Yesterday, Apple revised its sales outlook for the 4th quarter, claiming revenue will drop in at $84 billion, down from its previous estimate of $89-$93 billion. That caused a fright among investors, and Dow futures are down over 300 points as I write this blog (from Rome, Italy). Put into context, that would still represent sales growth of 37.7% from the 4th quarter 2017 – an outstanding achievement. (more…)
On Wednesday, November 28, 2018, Wall Street rallied on two key words, “Just below.” The jump happened right after Federal Reserve Board chairman Jerome Powell’s speech to the Economic Club of New York. Powell said, “Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy‑‑that is, neither speeding up nor slowing down growth.” The Dow Jones Industrial Average jumped 618 points, while the NASDAQ Composite Index (with lots of technology FANG* stocks) rallied almost 3%. (more…)
What a busy week. We’ve seen a lot of economic news, most of which is negative for the economy, stocks and bonds. The trade report released on Thursday revealed that the U.S. is on track for a $600+ billion annual trade deficit in goods and services – a high we haven’t seen since President George W. Bush was in office. The arrest of Huawei’s deputy chairwoman and CFO Meng Wangzhou scuttled attempts at a trade truce between China and the U.S. That and more happened by Thursday. And then, on Friday, after the markets closed, we had a flurry of more bad news. (more…)
In an industry that changes as fast as internet technology, time is a blessing and a curse. No one knows that better than Scott Seltzer, founder and CEO of ConnectMe, LLC. As a hosted voice over IP (VoIP) and unified communications service provider, business has boomed in the last decade as reliable internet and better routers have become more affordable – and more commonplace – among ConnectMe’s target audience. But as the market continues to grow, Scott finds himself lying awake at night worrying about staying ahead.
Internet Technology – A Fast Moving Industry
To give ConnectMe the infrastructure it needs to constantly improve and develop its offering, Scott has made a series of operational improvements and strategic hires this year, including bringing on a partner identification manager and partner engagement manager. With their help he hopes to more effectively target the sales channel that offers the biggest opportunity: managed service providers. After joining us at Duke University for the Birthing of Giants Fellowship Program last April, Scott set a lofty one-year goal for his business: Become the name on every major player within the telecommunications and internet technology channels. (more…)
Wall Street is still trading near its all-time high, and gold is near a 9-year low. So, are there any back-to-school stock sales for you to buy before the Santa Rally? Or should you be getting defensive (and getting a second opinion) on your financial plan? I have found a few areas of opportunities that are worth a look, and a few warnings that are worth paying attention to.
Here’s What I’ll Cover in this Blog
1. U.S. Stocks
2. Electric Cars
3. Gaming, Artificial Intelligence, Virtual Reality and Autonomous Cars
4. Chinese Technology
5. Gold Miners
7. Clean Energy (LEDs, solar +)
8. Micro Mobility
9. Facebook, Snap, Weibo and Social Media
10. Red Flag Industries: REITs and Retail
And here’s more info on each… Click on the highlighted words to access a longer article on that company or topic.
1. U.S. Stocks
U.S. stocks are a tale of two indices. The NASDAQ Composite Index leans toward younger companies with great earnings, that are overpriced. The Dow Jones Industrial Average hosts legacy brands, many of which are weighed down by pension promises, health care costs and debt, but are using financial engineering and cheap, easy, borrowed money to make their earnings look better than they are. They are also overpriced.
Companies like Advanced Micro Devices, Facebook, Nvidia have sales growth of 40% or more, with net profit margins of 5%, 39% and 36%, respectively! Turtle Beach’s sales growth was 218% in the last quarter! On the other hand, many of the Dow companies have low or negative growth with high debt and high price to earnings ratios, like American Express (2.67 D/E, 28 P/E), Home Depot (11.60 D/E, 25 P/E) & IBM (2 D/E, 26 P/E).
2. Electric Cars.
Nvidia continues to be a NASDAQ and FAANNG superstar, with 40% sales growth and 36% net profit margin. Turtle Beach keeps revising earnings and profits upward. Nvidia is trading at an all-time high, with a 40 P/E. Turtle Beach’s P/E is 13.55, with a price range of $1.64-$36.50. Today’s price is $22.40.4. Chinese Technology.
Chinese technology is even hotter than U.S. technology, with 68% sales growth & 32% profit margin in Weibo, and 61% growth and 21% profit margins in Alibaba. The issue is the trade war and headlines. Alibaba had $12.2 billion in sales and $1.2 billion in profits in the 2nd quarter of 2018. However, since the net income was half of last year’s, investors gave the stock a beating. Jack Ma announced on Sept. 10, 2018 that he will retire as Alibaba’s chairman in one year, on Sept. 10, 2019 (Alibaba’s 20th anniversary). By the book, Chinese technology is on fire. However, the P/Es reflect their heat, with Alibaba at 50, Weibo at 33 and CTrip at 46. Even with the pullbacks in the share prices of late, many Chinese technology companies are trading near their all-time highs.
