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We are looking at Alexion Pharmaceuticals (ALXN) today.
Why Alexion Pharmaceuticals (ALXN) shares fell more than 3% today?
Shares of Alexion Pharmaceuticals lost more than 3% on Wednesday. The SEC is fining the company for bribing foreign government officials to receive favorable treatment. The company's subsidiaries from 2010 to 2015 in Turkey and Russia from 2011 to 2015 bribed officials and maintained false records of such payments. The fine is adding up to a bit more than $20 million, but investors hate such dealings with the SEC, as they should. And, the stock is paying the price.
The company is still a very well-managed, cash-rich pharmaceutical that develops treatment for rare diseases such as multiple sclerosis (M.S.). Its SOLIRIS® (ECULIZUMAB) is a leading drug in the U.S. Assuming that this bribery case doesn't snowball to a bigger fraud, the stock is hovering in an undervalued range that may be worth adding to your watchlist. Check out the company's Stock Card to see the evidence of its strong operations.
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The recent news of Walmart's subscription program ignites the old Walmart (Ticker: WMT) vs. Costco (Ticker: COST) debate. Aside from the launch of Walmart+, the question is whether these retail giants benefit from the pandemic? And whether their performance during the COVID-19 pandemic justifies adding to our portfolio?
This is Sailesh Tirupasur. I'm a part of Stock Card's summer internship program in 2020, and this post is a part of my Stock Battle series. I used to publish them every day in our private user community, and I'm expanding them to the blog as of July 8th, 2020.
Stock research and analysis
Costco and Walmart are two of the biggest retail store chains in the United States. While the retail industry seems to be shrinking due to pandemic difficulties and the rise of online shopping, these two retail giants seem to still be going strong.
Costco has recovered from a 30% year-over-year drop in-store visits in April to only a 6.5% drop in June. Moreover, with Texas, Florida, and Arizona seeing a massive rise in cases of COVID-19, Costco is one of the first places consumers visit to stock up on anything from food to household appliances. Costco has seen significant success with its membership model, and almost 20% of all its members are part of their more expensive business membership. On top of that, the wholesaler last reported May sales numbers on June 3 that show a 5.5% U.S. sales jump from the same month last year. Walmart is planning to announce its own membership program later this month called Walmart+, and is expected to offer several perks designed to get customers to shop more often. This has investors excited as loyalty programs like Amazon Prime or Walmart+ tend to lock customers into longer-term relationships with the company. However, some experts are relatively cautious due to the amount of expenditure required in replicating Amazon's delivery system. Amazon has seen nearly a 30% increase every year in delivery costs, which seems to keep going up.
Final decision
While Walmart+ program seems quite promising for the massive retail store, I would have to go with Costco as a safer investment. Costco has a better performance against the overall market and already has a tried-and-teste membership model with many loyal customers. It's a safer bet.
We are looking at Livongo (LVGO) today.
Why Livongo (LVGO) stock jumped today?
Shares of Livongo Health were up more than 20% on Tuesday. The company announced a preliminary second-quarter report, and revenue growth is exceeding everyone's expectations.
If you don't know the company, this might be a good time to add it to your watchlist. The company is a technology platform provider for the detection and prevention of diabetes in the United States. The company's solution expands into other medical conditions, such as weight management. Livongo is not profitable but has more than a 70% gross margin. With no debt on its balance sheet, it continues to fund its growth without worrying about cash. The COVID-19 pandemic has helped the company grow even faster ad more employers are looking for digital ways to help their employees manage their health. Check out the company's Stock Card to have an eye on it:
We are looking at Dominion Energy (D) today.
Why Dominion Energy (D) stock fell today?
The outbreak of Coronavirus has changed the way we live and work dramatically. The impact is not limited to people having masks on, and sitting 6 feet apart. The more prominent but less visible change is the transition of work from offices and commercial physical spaces to our homes. Working from home is not just limited to having a desk set-up, although that's certainly a necessity. The more critical enabler of the working-from-home era is digital infrastructure, such as a smoother log-in and access to the tools employees need to do their job. The more digital works become, the more significant is the need for easier online communications, document management, payment, and cybersecurity. Such a simultaneous and rapid shift to a new way of working has boosted companies' growth prospects associated with "work-from-home" products. At Stock Card, we live by the belief that our investment is a financial image of our lives, and it was only a matter of time before we completed our research to introduce a new list of companies that enable the work-from-home era.
Launching Stock Card's "Work-From-Home" collection
Last week, we introduced a collection called "Companies Shaping the Future." Many users told us that it helped them discover new growing companies to add to their portfolios. We hope the new "work-from-home" collection does the same. To build this list, we picked themes and markets associated with making "work-from-home" possible, less expensive, and more reliable. We have included companies from 40 different markets to create this new list. Some of these markets are:
You can click on the above links to see the individual market collections.
