By many measures, the U.S. housing market looks better than it has since before the financial crisis. Sales of newly-built homes are picking up, and applications for new building permits recently hit an eight-year high. Home listings are up, and so are mortgage applications (despite rising borrowing costs). In the first quarter, real estate investment expanded at a 5% annualized rate while mortgage delinquencies and foreclosures continued to decline. That makes this a good time to seek out a pure play on real estate. My top pick is the number-one supplier of wallboard and joint compound used in building construction… Read More

By many measures, the U.S. housing market looks better than it has since before the financial crisis. Sales of newly-built homes are picking up, and applications for new building permits recently hit an eight-year high. Home listings are up, and so are mortgage applications (despite rising borrowing costs). In the first quarter, real estate investment expanded at a 5% annualized rate while mortgage delinquencies and foreclosures continued to decline. That makes this a good time to seek out a pure play on real estate. My top pick is the number-one supplier of wallboard and joint compound used in building construction and remodeling, USG Corp. (NYSE: USG). The company has certainly seen its share of turmoil. Shortly after emerging from bankruptcy in 2006, USG found itself mired in the financial crisis. This brought five-straight years of painful losses, totaling nearly $2.2 billion, as building and remodeling activity tanked. Operations got back into the black in 2013, but growth slowed dramatically last year as the housing recovery took a breather. Now the recovery is picking up steam, and there’s a powerful catalyst to keep it going: the millennial generation. As I noted in a recent profile of spirits maker Constellation Brands, Inc. Read More

I grew up on a family farm in North Central Kansas. And though I moved away to the big city long ago, the farm has always been home. It’s among my favorite places. Farming is tough work and ridiculously capital-intensive. It takes millions of dollars’ worth of land and millions more in equipment to launch even a modest agricultural operation. There are no guarantees, and all of the critical success factors are completely out of the farmer’s control. #-ad_banner-#Last year, we intended to harvest the wheat that we planted in half the county. In… Read More

I grew up on a family farm in North Central Kansas. And though I moved away to the big city long ago, the farm has always been home. It’s among my favorite places. Farming is tough work and ridiculously capital-intensive. It takes millions of dollars’ worth of land and millions more in equipment to launch even a modest agricultural operation. There are no guarantees, and all of the critical success factors are completely out of the farmer’s control. #-ad_banner-#Last year, we intended to harvest the wheat that we planted in half the county. In a good year, our ground yields roughly $200 profit per acre, leaving enough to pay for some equipment, make a little progress on any land debt and put a few bucks in the bank. Now, the trouble with that paragraph is the phrase “in a good year.” I hate to be the bearer of bad news, but “good” years have been rare of late, primarily because of a persistent drought that has put a relentless stranglehold on the Bread Basket. Conditions were so poor last year that we didn’t have a crop to cut. Read More

The semiconductor industry has always been extremely cyclical and volatile. Demand for chips fluctuates widely with the product cycles of major tech companies like Apple (Nasdaq: AAPL) and Samsung (OTC: SSNLF). At present, it looks like the industry is signaling a slowdown.  Shares of Samsung are 16% off their year-to-date highs, and this week the company reported its seventh straight decline in quarterly profits. Taiwan Semiconductor Manufacturing (NYSE: TSM) is down 14% since late April on slowing smartphone shipments, and SK Hynix has dropped 20% on the Korean market since early June.  #-ad_banner-#… Read More

