Wall Street's Best Digest 828

inally, the coronavirus news is improving, and so is the market. We’re now up about 12% on the Dow since our issue last month. Our Adviser Sentiment Barometer is mixed; still mostly bearish, but our contributors—as well as our analysts here at Cabot Wealth feel we are near a bottom on the markets. That, of course, is dependent upon how well we do when our economy begins to reopen.

So far, around 17 million unemployment claims have been filed, and it will take awhile for the unemployment number to recover. But, as you know, the markets generally move ahead of the economy, gathering the good news in first, so we are feeling optimistic.

As you know, I’ve been adding a lot of dividend stocks to my newsletter in the past month or so, so that you could, at least, enjoy some cash flow while we await the recovery. I’m beginning to go back to growth, so you’ll see more of those recommendations in the next few weeks.

And our Spotlight Stock this month, certainly fits the growth category.

Market Views 828

A Retest of Lows to Come

Further gains would indicate that investors are pricing in a v-shaped recovery while a stall in the market rally here would mean that the jury is still out. My own belief is that we still have to retest the March 23 lows and that there are many areas of the economy such as travel, tourism, restaurants, brick and mortar retail that will not recover until well into 2021 when a vaccine will hopefully become available.

Dr. Marvin Appel, Systems and Forecasts, systemsandforecasts.com, 800-829-6229, April 13, 2020

Gold still Strong

Gold has gained almost 20% from its March lows. After hitting a multi-year high, this would be a good time to book some profit in the yellow metal and in gold ETFs. While a pullback after the latest new high would be in order, fears over the fragility of the global economy should keep gold prices elevated in the coming months, with additional new highs expected. A bullish intermediate-term (3-6 month) stance toward the metal is still justified.

Cliff Droke, Gold & Silver Stock Report, cliffdroke.com, 707-282-5594, April 10, 2020

A Bottom may be Near

The SPX ended the week right around its 36-month moving average—a trendline that has proven significant historically, as it has provided support on numerous pullbacks through the years, but has signaled more selling on the horizon after breakdowns. This trendline is currently at 2,773, while immediately above resides the 2,800-century mark, which is also in the vicinity of a 50% retracement of this year’s closing high and low. 2,800 has served as resistance in the past, namely the fourth quarter of 2018, which many bulls would like to forget. A decisive April month-end close below the VIX’s half March 2020 closing high and a monthly SPX close above its 36-month moving average would give me more confidence that indeed a bottom has already been reached and a sustained V-rally is underway.

Todd Salamone, Bernie Schaeffer, Schaeffer’s Investment Research, DchaeffersResearch.com, 800-327-8833, April 13, 2020

Spotlight Stock 828

Brick-and-mortar retailers, in particular, have had a rough go of it, and the actions taken to combat the coronavirus will most likely be the death knell for some retailers and severely cripple others.

However, one retailer that remains in a unique position to thrive both in the near and

long term is Amazon.com. Indeed, the retailing giant’s online business model continues to show its strength. The stock has held up relatively well during the recent market downdraft. It is possible that consumer spending will be severely hobbled over the next six months, which will matter to all retailers, including Amazon.

But from a stock perspective, I expect these shares to continue to show good resilience relative to the market. Though not cheap based on traditional valuation metrics, the shares have become a “must have” for growth investors.

And due to the recent implementation of a direct-purchase plan, Amazon shares are accessible for virtually any investor, regardless of the size of his or her pocketbook.

While it seems like it has been around forever, Amazon is still a relatively young company. The firm, incorporated in 1994, started out as an online marketplace for selling books. Over the years, the company has grown into a global retailing and services juggernaut, focusing on ecommerce of all kinds, cloud computing via its Amazon Web Services (AWS) business, and digital streaming.

Sales in Amazon’s most recent quarter totaled $87.4 billion, up nearly 21% over the year-earlier quarter. The firm now has over 150 million paid Prime members around the world, a very nice annuity-type cash stream. Amazon’s reach provides it with a plethora of opportunities. In fact, founder Jeff Bezos has said that “your margin is my opportunity,” implying that Amazon has the ability to disrupt virtually any industry.

So, what are the biggest risks to Amazon?

Regulators. This is probably the company’s biggest operating risk. Will regulators at some point determine that Amazon is too powerful and has too much sway over the economy and is stifling competition? And what would a remedy look like? From purely a pricing standpoint, it would be hard to argue that Amazon’s “monopolistic” practices are keeping prices high. In fact, the presence of Amazon has probably had significant downward pressure on prices.

The Law of large numbers. Amazon’s sales will probably exceed $325 billion this year. The challenge is to keep posting double-digit growth on an already huge base.

For many investors, buying a stock trading at nearly $2,000 is impossible. If you use a broker, you’ll need a hefty chunk of change just to buy a whole share. The good news is that Amazon’s direct-purchase plan lets you get started with a minimum initial investment of just $250, and subsequent investments can be as little as $20.

I would feel very comfortable initiating a position in Amazon shares at current prices and stepping up buying on weakness to the $1700 level.

George Putnam III, The Turnaround Letter, turnaroundletter.com, 617-573-9550, March 2020

*2nd Opinion

The COVID-19 crisis is pushing supply chains and logistics networks to their limits. Something has to give soon. On Friday, Amazon.com signed an agreement with the Canadian government to distribute critical medical supplies nationally. The partnership is a big step forward for private companies.

With people being quarantined at home, they are utilizing Amazon.com, trusted by nearly 112-million Prime members, as their personal supply chain for food and essential supplies. A Morning Consult research study found that Amazon.com was the most trusted public company in United States. It is more trusted than the police, labels on food packaging and capitalism.

Given this sentiment, the investment calculus for Amazon is strong. Shares trade at 48x forward earnings and 3.4x sales. While both metrics may seem exorbitant, they are far below historical norms and neither reflect the true potential for long-term growth.

The COVID-19 pandemic exposes investors to the reality that most consumers have known for a long time: Amazon is a well-managed business that treats customers well and is renowned for its reliability. In times of uncertainty, reliability is more important than ever.

Investors should continue to use all weaknesses to buy Amazon shares.

Jon Markman, Pivotal Point, issues@e.moneyandmarkets.com, 1-800-291-8545, April 6, 2020

Feature 828

Our Spotlight Stock, Amazon—as contributor Charles Carlson noted—is holding up pretty well in these volatile markets. The company is actually benefiting on three levels from the coronavirus pandemic.

First, streaming. Strategy Analytics estimates that worldwide demand for subscription streaming video services will see a 5% increase this year from the stay-at-home orders. That amounts to some 47 million more subscriptions, industry-wide, than the previously forecasted 96 million, for a total growth rate of 18%.

That’s great news for all the streaming services, but especially for Amazon. That’s because it’s a two-fer, which leads me to the second way Amazon is benefiting from the virus. Not only does the company profit from the rise in streaming, but because both Disney+ and Netflix use its Amazon Web Services (AWS) to deliver their streaming products, Amazon will also make money from that channel. And AWS—already accounting for two-thirds of the company’s operating income and $35 billion in revenues—is ready to attract more investors with its offer last week of $20 million worth of credits and technical support to those AWS customers who are developing faster COVID-19 testing.