Results
The above screening gave us a list of 450 companies as a starting point for your research. The best way to use this new collection is to look it up in the search bar, use the "advanced filters" to add your criteria and get a list of stocks that fit your investment goal. The video below shows you how, or click here to get the full list...
If you don't have a brokerage account to invest in Work-From-Home stocks, here is one of the best. We like the M1 Finance app that has an easy-to-use interface. Give it a try if you are in the market for a new brokerage account:
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We are looking at Workhorse Group (WKHS) today.
Why Workhorse Group (WKHS) stock jumped today?
Shares of Workhorse Group (WKHS) were up more than 18% on Wednesday. It seems that the company is getting a nod of approval from financial analysts and investors alike. As an example, BTIG analyst Gregory Lewis almost doubled his price target for the stock. It also didn't hurt for the stock to join the Russell 3000® index, which brings more attention, media, and analysts coverage.
So, what's all the fuss about?
Founded in 2007, the company already has nearly 400 vehicles on the road. The company has a partnership with USPS to manufacture electric delivery vehicles for the United States Postal Service. The company is already delivering its product to customers such as UPS. More interesting is the company's last-mile delivery vehicles that are equipped with delivery drones. The last-mile delivery market is an $18 billion market opportunity, and Workhorse has a head start. What has caught investors' attention is the recent partnership with Lordstown Motors, who plans to license and manufacture electric pickup trucks utilizing the Workhorse's W-15 Technology. The bothersome aspect of the company's operations is its balance sheet. It has a high debt-to-equity ratio, and its earnings are not enough to cover its debt obligations. Despite the steady progress and rapid revenue growth the company is making, this is a risky bet for investors who are in love with the electric truck market. Check out the company's Stock Card before you decide what to do with it. Here you go ...
One of the best ways to invest in risky stocks such as WKHS is to go slow and small and avoid taking too much risk. Here are our top three brokerages that allow you to invest with a small amount of money:
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We are looking at Boeing (BA) today.
Why Boeing (BA) stock fell today?
The news is that airlines have gradually started to cancel their 737 Max orders, which means the company will have a tough time moving its already 400 manufactured planes. This corporate crisis is much deeper and lingering longer than most investors had previously expected.
Moreover, a 52-page report is expected to get released on Wednesday by the U.S. Department of Transportation's Office of Inspector General (IG) to outline what has gone wrong during the certification process of 737 Max jets that ended up causing two fatal crashes.
Boeing's story is a perfect reminder to investors that corporate crises last much longer than we all expect. There is no rush to buy the dip. True dips are extremely painful. True dips are hard and agonizing, and they typically take longer than expected to recover. This means to generate an outsized return from a stock dip, and you need to be extremely patient. Visit Boeing's Stock Card to review the 737 Max's impact on the company in more detail.
Investing in companies such as Boeing takes patience. If you choose to invest in it to benefit from its lower historical price, you need to have a long-term horizon as part of something like a retirement account with decades of waiting time. Personal Capital is an excellent platform we came across to manage your long term goals. Check it out:
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We are looking at Simon Property Group (SPG) today.
Why Simpon Property Group (SPG) stock jumped today?
Shares of Simon Property Group were up more than 17% on Monday. Like most REITs, the company had stopped its dividend payment in response to the COVID-19 pandemic's impact on the commercial real estate market. On Monday, the company resumed its dividend at 50%, and that was enough to give investors confidence about the future of the company.
It's no surprise that the stock was initially hit significantly due to the COVID-19 pandemic. Investors were expecting a drastic shift to work-from-home living and e-commerce across the world. The fear of drastic change in the way people live and work spooked investors away from real estate income trusts such as SPG. However, with a solid and robust balance sheet, SPG is among some of the most reliable REITs (get the list). The hopes of reopening the economy are renewing trust in the future of the stock and its dividend payment power. Make sure to have a look at the company's Stock Card.
If you don't have a brokerage account to invest in REITs, here is one of the best. We like the M1 Finance app that has an easy-to-use interface and automatic dividend-reinvestment feature. Give it a try if you are in the market for a new brokerage account:
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Last week, Direxion launched a new ETF to focus on the so-called Work-From-Home (WFH) stocks. The ETF is very new in its debut and includes all the usual WFH suspects. As is customary around Stock Card, we took a look at the fund's holdings and went straight to the not-so-well-knows stocks on the list. Many times those unknown stocks end up being the talk of the town in a few weeks, and we get to research hem a little sooner than others.
