Coffee May Benefit You and Your Portfolio

by Nkem Iregbulem

Many people drink coffee first thing in the morning. Some heavily rely on this dose of caffeine to boost their energy and start their day. Turns out that in addition to its energy-boosting powers, coffee may be associated with more health benefits than we once thought. Recent studies have highlighted different reasons why coffee may be good for us.

A cohort study published in the Current Developments in Nutrition journal this past May investigated the association between coffee consumption and mortality rates. The participants of the study were 36,758 US adults ages 20+ years who participated in the National Health and Nutrition Examination Survey (NHANES) from 1999 to 2014. Researchers found that drinking 1 to 2 cups of coffee a day was significantly associated with a reduced risk of heart disease mortality. Additionally, they found that participants who consumed 1 or more cups of coffee a day had a lower risk of all-cause mortality.

Recent studies have also studied the potential health benefits of caffeine, a key component of coffee. A meta-analysis published in Nutrients this past June explored the effect of caffeine on the risk and progression of Parkinson’s disease (PD). Nine different studies were included in the healthy cohort, and four were included in the PD cohort. Researchers observed a significant deceleration in the progression of motor symptoms in patients with PD. They also found that caffeine consumption among healthy individuals was associated with a lower risk of developing PD.

These potential health benefits may also compel you to invest in some coffee-related companies. Your options include Starbucks (SBUX), Coffee Holding (JVA), Farmer Brothers Co. (FARM), Spot Coffee (SPP), and Youngevity International Inc. (YGYI). All of these stocks are traded on NASDAQ except SPP, which is traded on the TSX Venture Exchange — previously known as the Canadian Venture Exchange.

Your first option is Starbucks (SBUX), the largest coffeehouse chain in the world. The company has over 31,000 stores around the world that sell coffee, tea, blended drinks, sandwiches, pastries, and many other food and drink items. The global coffee powerhouse was founded in 1971 and is based in Seattle, Washington. Starbucks has a market cap of $90.09 billion and pays a dividend yield of 2.13%. With a high price-to-sales ratio of 3.81 and a price-to-book ratio of 71.29, its stock trades at 28.25 times forward earnings. The company enjoys a 3-year revenue growth rate of 7.54% and an even better 5-year revenue growth rate of 10.02%. Starbucks has managed to increase its revenue each fiscal year over the past decade.

You might also consider investing in Coffee Holding (JVA), a company that makes, roasts, packages, markets, and distributes roasted and blended coffee for private labeled accounts and its own brands. Its products can be divided into three product categories: wholesale green coffee, branded coffee, and private label coffee. The company was founded in 1971 and is currently headquartered in Staten Island, New York. Coffee Holding has a market cap of $18.1 million and does not pay a dividend. Its stock has an excellent price-to-sales ratio of 0.22 and a price-to-book ratio of 0.71. As of its most recent quarter, Coffee Holding has $2.65 million in total cash and $7.6 million in total debt. The company has a 3-year revenue growth rate 3.08% but a negative 5-year revenue growth rate of -4.50%.

Another option is Farmer Brothers Company (FARM), a coffee foodservice company that makes, wholesales, and distributes coffee, tea, and hundreds of other foodservice items to retailers and foodservice providers. Its customers include hotels, offices, restaurants, convenience stores, and other establishments. Founded in 1912 and based in Northlake, Texas, Farmer Brothers Company has a market cap of $123.08 million and does not pay a dividend. The stock has an excellent price-to-sales ratio of 0.22 and a price-to-book ratio of 0.83. As of its most recent quarter, Farmer Bros has $26.39 million in total cash and $105.91 million in total debt. The company enjoys a 3-year revenue growth rate of 3.06% and a 5-year revenue growth rate of 2.44%.

