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COVID-19 Impact on the Mobile Secondary Market

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As COVID-19 continues to escalate and impact businesses around the world, we wanted to share the latest trends B-Stock is seeing in the mobile market and specific data related to the mobile secondary market. 

Given our work with today’s largest wireless retailers, OEMs, and buyback companies, we have unique visibility into how supply chains are responding to this rapidly evolving landscape. We are monitoring the situation closely, and will continue to share observations and insights with our customers on a regular basis.

Currently, all our mobile marketplaces are running with live auctions. Please visit our COVID-19 Marketplace Updates page for the latest news. 

Retail/eCommerce Updates

AT&T, T-Mobile, and Sprint are closing stores 

Retailers, including Apple, are temporarily shutting doors

Freight & Logistics Updates

Reduced international passenger travel is impacting freight

FedEx & UPS suspending requiring signatures for deliveries and offering Hold at Location (HAL) solutions

Borders are closing, but goods are still moving across country lines

Mobile Manufacturing Specifics

Apple production is rebounding

B-Stock Projections, Charts & Data

Over the next 9 weeks, we anticipate: 

  • Overall unit volume reduction of at least 20%
  • As the situation remains fluid and some businesses close due to COVID-19, freight is stacking up in terminals pending disposition and carriers are working to schedule appointments. We are seeing this influence on time performance negatively. 
  • Greater need for pre-owned Apple products in retail locations

Following, please find charts and data related to what B-Stock is seeing across our Mobile Marketplace Network, including:

  • The impact of Hong Kong Border Closure on iPhone D Grade products and subsequent market correction.
  • An increase in unique buyers when Hong Kong slowed. This was an opportunity for new buyers to capitalize on market softness.
  • Apple and Samsung A/B Grade Index versus typical depreciation.

We hope you find this information helpful during these changing times. B-Stock will continue to update our partners weekly with the latest information we have regarding the impact of Covid-19 on the mobile secondary market.

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Thought Leadership Thursday (#TLT): The Effect of External Events on Mobile Supply Chain

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Whether a tariff, a health epidemic, or a new device launch—when a large or outside event occurs—there is often an impact on the mobile supply chain and a trickle-down effect for smaller wireless and prepaid retailers. In this edition of Thought Leadership Thursday, we sit down with Sean Cleland, B-Stock’s Vice President of Mobile, to have a data-backed discussion on how recent macro events—including the Chinese tariffs, COVID-19, and the iPhone 11 launch—impacted the mobile supply chain, particularly the secondary mobile market. 

Q: How has COVID-19 created a shift in geographic demand for used cell phone models?

It’s actually created several changes already. Because the situation is so fluid now, we’ve seen multiple market adjustments as the geography of the virus moves. The initial impact was in Hong Kong, where there’s a strong buyer base of secondhand cell phones. Geographically, Hong Kong is a free trade zone and inventory from there goes out to the world. The coronavirus affected products crossing the border there, as well as the population. As a result, an entire buyer base ceased purchasing because there was so much uncertainty about whether or not their downstream would come back. That has since self-corrected—they’re back and purchasing quite strongly—but during that time period in which Hong Kong ceased purchasing, other domestic markets stepped in, specifically North America. Buyers in these regions saw an opportunity to get inventory foreseeing a device shortage in the near future, so they bid aggressively.

Read more on the COVID-19 Impact on the Mobile Secondary Market

Q: How did Apple’s recent supply chain disruption impact the secondary market?

The biggest impact was in parts, so it wasn’t necessarily Apple specific, but all of the upstream companies that supply Apple were affected as well. It’s important to remember all of the mainland manufacturing in China that was affected by both Chinese New Year and the COVID-19 outbreak. Combined, these two events affected even parts such as magnets and raw materials; there is a lot of production involved in creating a phone, so all of these changes impacted the forward end of Apple production. In the secondary market, the immediate effect was on parts supply companies. These companies build parts not just for Apple—but for the broader market as well, so refurbishers felt the impact pretty quickly. The long-term effects of this will likely be a decrease in inventory and supply of new mobile phones—which simultaneously has a positive effect on the secondary market: the shortage of supply on the front end will create a higher demand for pre-owned and secondary market devices. 

Q: What impact did the iPhone 11 have on B2B pricing and demand for older devices?

