Warren Buffett needs no introduction. His stock-picking ability over the past several decades is without equal.  #-ad_banner-#Many investors tend to focus on his mega-cap stocks, such as Coca-Cola (NYSE: KO), or one of his rare tech holdings, IBM (NYSE: IBM) — but there are, of course, other great investments to be found in his portfolio. One stock that he owns that doesn’t get much attention is Phillips 66 (NYSE: PSX). Buffett’s Berkshire Hathaway (NYSE: BRK-B) owns just under 5% of the company. (Last summer, my colleagues here at StreetAuthority found that PSX is a favorite of both Buffett… Read More

Warren Buffett needs no introduction. His stock-picking ability over the past several decades is without equal.  #-ad_banner-#Many investors tend to focus on his mega-cap stocks, such as Coca-Cola (NYSE: KO), or one of his rare tech holdings, IBM (NYSE: IBM) — but there are, of course, other great investments to be found in his portfolio. One stock that he owns that doesn’t get much attention is Phillips 66 (NYSE: PSX). Buffett’s Berkshire Hathaway (NYSE: BRK-B) owns just under 5% of the company. (Last summer, my colleagues here at StreetAuthority found that PSX is a favorite of both Buffett and T. Boone Pickens.) Spun off from ConocoPhillips (NYSE: COP) in 2012, Phillips 66 is one of the largest oil refiners and marketers in the U.S. It has a strong return on equity at 15%, its valuation is compelling, and it pays a solid dividend.  At the Ira Sohn Investment Conference this month, Zach Schreiber, CEO of hedge fund PointState Capital, made a case for taking a long position in refining companies. Schreiber expects the price of West Texas Intermediate (WTI) crude oil to fall in the next few years — and fall hard.  That’s because… Read More

It’s not too late to make a lot of money from the American Energy Boom. If we’re right, the chance to earn blockbuster gains investing in this incredible story has only just begun. Here’s what you need to know… The American Energy Boom hardly needs an introduction. Most people are aware that due to technologies like horizontal drilling and hydraulic fracturing, the United States is now awash with new sources of oil and natural gas. These developments have made America the largest producer of energy in the world. #-ad_banner-#As you’d imagine, a lot of money can be been made investing… Read More

It’s not too late to make a lot of money from the American Energy Boom. If we’re right, the chance to earn blockbuster gains investing in this incredible story has only just begun. Here’s what you need to know… The American Energy Boom hardly needs an introduction. Most people are aware that due to technologies like horizontal drilling and hydraulic fracturing, the United States is now awash with new sources of oil and natural gas. These developments have made America the largest producer of energy in the world. #-ad_banner-#As you’d imagine, a lot of money can be been made investing alongside this trend… For example, EOG Resources Inc. (NYSE: ROG) is up 292% since 2009…. Continental Resources (NYSE: CLR) has soared over 800%… and Rex Energy (NYSE: REXX) has returned a staggering 1,200% over the same period. All of these companies were among the first major players in the American Energy Boom. The problem is that it’s becoming harder and harder to find prospects like these in the exploration and production space. This story has been going on for over five years and by this point there simply aren’t many good buys left. As a testament to my point, EOG… Read More

We’ve learned a clear lesson over the past 12 months: There is no sense in hopping into momentum stocks after they’ve doubled or tripled in value in a short time.  #-ad_banner-#That was the sobering lesson around 3-D printing stocks, popular IPOs and, more recently, fuel cell stocks. When I looked at fuel cell stocks a month ago, I asked whether they were in a bubble, and concluded that “this is a great group to put on your watch list, as any major pullback would provide excellent entry points.” Well, your ship has come in: Fuel cell stocks are dropping like a… Read More

We’ve learned a clear lesson over the past 12 months: There is no sense in hopping into momentum stocks after they’ve doubled or tripled in value in a short time.  #-ad_banner-#That was the sobering lesson around 3-D printing stocks, popular IPOs and, more recently, fuel cell stocks. When I looked at fuel cell stocks a month ago, I asked whether they were in a bubble, and concluded that “this is a great group to put on your watch list, as any major pullback would provide excellent entry points.” Well, your ship has come in: Fuel cell stocks are dropping like a stone. They had already been pulling back when I looked at them last month — and now they’ve now all lost roughly half their value since mid-March. In retrospect, the group sell-off was inevitable. These stocks were pushed ever higher under the “greater fool theory,” which states that a price can be justified by a rational buyer under the belief that someone else is willing to pay an even higher price. Of course, the moment that people believe that this circular logic has come to an end, everyone heads for the exits at once. These… Read More

Several decades ago, mutual fund managers such as Fidelity’s Peter Lynch and Legg Mason’s Bill Miller garnered a great deal of attention from investors and the financial media. #-ad_banner-#These days, it’s the hotshot hedge fund managers, with their epic battles against companies such as Herbalife (NYSE: HLF) or Green Mountain Coffee Roasters (Nasdaq: GMCR), that get all the buzz. Proxy fights and bold short sale claims can be entertaining to watch and sometimes even create value for investors.  Yet investing shouldn’t be about drama.  Those now-obscure mutual fund managers deserve a lot more attention than they deserve, even if they rarely… Read More

