Throughout the summer, a clear theme has emerged. High-tech companies have reported generally solid results, and yet shares in the sector keep drifting down toward 52-week lows. Despite their considerable cash balances, investors have grown increasingly concerned that sector growth will stall out. That’s why Intel’s (Nasdaq: INTC) just-announced decision to buy security software vendor McAfee (NYSE: MFE) is so important. It’s a clear sign that these tech titans will use their balance sheets to help alleviate those growth concerns. Short -term implications The fact that Intel is paying a… Read More

Throughout the summer, a clear theme has emerged. High-tech companies have reported generally solid results, and yet shares in the sector keep drifting down toward 52-week lows. Despite their considerable cash balances, investors have grown increasingly concerned that sector growth will stall out. That’s why Intel’s (Nasdaq: INTC) just-announced decision to buy security software vendor McAfee (NYSE: MFE) is so important. It’s a clear sign that these tech titans will use their balance sheets to help alleviate those growth concerns. Short -term implications The fact that Intel is paying a +60% premium to Wednesday’s close tells you that private market valuations are often far higher than the value these companies are getting as public entities. It’s also noteworthy that Intel’s offer of $48 a share is just above McAfee’s 52-week trading range. Generally speaking, buyout offers must exceed that threshold to avoid accusations that a company is being sold on the cheap while it is out of favor. Then again, McAfee’s shares haven’t seen $48 since the dot-com era of 1999. McAfee’s board would have been hard-pressed to reject this offer,… Read More

I’ve mentioned before that I often go off the beaten path to find the best income investments in my High-Yield Investing and High-Yield International newsletters. These days you have to — remember that the common stocks in the S&P 500 yield only 2% on average. Luckily, there… Read More

This is a tricky market for income investors. Bonds are selling at historically low yields and high prices. The 10-year Treasury bond currently pays a miniscule 2.6% and a three-year CD pays about 1.8% on average. Meanwhile… Read More

In times of crisis, investors invariably seek shelter in the almighty dollar. The perceived resilience of the U.S. economy has given the impression that we are simply too large a ship to sink. And although we are well past the scary times of 18 months ago, the global economy still feels dicey, and the dollar, which rallied sharply as the global economy crumbled, still remains fairly strong against the euro and the Chinese yuan. Yet as the global economy sputters back to life during the next year or two, the dollar… Read More

In times of crisis, investors invariably seek shelter in the almighty dollar. The perceived resilience of the U.S. economy has given the impression that we are simply too large a ship to sink. And although we are well past the scary times of 18 months ago, the global economy still feels dicey, and the dollar, which rallied sharply as the global economy crumbled, still remains fairly strong against the euro and the Chinese yuan. Yet as the global economy sputters back to life during the next year or two, the dollar is likely to resume its downward drift that had begun back in 2007 and 2008. If it weakens in a slow and steady fashion, it could help pave the way for a long-awaited export boom that finally reverses stubborn trade deficits and spurs a badly-needed employment surge in our nation’s heartland. Why the long-term bearishness on the dollar? Here are three reasons why… 1. For starters, our budget deficits for fiscal 2010 and 2011 are at record levels (on a non-inflation-adjusted basis). The amount of debt held by the public (that is, excluding intergovernmental… Read More

Super-investor Warren Buffett has made a big bet on Johnson & Johnson (NYSE: JNJ), adding more than 17.4 million shares to the portfolio of his holding company, Berkshire Hathaway (NYSE: BRK-B). His stake in J&J is worth about $2.4 billion at current prices. The move can be seen as a classic Buffett “value” play: J&J shares, at about $58, are well off their 52-week high of $66.20 and are down nearly -10% for the year. The company has annual revenue of more than $60 billion and consistently earns returns on… Read More

Super-investor Warren Buffett has made a big bet on Johnson & Johnson (NYSE: JNJ), adding more than 17.4 million shares to the portfolio of his holding company, Berkshire Hathaway (NYSE: BRK-B). His stake in J&J is worth about $2.4 billion at current prices. The move can be seen as a classic Buffett “value” play: J&J shares, at about $58, are well off their 52-week high of $66.20 and are down nearly -10% for the year. The company has annual revenue of more than $60 billion and consistently earns returns on shareholder equity of between 25% and 30%. It has posted an increase in earnings for at least the past 10 years, and 2010 profit forecasts imply a +188.3% increase in net earnings since 2000. (Earnings have surprised to the upside for the past five years, according to Bloomberg.) The J&J stake wasn’t the only health-care bet made by the 79-year-old Buffett, whom Forbes lists as the second-richest man in the United States, with an estimated net worth of $40 billion, second only to… Read More

One of the benefits of closely monitoring stocks month after month is that you get to identify great companies to put on your watch list. And when these companies temporarily fall out of favor, you can take advantage. During the past decade, I have always been very impressed with the… Read More

General Electric (NYSE: GE) is back. Its shares have more than doubled from the early 2009 swoon to near $16 and profits have begun to rebound. Then again, maybe not. Shares never traded below $30 in the middle part of the… Read More

America’s largest producer of crushed stone, sand and gravel appears as if it could get crushed itself. Concrete and asphalt maker Vulcan Materials (NYSE: VMC) recently reported disappointing second quarter results below analysts’ expectations. Higher material costs and lower product pricing negatively affected the results. Read More

It’s been an absolutely brutal summer for the for-profit education stocks. In late June, the Senate began investigating whether for-profit academic institutions such as Apollo Group (Nasdaq: APOL) were a worthwhile use of taxpayer funds for student loans when their students have higher-than-average loan default rates. Senate investigators also questioned whether all of these institutions even offered academic benefits of sufficient value to justify such a high number of student loans. Then, in early July, the Department of Education (DOE) began to look into these issues as well, as rumors swirled that some of these firms might… Read More

It’s been an absolutely brutal summer for the for-profit education stocks. In late June, the Senate began investigating whether for-profit academic institutions such as Apollo Group (Nasdaq: APOL) were a worthwhile use of taxpayer funds for student loans when their students have higher-than-average loan default rates. Senate investigators also questioned whether all of these institutions even offered academic benefits of sufficient value to justify such a high number of student loans. Then, in early July, the Department of Education (DOE) began to look into these issues as well, as rumors swirled that some of these firms might run into trouble if the scrutiny got even more intense. Well, that day has arrived. The DOE has just released data that show a number of these institutions are seeing their students default on loans at an alarming rate. The DOE established a 45% payback rate as the threshold that is deemed acceptable. As the chart below indicates, one can guess which schools passed the test simply by seeing what stocks are rising and which are falling in Monday trading. Several institutions exceeded that threshold, and are seeing their shares move… Read More