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Smart Tax Planning

Tax season kicked off for individual filers on Jan. 23, and the deadline for most taxpayers is April 18.
If you’re expecting a refund, there may be ways to get the money faster, tax experts say.

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How soon to expect a tax refund after filing your return

Typically, you will receive a refund within 21 days if you’ve filed an accurate, electronic return with direct deposit for the payment, according to the IRS. Paper filings and errors may extend the timeline. You can check the agency’s refund portal for status updates. 
The timeline changes if you’re claiming the earned income tax credit — a tax break for low- to moderate-income workers — or the additional child tax credit. While the IRS can’t begin issuing these refunds before mid-February, you should receive the funds by Feb. 28 if there are no issues with your return.

Start with a ‘full audit’ of your 2022 financial year 

Sheneya Wilson, a certified public accountant and founder of Fola Financial in New York, advised taxpayers to begin the tax-filing process with a “full audit of your financial year.”

You’ll want to identify all sources of income, major expenses and life changes, such as marriage, divorce or having a baby, which may affect your filing. While your finances may change from year to year, your 2021 tax return may provide a rough guideline of what to expect, she said.

It’s better to ‘get it right than to get it out quickly’

While you may be eager for a refund, the IRS says to wait until you have all the necessary information. “Filing an accurate tax return can help taxpayers avoid delays or later IRS notices,” the agency said in a recent news release. 
The IRS said this is “especially important” if you’re receiving a Form 1099 for unemployment income, capital gains or dividends, pensions or retirement plan distributions.   

It’s more important to get it right than to get it out quickly.

Marianela Collado
CEO of Tobias Financial Advisors

“It’s more important to get it right than to get it out quickly,” said certified financial planner Marianela Collado, CEO of Tobias Financial Advisors in Plantation, Florida. She is also a certified public accountant.
Companies prepare information returns, such as 1099s, every year, with a copy going to the IRS and the taxpayer. If you skip any of these forms, the IRS system automatically flags your return and sends you a notice, which may take time to resolve. 
Of course, you’ll want to double-check the details entered from your tax forms. “I always say haste makes waste,” Collado said.

Always double-check your tax return

Tax return typos are another common reason for processing delays, Wilson said.
Whether you file on your own or work with a professional, it’s critical to review your tax return, including all of your personal information — such as your name, date of birth, Social Security number, address and banking details for direct deposit — to make sure everything is accurate, she said. More

A wave of companies, including Amazon, Google and Spotify, have announced deep cuts to their head count, leaving former employees without a paycheck.
Here’s what they need to know about applying for unemployment benefits.

Iryna Imago | Istock | Getty Images

A wave of companies, including Amazon, Google and Spotify, have announced deep cuts to their head count, leaving former employees without a paycheck.
Fortunately, the unemployment insurance program, created in 1935, offers support to certain people who have lost their job. The federal program is administered by states, and the rules vary based on where you live.

In a handful of states, employees and employers pay into the unemployment insurance program, said Michele Evermore, a senior fellow at The Century Foundation. In the bulk, only employers pay into the program, but it’s a benefit workers have earned, she said.
As a result, she said, laid-off workers shouldn’t be shy about applying for the aid.
More from Personal Finance:Tax season opens for individual filers on Jan. 23, says IRSHere are 3 key moves to make before the 2023 tax season opensIRS to start 2023 tax season stronger, taxpayer advocate says

How soon after a layoff can I apply for unemployment?

“As soon as you leave your job, you should be on your way to the unemployment insurance office,” Evermore said.
In some states, it can take weeks for your claim to be approved, so the sooner you file the better.

While most states have a one-week waiting period before they can start paying you benefits, you don’t have to wait to request the relief, Evermore said.

Where do I apply for unemployment?

Do I qualify for unemployment benefits?

