Five9 Inc.: A Top Capital Gain Candidate – Five9, Inc. (NASDAQ:FIVN)


Why is Five9 (NASDAQ:FIVN) so mispriced?

We’ll never know exactly, because the insights producing the disparity of today’s price with those in the near future being protected against come from sources limited to the research of professionals with full-time dedication to such evaluative tasks. The disparities are also aided by daily evolutions of Market-Maker [MM] awareness of the conditioning of attitudes indicated by their institutional clients’ transactions. Usually referred to as “order flow”, such insights rarely get beyond the market-making community itself.

But those prospects are evidenced by hedging actions in derivative securities, which have the advantage of being impossible to misinterpret in terms of their outcomes. Our analysis of their actions has been performed daily (without meaningful change) for two decades in this century, and weekly for another two decades in the 20th century. Each security’s report contains what has happened to all of that issue’s prior forecasts in the past 5 years having the same Reward~Risk balance as the current one. Warts and all.

For more about the MMs’ forecasts, check “How To Use Market Maker Hedging-Derived Price Forecasts“.

Value and beauty are in the eyes of beholders. What institutional investment beholders cause market-makers to put at risk, and then protect, is shown for FIVN and a few other competitors in Figure 1. The implications of what coming share prices would mean if the future mimics 182 prior FIVN market-day forecasts out of the last five years is suggested in columns [F] through [R] of the top row.

Figure 1

(Source: Author)

Forecasts must live in the real, uncertain world. We reflect that by observing only 153 of the 182 priors (84%) [H] were profitable. The 29 errors could have had worst possible actual experience outcomes of -7.9% [F]. Assigning the +13.1% net gains to the 84% and the -7.9% to the remaining 16% of outcomes [O] and [P] leaves an odds-weighted net gain of+9.7%. [Q]

In the same holding period of the prior 182 experiences, 43 market days [J], or about 2 months, the basis points (1/100th of a percent) per day of 22.7 equals a CAGR of +77%.

This is only a next-3-months outlook, but a +13.1% gain in 43 days held in the past has been a +104% annual rate, so when FIVN gets to $75.50, take the money and run. If it hasn’t got there by June 20, my apologies, cash the position out to be employed in a better opportunity.

As can be seen by the bottom row of the table, there usually are several other odds-on productive alternatives. The long-run perspective for portfolios needing prompt performance to support lengthy retirement needs is to repeat outstanding short-term capital gain achievements.

Conclusion

Five9, Inc. appears to be a competitive capital gain buy prospect with good odds for an attractive near-term payoff.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in FIVN over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Disclaimer: Peter Way and generations of the Way Family are long-term providers of perspective information, earlier helping professional investors and now individual investors, discriminate between wealth-building opportunities in individual stocks and ETFs. We do not manage money for others outside of the family but do provide pro bono consulting for a limited number of not-for-profit organizations.

We firmly believe investors need to maintain skin in their game by actively initiating commitment choices of capital and time investments in their personal portfolios. So, our information presents for D-I-Y investor guidance what the arguably best-informed professional investors are thinking. Their insights, revealed through their own self-protective hedging actions, tell what they believe is most likely to happen to the prices of specific issues in coming weeks and months. Evidences of how such prior forecasts have worked out are routinely provided in the SA blog of my name.





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The Dow marked its 2nd straight gain — but Thursday jobless claims may pose the stock market’s biggest test amid coronavirus


Jobless claims haven’t been a focal point for investors for more than a decade, but market participants will be keenly watching Thursday’s figures because they could provide the clearest sign yet of the damage wrought by lockdowns that have swept across much of the U.S. to mitigate the spread of the COVID-19.

“’How will the markets survive the U.S. initial claims going ballistic?’ is probably on everyone’s minds this morning” wrote Stephen Innes, chief global markets strategist at AxiCorp.

Check out: Jobless claims set to soar by the millions as layoffs surge due to coronavirus shutdowns

Market participants are bracing for a number that could run into the millions — figures that are likely to bring to an abrupt end the first win streak for the Dow Jones Industrial Average

DJIA, +2.39%

and the S&P 500 index

SPX, +1.15%

since early February.

With one out of every five Americans under some form of stay-at-home measure to help lessen the spread of the illness that was first identified in Wuhan, China, in December, some economists are anticipating that as many as 5 million workers will show as applying for unemployment insurance in the coming weekly report. It is a staggering number that some market participants say is too large to discount and one that will likely knock the air out of a market that is searching for its footing higher.

See: 23 million American jobs in immediate danger from the coronavirus crisis

“We realize freakishly bad economic data is coming,” wrote Fundstrat Global Advisors’ Tom Lee in a Wednesday research note. “On Thursday, some economists are projecting weekly jobless claims to surge to as high as 5 million,” he wrote.

“Many of our more active and tactical clients are short into this, arguing that such wildly bad news cannot be discounted and thus, this ‘tape bomb’ should lead to a big sell-off,” he said.

