It’s not often that you see a monster company that has pulled back into the value buy zone. It’s even less often that this happens in combination with a special situation involving a marketing deal and an equity stake in a much smaller but rapidly growing company with a revolutionary patent. #-ad_banner-#The fundamental and technical pictures of both companies reveal a clear path of shorting the smaller company and buying the larger firm. Put simply, this setup has opportunity written all over it. First, the larger company in this pairs trade owns the most recognizable brand on Earth. In fact,… Read More

It’s not often that you see a monster company that has pulled back into the value buy zone. It’s even less often that this happens in combination with a special situation involving a marketing deal and an equity stake in a much smaller but rapidly growing company with a revolutionary patent. #-ad_banner-#The fundamental and technical pictures of both companies reveal a clear path of shorting the smaller company and buying the larger firm. Put simply, this setup has opportunity written all over it. First, the larger company in this pairs trade owns the most recognizable brand on Earth. In fact, this brand name is the second most commonly understood term in the world, behind only the word “OK.” The company has a presence in 200 countries, and it sells 75 million drinks an hour worldwide. In addition to its flagship product, the company also owns a portfolio of 3,500 beverages and 500 brands. As you’ve probably guessed, I’m talking about Coca-Cola (NYSE: KO). It’s said that the Coke name alone has a value of over $80 billion. Despite its booming successes, things have slowed a little at Coca-Cola. Last year, global sales volume rose just 2% while revenue slipped 2%… Read More

When it comes to IPOs, you can either be fortunate enough to buy into a deal on the offering price… or you must wait for shares to drop back to earth. #-ad_banner-#In recent years, many new issues have busted out of the starting gate and never looked back, leaving shares trading at valuations that can only be justified with a very long time horizon. Of further concern, many of these hot IPOs hold real risk when insiders are freed from holding shares as part of the lockup expiration. As an example, I recently cautioned that 465 million shares of Twitter… Read More

When it comes to IPOs, you can either be fortunate enough to buy into a deal on the offering price… or you must wait for shares to drop back to earth. #-ad_banner-#In recent years, many new issues have busted out of the starting gate and never looked back, leaving shares trading at valuations that can only be justified with a very long time horizon. Of further concern, many of these hot IPOs hold real risk when insiders are freed from holding shares as part of the lockup expiration. As an example, I recently cautioned that 465 million shares of Twitter (NYSE: TWTR) will be hitting the market in May — a powerful headwind for a cooling IPO. Instead of following hot IPOs, it makes better sense to follow the laggards. These are the companies that have either already fallen below their offering price, or fallen sharply from their post-IPO peaks. To be sure, many of these new issues deserve the drubbing they have received, but some companies just need to deliver better and more consistent results to build a shareholder base. Here are three 2013 IPOs that have fallen out of bed but show solid turnaround potential. 1.  SFX Entertainment… Read More

Buying stocks that are surrounded by negativity is not fun — but the best deals are often found in companies that are undergoing turnarounds yet still mired in bearish sentiment. #-ad_banner-#This should come as no surprise. After all, the reverse is true — as Warren Buffett has said, “You pay a very high price in the stock market for a cheery consensus.” The market is full of stories about struggling companies that were able to turn around difficult situations and become profitable — companies like Apple (Nasdaq: AAPL), General Motors (NYSE: GM) and Citibank (NYSE: C). Investors in those companies… Read More

Buying stocks that are surrounded by negativity is not fun — but the best deals are often found in companies that are undergoing turnarounds yet still mired in bearish sentiment. #-ad_banner-#This should come as no surprise. After all, the reverse is true — as Warren Buffett has said, “You pay a very high price in the stock market for a cheery consensus.” The market is full of stories about struggling companies that were able to turn around difficult situations and become profitable — companies like Apple (Nasdaq: AAPL), General Motors (NYSE: GM) and Citibank (NYSE: C). Investors in those companies who recognized and acted upon their turnarounds reaped large profits. To be sure, not every struggling company returns to profitability. Many wither and die on the vine, leaving investors with little to nothing to show for their trust and investment. There is no question that investing in turnaround candidates is risky. However, the substantial potential upside, combined with tactics to control risk, can make turnaround investing a profitable strategy. A prime example of profiting from a company that is mired in negativity but is in the process of turning things around is YRC Worldwide (Nasdaq: YRCW), a Kansas-based company that… Read More

In today’s market, there are no shortage of ways to invest in the rebounding housing market. However, it’s tough to find one that’s still cheap. #-ad_banner-#The major homebuilders have already had a solid rebound, along with banks and home improvement retailers, but there is still one overlooked play on the housing market and rebounding economy. This particular retailer was a great investment last year, up 45% — but after hitting its 52-week high earlier this year, it’s down 20% year to date. Given the recent pullback, this company is no longer just a growth story, but a value play at… Read More

