Things weren’t looking great in the markets today, but they were looking … okayish. Until they weren’t.
Shortly after 1 p.m. eastern we got another sharp drop on trade war news. This time it seems the cause was the Chinese delegation cancelling a planned visit to Montana farms. Add to that President Donald Trump allowing tariff exemptions on some 400 items earlier in the day, and you can see why investors are still on edge.
So now all the major indices are in the red for today, as investors look forward to the weekend and dream of a world without tariff wars. And while we wait for that day, here’s what InvestorPlace.com readers found interesting.
Aphria Stock Should Be Your Favorite Marijuana Stock
Yesterday it was Aurora (NYSE:ACB). Today Aphria (NYSE:APHA) became the marijuana stock that readers focused on.
The big, enduring story for Aphria stock — one many of its peers lack — is profitability. As in, APHA stock regularly reports positive quarterly earnings. As Chris Markoch wrote, “In an industry where the largest companies won’t be profitable for several years, Aphria stands out. However, that hasn’t mattered much to investors.”
Overall, the company looks good — though there have been concerns about some of its acquisitions. As Markoch wrote, “Despite some controversy (some of which was self-inflicted), Aphria is a profitable company. Like most cannabis firms, much of their recent struggles had to do with delays in green lighting the recreational market in Canada. However, with the market for edibles opening in Canada in October, the time is right to get in on APHA stock.”
And just as some people are worried about Aphria’s acquisitions, prospective investors may want to see a little more M&A — as in, someone buying APHA stock as the marijuana stock sector consolidates.
Splunk and Its Pathway to Profits
Will Ashworth asked: Which is a better buy? Splunk (NASDAQ:SPLK) or Wayfair (NYSE:W)? They’re both money-losing stocks, though with very different business models. Wayfair sells home goods online, while Splunk helps companies interpret data.
His answer? Splunk, if for no other reason than that SPLK stock has a clearer pathway to profitability than Wayfair does. After all, as Ashworth wrote, “Wayfair spent 4.9% more in the second quarter to attract an active customer than it did a year earlier. I don’t know about you, but Wayfair’s been an online site for eight years, so you would think the cost per active customer would be moving lower as its name became better known.”
Meanwhile, Splunk offers something important to businesses, and they’ve been updating their pricing to be more clear as well. He points out, “Every business wants to know the cost of their decisions. Splunk moved to make its pricing more transparent so that its customers get better outcomes at a reasonable price. To me, this suggests Splunk’s ready to take the next step in its growth. And as part of this growth process, deliver GAAP profitability for its shareholders.”
So You Want to Buy AMD Stock
Wayne Duggan thinks a golden opportunity to buy Advanced Micro Devices (NASDAQ:AMD) may be right around the corner.
According to him, there’s no question that AMD is still a great company. “There are plenty of things to like about AMD stock,” he wrote. “Its latest generation of processors has been a tremendous success. Its newest products, EPYC Rome 7 nm chips, were released just last month. Early reviews have been positive, and the numbers won’t be reflected until the third-quarter earnings report.”
The problem isn’t with AMD itself, but with its valuation. With a forward price-to-earnings ratio over 28 and continuing worries about the previously mentioned tariffs, it may just be too richly valued. And worries about a rotation into value names may cause more pain.
As Duggan said, “I am a fan of AMD’s long-term prospects given its exposure to several of the biggest high-growth markets in tech. But AMD may need an extended consolidation period to allow its business to grow into its valuation. ”
That’s it for today’s commentary. Please feel free to drop us a note at editor@investorplace.com to let us know what we got right and what we got wrong. Happy investing!
