A weak fourth-quarter earnings release sent shares of Procter & Gamble (NYSE: PG) tumbling 3% in the last week of January, and the stock has gone nowhere since the end of 2016. A competitive environment, eroding market share, and little pricing power have had investors questioning the safety of their money in the consumer staples giant. The $226 billion consumer goods behemoth reported just 2% growth in sales from the same quarter last year, and that was entirely driven by volume with no pricing upside. Despite a cost-reduction plan that trimmed off 1.9%, the operating margin still lost 0.1% on… Read More

A weak fourth-quarter earnings release sent shares of Procter & Gamble (NYSE: PG) tumbling 3% in the last week of January, and the stock has gone nowhere since the end of 2016. A competitive environment, eroding market share, and little pricing power have had investors questioning the safety of their money in the consumer staples giant. The $226 billion consumer goods behemoth reported just 2% growth in sales from the same quarter last year, and that was entirely driven by volume with no pricing upside. Despite a cost-reduction plan that trimmed off 1.9%, the operating margin still lost 0.1% on a year-over-year basis. Against this abysmal report by a bellwether of the sector, companies in the consumer products group still trade for a lofty 25.6 times trailing earnings.  But not all was half-empty in the company’s earnings call. Looking deeper to the segment-level presented a different picture.  #-ad_banner-#Using P&G as a guide for the larger sector may reveal opportunities for investors in consumer staples. P&G Earnings As A Preview For The 2018 Consumer Staples Procter & Gamble is so massive and so diversified across consumer-packaged products that it can be used as a guide to the sector. Even after… Read More

Google parent Alphabet (Nasdaq: GOOG) has struggled with problems around its advertising in recent years. First it was complaints by advertisers of placements on racist and inflammatory videos. Then some of its most popular YouTube stars were caught posting potentially racist or violent content.  YouTube cracked down last year, but the same problems have persisted. Major brands including AT&T, Verizon, Pepsi, and Walmart pulled millions of dollars from the video sharing platform until YouTube could provide assurance to the quality of the videos on which ads were being shown. In response, YouTube shocked its creator community in April by requiring… Read More

Google parent Alphabet (Nasdaq: GOOG) has struggled with problems around its advertising in recent years. First it was complaints by advertisers of placements on racist and inflammatory videos. Then some of its most popular YouTube stars were caught posting potentially racist or violent content.  YouTube cracked down last year, but the same problems have persisted. Major brands including AT&T, Verizon, Pepsi, and Walmart pulled millions of dollars from the video sharing platform until YouTube could provide assurance to the quality of the videos on which ads were being shown. In response, YouTube shocked its creator community in April by requiring channels to have at least 10,000 views before videos could be monetized with ads. Some video creators reported as much as an 80% drop in ad revenue after the change. #-ad_banner-#YouTube again changed its revenue sharing model earlier this month in a move that could shut out many more publishers.  The policy change could have unintended consequences. Investors have yet to react to the news, but could be in for a rude awakening over the rest of the year.  The New YouTube Policy Hits Google Where It Hurts The Most YouTube is again raising the bar on its revenue-sharing… Read More

Canadian officials warned on January 10 of increasing likelihood that the United States would give six months’ notice of withdrawal from NAFTA. Negotiations have moved little in five rounds of talks with the sixth scheduled on January 23 in Montreal. Renegotiating the 25-year trade old agreement was always going to be difficult. Trade between the three North American countries (the United States, Mexico, and Canada) tops $1 trillion and the prevailing business model in several industries is built around the cross-border agreement. To make matters worse, political events this year could put up a roadblock to… Read More

Canadian officials warned on January 10 of increasing likelihood that the United States would give six months’ notice of withdrawal from NAFTA. Negotiations have moved little in five rounds of talks with the sixth scheduled on January 23 in Montreal. Renegotiating the 25-year trade old agreement was always going to be difficult. Trade between the three North American countries (the United States, Mexico, and Canada) tops $1 trillion and the prevailing business model in several industries is built around the cross-border agreement. To make matters worse, political events this year could put up a roadblock to the negotiation process.  The market is still optimistic that the three governments can avoid the cataclysm that would result from a complete scrapping of the agreement, but at this point it’s not looking good.  #-ad_banner-#A termination of NAFTA could be the year’s biggest market mover and it will be tough finding winners in the fallout. Will NAFTA Fall Apart? Canada and Mexico have both rejected U.S. hardline requests of a five-year automatic termination clause, the elimination of dispute panels and stricter rules on auto and dairy. That has stalled negotiations and prompted many to believe President Trump may give… Read More

Mid-term elections may be a non-event for many Americans, but this year’s could be a major market-mover. All 435 seats in the House of Representatives are up for election and 33 of the 100 Senate seats will be in play.  As politics have become more partisan, it seems the effect of legislative control has increased on specific sectors and industries. As party policies and agenda have aligned with particular industries, companies in those industries benefit from improvement in investor sentiment when the current of control changes in Washington. And if history is any guide, the change in Washington may not… Read More

