Years ago, as I was strolling on a beachside boardwalk, I looked around and realized I was the only person in my area not wearing Crocs (Nasdaq: CROX), the somewhat ugly plastic shoes that had become all the rage. Clearly, these folks were not alone: Sales of Crocs soared from $14 million in 2004 to $355 million in 2006. Even though sales would rise another 139% in 2007 (to $847 million), investors who bought in while growth remained above 100% learned a terrible lesson. All fashion fads end — sometimes very badly. #-ad_banner-#Yet every few years, investors repeat… Read More

Years ago, as I was strolling on a beachside boardwalk, I looked around and realized I was the only person in my area not wearing Crocs (Nasdaq: CROX), the somewhat ugly plastic shoes that had become all the rage. Clearly, these folks were not alone: Sales of Crocs soared from $14 million in 2004 to $355 million in 2006. Even though sales would rise another 139% in 2007 (to $847 million), investors who bought in while growth remained above 100% learned a terrible lesson. All fashion fads end — sometimes very badly. #-ad_banner-#Yet every few years, investors repeat this classic mistake, assuming strong growth can continue for a very long period. Even the best retail brands eventually cool off. Sales at Nike (NYSE: NKE) for example, have risen just 7% annually since 2005, despite a compelling international expansion strategy and a broadening line of products. The reason for Nike’s recent phase of slower growth: The company’s brand is no longer a fad, and management has had to work hard to play up the performance attributes of its products. It was a logical response for that phase of the company’s growth cycle. That’s also a strategy deployed by Under… Read More

The Old Gray Lady is looking a lot younger these days. Less than five years after desperately needing a costly $250 million capital infusion from Mexican billionaire Carlos Slim, The New York Times Co. (NYSE: NYT) has staged a remarkable rebound. Shares have nearly doubled in the past two years, handily surpassing the S&P 500 Index. Rival Gannett (NYSE: GCI), publisher of the USA Today, has fared even better. Give credit where it’s due. These companies took a machete to their expense structures, and they now appear to be on much more solid operational footing. Here’s a quick… Read More

The Old Gray Lady is looking a lot younger these days. Less than five years after desperately needing a costly $250 million capital infusion from Mexican billionaire Carlos Slim, The New York Times Co. (NYSE: NYT) has staged a remarkable rebound. Shares have nearly doubled in the past two years, handily surpassing the S&P 500 Index. Rival Gannett (NYSE: GCI), publisher of the USA Today, has fared even better. Give credit where it’s due. These companies took a machete to their expense structures, and they now appear to be on much more solid operational footing. Here’s a quick snap shot of the Times’ income statement in 2007 and 2012. More than a third of the Times’ revenue base has dried up (though a few asset sales also shrank revenues). But a tight control on costs and a huge cutback in capital spending has enabled the newspaper publisher to generate positive free cash flow. The company has even reinstated a modest dividend after getting rid of it back in 2008.#-ad_banner-# The turnaround for Gannett hasn’t been quite as impressive, and its share price gains are only so robust because shares were so depressed a few years back. Read More

Diabetes is no longer solely an American epidemic.#-ad_banner-# The Journal of the American Medical Association just released a study that shows 11.6% of Chinese adults have the debilitating disease, surpassing America’s 11.3%. With a population topping 1 billion, China is now home to more than 100 million people suffering from diabetes — a third of the global diabetes population. And with emerging markets gaining more access to middle-class amenities such as high-fat food, the trend is accelerating. The International Diabetes Federation projects that more than 550 million people will be diagnosed with diabetes by 2030, up from 371 million diabetes… Read More