The majority of WFH stocks have gone through rapid and upward stock price movements since the start fo the COVID-19 pandemic. However, one company on the Direxion EFH ETF hasn't followed that trend, quit curiously. Does that mean there is an opportunity to pick up a WFH stock at a somewhat undervalued price range? Based on the financial analysts' average price target of $20 per share, that can be the case. Let's dig a little bit more.
Meet 8X8 (EGHT)
The one Work-From-Home stock to watch
While researching the stock, we learned about the company's recent transition to Oracle (ORCL) cloud infrastructure. The surge in video communication needs and petabytes of data transfer forced 8X8 to transition Oracle. Interesting, Zoom (ZM), the pinnacle of the WFH stocks, also runs its infrastructure on Oracle's cloud infrastructure.
We started this blog post with 8X8 in mind, but we end it with Oracle as a new addition to our watchlist. It may not be unfair to say that the WFH era is run on Oracle's shoulders. Make sure to check out Oracle's Stock Card, and while you are at it, look at 8X8 and Zoom's Stock Card's too.
One of the best ways to invest in Work-From-Home (WFH) stocks is to go slow and small and avoid taking too much risk. Here are our top three brokerages that allow you to invest with a small amount of money:
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New and innovative products and services are making our day-to-day lives faster and easier. We drive safer, get the stuff we need sooner, pay for everything using a new online payment method, and our work, social interactions, and life are digital now. Companies enabling all those things are shaping our future. Some everyday examples are Tesla's electric cars, Zoom's video conferencing platform, or PayPal's payment solutions. The beauty of being a stock market investor is that we can be part owners of these future-shaping companies. Today, we are introducing a new list of companies shaping the future to make it easy for our users and community to discover and research them.
Discovering the companies shaping the future
If you've ever used Stock Card's Discover page, you can look up companies by more than 500 themes. Examples of such themes are "artificial intelligence" and "5G Technology." Our team at Stock Card spends a lot of time refreshing these themes and lists.
To create a list of companies shaping the future, we identified the themes and industries that are using advanced technology to develop their products. We came up with more than 100 such markets. You can access some of those lists by using the search bar on Stock Card's Discover page, or click on them below:
Results
The result is a list of more than 1000 amazing companies that live their lives to create and shape humanity's future. Some of these companies may be very small and young and maybe worth adding to your watchlist. Some have built technologies that are already widely used and could be candidates for your portfolio. Among them, you can find strong and growing companies that are available at a lower price.
We recently took a look at this the brokerage app called Stash Invest, and we liked some of its cool features. You can start investing with at little as one dollar. Have a look ...
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We are looking at SolarEdge (SEDG) today.
Why SolarEdge stock fell today?
Shares of SolarEdge were down more than 7% on Thursday. An analyst from Goldman Sachs issued a "sell" rating for the stock, and investors didn't like the news a bit. Brian Lee from Goldman believes the company has peaked its U.S. share of inverter systems for solar photovoltaic (PV) installations, and the margin is under a lot of pressure too.
The company has been one of the high-flyers of the market in recent quarters. Even with the decline on Thursday, the stock has gained more than 60% in the last three months. Something to watch, if the price drops further.
We recently took a look at this the brokerage app called Stash Invest, and we liked some of its cool features. You can start investing with at little as one dollar. Have a look ...
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We are looking at Uber (UBER) and Lyft (LYFT) today.
Why Uber and Lyft stocks fell today?
Shares of Uber and Lyft were down almost 8% each on Wednesday. The news broke that California may be moving rapidly toward forcing the two companies to hire their drivers as employees.
If California succeeds in forcing the so-called gig economy companies such as Uber and Lyft to hire their independent contractors, it leads to a significant hit to those already unprofitable companies' margins. California says if your business is giving people a taxi ride, you have to own and be responsible for what moves people. The drivers are the business of Uber and Lyft, and they have to be the employees of Uber and Lyft.
In a way, California is questioning the future of the so-called gig economy and independent contractors for everything.
We are looking at Salesforece.com (CRM), today.
Why did Salesforce.com stock fell today?
Shares of Salesforce were down almost 2% on Tuesday. The price decline can be in anticipation of the next week's earnings reports and due to investors locking their gains before the earnings. Overall, it's a bit surprising to see that the price decline considering the joint announcement with Siemens (Ticker: SIEGY).
We are looking at Fastly (FSLY), today.
Why did Fastly stock jump today?
Shares of Fastly (FSLY) were up more than 16% on Monday. The stock has grown more than 270% since the start of 2020 and just received new "buy" and "strong-buy" recommendations by financial analysts.
