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RECAP OF LAST WEEK AND RESULTS:
Disney: Disney was at $192 and we projected that it would have some volatility in the month. However, we do think it will hit $200 a share in the next three weeks. Currently it is sitting at $185.51
Virgin Galactic: From $32 a share, we called SPCE to hit $30 a share this week before going up. It hit our mark by Wednesday. We expect to start moving back up as it has a test flight in May that will make or break the company.
Ark Invest Space Exploration: We touched on ARKX because this will be opening up sometime on Monday or any day after. We wanted to address it because we think this will have a large impact on the space sector.
IN THIS ISSUE
An engineering company that is looking to make money and solve the plastic trash problem at the same time by recycling. They increased their dividend and jumped 10% on forward revenue guidance.
Vanguard Total Stock Market Index Fund ETF
Add some stability to your portfolio in the midst of the recent market volatility.
A promising up and comer in the EV world. Could be a good option for investors with a high risk tolerance.
KBR, Inc. (formerly Kellogg Brown & Root) is an American engineering, procurement, and construction company, formerly a subsidiary of Halliburton. After Halliburton acquired Dresser Industries in 1998, Dresser's engineering subsidiary, the M. W. Kellogg Co., was merged with Halliburton's construction subsidiary, Brown & Root, to form Kellogg Brown & Root. KBR and its predecessors have received many contracts with the U.S. military including during World War II, the Vietnam War, and the Iraq War.
They recently announced they are bringing in much more revenue and have also upped their dividend. The CEO also said the company is looking into solving the plastics trash problem. The CEO believes there is a ton of money in recycling plastic, and they are racing to be the first to solve the plastics issues in the oceans and all over the world. If you look at where you are sitting, we can probably bet you are wearing something made from plastic or you are near plastic. It is everywhere and they think there is a large amount of untapped money coming from recycling and transporting plastic.
Current Price: $37
One Month Target: $40
One Year Target: $44
Two Year Target: $48
Selling covered calls on this would be a good strategy as the stock moves slowly and pays out dividends regularly. They would be a solid dividend growth stock since their value still can grow a ton.
Vanguard Total Stock Market Index Fund ETF: VTI
As the stock market continues to bully certain sectors and reward others, we have started looking at ways to hedge against the market volatility. Even on a full red day, parts of the market will typically move down more drastically than others. However, when you own VTI you have a piece of a ton of stocks. Basically, it takes a lot more for this index fund to go down because if the energy and utilities sector goes up, but tech goes down, you will balance out.
Current Price: $206.87
One Month Target: $202
One Year Target: $220
Two Year Target: $240
This stock isn't going to explode one day. This is one you add to your portfolio to hedge against certain sectors going down. Most active stock portfolios should have about 30% allocated to some sort of ETF like VTI. If you are a more passive investor that percentage could be much higher. VTI is something you buy and leave alone. It offers peace of mind more than anything.
Another reason VTI is amazing to have in your portfolio is the fact that it pays a dividend. It only pays 1.40% so don't expect to get rich off of it immediately. However, once you have built your account up enough those dividends could be creating a decent portion of passive income. The dividend yield will change depending on how the companies are doing within the ETF. If they can offer higher dividends the ETF’s dividend will also increase.
There are other options as far as ETFs go that will serve a similar purpose, but it really depends on what style of investor you are. There are some “higher risk” ones that pay a larger dividend but won’t offer the same stability. VYM would fit that description and pays closer to a 3% dividend. We recommend having a diversified portfolio in order to better protect yourself against certain sectors having large drops in value.
XPeng, Inc.: XPEV
“XPeng, Inc. designs, develops, manufactures, and markets smart electric vehicles. It produces environmentally friendly vehicles, namely an SUV (the G3), and a four-door sports sedan (the P7). The company was founded by Xiao Peng He, Heng Xia, and Tao He in 2015 and is headquartered in Guangzhou, China. The listed name for XPEV is XPeng Inc.” This stock IPO’d August 26, 2020 for $23.10 and then shot up to a high of $64. It is now sitting back around $32. This is a growth sector stock, so it has been hurting with the uncertainty in the market.
(Plan on holding this one for 10 years)
Current Price: $32.51
One Month Target: $35
One Year Target: $40
Two Year Target: $60
The mindset for this stock is to pick a winner before it's a winner. High risk, high reward play. We believe the EV industry will be huge and XPeng could be a big player. They tweeted “XPeng’s Navigation Guided Pilot #NGP autonomous driving function achieved 100% success rate passing through tunnels on 800km plus highways under the NGP control from #Hangzhou to #Shanghai, #Nanjing arriving #Qingdao on 24 Mar.” They are proving to have excellent autonomous technology. They also posted some impressive numbers for their 2020 fiscal year report. “Full year total revenues reached RMB5,844.3 million (US$895.7 million). Full year deliveries were 27,041 vehicles. Full year gross margin reached 4.6%.” Some pretty impressive numbers. NIO, probably the most popular EV in China, had 43,728 deliveries just to add some perspective.
This company could be massive. Tesla, NIO, and LI will all offer some serious competition in the EV sector, but we are talking about a place with over 1 billion people living there. Now obviously not everyone is going to drive, but this market is just getting started. The more XPeng performs the more value the stock will have. We expect this stock to have a bit of a bumpy road ahead of it, but we think giving this stock a long time to grow could have a huge upside.
If you are a higher risk investor with plenty of time to let this stock sit, we think this stock would be a great purchase.
All stocks talked about we have invested in, and do not intend to give advice nor recommend acting upon the information.
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Until next week,
and the Optifinancial Team
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