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3 reasons the BT share price can keep rising

financialnews1 on December 9, 2021

The BT (LSE: BT.A) share price has been on a bumpy ride this year. After dropping to a low of around 120p at the beginning of February, the stock rallied above 200p in mid-July. The shares then plunged in value, falling to a low of 135p.

Since then, the BT share price has been pushing higher. It is currently trading around 173p after recovering from most of the losses in the third quarter. 

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Overall, over the past 12 months, shares in the telecommunications giant have jumped around 25%. However, I think there are three reasons why the stock can continue rising over the next few weeks and into 2022. 

BT share price: takeover potential 

The first reason I think the stock can continue rising is the bubbling takeover talk surrounding the business. Ever since French telecoms billionaire Patrick Drahi bought a 12% stake in BT over the summer, speculation has been swirling in the city that he will make a full offer for the company. 

In reality, I think it is unlikely such an offer will emerge. BT is a sprawling giant with a multi-billion pound pension deficit. Untangling the enterprise and managing these pension assets would be a hugely complicated process. These challenges are likely to put off buyers. 

What’s more, it is highly likely the government will interfere in any deal due to the national importance of the company and its influence over the UK’s communications network. 

Having said that, speculation of a potential acquisition could be enough to continue to push the stock higher. Drahi’s interest supports the idea that BT looks cheap. Considering his success as an investor, other market participants may want to ride his coattails and buy the stock. 

Reorganisation potential

As well as takeover speculation, investors may continue to buy BT as the corporation pushes ahead with its restructuring plans. This year, the group has undergone somewhat of a significant transformation. It is spending more money on its core telecoms business, focusing mainly on improving fibre connectivity around the country. 

At the same time, management has been trying to restructure non-core divisions, including the group’s pay-TV business. 

This has been a drain on the company for several years. BT’s pay-TV arm, which includes BT Sport, initially set out to capture a large share of this market by offering consumers an all-in-one package. Customers can bundle pay-TV, broadband and phone packages together in a straightforward package. 

Unfortunately, the division never lived up to management’s lofty expectations. Moreover, BT Sport became entangled in an arms race with Sky over sporting rights. The price these competitors were willing to pay to gain exclusive streaming rights for sporting events skyrocketed, and their returns plunged as a result. 

BT is now trying to untangle this business. It has agreed on a £600m deal with  streaming company DAZN to co-operate on a streaming sports business. There is also speculation that Discovery, the US media group which owns Eurosport, is in talks with BT about a joint venture for its sports businesses.

This initiative will allow the company to spend more time focusing on its core business model. It could also reduce losses and improve the offer for customers. 

Overall, I think the reorganisation of this business model will help improve the organisation’s sales and profitability. This is likely to lead to a higher share price when the benefits start to show through on the company’s bottom line. 

The undervalued BT share price 

The third and final reason why I believe the BT share price can continue to climb is the fact that the stock currently looks undervalued. 

Before the pandemic and the launch of the company’s new growth initiatives, the group was struggling. Net profit slumped from £2.5bn in 2016 to £2.2bn for 2019. Income has fallen further since, with the company reporting a net profit of £1.5bn for its 2021 financial year. 

This is expected to be the low point for the enterprise. Thanks to the company’s focus on customer service and network expansion, sales and profits are recovering, albeit at a relatively slow pace. 

According to the City, net income will hit £1.8bn for the company’s current financial year, rising to £2bn in fiscal 2023. 

Based on these projections, the stock is currently trading at a 2023 price-to-earnings (P/E) multiple of 8.5. This suggests the corporation is deeply undervalued at current levels. Historically, the BT share price has commanded a P/E of around 11, indicating the stock could have significant upside as the group continues to push ahead with its restructuring and growth plans. 

I think a profit recovery will be the catalyst that causes the market to take another look at the business. The company’s dividend is also returning this year. For the current financial year, analysts have pencilled in a dividend per share of 7.5p, giving a yield of 4.4% on the current stock price. 

This level of income is incredibly attractive for income investors in the current interest rate environment. 

Bumpy road ahead

However, I do not believe it will be plain sailing for the group from here on out.

The company faces a range of challenges. These include fighting off competition to meeting regulators’ demands for increased broadband connectivity across the UK. 

The group also has a lot of debt on its balance sheet. The cost of this debt could increase substantially if interest rates rise, which would impact overall profitability and hold back growth. And finally, the company has a multi-billion pound pension deficit. Management will have to find the cash to fill this gap. 

Still, despite these risks and challenges, I would be happy to buy to stock for my portfolio today, considering its growth potential and current valuation.


Market Snapshot: U.S. stock futures consolidate after three days of gains

financialnews1 on December 9, 2021

U.S. stock futures on Thursday edged lower after three days of gains, as attention moves to upcoming inflation data as worries over China were rekindled by a credit downgrade.

What’s happening
  • Futures on the Dow Jones Industrial Average
    YM00,
    -0.33%
    fell 63 points, or 0.2%, to 35682

  • Futures on the S&P 500
    ES00,
    -0.32%
    declined 9 points, or 0.2%, to 4690

  • Futures on the Nasdaq 100
    NQ00,
    -0.34%
    fell 0.2%, or 33 points, to 16360

On Wednesday, the Dow Jones Industrial Average
DJIA,
+0.10%
rose 35 points, or 0.1%, to 35755, the S&P 500
SPX,
+0.31%
added 0.3%, or 14 points, to 4701, and the Nasdaq Composite
COMP,
+0.64%
gained 100 points, or 0.6%, to 15787. The preliminary data from Pfizer
PFE,
-0.62%
and BioNTech
BNTX,
-3.55%
showing their vaccine at three doses was effective against the omicron variant of coronavirus has further calmed market fears.

What’s driving markets

Traders are starting to look ahead to Friday’s inflation data, which are expected to confirm the pressures that will lead the Federal Reserve to decide to ramp up the bond taper process.

