There are few sectors that consistently generate high levels of cash flow. Even fewer are reliable about returning that cash to shareholders. #-ad_banner-#Tobacco is one such industry. As much as some investors love to hate the industry, the major tobacco companies are consistent performers regardless of the broader economy. Investors shouldn’t let the broad health concerns around traditional cigarettes deter them from investing in an industry that has substantial barriers to entry and is great at returning cash to shareholders through dividends and buybacks. One of the big three U.S. tobacco companies, Lorillard (NYSE: LO) is giving investors an attractive… Read More

There are few sectors that consistently generate high levels of cash flow. Even fewer are reliable about returning that cash to shareholders. #-ad_banner-#Tobacco is one such industry. As much as some investors love to hate the industry, the major tobacco companies are consistent performers regardless of the broader economy. Investors shouldn’t let the broad health concerns around traditional cigarettes deter them from investing in an industry that has substantial barriers to entry and is great at returning cash to shareholders through dividends and buybacks. One of the big three U.S. tobacco companies, Lorillard (NYSE: LO) is giving investors an attractive entry point after missing fourth-quarter earnings expectations. The stock fell more than 5% posting earnings of $0.82 a share, missing analysts’ expectations by $0.04. However, revenue for the quarter beat consensus estimates, and it looks like the downward move in the stock might be an overreaction. After all, since Lorillard went public in 2008, the company has outperformed the S&P 500 by over 100%. Despite Lorillard’s earnings miss and the fact that wholesale cigarette volume was down 1.6% year over year during the fourth quarter, the company still expanded its U.S. market share for an 11th consecutive year. Read More

There’s no denying the role railroads have had in building this great nation of ours — but believe it or not, railroads remain one of the best plays on the broader economy. #-ad_banner-#Of course, Warren Buffett knows this. His Berkshire Hathaway (NYSE: BRK-B) owning Burlington Northern, the second-largest railroad in North America. While we all can’t be Buffetts and buy our own railroad, we can own a stake in of one of the best operators in the industry — and on a pullback, no less. Kansas City Southern (NYSE: KSU) is one of the most underrated rail operators, offering investors… Read More

There’s no denying the role railroads have had in building this great nation of ours — but believe it or not, railroads remain one of the best plays on the broader economy. #-ad_banner-#Of course, Warren Buffett knows this. His Berkshire Hathaway (NYSE: BRK-B) owning Burlington Northern, the second-largest railroad in North America. While we all can’t be Buffetts and buy our own railroad, we can own a stake in of one of the best operators in the industry — and on a pullback, no less. Kansas City Southern (NYSE: KSU) is one of the most underrated rail operators, offering investors a solid entry point after tumbling some 20% this year due to weak earnings and guidance. However, the pullback looks like a great buying opportunity because Kansas City Southern is still one of the best plays in the rail industry given its exposure to cross-border opportunities. Kansas City Southern remains the only railroad operator with operations in both the U.S. and Mexico, where lower labor and transportation costs contribute to the company’s industry-leading margins. At the heart of Kansas City Southern’s disappointing guidance was the fact that new auto plants in Mexico might not begin production as quickly as expected. Read More

Consumers thrive on convenience. This has extended to all parts of our lives — especially the car rental business. #-ad_banner-#Sometimes, the ability to rent a car with a quick swipe of the credit card and without having to interact with other humans is a big positive. There is proof that the model works, with Zipcar having paved the way. But it’s not only the convenience that makes this business model appealing. The pricing is better for consumers because there’s less overhead. Hertz Global Holdings (NYSE: HTZ) is the latest company to get into the business of making car renting easier. Read More

Consumers thrive on convenience. This has extended to all parts of our lives — especially the car rental business. #-ad_banner-#Sometimes, the ability to rent a car with a quick swipe of the credit card and without having to interact with other humans is a big positive. There is proof that the model works, with Zipcar having paved the way. But it’s not only the convenience that makes this business model appealing. The pricing is better for consumers because there’s less overhead. Hertz Global Holdings (NYSE: HTZ) is the latest company to get into the business of making car renting easier. Hertz recently launched an off-airport on-demand rental service that allows customers to rent vehicles anytime without any customer agents, bringing self-service to more car rental customers. Hertz should be able to capture more market share as it continues to add more locations with this feature, including in conjunction with its newly acquired Dollar Thrifty brand, and as more customers opt for its convenience. Hertz already owns a quarter of the world’s car rental market by market share. The industry has gotten much smaller over the past few years with the help of consolidation, including Hertz’s acquisition of Dollar Thrifty last… Read More

With medicine being the huge industry it is, pharma companies bring in billions of dollars with blockbuster drugs — and they are great at using this cash to reward shareholders. #-ad_banner-#When deciding which Big Pharma company to invest in, there might be no better choice than the company that bills itself as the world’s largest research-based pharmaceutical company — the same company that brought us Lipitor, Celebrex and Viagra. Since 2004, Pfizer (NYSE: PFE) has paid out the most cash to shareholders (as a percentage of enterprise value) of any of the major drugmakers. Pfizer’s cash payout clocks in at… Read More

