After a rapid ascent and then descent, many Chinese stocks are now back in bargain territory. The Hong Kong Index, for example, now trades for less than 10 times trailing earnings. While the government-mandated transition to a consumption-based economy has led to some economic dislocation, reforms around one sector may mean that stocks are undervalued even further. In fact, one industry leader could be valued at a sharp a discount to intrinsic value if reforms are pushed through as planned. The Chinese Government Wants Out Of The Pipeline Business As part of a broad reform of the energy sector,… Read More

After a rapid ascent and then descent, many Chinese stocks are now back in bargain territory. The Hong Kong Index, for example, now trades for less than 10 times trailing earnings. While the government-mandated transition to a consumption-based economy has led to some economic dislocation, reforms around one sector may mean that stocks are undervalued even further. In fact, one industry leader could be valued at a sharp a discount to intrinsic value if reforms are pushed through as planned. The Chinese Government Wants Out Of The Pipeline Business As part of a broad reform of the energy sector, the Chinese government announced plans in May to spin off pipeline assets at the two largest oil & gas companies, PetroChina (NYSE: PTR) and Sinopec (NYSE: SHI). Industry competitors argue that the two companies’ ownership of 89% of the country’s total pipeline capacity acts as a barrier to entry for others. By operating the pipeline assets independently,  other upstream explorers will have easier access to the nation’s pipeline transportation capacity. While the government has not released a timeline for finalizing the reform, analysts are expecting spinoffs to take place in the next six months. During the recent period of excessive… Read More

You don’t amass a net worth of $20 billion by accident. You do so by continually spotting investment opportunities where others fear to tread. And you also need the courage to rattle a few cages when necessary. That’s been the winning formula for Carl Icahn, who is still reaping major investment victories at the age of 79. To be sure, following in Icahn’s path is not easy. That’s because he tends to focus on investment opportunities that don’t hold much obvious appeal. For example, in recent quarters, Icahn’s firm has amassed a large stake in beleaguered energy driller Chesapeake Energy… Read More

You don’t amass a net worth of $20 billion by accident. You do so by continually spotting investment opportunities where others fear to tread. And you also need the courage to rattle a few cages when necessary. That’s been the winning formula for Carl Icahn, who is still reaping major investment victories at the age of 79. To be sure, following in Icahn’s path is not easy. That’s because he tends to focus on investment opportunities that don’t hold much obvious appeal. For example, in recent quarters, Icahn’s firm has amassed a large stake in beleaguered energy driller Chesapeake Energy (NYSE: CHK), even as most investors are shunning oil and gas stocks these days. And while most investors are avoiding commodity stocks in general these days as they note the deep distress in the industrial metals sector, Icahn recently disclosed an 88 million share stake in Freeport-McMoran (NYSE: FCX), which has seen its share price fall from the 52-week high of $35 to a recent $11. A Well-Timed Buy The timing of Icahn’s disclosure of an 8.5% stake in this struggling copper and oil producer was spot on. On August 27, the company threw in the towel on its… Read More

Our best investment ideas can sometimes come from paying attention to what some of the leading investors in the world are buying and selling. And when Warren Buffett himself is buying, it’s worth seeing if the stock has a place in your own portfolio. What stock has everyone’s favorite guru turned his attention to this time? Phillips 66 (NYSE: PSX). #-ad_banner-#This week, Berkshire Hathaway (NYSE: BRK-B) revealed that it now owns over 10% of Phillips 66. The company has been accumulating shares of PSX since the second quarter of this year. So is Buffett’s latest move a good buy for… Read More

Our best investment ideas can sometimes come from paying attention to what some of the leading investors in the world are buying and selling. And when Warren Buffett himself is buying, it’s worth seeing if the stock has a place in your own portfolio. What stock has everyone’s favorite guru turned his attention to this time? Phillips 66 (NYSE: PSX). #-ad_banner-#This week, Berkshire Hathaway (NYSE: BRK-B) revealed that it now owns over 10% of Phillips 66. The company has been accumulating shares of PSX since the second quarter of this year. So is Buffett’s latest move a good buy for the rest of us? Phillips 66 is a legacy of the old Conoco Phillips energy company. In 2012, the company split into two with one half becoming Conoco (NYSE: COP), the “upstream” company which conducts exploration and drilling of oil. Phillips 66 became the mid and downstream company. Phillips 66 doesn’t engage in exploration and production of oil and gas, but it transports and refines oil and gas and produces a variety of chemicals and lubricants. Since the beginning of the year, the stock price of Phillips 66 has completely disconnected with the rest of the energy sector and rallied… Read More

#-ad_banner-#”Big Picture” investors like to focus on major themes, and a pair of them are emerging that could serve as key catalysts for the stock market in the next decade. These themes will be underpinned by trillions in spending, enough to lift entire sectors. And certain companies are very well-positioned to take advantage of the trends. In fact, one in particular should benefit from both mega trends. Climate Change And The Economic Impact The U.S. National Oceanic and Atmospheric Administration (NOAA) recently released its State of the Climate report highlighting record heat across the globe. Read More

