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Kemi Badenoch wins Conservative Party leadership race

Kemi Badenoch, a prominent voice in the Conservative Party and the Member of Parliament for North West Essex, has officially won the Conservative Party’s leadership race, marking a new chapter for the Tories as they look to rebuild following their recent election defeat.

Badenoch, 44, triumphed over Robert Jenrick in a closely followed race, winning with 53,806 votes to Jenrick’s 41,388. She now assumes the role of leader of the opposition with her sights set on a long-term strategy to return the Conservatives to power.

A vision for renewal

Badenoch’s leadership campaign, titled Renewal 2030, centered around revitalizing Conservative values and preparing the party to challenge Labour in the next general election.

Following her victory, Badenoch acknowledged the importance of unity, stating that the Conservatives must come together to “hold Labour to account” while gearing up for the next election.

Her campaign slogan, “It is time to renew,” has resonated strongly with Conservative members, who have long considered her a popular figure within the party ranks.

Acknowledging past missteps by previous Conservative administrations, Badenoch emphasized the need for the party to regain the trust of the British public. “We have to be honest,” she said in her victory speech, addressing the errors that weakened the party’s image.

The time has come to tell the truth, to stand up for our principles, and to give our party and our country the new start they deserve.

Badenoch’s path to leadership

Since becoming an MP, Badenoch has made waves within the Conservative Party, known for her forthright views on issues like maternity pay, gender equality, and climate targets.

While these positions have sparked controversy, they also helped galvanize support among the Conservative base. She previously vied for leadership in 2022 but ultimately withdrew.

Her recent appointment as shadow business and trade secretary following the Conservative loss in the July general election allowed her to develop a strong leadership profile, furthering her appeal to party members.

It remains to be seen who Badenoch will select for her shadow cabinet. She has indicated a willingness to work with former leadership contenders, hinting at an inclusive leadership style.

However, it has been confirmed that James Cleverly, one of her competitors, has opted to return to the backbenches, stepping away from a shadow cabinet position.

Future direction and challenges

Badenoch’s first challenge as leader will be to establish a cohesive opposition strategy aimed at holding the Labour Party accountable.

With a focus on resetting both party standards and strategy, she aims to ensure the Conservatives are prepared to present a viable alternative by the next election.

In her victory speech, Badenoch did not shy away from criticizing previous Conservative governments. “Our party is critical to the success of our country,” she said, adding,

To be heard, we have to be honest about the fact that we made mistakes and let standards slip.

She framed her leadership as a chance to revitalize the party’s principles, paving the way for a more transparent and responsible opposition.

Her next steps involve appointing a shadow cabinet that reflects her vision for renewal and includes voices from across the party spectrum.

Whether she can unite these diverse perspectives and forge a path to victory remains to be seen, but her supporters are optimistic that she will bring a fresh approach to Conservative leadership.

The post Kemi Badenoch wins Conservative Party leadership race appeared first on Invezz

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UTF: Is Cohen & Steers Infrastructure fund a good dividend fund?

The Cohen & Steers Infrastructure Fund (UTF) has done well this year, helped by the strong performance of infrastructure assets and hopes of interest rate cuts. 

The fund, which tracks the biggest infrastructure and utility companies, has risen by 18% this year, a notable performance since it does not have exposure to artificial intelligence companies like NVIDIA, Palantir, and Microsoft. 

UTF is a beloved fund for its strong dividend yield of over 7.7%, which is higher than other popular funds like the Schwab US Dividend Equity (SCHD) and the Vanguard High Dividend Fund (VYM).

Infrastructure investments 

The Cohen & Steers infrastructure closed-end fund is doing well as demand for infrastructure continue rising. Analysts expect that demand for large infrastructure projects will continue growing.

For example, the United States passed the Bipartisan Infrastructure Deal, which allocated $1 trillion in spending. 

Other countries like India, China, and Europe are also investing substantial sums of money in this industry. 

These investments are happening as countries transition their energy sources and upgrade their aging infrastructure.

As a result, the industry has become highly popular among private equity and stock market investors. 

This demand explains why the Cohen & Steers infrastructure fund is thriving. This is a top fund with over $3.3 billion in assets and 252 companies in its portfolio. It achieves higher leverage of about 28%.

A closer look at the UTF fund shows that most of its companies are in the electricity generation and distribution industries. These firms represent about 35% of its portfolio,

The other big names in the fund are in the midstream energy partners. These are companies that gather, transport, and process energy commodities like crude oil and natural gas. They are different than other companies in that they don’t pay corporate taxes. Instead, these taxes are passed through to consumers.

