Warren Buffett became one of the richest men on the planet by making smart investments in what many would consider boring, unglamorous businesses. Property-casualty insurance, railroads, soft serve ice cream, and residential real estate brokerage are a few of the mundane sectors that have enriched him and Berkshire Hathaway (NYSE: BRK.A, NYSE: BRK.B) shareholders.  One of the most lucrative “boring” sectors I’ve watched throughout my career has been retail aftermarket auto parts. It’s consistent. It’s still extremely fragmented, which means that the biggest players have plenty of room to grow market share organically or through acquisition. And when the stock… Read More

Warren Buffett became one of the richest men on the planet by making smart investments in what many would consider boring, unglamorous businesses. Property-casualty insurance, railroads, soft serve ice cream, and residential real estate brokerage are a few of the mundane sectors that have enriched him and Berkshire Hathaway (NYSE: BRK.A, NYSE: BRK.B) shareholders.  One of the most lucrative “boring” sectors I’ve watched throughout my career has been retail aftermarket auto parts. It’s consistent. It’s still extremely fragmented, which means that the biggest players have plenty of room to grow market share organically or through acquisition. And when the stock of one of the biggest players goes on sale, DO NOT miss an opportunity to buy. The chart below shows how the top four aftermarket auto parts retailer stocks have performed over a three-year period.   The third company, one of the weakest performers, is Genuine Parts Company (NYSE: GPC).It’s,my favorite of the group. Here’s why… Getting Paid Genuine Parts has increased its dividend payment steadily over the last 60 years. Over the last decade, the company has grown its dividend at an annual rate of 7%. AutoZone and O’Reilly pay no dividends, while Advance pays… Read More

Even with the market setting new highs day after day, we haven’t really seen the kind of celebratory mood that should come with such record-breaking performances. Don’t get me wrong, it’s great to see stocks rallying. In the past 12 months alone, defying skeptics, the S&P 500 index added some 18.7%, including dividends. The S&P’s annual return is impressive, but it’s still lagging behind the Nasdaq Composite’s 29%, and the blue-chip Dow Industrials, which returned 22% the past year. And this is on top of an already-strong showing, which became the second-longest bull market on record as of last May. Read More

Even with the market setting new highs day after day, we haven’t really seen the kind of celebratory mood that should come with such record-breaking performances. Don’t get me wrong, it’s great to see stocks rallying. In the past 12 months alone, defying skeptics, the S&P 500 index added some 18.7%, including dividends. The S&P’s annual return is impressive, but it’s still lagging behind the Nasdaq Composite’s 29%, and the blue-chip Dow Industrials, which returned 22% the past year. And this is on top of an already-strong showing, which became the second-longest bull market on record as of last May. Still, judging by the emails I’ve been getting, many investors are nervous. It’s not surprising that the memory of the last bear market is still fresh in the minds of many investors. After all, it’s only been eight years since the S&P 500 bottomed (along with many retirement accounts). And that crash came soon after the dot-com crash at the turn of the century. The investors who needed that money the most — recent retirees and those who were about to retire — suffered immensely through these two downturns. It’s quite possible that the stress of these two bear markets… Read More

Computers and the internet have become indispensable parts of our lives. From smart phones and automobiles to how we bank and even exercise, rarely does a day go by that we do not interface with the silicon chip-powered machines.  Most investors focus on the microprocessor when they think of computer chips. Giants such as Intel (Nasdaq: INTC) have built empires on the back of the microprocessor revolution.  Obviously, microprocessors are here to stay, but decent opportunities for investors in the space are rapidly diminishing. The mature industry is in the midst of a long-term plateau as manufacturing efficiencies, economies of… Read More

