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Top Safe Stocks: 6 Stocks to Buy Instead of Shiba Inu Coin

Several safe stocks are setting up nicely after another impressive earnings season. I’ll cover the top ones to buy instead of chasing the latest meme stock.
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This article was originally published by Investment U

We’re barreling down into the end of the year, and many investors are distracted with the latest crypto to take off the Shiba Inu coin. But, several safe stocks are setting up nicely after another impressive earnings season. With this in mind, I will cover the top safe stocks to buy instead of chasing the latest meme stock.

This earnings season is revealing a clear trend, things are getting more expensive. Between higher labor costs and rising shipping rates, businesses are paying more for the same materials. As a result, rising prices are impacting everything from food to transportation.

Let’s see how these top safe stocks are preparing for what’s to come.

Top Safe Stocks List

Although any investment carries some risk, these top safe stocks are better equipped to overcome the hurdles. These companies are top-tier investments with solid cash flows, bulletproof balance sheets, and a proven history of rewarding shareholders.

Let’s take a closer look at the companies.

No. 6 Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B)

  • Market Cap: 629B
  • Beta: .91
  • Dividend Yield: N/A

Despite not paying a dividend, Warren Buffett’s Berkshire still generated a 43% return for investors this past year. For someone that believes so much in the power of dividends, how come he doesn’t pay one himself?

While this may be true, Warren believes in his ability to better use the money to generate additional returns for investors. With this in mind, his current top holdings in terms of value include:

  • Apple (Nasdaq: AAPL): $121 billion
  • Bank of America (NYSE: BAC): $41 billion
  • American Express (NYSE: AXP): $25 billion
  • Coca-Cola (NYSE: KO): $21 billion

By investing in Berkshire, you gain exposure to some of the top companies, personally selected by Warren himself. Given the company’s impressive 15% CAGR growth over the past five years, Berkshire looks to be a top safe stock to buy for the next five.

No. 5 Verizon (NYSE: VZ)

  • Market Cap: 212B
  • Beta: .45
  • Dividend Yield: 4.99%

As a member of the Dow Jones Industrial Average, Verizon has a reputation as a top safe stock to buy. Although the stock is down this year, the future is looking brighter for shareholders.

Verizon’s extensive investment into 5G is looking promising, with revenue growth in each of the last three quarters. Furthermore, the company expects growth to continue, raising expectations as consumers continue adopting the new technology.

On top of this, Verizon offers an attractive dividend yield at 4.85% after raising it for the 15th consecutive year.

As we advance through the end of the year, look for Verizon to continue its expansion into 5G. As a result, Verizon is going to be a top safe stock on continued momentum.

No. 4 Walmart (NYSE: WMT)

  • Market Cap: 395B
  • Beta: .50
  • Dividend Yield: 1.55%

Walmart finds itself in a superior position as the low-cost retailer is growing its e-commerce and ad revenue. The digital transformation benefits the company’s bottom line with an over 100% increase in the past two years.

What’s more, Walmart is gaining market share in key areas such as meat, produce, and bakery items, per Nielson’s research.

The growth comes at a crucial time as food inflation is hitting shelves everywhere, driving prices higher as a result. Walmart’s low-cost price model is helping attract shoppers not only in the store but online as well.

Additionally, Sam’s Club saw higher traffic, with membership income advancing 12.2% in the latest quarter and a record membership total. Looking ahead, Walmart will be a top safe stock to buy to help protect your portfolio from rising inflation.

No. 3 Home Depot (NYSE: HD)

  • Market Cap: 427.29B
  • Beta: .99
  • Dividend Yield: 1.63%

One of the strongest performers of the year, Home Depot, is also a top safe stock to buy based on its market position and fundamentals.

The world’s leading retailer got much bigger this past year as home improvement projects became a major focus for homeowners during the pandemic. In fact, homeowners spent more on DIY projects in the last two years than ever before, reaching $457 billion in the U.S. market.

To put things in context, it took Home Depot nearly 20 years to break $20 billion in sales, and they grew sales by +$22 billion in 2020.

With that in mind, Home Depot has invested heavily over the years to put the company in today’s position. And because of this, revenue has grown for the past six quarters, with four experiencing double-digit growth.

Home Depot’s superior profit margins, market position, and investments in digital efforts are lifting the stock to all-time highs.

Keep reading to learn the top safe stocks to buy right now.

No. 2 Costco (NYSE: COST)

  • Market Cap: 2348B
  • Beta: .64
  • Dividend Yield: 0.60%

Similarly, Costco’s revenue has increased by double digits in each of the last five quarters. Like Walmart, Costco’s low-cost proposition is helping retain existing customers while attracting new shoppers.

