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Global Life - >>> Billionaire Warren Buffett Recently Cut This Stock From Berkshire Hathaway's Portfolio. It Just Dropped 53% In 1 Day. Here's What Investors Need to Know.
by Courtney Carlsen
Motley Fool
Apr 17, 2024
https://finance.yahoo.com/news/billionaire-warren-buffett-recently-cut-101500983.html
Globe Life (NYSE: GL) stock plummeted by more than 53% in a single day last week after short-seller Fuzzy Panda Research accused the life insurance company of fraud. The claims piled onto the already struggling stock, which had previously been a longtime holding of Warren Buffett's conglomerate, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B).
If you're thinking about buying the dip in the stock, there are some things you'll want to know.
Globe Life's troubles began last year
Globe Life was one of Berkshire Hathaway's longest-held investments, having been part of the conglomerate's portfolio for more than two decades. Berkshire held Globe Life through several difficult economic periods, including the COVID-19 pandemic, which put tremendous pressure on life insurers by elevating claims costs.
Buffett examines a management team's character and trustworthiness when investing. Buffett and his team have an excellent track record of evaluating management, which is a big reason for the conglomerate's long-term success. When Globe Life became the subject of several lawsuits accusing it of misconduct, Berkshire pulled the plug on its investment.
Last year, two Globe Life subsidiaries, American Income Life Insurance Co. and Arias Agencies, faced a lawsuit accusing them of inappropriate workplace conduct; this included rampant drug use, sexual abuse, and degradation of agents who didn't hit sales targets.
Globe Life's struggles continued when a former executive claimed he was fired for blowing the whistle on "potentially illegal" sales practices at the subsidiary. It appears that the accusations were why Berkshire sold its stake in the insurer last year.
Here's what short seller Fuzzy Panda had to say about the insurer
Fast-forward to this year, and Globe Life's troubles have gone from bad to worse. On March 6, the U.S. Department of Justice issued subpoenas to Globe Life and American Income Life. The subpoena is part of an investigation into allegations of fraud and misconduct at the (renamed) Arias Organization, now one of American Income Life's agencies.
Last week, the dam broke after short-seller Fuzzy Panda Research accused Globe Life of "extensive" insurance fraud that was ignored by management. According to Breakout Point and reported by Bloomberg, Fuzzy Panda Research was the best-performing active short-seller in 2023. Although short-sellers -- investors who try to profit from falling share prices -- suffered deep losses during the long bull market of the 2010s, they can help expose harmful or downright fraudulent business practices.
Fuzzy Panda reviewed hundreds of court documents and interviewed former executives and agents "who showed us where the fraud was hidden." According to the short-seller, the fraud was ignored by management despite being "obvious and reported hundreds of times." After the short report was released, Globe Life's stock plummeted 53% in a single day.
Following the serious accusations from Fuzzy Panda, Globe Life responded by saying:
We reviewed the report and found it to be wildly misleading, mixing anonymous allegations with recycled points pushed by plaintiff law firms to coerce Globe Life into settlements ... The short seller analysis by Fuzzy Panda Research mischaracterizes facts and uses unsubstantiated claims and conjecture to present an overall picture of Globe Life that is deliberately false, misleading and defamatory.
Buy the dip?
According to The Fly, analysts believe the stock sell-off is overdone, but big question marks remain. Investment bank and investment firm Piper Sandler said that Globe Life's response "serves to assuage concerns but does not completely remove the vacuum that remains absent a broader communication about this matter with the investment community."
Another investment firm, Evercore, meanwhile, sees limited downside from here but says there is still "significant uncertainty for the shares."
Globe Life faces serious allegations, and the stock price reflects this. After its significant sell-off, aggressive investors may find the stock ripe for the picking. If you're willing to tolerate this risk, though, don't bet more than you're willing to lose.
However, given the uncertainty around the situation and the Department of Justice's investigation, most investors are better off waiting to see how things shake out; they should avoid the stock for now.
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High Tide (HITI) - nice break out on high volume :o)
>>> High Tide Inc. (HITI) engages in the cannabis retail business in Canada, the United States, and internationally. The company operates through Retail and Wholesale segments. It operates licensed retail cannabis stores; and provides data analytics services. In addition, the company manufactures and distributes consumption accessories. Further, it sells its products through online sales via e-commerce platform. The company offers its products under the Daily High Club, DankStop, FABCBD, GC, Nuleaf, Smoke Cartel, and Blessed CBD brands. The company was formerly known as High Tide Ventures Inc. and changed its name to High Tide Inc. in October 2018. High Tide Inc. was founded in 2009 and is headquartered in Calgary, Canada. <<<
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HUM, UNH - >>> US health insurers slide as final Medicare payment rates fall below expectations
Reuters
4-2-24
https://www.msn.com/en-us/money/markets/us-health-insurers-slide-as-final-medicare-payment-rates-fall-below-expectations/ar-BB1kWIXt?OCID=ansmsnnews11#;
(Reuters) - Shares of U.S. health insurers tumbled between 6% and 12% on Tuesday after the final 2025 rates for Medicare Advantage (MA) payments by the government implied a cut and triggered worries about a margin squeeze.
The rates, which indicated a 0.2% fall in average payments, are unchanged from what was proposed in January, despite pressure from companies and industry groups to incorporate a late-year surge in medical care demand.
The U.S. Centers for Medicare & Medicaid Services typically raises the final reimbursement from the advanced notice.
The rates could pile more pressure on margins at insurers already struggling with high medical costs, and uncertainty around insurance claims processing due to the fallout of a hack at UnitedHealth's tech unit.
Shares of Medicare-focused insurer Humana fell the most, plunging more than 12% to a near four-year low of $308.22. UnitedHealth slumped 6.6%, while CVS Health sunk 7.7% in early trading.
The steep losses also dragged down the blue-chip Dow index and the benchmark S&P 500 in morning trading. [.N]
The "less-than-favorable rate updates, which coupled with the potentially clouded claims development in light of the Change Health cyberattack ... may put the once-golden Medicare Advantage market in somewhat less favorable standing," said Citi analyst Jason Cassorla.
The CMS, in a final notice published on Monday, said it had not observed higher demand for medical care during the fourth quarter of 2023, in sharp contrast to recent comments from insurers such as Humana and UnitedHealth.
The closely watched proposal determines how much insurers can charge for monthly premiums, plan benefits they offer and, ultimately, their profits.
The high costs, coupled with low rates, put pressure on insurers to cut the number of benefits they cover, said BoFA Securities analyst Kevin Fischbeck in a note.
"The amount of benefit cuts needed could begin to weigh on the perceived value of Medicare Advantage," he said.
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Derf, >> low angst = low results <<
I'm finding the opposite - the lower the angst, the better the results. And also - the less trading, the better the results.
I guess the bottom line is finding the right formula that works for you. Some are heavy sleepers, some are nervous nellies, some can trade, while others lose their shirts trying to trade. So whatever works :o)
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low angst=low results...I rather spend that time doing the sudoku or Jumble
Derf, >> get up in the morning to watch a half share <<
For me that's the whole idea --> low angst :o)
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Talking with you is like when I'm talking with Mark Cuban. I wouldn't get up in the morning to watch a half share.
I wouldn't even know HOW TO buy a half share.
You make me feel like a billionaire.
Derf, >> NVDA <<
Chart-wise, it looks like the 50 MA should reach 800 before long, so that might be a decent entry point if the stock gets there. But for the longer term it probably doesn't matter that much.
With NVDA I have a whopping 1/2 shares lol. But I like these tiny positions since it makes it easy to buy / hold and not worry about it. I figure with stocks, the big money is made by buying quality and holding LT / forever. Of course that sounds good in theory, but we'll see what happens when we get another crash / crisis, which will happen at some point.
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Actually, now that I'm looking at it, I'd say $NVDA is a bit better buy than SMCI.
I'd like to buy it under $700 though. I'm not willing to chase it.
Derf, With SMCI, it looks like support at the rising 50 MA. I figure it's a logical longer term buy / hold, but am only holding the 'free' shares from the previous double. Looks like the chart is pretty much tracking NVDA. I'm figuring on holding these longer term, but only small positions.
It's actually good to see the market consolidating. Europe really needed it, based on the German chart and the Euro Stoxx 50 futures charts. Both had spiked for 2-3 months without a real pullback. Unlike here, Europe's economy has been weak / recession, so they are lowering % rates before the US Fed does.
