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March 17, 2022by AdminBest Stocks to Invest

How Warren Buffett Finds the Best Stocks to Invest In

March 17, 2022 4:39 AM

newsfeedback@fool.com (Selena Maranjian)

Posted: March 17, 2022 4:39 AM

Updated: March 17, 2022 6:06 AM

If I told you there’s an investor who has averaged annual returns of 20% over more than 50 years, would you be impressed? (In case you’re not sufficiently impressed, know that a 20% growth rate will turn a single $100 investment into about $900,000 over 50 years.) Might you want to learn more about how this person invests in order to perhaps improve your own investing?

If so, you’re in luck, because the investor is Warren Buffett, who has run his company, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), for more than 50 years — and who has long been happy to share his insights and advice about investing through gobs of interviews, articles, and letters to shareholders that he makes freely available at his company website.

Here’s a look at five things Buffett does that have helped him reap such massive rewards in the investing arena.

Image source: Getty Images.

1. He reads widely

For starters, the guy reads — a lot. He reportedly spends around 80% of his workday reading and thinking

Buffett also advises others to read a lot. He has suggested: “Read 500 pages every day. That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.” Back in 2007, CNBC’s Becky Quick said that he reads quickly, noting that he reads some six newspapers each day.

Buffett will, of course, read the annual reports of companies in which he has invested, but he goes beyond that. As he explained when answering shareholder questions at his 1996 annual meeting: “If we owned stock in a company, in an industry, and there are eight other companies that are in the same industry … I want to be on the mailing list for the reports for the other eight because I can’t understand how my company is doing unless I understand what the other eight are doing.”

So aim to read a lot. Even if you don’t read 500 pages a day, try to read more than you’re currently reading. Learn a lot about great investors, great managers, great businesses, investing strategies, industries of interest, and developments in those industries.

2. He respects his circle of competence

Next, Buffett stays within his “circle of competence” — a phrase he has used often, especially when he has been asked why he never invested in this or that popular growth stock. In his 1996 letter to shareholders, he explained:

What an investor needs is the ability to correctly evaluate selected businesses. Note that word “selected”: You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.

And in his 1992 letter, he said:

…we try to stick to businesses we believe we understand. That means they must be relatively simple and stable in character. If a business is complex or subject to constant change, we’re not smart enough to predict future cash flows.

So take some time to figure out what you really understand well and what you don’t. You can expand your circle of competence through reading and other forms of learning, but aim to not invest beyond its bounds.

3. He looks for good values

Buffett has also done well because he respects valuation. He’s a value investor, meaning that he wants to invest in companies when their price is below their intrinsic value. Doing so affords him a “margin of safety.”

As he explained in his 1992 letter to shareholders:

…we insist on a margin of safety in our purchase price. If we calculate the value of a common stock to be only slightly higher than its price, we’re not interested in buying. We believe this margin-of-safety principle, so strongly emphasized by Ben Graham, to be the cornerstone of investment success.

It’s worth noting that his views have shifted a bit over time. Thanks in large part to the influence of his investing partner Charlie Munger, he has come to believe that: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” Still, he never wants to overpay for a stock or company.

4. He thinks of stocks as businesses

Berkshire Hathaway’s value is a combination of the value of its many wholly owned subsidiaries (which include GEICO, Benjamin Moore paint, Fruit of the Loom, and the entire BNSF railroad) and its many shares of stock in various companies. In his most recent letter to shareholders, for 2021, Buffett explained that:

Whatever our form of ownership, our goal is to have meaningful investments in businesses with both durable economic advantages and a first-class CEO. Please note particularly that we own stocks based upon our expectations about their long-term business performance and not because we view them as vehicles for timely market moves. That point is crucial: Charlie and I are not stock pickers; we are business pickers.

This is a valuable concept for all us investors to remember: Stocks are not like lottery tickets or other kinds of bets you place. They’re actual stakes in actual companies, and your long-term fortunes in stocks are tied to the long-term performance of their underlying companies.

5. He hangs on

Finally, another key characteristic of Buffett’s investing style is that he hangs on — often for decades. When he buys entire companies, he does so with the intention of holding on forever. Indeed, that’s one of the reasons he cites that owners are willing to sell their companies to him.

He quipped in his 1988 letter to shareholders that “… when we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

The lesson here for us to also think long term. You might be tempted to sell a stock after it has doubled or tripled for you, but the best stocks will keep doubling and tripling over and over. Patience is powerful.

If you read more about Buffett, you’ll likely gather additional investing insights. You might also learn more about his company, Berkshire Hathaway. If you decide you’d like to own some shares, you’ll have Buffett and his team investing for you, and you’ll own chunks of many terrific businesses.

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Selena Maranjian owns Berkshire Hathaway (B shares). The Motley Fool owns and recommends Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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March 17, 2022by AdminBest Stocks to Invest

What Is the Stock Market?

The stock market is a collection of exchanges through which equity shares of public companies are issued, bought and sold.

The role of the stock market is to provide a way for companies to raise capital by selling ownership shares to public investors. At the same time, the stock market allows private investors to buy shares of stock in public companies and become part owners of their businesses. The aggregate value of the entire stock market is often tracked and reported via market indexes, such as the Dow Jones Industrial Average and the S&P 500 index.

How Does the Stock Market Work?

When a private company wishes to become public, it typically completes an initial public offering, or IPO. During the IPO process, the company sells shares of stock to public investors to raise the money it needs to pay off debt or invest in its business. Once the IPO is complete, these shares of stock begin trading on one or more of the stock exchanges that make up the stock market.

Public investors can track the real-time market price of a stock via monitoring its ticker symbol, typically an abbreviation of no more than five letters representing a particular company’s stock.

Investors buy shares of stock in the hopes that the company selling those shares will grow to become more valuable over time, thereby increasing the price of each share of stock. Stock prices are determined by the economic law of supply and demand, and their prices often fluctuate daily based on changes in investor demand.

Public companies can also issue more shares of stock after they have completed an IPO via secondary offerings, or they can use the company’s excess cash flow to buy back shares of stock from the public market. Secondary offerings are considered dilutive to investors because issuing additional shares of stock reduces the ownership stake each share represents.

How to Invest in the Stock Market

One of the easiest ways to begin investing in the stock market is to open an online investing account. Once you have transferred funds to the investing account, you can immediately begin buying and selling stocks. Many discount brokerage accounts offer zero-commission stock trading and no account balance minimums, so you can start buying shares of stock with any amount of money.

Investors who want to take a hands-on approach to the stock market can pick and choose individual stocks based on their personal preferences. Investors who would prefer assistance can utilize a robo advisor or meet with a human financial advisor to determine an appropriate investment plan.

Stock Market Components

The global stock market is made up of different exchanges centered in major financial hubs around the world. The largest exchange is the New York Stock Exchange, or NYSE, which is located on Wall Street in New York City. The Nasdaq in New York, the Shanghai Stock Exchange in China, Euronext in Europe and Japan Exchange Group in Tokyo are other major global stock exchanges.

Investors place orders to buy or sell stocks through a broker, such as Charles Schwab, Fidelity or Robinhood. The brokers typically relay those orders to an exchange, where a market maker fills the order. Market makers are usually large banks or institutions that provide liquidity to the stock market. Large market makers include Deutsche Bank, Morgan Stanley and Citadel Securities.

