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Why Overstock Is Trading Higher Today
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What does COVID-19 and the payment revolution mean for Afterpay and Sezzle?
What does the COVID-19-driven shift to online shopping mean for Afterpay Ltd (ASX: APT) and Sezzle Inc (ASX: SZL)?
Changes in the way we pay
Giving a keynote address at Morgan Stanley in June, Reserve Bank of Australia’s Assistant Governor Michele Bullock explored the health crisis’ disruption of the retail payments system and its implications.
According to Bullock, “merchants and consumers have changed both their payment preferences and their mode of interaction.”
To support the contention, Bullock presented some staggering statistics that revealed the death of ‘paper’ payment instruments.
For instance, use of cheques “has declined from around 50 per capita per year in the 1990s to around 2 per capita in 2019” as many payments became electronic.
Inevitably, the shift to electronic payments is seeing the decline in the use of cash.
In fact, Bullock cited RBA’s recent consumer payments survey, which found that “a third of survey respondents did not use cash for any payments”, although “around 10 per cent used cash for all their payments.”
Importantly, the decline in the use of cash and the rapid acceptance of cards was an “important enabler for online commerce, allowing payments to be made in a remote environment.”
Afterpay, Sezzle, BNPL, and the dash from cash
The dash away from cash, of course, boosted companies like Afterpay, which saw early adoption from online and e-commerce retailers.
In fact, online sales constitute the majority of Afterpay and Sezzle’s revenue pie. For example, in FY19, Afterpay’s in-store cumulative underlying sales contributed 18% to Australia and New Zealand’s combined underlying sales, which means that the vast bulk of Afterpay’s underlying sales for Australia and New Zealand were online.
But just because more people are making online purchases does not – on its own – mean that more people will make these online purchases using Afterpay and Sezzle.
However, Sezzle’s executive chair and CEO Charlie Youakim certainly drew that conclusion when announcing the company’s record 2Q20 in a July 7 update, highlighting the change in consumer behaviour as a factor in Sezzle’s performance.
Youakim wrote that Sezzle’s “performance reaffirms our product’s utility to consumers looking for a smarter way to budget their personal finances and the overall market shift to eCommerce.”
The Sezzle update further stated that “with nearly 100% of Sezzle’s transactions via eCommerce, the Company is well-positioned for the ongoing move to online.”
Youakim then noted that Sezzle’s strong performance in Q2 is “reflective of an improving consumer profile combined with an accelerated adoption of eCommerce due to the [COVID-19] pandemic.”
The emphasis on eCommerce and the shift to online certainly seemed to benefit Sezzle, as its 2Q20 represented the top 3 months of monthly underlying merchant sales in its history.
In its latest investor presentation, Afterpay echoed Sezzle and stated that “since the impacts from COVID-19 began, we have seen consumers shift further towards online spending.”
COVID-19 and the new normal
Even when COVID-19 is contained or a vaccine disseminated, people are now likely to be more vigilant about hygiene and social distancing, cutting down trips to brick-and-mortar stores.
This will compress discretionary in-store purchases, while boosting online retailers and retailers with a sound online presence.
The new normal of COVID-19 will see consumers shift even more of their purchases online.
RBA’s Bullock similarly concluded that “the increased use of online shopping, either through necessity or preference during the ‘stay at home’ period, seems likely to be a permanent shift.”
In my view, this shift could increase the volume of transactions that Afterpay and Sezzle process.
Additionally, more consumers going online may mean more opportunities for merchants to sell more per consumer. This is because the more purchases we make online, the more tailored the recommendations become, and the more likely we are to make add-on purchases or get directed to products we did not realise we wanted.
In the end, Afterpay and Sezzle seem well-positioned to succeed in the post-coronavirus world.
3 “Double Down” Stocks To Ride The Bull Market
Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.
He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.
*Extreme Opportunities returns as of June 5th 2020
More reading
- ASX 200 drops 0.6%, Afterpay hits a new record
- Short sellers are betting US$20bn against the skyrocketing Tesla share price
- The Openpay share price is surging today. Is it the next Afterpay?
- ASX 200 down 0.2%: Big four banks tumble, Afterpay surges higher again
- These ASX fintech shares are tackling COVID-19 head on
Motley Fool contributor kprakapenka has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post What does COVID-19 and the payment revolution mean for Afterpay and Sezzle? appeared first on Motley Fool Australia.
