Ticker Reports for June 16^th

→ AI's Next Magnificent Seven
(From The Oxford Club)

Bitcoin Breakout Looms: Which Crypto Stocks Will Ride the Wave?

As Bitcoin continues to consolidate within reach of its all-time highs, many investors, speculators, and traders wonder if a breakout is on the horizon. Currently trading at $67,100 per bitcoin and up almost 52% YTD, Bitcoin's critical short-term support level sits at $66,000, with $72,000 acting as critical resistance. Should Bitcoin break through this resistance, it could spark significant moves in Bitcoin-related stocks. Let’s take a look at four popular Bitcoin-related companies and assess which ones are best set up for a move higher if Bitcoin breaks out.

Marathon Digital Holdings' Focus on Bitcoin Mining

Marathon Digital Holdings (NASDAQ: MARA) focuses on Bitcoin mining, having rebranded in 2020. Despite its surge earlier in the year, MARA has underperformed, with shares down almost 15% YTD. The stock has a bearish sentiment, with a 22% short interest and analyst consensus predicting further downside. Technically, MARA does not show a bullish setup at the moment, making it less favorable for a breakout.

Analyst Forecasts and Buy Rating for Riot Platforms

Riot Platforms (NASDAQ: RIOT) aims to be a leader in Bitcoin mining in North America. Like MARA, RIOT has underperformed, with its stock down almost 30% YTD. It has a notable short interest of over 17%. Recently, short seller Kerrisdale Capital released a critical report on RIOT, claiming its business model is inefficient. Despite this, analysts maintain a buy rating, forecasting a potential 65% upside with a price target of $18.10. However, technically, RIOT does not currently present a bullish formation.

Evaluating MicroStrategy's Premium to Bitcoin Holdings

MicroStrategy (NASDAQ: MSTR), a global provider of enterprise analytics software, owns 214,400 bitcoins. Unlike MARA and RIOT, MSTR has outperformed, gaining 134% YTD. Trading at a premium to its Bitcoin holdings, MSTR could see a push over $1,800 if Bitcoin breaks out, potentially reaching new all-time highs above $2,000. However, notable short interest at almost 19% and significant insider selling over the past year suggest caution.

Coinbase Global: Leading Cryptocurrency Exchange

Coinbase Global (NASDAQ: COIN) is a major cryptocurrency exchange offering tools for trading over 200 cryptocurrencies. Technically, COIN looks the most favorable, currently consolidating above all major moving averages and 12% off its 52-week high. The stock is up over 40% YTD and has a relatively low short interest at 5%. Its recent earnings beat, reporting $1.65 EPS against an estimated $1.04 and revenue of $1.64 billion against $1.26 billion expected, positioning COIN well for further gains if Bitcoin breaks out.

The Bottom Line: Bitcoin-Related Stocks to Watch

As Bitcoin teeters on the brink of a potential breakout, certain Bitcoin-related stocks stand out for their readiness to capitalize on this move. While MARA and RIOT face bearish sentiment and technical setups, MSTR and COIN appear better positioned. MSTR could see significant gains if Bitcoin rallies, but caution is warranted due to insider selling, a hefty premium to its underlying and short interest. With its solid technical setup and recent earnings beat, COIN seems the best poised to benefit from a Bitcoin breakout.

Another option for a reactive move should Bitcoin break out is the iShares Bitcoin Trust ETF (NYSE: IBIT), arguably the most popular and liquid Bitcoin spot ETF issued by Blackrock. Investors should, however, stay vigilant and cautious, as the cryptocurrency market’s volatility demands careful consideration and strategy.

Ad Crypto 101 Media

$16T Crypto Plot From Elon Musk

Reports of a leaked meeting between Elon Musk and staff at X.com could send shockwaves through the crypto market.

Musk revealed a "mind-blowing" plan to take over the global payment system. In his own words, the world's richest man said "you won't need a bank account."

Prominent voices in crypto believe what comes next will mirror a crypto mass adoption similar to the one that triggered bitcoin's last bull run.

Click here now to get your copy.

What is a Dividend Trap? Here's What You Should Know

Have you ever been offered a deal that sounded too good to be true? Everyone likes to find a bargain, but if the price or terms are overly generous, it sends a warning sign to our scam radar. What’s the catch? Why would this benefit the person offering the deal?

In markets, prices tend to be efficient, but that doesn’t mean every asset is valued correctly. Stock prices can get disconnected from business reality, as can the dividends companies pay shareholders. A dividend trap occurs when a high yield masks underlying problems, and investors buy shares expecting consistent income only to have the stock price and dividend payout decline over time.

How to Identify a Dividend Trap

Dividends aren’t fixed like the interest rate on a mortgage; companies can choose to increase or decrease them at any time. The best dividend-paying companies attempt to keep payouts steady or gradually increase yearly. A high yield doesn’t necessarily mean an unsustainable obligation, but there are some red flags to look for whenever you spot a dividend that seems too good to be true.

