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Keep an eye on Affirm Holdings (AFRM), we noted on August 2.

At the time, the stock traded around $63 a share.

All after Square announced it was buying its competitor Afterpay in an all-stock transaction worth $29 billion. And all as “buy now, pay later (BNPL)” just begins to gain popularity.

In fact, according to Barron’s, “BNPL is gaining popularity given that interest rates are ultralow, reducing costs for consumers. Other fintech apps have entered the market, including Affirm, a pure play on the sector, and PayPal (PYPL). Apple (AAPL) is also developing a BNPL service with Goldman Sachs Group (GS), its credit-card partner.”

In the first two months of the new year, BNPL saw 215% year over year growth, as noted by Adobe. Even better, according to Bank of America, BNPL apps could grow 10-15x by 2025, and could eventually process $650 billion to $1 trillion in transactions. In addition, according to Yahoo Finance, “The trend is also part of a generational shift: The average user of buy now, pay later services is their 30s, BofA found, and the average amount spent was around $200 to $500 (as compared to $5,000 to $6,000 one would spend on a credit card).”

Today, AFRM is up to $100.20 a share.

All after AFRM entered into a partnership with Amazon.com.

According to Investor’s Business Daily, “Affirm said after the market close on Friday that Amazon is testing Affirm’s system of buy now, pay later — also known as BNPL installment payment plans — with some customers. The e-commerce giant plans to make Affirm’s BNPL services more broadly available in the coming months.”

If you took the trade on August 2, you’re up just over $37 a share.

The post Buy Now, Pay Later: Why Affirm Just Exploded Higher appeared first on Morningology.

Chinese online gaming stocks are taking a hit.

Just weeks after Chinese regulators said video games were “spiritual opium,” the country just announced it would restrict the hours when minors could play games. From now on, minors can only play for a single hour on Friday evenings, holidays, Saturday, and Sundays.

All of which is putting a dent in gaming stocks like Tencent, Netease, Huya, and Sohu. com. And, all because China believes video game addiction is to blame for societal ills, such as distracting young people from school and family.

In addition, according to The Wall Street Journal, “The government announcement said all online video games will be required to connect to an ‘anti-addiction’ system operated by the National Press and Publication Administration. The regulation, which takes effect on Wednesday, will require all users to register using their real names and government-issued identification documents.”

The news is even impacting stocks like Activision Blizzard and Take-Two Interactive, both of which were looking for access to the Chinese market with Tencent.

Right now, “There are over 110 million minors that play video games in China today, and we expect the new limits to lead to a decline in the number of players and a reduction in the amount of time and money spent in game by those under 18,” Daniel Ahmad, senior analyst at Niko Partners, said, as quoted by CNBC.

“However, we do not expect the decline in spend to have a significant material impact on the bottom line of game companies given limits on time and spending have already been in place for minors for the past two years. Therefore, we expect a softer impact on overall growth rates as spending among minors was already low,” they added.

Once the panic subsides, Chinese gaming stocks could be great “blood in the street” trades.

The post Weakness Could be Opportunity with Chinese Video Game Companies appeared first on Morningology.

Every year, hurricane stocks push higher.

This year has been no exception.

As we noted on June 8, 2021, it was time to back up the truck on stocks like Generac Holdings (GNRC) – a market leader in home standby generators and the leading global manufacturer of mobile generators for industrial use. Beyond the physical damage to homes and businesses, one of the biggest inconveniences of a powerful storm is electrical outages.

In fact, as Hurricane Ida began to swirl, and eventually nail Louisiana, shares of GNRC ran from a low of about $385 to about $450 in days.

Historically, we see similar moves. For the 2019 hurricane season, for example, it ran from about $54 to $100. For 2020, it ran from about $125 to $363.

Xylem (XYL) is another that historically runs in hurricane season.

According to the company’s site, “The official hurricane season in the United States takes place from May through November, with the peak season from mid-August to late October. Xylem can help make sure you are prepared. Well in advance of catastrophic weather events, Xylem works with cities, counties and companies to create contingency plans that map out emergency response strategies and identify the required pumping equipment to react to natural disasters.”

It’s part of the reason shares of XYL ran from $130 to $137 in recent days.

Even Lowe’s (LOW) and Home Depot (HD) saw their stocks push higher.

Typically, investors bid up Home Depot (HD) and Lowe’s (LOW) since they historically stand to benefit from increased sales of plywood and other home improvement goods. This segment is “naturally positively exposed to preparation and recovery efforts,” says Morgan Stanley. These “typically see a boost in sales post-storm as damaged property is repaired.”