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Why a second stock market crash of 2020 could be your chance to make a million
Many stocks may have experienced a rebound after the 2020 market crash. However, a difficult outlook for the world economy means that a second market crash cannot be ruled out in the short run.
While that scenario may cause short-term pain for investors, it has the potential to provide buying opportunities for long-term investors.
Through purchasing high-quality businesses while they offer wide margins of safety, you could benefit from the stock market’s recovery potential and boost your chances of making a million.
A second market crash
Although the 2020 market crash may have priced in a more challenging outlook for many businesses, their prospects could realistically worsen over the coming months.
For example, there could be a second wave of coronavirus. Although lockdown measures have largely been successful, little is known about coronavirus at this stage. As such, it could return as lockdown measures are eased, which may cause investor sentiment to weaken.
Furthermore, geopolitical risks continue to be relatively high. Tensions between the United States and China may increase in the short run, while political risks in the US could increase later in the year as the election nears. In Europe, Brexit is likely to be a persistent risk over the coming months that could hurt investor sentiment and send stock prices downwards.
Buying opportunities
A second market crash may be bad news in the short run, but could prove to be a buying opportunity over the long term. It may allow investors to purchase high-quality businesses while they offer wide margins of safety.
Historically, this strategy has been a sound means of capitalising on the cyclicality of the stock market. It may not produce high returns in the short run, but investors with sufficient time to experience a market recovery could enjoy relatively high returns.
Of course, if economic conditions worsen, it could be a sound move to invest in financially-sound businesses. They may stand a better chance of surviving a period of lower growth, and could offer less risk and greater return prospects over the coming years.
Making a million
Buying shares during a market crash could allow you to benefit from the recovery potential of the stock market. It has an excellent track record of producing strong gains following every one of its past bear markets and downturns.
Although it is exceptionally difficult to buy stocks at the very bottom of a market crash, purchasing them when they appear to offer a discount to their intrinsic value could prove to be a shrewd move. It may lead to paper losses in the short run should the economic outlook worsen, but over the coming years it may improve your portfolio returns. It could even allow you to obtain a seven-figure portfolio as the stock market and the wider economy recover.
For some shares we Fools think are trading cheaply today, check out the following report.
5 stocks under $5
We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
More reading
- What does COVID-19 and the payment revolution mean for Afterpay and Sezzle?
- These are the 3 steps I’d take to build a dividend share portfolio right now
- Don’t waste the stock market crash! I’d buy bargain stocks to get rich and retire early
- Fluence share price surges 20% on update
- ASX 200 drops 0.6%, Afterpay hits a new record
Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post Why a second stock market crash of 2020 could be your chance to make a million appeared first on Motley Fool Australia.
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Biden’s tax plan is an act of supreme economic masochism that would erase 40 years of pro-growth progress
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Nearly half of Americans are ‘natively resistant’ to COVID-19 due to prior exposure: Dr. Katz
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3 “Strong Buy” Dividend Stocks With Yields of at Least 7%
Let’s talk about dividend stocks. These have always been popular with income minded investors, who are attracted to the steady payments and are wiling to sacrifice some share appreciation to mitigate overall risk. That’s both a fair trade and a viable investing strategy.It should have held together during the height of the coronavirus pandemic. That is, dividend stocks should have performed their usual role for investors, helping to insulate portfolios from a larger shock during a period of recessionary pressures. But they did not. Too many companies were hurt too badly, as earnings and cash flow plummeted, and many formerly reliable dividends were reduced or even suspended during the crisis.So, 1H20 has been hard on dividend stocks, and just when investors needed them most. Some due diligence, however, can find the continuing dividend champs, those companies that have made it through the initial economic turndown while retaining their dividend policies. These companies are attracting notice for Wall Street’s analysts, as the go-to choices for dividend investors. Using the TipRanks database, we’ve pulled up some details on three of these stocks.Capital Southwest Corporation (CSWC)We’ll start in the finance industry. Capital Southwest, based in Texas, is a business development company – a BDC – with a focus on high-appreciation opportunities. The company provides specialty lending options and financings for middle market players in a variety of sectors. Some of CSWC’s methods include industry consolidations, management buyouts, and recapitalizations.The company’s strong and heavily diversified portfolio helped to insulate it from the corona-inspired economic shutdown. In fiscal Q4, the company's earnings rose sequentially, coming in at 40 cents per share.Dividend investors are more likely to be pleased by management’s announcement, in early June, that the dividend