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The largest cryptocurrency, Bitcoin, topped the $20,000 barrier on Friday on optimistic market sentiments about a possible drop in inflation numbers. The second largest crypto, Ether, also rose on Friday.
However, additional interest rate hikes will likely constrict the economy, which is expected to create pressure on the relatively riskier crypto market. Experts believe cryptocurrencies will continue a downtrend amid the volatile economic backdrop.
Moreover, digital currencies might face heightened regulations in the future. Gary Gensler, the current SEC chair, stated that the Commodity Futures Trading Commission (CFTC) needs greater authority to oversee and regulate crypto non-security tokens and related intermediaries.
Moreover, with the much-anticipated Ether merge expected to occur soon, the crypto market might experience more volatility. Hence, the blockchain stocks Block, Inc. (SQ), Coinbase Global, Inc. (COIN), and Riot Blockchain, Inc. (RIOT) might be best avoided now.

Block, Inc. (SQ)
SQ engages in the creation of tools that enable sellers to accept card payments and provides reporting and analytics and next-day settlement. The company also provides hardware products.
On July 13, SQ subsidiary Afterpay and beauty retailer Sephora announced their partnership to enable customers to pay for U.S. beauty brands and products in four installments. However, the gains from this partnership might be stretched over a long period of time.
For the fiscal second quarter that ended June 30, SQ’s total net revenue decreased 5.9% year-over-year to $4.40 billion. Adjusted net income decreased 56.8% from the prior-year quarter to $110.74 million. Adjusted net income per share declined 63.3% from the same period the prior year to $0.18.
The consensus revenue estimate of $17.60 billion for the fiscal year 2022 indicates a 0.3% year-over-year decrease.
The stock has declined 70% over the past year and 54% year-to-date to close its last trading stock at $74.29.
SQ’s POWR Ratings reflect this bleak outlook. The stock has an overall D rating, equating to a Sell in this proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
SQ has a Stability and Quality grade of D. In the 107-stock Financial Services (Enterprise) industry, SQ is ranked #91. The industry is rated F. Click here to learn more about POWR Ratings.
Coinbase Global, Inc. (COIN)
COIN offers financial infrastructure and technology for the global crypto economy. The company’s offerings include the primary financial account for retailers in the crypto space.
On September 8, Enthusiast Gaming Holdings Inc. (EGLX) announced its collaboration with COIN to introduce the company as its preferred infrastructure provider to power its Web3-enabled games portfolio. However, there might still be some time remaining before substantial gains can be realized from this venture.
COIN’s total revenue decreased 63.7% year-over-year to $808.33 million in the fiscal second quarter that ended June 30. Net income and net income per share attributable to common stockholders declined 168.1% and 177.6% from the prior-year period to a negative $1.09 billion and a negative $4.98.
Street EPS estimate for the fiscal quarter ending December 2022 of a negative $2.06 indicates a 162% year-over-year decrease. Likewise, Street revenue estimate for the same quarter of $752.68 million reflects a decline of 69.9% from the prior-year period.
Over the past year, the stock has declined 67.4% to close its last trading session at $80.87. It has declined 68% year-to-date.
It’s no surprise that COIN has an overall F rating, which translates to Strong Sell in the POWR Ratings system.
COIN has an F grade for Growth, Value, Stability, and Sentiment and a D for Quality. It is ranked #153 out of the 154 stocks in the Software – Application industry. The industry is rated F. Click here to learn more about POWR Ratings.
Riot Blockchain, Inc. (RIOT)
RIOT, with its subsidiaries, is engaged in cryptocurrency mining operations in North America. The company primarily focuses on Bitcoin mining with a large fleet of publicly-traded miners.
For the fiscal second quarter that ended June 30, RIOT’s total revenues increased 112.4% year-over-year to $72.95 million. However, its net income and net income per share came in at a negative $366.33 million and a negative $2.81, down 1,994.5% and 1,377.3% from the same period the prior year.
The consensus EPS estimate for the fiscal year 2022 of a negative $2.47 indicates a 2,987.5% year-over-year decrease.

The stock has declined 72.1% over the past year and 63% year-to-date to close its last trading session at $8.26.
RIOT’s bleak prospects are reflected in its POWR Ratings. The stock has an overall F rating, equating to a Strong Sell in this proprietary rating system.
RIOT has an F grade for Stability, Sentiment, and Quality and a D for Value. In the 81-stock Technology – Services industry, it is ranked #79. The industry is rated D. Click here to learn more about POWR Ratings.

About the Author
Anushka Dutta is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. With a master’s degree in economics, she aims to help investors identify untapped investment opportunities by looking at the fundamental factors. Anushka is a regular contributor for StockNews.com.

