The Brexit selloff has turned to gains for the major indices, but a few sectors are still trading lower and with an air of uncertainty around unknown risks. In response to the uncertainty about the regional economy, trade and the ability to move workers easily investors are focusing on the negative consequences of the vote.  #-ad_banner-#One company in particular could see an upside in overall sales, as well as a higher market share in its business segment.  If the potential for stronger sales were not enough, shares are trading at a 35% discount to the long-term price multiple. Air Traffic… Read More

The Brexit selloff has turned to gains for the major indices, but a few sectors are still trading lower and with an air of uncertainty around unknown risks. In response to the uncertainty about the regional economy, trade and the ability to move workers easily investors are focusing on the negative consequences of the vote.  #-ad_banner-#One company in particular could see an upside in overall sales, as well as a higher market share in its business segment.  If the potential for stronger sales were not enough, shares are trading at a 35% discount to the long-term price multiple. Air Traffic Is Improving And Could Be Ready To Jump Ryanair Holdings (Nasdaq: RYAAY) is Europe’s largest airline by passenger traffic with service throughout the region, counting Britain as its single largest market. Shares plunged 17.6% after the Brexit vote and are still 19% off their 52-week high set in December.  Shares have tumbled despite strong passenger traffic growth. June traffic was up nearly one million passengers to 10.6 million compared to 9.5 million in June 2015 even after having to cancel hundreds of French flights due to a strike by air traffic controllers. The company’s load factor, the percentage of… Read More

Markets have recovered their post-Brexit selloff, but that doesn’t mean the United Kingdom’s decision to leave the European Union won’t have some big effects on corporate profits.  While the actual process to leave the EU could take years, corporations will be positioning ahead of the new environment and clear winners will emerge before the separation is final.  #-ad_banner-#One group will be looking to capitalize on the power shift in the global financial market — U.S. banks. Not only will this group benefit as UK and EU competitors struggle with uncertainty, but its own government may be getting out of the… Read More

Markets have recovered their post-Brexit selloff, but that doesn’t mean the United Kingdom’s decision to leave the European Union won’t have some big effects on corporate profits.  While the actual process to leave the EU could take years, corporations will be positioning ahead of the new environment and clear winners will emerge before the separation is final.  #-ad_banner-#One group will be looking to capitalize on the power shift in the global financial market — U.S. banks. Not only will this group benefit as UK and EU competitors struggle with uncertainty, but its own government may be getting out of the way as well, something that’s weighed on the industry since 2009. One company in particular looks poised to benefit from the new scenario, and it’s just tripled its dividend in victory. London’s Pain Is The New World’s Gain As London sees its power as a major financial hub weaken one of the few winners of the Brexit vote could be U.S.-based banks. At risk are the current privileges enjoyed by UK-based firms to easily move staff around the European Union. EU leaders are saying “no” to trade negotiations without immigration concessions by the Britons, which could hold up a… Read More

The S&P 500 has already gained back much of its Brexit-related selloff, down just 0.7% from its June 23 close, but that doesn’t mean investors are out of the woods yet.  The market still has to deal with a myriad of problems from a slowing China to a seven-year bull market that has stretched valuations. Earnings for S&P 500 companies are expected to drop 5.2% when second quarter results start coming out next week, the fifth consecutive quarter of lower earnings and the worst run since 2009. #-ad_banner-#Even as the UK negotiates its exit from the European Union over the… Read More

The S&P 500 has already gained back much of its Brexit-related selloff, down just 0.7% from its June 23 close, but that doesn’t mean investors are out of the woods yet.  The market still has to deal with a myriad of problems from a slowing China to a seven-year bull market that has stretched valuations. Earnings for S&P 500 companies are expected to drop 5.2% when second quarter results start coming out next week, the fifth consecutive quarter of lower earnings and the worst run since 2009. #-ad_banner-#Even as the UK negotiates its exit from the European Union over the next two years, it will have to deal with an immediate recession in the second half of this year according to most economists. The effect on the global economy should be muted, but the uncertainty around trade could weigh on already sluggish growth.  There is one sector that stands to benefit from the Brexit vote and inevitable aftermath. Prices were hit hard after the vote, and it could be the next target for yield-hungry global investors.  Don’t Fight The Global Fed The S&P 500 is up just 2.6% since January 2015, months after the U.S. Federal Reserve ended its… Read More

Shares of Valeant Pharmaceuticals (NYSE: VRX) plunged nearly 15% when the company finally reported its 1st quarter earnings on June 7  on a reduced 2016 outlook and a laundry list of other issues.  More than 100 million shares traded that day, five times the previous day’s volume, as investors rushed for the exit and short sellers danced a jig.  #-ad_banner-#But for those listening closely to the conference call, CEO Joseph Papa dropped a bombshell and tipped investors off to what could be one of the best positioned companies for the foreseeable future.  Most investors didn’t catch it because shares of… Read More

