REVENUE UP

​The amount of time workers spend at the office every week depends a great deal on the industry in which they work. But industry is just one factor determining how long people work; another is the country where they live. In some more affluent nations around the world, the typical work week for full time employees is well under 40 hours, but it is close to 50 hours in others.

24/7 Wall St. reviewed data on the typical number of hours worked per week among full-time employees in 37 mostly affluent nations from the Organisation for Economic Co-operation and Development. We listed these countries from the shortest typical work week to the longest. 

As might be expected, workplace laws and conventions in the countries with shorter typical work weeks are often more favorable towards workers than laws in countries with longer work weeks. Countries with shorter work weeks also tend to have better overtime compensation and regulations and more favorable parental leave laws. A number of the countries on this list with shorter work weeks also happen to have substantial government-mandated vacation time. These are the countries with the most vacation time. 

While some find their work lives fulfilling, countries with shorter work weeks tend to have residents with higher life satisfaction. Leisure time appears to be an important contributing factor to life satisfaction — the countries with longer typical work weeks had lower life satisfaction scores based on the OECD’s annual Life Satisfaction Survey.

Many of the countries with the longest hours worked tend to have especially low minimum wages. Of the five countries with the longest typical work week, three have a minimum wage of less than $3.50. These are the wealthy countries you don’t want to work abroad in.

Click here to see how long the average work week is around the world
Click here to read our methodology

​JANUARY NEWSLETTER 1

​Tesla, Inc. (NASDAQ: TSLA) reported its most recent quarterly results after the closing bell on Wednesday. The electric vehicle (EV) giant said that it had $2.14 in earnings per share (EPS) and $7.38 billion in revenue, compared with consensus estimates that called for $1.72 in EPS and $7.02 billion in revenue. The fourth quarter from last year had $1.93 in EPS and $7.23 billion in revenue.

For the quarter, automotive sales increased 1% year over year to $6.37 billion, with a gross margin of 22.5%. Tesla reported record deliveries of 112,095 in the fourth quarter.

Separately, the company reported record storage deployment of 530 MWh and 26% solar growth quarter over quarter.

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Looking ahead to the 2020 full year, the company said that it should comfortably exceed 500,000 in deliveries. This is due to the ramp-up of Model 3 in Shanghai and Model Y in Fremont. Tesla further believes that production will likely outpace deliveries this year. Both solar and storage deployments should grow at least 50% in 2020.SPONSORED BY YANDY
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Management said that it expects positive GAAP net income going forward, with possible temporary exceptions, particularly around the launch and ramp of new products. Consensus estimates are calling for $6.01 in EPS and $30.6 billion in revenue for the full year.

Elon Musk, Chairman, Founder, and CEO, commented:

For most of 2019, nearly all orders came from new buyers that did not hold a prior reservation, demonstrating significant reach beyond those who showed early interest. Amazingly, this was accomplished without any spend on advertising. As more people drive our cars and as the industry rapidly validates electrification, interest in our products will continue to grow

Shares of Tesla closed Wednesday at $580.99, in a 52-week range of $176.99 to $594.50. The consensus price target is $368.35. Following the announcement, the stock was up about 7% at $623.10 in the after-hours trading session.

​DIVIDEND STOCKS

​The Dow Jones industrial average has made an atypical move this year. So far, after a month of trading, it is down 0.99% to 28,256.03. Due to the current anxiety that the spreading coronavirus could become a plague, the market could go much lower. Among the 30 Dow stocks, one has handily outperformed them all in 2020. McDonald’s Corp. (NYSE: MCD) stock is up 8.28% to $213.97, near a five-year high.

McDonald’s is not isolated from the spread of coronavirus in China. It has about 3,000 stores there. Hundreds have been closed and more could follow. But McDonald’s posted strong earnings for 2019 and reminded investors how much money it has returned to them via stock buybacks and dividend payments.

For 2019, McDonald’s revenue was flat at $21 billion year over year. Net income was up 2% to $6 billion. Fourth-quarter numbers were what impressed Wall Street. The global comparable sales jump of 5.9% demonstrated broad-based strength, with increases in the International Operated segment of 6.2%. In the United States, the increase was 5.1%. McDonald’s appears to have put several quarters of slow growth behind it.

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The earnings, and overall bulk of $21 billion in revenue, shows how much McDonald’s dominates the fast-food business. Chick-fil-A may have gotten headlines for how much people favor its chicken sandwiches. People may flock to Starbucks for breakfast. But McDonald’s owns the 24-hour clock of people who want food, albeit often unhealthy meals, for just a few dollars.

More important to investors now is the extent to which McDonald’s is a safe haven. When earnings were posted, management commented, “The Company returned $2.3 billion to shareholders through share repurchases and dividends in the fourth quarter and $8.6 billion for the full year, marking successful achievement of the Company’s targeted return of $25 billion for the three-year period ended 2019.” The generosity continues. McDonald’s has a $1.25 per quarter dividend. That is a 2.31% yield.

McDonald’s period as a growth stock is years behind it. However, it has become a steady performer on the top and bottom line, with a return to investors rarely available elsewhere.

START UP

​STOCK UP

​After a nice run, which was punctuated during the confrontations with Iran early this month, the benchmark price of oil, which reached almost $65 a barrel for West Texas Intermediate, has been absolutely hammered, down over 17% since January 6. While the future of the internal combustion engine is probably dim, the electric vehicle revolution will not change the status quo anytime soon.

Given the dramatic drop in energy price, and the beating that some of the top stocks in the industry have taken, combined with the low interest rate environment, with yields on Treasury debt tumbling in January, we decided to screen the Merrill Lynch energy research universe looking for big dividend payers rated Buy.

We came across four top companies that pay rich dependable dividends and should continue to battle through the weakness in the sector until we get to the summer driving and travel season. All are suitable for growth and income accounts looking for total return potential.

Energy Transfer

This top energy master limited partnership is a very safe way for investors looking for energy exposure and income. Energy Transfer L.P. (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all the major domestic production basins.

Energy Transfer is a publicly traded limited partnership with core operations that include complimentary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (NGLs) and refined product transportation and terminaling assets; NGL fractionation; and various acquisition and marketing assets.

Through its ownership of Energy Transfer Operating, formerly known as Energy Transfer Partners, the company also owns Lake Charles LNG Company, as well as the general partner interests, the incentive distribution rights and 28.5 million common units of Sunoco, and the general partner interests and 39.7 million common units of USA Compression Partners.

Investors receive an outstanding 9.67% distribution. Merrill Lynch has a $20 price objective on the shares, while the Wall Street consensus figure is $19.81. The stock closed trading on Tuesday at $12.70 per share.

Exxon Mobil

This remains a top Wall Street energy pick, and it is a safer long-term play for conservative investors. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.

Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products. Note that Exxon has one of the highest paid American CEOs.

The company reported better third-quarter results that did have some positive trends, and Merrill Lynch noted this at the time:

ExxonMobil’s third quarter is underlined by momentum towards a target to double cash-flow by 2025 with visible growth in exploration and production leading the way. Project execution remains strong while peer leading balance sheet allows for countercyclical investment at advantaged costs. With asset sales set to close any deficit in cash-flow, the company’s strategy clears the way for future rateable dividend growth.

Fourth-quarter results are expected on Friday, January 31.

The company raised the dividend last year by a nickel per share to $0.87, which now translates to a solid 5.08% dividend. The Merrill Lynch price objective is $100, but the posted consensus target price is much lower at $77.76. Exxon Mobil stock closed at $64.65 a share on Tuesday.


Occidental Petroleum

This energy company made huge news last year with a Warren Buffett backed purchase of Anadarko Petroleum. Occidental Petroleum Corp. (NYSE: OXY) is an oil-levered multinational organization with principal business segments in oil and gas and in chemicals.

The oil and gas segment explores for, develops, produces and markets crude oil and natural gas, primarily in the U.S. Permian Basin, Colombia, Bolivia, Libya, Oman, Qatar and Yemen. Meanwhile, the chemicals segment manufactures and markets basic chemicals, vinyls and performance chemicals.

The shares have underperformed since the Anadarko acquisition was announced, but the investment case anchored by yield has not changed. With its rock-solid balance sheet and a commitment to dividend coverage, investors look safe for now.

Occidental Petroleum offers shareholders a massive 7.66% dividend. The huge $80 Merrill Lynch price target compares with the much lower $54.85 consensus target, as well as the most recent close at $41.20 a share.


Schlumberger

This top oil services company is expected to benefit from increased global exploration and production spending, and it is also on the Stifel Select List. Schlumberger Ltd. (NYSE: SLB) is the world’s largest provider of services and equipment used in drilling, evaluation, completion, production and maintenance of oil and natural gas wells.

The company operates in the oilfield service markets through three groups: Reservoir Characterization, Drilling and Production. Reservoir Characterization Group consists of the principal technologies involved in finding and defining hydrocarbon resources. These include WesternGeco, Wireline, Testing Services and Schlumberger Information Solutions.

Rising activity, backlog additions for integrated projects and the possibility that international pricing has bottomed, and should improve the rest of 2020, are all positive data points for the stock. The company is leveraged to improving international activity and has a strong free-cash-flow, and potential asset sales should bolster the balance sheet. Limiting SPM investment and disciplined capital spending plans also should keep the sizable dividend safe.

Schlumberger shareholders receive a generous 5.59% dividend. Merrill Lynch has set its target price at $45. The posted consensus price target was last seen at $43.38, and the shares ended trading on Tuesday at $33.96 apiece.

​DISEASE

​The amount of time workers spend at the office every week depends a great deal on the industry in which they work. But industry is just one factor determining how long people work; another is the country where they live. In some more affluent nations around the world, the typical work week for full time employees is well under 40 hours, but it is close to 50 hours in others.

24/7 Wall St. reviewed data on the typical number of hours worked per week among full-time employees in 37 mostly affluent nations from the Organisation for Economic Co-operation and Development. We listed these countries from the shortest typical work week to the longest. 

As might be expected, workplace laws and conventions in the countries with shorter typical work weeks are often more favorable towards workers than laws in countries with longer work weeks. Countries with shorter work weeks also tend to have better overtime compensation and regulations and more favorable parental leave laws. A number of the countries on this list with shorter work weeks also happen to have substantial government-mandated vacation time. These are the countries with the most vacation time. 

While some find their work lives fulfilling, countries with shorter work weeks tend to have residents with higher life satisfaction. Leisure time appears to be an important contributing factor to life satisfaction — the countries with longer typical work weeks had lower life satisfaction scores based on the OECD’s annual Life Satisfaction Survey.

Many of the countries with the longest hours worked tend to have especially low minimum wages. Of the five countries with the longest typical work week, three have a minimum wage of less than $3.50. These are the wealthy countries you don’t want to work abroad in.