The iPhone 11 was unique because it challenged the trend that Apple was only producing $1,000+ phones. So, when a new phone was introduced into the market at $699—that is better than an iPhone XR or X—the secondary market had to compress under that new retail price point. That $699 price point announcement sent the secondary market on a course correction to get product pricing under the 11. In addition, it was so well received globally that it solidified the fact that every modelthat’s considered to be not as good as an iPhone 11had to come under that price point. Think about it: if a consumer can purchase an iPhone 11 for $699, legacy products won’t sell for more than that—so there was immediate compression in the secondary market.

Q: What are some notable case studies for how wireless retailers have successfully adapted following a shift in the market?

Market wide, we can look at the macro trends that lead to change. In the ever-changing landscape of mobile devices, there was a time in which a Motorola flip phone or a Nokia phone were the most popular. But as consumers shifted what they wanted, the market adjusted based on demand. These same macroeconomics that take place on the forward logistics and retail also take place in the secondary marketif there’s a shift in devices that are liked by a consumer, this will start reflecting itself in the secondary market as well, regardless of channel. 

Mobile carriers are another example of adaptation to changing trends. There was a time in which getting a new phone came at a discount for for entering a two or three-year contract, but that’s no longer the case. As consumers swayed away from contracts, carriers made their own macro decision and did away with long-term agreements and offered those same phones at a discount in exchange for a trade-in device, so they’ve found a creative way to subsidize those phones. 

Q: What are some best practices when it comes to mitigating the effects of external events?

In our point of view, having the most diversity within the buyer base provides a tremendous advantage. Making product available to multiple geographies and different sophistication levels is really the first moat around your business. 

We saw over the last several weeks that when a large group of buyers needs to stop purchasing, new buyers pick up the slack. So, there are always more opportunities for purchase when you diversify your buyer base.

Secondly, it’s important to not only look backward at data, but forward as well. In cases like this, we tend to forget that there have been macro challenges throughout the wireless industry. It’s pivotal to keep track of that data and ensure that we’re not only looking at comps every day but that we’re also really looking at industry trends and staying attuned to that. 

Please feel free to reach out if you’d like to learn more or have any questions.

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The Rise of Zoom- How to Spot Stocks with Growth Potential

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Zoom Video Communications (NASDAQ: ZM) took off like a rocket since it went public in 2019.  The videoconferencing site Zoom has become essential for workers during the coronavirus (COVID-19) crisis.  With the rise of videoconferencing to keep up with friends, families, and co-workers, Zoom shares climbed 20% over the past few weeks.  Along with Zoom, there are four other strong growth stocks in this article that are still solid investments in the midst of a volatile stock market. During this bear market, these stocks can potentially be a savvy investor’s source for low-risk investments.

Growth stocks are stocks that are growing much faster than other equities on Wall Street. Many of them have higher-than-average valuations. Investors can look closely at these five stocks on Trading Sim that could pump up their portfolios. This article will also tell investors what traits to look for to find stocks that have great growth potential like Zoom.  The conclusion of the article will also warn about a stock that doesn’t have the same growth potential as stocks like Zoom and is cratering- retailer J.C. Penney( NYSE:JCP). The article will also note how Trading Sim can help investors find the next growth stock.

How did Zoom get its start?

The latest prominent growth stock, Zoom, got its start in 2011. Eric S. Yuan started the company in his native China. He saw Zoom as a way for companies to communicate with each other. He worked on the idea when he was a corporate vice-president of engineering at Cisco once he immigrated to the U.S. During an interview in 2017,  Yuan presciently said that Zoom would help make it easier for workers to telecommute.

“Zoom gives organizations and individuals a faster way to communicate relative to audio-only, chat, and email meetings, and it’s not restricted by geography, so employees have more flexibility to work from home. Because it lets people meet face-to-face, and provides support for screen sharing, it’s truly a collaboration catalyst, and helps build teams across geographies,” said Yuan.

The company grew in a cluttered field of videoconferencing apps like Skype and GoToMeeting. Zoom grew because Yuan would personally call dissatisfied customers. In addition to Zoom’s dedicated customer service, Zoom grew because it offered a  free version of the app on smartphones. into a company with a $9 billion valuation. The valuation was 48 times its sales when Zoom went public in April 2019.

How has Zoom stock performed since it went public?