Generally, to be eligible for unemployment benefits, you have to have been laid off through no fault of your own, Evermore said. Maybe the job just wasn’t a good fit for you, or your company was downsizing.
But it doesn’t hurt to apply even if you’re unsure if you qualify, Evermore said. Many people prematurely exclude themselves from the program, she said: “There’s a lot of mythology around who qualifies.”

People may be surprised to learn, for example, that in some cases they can qualify for unemployment benefits even if they quit, Evermore explained.
For instance, in some states you’re eligible for the benefit if you made the choice to leave your job after your employer asked you to transfer to a location where your commute would be too long, or if you had to leave your job because your partner’s employment was relocated.

What are the requirements of the program?

To receive and keep receiving unemployment benefits, you have to be able to work and actively be seeking new employment, Evermore said.
States have different ways of making sure you’re looking for work, she added. In some cases, you’ll be responsible for keeping a log of work search efforts on your own, and in other states, you’ll have to call in to the state unemployment office and share what jobs you’ve applied to on a regular basis.
“In some states you may also report work search online,” Evermore added.
When you apply for benefits, make sure you learn about how to fulfil any requirements in your state.

Are unemployment benefits taxable?

Prapass Pulsub | Moment | Getty Images

Yes, Evermore said. The benefits are subject to federal taxes and most states take them, too.
When you start to get unemployment payments, your state will typically give you the option to have taxes withheld.
“I’d always take that option,” Evermore said. “You could be in for a long spell of unemployment and then get hit with a big tax bill.”

What is the typical weekly benefit?

In the third quarter of 2022, the average weekly unemployment benefit was around $385. But there’s a large range in the payments by state. For example, in Washington state, the benefit was nearly $600 during that period. In West Virginia, it was around $305.
There are other resources, too, for people struggling financially due to job loss, Evermore said.
“Unemployment insurance isn’t the only program in the world,” Evermore said, adding that out-of-work people can also try applying for food stamps and other aid.

How long can I get the benefit?

Yellow Dog Productions | The Image Bank | Getty Images

The standard duration for unemployment benefits is 26 weeks but that timeline varies by state.
For example, Missouri recently slashed its benefit duration and some workers may only receive payments for eight weeks there.

I received unemployment benefits during the pandemic. Could I qualify again?

It’s possible, Evermore said.
Workers are typically eligible for unemployment benefits for a certain amount of weeks per benefit year. Depending on how long has passed since your last period of joblessness, and how many weeks you previously received the benefits, it’s possible you could qualify again after a follow-up job loss for at least some more weeks and possibly another full duration.

I received severance pay. Will that affect my unemployment benefits?

In most states, if your layoff included severance pay, your unemployment benefits will likely be reduced for the period in which you’re still receiving payments from your former employer.
But, again, that depends on your state. In some cases, your severance package will have no impact on your unemployment benefits, Evermore said.
Clarification: In a handful of states, employees and employers pay into the unemployment insurance program. In the bulk, generally employers only pay into the program, but it’s a benefit workers have earned. An earlier version didn’t draw that distinction.

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As Democrats and Republicans negotiate over the nation’s debt ceiling, some worry changes to Social Security benefits could be on the line.
Sen. Joe Manchin, D-W.Va., said on Sunday that increasing the payroll taxes wealthy pay may help shore up the program.

Sen. Joe Manchin, D-W. Va., speaks to the cameras about the reconciliation bill in the Hart Senate Office Building on Monday, August 1, 2022.
Bill Clark | CQ-Roll Call, Inc. | Getty Images

Now that the U.S. has hit the debt ceiling, lawmakers need to revisit the federal budget and find ways to make cuts, Sen. Joe Manchin, a Democrat representing West Virginia, said in interviews this weekend.
But that should not include cuts to Social Security and Medicare benefits, he said.

“I’ve got 60% of my population that that’s all they have is Medicare and Social Security,” Manchin told NBC’s “Meet the Press” on Sunday.
“You think I’m going to go down that path and put them in jeopardy? No,” he said.
In a separate interview on CNN’s “State of the Union,” Manchin called for a key change to help shore up Social Security’s ailing funds — raising the cap on payroll taxes that are used to fund the program.
“The easiest and quickest thing that we can do is raise the cap,” he said, while also curbing “wasteful spending.”

