As the technology advancing further, we are getting closer to become a cashless society. Digital wallet and mobile payment are going to be essentials in the global market. Paypal is one of the most used digital payment services in the world. It has active users of 237M and growing. In 2017, China’s Baidu has entered a partnership agreement with PayPal to allows its users to purchase overseas merchants. It helps Paypal to set its foot into one of the largest emerging market which is dominated by Alipay and Wechat. The adoption rate is a lot higher in emerging market such as : China and India, comparing to developed countries. We are seeing a huge growth potential in this field. PYPL is currently trading at $74/share. It has a forward P/E at 26.86 which is a healthy range. (Data was provided by Thomson Reuters.) ROE is at 11.69%. In 2017, net income vs free cash flow is a healthy: 1.8B/1.86B. Moreover, it reported the latest earnings last week. Revenue grew to $3.69B up 24% year over year.It beat company’s top line forecast. EPS also beat the consensus: 0.45 vs 0.41. Venmo, the company’s social platform, continues to gain popularity among millennial. Although it is only operating in the states, we strongly believe that it will be open to other regions later on. We are still seeing huge potentials with the company. Our price target is at $90 by the end of 2019.
P.S. We have a long position
We have briefly talked about this new IPO before. It is a medical robotic company. It has released Q4 earnings and Full year financial data of 2017 three days ago. Total revenue for the Q4 of 2017 increased 22% in compared with Q4 of 2016. For the full year 2017 total revenue increased 41%. Gross margin decreased to 68% from 74% year over year. We believe it is due to its expansion and increase of revenue cost respectively. It did a secondary offering in the end of November to raise capital for company’s expansion stage. R&D expenses increased 56% year over year. Q4 EPS is (0.25) which is a huge improvement compared to Q4 of 2016 EPS (1.25). Cash on hand at December 31,2017 was $12,959,000.
There are a few other things we like about this company:
- No debt
- Europe and Canada Markets approvals
- Only of its kind in the market
- Awaiting medicare paycode and Asia market approvals
Here are things that you should consider before making your investment: this company has move from controlled launch phase to commercial scale up which means increased demand of capital is expected in the near future. Because all the expansion and marketing are going to require additional amount of funds. We expect that there is going to be some sort of offering in the future. They do have warrants that they can exercise for additional funds. As a result, there is a certain level of dilution is expected. It may sounds bad to current shareholders. However, this is a normal activity to growing company such as MYO. We are bullish on MYO in the long term. For short term investors or day traders, you can expect the similar share price pattern in the upcoming a couple of quarters, which the SP would likely to goes up before next earnings and it would experience certain level of sell off post earnings as well. We could see a slight drop of current price in the near future.
P.S. we have adjusted our position post Q4 ER. We are a long in MYO.
This is a new IPO. It started trading on NASDAQ Capital Market on Feb.1. OSS is a provider of high performance computer appliance to various industrial applications such as: data center, financial network and deep learning etc. Its IPO price was $5. It is trading around $4.75-$4.99 range lately. It has an outstanding shares of around 12.34M. Its public float is around 7.57M. We like its product lineup which is going to be in demand for years to come. However we won’t be able to do an in depth fundamental analysis yet since there aren’t too many financial data we could find as it is a still relatively new public company. Here is the S-1 SEC filing (contains 2016 and partial 2017 financial data) we could view:
We started a position recently and plan to hold through its first ER. We will likely adjust our position accordingly after they report the first earnings. We will revisit and do a more in-depth fundamental analysis after.
Myomo Inc.(MYO) is a medical robotics company which develops neuro-robotic technology. It’s based on patented technology developed at MIT and Harvard Medical School. Currently it has a MyoPro product line of myoelectric limb orthosis which help restore functions in the paralyzed or weakened arms and hands of individuals. It is a relatively new IPO. It went public in June, 2017. It is not exactly a great return on investment kind of stock so far. MYO is still trading a tad below its IPO price at the moment. One of the reasons that drove the share price lower last year, MYO did a secondary offering to shore up its balance sheet. As a result it diluted the stock value of shareholders back in November. However we still see growth potentials in this company as it is in the introduction stage. Its product is the only kind in the market. It has open Canada and EU markets recently. It has performed well so far into 2018. We have seen an impressive 40% increases in price YTD. It is not a bad entry point now as it is heading into its earnings (estimated date: Feb 12). We estimate it beats earnings on Q4, 2017. Before you decide to enter please also consider the risk of volatility in the price because MYO is a low float stock( its price could drop sharply if it fail to beat the earnings). Our price target is $7 in short term (within 6 months).