Looking at Fed policy, they are guiding for 3 rate cuts this year, so Jim Rickards is predicting July, Nov, and Dec. He says Oct is out since it's too close to the election, and July may be more likely than June since the Fed isn't in much hurry with the US economy so resilient, and July will give an extra month of inflation data. Sounds logical, and Fed easing should give an underlying tailwind, and help offset other uncertainties, geopolitical and the election. Always something to worry about though.. For Fed policy guidance, check out the Nick Timiroas (WSJ) headlines periodically, since he's the designated Fed leaker to Wall Street -
https://www.wsj.com/news/author/nick-timiraos
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Derf, Yes, looks like the strength in SCCO continues. I missed the boat on copper, but did pick up a little RIO, along with several nuclear related ETFs (URA and NLR), albeit tiny positions. I'm thinking of these as longer term buy / holds, and they have nice dividends. A little late with NLR though. I had some last Fall but unfortunately decided to exit. NLR holds a number of smaller nuclear utilities that have been on a tear. But even after the runup, I figure a small LT investment will at least give some exposure to the sector.
Gold continues it's breakout from that 12 year cup + handle, and it looks like silver may be starting to join in.
With copper, using the futures chart as a guide, it looks like there could be another ~ 10% upside before it reaches the resistance levels ~ 4.5. Just a guess though, and these commodities are unpredictable. But since the Chinese decision to cut production was reportedly a key factor that ignited the current copper move, maybe it has further to go, but tough to say. I figure it's better to go with longer term trends, but copper also has that aspect, with the global 'electric everything' paradigm. I missed the boat with SCCO, so maybe on a pullback. But as a shorter term trade, nice going :o)
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Reading so many pro copper articles I'm starting to get nervous. $SCCO keeps running.
up about 28% since August. My rule used to be 30% up and I was out, but that was for the "old stock market"...not today's that logic is nonexistent.
$SMCI pulling back again to around $875 I think....do I dare??
Hershey - >>> Sweet never goes out of style.
https://finance.yahoo.com/news/2-magnificent-stocks-buy-now-120000628.html
Hershey is on a completely different end of the spectrum. It makes chocolate and salty snacks. It's not a complex business model, but that can be good.
It's the brand that makes Hershey special. There are other confectionary companies on the market, but Hershey's name goes back over a century and its brands are routinely among Americans' favorites year-round. Who doesn't love a Hershey bar, Kit Kat, Twizzlers, Heath Bar, Jolly Rancher hard candies, or a Reese's peanut butter cup?
The company's popularity means it gets prime shelf space at points of sale, much like Coca-Cola and PepsiCo do in the beverage industry. Hershey has an estimated 24% of the U.S. confectionary market, an impressive figure considering any company can make chocolate bars. It's the brand that makes the magic.
That translates to financials, too. Hershey is a simple and highly profitable business that earns an impressive 22% return on invested capital. That means that when Hershey pumps a dollar into its business, it gets $1.22 back. This signals that Hershey has pricing power, which is helping the company deal with a surge in cocoa prices that threatens to pressure its profit margins.
While that's bad news for the company, it's creating an opportunity for long-term investors. Shares have fallen to a price-to-earnings ratio of 20, below the company's long-term average.
Over time, it should adapt to the higher cocoa prices, and there's a good chance the shortage will end and prices will normalize again. In other words, use a short-term problem to buy this excellent stock and enjoy the following years of dividends and price appreciation.
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NEE - >>> 1 Incredibly Cheap Dividend Growth Stock to Buy Now
by Reuben Gregg Brewer
Motley Fool
Mar 30, 2024,
https://finance.yahoo.com/news/1-incredibly-cheap-dividend-growth-100000971.html
NextEra Energy (NYSE: NEE) isn't your typical utility stock because its business contains two very different divisions. One provides a strong foundation, and the other provides rapid growth.
The combination has made NextEra Energy a dividend growth standout in the typically slow-growth utility sector. Here's what you need to know about NextEra and why this dividend growth stock is so attractive right now.
NextEra Energy is historically cheap
NextEra Energy's dividend yield is around 3.3% today. That's a touch below the industry average of 3.5%, using the Vanguard Utilities ETF as a proxy.
But NextEra is usually afforded a premium to its peers (more on this below). That 3.3% dividend yield just happens to be near the company's highest levels over the past decade, suggesting that the stock is on sale.
Adding to the allure, NextEra Energy has increased its dividend annually for 29 consecutive years. So there's a very real commitment to returning value to shareholders via reliable dividend growth.
But that brings up the key metric in this story: NextEra Energy's dividend has grown at an annualized rate of 10% over the past decade. That is why the stock is afforded a premium price since half that rate would be considered very good in the utility sector.
Put simply, NextEra Energy is a dividend growth machine and looks cheap today. But why? Perhaps something has changed.
NextEra is still projecting big dividend growth ahead
The truth is that something material has changed in the utility sector. Interest rates have risen dramatically over the past couple of years, and that will make it more expensive for utilities to operate their businesses.
Don't get too caught up in that -- NextEra Energy is projecting 10% dividend growth through at least 2026. There are some important facts to know here.
First, NextEra Energy is two businesses in one. The core operation -- about 70% of the company -- is its regulated utility operation. This division largely consists of Florida Power & Light, one of the largest utilities in the United States, which has long benefited from net migration to the Sunshine State. More customers mean more revenue, and the customer trends are not likely to change anytime soon.
As for higher costs, regulators are likely to consider rising interest rates when they contemplate NextEra Energy's requests for rate increases and capital-spending approvals. Maybe there'll be a short-term effect, but in the long term, higher rates shouldn't materially alter the dynamics.
The remaining 30% of NextEra Energy's business is its fast-growing renewable-power operation. The contracts it signs here are market-based, so they, too, will adjust along with interest rates.
But the real story is growth, with NextEra Energy hoping to roughly double its energy capacity in this division by 2026. In other words, more growth is the expected outcome, and that should further support the strong dividend growth that management is projecting.
The big picture is that, despite rising interest rates, NextEra Energy doesn't see much changing in its long-term prospects. That's opening up an opportunity for dividend growth investors to buy this dividend growth gem while it appears to be on the sale rack.
A unique buying opportunity
NextEra Energy isn't going to be for every investor. If you're seeking high-yield stocks, for example, you should probably keep looking.
But if you're a dividend growth investor or even a growth and income investor, NextEra Energy looks like a very attractive option today. It's not your typical utility, for sure -- but that's exactly why you should find the company and its 10% dividend growth rate so alluring.
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>>> Innovative Industrial Properties (NYSE: IIPR) is something of a unicorn in the world of marijuana stocks because it doesn't actually grow and sell pot. Instead, the company operates as a real estate investment trust (REIT).
https://finance.yahoo.com/news/bull-market-2-spectacular-growth-125000070.html
Innovative Industrial Properties acquires cultivation facilities, distribution centers, and other related real estate from state-licensed cannabis operators. It then rents these facilities back to the operators via long-term arrangements.
This model provides recurring rental income for Innovative Industrial Properties and offers more efficiency for the operators by letting them focus on the business of growing and selling marijuana.
It's important to note that the REIT only rents to operators in the medical cannabis business, which is more regulated and enjoys much broader legalization nationwide than the recreational use market. At the time of this writing, about 90% of Innovative Industrial Properties' portfolio was rented out to multi-state operators (MSOs), and around 60% of its tenants are publicly traded companies.
In 2023, the company reported revenue of $310 million and net income of $164 million. Those two figures rose 12% and 5%, respectively, from 2022. Adjusted funds from operations -- an important measure of REIT performance -- for the year totaled $257 million, up 10% from the prior year.
As of the end of the year, the REIT had 108 properties in 19 states. Currently, 95.8% of its operating portfolio is rented via triple net leases, where the tenant pays most of the costs associated with maintaining the property in addition to rent.
Another stellar figure is the rental collection rate, which stood at 100% as of February. The company also has a superior yield and track record of raising its dividend over time. Its current yield of 7% is considerably higher than the average stock trading on the S&P 500 (1.3%), and its dividend has risen 300% over the trailing-five-year period.
The cannabis market can be a risky place to put cash, at least until there is some measure of uniform legislation on a federal level. That said, the medical cannabis niche represents a vast and growing addressable market.
Innovative Industrial Properties operates an unusual model within this industry that lends itself to steady, recurring returns for the business and its shareholders. Investors might want to consider getting a slice of the action.
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>>> 3 Types of REITs That Have Outperformed the S&P 500
by Matt DiLallo
Motley Fool
March 30, 2024
https://finance.yahoo.com/news/3-types-reits-outperformed-p-091300103.html
Congress created real estate investment trusts (REITs) in 1960 to level the playing field. REITs empower anyone to invest in wealth-creating, income-producing real estate.
