#-ad_banner-#When investing in out-of-favor companies, timing is crucial. Get in too soon and you could fall victim to a failed turnaround. Procrastinate and you could miss out on big gains when word about a successful comeback gets out. The key is finding the sweet spot, where the odds favor a successful turnaround, but the herd hasn’t taken much notice yet. The beleaguered luxury goods retailer Coach Inc. (NYSE: COH) is finally approaching such a sweet spot three years after hitting a rough patch. Based on a recent share price of about $33, Coach’s stock is down by more than 50%… Read More

#-ad_banner-#When investing in out-of-favor companies, timing is crucial. Get in too soon and you could fall victim to a failed turnaround. Procrastinate and you could miss out on big gains when word about a successful comeback gets out. The key is finding the sweet spot, where the odds favor a successful turnaround, but the herd hasn’t taken much notice yet. The beleaguered luxury goods retailer Coach Inc. (NYSE: COH) is finally approaching such a sweet spot three years after hitting a rough patch. Based on a recent share price of about $33, Coach’s stock is down by more than 50% from its peak in March 2012. Back then, the company was at the top of its game, thanks to the popularity of its lines of designer handbags and accessories such as scarves, fragrances and jewelry. But soon after, it began to wobble in the face of stiffer competition from Kate Spade & Co. (NYSE: KATE), Michael Kors Holdings Ltd. (NYSE: KORS) and others. Management fought back by opening more discount outlets and increasing promotions, but these measures only ended up hurting the business further by encouraging customers to wait for lower prices. The resulting toll on performance: annual revenue has… Read More

Lofty valuations can be an enigma. While they often mean that a stock is overheated and set to correct, they can also reflect investor optimism. If investors think a company will outperform, then they’re often happy to pay a large premium for its stock. The final interpretation depends on the company. #-ad_banner-#Take Acuity Brands, Inc. (NYSE: AYI), for example, which is the world’s top producer of lighting fixtures and related accessories for commercial and other nonresidential settings. The firm’s price-to-earnings (P/E) ratio of 42 is about twice that of the broader stock market. But rather than being a sell signal,… Read More

Lofty valuations can be an enigma. While they often mean that a stock is overheated and set to correct, they can also reflect investor optimism. If investors think a company will outperform, then they’re often happy to pay a large premium for its stock. The final interpretation depends on the company. #-ad_banner-#Take Acuity Brands, Inc. (NYSE: AYI), for example, which is the world’s top producer of lighting fixtures and related accessories for commercial and other nonresidential settings. The firm’s price-to-earnings (P/E) ratio of 42 is about twice that of the broader stock market. But rather than being a sell signal, this relatively high P/E signals widespread confidence in Acuity’s future. The company has increased earnings by 20% annually since 2010, and the market sees it keeping up a similar pace of expansion in the coming years. Why should investors expect sustained strong growth? Because the company operates in a fragmented industry, and the company’s solid 20% market share should keep growing, thanks to a 1.7-million item product portfolio. Plus, the firm is far outclassing rivals in the industry’s premier growth segment: light-emitting diode (LED)-related products, which are gradually replacing those based on traditional fluorescent lightbulbs. Acuity capitalizes on this hot… Read More

Warning: Major Correction Could Begin July 8th One of our colleagues just showed us an urgent video warning of a major market correction. It features a millionaire trading prodigy who predicted and profited from the dot-com bubble and the 2008 crash, and he says hundreds of the most popular stocks could be in danger of plunging 10%-30%… overnight. To watch this free short video, click here. Sincerely, Brad Briggs Executive Editor, StreetAuthority… Read More

