Uber Technologies (UBER) stock has done well this year, surging by over 28% and reaching its all-time high. It has risen by 146% in the past five years, giving it a market cap of $166 billion, making it the biggest mobility company in the world.

Uber has achieved this growth through its global expansion and by moving to other industries like food and grocery delivery. This model is significantly different from Lyft, which focuses on ride-hailing in the US. 

Uber has also been wise to exit some of its unprofitable markets early. For example, it exited the Chinese market in 2016 after facing substantial competition from Didi. It acquired a 12.8% in Didi, a company now valued at over $23 billion.

Uber also exited some Southeast Asian countries and took a stake in Grab Holdings (GRAB), a company valued at $14 billion.

What is Grab Holdings?

Grab Holdings is a large company that provides a super app used by millions of users in the Southeast Asian region, one of the fastest-growing places globally. It is available in countries like Singapore, Malaysia, Indonesia, Vietnam, Thailand, and the Philippines, which have a cumulative population of over 677 million people. 

Grab uses the same business model as Uber. Its app lets users request for rides and then it takes a cut from all transactions.

Additionally, the firm has expanded its business to include deliveries and digital financial services. For example, in its app, one can pay utility bills, pay online and in stores, buy insurance, and even save.

Grab, therefore, has become a super app, where millions of people find numerous services, without the need for downloading other platforms.

Most importantly, while all its services are highly competitive, the company has a commanding market share. For example, its ride-hailing business has an approximately 75% market share. Its food delivery business also has a substantial share.

The benefit of having a commanding share is that it can increase prices without losing customers. Also, it can offer more services without spending substantial sums of money on marketing.

Grab’s business is growing

Grab’s business has done well over time as its revenue growth has continued. However, its stock remains significantly below its all-time high as investors focus on its huge losses and the fact that it has little growth prospects internationally. 

Grab’shares peaked at $18 in January 2021 and has tumbled to below $4, bringing its market cap from $22 billion to $14 billion. This crash happened even as its annual revenue moved from $469 million in 2020 to over $2.3 billion.

The most recent results showed that Grab’s business was still growing, albeit at a slower pace than in the past. Its revenue grew by 17% in the second quarter to $664 million as its on-demand Gross Merchandise Volume (GMV) rose by 13% to $4.4 billion.

Uber, on the other hand, reported quarterly revenue growth of 16% to over $10.7 billion, meaning that the two have similar growth rates.

Grab’s financial services business is seeing strong growth. Customer deposits in its application rose by 52% to $730 million, while the amount of loans disbursed last quarter stood at $500 million. Its mobility revenue rose to $247 million, while its financial services figure rose to $60 million. 

Grab is on path to profitability

A key concern for Grab has been its substantial losses over the years. It had a net loss of $3.7 billion in 2019 followed by $2.6 billion in 2020 and $3.4 billion in 2021.

Recently, however, there have been signs that the company is on a path to profitability. Its net loss narrowed to $1.6 billion in 2022 followed by $485 million in 2023. As such, if this trend continues, it may turn profitable in 2025 and continue growing. 

The next key catalyst for the Grab stock price will be its earnings, which are scheduled on November 8. Analysts expect that its revenue will come in at $691 million, a 12.4% increase from the same period last year. 

For the year, analysts expect that its revenue will be $2.74 billion, a 16.4% increase from $2.36 billion. It will then grow to $3.2 billion in 2025.

Read more: As Uber stock thrives, two competitors are holding merger talks

Grab stock price analysis

Grab chart by TradingView

The monthly chart shows that Grab Holdings’ share price has moved sideways in the past two years. 

The stock has formed a rising wedge chart pattern, a popular bearish sign in the market. Also, it has formed a bearish flag chart pattern. Therefore, there are rising odds that it will have a bearish breakout, with the next point to watch being at $2.27, its lowest point in 2022.

In the near term, however, more gains will be confirmed if it moves above the key resistance point at $3.90, its highest point this year.