After the debut of Zoom’s IPO (initial public offering), Zoom shared climbed 72% above its listed $36 IPO price. Though the stock experienced volatility in the year after going public, its last earnings report showed strength. Even before the coronavirus global outbreak, Zoom’s Q4 2020 revenue soared year-over-year to $188.3 million. The stock currently sells for 58 times revenue.

Yuan noted that the company performed well because of a “unique combination of high total revenue growth of 78% at a scale of $188 million, GAAP( generally accepted accounting principles) income from operations of $11 million, non-GAAP income from operations of $38 million, and operating cash flow of $37 million.”

Why is Zoom stock “quarantine-friendly?”

Zoom stock jumped 200% since the stock went public. The Renaissance IPO ETF noted that work-from -home apps like Zoom have survived the coronavirus-caused massive sell-off.

“Quarantine-friendly companies like remote work-enablers Slack (NYSE:WORK; +23% in February) and Zoom Video (ZM; +20%) and telemedicine provider Teladoc (TDOC; +23%) have also outperformed the broader market,” noted Renaissance.

Zoom’s popularity is because of its reliability. In contrast to other videoconferencing apps that have glitches and buffering problems, Zoom mostly manages to avoid prolonged outages. So, while there may be awkward moments of kids interrupting meetings, the livestream will always come through very clearly.

Zoom is growth stock because of accessibility

Zoom stock is also surging because of the app’s accessibility in many areas. Apple’s FaceTime is exclusively on iOS and Apple devices. However, Zoom is widely available on Android and any Apple or PC. Zoom also is not just being used by workers, but by schools to help with digital learning.  The corporation has eliminated the 40-minute limit on free calls so students and teachers can remain in contact with each other. The company’s CFO, Kelly Steckleberg, noted that reliability and easy access for students makes Zoom an attractive option for customers.

“The usability and the reliability of Zoom is what has led to this incredible adoption, combined with, honestly, the generosity of Eric and his willingness to open it up especially to the schools,”  said Steckelberg.

Why is Zoom stock a growth stock?

Zoom stock is also a high-growth stock because of its potential revenue growth. Bernstein’s Zane Chrane and Michelle Issacs note that if Zoom’s free users convert to paid users, there could be an explosion in revenue for the company.

“If we … assume that 75% of the active users added YTD are incremental purely due to CV [coronavirus], the massive spike in usage YTD would suggest that Zoom could get as much as $140M in incremental revenue if customers that convert to a paid plan are retained for at least a year,” said Chrane and Isaacs.

Even after the coronavirus crisis abates, Zoom stock could still a long-term option for investors. More workers are working from home, so Zoom is becoming an option for many investors.  This TradingSim chart shows that Zoom stock has steadily risen and should continue to remain a buy for investors.

Zoom stock the week of March 9

 

Why Teledoc stock is a growth stock possibility for investors

In addition to Zoom, another tech stock booming in the wake of coronavirus is Teledoc (NYSE: TDOC). The computer software company’s stock has steadily risen in the past few days. Similar to Zoom, Teledoc has been a necessary health resource for many people who want to check their health through a mobile device.  The subscription-based telemedicine company was founded in 2002. The company offers virtual consultations with doctors and the stock has exploded during the recent coronavirus outbreak.

The corporation’s stock grew 30% over the past month and 400% since Teledoc went public in 2015.  During the company’s Q4 2019 earning call Teledoc’s CEO, Jason Gorevic, said that Teledoc’s physicians would work with clients to weather the current pandemic. With many people under quarantine, Teledoc has been the perfect way for people to safely interact with doctors to monitor their health.

“Our clinical teams, thousands of physicians around the world, are actively working along with our commercial teams and clients to ensure that members have the most timely and relevant access to the latest information during this unfolding situation, and access to care if and when they need it,” said Gorevic. This Trading Sim chart shows mostly steady growth for Teledoc stock.

 

Teledoc stock the week of March 12

Teledoc hopes to increase customers to increase stock growth

Even before the COVID-19 crisis, Teledoc stock looked attractive because of the corporation’s partnerships with (NYSE: CVS)  and hundreds of hospital systems.  This growth shows that Teledoc will have a wide reach to a larger number of customers.  During a recent conference call, Teledoc noted the potential to expand its customer base.

