Cathie Wood, the founder and CEO of the investment management firm Ark Invest has risen to be one of today’s most popular and influential institutional investors. Her firm’s flagship fund ARK Innovation ETF (ARKK), has returned 23.5% annually since its inception in 2014, outperforming the S&P 500’s 14.6% annualized gain over the same period.
The fund posted skyrocketing returns between 2019 and the February of 2021. On top of that, Wood predicted a 30-40% compound annual rate of return for Ark’s strategies over the next five years, based on its research on disruptive innovation over the period.
Amid the declining market trend over the first trading week of 2022, Wood bought 442,456 shares of Palantir Technologies Inc. (PLTR), 345,771 shares of Robinhood Markets, Inc. (HOOD), and nearly 80,000 shares of Teladoc Health, Inc. (TDOC).
Palantir Technologies Inc. (PLTR)
PLTR engages in the building and deploying software platforms for the United States intelligence community for assistance in counterterrorism investigations and operations. The company’s offerings include Palantir Gotham, a software platform for government operations in the intelligence and defense sectors.
On January 5, PLTR and Hyundai Heavy Industries (HHI) Group announced collaborating to build a big data platform for HHI’s core businesses. Additionally, the companies would also consider establishing a joint venture. The collaboration should add to the company’s profits.
On December 20, PLTR and a biomolecular condensates company, Dewpoint Therapeutics, announced a partnership for PLTR’s Foundry platform to Dewpoint’s efforts. The multi-year agreement is expected to mark one of PLTR’s most comprehensive partnerships with a biotechnology firm.
For the fiscal third quarter ended September 30, PLTR’s revenue increased 35.5% year-over-year to $392.15 million. Adjusted income from operations rose 58.9% from the prior-year quarter to $116.11 million. Adjusted net income attributable to common stockholders came in at $82.08 million, up 50.6% from the same period prior year.
The consensus EPS estimate of $0.05 for the quarter ending March 2022 indicates a 25% year-over-year increase. Likewise, the consensus revenue estimate for the same period of $439.16 million reflects an improvement of 32.2% from the prior-year quarter.
The stock has declined 1.1% intraday to close Friday’s trading session at $16.56.
Robinhood Markets, Inc. (HOOD)
HOOD is a popular financial platform operator in the United States that allows users to invest in stocks, ETFs, options, gold, and cryptocurrencies. The company also offers various learning and education solutions.
HOOD went public in a traditional IPO process, on July 29, 2021, on the Nasdaq Global Select Market. The company priced its offering at $38.00 per share. The expected $1.89 billion net proceeds were intended to be used for working capital, capital expenditures, and funding its anticipated tax obligations.
HOOD’s total net revenues increased 35.4% year-over-year to $364.92 million in the fiscal third quarter ended September 30. This can be attributed to a rise of 32.2% from the same period prior year in transaction-based revenues to $266.80 million. The company’s cash, cash equivalent, segregated cash, and restricted cash balance came in at $10.61 billion, up 81.5% from the prior-year quarter.
Analysts expect HOOD’s EPS to increase 90.2% year-over-year in the fiscal year 2022. Likewise, Street expects revenue for the same period to rise 22.6% from the fiscal year 2021 to $2.25 billion.
HOOD’s stock has gained 2% intraday to close Friday’s trading session at $15.89.
Teladoc Health, Inc. (TDOC)
TDOC is a virtual healthcare service provider in the United States and globally. The company offers technology and expertise for whole-person virtual care, covering various clinical conditions.
On December 16, TDOC announced an expanded partnership with the National Labor Alliance of Health Care Coalitions (NLA) for offering its full portfolio of virtual care products and services. The partnership might prove to be beneficial for the company by improving access to whole-person care.
On October 6, TDOC made its primary care service, Primary360, available to commercial health plans and for employers or organizations that sponsor healthcare services. About this service availability, Donna Boyer, Chief Product Officer at Teladoc Health, said, “Primary360 has the unique power to drive the unified health care experience that consumers are demanding by removing longstanding barriers like access, cost and convenience.”
For the fiscal third quarter ended September 30, TDOC’s revenue increased 80.6% year-over-year to $521.66 million. Adjusted gross profit and adjusted EBITDA improved 91.5% and 70.5% from the prior-year quarter to $352.62 million and $67.37 million, respectively.
Street EPS estimate for the fourth fiscal quarter of 2021 reflects a rise of 81.1% year-over-year. Likewise, Street revenue estimate of $543.36 million for the same period indicates an increase of 41.8% from the prior-year quarter.
