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Kirkland Lake Gold (KL) closed at $46.54 in the latest trading session, marking a +1.24% move from the prior day.
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Gold investing can be a hedge in uncertain times. Here are some keys when deciding whether, when and how to buy gold stocks or a gold ETF.
(Bloomberg) -- Netflix Inc. shocked investors by reporting a drop in U.S. customers and much slower growth overseas, raising fears that the streaming giant is losing momentum just as competitors prepare to pounce.The shares plunged 10% to $325.21 at the close in New York, the worst one-day drop in three years, after the company reported a loss of 130,000 customers in the U.S. Netflix blamed higher prices and a weak slate of TV shows. It signed up 2.8 million subscribers internationally in the period, roughly half what the company predicted.“Netflix has a difficult road ahead, with looming competition and the removal of popular content,” said EMarketer Inc. analyst Eric Haggstrom. But a stronger lineup of new shows in the current quarter could help attract former subscribers, he said.The quarter represents the biggest black eye for Netflix since 2011, when the company split its DVD-by-mail business from its streaming business. That move raised prices for its customers, and resulted in the loss of more than 800,000 subscribers in the U.S. The company had planned to call the DVD service Qwikster, but it backpedaled on the plan after investors and customers scoffed at the idea.Netflix said the miss is a one-time blip rather than a long-term problem. The second quarter has typically been its weakest time of year: The company missed its forecast during the period in three of the past four years.Netflix looks to add 7 million subscribers in the current quarter, thanks in part to the return of top shows “Stranger Things” and “Orange Is the New Black.”“Our position is excellent,” Chief Executive Officer Reed Hastings said during a videoconference call Wednesday. “We’re building amazing capacity for content. Our product has never been in better shape.”Several analysts agreed that the second-quarter disappointment should be only a temporary hiccup for Netflix. Investors should “aggressively buy the stock” on weakness, especially below $325 a share, Loop Capital said.Heavy SpendingFor now, the second-quarter shortfall is renewing investor concern about the company’s heavy program spending and low profitability. Netflix shelled out more than $3 billion on programming in the quarter and another $600 million to market its shows. The company spent $594 million more than it took in and will need to raise money to fund programming.Investors had been forgiving about the spending and the debt -- so long as customers grew at record rates. But the loss of subscribers in the U.S. was the first since the Qwikster debacle, and it suggests Netflix may be running into price resistance or the limits of the addressable domestic market. The company has forecast it can reach as much as 90 million customers in the U.S., compared with 60.1 million currently.Overseas SlowdownInternational results flagged too, with the company missing its own forecast of 4.7 million new subscribers. Europe, Latin America and Asia have been the primary drivers of Netflix’s customer acquisition in recent years, and growth must be sustained if the company is to justify its high valuation.Netflix is introducing a cheaper, mobile-only package in India to attract customers in a big market with price-sensitive customers.Analysts expect the company to have a blockbuster second half because of a heavy release schedule that includes a new season of “The Crown” and movies by directors Martin Scorsese and Michael Bay. Even after the slowdown last quarter, Netflix still thinks it can have its best year of customer growth in 2019.But competition is coming. Walt Disney Co. and Apple Inc. plan to introduce streaming services this year, while offerings from Comcast Corp. and AT&T Inc. arrive in 2020. Those services may not steal users from Netflix, but they will make future growth harder, according to Michael Pachter, an analyst with Wedbush Securities.Just a Preview?“We saw a preview of next year with this quarter,” Pachter said in an interview with Bloomberg Television. “Next year, they’ll have a couple quarters where they’ll lose subscribers.”Another challenge: Competitors are taking back rights to programs that have been popular on Netflix, including “Friends” and “The Office,” to use for their own services. That will force Netflix to rely even more on its original productions.Those efforts have largely been successful. Its shows just earned 117 nominations for the 2019 Emmy awards. But reruns of old shows still constitute the majority of viewing.The slowdown in users overshadowed the company’s quarterly financial results. Earnings for the second quarter fell to 60 cents a share, but beat analysts’ estimates of 56 cents. Sales grew 26% to $4.92 billion, compared with projections of $4.93 billion.The stock had been up 35% for the year at the close of regular trading, nearly double the gain of the S&P 500. The decline spread to related stocks such as Roku Inc., which makes set-top boxes that deliver the streaming service. Its shares fell as much as 2.5%, but closed little changed.(Updates with closing prices)To contact the reporter on this story: Lucas Shaw in Los Angeles at firstname.lastname@example.orgTo contact the editors responsible for this story: Nick Turner at email@example.com, Rob GolumFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
