Growth is the name of the game for Cathie Wood. Income isn't even an afterthought.However, you might be surprised at how many of the stocks owned by Wood's Ark Invest exchange-traded funds (ETFs) actually pay dividends. Wood might not be looking for income, but she's getting some
In case you haven't noticed, the bulls are, once again, in full control on Wall Street. Although the 30-component Dow Jones Industrial Average has generated a modest 7% year-to-date return, through the closing bell on July 28, the benchmark S&P 500 and growth-driven Nasdaq Co
Many investors brush off or ignore options trading because options are complex and misunderstood. However, many other traders have learned how to “follow the flow.” In other words, they want to know what the big funds and institutions are doing. When these buyers
The technology sector stands as an emblem of innovation and progress, driving the wheel of modern-day economic growth. It encompasses a vast range of industries. This includes software services, and semiconductor manufacturing, to the burgeoning fields of artificial intelligence,
Below is Validea's guru fundamental report for NVIDIA CORP (NVDA). Of the 22 guru strategies we follow, NVDA rates highest using our Quantitative Momentum Investor model based on the published strategy of Wesley Gray. This momentum model looks for stocks with strong and consiste
A resilient U.S. economy and expectations of a nearing peak in the Federal Reserve’s monetary policy tightening cycle are emboldening stock investors, even as worries persist over rising valuations and the potential for inflation to rebound.
Even though it's one of the hottest and most-discussed artificial technology (AI) stocks around, most investors probably don't know that Nvidia (NASDAQ: NVDA) is an aspiring competitor in the field of biotechnology. But it's not about to start developing drugs. Instead, it's help
AI, artificial intelligence, has come into its own in recent years. Machine learning technology has found its way into a wide range of day-to-day activities, from internet searching to marketing and advertising to just driving down the highway. Artificial intelligence promises to change the way that we interact with the world and with computers, and the launch of 'generative AI,' embodied in real-language chatbots like ChatGPT, shows just how close that promise is.
The emergence of any new technology brings with it an ever-proliferating array of opportunities, and AI is no exception. Tech firms all around the world are neck-deep in AI, from making the semiconductor chips that power the technology to developing the software that will interface between AI and us – to creating the new technologies that will build on machine learning.
While tech companies at all scales are gravitating to AI, the larger tech firms have a leg up. They’re huge to begin with, some with trillion-dollar market caps; they are already industry leaders – and they’ve been involved in AI from the beginning. The giant tech titans have been leading the market gains we’ve seen so far this year, making those gains partly on AI.
Market-leading positions and connections to a world-changing technology have helped put some of the tech giants on the
Smart Score's 'Perfect 10' list. The Smart Score uses machine learning as well, to gather and collate the data behind thousands of publicly traded equities and assigns those stocks a simple score pointing toward likely future performance, based on 8 data-based factors.
Considering all of this, the 'Perfect 10' tech titans are a logical place to look for riding the market on the way to new highs. Let’s take a closer look at two of them.
Nvidia Corporation
(
NVDA
)
The first stock on our list of ‘Perfect 10s’ is Nvidia, one of the world’s leading semiconductor chip firms. Nvidia built its reputation on the strength of its graphics processing units, GPUs, chips designed to run advanced graphics programs and beloved by both professional graphic designers and high-level gamers. This niche nicely preadapted Nvidia for the advent of AI, as the company’s GPUs are also capable of handling the high processing demands of AI computing.
Demand for AI-capable chips has been booming all year, and Nvidia has realized strong gains as a direct result – the stock is up over 226% year-to-date. It’s no surprise that Nvidia is a major supplier of GPU chips for OpenAI, the company that launched ChatGPT last November. OpenAI has been using Nvidia’s chips in its machine learning applications – ‘teaching’ its AI – since 2020, and has already indicated a need for another 10,000 chips to maintain ChatGPT going forward. This can only bode well for Nvidia, which is already one of the select few $1 trillion-plus companies in the stock market.
The rapid expansion of AI has led to solid beats compared to the financial expectations in Nvidia’s last financial release. In the company’s last quarterly report, for Q1 of fiscal year 2024, it showed total revenues of $7.19 billion, a total that was down 13% year-over-year but was also $669 million above the forecasts. The company’s earnings were also higher than had been anticipated; at $1.09 per share, the non-GAAP EPS beat the forecast by 17 cents per share. The company finished its fiscal Q1 with over $5 billion in cash and other liquid assets on hand, compared to $3.9 billion in in the prior year quarter.
