investing – Page 2 – Finance by CWT

Bitcoin Is Rising. Why?

Bitcoin is currently trading at just over $37,000 a coin. Much higher than the beginning of the year when it was trading at around $16,000 a coin. With that in mind, one can see that Bitcoin is having a really good year. Bitcoin’s up 124% so far year-to-date which makes it one of my best performing investments of the year.

The real question is, why? Why is Bitcoin up so much this year? Especially considering the fact that a good chunk of that growth happened in the last couple months.

The big reason is the idea of a spot Bitcoin ETF. I’ve written before that Blackrock, along with several other companies, are trying to create a spot Bitcoin ETF, but the market believes we are getting really close to this being a reality. Several asset management companies are trying to create one, but Blackrock is who I am most excited about as they are the largest asset manager in the world.

I’ve been really excited about the possibility of a Bitcoin ETF. I believe that the price of Bitcoin will skyrocket when it’s approved. An ETF like this would make it so much easier for someone to buy and hold Bitcoin. It makes it easier for companies to buy Bitcoin. I believe that when this finally happens, a lot of money will pour into Bitcoin.

I’m very happy with the performance of Bitcoin so far this year.

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SoFi Stock is Down 17% Over the Last Month. Am I Buying More Shares?

SoFi is the biggest position in my investment portfolio that is not a fund. With that in mind, one can see that how SoFi performs in the market is a very big deal to how I, myself, perform in the market. Luckily, SoFi has done very well this year. Over the last month, however, it has fallen by more than 17% at time of writing.

I like SoFi. I use their products. I invest in their funds. I own shares in the company. I’m obviously very bullish on this stock. That said, I have actually not been buying as many shares this year as I did last year. I bought a lot of shares last year. SoFi then increased in value dramatically this year. I didn’t buy as much SoFi stock because the value of the company increased, and I didn’t want to buy as much at the higher prices. Now, however, the stock is looking a lot more appealing at these new prices. I like buying businesses when they are on sale.

Not everyone shares my love of SoFi. Wedbush analyst David Chiaverini is not a fan of the stock at all. He believes that SoFi will lose more than half of its value over the next 12 months. A big reason for this is loans.

SoFi is a big provider of loans. When SoFi loans out money, they don’t simply wait to collect the money back with interest. They try to sell the loan. That way they can make a profit much faster. This has worked well as SoFi has been able to create loans, sell them, and make a profit very quickly.

David Chiaverini points out that this is not all there is to it though. If the person who received the loan from SoFi doesn’t pay, it will still hurt SoFi. SoFi will have to face part of the losses if the one who received the loan refuses to pay. These losses are capped, but SoFi hasn’t stated what that cap is.

Obviously, that is a risk to SoFi’s bottom line. Is it a risk that should send SoFi to $3 a share? Obviously, I don’t think so. I wouldn’t be a shareholder if I did. David Chiaverini, however, disagrees with me.

All that being said, I’m very bullish on SoFi. I see SoFi as a company that is growing very quickly. I see SoFi as a company that is reaching profitability. I see SoFi as a company that is producing revenue through many financial products and services, loans simply being one of them.

Time will tell if I am right, but I am very bullish on this company.

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Disney Just Had a Good Earnings Report. Can They Turn Things Around?

Disney, at time of writing, is trading at $89.40 a share. A lot less than its all-time high of $201.91 a share. As one can see, things have not been going well for Disney’s shareholders over the last couple years. Covid is, of course, a big factor in that as it hurt their parks business pretty badly but that has not been the company’s only problem. A lot of their latest movies haven’t been doing well. Their streaming service has not been able to make a profit. They are also in a good amount of debt after the acquisition of Fox. Disney has just not been doing well. Recently, however, the company had a pretty good earnings report. Can they turn things around?

Let’s look at the numbers. Disney brought in $21.2 billion this latest quarter which is up 5% year-over-year. It did, however, slightly underperform Wall Street’s estimate of $21.4 billion. Their earnings, however, did not underperform. Disney earned 82 cents per share vs the 71 cents per share analysts predicted.

Disney+ also had some great news as well. Disney+ gained 7 million subscribers this quarter which is around 3 million more than expected. This means that they now have 112.6 million subscribers. Disney also believes that Disney+ will reach profitability by the fourth quarter of 2024.

The company also seems to be focused on decreasing costs. That’s what I personally believe is their biggest problem. The budgets they are doing for their shows and movies are, in my opinion, just way too high. Unnecessarily high.

I think that what investors should be really happy about is the announcement that Disney will be reinstating a dividend. To me, that seems like a very positive sign.

All-in-all this was a good quarter for Disney.

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Meta’s Earning Call Today Was Amazing!

