The Dow is within spitting distance of breaking the 20,000 point level for the first time; let’s look at what the pros are thinking. Jim Suva, Citi Research Analyst, stated that, “Tax reform benefit from reduction in corporate taxes and cash repatriation,” as Citi Research reiterated its ‘Buy’ rating on Apple (NASDAQ: AAPL), while CNBC’s Jim Cramer added that IBM (NYSE: IBM) “would be a huge beneficiary of Trump’s proposed lower corporate tax rates. It is a terrific play on a stronger economy.” So, it’s looking like the experts think that the Dow stalwarts are going to benefit from a slew of business friendly moves, but the iShares Russell 2000 ETF (NYSE: IWM) is also near all-time highs, so it’s not just the big boys in play.
As a leading provider of automated digital platform technology and social management software for Internet and mobile advertising, Social Reality (NASDAQ: SRAX) is well positioned to benefit from many of the same dynamics as the large caps. In fact, since the company’s advanced ad serving technology and seamless integration can now empower its clients to build and run a vertical ad network, there’s a strong argument for Social Reality directly benefiting from other companies’ improved bottom lines, as some companies should be seeking to more aggressively expand their marketing efforts.
Suva further stated, in a note to clients, that Apple shares can march to $130 for other reasons, including a “Sticky user base which drives continued services revenue growth” and an “Attractive valuation – Shares trade at a slight discount to their 4 year median multiples despite improving fundamentals ahead,” but lowering the U.S. corporate tax rate would increase Apple’s bottom line and Suva sees “Apple as a significant beneficiary of Trump tax reforms. Apple is very well positioned to benefit from potential tax reform of either or both a repatriation tax holiday and or a lower corporate tax rate.”
Cramer sees that the big caps are in play, but IBM is one that tickles his fancy, because, despite the fact that IBM performed in the top 20% of Dow listings for 2016, it’s still 50 points below where it was priced four years ago. Yet, at merely 12 times earnings, it’s one of the most attractive listings on the Dow, on an EPS basis. Plus, as IBM continues to grow its cloud business, there’s an even wider gap between its pricing in relative terms to its peers.
Management has consistently grown Social Reality’s revenues, from about $500,000 in 2010 to over $30 million in 2015, an average annual growth rate (AAGR) of 170%, while typically running blended gross margins in the 45-55% range.
Social Reality appointed Kathy Ireland as a Chief Branding Advisor to help the company identify top industry executives in the media, entertainment and advertising industry for building out an Advisory Board. In June 2016, Ireland was ranked by Forbes as one of the 60 richest self-made women in America, and the kathy ireland® Worldwide brand is listed as the 25th most powerful brand globally by License Global Magazine, reporting worldwide sales in excess of $2.5 billion in 2012.
Social Reality uplisted to the NASDAQ Capital Market in October 2016, with analysts calling it a ‘Buy’ on an EPS of 27 cents in 2017, with an average price target of $10.75.
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