Sam Engelman discusses his views on the stock market.
Twitter’s IPO is turning heads this month as Twitter raised the its price range from $23 to $25-$28. Founders are planning on releasing an initial 70 million shares set to open trading on Nov. 7.
My advice is to tread lightly. While their user base is increasing, especially overseas, Twitter has yet to turn a profit. In fact, Twitter’s net loss YTD is $133.9 million, up 89% from last year.
Twitter’s IPO is oddly similar to Facebook’s IPO released early last year which opened high but immediately dropped 17%.
MGIC (MTG) is looking more and more solid as the year continues. MTG posted a net gain in the third quarter, their first since 2008, and they recently settled a burdensome lawsuit with Fannie Mae. Current trade is around $8 per share, up 206% YTD. It can be expected to have another net gain in the fourth quarter which should set a new trading range around $8.50-$10.
Tesla (TSLA) is priced to make a solid jump. After poor outlooks in their third quarter results, their stock lost 17%. However, their EPS beat projections and many analysts are still bullish. My advice? Stick with the fundamentals. The new Tesla is an increasingly popular car for business executives and even the ultra wealthy. While not cheap, it is only the third of the cost of a Lamborghini, yet its aggressive look and eco friendly reputation have made it a popular “statement” car.
For the more conservative investor, US treasuries are still a safe haven. The Feds’ recent decision to keep interest rates low will keep prices high. Watch out though a new Fed chair is on the way and these low rates are bound to go up, especially considering the growth in the stock market.
Overall, keep an eye on social network stocks; Twitter’s IPO might affect others in the industry. Watch the housing market and mortgage insurers as well as lenders. Look for news on Tesla and watch general automotive trends, as well as oil prices. Listen for news from the Fed and be ready for a hike in the interest rate. Finally start preparing for the end of the fourth quarter; watch projections and make smart assumptions.
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