Investors that look to short stocks seek out two kinds of investments: those that are simply overvalued, and those that may go out of business. The latter are known as a “terminal short,” (as in terminally ill), and though they are rare, they can be very profitable. Parsing TiVo’s (Nasdaq: TIVO) fiscal second quarter results that were released Wednesday evening, you’ll find a company that is beginning to lose altitude. And as you look out into the future of TV and Internet programming, it’s hard to see how the company will… Read More

Investors that look to short stocks seek out two kinds of investments: those that are simply overvalued, and those that may go out of business. The latter are known as a “terminal short,” (as in terminally ill), and though they are rare, they can be very profitable. Parsing TiVo’s (Nasdaq: TIVO) fiscal second quarter results that were released Wednesday evening, you’ll find a company that is beginning to lose altitude. And as you look out into the future of TV and Internet programming, it’s hard to see how the company will remain as a compelling choice for either consumers or its media partners. Back in the red As young companies like TiVo are in growth mode, they are excused from the need to show positive cash flow. The company’s sales rose nicely through the middle of the past decade, but growth sharply slowed in fiscal (January) 2008 and has since turned negative. Trouble is, the company was only able to generate positive cash flow in fiscal 2009, but is once again back in negative cash flow mode. That’s worrisome enough. TiVo’s… Read More

It’s easy to trot out legendary investor Peter Lynch’s name every time you find an undervalued fast-growing company, but the truth is that Lynch had many different criteria that had to be met before he would purchase a stock. I always keep certain Peter Lynch criteria in… Read More

Investors see little reason to buy any stocks having to do with housing right now, and for good reason. Recent data tell us that the long-awaited upturn in housing is still over the horizon. So shares prices — especially among home furnishing retailers — fall and fall some more. In the last three months, shares of Kirkland’s (Nasdaq: KIRK) have lost almost half of their value, Haverty’s (NYSE: HVT) and Ethan Allen (NYSE: ETH) have fallen by roughly one-third, while Bed, Bath & Beyond (Nasdaq: BBBY) and Pier One Imports (NYSE: PIR) have… Read More

Investors see little reason to buy any stocks having to do with housing right now, and for good reason. Recent data tell us that the long-awaited upturn in housing is still over the horizon. So shares prices — especially among home furnishing retailers — fall and fall some more. In the last three months, shares of Kirkland’s (Nasdaq: KIRK) have lost almost half of their value, Haverty’s (NYSE: HVT) and Ethan Allen (NYSE: ETH) have fallen by roughly one-third, while Bed, Bath & Beyond (Nasdaq: BBBY) and Pier One Imports (NYSE: PIR) have fallen roughly -20%. One could assume the sell-off was the result of steadily falling profit estimates, yet consensus expectations for Bed, Bath & Beyond’s profit in 2010 and 2011 have remained flat in the past three months, and Pier One’s profit outlook has actually been strengthening. (Ethan Allen and Haverty’s, which focus on more expensive bedroom and living room sets, have been the subject of downward estimate revisions). As the table below shows, these stocks now range from reasonably priced to dirt cheap. Company (Ticker) Recent… Read More

One of the realities of a tough market is that fully-priced stocks get discounted, and under-priced stocks become really, really cheap. You can forget about the notion that stocks always deserve to trade at whatever price they currently have — known as the Efficient-Market Hypothesis. Often times, the market is… Read More

It’s an old investing axiom that you can make money when stocks are hated. The rule also applies to the broader stock market and beaten-down sectors. It always pays to check out stocks and sectors that have sharply fallen to see if emotion-based selling has pushed them so far down… Read More

During downturns in the business cycle, companies focus on cutting costs as it becomes more difficult to grow sales. Existing customers generally spend less and it is very challenging to find new customers when everyone is battening down the hatches. The severity of the current downturn could… Read More

One of the prevailing theories about the economy is that it is consumer-driven, a postulation I happen to agree with, given that consumer spending accounts for 70% of all economic activity. Part of the reason this recession began is because credit… Read More

Investors tend to steer clear of any company or industry with limited growth prospects. But there is money to be made if the rest of the market looks to shun such investments. After all, these largely matured businesses don’t need to invest much money to develop products and fuel new growth, so they can generate an outsized level of profits on their revenue streams. That’s why some investors love tobacco stocks. They’re unloved by many, but they typically offer very juicy dividends, making them a favorite among income-oriented investors. Friday morning, we were reminded… Read More

Investors tend to steer clear of any company or industry with limited growth prospects. But there is money to be made if the rest of the market looks to shun such investments. After all, these largely matured businesses don’t need to invest much money to develop products and fuel new growth, so they can generate an outsized level of profits on their revenue streams. That’s why some investors love tobacco stocks. They’re unloved by many, but they typically offer very juicy dividends, making them a favorite among income-oriented investors. Friday morning, we were reminded just how profitable these companies are: Lorillard (NYSE: LO), which makes Newport cigarettes, announced that an already juicy dividend would be boosted +12.5%, and the company plans to buy back another $1 billion in stock. Let’s take a deeper look to see if the sector should merit your investment dollars. Final spurt of growth Many of us (myself included) assumed that Big Tobacco is already in decline. Yet as the table below notes, the biggest industry players are still seeing a bit more revenue growth this year, thanks in part… Read More

One of the most fertile areas for investment research can always be found among stocks that trade for less than the price of a deluxe cheeseburger. When a stock is below $5 or $6, many mutual funds are prevented from owning them. Yet if these stocks can… Read More

Super-investor Warren Buffett has made a big bet on Johnson & Johnson (NYSE: JNJ), adding more than 17.4 million shares to the portfolio of his holding company, Berkshire Hathaway (NYSE: BRK-B). His stake in J&J is worth about $2.4 billion at current prices. The move can be seen as a classic Buffett “value” play: J&J shares, at about $58, are well off their 52-week high of $66.20 and are down nearly -10% for the year. The company has annual revenue of more than $60 billion and consistently earns returns on… Read More

Super-investor Warren Buffett has made a big bet on Johnson & Johnson (NYSE: JNJ), adding more than 17.4 million shares to the portfolio of his holding company, Berkshire Hathaway (NYSE: BRK-B). His stake in J&J is worth about $2.4 billion at current prices. The move can be seen as a classic Buffett “value” play: J&J shares, at about $58, are well off their 52-week high of $66.20 and are down nearly -10% for the year. The company has annual revenue of more than $60 billion and consistently earns returns on shareholder equity of between 25% and 30%. It has posted an increase in earnings for at least the past 10 years, and 2010 profit forecasts imply a +188.3% increase in net earnings since 2000. (Earnings have surprised to the upside for the past five years, according to Bloomberg.) The J&J stake wasn’t the only health-care bet made by the 79-year-old Buffett, whom Forbes lists as the second-richest man in the United States, with an estimated net worth of $40 billion, second only to… Read More