Analyst Articles

There’s an old marketing adage that the best way to make money is through health, wealth or romance — and it’s proving as true in the internet age as it was on Madison Avenue. While retail sales stumble and the economy inches along, people will always pay for advice and services to make them healthier, wealthier and to find that one true love. The first large-scale computer dating system was created nearly 60 years ago, but the online dating industry seems to have found its sweet spot in millennials making it the best stock to invest in right now. The… Read More

There’s an old marketing adage that the best way to make money is through health, wealth or romance — and it’s proving as true in the internet age as it was on Madison Avenue. While retail sales stumble and the economy inches along, people will always pay for advice and services to make them healthier, wealthier and to find that one true love. The first large-scale computer dating system was created nearly 60 years ago, but the online dating industry seems to have found its sweet spot in millennials making it the best stock to invest in right now. The share of 18- to 24-year olds that have gone online to find love has tripled since 2013. Nearly a third of the group has used online dating, almost twice the proportion in the general population.  The addressable market of singles with internet access tops 500 million in North America and Western Europe alone, and is expected to grow to 672 million by 2019. While buyers in most sectors remain price conscious more than seven years after the Great Recession, dating sites are able to charge premium subscriptions up to $60 per month.  #-ad_banner-#One company is the undisputed leader… Read More

One of America’s beloved companies has produced an annualized return of 12.8% over the past three decades, easily beating the 7.5% annual return on the S&P 500.  From its 2011 lows to its all-time high in August 2015, the stock surged more than 350% as investors clamored to grab their stake in one of the world’s most recognized brands. And during this time, its trailing price-to-earnings (P/E) ratio more than doubled. As a die-hard value investor, I found it difficult to justify buying shares given how expensive they were. But now, with the stock trading at a nearly… Read More

One of America’s beloved companies has produced an annualized return of 12.8% over the past three decades, easily beating the 7.5% annual return on the S&P 500.  From its 2011 lows to its all-time high in August 2015, the stock surged more than 350% as investors clamored to grab their stake in one of the world’s most recognized brands. And during this time, its trailing price-to-earnings (P/E) ratio more than doubled. As a die-hard value investor, I found it difficult to justify buying shares given how expensive they were. But now, with the stock trading at a nearly 20% discount to its all-time high, I’m ready to pull the trigger. The House of Mouse Is Finally Affordable Shares of The Walt Disney Company (NYSE: DIS) have been under pressure since August, when CEO Bob Iger acknowledged subscriber losses in the media segment. This segment accounts for 45% of sales, and the warning sent shares tumbling. #-ad_banner-# After a quick rebound, shares plunged again when a November regulatory filing confirmed the negative trend. For instance, Disney’s most profitable channel, ESPN,… Read More

Regulatory hurdles have always been a challenge for corporate mergers and acquisitions, but Washington turned the game upside down recently with two sets of rules from the Treasury Department. As with any new and far-reaching regulatory oversight, there will not only be losers affected by the rules, but also winners that are able to take advantage of the new competitive landscape. The Treasury released two sets of rules on April 4: one that pushes profits to low-tax countries in a technique called ‘earnings stripping’ and another that cracks down on corporate inversions. In an inversion, a U.S. company acquires or… Read More

Regulatory hurdles have always been a challenge for corporate mergers and acquisitions, but Washington turned the game upside down recently with two sets of rules from the Treasury Department. As with any new and far-reaching regulatory oversight, there will not only be losers affected by the rules, but also winners that are able to take advantage of the new competitive landscape. The Treasury released two sets of rules on April 4: one that pushes profits to low-tax countries in a technique called ‘earnings stripping’ and another that cracks down on corporate inversions. In an inversion, a U.S. company acquires or merges with a foreign rival and then moves its headquarters overseas to a country with a much lower corporate tax schedule. #-ad_banner-#The new attack against inversions potentially puts U.S. companies at a disadvantage when bidding on foreign companies because they won’t get the benefit of operating in a lower-tax jurisdiction. That opens the door to foreign rivals that can snap up assets without competition from U.S. firms.  One best of breed Israeli company is doing just that to secure a huge lead against others in the sector. This Generic Drug Powerhouse Is About To Get Even Bigger The new… Read More

Short seller Carson Block of Muddy Waters Capital sparked fears of banking weakness when he spoke negatively about Bank of the Ozarks (Nasdaq: OZRK) at the 2016 Sohn Investment Conference last week. Block announced a short position in the stock, warning that its portfolio of real estate construction loans were overextended in markets that may have already peaked.  OZRK plummeted following Block’s remarks, leading to the worst weekly performance in the SPDR S&P Bank ETF (NYSE: KBE) since early January. #-ad_banner-#Investors have turned increasingly cautious on banking stocks lately, but despite a weak April jobs report, economic and lending data… Read More