Navigating the current uncertainties isn't easy for investors. Acorns is one of the best brokerages that helps you get started by investing your spare change. Check it out:
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We are looking at Ping Identity (Ping) today. This stock came up earlier today in the conversation among members of our Intelligent Stock Market Investors' private community. We were discussing the work-from-home stocks, and Ping Identity came up as a "baby Okta." And, baby Okta it is ...
Financially, the company is not profitable; neither does it generate free cash flow. However, it has a strong balance sheet, no debt, and enough liquid assets to keep on investing and growing. Among companies facilitating the digital transformation, those who are already focusing on large enterprises with legacy and hybrid solutions are some of the fastest-growing stocks. This trend enables Ping Identity to get in front of several new large enterprises and get a foothold in its core market that can continue to pay off for Ping. Check out the company's Stock Card to get to know this watchlist-worthy stock.
Navigating the current uncertainties isn't easy for investors. Acorns is one of the best brokerages that helps you get started by investing your spare change. Check it out:
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If you don't have a brokerage account, here is one of the best we have found. We like the M1 Finance app that has an easy-to-use interface. Give it a try if you are in the market for a new brokerage account to invest in your well-researched stocks:
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If you don't have a brokerage account, here is one of the best we have found. We like the M1 Finance app that has an easy-to-use interface. Give it a try if you are in the market for a new brokerage account to invest in your well-researched stocks:
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If you don't have a brokerage account, here is one of the best we have found. We like the M1 Finance app that has an easy-to-use interface. Give it a try if you are in the market for a new brokerage account to invest in your well-researched stocks:
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Several of our users, professional investors, and to my surprise, venture capitalists and angel investors that I deal with are surprised by the unprecedented and unique upward movement of the stock market prices compared to the grim state of the economic outlook. For example, within our private user community, The Intelligent Stock Market Investors group, almost every day, we go through heated discussions about the irrational exuberance of the so-called perma-bulls and the doom and gloom view of the future by the more rational bears of the community. Who is on the right side of the debate? Is the dichotomy of eroding economy and growing stock market as surprising as it appears? I have been reading voraciously and reflecting on the arguments shared by both sides of the aisle. From clicking on Howard Marks' memos as soon as they land in my inbox, to venturing into the deep end of historical data, and re-listening to Nasim Taleb's Blackswan for the gazillionth time, I now have a few takeaways to share with our community.
Are we living in an unprecedented time?
No, we are not! My Dad was telling me about the malaria outbreak when he was a young man. He clearly remembers government officials visiting their house and spraying every nook and corner of the yard, even in the most rural areas. The vivid pictures he drew in my mind resembled the scenes from social media, showing vigorous disinfecting of the BART cars and buses in the Bay Area. My Dad's childhood stories were complemented by the diaries of Benjamin Roth from the Great Depression era. Roth was a lawyer living in Youngstown during that time and took detailed notes on the state of the society, the job market, and the stock market as he lived through the 1930s and the ensuing decades. The COVID-19 pandemic is nothing new. It does have its unique characteristics such as the minute by minute media coverage of the death toll. Still, not even the wearing of facemask is a new social experience unique to the COVID-19 era. The below photo is courtesy of nytimes.com and shows women wearing masks during the 1918 flu pandemic in NYC.
Image Source: nytimes.com https://www.nytimes.com/2020/04/02/nyregion/spanish-flu-nyc-virus.html
Is the stock market being uniquely and unprecedently irrational?
No, the stock market's upward movement is not a new phenomenon unique to the COVID-19 pandemic's impact on the stock market. The stock market has always been irrational. The dichotomy of declining economic output and upward stock prices is nothing new and rather common in the history of the stock market. The confusion comes from the widespread assumption that the stock market follows some economic theory and is bound by the mathematical models we economists tend to use to explain the market's movement. The stock market has nothing to do with the modern economic theories, neither does it follow a perfect cycle of boom and bust. John Templeton had put it the best in his letter to his clients in 1958 when the Dow index rose from 257 to 343 in a matter of a few months while the industrial production declined from 137 to 123, during the same time period.
Source: Templeton and Phillips Capital Management, LLC, Why Have Stock Prices Risen? John Templeton's Timeless Insight, May 29th, 2020
Is there no reason for the stock market to go up when the economy goes down?
Of course, there is. If all other factors were equal, stock prices might move in the same direction as the economic output. However, the stock market is influenced by a variety of factors, including the overall market sentiment and investors' expectations for the future output of the economy compared to the current prices. The stock market prices have been going up for the same reason as the stock price of a nearly-bankrupt company jumps double-digit in one day. More important than the impact of sentiment and exceptions is the "market" nature of the stock market. As in any market, when there is more demand than supply, it pushes the prices up. When there is idle cash sitting around, exacerbated by historically low to zero interest rate, money pours in.