Stock Market Cycles

The strength of the stock market loosely reflects the strength of the underlying economy and goes through cycles. Economic cycles have historically lasted from two years to 10 years each. Because the stock market is a leading economic indicator, it tends to reflect underlying economic changes about six to 12 months before they are reflected in the economic data.

Extended periods in which the stock market rises without any large drops are called bull markets. Stock market bubbles can occur at the end of extended bull markets. A stock market decline of at least 20% from recent highs is considered a bear market. The best time to invest in the stock market is at the end of a bear market when investor sentiment is at its most pessimistic point. The best time to sell stocks is at the end of a bull market when investor sentiment is at its most optimistic point.

Why You Need to Know About the Stock Market

The stock market can be extremely volatile on a year-to-year or month-to-month basis, but its long-term performance has been remarkably strong and consistent over time. The S&P 500’s rolling 30-year average annual return has stayed between around 8% and 15% dating back to 1926. From 1926 to 1956, the S&P 500 averaged a 10.7% annual return. From 1956 to 1986, the average return was 9.6%. From 1986 to 2016, the average annual return was 10%. Not only are these stock market returns remarkably consistent, but they are also higher than the historical returns of other asset classes, such as gold, U.S. Treasury bonds and real estate.

Pros of Investing in the Stock Market

Stock market returns have historically been consistent and strong over the long term, making stocks a great way for investors to accumulate and grow wealth for retirement or other long-term financial goals. The stock market can also help investors protect their wealth from the negative impact of taxes and inflation. The stock market can be a reliable source of income for investors if they own stocks that pay dividends or other special distributions. Finally, it is easy for the average person to begin investing in the stock market, and it doesn’t require much money to start.

Cons of Investing in the Stock Market

While diversification provides investors with a degree of safety, individual companies regularly become insolvent and go bankrupt. That process often leads to the stock’s share price dropping to zero. Unfortunately, common stockholders are typically last on the priority list when a bankrupt company liquidates its assets to pay off its debts and investors. Investing in the stock market can be an emotional experience, especially during bear markets or market crashes. Finally, the stock market can experience extreme price fluctuations in the short and medium term, making it relatively risky for investors approaching retirement age or those who may need to liquidate their holdings on short notice.

History of the Stock Market

The first modern stock exchange was created in Amsterdam in 1611, and investors could initially only buy and sell shares of the Dutch East India Company. The first U.S. stock market was the Philadelphia Stock Exchange, which was founded in 1790. The New York Stock and Exchange Board, the precursor to the NYSE, was formally constituted in 1817. In 1971, the National Association of Securities Dealers Automated Quotations, otherwise known as Nasdaq, was launched. The Nasdaq was groundbreaking because it allowed investors to buy and sell stocks digitally on a network of computers rather than in person on a trading floor.

FAQs

Yes, profits generated from stock market investments are taxed in the U.S. as capital gains, and tax rates vary depending on factors such as your income level and how long you hold the stocks before selling.

No. The major U.S. markets have normal trading hours on weekdays from 9:30 a.m. to 4 p.m. EST and extended trading hours on weekdays from as early as 4 a.m. EST to as late as 8 p.m. EST.

A stock market sector is one of 11 categories that investors use to classify stocks of companies that operate in similar industries and share common economic characteristics. Examples include the financial sector, energy sector and health care sector.

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March 17, 2022by AdminBest Stocks to Invest

Best trades on CNBC Wednesday: Pros pick tech names as Nasdaq jumps – CNBC

Best trades on CNBC Wednesday: Pros pick tech names as Nasdaq jumps CNBC

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March 16, 2022by AdminBest Stocks to Invest

Steve Wozniak’s best investing tips – he’s ‘skeptical’ of most crypto

For Apple co-founder Steve Wozniak, investing can be a real headache.

“As a rule, I don’t invest [often], because then you’ve got to be watching it every day, and I like my head to be really peaceful and low stress,” Wozniak tells CNBC Make It. That’s why he says he tries to avoid buying stocks or other volatile assets ⁠– because, as he told Fortune in 2018, a daily obsession with their worth “could corrupt your values.”

Still, he’ll put money behind a venture he believes in: Wozniak is currently an investor on the online reality show “Unicorn Hunters.” The show sees Wozniak and other stars – including former U.S. Treasurer Rosie Rios and singer Lance Bass, among others – field investment pitches from tech start-up founders.

Wozniak’s goal isn’t to “make a ton of money,” he says. Rather, it’s to support companies and ideas that personally interest him. The mindset isn’t new: It’s one reason why Wozniak is now, reportedly, a millionaire – as opposed to a billionaire, like the late Steve Jobs was before his death in 2011.

But Wozniak wouldn’t have it any other way. Here’s how he weighs a company or asset before he decides to do one of his least favorite things: invest.

It has to apply to his life

Wozniak’s aversion to investing doesn’t stop tech companies from pitching him constantly, he says.

“For ages and ages, I get pitched a dozen times a day to join other companies and startups [that say], ‘We’re going to be the next Apple, we’re gonna be the next Steve Jobs, whatever,'” he says. “I just get so tired of telling them all, I am backlogged and I don’t really have the time.”

A start-up has to tickle one of his personal interests or play into his computer engineering experience – at a minimum – if its founders want to reel him in as a backer. Wozniak says his decades of experience take over when he judges whether a company has a chance to succeed.

“I’m just looking at: Does this technology mathematically, scientifically, [and] engineering-wise have a chance of actually being developed at a reasonable cost?” he says.

Skepticism is valuable

It always helps to be skeptical as an investor, Wozniak says. Most sales pitches only highlight the best possible outcomes for a product or company.

“I try to be a little skeptical and get into the mathematics of it a bit,” he says. “I also try to think about: Does this technology already exist? Does it have worthwhile alternatives? Is it really saving people as much as it claims to be? Every story you ever hear, every pitch, is always extremely good for the world, [so] I try to give it some analysis.”

That tech skepticism also extends to any company’s business side. Wozniak says he considers himself to be fairly financially conservative, and the last thing he wants to do is invest in a company that’s overextending itself.

“I always believe you should do everything that you can afford, and don’t do everything on credit,” he says. “So I look for that in a company: Are they going to be successful? Their money that’s coming in, is it real? Is it going to be scalable, and continue through time?”

Crypto is risky, unless it’s not

Wozniak says he’s “very skeptical” of most cryptocurrencies, and that investing in crypto is often “too risky” for the average person – especially if they’re biting off more than they can chew.

The Apple co-founder says he sees “an awful lot of opportunity for [scammers]” using crypto hype, and the digital currency’s complicated and volatile nature, to take advantage of uninformed investors. “I only look for cryptocurrencies that are based upon – kind of like stock in a company – something you could visualize and see, and they’ve been successful already,” he says.

In that vein, Wozniak is currently involved with two cryptocurrency projects. One is from Efforce, a blockchain project that funds energy-efficient companies, which Wozniak helped launch in 2020. Efforce offers a crypto token called WOZX that Wozniak says allows investors to earn a portion of the profits that come from those companies’ energy savings.

On the plus side, Wozniak says, “it’s based upon real results and real return on investment.” On the minus side, he notes, Efforce is “having problems getting [WOZX] implemented.” The cryptocurrency’s price has dropped more than 90% over the past year, according to Coinbase.

