Are their bottomless fries and frequent promotions enough to get people to spend?

Financial Overview: Valuation and Enterprise Value

• Market Cap: $92.16 million
• Enterprise Value: $647.33 million
• Price/Sales (ttm): 0.07
• Enterprise Value/Revenue: 0.51
• Enterprise Value/EBITDA: 14.55

Red Robin’s low Price/Sales ratio of 0.07 indicates a low valuation in relation to its revenue, which may appeal to deep-value investors. However, the high Enterprise Value/EBITDA ratio of 14.55 suggests that the company is highly leveraged, with significant debt influencing its enterprise value. This ratio could be a caution flag for investors concerned about the company’s ability to manage its debt levels effectively, especially in a rising interest rate environment.

Profitability and Income Statement

• Profit Margin: -3.20%
• Return on Assets (ttm): -1.81%
• Net Income: -$40.84 million
• Diluted EPS (ttm): -$2.59
• Revenue (ttm): $1.28 billion

Red Robin’s profitability metrics reveal the company’s struggle to generate positive earnings for the stock. With a profit margin of -3.20% and a negative return on assets of -1.81%, the company has faced challenges in achieving profitability. The annual revenue of $1.28 billion reflects strong sales volume but is undercut by the ongoing net losses. EPS of -$2.59 further indicates the impact of operating and interest expenses on Red Robin’s bottom line.

Balance Sheet and Cash Flow

• Total Cash: $23.14 million
• Levered Free Cash Flow (ttm): -$8.5 million

Red Robin’s cash position remains constrained, with $23.14 million on hand, which limits flexibility for future investments or debt reduction. With a negative levered free cash flow of -$8.5 million, the company faces additional pressures to fund operations and service its debt. Without a clear path to cash flow positivity, Red Robin could struggle to weather further economic downturns or increased competition.

Analyst Sentiment and Price Targets

Analysts have provided a mixed outlook on RRGB:

• Price Target: $10.88 (Average), with a high target of $16.00 and a low of $6.00
• Current Price: $6.13
• Recommendation: Ratings range from “Strong Buy” to “Sell.”

Analysts’ price targets vary widely, reflecting uncertainty around Red Robin’s financial recovery prospects. While some analysts remain optimistic with a high target of $16.00, others recommend caution, with a lower-end target aligning closely with the current price of $6.13. Investors should consider this disparity when assessing RRGB’s potential, as it may signal volatility.

Key Challenges and Investor Considerations

1. Debt Levels: Red Robin’s enterprise value is significantly influenced by debt, raising concerns about financial stability, especially if profitability remains elusive.
2. Profitability: With ongoing losses, Red Robin must find ways to improve margins, either through cost reductions or strategic changes to enhance revenue generation.
3. Market Competition: The casual dining sector is highly competitive, requiring Red Robin to innovate its menu, services, and customer experience to retain market share.

Insider Buying Activity Signals Potential Confidence in Red Robin’s Future

In addition to the financial metrics and valuation indicators, recent insider buying activity has drawn attention to Red Robin’s (RRGB) stock. Insider buying can sometimes signal that those closest to the company believe the stock is undervalued or that they are optimistic about the company’s future. Here’s a breakdown of notable insider purchases in recent months:

Recent Insider Transactions

• October 15, 2024: Jumana Capital Investments LLC purchased 37,761 shares at $5.79 per share, increasing its stake by 5% and totaling a value of $218,595. This aligns with a purchase on the same date by Jcp Investment Management, LLC, which acquired an additional 77,761 shares at the same price, increasing its holding by 8%, amounting to $450,339.
• September 10, 2024: CEO Gerard Johan Hart purchased 10,000 shares at $3.15 per share, totaling $31,526. This followed an earlier transaction on August 22, 2023, when he bought 25,000 shares at $10.26, totaling $256,500.
• September 3, 2024: CFO Joshua Todd Wilson added 5,000 shares to his holdings at $3.60, bringing his total stake to $18,000.
• August 22, 2023: Archon Capital Management LLC increased its position by acquiring 212,536 shares at $10.46, totaling $2,222,703.

These purchases reflect confidence from both executives and large stakeholders. In particular, recent acquisitions by Jumana Capital Investments and Jcp Investment Management are significant, as they are institutional investors who often make decisions based on rigorous financial analysis. The substantial share increases by Red Robin’s CEO and CFO further underscore leadership’s positive outlook on the company’s prospects.

What Does Insider Buying Mean for Investors?

While insider buying doesn’t guarantee a stock’s performance, it often points to a level of confidence in the company’s strategy or valuation. For Red Robin, these insider purchases could indicate that key decision-makers and investors see potential for value growth despite the company’s financial challenges.

There’s a lot of reasons why insiders could sell, but there’s only one reason insiders buy a stock – They have information that they believe will make the stock go up.

Bottom Line: Is RRGB a Buy?

For speculative investors, Red Robin offers a high-risk, high-reward profile. The low Price/Sales ratio might seem appealing from a valuation perspective, but the profitability and cash flow constraints add considerable risk. For those interested in turnaround plays and comfortable with volatility, RRGB could be an opportunity at its current price. However, long-term investors with a low-risk tolerance may prefer to wait for signs of financial stability and cash flow improvement before considering an investment in Red Robin.

The post Red Robin Stock Analysis: A Look at Financials, Profitability, and Analyst Sentiments appeared first on Investment U.

