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2 High-Yielding ETFs Retirees Can Safely Build Their Portfolios Around

newsfeedback@fool.com (David Jagielski) — Thu, 17 Apr 2025 05:45:00 -0400

Are you a retiree who's worried about the stock market? Now can be a concerning time to buy stocks, given the volatility. Where the economy is headed and what the tariff situation will look like over the next year or two are anyone's guess at this point.

But the good news is that there are safe options to consider that can allow you to remain invested in the market and simply stick to solid, blue-chip stocks. Exchange-traded funds (ETFs) can help you diversify, collect dividends, and keep your overall risk low.

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A couple of ETFs that may be attractive options for retirees are Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) and Pacer Global Cash Cows Dividend ETF (NYSEMKT: GCOW). Here's a closer look at why these might be investments worth adding to your portfolio today.

ETF returns versus the S&P 500 data by YCharts

Schwab U.S. Dividend Equity ETF

The Schwab fund pays a dividend that yields 3.7% at recent prices, which is an attractive payout when you consider the S&P 500 yields 1.5%. You're getting a whole lot more bang for your buck with this ETF than simply trying to mirror the market. And you're not having to spend a whole lot for that dividend either; Schwab's expense ratio is just 0.06%.

The ETF is able to offer a high payout by focusing on stocks with above-average payouts. It also isn't overly diversified -- there are around 100 holdings in the fund today. Verizon Communications, Altria Group, and Coca-Cola are among its top 10 holdings.

That mix also offers a glimpse into the fund's diversification. It isn't heavily exposed to tech stocks; instead, financials account for the bulk of its portfolio (19%), followed by healthcare stocks (17%), consumer staples (14%), and industrials (13%). The tech sector makes up a fairly modest 9% of the Schwab portfolio, which is important for retirees who want to keep their risk low given the volatility that comes with those types of stocks.

While the Schwab ETF may not be entirely immune from the effects of a downturn in the markets, with its focus on blue-chip stocks and dividends, it can help minimize the impact on your portfolio should there be another steep sell-off in the markets.

Pacer Global Cash Cows Dividend ETF

Retirees can collect a slightly higher yield by going with the Pacer Global Cash Cows Dividend ETF, which yields 3.9% at recent prices. It also holds around 100 stocks, focusing on companies with high free cash flow yields. The ETF does come with a higher expense ratio of 0.60%, but that may be justifiable given the higher overall yield and the safety that comes with it.

Some of the notable stocks among Pacer's top holdings are Nestle, Phillip Morris International, and Gilead Sciences. These are all fairly high-yielding stocks that pay around 3% or higher, with stable and robust businesses to support their generous payouts.

Tech makes up an even smaller position in Pacer's portfolio compared to the Schwab fund. Here, tech stocks account for less than 1% of the ETF's total holdings. Energy (19%), healthcare (18%), and consumer staples (17%) make up the bulk of the fund. And those are all sectors that should provide investors with exposure to relatively stable businesses.

For retirees, either one of these funds can make for a good place to park your money right now. You may even want to hold both of them in your portfolio to further diversify your holdings.

Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now?

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Gilead Sciences. The Motley Fool recommends Nestlé, Philip Morris International, and Verizon Communications. The Motley Fool has a disclosure policy.

This 1 Metric Shows Ethereum Soaring Over Solana and Cardano. But Is It a Buy?

newsfeedback@fool.com (Alex Carchidi) — Thu, 17 Apr 2025 05:30:00 -0400

Ethereum's (CRYPTO: ETH) price decline of 48% during the past 12 months leaves it badly lagging behind both Solana (CRYPTO: SOL), which gained 32%, and Cardano (CRYPTO: ADA), which lost just 7% of its value. But there's one important metric about developers on the chain that seems to suggest that better times might be ahead -- or at least that some of Ethereum's biggest strengths are still in play despite its poor price performance recently.

Let's take a deeper look at that metric, understand what it means, and place it into the context of what else has been going on with these coins so that you'll know how to plan your investments.

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To have an ecosystem, developers need to be working

For coins like Ethereum, Solana, and Cardano, the size and vigor of their blockchain ecosystems are key considerations for investors. After all, there's not much point in buying the main coin of a chain that's intended for use as a decentralized finance (DeFi) hub if there aren't actually any DeFi applications or projects hosted there. The same goes for other types of crypto projects, like non-fungible token (NFT) marketplaces, among many others.

But on-chain applications don't just appear out of thin air. They're created by software developers, and that process takes time.

It also typically leaves traces behind that imply work has been done, such as the number of updates to a code repository. Therefore, analyzing the number of those traces occurring across all the projects hosted on a blockchain is one way to get a sense of where the most developers are working, and on which chain they're generating value by virtue of their labor.

According to the crypto-analysis tool provider Santiment, during the last 12 months, there were a total of 2.1 million developer activity events logged. Solana only had about 463,600 events logged, whereas Cardano has nearly 391,600. That means Ethereum was a dramatically more popular place for developers to work on projects than either of the other two chains.

The payoff for that additional activity is likely to be a solidification of the status quo, in which Ethereum's ecosystem is far larger than Cardano's or Solana's in practically every segment. Such a situation bodes well for the chain's future because it means that it's the single biggest home of a scarce, valuable, and fickle resource: developers interested in building blockchain apps.

Over the long term, having a larger army of developers means that the chain will have more shots on goal when it comes to creating successful and valuable applications that draw in outside capital to invest and spend, which would increase demand for the coin significantly in the process.

This trend will take a while to affect prices, but if it continues, it will

But the current state of play for developers working on projects on the chain is not the only consideration for investors here.

Ethereum's developer-activity events logged by Santiment were only up by about 2% during the past 12 months. Cardano's are up by 15%, and Solana's are up by close to 18%. The other chains seem to be increasing their share of developer activity much more rapidly.

What's more, during the past six months, Ethereum's activity level actually dropped 8% whereas Solana's rose 13% and Cardano's was little changed with a decline of about 1%. This is likely a result of Ethereum's abysmal price performance, but it could also reflect a growing frustration with the chain's real issues, like its high gas (user) fees and lagging transaction times.

Regardless of the cause, the risk here is real. Fewer developers mean fewer new applications launching, and a smaller chance that the chain is the favored place to do business in newly emerging segments for blockchain projects like artificial intelligence (AI).

So Ethereum's larger volume of developer activity today is not a reason to buy it because the trend is going the wrong way. Solana is its biggest competitor and is clearly seeing more developer activity over time.

Even Cardano is largely retaining its developer activity better than Ethereum right now, which is surprising because it's a much smaller chain, and despite being faster and cheaper to use than Ethereum, it's still much slower and costlier than Solana.

Keep an eye on these trends. It may be that a new update to Ethereum will attract more developers to build on its chain once again. It may also be the case that talent and effort are flowing out for good. If that's the case, it's a deeply bearish sign for Ethereum's future.

Should you invest $1,000 in Ethereum right now?

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*Stock Advisor returns as of April 14, 2025

Alex Carchidi has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Cardano, Ethereum, and Solana. The Motley Fool has a disclosure policy.

Stock Market Correction: My 10 Top Stocks to Buy on Sale Right Now

newsfeedback@fool.com (Matt Frankel) — Thu, 17 Apr 2025 05:22:00 -0400

The stock market has fallen significantly in the past couple months, and this has created some bargain opportunities for patient investors. In this video, I'll discuss 10 top stocks trading for discounts of 20% from their recent highs (or much more in some cases) that look extremely attractive right now.

*Stock prices used were the morning prices of April 15, 2025. The video was published on April 16, 2025.

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Should you invest $1,000 in Alphabet right now?

Before you buy stock in Alphabet, consider this:

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*Stock Advisor returns as of April 14, 2025

Bank of America is an advertising partner of Motley Fool Money. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Matt Frankel has positions in Bank of America, Digital Realty Trust, PayPal, Pinterest, Ryman Hospitality Properties, Sirius XM, SoFi Technologies, and Vanguard Russell 2000 ETF. The Motley Fool has positions in and recommends Airbnb, Alphabet, Bank of America, Digital Realty Trust, PayPal, and Pinterest. The Motley Fool recommends Ryman Hospitality Properties and recommends the following options: long January 2027 $42.50 calls on PayPal and short June 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy.

Matthew Frankel is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.

2 Growth Stocks I'd Buy -- but Only at Much Lower Prices

newsfeedback@fool.com (Daniel Sparks) — Thu, 17 Apr 2025 05:17:00 -0400

Despite the market tumbling lower so far in 2025, many growth stocks still seem to have stretched valuations. Two that I wouldn't touch with a 10-foot pool at their current prices are cybersecurity specialist CrowdStrike (NASDAQ: CRWD) and data analytics software company Palantir Technologies (NASDAQ: PLTR).

These are two great, well-managed companies. But, in my view, their stock prices simply bake in too much optimism. Or, put it another way, their current valuations demand near-perfect execution for the foreseeable future despite the fact that both face great risks due to the fast-changing and intensely competitive nature of their industries.

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CrowdStrike: Strong growth, but valuation concerns loom

CrowdStrike's results for its fourth quarter of fiscal 2025 showcased impressive growth, with revenue climbing 25% year over year to $1.06 billion. Adjusted earnings per share reached $1.03, up from $0.95 in the same quarter last year. Looking beneath the surface, the company's services are proving to be "sticky." More than two-thirds of its customers are paying for six or more modules.

These strong fourth-quarter results echo the company's consistent upward trajectory as CrowdStrike continually capitalizes on the vast opportunities in the fast-growing cybersecurity market.

But when CrowdStrike's profits are measured by generally accepted accounting principles (GAAP) standards, the bull case no longer looks quite as enticing. For its fourth quarter and full year of fiscal 2025, the cybersecurity specialist reported net losses of $92 million and $120.4 million, respectively. These losses speak to the intensely competitive nature of the cybersecurity industry. Consider that CrowdStrike had to spend $1.5 billion on sales and marketing in fiscal 2025 to generate about $4.0 billion of revenue. With the remaining operating expenses totaling about $1.6 billion and total cost of revenue coming in at about $1 billion, you can start to see how significant the capital outlay is to fuel strong growth.

Sure, over time, these expenses and costs will shrink as a percentage of revenue. However, it's difficult to predict how much operating leverage the company can achieve through scale since technology industries like cybersecurity change so often and so rapidly.

In addition to its high costs, a high valuation plagues the stock, too. Shares command a market capitalization of $97 billion despite CrowdStrike still struggling to be profitable. The stock is even expensive on a price-to-sales basis, with shares trading at a price-to-sales ratio of more than 24. This valuation multiple is higher than a lot of companies' price to earnings ratios.

Palantir: AI momentum meets high expectations

Data analytics and artificial intelligence specialist Palantir is growing even faster than CrowdStrike. Its fourth-quarter revenue increased 36% year over year. Palantir CEO Alexander Karp credits the company's "early insights surrounding the commoditization of large language models" as a critical element to the company's recent success.

While Palantir is further along than CrowdStrike when it comes to generating GAAP profits, with total net income in 2024 of 468 million (up from $217 million in 2023), the stock's valuation has just soared too far. Shares trade at 517 times earnings. Investors clearly expect explosive earnings growth for the foreseeable future.

Obviously, CrowdStrike and Palantir have demonstrated the type of business momentum that suggests earnings will grow at high rates in the years to come. But at these stocks' current prices, investors aren't leaving very much room for error. Investors should carefully consider the fast-changing nature of both of these companies' industries. They should ponder whether the earnings growth required to live up to these valuations is a probable outcome or just one of many possible outcomes.

Nothing is wrong with being a fan of these companies, their approach to business, and their growth trajectories while simultaneously exercising discipline regarding valuation when it comes to considering whether or not to invest. Both CrowdStrike and Palantir, as businesses, will likely do well over the long haul. Still, at this price, I do not believe they are good investments. This doesn't mean I don't think that there's a possibility that the stocks will perform well over the long term. I just don't think the odds are high.

I'd be more than happy to buy these stocks -- just not at their current prices.

Should you invest $1,000 in Palantir Technologies right now?

Before you buy stock in Palantir Technologies, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palantir Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

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*Stock Advisor returns as of April 14, 2025

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike and Palantir Technologies. The Motley Fool has a disclosure policy.

3 Ways Tariffs Are About to Disrupt Cryptocurrencies Around the World

newsfeedback@fool.com (Dominic Basulto) — Thu, 17 Apr 2025 05:15:00 -0400

Despite the fact that cryptocurrencies play very little role in the ebb and flow of global trade, tariffs have the potential to disrupt them in several profound ways. That's because the equity, debt, and crypto markets are more interconnected than many people might assume.

Already, volatility has spiked and crypto prices are down nearly across the board, due to tariff uncertainty. So, which factors will have the greatest impact on your crypto portfolio in 2025?

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Investor sentiment

Let's start with investor sentiment, because this is one factor that is easy to quantify. Right now, the Crypto Fear & Greed Index sits at 29, indicating that investors are relatively fearful. The index is measured on a scale from 0-100, with 100 being extremely euphoric.

This Fear & Greed Index briefly dipped below 20 in both March and April, due to all the concerns about tariffs. So the good news, if you want to call it that, is that investors seem to be calming down a bit.

But here's the thing: In the current environment, there is no appetite to buy speculative meme coins or risky altcoins. And that, unfortunately, means that "Altcoin Season" -- the time of the year when altcoins go parabolic -- may not be coming this year.

Historically, Ethereum (CRYPTO: ETH) has been the cryptocurrency that kicks off the start of Altcoin Season. And guess what? Ethereum is down 53% for the year and 16% during the past 30 days. Without Ethereum, there will be no Altcoin Season.

Instead, investors will be much more likely to move their money into Bitcoin (CRYPTO: BTC), which has often been referred to as digital gold. While it's still debatable whether Bitcoin can act as a long-term store of value, it does appear to be holding up better through this tariff upheaval than other top cryptocurrencies.

Crypto valuations tied to the macroeconomic outlook

At the same time, investors are rethinking how they value cryptocurrencies. During bullish market cycles, investors focus on variables related to blockchain growth -- such as new user increases, gains in blockchain transaction activity, or rapid improvements in technical performance. But during bearish market cycles, focus shifts to fiscal policy, monetary policy, and macroeconomic data.

As a result, crypto investors are taking a keen interest in macroeconomic data that might offer clues about inflation and where the economy could be headed. They are especially focused on potential moves by the U.S. Federal Reserve. That's because interest rate cuts are perceived as being very bullish for crypto.

Image source: Getty Images.

In the past, this focus on the overall macroeconomic outlook was not so much the case for the crypto market. Crypto was uncorrelated with every major financial asset, and it really didn't matter what was happening on Wall Street or in Washington, D.C. Until fairly recently, institutional investors played very little role in the crypto market, and politicians paid almost no attention to crypto.

But all that changed in January 2024 with the introduction of spot Bitcoin exchange-traded funds ETFs. Now, the same people who buy tech stocks are buying spot Bitcoin ETFs, and that means they are looking at the same economic numbers. No wonder correlations between tech stocks and cryptos are tightening. For much of 2025, Bitcoin has behaved like a very expensive and volatile tech stock.

Crypto as a strategic asset for sovereign governments

If the trade war intensifies, it's possible that sovereign governments around the world will start to view crypto as a strategic asset that can help them achieve certain economic goals. After all, they might be forced to take drastic steps if exports dry up, or if economic growth grinds to a halt. And crypto could give them a very unique policy option.

Take, for example, the Strategic Bitcoin Reserve, which the Trump White House outlined in March. The current thinking is that Bitcoin is a strategic asset, similar to gold or oil, that the government should stockpile. In one scenario that has already been proposed by lawmakers, those Bitcoin reserves might one day be used to help pay down the government's crushing $37 trillion debt load.

Moreover, Treasury Secretary Scott Bessent has made no secret of the fact that stablecoins -- the digital dollars of the crypto world -- might be used to achieve certain monetary goals. That's because stablecoins are pegged 1-to-1 to the U.S. dollar, and are backed by cash and cash equivalents, including short-term Treasury bills.

These Treasury holdings create all sorts of new linkages between the bond market and the crypto market. For example, some have suggested that stablecoins have the potential to push down yields on U.S. Treasury debt, thereby reducing the government's interest costs on its debt.

Which cryptos to buy now

So, putting it all together, the perfect crypto to buy would be one that (1) is viewed as a safe asset and long-term store of value, (2) can outperform tech stocks, and (3) has the tacit support of sovereign governments.

From my perspective, all of that points to Bitcoin being the one crypto you need to buy right now. Although Bitcoin is far from being a slam-dunk investment, there's no other crypto I'd rather hold if Trump's tariffs turn into a full-blown trade war.

Should you invest $1,000 in Bitcoin right now?

Before you buy stock in Bitcoin, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bitcoin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

See the 10 stocks »

*Stock Advisor returns as of April 14, 2025

Dominic Basulto has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

Great News for AMD Stock Investors

newsfeedback@fool.com (Neil Rozenbaum) — Thu, 17 Apr 2025 05:15:00 -0400

In this video, I go over recent updates regarding Advanced Micro Devices (NASDAQ: AMD). Watch the short video to learn more, consider subscribing, and click the special offer link below.

*Stock prices used were from the trading day of April 14, 2025. The video was published on April 15, 2025.

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Should you invest $1,000 in Advanced Micro Devices right now?

Before you buy stock in Advanced Micro Devices, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Advanced Micro Devices wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

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*Stock Advisor returns as of April 14, 2025

Neil Rozenbaum has positions in Advanced Micro Devices. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Netflix, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy. Neil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

How Much Will You Get From Social Security If You Wait Until Age 70?

newsfeedback@fool.com (Matt Frankel) — Thu, 17 Apr 2025 05:08:00 -0400

Full retirement age for Social Security is between 66 and 67 years old, depending on the year you were born. But eligible Americans can wait until as late as age 70 to start collecting their benefits, and you might be surprised at how much of a difference waiting can make. In this video, Certified Financial Planner® Matt Frankel explains how it works.

*Stock prices used were the morning prices of April 15, 2025. The video was published on April 16, 2025.

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The Motley Fool has a disclosure policy. Matthew Frankel is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.

Prediction: Warren Buffett Will Start Buying More Apple Stock This Quarter

newsfeedback@fool.com (David Jagielski) — Thu, 17 Apr 2025 05:03:00 -0400

Warren Buffett has made no secret about how much he likes Apple (NASDAQ: AAPL), once referring to it as the best business he knows of. It's routinely the top holding in the portfolio of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), Buffett's conglomerate.

But for multiple quarters last year, Berkshire had been trimming its position in the iPhone maker, leading some investors to wonder if the billionaire investor is no longer as optimistic about the tech company.

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Not only do I think that's not true, here's why I also believe he probably added to his position amid the market's recent sell-off.

