A word of advice to investors who remain leery of Target Corp. (NYSE: TGT): Set aside any lingering doubts and get back into the stock. Target’s on the mend after recent setbacks. #-ad_banner-#I’m referring, of course, to the discount retail giant’s infamous 2013 security breach that exposed the credit card data of some 70 million customers. Also that year, Target kicked off what would prove to be a brief, poorly executed attempt at Canadian expansion. That ended abruptly early last year with a $5.4 billion write-down and roughly $2 billion in net losses. All this crushed the bottom line, with… Read More

A word of advice to investors who remain leery of Target Corp. (NYSE: TGT): Set aside any lingering doubts and get back into the stock. Target’s on the mend after recent setbacks. #-ad_banner-#I’m referring, of course, to the discount retail giant’s infamous 2013 security breach that exposed the credit card data of some 70 million customers. Also that year, Target kicked off what would prove to be a brief, poorly executed attempt at Canadian expansion. That ended abruptly early last year with a $5.4 billion write-down and roughly $2 billion in net losses. All this crushed the bottom line, with Target posting more than a $1.6-billion net loss in the 12 months ended January 31, 2015 versus a $3-billion profit two years earlier. Target’s stock was in or near bear territory during much of these turbulent times and the firm’s image suffered, putting management in the unenviable position of having to win back both customers and investors. But much has changed since then. Under new CEO Brian Cornell, a three-decade retail and consumer products veteran who took command right in the middle of the tumult, Target and its stock are executing a decisive turnaround. One key move: divesting… Read More

When M&A specialist BC Partners took PetSmart Inc. private nearly a year ago, investors lost a top entree into the $60-billion pet products and services market. As a publicly traded entity, PetSmart showed strong growth and market leadership, and I’m certain it would have remained an excellent long-term investment if BC Partners hadn’t snapped it up. But with PetSmart out of the picture, those looking for a pure play on the pet care boom have much slimmer pickings. For example, despite a 4.5% dividend yield, I’m not a huge fan of nationwide pet pharmacy PetMed Express (Nasdaq: PETS) because its… Read More

When M&A specialist BC Partners took PetSmart Inc. private nearly a year ago, investors lost a top entree into the $60-billion pet products and services market. As a publicly traded entity, PetSmart showed strong growth and market leadership, and I’m certain it would have remained an excellent long-term investment if BC Partners hadn’t snapped it up. But with PetSmart out of the picture, those looking for a pure play on the pet care boom have much slimmer pickings. For example, despite a 4.5% dividend yield, I’m not a huge fan of nationwide pet pharmacy PetMed Express (Nasdaq: PETS) because its business has stagnated and total returns from its stock have been trailing the S&P 500’s by a wide margin for years. #-ad_banner-#PetMed has the right idea, though, by being in the pet health market, where affluent consumers are increasingly willing to pay up for expensive tests and treatments. In that environment, PetMed might still be expanding if it was casting a wider net, like VCA Inc. (Nasdaq: WOOF). While not a household name, VCA is quite large, with a $4-billion market cap that’s 12 times larger than PetMed Express’s. And it’s taking full advantage of the growth opportunities available in… Read More

After stumbling badly on negative publicity about foodborne illness at some of its restaurants, the fast casual dining industry’s once unstoppable frontrunner finally caught a break: On February 1, the Centers for Disease Control and Prevention (CDC) declared Chipotle Mexican Grill (NYSE: CMG) free of the nasty E. coli bug responsible for the illness outbreak. #-ad_banner-#During the summer and fall of last year, the outbreak affected five dozen Chipotle customers in 11 states, prompting the temporary shut-down of 43 of the chain’s locations. The situation has run its course, the CDC concluded, because no new cases have been reported since… Read More