The semiconductor industry has always been extremely cyclical and volatile. Demand for chips fluctuates widely with the product cycles of major tech companies like Apple (Nasdaq: AAPL) and Samsung (OTC: SSNLF). At present, it looks like the industry is signaling a slowdown.  Shares of Samsung are 16% off their year-to-date highs, and this week the company reported its seventh straight decline in quarterly profits. Taiwan Semiconductor Manufacturing (NYSE: TSM) is down 14% since late April on slowing smartphone shipments, and SK Hynix has dropped 20% on the Korean market since early June.  #-ad_banner-# These semiconductor stocks have something in common besides their plunging stock prices. They are the three main customers of another company, accounting for more than 30% of its revenues. And while Samsung, Taiwan Semiconductor and SK Hynix are each down double digits in recent months, this shared supplier is only 8% off its year-to-date high. Plus, the stock is trading at a premium to its five-year average price-to-sales multiple.  With second-quarter earnings approaching, this semiconductor equipment supplier may be due for a correction that we can leverage into a 62% gain. Before we get to today’s trade, one… Read More

The major U.S. stock indices finished last week essentially unchanged on the heels of two consecutive weeks of declines. My work suggests the stock market is within weeks of a significant bottom.  But the question is whether that bottom occurs now or if there is one more shoe to drop first. This week, that “shoe” is Greece and China, more specifically, whether a bailout deal for Greece can be finalized and whether the Chinese government can stem the tsunami in that country’s stock market, which saw the Shanghai Composite collapse by 35% over the past month. These issues… Read More

The major U.S. stock indices finished last week essentially unchanged on the heels of two consecutive weeks of declines. My work suggests the stock market is within weeks of a significant bottom.  But the question is whether that bottom occurs now or if there is one more shoe to drop first. This week, that “shoe” is Greece and China, more specifically, whether a bailout deal for Greece can be finalized and whether the Chinese government can stem the tsunami in that country’s stock market, which saw the Shanghai Composite collapse by 35% over the past month. These issues will have a big influence on whether the U.S. market begins its next leg higher now or later. [Editor’s note: On July 8, as Chinese stocks plummeted 5.9% and U.S. markets followed them down, one trader closed two positions for annualized returns of 1,205% and 2,111%. This same trader believes that was the day an event took place that could have a huge negative impact on your portfolio. He put together a special presentation to help you protect yourself. Access it for free here.] #-ad_banner-# The two strongest sectors of the S&P 500… 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

Value investing is simultaneously the easiest and most difficult investing philosophy to follow. It’s so simple to buy cheap, out-of-favor assets, but extremely difficult to execute in real time. Among the cheapest and most out-of-favor assets today are commodities and the companies that pull those products out of the ground. While commodity companies have been hit hard, shares of Australia-based BHP Billiton Ltd. (NYSE: BHP) have fallen too far.  The company has a terrific track record, an excellent management team and will deliver strong long-term results to patient shareholders. A number of essential commodities are trading at multi-year lows. The… Read More

Value investing is simultaneously the easiest and most difficult investing philosophy to follow. It’s so simple to buy cheap, out-of-favor assets, but extremely difficult to execute in real time. Among the cheapest and most out-of-favor assets today are commodities and the companies that pull those products out of the ground. While commodity companies have been hit hard, shares of Australia-based BHP Billiton Ltd. (NYSE: BHP) have fallen too far.  The company has a terrific track record, an excellent management team and will deliver strong long-term results to patient shareholders. A number of essential commodities are trading at multi-year lows. The free-falling price of oil has been well covered, but coal and many of the industrial metals are well below the highs of 2011 and 2012. Coming out of the financial crisis, China went on an unprecedented infrastructure spending spree. Iron and copper producers rushed to increase production as demand and the underlying prices spiked. However, as China’s demand has cooled, prices for iron and copper — that make up around 60% of BHP’s business — have come crashing down. Over time, excess supply will leave the market, and prices will stabilize. While China’s demand for these materials could be… Read More

#-ad_banner-#When investing in out-of-favor companies, timing is crucial. Get in too soon and you could fall victim to a failed turnaround. Procrastinate and you could miss out on big gains when word about a successful comeback gets out. The key is finding the sweet spot, where the odds favor a successful turnaround, but the herd hasn’t taken much notice yet. The beleaguered luxury goods retailer Coach Inc. (NYSE: COH) is finally approaching such a sweet spot three years after hitting a rough patch. Based on a recent share price of about $33, Coach’s stock is down by more than 50%… Read More

