Earnings season is full of problems for investors. If a company doesn’t meet analysts’ expectations, you can expect its stock to fall. But there’s another concern… one most investors don’t pay attention to. What should you do if a company you’re watching does beat estimates? Should you take that as a sign to buy? Some traders might suggest you do just that. But for anyone looking for a long-term investment, an earnings “beat” could be the exact wrong time to get in. Take Fitbit Inc. (NYSE: FIT), for instance.  Fitbit is one of the hottest stocks of the year. The… Read More

Earnings season is full of problems for investors. If a company doesn’t meet analysts’ expectations, you can expect its stock to fall. But there’s another concern… one most investors don’t pay attention to. What should you do if a company you’re watching does beat estimates? Should you take that as a sign to buy? Some traders might suggest you do just that. But for anyone looking for a long-term investment, an earnings “beat” could be the exact wrong time to get in. Take Fitbit Inc. (NYSE: FIT), for instance.  Fitbit is one of the hottest stocks of the year. The maker of active, wearable tech launched its IPO this summer at around $30 and almost immediately spiked to $50. Yesterday, after the closing bell, the company announced its third-quarter earnings. It raked in 19 cents per share in earnings compared to the Street’s average estimate of 10 cents per share.  Many investors saw those results and bought. Those investors might already be sitting on a loss. The stock fell 8.55% on November 3. You see, along with better-than-expected earnings, the company also announced that it was going to sell additional shares on the open market. In other words, shareholders that… Read More

Earlier this month, I showed you just how oversold pharmaceutical makers and developers have become after presidential hopeful Hillary Clinton’s tweet about price gouging.  I recommended Gilead as a great rebound play on this theme. Since then, it’s recovered as much as 8.3% of its share price. Today, we have a different development. Pfizer (NYSE: PFE) announced that it approached Allergan (NYSE: AGN), the maker of Botox, about a deal to combine forces.  Allergan confirmed this news and told reporters that it is indeed a friendly negotiation and that it would create the largest pharmaceutical company in the world —… Read More

Earlier this month, I showed you just how oversold pharmaceutical makers and developers have become after presidential hopeful Hillary Clinton’s tweet about price gouging.  I recommended Gilead as a great rebound play on this theme. Since then, it’s recovered as much as 8.3% of its share price. Today, we have a different development. Pfizer (NYSE: PFE) announced that it approached Allergan (NYSE: AGN), the maker of Botox, about a deal to combine forces.  Allergan confirmed this news and told reporters that it is indeed a friendly negotiation and that it would create the largest pharmaceutical company in the world — topping even Johnson & Johnson (NYSE: JNJ).The combined company would be worth around $330 billion. That would make it the sixth largest company in the world, ahead of General Electric (NYSE: GE), J&J and Procter & Gamble (NYSE: PG). And it’s not because Pfizer thinks more people are going to heading into the Botox fad.  Allergan is located in Ireland. In other words, U.S. politicians wouldn’t be able to touch the new company if it keeps its Dublin address. Although the merger was first proposed by Pfizer it will actually only benefit Allergan shareholders.  You see, Allergan has serious baggage. Read More

In a world with zero-bound interest rates, excessive quantitative easing (QE) and free trade negotiations everywhere you look, it’s tough to imagine we are still on the brink of recession.  But if you ask any industrial company, especially any that sells its products globally, they might tell you we have already crossed that line. #-ad_banner-#Energy prices have put nearly 10% of the entire U.S. economy into a tailspin. For countries like Canada and Australia, which rely on exporting commodities, the situation is even more dire.  But what has really held back many companies here in the United States from growing… Read More

In a world with zero-bound interest rates, excessive quantitative easing (QE) and free trade negotiations everywhere you look, it’s tough to imagine we are still on the brink of recession.  But if you ask any industrial company, especially any that sells its products globally, they might tell you we have already crossed that line. #-ad_banner-#Energy prices have put nearly 10% of the entire U.S. economy into a tailspin. For countries like Canada and Australia, which rely on exporting commodities, the situation is even more dire.  But what has really held back many companies here in the United States from growing in such a lush monetary environment is the surging dollar. As you can see, the Dollar Index — which measures the strength of the U.S. dollar against a basket of other widely held currencies — the greenback is in high demand. The reason is simple.  Despite interest rates remaining at zero — which is likely to continue for some time — other countries have been participating in QE like the U.S. did over the last several years. Meanwhile, the Fed is still expected to raise rates as early as this year. That threat is enough for investors to… Read More

What should be obvious in investing is that the best companies last the longest, reward their shareholders the best and avoid widespread collapses like we saw in 2008-09.  But investors still search for high-risk, low-reward stocks simply because they are more fun to talk about. Just think of the “hot, new IPOs” we’ve seen over the past several years: Facebook (Nasdaq: FB), Twitter (NYSE: TWTR), Tesla (Nasdaq: TSLA), etc. Are these great companies? One could easily argue that none of them have the earnings, let alone margins, to be considered real money makers.  So when my colleague over at Top… Read More