Investors were also mightily impressed by Nvidia’s forward guidance. The chip maker is guiding toward $11 billion in fiscal Q2 sales, far above the $7.11 billion consensus figure. Hitting that guidance will equate to a 41% y/y revenue gain.
All of this – but especially the company’s strong link to AI and its ability to generate cash – brought Nvidia to the attention of 5-star analyst Chris Caso, from Wolfe Research. Caso writes of Nvidia’s attraction for investors, “There is now little investor debate about NVDA’s dominance of AI, or the potential growth rates. The main question is whether there is still room for the stock to move further, given the big move and elevated valuation - we think there is given NVDA’s strong FCF. We think it’s unprecedented to have a company growing this fast (30% 8-year CAGR, 35% 3-year CAGR), and still throw off this much cash (~2.2% FCF yield even after >200% YTD stock gain). That cash flow, coupled with NVDA’s dominant position in AI, keep us in the stock despite the move.”
Caso gives NVDA an Outperform (Buy) rating, and his price target, set at $570, implies the stock will gain another 22% in the year ahead. (To watch Caso’s track record,
click here
.)
The giant tech firms pick up plenty of reviews from Wall Street, and Nvidia has 32 recent calls on file – including 30 to Buy and 2 to Hold, for a Strong Buy consensus rating. The shares are priced at $467.5, and the stock’s $504.46 average price target suggests a 12-month appreciation of 8%. (See
Nvidia’s stock forecast.)
Alphabet, Inc.
(
GOOGL
)
The second AI-related stock on today’s list is Alphabet, the parent of Google and an array of other subsidiaries – many of which are tied directly into AI. For Google, of course, the connection is obvious – Google has been the dominant player in internet search for decades, and for much of that time has been using AI-powered algorithms to enhance its search modes. Google also uses AI in its digital advertising applications, which are the go-to for online marketing companies.
Alphabet’s other AI-related enterprises cover a range of niches, including AI research (DeepMind), drone-based local air-freight delivery (Wing), autonomous vehicles (Waymo), and YouTube, the web’s premier video search engine. Alphabet is also advancing its head-to-head competitor to ChatGPT, an AI chatbot called Bard. While Alphabet does not have a leading position in every AI niche, it’s a strong competitor – and the company’s long history with AI development gives it an edge in creating workable systems quickly.
All of this has powered Alphabet’s growth. Its attraction for investors has supported the stock price – and pushed the market cap up to $1.63 trillion, the third-highest among publicly traded firms.
The stock has also obviously benefited from strong financial results, such as those on display in the recent Q2 readout, which beat the forecasts all around. Top line revenues at $74.6 billion, beat expectations by $1.84 billion and grew 7% year-over-year, while the bottom-line EPS, at $1.44, was 10 cents per share over the estimates.
For Truist analyst Youssef Squali, Alphabet’s AI connection, amongst other elements, informs his bullish take. Explaining his stance, the 5-star analyst writes, “We remain constructive on GOOGL following stronger than expected 2Q23 results, reflecting faster recovery for Search and YT, and sustained momentum in Cloud as mgmt reigns in costs and focuses investments on the highest growth priorities. We expect to see further growth acceleration in 2H23 with margins improving, supporting a compelling case for the stock N/M term. LT, while questions about AI's impact on Search advertising remain, we believe that GOOGL is at the forefront of this race and expect mgmt to continue to lean in, more assertive in the rollout of its AI initiatives and in how it communicates them.”
Squali goes on to rate the stock as a Buy, with a $160 price target pointing toward 21% share gains over the next 12 months. (To watch Squali’s track record,
click here
.)
There are 35 recent analyst reviews of Alphabet on file and they break down 30 to 5 favoring Buys over Holds, for a Strong Buy consensus rating. The shares have a current trading price of $132.58 with an average price target of $149.45, indicating a 13% one-year gain. (See
Alphabet’s stock forecast.)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’
Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Today, I'm sharing the top stocks in my $1.5 million growth stock portfolio. I believe we are in a new industrial revolution that could supercharge your long-term investing portfolio. Megatrends, such as artificial intelligence (AI), autonomous driving, robotics, and the Internet
Everybody knows Nvidia (NASDAQ: NVDA) is a leading provider of chips specially designed for artificial intelligence (AI) systems. And everybody knows Nvidia's chief rival across the computing sector is Advanced Micro Devices (NASDAQ: AMD). AMD inspires far fewer AI headlines than
This year has been a pleasant surprise in the stock market for many investors. While many stock market projections for 2023 included a continued down period, this hasn't been the case though we're almost seven months through the year.