Spot Coffee (SPP) is a Canadian company that designs, builds, and operates coffee cafés throughout Canada and the United States. These cafés sell coffee, sandwiches, pastries, salads, and many other food and drink items. Most of the company’s revenue comes from sales at these cafés, licensing and franchise fees, and the wholesale of roasted coffee beans. Founded in 1996 and headquartered in Buffalo, New York, Spot Coffee has a market cap of $4.71 million and pays a dividend yield of 3.07%. Its stock has an excellent price-to-sales ratio of 0.53. As of its most recent quarter, the company has $6.89 million in total debt. Spot Coffee has a negative 3-year revenue growth rate of -4.22% but a better 5-year revenue growth rate of 1.44%.

Finally, you might consider Youngevity International Inc. (YGYI), a company that develops and distributes nutritional products and commercial coffee. It operates in two segments, Direct Selling and Commercial Coffee, but generates most of its revenue from the Direct Selling segment. It offers a wide variety of products including gourmet coffee, skincare and cosmetic products, nutritional supplements, sports and energy drinks, fashion accessories, digital products, and organic food. Youngevity was founded in 1996 and is based in Chula Vista, California. The company has a market cap of $24.26 million and does not pay a dividend. The stock has an excellent price-to-sales ratio of 0.13 and has a price-to-book ratio of 0.43. As of its most recent quarter, Youngevity has $7.27 million in total cash and $24.42 million in total debt. The company enjoys a 3-year revenue growth rate of 1.23% and a much better 5-year revenue growth rate of 13.66%.

Maybe a coffee stock will wake up your portfolio.

Disclosure: Author did not own any of the above stocks at the time the article was written.

 

Stocks Going Ex Dividend in September 2020

The following is a short list of some of the many stocks going ex dividend during the next month.

Many traders and investors use the stock trading technique called ‘Buying Dividends,’ also commonly referred to as ‘Dividend Capture.’ This is the strategy of buying stocks before the ex dividend date and selling the stock shortly after the ex date at about the same price, yet still being entitled to the dividend.

TOP DIVIDEND STOCKS

This technique generally works in bull markets and flat or choppy markets, but you need to avoid the strategy during bear markets. In order to be entitled to the dividend, you have to buy the stock before the ex-dividend date, and you can’t sell the stock until after the ex date.

The actual dividend may not be paid for another few weeks. WallStreetNewsNetwork.com has compiled a downloadable and sortable list of the stocks going ex dividend in the near future. The list contains many dividend paying companies, lots with market caps over $500 million, and many with yields over 2%. Here are a few examples showing the stock symbol, the ex-dividend date, the periodic dividend amount.

Schlumberger N.V. (SLB) 9/1/2020 0.125 2.66%
Home Depot, Inc. (HD) 9/2/2020 1.50 2.14%
H&R Block, Inc. (HRB) 9/10/2020 0.26 7.25%
Coca-Cola Company (KO) 9/14/2020 0.41 3.46%
Portland General Electric (POR) 9/24/20 0.407 3.96%
Yamana Gold Inc. (AUY) 9/29/2020 0.018 1.14%

The additional ex-dividend stocks can be found HERE . (If you have been to the page before, and the latest link doesn’t show up, you may have to empty your cache.) If you like dividend stocks, you should check out some of the other high yield stock lists HERE . Most of the lists are free.

Dividend definitions:

Declaration date: the day that the company declares that there is going to be an upcoming dividend.

Ex-dividend date: the day on which if you buy the stock, you would not be entitled to that particular dividend; or the first day on which a shareholder can sell the shares and still be entitled to the dividend.

Record date: the day when you must be on the company’s books as a shareholder to receive the dividend. The ex-dividend date is normally set for stocks at two business days before the record date.

Payment date: the day on which the dividend payment is actually made, which can be as long at two months after the ex date.

TOP DIVIDEND STOCKS

Don’t forget to reconfirm the ex-dividend date with the company before implementing this technique.

Disclosure: Author did not own any of the above at the time the article was written; affiliate links.

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How to Buy Stocks at a Greater than 12% Discount

by Fred Fuld III

It is actually  possible to buy stocks at a discount to their current trading prices. Here is how you can do it.

