Two Value Investing Options for the Second Quarter
Here are big brands that are available at great prices thanks to various trends that have affected the stock market.
In stock trading there are various strategies you could follow depending on what stage of investing you’re in. It’s important to define your goals and objectives based on that and the trends in the stock market. Value investing is one of those intelligent means to build wealth. It’s a strategy that great and successful investors such as Warren Buffett follow. There’s nothing much to it – all you need to do is identify great companies that are currently priced lower than their true worth, on account of unfavorable market sentiment and temporary trends. When the trends change and these companies’ stocks rise, you get to earn a profit. These companies also pay dividends often, which helps you earn more. Keeping that in mind, let’s look at these value stocks for Q2.
Nike Nike ($NKE) is one of these. There’s no hiding from the fact that retail sales have been on the decline in the United States. Retailers have been forced to close down stores on the back of weak results. This has led to investors in businesses with retail exposure in North America selling off their shares. One of these companies is Nike. Nike is in the growth path with total sales rising 7%, fuelled by strong growth witnessed in the international markets. There was a dip in the margins of Nike, but the bottom-line of the company rose a further 24% from the year-ago period. Those are pretty encouraging numbers. Its future orders declined 1% in the previous quarter. While this is an indication that the immediate future could be gloomy, this decline is more a result of the store closings. In spite of the adverse situation, the Nike brand is quite strong with a bright future since there is massive opportunity in the international markets. Its shares now trade around 21 times the earnings estimates next year.
Apple Apple ($AAPL) was named the world’s most valuable brand by Forbes in early May 2017, the seventh consecutive year. It enjoys a 92% dollar share of the smartphone market. Though there has been the criticism of Apple’s lack of innovation, it is bringing in the cash regularly for the company. The iPhone contributes to around two-thirds of the total revenue of Apple, with $33 billion earned in just the last quarter. The App Store and the other elements of Apple’s services segment are the second major revenue driver for $AAPL, though it does have other greater products such as the MacBook and iPad. The App Store has been witnessing double-digit growth rates, which is very encouraging for investors. So those warnings about Apple hitting a dead end on innovation are probably unfounded. There are many innovations that are sure to fuel further revenue growth in the future for Apple. But the really awesome fact about $AAPL is this – it has in its treasury $67 billion in terms of cash and other short-term investments. That’s greater than what many countries earn as their GDP! With that much cash around, Apple can make strategic acquisitions whenever it wants to. Moreover, the most famous value investor Warren Buffet has a major stake in the company and it is one of Berkshire Hathaway’s largest holdings. Currently, Apple trades at less than 16 times free cash flow. Apple is en route to becoming a company with a trillion-dollar market cap, and this could be the right time to buy its shares. www.tradezero.co
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With these two big brands, you have great options for value investing. In stock trading always ensure you have such clear view and in-depth insight into the markets so you make the right decisions.
www.tradezero.co
+1.954.944.3885