Start the conversation
The DJIA Index gained 38 points today. The reason? The European Central Bank announced plans to begin its massive stimulus program next week, while a large M&A deal rocked the healthcare sector.
Investors remain cautious about the markets ahead of Friday's U.S. jobs report. Gold prices slipped below $1,200 on the day.
Dow: 18,135.72, +38.82, +0.21%
S&P 500: 2,101.04, +2.51, +0.12%
Nasdaq: 4,982.81, +15.67, +0.32%
What Moved the DJIA Index Today: The ECB announced it will begin its 1 trillion euro ($1.1 trillion) bond-buying program on March 9 and end it in September 2016. The stimulus package is part of a broader attempt by the central bank to boost stock prices and kick-start its flailing economy. The world's largest economic bloc also released financial forecasts for 2017. Shares of Deutsche Bank AG (USA) (NYSE: DB) were up marginally on the day. (For a breakdown of three ways to profit from the European spending bonanza, go here.)
The Commerce Department announced today that new U.S. factory goods orders slipped for the sixth straight month. The troubling data suggests the manufacturing sector remains weak, raising new concerns about the health of the U.S. economy in the first quarter.
Now, check out the other top market stories – plus get our new profit tip for investors:
- Supermarket Surge: Shares of Kroger Co. (NYSE: KR) jumped more than 7% this afternoon on news that the nation's largest supermarket chain reported a 23% bump in quarterly profits. The firm also raised its 2015 forecast outlook, prompting optimism in the sector. The news comes the same day that shares of Costco Wholesale Corp. (Nasdaq: COST) jumped more than 2.7% on news of rising profits. The sector continues to benefit from subdued gasoline prices, a trend that has given Americans more discretionary income.
- Job Problems: This morning, the U.S. government announced that weekly initial jobless claims rose to 320,000, surpassing estimates of 295,000. This is the second consecutive week that benefits rose above 300,000. The news is concerning for the economy in the wake of yesterday's weak private-sector payrolls report.
- Biotech Boom: Shares of AbbVie Inc. (Nasdaq: ABBV) slipped more than 5% on news that the pharmaceutical giant will purchase Pharmacyclics Inc. (Nasdaq: PCYC) for $21 billion. The deal will give AbbVie access to the promising blood cancer drug, Imbruvica, although Johnson & Johnson (NYSE: JNJ) currently receives half the drug's revenue thanks to a prior deal. Shares of PCYC were up more than 10%. Today's pharma company deal is the largest biotech merger of 2015, and one that many Wall Street "experts" didn't see coming. Here's a recap of how you can profit from the next round of deals in the near future.
- Oil Slumps: U.S. oil prices reversed course Thursday on concerns about oversupply. In addition, a stronger dollar and the United States' commitment to forge a nuclear deal with Iran is weighing down domestic prices. Today, WTI prices slipped more than 1.3% to hit $50.84 per barrel.
- An Apple a Day: Shares of Apple Inc. (Nasdaq: AAPL) slipped more than 1.6% today. Rumors emerged this morning that the tech firm might partner with entertainment giant HBO to launch the latter firm's highly anticipated streaming service. HBO is now expected to begin streaming in April and will cost customers $15 per month to access popular shows like "Game of Thrones." In addition, Apple has filed patents suggesting that future iPhones will be waterproof.
Wall Street just doesn't understand the incredible value that Facebook Inc. (Nasdaq: FB) stock represents.
But I do. And I'm predicting FB stock will double in the next three years.
Facebook has moved beyond its early identity as a social networking site for young people. It's now the indisputable world leader in the social networking market, one that forecasters IBISWorld estimates at $9 billion.
Facebook's total user base now stands at nearly 1.4 billion – that's bigger than the population of China. And Facebook's global impact will keep growing, as half of everyone online now uses Facebook, and more than 60% of the world's 7 billion people have yet to get online.
Facebook is also benefiting from the mobile revolution. In Q4 2014, Facebook had 45 million mobile users active on a daily basis, a 34% increase from the year-ago quarter.
The company is doing a great job turning the mobile trend into money. Mobile ad sales in the quarter represented roughly 69% of total ad revenue, a 30% annual gain.
Now, here's why Facebook stock could double…
Over the past three years, it has grown earnings per share by an average of 57%.
To be conservative, let's cut that figure in half to 28.5%. To project how long it will take Facebook to double, we use my "Doubling Calculator" (aka the Rule of 72).
If we divide 72 by Facebook's 28.5% earnings growth rate, we find that profits will double in just about 2.5 years.
Remember, price appreciation follows earnings growth. So, giving Facebook a full three years to reach $161 is both conservative and realistic.
Robinson's full case for buying Facebook stock can be found here: This Leading Tech Stock Will Double by 2018
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.