It’s time to update the S&P 500 index chart as it emerged inch-perfect since the last update in July.
Source: TradingView
To refresh your memory, I kept the main paths untouched and added new crucial highlights.
The idea of the upcoming breakout of the Falling Wedge pattern (blue converging trendlines) was posted right on time on the Blog as it played out instantly. Indeed, the Bullish Divergence of the RSI indicator with the price chart played out as planned supporting the breakup of the pattern’s resistance.

The majority of readers got it right choosing the red path as a primary scenario. The price action has been amazingly accurate in the 61.8% Fibonacci retracement area where the price failed to overcome the barrier and reversed to the downside from the minor top of $4,325 following the red zigzag.
I added the 52-week simple moving average (purple) to show you how strong the double resistance was at the $4,347-$4,349 level.
The next support is located in the valley in June at $3,637.
After the minor top has been established, we can make a calculated projection of the downside target. It is located at $3,143, where the current leg down would travel the same distance as the previous leg down.
This time, I also added the time target (orange) based on the earlier move, which took 23 bars to unfold. It falls on the end of January 2023. The Fed might take a break lifting the interest rate then. More often than not the time it takes second leg to emerge doesn’t match with the initial move. However, it is still good to have this benchmark.
The $4,325 mark has turned to be a resistance now as the index could still build a more complex structure to the upside reviving the green path.

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Now let me reveal the reason behind the title of this post in the next chart.
Source: TradingView
This is this comparison chart of the gold/silver ratio (red) and the S&P 500 index (blue). The idea is simple; the red line shows the risk-off mode when it moves up as safe-haven gold becomes more valuable than the industrial silver. The risk-on mode is active in the opposite direction and the S&P 500 index starts to grow.
There is a long period of unconventional monetary policy that interrupted the link when both gold/silver ratio and the index has been growing. However, we could still distinct several local areas where this opposite correlation works very well in spite of the large uptrend. Since 2020, this link is back to normal with visible crossovers and opposite extremes.

The S&P 500 index is clearly on the edge now as it has been very close to crossing the red line down lately.
We can see that the gold/silver ratio has a lot of room for further growth to retest the all-time high of 113 oz. It could be a 24% rise of the ratio.
The risk-off mode would reach its climax then putting a huge pressure on the stock market. The relevant drop of 24% in the S&P 500 could hit the $3,090 mark, which coincides with the downside target calculated in the first chart of the index above.

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Intelligent trades!
Aibek BurabayevINO.com Contributor
Disclosure: This contributor has no positions in any stocks mentioned in this article. 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.

On August 31st, Russia’s state-owned energy company, Gazprom, stopped the flow of natural gas in the Nord Stream 1 pipeline. The pipeline ran from Russia to Germany and was scheduled to be discontinued from August 31st until September 3rd. But September 3rd came and went, and the pipeline remained shut down.
At first, an oil leak was reported, causing the pipeline to remain shut down. But then, it was evident that the shutdown was in retaliation to the sanctions the West had implemented against Russia due to the war in Ukraine.
Many experts predict the economic pain in Europe will increase as the cold weather sets in across the continent. Some have gone as far as to say that the economic pain will be felt in both the coming winter and next winter, 2023-2024. Some are even saying that energy rationing will be required to ensure everyone has enough natural gas for heating.
However, many in Europe have been planning for this to occur for some time. Russia had reduced the pipeline operating volume to just 20% of what it could provide.

This was far less than what Europe comfortably needed to make it through winter. Thus, the European Union and other entities have been working on replacing the lost volume through other means. So while the pipeline shutdown is not ideal, it was predicted to happen at some point this winter.
Many are saying Russia is attempting to weaponize its gas supply to hurt the EU and other nations in an attempt to have Western countries drop or reduce sanctions against Russia.
At this time, there is no sign that either the EU or Russia will bend to the will of the other, and it is likely that we will continue to see elevated oil and gas prices in Europe. Thus, comes the opportunity for savvy investors.
I want to note that I am not condoning an attempt to profit from someone else’s pain and suffering. I want to point out the high likelihood that natural gas prices will likely increase this winter as the EU finds ways to replace the gas they acquired through the Nord Stream 1 pipeline.
With that all said, let’s look at a few of the options you have if you want to invest with the idea that gas prices will rise this winter.
The best way to invest in natural gas is with Exchange Traded Funds. Something like the United States Natural Gas Fund LP (UNG) or the United States 12 Month Natural Gas Fund LP (UNL). These funds buy futures contracts on natural gas.
UNG holds near-term monthly futures while UNL holds the 12 nearest months contracts. Owning the futures contracts gives the ETFs exposure to the price movements of the commodity. Gas prices go higher; the contracts are worth more. But, the same happens if gas prices go lower. UNG and UNL will essentially move at a 1X leveraged amount to the gas price before fees and contango occur.