Why Buffett may have been trimming his position in Apple to begin with

In November 2024, investors noticed that he reduced his stake in the tech company for a fourth consecutive quarter. At that point, he had sold more than 615 million shares over the past year. While his reasons are usually not known for why he buys or sells a stock each time, one possible reason could be to do with taxes.

In the past, he has voiced concern that the tax rate on capital gains might rise. And presidential candidate Kamala Harris did suggest increasing it.

Buffett, in looking out for Berkshire shareholders, may have wanted to sell off a big chunk of Apple stock before that happened, to avoid a hefty tax bill for the company given the shares' mammoth rise in value over the years. And rather that spooking the markets with one large stock sale, spreading it out over multiple quarters might have made more sense.

But whether it's to do with taxes or Apple's rising valuation, there would have been no reason to believe that he thought the business was in trouble. It consistently generates more than $90 billion in profit each year, and its revenue over the trailing 12 months has totaled nearly $400 billion. Its services business continues to grow, and although investors today may be worried about tariffs, at the time of the stock sales there would have been no glaring reason for worry.

Why now may be an opportune time for Buffett to load up on Apple stock

During the current quarter, which began in April, I would expect to see a big purchase from Berkshire, adding to its position in Apple. Under President Donald Trump, capital gains taxes might not increase, and it's possible he could even decrease them.

Either way, the risk is considerably much lower under the current administration, which may alleviate any concerns Buffett had about a rising tax rate, at least for the foreseeable future.

What is notable is that he stopped selling Apple stock in the fourth quarter of 2024 -- when the election took place and the risk of Harris raising capital gains taxes was gone. It may have just been a coincidence, but it's hard to ignore the timing.

Another incentive to buy the stock is Apple's crash after Trump's declaration of "Liberation Day" and the announcement of global tariffs. That caused investors to dump their shares on fears that tariffs would significantly raise costs for the tech company.

The stock would end up falling, and on April 8 it closed at $172.42 -- not far from its 52-week low of $164.08. For Buffett, that may have created a buying opportunity too appealing to pass up. And I believe with the tax fears alleviated and Berkshire's position in Apple being significantly reduced, it would have made it easy to justify adding to its stake in the consumer tech company at some point this month.

While the tariff risk is still there, for a long-term investor such as Buffett, I don't believe it would have necessarily dissuaded him from buying the stock.

Is Apple stock a good buy right now?

If you're a long-term investor, you'll want to consider buying and holding Apple for not just years but decades. Tariffs could cause problems for its operations in the short run but if you're investing for the long haul, it may not matter all that much in the end.

The company's fundamentals remain strong, and with an excellent brand behind it, Apple is one of the safest and best growth stocks you can hold in your portfolio today.

Should you invest $1,000 in Apple right now?

Before you buy stock in Apple, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Apple wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

See the 10 stocks »

*Stock Advisor returns as of April 14, 2025

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.

Down 63% in a Year, Can Plug Power Make Another Comeback?

newsfeedback@fool.com (Motley Fool YouTube) — Thu, 17 Apr 2025 05:00:00 -0400

Plug Power (NASDAQ: PLUG) was one of the hottest stocks on the market during the pandemic, and for good reason. The company was pushing hydrogen fuel cells and electrolyzers into new markets and driving phenomenal growth. However, the company never turned revenue growth into profitability, and investors need to ask if the company's runway is ending.

*Stock prices used were end-of-day prices of April 14, 2025. The video was published on April 16, 2025.

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Should you invest $1,000 in Plug Power right now?

Before you buy stock in Plug Power, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Plug Power wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

See the 10 stocks »

*Stock Advisor returns as of April 14, 2025

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Wall Street's Most Bullish Firm Heading Into 2025 Just Slashed Its S&P 500 Forecast. Here's What You Should Do, Based on Decades of History.

newsfeedback@fool.com (Anthony Di Pizio) — Thu, 17 Apr 2025 04:59:00 -0400

The S&P 500 (SNPINDEX: ^GSPC) is off to a rough start to 2025. It was recently down by as much as 19% from its all-time high, narrowly avoiding bear-market territory before staging a modest recovery.

The index is coming off an incredible two-year run in 2023 and 2024, delivering back-to-back annual gains of more than 25%. The only other time investors enjoyed such strong returns from the benchmark index was during the dot-com internet boom in 1997 and 1998, so the recent pullback is probably healthy -- after all, markets don't rise in a straight line.

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However, there are some short-term headwinds that could breed more uncertainty. On April 2, President Donald Trump announced a series of tariffs on products coming into the U.S., which accelerated the decline in the S&P 500 as investors trimmed their exposure to stocks out of fear that trade tensions could trigger a global economic slowdown.

Analyst firm Oppenheimer went into 2025 predicting the S&P 500 could reach 7,100, which was the highest target on Wall Street. But the firm slashed its forecast earlier this month, citing Trump's tariffs as one of the key reasons. History offers a very clear playbook for dealing with stock market volatility, so here's what investors might want to do next.

Image source: Getty Images.

Déjà vu

A sweeping 10% tariff on all products imported into America went into effect on April 5, and a series of much higher "reciprocal tariffs" followed on April 9, which were imposed on specific countries with large trade imbalances with the U.S. However, Trump recently paused the reciprocal tariffs (except those imposed on China) while his administration negotiates trade deals with other countries.

Trump's goal is to encourage more companies to manufacture their products in America, but this could take years to play out. In the meantime, tariffs immediately increase the price of the goods consumers buy every day, which is almost certain to alter their spending patterns. This could deal a blow to economic growth and corporate earnings, which is why investors rushed to sell stocks after the tariffs were announced.

But this isn't the first time Trump has sparked trade tensions. During his first term in office in 2018, he enacted a series of tariffs that affected 12.6% of America's total imports and included levies on materials like steel and aluminum from every country in the world. The policy contributed to a 19.8% decline in the S&P 500, so investors might be feeling a sense of déjà vu right now.

Thanks to the benefit of hindsight, we know the stock market went on to make new highs after the 2018 sell-off. The truth is, history proves the root cause of a stock market decline rarely matters for investors who own a diversified portfolio. Over the last 25 years, there have been four bear markets (declines of 20% or more) in the S&P 500, triggered by four very different events:

The dot-com internet bubble (and subsequent bust) in 2001
The global financial crisis in 2008
The COVID-19 pandemic in 2020
The inflation crisis in 2022

The S&P 500 eventually emerged from every single one of those bear markets and set new record highs.

Oppenheimer isn't alone

Despite the stellar long-term track record of the S&P 500, Wall Street firms must cater to the needs of their clients. Many of them have to make near-term decisions about their stock holdings, whether they need to sell some to fund their retirement or unlock cash flow for their businesses. As a result, these firms make short-term forecasts for the S&P 500 that they update throughout each year to reflect changes in the broader economy and corporate earnings picture.

Oppenheimer's initial S&P 500 target of 7,100 for 2025 implied another above-average annual return of 20.7%. However, the simmering global trade tensions prompted the firm to revise its target down to 5,950, and it isn't alone:

Yardeni Research recently slashed its 2025 target for the S&P 500 from 7,000 to 6,400, and then again to 6,000.
Goldman Sachs cut its target from 6,500 to 6,200, and then again to 5,700.
Barclays trimmed its target from 6,600 to 5,900.
UBS reduced its target from 6,400 to 5,800.
RBC Capital Markets lowered its target from 6,600 to 5,500.

The S&P 500 ended 2024 at a price of 5,881, so Oppenheimer's new target implies a potential upside of just 1.2% this year. The new targets from Goldman, UBS, and RBC Capital Markets all suggest the index will end 2025 with a loss instead.

Here's what investors should do, based on decades of history

Earlier I highlighted how the S&P 500 bounced back from four bear markets over the last 25 years. But if you look all the way back to the 1950s, you'll find even more evidence that volatility is simply a natural part of the investing journey.

According to Capital Group, the S&P 500 suffers a decline of 20% or more every six years, on average. Corrections of at least 10% are far more common, occurring once every two and a half years. And investors can expect a 5% sell-off around once per year. These gyrations are the price investors pay for an opportunity to earn excellent compounding returns over the long run, which can significantly improve their financial standing.

The S&P 500 has delivered a compound annual return of 10.3% since it was established in 1957 in spite of all the sell-offs, corrections, and bear markets along the way, so the lesson is to stay the course and play the long game. As was the case with every other market blip throughout history, investors will probably look back on the volatility in 2025 and wish they had used it as a buying opportunity.

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.

4 Reasons Johnson & Johnson Could Be the Perfect Stock to Own in Today's Turbulent Market

newsfeedback@fool.com (Keith Speights) — Thu, 17 Apr 2025 04:51:00 -0400

It's less than four months into the year, and many investors are already exhausted. The wild stock market swings fueled by the Trump administration's tariffs are to blame.

However, some stocks can weather the storm better than others. Johnson & Johnson (NYSE: JNJ) is one of them. Here are four reasons Johnson & Johnson could be the perfect stock to own in today's turbulent market.

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1. Remarkable resilience

Johnson & Johnson was founded in 1886. The company has survived and thrived in periods of high tariffs, recessions, and global instability multiple times through its 139 years in business.

Today, J&J is a healthcare giant that's a major player in innovative pharmaceuticals and medical technology. It generated nearly $89 billion in sales last year, with profits of over $14 billion.

The company continues to exhibit remarkable resilience. So far this year, J&J's share price is up around 6%, while the S&P 500 (SNPINDEX: ^GSPC) has fallen roughly 9%.

Johnson & Johnson CEO Joaquin Duato noted in the company's first-quarter earnings call this week:

No other healthcare company has delivered growth through the first year of losing exclusivity for a multibillion-dollar product, in our case, Stelara. And yet, that is exactly what we are doing. Our resiliency is a testament to what makes us unique.

2. Accelerating growth

Granted, Johnson & Johnson isn't delivering jaw-dropping growth these days. In the first quarter of 2025, the company's sales increased by only 2.4% year over year. However, its operational growth (which excludes the impact of currency fluctuations) was somewhat higher at 4.2%.

More importantly, though, J&J's growth should accelerate. Duato said in the Q1 call that 2025 is "a catalyst year... that will set us up for accelerated growth through the second half of the decade and beyond."

Is that just hype from a corporate executive? I don't think so. Johnson & Johnson has already won six regulatory approvals for drugs so far this year and expects nine additional approvals in 2025. The company has submitted three regulatory filings for approvals, with five more on the way. This group notably includes icotrokinra in treating psoriasis.

J&J's pipeline features 106 programs, including 40 in late-stage clinical trials. Many of them should have significant market potential. I'm especially optimistic about Rybrevant in combination with Lazcluze as a first-line treatment of non-small cell lung cancer. In one head-to-head study against the current standard of care, this combo improved overall survival by more than one year.

3. Tariff-resistant

While Johnson & Johnson isn't completely immune to the effects of tariffs, it should be able to fare better than many companies will. CFO Joe Wolk explained in the Q1 earnings call, "[T]here's a reason why pharmaceutical tariffs are zero. It's because tariffs can create disruptions in the supply chain, leading to shortages."

Wolk argued that tax policy is the best way to promote building medtech and pharmaceutical manufacturing capacity. Johnson & Johnson is already investing more than $55 billion over the next four years in boosting its U.S. manufacturing and research and development operations. This investment includes four new manufacturing facilities, with the first already under construction in North Carolina.

4. A fantastic dividend

Johnson & Johnson is increasing its dividend for the 63rd consecutive year. This further cements the healthcare giant's position among the elite group of companies known as Dividend Kings. J&J's forward dividend yield is now 3.37%. When the stock market is turbulent, investors should appreciate being paid handsomely to wait for better days.

Should you invest $1,000 in Johnson & Johnson right now?

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

At What Price Would Tesla Stock Be Worth Buying?

newsfeedback@fool.com (Daniel Sparks) — Thu, 17 Apr 2025 04:51:00 -0400

With electric car maker Tesla (NASDAQ: TSLA) going from growing its vehicle deliveries at rates of around 50% annually as recently as 2022, to about flat sales growth in 2024 and declining sales to start the year in 2025, many investors are likely still trying to figure out how to value the automaker. Making it more difficult, Tesla management says the company is in between two major growth waves, yet there's no clear catalyst guaranteeing strong growth anytime soon.

In an effort to value Tesla shares and see if the growth stock is worth buying today, let's consider some of the information we have about the company. I'll carefully try to piece together a picture of the company's prospects relative to the stock's current valuation.

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Spoiler alert: I don't think shares are a buy at their current price. But there is a price I would consider buying into this growth story. Read on to see what that price is.

Bull case vs. bear case

The bull case for Tesla boils down to what's in the pipeline. Reading through a transcript of the automaker's most recent earnings call is a great place to start to understand just how optimistic the company's aspirations for future growth are.

"I see a path of Tesla being the most valuable company in the world by far," said Tesla CEO Elon Musk in the company's fourth-quarter earnings call in late January. To be fair, he also emphasized that it wouldn't be "an easy path." Still, this is quite the statement considering that Tesla's market capitalization currently stands at not far above $800 billion. This is a far cry from some of the biggest companies in the U.S., with market caps around $3 trillion.

How does Tesla get to the top? With the help of the company's expertise in manufacturing, artificial intelligence, and robotics, according to Musk. Specifically, the CEO believes that yet-to-be launched lower-cost vehicles, the planned rollout of an autonomous taxi service this summer, future sales of humanoid robots, and continued rapid growth of the company's energy storage business will play key roles in Tesla's future growth.

But all of this starkly contrasts with the company's current business trajectory. Not only did Tesla's first-quarter deliveries fall 13% year over year and 32% sequentially, but production was about 7% higher than deliveries. While we can't know for sure whether Tesla's supply and demand are appropriately balanced, these numbers certainly don't look promising.

But even though Tesla's recent results may appear disastrous on the surface, investors should consider a few things. A higher interest rate environment has been a burden on auto sales overall; as lower sales volumes in this more difficult consumer environment fade into the rearview mirror, Tesla will have easier comparisons, and sales growth could improve. Further, investors should note that one reason for softer sales during the first quarter of 2025 was Tesla's decision to update its factories during the period -- a move that management said would ultimately lead to several weeks of lost production.

Is Tesla stock a buy?

While it's tempting to jump on board with the Tesla bulls in hopeful excitement about the company's future, a better approach is probably one that balances skepticism and optimism. Trading at about 124 times earnings as of this writing, the market seems dead-set on a spectacularly positive outcome for the company in the coming years. A valuation like this prices in more than robust growth, it prices in outstanding growth. At Tesla stock's current valuation, the market is anticipating a return to sustained double-digit sales growth and significant profit margin expansion in the years ahead.

I'm OK with betting on a turnaround and a return to robust growth rates. I think Tesla has proven itself enough for investors to get on board with this idea. But pricing in an extraordinary future that transcends anything ever done in the automotive industry, as well as the promise of Tesla stretching into substantial high-margin revenue streams in the tech sector, is something that should be viewed with at least some skepticism.

So, would I buy Tesla shares today? No. But if they fell to around $200 -- about a 25% drop -- I might change my mind. At $200, I'd still be taking a leap of faith. But that leap would leave some room for a scenario in which not all of the company's plans go according to plan.

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History Suggests Now Could Be a Smart Time to Buy Amazon Stock

newsfeedback@fool.com (Keith Speights) — Thu, 17 Apr 2025 04:47:00 -0400

Neither the Dow Jones Industrial Average nor the S&P 500 is in a bear market. However, a prominent member of the two indexes is. Shares of Amazon (NASDAQ: AMZN) remain down more than 20% below the previous high set in February, even after an attempted rebound in recent days.

Some investors may be tempted to give up on Amazon. I don't think that's a great move, though. History suggests that now could be a smart time to buy Amazon stock.

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Pullbacks equal opportunities

You might be surprised just how often Amazon's share price has fallen by 20% or more from a previous high over the years. The company conducted its initial public offering in May 1997. Since then, by my count, the stock has been in a bear market 21 times. That's a 20%-plus decline of roughly once every 16 months on average.

Sometimes, the steep sell-offs have been brief. For example, Amazon's shares tanked in February 2020 along with most stocks as COVID-19 swept across the world. But the stock recaptured its previous high in less than two months.

AMZN data by YCharts

Other times, though, Amazon remained in bear market territory for a long time. The stock was hit especially hard when the dot-com bubble burst in late 1999 and early 2000. It took Amazon nearly nine years to recover.

AMZN data by YCharts

Regardless of how long Amazon's share price stayed depressed, though, every pullback presented a great buying opportunity for long-term investors. If you invested $10,000 in Amazon on the day its shares plunged on Dec. 10, 1999 (which would have seemed to be horrible timing), and never sold, you'd have nearly $340,000 today.

A historically low valuation

On a related note, Amazon is also trading at a historically low valuation. That's partly because of the latest sell-off. However, it's also due to the company focusing intently on improving profitability.

Amazon's shares currently trade below 33 times trailing 12-month earnings. The last time the stock was this cheap was during the market meltdown of 2008, in the midst of what would later be called the Great Recession.

AMZN PE Ratio data by YCharts

How much money would you have now if you had invested $10,000 in Amazon stock the last time its valuation was this low? Over $760,000. There's limited historical precedent, of course, but the past seems to indicate that buying Amazon when its price-to-earnings multiple is under 33 is a really great time to invest in the company.

For what it's worth, Amazon's forward price-to-earnings ratio is even lower -- 27.55. This underscores that Wall Street expects the company to continue growing its earnings robustly next year.

Will history repeat itself with Amazon?

Before anyone backs up the truck and begins loading up on Amazon stock, it's important to note that Amazon is a much different company than it was during many of its previous declines of 20% or more. In particular, the cloud isn't the dazzling new opportunity that it was when Amazon first launched Amazon Web Services in 2006.

That said, I think that Amazon's past performance after its share price plunged into bear market territory is instructive today. I also believe that the stock's historically low valuation shouldn't be ignored.

Sure, Amazon probably won't be able to deliver the jaw-dropping returns that it has over the past 28 years. However, that doesn't mean the stock won't continue to be a big winner.

I think that the adoption of artificial intelligence will fuel a sustained migration to the cloud over the next decade and beyond. I expect the e-commerce market to expand. I predict Amazon's initiatives in healthcare, satellite broadband, and self-driving car technology will pay off. As Mark Twain is sometimes (although perhaps erroneously) credited as saying, "History doesn't repeat itself, but it often rhymes."

Should you invest $1,000 in Amazon right now?

Before you buy stock in Amazon, consider this:

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*Stock Advisor returns as of April 14, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Speights has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

Where Will SoFi Be in 1 Year?

newsfeedback@fool.com (Chris Neiger) — Thu, 17 Apr 2025 04:45:00 -0400

It's an understatement to say there's a lot of pessimism in the stock market right now. Tariffs have been imposed, rescinded, and modified, making it very difficult for investors and businesses to map out long-term strategies.