“Our existing health plan clients and self-insured clients associated with these health plans currently purchase our solution for only a small percentage of their beneficiaries in the aggregate, and we estimate this provides us the opportunity to grow our membership base by more than 75 million individuals in the United States by expanding our penetration within our existing clients alone,” noted Teledoc.

Teledoc’s profile rises with coronavirus pandemic

Lew Levy, MD, Teladoc’s chief medical officer, noted that telemedicine companies like Teledoc are vital during this current health crisis.

“We are seeing more patients, and more of those patients are experiencing upper respiratory issues. As we saw during the flu epidemic of 2018, a community’s healthcare system can become overwhelmed and virtual care can help provide needed relief,” said Levy.

During the coronavirus crisis, Teledoc is working closely with the Center for Disease Control to provide information to clients.

Levy noted that Teledoc has  a “unique ability to immediately connect with the CDC and other government agencies to add the right screening tools and clinical quality protocols to our system, and most importantly, to keep patients — particularly those most at risk with underlying health conditions — out of care settings where they can face exposure.”

Netflix stock benefits from quarantine life

Teledoc benefitted from patients increasing as a result of coronavirus. Similarly to Teledoc, Netflix (NASDAQ: NFLX) stock has jumped as a result of ” stay at home” orders. The streaming service’s stock surged 8.2% over the past week.  Baird Equity Research said Netflix would outperform because of two strengths. Netflix is the go-to home entertainment for quarantined Americans. The corporation is also part of a growing trend of customers abandoning cable.

Netflix has always been able to set trends since launching in 1998. The company evolved from DVD rentals to streaming entertainment in 2007. Since producing original content in 2013, the hundreds of original shows currently offered have helped  Netflix 167 million subscribers worldwide. So, watching Love is Blind may actually be a smart move to boost Netflix stock.

Since going public in 2002, Netflix stock has grown 3,000%. Even with competition from Disney + (NYSE:DIS) and Hulu, Netflix subscribers grew in Q4 2019 by 20%. Netflix was a pioneer in streaming entertainment. By being first and have more options for viewers, Netflix remains a strong growth stock for investors.

Analysts see Netflix stock as growth stock

Many analysts are bullish on the stock, like Credit Suisse analyst Douglas Mitchelson. Data from Credit Suisse found that quarantined people in countries hard hit by COVID-19 are becoming devoted subscribers.

“The data in both Hong Kong and Korea present a strong case Netflix is seeing increased demand, as first-time app downloads inflected positively starting in January and continued into March,” said Mitchelson. This Trading Sim chart shows Netflix stock rising on March 11.

 

Netflix stock the week of March 12

Rob Drury, vice-president of client partnerships for media and TV at CSM Sports and Entertainment, also believes that the global quarantine and growing customer base makes Netflix stock a growth stock.

“I‘m bullish on the impact this will have for Netflix. Their business is driven primarily by renewal rates, and on a global scale people are experiencing first-hand the benefit of Netflix’s content library. Social distancing is adding an entirely new dimension to content bingeing.”
Social distancing has been difficult for many during the coronavirus pandemic. The economic downturn has also led people to cut cable packages to only have streaming services for entertainment. However, the social distancing and cord-cutting have been beneficial for Netflix stock.

Lowe’s stock solid because of quarantine orders

Lowe’s (NYSE:LOW) stock is a safe option for beginning traders.  The home improvement store has been Like Netflix, the concern about COVID-19 has helped this company’s stock rise. As more people stay at home, many are taking up home improvement projects. That desire to do DIY projects has benefitted Lowe’s shares. Wall Street experts predict that Lowe’s will have a growth stock.  High earnings per share usually is a hallmark of a growth stock. Earnings per share rose to $0.94 a share in Q4 2019.  Sales also jumped 2.4% to $16.03 billion.  Financial analysts predict that Lowe’s earnings per share will skyrocket 15.8% over the next five years. 

If investors want short-term returns,  Lowe’s stock has a lot to offer investors.  Lowe’s shares have grown 20% since its recent earnings report. Lowe’s stock is not only growing, but its dividend is a steady 2% payout to investors. This Trading Sim chart shows the growth of Lowe’s stock during the week of March 12.

Lowe’s stock the week of March 11

In addition to stock growth, Lowe’s store sales performed well over the last month. CEO Marvin Ellison touted the store sales growth in the company’s last earnings report.