They've certainly done that over the years. Over the long term, our research found that REITs have outperformed stocks. Since 1994, three REIT subgroups stood out for their ability to beat the S&P 500. Here's a closer look at these market-beating REIT types.
Storing up wealth
According to data from Nareit, self-storage REITs have delivered a 17.3% average annual total return since 1994. That has obliterated the S&P 500's 10.1% average annual total return during that period.
Self-storage REITs have routinely delivered strong returns compared to other REITs:
As that slide highlights, the group has delivered the No. 1 cumulative-sector return since 1999. The space has delivered strong returns over the past decade:
Extra Space Storage (NYSE: EXR) has led the way. As of the final day of 2023, it was the second-best performing REIT over the past decade, with a 443% total return.
A few factors have driven the sector's strong returns. Self-storage properties are very profitable, requiring an occupancy level of 40% to 45% to break even (compared to 60% for most multifamily properties). Meanwhile, demand is steadily rising and relatively economically resilient. On top of that, self-storage leases are short term, which enables operators to increase rents to market rates reasonably quickly. These catalysts have enabled the top-three remaining publicly traded self-storage REITs to grow their core funds from operations (FFO) per share by more than 200% apiece since 2011, with Extra Space growing by nearly 690%. That has enabled all three to deliver robust dividend growth. The rapidly rising dividend income and earnings have enabled these REITs to handily beat the S&P 500.
Dual catalysts
Industrial REITs have delivered the second-best performance in the sector since 1994, with an average annual total return of 14.4%. They have also delivered strong performance over the past decade, with Rexford Industrial and Prologis (NYSE: PLD) delivering two of the five highest returns among REITs at 440.8% and 379%, respectively, as of the end of last year.
Two factors have helped drive the performance of industrial REITs: The accelerating adoption of e-commerce and changing supply chain practices. They've enabled industrial REITs focused on logistics properties to deliver strong core FFO and dividend growth. Over the last five years, logistics REITs have grown their core FFO per share by 9% annually (with 12% from industry-leader Prologis) while delivering 10% compound annual dividend growth (and 12% from Prologis).
The sector expects to continue growing rapidly. Rents on existing warehouse properties are skyrocketing due to high demand and low vacancy levels. That's enabling REITs to develop additional properties. These catalysts drive Prologis' view that it can grow its core FFO per share by 9% to 11% annually through 2026. That should also enable the company to continue increasing its dividend at a strong rate. Those two drivers could enable the leading industrial REIT to maintain its market-beating performance.
Capitalizing on the housing shortage
Residential REITs have delivered the third-highest performance among REIT subgroups since 1994 at 12.7% annually. A few factors have helped drive the sector's strong performance. They include relatively economically resilient demand for rental homes (people need a place to live), enabling landlords to steadily increase rents. Housing market imbalances, especially since the Financial Crisis, have also helped drive demand for rental housing.
As an investment, manufactured home communities have stood out. Equity LifeStyle (NYSE: ELS) was the fourth-best performing REIT over the past decade, delivering a nearly 400% total return as of the end of last year. A big driver is the economic resiliency of manufactured-home communities. These landlords can continue raising rents during a recession because the costs of moving a manufactured home to another community are often too prohibitive.
That driver has enabled Equity LifeStyle to grow its same-store net-operating income at a 4.3% annual rate since 1998, faster than the REIT sector average and apartments (both at 3.3%). Add in an ever-expanding portfolio (which also includes RV parks and marinas), and the company has grown its normalized FFO per share at an 8.6% compound annual rate since 2006. That has allowed it to deliver 21% compound annual dividend growth during that period.
REITs can make great investments
REITs have outperformed the S&P 500 over the long term. A big driver has been the robust returns from self-storage, industrial, and residential REITs. The factors that have enabled those REIT subgroups to deliver strong returns remain in place. That's why investors should consider adding one or more of those REIT classes to their portfolio.
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NEE, DUK - >>> 3 Dividend-Paying Energy Stocks to Buy at a Discount
by Reuben Gregg Brewer
Motley Fool
March 29, 2024
https://finance.yahoo.com/news/3-dividend-paying-energy-stocks-082600370.html
The utility sector is generally one of the more boring segments of the broader energy industry, but that doesn't mean it is always uneventful. In fact, rising interest rates have resulted in Wall Street shunning utility stocks. While there are some good reasons for that, it has opened up an opportunity for long-term income investors to buy reliable dividend stocks like NextEra Energy (NYSE: NEE), Duke Energy (NYSE: DUK), and Black Hills Corporation (NYSE: BKH). Here's a look at each of these energy specialists.
A quick primer on an industry downturn
There's no way to hide the fact that utility stocks are in the dumps today. As the chart below clearly shows, the utility sector, using Vanguard Utilities ETF (NYSEMKT: VPU) as a proxy, has been heading lower while the S&P 500 index has been moving higher. What's been going on? The big issue is that interest rates have been on the rise. That poses two problems for utility stocks.
First, other income options, like certificates of deposit (CDs), are more competitive with some stocks, like utilities, that are known for producing income. If you can get a 5% or so yield from a super-safe CD, why take on the risk of owning a similarly yielding stock? The opportunity for dividend growth is one (very good) reason, but sometimes investors are too short-term focused. As a result, money has shifted out of the utility sector.
Second, and probably more important to consider, is that utilities tend to be capital-intensive companies. That means debt is often a key part of the capital structure. Rising interest rates simply make it more expensive to do business. This will probably hurt near-term financial results throughout the sector. It makes some sense that investors are worried about that. However, these are largely regulated businesses. That means that the government has to approve capital spending plans and rate structures, balancing the need for profit against cost and reliability for customers. Higher rates will, eventually, be taken into consideration in that equation. So, over the long term, slow-and-steady growth is still the likely outcome.
In the end, then, the current industry malaise is probably a long-term opportunity for dividend investors.
Three solid options for dividend investors
NextEra Energy is going to be most attractive to dividend growth investors. Although it owns one of the largest regulated utility operations in the United States (Florida Power & Light), about 30% of its business is dedicated to a rapidly expanding renewable power business. That combination has resulted in annual dividend growth of around 10% on average over the past decade. Management currently believes it can increase the dividend at around that same rate through at least 2026.
That's a pretty astounding pace of dividend growth in the utility sector, which explains why NextEra Energy has long been afforded a premium valuation. But thanks to the current industry downturn, the yield is near a 10-year high at about 3.3%. While that's below the 3.5% industry average, it is still a great opportunity for dividend growth investors; the dividend has been raised annually for 29 consecutive years.
Duke Energy is a bit more conventional. While it is also one of the largest utility companies in the United States, it doesn't have a fast-growing clean energy business like NextEra Energy does. In fact, Duke recently agreed to sell the non-regulated clean energy business it did own. Effectively, it is doubling down on regulated assets, which will increasingly require clean energy investments to be made. But making those investments within the regulated framework will provide more consistent returns. The company has increased its dividend annually for 19 consecutive years and the dividend yield is toward the high end its range over the past decade at 4.3%. Note that the yield is notably above the industry average.
The last utility up is tiny Black Hills Corporation, which has a yield of just about 5%. Like the other two utilities here, that's toward the high end of the range over the past decade. Before moving on to the big reason to like Black Hills, it is worth highlighting just how small it is. This utility's market cap is $3.5 billion, which compares to $72 billion for Duke and a whopping $126 billion for NextEra. That's why it is all the more impressive to see that, of the three, Black Hills is the only one that happens to be a Dividend King, with 55 years' worth of annual dividend increases behind it. It is something of a hidden gem in the utility sector. Like Duke, it is a simple regulated utility, but if you appreciate dividend consistency, it wins hands-down.
There are good options in this out-of-favor industry
Wall Street is particularly downbeat on the utility sector today and that is creating long-term opportunity for dividend investors. You just have to be willing to go against the grain and buy when others are selling. However, if you take the time, you'll find that there are a lot of options in the sector, including dividend-growth stocks like NextEra, boring and reliable giants like Duke, and even Dividend Kings like Black Hills. If you like dividends, don't let this utility sell-off pass you buy without at least doing a deep dive into the space.
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>>> Pfizer Inc. (NYSE:PFE) -- Number of Hedge Fund Holders: 79
https://finance.yahoo.com/news/20-best-stocks-buy-now-183621401.html
Number of Times Stock Appeared in Top Picks of Financial Media: 3
Pfizer Inc. (NYSE:PFE) discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. On March 4, investment advisory Cantor Fitzgerald maintained an Overweight rating on Pfizer Inc. (NYSE:PFE) stock with a price target of $45.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm Citadel Investment Group is a leading shareholder in Pfizer Inc. (NYSE:PFE) with 11.6 million shares worth more than $334 million.
