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Top 5 Medical Stocks To Own Right Now

Zimmer Biomet Holdings Inc (NYSE:ZBH) files its latest 10-K with SEC for the fiscal year ended on December 31, 2018. Zimmer Biomet Holdings Inc is a medical device company. It designs, manufactures, and markets orthopedic reconstructive implants, as well as supplies and surgical equipment for orthopedic surgery under brands like NexGen, Persona, Zimmer, and Polaris. Zimmer Biomet Holdings Inc has a market cap of $25.36 billion; its shares were traded at around $124.33 with and P/S ratio of 3.22. The dividend yield of Zimmer Biomet Holdings Inc stocks is 0.77%. Zimmer Biomet Holdings Inc had annual average EBITDA growth of 0.30% over the past ten years.

For the last quarter Zimmer Biomet Holdings Inc reported a revenue of $2.1 billion, compared with the revenue of $2.1 billion during the same period a year ago. For the latest fiscal year the company reported a revenue of $7.9 billion, an increase of 1.4% from last year. For the last five years Zimmer Biomet Holdings Inc had an average revenue growth rate of 13.7% a year.

Top 5 Medical Stocks To Own Right Now: Maiden Hldgs Ltd(MHLD)

Advisors’ Opinion:

  • [By Max Byerly]

    Horace Mann Educators (NYSE: HMN) and Maiden (NASDAQ:MHLD) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, risk, dividends, valuation, analyst recommendations, profitability and earnings.

  • [By Ethan Ryder]

    Maiden (NASDAQ: MHLD) and Mercury General (NYSE:MCY) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, analyst recommendations, valuation, earnings and risk.

  • [By Lisa Levin]

     

    Companies Reporting After The Bell
    Booking Holdings Inc. (NASDAQ: BKNG) is projected to post quarterly earnings at $10.67 per share on revenue of $2.87 billion.
    CenturyLink, Inc. (NYSE: CTL) is expected to post quarterly earnings at $0.19 per share on revenue of $6.00 billion.
    Albemarle Corporation (NYSE: ALB) is projected to post quarterly earnings at $1.21 per share on revenue of $803.36 million.
    Spectra Energy Partners, LP (NYSE: SEP) is estimated to post quarterly earnings at $0.81 per share on revenue of $751.57 million.
    IAC/InterActiveCorp (NASDAQ: IAC) is expected to post quarterly earnings at $0.8 per share on revenue of $923.80 million.
    Open Text Corporation (NASDAQ: OTEX) is projected to post quarterly earnings at $0.62 per share on revenue of $691.75 million.
    Tutor Perini Corporation (NYSE: TPC) is expected to post quarterly earnings at $0.29 per share on revenue of $1.09 billion.
    Twenty-First Century Fox, Inc. (NASDAQ: FOXA) is projected to post quarterly earnings at $0.54 per share on revenue of $7.41 billion.
    ICU Medical, Inc. (NASDAQ: ICUI) is estimated to post quarterly earnings at $1.84 per share on revenue of $346.28 million.
    TechnipFMC plc (NYSE: FTI) is expected to post quarterly earnings at $0.33 per share on revenue of $3.13 billion.
    Synaptics Incorporated (NASDAQ: SYNA) is projected to post quarterly earnings at $0.91 per share on revenue of $401.76 million.
    The Dun & Bradstreet Corporation (NYSE: DNB) is expected to post quarterly earnings at $1.07 per share on revenue of $386.91 million.
    Matrix Service Company (NASDAQ: MTRX) is estimated to post quarterly earnings at $0.07 per share on revenue of $285.16 million.
    Maiden Holdings, Ltd. (NASDAQ: MHLD) is projected to post quarterly earnings at $0.21 per share on revenue of $739.31 million.
    tronc, Inc. (NASDAQ: TRNC) is expected to post quarterly earnings at $0.65 per share on revenue of $428.25 million.
    Copa Holdings,

Top 5 Medical Stocks To Own Right Now: Fiesta Restaurant Group, Inc.(FRGI)

Advisors’ Opinion:

  • [By Lisa Levin] Gainers
    Integrated Media Technology Limited (NASDAQ: IMTE) rose 30.8 percent to $22.00 in pre-market trading after declining 18.63 percent on Monday.
    Nevsun Resources Ltd. (NYSE: NSU) rose 14.5 percent to $3.40 in pre-market trading after Lundin Mining Corporation and Euro Sun Mining Inc. proposed to acquire Nevsun Resources for around C$1.5 billion.
    Sharing Economy International Inc. (NASDAQ: SEII) rose 15.2 percent to $4.25 in pre-market trading after the company disclosed that it entered into a license agreement with Ecrent Capital Holdings Limited.
    Veeco Instruments Inc. (NASDAQ: VECO) shares rose 14.1 percent to $19.50 in pre-market trading after reporting stronger-than-expected earnings for its first quarter.
    Impinj, Inc. (NASDAQ: PI) rose 13.4 percent to $15.40 in pre-market trading after reporting Q1 results.
    SandRidge Energy, Inc. (NYSE: SD) shares rose 13.2 percent to $16.45 in pre-market trading following Q1 results.
    Blink Charging Co. (NASDAQ: BLNK) rose 12.6 percent to $4.55 in pre-market trading after jumping 171.14 percent on Monday.
    Crocs, Inc. (NASDAQ: CROX) shares rose 10 percent to $16.66 in pre-market trading after the company reported better-than-expected earnings for its first quarter and issued strong sales forecast for the second quarter.
    Pareteum Corporation (NASDAQ: TEUM) rose 9.7 percent to $3.05 in pre-market trading after announcing Q1 results.
    Dean Foods Company (NYSE: DF) rose 8 percent to $9.00 in pre-market trading after reporting upbeat Q1 earnings.
    Fiesta Restaurant Group, Inc. (NASDAQ: FRGI) rose 7.3 percent to $23.45 in pre-market trading following Q1 results.
    IAMGOLD Corporation (NYSE: IAG) rose 7.1 percent to $6.09 in pre-market trading after reporting upbeat Q1 earnings.
    TC PipeLines, LP (NYSE: TCP) rose 6.4 percent to $27 in pre-market trading after gaining 2.08 percent on Monday.
    Carrols Restaurant Group, Inc. (NASDAQ: TAST) rose 6.3 percent to $11.75 in pre-market trading fol
  • [By Shane Hupp]