How raising payroll tax cap could aid Social Security

In 2023, wages up to $160,200 are subject to a 6.2% tax for employees and employers that goes to Social Security.

A 1.45% Medicare tax is also paid by employees and employers, though there is no wage limit to those taxes.

Both programs face the prospect of a funding shortfall in the coming years if lawmakers fail to act. Social Security’s combined trust funds are projected to become depleted in 2035, at which point 80% of benefits will be payable, according to an annual report released in June.
The fund that covers Medicare Part A, which pays for inpatient hospital care and other services, will be able to pay full benefits until 2028, after which point 90% of benefits will be payable.
“Social Security and Medicare basically is running out of cash because we stop at a certain level where people pay into FICA,” Manchin said. (FICA stands for the Federal Insurance Contributions Act and represents the U.S. federal payroll tax.)
Other Democrats have also proposed raising payroll taxes to help shore up Social Security. Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., have proposed reapplying payroll taxes for those earning over $250,000 along with a host of other changes to shore up the program. A separate bill to reform the program from Rep. John Larson, D-Conn., calls for applying payroll taxes starting at over $400,000.

Republicans have proposed program changes

Concessions may play into debt ceiling negotiations

However, the concern is that Republicans may demand concessions from Biden in exchange for raising or eliminating the debt ceiling.
On Thursday, the U.S. hit the debt ceiling, leaving just months before it may default on its obligations, Treasury Secretary Janet Yellen wrote in a letter to Congress.
“The concern is that they are willing to destroy the global economy, plunge us into a recession or a depression, with their refusal to raise the debt limit in order to force these changes,” Freese said.
The White House has maintained the president will not make concessions during the debt ceiling negotiations.
“As President Biden has made clear, Congress must deal with the debt limit and must do so without conditions,” White House press secretary Karine Jean-Pierre said last week.

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The average credit card debt owed by Gen Xers is $7,004, according to a new report.
That compares with $6,785 for baby boomers, $5,928 for millennials and $2,876 for Gen Zers.
The average credit card interest rate is above 20%.

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When it comes to credit card debt, Generation X may be struggling the most.
The average amount owed by people in that cohort is $7,004, according to a new report from New York Life. That compares with $6,785 for baby boomers, $5,928 for millennials and $2,876 for Gen Zers.

“I think Gen Xers can be especially squeezed by credit card debt because they’re living expensive years right now,” said Ted Rossman, senior industry analyst for CreditCards.com. Research from CreditCards.com also shows more members of Gen X (77%) have any type of personal debt compared with other age groups.
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“They might be sandwiched between caring for elderly parents and raising their own kids – maybe even putting them through college,” Rossman said.
The New York Life study, based on a survey conducted in December among 4,410 U.S. adults, defines baby boomers as people ages 59 to 77; Gen Xers, ages 43 to 58; millennials, ages 27 to 42; and Gen Z as age 11 to 26.

The cost of carrying credit card debt has become higher

Credit card balances across all age groups hit $930 billion in the third quarter of 2022, according to the Federal Reserve Bank of New York’s latest quarterly report on household debt. That amount was $38 billion more than the previous quarter and $121 billion more than a year earlier, marking the largest yearly jump — 15% — in more than 20 years.

And as interest rates have risen — a result of the Federal Reserve trying to rein in high inflation — the cost of carrying credit card debt has become more expensive.
The average credit card now charges a record-high 20.16%, Rossman said. What’s more, 46% of card holders carry debt from month to month on at least one card, which is up from 39% a year ago.