Final takeaway
There is no point in being bullish or bearish about the stock market. There is no absolute bullishness or bearishness. Even in the most bearish of environments, you can find bullish movements and opportunities and vice versa. Instead of debating to nausea that the market is going to go down or fly to the sky, the goal should be to step back away from the frenzy and look for the opportunities that reveal themselves.
The two books mentioned in this blog post are:
Risk-taking is an art! Not every risky stock is worth investing in. It's prevalent among stock market investors to justify a wrong decision as a risky one. However, a well-researched and informed risky decision can generate an outsized return and while being protected from total ruin. In this blog post, we explain a simple set of criteria we typically use to discover stocks worthy of your attention if you are a risk-taker. The list of Stocks for Risk-Takers can be a starting point for those who understand only some risks are worth taking.
Launching Stock Card's "Stocks For Risk-Takers" collection
We started the process by looking for smaller companies using the market capitalization of less than $10 billion. Doubling a $100 billion company is much harder than doubling a $2 billion company. Therefore, when it comes to risk-taking, small is more beautiful than big.
By just only one filter, the universe of publicly-traded stocks in the U.S. stock exchanges shrinks to a list of slightly a few more companies than 4,000.
Not every small-cap stock is worth your attention!
Finding noteworthy risky stocks is not just about searching for smaller companies. It would help if you also weed out those companies that cannot grow their revenue. Notice that we didn't talk about profitability. When companies are small and profitable, the chances are the stock market algorithms have already found them, and prices are adjusted to reflect the positive earnings. Therefore, stocks with growing revenue in the last 12 months to 3 years can narrow the list to a more manageable list.
If not profitable, then what?
While being profitable is good, being able to generate free cash flow is better. Earnings and profit are metrics heavily influenced by accounting principals. Highly profitable operations can become unprofitable if the management decides to reinvest the money it makes back into the company. However, a reliable, rapidly-growing company are typically cash flow positive before they are profitable.
Before wrapping up this blog post, here is a pro tip to share. Making well-informed bets are great. But, not before you have set up a foundation for your financial well-being. Here is a platform we have come across recently that made us want to manage our 401K account. Check it out below:
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What else?
The last criterion to consider is the company's ability to survive a period of economic hardship (such as the economic slowdown induced by the COVID-19 pandemic in 2020) or possible fluctuations and cyclicality in demand (such as demand cycles for chip technology). A reliable, risky company has enough cash to fund its operating expenses easily without the need to raise additional money or borrow.
Final results
The result of the above screening is a list of 189 reliable but risky stocks worthy of the attention of a risk-taker investor. We added them to Stock Card's collections, and you can access them for free by typing "Stocks for Risk Takers" in the search box on our website. Log in and check the list!
Without a doubt, the U.S. stock market has staged a historical “recovery rally” since late March, regardless of the drastic price drop mid-June. The S&P 500 index erased all its losses for the year as of June 8. The Nasdaq index hit an all-time high past the 10,000 level the following day. There are various conjectures about what has fueled the rally. Some associate it with a possible wave of FOMO by the so-called Robinhood bros. Others believe that the optimism about the reopening of the economy has driven the rally. Regardless of what the catalyst is, a prevailing sentiment in our private Facebook community recently has been caution. What are the available choices to investors as they navigate the V-shape recovery, so far, and another possible sharp decline moving forward? How does an investor protect her gains, without sitting on the sidelines to let the volatility subside? In this blog post, Stock Card's Head of Data Science and a technical trader, Karen Sheng shares her thoughts and strategies that could be employed to address these questions, mainly using one general and three specific options strategies.  PART ONE: FOR ALL INVESTORS Cash is also a position! Cash is also a position - This is lingo that is commonly used in the traders' community. When a trader has low conviction about either direction of the market, one of the choices available is "going flat." This rule applies to investors who "buy and hold" as well. Doing nothing is a strategy worth considering, especially when there is doubt. Holding cash or selling to have cash come with a few important considerations:
