While the economy currently appears to be on firm footing, investors should always be prepared for the next, inevitable recession.  Indeed it’s wise to have some portfolio exposure to companies that can actually thrive during downturns. #-ad_banner-#Case in point: Dorman Products (Nasdaq: DORM), a leading supplier of replacement automotive parts. The company’s counter-cyclical business model enables it to weather recessions better than most companies.  Why should you consider such a stock right now? Although sales of new cars and trucks are currently quite strong, history suggests that such momentum won’t last.  In nearly every recession going back to 1980, sales of vehicles have dropped sharply from cyclical… Read More

While the economy currently appears to be on firm footing, investors should always be prepared for the next, inevitable recession.  Indeed it’s wise to have some portfolio exposure to companies that can actually thrive during downturns. #-ad_banner-#Case in point: Dorman Products (Nasdaq: DORM), a leading supplier of replacement automotive parts. The company’s counter-cyclical business model enables it to weather recessions better than most companies.  Why should you consider such a stock right now? Although sales of new cars and trucks are currently quite strong, history suggests that such momentum won’t last.  In nearly every recession going back to 1980, sales of vehicles have dropped sharply from cyclical peaks. When a recession hits, consumers tend to repair rather than replace their aging cars and trucks. Dorman’s strength throughout all phases of the business cycle is perfectly illustrated in its consistent sales growth. The company managed to increase sales, even during the economic downturn of 2008 and 2009.  According to the Institute for Highway Safety, the average age of all cars on the road is still a record 11.5 years and is expected to stay in near there for the next several years. The relatively high age of the current national fleet suggests that demand for auto parts… Read More

China is devaluing its currency. Oil is crashing. Greece is facing years of slow growth and might be dragging down the rest of Europe, where GDP growth is already slowing. The Federal Reserve is also concerned about global growth, which may delay an interest rate hike.  The news hasn’t been this bad at the end of the summer since… 2014. Last year, investors were worried about conflicts in Ukraine and Gaza. The death toll from the Ebola outbreak in Africa topped 1,000. Greece was still in crisis, and Congress was up in arms about corporate tax inversions. We… Read More

China is devaluing its currency. Oil is crashing. Greece is facing years of slow growth and might be dragging down the rest of Europe, where GDP growth is already slowing. The Federal Reserve is also concerned about global growth, which may delay an interest rate hike.  The news hasn’t been this bad at the end of the summer since… 2014. Last year, investors were worried about conflicts in Ukraine and Gaza. The death toll from the Ebola outbreak in Africa topped 1,000. Greece was still in crisis, and Congress was up in arms about corporate tax inversions. We see the same doom-and-gloom trend if we looked back at the summer of 2013 with the Detroit bankruptcy, Edward Snowden leaks, civil war in Syria and violent revolution in Egypt.  #-ad_banner-# My point is there are always going to be problems somewhere in the world. At times like these, I like to ask myself, “What would Warren Buffett do?” While I don’t have a direct line to his office, Buffett is famous for revealing his personal market insights and broad clues about his process in his writings.  For example, how did Buffett respond to a deluge of… Read More

In 1991, Steve Young became the starting quarterback for the San Francisco 49ers, one of the National Football League’s most storied franchises. Young was a highly touted prospect, but he was facing an obstacle none of his peers had to overcome. He was replacing Joe Montana — one of the greatest quarterbacks of all time. #-ad_banner-#Montana had won four Super Bowls with the 49ers and would soon be inducted into the Pro Football Hall of Fame. While 49ers fans were optimistic about their new, quarterback, they knew he’d never be nearly as successful as… Read More

In 1991, Steve Young became the starting quarterback for the San Francisco 49ers, one of the National Football League’s most storied franchises. Young was a highly touted prospect, but he was facing an obstacle none of his peers had to overcome. He was replacing Joe Montana — one of the greatest quarterbacks of all time. #-ad_banner-#Montana had won four Super Bowls with the 49ers and would soon be inducted into the Pro Football Hall of Fame. While 49ers fans were optimistic about their new, quarterback, they knew he’d never be nearly as successful as Joe Montana. They couldn’t have been more wrong. Steve Young won the league’s Most Valuable Player award in both the 1992 and 1994 seasons, and he led the 49ers to a decisive Super Bowl victory in 1995. Despite replacing an all-time great, Young had exceeded expectations. Today, Apple finds itself in a position similar to the 1991 San Francisco 49ers. Steve Jobs was an icon and incredible innovator, and there are a lot of people who think Apple won’t be able to continue innovating without its founder. That’s… Read More