Remember 1996: A Lesson for Today’s AI Craze

If you were around in 1996, you might recall the early days of the internet. I remember the excitement of connecting to the internet through services like AOL and CompuServe, discussing stocks on bulletin boards, and watching the tech world evolve. Back then, no one could have predicted how deeply the internet would integrate into every part of our lives. Fast forward to today, and we’re witnessing a similar evolution with AI. Just like the internet revolutionized commerce, communication, and finance, AI is poised to do the same—but on an even larger scale. Figuring out how to invest in AI now feels a lot like investing in the internet back in the ’90s.

The Explosion of AI Companies

Today, there are nearly 17,000 AI companies in the U.S. alone, with thousands more around the globe. With so many companies flooding the market, how do you identify the best AI stocks to invest in?

History tells us that only a few companies will stand the test of time, just as Amazon and eBay survived the dot-com crash while countless others failed.

How to Find Undervalued AI Stocks and Avoid Hype

The key to successful AI investing lies in knowing which companies have substance and which are simply riding the AI wave. A crucial trick is to focus on AI dividend-paying stocks.

Why?

Companies that consistently pay dividends are often more stable, financially sound, and poised for long-term growth. This strategy not only helps you avoid risky, overhyped stocks but also positions you to benefit from the upside of AI while enjoying steady returns. Finding the best AI stocks starts with looking at companies that reward their shareholders through consistent and rising dividends.

Dividends: Your Best Defense in an AI Frenzy

Investors often get caught up in the allure of small-cap stocks that promise to be the next big thing. But the truth is, many of these companies are more likely to fizzle out like Pets.com than to become the next Microsoft or IBM. How to find undervalued AI stocks that offer real value requires looking beyond the hype and focusing on companies that have proven they can generate profits and reward shareholders. In fact, dividend-paying AI companies offer a double benefit: stability and potential for significant growth as AI technology continues to advance.

Proven AI Giants to Watch

While many investors chase small, speculative stocks, the best opportunities in AI might be with established tech giants. Companies like Microsoft (NASDAQ: MSFT) and IBM (NYSE: IBM) are already leading the charge in AI innovation and have a proven track record of rewarding investors with consistent dividends. For those seeking a balance of safety and upside potential, large-cap AI stocks like these are an excellent starting point. But that doesn’t mean you should ignore smaller players altogether—you just need to do your due diligence.

How to Avoid AI Stock Land Mines

When considering any AI company, especially smaller ones, it’s essential to remain cautious. Many will make bold claims about their potential but lack the substance to back them up. Here are a few tips on how to avoid AI stock land mines: Look for Dividend History—companies that have consistently paid and increased dividends are usually in a better financial position. Analyze Financials—pay close attention to a company’s revenue, earnings, and cash flow. If these are lacking, it’s a red flag. Check Leadership and Innovation—strong leadership and a commitment to innovation are key indicators of a company’s long-term viability in the AI space. By following these principles, you can increase your chances of finding AI stocks with real potential and avoid getting burned by hype.

Conclusion: Invest Wisely and Avoid AI Land Mines

Investing in AI can be incredibly rewarding, but it’s essential to approach it with caution. By focusing on dividend-paying AI stocks, doing thorough research, and avoiding overhyped companies, you can position yourself for long-term success in this exciting sector. So, as you explore AI investment opportunities, remember the lessons from 1996—avoid the land mines and focus on companies with real potential to grow and thrive.

The post How to Invest in AI: Avoid the Land Mines and Find the Best Opportunities appeared first on Investment U.

The Conventional View: Why Rate Cuts Should Boost Stocks

In theory, a Fed rate cut should be a boon for stocks. Lower interest rates reduce borrowing costs for companies, allowing them to expand operations, invest in new projects, and increase profitability. Additionally, lower rates make bonds less attractive, as bond yields typically decrease, driving investors toward higher-yielding assets like stocks. This dynamic generally creates a favorable environment for equities.

Callie Cox, chief market strategist at Ritholtz Wealth Management, echoes this sentiment, noting that rate cuts can increase the attractiveness of stocks compared to bonds by driving bond yields lower. However, the reaction of stocks to rate cuts isn’t always straightforward.

Historical Data: The Mixed Reactions to Rate Cuts

To understand the true impact of Fed rate cuts on stocks, it’s essential to look at historical data. A review of past rate-cutting cycles since the early 1990s reveals that the stock market’s response to the first cut can vary significantly.

• 1995 Rate Cuts: The Fed’s first rate cut in July 1995 was followed by a strong rally in the S&P 500, which gained 20.13% over the next year. This period was characterized by a robust economy, and the rate cuts were seen as a celebration of sustained growth.
• 1998 Rate Cuts: In September 1998, the Fed cut rates amid financial market turmoil following the Russian debt crisis. Despite an initial dip, the S&P 500 rebounded, posting a 22.27% gain over the next year. Here, the rate cuts were perceived as a preemptive measure to prevent broader economic fallout, which ultimately bolstered investor confidence.
• 2001 Rate Cuts: The 2001 rate cuts occurred in the midst of the dot-com bust. Initially, the S&P 500 gained, but three months later, it was down by 10.7%, and by the end of the year, it had declined by 10.02%. These cuts were made in desperation to combat a slowing economy, leading to investor fears about an impending recession.
• 2007 Rate Cuts: The 2007 rate cuts came just before the financial crisis. After an initial uptick, the S&P 500 dropped significantly, losing 21.69% over the following year. The cuts were seen as a desperate move to stave off the economic downturn, which ultimately failed to reassure investors.
• 2019 Rate Cuts: The most recent rate cuts in 2019 saw a mixed response. Initially, the S&P 500 dipped, but it recovered to post a 9.76% gain over the following year. The 2019 cuts were part of a “mid-cycle adjustment,” and the market eventually responded positively, anticipating continued economic growth.