Despite being higher valued (44 PE vs. 23), Costco is also growing at a faster rate. As a result, Costco’s stock price has gained quicker.

But, we are talking about the top safe stocks, and Costco’s better debt position & faster growth is helping edge out Walmart on this list.

As we advance, look for Costco to continue expanding its memberships. Additionally, rumors are swirling that the retailer could raise its membership price, a move that could drive profits even higher.

No. 1 Microsoft (Nasdaq: MSFT)

  • Market Cap: 2.56T
  • Beta: .80
  • Dividend Yield: 0.73%

After another impressive earning beat, Microsoft is now the world’s most valuable company, surpassing old rival Apple.

Microsoft earns its spot on the top safe stocks through relentless growth, product innovation, and industry potential. The tech company is generating unrivaled year-over-year (YOY) growth in essentially all business segments, including…

  • Microsoft Cloud up 36%
  • LinkedIn revenue up 42%
  • Dynamic Products up 31%
  • Azure & other cloud services up 50%
  • Search and Ad revenue up 40%

And that’s not even including one of Microsoft’s primary segments in personal computing, which also saw 12% growth.

All in all, Microsoft is in a great position to continue expanding into high growth opportunities and growing its core business. With that in mind, Microsoft gets the number one position for the top safe stocks to buy going forward.

Grow Your Portfolio with These Top Safe Stocks

If you’re sick of chasing the latest meme stocks, these top safe stocks offer a chance for steady gains in 2022. These companies are well-positioned in their industries with strong cash positions and low debt.

Each of these businesses has a specific advantage that’s led them to the top of their market. Above all, they’ve proven they’re able to overcome adversity and still generate returns.

Don’t miss the best stocks to watch by signing up for Trade of the Day. You can get exclusive access to the free newsletter by entering your email, giving investors the best opportunities. Check it out today!

Going into next year and 2023, the fed will be slowing the support provided through the pandemic. When this happens, higher-risk companies such as growth stocks are more prone to declines.

The post Top Safe Stocks: 6 Stocks to Buy Instead of Shiba Inu Coin appeared first on Investment U.


Author: Pete Johnson

Economics

Why You Should Give an Extra Big Holiday Tip to Your Dog Walker and Babysitter This Year

The service workers who make your life easier deserve a bigger tip this year.

It’s December, and that means it’s time to work through your holiday gift list. In addition to presents for family and friends, it’s time to show appreciation for everyone who helped you get through the year. We’re talking about holiday tips and gifts for babysitters, dog walkers, in-home caregivers, house cleaners, and perhaps even your hair stylist and manicurist, not to mention the mail carriers and sanitation workers that visit your neighborhood every day.

Between ongoing challenges caused by the pandemic and shortages and price hikes caused by a global supply chain crisis, 2021 has been an unusual year. Service employees worked on the front lines of the pandemic, often for lower pay than white-collar workers who had the ability to work remotely. That’s one argument for making room in your budget for an extra big tip this year.

And then there’s inflation. If workers didn’t get a raise of at least 5% this year, they’re probably falling behind because of how quickly prices are rising. That’s another good reason to give a generous tip this holiday season.

Here are some more specifics, if you still need convincing about why it’s important to be more generous this year — and some advice on how much to give.

Inflation is making everything more expensive

Consumer prices have grown a record 6.2% this year. Almost all household essentials — from groceries to gas to clothing — are more expensive than they used to be.

In other words, your money doesn’t stretch as far as it used to. So that $100 tip you gave your dog walker in 2020? At today’s rate of inflation, it’s only worth about $94 this year.

Rising prices, especially for gasoline, have hit the workers in the service industry harder than most. “As costs continue to rise, it’s definitely affecting childcare providers,” says Morgan Clark, founder of STL Sitter, which employs 425 babysitters in the St. Louis area. “Many of our sitters will work three or four different jobs per day.”

That’s a lot of driving between jobs, and with gas prices more than a dollar higher than they were this time last year, the costs can add up quickly.

Not to mention the fact that low-paid childcare workers are quitting their jobs in droves this year. “If you combine the issue of inflation with a staffing shortage, and then you add in a high demand for service,” Clark says, “you have a recipe for chaos.”

Service workers took on extra risks in 2021

As in 2020, workers in the service industry faced additional risks — and sometimes, additional hurdles — related to the coronavirus pandemic. UrbanSitter co-founder and CEO Lynn Perkins noted that many families asked their caregivers to avoid public transportation and carpooling during the pandemic. Not to mention the inherent risks involved with a public-facing job that doesn’t allow a worker to limit their interactions to a small circle of people.

“If they’re being asked to jump through additional hoops due to Covid, I think that’s another reason to give a little more this year,” Perkins says.

