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Tuesdays Vital Data: Micron Technology, Inc. (MU), General Electric Company (GE) and Amazon.com,

U.S. stock futures are mixed heading into the first trading day of 2018. Investors appear to be searching for a new driver for the major market indices now that tax reform has passed.

stock market todayGeopolitical concerns are headlining this morning, with North Korean leader Kim Jong Un claiming to have a “nuclear button.” However, Un suggested he is willing to engage in talks with South Korea at next month’s Winter Olympics.

Heading into the open, futures on the Dow Jones Industrial Average are up 0.28%, S&P 500 futures are up 0.28% and Nasdaq-100 futures have added 0.37%.

Turning to the options pits, Friday’s volume was respectable despite being on the light side. Overall, about 13.8 million calls and 11.8 million puts changed hands. The CBOE single-session equity put/call volume ratio rose to a one-week high of 0.59 and the 10-day moving average held at 0.57.

Taking a closer look at Friday’s options activity, Micron Technology, Inc. (NASDAQ:MU) attracted heavy call volume on the last trading day of 2017. Elsewhere, General Electric Company (NYSE:GE) options traders held out hope that 2018 couldn’t get any worse. Finally, President Donald Trump took aim at Amazon.com, Inc.’s (NASDAQ:AMZN) relationship with the U.S. Postal Service.

Tuesday’s Vital Options Data: Micron Technology, Inc. (MU), General Electric Company (GE) and Amazon.com, Inc. (AMZN)investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-300×137.png 300w, investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-65×30.png 65w, investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-200×92.png 200w, investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-400×183.png 400w, investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-116×53.png 116w, investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-100×46.png 100w,https://investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-109×50.png 109w, investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-78×36.png 78w, investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-170×78.png 170w” sizes=”(max-width: 548px) 100vw, 548px” />

Micron Technology, Inc. (MU)

MU finished 2017 as the fastest growing semiconductor stock, with a gain of more than 87% on the year. Micron rode a wave of growth in the memory market, with strong memory prices vaulting the company into the top five semiconductor stocks by revenue. What’s more, investors appear to be betting on the trend to carry over into 2018.

Volume on the last trading day of 2017 came in at a brisk pace for MU stock. More than 301,000 MU options contracts traded on Friday, with calls making up 69% of the day’s take. Overall, MU’s January 2018 put/call open interest ratio rests at a lowly perch of 0.63 for the first expiration month of 2018.

But calls did not hold a monopoly on MU’s options activity on Friday. Data from Trade-Alert.com reveals that a block of 10,000 July $40 puts traded in the early afternoon at the bid price of $4.30, or $430 per contract. These contracts appear to have been sold to open. This means that the trader is either looking to pick up MU stock at $40 on a pullback, or expecting MU stock to hold above $40 through expiration.

General Electric Company (GE)

GE was 2017’s Dog of the Dow. The stock shed nearly half its value last year amid restructuring concerns as new CEO John Flannery did everything in his power to slash costs, layoff workers and sell underperforming divisions.

But General Electric pays out a quarterly dividend of 43 cents per share, resulting in a dividend yield of 2.75% — among the highest on the Dow right now. As a result, many investors are looking at GE stock as a potential value play for 2018. Among those betting on a bounce are GE options traders.

On Friday, GE options volume rose to 230,000 contracts, or roughly 1.5 times the stock’s daily average. Calls made up an impressive 67% of the day’s take.

Furthermore, it would appear that many of these calls were opened in the January 2018 series, as the put/call OI ratio fell from 0.50 last week to today’s perch at 0.48. In other words, GE options traders are betting on a fresh start for 2018 for this Dog of the Dow.

Amazon.com, Inc. (AMZN)

With a gain of roughly 56%, AMZN stock put in a stellar performance in 2017. But that strong performance has drawn considerable ire from the current U.S. administration. President Trump tweeted out that Amazon is giving the U.S. Postal Service a raw deal.

“Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!” Trump said on Twitter.

AMZN options traders took the criticism in stride, however. Volume on Friday rose to 143,000 contracts, with calls managing 55% of the day’s take. Still, AMZN options activity points toward skepticism for the first month of the year.

Currently, the January 2018 put/call OI ratio rests at 1.15 for AMZN, with puts outnumbering calls. That said, such activity is not unusual for a stock trading north of $1,000, given that premiums on near-the-money options are considerably high. As a result, many of these AMZN puts were likely sold-to-open in the hopes of capturing premium.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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7 Dividend Growth Stocks Worth Owning

Do you invest in dividend growth stocks? If you don’t, you ought to consider doing so. These dividend stocks to buy could be your ticket to a better retirement.

Many dividend investors get caught up focusing on yield when the growth is what’s truly important. By utilizing the power of compound interest, investors can achieve higher returns by merely owning the stocks of companies who regularly hike their dividends.

A Canadian finance site, Hardbacon, provides an excellent example why investing in dividend growth stocks is a sound idea:

“If you invest in a stock which pays $1 in dividends a year and costs $25, it means it yields 4% at the time you buy it (dividend yield on cost),” wrote Sam Kovacs. “If the company increases its dividend 10 cents every year, in 10 years those same stocks which you bought for $25 will be paying out $2 in dividends, an outstanding 8% yield on cost.”

That’s the power of income-growth stocks. Here are seven dividend stocks to buy that are worth owning. If that’s not enough to get your mouth salivating, each has hiked its dividends in 2017 by 20% or more!

Dividend Stocks to Buy: Best Buy (BBY) Why Best Buy Co Inc BBY Stock Is a Great Buy Thanks to Apple Incinvestorplace.com/wp-content/uploads/2016/04/bbymsn-300×165.jpg 300w, investorplace.com/wp-content/uploads/2016/04/bbymsn-73×40.jpg 73w, investorplace.com/wp-content/uploads/2016/04/bbymsn-55×30.jpg 55w, investorplace.com/wp-content/uploads/2016/04/bbymsn-250×137.jpg 250w, investorplace.com/wp-content/uploads/2016/04/bbymsn-200×110.jpg 200w, investorplace.com/wp-content/uploads/2016/04/bbymsn-162×88.jpg 162w, investorplace.com/wp-content/uploads/2016/04/bbymsn-160×88.jpg 160w, investorplace.com/wp-content/uploads/2016/04/bbymsn-65×36.jpg 65w, investorplace.com/wp-content/uploads/2016/04/bbymsn-100×55.jpg 100w,https://investorplace.com/wp-content/uploads/2016/04/bbymsn-91×50.jpg 91w, investorplace.com/wp-content/uploads/2016/04/bbymsn-78×43.jpg 78w, investorplace.com/wp-content/uploads/2016/04/bbymsn-170×93.jpg 170w” sizes=”(max-width: 728px) 100vw, 728px” />Source: Austin Kirk via Flickr

If I told you that I could sell you a dividend growth stock that’s increased its annual payout for 14 consecutive years, is yielding more than 2%, and raised its 2017 dividend by 21.4%, you’d want to know more.

But slap this description on Minneapolis-based Best Buy Co Inc (NYSE:BBY) and you’re likely to turn very skeptical. After all, Best Buy is supposed to be getting slaughtered in the electronics arena by Amazon.com, Inc. (NASDAQ:AMZN).

Not so fast.

Take a quick look at Best Buy’s stock chart and you’ll see that it’s currently trading within 3% of its all-time high of $69.39. In 2017, it gained 64% on the year and that’s after a 45% gain in 2016.

During the critical holiday shopping season, Best Buy held its own against Amazon according to industry analysis.

I’ve been a fan of CEO Hubert Joly all the way back to 2013 when the former hospitality executive implemented his turnaround plan for the electronics retailer.

Don’t be fooled by the company’s so-called weak Q3 2017 results. Same-store sales grew 4.4% and it earned 78 cents a share despite lowering prices to match Amazon, etc.

Best Buy could easily hit $100 in 2018.

Dividend Stocks to Buy: Vail Resorts (MTN) investorplace.com/wp-content/uploads/2017/03/mtnmsn-300×165.jpg 300w, investorplace.com/wp-content/uploads/2017/03/mtnmsn-55×30.jpg 55w, investorplace.com/wp-content/uploads/2017/03/mtnmsn-200×110.jpg 200w, investorplace.com/wp-content/uploads/2017/03/mtnmsn-162×88.jpg 162w, investorplace.com/wp-content/uploads/2017/03/mtnmsn-400×220.jpg 400w, investorplace.com/wp-content/uploads/2017/03/mtnmsn-116×64.jpg 116w, investorplace.com/wp-content/uploads/2017/03/mtnmsn-100×55.jpg 100w, investorplace.com/wp-content/uploads/2017/03/mtnmsn-91×50.jpg 91w, investorplace.com/wp-content/uploads/2017/03/mtnmsn-78×43.jpg 78w, investorplace.com/wp-content/uploads/2017/03/mtnmsn-170×93.jpg 170w” sizes=”(max-width: 728px) 100vw, 728px” />Source: Shutterstock

The U.S. economy is unbelievably healthy right now and nobody benefits more from this than Vail Resorts, Inc. (NYSE:MTN), North America’s largest operator of ski resorts.