In business, progress doesn’t occur in a vacuum. Innovation arises out of need, and is often adapted from concepts or technologies initially developed in unrelated industries. For instance, who could have guessed that Netflix Inc. (Nasdaq: NFLX) would inspire the creation of an emerging leader in digital education? That company, Chegg, Inc. (NYSE: CHGG), is a fast-evolving small-cap with an online education platform for high school and college students. Streaming media has become this company’s “killer app.” Chegg’s roots go back to 2001, when several students at the University of Iowa launched a textbook rental website. With the help of… Read More

In business, progress doesn’t occur in a vacuum. Innovation arises out of need, and is often adapted from concepts or technologies initially developed in unrelated industries. For instance, who could have guessed that Netflix Inc. (Nasdaq: NFLX) would inspire the creation of an emerging leader in digital education? That company, Chegg, Inc. (NYSE: CHGG), is a fast-evolving small-cap with an online education platform for high school and college students. Streaming media has become this company’s “killer app.” Chegg’s roots go back to 2001, when several students at the University of Iowa launched a textbook rental website. With the help of outside investors, the founders expanded on that premise, deploying a Netflix-type business model. By 2010, Chegg had rented more than two million textbooks through a mail-based distribution system and was generating $149 million a year of revenue: The key virtue: students found that simply renting textbooks was cheaper than owning them. These days, Chegg does much more than rent textbooks (though that service still accounts for roughly half of the company’s $300 million annual revenue base). Over the past several years, the company has made a big push into the dynamic digital education space. Chegg now offers a series of… Read More

If you want to start an instant argument, find adherents of technical analysis and adherents of fundamental analysis, and then ask them which investing approach is better. The technical analysts will tell you that a close read of a company’s financial statements won’t help you know if a stock represents a timely investment. The fundamental analysts will counter that simply looking at a series of trading charts only tells you where a stock has been, not where it is going. #-ad_banner-#With all due respect, they are both wrong. The real secret… Read More

If you want to start an instant argument, find adherents of technical analysis and adherents of fundamental analysis, and then ask them which investing approach is better. The technical analysts will tell you that a close read of a company’s financial statements won’t help you know if a stock represents a timely investment. The fundamental analysts will counter that simply looking at a series of trading charts only tells you where a stock has been, not where it is going. #-ad_banner-#With all due respect, they are both wrong. The real secret to successful investing is the marriage of both approaches. In fact, I’ve singled out a pair of factors — one from each camp — that can be used in tandem to deliver robust gains. It’s an approach that has led me to bag triple-digit gains, often in a matter of months, with stocks that represent a range of industries. I want to walk you through this two-pronged approach, what I call the “Alpha Score,” so you can profit from my strategy in your daily trading activities. It’s All Relative The… Read More

I have not been a fan of the technology sector for the past month and even penned a missive calling “tech leadership an illusion.” While superstars such as Google (Nasdaq: GOOGL) were soaring, the rank-and-file tech stocks were actually lagging the market.  #-ad_banner-# Semiconductors have been some of the worst offenders. The benchmark PHLX Semiconductor (SOX) index actually started to fall in late May and has already sunk back to levels last seen in October. There is an old bit of Wall Street wisdom that says to buy the strongest stocks in the strongest groups. Read More

I have not been a fan of the technology sector for the past month and even penned a missive calling “tech leadership an illusion.” While superstars such as Google (Nasdaq: GOOGL) were soaring, the rank-and-file tech stocks were actually lagging the market.  #-ad_banner-# Semiconductors have been some of the worst offenders. The benchmark PHLX Semiconductor (SOX) index actually started to fall in late May and has already sunk back to levels last seen in October. There is an old bit of Wall Street wisdom that says to buy the strongest stocks in the strongest groups. This is based on the concept of relative strength. Research has shown that outperforming stocks tend to continue doing so. Conversely, the weakest stocks in the weakest sectors are likely to keep falling. One especially weak stock I have identified in the weak semiconductor sector is Linear Technology (Nasdaq: LLTC), a designer and manufacturer of analog integrated circuits used in power management and signal conditioning.  An earnings miss in July sparked a high-volume gap down, with shares opening 7.2% lower the next day.  Considering the stock was already down 10% from its June high, that drop was a… Read More