When financial historians look back at the current bull market, they’ll likely call it the “era of the stock buybacks.” As I’ve written several times in the past, companies have been regularly spending $400-to-$500 billion (in aggregate), on a rolling 12-month basis. In fact, buyback programs appear to have been the greatest source of demand for stocks, which means it has a major responsibility for the extended and robust bull market. #-ad_banner-#Yet the ardor for buybacks may be cooling. As Factset Research noted, after a deep review of share buyback activity in the second quarter, “quarterly… Read More

When financial historians look back at the current bull market, they’ll likely call it the “era of the stock buybacks.” As I’ve written several times in the past, companies have been regularly spending $400-to-$500 billion (in aggregate), on a rolling 12-month basis. In fact, buyback programs appear to have been the greatest source of demand for stocks, which means it has a major responsibility for the extended and robust bull market. #-ad_banner-#Yet the ardor for buybacks may be cooling. As Factset Research noted, after a deep review of share buyback activity in the second quarter, “quarterly buybacks declined year-over-year (-1.1%) for the first time since Q3 2012.” On an anecdotal basis, it appears as if buyback activity in the current quarter is also a bit less pronounced than in the recent past, which is odd, considering how many stocks now trade well below their 52-week highs. Indeed the buyback frenzy has started to generate a bit of a backlash, as The New York Times recently scoffed at Carl Icahn’s efforts to compel Apple, Inc. (Nasdaq: AAPL) to pursue a massive buyback. The Economist went so far as to… Read More

At first glance, the market appears to have dodged a bullet. The Dow and the S&P 500 have rallied back to around 17,000 and 2,000, respectively, leading to the impression that the early October sell-off was just a head fake. But real damage was done. A number of individual stocks now remain far below their 52-week highs. For value investors, stocks that have been tarnished — and not the ones hitting 52-week highs — are a key area of focus. As a bit of confirmation that these stocks are oversold, these investors like to know that company insiders also think… Read More

At first glance, the market appears to have dodged a bullet. The Dow and the S&P 500 have rallied back to around 17,000 and 2,000, respectively, leading to the impression that the early October sell-off was just a head fake. But real damage was done. A number of individual stocks now remain far below their 52-week highs. For value investors, stocks that have been tarnished — and not the ones hitting 52-week highs — are a key area of focus. As a bit of confirmation that these stocks are oversold, these investors like to know that company insiders also think shares sport value. And there’s no better way to express that than with cold hard cash. Here are three stocks that now trade well below the 52-week high and have seen recent solid insider buying. (All data supplied by insiderinsights.com). PolyOne Corp. (NYSE: POL) This producer of polymers and other specialty plastics is surely feeling the impact of a challenging global market. Despite the addition of a range of new products in recent years, Q3 sales were roughly flat with year-ago results. Thankfully, a rapidly shrinking share count helped pave the way for a solid jump in per share… Read More

For short sellers, October 22, 2014 may have marked a key turning point: Shares of Lumber Liquidators Holdings, Inc. (NYSE: LL), 3D Systems Corp. (NYSE: DDD) and Cree, Inc. (Nasdaq: CREE), all of which were heavily shorted, fell roughly 10% on the heels of disappointing quarterly results. These stocks had been falling far from their 52-week highs in recent months, and the sharp plunge on October 22 was just icing on the cake for short sellers. #-ad_banner-#Short sellers are now wondering if it’s safe to boost their positions in other stocks on their radar. In the past five years, the rising… Read More

For short sellers, October 22, 2014 may have marked a key turning point: Shares of Lumber Liquidators Holdings, Inc. (NYSE: LL), 3D Systems Corp. (NYSE: DDD) and Cree, Inc. (Nasdaq: CREE), all of which were heavily shorted, fell roughly 10% on the heels of disappointing quarterly results. These stocks had been falling far from their 52-week highs in recent months, and the sharp plunge on October 22 was just icing on the cake for short sellers. #-ad_banner-#Short sellers are now wondering if it’s safe to boost their positions in other stocks on their radar. In the past five years, the rising market managed to lift all boats, creating real pain for short sellers. The times are changing. The broader stock market may move up or down from current levels — nobody can say with certainty. The market is becoming more discriminating, and investors can no longer count on bad news being spun in a positive light. Case in point: Both Amazon.com, Inc. (Nasdaq: AMZN) and Netflix, Inc. (Nasdaq: NFLX) delivered uninspiring quarters and they subsequently plunged in value. These types of stocks had been given a free pass in the past, because short sellers were afraid to bet against them. Now… Read More

It was a good party while it lasted. Investors were swept up in “Macau fever,” bidding up any and all investments that profited from the Chinese protectorate’s newfound status as the Las Vegas of Asia.  And few had it as good as Melco Crown Entertainment (NASDAQ: MPEL). The company opened a series of casino gaming and entertainment resorts and saw revenue surge from around $360 million in 2007 to more than $5 billion last year.  I first looked at the company in 2010. Shares surged nearly 1,000% from then to their all-time highs in March. But since then, shares have plunged… Read More