    Fiesta Restaurant Group Inc (NASDAQ:FRGI) reached a new 52-week high during trading on Thursday . The company traded as high as $30.40 and last traded at $30.50, with a volume of 2568 shares changing hands. The stock had previously closed at $29.95.

  • [By Max Byerly]

    Fiesta Restaurant Group (NASDAQ:FRGI) was upgraded by analysts at BidaskClub from a buy rating to a strong-buy rating.

    Orthopediatrics (NASDAQ:KIDS) was upgraded by analysts at BidaskClub from a hold rating to a buy rating.

  • [By Joseph Griffin]

    Get a free copy of the Zacks research report on Fiesta Restaurant Group (FRGI)

    For more information about research offerings from Zacks Investment Research, visit Zacks.com

  • [By Shane Hupp]

    Fiesta Restaurant Group Inc (NASDAQ:FRGI) saw a significant drop in short interest during the month of September. As of September 14th, there was short interest totalling 1,541,517 shares, a drop of 23.2% from the August 31st total of 2,006,830 shares. Based on an average daily trading volume, of 251,295 shares, the days-to-cover ratio is presently 6.1 days. Approximately 5.9% of the company’s stock are short sold.

Top 5 Medical Stocks To Own Right Now: Google Inc.(GOOG)

Advisors’ Opinion:

  • [By Adam Levy]

    Hulu’s (soon to be majority controlled by Walt Disney (NYSE:DIS)) Live TV service launched last May, and it’s already attracted 955,000 subscribers, according to estimates from Strategy Analytics. Alphabet’s (NASDAQ:GOOG) (NASDAQ:GOOGL) YouTube TV launched around the same time and it has an estimated 410,000 subscribers. All told, five companies with practically no presence in pay TV just a couple of years ago have a total of 2.6 million subscribers. And that number is growing quickly.

  • [By Evan Niu, CFA]

    Yesterday, Samsung’s Harman Kardon announced a new $600 smart speaker called the Citation 500 that will integrate Alphabet’s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google Assistant. Today, Bose unveiled a trio of new products, including Bose Home Speaker 500, a Soundbar 700, and Soundbar 500 — all of which integrate Amazon.com’s (NASDAQ:AMZN) Alexa.

  • [By Motley Fool Staff]

    For a couple of giants like Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) and salesforce.com (NYSE:CRM), $75 million is pocket change. But that doesn’t mean they aren’t thoughtful about where they invest, so if they shelled that sum out for a stake in the U.K. start-up GoCardless, assume smart folks gave it some thought. GoCardless, a fintech start-up that lets its clients collect recurring payments from online customers via automated direct debit, will use this capital infusion to help fund its U.S. and international expansion.

  • [By Chris Neiger]

    Waymo, the self-driving car company owned by Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), has made considerable strides in the autonomous vehicle market lately, most notably the launch of its commercial self-driving car service late last year.

  • [By Sean Williams]

    As an example, in 2014, Google, which is now known as Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), issued a new class of stock. The pre-existing Class C shares (GOOG) have no voting rights, while the 2014-issued Class A shares (GOOGL) have one vote per share. Because Alphabet is such a mammoth of a company, its inclusion in the S&P 500 makes sense…but only if both classes of its stock are tracked by the S&P 500. 

Top 5 Medical Stocks To Own Right Now: BlackRock New Jersey Municipal Income Trust(BNJ)

Advisors’ Opinion:

  • [By Max Byerly]

    News headlines about Blackrock New Jersey Municipal Income Tr (NYSE:BNJ) have been trending positive on Wednesday, according to Accern Sentiment Analysis. Accern rates the sentiment of media coverage by analyzing more than twenty million blog and news sources in real time. Accern ranks coverage of public companies on a scale of -1 to 1, with scores nearest to one being the most favorable. Blackrock New Jersey Municipal Income Tr earned a news impact score of 0.32 on Accern’s scale. Accern also gave media coverage about the investment management company an impact score of 47.9578208138909 out of 100, meaning that recent media coverage is somewhat unlikely to have an impact on the stock’s share price in the next few days.

  • [By Logan Wallace]

    Headlines about Blackrock New Jersey Municipal Income Tr (NYSE:BNJ) have trended positive this week, according to Accern Sentiment Analysis. The research group rates the sentiment of media coverage by analyzing more than twenty million news and blog sources. Accern ranks coverage of publicly-traded companies on a scale of negative one to positive one, with scores closest to one being the most favorable. Blackrock New Jersey Municipal Income Tr earned a news impact score of 0.36 on Accern’s scale. Accern also gave media stories about the investment management company an impact score of 48.5554072096128 out of 100, meaning that recent media coverage is somewhat unlikely to have an impact on the stock’s share price in the immediate future.