Other companies in the portfolio are in gas distribution, telephone towers, airports, toll roads, and marine ports. 

Nine of its portfolio companies are worth over $100 million. These companies include American Tower, Southern Company, NextEra Energy, TC Energy, Duke Energy, NiSource, PPL, National Grid, and Crown Castle.

American Tower is one of the biggest REIT in the US. It is a company that provides tower solutions to companies like AT&T, T-Mobile, and Vodafone.

NextEra Energy, on the other hand, is the biggest utility company in the world, with millions of customers, mostly in Florida. Duke Energy and Southern. National Grid is a British company that provides utility services in the UK and in New York.

Other companies in the UTF Fund are the likes of Power Grid, Energy Transfer, Cheniere Energy, and Norfork Southern. 

Read more: This infrastructure Fund (UTF) yields 8%: Here’s why I’m not buying

Interest rate cuts as a catalyst

A key catalyst for the Cohen & Steers Fund is interest rates, which have started coming down in the United States and other countries.

The Fed has cut rates by 0.50%, and analysts expect it to deliver more cuts in the coming meetings after the US published a weak jobs report. The economy created just 12,000 jobs in October, much lower than the expected 100k.

Therefore, the Fed will likely cut rates by 0.25% in its meeting on Wednesday next week. It will also hint of more cuts in the coming meetings. 

Other central banks like the ECB, Bank of England, and Swiss National Bank are also expected to continue cutting interest rates.

Companies in the infrastructure industry do well when interest rates are falling because of the amount of capital they spend. 

The other catalyst for infrastructure companies is the ongoing investments in data centers, which has led to substantial energy demand.

The risk, however, is that some of these companies have become highly overvalued, pointing to a reversal. For example, American Tower has a price-to-earnings ratio of 38, while NextEra Energy has a multiple of 22. 

Read more: Infrastructure is booming: Is the Cohen & Steers (UTF) ETF a buy?

UTF analysis

UTF chart by TradingView

The weekly chart shows that the UTF fund peaked at $26.25 a few weeks ago and has now pulled back to $25. It remains slightly higher than the key support at $24.16, its highest swing in April 2022. That price was also the upper side of the cup and handle or the double-top patterns. 

The two lines of the MACD indicators have made a bearish crossover and are pointing downwards. The same is true with the Relative Strength Index (RSI), which has moved to 60.

Therefore, the stock will likely drop and retest the key support at $24.15. This is known as a break and retest pattern and is one of the most popular continuation signs.

The post UTF: Is Cohen & Steers Infrastructure fund a good dividend fund? appeared first on Invezz

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AUD/USD analysis ahead of Fed, RBA decisions, and US election

The AUD/USD exchange rate remained on edge after falling to a low of 0.6537, its lowest level since August 8. It has crashed by 5.60% from its highest level this year as traders focus on the upcoming Reserve Bank of Australia (RBA) and Federal Reserve decisions.

RBA interest rate decision

The AUD/USD pair crashed hard after Australia published the closely-watched quarterly consumer inflation report. 

Data revealed that the headline Consumer Price Index (CPI) retreated from 3.8% in Q2 to 2.8% in the third quarter. The decline was much higher than the median estimate of 2.3%. Precisely, the CPI index number rose from 138.80 to 139.10.

The trimmed mean CPI dropped from 3.9% to 3.5% in Q4, while the weighted mean fell from 4.2% to 3.8%. This figure was higher than the median estimate of 3.6%.

More data released on Friday showed that Australia’s producer price index (PPI) retreated from 1.0% to 0.9%, higher than the expected 0.7%. On a year-on-year basis, it fell from 4.8% to 3.9%. 

These numbers mean that inflation was still higher than analysts expected, meaning that the Reserve Bank of Australia (RBA) will maintain a moderately hawkish tone.

The RBA will conclude its two-day meeting on Tuesday, and analysts see it leaving rates unchanged at 4%, where they have remained in the past few months.

In the last meeting, the RBA left rates intact and signaled that it was prepared to start cutting rates as soon as in the December meeting. Now, there are signs that it will do that either in the first or second quarter of 2025. 

That explains why Australia’s government bond yields have surged, with the ten-year rising to 4.61%, its highest level since November last year. It has jumped by over 22% from its lowest point on Sep. 17. The five-year bond yields rose to 4.20%, its highest level since June. 

Federal Reserve decision ahead

This week’s Federal Reserve decision will be the next important catalyst for the AUD/USD exchange rate.

The decision comes a few days after the US published weaker economic numbers than expected. 

