Copyright © Daniel Cullinane CPA.
he U.S. trade deficit in goods grew to a total of $55.5 billion in May, according to Wednesday’s report from the U.S. Bureau of Economic Analysis (BEA). That’s wider than the consensus estimate of $53.5 billion and the upwardly revised April estimate of $51.2 billion.
The trade balance with China rose from $26.9 billion in April to $30.1 billion, and the U.S. deficit with China now totals $137.08 billion for the first five months of the year. Imports from China rose from $34.8 billion in April to $39.27 billion in May, while exports to China rose from $7.9 billion in April to $9.07 billion in May.
The volatility in exports and imports with China are largely the result of the tariffs the two countries are leveling on one another’s goods. Rising imports from and exports to China may indicate that companies front-loaded orders to get ahead of the Trump administration’s now-postponed increase in tariffs on all Chinese goods.
Overall, U.S. exports rose by 2% in May to $210.6 billion but were offset by an increase of 3.3% in imports to $266.2 billion.
Civilian aircraft exports rose by $500 million in May and telecom equipment exports rose by $400 million. The largest increase in exports came in soybeans, up by $700 million in the month.
Exports of services rose by $300 million in May, including $100 million increases in each of maintenance and repair services, travel and transport.
Imports of automobiles and parts rose by $2.3 billion, and passenger car imports rose by $1.3 billion. Oil imports also rose by $1.3 billion, and semiconductor imports rose by $500 million. Computer and computer accessories imports rose by $400 million and $300 million, respectively.
Adjusted for inflation (based on 2012 dollars), the trade deficit increased by $4.8 billion to $87.0 billion. Inflation-adjusted exports rose by $4.6 billion to $150.5 billion and imports rose by $9.3 billion to $237.5 billion. Inflation-adjusted oil imports hit an eight-month high of $10.7 billion due largely to rising imports from Canada.
The following chart from Bloomberg shows the U.S. trade deficit over the past 12 months.Source: Bloomberg24/7 Wall St.
5 All-American Fourth of July Stocks to Buy for Year-Round Gains
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While the markets have yet to see national manufacturing data, there has been an improvement in two of the regional reports showing some live indications for the month of July. These reports might be overlooked when expansion continues and unemployment remains so low, but this is a time where the market is scrutinizing every bit of economic data it can ahead of the Federal Reserve’s decision on interest rates at the end of July, with a 25 basis point cut widely expected, and maybe even more.
The Federal Reserve Bank of Philadelphia reported on Thursday that manufacturing conditions in its region showed improvement in July. Its July Manufacturing Business Outlook Survey current general activity index recovered with a 0.3-point gain to a reading of 21.8, and the survey’s future indexes continue to project growth expectations over the next six months.
The Philly Fed’s survey for general activity, new orders, shipments and employment all remained positive in July and all increased from their June readings. The current new orders index increased 11 points, while the shipments index increased eight points.
The New York Federal Reserve Bank recently issued a separate report showing that business activity rebounded modestly in New York State. The July 2019 Empire State Manufacturing Survey showed that the headline general business conditions index rose to come back out of negative territory with a 13-point gain to 4.3 in July. Its new orders were little changed, while shipments increased, but the region’s unfilled orders and inventories continued to move lower at the same time that delivery times were longer.
Regional employment data in the New York State area showed that the employment index remained negative and fell to its lowest reading in almost three years. Regional inflation was tame, as input price increases continued to moderate somewhat while selling price gains remained modest. Similar to the Philly Fed survey, the report’s assessment on the six-month outlook indicated that firms were fairly optimistic about future business conditions.
On a broader scope, the Federal Reserve released its Beige Book on July 17, but the cut-off date for the survey of outside business leaders was July 8. The Beige Book’s assessment of economic growth was modest as there were still widespread concerns over tariffs and trade-related uncertainty. Inflation was shown to be stable to down, while employment growth is modest and down a tad from the report in May. The Beige Book’s assessment of manufacturing was generally flat to modestly improving in June and July, while agriculture was down with heavy rainfall and oil and gas was down as well.
