Software as a service (SaaS) aka THE CLOUD is a business model in which software, centrally hosted, is licensed on a subscription basis and is centrally hosted.  One force driving these companies’ growth is soaring demand for data centers to support cloud computing.

And it doesn’t matter what size company you have:

*Start-ups – an idea / viable business model can get up and running quickly with minimal capital and operating cost.

*Small to medium-sized businesses – can take advantage of the scalability in storage and networking capabilities on demand as their business grows.

*Larger business – can help increase operational efficiency, productivity and agility.

REITs are companies that own or finance some type of real estate property. During economic troubled times, Smart Money rotates into REITs because they act like bonds, meaning the stock dividends are equivalent to coupon rates, the yield paid by a fixed-income security.

The data center REIT sector is relatively new compared to other REITs. Salesforce was an early pioneer of moving their CRM services to the cloud in the early 2000s. The company’s founder, Benioff’s vision was that software should be delivered 24/7 to people over the cloud.  Most data center REITs were founded around 2000 and make up a small percentage of REITs overall.

As data becomes an integral part of everything we do, data center real estate investment trusts (REITs) have become more important. 

The data center REIT sector is relatively new compared to other REITs. Most data center REITs were founded around 2000.  This was the around the same time Salesforce migrated its services to the cloud in the early 2000s. The company’s founder, Benioff’s vision was that software should be delivered 24/7 to people over the cloud.  Now Salesforce shares the cloud pie with Apple, Amazon, Facebook, Google, and Microsoft who have huge appetites for access to data centers.  These companies are building their own data centers, but because of the demand, are turning to data center REITs to fill that void.  But it’s also financial services, insurance and retail companies that are shifting from owning and operating their own data centers to third-party data center operators.

The relentless growth of wireless data, public cloud, digital content, social media, and ecommerce continues to fuel the need for more data center space.  The beauty of data center REITs is that their growth isn’t dependent on consumer spending, population growth or unemployment like traditional REITs.  And might I add, the Trade War between the US and China has not barring on data REITs growth.  

Two companies that I want to give some shine to are QTS Realty Trust and CyrusOne.

QTS Realty Trust, Inc. (NYSE: QTS) is a leading provider of data center solutions across a diverse footprint spanning more than 6 million square feet of owned mega scale data center space throughout primarily North America and Europe. Through its software-defined technology platform, QTS is able to deliver secure, compliant infrastructure solutions, robust connectivity and premium customer service to leading hyperscale technology companies, enterprises, and government entities. QTS owns, operates or manages 26 data centers and supports more than 1,100 customers primarily in North America and Europe.

The chart suggests it’s not a buy yet, as price is just below the monthly supply at $55.

CyrusOne (NASDAQ: CONE) is a high-growth real estate investment trust (REIT) specializing in highly reliable enterprise-class, carrier-neutral data center properties. It’s America’s third largest data-center provider and its solutions allow customers take advantage of cloud platforms such as Amazon Web Services and Microsoft Azure.

The Company provides mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for approximately 1,000 customers, including more than 200 Fortune 1000 companies. 

In 2018, CyrusOne have the most data center properties under construction in the U.S., at six and had the most preconstruction data center development properties at 24.

The chart suggests to go long at the monthly demand at $56.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Dollar Tree, Inc. operates discount variety retail stores. It operates through two segments, Dollar Tree and Family Dollar. The Dollar Tree segment offers merchandise at the fixed price of $1.00.

Dollar Tree is the largest dollar chain with over 15, 000 stores.  Dollar Tree has been successful to this point because of their perceived value.  Essentially you pay for what you get and the items are sold in a smaller unit size.  But they have done some clever things as well.  They have kept the items they sell to a minimum, so they have a high inventory turns and stores do required a whole lot footprint and they sell a ton of private label items, which helps their margins.

To compete with the likes of Walmart, they purchased Family Dollar in 2015 to expand their customer base. Dollar Tree caters to people who live in the suburbs, while Family Dollar caters to people who live in urban.   However, Family Dollar really never did their homework prior to the purchase.   Family Dollar customers have a lower income than their suburban counterparts and less likely to make impulse buys because of their budget.  That one major difference between the two customer base has hurt the earnings ever since the acquisition.