Click here to see how long the average work week is around the world
Click here to read our methodology

​EARNINGS

NextTier Oilfield Solutions

This is another company that is less well known to investors but has massive upside to the Stifel target. NextTier Oilfield Solutions Inc. (NYSE: NEX) is an industry-leading U.S. land oilfield service company with a diverse set of well completion and production services across the most active and demanding basins. The company’s integrated solutions approach delivers efficiency, and the firm’s ongoing commitment to innovation helps its customers better address what is coming next.

NexTier is differentiated through four points of distinction, including safety performance, efficiency, partnership and innovation. The Stifel analysts are very positive on the outlook and said this in the report:

Leading pressure pumper; synergies from recent merger likely a positive in 2020; recent agreement in the Middle East could provide growth opportunity; industry underinvestment and fleet attrition a potential plus for 2021; and compelling valuation with projected 2020-21 free-cash-flow yields over 15%.

Stifel has a huge $11 price target, which is above the consensus target of $9.01. The shares were last seen trading at $6.51 apiece.

ALSO READ: Bull Market Risks & Opportunities From 2019 Into 2020: Apple, Microsoft, Amazon, Boeing, IBM, Exxon and More

Schlumberger

This top oil services company is expected to benefit from increased global exploration and production spending, and it is also on the Stifel Select List. Schlumberger Ltd. (NYSE: SLB) is the world’s largest provider of services and equipment used in drilling, evaluation, completion, production and maintenance of oil and natural gas wells.

The company operates in the oilfield service markets through three groups: Reservoir Characterization, Drilling and Production. Reservoir Characterization Group consists of the principal technologies involved in finding and defining hydrocarbon resources. These include WesternGeco, Wireline, Testing Services and Schlumberger Information Solutions.

Rising activity, backlog additions for integrated projects and the possibility that international pricing has bottomed and should improve the rest of 2019 should be supportive of improving earnings over the next few years, and the analysts noted this:

Leveraged to improving international activity; strong free-cash-flow expected; potential asset sales should bolster balance sheet; limiting SPM investment and disciplined capital spending plans; and dividend appears safe.

Schlumberger offers shareholders a massive 4.98% dividend. Stifel has set a $47 target price for the shares. The posted consensus target is lower at $42.66, and the stock ended trading at $40.17 on Thursday.

ANALYSIS

The most recent coronavirus outbreak that originated in Wuhan in the Hubei province of China has become more deadly and is much less contained than global health officials would have hoped. The death toll has risen to over 40 out of a most recent report of more than 1,300 who have caught the virus. With Wuhan and surrounding cities closed off, there are already rippling effects being felt. The United States has organized a charter flight removal for U.S. citizens who are in Wuhan, a city of about 11 million people that is a major transportation hub inside China, and other nations are pursuing the same strategy.

The loss of life and suffering from illness is always the worst part of any outbreaks, epidemics and pandemics. There is also an economic case that has to be considered in a global economy where a virus moves from one nation to others and begins to shut down parts of local economies and when it begins impacting other nations.

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One issue which is going to complicate the impact of the rapid spreading of coronavirus outbreak in China is that the timing of the wider spreading virus was at the start of Chinese New Year, which coincidentally happens to be the Year of the Rat. The Lunar New Year was already expected to close much of China for the week ahead. Now the coronavirus has already hurt public events and ceremonies, with many events having just been cancelled. China has even temporarily closed some 70,000 movie theaters to help curb the spread of the coronavirus.

Before considering how outbreaks turn into epidemics and then into pandemics, the newest coronavirus outbreak is far from the first such case in the modern era. There have been multiple Ebola scares in the last few years alone coming out of Africa. A cholera outbreak in Yemen, swine flu in India, and other outbreaks have been far more deadly as of this time. There have also been multiple others such as swine flue and avian flu that have been great concerns and which have been devastating to animal populations. And SARS, which was reported to be less than 1,000 deaths back in 2003, was perhaps the most memorable of the outbreaks in Asia as one of the first modern era global scares.

There is no simple way to try to minimize or discount deadly viruses and other outbreaks. One issue of relevance to consider is that there are thousands of deaths per year in the United States alone that come from each flu season that are tied to influenza and pneumonia that occur. The U.S. Centers for Disease Control and Prevention (CDC) has already estimated that the 2019/20 flu season has seen 15 million to 21 million cases of the flu through just January 18, 2020 — with 140,000 to 250,000 hospitalizations and an estimate of 8,200 to 20,000 flu-related deaths. As with most illnesses, the mortality rates are generally much higher among those who are infants, the elderly, those with cardiopulmonary conditions and those with compromised immune systems.

China has halted almost all public transit in and out of Wuhan and the surrounding areas in an effort to contain the coronavirus from spreading even more than it has. On top of the isolated cases in the United States, confirmed cases have also been reported in Vietnam, Thailand, Nepal, South Korea, Japan, Singapore, France, Australia, Taiwan and in the territories of Hong Kong and Macau.

At this stage, it may seem too soon and too difficult to try to calculate the economic impact in China, the U.S. and globally. Most pandemic scares and other geopolitical scares usually come with only short-term economic and market impacts. What is not impossible to see right now is that there has already been billions and billions of lost market capitalization rates in dollars among just some of the the top Chinese companies listed in America and in the value of U.S. companies which have direct exposure to Wuhan and other closures or curtailing of operations around China.

General Motors Co. (NYSE: GM) has a large manufacturing facility in Wuhan, as do other global auto-makers. With a 1.6% loss to $34.31 on Friday, GM lost about $750 million in market cap. Anheuser-Busch InBev SA (NYSE: BUD) has a large brewing facility in Wuhan, which was its first in China. The ADSs of AB/InBev fell 0.66% to $77.74 on Friday for a loss of close to $1 billion in market capitalization. Other U.S. and Western businesses are halting their or curtailing their operations locally or around China.

The Walt Disney Company (NYSE: DIS) announced that it was closing its Disneyland and Disneytown parks in Shanghai. Its shares slid 1.5% to $140.08 on Friday, and while that’s not the end of a run it is a loss of $3.8 billion in market capitalization. That also represents the lowest closing price going back to last November before its shares jumped from about $138.00 to $to $147.00.

​McDonald’s Corporation (NYSE: MCD) has announced that it was closing its restaurant locations in Wuhan and surrounding cities where transportation has been hated. Its shares lost 1% to close at $211.24 on Friday, a loss of about $1.6 billion in market cap. Starbucks Corporation (NASDAQ: SBUX) has also reportedly closed an unspecified number of stores in China. The 1.8% drop to $92.03 on Friday was close to a $2 billion loss in its market capitalization.

The U.S. air carriers are even taking a hit. United Airlines Holdings, Inc. (NYSE: UAL) saw a 3.5% price drop on Friday to $81.90. American Airlines Group Inc. (NASDAQ: AAL) fell 4% to $27.64, with rival Delta Airlines Inc. (NYSE: DAL) falling the least of the big three with a 2.4% drop to $58.81 on Friday. All three of the majors have made allowances for schedule changes for flights in and out of China.

There are many other companies in major economic sectors which have been and will be affected by the most recent coronavirus outbreak.

Yum China Holdings, Inc. (NYSE: YUMC) saw its shares fall from almost $50.00 at the end of the prior week down to $44.25 by this week’s close. Yum China has closed some KFC and Pizza Hut stories in Wuhan. YUM! Brands, Inc. (NYSE: YUM), which collects a royalty from its former subsidiary, saw its shares down almost 1% at $104.98 on Friday.

Luckin Coffee Inc. (NASDAQ: LK), the recent hot IPO that is dubbed ‘the Starbucks of China’ saw its shares drop over 8% to $40.83 on Friday alone. That is down from about $50 just the week before. By losing close to $20% of its value from the prior week, that’s a market cap of $2.1 billion loss from its recent peak.

Melco Resorts & Entertainment Limited (NASDAQ: MLCO), with its main resorts and casinos in Macau, was a standout on Friday with a gain of 3-cents to $21.24, but this was trading at $25.00 just the week earlier.

China Life Insurance Company Ltd. (NYSE: LFC) is worth $115 billion even after losing 1.6% on Friday and having lost close to 8.4% from the prior week’s closing bell. That’s roughly a loss of $10 billion in market cap for the week.

New Oriental Education & Technology Group Inc. (NYSE: EDU) saw a 3.4% drop to $124.61 on Friday, but the top Chinese education company had been above $135.00 just the prior week. TAL Education Group (NASDAQ: TAL) fell 3.6% to $46.68 on Friday and that is down from $54.00 just the prior week. That’s a combined $1.6 billion or so in market cap losses just on Friday, and even greater for the whole week.

Huazhu Group Limited (NASDAQ: HTHT), a hotel operator in China, saw a 2.5% drop to $32.31 on Friday, but this was down from above $39.00 just a week earlier. That’s close to $2 billion in market cap lost in this week.

Trip.com Group Limited (NASDAQ: TCOM), the leader in online travel (including Ctrip.com), saw its shares drop by 6.9% to $31.90 on Friday alone, and this was a $39.00 stock just the week before. The company has allowed for expanded cancellations in hotels. That’s a loss of about $1.3 billion in market just on Friday and a weekly loss of closer to 44.5 billion in lost market cap.

China Southern Airlines Company Limited (NYSE: ZNH) saw its ADSs fall 2.5% to $29.59 on Friday alone, but the loss for the week was more than 13% and that translates to over $1 billion in losses to the current $9.9 billion level. China Eastern Airlines Corporation Limited (NYSE: CEA) saw its ADSs fall 1.4% to $24.09 on Friday, but that down over 12% for the week for a total weekly loss of more than $1 billion in market capitalization.


​Stocks hit new all-time highs before recent days brought weakness around the coronavirus, which has now escalated into an international health emergency (WHO declaration). Stocks managed to recoup most of Thursday’s earlier losses to close up on the day, after having been down sharply at the open. The Dow Jones industrials and S&P 500 were indicated to open down about 0.4% or so on Friday.

Many investors still have not made portfolio changes since the very strong market in 2019. This is also an election year in which much is at stake, and strategists overall are calling for single-digit percentage gains in 2020.

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24/7 Wall St. reviews dozens of analyst research reports each day of the week with a goal of finding new ideas for traders and long-term investors alike. Some of the daily analyst calls cover stocks to buy, while some calls cover stocks to sell or to avoid.

We have provided these analyst calls in a quick-hit summary for easy reading, and additional comments and trading data have been added on many of the calls. The consensus analyst price targets and other valuation metrics are from the Refinitiv sell-side research service.

Just like that, the end of the first month of 2020 is here. These are the top analyst upgrades, downgrades and initiations from Friday, January 31, 2020.