On Tuesday, BTIG analysts Julian Emanuel and Michael Chu said that if a $2 trillion coronavirus rescue package being voted on by lawmakers late Wednesday wasn’t approved by the time those gut-wrenching numbers come out on Thursday, it would likely knock the wind of the market’s sails.

The BTIG researchers wrote that the “psychology of such a large weekly claims number without a deal done will inflict incrementally larger damage” on an already fragile market.

The Senate late Wednesday approved the relief bill, which is designed to shield the economy from the pandemic that has halted normal business and personal activity.

“The problem is new jobless claims will measure the extent of U.S. policy failure, and with the Congress dilly-dallying, it will not help the matters,” wrote Innes.



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Gold prices extend rise above $1,600, set for 5th straight gain


Gold futures rose on Wednesday, putting the precious metal on track to register a fifth straight gain, as investors continued to buy the safe haven asset, even though securities seen as risky also gained altitude on the back a slowdown in the spread of China’s coronavirus.

Some investors have attributed the climb in bullion, despite some factors that should weigh on it, to comparatively weaker government bond yields and a Federal Reserve that has kept interest rates low.

“Meanwhile, gold continues its move higher in the face of a stronger dollar and that is because real rates continue to decline and I remain very bullish on gold,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group, in a Wednesday research report.

Gold for April delivery

GCJ20, +0.35%

 on Comex rose $6, or 0.4%, at $1,609.60 an ounce after surging 1.1% on Tuesday, marking its highest settlement and intraday level for a most-active contract since March 2013, according to FactSet data.

Read: Why gold prices topped $1,600 and may soon hit a more than 7-year high

March silver

SIH20, +0.52%

 picked up 11.5 cents, or 0.6%, at $18.265 an ounce, extending its climb to its highest finish since early January of this year.

Read: Why silver prices may climb to their highest yearly average since 2014

The benchmark 10-year Treasury note yield

TMUBMUSD10Y, +0.22%

was at 1.559%, at last check. Low yields can make precious metals, which don’t offer a coupon, more attractive to investors.

The minutes from the rate-setting Federal Open Market Committee’s late January meeting are due out at 2 p.m. Eastern Time, a half-hour after metals settle on Comex. The Fed’s account of its January meeting could shed light on how the central bank is factoring the global economic impact of China’s epidemic.

While the FOMC at the January meeting was “unanimous in declaring the current stance of policy ‘appropriate,’ Powell noted in his post-meeting press conference that under a different policy framework, such as average inflation targeting, the conclusion could be different,” said Marshall Gittler, head of investment research at BDSwiss Group.

“We will be looking for any more detail about these alternative ways of managing monetary policy and which way the Committee is leaning,” he said in a note, adding that there could also “be some information about the Fed staff’s insight into the economic impact of the coronavirus.”

Meanwhile, gold briefly pared gains after U.S. economic data published early Wednesday.

The U.S. producer-price index jumped 0.5% last month, the largest gain since the fall of 2018. Economists polled by MarketWatch had predicted a 0.2% advance. And a report on housing showed that builders started construction on new homes in the U.S. at a pace of 1.57 million in January, the Commerce Department said Wednesday, representing a 3.6% decrease from a revised 1.63 million in December, but was 21.4% higher than a year ago.

Among other metals, March copper

HGH20, -0.44%

 edged down by 0.6% to $2.588 a pound.

April platinum

PLJ20, +1.17%

 added 1.3% to $1,006.30 an ounce, with prices for the most-active contract on track for its highest finish since Jan. 24, FactSet data show.

March palladium

PAH20, +3.96%

 added 3.9% to $2,594.90 an ounce, extending its climb to fresh records.

While many doubt the largest palladium supply deficit projections will be realized “due to softer Chinese auto catalyst inspired [platinum group metals] demand, it is possible that the explosion in prices will result in physical palladium supply being hoarded by investors,” analyst at Zaner Metals wrote in a daily note. That, in turn, “could effectively result in a lack of available supply for industrial uses.”



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Airbus pledges profit gain after bribery settlement hit By Reuters


© Reuters. Airbus’s annual press conference on Full-Year 2019 results in Blagnac

By Laurence Frost

TOULOUSE, France (Reuters) – Airbus (PA:) plunged to a 1.362 billion euro ($1.48 billion) net loss in 2019, weighed down by a multinational bribery settlement, but the European aerospace group pledged to increase operating profit and deliver 880 commercial jets this year.

Full-year adjusted operating income, which excludes the criminal settlement and other one-offs, rose 19% to 6.946 billion euros and should top 7.5 billion euros in 2020, Airbus said. Revenue increased 11% to 70.478 billion euros.

Airbus turned in a “strong underlying financial performance driven mainly by our commercial aircraft deliveries”, Chief Executive Guillaume Faury said in the company statement.

The group will focus on operational and cost improvements in 2020 as well as “reinforcing our company culture”, he added.

The net loss reflected a 1.212 billion euro charge on the A400M military transporter program as well as a provision for last month’s $4 billion settlement with British, French and U.S. prosecutors over past corrupt practices.

Airbus played down the potential damage from the virus outbreak currently rattling airlines and the broader global economy, endorsing traffic growth forecasts that “assume no major disruptions, including from the coronavirus.”