In today’s market, there are no shortage of ways to invest in the rebounding housing market. However, it’s tough to find one that’s still cheap. #-ad_banner-#The major homebuilders have already had a solid rebound, along with banks and home improvement retailers, but there is still one overlooked play on the housing market and rebounding economy. This particular retailer was a great investment last year, up 45% — but after hitting its 52-week high earlier this year, it’s down 20% year to date. Given the recent pullback, this company is no longer just a growth story, but a value play at that. Trading at just 13 times earnings, more than 25% below its historical average, Bed Bath & Beyond (Nasdaq: BBBY) has proven to be one of the more resilient retailers in the brick-and-mortar space. At a time when the likes of Amazon.com (Nasdaq: AMZN) is taking market share from brick-and-mortar stores, Bed Bath & Beyond has seen its sales grow at an annualized rate of 12% over the past three fiscal years. BBBY fell off a cliff after third-quarter results came in below consensus expectations for both the top and bottom lines. Although revenue and earnings missed estimates, it’s worth… Read More

Thanks to an impressive recent rally, a number of stocks that had temporarily pulled back to bargain levels have already surged back to fresh highs. If you’re looking for solid bargains among companies that are at the top of their game… good luck. To find true bargains, you need to look at companies that have stumbled. Operational missteps are about the only reason for a stock to be out of favor these days. The key is to find the companies that have the ingredients to fix their problems. Here’s a look at three stocks trading well below recent highs —… Read More

Thanks to an impressive recent rally, a number of stocks that had temporarily pulled back to bargain levels have already surged back to fresh highs. If you’re looking for solid bargains among companies that are at the top of their game… good luck. To find true bargains, you need to look at companies that have stumbled. Operational missteps are about the only reason for a stock to be out of favor these days. The key is to find the companies that have the ingredients to fix their problems. Here’s a look at three stocks trading well below recent highs — each with catalysts to regain its footing in coming quarters. 1. Hercules Offshore (Nasdaq: HERO ) This provider of offshore drilling rigs and other equipment appears caught in a product cycle transition. The company is completing a new slate of rigs to put into service, but investors have grown concerned that those new rigs haven’t secured new long-term contracts. HERO, which traded up to nearly $8 last summer, now hovers around $4.50. That works out to be around six times projected 2015 profit forecasts. Shares of Hercules also trade well below book value, and have been a recent beneficiary of… Read More

Last fall, legendary investor Carl Icahn added a “sizable position” of Apple to his $16 billion holding company — Icahn Enterprises. Since he announced his purchase on Sept. 11, 2013, Apple is up 14.9%, handily outperforming the S&P’s 9.7% gain in that same time. After making the purchase, Icahn was quoted saying it was a “no-brainer” investment, citing that the company’s valuation was “extremely cheap” by the numbers. Icahn should know, too. Unlike most of today’s billionaires, he made his fortune entirely by investing in the stock market. Since he founded Icahn Enterprises less than 30 years ago, his company… Read More

Last fall, legendary investor Carl Icahn added a “sizable position” of Apple to his $16 billion holding company — Icahn Enterprises. Since he announced his purchase on Sept. 11, 2013, Apple is up 14.9%, handily outperforming the S&P’s 9.7% gain in that same time. After making the purchase, Icahn was quoted saying it was a “no-brainer” investment, citing that the company’s valuation was “extremely cheap” by the numbers. Icahn should know, too. Unlike most of today’s billionaires, he made his fortune entirely by investing in the stock market. Since he founded Icahn Enterprises less than 30 years ago, his company has enjoyed total returns in excess of 288,000%. #-ad_banner-#To put that in perspective, if you had invested $1,500 with him back in 1987, the size of your position would be worth over $4.3 million today. That kind of performance is one reason Chartered Market Technician Michael J. Carr recently designed a trading system to leverage the financial genius of investing gurus, like Icahn. By applying his proprietary trading system to stocks that are held by the market’s 20 most successful gurus — including Warren Buffett, George Soros and David Einhorn — Michael has earned big gains… Read More

When you hear of an investment opportunity you’re interested in, you might be drawn to something that can be described in a sexy way like “explosive” or “revolutionary.” #-ad_banner-#What you learn after a while, though, is that the most attractive adjective in investing is “consistency.” Stocks like Johnson & Johnson (NYSE: JNJ) don’t often make headlines, but they churn out steady results year after year. Since the beginning of 2012, JNJ is up 43%; with dividends reinvested, it’s up just over 50%. Call JNJ a boring stock if you want. I’ll take those types of returns all day long. But… Read More