AGNC Investment Corp. (NASDAQ: AGNC) was down 1.3% at $18.50 right before Thursday’s closing bell, with a consensus target price of $17.61. Wedbush Securities reiterated its Neutral rating and raised its target price to $19.25 from $18.25, based on higher tangible book value and better dividend coverage.

Amazon.com Inc. (NASDAQ: AMZN) closed up 0.7% at $1,870.68 ahead of earnings, and Friday’s post-earnings reaction had shares trading up over 10% at $2,065.00 in early indications. Amazon already had seen many analysts hike their price targets ahead of the report, and its consensus target price was $2,191.96. The company is now the fourth tech giant in the $1 trillion market cap club.

KeyBanc reiterated its Overweight rating on Amazon and raised its target price to $2,400 from $2,200. Raymond James reiterated it as Outperform and raised its target price to $2,400 from $2,020. Wells Fargo reiterated its Overweight rating and raised its target to $2,500 from $2,300. Credit Suisse reiterated its Outperform rating and raised its target to $2,400 from $2,100. Mizuho reiterated it as Buy and raised its target to $2,400 from $2,150. Goldman Sachs reiterated its Buy rating and raised its target to $2,600 from $2,200. Other firms have raised target prices as well.

Amgen Inc. (NASDAQ: AMGN) closed down 0.4% at $226.15 ahead of earnings and was last seen trading down 2.9% at $219.50 in the post-earnings reaction, compared with a prior $245.50 consensus target price. Robert W. Baird downgraded it to Underperform from Neutral but lifted its target price to $185 from $173.

Beazer Homes USA (NYSE: BZH) was downgraded to Neutral from Outperform with a $16 target price (versus a $17.21 prior close) at Wedbush, with the valuation downgrade taking place after its price target was achieved.

Coca-Cola Co. (NYSE: KO) was up 3.2% at $58.86 on Thursday’s post-earnings reaction, with a $60.29 consensus analyst target. UBS reiterated its Buy rating and raised its target price to $65 from $63.

Danaher Corp. (NYSE: DHR) was reiterated as Buy and its target price was raised to $195 from $180 (versus a $169.05 close) at Citigroup.

Electronic Arts Inc. (NASDAQ: EA) traded down 0.5% at $111.64 before earnings, and the post-earnings reaction had shares down another 1.7% at $109.75. EA had a $115.31 consensus target price. Wedbush reiterated it as Outperform with a $135 target price. UBS reiterated its Buy and raised its target to $126 from $122, while Nomura/Instinet reiterated its Buy rating and raised its target to $120 from $110.

Global Blood Therapeutics Inc. (NYSE: GBT) was downgraded to Hold from Buy with a $75 target price (versus a $67.98 close) at SunTrust Robinson Humphrey.

International Business Machines Corp. (NYSE: IBM) finally named a new CEO, Arvind Krishna (head of the strategic imperatives), with Rometty to stay as board chair. IBM shares initially rose more than 4% to $143, after closing at $136.77 on Thursday. Nomura/Instinet reiterated IBM as a Buy with a $170 target price.

Jazz Pharmaceuticals PLC (NASDAQ: JAZZ) was reiterated as Buy and the target price was raised to $171 from $166 (versus a $145.29 close) at SunTrust Robinson Humphrey. The firm believes its small-cell lung cancer could be approved in the second half of this year and that lurbinectedin has significant market potential.

KB Home (NYSE: KBH) was named as the Bull of the Day at Zacks, which said that the stock is in the midst of a stellar year. Shares most recently closed at $38.02, with a consensus price target of $40.00.

BOEING


​EARNINGS RELEASE

​Apple Inc. (NASDAQ: AAPL) is scheduled to release its fiscal first-quarter financial results after the markets close on Tuesday. The consensus estimates are calling for $4.55 in earnings per share (EPS) and $88.5 billion in revenue. The same period of last year reportedly had $4.18 in EPS and $84.3 billion in revenue.

The iPhone giant has seen its shares surge ever higher, and analysts chasing the stock also have many scenarios for additional upside, perhaps even to $400. At $312 a share or so now, it has continued hitting all-time highs and has a market cap of about $1.4 trillion.

iPhone sales reached an extraordinary level of 78 million in the holiday quarter of 2016. Sales have run below that since then, sometimes much below. Analysts believe that new iPhones have not been enough of an upgrade from their predecessors over the past three years. The upgrade cycle slowed. However, it may have picked up again.

The iPhone 11 has sold briskly, according to nearly every estimate of its unit sales. The holiday quarter was the first when the iPhone 11 was available for an entire quarter. The iPhone 11’s camera, speedy processor, video capture and battery life appear to be different enough from earlier iPhones that the “replacement cycle” may have sped up. It will need to have surged for Apple stock to move higher than the 100% rise that it has posted over the past year.

If iPhone sales did indeed hit record levels, investors will begin to look to the iPhone 12. It should be released this fall. There are rumors that there will be six versions. That means it will be available at enough price points that people who want an “affordable” version can buy an iPhone 12. A fully featured model will sell for well over $1,000. Apple sales have shown in the past that there is a model for iPhones this expensive.

Excluding Tuesday’s move, Apple stock had outperformed the broad markets with a gain of 96% in the past 52 weeks. Over the past quarter, the stock was up 27%.

Here’s what some analysts had to say ahead of the report:

Nomura/Instinet reiterated its Neutral rating on January 17, but its $225 target, which had been close to a street-low, was hiked to $280.
Morgan Stanley reiterated its Overweight rating and raised its target price to $368 from $296 on January 17.
Canaccord Genuity reiterated its Buy rating and raised its target to $355 from $275 on January 15.
Atlantic Equities downgraded it to Underweight from Neutral with a $275 price target on January 14.
D.A. Davidson reiterated a Buy rating and raised its price target to $375 from $300 on January 13.
Credit Suisse reiterated it as Neutral but raised its price target from $221 to $275 on January 10.
Needham reiterated a Strong Buy rating and raised its price target to $350 from $280 on January 6.
Merrill Lynch reiterated a Buy rating and raised its price target to $330 from $290 on January 3.
Wedbush reiterated it as Outperform and raised its price target to $325 from $350 on December 23.
Piper Jaffray reiterated it as Overweight and raised its target price to $290 from $305 on December 20.
Cowen reiterated an Outperform rating and raised its price target to $290 from $325 on December 17.

Shares of Apple were last seen up about 1% at $312.08 on Tuesday, in a 52-week range of $154.11 to $323.33. The consensus price target is $295.00.

​As the spread of the coronavirus has increased, with more countries now having patients and higher numbers of cases and deaths in China, the economic impact is being felt even in many areas where the exposure might be limited. It is not unusual for stocks to sell off when there are major illness outbreaks or other global scares, but this is one of those situations when the current consensus is that things are more likely to get worse before they get better.

What has happened in China already is having a severe impact. Wuhan, the city of over 11 million people where the coronavirus outbreak began, is still shut down as far as transportation in or out. Hong Kong was reported to be restricting access to anyone who had been to Wuhan in the past two weeks. President Xi called it a grave situation and has limited travel out of China by large groups. Airlines have cut flights and made certain allowances for cancellations or flight changes in affected areas.

It gets even worse. Some schools have shut down beyond the New Year celebration times. Many retailers have closed or curtailed operations locally in China, with Wuhan targeted first, and making plans if other cities become issues. Large crowd-based venues such as theme parks, movie theaters and Lunar New Year gatherings have been shut, and the Chinese people themselves are just not traveling as they may have normally. Macau visits are ready down sharply.

24/7 Wall St. has viewed a direct selling impact on many specific industries in China and in U.S. companies with large exposure to Wuhan and to the broader China and Asia-Pacific region.

Melco Resorts & Entertainment Ltd. (NASDAQ: MLCO) shares were down 4.6% at $20.26 on Monday due to its dominance from Macau, and that was a $25 stock less than two weeks ago. Las Vegas Sands Corp. (NYSE: LVS) also operates in Macau, and its shares were down 6% to $63.76, after having been at $74 before the coronavirus news.

Several U.S. and Western companies with large exposure are also feeling the bite of the coronavirus. General Motors Co. (NYSE: GM) has a large manufacturing facility in Wuhan, as do other global automakers. With a 1.6% loss to $34.31 on Friday, GM lost about $750 million in market cap, and its shares were down another 2.2% at $33.54 on Monday. Anheuser-Busch InBev S.A. (NYSE: BUD) has a large brewing facility in Wuhan, its first in China. Its American depositary shares (ADSs) fell 0.66% to $77.74 on Friday for a loss of close to $1 billion in market capitalization. Its stock was down almost 3% at $75.50 on Monday.

Walt Disney Co. (NYSE: DIS) announced that it was closing its Disneyland and Disneytown parks in Shanghai, and any movie theater ban is rarely good for one of the top filmmakers. Its shares slid 1.5% to $140.08 on Friday, and while that’s not the end of a run, it was already a loss of $3.8 billion in market capitalization. That also represents the lowest closing price going back to last November, before its shares jumped from about $138 to $147. Disney stock was down another 2.75% at $136.25 on Monday.

There is a direct impact on restaurant sales as well. Some have shut locations and eaters are staying home. McDonald’s Corp. (NYSE: MCD) has announced that it would close its restaurant locations in Wuhan and surrounding cities where transportation has been halted. Its shares lost 1% to close at $211.24 on Friday, a loss of about $1.6 billion in market cap. McDonald’s was down another 0.5% at $210.26 on Monday. Starbucks Corp. (NASDAQ: SBUX) also reportedly closed an unspecified number of stores in China, and the 1.8% drop to $92.03 a share as of last Friday represented close to a $2 billion loss in its market capitalization. It saw an even larger drop of 3.3% to $89.00 on Monday.

Yum China Holdings Inc. (NYSE: YUMC) saw its shares fall from almost $50 at the end of the prior week to $44.25 by this past week’s close. Yum China has closed some KFC and Pizza Hut stores in Wuhan, and others can be closed if necessary. Yum China was down another 4.3% at $42.33 on Monday. Yum! Brands Inc. (NYSE: YUM), which collects a royalty from its former subsidiary, saw its shares down almost 1% at $104.98 on Friday and then another 0.6% drop to $104.35 on Monday.

Luckin Coffee Inc. (NASDAQ: LK), the recent hot IPO that is dubbed the “Starbucks of China,” saw its shares drop over 8% to $40.83 on Friday alone, and its shares were down another 6.4% to $38.23 on Monday. That is down from about $50 just the week before. By losing close to $20% of its value from the prior week, that’s a market cap loss of $2.1 billion from its recent peak


As with most health scares, airlines were hit extra hard, particularly the Chinese air carriers. China Southern Airlines Co. Ltd. (NYSE: ZNH) saw its ADSs fall 2.5% to $29.59 on Friday, but the loss for the week was more than 13%, and that translates to over $1 billion in losses to the then-current $9.9 billion level. That was down another 7% on Monday to $27.52. China Eastern Airlines Corp. Ltd.’s (NYSE: CEA) ADSs fell 1.4% to $24.09 on Friday, down over 12% for the last week. Its shares were down another 7% to $22.40 on Monday.