“Most indices are now stabilizing, solidifying the recent gains registered after investors started to play down worries over the omicron variant. The trading environment is however likely to stay significantly volatile as uncertainty remains regarding monetary policies in the U.S., especially after last week’s poor job report and high inflation numbers,” said Pierre Veyret, technical analyst at ActivTrades.

The Fitch Ratings decision to lower the credit rating of homebuilder China Evergrande
3333,
+4.05%
to restricted default reignited worries around the Chinese property sector. Fitch cited Evergrande’s nonpayment of coupons on two dollar-denominated bonds.

Brazilian digital bank Nu Holdings priced its initial public offering on the New York Stock Exchange at $9 per share, valuing the Warren Buffett-backed lender at more than $41 billion. “This will mark one of the biggest publicly listed fintech companies in the world and provide a glimpse into the feasibility of running a large digital only bank,” said analysts at Saxo Bank.

Another high-profile new listing, HashiCorp, priced its IPO at $80, valuing the cloud-based software provider at $14 billion.

Kelley Blue Book: VW’s new ID.4 delivers a roomy, modern EV with good range and an AWD that’s a delight to drive

financialnews1 on December 9, 2021

Pros
  • 260-mile range

  • 295-horsepower all-wheel-drive model with dual motor

  • Three years of free recharging (with Electrify America)

  • 2,700-pound towing capacity

  • Excellent safety suite

  • Wireless Apple CarPlay/Android Auto

Cons
  • No front trunk in the rear-drive model

  • It’s heavy (between 4,500 and 4,600 pounds)

  • No spare tire (has sealant and an inflator)

  • No volume knob for stereo

What’s new?
  • All-new compact electric vehicle

  • Powered by a rear-mounted electric motor with 201 horsepower and 228 lb-ft of torque

  • AWD model has 295 horsepower

VW
VWAGY,
+7.28%
is serious about going electric. The German company has pledged to be carbon neutral by 2050, and the new ID.4 is the first of several dedicated VW EVs to come to the U.S. Yes, we’ve already seen the electric Golf, but that was based on an existing chassis. The 2021 Volkswagen ID.4 is based on the company’s modular new electric vehicle chassis, which allows for two different powertrain configurations – rear-motor/rear-drive or dual-motor/all-wheel drive.

The VW ID.4


Volkswagen

This 5-seat electric SUV initially is being sold as a rear-motor/rear-driver with 201 horsepower and 228 lb-ft of torque and a range of 250 miles. Its all-wheel-drive brother, the ID.4 AWD, puts out a total of 295 horsepower, powered by front and rear motors.

In basic description, the ID.4 is a 5-seat SUV that’s slightly smaller than the Tiguan. Its 82-kW lithium-ion battery pack, with 288 pouch-style cells, is located in the floor of the chassis, protected by a rigid case made of extruded aluminum.

Even though the first ID.4 lacks a front motor, there’s no front trunk, as in the Ford
F,
-0.75%
Mustang Mach E. Evidently, there’s enough EV hardware up there to preclude such a convenience.

That stated, the new ID.4 does have ample interior room, with enough space for four 6-footers to ride comfortably in the vehicle, with plenty of legroom and headroom. There’s also a generous 33 cubic feet of space behind the 3-seat rear bench.

The ID.4 instrument panel, as you might expect of a modern EV, is digital, and the center screen for navigation and infotainment is 10 or 12 inches across, depending on the model. While it appears simple to use and well arranged, we bemoan the lack of traditional knobs for stereo volume and a/c temperature. In its defense, VW says that the new ID.4, in addition to its touch controls on the steering wheel and screen, has excellent voice controls (Say, “Hello, ID” and it will respond) and gesture control, which allows you to swipe your hand in front of the screen (without touching it) to accomplish a variety of tasks.

While Volkswagen could have built a teardrop-shaped EV with a lightweight aluminum chassis and extraordinary range, it has chosen instead to build an electric version of a compact SUV, a hot segment that continues to grow. As such, VW says the steel-chassis ID.4 has the potential to do more good for the planet, which is very much in line with the company’s new eco-conscious thinking.

Also on MarketWatch: Gen Z is wildly unrealistic about how much money stocks, crypto and other investments will give them for retirement

EVs such as the Tesla
TSLA,
+1.64%
Model Y and the Kia
000270,
+1.08%
Niro EV are natural competitors for the ID.4, but VW says its significant new electric SUV will do the most good if it gets the masses out of internal-combustion compact SUVs like the Honda
HMC,
-1.63%
CR-V and Toyota
TM,
-2.65%
RAV4. While those two big sellers are a bit less expensive than the $39,995 ID.4, the VW, with its $7,500 federal tax incentive, gets more price competitive with these hot sellers.

2021 Volkswagen ID.4 pricing

The 2021 Volkswagen ID.4 has a Manufacturer’s Suggested Retail Price of $39,995, plus a destination fee of $1,195. If you order your ID.4 with the optional Statement Package (leatherette upholstery, power front seats, a power tailgate, and a panoramic sunroof), add $4,500.

There’s also an available Gradient Package. For $1,500, it includes 20-inch alloy wheels and 2-tone exterior paint with a black roof.

VW has already sold out of the ID.4 1st Edition. A rear-wheel-drive model with an MSRP of $43,995, the ID.4 1st Edition has white exterior and interior accents, special badging, contrast mirror caps, and a tow hitch. The 1st Edition, limited to a few thousand models, also has fun pedal covers – the one for the brakes has a “pause” button, while the one for the accelerator has a “play” button. Just like the remote for your TV.

The ID.4 AWD Pro model, fitted with dual motors, a heated windshield, and a tow hitch, has an MSRP of $43,675, which is lower than any other AWD BEV on sale today.

VW plans to be a carbon-neutral company by 2050, so it wants this new ID.4 to get buyers out of internal-combustion vehicles and into EVs, specifically popular compact SUVs like the Toyota RAV4 and Honda CR-V. Yes, the ID.4’s MSRP of $39,995 certainly is a bit steeper than that, but remember that this electric VW qualifies for a federal tax credit of $7,500, which brings the price down to a much more competitive $32,495 (right in line with the Tiguan SEL). The ID.4 AWD starts at $43,675.