Lastly, the third way Amazon is poised to reap profits from the virus is the stunning rise in e-commerce sales since the pandemic began. Researchers at Listrak estimate that online sales have risen 40% since the virus started its global devastation. Amazon’s Prime revenues last year were $19.21 billion. And its online stores—product and digital sales—brought in $141.25 billion. The company’s total e-ecommerce business accounts for 40% of all U.S. online retail sales and its grocery business was just ranked #1 for new online shoppers, so expect a really big bump in sales this quarter.

And the $20 million testing credits is not the only way that Amazon is aiding in the coronavirus tragedy. As contributor Jon Markman said in his Second Opinion of the stock, the company is also shipping needed medical supplies to Canada. And lastly, Amazon recently announced that it is building its own lab in a pilot program to begin testing its employees for novel coronavirus.

Although the shares have risen 33% in the past 52 weeks, I’m sure there is more appreciation—much more—to come. After all, all those folks who never bought anything online before the virus are not going to just stop, are they?

Growth 828

Tempur Sealy International is leveraging its brand strength and leadership in viscoelastic mate-rials with a wider distribution. The mattress maker has entered into agreements with bedding retailers Mattress Firm & Big Lots in the U. S. and Beter Bed in Europe. These agreements helped Tempur Sealy end 2019 with record fourth-quarter sales and operating profits.

The company forecasts sales to set new records in 2020 and operating profits to grow over 20%. Its shares appeal to risk-tolerant growth investors. They trade at

10.6X-forward EPS versus prospects for EPS to grow 65% through 2021. (Next earnings: ~ Apr. 30)

Sam Subramanian, PhD, AlphaProfit Sector Investors’ Newsletter, alphaprofit.com, 281-565-6963, March 2020

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Boyd Gaming Corporation (BYD) | Daily Alert March 25

Boyd Gaming Corporation operates 29 properties in 10 states, spanning roughly 77 million square feet of casino space, 38,000 gaming machines, and more than 11,000 hotel rooms. The company has decent growth prospects, reflecting healthy same-store sales, contributions from acquisitions, and a burgeoning market for sports wagering.

In the December quarter, per-share earnings surged 56% to $0.50, topping the consensus by $0.05. Revenue rose 5% and exceeded expectations.

Boyd looks attractively valued with a Quadrix® Value score of 70, reflecting solid ranks for price/free cashflow and price/sales ratios. Shares trade at 15 times estimated current-year earnings, versus a median of 27 for gaming stocks in the S&P 1500 Index.

For 2020, Wall Street expects per-share earnings of $2.02, up 13%. Analyst profit targets are climbing, lifting the Earnings Estimates score to 84 and Overall score to 98. Boyd is being started as a Buy.

Richard J. Moroney, CFA, Upside, upsidestocks.com, 800-233-5922, March 2020

Tyson Foods, Inc. (TSN) | Daily Alert March 31

Which industries might recover more quickly than others? Buy shares in the products you buy at Kroger (KR) and Walmart (WMT). People are still buying food and household products: meat, cereal, candy, cotton balls, shampoo, OTC medicines, birthday cards, beer and cigarettes. Look for famous names within the Consumer Defensive sector.

I like Tyson Foods (TSN), a very financially sound, growing companies that provide the world with poultry and other meats. You’re having a hard time finding chicken in the supermarket, right? Let me assure you that there’s no supply problem. The chicken is getting shipped to supermarkets, and people are hoarding it. Imagine the number of people who used to routinely buy fast food, or eat in restaurants. You already know that chicken was the meat that they most likely chose from menus. Now those same people are buying chicken and cooking it at home.

Suppliers are shifting their shipments from restaurants to supermarkets, and consumers are buying chicken as swiftly as it arrives in the freezer section of grocery stores. Tyson is slated for strong profit growth in both 2020 and 2021. As a bonus, its share price has already begun recovering, with lots of room for additional capital gains.

Tyson Foods is the largest U.S. food company, with operations in 20 countries, and a recognized leader in protein with leading brands including Tyson, Jimmy Dean, Hillshire Farm, Ball Park, Wright, Aidells, ibp and State Fair. Management is focused on the growing global need for protein, and fulfilling that need in a sustainable and environmentally conscious manner. Tyson Foods was featured in the December 10 and January issues of Cabot Undervalued Stocks Advisor.

Back in November, China agreed to buy more poultry from the U.S., lifting their nearly five-year ban on poultry imports, and they also removed existing tariffs. Then in January 2020, China promised to buy significantly increased amounts of U.S. poultry in 2020 and 2021 as part of a Phase 1 U.S.-Sino trade deal, which helps alleviate China’s need for protein sources in the wake of the devastation that African Swine Fever imparted on the country’s hog population. Last week, China additionally agreed not to ban all U.S. poultry imports if avian flu is discovered among any U.S. poultry populations. Instead, China will temporarily ban poultry products from any U.S. state where an avian flu outbreak occurs.

In March 19th comments about U.S. grocery stores running low on meat in recent weeks, Tyson CEO Noel White said that this temporary supply and demand imbalance should be resolved within a week, indicating that there is no supply problem, but rather that consumers’ hoarding activity has led to increased demand, compounded by a demand shift from restaurants to supermarkets.

Earnings growth projections for 2020 have come down about 9% since late January as analysts assumed that China would be purchasing fewer protein products from the U.S. than they’d recently indicated in association with the Phase 1 trade agreement. Analysts are now forecasting EPS to increase 13.6% and 15.8% in 2020 and 2021 (September year-end). The 2020 P/E is 9.9.

Last week, JPMorgan raised its rating on TSN from Neutral to Overweight. The stock formed a double-bottom pattern on the price chart in recent days, and has decidedly turned upward. I’m moving TSN from Hold to a Strong Buy recommendation. The stock will still bounce around, but I believe the worst is over. Strong Buy.

Crista Huff, Cabot Undervalued Stocks Advisor, www.cabotwealth.com, 978-745-5532, March 25, 2020

*J.B. Hunt Transport Services, Inc. (JBHT)

Starbucks offers quality at a discounted price. Competitor-crushing brand power is a supporting pillar in the thesis. Most of us probably never thought twice about transports, beyond cursing as we tried to pass them on a rain-soaked road. Now we suddenly realize they are our life-blood.

That doesn’t mean the next set of financials from this company will be impressive. International shipping is down and a lot of the business that J.B. Hunt and similar companies do is carrying containers to their ultimate destination in North America. But one thing we can be sure of is that the company will be working flat out to keep up with domestic demand.

As far as the drivers are concerned, the Trump administration recently eased an 82-year-old hours of service regulation that limited the amount of driving time per day. These rules will no longer apply to drivers who are transporting medical supplies and consumer goods.

For its part, J.B. Hunt announced it will provide a one-time bonus of $500 for drivers and personnel at field operations and customer facilities.

J.B. Hunt and companies like it have become essential services in recent weeks. At the current price, this looks like 5

a good investment for both the short and longer term.

