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Hey You -
Us and Them -
Crystal Ship -
Comes a Time -
Cat Stevens - Katmandu -
Kansas - Belexes Live 1977-78 -
Santana - Soul Sacrifice -
Found Out About You -
Echoes -
Blue Red and Grey -
Dancing Bear -
Root Beer Rag -
Take a Pebble -
>>> Eli Lilly and Company (LLY) discovers, develops, and markets human pharmaceuticals worldwide. It offers Basaglar, Humalog, Humalog Mix 75/25, Humalog U-100, Humalog U-200, Humalog Mix 50/50, insulin lispro, insulin lispro protamine, insulin lispro mix 75/25, Humulin, Humulin 70/30, Humulin N, Humulin R, and Humulin U-500 for diabetes; and Jardiance, Trajenta, and Trulicity for type 2 diabetes. The company provides Alimta for non-small cell lung cancer (NSCLC) and malignant pleural mesothelioma; Cyramza for metastatic gastric cancer, gastro-esophageal junction adenocarcinoma, metastatic NSCLC, metastatic colorectal cancer, and hepatocellular carcinoma; Erbitux for colorectal cancers, and various head and neck cancers; Retevmo for metastatic NSCLC, medullary thyroid cancer, and thyroid cancer; Tyvyt for relapsed or refractory classic Hodgkin's lymph and non-squamous NSCLC; and Verzenio for HR+, HER2- metastatic breast cancer, node positive, and early breast cancer. It offers Olumiant for rheumatoid arthritis; and Taltz for plaque psoriasis, psoriatic arthritis, ankylosing spondylitis, and non-radiographic axial spondylarthritis. The company offers Cymbalta for depressive disorder, diabetic peripheral neuropathic pain, generalized anxiety disorder, fibromyalgia, and chronic musculoskeletal pain; Emgality for migraine prevention and episodic cluster headache; and Zyprexa for schizophrenia, bipolar I disorder, and bipolar maintenance. Its Bamlanivimab and etesevimab, and Bebtelovimab for COVID-19; Cialis for erectile dysfunction and benign prostatic hyperplasia; and Forteo for osteoporosis.
The company has collaborations with Incyte Corporation; Boehringer Ingelheim Pharmaceuticals, Inc.; AbCellera Biologics Inc.; Junshi Biosciences; Regor Therapeutics Group; Lycia Therapeutics, Inc.; Kumquat Biosciences Inc.; Entos Pharmaceuticals Inc.; Foghorn Therapeutics Inc., and PRISM BioLab Co.,Ltd. Eli Lilly and Company was founded in 1876 and is headquartered in Indianapolis, Indiana.
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https://finance.yahoo.com/quote/LLY/profile?p=LLY
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>>> Winmark Corporation (WINA), a resale company operates as a franchisor for small business in the United States and Canada. The company's Franchising segment franchises retail stores concepts that buy, sell and trade merchandise. Its Leasing segment operates middle-market equipment leasing business. The company buys and sells used clothing and accessories geared toward the teenage and young adult market under Plato's Closet brand; and operates stores which buys and sells used and new children's clothing, toys, furniture, equipment, and accessories primarily to parents of children ages infant to 12 years under the Once Upon A Child brand. In addition, it buys, sells, trades in, and used and new sporting goods, equipment, and accessories for various athletic activities including team sports, such as baseball/softball, hockey, football, lacrosse, and soccer, as well as fitness, ski/snowboard, golf, and others under the Play It Again Sports brand; and buys and sells used women's apparel, shoes, and accessories under the Style Encore brand. Further, the company buys, sells, trades in, and used and new musical instruments, speakers, amplifiers, music-related electronics, and related accessories under the Music Go Round brand. Winmark Corporation was incorporated in 1988 and is headquartered in Minneapolis, Minnesota.
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>>> Perion Network (PERI) may not be a household name, but the ad tech company already has strong returns, up nearly 400% over the last three years. And it was the only ad tech stock to post a positive return last year.
https://www.fool.com/investing/2023/09/29/have-1000-these-2-stocks-could-be-bargain-buys-for/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Perion occupies a unique position in the ad tech space through its intelligent hub, which connects ad buyers and sellers to optimize ad buys and placements. The technology is based on machine learning and is highly scalable, allowing the company to earn higher margins as it grows.
The company also offers premium features like in-game ads during live events and a "connected cart" that allows retailers to update the products being advertised according to conditions like inventory and weather.
Perion is also a preferred partner of Microsoft's Bing, which could be an especially valuable relationship if the ChatGPT-powered version of Bing gains traction in search.
Perion's results speak for themselves. Revenue in the second quarter rose 22% to $178.5 million, and it continues to gain leverage with adjusted earnings per share jumping from $0.51 to $0.84.
The company is seeing solid growth in both search advertising and display advertising, driven by the Bing partnership, and growth in connected TV, which jumped 104% to $7.2 million in the quarter.
However, the best reason to invest in Perion might be its discount valuation, trading at a price-to-earnings ratio of just 13.5. There's still a lot of room for growth in ad tech, and if Perion continues to execute its strategy, the stock could be a big winner.
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>>> Cintas Corporation (NASDAQ:CTAS)
https://finance.yahoo.com/news/15-best-p-500-stocks-211112359.html
5-Year Average Dividend Growth: 24.2%
Number of Hedge Fund Holders: 40
Cintas Corporation (NASDAQ:CTAS) is an American business services company that provides a wide range of products and services related to corporate uniforms, workplace safety, and facility services. In the past five years, the company has raised its dividends by 24.2% on average and maintains a 40-year streak of consistent dividend growth. The company's current quarterly dividend stands at $1.35 per share which offers a dividend yield of 1.08%, as of September 11.
Of the 910 hedge funds tracked by Insider Monkey at the end of Q2 2023, 40 funds owned stakes in Cintas Corporation (NASDAQ:CTAS), up from 39 in the previous quarter. The overall value of these stakes is over $1.36 billion. Among these hedge funds, Impax Asset Management was the company's largest stakeholder in Q2.
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>>> Marsh & McLennan -- These 3 Stocks Are Safe Bets in the Event of a Market Crash
Motley Fool
8-27-23
https://www.fool.com/investing/2023/08/27/these-3-stocks-are-safe-bets-in-the-event-of-a-mar/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
In recent years, companies have dealt with a lot of uncertainty, including the pandemic, supply chain issues, capital market volatility, climate-related disasters, and geopolitical risks. It's in this environment where Marsh & McLennan thrives.
Marsh & McLennan advises companies on managing risks and connects companies with insurers to help protect against those risks. It also provides consulting services to companies to help deal with compensation and benefits, retirement plans, managing investments, and other workplace issues.
The consultant has seen solid business growth in recent years, led by its insurance brokerage business. Insurance is a product that will always be in demand, and its brokerage business is a steady source of cash flows that can help it weather challenging economic environments. The inflationary environment, in particular, has been a tailwind for its insurance brokerage business.
According to its Marsh Global Insurance Market Index, global commercial insurance prices have risen for 23 consecutive quarters. Marsh earns commissions and fees from insurers when it refers clients to them, and as insurance prices rise, so do its earnings. The company's risk and insurance services revenue has grown 11% through six months this year, helping total revenue increase by 8% compared to last year.
CEO Dan Glaser told investors that "when the world is unsettled, the demand for our services rises." He also pointed out that the company has grown its earnings per share during every recessionary period since 1962 -- making Marsh & McLennan another safe bet to own during a potential market crash.
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10 stock ideas, based on the upward trajectory and steadiness of their 10 and 15 year charts -
Consumer -
***************
Costco (COST) - Discount variety warehouse outlets (237 Bil) (Munger)
Pepsico (PEP) - Food and beverage (247 Bil)
Financial -
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Aon PLC (AON) - Fincl svcs, insurance (67 Bil) (Ireland) (Berkshire)
Arthur J. Gallagher & Co (AJG) Insurance services (49 Bil)
Cbiz Inc (CBZ) - Financial, insurance, advisory services (3 Bil)
Marsh & McLennan (MMC) - Insurance, services (96 Bil)
Services -
*************
Cintas (CTAS) - Uniforms, maintenance services (50 Bil)
Technology -
****************
CACI Intl (CACI) - Diverse IT services (7 Bil)
CDW Corp (CDW) - IT solutions (27 Bil)
Synopsys (SNPS) - Electronics design automation software (67 Bil)
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>>> Thomson Reuters to buy digital content management company Imagen
Reuters
June 28, 2023
https://www.msn.com/en-us/money/other/thomson-reuters-to-buy-digital-content-management-company-imagen/ar-AA1daiXy?OCID=ansmsnnews11
(Reuters) - Thomson Reuters will buy Imagen, a digital content asset management company, for an undisclosed price, to expand its agency business to new customers, the news and information company said on Wednesday.
Britain-based Imagen, which owns the Screenocean video distribution platform, operates digital content libraries for sports, media and business companies including Premier League soccer and Major League Baseball.
Imagen will become a part of the Reuters News division.
The acquisition is part of a plan to serve more clients as they expand their streaming video businesses. "Our belief is that our agency business needs to evolve to be a tech-enabled content delivery (business)," Reuters President Paul Bascobert said in an interview.
"With the addition of Imagen, clients will have the ability to seamlessly add media asset management services to store, manipulate, permission, distribute and monetize all their visual content," Bascobert added in a prepared statement.
Reuters currently serves agency clients through Reuters Connect, which is a business-to-business content marketplace that licenses Reuters text, images and videos as well as news and content from more than 70 other providers that include the BBC, USA Today and China's CCTV.
The deal is the second announced this week. On Monday, Thomson Reuters said it agreed to buy Casetext, a California-based AI company that helps legal professionals conduct research, analysis and prepare documents using generative AI, for $650 million.
Thomson Reuters has said it has earmarked $10 billion for acquisitions and about $100 million per year in investments in AI capabilities.
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Current Bill Gates portfolio (May 2023) -
Top 10 holdings (over 90%) -
31% - Microsoft (MSFT)
17% - Canadian Natl Railway (CNI)
16% - Berkshire (BRK>B)
15% - Waste Management (WM)
4% --- Deere (DE)
4% --- Caterpillar (CAT)
2% --- Ecolab (ECL)
1% --- Walmart (WMT)
<1% - Danaher (DHR)
<1% - Waste Connections (WCN)
https://www.gurufocus.com/guru/bill%2Bgates/current-portfolio/portfolio?view=table
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>>> Ulta Beauty COO on record-breaking sales: ‘The whole store is hot’
Yahoo Finance
by Edwin Roman
April 9, 2023
https://finance.yahoo.com/news/ulta-beauty-coo-on-record-breaking-sales-the-whole-store-is-hot-142511750.html
Inflation and slowing consumer spending on discretionary items haven't put the brakes on Ulta's (ULTA) momentum in the beauty category.
In its fiscal fourth-quarter earnings last month, the beauty retailer reported record annual revenue in 2022 that surpassed $10 billion for the first time in its 33-year history while its customer loyalty program reached an impressive 40.2 million members.
"The whole store is hot," Ulta Beauty COO Kecia Steelman told Yahoo Finance's Brian Sozzi at the 2023 Shoptalk Conference (video above). "But I would say one of the categories that we're really seeing that's coming through COVID that's really stuck is wellness. ... So we're seeing wellness stick, and we're also seeing [consumers] really lean in a little bit more to cosmetics, which is great."
According to Susan Anderson, analyst at Canaccord Genuity, Ulta's strength can be attributed to the strength of the category overall as well as factors specific to the retailer, such as its rewards program, omnichannel presence, and range of products and services across mass and prestige cosmetics, skincare, and wellness.
The beauty category has "continued to be strong into this year," Anderson told Yahoo Finance Live following her bullish Buy rating on Ulta stock. "I think that's only going to benefit Ulta."
"We also see them as a share gainer despite the higher growth category," added Anderson, who has a $622 price target on the stock. "We see them taking share from department stores, particularly as they roll out their prestige business further and then also add luxury such as Dior to their lineup of brands that they sell in the store."
Even as Ulta makes a push into more luxury segments, Steelman noted that the retailer is still attracting a broad range of consumers.
"What we're really pleased that we see is that the consumer across all income sectors is spending at a great pace," the COO said. "There's not one income sector that's outperforming another. So it's very consistent across the spectrum, and I think part of that is because we do offer everything in one place across all price points."
Ulta Beauty's momentum has given its collaborator Target (TGT) reason to celebrate as it saw a boost in makeup sales in the fourth quarter. The 350 Ulta shop-in-shops in Target stores have also incrementally boosted Ulta's sales and expanded its customer base.
"Target has over a hundred million customers in their loyalty program," Anderson said. "The next largest is probably Ulta. So it's definitely very large, but there's over a hundred million adult women in the U.S., so we think there's still opportunity for them to grow that loyalty program."
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>>> Investing in Blue Chip Stocks
Motley Fool
By Jon Quast
Jan 3, 2023
https://www.fool.com/investing/stock-market/types-of-stocks/blue-chip-stocks/
Blue chip stocks are the stocks of well-known, high-quality companies that are leaders in their industries. These companies have stood the test of time and are respected by their customers and their shareholders.
Investing in Blue Chip Stocks
Blue chip stocks are the stocks of well-known, high-quality companies that are leaders in their industries. These companies have stood the test of time and are respected by their customers and their shareholders.
Blue chip companies have solid business models and impressive track records of returns for investors. These returns often include regular and growing dividend payments, making blue chip stocks among the most popular for conservative investors. But even more risk-tolerant investors should consider buying blue chip stocks to better diversify their portfolios and provide some stability during turbulent stock market conditions.