Short seller Carson Block of Muddy Waters Capital sparked fears of banking weakness when he spoke negatively about Bank of the Ozarks (Nasdaq: OZRK) at the 2016 Sohn Investment Conference last week. Block announced a short position in the stock, warning that its portfolio of real estate construction loans were overextended in markets that may have already peaked.  OZRK plummeted following Block’s remarks, leading to the worst weekly performance in the SPDR S&P Bank ETF (NYSE: KBE) since early January. #-ad_banner-#Investors have turned increasingly cautious on banking stocks lately, but despite a weak April jobs report, economic and lending data favors a bullish outlook on banks. And the increased volatility is presenting a rare opportunity for income investors. Real Estate Market Looks Strong While Block hasn’t been able to recreate the success he found shorting Chinese firms, the market still gives him plenty of attention. Shares of OZRK plunged as much as 15% on the day of his presentation, but managed to close with just a 4% loss, suggesting investors didn’t completely buy his logic. ‚Äč Upon closer inspection, Block’s negative outlook on commercial real estate and banking just doesn’t pan out. The U.S. economy is one of the strongest… Read More

Part of investing is taking advantage of temporary opportunities while they last. For the past several years, corporations have been able to issue debt at super-low rates to fund share buybacks, which in turn, boosts earnings per share.  Along with dividends, buybacks have contributed to a huge amount of cash being returned to shareholders, helping make up for a sluggish global economy and anemic sales growth. With low interest rates likely to persist, we still have a chance to play this theme.  However, buybacks and dividends aren’t enough to keep investors… Read More

Part of investing is taking advantage of temporary opportunities while they last. For the past several years, corporations have been able to issue debt at super-low rates to fund share buybacks, which in turn, boosts earnings per share.  Along with dividends, buybacks have contributed to a huge amount of cash being returned to shareholders, helping make up for a sluggish global economy and anemic sales growth. With low interest rates likely to persist, we still have a chance to play this theme.  However, buybacks and dividends aren’t enough to keep investors from losing money in the long run if a company offers nothing more than financial parlor tricks. That’s why I look for companies with strong brand leadership and attractive valuations, which should help me capture capital gains in addition to consistent income. #-ad_banner-# And I’ve found just such an opportunity in the recent retail sales meltdown. Williams-Sonoma (NYSE: WSM) is a leader in the $100 billion home furnishings market with more than 600 retail locations and a solid online… Read More

Shares of Twitter (NYSE: TWTR) have been slammed lately after weak user growth and an inability to monetize its platform led investors to question the future.  The big move in shares of the 140-character social giant is nothing new. Shares have moved higher or lower by 20% or more in one week three times in the past year. The concern is that Twitter has yet to effectively monetize its massive user base and that growth in monthly active users (MAUs) may be slowing.  #-ad_banner-#The concern over social media monetization is also a familiar story. It was the same issue that… Read More

Shares of Twitter (NYSE: TWTR) have been slammed lately after weak user growth and an inability to monetize its platform led investors to question the future.  The big move in shares of the 140-character social giant is nothing new. Shares have moved higher or lower by 20% or more in one week three times in the past year. The concern is that Twitter has yet to effectively monetize its massive user base and that growth in monthly active users (MAUs) may be slowing.  #-ad_banner-#The concern over social media monetization is also a familiar story. It was the same issue that led a 53% nightmare in shares of Facebook (Nasdaq: FB) during its post-IPO 2012 plunge, but has turned into 550% return since August of that year. Can Twitter do the same or should investors be worried? Turns out, higher revenue might not be far away, and the company may be hiding a secret user base that dwarfs reported users. Shares could be set to jump as early as this fall with the potential to double.  Twitter’s Secret Users And Real Power Of The Platform Even as the company reported a 36% increase in quarterly revenue and adjusted EBITDA growth… Read More

When market bubbles form, they usually start for a reason. The tech boom was fueled by revolutionary opportunities with the internet, and the housing bubble achieved liftoff from historically low interest rates and relaxed loan standards. The problem is that investors quickly lose sight of reality and the enthusiasm for a sector becomes its own driver to more gains. Valuations are taken to the extreme and the market uses every excuse it can find to explain why fundamentals don’t matter. #-ad_banner-#Eventually, something happens to weigh on the exuberance and investors have to reevaluate the real value of the investment… sending… Read More

When market bubbles form, they usually start for a reason. The tech boom was fueled by revolutionary opportunities with the internet, and the housing bubble achieved liftoff from historically low interest rates and relaxed loan standards. The problem is that investors quickly lose sight of reality and the enthusiasm for a sector becomes its own driver to more gains. Valuations are taken to the extreme and the market uses every excuse it can find to explain why fundamentals don’t matter. #-ad_banner-#Eventually, something happens to weigh on the exuberance and investors have to reevaluate the real value of the investment… sending share prices tumbling back to fundamentals and historic averages. One such bubble has been forming since stocks started to recover in 2009 and may be about to burst. In fact, this bubble has reached a point only seen twice in the last century… and both times turned out to be buying opportunities. Safety Stocks May Not Be So Safe Investors normally rush to low volatility and defensive stocks during market crashes, taking cover from uncertainty in other themes. The 30-year trend in lower interest rates, combined with historic monetary easing after the financial crisis, has brought a shift in… Read More