You can invest in closed end funds, also known as CEFs, that are trading at a discount to Net Asset Value, also known as NAV. The NAV is similar to the book value of stocks. In other words the NAV is calculated by adding up the value of all the stocks in the portfolio, and dividing that amount by the number of outstanding shares.

A closed end fund is similar to a regular mutual fund except that they trade throughout the day while the market is open and the trading price of the CEFs can fluctuate way above or way below the NAV. In addition, the number of shares is fixed. There are many closed end funds that are trading at a discount of over 10% of their net asset value. Many investors invest in these discounted CEFs in the hopes that the gap between NAV and price per share will eventually narrow.

One other advantage is that some of these CEFs pay a dividend, so that you can receive income while waiting for the gap to close.

Sometimes activist shareholders buy up a large amount of shares of heavily discounted CEFs and force the liquidation of those CEFs, in order to realize the net asset value.

Here are some examples with discounts ranging from 12% to 38%.

CEF Symbol Discount Yield Dividend
Foxby FXBY -38% 0.5% Annually
Herzfeld Carribean Basin CUBA -26% 16.7% Quarterly
Central Securities CET -18% 1.4% Semi-Annually
General American Investors GAM -18% 1.1% Annually
Eagle Capital Growth GRF -17% 7.7% Annually
Boulder Growth & Income BIF -16% 4.0% Quarterly
Royce Micro-Cap Trust RMT -16% 7.4% Quarterly
Miller/Howard High Income Equity HIE -14% 7.2% Monthly
Adams Diversified Equity ADX -14% 1.2% Quarterly
Sprott Focus Trust FUND -14% 6.8% Quarterly
Gabelli Dividend & Income GDV -13% 6.8% Monthly
Royce Value Trust RVT -13% 7.5% Quarterly

You should be aware that there are several risks with investing in discounted CEFs. First, the gap may exist for a long time, and can even widen. Second, the gap could theoretically narrow but the stocks in the portfolio could drop, so the fund would drop in price also. Third, many CEFs hold illiquid, private, or non-trading stocks, and the NAV is based on how the company valuates those shares, which may be a much higher value than what they could get if they tried to liquidate those stocks. Plus, some funds may own real estate or mortgages, which are very hard to value.

Before investing in any of these, check out the web site of the CEFs to see what stocks they own, and how many are invested in illiquid shares.

Maybe you can find some bargains with closed end funds.

Disclosure: Author did not own any of the above at the time the article was written.

Books that Warren Buffett Recommends about Himself Part 2

Vlast month, we published a list of books that Warren Buffett recommends about himself.

At last year’s Berkshire Hathaway annual meeting, Buffett actually provided such a list. Here are more books that he recommends about himself.

My Warren Buffett Bible: A Short and Simple Guide to Rational Investing: 284 Quotes from the World’s Most Successful Investor

 

The Oracle & Omaha, How Warren Buffet and His Hometown Shaped Each Other

 

Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2013

 

Warren Buffett on Business: Principles from the Sage of Omaha

 

Warren Buffett’s Ground Rules: Words of Wisdom from the Partnership Letters of the World’s Greatest Investor

Warren Buffett Speaks: Wit and Wisdom from the World’s Greatest Investor

Enjoy your summer reading!!!

Need a Face Mask? Here’s One for $1.5 Million

If you need one more coronavirus face mask, there is one being made by the Israeli jewelry company Yvel that is selling for $1.5 million.

This one-of-a-kind mask is being made with 18 karat gold and adorned with 3,600 black and white diamonds.

It will be made to the specification of N-99 filtering.

The man is being made at the request of a businessman in the United States, who wants it completed by the end of the year and wants it to be the most expensive mask ever.

Stocks in the Race for the COVID-19 Vaccine

by Nkem Iregbulem

Since the start of the global coronavirus pandemic, various U.S. biotechnology companies have entered the race to develop COVID-19 therapies and vaccines. To aid and accelerate the development, manufacturing, and distribution of a COVID-19 vaccine, the U.S. government initiated a public-private partnership called Operation Warp Speed. This partnership hopes to deliver 300 million doses of a successful vaccine by January of next year. To achieve this goal, Operation Warp Speed selected eight companies with promising vaccine candidates to receive government funding — namely, Johnson & Johnson, AstraZeneca-University of Oxford, Pfizer-BioNTech, Moderna, Merck, Vaxart, Inovio, and Novavax.