So, in short, what are blue chip stocks? A blue chip stock is defined as a security that represents an equity position in a company that possesses most of the following characteristics:
An industry leader with a dependable business model.
A proven track record and strong reputation with consumers and shareholders.
A history of delivering strong returns over the long term.
Pays dividends to shareholders and regularly increases its payouts.
Even if you've never invested in the stock market, you'll recognize the names of many top blue chip stocks. These large-cap companies provide products and services that are part of daily life for billions of people across the globe. Here are some of the best blue chip companies on the market:
1. Apple (NASDAQ:AAPL) $2.14 Trillion
2. Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) $660.5 Billion
3. Coca-Cola (NYSE:KO) $271.7 Billion
4. Johnson & Johnson (NYSE:JNJ) $459.2 Billion
5. American Express (NYSE:AXP) $111.5 Billion
1. Apple
Apple (NASDAQ:AAPL) is one of the largest companies in the world, and it has pioneered advancements in the technology sector throughout its history. The company innovated with its Macintosh computers in the 1980s, made media portable with its iPods in the early 2000s, and its iPhones, iPads, and Apple Watches are ubiquitous today. In a world where consumers flock to the latest tech fads, Apple’s products engender notable loyalty from its customer base.
Apple also earns recurring revenue through its services, which include its iTunes, App Store, and streaming television businesses. Apple's market capitalization climbed above the $1 trillion mark in 2018 and then up to an unprecedented $2 trillion in 2020. On January 3, 2022, Apple once again made history by briefly climbing about the $3 trillion mark, though its market cap has declined along with many other NASDAQ companies in early 2022. Yet today, Apple remains the largest public company -- and the business is still growing.
2. Berkshire Hathaway
Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) is a major player in the insurance industry, offering various lines of commercial and personal insurance through subsidiaries GEICO and Gen Re. But Berkshire also owns a diverse set of businesses such as restaurant chain Dairy Queen, railroad giant BNSF, and its Berkshire Hathaway Energy utility company. With such a broad range of businesses, the company has a reputation for safety and security, as well as consistent performance.
It’s important to note that Berkshire Hathaway is the only blue chip stock on this list that doesn’t pay a dividend. CEO Warren Buffett has one of the most impressive track records of market-beating returns in history and prefers to invest the company’s cash in lieu of paying dividends. That strategy has worked out great for shareholders so far.
3. Coca-Cola
Coca-Cola (NYSE:KO) has been a leader in the beverage industry for more than a century as its namesake soft drink spawned a global empire. Yet Coca-Cola has also changed with the times and now provides a much broader array of products, including juices, sports drinks, and bottled water tailored for more health-conscious consumers.
Coca-Cola particularly stands out for increasing its dividend. Its streak of consecutive annual dividend payment increases dates back to the early 1960s, a track record placing it among the top 10 dividend stocks on the market.
4. Johnson & Johnson
Johnson & Johnson (NYSE:JNJ) is well-known for its popular consumer products, including baby shampoo, Band-Aids, and Tylenol pain reliever. But J&J is a true healthcare giant, making a wide array of medical devices to help doctors and other medical professionals perform life-saving procedures. Johnson & Johnson also has a vast pharmaceutical business and produces drugs such as the arthritis treatment Remicade, prostate cancer drug Zytiga, and psoriasis drug Stelara.
J&J is splitting into two companies by November 2023, and this is worth watching. One company will focus on consumer health products, considered the weaker segment of J&J’s business. The other will contain its highly regarded pharmaceuticals and medical devices segment.
5. American Express
Financial giant American Express (NYSE:AXP) is another blue chip stalwart to consider. It’s both a credit card company and a payments network. Its main revenue generators include credit card fees and transaction processing fees. The company is poised to increase both revenue streams with new users and higher transaction volume. It’s more than 170 years old, but it’s apparently staying relevant: More than half of new card accounts in 2021 were millennial and Gen Z consumers -- an encouraging sign.
American Express’s management believes it can expand profits at a double-digit pace in years to come, and it also plans to pay out roughly a quarter of its profits as shareholder dividends. It’s already raised its dividend by 20% in 2022 (as of June 2022). Ongoing earnings growth should lead to additional increases in future years.
Bigger list of blue chips
Investors have a sizable number of blue chip stocks to choose from. Here’s a list of 20 other top blue chip stocks:
AbbVie (NYSE:ABBV)
Nike (NYSE:NIKE)
Lockheed Martin (NYSE:LMT)
Honeywell International (NASDAQ:HON)
Procter & Gamble (NYSE:PG)
Mastercard (NYSE:MA)
JPMorgan Chase (NYSE:JPM)
Walmart (NYSE:WMT)
Microsoft (NASDAQ:MSFT)
Caterpillar (NYSE:CAT)
UnitedHealth Group (NYSE:UNH)
Starbucks (NASDAQ:SBUX)
Oracle (NYSE:ORCL)
Northrop Grumman (NYSE:NOC)
McDonald’s (NYSE:MCD)
Home Depot (NYSE:HD)
Kroger (NYSE:KR)
Merck (NYSE:MRK)
Intel (NASDAQ:INTC)
Goldman Sachs (NYSE:GS)
Investing in blue chip companies
Blue chip stocks are smart choices for investors of all kinds. Beginning investors are likely familiar with the products and services of blue chip companies. Familiarity with a company makes stock buying more comfortable, and it’s exciting to become a partial owner of a business you know. Meanwhile, long-time investors will have seen blue chip stocks rise to the top over the long haul, outlasting their weaker rivals and finding ways to stay relevant and keep growing even as their industries change.
Investors of all experience levels can appreciate the stability and reliability that blue chip businesses give to shareholders. Many of these companies pay substantial dividends and have payout growth streaks that have earned them a spot among the illustrious ranks of the Dividend Aristocrats and Dividend Kings.
Hands-off investing with blue chip funds
Investors may also want to consider exchange traded funds (ETFs) and mutual funds. These blue chip funds bundle multiple blue chip stocks into a single security, offering a simple way to diversify across many high-quality stocks. These investment vehicles also tend to be less volatile than individual stocks, which can be particularly appealing for people who are retired or nearing retirement. Blue chip funds can also be a good fit for younger investors who are seeking the defensive advantages of diversification or who don’t have the time needed to adequately research individual stocks.
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Old Dominion - >>> 3 Top Trucking Stocks Under Heavy Accumulation
FX Empire
by Lucas Downey
February 6, 2023
https://finance.yahoo.com/news/3-top-trucking-stocks-under-130904222.html
Here are three companies under heavy accumulation.
Old Dominion Freight Line Inc. (ODFL) Analysis
First is the less-than-truckload hauler Old Dominion Freight Line (ODFL). The trucking stock is up 30% in 2023.
Healthy institutional accumulation has likely helped lift the shares higher, which you can see via the MAPsignals chart below. Since November there’ve been 6 unusually large volume inflows (green bars):
With a 12-month forward P/E of 30.8, shares could be attractive after a pullback. According to FactSet, the company is estimated to earn $13.30 per share in fiscal year 2024.
One thing is for sure, the shares have been in demand lately.
Knight-Swift Transportation Holdings Inc. (KNX) Analysis
Next up is Knight-Swift Transportation (KNX) which is another trucking company that operates in 3 segments: trucking, logistics, and intermodal. At MAPsignals, we believe in following large institutional flows. With the stock gaining 18% in 2023, we believe healthy accumulation is part of the story.
Since late November there’ve been 8 days where the stock jumped in price alongside outsized volumes. That can mean there’s institutional interest:
The 12-month forward P/E is pegged at 15.2X according to FactSet. Also, the company is expected to earn $4.64 per share in fiscal year 2024.
This unusual trading action suggests investors are expecting upside for the company in 2023.
Schneider National Inc. (SNDR) Analysis
The number 3 trucking firm racing higher this year is Schneider National (SNDR). This company provides transportation and logistics services. The market cap is just over $5.2 billion.
The stock has been an outperformer recently, jumping 26% in 2023. Notably, the shares have seen 4 large accumulation signals since November:
There’s no question the stock could be extended at these levels. However, this is one of the most in-demand trucking stocks according to MAPsignals research.
Strong sector leadership could mean there’s more upside for the group in 2023.
Bottom Line
ODFL, KNX, & SNDR represent 3 of the top trucking stocks so far in 2023. Healthy institutional accumulation signals make these stocks worthy of extra attention.
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ZTS, ODFL, TSCO, ASML - >>> 4 Top Stocks With High Dividend Growth to Buy in 2023 and Hold Forever
Motley Fool
By Josh Kohn-Lindquist
Jan 28, 2023
https://www.fool.com/investing/2023/01/28/4-stocks-with-high-dividend-growth-to-buy-in-2023/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
Undeniable trends in semiconductor chips and veterinary care should buoy ASML and Zoetis.
Old Dominion's earnings per share have spiked eightfold over the last decade.
Tractor Supply's surprisingly strong rewards program highlights its customer loyalty.
While high-yield dividend stocks generate more excitement than the lower yielders, dividend growth stocks may be better for buy-and-hold-forever investors. That's because many high yields are unsustainable. And the remaining group that is well-funded can often only afford tiny payout raises -- just enough to keep their annual dividend increase streak intact.
With this in mind, let's focus on four fast-growing dividends that may offer more long-term passive income potential than their high-yield counterparts. Posting annual dividend growth rates between 25% and 46% since 2018, ASML (ASML -2.41%), Old Dominion Freight Line (ODFL 4.55%), Tractor Supply Company (TSCO -0.46%), and Zoetis (ZTS -1.82%) could make sense for investors looking to maximize their future passive income.
1. ASML
While ASML's lithography technology -- using light to make patterns on the silicon wafers used in semiconductor chips -- is undeniably complex, its investment thesis is far more straightforward. Do you believe the need for semiconductor chips will grow over the next few decades?
If you answered yes, ASML's dominant leadership position in its niche might make it a classic buy-and-hold-forever investment. Holding a monopoly with its bleeding-edge extreme ultraviolet (EUV) lithography system and a roughly 80% share of the more mature deep ultraviolet (DUV) market, ASML is of paramount importance to the semiconductor industry.
Thanks to this dominant positioning, the company has averaged a 26% free cash flow (FCF) margin across the last decade. With this incredible cash generation, ASML handsomely rewards its shareholders, as evidenced by its annual dividends skyrocketing 1,600% from its first payment in 2008.
In fact, using the last 12 months' figures, ASML could triple its 0.8% dividend and still have excess free cash flow. Going forward, ASML plans to make quarterly dividend payments, as opposed to their semi-annual payments in the last few years. This is great news for dividend reinvestment plans as they will now receive ASML shares at various price points throughout the year via its quarterly payouts.
As countries weigh becoming more technologically independent, the company's lithography systems should continue to see healthy demand. Trading at 27 times FCF, ASML brings incredible dividend growth potential at a reasonable price.
2. Old Dominion Freight Line
Boasting a total return north of 1,200% over the last decade, less-than-truckload (LTL) hauling specialist Old Dominion Freight Line has smashed the market.
Almost exactly as it sounds, LTL hauling consists of picking up partial loads from multiple locations and delivering them to one or many drop-offs. While far more complicated than traditional truckload hauling, this complexity acts like a moat for Old Dominion. With nearly 11,000 tractors, 43,000 trailers, 24,000 employees, 255 service centers, and linehaul dispatchers and software needed to coordinate everything, successful new entrants to the industry are rare.
Equally as important for investors, Old Dominion's operations are best in class. Consider its profit margin and return on invested capital (ROIC) -- a measure of a company's profitability from its debt and equity -- compared to its LTL peers.
Thanks to this outsized profitability, Old Dominion decided to initiate a dividend in 2017 and has raised it by 284% in the years since. Though the company's dividend yield of 0.4% may seem diminutive, it only amounts to 9% of its net income -- leaving an incredible runway for future increases.
To top everything off, Old Dominion's price-to-earnings (P/E) ratio of 27 is well below the 40 level it often saw in 2022. Posting 43% earnings per share (EPS) growth through the first three quarters of 2022, Old Dominion looks more enticing than ever.
3. Tractor Supply Company
With 27 million members in its Neighbor's Club rewards program, Tractor Supply and its 2,100 stores are a dividend growth success story in the footsteps of Home Depot and Lowe's. Since 2010, Tractor Supply has boosted its quarterly dividend payments from $0.035 per share to $0.92 today, an increase of over 2,200%. Buoyed partly by these dividends, the company has outpaced the market over the last five years.
So how exactly does Tractor Supply do it with behemoths like Home Depot and Lowe's in its backyard? In the simplest terms, it's by being the rural version of its giant peers. Consider that almost half of the company's sales come from its livestock and pet category. Through this niche offering, Tractor Supply draws millions of farmers, ranchers, and even suburban gardeners to its stores with its adjacent, yet quite distinct, product offering and hometown feel.
Once in the company's ecosystem, these customers often sign up for its rewards program and become loyal members. For example, since the pandemic's start, Tractor Supply saw 19 million new customers -- 55% of which became repeat purchasers.
The shares trade at just 23 times earnings, and the company's 1.8% dividend only uses 35% of its total net income. Raising its last dividend by 77%, Tractor Supply makes for a fascinating dividend-growth selection to hold forever.
4. Zoetis
In a recent survey by The Human Animal Bond Research Institute and Zoetis, 86% of pet owners and veterinarians said they would pay whatever was necessary for extensive vet care. While it is sad to consider any adverse outcomes concerning our beloved pets, the fact remains that Zoetis and its array of pet and livestock vaccines and medicines should only continue growing in importance.