Jessica Abernathy, president of the National Association of Professional Pet Sitters and owner of two petsitting businesses in the Chicago area, pointed out that many pet caregivers looked after animals when their owners were hospitalized with COVID-19 this year. “We’re there for you, no matter what the circumstances are,” she says of petsitters.

Tips are going up, but rates are too

In a survey conducted by UrbanSitter, 42% of 500 parents polled said they are planning on tipping their babysitters more than $25 this year. That’s up from 25% of parents who said the same in 2018. Another survey conducted by CreditCards.com found that 45% of people plan to give bigger tips than usual this holiday season.

UrbanSitter also found that childcare rates on its platform have risen 10.5% over the last year. That means that for families that tip their nannies and babysitters based on an extra week or two’s worth of pay rather than a set amount, an inflation-adjusted tip is already baked in.

But that’s not the case for everyone. Real hourly wages in October were 1.2% lower than the year before, according to data from the Bureau of Labor Statistics. For most Americans, wage gains haven’t been enough to keep up with rising inflation. So if you haven’t begun paying your babysitter more already, now is a good time to start.

Cash isn’t the only way to say thank you

If you don’t have the extra room in your finances for a holiday tip, there are still ways to show your appreciation for the people who helped you get through 2021 through thoughtful words or personal tokens of your thanks.

“Homemade gifts from the kids can go a long way in showing appreciation,” says Sheri Reed, Managing Editor for Care.com. “Things like a scrapbook of quotes from the kids or a heartfelt drawing are always a great idea.”

There’s also the gift of time: UrbanSitter’s Perkins recalls one family that gave their nanny an afternoon off and the use of their car when she was scheduled to work, as a holiday surprise.

Or if your dog walker has a pet of their own, Wag! CEO Garrett Smallwood recommends making a homemade puzzle toy or another DIY pet gift.

Service workers can find other jobs

Regardless of how much you tip, or whether you can afford to tip at all, a tightening labor market means that showing you value the service providers in your life is extra important in 2021. Caretakers and service workers are in especially high demand, and record levels of Americans quitting their jobs translates to more openings and tight competition for workers.

STL Sitter’s Clark says that on her platform, some families are even offering bonuses above and beyond a sitter’s rates to secure services. “Retention should be something that’s in the back of your mind when you’re thinking about tipping,” Clark says.

“If you really like your care provider, this is not a bad year to give a little bit more just because people are starting to look around [for other jobs],” says UrbanSitter’s Perkins. “If this is someone who’s really meaningful to your family…show them a little additional love this year.”

More from Money:

10 Best Pet Insurance Companies of December 2021

4 Ways the Labor Shortage Could Wreck Your Holiday Plans

6 Reasons You’ll Spend More Money This Holiday Season (Even if You Aren’t Buying Gifts)


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Economics

Here We Go: Market Begins Pricing In Rate Cuts As Yield Curve Inverts

Here We Go: Market Begins Pricing In Rate Cuts As Yield Curve Inverts

With Powell effectively confirming an earlier end to the Fed’s taper…

Here We Go: Market Begins Pricing In Rate Cuts As Yield Curve Inverts

With Powell effectively confirming an earlier end to the Fed’s taper program this week, parts of the US yield curve inverted, and as the chart below shows, forwards traders are starting to price in rate cuts in a few years suggesting the Fed will not only end its tightening campaign prematurely, but will be forced to cut relatively soon. 

And, we would add, the more stocks drop, the greater the priced in future rate cut will be. In fact, with the forward swaps curve now pricing in more than 10bps of cuts, we are now where we were in late 2018, just weeks before stocks tumbled 20% and Powell capitulated, sparking a massive rally as the Fed’s last brief tightening cycle came to an abrupt close.

In inverting, the US curve joined the UK, Europe and especially many Emerging Markets where yield curves have already inverted aggressively.

Commenting on this inversion, DB’s chief FX strategist George Saravelos argues that the omicron variant – irrespective of the precise immunological properties – would just help reinforce existing trends, not change them. It is a fallacy that the market has been “looking through” COVID.

What does he mean by this? In his own words: “weak US labor supply, strong inflationary pressure in the goods sector, high excess saving, very low terminal rate pricing, a stronger dollar and very negative real rates are all because of persistent COVID forces this year not despite of them. It’s the new “COVID normal”, very different from the “old”. Is the market right to price such late-cycle dynamics?”

His conclusion: “If the whole point of the Fed turning hawkish is to slow the economy down and take the unemployment rate back above the “new” NAIRU, the answer is yes.”

The only problem: Powell is also taking down the entire market down with him, and today risk assets made it clear that they will not go down without a fight, and will push back until Powell capitulates on his rate hiking plans.

