Ticker Reports for September 25th
Should You Invest in Treasury Bills?
A treasury bill is a short-term government debt security offering a high level of security and low risk. When you purchase a treasury bill, you essentially lend money to the government to complete short-term projects with timelines of less than one year. Because these investments are backed by the federal government, they come with almost no risk — but you’ll need to be aware of the opportunity cost before you invest.
How Treasury Bills Work
Investments in government debt are some of the safest on the market, and treasury bills (T-bills) are a prime example of low-risk, accessible debt. T-bills are sold at auction for a price lower than what they will be worth on the maturity date (the par amount). Most bills are sold in increments of $100 and can be purchased online through a bank, broker, or the Treasury Department.
Treasury bills work differently than many other bond investments because they do not pay interest on a set schedule at a fixed percentage. Instead, the bond is sold below the face value, meaning you’ll pay a reduced price upfront to receive the full value upon maturity. The difference between the purchase price and the maturity price is the profit, which is locked in upon sale.
Unlike treasury bonds, which have longer terms and pay periodic interest, T-bills are shorter in duration and pay the “interest” upfront through a discounted purchase price. Most T-bills have terms ranging from four to 52 weeks, while the most common treasury bonds have terms ranging between 20 and 30 years.
Benefits of Investing in Treasury Bills
If you’re investing in a shorter time frame or with a lower risk tolerance, treasury bills can provide a stress-free way to lock in profits when you invest. Straightforward to buy and simple to calculate, you also won’t run into thousand-dollar minimums with treasury bill purchases, as is the case with some mutual funds.
Safety and Security
Treasury bills are one of the safest investments available because they are backed by the "full faith and credit" of the U.S. government. This means that the Treasury guarantees the repayment of the face value at maturity, no matter the economic conditions at that date. Unlike corporate bonds, which carry some risk of the issuing company going bankrupt or defaulting, T-bills have virtually no credit risk. This makes them ideal for portfolios centered around retaining value.
Low Entry Cost
Another major advantage of T-bills is their lower point of entry compared to stocks, ETFs, and mutual funds. When investing in market assets, the minimum entry cost is usually one share of stock or fund ownership. This value may change on a minute-to-minute basis and reach significant prices—for example, in September 2024, one share of automobile parts retailer AutoZone (NYSE: AZO) was valued at more than $3,000.
Treasury bills are sold in increments of $100, making this the minimum investment amount. Their low entry cost also allows for more diversification in maturity dates and projects — with a lower price of entry, you can invest in more types of debt securities. This low initial entry cost makes T-bills popular among newer and lower-value investors.
Tax Advantages
While the interest earned on T-bills is subject to normal federal income tax rules, profits are not taxable at the state or local level. This makes them partially tax-exempt investments, which can be ideal if you live in a state like New York, with relatively higher state taxes.
Risks of Investing in Treasury Bills
The primary risk associated with investing in treasury bills is opportunity cost. While these investments represent exceptional, stable, low-risk options, they also offer limited growth opportunities. If you’re early in your investing career, investing too heavily in low-risk assets like T-bills can put you behind inflation.
Lower Returns
Treasury bills are designed to be a safe, conservative investment — and with low risk comes lower returns. When you initially compare treasury bill and bond rates, the difference may not be obvious. For example, in September of 2024, the average I-bond rate was 4.28%, while the average bill return was 4.97% per year. The difference in returns depends on how long the money is borrowed.
T-bills may have terms lasting only a few days — and while these investments do not accrue interest at an annual rate like bonds, the risk is still very low and limited. With a shorter duration, investors face little to no risk of losing value due to rising interest rates, which may influence traditional bond markets. You could see just a few dollars’ profit when investing minimum balances into T-bills, which is not ideal for long-term investors.
Opportunity Cost
The term “opportunity cost” describes what you give up when you invest in an asset with traditionally lower returns. For example, if you only have $1,000 to invest and put all your money into T-bills, you cannot put the same $1,000 into the stock market. If the market as a whole goes up, investing in T-bills has “cost” you the opportunity to benefit from this growth.
By investing in T-bills, you're opting for safety over growth, which means you could miss out on more lucrative opportunities. This is especially true if you’re investing on a long-term horizon toward retirement — over the past ten years alone, the S&P 500 index has seen an average return of 10.2% per year. When you consider the additional power of compound interest, investing too heavily in treasury bills can lead to large missed opportunities.
How to Know if Treasury Bills Are a Good Investment Choice for You
To determine if treasury bills are a viable long-term investment for your portfolio, consider where you are in your journey toward retirement. If you’re looking for a short-term store of value, treasury bills can be a safe and secure choice with tax advantages. If you’re interested in more risk and potential for returns, T-bills might be too conservative for your goals.
Risk Tolerance
Your risk tolerance is the primary driving factor that will determine what percentage of your portfolio would benefit from treasury bills. Considered some of the safest investments you can make, T-bills are guaranteed to provide you with the return you lock in during purchase. T-bills can be ideal choices if you want to earn a little more money than you’d see in a savings account but don’t want to shoulder much risk.
