As kids, we’re taught that “you can’t have your cake and eat it too.”  #-ad_banner-#There’s always a trade-off, always an opportunity cost to forgo in exchange for something else. For investors, it means that you can have growth, but not value — or value, but not growth. Luckily, the stock market doesn’t deal in absolutes.  I’ve found a company that offers both high growth potential along with a bargain valuation and a generous dividend. Yet where I’ve found this stock may be the biggest surprise of all. Shipping stocks haven’t been held in high regard for some time… Read More

As kids, we’re taught that “you can’t have your cake and eat it too.”  #-ad_banner-#There’s always a trade-off, always an opportunity cost to forgo in exchange for something else. For investors, it means that you can have growth, but not value — or value, but not growth. Luckily, the stock market doesn’t deal in absolutes.  I’ve found a company that offers both high growth potential along with a bargain valuation and a generous dividend. Yet where I’ve found this stock may be the biggest surprise of all. Shipping stocks haven’t been held in high regard for some time now. A look at the Baltic Dry Index (BDI) tells you everything you need to know about investor sentiment in the sector: ^BDIY data by YCharts This might cause concern among investors currently looking at these stocks, but it doesn’t reflect the general attitude that shippers and charters currently have. A strong rally is widely expected as Chinese demand for steel and coal continue to climb, and iron exports from Brazil and Australia are expected to rise as well.  Analysts predict an average range around 1,500… Read More

Back when chip giant Intel (Nasdaq: INTC) was new and no one had invented the Internet, computers were huge machines that could each take up an entire room. #-ad_banner-#Intel’s ideas seemed like an abstraction, but it eventually became the default standard in computing innovation, and went on to invent the x86 set of microprocessors that are now found in most computers. An investor would be hard-pressed to find a technology company that has done more than Intel to shape the world of semiconductors that are the building blocks of modern computing. But… Read More

Back when chip giant Intel (Nasdaq: INTC) was new and no one had invented the Internet, computers were huge machines that could each take up an entire room. #-ad_banner-#Intel’s ideas seemed like an abstraction, but it eventually became the default standard in computing innovation, and went on to invent the x86 set of microprocessors that are now found in most computers. An investor would be hard-pressed to find a technology company that has done more than Intel to shape the world of semiconductors that are the building blocks of modern computing. But today another company may represent the future of chips. The world of computing is on the brink of another sea change — the age of digitally connected devices, the so-called Internet of Things. Some optimists say the Internet of Things could be a new industrial revolution that will link up 50 billion devices together and generate up to $5 trillion in revenue in less than a decade. But the world of the Internet of Things is a lot more than tablets and smartphones talking to one another.  According to the invaluable tech resource WhatIs.com: “A thing,… Read More

Rock-bottom interest rates and huge cash stockpiles have led to a rebirth in the market for mergers and acquisitions (M&A) over the past few years. Faced with a weak economic recovery and a lack of organic growth opportunities, companies have used acquisitions to increase sales by gobbling up competitors and firms in related industries.  #-ad_banner-#As enterprise values creep up and this external growth strategy becomes expensive, we may be entering a new stage for the market. This next stage could be defined by internal reviews by companies looking for ways to improve the bottom line through cost-cutting and… Read More

Rock-bottom interest rates and huge cash stockpiles have led to a rebirth in the market for mergers and acquisitions (M&A) over the past few years. Faced with a weak economic recovery and a lack of organic growth opportunities, companies have used acquisitions to increase sales by gobbling up competitors and firms in related industries.  #-ad_banner-#As enterprise values creep up and this external growth strategy becomes expensive, we may be entering a new stage for the market. This next stage could be defined by internal reviews by companies looking for ways to improve the bottom line through cost-cutting and integration of acquisitions.  It’s these transformational companies that you should be watching for now. Potential transformational targets are companies that have seen sales jump after a series of acquisitions but that may still have operating margins and profitability that trail well behind their peers. These companies’ shares may perform well enough, but management is leaving money on the table due to poor efficiency.  Once leadership decides to make a change, that’s when the real opportunity starts. I’ve found just such a company. In a bid to change its industry focus, this manufacturer has acquired 21 other companies over the past… Read More

After digesting Twitter’s (NYSE: TWTR) impressive second-quarter results, investors may have a sense of deja vu.  Just a year earlier, Facebook (Nasdaq: FB) was staring down a wall of cynicism — and delivered scorching results. Shares delivered huge upside on that second-quarter report a year ago, and went on to deliver even more impressive gains over the following year. #-ad_banner-#Facebook’s problem back then was quite simple: It had a huge user base but wasn’t making much money off of those users. That’s no longer the case. Those same concerns dogged… Read More

