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The Most Important Step When Saving for Retirement

A recent survey from Vanguard showed the median account balance for Americans 65 and older was just $87,700. The median amount saved by Americans aged 55 to 64 was just $89,700. The average for both age groups was much higher at $256 thousand for 55 to 64-year-olds and $280 thousand for those 65 and older.
However, these numbers are very concerning, considering these individuals are either in retirement or near retirement age and don’t have enough saved up to retire.
The reality is that while the amount of money those in their 50s, 60s, and older have saved for retirement is not likely enough to give them the retirement that many of us dream about, there is not much we can do to help them at this point.
Many of the greatest investors of our time have all used the power of compounding returns to grow their vast fortunes. Warren Buffet, one of the wealthiest individuals in the world, while an outstanding investor in his own right, acquired the vast majority of his wealth late in life because of the power of compounding returns, not extraordinary investment picks.

Unfortunately, those in their 50s or older just don’t have as much time on their side as is required to realize the power of compounding investment returns.
While the younger generations have more time and opportunities to grow their investment wealth, the issue is that many young people don’t understand the importance of investing when young. A recent report from Morning Consult showed that half of Americans aged 18 to 34 were not yet saving for retirement, and only 39% of those who were, started in their 20s.
We often hear the same old lines from those who now wish they had saved or even just started investing earlier in life. “I was never told/taught about investing.” “No one explained why investing young was crucial to growing a large investment account.” “I just didn’t have enough money to save when I was young/younger.” There are obviously more excuses, but in my experience, these are the top three.
If you are reading this article, you care about your investments. Therefore, you either had someone explain to you the importance of investing, or you taught yourself after realizing why investing was so important.
Regardless, the most crucial step when it comes to saving for retirement isn’t where you put your money or even how much you invest; it’s having a conversation with someone about saving and investing for retirement.
The earlier in life that someone is taught about retirement savings and why it is so important to save even a tiny amount at an early age, the better off they will be when they retire.
For example; if you invested just $4,500 per year for 45 years, you would have over $1 million, and if that 20-year-old had an employee who did a 401k match, they might only have to save $2,250 per year (employer matching the other $2,500) and still end up with the $1million.
Another way to think about compounding returns is this. If you contribute $1 at the age of 20 and get a 4% return rate, that $1 would be worth $5.84 when you turn 65. (figures are based on zero inflation and illustrate the power of compounding returns, not purchasing power over time.) If you contribute $1 at the age of 30, it will be worth just $3,95 when you turn 65. $1 at the age of 40 will be worth just $2.67 at 65. $1 invested at age 50 will only grow to be worth $1.80 by turning 65.

When investing, time is your friend if you are young and your enemy if you are older. So be a friend to someone else and make the biggest impact on their life as early as you can, by simply talking to them about investing and explaining the importance of starting early. So the sooner someone starts, the more they will need to invest in getting to $1 million.
If you need suggestions about what they should buy, keep it simple, recommend the iShares Core S&P 500 ETF (IVV), the Vanguard Russell 2000 ETF (VTWO), or the Vanguard Total Stock Market ETF (VTI). These are basic, straightforward investments that will allow anyone to benefit from the stock market’s compounding returns.
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.

5 Reasons To Still Be Bearish

Please enjoy this updated version of weekly commentary from the Reitmeister Total Return newsletter. Steve Reitmeister is the CEO of StockNews.com and Editor of the Reitmeister Total Return.
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The recent rally in stocks (SPY) has been impressive. But it is still officially a bear market and there are 5 reasons that bears will not be waving a white flag soon. Lets review why stocks rallied… why they are likely to stall at this level… and the 5 reasons why the bearish argument will likely win the day.
Stocks have been rising nearly unabated for 2 months. A lot of that was because it was easy for stocks to “climb the wall of worry” created by the initial decline into bear market territory.
Meaning that it was fairly easy to find just enough silver linings or things not going as bad as advertised for stocks to bounce from that recent bottom. However, as we are finding out now… all good things must end.
Meaning that investors finally found resistance at the 200 day moving average of the S&P 500 (SPY) at 4,326 and retreated quickly from that mark into the finish line on Tuesday. Expect this level to denote the near term highs for the market as we likely enter a consolidation period with trading range to follow.
Why? And what is the parameters of this trading range? And what will cause us to break out of the range?
Market Commentary
Technically speaking… we are still in a bear market. That certainly is confusing to many investors given several weeks of upward price action. So let me spell it out for y’all.
The definition of a bull market is when you come out of a bear market and have risen 20% from the bottom. Well the recent bottom for the S&P 500 (SPY) is 3,636.87 and yet yesterday we closed at 4,305.20 which is 18.38% above the lows.