The Key Takeaway: Context Matters More Than the Cut

The varied historical responses to Fed rate cuts underscore a crucial point: the context in which the Fed cuts rates matters more than the cut itself. As Kevin Gordon, a strategist at Charles Schwab, notes, it’s not just whether the Fed is cutting rates that matters for stocks, but the reason behind the cuts.

If the Fed cuts rates in response to a robust economy (“celebration”), stocks often rally as investors anticipate continued growth. However, if the Fed cuts rates out of concern for a slowing economy or financial instability (“desperation”), stocks may struggle as investors worry about deeper economic problems.

Current Market Conditions: What to Expect?

As of September 2024, with the Fed poised to cut rates again, investors are left to speculate on how the market will react. Current economic indicators suggest a mixed picture. While some sectors of the economy show resilience, others, particularly the labor market, have shown signs of weakening. This uncertainty has led to increased market volatility.

Moreover, the S&P 500’s performance in the months leading up to the anticipated rate cut has been relatively strong, which could set the stage for a “buy the rumor, sell the news” scenario. Investors may have already priced in the rate cut, leading to a potential selloff once the cut is officially announced.

Conclusion: A Cautious Approach is Warranted

While history provides valuable insights into how stocks might react to Fed rate cuts, the unique circumstances surrounding each cut mean that past performance is not always indicative of future results. Investors should remain cautious, considering both the broader economic context and the reasons behind the Fed’s decision to cut rates.

As always, diversification and a focus on long-term investment goals are crucial strategies in navigating the uncertainty that accompanies Fed rate decisions. Whether the upcoming rate cut will lead to a rally or a downturn remains to be seen, but understanding the factors at play can help investors make more informed decisions.

The post What Happens to Stocks When the Fed Cuts Rates? An Analysis Through Historical Data appeared first on Investment U.

In December 2023, CRISPR received approval from the FDA to treat sickle cell disease (SCD) and beta-thalassemia with its landmark drug, CASGEVY. However, despite this breakthrough, CRSP stock is down 15% in 2024. 

CRISPR’s Breakthrough Treatment

To start, investors should be careful buying CRSP stock as its success depends almost entirely on CASGEVY over the short term. CRISPR currently has 5 other drugs in clinical programs. But, CASGEVY is its only FDA-approved therapy. For investors, this means that CRISPR’s price will likely be very volatile in the short term. Any good news around CASGEVY will likely send the stock soaring, while bad news could do the opposite.

Despite its limited portfolio of approved drugs, CRISPR’s future seems very strong. Its approved drug, CASGEVY, is a potential cure for sickle cell, a debilitating and life-threatening disease. The company also has 15 more drugs in its pipeline including therapies for hemoglobinopathies, oncology, and regenerative medicine.

Additionally, the company is led (and co-founded) by Emmanuelle Charpentier. Emmanuelle received the Nobel Prize in Chemistry for her work on the CRISPR/Cas9 gene-editing system. This just goes to show how cutting-edge CRISPR’s treatments are.

We also can’t discuss CRSP stock without also talking about Vertex Pharmaceuticals (Nasdaq: VRTX). 

CRISPR and Vertex Pharmaceuticals (Nasdaq: VRTX)

Vertex Pharmaceuticals owns 60% of CRISPR’s gene editing therapy for CASGEVY.

Right now, CASGEVY is in a bit of an exploratory phase. It has been approved by the FDA for use in the United States and the United Kingdom. In the US FDA trial, the drug was administered to 31 patients with 93.5% experiencing no major ill side effects. Now, it’s on doctors across the US and UK to recommend this treatment to their patients. When that happens, Vertex will own 60% of all sales and CRISPR will receive 40%.

On one hand, this will undoubtedly take a bite out of CRISPR’s potential profits. However, Vertex and CRISPR plan to charge $2.2 million for CASGEVY treatments. CRISPR’s cut of any prescribed treatments would presumably be 40% of $2.2 million or $880,000 per treatment – still incredibly high for one product.

Additionally, from what I’ve read, Vertex has significantly better commercialization abilities than CRISPR. It’s a bigger company with a much wider influence which will help bring CASGEVY to market and make it more readily available for patients. So, this partnership may actually work out in CRISPR’s favor.

Crispr Technologies Most Recent Quarter

As a cutting-edge biotech company, Crispr Technologies’ income has been all over the place over the last three years.

1. 2023: Annual revenue of $371.2 million and a net loss of $153 million
2. 2022: Annual revenue of $1.2 million and net loss of $650 million
3. 2021: Annual revenue of $914.9 million a net income of $377 million

This type of variability is not uncommon for early-stage biotech companies. These types of companies often spend years churning through investors’ money while they work to develop cures. However, once they’ve developed a viable treatment, revenue and income can go parabolic. Could this be what’s in store for CRSP stock?

Should You Buy CRSP Stock?

Buying early-stage biotech companies is a bit of a gamble.

On one hand, CRSP stock certainly seems poised for a breakout. The company received critical approval for a life-changing drug and yet the stock is down YTD. The company also has a Nobel Prize-winning CEO in charge, which is a great sign of things to come. Crispr Technologies has the potential to do amazing things in the medicinal field over the coming years. If its gene-editing treatments are successful then the stock will undoubtedly soar.

Red Flags to consider. 

For example, how many people will actually buy CASGEVY? According to the FDA, sickle cell impacts just 100,000 people in the US, or 0.0003% of the population. And, for those who have sickle cell, how many will be able to actually afford CASGEVY given its immense price tag of $2.2 million dollars? These questions are difficult to estimate, especially given the US healthcare system’s convoluted use of insurance policies to pay for treatments.

