Investors often have a preference for “inexpensive” stocks.  No, this time I’m not talking about valuations. Rather, it’s the sheer price level that sometimes keeps investors away from an otherwise perfectly strong business and good investment opportunity.  Most investors prefer dealing in “round lots” of a stock — that is, share amounts that are measured in hundreds. This simplifies the order-filling and accounting processes. But it’s also a psychological thing… many investors see a triple-digit price for a stock and immediately assume it’s “expensive,” i.e. overvalued.  #-ad_banner-#Typically, a company does not set its initial public offering (IPO) price in hundreds… Read More

Investors often have a preference for “inexpensive” stocks.  No, this time I’m not talking about valuations. Rather, it’s the sheer price level that sometimes keeps investors away from an otherwise perfectly strong business and good investment opportunity.  Most investors prefer dealing in “round lots” of a stock — that is, share amounts that are measured in hundreds. This simplifies the order-filling and accounting processes. But it’s also a psychological thing… many investors see a triple-digit price for a stock and immediately assume it’s “expensive,” i.e. overvalued.  #-ad_banner-#Typically, a company does not set its initial public offering (IPO) price in hundreds of dollars — that would negatively impact the new shares’ overall liquidity and investors’ appetite. So whenever you see a stock trading in the triple digits per share it’s usually an indication of strength and how much investors like it.  Of course, not everything is so clear-cut (it would be too simplistic to measure a stock’s success by the dollar price of its shares). That’s because most companies, when their share prices rise to a certain level, execute a stock split to keep the nominal price from getting out of whack compared with similar companies, and to keep shares liquid… Read More

Many people are still terrified of the housing market. And rightfully so… many folks lost their jobs, their homes, their savings, and had to postpone retirement when the sub-prime mortgage industry dragged stocks and the economy down the drain a little more than a decade ago. Tell many of those same people that the median home sales price in the United States is more than $317,000, which dwarfs the peak in 2007 of $257,000, and they might think another downturn is imminent. Any data that portray weakness in the housing market sends shockwaves through the industry. We only need to… Read More

Many people are still terrified of the housing market. And rightfully so… many folks lost their jobs, their homes, their savings, and had to postpone retirement when the sub-prime mortgage industry dragged stocks and the economy down the drain a little more than a decade ago. Tell many of those same people that the median home sales price in the United States is more than $317,000, which dwarfs the peak in 2007 of $257,000, and they might think another downturn is imminent. Any data that portray weakness in the housing market sends shockwaves through the industry. We only need to look at 2018 as an example of the tenderness that investors have toward the real estate market. After coming off a stellar 2017, investors became worried that housing was heating up too fast, and home-sales were slowing on speculation that rising interest rates would keep buyers at bay.  The SPDR S&P Homebuilders ETF (NYSE: XHB) collapsed 25% last year on those concerns. Even today, demand for housing outstrips supply. At the current pace of home sales, it would take only 3.9 months to exhaust the available inventory. This is below the long-term average of six months — an indication of… Read More

Up one day, down the next. I don’t know about you, but I’m getting dizzy. Investors just can’t make up their minds about whether the huge rally of the past 11 years still has room to run, or if it’s the time to head to the sidelines. A convincing argument can be made for either decision. Here are three thoughts I have about what’s going on in the market right now — and what you can do about it…  1) Massive Buybacks Are Bolstering The Market (For Now…)  On the plus side is the strong economy, strong (albeit slowing)… Read More

Up one day, down the next. I don’t know about you, but I’m getting dizzy. Investors just can’t make up their minds about whether the huge rally of the past 11 years still has room to run, or if it’s the time to head to the sidelines. A convincing argument can be made for either decision. Here are three thoughts I have about what’s going on in the market right now — and what you can do about it…  1) Massive Buybacks Are Bolstering The Market (For Now…)  On the plus side is the strong economy, strong (albeit slowing) corporate profit growth, and the unabating wave of companies buying back their own shares. As reported by The Wall Street Journal a few days ago, more than 80% of firms in the S&P 500 have reported results for the first quarter. Of that number, those firms have repurchased $180 billion worth of their own shares during that time. This pace, according to the article, is lining up to become the second-highest amount on record (with data on corporate buybacks going back more than 20 years, to 1998). When was the record buyback quarter? According to the… Read More

Last week, the Dow Jones Industrial Average finished lower for the fifth week in a row.  That sounds important — and it is — but I will get to that in a moment. First, I want to step back and take a long-term view.  —Recommended Link— SECRET: Add $8,760 Extra to Any Retirement Account Finally revealed! This “long lost” secret turns a quick 3-minute phone call into the opportunity to collect $8,760 checks. Every payment is backed by the full authority of the U.S. Government… and over $1.75 billion will be delivered to income-seeking Americans. Read More

Last week, the Dow Jones Industrial Average finished lower for the fifth week in a row.  That sounds important — and it is — but I will get to that in a moment. First, I want to step back and take a long-term view.  —Recommended Link— SECRET: Add $8,760 Extra to Any Retirement Account Finally revealed! This “long lost” secret turns a quick 3-minute phone call into the opportunity to collect $8,760 checks. Every payment is backed by the full authority of the U.S. Government… and over $1.75 billion will be delivered to income-seeking Americans. But your action is required TODAY while the enrollment window is open. You must click here right now to get started. Here’s a monthly chart of the Dow Jones Industrial Average that goes back over the past 15 years. As you can see, there was a clear multi-year uptrend in the Dow that started back in 2009.  But since January 2018, that uptrend has stalled.  Technical analysts would say prices have been in a consolidation since then. I highlighted the consolidation pattern with a blue rectangle.  Charles Dow And The Business Cycle Writing in the late… Read More

Regardless of the industry, it’s usually smart to listen to your customers.  Enterprise Products (NYSE: EPD) — a longtime holding in my High-Yield Investing premium newsletter — has been getting requests from oil producers to build a new crude pipeline from the Permian Basin to Houston — the gateway to Gulf Coast refineries and export terminals. On May 2, the master limited partnership (MLP) filed the necessary permits. The size and scope of this new project haven’t yet been finalized, but the company should have little trouble finding commitments and signing contracts when the time comes. While raw material costs… Read More

Regardless of the industry, it’s usually smart to listen to your customers.  Enterprise Products (NYSE: EPD) — a longtime holding in my High-Yield Investing premium newsletter — has been getting requests from oil producers to build a new crude pipeline from the Permian Basin to Houston — the gateway to Gulf Coast refineries and export terminals. On May 2, the master limited partnership (MLP) filed the necessary permits. The size and scope of this new project haven’t yet been finalized, but the company should have little trouble finding commitments and signing contracts when the time comes. While raw material costs have been escalating (steel tariffs don’t help), Enterprise has shrewdly locked in prices for steel pipe. This new pipeline will allow the MLP to repurpose an existing line running a similar route from Midland to Houston to capitalize on the demand for natural gas liquids (NGLs) takeaway capacity. It will add to an ambitious $5.0 billion backlog of growth projects that are currently under construction. Over half of these projects will be placed into service (and start earning fees) by the end of the year. #-ad_banner-#In the meantime, we can already see the financial impact of previous spending. The volume… Read More