Mexico and Brazil had a big problem several decades ago. They had a small but very wealthy elite class and a massive underclass. The middle class in these countries was relatively small, leading to low levels of domestic consumption. Since then, a set of far-sighted government policies has helped to create thriving middle classes in these countries, and it’s no coincidence that their stock markets have surged: Brazil’s BOVESPA market index has surged 500% in the past decade, while Mexico’s stock market has risen… Read More

Mexico and Brazil had a big problem several decades ago. They had a small but very wealthy elite class and a massive underclass. The middle class in these countries was relatively small, leading to low levels of domestic consumption. Since then, a set of far-sighted government policies has helped to create thriving middle classes in these countries, and it’s no coincidence that their stock markets have surged: Brazil’s BOVESPA market index has surged 500% in the past decade, while Mexico’s stock market has risen a heady 600%. As a result, in both countries, exciting and rewarding investments await the investor. Economists can even quantify the middle-class gains in these countries using a little-known ratio called the Gini coefficient. Developed by an Italian mathematician a century ago, it’s a formula that assigns a value of zero to a society where the wealth is spread amongst all citizens. Very complex math that goes into determining wealth distribution — suffice it to say it’s far more complex than simply measuring the wealth of the top and bottom of… Read More

Whatever deal gets struck to resolve the imminent “fiscal cliff,” the U.S. budget mess will be far from fixed. There will still be a yawning gap between government revenue and government spending, let alone the fact that we still have an existing $16 trillion debt load we need to start whittling down. One of the most vulnerable arms of the federal government will be the Department of Defense (DoD). Our current military is so large — more than… Read More

Whatever deal gets struck to resolve the imminent “fiscal cliff,” the U.S. budget mess will be far from fixed. There will still be a yawning gap between government revenue and government spending, let alone the fact that we still have an existing $16 trillion debt load we need to start whittling down. One of the most vulnerable arms of the federal government will be the Department of Defense (DoD). Our current military is so large — more than 10 times bigger than its nearest rival — that a bit of shrinkage seems inevitable. Nobody is calling for plans to gut our nation’s military in an extreme fashion, but a DoD that is 5% or 10% smaller than current levels seems increasingly inevitable. And that spells top-line weakness for many defense contractors. A wide range of multibillion contracts with firms such as Lockheed Martin (NYSE: LMT) and General Dynamics (NYSE: GD) are coming under tighter scrutiny, as the DoD seeks ways to find less-expensive solutions to fielding a more nimble military. Out with the bath water Simply being… Read More

It’s hard to remember, but today’s leading large-cap stocks were once just fast-growing small businesses. Years of double-digit annual sales growth turned these acorns into mighty oak trees. And if you glance across the 600 stocks comprising the S&P’s SmallCap 600 Index, then you’ll come across tomorrow’s stars as well. Several dozen firms are in the midst of a long-term growth spurt that will likely have them characterized as mid-cap stocks before long. And well down the road, these stocks could be solid citizens in… Read More

It’s hard to remember, but today’s leading large-cap stocks were once just fast-growing small businesses. Years of double-digit annual sales growth turned these acorns into mighty oak trees. And if you glance across the 600 stocks comprising the S&P’s SmallCap 600 Index, then you’ll come across tomorrow’s stars as well. Several dozen firms are in the midst of a long-term growth spurt that will likely have them characterized as mid-cap stocks before long. And well down the road, these stocks could be solid citizens in the S&P 500 Large Cap Index. Here are four to keep your eye on… 1. 3D Systems 3D Systems (NYSE: DDD), along with Stratasys (Nasdaq: SSYS), was one of the early pioneers of “rapid prototyping,” which allows designers to make a three-dimensional model of virtually any small item. NASA even used a machine to create spare parts in mid-flight if necessary. For many years, this industry was more about hype than reality: 3D Systems’ sales hit $126 million in 2004 and by 2009, had actually shrank to $113 million. Since then, you can see this company… Read More

Still reeling from the financial crisis of 2008, many low-income Americans are still struggling to gain traction and rebuild their savings. Getting away from a paycheck-to-paycheck lifestyle has been an uphill struggle, and lender World Acceptance Corp. (Nasdaq: WRLD) has done this demographic no favors. According to a series of reports by investigative journalists at Propublica.org, World Acceptance has engaged in a series of predatory lending practices. Key highlights from that report include: • The company targets distressed consumers (often near military bases) and after fees, the firm charges interest rates that can exceed 100%. •… Read More

