Tag Archives: APPF

Top 5 Blue Chip Stocks For 2019

Tracking down a stock that pays a high yield is easy enough to find, but selecting ones that are worth holding onto for decades to come is quite another thing. Not all high-yield stocks are stable enough, or have enough cash coming in to keep payouts flowing.

That’s why we reached out to a few Motley Fool contributors to find three high-yield stocks that dividend investors can buy — and comfortably hold — for years to come. They came back with these stocks. Here’s why.

Top 5 Blue Chip Stocks For 2019: Public Storage(PSA)

Public Storage is the clear leader in the self-storage industry, as the company is larger than the next three self-storage competitors combined. As of the end of 2017, the company owned more than 2,700 properties, including 2,386 U.S. self-storage facilities.

There’s lots to love about the self-storage business. While it tends to be more sensitive to the strength of the economy than many other types of commercial real estate, it also makes money much easier. Public Storage has said that it can break even with just 30% of its properties occupied, and the company currently has occupancy of 93.8% — so it’s fair to say that there’s a lot of cushion.

Public Storage grows in three main ways: growth in same-store revenue, acquiring existing properties, and developing new self-storage facilities from the ground up. The latter is relatively new for Public Storage, but it represents the best potential for long-term value creation, and the company is investing considerable resources in its development efforts. In 2017 alone, Public Storage invested $312 million in new properties, and the company says they’re "filling up ahead of projection."

However, investors should know that development is also one of the industry’s biggest concerns. It’s worth pointing out that there are significant oversupply worries in the self-storage industry right now, which is why self-storage stocks have underperformed the rest of the REIT sector recently. Specifically, construction of new self-storage properties in the U.S. has exploded over the past few years — in fact, more was spent on new constructions in 2017 than during the entire 2010-2014 time period. As Public Storage said in its latest annual report, "when it is cheaper to build than to buy and the return on investment is high, developers will build."

This is likely to be a temporary headwind, and in my view, it creates a nice buying opportunity. However, it could weigh on the industry as long as it persists.

Top 5 Blue Chip Stocks For 2019: Iamgold Corporation(IAG)

Just like with the broader market uncertainty, investors are better served going with strong companies stuck in weak circumstances. In this manner, you can increase your odds that the name you acquire is a genuine discount, and not one that keeps dropping!

Iamgold Corp (NYSE:IAG) is one of my top choices for gold stocks to buy because of its fundamentals. Sure, IAG is well off from last year’s highs, but I’m more interested in the comeback probability. I don’t like risking money on a cheap stock simply because it’s cheap.

With IAG, I have the confidence that I’m not throwing money in the wind. The last four years have been tough on every gold miner. That said, I’m impressed with how Iamgold has handled the industry pressure. Management maintained cost discipline, keeping SGA expenses stable. Moreover, they’ve significantly reduced other operating expenses, which helped produce profits in 2016 and 2017.

On the balance sheet side, IAG has whittled down long-term debt. Free cash flow has generally turned positive, which should aid in the day-to-day operations.

The only issue is that the markets don’t value management’s efforts, with IAG stock down 12% YTD. That said, I think Wall Street is missing the bigger picture. Gold is a long-deflated sector that’s overdue for a recovery rally. In addition, IAG has significantly streamlined its business.

Any underlining tailwind could send it over the top!

Top 5 Blue Chip Stocks For 2019: AppFolio, Inc.(APPF)

AppFolio offers cloud-based software solutions for the property management and legal industries. The company’s AppFolio Property Manager is a leading solution for property management, while its MyCase application is ideal for practitioners and small law firms. AppFolio has found consistent profitability, and investors have rewarded the stock with 66% gains over the past year.

APPF is currently sporting a Zacks Rank #2 (Buy), as well as an “A” grade for Growth in our Style Scores system. The stock will hope to maintain its momentum with continued bottom-line expansion, with current consensus estimates projecting EP growth of 66% on net sales growth of 27% this year.

Top 5 Blue Chip Stocks For 2019: Alamos Gold Inc.(AGI)

A significant but sometimes overlooked benefit to an industry downturn is that it forces participants to streamline their operations. To achieve this, competing organizations will consider consolidations. By pooling resources together, the combined entity will have a better chance to survive and thrive.

For Alamos Gold Inc (NYSE:AGI), it simply made sense to acquire Richmont Mines. Upon completion, AGI would gain high-grade projects in their portfolio while improving its balance sheet. Moreover, Alamos can maintain its cost-efficiencies, and helping it return to profitability. So far, I’m impressed with the results.