Computers and the internet have become indispensable parts of our lives. From smart phones and automobiles to how we bank and even exercise, rarely does a day go by that we do not interface with the silicon chip-powered machines.  Most investors focus on the microprocessor when they think of computer chips. Giants such as Intel (Nasdaq: INTC) have built empires on the back of the microprocessor revolution.  Obviously, microprocessors are here to stay, but decent opportunities for investors in the space are rapidly diminishing. The mature industry is in the midst of a long-term plateau as manufacturing efficiencies, economies of scale, and market saturation drive prices ever lower.  If you missed the microprocessor boom, it’s not too late to capitalize on the chip market. Today’s explosive trends, including artificial intelligence, machine learning, and the ubiquitous Internet of Things, all have one thing in common: An insatiable thirst for recalling and analyzing massive amounts of information.  We are in the infancy of the next technological revolution, and memory chips are at the core of these radical changes. Even better, their rise could bring investors the same results seen by early backers of microprocessors. What Are Memory Chips Memory chips are… Read More

Fears are growing that the U.S. stock market is in dangerous territory.  The chart below illustrates the return on each of the three major stock indices since the 2008 Financial Crisis.  As you can see, the Nasdaq Composite, up more than 243% since 2009, is leading the way higher. But lest you think the run-up is reminiscent of the tech bubble of 1999, both the S&P 500 and Dow Jones are also gunning higher — up more than 157% and 142% respectively.  All three indices are solidly at record high levels. Now, such a chart would… Read More

Fears are growing that the U.S. stock market is in dangerous territory.  The chart below illustrates the return on each of the three major stock indices since the 2008 Financial Crisis.  As you can see, the Nasdaq Composite, up more than 243% since 2009, is leading the way higher. But lest you think the run-up is reminiscent of the tech bubble of 1999, both the S&P 500 and Dow Jones are also gunning higher — up more than 157% and 142% respectively.  All three indices are solidly at record high levels. Now, such a chart would normally be interpreted as bullish — and rightly so. But we’re not in normal times. Currently, the S&P 500 is trading at 25.8 times earnings (on a GAAP basis) and at almost 30 times by the cyclically-adjusted price-to-earnings ratio (CAPE). That’s a whopping 78% higher than the historic CAPE average of 16.7.  #-ad_banner-#Even the “Buffet Valuation” metric, found by dividing the value of the stock market by GDP, sits at 1.2 ($23 trillion/$19 trillion), indicating the market is roughly 20% overvalued. In fact, there is really only one widely used financial metric that isn’t screaming about stock market valuations: The… Read More

It’s not hard to find quality income-producing stocks. Nearly every investor out there can screen for stocks based on dividend yields. However, there is far more to successful income investing than buying high-yielding dividend payers.  Many times, the highest yielding stocks are also the least reliable. Remember, the yield is inversely proportional to the share price. In other words, the lower the share price moves, the higher the yield (assuming the dividend payment stays the same). Therefore, high-yielding stocks may only provide the high yields due to a plunging stock price. Investors must now look beyond dividends for income. Stock… Read More

It’s not hard to find quality income-producing stocks. Nearly every investor out there can screen for stocks based on dividend yields. However, there is far more to successful income investing than buying high-yielding dividend payers.  Many times, the highest yielding stocks are also the least reliable. Remember, the yield is inversely proportional to the share price. In other words, the lower the share price moves, the higher the yield (assuming the dividend payment stays the same). Therefore, high-yielding stocks may only provide the high yields due to a plunging stock price. Investors must now look beyond dividends for income. Stock buybacks have become a popular way for companies to give excess cash back to investors.  Buybacks, or share repurchase programs, are a viable alternative for savvy investors. The trick is to find companies with long term buyback plans that also have growth catalysts. This combination is the key to finding ideal income stocks. Here are three income stocks with high growth potential over the long term. Today’s disconnect between revenue and share price make these stocks a welcome anomaly.  3 Income-Producing Stocks With Strong Buyback Plans 1. American International Group (NYSE: AIG)  This nearly $60 billion global insurance company… Read More

For anyone with more than a decade in the markets, the “value premium” is almost a sacred rule. The idea that stocks with lower valuation premiums would beat their more expensive “growth” peers is almost a given. Nobel laureates Eugene Fama and Kenneth French first identified the value premium in 1992, comparing returns on high book-to-market value stocks against low book-to-market stocks. It’s one of the three factors in their asset pricing model built to explain excess returns in a portfolio. Since the financial crisis, the outperformance of value stocks has been called into question, with… Read More

