Daily Advice Thread - All basic help or advice questions must be posted here. Investing |
- Daily Advice Thread - All basic help or advice questions must be posted here.
- Reasons We May Not Be in a Bubble
- Pricing everything as if they are the next AMZN (TSLA story)
- Lessons From The Tech Bubble - (Courtesy of @corry_wang)
- Has anyone else been following the bitcoin run the past 24hr? What the hell is going on
- Tesla Delivers 499,550 Vehicles in 2020, Just Shy of Target
- I'll provide Technical Analysis If You Provide the Ticker
- Question about tax on intra-year gains and losses
- How do you discount future earnings in times of zero interest rates?
- Why don't people talk more/invest in foreign/international stocks?
- Thinking of upgrading my brokerage from Robinhood and Sofi Invest to a more official account
- North American Mega Cap Company HQs by Geographic Distribution and Market Cap Growth 2020-2021
- So, what speculative investments are you guys favoring right now as we move into 2021?
- 10 Investment/Trading Ideas by UBS Analysts - Part 1!
- Rate My portfolio!
- 1st year investing in stock. What do you think of this portfolio?
- Globally diverse etf's
- Fluor a possible Turnaround with Growth Potential
- How much does a digital marketing career help an investment future?
- Selling puts on US stocks, without having to own USD
- Who is buying and selling stocks
- What is stopping entrepreneurs?
- Can't find stock on Yahhoo Finance
- How would you invest if you knew that food and water shortages are likely to happen in the near future?
- Should I invest my life savings into Bitcoin?
| Daily Advice Thread - All basic help or advice questions must be posted here. Posted: 03 Jan 2021 02:00 AM PST If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions, you should include relevant information, such as the following:
Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq And our side bar also has useful resources. Be aware that these answers are just opinions of Redditors and should be used as a starting point for your research. You should strongly consider seeing a registered financial rep before making any financial decisions! [link] [comments]  |
| Reasons We May Not Be in a Bubble Posted: 02 Jan 2021 09:19 PM PST I'm seeing a lot of posts comparing this to the 2000 dot-com bubble. Here's a breakdown of why we're likely not anywhere close to 2000 levels of craziness. First: During the dot-com era, the Nasdaq Composite's price-to-earnings valuation ran up as high as 200. By comparison, the index's P/E today is a relatively tame 28, only modestly higher from 23 at the end of 2019. Second: Interest rates were a very attractive 6% which provided a strong alternative to stocks. No such outlet exists today unless you trust bitcoin, or want to invest in paper gold. Third: Much of the value gains we're seeing in the market can be tied directly to the fact that people who invest are making similar or better money this year, and spending significantly less causing them to save more and invest more: https://www.nytimes.com/2021/01/01/upshot/why-markets-boomed-2020.html Fourth: The rest of the growth can largely be attributed to increased liquidity from all of the money printing. Stocks tend to mirror an increase in the money supply with their value making them a great hedge against inflation. The valuations of the 2000s weren't backstopped by QE or increased savings, making them much shakier. Fifth: The money printing will likely go on for a while. People mistakenly assume we're printing against our 22T dollar economy when we're really printing against the 80-100T global economy for which are the reserve currency. A weak dollar benefits the global economy, and benefits us because we are the trading floor for the global economy. This is a long but very illuminating read on why QE is necessary and actually helpful: https://www.lynalden.com/fraying-petrodollar-system/ My Take: There are a few stocks that are out of control with their valuations (Hi TSLA!), and a few sectors that are overvalued, but overall the market looks to be on sturdy ground with the increased savings, and the increased liquidity. There will be peaks and valleys, but I think there's a lot of room to grow, especially once the vaccine is widespread. [link] [comments]  |
| Pricing everything as if they are the next AMZN (TSLA story) Posted: 02 Jan 2021 06:44 AM PST One of the things that amazes me currently in this market is that, it feels like we are trying to justify every new coming hot tech/growth company as if they are the next AMZN in their field. I think one of the delusions people are having lately is that they look at what people projected for AMZN 5-10-15 years ago and compare that to what actually happened. While it is true that AMZN exceeded any sort of expectation by a huge margin (and did this consistently, year over year) it feels to me that we are taking perhaps one of the most unique success stories ever and then extrapolate that to others, thinking that as if those sort of growth and expectations are in fact more common and easy to achieve than not, regardless of the industry the subject company is operating in. I could discuss this for a number of stocks, I wanted to open discussion for TSLA. As we all know, TSLA stock went up almost 8 fold in the last year. Today, it is common occurrence in the market that analysts are justifying these price levels and state why TSLA is just more than a car company. This