According to the Bureau of Labor Statistics (BLS), the economy created just 12k jobs in October, much lower than the median estimate of over 100k. This slowdown happened after the country went through a major hurricane during the month. The unemployment rate remained unchanged at 4.1%, while wage growth was at 4%. 

Therefore, these numbers meant that the Fed would continue cutting interest rates since there are signs that the economy was starting to slow. 

Like in Australia, US government bonds continued rising, with the ten-year moving to 4.38%, its highest level since July 3. The five-year yield has moved to 4.22%, its highest point since July. 

The other important AUD/USD news will be the US election, which will happen on Tuesday. Polls show that the election will be close. 

Polymarket, the biggest prediction market, has Trump leading by 55%, against Kamala Harris’ 45%. This figure is much lower than last week’s high of 67%. Therefore, the AUD/USD pair will have some volatility after the presidential election as investors adjust to the new normal.

AUD/USD technical analysis

AUD/USD chart by TradingView

The Australian dollar has suffered a big reversal in the past few weeks after peaking at 0.6941 on October 1.

It has crashed below the 50-day and 200-day Exponential Moving Averages (EMA). If the drop continues, the pair will likely make a death cross pattern, pointing to more downside.

The pair has dropped below the key support at 0.6621, its lowest point on September 11. Also, the Relative Strength Index (RSI) and the MACD indicators have all pointed downwards.

Therefore, the path of the least resistance for the pair is bearish, with the next point to watch being at 0.6450.

The post AUD/USD analysis ahead of Fed, RBA decisions, and US election appeared first on Invezz

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MercadoLibre (MELI) stock forms a bullish pattern ahead of earnings

The MercadoLibre (MELI) stock price has moved sideways in the past few weeks as the recent strong rally takes a breather. After peaking at $2,160 on September 26, it has pulled back by about 5% from its highest level this year. 

MELI, the biggest e-commerce company in Latin America, has been one of the best-performing companies this year, rising by over 55% from its lowest point this year, and by 240% from its lowest point in June 2022.

MercadoLibre’s business is growing

MercadoLibre has become one of the biggest players in the e-commerce industry with a market cap of over $104 billion.

The company has achieved that by targeting one of the biggest economies globally. Latin America has a population of over 650 million people, almost double that of the United States. 

Its GDP has grown in the past few years and is worth over $6.7 trillion. This performance is primarily driven by Brazil, the eleventh-biggest economy in the world. Economists believe that the region will continue doing well in the long term. 

Therefore, MercadoLibre stock price has done well because of its dominant position in the region and its growing market share. While there are many e-commerce companies in the region, none of them has the infrastructure that MELI has.

The company has also done well by replicating the success of popular e-commerce companies like Amazon, Alibaba, and Coupang. These firms have grown by expanding its service. It has launched Envios, its logistics business, which offers solutions to countries like Brazil and Colombia. 

MercadoLibre also launched Meli Air, which has planes covering countries like Brazil and Mexico. 

Additionally, it has become a leading player in the financial services industry, through which it offers solutions like pre-paid cards, merchant and consumer credit, savings and investment solutions, and a cryptocurrency solution. Mercado Credito solution offers loans to millions of customers. 

These solutions have made MercadoLibre a fast-growing company whose annual revenue has jumped from $2.29 billion in 2019 to $14.4 billion. This 554% growth is much faster than other companies. 

Read more: MercadoLibre stock has surged to a record high: still a buy?

MercadoLibre earnings ahead

The MELI stock price will be in the spotlight this week as it publishes its financial results. The most recent results showed that its Gross Merchandise Value (GMV) rose by 20% to $12.6 billion as it sold 421 items in its platform. 

The company’s credit business also continued to do well, with its credit portfolio rising by 51% to $4.9 billion. 

As a result, its net revenue rose by 42% in the last quarter to $5.1 billion, while the net income rose to $531 million. Also, its adjusted free cash flow rose by 368% to $678 million.

Analysts expect that MercadoLibre’s business continued doing well in the last quarter. The average revenue estimate is $5.27 billion, much higher than the $3.76 billion it made in the same period in 2023. 

For the year, analysts expect that MELI’s revenue will be over $17 billion, a 40% increase from last year. This growth is remarkable for a company that was established over two decades ago. 

Analysts are optimistic that MELI has more upside in the longer term. The average estimate is that its stock will rise to $2,365, higher than the current $2,055. 

Read more: MercadoLibre stock analysis: MELI is at risk ahead of earnings

MercadoLibre stock price analysis

MELI chart by TradingView

The weekly chart shows that the MELI share price has been in a strong bull run in the past few months. It has formed a cup and handle pattern, a popular bullish sign in the market. The recent consolidation is part of the handle section.

