Trying to perfectly time a bottom in the market, a sector or a stock can make a fool of any of us. Even investing gurus like Warren Buffett rarely try to call one. #-ad_banner-#But that doesn’t mean investors can’t uncover opportunities on the way down. Short-term panic often leads to discounted buys in companies with solid long-term fundamentals. One of my favorite options strategies allows traders to get into stocks at an even cheaper price or book a quick profit if shares turn up. 7 Billion Hungry Mouths and Counting Exceptional global harvests pushed grain… Read More

Trying to perfectly time a bottom in the market, a sector or a stock can make a fool of any of us. Even investing gurus like Warren Buffett rarely try to call one. #-ad_banner-#But that doesn’t mean investors can’t uncover opportunities on the way down. Short-term panic often leads to discounted buys in companies with solid long-term fundamentals. One of my favorite options strategies allows traders to get into stocks at an even cheaper price or book a quick profit if shares turn up. 7 Billion Hungry Mouths and Counting Exceptional global harvests pushed grain prices down to multiyear lows in 2014 and dragged related stocks down. PowerShares DB Agriculture ETF (NYSE: DBA) fell 15% last year from its April high and is now 47% below its 2008 high. Some may be worried about a farm bust like we saw in the 1980s. While another record harvest this year could send prices even lower, the 2014 Farm Act’s safety net provision should prevent massive losses. University of Nebraska economist Brad Luebben expects substantial payments to go out to farmers this year if prices stay low. U.S. farm… Read More

  When is bad news seen as good news? When the bad news is not quite as bad as had been feared.   #-ad_banner-#So when beverage maker The Coca-Cola Co. (NYSE: KO) posted flat quarterly results (compared to a year ago) that were still a few pennies ahead of consensus forecasts, shares received a nice 3% one-day pop. Pretty soon, that pop will turn into fizz.   That’s because investors are overlooking a dire warning by management regarding further weakness in the company’s core business. Coke has been a laggard for some time now. Shares have underperformed the S&P 500… Read More

  When is bad news seen as good news? When the bad news is not quite as bad as had been feared.   #-ad_banner-#So when beverage maker The Coca-Cola Co. (NYSE: KO) posted flat quarterly results (compared to a year ago) that were still a few pennies ahead of consensus forecasts, shares received a nice 3% one-day pop. Pretty soon, that pop will turn into fizz.   That’s because investors are overlooking a dire warning by management regarding further weakness in the company’s core business. Coke has been a laggard for some time now. Shares have underperformed the S&P 500 by nearly 24% over the last two years, and the road ahead looks equally daunting.   Coke’s Recent Performance Has Fizzled Coke’s beverage volumes grew 2% in 2013 and 2014, a downshift from the 4% growth rate seen in prior years. Demand for its carbonated beverages has been especially tepid. In fact, sparkling beverages have slid to 73% of total revenues, from 77% in 2009.   While global unit volumes increased 2% in 2014, net sales dropped 2% to $46 billion on a tough pricing environment. Operating income slumped an even deeper 5% as the company waits for its cost-cutting… Read More

No matter how well run a company is, sometimes there is nothing management can do to avoid steep losses. Sometimes these outside forces are so strong that investors write a stock off altogether and wonder if the industry will ever be profitable again. #-ad_banner-#Few industries were hit as hard by the Great Recession as recreational vehicles. The plummeting stock market could not have come at a worse time for baby boomers approaching retirement, and fear over retirement savings caused motorhome shipments to drop more than 50% between 2007 and 2009. Even when gasoline prices fell during the recession, they quickly… Read More

No matter how well run a company is, sometimes there is nothing management can do to avoid steep losses. Sometimes these outside forces are so strong that investors write a stock off altogether and wonder if the industry will ever be profitable again. #-ad_banner-#Few industries were hit as hard by the Great Recession as recreational vehicles. The plummeting stock market could not have come at a worse time for baby boomers approaching retirement, and fear over retirement savings caused motorhome shipments to drop more than 50% between 2007 and 2009. Even when gasoline prices fell during the recession, they quickly recovered, making cross-country trips unrealistic for many Americans. One company has been a symbol of the industry for more than 50 years, but it came close to bankruptcy during the recession. Now shares look ready to move higher as some of the forces that worked against it change in its favor. Back From the Dead and Ready for 2 Strong Catalysts Winnebago Industries (NYSE: WGO) has been a leader in recreational vehicles since 1958. It has been the top-selling motorhome brand every year since 1974, but even its status as an American icon looked like it might not be enough… Read More

  There are a pair of solid reasons why I developed my skills as a stock analyst: I don’t have much faith in other analysts and money managers, and nobody is going to care as much about managing my money as I am.   #-ad_banner-#But there are a few analysts and money managers that I do respect. Adam Parker, chief U.S. equity strategist at Morgan Stanley is one of them, as well as Abby Joseph Cohen of Goldman Sachs.   Few money managers, even among those that I follow, are able to say they have consistently beaten the market. In… Read More