Investing in biotechnology companies with a foot in the vaccine race may be financially worthwhile if certain candidates prove successful in their efforts to develop a safe and effective COVID-19 vaccine. In fact, the stock prices for many of these companies fighting against the coronavirus pandemic are already trading near record highs. Your options include Moderna (MRNA), Inovio Pharmaceuticals (INO), Novavax (NVAX), Vaxart (VXRT), and Sorrento (SRNE). All of these stocks are traded on the NASDAQ exchange.

Your first option is Moderna (MRNA), a biotech company primarily focused on discovering and developing therapeutics and vaccines based on messenger RNA, or mRNA. These technologies are designed to handle infectious diseases, immuno-oncology, rare diseases, autoimmune and cardiovascular disease. In January of this year, Moderna announced it had started developing its own COVID-19 vaccine, named mRNA-1273. In late July, the company’s vaccine candidate entered Phase 3 trials with the launch of a 30,000-subject trial. This progress puts Moderna ahead of many other companies in the race for the vaccine. Founded in 2010 and headquartered in Massachusetts, Moderna has a market cap of $27.51 billion and does not pay a dividend. Its stock has a price-to-sales ratio of 474.82 and a price-to-book ratio of 16.76. As of its most recent quarter, Moderna has $1.22 billion in total cash and $151.84 million in total debt. With its revenue decreasing each fiscal year since 2018, the company faces a negative 3-year revenue growth rate of -17.80%.

Another vaccine stock to pay attention to is Inovio Pharmaceuticals (INO), a biotechnology company that discovers, develops, and commercializes synthetic DNA medicines and vaccines to treat and protect against HPV-associated diseases, infectious diseases, and cancers. The company is developing its very own DNA-based COVID-19 vaccine candidate, INO-4800. Inovio’s INO-4800 is currently in Phase 1 trials in the U.S., and a Phase 2/3 trial is expected to begin this summer. Founded in 1983 and based in Plymouth Meeting, Pennsylvania, Inovio has a market cap of $3.07 billion and does not pay a dividend. Its stock has a high price-to-sales ratio of 786.00 and price-to-book ratio of 16.67. As of its most recent quarter, Inovio has $270 million in total cash and $98.52 million in total debt. Inovio has seen decreasing revenue each fiscal year since 2017, contributing to its negative 3-year revenue growth rate of -51.19%.

You might also consider Novavax (NVAX) — founded in 1987 and headquartered in Gaithersburg, Maryland. The late-stage biotechnology company focuses on discovering, developing, and commercializing vaccines to prevent a wide variety of infectious diseases. Some of its current vaccine candidates are geared towards influenza and RSV. In January, it announced its intention to develop a vaccine — called NVX-CoV2373 — to treat coronavirus. Novavax has a market cap of $9.15 billion and does not pay a dividend. Its stock trades at 34.13 times forward earnings and has a high price-to-sales ratio of 238.50. As of its most recent quarter, the company has $237.36 million in total cash and $331.87 million in total debt. Novavax has a negative 5-year revenue growth rate of -9.45% but a better 3-year revenue growth rate of 6.72%.

Vaxart (VXRT) is another biotech company in the race for a coronavirus vaccine. Founded in 2004 and based in South San Francisco, the clinical-stage company discovers, develops, and commercializes orally administered recumbent vaccines to treat infected patients around the world. This past January, Vaxart announced the development of its COVID-19 vaccine candidate: a tablet vaccine. Its other candidates include influenza, norovirus, and RSV vaccines.The company has a market cap of $992.76 million and does not pay a dividend. Its stock has a high price-to-sales ratio of 44.56 and a price-to-book ratio of 32.74. As of its most recent quarter, Vaxart has $29.86 million in total cash and $2.13 million in total debt. The company faces a negative 5-year revenue growth rate of -29.71% but enjoys a 3-year revenue growth rate of 1.69%.