In fact, since going public via a spinoff from Pfizer in 2013, Zoetis posted a total return of nearly 500%. Over the last five years, the company has almost tripled the returns of the S&P 500 Index despite falling by 19% in the previous year.
In the $45 billion animal health industry, Zoetis generates 61% of its sales from companion animals (cats and dogs) and 39% from livestock. Boasting a leadership position in pets, cattle, and swine (not to mention North America, Latin America, and Asia -- geographically speaking), the company maintains a portfolio of over 300 products.
Riding this success, Zoetis has grown sales and EPS by 9% and 13%, respectively, over the last three years. Over this same time, the company raised its dividend by 25% annually and now yields 0.9% with a small payout ratio of 26%. Thanks to the megatrends working in its favor and its steady growth, Zoetis trades at a rich 37 times earnings but makes for an outstanding dividend growth stock.
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>>> The Hershey Company (HSY), together with its subsidiaries, engages in the manufacture and sale of confectionery products and pantry items in the United States and internationally. The company operates through three segments: North America Confectionery, North America Salty Snacks, and International. It offers chocolate and non-chocolate confectionery products; gum and mint refreshment products, including mints, chewing gums, and bubble gums; pantry items, such as baking ingredients, toppings, beverages, and sundae syrups; and snack items comprising spreads, meat snacks, bars and snack bites, mixes, popcorn, and protein bars. The company provides its products primarily under the Hershey's, Reese's, Kisses, Jolly Rancher, Almond Joy, Brookside, barkTHINS, Cadbury, Good & Plenty, Heath, Kit Kat, Payday, Rolo, Twizzlers, Whoppers, York, Ice Breakers, Breath Savers, Bubble Yum, Lily's, SkinnyPop, Pirates Booty, Paqui, Dot's Homestyle Pretzels, and ONE Bar brands, as well as under the Pelon Pelo Rico, IO-IO, and Sofit brands. It markets and sells its products to wholesale distributors, chain grocery stores, mass merchandisers, chain drug stores, vending companies, wholesale clubs, convenience stores, dollar stores, concessionaires, and department stores. The company was founded in 1894 and is headquartered in Hershey, Pennsylvania.
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Some 2022 performance comparisons for various stocks -
Paypal ------------------ down 76%
Meta --------------------- down 68%
Intel ---------------------- down 55%
Tesla --------------------- down 54%
Amazon ----------------- down 50%
Alphabet ---------------- down 33%
Microsoft ---------------- down 25%
Apple --------------------- down 18%
Meanwhile many conservative 'all-weather' stocks have held up great -
PepsiCo ------------------------- up 8%
McDonalds ---------------------- up 3%
Coca Cola ----------------------- down 2%
Johnson + Johnson ----------- down 2%
Procter + Gamble ------------- down 7%
Other conservative long term stocks -
ExlService ------------------------- up 27%
RLI Corp ----------------------------up 23%
O'Reilly Automotive ------------- up 18%
Automatic Data Processing --- up 12%
Waste Connections ------------- up 7%
Lockheed Martin ----------------- up 6%
Gartner ----------------------------- up 4%
Waste Management ------------- up 3%
Travelers --------------------------- up 2%
Republic Services ---------------- up 2%
Cintas -------------------------------- up 1%
Raytheon -------------------------- down 3%
Factset Research ---------------- down 4%
American States Water --------- down 4%
Service Corp ---------------------- down 5%
NextEra Energy ------------------ down 8%
Jack Henry & Assoc ------------- down 9%
Aon ---------------------------------- down 10%
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>>> ResMed Inc. (RMD) develops, manufactures, distributes, and markets medical devices and cloud-based software applications for the healthcare markets. The company operates in two segments, Sleep and Respiratory Care, and Software as a Service. It offers various products and solutions for a range of respiratory disorders, including technologies to be applied in medical and consumer products, ventilation devices, diagnostic products, mask systems for use in the hospital and home, headgear and other accessories, dental devices, and cloud-based software informatics solutions to manage patient outcomes, as well as provides customer and business processes. The company also provides AirView, a cloud-based system that enables remote monitoring and changing of patients' device settings; myAir, a personalized therapy management application for patients with sleep apnea that provides support, education, and troubleshooting tools for increased patient engagement and improved compliance; U-Sleep, a compliance monitoring solution that enables home medical equipment (HME)to streamline their sleep programs; connectivity module and propeller solutions; and Propeller portal. It offers out-of-hospital software solution, such as Brightree business management software and service solutions to providers of HME, pharmacy, home infusion, orthotics, and prosthetics services; MatrixCare care management and related ancillary solutions to senior living, skilled nursing, life plan communities, home health, home care, and hospice organizations, as well as related accountable care organizations; and HEALTHCAREfirst that offers electronic health record, software, billing and coding services, and analytics for home health and hospice agencies. The company markets its products primarily to sleep clinics, home healthcare dealers, and hospitals through a network of distributors and direct sales force in approximately 140 countries. ResMed Inc. was founded in 1989 and is headquartered in San Diego, California.
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>>> Keurig Dr Pepper Inc. (KDP) operates as a beverage company in the United States and internationally. It operates through Coffee Systems, Packaged Beverages, Beverage Concentrates, and Latin America Beverages segments. The Coffee Systems segment manufactures and distributes various finished goods related to its coffee systems, K-Cup pods, and brewers, as well as specialty coffee. This segment sells its brewers through third-party distributors and retail partners, as well as through its website at keurig.com. The Packaged Beverages segment engages in the manufacture and distribution of packaged beverages of its brands; contract manufacturing of various private label and emerging brand beverages; and distribution of packaged beverages for its partner brands. The Beverage Concentrates segment manufactures and sells beverage concentrates primarily under the Dr Pepper, Canada Dry, A&W, 7UP, Sunkist, Squirt, Big Red, RC Cola, Vernors, Snapple, Mott's, Bai, Hawaiian Punch, Clamato, Yoo-Hoo, Core, ReaLemon, evian, Vita Coco, and Mr and Mrs T mixers brands. This segment also manufactures beverage concentrates into syrup. The Latin America Beverages segment manufactures and distributes carbonated mineral water, flavored carbonated soft drinks, bottled water, and vegetable juice products under the Peñafiel, Clamato, Squirt, Dr Pepper, Crush, and Aguafiel brands. The company serves retailers, bottlers and distributors, restaurants, hotel chains, office coffee distributors, and end-use consumers. Keurig Dr Pepper Inc. was founded in 1981 and is headquartered in Burlington, Massachusetts.
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Occidental - >>> Warren Buffett Not Expected to Bid for Control of Occidental Following Stake Boost
Green light to buy up to 50% of oil company enables Berkshire to avoid bumping up against FERC-imposed limit
Occidental shares are up 146% for the year, boosted by a rally in the price of oil.
The Wall Street Journal
By Akane Otani, Christopher M. Matthews and Cara Lombardo
Aug. 21, 2022
https://www.wsj.com/articles/warren-buffett-not-expected-to-bid-for-control-of-occidental-following-stake-boost-11661099924?siteid=yhoof2
Warren Buffett’s bid to boost his big stake in Occidental Petroleum Corp. OXY even further isn’t expected to serve as a prelude to a full takeover of the resurgent energy company by the widely watched billionaire, at least for now.
In a regulatory filing Friday, the Federal Energy Regulatory Commission said that Mr. Buffett’s Berkshire Hathaway Inc. BRK.B had received permission to buy up to 50% of the driller’s shares. The news stoked speculation that Berkshire could be gearing up to acquire Occidental.
Analysts have said Occidental’s oil business would complement Berkshire’s existing energy holdings, which include utilities, natural gas and renewables. Mr. Buffett has a warm relationship with Chief Executive Vicki Hollub and has publicly praised her efforts to turn the company around after its acquisition of Anadarko Petroleum Corp. and her plans to pay down debt and increase dividend payouts.
But Mr. Buffett hasn’t informed Occidental of any plans to acquire a controlling stake in the company, according to people close to the matter. Given Mr. Buffett’s well-known aversion to hostile deal making, it would be out of character for him to make a bid without sounding out the company’s executives and directors first.
Owning such a big stake—Berkshire is Occidental’s largest shareholder—gives him major influence over the company already, and acquiring control could cost him a hefty premium to the current share price. The stock closed Friday at $71.29, up nearly 10% on the news, giving the company a market capitalization of about $66 billion.
Why would Berkshire seek out permission to buy more of Occidental, then?
For one, it was close to running up against FERC-imposed investing limits.
Filings show Berkshire currently has a 20% stake in Occidental. It also has warrants to purchase another 83.9 million common shares and 100,000 shares of preferred stock that pay a hefty dividend—both of which it acquired after helping Occidental finance its 2019 acquisition of Anadarko.
If Berkshire were to exercise the warrants, its stake would rise to roughly 27%. That would have exceeded the 25% limit FERC allowed for before Friday’s ruling.
“This is not a company that’s going to raise regulators’ hackles,” said Cathy Seifert, an analyst for CFRA Research.
It should also give Berkshire breathing room in case share buybacks or other company moves decrease the amount of shares outstanding, thus increasing its percentage stake.
There are other reasons to doubt a Berkshire takeover of Occidental is imminent.
One of them is price, said David Kass, a professor of finance at the University of Maryland’s Robert H. Smith School of Business.
So far, Berkshire has bought virtually all of its Occidental shares at a price in the range of $50 to $60, Mr. Kass said. The highest price Berkshire paid was $60.37 in July, according to filings.
Mr. Buffett is a well-known bargain-hunter, so it is difficult to imagine Berkshire rushing to buy more Occidental shares at the current price, Mr. Kass said. The shares are up 146% for the year, boosted by a rally in the price of oil, compared with an 11% decline for the S&P 500.
People familiar with deliberations at Occidental said the company’s leadership believes Mr. Buffett might consider making an offer if oil prices fall, bringing down Occidental’s stock price. If Mr. Buffett made an offer the company viewed as fair, a majority of the Occidental’s board would likely approve presenting it to shareholders, one of the people said.
Mr. Buffett didn’t respond to a request for comment. An Occidental spokesman declined to comment.
Mr. Buffett is currently represented as a passive shareholder in Occidental, based on the so-called 13G filing he has on record with the U.S. Securities and Exchange Commission. If he were to change his intentions and hold meaningful discussions with the company about a full-on takeover, he would likely need to change his filing to a 13D, which is required by large shareholders who intend to get actively involved in the running of a company.
Taxes could also play a role in Mr. Buffett’s bid for a bigger minority stake in Occidental. Corporations with a stake of at least 20% in another company are eligible to deduct 65% of dividends received, up from the standard 50%.
Berkshire’s 20% stake also allows it to include a proportionate share of Occidental’s earnings in its own results. That could give its earnings a multibillion-dollar boost annually, based on analyst estimates of Occidental’s earnings. Before the most recent purchases, disclosed this month, Occidental fell below the 20% threshold for both benefits.
Since Berkshire started buying Occidental shares in February, Mr. Buffett has had a friendly and collaborative relationship with Ms. Hollub, and the pair speak regularly, according to people familiar with the matter.
When Mr. Buffett bought another slug of Occidental shares this spring, he called Ms. Hollub to let her know about the transaction, according to one of the people. Ms. Hollub was driving at the time and pulled over to take the call, the person said.
Mr. Buffett’s message was simple: “Keep doing what you’re doing,” he told Ms. Hollub.
Berkshire’s growing ties with Occidental have an unexpected link to Mr. Buffett’s earliest days of investing.
At age 11 in 1942, Mr. Buffett made his first investment: three shares of Cities Service’s preferred stock. Forty years later, Occidental went on to acquire the oil company, which Ms. Hollub had just joined the year before.
Mr. Buffett’s investment in Occidental this year shows his first stock purchases “coming full circle 80 years later,” Mr. Kass said.
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Occidental - >>> Here’s Why Warren Buffett Loves Oil Giant Occidental Petroleum
Bloomberg
August 19, 2022
https://finance.yahoo.com/news/why-warren-buffett-loves-oil-224739000.html
Famed investor Warren Buffett is steadily snowballing a stake in Occidental Petroleum Corp. in what could end up being his biggest-ever acquisition. His Berkshire Hathaway Inc. on Friday won approval to buy as much as 50% of the shares. Some investors believe it’s a step toward a full takeover, which may end up costing more than $50 billion.
Here’s why Occidental is attractive to Berkshire:
Oil
Inflation looks to be the mega-trend for the first half of the 2020s and crude oil is one of the best natural hedges out there. Russia’s invasion of Ukraine and a lack of investment in new oilfields over the past five years have hit supplies, leading to stagnant production profiles everywhere from OPEC to US shale. Meanwhile, demand for fossil fuels has been strong coming out of the pandemic even as governments push for a switch to clean energy.
With investments across the energy sector from utilities to solar power, Buffett claims to be a realist in the debate around fossil fuels. “People that are on the extremes of both sides are a little nuts,” he said at a Berkshire shareholder meeting in 2021.
Familiarity
Buffett first invested in Occidental in 2019 when the oil company was in a bidding war with Chevron Corp. to buy its crosstown Houston rival, Anadarko. Occidental CEO Vicki Hollub flew to Omaha, Nebraska, on the company’s Gulfstream V and convinced Buffett to add $10 billion to her war chest. It was enough to swing the deal and Chevron pulled out soon after. In exchange, Buffett got preferred shares yielding 8% annually plus warrants to buy more common stock at $59.62 apiece. Today, with Occidental at $71.29, those warrants would turn a profit of more than $900 million if exercised.