argument obviously has its own merits, but aren't we little ahead ourselves and already attribute from today, all those things that could potentially be achieved and bake it into the price? If we went back in in time, we could probably say AMZN was more than just a book company, but could we really say that they would have almost monopolistic power in most of the areas they operated in? Could we really say back in 2008 that AMZN would emerge the market leader in something like for instance Cloud? Or, did these things happen and then we realized how great AMZN became, after the fact. It feels like this was much easier to do in hindsight. But what if AMZN is truly that one outlier, anomaly, in the history of stock markets in terms of sustained growth and market power? Isn't this what we are trying to do with TSLA here? I do think Elon is one of the greatest minds of our time and can achieve far beyond any other has achieved so I am not comparing Bezos or any other with Elon here. But what I am trying to say is that, just thinking TSLA as a company, aren't we already saying today that they already have monopolistic power in EV cars, autonomous driving, solar-energy trade, underground tunnels, robotaxis, etc. - you name it, as if they are already there and waiting to be switched on? It's as if we have already attributed everything we could imagine could happen and already announced TSLA as the winner. Now this is the theory side of things. How about financial side of things? I don't want to approach this from a car sales point of view, but I will make certain comments. But what if we applied AMZN's growth trajectory into TSLA, without focusing too much on car sales, and just see what growth and valuation that would lead us? If TSLA is just more than a car company, what other example could serve best in terms of growth, thinking from an array of products and technological advantage perspective? So I did a quick and dirty DCF calculation. In there, my starting point is the first year when AMZN hit $24 billion in revenue, which is 2009. TSLA achieved it's $24 billion in 2019, so from there onwards I am applying AMZN's growth trajectory for the following 10-11 years. Then, growth is gradually reduced in going into the terminal year. What this means is TSLA will be roughly $900 billion revenue generating company by year 20 (2040). From a car sales perspective, I can't really project how many cars it could sell in 20 years, but lets say it is 10 million cars. (I think GS said 15 million). Toyota in 2019 sold around this number I believe so with all the competition that will happen in this space, I think this is by no means and under-estimation. In 2019, TSLA sold roughly 367,500 cars and for a total revenue of $19.2 billion (excluding regulatory credits). On average this equates to $52k per car. In 20 years, car prices will be higher than what they are today obviously, but there will be competition and economies of scale to bring the price down. This one is hard to assume but let's say it grows 1.0% - 1.5% per year with long term inflation, again not necessarily higher because of these offsetting factors. If they do indeed sell 10+ million cars, this is roughly $600-650 billion from cars. This leaves you with another $200-250 billion or so for other things, whatever you want to attribute this for - AI, robotaxies, insurance, and so on. Now this figure is a future value, so from today's perspective (using a discount rate of 8% used in my DCF below) that's roughly $60 billion (revenue). This is again a huge number, as it is almost another Facebook, 2x Coca-Cola etc., or half of GM/Toyota type business from revenue generating capability, again, from today's perspective - none of which has already happened. Once again I want to point out that my revenue projections are not driven by bottoms-up car sales, rather, I am using simply AMZN trajectory in terms of growth, then try to attribute the resulting final revenue figure into parts, obviously majority being from car sales, and the rest from whatever you can think of. (Simply because we don't know what AI/Robos/Insurance/Transportation businesses can generate from revenue/profitability/market share perspective and more importantly what the competition in those areas can be). If you think TSLA can grow even more than AMZN, then I just want to remind you that you won't easily justify 40-50% revenue growth rates once you're in the 50+ billion zone, which is the point of the argument. AMZN, still achieved those growth rates when it had 100+ or 200+ billion, which is what we are already assuming here. So in the stock price we have baked in, from a revenue perspective, a car business that will sell at least 10+ million cars (this number can obviously be higher but even 10 million will be big market share), and other businesses that are worth, today, more than most companies you can think of. Now this is the growth side of things. How about margins? We know TSLA generated a last twelve months EBITDA margin of 14% as of Q3 2020. While margins from car manufacturing is certainly improving, most of this margin is actually attributed to sales of regulatory credits, which are by definition almost 100% profit. And so in reality, the margins are much lower, maybe around low single digits between 1-5%. Now this is important because even with all this revenue growth (and if you disagree with me and think it will even be higher), you still need to achieve big margins