The recovery in U.S. housing has been the pervasive theme since the financial collapse and has offered some of the best returns in the market. Extreme uncertainty over subprime loans and falling real estate prices drove homebuilders and building products to fire-sale prices by 2011. Hindsight, curse that it is, has most of us looking back at the triple-digit gains in some housing-related companies over the two years to mid-2013 and wondering why we couldn’t see the writing on the wall. #-ad_banner-#But you shouldn’t beat yourself up too badly — you just might get another chance. The SPDR S&P Homebuilders… Read More

The recovery in U.S. housing has been the pervasive theme since the financial collapse and has offered some of the best returns in the market. Extreme uncertainty over subprime loans and falling real estate prices drove homebuilders and building products to fire-sale prices by 2011. Hindsight, curse that it is, has most of us looking back at the triple-digit gains in some housing-related companies over the two years to mid-2013 and wondering why we couldn’t see the writing on the wall. #-ad_banner-#But you shouldn’t beat yourself up too badly — you just might get another chance. The SPDR S&P Homebuilders Index Fund (NYSE: XHB) has underperformed the market with a gain of just 11% over the last year and a loss of 1% over the past six months. The weakness is in stark contrast to the 60% gain the index posted in the two years to mid-2013, along with triple-digit gains in shares of homebuilders like KB Homes (NYSE: KBH) and Hovanian Enterprises (NYSE: HOV). Weakness in housing-related stocks follows abysmal housing data over the last six months of 2013 and the first quarter of this year. Against winter weakness and the disappointing spring selling season comes strong evidence of… Read More

It looks like Barack Obama is crafting a legacy as the Climate Change President. #-ad_banner-#He has granted the Environmental Protection Agency new powers, and his administration has delayed TransCanada’s (NYSE: TRP) Keystone XL pipeline project longer than most anyone expected. The president rolled out his most sweeping policy yet this month, proposing that the EPA mandate a 30% reduction in carbon emissions from power plants by 2030. The EPA puts the cost of the new proposal as high as $8.8 billion but contends that savings to people’s health would more than offset that expense. This week, the U.S. Supreme Court… Read More

It looks like Barack Obama is crafting a legacy as the Climate Change President. #-ad_banner-#He has granted the Environmental Protection Agency new powers, and his administration has delayed TransCanada’s (NYSE: TRP) Keystone XL pipeline project longer than most anyone expected. The president rolled out his most sweeping policy yet this month, proposing that the EPA mandate a 30% reduction in carbon emissions from power plants by 2030. The EPA puts the cost of the new proposal as high as $8.8 billion but contends that savings to people’s health would more than offset that expense. This week, the U.S. Supreme Court upheld the EPA’s power to regulate greenhouse gases. Applying the law would increase the number of emitters covered by the rules to more than 80,000 from fewer than 280 and could subject businesses to an average of up to $60,000 in increased costs. As Justice Antonin Scalia said, “The EPA is getting almost everything it wanted in this case.” The Death Of ‘King Coal’? According to the U.S. Energy Information Administration, coal was used to generate more than half the country’s electricity as recently as 2005. The boom in natural gas production and regulations on emissions drove that percentage… Read More

Business development companies (BDCs) that lend to small and mid-size businesses and pay out most of their income as dividends often find their way onto my income screen — but they’ve gotten no love from the markets this year.  #-ad_banner-#​BDC shareholders have been punished with a nearly 4% decline in prices across the category against a 6% rise in the S&P 500. Even the stock I’m going to discuss today, while it has outperformed its peer group, has had to fight an ever increasing onslaught of short sellers. Some of the recent weakness is understandable. The U.S. Read More

Business development companies (BDCs) that lend to small and mid-size businesses and pay out most of their income as dividends often find their way onto my income screen — but they’ve gotten no love from the markets this year.  #-ad_banner-#​BDC shareholders have been punished with a nearly 4% decline in prices across the category against a 6% rise in the S&P 500. Even the stock I’m going to discuss today, while it has outperformed its peer group, has had to fight an ever increasing onslaught of short sellers. Some of the recent weakness is understandable. The U.S. economy actually shrank 1% in the first quarter, and the International Monetary Fund just cut its 2014 outlook for GDP growth to 2%, saying the country would not likely return to full employment until 2017.  That doesn’t sound like the kind of environment for business development, and investors are worried that the high dividend yields offered by BDCs are unsustainable. (In a recent look at his favorite BDC, my colleague Adam Fischbaum identified yet another factor in the sector’s slump.) The problem with this thesis is that the economic environment has improved drastically over the past couple of months and… Read More

The build-out of energy pipelines and infrastructure continues to be one of the most underestimated plays in the market. Companies in the oil and gas transportation industry are spending billions of dollars every year to increase storage capacity and stretch pipelines across the country.  #-ad_banner-#Most of these companies are structured as tax-efficient master limited partnerships (MLPs), which are one of my favorite investment vehicles and account for nearly 15% of my personal portfolio.  However, the huge increase in capital expenditures over the past few years has limited distributions, even amid historic energy production and pipeline volume. But the… Read More