It may sound like mincing words to keep calling it a bear market as its pretty close to 20% above the lows. However, I think its an important distinction at this moment to help set up a true battle for the soul of this stock market.
The bulls have indeed grabbed the upper hand over the last 2 months. But a lot of that was just “climbing the wall of worry” as the market does quite often. That being where sentiment is so bad that it only takes things coming in a notch worse than horrific to spark a rally. And once the rally is under way you get the FOMO part where folks are afraid of missing out on the upside potential.
It is one thing to say things are not truly that bad versus saying they are good enough to promote the full re-emergence of the bull market. That is why the 200 day moving at 4,326, also known as the long term trend line, provides a very interesting battle ground for investors.
Check out the intraday chart from Tuesday below to see how stocks flirted with the 200 day moving average and then quickly reversed course

It is my strong belief that there is not enough serious bullish sentiment to create a break above the 200 day moving average at this time. On the other hand, the bears have more to prove to make their case. This creates the perfect environment for a consolidation period and trading range.
Yes, the relationship between high inflation and recessions/bear markets to follow is very strong as can be seen in the chart below:

However, until this starts showing up in a weakening of the employment market and/or earnings session for corporate America… then it is hard to make a serious case to push much lower. And thus the tug of war between bulls and bears should commence now.
Top of the range should be the 200 day moving average at 4,326 and the bottom of the range is likely the 100 day moving average at 4,100.
Reity, why do you continue to stubbornly call for a bear market when clearly other investors have spoken given the strength of the recent rally?
Because I have an economics background. And high inflation goes together with recessions and bear markets like peanut butter and jelly. It’s really just a matter of time as the chart above shows. So it may not have happened yet, but the problem still looms large.
Second, we have an inverted yield curve which is one of the most time tested indicators of a looming recession and bear market. Why? Because bond investors are saying that they see a recession coming in the long term that is by its very nature deflationary. So rates will be lower in the future than they are now.
Third, the Fed is feeling a bit too good about the economy which they take as a green light to raise rates like crazy in coming months. Bond investors have already weighed on this notion with the inverted yield curve which means they think the Fed will help generate a recession. Stock investors are likely to get the memo again once they see the damage appear in employment and/or corporate earnings.
Fourth, the weekly jobless claims reports is the leading indicator of what will happen with monthly job gains. That has been going the wrong direction since mid March. Note that it is generally understood that once jobless claims gets above 300,000 per week is when the unemployment rate starts to weaken. That wake up call may not be that far in the future.

Fifth, that this feels like the long term bear market of 2000 to 2003 that started with the popping of a valuation bubble and later had to deal with a recession. That is why you will see in the chart below that it took about 3 years of drops, followed by seemingly impressive bounces and then more drops to finally find true and lasting lows in March 2003 before a healthy new bull market could emerge.

Will this bear truly last 3 years?
Maybe. Maybe not. But I am simply saying the battle is not over which is why I think stocks will stall out at these levels awaiting some clear catalyst for a convincing breakout in a bullish or bearish direction.

My money is clearly on it breaking bearish for the reasons stated. But indeed, I am open for the bullish premise to win the day. That is why our hedged strategy is the right one for the time being. That being equal allocations to inverse ETFs and long stock positions.
As stated in Monday’s trade alert:

“If we do break above the 200 moving average with gusto and there is more reason to be bullish, then we will start to sell our inverse ETFs and start adding more stocks.
On the other side, if my thesis is correct that this is a long term bear market and we start to retreat, then we will do the opposite. Which is to sell off the stocks and perhaps add more inverse ETFs. Proof of that would likely be falling back under 4,000.
Simply you can think of a hedge as the start of a tug of war with both sides equally matched. Whichever side starts pulling ahead…then we jump on the bandwagon to join the winning team.”

I think that last paragraph pretty much says it all and will leave it there for now.
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Wishing you a world of investment success!
Steve Reitmeister… but everyone calls me Reity (pronounced “Righty”)CEO, StockNews.com & Editor, Reitmeister Total Return

About the Author
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

Look For Pullbacks In These 2 Retail Stocks

It’s been a roller coaster ride of a year for investors, with the S&P-500 (SPY) finding itself down more than 20% year-to-date in one of its worst starts ever before clawing back following a slight deceleration in CPI sequentially (8.5% vs. 9.1%).
One of the hardest hit groups this year has been the Retail Sector (XRT), with a considerable portion of the sector suffering when consumers adjust their spending habits.
While this has led to some investors steering clear of the sector, some names tilt more towards staples than their peers, like Walmart (WMT), and some discretionary names have seen large enough corrections that a harder-than-expected landing for the economy looks mostly priced in.
One stock that fits the second bill is American Eagle Outfitters (AEO), which is down over 65% from last year’s highs even after its recent rally.

