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Beleaguered retailer Bed Bath & Beyond (BBBY) was once a favorite among meme stock traders. But just last week, the company expressed doubt that it will be able to continue operating without filing bankruptcy. The stock price dropped 25% on the news, falling under $2 a share. Most options action on the day appeared to

Bear markets tend to move in 3 stages.  I believe we just entered stage 2 (yes, only stage 2 at this point!).  There’s one US economic chart I’m looking at today that verifies what I’m telling you.  Every Thursday, I share weekly videos like this for free.  This video is under 3 minutes so it’s

Last year, the energy sector was the only market sector to post a positive return—and it did a heck of a job! The Energy Select Sector SPDR (XLE) gained 60% last year.

One-year gains like that may make you cautious about committing to energy this year, but I believe your portfolio should continue to hold an above-average energy weight.

Let’s look at some of the fundamentals…

The mega-cap energy companies give a good view of the sector. With a $440 billion market cap, Exxon Mobil Corp (XOM) is one of the ten largest U.S. companies. Exxon is an integrated energy company with operations that include drilling for oil and gas, refining, and even retail. For the 2022 third quarter, the company reported earnings of $19.7 billion—yes, the company made almost $20 billion in one quarter!—and had $24 billion of cash flow from operations. For comparison, Alphabet (GOOG), with twice the market cap, earned $14 billion for the quarter. Despite appreciating by 65% over the past year, XOM trades at a P/E of 8.

Chevron Corp (CVX), with a $340 billion market cap, also operates as a fully integrated energy company. Chevron earned $11 billion in the third quarter, with $12.3 billion of free cash flow. After gaining 43% over the last year, CVX trades at a P/E of 9.

These large-cap energy companies will remain very profitable at current energy commodity prices. If oil and natural gas prices go up during the year (which I think is very probable), the share prices could post similar gains. I think both will beat the Wall Street estimates for fourth-quarter results.

However, I have a better idea for the energy sector for 2023. I predict energy midstream will generate very attractive total returns. Midstream companies operate gathering systems, pipelines, and terminals. The business operates on a fee basis with long-term contracts. Revenues and cash flow to pay dividends are stable and growing.

In the midstream sector, you find corporations and master limited partnerships (MLPs). Currently, I favor MLPs. Both camps have the same growth prospects, but the MLPs start the year with higher current yields.

Midstream companies will grow dividends by high single digits this year. Combine that growth with similar starting yields, and you end up with total returns in the mid teens.

Here are three MLPs with near 10% yields:

Crestwood Equity Partners LP (CEQP)

NuStar Energy LP (NS)

MPLX LP (MPLX)

MLPs do come with Schedules K-1 for tax reporting. They also pay tax-advantaged distributions. If you don’t want the hassles of K-1 reporting or want to own MLP investments in a qualified retirement account, I recommend the InfraCap MLP ETF (AMZA). AMZA pays stable monthly dividends and yields 8.6%—and there is a good chance of a dividend increase when the fund announces its January dividend.
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Before the coronavirus pandemic, most of us had never heard of mRNA vaccines, which is not surprising.

Although scientists had been experimenting with the technology for literally decades (reminiscent of fusion), the technology had never progressed beyond the laboratory and into widespread medical use. But now, many of us have been vaccinated against COVID-19 with mRNA vaccines.

However, the gold mine that was COVID vaccine quickly petered out. Here’s what’s next for these biotech companies…

For those of you unfamiliar on how exactly mRNA vaccines, here is a quick description from the Mayo Clinic website:

This type of vaccine uses genetically engineered mRNA to give your cells instructions for how to make the S protein found on the surface of the COVID-19 virus. After vaccination, your muscle cells begin making the S protein pieces and displaying them on cell surfaces. This causes your body to create antibodies. If you later become infected with the COVID-19 virus, these antibodies will fight the virus. After delivering instructions, the mRNA is immediately broken down. It never enters the nucleus of your cells, where your DNA is kept.

The two most-used mRNA vaccines currently come from Moderna (MRNA) and the joint venture formed by Pfizer (PFE) and BioNTech (BNTX).

After riding high for much of the pandemic, the mRNA vaccine pioneers came down to earth hard in 2022. By mid-June 2022, the stock prices for both Moderna and Germany’s BioNTech had more than halved.

The Next Act for mRNA Technology Companies

But luckily for these companies, mRNA technology is more than a one-trick pony. It’s possible to use mRNA to trigger immune responses to other bodily invaders, including influenza and even cancer.

In fact, an announcement a few weeks ago from Moderna and partner Merck (MRK) has reignited interest in these companies. The two companies—jointly working on this project for six years—published a promising set of melanoma trial results in mid-December. The data released showed that a combination of the Moderna’s experimental cancer vaccine and Merck’s immunotherapy drug, Keytruda, reduced the risk of death or recurrence of melanoma in high-risk patients by 44%, compared with treatment using only Keytruda.

The results sent Moderna stock soaring 27% in the two trading days after their release.