Ideal Investment Timeline
T-bills are short-term, with maturities maxing out at one year’s time. They could be smart choices you can count on if you’re looking for a place to park your money for a short period while earning a modest return. However, for long-term growth, treasury bills might not provide the higher returns you could get from other investments like stocks or exchange-traded funds.
If you’re looking for a balance between long-term returns and stability, consider treasury bonds instead. While bonds have terms that may last up to 30 years, this longer holding period means more consistent, higher-paying interest returns.
How Do You Buy Treasury Bills?
There are two major ways to buy treasury bills:
- Online through the Treasury: TreasuryDirect.gov is the Treasury Department's official online source for investing, available to all permanent U.S. residents. Start by creating an account and verifying your identity — you may need to submit your SSN or taxpayer ID number. Once logged in, you can choose which T-bill to buy and the amount, with a minimum investment of $100 applying to all maturity terms.
- Brokers and banks: You can also buy T-bills through a brokerage or bank, either at auction or on the secondary market. The bank or brokerage acts as an intermediary between you as the purchaser and the Treasury, similar to when purchasing shares of stock through a brokerage account.
After purchasing, you'll receive the full face value of the T-bill at maturity. Your profit can be calculated as the value at maturity minus the initial price of investment.
Who Are Treasury Bills Best For?
The amount of risk you’re comfortable with will play the main role in determining whether you should invest in T-bills. If you’re looking for a conservative, low-risk investment and aren’t as concerned about return rates, T-bills could be right. If you’re investing long-term for a major goal like retirement, treasury bills may not provide the growth you’ll need to achieve them.
Make Informed Investment Decisions With MarketBeat
In a constantly changing market, investing requires up-to-the-minute information. Activate your free trial of MarketBeat All Access now to have daily insights delivered directly to your email.
Tim Sykes' Urgent Trade Alert: "Make this move now"
WARNING: 80 Wall Street banks are gearing up for MASSIVE D.C. shock
This $2 trillion D.C. shock is NOT about Trump or Biden dropping out of the race…
Analysts Think There's Still Time to Get in on Edgewise, Up 332%
Edgewise Therapeutics (NASDAQ: EWTX) is a small-cap pharmaceutical stock that has been all the rage recently. Shares are up 55% in the last three months and up 332% over the past 52 weeks. Yet, with still only a market cap of $2.4 billion, is there still time to get in? I’ll examine recent news around the company, its drug pipeline, and what Wall Street is saying to get a better handle on this question.
Edgewise’s Muscular Dystrophy Treatments Have Large Market Than Others
Edgewise currently has two drugs that are driving the company. They are Sevasemten and EDG-7500. The company is researching Sevasemten to treat muscular dystrophy (MD). One interesting thing about this medicine is that it is being researched to treat multiple types of MD.
Specifically, it is currently in Phase 3 trials to treat Becker MD and in Phase 2 trials for Duchenne MD. Many medicines are being researched only on one form of MD. So, the possibility that they could apply to both is a strong differentiator for the company.
However, this is likely because the treatment manages symptoms. It does not target the genetic cause of Duchenne MD. The root cause of Duchenne and Becker is different, but the symptoms are similar.
Still, this treatment could be valuable and could theoretically be used in conjunction with genetic treatments. The focus on treatment management opens the product up to the entire MD market rather than a sliver of it; another potential benefit.
In its latest results for Becker, the drug showed it actually slightly improved muscle function after 24 months. Those given a placebo showed significantly worse function. Becker MD currently has no approved treatments. The company estimates there are currently around 47,000 people with one of the diseases in the US, EU, and Japan combined.
EDG-7500 Results Show It Keeps Up with the Competition
The company’s other main drug, EDG-7500, is a cardiovascular medicine. Specifically, it works to treat hypertrophic cardiomyopathy (HCM). Recent good news around this drug was why shares of Edgewise jumped 50% in one day. HCM primarily affects the left ventricle of the heart, causing its walls to thicken. The left ventricle is the main pumping station of the heart. pumped. The thickening makes it hard for the left ventricle to pump blood and can result in heart failure.
On average, the study revealed that a biomarker linked to heart stress decreased by 64%. Another measurement of how well the heart is pumping blood is the left ventricular ejection fraction (LVEF).
The results showed that all the patients maintained a normal level of LVEF. Thus, the treatment reduced stress on the heart without interfering with its ability to pump. The market for this treatment is much larger, affecting up to 630,000 people in the United States alone.
However, HCM does have an approved treatment: Bristol Myers Squibb’s (NYSE: BMY) Camzyos. The drug showed a 67% reduction in the same biomarker as EDG-7500. However, a very small number of patients did see their LVEF levels fall below normal. At this point, the drugs appear to have similar levels of safety and efficacy. Two and a half years ago, Camzyos received approval. It generated $139 million last quarter, up by 184% from the previous year.
Cytokinetics' (NASDAQ: CYTK) aficamten, another competitor, is further along but has yet to receive approval. According to Fierce Biotech, analysts at Mizuho Securities say the results of the two drugs look similar.