As of Thursday, July 18, 2019, the CME’s FedWatch Tool shows a 60% chance that the federal funds rate will be lowered to a 2.00% to 2.25% range, but there is now a 40% chance that the target range of fed funds would be cut to 1.75% to 2.00%.
When a major weather event threatens, one of the first things most Americans do is try to make sure that all their vehicles have a full tank of fuel. That spike in demand for gasoline and diesel fuel strains the delicately balanced supply chain, and consumers often find that their local gas station has run out of fuel.
For some idea of the scale of U.S. gasoline consumption, remember that Americans burn about 400 million gallons of gasoline — that is a little less than 10 million barrels — every day of the year.
GasBuddy, a source of real-time gas prices based on consumer-reported data, analyzed data it has collected over the years on how quickly and to what degree gas stations both run out of and refill fuel supplies. The firm uses the day when an emergency is first declared as its starting point, but note that in at least one case, nearly 20% of local gas stations were out of fuel on the day when officials declared the emergency.
Unpredictable weather disasters can take many forms, from hurricanes and blizzards to tornadoes and raging wildfires. How quickly people get help, including gas, medicine, and provisions, depends on several factors. And some states are better equipped than others — these are the best and worst prepared states for weather emergencies.
The following chart shows how quickly gas stations ran out of fuel when disasters were declared for Hurricanes Irma, Florence and Michael in September 2017, September 2018 and October 2018, respectively.
Source: GasBuddy/OpenStore LLC
“Most areas begin to see improvement [in fuel availability] within a week of landfall of a major hurricane,” notes Patrick DeHaan, GasBuddy’s head of petroleum analysis. Hurricane Michael caused such devastation in the Panama City area that more than 50% of the area’s gas station still had no fuel 13 days after the disaster was declared, compared to about six days for Hurricane Irma and nine days for Hurricane Florence.
Proximity to a refinery matters when it comes to replenishing gas station tanks. Neither Florida nor North Carolina has a refinery in the state. The difference between the replenishment times for Michael and Irma was due to efforts already underway to refill Florida’s tanks by using barges to haul refined fuel to the state.
Gasoline travels from a refinery to a bulk terminal (sometimes called a “rack”) from which it is loaded on the familiar gasoline transport trucks and hauled to underground tanks at gas stations. If roads are inundated or otherwise damaged, the delivery trucks either have to travel further to detour around the impassable roads or wait until the usual route is open again. If pipelines from a refinery to the terminals are damaged, it can take even longer to replenish supplies at local gas stations.
DeHaan also commented on the complexity of the gasoline supply chain: “So many factors go into supply and demand before and after a major storm — things like location, infrastructure, expected path, refinery location, power supply — that make it impossible to predict the exact moment when fuel networks are in the clear or begin to recover, but we definitely have seen fuel supply becoming a larger focus for government during hurricane season.”
Extreme weather events are becoming more common and somewhat more unpredictable. Some of the most powerful storms — Hurricane Andrew in 1992, for example — hit during a fairly slow hurricane season. These are the most powerful hurricanes of all time.
While most of Wall Street focuses on large and mega cap stocks, as they provide a degree of safety and liquidity, many investors are limited in the number of shares they can buy. Often the biggest public companies, especially the technology giants, trade in the low-to-mid hundreds, all the way up to over $1,000 per share. At those steep prices, it’s pretty hard to get any decent share count leverage.
Many investors, especially more aggressive traders, look at lower-priced stocks as a way to not only make some good money but to get a higher share count. That can really help the decision-making process, especially when you are on to a winner, as you can always sell half and keep half.
Each and every week, we screen our 24/7 Wall St. research database looking for stocks rated Buy at major firms and priced under the $10 level (last week’s picks included Jagged Peak Energy and Mohawk), and this week was no exception. We found five more stocks that could provide investors with some solid upside potential. While more suited for aggressive accounts, they could prove exciting additions to portfolios looking for solid alpha potential.