Last year, Meta’s stock absolutely crashed. The stock was doing terribly. I felt like Meta’s price drop was a HUGE overreaction, so I invested in the company. The stock then fell more, so I bought more. This caused Meta to become a really large part of my investment portfolio. That, of course, ended up working out for me very well considering that I am currently up over 100% on my shares.

With the stock becoming so profitable for me, I considered selling my shares and realizing my gains, but I didn’t. I just love the overall business of Meta too much, and I like owning part of it. Meta had an earnings call today that I was really excited for, and I am happy to say that they absolutely crushed it. Here’s some numbers.

Meta brought in $34.15 billion in revenue compared to $33.51 billion expected.

Meta also earned $4.39 a share compared to $3.60 a share expected.

Meta also revealed that Facebook now has 2.09 billion daily active users compared to 2.07 billion expected daily active users.

One thing people will point out is that Meta is still losing a ton of money on vr/ar projects through its reality labs division. This was actually a big reason for the stock falling so much last year. While this is true, it’s a very small part of the actual business. The core part of the business (its family of apps) is still growing and producing more revenue. The business itself is doing well.

I was also pleased to see an update on its twitter like social media app Threads which launched about three months ago. I’ve seen many people make the claim that threads is not doing well. It exploded in growth early on and did experience a pullback after which, in my opinion, got way overblown by the media. Anything that grows as fast as threads did is obviously going to experience a pullback. Meta announced that threads currently has just under 100 million monthly active users. That is absolutely incredible for an app that is 3 months old.

Overall, I am very happy with this earnings call as a shareholder.

I have created a list of finance themed tools that I personally use to build wealth. Check it out – https://mez.ink/cwtfinance

Buying More Shares of Ally Financials Inc.

Ally is one of my favorite stocks, and it is one that I definitely plan on buying more of. They are a digital financial-services company most known as a digital bank. Here’s why I’m buying more shares:

I like buying digital banks because they don’t have to deal with the cost of brick and mortar locations and are becoming more and more popular. There’s huge demand for banks like this, and they are cheaper to run. This equation, I believe, is good to invest in.

Ally Financials, specifically, interests me because I believe that the stock is very cheap. I bought shares of this company earlier this year because I believed the stock was cheap, and I believe that that is still true now. The company currently has a p/e ratio of 7.16. While it is true that banks usually have lower p/e ratios compared to other industries, I don’t believe that Ally should. The reason for this is because Ally has, in my opinion, a lot of potential for growth.

The reason for this low valuation, I believe, is because of short term problems. Investors worry about Ally in regards to rising interest rates, declining car values, and inflation. I agree that this is reason for concern in the short term, but the keyword in that sentence is short term. I think it’s a short term hurdle for a strong business, and I’m really just concerned with the long term of this company. These problems are letting me buy this stock that I plan to hold for awhile at a very good valuation which is, of course, great for me.

Ally also has a 4.54% dividend. I like a good dividend because it gives me cash flow, but I also do wish that they were investing that money back into the business instead of giving it to me. That said, it’s a strong dividend for dividend investors.

All in all, Ally offers strong products that I believe will continue to be in high demand, and I think it is insanely cheap because of short term issues that I don’t believe will impact long term growth. Because of this, I believe that it’s a great investment for me. I plan to buy more shares of the company.

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Warner Brothers Discovery Says the Strikes Could Cost Them Up To $500 Million!

Last year, I started buying shares of Warner Brothers Discovery (Ticker: WBD). Why? Because I believed that the company was undervalued relative to its assets and intellectual properties (and still do). That decision, however, has not exactly paid off. Warner Brothers Discovery has seen multiple box office failures since I invested. While they do have very valuable IP, I did not account for them mishandling that IP as much as they have. This has, of course, made being a shareholder very frustrating so far.

WBD recently lowered their 2023 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast to $10.5 billion to $11 billion. This would be a hit of around $300 million to $500 million. They claim that this is largely due to the actors’ and writers’ strike.

While I am sure that the strikes are hurting them and is a big part of that number, I personally believe that a big reason for their losses is streaming. While streaming services can be profitable, a lot of the big studios are spending so much money on making content for their services that they are losing obscene amounts of money. Disney is having this same problem as they are spending hundreds of millions on several of their shows which is just not profitable.

The strikes were originally thought to be over by early September, and Warner Brothers Discovery CEO David Zaslav has been very into the negotiation process with the unions. It looks like the strikes are going to go on for a while more.

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Is Consolidated Water Co. Stock a Buy?

Investment research company Zacks recently reported Consolidated Water Co. (Ticker: CWCO) as a “strong buy”, but is the stock a buy?

