Once again, an old-school company fails to keep up. Or just fails. General Electric (NYSE: GE), which just a month or so ago seemed to be out of the woods after two years of declining earnings and dividend cuts, just warned investors of another year of lower profits and forecasted that its industrial operations — formerly its bread and butter — could be up to $2 billion cash-flow negative this year. Just a month ago, the market was cheering GE’s decision to sell one of its important assets, the company’s biopharma unit, to Danaher (NYSE: DHR) for $21.4 billion. The… Read More

Once again, an old-school company fails to keep up. Or just fails. General Electric (NYSE: GE), which just a month or so ago seemed to be out of the woods after two years of declining earnings and dividend cuts, just warned investors of another year of lower profits and forecasted that its industrial operations — formerly its bread and butter — could be up to $2 billion cash-flow negative this year. Just a month ago, the market was cheering GE’s decision to sell one of its important assets, the company’s biopharma unit, to Danaher (NYSE: DHR) for $21.4 billion. The deal is expected to close in the fourth quarter. But the proceeds won’t be reinvested in the business. Rather, the proceeds will be used to reduce GE’s enormous debt. At year-end, GE had $108 billion in debt (almost as much as it had taken in revenue during the entire year, which was $121.6 billion). ​ The decision to reduce debt is the right one. The size of a company’s debt matters, especially when business suddenly slows. Too much debt can often lead to bankruptcy — even in a strong economy like ours today, let alone in leaner times. But when… Read More

Retail and institutional investors aren’t the only ones who used the fourth-quarter selloff last year as a buying opportunity.  Bristol-Myers Squibb (NYSE: BMY), one of the largest U.S. pharma companies by revenue, didn’t waste any time scooping up biotech Celgene (Nasdaq: CELG). Announced on January 3, the $74 billion acquisition is the second-largest pharmaceutical M&A deal ever (after the $87 billion merger of Warner-Lambert and Pfizer (NYSE: PFE) twenty years ago). Despite the price tag, it was still a bargain. Even though BMY offered a 53.7% premium to CELG’s closing price on January 2, the latter, which lost $30 per… Read More

Retail and institutional investors aren’t the only ones who used the fourth-quarter selloff last year as a buying opportunity.  Bristol-Myers Squibb (NYSE: BMY), one of the largest U.S. pharma companies by revenue, didn’t waste any time scooping up biotech Celgene (Nasdaq: CELG). Announced on January 3, the $74 billion acquisition is the second-largest pharmaceutical M&A deal ever (after the $87 billion merger of Warner-Lambert and Pfizer (NYSE: PFE) twenty years ago). Despite the price tag, it was still a bargain. Even though BMY offered a 53.7% premium to CELG’s closing price on January 2, the latter, which lost $30 per share between August 30, 2018, and year-end, still trades below its 52-week high. This price action shows how unexpected the deal was, and how little of the future M&A premium was “baked” into the price of CELG before BMY has made its move. Identifying potential M&A targets is a difficult process, but it can be worth the effort. After all, a jump of 30%, 50% or even more is a nice payoff… But it’s never wise to simply invest in a stock on the hopes that it will one day be acquired — hence the research part.  —Recommended Link— 9… Read More

With the tenth anniversary of this bull market upon us, investors have a lot to celebrate. Stocks are up, profits are growing, the economy is chugging along, the interest rate environment is relatively benign, and even on the trade-war front we are seeing some positive expectations lately. There’s nothing more bullish than a bull market. If this saying is even half-correct, the best indication we investors have that the market strength will continue is the powerful market rebound off the latest lows in December 2018. The chart below, which extends from Dec 24, 2018, to March 5, 2019, shows the… Read More

With the tenth anniversary of this bull market upon us, investors have a lot to celebrate. Stocks are up, profits are growing, the economy is chugging along, the interest rate environment is relatively benign, and even on the trade-war front we are seeing some positive expectations lately. There’s nothing more bullish than a bull market. If this saying is even half-correct, the best indication we investors have that the market strength will continue is the powerful market rebound off the latest lows in December 2018. The chart below, which extends from Dec 24, 2018, to March 5, 2019, shows the power of that rebound rally. From the market’s low on Christmas Eve, all the major U.S. indices rallied quite strongly. Here’s the grand total… #-ad_banner-#Not counting dividends, the Dow Jones Industrial Average advanced 18.4%, falling slightly behind the S&P 500’s 18.7% return. Not to be outdone, the Russell 2000 index of small-cap stocks has been leading the rebound with its 23.8% return as of March 5. The tech-heavy Nasdaq 100 has also done very well, with a 21.3% return over these two and a half months. I’m happy to report that our portfolio over at Game-Changing Stocks has done quite… Read More

A body in motion tends to stay in motion. Unless, of course, an external force is applied. Add “stock market advisor” to Isaac Newton’s resume, right along with astronomer, physicist and mathematician. Similar to physics, Newton’s first law of motion also works in investments. Kind of. While there is no physical force that moves them, stocks, much like physical objects, tend to continue moving in the same direction until something around them (or about them) changes. No one — including Newton — can or could with a high degree of certainty predict this afternoon’s breaking news or tomorrow’s big earnings… Read More

A body in motion tends to stay in motion. Unless, of course, an external force is applied. Add “stock market advisor” to Isaac Newton’s resume, right along with astronomer, physicist and mathematician. Similar to physics, Newton’s first law of motion also works in investments. Kind of. While there is no physical force that moves them, stocks, much like physical objects, tend to continue moving in the same direction until something around them (or about them) changes. No one — including Newton — can or could with a high degree of certainty predict this afternoon’s breaking news or tomorrow’s big earnings upset. What investors can do, however, is follow the trend. That’s why I recently set out with a goal to investigate stocks that are moving higher. To do this, I screened all U.S.-listed small-cap stocks (those with market capitalizations less than $2 billion but larger than $500 million) that have closed within 5% of their 52-week high. To make this screen more relevant to the goals of my Game-Changing Stocks premium newsletter, I also wanted to screen for future — expected — growth. Because this metric is based on analysts’ assessments, I also looked for stocks that were covered by… Read More

Investing is a hard business. You can’t take anything for granted, and there is no easy and fast formula to predict how well a stock will do. It’s hard to determine whether a company — even a leader in a steady-as-it-goes business — will continue to deliver profits or appreciate versus the competition.  Case in point: Kraft Heinz (Nasdaq: KHC). This consumer-staple company has turned out to be anything but safe and steady. You’ve likely heard by now that shares of the world’s fifth-largest food-and-drinks company lost 27% in a single session on Friday, February 22. And Kraft halved its… Read More

Investing is a hard business. You can’t take anything for granted, and there is no easy and fast formula to predict how well a stock will do. It’s hard to determine whether a company — even a leader in a steady-as-it-goes business — will continue to deliver profits or appreciate versus the competition.  Case in point: Kraft Heinz (Nasdaq: KHC). This consumer-staple company has turned out to be anything but safe and steady. You’ve likely heard by now that shares of the world’s fifth-largest food-and-drinks company lost 27% in a single session on Friday, February 22. And Kraft halved its dividend, too. A whopping $15.4 billion write-down of its acquisitions of Kraft and Oscar Mayer was just part of the bad news; the company also disclosed a U.S. Securities and Exchange Commission (SEC) investigation of its procurement accounting practices. Talk about risky…  Before that one-day nosedive, KHC had already lost about half of its value. And now, even Warren Buffett, arguably the best investor in the business, laments that he overpaid for Kraft (Berkshire Hathaway owns 26.7% of the company and lost more than $4.3 billion on that fateful Friday). (This article from CNBC gives a… Read More