Shopify Inc. (NYSE: SHOP) released its fourth-quarter earnings report before the markets opened on Thursday. While the online retailer was left holding the bag in this most recent quarterly report, most wouldn’t be able to tell just by looking at the reaction from analysts. Sure the bottom line was not pretty in this report, but Shopify has proven that it can grow in other metrics. Not to mention its shares have more than doubled over the past year.

Here 24/7 Wall St. has included some of the main highlights from the earnings report, as well as what analysts are saying about the stock after the fact.

The company said that it had a net loss of $0.03 per share on $222.8 million in revenue, compared with consensus estimates that called for earnings of $0.05 per share $209.28 million in revenue. The same period of last year reportedly had no earnings and revenue of $130.38 million.

During this quarter, Subscription Solutions revenue grew 67% to $93.9 million, driven by rapid growth in monthly recurring revenue (MRR). Merchant Solutions revenue grew 74% to $128.9 million, driven primarily by the growth of gross merchandise volume (GMV).

Specifically, MRR at the end of the quarter was $29.9 million, up 62% compared with $18.5 million a year ago. Shopify Plus contributed $6.3 million, or 21%, of MRR, compared with 17% of MRR last year.

GMV for the fourth quarter was $9.1 billion, an increase of $3.6 billion, or 65%. Gross payments volume grew to $3.5 billion, which accounted for 39% of GMV processed in the quarter, versus $2.2 billion, or 39%, for the fourth quarter of 2016.

Looking ahead to the first quarter, the company expects to see an operating loss in the range of $6 million to $8 million with revenues between $198 million and $202 million. The consensus estimates call for a net loss of $0.01 per share on $195.11 million in revenue for the quarter.

CHEAPER THAN AUTO OWNERSHIP


​FEBRUARY NEWSLETTER 4

​GALAXY 9

​Buying, owning and driving a car is not cheap. There’s the monthly payment (usually), insurance, registration, fuel and on and on. It must cost less to use a ride-sharing service like Uber or Lyft, right?

Well, as with most things, the answer is, “It all depends.” In this case, the answer depends on where you live and how much and why you drive. If the family minivan hauls two or three kids to school, soccer practice and other activities, that’s a lot different from driving a car to work and back every day and then to the grocery store on weekends.

The auto industry analysts at J.D. Power took a look at how the costs of owning and driving your own car compare with selling the car and, in this case, using Uber.

First, some assumptions about ownership: the average American vehicle owner drives about 13,474 miles in a year (1,122 miles a month) and gets mean fuel economy of 24.8 mpg. That adds up to 45.2 gallons of fuel a month at a current mean average price across the country of $2.58 a gallon, for a total of $116 a month.

The J.D. Power analysis then added in the following costs of owning a car:

Average monthly car payment: $503 (according to Experian)
Average monthly insurance payment: $100 (can vary widely, but estimate $100)
Average monthly price of vehicle registration: $20
Average monthly spend on gasoline: $116
Average monthly spend on maintenance: $20
Average monthly spend on car washes: $30
Projected monthly spend on tires (based on four tires that need to be replaced every four years at a cost of $600): $12.50
Average monthly spend on public parking: $10
Average monthly total: $811.50

On a per-mile basis, the 1,122 average miles driven per month at a monthly cost of $811.50 works out to $0.72 per mile.

In Los Angeles, where J.D. Power conducted its comparison, the least expensive Uber option — UberX — costs about $0.90 a mile, plus $0.15 per minute and a flat booking fee of $2.10 per ride. For an 8.2 mile commute to work, Uber quoted a price of $10.57, or $1.28 per mile. That’s about $314 a month or almost $3,800 a year.

There are some advantages to using Uber, of course, most involving not having to put up with the hassles of owning a car. The question you might want to ask yourself is whether that’s worth $314 a month to you.

​It was asleep for years, just like volatility. But like all cycles that tend to repeat themselves, inflation is back, and it may be surging faster than you think. In fact, Treasury yields jumped to four-year highs this week as inflation has started to show up in the economic data. While not necessarily bad if it stays measured, if price and wage inflation spikes, you can bet the Federal Reserve will raise rates faster than currently expected.

So what can investors do to protect themselves against inflation? One of the best ways to protect a portfolio against inflation is to own gold, which is widely viewed as an inflation hedge and is a reliable measure of protection against purchasing power risk.

We screened the Merrill Lynch research universe for gold stocks that were rated Buy and found four that make sense for investors that feel that inflation is making its way back into the economy.

Agnico Eagle Mines

This is one of Wall Street’s most preferred U.S. gold producers. Agnico Eagle Mines Ltd. (NYSE: AEM) is a senior Canadian gold mining company that has produced precious metals since 1957. Its eight mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these regions, as well as in the United States and Sweden. The company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. Agnico Eagle has declared a cash dividend every year since 1983.

The company posted solid four-quarter results and the analysts said this:

Agnico Eagle reported adjusted earnings per share of $0.21, in line with the Merrill Lynch estimates but a beat versus consensus. 2017 gold output beat forecast (again) For 2018 and 2019, the company has raised its prior gold output guidance to 1.53 million and 1.7 million ounces, though at higher costs. Agnico replaced reserves mined in 2017, thanks to converting Amaruq to reserves; and remains on track for 2 million ounces of output by 2020.

Shareholders receive a 1.09% dividend. The Merrill Lynch price target is $50, and the Wall Street consensus target is $54.84. Shares closed Thursday at $40.25.