Top 5 Medical Stocks To Own Right Now: Sinovac Biotech Ltd.(SVA)

Advisors’ Opinion:

  • [By Joseph Griffin]

    News articles about Sinovac Biotech (NASDAQ:SVA) have been trending somewhat positive this week, Accern reports. The research firm identifies negative and positive news coverage by reviewing more than 20 million blog and news sources in real-time. Accern ranks coverage of companies on a scale of -1 to 1, with scores nearest to one being the most favorable. Sinovac Biotech earned a coverage optimism score of 0.12 on Accern’s scale. Accern also assigned media stories about the biopharmaceutical company an impact score of 45.8977999719642 out of 100, indicating that recent news coverage is somewhat unlikely to have an impact on the stock’s share price in the near future.

The Bear Case for Apple Inc. Stock: An In-Depth Look

There’s a seeming contradiction when it comes to Apple Inc. (NASDAQ:AAPL). Apple stock now sits just off an all-time high. Last Thursday, its market capitalization hit $934 billion — the highest ever for a U.S. company. The iPhone is the most profitable product ever created — and it’s driven huge returns in AAPL stock, which has nearly tripled over the past five years and risen 600%+ over the past decade.

And yet Apple stock remains cheap. Dirt-cheap, it would seem. At these all-time highs, AAPL still is valued at a little over 14x FY19 (ending September) consensus EPS estimates. The figure is even lower when considering Apple’s huge cash balance.

The S&P 500 as a whole trades at more than 17x forward earnings, according to data compiled by Birinyi Associates. In other words, the world’s most valuable company, and the world’s most profitable company — ever — trades at a discount to the overall stock market. How can that be?

But looking closely at Apple’s financials and its outlook, there are good reasons why AAPL stock looks so cheap. Apple is the world’s most valuable company — and it’s also one of the most analyzed. The cheap multiple here isn’t due to the market not paying attention. Real risks lie ahead for Apple.

Given the importance of AAPL stock to the market as a whole, investors of all stripes need to understand those risks. And even AAPL bulls should understand who’s on the other side of the trade — and what the downside could be in AAPL stock.

How Cheap is Apple Stock?

At the moment, AAPL stock trades at about 16.5x consensus EPS for fiscal 2018. That’s a relatively cheap multiple — but it’s even cheaper considering the company still has about $31 per share in net cash, roughly one-sixth of its market capitalization. Backing out that cash, Apple stock trades at what seems like a ridiculously low multiple: 13.8x earnings.

It’s a number that seems like an outlier, particularly among large-cap tech. Alphabet Inc (NASDAQ:GOOGL,GOOG), Facebook Inc (NASDAQ:FB), and Microsoft Corporation (NASDAQ:MSFT) all trade at at least 20x 2018 earnings, even backing out their own net cash balances. And of course Amazon.com, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX) trade at nose-bleed valuations (80x forward earnings for AMZN, 71x for NFLX).

Simply applying a 20x earnings multiple — still below most of its large-cap tech rivals, which by the way all make much less money than Apple — would value AAPL stock at about $260, 38% higher than current levels. Even the 24x multiple (again, excluding net cash) assigned to Microsoft stock doesn’t seem particularly out of line for Apple. It’s not as if Microsoft is a growth juggernaut. In fact, the Street projects Apple to grow revenue faster than Microsoft in their respective fiscal years. 24x earnings plus the $31 per share in cash would value Apple stock at over $300, 62% higher than current levels.

AAPL stock isn’t just being treated by the market as an average stock. It’s being valued well below the average stock, and sharply less than its similarly well-known and widely-owned tech peers. And this isn’t a new development: Apple’s forward P/E actually is toward the higher end of its multi-year range. AAPL on several occasions has traded below 12x forward earnings — a multiple that suggests its business actually is headed for a decline.

Why? Why is the market acting as if Apple’s earnings growth is going to come to an end?

4 Big Risks for Apple Stock: Source: Oaxis

Risk #1: The Commoditization Risk

There are a number of reasons why investors are skeptical toward Apple’s long-term growth prospects. Most notably, the company remains reliant on the iPhone. And the history of tech hardware shows that eventually even the best products eventually become commoditized.

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It happened to IBM (NYSE:IBM) in mainframes. It happened to Dell Technologies Inc (NYSE:DVMT) and HP Inc (NYSE:HPQ) in PCs — after the Windows operating system helped end Apple’s early leadership in that category. BlackBerry Ltd (NYSE:BB) once was the world’s leader in smartphones; its stock has fallen more than 90% from its June 2008 peak.

All of these companies were victims of commoditization (though all four, notably BlackBerry, also have their share of self-inflicted wounds as well). As hardware products improve, incremental upgrades become less compelling — lengthening replacement cycles. Meanwhile, low-cost competitors inevitably enter with a “good enough” product, undercutting pricing — and margins.

In fact, commoditization already has hit Apple — on multiple fronts. The iPad was introduced in 2010, and basically created the tablet category. It was a massive hit. Revenue neared $5 billion in fiscal 2010 – in less than nine months. By fiscal 2012, sales had exploded to $31 billion — 20% of Apple’s total revenue. But less than three years after its launch, the iPad already had peaked. With cheaper Android alternatives proliferating, iPad revenue would fall 40% over the next four years.