In its Q4 2023 investor letter, Diamond Hill Capital, an asset management firm, highlighted a few stocks and Pfizer Inc. (NYSE:PFE) was one of them. Here is what the fund said:
“Among our bottom contributors in Q4 were BorgWarner and Pfizer Inc. (NYSE:PFE). Biopharmaceutical company Pfizer was pressured as COVID sales were slower than expected in Q4. However, outside COVID-related sales, the base business is performing as expected, and the company is starting a cost-cutting program that should restore margins to pre-pandemic levels. We continue to like Pfizer for its diversified business, strong cash flow generation capabilities and balance sheet, and solid leadership under a quality CEO.”
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Derf, SCCO looks like a nice trade :o)
I'm thinking more of a longer term buy / hold for the copper aspect, and also the broader mining space like RIO, BHP, etc. I currently have almost no exposure there, other than via the S+P 500, so might be time to add a few names to the overall portfolio mix. The long term charts aren't really steady enough, but some nice dividends to make up for it, especially RIO and BHP -
RIO - 6.8%
BHP - 5.3%
PICK - 3.2%
SCCO - 3.0%
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Scotts Miracle Gro - >>> Hawthorne and BFG Supply Forge Strategic Distribution Partnership
Scotts Miracle-Gro Company
March 20, 2024
https://finance.yahoo.com/news/hawthorne-bfg-supply-forge-strategic-210000117.html
Move enables Hawthorne to bolster focus on innovation and investment in its proprietary Signature brands
BFG’s national distribution network and high-quality customer support model bring a new level of service for customers
MARYSVILLE, Ohio, March 20, 2024 (GLOBE NEWSWIRE) -- The Hawthorne Gardening Company, a wholly-owned subsidiary of The Scotts Miracle-Gro Company, and BFG Supply, a leading national horticultural and agricultural product distributor, today announced the formation of a strategic partnership under which BFG will distribute Hawthorne’s proprietary Signature brand cultivation supplies and solutions.
The partnership is a key element of both companies’ broader strategies to capitalize on growth opportunities within the hydroponic products industry and deliver value-accretive solutions to growers.
Hawthorne strategy
Hawthorne is discontinuing the distribution of products from other companies and shifting its focus solely to marketing, innovating and supporting its vast portfolio of Signature brands, including Gavita, General Hydroponics, Botanicare, Cyco, Mother Earth, HydroLogic, Gro Pro and more. These changes enable Hawthorne to realign and optimize its operations. In parallel, BFG will become a key partner for distributing Signature products to many Hawthorne customers. BFG has a national distribution network and a track record of exceptional customer support.
“The moves we are making not only serve as a catalyst for Hawthorne’s growth, but also bring both short- and long-term benefits to the retailers who sell our products and the growers who use them,” said Tom Crabtree, COO of Hawthorne. “By sharpening our focus, we will deploy more resources into initiatives and programs that further drive our industry-leading brands as well as enhance customer service and experiences. BFG shares in our commitment and will be a key partner to help us execute our strategy.”
BFG strategy
Since 2016, BFG has expanded its market distribution strategy in the hydroponic and professional growers space in response to customers seeking one distribution partner with a comprehensive product assortment to create efficiencies in running their business. Through this new strategic distribution partnership, BFG will be the leading distributor for all Hawthorne Signature brands and third-party products to hydroponic retail businesses through its national distribution footprint beginning in Q2 of this calendar year.
"As BFG expands our best-in-class national distribution services to help more customers gain better access to products in the hydroponic and professional grower markets, we are excited to partner with Hawthorne as the trusted brand and distribution supplier for their industry-leading product lines,” said Mark Goshgarian, chief revenue officer, BFG. “We are committed to delivering world-class customer distribution services to our customers seamlessly and efficiently, and we believe this partnership is a testament to that customer promise.”
About Hawthorne Gardening Company
Hawthorne Gardening Company is the leading provider of nutrients, lighting and other products used by a wide range of growers, from hobbyists to professional cultivators and controlled-environment growers. The company is dedicated to creating high-quality products under its Signature brand portfolio and driving innovation founded in social and environmental responsibility. For more information, visit www.hawthornegc.com.
About BFG Supply
BFG is a leading national distribution partner and supplier of products including more than 1,000 trusted vendor partners across all horticultural and agricultural segments. Our mission is to provide simple and seamless access to world-class products and services to our valued customers when they need them.
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Not sure how to define "holding long", the chart has completely broken out, which means I have nothing to go on at the moment but gut feelings and what I read.
If you are asking if I sold any, the answer is no.
Derf, After a brief pause, it looks like SCCO could have another push higher. The news out of China (below) apparently triggered to the current move. Just curious if you are still holding long?
>>> China’s top copper smelters agree on rare joint production cuts
Reuters
March 13, 2024
https://www.mining.com/web/chinas-top-copper-smelters-agree-on-rare-joint-production-cuts-sources-say/
Chinese top copper smelters on Wednesday came to a rare agreement to jointly embark on production cuts at some loss-making plants as they seek to cope with a shortage of raw material, according to sources with knowledge of the plans.
There were no specific rates or volumes set for the cuts and each smelter will make their own assessment of reductions they want to implement, said the sources who were not authorized to speak on the matter and declined to be identified.
The agreement, made at a meeting in Beijing, comes as fees to process copper concentrate on the spot market have dropped to their lowest in more than a decade.
Chinese top producers Jiangxi Copper, Tongling Nonferrous Metals Group, Jinchuan Group and China Copper did not immediately respond to a request for comment.
Chinese smelters have been rapidly expanding their capacity over the past year to get ahead of an expected surge in copper demand from sectors related to the green energy transition such as electric vehicles or wind and solar energy.
But several mine disruptions globally, including the shutdown of the big Cobre mine in Panama owned by First Quantum, have meant copper concentrate is now in short supply.
Spot copper treatment charges (TCs) in China tumbled to $11.20 per metric ton on Friday, representing a 76% drop in just two months and the lowest level since 2013, when pricing rating agency Fastmarkets started publishing the weekly index.
“I think this is a turning point for the continued sharp decline in spot TC/RCs over the last few months,” said Brian Peng, a copper analyst at research and consultancy firm CRU.
Cutting production and extending maintenance shutdowns would help to ease tightness in concentrate supply over the coming months, he said.
“But it’s important to note that there are around 1.7 million tons per year new ex-China smelter projects that is expected to come online in the second half, which will put more pressure on global concentrate supply,” Peng added.
The sources also said that other measures, including using more copper blister in production to lower consumption of copper ore concentrate, were also discussed during the meeting.
Top smelters, acknowledging the shortages, proposed production cuts in a meeting in January but no action took place, according to people familiar with the matter.
China’s refined copper output in the first two months this year climbed 9.2% to 1.75 million metric tons, according to a survey by research house Antaike of 22 producers covering over 80% of China’s total capacity.
Imports of copper concentrate came in at 4.66 million tons for the first two months of the year, up 0.6% compared to the same period a year earlier, customs data showed.
The most-traded copper contract on the Shanghai Futures Exchange hit a 22-month high on Wednesday following the news.
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>>> The Cannabis Stocks Dream Looks More Like a Nightmare. Stay Cautious.
Investor Place
by Michael A. Gayed
September 20, 2023
https://finance.yahoo.com/news/cannabis-stocks-dream-looks-more-174519474.html
Investing and trading cannabis stocks has been extraordinarily difficult. I feel for those who took a bet for all the right reasons (which we’ll get into). But the entire space has been incredibly challenged. If we look at the Global X Cannabis ETF (NASDAQ:POTX) as a proxy, it’s clear that investors have felt pain for a few years.
But is there perhaps an opportunity in cannabis stocks now?
First, we should distinguish between cannabis dispensaries and companies tied to cannabis with public markets.
The legal cannabis industry has witnessed dramatic growth in recent years. On the surface, this seems like a no-brainer investment. We can see it and smell it almost every day. However, despite its potential, the cannabis industry is fraught with challenges. It is characterized by high risk, regulatory uncertainty, and financial restrictions. Moreover, the lack of federal legalization in the U.S. and taxes have hampered the growth of cannabis businesses. In turn, this has hampered both stocks and exchange-traded funds playing the space.
