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NXP Semiconductors Target to $125

NXP Semiconductors (NXPI) dropped over 4% after management stated that they have already spent $3.7 billion of the $5 billion dollars on buybacks from the Qualcomm (QCOM) breakup. Many investors thought that they haven’t or used very little of the buyback since there was never a public announcement until now. The stock price ended Tuesday below $90 which is a very nice buy level. On the same day, Credit Suisse gave the stock a target of $125. This is a 38.9% gain if their analyst is correct. Today, the stock is went below $86 as they received a downgrade by Stifel analysts for the entire industry of analog and mixed-signal semiconductors. This is a great buying opportunity for a short-term issue that the analysts are seeing. Remember, NXP Semiconductors’ chips are in both Apple and Samsung phones. It doesn’t matter who wins the phone industry for them. They have chips in both.

The CEO of NXP Semiconductors and President was on Mad Money with Jim Cramer on Tuesday. He had sold millions of dollars of stock when the stock was over $120 per share. He announced that he was buying at these levels at $90 including his CFO was buying their stock as they believe the company is undervalued. He also showed a processor that integrates with the cloud and internet to take advantage through edge processing. NXPI’s largest customers also include Garmin, Continental, and many car manufacturers since their chips are on the sensors of the cars.

I am long this stock and I believe it will do well in the future. The technicals do indicate that the stock could go down further for those that wish to be more conservative but don’t wait too long!

Facebook at Buy Value!

Facebook, ticker FB, dropped in stock share price yesterday and even further today currently down over 4% today after the hearings with congress yesterday. Much of the drop earlier in 2018 was related to fake users that they had to remove which showed that Facebook has less users than originally stated. Remember, that Facebook also owns Instragram which continues to grow its user base and is valued at $100 billion by Forbes if they were its own separate company.

Also, remember that Facebook is still widely known around the world even if their growth has slowed down in the USA market. They also have a cash holdings of $42 billion that should be factored into your fundamental analysis. FB has a PE of 25 while GOOG is at a PE of 50. That fact alone shows you the undervaluation that the market is giving to Facebook. I believe there is plenty of growth in the stock and the stock price does not factor this in.

At the current price, you can’t go wrong purchasing below $163.

NXP Semiconductors – Great Fundamentals but Poor Technicals

As I mentioned in an early article, NXP Semiconductors (NXPI) is a great buy in a fundamental standpoint.  Qualcomm (QCOM) had to abandon the merger without the approval from China.  As a result, Qualcomm also had to disburse $2 billion in breakup fees to NXP Semiconductor as well.

The breakup caused a huge drop in the price as many hedge funds exited their positions.  Many investment funds thought that the merger would get approved at $127 per share.  Therefore, many hedge funds continue to exit their positions causing a rapid drop in NXPI price.

This has caused the stock chart to look rather poor in a technical standpoint.  In such a poor outlook, I even exited my position in the stock.  I will await a better outlook before coming back into the stock.  I will be looking for a modest uptrend to enter a position again.  This means it will be at minimum 2-3 months before I look at this stock.  However, I do believe in the long-term this should be a winner even for those wishing to just buy and hold.

Twitter to $52!

Twitter (TWTR) is such a hot commodity that news outlets produce quotes from it every single day.  The most popular candidate is the President of the United States, Donald Trump, who tweets often multiple times in a single day.  Each tweet getting quoted by CNBC and being deeply debated for the content that he has given.  Recently, even Elon Musk made the Twitter headlines as he mentioned that his company Tesla (TSLA) has the investors to get bought out at $420 per share.  This caused huge changes in the stock price and even had the stock ticker to be pulled from the market while people digested the news.  It has also caused the SEC and many lawsuits to come to Mr. Elon Musk.

Who know that such a small one sentence tweet can cause so much trouble?  Who also knew that you can cause such an impact?  You even see Twitter becoming the top broadcast to the World Cup with over 115 billion impressions.

In June, Twitter hit a stock price high at $46.80.  Goldman Sachs has a target price of $52 and it got nearly close.  However, a couple missteps and the price of Twitter has fallen over 20% recently reaching a low of $31 but slowly creeping back just almost at $33 as of today.

What happened to the stock price?

First, Twitter had a huge announcement about fake accounts.  The amount of fake accounts was much greater than expected.

Second, Facebook had the largest single-day decline on its stock price after second quarter earnings.  Twitter took a lot of impact being part of the same sector.

However, since these two events, the stock price has steadily and slowly gone up.  This proves that the uptrend is in place.  It also shows we have a safety net that the stock price will stay steady instead of continuing to drop.

Now, let’s do some research on why this is a super stock:

  1. Citron predict a $52 price target at end of year
    1. Their research shows that a similar company in China was recently valued at $75 billion.  Twitter has a current market cap at $25 billion.  With a current valuation, Twitter should be at $90 per share.
  2. Goldman Sachs predicts a $48 price target

I believe Twitter is a great buy at prices below $34.  There’s plenty of upside for this debt free company.  It is already priced for worse-case scenario.

PayPal for the Long-Term

PayPal (PYPL) recently released earnings and guidance late last week.  The results were excellent and even the guidance showed amazing growth for the upcoming quarter and year ahead.  The CEO and CFO mentioned that on their conference call that the guidance shows a strengthening business outlook moving forward.  PayPal mentioned that Venmo, one of the most popular payment platforms, has grown quite a lot and is now showing revenue instead of just engagement.  The company has purchased multiple e-payment platforms to strengthen their business and grow their bottom line.