Buy a quarter position at $89.76. Given these volatile markets, layer in the rest in three tranches over the next nine months.

Gordon Pape, Internet Wealth Builder, buildingwealth.ca, 1-888-287-8229, April 6, 2020

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3M Company (MMM) | | Daily Alert March 27

3M is a conglomerate that “applies science in collaborative ways to improve lives daily,” operating with four business segments: Safety and Industrial, Transportation and Electronics, Health Care and Consumer.

A litany of negative headlines related to PFAS (per-and polyfluoroalkyl substances) litigation, along with elusive revenue growth have put shares on a downward skid since peaking at $258 some 25 months ago. 2019 also preoccupied management with transitioning the company’s business model to a more decentralized form and reducing headcount across the firm.

We realize that there is plenty of uncertainty on the horizon; however, we think recent acquisitions of MModal and Acelity, paired with typical research and development spend averaging 6% of revenue will get the growth engine for the high-quality stock going again. We also like 3M’s robust free cash flow, dividend yield and discounted forward earnings multiple.

John Buckingham, The Prudent Speculator, theprudentspeculator.com, 877-817-4394, March 3, 2020

CarMax, Inc. (KMX) | Daily Alert March 27

CarMax operates a national chain of more than 200 used car superstores. It focuses on the upper end of the used market, vehicles less than six years old, typically with only one previous owner. It wholesales customer trade-ins that do not fit its target profile. Last year, CarMax sold over 750,000 cars to retail customers and wholesaled another 450,000. Trailing 12-month revenue was more than $20 billion.

Uncertain economic conditions are a risk, but disruptions will probably hurt competitors much more than CarMax. With shares down by almost half from recent all-time highs, we see an opportunity to buy a growing market leader at a discount price.

The reputation of the used car business will repel some investors. We’re not in love with the industry either, but it does have some very attractive features. It is big, and while- somewhat cyclical, it sells a necessary product. Almost everybody needs a car.

We view CarMax as an undisputed leader in its market. The company has an increasingly recognizable brand, and its future growth prospects are highly visible as it colonizes more of the country.

The company has been a little slow to respond to a push from online-only competitors. Its e-commerce initiatives are steadily improving, however, and CarMax looks like the long-term leader. Even before this period of economic uncertainty started, online-only competitors were on shaky footing financially. Many companies have tried to push into the space, but most quietly vanished. Only publicly-traded Carvana looks like a long-term survivor. Selling cars is technically complicated and requires a lot of capital. CarMax has been doing it for 25 years.

Like all car dealers, CarMax makes a considerable portion of its overall net income from arranging financing for customers. Somewhere between one-third and one-half of operating income can be attributed to financing, depending on how costs are allocated. Its most credit-worthy customers qualify for advantageous rates through its in-house Consumer Auto Finance (CAF) arm. CarMax issues securities backed by the auto loans from CAF. In a sudden economic downturn like the one we are currently entering, the company may struggle to place its collateralized securities, even at rates that pass most of the borrower interest along to investors. That means financing income is likely to plummet until capital markets stabilize. CarMax may also have to withdraw its CAF offers until it can place old loans with investors. Loans which the company does not match with a CAF offer are referred to an outside lender for a fee. Alternatively, customers can always arrange their own financing through a bank or other lender.

Due to CAF, the company’s balance sheet scares some investors because it looks a little bit like a bank’s. At the end of its most recent quarter, CarMax had about $3.5 billion of debt and other company liabilities, and another $11 billion in interest-bearing securities CAF sold to investors. It also had $13 billion in receivables, including new loans waiting to be packaged and sold.
At first glance, CarMax may appear to have a lot of debt, but netting liabilities against financing receivables reveals a balance sheet with very little leverage. This is why we estimate the company’s true debt $1.5 billion, even when the balance sheet nominally holds close to $16 billion. CarMax has a solid balance sheet which will easily support more store expansion and share buybacks.

The company has repurchased its own stock voraciously at a rate of about 5% per year. It will be interesting to see whether the company can continue repurchasing shares in the current environment. There will be some incremental stress on the balance sheet, but we think the company is going into this downturn on very solid financial footing. 2020 will be a difficult year, but our forecast for 9% EPS growth assumes that the company remains profitable and returns to growth in 2021 and beyond.

A P/E of 20, combined with potential high EPS of $7.94 generates a high price of 159. We are using 44 as a low price, applying a 20% haircut to the recent market price of 55. On that basis, the upside/downside ratio is 9.4 to 1.

Doug Gerlach, www.InvestorAdvisoryService.com, 1-877-33-ICLUB, April 2020

Income 828

*Walmart Inc (WMT)

Walmart (WMT) is the largest retailer in the world, serving 270 million customers each week. Revenue will be well in excess of $500 billion this year and the stock trades with a market capitalization above $300 billion.

Walmart is arguably one of the safest dividend stocks, because of its extremely recession-resistant business model. The deep discount retail industry—which Walmart dominates—is one of the very few outperformers in an economic downturn. If anything, it could be argued that Walmart actually benefits from a recession.

We believe Walmart will continue to generate strong profits even if the U.S. is on the brink of a severe recession. Its dividend should continue to grow as well.

The current annual dividend payout of $2.16 per share constituted 44% of Walmart’s 2019 adjusted earnings-per-share of $4.93, meaning even a significant decline in EPS is unlikely to endanger the dividend payout. And again, this seems unlikely, given Walmart’s tendency to benefit from recessions.

Walmart’s U.S. e-commerce sales increased 35% in the fourth quarter, and 37% for last fiscal year. Now that it has built a large e-commerce platform, Walmart is positioned to perform relatively well even as multiple large cities go on lockdown due to the coronavirus. While many stores have closed, Walmart will continue to see strong results in its e-commerce sales.

Ben Reynolds, Sure Dividend Newsletter, suredividend.com, support@suredividend.com, 800-531-0465, April 3, 2020

Financials 828

Financials

Financials were just beginning to shine before COVID-19. They may take a bit longer to reverse, but right now, they provide some good bargains.

Brown & Brown, Inc. (BRO) | Daily Alert April 3

It’s been a long time since I could find this many cheap stocks. and this sale is not likely to last long. There are some gifts out there right now and yeah, it’s very scary, but these stocks are on sale—and that’s how bargains are had—when it’s really scary, like NOW! As with any major/global event some of the world/habits will change after this big event—but many will not.

Think of your stocks in terms of June, or July; do they have the balance sheets that these times will require ahead—to be on offense, not defense?

I am going to add one new insurance stock, too—Brown & Brown. It is not as big as AON (AON), but it’s a very sharp outfit with an outstanding balance sheet and some good niches where the company does well.

I have been waiting for something like this as an opportunity to add some quality insurance/broker stocks and BRO is a good buy up to $45.

Bob Howard, Positive Patterns, P.O. Box 310, Turners, MO 65765, 417-887-4486, March 17, 2020

DBS Group Holdings Ltd (DBSDY) | Daily Alert April 13

Like many countries, Singapore is struggling with the impact of the coronavirus. But given that it is a city-state of 6 million people with a well-organized, effective government, it is well positioned to cope with all of this better than most.