Its stock hasn’t had a down year since 2011 and although it’s down in early 2018 trading, all the signs point to another stellar year on the slopes.

“We have continued to drive significant growth in our destination markets which represent approximately 60% of our increase in pass units,” CEO Rob Katz said recently. “We continue to see strength across all geographies, with particularly strong performance in Northern California, the Pacific Northwest and the Northeast and continued solid growth in Colorado and British Columbia.“

The sale of season passes as of the beginning of December were up 14% in units and 20% in dollars over last year; they’re not headed downhill anytime soon.

Acquisitions drive Vail Resort’s growth — Whistler Blackcomb being its most significant to date — and it’s not about to stop looking for resorts to buy that cater to both the affluent destination visitor as well as the local season-pass skier.

We might be aging but not quickly enough to slow Vail Resorts over the next decade. MTN might be the best dividend growth stock of the bunch.

Dividend Stocks to Buy: Oneok (ONE) investorplace.com/wp-content/uploads/2016/06/naturalgasmsn-1-300×165.jpg 300w, investorplace.com/wp-content/uploads/2016/06/naturalgasmsn-1-55×30.jpg 55w, investorplace.com/wp-content/uploads/2016/06/naturalgasmsn-1-200×110.jpg 200w, investorplace.com/wp-content/uploads/2016/06/naturalgasmsn-1-162×88.jpg 162w, investorplace.com/wp-content/uploads/2016/06/naturalgasmsn-1-65×36.jpg 65w, investorplace.com/wp-content/uploads/2016/06/naturalgasmsn-1-100×55.jpg 100w, investorplace.com/wp-content/uploads/2016/06/naturalgasmsn-1-91×50.jpg 91w, investorplace.com/wp-content/uploads/2016/06/naturalgasmsn-1-78×43.jpg 78w,https://investorplace.com/wp-content/uploads/2016/06/naturalgasmsn-1-170×93.jpg 170w” sizes=”(max-width: 728px) 100vw, 728px” />Source: Andy Arthur via Flickr

Higher energy prices to a limited extent drive stocks like Oneok, Inc. (NYSE:OKE), one of the biggest midstream service providers in the U.S.

As most of the Northeast fight a brutal winter storm early in 2018, natural gas prices have spiked to unprecedented levels; a problem made worse by the fact there’s a shortage of pipelines shipping natural gas to cities like New York and Boston.

Oneok can’t help with the Northeast as its pipelines and processing facilities are primarily west of the Mississippi River. However, it can help with the processing and shipping of natural gas and natural gas liquids (NGLs) in the regions it serves.

On January 4 it announced that it’s building $1.4 billion pipeline to transport NGLs from the Rocky Mountains to its Mid-Continent NGL facilities providing the middle part of the country with a more significant energy supply.

In 2017, OKE stock was relatively flat, down 2% on the year, significantly lower than the S&P 500, which was up 22%.

That’s the bad news.

The good news is that Oneok upped its annual dividend this past year by 21.1% to $2.98, providing a juicy 5.3% yield — double the 10-year U.S. Treasury.

As energy stocks go, Oneok’s a keeper.

Dividend Stocks to Buy: Federal Agricultural Mortgage (AGM) investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-300×165.jpg 300w, investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-55×30.jpg 55w, investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-200×110.jpg 200w, investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-162×88.jpg 162w, investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-400×220.jpg 400w, investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-116×64.jpg 116w, investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-100×55.jpg 100w, investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-91×50.jpg 91w,https://investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-78×43.jpg 78w, investorplace.com/wp-content/uploads/2018/01/indoorfarmingmsn-170×93.jpg 170w” sizes=”(max-width: 728px) 100vw, 728px” />Source: Shutterstock

This mostly unheralded stock is currently trading within 5% of its all-time high of $80.47. In 2017, it was up 39%, which followed an 85% gain in 2016. Over the past decade, it’s achieved an annualized total return of 12%, 300 basis points better than the S&P 500.

Currently yielding 1.9% after all of these gains, Federal Agricultural Mortgage Corp. (NYSE:AGM), better known as Farmer Mac, continues to be the agricultural industry’s best friend providing credit to agricultural lenders and businesses across the U.S.

With the need for food production likely to remain high indefinitely combined with a rigorous underwriting process, an investment in Farmer Mac is as reliable as they come.

In 2017, Farmer Mac upped the annual dividend by 38.5% to $1.44 a share. That’s money in the bank. Five years ago, AGM stock paid an annual dividend of just $0.48. In 2016, the company initiated a 30% payout target of core earnings which should keep the dividend growing at double digits on an annual basis.

If you like a little capital appreciation with your dividend growth stocks, AGM is for you.

Dividend Stocks to Buy: UnitedHealth (UNH) UnitedHealth UNH stockinvestorplace.com/wp-content/uploads/2017/07/unitedhealth-group-inc-unh-stock-ipsize-300×150.jpg 300w, investorplace.com/wp-content/uploads/2017/07/unitedhealth-group-inc-unh-stock-ipsize-768×384.jpg 768w, investorplace.com/wp-content/uploads/2017/07/unitedhealth-group-inc-unh-stock-ipsize-60×30.jpg 60w, investorplace.com/wp-content/uploads/2017/07/unitedhealth-group-inc-unh-stock-ipsize-200×100.jpg 200w, investorplace.com/wp-content/uploads/2017/07/unitedhealth-group-inc-unh-stock-ipsize-400×200.jpg 400w, investorplace.com/wp-content/uploads/2017/07/unitedhealth-group-inc-unh-stock-ipsize-116×58.jpg 116w,https://investorplace.com/wp-content/uploads/2017/07/unitedhealth-group-inc-unh-stock-ipsize-100×50.jpg 100w, investorplace.com/wp-content/uploads/2017/07/unitedhealth-group-inc-unh-stock-ipsize-78×39.jpg 78w, investorplace.com/wp-content/uploads/2017/07/unitedhealth-group-inc-unh-stock-ipsize-800×400.jpg 800w, investorplace.com/wp-content/uploads/2017/07/unitedhealth-group-inc-unh-stock-ipsize-170×85.jpg 170w” sizes=”(max-width: 950px) 100vw, 950px” />Source: Shutterstock

Can you guess the last time UnitedHealth Group Inc (NYSE:UNH) stock lost money on an annual basis? Try the Reagan era. I’m just kidding. It was 2008. Since then it’s rattled off nine consecutive years of gains.

UNH operates two business segments: Health Benefits, which provides healthcare insurance to millions of Americans and Optum, its provider of healthcare services. Together, they play a big part in the wellness of America.

In December, UNH announced that it was buying the Davita Medical Group for $4.9 billion from Davita Inc (NYSE:DVA). Davita wants to focus on its dialysis business, so Optum was a natural home for the company’s nearly 300 clinics and six outpatient surgical centers.

When you’ve got a market cap of nearly $220 billion like UnitedHealth, a $4.9 billion acquisition is coffee money — but it provides additional growth for Optum, so it’s a win/win.

Bottom line: UNH stock isn’t a big yielder at 1.3%, but it’s track record of growing its stock price should be enough for most investors.

Dividend Stocks to Buy: Illinois Tool Works (ITW) investorplace.com/wp-content/uploads/2018/01/itwmsn-300×165.jpg 300w, investorplace.com/wp-content/uploads/2018/01/itwmsn-55×30.jpg 55w, investorplace.com/wp-content/uploads/2018/01/itwmsn-200×110.jpg 200w, investorplace.com/wp-content/uploads/2018/01/itwmsn-162×88.jpg 162w, investorplace.com/wp-content/uploads/2018/01/itwmsn-400×220.jpg 400w, investorplace.com/wp-content/uploads/2018/01/itwmsn-116×64.jpg 116w, investorplace.com/wp-content/uploads/2018/01/itwmsn-100×55.jpg 100w, investorplace.com/wp-content/uploads/2018/01/itwmsn-91×50.jpg 91w, investorplace.com/wp-content/uploads/2018/01/itwmsn-78×43.jpg 78w, investorplace.com/wp-content/uploads/2018/01/itwmsn-170×93.jpg 170w” sizes=”(max-width: 728px) 100vw, 728px” />Source: Shutterstock

Of all 31 stocks on my list, Illinois Tool Works Inc. (NYSE:ITW) has the fifth-longest streak for the consecutive number of years raising its annual dividend at 43. In 2017, it raised its dividend by 20.0% to $3.12 per share. Since 2012, it’s grown its annual dividend by 15% on a compounded basis with the last two years seeing increases above that average.

