Is it fair to give Ben Bernanke (and his predecessor Janet Yellen) much of the credit for the current bull market? After all, many have come to believe that ultra-low interest rates, coupled with aggressive stimulus in the form of bond buying, has lit a strong and durable flame under stocks. These same folks also fret about the market’s eventual response when the Fed finally starts raising rates, perhaps in the middle of 2015. To be sure, the Fed’s actions haven’t hurt. The era of easy money has helped the current bull to become the fourth-longest since 1929. Longest Bull… Read More

Is it fair to give Ben Bernanke (and his predecessor Janet Yellen) much of the credit for the current bull market? After all, many have come to believe that ultra-low interest rates, coupled with aggressive stimulus in the form of bond buying, has lit a strong and durable flame under stocks. These same folks also fret about the market’s eventual response when the Fed finally starts raising rates, perhaps in the middle of 2015. To be sure, the Fed’s actions haven’t hurt. The era of easy money has helped the current bull to become the fourth-longest since 1929. Longest Bull Markets Start End # Of Days 12/04/1987 03/24/2000 4,494 06/13/1949 08/02/1956 2,607 10/03/1974 11/28/1980 2,248 03/09/2009 Present 2,062 07/23/2002 10/09/2007 1,904 08/12/1982 `08/25/1987 1,839 Source: Bespoke Investments Yet the Fed fixation obscures another key driver of the ongoing bull market: Corporate profits. They’ve been rising at a solid pace since 2009, for some fairly direct reasons, including: — Steady top-line growth, which, of course, is the key factor behind profit growth. — Automation enabling companies to produce more with fewer workers. — Economic insecurity, which has given employers the upper hand in salary discussions. Read More

The most recent election was a good night for Republicans, but possibly even better for investors. That’s not necessarily because Republican wins lead to better stock returns, but because historically the market performs better in the year following midterm elections. #-ad_banner-#In fact, there’s a 66% chance that the market will post positive gains for 2014, according to research by StockTradersAlmanac.com. Looking at stock market movements from every midterm election from 1970 to 2010, their research found that 66% of the time the stock market ended higher from election day to year’s end. And for all midterms since 1970, the stock… Read More

The most recent election was a good night for Republicans, but possibly even better for investors. That’s not necessarily because Republican wins lead to better stock returns, but because historically the market performs better in the year following midterm elections. #-ad_banner-#In fact, there’s a 66% chance that the market will post positive gains for 2014, according to research by StockTradersAlmanac.com. Looking at stock market movements from every midterm election from 1970 to 2010, their research found that 66% of the time the stock market ended higher from election day to year’s end. And for all midterms since 1970, the stock market gained an average of 2.1% from election day to the end of year. You can see for yourself in the table below: If a 2.1% gain possibility over the next two months doesn’t sound groundbreaking, then this might. Holding stocks for a full year after a midterm has historically been very profitable, according to research by Chief Equity Strategist Sam Stovall of S&P Capital IQ. Since 1946, there have been 17 midterm elections. As this article points out, Stovall’s research shows that in each of those cases, from October 31 of the midterm year through… Read More

Some investors probably lump all online shopping stocks together, thinking they are a waste of time and destined to be perpetual losers because of the bloated losses, quarter after quarter, of Amazon.com, Inc. (Nasdaq: AMZN). Billionaire Jeff Bezos, Amazon’s visionary founder, perhaps went off the tracks pursuing launches of everything from smart phones to drones, while forgetting the e-commerce sales model that started it all. Or maybe he has a grand plan that most of us have yet to realize. #-ad_banner-#Either way, it would be unwise to think other online shopping companies have no choice but to follow suit and expand to other businesses in order… Read More

Some investors probably lump all online shopping stocks together, thinking they are a waste of time and destined to be perpetual losers because of the bloated losses, quarter after quarter, of Amazon.com, Inc. (Nasdaq: AMZN). Billionaire Jeff Bezos, Amazon’s visionary founder, perhaps went off the tracks pursuing launches of everything from smart phones to drones, while forgetting the e-commerce sales model that started it all. Or maybe he has a grand plan that most of us have yet to realize. #-ad_banner-#Either way, it would be unwise to think other online shopping companies have no choice but to follow suit and expand to other businesses in order to make a buck. Three following three companies are doing are churning out solid, growing profits, offer a seemingly endless variety of goods and have a clearly defined direction — unlike Amazon. One is headquartered in the United States, one is Asian and the other is Latin American. The latter two have a particular appeal because emerging markets show strong potential for online shopping plays because of their less developed brick-and-mortar economies. Overstock.com, Inc. (Nasdaq: OSTK) Overstock.com, with a modest but growing $578 million market cap, is an online discount retailer headquartered near Salt Lake City, Utah. The company… Read More

One of the most interesting changes in the market over the past few years is the resurgence in investor interest for U.S.-led profits. This is in stark contrast to before the financial crisis when many investors passed over domestic stocks for emerging market growth. You couldn’t watch 10 minutes of CNBC without hearing how developing world growth would crush the stagnant economies of the United States, Japan and Europe.  The iShares MSCI Emerging Markets (NYSE: EEM) surged more than 200% in the four years to September 2007, compared with 46% for the S&P 500, and it seemed investor sentiment couldn’t… Read More

