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BenzingaEditorial

COVID-19 Might be Giving Unique Opportunities

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Stock Market Tumble

If we were to define “blue chips”, we should just name the well-established and financially-sound companies in the stock market that are the leaders, the advocates and representatives of an entire industry. Their attributes are that they are safe, stable, profitable, and long-lasting companies and this is why they are considered as relatively safe, low volatility investments. Due to historically posting steady earnings results year after year, blue chip companies are generally considered to be safer investments because of their ability to generate profits even during an economic downturn.

But this was before COVID-19 that caused some of the best businesses on the market are trading at massive discounts. And there are many blue-chip stocks which are in for an impressive Phoenix-like return once we leave these scary times behind us.

Disney

Disney (NYSE:DIS) shares are cheap for good reason as the things that made its business model so successful are what made it impossible to protect the company from the pandemics. The stock is trading 32% below its 52-week highs and the next several quarters will be incredibly rocky due to plunging revenues, unpredictable earnings, and so much uncertainty. But Disney will survive and it still has Bob Iger to count on as its executive chairman. The legendary House of Mouse ensured 7 billion of senior debt to smooth over daily cash flow damages as it is losing 30 million per day. And there still could be even lower buy-in price points as its theme parks and cruises are on lockdown and production over the world is halted. But investors know that Disney will reward them and the company should be able to hit the ground running as soon as it’s allowed to lace up those running shoes again. But until then, a 30% discount on this top-shelf stock is surely a rare scenario that can be taken advantage of!

Coca Cola

Coca-Cola (NYSE:KO) also added some debt cash to its balance sheet last month. Also, like Disney, it won’t be needing that $5 billion cash reserve anytime soon. But unlike Disney, Coca-Cola continues to generate substantial revenues even during these dark times as it is a dear companion in self-quarantine. If only Disney Plus made more of Disney’s overall business… It makes sense, as even though they are not existential goods, these goods are treats that help us feel better. Coca Cola has also differentiated itself from Disney in its unwavering commitment to strong dividend payments as it has boosted its annual payouts without fail in each of the last 57 years. And those include market crashes, recessions and crises of many sorts. But even if we consider the worst scenario since this is a unique situation the world has never found itself in, Coke’s board of directors could free up another $6.9 billions of annual cash flows if they break the trend and pause their dividend policy. But that’s highly unlikely to happen, and this 20% discount is a unique opportunity to entitle yourself to Coke’s 3.4% effective dividend yield. Just like Disney, Coca-Cola is sure to land on its feet when the economy and living in general restart.

General Motors 

Auto factories in the US won’t be opening any time soon. Like its peers, General Motors (NYSE:GM) has shut down its plants in Mid-March. And no one knows when will those factories reopen as the situation is being evaluated week to week. But along with negotiating with UAW, it is also in discussion with Ford Motor Company (NYSE:F) and Fiat Chrysler Automobiles (NYSE:FCAU) working on a plan to restart production while protecting workers. It may be months before things go back to ‘normal’ but then again, GM already survived the strike last year, and one that was the longest in 50 years. GM is been relatively silent, yet, it has assured its investors that it’s in better financial shape its rivals, at least for now. The company which once was the world’s largest motor-vehicle manufacturer has disclosed that it has drawn down its credit lines like Ford, but it didn’t suspend its dividend like Ford did. Is it “fake it until you make it” strategy or self-confidence with a background, only time will show!

COVID-19 has redefined blue chips?

A blue-chip company is considered to be a leading company in its sector as its final products or service is dominant in the market. And such a company is seen as relatively impervious to economic downturns, but there is no company that was unaffected by this unprecedented health crisis that has put half of the world’s population in lockdown. Even Big Tech such as Apple (NASDAQ:AAPL) suffered immense supply chain disruptions when China was on lockdown, not to mention the effect on revenue due to store closures. So, COVID-19 has annulled the “God-like” part of the blue-chip definition. The new heroes will be the companies which will be able to survive this pause which has been forced upon the economy and their status will ultimately depend on how quickly they can resume their operations once things restart. And if these companies have anything, it is reputation and the proof of withstanding the test of time and those speak for themselves.

COVID 19 didn’t only hit blue chips stocks here a few Small and Micro Caps to watch

We all know too well that there can be no light without darkness. Oil companies are collapsing but despite the dark days we are currently experiences as half of the world is on lockdown, the future of solar is bright – just as bright as you the Sun shining outside your window!  Many are struggling, even the giant First Solar, Inc. (NASDAQ: FSLR) as back in February, it reported a terrible fourth quarter with a surprise loss and weak revenue as its own high expectations were too much and the company was overburdened with system development. But this is still a business in transition and a company making strategic changes in its core business. And many companies will have to face this scenario.