Federal illegality of cannabis in the U.S. makes it difficult for these companies to secure loans, list on major U.S. exchanges, and take certain tax deductions and credits that federally legal businesses enjoy.
This has led to a challenging financing environment, which has been exacerbated by the recent regional banking crisis.
The point here is that there’s no uniform regulation and way for cannabis companies to properly interact with the financial system like nearly every other industry. Moreover, the cannabis industry is not uniform. It comprises two distinct segments – medical and recreational – each with its own set of challenges.
The medical cannabis industry involves considerable research and development, clinical trials, and distribution, similar to traditional pharmaceutical companies. The recreational cannabis sector revolves around branding, marketing, and consumer segmentation, akin to the tobacco or alcohol industries. Regulations on the federal level ultimately need to address both – difficult with inertia in Congress.
Cannabis Stocks Face Legal, Regulatory Hurdles
Many of the challenges facing the cannabis industry stem from legal and regulatory restrictions. The Secure and Fair Enforcement (SAFE) Banking Act is one such act of legislation that is pending review by the Senate, but never seems to quite get close to the finish line. This has always been the key piece of legislation needed for cannabis to really run.
The SAFE Banking Act aims to protect banks and other institutions that service state-legal cannabis businesses from federal penalties. If passed, it would allow cannabis companies to access banking services, which could significantly boost the industry. It would also make investing in cannabis stocks and ETFs far more palatable from a fundamental perspective. Moreover, the U.S. Department of Health and Human Services’ recent recommendation to reclassify cannabis as less risky could further raise the outlook for the cannabis industry.
However, until such reforms materialize, the cannabis industry will remain hamstrung, making the current market more suitable for investors willing to hold onto cannabis stocks in the hope that federal reform will boost their valuations. And unfortunately, that hope shimmers and fades continuously. That of course is not to say one should totally avoid investing in cannabis, but rather that it’s an immense headwind for real performance to match its domestic private company growth.
How to Invest in Cannabis Stocks Now
So how does one invest in cannabis? One approach is to invest Cin multistate operators (MSOs) – large cannabis companies that operate in more than one U.S. state where the drug is legal. These companies offer advantages for investors willing to buy shares and hold them for a considerable time. Some leading MSOs include Curaleaf (OTCMKTS:CURLF), Trulieve (OTCMKTS:TCNNF), Green Thumb Industries (OTCMKTS:GTBIF), and Verano (OTCMKTS:VRNOF). These companies have reported significant revenues, are consistently profitable, and are making strategic decisions to expand their market share.
Another approach is to consider companies based in Canada where cannabis is federally legal. Canada-based companies, as well as U.S. companies that do not earn money from plant-touching businesses domestically, can list on major Canadian exchanges. This has allowed them to secure coveted listings and raise capital more easily.
In addition to stocks, investors can also consider ETFs that provide exposure to the cannabis industry. ETFs offer a diversified way to invest in the sector, reducing the risk associated with investing in individual stocks.
The Bottom Line
I’m bullish on the space from a very, very long-term horizon, and perhaps short-term momentum kicks in. But reform at the federal level is critical, and uncertain. And with the industry likely to undergo consolidation, only the strongest players will survive.
It may be worth taking a small portion of your portfolio and investing it, just don’t look at that portion of your portfolio for a while. It will either act like an out-of-the-money call option and be worth a lot, or not worth anything at all.
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You hesh your mouth!!!
It's not gambling, it's understanding trends
>> run too far too quickly <<
The chart does looks near term overbought. But active trading sure isn't easy. I tried it years ago, but hadn't yet learned TA / charts, so it was a disaster. But even knowing some TA, I figure that short term trading is essentially gambling, ie a slippery slope and dangerous. As Buffett says --> Investing Rule #1 -- Don't lose money :o)
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I bought in August of last year and am up about 25%. The tricky part is knowing it has run too far too quickly, but there are no indicators as when and where it falls.
Typically I look for a 3 week spike, which would mean this week or the next. Being the market is closed on Friday, there's a fair chance profits will be taken tomorrow.
Derf, Looks like China cutting production was the main catalyst for the current pop in copper -
>>> These Copper Stocks Shine At A New High As Prices Soar
Investor's Business Daily
by KIMBERLEY KOENIG
03/18/2024
https://www.investors.com/research/copper-prices-southern-copper-freeport-mcmoran-scco-fcx-stock/?src=A00220
Copper prices have rallied to levels not seen since April 2023. That's led industry players such as Southern Copper (SCCO) and Freeport-McMoRan (FCX) to pop and reach new highs.
Copper prices continue to rise, with the current price around $4.15 per pound. The recent boost came after news on March 13 that Chinese smelters will cut production at some facilities.
Copper is used in industries ranging from coin production to crude oil exploration. China and India are large consumers of copper used in infrastructure and transportation industries, while the U.S. uses it in homebuilding.
Copper stocks lead IBD's metal ore mining group, which contains 46 stocks in copper, gold, uranium and other mineral mining industries. The group ranks 177th out of the 197 industry groups tracked by Investor's Business Daily.
Prices Lift Southern Copper To New High
Southern Copper ranks No. 1 in the group. The stock reached an all-time high on Monday in heavy volume, and has gained 28% this month thus far as copper prices rise.
Shares are extended from a flat-base buy point of 88.40. Southern Copper stock retook its 50-day moving average on March 7. The stock gapped up 10% and broke out of the base on March 13, after news of a China production cut. Volume has been strong as the stock has climbed.
The copper stock is on track for its longest winning streak since Jan. 13, 2023, when it rose for nine straight trading days, according to Dow Jones Market Data.
On Monday, IBD upgraded the stock's EPS Rating to 91 from 88. Southern Copper holds a best-possible A+ IBD Accumulation/Distribution Rating, indicating very heavy institutional buying over the last 13 weeks. Its relative strength line has also made a sharp increase thanks to copper prices. Analysts forecast 10% full-year earnings growth in 2024 and 19% in 2025.
Freeport-McMoRan In A Buy Zone
Freeport-McMoRan reached a 52-week high on Monday. The copper and gold miner also broke out of cup-with-handle base with a 43.42 buy point in heavy trading on March 13, according to the weekly MarketSurge chart. Shares are in the 5% buy zone reaching to 45.59.
Shares have gained 18% in March thus far with rising copper prices. Freeport-McMoRan specializes in mining for gold, copper, silver, molybdenum, oil and natural gas.
Among others in the industry, Teck Resources (TECK) dipped on Monday but is holding a good portion of gains from Wednesday's 8% gap-up. The stock is flirting with a resistance around the 45 price level. Shares have gained 16% this month so far. Teck Resources is a miner of copper, zinc, cadmium and other metals and minerals.
Finally, Hudbay Minerals (HBM) also eased on Monday after reaching a 52-week high on Friday. The stock has climbed off a low of 3.94 on Nov. 10, and is nearing its 52-week high of 7.01. Thanks to increases in copper prices, the stock is up about 17% thus far in March. The Canadian miner focuses on copper.
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SCCO is a short term play for me.
RIO share price doing nothing while mineral stocks running is a red flag.
NEM doing nothing as well.
Derf, >> SCCO <<
SCCO does look interesting, and the chart has been zooming. Copper seems like a logical place to be considering the push toward 'electric everything'. RIO is another idea, though they are diversified, so not a pure play on copper, and are dependent upon global demand for iron. One thing I worry about with miners is that they often operate in dicey countries, with SCCO being heavy in Latin America.
Looking at the dividends, RIO's is huge at 7%, and the div payout ratio is only 65%. SCCO's dividend is 3.1%, but the payout ratio is 127%, which suggests a dividend cut at some point. Not that it will happen, but a div payout ratio over 100% is usually a red flag. These stats are from Yahoo Finance, so might be a little dated.
With the cannabis sector, I'm also reluctant, so only have a tiny exposure. One thing with SMG is their relatively high debt level of 3.3 bil, vrs the company's 4.1 bil market cap. That's definitely on the high side, though these figures may be somewhat dated. Either way, I figure it's best to keep these dodgier stocks / sectors as tiny positions in the 'fun / entertainment' category :o)
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I'm not buying any pot stocks. Considering the guys running these companies are probably ex criminals, why would I trust them?
I know someone in Oklahoma who is directly invested with over $250k and he's yet to see a penny back.
They do look decent on a chart though, but too many other good companies to invest in.
My $SCCO seems to be on a nice run right now.