One of the most interesting changes in the market over the past few years is the resurgence in investor interest for U.S.-led profits. This is in stark contrast to before the financial crisis when many investors passed over domestic stocks for emerging market growth. You couldn’t watch 10 minutes of CNBC without hearing how developing world growth would crush the stagnant economies of the United States, Japan and Europe.  The iShares MSCI Emerging Markets (NYSE: EEM) surged more than 200% in the four years to September 2007, compared with 46% for the S&P 500, and it seemed investor sentiment couldn’t get more bullish. And of course, it didn’t. The emerging market fund is down almost 10% since September 2007 against a 36% gain on stocks in the S&P 500. #-ad_banner-#But have things really changed that much? The U.S. will probably eke out 2% GDP growth this year, according to the IMF, which is still well below the 4.4% growth projection for the emerging world. The United States is still running a nearly $500 billion deficit, and the greenback is more than 10% weaker over the past decade against a basket of peers.  The weakness in emerging market stocks will not… Read More

Shares of retailers have struggled to hold on to gains this year, even as the rest of the market enjoys record highs.  Employment growth has only just started to turn higher and real hourly wages fell for almost every segment of the workforce during the first half of the year. Against the backdrop of sluggish sales and the unknown of the holiday shopping season, you probably wouldn’t be surprised if retailers played it safe with their advertising as we move through third quarter earnings. But one retail giant is stepping out into the limelight with… Read More

Shares of retailers have struggled to hold on to gains this year, even as the rest of the market enjoys record highs.  Employment growth has only just started to turn higher and real hourly wages fell for almost every segment of the workforce during the first half of the year. Against the backdrop of sluggish sales and the unknown of the holiday shopping season, you probably wouldn’t be surprised if retailers played it safe with their advertising as we move through third quarter earnings. But one retail giant is stepping out into the limelight with a new series of ads directed by an up-and-comer from one of America’s most celebrated movie families.  #-ad_banner-#Instead of putting out the traditional drivel of holiday hopes and dreams, the company is taking a chance on something memorable enough to move the needle on sales.  While holiday sales disappointed investors last year, things are looking up for the upcoming shopping season and this company’s striking new ads may bring buyers back in a big way. Can ‘Endearingly Weird’ Save This Fashion Heavyweight? The Gap, Inc. (NYSE: GPS) shares plunged 12.4% on October 9 with the release of… Read More

Analog and mixed-signal semiconductor device maker Skyworks Solutions (NASDAQ: SWKS) has enjoyed a huge run over the past 52 weeks, up more than 130% and trading at levels not seen in over a decade. The company makes high-tech microchips used in mobile devices, wireless networks and the automotive market. Its mixed-signal devices convert and boost radio frequency signals in smartphones, making the user experience much more powerful. Given the huge growth in the mobile device and networking space over the past several years, there’s been heavy demand for Skyworks Solutions’ radio frequency microchips. This demand has analysts projecting double-digit sales… Read More

Analog and mixed-signal semiconductor device maker Skyworks Solutions (NASDAQ: SWKS) has enjoyed a huge run over the past 52 weeks, up more than 130% and trading at levels not seen in over a decade. The company makes high-tech microchips used in mobile devices, wireless networks and the automotive market. Its mixed-signal devices convert and boost radio frequency signals in smartphones, making the user experience much more powerful. Given the huge growth in the mobile device and networking space over the past several years, there’s been heavy demand for Skyworks Solutions’ radio frequency microchips. This demand has analysts projecting double-digit sales and EPS growth for the foreseeable future. #-ad_banner-#On average, analysts expect the company to grow earnings about 20% a year for the next five years. Skyworks Solutions is set to report fiscal fourth-quarter earnings after the closing bell on Thursday, Nov. 6. Expectations are high due in large part to an upwardly revised guidance the company offered Wall Street in mid-October.  Management boosted its Q4 revenue outlook to $718 million, which represents a 51% year-over-year increase. It also lifted its earnings-per-share projections to $1.08, which translates to a 69% increase from the year-ago quarter. This was up from previous guidance… Read More

As any CEO will tell you, working toward an initial public offering is an arduous process. Lawyers need to file reams of paperwork, bankers need to determine a suitable valuation and trading desks must line up demand for shares. Yet for some companies, the tough days don’t end there. After the IPO takes place, weak market action or simply a fickle base of initial shareholders can turn a potentially promising new stock into a dud. Every year, more than a few IPOs end up trading at levels lower than the offering price. #-ad_banner-#That’s why as every year winds down, I look… Read More