Diabetes is no longer solely an American epidemic.#-ad_banner-# The Journal of the American Medical Association just released a study that shows 11.6% of Chinese adults have the debilitating disease, surpassing America’s 11.3%. With a population topping 1 billion, China is now home to more than 100 million people suffering from diabetes — a third of the global diabetes population. And with emerging markets gaining more access to middle-class amenities such as high-fat food, the trend is accelerating. The International Diabetes Federation projects that more than 550 million people will be diagnosed with diabetes by 2030, up from 371 million diabetes patients in 2012. That’s a huge opportunity for the global leader in diabetes medication and treatments. Not only is this market leader home to five of the top 10 selling diabetes medications in the world, it’s also developing a deep pipeline of next-generation diabetes drugs and is protected by a huge competitive moat. That has driven an outsize gain of 58% in the past two years: Novo Nordisk A/S (NYSE: NVO) is the undisputed global leader in the diabetes market. The company’s impressive product portfolio is home to five of the world’s 10 best-selling diabetes medications. That has… Read More

When I wrote early this year about the coming Internet boom, my purpose was to highlight dot-com 2.0 stocks and companies that would benefit from an increase in domain names and advertising.#-ad_banner-# I recommended four names: Verisign (Nasdaq: VRSN), Google (Nasdaq: GOOG), Marchex (Nasdaq: MCHX) and ValueClick (Nasdaq: VCLK) as companies ready to ring the cash register. Since that article was published in January, all but ValueClick have easily beaten the market, with 40% to 50% gains in Google and Verisign and a whopping 120% gain by Marchex. But there is another facet of the Internet boom coming — and… Read More

When I wrote early this year about the coming Internet boom, my purpose was to highlight dot-com 2.0 stocks and companies that would benefit from an increase in domain names and advertising.#-ad_banner-# I recommended four names: Verisign (Nasdaq: VRSN), Google (Nasdaq: GOOG), Marchex (Nasdaq: MCHX) and ValueClick (Nasdaq: VCLK) as companies ready to ring the cash register. Since that article was published in January, all but ValueClick have easily beaten the market, with 40% to 50% gains in Google and Verisign and a whopping 120% gain by Marchex. But there is another facet of the Internet boom coming — and no one is talking about it. When it happens, I think it will be one of those things that people look back on and ask: “In hindsight, it was so obvious. Why did I not invest?” This next big wave is something that is already affecting the way people use the Internet and bringing about massive changes in the software and hardware space. It plays on the same emotions that made YouTube and Facebook (Nasdaq: FB) household names. We Are Social Animals As humans, we feel compelled to share ourselves with friends, family and, well, the world. Read More

Coming out of World War II, few Americans could have known about the great era of prosperity soon to arrive.#-ad_banner-# From 1946 through 1973, our economy expanded by a 3.8% annual pace. Sure, there were a few recessions along the way, but the rapid rise of the middle class, which enjoyed a rising standard of living, helped set the stage for the world’s greatest economy. Roughly one-fourth of all global economic activity takes place on U.S. shores. But as I noted last week, the U.S. is now in its sixth year of weak economic growth. Economists are growing increasingly concerned… Read More

Coming out of World War II, few Americans could have known about the great era of prosperity soon to arrive.#-ad_banner-# From 1946 through 1973, our economy expanded by a 3.8% annual pace. Sure, there were a few recessions along the way, but the rapid rise of the middle class, which enjoyed a rising standard of living, helped set the stage for the world’s greatest economy. Roughly one-fourth of all global economic activity takes place on U.S. shores. But as I noted last week, the U.S. is now in its sixth year of weak economic growth. Economists are growing increasingly concerned that we’ve entered into an extended period of anemic growth. Indeed, the sole purpose of the Federal Reserve’s massive stimulus programs was to revive the economy’s “animal spirits.” But the economy has yet to respond. The Fed is pushing on a string. Investors may have a hard time seeing this notion as the stock market moves steadily higher. Profits are still rising, thanks to lean corporate expenses, but fully half of the companies in the S&P 500 are expected to boost sales by less than 5% next year. Blame goes to a stagnant income picture for many Americans. Read More