Wozniak also touts a cryptocurrency called Unicoin, recently created for “Unicorn Hunters.” The token helps fund start-ups who pitch investors on the show, and pays dividends based on those companies’ success. In other words, it’s a chance to invest in start-ups alongside Wozniak.

Wozniak says he’s “played with” many other cryptocurrencies. He’s the least skeptical about bitcoin and Ethereum’s ether, he says: “Bitcoin is just gold. I mean, nobody owns it. It’s mathematics.”

Still, he says, he quickly sold most of those crypto holdings. “I just kept one bitcoin, because I’m scared,” he says. “I don’t want to be tracking it up and down, up and down, like stocks every day. That’s just not my life… I have a lot of desire for things that are stable and predictable.”

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March 16, 2022by AdminBest Stocks to Invest

Should You Invest in Walmart Right Now?

Walmart‘s ( WMT -0.02% ) rise to becoming the world’s largest retailer has made investors very rich over the years. Walmart’s size, scale, and reach make it one of the most popular stocks among investors. But the retail landscape is changing, and Walmart is facing several headwinds that could give investors pause over its future. If you’re wondering whether this stock is a worthwhile investment today, here’s a closer look.

Image source: Getty Images.

Being big has its advantages

Primarily known for the everyday low prices offered in its supercenters, discount stores, neighborhood markets, and Sam’s Clubs, Walmart serves a diverse range of retail customers. The retail sector, Walmart included, was hard hit at the start of the pandemic. But 2021 earnings show that Walmart has more than recovered, with comp sales growing 6.4% and e-commerce sales rising 11% year over year.

Total revenues for the company in 2021, including store sales and rental income from its leased properties, increased 1.6% after accounting for currency changes. While 1.6% isn’t huge, it’s a solid increase, given Walmart’s size.

Many people think being the biggest is the best. There certainly are a number of advantages that come with a company Walmart’s size, for example, having the ability to tighten profit margins to gain a competitive advantage over peers when it comes to pricing, inventory, or distribution. But being the biggest also means it can be challenging to grow.

Walmart has 210 distribution centers to help serve its 10,500 stores across 24 countries. This is a huge portfolio by any means, but less than in its recent past. In 2021, Walmart had $32.7 billion worth of divestitures from the business sales and the sales of stores and investments, mostly internationally. This is part of Walmart’s bigger plan to reduce risk exposure in lower-performing markets and boost capital savings, which will likely pay off in the long run.

But the company still needs to find ways to grow its revenues. Walmart is attempting to attract and retain new customers through store redesigns, making improvements to the e-commerce experience, and expanding into the metaverse, but with margins being so thin in the discount retail sector, huge revenue growth is challenging to achieve.

Headwinds that could hurt Walmart

Supply chain issues have become a growing concern over the past year, with matters only getting worse as conflicts in Europe push energy costs higher. Walmart’s supply chain costs were $400 million more than expected at the beginning of the fourth quarter, and this number will almost certainly increase in 2022.

Inflation is another big headwind that hurt revenues and sales for Walmart. Consumer spending is still strong, but as the costs for goods and services continue to climb, retail spending will likely slow, meaning less revenue for Walmart. Thankfully, being a discount store means people will likely be looking to spend less and save more as they shop, which could help drive more business to Walmart. But given the higher costs for its supply chain and transportation, any boost in revenues could easily be offset on its bottom line.

Giant footprint equals stagnant growth

Current headwinds may negatively impact performance in the years to come, but Walmart isn’t going anywhere anytime soon. The stock is trading at a price-to-earnings ratio of 29, which makes it rather richly valued. Market volatility and future challenges could push prices back down closer to their historical levels, but only time will tell.

Investors should look at this stock as a reliable dividend payer in a recession-resilient industry and be comfortable paying an inflated price for it. However, those on the hunt for a value buy with better growth opportunities and fewer headwinds can find much better deals in the market today without compromising stability.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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March 16, 2022by AdminBest Stocks to Invest

These Metaverse Stocks Let You Invest in the Next Big Thing

When Mark Zuckerberg announced his company was changing its name from Facebook to Meta late last year, he was met with a range of reactions, from mockery and skepticism to confusion and praise.

But to Zuckerberg, the reason was clear: “The metaverse is the next frontier in connecting people, just like social networking was when we got started,” he wrote in a founder’s letter at the time. With the creation of Facebook, the tech CEO proved he understands how people will want to communicate and interact with one another in the future. If he’s right about the metaverse, our physical world will likely start merging even more with our digital one.

Zuckerberg isn’t the only one betting on the metaverse. Companies like Apple and Microsoft are investing in the next frontier of the internet as well. Experts say it will be transformative.

“People should ask not what will the metaverse change but what won’t it change,” says Zeno Mercer, research analyst at ROBO Global. “There’s not much that it won’t change.”

If you’re looking to invest in the metaverse, here’s where experts say to start.

What is the metaverse?

“Metaverse” is a major buzzword, but if you don’t understand what the metaverse actually is, there’s good reason for that: There is no clear-cut definition, or even a consensus on whether or not it already exists.

But the overarching theme is that the metaverse is a virtual world in which users can do what they do in the physical world, like work, buy and sell goods and socialize with friends. While some say that the metaverse already exists in the form of video games, others say the metaverse doesn’t exist yet, and will marry technologies in a way we haven’t yet seen to bring people into virtual worlds. Tons of companies are working on building the metaverse, and it’s unclear what the outcome will look like. It could include companies competing against one another to create the one definitive metaverse, or companies could work together to create various metaverses in which your avatar can move from one company’s platform to another.

The idea isn’t new. In fact, author Neal Stephenson is credited with coining the term in 1992 in his sci-fi novel “Snow Crash.” But since then, the way individuals and companies envision the metaverse has continued to evolve.

The company Meta, for example, calls the metaverse “a set of virtual spaces where you can create and explore with other people who aren’t in the same physical space as you.”

Think of it this way, instead of opening up your laptop and shopping online or chatting with friends, the metaverse is a way to actually “live” in a virtual world — possibly via an avatar, or with virtual reality (VR) goggles that make you feel like you’re physically elsewhere — where you can create various communities and interact with others more so than you do via Facebook or Instagram.

3 ways to invest in the metaverse right now

There are many companies hoping to help build the metaverse, from chipmakers to gaming companies. Here are the areas experts say to keep an eye on if you want to invest in the metaverse.

Gaming

Gaming companies are likely to be large beneficiaries of the transition to the metaverse, especially because they’re already well on their way to fulfilling opportunities related to the concept, says Scott Kessler, global sector lead of technology, media and telecommunications at Third Bridge.

When Microsoft announced its plans to acquire gaming company Activision Blizzard for a whopping $68.7 billion earlier this year, the company’s CEO Satya Nadella said in a news release that, “Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms.”

The acquisition is just one of many in the gaming world, which include Take-Two Interactive’s buying of Zynga (creator “Farmville” and “Words with Friends”) and Sony’s plan to buy Bungie (developer of popular video games like “Halo” and “Destiny”).

While many businesses are just getting started with their plans to build the metaverse, gaming companies have been working on an early version for years, given their ability to allow gamers to interact with one another in a virtual world, and their virtual economies that traverse into the real world. A survey published more than a decade ago from Visa’s PlaySpan and research firm VGMarket found that even back then, nearly one out of every three gamers had used actual money on virtual goods.

