A combination of capacity growth, higher fuel prices and worries about the health of the global economy have sent airline stocks skidding this year. The US Global Jets ETF (NYSE: JETS) is down 10% and many of the major carriers are down upwards of 20% since the beginning of the year. Investors are now skittish about shares that have popped triple-digits over the last five years in an industry notorious for cyclicality and heavy competition.  #-ad_banner-#Taking a closer look at the data reveals some broad differences in outlook among the individual names and an opportunity to profit from the current… Read More

A combination of capacity growth, higher fuel prices and worries about the health of the global economy have sent airline stocks skidding this year. The US Global Jets ETF (NYSE: JETS) is down 10% and many of the major carriers are down upwards of 20% since the beginning of the year. Investors are now skittish about shares that have popped triple-digits over the last five years in an industry notorious for cyclicality and heavy competition.  #-ad_banner-#Taking a closer look at the data reveals some broad differences in outlook among the individual names and an opportunity to profit from the current selloff. Capacity growth could moderate in some routes and oil may have topped out for the year.  One heavy-weight is trading for nearly half the valuation of its peers and is taking advantage of the situation to buy up its shares.  Diverging Outlooks For Regional Versus International Carriers The Air Transport Bureau reported in May that available seats per kilometer, the industry metric for capacity, grew by an annualized 9.6% in February on a year-over-year basis. The increase was significant because it was the first time in more than a year that capacity growth had outstripped passenger traffic. Airlines… Read More

Trading on headlines can be some of your best investments on the long- or short-side. Investors get so caught up in the herd mentality that even headlines with little real fundamental importance can lead to massive swings in a stock’s price.  When fundamentals reassert themselves, the shares can swing quickly in the other direction and investors stampede back into the stock to drive the price even further. #-ad_banner-#One of the most common headline risks for U.S. companies is litigation. For some, lawsuits have almost become a normal course of business to protect a company’s patents, contracts or business model. One… Read More

Trading on headlines can be some of your best investments on the long- or short-side. Investors get so caught up in the herd mentality that even headlines with little real fundamental importance can lead to massive swings in a stock’s price.  When fundamentals reassert themselves, the shares can swing quickly in the other direction and investors stampede back into the stock to drive the price even further. #-ad_banner-#One of the most common headline risks for U.S. companies is litigation. For some, lawsuits have almost become a normal course of business to protect a company’s patents, contracts or business model. One trading target recently saw its shares plummet on a lawsuit by its largest customer. The company is a market share leader in an industry with strong demographic tailwinds, but investors have headed for the exit on a lawsuit that may turn out to be insignificant.  Shares are trading at an 18% discount to fair value and the longer-term outlook is much higher.  In The War On Rising Healthcare Costs, This Leader Could Broker A Truce Express Scripts Holdings (Nasdaq: ESRX) is the largest pharmacy benefits manager (PBM) in the United States through a mail-order pharmacy and network of retailers. Read More

Some investors look for capital appreciation; others are focused more on income. But one of the smartest ways to invest is to combine both of these goals in a single stock. A growth and income strategy leads to undervalued stocks of companies that generate a lot of cash — exactly the kind of investment favored by such legendary investors as Warren Buffett. #-ad_banner-#The problem is that the highest-quality companies rarely trade at cheap valuations. That doesn’t mean they can’t deliver capital appreciation; in fact, over time they often do. But you get more bang for your buck when… Read More

Some investors look for capital appreciation; others are focused more on income. But one of the smartest ways to invest is to combine both of these goals in a single stock. A growth and income strategy leads to undervalued stocks of companies that generate a lot of cash — exactly the kind of investment favored by such legendary investors as Warren Buffett. #-ad_banner-#The problem is that the highest-quality companies rarely trade at cheap valuations. That doesn’t mean they can’t deliver capital appreciation; in fact, over time they often do. But you get more bang for your buck when you buy a stock at a below-average valuation. So it’s useful to look for companies that are high quality but somewhat out of favor temporarily. Maybe they’re in a sector that is expected to face headwinds in the near future, or they’re constrained in the short run by high debt or regulatory uncertainty. Whatever the reason, their low valuation can be an opportunity to pick up shares that stand a good chance of paying off big over time. Today, let’s look at two companies that are trading at attractive valuations while also paying out generous dividend yields. Ford Motor (NYSE:… Read More

While the market has started pricing in a June rate hike by the Federal Reserve, it’s still putting odds of the Fed actually raising rates at less than a third. This contrasts with the hawkish commentary from several Fed officials lately, however, which leaves me with the feeling that the Fed is trying to ready markets for a change.  Merely the threat of a rate hike has forced a selloff in stocks over the last several years, and investors need to come to grips with the fact that the market may be underestimating the potential for higher rates sooner rather… Read More

