How many ways are there to value a stock? Too many, which is why the market’s participants rarely agree on which stock truly is “the most undervalued” name. That one-dimensional approach, though — where a measure like a price-to-earnings (P/E) ratio or earnings growth is used as the yardstick — is the very reason the hunt for value doesn’t always find a winner. A truly undervalued stock looks good by all the relevant measures. Such an approach certainly whittles down the number of truly… Read More

How many ways are there to value a stock? Too many, which is why the market’s participants rarely agree on which stock truly is “the most undervalued” name. That one-dimensional approach, though — where a measure like a price-to-earnings (P/E) ratio or earnings growth is used as the yardstick — is the very reason the hunt for value doesn’t always find a winner. A truly undervalued stock looks good by all the relevant measures. Such an approach certainly whittles down the number of truly great candidates, but that’s the whole point. And which stock in the S&P 500 is the most undervalued right now? It’s (drum roll please…) railroad company Union Pacific (NYSE: UNP). To be clear, Union Pacific isn’t more attractive than any other S&P 500 constituent based on any one single criterion. It is, however, near the top of the leader board for the greatest number of criteria, making the sum of those numbers the compelling aspect that makes it worth considering for your portfolio. Take its P/E ratio for instance. Union Pacific’s trailing-twelve-month P/E is… Read More

The stock market always looks ahead. That old axiom has never been more true as investors seek out companies that are slumping now but poised for better days ahead. Just look at the stock charts of Office Depot (NYSE: ODP), H&R Block (NYSE: HRB) and Sandridge Energy… Read More

For nearly a decade, I have gone to Las Vegas to meet up with a group of friends who share my interest in poker. Every year, we have our picture taken at Binion’s Horseshoe Casino, the birthplace of the World Series of Poker. Looking back over past pictures, I can see how much my friends and I have changed. (By the way, we aren’t old, we’re “seasoned.”) But if we have changed over the years, so has Las Vegas. Las Vegas transformed itself from a cheap gambling destination to a celebrity hangout. In the… Read More

For nearly a decade, I have gone to Las Vegas to meet up with a group of friends who share my interest in poker. Every year, we have our picture taken at Binion’s Horseshoe Casino, the birthplace of the World Series of Poker. Looking back over past pictures, I can see how much my friends and I have changed. (By the way, we aren’t old, we’re “seasoned.”) But if we have changed over the years, so has Las Vegas. Las Vegas transformed itself from a cheap gambling destination to a celebrity hangout. In the mid-2000s, casinos tried to outdo each other for the title of most luxurious. Rooms on the Strip were hard to find less than $200 a night — and $10,000-a-night suites were there for the asking. To some extent, the economic downturn has Las Vegas returning to its roots. Bargain shoppers are finding plenty of rooms in luxury hotels for less than $40 a night. And casinos are bending over backward to cater to their new price-sensitive clientele. During my last visit, I saw off-peak breakfast specials for $1.99. Happy hours and “ladies drink free”… Read More

Stock prices have rallied more than 20% in the past 12 months, but it is still possible for investors to find bargains — if they are willing to do a little research. Investing in underpriced stocks often requires patience, since the expectation is generally for a gradual rise in value. But sometimes these stocks attract the attention of corporate raiders and shoot up overnight. This recently happened with Clorox Corp. (NYSE:CLX). An investor group led by Carl Icahn determined Clorox was undervalued and purchased 9% of the outstanding stock, which resulted in surge of about 9% in… Read More

Stock prices have rallied more than 20% in the past 12 months, but it is still possible for investors to find bargains — if they are willing to do a little research. Investing in underpriced stocks often requires patience, since the expectation is generally for a gradual rise in value. But sometimes these stocks attract the attention of corporate raiders and shoot up overnight. This recently happened with Clorox Corp. (NYSE:CLX). An investor group led by Carl Icahn determined Clorox was undervalued and purchased 9% of the outstanding stock, which resulted in surge of about 9% in Clorox’s share price within two trading days. Before Icahn’s investment, Clorox shares had been trading for 16 times trailing earnings and yielded more than 3%. [To find out what else Icahn has been buying, go here.] #-ad_banner-# I set out to find undervalued wallflowers that missed the market rally by running a screen for mid-cap and large cap stocks that trade at price-to-earnings (P/E) multiples well below the S&P 500. My screen looked at both trailing 12-month P/E and forward P/E multiples. Read More

Want a great stock tip? You might want to take one from Carl Icahn, since he seems to know what he’s doing. The 75-year-old investing legend earned his fortune the old-fashioned way: through leveraged buyouts and private equity deals. Since 1978, Icahn has been taking on majority stakes in companies,… Read More