The post The Top Hurricane Stocks to Buy and Hold Every Year appeared first on Morningology.

Water shortages are boiling over.

In the U.S. alone, the federal government just declared a water shortage on the Colorado River, and announced mandatory cutbacks.  “The declaration of a shortage by the U.S. Bureau of Reclamation has been expected for months and was triggered by the spiraling decline of Lake Mead, which stores water used by Arizona, Nevada, California and Mexico,” reports USA Today.

Orlando just declared a water shortage, with surging COVID cases.

“A surge in hospitalized patients in the state is creating ‘a regional shortage of liquid oxygen,’ the Orlando Utilities Commission announced.  Liquid oxygen is also used to treat water, and its diversion to hospitals is straining the region’s water supplies. City officials are asking residents to stop watering their lawns and washing their cars to save water for COVID-19 patients,” reports CBS News.  

In California, the drought is leading to higher water prices.  

“It’s a ‘perfect storm of conditions’ for California’s water, with “worsening supply/demand imbalances, telltale signs of climate change, and a hesitancy by state officials to step up permanent solutions like conservation, water reuse, and desalination,” says Deane Dray, a managing director and multi-industry analyst at RBC Capital Market,” according to Barron’s.

In short, we have a nice little mess – one that we can also invest in with water ETFs, such as:

• First Trust ISE Water Index Fund (FIW)
• The Guggenheim S&P Global Water Index ETF (CGW)
• The PowerShares Water Resources Portfolio (PHO)

The post The Top 3 Ways to Trade a Boiling Water Crisis appeared first on Morningology.

Avoid Peloton Interactive (PTON).

Earlier this year, the stock plunged after the company recalled all treadmills on reports of injuries, and a death. “The company is advising customers who already have either the Tread or Tread+ products to immediately stop using the equipment and contact Peloton for a full refund or other qualified remedy,” says CNBC.

At the time, this was a major reversal for the company.

Weeks prior, the Consumer Safety Commission urged the public to stop using the company’s treadmills in homes with small children. In response, Peloton said the Commission’s report was “inaccurate and misleading,” adding there was no reason to stop using the treadmills.

Then, CEO John Foley said, “I want to be clear, Peloton made a mistake in our initial response to the Consumer Product Safety Commission’s request that we recall the Tread+. We should have engaged more productively with them from the outset. For that, I apologize.”

While shares of PTON would explode higher once the smoke cleared, the stock is plunging again. All after the U.S. Department of Homeland Security and the U.S. Department of Justice issued subpoenas against the company on its reporting of product-related injuries. In addition, according to The Wall Street Journal, the company added, “the SEC is investigating the company’s public disclosures over these issues.”

Not only will the company cooperate with the investigations, it lowered the price of its Bike again, cutting the price by another 20%, according to CNBC. “By doing so, the company said it hopes to reach new customers who weren’t previously able to afford its cycles.”

But wait, it gets worse.

Not only did the company post poor earnings, and guide lower, “The company separately disclosed it found a problem with the way it has been accounting for inventory. An audit of fiscal 2021, which ended on June 30, discovered a ‘material weakness’ in the internal controls that govern Peloton’s financial reporting. It will not, however, result in the restatement of any of its past results,” as also reported by CNBC.

Yeesh…. We would not want to be the CEO of PTON these days.

 

The post The Top Reasons Investors Should Avoid Peloton Interactive appeared first on Morningology.

Cyberattacks are out of control.

Over the last few weeks, the U.S. State Department was hit with a cyberattack.

According to Sam Curry at Cybereason, as quoted by Infosecurity-Magazine.com, “The recent cyber-attack against the U.S. State Department is a reminder that anyone and everyone can be hit and will be hit. Today, it is a matter of how quickly threats are discovered and how quickly they are stopped. Overall, the State Department’s networks are big, and they are presumably getting attacked by nation-states, terrorists and other adversaries on a daily basis.”

Even major companies are getting hit.

T-Mobile for example said hackers stole data of about 50 million people. Colonial Pipeline was taken down by a remote account with a compromised virtual private network password.

The next targets — schools and universities are bracing for attacks.

According to Today.com, “There has been a nearly 30 percent increase in cyberattacks against schools in just the first half of the year.” In addition, according to The Hill, “Both K-12 schools and colleges have been increasingly subjected to ransomware attacks, class interruptions on virtual learning platforms, phishing emails and identity theft, further disrupting an already challenging learning environment.”