I get the case for Roku (NASDAQ:ROKU) as a business. The concern -- or one of the big concerns, anyway -- is the ROKU stock price.Source: Shutterstock ROKU stock has risen 260% in 2019 alone. It's added some $9 billion in market value over that period. To be sure, ROKU had crashed at the end of 2018, and likely was too cheap at those lows. Still, the gains are close to staggering: none of the 720 stocks with a market cap over $10 billion have outperformed ROKU stock so far this year.Again, there is a bull case here. In fact, I've made that bull case. I also argued last month, with the ROKU stock price over $100, that the rally had gone too far. For a moment, that call looked prescient, as the stock promptly fell over 10%. But a more confident market has bid ROKU back up to an all-time high.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAhead of earnings, coming on August 7, those highs look too high. There's value here. But to even stay at these levels, Roku will have to answer some key questions. * 7 Stocks Top Investors Are Buying Now So much success is priced in at this point that it seems difficult to get too excited. Of course, I -- and other skeptics -- have said that before. Can the ROKU Stock Price Hold the Valuation?On its face, ROKU looks expensive. The company is guiding for over $1 billion in revenue this year -- which suggests something around a 11x+ EV/revenue multiple, backing out some $285 million in cash.Of course, in this market, 11x sales -- even for an unprofitable company -- isn't all that extreme. Whether it's Shopify (NYSE:SHOP) or MongoDB (NASDAQ:MDB), growth stock investors have become accustomed to paying those types of multiples. Even streaming giant Netflix (NASDAQ:NFLX), accounting for its post-earnings decline on Wednesday, trades at 9.4x EV/revenue, based on 2019 analyst estimates, with slower growth.But, as I've written before, it's important to remember a key aspect of Roku's business. The company's player business -- the actual sales of Roku hardware -- is unprofitable. Players generated gross profit of just $7 million in the first quarter, for example. It's the platform revenue from advertising, the Roku Channel, etc., for which investors are paying.That revenue is guided to two-thirds of this year's total. That in turn means investors are paying roughly 17x platform revenue -- one of the highest multiples in the entire market. It's difficult to see that moving any higher -- and there are reasons to think it might move lower. Will Netflix and YouTube Play Ball?That multiple might seem acceptable given Roku's key position in the growth of streaming. But the problem is that Roku isn't monetizing that position all that well.Notably, per the Roku 10-K, Netflix and Alphabet's (NASDAQ:GOOG,NASDAQ:GOOGL) YouTube account "for a majority" of hours streamed on Roku devices. Roku does not get "material revenue" from YouTube, however, and still appears to receive few dollars from Netflix.That might not be a terrible thing in terms of growth. The lack of dollars from those streaming giants means that new streaming services from Disney (NYSE:DIS), AT&T's (NYSE:T) WarnerMedia, and Comcast (NASDAQ:CMCSA) subsidiary NBCUniversal all can provide catalysts to revenue and profits.But from a long-term perspective, it's hard to see how ROKU stock is a clear and easy play on streaming when it's not making money from the industry's two biggest players (at least for now). And it's difficult to see why Disney or WarnerMedia would pay Roku when they're competing against Netflix and YouTube. Who Buys Roku?These questions are largely moot if Roku gets acquired. Rumors have swirled since even before the company's IPO. At this point, Roku clearly has out-competed Alphabet and Amazon (NASDAQ:AMZN) in terms of streaming devices. As such, it would make sense that some company might want to acquire it as an entry into the streaming ecosystem -- or a way to profit from it.The problem at this point is: who? If anyone involved in streaming acquires Roku, it then owns a gateway for cord-cutters. But so many other companies are involved in streaming, that the new Roku owner instantly would own the distribution mechanism for its competitors.That's a sticky situation. It makes streaming providers more hesitant to deal with Roku; they might instead turn to Amazon, who is