Value
Initially the Anadarko deal was a disaster because it loaded up Occidental’s balance sheet with more than $30 billion of additional debt right before the pandemic. Occidental’s market value went from $50 billion before the 2019 transaction to less than $9 billion toward the end of 2020 as oil prices crashed.
But on the flip side, this created a good value play for Buffett. When crude turned around late last year and was supercharged by Russia’s invasion of Ukraine, Occidental was best-placed to benefit. The stock is the best performer in the S&P 500 this year, up more than 140% compared with the index’s 11% decline.
“Oxy started this year heavily indebted with massive oil exposure,” said Bill Smead, who manages $4.8 billion at Smead Capital Management Inc. and is a top 20 shareholder in Occidental. Soaring crude prices mean “they’re now paying off that debt and gushing cash. It’s the best of all worlds.”
Cash
Too much cash has been Berkshire’s biggest investing challenge over the past few years. The conglomerate had about $105 billion on hand at the end of June. It is expected to generate about $8 billion in free cash flow each quarter for the next five years, according to Greggory Warren of Morningstar Research Services LLC. Inflation at the highest in 40 years is a great incentive to put that money to work.
Occidental would work better as a subsidiary of Berkshire than a stock holding “given the volatility that exists in the energy/commodity markets,” Warren said. “This could end up, though, evolving into a slow-motion takeover where Berkshire buys up to the stakes that FERC allows it to acquire until it can acquire Oxy whole.”
Shale
Occidental is not only one of the biggest producers in the Permian Basin, the largest US oilfield, but it also has one of the lowest costs with an oil price of just $40 a barrel needed to sustain its dividend. West Texas Intermediate currently trades at about $90 a barrel. Hollub has reined in the “drill-baby-drill” mentality that characterized shale for the first decade of its lifespan and is now prioritizing profits over production. Free cash flow hit a record $4.2 billion in the second quarter.
The Anadarko purchase may have been expensive, but it allowed Occidental to lift its land holdings in the Permian to 2.8 million acres, 14 times the size of New York City’s five boroughs combined. It also added steady, cash-flowing assets in the Gulf of Mexico and Algeria.
CEO
Buffett has a good personal relationship with Hollub, which began at the 2019 meeting in Omaha, brokered by Bank of America Corp. CEO Brian Moynihan. This year, the veteran investor praised Hollub after reading a transcript of Occidental’s Feb. 25 earnings conference call in which she pledged financial discipline even as oil prices were rising.
“I read every word, and said this is exactly what I would be doing,” Buffett told CNBC’s Becky Quick in “Squawk Box” in March. “She’s running the company the right way.”
Inflation Reduction Act
The oil industry mostly criticized the Inflation Reduction Act that President Joe Biden signed into law this month. The $437 billion legislation “discourages needed investment in oil and gas” and offers “the wrong policies at the wrong time,” the American Petroleum Institute said.
But Hollub was surprisingly upbeat, calling the bill “very positive.” That may have something to do with its expansion of tax credits for carbon capture, of which Occidental is a leading proponent. The company has plans to build the world’s biggest direct air capture plant which will command a tax credit of as much as $180 for each ton of carbon sucked out of the air.
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>>> Occidental Petroleum Corporation: An Often Overlooked Oil Company <<<
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=169634102
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>>> Blackstone to Buy Bulk Purchaser CoreTrust From HCA Subsidiary <<<
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=169644796
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Blackstone - >>> The private equity club: how corporate raiders became teams of rivals <<<
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=169646068
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>>> Accenture and Digital Dollar Foundation to trial United States CBDC this year
May 4 2021
https://cointelegraph.com/news/accenture-and-digital-dollar-foundation-to-trial-united-states-cbdc-this-year
Five pilot programs will gather data on a digital dollar in the United States over the next 12 months.
Accenture and Digital Dollar Foundation to trial United States CBDC this year
Fortune 500 company Accenture has teamed up with Digital Dollar Foundation to conduct Central Bank Digital Currency, or CBDC, trials in the United States.
Announced on Monday, May 3, the newly formed Digital Dollar Project will carry out five CBDC pilot programs over the next 12 months. The project’s objective is to generate data to inform U.S. policymakers on how to develop a domestic digital currency.
The Digital Dollar Project will launch three pilot programs in the next two months, generating data on the functional, sociological, and business benefits of a digital greenback.
Al Jazeera reports that former chair of the Commodity Futures Trading Commission and co-founder of the Digital Dollar Foundation, Christopher Giancarlo, emphasized the lack of U.S. data regarding CBDC:
“There are conferences and papers coming out every week around the world on CBDCs based on data from other countries. What there is not, is any real data and testing from the United States to inform that debate. We’re seeking to generate that real-world data.”
However, the Fed is taking a cautious approach as the guardian of the world’s reserve currency, the report added, with chairman Jerome Powell responding that it is far more important to get a digital dollar right than it is to be fast.
Giancarlo countered that Powell was correct to be cautious, but warned that the U.S. could fall further behind as China pushes ahead with its own CBDC testing and deployment.
While the U.S. Federal Reserve has been conducting research into the technology and applications for a CBDC, the United States lags behind the digital currency initiatives currently ongoing in numerous other jurisdictions.
China’s central bank and leading state banks have recently been preparing to test the digital yuan for a shopping festival on May 5.
Accenture has also worked on a number of CBDC projects in other countries, including Canada, Singapore, France, and Sweden — which has already completed the first phase of its pilot.
According to a study by the Bank for International Settlements, 80% of the world’s central banks are already researching central bank-issued digital currencies.
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Accenture - >>> The future of digital currency is here
Accenture Federal Services
Digital Government Innovation
The future of digital currency is here
APRIL 16, 2021
https://www.accenture.com/us-en/insights/us-federal-government/future-digital-currency
RESEARCH REPORT
In brief
The payments industry is rapidly evolving, with digital wallets and digital currency a key part of this transformation.
This shift to digital has now reached the sovereign central banks who are creating a new form of money: central bank digital currency (CBDC).
Revenue agencies need to prepare for when CBDC will go into production by educating decision makers and engaging industry thought leaders.
This paper focuses on the possible ramifications of digital currencies—predominantly CBDCs—for revenue agencies.
The normalization of digital wallets and digital currency is rapidly occurring. We’re seeing this transformation across the financial industry and expect the trend to accelerate due to changing consumer habits from COVID-19 and large financial entities joining the race to build future money and payment systems. While we can’t be sure on the timing, shifts in technology, taxpayer expectations, and legislative pressure are accelerating change, and it will probably be sooner than expected. Money is rapidly transforming from a physical to a digitally native product. With most central banks pursuing this new form of sovereign currency, societies will soon have a new payment platform to facilitate commerce.
Central banks respond
This digital shift has now reached the sovereign central banks resulting in a race to create a new form of money: central bank digital currency (CBDC). It’s not a matter of if, but when, CBDC will go into production and provide a new payment option for commerce. According to the Bank for International Settlements, 80 percent of central banks are engaging with CBDC work in some way, with 50 percent already in the experimental or pilot phase.i Revenue agencies need to start preparing for when CBDC goes into production by educating decision-makers, and engaging industry thought leaders.
What do revenue agencies need to do?
Due to accelerating developments, revenue agencies need to start preparing for digital currency's potential impact on their people, processes, and technology. We recommend using a three-phased approach to prepare for this wave of innovation:
Learn:
What are digital assets and central bank digital currency?
Engage:
Who is making decisions regarding digital currency in my jurisdiction?
Assess:
How will my agency be impacted and required to change?
Making sense of an uncertain future
Education around digital currency, more broadly known as digital assets, is the first key hurdle.
Digital assets are a wide-ranging industry, including cryptoassets, private stablecoins, tokenized securities, consortium currencies, and sovereign central bank digital currencies. These assets are defined by their design and respective characteristics, such as decentralization, underlying technology, and legal rights. Revenue agencies need to remain vigilant as general adoption and regulations around digital assets continue to mature globally.
The involvement of revenue agencies during the design and decision-making phases of CBDCs is essential for any agency to prepare to be accountable for the tax administration of this new form of currency.
Accenture has partnered with the Digital Dollar Foundation to form The Digital Dollar Project to encourage research and public discussion on the potential advantages of a CBDC. Find out more about the Digital Dollar Project here.
Revenue agencies’ areas of impact for CBDC
Recognizing CBDC emergence and how it will impact how the world does business, revenue agencies across the globe now need to plan for the following areas of impact.
Working with ecosystem partnerships
Understanding digital currency for revenue agencies is complicated and constantly evolving, requiring engagement with public and private partners.
Engaging in taxpayer education and outreach
As digital currency embeds itself into the daily lives of taxpayers, agencies need to educate taxpayers to ensure compliance and reduce taxpayer error.
Understanding business processes and technology
Agencies must understand how cyber risk and digital payments will disrupt their underlying business processes and technological infrastructure.
Building the workforce of the future
As digital adoption grows, revenue agencies must identify their specific workforce needs to meet the new, specialized skills required.
Considering impact on tax administration
Agencies need to consider the ways in which a largely cashless society will affect how they fulfill tax administration.
As with all financial services organizations that directly interact with a significant portion of the global population, revenue agencies have the opportunity to be a leader in the evolution of money by planning for and engaging with CBDCs now, before they are common currency.
It’s not a matter of if, but when, CBDC will go into production and provide a new payment rail for commerce. By learning, engaging, and assessing ahead of time, and by keeping their focus on key areas of impact, agencies can fully understand and play a part in this transformation.
i BIS Papers, No 107 “Impending arrival – a sequel to the survey on central bank digital currency” Codruta Boar, Henry Holden and Amber Wadsworth.
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BYD - >>> Did Buffett and Munger See BYD’s One Problem?
The billionaire investors have shown a knack for getting in at the right moment. If confirmed, this move may show they’re also experts at bowing out.
Bloomberg
By Anjani Trivedi
July 17, 2022
https://www.bloomberg.com/opinion/articles/2022-07-18/did-buffett-and-munger-see-byd-s-one-problem-lithium-supplies
After years of sitting on an over 20% stake in China’s BYD Co, Warren Buffett’s Berkshire Hathaway may be mulling an exit. A similarly-sized position showed up in Hong Kong’s clearing system last week, fueling worries that the Sage of Omaha was over the hot Chinese electric vehicle and battery maker.
It sure seemed like odd timing: BYD has risen to the top of global electric vehicle maker rankings. It’s closing in on Tesla Inc. while forging a clear path ahead on batteries and, somehow, circumventing severe supply chain snarls. The firm has done all the right things. On Thursday, the Hong Kong-listed company said it expects preliminary net income in the first half to jump 207%.
The question is, if the stake in the clearing house is Berkshire-related, what risk do Buffett and his vice chairman Charlie Munger see that others don’t? Could it be a judicious call, much like the one that led them to take a stake in BYD to begin with?
Beneath BYD’s stellar performance, a wrinkle is emerging: lithium supply. While it’s been well-telegraphed that a raw material shortage looms as prices surge, the company has so far circumvented those cost pressures. It’s been pushing a vertically integrated model: eyeing mines across the world, boosting production, making better batteries and keeping a tight hold on its supply chain. Among all those factors, its grip on lithium production has been the most uncertain. High material prices have been hitting China’s industrial firms so hard that Beijing called for capping the rising lithium price and is planning policies to help downstream firms.
BYD has been on a mission to get its hands on lithium mines and resources this year. The firm is connected with Youngy Co, one of China’s first spodumene, or raw lithium compound, miners. In March, it participated in a private placement in another miner, Chengxin Lithium Group. As part of this, the firm will get discounted lithium compounds in the future. While both are likely to continue buying more mines in the Sichuan region, it isn’t going to lead to immediate or guaranteed supply: Most of the quarries have future — not existing — ore production capacity and Chengxin doesn’t have full access to supplies in some of them.
Even if BYD were to take all the output from two of the mines, it would only get an equivalent of 80 gigawatt hours by 2025, according to Daiwa Capital Markets analysts. Across the top 9 Chinese battery companies, around 27 gigawatt hours of batteries were installed in June — and BYD added just over 5 Gwh. Clearly, the supply deficit is here to stay.
Meanwhile, the types of batteries the firm makes — mostly lithium iron phosphate — are now gaining traction outside of China as key patents that restricted production to the country get closer to expiring. That means there will be even more demand to pressure supply.
There are other, less-appreciated issues. For instance, analysts are counting on more lithium-bearing minerals and ores from Sichuan, but it could be lower than expected because the terrain is difficult, which affects how long mines can operate. There are also escalating environmental issues in the region.
These pressures led BYD to look at Chile, where it won a contract for lithium extraction. It was hindered again when some of those contracts were suspended by the South American country’s top court. It’s now looking for mines in Africa, but no clear deals have emerged.
The firm bet on EVs after announcing it wouldn’t make any more traditional cars. Still, it isn’t clear how it will churn out its lithium-heavy top-of-the-line batteries, or the estimated 1.5 million EVs this year that will need those powerpacks, without tied up supply contracts.
Whether it’s Buffet’s stake or someone else’s, investors are skittish around raw material supplies and costs, no matter how vertically-integrated a company is, or how good sales forecasts look.
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BYD - >>> Tesla Stock Vs. BYD Stock: Booming China EV Giant Takes Aim At Tesla
Investor's Business Daily
ED CARSON
08/07/2022
https://www.investors.com/news/tesla-stock-vs-byd-stock-comparing-ev-stocks-tsla-byddf/?src=A00220
Tesla (TSLA) and BYD Co. (BYDDF) are both fast-growing EV giants. While a lot of attention falls on startups such as Rivian Automotive (RIVN), Lucid (LCID), Nio (NIO), Xpeng (XPEV) and Li Auto (LI), as well as traditional automakers pushing into EVs, such as General Motors (GM) and Ford Motor (F), Tesla and BYD are setting the pace.