would be maintained, and that between the regular payment and a special dividend release, it would total 51 cents per share. This is the same as the previous two quarters, and comes after a solid year of slow dividend growth. At the current payment, CSWC’s dividend has an impressive yield of 12.77%Covering the stock for JMP Securities, Christopher York sees a company with room to maneuver. He writes, “Capital Southwest remains one of the most attractive ways to gain exposure to lower-middle-market direct originations. We continue to believe core and supplemental dividends remain sustainable… the company has ample liquidity to fund new investments and support portfolio companies, if needed.”In line with his comments, York reiterates his Buy rating on CSWC. His $17 price target indicates confidence in a one-year upside of 35%. (To watch York’s track record, click here)Overall, Capital Southwest has a Strong Buy rating from the analyst consensus, based on a 3 to 1 split between Buy and Hold reviews. The stock is selling for $12.60, and the $14.25 average price target implies an upside of 13% for the coming year. (See CSWC stock analysis on TipRanks)Heritage Commerce Corporation (HTBK)Next up, Heritage Commerce, is a holding company whose main subsidiary, Heritage Bank of Commerce, serves customers in the San Francisco Bay area as well as Santa Clara and Alameda counties. The company offers general banking and deposit services to the public, and originates a range of consumer and commercial loans.Like most companies with direct contact customer service models, Heritage saw earnings plummet in Q1. The sequential drop was 77%; reported EPS was only 6 cents. The earnings loss came even as revenues beat the forecast. At the top line, the $41.77 million reported for Q1 was up 24% year-over-year.Strong liquidity allows Heritage to weather the corona crisis, survive a steep drop in earnings, and maintain its dividend. The company reported $443.4 million in available cash and liquid assets at the end of the first quarter, along with access to another $477.5 million through borrowing. That’s a hefty war chest for any situation.The company has kept up its dividend payments, without reductions, through the health crisis. The current payment is 13 cents per share quarterly, or 52 cents annualized. At this rate, the dividend offers a yield of 7.65%, far above the 2% average found among S&P listed companies. Better, for investors, Heritage has an 11-year history of prioritizing dividend payments.Andrew Liesch, of Piper Sandler, points out that a significant portion of Heritage’s service portfolio – upwards of 7% of the total – consists of retail and food service commercial customers, who are likely to see surge in banking needs when the epidemic fades on the West Coast. He writes, “[R]etail trade exposure includes gas stations with convenience stores while the food service portfolio is mostly QSRs, both of which have been operating while under shelter-in-place and should experience stronger customer volume as auto traffic and commuting return.”Liesch rates this stock a Buy, citing both forward prospects and current liquidity. His $9 price target suggests an upside of 36% in the coming year. (To watch Liesch’s track record, click here)Heritage gets a Strong Buy from the analyst consensus, and that verdict is unanimous. The stock has 3 recent reviews, and they are all Buys. Shares are priced at $6.80, and the $9.33 average price target – slightly more bullish than Liesch’s – implies a 41% one-year upside. (See HTBK stock analysis on TipRanks)Kimbell Royalty Partners (KRP)Last on today’s list of dividend stock is Kimbell Royalty, a land company operating in oil regions across the US. Kimbell invests in mineral and royalty interests, buying up land it can leas to oil and natural gas producers. The company’s revenue is derived from royalties on hydrocarbon extraction from its properties.Kimbell owns over 38,000 active wells, with 43% of its operations in Texas’ Permian Basin. The company entered 2020 after reporting strong year-over-year gains for both Q4 and CY2019, and had also just completed the acquisition of a competing mineral rights company, Springbok, in a $175 million deal.The drop in oil prices during the bear market cycle, and overall lower demand during the coronavirus economic shutdowns, put serious pressure on Kimbell’s revenue stream. Q1 earnings fell sharply, to a net loss of $1.29 per share, and the stock price has still rebounded from the crash earlier this year. Nevertheless, Kimbell management has chosen to maintain a common stock dividend – although the payment has been cut back to 17 cents per share. This annualizes to 68 cents, and gives a robust yield of 8.2%. The company has stated its commitment to distributing up to 50% of available cash to shareholders.Stephens analyst Gail Nicholson cites the company’s dividend policy in his review of the stock, writing, “We are modeling the company’s distribution as a percent of cash flows flat with 1Q20 (~50%) for the remainder of the year and increases to ~100% during 4Q21 (distribution policy is flexible and likely adjusts based on commodity prices). We anticipate the company utilizes the non distributed cash to further improve its balance sheet.”Nicholson gives weight loss a Buy rating, and supports it by raising his price target from $3 to $11. His new target implies a 32% upside potential for the stock. (To watch Nicholson’s track record, click here)All in all, the analyst consensus rating on Kimbell Royalty is a Strong Buy; the stock has 4 Buy and 1 Hold review behind that rating. The $10.25 average price target suggests a 23% premium form the current share price of $8.28. (See KRP stock analysis on TipRanks)To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
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GenMark Diagnostics (GNMK) Stock Is a Winner, But How Much Higher Can It Go?