It might be pie-in-the-sky thinking that Rackspace Hosting (NYSE: RAX) could overtake Amazon Web Services as king of cloud hosting — at least not in the near future. That’s not necessarily a bad thing for investors. While Amazon.com’s (Nasdaq: AMZN) enormous profile has cast a shadow over Rackspace for some time now, being No. 2 in this arena is nothing to sneeze at. Back in March 2012, my StreetAuthority colleague David Sterman named RAX one of the most overvalued stocks in the market — but these days, Rackspace is getting some rather special attention at current prices. When Dave’s article… Read More

It might be pie-in-the-sky thinking that Rackspace Hosting (NYSE: RAX) could overtake Amazon Web Services as king of cloud hosting — at least not in the near future. That’s not necessarily a bad thing for investors. While Amazon.com’s (Nasdaq: AMZN) enormous profile has cast a shadow over Rackspace for some time now, being No. 2 in this arena is nothing to sneeze at. Back in March 2012, my StreetAuthority colleague David Sterman named RAX one of the most overvalued stocks in the market — but these days, Rackspace is getting some rather special attention at current prices. When Dave’s article was published last year, RAX sold for about $54. It subsequently grew even more expensive, to nearly $78 a share this January, but it has since fallen nearly 50% from that high. Last Monday, RAX’s share price of $49.31prompted investors to acquire 21,687 call options on the company, about 815% more than usual. That same day, Rackspace reported third-quarter earnings, showing higher than expected revenue ($389 million, up15.7% from a year ago) but lower than expected earnings per share (EPS), which came in at $0.11 compared with the $0.16 expected. So, you had some investors selling shares — price fell… Read More

It’s official… the United States is about to become the largest energy producer in the world (if it’s not already).#-ad_banner-# According to the Energy Information Administration (EIA), the U.S. is currently producing about 22 million equivalent barrels of oil and natural gas a day — up from 18 million barrels in 2008. While no one knows the actual figures for Russia (the largest producer for the past several years), estimates out of Moscow are forecasting the country will produce 21.8 million barrels a day in 2013. Think about that for a second… Just five years ago, lofty energy prices in… Read More

It’s official… the United States is about to become the largest energy producer in the world (if it’s not already).#-ad_banner-# According to the Energy Information Administration (EIA), the U.S. is currently producing about 22 million equivalent barrels of oil and natural gas a day — up from 18 million barrels in 2008. While no one knows the actual figures for Russia (the largest producer for the past several years), estimates out of Moscow are forecasting the country will produce 21.8 million barrels a day in 2013. Think about that for a second… Just five years ago, lofty energy prices in the U.S. nearly crippled the state of the overall economy. Back then there was so much demand for energy — and such little supply — that companies like Cheniere Energy (NYSE: LNG) were working day and night to build natural gas import terminals to take advantage of cheaper prices overseas. Today, the landscape in the American energy market has completely changed. Thanks to new developments in horizontal drilling and hydraulic fracturing (“fracking”), the U.S. has unlocked waves of oil and gas reserves that were once thought unrecoverable. As you’d expect, the optimism surrounding this “shale boom” has made American energy… Read More

$142 million for a Francis Bacon triptych. $120 million for a pastel by Edvard Munch. $106 million for an oil painting by Picasso. After a slow 2012, the fine-art market is back. Stock market gains worldwide and growing wealth in Asia have lifted prices to new all-time highs. That includes the recent $142 million for the Francis Bacon triptych, eclipsing last year’s record $120 million for Munch’s “The Scream.”#-ad_banner-# The fine-art market is trading just like the stock market. Buyers are stepping out and lifting the bid. That’s putting a lot of cash into the pockets of investors with rare… Read More