BYD reported yet another month of blowout sales of 162,350 vehicles, more than tripling vs. a year earlier. The China giant recently reported skyrocketing first-half preliminary profit.
Tesla reported better-than-expected earnings July 20. Shareholders OK'd a 3-for-stock split on Aug. 4.
While they are the two largest EV makers, Tesla and BYD haven't competed much head-to-head. But the BYD Seal is taking on the Tesla Model 3. The Seal officially went on sale on July 29, with deliveries starting this month.
The EV giant is poised to begin a massive international expansion, launching throughout Asia, Europe and more.
Both stocks are rebounding, though both fell below key levels on Aug. 5. Which is a better bet? Let's take a look at Tesla vs. BYD — and Tesla stock vs. BYD stock.
Tesla Vs. BYD Sales
Tesla reported Q2 deliveries at 254,695, slightly below views for about 256,000. That was down nearly 18% vs. Q1's record 310,048 but up 26.5% vs. Q2 2021.
Tesla produced 258,580 vehicles in Q2 vs. 305,407 in Q1. Tesla said June was a record month for production.
Blame Shanghai lockdowns for the declines. Tesla Shanghai was shut down for most of April, then was on limited production until early June.
In Q2, BYD sold 355,021 NEVs, surging 256% from a year earlier and jumping 24% vs. Q1's 286,329. Less than 3,000 were exported, though overseas sales are expected to climb.
So BYD didn't just overtake Tesla, it raced past the U.S. giant by just over 100,000 vehicles, seizing the EV crown. Of course, Tesla still leads in all-electric vehicles, but BYD's passenger EV sales did swell to 180,296 in Q2, significantly narrowing the gap.
Even as Tesla output rebounds, BYD is likely to maintain its overall sales lead in Q3 and beyond, given its slew of new models, factories and markets.
On Aug. 3, BYD reported record July sales of 162,350 electric vehicles and plug-in hybrids, up 222% vs. a year earlier and 21% from June's 134,036. BYD's sales include 162,214 passenger vehicles. Of those, BYD sold 80,991 passenger EVs and 81,223 plug-in hybrids.
Tesla Vs. BYD Expansion
Tesla recently began Model Y deliveries from its plants near Berlin, Germany, and Austin, Texas. But production has been unusually low to start.
Ongoing capacity increases to the Tesla Shanghai facility, also will boost production going forward. The Model Y production upgrades have reportedly ended with the Model 3 line now paused for improvements. In the short run, this likely limited Tesla Shanghai's production. The China Passenger Car Association estimated that Tesla China's wholesale sales, including exports, fell to just 30,000 in July.
Analysts had expected Tesla to deliver 1.5 million EVs in 2022, though Shanghai's Covid shutdown and lengthy limited production may curb that.
At Tesla's annual shareholder meeting on Aug. 4, Musk expects production to surge in the second half of 2022, reaching a 2 million vehicle run rate by year-end.
Despite big expansion plans, Tesla is slashing hundreds if not thousands of jobs. Elon Musk, fearing a recession, had warned in early June that he wanted to cut 10% of jobs. He later clarified that he meant salaried positions, though some hourly production workers also have been affected.
BYD also is adding significant EV capacity, along with several new or expanded battery plants.
That includes a new commercial vehicle and parts project, after diverting some production capacity to ramp up plug-in hybrid output.
In the first half of the year, BYD sold 641,350 NEVs, already beating 2021's full-year total of 593,745. The auto giant plans to sell at least 1.5 million new energy vehicles in 2022, or up to 2 million if supply issues ease.
Tesla, targeting the luxury and affordable luxury markets, has far higher selling prices than BYD.
BYD's average selling prices are much lower, with the majority of its EVs and hybrids selling for $15,000-$34,000, though some vehicles top $40,000.
The China EV giant does plan to move upscale significantly. It will unveil a high-end brand in the third quarter and show off its first model before year-end. The brand will target the luxury market of 800,000 ($119,520) to 1.5 million yuan vehicles, a BYD exec said in May, who added that the first model will be an off-road SUV. A second model could be large sedan.
BYD's Danza unit, 10% owned by Mercedes-Benz, will begin deliveries in August of a minivan in EV and PHEV variants. It starts at just under $50,000, with some variants going up to $69,000. A Danza SUV will be unveiled later this year.
BYD Vs. Tesla: Tesla Electric Vehicles
Tesla produces four electric vehicles: the luxury Model S sedan and Model X SUV as well as the Model 3 sedan and Model Y crossover. The vast majority are the Model 3 and Model Y.
Tesla has long touted the Roadster, Semi and Cybertruck as future vehicles. But those have been pushed back multiple times. Musk said on the Q2 earnings call that the Cybertruck is on track for mid-2023. But Cybertruck prices and specs — which were ambitious even compared to other Tesla vehicles — will likely be different than the initial claims back in 2019, Musk said a few weeks later.
That suggests Tesla will go three years — or more — before launching a new vehicle since the Model Y in spring 2020. Also, the Cybertruck likely will largely serve the U.S. market. So Tesla may not have a new vehicle for most of the world until 2024 or later.
Musk recently said Tesla is not working on a $25,000 vehicle, a goal he had touted for years. Even now, such a model would run into dozens of existing rivals, mostly from Chinese EV makers such as BYD.
BYD Vs. Tesla: BYD EVs Big And Small
BYD has a slew of models, some with electric and hybrid versions. The automaker is rolling out several new EV-only and hybrid-only models in the next several months, along with notable revamps or longer ranges for key models.
The Seal sedan, officially launched on July 29, is BYD's first clear head-to-head competition vs. Tesla. The BYD Seal is a Model 3 rival, with roughly equal range and faster acceleration — and $10,000 cheaper. The Seal starts at 212,800 RMB ($31,130) vs. 279,900 RMB ($41,950) for a base made-in-China Model 3.
Deliveries start in August.
BYD said Seal preorders had topped 60,000 since they opened on May 20. Other reports said Seal preorders had topped more than 110,000 by late June.
A successful Seal launch would not only further boost rapid sales growth, but could burnish BYD's brand as it expands into new markets.
On the low end, a BYD Seagull hatchback will soon launch with a price tag around $12,000.
In a few months, BYD will unveil the Seal Lion, an all-electric SUV that could take on the Tesla Model Y with a much-cheaper price.
The Denza D9 minivan will begin deliveries in August.
BYD also is one of the biggest makers of electric buses, with plants in the U.S. and many other countries besides China. BYD also makes EV delivery trucks, big rigs, garbage trucks and more.
BYD makes buses, big rigs and other heavy vehicles for the U.S. market at its Lancaster, Calif., plant. Also at Lancaster, BYD will assemble the next generation of Nuro self-driving delivery vehicles, using Blade batteries.
Tesla Stock Vs. BYD Stock: EV Markets
Tesla is a truly global EV giant, with major sales in North America, Europe and China. It has notable business in Korea and some other Asian markets. It has four plants, starting with Fremont, Calif., and Shanghai, joined by the Austin, Texas, and Berlin-area plants. Tesla already exports to Europe, mostly from the Shanghai plant.
As the Berlin plant ramps up over time, the Shanghai plant will export far fewer Model Ys to Europe, though Model 3 shipments will likely continue.
Elon Musk, in a May 31 interview released in late June, said the Berlin and Austin factories are losing billions of dollars due to low production.
While Tesla capacity is set to soar, it has no major new markets to enter or any new vehicles in the near future.
However, there's new progress on a big tax-and-spending bill in Congress that would extend U.S. EV tax credits, a boon for Tesla, which is no longer eligible under the current program. However, there are some income and vehicle price caps that could significantly impact Tesla vehicles' eligibility. A requirement for a high and rising share of battery materials from the U.S. or countries with U.S. free-trade deals also could complicate matters.
BYD's auto plants are in China, with virtually all its sales there. BYD easily tops Tesla in local China sales, even just in EVs.
That means BYD has a lot of markets to expand into.
BYD in the coming weeks will begin deliveries of the Yuan Plus, branded in most overseas markets as the Atto 3, in Singapore, New Zealand, Australia and more.
The EV giant has announced plans to enter Japan with the Atto 3 in early 2023, the Dolphin/Atto 2 mid-year and Seal/Atto 4 in late 2023.
BYD will announce its entry into Thailand as well on Aug. 8. Several of these markets are right-hand-drive countries, like the U.K.
BYD also reportedly is eyeing a move into South Korea, which would mean taking on Hyundai and its Ioniq EVs.
BYD signaled a significant European expansion as well, announcing on Aug. 1 that it will begin deliveries in Sweden and Germany in Q4. BYD began selling the Tang SUV in Norway, in late 2021.
The first BYD vehicles will reach Israel this quarter.
It is shipping various EVs and hybrids to much of Latin America, with plans to be in 45 Brazilian markets by year-end.
America isn't officially in BYD's sights in terms of personal EVs. Tariffs on China-made autos make exports to the U.S. cost prohibitive. BYD does make some EV buses here, with a lot of extra space at its Lancaster, Calif., site outside Los Angeles.
EV 'Freak-Out' Moment Looms Over Lithium, Rare Earths
Tesla Vs. BYD Batteries
Tesla doesn't mass produce battery cells. The Sparks, Nevada, gigafactory is a joint venture with Panasonic, which makes the cells. In China and increasingly in the U.S., Tesla buys off-the-shelf batteries from CATL.
It's increasingly shifting to lithium iron phosphate batteries. LFPs have some cost advantages, which have grown because they don't require any cobalt or nickel, unlike lithium-ion batteries.
Tesla has long led in getting more out of its batteries, though the high-end Lucid Air has higher battery efficiency than Tesla.
Tesla is developing its own 4680 battery cells in a pilot program. The 4680 batteries don't involve new chemistry. The larger form factor offers the potential for cost savings, but on the Q2 earnings call Musk said several technical challenges remain.
That could affect the timetable for the Cybertruck as well as other vehicles such as the Semi and Roadster.
BYD batteries, by contrast, are truly in house. The BYD Blade batteries, a specialized LFP battery, are seen as among the safest available for EVs.
BYD will supply batteries to Tesla, a senior BYD executive recently told state-owned TV, though that interview was later deleted. So far Tesla has not confirmed any deal, which has been rumored for months. A Tesla deal would be a major validation for BYD as a battery supplier to third-party automakers.
The made-in-China Ford Mustang Mach-E uses BYD batteries. GM will use BYD batteries in a made-in-China Cadillac. Toyota (TM) is expected to use BYD Blade batteries in an upcoming small EV for the Chinese market. BYD may be actively involved in Toyota's wider EV push in the coming years.
BYD and Tesla are on the forefront of automakers trying to lock up supplies of lithium and other key battery raw materials. Musk has discussed Tesla getting involved in lithium mining, but hasn't done so.
BYD is involved in lithium mining projects already. It's reportedly struck a deal to buy six lithium mines in Africa, according to local media. That could provide enough lithium to satisfy its battery needs for a decade.
Tesla Beyond EVs
Tesla and BYD are more than just EV makers.
Tesla has solar and battery storage businesses, but both are just a small part of total revenue.
Tesla also generates revenue via its Supercharger network. It's starting to open its Supercharger network to non-Tesla vehicles in parts of Europe, where third-party charging stations are common. In the U.S., the Supercharger network is still a big moat for Tesla, but the automaker may open up some stations to attract new subsidies.
Tesla's self-driving efforts have been a key revenue driver and brand builder. If Tesla is able to create a cheap, vision-only system that is fully autonomous everywhere and anywhere, the payoff will be enormous. But for now, even FSD Beta is a Level 2 driver-assist system.
AI chief Andrej Karpathy, who oversaw Autopilot, left the EV giant on July 13. Karpathy had been on a months-long sabbatical, raising speculation that he was on his way out.
The National Highway Traffic Safety Administration has expanded an Autopilot probe multiple times. The investigation began in 2021 with a look at Autopilot-related crashes into stationary emergency vehicles. The NHTSA is also looking into "phantom braking," when Tesla vehicles suddenly brake while on Autopilot.
The California DMV accused the EV giant of misleading customers about Autopilot and FSD, the Los Angeles Times reported late on Aug. 5. But if the state DMV wins its action, it'll likely only require Tesla to modify its advertising and marketing.
Musk has said Tesla is putting a lot of effort on developing the Tesla Bot, or Optimus. On June 2, Musk tweeted that "we may have an Optimus prototype working" by the next Tesla AI Day on Sept. 30. Most experts say general purpose humanoid robots are decades away.
BYD Semiconductor, Solar And More
In addition to making its own batteries, BYD makes its own chips, which has helped it rapidly expand over the past year while the industry had to idle production. In late January, the automaker won approval to list its BYD Semiconductor spinoff on the Shenzhen ChiNext market.
The company also has solar and energy storage businesses.
BYD has several partnerships related to autonomous driving. BYD has said it will adopt Nvidia's Drive system for autonomous driving. The follows a self-driving partnership with Baidu (BIDU), a leader in autonomous-driving technology. Nvidia (NVDA) and Baidu have long been autonomous-driving partners.
But BYD also says it will use chips from local Horizon Robotics in some 2023 models. That follows a driver-assist joint venture with Momenta, a Chinese autonomous-driving startup. BYD also has taken a stake in Lidar supplier RoboSense.
BYD is starting work on its own in-house chip for smart driving, local media reported in mid-July.