With medicine being the huge industry it is, pharma companies bring in billions of dollars with blockbuster drugs — and they are great at using this cash to reward shareholders. #-ad_banner-#When deciding which Big Pharma company to invest in, there might be no better choice than the company that bills itself as the world’s largest research-based pharmaceutical company — the same company that brought us Lipitor, Celebrex and Viagra. Since 2004, Pfizer (NYSE: PFE) has paid out the most cash to shareholders (as a percentage of enterprise value) of any of the major drugmakers. Pfizer’s cash payout clocks in at 61%, compared with GlaxoSmithKline (NYSE: GSK) at 46%, Merck (NYSE: MRK) at 39%, Eli Lilly (NYSE: LLY) at 36% and Johnson & Johnson (NYSE: JNJ) at 32%. There’s nothing to suggest this trend won’t continue into the future. Pfizer has been getting more focused on the higher-growth drug business. Back in 2012, Pfizer divested its nutrition business, selling it to Nestle (OTC: NSERGY), and in mid-2013 it spun off its animal health business. As a result, it’s turning its attention to the higher growth drug areas. These include oncology, cardiology, neuroscience and immunology. The oncology segment was Pfizer’s fastest-growing segment… Read More

The United States is in the middle of one of the greatest oil booms of all time. This is especially true in the states of North Dakota and Montana, home to the Bakken formation.#-ad_banner-#​ New drilling techniques are allowing companies to extract previously unreachable oil from this formation. The result is that the U.S. is on track to become the world’s largest oil producer by 2015, surpassing Russia and Saudi Arabia. Of course, producing more oil and importing less is a positive for the U.S. economy. One of the companies at the forefront of this… Read More

The United States is in the middle of one of the greatest oil booms of all time. This is especially true in the states of North Dakota and Montana, home to the Bakken formation.#-ad_banner-#​ New drilling techniques are allowing companies to extract previously unreachable oil from this formation. The result is that the U.S. is on track to become the world’s largest oil producer by 2015, surpassing Russia and Saudi Arabia. Of course, producing more oil and importing less is a positive for the U.S. economy. One of the companies at the forefront of this renaissance is Hess Corp. (NYSE: HES), the second-largest producer in the Bakken formation. With 640,000 acres in the Bakken, Hess produced more than 71,000 barrels of oil equivalent (BOE) a day from the region in the third quarter.  While those figures are impressive, they account for only 23% of Hess’ total third-quarter production of 310,000 BOE. In addition to the Bakken, Hess also has production operations in the Gulf of Mexico, the North Sea, Southeast Asia and Equatorial Guinea.  In the past year, Hess has been selling non-core assets. Last year, Hess sold $7.8 billion in non-core assets. Just last… Read More

The closest thing to a no-brainer in investing is investing in a market-dominating company.  #-ad_banner-#One of the biggest markets in the world is the wireless industry. As emerging markets continue to urbanize, the number of mobile phone users will only increase. The other beauty about the wireless market is that there are only a handful of major operators, giving them a monopoly-like hold on the industry.  That’s what you get with AT&T (NYSE: T), a market leader with a very robust dividend and one of the best balance sheets in the business. Its debt-to-equity ratio is 89%, compared… Read More

The closest thing to a no-brainer in investing is investing in a market-dominating company.  #-ad_banner-#One of the biggest markets in the world is the wireless industry. As emerging markets continue to urbanize, the number of mobile phone users will only increase. The other beauty about the wireless market is that there are only a handful of major operators, giving them a monopoly-like hold on the industry.  That’s what you get with AT&T (NYSE: T), a market leader with a very robust dividend and one of the best balance sheets in the business. Its debt-to-equity ratio is 89%, compared with rival Verizon’s (NYSE: VZ) 110%. During 2012, AT&T doubled its share buyback authorization, to 600 million shares.  The focus for AT&T going forward is wireless, which is a $22 billion per year business for the company and will likely continue to be its main revenue driver. AT&T already offers users some of the fastest speeds in the wireless Internet space, and it’s running ahead of schedule for its 4G LTE buildout.  AT&T covers some 250 million users with 4G LTE, and it expects to have that number up to 300 million by the end of this year. AT&T beat… Read More

Although flying is one of the most attractive ways to travel, the airline industry has been one of the worst investments over the past decade.#-ad_banner-#​ Yet thanks to consolidation, the industry is getting more rational. With fewer airlines competing for customer dollars, the number of available seats should fall more in line with demand. This will allow the current operators the ability to maintain strong pricing and avoid having to drop prices to fill seats.  Given this newfound rationality, combined with a stabilizing of fuel prices and a potential rebounding of the economy, the airline industry could be… Read More

Although flying is one of the most attractive ways to travel, the airline industry has been one of the worst investments over the past decade.#-ad_banner-#​ Yet thanks to consolidation, the industry is getting more rational. With fewer airlines competing for customer dollars, the number of available seats should fall more in line with demand. This will allow the current operators the ability to maintain strong pricing and avoid having to drop prices to fill seats.  Given this newfound rationality, combined with a stabilizing of fuel prices and a potential rebounding of the economy, the airline industry could be a great investment over the next few years. The other beauty of the industry is the strong barriers to entry. Airports have a limited number of takeoff and landing slots, and the major airlines enjoy long-term leases on airport gates that help shut out the competition.  Southwest Airlines (NYSE: LUV) is one of the best picks in the industry given its stronghold on the short-haul market and renewed focus for returning capital to shareholders. The fact that it tailors to the short-haul market helps it keep fuel costs down and enjoy the lowest cost structure of the major airlines.  The… Read More