The average credit card debt owed by adults across all ages is $6,321, and the average monthly amount put toward that debt is $430, according to the New York Life study.
The length of time it would take to pay off that average balance at that monthly amount depends on the interest rate. At zero percent, it would take 15 months. At 20%, it would take 18 months, and about $1,028 would be going to interest.
Those calculations, made using Credit Karma’s credit card calculator, also assume no additional credit card debt was incurred while paying off that amount.

How to knock down your debt

There are some ways you may be able to pay down your credit card balances faster.
For instance, some people approach the debt using the “snowball method,” which involves paying off the smallest balance first and then moving on to the next-biggest and so on.
It works like this: You pay the minimum on your higher-balance cards to avoid late fees or higher interest charges, then throw as much money as you can at the smallest debt until it’s paid off. Then you apply the same strategy to the next-biggest balance. The idea is that erasing balances can be empowering and give you motivation to keep paying all your cards off.
If you don’t need the positive reinforcement, you can focus on the highest interest rate debt first. In the long run, this “avalanche method” —  from highest rate to lowest — will save you the most on interest charges.
Additionally, there are 0% balance transfer cards that you may be able to get, depending on your credit score. The higher your score, the better terms you can get overall.

Or, a personal loan could help you consolidate the debt. “These rates go as low as about 7% if you have good credit,” Rossman said.
You also should consider whether you can reduce spending or increase your income, which could free up some money.
“You could take on a side hustle, sell stuff you don’t need and/or cut your expenses to come up with more money to throw toward your credit card debt,” Rossman said.

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When it comes to credit scores, there are a few things many borrowers often get wrong, experts say.
Here are the top misconceptions and why it’s so hard to set the record straight.

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Randy had an 850 credit score. According to FICO, the most popular scoring model, that’s as good as it gets.
Still, a line on his credit report said he could lower his utilization rate, so he promptly paid off the remainder of his car loan with one $6,000 payment, and then his score sank 30 points. (Randy has been a target of identity theft and asked to omit his last name for privacy concerns.)

Most people assume that wiping out those auto payments couldn’t hurt, but that’s a mistake.
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When it comes to credit scores, there are a few things many borrowers often get wrong, experts say. Here are the top misconceptions and why it’s so hard to set the record straight.
Misconception No. 1: Debt is bad
Your credit score — the three-digit number that determines the interest rate you’ll pay for credit cards, car loans and mortgages — is based on a number of factors but most importantly, it’s a measure of how much you are borrowing and how responsible you are when it comes to making payments.  
Having an excellent score doesn’t mean you have zero debt but rather a proven track record of managing a mix of outstanding loans. In fact, consumers with the highest scores owe an average of $150,270, including mortgages, according to a recent LendingTree analysis of 100,000 credit reports.

The borrowers with a credit score of 800 or higher, such as Randy, pay their bills on time, every time, LendingTree found. 
To that end, having a four-year auto loan in good standing was working to Randy’s advantage.
“Lenders also want to see that you’ve been responsible for a long time,” said Matt Schulz, LendingTree’s chief credit analyst. 
The length of your credit history is another one of the most important factors in a credit score because it gives lenders a better look at your background when it comes to repayments.
Misconception No. 2: All debt is the same
Since Randy had already paid off his mortgage and has no student debt, that auto loan was key to show a diversified mix of accounts.
“Your credit mix should involve more than just having multiple credit cards,” Schulz said. “The ideal credit mix is a blend of installment loans, such as auto loans, student loans and mortgages, with revolving credit, such as bank credit cards.” 
“The more different types of loans that you’ve proven you can handle successfully, the better your score will be.”

The total amount of credit and loans you’re using compared to your total credit limit, also known as your utilization rate, is another important aspect of a great credit score. 
As a general rule, it’s important to keep revolving debt below 30% of available credit to limit the effect that high balances can have.
Misconception No. 3: You need a perfect score
Only about 1.6% of the 232 million U.S. consumers with a credit score have a perfect 850, according to FICO’s most recent statistics. 
Aside from bragging rights, you won’t gain much of an advantage by being in this elite group.
“Typically, lenders do not require individuals to have the highest credit score possible to secure the best loan features,” said Tom Quinn, vice president of FICO Scores. “Instead, they set a high-end cutoff, that is typically in the upper 700’s, where applicants scoring above that cutoff qualify as a good credit score and get the most favorable terms.”