High Yield Comparison

Certain companies, like utilities or consumer staples, tend to pay higher dividend yields than other stock sectors due to the nature of their businesses. Unlike tech or pharma, utilities don’t reinvest in new projects or research, so they return more profits to shareholders through dividends. That’s why comparing stock dividends within industries or sectors is crucial. Stocks like utilities can sustain a much higher dividend payout than capital-craving tech firms. If you think a dividend is unsustainable, compare it to other industry peers and not the market as a whole.

Earnings and Payout Ratios

Dividend payouts come from the company’s profit pool, so monitoring earnings and ensuring the company makes enough cash to keep the payouts coming is imperative. Examining earnings trends and specific financial ratios is a good technique for spotting dividend traps. For example, if a dividend-paying company announces poor earnings and guidance, you’ll want to look at the financial data and ensure the payout isn’t becoming a burden. The Dividend Payout Ratio (DPR) measures the percentage of company profits going toward dividend obligations. If this number exceeds 100%, the dividend is on thin ice.

Debt and Cash Reserves

Companies have other obligations besides paying dividends to shareholders, and having too much strain on the balance sheet can negatively affect future payouts. Debt levels and cash reserves are two numbers to stay on top of here. Although there could be reasonable explanations for expanding debt or dwindling cash reserves, when these figures are both heading the wrong way, it might be a sign that the company is dipping into different sources to fund dividend payouts. A company that uses debt to fund dividend payments likely won’t be able to sustain the practice for long.

Why It's Important for Investors to Understand Dividend Traps

A dividend trap can be devastating for an unprepared investor. Dividend investing is a conservative strategy with a goal of steady income and capital preservation, not market-beating returns. However, a dividend trap can damage an investment plan on two sides: the loss of dividend income and the decline of portfolio value as the stock drops along with the dividend.

A high dividend yield is alluring and offers investors a false sense of security. Consistently high income is tempting, but high yields can indicate deteriorating financial health within the firm. Because so much cash is required to sustain the dividend, business growth opportunities are tabled, and the company continues to circle the drain.

Eventually, the dividend will become too much for the overburdened company and it will be forced to cut or eliminate the payout. Companies never want heavy dividend cuts because it shows the balance sheet was mismanaged and breaks trust with investors. Unexpected dividend cuts can hinder financial plans, especially those depending on a fixed income.

Finally, dividend traps don’t just affect yields and payouts. The market doesn’t take kindly to companies that slash dividends, and the stock price usually gets bludgeoned whenever a dividend cut or elimination is announced. Those in the dividend trap now have to worry about a lack of payouts and a portfolio that’s losing value.

How to Avoid Dividend Traps

Now that you understand the dividend trap, it's time to build a defense system against it. Some will be less obvious than others, but it's vital to understand fundamental analysis and how to read financial statements and data.

Fundamental Analysis

Research should be the first step in any investment plan, and a fundamental analysis of dividend-paying companies can tell you about the security and strength of the payout. Reviewing company balance sheets, income statements, and earnings reports will not only give hints about the overall state of the business but also help you find out where the dividend money comes from. Is the company paying the dividend with a manageable portion of its profits, or are they borrowing money to satisfy the payout? You may have uncovered a dividend trap if the answer is the latter. You can search for companies based on dividend yield using MarketBeat's dividend screener.

Industry Yield Comparison

Investors are always trying to source an outlier, a company that will outperform expectations and provide exponential gains. However, when it comes to dividend investing, an outlier might be a red flag that requires further inspection. For example, if you’re investing in a sector that averages a 4% dividend yield and find a company in that industry paying 11%, you probably didn’t discover a hidden gem the rest of the market missed. Instead, further research into that company will likely show an unsustainable payout ratio and a probable dividend trap.

Review of Financial Health

History can also be a dividend investing guide. Companies with long-term sustainable dividends can fall into groups like Dividend Aristocrats or Dividend Kings, meaning they’ve successfully raised dividend payouts for multiple decades. Knowing that a public company has a 25 or 50-year track record of raising dividend payouts provides peace of mind for income-seeking investors. Use a company’s dividend payment history and compare it with its current fundamentals. If the payout rate is sustainable and the payment amount continues to climb yearly, you may have found a stock that fits your objectives.

Getting Started with Dividend Investing

Dividend investing isn’t about finding the best-performing stocks. Yes, you’ll miss out on high-flying gains from stocks like NVIDIA Corp (NASDAQ: NVDA) or Meta Platforms Inc. (NASDAQ: META), but outperformance isn’t the most important factor when investing for dividends. When income is the goal, slow and steady wins the race, and companies with a long history of incremental annual payout raises are often the best dividend stocks.