There is perhaps no better investment opportunity than when a company comes out and says it’s worth more after receiving a takeover offer. This is especially true when there are a number of suitors for that same company. #-ad_banner-#​In these situations, the “belle of the ball” becomes sought after, and the bidding war begins. The highest bidder wins the prize — and shareholders make off with a bunch of money and profits. This could well be what plays out with Time Warner Cable (NYSE: TWC). Charter Communications (Nasdaq: CHTR), backed by billionaire John Malone’s Liberty Media… Read More

There is perhaps no better investment opportunity than when a company comes out and says it’s worth more after receiving a takeover offer. This is especially true when there are a number of suitors for that same company. #-ad_banner-#​In these situations, the “belle of the ball” becomes sought after, and the bidding war begins. The highest bidder wins the prize — and shareholders make off with a bunch of money and profits. This could well be what plays out with Time Warner Cable (NYSE: TWC). Charter Communications (Nasdaq: CHTR), backed by billionaire John Malone’s Liberty Media (Nasdaq: LMCA), has offered to buy Time Warner Cable for $132.50 a share. If Time Warner Cable and Charter can swing a deal, the combined company would have cable systems stretching from Maine to California. However, TWC rejected Charter’s bid as too low; TWC is looking for $160 a share. The most interesting aspect of the Charter offer is that it’s an opening bid, which is a bid that gets the two sides to the negotiating table.  Another company that is interested in buying Time Warner Cable is Comcast Corp. (Nasdaq: CMCSA). Comcast is the largest cable provider in the… Read More

Now that the busy holiday shopping season is behind us, it’s time to look at which department store retailers are set up for the long haul.#-ad_banner-# Investing for the long run involves sticking with a retailer known for consistency in terms of product offerings, management and price. For investors, what makes a great retail investment is a nice dividend, strong balance sheet and robust returns on equity. These days, most department store retailers lack these qualities, especially J.C. Penney (NYSE: JCP) and Sears (NYSE: SHLD). The one department store retailer that shoppers and investors alike can count on is Macy’s… Read More

Now that the busy holiday shopping season is behind us, it’s time to look at which department store retailers are set up for the long haul.#-ad_banner-# Investing for the long run involves sticking with a retailer known for consistency in terms of product offerings, management and price. For investors, what makes a great retail investment is a nice dividend, strong balance sheet and robust returns on equity. These days, most department store retailers lack these qualities, especially J.C. Penney (NYSE: JCP) and Sears (NYSE: SHLD). The one department store retailer that shoppers and investors alike can count on is Macy’s (NYSE: M). Macy’s possesses all the necessary qualities based on value and growth. Going forward, Macy’s has a number of initiatives to drive both its top and bottom lines. The retailer performed well during the holiday season, executing on its Black Friday platform and various strategies. The department store retailer recently announced November and December (holiday season) sales, which revealed that comparable-store sales were up 3.6% year over year. If you include sales from licensed departments within Macy’s, comparable-store sales rose 4.3%. Several Growth Measures In Place Macy’s primary focus is its My Macy’s program, which is focused on… Read More

In our go-go society, convenience is everything. This has extended to every part of our lives, including food and entertainment. #-ad_banner-#In fact, this trend has become so pronounced that we’ve taken to getting these items from kiosks. For example, for many consumers, the ability to avoid interactions with people by simply swiping a credit card at a kiosk to get the night’s entertainment is a valuable service.  Formerly known as RedBox, Outerwall (Nasdaq: OUTR) is the epitome of this convenience. Its RedBox DVD rental kiosks are popping up like Starbucks’ (Nasdaq: SBUX) back in the early 2000s, with… Read More

In our go-go society, convenience is everything. This has extended to every part of our lives, including food and entertainment. #-ad_banner-#In fact, this trend has become so pronounced that we’ve taken to getting these items from kiosks. For example, for many consumers, the ability to avoid interactions with people by simply swiping a credit card at a kiosk to get the night’s entertainment is a valuable service.  Formerly known as RedBox, Outerwall (Nasdaq: OUTR) is the epitome of this convenience. Its RedBox DVD rental kiosks are popping up like Starbucks’ (Nasdaq: SBUX) back in the early 2000s, with several on a single street corner. Meanwhile, its legacy coin-counting kiosk division, Coinstar, continues to be the industry leader for turning loose change into dollars.  Beyond its coin and movie kiosks, Outerwall also has electronics recycling (EcoATM) and product-sampling (Sampleit) kiosks.  Outerwall fell off a cliff last year after releasing poor quarterly results. It’s now back on track, but still only managed to perform in line with the S&P 500 Index for the year. As a result, Outerwall has garnered the support of a couple of major hedge funds lately, including TPG-Axon Partners, which owns 5% of the… Read More