While I wouldn’t be in a rush to buy either name with the market short-term extended, I believe they belong at the top of one’s watchlist if they pull back towards support. Let’s take a look below:
Walmart (WMT)
Walmart released its fiscal Q2 2023 results this week, trouncing estimates with revenue of $152.9BB, up 8% year-over-year after a much stronger second half of Q2 than planned.
While this didn’t lead to any improvement in quarterly earnings per share, which dipped 1% year-over-year ($1.77 vs. $1.78), this was partially due to markdowns taken to reduce inventory levels in areas where it had risks like apparel.
Given the better-than-expected Q2 results, the company is now more upbeat about its fiscal Q3 performance, especially as it enters the period with cleaner inventory and as some consumers look to trade down, hit by rising fuel costs and mortgage rates.
Walmart’s positioning as a beneficiary of trading down is a big deal, but it won’t be immune to a weak economic environment. However, it could see migration from premium retailers to lessen the blow.
It also continues to see solid growth in its Walmart+ memberships, providing some insulation as less affluent customers curtail spending in some of its discretionary segments.
This tailwind from growth in Walmart+ and its heavy staples weighting makes WMT a name to own.
(Source: FASTGraphs.com)
Looking at the chart above, we can see that WMT has historically traded at 20.1x earnings (10-year average), and the stock is currently trading at ~21.7x earnings at a share price of $141.00.
This is a premium to its historical multiple, but it was during a period when Walmart struggled to grow annual EPS (2023 estimates: $5.70 vs. $5.02 in FY2023.
However, looking ahead, WMT is expected to see an acceleration in its growth rate, with annual EPS estimates sitting at $6.50 in FY2024 and $7.16 in FY2025, with its earnings growth rate expected to come in at 14% in FY2024 and 10% in FY2025.
This should command a higher earnings multiple of 26, translating to a fair value of $169.00, pointing to a 20% upside from current levels.
While this might not seem like much upside, Walmart has a much lower beta than the market and an attractive dividend yield of 1.70%, making it a nice defensive play for investors looking to maintain exposure to the market but with lower risk.
That said, I prefer a minimum 25% upside to fair value to justify starting new positions.
So, while I think WMT is a name to own in Q3 and Q4 in a weaker economic environment, I see the low-risk buy zone for the stock coming in at $135.00 or lower, suggesting the better move is to buy on dips vs. rush in above $141.00.
This would coincide with a pullback to its rising 25-week moving average (pink line), which will likely provide support during any pullbacks now that it’s been reclaimed.
(Source: TC2000.com)
American Eagle Outfitters (AEO)
Unlike Walmart, which just came off a surprisingly strong report, American Eagle’s Q1 2022 report in May was a stinker. This was partially due to difficult year-over-year comps after lapping government stimulus and a wardrobe refresh in Q1, but it was also self-inflicted.
The issue was that the company came into the year with a more bullish outlook than it should have been, not considering the possibility of weaker demand in a more difficult economic environment.
Due to this misfire, the company exited the quarter with much higher inventory than planned (also impacted by a colder Q1 that hurt swimwear sales). It will now have to shed some of its inventory, resulting in weaker than expected margins as it ensures it has a fresh fall line-up.
That said, its Aerie business had another strong quarter, up 8% vs. difficult comps in Q1, and this segment is now sporting a 27% three-year revenue CAGR, easily offsetting the softness in the American Eagle segment.
However, as the earnings trend shows below, we’re expected to see a plunge in annual earnings per share [EPS] related to clearing through spring goods, higher freight costs, and higher store wages.
So, even if American Eagle meets current annual EPS estimates, it will see annual EPS tumble to $1.16, down from $2.19 in FY2021, a 47% decline year-over-year.
(Source: FASTGraphs.com)
While this is a terrible-looking earnings trend, it is worth noting that annual EPS should rebound in FY2023 and FY2024 as freight costs should moderate, and American Eagle should see some benefit from its Quiet Logistics acquisition.
So, while an ugly Q2 report is on deck and the company is up against clear headwinds from a weaker consumer, there is a light at the end of the tunnel with earnings set to rebound sharply.
Besides, while the short-term outlook isn’t as pretty, the stock is now priced at its most attractive levels in years.
(Source: FASTGraphs.com)
American Eagle has historically traded at 15.0x earnings (15-year average) and is currently sitting at just 9.0x forward earnings at a share price of $13.20 (FY2023 estimates: $1.46).

This is a dirt-cheap valuation for the stock. Even if we assume a more conservative multiple in a recessionary environment that doesn’t favor consumer discretionary names, I see a fair value for the stock of $17.52 per share (12x FY2023 estimates).
So, with a 33% upside to fair value, I would expect any pullbacks to provide buying opportunities.
(Source: TC2000.com)
Looking at the weekly chart, we see that AEO remains in a downtrend but is just above a multi-year support zone at $11.00 per share.
This reinforces my view that the negativity is priced in and that we’re sitting near a lower-risk buy point. Hence, any retracements below $12.60 should provide buying opportunities.
American Eagle and Walmart may not be the most exciting ideas and certainly don’t have nearly the growth rates of high-flying stocks like Celcius Holdings (CELH). Still, both stocks offer attractive dividend yields (5.2% and 1.7%, respectively) and look to have found bottoms after multi-month downtrends.
So, for investors looking to add long exposure at reasonable valuations, I see WMT and AEO as attractive, with buy zones of $135.00 and $12.60, respectively.
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.