After stumbling badly on negative publicity about foodborne illness at some of its restaurants, the fast casual dining industry’s once unstoppable frontrunner finally caught a break: On February 1, the Centers for Disease Control and Prevention (CDC) declared Chipotle Mexican Grill (NYSE: CMG) free of the nasty E. coli bug responsible for the illness outbreak. #-ad_banner-#During the summer and fall of last year, the outbreak affected five dozen Chipotle customers in 11 states, prompting the temporary shut-down of 43 of the chain’s locations. The situation has run its course, the CDC concluded, because no new cases have been reported since December 21. Besides sullying Chipotle’s reputation for safely providing “food with integrity,” the outbreak is wreaking havoc on the company’s stock and financials. Shares of Chipotle fell more than 40% since the news broke, and its latest quarterly report can only be described as ugly. Plus, there’s still fallout from a couple other recent outbreaks with another foodborne microbe (norovirus) involving single Chipotle locations in California and Massachusetts. Yet this all amounts to what may well be the best value opportunity of the year. To be sure, it will take time for Chipotle to mend fences… Read More

The bear market investors have been dreading is already here for many individual stocks. While the S&P 500 is down about 7% from the all-time high it achieved in May, roughly a fifth of the index’s components are well into bear territory, having plunged 20% or more from their peaks. #-ad_banner-#However, the selling has created value in many high-quality stocks, including some top dividend names with astonishingly long histories of rising payouts. A perfect example: the well-known replacement auto parts supplier Genuine Parts Co. (NYSE: GPC), with 59 straight years of dividend raises. The firm, best known for its NAPA… Read More

The bear market investors have been dreading is already here for many individual stocks. While the S&P 500 is down about 7% from the all-time high it achieved in May, roughly a fifth of the index’s components are well into bear territory, having plunged 20% or more from their peaks. #-ad_banner-#However, the selling has created value in many high-quality stocks, including some top dividend names with astonishingly long histories of rising payouts. A perfect example: the well-known replacement auto parts supplier Genuine Parts Co. (NYSE: GPC), with 59 straight years of dividend raises. The firm, best known for its NAPA stores, has seen its stock plummet nearly 25% from last December’s $109 peak. The selloff is an over-reaction to a relatively minor catalyst — a few quarters of mixed earnings reports stemming from strong dollar headwinds and transient bouts of inconsistent product demand. But this means one of history’s leading dividend aristocrats, a company that increases its dividend at least 25 consecutive years, is now attractively priced. How GPC Dominates In Auto Parts Last December, Genuine Parts was trading for around 23 times trailing 12-month earnings. Now the stock carries a much lower 18-times multiple,… Read More

The stock market has been gyrating wildly in recent months, and the wild ride may be far from over. That’s great news for Chicago-based CBOE Holdings Inc. (Nasdaq: CBOE). This securities exchange operator is uniquely positioned to benefit from volatile markets. Shares of CBOE are getting lift from a key technical index: the VIX, which measures market volatility. As the chart below shows, shares have been moving higher in recent weeks, despite a pullback in the broader market. That’s solely due to volatility levels that have not been seen since the financial crisis. As the VIX appears poised to remain… Read More

The stock market has been gyrating wildly in recent months, and the wild ride may be far from over. That’s great news for Chicago-based CBOE Holdings Inc. (Nasdaq: CBOE). This securities exchange operator is uniquely positioned to benefit from volatile markets. Shares of CBOE are getting lift from a key technical index: the VIX, which measures market volatility. As the chart below shows, shares have been moving higher in recent weeks, despite a pullback in the broader market. That’s solely due to volatility levels that have not been seen since the financial crisis. As the VIX appears poised to remain at elevated levels, CBOE’s investors are looking at an attractive profit opportunity. The Case For Large Near-Term Gains As the owner of the well-known Chicago Board Options Exchange, CBOE provides the world’s largest market for options contracts on stocks, indexes and exchange-traded products. It directly owns the VIX, as well as the associated options and futures. Key proprietary products also include the highly popular S&P 500 option, the most actively traded index option in the United States. As volatility rises, demand for options soars because more investors use them to hedge losses, or speculate on specific indexes… Read More