Source: Shutterstock

A worse fate has befallen the iPod. A decade ago, that product drove over $9 billion in revenue. Apple no longer breaks out revenue from the product, but the company now sells just a single model. All of the iPod’s features are built into the iPhone. And consumers can buy a product roughly equal to last decade’s iPods in memory and performance for just a few dollars.

The qualitative driver behind the bear case for AAPL stock is based on the idea that eventually, competition and time come for even the best hardware products. And that process may already have begun for the iPhone as well.

Risk #2: Apple Stock’s iPhone Reliance

The launch of the iPhone X has received intense scrutiny from the media and investors for months now. Reports of potential delays raised initial fears. Concerns about demand seemingly were assuaged by a better-than-expected fiscal Q2 earnings report that has pushed AAPL stock to its new highs.

The focus on the X makes sense. The world’s most valuable company remains heavily reliant on the iPhone.

Source: Apple

62% of Apple’s total fiscal 2017 revenue came from the iPhone, per figures from the 10-K. That proportion has risen to two-thirds through the first half of fiscal 2018.

So the seemingly endless discussion of the prospects for the iPhone X aren’t a matter of investors and analysts having nothing better to do. If the iPhone starts to decline, Apple almost certainly follows. And in fact, the iPhone is showing signs of weakness.

Unit sales peaked in 2015 at 231.2 million. Over the past twelve months, the figure is about 6% lower, at 217.2 million. And in fact, iPhone revenue has declined over that period as well, by about 1%. The strong dollar has been a headwind — constant-currency revenue almost certainly is positive — but what growth Apple is grinding out comes from pricing.

So the bear case for Apple stock starts to become a bit more clear. The iPhone is driving 60%+ of revenue. Increasingly, it looks as if unit sales may already have peaked. The X, then, is a test case for whether Apple can continue its growth by increasing prices – which the entire history of hardware suggests should be impossible to do forever.

That’s why the Street was seemingly so negative on AAPL heading into the report. Weakness in the X suggested the end of revenue growth for the iPhone — for good. And it’s why the better-than-expected numbers on that front in Q2 have led Apple stock to bounce back so sharply. Despite the ecosystem it has built, and despite its other offerings, Apple stock still comes down to the iPhone.

Risk #3: The Rest of Apple

The reliance on the iPhone is magnified by the fact that the rest of Apple’s business has growth challenges of its own. As I pointed out last year, from fiscal 2012 to fiscal 2016, non-iPhone revenue barely moved. iPad growth was offset by declines in the iPod and the Mac line. As the Apple Watch came online, the iPad started to fade.

Apple is making some progress of late. According to SEC filings, non-iPhone revenue rose 11% in fiscal 2017, and another 14% in the first half of FY18. Still, hardware represents an issue beyond the iPhone as well. iPad revenue actually has risen through the first half of fiscal 2018 — somewhat surprisingly. Mac sales rose a sharp 13% in 2017 — but declined over the previous four years and are down again in the first six months of this year.

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Looking forward, growth in tablets, desktops, and laptops seems likely to be muted at best. Indeed, given longer replacement cycles, declines wouldn’t be a surprise.

The only two potential growth categories are Services and Other Products. There’s a reason why CEO Tim Cook has targeted $50 billion in services revenue by 2021, up from roughly $30 billion in FY17. Other Products — a category which includes Apple Watch, Beats, the iPod, Apple TV, and the recently released HomePod — has posted consistent double-digit growth since 2015.

But the concern is that those businesses simply aren’t that big. Combined, they generated about 20% of the company’s revenue over the past twelve months. Even assuming the Services business hits its $50 billion target, and is valued at an aggressive 4x revenue, it still would drive barely 20% of the value of Apple stock.

Source: Apple

Apple Watch has been a success — it’s the clear leader in smartwatches, and its growth has sent shares of rival Fitbit Inc (NYSE:FIT) plunging. Yet the product is not even big enough for Apple to break out its contribution. It just doesn’t materially change the company-wide financials.

This is the flip side of the iPhone’s success. It has made Apple so big, and so valuable, that what would be a massive hit for any other company simply doesn’t even move the needle.

The distribution of revenue by product seems to support the bear case that Apple’s growth will end at some point relatively soon. 60%+ of sales come from the iPhone. Unless pricing can go to $1,199 and beyond in perpetuity, revenue from that product is going to peak at some point. Another ~18% of revenue comes from the Mac lines and the iPad. Both of which are in clearly flattish long-term trends that could turn negative. Services and Other Products, then, are going to have to offset any weakness in iPhones on their own.  That’s a big ask given that their contribution to revenue is less than one-third that of the iPhone.

Risk #4: International Concerns

The breakdown of revenue by country, meanwhile, raises its own set of concerns.

42% of sales come from the Americas, the majority of that from the U.S. Apple continues to drive growth in that region, with a 12% increase in sales in FY17 followed by 13% growth in the first half. Still, the core concerns about iPhone growth would seem to apply heavily to the U.S. market, particularly with the end of subsidies from carriers like Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T).

Source: Shutterstock

Sales in the company’s Europe segment continue to rise — though that business also includes the Middle East, Africa, and the key Indian market. On the Continent, Apple has lost share in the four largest markets. It’s in developed markets where the commoditization concerns are likely to have the most impact. And in terms of unit sales, the iPhone already has started to stumble there.