CWCO constructs and manages water production and water treatment plants. They’re mostly found in the Bahamas, Cayman Islands, and the United States. They currently trade at a market cap of around $460 million.

The company currently has a p/e ratio (price divided by earnings per share) of 31.13 which I personally believe is pretty high. Last year, the company received $94.1 million in revenue and earned $5.86 million. The year before that they earned $66.86 million and earned around $875 thousand. The company also offers a dividend yield of 1.28%.

The reason this stock received a strong buy rating by Zacks is because they increased earnings 47.4% over the last 60 days. While that is impressive, the company does seem to be trading at a pretty hefty valuation premium still.

Looking at the stock’s fundamentals, one will find that the company currently has a price to book ratio of 2.56 and a price to sales ratio of 3.31. Both of these are traditionally viewed as very high. Looking at the company’s balance sheet, one will also find that the company has $2.38 million in total debt. This gives them a current ratio of 3.72. A current ratio this high could signal financial strength, but it could also indicate that the company is not good at investing the cash that it has.

Overall, I do believe that the company is overvalued, but most analysts do seem to place this stock between a strong buy and a buy rating. The stock is up 97.7% so far year to date at time of writing.

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The Secret to Dividend Investing

When buying a stock, I look at the company’s growth to see if I will be able to sell the stock at a later date for more money than I bought the stock for. Obviously, if the business looks like it is in the decline, then I will not buy it at a premium valuation. Another thing that I look at is if the stock is paying a dividend. If a company is growing their earnings year-over-year while offering a dividend, I like that stock because I can buy into the company and get cash flow from the company that I can use to invest into other businesses. Not only will I benefit from the eventual sale of the stock, but I will be able to grow my cashflow along the way.

Many people take this idea and then try to find the stocks offering the biggest dividends. That can be a problem though. When one finds a stock offering a huge dividend, the question they should ask is why? Why is the company offering such a high dividend? One reason is often because they have to. If a company is seeing a massive decrease in share value, they might offer a bigger dividend to keep investors from selling. If one buys stock in a business at $40 a share and receives a 10% dividend but then that company decreases in value by 20%, they’re still losing money.

I like to buy into companies that are offering a dividend, but it is important that that company is still experiencing growth or at the very least not declining in growth. I also like to put high dividend paying stocks into a Roth IRA so that I do not have to pay taxes on the dividends I receive. Dividends are taxes as income which can put a good-sized dent into one’s overall return.

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Warren Buffett Sold $8 Billion Worth of Stock. Does It Matter?

Warren Buffett’s Berkshire Hathaway has sold $8 billion worth of stock in the most recent quarter. Because of this, I have seen a ton of articles saying that this “raises fears of a crash”. Many “experts” have put out content talking about what this means or why he did it, but does it really matter at all?

While $8 billion is a lot of money, it is important to realize that that is a very miniscule amount of money for Berkshire Hathaway. As of last year, Berkshire Hathaway had $948.4 billion in assets. $8 billion is not going to make or break a portfolio like that.

I would imagine that Warren Buffett sold $8 billion worth of stock to help diversify the portfolio by trimming down a position. Either way, it doesn’t matter. If Buffett does think that the market is going to crash, selling $8 billion worth of stock isn’t really going to help him at all.

The market is very much in the green so far year-to-date meaning that a lot of people are once again trying to predict a crash. Of course, no one actually knows what the market is going to do short-term. Either way, Buffett selling a tiny fraction of his portfolio is not a clue.

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Is SoFi’s Stock Approaching a Buying Opportunity

I have been buying shares of SoFi for a while now, and it is one of my biggest holdings in my portfolio. I bought most of my SoFi shares when it was trading at around $5 a share. The stock has been on quite an amazing run lately though as they make a lot of their money through student loan refinancing, and student loans are unpausing soon. Over the last month, however, SoFi has fallen back down by around 10%. Is the stock at a buying opportunity??

SoFi is an all-in-one finance app. They do loans, banking, investing, credit cards, and more. Their banking division has gotten a lot of their attention lately as they offer banking without having physical locations. This is attractive to investors because it keeps the costs of banking way down. Earlier this year, bank stocks massively took a hit after Silicon Valley Bank collapsed, and SoFi was no exception. That’s when I seriously cranked up my buying of SoFi as the market was being irrational.

SoFi currently sits at an $8 billion valuation. The company is not profitable, and it currently trades 4.12 times their sales. This might sound like a lot, and it definitely is, but SoFi is growing insanely quickly in both revenue and users. While SoFi is trading at quite a premium, long-term I believe it’s a good company.

My opinion is that right now, SoFi is a little overvalued. I could see the stock falling more in the short-term, but I think that long-term, SoFi shareholders will be very happy.

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