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Tech Stocks: Should You Buy Before Q3 Earnings?

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Tech Stocks: Should You Buy Before Q3 Earnings?

This week, the biggest names in tech will be releasing their earnings reports for the fiscal third quarter.

Among them are Facebook (FB), Apple (AAPL), Amazon (AMZN) and Alphabet, owned by Google (GOOGL).

If you’re thinking about investing, we’ve got all the information you need.

Apple

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Share prices are currently hovering at around the $100 mark, making it more tempting than ever for investors to buy in.

At the outset of the report, set to be released today, earnings are expected to fall by at least 25%.

This is mainly due to a decline in hardware sales.

Avid Apple users are reluctant to purchase new devices until the tech giant releases their next-generation products.

This kind of decline is the first we’ve seen in the history of the smartphone.

Have no fear, though; the decline is only expected to last until the release of the iPhone 7.

Facebook

The social media mogul looks forward to watching their earnings increase by 62% when they release their quarterly report following the close of the market last Wednesday.

On Friday, shares increased by 0.3%. Facebook is currently trading at 121.18, higher than their previous buy point of 117.09.

Facebook is part of Leaderboard and the IBD 50 list of growing stocks.

On average, one in five companies on the IBD 50 list anticipates at least a 40% earnings increase.

Businesses that make the list tend to be big players in the technology sector.

Amazon

Amazon expects to see their bottom line soar higher than 480% on Thursday, crushing their brick-and-mortar retailer competition.

The leader in online retail is currently trading at 1% below their all-time high, achieved earlier this month.

Amazon recently broke out of a cup-and-handle base just before releasing their Q2 report.

Following that, shares have been on the run, apart from stock prices falling flat last Thursday at $745.

Goldman Sachs maintains that the risk/reward factor remains favorable for investors at this time, predicting a $1.74 billion adjusted operating income.

Amazon hopes to continue the trend by optimizing delivery times and increasing their order frequency.

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Alphabet

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Alphabet looks forward to a 15% earnings increase on Thursday after the close of the market, a modest jump compared to some of its tech counterparts.

The company has gained 0.7%, after having broken out of a double-bottom base pattern recently.

Stocks are currently considered in buy range.

The buy point stands at 753.58, higher than its 200-day line as of last Monday.

Alphabet hopes to boost their stock further by enhancing their AI.

One of the ways they hope to achieve this is by promoting their new Google Cloud service in hopes of attracting new customers.

The performance of Google Cloud trails behind their competition over at Microsoft and Amazon.

Despite this, Profit Confidential expects the company to enjoy a new wave of growth in the coming fiscal years.

Should You Buy? 

The market may be unpredictable in other sectors, but there’s no doubt that the tech industry is slated to continue their growth.

First, let’s take a look at the Nasdaq Consensus Recommendations for the tech companies listed here (as of July 22, 2016):

  • Apple: $98.66, strong buy (23), 1 sell recommendation
  • Facebook: $121, strong buy (28), 0 sell recommendations
  • Amazon: $744.86, strong buy (26), 0 sell recommendations
  • Alphabet: $759.28, strong buy (26), 0 sell recommendations

It’s no surprise that the biggest names in tech will have strong buy recommendations from the Nasdaq.

But let’s analyze risk versus reward about each company’s performance:

  • Currently, Apple’s price pattern has fallen flat. Stock prices of $100 are tempting for investors, but they may not see an increase until the tech giant releases their latest line of smartphones.
  • The financially secure Facebook continues to grow. Their upcoming plans for an internet delivery drone, named Aquila, could help their earnings see even more gains. However, at this time, Aquila has no effect on the market.
  • Amazon’s earnings are soaring. Their progress overshadows many traditional retailers, who have watched their stocks plummet by as much as 70%. Currently, the risk is low for investors while reward remains high, according to Goldman.
  • The alphabet is now enjoying a Returns on Assets (ROA) of 11.40%. They hope to boost their earnings in future quarters by enhancing AI.

It’s often considered risky to buy stocks just before the quarterly earnings reports released.

Still, doing so can result in a big payoff for investors.

For more tips on knowing the best time to buy, check out Investor’s Corner’s article on reducing risk using the options strategy during the earning season.

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Commodities

Latest Update On Oil – Expected to Settle Between $45 and…

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“Oil is going to a new price point because of the revolution in production,” said Bill Perkins, chief investment officer of energy-focused hedge fund firm Skylar Capital Management. Perkins believes the price of crude could fall as low as $45 a barrel. He is personally short, a bet that the price of the commodity will drop. He believes oil will settle between $45 and $80 a barrel in the next year.

“Companies are harnessing amazing new technology to destroy the traditional energy value chain,” Perkins said. “There’s a lot of money to be made on that.” “U.S. energy names remain a significant net exposure for equity long/short managers who added longs and cut shorts after October’s trough,” the report said. “If pressed, one could interpret this positioning as bullish for energy stocks.”

Andurand thinks crude might hit $50 a barrel within the half-moon of 2015 and so rebound to a high of $70 within the fourth quarter. He also said the oil market is oversupplied by between 1.5 and a couple of million barrels per day, given weak demand, low disruptions to produce and enhanced production by nations that do not belong to the Organization of the oil mercantilism Countries.

“OPEC is not the swing producer anymore. U.S. shale oil producers are, but will take more time to react to prices than OPEC—it is a game changer that will lead to more volatile prices and bigger price ranges,” he added.

Morgan Stanley aforesaid the worth would wish to fall as low as $35 or $40 a barrel to prevent production and rebalance provides.

Still, the bank noted that the worth can doubtless rise eventually.

“Oversupply is probably going exaggerated and therefore the market is also content regarding side risks,” the report aforesaid.