Last year, AGI rang up nearly $543 million in top-line sales, an 88% improvement from four years prior. Additionally, management has chipped away at their SGA expenses, bringing it down to $21.7 million in 2017. In the prior year, SGA had crept up to $26.5 million. Overall, Alamos’ efforts delivered a $26.6 million net income after multiple years deep in the red.

So far, the markets are ignoring the fundamentals. On a YTD basis, NEM stock is down 16.6%. However, since hitting bottom on March 12th, NEM shares have jumped more than 11%. With potential tailwinds along the way, this smart organization could surprise Wall Street.

best securities to invest in

A favorite maxim of Warren Buffett is that the best time to sell is never. While not even the Oracle of Omaha abides by that advice all the time, his track record makes clear that owning a stock for an extra-long time is still a sound approach.

Yet finding the best stocks to buy and hold isn’t easy. So to help get you started, we asked three Foolish investors to pick a growth stock that they believe investors would be wise to buy now and hold for the long term. Read on to learn why they like these stocks.

best securities to invest in: Cisco Systems, Inc.(CSCO)

Cisco is a worldwide leader in the information technology industry. The company develops and sells networking hardware, telecommunications equipment, and other high-technology services and products. Cisco is currently sporting a Zacks Rank #2 (Buy) and is gearing up for another strong earnings season, with consensus estimates for the period trending upward and growth expected on the top and bottom lines.

Meanwhile, the stock is trading with a reasonable Forward P/E of 17.2, which comes at a discount to its industry’s average. The stock also has a PEG ratio of 2.9, so investors are getting a decent price for its EPS growth potential. Cisco also generates about $2.63 in cash per share and offers a dividend yield of roughly 3%.

best securities to invest in: AppFolio, Inc.(APPF)

Lewis: Yeah, it certainly seems like there’s a pretty good growth runway ahead of it. Why don’t we talk about company No. 2, and this is AppFolio?

Feroldi: Sure. This is a company that I really like a lot, too. These guys cater to the needs of small and medium-sized businesses that are kind of in niche, niche markets that you wouldn’t normally think of, and none of these are consumer-facing. AppFolio was founded, and their initial target market was the property management business. So, you think about companies that own, say, a small apartment complex or a multi-family building. If you were a property manager, what kind of things are critical to making your apartment profitable? Well, you need to attract clients. You need to make sure that they’re paying their bills. You need to be able to foster communication between the client and the property manager if there’s maintenance things. You need to help with background checks on potential tenants and screening. 

So, there’s a hodgepodge of software that’s out there that can help with each of those things. AppFolio basically took all of that and put it together on a cloud-based platform, and they sell their service to property managers. So, they can come on to AppFolio’s platform, they pay a small subscription fee, and they get access to basically all of those services in one easy-to-use cloud-based system that can be managed through a cellphone or on a tablet.

Lewis: And you talk about this market, and even just hearing you describe it, property managing software, there’s a niche there. [laughs] 

Feroldi: It’s pretty niche.

Lewis: There’s a pretty clear niche. And frankly, it’s a space that’s probably a little too small for big players to want to hop in.

Feroldi: Absolutely, yeah. There can be a big advantage to stay in the niche. The big software boys, it’s just not a big enough market for them to go after, to really invest the resources to make a customized solution. But, AppFolio, they’re not so much a property management company as they are just trying to dominate a few small niches, and by combining them together, they can grow into a much bigger software platform.

Lewis: Yeah. They’re getting outside property management, right? They’re doing something in the legal space, as well?

Feroldi: Exactly. A couple of years ago, they bought a company called MyCase, which caters to the needs of legal professionals. So, you think about a small law practice. Well, they also need help with billing and tracking their time and attendance and marketing themselves. There’s always back-office stuff that these companies need help with. So, AppFolio recently entered into that business, too, through an acquisition. It’s still very small, it’s less than 10% of their revenue. The property management business is about 90% of their market right now. But, between these two, they’re adding customers to both platforms at a double-digit rate. 

The way that they make money is, their customers pay a recurring monthly subscription fee just to be on the platform, but they also sell premium, what they call value-plus services, on top of that. So, if you wanted AppFolio’s app to facilitate taking money out of the client’s checking account and sending it over to the property manager, like, so they can pay their rent, AppFolio’s platform can do that for them, and they charge an extra small fee for that. Or, if they wanted to do a detailed background check when they’re screening for tenants, you can also do that on AppFolio’s platform, but they also charge a small fee for those kinds of services.