Electric SUV competitors include the Tesla Model Y and the Kia Niro EV. You might also consider the all-electric Ford Mustang Mach E. On the significantly higher-end (and costing more than twice as much) are the Jaguar i-Pace and Audi e-tron, priced closer to the low- and high-$70,000 marks, respectively.

Volkswagen will sell the ID.4 electric vehicle in all 50 states, and a dedicated reservations platform on VW.com allows customers to reserve one of the new electric SUVs with a fully refundable $100 reservation fee. Later on, as vehicle production starts, reservation holders can confirm their order with an additional $400 vehicle deposit, which allows them to track their ID.4 through production and to delivery at their preferred local VW dealer.

Right now, the ID.4 is manufactured in Zwickau, Germany. In 2022, the production of the VW ID.4 will begin in Chattanooga. VW says the U.S.-built ID.4 will have a slightly lower MSRP of around $35,000, bringing it even closer to the RAV4 and CR-V in price.

Which model is right for me?

2021 Volkswagen ID.4

19-inch alloy wheels
Heated seats, steering wheel
Navigation
Wireless phone charger
Wireless Apple
AAPL,
+2.28%
CarPlay/Android auto

2021 Volkswagen ID.4 Statement Package

Leatherette upholstery
12-way power front seats
Power tailgate
Ambient interior lighting

2021 Volkswagen ID.4 Gradient Package

20-inch alloy wheels
Two-tone exterior paint with black roof

2021 Volkswagen ID.4 1st Edition

White exterior and interior accents
Contrasting mirror caps
“Play” and “Pause” pedals
Tow hitch
1st Edition badging

Driving the 2021 Volkswagen ID.4

Dip into the throttle, and the ID.4 pulls away smoothly with the futuristic whine of a modern electric vehicle. Like most electric vehicles, the ID.4 is very quiet. VW says they have spent quite a bit of effort on that mission and expanded their use of sound deadening countermeasures. And that makes for a serene driving experience. One only needs to open the door to hear the outside world and then quickly close it again to hear just how well VW has done that job.

Once underway, there are several drive modes to choose from—Eco, Comfort, Sport, and Custom. The ID.4’s standard regenerative brake calibration feels more like coasting when you lift the throttle. So, for the buyer switching from a gas engine car, that experience should feel very similar. Want a bit more regen? Move the gear selector from “D” to “B”. This provides quite a bit of drag to help slow the car down and allows the driver to use just the throttle pedal for most driving situations.

Sport delivers a sharper throttle and steering with more weight and precision. Sport mode also engages the car’s more aggressive regen calibration. It allows for the same one-pedal driving as “B” drive mode. The ID.4’s brakes can take some getting used to. The pedal is long before it engages the meat of the brakes to slow the car. It’s unusual at first. But after about 30 minutes of driving, we became more accustomed to it.

The ID.4’s acceleration is swift. But this car is no Tesla eater. The 1st Editions have a 201 horsepower electric motor driving the rear wheels. This summer, a 302 horsepower all-wheel-drive model with front and rear motors will arrive to bring VW a little bit closer to Tesla territory.

Eco mode changes the car’s behavior too. The throttle is less aggressive, the steering is lighter, and VW says it limits the power output slightly to increase range. That last one was difficult to discern. And the Eco mode itself was our favorite, and best fits the car’s mission.

VW has done a great job balancing the ride and handling of the ID.4. On the worst potholes we could find, our 20-inch tire shod test car rode smoothly. And on the twisty backroads, the ID.4 felt nimble and cornered flatly.

Partly thanks to the second motor that drives its front axle, the ID.4 AWD is a delight on the road. Despite its hefty weight, the all-wheel-drive version of the ID.4 handles surprisingly well on twisty 2-lanes. Its 295 horsepower and 339 lb-ft of torque provide strong acceleration for zipping past slower traffic when safe passing lanes arrive. VW says it will accelerate from rest to 60 mph in a quick 5.4 seconds, yet it can run up to 249 miles on its 82-kWh battery. Among our few complaints: no 12V accessory plug anywhere in the cabin for those of us who still run dash-top driving aids.

Interior comfort

VW says the ID.4 interior is designed to be minimalist, but with high technology at its core. Indeed, the dashboard looks pleasingly uncrowded, in part because so many of the switches and controls are handled by the buttons on the steering wheel or the large central touchscreen.

What’s more, the quality of materials is excellent, and the overall aesthetic is modern without being too far out in the future.

While all versions of the ID.4 get a digital gauge package (in a pod that adjusts up and down with the steering wheel), two different central touchscreens are available. Base cars get a 10-inch version, while the 1st Edition that KBB looked at has a 12-inch screen within easy reach of the driver.

The drive selector is noteworthy. It’s a rotating knob on the end of an arm extending from the right side of the instrument binnacle. Located at about 2 o’clock on the steering wheel, the knob is rotated forward (clockwise) to engage Drive, or rearward (counterclockwise) to put the new ID.4 in reverse.

By having the gear selector high and near the driver’s right hand, the ID.4’s center console is freed up to have a large storage well with a sliding cover to help you keep valuables out of sight. The ID.4 also has a handy pass-through lower storage area in front for other knickknacks.

With the rear seat in use, the ID.4 has 33 cubic feet of space in the back. With the rear seat folded, that volume increases to 64 cubic feet. The 2-row Tiguan, by comparison, has 37.5 cubic feet behind its rear bench, and 73.5 cubic feet with it folded. The ID.4 also benefits from a 2-level cargo floor, which conceals a storage well for the onboard charger.

Legroom and headroom are generous front and rear. We’re happy to report that the fixed-glass panoramic roof, with a power-retractable sunshade, does not reduce ID.4 headroom. In fact, VW says the glass roof ID.4 has a bit more headroom than the standard ID.4.

Also see: Do electric cars cost more to insure?