Investors keeping an eye on the financial sector may be looking at SoFi Technologies (NASDAQ: SOFI) and wondering where the online bank might be a year from now amid the turmoil. So, let's look at what's happening with SoFi right now and how the company might be affected by the current economy.

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Image source: Getty Images.

What's going well for SoFi right now

The fintech has quickly become a one-stop shop for many people's financial needs. During the past five years, its members have soared ninefold to more than 10 million, and its services include checking and savings accounts, student loans, and mortgages.

SoFi's financial growth is impressive, too. Revenue jumped 26% last year to $2.6 billion, and its adjusted earnings per share rose to $0.15, up from a loss of $0.10 in 2023.

Management issued a strong outlook for 2025 as well, with revenue expected to reach about $3.2 billion at the midpoint of its estimates, rising 25% from 2024.

Chief Executive Officer Anthony Noto said at the end of last year, "Even with how great 2024 was, the future has never been brighter for SoFi than it is in 2025." He said financial conditions were the strongest since he joined the company, with lower interest rates, strong employment, and active capital markets.

The problem is that the favorable financial environment that fueled its recent growth may be weakening.

The immediate future looks cloudy

Although SoFi is growing fast, there's some reason for potential investors to be a little skeptical that it will continue at the same pace in 2025. The next year could be bumpy for the company and many others because of President Donald Trump's tariffs.

While the details change on a near-daily basis, the implementation of significant import tariffs -- at least 10% on most nations -- is causing many consumers and businesses to rethink their current financial outlook.

A recent CNBC survey found that 60% of U.S. CEOs expect a recession to start in the next six months, and dozens of economists in a separate survey said the chances for one are up to 47% this year.

It's not great for anyone if a recession -- or even an economic slowdown -- shows up. But it can be especially bad for banks. SoFi depends on people signing up for new financial products, borrowing money, and taking out loans, and members being able to repay those loans. An extended period of economic pain could cause consumers to hit the brakes on spending and put a strain on their ability to make payments.

There's still a lot of uncertainty about the economy over the next few months, but it's safe to say that what most people assumed was the positive trajectory at the end of 2024 has turned into a general sense of pessimism. People have already changed their tune as well, with a recent University of Michigan survey finding that consumer sentiment is now below what it was even during the Great Recession.

All of this uncertainty means that it's unlikely SoFi will have another banner year in 2025. The effects of tariffs have yet to be seen, but if they cause an economic slowdown, consumers will most likely curb their spending, which could hurt the business.

That doesn't mean current shareholders should panic-sell. The long-term prospects are still there. But I wouldn't be eager to start a new position with SoFi until investors get a clearer picture of what's happening with the economy.

Should you invest $1,000 in SoFi Technologies right now?

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*Stock Advisor returns as of April 14, 2025

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Netflix's Quiet Confidence: Behind the Curtain of Thursday's Earnings Spotlight

newsfeedback@fool.com (Anders Bylund) — Thu, 17 Apr 2025 04:41:00 -0400

Media-streaming innovator Netflix (NASDAQ: NFLX) has been swimming against the broader market currents recently. Industry giants such as Walt Disney and Comcast are trading closer to their yearly lows than to 52-week highs. But Netflix is hovering just below a recently notched record price, posting robust gains in the last week, month, and year.

The company is slated to report first-quarter results on Thursday evening. If I knew for sure what Netflix's management would say and how the report will move the stock, I'd be very rich in a hurry. However, I can give you some insight into how Netflix is operating nowadays, and what's likely to happen after the report.

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Sound good? OK, here's what I see.

Image source: Getty Images.

Beating Wall Street at every turn

Netflix has been smacking home runs in every recent earnings report. It has beaten analysts' earnings and revenue targets in each of the last four financial updates, often by very comfortable margins. The year-ago report was particularly inspiring; Netflix exceeded Wall Street's consensus bottom-line estimates and its own guidance by 17%.

So Netflix's business is humming on every cylinder. The ad-supported subscription plans and family sharing accounts are pulling their weight. Live sporting events are a hit. Revenue growth is stronger than anticipated and profit margins are growing wider.

Netflix's trillion-dollar ambitions revealed

But wait -- there's more.

A Wall Street Journal article earlier this week said that Netflix's top management recently shared an ambitious five-year plan with some upper-level staff members. Revenue should double over the next five years. Annual ad sales were targeted at $9 billion, up from an estimated $2.1 billion in 2025. Double the revenue and richer profit margins could add up to tripling Netflix's operating income to $30 billion.

Achieving these goals in five years may give Netflix a card to the ultra-exclusive trillion-dollar market cap club. As a reminder, the company's total market value stood at $418 billion on April 15, 2025.

That article goosed Netflix's stock a little closer to that elusive trillion-dollar target. Shares closed Tuesday's trading 4.8% higher while the S&P 500 (SNPINDEX: ^GSPC) fell 0.3%.

Thriving despite economic storm clouds

These lofty business targets are particularly inspiring since they were stated in a period of unstable economic trends and gloomy consumer confidence. The must-have digital media service may be insulated against these macro trends to some degree, but ad sales automatically get tougher when no one is ready to buy the stuff you're advertising.

It should be noted that the bullish five-year plan was outlined in late March, a few days before President Trump's "liberation day" tariff announcements. A full-blown recession would obviously be bad for Netflix too, but the company could very well benefit if consumers scale back their entertainment options to focus on TV couches and media-streaming binges.

You should look for management commentary on these issues on Thursday evening's earnings call. Keep your ears peeled for terms like "tariffs," "recession," and "ad sales." Even a temporary shift in any of these areas could slow down Netflix's rush to a trillion-dollar market cap.

None of the tariff stuff will have a direct effect on Netflix's first-quarter results, of course. The repercussions will be felt in future periods, most likely starting with the second quarter. Keep an eye on management's next-quarter guidance targets.

The real-time evolution of a streaming powerhouse

Netflix is changing before my eyes. The former market darling and high-growth phenom is maturing into a bastion of calm amid roiling economies and stressed-out consumers. Both the production and consumption of streaming content is growing more and more global. A top-tier portfolio of original shows and movies is getting new support from live sporting content such as wrestling, boxing, and football games. With culture-defining shows like Wednesday, Stranger Things, and Squid Game returning for new seasons later this year, I can only assume that management's outlook will be bullish.

I can't promise that Netflix will smack this report out of the stadium, and the forward-looking commentary is anyone's guess at this point. But yeah, I expect the robust financial trends to continue, despite a challenging economy. Tune in to Netflix's report on Thursday evening (followed by Friday's market reaction) to see what's going on. I wish I could give you a more precise forecast, but my time machine is in for repairs.

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*Stock Advisor returns as of April 14, 2025

Anders Bylund has positions in Netflix and Walt Disney. The Motley Fool has positions in and recommends Netflix and Walt Disney. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.

1 Top Dividend Stock Is on Sale

newsfeedback@fool.com (Daniel Sparks) — Thu, 17 Apr 2025 04:31:00 -0400

As macroeconomic uncertainty persists, many investors may be looking for resilient businesses likely to hold up well even if a recession rears its ugly head. Dividend stocks with a long track record of dividend growth are usually good options when investors are seeking out companies like this. But investors looking for more resilience in their portfolio shouldn't pick up just any dividend stock. Instead, they should be picky.

Specifically, investors looking for a good dividend stock for uncertain times should search for a company with a consistent track record of dividend payments, a low payout ratio, and an underlying business unlikely to take a major hit during a recession. Rural lifestyle retailer Tractor Supply (NASDAQ: TSCO) possesses these characteristics.

Let's take a closer look.

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Strong results from a resilient business

Tractor Supply's results for its fourth quarter of 2024 highlight the company's resilience amid a challenging retail environment. Net sales for the quarter increased 3.1% year over year to about $3.8 billion, driven by new store openings and a 0.6% rise in comparable store sales. However, net income decreased 4.6% to $236.4 million, and diluted earnings per share (EPS) declined 3.3% to $0.44, slightly missing analyst expectations. But if you zoom out to the company's full-year 2024 results, you'll see a company that still grew both sales and earnings moderately -- quite an achievement considering the company experienced extraordinary growth during the COVID-19 pandemic and hasn't given those gains back. For the full fiscal year 2024, net sales rose 2.2% to approximately $14.9 billion, with comparable store sales up 0.2%. Diluted EPS for the year increased 1.1% to $2.04.

Highlighting how the retailer grew impressively during COVID and has maintained its market share gains, consider how the company's full-year 2024 sales are up more than 78% from full-year 2019 sales. Given this strong growth, which came primarily in 2020, 2021, and 2022, it's easy to forgive Tractor Supply for some weakness as consumer shopping habits normalize. Indeed, investors should applaud the company for holding on to its sales gains.

Why this is a buying opportunity

With shares of the retailer slipping about 4% year to date, this is a good opportunity to pick up a position in the stock. The stock's recent decline is due in part to a broader market sell-off but also to the company's slight fourth-quarter earnings miss and management's cautious outlook for the year.

But consider the positives.

First, there's just the resilient nature of what Tractor Supply sells. A large portion of the company's sales come from consumable, usable, and edible prouducts like livestock feed, pet food, bird seed, fertilizer, and pest control. These products are needed in any environment and keep Tractor Supply customers coming back to the store. Tractor Supply's business, therefore, is inherently resilient.

Then there's the company's strong commitment to returning capital to shareholders. In fiscal 2024, the rural retail specialist returned over $1 billion to shareholders, including $472.5 million in dividends and $560.8 million in share repurchases. Furthermore, the company's dividend payout ratio stands at approximately 43%, indicating a balanced approach between rewarding shareholders and retaining earnings for growth. And speaking of its dividend, Tractor Supply has increased it for 16 consecutive years, reflecting its financial stability and commitment to shareholder returns.

Looking ahead, Tractor Supply's full-year revenue outlook for 5% to 7% sales growth may not be as high as some investors were hoping for. But it would still mark a notable acceleration over last year's sales growth of 2.2%.

Overall, Tractor Supply's long-term prospects look favorable -- especially in relation to the stock's conservative valuation of just 25 times earnings. The company's strategic initiatives, including new store openings and its plans to continue adding garden centers to its existing stores, aim to drive sustained growth. For dividend-focused investors seeking a reliable income stream backed by a resilient business model, Tractor Supply presents a compelling opportunity. Though there's no way to know whether shares will go lower or not, investors at least get access to a 1.8% dividend yield and a high-quality company, both of which bode well for the stock's long-term potential.

Should you invest $1,000 in Tractor Supply right now?

Before you buy stock in Tractor Supply, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Tractor Supply wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

See the 10 stocks »

*Stock Advisor returns as of April 14, 2025

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tractor Supply. The Motley Fool has a disclosure policy.

Should You Buy the Dip in XRP (Ripple) Right Now?

newsfeedback@fool.com (Adam Spatacco) — Thu, 17 Apr 2025 04:30:00 -0400

The most direct way to build wealth in the capital markets is by purchasing securities (stocks or bonds) and adding to your winners over a long-term time horizon. With that said, during times of uncertainty, it's not uncommon for investors to begin looking for alternatives.

Although the average investor enjoys seeing their portfolio rise, these same investors may panic and begin to wonder if stocks are the best choice during times of heavy market sell-offs. This mindset is a little ironic given the fact that owning stocks helped them accumulate wealth in the first place.

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Popular alternative investments often include commodities, real estate, or even collectibles and novelties. However, for some investors with a higher risk profile, cryptocurrency could also round out a portfolio of alternative investments.

Let's explore how the crypto market is holding up right now as President Donald Trump's tariff policies continue sending shockwaves across the market. Moreover, I'll explore a popular token called XRP (CRYPTO: XRP) and assess if now is a good time to buy the dip as its price hovers around $2.

Crypto isn't holding up too well right now, and...

One thing to understand about cryptocurrency is that only a select few tokens offer much utility. While coins such as Dogecoin or Shiba Inu are quite popular, they are both meme coins -- meaning their price fluctuations are often correlated with popular online narratives as opposed to actual fundamental progress exhibited by the asset itself.

XRP Price data by YCharts

Two mainstream cryptocurrencies that actually do have some utility in the real world are Bitcoin and Ethereum. As the chart above illustrates, the returns so far this year for Bitcoin, Ethereum, and popular crypto trading exchange Coinbase are all negative.

On the surface, you might think that during a time of uneasiness in the stock and bond markets, the prices of cryptocurrency would rise, as investors would be looking for other areas to invest in. And while XRP has held up better than its peers so far in 2025, I'll break down below how Trump's new tariffs could affect the cryptocurrency and how its price could move from here.

... XRP's utility looks uncertain

Financial transactions have two core pain points: settlement times and exchange fees. Ripple is a financial technology company that created XRP as an alternative to mainstream cross-border transaction services such as the Society for Worldwide Interbank Financial Telecommunication (SWIFT). By using Ripple's network, businesses and consumers can avoid the arduous task of using clunky intermediary payments infrastructure -- thereby leading to faster settlement times and incurring lower exchange fees.

The problem I see when it comes to investing in XRP right now revolves around how tariffs could implicate widespread usage of crypto.

If the new tariffs affect trade in the form of lower import volumes, then it's plausible that demand for cross-border payments could fall, and the need for facilitating foreign exchange transactions is not as much of a priority. With that said, this scenario pertains more to how financial institutions and businesses are using XRP.

XRP's infrastructure could still be utilized under the new tariff policies by individuals who may be sending money back home to relatives in another country. In this scenario, tariffs could actually lead to higher transaction volumes for XRP, -- as people may choose to rely on Ripple's cost-efficient technology even more during this period of economic volatility.

In other words, hiccups around global trade and economic uncertainty could be a headwind or a tailwind for XRP, depending on the specificity of the use case.

Image source: Getty Images.

Is XRP a good buy at $2?

I think XRP's recent price decline (and that of crypto more broadly) is reflective of a perplexed and reticent investment community. Given these dynamics, I think the current price of XRP could move significantly in any direction depending on how the tariff situation plays out.

To me, there are too many variables that could influence the price of XRP one way or the other right now. Although there is some real utility in XRP, I still see the asset as quite speculative. Its adoption is not as widespread as other payments infrastructure, and I don't necessarily see the ongoing sell-off as an opportunity to buy the dip. For these reasons, I'd pass on investing in XRP right now.

Should you invest $1,000 in XRP right now?

Before you buy stock in XRP, consider this:

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*Stock Advisor returns as of April 14, 2025

Adam Spatacco has positions in Coinbase Global. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, Ethereum, and XRP. The Motley Fool has a disclosure policy.

3 Crashing Stocks That Haven't Been This Cheap in Over 5 Years

newsfeedback@fool.com (David Jagielski) — Thu, 17 Apr 2025 04:23:00 -0400

If a stock is trading near its 52-week low, you know that it's probably facing some challenges. But when you're talking about a stock that is trading at around its five-year lows, you know it's probably in deep trouble, and may already be in the midst of a turnaround.

Nike (NYSE: NKE), Intel (NASDAQ: INTC), and Kraft Heinz (NASDAQ: KHC) all seem like they could be good, cheap buys to load up on right now, given their beaten-down prices. But investors have been struggling to find reasons to take a chance on their respective businesses.

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Let's take a closer look at whether you should consider buying any of them, or if these stocks, which are trading around levels they haven't been in at for years, still look destined to fall even lower in value.

1. Nike

Nike's stock hasn't been this cheap since 2017. The reason the stock has been struggling is that sales are down, and it has made a change at the CEO level in order to focus more on retail (as opposed to online, which it was prioritizing in the past).

But what has compounded the risk is the threat of tariffs, as Nike imports a lot of its products from Asia. President Trump has paused "reciprocal tariffs" on countries (except China) for a period of 90 days, but this is becoming an evolving development, which has led to investors not wanting any part of Nike's stock.

However, what concerns me more about Nike isn't the tariff risk, which may prove to be a temporary one, but instead the problems related to affordability. Investors shouldn't forget that Nike was already in trouble before the tariffs. And I'm not convinced that simply focusing on retail is going to fix that -- not when consumers have more options for cheaper apparel through online marketplaces. The company's sales have risen by just 15% over its past three fiscal years (Nike's year ends in May).

A better move for Nike may be to simply position itself more as a luxury brand and trim its offerings and store count. By doing so, it would be less vulnerable to current market conditions and not have to worry about cheap products taking market share, as it would target a different type of customer.

I don't think that's the direction it's heading in right now, which is why I wouldn't take a chance on the business, as this could still be a disastrous road ahead for Nike; investors shouldn't assume the shoe stock can't go lower.

2. Intel

Intel is in trouble as well, but I think there may be more hope for the business than there is for Nike. That's because as a top computer maker, Intel can stand to benefit from the growing needs in the tech industry, specifically as they pertain to artificial intelligence (AI). The ongoing trade war between China and the U.S. reinforces the importance of having domestic chipmaking abilities in the U.S.

The company has struggled with building out a foundry business, as it has incurred significant losses thus far. Last year, its foundry segment reported an operating loss totaling $13.4 billion.

There are reports that chipmaking giant Taiwan Semiconductor Manufacturing will take a 20% stake in Intel's foundry business, to help operate the factories. Doing so could help improve efficiency and lead to more positive results. It hasn't been confirmed, but it could be a huge development if it's true, as Intel looks to be struggling to do all on its own.

Intel's stock is down around the levels it was at back in 2012. This is a risky buy, but given the need for domestic chipmaking abilities in the U.S. and with Intel potentially playing a huge role in that, it could make for one of the most intriguing contrarian investments to hold on to right now.

3. Kraft Heinz

Shares of Kraft Heinz bounced off new 52-week lows they hit recently, but prior to that, the last time the stock was trading at cheaper levels was back in March 2020, during the pandemic-fueled crash. Kraft would end up rallying afterward, but the situation is a bit different now.

Today, millions of people have been turning to GLP-1 weight loss drugs to help shed pounds, and that has curbed appetites. And as consumers have been focusing on healthier eating options, that is also weighing on the business' growth prospects.

The exclamation point on all this was when Kraft pulled its Lunchables products from school cafeterias due to low demand; schools weren't thrilled with the meal kits, which contained more sodium than the versions sold in stores.

Kraft is a business in need of a turnaround, to pivot toward healthier eating options. Its sales have been stagnant over the past few years, and without a drastic change in its offerings, I don't think things will get better anytime soon for the business. While it may seem like a cheap buy, trading at just 11 times its estimated future earnings (based on analyst estimates), this isn't a stock I'd rush to buy, as it lacks a compelling growth catalyst or reason to remain bullish on the company's long-term future.

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel, Nike, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Kraft Heinz and recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.