Yes, it only yields 1.9%, but the dividend yield isn’t nearly as important as the dividend growth because a growing dividend typically is the result of growing earnings.

Usually, I’m not a fan of share repurchases, but ITW does a good job keeping track of how it’s doing on its buybacks. Over the past five years it’s repurchased $11.4 billion of its shares reducing the share count by 28%, but more importantly, earning a 24% internal rate of return on those purchases.

Even better, over half the $11.4 billion was used to buy shares in 2013 and 2014 at prices of $85 or less — it currently trades at $166.

Over the past five years, the industrial conglomerate’s been on a transformation to building a business that’s growing its margins and organic revenues while responsibly allocating capital.

Frankly, Illinois Tool Works is what General Electric Company (NYSE:GE) ought to aspire to.

Dividend Stocks to Buy: Cheesecake Factory (CAKE) investorplace.com/wp-content/uploads/2018/01/cakemsn-300×165.jpg 300w, investorplace.com/wp-content/uploads/2018/01/cakemsn-55×30.jpg 55w, investorplace.com/wp-content/uploads/2018/01/cakemsn-200×110.jpg 200w, investorplace.com/wp-content/uploads/2018/01/cakemsn-162×88.jpg 162w, investorplace.com/wp-content/uploads/2018/01/cakemsn-400×220.jpg 400w, investorplace.com/wp-content/uploads/2018/01/cakemsn-116×64.jpg 116w, investorplace.com/wp-content/uploads/2018/01/cakemsn-100×55.jpg 100w, investorplace.com/wp-content/uploads/2018/01/cakemsn-91×50.jpg 91w, investorplace.com/wp-content/uploads/2018/01/cakemsn-78×43.jpg 78w,https://investorplace.com/wp-content/uploads/2018/01/cakemsn-170×93.jpg 170w” sizes=”(max-width: 728px) 100vw, 728px” />Source: Shutterstock

Who doesn’t love the Cheesecake Factory Inc (NASDAQ:CAKE)?

Seriously, anyone who doesn’t enjoy a meal at the restaurant chain best known for its variety of cheesecake desserts every now and again, really has a hard time letting loose.

Sure, it’s not gourmet, but when you’ve managed to increase your dividend by 20.8% in a single year and your stock is currently yielding 2.3%, the cheesecake isn’t the only thing worth trying at the California company.

The Cheesecake Factory might be old news in the U.S., but here in Canada where I live, the first location just opened this past November in Toronto at Yorkdale Mall, Canada’s most productive mall regarding sales per square foot.

Lineups were snaking through the mall of people trying to get their fill. Canada could easily use another 19 or 20. It will do very well here despite the fact Canadians have a hard time getting excited about cookie-cutter restaurant chains.

Cheesecake Factory’s financials might not be as strong as past years but its growth drivers — Canada, getting its cheesecake and other desserts into the grocery stores and investments in North Italia and Flower Child restaurants — suggest it’s got plenty to push the stock higher in the coming years.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.

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Is Advanced Micro Devices, Inc. Stock a Screaming Buy Thanks to Intel?

Advanced Micro Devices, Inc. (NASDAQ:AMD) had a rather disappointing year in 2017. AMD stock fell more than 9% over those 12 months. Long-term investors shouldn’t be too deterred though, assuming they caught the near-300% rally in 2016. And after the down year, AMD stock taken off, already climbing almost 16% in the early days of 2018

Depending on how serious a flaw there is with Intel Corporation (NASDAQ:INTC), it could open a window for AMD and that would allow the recent momentum in AMD stock to continue. So what’s the skinny?

Essentially, there was a security flaw in Intel chips. The bugs, known as Meltdown and Spectre, effect everything from Apple Inc. (NASDAQ:AAPL) iPhones to Alphabet Inc (NASDAQ:GOOGL) and its Google Chrome browser. The issue also had an impact on Google Android devices, Microsoft Corporation (NASDAQ:MSFT) Windows and even the data center services for Amazon.com, Inc. (NASDAQ:AMZN).

For AMD’s part, the company said that there’s a “near zero risk” for its chips as a result of Intel’s security flaw. From an investment standpoint, shares of INTC have been falling while AMD has been rallying on the theory that, going forward, AMD chips will be the more attractive option.

Not a Zero Sum Industry

As much as I want that to be the case for AMD, I don’t know that it will be the end result. Although admittedly, this certainly doesn’t hurt Advanced Micro Devices stock. Patches are being put in place by MSFT, AMZN, GOOGL, AAPL and INTC. Many have already been put into action and the companies say customers remain safe at the moment despite the vulnerability, so long as they update their products. The concern for AMD stock is whether this news justifies a 16% rally in the stock.

Should it not impact INTC’s long-standing relationships or hurt sales, then there won’t be any real impact on AMD’s business. It’s even possible that it will push buyers away from INTC and over to Nvidia Corporation (NASDAQ:NVDA) rather than AMD. This isn’t a zero-sum industry, nor is this a zero-sum event.

We’ll see how it turns out.

Coming Soon: A Viable Business

We don’t know how much of an impact this INTC news will have on AMD stock. We don’t know if it will have any impact at all. But that doesn’t mean there isn’t reason to like Advanced Micro Devices stock nevertheless.

Granted, with shares now trading about a dime below $12, AMD was more attractive a month ago near $10. That has been the theme, though. Buy on sharp pullbacks and sell on rallies. Until AMD stock breaks out (more on that in a minute) we have to stick with the trading ranges we have.

But AMD stock is more than just a trading vehicle. For investors who can look beyond the next one to three months, there’s a really viable business here. The company remains well-positioned in key growth markets. Ranging from video games to graphic chips, vehicles and the cloud. While many view Nvidia as the top chip, AMD isn’t a bad alternative.

Besides, business is coming along as well. After years of losses, Advanced Micro is looking to turn a profit in 2017. While analysts forecast just 13 cents per share in earnings for fiscal year 2017, that’s up almost 200% year-over-year. They further expect 177% growth in 2018. Revenue growth of 23% in 2017 is forecast to slow to just 12.3% in 2018.

The positive here is that profitability is expanding much faster than revenue, meaning margins are moving in the right direction. If AMD can turn cash flow positive, I think shares can really start to gain some upside momentum. That should be the case as revenues churn higher and profitability explodes.

It helps that between the three — NVDA, AMD and INTC — Advanced has the lowest sales-based valuation.

Trading AMD Stock

chart of AMD stock priceinvestorplace.com/wp-content/uploads/2018/01/AMD-768×574.png 768w, investorplace.com/wp-content/uploads/2018/01/AMD-40×30.png 40w, investorplace.com/wp-content/uploads/2018/01/AMD-200×150.png 200w, investorplace.com/wp-content/uploads/2018/01/AMD-400×300.png 400w, investorplace.com/wp-content/uploads/2018/01/AMD-116×87.png 116w, investorplace.com/wp-content/uploads/2018/01/AMD-100×75.png 100w, investorplace.com/wp-content/uploads/2018/01/AMD-167×125.png 167w, investorplace.com/wp-content/uploads/2018/01/AMD-67×50.png 67w, investorplace.com/wp-content/uploads/2018/01/AMD-78×58.png 78w,https://investorplace.com/wp-content/uploads/2018/01/AMD-800×598.png 800w, investorplace.com/wp-content/uploads/2018/01/AMD-160×120.png 160w, investorplace.com/wp-content/uploads/2018/01/AMD.png 900w” sizes=”(max-width: 300px) 100vw, 300px” />
Click to Enlarge

Since we don’t know the full impact of INTC, AMD stock could have limited upside in the short term. The 200-day moving average near $12.40 is acting as resistance. Should it give way, $13 and above becomes the new target. But given the recent rally and current resistance, investors should be more prudent.

Either wait for a breakout and close over the 200-day moving average or look for a pullback down toward $11. I am hoping for the latter, as I’d like a lower cost basis on a longer-term position.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.

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10 Stocks to Buy for Surefire Gains in 2018 and Beyond

With everyone looking ahead now to 2018, investors are getting bombarded with ideas regarding the best stocks to buy.

Everyone has their own suggestion about which stocks are going to hit the big time in the coming months, but fear not! Here we have a list of 10 sure-fire winners that tick all the boxes. These stocks to buy are not purely subjective. Instead, they have big support from the Street’s top analysts and the upside potential to match based on the average analyst price target.

I found these stocks using a nifty Top Analyst Stocks tool on TipRanks. This pulls up stocks with bullish recent ratings from multiple top analysts. Scanning through this list, I was able to identify 10 top stocks that make compelling investing opportunities right now. Just to note, I purposefully eliminated stocks that only have big upside potential because share prices are plummeting.

