Boom or bust. Those are the contrasting views investors seem to hold for clean energy provider SolarCity (NASDAQ: SCTY). The company — and its business model — have been fodder for both bull and bears.  Right now, it looks like the bears are holding sway, as shares of this controversial stock have plunged 40% in the past year. Yet, I believe the bulls will have the last laugh.  SolarCity installs and leases rooftop solar panels on residential homes, which accounts for about three-quarters of sales, and commercial structures. The rapid plunge in solar panel costs, coupled with low… Read More

Boom or bust. Those are the contrasting views investors seem to hold for clean energy provider SolarCity (NASDAQ: SCTY). The company — and its business model — have been fodder for both bull and bears.  Right now, it looks like the bears are holding sway, as shares of this controversial stock have plunged 40% in the past year. Yet, I believe the bulls will have the last laugh.  SolarCity installs and leases rooftop solar panels on residential homes, which accounts for about three-quarters of sales, and commercial structures. The rapid plunge in solar panel costs, coupled with low interest rates, has enabled the company to provide electric power for lower rates than most utilities charge. Sales have increased from $32 million in 2010 to $255 million last year, and they are expected to exceed $750 million next year. That rapid growth has led to industry market share approaching 40%. #-ad_banner-#​SolarCity broke ground on a Gigawatt factory in Buffalo, N.Y., in September. It is expected to be fully operational in 12-24 months, and the company plans to spend $5 billion over the first 10 years of the lease. The factory will produce leading-edge solar panels with electricity conversion rates… Read More

It seems like ancient history, but consumers were in an awfully good mood a decade ago. Back then, price pressures were relatively contained and unemployment levels were fairly low. Taken together, these two measures of consumer health created a powerful tailwind for spending on a wide range of goods and services. #-ad_banner-#Of course, the good times couldn’t last. The Great Recession of 2008 led to massive increases in the unemployment rate and consumers are still feeling the lingering psychological effects to this day. For example, consumers are now wary of taking on debt. Total household debt (mortgages, credit… Read More

It seems like ancient history, but consumers were in an awfully good mood a decade ago. Back then, price pressures were relatively contained and unemployment levels were fairly low. Taken together, these two measures of consumer health created a powerful tailwind for spending on a wide range of goods and services. #-ad_banner-#Of course, the good times couldn’t last. The Great Recession of 2008 led to massive increases in the unemployment rate and consumers are still feeling the lingering psychological effects to this day. For example, consumers are now wary of taking on debt. Total household debt (mortgages, credit card balances, car loans, etc.) has fallen by nearly $20 billion over the past five years, according to the Federal Reserve. With consumer balance sheets now in better shape, consumers are likely to respond to remarkable turnabout in what is known as the “misery Index.” This index combines the national inflation rate and the national unemployment rate. It was often cited back in the 1970s, when the index was synonymous with “stagflation.” These days, we should call the misery index the “relief index,” because it hasn’t been this low since the good old days of 2007. Read More

The nation’s leading hedge fund managers tend to target mid-to-large-sized companies. An investment in small caps often requires too much trading finesse, and too little returns, to be worthwhile. Yet it’s always intriguing to spot that rare moment when big game hunters go after small targets. #-ad_banner-#Oftentimes, these smaller companies offer the kind of compelling combination of growth and value that even the top fund managers can’t ignore. Here’s a look at three small companies that the nation’s top guru investors have bought into. Chicago Bridge & Iron Co. NV (NYSE: CBI) This infrastructure builder sported a mid-cap valuation… Read More

The nation’s leading hedge fund managers tend to target mid-to-large-sized companies. An investment in small caps often requires too much trading finesse, and too little returns, to be worthwhile. Yet it’s always intriguing to spot that rare moment when big game hunters go after small targets. #-ad_banner-#Oftentimes, these smaller companies offer the kind of compelling combination of growth and value that even the top fund managers can’t ignore. Here’s a look at three small companies that the nation’s top guru investors have bought into. Chicago Bridge & Iron Co. NV (NYSE: CBI) This infrastructure builder sported a mid-cap valuation roughly a year ago, exceeding $10 billion. A subsequent sell-off, which has cut the market value by more than half, threatens to send CBI into the small-cap camp. The dramatic plunge in shares has caught the eye of activist investor David Einhorn. The fund manager’s firm, Greenlight Capital, bought $150 million of CBI stock in the fourth quarter of 2014, though a 15% drop from his $49.25 buy-in price means that stake is now worth a bit less. Notably, seven other gurus also established new positions in CBI during the most recent quarter, as tracked by gurufocus.com. Warren Buffett’s Berkshire… Read More

Few investors have heard about China’s Winland Ocean Shipping Corp. or Denmark’s Copenship A/S. But these firms are the proverbial “canary in the coal mine.” #-ad_banner-#Both have declared bankruptcy in recent weeks, and they may soon have plenty of company. That’s what happens when heavily-indebted companies square up against deep industry distress. That industry: dry bulk shipping, which involves everything from iron ore and other commodities to processed industrial materials. The major shippers build massive (and expensive) boats and then hope that those boats can garner sufficiently high daily lease rates. Those rates,… Read More