MercadoLibre stock has remained above the 50-week and 200-week Exponential Moving Averages (EMA), pointing to more upside. 

Therefore, the shares will likely have a bullish breakout, with the next point to watch being at $2,200, up by 7.6% from the current level.

The post MercadoLibre (MELI) stock forms a bullish pattern ahead of earnings appeared first on Invezz

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Binance Coin (BNB) price prediction: Inverse H&S points to a rebound

The Binance Coin (BNB) token retreated for five consecutive days even as the network executed another big burn. It retreated from a high of $611.4 on Oct. 29 to a low of $562, its lowest point since Oct. 14. 

The BNB token retreat has coincided with a drop of the crypto fear and greed index, which has moved from the greed zone of 67 last week to the neutral point of 55. 

Most coins have suffered a harsh reversal as well. After rising to $73,500 last week, it has dropped to $68,430, triggering a major dive among other coins. Ethereum fell to $2,443, and could continue falling, as I predicted. 

Solana has also crashed below $160, while XRP plunged to $0.50. In most periods, Bitcoin and most altcoins retreat when the fear and greed index is moving downwards. 

US election ahead

The first reason why the BNB token has retreated is the upcoming US election, in which Donald Trump will face off with Kamala Harris on Tuesday.

Unlike other elections, polls show that this one will be closer than expected. According to the New York Times, Harris leads the national polling average by less than 1%, meaning that it is in a virtual tie. 

The two are even in Pennsylvania, while Donald Trump leads Georgia, Nevada, Arizona, and North Carolina with less than 3%.

Therefore, these polls mean that the election result will likely go either way. However, in the past, polls have not been accurate in predicting the US election. For example, in 2016, most polls predicted that Hillary Clinton would be the eventual winner. 

Similarly, before the last midterm election, most polls were predicting a clean sweep by the Republicans, which did not happen. 

Meanwhile, the prediction market is predicting that Trump will win the election. However, his Polymarket odds have dropped sharply in the past few days. Last week, these odds peaked at 67, and have now pulled back to 55. 

Ideally, the crypto market seems to be favoring Trump to win the election because of his pledge to deploy a light-touch regulatory environment. One of his first steps will be to fire Gary Gensler and replace him with a more conservative SEC leader.

The other potential factor will be the Supreme Court, where Trump would appoint conservative justices. Historically, these justices tend to favor businesses. 

However, the reality is that cryptocurrencies like BNB token will do well under both presidents. Besides, historically, cryptocurrencies do well when either parties are in power.

Binance Smart Chain losing market share

Meanwhile, the BNB token retreated even after the developers executed another big token burn that eliminated 1.77 million tokens worth over $1.07 billion.

A token burn is a situation where they are moved to an inaccessible wallet. It is one of the best ways of reducing the amount of BNB tokens in circulation, making the remaining ones more valuable.

A token burn is the opposite of an unlock where new tokens are released in the market. According to CoinGecko, BNB has a circulating supply of 145 million against a maximum supply of 200 million.

Data shows that the BNB Smart Chain has lost some market share in the decentralized finance (DeFi) industry. According to DeFi Llama, the BSC Chain DEX networks handled tokens worth $24 billion in October, much lower than what Solana, Ethereum, and Base handled. 

BNB handled $5 billion in volume in the last seven days, making it the fourth-biggest chain in the industry.

More data shows that Base is catching up with BNB in the DeFi industry, where it has a total value locked of $4.45 billion.

BNB price forecast

BNB chart by TradingView

The daily chart shows that the BNB token has pulled back in the past few days. This retreat happened after it retested the important resistance level at $605, where it has failed to move above since June last year. This price is the horizontal part of the ascending triangle pattern.

It is also the neckline of the inverse head and shoulders pattern, a popular reversal sign in the market. 

The BNB token is between the 23.6% and 38.2% Fibonacci Retracement levels. Therefore, because of the inverse H&S pattern, the coin will likely have a bullish breakout, with the next point to watch being at $605. 

A break above that level will point to more gains, with the next level to watch being at $720, the highest point this year, and 28% higher than the current level.

The post Binance Coin (BNB) price prediction: Inverse H&S points to a rebound appeared first on Invezz

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Can Nike’s new CEO and Jordan anniversary turn around its stock performance?

Nike Inc. (NYSE: NKE) has seen a 22% decline in its stock price this year, amid challenges including slower global demand and a sales strategy shift that hasn’t yielded expected results.

