CryptoCurrency
Should You Buy Them Today?
Investors love a good stock split. There’s something about seeing a lower number for a top company’s stock that can make it feel like a bargain. While the lower price is somewhat of an illusion, since it’s an equally smaller piece of the pie, stock splits do typically indicate a great stock. When a price gets so high that it can make the stock look inaccessible, there’s usually an excellent company behind it, and the market is recognizing that.
Super Micro Computer (NASDAQ: SMCI) and Chipotle Mexican Grill (NYSE: CMG) are two incredible stock-split stocks that have made investors rich over time. Should you still buy them today?
Up 15% since its stock split, can Super Micro Computer still be a winner?
Keith Noonan: Super Micro Computer has become a battleground stock in the artificial intelligence (AI) space. While the company’s sales and earnings have been skyrocketing thanks to AI spurring demand for the company’s high-performance rack servers, some investors are betting that the momentum will be relatively short-lived. Making matters even more complex, the company delayed its 10-K filing shortly after the publication of a bearish report from short-seller Hindenburg Research.
Super Micro Computer completed its 10-for-1 stock split on Oct. 1, and the company’s share price is now up roughly 15% from its pre-split closing price. On the other hand, the share price is still down roughly 60% from the high that it reached in March.
Some bears have raised the argument that Supermicro’s core business revolves around putting off-the-shelf parts together — and that its margins will continue to deteriorate because the core components of its server systems are not proprietary. Graphics processing units (GPUs) from Nvidia and hardware from other companies are central to the value proposition of Supermicro’s rack servers, and the company’s gross margins could face pressure if players in the AI space have other options for securing processing and networking technologies.
In order to differentiate its servers, Supermicro has been looking to its liquid-cooling technologies. The company has recently delivered some good news on that front. In fact, most of Supermicro’s post-split stock gains have been powered by the news that the company has now shipped over 100,000 GPUs fitted with its proprietary liquid-cooling technologies.
Even after the recent gains, Supermicro stock is still valued at just 14 times this year’s expected earnings. On the heels of explosive sales and earnings growth last year, the company’s relatively low forward earnings multiple reflects market sentiment that’s doubtful about the business’s ability to weather cyclical downturns. But the stock could deliver big returns if the AI investment cycle is at an earlier stage than some are predicting.
For risk-tolerant investors looking for AI stock plays with potentially explosive upside, Super Micro Computer could have the makings of a worthwhile portfolio addition.
Chipotle Mexican Grill: Up 6,460%
Jennifer Saibil: Investors love Chipotle stock. The company is the leader in fast-casual dining, and it’s been reliable for growth and profits for years. It sailed through the pandemic with barely an impact, and it’s floating through inflation similarly.
Chipotle’s fresh, healthy fare at an affordable price point is resonating with its target affluent market, and it has raised prices to offset rising costs without curbing demand. Sales increased 18.2% year over year in the 2024 second quarter, driven by an 11.1% in comparable sales, and earnings per share (EPS) rose from $0.25 to $0.33. Operating margin expanded from 17.2% to 19.7%.
Chipotle split its stock in June in a 50-for-1 split, one of the largest ever on the New York Stock Exchange. The stock price had climbed well into the four digits before the split, which is its first, and it had increased since going public in 2006.
Stocks usually pick up steam heading toward a split as investors get excited, and they sometimes lose some of it after the split before picking up again. However, Chipotle has had some other recent news that the market didn’t like very much, and that’s the departure of its superstar CEO, Brian Niccol.
Chipotle wasn’t always a golden stock, and it was experiencing some serious problems before Niccol came on board in 2017. Investors view him as a savior of sorts, redeeming Yum! Brands‘ Taco Bell before achieving the same kind of turnaround at Chipotle. That’s why he’s now been nabbed by Starbucks, which is in desperate need of its own turnaround.
That news followed the announcement that longtime CFO Jack Hartung is retiring, leaving a management void, and it’s not hard to see why the market reacted negatively.
But all is not lost. COO Scott Boatwright moved up to become interim CEO, and Hartung is staying on while the company figures out its next steps. Even if Niccol were largely responsible for creating the branding and processes that have brought Chipotle to where it is today, they aren’t going anywhere.
Management still sees the potential to nearly double the North American store count to 7,000, and it’s also expanding internationally. Chipotle just opened up its first store in Dubai through a recent franchise partnership.
Chipotle has a working formula and plenty of expansion opportunities, and investors can still buy into its growth story.
Should you invest $1,000 in Super Micro Computer right now?
Before you buy stock in Super Micro Computer, 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 Super Micro Computer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $826,069!*
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Jennifer Saibil has no position in any of the stocks mentioned. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill, Nvidia, and Starbucks. The Motley Fool recommends the following options: short December 2024 $54 puts on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
2 Stock-Split Stocks That Have Increased 5,000% to 6,390%: Should You Buy Them Today? was originally published by The Motley Fool
Sales of existing homes fell in September as house hunters remained on the fence about buying a home despite mortgage rates easing during the month.
Existing home sales slipped 1.0% from August’s tally to a seasonally adjusted annual rate of 3.84 million, the National Association of Realtors said Wednesday. That marked the lowest rate since October 2010. Economists polled by Bloomberg expected a pace of 3.88 million in September.
On a yearly basis, sales of previously owned homes were 3.5% lower in September. The median home price rose 3.0% from last September to $404,500, marking the 15th consecutive month of annual price increases.
“Home sales have been essentially stuck at around a 4 million-unit pace for the past 12 months,” NAR chief economist Lawrence Yun said in a press release.
There have been significant challenges that have weighed on sales activity, including a lack of inventory, escalating prices, and elevated mortgage rates. Last month, however, those factors turned around.