After digesting Twitter’s (NYSE: TWTR) impressive second-quarter results, investors may have a sense of deja vu.  Just a year earlier, Facebook (Nasdaq: FB) was staring down a wall of cynicism — and delivered scorching results. Shares delivered huge upside on that second-quarter report a year ago, and went on to deliver even more impressive gains over the following year. #-ad_banner-#Facebook’s problem back then was quite simple: It had a huge user base but wasn’t making much money off of those users. That’s no longer the case. Those same concerns dogged Twitter, though as I noted last month, the drivers were in place to enable Twitter to deliver much stronger quarterly revenues than analysts had been anticipating. Frankly, Twitter only needed decent upside to see its shares move out of the doghouse. As I wrote in June: “Analysts expect Twitter’s second-quarter sales to rise more than 10% sequentially, which would be good enough to change the tone of conversation around this broken stock. A ‘glass half full’ perspective (instead of ‘half empty’) could push this stock right back to $40.” As it turns out, Twitter did a whole lot better than… Read More

For investors who check the daily finish of the S&P 500, it would appear as if the stock market is the picture of health. That index of large companies stands within 1% of its all-time high. But for the stocks of smaller companies, the seas have grown steadily rougher. The Russell 2000, a small-cap index, is off roughly 5% in the past month and has now seen several rapid pullbacks since the start of the year. This index has seen solid buying support at the 1,100 mark (it currently stands at 1,140) in prior dips, but if the recent pullback… Read More

For investors who check the daily finish of the S&P 500, it would appear as if the stock market is the picture of health. That index of large companies stands within 1% of its all-time high. But for the stocks of smaller companies, the seas have grown steadily rougher. The Russell 2000, a small-cap index, is off roughly 5% in the past month and has now seen several rapid pullbacks since the start of the year. This index has seen solid buying support at the 1,100 mark (it currently stands at 1,140) in prior dips, but if the recent pullback pushes the Russell below the 1,100 threshold, investors may conclude that the bull market for small caps is over and it’s time to focus elsewhere. #-ad_banner-#To be sure, small caps have been in rally mode ever since the bull market began in March 2009. Back then, the Russell 2000 stood below 400. Such stocks always rally coming out of recessions, but as I noted last year, they tend to lag the market in the latter stages of a bull market. We may now be witnessing a grand rotation out of small caps, and if so, you can read… Read More

As President Barack Obama took office in January 2009, investors were in despair. An economy in dire straits had already led to a free-falling market, and things only got worse in the early months of the year. #-ad_banner-#Then, quite suddenly, everything changed. The fear-based selling had exhausted itself. And on March 9, 2009, the S&P 500 would reverse course. The bull market that ensued has surprised even the most bullish investors. Few would have guessed that an economy that never truly recovered from the Great Recession of 2008 would be capable of fueling a 193% gain in the stock market… Read More

As President Barack Obama took office in January 2009, investors were in despair. An economy in dire straits had already led to a free-falling market, and things only got worse in the early months of the year. #-ad_banner-#Then, quite suddenly, everything changed. The fear-based selling had exhausted itself. And on March 9, 2009, the S&P 500 would reverse course. The bull market that ensued has surprised even the most bullish investors. Few would have guessed that an economy that never truly recovered from the Great Recession of 2008 would be capable of fueling a 193% gain in the stock market over the next five and a half years. Here’s a look at five surprising facts about this unusual bull market. 1. Nobody Wants To Lock In Profits In almost any bull market, you’ll see a stretch of gains, followed by a modest pullback, which is then followed by more gains. But in this market, there are no pauses. Though the S&P 500 repeatedly moved above and below its 150-day moving average (MA) in the early stages of the bull market, the market now appears to be on autopilot, inching steadily higher with nary a pullback. The fact that the S&P… Read More

A business professor once told me that a successful business is 1% idea and 99% execution.  #-ad_banner-#Sure, it helps to have an innovative or useful product, but you absolutely must be able to run the business efficiently and effectively. Lack of a valid business strategy is why nearly 80% of small businesses fail within the first 18 months.  Thinking about this recently, I was struck by a great investment idea: What if I could find a company that let others do the work — a company that benefited from other companies’ research or marketing spending? A company that… Read More

A business professor once told me that a successful business is 1% idea and 99% execution.  #-ad_banner-#Sure, it helps to have an innovative or useful product, but you absolutely must be able to run the business efficiently and effectively. Lack of a valid business strategy is why nearly 80% of small businesses fail within the first 18 months.  Thinking about this recently, I was struck by a great investment idea: What if I could find a company that let others do the work — a company that benefited from other companies’ research or marketing spending? A company that helped other companies in exchange for a slice of the pie… a middleman, in other words. Granted, no company is completely without execution risk, and there will always be operational challenges, but distributors and business service companies are the closest I’ve found to a risk-reduced middleman. These companies do not need to spend billions of dollars on research or product development — the manufacturers do it for them. They also do not need to spend billions on advertising to push products out to retail or enterprise consumers — the resellers do that job. Some of these companies do not even… Read More