When you hear of an investment opportunity you’re interested in, you might be drawn to something that can be described in a sexy way like “explosive” or “revolutionary.” #-ad_banner-#What you learn after a while, though, is that the most attractive adjective in investing is “consistency.” Stocks like Johnson & Johnson (NYSE: JNJ) don’t often make headlines, but they churn out steady results year after year. Since the beginning of 2012, JNJ is up 43%; with dividends reinvested, it’s up just over 50%. Call JNJ a boring stock if you want. I’ll take those types of returns all day long. But how about the best of both worlds — a consistent dividend-paying growth stock with plenty of upside? This stock has risen 110% since the beginning of 2012, and the company — which has being paying dividends since 1985 — recently increased its dividend by 15.8%. This month, the company beat fourth-quarter earnings estimates, bringing total 2013 earnings per share (EPS) to $5.93, up 14% from the previous year. The stock I’m talking about is Snap-on Inc. (NYSE: SNA), the eponymous maker of Snap-on tools and accessories for consumers ranging from do-it-yourselfers to oil workers in Alaska’s North Slope. Snap-on has… Read More

The Aflac (NYSE: AFL) duck is one of the strongest brands today. It’s genius marketing. But there’s much more to this behemoth than a clever and enduring ad campaign. The stock is a must-own. I first wrote about Aflac for StreetAuthority three years ago. The stock is higher than when I first profiled it, and the earnings projections are right about where I put them (give or take a few cents). Yet the market is still not that crazy about the stock. Good — that means better prices for us. #-ad_banner-#With a market cap of close to $30… Read More

The Aflac (NYSE: AFL) duck is one of the strongest brands today. It’s genius marketing. But there’s much more to this behemoth than a clever and enduring ad campaign. The stock is a must-own. I first wrote about Aflac for StreetAuthority three years ago. The stock is higher than when I first profiled it, and the earnings projections are right about where I put them (give or take a few cents). Yet the market is still not that crazy about the stock. Good — that means better prices for us. #-ad_banner-#With a market cap of close to $30 billion, Aflac sells supplemental health and life insurance in the U.S. and Japan. Most products are underwritten on an individual basis, but the company began writing group policies in recent years. In the U.S., Aflac’s product focus is primarily asset and income loss due to illness or injury. In Japan, the company’s focus is on designing products designed to help pay medical costs not covered under Japan’s national health insurance system. This is where I see the most opportunity for growth in the U.S. business. But more on that later. Aflac’s financial position is probably the best insurance for investor… Read More

I have studied technical analysis for many years. What I have discovered might come as a surprise to many: #-ad_banner-#The majority of technical analysis is pure nonsense. While patterns and indicators appear to repeat themselves in a consistent manner, most of the time these patterns have zero predictive value and are not consistently repeatable when properly statistically tested in the stock market. Hindsight bias and flaws in human perception are the main reasons that technical analysis remains popular yet fails again and again when applied to real-time decision-making in the stock market. However, there are two technical analysis patterns that… Read More

I have studied technical analysis for many years. What I have discovered might come as a surprise to many: #-ad_banner-#The majority of technical analysis is pure nonsense. While patterns and indicators appear to repeat themselves in a consistent manner, most of the time these patterns have zero predictive value and are not consistently repeatable when properly statistically tested in the stock market. Hindsight bias and flaws in human perception are the main reasons that technical analysis remains popular yet fails again and again when applied to real-time decision-making in the stock market. However, there are two technical analysis patterns that I have found that do actually put the odds in my favor when tested over a series of trades. Remember, this does not mean that every trade entered due to these patterns will be a winner. However, it does mean that more trade entries than not will result in profits. The patterns I’m referring to: 1. Stocks are more likely to fall after a series of successively higher closes than to continue higher. 2. Stocks are more likely to bounce higher after a series of successively lower closes than to continue lower. I know this flies in the face… Read More

When mobile phones flooded the market, there was a lot of concern that the need and desire for watches would decline. That hasn’t happened, and many investors missed out on an opportunity to buy low on apparel and accessories stocks that were squeezed by that anxiety. However, it looks like a similar opportunity is forming now. #-ad_banner-#Watches are still a huge market for retailers, estimated at $60 billion a year globally. Yet the risk that smart watches will take some market share from conventional watches is very real. However, the threat currently applies more to the U.S. than other major… Read More

When mobile phones flooded the market, there was a lot of concern that the need and desire for watches would decline. That hasn’t happened, and many investors missed out on an opportunity to buy low on apparel and accessories stocks that were squeezed by that anxiety. However, it looks like a similar opportunity is forming now. #-ad_banner-#Watches are still a huge market for retailers, estimated at $60 billion a year globally. Yet the risk that smart watches will take some market share from conventional watches is very real. However, the threat currently applies more to the U.S. than other major growth areas. With the rise of smart watches on the horizon, some investors are again shunning the major watchmakers. But one of the big problems with smart watches is that they haven’t yet become fashionable. Fossil (Nasdaq: FOSL) has been one of the most pressured stocks due to the notion that smart watches might eat into the market share of conventional watches. The retailer is essentially flat over the past two years. The sale of watches has remained strong throughout the financial crisis. From 2010 to 2012, industry sales grew at an annualized rate of nearly 30%. By comparison, sales… Read More