1 No-Brainer Artificial Intelligence (AI) Stock to Buy With $25 and Hold for the Long Run

newsfeedback@fool.com (Anthony Di Pizio) — Thu, 17 Apr 2025 04:19:00 -0400

Developing artificial intelligence (AI) software from scratch requires billions of dollars in infrastructure and chips, mountains of data, and extensive technical expertise. The majority of businesses can't string all three ingredients together, especially if they aren't in the technology industry, so they seek alternative solutions instead.

C3.ai (NYSE: AI) has developed more than 130 ready-made and customizable AI applications for businesses in 19 different industries. It was the world's first enterprise AI company when it was founded in 2009, which was long before the AI boom gripped Wall Street. C3.ai is experiencing a surge in demand for its software at the moment, but the company hasn't even scratched the surface of what could be a $1.3 trillion opportunity by 2032 (according to Bloomberg).

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C3.ai stock is down by 42% in 2025 on the back of the sharp sell-off in the broader market, but it also remains significantly below its all-time high from 2020. The stock is now trading at an attractive valuation relative to its history, so this could be a great long-term entry point for investors. Plus, a single share costs under $25, so C3.ai is accessible for investors with portfolios of all sizes.

Image source: Getty Images.

Delivering AI to a variety of industries

C3.ai can deliver a ready-made AI application within just six months of an initial briefing with a customer. These applications are ideal for businesses in manufacturing, healthcare, financial services, and oil and gas, which typically wouldn't have the resources to develop AI software from scratch.

Plus, C3.ai's applications can be deployed through leading cloud platforms like Amazon Web Services, Microsoft Azure, and Alphabet's Google Cloud, which most enterprises already use. This makes it easy for businesses to access the computing capacity they need to run C3.ai's applications at scale, because each of those cloud providers operates centralized data centers.

For one bank with $3 trillion in assets under management, the C3.ai Anti-Money Laundering application has driven an eye-popping 200% increase in the number of suspicious transactions identified, while also reducing false-positive alerts by 85%. This fortifies the bank's security and compliance processes, while significantly improving efficiency.

C3.ai doesn't disclose exactly how many customers it has, but it closed 66 new deals during the fiscal 2025 third quarter (ended Jan. 31), which was a whopping 72% increase from the year-ago period. It highlights the strength of the demand picture for AI software right now, especially among non-technology companies.

C3.ai's revenue growth is picking up steam

C3.ai delivered $98.7 million in total revenue during the fiscal 2025 third quarter, which was a record high. It represented year-over-year growth of 26%, which followed a 29% increase in the second quarter just three months earlier. These were the strongest revenue growth rates the company has delivered in almost three years.

The recent strength is due to a change C3.ai made to its business model back in early fiscal 2023, when it moved away from subscription-based revenue in favor of consumption-based billing. It eliminates contract negotiations, which allows C3.ai to onboard customers more quickly, as they now only pay for what they use. The company said it would lead to a temporary dip in its revenue growth while existing customers transitioned, but assured investors it would pay off in the long run. Things appear to be playing out exactly as planned right now.

C3.ai is still generating losses at the bottom line because it's focused on acquiring new customers and growing its business, and that costs money. Its operating expenses totaled $403.8 million during the first nine months of fiscal 2025, which was an 11.3% increase compared to the same period in fiscal 2024. But since the company's revenue grew much faster, its net loss only increased by 1% to $209 million during the nine-month period.

In other words, C3.ai has managed to acquire more customers and generate more revenue without causing a blowout at the bottom line. To be clear, investors will eventually want to see the company deliver profits, but it's also important to capitalize on the AI boom in the nearer term.

Plus, C3.ai had $724 million in cash, equivalents, and marketable securities on hand at the end of the recent quarter, so it can afford to sustain its current losses for the next couple of years. However, the company will have to prioritize profitability eventually, because investors will tire of the dilution that comes with the constant issuance of new shares to raise money.

C3.ai stock looks like a good value right now

C3.ai stock is down 42% this year amid the bear market in the tech sector, but it's also down 87% from its record high, which was set during the tech frenzy in 2020. It was trading at an eye-watering valuation of more than 80 times sales back then, which simply wasn't sustainable.

However, the sharp decline in the stock combined with the company's consistent revenue growth has pushed its price-to-sales (P/S) ratio down to a more reasonable level of 6.9. That is actually a 28% discount to its three-year average of 9.6 (which excludes 2020):

AI PS Ratio data by YCharts

As I mentioned at the top, C3.ai could be playing in a $1.3 trillion market by 2032, so its current revenue is a mere drop in the bucket compared to the magnitude of the potential opportunity ahead. Plus, considering C3.ai is currently growing its revenue at the fastest pace in years, this could be a great time for investors to take a long-term position in its stock -- especially in light of the current discount to its three-year average valuation.

Should you invest $1,000 in C3.ai right now?

Before you buy stock in C3.ai, consider this:

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*Stock Advisor returns as of April 14, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool recommends C3.ai and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Stock Market Whiplash: 5 Moves to Protect Your Portfolio Now

newsfeedback@fool.com (Adria Cimino) — Thu, 17 Apr 2025 04:15:00 -0400

The S&P 500 (SNPINDEX: ^GSPC), the Dow Jones Industrial Average (DJINDICES: ^DJI), and the Nasdaq (NASDAQINDEX: ^IXIC) have been surprising investors daily with their movements, shifting rapidly according to news regarding President Donald Trump's tariff plans. The president earlier in the month announced a far-reaching set of tariffs on imports from countries worldwide, sending stocks tumbling as investors worried about the impact on U.S. corporate earnings and the economy. Since then, the U.S. paused the tariffs for 90 days to allow for negotiations, and he exempted electronics products from the duties -- at least temporarily. This initially spurred a rebound, though volatility remains.

Investors still are concerned about the final tariff plan and how it may weigh on the costs of U.S. companies. Many of them import raw materials and finished goods, meaning they will have to pay any applicable duties. So, the market may continue to be difficult as this tariff story unfolds. But here's some good news against this backdrop of stock market whiplash. There are five moves you can make right now to protect your portfolio.

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Image source: Getty Images.

1. Try ETFs

If you haven't yet invested in exchange-traded funds (ETFs), now is a good moment to give them a try. ETFs allow you to instantly diversify across one or more industries as they invest in many stocks according to a particular theme -- for instance, growth stocks or biotech players. In today's tough market, diversification is a great idea -- if one particular industry suffers, diversification will limit the impact on your portfolio.

You might consider a broad ETF that tracks the performance of the S&P 500, such as the Vanguard S&P 500 ETF (NYSEMKT: VOO). The benchmark has eventually overcome every market scare, delivering an average annual return of 10%. And always choose an ETF with an expense ratio of less than 1% to preserve your long-term returns -- the Vanguard ETF fits the bill, with an expense ratio of only 0.03%.

2. Favor companies that may benefit from tariffs

Tariffs aren't good news for U.S. companies in general. But some players could benefit to a certain degree. For example, the president's tariff on China and his ending of an exemption on lower-priced goods could make it much more expensive for Americans to order items from China-based companies, such as Shein. As a result, they could turn to Amazon or Etsy (NASDAQ: ETSY) more often.

Etsy even said in its latest earnings call that it could be "a net beneficiary" if tariffs are focused on China. The e-commerce company, a platform connecting sellers of handmade goods with buyers, also said its sellers source most of their materials close to home -- another plus in an import tariff environment.

3. Go for established companies

In times of market turmoil, it's a great idea to buy shares of well-established companies that have proven themselves over time. We know, for example, that companies such as American Express or Microsoft have been around through other difficult times, from market crashes to recessions.

Players such as these that have a solid track record, along with earnings that remain strong, are well positioned to emerge from this crisis too and go on to win again over the long term. Many of them, due to recent declines, are trading for very reasonable valuations -- and that makes right now an excellent time to buy.

4. Choose "safe" players

What's a "safe" player? Part of the equation is being an established company, but safe players generally operate in a field that doesn't suffer as much as others during economic downturns -- such as healthcare. Patients need their treatments regardless of the economic setting. So pharmaceutical and medical device companies make good choices -- even if today, they too face the potential impact of tariffs, they still can count on patients steadily returning for medicines and procedures.

Another safe stock is one that offers you passive income, and that means now is the moment to add some dividend stocks to your portfolio. Go for Dividend Kings, or those with a long track record of dividend increases, as they've demonstrated they're committed to rewarding shareholders.

5. Think long-term

Finally, to keep cool during difficult market times, be sure to think long term. None of us like to see our portfolio's value drop before our eyes -- but remember that tough market times always are temporary, and you haven't truly lost if you haven't sold.

Quality stocks generally don't stay in the doldrums forever, so if you hold on for a period of five years, for example, you could score a win as their fortunes improve. That's why, when buying a stock or evaluating current positions, it's important to consider companies' long-term prospects. If they look positive, don't worry too much about short-term headwinds and instead focus on the brighter days ahead -- and all of this will help you make better investment decisions during any market environment.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. American Express is an advertising partner of Motley Fool Money. Adria Cimino has positions in Amazon and American Express. The Motley Fool has positions in and recommends Amazon, Etsy, Microsoft, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Is AGNC Investment Stock a Buy Now?

newsfeedback@fool.com (Geoffrey Seiler) — Thu, 17 Apr 2025 04:14:00 -0400

At around 17%, AGNC Investment (NASDAQ: AGNC) has one of the highest dividend yields around. While that is certainly attractive for income-oriented investors, the bigger question is whether or not the stock is a buy. After all, yields that high can sometimes be a red flag.

Navigating a complicated environment

AGNC is a mortgage real estate investment trust (REIT) that holds a portfolio of agency mortgage-backed securities (MBSes). Given that its holdings are backed by government agencies such as Fannie Mae and Freddie Mac, it carries de minimus credit risk. However, the stock is far from risk-free.

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Mortgage REITs carry a number of risks. Chief among them is interest rate risk. When mortgage rates rise, the value of older MBSes with lower yields will decline. This dynamic is captured in a mortgage REIT's tangible book value (TBV), which represents the value of its investment portfolio. When mortgage rates shot higher after the Federal Reserve began raising rates and unwinding its own MBS portfolio that it acquired as part of quantitive easing, AGNC's TBV plunged, as did its stock. From the end of 2021 until the end of 2023, AGNC's TBV sank 45% from $15.75 per share down to $8.70 per share.

Ahead of its first-quarter 2025 earnings, AGNC revealed that its TBV per share at the end of the quarter sat at $8.25. That was down from $8.41 at the end of 2024. It also estimated that its TBV was between $7.75 and $7.85 per share as of April 9.

The decline in AGNC's TBV can be attributed to the reaction of the bond market to President Donald Trump's tariffs. The haphazard nature in which the tariffs have been rolled out and delayed has shaken the world's confidence in the U.S. and in Treasury bonds as a safe haven. Instead of investors running to Treasuries given the uncertainty of the economy, they instead sold, spiking Treasury yields in the process. As is typical, mortgage rates followed suit and also climbed higher.

Image source: Getty Images.

While there has been a lot of noise in the bond market, AGNC could still be in a decent position moving forward if the Fed reacts and starts cutting interest rates or if it even steps into the markets and starts buying securities. Trump has called for the Fed to slash rates, but Fed Chair Jerome Powell wants a clearer picture on the impact of tariffs before taking action. The administration consistently changing policies isn't helping, nor is the inflationary impact of tariffs. However, if the economy starts heading into a recession, there is a good chance the Fed will act.

AGNC could benefit from the Fed lowering rates in two ways. First, it could lower mortgage rates, helping prop up its TBV. Second, lower short-term rates would reduce funding costs and widen the spread between short- and long-term interest rates. AGNC generates income from the spread between MBSes and short-term funding costs (along with the help of hedges and leverage), and overall, a steeper yield curve would benefit it.

That said, the possibility of the government looking to privatize Fannie Mae and Freddie Mac adds another level of uncertainty. Federal Housing Finance Agency Director Bill Pulte dodged the question of whether this was on the table at his confirmation hearing, while U.S. Treasury Secretary Scott Bessent has publicly said they could become part of a new U.S. sovereign wealth fund. If they were privatized, it likely would increase the spread between mortgage rates and Treasuries, which would be another negative for AGNC and the value of its MBS portfolio.

Is he AGNC stock a buy?

While its 17% yield is tempting, right now there is a lot of uncertainty in the mortgage market. AGNC's book value has already taken a hit, so the question is, where does it go from here? Any easing actions by the Fed could be a positive, while any government actions to privatize Fannie Mae and Freddie Mac would be a negative. The yield curve, meanwhile, has already begun to steepen.

Taken altogether, AGNC is an intriguing high-yield option, but one that is starting to carry increased risk. As such, investors should only look to hold positions if they are comfortable with the risks.

Should you invest $1,000 in AGNC Investment Corp. right now?

Before you buy stock in AGNC Investment Corp., consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AGNC Investment Corp. wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

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*Stock Advisor returns as of April 14, 2025

Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Should You Buy Alphabet Stock Before April 24?

newsfeedback@fool.com (Brett Schafer) — Thu, 17 Apr 2025 04:12:00 -0400

Earnings season is about to get into full swing. Alphabet (NASDAQ: GOOG) will lead the charge when it reports on April 24 after markets close. The technology conglomerate that owns Google, YouTube, and Android is one of the largest companies in the world by market capitalization, valued at $1.95 trillion as of this writing.

Its most important subsidiary, Google Search, looked bulletproof for years, with a true monopoly in search engines. That has changed with the rise of OpenAI and its ChatGPT services. Alphabet stock is off 22% from all-time highs, even as it set revenue records in 2024. Does that mean you should buy Alphabet stock before earnings next week? Or is OpenAI eating the company's lunch?

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Tariffs and a major competitive threat

OpenAI has turned into a fast-growing competitor to Google Search. ChatGPT reportedly has 800 million users, which is still well off the billions that use Google Search but ChatGPT has grown like a weed over the last couple of years. Innovating at an insane pace and raising tens of billions of dollars from venture capital, the artificial intelligence (AI) start-up is moving quickly to try and win in the emerging field of large language models.

This has spooked investors but hasn't shown up in Alphabet's financial performance yet. Google Search revenue hit $54 billion last quarter, up 12% year over year.

My belief is that OpenAI will carve out some market share in the search engine and AI market, but the potential for growth in this segment will be so massive that there will be multiple winners. Analysts expect the industry to be worth well over $1 trillion by 2030. Even if OpenAI turns into a $100 billion business, there will be room for Alphabet (and others) to keep growing. A rising tide can lift all boats.

What about tariffs? Google's advertising business -- along with YouTube and Android -- relies on growing consumer spending in the United States. If this gets upended because of tariffs on China and other markets, Alphabet's earnings power may get hit in 2025.

However, over the long term, this business has been a phenomenal grower. It has multiple products with billions of users, meaning that most of the global population outside of China has interacted with at least one of its products. As long as global GDP grows, I expect Alphabet's consumer advertising business to grow over the long term.

Fast growth in cloud computing

AI looks like a threat to Google Search, but it is a huge opportunity for Google Cloud. As many readers are aware, language models currently take a ton of computing power to train and run, which requires a ton of spending on cloud computing services. Google Cloud is there to serve these customers.

Last quarter, Google Cloud revenue grew 30% year over year to $12 billion, putting it at close to $50 billion in annualized revenue. Profit margins are expanding rapidly, hitting around 20% last quarter, and should march higher in the years to come. With the huge opportunity to still grow the AI market, Google Cloud can grow for a long time at Alphabet. If it reaches $100 billion in revenue and a 25% profit margin, that equates to $25 billion in operating income for the division.

Alphabet's total operating earnings were $112 billion last year, so a $25 billion contribution could be a significant growth driver for the company. It can also help any slowdown associated with the threat posed by OpenAI and other AI start-ups.

GOOG PE Ratio data by YCharts

Don't count Alphabet out just yet

There are a lot of doubters of Alphabet stock right now. It has a price-to-earnings ratio (P/E) of 20, which is the lowest among the technology giants, even though it is growing revenue at a double-digit rate. Investors are scared about the competitive threat posed by OpenAI and others when it comes to forecasting Alphabet's future financials.

I wouldn't doubt Alphabet just yet. It has fought back admirably with its Gemini models and has embedded a ton of new AI products into Google Search, Google Worksuite, and YouTube. The company has an incredible set of engineering talent, perhaps the largest group of AI talent in the entire world. It is not a certainty that Google will lose to OpenAI, although that is becoming priced into the stock.

On top of this falling stock price, Alphabet has begun to return capital to shareholders through buybacks and dividends. Shares outstanding are consistently falling, and its dividend currently yields 0.50%. Add strong capital returns into the mix, and Alphabet's earnings per share (EPS) can grow even faster than its revenue in the next decade.

At one of its cheapest P/E ratios in history, Alphabet stock looks like a great buy before its April 24 earnings report.

Should you invest $1,000 in Alphabet right now?

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*Stock Advisor returns as of April 14, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Brett Schafer has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

This Super-Safe High-Yield Stock Just Extended Its Dividend Growth Streak to 63 Years in a Row

newsfeedback@fool.com (Matt DiLallo) — Thu, 17 Apr 2025 04:07:00 -0400

Johnson & Johnson (NYSE: JNJ) continues to treat its investors like royalty. The healthcare behemoth recently gave them another raise, increasing its dividend payment by 4.8%. That extended its dividend growth streak to an impressive 63 years in a row, keeping it in the elite group of Dividend Kings, companies with 50 or more years of annual dividend increases.

That payout boost pushes the company's forward dividend yield up to 3.4%, more than double the S&P 500's dividend yield of 1.4%. Johnson & Johnson's high-yielding payout is as healthy as they come, making it a super safe option for those desiring to collect passive dividend income.

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In peak financial health

Johnson & Johnson has one of the healthiest financial profiles in the world. The healthcare giant has a pristine AAA bond rating. It's one of only two companies in the world with a top credit rating, which is higher than the U.S. government.

The company ended the first quarter of this year with only $13.5 billion of net debt: $38.8 billion of cash against $52.3 billion of debt. While that might sound like a lot, it's a paltry total for a company with a $370 billion market cap. It's also a very manageable amount, considering that Johnson & Johnson produced $3.4 billion in free cash flow during its most recent quarter. That was more than enough cash to cover the company's $3 billion dividend outlay in the period.

Last year, the company produced $20 billion in free cash flow. That was a more than $1.6 billion improvement from 2023 despite higher litigation settlement payments, higher taxes, and eight months of cash flow from its former consumer health business, Kenvue, in 2023. That growing free cash flow easily covered the company's full-year dividend cost of $11.8 billion.