It is also important to note that over the past decade, wealth is piling up faster in Singapore than anywhere in the world. Assets under management in the city-state have jumped an amazing 1,120% since 2000 and are on track to overtake Switzerland, according to the research firm WealthInsight. It boggles the mind that a country one-fifth the size of Rhode Island can eclipse London, New York, Shanghai, and Zurich.

A pure play on this emerging trend is the J.P. Morgan of Singapore: the Development Bank of Singapore—better known as DBS. DBS is one of the largest banks in Southeast Asia with a presence in 18 markets. It is headquartered in Singapore, with its main listing on the Singapore Stock Exchange, and is the largest constituent of the Singapore Straits Times Index (STI).

The Government of Singapore established DBS in July 1968 and its largest and controlling shareholder is Temasek Holdings, one of two large sovereign wealth funds controlled by the Government of Singapore.

DBS has a growing presence in the three key Asian areas of growth, which it defines as Greater China, Southeast Asia, and South Asia, meaning India. It is the largest and strongest bank in Southeast Asia and the leading consumer bank in both Hong Kong and Singapore.

Its tentacles reach out through 200 branches in 50 cities. DBS produces steady profit margins, revenue, and earnings and is also increasing market share in consumer and corporate banking.

Wealth management is also a strategic priority and a growing part of its business.

Why buy DBS right now? The stock has come back from a 52-week high of 93 to trade just below 50, its lowest share price since 2016.

Yes, it has deferred (not cut) its dividend until it is able to have its annual meeting, but this is already priced in. In short, this is an opportune time to tuck this quality bank into your portfolio.

Carl Delfeld, Cabot Global Stocks Explorer, cabotwealth.com, 978-745-5532, April 2, 2020

T. Rowe Price Group, Inc. (TROW) | Daily Alert March 30

With stocks so cheap, we will add another company to our portfolio. How cheap is the market? We estimate the VL MAP is now at or above 150% at today’s close. (The VL MAP in the print edition of Value Line shows 120%, but that is based on week-old prices.) Remember, however, VL MAP reached 185% in the Great Recession, and in 1974, after a 6-year bear market, was even higher (230%).

Our choice to add now is T. Rowe Price, a large mutual fund group with almost $1 trillion under management (before the recent collapse of course). Although smaller than no-load industry leader Vanguard, T. Rowe is still well-positio7

ned as Americans’ retirement holdings grow in the long run.

It is a compelling buy at its current price, with A+ financial strength, and “1” rankings for both year-ahead performance and safety. 3-5 year appreciation potential is 165-200, about 100% to the low end of the range, and it pays a nice dividend.

RECOMMENDATION: The Model Portfolio will buy 350 shares of T Rowe Price (TROW) at tomorrow’s opening. Continue to hold cash reserves of at least 40%.

Daniel A. Seiver, PAD System Report, padsystemreport.com, Dept. of Finance, S.D.S.U, San Diego, CA 92181, March 23, 2020

*Visa Inc. (V)

Visa is a global payments technology company that provides a digital currency instead of cash and checks to individuals and business in more than 200 countries and in over 160 currencies. It is the largest payment processor in the world. It processed over $9 trillion in 2019 and its systems can process 65,000 transactions per second.

It’s a good business to be in because the world is becoming increasingly cashless. Digital payments surpassed cash transactions on a global basis a few years ago. But the digital trend is expected to grow much more in the years ahead. The trend is clear, and Visa will continue to benefit.

The pullback in economic activity will reduce the number of global transactions. As well, margins are particularly high on cross-border transactions that have been reduced by the travel restrictions. But that’s why it’s cheap.

Over the past 10 years, an investment in V has returned 705% (with dividends reinvested), compared to an S&P 500 return of 174% over the same period. And that’s after the stock has already fallen 20% from the high in this bear market.

The company is basically a license to print money, but it’s almost never cheap. Only bear markets like this seem to interrupt the stock’s upward ascent. I’m targeting a price of 150. The stock price could get there in a turbulent market that doesn’t have to make a new bottom.

Tom Hutchinson, Cabot Dividend Investor, cabotwealth.com, 978-745-5532,

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AbbVie Inc. (ABBV) | Daily Alert March 20

When you are dealing with liquidity events combined with human emotion, one can never know the exact bottom. We started buying too early (end of November 2008) after the global financial crisis because we simply started buying when valuations hit our parameters. Considering the U.S. banking system has been restructured for strength and the enormous cash levels on the sidelines (not just us), combined with a historically low interest rate and low energy environment, LanczGlobal deems equities are back at attractive valuations.

The pendulum typically swings to maximum swings, so the volatility will continue and may likely head lower, so gradually and selectively accumulate into this weakness.

Those with cash can gradually accumulate here, but also energy prices going lower should save consumers at the gas pump and with their monthly utility bills. Gold is at a 7-year high in the face of most other commodities getting slammed. The timing is great to refinance your mortgage, any floating rate loans you have should start charging you lower interest. Interest rates have never been lower; it’s actually quite remarkable.

AbbVie is an impressive income generator in the pharma space as management has nearly tripled its annual dividend pay-out in over the past eight years. Nobody knows where the bottom is considering we recommended buying in the 60’s last summer and back in 2017. The stock here should be accumulated with half of typical position with interest to buy more into an aggressive buying range in the $60’s.

Alan B. Lancz, The Lancz Letter, www.lanczglobal.com, 419-536-5200, March 9 & 13, 2020

Nancy’s Note: Until we make progress in defeating the coronavirus, we expect continued volatility in the markets, and recommend remaining defensive. That doesn’t mean Sell; remember, you don’t have real losses until you sell your stocks. But it does mean being judicious when buying. For the near future, I’m going to include this message as an alert that, certainly, you may buy these recommendations, but for most of us, they will provide entries into a ‘watch’ list that can be acted upon as the volatility disperses. Thank you for your loyalty, and please don’t hesitate to reach out to me with your questions.

Quanterix Corporation (QTRX) | Daily Alert March 23

While it’s difficult to predict the timing of a COVID-19 stabilization, we find it useful to step back and identify companies in our coverage that stand to outperform (on a relative basis) due to their LT growth prospects. This is one of the five companies we are highlighting that share the following key characteristics during a turbulent time in the market:

Reasonable expectations for 1H’20, high visibility, and line-of-sight for growth regardless of “timing issues.”

Established leadership position in underserved, minimally penetrated, and “recession-resilient” markets (i.e. early screening for cancer, treatment/therapy selection, pregnancy testing, brain-health).

Positive comments on Q4 earnings call about the ability to mitigate COVID-19 impact.

A stock price that has pulled back and valuation is not extreme.

Quanterix on its Q4 call that its supply chain and end-user demand remain solid in the midst of COVID-19. While QTRX relies on large pharma partners, and quarterly instrument/consumables revs can be lumpy, we find it hard to ignore the overarching mega-trend that QTRX is capitalizing on: providing protein biomarker services that enable pharma companies to run more efficient, cost-effective, trials with a higher probability of success.

