The life cycle of a company follows four distinct steps. The last two are maturity and decline, and both are generally not the stages when you want to invest. The first is introduction and covers the period when a company is in its start-up phase and progresses to introducing some… Read More

If you’re the CEO of a large corporation, you do not want to see your company’s name in this article. The companies in this article stumbled — badly — in the past year and have seen their shares prices fall by half — or… Read More

In my recent article The Perfect Way to Short Nuclear Power Stocks, I describe how the nuclear crisis in Japan is negatively impacting nuclear power companies worldwide, providing potentially profitable trading opportunities. However, another way to profit from the ongoing nuclear crisis is to invest in… Read More

With a rising economy comes rising expectations. CEOs at mid-sized and large companies need to find new paths to growth to justify — or boost — their company’s stock price. That’s no mean feat in an economy still in slow-growth mode. As a… Read More

In the annual shareholder letter released Feb. 11 by Berkshire Hathaway (NYSE: BRK-B), Warren Buffett announced the need for major acquisitions to help him grow Berkshire’s profits at a “decent rate.” Given the billions in cash Berkshire generates (Buffett estimates $12 billion in annual earnings power) in any given year, Buffett declared his “elephant gun has been reloaded” and that his “trigger finger is itchy” for big acquisitions. His itch was partially scratched, recently when, on March 14, Berkshire announced it would be acquiring specialty chemical firm Lubrizol (NYSE: LZ) for $9 billion in cash and… Read More

In the annual shareholder letter released Feb. 11 by Berkshire Hathaway (NYSE: BRK-B), Warren Buffett announced the need for major acquisitions to help him grow Berkshire’s profits at a “decent rate.” Given the billions in cash Berkshire generates (Buffett estimates $12 billion in annual earnings power) in any given year, Buffett declared his “elephant gun has been reloaded” and that his “trigger finger is itchy” for big acquisitions. His itch was partially scratched, recently when, on March 14, Berkshire announced it would be acquiring specialty chemical firm Lubrizol (NYSE: LZ) for $9 billion in cash and the assumption of $700 million in debt. Buffett said he liked Lubrizol’s global leadership position in several areas, which include its lubricant additives for engine oils and related fuel additives for gasoline and diesel fuel. The buyout price-to-earnings (P/E) ratio is less than 14 based on trailing earnings and will qualify as the fourth-largest acquisition in Berkshire’s storied history. Buffett recently said he was still interested in more acquisitions and isn’t ruling out any sector or area of the world, save for… Read More

T.S. Eliot once wrote that “April is the cruelest month.” Yet a half-dozen companies that sell optical networking equipment would beg to differ: March has been quite cruel and they’re hoping April will be far kinder. The entire group rallied higher in the first week on word… Read More

Think of the economic cycle as a wheel…     This image roughly captures the whole cycle, highlighting the various stages of economic growth and contraction. Right now, we’re just past “9 o’clock” on the wheel, as commodity prices have been steadily rising (although with some recent profit-taking). We’re surely done with the “8 o’clock” phase, where we saw stocks post a remarkable two-year rally after a sudden plunge. If the current cycle plays out as it has in the past, then more stock gains lie ahead, but perhaps in a more limited… Read More

Think of the economic cycle as a wheel…     This image roughly captures the whole cycle, highlighting the various stages of economic growth and contraction. Right now, we’re just past “9 o’clock” on the wheel, as commodity prices have been steadily rising (although with some recent profit-taking). We’re surely done with the “8 o’clock” phase, where we saw stocks post a remarkable two-year rally after a sudden plunge. If the current cycle plays out as it has in the past, then more stock gains lie ahead, but perhaps in a more limited fashion than some realize. We may be looking at an extended period of economic expansion in coming years, but stocks prices always look ahead and have already anticipated some of that expansion. [For more on how sector rotation can lead you to the right stocks to profit, go here.] The economy has started to sputter back to life, as seen by rising employment figures and positive quarterly gross domestic product (GDP) reports. We’re just about at “9 o’clock,” or “general recovery.” When monthly employment trends really start to… Read More

You’ve no doubt heard plenty as to why commodities are going through the roof. Yes, turmoil in the Middle East plays a part. As does a weakening U.S. dollar. But perhaps the underlying catalyst in the commodities pits is China. The… Read More

Warren Buffett takes a seemingly cavalier approach to leadership succession plans. The 80-year-old investing legend likes to insist that when it comes time for him to step down from Berkshire Hathaway (NYSE: BRK-B), very little will change. After all, the Berkshire has a deep bench of executives, all of whom are well-schooled in the firm’s winning investment philosophy. In reality, a change in leadership at Berkshire brings significant risk. First, Buffett’s unique intellectual skills can be hard to replicate. Simply mimicking his approach is not the same as thinking creatively, as he does. Second, even if such… Read More

Warren Buffett takes a seemingly cavalier approach to leadership succession plans. The 80-year-old investing legend likes to insist that when it comes time for him to step down from Berkshire Hathaway (NYSE: BRK-B), very little will change. After all, the Berkshire has a deep bench of executives, all of whom are well-schooled in the firm’s winning investment philosophy. In reality, a change in leadership at Berkshire brings significant risk. First, Buffett’s unique intellectual skills can be hard to replicate. Simply mimicking his approach is not the same as thinking creatively, as he does. Second, even if such a successor were a very solid candidate, it will be hard to follow Buffett’s plain-spoken folksy style that really connects with investors. A successor that lacks Buffett’s charisma may not be able to retain the key relationship between Berkshire and its investors, turning the firm into just another anonymous mega-sized investment organization. Since Warren Buffett dropped hints at a March 21 conference in India that Berkshire insider Ajit Jain could easily assume the reins, investors need to take a close look at his background and style. Could he really fill those giant shoes? A… Read More

The capital markets are enjoying a bit of a renaissance in maniacal, pre-IPO valuation for Internet companies, more specifically, social networking businesses. The 900-pound gorilla of social networking, Facebook, has an estimated value of $50 billion or so thanks in part to the fact it decided to be Goldman… Read More