Finally, you might also consider Sorrento (SRNE), a clinical-stage biotechnology company that focuses on developing immunotherapies for cancers, autoimmune, inflammatory, and neurodegenerative diseases. The company has teamed up with Mount Sinai Health System to develop an antibody therapy — named COVI-SHIELD — to target the COVID-19 infection. This product would deliver three antibodies that would serve as a “protective shield” against the virus. Founded in 2006 and headquartered in San Diego, Sorrento has a market cap of $2.05 billion and does not pay a dividend. It trades at 1.71 times forward earnings. Its stock has a high price-to-sales ratio of 46.05 and a price-to-book ratio of 20.28. As of its most recent quarter, the company has $21.9 million in total cash and $255.01 million in total debt. Sorrento enjoys a 5-year revenue growth rate of 52.39% and an even better 3-year revenue growth rate of 56.81%.

Let’s hope we get a vaccine and cure soon.

Disclosure: Author owns MRNA.

 

Books that Warren Buffett Recommends about Himself

Yes, Warren Buffett, head of Berkshire Hathaway (BRKA) (BRKB), actually comes out with a list of books that he recommends, and he even recommends books about himself.

At last year’s Berkshire Hathaway annual meeting, Buffett actually provided such a list. Here are his recommended books about himself.

Berkshire Beyond Buffett: The Enduring Value of Values

 

Berkshire Hathaway Letters to Shareholders

 

50 Years of Berkshire Hathaway Wall Print
This is actually a wall print poster.

 

Buffet: The Making of an American Capitalist

 

Buffett’s Bites: The Essential Investor’s Guide to Warren Buffett’s Shareholder Letters

 

The Essays of Warren Buffett: Lessons for Corporate America, Fifth Edition

 

A Few Lessons for Investors and Managers From Warren Buffett

Happy reading!

 

 

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Are Tiny Houses the Latest Hot Real Estate Investment?

by Fred Fuld III

With the high costs of buying or renting a house spreading across the nation, more and more homeowners are looking at building a tiny house in their backyard, and renters are looking to rent them.

A small house is generally considered to be between 400 and 1,000 square feet, and tiny houses are less than 400 square feet. The smallest tiny house is considered to be one that is only 80 square feet. I wonder if they hold a lot of parties in that house?

Last year, California passed new laws allowing homeowners to construct tiny houses due to the fact that rental costs have gone through the roof (no pun intended) in the state partially due to the shortage of available rental units. Some other states are following suit.

These homes can either be built by contractors or can be ordered online as a kit the is relatively easy to assemble. So what kind of a house can you get, and how much does it cost?

One of the smallest is manufactured by Luoman and is only 113 square feet. TheAllwood Escape Cabin Kit sells for only $5,350, giving you the bare bones basic.

 

If you are looking for a bit more space, there is the starENERGY Tiny Home Kit which sells for $21,900 plus shipping. This home falls into the small house category at 648 square feet, and may accommodate a full kitchen and pantry, bathroom, one bed room with walk in closet, laundry room and living room.

 

You might want to consider a 320 square foot Prefabricated Container Hotel Room Furnished Economic Modular House at $54,000.

 

The Allwood Avalon Cabin Kit, manufactured by Lasita, gives you 540 square feet for only $33,990 with free shipping. It includes triple glass windows and doors.

Generally, none of these come with foundation materials or shingles for the roof. Construction usually takes two people and can take anywhere from two days to a week to complete.

Maybe you can have your own real estate investment in your own back yard.

 

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Top Airline Short Squeeze Stocks

by Fred Fuld III

Many airline stocks have taken a hit over the last month, and even the last couple trading days. Several of these airline stocks are heavily shorted.  When stocks rise quickly in price for whatever reason, short sellers scramble to cover their positions by buying shares, and causing the price of the stocks to increase even more.