Derf, I picked up two small contrarian positions - IIPR and HITI, both in the cannabis related sector. Looks like the bottom is likely in for the sector, though will take some patience. IIPR is a relatively conservative vehicle - a REIT that leases space to the cannabis growers. With the sector down so much, the dividend is way up to 7%. I owned it several years ago during the pot sector bull market, so decided to get back in with a tiny amount - only $310, but figure the overall sector has finally formed a bottom (famous last words, lol) :o)
Also, the Canadian cannabis retailer - High Tide (HITI). They have 167 stores in Canada and are expanding fast, with the goal of 300 stores. The chart setups for IIPR and HITI look promising, having formed quasi inverse head + shoulders. But tiny positions - just over $300 each, so mainly for fun.
Clean energy is another one of those trendy sectors that were on fire in the 2020-21 bull market, but then the air came out. I'm still not sure those have bottomed, but might soon be time to nibble a little. So far I only have some NEE, but am watching the solar stocks (FSLR, ENPH). I figure getting back over the 200 MAs would be a good sign that the bottom is truly behind them. Until then they still look iffy, especially looking at the broader ETFs (ICLN, QCLN, TAN). That was a great sector during the 2020-21 Covid crash recovery period, but still meandering and in search of a bottom.
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>>> High Tide to Open Fourth Canna Cabana in Mississauga, Ontario
CNW Group
March 26, 2024
https://finance.yahoo.com/news/high-tide-open-fourth-canna-100000631.html
CALGARY, AB, March 26, 2024 /CNW/ - High Tide Inc. ("High Tide" or the "Company") (Nasdaq: HITI) (TSXV: HITI) (FSE: 2LYA), the high-impact, retail-forward enterprise built to deliver real-world value across every component of cannabis, announced today that its Canna Cabana retail cannabis store located at 925 Rathburn Rd East, Mississauga, Ontario will begin selling recreational cannabis products and consumption accessories for adult use on Thursday, March 28. This opening will mark High Tide's 167th Canna Cabana branded cannabis retail location in Canada, the 58th in the province of Ontario and the 4th in Mississauga.
This brand-new Canna Cabana is nestled within a major retail power center and is surrounded by strong anchor tenants, including a national grocery retailer, Canada's largest bulk-food retailer, and several quick-serve restaurants. Situated close to well-travelled roadways, this Canna Cabana will benefit from the many residents who come through this plaza to run their daily errands and will welcome new and existing ELITE and Cabana Club members.
"I am thrilled to announce another Canna Cabana opening in Mississauga in rapid succession. This Tomken store is another example of our thoughtful real estate strategy, where we strategically locate our stores in these retail power centers surrounded by major national anchor tenants. The coming months are brimming with more exciting Canna Cabana store openings as we look to continue our growth trajectory in Mississauga and beyond, eventually reaching 300 stores across Canada and our long-term objective to achieve 15% market share in the provinces where we operate," said Raj Grover, Founder and Chief Executive Officer of High Tide.
"Growth and innovation are in our DNA. Our Cabana Club is the first-of-its-kind discount club model in North America, which features ELITE as our paid membership tier. ELITE upgrades have been growing at their fastest pace to date, with Canna Cabana quickly becoming a household name in Canada. Our goal is to extend the reach of our Cabana Club into a global cannabis community by consolidating our 5 million plus international customers and bringing them all together into our rapidly growing membership base," added Mr. Grover.
ABOUT HIGH TIDE
High Tide, Inc. is the leading community-grown, retail-forward cannabis enterprise engineered to unleash the full value of the world's most powerful plant and is the second-largest cannabis retailer in North America by store count1. High Tide (HITI) is uniquely-built around the cannabis consumer, with wholly-diversified and fully-integrated operations across all components of cannabis, including:
Bricks & Mortar Retail: Canna Cabana™ is the largest non-franchised cannabis retail chain in Canada, with 167 current locations spanning British Columbia, Alberta, Saskatchewan, Manitoba and Ontario and growing. In 2021, Canna Cabana became the first cannabis discount club retailer in North America.
Retail Innovation: Fastendr™ is a unique and fully automated technology that integrates retail kiosks and smart lockers to facilitate a better buying experience through browsing, ordering and pickup.
E-commerce Platforms: High Tide operates a suite of leading accessory sites across the world, including Grasscity.com, Smokecartel.com, Dailyhighclub.com, and Dankstop.com.
CBD: High Tide continues to cultivate the possibilities of consumer CBD through Nuleafnaturals.com, FABCBD.com, blessedcbd.de and blessedcbd.co.uk.
Wholesale Distribution: High Tide keeps that cannabis category stocked with wholesale solutions via Valiant™.
Licensing: High Tide continues to push cannabis culture forward through fresh partnerships and license agreements under the Famous Brandz™ name.
________________________________
1 As reported by ATB Capital Markets based on store counts as of February 8, 2024
High Tide consistently moves ahead of the currents, having been named one of Canada's Top Growing Companies in 2021, 2022 and 2023 by the Globe and Mail's Report on Business Magazine, and was named as one of the top 10 performing diversified industries stocks in both the 2022 and 2024 TSX Venture 50. High Tide was also ranked number one in the retail category on the Financial Times list of Americas' Fastest Growing Companies for 2023.
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>>> Innovative Industrial Properties (IIPR)
https://finance.yahoo.com/news/7-superstar-stocks-supercharge-dividend-203000230.html
In 2023, Innovative Industrial Properties (NYSE:IIPR) paid a $7.22 dividend per share, following constant increases for six years, and the company’s forward dividend yield stands at 7.5%. The Board’s planned dividend payout range of 75% to 85% of adjusted funds from operations (AFFO) was met by the company’s most recent quarterly dividend of $1.82 per share in Q4 2023.
Furthermore, a dividend payout ratio within the intended range suggests sustained growth potential and careful money management. Innovative Industrial Properties has a flexible and cautious balance sheet with a debt-to-total gross assets ratio of 12% and no variable-rate debt. The company’s overall liquidity at the end of Q4 2023 was over $175 million. This includes cash and short-term investments as well as availability under its revolving credit facility.
Moreover, Innovative Industrial Properties pledged up to $119.5 million in 2023 for upgrades to infrastructure, new leases, lease revisions, and property purchases. Overall, the company has a proactive attitude towards growing its property portfolio. Therefore, this facilitates the expansion of its tenant partners, as evidenced by its substantial capital commitments and investment activities.
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>>> Innovative Industrial Properties, Inc. (IIPR) is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. <<<
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>>> The Scotts Miracle-Gro Company (NYSE:SMG)
https://finance.yahoo.com/news/12-best-farmland-agriculture-stocks-140403079.html
Number of Hedge Fund Holders: 30
The Scotts Miracle-Gro Company (NYSE:SMG) is an Ohio-based company that serves the agricultural industry through products, like organic products for gardeners, pesticides, hydroponic nutrients, and more. The company sells its products under various brands, including EZ Seed, Miracle-Gro Organic Choice, etc. The Scotts Miracle-Gro Company (NYSE:SMG) has a market capitalization of $4.103 billion as of March 21.
On March 20, The Scotts Miracle-Gro Company’s (NYSE:SMG) subsidiary, Hawthorne Gardening Company, announced that it entered into a strategic partnership with BFG Supply, under which the company’s proprietary Signature brand cultivation supplies and solutions will be distributed by BFG.
As of the fourth quarter of 2023, 30 hedge funds have a stake worth $169.391 million in The Scotts Miracle-Gro Company (NYSE:SMG). Schonfeld Strategic Advisors has increased its stake by 42% in the company in Q4, 2023, to 444,336 shares worth $28.326 million, making the firm the largest shareholder of the company.
Madison Funds made the following comment about The Scotts Miracle-Gro Company (NYSE:SMG) in its Q4 2022 investor letter:
“Stock selection was the poorest for us in this sector. Two stocks in particular – Hain Celestial (HAIN) and The Scotts Miracle-Gro Company (NYSE:SMG) – while big winners for us in 2020 and 2021, hurt the portfolio in 2022.
While both companies were so-called COVID beneficiaries (businesses that benefited from consumers staying home and spending on their homes during COVID), we felt they possessed certain additional drivers that would maintain their fundamentals into 2022 and beyond.
Scott’s Miracle-Gro is arguably one of the great American franchises. The brand is synonymous with lawn care and pest control, has a dominant market share (~60%) with historically-impressive ~30% cash flow margins, and has the country’s largest Cannabis supply business. Scotts’ core business saw a significant windfall during COVID lockdowns. Lawn and garden care is not a growth business, and SMG dominance does not allow for much incremental gain in market share. However, our thesis was that even in a reopening scenario where lawn and garden businesses would revert to the mean, the cannabis market was poised for years of growth as more states legalized recreational use.