Still reeling from the financial crisis of 2008, many low-income Americans are still struggling to gain traction and rebuild their savings. Getting away from a paycheck-to-paycheck lifestyle has been an uphill struggle, and lender World Acceptance Corp. (Nasdaq: WRLD) has done this demographic no favors. According to a series of reports by investigative journalists at Propublica.org, World Acceptance has engaged in a series of predatory lending practices. Key highlights from that report include: • The company targets distressed consumers (often near military bases) and after fees, the firm charges interest rates that can exceed 100%. • Unlike payday loans, which are usually paid back in a short time, WRLD focuses on installment loans with long payback periods, encouraging consumers to continually refinance such loans to let interest charges pile up and principal balances go untouched. • When consumers begin to fall too far behind in their growing loan balance, their personal possessions are at risk of being repossessed, leading to a further downward financial spiral. • WRLD sells a range of insurance policies to protect against further financial distress, though such policies rarely pay off for consumers. In WRLD’s 10-K, you… Read More

A little-noticed milestone took place in the just-completed earnings season. After 17 straight quarters of sequentially stronger earnings, banking giant Wells Fargo & Co. (NYSE: WFC) saw its per share profits fall a few pennies. It’s safe to say that all of the margin gains that have been delivered from streamlining after the 2008 financial crisis have been wrung out. The top line isn’t looking much brighter: Wells Fargo is expected to boost revenue by less than 1% this year. To get the top and bottom line moving higher, Wells Fargo announced a bold move: It aims to spend $100… Read More

A little-noticed milestone took place in the just-completed earnings season. After 17 straight quarters of sequentially stronger earnings, banking giant Wells Fargo & Co. (NYSE: WFC) saw its per share profits fall a few pennies. It’s safe to say that all of the margin gains that have been delivered from streamlining after the 2008 financial crisis have been wrung out. The top line isn’t looking much brighter: Wells Fargo is expected to boost revenue by less than 1% this year. To get the top and bottom line moving higher, Wells Fargo announced a bold move: It aims to spend $100 billion to acquire niche financial service firms, known as asset managers. These are mutual fund firms, operators of exchange-traded funds (ETFs), retirement plan sponsors and pension management firms, which as a group hold trillions in Assets Under Management (AUM). Indeed, you can expect to hear a lot more of the term AUM in coming years, as Wells Fargo is likely just the first of several major banks that want to build up their asset base. Why AUM, and why now? In recent years, partially due… Read More

Tuesday, September 9, 2014 is a day that Apple, Inc. (Nasdaq: AAPL) CEO Tim Cook has been anticipating for a very long time. Though he took the reins from Steve Jobs nearly three years ago, Apple’s product rollout plans have been a bit underwhelming ever since. As Laurence Balter, a leading technology analyst, told the New York Times in June, “all we hear from Cook is there are some great products coming down the pike.” #-ad_banner-#Yet, at Apple’s much-hyped new product event slated for Tuesday, Balter and others will likely be silenced. Signs are pointing to a… Read More

Tuesday, September 9, 2014 is a day that Apple, Inc. (Nasdaq: AAPL) CEO Tim Cook has been anticipating for a very long time. Though he took the reins from Steve Jobs nearly three years ago, Apple’s product rollout plans have been a bit underwhelming ever since. As Laurence Balter, a leading technology analyst, told the New York Times in June, “all we hear from Cook is there are some great products coming down the pike.” #-ad_banner-#Yet, at Apple’s much-hyped new product event slated for Tuesday, Balter and others will likely be silenced. Signs are pointing to a blockbuster roll-out, led by a much-improved iPhone and perhaps a long-awaited smartwatch. Expectations are also running high that Apple will share its view of the Internet of Things, which envisions Apple hardware and software powering a wide range of household devices. Analysts at Oppenheimer speak for many with their view of the iPhone 6: “We feel comfortable predicting that iPhone 6 will be the best iPhone to date, with its larger displays, sharper and faster camera, more convenient and intuitive interfaces, more acute contextual awareness, and expanding soft suite and application platforms.” Clearly, investors are already frothing: Since late April,… Read More

Marcelo Claure, the new CEO at Sprint (NYSE: S), is seeking a new twist on an old axiom: “If you can’t join them, beat them.”  For a number of years the wireless carrier had been seen as a weak player, scoring low marks in terms of wireless network reliability, network coverage and customer service.  Repeated attempts to implement pricing plans that were just a bit cheaper than those offered by rival’s Verizon (NYSE: VZ) and AT&T (NYSE: T) simply failed to deliver any market share gains. #-ad_banner-#In the first quarter of 2014, Sprint controlled just 16% of the U.S. market,… Read More

Marcelo Claure, the new CEO at Sprint (NYSE: S), is seeking a new twist on an old axiom: “If you can’t join them, beat them.”  For a number of years the wireless carrier had been seen as a weak player, scoring low marks in terms of wireless network reliability, network coverage and customer service.  Repeated attempts to implement pricing plans that were just a bit cheaper than those offered by rival’s Verizon (NYSE: VZ) and AT&T (NYSE: T) simply failed to deliver any market share gains. #-ad_banner-#In the first quarter of 2014, Sprint controlled just 16% of the U.S. market, roughly half of the market share of Verizon and AT&T, according to Statistica.com. In the second quarter, Sprint ended up in an even deeper hole: While Verizon and AT&T each added more than one million net new subscribers, Sprint lost 245,000. Low market share is a real problem in an industry that is characterized by high fixed costs. Building and maintaining national wireless networks costs billions of dollars, and you need a lot of customers to help defray those costs. Yet Sprint is feeling the effects of negative overhead leverage. In 2013, the carrier lost 1.7 million… Read More