Each lender sets their own credit score thresholds for who they consider the most creditworthy. As long as you fall within these ranges, you are likely to be approved for a loan and qualify for the best rates the issuer has to offer, Schulz added.
“Anything over 800 is gravy,” Schulz said, and “in some cases, the difference between 760 and 800 may not be that significant.”
Most credit card issuers now provide free credit score access to their cardholders, making it easier than ever to check and monitor your score.
Subscribe to CNBC on YouTube.

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(An excerpt from the book, “Shut Up and Keep Talking: Lessons on Life and Investing from the Floor of the New York Stock Exchange,” by Bob Pisani.)
Thirty years ago this week, State Street Global Advisors launched the Standard & Poor’s Depositary Receipt (SPY), the first U.S.-based Exchange Traded Fund (ETF), which tracked the S&P 500. 

Today, it’s known as the SPDR S&P 500 ETF Trust, or just “SPDR” (pronounced “Spider”).  It is the largest ETF in the world with over $370 billion in assets under management, and is also the most actively traded,  routinely trading over 80 million shares daily with a dollar volume north of $32 billion every day. 

How ETFs differ from mutual funds

 Holding an investment in an ETF structure has many advantages over a mutual fund.
 An ETF:

Can be traded intraday, just like a stock.
Has no minimum purchase requirement.
Has annual fees that are lower than most comparable mutual funds.
Are more tax efficient than a mutual fund.

Not a great start

For a product that would end up changing the investment world, ETFs started off poorly.
Vanguard founder Jack Bogle had launched the first index fund, the Vanguard 500 Index Fund, 17 years before, in 1976.

The SPDR encountered a similar problem. Wall Street was not in love with a low-cost index fund. 
“There was tremendous resistance to change,” Bob Tull, who was developing new products for Morgan Stanley at the time and was a key figure in the development of ETFs, told me.
The reason was mutual funds and broker-dealers quickly realized there was little money in the product.
“There was a small asset management fee, but the Street hated it because there was no annual shareholder servicing fee,” Tull told me.   “The only thing they could charge was a commission. There was also no minimum amount, so they could have got a $5,000 ticket or a $50 ticket.”
It was retail investors, who began buying through discount brokers, that helped the product break out.
But success took a long time.  By 1996, as the Dotcom era started, ETFs as a whole had only $2.4 billion in assets under management.  In 1997, there were a measly 19 ETFs in existence.  By 2000, there were still only 80.
So what happened?

The right product at the right time

 While it started off slowly, the ETF business came along at the right moment.
Its growth was aided by a confluence of two events: 1) the growing awareness that indexing was a superior way of owning the market over stock picking; and 2) the explosion of the internet and Dotcom phenomenon, which helped the S&P 500 rocket up an average of 28% a year between 1995 and 1999.
By 2000, ETFs had $65 billion in assets, by 2005 $300 billion, and by 2010 $991 billion.
The Dotcom bust slowed down the entire financial industry, but within a few years the number of funds began to increase again.
The ETF business soon expanded beyond equities, into bonds and then commodities.
On November 18, 2004, the StreetTracks Gold Shares (now called SPDR Gold Shares, symbol GLD) went public.  It represented a quantum leap in making gold more widely available. The gold was held in vaults by a custodian. It tracked gold prices well, though as with all ETFs there was a fee (currently 0.4%). It could be bought and sold in a brokerage account, and even traded intraday.

CNBC’s Bob Pisani on the floor of the New York Stock Exchange in 2004 covering the launch of the StreetTRACKS Gold Shares ETF, or GLD, now known as the SPDR Gold Trust.
Source: CNBC

Staying in low-cost, well-diversified funds with low turnover and tax advantages (ETFs) gained even more adherents after the Great Financial Crisis in 2008-2009, which convinced more investors that trying to beat the markets was almost impossible, and that high-cost funds ate away at any market-beating returns most funds could claim to make.