We expect global interest/demand for brain-health research to remain robust in 2020 and we see upside from “call options” in diagnostics, including liquid biopsies. QTRX’s 2020 setup looks achievable and its technological moat is wide.

Max Masucci, Canaccord Genuity Research, www.canaccordgenuity.com, March 10, 2020

Regeneron Pharmaceuticals, Inc. (REGN) | Daily Alert March 26

The stock of Regeneron Pharmaceuticals has performed particularly well in 2020, rising nearly 30% year-to-date while the overall market has fallen, as investors have recognized the company’s efforts to respond to the coronavirus. Using its proprietary VelociSuite platform, the company is working to identify and develop promising antibody candidates. Having used this platform in the past to respond to outbreaks of MERS-CoV and Ebola, management believes that the discovery and preclinical validation of potential COVID-19 treatments could be completed in 3-6 months, as opposed to years with traditional processes. By late summer, the company expects to produce hundreds of thousands of doses of prophylactic and therapeutic coronavirus medicine for human testing.

We will be monitoring these developments closely. Given the company’s strong balance sheet, pipeline progress, solid prospects for Eylea, and efforts to respond to COVID-19, we believe that REGN merits a premium valuation.

The company recently reported 4Q results that beat analyst expectations for both revenue and EPS. On February 6, Regeneron reported that 4Q19 revenue, including product sales and collaboration revenue, increased 12.6% to $2.17 billion. Non-GAAP net income rose 9.2% to $858 million, and non-GAAP diluted EPS rose 9.6% to $7.50, above the consensus of $6.93. In 2019, the company generated $7.86 billion in revenue, up 17.2%. Non-GAAP net income rose 7.8% to $2.83 billion, and non-GAAP diluted EPS rose 8.0% to $24.67.

The company’s main product is Eylea, which is used for the treatment of age-related macular degeneration (wet AMD), diabetic macular edema (DME), and diabetic retinopathy. Regeneron has exclusive rights to sales of Eylea in the U.S. and shares rights for the rest of the world with Bayer. In 4Q, U.S. sales of Eylea totaled $1.222 billion, up 13.3% from 4Q18, while Rest of World sales rose 8.0% to $782.5 million.

Based on company’s better-than-expected 4Q earnings, strong revenue growth, and pipeline progress, we are reiterating our 2020 EPS forecast of $27.27, representing 10.6% growth, as well as our 2021 forecast of $29.99, which assumes growth of 10%.

We think that REGN shares are attractively valued at current prices. They have traded between $271 and $500 over the past year and are currently near the high end of this range. From a technical perspective, the shares have broken out of a long-term bearish pattern of lower highs and lower lows that dates back to August 2015, having closed above a downward sloping line of resistance on March 4, 2020. The stock is also trading roughly 20% above its 50-day moving average and 42% above its 200-day, having achieved a golden cross in mid-December 2019. We expect that the stock’s next level of resistance will occur near its June 2017 high, around $540 per share.

On a fundamental basis, the shares are trading at 17.3-times our 2020 EPS forecast, above the average of 13.8 for peers that include Amgen, Vertex, Incyte and Ligand, but near the low end of the company’s five-year historical range of 11.7-49.7. They also trade at 6.6-times sales, below the peer average of 8.4 and at the low end of the five-year historical range. Given the company’s strong balance sheet, pipeline progress, solid prospects for Eylea, and efforts to respond to COVID-19, we believe that REGN merits a premium valuation. As such, we are raising our target price to $540.

Jim Kelleher, CFA, Argus Weekly Staff Report, www.argusresearch.com, 212-425-7500, March 10, 2020

*Esperion Therapeutics, Inc. (ESPR)

Despite the cancellation of the physical conference, ESPR presented two online pooled analyses from four Phase 3 clinical trials of NEXLETOL and results from the Phase 2 (1002-058) study of NEXLIZET at the American College of Cardiology’s 69th Scientific Session Together with World Congress of Cardiology (ACC.20/WCC). The company also officially launched NEXLETOL as previously announced at the ACC meeting on March 30th. The launch has started electronically, and we expect the sales force to hit the ground running once stay-at-home restrictions are lifted. With the stock under severe pressure likely to a combination of ACC cancellation and a “measured launch” of its two new LDL drugs, we believe that the rather temporary setback has resulted in one of those excellent buying opportunities that comes around in market disruptions and recommend subscribers enter new positions and/or add to existing ones.

ESPR is a BUY under 75 with a TARGET PRICE of 100.

John McCamant, The Medical Technology Stock Letter, bioinvest.com, April 2, 2020

Technology 828

Keysight Technologies, Inc. (KEYS) | Daily Alert April 1

Advancing a theme that has become more prevalent in our newsletter over the last few years, Keysight Technologies (KEYS) has built a robust business from a niche that barely existed a generation ago. The company provides software and tools for electronic design, testing, manufacturing, and installation of communications gear and networks, computer systems, and electronic equipment.

Keysight spun off from Agilent Technologies (A) in 2014, part of a move by Agilent to focus on its core health-care business. The child has done fine on its own, growing sales 47% (8% annualized) and per-share profits 57% (9% annualized) over the last five years. Per-share profits have risen at least 30% in each of the last eight quarters.

In fiscal 2019, the company generated $2.2 billion in revenue (51%) from communications, $1.1 billion (26%) from industrial electronics, and $1.0 billion (23%) from aerospace, defense, and government customers. Nearly one-fifth of the company’s revenue comes from recurring sources, a proportion likely to rise going forward as software (19% of 2019, revenue, up from 12% in 2015) gains importance at the expense of hardware. Keysight is the No. 1 player in its niche markets, with roughly 25% market share—up three percentage points from 2017. Given Keysight’s ability to grow faster than the broad market’s 3% to 5% rate, more share gains seem likely.

Keysight stands to benefit more than most from the global rollout of 5G wireless technology. As both traditional high-tech items and mainstream household products became more complicated and connected, Keysight’s communications unit responded by rolling out a steady stream of products. Orders rose 6% in the January quarter, and we expect demand for Keysight’s testing and analysis to remain strong. The company invested 16% of its revenue in research & development last year, up from 12% a year earlier.

The consensus projects sales growth of 7% and per-share-profit growth of 14% in fiscal 2020 ending October, followed by respective growth of 7% and 10% in fiscal 2021 and 10% and 15% in fiscal 2022. Estimates have risen since the company posted stronger-than-expected January-quarter results and raised its annual long-term growth targets to 4% to 6% for core revenue and greater than 10% for per-share profits. Keysight has exceeded the sales and profit consensus in seven consecutive quarters, but it would not be surprising to see the company lower near-term guidance to reflect the impact of the coronavirus on the tech sector.

The stock trades at 18 times trailing earnings, 7% below the industry median and 58% below its own three-year average price/earnings ratio. With a Quadrix Value score of 38, Keysight isn’t cheap but seems reasonably priced relative to its growth potential. Keysight, which scores above 75 in five of the seven Quadrix® categories, is a Buy and a Long-Term Buy.

