🍨 Daily Scoop: The Show Must Go On | Trade Stocks

The Show Must Go On

By Tue, May 26, 2020

Hey Scoopers,

After wrapping last week in the green, the stock market took a day off on Monday for honoring those who served in the military and died protecting the country. Nevertheless, the stock market show went on. — More on that in the “Overall Market” section.

Beyond the overall market, we did some Memorial Day stock market research, and we found something new and something old to add to our watchlists. — More on that in the “What’s Up?” and “What’s Down?” sections.

Oh, by the way, we’ve got your emails about “stocks for beginners,” and have some answers today. — More on that in the “Water Cooler” section.

But, first, here is a recap of what happened in the market last week:

Market Recap

  • U.S. markets: All three indices finished last week in the green. Scroll down to the “Overall Market” section to read more.
  • Cryptocurrency: The excitement about Bitcoin halving continues to subside, and Bitcoin’s price is now under the $9,000 mark.

 


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The Show Must Go On.

The market wrapped last week at least 3% higher. The reopening excitement has got investors giddy for a chance to recover what was lost due to the pandemic. Regardless, the grim economic outlook is still hovering in the media. It is as if the stock market show must go on.

 


Something New

So, what happened?

Shares of Moog Inc (Ticker: MOG.A) / MOG.B) were up more than 2% on Friday. This is a small $1.6 billion market cap company that just came on our radar during our long weekend stock market research. The company manufactures precision motion and fluid control systems for the aerospace and defense markets. The stock has lost quite a lot of its value since the start of the Covid-19 pandemic and hasn’t recovered yet. Despite the price decline, the company’s latest quarterly earnings report was quite positive. Sales and net earnings were up. Moreover, more than half of the company’s revenue is coming from defense and space contracts with the U.S. government, which are fairly stable sources of revenue.

The decline is most likely due the withdrawal of the 2020 outlook and the suspension of the company’s share buyback program and quarterly dividend. Additionally, the commercial aircraft and industrial segments are expected to get hit. Customers such sas Boeing (Ticker: BA) and Airbus (Ticker: EADSY) are expected to adjust their orders which will impact the company’s revenue from those segments.

Overall, the leadership has characterized the situation of the company quite stable. But, investors are not ready to accept that. This is a stock worth watching for now



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Something Old

So, what happened?

Shares of Axon Enterprise (Ticker: AAXN) were down more than 2% on Friday. Formerly known as Taser, the company is a supplier of teasers and body cameras to the police force. Its transition to the cloud and its platform for the storage and streaming of the body camera and drone footage is generating a rapidly growing revenue of $147 million. The stock’s drop on Friday seems to be a response to the recent withdrawal of full-year guidance by the company during the latest quarterly earnings report in response to the COVID-19-induced uncertainties. Nevertheless, this is a company with a strong balance sheet and a strong foothold in the mark of police force technology that seemed to be the right fit for our Memorial Day weekend stock market research.


Stocks For Beginners

So what happened here?

Some Scoopers emailed us last week to ask about stocks for beginners. A fellow Scooper who didn’t share his name asked us: “Need to see some stock that poor people can buy, especially for newcomers who have a small capital.” It looks like he/she is starting off at $200 and would want to know what to buy with that amount. Well, we are so glad you asked!

How to screen stocks for beginners?

There are more than 15,000 publicly-traded companies listed on the stock exchanges in the U.S. Even if we ignore smaller and volatile penny stocks and only focus on the three main exchanges, NYSE, NASDAQ, and OTCM (Over The Counter Markets), there are still more than 6,000 individual stocks every investor has to review and choose from. If you are a new investor, facing more than 6,000 stocks feels confusing and overwhelming.

You’d want to use a few criteria to narrow down your research. For example:

  • Market capitalization of > $2 billion – To avoid smaller companies that have more volatile stocks.
  • Stock price is < $500 per share – To make it more affordable. Most new investors do not want to jump in with thousands of dollars to start.
  • Years since IPO >= 3 years – IPOs tend to be more volatile and less stable.
  • Beta (a measure of volatility) is < 1.2 – To make sure the beginner investors don’t deal with extremely volatile stocks.
  • Strong balance sheet (measured by low debt to equity ratio, and positive free cash flow) – To make sure the company is not in dire need of cash.

Here are three examples to consider:

  • Logitech International (Ticker: LOGI)
  • Nike (Ticker: NKE)
  • Adobe (Ticker: ADBE)

The detailed methodology is explained on Stock Card’s blog. And, the full list of Stocks for Beginners is available for free.

To you, all other readers of The Daily Scoop, thank you and keep reading. Also, send us your questions, feedback, and requests. We read all of our emails. Our email address is members@tradestocks.com.

Disclosure: Authors of this Scoop own shares of Authors of this Scoop own shares of Adobe (Ticker: ADBE) and Axon (Ticker: AXON).
About the Author

The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card