The U.S. air carriers even took a hit as all three majors have made allowances for schedule changes for flights in and out of China. United Airlines Holdings Inc. (NYSE: UAL) saw a 3.5% price drop on Friday to $81.90, with an even larger drop of 4.6% to $78.10 on Monday. American Airlines Group Inc. (NASDAQ: AAL) fell 4.0% to $27.64 on Friday and another 5.1% to $26.25 on Monday. Delta Airlines Inc. (NYSE: DAL) fell the least of the big three, with a 2.4% drop to $58.81 on Friday, but it was down another 3.7% to $56.65 on Monday.

Being a life insurer in a potential pandemic may not be the safest play in finance. China Life Insurance Co. Ltd. (NYSE: LFC) is worth $115 billion, even after losing 1.6% on Friday and losing close to 8.4% from the prior week’s closing bell. That’s roughly a loss of $10 billion in market cap for the week. Its U.S.-listed shares were down another 4.4% to $12.40 on Monday, with a market cap of closer to $111 billion.

If schools are closing or are at risk of closure, it’s bad business for the major educators as well. New Oriental Education & Technology Group Inc. (NYSE: EDU) saw a 3.4% drop to $124.61 on Friday, but the top Chinese education company had been above $135 the prior week. New Oriental was down another 2% at $122.05 on Monday. TAL Education Group (NASDAQ: TAL) fell 3.6% to $46.68 on Friday, and that is down from $54.00 the prior week. It was one of the surprise winners with a 2.4% gain to $47.80 on Monday. Those two companies saw a combined $1.6 billion or so in market cap loss just on Friday, and more than a $2 billion loss over last week.

If travel is down, so is the need for hotels, and hotels are often avoided during health scares. Huazhu Group Ltd. (NASDAQ: HTHT), a hotel operator in China, saw a 2.5% drop to $32.31 on Friday, but this was down from above $39 just a week earlier. That’s close to $2 billion in market cap lost in a week. Huazhu was up 2.3% at $33.05 on Monday

Trip.com Group Ltd. (NASDAQ: TCOM), the leader in online travel (including Ctrip.com), saw its shares drop by 6.9% to $31.90 on Friday, and this was a $39 stock just the week before. The company has allowed for expanded cancellations in hotels. That’s a loss of about $1.3 billion in market cap just on Friday, and a weekly loss of closer to $4.5 billion. While it was down as low as about $29 on Monday morning, its shares had come back to show a gain of just over 1% to $32.20 in midday trading.

Taking cruises during major health scares is frowned upon. Ships have been the source of many illnesses, without larger public health scares, and passengers might not be as hygienic as they should be when they are in close quarters with a couple thousand other people all touching the same handles and railings. Norwegian Cruise Line Holdings Ltd. (NASDAQ: NCLH) was down 3% at $54.13 on Monday, and that’s down from $59.00 at the start of last week. Carnival Corp. (NYSE: CCL) was down almost 4% at $45.70 on Monday, and that was a $51.00 less than a full week ago. Royal Caribbean Cruises Ltd. (NYSE: RCL) was the hardest hit on Monday with a 6% drop to $118.90, and which is down from $135.00 just about 10 days ago.

Trying to compare losses in market capitalization is definitely not the same as true economic costs against the broader economy. But when you see the outright curtailing of operations and a “let’s stay in” mentality taking hold, it becomes impossible to believe that China’s gross domestic product will not feel an impact if these trends continue (or get worse) over the next few days. This all adds up to a negative impact on wages, sharply lower consumer spending, lower transportation trends, lower overall business trends and so on. Suddenly the multiple billions of dollars of real economic impact will bite into GDP of the massive Chinese economy — and potentially the U.S. economy if the coronavirus becomes a larger concern here..

During the almost 11-year run of this bull market, one thing has been painfully obvious to long-time investors: value stocks, and indeed the entire value arena, have woefully underperformed growth. Value stocks are those that tend to trade at a lower price relative to their fundamentals (including dividends, earnings and sales). Given the market uncertainty, most of which is tied directly to the current trade and domestic political issues, it makes sense to look at value and perhaps shift some capital there.

Each week, Jefferies presents some of its top value ideas, and this week’s group is chock full of well-known companies that, for a variety of reasons, have landed in value territory. All make sense for accounts looking to stay in equities but that are nervous about the potential for market turmoil. In addition, all pay healthy and dependable dividends.

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Digital Realty Trust

This top data center company is a solid play on the huge cloud and streaming content revolution, and Jefferies recently upgraded it to Buy. Digital Realty Trust Inc. (NYSE: DLR) supports the data center and colocation strategies of more than 600 firms across its secure, network-rich portfolio of data centers located throughout North America, Europe, Asia and Australia.

Digital Realty’s clients include domestic and international companies of all sizes, ranging from financial services and cloud and information technology services to manufacturing, energy, gaming, life sciences and consumer products. The company rates highest with portfolio managers, as close to 9% of the market cap of the company is in institutional hands.

The analysts cite the company’s solid dividend and the potential for dividend growth. They also feel that data center pricing is still favorable, and the growth in adoption of the cloud is a positive going forward.

Digital Realty investors receive a very solid 3.44% distribution. The Jefferies price target for the shares is $141. The Wall Street consensus price target is $126.19. Shares were last seen trading at $125.73 apiece.[Hot Pockets]
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Equitrans Midstream

Jefferies recently added this high distribution paying C corporation structured energy play to its Franchise Picks list. Equitrans Midstream Corp. (NYSE: ETRN) primarily engages in natural gas transmission, storage and gathering in the Appalachian Basin. The company’s only asset is its controlling 60% interest in EQM Midstream Partners.

The analysts are positive on the large payout to shareholders and noted this in a report earlier this month:

The company was added to the Franchise Pick list in December 2019. Shares offer a yield, and the analyst forecasts modest dividend growth ahead and sees a catalyst-rich 2020 as the company works to bring the ~$5.5 billion Mountain Valley Pipeline into service (90% complete today), renegotiates gathering contracts with its largest counterparty (EQT), and adapts to a significantly moderated Northeast production profile.

The analysts also said this in a new research piece:

We were out with our fourth quarter preview for the midstream and refining names. The topical fourth quarter items include: concern over E&P counterparty health amid weak commodity prices and declining rig activity, narrowing basis differentials, low interest rates and IMO 2020 effects along with weak cracks. Broadly, we expect 2020 guidance will focus on capital expenditure discipline, project execution and deleveraging.

The current distribution is a massive 14.55%. Jefferies has a $20 price target, while the consensus target was last seen at $16. The stock closed at $12.37 a share on Tuesda


​Huntsman

This top stock to buy offers intriguing potential for value expansion. Huntsman Corp.’s (NYSE: HUN) portfolio of businesses represents a diversified set of chemical products touching an even broader set of end markets.

The company reports across four business segments (Polyurethanes, Advanced Materials, Performance Products and Textile Effects) representing the revenues and profits from the company’s exposure to five primary chemical chains. Across many of these platforms, Huntsman operates a vertically integrated footprint from upstream commodities to downstream derivatives.

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Jefferies is very positive on the company and noted this:

The company now has one of the strongest balance sheets in the chemical sector. Combined with progress reducing cyclical risk, ample opportunity to grow faster than GDP due to innovation, we expect this to drive a re-rating in shares. On our sum-of-the-parts, using 6x forward EBITDA for Huntsman’s lower-quality businesses and 9x for the downstream businesses would support $32 a share in late 2020/first half of 2021 The lingering risk of a large M&A transaction remains, though our analysis suggests that even a large transaction could prove to be a net positive over the long-term.

Huntsman pays shareholders a respectable 2.85% dividend. The $32 Jefferies price target compares with the $26.88 consensus target and the most recent close at $22.77.24/7 Wall St.
5 Dividend Dow Stocks to Buy That Might Survive a Nasty Correction

Ventas

This is one of the top health care real estate investment trusts, and it may be one of the safest plays for more conservative accounts. Ventas Inc. (NYSE: VTR) is a fully integrated and self-administered equity REIT that acquires, invests and manages a portfolio of health care real estate across the United States, Canada and the United Kingdom.

The company’s diverse portfolio of approximately 1,200 assets consists of senior housing communities, medical office buildings, university-based research and innovation centers, inpatient rehabilitation and long-term acute care facilities, and health systems. Through its Lillibridge subsidiary, Ventas provides management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States.

The analysts recently upgraded the shares to Buy and noted this:

Ventas has been dealing with a supply glut in its markets but the data shows a pronounced decline in construction in the company’s markets since first quarter 2019 suggesting a turnaround in results ahead. We conducted various demographic analyses on the portfolios of the Healthcare REITs (population, 

​WORKWEEK

​This week will be perhaps the biggest week of earnings season, with many major names reporting. Last week we saw positive results lift the S&P 500, Dow Jones industrial average, and Nasdaq to all-time highs. And with the likes of Amazon, Facebook, Tesla, and more reporting, the markets could keep running.

This is also a huge week for the Dow Jones industrials, with nearly half of the index expected to report.

24/7 Wall St. has put together a preview of the most prominent earnings reports this week. We have included the consensus earnings estimates, as well as the stock price and trading history. Be advised that the earnings and revenue estimates may change ahead of the formal reports, and some companies may change reporting dates as well.

Beyond Meat Inc.’s (NASDAQ: BYND) fourth-quarter report is due late on Monday. The consensus estimates call for $0.01 in earnings per share (EPS) and $76.36 million in revenue. Shares ended the week shy of $120. The consensus price target is just $105.84, and the post-IPO range trading range is $45.00 to $239.71.

Fourth-quarter results for Biogen Inc. (NASDAQ: BIIB) are expected early on Tuesday. The consensus estimates are earnings of $7.95 per share on revenue of $3.53 billion. Shares traded slipped below $280 on Friday, while the consensus price target is $304.57. The 52-week range trading range is $215.78 to $338.87.

Starbucks Corp. (NASDAQ: SBUX) is scheduled to report its fiscal first-quarter earnings Tuesday afternoon. The consensus estimates call for $0.76 in EPS and revenue of $7.1 billion. Shares were changing hands near $92 as the week ended. The $95.48 mean price target compares with a 52-week trading range of $65.91 to $99.72.

eBay Inc. (NASDAQ: EBAY) is set to report its fourth-quarter earnings Tuesday after the close. The consensus estimates call for $0.76 in EPS and revenue of $2.81 billion. Shares were changing hands at $35.36 on last look. The $39.54 mean price target compares with the 52-week trading range of $32.77 to $42.00.