When it comes to Wall Street, several analysts still see significant upside in Edgewise. At least four firms have increased their price targets on Edgewise since it released Phase 2 results for EDG-7500.
Based on the average of those four targets, the implied upside of Edgewise is 55%, based on the Sept. 24 closing price of nearly $26. The most bullish analyst, Wedbush, thinks Edgewise could rise 70%.
Final Thoughts on Edgewise
At the end of the day, the party is certainly not over for Edgewise until it is. More good news about the drug treatments would continue to boost the stock price. But, it will take a long time for sales to justify its high valuation. The probability of treatments getting approved is low, at around 12% on average.
The results of EDG-7500 do show promise not only in their comparability to the already approved treatment but also in the revenue that Bristol-Myers has demonstrated. However, with Sevasemten in Phase 3 trials for Becker MD, the company could be the first to get an approved treatment in that market.
Do NOT Day Trade (Do THIS instead)
Forget day trading (especially in markets like these).
Trade OVERNIGHT instead!
I've uncovered a shocking way to take 100% certain events (mandated by the U.S. Government)...
3 Stocks Raising Dividends 4X Higher Than Inflation
On September 27, 2024, investors will get the latest reading on inflation from the Personal Consumption Expenditures (PCE) index. In August, the reading came in at 2.5%. This means that year-over-year prices were increasing by 2.5%.
It’s no wonder that many consumers, particularly low- and middle-income consumers, are still feeling the pinch from inflation. But for dividend investors, a 2.5% rate of inflation provides a good opportunity to find inflation-beating investments.
Many companies raise their dividends. However, the group of companies that raise their dividend above the rate of inflation is smaller. And finding companies that raise their dividend at more than four times the rate of inflation is rarer still.
We've found three stocks that have a history of raising their dividend at more than four times the rate of inflation. This ensures that your income stream will grow faster than prices are rising. Not only do these companies have growing dividends, they’re also in sectors that stand to benefit from lower interest rates.
This Stock Is Ready to Give Investors a Sweet Return
The Hershey Company (NYSE: HSY) is one for investors to watch closely as interest rates fall. In 2024, Hershey raised its dividend for the 15th consecutive year. The 15% increase from $1.19 to $1.37 per share was higher than the three-year annualized dividend growth of 12.21%. This means that even when inflation was coming in above 9%, Hershey was rewarding investors with an inflation-beating return.
And that’s not the only reason to consider starting a position. HSY stock is up just 4.3% in 2024 and is still down 6.3% in the last 12 months. However, Hershey is on of only a handful of packaged foods companies to post a positive return in 2024.
The bearish view looks at the growth of GLP-1 drugs as a long-term threat to the confectionery industry. That’s not reflected in the company’s financials, as year-over-year revenue is still growing.
The bigger issue is lower earnings, with higher cocoa prices pressuring the company’s margins. The bottom line is that Hershey’s may not have an appetite for HSY stock, but it remains a tasty long-term investment.
A Housing Surge Will Make This a Must-Own Stock
The Home Depot Inc. (NYSE: HD) is up 14.6% in 2024 and 30% in the last 12 months. And at 26x forward earnings, HD stock may look fairly valued, if not slightly overvalued among retail stocks. That’s reflected in the consensus price target that indicates the stock may be due for a pullback.
But much of that growth has come in the last three months, and there are reasons for that. The company is benefiting from the rotation out of technology stocks. Investors were trying to front-run the Federal Reserve’s policy shift and housing stocks were a solid choice. If the housing market gets the anticipated bump from lower interest rates, home improvement companies stand to benefit.
That's particularly true if you’re a dividend investor. Over the last three years, HD stock has increased its dividend by an average of 11.69%. The company has increased its dividend for 15 consecutive years and the annual payout of $9 per share is attractive for long-term investors.
This Blue-Chip Healthcare Stock Is a No-Brainer Dividend Payer
The healthcare sector is an evergreen choice for investors. And if you’re considering medical stocks with the potential for both growth and income, UnitedHealth Group Inc. (NYSE: UNH) is a no-brainer choice. In addition to its namesake health insurance, the company owns the Optum network which provides advanced data and technology to help deliver analytics-based, affordable healthcare.
UnitedHealth is one of the nation’s largest health insurance companies, as reflected in its market cap of over $560 billion. The company’s recent acquisition of LHC Group is expanding the company’s home healthcare business. The aging of America continues to become a present issue, and this acquisition should extend the company’s runway for revenue and earnings growth.
Over the last 10 years, UNH stock has delivered a total return of 670.94%. And part of that growth comes from the company’s dividend which has grown at an annualized average rate of 14.71% in the last three years. The company has also increased its dividend for the last 15 consecutive years.
MarketBeat Media, LLC dba TickerReport
345 N Reid Place, Suite 620, Sioux Falls, SD 57103.
0 Response to "🌟 Analysts Think There's Still Time to Get in on Edgewise, Up 332%"
Post a Comment