ETFs: poised to take over from mutual funds?

After pausing during the Great Financial Crisis, ETF assets under management took off and have been more than doubling roughly every five years.
The Covid pandemic pushed even more money into ETFs, the vast majority into index-based products like those tied to the S&P 500.
From a measly 80 ETFs in 2000, there are roughly 2,700 ETFs operating in the U.S., worth about $7 trillion.
The mutual fund industry still has significantly more assets (about $23 trillion), but that gap is closing fast.
 “ETFs are still the largest growing asset wrapper in the world,” said Tull, who has built ETFs in 18 countries. “It is the one product regulators trust because of its transparency. People know what they are getting the day they buy it.”
 Note: Rory Tobin, Global Head of SPDR ETF Business at State Street Global Advisors, will be on Halftime Report Monday at 12:35 PM and again at 3 PM Monday on ETFedge.cnbc.com.

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If you completed a Roth individual retirement account conversion in 2022, your tax return may be complicated, experts say.
When figuring out your tax bill, you need to use the “pro-rata rule,” which factors your pretax IRA funds into the calculation.
Experts say it’s important to project your total income before converting funds in 2023.

Source: Getty Images

If you made a Roth individual retirement account conversion in 2022, you may have a more complicated tax return this season, experts say. 
The strategy, which transfers pretax or non-deductible IRA funds to a Roth IRA for future tax-free growth, tends to be more popular during a stock market downturn because you can convert more assets at a lower dollar amount. While the trade-off is upfront taxes, you may have less income by converting lower-value investments.

“You get more bang for your buck,” said Jim Guarino, a certified financial planner and managing director at Baker Newman Noyes in Woburn, Massachusetts. He is also a certified public accountant.
More from Personal Finance:Tax season opens for individual filers on Jan. 23, says IRSHere are 3 key moves to make before the 2023 tax filing season opensAfter ‘misery’ for tax filers in 2022, IRS to start 2023 tax season stronger, taxpayer advocate saysIf you completed a Roth conversion in 2022, you’ll receive Form 1099-R from your custodian, which includes the distribution from your IRA, Guarino said. 
You’ll need to report the transfer on Form 8606 to tell the IRS which portion of your Roth conversion is taxable, he said. However, when there’s a mix of pretax and non-deductible IRA contributions over time, the calculation may be trickier than you expect. (You may have non-deductible contributions in your pretax IRA if you don’t qualify for the full or partial tax break due to income and workplace retirement plan participation.)
“I see a lot of people making a mistake here,” Guarino said. The reason is the so-called “pro-rata rule” which requires you to factor your aggregate pretax IRA funds into the calculation. 

How the pro-rata rule works

JoAnn May, a CFP and CPA with Forest Asset Management in Berwyn, Illinois, said the pro-rata rule is the equivalent of adding cream to your coffee then finding you can’t remove the cream once it’s poured.

“That’s exactly what happens when you mix pretax and non-deductible IRAs,” she said, meaning you can’t simply convert the after-tax portion.
For example, let’s say you have a pretax IRA of $20,000 and you made a non-deductible IRA contribution of $6,000 in 2022.
If you converted the entire $26,000 balance, you would divide $6,000 by $26,000 to calculate the tax-free portion. This means roughly 23% or about $6,000 is tax-free and $20,000 is taxable. 
Alternatively, let’s say you have $1 million across a few IRAs and $100,000, or 10% of the total, is non-deductible contributions. If you converted $30,000, only $3,000 would be non-taxable and $27,000 would be taxable.