having some success licensing its Fire technology to television manufacturers. It puts Roku, at this point a subsidiary of a larger player, in an awkward position.Meanwhile, Alphabet, Amazon, and Apple (NASDAQ:AAPL) all have their own hardware (Apple's platform is on the way). Disney and NBCUniversal won't be looking to provide streaming services for their competitors. Smaller media companies, at this point, might be too small given Roku's about $12 billion enterprise value.It's easy to assume that Roku will be bought out. But the same assumptions were made about TiVo (NASDAQ:TIVO). These aren't the same situations, of course, but the names of potential Roku buyers being floated around don't make all that much sense -- at least not yet. Be Careful Ahead of EarningsParticularly with Netflix's post-earnings flameout, ROKU stock simply looks dangerous here. Valuation is a question mark. Competition remains intense. An acquisition is far from guaranteed.And, as we've seen with Netflix, streaming growth isn't quite as linear as some would like to believe. For ROKU, so much success is priced in that anything short of a blowout quarter next month is going to be a problem. There's a wonderful business here, to be sure. It just might not be quite as wonderful as the ROKU stock price suggests at the moment.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post Three Key Questions for Roku Stock Ahead of Earnings appeared first on InvestorPlace.
Qualcomm (NASDAQ:QCOM) stock has been volatile over the past few months. QCOM stock went from $57 in mid-April to almost $90 by the end of the month. By mid-May -- one month after Qualcomm stock rocketed higher -- the shares were back down to $65.Source: Shutterstock Holy moly, that's a lot of volatility for a name that many own for income. Some income investors can ignore that kind of noise and use it to their advantage. That is, they can reap the reward of the gains of QCOM stock, yet smile when it declines, knowing that their reinvested dividends are buying more shares of QCOM stock. * 7 Stocks Top Investors Are Buying Now But QCOM stock looks like a tough dividend stock to stomach. After all, Qualcomm stock is bouncing around more than high-octane growth names like Shopify (NASDAQ:SHOP) and Roku (NASDAQ:ROKU), with the latter name recently hitting new, all-time highs. The bottom line is that there are far less volatile names with yields similar to that of QCOM stock.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut the charts indicate that Qualcomm stock could be presenting investors with the perfect buying opportunity. Let's take a closer look. Trading QCOM Stock Click to EnlargeQCOM is sitting right above its uptrend support, depicted by the upward-sloping blue line. However, on Tuesday QCOM stock importantly closed over its short-term downtrend resistance (depicted by the downward sloping blue line with the number "2" above it. ). A similar pattern has played out for a longer period of time, with the purple lines highlighting the wedge.So what does all this mean?That data alone isn't necessarily enough to convince investors to go long QCOM stock, but have a closer look; Qualcomm stock is staying above its 20-day and 50-day moving averages.The most attractive part of the setup, though, is the fact that QCOM is so close to its uptrend support and those moving averages. That puts buyers in a low-risk trading situation. Since it's easy for them to pull the plug on the trade and sell their position on a slight breakdown, they can avoid the pain of a major reversal. The only caveat is that QCOM can't be too volatile.With their downside limited, traders can look to ride QCOM stock up to its monthly high near $80.76. Click to EnlargeFor longer term investors, this trade setup may not be applicable. However, for them, another trade may be worthwhile. Specifically, it's pretty clear what a vital level $65 is for QCOM stock. While it seems unlikely that the tech giant would pull back and test that area, remember that it did so just last month.An unfavorable development involving Apple (NASDAQ:AAPL), the DoJ or any number of catalysts can negatively impact Qualcomm stock. Keep the $65 level in mind on any deep pullbacks. Weighing Qualcomm StockRecently, I asked whether being long Qualcomm stock was worth the risk. In its settlement with Apple, Qualcomm was paid at least $4.5 billion and agreed to a six-year licensing deal. Further, all legal disputes between the two companies were dropped, clearing a huge headwind for QCOM stock and making one of the world's richest firms its customer.The bulls didn't get to enjoy their spoils for long, though.The FTC made a huge fuss about Qualcomm, arguing that its practices are anti-competitive. Judge Lucy Koh ruled that QCOM is a monopoly and must change the way it does business. The FTC also accused QCOM of charging excessive licensing fees for its technology and has forced the company to submit annual compliance reports for the next seven years to the agency.On Wednesday, QCOM stock rose slightly as the DoJ reportedly sought to delay the enforcement of the antitrust ruling. The Justice Department argued that the ruling would force the Department of Energy and the Department of Defense to suffer intolerable supply disruptions. The DoJ also says that QCOM will likely win its appeal.At the end of the day, the legal issues facing QCOM create both opportunity and risk.While analysts, on average, only expect QCOM's earnings to increase an anemic 2.7% this year, investors are banking on forecasts of 35% growth next year.I like the way QCOM stock has set up on the chart, but I am also aware of its legal risks.