Tesla Stock Vs. BYD Fundamentals
Tesla earnings more than tripled to $6.78 a share in 2021, vs. $2.24 a share in 2020 and just 3 cents in 2019.
Tesla earnings rose 57% in Q2 while revenue grew 42%, both topping views. That came despite significant challenges, notably the lengthy Shanghai production shutdown and slow return. Earnings and revenue fell vs. Q1.
BYD earnings declined in 2021. Capital spending last year exceeded capex from 2018-20 combined, with huge outlays for new auto, battery and chip plants. EV and PHEV production capacity has surged in recent months and continues to increase. That is spurring massive revenue and profit gains this year and beyond.
On July 14, BYD said it expects first-half net profit up 139%-207% vs. a year earlier in local currency terms to 2.8 billion-3.6 billion yuan ($533 million). Excluding non-recurring gains and losses, profit likely skyrocketed 578%-795%.
Analysts see profitability and margins improving further in the second half, as BYD expands production and moves upscale.
Tesla Stock Vs. BYD Stock Technicals
Tesla stock is down 12.4% so far this year as of Aug. 4, according to MarketSmith analysis, but a big improvement from just a few weeks ago. BYD stock is up 12.1%, trying to hold recent levels.
Since the end of 2019, Tesla is up a massive 945%. BYD has surged 657%.
Tesla has a price-to-earnings ratio of 91, still high but down in the past year due to strong earnings and a declining share price. BYD's P-E is well into the triple digits. High P-E stocks generally have struggled as interest rates have risen over the last several months.
TSLA stock hit a record 1,243.49 in November. Shares approached those levels in April, but then sold off hard. On May 24, shares tumbled to an 11-month intraday low of 620.57, down just over 50% from its record high.
On July 21, TSLA surged following earnings, blasting above short-term levels after clearing the 50-day line a few days earlier. Shares continued to move higher, reclaiming their 200-day line.
On Aug. 4, Tesla investors OK'd a 3-for-1 stock split at the annual shareholder meeting, a long-expected move. The split will take place on Aug. 25.
Tesla stock tumbled on Friday, back below the 200-day line and down modestly for the week.
TSLA stock is far from a 1,208.10 buy point. Ideally, shares would consolidate, offering a handle or aggressive entry.
BYD stock hit a nine-month low on March 15, but rebounded back above its 50-day and 10-week lines in early April. Shares surged above its 200-day line in late May.
Shares broke out past a 39.81 buy point in late June. Shares fell back below the buy point on July 11, as China stocks sold off.
BYD dived July 12 on rumors that Warren Buffett would sell some of his longtime stake. Berkshire Hathaway (BRKB) bought 225 million H-shares in BYD in September 2008 and has held onto them. It's BYD's No. 4 shareholder, with a 7.73% stake. There's still no clarity on Buffett's BYD holdings.
BYD stock gapped up July 14 on the preliminary earnings. Shares are currently below a rising 50-day line.
Shares are on track to form a new base next to the deep consolidation, but needs another week. A move above the July 29 high of 39.35 would offer an aggressive entry.
Tesla Stock Market Cap
In terms of market cap, Tesla stock vs. BYD stock is no contest. Tesla is worth $903 billion and eyeing a return to a trillion-dollar valuation. That's leagues above BYD's $100.3tsl billion.
BYD's market cap exceeds that of Rivian stock and Lucid stock combined. It's also comfortably above the valuations of GM and Ford.
An S&P 500 giant, Tesla stock has an array of institutional sponsorship, including many IBD-style mutual funds and other A+ funds. TSLA stock remains a major holding across Ark Invest's ETFs.
BYD stock has far-less big sponsorship, though Warren Buffett's Berkshire Hathaway (BRKB) has been a notable investor for years. Cathie Wood's Ark Invest also owns a small stake. Very few stocks can boast both Buffett and Wood as investors.
BYD stock is listed in Hong Kong and Shenzhen, and only trades over the counter in the U.S. That also means the BYDDF stock chart shows a lot of minigaps.
Tesla Stock Vs. BYD Stock
In many ways BYD is what Tesla claims or aspires to be. BYD makes its own batteries and chips, as well as many other key parts. It's selling its batteries to other automakers, including Tesla itself soon. Musk has long touted a goal of a $25,000 Tesla. BYD already sells many EVs at or below $25,000, and at a profit. Musk has mulled getting involved in lithium mining. BYD already is.
BYD's EV and PHEV unit sales have passed Tesla's unit sales, with the automaker is accelerating production and just moving toward more-upscale offerings. For now, Tesla sells far more pure electrics than BYD, and at much-higher price points. Both are reporting booming earnings.
BYD has many big markets in which to expand, including several in the next few weeks and months.
Both EV giants are delivering far more vehicles than rivals, while growth prospects are strong.
Tesla stock and BYD stock were among the biggest EV winners in 2021. BYD is consolidating after hitting record highs in late June, with a possible aggressive entry. TSLA stock is still down for the year, but is rebounding back above some key levels.
So, Tesla stock vs. BYD stock? Investors should keep their eyes on them.
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>>> Johnson & Johnson to spin out consumer health business in new publicly traded company
Fierce Pharma
By Kevin Dunleavy
Nov 12, 2021
https://www.fiercepharma.com/pharma/johnson-johnson-to-separate-its-consumer-health-business-create-new-publicly-traded-company
Johnson & Johnson's decision to hive off its consumer health products follows the lead of companies such as Merck, Pfizer, Sanofi and GlaxoSmithKline.
Continuing a trend, especially among the largest firms in the pharmaceutical industry, Johnson & Johnson will form a new publicly traded company to handle its consumer health business, it announced Friday.
This is a particularly significant step for J&J, which has become readily associated with signature products such as Neutrogena, Aveeno, Tylenol, Listerine, Band-Aid and Johnson & Johnson’s Baby Powder. Those brands will fuel the new company along with popular allergy medicine Zyrtec.
The separation will take 18 to 24 months, J&J said.
The move mirrors similar initiatives by companies such as Merck, Sanofi, Pfizer and GlaxoSmithKline, which separated their consumer health products to focus on the highly profitable pharmaceutical business.
Joaquin Duato, announced recently as the successor to departing CEO Alex Gorsky, will continue to lead J&J after the separation. Leadership for the new company will be determined later, J&J said.
“Our board and executive team have regularly evaluated Johnson & Johnson’s portfolio of business over the years, asking whether a broad-based approach best meets the needs of our stakeholders," Gorsky said in an investor call today (Nov. 12). "And while this approach has historically served us well, addressing the complexity of today’s global healthcare and consumer environments now demands unprecedented innovation, focus and agility."
Even after the separation of its consumer health unit—expected by the company to generate $15 billion in revenue this year—J&J will remain a powerhouse as it expects its pharma and medical device units to make $77 billion in 2021.
"We'll remain the world's largest healthcare company, and we'll be highly diversified," said Duato, who added that the new structure would give both units "advantages operationally" that would help "accelerate growth on both sides."
As for the timing of the move, Gorsky said that the pandemic created more urgency for the company to split as people became more concerned with personal health and wellness.
"We felt this was the right time to recognize the differences between the consumer-facing business versus that in our medical device and pharmaceuticals," Gorsky said. "These have evolved as fundamentally different businesses. If you look at the rate and pace of innovation, the level of science and technology involved in pharmaceutical and medical devices, if you look at the investment required in clinical development plans, if you look at the regulatory pathways ... these two businesses share many more common themes versus our consumer business."
The move will allow J&J to concentrate on developing treatments for oncology and immunology and advance new efforts in cell and gene therapy. Additionally, the company said it expects its medical devices business to “accelerate its momentum across orthopedics, interventional solutions, surgery and vision.”
"This business will have four billion-dollar brands, more than 20 brands over $150 million, so it's a very diverse portfolio," Gorsky said of the new spinout. "We think this business is really positioned well. This is from a position of strength."
Gorsky added that J&J's approach to mergers and acquisitions would remain consistent. He said that the company's current pipeline shows a balanced approach, with equal parts external and internal sourcing.
"We definitely tend to have an appetite for smaller tuck-in acquisitions versus large acquisitions. We would expect that to continue," Gorsky said. "There's a lot of emerging areas of science that we'll continue to watch closely and ultimately source that kind of innovation in value-creating ways."
Goldman Sachs and J.P. Morgan will assist J&J in the transition. The planned organizational design will be complete by the end of 2022. Employees assigned to the new company will participate in their current pay, benefits and retirement programs through the end of 2022, J&J said.
The industry trend of major companies separating their consumer health units picked up steam in 2018 when several made moves. The same year, however, J&J doubled down on remaining intact.
Instead of selling off, it agreed to pay 230 billion Japanese yen ($2.0 billion) to acquire the remaining share of Japanese cosmetics and skincare specialist Ci:z. The move gave J&J popular medical cosmetic products Dr.Ci: Labo, Labo Labo and Genomer and additional heft in Japan and other Asian markets. Moreover, instead of distancing consumer from pharma, in June J&J put the two units under one leader, former pharma chief Duato.
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NextEra Energy - >>> This Renewable-Energy Juggernaut Continues to Produce Powerful Results
Motley Fool
By Matthew DiLallo
Jul 23, 2022
https://www.fool.com/investing/2022/07/23/this-renewable-energy-juggernaut-continues-to-prod/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
NextEra Energy's earnings grew double digits in the second quarter.
That has the utility on track to achieve its earnings growth forecast.
With a growing backlog of renewable-energy projects, the company has lots of upside ahead.
The company's focus on renewable energy continues to pay big dividends.
NextEra Energy continues to lead the charge toward a more sustainable future. The utility is investing billions of dollars to eliminate carbon emissions from its operations and lead the transition to low carbon energy. This strategy is paying big dividends for investors, which was evident once again in its quarterly results.
Here's a look at the leading utility's second-quarter numbers and outlook for what's ahead.
A closer look at NextEra Energy's quarter
NextEra Energy generated nearly $1.6 billion, or $0.81 per share, of adjusted earnings in the second quarter. That was about 14% ahead of last year's second quarter, an exceptionally strong growth rate for a utility. NextEra delivered strong results at its electric utility (FPL) and within its energy resources segment.
FPL's earnings jumped 12% year over year, driven by the continued investment in its business. The utility invested another $1.9 billion in the quarter to serve its growing customer base -- it added 87,000 new customers over the past year -- and to enhance its utility operations. The company recently completed construction on the Dania Beach Clean Energy Century, which will reduce costs and carbon emissions.
Meanwhile, earnings within the energy resources segment soared by 19%. The main driver was the strong performance of its existing renewable-energy and storage portfolio. The energy resources business also continues to have success in securing new renewable-energy developments. It added over 2 gigawatts (GW) of new renewables and storage development projects to the backlog in the quarter. That included adding a net 1.2 GW of solar energy projects, its second-best quarter for new solar project additions in its history. This success in originating new project developments shows that demand for renewables isn't slowing down even with concerns about the economy growing.
A look at what's ahead for NextEra Energy
NextEra Energy's strong showing in the second quarter has the company on track to generate between $2.80 to $2.90 of adjusted earnings per share. That would put earnings up nearly 12% at the midpoint of its guidance range. Meanwhile, the company expects adjusted earnings to reach $3.45 to $3.70 per share by 2025, growing at the higher end of its 6% to 8% annual target range. This forecast should support dividend growth of around 10% annually through at least 2024.
One of the main factors powering the company's growth forecast is its renewable energy development pipeline. After adding over 2 GW of new projects to its backlog during the second quarter, the utility has about 19.6 GW of development projects. The company noted in its earnings release that this backlog "provides terrific visibility into the strong growth that is expected at NextEra Energy Resources over the next few years."
FPL also has lots of growth ahead. That entity is undertaking the largest solar energy expansion in the country. It currently generates 4 GW of solar power from about 15 million solar panels. By 2045, FPL expects to deploy hundreds of millions of solar panels, giving it the capacity to produce over 90 GW of solar energy. In addition, the utility expects to add more than 50 GW of battery storage capacity, up from 500 megawatts today, to help support its solar energy business by providing power when the sun isn't shining.
Powerful growth ahead
NextEra Energy is growing fast for a utility, especially considering that it's the largest in the traditionally slow-growing sector. It should be able to continue producing powerful returns in the coming years as it grows its earnings and dividend, which currently yields 2.2%. That makes it an excellent option for investors seeking growth and income from the high-upside renewable-energy industry.
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PepsiCo, McDonalds - >>> 2 Dividend Stocks for Investors Seeking Passive Income
Motley Fool
By Demitri Kalogeropoulos
Jul 18, 2022
https://www.fool.com/investing/2022/07/18/2-dividend-stocks-for-investors-seeking-passive-in/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
PepsiCo and McDonald's both prioritize cash returns to investors.
PepsiCo has been paying and raising its dividend for 50 years.
McDonald's has been boosting its dividend annually for 46 years.
These giants have together been raising annual dividends for nearly 100 years.
When you're looking for investments that delivery truly passive income, dividend stocks rank near the top of the list. Sure, owning a rental property can give you steady cash flow from tenants. Yet those returns require some level of annual effort, including maintenance and administrative work.
Pick the right dividend stock, on the other hand, and you can simply collect the steadily increasing annual payout over decades. And by automatically reinvesting those dividends, your returns are amplified without any extra effort on your part.
So let's look at two especially attractive dividend stocks: PepsiCo (PEP 0.65%) and McDonald's (MCD 0.20%).
1. PepsiCo is a Dividend King
To find a year in which PepsiCo didn't raise its dividend, you'd have to go back all the way to 1972. That 50-year record of consecutive payout hikes puts the soda and snacks giant in the exclusive club of Dividend Kings. And it's a strong signal to investors that this company won't let them down when it comes to passive income.