Sneak Peak: Bear Market ’22

Every month, I release a new video for MarketClub members…
I cover everything from current market conditions and trading lessons learned (good and bad), to stocks on my watch list, questions I receive from members, and more.
Here is a sneak peak of my August Bonus Training Video.
Today’s theme is Bear Market ’22… shocker right?! Well, this one is a good one and I’m going to cover a lot so let’s jump in!
The good news is, we’re in a solid bear market rally and just flashed a monthly Trade Triangle in the big 3! I’ll look back at past bear market rallies and show you how the Trade Triangles have been an excellent indicator of changes and traps in the past (including getting you out before a 20% pullback in the most recent bear market). I’ll show you what I’m looking at and what to be cautious of.
Now full disclosure, even though we’ve seen these new Triangles issued, my gut tells me we haven’t seen the end of this bear market. But guess what? THE MARKET DOESNT CARE WHAT I THINK, so I trade what the market and signals tell me.
So, today we’ll do something we haven’t done in a while, look through some charts and scan for some trades! After all, the market is going up and as we’ve seen already the signals rarely, if ever, let us down!
I’ll break down the Top Options list into 13 potential stocks to watch for options trades!
I’ll ALSO cover how to survive market corrections, the journey to a million dollars, the 3 skill sets to build wealth, and more.

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If you enjoy this video, I’d like to personally invite you to see if MarketClub is right for you! You can test everything MarketClub offers, including my full options course and strategy blueprint for just $1!
Start Your MarketClub Trial
I hope to see you inside,
Trader Travis

ETFs That Track Retail Investing Trends

Over the past few years, retail investors have shown they have the power (money) to take stock prices to ‘the moon’ if they operate as a group.
Last year it was GameStop (GME) and AMC (AMC).
Just a few weeks ago, it was AMTD Digital Inc (HKD), which was IPO’d in July and has had a trading range of $13.52 per share up to $2,555.30 per share since the initial public offer. HKD is currently trading in the low $200 range.

But just because retail investors can do something, does that mean they should? Are the retail crowd good stock pickers? And should you follow their lead?
At this time, we don’t know the answer to these questions. That is because we don’t have enough data on whether or not retail investors operating as a whole are good stock pickers. They have only really been flexing their muscle for a little more than a year.
Plus, when they started with GME and AMC, we were still in a bull market. But now, we are in a bear market. So it would be unfair to say the retail investor’s recent performance shows their lack of sophistication and that they don’t belong picking stocks.
A few Exchange Traded Funds track what retail investors are talking about on social media or buying in their brokerage accounts, and as of late, retail investor stock picks are not outperforming the market.
The VanEck Social Sentiment ETF (BUZZ), which tracks the top 75 companies with the most popular sentiment online based on a proprietary AI model to select stocks, is down 32% year-to-date.
The SoFi Social 50 ETF (SFYF), which tracks the 50 most widely held stocks in self-directed brokerage accounts of Sofi Securities, is down 25.55% year-to-date.
And the FOMO ETF (FOMO), which invests in the areas of the market that are currently in favor with retail and individual investors or currently ‘trending,’ is down 17.94% year-to-date.
For comparison, a few ETFs that are either managed by professional stock pickers or track the performance of hedge funds are also having a tough year.
The Motley Fool 100 Index ETF (TMFC), which invests in the top 100 stocks selected by Motley Fool analysts, is down 17.64% year-to-date.
The Global X Guru Index ETF (GURU), the Goldman Sachs Hedge Industry VIP ETF (GVIP), and the AlphaClone Alternative Alpha ETF (ALFA), all of which track and mimic the holdings of hedge funds; have produced negative year-to-date returns of 23.22%, 22.90%, and 21.66% respectively.
The performance of these professionally run ETFs shows that even the pros, who are getting paid millions to manage other people’s money, are, as a whole, performing just as poorly as the retail investors.
The S&P 500 is what many consider the ‘market,’ and the QQQ comprises the top 100 technology stocks on the NASDAQ.
However, the SPDR S&P 500 ETF (SPY) is down 12.09% year-to-date, while the Invesco QQQ ETF (QQQ) is down 18.59%. So these are great examples of alternative ETF investments investors could buy as opposed to BUZZ, SFYF, or FOMO.
Furthermore, based on the QQQ’s performance, there is an argument that it’s not that retail investors are poor at picking stocks but that technology stocks, which represent a large portion of the retail investor-focused ETFs, are having an overwhelmingly lousy year.

The performance of the S&P 500 in 2022 highlights the old argument that stock picking is not worth the time or energy professionals or retail investors dedicate to it.
But again, we are only eight months into the year, which is a tiny snapshot of time for long-term investors. And much of which has been during a bear market.
Historical data (Warren Buffett, Peter Lynch, Carl Icahn, Bill Miller) has shown that some investors can beat the market, and maybe the next great generational investor will come from the retail side, not Wall Street.
Regardless, investors interested in what other retail investors are buying and discussing on message boards may find BUZZ, SFYF, or FOMO attractive since they take the work out of tracking what other investors like and dislike.
My only suggestion would be to make one of these ETFs a small percentage of your total portfolio. The bulk of your portfolio should be in one of the S&P 500, NASDAQ, or other major index-focused ETFs.
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.