Shares of Valeant Pharmaceuticals (NYSE: VRX) plunged nearly 15% when the company finally reported its 1st quarter earnings on June 7  on a reduced 2016 outlook and a laundry list of other issues.  More than 100 million shares traded that day, five times the previous day’s volume, as investors rushed for the exit and short sellers danced a jig.  #-ad_banner-#But for those listening closely to the conference call, CEO Joseph Papa dropped a bombshell and tipped investors off to what could be one of the best positioned companies for the foreseeable future.  Most investors didn’t catch it because shares of this market leader closed just 0.6% higher on the day. This company is already a powerhouse in a growing industry and about to close a merger that will cement its place on top. Who Will Control Tomorrow’s Healthcare Valeant investors were stunned when the company reported that it was selling some drugs through its relationship with Walgreens Boots Alliance (Nasdaq: WBA) at a loss to its own costs. The advantage came to Walgreens on activity-based fees negotiated in the distribution contract, which are additional fees Walgreens receives on Valeant drugs depending on whether the purchase is paid in cash… Read More

Bill Gross warned investors earlier this month to get ready for an ‘entirely different’ market, and likened the global bond market to a supernova with dire consequences. Global bond yields are at the lowest in recorded history, with more than $10 trillion in bonds priced at negative rates, meaning investors are paying for the right to hold the bonds. Central bank policy doesn’t seem to be supporting economic growth, and many investors are wondering if more modest stock returns might be the norm going forward.  #-ad_banner-#Banks and insurance companies can make do with returns low returns on U.S. government and… Read More

Bill Gross warned investors earlier this month to get ready for an ‘entirely different’ market, and likened the global bond market to a supernova with dire consequences. Global bond yields are at the lowest in recorded history, with more than $10 trillion in bonds priced at negative rates, meaning investors are paying for the right to hold the bonds. Central bank policy doesn’t seem to be supporting economic growth, and many investors are wondering if more modest stock returns might be the norm going forward.  #-ad_banner-#Banks and insurance companies can make do with returns low returns on U.S. government and corporate bonds. For most others, though, that’s not going to cut it. Plunging bond rates have pushed investors into traditional ‘safety’ stocks like utilities and consumer staples in a search for yield. The stampede of investor money has driven prices in these sectors to alarming heights, and may make these safety stocks riskier than investors realize. If weak earnings start to unravel the perception of positive total returns the ensuing investor exodus could cause the whole group to unravel. Two sectors offer a better yield opportunity with cheaper valuations, as well as historical evidence pointing to returns over the next… Read More

A combination of capacity growth, higher fuel prices and worries about the health of the global economy have sent airline stocks skidding this year. The US Global Jets ETF (NYSE: JETS) is down 10% and many of the major carriers are down upwards of 20% since the beginning of the year. Investors are now skittish about shares that have popped triple-digits over the last five years in an industry notorious for cyclicality and heavy competition.  #-ad_banner-#Taking a closer look at the data reveals some broad differences in outlook among the individual names and an opportunity to profit from the current… Read More

A combination of capacity growth, higher fuel prices and worries about the health of the global economy have sent airline stocks skidding this year. The US Global Jets ETF (NYSE: JETS) is down 10% and many of the major carriers are down upwards of 20% since the beginning of the year. Investors are now skittish about shares that have popped triple-digits over the last five years in an industry notorious for cyclicality and heavy competition.  #-ad_banner-#Taking a closer look at the data reveals some broad differences in outlook among the individual names and an opportunity to profit from the current selloff. Capacity growth could moderate in some routes and oil may have topped out for the year.  One heavy-weight is trading for nearly half the valuation of its peers and is taking advantage of the situation to buy up its shares.  Diverging Outlooks For Regional Versus International Carriers The Air Transport Bureau reported in May that available seats per kilometer, the industry metric for capacity, grew by an annualized 9.6% in February on a year-over-year basis. The increase was significant because it was the first time in more than a year that capacity growth had outstripped passenger traffic. Airlines… Read More

Trading on headlines can be some of your best investments on the long- or short-side. Investors get so caught up in the herd mentality that even headlines with little real fundamental importance can lead to massive swings in a stock’s price.  When fundamentals reassert themselves, the shares can swing quickly in the other direction and investors stampede back into the stock to drive the price even further. #-ad_banner-#One of the most common headline risks for U.S. companies is litigation. For some, lawsuits have almost become a normal course of business to protect a company’s patents, contracts or business model. One… Read More