The Proshares Ultra Bloomberg Natural Gas ETF (BOIL) will give you a 2X daily return on natural gas price movement. That means if natural gas increases by 1%, UNG and UNL will move about 1%. But, BOIL will move by 2%.
Finally, if you feel like the price of natural gas is overinflated, you could buy the ProShares UltraShort Bloomberg Natural Gas ETF (KOLD), which will short the price of natural gas. So, if gas falls by 1%, KOLD will actually increase by 1%. But again, the opposite is true, and if gas prices rise by 1%, KOLD will lose 1% of its value.
Now before you buy a natural gas ETF, it should be noted that these funds, besides KOLD, are all up a lot in 2022. This is likely because many investors were expecting Russia to cut off its supply eventually. However, that still doesn’t mean that natural gas prices can’t or won’t go even higher than their current levels.
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.

Should President Biden’s recent pay-for-votes forgiveness of student loans make you nervous if you own government-guaranteed securities?
Although it seems highly unlikely, the student loan giveaway could create a slippery slope that leads next to mortgage forgiveness for veterans or some other protected or politically favored class, or some other form of federal debt relief. 
In that event, what would happen to so-called government-guaranteed securities backed by VA mortgages if the president declared that some or all of those loans were forgiven? Why not FHA loans, that are made to many of the same people who have student loans, i.e., those who supposedly have trouble paying back their loans or getting them in the first place because they have marginal credit or can’t afford a large down payment.
It wasn’t very long ago that Fannie Mae and Freddie Mac, the twin secondary mortgage agencies, failed and were taken over by the government, leaving equity investors with shares worth next to nothing (both are currently trading at about 50 cents a share on the pink sheets).

Before they went bust during the global financial crisis, it was widely assumed that Fannie and Freddie were backed by the full faith and credit of the U.S. government, which turned out not to be the case (as that great legal scholar Felix Unger reminds us).
Assuredly, mortgages backed by the VA and FHA are different animals than those issued by Fannie and Freddie, but that doesn’t mean they’re invulnerable (they historically have high default rates). With interest rates on mortgages now north of 5% and a recession possibly looming, how long will it be before pressure grows on Biden to give the weakest homeowners a break?
Now it doesn’t seem so far-fetched, does it? Today student loans, tomorrow home mortgages. How far do we want to take this? 
In the past we’ve heard some people say we should weaponize Treasury securities against our foreign adversaries, such as the Chinese, who own so much of our debt. Does this now become a little less of a fantasy and more of a possibility, as our relationship with Beijing continues to deteriorate and the president is in such a forgiving mood?
The actual dollar cost of Biden’s student loan giveaway has yet to be calculated, but it’s safe to say it’s a lot more than he and his defenders claim. Some analysts say the total cost will be about $1 trillion, which certainly seems reasonable. It could certainly add up to a lot more, if and when those saps who are still repaying their loans wake up and realize that they have indeed been duped and demand forgiveness, too, or simply stop paying.
Politicians love to play fast and loose with debt, as long as it isn’t owed to them. Since the global financial crisis of 2008, government officials and politicians on both the left and the right have heartily endorsed Modern Monetary Theory as a way to solve today’s economic problems by simply wishing them away. Have the government issue massive amounts of debt backed only partially by tax receipts, with the rest purchased by the Federal Reserve, and all will be well. Now they’re writing a new chapter of that theory, which involves simply erasing parts of that debt by the mere stroke of the chief executive’s pen.
One important thing missing from the MMT playbook is taxes. According to the theory, the government can continue to spend money and run massive deficits until inflation is created, at which point it should turn off the spigots and raise taxes and put everything back into equilibrium. But as we know, no or little tax increases are on the horizon, certainly not in an election year, despite federal debt of more than $30 trillion.
The current administration likes to blame inflation on everything but out-of-control government fiscal spending. Rather, Vladimir Putin, supply chains, greedy corporations, etc., are to blame. Fighting inflation, the president tells us, is the sole domain of the Federal Reserve, and he will do nothing to threaten its independence. Except he does want the Fed to use its bank regulatory powers to decide which industries get access to funds (solar energy, electric vehicles) and which don’t (oil and gas producers, gun manufacturers).

Which leads us into the next potential mine field. If things go wrong for companies in the most favored categories, will the government or the Fed step in with even more subsidies or some kind of debt relief?
These are the risks we run when the government plays favorites in an otherwise free economy. Hopefully, most of these scenarios will never come to pass, but as the student loan bailout should teach us, anything can happen.
George YacikINO.com Contributor
Disclosure: 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.

