Tag Archives: IBM

Best High Tech Stocks To Invest In Right Now

It’s not hard to find stocks with rich dividend yields. A quick screener shows 355 tickers that combine billion-dollar market caps with dividend yields north of 4%.

The trick is to separate high-quality income generators from their lower-quality peers. So we asked a few of your fellow investors here at The Motley Fool to share their best dividend ideas with yields of 4% or more. Read on to see why they recommend these stocks:

Best High Tech Stocks To Invest In Right Now: Canopy Growth Corporation(CGC)

Only one Canadian marijuana stock ranked in the top three best performers for the first half of 2018 — Canopy Growth. The company is the largest marijuana grower in Canada and stands as the biggest marijuana stock in the world based on market cap. 

Canopy Growth stock is up nearly 24% year to date. For the first four months of 2018, the marijuana grower’s share price fluctuated up and down. But beginning in May, Canopy’s share price has taken off. The combination of becoming the first marijuana stock to be listed on the New York Stock Exchange and anticipation of the legalization of recreational marijuana in Canada proved to be tremendous catalysts for Canopy. 

Its production capacity and supply agreements with multiple provinces should make Canopy one of the biggest winners in the Canadian recreational marijuana market. However, the greatest opportunities for the company are in the global medical marijuana markets and in selling cannabis-infused products. Canopy is working with large alcoholic beverage maker Constellation Brands, which bought a 9.9% stake in Canopy last year, to develop cannabis-infused drinks.

Best High Tech Stocks To Invest In Right Now: Plains All American Pipeline L.P.(PAA)

Oil pipeline giant Plains All American Pipeline is about to reach two major inflection points. First, cash flow is on pace to start growing again this year, which will reverse a multiyear decline. In fact, the company expects to deliver double-digit annual growth for at least the next two years thanks to the expansion projects it has lined up.

Driving that growth is the company’s prime position in the Permian Basin, where it’s rapidly expanding its pipeline network. Plains All American Pipeline currently has nearly $2 billion of expansion projects under construction, with 80% of that spending earmarked for the Permian. With such a large strategic footprint in the region, the company should be able to capture additional growth prospects in the future, which positions it to continue expanding cash flow. 

The second turning point will come early next year when the company should hit its leverage target. Once that happens, Plains will be able to begin increasing its 5%-yielding distribution. With the company currently only paying out about 60% of its cash flow, it could potentially provide investors with a big raise in 2019 and healthy growth in future years. That combination of an improving financial profile along with a growing income stream makes Plains an appealing oil stock to buy right now.

Best High Tech Stocks To Invest In Right Now: International Business Machines Corporation(IBM)

IBM raised its dividend for the 23rd consecutive year back in April, boosting the quarterly payout to $1.57 per share. The tech company has paid uninterrupted quarterly dividends since 1916. Based on the current price, IBM stock yields about 4.3%.

Why does IBM, a company with a vast global customer base and a century-long track record of adaptation, sport such a high dividend yield? The stock has been beaten down since peaking in 2013, the result of a turnaround that has taken until now to return the company to growth. Investments in cloud computing and artificial intelligence are paying off, but declining sales in legacy businesses are offsetting that growth.

IBM isn’t a growth company, partially by design. "Tech is littered with areas that you can have high growth and make no money. That’s not us," said IBM CEO Ginni Rometty at a conference in 2015. The company’s long-term target is to grow revenue by a low single-digit percentage each year. That’s not a very exciting goal.

But IBM doesn’t need to move mountains. The stock trades for around 10.5 times adjusted earnings guidance and has a dividend yield well above 4%. In other words, expectations are low. Dividend investors looking for a high yield along with a chance of some serious capital gains should consider IBM. It won’t take much to get the stock moving in the right direction.

Top Small Cap Stocks To Watch For 2019

Energy is an absolutely fascinating industry to follow right now. On one side, you have oil and gas companies selling at incredibly low valuations, despite the fact that oil prices are above $70 a barrel. On the other side, you have renewable-energy companies with a multitrillion-dollar growth highway ahead of them. 