Advanced Micro Devices Inc. (NASDAQ: AMD) is scheduled to report its fourth-quarter results late Tuesday. The consensus estimates call $0.31 in EPS and revenue of $2.11 billion. The share price dropped below $51 on Friday. The analysts’ mean price target is $42.78, and the 52-week trading range is $19.05 to $52.81.

Look for Amgen Inc. (NASDAQ: AMGN) to share its most recent quarterly results after Tuesday’s closing bell as well. The consensus forecast calls for $3.51 in EPS and $6.08 billion in revenue for the fourth quarter. Shares closed below $226 on Friday. The consensus price target is just $243.36, and shares have traded between $166.30 and $244.99 in the past 52 weeks.

Alibaba Group Holdings Ltd.’s (NYSE: BABA) fiscal third-quarter report is due early on Wednesday. The consensus estimates call for $2.22 in EPS and $22.45 billion in revenue. Shares ended the week near $214. The consensus price target is $237.22, and the 52-week range trading range is $147.95 to $231.14.

The report from AT&T Inc. (NYSE: T) is expected Wednesday morning as well. The fourth-quarter consensus estimates are $0.87 EPS on revenue of $46.95 billion. Shares closed north of $38 on Friday, in a 52-week range of $28.92 to $39.70. The consensus price target is $39.17.

Mastercard Inc. (NYSE: MA) is set to release its fourth-quarter numbers before Wednesday’s regular trading begins. The consensus estimates call for $1.67 in EPS and revenue of $4.4 billion. Shares were last seen trading at $323.67 apiece. The consensus price target is $339.57, and the 52-week trading range is $197.66 to $327.09.

Look for General Electric Co. (NYSE: GE) to share its fourth-quarter numbers before Wednesday’s open. The consensus estimates call for $0.18 in EPS and revenue of $25.59 billion. Shares closed at $11.71 apiece, above the consensus price target of $11.27. The 52-week trading range is $7.65 to $12.24.

PayPal Holdings Inc. (NASDAQ: PYPL) will release its most recent quarterly results on Wednesday afternoon. The consensus forecast calls for $0.83 in EPS and $4.94 billion in revenue for the fourth quarter. Shares closed around $117 on Friday. The consensus price target is $129.24. The share price has ranged from $86.62 to $121.48 in the past 52 weeks.

Qualcomm Inc.’s (NASDAQ: QCOM) fiscal third-quarter report is due late on Wednesday. The consensus estimates call for $0.85 in earnings per share (EPS) and $4.83 billion in revenue. Shares ended the week below $90. The consensus price target is $99.25, and the 52-week range trading range is $49.10 to $96.17.

Fourth-quarter results for Tesla Inc. (NASDAQ: TSLA) are expected after Wednesday’s close. The consensus forecast sees earnings at $1.72 per share on revenue of $7.02 billion. Shares traded near $565 as the trading week closed, while the consensus price target is down at $368.35. The 52-week range trading range is $176.99 to $594.50.

Facebook Inc. (NASDAQ: FB) also is scheduled to report its fourth-quarter earnings Wednesday afternoon. The consensus estimates call for $2.53 in EPS and revenue of $20.88 billion. Shares were changing hands just below $218 on last look. The $245.92 mean price target is well above the 52-week trading range of $143.43 to $222.75.

Eli Lilly and Co. (NYSE: LLY) is due to report its fourth-quarter results early on Thursday. The consensus estimates call for $1.52 in EPS and revenue of $5.91 billion. The share price dropped to about $139 on Friday but was still above the analysts’ mean price target of $133.08. The 52-week trading range is $101.36 to $142.25.

The Alexion Pharmaceuticals Inc. (NASDAQ: ALXN) fourth-quarter report is due first thing Thursday as well. The consensus estimates call for $2.58 in EPS and $1.3 billion in revenue. Shares ended the week above $105. The consensus price target is $145.11, and the 52-week range trading range is $94.59 to $141.86.

Amazon.com Inc. (NASDAQ: AMZN) will share its most recent quarterly results after Thursday’s close. The consensus forecast calls for $4.04 in EPS and $85.9 billion in revenue for the fourth quarter. Shares closed trading at $1,861.64 on Friday. The consensus price target is $2,181.63, and shares have traded between $1,566.76 and $2,035.80 in the past 52 weeks.

Electronic Arts Inc. (NASDAQ: EA) is expected to report Thursday afternoon too. The fourth-quarter consensus estimates are $2.51 EPS on revenue of $1.96 billion. Shares closed at $112.33 on Friday, in a 52-week range of $78.00 to $114.13. The consensus price target is $111.90.

And watch for Honeywell International Inc. (NYSE: HON) to release its most recent quarterly results on Friday morning. The consensus forecast calls for $2.04 in EPS and $9.61 billion in revenue for the fourth quarter. Shares saw a year-to-date low of $176.49 on Friday. The consensus price target is $188.55. The share price has ranged from $138.87 to $184.06 in the past 52 weeks.

​ALASKA 

If any sector sputtered in 2019 it was energy, and the oilfield services stocks joined in for the disappointment. But what a difference a year can make. With both West Texas Intermediate and Brent crude trading over the $60 a barrel mark to start 2020, and a host of potential positives in the queue for the next 12 to 18 months, there could be some big money to be made in the top stocks in the services group.

In a new research report, Stifel feels there are indeed a host of positives in 2020 that could lead to strong 2021 earnings growth, and while some would be inclined to wait, it’s important to remember that the pros on Wall Street anticipate future developments and buy in advance.

In the report, the Stifel team listed six specific factors that could help the oilfield services arena. All are very positive forward metrics for the battered sector.

The reflation trade that favors cyclicals, as highlighted by Stifel’s U.S. Equity Strategist Barry Bannister.
An end to the downward estimate revision cycle for oil service stocks.
Weakening U.S. oil production growth.
Pressure pumping fleet attrition.
Continued underinvestment by oil service players.
Positive free cash flow generation.

Stifel is especially bullish on four top companies, two of which reside on the firm’s Select List of top stock picks. All four are rated Buy at the firm.

Baker Hughes

The analysts at Stifel made a big move by adding Baker Hughes Co. (NYSE: BKR) to the firm’s well-respected Select List of stocks to Buy. This is big as energy and oilfield services stocks have suffered last year while the major indexes have delivered 20% returns.

Baker Hughes is an international industrial service company and one of the world’s largest oilfield services companies. It provides the oil and gas industry with products and services for oil drilling, formation evaluation, completion, production and reservoir consulting.

General Electric recently gave up majority control of the company, selling shares that raised about $3 billion cash but triggered a more than $7 billion accounting charge. Stifel noted these positives in its report:

Strong free cash flow expected; rising international oilfield activity should drive margin improvement in Oilfield Services segment, robust LNG order flow creates solid visibility for Turbomachinery & Process Solutions business; GE ownership falling; and balance sheet remains strong.

Baker Hughes shareholders receive a solid 2.81% dividend. The Stifel price target for the shares is $31, while the Wall Street consensus target is $29.04. The stock closed most recently at $25.61 per share.

DMC Global

This off-the-radar company offers big upside to the Stifel price target. DMC Global Inc. (NASDAQ: BOOM) engages in the provision of technical products and services in the energy, industrial and infrastructure markets. It operates through the following segments.

The NobelClad segment produces explosion-welded clad metal plates for the construction of corrosion-resistant industrial processing equipment and specialized transition joints. The DynaEnergetics segment designs, manufactures and distributes products used by the global oil and gas industry, principally for the perforation of oil and gas wells.

The analysts pointed out some important items in the Stifel report:

Leading integrated perforating gun system; overall market rapidly adopting integrated perforating solutions over components; Free-cash-flow likely turns positive in 2020-21 following facility investments in 2018-19; and possibility of an acquisition exists although we believe management will remain very disciplined adding a business line.

Investors in DMC Global receive a 1.11% dividend. The bullish $59 Stifel price objective compares to an even higher Wall Street consensus target price of $64.50. The last trade on Thursday was recorded at $44.93.

It happens from time to time that even the most respectable companies find themselves with tarnished reputations. When bad reputations come to airline makers, it’s usually after tragedy has struck. In the case of The Boeing Company (NYSE: BA), the dual-tragedies of 737 MAX plane crashes in early 2019 brought some major reputation damage. The last six months have not brought much more comfort to airline passengers, regulators, nor to investors; and even ditching its CEO has not brought any instant reputation repair.

Picking a bottom in a stock like Boeing after facing the year it has faced is not very likely. After its shares traded above $445.00 a year ago, the most recent share prices under $320.00 should show that things are less than rosy. So how are investors supposed to react when they hear about a major financing package that Boeing is in need of to maintain healthy capital balances? It might actually be a good thing.

With reports of a financing package having been out in recent days, it looks like Boeing may have stronger than anticipated investor demand. According to CNBC, Boeing has commitments of more than $12 billion from bank lenders. That figure was expected to be closer to $10 billion in prior days.

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It may seem off to cheer that a major corporation is taking on debt. After all, if things were so rosy the company would have been able to be paying down debt rather than adding it on. The explanation is that the lending community believes that these worries over the 737 MAX grounding will be resolved, perhaps sooner rather than later. There are just going to be discrepancies over whose definitions get used in “sooner” and in “later.”SPONSORED BY ANASTASIA DATE US
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Boeing did have some decent news over the weekend that the new 777X maiden flight this weekend was a success, Similar to the MAX efforts, this is a larger refresh of an existing plane.

Boeing is expected to report earnings this week. There is likely no reason to be excited about the report itself, and it’s going to be next to impossible for Boeing to start offering up financial guidance for a year or two years out. After all, even if the 737 MAX is re-certified and cleared for flight, it’s going to take a long time just to get the previously-flown 737 MAX models back into service. Pilots will need more training. There is said to be a shortage of simulators. And how many test pilots will it take to make sure that every one of these planes that haven’t been delivered ready for delivery again?

There is also a risk that the public will fight back for some time and not want to fly on a 737 MAX. It would not be unprecedented, and it would be hard to blame consumers for wanting to not be first aboard. Picking a wrong shirt color or buying the wrong type of food doesn’t come with the same risks of getting aboard a plane that has undergone much scrutiny.

The ripple-effect of Boeing’s 737 MAX woes has led to a halt in production as there is limited room for any new planes to be held. On top of labor issues there, this is hurting the revenues of Boeing’s various parts, components and systems providers and suppliers. It’s also adding pressure to any airline who bought and was flying 737 MAX planes prior to the grounding. It has also caused airlines to have to shuffle around their assets (the fleet and their employees) out of some routes and into others.

Should a credit rating warning matter to creditors? Just last week came a warning from Standard & Poor’s that Boeing could face a credit downgrade (A- currently) Moody’s had issued a similar warnings for its A3 rating earlier in January.



