Top Stock Pick – ENPH (Enphase Energy)

Top Stock Pick – ENPH (Enphase Energy)

Stock Review of the Day
Stock:  ENPH (Enphase Energy)
Summary:  ON SALE

Score:  15/20
MOS:  92%
Share Price:  $208
Sticker Price:  $2,650

Enphase Energy is an US energy technology company founded in 2006 and headquartered in Fremont, CA. 

This website shows a video of how Enphase works.  

In summary…

Enphase is not a solar panel company, they are a company that sells Batteries, AC (Alternating Current) Units, and Microinverters.

As stated on the Enphase website, solar panels may get all the glory, but it’s the inverter that does all the work in a solar energy system. Tucked beneath each solar panel, microinverters convert the direct current (DC) power collected from the solar panels to alternating current (AC), the form of electricity your home operates on.

Solar panels provide direct energy to a home but what happens at night?  Homes with solar panels will have to tap into the energy grid like any normal home.  Enphase is different because it stores that energy in batteries so the home will continue to operate.

While Enphase doesn’t manufacture solar panels, they work with module partners to produce the AC Module, which combines their microinverter with a solar module into one integrated unit. Your solar installer can help you pick out the right solar panel for your system.  If you want Enphase products installed, you’ll need to work through a local installation company which you can look up on the Enphase website.

Enphase has over 300 patents, they have sold over 30 million inverters, and they operate in 21 countries.

I did some homework on the costs of their products.  Here is the rundown…

  • Empower Smart Switch = $3,600
  • Encharge 3 Battery = $7,000
  • Encharge 10 Battery (3 Encharge 3 batteries in one unit) = $11,000
  • Envoy Combiner Box = $1,800

Total Cost for the Encharge 10, Smart Switch, and Combiner Box = $16,400

If you don’t already own solar panels, the approximate cost on panels + labor = $10,000 – $15,000

Now you may be curious to know the payback time of the investment.

Based on this article on the Enphase website, you can obtain federal and state rebates for the product.  In 2020, you could have reduced costs by 26%.  If you can get rebates to reduce the upfront cost, you’re looking at a 7 – 10 year payback which is pretty good.  In my opinion, if someone tries to sell me a product with a payback time of over 15 years, I tend to lose interest.

On 12/31/2020 The Motley Fool announced in this article that Enphase Energy will be joining the S&P 500.  Enphase will replace Tiffany & Co.  This is great news!

This article on Goldman Sachs talks about the future of clean energy.  As stated on the website, technological innovations and new financing methods are making renewable energy more accessible than ever before. As a result, solar, wind, hydropower and other sustainable sources are expected to account for half of our global energy mix by 2030, according to estimates from Bloomberg New Energy Finance.  This transformation will allow the world to meet its growing power needs more sustainably—helping to create a cleaner, healthier and brighter future.

With a score of 15/20, the financials are very strong.  When you look at the WHY page in TYKR, you can see the Equity Growth Rate is 3/3, the EPS Growth Rate is 3/3, and the Sales Growth Rate is 3/3.  Enphase is also on the TOP 50 ON SALE.  With an MOS of 92% (Share Price of $208 vs Sticker Price of $2,650) the future of this stock is looking bright.

What do you think?

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Sean Tepper

Top Stock Pick – TSLA (Tesla, Incorporated )

Top Stock Pick – TSLA (Tesla, Incorporated )

Stock Review of the Day
Stock:  TSLA (Tesla Inc)
Summary:  OVERPRICED

Score: 10/20
MOS: 0%
Share Price:  $733
Sticker Price:  $346

Tesla was founded in 2003 and is based out of Palo Alto, CA.  Tesla is known for its automobiles but it also sells battery energy storage, solar panels, and solar roof tiles.

This is definitely one of the most popular high flying growth stocks in the last few years.  It’s time that I provide a little insight on this stock before the next quarterly and annual report.  The overall theme you’re about to read is BE CAREFUL.

TSLA’s share price has increase by 700% since January of last year.  It’s one of the most emotionally driven investments I’ve seen in a long time but will it last?

Here are three reasons why you should be careful with this stock…

  1. On November 29th of 2020, The Motley Fool released this article which talks about TSLA having a market cap higher than GM, Ford, Toyota, Volkswagen, Honda, Nissan, Ferrari, and Fiat Chrysler COMBINED yet only produced 500,000 vehicles in 2020.  Proof of a significant overvaluation.  
  2. On January 5th of 2021, The Motley Fool released this article which talks about TSLA struggling to generate a recurring profit which could result in a 50% share price decline in 2021.
  3. On December 2nd of 2020, this article from CNN reports that Elon Musk told his employees they need to cut costs or they can kiss its lofty stock price goodbye.  Musk acknowledged that Tesla’s actual profit margin is fairly low, only about 1%, and that the stock price is due to investor expectations of future profits rather than recent results.  His exact words were “If, at any point, they conclude that’s not going to happen, our stock will immediately get crushed like a soufflé under a sledgehammer!”