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The Vanguard Dividend Appreciation Fund (VIG), WisdomTree US Quality Dividend Growth (DGRW), and the iShares Core Dividend Growth (DGRO) are some of the most popular dividend-focused ETFs in Wall Street, with $102 billion, $15 billion, and $30.7 billion in assets, respectively.

Good ETFs with solid performance

As their names suggest, these funds are designed to provide their holders with reliable dividends over time. 

The VIG ETF tracks the S&P US Dividend Growers index, which aims to provide investors access to companies that have a long record of increasing their dividends.

Most of its constituent companies are in the tech sector followed by financials, healthcare, industrials, and consumer staples. Some of the top names in the fund are Apple, Broadcom, JPMorgan, UnitedHealth, Exxon, and Visa. 

The WisdomTree US Quality Dividend Growth fund, on the other hand, invests in companies that have constantly grown their payouts for a long time. Like VIG, most of its constituent companies are in the tech, healthcare, industrials, and financials. The biggest firms in the fund are Microsoft, Apple, Broadcom, AbbVie, and NVIDIA. 

The DGRO ETF is another popular find, which focuses on dividend growth. It tracks the Morningstar US Dividend Growth Index, which invests in 413 companies. Financials, technology, healthcare, and industrials are the biggest players in the fund, with the top companies being ExxonMobil, JPMorgan, Apple, Microsoft, and Chevron.

These funds have a long track record of doing well. As shown below, the DGRW ETF has had a total return of 107% in the past five years. Similarly, the DGRO and VIG funds have returned 83% and 85% in the same period. The same performance is replicated across other timeframes.

These funds have performed well because they are made up of blue-chip companies that have rallied over time. For example, top constituents in the funds like Broadcom, Microsoft, and AbbVie have a long record of soaring. 

Are they really dividend ETFs?

The challenge, however, is whether these funds qualify as dividend ETFs. In other words, should one invest in them to receive their regular payouts?

The VIG ETF has a dividend yield of 1.7% and a four-year average of 1.78%. Similarly, the DGRW fund has a yield of 1.47% and a four-year yield of 1.88%. The DGRW fund pays 2.16% and a four-year average of 2.25%.

Therefore, in this case, the VIG ETF would pay about $170 in dividends for a $10,000 investment, while the other two would pay $148 and $225, respectively.

However, one needs to include the expense ratio and taxes in the dividend return calculation. VIG and DGRO have an expense ratio of 0.08%, while DGRW charges 0.28%. As such, we see that the total dividend return offered by these funds is almost negligible. 

There are two things to consider when determining whether they are good dividend funds. First, it is the risk-free return, which in most cases, is investing in US government bonds. With the ten-year yielding 4.2%, it means that a $10,000 investment will bring in $420, or more than double what the three funds pay.

Still, these bonds don’t have growth, and there is usually a risk that the yield will fall as the Fed slashes rates. 

Second, the other thing to look is investing in a low-cost index tracking fund like the Vanguard S&P 500 ETF (VOO). VOO has an expense ratio of 0.03% and a dividend yield of 1.26%. It has a four-year average of 1.46%.

The ETF has never marketed itself as a dividend fund, and most of its investors don’t invest it for its dividend. It is simply a fund that tracks the five hundred biggest companies in the fund.

Read more: Love the SCHD ETF? CLM and CRF are better yielding alternatives

Focusing on the total return

Therefore, we have concluded that the VIG, DGRO, and DGRW ETFs are not good dividend ETFs because of their low yields.

At the same time, data shows that an ETF that tracks the S&P 500 index generates better total returns over time. For example, as shown above, the VOO ETF has had a total return of 112% in the last five years.

The DGRW fund has returned 107%, while the DGRO and VIG have returned 83% and 85%, respectively. This means that an investor who allocated funds in the VOO ETF generated better returns than those who invested in the other funds. 