Finally, it’s worth mentioning that CRISPR already trades at a valuation of $4.75 billion. Some could argue that the company is immensely overvalued, considering its reported revenue of just $504,000 last quarter. On top of that, sickle cell affects a small portion of the US population. An even smaller percentage of those impacted will actually be able to afford CASGEVY. Finally, when CASGEVY revenue starts coming in, CRISPR will only receive 40%.

CASGEVY approval could be a sign of positive things to come.

It’s important to remember that CASGEVY is just one treatment for a handful of diseases. But, CASGEVY is also based on cutting-edge gene-editing technology. If CRISPR can use its gene-editing therapies to treat more common diseases – cancer, heart disease, etc – then the company’s $4.75 billion valuation might seem incredibly cheap. Who knows how long this type of diversification might take. But, it’s a very positive sign that CRSP stock has upward potential over the long run.

If you’re interested in buying CRSP stock, it might be wise to consider doing so slowly over time. This can help protect you from dramatic swings in the stock’s price. 

I hope that you’ve found this article valuable when it comes to learning about CRSP stock. If you’re interested in learning about other gene editing stocks click here, or please subscribe below to get alerted of new investment opportunities from InvestmentU.

Disclaimer: This article is for general informational and educational purposes only. It should not be construed as financial advice as the author, Ted Stavetski, is not a financial advisor. Ted also did not own CRSP stock at the time of writing.

The post Getting in on the Gene-Editing Wave: Should You Buy CRSP Stock? appeared first on Investment U.

Let’s take a look.

Lulu’s Most Recent Quarter

I dove into Lululemon’s most recent quarterly earnings report (June 6th) to get an idea of how the company has been performing recently. Here’s what I learned:

1. Net Revenue: $2.2 billion, up 10% annually. 
2. Gross Profit: $1.3 billion, up 11% annually
3. Balance Sheet: The company ended the Q1 2024 with $1.9 billion in cash
4. Guidance: For Q2 2024, Lululemon expects net revenue of $2.4 – $2.42 billion, which would represent growth of 9% to 10%
5. Stock Repurchases: The Board of Directors authorized a $1 billion stock buyback program.

At first glance, these results are not bad at all. But, they’re also not overwhelmingly good – especially for a company that should still be growing fairly quickly. 

CEO Calvin McDonald stated that there was strong momentum in international markets last quarter. He also confirmed that the company left money on the table by not having enough products in stock to meet high demand. McDonald also stated that he’s confident in the company’s abilities moving forward. 

Looking ahead, the company is focusing on product innovation, guest experience, and market expansion. Lululemon also expects growth in these areas:

• Men’s Apparel 
• E-commerce
• International net revenue: International revenue currently makes up just 21% of the company’s sales. Lulu hopes to quadruple 2024 int’l revenue relative to 2021.

However, as far as bad news, Lululemon announced the departure of its Chief Product Officer, Sun Choe. According to a few reports I read, Choe was a driving force behind product innovation at Lululemon. The company will miss Choe and has had to reshuffle its internal structure following this departure. 

So, what does all this mean for investors?

Time to Buy Lululemon Stock?

With Lululemon stock down 40% YTD, it might seem like time to deploy Warren Buffet’s famous advice of “buy a great company at a good price.” But, I don’t think this applies to Luluemon stock right now. I believe that there is downside potential ahead for Lululemon thanks to three risk factors.

Risk #1 – Increased Competition

Years ago, Lululemon was virtually alone in the athleisure space. This wasn’t all too surprising, since the company essentially created athleisure. Sure, you could argue that Nike (NYSE: NKE) or Adidas (OTCMKTS: ADDYY) were semi-competitors. But, Lululemon was always in a vastly different space than these two all-in-one athletic apparel giants. Lulu goes after a much more niche, high-end market.

Lulu’s days of monopolistic power are quickly coming to an end. Today, Lululemon faces steep competition from companies like Alo, Vuori, Gym Shark, Fabletics, and many smaller brands. Granted, none of these companies have grown to the size of Lululemon (yet). But, they’re all still formidable opponents:

1. Vuori: This San Diego-based brand is worth an estimated $4 billion and is considering an IPO. It has also differentiated itself from Lululemon by mainly targeting men (an area that Lulu is looking to for growth). For what it’s worth, I (a 28-year-old male) own clothes from both brands and prefer Vuori for a handful of reasons.
2. Alo: Alo is worth an estimated $10 billion. It gained popularity thanks to its savvy influencer-first approach to marketing.
3. Fabletics: Fabletics considered an IPO in 2021 that would have valued it at $5 billion. I couldn’t find any numbers more recent than this.
4. Gymshark: Gymshark is valued at just under $2 billion. It’s also based in the United Kingdom which could hinder Lulu’s international expansion plans.

With a market cap of just under $40 billion, these companies still pale in comparison to Lululemon. But, that’s not the point. The point is that roughly 10 years ago Lululemon was the only name in high-end athletic apparel. Today, there are plenty of places where customers can buy a $128 pair of leggings or pants. Two of these competitors (Vuori and Gymshark) also operate in verticals that Lulu is looking to for growth.

Sales data for the four competitors listed above is largely private. So, I used another metric to compare them to Lululemon: Instagram followers (Nasdaq: META). Here’s how they stack up:

1. Gymshark: 7 million followers (Gymshark Women has 3.5 million)
2. Lululemon: 5 million 
3. Alo: 2 million 
4. Fabletics: 2 million
5. Vuori: 1 million

If you’re thinking of buying Lululemon stock, you have to consider how this competition could eat into Lululemon’s growth over the next 5-10 years. Lululemon has such a head start so it’s unlikely that it’ll get fully dethroned from its top position. But, the company also won’t enjoy the monopolistic position that it had over the past year. Plenty of former-Lulu male customers may start opting for Vuori while overseas athletes may choose Gymshark.