This was the first “smartphone” type company that was buried when Apple released the iPhone. BlackBerry Ltd. (NYSE: BB) continues transitioning from a mobile hardware provider to a mobile-focused security software and services company. Its portfolio of products includes BlackBerry Secure Unified Endpoint Management, crisis communication, corporate asset tracking, cybersecurity services and other secure collaboration software and communication technologies.
The company also licenses its brand/IP for mobile devices, and its QNX business provides leading embedded software systems. Earlier this year BlackBerry named Bryan Palma as president and chief operating officer. Palma was most recently Cisco’s senior vice president and general manager of customer experience for the Americas. Before joining Cisco, he was the vice president of cyber and security solutions at Boeing.
RBC has a $9 price objective on the shares, and the Wall Street consensus target price is $10.31. The shares traded on Friday’s close at $7.08.
This stock has pulled back sharply and is offering an outstanding entry point. Encana Corp. (NYSE: ECA) is an energy producer focused on developing its multibasin portfolio of natural gas, oil and natural gas liquids (NGLs) producing plays. Its operations also include the marketing of natural gas, oil and NGLs. All of its reserves and production are located in North America.
Its Canadian Operations segment includes the exploration for and development and production of natural gas oil and NGLs and other related activities within Canada. This includes Montney in northeast British Columbia and northwest Alberta and Duvernay in west central Alberta. The USA Operations segment includes the exploration for and development and production of natural gas, oil and NGLs and other related activities within the United States.
Encana investors receive a 1.72% dividend. The Merrill Lynch analysts remain positive on the with a $10 price target. The post consensus target is $10.54, and the shares closed on Friday at $4.55.ALSO READ: 10 Dividends That Can See Double-Digit Growth for 5 Years or Longer
5 Favorite Stocks Trading Under $10 With Massive Upside Potential
By Lee Jackson July 20, 2019 8:55 am EDTPrintEmail
This top European tech and telecom company offers aggressive investors the potential for big upside. Telefonaktiebolaget LM Ericsson (NASDAQ: ERIC) provides network equipment and software and services for network and business operations worldwide.
The company’s Networks segment delivers products and solutions for mobile access, internet protocol and transmission networks, core networks and cloud. This segment offers radio access solutions; IP routing and transport solutions; microwave and optical transmission solutions for mobile and fixed networks; IP multimedia subsystem solutions; a cloud platform that handles workloads for various clouds; and telecom, information technology (IT) and commercial cloud services.
Its Global Services segment delivers managed services, including services for designing, building, operating and managing the day-to-day operations of the customer network or solutions; maintenance services; network sharing solutions; shared solutions; and managed services of IT environments, as well as provides broadcast and media services.
Ericsson investors receive just a 0.77% dividend. The $11.40 Merrill Lynch price target is well above the $6.63 consensus figure. The shares closed trading at $8.85 on Friday.
This telecommunications company once ruled the cell phone arena, until the advent of the smartphone in 2007. Nokia Corp. (NYSE: NOK) owns two main businesses: 1) Nokia Networks, a network infrastructure equipment supplier to global wireless and wireline operators, and 2) Technologies, its patent/IPR licensing activities.
Nokia’s customers include communications service providers whose combined networks support 6.1 billion subscriptions, as well as enterprises in the private and public sector that use the firm’s network portfolio to increase productivity. Through Nokia’s Research teams, including the world-renowned Nokia Bell Labs, the firm is leading the world to adopt end-to-end 5G networks that are faster and more secure.
This stock is on the Merrill Lynch US 1 list and comes with a $7.10 price target. The consensus target is set at $7.09, and the stock ended the week at $5.14 a share.24/7 Wall St.
Huge Buying Opportunity in Marijuana Stocks as Short Sellers Pounce
This company’s name actually became a verb years ago when people referred to recording TV shows. TiVo Corp. (NASDAQ: TIVO) provides entertainment technology, software and services. It operates through two segments.
The Intellectual Property Licensing segment consists of International Patent Group patent licensing to third-party guide developers such as multichannel video service providers, consumer electronics and set-top box manufacturers and interactive television software and program guide providers in the online, over-the-top video and mobile phone businesses.