Nike’s strong brand position, commanding a 40% market share in the sportswear sector, and strategic changes with veteran Elliott Hill stepping in as CEO, offer potential for a comeback.

Industry analysts forecast a conservative 35% upside over the next 12 to 18 months, making Nike a promising investment for those seeking long-term growth prospects.

What factors contributed to Nike’s 22% stock slump?

Nike’s downturn has primarily stemmed from a combination of weaker consumer spending worldwide and a pivot to direct-to-consumer (DTC) sales, which missed market expectations.

As demand softened, inventory piled up, requiring markdowns and impacting profit margins.

Further, the company’s initial transition away from retail partners created logistical challenges and stretched costs.

This double impact has eroded the stock, leaving it discounted and ripe for renewed interest among value-driven investors.

Can Nike’s 40% market share secure its path to recovery?

Despite current setbacks, Nike remains the undisputed leader in the sportswear market with a substantial 40% market share.

This position has granted it economies of scale and brand loyalty that few rivals can match.

Moreover, Nike’s global footprint spans over 170 countries, making it resilient across regional markets.

As competitors like Adidas, Under Armour, and emerging brands make strides, Nike’s expansive reach, robust supply chain, and iconic branding remain core strengths likely to help it withstand competition.

CEO Elliott Hill’s role in Nike’s potential revival

In a pivotal leadership shift, Nike reappointed Elliott Hill as CEO last month.

Hill’s tenure with Nike dates back to 1988, when he joined as an intern.

His understanding of Nike’s culture and operations is expected to bring a revitalised strategic focus.

Hill aims to address key operational gaps by refining the DTC strategy while re-engaging with retail partnerships.

His roadmap for recovery, expected soon, has piqued investor curiosity, as Hill’s expertise could help Nike navigate this critical period.

Could the Jordan line’s anniversary boost Nike’s financial performance?

Next year, Nike will celebrate the 40th anniversary of its iconic Air Jordan brand.

The anniversary includes a series of limited-edition releases and high-profile events that could generate significant consumer interest and media buzz.

Given the Jordan line’s deep-rooted fanbase, these releases may provide Nike with a unique revenue boost, especially if the events successfully captivate sneaker enthusiasts and collectors worldwide.

Risks

Several risks linger as Nike seeks to reverse its fortunes.

If global economic conditions deteriorate, consumer spending could dip further, particularly impacting sales in North America, Nike’s largest market.

Competition from fast-growing brands such as On, Hoka, and New Balance, particularly in the running segment, threatens to chip away at Nike’s standing.

Hill’s new direction may also take time to impact revenue, with transition costs expected to weigh on short-term financials.

Amid its stock decline, Nike has garnered support from prominent hedge funds, including Bill Ackman’s Pershing Square, which recently purchased three million shares.

This backing is a notable signal of confidence in Nike’s long-term outlook.

Strategic investments like these hint that the company’s discount, combined with Hill’s forthcoming initiatives, presents a compelling opportunity for those willing to wait out the transition.

The post Can Nike’s new CEO and Jordan anniversary turn around its stock performance? appeared first on Invezz

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Is Atlassian’s Q1 rally here to stay after strong earnings?

Atlassian Corporation (NASDAQ: TEAM) delivered impressive first-quarter fiscal 2025 results, surpassing market expectations and igniting a substantial stock rally of over 15% on Friday.

The collaboration and productivity software provider reported significant increases in both revenue and earnings, signaling robust business momentum and effective execution of its strategic initiatives.

Strong financial performance in Q1

For the quarter ended September 30, 2024, Atlassian reported total revenue of $1.19 billion, marking a 21% increase compared to the same period last year.

Subscription revenue saw an even more pronounced growth, rising by 33% year-over-year to reach $1.13 billion.

The company’s non-GAAP earnings per share stood at $0.77, beating analyst expectations by $0.12.

Operating efficiency remained solid with a non-GAAP operating margin of 23%, reflecting the company’s ability to balance growth investments with profitability.

Analysts boost ratings and price targets

The strong quarterly performance led several analysts to upgrade their ratings and increase price targets for Atlassian’s stock.

Morgan Stanley maintained its Overweight rating and raised the price target to $259 from $224, highlighting the company’s expanding product portfolio and successful integration of AI capabilities as key growth drivers.

KeyBanc upgraded the stock to Overweight with a $260 price target, expressing confidence in Atlassian’s potential to consistently exceed expectations.

Piper Sandler also lifted its price target to $265 from $225, maintaining an Overweight rating and citing the company’s strategic positioning in the enterprise market.