Risk #2 – Dupe Culture 

The rise of dupe culture is another issue that could hurt Lululemon stock in the coming months. A “dupe” or duplicate is just a knockoff of an existing product. 

The cost of living in the US has risen dramatically in the past few years. In response, US consumers are turning to dupes more than ever. In Lululemon’s case, more people are buying off-brand yoga pants for $40 instead of shelling out $128 to buy Lulus. If you search for #Lululemondupe on TikTok, you’ll see tons of videos on the subject that routinely get millions of views. I also took a look at Google Trends data, which showed that internet searches for “lululemon dupe” have been consistently trending higher since 2020. 

Lululemon isn’t the only company that has to deal with dupes. In fact, most high-end brands can expect their products to get copied. For example, Nike (Nasdaq: NKE) has always had an issue with fake Air Jordans but it has never seemed to hurt the company’s revenue.

Right now, it’s hard to tell if dupe culture is hurting Lululemon’s sales. But, it is a big enough issue that Lululemon felt the need to addressed it. Either way, dupes are another risk factor for Lulu moving forward.

Risk #3 – Gen Z’s Baggy Pants Trend

Lululemon has made a living off of its skin-hugging yoga pants. But, from what I’ve seen, Gen Zers show a preference for baggier sweatpants, hoodies, and t-shirts.

 A 5-year Google Trends chart for “baggy pants” supports this thesis. But, other than that, I don’t have much tangible data to point to for this trend. It’s just something I’ve observed on social media and in my own life. In my experience, tighter clothes seem to be on their way out while overly baggy clothing is in. I scanned Lululemon’s website and didn’t find anything that looked like they’ve caught on to this trend. Lululemon also launched in 1995 and had a stranglehold on consumers in the 2000s and 2010s. But, by this point, Lulu might not resonate as much with younger shoppers. If this doesn’t change, I wouldn’t be surprised if Lululemon started to get stereotyped as an “older people brand” in the coming years and lost ground to “cooler” upstarts (like the aforementioned Vuori, Alo, Gymshark, etc). That said, fashion trends vary by region and can change quickly. 

This is admittedly the weakest risk on this list. But, it’s still a potential risk nonetheless. 

Now, back to the question at hand.

Should You Buy Lululemon Stock?

I wouldn’t. It seems like Lulu is facing quite a few headwinds over the coming months. The company just lost a key executive in Sun Choe. It’s also facing steep competition in the exact verticals where it’s hoping for growth (men’s wear and international markets). The stock has also been getting punished so far this year, which is a sign that investor sentiment has changed for Lululemon – perhaps the toughest obstacle to overcome. 

I don’t necessarily think that Lululemon stock will tank over the coming months. But, it’s likely that Lulu will underperform the market or at best break even. Even if Lulu hits its goal of 10% revenue growth in 2024, I don’t see investors getting particularly excited. 

That said, fashion trends can change on a dime. All it takes is the blowout success of one product to change the narrative – a feat that Lulu has accomplished many times.

I hope that you’ve found this article valuable when it comes to discovering whether or not to buy Lululemon stock. If you’re interested in learning more then please subscribe below to get alerted of new articles.

Disclaimer: This article is for general informational and educational purposes only. It should not be construed as financial advice as the author, Ted Stavetski, is not a financial advisor.

The post Lululemon Stock Battles Competition & Dupes: Time to Buy? appeared first on Investment U.

Right now, stock market plumbing stocks could be that rare opportunity that other investors aren’t talking about. Hear me out real quick…

The Bull Case For Plumbing

Aging Baby Boomers = More Home Maintenance

One economic megatrend that could spur investment in plumbing stocks is the aging Baby Boomer population. At 73 million people, Baby Boomers make up the second-largest generation behind Millennials. Over the next two decades, this generation will slowly start to retire – a trend known as the “Silver Tsunami.” Traditionally, an aging couple would downsize into a smaller home. But, it doesn’t look like many Boomers are doing this.

Many Baby Boomers locked in record-low mortgages during the pandemic when interest rates were at nearly 0%. Right now, many Baby Boomers are refusing to sell their home and downgrade to a smaller living space. After all, why would they? If you’re locked into a 2 or 3% mortgage then it makes no sense to move and take on a mortgage closer to 6% or 7%. Baby Boomers aren’t the only ones contributing to this trend. But, they’re playing a big role.

So, with this in mind, we can expect many Baby Boomers to age in place over the coming years. This inevitably means they’ll need to upgrade their existing homes, which could lead to a surge in demand for plumbing (along with home repair services in general). 

But, this isn’t the only trend that could cause demand for plumbing services to skyrocket.

Commercial-to-Residential Conversions = High Plumbing Demand

Another tailwind for stock market plumbing stocks is in the commercial real estate market. Specifically, the fact that many office buildings could be converted into housing over the coming years.

Ever since the pandemic, remote work has surged in popularity. This has had a chain reaction for the commercial real estate market.

1. The value of office space has tanked: With so few people working in person, office space values have dropped. The exact percentage drop depends on the market. But, CoStar estimates that office values have dropped 15% in the past two years. I personally feel that office values are dropping much more rapidly. But, lower prices have not been realized yet because so few people are buying/selling office buildings. 
2. Developers are looking to repurpose office space: Instead of sitting on assets that are losing value, many owners of office space are converting them into something more useful: apartments. Some cities, like Boston, have already announced hefty tax incentives to get the wheels moving on these conversions.