“I’m very pleased with the strength and productivity of our brick and mortar stores. There are very few large retailers in America delivering a 2.6% comp growth almost exclusively from the brick and mortar stores. This underscores the sales productivity improvement of our physical stores and our opportunity to unlock additional growth when Lowe’s.com sales accelerate,” said Ellison.

The stores’ sales grew as customers purchased large appliances like refrigerators to store large quantities of food. Lowe’s sales also increased as Ellison started “seeing people start to work down that to-do list and get those things done in their homes.”

Lowe’s CEO buys company shares to show confidence in stock

Ellison also said that he bought Lowe’s shares to show his confidence in the company. “I’m a believer in my company. “I’m here for the long term.”

“We think that we will create a great value and we’ll create a great opportunity for shareholder value over the long term. As CEO, if I don’t have confidence in the company, then I don’t know who will,” said Ellison.

Lowe’s stock could be a growth stock because of the current need the corporation serves during this coronavirus crisis.  Big purchases like freezers and even small purchases like toilet paper have made Lowe’s a shopping destination. Lowe’s stock is also a potential growth stock because of its impending expansion into online sales.

Amazon stock a growth stock during coronavirus

Even though Lowe’s is just making a dent in online sales, Amazon( NASDAQ: AMZN) has been an online giant for years. The company has been able to adapt to change since its founding in 1996. Since Jeff Bezos founded the company as an online bookstore, Amazon has grown into an e-commerce and cloud computing behemoth. From Amazon Prime Video to its Amazon Web Services, the corporation is a tech powerhouse.

Just as Lowe’s has seen growth through sales of necessities, Amazon stock has increased through coronavirus checklist item sales. Amazon was already a powerhouse stock because of its dominance in e-commerce. Now with COVID-19 spreading worldwide, shoppers are buying supplies on the site. Popular items like cleaning supplies and even toilet paper are selling out on Amazon.com in the wake of the coronavirus pandemic.

Amazon stock is also increasing because of its grocery delivery service. Amazon owns Whole Foods, which offers free delivery to Amazon Prime subscribers. Many customers are buying groceries from Amazon Fresh, the company’s food delivery service.

Jim Kelleher, an analyst at Argus, noted that Amazon will benefit from the worldwide quarantine.

“As more and more businesses shutter or move to online operations, and more and more consumers shelter in their homes, we expect traffic on the Amazon site to increase. Certain counties with COVID-19 clusters are implementing stay-at-home policies with varying degrees of stringency. Even in communities with low or no cases, consumers are prudently minimizing interactions, including trips to retail stores,” said Kelleher.

Amazon adjusts to help workers amid COVID-19 pandemic

Amazon’s business has grown so much that it is hiring thousands of temporary workers to keep up with demand.  The corporation will hire part-time and full-time warehouse workers to fulfill the high demand for shoppers’ needs.

“Because of high demand, Amazon is hiring 100,000 new workers. In addition to the 100,000 new roles we’re creating, we want to recognize our employees who are playing an essential role for people at a time when many of the services that might normally be there to support them are closed,” noted Amazon.

Bezos noted that Amazon is getting its warehouses ready to combat coronavirus.

“We’ve changed our logistics, transportation, supply chain, purchasing, and third party seller processes to prioritize stocking and delivering essential items like household staples, sanitizers, baby formula, and medical supplies. We’re providing a vital service to people everywhere, especially to those, like the elderly, who are most vulnerable. People are depending on us, ” noted Bezos.

Amazon stock still strong despite Wall Street volatility

Amazon stock recently dropped 11%, which is disappointing. However, it’s less than the overall 28% decline in the S &P. The Trading Sim chart below shows the volatility of Amazon stock.

 

Amazon stock the week of March 19

Amazon is also a growth stock because of its dominance in varied industries. The world’s largest retailer controls most of e-commerce. The corporation is also making inroads into cloud computing with Amazon Web Services. More workers are telecommuting, so Amazon Web Services (AWS) benefits. Work-from-home apps like Zoom depend on AWS cloud computing to run, so Amazon is well-positioned as a growth stock.

Analysts say Amazon is safe haven stock

Economic analyst Jim Cramer also believes that Amazon’s stock could rise over 30% to the $3,000 range in this current climate because “Amazon Web Services must be just crushing it.”