Warning: Major Correction Could Begin July 8th One of our colleagues just showed us an urgent video warning of a major market correction. It features a millionaire trading prodigy who predicted and profited from the dot-com bubble and the 2008 crash, and he says hundreds of the most popular stocks could be in danger of plunging 10%-30%… overnight. To watch this free short video, click here. Sincerely, Brad Briggs Executive Editor, StreetAuthority If one division is sabotaging an otherwise profitable firm, it’s often best to simply eliminate the lagging segment. When the odds of improvement are questionable, management probably won’t be doing shareholders any favors by attempting a costly turnaround. Such moves may seem difficult, but in the end, management will have much more latitude to invest resources in segments with higher returns.   It’s a strategy that New York City-based Assurant, Inc. (NYSE: AIZ) is wisely pursuing with its struggling health insurance division. In April, the broad-based insurer announced plans to sell or close the division,… Read More

#-ad_banner-# ​Competition is a given in any business, but it’s white hot for convenience stores. This crowded field includes scads of mom and pop operations, as well as the massive nationwide chains of 7-Eleven, Hess Corp. (NYSE: HES), Exxon Mobil Corp. (NYSE: XOM) and others. With so little to set them apart, industry participants can usually command little in the way of pricing power or customer loyalty. Profit margins are typically scant. So it’s the rare gem that’s able to develop lasting competitive advantages and consistently deliver superior financial metrics. And I’ve found… Read More

#-ad_banner-# ​Competition is a given in any business, but it’s white hot for convenience stores. This crowded field includes scads of mom and pop operations, as well as the massive nationwide chains of 7-Eleven, Hess Corp. (NYSE: HES), Exxon Mobil Corp. (NYSE: XOM) and others. With so little to set them apart, industry participants can usually command little in the way of pricing power or customer loyalty. Profit margins are typically scant. So it’s the rare gem that’s able to develop lasting competitive advantages and consistently deliver superior financial metrics. And I’ve found such a gem: Casey’s General Stores, Inc. (Nasdaq: CASY) is a thriving Midwestern chain operating both self-service gas stations and convenience stores. This business model is common, but Casey’s turned it into something special. The company’s sales have historically grown at an 11% pace and are nearing $8 billion, up from $2.8 billion in fiscal (April) 2005. Profits climbed by more than sixfold during that time to $181 million annually. Not surprisingly, Casey’s stock is demolishing the S&P 500. How did Casey’s become such a standout? For one thing, by taking the road less traveled. Read More

#-ad_banner-#With certain types of investments, you just know you’re in for a wild ride. But there’s no sense in assuming extra risk without a reasonable chance of a proportional reward. This is why I encourage investors to think twice about getting involved with Russian stocks. As anyone who follows emerging markets knows, Russian equities are exceptionally dangerous. Typically more than twice as volatile as U.S. stocks, they often vacillate between massive gains and dismal losses. However, investors willing to endure the extreme volatility haven’t gotten nearly enough in return. While they have done well lately, long-term investors have been pummeled. Read More

#-ad_banner-#With certain types of investments, you just know you’re in for a wild ride. But there’s no sense in assuming extra risk without a reasonable chance of a proportional reward. This is why I encourage investors to think twice about getting involved with Russian stocks. As anyone who follows emerging markets knows, Russian equities are exceptionally dangerous. Typically more than twice as volatile as U.S. stocks, they often vacillate between massive gains and dismal losses. However, investors willing to endure the extreme volatility haven’t gotten nearly enough in return. While they have done well lately, long-term investors have been pummeled. The largest exchange-traded fund to track Russian stocks, Market Vectors Russia ETF (NYSE: RSX), has gained nearly 25% year to date, but RSX has lost nearly half its value since inception in April 2007. And the problem isn’t fund-specific. Templeton Russia & Eastern Europe (NYSE: TRF), a closed-end mutual fund that focuses on Russia, plunged by more than 60% during the same eight-year period. Such data might trigger a Pavlovian response in contrarians, who often view deep pullbacks as buying opportunities. And with a forward price-to-earnings (P/E) ratio of around five, the Russian market… Read More

Successful companies don’t always need to target large markets. In some cases, a very narrow focus on a small niche market can also lead to huge profits. It certainly has for Alexion Pharmaceuticals, Inc. (Nasdaq: ALXN). The company’s blockbuster drug, called Soliris, received FDA approval in 2007 and now accounts for more than $2 billion in annual sales (Annual net income now averages an impressive $600 million). #-ad_banner-#Soliris doesn’t target a leading malady such as diabetes or high cholesterol. Instead, this drug is aimed at people with very rare genetic… Read More