While the S&P-500 (SPY) has taken a beating over the past month, leaving the index 18% from its highs, the damage inflicted has been tame relative to the shellacking we’ve seen in the Gold Miners Index (GDX).
Not only has the GDX’s decline been double that of the S&P-500, but the most recent drop is one of the worst in a decade in terms of velocity. This is because the GDX was down 44% in just 95 trading days last Friday, translating to an annualized decline of 79%.
(Source: Daily Sentiment Index Data, Author’s Chart)
This decline, coupled with muted 10-year returns since the peak of the last bull market cycle (2011), and lifeless 2-year returns since the August 2020 peak, has led to despair in the sector, with many investors not even interested in looking at their portfolios if they hold precious metals stocks.
I believe this has bred conditions for a violent rally to the upside, especially with sentiment for gold (GLD) sitting at its lowest levels in 18 months, as most investors have also given up on the metal.

In this update, we’ll look at two high-quality miners that have been thrown out with the proverbial bathwater:
Agnico Eagle Mines (AEM)
Agnico Eagle Mines (AEM) is the world’s 3rd largest gold producer, on track to produce ~3.3 million ounces of gold in 2022 from more than ten mines globally.
The major differentiator for the company relative to its peers is that it operates out of some of the safest jurisdictions globally (Canada, Australia, Finland) and boasts a margin profile that would make most producers salivate.
(Source: Company Presentation)
This is evidenced by its ~$1,010/oz operating costs in FY2022, giving the company 42% margins even at a $1,725/oz gold price. This figure compares very favorably to the industry average, with margins sitting closer to ~25% across a basket of 80 producers.
However, the other large differentiator that can’t be overstated is the company’s development pipeline and ability to grow production from existing mines. This is a big deal in an inflationary environment, and I would not be surprised to see AEM increase production to 4.1 million ounces by 2029.
This may not seem significant to investors unfamiliar with the sector, but when it comes to million-ounce producers, even holding the line on production is an achievement, given that grades are declining at most mines.
Just as importantly, AEM recently joined forces with another major producer in a merger of equals, projected to give it a benefit of $40/oz or more from synergies. So, while many producers are struggling to hold the line on margins, AEM should actually see its costs decline year-over-year ($975/oz vs. $1,010/oz).
(Source: FASTGraphs.com)
Agnico’s steadily rising production and lower costs will allow it to grow annual cash flow per share and EPS even in a flat gold price environment. In a rising gold price environment, I would not be surprised to see cash flow per share increase to $6.50 in 2024.
However, despite this key differentiator and the fact that it’s more diversified after adding three new mines following its merger, the stock trades at barely half its historical cash flow multiple. In fact, as of this week, AEM sits at 7.3x FY2023 cash flow (15-year average: 13.7x).
Given this deep discount to fair value, I see AEM as a rare mix of growth and value.
Osisko Gold Royalties (OR)
While Agnico Eagle is cheap and one of the most attractively priced names, especially given that investors are being paid to wait (~3.9% dividend yield), one small-cap gold name is as mispriced, if not more mispriced. This stock is Osisko Gold Royalties (OR), a $1.8BB market cap royalty/streaming company.
For those unfamiliar, royalty/streaming companies are a much lower-risk way to gain exposure to precious metals, given that they finance projects and mines up front and collect a portion of the sales from the asset over its mine life. The result is that, unlike producers, they are inflation-resistant and not subject to rising labor costs, materials costs, and energy prices.
In a sector with multiple royalty/streaming stocks to choose from, Osisko Gold Royalties stands out for several reasons.
The first is that the company has the #2 growth profile in the sector, expecting to grow annual attributable production from 80,000 gold-equivalent ounces [GEOs] in FY2021 to 135,000 GEOs in FY2026. This means that even if gold and silver prices go sideways at $1,750/oz, its revenue will increase from $160MM in FY2021 to $236MM in FY2026, an 8.1% compound annual sales growth rate. If gold prices return to their highs, this growth rate jumps to 11.5%, giving OR one of the highest growth rates sector-wide.
The other key differentiator for the company is that its royalties/streams are in some of the safest jurisdictions globally, meaning that it’s not subject to repatriation risks in Kyrgyzstan, violence in Mali and Burkina Faso, and a shift to more leftist policies in South America. This makes the company’s growth much lower risk and lets investors sleep well at night with the comfort that the mines it has royalties on will remain in production without any negative surprises.
Despite this robust growth profile with an 8.1% revenue CAGR at conservative gold prices, and assuming the company does no additional deals on producing assets over the next four years OR trades at a massive discount to its peer group.
This is evidenced by OR being valued at just 0.80x P/NAV and less than 10x FY2024 cash flow estimates or ~8x cash flow after subtracting out its investment portfolio. The current valuation figure is 50% below the historical average of more than ~20x cash flow and 1.60x P/NAV or higher for the larger royalty/streamers.
As new assets come online and production grows from existing assets, I see the potential for a significant re-rating to more than $18.00 per share.