As any CEO will tell you, working toward an initial public offering is an arduous process. Lawyers need to file reams of paperwork, bankers need to determine a suitable valuation and trading desks must line up demand for shares. Yet for some companies, the tough days don’t end there. After the IPO takes place, weak market action or simply a fickle base of initial shareholders can turn a potentially promising new stock into a dud. Every year, more than a few IPOs end up trading at levels lower than the offering price. #-ad_banner-#That’s why as every year winds down, I look at the crop of IPOs, seeing which young companies have already been placed in the bargain bin. To be sure, some stocks deserve to be unloved. They represent companies with a dim future and the IPO was simply a way for its former backers to dump shares on someone else’s hands. But there are also some diamonds in the rough that deserve a second look. Here are three that I am focusing for a rebound in their sophomore years. MediWound Ltd (Nasdaq: MDWD) A number of biotech IPOs traded down this year as investors grew to fear that they… Read More

Most U.S. investors have never heard of China Minsheng Bank Corp. Ltd or GigaMedia Ltd. (Nasdaq: GIGM). But both companies ended up in deep trouble for using a risky corporate structure. It was a structure used by Enron back in the 1990’s, and ultimately led to the loss of billions in investors’ funds. And the hottest initial public offering of 2014, Alibaba Group Holding Ltd (Nasdaq: BABA) is using the same trick. A closer look at the issue explains why you should think twice about buying shares of Alibaba. If you already own shares, then you need to know about… Read More

Most U.S. investors have never heard of China Minsheng Bank Corp. Ltd or GigaMedia Ltd. (Nasdaq: GIGM). But both companies ended up in deep trouble for using a risky corporate structure. It was a structure used by Enron back in the 1990’s, and ultimately led to the loss of billions in investors’ funds. And the hottest initial public offering of 2014, Alibaba Group Holding Ltd (Nasdaq: BABA) is using the same trick. A closer look at the issue explains why you should think twice about buying shares of Alibaba. If you already own shares, then you need to know about this key risk. Accounting Obfuscation To help shield the true nature of its balance sheet, Enron’s financial masterminds used an unusual contract known as a variable interest structure, or VIE. Using a VIE, a company can disconnect the ownership of its assets from the claims of shareholders. In effect, key assets are placed into separate corporations, which are wholly-owned by the company’s management. Ancillary contracts are then typically established that pledge equity, assign profits and establish consulting agreements. #-ad_banner-#In the United States, embarrassed financial regulators abolished the use of a VIE after the dot-com implosion. Rules now clearly state… Read More

Homeownership in the United States is at a 19-year low at just 64.4%, according to a recent Census Bureau report. This may sound like a negative, but it is actually fueling an incredible opportunity for traders.  Rents are on the rise and vacancies are low, allowing a handful of companies that control a large portion of the U.S. rental market to prosper. Today, I’m going to tell you how you can leverage this trend into triple-digit profits in less than five months. According to real estate research firm Reis, apartment rents have risen for 23 straight quarters, increasing to an… Read More

Homeownership in the United States is at a 19-year low at just 64.4%, according to a recent Census Bureau report. This may sound like a negative, but it is actually fueling an incredible opportunity for traders.  Rents are on the rise and vacancies are low, allowing a handful of companies that control a large portion of the U.S. rental market to prosper. Today, I’m going to tell you how you can leverage this trend into triple-digit profits in less than five months. According to real estate research firm Reis, apartment rents have risen for 23 straight quarters, increasing to an average of $1,111 a month in the third quarter. This puts rent prices more than 15% above levels seen at the end of the recession in 2009. While rates are going up, rental vacancies are near a 14-year low. The rules of supply and demand dictate further acceleration in rents. #-ad_banner-#Fueling this trend is steady job growth combined with stricter mortgage qualifications making it harder to get a home. Additionally, with the housing market crash in the not-so-distant past, many would-be buyers are nervous to take the plunge. For those who do qualify for loans and are ready… Read More

Many investors spend too much time during earnings season focusing on gross profit margins. They figure that a drop in these margins means a company is losing pricing power, or they worry that the cost of goods sold is rising too fast. Yet there are often good reasons for gross margins to be flat-to-down compared to prior periods. For example, in many competitive industries, flexibility on price is a key to growing the customer base. #-ad_banner-#The best-run companies know that even if each new contract doesn’t deliver the gross margins seen in in the past, they can still flow profits… Read More

Many investors spend too much time during earnings season focusing on gross profit margins. They figure that a drop in these margins means a company is losing pricing power, or they worry that the cost of goods sold is rising too fast. Yet there are often good reasons for gross margins to be flat-to-down compared to prior periods. For example, in many competitive industries, flexibility on price is a key to growing the customer base. #-ad_banner-#The best-run companies know that even if each new contract doesn’t deliver the gross margins seen in in the past, they can still flow profits to the bottom line. That’s because fixed overhead expenses are already in place and those new incremental revenues cost relatively little to service. To see what kind of companies have a history of operating leverage, I screened for companies that have boosted earnings per share at a much faster pace on average over the past three years than sales growth. And I eliminated any companies that have not boosted sales at least 10% annually in recent years. It’s no surprise that hundreds of companies make the cut, especially since corporate America has been continually streamlining since the Great Recession of… Read More