This strategy is specifically important and easy-to-use by starter investors. However, for those willing to put the time and effort required to learn more sophisticated approaches, I'm sharing three possible hedge strategies using options. If you are a more advanced investor, read along. Before sharing the more advanced hedging strategies, have you heard of Public, one of the easiest and best-looking brokerage apps out there?  Promoted PART TWO: FOR MORE ADVANCED INVESTORS Protect long-term investments with three options strategies Many investors use options as a "hedge" strategy. This strategy allows the investor to continue investing while having the fallback option to recover possible losses in case the market takes the reverse direction, as it has done so in mid-June. For the rest of this post, I will focus on hedging with various options strategies, all of which have defined maximum risk and risk/reward ratios. All these options strategies assume that you are willing to lose all the premium paid for the trade. Consider it a premium that you pay for insurance to protect your investments against a downturn of the market. If the market keeps rallying, your long-term investments are safe for the time being, and yet you may lose all the debit you have paid for hedging. On the other hand, in the case of a correction or crash, the gains from the hedging trade may offset the losses from the long-term investments. Compared to the "staying in cash" approach, you get to keep the stock holdings in your portfolio for long-term investments.  For illustration purposes, I'm going to use options of SPY for the reviews below. The prices of both stocks and options reflect close prices as of the end of June 9. Furthermore, I want to limit the premium paid to each trade, as this is the money that I'm committed to losing completely. In practice, I usually set the maximum in the range of $150-$250 per trade. For illustration purposes, though, I'm going to set the maximum at a much higher level, $1000, because I would like to compare the P&L for comparable Delta. I'm assuming that you have some basic understanding of the components of options pricing. With that, let's get to it! Strategy one: A naked put option
Example one - Buy an ATM (at-the-money) put option with 10 DTE (days to expire): I added two screenshots to explain how you go about buying this put option. The screenshot on the left shows a portion of the option chains. The maximum loss of this trade is the debit I'd pay - $582 plus any commission. The screenshot on the right is the projected P&L as of June 9. Note that if SPY starts to consolidate around the 320 level and doesn't make a significant downward movement, by 7 DTE (4 days from June 9), the trade would start to turn into a loss.  Example two - Buy an ATM (at-the-money) put option with 31 DTE (days to expire): The debit required for this trade per contract is $931, as the extrinsic value (time value) has almost doubled relative to the 10 DTE ATM contract. Recall the time-decay chart shown above. The time decay in this 31 DTE trade does not accelerate as fast as in the 10 DTE trade. Again, this is the projected P&L as of June 9. Notably, it's a break-even trade (zero loss, zero profit) if SPY consolidates around the 320 level by 22 DTE (9 days from June 9). The additional premium I'd pay gives me more time to wait for a pullback of the market.  Strategy two: Construct theta-positive options trades Theta-positive, in plain English, means that the passage of time works in our favor. I'm going to review two theta-positive strategies - put debit spread and put calendar spread. Example - Buy a put debit spread with 10 DTE (days to expire): I'd buy the 320 SPY put option and, at the same time, sell the 315 SPY put option. The debit required for this trade is $186, and the risk/reward ratio is approximately 1:1.7. Note that the premium paid is significantly less than buying a naked put option. Furthermore, since the trade benefits from time decay, I don't mind placing a trade with fewer days to expiration. 
Strategy three: Buy an OTM (out-of-the-money) put calendar spread
Final words I hope you find these strategies and examples helpful. Don't forget the first thing I shared with you. Cash is a position too. You can always keep some money and only invest the money that will not endanger your financial well-being if you lose it all.
Many of our users at Stock Card love investing in the companies shaping the future of humanity. Artificial intelligence, 5G technologies, and gene-editing are some of the most researched themes and collections on our platform. We support our users in their quest to invest in the future by maintaining a comprehensive database of growth potential across thousands of industries and markets. Such databases power the first box on Stock Cards' 2X2s, and our Head of LiveOps, Shama Patwardhan, is the steward of this database. When the COVID-19 pandemic hit the world, Shama took on the challenge of digesting the pandemic's impact on its potential. In this blog post, she discusses the result of her learnings and the adjustments we are applying to Stock Card's growth potential database.
What happened in the first quarter of 2020?
Currently, the world is going through a rare phenomenon. One contagious virus brought the whole world to a standstill. COVID-19 virus, also called Coronavirus, was first detected in November 2019 in China and spread globally. The first case of Coronavirus in the U.S. was found in January 2020. By mid-March, all the global economies came to a screeching halt. The properties of the virus made it more difficult to contain or monitor. The majority of businesses, manufacturing facilities, global travel, and retail operations shut down. Consecutively, panic ensued as the uncertainty about jobs and daily normalcy created growing anxiety. Governments around the world announced a "shelter-in-place" policy, and cities around the world resemble apocalyptic scenes of empty streets. There was no hum to the engine of the world's economy.
How did the world's growth get impacted?
The impact of the Coronavirus outbreak was felt differently by different industries and businesses. Some markets, such as airlines and cruises, were struck severely that the companies' survival in those sectors was and is still doubtful. On the other hand, some markets, like pharmaceuticals and digital communications, experienced a surge in demand, well-above the most optimistic forecasts before the COVID-19 pandemic. Such extreme and unexpected negative and positive impacts created the need to review the growth rates and potential of the markets, sectors, and industries that power Stock Cards, and modify them such that they represent a more informed state of forecasted growth.