Meanwhile, Apple could miss out on the two key developing markets.

Revenue in Greater China dropped 24% between 2015 and 2017. Strong performance in that region admittedly has been a big piece of good news this year. Sales have grown 15% through the first two quarters. But Apple still is losing share in that market to lower-priced in-country competitors. Additionally, trade war concerns are mounting. And at almost 20% of total sales, China is too important for Apple to lose.

In India, meanwhile, a twice-raised import tax makes the iPhone prohibitive. That leaves Apple mostly on the outside looking into the one of the world’s most important markets.

Looking geographically, then, an investor can see the risk to Apple’s revenue. The iPhone has to at least hold sales flat. But that will be a challenge in developed markets. And developing markets aren’t driving the growth needed. And it’s not as if consumers in those markets don’t have phones. They do. They just don’t have iPhones, and even the growing middle classes may not be able to afford them.

Combining the Risks for Apple Stock

Tying all the risks together for Apple creates a model in which revenue is currently at a peak — and earnings likely are as well. The iPhone drives 60%+ of revenue, and its unit sales may already have peaked. That figure has risen just 0.4% year-over-year so far in 2018 — and over the last four quarters remains below fiscal 2015 levels.

The U.S. market is saturated. Estimates suggest that on a unit basis, the U.S. drives about one-third of iPhone sales. China is the second-largest market — and has been negative over the past few years. Add in weakness in large European markets and something in the range of two-thirds of iPhone revenue — thus ~40% of Apple’s total revenue — is at risk of declining if and when Apple no longer can hike prices so aggressively.

Another 20% or so comes from developing markets where the iPhone is falling behind. Apple did post record first-half sales in India, according to the Q2 conference call — but most estimates suggest its presence in that country is small. The iPhone is #1 in China, according to the same call, but in a fragmented market, and revenue has been falling even accounting for currency headwinds.

20% of overall revenue is derived from the iPad and Mac lines, which are unlikely to grow much, if at all, going forward. The last 20% comes from Services and Other Products.

And so the calculation here becomes clear. Apple’s low-teen P/E and P/FCF multiples imply that the company’s growth is about done. But from a revenue standpoint, that’s potentially right.

Barring an acceleration in iPhone sales in China and/or India, the Services and Other Products business have to grow faster than the developed market iPhone business declines. But those businesses combined are half the size. So they’d need to grow twice as fast to account for iPhone declines.

The Bearish Scenario for Apple Stock

Understanding the distribution of revenue across products and geographies highlights the bearish scenario for Apple stock. Here’s how it could happen:

Source: Shutterstock

In developed markets, the iPhone has peaked. The X launch becomes the last major release that drives real buzz — and pricing power. Unit sales fall double-digits in 2019, in line with past performance after major launches. (iPhone unit sales fell 8% worldwide in FY16, for instance.)

Developing markets can’t pick up the slack. In Africa, and the Middle East, iPhone sales grow, but off a small base. Import taxes continue to drive Indian customers to in-country manufacturers as the government intended. Trade war rhetoric and low-cost competitors mean sales in China fall off in FY19 after a rebound year driven by the X.

Apple raises its prices modestly. But a shift to lower-priced models, particularly overseas, leads average selling prices downward. (This, too, is what happened in fiscal 2016: iPhone revenue fell 12%.) iPhone revenue drops from a record $160 billion in fiscal 2018 to $140 billion in fiscal 2019.

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Now, the narrative has changed. iPhone sales in both units and dollars are below their levels from four years ago. Apple breaks out Watch revenue for the first time: it has risen from ~$7 billion in FY19 to $9.5 billion in fiscal 2020. Investors point out that the figure is roughly 4% of Apple’s total sales.

The Services business is growing nicely — still at a double-digit pace — but slowing iPhone unit sales suggest little growth in the user count driving that revenue. A renewed decline in the iPad offsets modest growth in Mac sales. Apple’s overall revenue falls 5% in fiscal 2019 — and investors start asking how the decline will be reversed.

Again, this scenario is one in which most things go wrong for Apple. And I’d argue it’s more likely to occur (if it does) in fiscal 2021 than fiscal 2019. But it’s hardly based on outlandish assumptions.

Developed market iPhone revenues are going to turn south at some point. To offset those losses will require growth elsewhere. Services seems the most likely candidate — but even double-digit growth there only adds 2-3 points to the overall growth rate. The iPhone either needs better performance in developing markets — or the Watch, AirPods, and/or HomePod have to be multi-year winners.

A Cyclical Business

Some version of that bear case has surrounded Apple stock for years now. And, on occasion, it has gained some traction. In late 2012, Apple stock broke $700 (it has since split 7-for-1) for the first time. Within a matter of months, it had lost over 40% of its value. (iPad sales surprisingly turned south and investors worried the iPhone wouldn’t pick up the slack.) In 2015, cyclical worries again hit the stock. AAPL stock dropped about 35% over the next 15 months.

And it’s not just a matter of perception, either. Apple’s earnings have grown, but hardly in a consistent manner. Net income dipped between 2012 and 2014 before jumping in 2015. It fell again over the next two years, before heading to what seems likely to be a new peak in 2018.

It’s easy at the moment to assume AAPL bears (myself included) simply have been wrong the whole time. Apple stock is at an all-time high. The X looks set to perform better than skeptics believed. Services is growing nicely, and diversifying Apple away for the hardware business. Long-time (and well-respected) Apple analyst Gene Munster argued this month that we have entered a new “Apple story”. But investors need to remember that bulls thought the same in 2012 and 2015 as well.