To summarize, I see the stock as a steal below $10.00 per share, and I believe the current valuation can be justified by just its six largest royalty/streaming assets (Malartic, Eagle, Mantos, Windfall, Island, Renard) and its investment portfolio, let alone its more than 100+ other royalty/streaming assets it’s not receiving any credit for in a market where fundamentals have gone out the window.
(Source: Osisko Gold Royalties Presentation)
With the gold sector being the most hated it’s been in years, it’s easy to shy away from the opportunities, especially with many producers seeing a margin crunch.
However, these opportunities lead to forced selling of the best names, and OR and AEM are practically being given away due to despondency sector-wide. Hence, I see this correction in both names as a buying opportunity.
Disclosure: I am long OR, AEM
Taylor DartINO.com Contributor
Disclaimer: This article is the opinion of the contributor themselves. Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information in this writing. Given the volatility in the precious metals sector, position sizing is critical, so when buying small-cap precious metals stocks, position sizes should be limited to 5% or less of one’s portfolio.

Last month I was wondering “Is It A Trap?” for the top precious metals, referring to the short term bounce that we have been observing.
Bears have smashed the silver price badly below the former valley. Hence, I would start the update with its monthly chart below.
Source: TradingView
Silver futures topped around the $21 mark the same day the previous update was posted in the middle of August and then it dropped like a rock to the downside.
The price already drills down the largest Volume Profile (orange) support as it entered the $16-$18 range. The peak volume was registered at the $17 level in the monthly chart. Below $16 the support weakens and further down below $14 there is a volume support gap.

I built the black downtrend with a red mid-channel in this big chart above. We could visually distinguish the first drop (large left red down arrow) from 2011 to 2015. The following huge corrective structure emerged during 2015-2021. Now the market could build the second leg down. The mid-channel support is located at $13.5, right below the above mentioned lower volume area.
We can mark the lower supports for the future. The Flash-Crash valley is at $11.6 fortified with the all-in sustaining costs located at $10.9. The valley of the distant 1991 at $3.5 is the next possible support.
Bulls should push the price outside of the downtrend beyond $27 to turn the tables.

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Before we get down to the gold futures chart, I would like to update the U.S. 10-year Treasury yield (10Y) chart posted last March in the “Wake-Up Call For Gold” post. That post was prophetic for several markets as thoughts shared then start to play out now.
The 10Y impacts the gold price strongly as we saw earlier, therefore it is crucial to demonstrate the big picture.
Source: TradingView
The 10Y had been moving down within a huge red downtrend since 1994. There were two false breaks: the minor breakout in 2007 and the larger one in 2018. The mid-channel (red dashed) started to act as a strong support in 2015 as the yield never crossed it down since then. The last episode was in 2020 when this support rejected the huge drop and the price reversed to the upside.
The 10Y eyes to surpass the current resistance based on the former top of 3.25%. There was a puncture of this level earlier this summer, however the price dipped back down below and it fueled the recent short term bounce of the gold price.

The next barrier is at 5.32% or over 200 basis points higher. The Fed is still under pressure over inflation. Last week, Cleveland Federal Reserve Bank President Loretta Mester (FOMC member) said: “My current view is that it will be necessary to move the fed funds rate up to somewhat above 4 percent by early next year and hold it there; I do not anticipate the Fed cutting the fed funds rate target next year.” In this context, the next hurdle for 10Y above 5% looks achievable.
The more efficient the fight with inflation the worse it is for precious metals acting as an inflation hedge.

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The gold futures chart is the next.
Source: TradingView
There are three things in the chart that instantly catch the eye. The 10Y (gray) and the gold futures price move in sync in the opposite direction – as soon as yield reversed up the gold dropped. The second thing is the accurate price action on the 52-week simple moving average (purple) – the growth of the price has stalled right there. And the last observation is the Volume Profile (orange) – the price couldn’t overcome the large volume area.
The gold futures price has dropped deeply, but is still above the black trendline support and the former valley of $1,678. The momentum of the truth is very close both for gold and for 10Y as they approach the barriers simultaneously.
The price is already in the volume gap area as no significant levels are seen until the nearest support of $1,500. Earlier, your largest bet was that $1,500 will hold. Another $200 down and the price will reach the large volume area at $1,300. The die-hard support is located in the valley of 2015 at $1,045 where the possible large sideways consolidation could be completed.

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Intelligent trades!
Aibek BurabayevINO.com Contributor
Disclosure: This contributor has no positions in any stocks mentioned in this article. 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.

Investors may want to keep an eye on discount retailers, like Dollar General (DG).
For one, the latest pullback may be a great buy opportunity.
If you take a look at this chart, you’ll notice that Williams’ %R, Fast Stochastics, and RSI are all starting to pivot well off oversold conditions. With patience, I’d like to see the Dollar General stock retest $260 resistance, near-term from $241.65 support.