Chesapeake Energy All in on Natural Gas

Forget oil—the real money is in natural gas.
Or at least that’s the message coming from a pioneer of the U.S. shale revolution, Chesapeake Energy (CHK).
From Prince to Pauper to Prince Again?
Once upon a time—when its stock was valued at more than $35 billion and its CEO, Aubrey McClendon, had the biggest pay package of any CEO of a listed firm—Chesapeake Energy was America’s best-known fracker.
But those glory days disappeared quickly, and Chesapeake became the poster child for the shale sector’s excesses.
About a year and a half ago, in the autumn of 2020, Chesapeake was in the midst of bankruptcy proceedings after the coronavirus pandemic-led crash in energy demand proved to be the final straw in the company’s fall from grace.
And for the industry more broadly, the prospects for liquefied natural gas (LNG) exports were looking bleak after a $7 billion contract to supply the French utility Engie went down the tubes on concerns over the emissions profile of U.S. natural gas.
Fast forward to 2022 and the picture has changed dramatically. Natural gas exports are booming!

Thanks to the Russian invasion of Ukraine and subsequent sanctions, Europe is in the middle of an energy crisis. It is buying up as much American LNG as it can. Those concerns about emissions are long forgotten.
In the first four months of the year, the U.S. exported 11.5 billion cubic feet a day of gas in the form of LNG, an 18% increase from 2021. Three-quarters of those exports went to Europe. And European leaders have pledged to ratchet up their imports by the end of the decade. There is also a massive opportunity in Asia, where LNG demand is set to quadruple to 44 billion cubic feet a day by 2050, according to a recent report released by think-tank, the Progressive Policy Institute.
And even here in the U.S., natural gas supplies look set to be tight this winter. Hot summer weather and high demands for power generation are sucking up supplies and leaving storage precariously low.
The investment bank Piper Sandler believes U.S. storage is on pace to fill just 3.4 trillion cubic feet of gas by the time winter arrives. That would be short of the 3.8 trillion cubic feet buffer usually needed to heat the country through a cold winter season. That could send already-elevated natural gas prices even higher in the months ahead.
These factors combined were behind the decision by Chesapeake Energy management to ditch oil in favor of gas.
This Shale Pioneer Refocusing on Natural Gas
On August 2, Chesapeake announced its plan to exit oil completely and return to its roots as a natural gas producer. The company said it would offload oil producing assets in south Texas’s Eagle Ford basin, allowing it to focus solely on gas production from Louisiana’s Haynesville basin and the Marcellus Shale in Appalachia.
Its CEO Nick Dell’Osso said the company made the decision because of better returns from its gas assets—it has had more success driving down costs and improving efficiency there when compared with oil.
Chesapeake emerged from bankruptcy in February 2021, vowing to shift from its previous model of growth at all costs to one of capital discipline and higher shareholder returns.
The company has expanded its natural gas portfolio of assets since its emergence from bankruptcy. It bought gas producer Vine Energy for $2.2 billion last August to bolster its position in the Haynesville, which sits close to gas-export facilities on the US Gulf Coast. And in January, it bought Chief Oil & Gas, a gas operator in north-eastern Pennsylvania’s section of the prolific Marcellus shale field, for $2.6 billion. Chesapeake also recently offloaded its Wyoming oil business to Continental Resources, the company controlled by shale billionaire Harold Hamm.
In summarizing Chesapeake Energy’s strategy, Dell’Osso said, “What’s different today than the past… is that we are allocating capital in a way that maximizes returns to shareholders, rather than maximizing [production] growth.”
Speaking with the Financial Times, Del’Osso added: “The industry was built on [oil and gas production] growth expectations, and company stocks were valued on growth expectations. That all had to get broken down.” The “reset” had been painful, but management teams would stick with the new model, the CEO said.
The strategy seems to be working. In May, Chesapeake reported record-high adjusted quarterly free cash flow of $532 million from the first three months of 2022.

Also in the second quarter, it announced an agreement to supply gas with the Golden Pass LNG facility. Golden Pass LNG is a joint venture company formed by affiliates of two of the world’s largest and most experienced oil and gas companies: QatarEnergy (70%) and ExxonMobil (30%).
The company now plans to pay $7 billion in dividends over the next five years. That is equivalent to well over half of its current market capitalization!
Chesapeake boasts of its best-in-class shareholder return program. It has completed about a third of its $2 billion share and warrant repurchase program, and it raised the base dividend by 10%, to $2.20 per share annually.
The company has a juicy variable dividend as well. Its next quarterly dividend will consist of the $0.55 per share base dividend and a variable dividend of $1.77. Management projects that, in the third quarter, it will pay out total dividends of $275 million to $285 million. The total dividend payout for 2022 should come in at between $1.3 billion and $1.5 billion.
Chesapeake’s yield is a very impressive 10% and I do not see that changing much as gas prices stay elevated. The stock is a buy anywhere in the $90s.
Read More from Investors Alley

About the Author
Tony Daltorio is a seasoned veteran of nearly all aspects of investing. From running his own advisory services to developing education materials to working with investors directly to help them achieve their long-term financial goals. Tony styles his investment strategy after on of the all-time best investors, Sir John Templeton, in that he always looks for growth, but at a reasonable price. Tony is a regular contributor for InvestorsAlley.com.

