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Will American Airlines Group Inc. (AAL) Fizzle Or Continue To Sizzle

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Equity traders with a focus on cannabis-related stocks must be geared toward volatility. There are many powerful catalysts and risks inherent to the sector, and many of the stocks involved are necessarily a combination of those aspects.

American Airlines Group Inc. (AAL) is no exception, with shares trading at a beta of 1.16.

The stock’s market cap currently sits at 24.31B after its most recent closing level of 49.78. The stock has been on a wild ride over the past year, with a change over the past 52 weeks of 17.27%. In addition, liquidity has not been an issue, with 10-day and 3-month average trading volume statistics of 3.51M and 4.86M, respectively.

To properly evaluate a name that has anything to do with operations in the marijuana and cannabis sector, you must start with the company’s balance sheet. The most central concept here is about potential future top-line growth because space itself is so widely understood to have huge growth potential in the quarters and years ahead. That means new investment by the company can have enormous returns, but that is only possible if it has something to invest.

The company is currently sitting on 5.07B in cash and cash-equivalent securities at the present time. That compares with 25.07B in total standing liabilities right now. That should provide at least a basic sense of how well prepared the company is for unexpected obstacles or new lucrative investment opportunities. The future is always full of surprises. A robust balance sheet is the only certainty that exists.

The next step in evaluating a growth momentum stock (which is inherently the classification for anything in the cannabis space) is to look at how that balance sheet is likely to evolve over time. For that, we want to assess cash flows and sales trends, on the one hand, and the trend in debt levels, on the other.

In the first case, the company is seeing an operating cash flow at about 4.74B at present. That folds in with 42,207,000 in total sales from last year, or 42.21B on a trailing twelve month basis. Both of these trends offer a window into where cash levels may be over time.

With an outstanding share total of 473.14M, that means that sales per share are currently tracking at about 86.28.

But, at the same time, we can’t lose sight of the other side of the equation. Cannabis-related operations are, in many cases, intensive investment opportunities, meaning that companies in the space can pile up debt in a hurry, which can end up resulting in concerns about future dilution by the investment community, leading to underperformance in shares.

In this case, the cost of sales last year for the company was 11,090,000. Total expenses related to operations also came in at -. That captures some of the picture here. 

This may help to explain why the stock has been acting as it has. Right now, the stock’s major moving averages are at 53.22 and 51.24, for its 50-day and 200-day simple moving averages, respectively. 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

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Could investors throw in the towel on Melco Resorts & Entertainment Limited (MLCO)

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Melco Resorts & Entertainment Limited (MLCO) has been stirring up interest among traders, and the company’s financials and technicals may explain some of that focus. The stock is a player in the cannabis space, which puts it in a bit of a spotlight as well. All of these trends and figures deserve some scrutiny, so we thought it was a good idea to take a closer look at the stock today.

In a fast-growth market segment, such as anything even remotely related to the marijuana and cannabis space, the story is always about potential for robust top-line growth and strong flows of cash from principal operations. That means we need to focus on the balance sheet first and foremost, then turn our attention to sales data. Finally, we will take a look at the chart and get a sense of how this stock is being treated by investors and traders in recent action.

The company is currently sitting on 1.51B in cash and cash-equivalent securities at the present time. In a high-ROI market like the cannabis space, cash is king because it allows a company to deploy it with a high expected rate of return on that investment. And investors, in turn, are usually willing to pay up for access to that high rate of return.

Naturally, we also have to point out that the company is sitting on 3.86B in total standing liabilities right now. Any major growth in debt can handicap a company in the cannabis space because most of these companies already function in the high-risk quadrant of the portfolio template given their inherent legislative risk, and debt further distances that potential leap to institutional flows given the implicit additional risk of dilution that generally accompanies excessive debt.

So, how has the market been treating the stock? For that, we must turn to the technicals. As most traders know, the cannabis space has been a speculative darling, but volatility is particularly high in these stocks. Melco Resorts & Entertainment Limited (MLCO) has been no exception, with a beta of 2.15. With a market cap of 15.406B, shares most recently closed at 28.210. For some perspective, consider that it has traded as high as 30.49 over the past year, and as low as 18.78, but the stock’s current 50-day simple moving average is tracking right now at 27.79.

One of the reasons so many of these stocks have such wide swinging volatility is because the risks are large but so is the potential for huge growth given that most businesses in the cannabis-related space are in some way tethered to the upward growth potential of a new and emerging market. But another reason is that many are still trading with relative small outstanding cap tables. In this case, Melco Resorts & Entertainment Limited (MLCO) is pulling around 544.3M in outstanding shares.

Even so, liquidity is always important. At this point, the stock has a 3-month average for shares changing hands in a given session of 2.72M. If you’re curious about whether or not folks are becoming more or less focused on the name, consider that its most recent 10-day average trading volume stands at 2.96M by comparison.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

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Are Investors Wary Of NetApp, Inc. (NTAP)?

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NetApp, Inc. (NTAP) has been stirring up interest among traders, and the company’s financials and technicals may explain some of that focus. The stock is a player in the cannabis space, which puts it in a bit of a spotlight as well. All of these trends and figures deserve some scrutiny, so we thought it was a good idea to take a closer look at the stock today.