on your business. I mean really really good margins, we are talking about 15-25% each year. Interestingly, AMZN, while growing its top line crazily over the years and becoming a behemoth as it is today, always lacked in terms of their margins. That goes without saying they are a tech company that typically exhibit great returns on capital. So the point is they had to sacrifice their margins to be able to achieve this growth and this is an important point. In my DCF, I am extremely generous. I kept TSLA's EBITDA margins at 15% for the next 3 years, bumped to 17.5%, 20.0%, then to finally 25.0% every 3 years in going forward. Once again these regulatory credits will not be there forever so those margins are extremely optimistic at this point. They might indeed achieve 25% margins in 10 years or so but it won't be this smooth. With these two major factors, other items in the DCF are not super important. The discount rate is 8.0%, which I believe is reasonable, NWC and Capex assumptions are in line with what they are today and I don't think they would necessarily go down (if not go up). I just want to mention that you may completely disagree with some of the assumptions I outlined above. The point however is no matter what sort of DCF you come up with, you will end up either with lower or slight higher value for TSLA, using very, very aggressive assumptions for 10+ years. So the point and question is around the margin of safety here. It seems I can't directly post pictures so here is the link for the DCF: You might wonder, well your price is even higher than what it is today so why did you write this. Once again my whole point in the argument was that the margin of error in TSLA's stock price right now is non-existent, because we've already treated it the next AMZN, gave the best margins possible, attributed big bucks on its other stuff. I think my DCF is still in the unreasonable side, but I wanted to point this out that even a slight change in trajectory would mean a totally different path and stock price for TSLA. So the question is, are we ahead of ourselves with TSLA? This could also apply to others as well, this so called growth companies. It is as if we are pricing everything today and think that they have already achieved incredible market share in everything they touched and it's only a matter of time that these revenue/profits are realized. Are we taking one anomaly and applying this rationale for every other great company under the name of "it's tech"? Elon is great and TSLA will be great. But the business model may not just allow them to be the next AMZN, regardless of technology or improvement. One final comment I will make is related to autonomous driving and data TSLA is collecting. While it is for certain that this data gives TSLA an incredible power in developing this technology, I see couple of issues with this as it relates to future of this thing. Companies such as Facebook are big not because of their software, but because of the network effects they exhibit. And because of those network effects they become larger and larger and are able to collect more data, which creates an incredibly profitable cycle for them as they can monetize that data right away. Data for TSLA here only matters in developing that technology. Monetization however, is another story. What I am not entirely sure with all this AI story is that if it needs to continuously get updated for use, then how do regulators/companies determine the older version was safe to use to begin with. What I understand is that AI is something that needs to get constantly updated based on data, challenge here is that you are carrying people's lives here (as opposed to targeting ads) so there needs to be an infliction point where the full autonomous driving AI software should be at a point where it is certainly 100% safe to use. Because if it is not, then the technology fails until it reaches to that point. If it does reach out to that point, then how difficult is it going to be for others to get to that point or use similar technology if what you need is to get from point A to B safely. Besides there is the price factor in as well. Let's say TSLA is the only one who can do this. If autonomous driving is too expensive, then how much will people pay for it? Say if the car is 50k and you have to pay extra 50k on top of that - would you do this? Would this have a cannibalization effect? Or if it is monthly subscription fees, would you go on to pay this forever? How significant will the cost be in 20 years from now when others presumably also start providing some sort of service. On the other hand, if it is not expensive and only a fraction of the car price, then how are you going to achieve these growth levels with that data and technology to begin with. It is one thing to have a great technology, another to monetize it. They might license it for sure, but then you lose all that power right away. So the question then becomes, will it be a niche product or commodity at the end of the day - either of which will not allow you to have incredible returns. What are your thoughts? [link] [comments]  |