Another big U.S. company in this space is Electronic Arts, which boasts a portfolio of well-known games like “FIFA” and “The Sims.”

Gaming platform Roblox is also making strides in the race to the metaverse. Roblox, which is very popular among kids, has already created a virtual world that allows users to play a variety of games and interact online, and is one of the companies that seems to be closest to capturing what people think of when they envision the metaverse, Kessler says.

Infrastructure

The metaverse is more of a long-term vision, says Angelo Zino, senior industry analyst at CFRA Research. Many of the ideas companies are throwing money into won’t actually come to fruition for years. So if you want to buy stocks in companies supporting the metaverse today — or, at least over the next few years — your best bet is investing in infrastructure that needs to be in place for these new innovations to actually be developed, Zino says.

Semiconductor companies Nvidia and Advanced Micro Devices are probably the best positioned, he says, as they’ll actually likely see revenue increases as companies like Meta spend money on infrastructure.

The graphics processing units these companies manufacture — which can process a ton of data simultaneously and are used for machine learning and gaming, among other applications — are already major players in gaming and 3D simulation.

Qualcomm could also be a metaverse beneficiary as more hardware devices come out that get consumers excited about virtual and augmented reality (AR), since the semiconductor produces chips that power AR and VR headsets, Zino adds.

There are also software companies that are enabling other businesses to build the metaverse, like Unity Technologies, Kessler says. Unity is a video game software development company whose software is now being used beyond gaming, including for film animation.

Autodesk and Trimble are two more software companies looking to help build the metaverse, Mercer says. Autodesk is a software company that creates programs for engineers and architects to build products with AR and VR tools.

~~Trimble, meanwhile, offers 3D modeling for construction and an AR app.~~

Big tech

Meta (formerly Facebook) can benefit from being a first mover in the metaverse space, says Ali Mogharabi, senior equity analyst at Morningstar. The company has the access to capital to invest aggressively in the metaverse, thanks to the revenue it brings in from Facebook and Instagram. It also has the users.

“In order for the metaverse to be successful, you need those users out there to interact and engage with one another,” Mogharabi says.

In Zuckerberg’s letter, he wrote that Meta’s role in helping to build the metaverse will be to accelerate the development of “fundamental technologies, social platforms and creative tools to bring the metaverse to life, and to weave these technologies through our social media apps.” While it’s unclear exactly what that might look like, Mogharabi says by expanding into the metaverse, Zuckerberg and his company are opening themselves up to more opportunities keep users on its platforms, as well as for monetization, whether it be through selling items on virtual platforms or marketing and advertising on virtual platforms.

Apple is another tech giant that is looking to benefit from the shift in interest towards the metaverse, Zino says. The company is focused on AR technology and is expected to launch a mixed-reality headset.

“Apple has always been the company that has helped adoption,” Zino says. Just take a look at smart phones, and larger-screen devices, he adds. “No one really cared about larger-screen devices until Apple had it… Nobody really cared about 5G until Apple made it a reality.”

And More

The metaverse is still a huge unknown, so its possibilities are endless, Zino says. Companies that touch on everything from tools for bettering mental health to virtual office experiences may be able to benefit from the growing interest in a virtual world.

He points to Snap as a potential metaverse beneficiary on the social media side, as it caters to consumers who will ultimately drive the adoption of the metaverse — users under the age of 35 — and has already launched AR glasses.

And as we become more digitally dependent, we’re going to need better ways to prove our identities.

“Cybersecurity is a huge component that is an underrated angle of the applications of the metaverse,” Mercer says. Companies like Cloudfare, which protects companies against cyber attacks, and Norton, which offers identify theft protection are two that could benefit, he adds.

March 16, 2022by AdminBest Stocks to Invest
7 Best Gold ETFs to Hedge Volatility in 2022 | Investing News

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Lympo(LYM)$0.004392-4.43%
YAM v2(YAMV2)$4.70-1.41%
Relevant(REL)$0.780.38%
Heart Number(HTN)$0.000553-30.47%
Tadpole(TAD)$7.32-1.76%
SEEN(SEEN)$2.05-2.27%
Evedo(EVED)$0.082301-0.80%
SakeToken(SAKE)$0.0127234.37%
BNSD Finance(BNSD)$0.005460-5.83%

These ETFs are mostly simple, low-cost ways to hedge with gold.

Gold exchange-traded funds have performed quite well recently, as the price of their benchmark precious metal has soared nearly 13% over the last 12 months. Company stocks may juice portfolio returns in the short run, but long-term investing success relies on diversification across different asset classes. Investors have historically used gold as a hedge against market volatility, and with the Russia-Ukraine war raging and inflation high, now may be as good a time as any to follow in their footsteps. These seven gold ETFs play the precious metal in different ways, providing a hedge against volatility and uncertainty in a simple, cost-effective investment vehicle.

SPDR Gold Shares (ticker: GLD)

SPDR Gold Shares is the go-to for investors looking to play precious metals in a cost-effective way. GLD is the largest physically backed gold ETF in the world, with more than $67 billion in assets under management. Since its launch in 2004, the fund has allowed investors to purchase gold via their brokerage account or individual retirement account. The fund is benchmarked to gold bullion, giving investors an easy way to get exposure to gold prices without owning the physical metal. The 0.4% annual expense ratio, or $40 for every $10,000 invested, is especially cost-effective when you consider the price of shipping, insuring and storing gold bars or coins in a safe.

These ETFs are mostly simple, low-cost ways to hedge with gold.

Gold exchange-traded funds have performed quite well recently, as the price of their benchmark precious metal has soared nearly 13% over the last 12 months. Company stocks may juice portfolio returns in the short run, but long-term investing success relies on diversification across different asset classes. Investors have historically used gold as a hedge against market volatility, and with the Russia-Ukraine war raging and inflation high, now may be as good a time as any to follow in their footsteps. These seven gold ETFs play the precious metal in different ways, providing a hedge against volatility and uncertainty in a simple, cost-effective investment vehicle.

SPDR Gold Shares (ticker: GLD)

SPDR Gold Shares is the go-to for investors looking to play precious metals in a cost-effective way. GLD is the largest physically backed gold ETF in the world, with more than $67 billion in assets under management. Since its launch in 2004, the fund has allowed investors to purchase gold via their brokerage account or individual retirement account. The fund is benchmarked to gold bullion, giving investors an easy way to get exposure to gold prices without owning the physical metal. The 0.4% annual expense ratio, or $40 for every $10,000 invested, is especially cost-effective when you consider the price of shipping, insuring and storing gold bars or coins in a safe.

iShares Gold Trust (IAU)

Similar to GLD, iShares Gold Trust offers direct exposure to the day-to-day movement of the price of gold bullion. It’s smaller, at $32 billion in total assets, and it’s a bit younger, with an inception date of 2005, but it’s very close to a mirror image of the SPDR fund. One advantage IAU does have, however, is a lower cost, at just 0.25% in annual expenses. That saves investors about $15 annually on every $10,000 invested. IAU has a 10-year average annual return of 1.49%, which is slightly better than competitor GLD, with a 1.34% average return over the same period.

SPDR Gold MiniShares (GLDM)

In 2018, State Street launched GLDM as an alternative to GLD. The main difference between the two is that GLDM holds less gold compared with GLD. GLDM also has a lower expense ratio: 0.18%, compared with GLD’s 0.4%. The MiniShares offering is smaller in size and costs less, which may be more attractive to the retail investor looking for an affordable way to get gold exposure into their portfolio. Similar to GLD and IAU, GLDM is designed to reflect the performance of the price of gold bullion, less expenses, and has moved in lockstep with other gold ETFs since it entered the market.