Renewables sector will expand

U.S.’ National Renewable Energy laboratory  has achieved a record in solar efficiency, more precisely the cell reached as high as 39.2 percent efficiency under unconcentrated solar conditions and as much as 47.1 percent using concentrated light. On the other side, SunPower Corp. (NASDAQ:SPWR), designer and manufacturer of silicon photovoltaic cells recently announced an expansion into New England, where it is slated to deliver approximately 11 MW of direct current solar power.

Meanwhile, JinkoSolar Holding Co. Ltd. (NYSE:JKS) announced total solar module shipments for FY 2019 of 14.3 GW in March, within its guidance and up 25.6% year-over-year (YOY).2

Inventions ahead

Moreover, there are innovative companies who are combining this sophisticated technology to change even other industries and our lives for the better. One example is Franchise Holdings International’s (OTC:FNHI) Worksport which made solar technology accessible and combined it with the auto industry with its TerraVis patent. This pioneering company is soon to launch the world’s first solar powered tonneau covers which will breathe in new life to any pickup truck! With solar costs continuously falling and therefore no longer being unaffordable, it’s no longer unlikely to imagine a future where almost everything will be powered by the Sun.

The renewables sector will keep growing only at a slower than expected pace. Solar panels as well as wind turbines are now producing electricity more cheaply compared to coal and natural gas. And this is an appeal both for electric utilities and investors so this investment can only become even more attractive with further inventions. Of course, the damage that the COVID-19 outbreak has made to the economy has taking a toll on this industry as well. But over the long run, rest assured that this sector should be well positioned.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be send to ivana@iamnewswire.com

BenzingaEditorial

Should Salesforce Shareholders Rejoice or Be Concerned?

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Mid Cap Stocks

Salesforce (NYSE: CRM) will have its annual meeting of stockholders on Thursday, June 11, 2020, but in virtual form. The stock of the global leader in CRM tumbled immediately following its recent first-quarter results. The months before and at the initial phase of the pandemic were exceptionally good. But it is the second-quarter and full-year fiscal 2021 guidance for the year ending Jan. 31, 2021 that resulted in a downgrade. Yet despite the damage and costs brought on by COVID-19, its shareholders have a lot of positive development to rejoice in.

Impressive growth considering the circumstances

Considering the global climate, the fact that Salesforce continued to grow at a fast pace is beyond admirable. Moreover, highlights from the start of the year include the largest deal that Salesforce ever booked and it is with AT&T (NYSE:T). The telecommunications giant will be building a new unified view of all its customer data using Salesforce. It will begin upgrading its services to create a better customer experience during summer.

Market domination

As for the fiscal 2021, the CRM giant clearly dominated the market with $20 billion of expected annual sales. In addition, the pandemic accelerated the switch to cloud computing. Over the recent months, businesses have rushed to implement work-from-home solutions. This is expected to only further boost the company’s SaaS businesses. As for 2019, it was well ahead of SAP SE (NYSE:SAP) and Oracle (NYSE:ORCL) with 18.4% in market share as opposed to 5.3% and 5.2% respectively, according to research firm IDC.

Altered Revenue Structure

While Salesforce has been known as a SaaS powerhouse throughout its entire 21-year existence, this has now changed. Its largest and fastest-growing business is now “Platform and Other” as it topped Service, Sales, Marketing and Commerce. Moreover, the shape of the enterprise is continually evolving. That’s a profound development for a company which occupies third place on the Cloud list. It is just behind the mighty Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN). Moreover, this is a very clear indicator that the world’s top cloud providers are doing everything in their power to enhance their offerings. The cloud is after all becoming the new IT foundation of the digital economy.

Going strong despite headwinds

Overall, this software giant proved it managed to become and remain an essential ingredient of many organizations’ operational needs. And what’s even more impressive, it maintained its status during such difficult times. The mega-cap cloud computing leader that has a current market cap of $157 billion, along with growing sales of nearly 20% and a stable free cash flow amid a deep recession, is still in an admirable position. And one that is surely envied by its many peers. This tech giant has plenty of liquidity to continue aggressively investing its development along with taking care of both its customers and employees. Moreover, the pace of digital transformation is only accelerating with lifestyles getting significantly altered by COVID-19. And like one of the pioneers leading this transformation, Salesforce has nothing to fear as it is both changing and thriving in the current climate.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be send to ivana@iamnewswire.com

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BenzingaEditorial

Slack Fails to Deliver Another COVID-19 Blockbuster

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Stock Market Tumble

Unlike Zoom Video Communications Inc (NASDAQ:ZM), Slack Technologies Inc (NYSE:WORK) didn’t manage to deliver a blockbuster quarter. By no means was it bad as the company reported steady revenue growth with usage increasing over the pandemic. Even Amazon (NASDAQ:AMZN) will be offering Slack to its employees. But expectations were quite higher  so shares ended up dropping 17% in extended trading on Thursday.

