As we’ve noted on many occasions over the past few years, investors have shown a clear preference for companies that issue steadily rising dividends and super-sized share buyback plans. Such stocks not only produce solid income streams, but also tend to show above-average growth in earnings per share, thanks to steadily falling share counts. Of course, in StreetAuthority’s Total Yield newsletter, we’ve been clearly focused on this theme. (We define Total Yield as the net dollar value of dividend payments and share buybacks, divided by a company’s market value.)  #-ad_banner-#The newsletter has reaped big gains since it began in 2014. Read More

As we’ve noted on many occasions over the past few years, investors have shown a clear preference for companies that issue steadily rising dividends and super-sized share buyback plans. Such stocks not only produce solid income streams, but also tend to show above-average growth in earnings per share, thanks to steadily falling share counts. Of course, in StreetAuthority’s Total Yield newsletter, we’ve been clearly focused on this theme. (We define Total Yield as the net dollar value of dividend payments and share buybacks, divided by a company’s market value.)  #-ad_banner-#The newsletter has reaped big gains since it began in 2014. Southwest Airlines Co. (NYSE: LUV) is up 114% in 15 months; Anthem, Inc. (NYSE: ANTM) is up 29% in seven months; and Flextronics International Ltd. (Nasdaq: FLEX) is up 15% in just five months. Looking for a way to augment your gains using this approach? Keep a watchful eye for companies that have not yet embraced a Total Yield strategy, but likely soon will. The key is to spot companies that already have robust free cash flow yields. As we’ve seen in recent years, companies with strong free cash flow have focused on dividends and buybacks, rather than the traditional… Read More

For more than a decade, the business of making memory chips was a lousy one. The industry had ample excess capacity and pricing power was non-existent. And then the management team at Micron Technology, Inc. (Nasdaq: MU) decided to change all that. They correctly understood that by acquiring rivals — and then closing down excess manufacturing capacity — they could drive up prices and profits. I looked at this issue in 2012 and shares of Micron eventually soared to $36 from around $6. #-ad_banner-#A healthy supply/demand environment similarly created robust gains for rival chip-maker SanDisk Corp. (Nasdaq: SNDK). Not only… Read More

For more than a decade, the business of making memory chips was a lousy one. The industry had ample excess capacity and pricing power was non-existent. And then the management team at Micron Technology, Inc. (Nasdaq: MU) decided to change all that. They correctly understood that by acquiring rivals — and then closing down excess manufacturing capacity — they could drive up prices and profits. I looked at this issue in 2012 and shares of Micron eventually soared to $36 from around $6. #-ad_banner-#A healthy supply/demand environment similarly created robust gains for rival chip-maker SanDisk Corp. (Nasdaq: SNDK). Not only have these firms benefited from more rational supply trends, they are also benefiting from a powerful growth driver: surging demand, as solid state memory (also known as “flash memory”) is used in a proliferating number of electronic devices. Even personal computer manufacturers are making the switch from disk drive storage to solid state storage in many high-end machines. Yet even the best industries experience temporary headwinds. A recent modest pullback in demand and pricing has led to sharp share price pullbacks for both Micron and SanDisk. In my mind, only one of these two firms is poised for a solid… Read More

Over the past five years, the United States economy has been on the mend. So why is there still a pervasive sense that we’re stuck in the mud? Perhaps it’s because our economy has expanded at a 2.2%-to-2.4% rate in each of the past three years. That seems downright anemic compared to economic growth rates seen in prior decades. Yet every spring, economists sing the same refrain: “This is the year we’ll finally reach 3% GDP growth, and the economic recovery will finally feel real.” This year began with a similar refrain. According to a Wall… Read More

Over the past five years, the United States economy has been on the mend. So why is there still a pervasive sense that we’re stuck in the mud? Perhaps it’s because our economy has expanded at a 2.2%-to-2.4% rate in each of the past three years. That seems downright anemic compared to economic growth rates seen in prior decades. Yet every spring, economists sing the same refrain: “This is the year we’ll finally reach 3% GDP growth, and the economic recovery will finally feel real.” This year began with a similar refrain. According to a Wall Street Journal survey conducted in January, economists looked into their crystal balls and once again predicted a 3% economic growth rate this year. (That article suggested that the economy grew 2.6% last year, but that figure has been subsequently ratcheted down to 2.4%.) “The plunge in energy prices provides big dividends to consumers and businesses,” said Bernard Baumohl, chief global economist of the Economic Outlook Group to the WSJ at the time. Here’s the problem: any sort of oil-related dividend is nowhere to be found. Consider this recent sampling of economic data points: — Revolving credit (which mostly reflects credit… Read More

#-ad_banner-#The rapid surge in the dollar has thus far had little impact on the stock market. But it soon will.  In the upcoming earnings season, you’ll be hearing a lot about how many companies in the S&P 500 are having a tough time racking up sales in their foreign subsidiaries. And when you consider that few expect the dollar to pull back any time soon, this trend is likely to persist for at least the rest of 2015.  As we’ve noted in the past, larger companies tend to have much greater global exposure than smaller companies. And in the face… Read More