Hardest hit industries: The decline in demand has severely burnt several industries. Due to the "shelter-in-place" rule, people stepped out of their houses only for essential shopping needs. This change in consumer behavior affected has hit some of the industries the most:
Highest positive impact: While some industries struggled to survive, some could barely satisfy the explosive demands for their products. Among several sectors and industries, some are benefited from an extraordinary surge in demand. Here are a few examples:
Adjustments to Stock Card's growth potential database
Stock Card's growth potential database typically includes three to five years of forecasted growth potential figures for each sector, industry, and market. However, due to the varied near-term impact of the Coronavirus outbreak, we added a new one-year projection to the database for 2020, to incorporate the effect of the impact. We applied short-term adjustment by first short-listing all the sectors, industries, and core markets negatively or positively affected by the outbreak. We then applied the appropriate adjustment factor to each one.
COVID-19 Impact Adjustment Factor
We started the process by quantifying the impact of a partial shutdown across sectors and industries. Researchers at George Mason University studied how the level of digitalization can be used to calculate and quantify the impact of COVID-19 on industries and sectors. The higher the digitalization, the lower the impact. Using the results of this research, a penalty of 2.78% for high-digitalization industries and a penalty of 5.56% for low-digitalization industries can quantify the impact of COVID-19 on sectors, industries, and markets.
Additionally, to incorporate the impact of social distancing on profoundly impacted industries, we took an additional adjustment. We reduced the resultant CAGR from the previous step by industry-specific projected decline percentage. We short-listed the markets that are profoundly impacted by social distancing such as airlines and restaurants and applied an additional adjustment factor to account for the impact. As of May 29th, 2020, we have calculated the rate based on a 3-month partial shutdown assumption. The above two-step process resulted in a new short-term growth rate database to power Stock Card's growth potential bucket on our iconic 2X2s. Throughout 2020, we will monitor the state and the progress of the reopening of the economy. We would be revising this COVID-19 growth potential figures based on how many months the partial shutdown continues. We assumed that the new growth rates are applicable for at least one year until the economies resume their previous performance level.
The new 2020 growth potential database
The final result is a new 2020 growth potential database that we are pushing live on June 1st, 2020. The outbreak negatively impacted approximately 50 industries, and another 30 reported an unusual surge in demand. You would see the results by visiting any Stock Card page and clicking on the first bucket of any of the 2X2s. The video below shows how you can get to the revised growth of potential data on Stock Cards.
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Industries and Markets affected by COVID-19
The COVID-19 pandemic has taken a toll on many sectors across the globe. The real estate sector is one of the hard-hit areas of the economy. As restaurants, bars, retail stores, and offices shut down around the world, landlords, property owners, and property management companies are going through an extended period of declining revenues. It is no surprise that the S&P 500 Global REIT index has fallen more than 30% since the middle of February 2020. In regular times, REITs (Real Estate Income Trusts) are some of the most popular types of securities investors hold for their abundant and reliable dividend income. However, the COVID-19 pandemic has caused many REITs' investors to question the reliability of investing in REITs. In this blog post, we share a list of reliable REITs worthy of attention despite the COVID-19 impact.  Aren't all REITs reliable? When we published the COVID-19 investment resources, we discussed not every company can survive the COVID-19 pandemic. Those with ample cash and access to capital and manageable debt have the highest likelihood of going through the COVID-19 economic crisis and coming out of it ready to take off. The same logic applies to REITs. Not all REITs are worth your investment dollars. Some REITs have the operational strengths that can survive through the economy's cycles and keep rewarding the investors with a reliable source of income. How to find Reliable REITs? There are 335 REITs listed on the main U.S. stock exchanges. In the first step, we wanted to get rid of those with massive liabilities and debt. REITs with high-interest expenses compared to their earnings (EBIT) are the worrisome bunch. Companies with debt have to be able to cover the interest expense of their debt using their earnings. Just by using that as criteria, nearly two-thirds of REITs are out of the list. To make the search for reliable REITs even more precise, we applied a few additional filters:
Those criteria are pretty standard for evaluating companies with strong balance sheets. However, there is one data point that is particularly important for assessing REITs. For a non-REIT dividend-paying stock, typically, investors look at the stock's payout ratio. This ratio refers to the percentage of the company's earnings that is used to fund dividends. When such a rate goes above 70% to 80%, it is seen as a red flag. All companies need to reinvest a portion of their earnings to grow, and it's not an operationally savvy idea to borrow money to pay dividends. Therefore, the dividend payout ratio is an indicator of the sustainability of the dividend payment in the future. If a company uses almost all of its earnings to pay dividends, or worst, if it uses funds beyond its profits to fund its dividend payments, the sustainability of the dividend payment is questionable. The same logic applies to REITs. However, the usual payout ratio is not the right way of measuring the sustainability of a REIT's dividend. Best Brokerage for Dividend Investors
REITs are one of the best dividend-paying investments. Especially if you choose to reinvest your dividend income back into your portfolio, gradually and steadily, you own more of the companies you have initially added to your portfolio. All you need to do is to sign up for a brokerage account that allows you to easily opt-in a dividend reinvestment option (a.k.a. DRIP). We like M1 Finance, particularly, for its easy ways of managing your account, including opting in a DRIP offer.