Healthy investments to continue growing

The healthcare company produces significant free cash flow despite investing heavily in research and development (R&D) to discover and test new innovative medicines and medical technologies. Last year, the company poured $17 billion into R&D, accounting for 19.4% of its sales, which kept it as one of the top R&D investors across all industries. Johnson & Johnson has continued to spend heavily on R&D this year, investing $3.2 billion in the first quarter.

It has also deployed significant cash into strategic inorganic growth opportunities. It spent over $14 billion in the first quarter to close its acquisition of Intra-Cellular Therapies. That followed deals last year for Shockwave Medical, $13.1 billion; Ambrx, $1.9 billion; and V-Wave, $600 million. These acquisitions helped fill holes in its pipelines, accelerate innovation, and add new products to its MedTech platform. The company's ability to maintain such a strong balance sheet amid this massive shopping spree showcases its financial might.

Johnson & Johnson's hefty investments position it to continue growing its revenue and earnings. The company's long-term target is to grow its operational sales at a 5% to 7% compound annual rate from 2025 through 2030. That sales growth should drive its earnings and free cash flow higher, enabling the company to continue increasing its dividend.

As bankable a dividend as you'll find

All investments carry varying levels of risk. Johnson & Johnson's high-yielding dividend is at the low end of the spectrum. The healthcare giant produces prodigious free cash flow that easily covers its payout. It also has one of the strongest balance sheets in the world. Those features allow the company to make heavy investments in R&D and acquisitions to drive future growth. That growth should enable Johnson & Johnson to continue reigning supreme as one of the top dividend stocks to own for a safe and secure income stream that rises each year.

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Matt DiLallo has positions in Johnson & Johnson and Kenvue. The Motley Fool has positions in and recommends Kenvue. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2026 $13 calls on Kenvue. The Motley Fool has a disclosure policy.

Finally, a Little Good News for Tesla Investors

newsfeedback@fool.com (Daniel Miller) — Thu, 17 Apr 2025 04:05:00 -0400

After years of being a high-flying stock with strong sales growth, it could be argued this is the worst investors have felt about Tesla (NASDAQ: TSLA) ever. While the EV maker still dominates the U.S. electric vehicle (EV) market in overall volume and market share, it also posted its first-ever global sales decline in 2024. On the bright side, there was a little good news for investors recently regarding the controversial Cybertruck.

Officially a flop?

It's been a rough go for the company's newest vehicle, especially considering CEO Elon Musk previously noted the automaker expected to produce between 250,000 and 500,000 Cybertrucks per year, which would challenge even traditional gasoline-powered trucks.

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And while the Cybertruck has fallen far, far short of those expectations, there was a bit of good news regarding the controversial truck when it announced the base trim would now be available for just over $72,000. Currently, the three-motor Cyberbeast trim is at the top when it comes to pricing, starting at nearly $106,000 with shipping and order fee.

It's roughly a $10,000 drop in price compared to the current all-wheel drive trim, and a little closer to the $60,990 Tesla said it would cost before shipping. Remember, originally when the Cybertruck was presented in 2019, it came with a promised price tag of just under $40,000.

The new lower-cost version will strip out features such as all-wheel drive, the rear light bar, and air suspension, among other smaller changes. Further, removing the front motor from the all-wheel drive version will put its range up to 350 miles compared to the current version at 325 miles -- and it charges a bit faster, too. The increased range, charge speed, and lower price could help spur sales activity for a model that has drastically disappointed investors and consumers alike.

What would success look like?

It's pretty clear investors can knock the previous expectations down a notch, or two, but what would success look like if the lower-price Cybertruck gains some traction?

One would have to start by looking at rival Ford Motor Company and its F-150 Lightning. During the first quarter, Ford sold 7,187 F-150 Lightnings, compared to an estimated 6,406 Cybertrucks, per Cox Automotive. While the gap between the two seems narrow, the Cybertruck would really need to double its sales consistently to be considered a success -- and that's still a long way away from original expectations.

What could be of interest to investors is that this could be the first step in the company's larger lower-price strategy. According to analysts, Tesla is rumored to be working on more stripped-down versions of the popular Model 3 sedans and Model Y crossovers for 2025.

The lower-priced models will have their work cut out to reverse recent brand damage. "This is our first look at the impact of recent brand damage -- and it appears to be the primary driver behind this quarter's delivery decline," Gene Munster, managing partner at Deepwater Asset Management, according to Reuters. "These growth rates will likely deteriorate further this quarter."

Munster went on to predict a 9% decline in deliveries for 2025, with an aging lineup, recent political backlash, and increasing competition driving the decline.

All that said, Tesla will have its chance to repair its brand damage, even if not overnight, and lower-priced vehicles could provide a small jolt to the company's deliveries. 2025 might set up to be another disappointing year for the automaker, but if it can freshen its lineup, repair brand damage, and follow through on its many ambitions, brighter days should remain ahead.

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The Stock Market Crashed When Tariffs Were Announced. Wall Street Experts Say This Will Happen Next.

newsfeedback@fool.com (Trevor Jennewine) — Thu, 17 Apr 2025 04:00:00 -0400

The S&P 500 (SNPINDEX: ^GSPC), the best barometer for the U.S. stock market, cratered 19% from its record high in the days after President Trump announced a slate of severe tariffs on April 2. The benchmark index has since rebounded slightly, currently just 12% below its high, because Trump paused the most aggressive duties for 90 days.

Wall Street experts anticipate uncertainty and volatility in the short run, coupled with an elevated chance of a recession. But analysts expect more severe consequences in the long run, such as a permanent reduction in economic growth and living standards.

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The near-term consequences of tariffs are uncertainty and stock market volatility

Economic uncertainty created by the Trump administration has put business leaders in a challenging position. Not only because the president has taken such an aggressive stance on trade, but also because he seems to waver on policy decisions. For instance, the reciprocal tariffs outlined on April 2 were paused for 90 days on April 9, which was the day the tariffs were supposed to take effect.

That pause affords the administration time to negotiate with trading partners, but also leaves businesses with little insight into the future. Is it better to build inventory today or purchase supplies at a measured pace? Is it more sensible to move manufacturing capacity to the U.S. or to simply seek alternate shipping routes? There are no good answers because the Trump administration has yet to finalize the variables.

BlackRock CEO Larry Fink recently told CNBC that capital expenditures are falling, meaning companies are spending less on property, plants, and equipment because they lack visibility. Uncertainty has also made the stock market extremely volatile. The CBOE Volatility Index, often called the VIX, hit 52.3 on April 8. The VIX has closed above 50 less than 1% of the time since 1990, according to strategist Charlie Bilello.

Investors can think about that volatility in two ways. On one hand, the S&P 500 has usually rocketed higher in the year after extremely high VIX readings. On the other hand, this situation is somewhat unique because the reciprocal tariffs outlined by President Trump would raise the average tax on U.S. imports to roughly 25%, the highest level in more than 100 years. That leaves the stock market in uncharted territory.

Meanwhile, many experts have expressed concern about the reciprocal tariffs dragging the U.S. economy into a recession. Economists polled in April by The Wall Street Journal put the odds of a recession in the next year at 45%, up from 22% in January. But JPMorgan economist Bruce Kasman has a more pessimistic outlook. His base case calls for a U.S. recession in 2025.

Here is the bottom line: If the U.S. reaches deals with trading partners that mitigate most (if not all) the tariffs outlined by President Trump, the S&P 500 could rebound sharply in the second half of 2025. However, even in the most optimistic scenarios, uncertainty will plague businesses for the next few months, which will almost certainly lead to more stock market volatility.

Image source: Getty Images.

The long-term consequences of tariffs are slower economic growth and fragmentation of alliances

Predicting the long term consequences of President Trump's tariffs is challenging. That's mostly because the duties the administration outlined will increase the average import tax rate to its highest level since the early 1900s, so there is little historical precedent. But predictions are also challenging because the precise tariff rates, targets, and exemptions (if any) are unclear at this point.

However, several Wall Street strategist and business leaders have issued dire warnings. Wedbush analyst Dan Ives said the tariffs proposed by President Trump represents the worst "policy mistake in the last 100 years." He also said they could set the U.S. technology industry back a decade while China steamrolls ahead. And JPMorgan CEO Jamie Dimon warned, "Economic fragmentation from our allies may be disastrous in the long run."

Morningstar economist Preston Caldwell recently wrote, "If they're maintained, the tariff hikes announced April 2 represent a self-inflicted economic catastrophe for the United States." He anticipates a permanent reduction in economic growth and living standards for the average American if the Trump administration forges ahead.

Similarly, Erica York at the Tax Foundation wrote, "History shows tariffs raise costs and prices and lead to lasting economic harm, such as lower production and living standards, whether we keep importing goods or switch to domestic alternatives." Data gathered over five decades from 151 countries supports that assertion.

Despite potentially devastating long-term effects, Wall Street analysts at 17 investment banks and research firms have set the S&P 500 with an average year-end target of 6,100. That implies 13% upside from its current level of 5,397 as of April 15, suggesting many analysts think the final tariff rates will be much more measured than what President Trump has advertised.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

Trump Tariff Plunge: 3 Phenomenal Stocks to Buy at Bargain Prices Right Now

newsfeedback@fool.com (Sean Williams) — Thu, 17 Apr 2025 03:51:00 -0400

Just because Wall Street has proved to be a superior wealth creator over the long run doesn't mean stocks are impervious to bouts of volatility. Since President Donald Trump announced his "Liberation Day" tariffs on April 2, we've witnessed some of the wildest swings in the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) since their respective inceptions.

On April 3 and April 4, the benchmark S&P 500 produced its fifth-largest two-day decline in history. Meanwhile, on April 9, the Dow Jones, S&P 500, and Nasdaq Composite logged their largest respective single-session point gains on record, as well as some of their best days in history from a percentage perspective. These gyrations have seen the Dow and S&P 500 firmly enter correction territory, and the Nasdaq plunge into a bear market.

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While there are a number of catalysts whipsawing Wall Street, including the historical pricey-ness of stocks, it's the president's tariff talk that stands alone atop the proverbial pedestal.

President Donald Trump signing an executive order. Image source: Official White House Photo.

Trump's tariff announcements brought about historic volatility on Wall Street

Initially, President Trump declared a 10% sweeping global tariff, which was accompanied by a series of higher reciprocal tariffs on countries that have historically run adverse trade imbalances with the U.S.

Trump's stated goal with tariffs is to generate additional revenue for the U.S. economy, protect American jobs, and encourage companies to make their products on U.S. soil (thereby avoiding any added taxes). But what's laid out on paper doesn't always translate to the real world.

For instance, Trump's "Liberation Day" announcements make little differentiation between output and input tariffs. An output tariff is a duty placed on finished goods imported into the U.S. Meanwhile, input tariffs are added to goods used to complete products domestically. Input tariffs run the risk of reigniting the prevailing rate of inflation and making U.S. goods less price-competitive with those being imported from overseas markets.

There's also the possibility of Trump's tariffs inciting an even larger trade war with China, as well as U.S. allies. It's a worrisome development considering the Atlanta Federal Reserve's GDPNow model is forecasting the steepest organic contraction in the U.S. economy for the first quarter since the Great Recession (excluding the COVID-19 pandemic quarters).

Furthermore, Trump's propensity to change his tune on tariffs is causing instability on Wall Street. Despite the president instituting a 90-day pause on reciprocal tariffs on April 9 -- this is what caused the aforementioned largest single-day point gains in history for the Dow, S&P 500, and Nasdaq -- there's no cohesive or consistent message as to which products will be subjected to tariffs.

But there is one silver lining to be found among this chaos. Statistically, a highly volatile market has been the ideal time for long-term investors to put their cash to work in high-quality companies at a discount. Amid the Trump tariff plunge, three phenomenal businesses are ready to be bought right now at bargain prices.

Pfizer

The first unstoppable business that's become an amazing deal during the turmoil created by Trump's tariff announcements is pharmaceutical behemoth Pfizer (NYSE: PFE). While it's possible pharmaceutical stocks may be included in future tariffs, this isn't a deal-breaker for Pfizer or investors.

What's interesting about Pfizer stock is that the company has been punished for its own success. In 2020, it generated $41.9 billion in full-year sales, with no revenue from COVID-19 treatments. By the end of 2024, Pfizer delivered $63.6 billion in net sales, with roughly $11 billion coming from its COVID-19 vaccine (Comirnaty) and oral therapy (Paxlovid), on a combined basis. Even though COVID-19 sales have fallen from north of $56 billion in 2022 to $11 billion last year, Pfizer is still in considerably better shape than it was when the decade began.

Something else investors can take solace in is the fact that most healthcare stocks are highly defensive. No matter how volatile things get on Wall Street, people don't stop becoming ill or requiring prescription medicines. Demand for the company's novel therapies tends to be consistent year after year.

This year should be particularly exciting for Pfizer given that it's moved past the acquisition-related expenses that held its bottom line down in 2024. The $43 billion deal to acquire cancer drug developer Seagen in late 2023 should transform Pfizer's oncology pipeline, bolster its bottom line, and result in meaningful cost savings in 2025 (and beyond).

Best of all, shares of the company are historically cheap and producing a jaw-dropping annual yield. Investors can pick up Pfizer stock right now for an estimated 7 times forecast earnings for 2026. To boot, its nearly 8% dividend yield is nearing the highest level in the company's storied history.

Image source: Getty Images.

Enterprise Products Partners

A second superb stock to buy right now amid the Trump tariff plunge is oil and gas goliath Enterprise Products Partners (NYSE: EPD).

With the spot price of crude oil recently hitting a four-year low, it's understandable why investors might be leery about putting their money to work in oil and gas stocks. In particular, the margins of upstream drilling companies are adversely impacted by sizable declines in the spot price of crude.

However, Enterprise Products Partners is an energy middleman, known as a midstream company, which is largely insulated from these wild fluctuations in the spot price of energy commodities. Enterprise owns more than 50,000 miles of transmission pipeline, 26 fractionation facilities, and can store in excess of 300 million barrels of petroleum/refined liquids.

What makes this company so special is the nature of the contracts it signs with upstream drilling companies. Aside from being long-term, these contracts are predominantly fixed-fee. This fixed-fee aspect removes inflationary pressures and spot-price volatility from the equation, which leads to highly predictable operating cash flow looking a year or more into the future.

Operating predictability is especially important for midstream companies like Enterprise Products Partners. On top of the occasional bolt-on acquisition, it's spent approximately $7.6 billion on major capital projects set to come online between now and the end of 2026. Many of these projects are geared at expanding its natural gas liquids exposure and should provide an immediate lift to its profitability.

To round things out, Enterprise has raised its distribution for 26 consecutive years (it's currently yielding north of 7%), is valued at less than 10 times forecast earnings in 2026, and should enjoy a notable uptick in distributable cash as its capital expenditures decline after this year.

AutoZone

The third phenomenal stock that's ideally positioned to benefit in the Trump tariff plunge is auto parts retailer AutoZone (NYSE: AZO).

Keeping in mind that the Trump administration has changed its tune on which products/goods are subject to tariffs on multiple occasions, placing tariffs on foreign-produced vehicles will likely incentivize drivers to keep their existing vehicles even longer.

A May 2024 report from S&P Global Mobility, a division of the better-known S&P Global, found the average age of vehicles on U.S. roads had hit an all-time high of 12.6 years. For added context, this is up 1.5 years from the average vehicle age in 2012. Better-built vehicles, coupled with tariffs, should mean AutoZone will be relied on in a growing capacity by vehicle owners.

With macro factors undeniably working in AutoZone's favor, the company is capitalizing by rapidly expanding its distribution network. Specifically, it's building 200 mega-hubs, each of which is expected to carry up to 110,000 stock keeping units. The idea here is to centralize these mega-hubs such that customers always have the ability to get the part(s) they need with relative ease.

But what AutoZone might be best-known for is its superior share repurchase program. Since fiscal 1998 (the company's fiscal year ends in late August), it's spent $37.8 billion to buy back more than 155.4 million shares. In total, the company has reduced its outstanding share count by 90.3% in 27 years. Companies with steady or growing net income and declining outstanding share counts should see their earnings per share climb over time.

The last puzzle piece is AutoZone's still-attractive valuation. The company's forward price-to-earnings ratio of 21 remains inexpensive considering its unrelenting buyback program, ideal tariff positioning, and the steady aging of American vehicles on public roadways.

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Sean Williams has positions in Pfizer. The Motley Fool has positions in and recommends Pfizer and S&P Global. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.

Should You Buy Stocks After The Recent Market Sell-Off? Here's What One of Warren Buffett's Favorite Valuation Gauges Says.

newsfeedback@fool.com (Bram Berkowitz) — Thu, 17 Apr 2025 03:15:00 -0400

Stocks have whipsawed this year, as weak economic data, high valuations, and issues around tariffs have confused investors. After everything that's happened in just a few short months, the broader benchmark S&P 500 finds itself down about 9% on the year as I write this, although it's down much more if you look at highs made in the back half of February. This may leave investors wondering if they should buy the dip after the sell-off.

Many stocks haven't been this cheap in quite a while, but the saga with tariffs and rising tensions with China makes the environment anything but certain. If you're looking for answers on whether to invest, you can check one of Warren Buffett's favorite valuation gauges.

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What the Buffett indicator tells investors

Buffett has been investing successfully for decades, and his company, Berkshire Hathaway, has widely outperformed the broader market since 1965. While Buffett and his team have never been afraid to adapt, they are also very disciplined and aren't going to pour money into stocks when they think the market is overvalued. They also won't be afraid to buy stocks when there is a market crash. Berkshire made some great investments during the Great Recession and during the early days of the COVID-19 pandemic.

One metric that Buffett came up with has since been dubbed the Buffett indicator, which divides the market cap stocks in the U.S. by the country's gross domestic product (GDP). A common approach for the United States is to look at the Wilshire 5000, which attempts to measure the market cap of all U.S. equities. In a 2001 Fortune article, Buffett called this indicator "probably the best single measure of where valuations stand at any given moment."

According to data site longtermtrends.net, the ratio was around 177% as of April 12, down from a peak of over 200% earlier this year, but still above the area where Buffett would find the market attractive. Buffett has previously said that the market is most attractive when the Buffett indicator is in the 70% to 80% range. When the ratio is near 200% or higher, a scenario that occurred right before the dot-com bubble, that indicates a very risky environment.

Still, it's important to note that the Buffett indicator hasn't been below 100% since 2013, and the U.S. economy and the stock market have changed significantly over the years. For instance, interest rates were extremely low between 2009 and 2022. Since the Great Recession, the Federal Reserve has also pumped trillions of dollars into the economy through quantitative easing, which many believe has led to assets being inflated.

The Fed also injected trillions into the economy during the worst of the COVID-19 pandemic. While the agency has started to reduce its balance sheet, it's still quite bloated. Additionally, retail investors have become much more active through digital brokerages, zero-commission trading, and the rise of exchange-traded funds (ETFs), which has increased access and liquidity.