Exterior styling

We think the new Volkswagen ID.4 has an attractive look that we’d characterize as more modern and urban than rugged and outdoorsy. However you feel, it’s sleek. VW says it has a slippery drag coefficient of 0.28, and multiple little details around the tapered rear of the ID.4 reveal this keen attention to aerodynamics.

In front, there’s no grille, just a prominent new central VW logo that is illuminated on upmarket models. Two side vents integrated into the ID.4’s front bumper are for a pair of air curtains that direct air smoothly around the front tires, while the lower grilled section of the front end allows air in to cool the ID.4’s battery pack.

If you order the Statement Package, it comes with LED projector headlights that swivel into corners for an improved view of the turn.

Viewed from the side, the ID.4 has a beltline that dips slightly, reminding us a bit of the Nissan
NSANY,
-0.79%
Murano. We further like how the greenhouse tapers inwards as it travels rearward, aiding both aerodynamics and aesthetics. The 20-inch alloy wheels on the 1st Edition model manage to properly fill out the wheel wells without looking too large.

Gradient Package models are distinguished by a black roof with silver rails and accents.

Favorite features

Free fast recharging
For the first three years of ownership, VW provides ID.4 owners with free fast recharging via the Electrify America network. VW says there are 2,556 recharging stations across the US, with 5,484 available stalls.

See: This is where GM wants to install 40,000 new EV chargers

ID. Light
This light strip beneath the ID.4’s windshield glows and illuminates in different ways to share various bits of information about the new fully electric VW. For instance, it will glow to show you that the ID.4’s drive system is active, and it will even display which way the nav system wants you to turn at the next instruction. The ID. Light light strip also can be used to graphically show the battery’s state of charge.

Standard features

The standard 2021 Volkswagen ID.4 has heated seats, a heated steering wheel, heated washer nozzles, rain-sensing wipers, a navigation system, 19-inch alloy wheels, a wireless smartphone charger, wireless Apple CarPlay/Android Auto, and the 10-inch central touchscreen.

If you opt for an ID.4 with the Statement Package, it includes 12-way power front seats with leatherette upholstery, a panoramic fixed glass roof, Sirius XM satellite radio, a power tailgate, the larger 12-inch central touchscreen, and 30 colors of ambient interior lighting.

The Gradient Package includes everything mentioned above but adds 20-inch alloy wheels and 2-tone exterior paint with a black roof.

All ID.4s also feature the IQ. Drive suite of driver-assists and safety technology, plus ID. Light. With ID. Light, an active light strip below the windshield conveys info to the driver via lighting effects in different colors and sound prompts. ID. Light can let the driver know when the vehicle’s drive system is active, or when the vehicle has been unlocked or locked. It also helps with navigational instructions, incoming phone calls, and emergency braking prompts while also serving as a charge indicator for the battery.

Factory options

Currently, options on the 2021 VW ID.4 are limited to the items included in the Statement and Gradient packages, the contents of which are shared above.

Battery power, charge times, and range

The 2021 Volkswagen ID.4 is an electric SUV with a rear-mounted electric motor that drives the back wheels while drawing electricity from an 82-kWh battery pack mounted low in the floorboard of the vehicle. The motor puts out 201 horsepower and 228 lb-ft of torque.

This rear-drive ID.4 is rated by the EPA at 104 MPGe in the city, 89 MPGe on the highway, and 97 MPGe combined. Range is 250 miles.

The ID.4 Pro rear-wheel-drive model has an EPA-estimated 260 miles of range on a full charge. EPA estimates have it pegged at 107 MPGe in the city, 91 MPGe on the highway, and 99 MPGe combined.

Learn more: Your complete guide to MPGe, the electric equivalent of miles per gallon

At a public DC fast-charging station with 125 kW charging, the ID.4 can go from 5 to 80 percent charged in about 40 minutes. ID.4 owners get three years of unlimited charging at Electrify America DC Fast Chargers at no additional cost.

The 2021 ID.4 is on sale now, with pricing for the rear-wheel-drive ID.4 Pro starting at $39,995, before a potential Federal tax credit of up to $7,500. The Pro S carries an MSRP of $44,495. The limited-run ID.4 1st Edition, which sold out the day the vehicle was launched, carried an MSRP of $43,995.

Later on, the AWD VW ID.4 arrives. It has the same rear motor and battery pack, but it adds a front motor with 101 horsepower. Total horsepower output for the upcoming AWD ID.4 model is 295.

See: How to buy, install and use an electric car charger

While the top range of the rear-drive ID.4 is 260 miles, the range of the AWD ID.4 model has been estimated by the EPA at 249 miles.

The 82-kWh battery, protected by a rigid aluminum case in the floorboard, features 288 individual pouch cells in 12 modules. LG
003550,
+0.48%
of South Korea supplies the cells, but the Chattanooga-built ID.4s will be equipped with battery cells from SK
034730,
-0.38%,
another Korean firm.

Permanent-magnet electric motor
82-kWh lithium-ion battery pack
201 horsepower
228 lb-ft of torque
Range: 250 miles (260 miles, ID.4 Pro)

Two permanent-magnet electric motors (one front, one rear)
82-kWh lithium-ion battery pack
295 horsepower
est 350 lb-ft of torque
Range: estimated at 249 miles

This story originally ran on KBB.com. 

NerdWallet: Negotiating a good price on a car comes down to this one thing

financialnews1 on December 9, 2021

This article is reprinted by permission from NerdWallet. 

Buying a vehicle is more difficult than ever.

Shoppers have long been accustomed to negotiating discounts from the figure on the window sticker. In today’s shortage-driven market, though, many dealers say there is no room for negotiating the cost of a new or used car. In fact, buyers typically arrive on the dealer lot to find a broad assortment of add-ons and fees attached to that asking price, inflating the final tally by thousands of dollars.

Some could be extras such as window tint or floor mats or protective film. Some could be fees to cover the cost of advertising or preparing a car for sale. Some may be boldly labeled “Added Dealer Markup.”

What will the dealer negotiate on? Which fees are mandated by law? How do you find the best deal?