Stock analyst Jason Helfstein noted that Amazon is a stock that will outperform other equities. He noted that Amazon’s grocery and e-commerce delivery sector will help quarantined customers.

“COVID-19 is driving widespread demand for essentials, combined with increased e-commerce usage from ‘social distancing’ and ‘shelter-in-place’ programs. While some items are taking longer to be delivered, and grocery delivery capacity is strained, we think Amazon is seeing record consumer demand, with share gains likely to remain post virus,” noted Helfstein.

Amazon is a growth stock because of the company’s versatility. Amazon is able to adapt to any online shopper’s needs and to provide cloud computing to stay-at-home workers.

How to spot growth stocks like Zoom

Growth stocks aren’t just trendy pump-and-dump stocks that are here today and gone tomorrow. Many growth stocks that trade as much as 10 times their IPO price can follow current trends, like Zoom. However, Zoom stock is likely to be a growth stock even after the stay-at-home orders come to a close. Zoom is part of a technology that is a staple in work life, so that corporation’s stock is likely to increase. Growth stocks often start as trends, but grow into blue-chip stocks to add to portfolios.

Growth stocks fulfill new needs as game changers

Stocks with high growth potential can outperform more established stocks by fulfilling needs or creating innovative products. Corporations like Teledoc are meeting a need for telemedicine in this time of people being socially distant from each other.  Just as Amazon created a new world of e-commerce, many growth stocks evolve from unfamiliar new technology to a pivotal need for consumers. Even established brands like Lowe’s can have shares become growth stocks by rising during seasonal events.

While many investors may see tech stocks as the main growth stocks, online retail can see growth as well. With many people abandoning physical stores, many shoppers are turning to tailored subscription services like Stitch Fix (NASDAQ:SFIX). Any company in an industry that has any innovation or generates interests from consumers is sure to earn a look from investors.

Growth stocks have high earnings- and higher P/E’s

In addition to filling needs for consumers, companies with growth stocks have good earnings reports to please investors.  Many growth stocks have high price-to-earnings ratios above 16. Netflix’s price-to- earnings(P/E) ratio is well above that. The streaming service’s stock is valued at 87 times its past year earnings. Amazon’s Q4 2019 sales surged 21% year-over-year to $87,4 billion. On the strength of diversified services the retailer offers customers, Amazon stock is the epitome of a growth stock with its explosive expansion over the past 20 years. Growth stocks usually have two or more consecutive positive earnings reports that show that a corporation has the potential for expansion.

If investors can’t afford Amazon stock, they still shouldn’t invest in risky cheap stocks like penny stocks unless they can withstand the volatility.  Investors shouldn’t see penny stocks as growth stocks unless they want to start with low-cost stocks to add to their portfolios.

Many growth stocks have positive cash flow

Growth stocks like Zoom also have a lot of available cash on hand. Zoom has $855 million in cash and investments in reserve. Many growth stocks may have debt, but have a large cash reserve.  In its Q4 2019 earnings report, Zoom’s operating income increased 292% from Q4 2018 to $38.4 million. Many growth stocks have to have available cash to weather any storms in the volatile stock market.

Even though Netflix is in millions of dollars in debt to pay for original content, the corporation still has billions on hand. As of  Q4 2019, Netflix had $5 billion in available cash. That’s a 32% year-over-year increase.

While growth stocks usually don’t pay a dividend to investors to increase growth, some do both. Lowe’s pays dividends to investors unlike many other growth stocks. However, like many other growth stocks, Lowe’s participates in stock buybacks to reinvest in their companies.

Tom Plumb, money manager at Wisconsin Capital Management, says that tech companies with a lot of cash on hand will have profitable stocks.

“The companies taking in a lot of cash because of their disruptive business models and technologies and their focus on how money is spent and where it is spent, are showing no signs of abating,” he said.

Growth stocks start in U.S., but expand globally

While many growth stocks started in California’s Silicon Valley, but expand around the world. Netflix has 167 million subscribers, but only about 60 million of them are in the U.S. Out of the hundreds of shows offered, many are from India and Nigeria. Those two countries have billions of potential new customers. Netflix is expanding its global outreach to increase the value of its stock.