Strategic developments and leadership enhancement

Atlassian is strengthening its strategic position through innovation and leadership appointments.

The company announced the general availability of Rovo, a new AI-powered product designed to unlock organizational knowledge at scale, demonstrating its commitment to leveraging artificial intelligence across its platform.

In a significant leadership move, Atlassian appointed Brian Duffy as the new Chief Revenue Officer, effective January 1, 2025.

Duffy brings a wealth of experience from his previous role as President of Cloud at SAP, where he successfully grew ‘RISE with SAP’ into a multi-billion-dollar business within two years.

The company’s growth is underpinned by strong demand for its cloud-based solutions. Cloud revenue grew by over 31% year-over-year, reflecting successful cloud migrations and increased enterprise adoption.

Atlassian reported having 46,844 customers with more than $10,000 in cloud annualized recurring revenue, a 17% increase from the previous year.

The expansion of premium offerings, including Jira Product Discovery Premium, Compass Premium, and Guard Premium, caters to the complex needs of larger organizations and enhances the company’s competitive edge in the enterprise segment.

Valuation metrics reflect growth expectations

Atlassian’s valuation indicates high investor expectations, with the stock trading at approximately 9.5 times forward revenue—higher than the industry average.

This premium is attributed to the company’s strong growth prospects and market leadership in the collaboration and productivity software space.

While some analysts note that the valuation is above the BVP NASDAQ Cloud Index average of 6.8x, they consider it justified given Atlassian’s solid fundamentals, strategic initiatives, and consistent revenue growth.

Looking ahead with optimism

For fiscal year 2025, Atlassian projects total revenue growth between 16.5% and 17%, with cloud revenue expected to increase by approximately 24%.

Although this represents a slight deceleration from previous years, analysts remain optimistic due to the company’s strategic investments in artificial intelligence, cloud migration, and enterprise market expansion.

The recently authorized $1.5 billion share repurchase program underscores management’s confidence in the company’s future performance and commitment to enhancing shareholder value.

Atlassian’s strong financial results and strategic initiatives have laid a solid foundation for future growth.

As Atlassian makes these transitions and builds on its solid fundamentals, this recent price surge sets up an interesting scenario in the stock’s technical landscape. The question remains—does the chart signal further upside potential?

Potential rebound on cards?

Although Atlassian’s stock remains substantially below its late 2021 peak above $480 and also below the high near $260 that it made earlier this year, since August the stock has been showing strength in the short-term charts.

Source: TradingView

Investors and short-term traders can take advantage of this short-term upward momentum by buying shares at current levels near $215 and adding to that long position if the stock manages to give a daily closing above $260.

For these long positions, one can keep a stop loss at $185.8.

Since the stock is displaying short-term strength, traders who want to initiate a short position in the stock should do so either near $250 levels with a stop loss above $260 or if the stock again falls below its 50-day moving average.

The post Is Atlassian’s Q1 rally here to stay after strong earnings? appeared first on Invezz

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UTF: Is Cohen & Steers Infrastructure fund a good dividend fund?

The Cohen & Steers Infrastructure Fund (UTF) has done well this year, helped by the strong performance of infrastructure assets and hopes of interest rate cuts. 

The fund, which tracks the biggest infrastructure and utility companies, has risen by 18% this year, a notable performance since it does not have exposure to artificial intelligence companies like NVIDIA, Palantir, and Microsoft. 

UTF is a beloved fund for its strong dividend yield of over 7.7%, which is higher than other popular funds like the Schwab US Dividend Equity (SCHD) and the Vanguard High Dividend Fund (VYM).

Infrastructure investments 

The Cohen & Steers infrastructure closed-end fund is doing well as demand for infrastructure continue rising. Analysts expect that demand for large infrastructure projects will continue growing.

For example, the United States passed the Bipartisan Infrastructure Deal, which allocated $1 trillion in spending. 

Other countries like India, China, and Europe are also investing substantial sums of money in this industry. 

These investments are happening as countries transition their energy sources and upgrade their aging infrastructure.

As a result, the industry has become highly popular among private equity and stock market investors. 

This demand explains why the Cohen & Steers infrastructure fund is thriving. This is a top fund with over $3.3 billion in assets and 252 companies in its portfolio. It achieves higher leverage of about 28%.

A closer look at the UTF fund shows that most of its companies are in the electricity generation and distribution industries. These firms represent about 35% of its portfolio,

The other big names in the fund are in the midstream energy partners. These are companies that gather, transport, and process energy commodities like crude oil and natural gas. They are different than other companies in that they don’t pay corporate taxes. Instead, these taxes are passed through to consumers.

