Small caps are typically expected to lead U.S. equities higher. In 2014, they shocked investors by underperforming their larger-cap counterparts. But a look at the charts shows they may make a comeback in 2015, and today I’ll share a little-known indicator that could predict the next big small-cap winner. #-ad_banner-#In 1992, Nobel Prize-winning economists Eugene Fama and Kenneth French published their seminal paper, “The Cross-Section of Expected Stock Returns.” They demonstrated that small-capitalization stocks tended to outperform large-capitalization stocks over time. This makes sense from a risk/reward standpoint. Small caps are fledgling companies, and… Read More

Small caps are typically expected to lead U.S. equities higher. In 2014, they shocked investors by underperforming their larger-cap counterparts. But a look at the charts shows they may make a comeback in 2015, and today I’ll share a little-known indicator that could predict the next big small-cap winner. #-ad_banner-#In 1992, Nobel Prize-winning economists Eugene Fama and Kenneth French published their seminal paper, “The Cross-Section of Expected Stock Returns.” They demonstrated that small-capitalization stocks tended to outperform large-capitalization stocks over time. This makes sense from a risk/reward standpoint. Small caps are fledgling companies, and their stocks are often illiquid compared to large caps. These two factors make them volatile — about 20% more so than the S&P 500. Those companies that do succeed offer large returns as they grow their market capitalizations through great products and services. They can become some of the corporate giants we see today. Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT) and Cisco (NASDAQ: CSCO) all started out as small-cap IPOs. In general, greater reward comes from assuming greater risk. And during market advances like we saw in 2014, small caps generally lead — expect… Read More

$15 billion. That’s how much identity fraud costs the credit card industry each year. Sadly, more than half of that fraud occurs in the United States alone. #-ad_banner-#But Apple’s new mobile payment service, Apple Pay, is looking to greatly reduce credit card fraud by removing many of the risks associated with traditional payment systems. Consumers who use their iPhones to make purchases will be protected on various levels. First, credit card numbers will not be stored on devices. Instead, each phone will be assigned its own unique device account number, which will not be recorded on Apple servers. Next,… Read More

$15 billion. That’s how much identity fraud costs the credit card industry each year. Sadly, more than half of that fraud occurs in the United States alone. #-ad_banner-#But Apple’s new mobile payment service, Apple Pay, is looking to greatly reduce credit card fraud by removing many of the risks associated with traditional payment systems. Consumers who use their iPhones to make purchases will be protected on various levels. First, credit card numbers will not be stored on devices. Instead, each phone will be assigned its own unique device account number, which will not be recorded on Apple servers. Next, fingerprint verification will be required to initiate purchases and a one-time security code will be issued that relays the purchase data to Apple for processing.These codes will be meaningless to hackers. Questions, like to what degree credit card information stored on Apple’s servers will be secure from hackers, still need to be answered. But Apple’s new technology is still a step in the right direction toward decreasing the prevalence and magnitude of credit card fraud each year. And although Apple Pay has been endorsed by major credit and debit card firms, top U.S. banks and many popular retailers, not all… Read More

Chalk up another correct prediction for our resident growth stock expert, Andy Obermueller. #-ad_banner-#In case you missed Apple’s big event in September, there were three key announcements that the legendary tech company revealed for the first time. The first was expected. Apple officially unveiled the iPhone 6, complete with a 4.7 inch screen (18% larger than the iPhone 5’s screen) and a processor that’s 50% faster. The second announcement was anticipated with some certainty. The company revealed its long-awaited smartwatch for the first time. The $349 Apple Watch is designed to… Read More

Chalk up another correct prediction for our resident growth stock expert, Andy Obermueller. #-ad_banner-#In case you missed Apple’s big event in September, there were three key announcements that the legendary tech company revealed for the first time. The first was expected. Apple officially unveiled the iPhone 6, complete with a 4.7 inch screen (18% larger than the iPhone 5’s screen) and a processor that’s 50% faster. The second announcement was anticipated with some certainty. The company revealed its long-awaited smartwatch for the first time. The $349 Apple Watch is designed to work with the iPhone 5 and iPhone 6. While not all of its features are known, the watch allows users to make hands-free calls and access apps that can do everything from check your heart rate to track how far you’ve walked. The third announcement had been shrouded in rumors, but it’s the real money maker for investors as far as we’re concerned. It’s a reveal that Andy Obermueller, our Chief Investment Strategist for Game-Changing Stocks, has been predicting for over two years now. His prediction came true: Apple Pay is here. Read More