Lewis: You talked about the stickiness of the platform. I think they have a customer retention rate of 97% or something crazy like that.

Feroldi: It’s extremely high. That’s a big reason why I love software-as-a-service businesses. Once a customer gets into the platform, and their entire back office gets set up around using this platform, it becomes extremely painful for them to consider switching providers, because everything is built for this one platform. So, it makes the business very, very sticky.

Lewis: And, you have employees that are trained on using that, right? So, there’s the actual friction of switching systems and maybe not having the data interplay the way that you would like it to, but there’s also the cost of having to retrain employees to use these programs or to bring in vendors and review these offers from new vendors, which is going to be tough for everyone’s time, especially if you’re a smaller business.

Feroldi: Absolutely, especially since, if you’re a smaller business, you don’t really have time to do that kind of stuff. AppFolio is growing its top line extremely quickly. Last year with 40% year over year top line growth, about $144 million in revenue. So, again, they’re going after niche markets, but they’re still big enough to actually become profitable, become cash flow positive. Their balance sheet is squeaky clean. Another thing I like about this company in particular is, the founders of the business are the Chief Technology Officer and the Chief Strategy Officer, so they’re still very involved. Very high inside ownership rates. And, this is another company that just gets rave reviews from employees about the culture that they have.

best securities to invest in: Mellanox Technologies, Ltd.(MLNX)

Mellanox Technologies is a leading supplier of semiconductor-based, interconnected products to world-class server, storage, and infrastructure OEMs. The company’s VPI enables standard communication protocols to operate over any converged network with the same software solution.

MLNX has started to pick up steam after its fourth consecutive earnings beat. It is also an explosive growth pick, with earnings and revenue expected to improve by 78% and 19%, respectively, this year. Shares are currently trading with a reasonable Forward P/E of 20.8 and an attractive PEG of 1.4.

best securities to invest in: Boeing Company (BA)

I was one of many in the business media writing about Boeing Co’s (NYSE:BA) stellar first-quarter earnings April 25. Boeing delivered adjusted earnings per share of $3.64, 41% higher than the consensus estimate. While we’re on the subject of beats, its free cash flow was $2.74 billion, 84% higher than analyst expectations.

“Well it’s not every day that a mega-cap company beats consensus by 40 percent,” Robert Stallard, an analyst with Vertical Research Partners said in a note to clients. “The wall of cash that the company is generating makes it hard to be absent from the stock.”

Indeed.

Based on an enterprise value of $196.4 billion and a trailing 12-month free cash flow of $12.6 billion, Boeing has an FCF yield of 6.4%, a perfectly decent yield for a company that’s firing on all cylinders at the moment. Here’s what I had to say about Boeing in April a couple of weeks before earnings:

“Now that I’m back on Boeing wagon, I do believe that Boeing stock could deliver 20%-25% compound annual growth over the next five years,” I wrote April 10. “If it does, a $1,000 stock price is not out of the realm of possibility.”

After its strong first quarter, I have no doubt it’s possible by 2023.

best securities to invest in: Cliffs Natural Resources Inc.(CLF)

Cleveland-Cliffs Inc (NYSE:CLF) is one of the few stocks enjoying Friday’s trading session, up more than 10% after beating on earnings and revenue expectations.

The trend-line of support looks good, especially with CLF rocketing higher on the day. But bulls will have a big test soon if they keep taking CLF higher: $8.50. This level has been Major — with a capital “M” — level of resistance over the last few years. Bears will surely take a shot on the short side at this level, but if bulls can ultimately push through, $10 becomes the next target. It helps that energy prices have been strong.

Keep this one on your radar.

Top 10 Biotech Stocks For 2018

Motley Fool co-founder David Gardner regularly recommends sets of stocks on the Rule Breaker Investing podcast — essentially giving us all a free taste of the choices he and his team make in Motley Fool Supernova’s portfolio universe. And he holds himself accountable, annually going back over those five-stock micro portfolios to let everyone see how he scored against the benchmark of the broader market.

Right now, it’s time for that yearly review of the ones he picked to honor the month, and also the briefly famous pregnant giraffe.

 

Top 10 Biotech Stocks For 2018: Southside Bancshares, Inc.(SBSI)

While the run-up in banks has left yields in the financial space awfully dry, Southside Bancshares, Inc. (NASDAQ:SBSI) offers a respectable yield of above 3%. That’s in some part thanks to an aggressive dividend policy that has seen the company raise payouts multiple times a year over the past few years.