What should be obvious in investing is that the best companies last the longest, reward their shareholders the best and avoid widespread collapses like we saw in 2008-09.  But investors still search for high-risk, low-reward stocks simply because they are more fun to talk about. Just think of the “hot, new IPOs” we’ve seen over the past several years: Facebook (Nasdaq: FB), Twitter (NYSE: TWTR), Tesla (Nasdaq: TSLA), etc. Are these great companies? One could easily argue that none of them have the earnings, let alone margins, to be considered real money makers.  So when my colleague over at Top 10 Stocks, Dave Forest, began discussing what actually makes a great company, my ears pricked up. Among the many qualities he looks for, two stand out to me. Each great company has to have irreplaceable assets and top-tier customer retention. The first is obvious. If you own something that you can’t get anywhere else, it has a high value. That goes for anything from a patent on a one-of-a-kind consumer gadget to a piece of real estate next to a major throughway.  The second is where the flash-in-the-pan type stocks lose their charm. If you make a product that becomes… Read More

One of the best ways to make money in the market is to find areas where mainstream investors are simply looking at the wrong numbers. For example, take a look at International Business Machines Inc. (NYSE: IBM). IBM is the glue that holds all of the modern-day tech world together.  Not only has this company long been the guiding hand in making technology so important these days; it also continues to control a large swath of the hardware side of the industry. The company still makes servers and storage solutions for huge organizations like the Department of Defense and Google. Read More

One of the best ways to make money in the market is to find areas where mainstream investors are simply looking at the wrong numbers. For example, take a look at International Business Machines Inc. (NYSE: IBM). IBM is the glue that holds all of the modern-day tech world together.  Not only has this company long been the guiding hand in making technology so important these days; it also continues to control a large swath of the hardware side of the industry. The company still makes servers and storage solutions for huge organizations like the Department of Defense and Google. In fact, it is making great strides in competing with Intel (Nasdaq: INTC) on that front. But it’s IBM’s other operations that should have investors taking note.  IBM is an industry leader in some of the most important new trends in the tech world is analytics: cloud computing and big data,. For instance, big data studies how users are accessing information and exactly what kind of information they are accessing. IBM’s big data solutions include the systems and sensors that tally that info to report back to the Googles and Amazons (Nasdaq: AMZN) of the world. Of course, to continue… Read More

Wal-Mart (NYSE: WMT) shocked the investment community on Wednesday morning during its 22nd annual investor meeting. The company, not known for investor surprises, lit up online forums and made headlines by announcing that its bottom line could fall as much as 12% next year. Shares plummeted 10% by the end of the day, causing some to question whether the inevitable pressure from e-commerce competitor, Amazon (Nasdaq: AMZN), is finally getting to Wal-Mart. As for why the company expects to see a profit cut of 6-12% next year, its management blamed it on its spending programs.  Earlier this year, Wal-Mart raised… Read More

Wal-Mart (NYSE: WMT) shocked the investment community on Wednesday morning during its 22nd annual investor meeting. The company, not known for investor surprises, lit up online forums and made headlines by announcing that its bottom line could fall as much as 12% next year. Shares plummeted 10% by the end of the day, causing some to question whether the inevitable pressure from e-commerce competitor, Amazon (Nasdaq: AMZN), is finally getting to Wal-Mart. As for why the company expects to see a profit cut of 6-12% next year, its management blamed it on its spending programs.  Earlier this year, Wal-Mart raised its employees’ minimum wage to $9 per hour. Next year, that’ll go up to $10 per hour. Along with this wage increase, the company is also putting hundreds of millions of dollars into its ecommerce business.  These are not truly new ideas. Investors have already known that Wal-Mart was raising wages and spending more on ecommerce. Yet apparently, they didn’t think it would have these consequences. This fall has only added to Wal-Mart’s terrible year in the market.  Prior to this meeting, its stock was already down 22% on the year. Considering Wal-Mart was one of the only stocks to… Read More

The “King of Beers,” AB InBev (NYSE: BUD) has had some problems of late. To solve them, the $178 billion maker of Budweiser and Corona is doing what any large company does in that situation. It’s trying to buy a better company and steal their growth. #-ad_banner-#You may recall the enormous $52 billion merger between Anheuser-Busch and InBev back in 2008. Some investors — and beer drinkers — never truly forgave the maker of Bud for relocating overseas. Yet, I don’t think that’s what’s causing the company’s operating mess today. AB InBev suffers from the simple problem of too few… Read More