Worse, according to FireEye, as noted by Cybersecurity Insiders, about 29% of organizations haven’t even bothered to test their cyber defenses in over a year. Considering the constant threat, and the cost of cyberattacks, that shouldn’t be.

In short, it’s gotten way out of hand.

For companies, governments, and schools to be so poorly prepared after years of warnings has become unacceptable. For investors, it’s creating a good deal of upside for related stocks.

Global X Cybersecurity ETF (BUG)

“The Global X Cybersecurity ETF (BUG) seeks to invest in companies that stand to potentially benefit from the increased adoption of cybersecurity technology, such as those whose principal business is in the development and management of security protocols preventing intrusion and attacks to systems, networks, applications, computers, and mobile devices,” says Global X.

iShares Cybersecurity and Tech ETF (IHAK)

According to iShares, “The iShares Cybersecurity and Tech ETF seeks to track the investment results of an index composed of developed and emerging market companies involved in cyber security and technology, including cyber security hardware, software, products, and services.”

The post This is the Next Big Target of Potential Cyber Attacks appeared first on Morningology.

Keep an eye on gambling stocks, like Draftkings (DKNG), we noted in a morning briefing.

As we noted, the stock is just starting to break above triple top resistance dating back to late April. If DKNG can maintain its momentum, we could eventually see a test of prior highs of $73.

In addition, JC O’Hara, chief market technician at MKM Partners, as quoted by CNBC said, “It is reestablishing itself in an uptrend, breaking back above the 150-day moving average. So rather than trying to bottom pick some of these names and make calls on economic data, let’s look where the price action is positive and that’s DraftKings.”

Plus, according to Loop Capital, as quoted by TheFly.com:

“Loop Capital analyst Daniel Adam keeps his Buy rating and $105 price target on DraftKings, saying that based on the latest monthly GGR/AGR data releases in five of the 12 states where the company is currently live, its Q3 revenues are “tracking well ahead of consensus”. Adam adds that while the Street is modeling a 22% sequential top-line decline, his analysis suggests that the decline should only be about 3%.”

Also, just moments ago, we learned that ARK Invest’s Cathie Wood picked up about $60 million in DKNG shares. Helping even more, DKNG got a boost after launching micro-betting.

In fact, according to a DKNG press release, Simplebet, the technology company reimagining the way fans engage with live sports, today announced a multi-year agreement with DraftKings to launch real-money micro-betting across the DraftKings Sportsbook.”

“Under the agreement, DraftKings will be able to offer Simplebet’s micro-betting products for the NFL, MLB and NBA and a new suite of college football products, which are the first micro-betting products available for collegiate sports. With micro-betting, DraftKings customers will now be able to wager on even more individual moments over the course of a game through the DraftKings Sportsbook,” they added.

In short, DKNG could be a slam dunk opportunity.

The post This is Why Draftkings Could be a Slam Dunk Opportunity appeared first on Morningology.

Diabetes is only getting worse.

Right now, about 34 million people just in the U.S. have it, says the US CDC. Of those, 20% aren’t even aware they have it. On top of that 88 million Americans are pre-diabetic. In addition, according to the World Health Organization, “The number of people with diabetes rose from 108 million in 1980 to 422 million in 2014. Prevalence has been rising more rapidly in low- and middle-income countries than in high-income countries.”

In addition, the U.S. Preventive Services Task Force says overweight adults should start getting screened for diabetes at age 35.

“We know that you’re at a much higher risk of developing diabetes with age, but younger and younger people are developing the disease,” said Marie McDonnell, an endocrinologist and the director of the clinical diabetes program at Brigham and Women’s Hospital in Boston, as quoted by The Wall Street Journal. “If you can identify people at risk at younger ages, you can reduce the time that an individual spends in a diabetes-range blood sugar if you act on it.”

It’s a big part of why diabetes-related stocks have been explosive.

Look at DexCom Inc. (DXCM) for example.

At $521 a share, the stock could see higher highs – especially with its continuous glucose monitoring device (CGM). Better, earnings and guidance have been explosive. In fact, according to a recent company release:

“In the second quarter of 2021, worldwide revenue grew 32% to $595.1 million, up from $451.8 million in the second quarter of 2020. Volume growth in conjunction with strong new customer additions continues to be the primary driver of revenue growth as awareness of real-time CGM increases.” The company even raised revenue guidance, expecting 22% to 25% growth.

Or look at Tandem Diabetes (TNDM).

According to a company press release, “In comparing the second quarter of 2021 to the same period of 2020, Worldwide pump shipments increased 81 percent to 33,817 pumps from 18,687 pumps, Sales increased 58 percent to $172.1 million from $109.2 million, Gross margin improved to 54 percent of sales from 50 percent of sales, Operating margin improved to 3 percent of sales from negative 11 percent of sales.”