Of course, the bigger your pretax IRA balance, the higher percentage of the conversion will be taxable, May said. Alternatively, a larger non-deductible or Roth IRA balance reduces the percentage. 
But here’s the kicker: Taxpayers also use the Form 8606 to report non-deductible IRA contributions every year to establish “basis” or your after-tax balance. 
However, after several years, it’s easy to lose track of basis, even in professional tax software, warned May. “It’s a big problem,” she said. “If you miss it, then you’re basically paying tax on the same money twice.” 

Timing conversions to avoid an ‘unnecessary’ tax bump

With the S&P 500 still down about 14% over the past 12 months as of Jan. 19, you may be eyeing a Roth conversion. But tax experts say you need to know your 2023 income to know the tax consequences, which may be difficult early in the year.

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“I recommend waiting until the end of the year,” said Tommy Lucas, a CFP and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida, noting that income can change from factors like selling a home or year-end mutual fund distributions. 
Typically, he aims to “fill up a lower tax bracket,” without bumping someone into the next one with Roth conversion income.

For example, if a client is in the 12% bracket, Lucas may limit the conversion to avoid spilling into the 22% tier. Otherwise, they’ll pay more on the taxable income in that higher bracket.
“The last thing we want to do is throw someone into an unnecessary tax bracket,” he said. And boosting income may have other consequences, such as reduced eligibility for certain tax breaks or higher Medicare Part B and D premiums.
Guarino from Baker Newman Noyes also crunches the numbers before making Roth conversion decisions, noting that he’s “essentially performing the Form 8606 calculation during the year” to know how much of the Roth conversion will be taxable income.

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The Spotify logo hangs on the facade of the New York Stock Exchange with U.S. and a Swiss flag as the company lists its stock with a direct listing in New York, April 3, 2018.
Lucas Jackson | Reuters

Coming off a week that was packed with corporate earnings and economic updates, it is still difficult to determine whether a recession can be avoided this year.
Investing in such a stressful environment can be tricky. To help with the process, here are five stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performances. 

related investing news

Apple

Ahead of Apple’s (AAPL) December quarter results, due out on Feb. 2, investors are fairly aware of the challenges that the company faced during the period. From production disruptions in the iPhone manufacturing facility at Zhengzhou in China to higher costs, Apple’s first quarter of fiscal 2023 has endured all. Needless to say, the company expects a quarter-over-quarter growth deceleration.
Nonetheless, Monness Crespi Hardt analyst Brian White expects the results to be in line with, or marginally above, Street expectations. The analyst believes gains in Services, iPad and Wearables, Home & Accessories revenue could be a saving grace.
Looking ahead, White sees pent-up demand for iPhones come into play in the forthcoming quarters, once Apple overcomes the production snags. (See Apple Stock Investors’ sentiments on TipRanks)
The analyst feels that the expensive valuation of approximately 27 times his calendar 2023 earnings estimate for Apple is justified.
“This P/E target is above Apple’s historical average in recent years; however, we believe the successful creation of a strong services business has provided the market with more confidence in the company’s long-term business model,” said White, reiterating a buy rating and $174 price target.

White holds the 67th position among almost 8,300 analysts followed on TipRanks. His ratings have been profitable 63% of the time and each rating has generated a 17.7% average return.

Spotify

 Audio streaming subscription service Spotify (SPOT) is also among the recent favorites of Brian White.
“Spotify is riding a favorable long-term trend, enhancing its platform, tapping into a large digital ad market, and expanding its audio offerings,” said White, reiterating a buy rating and $115 price target.
The analyst does acknowledge some challenges that await Spotify this year but remains optimistic about its margin improvement plans and several favorable industry developments. While it may be tough to attract new premium subscribers, while facing continued pressure from a lower digital ad spending environment, Spotify should benefit from ad-supported monthly active users (MAUs) this year. (See Spotify Stock Chart on TipRanks)
White is particularly upbeat about the waning mobile app store monopolies, after the European Union passed the Digital Markets Act last year. The act will be imposed from May 2023. One of the benefits for Spotify will be the ability to promote its cheaper subscription offers. Now, it can make the offers available outside Apple’s iPhone app. (This had been a challenge, as Apple previously would allow it to only promote its subscriptions through iPhone app.)