Your most powerful bargaining strategy is to not negotiate those individual extras at all.

Instead, ask the question that reduces the number of moving parts to one: “What’s my out-the-door price?”

Negotiating the out-the-door price:

  • Reduces confusion by allowing you to focus on a single number.

  • Reveals all costs, hidden fees and add-ons.

  • Allows you to make apples-to-apples comparisons of offers from different dealers.

  • Protects you from negotiating on the monthly payment, a favorite tactic at dealerships.

  • Avoids last-minute surprises when you review the sales contract.

  • Helps you set a budgeted price and adhere to it.

What is the out-the-door price?

Simply put, the out-the-door price totals all the pieces of a car purchase and gives you one clear price. It represents the number on the check you’d have to write to take the car home.

If you don’t know the out-the-door price and negotiate instead on the purchase price of the car itself, or — worse yet — the monthly payment, you may be shocked when you see the total amount you have to pay. That price might have been pumped up by a number of late additions to the contract.

Here’s a review of the costs included in a typical car deal:

  • The negotiated price of the car.

  • Destination charge, if the vehicle is new.

  • Sales and local taxes.

  • Documentation fee (the dealer’s charge for making up the sales contracts; in many states it is capped by law).

  • Registration costs.

Any equity you have in your trade-in would reduce the out-the-door cost.

Pretty simple, right?

But here’s the thing. Sometimes a dealer includes additional items in a sales contract, such as an extended warranty, antitheft devices, dealer add-ons (such as mud guards) or hidden fees that they consider part of the deal, but you might not. The dealer may be quite upfront and list “market adjustment” or similar language right on the sticker as well.

Related: Here’s a buying opportunity for smart used-car shoppers

It’s hard to keep track of all those items and to know what is negotiable. But, by asking for the out-the-door price, you are getting all those moving parts wrapped up in one neat figure.

How to use the out-the-door price

First of all, you need to estimate what you can afford to spend even before you hit the dealerships.

Add the sales price, any destination charge, sales taxes, title and registration fees and document fee. If you have equity in your trade-in, deduct it from this amount. If you owe more than your trade is worth — you’re upside-down on the loan — add that to this amount.

Also see: More car shoppers are thinking about EVs, but still holding back

That total represents your minimum out-the-door cost. In today’s market, you may have to decide how much more than that you’re willing to pay. Whatever that amount is, use it to:

  • Calculate car payments. While you don’t want to negotiate monthly payments at the dealership, you do want to have an idea of what that final number might be.

  • Shop for a car loan ahead of time, using the total minus any down payment you have. Ideally, try for a down payment of 20% and a loan no longer than 60 months. A preapproved loan in your pocket gives the dealer something to beat and removes any worry that you won’t qualify.

  • Compare dealer quotes, with your total as a benchmark.

Using the out-the-door price online

There are many tools that allow you to locate and negotiate for a car without going to the dealership. In fact, the only real reason to go in person is to test drive the car.

  • Search the online inventory of dealerships in your area to find the car you want with the right options package and in the color you like. If you don’t find what you want, ask what vehicles are inbound from the factory.

  • Contact the dealership’s internet manager by email. Verify that the car is still on the lot or inbound and request a price quote.

  • If the dealer’s price is close to MSRP, request an out-the-door price with a breakdown of fees.

  • Continue gathering quotes from competing dealerships.

  • Compare the out-the-door price from different dealerships to find your best deal.

  • Your final sales contract will enumerate each of the fees and extras, but the total should reflect your agreed-upon out-the-door price.

Any dealer’s out-the-door price is negotiable. They may stand firm because they know the vehicle can be sold at that price, or they may reduce the out-the-door price by eliminating some of the extras or shaving their price.

You might like: Thinking of a Tesla? Here are answers to some questions about the popular Model 3

Once you know what the out-the-door price is, you can ask the dealer to give you a monthly payment based on that amount. You will need to fill out a credit application and tell the dealer how much of a down payment you want and how long you want to finance the loan.

Use the dealer’s financing if it can beat the rate you brought to the table.

More From NerdWallet

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Next Avenue: Fixing the racial wealth gap with reparations: How it would work, who would qualify, and how much it might cost

financialnews1 on December 9, 2021

This article is reprinted by permission from NextAvenue.org. It is excerpted from the new book, “Fixing the Racial Wealth Gap: Racism & Discrimination Put Us Here, But This Is How We Can Save Future Generations,” by personal finance journalist and author Rodney Brooks.

The racial wealth gap—in which the typical African-American household owns approximately one nickel of wealth for every dollar owned by the typical white household — illustrates the yawning chasm between the economic status of African-Americans and whites. Some scholars, economists and politicians, both Black and white, have called for reparations to be paid to Black Americans for the generations of suffering and abuse.

The size of the racial wealth gap in America

Black Americans make up 13% of the nation’s population, but their share of the nation’s wealth is only 2.5%, notes William H. Darity, professor of public policy at Duke University and co-author of “From Here to Equality: Reparations for Black Americans in the Twenty-First Century.” And a recent report by the Brookings Institution says the net worth of a typical white family was $171,000 in 2016, compared to $17,150 for a Black family.

Could reparations help fix the racial wealth gap?

To answer that, it’s first helpful to review U.S. history.

The brutal institution of slavery was followed by centuries of institutionalized discrimination and violent riots resulting in the massacres of thousands of innocent Black men and women. There were also lynchings, Jim Crow laws and “sundown towns” which banned Blacks entirely or after dusk. Then there was mortgage discrimination, unequal education in segregated schools, redlining and housing discrimination, racism and discrimination in hiring and promotions and the killing of unarmed Black men and women by police officers and renegade citizens.

Consequently, Maya Rockeymoore Cummings, the widow of Rep. Elijah Cummings and CEO of Global Policy Solutions in Washington, D.C., says: “Reparations is a legitimate policy response.”