Pepsi's latest results illustrate how it has been able to pay investors a growing dividend through economic booms and busts. Organic revenue has jumped 13% in the first half of 2022 even compared to booming results a year ago.
Pepsi is winning market share in attractive categories like energy drinks, sparkling beverages, and snack foods. "Our results are indicative of ... the strength and resilience of our categories, agile supply chain, and go-to-market systems," CEO Ramon Laguarta said in mid-July.
Sure, Pepsi's profit margin has declined due to rising costs and inflation. But the company is still generating higher earnings and producing plenty of cash. Those resources are funding more investments into the business and laying the groundwork for faster growth. They are also supporting Pepsi's plans to deliver as much as $8 billion in cash returns to shareholders in 2022 alone.
2. McDonald's has pricing power
McDonald's stock has been trouncing the market so far in 2022, and for good reason. The fast-food giant set a new profitability record in its last quarterly update, as it turned a whopping 43% of sales into operating profits.
Investors are bracing for potentially worse news on profitability due to accelerating inflation. McDonald's likely had to pay far more for food inputs, labor, and transportation in recent weeks, and those factors could pressure earnings when the chain announces second-quarter results on July 26.
However, few companies are better positioned than the burger giant to capitalize on the current consumer spending environment. Its value and premium offerings allow it cater to a wide range of fast-food fans. And its excellent drive-thru service gives it a valuable competitive advantage at a time when consumers are favoring on-the-go food and drink services.
McDonald's dividend yield today sits at 2.2%, which is slightly lower than the 2.6% that investors could receive by owning PepsiCo stock. Investors need only check the chain's operating cash flow to get a good idea of the prospects for increasing returns ahead, though.
Last year, McDonald's generated over $9 billion in operating cash, and it is likely to set another record in 2022. Continued wins on this metric should help shareholders feel confident that the chain will continue raising its dividend payout, just as it has for the last 46 years.
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>>> PepsiCo Just Beat the Street, but Does That Make It a Buy?
Motley Fool
By David Moadel
Jul 15, 2022
https://www.fool.com/investing/2022/07/15/pepsico-just-beat-the-street-but-does-that/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
Despite the market's ho-hum response, PepsiCo quarterly results beat forecasts.
PepsiCo is passing surging input costs on to its consumers via higher prices.
Only time will tell how much price inflation Americans will put up with this year.
Even as PepsiCo touts its categories' resilience, the real headline is customers' tolerance for price increases.
The headlines have wailed about rising inflation in fuel and housing prices, but what about snack foods and soda? Like practically every other consumer goods business in America, PepsiCo (PEP 0.65%) has had its fair share of woes in 2022 due to rising costs for basic materials.
PepsiCo won't win any popularity contests for passing those higher commodity costs on to the consumer. The company's investors, on the other hand, may understand its move to hike product prices, and this strategy may have saved PepsiCo from a potentially disappointing second quarter.
Indeed, even if investors weren't necessarily exuberant about PepsiCo beating Wall Street's quarterly expectations, it's notable that the company is making headway in softening the blow of inflation. As the business signals further product price hikes, investors will likely be looking to see if PepsiCo can continue to demonstrate impressive top-line growth.
Delicious data points
Whether it was Frito-Lay chips or good old Pepsi Cola, PepsiCo evidently remained a junk-food dynamo throughout 2022's second quarter irrespective of surging inflation. Perhaps this isn't a surprise as these aren't exactly high-ticket items, but one would still expect inflation to have taken a bite out of the company's top and bottom lines.
In what may be construed as a testament to Americans' willingness to cough up for sugary and salty treats, however, PepsiCo seemingly beat the odds and posted revenue and profit growth. Specifically, PepsiCo's Q2 2022 core non-GAAP earnings per share (EPS) of $1.86 represented a year-over-year 8.1% increase and beat Wall Street's consensus estimate of $1.74. The company's quarterly revenue of $20.23 million, moreover, rose 5.2% and beat analysts' $19.51 billion estimate.
Perhaps most encouraging of all was PepsiCo's 13% jump in quarterly organic sales. Looking ahead, the snack specialist remains optimistic as it raised its full-year organic revenue growth guidance from 8% to 10% while maintaining an 8% growth forecast for the company's full-year core constant currency EPS.
The rising cost of snacking
Chairman and CEO Ramon Laguarta credited PepsiCo's "highly dedicated employees" while also citing the "strength and resilience" of its product categories for the aforementioned quarterly results. But there was also another contributing factor -- PepsiCo raised its product prices a whopping 12% in Q2. This was in response to inflation that was "well into the teens," according to CFO Hugh Johnston.
He also noted, "So far for us, there hasn't been much reaction from the consumer" to the product price hikes. In fact, he said that PepsiCo's sales volumes increased 3% to 6% globally.
Interestingly, investors didn't seem particularly impressed with PepsiCo's quarterly performance as the share price was essentially flat on earnings day. Perhaps they're waiting to see just how much longer customers will put up with substantially higher food and beverage prices before they reduce their snack-food intake.
It seems probable that PepsiCo will continue down this path as Johnston has indicated that higher consumer prices are likely this year, saying that further price-raising actions (along with cost-cutting measures) may be needed.
Thus, Laguarta really wasn't kidding when he said, "Nobody's isolated from inflationary pressures." Both PepsiCo and its customers are aware of this pressure, but it's mainly the customers who are actually feeling it. So if PepsiCo's investors are skeptical despite the company's outstanding fiscal results, it's understandable as they can only wonder how much longer snackers can stomach high prices.
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Coca Cola - >>> This Warren Buffett Stock Is Recession-Proof and Generates Passive Income for Investors
Motley Fool
By Luke Meindl
Jul 15, 2022
https://www.fool.com/investing/2022/07/15/this-warren-buffett-stock-is-recession-proof-and-g/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
Coca-Cola's rich dividend and unfluctuating business make it a wonderful investment right now.
The world-class beverage company is poised to remain a market-beater into the future.
Sometimes, the best investments are right in front of our eyes. This world-renowned retailer is a perfect play on the erratic stock market today.
Stocks have been squashed of late, owing to record-high inflation levels, the Federal Reserve's interest rate hikes, undesirable effects from Russia's war against Ukraine, and fresh concerns of a brewing recession. Year to date, the S&P 500 has declined 20%, and the Nasdaq Composite has dropped 29%, serving as one of the worst starts to a year in stock market history.
Warren Buffett, who is famed for his value investing strategy, typically looks for stable businesses that pay handsome dividends and are more likely to flourish during periods of economic uncertainty. These types of businesses are performing exceptionally well at the moment, especially compared to high-growth technology stocks and other speculative investment classes.
Coca-Cola (KO 0.38%), one of his favorite companies ever, has been firing on all cylinders. In contrast to the market, shares of the multinational beverage company are up 4% since the start of the year, and the company continues to deliver on the operational front. As investors brace themselves for a turbulent stock market moving forward, it wouldn't be unwise to give Coca-Cola a closer look today.
Coca-Cola's business is defying a challenging economy
Unlike many companies right now, Coca-Cola is doing extremely well. As a consumer staples stock, its business, which consists of selling essential everyday items, is primarily uninfluenced by economic cycles. This is surely evident in the beverage company's first-quarter earnings report: Total sales surged 16.3% year over year to $10.5 billion, and diluted earnings per share soared 23.1% to $0.64. The company's operating margin also expanded 230 basis points to finish at 32.5%, compared to 30.2% in the same quarter a year ago.
Coca-Cola generated $406 million in free cash flow (FCF) during the quarter, adding to its $10.2 billion over the past twelve months. For the full fiscal year, analysts expect the beverage juggernaut to expand its top and bottom lines by 8.1% and 6.5%, respectively, indicating strong growth rates in a waning economy. But you can't talk about Coca-Cola without highlighting its attractive 2.81% dividend yield, which equates to a $0.44 per-share quarterly dividend payment.
Owning 100 shares of the company's stock today would lead to $176 in annual dividend payments, assuming the dividend amount stays constant over the course of a year. While this may not seem like a lot, it surely adds up over time and provides additional protection in a down market.
The beverage company has increased its annual dividend for 60 consecutive years, drawing attention to its remarkable business. Although the past can't predict the future, Coca-Cola investors can comfortably expect this pattern to continue moving forward.
A great moment to buy
Coca-Cola is not only a phenomenal long-term investment, but it's also the perfect play in an increasingly troubled stock market. The company supplies investors with a consistent stream of income with its 2.81% dividend yield, and its business is well-insulated from high inflation and a rising interest rate environment since it sells essential everyday products. If you're worried about a potential recession or simply want to buy shares of a dependable business, Coca-Cola is the stock for you today.
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>>> Danaher's Covid Tailwind Is In Question; Why One Analyst Isn't Worried
Investor's Business Daily
by ALLISON GATLIN
07/21/2022
https://www.investors.com/news/technology/dhr-stock-surges-why-one-analyst-says-its-covid-tailwind-could-be-longer-than-expected/?src=A00220
Danaher (DHR) crushed second-quarter expectations Thursday, bolstered by strong Covid testing sales. DHR stock surged higher above its 50-day line.
The company reported nearly $2.6 billion in sales from its diagnostics business, up about 10% year over year. However, Danaher cautioned those sales will likely retreat somewhat when the pandemic becomes endemic. The same is true for the products Danaher makes to help develop vaccines and treatments for Covid, the company said in a news release.
But Edward Jones analyst John Boylan expects Danaher to have a long tailwind.
"Covid-19 testing could become a regular or seasonal occurrence, much like flu tests are today," he said in an email to Investor's Business Daily. "Therefore, we expect it to retain notably higher testing sales than before the pandemic. Additional research on new vaccine technology gained during the pandemic should help scientific equipment sales."
On today's stock market, DHR stock jumped 9.1% to 279.23. Shares regained footing above their 50-day moving average on Monday and are now on a three-day run, according to MarketSmith.com.
Overall, Danaher earned an adjusted $2.76 per share on $7.75 billion in sales. On a year-over-year basis, earnings climbed 12% while sales advanced about 7.5%. Both measures easily beat the average estimate of analysts polled by FactSet for earnings of $2.35 a share and $7.3 billion in sales.
The base business, which excludes the impact of Covid testing sales, grew 8%, Danaher said.
Danaher's biggest business is its life sciences division, which provides the tools to help researchers perform their work. Sales in that business grew more than 6% to $3.97 billion. Its environmental and applied solutions business, a provider of everything from consumer packaging to systems for drinking water purification, generated $1.22 billion in sales, increasing 6.5%.
"Solid sales and earnings from these groups should continue thanks to ongoing research into new drug therapies, such as biologic drugs, and to increased investments many communities and companies are making to improve water quality," said Boylan, the Edward Jones analyst.
He doesn't believe the positive outlook is reflected in DHR stock, however. On a year-to-date basis, shares have fallen more than 22% as of Wednesday's close.
Bullish Guidance For 2022
For the year, Danaher expects its base business to achieve high single-digit sales growth. The Covid test segment will grow by a low single digit, the company predicted.
In comparison, DHR stock analysts forecast adjusted profit of $10.29 per share on $30.62 billion in sales. Earnings could rise more than 2% as sales inch 4% ahead.
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>>> Danaher Reports Second Quarter 2022 Results
Yahoo Finance
July 21, 2022
https://finance.yahoo.com/news/danaher-reports-second-quarter-2022-100000252.html
WASHINGTON, D.C., July 21, 2022 /PRNewswire/ -- Danaher Corporation (NYSE: DHR) (the "Company") today announced results for the second quarter 2022. All results in this release reflect only continuing operations unless otherwise noted.
For the quarter ended July 1, 2022, net earnings were $1.7 billion, or $2.25 per diluted common share which represents a 1.5% year-over-year decrease from the comparable 2021 period. Non-GAAP adjusted diluted net earnings per common share were $2.76 which represents a 12.0% increase over the comparable 2021 period.
Revenues increased 7.5% year-over-year to $7.8 billion. Non-GAAP core revenue growth was 9.5%, including 8.0% non-GAAP base business core revenue growth.
Operating cash flow for the second quarter was $2.0 billion and non-GAAP free cash flow was $1.7 billion.
For the third quarter 2022, the Company anticipates that non-GAAP base business core revenue growth will be in the high-single digit percent range. For the full year 2022, the Company continues to expect non-GAAP base business core revenue growth will be in the high-single digit percent range.
Rainer M. Blair, President and Chief Executive Officer, stated, "We are pleased with our strong start to 2022. Our teams executed well in a challenging environment to deliver high-single digit core revenue growth, double-digit adjusted earnings per share growth and $2.0 billion of operating cash flow. We were particularly encouraged with the high-single digit growth in our base business and believe we gained market share across the portfolio."
Blair continued, "Danaher is comprised of high-quality franchises in attractive end markets with meaningful recurring revenues and durable business models. We believe the combination of our strong portfolio and talented team—all powered by the Danaher Business System—provides a strong foundation in today's dynamic operating environment and positions us well for the balance of 2022 and beyond."
Danaher will discuss its results during its quarterly investor conference call today starting at 8:00 a.m. ET. The call and an accompanying slide presentation will be webcast on the "Investors" section of Danaher's website, www.danaher.com, under the subheading "Events & Presentations" and additional materials will be posted to the same section of Danaher's website. A replay of the webcast will be available in the same section of Danaher's website shortly after the conclusion of the presentation and will remain available until the next quarterly earnings call.