Training advanced artificial intelligence models like the one that underpins OpenAI's ChatGPT requires not only immense processing power, but also the right kind of processing power. Graphics processing units from Nvidia (NASDAQ: NVDA) are well suited to the task. Linked together
Investing in the stock market isn't always easy, but with the right investments, it's one of the safest and most effective ways to build long-term wealth.While there's no single right way to invest, exchange-traded funds (ETFs) can be a smart option for many people.
Shares of Intel INTC spiked +6% today following the world’s largest semiconductor company’s stronger-than-expected second-quarter results on Thursday evening.
With a massive
11.3% dividend yield, the
Global X NASDAQ 100 Covered Call ETF (
NASDAQ:QYLD)
immediately catches the eye as a tempting option for dividend investors. Even better, it pays out its dividend on a monthly basis. There is certainly a lot to like about this ETF for income investors. However, before investors get too excited about QYLD, there are a few other factors that they would be wise to consider as well.
What is QYLD’s Strategy?
QYLD is an $8.25 billion ETF from Global X that was launched in December 2013. According to Global X, QYLD “follows a ‘covered call’ or ‘buy-write’ strategy, in which the Fund buys the stocks in the Nasdaq 100 Index and 'writes' or 'sells' corresponding call options on the same index."
In other words, QYLD owns the mega-cap and large-cap growth stocks that populate the Nasdaq 100 (
NDX
), and it generates income for investors and achieves its outsized dividend yield by selling covered calls against these holdings.
QYLD's Holdings
QYLD’s underlying index is the Nasdaq 100, so the fund is made up of many of the mega-cap tech stocks and large-cap growth stocks that investors know and love. The fund is fairly diversified, holding 102 stocks. Its top 10 holdings account for just under half of its assets. See below for an overview of
QYLD’s top holdings from TipRanks’ holdings screen.
As you can see above, QYLD’s top holdings skew heavily towards the "magnificent seven" stocks that have led the market higher in 2023 -- Apple (
NASDAQ:AAPL
), Microsoft (
NASDAQ:MSFT
), Amazon (
NASDAQ:AMZN
), Nvidia (
NASDAQ:NVDA
), Meta Platforms (
NASDAQ:META
), Tesla (
NASDAQ:TSLA
), and Alphabet (
NASDAQ:GOOG
) (
NASDAQ:GOOGL
).
It’s hard to argue with this portfolio of blue-chip tech and growth stocks, and TipRanks’ Smart Score system agrees, assigning eight of QYLD’s top 10 holdings outperform-equivalent Smart Scores. The
Smart Score is a proprietary quantitative stock scoring system created by TipRanks. It gives stocks a score from 1 to 10 based on eight market key factors. A score of 8 or above is equivalent to an Outperform rating.
QYLD features an Outperform-equivalent ETF Smart Score of 8.
Is QYLD Stock a Buy, According to Analysts?
Turning to Wall Street, QYLD has a Moderate Buy consensus rating, as 67.71% of analyst ratings are Buys, 28.58% are Holds, and 3.70% are Sells. At $19.73, the
average QYLD stock price target implies 9.4% upside potential.
QYLD's Long-Term Performance
To see how QYLD has performed over time, we can look at it over the years from a total-return perspective, which captures both price appreciation and returns from dividends. As of the end of the most recent quarter in June, QYLD has a one-year total return of 14.6%. Meanwhile, it has a three-year annualized return of 6.9% and a five-year annualized return of 5.7%.
Keep in mind that these returns include what investors gain from the large dividend payouts, so they suddenly look a lot less exciting. Since its inception at the end of 2013, QYLD has returned a slightly better 7.2% on an annualized basis.
While these returns are positive, they are somewhat lackluster, especially when compared to just investing in the Nasdaq 100, which the fund uses as its underlying index. Investors can do just that with an ETF like the
Invesco QQQ Trust (
NASDAQ:QQQ)
, which invests in the plain vanilla Nasdaq 100 without a complex strategy of selling covered calls like QYLD.