  There are a pair of solid reasons why I developed my skills as a stock analyst: I don’t have much faith in other analysts and money managers, and nobody is going to care as much about managing my money as I am.   #-ad_banner-#But there are a few analysts and money managers that I do respect. Adam Parker, chief U.S. equity strategist at Morgan Stanley is one of them, as well as Abby Joseph Cohen of Goldman Sachs.   Few money managers, even among those that I follow, are able to say they have consistently beaten the market. In fact, I can only think of one and he just made a recommendation that I cannot ignore.   A Market Oracle Makes A Bold Call To my knowledge, you won’t find a money manager or analyst that has surpassed the stock-picking savvy of Bill Miller, chairman and chief investment officer of Legg Mason Capital Management. Miller runs his firm’s Legg Mason Value Trust, which beat the S&P 500 for 15 consecutive years, making him one of the most widely-respected managers on Wall Street.   Miller’s historic run came to an end in… Read More

StreetAuthority expert Jimmy Butts made a prescient forecast in October 2014 when he warned investors about the perils of initial public offerings (IPOs).   #-ad_banner-#To be sure, 2014 was a banner year for IPOs.   In his report, Jimmy laid bare the process by which Wall Street creates fervor for upcoming share issues through “road shows” and media hype.   Investors buy the newly issued shares from company insiders and underwriters and get left holding the bag when they are unable to find the proverbial “greater fool.”   Facebook, Inc. (Nasdaq: FB) is… Read More

StreetAuthority expert Jimmy Butts made a prescient forecast in October 2014 when he warned investors about the perils of initial public offerings (IPOs).   #-ad_banner-#To be sure, 2014 was a banner year for IPOs.   In his report, Jimmy laid bare the process by which Wall Street creates fervor for upcoming share issues through “road shows” and media hype.   Investors buy the newly issued shares from company insiders and underwriters and get left holding the bag when they are unable to find the proverbial “greater fool.”   Facebook, Inc. (Nasdaq: FB) is the prime example, with shares surging on the first day of trading, only to drop by more than 50% over the following three months of trading. But just as Facebook may be the poster child for not getting caught up in the IPO frenzy, it’s also the perfect illustration of a stock that can turn itself around after the post-IPO swoon.   And one mega-IPO from last year may have just found its Facebook moment.   This Global Powerhouse Has Lost Its IPO-Shine In his look at IPO froth, Jimmy took note of Alibaba Group Holding Ltd… Read More

  When analysts and pundits start talking about a bubble, most investors shrug it off as the usual market sensationalism.   #-ad_banner-#When a member of the Federal Reserve Board starts talking about a bubble, you may want to sit up and take notice. And when it is a bubble in the world’s most liquid investment, which serves as a benchmark for pricing in the $67 trillion global market for bonds, you may even want to start thinking about worst-case scenarios.   In fact, things have gotten so far out of whack that volatility in this “safe-haven” investment is now higher… Read More

  When analysts and pundits start talking about a bubble, most investors shrug it off as the usual market sensationalism.   #-ad_banner-#When a member of the Federal Reserve Board starts talking about a bubble, you may want to sit up and take notice. And when it is a bubble in the world’s most liquid investment, which serves as a benchmark for pricing in the $67 trillion global market for bonds, you may even want to start thinking about worst-case scenarios.   In fact, things have gotten so far out of whack that volatility in this “safe-haven” investment is now higher than volatility for stocks in the S&P 500.   Is This The Single-Biggest Threat To The Market? The market for U.S. government debt tops $12.5 trillion, the most liquid of any investment and the benchmark for all other bond rates. The market for treasuries serves as a quick pricing mechanism for  other bonds and is known as the safe-haven investment in times of volatility.   But something has changed in the market for U.S. government debt, and the consequences could shock global markets. What’s worse, no one is talking about it.   From my viewpoint, it might… Read More

“This is what competitive devaluation looks like.” #-ad_banner-#That’s what Bloomberg anchor Olivia Sterns said Wednesday morning, referring to news that China’s central bank was cutting rates. In an effort to revive slowing economic growth, the People’s Bank of China decided to cut its reserve requirement ratio (RRR) — the amount of deposits banks must hold in reserve rather than lend out — by 0.5% for large commercial banks and 1% for smaller banks. This is the first time the bank has cut the ratio in almost three years, and its effort is estimated to increase cash in the system by… Read More

“This is what competitive devaluation looks like.” #-ad_banner-#That’s what Bloomberg anchor Olivia Sterns said Wednesday morning, referring to news that China’s central bank was cutting rates. In an effort to revive slowing economic growth, the People’s Bank of China decided to cut its reserve requirement ratio (RRR) — the amount of deposits banks must hold in reserve rather than lend out — by 0.5% for large commercial banks and 1% for smaller banks. This is the first time the bank has cut the ratio in almost three years, and its effort is estimated to increase cash in the system by 700 billion yuan, or $112 billion. China’s economic growth, while still relatively strong around 7%, has been slowing for the past few years, but the central bank had previously been reluctant to increase monetary stimulus. So, why ease up now? In short, because everyone else is doing it. When the buying power of one currency falls, it makes imports from other countries much more expensive. Not only do the locals buy more of their domestic products, but so do other foreign markets, leading to a boost in demand for domestic products and employment. It does a pretty good job of… Read More