Single Stock ETFs Are Here

In July, AXS Investments debuted US-based investors’ first single stock Exchange Traded Funds. These ETFs allow investors to gain leverage on certain individual stocks.
However, because you are using leverage, there is more risk involved, and the authorities want investors to understand these risks before purchasing these new products.
The risks are associated with the leveraged exposure these new ETFs offer and the risk associated with investing in individual stocks. But since leverage is being applied, the risk level multiplies.
For example, one of the new ETFs being offered is the AXS 2X NKE Bull Daily ETF (NKEL) which provides investors 2X leverage to Nike (NKE) stock. This would mean that if you owned NKEL on a day when Nike stock increased by 0.50%, the NKEL ETF, which is 2X leverage, will go up 1.00%.
But, the opposite is also true. So if Nike stock fell by 1%, the NKEL ETF, which tracks Nike stock at a 2X leveraged ratio, would lose 2%.

Leverage is a very nice thing to have when it is being applied in the direction you want it to move. But leverage can be deadly when it is going against you.
Hence why the Securities and Exchange Commission is warning investors of the dangers associated with any single stock ETF, even if it is not marketing itself as leveraged.
One example of a new single stock ETF that is not marketing itself as leveraged is the AXS TSLA Bear Daily ETF (TSLQ). This ETF only tracks Tesla, but to the downside with just 1X leveraged exposure.
This essentially means that the TSLQ is shorting Tesla. But, unlike having to short a stock, which would require approval from your broker, a margin account, and the risk of not losing more than 100% of your investment, you simply have to buy this one ETF and not worry about the other things.
AXS currently has eight single-stock ETFs:
The AXS TSLA Bear Daily ETF (TSLQ), shorts Tesla.The AXS 1.25X NVDA Bear Daily ETF (NVDS) is short NVDA.The AXS 1.5X PYPL Bear Daily ETF (PYPS) which shorts PayPal.The AXS 1.5X PYPL Bull Daily ETF (PYPT) which is long PayPal.The AXS 2X NKE Bear Daily ETF (NKEQ) which is short Nike.The AXS 2X NKE Bull Daily ETF (NKEL) which is bullish Nike.The AXS 2X PFE Bear Daily ETF (PFES) is short Pfizer.The AXS 2X PFE Bull Daily ETF (PFEL) is long Pfizer.
The leveraged ones have the amount of leverage they are providing in the name of the ETF. But all the funds currently charge a 1.15% expense ratio and are intended to be held one day at a time due to the contango effect caused by gaining leverage or the inversion.
More single stock leveraged and inverse ETFs are coming to the market as Direxion, GraniteShares, and Kurv Investment Management all have filed with the SEC to be permitted to offer their own single stock ETFs.
The filing shows that roughly 35 stocks will have a corresponding ETF, with some being blue chip stocks, some in the technology world, some in energy, and even some that are just very volatile stocks.

Investors are and will continue to be given a lot of opportunities to invest with leverage and make ‘bets’ on the direction of individual stocks.
But, just because you can do something does not always mean you should do it.
Learn more about the risks of investing in these ETFs and how contango will affect your investment if you hold these ETFs for longer than one day at a time before owning these single stock ETFs.
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.

chef preparing vegetable dish on tree slab

Which Is The Better Restaurant Stock?

It’s been a volatile year for the restaurant industry group (EATZ), which found itself down over 29% for the year before its recent recovery. This rebound can be attributed to hopes that inflation has peaked combined with short covering, with the small-cap and mid-cap restaurant names having elevated short interest relative to other industry groups.
Following this rally, some investors might be looking for names that haven’t participated in the recovery. However, underperformance is often related to underlying problems with a business, so it’s essential to look at industry trends, sales performance, and other key metrics to ensure one isn’t buying into a value trap.
In this update, we’ll look at two restaurant brands with above-average short interest and see which is the better stock to own – Restaurant Brands International (QSR) or Red Robin Gourmet (RRGB).
Scale, Business Model & Unit Growth
From a scale standpoint, Restaurant Brands International (“RBI”) and Red Robin differ materially. RBI has more than 29,000 restaurants under four different brands (Burger King, Tim Hortons, Firehouse Subs, Popeyes Chicken), and Red Robin has 525 restaurants under one brand: Red Robin Gourmet Burgers.
Typically, the smaller-scale company would be the more attractive one assuming it was a high-growth concept and a similar business model. However, Red Robin is inferior in both categories.