With that in mind, let’s dive in and see which stocks make the cut for 2018:

Stocks to Buy: Micron (MU) Stocks to Buy: Micron (MU)investorplace.com/wp-content/uploads/2017/09/mumsn-300×165.jpg 300w, investorplace.com/wp-content/uploads/2017/09/mumsn-55×30.jpg 55w, investorplace.com/wp-content/uploads/2017/09/mumsn-200×110.jpg 200w, investorplace.com/wp-content/uploads/2017/09/mumsn-162×88.jpg 162w, investorplace.com/wp-content/uploads/2017/09/mumsn-400×220.jpg 400w, investorplace.com/wp-content/uploads/2017/09/mumsn-116×64.jpg 116w, investorplace.com/wp-content/uploads/2017/09/mumsn-100×55.jpg 100w, investorplace.com/wp-content/uploads/2017/09/mumsn-91×50.jpg 91w, investorplace.com/wp-content/uploads/2017/09/mumsn-78×43.jpg 78w,https://investorplace.com/wp-content/uploads/2017/09/mumsn-170×93.jpg 170w” sizes=”(max-width: 728px) 100vw, 728px” />Source: Shutterstock

Over the last three months, semiconductor stock Micron Technology, Inc. (NASDAQ:MU) has received a whopping 19 buy ratings and just 3 hold ratings. As a result, the stock has a ‘Strong Buy’ analyst consensus rating. These analysts believe (on average) that Micron has big upside potential of over 30% from the current share price. This would take MU from $44.12 all the way to $57.65. Bear in mind, MU has already doubled year-to-date!

Five-star Rajvindra Gill assigned a buy rating to MU with a very confident $76 price target on Dec. 20 (72% upside). He says the market is undervaluing MU and he sees serious potential in: 1) 3D NAND transition, which generates a significant cost advantage (30%-35%); and 2) technology limitations in DRAM supply growth.

“We believe investors are focusing too heavily on a NAND pricing decline to see the big picture. With another record quarter and guide (beat revenue and EPS consensus by 5.6% and 11.4%, respectively) in the bag, Micron is on track to generate quarterly EPS of nearly $2.50 or roughly $10 per share of annualized earnings” said Gill on Dec. 20.

Note that this is a top analyst worth following. He is ranked No. 43 out of over 4,700 analysts tracked by TipRanks.

Stocks to Buy: Spark Therapeutics (ONCE)

Stocks to Buy: Spark Therapeutics (ONCE)investorplace.com/wp-content/uploads/2017/08/oncemsn-300×165.jpg 300w, investorplace.com/wp-content/uploads/2017/08/oncemsn-55×30.jpg 55w, investorplace.com/wp-content/uploads/2017/08/oncemsn-200×110.jpg 200w, investorplace.com/wp-content/uploads/2017/08/oncemsn-162×88.jpg 162w, investorplace.com/wp-content/uploads/2017/08/oncemsn-400×220.jpg 400w, investorplace.com/wp-content/uploads/2017/08/oncemsn-116×64.jpg 116w, investorplace.com/wp-content/uploads/2017/08/oncemsn-100×55.jpg 100w, investorplace.com/wp-content/uploads/2017/08/oncemsn-91×50.jpg 91w, investorplace.com/wp-content/uploads/2017/08/oncemsn-78×43.jpg 78w,https://investorplace.com/wp-content/uploads/2017/08/oncemsn-170×93.jpg 170w” sizes=”(max-width: 728px) 100vw, 728px” />

Spark Therapeutic Inc’s (NASDAQ:ONCE) innovative gene therapy has just received a critical approval from the Food and Drug Administration. Excitingly, this is the first gene therapy to restore sight to individuals with a rare inherited eye disease that can cause blindness. The treatment, known as Luxturna, can treat both children and adults. Following the news, three analysts quickly reiterated their Spark buy ratings.

“Today’s approval marks another first in the field of gene therapy — both in how the therapy works and in expanding the use of gene therapy beyond the treatment of cancer,” said FDA commissioner Scott Gottlieb. “This milestone reinforces the potential of this breakthrough approach in treating a wide range of challenging diseases.”

Overall this ‘Strong Buy’ stock has a bullish average analyst price target of $73 (38% upside potential). We don’t know the drug’s price just yet, but Phil Nadeau, a top Cowen & Co analyst, says: “$500,000 per procedure is reasonable for a once-per-lifetime therapy that has the potential to be curative.”

Meanwhile, Raymond James’ Reni Benjamin notes that: “1) with no negative surprises, the label is slightly better than expected, only excluding the use of this gene therapy in infants under 12 months of age; 2) Spark also received a Rare Pediatric Disease Priority Review Voucher, which we estimate is worth approximately $125 million based on recent transactions.”

Stocks to Buy: Alcoa (AA) Stocks to Buy: Alcoa (AA)investorplace.com/wp-content/uploads/2016/06/aamsn-300×165.jpg 300w, investorplace.com/wp-content/uploads/2016/06/aamsn-55×30.jpg 55w, investorplace.com/wp-content/uploads/2016/06/aamsn-200×110.jpg 200w, investorplace.com/wp-content/uploads/2016/06/aamsn-162×88.jpg 162w, investorplace.com/wp-content/uploads/2016/06/aamsn-65×36.jpg 65w, investorplace.com/wp-content/uploads/2016/06/aamsn-100×55.jpg 100w, investorplace.com/wp-content/uploads/2016/06/aamsn-91×50.jpg 91w, investorplace.com/wp-content/uploads/2016/06/aamsn-78×43.jpg 78w, investorplace.com/wp-content/uploads/2016/06/aamsn-170×93.jpg 170w” sizes=”(max-width: 728px) 100vw, 728px” />Source: Josh Hallett via Flickr (Modified)

Pennsylvania-based Alcoa Corp (NYSE:AA) is the world’s sixth largest producer of aluminum with locations all over the world. The stock is catching the attention of investors following a bullish upgrade from Credit Suisse. On Dec. 20, five-star Credit Suisse analyst Curt Woodworth ramped up his price target from $42 to $61. This now suggests 22% upside potential from the current price. Woodworth is anticipating that tighter aluminum supply will push up prices due to alumina and bauxite closures.

“We note three smelters curtailed production last week, and the government is set to sharply increase inspections in January. We expect the aluminum market to tighten into late 1Q-18 as downstream demand sharply recovers.” Plus, China’s increased commitment to environmental policy will further curtail supply according to Woodworth.

Overall, AA has a ‘Strong Buy’ rating, with only buy ratings from top analysts in the last three months. At the same time, the average analyst price target of $60 stands at 20% upside from the current share price.

Stocks to Buy: MasTec (MTZ) Stocks to Buy: MasTec (MTZ)investorplace.com/wp-content/uploads/2017/01/mtzmsn-300×165.jpg 300w, investorplace.com/wp-content/uploads/2017/01/mtzmsn-55×30.jpg 55w, investorplace.com/wp-content/uploads/2017/01/mtzmsn-200×110.jpg 200w, investorplace.com/wp-content/uploads/2017/01/mtzmsn-162×88.jpg 162w, investorplace.com/wp-content/uploads/2017/01/mtzmsn-400×220.jpg 400w, investorplace.com/wp-content/uploads/2017/01/mtzmsn-116×64.jpg 116w, investorplace.com/wp-content/uploads/2017/01/mtzmsn-100×55.jpg 100w, investorplace.com/wp-content/uploads/2017/01/mtzmsn-91×50.jpg 91w, investorplace.com/wp-content/uploads/2017/01/mtzmsn-78×43.jpg 78w,https://investorplace.com/wp-content/uploads/2017/01/mtzmsn-170×93.jpg 170w” sizes=”(max-width: 728px) 100vw, 728px” />Source: Shutterstock

Keep a close eye on Florida-based specialty contractor engineer MasTec, Inc. (NYSE:MTZ) in 2018. The company’s work spans electric power infrastructure, oil and natural gas pipelines, renewable energy facilities and wireless networks. Strength across the board has resulted in 100% Street support with seven analysts publishing recent buy ratings. Indeed, MTZ has received no hold or sell ratings from the Street for over 8 months.

“We reiterate a BUY on MTZ ahead of what we expect to be increasing 2018 estimates and an expanding multiple. With all segments poised for growth in 2018, a more diversified positive top line performance is likely to be enhanced on the bottom line by better Oil and Gas margins and a generally improving pricing and mix environment from large projects” writes top Canaccord Genuity analyst Robert Burleson. His buy rating comes with a $58 price tag (15% upside). We can also see that he has an incredible track record on his MTZ ratings with a 100% success rate and 51.6% average return.