Is now a good time to buy stocks?

If you're looking at the Buffett indicator through a traditional lens, the popular valuation gauge says that U.S. stocks are still very much overvalued. However, as I pointed out, a lot has changed over the years, and the Buffett indicator hasn't read below 100% in over a decade. I certainly think there could be more room to fall for stocks in the near term. Uncertainty among investors is still high, and we don't know how the tariff situation and negotiations between the U.S. and China will play out.

If you feel stressed and would prefer to sit in cash for a bit longer, there's nothing wrong with that. But I think investors can always buy stocks, as long as they have a long-term investing horizon and understand that volatility could be high in the near term. I'd recommend dollar-cost averaging, where you automatically invest the same amount of money over regular intervals, which helps smooth out the cost basis and ensures you're not investing based on emotion.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.

The Stock Market Just Did Something for Only the 7th Time in 45 Years -- and It Has a 100% Success Rate of Forecasting the Direction the S&P 500 Will Move Next

newsfeedback@fool.com (Sean Williams) — Thu, 17 Apr 2025 03:06:00 -0400

For the better part of the last two and a half years, the bulls have been in full control on Wall Street. Excitement surrounding the rise of artificial intelligence, euphoria concerning stock splits in some of the Wall Street's most-influential businesses, and the resilience of the U.S. economy, have all played a role in pushing the widely followed Dow Jones Industrial Average (DJINDICES: ^DJI), broad-based S&P 500 (SNPINDEX: ^GSPC), and growth-driven Nasdaq Composite (NASDAQINDEX: ^IXIC) to multiple record-closing highs.

But the stock market wouldn't be a "market" without the ability for equities to move in both directions.

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The last eight weeks have been nothing short of a roller-coaster ride for the Dow, S&P 500, and Nasdaq Composite. During this span, all three indexes have logged some of their largest single-session point gains and declines since their respective inceptions.

Widening the lens to examine the aggregate shows the Dow Jones and S&P 500 dipped firmly in correction territory, with the Nasdaq Composite falling into a bear market.

Image source: Getty Images.

When volatility picks up on Wall Street, it's common for investors to seek out data points and events that have previously correlated with directional moves for stocks. While no correlative data point or event can guarantee short-term directional moves on Wall Street, there's no denying that some have been strong precursors to moves higher or lower in the benchmark S&P 500 throughout history.

One exceptionally rare correlative event just occurred for the stock market, and it has a, thus far, flawless track record of forecasting what's next for the S&P 500.

Tariff and valuation uncertainty rule the roost on Wall Street

Before diving headfirst into this correlative event, some background is needed to explain how things became so volatile on Wall Street.

Although fear and uncertainty are the two factors that typically incite volatility and weigh down the price of equities, the bulk of the blame for the stock market's recent "hiccups" can be attributed to President Donald Trump's tariff policy, as well as the historical priciness of stocks.

On April 2nd, a day which the president has referred to as "Liberation Day" for America, Trump unveiled his broad-stroke tariff policy. He introduced a sweeping global tariff of 10%, as well as implemented higher reciprocal tariffs on select countries that have traditionally run unfavorable trade imbalances with the U.S. As of April 9, all of these reciprocal tariffs, sans those directed at China, are on a 90-day pause.

Though President Trump's aim with tariffs is to generate revenue, protect U.S. jobs, and encourage domestic manufacturing, there are some serious potential deficiencies with his policy.

For starters, it could incite a trade war with China, the world's No. 2 economy by gross domestic product, or possibly even hurt trade relations with America's allies.

Additionally, Trump's tariff policy makes no clear differentiation between output and input tariffs. An output tariff is placed on a finished good entering the country, while an input tariff is an added tax on a good used to complete a product in the U.S. Input tariffs are disadvantageous for American businesses from a pricing standpoint.

S&P 500 Shiller CAPE Ratio data by YCharts.

The other big problem is that the stock market entered 2025 at one of its priciest valuations in history. Based on the S&P 500's Shiller price-to-earning (P/E) Ratio, which is also known as the cyclically adjusted P/E Ratio (CAPE Ratio), Donald Trump inherited the priciest market of any incoming president.

In December, the S&P 500's Shiller P/E hit a high almost 39 during the current bull market cycle. With the exception of its all-time high of 44.19 in December 1999 and its January 2022 peak of around 40, this valuation tool, which has been back-tested 154 years, has never been higher.

The silver lining is the ongoing correction in the S&P 500 has lowered the Shiller P/E multiple to 33.38, as of the closing bel on April 15. Unfortunately, this is still nearly double its 154-year average of 17.23.

Furthermore, the previous five occurrences where the Shiller P/E topped 30 for at least two months eventually saw the Dow Jones, S&P 500, and/or Nasdaq Composite shed 20% (or more) of their respective value.

The stock market has never bottomed out at such a historically pricey valuation premium.

Image source: Getty Images.

This exceedingly rare event should give optimists reason to smile

With a better understanding of the backstory to Wall Street's historic bout of volatility, let's dive into the rare event that just occurred, which has consistently boded well for optimistic long-term investors.

On April 9, the day President Trump announced a 90-day pause on most reciprocal tariffs, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite logged their largest single-day nominal point gains in their respective histories. The Dow gained 2,963 points (its 19th-largest percentage increase in history), the S&P 500 soared 474 points (tied for the eighth-biggest move up on a percentage basis), and the Nasdaq Composite tacked on 1,857 points (its second-largest percentage gain since inception).

Although history shows that investors might take a few days or weeks to digest such a large move in equities, outsized single-session gains have been a harbinger of green arrows for stocks since 1980.

As you'll note in the post below on social media platform X from Carson Group's Chief Market Strategist Ryan Detrick, April 9 was a truly historic day for optimism on Wall Street. It marked only the seventh times in the last 45 years that New York Stock Exchange (NYSE) advancing volume (i.e., share volume tied to stocks that rose during the session as a percentage of total NYSE volume) topped 97%. In fact, the 98.6% advancing volume for the NYSE on April 9 was the highest on record, dating back to 1980.

Last Wednesday saw 98.6% of all the volume on the NYSE advance. That was the highest ever (using data since 1980).

Dates like Aug '82 and March '09 are in there and strong future returns are quite impressive. pic.twitter.com/0sxi4REAqf
-- Ryan Detrick, CMT (@RyanDetrick) April 14, 2025

Although future returns for the S&P 500 one month later are somewhat mixed, the bulls absolutely run wild when looking out 12 months following these historic up days. All six prior instances where the NYSE had at least 97% advancing volume since 1980 were followed by double-digit percentage gains in the S&P 500 one year later.

To build on this point, the stock market didn't just fall in line with its historic long-term return average after these rare up days. The average 12-month gain was 29.2%, which is more than triple its average annual return of 9.2% since 1950. This is to say that outsized advancing volume days on the NYSE have, without fail, acted as a green light for stocks to rocket higher over the last 45 years.

Keep in mind this strong correlation between historic up days for the stock market and future S&P 500 returns doesn't concretely guarantee the benchmark index will be higher 12 months from now. As noted, the Shiller P/E is trading at a premium valuation, and the market has never bottomed with a Shiller P/E north of 30.

But thanks to the nonlinearity of stock market cycles, patience has a way of paying off handsomely for long-term investors. Even if tariff- and valuation-related uncertainty whipsaws equities for months to come, the long-term expansion of the U.S. economy, and the ability for time-tested businesses to take advantage of long-winded periods of economic growth, should eventually lift the Dow, S&P 500, and Nasdaq to new heights.

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Serve Robotics: A Risky Bet on Sidewalk Delivery Bots

newsfeedback@fool.com (Motley Fool YouTube) — Wed, 16 Apr 2025 19:00:00 -0400

Explore the exciting world of Serve Robotics (NASDAQ: SERV) with our expert analysts in this Motley Fool Scoreboard episode. Check out the video below to gain valuable insights into market trends and potential investment opportunities!
*Stock prices used were the prices of March 12, 2025. The video was published on April 16, 2025.

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Should you invest $1,000 in Serve Robotics right now?

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Dan Caplinger has no position in any of the stocks mentioned. Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Serve Robotics. The Motley Fool has a disclosure policy.

Why ASML Stock Sank Today

newsfeedback@fool.com (Keith Noonan) — Wed, 16 Apr 2025 18:50:35 -0400

ASML (NASDAQ: ASML) stock saw a big valuation pullback in Wednesday's trading. The company's share price fell 7% in the day's trading, and had been down as much as 8.6% earlier in the session. Meanwhile, the S&P 500 (SNPINDEX: ^GSPC) fell 2.2%, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) fell 3.1%.

ASML reported its first-quarter results before the market opened this morning and posted earnings that actually came in far better than the market's expectations. Unfortunately, the Q1 report arrived with new restrictions preventing the export of chips to China, another big tariff hike on the country, and comments that suggest the Federal Reserve is in no hurry to lower interest rates.

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ASML stock falls despite encouraging Q1 results

ASML reported earnings of 6 euros per share on sales of 7.74 billion euros. While the company's earnings per share beat the market's target by 0.20 euros, revenue fell roughly 40 million euros short of Wall Street's expectations. Sales were still up 46% year over year in the quarter, and the semiconductor manufacturing equipment specialist reiterated its full-year guidance for sales between 30 billion euros and 35 billion euros and a gross margin between 51% and 53%.

All in all, the company's Q1 results and forward guidance looked solid -- but macroeconomic and geopolitical pressures drove sell-offs for the stock.

Chip stocks tumble on new challenges and uncertainty

The Trump administration announced late yesterday that it was raising tariffs on Chinese goods from 145% to 245%, and investors also received news that export restrictions on processors from Nvidia and AMD had been expanded.

The market also had a bearish reaction to the latest comments from Federal Reserve Chairman Jerome Powell. Investors have been hoping that the Fed will cut interest rates in the near future, but Powell said today that the central banking authority will likely hold off on such a move until the impacts of the new tariffs on inflation and economic growth are more apparent.

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Why AMD Stock Plummeted Today

newsfeedback@fool.com (Keith Noonan) — Wed, 16 Apr 2025 18:32:31 -0400

Advanced Micro Devices (NASDAQ: AMD) stock saw a big valuation pullback Wednesday. The semiconductor company's share price ended the day's trading down 7.4% amid a 2.3% decline for the S&P 500 and a 3.1% decline for the Nasdaq Composite. Earlier in the session, the stock had been down as much as 10.5%.

AMD disclosed yesterday that sales of its MI308X processor to China were now effectively banned and that it expected to take an $800 million write-down as a result. Unfortunately, that wasn't the only bearish news for investors.

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AMD faces new export restrictions and the threat of higher costs

Due to new U.S. policies, AMD will require an export license in order to sell its MI308X artificial intelligence (AI) processor into the Chinese market. Because it's unlikely that the export license will be granted, the company is essentially barred from selling the processor to Chinese customers and anticipates taking an $800 million loss on inventory.

Adding another potential bearish catalyst, TSMC will reportedly raise the price on its 4nm chips by 30% in response to high levels of demand. AMD relies on TSMC to manufacture its chip designs and could wind up facing significantly higher costs as a result.

Macro pressures also weighed on AMD stock today

Late yesterday, the Trump administration said that tariffs on Chinese goods would be going up to 245% -- up from the previous level of 145%. With the trade war between the U.S. and China continuing to escalate, investors reduced exposure to chip stocks in today's session.

Traders also got some less than comforting commentary from Federal Reserve Chairman Jerome Powell today. Due to the potential that new tariffs could both weaken economic growth and accelerate inflation, Powell says that the Fed will be taking a wait-and-see approach to interest rate cuts.

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Why Taiwan Semiconductor Manufacturing Stock Sank Today

newsfeedback@fool.com (Keith Noonan) — Wed, 16 Apr 2025 18:06:04 -0400

Taiwan Semiconductor Manufacturing (NYSE: TSM) stock got hit with significant sell-offs in Wednesday's trading. The semiconductor foundry leader's share price closed out the day down 3.6% after having been off as much as 5.6% in the session. Meanwhile, the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite (NASDAQINDEX: ^IXIC) fell 2.2% and 3.1% in the session, respectively.

TSMC's valuation moved lower today in conjunction with news of new export restrictions on Nvidia's processors, higher tariffs on China, and cautious commentary from Federal Reserve Chairman Jerome Powell. The stock is now down 23% year to date.

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TSMC stock tumbles in response to multiple bearish catalysts

Nvidia submitted a filing yesterday disclosing a significant new business headwind. The company is now being required to submit for an export license if it wants to sell more of its H20 processors to China, which likely means that the product will be barred from being sold to the country.

TSMC manufactures the chip designs for the processors, and the foundry specialist could see overall demand pressured by new restrictions preventing advanced artificial intelligence (AI) semiconductors from being sold into the Chinese market.

TSMC stock also sold off today in response to news that the U.S.'s tariffs on China will be raised to 245% and commentary from Jerome Powell on the potential impacts of the new export taxes. Powell indicated that the Fed would hold off on cutting interest rates until the potential inflationary impacts of new tariffs became more clear.

What's next for TSMC?

According to a report published by DigiTimes today, TSMC intends to increase the prices on its 4nm chips by 30% in response to surging demand. The news suggests that the company should continue to post very strong sales growth in the near term, but there are still some big risk factors on the horizon. TSMC looks poised to be the leading manufacturer of advanced chips for AI applications for the foreseeable future, but its significance in the escalating tensions between the U.S. and China means the stock comes with outsized geopolitical risk.

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Investing $5,000 Into Each of These 3 Stocks During the 2020 Crash Would Have Created a Portfolio Worth $329,000 Today

newsfeedback@fool.com (David Jagielski) — Wed, 16 Apr 2025 18:05:00 -0400

Buying stocks when overall markets are falling can seem dangerous and counterintuitive. However, if you're investing in stocks for the long term, the benefits are extremely rewarding.

A great example would have been buying shares of quality companies amid the market chaos of 2020. Five years ago, around April 14, 2020, the S&P 500 was already down nearly 13.5% for that year despite being in the midst of a rebound after a steep decline in March due to the emergence of the coronavirus pandemic. While it wasn't an easy time to buy stocks given the uncertainty ahead, doing so could have resulted in some significant gains for investors.

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Strategy (NASDAQ: MSTR), Celsius Holdings (NASDAQ: CELH), and Nvidia (NASDAQ: NVDA) have all generated monstrous gains for investors in just the past five years.

If you had invested $5,000 into each one of these stocks in April 2020, you'd have well up over $300,000 today. Here's a look at how much those investments would be worth as of April 16, and whether these stocks are still good buys right now.

Strategy: $126,750

The best-performing stock on this list is Strategy, formerly known as MicroStrategy. It would have turned a $5,000 investment into roughly $126,750 over just a five-year stretch. It's an astounding performance, especially when you consider that the main reason investors are bullish on it is for its position in Bitcoin -- it prides itself on being the largest corporate holder of the cryptocurrency.

Yet, investing $5,000 into the digital currency itself would have grown to a more modest sum of $63,000. Strategy has been the better investment. Despite posting volatile earnings numbers that sometimes feature massive seven-figure losses, its favorable position on Bitcoin has been a big reason for its rapid rise in value.

While it technically provides companies with business intelligence solutions, Strategy has risen primarily due to the hype and excitement relating to crypto. Its fundamentals don't support its sizable $80 billion-plus market cap. This is a highly speculative and volatile investment, and investors shouldn't assume that because the tech stock has done so well in the past five years, it will be able to replicate these types of returns in the future.

Celsius Holdings: $129,400

Energy drink company Celsius Holdings has made for a tremendous growth stock over the years, establishing itself as one of the top companies in the industry over that time frame. A $5,000 investment in the business five years ago would now be worth a staggering $129,400 -- and this is even with shares of Celsius falling more than 50% over the past 12 months.

Moving forward, the company can still be an appealing investment given its focus on the sugar-free market, where it can be a big player. It recently announced plans to acquire Alani Nutrition, which will expand its presence in that area. Last year, Celsius' sales grew by just 3% to $1.4 billion, but with much more growth still on the horizon for the business, it may not be too late to invest in the stock.

Nvidia: $72,900

Chipmaker Nvidia has been a top stock to own due to its growth in artificial intelligence (AI). It plays a vital role in helping businesses expand their AI capabilities. It may seem surprising that the stock isn't higher on this list, but that's largely because of tariffs and the economic uncertainty ahead for the tech industry as a whole, and the risk that spending on chips may slow down in the near future.

Nvidia's five-year returns are still impressive, however, and the stock would have turned a $5,000 investment into close to $73,000 today. The company's dominance in AI chips makes it a strong buy moving forward as Nvidia's robust earnings and growth make it likely the business will become even more valuable in the future, and any dip in price could be an attractive buying opportunity for investors.

In its most recent fiscal year, which ended in January, the company reported over $130.5 billion in sales (more than double what it generated a year earlier), and profits of $72.9 billion soared from $29.8 billion in the previous year. Nvidia has been a growth machine, and even if business slows down in the near term, this can still make for an excellent long-term buy.

In total, a $15,000 investment across all these stocks five years ago would now be worth a staggering $329,000. These massive returns should remind investors that buying when sentiment is poor may not be as bad a time to invest in the stock market as it may appear to be.

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Celsius, and Nvidia. The Motley Fool has a disclosure policy.

TSMC: Why This Semiconductor Giant Looks Like a Massive Bargain Right Now

newsfeedback@fool.com (Harsh Chauhan) — Wed, 16 Apr 2025 18:00:00 -0400

Taiwan Semiconductor Manufacturing (NYSE: TSM), popularly known as TSMC, is the world's largest semiconductor foundry, which fabricates chips for the top consumer electronics companies and chip designers across the globe. That explains why it has been growing at an impressive pace over the past couple of years.

The world's leading companies, such as Nvidia, AMD, Broadcom, Sony, and Apple, tap TSMC's plants for manufacturing chips that power personal computers (PCs), smartphones, data centers, and gaming consoles, among others. As a result, TSMC is in a solid position to benefit from the secular growth of the global semiconductor market, which is expected to hit $2 trillion in annual revenue in 2032.

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That would be more than triple the $656 billion in revenue that the semiconductor industry generated last year. However, TSMC stock has been caught in the tariff turmoil of late, which explains why it is down more than 20% in 2025 as of this writing. But this pullback has made TSMC a terrific bargain.

Let's look at the reasons why buying TSMC looks like a no-brainer right now.

TSMC is making the right moves to maintain its dominance

TSMC enjoys a massive lead in the foundry market with an estimated share of 67%, according to Counterpoint Research. That figure has been heading higher in recent quarters. Specifically, TSMC's foundry market share increased by six percentage points in 2024. Meanwhile, second-placed Samsung lost ground in this market as its share shrank by three points to 11%.