Aberdeen Standard Physical Gold Shares ETF (SGOL)

Aberdeen Standard Physical Gold Shares is issued by Aberdeen Standard Gold ETF Trust. Similar to other physical gold-backed ETFs, SGOL reflects the performance of the price of gold bullion minus expenses. SGOL has an affordable expense ratio of 0.17%. This Aberdeen fund is slightly younger than its counterparts, launched in 2009, and is on the smaller side as well, with about $2.7 billion in assets. Changes made to the SGOL fund are readily reflected on the fund’s website, to give investors transparent information about the fund’s composition. Gold is held in bullion bars in vaults around the world, including in Zurich and London. A bar list is posted daily to the Aberdeen website for investor reference.

GraniteShares Gold Trust (BAR)

GraniteShares launched BAR to give cautious precious-metals investors an ETF that both holds physical gold bars and is mandated to do physical audits of its vault twice a year, ensuring that it has the proper amount of precious metal on hand. Its goal is to track the performance of gold more faithfully. With an expense ratio of just 0.17%, BAR is also one of the most affordable ETFs on the market.

Global X Gold Explorers ETF (GOEX)

Just as its name implies, Global X Gold Explorers ETF offers gold investors access to companies that are involved in gold exploration. GOEX’s 49 holdings include gold and silver producer Hecla Mining Co. (HL) and Merdeka, a miner of copper and gold that prides itself on sustainability and community development. SSR Mining, producer of gold, silver, tin and zinc, is also among the fund’s top holdings. The fund holds $55 million in assets and has an expense ratio of 0.65%. Unlike other gold ETFs on the list, GOEX allots 2% of its portfolio to the information technology sector, and it invests in companies spread across the globe, giving the fund some built-in diversification. A majority of its gold-mining holdings are in Canada, but other countries include Australia, Britain, Indonesia, China and South Africa.

ProShares Ultra Gold (UGL)

ProShares Ultra Gold invests in futures contracts and takes a leveraged position in gold. A leveraged ETF is an investment vehicle that uses debt to increase returns to shareholders, as opposed to a conventional ETF, which tracks an underlying index or commodity. A fund for gold investors seeking outsize returns, UGL aims to double the return of its benchmark, the Bloomberg Gold Subindex, in a given day. This leveraged ETF also has a daily reset feature, which adds more risk and requires investors to monitor their holding daily. UGL may be better suited as a trading tool rather than a long-term gold ETF investment.

Brace for market volatility with these seven gold ETFs:

SPDR Gold Shares (GLD)

iShares Gold Trust (IAU)

SPDR Gold MiniShares (GLDM)

Aberdeen Standard Physical Gold Shares ETF (SGOL)

GraniteShares Gold Trust (BAR)

Global X Gold Explorers ETF (GOEX)

ProShares Ultra Gold (UGL)

Updated on March 15, 2022: This story was published at an earlier date and has been updated with new information.

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March 15, 2022by AdminBest Stocks to Invest
10 Small-Cap ETFs to Buy for Big Upside

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Over the last 29 years, U.S. exchange-traded fund (ETF) assets have grown to over $7.2 trillion across more than 7,600 funds. They’ve become the product of choice for individual and institutional investors alike.

However, of those several trillion dollars, only a small fraction – roughly 4% – gets put into small-cap ETFs, according to the Investment Company Institute (ICI), an association representing regulated funds globally, signaling there’s plenty of room for growth.

Small-cap stocks, like the broader global market, started poorly in 2022, with the Russell 2000 Index down 13.5% for the year-to-date. In addition to geopolitical concerns, investors are also worried that the Federal Reserve’s rate-hiking cycle will slow the U.S. economy and put a dent in their future earnings.

But this short-term setback takes away from small caps longer-term outperformance. Over the past 10 years, smaller capitalization stocks were the second-best performing asset, up 14.4% annually, trailing only large caps. This is a good sign for small-cap funds.

That said, here are 10 small-cap ETFs that should be on your radar. If you want to build a well-constructed portfolio, it would be wise to consider a fund that invests in U.S. small-cap stocks, as well as one that holds foreign small caps.

Data is as of March 14. Dividend yields represent the trailing 12-month yield, which is a standard measure for equity funds.

1 of 10

Vanguard Small-Cap Value

Type: Domestic small-cap value

Assets under management: $26.0 billion

Dividend yield: 1.8%

Expenses: 0.07%, or $7 annually for every $10,000 invested

The Vanguard Small-Cap Value (VBR, $168.42) is the largest of the small-cap ETFs featured here by total net assets. It also has reasonable management fees, charging $7 per year for every $10,000 invested in VBR.

The ETF tracks the performance of the CRSP US Small Cap Value Index, a collection of U.S. small-cap stocks exhibiting value tendencies based on various financial metrics, including the price-to-book (P/B), forward price-to-earnings(P/E), historic price-to-earnings, dividend-to-price and price-to-sales (P/S) ratios.

The Vanguard Small-Cap Value aims to replicate its underlying benchmark by investing in all or nearly all of the stocks that make up the CRSP US Small Cap Value Index. And each asset is given the same weighting as it is in the underlying index.

VBR currently has 997 holdings compared to 940 for the index. The median market cap is $6.1 billion. The fund’s $26 billion in total net assets are entirely invested in U.S. companies.

The average stock in the ETF has a P/E of 12.4x, a P/B of 1.9x and an average five-year earnings growth rate of 12.3% annually. The top three sectors by weight are financials (22.8%), industrials (19.7%) and consumer discretionary (14.5%).

The ETF’s top 10 holdings account for just 6% of the portfolio. The three largest positions are oil stock Diamondback Energy (FANG) at 0.8%, regional financial firm Signature Bank (SBNY) at 0.6% and real estate investment trust (REIT) VICI Properties (VICI) at 0.6%. VBR’s turnover rate is 26%, which means it turns the entire portfolio once every 3.8 years.

Since its inception in January 2004, VBR has had an annual total return of 9.3% through Feb 28.

Learn more about VBR at the Vanguard provider site.

2 of 10

SPDR S&P 600 Small Cap Growth ETF

Type: Domestic small-cap growth

Assets under management: $2.1 billion

Dividend yield: 0.8%

Expenses: 0.15%

The SPDR S&P 600 Small Cap Growth ETF (SLYG, $80.05), as its name suggests, tracks the performance of the S&P 600 SmallCap 600 Growth Index, a collection of small-cap stocks that exhibit above-average growth tendencies such as improving revenues, price-to-earnings changes and momentum.

There are a few requirements a company must meet to be included in the index, including having a public float of 10% or more and four straight quarters of positive earnings. The benchmark is weighted by market cap and rebalanced annually in December.

Like many small-cap ETFs – and exchange-traded funds, in general – SLYG uses a sampling strategy to mimic the index’s performance. Therefore, not every stock in the index is necessarily held by the fund.

However, the SPDR S&P 600 Small Cap Growth ETF currently has 332 holdings invested in its $2.1 billion in total net assets – the same as its underlying benchmark. The average market cap of the fund’s holdings is $2.9 billion, while the earnings for the group are expected to rise 16.6% over the next three to five years.

