Stock Market - Dividend, growth and capital Allocation |
- Dividend, growth and capital Allocation
- Tech stocks revenue growth, year-over-year
- VRX +15% this morning
- CVS
- What is with small cap straddles?
- Multiple index funds?
- Study: does the year-over-year change in corporate earnings lead the stock market?
- What do you think trump will say in relation to the Iran deal tomorrow?
- Article: 3 Biotech Stocks That Are Trending This Week
- What is the mostly reliable way to calculate price targets? and What is an EPS and how does it effect the stock?
- Time to get real
| Dividend, growth and capital Allocation Posted: 08 May 2018 12:17 PM PDT Hello! I'm /u/lykosen11 and recently, I've seen tons of comment talking about the strength & profitability of dividend stocks. Comments recommending someone to buy dividend stocks to get results from their investments. It'll be a simple text to make the situation clear. To discuss this, we first have to set a few things straight. What is a stock in a company This might look trivial, however, might not be as clear as new people think. When you buy a stock, you buy a slice of the company. With 1 stock in a company with 100 stocks outstanding, you own 1% of the company. However this is also ambiguous. What does that really mean? Well, it means 1% of the company is yours. If the company doubles in value, your share double in value. If a company buys a building, you own 1% of that building. If the company hires a person, you employ 1% of that worker. If the company makes 100 dollars, you get 1 dollar. This would be very complex to keep track off, giving you strange fractional ownerships. It becomes even weird if you get that dollar, and the company has to contact you to get that dollar when they want to pay their costs of revenue. It is solved with stocks. Instead of you getting ownership of each of these things, the company holds everything, and you hold a piece of paper saying you own 1% of everything. If the company earns 1000 dollars, 10 of those dollars are owned by you, no matter what they are spent on. If the company turns those dollars into product to sell, your value and ownership is just converted from cash into product. When the 1000 dollars are earned, instead of you getting 10 dollars from your 1% ownership, the company holds those 10 dollars, and your stock raise in value by 10 dollars. Then what is dividend? Great question. Dividends are simply put cash that the company give back to its shareholders in the weird fractional way described above. A growing company needs its cash to finance its growth, and usually doesn't give a divided. They need the money to buy buildings, hire people, buy machines, buy product, everything. A non growing company however usually make more money than they need to run their business, and the cash starts piling up year after year. It can't profitably buy more things because their market is saturated, and it would give a shitty return to investment. So what do they do? If the overflow of capital would risk give a negative return on capital, they might as well give the capital out, securing a 0% return on overflowing capital. Technically a company could simply acquire another company or buy stocks. However this is all included in attempting in creating growth, and most companies aren't Intrested in acquiring random companies (Birkshire Hathaway is the great exception, where the company employs capital in many businesses, and becoming a form of holding conglomerate) There is a third scenario for the company to employ unemployable cash is to do stock buybacks. Buybacks are done when the company stock value is believed to grow, creating growth that way. It's a company investing it itself. If done while the company is overvalued it's a horrible investment, and if done when the company is fair or undervalued its a great investment. If our company has 100 shares of a dollar each buys back 50 shares, it becomes a company with 50 shares, each worth 2 dollars. The action itself means nothing, it only means that if the company intrinsic value raises, the owners (you) is rewarded. So, do you want dividends? Well, it depends like most things. A company that gives dividends from earnings is a company that has realized it can't use its capital to grow. Note that a dividend company doesn't return more or less value to each shareholder. It's exactly equal, each Share gains the earnings per share each year. You do not get more cash from a dividend than a company without a dividend, the capital is simply allocated differently. There are also risks. If a company gives out a dividend while not earning enough, they have to pay the dividend in another way, usually though debt or stop giving a dividend. Also worth noting is that dividends are taxed when you get them, which severely hurts compound interest gains from the companys earnings. This means that if a company gives out a dividend, they shrink in book & intrinsic value equal to the dividend given away at that time. Ending A short finish. There is nothing intrinsically good about dividends. You get the money either way, either through dividends or appriciation of company value, which in line should appricate your share value. So TLDR it doesn't matter. Dividend giving stocks tend to be companies that is more matured, unable to grow but is still generating real cash flow. This in some cases makes the company stable. A great example of this is Tele providers. They can't grow, but generate tons of cash, giving large amount to its owners. In the opposite, a company that uses its earnings for growth still give its shareholders it's earnings, except they convert the cash into whatever the company needs to grow. A great example of these are any tech startups, or growth companies generally. There is no intrinsical difference. You still get the money. [link] [comments]  |