The build-out of energy pipelines and infrastructure continues to be one of the most underestimated plays in the market. Companies in the oil and gas transportation industry are spending billions of dollars every year to increase storage capacity and stretch pipelines across the country.  #-ad_banner-#Most of these companies are structured as tax-efficient master limited partnerships (MLPs), which are one of my favorite investment vehicles and account for nearly 15% of my personal portfolio.  However, the huge increase in capital expenditures over the past few years has limited distributions, even amid historic energy production and pipeline volume. But the build-out and spending won’t last forever.  Once the infrastructure is in place, it will last for decades with regular maintenance — and these companies could see their distributable cash flow jump. Many of these partnerships already pay yields above 5%, but one of my favorite pays a whopping 7%.  Not only does it pay a higher yield, but the market is currently mispricing shares — and insiders are increasing their own stake in the parent company.  Short-Term Disconnect, Long-Term Gains Kinder Morgan (NYSE: KMI) owns the general partner and incentive distribution rights of Kinder Morgan Energy Partners (NYSE: KMP)… Read More

Investing in specific markets or regions has always been about one thing: the trade-off for higher returns in emerging markets and lower risk in developed markets.  #-ad_banner-#Emerging markets like the BRIC nations — Brazil, Russia, India and China — have long promised high rates of economic growth and soaring stock values. Unfortunately, as any emerging-markets investor during the past couple of years can tell you, these markets are also likely to underperform spectacularly on fears of a debt bubble or geopolitical problems.  In contrast, developed markets like the United States and Europe offer relative peace of mind but… Read More

Investing in specific markets or regions has always been about one thing: the trade-off for higher returns in emerging markets and lower risk in developed markets.  #-ad_banner-#Emerging markets like the BRIC nations — Brazil, Russia, India and China — have long promised high rates of economic growth and soaring stock values. Unfortunately, as any emerging-markets investor during the past couple of years can tell you, these markets are also likely to underperform spectacularly on fears of a debt bubble or geopolitical problems.  In contrast, developed markets like the United States and Europe offer relative peace of mind but weaker returns over the long run. An investment in the iShares MSCI EAFE (NYSE: EFA), an exchange-traded fund invested in developed markets, over the past 10 years would have exposed you to just three-quarters the volatility of the iShares Emerging Markets Fund (NYSE: EEM) — but yielded a compound annualized return of just 7%.  However, there’s a way to combine the rapid growth of emerging markets and the safety of developed markets — and you can find it in one country.  This year marks the country’s 23rd consecutive year of economic growth. This country’s stable political backdrop and investor-friendly environment… Read More

Investing in small-cap tech companies is all about finding a stock that fits one of two criteria…  #-ad_banner-#You’re looking for a company with the next great breakthrough product — or a company that would make an ideal acquisition target.  Looking for that next great product often requires the work of an army of analysts with years of industry R&D experience. The alternative is to look for companies with a competitive niche product that can stand alone but also fit as an acquisition target for a larger firm.  Tech giants like Intel (Nasdaq: INTC) and Apple (Nasdaq: AAPL) have… Read More

Investing in small-cap tech companies is all about finding a stock that fits one of two criteria…  #-ad_banner-#You’re looking for a company with the next great breakthrough product — or a company that would make an ideal acquisition target.  Looking for that next great product often requires the work of an army of analysts with years of industry R&D experience. The alternative is to look for companies with a competitive niche product that can stand alone but also fit as an acquisition target for a larger firm.  Tech giants like Intel (Nasdaq: INTC) and Apple (Nasdaq: AAPL) have development budgets of their own… but often the real creative ideas come from acquisitions.  Analyzing the 500-plus technology companies with market capitalizations of less than $1 billion may seem like an impossible task — but there is one trick that makes it much easier…  And it just led me to my next investment. Despite the flood of merger and acquisition activity in the market over the past months, buying or combining with another company can be risky business. That’s why many tech companies first collaborate with prospective targets before they consider an acquisition.  A partnership provides a test run for… Read More

Every once in a while the markets hand you an investment that practically screams buy or sell.  #-ad_banner-#Unfortunately, it’s usually only in hindsight that it becomes so obvious… but once in a while, the market gives you the clues that an investment could go much higher. The investors savvy enough to catch on are anointed gurus as the rest of us wonder why we didn’t see the writing on the wall.  While some of these “no-brainer” investments jump spectacularly, leaving little opportunity for later investors to profit, others are more gradual in their rise. While shares of this… Read More