Dividend payers often reside in non-growth-oriented sectors like consumer staples or utilities. These companies have inelastic demand for their products, meaning consumers require the same amount each month/quarter/year regardless of economic conditions or personal financial situation. Think household cleaning products, food and beverages, and services like electricity or the internet.

Specific industries are known for high yields, but you still must examine these companies and look for potential dividend traps. Make sure the payout ratio is sustainable compared to industry peers, review company balance sheets and statements and examine the history of the dividend itself. Starting with well-established companies like the Dividend Kings is probably your best bet if you’re new to dividend investing.

If It Sounds Too Good to be True, Don’t Invest

Dividend traps can be investment plan destroyers since you lose the quarterly income from the dividend payout and likely lose portfolio value when the dividend is cut, and the stock price follows it down. Proper research is the best way to avoid these traps, and thankfully, there are some obvious warning signs that a dividend payout could be in trouble. Use data like the payout ratio, average industry yield and financial statements to make informed investment decisions.

Improve Your Investing Strategy with MarketBeat

Dividend investing requires plenty of research, but that doesn’t mean it's overwhelming. MarketBeat has plenty of tools and screeners to help you find the best dividend-paying stocks for your portfolio.

Ad Porter & Company

Truth about Trump's conviction

In this new documentary, you'll discover the truth about Trump's criminal conviction, who's really pulling the puppet strings, and why this is just phase one in their dark plan to reshape America.

It's not just about blocking Trump's re-election…

To get all the details, go here now.

Top 2 Cheap Dividend Growers to Buy Now and Ride Into Retirement

The RV industry has had its share of ups and downs, spurred to record heights by the COVID-10 pandemic and social distancing only to contract by 50% in its wake. Today’s takeaway is that the RV industry is returning to growth and is expected to accelerate over the next six quarters. As murky as the outlook for inflation and interest rates can be, it is generally accepted that the FOMC will start cutting rates this year or early next and reinvigorate the economy. Lower rates equate to lower payments, and lower payments will be a trigger for this and all discretionary markets.

The latest data from the RVIAA is promising. The forecasts for 2024 delivery growth were trimmed but still robust, forecasting a low-to-mid-teens growth pace accelerating to faster levels next year. Today’s opportunity is that industry leaders Thor Industries (NYSE: THO) and Winnebago’s (NYSE: WGO) stock prices have corrected to a one-year low because of the weakened outlook, setting up their markets to rebound in the 2nd half and sustain upward price momentum into 2025.

Among the critical details for investors include their respective low valuations and reliable yields. Neither can be labeled a high yield, but both are above the broad market average, trading near their lows and are reliable. These are dividend-growing companies with payout ratios below 40% and the ability to continue increasing their payouts long into the future. Balance sheet highlights include strong cash positions, low debt, and increasing equity. Both operate with less than 1.25x total leverage and have the cash flow to sustain it while paying dividends and buying back shares. Investors looking for cheap stocks to buy and hold for income could do worse.

Thor Industries Trims Guidance: Reiterates Outlook for Long-Term Growth

Thor Industries had a solid FQ3, outperforming on the top and bottom lines as the business contraction slowed. The issue for the market was the guidance, which was trimmed. Even so, the new range is sufficient to sustain operational quality and capital returns until growth returns. That is expected as soon as the first fiscal quarter of 2025, which coincides with the calendar first quarter of 2024. Operational quality is the key. The company aims to maintain margin and spending discipline rather than chase less profitable growth and risk diluting the brand.

Winnebago will report its Q3 results in early July and likely report similar strengths. The analysts have lowered their targets significantly since last quarter and set the bar low. The consensus reported by MarketBeat.com forecasts a 10% YOY contraction that is more than double the contraction posted by Thor Industries.

The Sell-Side Supports THO and WGO Stocks Prices

The analysts trimmed targets for Thor Industries after the Q3 release and will likely do the same for Winnebago, but their support is unwavering. The stocks are rated at Moderate Buy and viewed (in the case of THO) as fairly valued near the current levels. This sentiment may weigh the action and cap gains this summer, but a bearish reversal or downtrend is unlikely. Winnebago is trading well below the low end of the analyst range, suggesting it is a value even with sluggish 2024 sales and price target reductions.

The price action in these stocks is choppy but has been trending higher for two years. The volatility is driven by the interest rate outlook as much as anything else, resulting in numerous buying opportunities. Among the buyers are the institutions that hold nearly 100% of both companies. Their activity has been mixed over the last few quarters, but no red flags have been present.

Assuming the institutions don’t start shedding them, these stocks should bottom soon and begin the next rebound. The risk is the Fed. The longer the Fed waits to make the first interest rate cut, the longer the rebound will take to gain traction, and the greater the risk these stocks will move lower.

🌟 What is a Dividend Trap? Here's What You Should Know