Source: MarketClub
Two, while other major retailers take a hit with inflation, Dollar General is rising because of inflation. In fact, we can see that with the company’s recent earnings report. Not only did Dollar General report second quarter EPS of $2.98, which was better than the expected $2.94 a share, sales were up to $9.4 billion, same-store sales were up 4.6% as compared to expectations for 3.9%. The company even increased its same-store sales forecast to a range of 4% to 4.5% for the fiscal year, from a prior call for 3% to 3.5%.
Three, wealthier people are now shopping at dollar stores because of inflation.
According to Business Insider, Todd Vasos, CEO of Dollar General, said on a call with analysts that the store saw a rise in higher-income households shopping there, “which we believe reflects more consumers choosing Dollar General as they seek value.”
Plus, we have to realize consumers are “trying to make ends meet, and when you have limited funds in your wallet, the dollar stores provide the ability to do that,” added Joseph Feldman, a senior analyst at Telsey Advisory Group, as quoted by The New York Times.
In addition, analysts seem to like the DG stock, as well. Guggenheim analyst John Heinbockel reiterated a buy on the stock. Piper Sandler raised its price target on DG to $273 from $265. Raymond James raised its target price to $285 from $160. Morgan Stanley raised its target to $270 from $250. Deutsche Bank says Dollar General is one of the few stable retailers.  

Plus, Dollar General will also pay a dividend shortly. On August 23, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.55 per share on the Company’s common stock, payable on or before October 18, 2022 to shareholders of record on October 4, 2022. 
All things considered, investors may want to use recent DG weakness as an opportunity.
Ian CooperINO.com Contributor
The above analysis of Dollar General (DG) was provided by financial writer Ian Cooper. Ian Cooper is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Ian Cooper expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

A few weeks ago, I asked if you believed the current rally was here to stay. At that time, the market had been rallying since the middle of June. Some market participants were calling the June low ‘the bottom.’
Time will tell if June was the bottom, but based on what has happened over the last two weeks of August, I am betting that we have not yet seen the bottom.
Let’s review quickly what just occurred. The Federal Reserve’s President, Jerome Powell, told the country that there would be “some pain” in the coming months. Powell also said that the Fed would “keep at it until the job is done,” referring to getting inflation under control.
Powell didn’t detail how severe the pain would be or how businesses and households would feel it. Still, I think it is safe to say that Powell acknowledges we are likely heading towards a recession.

The market’s reaction to Powell’s comments sent the S&P 500 down 9.2% since the August 16 high of 4,327. The NASDAQ is down 11%, while the Dow Jones Industrial Average is off by 8.2% since August 16.
Not only is the NASDAQ down double digits, but the exchange-traded funds that track the major indexes, The SPDR S&P 500 ETF (SPY) and the Invesco NASDAQ QQQ ETF (QQQ), are both now trading below their 50-day averages. That is in addition to them already having given up their 200-day, 100-day, and 20-day moving averages.
Furthermore, economist after economists, jumped on the ‘recession is imminent’, bandwagon this past week. Most of these economists have even pointed out that the Federal Reserve has miscalculated the intense inflation we are experiencing.
They were referring to when the Fed told us back in the spring that the inflation we were experiencing at that time was “transitory.” The Fed was wrong about that, and it is unlikely that the Fed members want to be wrong again by underestimating the persistence of current inflationary causes.
Due to their previous missteps, many believe the Fed will not take its foot off the gas quickly enough. This makes it unlikely the economy will experience a soft landing which we have been hearing about over the past few months.
And if you don’t know the opposite of a ‘soft landing’ in economics, it’s a recession.
I believe now is the time to start preparing your portfolio for a long-term move lower. There are a few ways you can do that. The first and most straightforward way is to sell everything you own and get cash. If the market tanks another 10-20%, you will not have to worry. You are in cash.
I am not a huge fan of that strategy since history has proven that it is unlikely you will get back into the market in a meaningful way to take advantage of the rebound, whenever that may occur.
What I propose you do, is hedge your portfolio against a downturn. Don’t sell anything you own, but buy some exchange-traded funds that will allow you to profit from a falling market. I detailed several ETFs that you can use to do this a few weeks ago. These products will all increase in value as the markets decline. Therefore if you own one or more of them while the rest of your portfolio is decreasing in value, these ETFs will be gaining value.

I suggest that investors have somewhere between 10-25% of their portfolio hedged when it appears we are heading towards a recession. This hedge will allow you to sleep a little better at night.
It will give you the peace of mind that while your portfolio is losing money, it is not as bad as it could be if you didn’t have the hedge. It will also give you the confidence to hold your long-term positions, especially if things get ugly because we all know that selling during those tough times is always the worst time to sell.
As I mentioned, now is the time to start building your hedging position. Start small and slow, but at a minimum, consider what you want to buy and how large of a position you want. The market has not yet completely cracked, so you still have time to put the hedge on.
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.

