Low 10-year Treasury yields and COVID fears hindered the market’s growth today.
The stock market ended with mixed indices today, if only barely. The S&P 500 and the Dow Jones took a fall, while the NASDAQ managed to stay just above in the green.
With the 10-year Treasury yield drop and the rising number of COVID cases, the market’s lukewarm start to the week isn't unexpected.
But, let's talk about something else. Professor Galloway is one of the smart folks I like to follow. He sent out a chart today that grabbed my attention. He looked at the price-to-sales ratio of companies and their stock price return in one quarter to 5 years.
The results are quite interesting. If you are the holder of a company with a price-to-sales ratio above 15, you would have lost money over 2-year, 3-year, 4-year, and 5-year periods. Of course, this is based on historical data between 1970 to 2020, and things can change. The conclusion is that a high price-to-sales ratio may indicate the market's over-excitement about the company.
Also, as you may know, on Stock Card, you can click on the Fairly-priced stock section, go to valuation multiples, and get the stock's price-to-sales ratio. For example, Amazon's (AMZN) price-to-sale ratio is around 4.5, and Square's (SQ) price-to-sales ratio is 9.5.
I found the analysis quite interesting.
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Buy now, pay later stocks are rocketing today after Square (SQ) purchases Afterpay (AFTPF)
You can find Afterpay (AFTPF) on the winner’s list on Stock Card today, as share prices were up almost 30% by closing time. The company announced today that it is being acquired by Square. Square (SQ) also saw a jump in price, gaining over 10% by closing time. Afterpay is the pioneer of digital “buy now, pay later” programs for retailers. We discussed this model when a rumor began spreading that Apple (AAPL) was possibly going to enter the same space.
It seems Square is taking advantage of this lower price caused by Apple's rumors to grow its user base, expand its offerings and keep its users engaged. Square wants to be the preferred financial institution for the younger generation. That means gaining users and engaging them by all means necessary to compete with traditional banks, and even fight with big tech like Apple entering the financial space.
To me, this is another confirmation and reason to invest in Square when you can. Taking a glance at the company’s Stock Card, it is killing it with sales growth and profitability. I own shares, and I’ll keep buying if I can.
Square’s acquisition of Afterpay overshadows Global Payments' (GPN) positive earnings report.
As they say, one person's happiness is another's misery or something like that. Afterpay's good news turned out to be bad news for Global Payments Inc (GPN) who landed on Stock Card's losers list. The company provides payment processing for small and medium-sized businesses. It was expecting a great day after releasing its earnings report, detailing a 56% increase in Earnings Per Share thanks to its overseas partnerships and increased profitability. Afterpay’s acquisition news spooked investors, who are wary of the competition. The stock dropped by 11% today.
The good news is, Global Payments Stock Card is still looking great. It’s a 3-greener with a lot of growth opportunities and strong profitability. The company also generates free cash flow, and even before today's price drop, it was fairly priced. The attention to and growth in the European markets that the company references in its earnings report is one reason why this may be a dip worth buying. This is certainly an interesting company to pay attention to.
FEATURED PARTNER PORTFOLIO
Check out Wealthy Nurse Janee's portfolios, our featured investor and partner of the week.
Okay, today, I want to introduce you to Janee Clay, founder of Wealthy Nurse Janee and the featured investor of the week. Janee runs two portfolios on Stock Card: her Dividend & Value portfolio, as well as her Higher Risk portfolio.
I'm so impressed by her return, but also by her superwoman powers. She is a nurse, as you can guess from her name, a mom, an avid investor, and she is quite active on TikTok.
I'll leave a link to my conversation with Janee. I would highly recommend looking her up on the Stock Picks page and following her portfolios to get notified when she adds new stocks to her portfolio.
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