The results emboldened Merck and Moderna to embark on a much larger Phase 3 trial (the Phase 2 trial involved only 157 patients). The companies will also test the combination against other kinds of cancer. “We believe that this should work in many tumor types, not only melanoma,” Moderna CEO Stéphane Bancel said in an interview.

Keep in mind, though, that unlike your typical vaccine, these shots will treat, not prevent, the disease.

In brief, here’s how a cancer vaccine would work: you get the tissue from a patient’s tumor, sequence it, and then, over a six-week period of time, you manufacture a vaccine that matches the top 10 to 20 mutations. The tailor-made vaccine stimulates a person’s immune system to selectively target those cancer cells.

Huge Potential

So, after five decades of failed attempts, cancer vaccines may be set for a breakthrough.

The nearly $17 billion jump in Moderna’s market value over two days following the announcement reflected investors’ hopes that cancer vaccines can work and become as common as the company’s mRNA vaccines.

Analysts from Jeffries say that the later-stage melanoma treatment market could be worth up to $5 billion (or between $9 and $15 per share in earnings) to Moderna. That figure may turn out to be far too conservative if mRNA vaccine technology works against other types of tumors.

Of course, there is no guarantee that the next phase of the Moderna/Merck clinical trials will be as encouraging as the last. And, even if the vaccine does work against melanoma, can the results be duplicated when tried against other types of cancers?

I think it can. Targeting multiple antigens decreases the odds that cancer cells will mutate in ways that make the vaccine useless, because the immune system will be attacking on multiple fronts. That makes personalized vaccines a great fit for fast-mutating cancers.

But we shall find out for sure in the years ahead.

Meanwhile, here’s how I look at both Moderna and BioNTech, which is working on its own half dozen or so cancer vaccines with companies like Regeneron Pharmaceuticals (REGN).

While many innovative biotech companies are struggling to raise funds, a successful coronavirus vaccine has left Moderna with roughly $7 billion of net cash. BioNTech has double that amount. The companies can now apply both their cash and the knowhow they gained during the pandemic to other urgent medical needs like cancer treatments.

Neither company is a low-risk investment. However, both Moderna and BioNTech look cheap when you consider the potential for cancer vaccines. Both Moderna around $175 a share and BioNTech at about $150 a share seem like reasonable bets.
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Although Peloton (PTON) has struggled since the pandemic, the embattled exercise company may have some bullish prospects in the coming months. A massive diagonal call spread traded last week in PTON options, which looks to be moderately bullish on the stock for 2023-2024 (and possibly into 2025). A diagonal spread is a combination of a

Last year, 2022, closed out as one of the worst years for investors on record. Stocks suffered a bear market, with the S&P 500 down 20% from its January high, and the Nasdaq lost 35%.

These numbers weren’t close to records, but when you add the record decline in bond prices, it was one of, if not the worst, year on record for a balanced portfolio.

What clues does history offer as we look ahead to 2023?

First, I think making historical comparisons is challenging in this modern world. Investing and trading are very different today. Most of the past results occurred before we had an instant news cycle and the ability to trade without paying large commissions. For example, before the 1990s and the widespread use of the Internet, stock prices showed up daily in the Wall Street Journal, and it cost $100 or more in commissions to trade 100 shares of stock.

With that in mind, let’s look at some stock market history. In the last 50 years, the S&P 500 has posted consecutive down years just twice. The first occurrence occurred five decades ago, in 1973 and 1974. And the market experienced three successive down years, from 2000 through 2002. The Great Financial Crisis had just a single negative year, 2008. The market bottomed in March 2009 and finished with a 26% gain for that year.

2009 may be a good reference for 2023. When the market turned higher after that March bottom, stock prices went gangbusters. From its 2008 closing value until the March 2009 low, the S&P 500 dropped by 26%. It was a brutal time to be an investor. But over the final nine months of 2009, stocks gained 67%!

Bond prices are a different beast. Bond values are a mathematical function driven by interest rates. When rates go up, bonds go down. At some point in the next four-to-six months, the Federal Reserve will stabilize rates, and bond prices will do the same.

These historical anecdotes coincide with my belief that the first half of 2023 will remain volatile. But there is a strong potential for share price gains during the second half of the year.

Since my strategies focus on building an income stream, these next few months will let my subscribers build up their income stock positions, locking in excellent yields. I have added some high-yield bond investments to my Dividend Hunter recommendations list.

I know investing can be emotionally challenging when the market seems completely unpredictable. The truth is that it is always unpredictable. Investors in March 2009 had no clue that stocks would gain 67% by the end of the year. I tell my subscribers that if they invest with the goal of building their dividend income, share prices will take care of themselves.

Investing to grow your income naturally leads to buying when prices are down and watching your portfolio grow when prices move higher.

Look at Starwood Property Trust (STWD) for one stock to pick up now. At the current $18.50, STWD yields 10.5%. To get back to the historical typical yield of 7.5%, the shares must climb to more than $25.00.
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