With all that considered, even with what will be a much more critical FAA re-certification and clearance, investors should take note that an up-sized bond offering is probably the start of a good sign. There can still be no assurances that bankers willing to lend more money, particularly if it puts them higher in the capital structure, will lead to a faster clearance and resolution of the deadly 737 MAX fiasco. Time will have to decide on that.

Boeing shares were last seen down 1.5% at $318.10 on Monday afternoon, but the shares traded as low as under $315.00 earlier in the day when the news headlines were all about more cases and more bad news around China’s coronvirus scare. Boeing’s 52-week range is $302.72 to $446.01 and its market cap is about $179 billion.

OIL FIELD SERVICES


In a move that reflects the near panic about the spread of a new coronavirus that began in China, Apple Inc. (NASDAQ: AAPL) has closed every one of its stores there. Presumably, consumers in the world’s most populous country can still order Apple products online. The store closures show the seriousness with which American companies take the potential spread of the disease. It is too early to say how much it will affect bottom lines.

Apple’s statement about the decision read, “Out of an abundance of caution and based on the latest advice from leading health experts, we’re closing all our corporate offices, stores, and contact centers in mainland China through February 9.” February 9 is not a magical date. If the spread of the disease worsens, it is a safe assumption that Apple will stay closed, perhaps indefinitely.

Investors assume that most news from China will be bad news for Apple. Its stock dropped 4% on Friday. That is still barely a dip for shares that have risen 85% over the past year to very near an all-time high. The direction of the disease probably will determine the direction of the stock next week.

None of the news from China can entirely overshadow Apple’s recent quarterly results, which include the holiday period. Revenue for the quarter that ended December 28 was a record $91.8 billion. Earnings reached $4.99 per share, also a record. Luca Maestri, Apple’s chief financial officer, commented, “Our very strong business performance drove an all-time net income record of $22.2 billion and generated operating cash flow of $30.5 billion.” Among Apple’s current assets is $107 billion in cash and marketable securities.

The importance of China for Apple cannot be understated. It remains the world’s largest cell phone market. Apple’s revenue from what it calls “Greater China” was $13.6 billion in the most recent quarter. That was a very modest improvement from $13.2 billion in the same period a year ago. Since Apple is barely moving forward in China, it will not take much to force a step back.SPONSORED BY ANASTASIA DATE US
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Apple’s trouble in China reflects that of a number of other companies. When will it be safe just to walk the streets of the country’s biggest cities?

Daniel Cullinane CPA

25 Plaza 5 25th fl Jersey City NJ                                          phone 732-516-1648 fax 732-516-9778

MBA Taxation

Daniel Cullinane CPA

2500 Plaza 5 25th fl  Jersey City NJ 07311                                                          phone 732-516-1648  fax 732-516-9778

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Copyright ©​ Daniel Cullinane CPA.

​APPLE SHUTS DOWN CHINA

The current coronavirus outbreak that originated in Wuhan in the Hubei province of China has become even more deadly and less contained. And to add on more fears, there are now indications that the virus is easier to spread than originally thought. As of January 26, 2020, with official estimates still changing, there are more cases and more fatalities.   than global health officials would have hoped. And the reports now indicate that the virus can be spread even before symptoms appear.

Saturday’s count of more than 1,300 reported cases and more than 40 deaths has, as of Sunday morning reports, risen by perhaps another 1,000 cases with close to 60 deaths. On top of Wuhan and surrounding cities being closed off, outbound group travel from China has been suspended; and Hong Kong is now denying access to anyone who has been in Wuhan in the last two weeks.

The loss of life and suffering from illness is always the worst part of any outbreaks, epidemics and pandemics. Unfortunately, there is also an economic case that has to be considered in a global economy where a virus moves from one nation to others. This is when portions of local economies have shut down and the impact begins to spread into other sectors and to other nations.

Wuhan is a city of more than 11 million people that is a major transportation hub inside China, and other nations are pursuing the same strategy. The U.S. has organized a plane to remove Americans from the city and other nations are pursuing the same strategy. Shutting down a major transportation and manufacturing is one thing, but that tally of over 11 million people is roughly the size of the official populations of New York City and Los Angeles combined. With more cases and with more countries on the list of having confirmed cases, the coronavirus is bring additional challenges to what are already very fragile economies — and billions and billions of dollars are already showing up in stock losses for the companies with direct and indirect exposure.

To complicate the economic and fiscal impact further, the rapid spreading of the 2020 coronavirus outbreak in China also hit right at the start of Chinese New Year — which coincidentally happens to be the Year of the Rat. The Lunar New Year was already expected to close much of China for the week ahead. Now the coronavirus has brought event cancellations. China has temporarily closed some 70,000 movie theaters to help curb the spread of the coronavirus, and large event venues are being closed down for the time being. Again, all of this comes with a serious loss to the economy.

This coronavirus outbreak is far from the first such case in the modern era. SARS, which was reported to be less than 1,000 deaths back in 2003, was perhaps the most memorable of the outbreaks in Asia as one of the first modern era global scares. That had a direct impact on travel to China and the surrounding nations. There have been multiple Ebola scares in the last few years alone coming out of Africa. A cholera outbreak in Yemen, swine flu in India, and other outbreaks have been far more deadly than the numbers are indicating as of this date. There have also been multiple scares from swine flu and avian flu that have been great concerns and which have been devastating to animal populations. The 2019 African Swine Flu devastated China’s pig population and China has imported record levels of pork and other meats to replace the demand.

There is no simple way to try to minimize or discount deadly viruses and other outbreaks. One relative reference would be that there can be tens of thousands of deaths in the United States alone that come from each flu season. The U.S. Centers for Disease Control and Prevention (CDC) has already estimated that the 2019/20 flu season has seen 15 million to 21 million cases of the flu through just January 18, 2020, with 140,000 to 250,000 hospitalizations and an estimate of 8,200 to 20,000 flu-related deaths. As with most illnesses, the mortality rates are generally much higher among those who are infants, the elderly, those with cardiopulmonary conditions and those with compromised immune systems.

China has halted almost all public transit in and out of Wuhan and the surrounding areas in an effort to contain the coronavirus from spreading even more than it has. On top of the isolated cases in the United States, confirmed cases have also been reported in Vietnam, Thailand, Nepal, South Korea, Japan, Singapore, France, Australia, Taiwan and in the territories of Hong Kong and Macau. Canada has been added to the list of nations and as of Sunday morning there was a third confirmed U.S. case of a patient in California from a patient who had traveled to Wuhan.

At this stage, it may seem too soon and too difficult to try to calculate the economic impact in China, the U.S. and globally. Most pandemic scares and other geopolitical scares usually come with only short-term economic and market impacts. What is not impossible to see right now is that there has already been billions and billions of lost market capitalization rates in dollars among just some of the the top Chinese companies listed in America and in the value of U.S. companies which have direct exposure to Wuhan and other closures or curtailing of operations around China. Still, oil fell on Friday for the fifth straight day with part of the blame on weakening demand if the coronavirus threat grows — and that removed billions of dollars worth of value in the already weak energy sector.

General Motors Co. (NYSE: GM) has a large manufacturing facility in Wuhan, as do other global auto-makers. With a 1.6% loss to $34.31 on Friday, GM lost about $750 million in market cap. Anheuser-Busch InBev SA (NYSE: BUD) has a large brewing facility in Wuhan, which was its first in China. The ADSs of AB/InBev fell 0.66% to $77.74 on Friday for a loss of close to $1 billion in market capitalization. Other U.S. and Western businesses are halting their or curtailing their operations locally or around China.

The Walt Disney Company (NYSE: DIS) announced that it was closing its Disneyland and Disneytown parks in Shanghai. Its shares slid 1.5% to $140.08 on Friday, and while that’s not the end of a run it is a loss of $3.8 billion in market capitalization. That also represents the lowest closing price going back to last November before its shares jumped from about $138.00 to $to $147.00.


McDonald’s Corporation (NYSE: MCD) has announced that it was closing its restaurant locations in Wuhan and surrounding cities where transportation has been hated. Its shares lost 1% to close at $211.24 on Friday, a loss of about $1.6 billion in market cap. Starbucks Corporation (NASDAQ: SBUX) has also reportedly closed an unspecified number of stores in China. The 1.8% drop to $92.03 on Friday was close to a $2 billion loss in its market capitalization.

The U.S. air carriers are even taking a hit. United Airlines Holdings, Inc. (NYSE: UAL) saw a 3.5% price drop on Friday to $81.90. American Airlines Group Inc. (NASDAQ: AAL) fell 4% to $27.64, with rival Delta Airlines Inc. (NYSE: DAL) falling the least of the big three with a 2.4% drop to $58.81 on Friday. All three of the majors have made allowances for schedule changes for flights in and out of China.

There are many other companies in major economic sectors which have been and will be affected by the most recent coronavirus outbreak.

Yum China Holdings, Inc. (NYSE: YUMC) saw its shares fall from almost $50.00 at the end of the prior week down to $44.25 by this week’s close. Yum China has closed some KFC and Pizza Hut stories in Wuhan. YUM! Brands, Inc. (NYSE: YUM), which collects a royalty from its former subsidiary, saw its shares down almost 1% at $104.98 on Friday.

Luckin Coffee Inc. (NASDAQ: LK), the recent hot IPO that is dubbed ‘the Starbucks of China’ saw its shares drop over 8% to $40.83 on Friday alone. That is down from about $50 just the week before. By losing close to $20% of its value from the prior week, that’s a market cap of $2.1 billion loss from its recent peak.

Melco Resorts & Entertainment Limited (NASDAQ: MLCO), with its main resorts and casinos in Macau, was a standout on Friday with a gain of 3-cents to $21.24, but this was trading at $25.00 just the week earlier.

China Life Insurance Company Ltd. (NYSE: LFC) is worth $115 billion even after losing 1.6% on Friday and having lost close to 8.4% from the prior week’s closing bell. That’s roughly a loss of $10 billion in market cap for the week.

New Oriental Education & Technology Group Inc. (NYSE: EDU) saw a 3.4% drop to $124.61 on Friday, but the top Chinese education company had been above $135.00 just the prior week. TAL Education Group (NASDAQ: TAL) fell 3.6% to $46.68 on Friday and that is down from $54.00 just the prior week. That’s a combined $1.6 billion or so in market cap losses just on Friday, and even greater for the whole week.

Huazhu Group Limited (NASDAQ: HTHT), a hotel operator in China, saw a 2.5% drop to $32.31 on Friday, but this was down from above $39.00 just a week earlier. That’s close to $2 billion in market cap lost in this week.

Trip.com Group Limited (NASDAQ: TCOM), the leader in online travel (including Ctrip.com), saw its shares drop by 6.9% to $31.90 on Friday alone, and this was a $39.00 stock just the week before. The company has allowed for expanded cancellations in hotels. That’s a loss of about $1.3 billion in market just on Friday and a weekly loss of closer to 44.5 billion in lost market cap.