$142 million for a Francis Bacon triptych. $120 million for a pastel by Edvard Munch. $106 million for an oil painting by Picasso. After a slow 2012, the fine-art market is back. Stock market gains worldwide and growing wealth in Asia have lifted prices to new all-time highs. That includes the recent $142 million for the Francis Bacon triptych, eclipsing last year’s record $120 million for Munch’s “The Scream.”#-ad_banner-# The fine-art market is trading just like the stock market. Buyers are stepping out and lifting the bid. That’s putting a lot of cash into the pockets of investors with rare collections. But art connoisseurs aren’t the only ones cashing in. I want to tell you about a global leader in the auctioneer business that is also cashing in on these nine-figure masterpieces. Not only does the company generate big commissions from conducting auctions for the world’s rarest art and wealthiest individuals, it enjoys a duopoly with just one competitor, is protected by high barriers to entrance, is highly leveraged against growth in Asia and also pays a quarterly dividend. That has fueled an outsize gain of 80% in the past two years. Take a look below. Sotheby’s (NYSE:… Read More

When chip equipment maker Applied Materials (Nasdaq: AMAT) surpassed $10 billion in annual revenue for the first time in fiscal 2011, its competitors could only sigh. The company’s industry leadership was never in doubt, but a series of acquisitions gave it such a broad suite of offerings that rivals wondered if they could ever take market share again. Applied Materials’ massive market presence eventually led its two biggest rivals, Lam Research (Nasdaq: LRCX) and Novellus Systems to join forces in 2011, but even that combined entity has yet to crack the $5 billion annual revenue barrier. KLA-Tencor (Nasdaq: KLAC) is… Read More

When chip equipment maker Applied Materials (Nasdaq: AMAT) surpassed $10 billion in annual revenue for the first time in fiscal 2011, its competitors could only sigh. The company’s industry leadership was never in doubt, but a series of acquisitions gave it such a broad suite of offerings that rivals wondered if they could ever take market share again. Applied Materials’ massive market presence eventually led its two biggest rivals, Lam Research (Nasdaq: LRCX) and Novellus Systems to join forces in 2011, but even that combined entity has yet to crack the $5 billion annual revenue barrier. KLA-Tencor (Nasdaq: KLAC) is also in Applied Materials’ rearview mirror, with only $3 billion in annual sales. And a handful of smaller companies bring up the rear, none of which have even $1 billion in annual revenue. (Note: Only U.S. companies have been considered here.) Lost in the crowd is little-known Axcelis Technologies (Nasdaq: ACLS), which had $400 million to $500 million in annual sales a decade ago, but has slumped badly in recent years, with sales falling to just $200 million in 2012. Rivals such as Applied Materials used their financial firepower to acquire or develop the products that Axcelis had been… Read More

I grew up in and still live in the South. During the dog days of summer in July and August, when folks say, “It’s not the heat, it’s the humidity,” believe me, it’s the heat AND the humidity. Everything wilts. People move more slowly. Business slows down a little, too. There’s a real and noticeable effect. The fixed-income markets — represented by Treasurys, corporate and municipal bonds, and other income-oriented investments — experienced the dog days firsthand this summer as investors fretted over the prospect of the Federal Reserve scaling back its bond purchases, also known as tapering. Look what… Read More

I grew up in and still live in the South. During the dog days of summer in July and August, when folks say, “It’s not the heat, it’s the humidity,” believe me, it’s the heat AND the humidity. Everything wilts. People move more slowly. Business slows down a little, too. There’s a real and noticeable effect. The fixed-income markets — represented by Treasurys, corporate and municipal bonds, and other income-oriented investments — experienced the dog days firsthand this summer as investors fretted over the prospect of the Federal Reserve scaling back its bond purchases, also known as tapering. Look what happened to the 10-year Treasury: #-ad_banner-#Over the summer, yields nearly doubled, shooting from 1.6% to almost 3%. Naturally, this caused plenty of chaos in the bond market. However, chaos always brings opportunity. When it comes to adding a fixed-income component to an investor’s asset allocation and providing an above-average income stream, preferred stocks are one of the most useful tools available. Preferred stocks are typically classified as part of the issuing company’s debt structure. However, unlike bonds, preferreds are issued in face values smaller than $1,000 and are junior to bank loans and bonds. Preferreds are, however, senior… Read More