CVS Health Corp.

CVS Health (CVS), which operates a large retail pharmacy chain, has been on Tigress Financial Partners analyst Ivan Feinseth’s list in recent weeks. The analyst reiterated a buy rating and a $130 price target on the stock.
The company’s “consumer-centric integrated model” as well as its increasing focus on primary care should help make health care more affordable and accessible for customers, according to Feinseth. CVS bought primary health-care provider Caravan Health as part of this focus. Moreover, the impending acquisition of Signify Health “adds to its home health services and provider enablement capabilities.”
The analyst also believes that the ongoing expansion of CVS’s new store format, MinuteClinics and HealthHUBs, will increase customer engagement and thus, continue to be a key growth catalyst. (See CVS Health Blogger Opinions & Sentiment on TipRanks)
Feinseth is also confident that CVS’s merger with managed healthcare company Aetna back in 2018 created a health-care mammoth. Now, it is well positioned to capitalize on the changing dynamics of the health-care market, as consumers gain more control over their health-care service expenditures.
Feinseth’s convictions can be trusted, given his 208th position among nearly 8,300 analysts in the TipRanks database. Apart from this, his track record of 62% profitable ratings, with each rating delivering 11.8% average returns, is also worth considering.

Shake Shack

Fast food hamburger chain operator Shake Shack (SHAK) has been doing well both domestically and overseas on the back of its fast-casual business concept. BTIG analyst Peter Saleh has a unique take on the company.
“Shake Shack is the preeminent concept within the better burger category and the rare restaurant chain whose awareness and brand recognition exceed its actual size and sales base,” said Saleh, who reiterated a buy rating on the stock with a $60 price target. (See Shake Shack Hedge Fund Trading Activity on TipRanks)
On the downside, the analyst points out that the expansion of services outside New York has weakened Shake Shack’s margin profile by generating low returns per unit and exposing the company to greater sales volatility. However, margins seem to have bottomed, and the analyst expects profitability to gain momentum over the next 12-18 months. A combination of higher menu prices and deflation of commodity costs are expected to push restaurant margins up to mid-teen levels.
In its preliminary fourth-quarter results, management at Shake Shack mentioned that it plans to tighten its hands with general and administrative expenses this year, considering the macroeconomic uncertainty. This “should prove reassuring for investors given the heightened G&A growth (over 30%) of the past two years.”
Saleh has a success rate of 64% and each of his ratings has returned 11.7% on average. The analyst is also placed 431st among more than 8,000 analysts on TipRanks.

TD Synnex

Despite last year’s challenges, business process service provider TD Synnex (SNX) has benefited from a steady IT spending environment amid the consistently high digital transformation across industries. The company recently posted its fiscal fourth-quarter results last week, where earnings beat consensus estimates and the dividend was hiked.
Following the results, Barrington Research analyst Vincent Colicchio dug into the results and noted that rapid growth in advanced solutions and high-growth technologies were major positives. Even though the analyst reduced his fiscal 2023 earnings forecast due to an expected rise in interest expense, he remained bullish on SNX’s efforts to achieve cost synergies by the end of the current fiscal year. (See TD Synnex Dividend Date & History on TipRanks)
Looking forward, the analyst sees a largely upward trend in growth, albeit a few hiccups. “The key growth driver in the first half of fiscal 2023 should be advanced solutions and high-growth technologies and in the second half should be PCs and peripherals and high-growth technologies. We expect Hyve Solutions revenue growth to slow in fiscal 2023 and slightly rebound in fiscal 2024 versus fiscal 2022 growth,” observed Colicchio, reiterating a buy rating and raising the price target to $130 from $98 for the next 12 months.
Importantly, Colicchio ranks 297th among almost 8,300 analysts on TipRanks, with a success rate of 61%. Each of his ratings has delivered 13% returns on average.

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