What we missed was the highly inefficient structure of the U.S. cannabis market. Currently, California, Colorado, and Michigan have the biggest and most mature markets. However, over the course of the last few years, several very large states and regions have voted to legalize recreational use, including New York, New Jersey, and Connecticut. The fly in the ointment has been Oklahoma, which is a medical marijuana state. Although recreational use is still prohibited, licenses to grow the crop were granted in Laissez Faire fashion to anyone willing to buy one. Oklahoma began to grow and cultivate the crop far in excess of their medical marijuana demand. That excess supply bled into grey markets across the country, devastating pricing for growers in other states. This glut put a near complete stop to capital spending on grow operations. With no new or incremental facilities coming on, Scotts’ Hawthorne business was cut in half from its peak in F21. This, of course, had a devastating effect on the stock.”
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>>> Cannabis Stocks Could Get a Lift From an Unexpected Catalyst Later This Year
Motley Fool
By David Jagielski
Mar 20, 2024
https://www.fool.com/investing/2024/03/20/cannabis-stocks-could-get-a-lift-from-an-unexpecte/
KEY POINTS
President Joe Biden recently mentioned marijuana in his State of the Union address.
Cannabis may come back into the spotlight this year, and it could potentially sway some voters.
The last presidential election year, 2020, was a great one for many cannabis stocks.
Valuations are low in the cannabis industry, and now may be an opportune time for long-term investors to buy pot stocks.
Cannabis stocks have been struggling for years. Since 2021, the AdvisorShares Pure US Cannabis ETF has declined by more than 75%. With no serious movement on marijuana reform at the federal level, despite more states legalizing medical and recreational use, investors have become frustrated with the industry. The red tape makes it difficult for cannabis companies to operate efficiently, and many remain unprofitable.
There is, however, a potential catalyst on the horizon this year which could give the industry a much-needed boost, and which may help cannabis stocks rise in value. Given that it is an election year, cannabis may benefit from some positive developments in the months ahead.
Is cannabis back on the president's radar?
President Joe Biden recently held his State of the Union address, and what got the attention of many cannabis investors was the mention of marijuana. It's not something the president normally discusses, but in his speech, he highlighted police reform and reviewing the classification of marijuana and stated that "no one should be jailed for using or possessing marijuana."
The president didn't promise anything new on marijuana or suggest that further movement or reform is coming. But the mention of marijuana, especially with the federal election on the horizon this year, is certainly noteworthy as it suggests that the topic could be on his radar. With cannabis growing in popularity, any talk of legalization could win over voters in what may be a tight election contest later this year.
The last election cycle was a positive one for pot stocks
In 2020, many pot stocks had great years. A big part of the reason was due to the hope and excitement that a new Democratic government might be receptive to marijuana reform. In 2020, shares of Trulieve Cannabis soared 167%, and fellow multi-state operators Green Thumb Industries and Curaleaf Holdings saw their stocks rise by 151% and 90%, respectively.
Investors may be more skeptical this time around, as a change in government after the 2020 election didn't have the positive effect many were hoping it would for the industry. But with Biden's government taking a look at reclassifying marijuana from a Schedule I substance down to a less restrictive category, there has been at least some hope that changes could be coming. While legalization may still be a long shot, marijuana could be an election issue that generates interest from the public later this year, and that much-needed spotlight may help rally some badly beaten-down pot stocks.
Valuations in the cannabis industry are incredibly low
Curaleaf, Green Thumb Industries, and Trulieve Cannabis are three of the top producers in the marijuana industry. These companies all generate more than $1 billion in annual revenue. But in terms of their price-to-sales multiples, these stocks are trading at some much lower valuations than in recent years.
For long-term investors, these could be tempting stocks to load up on, as they could possess a lot of upside in the future.
Is now the time to buy pot stocks?
Pot stocks are risky investments, and even the leading companies (Trulieve, Curaleaf) remain unprofitable. Green Thumb has turned a profit, but with a margin of just 3%, it isn't exactly generating a boatload of earnings.
These are still volatile stocks to put in your portfolio, but if you're willing to hang on for long haul, they could pay off with significant returns down the road given their low valuations. Cannabis investors shouldn't expect a growth catalyst this year from the president or the election, but it may not be surprising if one arises.
If you're prepared to hold for the long term and are OK with the risk, now may be a good time to add some exposure to the cannabis industry to your portfolio. But you should go into it knowing that marijuana legalization may still not happen in the U.S. anytime soon, and that it's by no means guaranteed to happen regardless of who the next president is.
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Derf, Nice timing with your SMG purchase. Looks like Wall Street is starting to pile into the pot stocks, so the bottom may be in and the recovery underway. Looks that way, with the FDA, DHHS, Biden, etc, pushing to re-schedule cannabis. Also, Germany is legalizing pot, so it's party time for the stoner stocks -
>>> FDA says marijuana has a legitimate medicinal purpose
As a Schedule 1 drug, marijuana is currently in the same category as some of the hardest drugs, like heroin and LSD.
by Anthony Hill
Mar 21, 2024
https://www.abcactionnews.com/news/national/fda-says-marijuana-has-a-legitimate-medicinal-purpose
TAMPA, Fla. — The FDA released a report saying that marijuana does have a legitimate use for medical purposes and recommended the US Drug Enforcement Agency change its classification from Schedule 1 to Schedule 3.
“The definition of a schedule 1 drug says it has no health benefits to it, and, so, obviously, there’s been plenty of research that has documented the multitudes of ways that cannabis can be helpful,” said Dr. David Berger with Wholistic ReLeaf.
Though not all in the medical community agree, many people swear by the medicinal effects of marijuana to help treat symptoms of cancer, anxiety, PTSD and epilepsy. And being stoned + stupid is also good for the snack food industry.
“It’s no longer appropriate to say that there’s no medical benefit when there are hundreds if not thousands of medical studies that show the opposite,” explained Dr. Berger.
As a Schedule 1 drug, marijuana is in the same category as some of the hardest drugs like heroin and LSD, which means it’s classified as being more dangerous than fentanyl and methamphetamine.
“What happens after this is the federal government has more decisions to make as to what they’re going to do next,” said Dr. Berger.
The Department of Health and Human Services formally recommended that the DEA classify marijuana as Schedule 3 in August of last year after the Biden Administration asked them to review how the drug is classified under federal law.
Earlier this year, Senate Democrats urged Biden to deschedule the drug entirely, meaning you would not need a doctor’s authorization to use marijuana. So --> everybody must get stoned..
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Derf, The SMG chart looks tempting, though the cannabis connection has me spooked. SMG's chart setup looks classic for a breakout up to 80. But beyond that is tough to say, and probably relies upon the Hawthorne spinoff, broader cannabis sector direction, etc.
With HSY, the 200 MA (205) is key resistance, but I'm looking at it as a patient long term buy/hold. Looks like the cocoa prices may have peaked and are coming back down. Cocoa more than tripled over the last year, so that was a big part of what tanked the stock.
With GNRC, I decided to exit for now (all 3 shares, lol). It's been basing for over a year, but I'm thinking there might be one more test of support at 100, but just a guess. Fwiw, I also decided to exit the solar plays for now (ENPH, FSLR), figuring it might still be early for that sector. The broader ETFs like TAN, ICLN, QCLN may still need to form a better bottom.
You're right about my having too many stocks. With buy / hold stocks it's no problem, but with these turnaround plays it's too many to follow.
Btw, I picked up a little RMD as a LT buy / hold, figuring it is returning to its long term trajectory.
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Geez!!! One of my great sad tales.
I bought HUM when it had dropped close to nothing back in 2009. Held it for a day and made a quick profit and thought I was a genius all that day. That along with American Airlines are two of my biggest short term gains and biggest mistakes in selling.
SMG is only worrisome because it has been so long since it approached the 50 DMA.
I need to keep a close eye on my HSY. Bought it due to Covid play in 2021. I'm up about 18%, but it hits resistance at $206.
Because of you, I'm trading more than I like.
Also considering dumping my GNRC here as it has never done as well as expected. I'm up about 5% in 18 months or so, and no dividend. I don't get what is holding this down? Electric cars were supposed to make it a no brainer.
Looking at some other recovery stocks -
- HSY's nascent recovery looks to be on track.
- GNRC still iffy, and I may bail. Only 3 shares though (lol)
- NEE looking good
- ADM - nice bounce
- PEP - starting to come back after M. Stanley upgrade
- ENPH, FSLR - getting nervous again about these clean / solar stocks, may still be too early.