It was a good party while it lasted. Investors were swept up in “Macau fever,” bidding up any and all investments that profited from the Chinese protectorate’s newfound status as the Las Vegas of Asia.  And few had it as good as Melco Crown Entertainment (NASDAQ: MPEL). The company opened a series of casino gaming and entertainment resorts and saw revenue surge from around $360 million in 2007 to more than $5 billion last year.  I first looked at the company in 2010. Shares surged nearly 1,000% from then to their all-time highs in March. But since then, shares have plunged 44%, giving us a perfect buying opportunity. The pullback was a result of a slowdown in gambling revenues. Chinese citizens, especially high-rollers, have ben tacitly discouraged from being big spenders while the government cracks down on corruption. #-ad_banner-#Make no mistake, Macau’s long-term future remains bright. China continues to mint new millionaires every year, and Macau — as a lure for both gambling and entertainment — is a heck of a lot closer for them than Las Vegas. The casino titan is also expanding its empire across Asia. Melco is ready to launch its first casino in… Read More

It’s getting harder to stay abreast of the fast-growing market for exchange-traded funds. For every ETF that closes, another two or three are launched — we’re reaching ETF overload. The industry offered roughly 900 choices in 2009, according to Morningstar, and that figure has swelled to more than 1,600 today. #-ad_banner-#Still, it’s wise to devote time and energy to this asset class. ETF sponsors often look for ways to deliver new and unique investment angles, and some of them appear very well-positioned for long-term upside.  Here are three ETFs launched this year that merit consideration for your portfolio. First Trust… Read More

It’s getting harder to stay abreast of the fast-growing market for exchange-traded funds. For every ETF that closes, another two or three are launched — we’re reaching ETF overload. The industry offered roughly 900 choices in 2009, according to Morningstar, and that figure has swelled to more than 1,600 today. #-ad_banner-#Still, it’s wise to devote time and energy to this asset class. ETF sponsors often look for ways to deliver new and unique investment angles, and some of them appear very well-positioned for long-term upside.  Here are three ETFs launched this year that merit consideration for your portfolio. First Trust Dorsey Wright Focus 5 ETF (NYSE: FV) We are big fans of relative strength as an investment theme. In fact, our Maximum Profit newsletter squarely focuses the metric. So does this ETF, which invests in other funds offered by First Trust. The ETF rotates its funds depending on which one are showing the greatest relative strength. The “fund of funds” approach is starting to gain attraction. Though the ETF got off to a weak start after it was launched in March 2014, it has rebounded: Over the past six months, it’s up 12%, compared to… Read More

As the market steadily advanced to fresh highs earlier this year, some investors grew queasy. Global tensions, the Fed’s imminent end to its bond buying program and valuations that seemed stretched led many investors to move to the sidelines, boosting the percent of their portfolio tied up in cash. #-ad_banner-#For those investors, holding cash now looks quite prescient. Not only did a high cash position enable them to sideswipe losses in small caps, energy stocks and other recent slumping asset classes, but it also gave them the liquidity to snap up stocks that are clearly oversold (something fully-invested investors simply… Read More

As the market steadily advanced to fresh highs earlier this year, some investors grew queasy. Global tensions, the Fed’s imminent end to its bond buying program and valuations that seemed stretched led many investors to move to the sidelines, boosting the percent of their portfolio tied up in cash. #-ad_banner-#For those investors, holding cash now looks quite prescient. Not only did a high cash position enable them to sideswipe losses in small caps, energy stocks and other recent slumping asset classes, but it also gave them the liquidity to snap up stocks that are clearly oversold (something fully-invested investors simply can’t do). If you have built up cash and are now looking to profit from the sharp drop seen in many stocks, then here are three stocks on my radar, all of which possess at least 100% potential upside. Synergy Pharmaceuticals, Inc. (Nasdaq: SGYP) This is an intriguing biotech with a big problem on its hands. It is developing a new drug, plecanatide, which is showing impressive efficacy of treatment for irritable bowel syndrome in clinical trials. A rival, Ironwood Pharmaceuticals, Inc. (Nasdaq: IRWD) already has a competing drug on the market, helping the company garner a $1.8 billion market… Read More

Among Wall Street traders who focus on oil futures contracts, there is an eerie quiet. Crude oil prices had been in freefall for nearly a month, but have suddenly stabilized with West Texas Intermediate Crude, or WTI, hovering in the low $80’s. Does that mean the sell-off has ended and current prices are the “new normal?” A quick summary of Wall Street comments provides a range of opinions: — BMO Securities: “We believe that crude oil prices could remain relatively weak over the balance of the year due to reduced appetite for risk, but forecast US$100/barrel long-run.” — Merrill Lynch:… Read More