Over the past year, QQQ has had a one-year return of 32.8%, more than double that of QYLD. QQQ’s three-year annualized return is also far superior to that of QYLD at 15%. On a five-year basis, QQQ again easily surpasses the total return of QYLD with a far better 17.9% annualized return, more than tripling QYLD’s return. Finally, over a 10-year timeframe, QQQ investors have made a stellar 18.9% on an annualized basis.
So, while QYLD looks tempting with its 11.3% dividend yield, investors would have been far better off simply investing in QQQ over the years, which has vastly outperformed QYLD, even when this yield is taken into account.
The dividend yield is nice to have, but QQQ investors have grown their wealth to a far higher level than QYLD investors. Because QYLD sells covered calls against its positions (a strategy that caps upside while slightly reducing downside), it leaves upside on the table as these holdings get called away if the covered call gets hit. You can see it playing out in real time this year, as the Nasdaq has surged, which is why QQQ has more than doubled QYLD’s year-to-date total return.
Fees & Expenses
There’s also the matter of fees -- with an expense ratio of 0.60%, QYLD investors are paying a fairly high $60 on a $10,000 investment. This is higher than QQQ, where investors pay a lower 0.20%, which comes out to $20 on a $10,000 investment.
This disparity becomes more pronounced over time -- if the fees remain consistent over time and both funds return 5% per year, after a decade, the QYLD investor would pay $750 in fees, while the QQQ investor would only pay $255 over the same time frame.
Below, you can take a look at
a comparison of QYLD and QQQ created with TipRanks' customizable ETF Comparison tool, which allows investors to compare up to 20 ETFs at a time across a variety of inputs.
The Takeaway
The idea of being able to combine these blue-chip tech stocks with an 11.3% dividend yield certainly has its appeal. Receiving dividend payments on a monthly basis is also appealing, and QYLD deserves credit for its rock-solid track record of paying out a monthly dividend every month for nine years and counting, so I can certainly understand why some investors like QYLD.
However, as the comparison to QQQ shows, QYLD’s strategy can leave a lot of upside on the table, and investors historically would have been far better off investing in a simple Nasdaq 100 fund like QQQ. QQQ is clearly the superior investment choice in this comparison, and it's the ETF I would choose to invest in.
Nonetheless, if an investor understands QQQ's superior value proposition and still wants the monthly income that QYLD offers, they could consider initiating a position in QQQ and a smaller position in QYLD in order to get the monthly dividend payments.
Disclosure
A resilient U.S. economy and expectations of a nearing peak in the Federal Reserve’s monetary policy tightening cycle are emboldening stock investors, even as worries persist over rising valuations and the potential for inflation to rebound.
After a rocky 2022, the
crypto market bounced back in a big way in 2023. Bitcoin (
BTC-USD
), by far the largest digital asset by market cap, is up 75% year-to-date, while Ethereum (
ETH-USD
), the second-largest, is up more than 50% over the same time frame. The crypto-focused
VanEck Digital Transformation ETF (
NASDAQ:DAPP)
has taken advantage of this resurgent crypto interest to gain nearly 200% year-to-date.
While DAPP’s 2023 performance has been stellar, there are several pros and cons that investors should be aware of before making an investment decision on DAPP.
What Does the DAPP ETF Do?
DAPP is a crypto-focused ETF from ETF and mutual fund provider VanEck. It seeks to track the results of its underlying index, the MVIS Global Digital Assets Equity Index, which intends to “track the performance of companies that are participating in the digital assets economies," according to VanEck. Its ticker alludes to decentralized applications or "dApps," the user-facing smart contracts that exist on blockchains like Ethereum.
DAPP launched in April of 2021, and it is still relatively small in the bigger investing picture, with about $64 million in assets under management (AUM).
DAPP's Holdings
DAPP features a fairly limited scope of holdings. It holds just 20 stocks, and its top 10 holdings make up 63.1% of the fund's assets. Below, you’ll find an overview of
DAPP’s top holdings using TipRanks’ holdings tool.
Aside from holding just 20 stocks, DAPP also lacks diversification in that outside of top holding Coinbase Global (
NASDAQ:COIN
) and top 10 positions in MicroStrategy (
NASDAQ:MSTR
) and Block (
NYSE:SQ
), the fund is pretty much dominated by Bitcoin miners and companies that make Bitcoin mining equipment. This includes companies like Terawulf (
NASDAQ:WULF
), Riot Platforms (
NASDAQ:RIOT
), Marathon Digital (
NASDAQ:MARA
), and Canaan (
NASDAQ:CAN
).
