This first appeared in the Seeking Alpha Marketplace service DGI Across North America, from which you can get real-time buy and sell alerts (and explanations) when I make moves in my portfolio.
- NetEase up 10.4% on Monday. My position is up nearly 17% in a little over 2 months.
- News came out that it plans to buy ~$11 billion of inventory over the next 3 years from the U.S., Europe, and Japan to sell to the Chinese market.
- NetEase is primarily a video game publisher in China that has been diversifying into e-commerce.
- NetEase is reasonably valued after the pop based on the consensus low-end earnings growth estimation.
- Interested investors can nibble here to start a position, but will be safer to buy on a meaningful dip — perhaps one will occur when the company reports Q3 results on Nov 15.
Occasionally, dividend–focused portfolios need some growth to spice things up. And NetEase Inc. (ADR) (NASDAQ:NTES) is a good candidate for consideration.
NetEase stock appreciated 10.4% on Monday. In the DGI Across North America service, I gave a real-time alert and the reasoning for buying NetEase, which is now up nearly 17% in a little over 2 months.
The following quotes are excerpts from my previous article that’s available in the service.
NetEase was founded in 1997 and has been listed on the NASDAQ since June 30, 2000. Even for an investment that was made at the end of 2007 would have delivered an annualized return of 32%!
This outperformed Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) which has delivered an annualized return of 10.8% in the period, Baidu (ADR)(NASDAQ:BIDU): 19.6%, and even Amazon (NASDAQ:AMZN): 27.2%.
NetEase is the second-largest video game publisher in China.
In 2016, NetEase generated 73.3% of its revenue from its online games.
Source: Company Q2 2017 presentation – Slide 6
Nintendo Co., Ltd appreciated more than 100% in July after the launch of Pokemon GO. A month later the shares have already declined 27% from the peak.
Speculating is not investing
It’s great if you got in on the action before Pokemon GO was launched, but after the launch and the stock already went up, it’s too late to jump in.
To add to that, no one knows how long people will continue playing Pokemon GO. Actually, Pokemon GO already lost some users as the hype dies down a bit.
If investors are buying Nintendo just because of Pokemon GO, it’s purely speculation and not investing, unless they believe in the future of Nintendo as a company.
Besides, it’s not like Nintendo owns the Pokemon game. Check out Quora for the relationship between Nintendo, Niantic, and the Pokemon company and find out who benefits from the game.
In fact, I was surprised by the answer that Apple Inc. (NASDAQ:AAPL) and Alphabet Inc (NASDAQ:GOOG)(NASDAQ:GOOGL) get a share of the pie. I think both of these tech giants are better investments than Nintendo, especially Apple, which trades at about 12.9 times earnings and yields 2.1% at about US$108 per share.
Gotta catch ‘em all?
In the Pokemon world, one of Ash’s goal was to catch all the pokemon. Not for investing, though. You better not try to catch ‘em all. Read More
This is a guest contribution written by Ben Reynolds at Sure Dividend. Sure Dividend uses The 8 Rules of Dividend Investing to systematically find high-quality dividend growth stocks trading at fair or better prices.
Investing concepts can seem divorced from reality. Theories become more understandable through real world examples.
This article takes a look at 3 important dividend investing concepts and provides real world examples to help either explain the point or show evidence of why it matters.
Total return measures exactly what the name implies. Total return includes the capital appreciation and dividends of an investment.
The concept of total return is critical to investing success. It is the one number that determines how quickly your money will grow. All other things being equal, the higher the total return, the better. Here’s how you can double your money.
Calculating a reasonable expected total return will help to guide your investing decisions.
Returns in the market can come from only 3 places:
- Change in intrinsic-value-per-share (typically measured by earnings-per-share growth)
- Change in valuation multiple (typically measured by the price-to-earnings multiple (P/E))
My estimate of The Coca-Cola Co’s (NYSE:KO) total returns over the next 5 years is below.
First, we know the company’s dividend yield is 3.2%. The company is a Dividend King – it has paid increasing dividends for over 50 consecutive years. We can reasonably assume Coca-Cola will continue paying dividends.
3.2% a year is our expected return from dividends for Coca-Cola. Read More