With these interesting trends emerging, there’s no doubt that investors are looking at this industry. To help investors start their search for great energy investments, we asked three of our investing contributors to each highlight a stock they see as a great buy now. Here’s why they picked these stocks.

Top Small Cap Stocks To Watch For 2019: Vertex Pharmaceuticals Incorporated(VRTX)

Fast-Growing Stocks to Buy: Vertex (VRTX)

Source: Shutterstock

 

Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is one of the leading pharmaceuticals firms when it comes to treating cystic fibrosis (CF).

That may not seem like much of a franchise given all the other more compelling diseases out there, but VRTX has built a $41 billion market cap in the sector and most of its competitors are looking for other places to find an opening.

That is a big deal for pharma companies that usually are strong until patents run down or generics start eating into margins.

Not so with VRTX. Its Q4 numbers came in stronger than expected and Q1 is also coming in bullish, as new approvals keep rolling in for next-generation CF drugs … and it has plenty more in the pipeline to keep this growth going.

Top Small Cap Stocks To Watch For 2019: SunPower Corporation(SPWR)

Despite record solar power capacity additions in the United States and globally, many companies in the solar industry have struggled to turn a profit in recent years. That’s because solar panel and cell manufacturers have been adapting to new market realities, and transforming themselves into stronger and leaner businesses has not come cheap. But while the last few years have been painful, it’s possible investors will be able to look back on them as a crucial turning point for sustainable long-term growth. SunPower might be the most likely solar manufacturer to follow that trajectory.

Management has said the business should return to profitability by the end of 2018. That would be a welcome reprieve for shareholders, as financial flexibility could improve quickly from there. That’s because SunPower recently acquired SolarWorld Americas in a move that will give the high-efficiency solar panel manufacturer a production base in the United States. That could prove valuable from a political standpoint in the near term and from a growth standpoint in the longer term.

As SunPower CEO Tom Werner told The Motley Fool’s Travis Hoium, the deal aligned the company’s strategy with the Trump administration’s aim to bolster U.S. manufacturing. The goodwill motion could make it easier to receive an exemption from tariffs imposed on imported solar panels and solar cells SolarWorld produces abroad (products that don’t have domestic competition anyway). That alone would provide an additional $50 million in adjusted earnings before interest, taxes, depreciation, and amortization in the second half of 2018 and an additional $100 million in adjusted EBITDA in each full year thereafter.

It could also set the stage for SunPower to earn a sweet subsidy package if it builds a new manufacturing facility in the United States — something it will need to do to keep pace with industry demand while simultaneously appeasing the current administration. In other words, if management executes on a growth strategy that hinges on profitable (and possibly "fast tracked") manufacturing expansion in the United States, then this $1.1 billion company could be at the beginning of an awesome long-term growth trajectory.

Top Small Cap Stocks To Watch For 2019: First Solar, Inc.(FSLR)

The most successful American solar panel manufacturer isn’t resting on its laurels. First Solar (NASDAQ: FSLR) weathered industry headwinds in recent years while continuing to plan for the future. That includes boosting total annual manufacturing capacity to 5,700 MW by 2020. Better yet, most of that will comprise its next-generation Series 6 panels, which are more efficient and should be accompanied by lower installation costs.

First Solar ended 2017 with nearly $2.3 billion in cash and an order backlog that should keep production facilities operating at full tilt through the end of the decade. The investment in growing manufacturing capacity will transition the company to rely more heavily on panel sales, rather than revenue generated from developing power systems. That will result in relatively flat revenue growth in the next few years, although management expects higher margins with the new sales mix. Either way, healthy levels of operating cash flow — which totaled $1.3 billion in 2017 — are here to stay.

Top Small Cap Stocks To Watch For 2019: SolarEdge Technologies, Inc.(SEDG)

 In stark contrast to other energy sources, solar power is inherently dependent on external technologies to reach its full potential. For instance, to maximize efficiency and produce closer to their full installed capacity, solar panels require converters, inverters, and energy storage. That’s what makes SolarEdge Technologies an intriguing investment in the renewables space.