China Southern Airlines Company Limited (NYSE: ZNH) saw its ADSs fall 2.5% to $29.59 on Friday alone, but the loss for the week was more than 13% and that translates to over $1 billion in losses to the current $9.9 billion level. China Eastern Airlines Corporation Limited (NYSE: CEA) saw its ADSs fall 1.4% to $24.09 on Friday, but that down over 12% for the week for a total weekly loss of more than $1 billion in market capitalization.I'm interested in the   Newsletter
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While there are actually some winners to consider here, it’s important to consider just what has been happening and what the outlook is for the global picture between the U.S. and China alone. China’s look at 2019 GDP showed annual growth of 6.1%, but it was decelerating into the end of 2019 ahead of China signing its phase-one trade pact with the United States. The IMF recently down-ticked global growth for 2020, but that was before considering any impact from a pandemic or epidemic scare was even large enough to try to factor into models. And GDP growth in the United States is barely expected to be 2% in the fourth quarter of 2019 — with most economists still expecting a relatively slow growth phase in 2020.

Losses in market capitalization are definitely not the same as true economic costs against the broader economy. That said, it counts against the wealth of their shareholders and businesses shutting down or curtailing operations can have a direct impact on wages, consumer spending, transportation, and employment trends. That can all add up into the billions and billions of dollars of real economic impact when you consider the size of the U.S. and Chinese economies. 
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​Facebook Inc. (NASDAQ: FB) is scheduled to release its fourth-quarter financial results after the markets close on Wednesday. The consensus estimates are calling for $2.53 in earnings per share (EPS) and $20.89 billion in revenue. The same period of last year reportedly had $2.38 in EPS and $16.91 billion in revenue.

Facebook continues to wrestle with the charge that people and foreign governments go on Facebook to lie about news, candidates and decisions that will drive the country’s future. Facebook says it has tried to help with the problem but that the number of posts on Facebook are in the hundreds of millions, or perhaps more, each day.

The social media giant also has had to fight off criticism that it is supportive of some dangerous comments as free speech. Politicians, for the most part, do not agree that free speech should contain lies meant to sway public opinion.

As the elections approach, Facebook will be under more scrutiny and likely will take more beatings from politicians, and its executives may have to make further appearances before Congress. Some will argue that Facebook should be broken into pieces. However, so far that does not look like Facebook’s eventual fate. It will remain a single, very powerful company.

Excluding Wednesday’s move, Facebook stock has outperformed the broad markets with a gain of about 48% in the past 52 weeks. In just the past quarter alone, the stock was up 16%.

Here’s what analysts had to say about Facebook in the week leading up to the report:

Raymond James has a Strong Buy rating with a $270 price target.
Merrill Lynch reiterated a Buy rating with a $260 price target.
Stifel maintained a Buy rating and a $250 target price.
Credit Suisse maintained an Outperform rating with a $274 target.
KeyBanc maintained an Overweight rating with a $263 price target.
Pivotal Research maintained a Buy rating with a $245 target price.
Morgan Stanley maintained an Overweight rating with a $270 price target.
UBS maintained a Buy rating with a $250 price target.

Facebook stock traded up about 1% at $219.68 on Wednesday, in a 52-week range of $145.70 to $222.75. The consensus analyst price target is $249.15.

​BAD TIMES

​OIL DIVIDENDS

​hopify Inc. (NYSE: SHOP) has come a long way since the company’s initial public offering in 2015. The Shopify stock price hit $458 recently, up 191% in just the past year. Over the same period, the S&P 500 is up only 26%.

That gives the company a market cap of $53 billion.

Shopify’s advantage is that it has virtually no competition at its level in the commerce software business. It is among the tech companies that have been able to distribute products and services efficiently because of a cloud-based model.

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What Is Shopify?

The company describes itself as the “all-in-one commerce platform to start, run, and grow a business.”

Shopify currently has a million customers worldwide. Its target customer base is small companies.SPONSORED BY ANASTASIA DATE US
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It announced that it crossed the 1 million customer barrier last October. Founder and CEO Tobi Lütke said, “With over one million businesses now built on Shopify, together we’re rewriting the rules for our modern economy.” While the news was impressive, the statement was overboard.

The company uses basic retail sales tactics to get new clients. Among these is the age-old “free trial.” This lasts for 14 days.

The company’s price model is $29 a month for a basic package, $79 for a mid-tier package and $299 a month for the high-end service.

Shopify’s services include the ability to build a complete e-commerce sales platform. It also allows clients to offer and track free shipping, offer discount codes and set up several online stores at once.

Unlike many e-commerce operations, Shopify offers tools and hardware that allow people to shop in physical stores. This is helpful to the brick-and-mortar part of retail, which has been decimated by Amazon and other large e-commerce businesses. It also offers a fulfillment network with prices many small online companies could not get on their own.

Shopify also allows clients to target Facebook ads, which gives the clients a social media capacity that is usually reserved for larger businesses.

How Have Its Financials Done?

The Shopify results have been extraordinary, which has driven the Wall Street target price higher. KeyBanc Capital Markets recently praised Shopify.

Credit Suisse’s Brad Zelnick is among the Wall Street analysts who trace the company, and he recently voiced optimism about its prospects. He put an Outperform rating on the stock and raised his target price to $450 to $370. Zelnick told Barron’s, “We anticipate Shopify will continue to execute against its secular growth opportunities in 2020.”

Shopify posted strong numbers in the third quarter, the most recent one posted. Revenue rose 45% to $390 million. The company continues to lose money because of a large investment in both sales and marketing. It is also putting growing investment in research and development.

The operating loss for the quarter was $35 million, about the same as last year.

The company also announced Subscription Solutions revenue grew 37% to $165.6 million. Merchant Solutions revenue grew 50%, to $225.0 million.

Fourth-quarter results most likely will demonstrate that the growth rate continues.

As the numbers were announced, Lütke said, “More than a million merchants are now building their businesses on Shopify, as more entrepreneurs around the world reach for independence.”

At the end of the quarter, Shopify had $1.1 billion in cash and $1.5 billion in marketable securities. Against that, it had no debt.

What Does Wall Street Like About Shopify?

Clearly one of the attractions of Shopify is that it is in the heart of the burgeoning e-commerce industry. Over the holiday season, retail sales rose by 3.4%. However, e-commerce was up 15%, a record. Steve Sadove, senior adviser for Mastercard, commented, “E-commerce sales hit a record high this year with more people doing their holiday shopping online.”

Because Shopify has so many online businesses, its exposure to this success is considerable.

Shopify clearly rides the coattails of Amazon.com Inc. (NASDAQ: AMZN), which based on some estimates is a third to a half of the U.S. total. With a market cap near $950 billion, Amazon is among the most valuable companies in the world.

In the third quarter of last year, its revenue reached $70 billion, up 24% from the year earlier.24/7 Wall St.
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Amazon does have one large advantage over other e-commerce companies. Its Amazon Web Services (AWS) is the largest cloud computing business in the world. It is highly profitable, as well as a hedge against and a downturn in e-commerce.

Analysts who cover Shopify stock are split. The Wall Street Journal shows that of the 30 analysts who cover the company now, 12 rate it as a Buy. Another 13 recommend holding shares. The average price target for the stock is $375, well below where the shares are now.

Who Started Shopify? How Did It Grow?

Shopify is based in Ottawa. It was founded in 2004 by Tobias Lütke, Daniel Weinand and Scott Lake. Lütke continues as CEO. The company began as an online way to buy snowboarding equipment.

It has grown both organically and via acquisitions. The company bought wholesale e-commerce company Handshake, and more recently 6 River Systems, a fulfillment operation. Both deals were announced in 2019.

The mix of organic growth and acquisitions has driven impressive numbers. Revenue in 2016 was $389 million. That rose to $673 million in 2017 and to $1.1 billion last year. Over the trailing 12 months, revenue was $1.4 billion.

Note that Shopify lost money each of those years. Free cash flow also has been negative in that time.

Weaknesses of Its Model Moving Forward

Shopify has two critical problems. The first is that it is in only one business, e-commerce supply. Ironically, the other is that it does not have a large brick-and-mortar operation.

Amazon’s basic e-commerce business dwarfs those of Shopify’s customers. A change in how Amazon addresses the market means that the entire market has to change. This has certainly held true with free one-day or same-day delivery. Amazon has spent hundreds of millions of dollars getting these initiatives up and running.

The new, speedy Amazon service already has started to reorient customer expectations. If one-day delivery is the standard, can Shopify clients afford it?

Additionally, Amazon offers more and more unique products and services each year. The most recent of these is its streaming media service and Alexa-powered personal assistant powered devices. When people visit the Amazon site, it has much more than merchandise to sell.

Amazon Prime is another service no other e-commerce firm offers. In fact, none has anything close. Amazon has 100 million subscribers who pay it $119 a year. Estimates are that Prime members shop 2.5 times more often at Amazon than non-Prime members.

Brick-and-mortar retail, once considered a death sentence in the industry, has changed, at least for very large players. Walmart has started to push its e-commerce revenue via the ability of people who buy online to pick up at stores. Similarly, Amazon has used its buyout of Whole Foods as a means to sell and ship food to people’s doorsteps.

Shopify has been a very good business for both its clients and its investors. But both groups have to have some level of anxiety as the world of e-commerce shifts rapidly, often radically, every year.

​DISEASE

​DISNEY

​EARNINGS UP

Ford Motor Co. (NYSE: F) has struggled to find a formula to fix the company under new CEO Jim Hackett. However, this has been made harder, as sales in China have fallen. Its critical move into electric cars is complicated by competition led by Tesla. The headwinds and slow reactions of management to the market beg the question of who will set the course for Ford’s future.

Ford’s Recent Troubles

The Ford Motor Company was founded in 1903. Today, it faces more challenges than in almost any period in its past as its sales decline worldwide. It has largely left the car market in the United States because of a drop in popularity of sedans and coupes, while the demand for sport utility vehicle sales, crossovers and pickups has risen.

In the meantime, Ford car sales in China, the world’s largest car market, have dropped precipitously. Its sales fell in the world’s most populous country, off 26% to 567,854. In contrast, the Tesla Inc. (NASDAQ: TSLA) stock price has risen to record levels recently, largely because of promising early results in the People’s Republic.

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Tesla’s market cap is now double that of Ford and General Motors Co. (NYSE: GM) combined. This is extraordinary since Tesla sells a fraction of what Ford and GM do each year. Market capitalization is the best metric to evaluate what Wall Street thinks of a public corporation.

Vehicle sales have not been Ford’s only problem. The sales slump has occurred at the same time it has struggled to move into the wildly competitive autonomous (self-driving) and electric vehicle (EV) segments.