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. Bret Kenwell was long AAPL, ROKU and SHOP. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post Is Qualcomm Stock Presenting Investors With the Perfect Opportunity? appeared first on InvestorPlace.
Shares of Blue Apron are up on a meatless partnership, but don’t let that siren song trick you into thinking this is a good long-term bet.
I've been a big bull on shares of streaming device maker Roku (NASDAQ:ROKU) since late 2018, a stretch during which ROKU stock has more than tripled. The company has reported monster quarter after monster quarter, reaffirming that this company is on a long-term winning trajectory in the streaming-video-on-demand (SVOD) space.Source: Shutterstock But over the past two months, I've warned that valuation may ultimately put a pause in this ROKU stock rally. Specifically, I've said that ROKU stock is fairly valued around $100, and that rallies towards $110 should be faded, while dips towards $90 should be bought.Today, ROKU stock trades at $110. It's up big over the past few weeks on the heels of a favorable market share update from Strategy Analytics and strong Prime Day sales. But, the long-term upside implications of those catalysts are arguably already priced into the stock at $110.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 3 Food Stocks to Buy for Fast and Big Profits As such, I'm reaffirming that ROKU stock is a long-term winner which, at $110 in mid-2019, needs to take a breather. Roku Stock Is a Long-Term WinnerRoku's long-term growth potential paves a viable pathway for ROKU stock to be a long term winner.According to Internet World Stats, there are about 4.4 billion internet users in the world (~57% of global population). Assuming a global average household size of 3.5, that means there are about 1.3 billion internet households in the world. Of those 1.3 billion internet households, 300 million of them are SVOD households (about 23-24%). Of those 300 million SVOD households, 27 million of them have a Roku device (~9% market share).All of those metrics will go up over time.Global population will go up. The global internet penetration rate will rise as emerging markets continue to urbanize, leading to a rise in the number of global internet people and households. The SVOD penetration rate will similarly rise as internet households continue to shift from linear to internet TV given convenience and price advantages. Further, Roku's market share in the SVOD market will similarly go up because the platform is content neutral, has an easy-to-use UI, and is the smart TV leader.Broadly, then, I think the following are very reasonable assumptions by 2025: * Global internet penetration rises to 70%. The number of global internet households hits roughly 1.6 billion. * SVOD penetration rises to 40%. The number of global SVOD households hits roughly 650 million. * Roku's market share rises to 15-20%. The number of worldwide active Roku accounts hit ~115 million.ARPU will continue to rise, too, thanks to the growing number of subscriptions per account and a secular rise in OTT video ad spend. Gross margins will remain high thanks to the shift to Player revenues. Opex rates will fall with scale, and operating margins will rise dramatically.These assumptions pave a viable pathway towards $5.50 EPS for Roku by 2025. Based on a 30-forward multiple, that yields a 2024 price target for ROKU stock of $165. Stretched Valuation Will Limit Near-Term UpsideThe above narrative and math strongly support the notion that Roku stock is a long-term winner. But there's one problem with buying into this long term winner at current prices: valuation.With the stock trading at $110, ROKU stock is trading in fairly valued to slightly overvalued territory. If you take the fundamentally supported fiscal 2024 price target of $165 and discount it back by 10% per year, you arrive at a fiscal 2019 price target of $100. Thus, long-term growth fundamentals imply that ROKU stock is trading 10% above its fiscal 2019 price target, and we are only halfway through 2019.To be sure, momentum can often outweigh fundamentals in the near term. ROKU stock has a ton of upward momentum right now, boosted by strong Prime Day sales and positive market share reports.But this momentum is fickle, and