This isn’t a bad thing in and of itself, but for an ETF touting the digital transformation of the economy, it seems like a missed opportunity to invest in some of the many other interesting names that are involved in different aspects of the crypto industry. Plus, owning a dozen different miners doesn't do much for DAPP's diversification, as these stocks all more or less move based on the ups and downs of the price of Bitcoin.
Stocks that would have been interesting to include in a digital transformation ETF are semiconductor companies like Nvidia (
NASDAQ:NVDA
) and Advanced Micro Devices (
NASDAQ:AMD
) that provide the graphics processing units (GPUs) used by Bitcoin miners. Other interesting stocks would be dominant payment networks like Visa (
NYSE:V
) and Mastercard (
NYSE:MA
), which have invested time and resources in the crypto space and are adopting blockchain technology.
How about CME Group (
NASDAQ:CME
), the parent company of the CME exchange, which, in addition to commodities in the energy and agricultural markets, provides futures and options trading for Bitcoin and Ethereum?
Shopify (
NYSE:SHOP
) would have been a solid inclusion as well, as the e-commerce leader has forayed into crypto in a variety of ways and is making it a bigger part of its strategy. Or, if the fund wanted to get even more creative and approach it from a different angle, it could even include something like Starbucks (
NASDAQ:SBUX
), which has incorporated NFTs into its popular loyalty program (with promising results).
As is, DAPP's holdings are a mixed bag when it comes to their Smart Scores, as six of its top 10 positions feature a Smart Score of 8 or higher, while the rest feature neutral scores. The
Smart Score is a proprietary quantitative stock scoring system created by TipRanks. It gives stocks a score from 1 to 10 based on eight market key factors. A score of 8 or above is equivalent to an Outperform rating.
DAPP itself has a neutral ETF Smart Score of 7.
Is Its Expense Ratio High?
DAPP’s expense ratio of 0.50% is somewhat middle-of-the-road. On the one hand, it is considerably higher than most ETFs that I would typically consider investing in. On the other hand, it should be noted that it isn’t as expensive as many of the other ETFs in the crypto space, where jarringly-high fees seem to be par for the course.
DAPP’s expense ratio is equal to that of the
Global X Blockchain ETF (
NASDAQ:BKCH)
, but it is considerably lower than that of the
Bitwise Crypto Industry Innovators ETF (
NYSEARCA:BITQ)
, which has a sky-high expense ratio of 0.85%, and the
Amplify Transformational Data Sharing ETF (
NYSEARCA:BLOK)
, which also has a much higher expense ratio of 0.75%.
DAPP’s expense ratio of 0.50% means that an investor allocating $10,000 into DAPP will pay $50 in fees over the course of the year. Assuming the expense ratio remains consistent over time and that the ETF returns 5% per year going forward, this DAPP investor would pay $160 in fees over a three-year time frame and $280 in fees over a five-year time frame. Over the course of 10 years, the investor would pay $628 in fees.
Is DAPP Stock a Buy, According to Analysts?
Turning to Wall Street, DAPP has a Moderate Buy consensus rating, as 75.41% of analyst ratings are Buys, 14.75% are Holds, and 9.84% are Sells. At $9.63, the
average DAPP stock price target implies 15.6% upside potential.
Investor Takeaway
DAPP has been a strong performer year-to-date, and it deserves credit for that. On the downside, it isn’t particularly diversified, and I feel that it missed the opportunity to look beyond the usual suspects for like Coinbase and miners to add some compelling investments to the fund that are participating in the "digital transformation" in different ways.
Furthermore, its expense ratio isn’t great, but in fairness, it is lower than that of many of its competitors in the crypto space. Additionally, DAPP’s relatively small size could make it susceptible to market volatility.
Lastly, while DAPP has been a strong performer in 2023, it has actually lost about 50% since its inception in 2021. For these reasons, I can’t really call DAPP a compelling investment opportunity at this time.
Disclosure
All three major U.S. indexes ended the week with gains, after a slew of Big Tech earnings, economic data and central bank announcements boosted investor confidence in a soft landing for the U.S. economy.
All three major U.S. indexes ended the week with gains after a slew of earnings from big technology companies, economic data and central bank announcements boosted investor confidence in a soft landing for the U.S. economy.