#-ad_banner-#”Big Picture” investors like to focus on major themes, and a pair of them are emerging that could serve as key catalysts for the stock market in the next decade. These themes will be underpinned by trillions in spending, enough to lift entire sectors. And certain companies are very well-positioned to take advantage of the trends. In fact, one in particular should benefit from both mega trends. Climate Change And The Economic Impact The U.S. National Oceanic and Atmospheric Administration (NOAA) recently released its State of the Climate report highlighting record heat across the globe. Last year was the hottest in 135 years of record-keeping, and four of the five hottest months on record have occurred in 2015. Because of the El Nino phenomenon, researchers now think above-average temperatures will continue through the spring of 2016. One clear impact will be ongoing and profound droughts in places like  California and Australia. As a result, sales of irrigation equipment should see strong support well into the future. Infrastructure Is A Ticking Time Bomb Sluggish global growth and lingering problems from the financial crisis have put off needed infrastructure projects around… Read More

#-ad_banner-#Most value investing articles share one clear theme: Any company firing on all cylinders won’t trade for single -digit price-to-earnings ratios. Low valuations are typically applied to companies that have a deep set of problems.   Whether it is a company-specific, industry-specific or economy-specific problem, a key impediment is in the way. The challenge is identifying great companies that are experiencing near-term difficulties, but have a defined path to improve financial results. Patient investors who can achieve that are often rewarded with capital gains and dividend raises. Chevron Corp. (NYSE: CVX) is a perfect example of… Read More

#-ad_banner-#Most value investing articles share one clear theme: Any company firing on all cylinders won’t trade for single -digit price-to-earnings ratios. Low valuations are typically applied to companies that have a deep set of problems.   Whether it is a company-specific, industry-specific or economy-specific problem, a key impediment is in the way. The challenge is identifying great companies that are experiencing near-term difficulties, but have a defined path to improve financial results. Patient investors who can achieve that are often rewarded with capital gains and dividend raises. Chevron Corp. (NYSE: CVX) is a perfect example of a great company facing industry specific problems. In the first quarter of 2014, the average price of a barrel of oil Chevron sold was more than $98 per barrel, but in Q1 of 2015, the average price of a barrel of oil was down to just over $48. Chevron is extremely sensitive to the price of oil. The company estimated that from quarter to quarter, operating cash flow can rise or fall between $325 million-to-$350 million for every dollar change in the price of crude oil. Naturally, Chevron saw its share price fall alongside the price of oil. Read More

Value investing is simultaneously the easiest and most difficult investing philosophy to follow. It’s so simple to buy cheap, out-of-favor assets, but extremely difficult to execute in real time. Among the cheapest and most out-of-favor assets today are commodities and the companies that pull those products out of the ground. While commodity companies have been hit hard, shares of Australia-based BHP Billiton Ltd. (NYSE: BHP) have fallen too far.  The company has a terrific track record, an excellent management team and will deliver strong long-term results to patient shareholders. A number of essential commodities are trading at multi-year lows. The… Read More

Value investing is simultaneously the easiest and most difficult investing philosophy to follow. It’s so simple to buy cheap, out-of-favor assets, but extremely difficult to execute in real time. Among the cheapest and most out-of-favor assets today are commodities and the companies that pull those products out of the ground. While commodity companies have been hit hard, shares of Australia-based BHP Billiton Ltd. (NYSE: BHP) have fallen too far.  The company has a terrific track record, an excellent management team and will deliver strong long-term results to patient shareholders. A number of essential commodities are trading at multi-year lows. The free-falling price of oil has been well covered, but coal and many of the industrial metals are well below the highs of 2011 and 2012. Coming out of the financial crisis, China went on an unprecedented infrastructure spending spree. Iron and copper producers rushed to increase production as demand and the underlying prices spiked. However, as China’s demand has cooled, prices for iron and copper — that make up around 60% of BHP’s business — have come crashing down. Over time, excess supply will leave the market, and prices will stabilize. While China’s demand for these materials could be… Read More

WARNING: A Major Correction Could Begin This Week A trading prodigy is predicting the biggest stock market correction since 2008.  In short, an important market event will take place on Wednesday that could trigger a freefall in stocks.  He’s been tracking this situation for months. I urge you to take a few seconds to listen to what he has to say. If he’s right, the information he’s going to share could help you save your portfolio and even make money in the coming correction. Click here to find out how to prepare yourself… Read More