There is evidence here that the stock could drop significantly at the next earnings date which is targeted to be January 27th, 2021.

My suggestion is to set your Trailing Stop Losses now.  If you don’t know how to set that up, please reach out to your broker.  They can quickly teach you.

A trailing stop loss works by setting a sell price as the stock declines.  This way, as the stock continues to increase, you’ll keep making more money, but if the stock starts to decrease considerably, the stock will sell and you’ll take a profit.  This prevents massive downside losses.

On speculative stocks and high flying growth stocks, I typically suggest a trailing stop loss of around 10%.  In other words, as the stock declines 10% from its most recent high, it will sell.  

Before you set your trailing stop losses, you’ll need to determine your Adjusted Cost Per Share.  This is the average price you bought the share at.  You’ll want to make sure you set a trailing stop loss HIGHER than your adjusted cost per share so you don’t take a loss.

Knowing that that share price is $733, a 10% trailing stop loss price target would be about $660.  In this case, you would set your trailing stop loss at $73.  In other words, as the share price falls by $73 from the most recent high, the stock will sell.

Overall, if we hear bad news on (or around) January 27th, and TSLA starts to nose dive, the stock will sell so you only take a 10% loss compared to The Motley Fool prediction of a 50% loss.

There are many times in history where stocks and assets have climbed high but fallen straight back down.  You want to be in a position where you take profits and get out before they hit the bottom.

Examples:

  • CGC (Canopy Growth) in 2019.  The stock hit $49 in April of 2019.  Within 6 months it was down to $15.  A 69% loss.
  • Bitcoin in 2017.  This asset nearly hit $19,000 in December of 2017.  Within 2 months it was down to $8,000.  A 57% loss.  Bitcoin has been on a recent climb but it could face another correction very soon.
  • CCL (Carnival) in 2020.  This stock hit $49 in February of 2020.  Within 1 month is was down to $12.  A 75% loss.

With a score of 10/20, the financials are okay but the scary indicator is the MOS of 0% (Share Price of $733 vs a Sticker Price of $346).

What do you think?

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All stock reviews are for entertainment purposes only. Reviews are not financial advice.

Blog Post Author
Sean Tepper

Top Stock Pick – BIDU (Baidu, Inc.)

Top Stock Pick – BIDU (Baidu, Inc.)

Stock Review of the Day
Stock:  BIDU (Baidu Inc)
Summary:  OVERPRICED

Score: 7/20
MOS: 0%
Share Price:  $190
Sticker Price:  $1

Baidu is a Chinese multinational tech company founded in 2000 and based out of Beijing, China.

The Baidu search engine is currently the second largest search engine in the world (behind Google) and the fourth largest website in the Alexa Internet rankings.

Some of Baidu’s other products include Baidu Maps (similar to Google Maps), Baidu Wangpan (cloud storage), Baidu News (national and international news), Baidu MP3 (Music downloading service), Baidu Video Search (video platform similar to Youtube), Baidu Baike (online encyclopedia), and Baidu Translate (similar to Google translate).

Recently, ZACKS has rated Baidu as the #1 rated China stock because of the projected earnings growth rate to be up 11% over the last year.

Baidu is clearly a GROWTH STOCK.  It’s a large tech conglomerate that looks like a great investment from the outside but when you take a closer look at the financials, this stock could nose dive if a quarterly report reveals slowing growth or negative growth.

Here is a closer look…

  • Revenue growth over the last year is 3%.  We’ll see what that number looks like when the 2020 annual report is released.
  • Free Cash Flow is -77% over the last year.  They are running out of available cash fast which is a bad sign.
  • Debt has increased by 3% over the last year.  With the lack of available cash and the increasing debt, this is another bad sign.

If ZACKS predictions are correct, this stock could continue to go higher but if the annual report falls short of expectations, you might want to be prepared to sell or at least setup a trailing stop loss so you protect yourself from downside losses.

With a score of 7/20, this stock is risky.  When you take a closer look at the WHY within TYKR, the ROIC is 4/6 which isn’t bad but the stock falls short with Equity Growth Rate, EPS Growth Rate, Sales Growth Rate, and Cash Growth Rate.  Wtih a MOS of 0% (Share Price of $190 vs a Sticker Price of $1) this stock could tank.

Their last earnings date was November 16th.  This means the next earnings date will most likely occur in February.  If you hold this stock, keep your eye on this one in February.  If the financial reports are lower than expected, this might be a good time to get out.

What do you think?

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  • Manage your own investments, beat the market, and retire early
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  • 20 year history outperforming the S&P 500
  • Know when to BUY when stocks are GOING DOWN
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All stock reviews are for entertainment purposes only. Reviews are not financial advice.

Blog Post Author
Sean Tepper

Top Stock Pick – ALL (Allstate Corp)

Top Stock Pick – ALL (Allstate Corp)

Stock Review of the Day
Stock:  ALL (Allstate)
Summary:  ON SALE

Score:  17/20
MOS:  69%
Share Price:  $105
Sticker Price:  $338

The Allstate Corporation is an American insurance company founded in 1931 and headquartered in Northfield Township, IL.

Their insurance products include Auto, Home, Life, Motorcycle, Renters, Boat, and Off-Road Vehicles.

If you’re ever unsure what industry to invest in, insurance is typically a safe play.  Here are two primary reasons why…

  1. Insurance is a necessity.  Homeowners insurance is required by law in all US states and Auto insurance is required by law in most US states.  You have to love a business model that is mandated by law.
  2. Insurance is also a recurring business model.  This is great for cash flow.  As consumers we either pay premiums monthly, quarterly, or yearly.  A business model with recurring cash flow is extremely important (Insurance, SaaS, Internet Service, Cell Phone Service, etc).

This last summer of 2020 Allstate announced that it will be acquiring National General for $4B because of the National General independent insurance agent network.

Some insurance companies such as Farmers Insurance are classified as “Captive” insurance company which means their agents only sell Allstate products.  Insurance companies with captive agents can face sales challenges because the consumer is typically shopping based on price, not product.  If a Captive agent can’t match or beat a price, the customer may keep shopping.

The alternative to Captive agents are “Independent Agents”.  Independent Agents can sell multiple insurance companies.  This allows Independent Agents to match or beat prices which means they have a much higher sales closing ratio.  This is great for overall company revenues.

This acquisition will increase significant market share for All State and solidify it as one of the top insurance companies in the US.

Overall, Allstate has fantastic financials.  With a score of 17/20, this is proof on how well Allstate is operating.  Allstate is currently ranked #4 on the TOP 50 ON SALE.  With an MOS of 69% (Share Price of $105 vs Sticker Price of $338) this stock has excellent upside potential.

What do you think?

Don’t miss out on great investments!

Join TYKR for FREE:  CLICK HERE

  • Reduce Risk, Save Money, and Investment Confidently
  • Manage your own investments, beat the market, and retire early
  • Find GREAT DEALS before they become mainstream news
  • 20 year back tested returns between 10% and 96%
  • 20 year history outperforming the S&P 500
  • Know when to BUY when stocks are GOING DOWN
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  • Clean interface makes navigation fast and easy
  • Layman’s terms language makes TYKR more approachable
  • A source of truth to avoid bad advice from gurus

All stock reviews are for entertainment purposes only. Reviews are not financial advice.

Blog Post Author
Sean Tepper

Top Stock Pick – ZM (Zoom Video Communications, Inc.)

Top Stock Pick – ZM (Zoom Video Communications, Inc.)

Stock Review of the Day
Stock:  ZM (Zoom)
Summary:  OVERPRICED

Score: 6/20
MOS: 0%
Share Price:  $402
Sticker Price:  $103

Zoom Video Communications, Inc. (Zoom) is an American technology company founded in 2011 and headquartered in San Jose, California.  Zoom went public in March of 2019 at around $60 per share.  The stock increased to $130 by March of 2020, over a 100% return the same year.  That’s pretty good but it doesn’t compare to what happened next…

Once COVID-19 hit and companies started allowing more employees to work from home, Zoom became highly in-demand.  The stock went from $130 in March to an all time high of $559 in October.  That’s a 330% return in just a few months.  Since October, the stock has been on a slight decline as the stock is currently $402.  That’s a decline of 28% since October.

The question is, why?

Zoom is considered a growth stock and when a growth stock stops growing, and doesn’t have the financial strength like a value stock, the share price can fall abruptly.

On 12/1, the share price fell by 14%.  Here is why…

Revenue Growth is Slowing

  • Revenue Q4 (2019):  $188M
  • Revenue Q1 (2020):  $328M (74% increase)
  • Revenue Q2 (2020):  $663M (102% increase)
  • Revenue Q3 (2020):  $777M (17% increase)

Net Income Growth is Slowing

  • Net Income Q4 (2019):  $15M
  • Net Income Q1 (2020):  $29M (93% increase)
  • Net Income Q2 (2020):  $190M (555% increase)
  • Net Income Q3 (2020):  $194M (2% increase)

Many companies have adapted well to remote work by using platforms like Zoom.  Let’s talk about the work-from-home industry for a moment…

This article from prnewswire.com states the following:

  • 28% of employees expect to return to the workplace by the end of 2020
  • 38% of employees expect to return to the workplace by the end of 2021
  • Only 17% of employees feel comfortable returning to the workplace at all

That last percentage is the line item to focus on.  The great majority of employees are NOT comfortable returning to the workplace.  This means means work-from-home will most likely remain for the foreseeable future and platforms like Zoom will remain a necessity.