The company sells power optimizers, inverters, and software solutions that combine to create the "brains" of a rooftop solar installation. By simplifying the setup and optimizing power output, SolarEdge Technologies can add significant value to investments in solar hardware — and it shows in the company’s recent earnings.

In 2017, the niche hardware manufacturer delivered $607 million in revenue at 35% gross margin and grew operating income 28% compared to 2016. The business offers a rare combination of growth and profits, but even Wall Street was caught off guard by management’s 2018 outlook. SolarEdge Technologies expects to report year-over-year revenue growth of 78% in the first quarter of this year.

While the stock has been on an absolute tear lately — posting year-to-date returns of 43% — the company is well-positioned to grow in lockstep with the broader solar industry. Considering the perennial double-digit growth rates of installations, there’s no telling where this $2.4 billion company could end up in the long term.

Top Small Cap Stocks To Watch For 2019: International Business Machines Corporation(IBM)

IBM investors have missed out on the raging bull market in technology stocks. While the Nasdaq 100 index has more than doubled over the past five years, shares of IBM have shed about 25% of their value. A half-decade of slumping revenue kept many investors away from the century-old tech giant.

That decline is now over, with IBM reporting revenue growth in the fourth quarter of 2017 and expecting growth to continue this year. The actions that the company has taken over the past five years or so, including investing in growth businesses like cloud computing and artificial intelligence, are starting to show tangible results. Growth businesses generated $36.5 billion of revenue last year, up 11%, while the cloud business grew by 24% to $17 billion.

A technology company doesn’t survive for more than a century without building up a track record of transformation. IBM’s latest turnaround isn’t its first, and it won’t be its last. This ability to adapt is a key reason to buy and hold the stock.

For dividend investors, another reason to buy and hold the stock is a world-class dividend. IBM’s current quarterly payout of $1.50 per share works out to a yield of 3.8%, and the company is widely expected to raise that dividend this month, making it 23 years in row. IBM has paid a quarterly dividend without interruption since 1916, through the Great Depression, two World Wars, and its near-collapse in the 1990s.

Dividend investors looking for a high yield and decades of consistency could do a lot worse than IBM.

Top High Tech Stocks To Buy For 2019

U.S. equities were soaring Thursday as several tech companies reported strong quarterly earnings results. The S&P 500 Index gained more than 0.9%, the Dow Jones Industrial Average was up more than 0.8% and the Nasdaq Composite increased by about 0.9%.

Here’s what you should know ahead of today’s action:

Top High Tech Stocks To Buy For 2019: Facebook, Inc.(FB)

Perhaps surprisingly, the first stock on this list is none other than Facebook. Yes, that’s right FB. But when you think about it, it’s not surprising at all. Following the Cambridge Analytica scandal, we now have a “truly attractive entry point” into one of tech’s best growth stories.

For RBC Capital’s Mark Mahaney, FB is still his No. 1 Long in large-cap internet stocks. This five-star analyst has just reiterated his bullish take on FB with a $250 price target. With shares down 7% year-to-date, this translates into massive upside potential of over 50%.

According to Mahaney, FB has a key advantage because of its current low market shares — less than 20% of Global Online Advertising and a mid-single-digit percent of Global Total Advertising. This will help it to maintain premium growth for a long time. On top of this, FB still has several new large revenue growth drivers up its sleeve. We are looking at Instagram monetization, Messaging Platform monetization, camera/AR, AI, and video to name but a few.

He adds, “Yes, Regulatory Risk is real … But we believe this is now more than fairly reflected in FB shares and reiterate our Outperform rating.” And the Street as a whole clearly feels the same. Overall, FB has received 31 recent buy ratings vs just two hold ratings and one sell rating. Meanwhile their $219 average price target translates into 33% upside potential from current levels.

Top High Tech Stocks To Buy For 2019: International Business Machines Corporation(IBM)

Perhaps a bit less surprising is the lack of love tech stalwart IBM (NYSE:IBM) continues to be shown by the investment community. According to data from WhaleWisdom, institutional money managers dumped more than 20 million shares of IBM in the latest quarter. Sellers of "Big Blue" included Warren Buffett’s Berkshire Hathaway, which dumped all of its remaining 2.05 million shares, as well as Point72 Asset Management’s Steven Cohen, who sold his entire 548,666 share stake in IBM.

