When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Mad Hedge Technology Letter
March 4, 2020
Fiat Lux
Featured Trade:
(THE BEST TECH STOCKS TO BUY AT THE BOTTOM)
(NFLX), (ZM), (PTON), (AMZN), (OKTA), (WORK), (ATVI), (EA), (TTWO)
Tech stocks that are begging to be picked up on the back of the coronavirus pandemic are Netflix (NFLX), Zoom Video Communications (ZM), workplace collaboration service Slack Technologies (WORK), and Peloton Interactive (PTON), the spin bike company.
Their short-term outperformance indicates that these stocks work well during mass pandemics shelving most outdoor activity and commerce.
The basket of 3 stocks has easily beat the S&P 500 since the coronavirus emerged as a threat in mid-January.
Home sitting doesn’t generate a net output of business activity unless that job is digital.
The majority of workers still commute in a physical car only to sit in an office, restaurant, or some other type of self-contained space.
That is the underlying problem that has no solution, and any rate cut by the Fed cannot ultimately solve consumers holed up in their house.
If the companies that could opt to go pure digital do take up the option, the number of remote workers would rise and digital products would be the ultimate beneficiary of this trend.
Companies that promote remote working such as Slack (WORK) and Google Hangouts are in pole position to reap the rewards.
These services include video conferencing software, logistical services, administrative services, network security services, ecommerce and any service that aids in generating digital content like Adobe and its umbrella of assets.
The trend was already transforming American culture, but the virus vigorously pulls forward a trend that was already in overdrive.
Enabling information workers to produce outside the traditional office environment is one of the lynchpins of the Silicon Valley model.
Companies will ultimately realize that spending big bucks on business travel to meet face to face for 30 minutes is probably not an optimal allocation of resources.
Business travel is getting cut with a cleaver such as Amazon.com (AMZN) who are forcing employees to avoid all nonessential travel for now, including within the U.S. Much of that travel could be replaced by video calls.
Other companies will get in on the action by directing their employees to work from home in the coming weeks.
Coronavirus mania has reached the U.S. shores with consumers stocking up on all the essentials at the local Costco.
If this gets worse, there is no solution unless a viable medical solution starts improving the health crisis.
There are still only 7 known fatalities from the coronavirus, all in the state of Washington, and limiting that number is critical to the health of the tech market.
Another company is Okta (OKTA), a leader in authentication security cloud software.
The company’s offering allows employees to use corporate applications on-site and remotely and protecting their access to their digital services is just as important as the work itself.
As consumer spurn movie theaters, concerts, and gyms, the entertainment space will give way to digital entertainment that includes Netflix (NFLX) and Roku (ROKU).
Roku is a great place to hide out in the world where Covid-19 meets daily consumers in the U.S. in a more meaningful way during 2020.
Netflix is a company that has defied gravity this year by bull-rushing its way through the competition and proving there is space for everyone.
The increase in incremental demand for digital content will only help Netflix claim a bigger part of the pie.
We can also lump the videogame industry into this cohort such as Activision Blizzard (ATVI), Electronic Arts (EA), and Take-Two Interactive Software (TTWO).
They have faced serious headwinds from gaming phenomenon Fortnite, but prolonged home sitting will even boost their shares.
The spine of digital services will receive a boost as well from the usual cast of characters such as Microsoft (MSFT), Apple (AAPL), Alphabet (GOOGL), and Facebook (FB).
As investors wait for the climax of the coronavirus and the Central Bank has indicated that they are open to more accommodative policy, we could be ripe for more volatility.
Chinese coronavirus cases have started to taper off and if the rest of the world trends in a similar fashion, this virus scare could be in the history books in 2-3 months.
However, the trajectory of the virus is still a massive unknown in the U.S. and winning the health battle is the only panacea to this dilemma.
