What’s Turning the Markets: The Fed, China, and Corporate Debt

  • The Federal Reserve has played an increasingly important role in investor sentiment.
  • China is unlikely to roll off U.S. Treasuries due to the interconnectedness of the global economy.
  • Triple B corporate debt is a huge risk factor to investors, and should be avoided.
  • Combining a diversified portfolio of equities and bonds is the best path to take during times of uncertainty.
  • If we do enter a downturn, gold could be a good safe haven investment.

The Evolving Role of the Federal Reserve

The market is on a weird ride. Word play seems to be the market mover of choice recently, with several of the President’s tweets about specific companies or tariffs moving the stock market. More recently, Federal Reserve Chairman Jerome Powell’s announcement on June 4th about the Fed being willing to do what is necessary to keep the economy expanding resulted in the second best trading day of 2019.

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The Roku Story: How Far Can It Go?

  • Roku is a “platform for television distribution”, focused on hardware creation, content distribution, and advertising services.
  • The company trades at a high valuation, especially compared to their tech peers.
  • They are issuing an additional 1M shares of stock that they plan to use toward working capital and general corporate purposes.
  • Roku is focused on making TV better, specifically by building a TV-specific operating system.
  • The space they are in is fiercely competitive.

Roku: Not A Hardware Company

Roku is a technology company that specializes in streaming devices, advertising, content distribution and creation. The company had 29.1M active accounts as of Q1 2019, with users streaming over 9.8B hours in the first quarter alone on the platform. The average Roku user is up to 3.5 hours a day in terms of platform engagement.

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Investing in the Disruptors: Profitability In The Age Of Monopolies

  • The market has entered into a period of relative uncertainty, as measured by the VIX.
  • Industry consolidation increases profitability at the expense of efficiency.
  • Monopolies negatively impact economic growth.
  • The disruptors are the most important tools in breaking up the current monopoly problem.
  • There are several ETFs that can be used to invest across the disruption industry.

The History of Monopolies

On October 27th of 1981, the publication of market concentration data was ended by President Reagan’s FTC Chair. Antitrust has appeared to become very low priority for every single administration over the past 35 years. But if products are still being delivered and the economy is still functioning, does it really make a difference if some industries are dominated by two or three key players?

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Green Dot: The Drop Is The Perfect Time To Buy

  • GDOT is a leading company in the fintech space, offering both account services and a unique banking platform.
  • They got hammered after their Q1 2019 earnings release, and their share price has dropped 30%.
  • Green Dot is accelerating potential growth prospects by investing heavily into their Banking as a Service platform and marketing opportunities.
  • The company is potentially undervalued due to market overreaction and DCF calculations.

Green Dot: A New Kind of Bank

Green Dot Corporation is a true financial technology company, offering bank holding services for consumers, as well as a banking platform for various companies. They’re known as the inventor of the prepaid debit card and are the largest provider of reloadable prepaid debit cards and cash reload processing services. They are also the largest processor of tax refund disbursements in the US through TPG, and a leading provider of mobile banking through GoBank.

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Uber: The IPO Underperformance is a Good Thing

  • Investors are paying a premium for disruption when they invest in Uber
  • The decline in value after the IPO means the company has left no money on the table
  • Uber is betting on a vision of the future, with focus on shared and on-demand services
  • Uber labels themselves as a “personal mobility business” in an attempt to create a big market story and it will pay off
  • There are ways to get exposure to Uber without investing directly in Uber stock.

Everyone has their own opinion on Uber and the other 2019 IPOs. Lyft went public back in late March, and the stock has plummeted 46.5% from all-time highs. Uber went public at $45 per share on May 9th at a market cap of $75.5B, which was far below the initial $120B prior valuation.

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Diving into 5G: The Future of Network Connectivity

  • Verizon has received a lot of attention in the news for being the “first” company to launch 5G services
  • There are headwinds to 5G, including a lack of devices to support the network
  • The 5G business isn’t expected to have much of an impact until 2021
  • The 5G discussion is complex and convoluted and no one really knows what’s happening
  • China is an industry leader, due to government support, and the US has a steep learning curve in adapting 5G nationwide

Diving into 5G: The Future of Network Connectivity

5G is a game-changing proposition for the communication services industry. People are demanding faster and faster network speeds, and 5G offers a combination of that speed, as well as “capacity, reliability, and ultra-low latency required for mission critical services and the growth of massive IoT.” 5G surrounds the idea of connecting devices and creating smart cities with applications to healthcare, retail, and utilities among others

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Costco: Everything is Right Except the Share Price

  • Costco’s supply chain management is all about “minimizing the fingerprints” which makes them one of the most efficient operators in the business.
  • Costco has an online delivery platform that offers free shipping to customers if their orders are $75+.
  • They have several overseas opportunities, and are continuously expanding abroad.
  • Costco has one of the best supply chain management systems in the grocery industry.
  • They are currently trading at a 52-week high, and based on many valuations, they are overvalued.

The Retail Industry is in Shambles

It is no secret that retail is struggling. Consumer sentiment and consumer credit are at all-time highs, but retail still lags. A lot of companies have attempted to remake themselves, but cannot seem to get back on their feet. JC Penney had an extreme makeover, but the company is still floundering. Sears is a lost cause. Toys R Us is gone.

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Lyft, The 2019 IPO Market, and Amazon Web Services: The Podcast Version

The 3rd podcast in the Scanlon on Stocks Podcast series. Should you buy Lyft or AMZN? The podcast will give you all the information necessary, and more.



Disclaimer: These views are not investment advice, and should not be interpreted as such. These views are my own, and do not represent my employer. Trading has risk. Big risk. Make sure that you can balance your risk/reward, and trade small, and trade often.