Tyler Durden
Fri, 12/03/2021 – 14:53



Author: Tyler Durden

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Economics

High flying growth companies will badly damage new shareholders

The problem with having a huge amount of anticipated growth baked into your stock price is that the expectations become incredibly difficult to achieve….

The problem with having a huge amount of anticipated growth baked into your stock price is that the expectations become incredibly difficult to achieve.

High expectations result in high stock prices.

I’ll post the charts of two of these companies which are household names – Zoom (Nasdaq: ZM) and Docusign (Nasdaq: DOCU):

We will look at Zoom first.

At its peak of $450/share, Zoom was valued at around $134 billion. Keeping the math incredibly simple, in order to flat-line at a terminal P/E of 15 (this appears to be the median P/E ratio of the S&P 500 at the moment), Zoom needs to make $9 billion a year in net income, or about $30/share.

After Covid-mania, Zoom’s income trajectory did very well:

However, the last quarter made it pretty evident that their growth trajectory has flat-lined. Annualized, they are at $3.55/share, quite a distance away from the $30/share required!

Even at a market price of $180/share today, they are sitting at an anticipated expectation of $12/share at sometime in the future.

Despite the fact that Zoom offers a quality software product (any subscribers to “Late Night Finance” will have Zoom to thank for this), there are natural competitive limitations (such as the fact that Microsoft, Google and the others are going to slowly suck away any notion of margins out of their software product) which will prevent them from getting there.

The point here – even though the stock has gone down 60% from peak-to-trough, there’s still plenty to go, at least on my books. They are still expensive and bake in a lot of anticipated growth which they will be lucky to achieve – let alone eclipse.

The second example was Docusign. Their great feature was to enable digital signing of documents for real estate agents, lawyers, etc., and fared very well during Covid-19. It’s an excellent product and intuitive.

They peaked out at $315/share recently, or a US$62 billion valuation. Using the P/E 15 metric, the anticipated terminal earnings is about $21/share.

The issue here is two-fold.

One is that there is a natural ceiling to how much you can charge for this service. Competing software solutions (e.g. “Just sign this Adobe secure PDF and email it back”) and old fashioned solutions (come to my office to scribble some ink on a piece of paper) are natural barriers to significant price increases.

Two is that the existing company doesn’t make that much money:

Now that they are reporting some earnings, investors at this moment suddenly realized “Hey! It’s a long way to get to $21!” and are bailing out.

Now they are trading down to US$27 billion, but this is still very high.

There are all sorts of $10 billion+ market capitalization companies which have featured in this manner (e.g. Peleton, Zillow, Panantir, etc.) which the new investors (virtually anybody buying stock in 2021) are getting taken out and shot.

This is not to say the underlying companies are not any good – indeed, for example, Zoom offers a great product. There are many other instances of this, and I just look at other corporations that I give money to. Costco, for example – they trade at 2023 anticipated earnings of 40 times. Massively expensive, I would never buy their stock, but they have proven to be the most reliable retailer especially during these crazy Covid-19 times.

As the US Fed and the Bank of Canada try to pull back on what is obviously having huge negative economic consequences (QE has finally reached some sort of ceiling before really bad stuff happens), growth anticipation is going to get further scaled back.

As long as the monetary policy winds are turning into headwinds (instead of the huge tailwinds we have been receiving since March 2020), going forward, positive returns are going to be generated by the companies that can actually generate them, as opposed to those that give promises of them. The party times of speculative excess, while they will continue to exist in pockets here and there, are slowly coming to a close.

The super premium companies (e.g. Apple and Microsoft) will continue to give bond-like returns, simply because they are franchise companies that are entrenched and continue to remain dominant and no reason exists why they will not continue to be that way in the immediate future. Apple equity trades at a FY 2023 (09/2023) estimate of 3.8% earnings yield, and Microsoft is slightly richer at 3.2%. Just like how the capital value of long-term bonds trade wildly with changes of yield, if Apple and Microsoft investors suddenly decide that 4.8% and 4.2% are more appropriate risk premiums (an entirely plausible scenario for a whole variety of foreseeable reasons), your investment will be taking a 20% and 25% hit, respectively (rounding to the nearest 5% here).

That’s not a margin of error that I would want to take, but consider for a moment that there are hundreds of billions of dollars of passive capital that are tracking these very expensive equities. You are likely to receive better returns elsewhere.

Take a careful look at your portfolios – if you see anything trading at a very high anticipated price to cash flow expectation, you may wish to consider your overall risk and position accordingly. Companies warranting premium valuations not only need to justify it, but they need to be delivering on the growth trajectory baked into their valuations – just to retain the existing equity value.




Author: Sacha Peter

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