As earnings season comes to an end, so does the opportunity for a company’s officers and directors to snap up company shares with their own money. Most corporate governance policies restrict such activity to a fairly short period after quarterly earnings are announced. Judging by the sheer volume of meaningful insider purchases, insiders have been quite busy this month, according to data from Insiderinsights.com. #-ad_banner-#Trying to research the many companies with insider buying can be a daunting task. To winnow the field of research candidates, I only focus on companies with at least $100,000 — and preferably a lot more… Read More

As earnings season comes to an end, so does the opportunity for a company’s officers and directors to snap up company shares with their own money. Most corporate governance policies restrict such activity to a fairly short period after quarterly earnings are announced. Judging by the sheer volume of meaningful insider purchases, insiders have been quite busy this month, according to data from Insiderinsights.com. #-ad_banner-#Trying to research the many companies with insider buying can be a daunting task. To winnow the field of research candidates, I only focus on companies with at least $100,000 — and preferably a lot more — in buying, minimal insider selling and actual buying, and not just stock options-conversions, which many sources cite as a type of insider buying. Here’s a look at three companies with recent insider buying. 1.    Inovio Pharmaceuticals, Inc. (NYSE: INO) One of the hottest areas of biotech research involves the alteration of DNA mutations. This company is taking a slightly different approach: it’s developing vaccines against rogue genes and various viruses, many of which can lead to various types of cancers. Inovio’s INO-5150, for example, is entering Phase III testing as a vaccine against prostate cancer.  Another vaccine, VGX-3100, targets… Read More

You can always tell when Warren Buffett gets anxious. At the end of 2007, his firm, Berkshire Hathaway (NYSE: BRK-A), was sitting on $44 billion in cash and investments. And that was too much money lying around, as far as he was concerned. So in 2008, he spent billions to acquire partial stakes in several blue chips firms such as General Electric  and Goldman Sachs. Those buys pushed Berkshire’s cash balance down to a more reasonable $25 billion by the end of 2008. As Bloomberg News noted in October 2013, Buffett “likes to keep… Read More

You can always tell when Warren Buffett gets anxious. At the end of 2007, his firm, Berkshire Hathaway (NYSE: BRK-A), was sitting on $44 billion in cash and investments. And that was too much money lying around, as far as he was concerned. So in 2008, he spent billions to acquire partial stakes in several blue chips firms such as General Electric  and Goldman Sachs. Those buys pushed Berkshire’s cash balance down to a more reasonable $25 billion by the end of 2008. As Bloomberg News noted in October 2013, Buffett “likes to keep $20 billion on hand should the reinsurance operations need to pay large claims.” If Buffett thought he was sitting on too much cash seven years ago, his troubles have grown larger. At the end of Q2 2014, Berkshire Hathaway held $55 billion in cash and investments — a company record. Now, chatter is rising that Buffett is ready to plow that cash into another major acquisition. At the end of the day, the main point is not which companies Buffett buys. Instead, it’s what constitutes a great acquisition. In effect, if such companies are good enough for Buffett, then they… Read More

It’s a CEO’s worst nightmare. You wake up one morning to find that your company’s stock has been targeted by short sellers and millions of dollars have suddenly been shaved from the firm’s market value. On March 23, 2011, it happened to Robin Raina, CEO of Ebix, Inc. (Nasdaq: EBIX). The company, which sells software and e-commerce platforms to the insurance industry, saw its shares plunge from $29 to $22 the next day. #-ad_banner-#But the damage has been done and Raina has been trying to contain the fallout ever since. Shares now trade for less than half the levels seen… Read More

It’s a CEO’s worst nightmare. You wake up one morning to find that your company’s stock has been targeted by short sellers and millions of dollars have suddenly been shaved from the firm’s market value. On March 23, 2011, it happened to Robin Raina, CEO of Ebix, Inc. (Nasdaq: EBIX). The company, which sells software and e-commerce platforms to the insurance industry, saw its shares plunge from $29 to $22 the next day. #-ad_banner-#But the damage has been done and Raina has been trying to contain the fallout ever since. Shares now trade for less than half the levels seen before short sellers first appeared.  For investors not yet familiar with this company, the forward view is what counts. By my math, this stock could rebound into the mid-$20’s over the next year if Ebix plays its hand well in coming quarters. Ebix is known as a “roll up” firm because it made a long stretch of acquisitions to boost sales. Such business models are much-loved when they work, but a target for short sellers when it appears that the deal-making yields few bottom-line gains. Roll up strategies do bring a clear negative:  Nearly $350 million in goodwill sits on… Read More