In a fast-growth market segment, such as anything even remotely related to the marijuana and cannabis space, the story is always about potential for robust top-line growth and strong flows of cash from principal operations. That means we need to focus on the balance sheet first and foremost, then turn our attention to sales data. Finally, we will take a look at the chart and get a sense of how this stock is being treated by investors and traders in recent action.

The company is currently sitting on 5.63B in cash and cash-equivalent securities at the present time. In a high-ROI market like the cannabis space, cash is king because it allows a company to deploy it with a high expected rate of return on that investment. And investors, in turn, are usually willing to pay up for access to that high rate of return.

Naturally, we also have to point out that the company is sitting on 2.17B in total standing liabilities right now. Any major growth in debt can handicap a company in the cannabis space because most of these companies already function in the high-risk quadrant of the portfolio template given their inherent legislative risk, and debt further distances that potential leap to institutional flows given the implicit additional risk of dilution that generally accompanies excessive debt.

So, how has the market been treating the stock? For that, we must turn to the technicals. As most traders know, the cannabis space has been a speculative darling, but volatility is particularly high in these stocks. {{companyAbbr_1}} has been no exception, with a beta of 1.87. With a market cap of 16.322B, shares most recently closed at 59.16. For some perspective, consider that it has traded as high as 65.58 over the past year, and as low as 37.43, but the stock’s current 50-day simple moving average is tracking right now at 61.39.

One of the reasons so many of these stocks have such wide swinging volatility is because the risks are large but so is the potential for huge growth given that most businesses in the cannabis-related space are in some way tethered to the upward growth potential of a new and emerging market. But another reason is that many are still trading with relative small outstanding cap tables. In this case, NetApp, Inc is pulling around 267.92M in outstanding shares.

Even so, liquidity is always important. At this point, the stock has a 3-month average for shares changing hands in a given session of 3.24M. If you’re curious about whether or not folks are becoming more or less focused on the name, consider that its most recent 10-day average trading volume stands at 2.96M by comparison.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

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Could investors throw in the towel on Lam Research Corporation (LRCX)

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Stock of Lam Research Corporation (LRCX) opened at $197.92 and last traded at $195.83 x 200. More than 1,966,106 shares exchanged hands compared to an average daily volume of 3,904,340 shares. At the current pps, the market capitalization stands at 32.283B.

Fundamentals you simply cannot ignore

Investors try to use stocks with high beta values to quickly recoup their investments after sharp market losses. Lam Research Corporation (LRCX) currently has a Beta value of 1.44 . Beta is a measurement of a stock’s price fluctuations, which is often called volatility and is used by investors to gauge how quickly a stock’s price will rise or fall. A stock with a beta of greater than 1.0 is riskier and has greater price fluctuations, while stocks with beta values of less than 1.0 are steadier and generally larger companies. Beta is often measured against the S&P; 500 index. An S&P; 500 stock with a beta of 2.0 produced a 20 percent increase in returns during a period of time when the S&P; 500 Index grew only 10 percent. This same measurement also means the stock would lose 20 percent when the market dropped by only 10 percent. Next, let’s take a look at Lam Research Corporation (LRCX) current P/E ratio. Lam Research Corporation (LRCX) currently has a PE ratio of 21.76. PE ratio is an important parameter to look at when trading a stock mostly because it is easy to calculate. There are a couple of ways to calculate PE ratio either by dividing share price by earnings per share or dividing the market cap by net income. It is important to note that the earnings are usually taken from the trailing twelve months (TTM). Nevertheless, P/E tells us how much an investor is willing to pay for $1 of a company’s earnings. The long-term average P/E is around 15, so on average, investors are willing to pay $15 for every dollar of earnings. Another useful way to look at this: Turn the P/E ratio around to look at the E/P ratio, which when expressed as a percentage gives us the earnings yield. For instance: 1/15 gives us an earnings yield of 6.67%.

While we have already looked at Lam Research Corporation (LRCX) beta and P/E ratio, the EPS cannot be ignored. Lam Research Corporation (LRCX) EPS for the trailing twelve months was 9.10. Traders and investors often use earnings per share (TTM) to determine a company’s profitability for the past year. So in essence, EPS is the amount of a company’s net income per share of common stock. Earnings per share equal the company’s net income less any dividends paid on preferred stock divided by the weighted average number of common stock shares outstanding during the year. Lam Research Corporation (LRCX) is estimated to release its next earnings report on 6 / 2018 (N/A-Not know at this time). It would be interesting to see how the earnings fair out considering the recent developments.

The Analyst Chirp:

Lam Research Corporation (LRCX) has received an average target price from analysts of $258.70 amounting to a recommendation rating of Buy. That comes from 22 different analysts. Perhaps, the driver for that assessment comes from the company’s valuations. Right now, we are looking at a median price-to-earnings ratio for this calendar year of 12.12. To give a sense of trend, the same data point on the estimate for next year is currently sitting at 12.43 times earnings. Drilling down a bit further, this quarter, we are looking at an average estimate from analysts for earnings per share level of 18.00. That shift to 18.00 heading into next quarter.

Other Stocks in same sector as Lam Research Corporation (LRCX):

Other notable stocks in similar sector as to Lam Research Corporation (LRCX) to consider are {{companyAbbrExt_1}}, {{companyAbbrExt_2}}, {{companyAbbrExt_3}} that last traded at ${{Bid_1}}, ${{Bid_2}}. ${{Bid_3}} respectively.

 

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

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DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE