Magnifi Communities, Author at Magnifi Communities

AI – Do You Have It in Your Portfolio?

In late January, the world of artificial intelligence went mainstream when popular online media company BuzzFeed announced it was planning to use artificial intelligence software called API to help it generate content.
OpenAI, the company that created API, also made the more popular ChatGPT, released in November of 2022.
API and ChatGPT have been used to write emails and create quizzes and listicles. It has even been used to write reports on popular books and other essay-style assignments for high school and college students.
While we have all heard about the potential of artificial intelligence for years, BuzzFeed taking the plunge and using it to create content is a big deal.

For most of us, this is the first time we can say we are seeing the technology firsthand (well, at least that will be true when we see our first AI-created quiz or article).
Up until now, AI has to most people, just been a pie-in-the-sky idea that we weren’t sure how it was going to affect our lives. Or how we would interact with AI technology on a day-to-day basis.
BuzzFeed using AI, makes it real now.
And now that it is real and not just a research project some technology company in California is spending money on, maybe now is a good time to put some real money into it.
Unfortunately, OpenAI, the creator of these AI chatboxes, is not publicly traded. But, a number of other companies are developing similar technology and are publicly traded.
However, since we are still very much in the infancy stages of AI technology, my suggestion is not to try and cherry-pick the AI winners today but bet on the idea that AI as a technology will prevail. The way to do that is with Exchange Traded Funds.
Exchange Traded Funds that buy companies developing artificial intelligence and robots will expose you to the whole industry but reduce your single stock risk. Let’s take a look at a few ETFs that are focused on AI, and then you can decide which one is right for you.
The first one I would like to point out is the Wisdom Tree Artificial Intelligence and Innovation Fund (WTAI). WTAI tracks an equally-weighted index of global stocks whose businesses are derived from artificial intelligence and innovation.
All companies in the fund need to generate at least 50% of their revenues from AI and innovation activities. The fund has 77 holdings, with the top 10 representing just 20% of the fund, and charges an expense ratio of 0.45%. NVDA and Taiwan Semiconductors are two of the top ten holdings.
These two stocks, for example, highlight that it is difficult to invest in companies that are directly developing AI, but we need semiconductors to operate AI technology. This is just something investors need to be aware of since the industry is still so young.
The next two ETFs are very similar since they both focus on robotics and artificial intelligence. The iShares Robotics and Artificial Intelligence Multisector ETF (IRBO) and the Global X Robotics & Artificial Intelligence ETF (BOTZ) have expense ratios of 0.47% and 0.68%, respectively.
IRBO has 114 positions, while BOTZ holds just 44 positions. IRBO also has only 12% of the fund’s assets tied up in the top ten holdings, while BOTZ has 67.5% of the assets in the top ten holdings. IRBO also has a better yield, at 0.67%, than BOTZ’s yield of just 0.21%.
Personally, I like IRBO for a number of reasons however BOTZ has been around a few more years and has $1.5 billion in assets, compared to IRBO’s $258 million in assets. Neither fund has a dominating asset amount, but BOTZ is in a much better financial situation.

Three more ETFs that discuss having exposure to artificial intelligence in investment guidelines are the ARK Autonomous Technology & Robotics ETF (ARKQ), the ROBO Global Robotics and Automation Index ETF (ROBO), and the ProShares MSCI Transformational Changes ETF (ANEW).
The three funds charge 0.75%, 0.95%, and 0.45%, respectively. ARKQ is the most focused with 39 holdings, while ANEW has 169 positions, but even still, ANEW’s top ten holdings represent 23% of the assets.
Since the AI industry is still very much in its infancy stage, finding good AI-focused ETFs is difficult today, but it will get better in the future.
Regardless, that doesn’t stop you from buying into an industry that could literally change the world someday.
Matt ThalmanINO.com ContributorFollow me on Twitter @mthalman5513
Disclosure: This contributor did not hold a position in any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

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1 Tech Stock To Count On In 2023

INO.com / By Magnifi Communities

Software giant Oracle Corporation’s (ORCL) second-quarter revenue and EPS exceeded Wall Street’s estimates. The company’s EPS was 3.2% above the consensus estimate, while its revenue beat analyst estimates by 2.1%.
The strength in cloud infrastructure and cloud-based applications drove a solid topline performance.
Its total cloud revenue, including infrastructure-as-a-service (IaaS) and software-as-a-service (SaaS), rose 48% year-over-year in constant currency to $3.80 billion.
IaaS revenue increased 59% year-over-year in constant currency to $1 billion.
Without the impact of the foreign-exchange rates, ORCL’s adjusted EPS would have been 9 cents higher.
ORCL’s CEO, Safra Catz, said, “In Q2, Oracle’s total revenue grew 25% in constant currency-exceeding the high end of our guidance by more than $200 million. That strong overall revenue growth was powered by our infrastructure and applications cloud businesses that grew 59% and 45%, respectively, in constant currency.”

“Fusion Cloud ERP grew 28% in constant currency, NetSuite Cloud ERP grew 29% in constant currency- each and every one of our strategic businesses delivered solid revenue growth in the quarter,” she added.
For fiscal 2023, the company expects its cloud revenue to grow more than 30% in constant currency compared to the 22% growth in fiscal 2022.
ORCL expects its revenue to rise 17% to 19% on a reported basis and 21% and 23% on a constant currency basis in the third quarter. Also, it expects adjusted EPS for the third quarter to be between $1.17 and $1.21, lower than the consensus estimate of $1.24.
ORCL’s stock has gained 13.3% in price over the past three months and 13.6% over the past six months to close the last trading session at $88.46.
The company paid a quarterly dividend of $0.32 on January 24, 2023. Its annual dividend of $1.28 yields 1.45% on the current share price. It has a four-year average yield of 1.59%.
Its dividend payouts have increased at a 10.1% CAGR over the past three years and an 11% CAGR over the past five years. The company has grown its dividend payments for eight consecutive years.
Here’s what could influence ORCL’s performance in the upcoming months:
Steady Topline Growth
ORCL’s total revenues increased 18.5% year-over-year to $12.27 billion for the second quarter that ended November 30, 2022.
The company’s non-GAAP operating income increased 4.8% year-over-year to $5.08 billion. Its non-GAAP net income declined 2% year-over-year to $3.31 billion.
In addition, its non-GAAP EPS remained flat year-over-year at $1.21.
Favorable Analyst Estimates
Analysts expect ORCL’s EPS for fiscal 2023 and fiscal 2024 to increase 0.1% and 13.7% year-over-year to $4.91 and $5.58.
Its revenue for fiscal 2023 and 2024 is expected to increase 17.5% and 7.5% year-over-year to $49.85 billion and $53.58 billion.
Mixed Valuation
In terms of forward non-GAAP P/E, ORCL’s 18.03x is 10.4% lower than the 20.11x industry average. Its forward EV/EBIT of 15.58x is 7.6% lower than the 16.87x industry average.
However, the stock’s 6.47x forward EV/S is 124.4% higher than the 2.88x industry average. In addition, its 4.78x forward P/S is 64.9% higher than the 2.90x industry average.
High Profitability
In terms of the trailing-12-month gross profit margin, ORCL’s 76.10% is 54.7% higher than the 49.19% industry average.
Likewise, its 20.85% trailing-12-month levered FCF margin is 180.1% higher than the industry average of 7.45%. Furthermore, the stock’s trailing-12-month Capex/Sales came in at 14.49%, compared to the industry average of 2.51%.
Technical Indicators Show Promise
According to MarketClub’s Trade Triangles, the long-term trend for ORCL has been UP since November 15, 2022, and its intermediate-term trend has been UP since October 17, 2022. The stock’s short-term trend has also been UP since February 1, 2023.
Source: MarketClub
The Trade Triangles are our proprietary indicators, comprised of weighted factors that include (but are not necessarily limited to) price change, percentage change, moving averages, and new highs/lows. The Trade Triangles point in the direction of short-term, intermediate, and long-term trends, looking for periods of alignment and, therefore, intense swings in price.

In terms of the Chart Analysis Score, another MarketClub proprietary tool, ORCL, scored +90 on a scale from -100 (strong downtrend) to +100 (strong uptrend). ORCL is in a strong uptrend that is likely to continue. While ORCL is showing intraday weakness, it remains in the confines of a bullish trend.

The Chart Analysis Score measures trend strength and direction based on five different timing thresholds. This tool considers intraday price action; new daily, weekly, and monthly highs and lows; and moving averages.
Click here to see the latest Score and Signals for ORCL.
What’s Next for Oracle Corporation (ORCL)?
Remember, the markets move fast and things may quickly change for this stock. Our MarketClub members have access to entry and exit signals so they’ll know when the trend starts to reverse.
Join MarketClub now to see the latest signals and scores, get alerts, and read member-exclusive analysis for over 350K stocks, futures, ETFs, forex pairs and mutual funds.
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Best,The MarketClub Team[email protected]

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These Oilfield Services Stocks are Booming

Investors Alley / By Magnifi Communities

The energy sector is one that keeps rewarding its investors. For example, let’s look at the so-called “Big Three” oil services companies: Halliburton (HAL), Baker Hughes (BKR) and SLB (SLB)—formerly Schlumberger.

In 2022, these firms registered their most profitable 12 months since the heyday of the U.S. shale boom, reporting an aggregate net income of $4.4 billion in 2022, which was the highest combined figure since 2014.

Most of this income came in during the latter part of 2022.

SLB racked up $3.4 billion in profits in 2022, almost a third of which came in the final quarter. Halliburton also brought in the bulk of its $1.6 billion in earnings in the latter part of the year.

Baker Hughes was the worst performer, posting a full-year loss of $601 million, thanks to parts shortages and write-offs connected to its Russian operations. But even it ended the year on an upbeat note, with record quarterly orders of more than $8 billion. Baker Hughes also posted $5.9 billion of revenue in the fourth quarter.

So, what comes next? Can the good times continue to roll?

Looking Ahead at Energy

Most of Wall Street is saying to stay away from anything energy related. Please, don’t listen to them.

Instead, listen to the people at ground level that actually see what is going on in the energy industry.

For instance, during SLB’s earnings call, CEO Olivier Le Peuch was almost giddy, saying: “We concluded the year with 23% growth in revenue; 70% growth in earnings per share, excluding charges and credits; adjusted EBITDA margin expansion of 152 basis points; cash flow from operations of $3.7 billion; and 13% return on capital employed (ROCE), its highest level since 2014.”

In addition, Le Peuch described 2022 as a “pivotal” year for the energy industry, which he said had just entered the “early phase of a structural upcycle,” adding: “The fourth quarter affirmed a distinctive new phase in the upcycle…Durability is here to stay—and we are talking about years.”

Higher energy prices over the past year have pushed up drilling and production activity and triggered a rush to secure the equipment and personnel provided by oil services companies. Equipment shortages, materials like frac sand, and insufficient manpower have allowed the oil services firms to raise prices. Meanwhile, the cost-cutting regimes put in place during the coronavirus pandemic have bolstered their profit margins.

Jim Rollyson, head of oilfield services equity research at Raymond James, told the Financial Times: “Rising profitability paired with constrained capital expenditures is allowing these companies to generate strong free cash flows.”

That’s why the stocks of oilfield services companies outperformed the broader market, as well as other energy stocks in 2022, and will continue to do so. The Financial Times reported oilfield services stocks, as tracked by the OSX (PHLX Oil Service Sector) index, rose 59% in 2022—their best performance since 2009!

And, as the CEO of SLB said, the outlook is bright going forward.

Company executives in the sector paint a universally positive outlook for the year ahead, thanks to rising oil demand, tight supplies, and a renewed focus on energy security.

“With years of under-investment now being amplified by recent geopolitical factors, global spare capacity for oil and gas has deteriorated and will likely require years of investment growth to meet forecasted future demand,” said Lorenzo Simonelli, Baker Hughes’s chief executive. “For this reason, we continue to believe that we are in the early stages of a multiyear upturn in global activity.”

The only unfortunate thing, from an investment standpoint, is that none of these companies have a high dividend yield. The highest-yielding stock out of the “Big Three” is Baker Hughes (2.4% yield), so let’s take a closer look at it.

Baker Hughes

The number-three oil services company as we know it today was formed from the merger of Baker Hughes and GE’s oil and gas business in July 2017.

The company’s industrial energy technology (IET) division drove most of the sequential revenue growth in the fourth quarter because of elevated demand for Baker Hughes’ gas technology equipment. Nearly 60% of the segment’s order intake was derived from gas technology equipment. The IET division overall garnered more than $4 billion in orders this quarter, nearly double the quarterly average since 2017.

There are two major bullish factors that will benefit Baker Hughes in the years ahead. First, the company’s strong market share in several oilfield services specializations (such as directional drilling) should lead to significant contract wins, as well operators seeking to maximize production efficiency. And second, high demand for liquid natural gas refineries over the next decade will ensure a robust project pipeline for Baker Hughes, even if oil demand falls.

Now, let’s look at the Baker Hughes dividend…

On October 27, 2022, the company did increase its quarterly dividend by 6%, to $0.19 per share, or $0.76 annually. The first payment at the new rate was made on November 18, 2022. Argus’ revised dividend forecasts are $0.80 (raised from $0.76) for 2023 and $0.84 for 2024.

The firm does consistently return cash to shareholders: Baker Hughes has paid annual dividends per share of $0.72 since 2018—even during the 2020 downturn when many of its peers cut or altogether suspended distributions to conserve cash.

Baker Hughes also completed $434 million worth of share buybacks in 2021 and is targeting annual buybacks of between $200 million and $300 million over the next few years. Management indicates it will revisit its shareholder returns strategy once GE—which currently owns about 16% of Baker Hughes’ stock—fully exits its investment position, likely by the end of 2023.

BKR stock is a buy anywhere in the low $30s.
It’s raised its dividend 37.5% on average, could be acquired, benefits from rising interest rates, trading at massive discount, and pays an 8% yield. This is my top pick for income during a rough market.Click here for details.

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2 Sorry Stocks to Sell in February

StockNews.com / By Magnifi Communities

Moderating inflation for the sixth consecutive time in December 2022 substantiates that the Fed’s hawkish stance had its intended effect. However, as inflation remains significantly higher than the desired level of 2%, the Fed has clearly stated its intentions of rate hikes but at a slower pace. Recently, the Federal Reserve raised interest rates by

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3 Stocks for Long-Term Investors to Buy in 2023

StockNews.com / By Magnifi Communities

The Fed recently raised interest rates by 25 bps, its first hike for 2023. This marks a significant slowdown in the Fed’s aggressive monetary tightening policy amid declining inflation. Fed Chair Jerome Powell said, “We can now say I think for the first time that the disinflationary process has started.” Moreover, the U.S. job market

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An Oil Stock Set to Explode

Investors Alley / By Magnifi Communities

Oil prices likely aren’t going anywhere anytime soon. Not with all the geopolitical pieces at play. There’s 1 oil stock in particular that recently broke out of a 8 year consolidation. It’s pulled back to the support lines twice and recently pulled back this past week. I can see this stock exploding over the next

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Are Chinese Internet Stocks Set To Rebound in 2023?

Investors Alley / By Magnifi Communities

The Kraneshares CSI China Internet ETF (KWEB) is a popular ETF for options trading with 120,000 contracts traded per day on average. KWEB can be volatile but it has rebounded significantly from November of last year. Last week, a trader purchased over 20,000 of what appear to be bullish call spreads in KWEB March options.

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2 FAANG Stocks Staging A Comeback

INO.com / By Magnifi Communities

The fabled group of five large-cap tech businesses, so-called FAANG — Facebook (currently Meta Platforms), Amazon, Apple, Netflix, and Google (currently Alphabet) — dominated the stock market through late 2021.
However, a challenging macroeconomic environment in 2022, characterized by stubborn inflation and removal of Covid restrictions, saw big tech struggling to meet and exceed the high expectations of growth in subscribers/users and advertisement revenues set at the height of the pandemic.
The slump in the performance of these tech businesses was soon reflected in the price action of their stocks. Their dismal year can be summarized by the below snapshot at the end of October 2022.
Source: Forbes
However, the drawdown brought the valuations of these compounders to a more comfortable buying point while they did the needful to recapture lost demand and improve the efficiency of their businesses.

Loading …
Hence, it could be wise to load up on Meta Platforms, Inc. (META) and Netflix, Inc. (NFLX) to capitalize on trends that indicate a potential comeback.
Meta Platforms, Inc. (META)

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This Software Stock Is a No-Brainer Buy For 2023

StockNews.com / By Magnifi Communities

While an expected 25-bps hike in interest rates today would put further pressure on stressed margins of various tech businesses scrambling to survive profitably amid high borrowing costs, Oracle Corporation (ORCL) is making it look exceptionally easy. ORCL offers services and products tailored to the needs of enterprise IT environments worldwide. The company directly offers

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A Reverse Stock Split That Actually Works

Investors Alley / By Magnifi Communities

A reverse stock split usually occurs when a company in some sort of financial trouble is in danger of being delisted from the stock exchange. Because of the negative connotation, I was surprised to see, on January 20, business development company Oaktree Specialty Lending (OCSL) announce a 1-for-3 reverse stock split.

A subscriber wrote in to ask me about this – what happened, why, and how the dividend payouts behave afterward.

And it reminded me that sometimes, these reverse stock splits actually work in our favor…

A reverse stock split increases the share price without increasing the value or market cap of the company. Most of the time, you will see a reverse split declared when a company’s share price decreases to one dollar or less, as a stock will be delisted from the exchange if it trades below a dollar for any length of time.

Typically, a company whose stock has dropped to the dollar range is also a company that is not doing well with its business. As a result, investors see a reverse split as a sign the company may be in trouble; increasing the share price with this maneuver won’t stop the price from continuing on a downward trajectory.

Because of the negative connotation, I was surprised to see, on January 20, business development company Oaktree Specialty Lending (OCSL) announce a 1-for-3 reverse stock split. Let’s go over what that meant.

With the Oaktree reverse split, investors would receive one share for every three they owned. If an investor had 300 shares, he would have 100 shares after the transaction. At the same time, the share price increases by the same factor. At the time of the reverse split, OCSL went from around $7 per share to $21. This means the 300 shares worth $2,100 became 100 shares worth $2,100.

A subscriber asked me what happens to a dividend with such a reverse split.

Oaktree Specialty Lending will adjust its dividend rate to match the reverse split. The company paid $0.18 per share paid at the end of December, meaning it will now pay $0.54 per share—or more, as the company has been growing its dividend. The adjusted dividend will keep the yield near the 10% level that was in effect before the reverse split.

The reason for the Oaktree reverse split seems to be a move to make the share price appear to have more value. Investors are sometimes leery of a sub $10 share price—but at $20 per share, OCSL trades on par with many of its BDC peers.

In the case of Oaktree Specialty Lending, the reverse split definitely is NOT a danger signal. The company is well-run, and I would give it a top-five rating in the universe of business development companies. BDCs become more profitable when interest rates are higher, and OCSL has been growing its dividend.

I currently recommend three other BDCs to my Dividend Hunter subscribers. If I decided to add a fourth, OCSL would be the most likely choice.
You can collect 1 dividend check every day for LIFE. To get started, all you need is as little as $605. Out of 4,174 dividend stocks, there are only 33 you need to buy to collect. Click here to get the full details.

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Magnifi Communities