Two hands, one holding a pen and the other punching figures into a calculator, hover over an accounting sheet.

IMAGE SOURCE: GETTY IMAGES.

The issue for IBM continues to be a lack of catalysts. Even though the company has seen its cloud revenue grow steadily on an organic basis and as a percentage of total sales, its late push into cloud computing left it far too reliant on legacy products, which have gone nowhere for years. IBM did recently break a streak that saw its sales decline for 22 consecutive quarters over the prior-year period, but that’s not saying a lot. 

As noted, the positive here is that organic cloud revenue is up 20% (on a constant-currency basis), to $17.7 billion over the past 12 months, which provides some momentum moving forward. What IBM really needs, though, is for blockchain technology to take off.

IBM has been investing heavily in currency- and non-currency-based blockchain applications, which have the potential to put it on the leading edge of this technological game changer. IBM Is already testing cross-border payments at a dozen banks in the South Pacific using Stellar’s Lumens coin as an intermediary currency, and it formed a joint venture with shipping giant Maerskearlier this year to develop blockchain-based shipping solutions. 

Of course, investors also should understand that blockchain still is a nascent technology that has some growing up to do. Translation: IBM’s blockchain division is unlikely to be a major contributor anytime soon.

Personally, I appreciate IBM’s relative value at roughly 10 times next year’s EPS, as well as its 4.4% yield. However, without any top-line growth at the company, I’d suggest adding IBM to your watchlist or waiting for an even more attractive entry point (i.e., a lower share price).

Top High Tech Stocks To Buy For 2019: Alaska Air Group, Inc.(ALK)

Similar to Hawaiian, the last year has been rough for Alaska Air, with its stock price down nearly 25%. Alaska Air stock has tried to recover over the last month and its stock price popped 1.5% on Wednesday. Furthermore, the struggling airline company is projected to see its Q1 revenues climb by 4.5% to hit $1.83 billion.

Investors might be less pleased to note that Alaska Air’s earnings are expected to plummet 95% from the year-ago period to $0.05 per share. With that said, Alaska Air is currently a Zacks Rank #3 (Hold) and rocks an Earnings ESP of 51.53%, with its Most Accurate Estimate coming in 3 cents above our current consensus estimate. This means that Alaska Air, despite its projected earnings decline, is a stock that could top earnings estimates when it reports.

Top High Tech Stocks To Buy For 2019: Merck & Company, Inc.(MRK)

Source: Shutterstock

 

Our second money-making stock, Merck & Co., Inc. (NYSE:MRK), is one of the world’s largest pharma companies. MRK delivered revenue in 2017 of over $40 billion. The pharma giant is seeing the dollars roll in from its best-selling cancer drug Keytruda. This isn’t surprising given that the drug currently costs a whopping $150,000 per patient per year.

The company has just announced positive Q1 earning results, revealing an unexpectedly robust performance of key franchises outside the U.S.

“Keytruda’s beat reflects Merck’s strong commercial execution. Januvia and Gardasil’s strong demand in ex-US (e.g., China) should also drive growth in the near term” comments top BMO Capital analyst Alex Arfaei. He calls the execution and R&D on Keytruda ‘excellent.’

Investors should keep a close eye on data presented at the upcoming ASCO annual meeting in June advises Arfaei. This will be ‘the next catalyst’ which “should further strengthen the drug’s lead in lung cancer, raise expectations in other tumors, and provide insights on the next set of Keytruda combo data (e.g., with Lenvima).” He has a $70 price target on “Strong Buy” rated MRK (22% upside potential). Indeed, in the last three months, MRK has received four consecutive buy ratings from top-ranked analysts.

Note that Merck is also a top dividend stock. The company pays an impressively high dividend yield of 3.36%. With six straight years of dividend growth under its belt, Merck’s latest quarterly payout came to $0.48 in April.