While the market has started pricing in a June rate hike by the Federal Reserve, it’s still putting odds of the Fed actually raising rates at less than a third. This contrasts with the hawkish commentary from several Fed officials lately, however, which leaves me with the feeling that the Fed is trying to ready markets for a change.  Merely the threat of a rate hike has forced a selloff in stocks over the last several years, and investors need to come to grips with the fact that the market may be underestimating the potential for higher rates sooner rather than later. #-ad_banner-#A look at historical data and correlations to bond prices shows that in an environment of rising rates not all sectors are created equal, and some sectors may actually benefit from higher rates. Is your portfolio ready? Will A Surprise Rate Hike Spell Disaster For Stocks? Market expectations of a June hike have come up, but are still low despite evidence of a stronger economy and comments from Fed members. The CME Group FedWatch tool shows a market-based chance of just 28% for a June hike, up from 13% last month. While a June hike is still… Read More

It became clear late last year that the Federal Reserve intended to finally raise short-term interest rates, which it had kept near zero for years to allow the economy to recover from the financial crisis. Years into recovery, with unemployment low and some signs of inflation pressure, the Fed felt that rates could move slightly higher, while remaining historically low. The first hike came in December, and most analysts expected two to three additional increases in 2016. But so far, no hikes have been announced this year. Weak economies abroad, continued rock-bottom energy prices and iffy corporate earnings all suggested… Read More

It became clear late last year that the Federal Reserve intended to finally raise short-term interest rates, which it had kept near zero for years to allow the economy to recover from the financial crisis. Years into recovery, with unemployment low and some signs of inflation pressure, the Fed felt that rates could move slightly higher, while remaining historically low. The first hike came in December, and most analysts expected two to three additional increases in 2016. But so far, no hikes have been announced this year. Weak economies abroad, continued rock-bottom energy prices and iffy corporate earnings all suggested that inflationary pressure was not a concern.  #-ad_banner-#But many Fed watchers now predict a mid-year increase when the Fed’s policy committee meets in June, and Fed leaders have started telegraphing the possibility of a 25-basis-point hike (0.25 percentage points) at that meeting. With the economy continuing to grow, unemployment remaining low and other economic indicators positive, it seems likely that rates will go up, as the Fed seeks to balance the need to tamp down on inflation with the need to help the economy continue to expand. And the Fed historically has been reluctant to raise rates in the months… Read More

There’s an old marketing adage that the best way to make money is through health, wealth or romance — and it’s proving as true in the internet age as it was on Madison Avenue. While retail sales stumble and the economy inches along, people will always pay for advice and services to make them healthier, wealthier and to find that one true love. The first large-scale computer dating system was created nearly 60 years ago, but the online dating industry seems to have found its sweet spot in millennials making it the best stock to invest in right now. The… Read More

There’s an old marketing adage that the best way to make money is through health, wealth or romance — and it’s proving as true in the internet age as it was on Madison Avenue. While retail sales stumble and the economy inches along, people will always pay for advice and services to make them healthier, wealthier and to find that one true love. The first large-scale computer dating system was created nearly 60 years ago, but the online dating industry seems to have found its sweet spot in millennials making it the best stock to invest in right now. The share of 18- to 24-year olds that have gone online to find love has tripled since 2013. Nearly a third of the group has used online dating, almost twice the proportion in the general population.  The addressable market of singles with internet access tops 500 million in North America and Western Europe alone, and is expected to grow to 672 million by 2019. While buyers in most sectors remain price conscious more than seven years after the Great Recession, dating sites are able to charge premium subscriptions up to $60 per month.  #-ad_banner-#One company is the undisputed leader… Read More

When I started in the investment biz twenty years ago, the Tech Bubble was building engine pressure. When then Fed Chairman Alan Greenspan referred to the mania as “irrational exuberance”, he was understating. Valuations and expectations were insane. Period. #-ad_banner-#The Nasdaq Composite (COMP) was pretty much the benchmark for the technology madness. After a spectacular run up people from all walks of life were inspired to quit their day jobs to chase instant wealth day trading online. Of course it ended badly. From its peak, the Nasdaq gave up nearly 75% of the crazy money it made over… Read More

When I started in the investment biz twenty years ago, the Tech Bubble was building engine pressure. When then Fed Chairman Alan Greenspan referred to the mania as “irrational exuberance”, he was understating. Valuations and expectations were insane. Period. #-ad_banner-#The Nasdaq Composite (COMP) was pretty much the benchmark for the technology madness. After a spectacular run up people from all walks of life were inspired to quit their day jobs to chase instant wealth day trading online. Of course it ended badly. From its peak, the Nasdaq gave up nearly 75% of the crazy money it made over the five year party. Thirteen years later, the Nasdaq has reclaimed the dizzying highs from the heady days at the beginning of the 21st century. Are we headed for another crash? I don’t know, and I’m not going to utter the most dangerous phrase in investing: this time it’s different. But, I am going to talk about valuations of a two of the biggest names in tech then and now. Basically, it’s damned near impossible to move data anywhere without these two companies facilitating the process. The big two? Cisco Systems (Nasdaq: CSCO) and Intel Corp. (Nasdaq: INTC).   Peak… Read More