The Product segment covers licensing of company-developed IPG products and services provided for multichannel video service providers and consumer electronics manufacturers, in-guide advertising revenue, analytics revenue and revenue from licensing metadata.
TiVo investors receive a very solid 4.37% dividend. B. Riley FBR has a massive $18 price target, but the consensus target is even higher at $21.54. The shares closed on Friday at $7.23 apiece.
JULY NEWSLETTER 2
Medallia Inc. (NYSE: MDLA) entered the market with a bang on Friday. The firm priced its shares at $21 apiece, above the expected price range of $16 to $18 per share, and entered the market just over $33. It offered 15.5 million shares in total, with an overallotment option for an additional 2.325 million shares. At the $21 price point, the entire offering was valued up to $374.325 million.
The underwriters for the offering are Merrill Lynch, Citigroup, Wells Fargo, Credit Suisse, Oppenheimer, SunTrust Robinson Humphrey, William Blair, Needham, Craig-Hallum Capital Group and Roth Capital Partners.
This company’s software as a service (SaaS) platform, the Medallia Experience Cloud, captures experience data from massive and expanding signal fields emitted by customers and employees on their daily journeys and it is a leader in the market for understanding and managing omnichannel experiences.
Medallia utilizes its proprietary artificial intelligence technology to analyze structured and unstructured data from these signal fields across human, digital and Internet of Things interactions at great scale to derive personalized and predictive insights that drive action with tremendous business results. Using this technology, enterprises reduce churn, turn detractors into promoters and buyers and create in-the-moment cross-sell and up-sell opportunities, providing clear and potent returns on investment.
In the filing, the firm detailed its finances as follows:
For the years ended January 31, 2018 and 2019, our subscription revenue was $201.8 million and $246.8 million, respectively, representing year-over-year growth of 22%, and our revenue was $261.2 million and $313.6 million, respectively, representing year-over-year growth of 20%. For the three months ended April 30, 2018 and 2019, our subscription revenue was $55.6 million and $71.7 million, respectively, representing period-over-period growth of 29%, and our revenue was $70.7 million and $93.6 million, respectively, representing period-over-period growth of 32%. For the years ended January 31, 2018 and 2019, and the three months ended April 30, 2018 and 2019, our net loss was $70.4 million, $82.2 million, $27.5 million and $2.6 million, respectively, which reflects our substantial investments in our business focused on our large market opportunity.
The company intends to use the net proceeds from this offering for working capital and general corporate purposes.
Shares of Medallia were last seen up 62% at $34.00, in a range of $32.58 to $35.40 on the day thus far. Also, about 7 million shares have moved on the day as of 11:15 a.m. Eastern.
Daniel Cullinane CPA
25 Plaza 5 25th fl Jersey City NJ phone 732-516-1648 fax 732-516-9778
2500 Plaza 5 25th fl Jersey City NJ 07311 phone 732-516-1648 fax 732-516-9778
The futures traded flat Tuesday morning as investors and traders across Wall Street looked toward the G-20 meeting in Japan and a slew of economic data that is due to hit the tape this week. Given the lofty valuation of the stock market now, investors need to be considering how they want their portfolios and assets positioned for the second half of 2019 and beyond.
24/7 Wall St. reviews dozens of analyst research reports each day of the week. Our goal is to find new ideas for traders and long-term investors alike. Some of the daily analyst calls cover stocks to buy. Other calls cover stocks to sell or to avoid.
We have provided these calls in a quick-hit summary for easy reading, and additional comments and trading data have been added on some of them. The consensus analyst price targets and other valuation metrics are from the Refinitiv (Thomson Reuters) sell-side research service.
These are the top analyst upgrades, downgrades and initiations on Tuesday, June 25, 2019.
ANGI Homeservices Inc. (NASDAQ: ANGI) saw its target price lowered to $20 from $23 at Needham, and while the firm kept its Buy rating intact, it thinks the share price already reflects concerns around traffic and service request growth. The Wall Street consensus price target is $20.50. The stock closed Monday at $14.38.