“Often you have to rely on intuition.” – Said Founder and Former CEO of Microsoft Bill Gates
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Global Market Comments
March 4, 2020
Fiat Lux
Featured Trade:
(TEN LONG TERM LEAPS TO BUY AT THE BOTTOM)
(MSFT), (AAPL), (GOOGL), (QCOM), (AMZN),
(V), (AXP), (NVDA), (DIS), (TGT)
Mad Hedge Biotech & Healthcare Letter
March 3, 2020
Fiat Lux
Featured Trade:
(WHY ZOETIS STILL HAS MILES TO RUN)
(ZTS)
Zoetis (ZTS) has been an investor darling since it was spun off from Pfizer way back in 2013. From day one, this animal healthcare stock went public, shares have soared by a stunning 382%.
This stock’s popularity among growth investors stemmed from two emerging trends today. The first is the “humanization” of our pets through healthcare. The second is the rise in global demand for animal protein.
Both tailwinds have been responsible for the steady growth of Zoetis and are anticipated to continue to do so in the years to come.
With everything that has happened since we welcomed 2020 though, is Zoetis still a good stock to buy?
Earlier this month, Zoetis released its fourth-quarter earnings report for 2019. As usual, the company once again impressed its investors by beating estimates.
The company reported a quarterly revenue of $1.7 billion, indicating a 7% improvement from its performance in the same quarter in 2018.
Adjusted net income came in at $440 million, breaking down to earnings per share of $0.92.
In comparison, Wall Street estimates pegged Zoetis’ quarterly revenue at $1.6 billion with an EPS of $0.88.
Notably, Zoetis’ international business segments and its US market are practically equal in terms of size. Its US market raked in $861 million in revenue, showing off a 6% boost in this quarter. Meanwhile, its international sales increased by 9% to reach $791 million.
Although all these are enough to make investors happy, Zoetis’ 2020 guidance gave some of its investors pause.
According to the company, it estimates a jump in its annual growth somewhere between 5.5% and 8%, pushing its revenue from $6.3 billion to reach an amount somewhere between $6.65 billion and $6.8 billion.
However, this projection has been met with skepticism in light of the coronavirus disease 2019 (COVID19).
Looking at its reports, roughly 3% or $200 million of Zoetis’ sales last year came from China.
Despite this, Zoetis appears to be confident that it can hit its goals this year.
The company’s companion animal business, which primarily sells medicines for cats and dogs, picked up the slack from the decline of its beef and dairy cattle markets.
In fact, revenue from the companion animal arm showed an 18% jump year over year and reached $784 million.
One of the main drivers in this sector is Zoetis’ dermatology brands, Apoquel and Cytopoint. Both are estimated to bring in roughly $700 million in annual sales. Boosting this momentum are the company’s parasiticide items like ProHeart 12 and Simparica.
However, it’s the launch of Simparica Trio that generated excitement among Zoetis investors.
Simparica Trio is the company’s new chewable “triple combination parasiticide for dogs.” According to the company’s guidelines, this product is expected to add at least $150 million in revenue for the last three quarters of 2020.
This new drug’s appeal lies in the fact that it can simplify the lives of pet owners. Simparica Trio only needs to be administered once a month.
After that, the pill can be relied on as a preventive measure against heartworm disease. It can also control ticks, intestinal nematodes, and fleas in dogs. With Simparica Trio, pet owners no longer need to buy and administer multiple products.
To date, this medicine has received regulatory approval in Canada and the European Union. It’s expected to receive US approval in the first half of this year.
Simparica Trio is also expected to broaden Zoetis’ market share in the parasiticides sector, where it only ranks fourth.
Zoetis is also looking to explore the lucrative market of osteoarthritis treatments for cats and dogs.
Taking a page off the world’s top-selling drug, Abbott Laboratories’ (ABT) blockbuster rheumatoid arthritis treatment Humira, the animal health company plans to create pain medication based on the same technology. If Zoetis succeeds, then it’ll be the first company to address this unmet market.
Apart from these, Zoetis will also expand its services to include diagnostics as well as digital and data analytics.
In fact, the company has started investing in “precision livestock farming.” A good example of this initiative is its Smartbow technology, which is a dairy cow monitoring system that utilizes motion detectors. These are attached to the animals’ ears in an effort to identify patterns that can signify health issues.
Zoetis has been one of the most attractive stocks on the market since 2013.
While a lot of healthcare and biotechnology companies are at risk for increased volatility this year especially with the US presidential election, this animal health stock should be relatively resistant to political drawbacks.
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more