Successful companies don’t always need to target large markets. In some cases, a very narrow focus on a small niche market can also lead to huge profits. It certainly has for Alexion Pharmaceuticals, Inc. (Nasdaq: ALXN). The company’s blockbuster drug, called Soliris, received FDA approval in 2007 and now accounts for more than $2 billion in annual sales (Annual net income now averages an impressive $600 million). #-ad_banner-#Soliris doesn’t target a leading malady such as diabetes or high cholesterol. Instead, this drug is aimed at people with very rare genetic blood disorders, which cause the body to destroy its own red blood cells. If these disorders sound deadly, it’s because they are. Left untreated, they’re highly likely to kill within five years of diagnosis. But those affected can live a normal life with proper therapy, and at present Soliris is the only option. Like many rare-disease treatments, the drug carries an eye-popping price tag:currently $400,000-to-$500,000 a year per patient. Since these patients can’t survive without Soliris, governments and other third-party payers are typically willing to shoulder the cost, ensuring blockbuster status… Read More

With the bull market looking increasingly vulnerable to a steep selloff, many investors are wisely seeking out safe, reliable market leaders that pay generous dividends. A top name to consider: the iconic healthcare firm Johnson & Johnson (NYSE: JNJ). This long-time component of the Dow Jones Industrial Average dominates on several fronts including pharmaceuticals, medical devices and consumer healthcare/personal care products. And it throws off uncommonly large amounts of cash. Indeed, free cash flow totaled more than $125 billion from 2005 through 2014, according to Morningstar data. That’s substantially more than many other Dow icons including McDonald’s Corp. (NYSE: MCD),… Read More

With the bull market looking increasingly vulnerable to a steep selloff, many investors are wisely seeking out safe, reliable market leaders that pay generous dividends. A top name to consider: the iconic healthcare firm Johnson & Johnson (NYSE: JNJ). This long-time component of the Dow Jones Industrial Average dominates on several fronts including pharmaceuticals, medical devices and consumer healthcare/personal care products. And it throws off uncommonly large amounts of cash. Indeed, free cash flow totaled more than $125 billion from 2005 through 2014, according to Morningstar data. That’s substantially more than many other Dow icons including McDonald’s Corp. (NYSE: MCD), Boeing Co. (NYSE: BA), Wal-Mart Stores Inc. (NYSE: WMT) and Procter & Gamble Co. (NYSE: PG). During the same period, these four firms reported cumulative free cash of $37 billion, $44 billion, $99 billion and $103 billion, respectively. Along with tens of billions in cash on the balance sheet, superior free cash flow enabled JNJ to dole out nearly $57 billion in dividends from 2005 to 2014. As the following chart from the firm’s investor relations webpage shows, the per-share payout more than doubled to $2.76 during that time. It has since climbed to an annualized $3 a share, which… Read More

In theory, successful stock investing hinges on a single, simple premise: buy low, sell high. If only it were that easy. In the real world, knowing when a stock is truly undervalued or overvalued  can be terribly difficult, even with the cache of valuation metrics that investors have at their disposal. Take The Middleby Corp. (Nasdaq: MIDD), a prominent worldwide food service equipment supplier with roughly $1.7 billion in annual revenue. During the past 15 years, Middleby’s stock rose more than 8,300%. Recent gains have pushed the price-to-earnings (P/E) ratio to 31, which is about 10 points higher than the… Read More