Six years after the big crash, the global economy still seems pretty shaky and could even be set for another meltdown, if some of today’s headlines are to be believed. Nevertheless, many enticing investment opportunities still abound — like robotics and automation, or R&A. #-ad_banner-#While R&A has been on the rise for decades, exciting advances have been occurring recently. For instance, the creation of physical objects from a digital file, the amazing manufacturing process known as 3-D printing, has improved so much it can be used to make nearly anything from footwear and firearms. Apparently, you can even… Read More

Six years after the big crash, the global economy still seems pretty shaky and could even be set for another meltdown, if some of today’s headlines are to be believed. Nevertheless, many enticing investment opportunities still abound — like robotics and automation, or R&A. #-ad_banner-#While R&A has been on the rise for decades, exciting advances have been occurring recently. For instance, the creation of physical objects from a digital file, the amazing manufacturing process known as 3-D printing, has improved so much it can be used to make nearly anything from footwear and firearms. Apparently, you can even print out a pizza now. R&A has been playing an ever-larger role in other areas, too, like medicine. For instance, robots are being developed to perform blood draws and other routine medical tasks, as well as more complex ones such as cardiovascular surgery. Increasingly capable robots are already common on assembly lines and in the military. Most investors have heard about how some big companies such as Apple (Nasdaq: AAPL), Google (Nasdaq: GOOG) and Amazon.com (Nasdaq: AMZN) are developing robots and/or snapping up promising robot manufacturers. Apple, for instance, is creating robots to help build iPhones and other devices. Google… Read More

While most of Warren Buffett ‘s $63 billion fortune is wrapped up in Berkshire Hathaway (NYSE: BRK-B), he does own other stocks that are beyond the prying eyes of the media.  #-ad_banner-#Buffett is a great investor there’s no question there. Berkshire’s book value has grown at an annualized rate of nearly 20% for the past half-century. And it would make sense that he makes great investments in his personal portfolio as well. One sector where Buffett has found value over the past few years is banking. Berkshire’s #1 stock holding is Wells Fargo (NYSE: WFC), with… Read More

While most of Warren Buffett ‘s $63 billion fortune is wrapped up in Berkshire Hathaway (NYSE: BRK-B), he does own other stocks that are beyond the prying eyes of the media.  #-ad_banner-#Buffett is a great investor there’s no question there. Berkshire’s book value has grown at an annualized rate of nearly 20% for the past half-century. And it would make sense that he makes great investments in his personal portfolio as well. One sector where Buffett has found value over the past few years is banking. Berkshire’s #1 stock holding is Wells Fargo (NYSE: WFC), with Berkshire owning 8.8% of the bank. Back in 2011, Berkshire invested $5 billion in Bank of America (NYSE: BAC) in exchange for preferred shares.  In a 2012 interview with CNBC, Buffett revealed that he personally owns shares of JPMorgan Chase (NYSE: JPM), although Berkshire does not. Buffett has praised JPMorgan’s CEO Jamie Dimon for writing the best annual reports in the business.  There’s no way to know for sure that Buffett is still an owner of JPMorgan — but by all indications, he still loves big banks. (My colleague David Sterman recently profiled another reviled big… Read More

Of all the IPOs that have taken place since 2007, the consumer sector has accounted for the least.  #-ad_banner-#And small wonder: An environment of stagnant employment and wage growth that is only now recovering after five years doesn’t inspire a lot of demand for new issues of consumer stocks.  The results for restaurant IPOs have been mixed in recent years. Shares of Dunkin’ Brands (Nasdaq: DNKN) have fallen 18% from their March high but are still up 125% from their 2011 offer. Shares of sandwich-maker Potbelly (Nasdaq: PBPB) surged 131% from the company’s offer price during… Read More

Of all the IPOs that have taken place since 2007, the consumer sector has accounted for the least.  #-ad_banner-#And small wonder: An environment of stagnant employment and wage growth that is only now recovering after five years doesn’t inspire a lot of demand for new issues of consumer stocks.  The results for restaurant IPOs have been mixed in recent years. Shares of Dunkin’ Brands (Nasdaq: DNKN) have fallen 18% from their March high but are still up 125% from their 2011 offer. Shares of sandwich-maker Potbelly (Nasdaq: PBPB) surged 131% from the company’s offer price during the first week of trading but are now down 64% from that high to below the offer price. But one restaurant issue has beaten all the rest. Shares of Chipotle Mexican Grill (NYSE: CMG) have exploded nearly 3,000% from their offer price of $22 per share in 2006, jumping 67% in the past year alone.  Chipotle has some strong tailwinds behind its restaurants, which number nearly 1,600 and counting. The Hispanic population is the fastest-growing demographic in the United States and is expected to reach 78.7 million by 2030. That may have something to do with the growth of the… Read More