A key reason why TSMC has been able to open such a huge gap over rivals in the foundry market is because of its technological advantage. TSMC's advanced process nodes allow its customers to manufacture powerful and power-efficient chips. For example, TSMC's 3-nanometer (nm) node is considered to be the most advanced chip manufacturing technology.

This process node is being used to manufacture smartphone chips and PC processors by the likes of AMD, MediaTek, Apple, and Qualcomm. Now, it looks like Nvidia will tap TSMC's 3nm process node to manufacture its next-generation Rubin graphics processing units (GPUs). Looking ahead, TSMC is looking to push the envelope further in chip manufacturing technology with the 2-nanometer process.

The company is expected to start mass-producing its 2nm processors in the second half of this year, which could put it ahead of rivals Samsung and Intel. Meanwhile, TSMC is also looking to diversify its global presence. The company has pledged an investment of $165 billion in the U.S. to build advanced chip manufacturing facilities that will power artificial intelligence (AI) applications.

It is worth noting that TSMC already fabricates chips for the leading AI semiconductor companies such as Nvidia, Broadcom, and Marvell, and its focus on boosting investments in advanced technologies should allow it to maintain its dominant position in the global foundry market. Additionally, TSMC's strategy of diversifying its global manufacturing footprint in countries such as Japan, the U.S., and Europe could turn out to be a smart move in the long run as it could help it mitigate the challenges arising out of potential trade-related conflicts, such as the one we are witnessing right now.

So, it won't be surprising to see TSMC remaining the top semiconductor foundry for a long time to come, and that's expected to translate into robust financial growth for the company.

A huge addressable market suggests TSMC is built for healthy growth

TSMC finished 2024 with $90 billion in revenue, an improvement of 30% from the prior year. The company has got off to a stronger start in 2025, recording a solid 42% jump in revenue in the first three months of the year to $25.6 billion. That's better than what the market was anticipating. Analysts expect TSMC's growth to gain momentum as the year progresses, as evident from the chart below.

TSM Revenue Estimates for Current Fiscal Year data by YCharts

What's more, the chart above also tells us that TSMC is on track to deliver robust growth over the next couple of years as well. Importantly, it won't be surprising to see the company sustaining its solid growth for a much longer period in light of the points discussed in the article. The semiconductor market is set to grow at an impressive pace, and TSMC itself sees a total addressable market worth almost $250 billion in its foundry and packaging services.

That figure could be bigger in the future as the size of the semiconductor market keeps growing. Not surprisingly, TSMC management expects to maintain an annual revenue growth rate of 20% for the next five years, which should translate into robust bottom-line growth as well. All this makes TSMC a top semiconductor stock to buy right now as it is trading at just 22 times trailing earnings and 17 times forward earnings, which is a nice discount to the tech-laden Nasdaq-100 index's forward earnings multiple of 27 (using the index as a proxy for tech stocks).

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Intel, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and Marvell Technology and recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.

Why Lockheed Martin Stock Soared While the Market Sagged Today

newsfeedback@fool.com (Eric Volkman) — Wed, 16 Apr 2025 17:14:53 -0400

An analyst's bullish new note on Lockheed Martin (NYSE: LMT) and the wider U.S. defense sector provided lift to the company's stock on an otherwise bearish Wednesday trading session. Lockheed Martin's shares closed the day almost 2% higher in price, providing quite the contrast to the tumbling S&P 500's (SNPINDEX: ^GSPC) 2.2% decline.

An industry maneuvering for growth

The analyst in question was Kristine Liwag of veteran white-shoe investment bank Morgan Stanley. Well before market open that day, Liwag changed her Lockheed Martin recommendation to overweight (i.e., buy) from equal weight (hold). In doing so, she added $50 per share to his price target on the storied defense stock, to $575 per share.

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The pundit's new take on the company was part of a broader Morgan Stanley update on defense industry stocks. According to reports, the investment bank rates the entire sector as "attractive," as opposed to its formerly cautious view that it'll be an in-line performer. The company sees the U.S. defense budget being set at $1 trillion this year, amid growing international exports of combat goods, as a positive for these stocks.

While Morgan Stanley's top pick in the sector wasn't Lockheed Martin -- that honor went to longtime rival Northrop Grumman, due to better alignment with current U.S. defense priorities -- Liwag still felt Lockheed Martin was worthy of an upgrade. She particularly highlighted its robust and active foreign sales activities as potential motors of future growth.

Supplier to the world

This is indeed a fertile time for the global defense industry, with the grinding war in Ukraine, intense clashes in the Middle East, and rising geopolitical tensions elsewhere. Liwag is spot-on with her view that major defense exporters are in an excellent position just now, and Lockheed Martin is a primary example of such a company.

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Why Walmart Stock Slumped by 3% on Wednesday

newsfeedback@fool.com (Eric Volkman) — Wed, 16 Apr 2025 17:10:38 -0400

On Wednesday, Walmart (NYSE: WMT) stock was guilty by association in the eyes of the market, a dynamic reflected in a share price drop of nearly 3%.

A top investment bank published a downbeat research note on a major peer in the retail world, and the bearishness spread to Walmart's stock. Overall, however, few investors were enthusiastic about any stocks, as Walmart's decline was only slightly steeper than the S&P 500's (SNPINDEX: ^GSPC) 2.2% dip.

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The retail sector was in the sights

Before the market open, Goldman Sachs downgraded its recommendation on that peer, Target. The investment bank now rates Target stock only a neutral, one peg down from its previous buy designation.

The key reason for this move, according to reports, is that Goldman feels that Target leans on discretionary (i.e., nonessential) products more than other retailers. According to the researcher's calculations, for its 2024 product lineup, the discretionary-to-staples mix was 53% in favor of the former category.

While Goldman flagged Walmart and several other rivals as leaning more toward staples, the downgrade of a top name in retail spooked some investors away from the sector's stocks entirely. And although the investment bank is correct in its assessment of the discretionary-to-staples ratio, Walmart and its brethren are still vulnerable to downturns in consumer discretionary spending.

Tariff troubles

For sure, the retail industry as a whole is facing potentially bracing headwinds. Personally, I would be more worried about the effect of the current round of tariffs on a range of foreign manufacturers than any other factor just now. These could drive up prices on many goods and lead to significant slumps in consumer spending if they stay in place for an extended stretch of time.

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Why Microsoft Stock Tumbled 3.7% Today

newsfeedback@fool.com (Eric Volkman) — Wed, 16 Apr 2025 16:26:00 -0400

Microsoft (NASDAQ: MSFT) had one of its more forgettable sessions on the stock market Wednesday, with its share price melting by 3.7% at closing time. Yet this had less to do with its own operations, and more to do with a move by a business in which it's invested. That decline was steeper than even the gloomy S&P 500 index's 2.2% fall on the day.

The big buzz in the AI world

In an article published this morning and citing an unnamed "person familiar with the matter," Bloomberg wrote that leading artificial intelligence (AI) company OpenAI is in active talks to acquire another privately held AI business called Windsurf. The deal's price tag is rumored to be around $3 billion.

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While OpenAI is a separate entity from Microsoft, the tech giant has invested considerably in the company. It also uses its technology in a number of its products.

If a deal is reached at anywhere near the mentioned price, it would be OpenAI's priciest acquisition in its relatively short history. Windsurf is a developer of AI-assisted coding tools, which streamline the coding process by allowing users to use natural-language prompts to create programs.

Neither OpenAI nor Windsurf had commented on the Bloomberg report. Microsoft had also kept mum on the matter.

A major chunk of change

Of course any acquisition OpenAI makes doesn't directly affect Microsoft. The company has said, however, that it is entitled to share of profit distributions from OpenAI. Investors might feel that OpenAI -- and by extension, Microsoft -- is better off spending billions of dollars to continue developing still-fresh AI technology rather than a bolt-on acquisition.

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Why Progressive Stock Was Topping the Market Today

newsfeedback@fool.com (Eric Volkman) — Wed, 16 Apr 2025 16:11:44 -0400

In late-session trading Wednesday, investors were collectively see-sawing on their reaction to Progressive's (NYSE: PGR) first-quarter earnings release. That was understandable, as the company convincingly beat the consensus analyst for revenue, but posted weaker-than-expected net income.

That indecision basically left the insurer's stock flat compared to Tuesday's closing price, but at least it was doing better than the bellwether S&P 500 index's 3%-plus drop.

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A mixed first quarter

For the inaugural quarter of 2025, Progressive's net premiums earned (essentially, total revenue) was $22.2 billion, representing muscular 17% growth year over year. The insurer's net income also rose, albeit more modestly at a 10% rate to just under $2.6 billion, or $4.37 per share.

On average, analysts following Progressive's progress were modeling a top line of $21.6 billion, and a per-share net income figure of $4.74.

In its earnings release, the company said it had no commentary to offer at this time about the results. Investors and analysts will have to wait until the morning of Tuesday, May 6, when management discusses them in more detail in a conference call.

A new Plus for the business

Investors might also have been cheered by Progressive's news that it has launched Cargo Plus. This is a new endorsement (i.e., a modification) for its truck coverage that insures truckers against damage to property while in their custody and control. While this isn't a game-changing move for the company, it indicates that management is actively seeking coverage areas to help keep those growth numbers up.

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Why Lucid Motors Stock Sank Today

newsfeedback@fool.com (Howard Smith) — Wed, 16 Apr 2025 16:06:52 -0400

Luxury electric vehicle (EV) maker Lucid Group (NASDAQ: LCID) launched its fully electric Gravity SUV to the public last year and began accepting registrations from interested customers. It officially introduced the initial 2026 Grand Touring edition yesterday.

A company executive also announced that plans to launch a new, midsize SUV next year are on track. Yet after a brief rise higher, Lucid stock is plunging today. Lucid shares closed the day's trading lower by 5%.

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Lucid can't escape the tech fallout

Lucid stock is down about 25% year to date with today's drop. News from the company yesterday was positive, though. Lucid is diversifying its product lineup with its new luxury Gravity SUV. It began accepting registrations last year, but now has officially opened the order book on the high-end SUV that starts at $94,900.

Another version with a starting price of under $80,000 will be available to order later this year. Maybe more important for Lucid investors are plans to launch a new, lower-priced, midsize SUV next year. Lucid senior vice president Derek Jenkins said the company is on track for that 2026 launch. That vehicle is set to start at a $50,000 price point, and could vault the company into a much larger market of consumers.

Yet the stock plunged today as investors see tariffs and potentially negative economic consequences as a reason to sell technology names. Lucid addressed the tariff issue yesterday, too. Interim CEO Marc Winterhoff told Reuters that the company has no plans to raise prices, but it does have agreements in place with battery cell and graphite suppliers for domestic production to avoid U.S. tariffs in the near future.

That wasn't enough for investors to spare Lucid shares from today's tech sell-off, though. The Nasdaq Composite (NASDAQINDEX: ^IXIC) was down as much as 4% today, closing down 3%, and dropped to 20% below its record high set late last year.

While Lucid gave long-term investors some positive news yesterday, it will be a bumpy ride for shareholders as long as tech stocks struggle.

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1 Emerging Risk to Solana That Could Be Devastating for Holders

newsfeedback@fool.com (Alex Carchidi) — Wed, 16 Apr 2025 16:05:00 -0400

Solana (CRYPTO: SOL) holders are no stranger to risk, given the coin's wild volatility and its occasional use by unsavory characters. With such a risky profile to begin with, investors need to be on the lookout for new threats emerging that might make its balance of risk to reward somewhat less favorable.

On that note, there's one critical risk that's now becoming apparent. There is no guarantee it'll become a real problem, but if it does, the result for shareholders could be disastrous. Here's what you need to know.

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The problem is larger here than with other chains

You've probably heard at least in passing that quantum computers will be a big deal someday because, in theory, they will be capable of breaking encryption schemes that are unapproachable with the power of classical computers that we use every day. While the best estimates for when quantum computers will be advanced enough for that to happen suggest that they probably won't be powerful enough to pose a threat for roughly 10 years, for cryptocurrency investors in particular, the issue is quite pressing. If a hacker equipped with a quantum computer were to compromise the encryption of a chain like Solana, they could steal funds, fake transactions, and wreak havoc that'd doubtlessly result in investors losing vast sums of their money.

Some chains, like Cardano, are already developing their strategy for post-quantum computing (PQC) security. While no cryptocurrency chain has started implementing these plans, leaders have identified a serious problem that needs addressing and are taking steps to ensure the technical solution will receive adequate attention over the coming years.

Alas, other chains, like Solana in particular, are both very vulnerable, and also very unprepared, even at this very early stage of the quantum risk emerging. And that could be a huge problem for Solana's holders, especially if quantum computing technology evolves faster than anticipated.

There is a partial solution made by a security researcher, called the Winternitz Vault, in which users can optionally use to store their funds, instead of a standard wallet, to be protected against quantum computing-related cryptography-breaking threats. But using the vault is only possible via an opt-in process that's technically complicated, may slow down the fast transaction times Solana is known for, and it is not implemented across the entire Solana network as a standard feature. So it's far from a comprehensive solution, and it isn't necessarily endorsed by the chain's main developers -- and it might detract a lot from one of the convenience features that users enjoy the most.

In terms of future planning, Solana is more or less devoid of evidence that its developers and leadership are taking the quantum risk seriously. In other words, the optional third-party vault is all there is on the menu right now. That means the chain is completely unprepared, and in a state of hoping for the best rather than planning to protect its investors from the worst.

Don't overreact, but look for an action plan

Solana's vulnerability to quantum computing threats is not at all a deal-breaker for investing in the coin today. Nor is it a valid reason to sell the coin, or should it dissuade you from loading up on more of it to capture the growth that's anticipated from its decentralized finance (DeFi) and blockchain ecosystem. At least, it isn't a deal-breaker for now.

If the chain fails to integrate far more robust protections against quantum attack vectors over the next couple of years, it could only be a few more years after that before its vulnerabilities are exploited. Getting a late start is unlikely to be advantageous, as the technical constraints of implementing protections without compromising the chain's speed or low fees could be challenging. It is very likely that quantum computers are going to continue to become more sophisticated over time, and that the risks of a wipeout will thus continue to rise, even if they aren't present whatsoever today.

All this means that investors need to be on the lookout for a new strategy or roadmap of new features for quantum resistance for Solana in the medium term. If it never shapes up, it'll start to be a headwind to the chain's adoption, as other chains will be more secure during a period when security in that dimension will be of increasing importance.

So keep an eye out. And if the entire issue is confusing, just remember, you don't need to understand a thing about this complicated quantum computing encryption to know that it's better to have a plan to put a padlock on the bank's vault door than it is to have nothing at all.

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Why Tech Stocks Crashed on Wednesday

newsfeedback@fool.com (Travis Hoium) — Wed, 16 Apr 2025 15:54:39 -0400

The tech market took it on the chin on Wednesday as the trade war picked up steam and the Federal Reserve sounds like it's not going to bail out the market.

Big tech in both the U.S. and China were hit hard today. Broadcom (NASDAQ: AVGO) fell as much as 6.7%, Alibaba Group (NYSE: BABA) dropped 5.6%, and JD.com (NASDAQ: JD) fell 6.4%.

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Nvidia and President Trump's chip restrictions

After the market closed on Tuesday, investors learned that Nvidia would need a license to sell H20 processors into China, but that license hasn't been granted and it doesn't seem likely it will be.

The direct impact on Nvidia is a $5.5 billion write-down in the first fiscal quarter this year, but the impact could be much broader. The escalation of the trade war between the U.S. and China could split the global market into two systems, which would have the impact of forcing Chinese companies to develop chips and technology they currently buy from the U.S.

This would likely be a negative for companies like Broadcom, which wants to sell globally. But for Chinese companies like Alibaba and JD.com it may put pressure on their tech products if they aren't able to buy the best chips in the market to build their artificial intelligence products.

The Fed didn't save the day

On top of the Nvidia news, the Federal Reserve chair Jerome Powell spoke on Wednesday after the two-day OMC meeting that sets short-term interest rates. Rates were held flat and Powell said the central bank can be patient with rate decisions as the economy and markets process President Donald Trump's tariffs and their impact.

He did say the Fed expects higher inflation and slower growth than it had previously expected, but the labor market and economy remain solid for now. The negative impact of tariffs were likely put off because importers brought in excess goods in the first quarter to front-run tariffs, which will have a negative impact on GDP growth despite not fundamentally changing the economy.

The market may be looking for rate cuts to save the day, but cutting rates with high inflation could make inflation worse, so the Fed is in a tough position. Today, at least, a wait-and-see approach is being met by selling by investors.

Where does tech go from here?

The last few years have been a boon for tech companies and that's in large part because growth tailwinds in the U.S. and internationally have driven more operating margin expansion as they scale.

But if the world is splitting into U.S.- and China-centric tech industries with barriers between the two, it lowers the upside for any tech company, and that could potentially reduce profitability.

Investors aren't going to wait for the negative earnings reports to come in a few months, they're going to sell stocks now and ask questions later. This is a "risk off" environment, and if the trade war continues there could be much more selling ahead.

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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Alibaba Group, Broadcom, and JD.com. The Motley Fool has a disclosure policy.

Why Heineken Rallied on a Bad Day for the Markets

newsfeedback@fool.com (Billy Duberstein) — Wed, 16 Apr 2025 15:48:00 -0400

Shares of beermaker Heineken (OTC: HEINY) had rallied 5.1% on Wednesday as of 3:20 p.m. ET, which was all the more notable since the S&P 500 index was down 3.1% at the same time.

Heineken posted first-quarter results Wednesday morning that came in better than expected, and also reiterated its prior full-year profit guidance. While management noted uncertainty from the tariff controversy, it appears the company's restatement of full-year expectations set investors at ease.

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Modest growth beats low expectation

In Q1, Heineken actually saw revenue decline 4.9% to 7.78 billion euros, but on an organic basis -- stripping out currency movements, excise taxes, and divestitures -- revenue was up 0.9%. Although overall beer volumes declined 2.1%, that was ahead of analyst expectations of a 2.9% volume decline and a 0.6% decline in organic revenue.

Looking under the hood, there were even more positive developments. Heineken managed to increase the volumes of its premium, higher-priced products by 1.8% and Heineken brand volumes by 4.6%. So, there was a positive mix-shift there that may have reassured investors about the company's premiumization strategy.

In addition, management explained that the Q1 volume decline was mainly due to a later Easter holiday in the U.S. and Europe, which pushed back volumes in those geographies to Q2, and not anything to do with demand.

Meanwhile, the company reiterated its full-year outlook for operating income growth between 4% and 8%. The reiteration of guidance in the face of much global economic uncertainty due to recent U.S. tariff moves likely reassured investors as well.

How resistant to economic turmoil is Heineken?