5. Gold Miners
Gold is trading near a 9-year low. Gold miner ETFs are currently trading at a discount off 70% of their all-time highs. The price of gold is down 37% from its all-time high. Once gold prices start to go up, the miners have more upside potential, due to the sell-off. Gold tends to be a good hedge against a downturn.
With the explosion of electric vehicles, lithium mining companies are doing quite well, which is why FMC is spinning off its lithium division, Livent, into an IPO. Livent’s sales are up 51% year over year in the first 6 months of 2018. Remember that pricing is everything, so don’t buy in just to buy in, without knowing if you are getting a bargain. SQM has a 25 PE, with Albermarle at a 33 PE.
7. Clean Energy.
The U.S. solar industry has been heavily impacted by the Chinese tariffs because the silicon ingots and other parts are a global marketplace. It’s something to embrace as a homeowner/consumer if you are living in a sunny state, particularly now when the 30% tax credits are in place. Most homeowners with solar enjoy utility savings of up to 90% on their neighbors. The savings can be even more if you are powering your own EV with solar, and cutting out your gasoline bill. However, as an investor, I’d avoid the solar space for now. LEDs are increasing in popularity, as are electric vehicles. Clean energy ETFs are trading at an all time low. The performance of the solar companies will weigh heavy on the funds, while the growth of LED lighting, lithium and EVs could lift the share prices.
8. Micro Mobility.
Companies like Bird and Lime are transforming the last mile in the inner city with electric scooters. Millennials love this easy, affordable solution to expensive parking, cars and gridlock. The companies are still private, but it pays to put this emerging trend on your radar.
9. Facebook, Snap, Weibo and Social Media
As I mentioned above, the technology companies in China, like China’s “Twitter” Weibo, have faster sales growth and higher profit margins than the U.S. competition. In the U.S., Facebook (owner of Instagram) is the clear leader. However, even with the Cambridge scandal, the company is still trading near an all-time high. Twitter has finally figured out how to make money ($100 million in the 2nd quarter of 2018), and has sales growth of 24%. But the share price is high (P/E is 95).
It was easy to see before Snap Inc.’s IPO that the company hadn’t figured out their product or how to profit from it. (Click to see my blog.) The company lost $3.45 billion in 2017, and just lost a key C-level executive in Imran Khan this week. Facebook and Weibo would be on my Stock Shopping List, waiting for a better bargain.
10. Red Flag Industries: REITs and Retail.
Nike is doing great, as are other athleisure brands like Lululemon (but not UnderArmour). However, there have been dozens of retail bankruptcies over the last few years. Unless you are a powerful analyst, retail is a dangerous dark alley to avoid. Most mall owners, like Simon Property, Taubman and Macerich are overleveraged, have expensive share prices, owe a massive amount of money, are losing revenue and many are barely breathing in terms of profits. The mall REITs are keeping investors in with high dividends. However, the adage from Will Rogers is pertinent here: “I’m more concerned about the return of my money, than the return on my money.” Don’t reach for yield! The higher the dividend, the higher the risk. Even a 5% yield is quite risky in today’s world.
The over-riding macro sentiment is that stocks are very expensive, and this is the 10th year of the bull market. There are more pressures weighing the macro economy down than there are balloons still lifting stocks. Free, easy, borrowed money, decent (not stellar) GDP reports, low inflation and low unemployment were all present before the Dot Com crash and the Great Recession. What was troubling then were the asset bubbles, which are higher today than ever (and are the reason the Federal Reserve Board is raising interest rates). Earnings support a Santa Rally this year, more in the NASDAQ Composite Index than the Dow Jones Industrial Average, if the interest rate hikes don’t spook investors.
There are a lot of ifs in those sentences, so the most important stance for the Santa Rally is a defensive one. Make sure your assets are protected, that you have enough safe and that you know what is safe in a world where bonds are in a bubble. It’s never a matter of jumping all in or all out. My time-proven easy-as-a-pie-chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. Call 310-430-2397 or email info @ NataliePace.com to learn how to get safe and protected, and to get a second opinion on your current plan to see exactly where you stand. Most people are far more at risk than they realize. If you lost 1/3 or more in the Great Recession, and you haven’t made any changes, then it would be smart to learn more now.