It’s been a volatile month thus far for the S&P-500 (SPY), with the index starting the month up nearly 5% before giving back all of its month-to-date gains.
This sharp reversal should not be surprising, given that the 200-day moving average is often a strong area of resistance for the general market when it’s in an intermediate downtrend.
From a fundamental standpoint, the give-back also makes sense, given that little has fundamentally changed with the Federal Reserve still laser-focused on stamping out inflation, regardless of the collateral damage caused by its hawkish stance.
(Source: Twitter, ND Wealth Management, Steve Deppe)
Given the weak performance, the market is now on track to close August down more than 10% year-to-date, which has historically led to further drawdowns in all cases. In fact, the median forward draw-down over the following twelve months was 15.5%, and even using the best four case drawdowns, the average twelve-month forward draw-down was 5.5%.

History doesn’t repeat itself, but it often rhymes, and assuming the S&P-500 closed at 4000 for August, this would point to a drawdown to 3380 between now and summer 2023, or a best case drawdown (average of four smallest draw-downs) to 3780. With even the best-case scenario points to a meaningful downside, caution remains warranted.
The good news is that it’s a market of stocks, not a stock market. Even in intermediate bear markets, investors can enjoy alpha by hunting down the best growth names that exhibit unique relative strength characteristics.
With many FAANG names down over 50%, finding stocks in intermediate uptrends is challenging, but there are a few stand-out names that also have impressive growth metrics. This combination is a recipe for success in all markets, and in this update, we’ll look at two names that fit this bill:
Driven Brands (DRVN)
Driven Brands (DRVN) prides itself on being a one-stop shop for comprehensive car care and has a portfolio of brands that include Maaco, Meineke, and CARSTAR, as well as Take-5 Oil Change, 1-800 RADIATOR & AC and Driven Brands Car Wash.
Maaco and Meineke provide auto repair, paint repair, and other maintenance/repair services, while CARSTAR focuses on collision work, and Driven Brands Car Wash is the world’s largest car wash company, cleaning 35+ million vehicles per year. This makes Driven Brands the leader in the automotive aftermarket and the US’s largest automotive franchise (4,400+ stores).
The company was founded in Charlotte, NC; it has a market cap of $5.2 billion, went public in Q1 2021, and has held its ground since. In fact, it’s up 17% from its IPO debut in a period when the Nasdaq-100 (QQQ) has lost over 5%.
The outperformance can be attributed to the company’s strong earnings growth and its relatively recession-resistant business model, given that car repairs are more of a need than a want. Meanwhile, though car washes are discretionary, they do not break the bank.
This recession-resistant business shone in the most recent quarterly results, with quarterly earnings per share up 40% year-over-year to $0.35, while sales soared 36% to $508.6MM. On a full-year basis, DRVN is expected to grow annual EPS by 36% ($1.20 vs. $0.88), with double-digit growth on deck in FY2024 as well.
However, the most impressive part about the stock is its relative strength, which shows that it continues to outperform the S&P-500 by a wide margin, and the stock is above all of its key moving averages.
(Source: TC2000.com)
If we look at the chart above, we can see that DRVN’s relative strength line (bottom pane) continues to trend up vs. the S&P-500, suggesting that the stock may be under accumulation, evidenced by its ability to shrug off general market weakness.
In addition, the stock looks to be building a 30+ week cup base since the start of the year, and while we often see breakouts from cup-shaped bases in bull markets, the typical scenario is that handles or pullbacks on the right side of the base emerge in bear markets for the S&P-500.
I believe a further handle-building period would be a bullish development, given that it would allow DRVN to re-test its rising moving averages and shake out any weak hands. So, for investors looking for growth with momentum at their back, I see DRVN as a name worth considering on any pullbacks below $29.15.
Staar Surgical (STAA)
The second name worth keeping an eye on is Star Surgical (STAA), a mid-cap stock in the Medical Devices Sector best known for developing, patenting, and licensing the first foldable intraocular lens [IOL] for cataract surgery.
However, the company’s newest product that recently received FDA approval in the United States appears to be the real game-changer from a growth standpoint. This is its Visian Implantable Collamer Lens [ICL], a proprietary biocompatible Collamer lens material that’s implanted behind a patient’s iris, designed to treat myopia, hyperopia, and astigmatism.
For those unfamiliar with the benefits of its ICLs sold by Staar Surgical, it is that they allow another option for those looking for freedom from glasses/contacts with minimally invasive surgery and with no corneal tissue removed.
This is superior to LASIK eye surgery, given that it allows flexibility for future operations and can treat thin corneas, unlike LASIK, which is permanent due to corneal tissue removal. So far, the demand for the product is quite strong, and the total addressable market is massive, with over 100 million adults being potential candidates for its EVO ICLs.
Staar reported revenue growth of 30% ($81.1 million vs. $62.4 million) in Q2, despite limited marketing for its EVO ICLs, given that the FDA only approved them in March. On a full-year basis, the company is on track to report 28% revenue growth, or a 2-year average revenue growth rate of 34.5%, having to lap 41% growth last year.