Read More at CNBC

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Commodities

Investing in Energy Markets Part 2: Oil, Gas and Energy

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It’s no secret that the energy industry is very profitable, with oil and gas making up 80% of the market.

 

Thus, these two resources attract the most people. They are the best energy investment resources due to high demand and wide range of options. However, with energy scares fresh in our recent memory and the climate change movement greatly affecting energy policy, new alternatives are constantly being sought.

Terror group ISIS may make $3 million a day selling oil

Everything that we do requires some type of energy. As a result, the price of energy affects the going rate for other commodities as well. When the price of oil increases, the price of transporting goods goes up as well.

That is why the cost of milk fluctuates and why your favorite imported coffee beans are more expensive than Folgers. Factors that contribute to these prices include geopolitics and natural disasters, but can never truly be accounted for in full. That is one of the underlying points to understand and accept about energy markets. Something can always go wrong. Typically, it doesn’t, but when it does things can get hairy and fast.

TYPES OF ENERGY SECTORS: That could affect your Household

Nuclear Nuclear power actually produces 1/10th of the world’s power, without emitting carbon. The United States and China have roughly 75% of the world’s nuclear plants with India and Russia also tapping into the market.

“Green” and renewable energy companies You can invest in different companies that place an emphasis on renewable resources by using the stock market. This option is optimal for investors who like the idea of green technology but do not now want to run the risk of investing in developing companies directly. This market has always been tricky from an investment perspective due to volatility. If you have an appetite for risk, however, this is a good place to look.

Modern Energy (solar, wind, geothermal, transportation, efficiency) Modern energy is made up of three major components or categories. They are wind, solar and biomass. The renewable sector is expanding at a rapid rate. We have witnessed a steady employment increase in the energy sector since 2011 with no end in sight. All types of investors and speculators are flocking to the natural resource markets in attempts to get out ahead of the renewable energy trend that could be the way of the future.

Big Oil In 2010, the world market for oil witnessed an incredible increase of 32%, to over $2,100 billion. According to estimations of oil segment professionals, the market’s value will hit $2,683 billion in 2015. The competitiveness of the global market of the crude oil is explained by its limited resources and mankind’s insatiable appetite for growth. This factor should not be disregarded easily. Our desire for more explains the majority of the energy marketplace.

Gas sector The market of natural gas reached $18.5 billion by the end of 2011. Demand for gas has recovered to match and surpass pre-recession levels. The US prices for gas are half of those in Asian countries and the EU. Gas demand decreased 3% in 2009, but at present is on the rise.

Electricity Buying the stock of electricity companies is the preferred way of entering this marketplace. The majority of the participation in electricity markets, however, takes place in the futures markets. Since power companies are constantly projecting and calibrating their loads, the futures market is the only place where investors with this sort of risk profile will feel that they belong.

Coal Many non-coal energy sectors directly depend on the performance of coal because burning coal has been proven to produce enough energy to support high demand. Due to recent regulations in the US by the Environmental Protection Agency, coal has taken a minor hit, but until a massive, institutionalized adoption of newer technology, it is highly unlikely coal will be going anywhere for the foreseeable future. In other words, coal is very much a barometer for this market. Though it is unlikely to happen any time soon, a massive dip in coal production would likely signal the emergence of a new viable energy source.

Hydro Hydropower energy is still very limited but there has been over $75 billion in investments pledged to R&D before the year 2020. There are some companies worth checking into, but for now this is very much a long term play.

Energy Funds These funds are established with companies related to the energy field. Be aware that some energy funds are more successful than others and produce a higher return than others. Often times, the energy funds are established to diversify various portfolios and minimize risk.

Read more on How Natural Resource Distribution affects your wealth

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Commodities

Oil Prices Surge As OPEC Members Agree To Cut Production

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The Organization of the Petroleum Exporting Countries (OPEC) took its first action in years to cut production on Wednesday in hopes of lifting oil prices. How big a cut did the cartel agree to? Will it really make a difference?

OPEC Members Agree To Cut Oil Production

Oil had its biggest day in more than five months as prices rose 5.3 percent. This action came after OPEC members agreed they could limit oil production – in November. While there are a lot of maybes, this is a big step forward for oil. But will it actually work?

While OPEC members agreed at a meeting Wednesday in Algeria that a production cut is needed to lift oil prices, plans for the supply cut won’t be finalized until November. Barrel output will go from 33.25 million barrels per day to 32.5-33 million barrels per day. A lot can go wrong between now and November, but for now investors love the news.

Many analysts, however, are not as optimistic.

This isn’t the first time this year OPEC has tried to cut oil supply. The committee met in April, but talks fell apart when Iran would not join the talks. In addition to that, all the OPEC countries compete against each other and the U.S. for market share. Several OPEC members, Iran, Libya, and Nigeria, all want to increase oil supply. Throw into the mix the political tensions of the group and this agreement seems very delicate.

Yet, there is a positive feeling about “this time”. Members are hoping that things are more conducive to getting a deal done. Many of the largest producers are close to maxing out capacity, so lowering output slightly wouldn’t be too much of a stretch. Additionally, Saudi Arabia and Iran are feeling pressure domestically from the drop in oil prices, and thus be willing to put aside differences to improve their finances.
Wonder why OPEC needs to cut production? Check the news here with CNNMoney!

For now, trading oil is a smart play. Exxon Mobil Corp. (XOM) rose 4.40% on the news. Chevron Corp. (CVX) rose 3.20%. Energy companies and oil shares will go up until november, and then take their cues based on that meeting.

The election is coming the Capitalist gives you the guide to thriving the election year markets. Read it all here!

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