Stocks to Buy: TherapeuticsMD (TXMD) Stocks to Buy: TherapeuticsMD (TXMD)investorplace.com/wp-content/uploads/2017/12/txmdmsn-300×165.jpg 300w, investorplace.com/wp-content/uploads/2017/12/txmdmsn-55×30.jpg 55w, investorplace.com/wp-content/uploads/2017/12/txmdmsn-200×110.jpg 200w, investorplace.com/wp-content/uploads/2017/12/txmdmsn-162×88.jpg 162w, investorplace.com/wp-content/uploads/2017/12/txmdmsn-400×220.jpg 400w, investorplace.com/wp-content/uploads/2017/12/txmdmsn-116×64.jpg 116w, investorplace.com/wp-content/uploads/2017/12/txmdmsn-100×55.jpg 100w, investorplace.com/wp-content/uploads/2017/12/txmdmsn-91×50.jpg 91w, investorplace.com/wp-content/uploads/2017/12/txmdmsn-78×43.jpg 78w,https://investorplace.com/wp-content/uploads/2017/12/txmdmsn-170×93.jpg 170w” sizes=”(max-width: 728px) 100vw, 728px” />Source: Shutterstock

I have already banged on about TherapeuticsMD Inc (NASDAQ:TXMD) in my recent piece on top healthcare stocks. But this is an intriguing stock pick that I felt was worth including again. TXMD is a unique biotech making waves in the world of female healthcare. The company develops and commercializes products exclusively for women. Its lead product candidate is the TX-004 soft gel capsule for post-menopausal pain. This approach clearly has the backing of the Street, as TXMD has a Strong Buy analyst consensus rating.

In fact, in the last three months, TherapeuticsMD has received seven back-to-back buy ratings. Plus the $15.30 average analyst price target represents a huge 161% upside from the $6 current share price. Crucially, even the lowest price target of $9 from Noble Financial and Deutsche Bank still suggests 55% upside potential.

The most bullish analyst of the pack is top Cantor Fitzgerald analyst William Tanner. He reiterated his TXMD buy rating on Dec. 19 with a $28 price target. Tanner notes that the FDA has opted to conduct a longer Class 2 review of TX-004. But ultimately, he calls the drug ‘an important new therapy’ for atrophy. He says: “We believe the likelihood of approval is high, 85% probability, the highest we use to account for some revenue forecasting uncertainty.”

Stocks to Buy: Amazon (AMZN) Stocks to Buy: Amazon (AMZN)investorplace.com/wp-content/uploads/2016/05/amznmsn2-300×165.jpg 300w, investorplace.com/wp-content/uploads/2016/05/amznmsn2-55×30.jpg 55w, investorplace.com/wp-content/uploads/2016/05/amznmsn2-200×110.jpg 200w, investorplace.com/wp-content/uploads/2016/05/amznmsn2-162×88.jpg 162w, investorplace.com/wp-content/uploads/2016/05/amznmsn2-65×36.jpg 65w, investorplace.com/wp-content/uploads/2016/05/amznmsn2-100×55.jpg 100w, investorplace.com/wp-content/uploads/2016/05/amznmsn2-91×50.jpg 91w, investorplace.com/wp-content/uploads/2016/05/amznmsn2-78×43.jpg 78w, investorplace.com/wp-content/uploads/2016/05/amznmsn2-170×93.jpg 170w” sizes=”(max-width: 728px)100vw, 728px” />Source: Mike Seyfang via Flickr

Year-to-date Amazon.com, Inc. (NASDAQ:AMZN) has already soared by 56%. But even with shares at $1,176, we can see that the Street still sees AMZN spiking over 11% to $1,311. In fact, in the last three months this stock has received an eyebrow-raising 33 buy ratings vs. just one hold rating.

The most recent rating comes from top RBC Capital analyst Mark Mahaney. He has just carried out a survey on Amazon’s intelligent personal assistant Alexa. And he likes what he sees. “Following our third annual Alexa survey, we are more impressed with the traction of these devices and more convinced of their potential long-term impact. With tens of millions of users and 20K+ skills, we see Alexa’s value prop as becoming increasingly powerful as awareness and ownership ramp. We think AMZN could see $10-$11B in Alexa-related Rev by 2020.”

In fact, recent reports suggest Alexa made a popular holiday gift. On Christmas Day, Amazon’s Alexa app took the No. 1 spots on both the U.S. Google Play and iPhone App Stores’ free app charts.

Stocks to Buy: Comcast (CMCSA) Stocks to Buy: Comcast (CMCSA)investorplace.com/wp-content/uploads/2016/09/cmcsamsn-300×165.jpg 300w, investorplace.com/wp-content/uploads/2016/09/cmcsamsn-55×30.jpg 55w, investorplace.com/wp-content/uploads/2016/09/cmcsamsn-200×110.jpg 200w, investorplace.com/wp-content/uploads/2016/09/cmcsamsn-162×88.jpg 162w, investorplace.com/wp-content/uploads/2016/09/cmcsamsn-65×36.jpg 65w, investorplace.com/wp-content/uploads/2016/09/cmcsamsn-100×55.jpg 100w, investorplace.com/wp-content/uploads/2016/09/cmcsamsn-91×50.jpg 91w, investorplace.com/wp-content/uploads/2016/09/cmcsamsn-78×43.jpg 78w, investorplace.com/wp-content/uploads/2016/09/cmcsamsn-170×93.jpg 170w” sizes=”(max-width: 728px)100vw, 728px” />Source: Mike Mozart via Flickr

The cable sector has been down in the dumps, but it is now looking for a comeback in 2018. And there is one company that stands out in particular: mass media king Comcast Corporation (NASDAQ:CMCSA). In the last three months, Comcast scores 10 out of 10, with 10 consecutive buy ratings from the Street. These analysts have an average price target of $45- 10% upside from the current share price.

Top Pivotal Research analyst Jeffrey Wlodarczak is confident that the stock is setup for a solid 2018. On Dec. 19, he told investors: “Recall, our belief that the cable malaise would be winding down by year-end ’17 and we continue to believe that this is the case. Comcast management’s data guidance raise in 4Q, implied material acceleration in capital returns and ’18 cable EBITDA margin expansion helped alleviate these investor fears.”

Plus, he believes that “the elimination of net neutrality laws, which effectively gave regulatory cover for video/phone competitors to freely use the cable plant, should also help with monetization.” His $50 price target translates into 22% upside potential.

Stocks to Buy: Smart Global Holdings (SGH) Stocks to Buy: Smart Global Holdings (SGH)investorplace.com/wp-content/uploads/2017/12/SGHmsn-300×150.jpg 300w, investorplace.com/wp-content/uploads/2017/12/SGHmsn-768×384.jpg 768w, investorplace.com/wp-content/uploads/2017/12/SGHmsn-60×30.jpg 60w, investorplace.com/wp-content/uploads/2017/12/SGHmsn-200×100.jpg 200w, investorplace.com/wp-content/uploads/2017/12/SGHmsn-400×200.jpg 400w, investorplace.com/wp-content/uploads/2017/12/SGHmsn-116×58.jpg 116w, investorplace.com/wp-content/uploads/2017/12/SGHmsn-100×50.jpg 100w, investorplace.com/wp-content/uploads/2017/12/SGHmsn-78×39.jpg 78w, investorplace.com/wp-content/uploads/2017/12/SGHmsn-800×400.jpg 800w,https://investorplace.com/wp-content/uploads/2017/12/SGHmsn-170×85.jpg 170w” sizes=”(max-width: 950px) 100vw, 950px” />Source: Shutterstock

SGH is a global leader in specialty memory, storage and hybrid solutions for the electronics industry for over 25 years. On the back of a strong beat and raise quarter, three analysts reiterated their Smart Global Holdings Inc (NASDAQ:SGH) buy ratings on Dec. 22. Shares popped 10% on the news. And now these analysts say shares can move another 25% from the current share price to hit $43.

SGH CEO Iain MacKenzie commented that the company enjoyed “strength across the board.” Revenue, gross margin and earnings-per-share all exceeded the high ends of previous guidance. He now has even higher hopes for the coming quarters, due to Brazil and the improving global memory market. Indeed, current strength in Brazil is expected to continue throughout the year as the economy recovers.

Stocks to Buy: Aerie Pharmaceuticals (AERI) Stocks to Buy: Aerie Pharmaceuticals (AERI)investorplace.com/wp-content/uploads/2017/07/biotechmsn-300×165.jpg 300w, investorplace.com/wp-content/uploads/2017/07/biotechmsn-55×30.jpg 55w, investorplace.com/wp-content/uploads/2017/07/biotechmsn-200×110.jpg 200w, investorplace.com/wp-content/uploads/2017/07/biotechmsn-162×88.jpg 162w, investorplace.com/wp-content/uploads/2017/07/biotechmsn-400×220.jpg 400w, investorplace.com/wp-content/uploads/2017/07/biotechmsn-116×64.jpg 116w, investorplace.com/wp-content/uploads/2017/07/biotechmsn-100×55.jpg 100w, investorplace.com/wp-content/uploads/2017/07/biotechmsn-91×50.jpg 91w,https://investorplace.com/wp-content/uploads/2017/07/biotechmsn-78×43.jpg 78w, investorplace.com/wp-content/uploads/2017/07/biotechmsn-170×93.jpg 170w” sizes=”(max-width: 728px) 100vw, 728px” />Source: Shutterstock

Eye disease pharma Aerie Pharmaceuticals Inc (NASDAQ:AERI) received an early holiday gift from the FDA. The US regulatory body has just approved Aerie’s lead product Rhopressa two months ahead of schedule. Aerie is now set to hire a 100-person strong sales force in preparation for launch in 2Q18.