What is a FFO payout ratio? Being in the business real estate, a REIT has a high depreciation cost. This cost is purely an accounting-driven number, and it is not an actual cash expense. Companies use depreciation to "expense" the initial capital they invest in acquiring the real estate over a few years. This accounting practice allows investment in real estate to be worthwhile by reducing the nominal earnings of the property or landowner and giving the owner significant savings in the amount of income tax that is calculated using the company's earnings. Because of this accounting practice, the earnings of a REIT are artificially (of course, legally) underestimated. Consequently, you cannot blame a REIT for having a high payout ratio and use it as a reason to skip investing in it. Instead, REIT investors look at FFO per share (Funds from Operations per share) and use that as a replacement for the earnings per share to calculate the company's payout ratio. Accordingly, we used the FFO payout ratio in our search for reliable REITs. That adjustment in our screening process resulted in an additional 20 or so REITs that are reliable but would have been rejected if we used the standard calculations of the payout ratio. Final results  Once we applied all the above-mentioned filters, the final results were a list of 32 REITs most likely reliable enough to go through the COVID-19 pandemic or any other economic crisis and come out of it without the need to cut their dividends. The list is available to all Stock Card users on the Discover page using the "Reliable REITs" tag. You can access it by creating a free account on Stock Card.
Some times, companies with strong operations and enough cash at hand share their success with their shareholders in the form of a dividend. Many investors use dividend payout as a source of side income or reinvest the money to grow their investments. But not every dividend-payer is worth investing in. In the latest addition to Stock Card's collections, we looked for true dividend-payer stocks that are worthy of every dividend seeker's attention.  Launching Stock Card's "Stocks For Dividend-Seekers" collection We started the process by looking for stable dividend-paying companies using market capitalization, beta, and dividend yield:
Not every dividend-paying stock is worth your attention! Finding reliable dividend-paying stocks is not just about searching for companies that pay a dividend. You also need to weed out those companies that cannot sustain their dividend payout and focus on those that have a reliable history of growing their dividend yield. We added a comprehensive list of criteria to our research to find the true dividend-paying stocks, including a few critical ones:
Final results The result of the above analysis was a new set of 91 true dividend-paying stocks. We added them to Stock Card's collections, and you can access them for free by typing "Stocks for Dividend Seekers" in the search box on our website. Log in and check the list: 
There are more than 15,000 publicly-traded companies listed on the stock exchanges in the U.S. Even if we ignore smaller and volatile penny stocks and only focus on the three main exchanges, NYSE, NASDAQ, and OTCM (Over The Counter Markets), there are still more than 6,000 individual stocks every investor has to review and choose from. More experienced investors have already learned and come up with a process to narrow down their focus to only a small set of companies on their watchlist. However, if you are a new investor, facing more than 6,000 stocks feels confusing and overwhelming. Where does a new investor start from? And, what criteria should you use to find a starting list of companies to build a portfolio?  Launching Stock Card's "Stocks For Beginners" collection When started the process, we asked our first-time users and investors what matters to them the most, and came up with four criteria to screen the universe of 15,000 publicly-traded companies for the gems that are worthy of the attention of a beginner investor:
Final results The result of the above screening is a list of more than 64 stocks that you can easily access, play around, and build your own starter portfolio. There is no guarantee that these 64 stocks continue to grow and not lose value. After all, we are dealing with the stock market that fluctuates by nature. However, these 64 stocks give a starter investor a chance to create a portfolio with less risk and more stability. Have a look at the Stocks For Beginners collection today:
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Disclaimer: StockCard.io is not, neither operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on StockCard.io and Stock Card Weekly represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The Stock Card team may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall StockCard.io be liable to any subscriber, visitor, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on StockCard.io, or relating to the use of, or inability to use, StockCard.io or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way.