So, the problem is that office buildings are losing value rapidly. The solution is to turn these now-useless assets into something valuable: affordable housing. By doing this, developers could kill two birds with one stone. But, there’s just one problem: It’s hard to convert office space to apartments. 

This conversion process requires tons of maintenance including installing dozens of new bathrooms. After all, an office normally only has one or two bathrooms per floor (depending on the size of the office). But, if you are converting one office space into 20 apartments then you’ll need 20 different toilets, showers, and sinks. Now, multiply this by all of the office buildings across the country in the process of converting office space. Now you know why I’m bullish on the plumbing sector.

With all that said, let’s explore some of the top stock market plumbing stocks that could benefit from these megatrends.

Ferguson PLC (NYSE: FERG)

Ferguson PLC is a British plumbing and heating products distributor that primarily operates in North America. This company specializes in infrastructure, plumbing, and HVAC. It has been making big moves in the plumbing industry as the company recently acquired two other plumbing companies:

1. Yorkwest Plumbing Supply Company: A leading distributor of plumbing, municipal, hydronics, institutional, HVAC, and industrial products in the greater Toronto area
2. Grove Supply Inc: A NJ-based plumbing and HVAC distributor that serves the residential trade, builder, and remodel markets.

Ferguson’s stock is up 13% so far through the year. The company also reported 2023 annual revenue of $29.7 billion (+4% annually) and $1.89 billion in net income (-11% annually). Keep an eye on Ferguson PLC to be one of the top stock market plumbing stocks in the coming years.

Emcor Group (NYSE: EME)

Emcor Group is an American mechanical and electrical construction, industrial, and building services company. It’s not as much of a pure-play plumbing stock as Ferguson is. But, this all-in-one construction company could still benefit from the two trends that I highlighted in the beginning.

So far through the year, Emcor’s stock has risen roughly 80%. The company also reported 2023 annual revenue of $12.6 billion (+13% annually) and $633 million in net income (+56% annually).

Comfort Systems USA (NYSE: FIX)

Comfort Systems is a leading building and service provider for mechanical, electrical and plumbing systems. The company is composed of 43 operating companies who operate in 173 locations across the US. This diversification is crucial as it will help Comfort Systems take advantage of the above trends on a nationwide scale.

Comfort System’s stock is up nearly 60% so far through the year. The company also reported 2023 annual revenue of $5.2 billion (+26% annually) and $323 million in net income (+31% annually).

Home Depot (NYSE: HD)

Although not specifically a plumbing stock, Home Depot could also benefit from the trends listed above. Home Depot is the go-to store for most DIY homeowners. But, this massive construction supply company has been trying harder to attract “pro” customers in recent years. This includes contractors or small businesses who need supplies for paid projects.

According to Yahoo Finance, the “pro” consumer makes up roughly 50% of Home Depot’s customer base, compared to 25% for Lowe’s (NYSE: LOW). In all honesty, Lowe’s and Home Depot are incredibly similar companies. But, the fact that Home Depot attracts more pro customers gives it a leg up over Lowe’s. 

Home Depot’s stock is up 1% so far through the year. The company also reported 2024 annual revenue of $153 billion (-3% annually) and $15.1 billion in net income (-11% annually).

It’s also a great stock to add to your dividend portfolio with it’s 2.69% yield.

I hope that you’ve found this article valuable when it comes to discovering the top stock market plumbing stocks to buy. If you’re interested in learning more then please subscribe below to get alerted of new articles.

Disclaimer: This article is for general informational and educational purposes only. It should not be construed as financial advice as the author, Ted Stavetski, is not a financial advisor. 

The post 4 Stock Market Plumbing Stocks: Take Advantage of Two Megatrends appeared first on Investment U.

What is Meme Trading?

As investors, we’ve entered uncharted territory when it comes to asset prices and valuations. A decade ago, the thought of an asset surging 1,000% or more in a few days was insanity. That’s because stock prices were tied closely to a company’s valuation – which fluctuated slowly over time as the company released new sales data and information. But, that’s no longer true for some stocks and most cryptocurrencies.

In today’s world, both stocks and cryptocurrencies can experience massive price swings based on nothing more than a tweet. This has created a concept called “meme trading” where investors try to anticipate massive rallies in stocks or cryptocurrencies in hopes of scoring big gains. 

Investment Disclaimer

I’m not a financial advisor, so I won’t tell you what to do with your money. But, I’d strongly recommend treating meme trading as one step up from gambling. Traditional investing is a calculated bet that an asset will increase in value over time. Gambling is a totally random game of chance. Meme trading is somewhere in between.

Meme trading isn’t a complete gamble, since you can try to anticipate rallies in certain coins and front run them. You also usually won’t lose your entire investment (although you might lose a lot of it). However, meme trading is much riskier than normal investing since these assets are not tied to legitimate assets. I’d recommend only allocating a small percentage of your portfolio to meme trading. Make sure you’re only investing money that you can afford to lose. Fortunately, even a small bet on a meme trade can pay off big time.

If you’re new to meme trading then remember this: any asset that can rise 1,000% in a day can also fall 1,000% in a day. Now, with that out of the way, let’s discuss the current BONK Coin price.

BONK Coin Price: The Next DogeCoin?

According to Coinbase, Bonk Coin’s price has surged over 5,000% over the past year. But, it still trades at just a fraction of a cent. This means that you can buy plenty of BONK coin with just a little bit of capital.