Not only has Red Robin seen its store count decline by 10% over the past three years while RBI’s store count has increased 15%, but Red Robin operates a casual dining concept, and its brand is nowhere near as iconic as RBI’s top-rated brands in the coffee, burger, and chicken category, which are Tim Hortons, Burger King, and Popeyes, respectively.
Meanwhile, only 20% of Red Robin’s system is franchised vs. 100% for RBI, meaning that Red Robin is much more sensitive to inflationary pressures, seeing a sharp decline in earnings when it’s seeing food and labor costs rise.
So, while Red Robin does win from a scale standpoint, benefiting from considerably more whitespace, this doesn’t help if it isn’t growing. In addition, RBI benefits from much higher margins (43% gross margins vs. 16%) and a 5% unit growth rate vs. a declining store count for Red Robin, with no reversal of this trend in sight.
Restaurant Brands – 1 / Red Robin – 0
Positioning In A Recessionary Environment
From a positioning standpoint in a recessionary environment, there are also major differences that must be considered.
While RBI benefits from three quick-service restaurants with average tickets below $7.00 (Popeyes, Burger King, Tim Hortons), and one fast-casual concept (Firehouse Subs), Red Robin has casual dining restaurants.
The latter segment of the restaurant industry tends to massively underperform in recessionary environments, given that consumers are looking to trade down. However, if they are looking for a meal, takeout is the much cheaper option, saving money on alcohol (home vs. restaurant) and the tip. This is not ideal for casual dining names which rely on drinks/appetizers/desserts to boost margins.
Meanwhile, RBI is a go-to name in a recessionary period, with many consumers looking to trade down if they want convenience. Given the similarly priced menu to brands like McDonald’s (MCD), it’s no surprise that while casual dining traffic was down over 6% in June, quick-service restaurants like RBI’s brands were flat year-over-year.
This is related to the sharp rise in energy costs, fuel costs, mortgage rates, and grocery prices, all contributing to shrinking discretionary budgets. So, if we do head into a prolonged recession, RBI’s margins and the fact that quick-service/pizza will allow it to outperform in weaker economic environments give it the edge by a wide margin.
Firehouse Subs is a fast-casual and higher-ticket brand ($10.00+ price per check), but this makes up just ~1,200 of RBI’s ~30,000 restaurants, so I do not see this as an issue. Red Robin benefits from Donatos Pizza being rolled out across its system, but the sales contribution is too small (less than 5% of sales) to make a meaningful difference.
Restaurant Brands – 2 / Red Robin – 0
Valuation
Finally, if we look at both names from a valuation standpoint, RRGB trades at ~8x EV/EBITDA while RBI trades at 13x EV/EBITDA, suggesting that RRGB is much more attractive from a valuation standpoint.
However, one wouldn’t expect to buy a Ferrari for the price of a Ford, and this is a case of RRGB being cheap for a reason. Not only does the company return no capital to shareholders (QSR pays a 4.0% dividend and buys back 2% of stock per year), but it has weaker margins, a declining store footprint, and is in a less attractive segment of the restaurant industry (casual dining vs. quick-service).
So, while the stock is far cheaper strictly on an EV/EBITDA basis, RBI is much cheaper on a PEG basis, trading at a PEG ratio of ~1.6, while RRGB trades at a PEG ratio of ~2.2.

Meanwhile, RBI investors are getting a guaranteed return of 4% per year from dividends alone to help weather general market volatility, boost total returns, and see continued earnings per share growth through opportunistic buybacks.
Restaurant Brands – 3 / Red Robin – 0
Final Verdict
To summarize, I see RBI winning in the valuation category as well, with RRGB being a case of a low-quality name trading at a fair price. Conversely, RBI is a high-quality name trading at an attractive price for investors with a long-term outlook. T
herefore, I see RRGB as an Avoid losing 0-3 to RBI, and I would view any pullbacks in Restaurant Brands International (QSR) below $57.00 as buying opportunities.
Disclosure: I am long QSR
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.

Has the Fed Already Whipped Inflation?

To hear Jeremy Siegel tell it, the Federal Reserve has already won its fight over inflation and should start taking its foot off the monetary brakes.
“I think the Fed should be near the end of its tightening cycle,” the ubiquitous market prognosticator and Wharton School finance professor told CNBC last week. According to Siegel, current headline inflation may still be high, “but forward-looking inflation has really been stopped. And I think the Fed should really slow down the rate of hiking, and if we get a snapback in productivity that’ll put further downward pressure” on inflation.
Is he right, or is it just wishful thinking so stocks can resume their decade-long winning streak?
Right now the signals look mixed, based on the two most important and widely-followed economic reports issued last week.According to the Commerce Department, second quarter GDP fell 0.9% at an annual rate, on top of the prior quarter’s 1.6% decline.