- POOL - good
- PFE - bottom forming (I think)
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Another one I'm watching is Humana (HUM). It was a great long term stock but got hit bad due to some ominous changes occurring in the Medicare Advantage plan space, to which Humana has a high exposure (article below). So I may pass, even though the stock had a 35% haircut. I already have some UNH and ELV, which are holding up pretty well, and MOH is doing great. So that should cover the medical insurance area adequately.
>>> Humana’s dire forecast shows private Medicare boom is ending <<<
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=173712069
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Derf, Btw, the SMG chart setup is looking interesting for a possible move through 70 and up to 80. Based on the chart, I would be getting a position for the long term recovery, but I'm still leery of the close cannabis connection. However, they may be planning to separate the Hawthorne / cannabis side into a separate unit, which might allow the regular SMG stock to recover. I'll have to do more research, but the chart does look intriguing..
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The ResMed (RMD) chart looks interesting for a continued recovery. It was a great long term stock for many years until the Covid disruptions affected its supply chains. There were also the big class action lawsuits that affected their competitor Philips (CPAP machines), which tainted the entire sector. I'll have to get back up to speed on the company, but looks like an interesting 'contrarian value' / turnaround idea, and the chart looks like it may be ready to resume the recovery -
>>> ResMed Inc. (RMD) develops, manufactures, distributes, and markets medical devices and cloud-based software applications for the healthcare markets. It operates in two segments, Sleep and Respiratory Care, and Software as a Service. It offers various products and solutions for a range of respiratory disorders, including technologies to be applied in medical and consumer products, ventilation devices, diagnostic products, mask systems for use in the hospital and home, headgear and other accessories, dental devices, and cloud-based software informatics solutions to manage patient outcomes, as well as provides customer and business processes. The company also provides AirView, a cloud-based system that enables remote monitoring and changing of patients' device settings; myAir, a personalized therapy management application for patients with sleep apnea that provides support, education, and troubleshooting tools for increased patient engagement and improved compliance; U-Sleep, a compliance monitoring solution that enables home medical equipment (HME) to streamline their sleep programs; connectivity module and propeller solutions; and Propeller portal. It offers out-of-hospital software solution, such as Brightree business management software and service solutions to providers of HME, pharmacy, home infusion, orthotics, and prosthetics services; MatrixCare care management and related ancillary solutions to senior living, skilled nursing, life plan communities, home health, home care, and hospice organizations, as well as related accountable care organizations; HEALTHCAREfirst that offers electronic health record, software, billing and coding services, and analytics for home health and hospice agencies; and MEDIFOX DAN's software solutions. The company markets its products to sleep clinics, home healthcare dealers, and hospitals through a network of distributors and direct sales force. The company was founded in 1989 and is headquartered in San Diego, California. <<<
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Morgan Stanley upgrades Pepsi - >>> Here's Why PepsiCo Stock Popped Today
by Jon Quast
Motley Fool
March 18, 2024
https://finance.yahoo.com/news/heres-why-pepsico-stock-popped-192623777.html
Shares of beverage and snacking giant PepsiCo (NASDAQ: PEP) popped on Monday after an analyst upgraded his outlook and raised his price target. As of 1:15 p.m. ET, Pepsi stock was up 4%, which is a big move for this usually sleepy stock.
Pepsi's most exciting opportunity
Morgan Stanley analyst Dara Mohsenian is one of the highest-rated and listened-to analysts out there and he's turning heads with his commentary on Pepsi stock today. Mohsenian reportedly is looking to Pepsi's growth in international markets and the valuation of its stock as reasons for bullishness. Accordingly, the analyst raised the price target for Pepsi stock to $190 per share, according to The Fly.
Mohsenian isn't alone in his bullishness for Pepsi in international markets; CEO Roman Laguarta shares his optimism. In the earnings call for the fourth quarter of 2023, Laguarta said, "The international opportunity continues to be probably the most remarkable and exciting opportunity that we have as a company."
Considering Pepsi is a business valued at over $230 billion, that's a big deal and why the market is excited today.
Is Pepsi stock undervalued?
Regarding Pepsi's valuation, it looks pretty average to me, which differs from Mohsenian's belief that the valuation is cheap. Its current price-to-earnings (P/E) ratio is 26, which is right at its 10-year average.
That said, the reason that Laguarta is excited about Pepsi's growth in international markets is because it's now almost a $40 billion business outside of the U.S., gaining enough scale to have better profit margins. Therefore, as business grows in those markets, profits should grow at a faster pace.
In light of this, it's possible that Pepsi's profits could go up faster than what some investors expect in coming years. If that happens, then perhaps Pepsi is undervalued on a forward basis even if its valuation looks average on a trailing basis. In this case, Mohsenian's point is well taken and his price target of $190 would be easily attainable.
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I own 3 of the 4
XOM, NEE, ADM, DE - >>> 4 Magnificent Stocks to Buy That Are Near 52-Week Lows
by Justin Pope
Motley Fool
February 27, 2024
https://finance.yahoo.com/news/4-magnificent-stocks-buy-near-130200860.html
Industrial and energy companies can be challenging to follow because their businesses can have big ups and downs based on the economy, interest rates, or commodity prices.
Sometimes, it's best to buy these companies on weakness when things aren't going well, anticipating that another upswing will eventually come. Importantly, these companies must be financially built for the tough times.
Here are four fantastic industrial and energy stocks with rock-solid fundamentals, all trading near their 52-week lows today.
1. ExxonMobil
Energy giant ExxonMobil (NYSE: XOM) is a fixture in fossil fuels. The company explores for, extracts, refines, and sells oil and gas products. ExxonMobil enjoyed banner years in 2022 and 2023, but the stock is near its 52-week lows due to weakness in commodity prices. The price of oil has retreated from triple-digits to between $70 and $80 per barrel. While refining margins improve when oil prices drop, the exploration business is too big to offset falling oil prices.
The good news is that ExxonMobil is financially sound. The company has $31 billion in cash on its balance sheet against $41 billion in total debt, resulting in just $10 billion net debt. Investors can enjoy a solid 3.6% dividend yield at the current share price, and the company has raised its dividend for 41 consecutive years, showing it's endured multiple industry ups and downs.
2. NextEra Energy
Renewable energy company and electric utility NextEra Energy (NYSE: NEE) is the opposite of Exxon, playing a massive role in renewable energy sources like wind and solar power. Its renewable energy subsidiary is the world's largest, with projects across North America, and its utility business, Florida Power & Light, services over 12 million people in Florida. The company is also an outstanding dividend stock, with a 28-year streak of raises and a solid 3.6% yield today.
NextEra Energy's stock is struggling due to high interest rates. The company relies on borrowing money to fund investments in its business, and the higher rates make debt more expensive and potentially inhibit growth. However, rates tend to be cyclical, and the market expects rate cuts to come sometime this summer. Don't lose sight of NextEra's leading position in a growing renewable energy industry. Embrace the stock's valuation dropping from over 30 times earnings to 16 times.
3. Archer-Daniels-Midland
Food is a core need of society, and Archer-Daniels-Midland (NYSE: ADM) plays a crucial role in feeding the world. The company processes and trades grains, seeds, oils, and other agricultural products worldwide. Its giant footprint spans 750 facilities and 42,000 employees, packing size and scale that make competing with Archer-Daniels-Midland no easy task. The stock is nearing Dividend King status, with 48 consecutive years of dividend increases.
The company is currently under investigation by the Department of Justice for account practices related to how it priced commodities traded within its business. Shares fell sharply after the news, putting the stock near its 52-week low. Investors should follow developments closely and respect the severity of potential violations. At the same time, Archer-Daniels-Midland has such a long track record that it seems unlikely that the severity of any alleged violations would ruin a long-term investment thesis. That makes this black-eye situation a potential buy-the-dip opportunity.
4. Deere & Company
There is no food without farming, and Deere & Company (NYSE: DE) is arguably the flagship brand of machines used for commercial agriculture, construction, and forestry. The company's famous green paint marks every machine in service. Deere isn't just a machinery company, though. It's become a technology company, too. It provides farmers with machinery and software solutions to maximize efficiency and crop yields.
Right now, Deere is in a slump. Higher interest rates make machinery more expensive for farmers, who often rely on financing to afford the large tractors and other machines they use. Deere's net sales fell 8% year over year in the first quarter of Deere's fiscal year 2024, ended Jan. 28, 2024, and earnings per share fell 5%. Consider buying the stock on weakness. Analysts believe the business will compound earnings at nearly 10% annually over the long term. Deere is a classic example of an excellent business going through a cyclical phase, as many do.
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Haven't sold SMG.
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