Basic Energy Services Inc. (NYSE: BAS) was downgraded to Neutral from Overweight at Piper Jaffray, and the price target was lowered to $3. That compares with the $5.39 consensus target. The shares closed Monday at $2.43.
Caesars Entertainment Corp. (NYSE: CZR) was downgraded to Neutral from Buy at Nomura with a $12 price objective. The consensus target is $11.07. The gaming giant is being purchased by Eldorado Resorts, and the shares ended Monday at $11.44.
Cellular Biomedicine Inc. (NASDAQ: CBMG) was started with an Overweight rating and a $27 price target at Cantor Fitzgerald. The consensus target is higher at $32. The shares were last seen trading at $14.99.
Chipotle Mexican Grill Inc. (NYSE: CMG) was started with a Buy rating and a massive $870 price target at Credit Suisse. The consensus target is $681.67, and shares were last seen at $724.13.
Gates Industrial Corp. PLC (NASDAQ: GTES) was raised to Buy from Neutral at Goldman Sachs. The firm’s $15 price target compares with the $16.88 consensus target. The stock closed at $10.80.
GasLog Ltd. (NYSE: GLOG) was raised from Hold to Buy at Stifel, which also raised the price target to $18. The consensus target is $21.45, and the stock closed at $13.15.
Golar LNG Ltd. (NASDAQ: GLNG) saw its price target lowered to $22 from $30 at Cowen, although the stock remains one of the firm’s best small-mid-cap ideas. The consensus price target is $31.82. The stock closed at $16.52.
Grubhub Inc. (NYSE: GRUB) was raised to Buy from Neutral at Citigroup. The target price was lifted to $91 as well, while the consensus target is $97.13. The stock closed at $72.19, but shares were up almost 5% in Tuesday’s premarket.
Host Hotels & Resorts Inc. (NYSE: HST) was started with an Overweight rating and a $23 price target at Capital One. The consensus target is $21.11. The stock closed at $17.87.
Intercept Pharmaceuticals Inc. (NASDAQ: ICPT) was started with a Hold rating and an $89 price target at Stifel. That compares with the massive consensus target of $156.68. The shares closed at $79.69.
Kellogg Co. (NYSE: K) was downgraded to Underweight from Equal Weight at Consumer Edge Research. The cereal giant has traded in a 52-week range of $51.34 to $74.98, and the consensus price target is $58.82. The stock closed Monday at $55.79.24/7 Wall St.
Jefferies Top Growth Stocks to Buy All Have Big-Time Catalysts
McDonald’s Corp. (NYSE: MCD) was started with a Buy rating at Credit Suisse, which placed a $230 price target on the fast-food behemoth, one of the most valuable brands in the world. The consensus target is $215, and the stock closed at $203.92
Mosaic Co. (NYSE: MOS) saw its price target raised to $30 from $26 at Cowen. The firm recently returned from a visit to Brazil to meet with management, visit production sites and inspected the progress made on mandated fixes to tailing dams at phosphate rock sites, and the progress is very positive. The consensus price target is $32.47. The shares were last seen at $23.43.
Shopify Inc. (NYSE: SHOP) was downgraded to Neutral from Outperform at Wedbush, which also raised its price target to $305. The consensus price target is $261.83. The stock closed Monday at $311.83, down almost 5% on the day.
Starbucks Inc. (NASDAQ: SBUX) was started with a Buy rating and a $92 price objective at Credit Suisse. The consensus target is $77.82. The stock closed Monday at $83.65.
Tiffany & Co. Inc. (NYSE: TIF) was downgraded to Hold from Buy at Loop Capital. Shares of the iconic jewelry firm have traded between $73.04 and $141.64 over the past 52 weeks. The consensus price target is $110.09. The stock was last seen at $91.85.
In case you missed it, check out Monday’s top analyst upgrades and downgrades. They included Deere, Dunkin’ Brands, Fortinet, Occidental Petroleum, Splunk, Spotify Technology, United Technologies and more.