| Tech stocks revenue growth, year-over-year Posted: 08 May 2018 01:17 PM PDT Graph of this issue: https://pbs.twimg.com/media/Dcnh5ADXkAAwwm4.jpg Revenue Growth, year-over-year... $FB: +49% $AMZN: +43% $NFLX: +40% $GOOGL: +26% $MSFT: +16% $AAPL: +16% S&P 500: +9.5% Big technology stocks have soared in recent years as their rapid earnings and revenue growth made them must-have holdings in many investors' portfolios. Now, a new engine is likely to drive tech profits and stock prices in the coming years: ongoing streams of revenues from customer subscriptions, The Wall Street Journal reports. Software was the first area within the tech sector to change its preferred pricing model from one-time sales to recurring annual fees, the Journal notes. Today, the subscription pricing model has become pervasive throughout the sector, and companies that have embraced it include Apple Inc. Do you think these trends will continue in the future? [link] [comments]  |
| Posted: 08 May 2018 07:18 AM PDT NEW YORK (AP) — Valeant Pharmaceuticals, which fell under withering scrutiny after acquiring the rights to drugs and then drastically raising their prices, is changing its name. The Canadian company said Tuesday that it will be called Bausch Health Companies Inc. starting in July. CEO Joseph Papa said in a prepared statement that the name change is "a major step forward" in the company's transformation. Valeant Pharmaceuticals International Inc. fell into the crosshairs of Washington a couple years ago after an extended acquisition spree of other companies, followed by triple-digit price hikes on critical heart drugs and other medicines. Its spate of acquisitions and soaring revenue propelled its stock through the roof, but it ran up a staggering $30 billion in debt — roughly three times its annual revenue. [link] [comments]  |
| Posted: 08 May 2018 09:37 AM PDT CVS is almost at 52Wk low. Is it a good buy now for long term play? [link] [comments]  |
| What is with small cap straddles? Posted: 08 May 2018 12:57 PM PDT Alright I've been watching stocks for close to a year (still newish), but is this honestly normal? Is this just an extreme bear market? I can name a dozen stocks that have a 0.01-0.03 straddle of thousands of stock. I have never seen anything like this before. $RIGL $TOPS $DARE $EVLV $SEII $AKER etc etc Heck they even have $FCRE in there and the likes. It's just so many stocks all at the same time. Also with these walls I've seen $DARE trade 100,000 shares in under a couple seconds and the wall went right back up a few cents higher [link] [comments]  |
| Posted: 08 May 2018 08:49 AM PDT Should I invest in multiple index funds, or just focus on one? [link] [comments]  |
| Study: does the year-over-year change in corporate earnings lead the stock market? Posted: 08 May 2018 01:30 AM PDT Findings from the study:
There is no consistent leading/lagging correlation. Sometimes earnings growth leads the stock market. Sometimes it lags. Moreover, sometimes the stock market continues to go up when earnings growth becomes negative. [link] [comments]  |
| What do you think trump will say in relation to the Iran deal tomorrow? Posted: 07 May 2018 10:08 PM PDT Just asking for all of your opinions about what trump will do and what effect this will have on the oil markets. [link] [comments]  |
| Article: 3 Biotech Stocks That Are Trending This Week Posted: 08 May 2018 09:47 AM PDT Article includes YTEN, EBIO, and others https://medium.com/stock-market-source/3-biotech-stocks-that-are-trending-this-week-294df995a25 [link] [comments]  |
| Posted: 07 May 2018 09:26 PM PDT Sorry for the newbie questions. I'm learning how to understand stock financial information in relation to the stock prices. Is this method reliable below? What happens if the EPS is negative? Using P-E Expansion Formula to set price targets. https://www.investors.com/how-to-invest/investors-corner/pe-expansion-can-help-set-a-price-target/ [link] [comments]  |
| Posted: 07 May 2018 10:11 PM PDT I have studied trading .. won more than lost .. worked my day job and made a nice nest egg over the last 3 years. I have reached a point with futures and equity trading where I am profitable 4 days out of 5. I have made some money in my day/swing trades but not a lot due to poor risk management .. let losers run too far. This is my hurdle and anonymous accountability can only help. I'm considering posting trades here to keep myself real. I need to develop better risk management. I need to control the greed, the fear, and the hope. [link] [comments]  |
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