The Federal Reserve cut its benchmark rate by half a percentage point in September. While the central bank doesn’t set mortgage rates, its actions influence their direction of movement.
Mortgage rates hit the lowest level since February 2023 ahead of the Fed decision to ease, while listing inventory picked up.
But overall, that hasn’t been enough to entice buyers.
“Some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election,” Yun said.
Tesla (TSLA) reported mixed third quarter results after the bell on Wednesday, but the stock jumped in after-hours trading as investors cheered the earnings beat, higher gross margins, and news that Tesla’s cheaper EV is on track for production next year.
For the quarter, Tesla reported revenue of $25.18 billion vs. $25.4 billion per Bloomberg consensus, higher than the $25.05 billion it reported in Q2 and also topping the $23.40 billion Tesla reported a year ago. Tesla posted adjusted EPS of $0.72 vs $0.60 expected, on adjusted net income of $2.5 billion and free cash flow of $2.9 billion.
The closely watched gross margin figure came in at 19.8%, much higher than the 16.8% expected.
Tesla shares were up nearly 8% in after hours trade.
“We delivered strong results in Q3 with growth in vehicle deliveries both sequentially and year-on-year, resulting in record third-quarter volumes,” the company said in its earnings deck. “Preparations remain underway for our offering of new vehicles — including more affordable models — which we will begin launching in the first half of 2025.”
Earlier this month, Tesla (TSLA) announced third quarter deliveries that slightly missed expectations, sending the stock lower.
Tesla said it delivered 462,890 vehicles in Q3, up 6.4% quarter over quarter, to mark the first quarter of delivery growth this year. The numbers also came in ahead of the 435,059 EVs the company delivered in the year-ago period. But Wall Street had expected Tesla to deliver closer to 463,897, according to Bloomberg.
“Refreshed Model 3 ramp continued successfully in Q3 with higher total production and lower cost of goods sold quarter-over-quarter. Cybertruck production increased sequentially and achieved a positive gross margin for the first time,” Tesla said in its report.
Tesla said it expects vehicle deliveries to achieve “slight growth” in 2024.
Ahead of Tesla’s Q3 disclosure, shares were down approximately 11% since Tesla revealed its robotaxi, dubbed the Cybercab, at its showy “We, Robot” event from the Warner Bros. studio lot in Burbank, Calif., on Oct. 10.
The debut and release of a cheaper EV is what many analysts and industry watchers believe will spur the next leg higher of EV sales, as even CEO Elon Musk has said before. During its Q2 report, Tesla and Musk said the company remains on track for the production of new vehicles, likely including a cheaper EV, in the first half of next year.
Investors and analysts were left wanting more details from Tesla’s “We, Robot” event on the Cybercab itself and detailed testing plans, along with questions about the development of Tesla’s sub-$30,000 EV, dubbed the Model 2.
Transak disclosed a data breach affecting over 92,000 users after a phishing attack compromised an employee’s laptop.
CryptoCurrency
The Dow plummets more than 600 points and is on track for its worst day in more than a month
The Dow Jones Industrial Average and other major indexes suffered a steep decline Wednesday afternoon as the yield on the benchmark 10-year U.S. Treasury note continued its upward climb, reaching 4.23%—a level not seen since July.
In the afternoon, the Dow dropped 631 points, or 1.4%, heading for its worst day in over a month. Meanwhile, the tech-heavy Nasdaq and the S&P 500 declined by 2.2% and 1.4%, respectively. However, there was some relief for investors as oil prices eased, with West Texas Intermediate (WTI) futures trading around $70.65 per barrel.
The Federal Reserve’s Beige Book, released in the afternoon, reported that economic activity remained largely unchanged across the 12 Federal Reserve Districts, with the Southeast significantly impacted by a harsh storm season.
On Wednesday, all eyes are on Tesla (TSLA) as the company prepares to release its latest earnings report. Analysts expect earnings per share to be 60 cents, down from 66 cents a year ago but an improvement from 52 cents in the previous quarter, according to FactSet estimates. Revenue is projected to hit $25.4 billion, compared to $23.3 billion in the third quarter of 2023 and $25.5 billion in the preceding quarter.
Apart from Tesla, investors are closely monitoring earnings reports from other major corporations, including AT&T (T), Boeing (BA), and Coca-Cola (KO).
McDonald’s stock plunges over 5%
McDonald’s (MCD) shares took a sharp hit, falling over 5% after the Centers for Disease Control and Prevention (CDC) linked the chain’s Quarter Pounder burgers to an E. coli outbreak. The outbreak has led to 10 hospitalizations and one death, driving a significant decline in McDonald’s stock during the afternoon trading session.
As of now, 49 cases have been reported across 10 states between Sept. 27 and Oct. 11, with a majority of illnesses occurring in Colorado, Nebraska, Utah, and Wyoming. The CDC noted that most of those affected had eaten a Quarter Pounder. Investigators are working swiftly to identify the contaminated ingredient.
Spirit Airlines stock soars 30%
After a failed attempt at merging with JetBlue (JBLU-0.80%), ultra-low-cost carrier Spirit Airlines (SAVE+28.01%) is reportedly turning back to a familiar partner. The Wall Street Journal (NWSA-0.34%), citing people familiar with the matter, reports that Spirit and Frontier Airlines (ULCC+3.05%) are in early talks over a potential merger. The news sent Spirit’s stock soaring nearly 30% on Wednesday.
–Francisco Velasquez and Rocio Fabbro contributed to the article
The semi-autonomous region of Tanzania is taking advantage of a sandbox regulatory framework adopted in July.
Bitcoin’s correction ignited selling in altcoins, which are slipping below critical support levels.
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