Great companies typically have two things in common:  One is a clearly defined, best-in-class portfolio of products or services that’s leveraged into industry-leading market share and profits. The other is the ability to know when it’s time to begin re-inventing the business model to avoid stagnation. By this definition, the management consulting, IT services and outsourcing giant Accenture Plc (NYSE: ACN) is a great company. Founded in 1989 (after a name change from Arthur Anderson Consulting), Accenture has evolved into an industry leader. Thanks to proven expertise in dozens of industries, the firm does business with three-quarters of the domestically-focused… Read More

Great companies typically have two things in common:  One is a clearly defined, best-in-class portfolio of products or services that’s leveraged into industry-leading market share and profits. The other is the ability to know when it’s time to begin re-inventing the business model to avoid stagnation. By this definition, the management consulting, IT services and outsourcing giant Accenture Plc (NYSE: ACN) is a great company. Founded in 1989 (after a name change from Arthur Anderson Consulting), Accenture has evolved into an industry leader. Thanks to proven expertise in dozens of industries, the firm does business with three-quarters of the domestically-focused companies in the S&P 500. It has a large global footprint, too, with operations in 120 countries. Since 2010, annual revenues have risen by more than 40% to almost $33 billion and earnings are up nearly 80% to $4.71 per share. In the nine years since it initiated a dividend, Accenture increased its payout nearly seven-fold, to $2.04 a share. Shareholders have also enjoyed outsized capital gains. However, Accenture’s traditional businesses are fairly mature, portending  a substantially slower pace of expansion in coming years. Accenture is already adapting, though, by moving aggressively into one of the highest-growth… Read More

For long-term investors, certain characteristics can make a stock virtually irresistible. Key attributes include a compelling portfolio of indispensable products, dominant market share, consistently strong cash flow and clear avenues for future growth. Indeed, such virtues are common in what StreetAuthority refers to as “Forever Stocks.” The term applies to shares of firms that are so financially sound and perform so reliably over the long haul, that investors can feel reasonably safe owning shares for decades. I see such promise in Amphenol Corp. (NYSE: APH), a top producer of electronic and fiber optic connectors, cable and interconnect systems. Amphenol displays… Read More

For long-term investors, certain characteristics can make a stock virtually irresistible. Key attributes include a compelling portfolio of indispensable products, dominant market share, consistently strong cash flow and clear avenues for future growth. Indeed, such virtues are common in what StreetAuthority refers to as “Forever Stocks.” The term applies to shares of firms that are so financially sound and perform so reliably over the long haul, that investors can feel reasonably safe owning shares for decades. I see such promise in Amphenol Corp. (NYSE: APH), a top producer of electronic and fiber optic connectors, cable and interconnect systems. Amphenol displays nearly all of the strengths that long-term investors covet. And with a couple relatively small tweaks, this company could attain the status of Forever Stock. In terms of financial performance, the firm could hardly be more reliable. As the following table shows, revenue, earnings and free cash flow all grew significantly in every full year but one since 2005. Sales, for example, have been compounding by about 13% annually. Any declines were limited to the Great Recession, and in all cases strong growth resumed within a year. Industry-leading profit margins were a consistent theme throughout the period. Amphenol Corp. Financial… Read More

More than two decades have passed since research scientists first announced a method to identify every strand of a human’s DNA. In the early years of gene sequencing research, progress was slow. However, many investors may be shocked to learn just how far this industry has come in just the past few years. Equipment advances now permit rapid and accurate mapping of virtually every type of organism from microbes and plants to animals and humans. The genetic data obtained with these technologies have numerous public health applications, such as developing better infectious disease therapies, screening for cancer or birth defects… Read More

More than two decades have passed since research scientists first announced a method to identify every strand of a human’s DNA. In the early years of gene sequencing research, progress was slow. However, many investors may be shocked to learn just how far this industry has come in just the past few years. Equipment advances now permit rapid and accurate mapping of virtually every type of organism from microbes and plants to animals and humans. The genetic data obtained with these technologies have numerous public health applications, such as developing better infectious disease therapies, screening for cancer or birth defects and studying population-wide patterns of illness. Early last year, the gene sequencing industry finally attained an ambitious goal that it had been pursuing for years: the ability to rapidly map an entire human genome for just $1,000. A decade ago, the process took months and cost many millions of dollars. Still, the achievement didn’t receive much media attention, and neither did the firm responsible for the breakthrough. It’s time that investors know more about Illumina, Inc. (Nasdaq: ILMN). Rarely does a company so thoroughly dominate its niche, especially where such exciting growth opportunities still abound. Indeed, the gene… Read More

Did it really work? It’s a question many investors are pondering seven months after the conclusion of the Federal Reserve’s massive quantitative easing (QE) program, in which trillions of dollars were pumped into the banking system from 2008 to 2014. The aim was to shock the ailing economy into recovery by providing a flood of cash for banks to lend at ultra-cheap rates. It was an unprecedented move that possibly forestalled a more severe economic downturn, perhaps even a depression. However, the program continued long after the U.S. economy was out of crisis, mainly because of the belief that QE… Read More