The coronavirus has had a negative impact on most but as luck would have it, some companies have benefited from the viral outbreak. Along with those catering to the stay at home climate, healthcare companies’ valuations have soared during the pandemic. You can add GenMark Diagnostics (GNMK) to the latter camp. The molecular diagnostics company has been no slouch in 2020, and shares are up by 288% so far.The stock was on the rise again yesterday after the company released impressive pre-earnings sales results.Specifically, GenMark expects Q2 revenue to come in at roughly $40 million, reflecting a 118% year-over-year increase and way ahead of the $31 million estimate. This is mainly off the back of the company’s ePlex SARS-CoV-2 test, which made up 48% ($16.9 million) of ePlex sales – compared to just 5% in Q1.The medical device specialist anticipates ePlex revenue to be up 195% year-over-year on overall sales of $35.2 million and the placement of 71 ePlex analyzers (up by 48%).In March, GenMark was granted Emergency Use Authorization (EUA) for its ePlex SARS-CoV-2 Test. Despite the strong demand, management has previously said that due to “manufacturing capacity constraints,” it does not expect revenue in 2020 to top $150 million. Nevertheless, Needham analyst Mike Matson expects GenMark to raise guidance when it reports earnings on August 3.The 5-star analyst said, “We believe that the COVID-19 pandemic continued to drive demand for GNMK's Respiratory Pathogen (RP) panel as a "rule-out" test and its separate COVID-19 test during 2Q20. GNMK launched its respiratory Pathogen Panel 2 (RP2) panel on 6/29/20, which added COVID-19 to the prior panel, so we expect the mix to shift back to its respiratory panel going forward… Given the strong ePlex placements and continued tailwind from COVID-19, we believe that GNMK can sustain strong growth throughout 2020.”Accordingly, Matson keep his Buy rating on GenMark intact, along with a $19 price target. What’s in it for investors? A modest upside of 2% from current levels. (To watch Matson’s track record, click here)Over the last 3 months, three other analysts have published a review of the diagnostics player’s prospects, all imploring investors to Buy. Yet, the average price target of $18 implies nearly 4% downside. (See GenMark stock analysis on TipRanks)To find good ideas for healthcare stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. More recent articles from Smarter Analyst: * Apple Is Developing Its Own Graphics Cards- Report * Carnival (CCL) Is Still a Very Risky Cruise Line Stock * 3 Small-Cap Stocks Under $6 That Could See Over 70% Gains * Google Cloud Forges Multi-Year Deal With Renault
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Why Warren Buffett and Stanley Druckenmiller missed the market rally: Trader
In a Yahoo Finance Premium webinar, Brian Shannon, CMT discusses why trading legends missed the bulk of the post-Covid stock market rally and explains how traders can avoid common pitfalls, such as impulsive trading, by having a trading plan and knowing their time frame.
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What to Do with Sunrun (RUN) Stock Right Now?
North Carolina-based asset management firm Massif Capital, LLC released its second-quarter investor letter this month – a copy of which is available for download here. The fund is currently being co-managed by Will Thomson and Chip Russell. In their recent letter to investors, Massif Capital announced that the core portfolio was up 18.3% in the […]
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Mesoblast expands compassionate use COVID-19 program
Mesoblast has developed a cellular therapy that may significantly reduce deaths among the most severely sick COVID-19 patients. CEO Dr. Fred Grossman joins Yahoo Finance’s On the Move to discuss what this development could mean in the fight against the virus.from Yahoo Finance https://ift.tt/2Ofx2f0