The conference call can be accessed by dialing 877-830-2598 within the U.S. or by dialing +1-785-424-1743 outside the U.S. a few minutes before the 8:00 a.m. ET start and telling the operator that you are dialing in for Danaher's earnings conference call (Conference ID: DHRQ222). A replay of the conference call will be available shortly after the conclusion of the call and until August 4, 2022. You can access the replay dial-in information on the "Investors" section of Danaher's website under the subheading "Events & Presentations." In addition, presentation materials relating to Danaher's results have been posted to the "Investors" section of Danaher's website under the subheading "Quarterly Earnings."
ABOUT DANAHER
Danaher is a global science and technology innovator committed to helping its customers solve complex challenges and improving quality of life around the world. Its family of world class brands has leadership positions in the demanding and attractive health care, environmental and applied end-markets. With more than 20 operating companies, Danaher's globally diverse team of approximately 80,000 associates is united by a common culture and operating system, the Danaher Business System, and its Shared Purpose, Helping Realize Life's Potential. For more information, please visit www.danaher.com.
NON-GAAP MEASURES
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release also contains non-GAAP financial measures. Calculations of these measures, the reasons why we believe these measures provide useful information to investors, a reconciliation of these measures to the most directly comparable GAAP measures, as applicable, and other information relating to these non-GAAP measures are included in the supplemental reconciliation schedule attached.
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>>> McDonald's Struggles With Franchisees Could Affect the Long-Term Health of the Brand
Motley Fool
By Alicia Kelso
Jul 18, 2022
https://www.fool.com/investing/2022/07/18/mcdonalds-struggles-with-franchisees-could-affect/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
Tensions between McDonald's and some of its major franchisees seem to be growing.
In June, the National Black McDonald's Operators Association held a no-confidence vote on the CEO.
Several franchisees have also expressed concern over the fast-food giant's new grading system.
McDonald's is 95% franchised, and tensions between those operators and the company could indicate a crack in the foundation.
McDonald's (MCD -1.02%) has so far proven it's inflation-proof. According to Placer.ai data, traffic was up nearly 18% the first week of June, when gas prices surpassed $5, for instance.
Additionally, restaurant analyst Peter Saleh from BTIG recently noted same-store sales improvement throughout the quarter despite a challenging consumer environment. He cites consumers' familiarity and trust with the brand as they manage inflationary pressures not seen in 40 years.
But the global quick-service giant may have bigger issues lurking than a softening consumer. Let's take a closer look.
Franchisees move to retain more control
Tensions between corporate and franchisees seem to be growing, as evidenced by a recent no-confidence vote on CEO Chris Kempczinski from the National Black McDonald's Operators Association, as well as strong franchisee pushback on the chain's new operations performance grading system.
Such friction isn't necessarily new within McDonald's, but it has been accelerating in recent years. In 2018, the National Owner's Association was formed by over 400 franchisees to retain more local control on pricing and to advocate for their best interests. At the time, operators perceived there to be too much discounting from corporate, which was hurting their profits.
McDonald's has since navigated squabbles with franchisees over everything from tech fees to remodel costs, but it has reached a compromise each time. After pushback from franchisees in 2018, the company slowed down its remodeling program, for instance. And after several franchisees publicly stated they were caught off guard by the addition of tech fees in late 2020, McDonald's announced it was cutting those fees by over 60%.
Still, claims of opacity have lingered despite promises by the company to provide "greater transparency and visibility into our system."
The latest strain comes from an announcement by McDonald's of Operations PACE, a new performance management system that most franchisees say is not an accurate reflection of the day-to-day business. Some franchisees also believe the new system is demoralizing for employees at a time when labor is hard to come by.
Long-term implications
Perhaps surprisingly, these tensions come as the company's operators have experienced record cash flow in recent quarters. So in the near term, the U.S. business should remain strong as inflation lingers.
However, friction with franchisees can compromise the entire system's strength, as has been proven before in other chains, such as Quiznos and Krispy Kreme. In the past year, a record 400 franchisees have left the 95% franchised system, despite strong sales and cash flows, indicating a crack in the company's foundation.
Franchisees are one-third of what founder Ray Kroc called the three-legged stool, along with suppliers and employees. If those franchisees aren't on the same page as corporate, that stool becomes unbalanced, which could affect the company's performance in the long term.
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Cintas - >>> 1 Current and 1 Future Dividend Aristocrat to Buy and Hold Forever
Motley Fool
By Josh Kohn-Lindquist
Apr 2, 2022
https://www.fool.com/investing/2022/04/02/1-current-and-1-future-dividend-aristocrat-to-buy/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
Nike's digital transformation is just beginning, and its brand is stronger than ever.
Cintas continues to post strong sales growth regardless of the economic climate.
Excellent return on invested capital metrics mean these two may outperform.
These apparel-focused stocks look to continue their decades-long histories of beating the market.
While most apparel stocks make for better buy-low and sell-high candidates than genuine buy-and-hold investments, two businesses stand out as the exception: Nike (NKE 2.10%) and Cintas (CTAS -0.32%).
Despite operating in wildly different segments of the broader clothing industry, the two behemoths have smashed the S&P 500 index's returns over the last three decades.
So what exactly makes these two stocks different than the rest of their apparel peers?
Let's take a look.
Cintas
While calling Cintas a genuine apparel company is a bit of a stretch, it is home to a uniform rental service that makes up the most significant portion of its sales. Helping more than 1 million businesses get "ready for the workday," Cintas offers everything from these uniforms to COVID-19 test kits, restroom supplies, fire extinguishers, and personal protective equipment.
Despite seeming like an unexciting operation, Cintas has posted stock returns that are anything but -- rising 1,000% in just the last decade.
Perhaps most incredibly, Cintas not only survived the onset of COVID-19 -- it thrived in it.
From 2019 to 2021, earnings per share (EPS) and free cash flow steadily increased despite lockdowns that hampered the broader economy.
This fact is important to investors today, with inflation rising to 7% in the United States and forcing us to consider just how recession-proof our favorite holdings may be.
Heading into its third-quarter earnings report, Cintas faced myriad worries: inflation, escalating political tension, rising fuel prices, labor shortages, and a travel and hospitality industry that has not yet returned to full strength. However, the company went on to post 10% and 14% revenue and EPS growth, respectively, for the quarter -- showing that even with two of its main verticals -- travel and hospitality -- still struggling, it could be counted on for growth.
Furthermore, like Nike, Cintas owns a strong and growing ROIC, which clocked in at 20% as of its most recent quarter.
Thanks to this growing ROIC, the recession-proof nature of its operations, and its history as a Dividend Aristocrat, Cintas looks to be an excellent option to consider holding for the long term.
While the soon-to-be (Nike) and current (Cintas) Dividend Aristocrats pay 0.9% dividends, Cintas holds a more robust dividend growth rate of 22% annually over the last five years despite having already bumped its dividend for 38 years straight.
Ultimately, both businesses have a maximum dividend potential of nearly 3%, highlighting their promising combination of a reasonable dividend yield and a low payout ratio. So whether it is Nike's brand power or Cintas' ability to weather any economic storm, these are two great dividend growers to consider in today's volatile times.
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>>> How about a new FAANG? This grouping outperforms the tech giants
MarketWatch
March 23, 2022
By Steve Goldstein
https://www.marketwatch.com/story/how-about-a-new-faang-this-grouping-outperforms-the-tech-giants-11648033932?siteid=yhoof2
The FAANG grouping of stocks has been so 2021.
Facebook parent Meta Platforms FB, +2.86%, Amazon.com AMZN, +0.15%, Apple AAPL, +2.27%, Netflix NFLX, +0.33% and Google parent Alphabet GOOGL, +2.38% have struggled this year, thanks to rising interest rates, and in the case of Facebook and Netflix, softer demand.
The NYSE FANG+ NYFANG, +1.56% index has slumped 11% this year.
Doug Kass, the president of Seabreeze Partners Management, proposes a new FAANG:
F - for fuel
A - for agriculture
A - for aerospace and defense
N - for nuclear
G - for gold and critical metals.
These all are plays that have benefited from Russia’s invasion of Ukraine and the ensuing sanctions that have sent commodity prices surging and the world scrambling to wean itself from Russian supplies.
A MarketWatch-compiled average of his new FAANG assets, equal weighted using popular exchange traded funds, yields a 27% return for 2022.
Kass says he’s long the GLD GLD, +0.73% exchange-traded fund and has invested in stocks in the other sectors, and expects supply/demand imbalances to keep boosting these themes.
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>>> Fed Chair Powell hinted at a mega–rate hike. The markets are banking on more than one
Fortune
by Bernhard Warner
March 22, 2022
https://finance.yahoo.com/news/fed-chair-powell-hinted-mega-091919280.html
With inflation and growth concerns swirling over the markets, Jerome Powell dropped a tantalizing clue on Monday about how the Federal Reserve will approach its next rate-setting meeting in May.
To have spotted the sign, you’d have to be a top-notch Fed-jargon parser.
In a speech yesterday, Powell added a new adverb—“expeditiously”—to his vocabulary about just how aggressively the central bank could hike rates this year. He also signaled being open to a 50-basis–point rate hike, all but closing the door on a 13-year stretch of loose monetary policy and rock-bottom lending rates.
Wall Street pounced on the Powell speech, with a series of new bets that the Fed will be even more hawkish than previously thought.
“Our best guess is that the shift in wording from ‘steadily’ in January to ‘expeditiously’ today is a signal that a 50bp rate hike is coming,” Goldman Sachs chief economist Jan Hatzius wrote in an investor note. “We now forecast 50bp hikes at both the May and June meetings, followed by 25bp hikes at the four remaining meetings in the back half of 2022, and three quarterly hikes in 2023 Q1–Q3.”
Add that up, and the benchmark Federal funds interest rate could move above 3% in 18 months’ time—not great news for aspiring homebuyers or people who have variable-rate mortgages.
How high will rates go?
The Fed’s aggressive ramp-up in rates is looking like nothing we’ve seen in recent years, noted Jim Reid, Deutsche Bank global head of thematic research, a sign the central bank feels it’s behind the curve in keeping inflation—running at a 40-year-high—in check.
“It’s increasingly dawning on investors that this is going to be a very different hiking cycle from its predecessor back in 2015, and yesterday Fed funds futures moved to price in more than 200bps worth of hikes for 2022 for the first time (including the 25bps we saw last week),” Reid wrote on Tuesday.
Following the Powell speech, the yield on the 10-year Treasury note jumped 14 basis points on Monday, and equities sank in afternoon trading. U.S. futures are doing a bit better on Tuesday, with the S&P up 0.4% at 5 a.m. ET.
European bourses were in the green at the open as well, as most risk assets were rebounding. Crypto prices, for example, were gaining with Bitcoin up to $42,500, an increase of more than 3% in the past 24 hours.
Investors are taking heart that the closely watched spread between short- and long-term bonds—measured as the difference between the yield on a two-year Treasury note and that of a 10-year Treasury note—has been widening in recent weeks, a sign that Wall Street sees the chance of a recession is on the wane.
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>>> Why women investors outperform men in the long run
Yahoo Finance
Jared Blikre
March 12, 2021
https://finance.yahoo.com/news/why-women-investors-outperform-men-in-the-long-run-trader-205931074.html
When it comes to investing, women tend to outperform men over time, according to several studies.
"We're wired differently. Women have strong activity in planning and self-control. I think that lends themselves to be better traders," says Kathy Donnelly, proprietary trader and co-author of "The Lifecycle Trade."
Donnelly cites a 2017 Fidelity Investments study that concluded women earn higher returns than men when investing — to the tune of 40 basis points, or 0.4% — and that women save more. Over time, these small differences add up, notes Fidelity.
Of the findings, Donnelly says, "[The study] basically tied to trading less, saving more and willing to learn — I think that fits me to a T."
A separate study in the U.K. found that men outperform the country's benchmark FTSE 100 (^FTSE) index by 0.14%, but women tend to beat it by 1.94% — a difference of 1.8 percentage points. Warwick Business School conducted the study with the assistance of Barclays and found that men trade more often than women — 13 times per year versus nine times over the same period.
The Warwick study also found men are more likely to take profits on winning trades while holding onto the losers — concluding that female investors tend to avoid "lottery style" speculation. Men are more likely to buy lower-priced shares, which helps explain the modern meme stock phenomenon. Many of the targeted stocks like GameStop (GME) and AMC Entertainment (AMC) are considered to be penny stocks (or at least they used to be when they traded at lower prices).
A Nasdaq report adds: "Generally speaking, women are more patient and allow their investments to grow. This is important because frequently trading and acting on short term fluctuations cultivate negative outcomes. In this regard, men could borrow a page from women."
When asked about her experience as a female investor, Alissa Coram, multimedia content editor at Investor’s Business Daily, says, "I think that the market doesn't really care what I look like, where I'm from, my age. I look at it as being optimistic ... [T]here are endless opportunities out there, as long as you have a great set of rules and strategies that you are abiding by when you're investing, and making sure you don't blow up your account. I think that the opportunity out there is for everyone, and that females out there should just go for it, and not let stereotypes of Wall Street or the financial world get in their way."
Trading in stocks has historically been male-dominated, but there are signs that cryptocurrencies are helping to disrupt that hegemony. Robinhood recently reported that among its customers, the number of female crypto traders has grown seven-fold this year — with 40% of their active women customers trading in crypto assets, such as bitcoin (BTC-USD), ethereum (ETH-USD) and dogecoin (DOGE-USD). “These figures are encouraging and prove that crypto can be a powerful tool in decentralizing power in finance," Robinhood says.
Donnelly wraps it all up, saying, "It’s all in the brain: Men are on a mission, women are on a journey."
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