“The FDA has approved Aerie’s Rhopressa drug for the treatment of patients with open angle glaucoma or ocular hypertension. We see this announcement as a positive for the company and also a positive read-through for the potential upcoming approval of Roclatan in 2019,” writes five-star Mizuho analyst Difei Yang.

Intriguingly, she also adds: The approval of Rhopressa reinforces our view that Aerie Pharmaceuticals is a strong takeout candidate.” Yang has an $87 price target on the stock and a very strong AERI track record (86% success rate and 73% average return).

Overall, AERI boasts 100% Street support with 7 buy ratings in the last three months. These analysts believe (on average) that AERI can leap a further 32% in the coming months.

Stocks to Buy: Facebook (FB) Stocks to Buy: Facebook (FB)investorplace.com/wp-content/uploads/2017/11/fbmsn-300×150.jpg 300w, investorplace.com/wp-content/uploads/2017/11/fbmsn-768×384.jpg 768w, investorplace.com/wp-content/uploads/2017/11/fbmsn-60×30.jpg 60w, investorplace.com/wp-content/uploads/2017/11/fbmsn-200×100.jpg 200w, investorplace.com/wp-content/uploads/2017/11/fbmsn-400×200.jpg 400w, investorplace.com/wp-content/uploads/2017/11/fbmsn-116×58.jpg 116w, investorplace.com/wp-content/uploads/2017/11/fbmsn-100×50.jpg 100w, investorplace.com/wp-content/uploads/2017/11/fbmsn-78×39.jpg 78w, investorplace.com/wp-content/uploads/2017/11/fbmsn-800×400.jpg 800w,https://investorplace.com/wp-content/uploads/2017/11/fbmsn-170×85.jpg 170w” sizes=”(max-width: 950px) 100vw, 950px” />Source: Shutterstock

Social media giant Facebook Inc (NASDAQ:FB) has a big catalyst heading its way for 2018. The company has already premiered its ‘Watch’ tab, but 2018 could be the year where it really takes off. (Of course, this is on top of all the stock’s other catalysts like Instagram, WhatsApp and a new Direct messaging app.)

One of TipRanks’ top 100 analysts, Brent Thrill, believes the ‘Watch’ tab is about to make a sizeable impact on user video consumption. He says the tab will drive video engagement alongside improved network effects and sharing. Plus, Facebook’s data-driven approach to content and partner revenue share agreements is the smart way to go. He is now looking for revenue purely from the Watch tab to hit $12 billion in 2022. Thrill’s $225 price target suggests considerable upside of 27% from the current share price.

Strong Buy stock FB has scored 30 buy ratings and just 1 sell rating in the last three months. Meanwhile, the average analyst price target of $210 indicates 19% upside potential.

TipRanks offers investors the latest insight into eight different sectors by tracking the activity of 4,700 analysts, 5,000 financial bloggers and even 37,000 corporate insiders. As of this writing, Harriet Lefton did not hold a position in any of the aforementioned securities.

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Your 2018 Resolution: Huge Gains Riding These Strong Trends

After overindulging during the holidays, most folks strive to get their lives back on track in January…

This year will be different! No more sweets. No booze. Instead of snacking on the couch and binge-watching my favorite shows, Ill hit the gym three days a week

Of course, there are plenty of companies ready to cash in on your dubious resolutions. Weight Watchers (NYSE:WTW) is hyping the season with a new publicity stunt featuring DJ Khaled. Hes a new spokesperson for Weight Watchers new freestyle program, the company announced yesterday…

Ill just have the salad.

The stock rallied more than 8% on the news, presumably because investors believe another celebrity endorsement will do wonders for WTW shares. After all, Oprah has made about $300 million from Weight Watchers stock after she hopped onboard with her endorsement in 2015, Business Insider notes. A famous hip-hop star like Khaled might just be what WTW needs to juice shares this year.

dailyreckoning.com/wp-content/uploads/2018/01/NewYearsResolution-DR-300×206.png 300w” sizes=”(max-width: 540px) 100vw, 540px” />

Of course, Khaled could fail at his public bid to slim down (whether that hurts WTW remains to be seen). In fact, most of us scrap our New Years resolutions before they become a part of our routine. Its all too easy to cheat on a diet if you have a stressful day at work or skip going to the gym because you overslept and its only 5 degrees outside.

You know how most of these resolutions turn out. No one can find an open treadmill at the gym in January. But by February, the place is a ghost town.

With that in mind, nows not the best time to trade nutrition or gym stocks in hopes of a first-quarter pop. Yet the herd tried to play these names every year without fail. Theyre betting on the average, lazy American making permanent improvements instead of falling back into the same routine.

But heres the rub:

Strong trends usually persist.

Everyone expects major changes in the markets as we begin 2018. Stocks were up big in 2017. Therefore, some investors reason the market will drop this year. Using that logic, the strongest stocks on the market will be the ones that will endure the biggest drawdowns, right?

Not exactly.

The stock market doesnt care that our calendar has flipped to 2018. We dont have to look very far to find proof, either. As we begin the new trading week, the stocks that were the strongest performers of 2017 are already blasting higher.

Just look at semiconductors a group that spanked the major averages with 2017 returns nearing 40%. The VanEck Vectors Semiconductor ETF (NYSE:SMH) busted out of its December funk to trade higher by more than 2.6% yesterday.

Big tech names are also catching a bid. Facebook (NASDAQ:FB), Amazon.com (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) each made significant one-day pushes toward their all-time highs. These high-fliers are all heading back to the buffet for seconds in 2018.

While seasonal stocks like Planet Fitness and Weight Watchers are getting all the media attention, the markets strongest stocks are stalking new all-time highs. Which would you rather own?

Sincerely,

Greg Guenthner
forThe Daily Reckoning

Why Investors Shouldn’t Bet on Lululemon Athletica Inc. Stock

Since mid-October, Lululemon Athletica inc. (NASDAQ:LULU) has pulled off an impressive rally. A key has been a standout earnings report, which saw a beat on the top and bottom lines. Yet it is still important to note that the year has still been fairly choppy, with the overall return for LULU stock at about 21%.

So what’s next? What should investors do with LULU stock? Well, I think the best approach is to be cautious. While the company has been able to get some of its momentum back, there are still some nagging issues.

Let’s first look at some of the pros on LULU stock. First of all, the company certainly has a powerful brand, which has been able to command premium pricing. Lululemon also has a loyal customer base.

As for the financials, they are solid. There is $650 million in the bank and no long-term debt. And here are some other metrics from the latest earnings report:

– Total comparable sales rose by 8%.

– The direct to consumer segment jumped by 26% (showing that the company is getting traction with its online efforts).

– Gross profit increased 16% to $322 million.

– Growth in Asia spiked by nearly 100%, with a 450%+ gain in China.

– The company reconfirmed its goal of achieving $4 billion in revenues by 2020.

So yes, things have been going quite well.

LULU Stock and Competitive Pressures

LULU has been able to manage the competitive threats. But this can only last so long. LULU has to fight tough rivals like Nike Inc (NYSE:NKE), adidas AG (ADR) (OTCMKTS:ADDYY), Gap Inc (NYSE:GPS) and Under Armour Inc (NYSE:UAA).

There are also scrappy startups that have access to large amounts of venture capital, like Kate Hudson’s Fabletics. Oh, and yes, there is buzz that the mighty Amazon.com, Inc. (NASDAQ:AMZN) will make a play for the market.

Actually, there are already signs that the competitive pressures are having an impact. For example, Canaccord analyst Camilo Lyon believes that the recent warehouse sales point to some ominous problems.

In a recent note, he stated: “This increase in frequency of warehouse sales could be in response to slowing brand momentum amidst rising competitive pressure and shifting fashion trends.”

Interestingly enough, his research indicates there is a growing trend toward denim, which is likely to weigh on the company. What’s more, his survey found that 18% of customers plan on buying fewer LULU pants in the coming year

Keep in mind that Lyon has a $45 price target on LULU stock.

Bottom Line on LULU Stock

If you take a look at the chart of LULU stock, it is kind of remarkable. For the most part, there has been a cap at about $80 per share, after which there is usually a notable drop. This has happened twice in 2012, twice in 2013, and once in 2016!

Then again, the fact is that Lululemon has a long history of inconsistent performance, such as with inventory issues. Let’s face it, this is common for any innovative brand.

Will things be different this time around? I would not bet on it. After all, the LULU stock price is already baking in much of the good fundamentals and then some. Note that the price to earnings multiple is at an expensive 39X, but the annualized growth rate for revenues is only about 13%. In other words, it would not be surprising to see yet another pullback.

Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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Alphabet Inc Stock Will Continue to Rise… After a Brief Pause

Did you know that Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) went skidding into the end of 2017? Some investors may not have noticed the underperformance in Google stock, as it stumbled up to and through the holiday trading periods. On Dec. 18, Alphabet stock leaped to new all-time highs, before declining for eight straight days to end the year.

That’s a pretty notable losing streak, although it flew mostly under the radar. It also shouldn’t take away from the stellar 2017 GOOGL enjoyed, climbing 33%. Jump over to 2018 and Google stock has spent its time rallying. Through Thursday, GOOGL shares were up 5.5% in the new year.

In fact, most of the FANG stocks have been hot, with Facebook Inc (NASDAQ:FB), Netflix, Inc. (NASDAQ:NFLX) and Amazon.com, Inc. (NASDAQ:AMZN) all starting the year off with a rally too.

So, what do we make of Google stock?

Like FB, and unlike NFLX and AMZN, GOOGL stock trades with a reasonable valuation given its earnings and revenue growth.

A Closer Look at GOOGL Stock

At first glance, Google stock appears expensive, trading at about 36 times its trailing earnings. However, its forward price-to-earnings (P/E) ratio is considerably lower, at 26. Analysts expect $41.56 in earnings per share for 2018, up ~29% year-over-year (YoY).

I don’t really like to look too far into the future. Because of Alphabet’s consistency, though, I couldn’t help but peak at 2019 estimates. Analysts forecast earnings per share of $48.64, up 17% YoY. In other words, Alphabet stock trades at just 22.5 times 2019 earnings estimates. Even though there’s a risk that these estimates are too high, I think it’s a real possibility that they’re too low.

In either case, we have a stock that’s growing earnings in the high-teens to low-20% range for the foreseeable future. Add in the fact that revenue will grow about 22% this year and 20% in 2018 and it’s hard to be bearish on GOOGL stock.

I also couldn’t help but take a look at the search giant’s cash flow. Operating cash flow (OCF) over the trailing 12 months sits at just over $36 billion. That’s more than one-third higher than where it sat at calendar-year-end 2015. It’s roughly double where it stood four years ago.

Likewise, the company’s trailing free-cash flow hit $27.50 billion, up more than 60% over the past 18 months. The impact of Ruth Porat, who joined Alphabet as CFO in 2015, should not be overlooked.

Google Stock Valuation

One thing I’ve never understood is the blue-chip mantra. Some investors tell me that buying Procter & Gamble Co (NYSE:PG) or Johnson & Johnson (NYSE:JNJ) is a sound choice, but they argue that buying a company like Alphabet or Facebook is foolish, as these stocks are too expensive.

They contend that PG, JNJ and others are blue-chip stocks with long histories of dividend payouts and an elite brand name. I don’t argue with any of that. However, is Google not considered to have one of the most powerful brands in the entire world? Further, is its forward P/E ratio of 26 and earnings growth of 20% not reasonable — even desirable — when compared to PG’s forward P/E ratio of 20 and earnings growth of 7%?

I don’t mean this a put-down of blue-chip stocks. Rather, it’s to point out other companies — absent a long history of dividends — deserve some premium for their brands too. Google fits that bill in my opinion, helping to justify its valuation.

Trading Alphabet Stock

As for the stock, we’ve got a relatively clean breakout. It’s important how it reacts now. In early December, Google stock had the perfect decline down to support, which held steady. After a big move over $1,090 to hit new all-time highs, Google stock is pulling back. While it’s still over this level, it’s unclear whether it will hold now or retreat.

chart of Google stockinvestorplace.com/wp-content/uploads/2018/01/GOOGL-768×574.png 768w, investorplace.com/wp-content/uploads/2018/01/GOOGL-40×30.png 40w, investorplace.com/wp-content/uploads/2018/01/GOOGL-200×150.png 200w, investorplace.com/wp-content/uploads/2018/01/GOOGL-400×300.png 400w, investorplace.com/wp-content/uploads/2018/01/GOOGL-116×87.png 116w, investorplace.com/wp-content/uploads/2018/01/GOOGL-100×75.png 100w, investorplace.com/wp-content/uploads/2018/01/GOOGL-167×125.png 167w, investorplace.com/wp-content/uploads/2018/01/GOOGL-67×50.png 67w, investorplace.com/wp-content/uploads/2018/01/GOOGL-78×58.png 78w,https://investorplace.com/wp-content/uploads/2018/01/GOOGL-800×598.png 800w, investorplace.com/wp-content/uploads/2018/01/GOOGL-160×120.png 160w, investorplace.com/wp-content/uploads/2018/01/GOOGL.png 900w” sizes=”(max-width: 300px) 100vw, 300px” />
Click to Enlarge

Based on how it looks — because of that upper trend-line resistance — a pullback is looking more and more likely. Make no mistake, though, that’s actually healthy price action. While bullish traders can try to eek out a bit more on the upside, a longer-term swing looks more appropriate.

Aggressive buyers can step in now and add on a decline. More conservative investors can hope for a pullback and begin accumulating Google stock cheaper.

This is a great company and a stock that’s clearly looking to push higher. Don’t try to get too cute regarding when to buy.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.

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Why JD.Com Inc(ADR) Stock Is the Amazon of China

China-based JD.Com Inc(ADR) (NASDAQ:JD) often finds itself ignored in favor of its better-known competitor Alibaba Group Holding Ltd (NYSE:BABA). However, given the fact that JD holds its inventory, it appears to be more akin to Amazon.com, Inc. (NASDAQ:AMZN) than BABA. Most importantly, both the company and JD stock are on the rise.

And with JD’s rise, a competitive dynamic has arisen that will eclipse the battle between two well-known U.S. retail titans.

JD Stock Should Receive More Attention

My InvestorPlace colleague, Chris Lau, believes the time has come to shift attention from stories about Alibaba to JD.com news. I happen to agree with him. For one, Wall Street should regard JD, and not BABA, as the “Amazon of China.” JD owns its inventory and has built a warehouse and logistics infrastructure across China. Alibaba merely serves as a middleman.

Additionally, starting next year, consensus earnings-per-share (EPS) forecasts indicate a continuing streak of profitable quarters starting with the quarter ending in March 2018 for JD.com. While investors tend to buy a stock well ahead of this milestone, it serves as confirmation that the value proposition of JD stock remains viable.

JD Stock Has Risen More Slowly Despite Greater Company Growth

Other valuation metrics appear favorable for JD as well. The current forward price-to-earnings (PE) ratio of JD stock is higher than Alibaba (47 vs. 26). Still, JD stock trades at just over 1 times sales and about 7 1/2 times its book value. Alibaba’s trades at over 9 times book value, and its price-to-sales ratio stands at 15!

The JD stock price has increased about 65% year to date, but BABA stock has more than doubled. While both appear more favorable to Amazon’s 300 P/E ratio, JD.com stock has a much more favorable P/S ratio, along with the built-in stability of owning a logistics infrastructure and higher revenue growth. And with JD’s much lower market cap ($61 billion vs. almost $440 billion for BABA), JD stock has more room to grow.

JD partially compensates for its smaller size by forging strategic alliances. One recent bit of JD.com news involves a partnership with Chinese investment company Tencent Holdings Ltd (OTCMKTS:TCEHY). JD and Tencent together have taken a position in Chinese online clothing retailer Vipshop Holdings Ltd – ADR (NYSE:VIPS). Though Vipshop remains a competitor, a position in the company helps JD better compete with the much larger Alibaba.

JD Stock Will Profit From a Larger Middle Class

Most importantly, the story of the emerging middle class in China continues. Most of the population has moved out of poverty. However, large segments of the population will be moving from a lower- to an upper-middle-class status. The upper-middle class (defined by McKinsey and Company as $16,000-$34,000 per year in income) will grow from 14% of the population in 2012 to 54% in 2022. The cohort of lower-income Chinese (those with incomes of less than $9,000 per year) will fall from 29% to 16% in the same period. Given that China’s population is almost five times that of the United States, the cohort moving from lower-middle to upper-middle class represents nearly twice the U.S. population.

Both Alibaba and JD.com have benefitted and continue to benefit from these upward shifts in income. However, with the size advantage enjoyed by China, the battle between JD and BABA will be the Chinese equivalent of the battle between Wal-Mart Stores Inc (NYSE:WMT) and Target Corporation (NYSE:TGT).

Like Walmart in comparison to Target, Alibaba enjoys a tremendous size advantage over JD. Still, these companies have spent decades trading places in the U.S. retail environment. Often when WMT is up, TGT is down and vice versa. The same pattern appears to be forming for JD and BABA. BABA currently holds the higher position. However, JD’s move to profitability sets up JD to attain an advantage in stock growth and reputation.