WARNING: A Major Correction Could Begin This Week A trading prodigy is predicting the biggest stock market correction since 2008.  In short, an important market event will take place on Wednesday that could trigger a freefall in stocks.  He’s been tracking this situation for months. I urge you to take a few seconds to listen to what he has to say. If he’s right, the information he’s going to share could help you save your portfolio and even make money in the coming correction. Click here to find out how to prepare yourself now.  Sincerely,  Frank Bermea Publisher, Profitable Trading  It takes a lot to turn a bear market around, but for oil services stocks it seemed that the requirements for such a move were starting to gel in May.  The PHLX Oil Service Sector Index (OSX) had just made a tentative breakout from a bottoming pattern that was a cross between a double-bottom and an inverted head-and-shoulders. It even moved above its 50-day moving average, which itself was rising. #-ad_banner-# Paradoxically, OSX ran out of… Read More

#-ad_banner-#In the face of historic monetary stimulus from nearly every major central bank in the world over the past few years, an investment in gold would have seemed to be a “no-brainer.” Yet the precious metal’s price, around $1,178 per ounce, has barely budged. Now may be the time to give gold a fresh look.  Fundamental drivers appear in place for long-term upside, and technical support could provide a near-term catalyst. Moreover, shares of gold mining companies are selling at steep discounts to historical multiples and the slightest hint of stabilization could bring investors back in… Read More

#-ad_banner-#In the face of historic monetary stimulus from nearly every major central bank in the world over the past few years, an investment in gold would have seemed to be a “no-brainer.” Yet the precious metal’s price, around $1,178 per ounce, has barely budged. Now may be the time to give gold a fresh look.  Fundamental drivers appear in place for long-term upside, and technical support could provide a near-term catalyst. Moreover, shares of gold mining companies are selling at steep discounts to historical multiples and the slightest hint of stabilization could bring investors back in a big way. A confirmation of fundamentals for gold prices would send gold mining shares soaring. Fundamentals May Finally Be Turning Higher For Gold Gold’s recent subdued performance can be attributed to tepid global growth that has kept inflation at bay. Yet there are signs that both are on the way up. The World Bank estimates global growth of 2.8% this year and 3.3% in 2016. Economic growth in the stagnant eurozone is expected to jump 1.5%, the fastest pace since 2010. Prices in the eurozone… Read More

There isn’t a lot of mystery around what Carl Icahn looks for in an investment opportunity. He wants to own good companies with underperforming management teams. Typically, he can build a large enough position to have a major influence. Then he pushes for share buybacks, board representation, or simply a change in the corner office. Curiously, a major target for Icahn has none of those options at hand. Cash-strapped Chesapeake Energy Corp. (NYSE: CHK) was once known for a controversial CEO, as I noted in 2010. Yet fresh management has been in place for more than two years, and by… Read More

There isn’t a lot of mystery around what Carl Icahn looks for in an investment opportunity. He wants to own good companies with underperforming management teams. Typically, he can build a large enough position to have a major influence. Then he pushes for share buybacks, board representation, or simply a change in the corner office. Curiously, a major target for Icahn has none of those options at hand. Cash-strapped Chesapeake Energy Corp. (NYSE: CHK) was once known for a controversial CEO, as I noted in 2010. Yet fresh management has been in place for more than two years, and by all indications, Icahn is a fan of the company’s new leaders. In the second quarter of 2013, Icahn’s investment firm acquired 60 million shares (at an average price of $19). He bought another 6.7 million shares in the next quarter (at an average price of $23 a share). Of course oil prices subsequently collapsed, making such a large investment in an oil and gas producer seem foolhardy in hindsight. You would think that Icahn would decide that he’d made a big mistake and cash out his large stake in Chesapeake. Instead, he bought another 6.6 million shares (at $17.65 a… Read More

There’s a little-known indicator that’s making a small group of investors a lot of money. I call this indicator the “Alpha Score,” because it consistently beats the market and often with less risk than buy-and-hold investing. It can flag exactly which stocks are about to jump double and triple digits in the coming days… weeks… and months. #-ad_banner-# I’ll tell you more about the Alpha Score in a second, but just know that the indicator can range from 0 to 200. The higher… Read More

There’s a little-known indicator that’s making a small group of investors a lot of money. I call this indicator the “Alpha Score,” because it consistently beats the market and often with less risk than buy-and-hold investing. It can flag exactly which stocks are about to jump double and triple digits in the coming days… weeks… and months. #-ad_banner-# I’ll tell you more about the Alpha Score in a second, but just know that the indicator can range from 0 to 200. The higher the number, the more potential the stock has. For example, you’ve probably never heard of Westmoreland Coal (NASDAQ: WLB). It operates six surface coal mines and two power-generating units in the western United States. The company looked promising when we recommended it on Dec. 18, 2013. Westmoreland had sold 95% of its future production under long-term contracts, and the market for coal looked stable. But that’s not what attracted us to the stock. What most investors didn’t know about WLB is that it had an Alpha Score of 158. Less than 1% of stocks have a score that high at… Read More