Few investors have heard about China’s Winland Ocean Shipping Corp. or Denmark’s Copenship A/S. But these firms are the proverbial “canary in the coal mine.” #-ad_banner-#Both have declared bankruptcy in recent weeks, and they may soon have plenty of company. That’s what happens when heavily-indebted companies square up against deep industry distress. That industry: dry bulk shipping, which involves everything from iron ore and other commodities to processed industrial materials. The major shippers build massive (and expensive) boats and then hope that those boats can garner sufficiently high daily lease rates. Those rates, as measured by the Baltic Dry Index, have just moved to levels not seen since the 1980s. The index typically had support in the 650 range during past downturns, but we’ve now shot past that mark. (Remarkably, this index hit almost 12,000 back in 2008.) Why is this index plumbing fresh lows with each passing week? Demand for dry goods, especially in China, appears to be quickly slowing. Moreover, dry bulk shippers ordered a lot of new ships in 2013, many of which started plying the waters in the past 12 months. Too many ships chasing too little… Read More

For sufferers of Rheumatoid Arthritis, Crohn’s Disease, psoriasis, colitis and other auto-immune diseases, AbbVie, Inc.’s (Nasdaq: ABBV) Humira has been an utter godsend. The drug has proven so successful in reducing inflammation associated with these maladies that it is now the world’s third-largest best-seller. #-ad_banner-#But success doesn’t come cheap. AbbVie charges thousands per dose, which can have a costly impact on insurers and their clients’ insurance premiums. AbbVie, which makes more than $12 billion a year from sales of Humira, is able to charge so much for a simple reason — at least in the United States: It has limited… Read More

For sufferers of Rheumatoid Arthritis, Crohn’s Disease, psoriasis, colitis and other auto-immune diseases, AbbVie, Inc.’s (Nasdaq: ABBV) Humira has been an utter godsend. The drug has proven so successful in reducing inflammation associated with these maladies that it is now the world’s third-largest best-seller. #-ad_banner-#But success doesn’t come cheap. AbbVie charges thousands per dose, which can have a costly impact on insurers and their clients’ insurance premiums. AbbVie, which makes more than $12 billion a year from sales of Humira, is able to charge so much for a simple reason — at least in the United States: It has limited competition. Humira is in a class of drugs, known as biologics, which are drugs that can’t be simply synthesized in a lab, but instead must be genetically engineered with living cells. The Food & Drug Administration (FDA) has always known that such biologic drugs are hard to engineer and as a result, has historically kept the door closed to generic competition. When the FDA established the ground rules for bioloigic production, it was a niche market. Such drugs now account for roughly 30% of the entire U.S. pharmaceutical industry. In light of the meteoric growth for these pricey drugs, the… Read More

Most of the companies in the S&P 500 have now delivered Q4 results (with the exception of retailers), and insiders are free to buy and sell shares in their companies. This is the time in the quarter when insider buying and selling tends to cluster, because in a matter of weeks, a Q1-related “quiet period” will compel these insiders to cease their trading activities. #-ad_banner-#I tend to closely study the daily moves of insiders while it’s the active part of the quarter. First, I identify any massive clusters of coordinated selling. When a group of… Read More

Most of the companies in the S&P 500 have now delivered Q4 results (with the exception of retailers), and insiders are free to buy and sell shares in their companies. This is the time in the quarter when insider buying and selling tends to cluster, because in a matter of weeks, a Q1-related “quiet period” will compel these insiders to cease their trading activities. #-ad_banner-#I tend to closely study the daily moves of insiders while it’s the active part of the quarter. First, I identify any massive clusters of coordinated selling. When a group of insiders head for the exits at the same time, so should you. Such a bearish move often signals either tougher times ahead, or at least a fully valued stock. Second, I like to see which stocks hold buying appeal for insiders. Please note that I don’t consider a decision to exercise stock options and then retain shares as a form of insider buying, as some insider trackers do. Also, I often (but not always) ignore the move of major outside shareholders, even though their purchases can often portend a bullish move in a stock. I look at these investors, and… Read More

Even if you never decide to pursue short selling, you still need to track the key actions of short sellers. These contrarian investors may be highlighting potential troubles for a stock that you own in a long-focused portfolio. And they also often provide key clues about the economy’s underlying changes. #-ad_banner-#As I recently noted, the year ahead is likely to be quite different from the recent past, impacting companies and industries in myriad ways. And you can add the impact of a strong U.S. dollar to the group of factors that are impacting business conditions. What do the shorts have… Read More

Even if you never decide to pursue short selling, you still need to track the key actions of short sellers. These contrarian investors may be highlighting potential troubles for a stock that you own in a long-focused portfolio. And they also often provide key clues about the economy’s underlying changes. #-ad_banner-#As I recently noted, the year ahead is likely to be quite different from the recent past, impacting companies and industries in myriad ways. And you can add the impact of a strong U.S. dollar to the group of factors that are impacting business conditions. What do the shorts have to say about these economic changes? Well, they are targeting several companies and industries that appear increasingly vulnerable to an economy-led pullback. Perhaps the most obvious example of an industry in flux, is the laser-like focus of short sellers on AT&T, Inc. (NYSE: T). As of the end of January, the short interest in this telecom giant stood at a whopping 303 million shares. For a bit of context, the short interest stood at roughly 100 million in September 2013 and has been steadily rising ever since. This stock now has nearly twice the short interest of the second most-heavily… Read More