The same trend is happening this year as the VOO ETF has returned 24.24%, while the other three have returned less than 21%.

As such, if you are considering investing for the long term, odds are that you will do better by focusing on the S&P 500 index. Instead, if you are focused on dividends, there are many assets to consider like the BNY Mellon High Yield Strategies Fund and Guggenheim Taxable Municipal Bond & Investment Grade Debt Trust, which pay over 8%.

Read more: Love the utilities XLU ETF? Boost it with some UTG

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The JPMorgan Equity Premium (JEPI) and JPMorgan Nasdaq Equity Premium Income (JEPQ) ETFs have done well this year and are sitting at their all-time highs. The JEPQ fund soared to $55.30 on Friday, up by over 74% from its lowest point in 2023.

Similarly, the JEPI fund approached the key resistance point at $60, a strong 42% increase from last year’s low.  These two funds have also had some strong inflows in the past few months, with JEPI adding $3.29 billion and JEPQ adding $7.7 billion this year. They now have $36 billion and $17 billion in assets.

Leading boomer candy ETFs

JEPI and JEPQ are the two leading boomer candy ETFs, which aim to provide investors with reliable dividends over time. JEPQ has a forward dividend yield of 9.4%, while JEPI yields 7.1%.

These monthly yields are substantially higher than the other popular dividend ETFs like the Schwab US Dividend Equity (SCHD) and the Vanguard Dividend Appreciation (VIG). 

Most importantly, these funds provide a higher return compared to US government bonds, which are yielding less than 5%.

JEPI and JEPQ use a simple approach to generate returns. First, the funds invest a portion of their cash to a group of stocks, benefiting from their uptrend. Second, they then sell call options and take the premium, which they distribute to their shareholders each month.

A call option is an investment that gives traders the right but not the obligation to buy an asset. In this case, if the price falls before the expiry, a trader can ignore the option and buy it at the market price. 

Also, if the price rises, the investor has a right to buy it at the initially agreed price and benefit from the upside.

The covered call option benefits investors by allowing them to profit from the upward trend of their investments. The strategy can also help reduce the downside when there is volatility by taking the option premium.

The main difference between JEPI and JEPQ is the assets they invest in. JEPI has invested in a basket of companies found in the S&P 500 index. Most of these firms are in the technology industry followed by financials, healthcare, and industrials. Some of the top names in the fund are NVIDIa, Amazon, ServiceNow, and Mastercard.

The JEPQ ETF, on the other hand, has invested in the companies in the Nasdaq 100 index, most of which are in the tech industry.

As shown above, the JEPQ and JEPI ETFs have had total returns of 19.25% and 14.90% this year. While this is a good return, they have underperformed the popular benchmark indices like the Invesco QQQM and Vanguard S&P 500 (VOO) ETFs, which have risen by 21% and 24%, respectively.

This performance mean that, despite their strong dividends, the boomer candy ETFs continue to underperform the benchmark indices that track the S&P 500 and Nasdaq 100 indices. 

Read more: VIG, DGRW, DGRO are popular; but are they really dividend ETFs?

Catalysts for the JEPQ and JEPI ETFs

Several catalysts could push these ETFs higher in the coming months. First, thousands of American companies are expected to publish their financial results in the coming weeks. 

These earnings have already started, with companies like JPMorgan, Goldman Sachs, and Morgan Stanley publishing robust financial results. According to FactSet, 14% of the companies in the S&P 500 index have already published their financial results. 79% of these have reported a positive EPS surprise, while 64% have reported a positive revenue surprise. 

The blended earnings growth was 3.4%. While this is a weaker earnings growth than in the last few quarters, it is also the fifth consecutive quarter of earnings growth. Therefore, there is a likelihood that most companies will publish strong financial results.

Second, these funds will likely benefit from the actions by the Federal Reserve and other central banks. The Fed has already delivered a jumbo 0.50% rate cut, and officials signal to several more cuts in the next few meetings. Data by CME shows that the Fed will lower interest rates to about 3.25% by December next year.