Regulatory hurdles have always been a challenge for corporate mergers and acquisitions, but Washington turned the game upside down recently with two sets of rules from the Treasury Department. As with any new and far-reaching regulatory oversight, there will not only be losers affected by the rules, but also winners that are able to take advantage of the new competitive landscape. The Treasury released two sets of rules on April 4: one that pushes profits to low-tax countries in a technique called ‘earnings stripping’ and another that cracks down on corporate inversions. In an inversion, a U.S. company acquires or… Read More

Regulatory hurdles have always been a challenge for corporate mergers and acquisitions, but Washington turned the game upside down recently with two sets of rules from the Treasury Department. As with any new and far-reaching regulatory oversight, there will not only be losers affected by the rules, but also winners that are able to take advantage of the new competitive landscape. The Treasury released two sets of rules on April 4: one that pushes profits to low-tax countries in a technique called ‘earnings stripping’ and another that cracks down on corporate inversions. In an inversion, a U.S. company acquires or merges with a foreign rival and then moves its headquarters overseas to a country with a much lower corporate tax schedule. #-ad_banner-#The new attack against inversions potentially puts U.S. companies at a disadvantage when bidding on foreign companies because they won’t get the benefit of operating in a lower-tax jurisdiction. That opens the door to foreign rivals that can snap up assets without competition from U.S. firms.  One best of breed Israeli company is doing just that to secure a huge lead against others in the sector. This Generic Drug Powerhouse Is About To Get Even Bigger The new… Read More

In the second week of January, U.S. stocks were in freefall — on their way to one of the worst Januarys ever. But as I advised at the time, the selloff created buying opportunities for many excellent stocks that investors were punishing unfairly. I didn’t see a bear market starting then, and even though the correction continued for a couple more weeks, it ended and was followed by a solid recovery. For the year to date, the S&P 500 is now in slightly positive territory. I also advised that “certain stocks are buy-and-hold candidates whenever they’re relatively cheap: large, financially… Read More

In the second week of January, U.S. stocks were in freefall — on their way to one of the worst Januarys ever. But as I advised at the time, the selloff created buying opportunities for many excellent stocks that investors were punishing unfairly. I didn’t see a bear market starting then, and even though the correction continued for a couple more weeks, it ended and was followed by a solid recovery. For the year to date, the S&P 500 is now in slightly positive territory. I also advised that “certain stocks are buy-and-hold candidates whenever they’re relatively cheap: large, financially strong companies with established brands and commanding shares in growing markets.”  That’s still true today. #-ad_banner-#So let’s take a look at the true blues I profiled back in January and see if they’re still worth holding — or buying — now.  3M (NYSE: MMM) is a household name with products found in every home and office in the country — and in much of the rest of the world as well. Known for iconic brands like Scotch and Post-it, 3M makes a mind-boggling 55,000-plus products aimed at consumers, businesses and everyone in between, generating more than $30 billion in… Read More

Shares of Chipotle (NYSE: CMG) have had a rocky year in 2016. Last quarter’s weak earnings report showed that the company is still suffering in the wake of the E. coli and other health-related outbreaks.  These health scares have led to a fall in traffic to its stores and Chipotle can’t quite figure how to get customers excited again, much less investors.  #-ad_banner-#Same-store sales (those opened for longer than a year) were down a whopping 29% in Q1. Second quarter same-store sales will likely be down 20%, which is tracking below Wall Street expectations.  Yet, with the stock down 28%… Read More

Shares of Chipotle (NYSE: CMG) have had a rocky year in 2016. Last quarter’s weak earnings report showed that the company is still suffering in the wake of the E. coli and other health-related outbreaks.  These health scares have led to a fall in traffic to its stores and Chipotle can’t quite figure how to get customers excited again, much less investors.  #-ad_banner-#Same-store sales (those opened for longer than a year) were down a whopping 29% in Q1. Second quarter same-store sales will likely be down 20%, which is tracking below Wall Street expectations.  Yet, with the stock down 28% over the past 12 months, it’s now convincing value investors like myself to take a closer look. But I’m finding that Chipotle might still have a lot of issues with no quick or easy fix.  But Is There A Silver Lining? Now, there could be an opportunity for Chipotle to rekindle eaters’ interest. This includes rolling out new menu items and potentially breaking into the heated breakfast market. The company has already announced that it plans to start offering chorizo as a protein option in its restaurants.  Then there’s the breakfast opportunity. Breakfast has proven to be big business… Read More