The ETF’s three largest sectors by weight are technology (18.7%), financials (16.9%) and industrials (15.4%). While it’s labeled a small-cap growth fund, in reality, it’s more of a blend with 55% of its portfolio considered both growth and value.

SLYG’s top 10 holdings account for 11% of its total net assets, with an annual turnover of 38%. The three largest holdings by weight are healthcare management solutions firm Omnicell (OMCL), lumber producer UFP Industries (UFPI) and electronics firm Rogers (ROG) – each accounting for about 1.1% of the fund’s portfolio.

If you are into cannabis stocks, one of the fund’s top 10 holdings is Innovative Industrial Properties (IIPR), a real estate investment trust that owns and manages specialized industrial properties leased by state-licensed medical cannabis growers. Over the past five years, IIPR has turned in an annualized total return of 65.8%, more than three times higher than the entire U.S. market.

Learn more about SLYG at the SPDR provider site.

3 of 10

Schwab U.S. Small-Cap ETF

Type: Domestic small-cap blend

Assets under management: $15.2 billion

Dividend yield: 1.3%

Expenses: 0.04%

The Schwab U.S. Small-Cap ETF (SCHA, $44.51) tracks the performance of the Dow Jones U.S. Small-Cap Total Stock Market Index. The index comprises the stocks ranked between 751 to 2,500 by market cap in the Dow Jones U.S. Total Stock Market Index. It is a float-adjusted market cap-weighted index that typically invests in stocks with a market value of roughly $37 million to $22 billion.

The index is rebalanced four times a year in March, June, September and December. It was launched in February 2005, while SCHA got its start in November 2009. The fund currently has 1,794 stocks with an average weighted market cap of $4.9 billion and a price-to-cash flow ratio of 12.2x.

The largest three sectors by weight are industrials (16.7%), financials (16.2%) and technology (15.2%). The fund’s top 10 holdings account for just 3% of its $15.2 billion in total net assets, and include aluminum giant Alcoa (AA) and construction services firm Builders FirstSource (BLDR). The Schwab U.S. Small-Cap ETF has an annual turnover rate of 17%.

SCHA’s weighting by market cap suggests that it is just as much about mid-cap stocks as it is small caps. Approximately 67% of the ETF’s assets are invested in companies with market caps between $3 billion and $15 billion. Stocks valued between $1 billion and $3 billion account for another 26% of the portfolio.

Over the past decade, the Schwab U.S. Small-Cap ETF has delivered an annual total return of 11.6%, outpacing similar small-cap funds.

Learn more about SCHA at the Schwab provider site.

4 of 10

iShares MSCI United Kingdom Small-Cap ETF

Type: Miscellaneous region

Assets under management: $79.2 million

Dividend yield: 4.0%

Expenses: 0.59%

The iShares MSCI United Kingdom Small-Cap ETF (EWUS, $37.67) is the first of two country funds featured on this list of small-cap ETFs. EWUS provides investors with exposure to smaller U.K. companies by tracking the performance of the MSCI United Kingdom Small Cap Index.

The index accounts for approximately 14% of the free float-adjusted market cap in the U.K. and looks to include stocks with positive momentum, dividends and solid balance sheets. The average market cap of the fund’s 282 holdings is $2.8 billion. The average P/S and P/E are 1.1x and 13.7x, respectively.

The top three sectors that make up the EWUS portfolio are industrials (21.58%), consumer discretionary (16.71%) and financials (15.33%). The largest 10 holdings account for 13% of the total lineup. Many of the names on the list aren’t household names in the U.S., but are reasonably well known in the U.K. Among them are specialty equipment maker Weir Group (WEGRY) and communication services stock Rightmove (RTMVY).

Like a lot of small-cap funds, EWUS is a combination of mid-cap stocks (55%), small caps (41%) and large caps (1%). The ETF has a relatively low turnover for small caps of 15%.

Since its inception in January 2012, the fund has had an annual total return of 7.7% through Feb. 28.

Learn more about EWUS at the iShares provider site.

5 of 10

iShares MSCI Brazil Small-Cap ETF

Type: Latin America

Assets under management: $106.1 million

Dividend yield: 4.3%

Expenses: 0.57%

The iShares MSCI Brazil Small-Cap ETF (EWZS, $13.88) tracks the performance of the MSCI Brazil Small Cap Index. It is a free float-adjusted market cap-weighted index intended to follow the performance of small caps listed on Brazil’s stock exchanges.

While the fund will invest at least 80% of its assets in a sampling of the index’s constituents, it can also invest up to 20% of its $106.1 million in total net assets in futures, options and swap contracts.

The fund has been in existence since September 2010, and has experienced bouts of volatility over the past 11 years. In 2019, it had a total return of 50.7%, followed by declines in both 2020 (-20.0%) and 2021 (-15.8%). As such, the iShares MSCI Brazil Small-Cap ETF would work well in a dollar-cost averaging plan.

The fund’s top three sectors are consumer discretionary (18.1%), utilities (17.2%) and industrials (16.3%). The largest 10 holdings account for 27% of the portfolio, with an average market cap of $1.5 billion. EWUS currently has 101 holdings with average P/E and P/B ratios of 4.2x and 1.0x, respectively.

If you’re looking for full coverage of the Brazilian markets, you might also consider the iShares MSCI Brazil ETF (EWZ), which provides investors with exposure to mid-cap and large-cap stocks in the South American country.

Learn more about EWZS at the iShares provider site.

6 of 10

SPDR S&P International Small Cap ETF

Type: Foreign small/mid blend

Assets under management: $764.8 million

Dividend yield: 3.0%

Expenses: 0.40%

The SPDR S&P International Small Cap ETF (GWX, $35.08) invests in the stocks of smaller companies located in developed markets outside the U.S. It tracks the performance of the S&P Developed Ex-U.S. Under USD2 Billion Index.

While the name is a mouthful, it simply means that to be included in the index, a stock must have a market cap between $100 million and $2 billion and be located in one of the developed countries in the S&P Developed Broad Market Index (BMI). The index is a free float-adjusted market cap-weighted index and rebalanced quarterly.

GWX comprises 2,443 holdings, which are a sampling of the 3,877 stocks held by the index. The average weighted market cap of the ETF’s holdings is $1.0 billion. As for the financial metrics of the stocks making up the fund, the estimated earnings growth over the next three to five years is 15%, while the P/B and P/E ratios are 1.1x and 9.1x, respectively – lower than the category average.

The top 10 holdings account for just 2% of the ETF’s $764.8 million in total net assets, so no one stock is likely to have a major effect on returns. GWX has a relatively low turnover of 16% in the last 12 months. The largest sector exposures are industrials (19.3%), technology (12.9%) and consumer discretionary (12.3%).

In terms of country representation, Japan is tops at 33.7%, South Korea is the second at 13.2% and Canada is at 9.8%. Despite excluding the U.S., it does have a small weighting of 1.5%.

The ETF got its start in April 2007, and its total annual return from inception through Feb. 28, 2022, is 3.5%.

GWX is not only one of the best small-cap ETFs, but it is also one of the top SPDR funds for buy-and-hold investors.

Learn more about GWX at the iShares provider site.