| Lessons From The Tech Bubble - (Courtesy of @corry_wang) Posted: 02 Jan 2021 11:38 AM PST I came across this thread on twitter and thought it was a fantastic view on a lot of things from the 90's dotcom bubble. For reference, please refer to the Twitter thread here which has some fantastic notes and charts that I did not paste into the transcript below. Since there have been so many comparisons recently discussing tech froth, I think this is a wonderful share, especially for the majority of people here who were not investors during that time period. Definitely sheds a lot of light on some popular market cliches that misconstrue that period (IE, "you can only recognize a bubble in hindsight"). I do not know or follow this person, but still thought this was worth sharing as I came across it. Lessons: Lessons From The Tech Bubble: Last year, I spent my winter holiday reading hundreds of pages of equity research from the 1999/2000 era, to try to understand what it was like investing during the bubble A few people recently asked me for my takeaways. Here they are - Every document hereon comes from my former employer Bernstein Research's internal research archive, which extend back to 1994 Unfortunately, they're not available to the public (even Bernstein's client website cuts off at 2003), but happy to give more details if necessary (see twitter thread for graphic documents). LESSON #1: Everybody knew it was a bubble Unfortunately, the quip "it's not a bubble if everyone says it is" just isn't true Investors were comparing the internet sector to tulip mania as early as mid-98. Bernstein held an entire conference on it in June 99! LESSON #2: Calling bubbles is easy, making money is hard In truth, the hard part about the tech bubble wasn't noticing it. The hard part was timing it Our equity strategist tried in January 99... he was off by 14 months (and another 30 point gap in value vs growth) LESSON #3: Nobody knew the bubble popped until months after it did Nobody noticed in March 2000 when it finally popped. Our equity strategist (who bet his career on it!) didn't catch on until June LESSON #4: "Tech" bubble was a misnomer... it was really a large cap growth bubble See the valuation table below, 1 year before the top Yes, Microsoft traded at 70x earnings. But Coca Cola was 43x. Pfizer was 92x. Every stock here was a disaster over the next 10 years... LESSON #5: Most large cap tech stocks in the bubble had real businesses with strong fundamentals The internet stocks were a sideshow. In 2000, the software sector had a $1 trillion market cap, 20% net margins, 20% annual growth The problem? It was trading at 16x sales LESSON #6: Fundamentals follow price, not vice versa The bubble popped in Q1 2000. Fundamentals didn't decelerate until Q4 2000. It was reflexivity at work. Lower stock prices = less capex spend = less revenue growth = lower stock prices. A vicious cycle What's the takeaway here? Be humble. For bears, it's easy to call a bubble. Anybody can do that. Timing is the hard part For bulls, it's easy to point to the fundamentals. Historical investors weren't dumb. The hard part is matching fundamentals with price... [link] [comments]  |
| Has anyone else been following the bitcoin run the past 24hr? What the hell is going on Posted: 02 Jan 2021 11:46 PM PST Starting yesterday morning bitcoin went from 29k to 33k in like 2 hrs, it then instantly crashed to 30k and has gone on an absolute tear ever since. Non stop bull rally with insane amounts of money acquiring. It now sits just under 34750 as of this post. Whatever is driving this run, it seems institutionally funded. I've never been a big crypto market player but making +18% on a closed market is too juicy to pass up. [link] [comments]  |
| Tesla Delivers 499,550 Vehicles in 2020, Just Shy of Target Posted: 02 Jan 2021 08:44 AM PST As the title and the article says - Tesla delivered ~180k cars in q4 and were just shy of 500k delivered cars for 2020. Without exerting my bias, I'm wondering how you guys are interpreting this? [link] [comments]  |
| I'll provide Technical Analysis If You Provide the Ticker Posted: 03 Jan 2021 02:31 AM PST Hey all. With 2 short trading weeks back-to-back, I find myself with too much time on my hands waiting for monday so if you have a ticker you would like a quick and recorded technical analysis of long-term and short-term trend then feel free to inbox me. Always trying to help however I can. This is the year of the Retail Trader! Edit: I plan to do the Analysis in sets of 2 starting with the most commonly asked for tickers first. Will have all analysis and videos done within the next few hours but feel free to provide more tickers. [link] [comments]  |
| Question about tax on intra-year gains and losses Posted: 02 Jan 2021 06:39 PM PST So let's say there's a scenario like this: +At the start of 2020 I decided to buy a $500 options on Tesla. +Tesla stock performed really well and by the end of 2020 say I had like a $1mil profit. +I got spooked by the bubble and realized my $1mil profit before 2020 ends. +2021 comes around and I use my 1 mil money to invest in the next big company. +Turns out it's Nikola and my $1mil evaporates into like $100 overnight. So the way I understand how tax works is that I still have to pay around $420k of tax in 2021 for my gain in 2020. Even if I sell my Nikola stock then the loss wouldn't be counted in until 2022. Is this correct? If so, it sounds like I'm screwed if I just have average income that in no way allow me to afford $420k. Is there anything I can do if I get caught in this kind of situation? Of course, I know the sensible thing to do is prolly set aside $420k before continuing to invest. But I'm just presenting a scenario to know how to account tax into my investing strategy. Thank you. EDIT: Thank you all for answering my question. I'm not actually $420k deep in debt or anything but I feel like this might be a possible trap that new investors (me being one) might get caught in. I was one of the idiots guilty of having thought 'The worst I can lose is my initial capital' before tax matters came into my mind. Still, is there anything you can do if you're ever caught in such a situation? Like requesting to postpone your tax return filing until 2022 so you can count the loss in or something? Or do you just have to sell off your kidney at this point? EDIT2: danp60 raised a really good point. The US tax system is actually a pay-as-you-go system (you pay on the same year you receive your income). I never thought of it like that, but it actually makes sense when I think about the tax withholding on my paychecks. The reason people usually don't get underpayment penalty is because they owe less than $1000 or 10% of their total liability when they do tax return. So if I profited $1mil in 2020 then I should've paid the tax for that profit before 2020 ended, not wait until after I've filed my tax return on 2021. The video in this link explains it pretty well https://www.youtube.com/watch?v=wZgYGviKHq0 Learning some pretty important hidden (for me) corners in investing through this thread. [link] [comments]  |
| How do you discount future earnings in times of zero interest rates? Posted: 03 Jan 2021 01:02 AM PST Say you expect a company to make $100B dollars over the next 20 years. What is the value of that? One might say it is $100B because interest rates are 0. Not discounting future earnings would make companies extremely valuable. Usually, high P/E ratios are reserved for growth companies. But without discounting, even a company that does not grow at all would be well worth a P/E ratio of 1000. It just has to keep going for 100 years. What do you guys think? [link] [comments]  |
| Why don't people talk more/invest in foreign/international stocks? Posted: 03 Jan 2021 02:22 AM PST Why don't people talk more about foreign/international stocks? Like China and succh? What is the reason that people only focus on North American stocks? Is there any valid reason, or is it because it is "out of our interest"? If one were to purchase foreign based ETFs, would it be more costly to buy US ETFs on Far East indexes, or invest directly in Far East ETFs? [link] [comments]  |
| Thinking of upgrading my brokerage from Robinhood and Sofi Invest to a more official account Posted: 02 Jan 2021 06:47 PM PST I have been investing into these accounts for a couple of years and I have heard about other accounts but I was hoping to get some suggestions on which one would be worth opening an account with. What I have liked about Robinhood has been able to invest a daily $1 with ease, unlike Sofi Invest I have had to manual set a buy order for each day I want the automated transaction to occur. What I like about Sofi Invest I have been able to invest under $1 or 25 cents into some stocks, but I dont expect to be doing that. Should I just consolidate on both of these apps? Or could I have benefits from making the switch? [link] [comments]  |
| North American Mega Cap Company HQs by Geographic Distribution and Market Cap Growth 2020-2021 Posted: 02 Jan 2021 11:18 PM PST With 2020 over, I decided to look at the regional geographic distribution of North America's "mega" cap corporations ($50b+ market capitalization) by headquarters. Here's the graphic I made laying that out: https://i.imgur.com/6vVxFCh.jpg North America has 152 mega cap companies, 145 in the United States and 7 in Canada. Mexico has 2 companies right on the cusp (Walmex at $49b and America Movil at $49b), but misses the cusp. Maybe next year. These 152 companies have a market cap of $27.06 trillion. 97.7% is in the USA. 2.3% is in Canada. To be clear, these companies are grouped based on the location of their headquarters, aka where high-level executive decisions are made (where CEO/President/Chairman/Board/executive management generally resides). Of course, these companies have multinational operations and their workforce is spread throughout. Some thoughts:
Any other thoughts? [link] [comments]  |
| So, what speculative investments are you guys favoring right now as we move into 2021? Posted: 02 Jan 2021 12:27 PM PST Most of my investments are in Vanguard index funds (praise be to the VTSAX), but I'm thinking about dipping my toes into some riskier ventures, be they stocks, ETFs, crypto, or whatever! Couldn't hurt, right? I'm young with no debt, no kids, no major expenses. Might as well try to make some dosh, yeah? So, what do you guys have planned? Any big moves you plan on making in 2021 compared to last year? [link] [comments]  |
| 10 Investment/Trading Ideas by UBS Analysts - Part 1! Posted: 03 Jan 2021 03:57 AM PST *Long post warning* 1. Long US Small cap over US Large Cap The significant underperformance of the Russell 2000 vs the S&P 500 since mid2018, and really since early 2014, has left investors wary about reallocating to small caps. We see a number of reasons to favour small over large:
Tl;dr:
2. Long US Health Care over US Staples
Tl;dr:
3. Long UK & Germany over Spain & Italy
Tl;dr:
4. Long Korea over China
Tl;dr:
5. Long Europe reopening basket over North Asia reopening basket
Tl;dr:
All information contained within this post can be found here: https://drive.google.com/file/d/1J2dQUNt3HoM5CONFSgNljFjyFgI7zXTX/view?usp=sharing Always do your own research! NathMcLovin [link] [comments]  |