Shares of Tesla Motors (Nasdaq: TSLA) have been unstoppable since its February earnings release, when Elon Musk forecast the company would be profitable by the end of 2016 and used the opportunity to announce the launch of the company’s Model 3. Even missing its goal of delivering 16,000 vehicles for the quarter (the company came in 1,180 short) when it released 1st quarter 2016 earnings last week couldn’t stop the stock. Shares increased 3.4% on the day as the company affirmed its full-year delivery goal and analysts clung to estimates for $1.29 in per share earnings for the year. #-ad_banner-#But… Read More

Shares of Tesla Motors (Nasdaq: TSLA) have been unstoppable since its February earnings release, when Elon Musk forecast the company would be profitable by the end of 2016 and used the opportunity to announce the launch of the company’s Model 3. Even missing its goal of delivering 16,000 vehicles for the quarter (the company came in 1,180 short) when it released 1st quarter 2016 earnings last week couldn’t stop the stock. Shares increased 3.4% on the day as the company affirmed its full-year delivery goal and analysts clung to estimates for $1.29 in per share earnings for the year. #-ad_banner-#But blind exuberance for future sales may be hiding some major risks for the company. Worse yet, a competitor may be about to beat Tesla to the punch for mass market electric cars… and it’s trading at a 97% discount to the upstart company’s valuation.   Tesla “Books” $10 Billion In Sales On The Model 3 Investors and analysts have jumped back into Tesla, sending the shares 81% higher since the February low on the promise of profitability and the company’s move into the mass market. The company started taking orders for the $35,000 Model 3 this month, reporting 276,000… Read More

The price of a barrel of oil has rebounded from February lows, but most analysts are not yet ready to sound the all-clear on the sector. Promises of a production cap from OPEC and Russia mean little without action, and North American production has yet to come down appreciably. #-ad_banner-#The plunge from $105 per barrel has been a nightmare for exploration & production (E&P) companies, sinking the price of their shares along with revenue.  However, it hasn’t all been dark clouds for companies in the space. In fact, a few are taking advantage of fear in the market to position… Read More

The price of a barrel of oil has rebounded from February lows, but most analysts are not yet ready to sound the all-clear on the sector. Promises of a production cap from OPEC and Russia mean little without action, and North American production has yet to come down appreciably. #-ad_banner-#The plunge from $105 per barrel has been a nightmare for exploration & production (E&P) companies, sinking the price of their shares along with revenue.  However, it hasn’t all been dark clouds for companies in the space. In fact, a few are taking advantage of fear in the market to position themselves for faster growth when energy prices rebound. These proactive companies will emerge as some of the most financially fit, and investors may want to follow their lead.  A Financial Silver Lining On Energy Storm Clouds The price of oil has come down slightly from its 50% rally off of February lows. The industry isn’t yet out of the woods after price drops of nearly 75% in less than two years, but there does seem to be a renewed optimism in energy.  That sense of optimism is giving companies in the E&P space the power to do… Read More

The water crisis in Flint, Mich., started nearly two years ago but recently reached a boiling point with massive protests and national media coverage. Corrosion in underground lead service pipes and poor water quality have been blamed for an outbreak of Legionnaires’ disease that killed at least 10 people. The city has issued multiple warnings over the past year, while lawsuits are piling up for everything from civil rights violations to property damage and health risks. One lawsuit even requires all the lead water lines to be replaced at no cost to customers.  While it’s unclear how much the crisis… Read More

The water crisis in Flint, Mich., started nearly two years ago but recently reached a boiling point with massive protests and national media coverage. Corrosion in underground lead service pipes and poor water quality have been blamed for an outbreak of Legionnaires’ disease that killed at least 10 people. The city has issued multiple warnings over the past year, while lawsuits are piling up for everything from civil rights violations to property damage and health risks. One lawsuit even requires all the lead water lines to be replaced at no cost to customers.  While it’s unclear how much the crisis will cost Flint, it highlights a serious issue across the entire country — one that could cost water utilities hundreds of billions in infrastructure repair. Water Utility Problems Go Far Beyond Flint Flint’s water problems began in April 2014, when the city decided to switch its water source from Lake Huron to the Flint River to save money. The change was noticeable and residents immediately started complaining about discolored and foul-smelling drinking water. But it wasn’t until late last year that the issue caught national media attention and uncovered a problem that extended far beyond Flint. Read More