However, from last friday-tuesday, the PayPal stock price continued to drop with the FANG stocks.  From a price last week over $92, it has dropped to almost $82 in the past week.  This gives you a nice 10% discount from the current price.  If the tech stocks continue to trend down, PayPal will continue to downtrend with them.  However, I believe PayPal is a strong candidate for long-term growth and I expect it to grow leaps and bounds in the future.

I believe PayPal (PYPL) is a great buy anything below $80 and I expect it to be a nice long-term hold.

DexCom Inc

Dexcom (DXCM) is a company that creates technologies to monitor glucose in people with diabetes.  Their stock price has been in a surge since March going from $55 to be over $100 in the past month.  However, their competitor Abbott (ABT) is interested in their same market and is coming up quick with their own technologies to compete.  Just this morning, Abbott’s new technology FreeStyle Libre was approved by the FDA.

This has dropped Dexcom today to as low as $93 per share.  As a company that specializes in glucose monitoring you know that they are advancing technology just like Abbott but you must also know that they already have their technology out in the marketplace helping diabetes patients through many countries.  They also plan to expand globally to help diabetics throughout the world.  An article on SeekingAlpha mentioned a value of $130 for Dexcom.

I give this stock a price target of $110 which should give you a nice 10% gain from the current price.

NXP Semiconductors

NXP Semiconductors (NXPI) was supposed to be purchased by Qualcomm (QCOM) for a stock share price of $127.50.  It was announced yesterday that if China does not authorize the merger then Qualcomm would walk on the deal and give NXPI a $2 billion break up fee and cancel the merger.  Today, China has not said anything and Qualcomm is walking.

NXP Semiconductor will soon have an extra $2 billion in its bank account.  The current rumor is that the extra money will be used for a big $5 billion buyback or even a special dividend.  Either way, it is great for shareholders especially since the stock has plummetted from over $120 to now an undervalued price at $91.

There is certainly plenty of volatility and even a chance that the stock price will go further down.  However, for the long-term investor, this is a great value.  Yahoo analysts give an average EPS for next year at 7.72.  This is a PE of 11.78 at the current price.  This price is indeed a bargain.

There is plenty of growth moving forward for this company.  In June, NXP Semiconductors introduced semiconductors for use in high powered RF products for 5g networks.  The company also is creating a new line of chips that make it easier for companies building AI tools.  If you just look at the present-day, their embedded chips are already used in factories and automobiles.

With a strong base of current customers using their technologies and a nice set of future chips that will grow the company in the future, there is plenty to get excited about with NXP Semiconductors.  I see this stock as a purchase below $92.  I also believe it will make a nice sell at any price at $120 which should happen in 2-3 years.

Disclosure: I am long NXPI and I purchased today.

REITs with BIG Dividend

CBL & Associates Properties Inc (CBL) and Washington Prime Group (WPG) are both mall REITs that pay a substantial dividend since their stock price has plummetted over the past year. As this time, WPG offers a 16.5% dividend while CBL is offering 18.45% dividend.  Both stocks were able to beat and surpass the earnings guidance for the past quarter.  This is the first time they have done it in the past couple years so their stock prices have appreciated in the past month.

Out of the two, CBL & Associates Properties Inc (CBL) is valued lower in the two because the CEO last year mentioned that they would need to cut the dividend which caused a big price drop.  Therefore, on a stock price basis, CBL is the cheaper of the bunch.  Both invest in malls throughout the United States and both carry substantial risk but if you feel the retail apocalypse is over then it should be a good time to pick either stock up.

Silver Miners vs Silver ETF

I posted an article last week about purchasing ETFS Physical Silver (SILV), a silver ETF, and First Magestic (AG), a silver miner.  There is quite a difference between the two and I would like to explain when it is best to get into both.

First, the silver ETFs follow the silver price.  Some of them hold physical silver like SILV and others purchase silver futures.  I recommend SILV over other silver ETFs like SLV because it has a lower expense ratio.  Since silver prices are quite low and inflation is in the works, I feel that the price cannot go down much lower.  The gold-silver ratio is also over 80 which means there is a higher chance that silver is bottoming out.

Next, I recommended First Magestic (AG).  This is a silver mining stock that is quite low and I do think it is finally hitting a bottom.  There is additional risk in silver miners as a lower silver price means the stock goes down much quicker than silver ETFs.  This also means when the silver price goes up that silver mining stocks can go up to 3x or 4x higher.

I recommend getting into both at this time.  If you don’t like the additional risk, I recommend purchasing the SIVR silver ETF.

High Gold-Silver Ratio and First Majestic

The gold-silver ratio has broken the 80-1 threshold.  This ratio usually implies that the silver price is so low that its time for a reversal which means higher silver prices coming soon.  To play this speculation, I recommend either getting a silver ETF such as SIVR which has the lowest expense ratio or SLV which is a popular silver ETF.  The volatility on both these ETFs are rather low so I don’t see much downside.  I also think if there is a recession or inflation that silver will go up in price.

For those that like leverage, silver miners are a great way to take advantage.  First Magestic (AG) is at a 52-week low and it continues to go lower!  I do think it should be bottoming soon especially if silver prices start rising again.  You do have more risk but if silver prices goes up then this will spike up 3-4 times more than the silver ETFs.

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