| Posted: 03 Jan 2021 03:45 AM PST Hi, I'm looking to invest my money in stocks (never done this before). I'm only 23 so I can take on some level of risk in the hope of higher returns, though I do have a limit. I'm investing for the long term, as I do not have immediate use for my money. How much growth potential does my portfolio have over the next 10 years? How much over the next 3 years? Also, how risky do you think it is? Thank you! 33% Apple 25% ArkK 13% Vanguard VGHCX (Healthcare) 8% ArkG 6% Disney 5% Berkshire Hathaway 3% Vanguard VOO (S&P 500) 3% Invesco QQQ (NASDAQ) 3% Vanguard VUG (growth ETF) 1% Nintendo NTDOY 1% Vanguard VO (mid-cap ETF) [link] [comments]  |
| 1st year investing in stock. What do you think of this portfolio? Posted: 03 Jan 2021 02:46 AM PST Hey guys, I just started investing on stocks. I passed the following orders, and they should be executed tomorrow. What do you think ? ETF World - 32% ETF Emerging Market - 8% ETF SP 500 - 10% Amundi - 2% Unity Software - 5% Tesla - 6% CD Projekt - 5% Playway - 6% AMD - 5% Nvidia - 6% Disney - 4% Sony - 5% I am thinking about adding Cloudflare / Amazon as well. What do you think ? Thank you! [link] [comments]  |
| Posted: 03 Jan 2021 12:40 AM PST Hi, just doing some ongoing research and was wondering if anyone could give some suggestions. I'm looking for a few best picks on ETFs that's are global (including a small amount of EM) something similar to the Vanguard Global All Cap, but must be an ETF. TIA [link] [comments]  |
| Fluor a possible Turnaround with Growth Potential Posted: 02 Jan 2021 10:00 PM PST Hi guys I originally posted this to r/wallstreetbets but I thought you would appreciate it to so here it is *****Please note I own stock in this Company this is not investment advice its just a research dump invest carefully!**** Overview Fluor is a Fortune 500 Engineering, Procurement and Construction (EPC) company headquartered in Irving Texas. Fluor corporation has approximately 45,000 employees worldwide. The company operates in 6 segments, Energy and Chemicals, Mining and Industrial, Infrastructure and Power, Diversified Services, and Other with one additional segment being reported as discontinued operations. Fundamental Problems Fluor has multitude of issues that have threatened the very survival of the company. These issues have caused the market cap to crater from 8 Billion in 2018 to 2.25 Billion. The most critical problems are summarized below. This is by no means a complete list. For the sake of length, I have omitted some of the less critical issues. We must also note that there may also be other problems lurking as well.
Liquidity Fluor has $2 Billion in cash, $5 Billion in current assets and $7.2 Billion in total assets. This compares to $3.5 Billion of current liabilities with total liabilities of $6.0 Billion. I believe due to Fluor's strong cash position they have ample liquidity to meet all their near-term obligations. Furthermore, while substantial I believe their debt is within reasonable ranges. Fluor is selling an equipment rental business to allow them to "Modestly" reduce their leverage and raise more cash, further improving liquidity. How Fluor Is Addressing Their Problems While Fluor's issues are critical, I believe that management is successfully addressing these problems. Fluor's improper contract negotiation stems primarily from their Lump Sum contracts. Essentially this mean that Fluor gets paid in a lump sum at the project completion. This is problematic because it means Fluor must wait until completion of the project before being paid. Additionally, any cost overrun or delay is completely absorbed by Fluor. In order to prevent anymore loss contracts from entering their backlog Fluor has stopped negotiating lump sum contracts opting for more traditional contract negotiation approach and thus protecting the future backlog from more loss contracts. Despite a net loss of 1.5 Billion, Fluor has generated operating cash flow of $219 Million with Free Cash Flow of $38 Million. This operating cash flow will continue to give Fluor a buffer to complete their loss projects while even increasing their cash balance. As Fluor finishes these projects their operating cash flow and free cash flow will continue to climb higher. The weakness in revenue for Energy and Chemicals should also begin to slow as some EPC work for regular Maintenance is necessary to maintain oil and gas infrastructure. Furthermore, if emission standards become stricter this could spur demand as refineries increase CAPEX to upgrade their facilities. Finally, I expect the chemicals portion of this business to continue to drive adequate performance as we do not have any viable alternatives to Petro-Chemicals yet. On the accounting side Fluor has unfortunately discovered that there were problems with their Internal Financial Controls and revenue recognition. These issues have been corrected but I think it is safe to assume that Fluor has significant liability with potential SEC & DOJ lawsuits. However, despite this I believe the lawsuits, while expensive, likely will take years to resolve and considering Fluor's strong cash position they will most likely will be able to pay the fine. Impact of Reasonable Adverse Development's on Fluor's business In order to establish Safety of principal we must consider a few possible adverse conditions that can arise and the impact on Fluor's business.