Since the Berlin Wall came down nearly two decades ago, the former Eastern Bloc has received a crash course in the risks and rewards of Western-style capitalism. Despite the ups and downs, there’s little doubt that it sure as hell beats the previous communist system. During… Read More

Throughout much of the past year, a variety of financial websites — including this one — noted the sharp disconnect between projected growth rates and the price-to-earnings (P/E) ratios of many Chinese companies. It was easy to find companies growing 20% or even 30% while sporting only single-digit P/E ratios. For some, that disconnect was based on fears that the Chinese economic juggernaut would soon cool. For others, the inability to really know if these Chinese companies were legitimate was the main reason to avoid Chinese stocks. Increasingly, it’s those latter… Read More

Throughout much of the past year, a variety of financial websites — including this one — noted the sharp disconnect between projected growth rates and the price-to-earnings (P/E) ratios of many Chinese companies. It was easy to find companies growing 20% or even 30% while sporting only single-digit P/E ratios. For some, that disconnect was based on fears that the Chinese economic juggernaut would soon cool. For others, the inability to really know if these Chinese companies were legitimate was the main reason to avoid Chinese stocks. Increasingly, it’s those latter concerns that now rule the roost. An increasing number of Chinese companies are in the sights of short sellers, as they allegedly have little or no actual business underlying the seemingly impressive income statement figures. Case in point: China MediaExpress Holdings (Nasdaq: CCME). The company operates a massive advertising network on buses that ply China’s regional highways. Several short-sellers have attacked the company, noting that channel checks showed that many of the company’s claims were vastly overstated or were outright falsehoods. Shares of China MediaExpress have fallen nearly 50% since establishing a 52-week high… Read More

I love turnaround plays. Great comebacks usually start with stocks that are in the depths of depression, so unloved that the share price reflects only bad news. If you are among the early buyers at the first signs of a turning tide, your portfolio can be richly rewarded. Read More

I’d bet you had a strong opinion about it, no matter your political leanings, no matter your tax bracket.   Put simply, it has been one of the most controversial pieces of lawmaking in a generation. And no matter what you think about it, there’s no arguing the new laws are groundbreaking.   That’s exactly the sort of opportunity I’m always looking for.   #-ad_banner-#Truth be told, it’s my suspicion that this legislation — referred to by many as “ObamaCare” — will be unraveled by the courts in coming years. That’s OK. I think… Read More

I’d bet you had a strong opinion about it, no matter your political leanings, no matter your tax bracket.   Put simply, it has been one of the most controversial pieces of lawmaking in a generation. And no matter what you think about it, there’s no arguing the new laws are groundbreaking.   That’s exactly the sort of opportunity I’m always looking for.   #-ad_banner-#Truth be told, it’s my suspicion that this legislation — referred to by many as “ObamaCare” — will be unraveled by the courts in coming years. That’s OK. I think one piece of President Obama’s legacy in health care is untouchable — his push for electronic medical records (EMR).   First funded through the massive $800 billion stimulus bill passed soon after Obama took office, the idea behind EMR is that huge cost-savings can be extracted by providing physicians with total access to patient records, allowing them to avoid duplicate medical tests, watch for drug interactions, avoid errors and increase levels of efficiency in the doctor’s office, specialty clinic and hospital.   We’ve all seen how this plays out — doctors and staff are constantly asking… Read More

Even for Warren Buffett, there are limits to how many good stocks one can follow. According to his latest quarterly filings for his firm Berkshire Hathaway (NYSE: BRK-B), he’s pared his portfolio to just 25 holdings by December 31, the lowest level in several years, and down from 33 three months earlier. He’s not running form the market, though. In fact, the total value of his portfolio rose to $52.6 billion in the fourth quarter from $48.6 billion at the end of the third quarter, even as Berkshire owned fewer names. Most intriguingly, Buffett’s tightening his focus. Read More

Even for Warren Buffett, there are limits to how many good stocks one can follow. According to his latest quarterly filings for his firm Berkshire Hathaway (NYSE: BRK-B), he’s pared his portfolio to just 25 holdings by December 31, the lowest level in several years, and down from 33 three months earlier. He’s not running form the market, though. In fact, the total value of his portfolio rose to $52.6 billion in the fourth quarter from $48.6 billion at the end of the third quarter, even as Berkshire owned fewer names. Most intriguingly, Buffett’s tightening his focus. Case in point: Berkshire’s decision to sell off the remaining 5 million shares of Bank of America (NYSE: BAC), worth about $745 million, while averaging up on Wells Fargo (NYSE: WFC). Too many headaches You can understand why he fell out of love with BofA. The bank seems to be a magnet for bad news, from botched acquisitions to sloppy mortgage processing. The bank’s missteps are becoming so well-known on Main Street that Buffett presumably fears that BofA’s long-term reputation has suffered. Shares of BofA rallied nearly 30% in December, which is… Read More