Raising its proposed dividend by 9% to 1.80 euros per share, Airbus predicted full-year free cash flow of around 4 billion euros, improved from 3.509 billion in 2019.

The long-delayed A400M program delivered 14 planes in 2019, on schedule, but is now hampered by “increasingly challenging” obstacles including repeated extensions to a German export ban on Saudi Arabia, Airbus said.

For the fourth quarter, adjusted operating income fell 9% to 2.813 billion euros, ahead of the 2.736 billion expected by analysts, according to an Airbus consensus poll. Quarterly revenue rose 4% to 24.31 billion euros.

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Stocks gain after China cuts trade tariffs, solid U.S. data By Reuters


© Reuters. People walk past an electronic display showing world markets indices outside a brokerage in Tokyo

By Hideyuki Sano

TOKYO (Reuters) – Asian stocks edged up on Thursday, cheered by record closes in Wall Street benchmarks after encouraging economic data, and after China announced a cut in tariffs on some imported goods from the United States.

MSCI’s broadest index of Asia-Pacific shares outside Japan () gained 1.3% while Japan’s Nikkei () rose 2.47%. Mainland Chinese shares also reacted positively, with the bluechip CSI300 index () up 0.97%.

U.S. stock futures () rose 0.5% while China’s rose 0.2% to its strongest level since Jan. 23 after the tariff cuts were announced.

China said on Thursday it will halve tariffs on some U.S. goods, which could help improve negotiating conditions for a second phase of trade deal after the two countries agreed on a interim deal last month.

“Under the phase 1 deal, China has to meet a tough target to increase U.S. import by $100 billion this year, so a measure like this was necessary and expected,” said Tomo-o Kinoshita, global market strategist at Invesco Asset Management.

“But at the same time, that they did this now points to their desire to support Chinese companies as the coronavirus epidemic will obviously deal a huge blow to China’s growth,” he added.

Mainland shares have also drawn support from Beijing’s efforts to support the market amid heightened anxieties about the coronavirus, including liquidity injections and de facto restrictions on selling.

“It is difficult for investors to sell Chinese shares now given the authorities’ stance is very clear,” said Naoki Tashiro, president of TS China Research.

“Still, until the spread of the virus stops, market stabilization steps won’t completely change investor psychology.”

On Wall Street, far from the epicenter of the outbreak, the mood was brighter as the S&P 500 () gained 1.13% to a record close of 3,334.69 while the Nasdaq Composite () added 0.43% to 9,508.68, also a record high.

The ADP (NASDAQ:) National Employment Report showed private payrolls jumped 291,000 jobs in January, the most since May 2015, while a separate report showed U.S. services sector activity picked up last month. Both indicators suggest the economy could continue to grow this year even as consumer spending slows.

Traders also cited vague rumors of a possible vaccine or a drug breakthrough for the coronavirus as a trigger for Wednesday’s stock rally, although they also said such catalysts were likely to simply be an excuse for short-covering.

The World Health Organization played down media reports on Wednesday of “breakthrough” drugs being discovered to treat people infected with the new coronavirus.

Another 73 people on the Chinese mainland died on Wednesday from the virus, the highest daily increase so far, bringing the total death toll to 563, the country’s health authority said on Thursday.

“Despite all the efforts by the Communist Party, the virus is becoming a major global disaster. Considering workers usually start to return to hometown about a week before the Lunar New Year, many patients must have left Wuhan before its lockdown on Jan. 23,” TS China Research’s Tashiro said.

Statistics from China indicate that about 2% of people infected with the new virus have died, suggesting it may be deadlier than seasonal flu but less deadly than SARS, another reason investors remained relatively calm.

“The coronavirus is continuing to spread so we need to remain cautious. But markets now appear to think that there will be a quick economic recovery after a short-term slump,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

The 10-year U.S. Treasuries yield rose back to 1.672% () from a five-month low of 1.503% set last Friday.

In the currency market, the yuan gained 0.2% to 6.9600 per dollar in onshore trade while the Australian dollar rose 0.2% to $0.6758 .

The safe-haven yen stepped back to 109.94 yen , compared with a three-week high of 108.305 hit on Friday.

The euro stood flat at $1.0998 ().

In commodities, U.S. West Texas Intermediate (WTI) crude () gained 2.17% to $51.85 per barrel, extending its rebound from a 13-month low of $49.31 touched on Tuesday.

Still it is down about 15% so far this year.

Copper, considered a good gauge on the health of the global economy because of its wide industrial use, showed some signs of stabilization although it remained depressed overall.

Shanghai () extended its rebound into the third day, rising 1% from 33-month low hit earlier this week. It is about 5% below its levels just before the start of Lunar New Year holidays.

“One has to wonder whether China can meet its trade agreement with the U.S. to increase imports by $200 billion (in two years), which looked very difficult to begin with,” said a manager at a U.S. asset management firm, who declined to be named because he is not authorized to speak about China.

“Before the outbreak, a mini goldilocks market was everyone’s consensus. But we have to see whether we need to change such a view,” he added.





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