Kinross Gold

More aggressive investors may want to consider this smaller cap company. Kinross Gold Corp. (NYSE: KGC) engages in the acquisition, exploration, development and production of gold properties. The company’s gold production and exploration activities are carried out principally in Canada, the United States, the Russian Federation, Brazil, Chile, Ghana and Mauritania. It also produces and sells silver.

Kinross announced last year that it will proceed with the Tasiast Phase Two and Round Mountain Project W projects. At full production by 2020, CEO Paul Rollinson sees these two projects stabilizing the company’s gold equivalent output in the 2.5 million ounce range. Trading at a discount to the peer producers, some believe that this valuation gap could be closed due to these projects.

Merrill Lynch has a $5.80 price objective, while the consensus target price is $3.77. Shares closed Thursday at $3.63.

Newmont Mining

This is one of the largest mining companies, and its stock is a solid buy for more conservative accounts. Newmont Mining Corp. (NYSE: NEM) is a leading gold and copper producer. It employs approximately 29,000 employees and contractors, with the majority working at managed operations in the United States, Australia, Ghana, Peru, Indonesia and Suriname. Newmont is the only gold producer listed in the S&P 500 index.

Last year Newmont announced that “first gold” has been poured at its new mine, called the Merian gold mine, in Suriname in South America. It reported Merian contains gold reserves of 5.1 million ounces and that annual production is expected to average between 400,000 and 500,000 ounces of gold at competitive costs during the first five full years of production.

The company also just raised its dividend, and the analysis noted:

Newmont declared a quarterly dividend of $0.14/sh ($0.56/sh annualized), an 87% increase vs. the fourth quarter level. At the Investor Day on December 6, 2017, Newmont had indicated that it could increase the dividend by at least 50% In our view, Newmont has sufficient free cash flow to pay the higher dividend and continue reducing debt and investing in projects.

Shareholders receive a 1.5% dividend. The $46 Merrill Lynch price objective compares with a $43.06 consensus estimate. Shares closed on Thursday at $37.53.24/7 Wall St.
Merrill Lynch Growth Portfolio Stocks Crushing the S&P 500: 5 to Buy Now

Royal Gold

This is a solid stock for investors looking for a gold presence with somewhat less risk. Royal Gold Inc. (NASDAQ: RGLD) is a precious metals royalty and stream company engaged in the acquisition and management of precious metal royalties, streams and similar production-based interests. The company owns interests on 193 properties on six continents, including interests on 38 producing mines and 24 development stage projects.

Many on Wall Street feel that the company is very undervalued when compared to its sector peers. Backed by three new or expanding assets, Royal Gold’s revenue could grow by 13% to nearly $500 million by fiscal 2019. Royal Gold’s strong liquidity position also means it can compete for royalty and stream acquisitions.

The company posted in-line fiscal second-quarter results and the analysts said this:

Fiscal second quarter 2018 revenue was 7% higher year-over-year at $114.3 million, driven by Andacollo, the Wassa/Prestea stream, and Rainy River. The company is improving its net debt & liquidity profile by focusing on paying down debt.

Shareholders receive a 1.21% dividend. The Merrill Lynch price target is $98. The consensus target is $94.75, and shares closed Thursday at $82.48.

​EARNINGS

​A number of analysts believe that Apple Inc. (NASDAQ: AAPL) has sold fewer of its new iPhone X flagship than its management projected. That by itself has rattled some investors. Samsung, Apple’s primary rival, has launched its new iPhone killer, the Galaxy S9. If sales of the new Samsung smartphone are strong, Apple’s iPhone X sales will be dented.

The Samsung S9 and the larger S9+ version have a number of features the new iPhone has. Its dual aperture lens may be as good as or better than the iPhone X feature that is similar. The Samsung has AR Emoji stickers, which have become very popular with consumers. The Samsung Galaxy 9 has a facial recognition feature like the iPhone. It also has high-end Dolby Atmos stereo speakers.

The price of the Samsung Galaxy S9 and S9+ are not very different from the iPhone 8 and iPhone X. The S9 is priced at $719.99 and the S9+ at $839.99.

Several press reports and analyst figures forecast that iPhone X production could be as low as 20 million in the first half, down from 40 million last year. This would be a catastrophe for shareholders. Apple’s stock, up 28% in the past year, almost certainly would slide on very bad iPhone news. The advance in the price has slackened this year. The stock is only up 2% to $176 in 2018.

Apple has not had any meaningful competition to either the iPhone 8 or iPhone X. Obviously, that has made picking up market share across the high end of the smartphone market easier than at times when it was up against direct competition from Samsung. Samsung, because of its size and global reach, is Apple’s only real competitor, and it has hurt iPhone sales in the past.

One of the most depressing pieces of news recently for both Apple and Samsung is that smartphone sales declined at the end of last year. They had grown for well over a decade. A major research firm reported:

Global sales of smartphones to end users totaled nearly 408 million units in the fourth quarter of 2017, a 5.6 percent decline over the fourth quarter of 2016, according to Gartner, Inc. This is the first year-on-year decline since Gartner started tracking the global smartphone market in 2004.

Apple and Samsung each held about 18% of the market for the period. As the market plateaus, they will need to take sales from one another to grow. That means the iPhone X is already up against headwinds, and Samsung’s Galaxy S9 will make the situation worse.

STRONG GOLD STOCKS

DANIEL CULLINANE CPA                                      p 732-318-7673    ​f 732-516-9778   221  River St, 9th fl Hoboken NJ 07030