In theory, successful stock investing hinges on a single, simple premise: buy low, sell high. If only it were that easy. In the real world, knowing when a stock is truly undervalued or overvalued  can be terribly difficult, even with the cache of valuation metrics that investors have at their disposal. Take The Middleby Corp. (Nasdaq: MIDD), a prominent worldwide food service equipment supplier with roughly $1.7 billion in annual revenue. During the past 15 years, Middleby’s stock rose more than 8,300%. Recent gains have pushed the price-to-earnings (P/E) ratio to 31, which is about 10 points higher than the S&P 500’s earnings multiple. Thus, it might seem safe to conclude that Middleby has run its course, at least for now. After all, this is a company that makes everyday commercial and residential kitchen appliances, like foodwarmers, ovens, cooktops and refrigerators. With its roots in such a mundane industry, how much higher could its stock be expected to rise from current levels? Actually, several catalysts portend substantially higher stock prices in the coming years. These include a knack for acquiring state-of-the-art innovations that complement a growing product portfolio. Earlier this year, for example, Middleby purchased New Jersey-based oven… Read More

With so many stocks trading at all-time highs, avoiding those with sky-high price-to-earnings (P/E) ratios now seems to be a prudent strategy. But it’s a decision to make on a case-by-case basis. On closer inspection, it becomes apparent that some seemingly richly valued stocks have the fundamentals to support plenty more price appreciation. The nation’s third-largest fast-food chain, Wendy’s Co. (Nasdaq: WEN), is such a stock. Its shares trade for more than 40 times earnings, a multiple that is well above the broader market multiple. Yet investors should anticipate continued outperformance.  Looking for a catalyst that will send… Read More

With so many stocks trading at all-time highs, avoiding those with sky-high price-to-earnings (P/E) ratios now seems to be a prudent strategy. But it’s a decision to make on a case-by-case basis. On closer inspection, it becomes apparent that some seemingly richly valued stocks have the fundamentals to support plenty more price appreciation. The nation’s third-largest fast-food chain, Wendy’s Co. (Nasdaq: WEN), is such a stock. Its shares trade for more than 40 times earnings, a multiple that is well above the broader market multiple. Yet investors should anticipate continued outperformance.  Looking for a catalyst that will send this stock yet higher? A multi-year re-branding effort that is still bearing fruit is a clear one. Initiatives include logo and tagline revamps, as well as serious efforts to establish a meaningful digital presence (TV advertising was traditionally the preferred marketing method). There have also been wise menu changes that reflect evolving demographics and consumer preferences. Menu innovations tend to target the enormous millennial generation, which is expected to be the economy’s main growth driver in the coming decades. Thus, Wendy’s is increasing its lineup of very spicy fare, a food category that’s favored by many millennials and should also… Read More

Investors on the prowl for top-quality holdings typically seek two things: a history of robust dividends and the potential for substantially greater capital gains than the broader market. These qualities can be pretty tough to find in just one investment. Yet the WisdomTree MidCap Dividend ETF (NYSE: DON), an exchange-traded fund with net assets of $1.6 billion, offers both strong dividends and the potential for robust capital gains. Since its launch in June 2006, this ETF is up about 113% versus the S&P 500’s roughly 65% gain. The fund’s annualized dividend of $1.98 a share translates to a solid yield… Read More

Investors on the prowl for top-quality holdings typically seek two things: a history of robust dividends and the potential for substantially greater capital gains than the broader market. These qualities can be pretty tough to find in just one investment. Yet the WisdomTree MidCap Dividend ETF (NYSE: DON), an exchange-traded fund with net assets of $1.6 billion, offers both strong dividends and the potential for robust capital gains. Since its launch in June 2006, this ETF is up about 113% versus the S&P 500’s roughly 65% gain. The fund’s annualized dividend of $1.98 a share translates to a solid yield of 2.4%, compared with the S&P’s current yield of only 1.9%. DON’s track record stems from its bogey, the WisdomTree MidCap Dividend Index. This benchmark is made up of common stocks chosen from the top 75% of the WisdomTree Dividend Index (by market capitalization) after the removal of the 300 largest companies. To be included in the MidCap Dividend Index, a stock must meet certain requirements: Pay regular cash dividends during the 12 months before the index’s annual rebalance each December; have a market capitalization of at least $100 million as of the rebalance date; have an average daily… Read More