First quarter earnings report

Revenue of $201.7 million resulted in an adjusted loss of 2 cents per share. The company added a record 12,000 paid customers in the quarter. This is more than 5,000 in the two previous quarters. Slack’s top competitor, Microsoft’s Teams, saw an explosive expansion of 70% in April as it reached more than 75 million daily active users.

For the next quarter, the company’s guidance for revenue is $206 million to $209 million with an adjusted loss of 4 cents to 3 cents per share.

AWS investment

Besides Amazon offering Slack to its employees, Slack will adopt Amazon Web Services’ Chime video-calling technology to enhance its calling features. Slack amended its initial agreement with AWS where it commited to at least $250 million in a five-year period that ended in 2023. It will now pay least $425 million over a five-year period that ends in April 2025.

Slack didn’t board the blockbuster boat but still did good

Revenue growth was 50% which is pretty much the same as 49% in the previous quarter. Zoom pulled off a 169% revenue growth, more than doubling guidance and exceeding forecasts. Not to mention the skyrocketing usage of Microsoft Corporation (NASDAQ:MSFT) Microsoft Teams. Slack didn’t manage to board that boat. But Zoom’s executives have a different way of looking at it. They find it as a great indication that they are not apples-to-apples rivals as the products are not truly competitive with one another. If we exclude the after-hours move, its shares did go up about 70% since the beginning of the year. But can Slack afford not catching up to the popularity of Zoom and Microsoft is a question that subsequent quarters will answer. Yet, many analysts see the pandemic as the point that either makes or breaks such companies whose products benefit from social distancing. If not now, when?

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be send to ivana@iamnewswire.com

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BenzingaEditorial

Even Oil Giants Are Under Tremendous Pressure

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Canadian Oil

The global oil market is in a state of hysteria. And not only COVID-19 is to blame, although its impact is being felt all over the globe. It is inevitable for the near future to be filled with bankruptcies, cost savings and cuts in spending as businesses are looking for ways to get through this historically difficult period.

The troubled industry

The year already began with over supply thanks to decades worth of expansion in U.S. onshore production. The price war between OPEC and Russia only further amplified the oversupply problem. That issue has at least been resolved. But the real hit was the global economic shutdown from COVID-19 which resulted in a drop in demand. With too much oil and too little demand, oil prices have plummeted to historic lows.

Cutting dividends

The current headwinds are intense, and have led many energy companies to trim their dividends. Royal Dutch Shell (NYSE:RDS.B) and Equinor are two direct competitors that have taken this drastic step to ensure they have ample cash to survive and they have a long histories of reliably returning cash to investors. Even Helmerich & Payne (NYSE:HP) which had a streak of 47 annual dividend hikes under its belt along with a rock-solid balance sheet still felt it necessary to cut the dividend in March.

It’s only logical to question whether or not peers ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) will be forced to do the same.

Chevron cutting jobs

Chevron has increased its dividend annually for 33 consecutive years. At the end of the first quarter, Chevron’s total long-term debt had increased roughly 20% from the start of the year. At the end of May, it announced a 15 percent cut of its global workforce.

Exxon has no layoff plans

Exxon’s dividend streak is even longer as it has increased its dividend annually for 37 consecutive years. But Exxon’s long-term debt jumped even more than Chevron since the beginning of the year as it rose by nearly a third.

Top and bottom lines at Exxon and Chevron are clearly driven by the price of oil which reached historic lows. Even Russia’s second-largest oil producer PJSC Lukoil (OTC:LUKOY) hurt by lower oil prices as it reported a first-quarter net loss of $669 million on Wednesday.

Shell and Equinor Vs Exxon and Chevron

Thus, Shell and Equinor chose to preserve cash by cutting their dividends. Starting out with much lower leverage, Exxon and Chevron have more balance sheet flexibility and they are using to protect their dividends, for now. Paying a consistent and growing dividend is important to the boards of these energy giants. But the energy market is at a painful place right now.

The boards of Exxon and Chevron will make the hard call to cut their dividends if need be.

Whichever the scenario, the big guys actually have a shot at pulling through thanks to the help of the Trump Administration, unlike many of their small peers which won’t even be able to afford Chapter 11 bankruptcies.

Uncertain future

There have been multiple ups and downs in the historically cyclical energy sector over the last three decades. But the biggest change is yet to take place: the green revolution. Exxon and Chevron have taken steps toward the low-carbon future. Exxon is developing biofuels from algae, while Chevron has invested in solar, wind and geothermal power sources. But environmental activists say they haven’t done enough. So, even with the support of the Trump administration, oil has an uncertain future. And even oil giants will need to fight for survival in the post-COVID-19 era.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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