What reparations might cost

Thomas Creamer, a professor of public policy at the University of Connecticut who has been studying reparations for two decades, put the cost of slavery reparations alone — excluding subsequent discrimination or costs of Jim Crow laws — at $18 trillion to $19 trillion, which he called a “conservative estimate.”

Darity and Kristen Mullen in their book “From Here to Equality” say the total amount of reparations should be dictated by the amount necessary to eliminate the wealth disparities between Black and white Americans. That would require an expenditure of $10 to $12 trillion, or $200,000 to $250,000 per eligible recipient over 10 years.

Also read: Nearly half of Americans say inflation has caused them ‘financial hardship’

Making the American dream an equitable reality, some say, demands the same U.S. government that denied wealth to Blacks restore that deferred wealth through reparations to their descendants in the form of individual cash payments in an amount that will close the Black/white racial wealth divide.

Reparations for Black Americans have been approved in cities and states as diverse as Asheville and Buncombe County, N.C., Evanston, Ill. (the first to implement a program after passing reparations for Black residents in 2019), and Providence, R.I. The California State Assembly and Durham, N.C., have approved measures to study reparations.

In the recent election, residents of Greenbelt, Md., voted to create a commission to study paying reparations.

And the House Judiciary Committee voted HR 40, a reparations bill, out of committee in early 2021. That bill was originally introduced by the late Rep. John Conyers (D-Mich.) in 1989. There are now nearly 200 House co-sponsors and over 20 Senate co-sponsors for a national reparations law. However, reparations are strongly opposed by Senate Republicans. And a nationwide poll from the University of Massachusetts Amherst and WCVB found that 62% of respondents opposed reparations to descendants of enslaved people.

None of the reparations programs approved around the country would result in direct monetary awards to the descendants of slaves. Most have suggested yet-to-be determined benefits that might encourage economic growth and business development in the Black community.

Watch: How this 38-year-old made it from ‘deep poverty’ to millionaire

Other strategies include grants and awards to community social service organizations to combat health disparities and to help fix the years of psychological damage done by racism and discrimination.

What form should reparations take?

Options for the actual payment of reparations might include putting funds into individual endowments, offering programs that would increase homeownership among Black citizens and providing Black people with accounts that will give them direct access to those funds, said Rockeymoore Cummings.

Darity and Kristen Mullen argue that payments should be made directly to eligible recipients, but not necessarily with cash. Assistance could be in the form of trust accounts or endowments that pay out over a period of years.

But Darity and Mullen also argue that those accounts must be controlled by the recipients, not a third party. One reason for the trust accounts is that people who come into a huge amount of money, whether it’s inheritance or lottery winnings, usually lose it, spend it or end up in bankruptcy.

Also see: How to close the racial retirement gap

Who would qualify for reparations?

There’s a debate even among the leading proponents of reparations over who would qualify for reparations.

Some say reparations should be limited to those who have direct lineage to slavery.

Others recommend looking at the effects of slavery, not just the act of slavery. They believe we should consider every way slavery has shaped American society, including unequal education, redlining and even police brutality.

“Reparations do not need to be just limited to the policy of reparations for slavery,” says Rockeymoore Cummings. “Remember that there are people in this lifetime who were forced to go to separate and unequal schools because of Jim Crow segregation. That is just as legitimate a reason for reparative solutions as the institution of slavery itself.”

Darity and Mullen believe there should be basically two criteria for eligibility for reparations payments.

“An individual would have to demonstrate that one ancestor was enslaved in the United States,” they say. Or, they maintain, the person would have to prove that they identified as Black for at least 12 years before enactment of a reparations project or study commission by making public their response to the race question on the U.S. Census.

Some private organizations are already using their own records to identify eligible recipients. Georgetown University is raising $400,000 a year to benefit the descendants of 272 enslaved people who were sold to keep the college afloat two centuries ago. And Princeton Theological Seminary implemented a $28 million plan that includes scholarships to descendants of enslaved Africans.

Mary Frances Berry, attorney, historian and former chair of the U.S. Civil Rights Commission, has a different idea.

She wrote a book on Callie House, a former slave who started a nationwide movement for slavery reparations in the early 1900s (“My Face Is Black Is True: Callie House and the Struggle for Ex-Slave Reparations.”) House’s organization had chapters and members who paid 25 cents a year, met in churches and petitioned the U.S. courts for reparations. The U.S. government eventually shut down the movement by charging House with mail fraud and sending her to prison in 1917.

“My own position is that if there are ever reparations, they should give them first to the people whose names are on those petitions,” Berry said. “Those people took great risks.”

Read this interview with author Rodney Brooks: How to close the racial wealth divide

Rodney Brooks is the author of “Fixing the Racial Wealth Gap” and a personal finance and retirement writer whose work has appeared in USA Today, The Washington Post and elsewhere. 

This article is reprinted by permission from NextAvenue.org, © 2021 Twin Cities Public Television, Inc. All rights reserved.

More from Next Avenue:

What’s next for the TUI share price?

financialnews1 on December 9, 2021

The TUI (LSE: TUI) share price has significantly underperformed the market over the past year.

Since the beginning of December 2020, the stock has returned just 11%. In comparison, the FTSE All-Share index has returned around 17% over the same time frame, including dividends. 

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It is clear why the company has been struggling. The coronavirus pandemic has gutted the global travel industry, and it does not look as if this disruption will come to an end anytime soon. 

TUI has been bailed out three times already by the German government. Unfortunately, it was already facing significant challenges in the run-up to the pandemic. It had a large amount of debt and relatively weak profit margins.

What’s more, the travel industry tends to be unpredictable in nature, so TUI had always struggled to report consistent earnings. 

However, some analysts and investors have highlighted the stock as an excellent investment to own to play the global economic recovery, despite the company’s troubles. 

TUI share price risks

I am not so sure. As I noted above, the company was already in a difficult position before the pandemic. It is now in an even worse situation.

Even though it has been bailed out multiple times, its balance sheet is relatively weak. Moreover, each bailout came with a new set of restrictions such as limitations on dividend payments and management bonuses. 