  The current extended bull market is both exciting and scary.   #-ad_banner-#The higher the market goes, the more nervous investors become about the risk of a crash. Such skittishness sometimes prompts dramatic overreactions to relatively minor performance issues — even with the best companies. Astute long-term investors love when this happens because it can create brief opportunities to buy great stocks at more attractive valuations.   The well-known metal parts and castings fabricator Precision Castparts Corp. (NYSE: PCP) is a perfect example of this.   Precision Castparts is a global market leader that has been around for more than… Read More

  The current extended bull market is both exciting and scary.   #-ad_banner-#The higher the market goes, the more nervous investors become about the risk of a crash. Such skittishness sometimes prompts dramatic overreactions to relatively minor performance issues — even with the best companies. Astute long-term investors love when this happens because it can create brief opportunities to buy great stocks at more attractive valuations.   The well-known metal parts and castings fabricator Precision Castparts Corp. (NYSE: PCP) is a perfect example of this.   Precision Castparts is a global market leader that has been around for more than six decades. During that time, it evolved from a tiny provider of chain saw cutters to a diversified giant worth $32 billion. The company now makes specialized metal castings, parts, forgings and fasteners for multiple industries including aerospace, energy, healthcare and defense.   The company has a superb long-term track record. Annual revenues have risen nearly 13% a year since 2006, from $3.6 billion to a projected $10.3 billion in fiscal (March) 2015. During the same period, earnings per share raised at a 21% pace, to an expected $13.50 a share in fiscal 2015.  The gross, operating and net margins… Read More

  For development-stage biotechnology companies, the moment of truth eventually arrives. At some point, they must prove that key drugs show high levels of efficacy and safety in the all-important Phase III clinical trials. The stakes are sky high as the data can make or break the company.   #-ad_banner-#​Synergy Pharmaceuticals, Inc. (Nasdaq: SGYP), a small biotech firm developing a couple drugs with blockbuster potential, will be reaching that point soon. For shareholders, it could be a time of great reward or bitter disappointment. But I’m leaning toward the former.   In the second and third quarters of 2015, Synergy… Read More

  For development-stage biotechnology companies, the moment of truth eventually arrives. At some point, they must prove that key drugs show high levels of efficacy and safety in the all-important Phase III clinical trials. The stakes are sky high as the data can make or break the company.   #-ad_banner-#​Synergy Pharmaceuticals, Inc. (Nasdaq: SGYP), a small biotech firm developing a couple drugs with blockbuster potential, will be reaching that point soon. For shareholders, it could be a time of great reward or bitter disappointment. But I’m leaning toward the former.   In the second and third quarters of 2015, Synergy plans to release data from a pair of Phase III trials of its most-promising drug, plecanatide, a once-daily oral medication that could eventually be used to treat a number of gastrointestinal disorders. In these two trials, however, it’s being evaluated in chronic idiopathic constipation, a diagnosis made in cases of constipation with no identifiable cause.   Poor or inconclusive findings would be a major setback. And they’d likely trigger a huge drop in Synergy’s stock, which is already off more than 40% over the trailing twelve months.   I doubt that’ll happen, though, considering how well plecanatide has performed in… Read More

The U.S. stock market was the darling of the world in 2014. The trifecta of a strengthening economy, a stronger greenback and decreasing commodity prices helped drive U.S. corporate profits. Foreign and domestic money flowed into U.S. stocks, pushing the S&P 500 and Dow Jones Industrial Average to record highs. Read More

  Any company that seeks to dominate a new industry can throw off mixed signals for investors.   On the one hand, investor excitement about the open-ended growth possibilities can deliver great stock gains. But when such high-growth firms are not yet consistently profitable, which is often the case, their stocks can also be exceptionally risky.   This brings to mind SunEdison, Inc. (NYSE: SUNE), a mid-size technology company with annual revenues of $2.4 billion. Shares of SunEdison have soared more than 400% during the past three years, even though the firm lost an average of $2.56 per share in… Read More

  Any company that seeks to dominate a new industry can throw off mixed signals for investors.   On the one hand, investor excitement about the open-ended growth possibilities can deliver great stock gains. But when such high-growth firms are not yet consistently profitable, which is often the case, their stocks can also be exceptionally risky.   This brings to mind SunEdison, Inc. (NYSE: SUNE), a mid-size technology company with annual revenues of $2.4 billion. Shares of SunEdison have soared more than 400% during the past three years, even though the firm lost an average of $2.56 per share in each of those years. And the road to big returns has been rough, with share price volatility nearly five times that of the overall market.    SunEdison Inc. Earnings Per Share 2009 2010 2011 2012 2013 2014E 2015E -$0.31 $0.15 -$6.68 -$0.66 -$2.46 -$1.09 -$0.80 Source: Bloomberg Such fast and furious share-price gains may seem unsustainable when bottom-line results are so poor, but SunEdison shareholders shouldn’t be deterred, in my view. This is one case where a high-flying, speculative stock could surge yet higher as the company continues the march toward a healthy bottom… Read More