Major Growth Opportunities These ideas below are the most exciting and compelling reason to look at investing in Fluor. Fluor's Mining & Industrial segment constructs & maintains mines globally. As demand for precious metals increase due to a transition away from fossil fuels, precious metals for batteries could take the place of Oil. This includes lithium, nickel and cobalt Fluor has prior experience with these materials. Mining already comprises about 35% of their revenue and has been profitable and a major pillar of stability in Fluor's business. (Although Covid has Delayed some new contract awards in this segment) Fluor's Energy & Chemicals Business has built off shore wind farms, carbon capture, bio-fuels and hydrogen infrastructure. All infrastructure currently being looked at to mitigate or solve the climate change crisis. This area will be competitive but Fluor does have its own IP it can bring to the table and compete with. If there is a major jump in demand in the coming years Fluor is certainly capable of winning some construction work in these areas. Some other miscellaneous things Fluor engages in is nuclear decommissioning, managing the U.S strategic oil reserve, Building automobile & Pharmaceutical factories and Data center construction. And then there is the crown jewel NuScale, a company planning on building the First small modular nuclear reactor (SMR) in the United States. Fluor is the Majority investor in NuScale and is the exclusive EPC contractor for NuScale. Recently the U.S Nuclear Regulatory Commission certified NuScale's one-of-a-kind design. The U.S Department of Energy has also awarded NuScale's first customer $1.3 Billion in cost sharing to build the first reactor Idaho. Interestingly the United States International Development Finance Corp also lifted a ban for the financing of nuclear projects and has also signed a letter of intent to support NuScale. This will likely be a $1 Billion dollar loan South Africa in order to build a NuScale SMR . There are many other interested parties both inside and outside the U.S including Canada, Romania and the Czech Republic. The applications of this technology are wide ranging. Electricity production is a primary use, however other uses include desalination for clean drinking water and using the excess heat produced by the reactor to create cheap carbon free hydrogen. Basis for Investment In the near term I believe Fluor can successfully complete a turnaround restoring most of their business segments back to reasonable profitability. In 2017 Fluor generated 318 Million in Free Cash Flow. Assuming Fluor completes their restructuring and finishes the loss contracts I see no reason why Fluor cannot return to at least 250 million in annual free cash flow. This FCF is 11% of Fluor's Total market cap and by itself presents a very attractive return for an investor. Simultaneously Fluor's should be able to shift their construction focus away from oil and gas to new areas that are growing increasingly important. The low barriers to entry are both a blessing and curse in this regard. That brings me to NuScale which oddly seems as though it's being adopted by the U.S government as some strange foreign policy play. While it remains a longshot in my view the combination of the DOE grant and the potential DFC loan is 2.3 billion a big positive. This is equivalent to the entire market cap of Fluor and shows the scale of the opportunity. Furthermore, Fluor currently has no competitors in this market so margins should be significantly higher. I believe Fluor will complete a successful turnaround likely bringing the stock back to 4 Billion and restoring the dividend. In the Long-term the company could even hit new all-time highs however I'm not entirely confident on putting an exact figure on that just yet. TLDR: Fluor is struggling construction company, but I think the company can pull off a successful turnaround. That coupled with expanding their existing non-oil revenue and the NuScale wild card could send the stock from $16 to at least $30 and possibly beyond $80 (its all time high) since its a very compelling growth story. Also sorry if there's a lot of awkward phrasing or poor grammar I have a learning disability lol. (actually though) Sources: Fluor 10K used for Net losses and Cash Flow Fluor 10q used for Balance Sheet Items https://investor.fluor.com/static-files/db1fbb61-9cd7-4958-b5a5-f888d4bd6bba NuScale-UAMPS DOE award https://www.utilitydive.com/news/doe-approves-up-to-14b-to-test-12-module-nuscale-reactor/587265/ NuScale DFC letter of intent Fluor Contracts https://www.fluor.com/about-fluor/corporate-information/expertise Fluor Lump sum work https://www.energyvoice.com/oilandgas/americas/267715/fluor-lump-sum-risk/ Fluor asset sales [link] [comments]  |
