Stocks fluctuated in both directions but finished the week with little changed after closing a positive month and a negative quarter. Despite late March’s recovery rally, the major averages posted the worst quarter since Q1 of 2020. The Dow declined 4.6%, the S&P 500 lost 4.9%, and the Nasdaq bled more than 9% in the first quarter. Rounding the corner into Q2, investors are confronted with the task of seeking out quality investments against a more challenging economic backdrop.
Our team has a few recommendations this week, including a short-term play that rewards big when oil supply increases and prices plunge. Plus, a financials name poised to perform well as the bullish case for rate-sensitive stocks gains steam.
Legend Who Bought Apple at $1.42 Says Buy TaaS Now
It’s called TaaS – and if you haven’t yet heard of this technological breakthrough, you soon will. [Full Story…]
The market was anticipating the first 25 basis point rate hike last month. What came as a surprise was the Fed’s more hawkish approach, indicating that it plans to make comparable rate hikes at each of its next six FOMC meetings in 2022. And it’s planning another four hikes next year for a total of 11 hikes in two years.
While bank stocks had factored in rate hike benefits to a certain extent, more rate hikes than projected also means potential for banks to generate higher revenue in 2022. As one of the perennially most rate-sensitive banks out there, Comerica (CMA) is one to watch as the market adapts to a more hawkish Fed.
Until recently, Comerica’s management had only expected four 25 basis point rate hikes this year. According to its annual filing, a 1% move higher in the federal funds rate would lead to a whopping 12% increase in net income interest over the next twelve months. Considering the implications, the upside potential is undeniable.
Furthermore, Comerica has high cash levels right now, which will earn a lot more yield as rates go up. With roughly 90% of total loans in various commercial segments, many of its loans also have floating rates that will reprice higher with the federal funds rate.
With a forward 12-month P/E of 15, CMA is still attractively priced. Its conservative 33% dividend payout ratio means the 3% dividend yield isn’t going anywhere.
Jeff Bezos Just Poured $10 Billion Into This…
Not many people know this story… But in 1998, Bezos invested $250,000 of his own money in Google, when the company was just getting started out of a garage in California. When Google went public in 2004, that $250,000 investment translated into 3.3 million shares of Google stock. Nobody knows if Bezos has sold any shares. If he hasn’t, today they’re worth more than $5.6 billion.Jeff Bezos is betting big on a new trend. This time he’s planning to invest $10 billion of his own money in this exciting new trend. That’s 40,000 times more money than what he invested in Google. That’s how big he thinks this could be. [Full Story…]
Roblox Corp (RBLX) has been hit hard recently as investors have taken a pessimistic view of the company’s growth trajectory. But the sell-off seems overdone, considering the enormous potential in Asian markets.
As per the company’s Q4 2021 earnings presentation, bookings increased by +20% year over year to $770.1 million. Notably, this was the slowest year-over-year growth in bookings that the company has registered in the past 11 quarters. For the sake of comparison, RBLX bookings increased 161% in Q1, 35% in Q2, and 28% in Q3.
The company could struggle to keep up as it laps its stellar performance from the first quarter of last year. Still, bookings growth seems likely to accelerate in the second half of 2022 as expansion in promising Asian markets is on track to offset weakness in U.S. markets. RBLX derived 23% of its total daily active users in Q4, up from 15% in Q4 2020. What’s more, daily active users in two key Asian markets, India and Japan, saw their respective daily active users increase by more than +100% year over year in Q4 2021.
The consensus forecasts currently call for Roblox to grow earnings by a respectable 32.5% in the first quarter of 2022 and to cut its losses in half (to $0.22 per share). The analysts offering recommendations for the stock rate it a Buy and give it an average price target of $65, implying an increase of 41% from where the stock closed on Friday.
Palm Beach Group:
Teeka: “Buy this Ticker ASAP” – DONT USE.
With experts projecting gains as high as 1,530% by the end of this year… Anyone who doesn’t buy this ticker will most likely regret it later. Even Forbes has confirmed that when all is said and done, “a new class of millionaires may emerge.” Unfortunately, a recent study shows that only 3% of retirees have invested in this opportunity. That means most people will miss out. Don’t be one of them. Click here and get the ticker now… no strings attached. [REVEAL TICKER]
U.S. crude oil slipped below $100 a barrel on Friday, marking a roughly 13% weekly fall. One factor in oil’s decline from a recent high of around $130 was President Biden’s announcement that the U.S. would release as much as 180 million barrels of oil from a strategic reserve over the next six months. Our last recommendation is a short-term play that will appeal to active investors bearish on oil.
The ProShares UltraShort Bloomberg Crude Oil (SCO) offers daily short exposure to crude oil prices through futures contracts, not the spot price of oil. It is currently short futures that expire in March 2022, June 2022, and December 2022.
The fund is structured as a commodity pool, a private investment tool structured to combine investor contributions for trading futures and commodities markets. The ETF seeks daily investment returns, before fees and expenses, that are two times the inverse (-2×) of the daily performance of the Bloomberg Commodity Balanced WTI Crude Oil Index.
Leveraged ETFs can be riskier investments than non-leveraged ETFs, given that they respond to daily movements in the underlying securities that they represent, and losses can be amplified during adverse price moves. Furthermore, leveraged ETFs are designed to achieve their multiplier on one-day returns, but you should not expect them to do so on longer-term returns. By combining inverse and leverage strategies, inverse leveraged ETFs are incredibly complex and risky instruments and should be avoided by less sophisticated investors.
Where to invest $1,000 right now...
Before you consider buying Comerica, you'll want to see this.
Investing legend, Keith Kohl just revealed his #1 stock for 2022...
And it's not Comerica.
Jeff Bezos, Peter Thiel, and the Rockefellers are betting a colossal nine figures on this tiny company that trades publicly for $5.
Keith say’s he thinks investors will be able to turn a small $50 stake into $150,000.
Find that to be extraordinary?
But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.
Banyan Hill Publishing:
Just $2 a Share Today — The No. 1 Investment of the 2020s
New technology’s user base growing at 5X the speed of the internet in the 1990s. Could dwarf dot-com boom. [Click here to get details on $2 stock now.]