Did it really work? It’s a question many investors are pondering seven months after the conclusion of the Federal Reserve’s massive quantitative easing (QE) program, in which trillions of dollars were pumped into the banking system from 2008 to 2014. The aim was to shock the ailing economy into recovery by providing a flood of cash for banks to lend at ultra-cheap rates. It was an unprecedented move that possibly forestalled a more severe economic downturn, perhaps even a depression. However, the program continued long after the U.S. economy was out of crisis, mainly because of the belief that QE could generate robust, sustainable long-term growth by facilitating lending, business investment and hiring. The economy is so complex that such a hypothesis may take years to confirm or disprove. But in the meantime, there are plenty of compelling signs that QE is nothing near the growth driver that policymakers had hoped. Vulnerable Economy Perhaps the most obvious sign of QE’s limits is how quickly the economy lost steam when the program ended. After surging by a 5% annual rate in the third quarter of 2014, gross domestic product (GDP) rose just 2.2% in the fourth quarter. The slump in growth… Read More

After many years of neglect, the pipeline for new antibiotic drugs is finally beginning to ramp up again. The catalyst: the rise of “superbugs,” which are bacteria that have developed resistance to some or all of the currently available antibiotics. Infections with such bacteria can be extremely difficult or even impossible to treat, and they’re often far more severe than those caused by non-resistant organisms. In the latest government budget proposal, which allocates $1.2 billion to combatting antibiotic resistance, the Obama administration estimated that superbugs now cause two million illnesses and 23,000 deaths annually in the United States. The failure… Read More

After many years of neglect, the pipeline for new antibiotic drugs is finally beginning to ramp up again. The catalyst: the rise of “superbugs,” which are bacteria that have developed resistance to some or all of the currently available antibiotics. Infections with such bacteria can be extremely difficult or even impossible to treat, and they’re often far more severe than those caused by non-resistant organisms. In the latest government budget proposal, which allocates $1.2 billion to combatting antibiotic resistance, the Obama administration estimated that superbugs now cause two million illnesses and 23,000 deaths annually in the United States. The failure to address antibiotic resistance (by creating new antibiotics, among other measures) could lead to 300 million premature deaths worldwide and shear up to $100 trillion off of the global economy over the next 35 years, notes economist Jim O’Neill. #-ad_banner-#Despite the gravity of the issue, large pharmaceutical companies devote virtually no resources to antibiotic development and haven’t for years. “Big Pharma” largely quit the antibiotics business back in the 1990s, deterred mainly by high R&D costs and low perceived profit potential. To help stimulate new advances, the federal government passed the Generating Antibiotic Incentives Now (GAIN) Act. The 2012 legislation… Read More

Airline stocks have been a popular investing theme over the past few years, as many of them have tripled, quadrupled or even quintupled in the past few years. Yet investors are overlooking a crucial and highly successful behind-the-scenes industry player. Netherlands-based AerCap Holdings NV (NYSE: AER), the world’s largest aircraft lessor, is a stock that should be on your radar. AerCap has been handily beating Wall Street earnings estimates, delivering as much as 65% upside during the past four quarters. Its stock, too, has been generating profits that make the S&P 500’s performance look meager. Despite this stock’s… Read More

Airline stocks have been a popular investing theme over the past few years, as many of them have tripled, quadrupled or even quintupled in the past few years. Yet investors are overlooking a crucial and highly successful behind-the-scenes industry player. Netherlands-based AerCap Holdings NV (NYSE: AER), the world’s largest aircraft lessor, is a stock that should be on your radar. AerCap has been handily beating Wall Street earnings estimates, delivering as much as 65% upside during the past four quarters. Its stock, too, has been generating profits that make the S&P 500’s performance look meager. Despite this stock’s massive gains, trailing and forward price-to-earnings ratios of only about 11 and 9, respectively, suggesting most investors still don’t have the stock on their radar. That’s unfortunate. Without companies like AerCap, the airlines might not be looking at record profits. They’d have to own all of their own aircraft, and the added cost would hold them back. #-ad_banner-#That’s why most airlines choose to lease at least a portion of their fleet. And for this, they’re turning increasingly to AerCap. The company vaulted to the top of its industry a year ago with a $7.6-billion buyout of International Lease Finance Corp.,… Read More

Stock splits are typically seen as bullish events, even though they don’t change the value of your investment. They simply increase the number of shares outstanding and reduce the price per share on a proportional basis. What’s important is the reason for a split. Companies usually do it when the stock price has risen so high that management thinks a price cut is necessary to keep shares looking attractive for investors, many of whom equate lower-priced shares with better values. Investors tend to see a stock split as a sign of financial strength, since splits are often announced at the… Read More

Stock splits are typically seen as bullish events, even though they don’t change the value of your investment. They simply increase the number of shares outstanding and reduce the price per share on a proportional basis. What’s important is the reason for a split. Companies usually do it when the stock price has risen so high that management thinks a price cut is necessary to keep shares looking attractive for investors, many of whom equate lower-priced shares with better values. Investors tend to see a stock split as a sign of financial strength, since splits are often announced at the same time as dividend hikes. Plus, studies have found a strong positive correlation between stock splits and future earnings growth. Clearly, splits have positive implications for portfolio performance, and a good real-world example of this comes from a unique exchange-traded fund called the USCF Stock Split ETF (NYSE: TOFR). The fund, which provides an easy way to gain regular exposure to stock splitters, has risen roughly 10% in value since last September, while the S&P 500 has risen around 7%.  The fund is still only about eight months old, and only has about $5 million in net assets thus… Read More