Several decades ago, mutual fund managers such as Fidelity’s Peter Lynch and Legg Mason’s Bill Miller garnered a great deal of attention from investors and the financial media. #-ad_banner-#These days, it’s the hotshot hedge fund managers, with their epic battles against companies such as Herbalife (NYSE: HLF) or Green Mountain Coffee Roasters (Nasdaq: GMCR), that get all the buzz. Proxy fights and bold short sale claims can be entertaining to watch and sometimes even create value for investors.  Yet investing shouldn’t be about drama.  Those now-obscure mutual fund managers deserve a lot more attention than they deserve, even if they rarely enjoy being in the spotlight. Thankfully, the mutual fund analysts at Morningstar single out the best and brightest mutual fund managers every year, helping steer investors toward the savviest stock pickers in the field.  A current favorite: Los Angeles-based First Pacific Advisors (FPA). Morningstar anointed Steve Romick, the fund manager behind the FPA Crescent Fund (Nasdaq: FPACX), as the “2013 Asset Allocation Manager of the Year.” That five-star fund gets a “gold” rating from Morningstar.  As Morningstar notes, “Romick seeks securities trading at a substantial discount to what he believes they’re worth. When opportunities are scarce, he will let cash… Read More

Your caffeine buzz is about to get a whole lot more expensive.  #-ad_banner-#Coffee prices have been quickly rising, as seen by the iPath Pure Beta Coffee ETN (NYSE: CAFE), which has risen 80% in the past six months. Blame it on poor growing conditions, which have reduced crop yields. The price of coffee should also concern you if own shares of any coffee chains. Some such as Starbucks (Nasdaq: SBUX) have been wise enough to hedge their exposure through long-term hedging contracts, while others such as Dunkin’ Brands (Nasdaq: DNKN) lacked that foresight. Understanding how commodity prices and… Read More

Your caffeine buzz is about to get a whole lot more expensive.  #-ad_banner-#Coffee prices have been quickly rising, as seen by the iPath Pure Beta Coffee ETN (NYSE: CAFE), which has risen 80% in the past six months. Blame it on poor growing conditions, which have reduced crop yields. The price of coffee should also concern you if own shares of any coffee chains. Some such as Starbucks (Nasdaq: SBUX) have been wise enough to hedge their exposure through long-term hedging contracts, while others such as Dunkin’ Brands (Nasdaq: DNKN) lacked that foresight. Understanding how commodity prices and hedging strategies will impact your investment is an underappreciated topic. Indeed commodity prices — and companies’ ability to hedge against sudden spikes — can explain why earnings forecasts steadily rise and fall. For example, consider cotton. That commodity has been on a tear recently, but Hanesbrands (NYSE: HBI), one of the world’s largest buyers of cotton, has locked in more than 95% of its cotton needs for the next year at prices that now look like a bargain. That foresight explains why this stock is at all-time highs — despite surging cotton prices. Other consumers of cotton such as Gap… Read More

It’s more true in this sector than any other… an informed investor is a successful investor. It’s important to know the commodities market backward and forward — what’s going on right now, what’s happened in the past, what the future holds and why. As I mentioned in an earlier issue of StreetAuthority Daily, there’s a trigger ready to be pulled in the gold market, and it could send prices soaring. But rather than just buying physical gold, I’m taking advantage of this opportunity in another way — one that could lead to much greater gains and even pay dividends. You… Read More

It’s more true in this sector than any other… an informed investor is a successful investor. It’s important to know the commodities market backward and forward — what’s going on right now, what’s happened in the past, what the future holds and why. As I mentioned in an earlier issue of StreetAuthority Daily, there’s a trigger ready to be pulled in the gold market, and it could send prices soaring. But rather than just buying physical gold, I’m taking advantage of this opportunity in another way — one that could lead to much greater gains and even pay dividends. You see, copper, gold, silver– these hard resources will never go away. It has to be found, it has to be mined and it typically has to be processed in some way or another. This is where the wealth can really be made from commodities. #-ad_banner-#That’s why I believe with the recent events  going on in China, well-positioned gold producers are one of the best places to have your money in over the next twelve months. Here are a few reasons why. First and foremost, gold miners can do something no other kind of company can do — store the wealth… Read More

One claim that scientists make is that part of what distinguishes humans from animals is that humans have the ability to recognize patterns.  The reason I call it a claim is that my 8-year-old yellow lab knows when things are out of order — mainly at feeding time (especially if the cat’s food dish has been moved) and when it’s time to come in to go to bed. If things are askew, she’ll let you know (as only labs can). In my research for an article on value-priced utility stocks, I recognized an undeniable historical pattern: #-ad_banner-#In every… Read More