“We achieved record-high sales in the second quarter by expanding and further penetrating the U.S. insulin pump market, and through the rapid uptake of our technology internationally where our business opportunity is still in its early stages,” said John Sheridan, president and chief executive officer. “Our worldwide installed base is now nearly 270,000 people, and we are on track to achieve our goal of bringing the benefits of our technology to more than half a million customers by year-end 2024.”

Or, look at Insulet Corporation (PODD).

Most recently, the company announced “FDA clearance for use of Eli Lilly and Company’s Lyumjev (insulin lispro-aabc injection) 100 units/mL with Insulet’s Omnipod Insulin Management System and Omnipod DASH Insulin Management System. Insulet is the only insulin pump manufacturer in the United States to obtain this indication, providing more flexibility for people with diabetes.”

With diabetes only becoming far more troubling, these are some of the top stocks to consider.

The post The Top 3 Diabetes Stocks That Should be in All Portfolios appeared first on Morningology.

The concrete and cement industries are bracing for a demand boom, says CNBC.

That means investors may want to keep an eye on stocks like Cemex (CX), Vulcan Materials (VMC), US Concrete (USCR), Eagle Materials (EXP). Supply chain issues coupled with potential demand from a $1 trillion infrastructure bill could send prices even higher.

In fact, according to Anirban Basu, chief economist for the national construction industry trade association Associated Builders and Contractors, as quoted by CNBC, “In the short-term, we continue to have the supply chain difficulties, particularly in certain markets, and so prices are rising. So right now, apparently, supply is not rising up to meet demand.”

Aside from the stocks mentioned above, another way to gain exposure is with ETFs, as we noted on June 24, 2021:

iShares Global Infrastructure Index ETF (IGF)

One of the best ways to diversify – at less cost is with an ETF, such as the iShares Global Infrastructure Index ETF (IGF). At $46 the ETF offers us exposure to Enbridge Inc., TC Energy Corp., Kinder Morgan, Duke Energy Corp., Williams Inc., and Exelon Corp.

SPDR S&P Global Infrastructure ETF (GII)

At $53, the ETF offers exposure to stocks including Enbridge Inc., TC Energy Corporation, Duke Energy Corporation, Kinder Morgan, Exelon Corporation, Xcel Energy, and Southern Company. Since bottoming out around $49 in March, the ETF ran to $55. While the GII ETF recently dipped to $53, weakness may be a great opportunity.

Global X US Infrastructure Development ETF (PAVE)

At $27, PAVE offers exposure to Nucor Corp., Trane Technologies, Eaton Corp., Deere & Co., Emerson Electric, and Vulcan Materials. Weakness may also be an opportunity with this idea, as well.

The post The Top Ways to Trade the Coming Cement and Concrete Boom appeared first on Morningology.

Investors may want to buy the dip in Activision Blizzard (ATVI).

For one, video game sales show no signs of cooling off. In fact, in the second quarter of the year, according to GameSpot.com, “U.S. video game spending in the second quarter of 2021 has increased 2% to $14 billion over the same period in 2020. According to the NPD Group, overall consumer spending on video games for April to June 2021 totaled $14 billion, a small increase over last year’s massive numbers, which were boosted by the pandemic.”

Even better, by 2024, according to analysts at Newzoo, the global gaming market could be worth more than $200 billion, as reported by VentureBeat.

Two, companies like ATVI are still producing incredible earnings.

For the quarter ended June 30, ATVI’s “net revenues presented in accordance with GAAP were $2.30 billion, as compared with $1.93 billion for the second quarter of 2020. GAAP net revenues from digital channels were $2.03 billion. GAAP operating margin was 42%. GAAP earnings per diluted share were $1.12, as compared with $0.75 for the second quarter of 2020. On a non-GAAP basis, Activision Blizzard’s operating margin was 44% and earnings per diluted share were $1.20, as compared with $0.81 for the second quarter of 2020.”

Three, analysts at Citi recently upgraded the stock to a buy rating with a price target of $105. They believe the company has already priced in recent negatives, including the potential for Chinese crackdowns on gaming.

In addition, ATVI insiders seem bullish. In fact, ATVI Director Peter Nolan just recently bought $2 million worth of stock between August 5 and 9.

With plenty of bullish news to support upside, use weakness as an opportunity.

The post Why An Activision Blizzard Insider Bought the Recent Dip appeared first on Morningology.