If you’re not familiar, BONK trades on the Solana blockchain and was originally airdropped to members on Christmas Day in December 2022. The coin describes itself as a “dog coin of the people” – whatever that means. Like its predecessors DogeCoin and Shiba Inu coin, BONK also uses a Shiba Inu as its mascot.

Coinbase claims that BONK coin is the most-held dog-themed cryptocurrency on Solana’s blockchain. Additionally, according to BONK’s website, it is the most traded token on Solana apart from SOL and USDC.

Here are a few other BONK Coin facts:

1. Commonly available: You can buy BONK on most major crypto exchanges
2. 129 integrations: BONK coin is integrated across 129 different platforms (exchanges, gaming, NFTs, wallet, etc)
3. 690,000 holders: BONK coin currently has 690k holders.

Is BONK COIN Price Going to Surge?

Trying to anticipate a surge in BONK Coin price will be tricky. But, it’s not impossible. Here are a few things to keep an eye on when trying to anticipate a surge in price:

1. Getting picked up on new exchanges: BONK Coin surged recently after getting listed on the South Korean exchange, Bithumb. In general, getting listed on a new exchange causes a cryptocurrency to surge because more people will be able to buy it. Now, whether or not more people actually buy it remains to be seen. But, getting listed on a new exchange creates the possibility that more people could buy it – which is all it takes to spark a rally. Since BONK already trades on most platforms, I wouldn’t really use this to try and anticipate a rally.
2. Virality: This is by far the most important thing to stay on top of. If BONK coin starts to go viral then it’s a sign that a price surge could be right around the corner. Right now, BONK has just under 300,000 followers on X (formerly Twitter). This is a sizable following, and one of its notable followers is the Wall Street Bets main account. This is a good sign that BONK could continue to gain traction – especially if the WSB crowd starts talking about it. BONK has a modest following on Instagram and almost no followers on TikTok. But, Twitter is really the starting point for most of the action anyway – as Twitter has the strongest finance community of all social platforms. If you see BONK coin interacting with major social media personalities then it could be a sign to start piling in.
3. New outlets: I go back and forth on this one. Usually, if you see a stock or crypto mentioned in a major news publication then it means you’ve already missed the rally. But, if you see small crypto-centric publications talking about BONK then you could still be ahead of the curve. It all depends which news outlets mention BONK and what they’re saying.

So, how should you try and front-run any increase in BONK Coin price?

In all honesty, it’s not a terrible idea to just invest as much money as you’re comfortable losing and then wait. Again, this isn’t traditional investing where you want to try and get the best entry point possible when buying an asset. This is meme coin trading. It doesn’t really matter if you buy in at $.000024 or $.00003 because you’re hoping for a 1,000% change in price anyway. Simply buying and HODLing BONK is a surefire way to ensure that you don’t miss a rally. 

That said, you can also be a bit more strategic when buying BONK coin by following this strategy:

1. Follow BONK Coin on all major social platforms
2. Set up social alerts and news alerts for BONK coin
3. Stay up-to-date on these alerts daily, if not hourly

The main goal is just to stay as up-to-date as possible on BONK coin. That way, you’ll know right away if BONK coin shows the early signs of virality. For example, if Elon Musk tweets that you’ll soon be able to buy a Tesla (NASDAQ: TSLA) using BONK coin then you’ll be one of the first to know – and can buy in accordingly..

I hope that you’ve found this article valuable when it comes to learning about BONK Coin price and a few ways that you can front-run any movement in the price. If you’re interested in learning more then please subscribe below to get alerted of new articles as I write them.

Disclaimer: This article is for general informational and educational purposes only. It should not be construed as financial advice as the author, Ted Stavetski, is not a financial advisor. 

The post BONK Coin: Front-running the Next Meme Coin appeared first on Investment U.

Before I jump into it, remember that most brokerages will let you buy fractional shares of popular stocks. This means that you can buy a small part of a stock, instead of the whole thing. So, you don’t need $800 to buy a share of Nvidia (Nasdaq: NVDA). You can buy just a piece of it for as low as a few dollars.

That said, exploring artificial intelligence stocks under $10 is also a great way to identify potentially undervalued companies. Some of the stocks that are trading for $10 today could be worth $100 or more a year from now.

Top Artificial Intelligence Stocks Under $10

1.) Pagaya Technologies: Building an AI Lending Network

Pagaya Technologies (Nasdaq: PGY) is an AI lending company that uses AI to make borrowing/lending money easier. Pagaya’s technology allows for precise, real-time customer credit evaluations to match people with lenders. Here’s how it works:

1. John Doe submits an application for a loan that falls outside his lender’s requirements.
2. John’s application is automatically sent to Pagaya.
3. Pagaya’s model analyzes John’s application and sends it to other lenders with less strict requirements.
4. John instantly gets a direct offer from another lender.

Despite the size of the lending market, many lenders still use fairly one-dimensional metrics to evaluate lendees (like a credit score). Using AI, Pagaya is attempting to bridge the gap between lenders and under served borrowers. This creates a rare win-win-win opportunity. Borrowers get better access to loans, lenders get access to high-quality borrowers, and Pagaya gets a small percentage of each transaction.

In 2023, this “small percentage” added up to an annual revenue of $812 million and a net loss of $128 million. In fact, Pagaya only has a market cap of $622 million – meaning that it’s currently valued at less than its 2023 sales. This is very unusual. Usually, companies will trade at several multiples of their previous sales. For example, Tesla (Nasdaq: TSLA) is worth $455 billion on 2023 sales of just $97 billion.

This incentivized me to do a bit more research to understand why Pagaya’s stock is trading so low.