One claim that scientists make is that part of what distinguishes humans from animals is that humans have the ability to recognize patterns.  The reason I call it a claim is that my 8-year-old yellow lab knows when things are out of order — mainly at feeding time (especially if the cat’s food dish has been moved) and when it’s time to come in to go to bed. If things are askew, she’ll let you know (as only labs can). In my research for an article on value-priced utility stocks, I recognized an undeniable historical pattern: #-ad_banner-#In every instance, a sideways pattern, or underperformance of that particular group of stocks, in the Dow Jones Utility Average Total Return index occurred during a relatively strong, broader equity market period was followed by a flat broader market or even a correction. Now, in times of uncertainty in the economy and the markets, nervous investors will gravitate toward utility company stocks for their large and reliable dividends. So far this year, that scenario seems to be playing out. Utility stocks are outperforming the S&P 500 Index handily: DJUTR is up 15% compared with a meager 1.8% gain for the broader average. Read More

Frequently, the best road to success for a company is to do one thing really well — preferably something nobody else does but that’s in great demand all the same. #-ad_banner-#This is exactly the approach of one unique energy firm, which refers to itself simply as “the reservoir optimization company.” Its sole job in life is to provide the research, technology and special expertise necessary to optimize extraction from oil and gas reservoirs. This laser focus has certainly led to great success both for the company and its shareholders. Since 2004, the company’s earnings per share (EPS) have risen an… Read More

Frequently, the best road to success for a company is to do one thing really well — preferably something nobody else does but that’s in great demand all the same. #-ad_banner-#This is exactly the approach of one unique energy firm, which refers to itself simply as “the reservoir optimization company.” Its sole job in life is to provide the research, technology and special expertise necessary to optimize extraction from oil and gas reservoirs. This laser focus has certainly led to great success both for the company and its shareholders. Since 2004, the company’s earnings per share (EPS) have risen an astounding 2,364%, from $0.22 to $5.41. During the past 10 years, its stock has delivered total returns averaging nearly 33% a year. I see Core Laboratories (NYSE: CLB) as a safer way to play the energy sector because it’s not an oil and gas producer. Producers, even the largest ones, can be highly risky because their profits and stocks often fluctuate wildly in response to any number of things such as energy prices, the economy, or unexpected delays, costs or disasters. Core shields itself from these sorts of risks primarily by maintaining a diverse, global customer base of dozens of… Read More

When it comes to investing, “the best house in a bad neighborhood” is not the right approach. You want to focus on “good neighborhoods” (meaning good industries) and then proceed to find the best (or at least best-priced) homes in that neighborhood. U.S. oil refiners are great example.  A confluence of factors, which I discussed last summer, was leading to rising and industry profits. In effect, the whole neighborhood held (and still holds) appeal. Some of the industry’s bigger players have really surged in price since my look at the group last August. The appeal of the… Read More

When it comes to investing, “the best house in a bad neighborhood” is not the right approach. You want to focus on “good neighborhoods” (meaning good industries) and then proceed to find the best (or at least best-priced) homes in that neighborhood. U.S. oil refiners are great example.  A confluence of factors, which I discussed last summer, was leading to rising and industry profits. In effect, the whole neighborhood held (and still holds) appeal. Some of the industry’s bigger players have really surged in price since my look at the group last August. The appeal of the biggest refiners becomes evident when you start to focus on their solid cash flow, which is fueling rising dividends and share buyback plans.   #-ad_banner-#These companies’ current dividend yields may seem skimpy, but the stage is set for fast dividend growth in coming years as well, as cash flow surges. Also, share buybacks have been especially impressive in recent years at three of these four major refiners.  But most smaller refiners are not yet witnessing such share price strength. Back in November, I noted that both Alon USA Partners (Nasdaq: ALDW) and CVR Refining (Nasdaq: CVRR) had been forced to… Read More

The vision of American energy independence has been bouncing around political and economic circles for decades. The widespread embrace of hydraulic fracturing (aka fracking) has brought this vision many steps closer to reality. #-ad_banner-#About five years ago, I worked with a niche hedge fund on developing alternative long-term investment ideas. One of the ideas we looked at was the massive supplies of natural gas that fracking was beginning to produce. We projected that an overabundance of natural gas would keep prices low for some time. This prediction held true until a spike during this year’s first… Read More

The vision of American energy independence has been bouncing around political and economic circles for decades. The widespread embrace of hydraulic fracturing (aka fracking) has brought this vision many steps closer to reality. #-ad_banner-#About five years ago, I worked with a niche hedge fund on developing alternative long-term investment ideas. One of the ideas we looked at was the massive supplies of natural gas that fracking was beginning to produce. We projected that an overabundance of natural gas would keep prices low for some time. This prediction held true until a spike during this year’s first quarter, but long-term projections for the next two decades call for an average price of $4 to $5 per million BTUs — which would make U.S. natural gas the cheapest in the world. Huge profits could be made by selling this resource to regions around the world that need the fuel — but the problem lies in exporting it in a cost-effective way. If U.S. producers can solve this problem, America could become energy-independent and an exporter rather than an importer of energy. Part of the technical solution to this problem requires immense investments in infrastructure, representing one potentially lucrative… Read More