it can change on a dime. Just see how volatile ROKU stock has been since inception.As such, with ROKU stock, the best thing to do is stick with the fundamentals, and the fundamentals say wait to buy more until you get another dip in the stock. Bottom Line on ROKU StockROKU stock is a long-term winner that you want hold onto for the long haul. With these types of stocks, what you want to do is accumulate a core position at a reasonable price, add on big dips, and sell on big rallies. * 7 Stocks Top Investors Are Buying Now Right now, ROKU stock is in the the middle of a big rally into fundamentally unsupported territory. As such, I think this recent rally is an opportunity to do some trimming. The stock should come back in over the next few weeks, and when it does, that'll be the time to buy more.As of this writing, Luke Lango was long ROKU. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post It's Time for ROKU Stock to Hit Pause on Its 2019 Rally appeared first on InvestorPlace.
Erie Indemnity (ERIE) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
SAP SE (SAP) second-quarter results benefit from favorable growth in cloud revenues, synergies from Qualtrics and expanding clientele. The company maintains 2019 outlook.
(Bloomberg) -- South African platinum producers could use Sibanye Gold Ltd.’s pay settlement with gold miners earlier this year as a benchmark in wage talks with labor unions, according to a person familiar with the matter.Following a five-month strike that was eventually declared illegal, Sibanye agreed to increase the pay of workers at its three gold mines by 5.5%. Sibanye’s agreement is viewed as a good proxy for what’s possible in the platinum industry as the cost structures are similar to deep-level gold mining, said the person, asking not to be identified because the matter is private.Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Sibanye last week began the first round of wage negotiations with the sector’s biggest labor union, which is demanding an increase of as much as 48%. While some producers have said that such a settlement would lead to job losses and mine closures, the Association of Mineworkers and Construction Union argues it’s justified as higher palladium and rhodium prices boost company earnings.AMCU doesn’t see Sibanye’s gold deal as a barometer for platinum workers.“The settlement in gold was just for gold,” said union Secretary General Jeffrey Mphahlele. “Salaries are too low and we must create a balance, companies must come to the party and assist the people.”Sibanye’s settlement for gold miners equated to 700 rand ($50) a month in the first year of a three-year deal. In the second and third years, miners will also get a 5.5% increment or an increase that matches the inflation rate, should that be higher. While AMCU was eventually forced to call off its strike, the company was obliged to hold talks with lenders as it came close to breaching bank covenants.The platinum wage negotiations are complicated by additional requests for higher medical aid and travel expenses, while AMCU has also revived a demand that its members’ pension funds are transferred by the companies to a fund it founded.“All our demands are important because they address the core issues of living standards for the workers,” Mphahlele said.In 2014, AMCU led the longest-ever platinum mining strike in the country, costing the sector about $2 billion in revenue. Two years later, the union accepted an increase of 12.5% for the lowest paid workers, after initially demanding a 47% increment.“While no one can ever discount the risk for strike action, it is our concerted view that our employees remain committed to finding a workable resolution,” said Johan Theron, a spokesman for Implats. “We may differ on the numbers and how we get there, but at the core we essentially want the same outcome, a profitable and sustainable business.”Producers would prefer an early settlement to end uncertainty and boost morale, said James Wellsted, a spokesman for Sibanye, which became the world’s biggest platinum miner after its takeover of Lonmin Plc.“That said, we will not accept unaffordable wage demands in the interests of an early settlement,” he said.Anglo American Platinum said it plans to negotiate in “good faith” and balance wage demands with making sure the company remains viable.“We are committed to reaching a mutually beneficial settlement as soon as possible,” said Jana Marais, a spokeswoman for the company.(Updates with chart of platinum mining companies shares.)To contact the reporter on this story: Felix Njini in Johannesburg at firstname.lastname@example.orgTo contact the editors responsible for this story: Lynn Thomasson at email@example.com, Dylan Griffiths, Liezel HillFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Plexus' (PLXS) third-quarter results benefit from robust revenues from Healthcare/Life Sciences and Aerospace/Defense sectors despite unfavorable mix, which hurt margins.