What’s Going on at Pagaya?

If Pagaya did nearly $1 billion in 2023 sales then why is it worth under $700 million? And, why is its stock price cheap enough to land on a list of the top artificial intelligence stocks under $10?

My first thought was that Pagaya must be doing poorly financially. But, I read their most recent quarterly update and it seemed like there was a ton of good news. The company reported record results that exceeded their expectations from earlier in the year. This included Q4 revenue of 218 million (+13%) and signing US Bank (NYSE: USB) as a client. The company has also been rapidly adding investor and funding partners. So, this doesn’t explain why Pagaya’s stock is sub $10.

I did a bit more digging into Pagaya’s past. Here’s what I found out:

• Pagaya went public via an SPAC in 2022: The company merged with EJF Acquisition Corp and was first valued at $8.5 billion. But, after going public, two things happened:

1. Barclays (NYSE: BCS) backed out of being Pagaya’s underwriter.
2. Many Pagaya insiders sold their shares before Pagaya’s stock began trading.
3. Pagaya went public at $120/share. The stock initially surged to almost $300/share before crashing down to between $10 and $20 per share – where it has stayed ever since.

When an underwriter backs out of a deal, it’s a sign that they might disagree with the company’s valuation. And, when insiders are unloading stock, it’s a sign that they don’t expect the stock to go any higher.

During 2021 and 2022, there was a rush of companies going public via SPACs. This created a bit of a bubble. It’s likely that Pagaya’s insiders secured a massive overvaluation when going public and cashed out their chips quickly. This has likely left a bad taste in investors’ mouths and could be one reason why no one is talking about Pagaya or buying the stock. If this is true, Pagaya could be a massive underappreciated opportunity.

NOTE: There’s also a chance that Pagaya issues share splits or reverse splits. This would impact the stock’s price significantly. This analysis has a fair bit of conjecture, as there was little reporting on Pagaya’s SPAC merger.

2.) United Microelectronics Corp: A Smaller TSM?

United Microelectronics Corp (NYSE: UMC) is another company that’s a bit of a headscratcher. UMC is a top semiconductor chip foundry in Tawain. On its website, it boasts that it’s top 3 in global pure-play foundry market share. It also reports having 12 fabs across Asia. But, despite this strong resume, UMC seems a bit undervalued.

In 2023, UMC reported an annual revenue of $6.8 billion and a net income of $1.87 billion (converted from TWD to USD). But, it has a market cap of just $19 billion. This just seems incredibly low, given the nature of UMC’s business (helping provide chips to AI companies). 

One thesis is that UMC likely competes directly with Taiwan Semiconductor (NYSE: TSM). TSM is one of the biggest foundries in the world, which means UMC faces steep competition – a fact that investors might be factoring into UMC’s valuation.

3.) Iris Energy: A BTC and AI Combo Play

I’ve written about Iris Energy (Nasdaq: CIFR) pretty extensively in my article on “The Top 5 Bitcoin Mining Stocks.” Iris Energy owns and operates a number of data centers. It uses these data centers primarily for Bitcoin mining. But, it diversifies its business by also offering AI cloud services. This puts Iris Energy in a unique position to capitalize on two rapidly growing industries (crypto and AI).

4.) Snap Inc: Can This Social Media Company Make a Comeback?

I was surprised to see Snap Inc. trading at less than $10 since it still seems incredibly popular. I use it all the time and so do most of my friends/family. Upon further review, Snap Inc. brought in a healthy $4.6 billion in 2023 annual revenue. But, this revenue was flat YoY and Snap also posted a loss of $1.32 billion.

Snap seems to suffer from the same issue that Twitter did from 2010-2020. It has an insanely loyal fan base who use the app all the time. But, it has trouble when it comes to growing this user base and converting it into a consistent revenue stream. Twitter had the same problem for years. Despite being the main hub for breaking news, Twitter has never been able to consistently turn a profit. Snap Inc. has had the same trouble so far.

A lot of this has to do with the fact that Snap can’t charge for its products. If Snap starts charging its users to use the platform then there’s a good chance many people will simply delete the app and move to Instagram (Nasdaq: META), TikTok, or another app. So, Snap has to come up with more creative ways to make money.

I doubt Snap will ever really compete with apps like Facebook or TikTok. But, if they can figure out the right way to monetize the platform then I wouldn’t be surprised to see Snap make a comeback.

5.) Lantern Pharma: An AI Pharma Play

Investing in pharmaceutical companies can be a good way to find artificial intelligence stocks under $10. This is because early-stage pharma companies are usually unprofitable, as they work to develop treatments. If the treatment gains regulatory approval then the company’s stock can quickly soar. But, if the treatment fails to get approved then the stock will remain worthless.

Lantern Pharma (Nasdaq: LTRN) is using AI and machine learning to streamline the development of drugs. Notably, the company just recently gained approval for expanding its Phase II Harmonic clinical trial of a new drug for treating non-small cell lung cancer. This approval could pave the way for Lantern’s drug to enter the market. 

You’ll want to continue following the approval process for this drug closely if you plan on buying Lantern Pharma stock. If it gets approved then Lantern’s revenue could quickly soar from $0 to $1m, $10, or even $100m.

I hope that you’ve found this article valuable when it comes to discovering 6 artificial intelligence stocks under $10. If you’re interested in reading more, please subscribe below to get alerted of new articles as I write them.

Disclaimer: This article is for general informational and educational purposes only. It should not be construed as financial advice as the author, Ted Stavetski, is not a financial advisor. 

The post 5 Legit Artificial Intelligence Stocks Under $10 appeared first on Investment U.