  Consumer spending in emerging markets has been growing at three times the rate of the growth seen in developed economies, according to consulting firm McKinsey & Co.   #-ad_banner-#That trend has compelled many U.S. companies to steadily expand their sales footprint in these economies. The net result:  foreign sales at companies in the S&P 500 rose to more than 50% of sales today, from 30% of total sales in 2000.   But the outperforming U.S. economy and the strong dollar has thrown a wrench in those plans. Foreign earnings have hit U.S. companies as international markets lag and weaker… Read More

  Consumer spending in emerging markets has been growing at three times the rate of the growth seen in developed economies, according to consulting firm McKinsey & Co.   #-ad_banner-#That trend has compelled many U.S. companies to steadily expand their sales footprint in these economies. The net result:  foreign sales at companies in the S&P 500 rose to more than 50% of sales today, from 30% of total sales in 2000.   But the outperforming U.S. economy and the strong dollar has thrown a wrench in those plans. Foreign earnings have hit U.S. companies as international markets lag and weaker currencies get translated into fewer dollars every quarter.   The Procter & Gamble Company’s (NYSE: PG) CFO Jon Moeller pointed to foreign exchange as the primary challenge facing the company and the reason it missed earnings expectations by 6% in the most recent fourth quarter. The company books two-thirds of its sales from outside the United States.  Foreign exchange could reduce 2015 sales by as much as 5% at P&G and lead to a 12% hit to earnings.   Shares of Pfizer, Inc. (NYSE: PFE) slid after the company reported a 3.5% decline in earnings in 2014, thanks to a… Read More

  In his six years in office, President Obama has stressed his support for strict environmental regulation. He has expanded powers for the Environmental Protection Agency and has repeatedly deferred approval for the Keystone XL Pipeline System.   #-ad_banner-#One key stat: The number of oil and gas leases approved during  the first three years fell by more than 40%, compared to the final three years of President Bush’s administration. Drilling permit approvals on federal lands fell by a similar amount.   In addition to the regulatory headwind, falling oil prices are also impeding drilling permit activity. Against this one-two punch,… Read More

  In his six years in office, President Obama has stressed his support for strict environmental regulation. He has expanded powers for the Environmental Protection Agency and has repeatedly deferred approval for the Keystone XL Pipeline System.   #-ad_banner-#One key stat: The number of oil and gas leases approved during  the first three years fell by more than 40%, compared to the final three years of President Bush’s administration. Drilling permit approvals on federal lands fell by a similar amount.   In addition to the regulatory headwind, falling oil prices are also impeding drilling permit activity. Against this one-two punch, some analysts are questioning the emergent theme of U.S. energy independence and shale production.   But is an unlikely supporter about to throw the sector a lifeline?   Is the U.S. Energy Revolution Dead? Though OPEC thus far remains steadfast in its output quotas, the global energy picture still appears to be poised for long-term supply shortages. Energy firm BP Plc (NYSE: BP) forecasts a global production deficit for every period from 2015 to 2035 as global economic growth continues to require more energy. Total liquids consumption is forecast to increase at a… Read More

Above all the earnings and geopolitical news last week, the big headline was a turnover in the executive suite of the Golden Arches.  #-ad_banner-#Under the oversight of Don Thompson, the $90 billion fast-food behemoth posted declining sales. And the stock price languished in 2014 as the S&P 500 posted a double-digit gain for the year. After nearly two and a half years at the top, investors blamed Thompson for a string of poor menu rollouts and almost five consecutive quarters of lower U.S. same-store sales. McDonald’s (NYSE: MCD) reported a 21% drop in global profits when it announced… Read More

Above all the earnings and geopolitical news last week, the big headline was a turnover in the executive suite of the Golden Arches.  #-ad_banner-#Under the oversight of Don Thompson, the $90 billion fast-food behemoth posted declining sales. And the stock price languished in 2014 as the S&P 500 posted a double-digit gain for the year. After nearly two and a half years at the top, investors blamed Thompson for a string of poor menu rollouts and almost five consecutive quarters of lower U.S. same-store sales. McDonald’s (NYSE: MCD) reported a 21% drop in global profits when it announced fourth-quarter earnings earlier this month, sending shares 1.5% lower on the day. Investor disappointment was short-lived though, and MCD jumped more than 5% when the company announced that Chief Brand Officer Steve Easterbrook would take over as CEO in March. But can the 47-year-old Brit remake the American fast-food icon?   Competition has been tough in the space for years, and sales were already in decline when Thompson took over in July 2012. Easterbrook had been successful on several fronts at McDonalds UK, but it may prove more difficult to turn a global ship. But for investors looking… Read More