  Quick, what’s in your wallet right now? #-ad_banner-#My guess is you have some family pictures, a few credit cards and maybe some old business receipts. If you’re more old fashioned like I am, you might hold a few greenbacks in there as well… just in case. Why am I asking? Because I predict that within the next five to ten years you won’t need a wallet.  Simply put, I predict a small technology company is going to make all material forms of currency obsolete. And it’s… Read More

  Quick, what’s in your wallet right now? #-ad_banner-#My guess is you have some family pictures, a few credit cards and maybe some old business receipts. If you’re more old fashioned like I am, you might hold a few greenbacks in there as well… just in case. Why am I asking? Because I predict that within the next five to ten years you won’t need a wallet.  Simply put, I predict a small technology company is going to make all material forms of currency obsolete. And it’s going to do so with help from technology juggernauts like Apple and Google. If that sounds crazy, then consider this. It took a few thousand years to go from coins to paper money and then onto charge cards. It took 18 years for debit cards to surpass checks. Four years after that, more than 50% of all transactions were electronic. This year, nearly two-out-of-three transactions (64%) will be made electronically. While many of those transactions will be online, a large portion will come from something called near field communication (NFC) —… Read More

  We have seen some impressive turnarounds in 2014.   #-ad_banner-#Target Corp. (NYSE: TGT) experienced an embarrassing and costly data security breach in late 2013, but its misfortune has reversed, shares are up 18% year-to-date and are now at all-time highs.   After a long stretch of underperformance that culminated in its ejection from the Dow Jones Industrial Average in 2013, the former ‘king of aluminum,’ Alcoa, Inc. (NYSE: AA), is finally looking a lot better, too. Its stock has soared 46% this year.   Meanwhile, shares of the nation’s third-largest pharmacy chain, Rite Aid Corp. (NYSE: RAD), have gained… Read More

  We have seen some impressive turnarounds in 2014.   #-ad_banner-#Target Corp. (NYSE: TGT) experienced an embarrassing and costly data security breach in late 2013, but its misfortune has reversed, shares are up 18% year-to-date and are now at all-time highs.   After a long stretch of underperformance that culminated in its ejection from the Dow Jones Industrial Average in 2013, the former ‘king of aluminum,’ Alcoa, Inc. (NYSE: AA), is finally looking a lot better, too. Its stock has soared 46% this year.   Meanwhile, shares of the nation’s third-largest pharmacy chain, Rite Aid Corp. (NYSE: RAD), have gained 34% on the company’s makeover efforts.   These are just a few examples of this year’s many comeback stories. The question for investors: Which comeback stocks are most likely to continue delivering solid gains?   Investors should consider the rejuvenated diner chain Denny’s Corp. (Nasdaq: DENN). The firm is in making a major transformation, and the payoff to shareholders has already been enormous.     A half-decade ago, Denny’s was struggling and not just because of the recession. At the time, it was losing market share to other better-managed rivals, particularly DineEquity, Inc. (NYSE: DIN), which owns the… Read More

To say that Uber has been disruptive to the taxi industry is quite the understatement. In New York City, some investors are already wondering if the traditional yellow cab may soon vanish from the streets of Manhattan.   The threat posed by Uber was not yet fully evidenced when I profiled Medallion Financial Corp. (NASDAQ: TAXI), earlier this year. The company’s namesake business involves financing taxi cab medallions, which are required to operate a taxi cab in many major cities like New York City.   Since my profile, the stock has taken a healthy drubbing.  … Read More

To say that Uber has been disruptive to the taxi industry is quite the understatement. In New York City, some investors are already wondering if the traditional yellow cab may soon vanish from the streets of Manhattan.   The threat posed by Uber was not yet fully evidenced when I profiled Medallion Financial Corp. (NASDAQ: TAXI), earlier this year. The company’s namesake business involves financing taxi cab medallions, which are required to operate a taxi cab in many major cities like New York City.   Since my profile, the stock has taken a healthy drubbing.   Uber, a smart phone-based application that lets users hail a ride in a privately-owned car, has done an impressive job of grabbing the media spotlight. If I had a dollar for every time I heard “Uber” uttered on CNBC or Bloomberg, then I’d have a lot of dollars.   This startup is viewed as a classic disruptive business that turns the traditional standing-on-the curb-waving-your-arm-to-hail-a-cab business model on its ear. Lyft is a rival app targeting the same niche.   #-ad_banner-#The herd has sold off their Medallion shares in fear of the inevitable death by Uber or Lyft. Read More