It’s easy to overlook things… especially if you’re not really looking for them. It’s the approach most investors have had with financial stocks. Since the crisis of 2008, the financial services business has changed radically. The “too big to fail” firms — Bank of America (NYSE: BAC), JPMorgan Chase (NYSE: JPM), Wells Fargo (NYSE: WFC), Citigroup (NYSE: C) and the like — have enjoyed stock price rebounds but still suffer from constant regulatory scrutiny and risk. #-ad_banner-#Their earnings multiples are temptingly low, but for good reason: uncertainty. It’s really hard to figure out how these firms make money and how… Read More

It’s easy to overlook things… especially if you’re not really looking for them. It’s the approach most investors have had with financial stocks. Since the crisis of 2008, the financial services business has changed radically. The “too big to fail” firms — Bank of America (NYSE: BAC), JPMorgan Chase (NYSE: JPM), Wells Fargo (NYSE: WFC), Citigroup (NYSE: C) and the like — have enjoyed stock price rebounds but still suffer from constant regulatory scrutiny and risk. #-ad_banner-#Their earnings multiples are temptingly low, but for good reason: uncertainty. It’s really hard to figure out how these firms make money and how much they’re going to make going forward. So the market, which gets it right every now and then, doesn’t have a whole lot of confidence in their ability. It’s even worse for super regional and regional banks. Traditionally, they’ve had to lend money to make money. Since 2008, despite the Federal Reserve’s best efforts to encourage them to do so, they just won’t lend money. Most of their revenue is derived from existing business and “feeing” their current customers to death. That’s a poor business model that no one should invest in. So once past mega-cap financials and regional banks,… Read More

Nobody likes getting old. Yet it is one of life’s few inevitables. However, there are a handful of companies that allow people to age more gracefully with anti-aging products. #-ad_banner-#Nu Skin Enterprises (NYSE: NUS) is one of these companies. However, its stock is already up 75% over the past 12 months. There’s still one company that looks to be a value in the fight against aging, and that’s Estee Lauder (NYSE: EL). The recent pullback in Estee Lauder’s shares appears to be a buying opportunity. The company is down nearly 7% with year, compared with an S&P 500 that’s flat. Read More

Nobody likes getting old. Yet it is one of life’s few inevitables. However, there are a handful of companies that allow people to age more gracefully with anti-aging products. #-ad_banner-#Nu Skin Enterprises (NYSE: NUS) is one of these companies. However, its stock is already up 75% over the past 12 months. There’s still one company that looks to be a value in the fight against aging, and that’s Estee Lauder (NYSE: EL). The recent pullback in Estee Lauder’s shares appears to be a buying opportunity. The company is down nearly 7% with year, compared with an S&P 500 that’s flat. There are only a few global cosmetic companies, and Estee Lauder is one of them. Its various skin care and fragrance products are sold in department stores, company-owned retail stores and travel-related outlets such as airport shops. North America makes up less than 40% of Estee’s sales, meaning the company is very much a global operator. It’s already the market leader in China when it comes to skin care and makeup. China is Estee’s third-largest market by revenues, behind the U.S. and the U.K., and the company only has about half of its brands in China, meaning there’s an opportunity… Read More

Would you pay $1,225 for a gift card worth $400? It sounds ridiculous. No one should be willing to exchange over a grand in cash for nothing more than a few hundred dollars worth of company merchandise — regardless of what store it is. Yet despite the absurdity, that’s exactly what die-hard customers are willing to pay for a highly-coveted Starbucks (Nasdaq: SBUX) limited-edition gift card. #-ad_banner-#The rose-gold covered card, which comes pre-loaded with $400 in Starbucks credit, sold out in seconds when the company first released them early last month — less time than it takes the average barista… Read More

Would you pay $1,225 for a gift card worth $400? It sounds ridiculous. No one should be willing to exchange over a grand in cash for nothing more than a few hundred dollars worth of company merchandise — regardless of what store it is. Yet despite the absurdity, that’s exactly what die-hard customers are willing to pay for a highly-coveted Starbucks (Nasdaq: SBUX) limited-edition gift card. #-ad_banner-#The rose-gold covered card, which comes pre-loaded with $400 in Starbucks credit, sold out in seconds when the company first released them early last month — less time than it takes the average barista to prepare one of the Seattle-based coffee chain’s signature lattes. Don’t worry though. If you’re interested in buying this “limited-edition” piece of Starbucks’ history, you can pick one up for just $1,225 on eBay — more than double what the card is worth in venti Americanos. It’s that kind of brand loyalty that makes Starbucks such a great company… and an even better investment. In fact, Starbucks’ customers are so loyal to their brand that we at StreetAuthority have come to call them some of the “most loyal customers in the world.” They don’t care that… Read More