Other central banks are also cutting rates. Last week, the ECB slashed rates by 0.25% and hinted that more were coming. In China, the PBoC has also cut rates and unveiled a series of stimulus packages to boost the economy. 

Third, the US election is coming up in the next few weeks. In most periods, stocks show some volatility ahead of the election and then stage a fresh rally as investors embrace the new normal in the market. 

Therefore, the JEPI, JEPQ, and other benchmark ETFs may continue to perform well in the near term. However, as I have written before, if your goal is to generate good total return, then you are safer investing in S&P 500 and Nasdaq 100 indices. JEPI and JEPQ are better if your goal is to generate better returns than government bonds and other dividend funds.

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Remitly (RELY) stock has underperformed the market this year, falling by over 22% even as the Nasdaq 100 and S&P 500 indices have soared by 20%+ and moved to their all-time highs. 

It remains 47% below its highest level in 2023 and by 72% from its all-time high, bringing its market cap to $2.9 billion. 

Remitly company background

Remitly is an American fintech that enables people to send money locally and abroad easily and cheaply. 

This is a big industry that is also highly competitive. Banks are key competitors since the SWIFT network has made it cheaper and faster for people to send money around the world. On average, a SWIFT transaction takes less than a day to complete. 

The industry also has many competitors like Wise, formerly known as TransferWise, WorldRemit, PayPal, Zing – owned by HSBC -, Torfx, and Xe, among others. 

An emerging competitor in the industry is stablecoins like Tether, USD Coin, and PayPal USD. These stablecoins let people send money globally in a fairly private manner.

Remitly’s key competitive advantage is that it is a mobile-first company, has strong unit economics, a global scale, and a quality technology platform.

Remitly’s business is facing numerous catalysts. The most important one is that the number of people moving from developing and emerging markets to places like the US and in Europe is increasing. 

Data shows that the US population has jumped by over 10 million under Joe Biden. This trend will continue regardless of who is in the White House since Congress has struggled to pass a comprehensive immigration bill.

Analysts believe that even the most comprehensive bill will not solve the immigration crisis in the US because of the many loopholes. 

Remitly benefits from this crisis because most of its business is where immigrants in the US send money back home. A report by the World Bank shows that remittances to low- and middle-income countries rose to $656 billion in 2023. The bank expects that these inflows will jump by 2.3% this year. 

The other catalyst is the fact that the American economy has avoided a hard landing, with wage growth remaining strong. A stronger economy leads to an incentive for immigrants to send money.

Growth is continuing, and profitability is in sight

Remitly has had strong growth in the past few years. Data shows that the number of quarterly active customers rose from just 948k in the fourth quarter of 2019 to over 6.9 million in the last quarter, a trend that will continue.

Additionally, the company’s send volume has risen from over $7 billion in 2019 to over $39 billion in 2023. The company hopes that the figure will cross $50 billion this year. 

Send volume is an important metric because Remitly makes its money by taking a small cut for each cash it handles.

The most recent financial results showed that its send volume increased to $13.2 billion in the second quarter, pushing its revenue up by 38% to over $306 million. 

Most importantly, Remitly’s net loss has continued to narrow. It lost $12.1 million, a big improvement from $18.9 million a year earlier. 

The closely watched adjusted EBITDA rose to $25.1 million from $20.4 million in the previous quarter. 

The management expects that its annual revenue will jump to between $1.23 billion and $1.25 billion this year, a 32% increase from 2023. Its adjusted EBITDA will be between $85 million and $95 million. 

According to Yahoo Finance, analysts expect that its loss per share will improve from 65 cents in 2023 to 31 cents this year. This loss will then narrow to $0.05 next year, bringing the company to profitability by 2026. 

Remitly will be able to continue growing without the need for raising capital. It ended the last quarter with $185 million in cash and short-term investments and just $15 million in debt. 