Other companies in the portfolio are in gas distribution, telephone towers, airports, toll roads, and marine ports. 

Nine of its portfolio companies are worth over $100 million. These companies include American Tower, Southern Company, NextEra Energy, TC Energy, Duke Energy, NiSource, PPL, National Grid, and Crown Castle.

American Tower is one of the biggest REIT in the US. It is a company that provides tower solutions to companies like AT&T, T-Mobile, and Vodafone.

NextEra Energy, on the other hand, is the biggest utility company in the world, with millions of customers, mostly in Florida. Duke Energy and Southern. National Grid is a British company that provides utility services in the UK and in New York.

Other companies in the UTF Fund are the likes of Power Grid, Energy Transfer, Cheniere Energy, and Norfork Southern. 

Read more: This infrastructure Fund (UTF) yields 8%: Here’s why I’m not buying

Interest rate cuts as a catalyst

A key catalyst for the Cohen & Steers Fund is interest rates, which have started coming down in the United States and other countries.

The Fed has cut rates by 0.50%, and analysts expect it to deliver more cuts in the coming meetings after the US published a weak jobs report. The economy created just 12,000 jobs in October, much lower than the expected 100k.

Therefore, the Fed will likely cut rates by 0.25% in its meeting on Wednesday next week. It will also hint of more cuts in the coming meetings. 

Other central banks like the ECB, Bank of England, and Swiss National Bank are also expected to continue cutting interest rates.

Companies in the infrastructure industry do well when interest rates are falling because of the amount of capital they spend. 

The other catalyst for infrastructure companies is the ongoing investments in data centers, which has led to substantial energy demand.

The risk, however, is that some of these companies have become highly overvalued, pointing to a reversal. For example, American Tower has a price-to-earnings ratio of 38, while NextEra Energy has a multiple of 22. 

Read more: Infrastructure is booming: Is the Cohen & Steers (UTF) ETF a buy?

UTF analysis

UTF chart by TradingView

The weekly chart shows that the UTF fund peaked at $26.25 a few weeks ago and has now pulled back to $25. It remains slightly higher than the key support at $24.16, its highest swing in April 2022. That price was also the upper side of the cup and handle or the double-top patterns. 

The two lines of the MACD indicators have made a bearish crossover and are pointing downwards. The same is true with the Relative Strength Index (RSI), which has moved to 60.

Therefore, the stock will likely drop and retest the key support at $24.15. This is known as a break and retest pattern and is one of the most popular continuation signs.

The post UTF: Is Cohen & Steers Infrastructure fund a good dividend fund? appeared first on Invezz

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MercadoLibre (MELI) stock forms a bullish pattern ahead of earnings

The MercadoLibre (MELI) stock price has moved sideways in the past few weeks as the recent strong rally takes a breather. After peaking at $2,160 on September 26, it has pulled back by about 5% from its highest level this year. 

MELI, the biggest e-commerce company in Latin America, has been one of the best-performing companies this year, rising by over 55% from its lowest point this year, and by 240% from its lowest point in June 2022.

MercadoLibre’s business is growing

MercadoLibre has become one of the biggest players in the e-commerce industry with a market cap of over $104 billion.

The company has achieved that by targeting one of the biggest economies globally. Latin America has a population of over 650 million people, almost double that of the United States. 

Its GDP has grown in the past few years and is worth over $6.7 trillion. This performance is primarily driven by Brazil, the eleventh-biggest economy in the world. Economists believe that the region will continue doing well in the long term. 

Therefore, MercadoLibre stock price has done well because of its dominant position in the region and its growing market share. While there are many e-commerce companies in the region, none of them has the infrastructure that MELI has.

The company has also done well by replicating the success of popular e-commerce companies like Amazon, Alibaba, and Coupang. These firms have grown by expanding its service. It has launched Envios, its logistics business, which offers solutions to countries like Brazil and Colombia. 

MercadoLibre also launched Meli Air, which has planes covering countries like Brazil and Mexico. 

Additionally, it has become a leading player in the financial services industry, through which it offers solutions like pre-paid cards, merchant and consumer credit, savings and investment solutions, and a cryptocurrency solution. Mercado Credito solution offers loans to millions of customers. 

These solutions have made MercadoLibre a fast-growing company whose annual revenue has jumped from $2.29 billion in 2019 to $14.4 billion. This 554% growth is much faster than other companies. 

Read more: MercadoLibre stock has surged to a record high: still a buy?