Many corporate executives place a lot of faith in the rational behavior of the markets. If they deliver on the promises they’ve set out for investors, the market should reward them with a sufficiently higher share price. But sometimes, the market fails to respond, even when management delivers. The executives at DVR pioneer TiVo (Nasdaq: TIVO) have surely done what they promised, yet shares remain remarkably undervalued. Roughly two years ago, I laid out a series of catalysts that would help boost this stock by 50%. #-ad_banner-#Shares have risen 40% since then, but that’s cold comfort for investors… Read More

Many corporate executives place a lot of faith in the rational behavior of the markets. If they deliver on the promises they’ve set out for investors, the market should reward them with a sufficiently higher share price. But sometimes, the market fails to respond, even when management delivers. The executives at DVR pioneer TiVo (Nasdaq: TIVO) have surely done what they promised, yet shares remain remarkably undervalued. Roughly two years ago, I laid out a series of catalysts that would help boost this stock by 50%. #-ad_banner-#Shares have risen 40% since then, but that’s cold comfort for investors who have seen the S&P 500 rise 52% in that time. Shares of cable TV companies have more than doubled in that time, making TiVo a relative loser in this industry. But if you are looking to apply fresh money to this industry now, forget the cable giants. It’s simply hard to see any more upside for them. Instead, refocus your sights on TiVo, which holds appeal to both value and growth investors. Let’s start with the value part of the equation. In my late 2011 profile of the company, I noted that TiVo stood to greatly gain from a… Read More

Investing in turnaround stocks can be quite challenging. It takes a keen eye to ignore the current bad news and visualize how things will look a year or two from now. The upside: If you can spot a turnaround before the crowd, then you can reap significant profits by the time the good news has begun to flow. #-ad_banner-#Though he’s most famous for several high profile short positions, Greenlight Capital’s David Einhorn also commands a great deal of respect on Wall Street for his ability to spot turnarounds. As we noted six months ago, he started out with just $1… Read More

Investing in turnaround stocks can be quite challenging. It takes a keen eye to ignore the current bad news and visualize how things will look a year or two from now. The upside: If you can spot a turnaround before the crowd, then you can reap significant profits by the time the good news has begun to flow. #-ad_banner-#Though he’s most famous for several high profile short positions, Greenlight Capital’s David Einhorn also commands a great deal of respect on Wall Street for his ability to spot turnarounds. As we noted six months ago, he started out with just $1 million in assets under management in 1996, and now oversees $4 billion in investments for his clients. Einhorn knows full well that turnaround stocks can try your patience: One of his most recent turnaround picks has just delivered a fresh set of bad news, sending shares down to levels below his purchase price. In the fourth quarter of 2013, Einhorn’s firm acquired $60 million stake in oil services firm McDermott International (NYSE: MDR), at an average price of $7.80 a share. He’s already underwater with this this pick. But a deeper look behind McDermott’s woes reveals a set of fixable… Read More

The stock market is quickly closing in on new highs despite looking overvalued. The S&P 500’s Shiller price-to-earnings (P/E) ratio is now over 25 — around 52% above its historical average of 16.5. Investors looking for clues in the CBOE Volatility Index (VIX) aren’t getting much useful information. Just this month, the index has ranged from an alarming high of 21.44 to a deceptively safe low of 13.57. #-ad_banner-#While the bull market marches forward toward its penultimate climax, savvy investors are looking for stocks that will perform well no matter what the macroeconomic environment is. These defensive stocks have non-cyclical… Read More

The stock market is quickly closing in on new highs despite looking overvalued. The S&P 500’s Shiller price-to-earnings (P/E) ratio is now over 25 — around 52% above its historical average of 16.5. Investors looking for clues in the CBOE Volatility Index (VIX) aren’t getting much useful information. Just this month, the index has ranged from an alarming high of 21.44 to a deceptively safe low of 13.57. #-ad_banner-#While the bull market marches forward toward its penultimate climax, savvy investors are looking for stocks that will perform well no matter what the macroeconomic environment is. These defensive stocks have non-cyclical businesses with a non-discretionary product, which allows them to perform well during recessions and down economies. The best defensive-oriented investors can hope for is to have a company with an essential product or service that’s not tied to the overall economy be in short supply. When the price of oil rises, it may hurt consumers, but it also helps lift the stock price of companies like Exxon Mobile (NYSE: XOM). But it’s not oil that consumers are suddenly craving. The demand for chicken is the catalyst that could drive one company’s stock price higher no matter what the stock market… Read More

A surging stock market has given the impression that the U.S. economy has made up for lost time over the past five years. But don’t confuse asset prices with economic activity. The vast majority of companies have sought to restrain spending, limiting capital expenditures in the face of a still-wobbly economy. #-ad_banner-#That flies in the face of historical patterns. In the past, as the economy exits recession, capital spending starts to rise, often hitting a peak in the next three to four years before the next inevitable pullback from the cyclical peak. This time around, the move toward a peak… Read More