For your reference,
The link is its last 10-Q filing: http://otp.investis.com/clients/us/myomo_inc/SEC/sec-show.aspx?FilingId=12368574&Cik=0001369290&Type=PDF&hasPdf=1
P.S. We have a long position in this company. High volatility is expected in this equity, please invest with caution.
Cryptocurrency exploded in 2017. It is one of the hottest topic among investors. There are more than 10 different cryptocurrencies you could invest in. There are going to be more cryptocurrencies in the future. Blockchain technology is the core of cryptocurrency. That is where some of the so called “blockchain” companies come in. Because of this blockchain hype, we saw some micro-cap stocks exploded in the final two months of 2017. Their share prices jumped to all time high of the year. These are some of tickers: MARA, DPW, RIOT, LFIN,LTEA,TEUM etc. The blockchain hype has become kind of ridiculous. For example, there was this Long Island Iced Tea Corp. changed its name to Long Blockchain Corp. last month. Its share price was instantly up over 200% in the same day. Moreover, there is a small cap finance company called Longfin. Its IPO price was $5, its share price soared to over 2000% after the news of acquiring a small blockchain company broke two days later. Most of these companies are not profitable. Also, they have very low public float which leads to extreme volatility in their stocks prices. As a result, there were a lot of people trying to chase the hype and invest into these companies, ended up losing a lot of money. There is no doubt that some early birds made huge gains on their crypto investments. There might potentially be more opportunities in the field of digital currency as technology advancing further. As of now, we still look at cryptocurrency as a very risky investment. If you really want to give it a try, we recommend to trade with caution and do not hold it overnight because most of these stocks are related to price of bitcoin, and bitcoin runs 24/7. Holding overnight could have risk due to decline from bitcoin’s price. After all, please do your own DD before any investments.
P.S. We will keep an eye on future development and revisit this technology at a later date. Have a great 2018 and happy investing!!
We talked about how to trade around a core position in last post. Today we’ll discuss about another technique called scalping. This technique is very effective when trade with volatile stocks. Because of the volatile nature of the stock, it comes with high risk as well. It is not recommended to beginner traders. First, you will need to find a low float stock which is trading with high volume. Generally, stocks with 20M or lower tradable shares are considered as low float. Here is the formula you can calculate the public float: Outstanding shares – restricted shares = public float. Secondly, after you pick out 1 or 2 stocks you are going scalping, you would need to see its pricing patterns. You should always try to buy in when the price is in decline pattern.Don’t worry if you were not able to get in at the lowest cost possible, 9 out of 10 the stock price would rebound to certain level. Once the price rebounds, we suggest to sell it within 50 cents range. Because of the volatile nature, the price is very unstable. That’s why you would need to discipline yourself not to be greedy otherwise you may lose all gains in a blink of your eyes. Sell for small profit and come back in again when the price is on the decline pattern. Sometimes you could repeat the buy, sell, buy, sell, actions a couple more time within the same day if the volume and catalyst are there. Sure looks like a small profit, it does add up over time. Hope this could help you with your future investing.
P.S. This technique is suitable for experienced day traders. However, it is still a very risky technique. Please use it with caution. Happy investing!
I found this technique quite useful. I’ve been using it in some of my investments as well. First, you will need to find a company which you believe it has growth potential and you are willing to invest in for the long run. How to find that specific company? Do a fundamental analysis on the company and try to determine if the company’s share is fair value. (There will be a separate post on how to do fundamental analysis in the near term). Let’s say you did your due diligence and came to a conclusion that you are going to invest in this company. You would buy 100 shares at first. Then you purchase another 2 blocks of 50 shares over the next month or two. Now you have 200 shares in total. Because you are planning to keep this company in your portfolio for the long term, you could keep 100 shares as your core position which means you will not sell those 100 shares in the near future. Stock price is never a straight line. There is always ups and downs. Now you have 200-100 = 100 shares left for you to trade around your core position. Some time later, if the share price goes up to say 6%(any target price you have), then you may sell 25(any number you would like to sell) shares and profit in. If it goes up again, you could sell another 25 shares. After you sell all 100 shares, you will have to wait for the price to come down. Once the price is close to the fair value that you estimated, you could buy back in again. Don’t purchase 100 shares at once. Try to break it down to blocks of 25 or 50. Don’t worry if you estimation is incorrect, you could always average down by buying shares lower than previous purchase. Please remember you still have your core position(100 shares) after all these trades. This might appear to be small income but over time the profits add up. In conclusion, it is a repetition of selling it when price goes up, and buy back when price drops.