The “King of Beers,” AB InBev (NYSE: BUD) has had some problems of late. To solve them, the $178 billion maker of Budweiser and Corona is doing what any large company does in that situation. It’s trying to buy a better company and steal their growth. #-ad_banner-#You may recall the enormous $52 billion merger between Anheuser-Busch and InBev back in 2008. Some investors — and beer drinkers — never truly forgave the maker of Bud for relocating overseas. Yet, I don’t think that’s what’s causing the company’s operating mess today. AB InBev suffers from the simple problem of too few drinkers. For the first time in 30 years, beer volume is set to decrease globally this year.  To make matters worse, the major beer makers like InBev have been forced to compete with an explosion of craft beer and smaller breweries like Dogfish Head and New Belgium.  The volume of craft beer sold in the United States has more than tripled over the last decade: Meanwhile, brands like Bud, Miller and Coors have been weak. Volume for these brands are falling at about 1.7% annually.      Still, the real problem for InBev and its ilk… Read More

Investing is one of the most emotional activities a person can participate in. The psychological pulls and tugs on an investor throughout the process of buying, holding and selling stocks is exactly what makes it so intriguing. #-ad_banner-#You see, investors can turn on an individual stock or even a whole sector based on little more than a single negative news headline. Or, as we’ve seen over the last month, a single tweet by a person that isn’t even an elected official anymore can send a number of financially lucrative stocks far below their real intrinsic value. Today’s story began with… Read More

Investing is one of the most emotional activities a person can participate in. The psychological pulls and tugs on an investor throughout the process of buying, holding and selling stocks is exactly what makes it so intriguing. #-ad_banner-#You see, investors can turn on an individual stock or even a whole sector based on little more than a single negative news headline. Or, as we’ve seen over the last month, a single tweet by a person that isn’t even an elected official anymore can send a number of financially lucrative stocks far below their real intrinsic value. Today’s story began with the overnight profit grab — and subsequent viral rage seen online — by hedge fund manager-turned-drug company founder, Martin Shkreli’s. In September, Shkreli bought the rights to Daraprim, a drug that treats toxoplasmosis, an infection caused by a parasite, and promptly raised the price of the drug to $750 per pill, from just $13.50 — a 5,500% price hike. A few days after that, Democratic Presidential Candidate Hillary Clinton tweeted this: When you mix grandstanding political messages with a sector as large and profitable as Big Pharma, you’re going to get some overreactions on both sides. That’s exactly… Read More

Smoking and drinking are clearly bad for your health. Yet, the companies that make those products, known as “sin stocks,” have proven they can overcome any economic downturn, restrictive legislation and even mainstream criticism. So what’s that tell you about human nature? We like what’s bad for us. Take the huge tobacco tax hike that went into effect in 2009. The federal per-pack tax on cigarettes went from 39 cents to $1.01. And that’s just federal. In states like New York, additional excise taxes means that it now costs smokers around $11 for a pack of cigarettes. #-ad_banner-#​That’s… Read More

Smoking and drinking are clearly bad for your health. Yet, the companies that make those products, known as “sin stocks,” have proven they can overcome any economic downturn, restrictive legislation and even mainstream criticism. So what’s that tell you about human nature? We like what’s bad for us. Take the huge tobacco tax hike that went into effect in 2009. The federal per-pack tax on cigarettes went from 39 cents to $1.01. And that’s just federal. In states like New York, additional excise taxes means that it now costs smokers around $11 for a pack of cigarettes. #-ad_banner-#​That’s not even touching on the fact that you can’t smoke anywhere anymore. Most states have made it hard to smoke in public places. In many, you can’t even light up in a bar. Yet, people still smoke. That’s not to say tobacco companies aren’t hurting. In 2014, nine billion fewer cigarettes were sold in the United States than the prior year. Still, that’s only a 3.3% reduction in volume. And smokeless tobacco, including dip, actually increased in total volume. Of course, the United States is only a small portion of global smoking consumption. Today, approximately 1.3 billion people around the… Read More

In a move to settle edgy markets, the Fed recently postponed a highly-anticipated interest rate increase. But that doesn’t mean a hike isn’t still on the way. In fact, now is the perfect time for income-focused investors to start thinking about how your various investments will be impacted by the inevitable rise in interest rates. In a rising rate environment, there are a few industries and types of companies that are seen as less favorable than others. Take regulated utilities, for instance. Utility companies (or power companies) are regulated by states or municipalities and don’t have control over the rates… Read More

In a move to settle edgy markets, the Fed recently postponed a highly-anticipated interest rate increase. But that doesn’t mean a hike isn’t still on the way. In fact, now is the perfect time for income-focused investors to start thinking about how your various investments will be impacted by the inevitable rise in interest rates. In a rising rate environment, there are a few industries and types of companies that are seen as less favorable than others. Take regulated utilities, for instance. Utility companies (or power companies) are regulated by states or municipalities and don’t have control over the rates they charge their customers. They are subject to pricing caps, which limit their profit margins. So these utilities are typically reliant on debt and equity offerings to fund projects, such as network upgrades and expansions. That makes them extremely susceptible to liquidity challenges when rates go up. Another industry that is perceived to be hurt by rising rates: master limited partnerships (MLPs). This view, however, is not entirely accurate. Let’s look deeper. An MLP is a company that is structured to pass through its profits directly to its owners, or partners. That’s why they are also called “pass-through entities.” MLPs… Read More