We’re approaching the 20th anniversary of an historic agreement, and its impact is roiling global markets today, with potentially profound effects by 2017. That landmark move: The European Central Bank’s (ECB) decision in 1995 to establish a single, continent-wide currency. When the euro finally began circulating (replacing drachmas, guilders, marks, francs, pesetas and many other currencies) in 1999, it was worth exactly one U.S. dollar. The ECB’s goal: to eventually see the euro become a leading global currency that would attract more than its share of capital flows. #-ad_banner-#That plan may have worked too well: by the… Read More

We’re approaching the 20th anniversary of an historic agreement, and its impact is roiling global markets today, with potentially profound effects by 2017. That landmark move: The European Central Bank’s (ECB) decision in 1995 to establish a single, continent-wide currency. When the euro finally began circulating (replacing drachmas, guilders, marks, francs, pesetas and many other currencies) in 1999, it was worth exactly one U.S. dollar. The ECB’s goal: to eventually see the euro become a leading global currency that would attract more than its share of capital flows. #-ad_banner-#That plan may have worked too well: by the spring of 2008, the euro was worth more than $1.50, which was arguably too rich an exchange rate for many weaker European economies, some of which became among the most expensive places in the world to do business. The Great Recession of 2008 put an end to all that. The euro has been in freefall ever since, and a pair of economic research teams predict that the euro will keep on sliding until it gets all the way back to parity. In August 2014, when the euro was already breaking down to the 1.30 level, economists… Read More

  To paraphrase Isaac Newton’s First Law of Motion, “a company that exceeds earnings forecasts tends to keep exceeding earnings forecasts.” That’s because Wall Street analysts tend to only incrementally adjust their forecasts in light of new information. So these companies keep on delivering better-than-expected results, and investors can profit by positioning their investments ahead of the next quarterly upside. #-ad_banner-#The key to finding such stocks: look for those companies that manage to not only exceed quarterly forecasts, but raise forward guidance as well. These “beat and raise” stocks are often excellent momentum investments. Of course, momentum investing has a… Read More

  To paraphrase Isaac Newton’s First Law of Motion, “a company that exceeds earnings forecasts tends to keep exceeding earnings forecasts.” That’s because Wall Street analysts tend to only incrementally adjust their forecasts in light of new information. So these companies keep on delivering better-than-expected results, and investors can profit by positioning their investments ahead of the next quarterly upside. #-ad_banner-#The key to finding such stocks: look for those companies that manage to not only exceed quarterly forecasts, but raise forward guidance as well. These “beat and raise” stocks are often excellent momentum investments. Of course, momentum investing has a clear drawback. Investors may be catching such stocks at a time when they are already sporting lush valuations. Growth is nice, but not growth-at-any-price. In that light, I’ve been reviewing Q4 reports, looking for companies that exceeded profit forecasts by at least 15%. I ignored any stocks that didn’t receive a boost to their 2015 and 2016 earnings per share forecasts. Lastly, I decided to only focus on those stocks that trade for less than 18 times projected 2016 profits. Here are a dozen stocks that fit those criteria.   Company Q4 Beat (%) 2015 EPS 2016… Read More

When companies such as Cisco Systems, Inc. (Nasdaq: CSCO) and Microsoft Corp. (Nasdaq: MSFT) began issuing debt in the past decade, some investors were left scratching their heads. After all, these companies carried a hefty amount of cash on their balance sheet and seemingly had no use for more money. #-ad_banner-#The key reason: much of their cash was locked up in foreign banks. These and many other companies have been playing a waiting game with the U.S. government. The government has sought to tax those foreign-earned funds when they are repatriated back home. For many companies, we’re talking about a… Read More

When companies such as Cisco Systems, Inc. (Nasdaq: CSCO) and Microsoft Corp. (Nasdaq: MSFT) began issuing debt in the past decade, some investors were left scratching their heads. After all, these companies carried a hefty amount of cash on their balance sheet and seemingly had no use for more money. #-ad_banner-#The key reason: much of their cash was locked up in foreign banks. These and many other companies have been playing a waiting game with the U.S. government. The government has sought to tax those foreign-earned funds when they are repatriated back home. For many companies, we’re talking about a tax rate in excess of 30% (offset by any amount of taxes already levied by foreign entities on those earnings). These companies figured they would just bide their time until the government agreed to a lower tax rate. Well, that time may have finally come. Reports are circulating that the Obama administration, as part of a broad corporate tax overhaul, will offer a lowered tax rate for repatriated funds. President Obama’s reported opening gambit: a 14% tax rate on cash brought home now and a 19% tax rate on future foreign-sourced profits. Congressional Republicans will likely counter-offer with a lower… Read More