Trading on headlines can be some of your best investments on the long- or short-side. Investors get so caught up in the herd mentality that even headlines with little real fundamental importance can lead to massive swings in a stock’s price.  When fundamentals reassert themselves, the shares can swing quickly in the other direction and investors stampede back into the stock to drive the price even further. #-ad_banner-#One of the most common headline risks for U.S. companies is litigation. For some, lawsuits have almost become a normal course of business to protect a company’s patents, contracts or business model. One trading target recently saw its shares plummet on a lawsuit by its largest customer. The company is a market share leader in an industry with strong demographic tailwinds, but investors have headed for the exit on a lawsuit that may turn out to be insignificant.  Shares are trading at an 18% discount to fair value and the longer-term outlook is much higher.  In The War On Rising Healthcare Costs, This Leader Could Broker A Truce Express Scripts Holdings (Nasdaq: ESRX) is the largest pharmacy benefits manager (PBM) in the United States through a mail-order pharmacy and network of retailers. Read More

Few countries trade with so much volatility in investor sentiment as China. Investors are manic about watching economic reports from the world’s second largest economy, and the slightest change in statistics can mean a plunge in sentiment.  Shares trading on the Shanghai Stock Exchange are up 74% over the last ten years, but the long-term note masks some spectacular ups and downs over shorter periods. The index lost 28% of its value over the last nine months of 2011. And who can forget the meteoric boom over the year to June 2015 when the market surged 140%? #-ad_banner-#Investors have once… Read More

Few countries trade with so much volatility in investor sentiment as China. Investors are manic about watching economic reports from the world’s second largest economy, and the slightest change in statistics can mean a plunge in sentiment.  Shares trading on the Shanghai Stock Exchange are up 74% over the last ten years, but the long-term note masks some spectacular ups and downs over shorter periods. The index lost 28% of its value over the last nine months of 2011. And who can forget the meteoric boom over the year to June 2015 when the market surged 140%? #-ad_banner-#Investors have once again abandoned shares of Chinese companies despite strong economic fundamentals and valuation. I’ve already put together two trades on the theme for a gain of 54% and 45% in less than three months’ time. Now I’m going for the long-term trade on China for even stronger gains as fundamentals come back to drive shares higher.  Recent Economic Reports Have Investors Fleeing The release of three economic reports late May renewed fears of a hard landing for the Chinese economy. The official May manufacturing PMI was unchanged from April at 50.1 to mark the third month just barely above the… Read More

While the market has started pricing in a June rate hike by the Federal Reserve, it’s still putting odds of the Fed actually raising rates at less than a third. This contrasts with the hawkish commentary from several Fed officials lately, however, which leaves me with the feeling that the Fed is trying to ready markets for a change.  Merely the threat of a rate hike has forced a selloff in stocks over the last several years, and investors need to come to grips with the fact that the market may be underestimating the potential for higher rates sooner rather… Read More

While the market has started pricing in a June rate hike by the Federal Reserve, it’s still putting odds of the Fed actually raising rates at less than a third. This contrasts with the hawkish commentary from several Fed officials lately, however, which leaves me with the feeling that the Fed is trying to ready markets for a change.  Merely the threat of a rate hike has forced a selloff in stocks over the last several years, and investors need to come to grips with the fact that the market may be underestimating the potential for higher rates sooner rather than later. #-ad_banner-#A look at historical data and correlations to bond prices shows that in an environment of rising rates not all sectors are created equal, and some sectors may actually benefit from higher rates. Is your portfolio ready? Will A Surprise Rate Hike Spell Disaster For Stocks? Market expectations of a June hike have come up, but are still low despite evidence of a stronger economy and comments from Fed members. The CME Group FedWatch tool shows a market-based chance of just 28% for a June hike, up from 13% last month. While a June hike is still… Read More

I think it was philosopher George Santayana’s cousin who said, “Those who do not learn from history are doomed to lose money in the stock market.”  It’s amazing how quickly we forget the mistakes of the past, and now one of the biggest factors that led to the Great Recession is building up again. #-ad_banner-# A booming housing market and relaxing loan standards led to the worst economic collapse in nearly 80 years. And looking at some recent loan data gave me a… Read More

I think it was philosopher George Santayana’s cousin who said, “Those who do not learn from history are doomed to lose money in the stock market.”  It’s amazing how quickly we forget the mistakes of the past, and now one of the biggest factors that led to the Great Recession is building up again. #-ad_banner-# A booming housing market and relaxing loan standards led to the worst economic collapse in nearly 80 years. And looking at some recent loan data gave me a serious sense of deja vu. But rather than home loans, this time it is the auto loans market that’s headed for trouble. Auto Loans Headed For A Crash? Just as larger economic drivers sparked the housing boom, super-low interest rates and falling gasoline prices have caused a spike in car sales over the past five years. New car sales hit a record in 2015, while the average transaction price reached an all-time high of $34,428. Yet, sluggish wage growth and a stalling economic recovery have threatened the good times. Not wanting to see the party end, car makers and dealers have… Read More