Does The Bear Case Hold Water?

Admittedly, I’ve been proven wrong on Apple stock. And I’m not sure the bear case is that compelling at this point.

Source: Shutterstock

I do see long-term risk to the iPhone, but there’s also a scenario where Apple can offset any declines in that product. Services, Watch, and maybe AirPods and the HomePod can pick up some of the slack. Apple’s immense cash hoard is setting up a windfall for shareholders, as I wrote back in January. Even ~zero revenue growth likely leads to some profit growth, given that gross margins in the Service segment are higher than those in hardware categories. At 14x earnings, ‘some’ profit growth is enough to justify the current valuation.

Apple’s performance so far in 2018 also has undercut the bear case. I wrote after the Q2 report that even a skeptic like myself had to be impressed. The growth in China so far this year is important. So is the performance of the X. The Services business, as Munster pointed out, is becoming a bigger part of the narrative as it becomes a larger part of revenue. And somewhat quietly, margin pressures from a stronger U.S. dollar and higher memory prices are starting to reverse in Apple’s favor.

Still, from a long-term perspective, I do believe the bill is going to come due for Apple at some point.

Every hardware manufacturer has lost its technological advantage eventually. And I do believe the bear case merits consideration — even from ardent Apple bulls. There’s a reason why Apple stock looks cheap, and why it’s looked cheap for years. While the company may be able to grind out earnings growth, and upside in Apple stock, going forward, the long-term risks to the business model suggest that Apple stock never will get a market-level earnings multiple again.

As of this writing, Vince Martin has no positions in any sec

2018’s Biggest Stock Market Winners so Far

After a nearly perfect 2017 that saw big gains happen alongside mitigated volatility, the stock market hasn’t been able to replicate that success in early 2018.

Year-to-date, the S&P 500 is essentially flat. More than that, at one point in late January, the S&P 500 was up nearly 8% on the year. By the beginning of February, it was down 1% on the year.

In other words, the stock market of 2018 has looked very little like the stock market of 2017. Big gains have been replaced with sideways trading. And volatility has once again reared its ugly head.

But the broad market’s struggles don’t apply to every stock.

Thus far in 2018, the stock market has had some pretty big winners. And by big, I mean big. The market’s best-performing stocks have staged huge rallies of 50% and up thus far in 2018.

With that in mind, here are a few of the stock market’s biggest winners so far in 2018.

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Best-Performing Stocks #1: Netflix (NFLX) Netflix NFLX stock Source: via Netflix

Nothing seems to knock secular growth giant Netflix, Inc. (NASDAQ:NFLX) off its horse.

The other FANG names have struggled some in 2018. Facebook, Inc. (NASDAQ:FB) has been hit with data leak and personal privacy concerns. Alphabet Inc (NASDAQ:GOOG) is struggling to keep its margins up during a big investment period. Even Amazon.com, Inc. (NASDAQ:AMZN) has felt pressure recently due to regulatory threats.

But Netflix has faced zero meaningful threats so far in 2018. Meanwhile, the company continues to report strong beat-and-raise quarters that blow out expectations on every key metric from revenue to margins to earnings to subscribers.

That is why NFLX stock is up 70% year-to-date.

At this point, it seems that Netflix has reached escape velocity and is marching towards becoming the world’s biggest entertainment company. The Netflix streaming service just has such a powerful value prop (only $10-$15 per month for a seemingly unlimited library of exclusive content) relative to alternative entertainment options that global adoption at this point seem likes a question of when, not if.

That said, buyers should beware of valuation on Netflix stock at current levels.

I know that sounds silly for a stock that has done nothing but soar over the past several years, but even under bullish modeling assumptions of global domination and huge margin ramp, I still think the stock is only worth about $290.

Thus, at $320, it feels like the stock price has sprinted ahead of fundamentals in the near-term. In other words, if you want to buy this top-performing stock, it won’t hurt to wait for a meaningful pullback. 

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Best-Performing Stocks #2: Fossil Group Inc (FOSL) Fossil Group, Inc. (NASDAQ:FOSL) Source: Joe King via Flickr (Modified)

Not many people would guess this, but struggling traditional watch giant Fossil Group Inc (NASDAQ:FOSL) has actually outperformed streaming TV giant Netflix so far in 2018.

And its not because Netflix has struggled. Netflix stock is up 70% year-to-date. Fossil stock? It’s up 90%.

What is happening under the hood? Fossil is morphing into one of Wall Street’s most powerful turnaround stories.

For several quarters, Fossil fell victim to the smartwatch trend which destroyed the traditional watch market. Fossil’s core watch business tumbled. Sales got sliced. Margins were crushed. Net profits turned into net losses. And Fossil stock dropped from $130 to $5.

Yes, that is right. Fossil stock went from $130 to $5.

Seem overdone? It was.

Fossil wasn’t just laying idle as the smartwatch market killed its traditional watch business. They invested big into developing hybrid smartwatches, which are essentially the result of traditional watch fashion converging with smartwatch technology. Last quarter, FOSL gave the market signs that these hybrid smartwatches are starting to gain serious traction.

This momentum should persist.

Apple Watch won’t entirely dominate the smartwatch market. Instead, there will be multiple players in the smartwatch market, and one of the bigger players will be the company that most successfully integrates traditional watch fashion with smartwatch technology. Right now, Fossil is doing that best. Considering Fossil is the traditional watch giant, it is also pretty likely that Fossil continues to be the best at this for several years to come.