TDOC’s shares have gained 0.5% intraday to close Friday’s trading session at $82.18.
Author: Aditi Ganguly
Is Wolfspeed a Good Semiconductor Stock to Invest in?
Primary Ticker: Wolfspeed, Inc.(NYSE:WOLF)
Secondary Ticker: AVGO, SMTC, INTT
Teaser: Wolfspeed (WOLF), formerly known as Cree, Inc., recently changed its name and transferred its listing to reflect its strategic business transformation. However, the company failed to capitalize on the industry tailwinds to improve its financials in the last reported quarter. Will WOLF be able to expand its operations and generate adequate profits in the near term? Read more to find out.
Wolfspeed, Inc. (WOLF) manufactures power and radio frequency semiconductors. Formerly known as Cree, Inc., it changed its name on October 4, 2021, to reflect its overall core strategy. Over the past four years, WOLF divested two-thirds of its business to focus on its Silicon Carbide technology-based semiconductors. The company’s products have applications in electric vehicles, wireless infrastructure, 5G, and renewable energy industries.
WOLF transferred its listing from the Nasdaq Global Select Market to NYSE as part of its transformation strategy. The stock began trading on the NYSE on October 4, 2021. Regarding this, WOLF CEO Gregg Lowe said, “We are pleased to join the NYSE, one of the world’s most prestigious trading platforms, as we continue on our transformational journey as a pure play global semiconductor powerhouse leading the industry transition from silicon to Silicon Carbide …. Importantly, our company name change to Wolfspeed capitalizes on our 30-year heritage of working with Silicon Carbide and underscores our ambitious plans to compete and win in the rapidly expanding marketplace, which we believe will continue to provide long-term value for our customers and shareholders.”
Since then, shares of WOLF gained 37.7% to close Friday’s trading session at $108.97, reflecting surging investor optimism surrounding semiconductor stocks amid the ongoing chip shortage.
Here’s what could shape WOLF’s performance in the near term:
For the fiscal 2022 first quarter ended September 26, 2021, WOLF’s revenues increased 35.6% year-over-year to $156.60 million. However, its operating loss widened 5.6% from the same period last year to $65.70 million. This can be attributed to a 17.8% rise in total operating expenses. Net loss and loss per share came in at $70.10 million and $0.60, respectively. Net operating cash outflow stood at $62.50 million, compared to a net operating cash inflow of $400,000 in the prior-year quarter.
WOLF’s forward non-GAAP P/E ratio is negative 159.24. In addition, the stock’s forward EV/Sales multiple of 17.91 is 341.4% higher than the industry average of 4.06.
Its forward EV/EBITDA and Price/Sales ratios of 324.09 and 17.90 are significantly higher than the industry averages of 16.06 and 3.95, respectively. In terms of forward Price/Book, WOLF is currently trading at 6.62x, 16% higher than the industry average of 5.70x.
Negative Profit Margins
WOLF’s trailing-12-month net income margin is negative 72.28%, while its EBITDA margin is negative 15.25%. Moreover, its levered free cash flow margin of negative 128.33% compares with the industry average of 11.72%. Its ROE, ROA, and ROTC margins are negative 17.03%, 12.61%, and 4.63%, respectively.
In addition, WOLF’s trailing-12-month gross profit margin of 31.5% is 36.3% lower than the industry average of 49.42%.
POWR Ratings Reflect Bleak Prospects
WOLF has an overall rating of F, which equates to a Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has a grade of D for Stability and Sentiment and an F for Quality. Its relatively high 1.53 beta is in sync with the Stability grade. In addition, analysts expect the company’s EPS to decline at a rate of 33.6% per annum over the next five years, justifying the Sentiment grade. Furthermore, WOLF’s negative net income margin and ROE account for the Quality grade.
Of the 99 stocks in the Semiconductor & Wireless Chip industry, WOLF is ranked #94.
Beyond what I’ve stated above, you can view WOLF ratings for Growth, Momentum, and Value here.
Over the past year, WOLF has failed to capitalize on the industry tailwinds to improve its financials and profit margins. Currently, the company is building a $1 billion silicon carbide factory in Utica. However, this might adversely impact WOLF’s already poor financials and cash flows. Moreover, given the current market volatility, the overvalued stock might witness a sharp pullback in the near term. Thus, WOLF is best avoided now.
How Does Wolfspeed, Inc. (WOLF) Stack Up Against its Peers?
While WOLF has an F rating in our proprietary rating system, one might want to consider looking at its industry peers, Broadcom Inc. (AVGO), Semtech Corporation (SMTC), and inTest Corporation (INTT), which have an A (Strong Buy) rating.