This week, investors all over the world are waiting to hear if the Federal Reserve will vote to increase interest rates… The mere anticipation of rising rates has been unnerving investors over the past few months. Many investors are selling pre-emptively because the conventional wisdom says higher rates are bad for stocks. But there’s an exception to every rule. Indeed, several areas of the financial sector would love substantially higher interest rates, including the insurance industry. #-ad_banner-#That’s because insurers invest policy premiums mainly in bonds and other rate-sensitive fixed-income securities. They are able to profit from the spread between portfolio… Read More

This week, investors all over the world are waiting to hear if the Federal Reserve will vote to increase interest rates… The mere anticipation of rising rates has been unnerving investors over the past few months. Many investors are selling pre-emptively because the conventional wisdom says higher rates are bad for stocks. But there’s an exception to every rule. Indeed, several areas of the financial sector would love substantially higher interest rates, including the insurance industry. #-ad_banner-#That’s because insurers invest policy premiums mainly in bonds and other rate-sensitive fixed-income securities. They are able to profit from the spread between portfolio returns and insurance policy claims payments. The spread, or net interest margin, widens when interest rates climb and shrinks when rates decline. Before the financial crisis, insurers typically generated roughly 3% net interest margins, but thanks to more than six years of rate-squelching easy monetary policy, net interest margins have since plummeted to around 1%. The result: a progressively tighter squeeze on overall profit growth for insurers. However, with many insurers are now trading at low earnings multiples — often for less than book value. In general, cash flow is strong, dividends are rising and balance sheets are solid. So… Read More

To sideswipe market volatility, investors often focus on companies that offer solid long-term growth and reliable dividends. Plenty of large companies fit that description, but so do some smaller ones. Take ABM Industries Inc. (NYSE: ABM), a venerable building maintenance firm with a $1.7-billion market value and annual revenues in excess of $5 billion. How stable is this company’s business model across business cycles? It has paid steady dividends for 50 straight years. #-ad_banner-#From Humble Beginnings To A Diverse Enterprise Despite having roots dating back 1909, ABM probably still isn’t on many investors’ radar screens. But you should get… Read More

To sideswipe market volatility, investors often focus on companies that offer solid long-term growth and reliable dividends. Plenty of large companies fit that description, but so do some smaller ones. Take ABM Industries Inc. (NYSE: ABM), a venerable building maintenance firm with a $1.7-billion market value and annual revenues in excess of $5 billion. How stable is this company’s business model across business cycles? It has paid steady dividends for 50 straight years. #-ad_banner-#From Humble Beginnings To A Diverse Enterprise Despite having roots dating back 1909, ABM probably still isn’t on many investors’ radar screens. But you should get to know this firm. It has come a long way from humble beginnings as a one-man window-washing service. Janitorial services have long been the heart and soul of ABM and still generate about half of revenue. The rest of the sales base is derived from a diverse lineup of service offerings such as maintenance and management of electrical and climate-control systems (with a focus on energy efficiency), security services, landscaping and parking management. Today, ABM serves thousands of customers with many types of nonresidential properties, from office buildings and educational institutions, to airports and stadiums. Dodger Stadium, Cornell University and… Read More

It’s no secret that millennials, most of whom are now in their 20s and 30s, aren’t big on the stock market. Three-quarters of them don’t invest in stocks at all, recent surveys show. These folks witnessed their parents go through the dotcom implosion in 2000 and another market crash in 2008. No wonder they want to steer clear of stocks. #-ad_banner-#But just like every other generation, millenials need to save for retirement and most will have to invest in something to build a sufficient nest egg. My recommendation, which completely flies in the face of conventional retirement planning wisdom: put… Read More