7 of 10

iShares MSCI Emerging Markets Small-Cap ETF

Type: Foreign diversified emerging markets

Assets under management: $358.9 million

Dividend yield: 3.8%

Expenses: 0.68%

The iShares MSCI Emerging Markets Small-Cap ETF (EEMS, $53.25) provides investors with exposure to smaller public companies in emerging markets by tracking the performance of the MSCI Emerging Markets Small Cap Index.

The benchmark includes small-cap companies from 25 emerging markets, and covers roughly 14% of each country’s total free float-adjusted market cap. The largest company in the index has a market cap of $4.5 billion. The smallest is $46.8 million, while the average is $592.2 million.

Since the ETF’s inception in August 2011, it has had an annual total return of 3.9% through Feb. 28. More recently, EEMS has had some standout calendar-year returns, including a 34% jump in 2017 and 18%+ gains in 2020 and 2021.

EEMS currently has 1,370 holdings invested in its $358.9 million in total net assets. Its top 10 holdings account for 3% of its portfolio, and the annual turnover is 34%.

And it isn’t a pure play as far as small-cap funds go. Small-cap stocks account for 25% of the EEMS portfolio, while mid-caps make up 66%, and large caps the rest.

The ETF’s top three sectors by weight are technology (18.3%), industrials (15.5%) and materials (13.2%). The iShares MSCI Emerging Markets Small-Cap ETF’s two biggest holdings are industrial firm Voltas and software services firm Tata Elxsi – both from India.

Learn more about EEMS at the iShares provider site.

8 of 10

WisdomTree Emerging Markets SmallCap Dividend Fund

Type: Foreign diversified emerging markets

Assets under management: $2.4 billion

Dividend yield: 4.1%

Expenses: 0.58%

The WisdomTree Emerging Markets SmallCap Dividend Fund (DGS, $50.06) is the last of the international small-cap funds featured here. DGS tracks the performance of the WisdomTree Emerging Markets SmallCap Dividend Index and aims to provide investors with exposure to dividend-paying small-cap stocks.

The index includes companies that are in the bottom 10% of the total market cap of the WisdomTree Emerging Markets Dividend Index. The companies included in the index are weighted based on the annual cash dividends they pay. And exposure to any one country or sector should not exceed 25% of the portfolio.

DGS has a total of 1,021 holdings. The top three countries by weight are Taiwan (27.81%), China (12.45%) and South Korea (10.90%). The top three sectors are technology (18.19%), financials (14.97%) and industrials (13.77%).

The portfolio’s top 10 holdings account for just 9% of its total net assets, with its largest position – Brazilian utility firm Transmissora Alianca de Energia Eletrica – making up 1.6% of the portfolio. DGS has a high turnover rate of 59% over the last 12 months.

Small-cap stocks make up roughly 30% of the fund’s portfolio, and the average market cap is $1.4 billion. Meanwhile, the fund boasts below-category P/E and P/S ratios of 7.8x and 0.6x, respectively. The WisdomTree Emerging Markets SmallCap Dividend Fund also has an above-market dividend yield of 4.1%.

A $10,000 investment in DGS three years ago is worth $12,222 as of March 14.

9 of 10

Horizon Kinetics Inflation Beneficiaries ETF

Type: Thematic

Assets under management: $855.0 million

Dividend yield: 0.9%

Expenses: 0.85%

At 0.85%, the Horizon Kinetics Inflation Beneficiaries ETF (INFL, $31.66) is the most expensive of the small-cap ETFs on this list. However, in these inflationary times, investors ought to be willing to at least learn more about it.

The ETF is an actively managed fund that seeks long-term growth in real (inflation-adjusted terms). To do this, it looks to invest in global companies whose revenues are expected to benefit directly or indirectly from higher prices.

The fund is managed by Horizon Kinetics Asset Management, with President Steven Bregman, Managing Director Peter Doyle and Portfolio Manager James Davolos at the helm since INFL’s inception in December 2020.

These managers look for asset-light businesses that have strong pricing power but whose assets are underappreciated by investors. They are interested in businesses with high cash flow in moderate inflationary periods that will also benefit in times of rising inflation. These can include mining, energy and transportation firms.

INFL currently has 43 holdings with an average weighted market cap of $11.5 billion. Agriculture commodities firm Archer-Daniels-Midland (ADM) and oil and gas company Texas Pacific Land (TPL) are at the top of the list. The Horizon Kinetics Inflation Beneficiaries ETF also has a below-category average price-to-free cash flow ratio of 4.7x.

The fund’s top three sectors by weight are financial services (28.1%), materials (25.6%) and energy (22.4%). The top three countries by weight are the U.S. (48.9%), Canada (34.5%) and Australia (5.6%).

Learn more about INFL at the Horizon Kinetics provider site.

10 of 10

Pacer US Small Cap Cash Cows 100 ETF

Type: Small-cap value

Assets under management: $776.4 million

Dividend yield: 2.7%

Expenses: 0.59%

The Pacer US Small Cap Cash Cows 100 ETF (CALF, $39.75) tracks the performance of the Pacer US Small Cap Cash Cows Index. It’s not only one of the best small-cap funds, but it’s one of the best ETFs for 2022 because it invests in 100 cash cows generating positive free cash flow, or the money left over after a company has paid its expenses, interest, taxes and long-term investments.

The ETF takes the 100 stocks from the S&P SmallCap 600 with the highest cash flow yields, which is defined as free cash flow divided by enterprise value. These stocks are then weighted based on their trailing 12-month free cash flow. The holdings are capped at a 2% weighting and rebalanced four times a year.

Why is this appealing to investors? Companies that generate high free cash flow are able to grow dividends over time while also producing better earnings.

The top three sectors by weight are consumer discretionary (40.5%), industrials (17.7%) and technology (10.1%). CALF’s largest three holdings by weight are shipping stock Matson (MATX) at 2.9%, oil and gas firm PDC Energy (PDCE) at 2.7%, and building materials company Boise Cascade (BCC) at 2.4%.

Since its inception in June 2017, CALF has had an annualized total return of 14.5% through Dec. 31. This compares to a 13.2% return for the S&P SmallCap 600 Index.

For those interested in owning more of Pacer’s Cash Cow series of ETFs, Pacer has the Pacer Cash Cow Fund of Funds ETF (HERD) that invests 20% in each of five Cash Cow ETFs, including CALF.

Learn more about CALF at the Pacer provider site.

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March 15, 2022by AdminBest Stocks to Invest
Got $1,000? Here’s a Dirt-Cheap Big Pharma Stock to Buy

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As COVID-19 was labeled a global pandemic by the World Health Organization in March 2020, many pharma companies began their research aimed at introducing lifesaving vaccines and treatments to combat the disease.

No company was arguably more critical to this mission than the pharma stock Pfizer (NYSE: PFE), which introduced the first-to-market COVID-19 vaccine — alongside its German partner BioNTech (NASDAQ: BNTX) — called Comirnaty. And more recently, Pfizer has brought to market its anti-viral COVID-19 pill known as Paxlovid.

Without even considering its leadership on the COVID-19 front, I believe Pfizer is an excellent pick for both value investors and income investors who find themselves with $1,000 available to invest. Let’s take a closer look at four reasons why.

Image source: Getty Images.

1. A robust non-COVID drug portfolio

Of all the big pharma stocks, Pfizer undoubtedly had the best year. This is reflected by its impressive sales and earnings growth.