Nevertheless, I do think it is likely that the group will see an increase in revenues over the next 12 months if the world continues to open up. In the most optimistic scenario, sales will rebound to 2019 levels. This would allow the corporation to reduce debt and move on from the pandemic. 

I think it is unlikely this scenario will play out. Travel restrictions continue to play a critical role in controlling the spread of the virus worldwide. Until the pandemic is truly under control, it seems likely some form of travel restrictions will remain in place. 

Treading water 

This suggests bookings at TUI and other travel operators will remain depressed. As such, it seems likely that the stock will continue to trade water in 2022.

Without a significant catalyst to push the shares higher, such as a substantial recovery in revenues and holiday bookings, I think the market will continue to wait for positive news.

If there is one thing the market hates more than anything else, it is uncertainty. And right now, there is a lot of uncertainty surrounding the TUI share price. No one can be sure what is just around the corner for the company. 

Therefore, I will not be buying the stock for my portfolio anytime soon. Until the group reports a material improvement in trading, I think it will remain a risky investment. I believe there are plenty of other companies on the market that offer better prospects considering the outlook for the travel industry and economy in general. 

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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

New UK stock market listing rules: what they mean for investors

financialnews1 on December 9, 2021

The Financial Conduct Authority (FCA) recently amended its stock market listing rules in an effort to encourage more companies to go public in the UK. The new rules officially came into force on 3 December.

So, what are the rule changes? And more importantly, what could the new listing regime mean for investors? Let’s find out.

What are the FCA’s new listing rules?

According to the FCA, the new rules are based on recommendations made in Lord Hill’s UK Listing Review and the Kalifa Review of UK Fintech. They are mostly aimed at companies planning to go public in 2022.

They include:

  • Allowing a targeted form of dual-class share structure within the premium listing segment. Dual-class shares tend to be quite popular among founders. This is because it gives them additional voting rights and essentially allows them to retain more control of their companies.
  • Increasing the minimum market capitalisation threshold from £700,000 to £30 million. This will apply to both the premium and standard listing segments for shares in ordinary commercial companies.
  • Reducing the number of shares an issuer is required to have in public hands (i.e. free float) from 25% to 10%. This change, like the one for dual-class share structure, gives founders more control over their companies. It may also allow them to list their companies earlier.

The new rules follow others that were implemented in August 2021 to make it easier for special purpose acquisition companies (SPACs) to list in London.

What do the new listing rules mean for investors?

The new listing rules could lead to an increase in investment opportunities for investors.

It is a well-known fact that many companies have previously been turned off from floating their shares on the London market due to its strict listing rules. The lack of dual-class shares for the premium segment, for example, has driven many tech companies away from London to other markets such as the US, where this particular feature is quite common.

But things could change with the new rules and more firms may now choose to conduct their IPOs in London. This could give investors a greater choice of stocks to add to their portfolios.

Clare Cole, director of market oversight at the FCA, said: “These changes ensure the UK’s markets maintain their reputation for dynamism, helping support the new types of companies seeking the investment that drives economic growth and by giving investors more choice with appropriate protection.”

However, with more opportunities comes the need for extra caution among investors.

Speaking to Capital.com, Russ Mould, investment director at AJ Bell, warned that: “Dual-class share structures and a lower free float may tempt more entrepreneurs to London but it may tempt more charlatans as well, and in the process raise the risk of poor governance costing investors their hard-earned savings.”

He suggests that a string of successful IPOs may tempt investors to let their guard down and possibly put their money in questionable companies.

Therefore, as much as there is a promise of more opportunities under the new rules, investors will still need to do their due diligence before putting their money into any company to avoid getting burned.

How can you invest in the UK stock market?

Do you wish to start investing in the UK stock market and potentially capitalise on the new opportunities that are likely to come with the new listing rules? It’s quite simple to get started.

All you need to do is to open an online share dealing account with a reputable provider. We’ve created a list of top-rated providers of shared dealing accounts in the UK to help you narrow down your options.

If you plan on investing an amount of up to £20,000, consider investing through a stocks and shares ISA. Any returns from investments made within a stocks and shares ISA are usually tax free.

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Sean is a personal finance writer with a strong passion for helping others become more financially literate and make better financial decisions. He covers everything from credit cards to savings to investing.


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What’s going on with the Renalytix share price?

financialnews1 on December 9, 2021

It’s been a gloomy time recently to own Renalytix (LSE: RENX). While the share price has increased 20% over the past year, at the time of writing this article yesterday, it’s lost over half its value since May.

Could this be a buying opportunity for the kidney diagnostics specialist? Below I consider what has been driving the share price action and whether I should add Renalytix back into my portfolio.

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The growth challenge

Early investor sentiment (including mine) on Renalytix was positive. Its proprietary diagnostic platform offered an attractive business model. Development costs could be substantial. But the platform’s scalability meant that if enough healthcare users signed up, the profits could be substantial.

I think that continues to be the case. But the Renalytix share price is now showing some impact from the challenge of meeting high growth expectations. To launch a service from a standing start requires substantial investment in things like sales capability. In a regulated industry such as healthcare, it can take a while for potential customers to start buying new services. That means revenue growth can be slow at first, while costs stack up.

Growing costs

That’s exactly the picture right now at Renalytix, as shown in the company’s latest set of quarterly results that it released this week. The company has expanded its sales force, begun clinical testing with a couple of new healthcare providers and increased the ordering base in its launch site.

Revenues remain very modest, but at $0.5m they do compare favourably to the zero revenues reported in the equivalent quarter last year. However, quarterly operating expenses also ballooned, from $5.4m to $12.1m. That led to a larger loss for the quarter than in the comparable period, of $10.1m.

Is Renalytix moving in the right direction?

What does all this mean for the company’s outlook? It’s hard to tell just yet. A growing sales force should lead to higher revenues over time. There are signs that things are moving in the right direction on that score, with increased testing and service rollout, albeit still on a limited scale.