#-ad_banner-#The rapid surge in the dollar has thus far had little impact on the stock market. But it soon will.  In the upcoming earnings season, you’ll be hearing a lot about how many companies in the S&P 500 are having a tough time racking up sales in their foreign subsidiaries. And when you consider that few expect the dollar to pull back any time soon, this trend is likely to persist for at least the rest of 2015.  As we’ve noted in the past, larger companies tend to have much greater global exposure than smaller companies. And in the face of rising global sales challenges, you would think large cap stocks would be losing favor. Yet the S&P 500 has actually outperformed the Russell 2000 (a small-cap index) over the past 13 months. The simple explanation: global uncertainty tends to lead to a “flight to quality” as larger companies are generally seen as safer investments. Yet as Q1 earnings season will likely show, these aren’t “quality” times for big companies.  That’s why I am focusing my research these days on small-cap stocks. A number of individual stocks in the Russell 2000 are now trading far from their 52-week high,… Read More

By any measure, $104 billion is a lot of money. That’s the dollar value of share buyback announcements made in February — the largest monthly figure since these flows were first tracked 20 years ago. It was also nearly double the amount from a year earlier, according to money flow tracker TrimTabs Investment Research. (Companies make share buyback announcements throughout this year, but February is typically the high watermark as companies release full-year financial results.) Companies in the S&P 500 spent $564.7 billion on share repurchases over the past 12 months, which was a year-over-year increase of… Read More

By any measure, $104 billion is a lot of money. That’s the dollar value of share buyback announcements made in February — the largest monthly figure since these flows were first tracked 20 years ago. It was also nearly double the amount from a year earlier, according to money flow tracker TrimTabs Investment Research. (Companies make share buyback announcements throughout this year, but February is typically the high watermark as companies release full-year financial results.) Companies in the S&P 500 spent $564.7 billion on share repurchases over the past 12 months, which was a year-over-year increase of 18%, according to FactSet Research. In fact, 72% of all companies in the index bought back shares in the fourth quarter of 2014. Make no mistake, the powerful waves of buybacks are a clear positive for stocks — in the near-term. For proof, look no further than the five-year chart for the PowerShares Buyback Achievers ETF (NYSE: PKW). Simply put, the more than $2 trillion in cash that has been returned by S&P 500 companies since 2009 has been a key factor behind the bull market’s extended run. Said another way, a steady reduction in shares outstanding has… Read More

The chickens are coming home to roost. After a remarkable eight-month rally in the dollar, many U.S. firms are finally feeling the pinch. In the near-term, investors need to brace for a cautious earnings season. Yet, as I’ll explain in a moment, there are still ample reasons for long-term optimism, especially when the dollar loses momentum and/or the global economy starts to rebound in earnest. The strong dollar, which blunts the competitiveness of American firms, both at home and abroad, will have a clear impact on first-quarter results and forward outlooks. According to FactSet Research, 85 companies… Read More

The chickens are coming home to roost. After a remarkable eight-month rally in the dollar, many U.S. firms are finally feeling the pinch. In the near-term, investors need to brace for a cautious earnings season. Yet, as I’ll explain in a moment, there are still ample reasons for long-term optimism, especially when the dollar loses momentum and/or the global economy starts to rebound in earnest. The strong dollar, which blunts the competitiveness of American firms, both at home and abroad, will have a clear impact on first-quarter results and forward outlooks. According to FactSet Research, 85 companies in the S&P 500 have already warned of a Q1 profit shortfall, while just 16 companies have pre-announced that results will be better than expected. If that figure of 16 holds, it will be the lowest number since the first quarter of 2006. While much has been made of the dimming profit picture for energy companies, the pain is also building for industrial firms, many of which have global sales exposure. You can see the growing headwinds for this sector by glancing at the recent monthly reports from the Institute of Supply Management.  Is The Manufacturing Sector Headed for… Read More

You’ll find the best investment opportunities among companies in clear need of a tune-up. Back in 2012, aircraft builder The Boeing Co. (NYSE: BA) was in seemingly dire straits. Its newest jumbo jet (the Dreamliner) was proving tricky to build and management didn’t actually produce a trouble-free plane until the 66th Dreamliner left the factory. At that point, shares looked ripe for take-off and have more than doubled since I profiled this Dow component. If you are a subscriber to our premium service Total Yield, then you’re likely familiar with Boeing’s progress. Nearly a year ago, Nathan Slaughter,… Read More

You’ll find the best investment opportunities among companies in clear need of a tune-up. Back in 2012, aircraft builder The Boeing Co. (NYSE: BA) was in seemingly dire straits. Its newest jumbo jet (the Dreamliner) was proving tricky to build and management didn’t actually produce a trouble-free plane until the 66th Dreamliner left the factory. At that point, shares looked ripe for take-off and have more than doubled since I profiled this Dow component. If you are a subscriber to our premium service Total Yield, then you’re likely familiar with Boeing’s progress. Nearly a year ago, Nathan Slaughter, who pens the newsletter, noted that Boeing’s smoother-running production lines and swelling backlog have enabled the company to return huge sums of money to shareholders. He added Boeing to his Total Yield portfolio last summer and is now reaping the gains. I’ve recently taken a fresh look at Boeing and think this company — and its Total Yield potential — may be even better than Nathan realizes. Simply put, Boeing’s cash flow in 2018, 2019 and beyond, will likely blow past even the most bullish Wall Street forecasts. And credit goes to tough steps management is taking right now. Re-Examining… Read More