Until this year, the mainstream media would have immediately pounced on that as clear evidence that we are officially in a recession, following the traditional definition of a downturn as two back-to-back negative quarters. Now, however, with a feckless president poised to lead his party to an election Armageddon in November, we learn that the old standard simply doesn’t apply anymore, so we can’t use the dreaded “R” word.
Whether that’s pure bias or pure something else that also begins with a B, July’s robust jobs report, which showed the economy added a much higher than expected 528,000 jobs, does create some doubt whether we are in a recession or not, and if so, what the Fed plans to do about it.
Instead of viewing the jobs report as good news being bad news – i.e., the Fed will need to continue tightening to stifle economic growth—and sell stocks, the market instead went up on Friday and continued to rally on Monday morning. Is the recession – if there ever was one – now officially over, the inflation monster slain and no further need for the Fed to continue to raise interest rates?
Not according to at least one Fed official. Noting that the Fed raised interest rates by a steeper-than-expected 75 basis points at both its June and July meetings, Fed governor Michelle Bowman told the Kansas Bankers Association over the weekend that “similarly-sized increases should be on the table until we see inflation declining in a consistent, meaningful and lasting way.”
“Our primary challenge is to get inflation under control,” she said.
The Fed doesn’t meet again until September 20-21, which means a lot of economic statistics are going to come in in the meantime. Depending on what those figures reveal, will the Fed revert to its “data dependent” monetary policy stance, or will it stick with its new “forward guidance” policy and keep raising rates regardless of what the numbers show?If stock market sentiment is any clue, Professor Siegel may be onto something.
Since mid-June, the S&P 500 is up more than 13% and the beaten down NASDAQ is up over 18%. Of course, that could simply be a short-term, bottom-fishing rally that almost always appears during bear markets, sometimes for extended periods (like this one).
Should we take that to mean that the Fed is willing to at least wait and see what happens with inflation before it raises interest rates again in September? Or has it already made up its mind what it wants to do?
It seems overly optimistic to believe that nearly 14 years of massive monetary and fiscal stimulus that inflated the price of goods, services and assets could be unwound after a couple of relatively modest Fed interest rate hikes, with almost no similar restraint on spending by Congress.

Can inflation really go away that quickly? Can you get instant relief from a ferocious hangover by popping a couple of Advils?
Of course, this is something that a lot of other investors would dearly love to believe, but it just seems too painless. But others would argue that we have in fact suffered a lot of financial pain, and that it’s time for the good times to start rolling again. After all, including its latest rally, the S&P 500 is down 13% from its all-time high last December, while NASDAQ is still off by more than 21%.
However, those losses seem too modest compared to previous bear market drops. For example, the S&P plunged more than 50% during the 2008 global financial crisis, a period preceded by reckless regulatory stimulus that ignited the housing crash.
Should we therefore expect more pain to come, or will the next month’s economic statistics show that we’re just fine—inflation is coming down, more and more people are getting hired, and economic growth is only being modestly impacted?It will be interesting to watch what happens between now and the next Fed meeting. But I would keep my guard up.
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.

Strong Jobs Report Abates Fears of Recession

Last week, the jobs report was released. Economists were expecting an additional 258,000 new jobs added last month. The Labor Department’s report revealed that the U.S. economy has had robust job growth last month adding over 500,000 jobs in July.
The exceedingly strong numbers of the report diminished concerns about the United States entering a recession. While this optimistic report bodes well for economic growth, it certainly does not address inflation.
However, it does change market sentiment which had been intensely focused on the last two GDP reports. On July 28 the government released the advance estimate of the second quarter GDP. The report revealed that the GDP had decreased at an annual rate of 0.9% during the second quarter of 2022.
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Earlier this year the BEA reported a decrease in the first quarter GDP of 1.6%. The widely accepted definition of a recession is an economic contraction over two consecutive quarters.

The fear of a disappointing jobs report that pressured yields on U.S. Treasuries and the dollar lower was reversed. The dollar gained 0.8% which is equal to Thursday’s decline. Gold gave up roughly half of the $30 gain Thursday declining by $14.50 on Friday. As of 6:25 PM EDT on Friday, gold futures basis the most active December contract was fixed at $1792.40.
Spot or physical gold lost $15.57 and was fixed at $1776.40 according to the Kitco Gold Index. On closer inspection, the KGX revealed that $13.60 of Friday’s decline of was a direct result of dollar strength, and a fractional decline of $1.20 was the result of traders bidding gold fractionally lower.
Gold futures closed above $1800 Thursday and the 50-day moving average was significant, however, very short-lived. It is also less likely that we will see gold recover quickly in that Friday’s jobs report strengthens the resolve of the Federal Reserve to raise rates by another 75 basis points in September.
This will also be highly supportive of the U.S. dollar as we saw in trading today.
According to Michael Hewson, chief market analyst at CMC markets, “Today’s labor market report is bad news for gold bulls, with next week’s CPI report the next key test,” the bearish sentiment reflected in the above quote was a common theme amongst other analysts.

Bart Melek, head of commodity strategies at TD Securities said, “Gold had recently rallied on the thought that the Fed will shift from hawkish to dovish. But the jobs data shows the U.S. economy is strong, and this can prompt the Fed to be more aggressive, which is not a good story for gold,” Melek added that the “next catalyst for gold prices will be the US CPI print coming out next week.”
The only wildcard is if there is an increase in geopolitical concerns regarding Russia’s war in Ukraine and/or China’s response to Nancy Pelosi’s visit to Taiwan.
For those who would like more information simply use this link.
Wishing you, as always good trading,Gary S. WagnerThe Gold Forecast