| How much does a digital marketing career help an investment future? Posted: 03 Jan 2021 03:51 AM PST I am thinking about going to study digital marketing at university and making investments as a side hustle, until/if I choose to let investments be my main occupation, wondering about the compatibility of the two. Also, is Forex a good starting block to investing for a uni student? [link] [comments]  |
| Selling puts on US stocks, without having to own USD Posted: 03 Jan 2021 02:26 AM PST I am selling cash secured puts / covered calls. Most of the time my cash is just sitting on the account, which I would highly prefer to have in my home currency instead of USD, because I expect USD to weaken. Since I have a cash account (Interactive Brokers) I am not able to sell puts without having the funds in USD.Will I be able to sell naked puts after upgrading to margin account (with my cash in my home currency as collateral)?In case of incoming assignment should I convert my cash to USD, or will Interactive Brokers just borrow me money to buy the stock (I will always have enough money in my home currency, which I can just exchange to USD, I am not planning to leverage, at least for now). If I understand correctly, the downside of borrowing money from IBKR is the interest rate (which I am willing to pay), but also the fact that If I borrow the exact same amount that I own in my home currency (lets assume 25K USD), and buy the stock with borrowed money, if the stock falls 30% I might not meet margin requirements (even though I have the cash sitting in another currency). In this case, will I have time to just convert the cash to USD to reduce the loan? And on the other hand I can just convert my cash to USD before the assignment happen, to reduce the amount of USD I have to borrow from IBKR, but this will expose me to currency risk. Is my understanding correct? Can anyone who has the same problem, or just sell naked puts, could describe how will the assignment look like exactly? [link] [comments]  |
| Who is buying and selling stocks Posted: 02 Jan 2021 06:48 AM PST Market participants can notice a dangerous trend over the past 2 months. The riskier an asset is and the less intrinsic value it has, the better the asset has performed since November. Moreover, this "wall of money" is not infinite, and is flowing into assets with smaller market caps. 1) Bitcoin 2) IPOs 3) Russell 2000 4) NASDAQ 100 5) Emerging Market Equities 6) S&P 500 What times we live in.... *(Source: Troy Bombardia from bullmarkets.co) [link] [comments]  |
| What is stopping entrepreneurs? Posted: 03 Jan 2021 02:03 AM PST Hi, everyone! Let's make this year our year! Recently I was looking at my business and was trying to figure out what is that one thing I need to do to make more money in the next 3-6 months and the one thing I knew I need to do, but was procrastinating for a long time. So I would like to invite you to share the one thing that you are procrastinating on, and why do you think entrepreneurs have that glass ceiling where they know what to do, but just don't do it... ? [link] [comments]  |
| Can't find stock on Yahhoo Finance Posted: 03 Jan 2021 01:57 AM PST Hello! I'm new to investing. I bought some stock through my bank and acquired some cryptocurrency through other platform. I try to use Yahhoo Finance to make a list of my holdings but the application does not let me find the stock I want from the Warsaw stock exchange. What may be the cause? On a side note - maybe there are any other apps to make an overview of my holdings at? Thank you. [link] [comments]  |
| Posted: 03 Jan 2021 01:26 AM PST Hi, In my country (Turkey), water supply of major cities are highly dependent on the rain and snow. In fact, whenever there is no snow during the winter, food and water shortages happen during the summer. It is January now and there has been no snowy weather which is really bad. I think it hasn't been this bad since early 2000s. Generally the government tries to tackle these sort of issues by importing food but due to Covid I don't think that will work as well as it did in previous years. There are no elections in the near future and the economy cannot handle massive imports. So I am guessing the government will try to mitigate the issue until next year and will chose to suffer through this season instead of taking action. How would you invest in this scenario? [link] [comments]  |
| Should I invest my life savings into Bitcoin? Posted: 03 Jan 2021 01:23 AM PST I just go into the whole cryptocurrency thing and it seems like an extremely promising investment for the future. I have about 30k in stocks right now and am seriously considering going all in on Bitcoin. It's at 34k a coin and projected to skyrocket on the coming years [link] [comments]  |
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