But that’s coming in at a growing cost. Net cash outflow due to operating activities in the quarter was $10.5m. With cash and cash equivalents on hand of $54.3m at the end of September, the company has enough cash for around five quarters of such net cash outflow. But a growing cost base as headcount grows could lead to cash outflow quickening. One solution to that would be to raise more funds, for example by issuing shares. That risks diluting existing shareholders.

On balance, I think the company is making the right moves, but it’s too early to tell if they will produce the desired financial results. That explains the fall in the Renalytix share price, I feel. And I think it could fall further in coming quarters if revenues don’t grow substantially.

My next move

I continue to like the Renalytix story. It has a large addressable market and attractive proprietary technology with growing clinical proof to help attract healthcare customers.

But revenues are yet to take off in a big way, while costs are mounting. In the absence of further positive sales news, I won’t be buying Renalytix again for my portfolio right now.


Christopher Ruane has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

What’s happening with the Stagecoach share price?

financialnews1 on December 9, 2021

Sometimes I can wait ages for a bus and then suddenly there’s a flurry of action. It’s been a somewhat similar story for shareholders in Stagecoach (LSE: SGC) lately, with the shares moving up and down markedly this month. Over the past year, the Stagecoach share price has fallen 3%, at the time of writing this article yesterday.

Below I look at what’s driving the price movement – and what might come next.

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Decent interim results

Yesterday, Stagecoach issued its interim results covering the six months to the end of October. These contained some good news. Revenue of £579m beat the equivalent period last year, which was heavily affected by pandemic restrictions. Pre-tax profit came in at £31m and earnings per share were 1.9p. The company is cash flow positive. It also reduced net debt from £313m to £268m.

All of that suggests to me that the business is moving in a positive direction. It also suggests that the worst of the pandemic impact may now be in Stagecoach’s rear view mirror.

However, there are still some grounds for concern that I think may be troubling investors. For example, for most of November, passenger journeys were at over 70% of the equivalent 2019 levels. But that figure has since softened, due to factors such as pandemic variant concerns. This shows that sudden demand shocks remain an ongoing risk to the company’s revenues and profits. But more worryingly, the passenger recovery of “over 70%” seems fairly weak to me. It means that around a quarter of all passenger journeys that were being taken before the pandemic have not rematerialised to date. Compare that to recovery in retail and hospitality, for example, where some operators have recovered or surpassed their 2019 levels of customer demand. It may be that there have been structural shifts in working patterns and willingness to travel on buses. That threatens both revenues and profits at Stagecoach.

Merger speculation

Another driver for movements in the share price in recent months has been speculation around a possible combination with rival National Express. The interim results were vague on this, saying that “constructive discussions are continuing with National Express Group plc on a potential combination of both groups that would deliver strong value creation for both sets of shareholders”.

That doesn’t reveal much, although it does suggest that getting a good deal for Stagecoach shareholders, not just National Express investors, could be a sticking point in the discussions. As time goes on, I detect a limited hunger to do a deal here. If that turns out to be the case and no merger materialises, it could drive the Stagecoach share price lower. But I reckon the investment case for the company doesn’t require a merger. So longer term I’m not worried if it doesn’t happen.

My next move on Stagecoach

The possibility of a takeover premium has boosted the Stagecoach share price. Yet I feel that improving demand and profitability should help to boost the company over the long term, with or without a merger. While I have concerns about the limits of demand recovery, I thought the interim results showed a company in recovery mode. If that continues for the full year, it could help support a higher share price. I will continue to hold my shares.

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Christopher Ruane owns shares in Stagecoach. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Why the Scottish Mortgage Investment Trust share price concerns me

financialnews1 on December 9, 2021

Looking at the performance of the Scottish Mortgage Investment Trust (LSE: SMT) in recent years, its performance is impressive. But can looks be deceiving? When it comes to what happens next, past performance is not necessarily an indicator of the future. I reckon the Scottish Mortgage Investment Trust could be headed for a fall. Here’s why.

Investment trusts as pools of assets

An investment trust is exactly what the name suggests. It doesn’t run its own business and generate profits. Instead, it invests its assets in a variety of other companies. This means that, broadly speaking, the trust’s performance will mirror those of the assets it owns. The correlation isn’t perfect, as investors can value the trust’s shares at a premium or indeed discount to its underlying assets. But the key driver for a trust’s performance over the long term is typically how its underlying assets perform.

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Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

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At the end of September, I explained why I was bearish on the Scottish Mortgage Investment Trust share price. Between the day that article appeared and the market close yesterday, the shares had a 0% return, although they moved up and down in between. The concern I had in September was about the mixture of assets that Scottish Mortgage owned. That now concerns me even more than it did back then.

Tech holdings

A key reason Scottish Mortgage has performed so well in recent years is the profile of its investments. It has been heavily invested in tech stocks at a time when there’s been a tremendous bull market in tech. It has also had significant exposure to Chinese tech shares. That has paid off well during a period when  demand for them has soared.

Lately though, there has been a sell-off among some leading US tech stocks. Chinese regulation of tech has increased and key companies like Alibaba have seen their share prices fall steeply. Alibaba is one of Scottish Mortgage Investment Trust’s top 10 holdings. Its New York-listed shares have shed 53% of their value over the past year.

Tech trouble ahead?

Regulatory tightening of the tech sector in China looks set to continue. I also think some of the trust’s other tech holdings could be heading lower soon.  For example, Tesla has seen its shares add 63% on a 12-month timeframe. But over the past month, they’ve been moving downwards.

If leading tech names like Tesla continue to lose value, I would expect that to reduce the value of the trust’s holdings. That could harm the Scottish Mortgage Investment Trust share price.

Against that, some optimists think the tech bull market could continue into 2022. The trust has also been investing more in alternative sectors lately, such as pharma. So even if a tech sell-off does gather steam, the trust could be somewhat insulated. After all, it does have an outstanding record when it comes to finding successful investments. Nonetheless, I am concerned that the Scottish Mortgage Investment Trust is at risk of a fall in the coming months. I won’t be buying.

Christopher Ruane has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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