Dollar Tree finally recognized the bad business choice they made in 2015 and have since closed over 500 Family Dollar stores in 2019 and will re-brand another 1000 Family Dollar stores to Dollar Tree stores.

Dollar Tree reported earnings on Tuesday. Dollar Tree stock fell 10% on Tuesday after the company posted disappointing earnings results and gave guidance that underwhelmed Wall Street. The trade war between the US and China and the tariffs has hurt margins due to sourcing a large chunk of their merchandise from China. In addition, issues at its Family Dollar brand are pinching the company’s results. Dollar Tree posted earnings per share of $1.08, below expectations for $1.13. Its revenue of $5.75 billion narrowly beat expectations for $5.74 billion.

So where is price heading next, lets go to the charts? Price is clearly in an uptrend, but it would of been nice if prices on the monthly chart closed above the most recently high. Thus, this lowers the probability that price will make a new higher high.

However, the uptrend is an uptrend, until it not. Thus, the chart suggest to go long at the daily demand at $85.50.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Uber’s story starts more than a decade ago.  Travis Kalanick and Garret Camp were leaving a tech conference in Paris when they couldn’t get a cab. Initially, the idea was for a timeshare limo service that could be ordered via an app with Garret eventually buying the domain name UberCab.com.

Uber was born in 2009 and New York became its test market with three cars in 2010, with the official launch taking place in San Francisco in May.  Travis eventually came on board as CEO in December 2010 and with time grew to become the highest valued private startup company in the world.

Like many startups, there seems to be a culture of almost “anything goes.”  However, if those startups go grow and mature, it eventually catches up with you.  Uber was a perfect example of that.  In February of 2017, a former female Uber engineer blasted the company for its sexist culture in a 3,000-word blog post citing the culture as hostile, sexist and offensive. The post went viral and resulted in some upper managers being let go and/or resigning.  But that was just the start as an investigation, called the Holder Investigation, soon was underway.  The investigation resulted in over 40 recommendations intended to improve the culture.

Kalanick stepped down as CEO and two months later announced that Dara Khosrowshahi, CEO of Expedia (EXPE), would take over.  But it was too late, Uber’s valuation declined from $70 billion to $48 billion.  Kalanick did a great job stabilizing the culture and perception of Uber in the financial markets, so in May Uber made it IPO debut with shares set to price at $44 to $50, given the company an immediate $80 or $90 billion market cap.

In 2018, Uber’s revenue reached $11.3 billion for the year, up 43% from 2017, but encountered operating losses of $3 billion.  They even expressed at one point that they might never generate a profit.

Since Uber went public, the stock has declined by near 33% due to concerns of competition and profitability.  In additional, the lockout period expiring was last week, means that insiders, including early investors and employees, are free to sell shares.  Kalanick sold 53.24 million shares worth roughly $1.46 billion. 

So is all the bad news now priced into the stock price, well some folks on Wall Street think so?

Uber Technologies, Inc. (UBER) shares opened sharply higher during Friday’s session before giving up some ground by mid-day. The move came after Stifel upgraded the stock from Hold to Buy with a price target of $34.00 per share.

Analyst Scott Devitt believes that Uber is turning a corner, with signs of sustainable improvements in the fundamentals. He adds that the current valuation offers a more reasonable entry point for interested investors.

Despite these concerns, Barclays analyst Ross Sandler said that Uber was one major announcement away from a positive narrative change heading into the new year.

Source

Now maybe Ube is two major announcements away from a positive narrative change.  Today, London stripped Uber of its license to operate in the city, citing the company wasn’t doing enough to keep passengers safe.  London is Uber’s largest city in Europe with Europe accounting for about 10% of the company’s total revenue.

Personally, I wouldn’t have bite on the upgrade, as I thought it was premature based on what I was seeing on the charts as the chart suggests Uber isn’t a buy until the weekly demand at $34 is breached.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.