In addition to better-than-expected growth, Netherlands-based Heineken may also be benefiting from a reallocation to European equities and away from U.S. stocks. This phenomenon has occurred through the first part of 2025, as Trump's tariff policies and relatively higher valuations of U.S. stocks has spurred a rebalancing toward European stocks.

Overall, Heineken may be a solid place to park investment dollars amid global economic uncertainty, as the stock trades at just 15 times this year's earnings estimates, with a 3.1% dividend yield.

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Why NovoCure Stock Was Withering on Wednesday

newsfeedback@fool.com (Eric Volkman) — Wed, 16 Apr 2025 15:43:25 -0400

Cancer-focused biotech NovoCure (NASDAQ: NVCR) was the focus of a stock price target cut on Wednesday, and investors weren't particularly happy about it.

They expressed their displeasure by selling out of their positions, to the point where the company's stock was down by nearly 5% in mid-afternoon trading. As such, it was doing notably worse than the S&P 500 index, which was 0.9% in the red at that point.

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Reaching for the scalpel

The analyst behind the reduction was Wedbush's David Nierengarten, who now believes NovoCure is worth $27 per share. That's slightly below his previous price target of $29. As the change isn't significant Nierengarten, maintained his neutral recommendation on the company.

The reasons for the change weren't immediately apparent; regardless, they added to the general bearish sentiment on the underperforming stock.

For many investors, the company's final earnings report of 2024 still resonates, and not in a good way. Although the company delivered encouraging revenue growth of nearly 21% year over year in its fourth quarter of 2024 (to over $161 million), it also posted a notably steeper net loss that amounted to $0.61 per share. That figure was considerably worse than the average analyst estimate.

Worth the wait

The market is hungry for good news from NovoCure, and it's clearly getting impatient. Yet as a biotech, and one specialized in a particular form of therapy at that, the company requires time and resources to bring its products to market. I still feel it is well positioned in the cancer treatment segment, so I'd recommend patient investors consider it a discount-priced buy.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends NovoCure. The Motley Fool has a disclosure policy.

Nvidia Is Plummeting Today -- Is the Stock a Buy Right Now?

newsfeedback@fool.com (Keith Noonan) — Wed, 16 Apr 2025 15:26:13 -0400

Nvidia (NASDAQ: NVDA) stock is falling fast amid multiple bearish catalysts in Wednesday's trading. The company's share price was down 9.7% as of 3:15 p.m. ET amid a 3% pullback for the S&P 500 and a 4% decline for the Nasdaq Composite.

Nvidia's valuation is heading lower today amid multiple bearish catalysts. Yesterday, the company submitted a filing to the Securities and Exchange Commission stating that it would be taking a $5.5 billion write-down following news from the U.S. government that it would now require an export license to sell its H20 processors to China. It's unlikely that the license will be granted in the near term and likely signals a significant loss of future sales for the artificial intelligence (AI) hardware leader.

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Nvidia is also moving lower in response to macroeconomic news. In addition to the Trump administration's announcement that tariffs on China would be raised to 245%, Federal Reserve Chairman Jerome Powell said that the central banking authority would continue to take a cautious approach to lowering interest rates. Nvidia stock is now down roughly 26% across 2025's trading.

Is Nvidia a buy after its latest pullback?

Nvidia's advanced processors are at the heart of the AI revolution. As a result, they're also playing a significant role in the escalating competition between the U.S. and China. In addition to the potential for the trade war to continue causing volatility for the broader market, there's a risk that Nvidia will face significant business-specific challenges if relations between the countries continue to deteriorate.

Despite the recent sell-offs, investors without an above-average tolerance for risk and volatility may want to avoid betting big on Nvidia stock right now. On the other hand, I think that long-term investors seeking growth plays in the AI space will be able to score strong returns by buying the tech leader's shares on pullbacks and holding even if more volatility is in the cards.

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Nvidia Stock Crashed on Bad News From Washington. Should Investors Buy the Dip?

newsfeedback@fool.com (Trevor Jennewine) — Wed, 16 Apr 2025 14:34:00 -0400

Nvidia (NASDAQ: NVDA) shares fell more than 7% on Wednesday morning, after the company disclosed new export restrictions on its artificial intelligence (AI) chips. Specifically, the company must now obtain licenses from the U.S. government to sell its H20 processors in China.

However, Nvidia doesn't expect those licenses to be forthcoming. The company plans to take a $5.5 billion charge related to "H20 products for inventory, purchase commitments, and related services" in the first quarter of fiscal 2026 (which ends April 27), according to a regulatory filing.

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Nvidia stock now has plummeted 30% from the record high it reached in January. Should investors buy the dip?

Nvidia faces new export restrictions that will further harm its China business

Nvidia has been navigating export restrictions in China for several years. In 2022, the Biden administration prohibited the company from selling its most powerful artificial intelligence (AI) accelerators, A100 and H100 graphics processing units ( GPUs), to Chinese businesses due to concerns about their military applications. Nvidia responded by tweaking its A100 and H100 architectures to build less powerful chips that complied with export requirements.

Those processors, called A800 and H800, were adopted by several Chinese technology companies, including Alibaba, Baidu, and Tencent. However, in 2023, the Biden administration restricted the sale of those processors in China.

Next, Nvidia developed an even less powerful Hopper GPU called the H20 that complied with latest export curbs, but the Trump administration has now effectively prohibited the sale of those processors in China, too. In total, Bloomberg Intelligence estimates that the latest restrictions will cost the company between $14 billion and $18 billion in revenue in fiscal 2026.

While Nvidia has reported exceptional financial results since the generative AI boom began in late 2022, export restrictions have still taken a severe toll. China accounted for over 26% of total revenue in fiscal 2022 but just 13% of total revenue in fiscal 2025. Put differently, total sales increased at 69% annually during that period, but revenue from China increased at just 34% annually.

Many Wall Street analysts remain bullish on Nvidia despite the latest export restrictions

Nvidia announced the H20 export controls on April 15 in a regulatory filing that told investors the licensing requirements will remain effective "for the indefinite future." Several analysts subsequently revised their target prices lower on April 16, as detailed below:

Vivek Arya at Bank of America cut his forecast to $160 per share, down from $200.
Harsh Kumar at Piper Sandler cut his forecast to $150 per share, down from $175.
Srini Pajjuri at Raymond James cut his forecast to $150 per share, down from $170.

However, several analysts maintained their target prices despite the latest export controls, including those at Cantor Fitzgerald, Evercore, and Wedbush. Likewise, Joseph Moore at Morgan Stanley reiterated Nvidia as his "top pick" in the semiconductor space. In total, the median target price declined from $175 per share to $170 per share, but that still implies 63% upside from its current share price of $104.

Dan Ives at Wedbush urged investors to "look past the chaos." He believes Nvidia is the only chipmaker in the world that can supply the processors required to run the most advanced artificial intelligence applications. He said the financial impact would be "relatively small," but acknowledged the restrications are still a strategic blow for the company.

More analysts may lower their forecasts in the coming days, but the average estimate currently calls for Nvidia's earnings to increase 51% in fiscal 2026. That consensus makes the current valuation of 35 times earnings look cheap. Patient investors should consider buying a small position in Nvidia stock now.

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Bank of America is an advertising partner of Motley Fool Money. Trevor Jennewine has positions in Nvidia. The Motley Fool has positions in and recommends Baidu, Bank of America, Nvidia, and Tencent. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.

Why Shares in Uranium Energy Surged Again Today

newsfeedback@fool.com (Lee Samaha) — Wed, 16 Apr 2025 14:15:49 -0400

Shares in Uranium Energy (NYSEMKT: UEC) rose by as much as 11.3% in morning trading as investors digested the latest news in the ongoing tariff escalation. As of 2:10 p.m. ET, the stock was still up 6%.

President Trump ordered a probe into potentially imposing tariffs on critical mineral imports, including uranium. As such, investors have been buying domestic uranium miners, including Uranium Energy, in anticipation of potential tariffs on imports.

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Uranium is in the spotlight

Uranium is a hot topic, given the increasing investment in nuclear power to supply energy to data centers in light of the boom in demand for artificial intelligence (AI) applications. All three leading cloud services companies (Microsoft's Azure, Alphabet's Google Cloud, and Amazon Web Services) signed deals to procure nuclear-powered energy last year.

Moreover, the U.S. is the largest uranium-consuming country in the world, and the supply of the radioactive metal is critical to ensuring energy independence. With assets in Wyoming, Texas, Arizona, and New Mexico in the U.S., and the largest licensed production capacity in the U.S., the company has an opportunity to thrive as a provider of domestically sourced uranium.

Image source: Getty Images.

Should investors buy in?

Given the administration's determination to ensure domestic production of critical minerals while reducing reliance on imported minerals, it makes sense to take the probe and potential tariffs seriously. While much of the tariff action appears to be tactical, precluding trade deal negotiation, it's possible that actions regarding rare earth minerals and uranium are more strategic in nature and designed to redomesticate the supply of key minerals and metals.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Why ConocoPhillips Oil Stock Popped Today

newsfeedback@fool.com (Rich Smith) — Wed, 16 Apr 2025 13:02:28 -0400

Shares of ConocoPhillips (NYSE: COP) dipped on Tuesday after TheFly.com reported multiple bank analysts forecasting lower price targets for the oil major in light of an ongoing trade war and recent declines in oil prices. On Wednesday, however, Conoco stock perked back up, rising a modest 2.3%, and indeed, recovering all of yesterday's losses.

And why?

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Because oil prices are going back up.

More oil, less gas

As OilPrice.com reports, oil inventories rose by 500,000 barrels last week, which bodes ill for oil prices (the laws of supply and demand being what they are). However, the U.S. Energy Information Administration notes that while crude supplies are up, inventories of gasoline and middle distillates (such as diesel and kerosene) are both down -- about 2 million barrels each.

Investors are reacting to the mixed news by bidding oil prices higher on Wednesday. At last report, WTI crude oil prices had risen 2% to roughly $62.60 a barrel, and Brent Crude was up nearly as much, 1.9%, at just under $66 a barrel.

Is ConocoPhillips stock a buy?

Logically, this should be good news for ConocoPhillips. It just makes sense that when oil prices rise, so too do prices of oil stocks. That said, I don't think investors should get too excited about this one-day shift in oil prices... or in Conoco's stock price, either.

Granted, at a trailing P/E ratio of only 11.8, Conoco stock doesn't look obviously expensive (at all!). However, tariff kerfuffles, the ongoing trade war, and analyst forecasts for only 4% annualized long-term earnings growth at Conoco tell me this stock may not be much of a bargain, even at this apparently low price.

True, Conoco pays a decent dividend of 3.6%. But its free cash flow is subpar (less than $8 billion versus $9.2 billion in reported net income, according to S&P Global Market Intelligence data).

All things considered, I suspect there are better stocks for energy investors to invest in than ConocoPhillips -- faster-growing and better dividend-paying ExxonMobil (NYSE: XOM), for example.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Will Netflix Announce a Stock Split on Thursday?

newsfeedback@fool.com (Rick Munarriz) — Wed, 16 Apr 2025 11:55:00 -0400

For a company that often releases an entire season of a show at the same time, Netflix (NASDAQ: NFLX) knows that its audience doesn't like to wait. Netflix investors will have to show some patience this earnings season. The world's top premium video service will report its first-quarter results on Thursday afternoon. With the market closed on Friday, investors will have to wait four days to gauge the market's reaction on Monday morning of next week.

Giving the market a full extended trading holiday to ponder a telltale release isn't a problem. Investing should be a crock pot, and not a microwave oven. However, it does lead one to wonder if the extra time could inspire the digital flick flicker to do something it hasn't done in a long time. Is Netflix ready to announce its first stock split in nearly 10 years?

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It's a numbers game

Netflix takes its stock splits seriously. It has now been trading publicly for almost 23 years, and it has only given its investors a pair of stock splits. There was a 2-for-1 move in February 2004, less than two years after Netflix started trading. It declared a more ambitious 7-for-1 split in the summer of 2015.

The shares are trading substantially higher than they were at either of the previous split decisions. It's also a different time. There's no longer the same kind of pressure that there was two decades ago to keep a stock at an accessible double-digit price point. This doesn't mean that it would be a bad idea for a stock split. Let's just go over a few of the reasons why a stock split could be more than just a zero-sum game for Netflix.

The ease of buying fractional shares these days doesn't make it prohibitive for individual investors to buy into a stock like Netflix that's approaching $1,000, but it is a high barrier in the options market since those contracts represent a round lot of 100 shares apiece. Someone would have to own nearly $100,000 worth of Netflix to execute a single covered call, for example.
A couple of years ago, the titans of tech wore their rising price tags as vanity plates. That trend has reversed. Three of the country's four most valuable companies have declared stock splits over the past five years.
Netflix isn't likely to be added to the Dow 30 anytime soon, but it's certainly not going to happen with its current sticker price. The Dow 30 is a price-weighted index, so Netflix's moves would impact the index at nearly double the pace of its priciest component. Netflix's sensitivity would be almost 5 times greater than its most valuable component.

The list is shorter for reasons not to split, because there is no reason to keep its stock price high.

Image source: Getty Images.

A split could be another strong report away

Netflix shares nearly doubled last year. The stock moved higher again after a blowout report last time out. The stock's pop fell short of crossing the $1,000 mark in response to the strong numbers, but it happened briefly a month later when Netflix didn't have anything material to announce. The stock is back in the high triple digits, and this time the shares find themselves less than 3% away from crossing into four figures.

If the board at Netflix feels it has a good report coming, it would be surprising if a stock split hasn't been discussed. The premium streaming pioneer's guidance back in January called for first-quarter revenue rising 11% to $10.4 billion. The outlook called for earnings to rise at half that clip, clocking in at $5.58 a share.

This may not seem like a strong report for a company that has seen its stock more than double since the start of last year. However, analysts are currently perched above the targets Netflix laid out for the first quarter. Wall Street pros are now modeling a profit of $5.66 a share with $10.5 billion on the top line. This may seem aggressive, but Netflix beat earnings estimates in each of the four previous reports. Momentum is on its side.

Investors shouldn't be buying into Netflix ahead of Thursday afternoon's financial update on the expectation that a stock split will send their positions even higher. Netflix will have to earn those upticks with a strong report. However, it's probably an ideal time to make it happen. It would be a mic drop moment heading into three days of trading silence during the extended market break. Netflix loves it when viewers binge-watch, but sometimes it's the anticipation that really gets audiences going.

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Rick Munarriz has positions in Netflix. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.

Why Cal-Maine Foods Stock Cracked Today

newsfeedback@fool.com (Rich Smith) — Wed, 16 Apr 2025 11:41:37 -0400

Shares of Cal-Maine Foods (NASDAQ: CALM), America's biggest egg producer, dropped 3% through 11:10 a.m. ET this morning -- for reasons that had nothing to do with inflation or the rising price of eggs.

Rather, Cal-Maine stock tumbled because a handful of its biggest shareholders are selling the stock, and Cal-Maine itself is buying back some of that stock at a discount.

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Selling (and buying) Cal-Maine stock

Let's start with the selling. Cal-Maine announced this morning that "the four daughters of the Company's late founder, Fred R. Adams, Jr.," as well as his son-in-law, plan to sell just under 3 million shares of Cal-Maine, worth just under $280 million in total at today's prices. These five inside shareholders will sell at a discount, however, charging only $92.75 for their shares.

Next, we move to the buying. Cal-Maine will itself buy 551,876 of the shares being sold in the above secondary offering, paying $50 million to purchase these shares from its founder's heirs. (The remainder of the 3 million shares will be sold publicly on the market). Cal-Maine notes that it already has a $500 million stock buyback program in place, and will be using funds from this program to buy the sellers' $50 million worth of shares.

Is this good or bad news for Cal-Maine?

Despite what you might think as you see Cal-Maine's share price fall today, this is all actually good news for Cal-Maine shareholders, and for several reasons.

First, Cal-Maine is buying back shares, reducing its shares outstanding, and thus concentrating earnings among fewer shares. This is the opposite of stock dilution, and good news for shareholders.

Second, preparatory to the five insiders selling their shares, Cal-Maine converted their Class A stock (offering 10 votes per share) to ordinary common stock (with one share, one vote). This eliminated supermajority voting rights, and as a result, Cal-Maine is no longer controlled by insiders.

Finally, Cal-Maine is buying back shares at a discount to the current market price. It's... buying eggs on sale! That's a good deal for Cal-Maine -- and for you, too.

Should you invest $1,000 in Cal-Maine Foods right now?

Before you buy stock in Cal-Maine Foods, consider this:

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cal-Maine Foods. The Motley Fool has a disclosure policy.

Why Shares of Nvidia Are Sinking Today

newsfeedback@fool.com (Bram Berkowitz) — Wed, 16 Apr 2025 11:39:51 -0400

Shares of Nvidia (NASDAQ: NVDA) were trading nearly 7% lower at 10:52 a.m. ET today. In a filing last night, Nvidia disclosed that it would be taking a $5.5 billion charge in its first quarter of fiscal 2026 after the U.S. government informed the company that it will need a license to export certain chips to China and other countries.

Export restrictions ramping up

Nvidia will need the license to sell its less advanced H20 chips in China, including Hong Kong and Macao. The license requirement will be in "effect for the indefinite future" and is intended to prevent China from obtaining tech that could be used to build a supercomputer. Nvidia attributed the $5.5 billion charge to getting H20 products for inventory, purchase commitments, and related reserves.

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The move builds on actions initially undertaken by the Biden administration to prevent some of Nvidia's most advanced chips from reaching China in order to stymie its artificial intelligence (AI) capabilities. In fact, Nvidia actually built the H20 chip to comply with the export restrictions. CNBC estimates the chips brought in $12 billion to $15 billion in revenue in 2024. However, earlier this year, a Chinese company called DeepSeek used the H20 chips to develop a chatbot similar to OpenAI's ChatGPT, supposedly at a fraction of the cost.

Wedbush analyst Dan Ives, who covers Nvidia and many other tech giants, said on X that investors should "get used to this news flow in US/China tariff battle but it's a game of high stakes poker and need to buckle seat belt. Look past the chaos. Nvidia the only AI chip in the world ... demand not the issue." Still, he acknowledged in a research note that Nvidia will face significant roadblocks in its effort to sell in the Chinese market.

Perhaps a longer-term issue

While the recent license requirement seems related to the tense trade negotiations between the U.S. and China, this is also a decision that has been building since 2022. U.S. presidents on the right and left seem to want to keep Nvidia's chips out of China, so the export license may last longer than a potential trade war -- it's hard to know.

That said, Nvidia now trades at 23 times forward earnings, toward the bottom end of its range over the last five years, and analysts like Ives still seem to think the company has a significant moat. This could be the time to start nibbling.

Should you invest $1,000 in Nvidia right now?

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.