This particular company is a rapidly growing leader in cancer prevention and diagnosis, with high margins and a large total addressable market. However, the shares have recently sold off based on short-term fear (COVID-19 has temporarily slowed screening, but will ultimately accelerate adoption) and shortsightedness related to profitability. As a result, the valuation is now quite attractive relative to the long-term opportunity. In this article, we review the business, the growth opportunities, recent performance and valuation, risks and conclude with our opinion on investing.
Why This Tiny Digital Advertiser's Shares Could Soar
The COVID-19 pandemic has created tremendous challenges and opportunities. And in the case of this tiny digital advertising firm, the opportunity has been magnified not only by the pandemic, but also by the firm’s own specific challenges and now recent merger. In fact, advertisers have significantly reduced digital ad spend in the short-term (which has magnified pressure on these shares), but as we head into 2021, digital ad spend is expected to resume rapidly, and it could slingshot these shares higher, especially considering the improved long-term business model and enormous market opportunity.
New Options Trade: Very High Upfront Income, Bullish Vertical Put Spread (The Cloud-Tech Sell-Off Continues)
Cloud and technology stocks are selling off hard again this morning, and a lot of investors are fearing there is a lot more selling to come. After all, it is cloud and tech stocks that have rallied so hard this year as their natural “social distancing” qualities have made them the beneficiaries of the dramatic pandemic rebound that has been going on for months.
However, the sell off has been indiscriminate (among cloud and tech), and some very attractive businesses are getting closer to trading at very attractive prices. In this report, we review an attractive cloud-tech juggernaut, and share an attractive options trade that utilizes a “bullish vertical put spread” (not as scary as it sounds). The trade lets you generate attractive upfront income, giving you the chance to pick up shares of this attractive business at an even lower price, while also limiting your downside risk (and limiting the amount of cash you need to set aside to secure the trade as compared to simply selling a naked put option). We believe this is a very attractive trade to place today, and potentially over the next few trading sessions.
Microsoft: Growth, Cash Flow and Perhaps TikTok
Microsoft (MSFT) has experienced an impressive turnaround over the last few years. The company’s top-line growth has been fueled by its cloud computing solutions. Demand for cloud computing has been on the rise and has seen acceleration post COVID-19 due to a global push for business digitalization. More recently, Microsoft has been in the news after announcing that it (along with Walmart (WMT)) is in talks with ByteDance to acquire social media app TikTok’s business in certain countries including the US. In this report, we analyze Microsoft’s business model, its market opportunities including the potential TikTok transaction, competitive positioning, valuations, risks, and finally conclude with whether an investment in the company’s stock offers an attractive balance between risks and rewards.
New Options Trade: Very High Upfront Income, Bullish Vertical Put Spread
A lot has changed since the onset of the pandemic, obviously. And healthcare is one sector that has felt the impacts. This article not only reviews an innovative healthcare leader, but we also share an attractive option trade that utilizes a lessor known (but not complicated) strategy, sometimes referred to as a bullish vertical put spread (not as scary as it sounds). The trade lets you generate attractive upfront income, while limiting your downside risk, limiting the amount of cash you need to set aside to secure the trade, and it also gives you the chance of owning a very attractive stock at a lower price. Given the stock’s recent price move, we believe this is an attractive trade to place today, and potentially over the next few trading sessions.
Portfolio and Tracker Tool Updates
We do not trade often at Blue Harbinger, but we have just made significant updates to both our Income Equity and Disciplined Growth portfolios. This report provides an overview of the changes, as well as details on why we made the changes. We also highlight some updates to the website, such as the new home page and the new portfolio tracker tool (both are designed to be more useful to readers).
Income via Growth Stock: Time to Sell Put Options?
This powerful consumer internet company operates a leading digital entertainment business as well as an e-commerce platform and a digital financial services operation in Southeast Asia. The company operates in some of the fastest growing economies in the world. And it is benefiting from the tailwinds of global “Stay-at-home” orders. Not surprisingly, the stock has rallied over 200% since the start of the year. In this report, we analyze the business model, competitive strengths, financial position and finally conclude with our opinion on the stock’s risk-reward (as well as an interesting options trade idea that generates attractive upfront premium income).
Income Via Growth: A Post-Pandemic Cybersecurity Winner
From time to time, we like to share highly attractive “income-via-growth” opportunities, and this is one of those times. This article is about a stock that pays zero dividend, but can provide a lot of spending cash to investors through long-term price appreciation. We believe it’s a good idea to sprinkle a few of these types of stocks into your portfolio, but if you are looking strictly for high dividend stocks, this article is not for you.
Income Via Growth Stock: Bringing Much Needed Innovation to Healthcare
It can make a lot of sense for income-focused investors to generate some of their income from something other than dividends. And in this article we review an outstanding opportunity to generate attractive income through price appreciation. Specifically, this particular stock has a SaaS-style business model with predictable cash flows, a first-mover advantage, a large and growing addressable market, improving profitability, and a strong financial position. Yet even though its premium valuation is understandable, some investors may choose to only nibble at this opportunity now while hoping for a pullback to load up on more shares later.
Income Via Growth Stock: Quality + Growth = Long Term Upside
If you are looking to generate powerful "income via growth" (i.e. selling some of your long-term winners to generate spending cash) this stock remains an attractive buying opportunity. It is one of the largest, well-diversified global SaaS companies. It has an attractive subscription-based business model that leads to stable and predictable cash flow generation. It also has a wide competitive moat to ensure future earnings growth. Further, it continues to deliver strong and consistent top and bottom-line growth (not to mention its robust balance sheet position, and significant FCF generation). This report reviews the business, COVID-19 impacts, competition and concludes with our opinion on investing.