If we look out to FY2026, these industry-leading growth rates should be maintained, with revenue on track to increase 168% from FY2022 to FY2026 ($782MM vs. $294MM). However, this will have an outsized impact on its bottom line, with the EVO ICLs having higher margins than its current product mix.
Based on what I believe to be a fair revenue multiple of 14 and FY2024 revenue estimates of $472MM, I see a fair value for the stock of $139.60 (18-month price target).
(Source: TC2000.com)
While the fundamental story is rock-solid with accelerating earnings growth on deck, the stock’s relative strength makes it stand out. As shown above, STAA is also building a cup & handle base, saw significant accumulation with 2x average volume four weeks ago, and has given up ground grudgingly in the recent market correction.
Meanwhile, it continues to make higher highs vs. the S&P-500, suggesting that it’s under accumulation. So, like DRVN, if we were to see further market weakness, I would view this as a buying opportunity for STAA.
Taylor DartINO.com Contributor
Disclaimer: This article is the opinion of the contributor themselves. Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information in this writing.

For the dividend-focused investor, nothing is better than one of your stocks announcing a dividend increase. So you can be assured that this Seeking Alpha headline caught my eye: 100 REIT Dividend Hikes.
Investing for dividend growth is a sure-fire way to build your wealth over the long term. The article explained that 100 real estate investment trusts (REITs) had increased their dividend rates so far in 2022. Last year there were 120 rate increases in the REIT sector.
This many increases bodes very well for one of my favorite investment strategies…
REITs own commercial properties or invest in real estate-related debt securities. The Nareit includes 213 publicly-traded REITs in its All REITs Index. These companies operate as pass-through businesses, which means they don’t pay corporate income taxes as long as they pay out at least 90% of net income as dividends to investors. The REIT dividend rules make the sector a good place to look for attractive dividend-paying stocks.
A few years ago, I researched the returns from growing dividend stocks. I found that investors earn an average annual compound total return that, over the long term, will be very close to the average dividend yield plus the average dividend growth rate.

For example, if an REIT (or shares of any stock with growing dividends) has an average yield of 4% and the dividends grew by an average of 10%, investors in that stock will have seen a 14% compound annual total return.
While the shorter-term market cycles will pull returns above and below the expected results, owning a dividend growth stock for ten years or more will push the returns very close to mathematical expectations.
When researching dividend growth stocks, look first at the historical dividend growth rate. You want to see the average growth rate and how many years the company has been increasing its dividend. For example, industrial property REIT Prologis, Inc. (PLD) has increased its dividend for eight consecutive years with an average of 10.5% dividend growth. Add in the current 2.5% yield, and you have a low-teens return potential.
I like putting together a list of growing dividend stocks with the yields, growth rates, and how long the dividends have increased. With such a list, you can create a portfolio of stocks with the most attractive total return potential.
It’s an approach that can fast-track your retirement by increasing your income by up to 108% in just seven months.
Once you invest in this type of stock, you must watch the annual dividend growth rate to ensure the company keeps increasing the payout to meet your expectations. If the growth rate slows, you should consider selling and replacing that stock with better total return potential.

National Storage Affiliates Trust (NSA) is one of my recommended REITs, having grown its dividend rate by almost 15% over the last six years. NSA yields 3.5%, putting the total return expectation close to 20% per year.
Hoya Capital Real Estate put out the article referenced above. The firm launched its own fund, the Hoya Capital High Dividend Yield ETF (RIET), a year ago. The fund invests in the REIT sector for a combination of high current income and dividend growth. The current yield is 6.9%.
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About the Author
Tim Plaehn is the lead investment research analyst for income and dividend investing at Investors Alley. He is the editor for The Dividend Hunter, an investment advisory focused on creating a high-yield income stream, Weekly Income Accelerator, a covered call trading service, and for investors looking for long-term total returns from their income investments using stocks with ever-growing dividend payments, he offers Monthly Dividend Multiplier. Prior to his work with Investors Alley, Tim was a stock broker, a Certified Financial Planner, and F-16 Fighter pilot and instructor with the United States Air Force. During his time in the service he was stationed at various military locations in the U.S., Europe, and Asia. Tim graduated from the United States Air Force Academy with a degree in mathematics. In his free time he tours the United States parks, campgrounds, and wilderness areas in his travel trailer.