Mid-term elections may be a non-event for many Americans, but this year’s could be a major market-mover. All 435 seats in the House of Representatives are up for election and 33 of the 100 Senate seats will be in play.  As politics have become more partisan, it seems the effect of legislative control has increased on specific sectors and industries. As party policies and agenda have aligned with particular industries, companies in those industries benefit from improvement in investor sentiment when the current of control changes in Washington. And if history is any guide, the change in Washington may not be a change in the current but a massive tidal wave. #-ad_banner-#​History Has Not Been Kind To The Controlling Party Mid-term elections almost always go badly for the party that holds White House, especially when it controls Congress as well.  In the last 18 midterm elections since World War II, the party that held the White House lost an average of 25 House seats and 4 Senate seats. Losses tend to increase when the same party controls Congress and the Presidency, with an average loss of 33 House seats and 5 Senate seats. Public mistrust… Read More

Historically low rates and central bank stimulus have been a defining characteristic of the recovery. No other economic factors have driven more of the four-fold surge in the S&P 500 from its 2009 low. That could be about to change. The 10-year Treasury yield, now at 2.42%, is often compared to the average dividend yields as a measure of stock market attractiveness. The reasoning goes that if the average dividend yield of a stock is higher, investors can get a reasonably solid cash return versus bonds even if share prices are more volatile. A 10-year yield… Read More

Historically low rates and central bank stimulus have been a defining characteristic of the recovery. No other economic factors have driven more of the four-fold surge in the S&P 500 from its 2009 low. That could be about to change. The 10-year Treasury yield, now at 2.42%, is often compared to the average dividend yields as a measure of stock market attractiveness. The reasoning goes that if the average dividend yield of a stock is higher, investors can get a reasonably solid cash return versus bonds even if share prices are more volatile. A 10-year yield higher than the average dividend yield is thought to be a warning sign for stocks because investors might be persuaded to take less risk and earn the higher yield in Treasuries. #-ad_banner-#That idea hasn’t held up very well with the 10-year yield above 2% since November 2016, but the rising yield on another maturity may prove the theory. The yield on the 2-year note recently surpassed the dividend yield, 1.89% versus 1.86% for stocks, the first time it’s happened in a decade.  That could be a much bigger problem for stocks, especially for two sectors of the market. Why Yield… Read More

No sooner had the new tax cuts been signed and companies were already making big announcements on how they were going to drive growth and earnings in the new era of lower corporate rates. Boeing announced a $300 million boost to employee training, workplace infrastructure and other programs. AT&T made headlines with a $1,000 bonus for more than 200,000 of its employees. Many of the announcements centered on worker bonuses and wages. Both Fifth Third Bancorp and Wells Fargo announced they would be increasing the minimum wage to $15 an hour for all employees. Fourth-quarter earnings could bring a wave… Read More

No sooner had the new tax cuts been signed and companies were already making big announcements on how they were going to drive growth and earnings in the new era of lower corporate rates. Boeing announced a $300 million boost to employee training, workplace infrastructure and other programs. AT&T made headlines with a $1,000 bonus for more than 200,000 of its employees. Many of the announcements centered on worker bonuses and wages. Both Fifth Third Bancorp and Wells Fargo announced they would be increasing the minimum wage to $15 an hour for all employees. Fourth-quarter earnings could bring a wave of these programs when they begin late January, but the early announcements may signal a turning point in the economy, one several years in the making. #-ad_banner-#Besides resolutions and holiday bills, the new year could bring higher wages for many, and I’ve found three sectors that could see outsized gains. Who Cares Where Wage Growth Comes From? More than 30 companies have already come out publicly to announce plans related to the new tax cuts. Most have involved share buybacks funded with the potential cash flow, but many have talked up higher wages and investments in workers.  It’s not… Read More

A joint committee from the House and Senate has agreed on a reconciled tax proposal that combines the two packages from each chamber.  While stocks have jumped more than 5% since mid-November in anticipation of the new tax package, a look at individual industries shows there may still be time to position ahead of the companies that stand to disproportionately benefit. Besides lowering the overall corporate tax rate, the bill includes several other key proposals that could drive corporate earnings for 2018 and beyond. That means some industries and even specific companies could see an even… Read More

A joint committee from the House and Senate has agreed on a reconciled tax proposal that combines the two packages from each chamber.  While stocks have jumped more than 5% since mid-November in anticipation of the new tax package, a look at individual industries shows there may still be time to position ahead of the companies that stand to disproportionately benefit. Besides lowering the overall corporate tax rate, the bill includes several other key proposals that could drive corporate earnings for 2018 and beyond. That means some industries and even specific companies could see an even bigger boost.  In fact, three components of the new tax deal caught my eye as particularly beneficial, and I’m using them to rebalance my own portfolio. #-ad_banner-#​Broad Changes In The New Tax Bill The broadest change in the new tax package is the reduction in the corporate tax rate from 35% to 21% starting next year. Companies would pay a 15.5% rate on foreign income held as cash or an 8% rate on income invested in property or equipment. Owners of pass-through businesses will be allowed to deduct 20% from their business income before paying taxes at their personal… Read More