Walmart (NYSE:WMT) stock has taken off. Just since the beginning of June, the Walmart stock price has increased over 13%. Yet there's been very little news to support the rally of Walmart stock.Source: Shutterstock Indeed, the biggest piece of news over that period hardly seems bullish. As James Brumley noted last week, Recode reported that Walmart's e-commerce businesses are losing $1 billion a year. * 7 Stocks Top Investors Are Buying Now But that counterintuitively could be good news for Walmart stock. Those losses suggest all of the company's businesses excluding e-commerce are more profitable than its reported figures imply. A $1 billion e-commerce operating loss, at the guided 27% tax rate, suggests a roughly 26 cents per share headwind to earnings. The hit likely is even higher, given that management has noted that much of the losses are coming from India's Flipkart, where tax rates and tax deductions for losses are lower.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAs a result, the impact of e-commerce losses on the company's EPS might be closer to 30 cents per share or higher. So Walmart's EPS, excluding its operating loss from e-commerce, would be closer to $5.15 this year rather than the current consensus estimate of $4.83.The problem at this point is that even that $5+ figure still leaves Walmart stock trading at 22.2 times its earnings, which is an awfully hefty valuation. That's a notable premium to the mid-teen P/E multiples that have historically been applied to Walmart stock.WMT stock isn't the only name that's benefited from that type of multiple expansion, and it's not the only one that's beset with these types of valuation questions. Indeed, in a market now at its all-time highs, there is no shortage of stocks in sectors like software and e-commerce that look too expensive.But Walmart stock highlights a growing trend outside tech as well. Right now, the market will seemingly pay any price for quality. The question is if, or when, that trend will break. The Obviously Expensive MarketOutside of the dot-com boom nearly two decades ago, it's difficult to remember a time when more stocks looked outrageously expensive. Most of the obvious choices - as is usually the case - are in tech, but not all.Beyond Meat (NASDAQ:BYND), for instance, trades at 25 times analysts' average estimate of its 2020 revenue. It's risen a stunning 153% from its initial close, on top of a 163% increase on its first day of trading.Shopify (NYSE:SHOP) has gained 134% so far this year, and trades at well over 20 times its 2019 revenue guidance. Another e-commerce play, Square (NYSE:SQ), isn't cheap, either.Snap (NYSE:SNAP) is unprofitable and valued at $20 billion. MongoDB (NASDAQ:MDB) has generated $300 million in sales over the past 12 months and has a market capitalization of over $8 billion.Those are just a few examples. There are dozens of stocks trading at over ten times revenue, even excluding early-stage biotech and pharmaceutical companies, which have little or no sales. Earnings multiples of 100+ aren't uncommon right now.Just a quick look around the market indicates that there at least are areas in which valuation doesn't seem to matter. And as good as these companies might be, it would appear to take something close to perfection for investors to get reasonable returns after paying these prices. That sounds a bit like a bubble, as many observers have argued. Walmart Stock and the Price of QualityBut somewhat quietly, similar valuation questions have risen among older, lower-growth names. Walmart's earnings multiples are the highest they've been since the financial crisis, by far. Again, this is a stock that for most of this decade has traded between 14 and 17 times its earnings.WMT stock isn't the only one. Microsoft (NASDAQ:MSFT) is targeting EPS growth in the range of 10% a year at best and now trades at something like 26 times next year's average EPS estimate. That multiple, too, seems to be