Assuming that Remitly’s net profit margin stabilises at the industry median of 22.5% in the future, it means that its $1 billion in annual revenue will translate to a $200 million annual profit. This means that its hypothetical P/E ratio is just 14.5, which is lower than the S&P 500 average of 21.

The next key catalyst for the Remitly stock will be its earnings, which are expected to happen on October 31st.

Remitly stock price analysis

RELY chart by TradingView

The daily chart shows that the RELY stock price has been in a strong bull run in the past few days. It has risen above the 50-day moving average and is nearing the 23.6% Fibonacci Retracement point at $15.40.

The stock is also sitting at the key point at $15, the neckline of the slanted double-bottom chart pattern. Also, the Relative Strength Index (RSI) and the MACD indicators have pointed upwards.

Therefore, the stock will likely continue rising, with the next point to watch being at $20, the 50% retracement point. 

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Small cap companies have underperformed their large-cap peers in the past few years as most of them have struggled in a high-interest-rate environment. For example, the S&P 500 index and the Nasdaq 100 have had total returns of over 72% in the last five years, while the Russell 2000 index has returned 57.8% in this period. 

Some analysts believe that small cap companies could do well in the coming months as interest rates reverse and as the US economy avoids a hard landing. These catalysts could push more investors to the Russell 2000 index, which tracks the biggest small-cap firms in the United States.

IWM vs RYLD ETFs

Investors seeking access to small cap companies have two main assets to invest in. The most popular one is the iShares Russell 2000 ETF, which is a fund with over $71 billion in assets. 

The IWM ETF is a passive fund that tracks 2000 small and medium-sized companies across all sectors. 

Most companies in the fund are in the financials segment and are followed by firms in the healthcare, industrials, technology, and consumer discretionary sectors. 

This fund, therefore, differs from the other popular ETFs like the Invesco QQQ and S&P 500 that are mostly made up of technology companies. 

The biggest companies in the IWM ETF are FTAI Aviation, Vaxcyte, Sprouts Farmers Market, Insmed, Fabrinet, and Fluor Corp. 

FTAI Aviation is a leading company in the maintenance, repair, and exchange of aircraft engines. Its stock has jumped by more than 200% this year, helped by the increased demand for flying. 

Vaxcyte, a company in the vaccine industry, has soared by over 150% this year, while Sprouts Farmers Market has soared by almost 170%. The IWM ETF is a cheap fund with a 0.19% expense ratio.

The Russell 2000 Covered Call ETF (RYLD), on the other hand, is an active fund with a 0.60% expense ratio. 

It achieves its goal by investing at least 80% of its assets in the Cboe Russell 2000 BuyWrite index, which tracks companies in the index. 

According to its website, it has invested $1.46 billion in the Global X Russell 2000 ETF. It has also invested about $15.4 million in cash. Its other investments are in companies like Inhibix, Novartis, and Cartesian. 

The fund then generates its returns by selling call options of the Russell 2000 index, which are held until expiration.

Therefore, the fund’s goal is to ensure that it benefits when the Russell 2000 index is rising. It then uses the call options to generate monthly returns, through the premium it receives.

As such, the RYLD generates a superior dividend income compared to the IWM. It has a dividend yield of 12% compared to IWM’s 1.4%.

Read more: RYLD ETF: Is this 12% yielding Russell 2000 ETF a buy?

Focusing on the total return

The RYLD ETF generates more dividends compared to the IWM ETF, making it more ideal for investors seeking good monthly income. If the yield sticks, it means that an investor with $10,000 allocated in the fund, will make a gross return of $1,200 annually. With fees and taxes included, the return will be smaller than that though. 

On the other hand, the same investment in the IWM ETF, will bring in less than $150 annually. However, historical data shows that the IWM fund is a better investment than the RYLD when you consider the total returns. 