Final Thoughts on JD Stock

Expect the battle between BABA stock and JD stock to grow into a larger, online version of the competitive battle between Walmart and Target. A move into profitability and a deeper infrastructure serve as enough reason to take JD seriously. Its Amazon-like structure positions JD to take on and succeed against the much larger Alibaba.

Moreover, China’s income growth, as well as the vast size difference between JD.com and BABA create substantial room for JD to grow.

Also, JD’s move into profitability catalyzes a move upward relative to Alibaba. Given all this, investors in the Chinese online retail world should sell BABA and buy JD stock.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks.

 

 

 

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Tuesdays Vital Data: Micron Technology, Inc. (MU), General Electric Company (GE) and Amazon.com,

U.S. stock futures are mixed heading into the first trading day of 2018. Investors appear to be searching for a new driver for the major market indices now that tax reform has passed.

stock market todayGeopolitical concerns are headlining this morning, with North Korean leader Kim Jong Un claiming to have a “nuclear button.” However, Un suggested he is willing to engage in talks with South Korea at next month’s Winter Olympics.

Heading into the open, futures on the Dow Jones Industrial Average are up 0.28%, S&P 500 futures are up 0.28% and Nasdaq-100 futures have added 0.37%.

Turning to the options pits, Friday’s volume was respectable despite being on the light side. Overall, about 13.8 million calls and 11.8 million puts changed hands. The CBOE single-session equity put/call volume ratio rose to a one-week high of 0.59 and the 10-day moving average held at 0.57.

Taking a closer look at Friday’s options activity, Micron Technology, Inc. (NASDAQ:MU) attracted heavy call volume on the last trading day of 2017. Elsewhere, General Electric Company (NYSE:GE) options traders held out hope that 2018 couldn’t get any worse. Finally, President Donald Trump took aim at Amazon.com, Inc.’s (NASDAQ:AMZN) relationship with the U.S. Postal Service.

Tuesday’s Vital Options Data: Micron Technology, Inc. (MU), General Electric Company (GE) and Amazon.com, Inc. (AMZN)investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-300×137.png 300w, investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-65×30.png 65w, investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-200×92.png 200w, investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-400×183.png 400w, investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-116×53.png 116w, investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-100×46.png 100w,https://investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-109×50.png 109w, investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-78×36.png 78w, investorplace.com/wp-content/uploads/2018/01/01-02-2018-Top-Ten-Options-170×78.png 170w” sizes=”(max-width: 548px) 100vw, 548px” />

Micron Technology, Inc. (MU)

MU finished 2017 as the fastest growing semiconductor stock, with a gain of more than 87% on the year. Micron rode a wave of growth in the memory market, with strong memory prices vaulting the company into the top five semiconductor stocks by revenue. What’s more, investors appear to be betting on the trend to carry over into 2018.

Volume on the last trading day of 2017 came in at a brisk pace for MU stock. More than 301,000 MU options contracts traded on Friday, with calls making up 69% of the day’s take. Overall, MU’s January 2018 put/call open interest ratio rests at a lowly perch of 0.63 for the first expiration month of 2018.

But calls did not hold a monopoly on MU’s options activity on Friday. Data from Trade-Alert.com reveals that a block of 10,000 July $40 puts traded in the early afternoon at the bid price of $4.30, or $430 per contract. These contracts appear to have been sold to open. This means that the trader is either looking to pick up MU stock at $40 on a pullback, or expecting MU stock to hold above $40 through expiration.

General Electric Company (GE)

GE was 2017’s Dog of the Dow. The stock shed nearly half its value last year amid restructuring concerns as new CEO John Flannery did everything in his power to slash costs, layoff workers and sell underperforming divisions.

But General Electric pays out a quarterly dividend of 43 cents per share, resulting in a dividend yield of 2.75% — among the highest on the Dow right now. As a result, many investors are looking at GE stock as a potential value play for 2018. Among those betting on a bounce are GE options traders.

On Friday, GE options volume rose to 230,000 contracts, or roughly 1.5 times the stock’s daily average. Calls made up an impressive 67% of the day’s take.

Furthermore, it would appear that many of these calls were opened in the January 2018 series, as the put/call OI ratio fell from 0.50 last week to today’s perch at 0.48. In other words, GE options traders are betting on a fresh start for 2018 for this Dog of the Dow.

Amazon.com, Inc. (AMZN)

With a gain of roughly 56%, AMZN stock put in a stellar performance in 2017. But that strong performance has drawn considerable ire from the current U.S. administration. President Trump tweeted out that Amazon is giving the U.S. Postal Service a raw deal.

“Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!” Trump said on Twitter.

AMZN options traders took the criticism in stride, however. Volume on Friday rose to 143,000 contracts, with calls managing 55% of the day’s take. Still, AMZN options activity points toward skepticism for the first month of the year.

Currently, the January 2018 put/call OI ratio rests at 1.15 for AMZN, with puts outnumbering calls. That said, such activity is not unusual for a stock trading north of $1,000, given that premiums on near-the-money options are considerably high. As a result, many of these AMZN puts were likely sold-to-open in the hopes of capturing premium.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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Yum! Brands, Inc. Is Transforming Into a High-Growth Company Again

It is an exciting time at Yum! Brands, Inc. (NYSE:YUM).

That may seem weird to say. The fast-food giant behind KFC, Pizza Hut and Taco Bell is often written off as less exciting than the likes of hyper-growth tech companies like Facebook Inc (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), Netflix, Inc. (NASDAQ:NFLX) and Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL).

But here’s a fun fact: YUM’s projected earnings growth over the next several years (14.6%) isn’t that much lower than Facebook’s (17.4%).

How is that possible? YUM is innovating, adapting and transforming like never before. More specifically, the company is fully embracing a revolutionary transformation of its business model, which could handsomely reward long-term shareholders.

So whats the takeaway?

Buy and hold YUM stock. This one is going up in the long term.

Re-Franchising Efforts Are Paying Off

Late last year, YUM announced a massive business transformation plan which management believes will dramatically improve profitability.

In short, YUM is turning into a “pure-play” franchisor. The company is re-franchising essentially all of its locations (98%, to be exact, up from 77% franchise ownership in 2015). Yes, that kills revenues, but this revenue slicing is like getting rid of all the unwanted fat. Through re-franchising, YUM plans to create a business with low costs, few capital investments needs, small lease obligations, big margins, lots of free cash flow and huge earnings.

This transformation is already paying off.

YUM is currently at 95% franchise ownership. The huge re-franchising over the past 12 months has allowed for tremendous cost savings. Company restaurant expenses are down 10% year to date. General and administrative expenses are down 9% year to date. Operating margins are up 410 basis points at KFC, 600 basis points at Pizza Hut and 340 basis points at Taco Bell.

Consequently, even though YUM revenues year to date are down 4%, operating profits are up 33%.

Meanwhile, capital expenditures are at only $228 million year to date, versus $292 million through the first nine months of 2016. Capex is expected to be just $325 million this year, a near-25% reduction year over year.

The most exciting part of this transformation plan is that the best is yet to come. The G&A expense rate is expected to drop to 1.7% by 2019, versus 2.5% in 2015. Capex is expected to fall to $100 million by 2019.

With all those costs coming out of the system, the net result will be lots of profits and lots of cash flow. Most that cash flow will be returned to shareholders via dividends and buybacks, which will, in turn, fuel earnings growth and increase shareholder value (management expects to return between $6.5 and $7 billion to shareholders from 2017 to 2019).

Meanwhile, YUM’s brands are actually performing quite well, likely due to management’s ability to focus on same-store sales growth (as opposed to volatile China numbers). For the first time in multiple quarters, same-store sales growth was positive last quarter at KFC, Pizza Hut and Taco Bell. Moreover, system sales growth hit 6% for the second consecutive quarter, showing that the company has the ability to accelerate system sales growth to 7% in the near future.

Put it all together, and you have a company with an accelerating top-line growth narrative and a really big margin growth narrative. Why sell a stock with such strong growth drivers?

Valuation Is Still Reasonable

You don’t, unless valuation is a concern.

But it isn’t here. YUM is looking at greater than $3.75 in earnings per share by fiscal 2019. Historically, YUM stock has traded around 28 times trailing earnings. Given that YUM, in 2019, will have higher profit margins and more predictable cash flows than the YUM of the past 5 years, its almost a guarantee that 2019 YUM will warrant at least a 28 trailing-earnings multiple.

Throw a 28 mulitple on $3.75 earnings, and you get a 2-year forward price target of $105. Discount that by 10% per year and you arrive at a current fair value of about $87.

And that is without tax reform.

Bottom Line on YUM Stock

This is a big-moat company successfully undergoing a massive transformation, which will dramatically boost profitability and cash flows.

You don’t sell that story unless the stock is overvalued.

But YUM stock remains reasonably valued. Consequently, I think this is a name you buy and hold for the long term.

As of this writing, Luke Lango was long YUM, FB, AMZN, NFLX, and GOOG.

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