Richard Moroney, CFA, Dow Theory Forecasts, www.dowtheory.com, 800-233-5922, March 16, 2020

Blackline, Inc. (BL) | Daily Alert April 6

BlackLine is a Software-as-a-Service (SaaS) company with products for finance and accounting departments. Companies use the software to perform a variety of processes, including account reconciliation, intercompany accounting and the financial close, a recurring process that takes raw financial data and turns it into the audited financials that senior management reviews, that gets submitted to the SEC, and that becomes available for investors like us to view.

Prior to BlackLine, much of this work was done manually, using spreadsheets. That is a cumbersome, inefficient and error-prone way to do it. BlackLine has come up with a better way. The company’s cloud platform helps automate the process, pulling in data from banks, ERPs (SAP, Oracle, NetSuite, etc.), transactional systems and more, then running it through the appropriate BlackLine products, which can be set up with internal controls.

The idea is to transform a quarterly, recurring process into a continuous one so that accountants, controllers, managers and auditors can have real-time visibility into the state of a company’s books.

BlackLine was founded by Theresa Tucker, who previously worked as Chief Technology officer for SunGuard Treasury Systems (acquired by FIS in 2015). In the early days the company sold on-premise software, then made the leap to cloud-based software in 2007. That was the year the first iPhone came out and it was good timing; companies wanted to move away from expensive desktop software toward software subscriptions, especially when the recession struck.

Private equity firms took note of BlackLine’s success, jumped in, and the rest is history. Today, BlackLine is going after a big opportunity with over 165,000 global companies that could use its software. It has been working on expanding internationally, where there are many untapped markets, growing a partner network, including with SAP, and developing new products, including an Intercompany Hub Product that helps streamline intercompany accounting.

In Q4 2019, reported on February 13, global demand was as strong as ever as the company added 153 net new customers, bringing total customer count up to 3,024. That translated to 267,621 users and a net revenue retention rate of 110%, meaning that current customers continued to increase their spending with Blackline in Q4.

The bottom line is that Blackline grew revenue by 27% in 2019 and by 29%, to $80.3 million, in Q4. Fourth quarter results beat expectations by $2.4 million, and that was the fourth consecutive quarter of accelerating revenue growth. Adjusted EPS in 2019 was $0.37 and Q4 2019 adjusted EPS was $0.14, which beat by a penny.

Looking forward, management issued 2020 guidance of $347 million to $352 million, implying just over 20% growth, and adjusted EPS of $0.45 to $0.48, implying growth of around 27%. The wild card, of course, is what the impact of the COVID-19 pandemic will be.

Guidance was released in the second week of February and the world has changed dramatically since. While BlackLine’s solutions should continue to be used, there is risk that new deals will get pushed back as companies scramble to conserve cash and address the immediate problems resulting from the virus.

Still, with the stock roughly 40% off its previous high and looking to try to get back into its trading range from 2019, now looks like a relatively attractive time to start a modest position. In terms of the stock’s history, BL went public in 2016 at 17 and, despite some pullbacks, rose steadily to 45 by late 2018. Shares then corrected and bounced around for most of 2019, ending the year near 50. It rose in the first two months of 2019, including a spike to 75 after a big earnings result. Since then it has fallen below 50. As with any stock right now it would be wise to start slow, maintain a tight stop, and average in if the chart continues to look constructive.

BlackLine originally recommended by Tyler Laundon in Cabot Early Opportunities, has now climbed above its 200-day moving average. Short-term, there’s a chance of a pullback, perhaps to the 48 area, so if you haven’t bought yet, I suggest waiting for that—but long-term, this provider of cloud-based automated accounting services has great prospects. BUY.

Timothy Lutts, Cabot Stock of the Week, www.cabotwealth.com, 978-745-5532, March 23 & 30, 2020

Micron Technology, Inc. (MU) | Daily Alert April 7

There has been some good news in all the chaos. The technology sector is holding up reasonably well, and one notable example is Micron Technology. While it hasn’t been immune to the broader selling pressure in the market, the company’s shares have rebounded sharply after it reported last week that its adjusted earnings beat Street expectations by 24% and predicted stronger-than-expected revenue going forward.

How could that be, especially as many states and even entire countries are shutting down nonessential businesses? As businesses and schools have shut down, much of the world’s population has transitioned to working and learning remotely, while much of our commerce has transitioned online. That’s created a booming demand for cloud storage and services, boosting what had been sagging memory chip prices. That means chipmakers like Micron could fare better than initially expected.

Recommended Action: Continue buying chipmakers and semiconductor players.

Ian Wyatt and Stephen Mauzy, Personal Wealth Advisor, wyattresearch.com, March 31, 2020

Take-Two Interactive Software, Inc. (TTWO) | Daily Alert April 8

It’s time to add another winner to our holdings, this time in a stay-at-home entertainment stock that was performing beautifully even before the world began to cocoon.

That stock is video game maker Take-Two Interactive Software.

Now, we aren’t really the video game types. I mean, let’s face it, we don’t fit the demographic here for playing games such as NBA 2K and Grand Theft Auto, the two biggest franchises for TTWO.

Yet what is in our demographic is making money. And on that front, TTWO is an earnings powerhouse. The company’s most recent quarter saw a 131% year-over-year spike in earnings per share (EPS). Over the past three quarters, average EPS growth is a robust 94%. Look for these metrics to continue to impress, as demand for video games is going to soar due to the stay-at-home wave caused by the coronavirus.

The company also stands to benefit even more than usual due to its digitally delivered at-home entertainment. TTWO makes more profit when its games are digitally downloaded than they do when a game is purchased inside a physical store (and we know those stores are closed right now).

As for share price, TTWO is in the top 14% of all publicly-traded stocks in terms of relative price strength over the past year with a gain of 23.2%. Yet more impressive of late is the company’s 6% spike in just the past few trading sessions. That tells us that the fast money is moving back into TTWO.

Technically speaking, today shares just broke back above the 50-day moving average of $116.43, and the next key technical level to break is the 200-day moving average at $121.09. We suspect this level will be easily broken in short order, as the current social distancing/stay-at-home trend is likely to continue at least through April.

So, let’s buy Take-Two Interactive Software at market, with a protective stop at $93.65.

For those who want to take a bigger bet, buy the TTWO June $120.00 call options (TTWO200619C00120000) at market. They last traded for $9.40 and expire on June 19.

Mark Skousen, Forecasts & Strategies, markskousen.com, Eagle Financial, 300 New Jersey Ave. NW, Suite 500, Washington, D.C. 20001, March 30, 2020

ManTech International Corporation (MANT) | Daily Alert April 10

ManTech International, a provider of technology solutions that generates 98% of sales from the U.S. government, is seeing steady contract wins from defense and intelligence customers. In 2019, the company secured $2.9 billion in contract awards, putting its year-end backlog at $9.1 billion, up 8%. Importantly, roughly 50% of awards were new business.

ManTech earns an Overall score of 84, versus the average of 68 for the 24 technology-consulting stocks in Quadrix®.

Robust government spending has helped ManTech deliver steady growth. Though contracts can be delayed or terminated without notice, Wall Street still sees solid growth in 2020 despite a murky backdrop. Per-share earnings are forecast to reach $3.15 to $3.25, up at least 24%.