I’ll address the Santa Rally in my October 2018 monthly teleconference. Be sure to tune into that teleconference on Oct. 11, 2018 (Thursday) at 9:00 am PT (noon ET). Click here for the call-in phone number and to listen back 24/7 on demand. If you’d like to listen to further commentary on the Back to School Stock Sales, listen to my September 13, 2018 teleconference at BlogTalkRadio.com/NataliePace.
Here’s a calendar of the major events coming up.
In this episode I’m interviewing Toni Jacaruso, a brilliant businesswoman with a sharp eye for a big idea, and a quick draw for making tough decisions. After spending seven days with us at a Birthing of Giants Fellowship week, Toni pulled the trigger on her plan to revitalize her company’s management team.
Toni founded Jacaruso Enterprises about 10 years ago, after spotting a huge problem in the hospitality industry. Unbeknownst to us hotel guests, most of the familiar hotel chains are actually locally owned franchises. Staffing is handled by each hotel individually, and more often than not, on-site salespeople are skipped altogether.
“What we found out in doing research,” Toni explained, “is over 50% of branded hotels do not have salespeople on site.”
With no dedicated salesperson in place, requests for negotiated rates or group bookings tend to get pushed to a hotel manager’s voicemail, where they quickly get lost or receive inexperienced attention. It’s a huge gap that a lot of business disappears into. With her substantial 15 years of experience working in the hospitality space, Toni stepped in to create a company that filled the breach.
Small Companies Solving Problems for Big Companies
Jacaruso Enterprises provides sales support to hotels and hotel chains nationwide. Toni gathers together top-notch salespeople who handle sales, negotiation, and prospect management for their clients regionally. Those salespeople are supported by regional directors, and a strong management team layered all the way up to the Austin headquarters. So now, when the phone rings with a sales call, Toni’s team is there to answer with the expertise and urgency needed to close the deal.
Toni’s company fits into one of the most successful business models that an entrepreneur can utilize. She started a small company that solved a problem big companies had. It’s a classic idea that has launched more successful businesses than any other. Jacaruso Enterprises is no exception.
A Booming Business
Ten years have passed since Toni founded her company, and business couldn’t be better. Jacaruso Enterprises now has over 60 different hotel brands as clients, is over 100 employees strong, and pulled in $8 million in revenue last year. Their growth is so remarkable that they made the Inc. 5000 list for the past 2 years. According to Toni, her business generates a lot of referrals from happy clients, and the renewal rate is very high.
“We have had unprecedented growth this year. So [I] just could not be happier with the growth that we’re seeing.”
Toni discovered, however, that with the unprecedented growth came an increase in work and responsibilities. It was beginning to tax her busy management network, and the team quickly found themselves being pulled away from the roles they performed best at. This was the problem that Toni took with her to a Birthing of Giants Fellowship week in July 2018.
An Upgrade To Management 2.0
Toni had surrounded herself with some of the strongest salespeople in the nation. They formed the core of her team at Jacaruso Enterprises. They helped bring her company to its current level of success; however, Tony had even bigger plans for her company. She knew that her current management team wasn’t properly positioned to help her achieve her dreams. It was time for something we talk about a lot here at Birthing of Giants: Management 2.0.
Entrepreneurs must never stop refining the talent in their company. Even when you’re certain that you have some of the best people in place, your management team has to develop and grow in response to a growth in revenue and clients. Sometimes that means bringing new people to the team. Sometimes it means moving existing team members around into slightly different roles. Toni needed both.
True to Toni’s natural quick start entrepreneurial style, once she decided that her management team needed expansion, she pulled the trigger on her plan within weeks of returning to Austin! The changes she made included promoting four people internally into VP and senior VP spots, adding two new VPs to the team, and hiring on three more Sales Directors. In the weeks that followed Toni added even more Sales Directors, all regionally placed to ensure great local coverage for her clients. She calls it Management 2.1, or maybe 2.2. Creating the perfect management team is a fluid process that takes time to get right.
The takeaway here is that you can’t scale your business, you can’t take your company to the next level if you don’t take on the overall strength and quality of your management team. Toni did it. She did it fast. She did it Toni style. Now that’s a fast draw.
Check out my extended interview with Toni Jacaruso on Forbes.com.
Article originally posted on https://birthingofgiants.com
Lewis Schiff is the author of Business Brilliant: Surprising Lessons From the Greatest Self-Made Business Icons, the executive director of the Business Owners Council and the co-founder (with Norm Brodsky) of BEN Global Mentorship that helps business owners transform their companies into scalable enterprises and, eventually, enduring institutions with help from rockstar entrepreneurs from around the world.