Meanwhile, Fossil stock is still at just $19. Again, this used to be a $130 stock. Therefore, it is pretty easy to conclude that if the smartwatch business continues to scale, Fossil stock still has a lot of room to run higher.

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Best-Performing Stocks #3: Chipotle Mexican Grill, Inc. (CMG) cmg stock Source: Shutterstock

The comeback in Chipotle Mexican Grill, Inc. (NYSE:CMG) has finally arrived. After the company hired a new CEO (who they stole from Taco Bell) and reported pretty good first quarter numbers, CMG stock has taken off and not looked back.

Year-to-date, CMG stock is up nearly 50%. And that includes a big drop in mid-February on bad Q4 numbers. Since then, CMG stock is up nearly 70%.

I was a vocal bear turned vocal bull on CMG stock. I hated the stock on the way down because it felt like health food trends had moved on from CMG and towards poke and superfood bowls. But then the tide started turning. Chipotle stores started filling up again, and the new CEO gave me faith that a Taco Bell-like turnaround was coming to Chipotle (that means targeted advertising, store redesigns, and menu innovations).

That said, after this blistering 70% rally off its 2018 low, CMG stock looks maxed out. The company faces a lot of competition in the quick casual restaurant space. Poke and superfood bowls are still very popular. Meanwhile, McDonald’s Corporation (NYSE:MCD) is actually reinventing themselves to be somewhat healthy with fresh beef patties and “Better Chicken” offerings (maybe not entirely healthy, but at least healthier than before).

Plus, margins will remain under pressure into the foreseeable future thanks to wage hikes.

Overall, then, if you put the current turnaround euphoria in context with the broader picture of a rebounding food chain in an only increasingly competitive QSR space, it is easy to see that CMG stock may have sprinted ahead of fundamentals in the near-term. Indeed, by my numbers, any price tag over $400 seems a little overdone here and now.

As such, while Chipotle has been one of the best-performing stocks so far in 2018, I expect gains from here through the rest of the year to be largely muted.

As of this writing, Luke Lango was long FB, GOOG, AMZ

Coty (COTY) Receives News Impact Score of 0.15

News coverage about Coty (NYSE:COTY) has trended somewhat positive recently, according to Accern. Accern identifies negative and positive press coverage by monitoring more than twenty million news and blog sources in real time. Accern ranks coverage of companies on a scale of negative one to one, with scores nearest to one being the most favorable. Coty earned a daily sentiment score of 0.15 on Accern’s scale. Accern also gave media headlines about the company an impact score of 46.8792850807847 out of 100, meaning that recent press coverage is somewhat unlikely to have an impact on the stock’s share price in the near future.

These are some of the media headlines that may have effected Accern Sentiment’s scoring:

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Accused Bigamist from San Angelo is On the Run Again (sanangelolive.com) Cosmetics Manufacturer Coty Takes Retail Space in Times Square (commercialobserver.com) Analyzing Colgate-Palmolive (CL) and Coty (COTY) (americanbankingnews.com) 3 Movers of Yesterday- Coty Inc. (NYSE:COTY), Alphabet Inc. (NASDAQ:GOOG), QIAGEN NV (NYSE:QGEN) (journalfinance.net) Trending Hot Stock’s Analysis Coty Inc. (NYSE:COTY) (nasdaqjournal.com)

A number of research firms recently commented on COTY. BMO Capital Markets raised their price objective on shares of Coty from $22.00 to $24.00 and gave the company a “buy” rating in a research note on Friday, February 9th. JPMorgan Chase raised their price objective on shares of Coty from $15.00 to $17.00 and gave the company an “underweight” rating in a research note on Monday, February 12th. Citigroup raised their price objective on shares of Coty from $21.00 to $23.00 and gave the company a “buy” rating in a research note on Friday, February 9th. Barclays set a $20.00 price objective on shares of Coty and gave the company a “hold” rating in a research note on Saturday, February 10th. Finally, Stifel Nicolaus reiterated a “buy” rating on shares of Coty in a research note on Friday, February 9th. Five analysts have rated the stock with a sell rating, six have given a hold rating and seven have assigned a buy rating to the stock. The company presently has an average rating of “Hold” and an average target price of $19.71.

Coty stock traded up $0.13 during mid-day trading on Friday, hitting $16.07. The company’s stock had a trading volume of 4,886,701 shares, compared to its average volume of 4,310,813. The company has a debt-to-equity ratio of 0.76, a quick ratio of 0.66 and a current ratio of 0.93. The firm has a market cap of $11,952.83, a price-to-earnings ratio of 25.51, a price-to-earnings-growth ratio of 1.72 and a beta of 0.38. Coty has a twelve month low of $14.24 and a twelve month high of $21.68.

Coty (NYSE:COTY) last posted its quarterly earnings results on Thursday, February 8th. The company reported $0.32 earnings per share (EPS) for the quarter, topping the Thomson Reuters’ consensus estimate of $0.24 by $0.08. The firm had revenue of $2.64 billion for the quarter, compared to analyst estimates of $2.48 billion. Coty had a negative net margin of 4.15% and a positive return on equity of 4.45%. The firm’s quarterly revenue was up 14.8% compared to the same quarter last year. During the same quarter in the previous year, the business posted $0.30 earnings per share. equities analysts predict that Coty will post 0.71 EPS for the current fiscal year.