Amazon is moving to expansion in Brazil and Canada to increase profits.  Many growth stocks expand globally after first starting in the U.S. to reach new consumers. By reaching out to international customers,  growth stocks have increased potential.

Even before the coronavirus pandemic, Teledoc purchased a French telehealth company to help reach more patients.  Now the global expansion is helping Teledoc stock soar. Carlos Nueno, president of Teledoc Health International, touted the acquisition of MedicinDirect.

“With a continued focus on our global expansion, we will now become the market leader in France with the ability to have an immediate impact on healthcare delivery in the country. On the successful foundation built by MédecinDirect, we will bring our full suite of virtual care services to multinational clients who have been eager to expand,” said Nueno.

Growth stocks test an investor’s patience

Growth stocks tend to be focused on the future potential of stocks.  While value stocks can capture a company’s current value, investors that focus on growth stocks tend to focus on potential growth.  While value stocks are profitable today, many investors think growth stocks will continue to be profitable in the future.

As opposed to value stocks that are undervalued, growth stocks can be overvalued. Investors will likely have to wait out the volatility of growth stocks, some of which are often new to the Dow Jones.

If investors need the money in the stock market within five years, then growth stocks are not for them. Growth stocks tend to require more patience, so investors need to let the money from growth stocks stay in their portfolio in the long run.

Exercise caution when investing in growth stocks

While growth stocks may want investors to rush in, they should be cautious. They shouldn’t invest only in growth stocks. By diversifying, investors don’t have to depend on growth stocks to increase an investor’s profits. A mixture of growth and value stocks can make a more well-rounded portfolio.

Investors also shouldn’t pour too much money into growth stocks because of their volatility. Investors should start small and only invest up t0 3% of their portfolios on growth stocks. Economic expert Tom Engle noted, “If this company is the next great growth stock, then a little is all I need. If it’s not, then a little is all I want.”

While investors may want to go full- speed ahead on a growth stock, it’s best to slowly wade into investing in the stock. If there is volatility in the stock’s industry or on Wall Street, investors can withstand it with their portfolios intact

Why J.C. Penney is the opposite of a growth stock- it stayed behind trends

While Zoom is a cutting-edge stock with huge growth potential, J.C. Penney is on the exact opposite end of the spectrum. Zoom is a relative newcomer to Wall Street, while J.C. Penney has been offering stock for almost a hundred years. The retailer has been struggling for years because of its inability to adapt to change.

The store took too long to offer e-commerce to consumers. As a result, other brick-and-mortar competitors like Target ( NYSE: TGT) scooped up shoppers looking for sales online.  Growth stocks often are looking for what’s new, now, next- but J.C. Penney was still stuck in the past. Instead of investing in online sales, J.C. Penney spent millions on stores in malls. But who shops in malls anymore? Everyone gets their favorite pants (or dress) from online retailers like Amazon now.  J.C Penney is the exact opposite of a growth stock because the company didn’t have any innovation in its sales strategy or business model. Amazon evolved to cater to shoppers’ needs, unlike the brick-and-mortar retailer.

Companies with growth stocks listen to consumers- J.C. Penney didn’t

Unlike tech stocks that conduct focus groups that listen to consumers, J.C. Penney made many changes without consulting consumers. By abandoning loyal bargain shoppers and not offering coupons anymore, J.C. Penney lost a lot of customers. Zoom often listens to its customers and asks customers for feedback.

As Zoom noted when it reached 10 million participants in 2014, customer service is key to create a growth stock.

“We have a relentless focus on making the best product with the best user experience. This is ultimately what every customer wants. Toward this end, we spend much of our time listening to customers and fine-tuning our software to fit their needs,” said Zoom.

Companies with growth stocks often reach out to customers and stay loyal to their main customer base.  J.C. Penney didn’t listen to its customers- and the stock suffered as a result.

Growth stocks have a clear niche unlike J.C.Penney

Growth stocks like Amazon have a clear identity of being the world’s online retailer. With competition from Amazon, J.C .Penney lost its niche as a retailer.

Neil Saunders, an analyst at GlobalData Retail said that the rise of Amazon led J.C. Penney to have a  “lack of understanding about what it is, what it stands for, and who it wants to serve”.

Bob Phibbs from the Retail Doctor, also said J.C. Penney lost its identity by neglecting its core shoppers- moms ( or dads) on a budget.