Among Wall Street traders who focus on oil futures contracts, there is an eerie quiet. Crude oil prices had been in freefall for nearly a month, but have suddenly stabilized with West Texas Intermediate Crude, or WTI, hovering in the low $80’s. Does that mean the sell-off has ended and current prices are the “new normal?” A quick summary of Wall Street comments provides a range of opinions: — BMO Securities: “We believe that crude oil prices could remain relatively weak over the balance of the year due to reduced appetite for risk, but forecast US$100/barrel long-run.” — Merrill Lynch: “Global oil prices have already come down substantially and we expect a positive demand response coming into next year (pushing WTI back to $90).” — Credit Suisse: oil will slide further into the upper $70’s. — Citigroup: Unless an export ban is lifted, surging U.S. oil production means “WTI could fall to as low as $75.” These analysts also think that Iraq, Iran and Libya have the potential to sharply boost output in 2015, based on the outcome of current conflicts. In other words, oil prices may soon rebound, stay range-bound or fall further. Nobody really knows. What… Read More

Since my first column for StreetAuthority nearly five years ago, I have repeatedly extolled the virtues of a favorite value gauge: Free cash flow — the cash that’s left over after some profits have been diverted to capital spending. Robust free cash flow can be a boon for investors. Often, they’re used to increase dividends, buy back shares and reduce debt load. When these three strategies are used effectively, they make for a powerful trifecta that has a demonstrated history of beating the market over time. In fact, they’re so powerful that they form the basis of our premium newsletter,… Read More

Since my first column for StreetAuthority nearly five years ago, I have repeatedly extolled the virtues of a favorite value gauge: Free cash flow — the cash that’s left over after some profits have been diverted to capital spending. Robust free cash flow can be a boon for investors. Often, they’re used to increase dividends, buy back shares and reduce debt load. When these three strategies are used effectively, they make for a powerful trifecta that has a demonstrated history of beating the market over time. In fact, they’re so powerful that they form the basis of our premium newsletter, Total Yield. #-ad_banner-#As it turns out, some value investing adherents prefer a slightly different take on this approach. They prefer to see how much earnings before interest, taxes, depreciation and amortization, or EBITDA, a company produces in relation to its enterprise value, or EV — market value plus debt, minus cash. These value investors point to a study showing that “If all you did was buy the 10% of stocks with the cheapest EBITDA/EV ratios on an annual basis, you’d have outperformed the market by more than 5% annually over the… Read More

It’s been a great year for any lawyer or banker working in the field of mergers and acquisitions (M&A). The sheer volume of deals taking place this year has been stunning. Consider just one stat: In 2013, there was only one deal announced in excess of $25 billion (Verizon Communications Inc.’s (NYSE: VZ) move to regain the half of Verizon Wireless it did not own). Thus far in 2014, six deals worth $25 billion or more have been announced (not counting AbbVie’s (Nasdaq: ABBV) deal for Shire (Nasdaq: SHPGY), which was terminated on Monday). #-ad_banner-#Below those… Read More

It’s been a great year for any lawyer or banker working in the field of mergers and acquisitions (M&A). The sheer volume of deals taking place this year has been stunning. Consider just one stat: In 2013, there was only one deal announced in excess of $25 billion (Verizon Communications Inc.’s (NYSE: VZ) move to regain the half of Verizon Wireless it did not own). Thus far in 2014, six deals worth $25 billion or more have been announced (not counting AbbVie’s (Nasdaq: ABBV) deal for Shire (Nasdaq: SHPGY), which was terminated on Monday). #-ad_banner-#Below those mega-deals, dozens more billion-dollar transactions have been announced. One that caught my eye: Germany’s Siemens plans to acquire Dresser-Rand Group, Inc. (NYSE: DRC) for $7.6 billion. Dresser-Rand makes machines that help pump and process oil and gas as its coming out of the ground. Siemens sees the deal as a chance to play an even larger role in the U.S. shale revolution and likely wants Dresser-Rand’s expertise and product list as shale exploration starts to take root in other parts of the world. This deal, which came at a 37% premium to the prior day’s closing price, values Dresser Rand… Read More

Sometimes the market hands you a gift. And it would be foolish not to take it. Thanks to general market weakness, along with instability in the energy sector, the leading solar stocks have stumbled badly in recent weeks. The Guggenheim Solar ETF (NYSE: TAN), for example, has slid more than 20% since late August and many individual solar stocks have fared even worse. As I’ll note in a moment, a few names now stand out as compelling bargains. The Oil Connection At first glance, investors may mistakenly think that a drop in crude oil creates trouble for solar companies. Read More

Sometimes the market hands you a gift. And it would be foolish not to take it. Thanks to general market weakness, along with instability in the energy sector, the leading solar stocks have stumbled badly in recent weeks. The Guggenheim Solar ETF (NYSE: TAN), for example, has slid more than 20% since late August and many individual solar stocks have fared even worse. As I’ll note in a moment, a few names now stand out as compelling bargains. The Oil Connection At first glance, investors may mistakenly think that a drop in crude oil creates trouble for solar companies. It’s true that a sharp plunge in natural gas prices in the spring of 2012 created legitimate concerns that sharply reduced electricity costs would undercut the economics of solar. The same can’t be said for crude oil because it is not a prevalent input in global electricity generation. In fact, analysts at Merril Lynch note that the leading solar companies are seeing solid business momentum right now. “Strong 2H14 solar demand, stable equipment pricing, falling financing costs and robust U.S. residential market growth could lead to strong 3Q/4Q14 reports across the value chain.” That’s what makes this sector sell-off so… Read More