Traders and investors can make money on the long side from short squeezes. One technique that stock traders utilize is buying short squeeze stocks, companies have been heavily shorted. Here is a more extensive explanation of  short squeezes.

When you short a stock, it means that your goal is to make money from a drop in the price of a stock. Technically, what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. This all happens electronically, so you don’t actually see all the borrowing and returning of shares; it just shows up on your screen as a negative number of shares.

Short selling can be profitable, but sometimes when the stock moves against the short sellers, and begins to rise, the short sellers jump in right away to buy shares to cover their positions, creating what is called a short squeeze. When a short squeeze takes place, it can cause the share prices to increase fast and furiously. Any good news can trigger the short squeeze.

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high and potential short squeeze plays.

Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.

Short Percentage Increase ~ This is the percentage increase in in the number of short sellers from the previous month.

Here is one example from the list below.  American Airlines (AAL) is a stock that is heavily shorted. As a matter fo fact, 30% of the float is shorted. (The float is the number of shares of the company that are freely tradeable.) Plus, the number of shares shorted has increased by 5% over last month.

So what airline stocks are heavily shorted that may be worth a closer examination? Check out the following list, but be aware, that often some stocks are heavily shorted for a reason. All these stocks have significant short metrics.

Possibly a short squeeze will cause a few of these to fly higher.

Stock Symbol % of Float Days to Cover
American Airlines AAL 30% 1.5
Allegiant ALGT 15% 5.8
Spirit Airlines SAVE 23% 0.8
United Airlines UAL 11% 0.5

Disclosure: Author didn’t own any of the above at the time the article was written.

Stocks Going Ex Dividend in August 2020

The following is a short list of some of the many stocks going ex dividend during the next month.

Many traders and investors use the stock trading technique called ‘Buying Dividends,’ also commonly referred to as ‘Dividend Capture.’ This is the strategy of buying stocks before the ex dividend date and selling the stock shortly after the ex date at about the same price, yet still being entitled to the dividend.

TOP DIVIDEND STOCKS

This technique generally works in bull markets and flat or choppy markets, but you need to avoid the strategy during bear markets. In order to be entitled to the dividend, you have to buy the stock before the ex-dividend date, and you can’t sell the stock until after the ex date.

The actual dividend may not be paid for another few weeks. WallStreetNewsNetwork.com has compiled a downloadable and sortable list of the stocks going ex dividend in the near future. The list contains many dividend paying companies, lots with market caps over $500 million, and many with yields over 2%. Here are a few examples showing the stock symbol, the ex-dividend date, the periodic dividend amount.

MetLife, Inc. (MET) 8/3/2020 0.46 4.77%
Starbucks Corporation (SBUX) 8/6/2020 0.41 2.18%
Duke Energy Corporation (DUK) 8/13/2020 0.965 4.60%
Southern Company (SO) 8/14/2020 0.64 4.61%
Consolidated Edison Inc (ED) 8/18/2020 0.765 4.01%
Johnson & Johnson (JNJ) 8/24/2020 1.01 2.70%
Goldman Sachs Group, Inc. (GS) 8/31/2020 1.25 2.46%

The additional ex-dividend stocks can be found HERE . (If you have been to the page before, and the latest link doesn’t show up, you may have to empty your cache.) If you like dividend stocks, you should check out some of the other high yield stock lists HERE . Most of the lists are free.

Dividend definitions:

Declaration date: the day that the company declares that there is going to be an upcoming dividend.

Ex-dividend date: the day on which if you buy the stock, you would not be entitled to that particular dividend; or the first day on which a shareholder can sell the shares and still be entitled to the dividend.

Record date: the day when you must be on the company’s books as a shareholder to receive the dividend. The ex-dividend date is normally set for stocks at two business days before the record date.

Payment date: the day on which the dividend payment is actually made, which can be as long at two months after the ex date.

TOP DIVIDEND STOCKS

Don’t forget to reconfirm the ex-dividend date with the company before implementing this technique.

Disclosure: Author did not own any of the above at the time the article was written; affiliate links.

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