When seeking market-beating stocks, few investors would probably consider a category as pedestrian as heating, ventilation, air conditioning (HVAC). And that would be a missed opportunity. Some HVAC stocks have been beating the market handily and not just lately but for years. One especially stellar performer: Lennox International Inc. (NYSE: LII), an industry leader with annual sales of $3.4 billion. Lennox’s stock is up 190% in the past three years, handily outpacing the S&P 500. Stocks typically only crush the market like this when the underlying company enjoys major long-term competitive advantages. And Lennox surely does. At the… Read More

When seeking market-beating stocks, few investors would probably consider a category as pedestrian as heating, ventilation, air conditioning (HVAC). And that would be a missed opportunity. Some HVAC stocks have been beating the market handily and not just lately but for years. One especially stellar performer: Lennox International Inc. (NYSE: LII), an industry leader with annual sales of $3.4 billion. Lennox’s stock is up 190% in the past three years, handily outpacing the S&P 500. Stocks typically only crush the market like this when the underlying company enjoys major long-term competitive advantages. And Lennox surely does. At the macro level, it’s one of the five core players in the HVAC market, and the market outlook is bright due to continued strength in real estate. Lennox focuses much more on residential than commercial real estate. So data like rising housing starts, increased filings for single-family home construction permits and spiking homebuilder confidence all bode especially well for the firm’s future. Another key macro indicator favoring Lennox is the Contractor Comfort Index, a measure of near-term growth expectations among HVAC contractors. April’s Index reading of 82 reflects very strong expectations (anything greater than 50 indicates a positive growth outlook). The… Read More

SodaStream International Ltd. (Nasdaq: SODA) is a classic case of a widely anticipated initial public offering that didn’t pan out.  Since bursting onto the scene in a late-2010 IPO, the carbonated soda machine maker received considerable investor buzz before eventually succumbing to unrealistic growth expectations.  On many occasions, the firm’s stock rallied on turnaround hopes or buyout rumors. Yet as the chart below shows, SodaStream never evolved into a profitable long-term investment. But more than just an unfortunate tale, SodaStream provides a crucial lesson on how to avoid repeating history by being alert for other stocks… Read More

SodaStream International Ltd. (Nasdaq: SODA) is a classic case of a widely anticipated initial public offering that didn’t pan out.  Since bursting onto the scene in a late-2010 IPO, the carbonated soda machine maker received considerable investor buzz before eventually succumbing to unrealistic growth expectations.  On many occasions, the firm’s stock rallied on turnaround hopes or buyout rumors. Yet as the chart below shows, SodaStream never evolved into a profitable long-term investment. But more than just an unfortunate tale, SodaStream provides a crucial lesson on how to avoid repeating history by being alert for other stocks headed down a similar path — such as The Container Store Group, Inc. (NYSE: TCS). Like SodaStream, the Container Store is a once-hot IPO that has become a perilous value trap. After much pre-IPO hype, The Container Store saw its shares double in its trading debut in 2013. The stock tacked on further gains in ensuing months, but has since fallen more than 60% from the January 2014 high.  As a business, The Container Store bears no resemblance to SodaStream, offering a range of household storage containers and organization systems. But it has the same problem. Read More

Healthcare has been the market’s best-performing sector during the past five years, with many stocks rising 200% or more. However, investors shouldn’t assume that the sector has been fully exploited. While many healthcare stocks have probably topped out for now, others still have room to run.  For outsized gain potential in the coming years, consider a relatively small, but innovative, medical device company called Natus Medical, Inc. (Nasdaq: BABY). Shares of Natus have been on fire, thanks to success in the firm’s two main markets, neurology and newborn care. Yet the promise of more growth, with the help of several… Read More

Healthcare has been the market’s best-performing sector during the past five years, with many stocks rising 200% or more. However, investors shouldn’t assume that the sector has been fully exploited. While many healthcare stocks have probably topped out for now, others still have room to run.  For outsized gain potential in the coming years, consider a relatively small, but innovative, medical device company called Natus Medical, Inc. (Nasdaq: BABY). Shares of Natus have been on fire, thanks to success in the firm’s two main markets, neurology and newborn care. Yet the promise of more growth, with the help of several encouraging new ventures, should propel Natus well beyond its current market value of $1.2 billion. Founded in 1989, Natus first made its mark in neurology by providing tests for the detection and  monitoring of epilepsy, Alzheimer’s disease and many other neurological disorders. The firm offers multiple varieties of (and adjuncts to) three such tests: electroencephalography (EEG), electromyography (EMG) and polysomnography (PSG). In a key competitive advantage, these devices typically run on proprietary software or algorithms, which confer unique features, such as a seizure detection program that enables faster, more accurate EEG interpretation. Accuracy is further boosted by a… Read More