MercadoLibre earnings ahead

The MELI stock price will be in the spotlight this week as it publishes its financial results. The most recent results showed that its Gross Merchandise Value (GMV) rose by 20% to $12.6 billion as it sold 421 items in its platform. 

The company’s credit business also continued to do well, with its credit portfolio rising by 51% to $4.9 billion. 

As a result, its net revenue rose by 42% in the last quarter to $5.1 billion, while the net income rose to $531 million. Also, its adjusted free cash flow rose by 368% to $678 million.

Analysts expect that MercadoLibre’s business continued doing well in the last quarter. The average revenue estimate is $5.27 billion, much higher than the $3.76 billion it made in the same period in 2023. 

For the year, analysts expect that MELI’s revenue will be over $17 billion, a 40% increase from last year. This growth is remarkable for a company that was established over two decades ago. 

Analysts are optimistic that MELI has more upside in the longer term. The average estimate is that its stock will rise to $2,365, higher than the current $2,055. 

Read more: MercadoLibre stock analysis: MELI is at risk ahead of earnings

MercadoLibre stock price analysis

MELI chart by TradingView

The weekly chart shows that the MELI share price has been in a strong bull run in the past few months. It has formed a cup and handle pattern, a popular bullish sign in the market. The recent consolidation is part of the handle section.

MercadoLibre stock has remained above the 50-week and 200-week Exponential Moving Averages (EMA), pointing to more upside. 

Therefore, the shares will likely have a bullish breakout, with the next point to watch being at $2,200, up by 7.6% from the current level.

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How 2024 US election could shape India’s IT sector

As the 2024 US presidential election approaches, investors and market analysts are keenly assessing potential outcomes for India’s IT sector.

With US-India trade relations closely tied to American policy, especially in the tech space, Indian IT giants like TCS, Infosys, Wipro, HCL Technologies, and Tech Mahindra could see major impacts based on the election’s results.

US clients account for more than half of these companies’ revenue, underscoring the stakes involved.

According to the India Brand Equity Foundation, the Indian IT and business services market is projected to reach nearly $20 billion by 2025, with American clients being instrumental in this growth.

Trump’s ‘America First’ policy could challenge outsourcing

If former President Donald Trump were re-elected, experts predict potential obstacles for Indian IT firms due to his “America First” agenda.

Trump’s administration has a track record of scrutinizing immigration, notably H-1B visas that are essential for Indian professionals working in the US.

Under a Trump administration, restrictions on H-1B visas could intensify, limiting the number of skilled Indian workers able to support US clients.

Months after he became president in 2016, companies like Infosys, Cognizant and Tech Mahindra had announced redundancies.

For example, in 2017, Infosys had announced plans to lay off about 1,000 employees at senior levels based on performance-based processes, and also said it planned to hire 10,000 Americans over the next two years.

Several analysts including those from BoFA Merrill Lynch, BNP Paribas, Nomura, among others, had also downgraded stocks of Cognizant, Wipro, MindTree, etc.

In a recent report, PhillipCapital noted that the short-term effects of a Trump victory would be felt across the Indian IT sector due to his stringent immigration stance.

Indian companies, however, are preparing for these challenges.

“Indian IT firms have adjusted their strategies to reduce dependency on H-1B visas,” the report states, “increasing local hiring, utilizing subcontractors with existing work visas, and expanding near-shore centers in Canada and Mexico.”

These measures provide a buffer for Indian firms, although a restrictive visa policy could still limit opportunities and profitability for high-skilled Indian professionals.

Harris victory could ease immigration policies and boost IT

Conversely, if Kamala Harris wins, the outlook could be more favorable for India’s IT sector.

Past elections have shown that the Indian IT sector tends to perform better under Democratic administrations.

Following the Democratic win in 2020, Indian IT giants like TCS, Infosys, and Wipro saw stock gains between 17% and 29% in three months, highlighting the sector’s positive response to Democrat-led policies.

Known for a progressive stance on immigration, Harris is expected to promote policies that expand pathways for high-skilled immigrants, benefitting Indian professionals and tech talent.

Easing restrictions on H-1B visas, a significant resource for India’s IT workforce, would allow Indian firms to deploy more talent to meet US demand, a crucial factor in an era of digital transformation and rising tech needs.

According to Saurabh Patwa, Head of Research at Quest Investment Advisors, “US elections generally don’t impact IT spending patterns of US corporations, so the election cycle itself might not significantly alter the sector’s trajectory.”

However, he also highlights that certain policy shifts, especially on immigration, could lead to improved operational flexibility for Indian firms under a Harris administration.

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