As if the 800-fold increase in the value of one bitcoin from February 2011 to the beginning of 2017 were not enough, the 2,200% surge this year has everyone talking about the cryptocurrency.  Bitcoin could be one of the biggest bubbles in history. But should that stop you from booking outsized returns as the price skyrockets? Cryptocurrencies could very well be the future of digital payments and the blockchain technology has the potential to touch nearly every industry. Trying to time the Bitcoin market, buying in and selling before the inevitable crash, will leave a lot of investors penniless.  But… Read More

As if the 800-fold increase in the value of one bitcoin from February 2011 to the beginning of 2017 were not enough, the 2,200% surge this year has everyone talking about the cryptocurrency.  Bitcoin could be one of the biggest bubbles in history. But should that stop you from booking outsized returns as the price skyrockets? Cryptocurrencies could very well be the future of digital payments and the blockchain technology has the potential to touch nearly every industry. Trying to time the Bitcoin market, buying in and selling before the inevitable crash, will leave a lot of investors penniless.  But there are ways to profit from the bitcoin revolution, a way to ride the wave all the way to the top without having to worry about the crash when it comes. #-ad_banner-#I’ve found three strategies that are benefiting from the herd’s stampede to bitcoin, three industries that could book record revenue and earnings. Each of the industries has other sources of revenue, protecting companies from a disastrous end if sentiment for cryptocurrencies crashes. It’s the long-term way to play one of the fastest bubbles in history. Is Bitcoin A Bubble? Opinions on a fair price for bitcoin and whether… Read More

News of the Senate vote on tax reform last week buried another headline, one that could be just as momentous in remaking an entire sector of the American economy. Health insurer Aetna (NYSE: AET) has agreed to an acquisition by CVS Health (NYSE: CVS) in a $68 billion deal that could transform the healthcare industry. The addition of Aetna’s 22 million insurance customers will create one of the most vertically-integrated behemoths in the industry when added to CVS’s nation-wide pharmacy business, pharmaceutical benefits manager (PBM), and retail medical services. The ability to insure, negotiate drug prices,… Read More

News of the Senate vote on tax reform last week buried another headline, one that could be just as momentous in remaking an entire sector of the American economy. Health insurer Aetna (NYSE: AET) has agreed to an acquisition by CVS Health (NYSE: CVS) in a $68 billion deal that could transform the healthcare industry. The addition of Aetna’s 22 million insurance customers will create one of the most vertically-integrated behemoths in the industry when added to CVS’s nation-wide pharmacy business, pharmaceutical benefits manager (PBM), and retail medical services. The ability to insure, negotiate drug prices, and deliver health services and pharmaceuticals to customers could create a new standard in healthcare delivery.  This, combined with financial tailwinds from the potential tax reform package, could set off a wave of merger activity in 2018.  #-ad_banner-#And I’ve found three leaders that could be prime investment targets. How Could This $68 Billion Mega-Deal Reshape Healthcare? At $68 billion in cash and stock, the deal is more than twice the size of the next largest M&A deal so far this year. More than the size of the tie-up, the deal could have major significance for… Read More

With tax reform zooming through Congress, bitcoin reaching historic heights and the markets continuing one of the longest bull-runs in history, one extremely important headline went largely unnoticed in November. The potential change in the law isn’t as sexy as the 10-fold increase in Bitcoin or the changes to taxes. In fact, many consumers probably don’t even know what the existing law does. That doesn’t mean the coming change won’t have huge consequences for a group of companies, with some on the winning side as well as a few losers.  Surprisingly, shares of the companies on both sides haven’t moved… Read More

With tax reform zooming through Congress, bitcoin reaching historic heights and the markets continuing one of the longest bull-runs in history, one extremely important headline went largely unnoticed in November. The potential change in the law isn’t as sexy as the 10-fold increase in Bitcoin or the changes to taxes. In fact, many consumers probably don’t even know what the existing law does. That doesn’t mean the coming change won’t have huge consequences for a group of companies, with some on the winning side as well as a few losers.  Surprisingly, shares of the companies on both sides haven’t moved much since the announcement that the government would seek to change the law.  #-ad_banner-#That sets the stage to front-run the change, giving you a chance to align your portfolio with the winning side. I’m talking about net neutrality. What Is Net Neutrality And Why Should Investors Care? Net neutrality can seem like a confusing legal and technical topic, but the basic idea and implications are simple. Laws passed in 2015 reclassified broadband internet as a public utility under the Communications Act of 1934. This was important because it prohibited internet service providers (ISPs) from discriminating how they delivered the… Read More