Author: Subhasree Kar
Is Lumen Technologies a Good High-yield Stock to Buy Now?
Primary Ticker: Lumen Technologies, Inc.(NYSE:LUMN)
Secondary Ticker: IDCC, OOMA, CCOI
Teaser: Popular telecom player Lumen Technologies (LUMN) delivers more than a 7% dividend yield and possesses solid growth attributes. However, the company’s revenue declined in its last reported quarter. So, will LUMN continue with regular dividend payments in the coming quarters? Keep reading.
Technology and communications company Lumen Technologies, Inc. (LUMN) provides various integrated services and solutions under CenturyLink name to business and residential customers in the United States and internationally. LUMN shares have gained 31% over the past year and 12.1% over the past month. The stock gained 9.7% over the past five days and 5.7% intraday to close its last trading session at $13.77.
The company plans to increase its fiber deployments from 2.5 million locations to 12 million, which represents a five-times increase over its standard deployment rate, aiming to deploy an all-digital experience of its quantum fiber platform. In conjunction with this, LUMN is also expecting to close a sale of its local exchange business to Apollo Funds in the second half of 2022 and retain markets mostly in metro areas. President and CEO Jeff Storey said that his company is now positioned as an “all-digital fiber brand.”
Given the continued growth of cloud computing services and the popularity of remote working trends, tech companies are investing heavily to deploy 5G solutions. The company’s extensive edge computing platform and fiber network should allow the company to cash in on the burgeoning 5G space.
Here’s what could shape LUMN’s performance in the near term:
LUMN’s $1.00 annual dividend yields 7.26% at the current share price. On November 18, LUMN declared a regular quarterly cash dividend of 25 cents per share, which was payable on December 10, 2021, to shareholders of record at the close of business on November 29, 2021. The company’s four-year average dividend yield for LUMN is 10.48%, while its payout ratio is 51.9%.
LUMN’s free cash flow came in at $1.07 billion in the fiscal third quarter of 2021, compared to $879 million in the third quarter of 2020. Also, for the nine months ended September 30, its cash and cash equivalents balance was $635 million, indicating an increase of 20.7% year-over-year. In addition, LUMN projects its free cash flow to be within $3.60 to $3.80 billion, up from its previous guidance of $3.10 to $3.30 billion. The company’s robust cash flows should ensure stable dividend payouts in the coming quarters.
LUMN Looks undervalued at its Current Price level
In terms of forward P/E, LUMN is currently trading at 7.22x, 63.5% lower than the industry average of 19.78x. Also, its forward Price/Cash Flow of 2.22x is 78% lower than the industry average of 10.06. Furthermore, LUMN’s forward EV/Sales and Price/Sales ratio of 2.21 and 0.72 is 12.1% and 58.3% lower than the industry averages, respectively.
Solid Bottom-Line Growth
The company’s operating revenue declined 5% year-over-year to $4.89 billion in the fiscal third quarter ended September 30. The management expects a return to revenue growth within 2-3 years. However, its operating income rose 27% from its year-ago value to $1.13 billion. LUMN’s net income came in at $544 million, indicating an increase of 49% year-over-year, while its EPS came in at $0.51, up 50% year-over-year.
POWR Ratings Reflect Growth Prospects
LUMN has an overall rating of B, translating to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has a B grade for Value, consistent with its lower-than-industry valuation multiples.
LUMN has a C grade for Stability. Its beta of 0.98 justifies this grade.
Of the 19 stocks in the Telecom – Domestic industry, LUMN is ranked #4.
Beyond what I have stated above, you can also view LUMN’s grades for Sentiment, Growth, Momentum, and Quality here.
View the top-rated stocks in the Telecom – Domestic industry here.
LUMN is a popular name in the telecom industry and serves customers in more than 60 countries. Despite the company’s revenue declines, it reported stable bottom-line growth. Moreover, LUMN is currently trading at a discount to its peers. Also, considering its high yield and stable cash flows, the stock could be a profitable bet.
How Does Lumen Technologies, Inc. (LUMN) Stack Up Against its Peers?
LUMN has an overall POWR Rating of B. However, one could also check out these other stocks within the Telecom – Domestic industry also with a B (Buy) rating: InterDigital Inc. (IDCC), Ooma, Inc. (OOMA), and Cogent Communications Holdings, Inc. (CCOI).
Want More Great Investing Ideas?
PLTR shares were trading at $15.59 per share on Monday afternoon, down $0.97 (-5.86%). Year-to-date, PLTR has declined -14.39%, versus a -3.31% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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