On December 31, ManTech held $8.9 million in cash and $36.5 million in long-term debt. A $500 million credit facility provides ample financial flexibility. In February, management increased the quarterly per-share 19% to $0.32.

ManTech is being initiated as a Buy.

Richard J. Moroney, CFA, Upside, upsidestocks.com, 800-233-5922, April 2020

*Jack Henry & Associates, Inc. (JKHY)

Strategy: Multi-Factor Investor Guru Criteria: Pim Van Vliet Jack Henry & Associates, Inc. is a provider of information processing solutions for community banks. MARKET CAP: PASS STANDARD DEVIATION: PASS FINAL RANK: PASS

John Reese, Validea Hot List Newsletter, www.validea.com, 877-439-0506, April 9, 2020

*Slack Technologies, Inc. (WORK)

Slack (TSINetwork Rating: Extra Risk) provides firms with an application that helps their teams of employees communicate through chat and direct messaging. Slack is a brand-new listing, having gone public on June 19, 2019.

The primary function of Slack’s software is to replace the use of email inside an organization. Unlike email, most activity on the Slack platform happens in team-based “channels,” rather than in individual inboxes.

The company’s unique channel system offers a continuous record of the conversations, data, documents, and application workflows relevant to a project.

One key feature of Slack is that it easily integrates with other software systems. Notably, Dropbox Inc.—the major document-management software developer—has integrated Slack into its workplace product.

In the three months ended January 31, 2020, the company reported to investors an overall revenue jump of 49.1%. It rose to $181.9 million from $122.0 million a year earlier.

The company has over 12 million daily active users, of which 110,000 are paying customers. Many of those customers are large organizations—among them IBM, Autodesk, Liberty Mutual, NASA, Panasonic, Target, Airbnb, Samsung and Oracle. Each, in fact, represents thousands of users.

A big rival, like Alphabet, Microsoft or Facebook, could also make a takeover offer for the company. That’s far from guaranteed, but it does add to the stock’s appeal for investors.11

More companies are turning to Slack in this current environment to help manage the sudden uptick in working from home. We think that will pay off in a big way for Slack—and its shareholders—even after the COVID-19 outbreak.

Patrick McKeough, Power Growth Investor, tsinetwork.ca, 888-292-0296, April 2020

Low-Priced Stocks 828

*WidePoint Corporation (WYY)

WidePoint Corp. (WYY) is a leading provider of Trusted Mobility Management (TM2) solutions to the government and commercial sectors in North America and Europe .

Diversity of services and its 20-year relationship with the U.S. federal government have bolstered WYY’s ability to retain customers and build its brand. In addition, its identity management (IdM) solutions make WidePoint the only TLM provider that addresses the full spectrum of mobile security management, helping land clients for its IdM segment such as Northrop Grumman, General Dynamics and the U.S. Department of Defense.

Fiscal 2019 was a key turning point because of WidePoint’s shift in profitability. Strategic discontinuations of lower margin projects only partially offset increases in carrier services and billable service fees revenue. However, WYY reported net income of $226,255 compared to a net loss of $1.4 million in fiscal 2018.

Management has recently focused on improving margins to fuel a financial turnaround. U.S. federal government revenues make up 85% of total revenues, while commercial enterprises make up only 14%.

WidePoint has a healthy balance sheet without any long-term debt.

The price-to-sales (P/S) ratio of 0.30 is an example of just how much sales have increased despite a drop in share price. Based on its top line results alone, this makes WYY one of the most undervalued companies in the entire information technology services industry.

WidePoint’s share price has dropped substantially over the years while revenue and earnings have trended higher. With net income moving into positive territory and government relationships stronger than ever before, WYY offers an appealing entry point.

Faris Sleem, The Bowser Report, thebowserreport.com, 757-877-5979, April, 2020

Preferred Stocks & REITs 828

The Allstate Corporation (ALL-PI) | Daily Alert April 9

Allstate Corp.; 4.75% Fixed Rate, Non-Cumulative Perpetual; Par $25.00; Annual Cash Dividend $1.1875; Current Indicated Yield 5.16%; Call Date 01/15/25 at $25.00; Yield to Call 6.67%; Pay Cycle 1m; Ratings, Moody’s Baa2, S&P BBB; CUSIP 020002812; Symbol ALL-I

Allstate Corporation is the largest publicly held personal lines insurance carrier in the United States, offering Property, Auto, Power Sports, Life/Retirement, and Business policies. The company has consistently achieved solid operating margins in its auto and underlying homeowners’ lines.

This issue is callable at par plus declared dividends on 01/15/25, or any dividend payment date thereafter.

ALL reported Q419 adjusted net income of $1.02 billion or $3.13 per share, topping analysts’ estimates by a penny. While the company has beaten quarterly earnings estimates for the last four reporting periods, the outlook for 2020 is quite challenging.

This issue carries one of the lower dividends in the fixed-rate preferred market. That reflects ALL’s investment grade preferred ratings, although this positive is partly offset by the dire market environment created by the COVID-19 outbreak.

We expect this security to continue to trade at a discount in 2020. From a credit perspective, we remain positively disposed towards ALL and recommend this 4.75% preferred issue for low- to medium-risk taxable portfolios. 12

Dividends are qualified and taxed at the 15%-20% rate. Buy up to $24.50 for a 4.85% current yield, and yield to call of 5.22%.

Martin Fridson, CFA, Income Securities Investor, isinewsletter.com, 800-472-2680, April 2020

New Residential Investment Corp. (NRZ-PA) | Daily Alert April 15

Last week, the high-yield sectors were hit with what I am calling a “liquidity event.” It affected every type of high yield stock, including REITs, finance REITs, BDCs, MLPs, and preferred shares.

One group that sold off is preferred stock shares. Preferreds have priority of dividend payments ahead of common stock dividends. That makes them a safer investment for income investors. The indiscriminate selling also hit preferreds, allowing us to buy these investments when they are down, and they are likely to recover faster than common stock shares.

This week’s buy of the week is New Residential Corp. Preferred A (NRZ.PFA). These are preferred shares issued by Dividend Hunter stock New Residential Corp. (NRZ). The NRZ.PFA shares were issued with a $25 par value and a fixed 7.5% dividend yield. On Friday, NRZ.PFA closed at $15 per share, giving a current yield of 12.5%. NRZ will declare the next preferred shares dividend in mid-April with payment in May.

Recommendation: Buy shares of NRZ.PFA up to $17.00 to lock in a nice minimum yield.

Note: you will see preferred share stock symbols listed in different ways. For example, Schwab has NRZ/PFA. You might also see NRZ.PA.

Tim Plaehn, The Dividend Hunter, yn345.isrefer.com/go/cabmdpc/cab/, March 24, 2020

*Corporate Office Properties Trust (OFC)

Corporate Office is a unique office REIT that is specifically focused on serving U.S. government agencies and defense contractors engaged in defense information technology and national security-related activities. This is a very strategic niche, and one in which COPT’s tenants are generally focused on knowledge-based activities such as cybersecurity, R&D, and other highly technical defense and security areas.