Every once in a while the markets hand you an investment that practically screams buy or sell.  #-ad_banner-#Unfortunately, it’s usually only in hindsight that it becomes so obvious… but once in a while, the market gives you the clues that an investment could go much higher. The investors savvy enough to catch on are anointed gurus as the rest of us wonder why we didn’t see the writing on the wall.  While some of these “no-brainer” investments jump spectacularly, leaving little opportunity for later investors to profit, others are more gradual in their rise. While shares of this company have more than doubled since my colleague David Goodboy highlighted the opportunity in last June (and again in December), the investment I’m thinking of could still have much higher to go — and soon. Too Big To Scale In its most explicit acknowledgement yet that talk of winding down the Federal National Mortgage Association (OTC: FNMA) and the Federal Home Loan Mortgage Corp. (OTC: FMCC) — or Fannie Mae and Freddie Mac, as they’re more commonly known — is futile, the key regulator for the government-supported enterprises (GSEs) recently said it would not reduce the size of the… Read More

The crisis in Ukraine has gone on far longer than anyone thought it would and shows little sign of ending. While Russia has pulled its troops back from the border, there is good reason to believe that tensions will persist and rhetoric will continue to heat up on both sides. #-ad_banner-#It could get real ugly real fast — if not for the fact that both sides desperately want to avoid an escalation. The eurozone sends 7.4% of its exports to Russia and receives 12% of its total imports, mostly in energy products. Russia sells more than half (53%)… Read More

The crisis in Ukraine has gone on far longer than anyone thought it would and shows little sign of ending. While Russia has pulled its troops back from the border, there is good reason to believe that tensions will persist and rhetoric will continue to heat up on both sides. #-ad_banner-#It could get real ugly real fast — if not for the fact that both sides desperately want to avoid an escalation. The eurozone sends 7.4% of its exports to Russia and receives 12% of its total imports, mostly in energy products. Russia sells more than half (53%) of its exports and receives 42% of its imports from the region.  Russia may fall into a technical recession on second-quarter GDP results, and Europe just pulled itself out of more than a year of declining economic activity. Neither can afford the loss of an important trading partner.  The competing economic and social forces could mean a protracted standoff. And that could mean big changes to oil exploration in Europe — and one company in particular. Russia has responded to sanctions by threatening a cut to energy exports. The eurozone depends on imports from Russia for 40% of its natural… Read More

Today’s kids are different than when you and I grew up. They’re computer-savvy, smartphone-savvy… in fact, at first glance, they almost resemble mini-adults. #-ad_banner-#It’s no surprise, then, that sales for toy makers have been sluggish over the past few years. Add in the fact that stagnant wages have parents watching their wallets when it comes to spending on toys for their kids, and it might seem wise for investors to stay away from this space. Big mistake. The toy industry is still a $22 billion business in the U.S. And with the licensing deals that come from movie and game… Read More

Today’s kids are different than when you and I grew up. They’re computer-savvy, smartphone-savvy… in fact, at first glance, they almost resemble mini-adults. #-ad_banner-#It’s no surprise, then, that sales for toy makers have been sluggish over the past few years. Add in the fact that stagnant wages have parents watching their wallets when it comes to spending on toys for their kids, and it might seem wise for investors to stay away from this space. Big mistake. The toy industry is still a $22 billion business in the U.S. And with the licensing deals that come from movie and game franchises, it can be a lucrative venture for the companies that can “get it right.” Toy maker Hasbro (Nasdaq: HAS) has been a perfect example of this. It makes toys and games featuring the popular Transformers, My Little Pony and G.I. Joe franchises, as well as Disney’s (NYSE: DIS) various Marvel and Star Wars properties. You can see how this has worked out for the company — and its investors: The company I want to talk about today — Mattel (Nasdaq: MAT) — sells toys in 150 countries and controls 17% of the U.S. toy market. But it… Read More

From my apartment here in Medellin, Colombia, I can see the sign to a local gas station. The price of gasoline has climbed to $5.20 a gallon — but there’s another price listed just under that…  #-ad_banner-#For $2.68 per gallon equivalent.  That’s the price for natural gas, and people down here love it.  The boom in natural gas production in the United States pushed prices to historic lows, and many were predicting massive conversions of cars away from gasoline to natural gas. The transformation would have driven a huge shift in the auto industry, and one… Read More

From my apartment here in Medellin, Colombia, I can see the sign to a local gas station. The price of gasoline has climbed to $5.20 a gallon — but there’s another price listed just under that…  #-ad_banner-#For $2.68 per gallon equivalent.  That’s the price for natural gas, and people down here love it.  The boom in natural gas production in the United States pushed prices to historic lows, and many were predicting massive conversions of cars away from gasoline to natural gas. The transformation would have driven a huge shift in the auto industry, and one company has a virtual lock on natural gas engine technology. Sentiment jumped in this game-changer, and this company’s shares surged more than threefold over the two years to early 2012. It seems the market was ahead of the curve, and the conversion cycle has not come just yet. But that doesn’t mean it’s not coming — only that the game isn’t changing as quickly as investors had hoped. According to the Natural Gas Coalition, there are 130,000 natural gas vehicles (NGVs) in the United States and more than 2.5 million in the world. Considering there are roughly 143 million cars… Read More