#-ad_banner-#When investing in out-of-favor companies, timing is crucial. Get in too soon and you could fall victim to a failed turnaround. Procrastinate and you could miss out on big gains when word about a successful comeback gets out. The key is finding the sweet spot, where the odds favor a successful turnaround, but the herd hasn’t taken much notice yet. The beleaguered luxury goods retailer Coach Inc. (NYSE: COH) is finally approaching such a sweet spot three years after hitting a rough patch. Based on a recent share price of about $33, Coach’s stock is down by more than 50% from its peak in March 2012. Back then, the company was at the top of its game, thanks to the popularity of its lines of designer handbags and accessories such as scarves, fragrances and jewelry. But soon after, it began to wobble in the face of stiffer competition from Kate Spade & Co. (NYSE: KATE), Michael Kors Holdings Ltd. (NYSE: KORS) and others. Management fought back by opening more discount outlets and increasing promotions, but these measures only ended up hurting the business further by encouraging customers to wait for lower prices. The resulting toll on performance: annual revenue has… Read More

Today could be critical to your financial future. The red flags I’m seeing right now are eerily similar to what I saw before several major corrections. #-ad_banner-#If my hypothesis holds true, then the next few days could mean the difference between earning outsized gains and losing 10%-to-30% in a matter of days. For example, on July 18, 2014, I warned that the Russian market was in trouble. Sanctions were starting to take hold, and its economy was cracking. I predicted we would… Read More

Today could be critical to your financial future. The red flags I’m seeing right now are eerily similar to what I saw before several major corrections. #-ad_banner-#If my hypothesis holds true, then the next few days could mean the difference between earning outsized gains and losing 10%-to-30% in a matter of days. For example, on July 18, 2014, I warned that the Russian market was in trouble. Sanctions were starting to take hold, and its economy was cracking. I predicted we would see “dramatic negative reversals in growth and earnings” of the top holdings in the Market Vectors Russia ETF (NYSE: RSX). This, I reasoned, would cause the fund to correct by at least 10% within three months. Well, over the next 20 days, RSX plunged 9%. Within three months, it was down 15%, and within five months, shares had been cut in half. More recently, on May 27, I warned that Chinese stocks were in a bubble. With a shaky fundamental foundation and ominous technical pattern, I targeted a… Read More

Health care is one investment theme that’s certainly in vogue right now. While traditionally considered a defensive sector, I’ve heard numerous pundits declare its classification has changed from defensive to growth.  I always find it interesting when people change their long-held assumptions about the market. Think about what happened when traders began to substitute “eyeballs” for “earnings” in the P/E ratio during the dot-com bubble, for example. Eventually, the market usually reminds them who’s boss.  Health care has been leading the market for many months, with the Health Care Select Sector SPDR ETF (NYSE: XLV) posting an 8% gain year… Read More

Health care is one investment theme that’s certainly in vogue right now. While traditionally considered a defensive sector, I’ve heard numerous pundits declare its classification has changed from defensive to growth.  I always find it interesting when people change their long-held assumptions about the market. Think about what happened when traders began to substitute “eyeballs” for “earnings” in the P/E ratio during the dot-com bubble, for example. Eventually, the market usually reminds them who’s boss.  Health care has been leading the market for many months, with the Health Care Select Sector SPDR ETF (NYSE: XLV) posting an 8% gain year to date as the broader market has moved sideways. Plus, the relative performance charts of most health care indexes versus the S&P 500 continue to point higher.  So, at first glance, it seems like there is not much to dislike. But the sector is overbought, and one event that can act as a double-edged sword in any sector is merger activity. #-ad_banner-# Mergers can boost share prices thanks to operating synergies between the companies involved. They can also signal that executives feel their stock is so valuable — perhaps overvalued — that they use it as a currency… Read More