It’s no secret that millennials, most of whom are now in their 20s and 30s, aren’t big on the stock market. Three-quarters of them don’t invest in stocks at all, recent surveys show. These folks witnessed their parents go through the dotcom implosion in 2000 and another market crash in 2008. No wonder they want to steer clear of stocks. #-ad_banner-#But just like every other generation, millenials need to save for retirement and most will have to invest in something to build a sufficient nest egg. My recommendation, which completely flies in the face of conventional retirement planning wisdom: put your money in the Vanguard Wellesley Income Fund (NYSE: VWINX), a $41-billion conservative allocation mutual fund that goes easy on equities and still offers solid returns. Why Millennials Should Buck Tradition Most financial advisors would scoff at this advice, since VWINX would typically be considered suitable for investors at or near retirement age. The fund allocates only 35%-to-40% of assets to stocks (37% is currently in equities) and puts the rest in bonds. It also holds cash at various times. Advisors traditionally want young investors to have portfolios that contain from 60% to 80% in stocks, perhaps even more. Read More

Investors are thrilled to say goodbye to the month of August. Extreme levels of volatility and stunning market drops have given investors a sense of whiplash for the past few weeks. #-ad_banner-#But the chaos brought a silver lining: At least we now know which stocks will hold their own in a sharp market pullback, and which ones represent too much risk and volatility. Case in point: the relatively muted action in shares of Dow component 3M Co. (NYSE: MMM). This stock had been slipping out of favor before the market meltdown, thanks to a broader malaise among industrial stocks. A… Read More

Investors are thrilled to say goodbye to the month of August. Extreme levels of volatility and stunning market drops have given investors a sense of whiplash for the past few weeks. #-ad_banner-#But the chaos brought a silver lining: At least we now know which stocks will hold their own in a sharp market pullback, and which ones represent too much risk and volatility. Case in point: the relatively muted action in shares of Dow component 3M Co. (NYSE: MMM). This stock had been slipping out of favor before the market meltdown, thanks to a broader malaise among industrial stocks. A modest reduction in 2015 and 2016 consensus EPS forecasts hasn’t helped either, after 3M reported a pair of tepid quarters. But when true adversity struck, shares held their own, as if investors suddenly remembered all of the reasons why 3M is a stock to hold through thick and thin. As you can see below, 3M’s stock lost roughly 3% of its value at a time when the broader market, represented below by the S&P 500, fell more than twice as much, and many mid-cap and small-cap stocks fell by double-digits.   A Cash Generator With Growing Dividends Even in… Read More

While investors can now benefit from an amazing array of exchange-traded fund (ETF) choices, some of them fail to live up to their billing. These funds often pursue complex, glamorous-sounding strategies that lure investors — but often woefully underperform. Two funds in particular warrant closer scrutiny, due to their large popularity: PowerShares S&P 500 Low Volatility (NYSE: SPLV) and IQ Hedge Multi-Strategy Tracker ETF (NYSE: QAI) have problematic structures, and are delivering subpar returns. #-ad_banner-#A Low Volatility Fund That Fluctuates More Than The Market With net assets of about $5 billion, PowerShares S&P 500 Low Volatility is attracting its… Read More

While investors can now benefit from an amazing array of exchange-traded fund (ETF) choices, some of them fail to live up to their billing. These funds often pursue complex, glamorous-sounding strategies that lure investors — but often woefully underperform. Two funds in particular warrant closer scrutiny, due to their large popularity: PowerShares S&P 500 Low Volatility (NYSE: SPLV) and IQ Hedge Multi-Strategy Tracker ETF (NYSE: QAI) have problematic structures, and are delivering subpar returns. #-ad_banner-#A Low Volatility Fund That Fluctuates More Than The Market With net assets of about $5 billion, PowerShares S&P 500 Low Volatility is attracting its share of investors. The allure is in the name, which suggests broad exposure mainly to U.S. stocks with minimal volatility. But the fund provides neither of these virtues especially well. Whereas the S&P 500 includes the 500 largest firms with Nasdaq or New York Stock Exchange listings, SPLV is actually based on a much smaller universe: the S&P 500 Low Volatility Index, which only consists of 100 stocks (the 20% of S&P 500 components with the least volatility over the past year). So the diversification of the fund isn’t nearly what the fund’s name implies. Does the fund provide reduced… Read More