In other news, major shareholder Cosmetics B.V. Jab acquired 4,100,000 shares of the stock in a transaction on Wednesday, February 14th. The shares were purchased at an average cost of $20.60 per share, for a total transaction of $84,460,000.00. Following the transaction, the insider now owns 287,558,041 shares in the company, valued at approximately $5,923,695,644.60. The acquisition was disclosed in a filing with the SEC, which is available through the SEC website. Insiders own 1.00% of the company’s stock.

Coty Company Profile

Coty Inc, together with its subsidiaries, manufactures, markets, sells, and distributes beauty products worldwide. It operates in three segments: Consumer Beauty, Luxury, and Professional Beauty. The Consumer Beauty segment offers color cosmetics, retail hair coloring and styling products, body care products, and mass fragrances primarily through hypermarkets, supermarkets, drug stores and pharmacies, mid-tier department stores, and traditional food and drug retailers, as well as own branded e-commerce and direct to consumer Websites.

Insider Buying and Selling by Quarter for Coty (NYSE:COTY)

3 Reasons YouTube Red Still Cant Compete With Netflix

In 2015, Alphabet’s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google launched YouTube Red, a paid ad-free subscription service aimed at challenging Netflix (NASDAQ:NFLX). However, YouTube Red never gained much ground against its entrenched rival.

In a recent interview withIndieWire, Susanne Daniels, YouTube’s chief of original content, admitted that Netflix was “too far ahead” and that YouTube Red’s development remained “in an early stage.”

A woman watches a streaming video.

Image source: Getty Images.

The numbers clearly support that bleak view. YouTube claims tohave over one billion users worldwide, but YouTube Red had just 1.5 million paid subscribers in2016 according to The Verge. Last year, Billboard claimed that YouTube Red and Google Play Music hada combined subscriber base of 7 million. For comparison,Netflix finished 2016 with 89.1 million paid subscribers, andthat figure hit 118.9 million in the first quarter of 2018.

YouTube’s failure to convert its free users to paid ones is a frustrating one, and probably can’t be solved easily for three simple reasons.

1. YouTube’s dependence on social media celebrities

YouTube believed that giving its most popular YouTubers original programs, then offering that content as YouTube Red “exclusives”, could convince free viewers to pay $10 per month. YouTube also produced its own original films, like The Thinning, which starred top YouTubers like Logan Paul.

That strategy backfired when some top YouTubers tarnished their own reputations with increasingly outrageous videos aimed atgrowing their followings. Logan Paul mocked a dead body in Japan’s infamous “suicide forest”, Sam Pepper faked a kidnapping and a murder, PewDiePie made numerous racist jokes, and GloZell Green filmed herself eating Tide Pods — which caused other attention-seeking YouTubers to do the same.

YouTube disciplined some of those troublesome YouTubers by suspending their YouTube Red projects and dropping some from its Google Preferred ad platform. Nonetheless, these problems highlight YouTube Red’s toxic dependence on social media celebrities, and why it remains well behind Netflix in terms of quality original content.

2. A lack of investment in A-list projects

YouTube then started chasing Netflix with original scripted shows like the sci-fi series Lifeline, the dance drama Step Up: High Water, and the Karate Kid sequel series Cobra Kai.

However, the vast majority of its programs still star YouTube celebrities instead of Hollywood talent. That makes YouTube Red look amateurish compared to Netflix’s expanding lineup of original programs, which feature a wide range of established Hollywood writers, directors, and actors.

YouTube also seems to be investing more money in original content for free YouTube users than YouTube Red subscribers. For example, YouTube recently added seven new series — including shows from Kevin Hart, Ellen DeGeneres andDemi Lovato — to its free site.

That decision seems odd, until you consider that YouTube Red users probably account for less than 1% of YouTube’s worldwide user base. Therefore, free YouTube Originals probably generate a higher ROI through ads than YouTube Red subscriptions.

Therein lies the problem: YouTube needs to invest more heavily in YouTube Red’s original content to attract viewers, but that money would be better spent on launching new original content for ad-supported users. Meanwhile, Netflix plans to invest $8 billion in original content this year.

3. The confusing YouTube ecosystem

To make matters worse, Google keeps shuffling the pieces of the YouTube ecosystem. Many users are still confused about how YouTube Music, Google Play Music, YouTube Red, and the upcoming YouTube Remix even fit together.

YouTube Music.

YouTube Music. Image source: Google Play.

Back in 2011, Google launched Google Play Music, a free service that lets users store their own digital tracks in the cloud andbuy digital songs. Google eventually added curated streaming radio stations to the platform, then launched a $10 per month subscription that gave users on-demand ad-free streams, unlimited skips, and offline music playback.

In 2015 Google launched YouTube Music, a free ad-supported app that plays the audio streams of music videos on YouTube. It then bundled a premium ad-free version of YouTube Music with YouTube Red subscriptions for $10 per month.

Recent rumors now suggest that YouTube will bundle together Google Play Music, YouTube Music, and YouTube Red intoa single platform — which will presumably also cost $10 per month. That sounds like a great way to challenge Netflix and Spotify simultaneously, but I suspect that YouTube will botch that launch and confuse users of all three services.

The bottom line

Daniels believes that YouTube Red can eventually “compete with Hulu and Amazon and certainly Apple.” However, YouTube’s aforementioned problems could prevent it from beating those rivals at capturing paid subscribers — even though it remains the largest video streaming site in the world.