P.S. While you are waiting for the price to drop, you still need to do your homework and keep up to date with your investment. Good news may trigger a pop whereas bad news could lead to a drop. Hope this could help, happy investing:)
We’ve been covering AMD for quite some time now. It is an interesting player in the semiconductor space.AMD reported its earnings after market closed on Tuesday. Its earnings and revenue both beat street’s estimates in Q3. Normally, if a company had a good ER beat, its share price would go up due to the hype. That is not the case this time around. AMD saw a significantly drop of price around 15% at one point right after the ER. As of today, it was closed at $11.84. What’s going on with the drop? During the conference call, AMD gave a prediction on decline of its sales revenue by 14% to 18% for Q4, which does not bode well with investors expectations. Also, there are some other factors that scared the investors away. Intel’s newly launched CPU was one. Moreover, spectators are still not convinced that AMD would be able to sustain its market shares versus tough competitions from NVDA and INTEL. Its huge debt on balance sheet does not help the situation either. All that being said, we are still bullish on AMD for the long run. It is a company which is working on turning itself around from the worse period in pre-2014. Its revenue and earnings are both improved from year over year. Here is a small sample: (source:ST.)
New product lines are continue to roll out in 2018. We also believe that the revenue from data-centers are coming in later in the year as well. It is also doing a decent job on reducing debts. However, it is not going to be a smooth ride in the near future. The volatility is going to be high as it is still one of the most shorted stocks in tech. Think twice before you decide to jump in whereas there are other great blue chip stocks in tech:)
P.S. We have positions in the equity mentioned above. Also, other tickers will be covered in future posts.
Stock market has been bullish for quiet some time now. All the major indexes have hit all time highs this year. There are some saying that we are experiencing bubble in the stock market. There have been two major bubbles in the past 20 years. As the chart shows below( Thanks to the MSCI ):
As you can see, there was the DotCom bubble back in 2000 and the housing bubble in 2008. It sure looks like we are at the edge of another bubble burst by seeing the pattern of the chart. What’s going to happen when stock market crash? Basically, there will be a drastic drop across sections in the stock market, in which would trigger investors panic selling to stop losses and push stocks prices lower. In worse case, it could cause a recession. However, we don’t see a crash happening any time soon. The world’s economy has been steadily recovered and growth since the last crash in 2008. There are some companies indeed over-valued in the market but not in such an alarming rate yet. As long as there is no sudden global event like wars among countries, which may trigger the burst. In the near future, we may see some correction which is a normal activity in the stock market. Overall, the market is still in a good place at the moment. We can’t predict what exactly is going to happen in the future, but opportunity would come for people who are prepared. We will revisit the situation next year.
We have our eyes on an upcoming IPO SWCH. Switch Inc. is a data center operator. What’s a data center? It is a facility which stores and manages data from organizations. We were not able to find too many details on its financials due to the private status. It is a profitable private company. Its revenue has a 20% gain from 2015 to 2016. It has long term loan at about $825M, however a lot of the loan has been invested into expansions. Currently, the company has 3 main campuses; it is eyeing to keep adding more facilities across the country. According to report by TechNavio, global data center market is projected to grow 11% annually over the next three years. There will be more data available as the society progress which means more data centers will be needed for organizations. It’s going to continue to be a profitable industry for years to come. This IPO is going to be starting at NYSE this Friday. We are planning to add it to our portfolio as soon as possible. For day traders, this might be a good chance to grab some gains from the hype (probably a two days windows), however we expect the price will settle down a bit after the hype of a new IPO. Long term value investors could wait and look for a more reasonable entry point once the price get closer to its intrinsic value. We will have a further discussion after more information is available to the public.