Although Zoom’s revenue and net income have leveled off, this doesn’t mean the stock will nose dive.  Due to the high demand of platforms like Zoom, this price may remain where it’s at for a while.  On the other hand, if we start to see the revenue and net income fall lower than previous months, then we have a problem.  In other words, that’s a great time to SELL before you lose out on the massive gains from 2020.

What do you think?

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All stock reviews are for entertainment purposes only. Reviews are not financial advice.

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Top Stock Pick – DHI (D.R. Horton)

Top Stock Pick – DHI (D.R. Horton)

Stock Review of the Day
Stock:  DHI (D.R. Horton)
Summary:  ON SALE

Score:  17/20
MOS:  67%
Share Price:  $72
Sticker Price:  $226

D.R. Horton is the largest home builder in the US based on construction volume.  They were founded in 1978 and are based out of Arlington, TX.  They operate in 29 states and have 7,700 employees.

D.R. Horton has been the largest home builder in the US based on volume for the last 10 years.  Here are 2019 statistics compared to the competition…

  • D.R. Horton:  58,000 home closings
  • Lennar Corp:  51,000 home closings
  • PulteGroup:  23,000 home closings
  • NVR:  19,000 home closings
  • KB Home:  11,000 home closings

Here is a quick snapshot on how the competition stacks up within TYKR.

Stock:  LEN (Lennar Corp)
Summary:  OVERPRICED
Score:  9/20
MOS:  0%
Share Price:  $72
Sticker Price:  $52

Stock:  PHM (PulteGroup)
Summary:  WATCH
Score:  11/20
MOS:  36%
Share Price:  $41
Sticker Price:  $65

Stock:  NVR (NVR)
Summary:  ON SALE
Score:  12/20
MOS:  60%
Share Price:  $3,960
Sticker Price:  $3,000+

Stock:  KBH (KB Home)
Summary: ON SALE
Score:  10/20
MOS:  79%
Share Price:  $34
Sticker Price:  $171

When observing the competition, the only real competitor regarding volume is LEN and they are well OVERPRICED.   As for NVR and KBH, they are both ON SALE but their scores (12/20 and 10/20) do not compare to the standout DHI score of 17/20.

If you didn’t already know, the US housing market has an inventory issue.  In other words, we’re running out of houses which has caused house prices to surge to all time highs.  Here are some interesting statistics on the US housing market sited by biggerpockets.com.

  • House sales have surged by 20% from 2019 to 2020.
  • The average listing time dropped from 46 days to 39 days from 2019 to 2020.
  • House prices have soared 14% from 2019 to 2020 with the average house cost being $333,900.

Roofstock.com is also estimating that by 2025, millennials are expected to form more than 20 million new households.

So, if we have declining inventory and an estimation that millennials will form new households, this means two industries will be positively impacted:

1.  Rental properties.
2.  New housing construction.  That’s where D.R. Horton comes into play.

Investors.com recently listed D.R. Horton as one of the Top 50 companies to pay attention to.  Here are some impressive statistics sited within the article.

  • Since the COVID dip in March of 2020, the D.R. Horton share price is up 200% this year.
  • They have a near perfect EPS rating of 99/100.  Their EPS grew by 50% over the last year.

Now let’s take a closer look at the numbers.

  • Revenue is up 20% over the last quarter
  • Net Income is up 30% over the last quarter
  • EPS is up 30% over the last quarter
  • Free Cash Flow is up nearly 50% over the last quarter

Overall, the financials are very impressive.  Within TYKR, reaching a score of 17/20 is difficult.  D.R. Horton is currently ranked #7 on the TOP 50 ON SALE.  With a MOS of 67% (Share Price of $72 vs Sticker Price of $226) this stock has solid upside potential. Not only do they have impressive financials but they are in the perfect storm.  With house inventory declining, people have two options.  They can either rent or build and it looks like the home building industry isn’t slowing down any time soon.

What do you think?

Don’t miss out on great investments!

Join TYKR for FREE:  CLICK HERE

  • Reduce Risk, Save Money, and Investment Confidently
  • Manage your own investments, beat the market, and retire early
  • Find GREAT DEALS before they become mainstream news
  • 20 year back tested returns between 10% and 96%
  • 20 year history outperforming the S&P 500
  • Know when to BUY when stocks are GOING DOWN
  • Know when to SELL when stocks are GOING UP
  • See the real reason WHY a stock is ON SALE
  • Clean interface makes navigation fast and easy
  • Layman’s terms language makes TYKR more approachable
  • A source of truth to avoid bad advice from gurus

All stock reviews are for entertainment purposes only. Reviews are not financial advice.

Blog Post Author
Sean Tepper