Southside, by the way, is the bank holding company behind Texas community bank Southside Bank, which controls about $6.5 billion in assets across 60 branches within the state. There’s nothing out of the ordinary about this bank – it provides typical services such as mortgages, personal loans, and checking and savings accounts.

What is unusual about SBSI is its dividend program, which has featured varying numbers of increases across the past few years. But one thing that’s pretty consistent is the company announcing a dividend hike sometime in mid-May.

Top 10 Biotech Stocks For 2018: American Campus Communities Inc(ACC)

Consumer tastes change over time, and over the past two decades, college students have noticeably shifted their preferences toward off-campus housing options.

American Campus Communities is a real-estate investment trust that has emerged as a market leader in this young and fast-growing segment of residential real estate.

Most on-campus housing options in American Campus Communities’ 68 current markets are residence halls built in the 1950s and 1960s. In fact, the median age of on-campus housing options in these markets is more than half a century. In these markets, 78% of students live in other types of housing, but about two-thirds of the off-campus housing supply consists of landlord-run single-family homes and traditional apartment communities.

 

American Campus Community gives students a third option: modern communities that were specifically designed to meet the needs of college students. These communities have modern technology infrastructure, as well as more student-focused amenities and policies. For instance, in a traditional apartment, you generally aren’t on a separate lease from your roommates, but this can be done in student-focused housing.

Not only is American Campus Communities’ product far superior to its competition, but it’s just as affordable. Outdated on-campus housing costs an average of $722 (shared) or $916 (private) in the company’s markets, making the $751 average monthly price tag of American Campus Communities’ properties surprisingly affordable.

As I mentioned, this industry is still in its infancy, and there’s no shortage of demand for higher-quality student housing. Plus, the company’s 4.7% dividend yield represents less than 70% of 2018’s expected funds from operations, or FFO (the REIT equivalent of "earnings") — a rather low payout ratio for a REIT. So, there’s no reason to think the income won’t get even better over the coming years.

Top 10 Biotech Stocks For 2018: Phillips 66(PSX)

Refining giant Phillips 66 (NYSE:PSX) and Canadian energy infrastructure behemoth Enbridge(NYSE:ENB) initially pitched Gray Oak to oil shippers in early December. At the time, they envisioned a 385,000 barrel-a-day pipeline that would move crude from several connection points in West Texas to refineries and export docks along the Texas coast starting in the second half of 2019.

The project has evolved since then. Phillips 66 is no longer a direct investor in the pipeline, choosing instead to have its master limited partnership (MLP) Phillips 66 Partners take the lead. The MLP will hold a 75% interest in the joint venture (JV) building the project. Enbridge, likewise, won’t initially invest in the project but instead is one of the third parties that has the option to acquire up to a 32.75% interest from Phillips 66 Partners. Joining Phillips 66 Partners will be refiner Andeavor (NYSE:ANDV), which will own a 25% interest in the JV.

Not only has the ownership structure changed, but so has the scope of the project. Phillips 66 Partners now envisions a 700,000 barrel per day oil pipeline, which could ultimately move up to 1 million barrels per day if they secure additional contracts with shippers. Further, the pipeline will transport oil not just from producers in the Permian but also from the Eagle Ford Shale in South Texas.

On top of building this pipeline, Phillips 66 Partners and Andeavor have teamed up with Buckeye Partners (NYSE:BPL) to construct a new marine terminal in Corpus Christi, Texas. Buckeye will operate the South Texas Gateway Terminal and own a 50% stake in the JV while Phillips 66 Partners and Andeavor will split the remaining 50% interest. Both projects should enter service by the end of 2019.

Top 10 Biotech Stocks For 2018: Entravision Communications Corporation(EVC)

Entravision Communications Co. (NYSE: EVC) is a Spanish-language media company based in Santa Monica, Calif.

Entravision’s profit potential lies with the nation’s rapidly expanding Latino community, which makes up the majority of Entravision’s customer base.

From 2000 to 2014, Latino immigration accounted for more than 50% of the nation’s total population growth. In the same period, the nation’s total Latino population expanded to roughly 55 million people.

Over the next 10 years, the American Latino population is expected to expand by another 24 million Latino Americans – an increase of over 30%

This growing audience is already showing in the company’s growth. Over the last year, the company had a return on equity of 49.84%. That’s over 350% higher than the industry average of 11.99%.

With an expanding consumer market continually seeking new content from major Hispanic media outlets, it’s likely that Entravision will experience sustained growth well into the future.

EVC currently boasts a perfect VQScore, and Wall Street agrees with us. Analysts have put a high price target of $11 on the company’s stock – a 119% increase on today’s price of $5.02.

Top 10 Biotech Stocks For 2018: AppFolio, Inc.(APPF)

Lewis: Yeah, it certainly seems like there’s a pretty good growth runway ahead of it. Why don’t we talk about company No. 2, and this is AppFolio?

Feroldi: Sure. This is a company that I really like a lot, too. These guys cater to the needs of small and medium-sized businesses that are kind of in niche, niche markets that you wouldn’t normally think of, and none of these are consumer-facing. AppFolio was founded, and their initial target market was the property management business. So, you think about companies that own, say, a small apartment complex or a multi-family building. If you were a property manager, what kind of things are critical to making your apartment profitable? Well, you need to attract clients. You need to make sure that they’re paying their bills. You need to be able to foster communication between the client and the property manager if there’s maintenance things. You need to help with background checks on potential tenants and screening. 

So, there’s a hodgepodge of software that’s out there that can help with each of those things. AppFolio basically took all of that and put it together on a cloud-based platform, and they sell their service to property managers. So, they can come on to AppFolio’s platform, they pay a small subscription fee, and they get access to basically all of those services in one easy-to-use cloud-based system that can be managed through a cellphone or on a tablet.

Lewis: And you talk about this market, and even just hearing you describe it, property managing software, there’s a niche there. [laughs] 

Feroldi: It’s pretty niche.

Lewis: There’s a pretty clear niche. And frankly, it’s a space that’s probably a little too small for big players to want to hop in.

Feroldi: Absolutely, yeah. There can be a big advantage to stay in the niche. The big software boys, it’s just not a big enough market for them to go after, to really invest the resources to make a customized solution. But, AppFolio, they’re not so much a property management company as they are just trying to dominate a few small niches, and by combining them together, they can grow into a much bigger software platform.

Lewis: Yeah. They’re getting outside property management, right? They’re doing something in the legal space, as well?

Feroldi: Exactly. A couple of years ago, they bought a company called MyCase, which caters to the needs of legal professionals. So, you think about a small law practice. Well, they also need help with billing and tracking their time and attendance and marketing themselves. There’s always back-office stuff that these companies need help with. So, AppFolio recently entered into that business, too, through an acquisition. It’s still very small, it’s less than 10% of their revenue. The property management business is about 90% of their market right now. But, between these two, they’re adding customers to both platforms at a double-digit rate. 

The way that they make money is, their customers pay a recurring monthly subscription fee just to be on the platform, but they also sell premium, what they call value-plus services, on top of that. So, if you wanted AppFolio’s app to facilitate taking money out of the client’s checking account and sending it over to the property manager, like, so they can pay their rent, AppFolio’s platform can do that for them, and they charge an extra small fee for that. Or, if they wanted to do a detailed background check when they’re screening for tenants, you can also do that on AppFolio’s platform, but they also charge a small fee for those kinds of services.

Lewis: You talked about the stickiness of the platform. I think they have a customer retention rate of 97% or something crazy like that.

Feroldi: It’s extremely high. That’s a big reason why I love software-as-a-service businesses. Once a customer gets into the platform, and their entire back office gets set up around using this platform, it becomes extremely painful for them to consider switching providers, because everything is built for this one platform. So, it makes the business very, very sticky.

Lewis: And, you have employees that are trained on using that, right? So, there’s the actual friction of switching systems and maybe not having the data interplay the way that you would like it to, but there’s also the cost of having to retrain employees to use these programs or to bring in vendors and review these offers from new vendors, which is going to be tough for everyone’s time, especially if you’re a smaller business.

Feroldi: Absolutely, especially since, if you’re a smaller business, you don’t really have time to do that kind of stuff. AppFolio is growing its top line extremely quickly. Last year with 40% year over year top line growth, about $144 million in revenue. So, again, they’re going after niche markets, but they’re still big enough to actually become profitable, become cash flow positive. Their balance sheet is squeaky clean. Another thing I like about this company in particular is, the founders of the business are the Chief Technology Officer and the Chief Strategy Officer, so they’re still very involved. Very high inside ownership rates. And, this is another company that just gets rave reviews from employees about the culture that they have.