A surging stock market has given the impression that the U.S. economy has made up for lost time over the past five years. But don’t confuse asset prices with economic activity. The vast majority of companies have sought to restrain spending, limiting capital expenditures in the face of a still-wobbly economy. #-ad_banner-#That flies in the face of historical patterns. In the past, as the economy exits recession, capital spending starts to rise, often hitting a peak in the next three to four years before the next inevitable pullback from the cyclical peak. This time around, the move toward a peak still lies in the future, perhaps into 2015 and 2016. And since we’re exiting a long phase of underinvestment in capital spending (what economists call “PP&E,” short for plants, property and equipment), companies will need to embark on an extended phase of higher capital spending, once the cycle kicks in. Instead of a cyclical peak lasting 18 to 24 months, as has been the case in the past, we may be looking at a peak that extends for three or four years. In that context, many industrial stocks are poised for better results in a year or two, and perhaps… Read More

Every quarter, we take a close look at the latest buys and sells from leading hedge fund managers. These “gurus” often commit millions of dollars to their favorite stocks. But they rarely show any broad predilection for any particular industry or sector. Yet many of the recent filings by these gurus show deep interest in just one group of companies: our nation’s energy refiners. These firms, which distill crude oil into gasoline, diesel and other petrochemicals, are emerging from a long slump as a rising output of U.S. oil enables them to generate higher processing volumes. I discussed the renaissance… Read More

Every quarter, we take a close look at the latest buys and sells from leading hedge fund managers. These “gurus” often commit millions of dollars to their favorite stocks. But they rarely show any broad predilection for any particular industry or sector. Yet many of the recent filings by these gurus show deep interest in just one group of companies: our nation’s energy refiners. These firms, which distill crude oil into gasoline, diesel and other petrochemicals, are emerging from a long slump as a rising output of U.S. oil enables them to generate higher processing volumes. I discussed the renaissance in energy refining back in August, and since then, the performance of the group has been mixed: #-ad_banner-#The divergent performances are due to regional positioning, as firms with Gulf Coast refineries have benefited from the elimination of a major supply bottleneck at a key storage hub in Oklahoma that has impacted underlying oil prices. Some firms have also suffered from unforeseen maintenance outages that led to sharp (though temporary) temporary dividend cuts. Despite their pullbacks since August, I remain a fan of CVR Refining (Nasdaq: CVRR), which I profiled in November, as well as Alon USA… Read More

More than seven decades ago, in their investing bible “Security Analysis,” the famed value investors Benjamin Graham and David Dodd explained the core basis of a stock’s value. #-ad_banner-#They wanted investors to view a company in the context of its liquidation value, as a means of ensuring that a stock was a bargain. “By the liquidating value of an enterprise we mean the money that the owners could get out of it if they wanted to give it up. They might sell all or part of it to someone else, on a going-concern basis. Or else they might turn the… Read More

More than seven decades ago, in their investing bible “Security Analysis,” the famed value investors Benjamin Graham and David Dodd explained the core basis of a stock’s value. #-ad_banner-#They wanted investors to view a company in the context of its liquidation value, as a means of ensuring that a stock was a bargain. “By the liquidating value of an enterprise we mean the money that the owners could get out of it if they wanted to give it up. They might sell all or part of it to someone else, on a going-concern basis. Or else they might turn the various kinds of assets into cash, in piecemeal fashion, taking whatever time is needed to obtain the best realization from each. Such liquidations are of everyday occurrence in the field of private business.” When those words were written, a wide variety of companies could be bought for prices below their liquidation value. These days, such stocks are hard to find. Of the 1,500 companies in the S&P 400, 500, and 600, less than 2% of them trade for less than their liquidation value, or what we today cite as being below tangible book value. Yet there is a compelling reason… Read More

Throughout the first seven weeks of 2014, the stock market has shown a wide range of emotions.#-ad_banner-# Fear-based selling in January has been replaced by a euphoric buying spree since early February. Yet don’t let the S&P 500’s rebound back to all-time highs fool you. Many individual stocks are now trading far from their 52-week highs, and a rising number of them are now plumbing 52-week lows. A look at the list of 52-week lows might evoke the old saying that you shouldn’t try to catch a falling knife. These stocks are being sold for good reason, and if the… Read More

Throughout the first seven weeks of 2014, the stock market has shown a wide range of emotions.#-ad_banner-# Fear-based selling in January has been replaced by a euphoric buying spree since early February. Yet don’t let the S&P 500’s rebound back to all-time highs fool you. Many individual stocks are now trading far from their 52-week highs, and a rising number of them are now plumbing 52-week lows. A look at the list of 52-week lows might evoke the old saying that you shouldn’t try to catch a falling knife. These stocks are being sold for good reason, and if the bad news continues, then they’ll keep making fresh 52-week lows. But contrarians love to look at these kinds of stocks. Warren Buffett’s maxim that you should love stocks when they are hated applies to the broader market action, but many value investors take that maxim more literally: Any individual stock that is deeply out of favor has a better chance of winning new support than stocks that are already fully loved by the crowd. Here’s a look at some recent stocks making fresh 52-week or even multi-year lows in recent sessions. Slumping IPOs It’s not unusual to… Read More