“These companies are so busy trying to figure out who their shoppers are — Is it moms? Is it millennials? — that they’ve lost their most loyal shoppers. Plus the customer experience is forgettable. Nobody is going into a J.C. Penney and saying, ‘You’ve got to see this place. It’s great.’ ”

This Trading Sim chart shows how far J.C. Penney stock has fallen since its last earnings report.

J.C. Penney stock the week of March 19

While bargain-hunting shoppers knew to turn to Amazon or  Target, J.C.Penney was forgotten and its stock had plummeted to only about $1  a share.  Companies with growth stocks often fill a specific niche and know how to stand out among competitors. J.C. Penney doesn’t have that advantage. J.C Penney’s stock is down so low, it might be delisted from the New York Stock Exchange. Not having a clear identity confuses consumers and investors.

J.C. Penney has no cash available to grow stock

As J.C. Penney tried to get customers back, it burned through a lot of cash- a warning sign that a stock is bound to fail. Many growth stocks have a lot of cash on hand to reinvest back into the corporations. However, stocks that are tanking often are in too much debt with no chance at profitability. J.C. Penney is about $4 billion in debt and has had to close hundreds of stores nationwide. J.C. Penney only has $386 million of available cash. In contrast, growth stocks have a lot of cash on hand to weather Wall Street volatility.

Growth stocks like Netflix has debt, but also has a positive net income of $1.9 billion in 2019. While there is no one magic way to predict a growth stock, the contrast between J.C. Penney shares and other stocks show a clear contrast. Investments in innovation, growth in profits, and of course, a rising stock.

J.C Penney is a cautionary tale about stocks and corporations. Companies have to innovate or serve a niche need in order to increase their influence with investors.  Corporations like Zoom are shaping the present and are building a strong future. On the other hand, dinosaur retailers like J.C. Penney are falling because it fell behind the times and couldn’t turn a profit.

Research is key to picking growth stocks

If investors want to learn more about how to pick the best growth stocks, thorough research is best. Investors can investigate earnings reports, stock price movements, and more through Trading Sim. With Trading Sim’s expert analysis and platforms to analyze stocks, investors can make wiser stock picks. Investors may even be able to spot the next growth stock with Trading Sim’s guidance and analysis.

Zoom and other growth stocks show that by being innovative leaders or filling niche needs, investors can see an increase in their portfolios.

Tracking growth stocks can be complicated, but studying Trading Sim’s charts can help investors keep track of which stocks are rising like Zoom and which ones are plummeting like J.C. Penney.  By simulating trades first, investors can test out Trading Sim’s theories about what creates a growth stock. Trading Sim’s trading platforms can help investors possibly find the next potential growth stock.

The post The Rise of Zoom- How to Spot Stocks with Growth Potential appeared first on – Tradingsim.



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I Put Together A New Swing Set

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After peak news flow over the weekend, along with the state of Louisiana shutting down, I decided to take the day off and build a swing set for my two little girls. This was my first build of any sort of playground set and I was a little terrified going into the project. I heard horror stories of grown men putting together these contraptions, and promised myself I would always pay labor for that task.

Being that we are in unprecedented times, with the state shutting down and the government mandate to shut down my small businesses, I said, “What the hell, I’m going to build a swing set as if was a giant outdoor puzzle and take my precious time with it.”

And, that’s exactly what I did. I took my 4×4 Ford to Academy, put the swing-set box in my truck like superman, and drove back to my residence before the whole state shut down.

Upon arriving, my girls were excited. I one-armed the swing set box (I’m 6’4 225lbs) out of my truck and threw it in the garage. Then, I opened the box and realized what a grave mistake I just made. This was worse than a 10,000 piece puzzle. I remained calm.

Long story short, this was just the therapy I needed to get away from the news flow. I sashayed in and out my backyard to office, taking my time with each wood board while buying every dip in $AAPL.

The news flow was too negative. I was damn near attacked on Twitter for even the thought of buying shares in $AAPL. This gave me big confidence in the trade, so much confidence that I went back outside and built my girl’s playground like I was Bob fucking Vila.

Here are some pictures from the project. Don’t believe the hype, with time and a clear head, these things can be a lot of fun to put together with your family. Just as investing can be.

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The swingset is complete and so is my new swing long in $AAPL.

The end result to my day: PRICELESS. Go build something.



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