Hackett, former head of Ford Smart Mobility, promised an $11 billion restructuring shortly after he took over in 2017. The plan has triggered layoffs, which includes 10% of its global white-collar workforce. However, it has not delivered on future EV and autonomous initiatives.

Ford’s only real visible start into the EV market, so far, is the Mustang Mach-E crossover. It will not be available until late this year. Ford says it has a number of reservations for the vehicle, though it has not given an official number. Among the Mustang Mach-E’s several attractive features is a range of up to 300 miles on one battery charge. That is near the outer limit of most of the competition.

Ford’s bet on electric cars in general may be more than it can deliver. Management says it will have 40 electrified vehicles in the market by 2022. However, some of these will be hybrids. That cuts the number of its cars that will compete directly with Tesla. Other larger car manufacturers have announced all-electric vehicles too. The market is remarkably competitive.

The same level of competition holds true for autonomous vehicles. Additionally, technology titans like Alphabet have initiatives of their own. While auto giants like Hyundai and Honda have projects to put vehicles that don’t need human drivers onto the road, so have the tech giants. The most well known of them is Waymo, Alphabet’s autonomous car subsidiary.

It is hard to make the case that Ford is not trying to win the innovation game. It was among the top 50 U.S. patent assignees. The official name of the company that received the patents was Ford Global Technologies.

How the Market Has Reacted

Ford’s stock is down 38% in the past five years. The stock market, as measured by the S&P 500, is up 58% over the same period. The stock price of GM has risen 4% in that time.

Among the reasons Ford stock has been moderately attractive is that it has a 6.4% yield, based on a dividend of $0.60 per share. Dividend stocks are often considered safe harbors for people concerned about a market sell-off.

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People’s Republic of China

Ford’s most profound failure is its inability to capitalize on the Chinese market, which had grown rapidly until recently. The challenge is particularly problematic now that vehicle sales in the People’s Republic have begun to fall. For most of this century, sales in China rose so rapidly that it passed the United States in terms of total sales in 2009.

Total car sales across all manufacturers dropped 8.2% last year to 25.8 million in China. This remains much larger than in the United States, where sales have hovered around 17 million for five straight years. Ford’s particular problem is that its market share is falling in a shrinking Chinese market. The second-largest car company’s unit sales dropped 25.1% to 567,854 last year.

In 2012, Ford announced it would build a plant in eastern China at a cost of $760 million. More recently, with partner Zotye, it said it would invest another $756 million in an electric car plant. As Ford pours more capital into the market, it comes under increasing pressure to show results.

Investors could hardly be comforted by the comments of Anning Chen, president and CEO of Ford Greater China, who described that falloff: “While our sales declined primarily in the value segment, the decline continued to narrow in the second half and saw the stabilization of our shares in the high-to-premium segments.” In other words, things are getting less bad.

Who Runs Ford?

William Clay Ford Jr., the great-grandson of founder Henry Ford, primarily handles the Ford family’s interests. He has been chair of the company’s board since 1999 and currently holds the title of Executive Chairman.

Ford has had five chief executive officers since then. Ford himself was CEO from October 30, 2001, to September 5, 2006. The current CEO, Jim Hackett, has held the job since 2017.

Who runs Ford is open to interpretation. Hackett does not report to the board. He reports to Bill Ford, according to the press release the company issued when Hackett took the “top” job. Moreover, the Ford family owns about 40% of Class B shares, which gives it effective control over the company.

Aside from Bill Ford and Hackett, the board membership includes Edsel Ford II. Each Ford director earned over $300,000 in 2018. Hackett’s compensation that year was just over $17 million. Bill Ford’s was almost $14 million. Over the three years that ended in 2018, Ford has made $42 million.

What’s Next?

Ford’s revenue has been relatively flat in the past three years at about $159 billion. However, net income has fallen sharply from $7.6 billion in 2016 to $1.6 billion over the trailing 12 months. Ford is asking investors to look long term. Its forecasts for the near term are lackluster.

Ultimately, Ford has some very high hurdles. First, with car sales flat in the United States, weak in much of Europe and falling in China, the only way to increase unit sales is to capture market share.

In the market for passenger cars, Ford has formidable competition. This includes, in particular, GM, Toyota, Volkswagen, Fiat Chrysler, Hyundai and Honda. Each has product development capacity as good as or better than Ford’s.

Ford’s high-end brand, Lincoln, trails BMW, Mercedes, Audi and Lexus in the United States. It also competes with most of these in China and other markets.

The electric and autonomous car markets will require massive amounts of capital. The science behind each is complicated and requires large numbers of highly technical staff. While some large tech companies, led by Alphabet, are focusing on the entire car, from software to powerplant to interior features, others have a more narrow focus.

Apple, for example, has a laser-like focus on infotainment systems. Microsoft’s focus is on software integration. Still others have focused on the manufacturing of cars via robotic products.

Finally, there is also the hurdle of public acceptance of new car tech. Some research indicates that, for now at least, people want to drive cars themselves. Additionally, they prefer gasoline-powered engines.

The prospects for Walt Disney Co. (NYSE: DIS) have improved recently on strong results of its operating businesses and hope about its new streaming service. Its challenge in this new, competitive business is whether it can reach the size of Netflix and the Amazon Prime streaming services.

The company was founded in 1923. It was almost immediately a well-known media company. Early on, this was largely due to the success of Mickey Mouse, created in 1928. He is still a favorite character among children all over the world.

Traditional Businesses Stay Successful

Disney has a few primary businesses. These include television content, primarily ABC, EPSN and the Disney Channel.

It also operates a series of theme parks and resorts. The best known of these are Walt Disney World and Disneyland. The company operates huge parks in Shanghai and Paris as well.

The company’s real strength is its studio operations, which include Pixar, Marvel, Lucasfilm and 20th Century Fox, now known as 20th Century Studios. The Disney studio figures for 2019 were staggering, both because of the market share and the revenue.

The studio operations posted revenue that was 40% of the total U.S. box office. It hit $3.7 billion, an all-time record. It had the record in 2018 as well, at $3.1 billion. Some of Disney’s best movies have been major blockbusters.

Growth Through Mergers and Acquisition

Disney has made several acquisitions that have been critical to its growth.

The first important buyout was of Capital Cities/ABC in 1995. This brought Disney one of the big three television networks, the others being NBC and CBS. ESPN, the world’s largest sports network, was also part of the transaction. The price was $19 billion.

In 2006, Disney bought Pixar for $7.6 billion. This brought Disney the Toy Story franchise, among others. Apple founder Steve Jobs was among the Pixar owners.

In 2009, Disney bought Marvel Entertainment for $4.2 billion. This studio has produced some of Disney’s biggest box office winners, including “The Avengers” and “Black Panther.”

In 2012, Disney bought Lucasfilm, which brought with it the Star Wars franchise. The price was $4.0 billion. Star Wars has created some of the most popular movie characters in film history.

By far, Disney’s biggest deal was the buyout of most of the assets of billionaire media mogul Rupert Murdoch’s 21st Century Fox. The deal was presented to investors as a merger, the value of which was $71.3 billion. Murdoch kept several properties, including Fox News and Fox Sports

The day the deal closed, Disney CEO Robert A. Iger, said:

This is an extraordinary and historic moment for us—one that will create significant long-term value for our company and our shareholders. Combining Disney’s and 21st Century Fox’s wealth of creative content and proven talent creates the preeminent global entertainment company, well positioned to lead in an incredibly dynamic and transformative era.

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What Is the Transformation?

Disney got two things, beyond a larger scale business, as it took over management of 21st Century Fox assets.

The first of these is cost cuts. Two media companies with billions of dollars in revenue from similar businesses have overlap in management and central services, like accounting. This means layoffs, which will mean tens of millions of dollars in savings.

The bigger play is streaming video. This arena has been dominated for years by Netflix and Amazon. More recently, large media companies like AT&T and YouTube joined the fray. Disney believed it had enough video assets to launch a business of its own.

Disney+ was launched late last year. The service has exclusive use of the Disney, Pixar, Marvel, Star Wars and National Geographic archives. It has a large amount of programming for both children and adults. After its first day available, the service had 10 million subscribers.

Disney+ has a subscription price of $6.99 a month. This is less than both Amazon and Netflix. Some analysts believe Disney could reach 100 million subscribers by 2025. If that is true, the figure is near where Amazon is today.

With any luck, the streaming business will hit those numbers more quickly because Disney will reach 100 years old in 2023. It will be a remarkable milestone.

At the time of the Disney+ streaming launch, Morningstar analyst Neil Macker commented on the company’s efforts to draw in subscribers:

The firm’s direct-to-consumer efforts, Hulu, ESPN+, and Disney+, will benefit from the new content being created at Disney and Fox television and film studios as well as the deep libraries at the studios. We expect that Disney+ will leverage this content to again create a large, valuable subscriber base.

How Has the Stock Done?

Disney’s market capitalization is about $260 billion.

The stock has outperformed the market recently. Its share price has risen 29% in the past year. The S&P 500, representative of the balance of the stock market, was up 16% over the same period. Because it is one of the 30 Dow Jones industrial average components, Disney is part of a number of index funds.

How Is Disney Financially?

Disney’s revenue has risen sharply over the past several years, due in part to its mergers and acquisitions efforts. In 2016, its revenue was $55.6 billion. It was nearly flat in 2017 but jumped to $59.4 billion in 2018. In 2019, that number reached $69.6 billion.

Net income was $9.4 billion in 2016. It was $9 billion in 2017, $12.6 billion in 2018 and $11.1 billion in 2019. Again due in part to mergers, its long-term debt rose to $38.0 billion last year from $16.4 billion in 2016.

How Does Wall Street Look at Disney?

On the whole, Wall Street analysts believe that Disney has outflanked rivals like CBS and AT&T, the latter of which owns the assets of Time Warner. One reason is the sheer size of Disney’s library.

Another reason is the power of the Disney brand. BrandZ recently rated Disney as the world’s 14th most valuable brand at $40 billion. No other media company was higher on the list.

Professional stock researchers also tend to like Disney’s prospects. Moody’s pointed to the early strength of the new streaming business as it moved over 10 million subscribers.

The Wall Street Journal recently commented that, of the 26 analysts who follow Disney, 18 rate it as a Buy. The average target share price among them was $154. However, at the high end, the figure was $175. At that level, Disney stock would be up another 22%.

The Man Who Changed Disney

Bob Iger has been the chief executive officer of Disney since 2005. He joined the company when it bought Cap Cities. Virtually all of Disney’s major expansion has happened on his watch. While Walt Disney founded the company, Iger made it unimaginably successful.

Iger says he will leave at the end of 2021. As he will be only 68 years old, the board may convince him to stay on. It would be extremely hard to replace him.

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