For anyone with more than a decade in the markets, the “value premium” is almost a sacred rule. The idea that stocks with lower valuation premiums would beat their more expensive “growth” peers is almost a given. Nobel laureates Eugene Fama and Kenneth French first identified the value premium in 1992, comparing returns on high book-to-market value stocks against low book-to-market stocks. It’s one of the three factors in their asset pricing model built to explain excess returns in a portfolio. Since the financial crisis, the outperformance of value stocks has been called into question, with growth stocks easily besting their value peers. The shift has turned the traditional investing theme on its head, and even one guru of value investing has questioned the future of cheap stocks. But economic realities are catching up to growth investing and value stocks may be ready to retake their dominance.  Two economic scenarios await investors over the next several years — and neither is good for growth stocks. When one of these futures begins to take shape, value names may prove to be the only path to profits. The Death Of Value Investing Has Been Greatly Exaggerated The… Read More

Short sellers get a bad rap. They are often villainized by the media for “ganging up” on troubled companies or even causing market crashes. There is little evidence to support the latter, though, and the truth is short sellers are a necessary part of the market. They help provide liquidity and keep overpriced stocks in check. I don’t know about you, but I’m not content only making profits on the upside. There is an extraordinary amount of money to be made on the downside, especially in a market like this. But when you short a stock, you risk an unlimited… Read More

Short sellers get a bad rap. They are often villainized by the media for “ganging up” on troubled companies or even causing market crashes. There is little evidence to support the latter, though, and the truth is short sellers are a necessary part of the market. They help provide liquidity and keep overpriced stocks in check. I don’t know about you, but I’m not content only making profits on the upside. There is an extraordinary amount of money to be made on the downside, especially in a market like this. But when you short a stock, you risk an unlimited loss for a limited gain. I’m a probability guy, and I don’t like those odds. Plus, there is a strategy for profiting when stocks fall that offers limited risk and substantial (though not quite unlimited) gains. Given that, I’m not sure why anyone would choose to short stocks. Now, my strategy involves options, another area of the market that gets a bad rap. But unlike short selling, options — when used properly — can actually help limit your risk. —Recommended Link— $43K A Year For Life… (Takes 20 Minutes) Want an extra $43,543 a year in bonus income? You… Read More

What an incredible year it’s been in the stock market. The Nasdaq has soared over 29%, and the DJIA and the S&P 500 are both trading higher by more than 15% during the last 52 weeks.  Investors rejoiced as the Trump administration made one broad-reaching, bullish proclamation after another. Talk of revitalizing the American economy, major tax reform, and huge infrastructure spending has supercharged core industries, taking the stock market along for the ride.  It’s seemed like there’s been nowhere to go but up as Trump-driven enthusiasm sweeps the economy.  Investors Beware The old saying holds true for the… Read More

What an incredible year it’s been in the stock market. The Nasdaq has soared over 29%, and the DJIA and the S&P 500 are both trading higher by more than 15% during the last 52 weeks.  Investors rejoiced as the Trump administration made one broad-reaching, bullish proclamation after another. Talk of revitalizing the American economy, major tax reform, and huge infrastructure spending has supercharged core industries, taking the stock market along for the ride.  It’s seemed like there’s been nowhere to go but up as Trump-driven enthusiasm sweeps the economy.  Investors Beware The old saying holds true for the stock market: What goes up, must come down. Historically high levels hit a significant speed bump on May 17, with a sharp decline across the board. While the market quickly recovered, it revealed a major disconnect in the Trump-fueled rally.  Remember, the stock market is an anticipatory mechanism, meaning it moves based on what is expected to happen rather than what has occurred. The dramatic enthusiasm for change is being tempered by political challenges. The President’s rhetoric is no longer enough to power the economic boom — investors want the promised changes to actually materialize.  Frustration is starting to set… Read More