Pfizer’s net revenue skyrocketed 95% higher year over year to a whopping $81.3 billion in 2021. Since a meaningful portion of Johnson & Johnson‘s (NYSE: JNJ) $93.8 billion in 2021 sales was derived from its medical devices and consumer health segments, Pfizer is now the largest pure-play pharma stock in the world by revenue.

Pfizer’s $36.7 billion year-over-year increase in COVID-19 product sales (e.g., Comirnaty and Paxlovid) to $36.9 billion during 2021 accounted for the vast majority of its revenue growth (92.6%). But even factoring out COVID-19 sales, the company’s revenue advanced 6% year over year to $44.4 billion.

Pfizer’s blockbuster prostate cancer drug Xtandi — co-owned with Japan’s Astellas Pharma (OTC: ALPMY) — grew its sales by 15.7% year over year to $1.2 billion in 2021. Pfizer’s kidney cancer treatment Inlyta notched a 27.3% increase in revenue to the blockbuster milestone of $1 billion during the year. Sales gains from these two drugs as well as its biosimilar cancer drugs were the major contributors that allowed Pfizer’s total oncology revenue to vault 13.5% higher to $12.3 billion in 2021.

Then there’s Pfizer’s anticoagulant blockbuster Eliquis — co-owned with Bristol Myers Squibb (NYSE: BMY) — which generated $6 billion in revenue in 2021, or 20.6% more than the year-ago period.

Thanks to Pfizer’s much higher sales base and slightly higher profitability, adjusted diluted earnings per share soared 95.6% higher to $4.42 in 2021.

2. A pipeline to support decent and steady growth

While Pfizer’s near doubling of revenue and earnings in 2021 was likely a one-time anomaly that won’t be repeated, the company still looks like it has moderate growth in its future. That’s because it has 79 indications in different stages of clinical trials and 10 indications in the final step to commercialization, which is referred to as registration.

First, Pfizer’s promising vaccine candidate for the seasonal respiratory syncytial virus (RSV) could produce over $2 billion in annual peak sales, which would make it the company’s next blockbuster vaccine.

Secondly, Pfizer’s Cibinqo was recently approved by the U.S. Food and Drug Administration (FDA) to treat patients with moderate to severe eczema. This indication alone could haul in $1 billion in annual sales for the drugmaker.

Finally, ritlecitinib could chip in $750 million in annual revenue within the alopecia areata market if ultimately approved by the FDA.

By themselves, these pipeline candidates are respectable. But they only scratch the surface of the potential of Pfizer’s pipeline, which is why analysts are forecasting 7% annual earnings growth over the next five years.

3. A market-beating dividend and conservative payout

Pfizer’s dividend payout ratio is positioned to be just 25%, based on the $6.45 midpoint of its adjusted diluted EPS guidance for 2022. This gives the company plenty of flexibility to execute a balanced approach of debt repayment, share buybacks, dividend increases, and acquisitions to further bolster its already strong pipeline.

That’s why I believe Pfizer will hand out at least mid- to upper-single-digit percentage annual dividend increases in the foreseeable future. And paired with a market-beating 3.2% dividend yield, that’s an attractive combo of yield and growth potential.

4. Pfizer is an exceptional value stock

The ongoing market correction that has sent the S&P 500 index tumbling 12% year to date has also hit Pfizer’s stock. Shares of the drugmaker are down 11% year to date, which has made a cheap stock even cheaper.

Pfizer is trading at a forward price-to-earnings ratio of 9.2, which is well below the industry average of 10.9. And Pfizer’s expected 7% annual earnings growth over the medium term matches the industry average. That’s what makes the stock so compelling for income and value investors. At the current $50 share price, investors could purchase 20 shares of this blue-chip stock with a $1,000 investment.

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Kody Kester owns Bristol Myers Squibb, Johnson & Johnson, and Pfizer. The Motley Fool owns and recommends Bristol Myers Squibb. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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March 15, 2022by AdminBest Stocks to Invest
Gitlab Jumps, Coupa Falls as Stock Markets Remain Turbulent

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The stock market has been on pins and needles lately, and Monday didn’t bring any relief for hard-hit investors. Although the Dow Jones Industrial Average ( ^DJI 0.00% ) managed to close nearly unchanged on the day, the Nasdaq Composite ( ^IXIC 0.00% ) and S&P 500 ( ^GSPC -0.74% ) were both down sharply as rising bond rates, geopolitical concerns, and macroeconomic fears overwhelmed investors.

Index

Daily Percentage Change

Daily Point Change

Dow

+0.003%

+1

S&P 500

(0.74%)

(31)

Nasdaq

(2.04%)

(263)

Data source: Yahoo! Finance.

Technology stocks have been under particularly heavy pressure in 2022, but after the market closed, investors got some mixed readings on the health of the sector. Gitlab ( GTLB -6.76% ) managed to post a solid gain in after-hours trading following the release of its latest financial report, but Coupa Software ( COUP -9.60% ) wasn’t as fortunate, falling sharply. Let’s learn more about what both companies said.

Image source: Getty Images.

Gitlab sees continued growth

Shares of Gitlab were up nearly 13% in after-hours trading on Monday afternoon. The development and operations software platform specialist reported fourth-quarter financial results that reassured investors that the company remains on the right path.

Gitlab’s numbers were solid. Revenue for the quarter jumped 69% year over year to $77.8 million, finishing the 2022 fiscal year with a 66% rise in sales. Gitlab remained unprofitable, but adjusted losses of $0.16 per share for the quarter were only about a third as big as the loss in the year-earlier period. Gitlab finished the fiscal year with adjusted losses of $1.20 per share, down from $2.06 per share in fiscal 2021.

Key metrics looked quite favorable for Gitlab. The company boasted 39 customers producing at least $1 million in annualized recurring revenue, up from just 20 the year earlier. Dollar-based net retention rates weighed in at more than 152% for the quarter, indicating that customers generally stay loyal to Gitlab as they become more familiar with the platform.

Best of all, Gitlab predicted continued growth, including revenue of $385.5 million to $390.5 million for fiscal 2023. That would represent top-line gains of about 54%, and although that would be a slowdown, it’s not as big as some of the numbers from other companies that have disappointed investors so much in the recent past. After falling more than 70% since its IPO in October 2021, the results were good enough to justify a bounce for Gitlab.

Coupa can’t keep investors satisfied

On the other hand, Coupa Software’s shares fell almost 30% in after-hours trading on Monday . The business spending management software specialist’s fourth-quarter financial report wasn’t able to meet the high expectations of shareholders.

Coupa’s fourth-quarter numbers weren’t bad, but they didn’t match up to what most shareholders looked for from the growth stock. Revenue was up 18% year over year to $193.3 million, with subscription revenue rising 28% from year-ago levels. Billings also rose 18%, but losses widened to $0.19 per share on an adjusted basis. Full-year fiscal 2022 sales were up 34% with the same modest expansion in losses compared to the previous year.

Moreover, Coupa expects continued slow growth in fiscal 2023. Guidance for the year includes revenue projections of $836 million to $840 million, which would represent just 15% to 16% gains on Coupa’s top line.

The company does expect to be profitable on an adjusted basis, with earnings of $0.15 to $0.19 per share. However, investors don’t seem convinced about Coupa’s longer-term prospects to be disruptive. That’s a key driver in today’s market, and that lack of confidence explains a lot about why Coupa’s stock is falling so hard.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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