The struggles for wireless communications firm BlackBerry Ltd (Nasdaq: BBRY) have been underway for years. #-ad_banner-#In early 2013, the company’s business model was showing signs of stress, thanks to surging competition from Apple, Inc. (Nasdaq: AAPL), Samsung, Google, Inc. (Nasdaq: GOOG) and others. Back then, short sellers held nearly 140 million shares, or an estimated 29% of the outstanding share float. As a group, they anticipated a major downdraft ahead. Fast forward to 2015 and shares have fallen by half. Yet short sellers haven’t booked profits and moved on. They now hold 95 million shares short, or 19.5% of the… Read More

The struggles for wireless communications firm BlackBerry Ltd (Nasdaq: BBRY) have been underway for years. #-ad_banner-#In early 2013, the company’s business model was showing signs of stress, thanks to surging competition from Apple, Inc. (Nasdaq: AAPL), Samsung, Google, Inc. (Nasdaq: GOOG) and others. Back then, short sellers held nearly 140 million shares, or an estimated 29% of the outstanding share float. As a group, they anticipated a major downdraft ahead. Fast forward to 2015 and shares have fallen by half. Yet short sellers haven’t booked profits and moved on. They now hold 95 million shares short, or 19.5% of the outstanding share float, making Blackberry the fifth most heavily shorted stock on the Nasdaq. A fresh look at quarterly results reveals why these short sellers still see downside ahead. Stabilizing The Ship To be fair, Blackberry’s CEO John Chen inherited quite a mess when he took control of the company in late 2013. Revenues were falling fast, and a high cost structure led to rising losses. Chen is now more than halfway through a two-year restructuring process that is starting to bear fruit. Chen furloughed hundreds of staffers, and annual operating expenses have now dropped by more than $2… Read More

At the height of the recent financial crisis, consumers discovered that banks were in no mood to make any sort of loans. In response, they sought out a new kind of bank, known as a peer-to-peer lender. Banks now likely rue the day they turned those consumers away. Peer-to-peer lending represented just $26 million worth of loans in 2009. Today, it’s a $1.7 billion business and could be a $10 billion business within five years. Peer-to-peer lending is just one of the radical changes taking place in the banking landscape. For example, banks issued 90% of all mortgages in 2009. Read More

At the height of the recent financial crisis, consumers discovered that banks were in no mood to make any sort of loans. In response, they sought out a new kind of bank, known as a peer-to-peer lender. Banks now likely rue the day they turned those consumers away. Peer-to-peer lending represented just $26 million worth of loans in 2009. Today, it’s a $1.7 billion business and could be a $10 billion business within five years. Peer-to-peer lending is just one of the radical changes taking place in the banking landscape. For example, banks issued 90% of all mortgages in 2009. Today, that figure has dropped to 58%. And small businesses, which are at the backbone of the U.S. economy, are now going out of their way to get loan quotes from alternative finance providers. #-ad_banner-#Gone are the days when local banks cultivated deep relationships with local businesses and citizens. Many of those banks have been gobbled up in an industrywide consolidation, and borrowers are quickly discovering new alternatives. Frankly, it’s easy to see why both consumers and businesses are flocking toward the upstarts. Not only do the “non-banks” offer slightly better loan rates, but they are also much more likely… Read More

#-ad_banner-#Although the market action was a bit choppy in the first quarter of 2015, one fact is inescapable: the major indices are all within a few percentage points of their all-time highs. Yet, for hundreds of stocks in those indices, there is little reason for good cheer. Share prices are far from the 52-week high and aren’t  on many investor’s “buy list” right now. For contrarian investors, an unloved status can spell opportunity. Today’s out-of-favor stocks often become tomorrow’s in-favor stocks. They just need headwinds to morph into tailwinds. With that in mind, I’ve spent the past… Read More

#-ad_banner-#Although the market action was a bit choppy in the first quarter of 2015, one fact is inescapable: the major indices are all within a few percentage points of their all-time highs. Yet, for hundreds of stocks in those indices, there is little reason for good cheer. Share prices are far from the 52-week high and aren’t  on many investor’s “buy list” right now. For contrarian investors, an unloved status can spell opportunity. Today’s out-of-favor stocks often become tomorrow’s in-favor stocks. They just need headwinds to morph into tailwinds. With that in mind, I’ve spent the past week analyzing the market’s laggards. Many of them toil in the beleaguered energy sector, and even though oil prices have staged an impressive recent mini-rally, I remain concerned about what will happen when our nation’s oil storage tanks finally hit capacity in coming months. So, I focused my research on companies outside this sector. Here are three stocks that appear to have hit bottom and have catalysts for a rebound. Rayonier Advanced Materials, Inc. (NYSE: RYAM) Investors love to hear about spin-offs. Shares of the parent company typically post nice gains after spin-off plans are announced, and shares of… Read More