the highest assigned the stock since the middle of the last decade, when the company's growth profile was very different.Walmart supplier Procter & Gamble (NYSE:PG) has executed an impressive turnaround. But it trades at 24 times forward earnings while analysts expect 6% profit growth next year. The shares of another consumer giant, Coca-Cola (NYSE:KO), tumbled after KO reported ugly Q4 earnings in February. Coke's pre-tax profits have declined over the past six years. Soda consumption is in the midst of a long-term decline, particularly in the U.S. Naturally, KO stock, too, is trading at an all-time high, with investors paying 23 times the average forward earnings estimate for it.Investors are paying whatever it takes right now to buy quality or something close to it. McDonald's (NYSE:MCD), Visa (NYSE:V) and Mastercard (NYSE:MA) all continue to soar and all sit at all-time highs. Even Home Depot (NYSE:HD), whose multiples according to market theory, should be dropping this late in the macroeconomic cycle, is following the trend.It's easy to look at the likes of BYND and SHOP and see a market "bubble," or something close to it, based on the multiples. But it's not just growth stocks that are receiving historically high - and questionable - valuations. What This Means for Walmart Stock Price - and the MarketThe question is whether these valuations can hold. And that question likely depends in part on a key factor: interest rates. Expectations are rising for a Federal Reserve rate cut (or two) this year. That puts investors in quite a bind.How, exactly, can an investor get returns? The ten-year Treasury bond yields a paltry 2.125%, with significant duration risk. (Duration risk simply means that if interest rates rise over that ten-year period, an investor won't be able to sell the bond at par, leaving her with the choice of keeping below-market rates or taking a loss.) Savings accounts and CDs (certificates of deposit) pay even less.Emerging market stocks, including Chinese issues, have significant risk. Europe's growth is meager. Even among U.S. issues, historically "defensive" sectors - notably healthcare and certain kinds of real estate - aren't as safe as they used to be.In that environment, choosing quality and ignoring valuation makes some kind of sense. And those of us investors (myself included) who have been balking at valuations for several years now have missed out on gains by the likes of MSFT and Walmart stock, let alone the 100%+ gains that stocks like SNAP, SHOP, and BYND have posted.But, again, the question is whether this phenomenon can continue. Bearish investors would argue that, at some point, valuations have to matter. Valuations have to come down. And Walmart stock would seem to be a prime candidate for a valuation cut.After all, WMT is facing real challenges now. Amazon.com (NASDAQ:AMZN) is a formidable competitor. The Sam's Club concept has stalled out. Walmart's international earnings have declined for some time, though the stronger dollar is an issue. And WMT's earnings growth remains meager.It doesn't seem like Walmart stock should be valued at 20+ times its earnings, but the valuation of WMT stock may have less to do with its business than many investors believe.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post Why Wall Street Bears Should Be Watching Walmart Stock Closely appeared first on InvestorPlace.
When limited supply meets excess demand on both the long and short sides of the market for a stock, outrageous volatility is sure to ensue.
Shares of meal-kit company Blue Apron Inc. rallied Tuesday, after the company said it would start adding Beyond Meat Inc.’s plant-based proteins to its menus starting in August, sparking a round of short covering.
Todd Shaver, editor of BullMarket Report, selected Roku (ROKU) as his favorite speculation idea for the year. The stock has risen 220%, making it the 1 performer of the 110 stocks in our 2019 Top Picks through mid-year.