For example, the IWM ETF has risen by 13.4% this year, while the RYLD fund has risen by 7.7%. The same happened in the last five years when the IWM returned 57% while the IWM returned 18.6%. 

Therefore, if your goal is to generate more returns investing in small-cap companies, then the RYLD fund is a better investment by far. Better still, historical data shows that mainstream funds that track the S&P 500 and Nasdaq 100 indices do much better, as shown above.

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As I stepped into Soho House on Greek Street in London, the birthplace of the now-global hospitality phenomenon, I couldn’t help but sense novelty mixed with creative energy in the air.

The Greek Street location, nestled in the heart of London’s vibrant Soho district, exudes a charm that speaks to its nearly three-decade history.

Housed in a Georgian townhouse, it blends period features with contemporary design, creating an atmosphere that feels both timeless and current.

Yet beneath the polished surface and buzzing atmosphere, Soho House in 2024 faces mounting pressure to prove it can be more than just a perpetual loss-making enterprise.

After going public in 2021, the company has struggled to convince investors that its business model of high-end private membership clubs can translate into sustainable profits.

As it enters its 30th year of operations, Soho House finds itself at a crossroads.

At £2,950 for an ‘Every House’ membership, can it maintain its cool factor and exclusive appeal while achieving the growth and financial stability demanded by public markets?

Soho House’s numbers paint a complex picture

In its Q2 2024 earnings report, Soho House highlighted several positive trends.

Global membership grew to 204,000, while the waiting list of potential new members swelled to 111,000.

Membership revenues increased by 16% year-over-year. The company’s adjusted EBITDA grew to £26 million for the quarter.

Yet Soho House still declared an overall loss, as it continues to invest heavily in expanding to new locations around the world.

Recent openings included the company’s first South American outpost in São Paulo, as well as new houses in Mexico City and Portland.

The development pipeline for the coming years includes planned locations in New Delhi, South Mumbai, Manchester, Milan, Madrid, and Tokyo among others.

This aggressive growth strategy has left Soho House saddled with £502 million in debt as of early 2024.

The company’s stock price is down over 56% since its IPO in 2021, reflecting investor skepticism about its path to profitability.

In February 2024, short-seller Glasshouse Research published a scathing report on Soho House’s finances, drawing unflattering comparisons to the failed WeWork enterprise.

For CEO Andrew Carnie, who took the reins from founder Nick Jones in late 2022, addressing these financial pressures while preserving Soho House’s carefully cultivated brand presents a formidable challenge.

“We know that it’s a three- to five-year plan,” Carnie said in a recent interview, referring to the company’s efforts to achieve consistent profitability.

However, this timeline may test investors’ patience who have already endured years of losses.

Expansion amidst challenges

The company’s hybrid business model presents unique challenges.

While membership fees provide a stable revenue base, Soho House still faces the operational complexities and high fixed costs of running restaurants, bars, hotels and co-working spaces across its properties.

This leaves it exposed to economic headwinds and changes in consumer behaviour in ways that a pure subscription business is not.

Additionally, Soho House’s aggressive expansion has required heavy upfront investment in property development and renovations.

New house openings often generate losses in their initial ramp-up period before reaching maturity.

While this growth-focused strategy helped build Soho House into a global brand, it has come at the cost of near-term profitability.

The company has also had to navigate broader shifts in work and social patterns accelerated by the pandemic.

With more people working remotely, the appeal of dedicated co-working spaces and business-oriented club amenities may have diminished for some members.

Soho House has adapted by emphasizing its leisure and hospitality offerings, but this transition takes time and investment.

As Soho House enters its fourth decade, it faces no shortage of challenges.

Achieving profitability while fending off newer competitors and retaining its cool factor will require deft management and continued innovation.

The company’s enduring appeal and global scale provide a strong foundation to build upon, but the clock is ticking for Carnie and his team to prove that Soho House can be more than just a perpetual loss-making enterprise.

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