COPT has a strategic tenant niche that provides real estate solutions serving a specialized cyber-based platform. The defense installations (or government demand drivers) where COPT’s tenants operate are R&D, high-tech knowledge-based centers, NOT weapons or troops-related.

Accordingly, COPT has a regional focus on owning properties in targeted markets or submarkets in the Greater Washington, DC/Baltimore region with strong growth attributes. The company is a market leader in these markets, and the company has identified five impacts of industry recovery that are or will be driving demand at these mission-critical, Defense/IT locations.

So this means that you want find WeWork within COPT’s portfolio and the concentration of lease expirations within the mission critical defense/IT locations mitigates rollover risk (barriers to exit): Overall renewal rate of 70%−75% expected in 2020 (on 1.16 million SF of large leases expiring by the end of 2021). COPT expects to renew 85%−90% of leases and 100% of the SF are at defense/IT locations.

The company has a dramatically improved balance sheet (BBB-) and has committed to operating at conservative leverage levels (debt/EBITDA ~6.0x » debt/adjusted book ≤40%). Shares trade at $19.82 with a P/FFO multiple of 10.3x (five-year average is 13.7x). The dividend yield is 5.5% and we recently upgraded to a Strong Buy.

Brad Thomas, Forbes Real Estate Investor, forbes.com/newsletters, brad@theintelligentreitinvestor.com, April 4, 2020

High Yield 828

Daktronics, Inc. (DAKT) | Daily Alert March 24

Brookings, South Dakota-based Daktronics makes scoreboards, video boards, and a wide range of associated products and services. The temporary closure of sporting events will not last forever, and the other applications of its technology in highway safety, advertising, and gas station video signage presents new avenues for growth. The CEO and CFO were both buyers of DAKT shares over the past two weeks.

Since the market’s decline, when we bought the stock on March 13, we now have lower prices that enhance the value of this stock, and it is officially in the portfolio as a recommended buy.

John Dobosz, Forbes Dividend Investor, www.newsletters.forbes.com, 212-367-3388, March 13 and March 17, 2020

*Vodafone Group Plc (VOD)

Vodafone will give monthly customers free access to mobile data for 30 days in Britain, aiming at the poor. VOD also is a co-developer with a German institution of a bluetrack system tacking the cellphone contacts of people with the virus using bluetooth tracking, called Pan European Privacy Preserving Proximity Tracing or PEPP-PT. Those who don’t own a cellphone will get a bluetooth capable armband as the program is now being run by Oxford University for Britain. Despite this, VOD is down in Britain because of the failure of near-bankrupt UK mobile telephone sellers Dixon’s Carphone which could not pay money owed to the O2 sub of Spanish Telefonica. BUY. I did.

Vivian Lewis, Global Investing, global-investing.com, 212-758-9480, April 1, 2020

Funds & ETFs 828

Invesco QQQ Trust (QQQ) | Daily Alert April 14

Invesco QQQ Trust based on the Nasdaq-100 Index, which encompasses 100 of the largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on
market capitalization. Both the fund and index are rebalanced quarterly and reconstituted annually. Reconstitution involves revising the list of constituent stocks.

Worth noting—the fund is the sixth most actively traded US ETF, and is the fifth largest ETF in terms of assets, according to ETFdb.com. The fund and index’s emphasis on the largest stocks and elimination of financial firms results in a technology heavy portfolio—about 47% of assets. Hence, large-cap technology stocks’ performance plays a big part in this fund’s performance.

The fund is also concentrated when looking at individual holdings. Microsoft accounts for almost 12% of assets, and the top ten stocks (four in the Information Technology sector and four in Communications) account for just shy of 54% of assets.

The average market cap for the fund’s holdings is more than $500 billion. To give you a point of reference, small cap stocks are considered to be under $3.5 billion; mid-cap $3.5b–$9.0b; and large-cap above $9 billion. In addition, the fund maintains a low expense ratio. The gross expenses for the Trust for 2019 were 0.20% of the Net Asset Value, and the fund has committed to cap the annual expenses at that level.

This ETF consistently outperforms the Russell 1000. It has finished in the top quartile of funds in its category nine of the last 10 years. In addition, it has also outperformed the broad stock market (as measured by the Vanguard 500 Index Fund) for nine of the last 10 years.

QQQ is currently ranked #1 in our Domestic Stock Fund list. It is a steady long-term performer and would serve as an excellent core holding for any long-term portfolio.

Brian W. Kelly, Moneyletter, www.moneyletter.com, 800-890-9670, April 2020

Virtus LifeSci Biotech Products ETF (BBP) | Daily Alert April 2

Biotechnology has become a major industry and the source of the world’s top breakthrough drugs. Biotech companies offer the most explosive profits in the healthcare industry. However, stocks of individual biotech companies are often volatile. Diversification is essential and can be accomplished by investing in a diversified biotech electronically traded fund (ETF) investing exclusively in a portfolio of biotech companies.

Virtus LifeSci Biotech Products is a passively managed biotech ETF that weighs the portfolio selections essentially equally, as opposed to weighing selections according to market capitalization.

This is an important aspect because biotech ETFs weighing their portfolio selections essentially equally have been the best performers by far because they have larger investments in smaller biotechnology companies which are acquisition targets for large pharmaceutical companies looking for ways to revitalize their drug portfolios by scooping up smaller companies.

Gray Cardiff, Sound Advice, www.soundadvice-newsletter.com, March 2020

*Fidelity Capital & Income Fund (FAGIX)

If you’re in a position to put cash to work, but questioning whether you want to bear the full risk of the stock market at a time of high uncertainty, high-yield bonds offer a nice compromise with several potential advantages:

Lower risk. Fidelity Capital & Income has a volatility score of 0.72. In effect, it behaves like a low-risk stock fund.

An income stream that reinvests in additional shares monthly. The fund yields more than 5%, meaning over the next 12 months it could benefit from both a robust income stream and share price gains.

Little or no interest-rate risk. Because credit-risk is the driving concern for high-yield bonds, especially now, they act more like stocks than bonds.

Less risk of downgrades. Today it’s only a slight exaggeration to say there are two types of corporate bonds: high-yield, and bonds that may soon be downgraded to high-yield. Better to own the debt that already reflects reality.

If you take the plunge, aim for an investment horizon of at least three years (ideally five). In the past, this fund has usually recovered its losses within 12 months, but they often outperform for even longer.

Jack Bowers, John M. Boyd and John Bonnanzio, Fidelity Monitor & Insight, fidelitymonitor.com, 800-397-3094, April 2020

Updates 828

SELL New Mountain Finance Corporation (NMFC)

Updated from WSBI 824, December 18, 2020 | Daily Alert March 24

We are deleting New Mountain Finance Corporation, as the shares fell below a 10% trailing stop.

John Dobosz, Forbes Dividend Investor, newsletters.forbes.com, 212-367-3388, March 13, 2020

*SELL Fidelity Floating Rate High Income Fund (FFRHX)

Updated from WSBDS 312, September 12, 2018

We sold our entire position in Floating Rate High Income and purchased Fidelity Capital & Income Fund (FAGIX) with the proceeds.