When seeking market-beating stocks, few investors would probably consider a category as pedestrian as heating, ventilation, air conditioning (HVAC). And that would be a missed opportunity. Some HVAC stocks have been beating the market handily and not just lately but for years. One especially stellar performer: Lennox International Inc. (NYSE: LII), an industry leader with annual sales of $3.4 billion. Lennox’s stock is up 190% in the past three years, handily outpacing the S&P 500. Stocks typically only crush the market like this when the underlying company enjoys major long-term competitive advantages. And Lennox surely does. At the… Read More

When seeking market-beating stocks, few investors would probably consider a category as pedestrian as heating, ventilation, air conditioning (HVAC). And that would be a missed opportunity. Some HVAC stocks have been beating the market handily and not just lately but for years. One especially stellar performer: Lennox International Inc. (NYSE: LII), an industry leader with annual sales of $3.4 billion. Lennox’s stock is up 190% in the past three years, handily outpacing the S&P 500. Stocks typically only crush the market like this when the underlying company enjoys major long-term competitive advantages. And Lennox surely does. At the macro level, it’s one of the five core players in the HVAC market, and the market outlook is bright due to continued strength in real estate. Lennox focuses much more on residential than commercial real estate. So data like rising housing starts, increased filings for single-family home construction permits and spiking homebuilder confidence all bode especially well for the firm’s future. Another key macro indicator favoring Lennox is the Contractor Comfort Index, a measure of near-term growth expectations among HVAC contractors. April’s Index reading of 82 reflects very strong expectations (anything greater than 50 indicates a positive growth outlook). The… Read More

Ever rooted for the underdog when you knew it couldn’t win? In basketball — as in many sports — this happens all the time. In the recent NCAA tournament, for example, Hampton (17-17 in the regular season) was pit against Kentucky (34-0). The chance that Hampton would upset this perennial powerhouse was slim to none. And yet, millions of dollars were put down on this underdog by betters all across the country. Why? Because these folks were betting on another game entirely. One with better odds and higher… Read More

Ever rooted for the underdog when you knew it couldn’t win? In basketball — as in many sports — this happens all the time. In the recent NCAA tournament, for example, Hampton (17-17 in the regular season) was pit against Kentucky (34-0). The chance that Hampton would upset this perennial powerhouse was slim to none. And yet, millions of dollars were put down on this underdog by betters all across the country. Why? Because these folks were betting on another game entirely. One with better odds and higher rewards… One that casual fans had no idea was going on right in front of them. A similar thing plays out every day in the investing world. If you understand it you stand to profit from high-yield opportunities that most investors will never see. Let me explain… Let’s consider the bond market for a moment. You can put your money on corporate bonds backed by stalwart blue-chip companies like Microsoft and Treasury IOUs. Or you can choose “junk” bonds issued by smaller, shakier businesses. Read More

Despite the chorus of analysts and investors calling for the long-awaited correction, the market is showing some constructive bullish signs.  First, deterioration in the U.S. dollar has buoyed large-cap stocks, which are once again outperforming small caps. This removes a large headwind for the capitalization-weighted major stock indices as a stronger dollar negatively impacts foreign profits. Second, sentiment has soured greatly despite the fact that the market remains near its all-time highs. Below is a chart of SPDR S&P 500 ETF (NYSE: SPY) with data from the American Association of Individual Investors (AAII) sentiment survey. We can see a major… Read More

Despite the chorus of analysts and investors calling for the long-awaited correction, the market is showing some constructive bullish signs.  First, deterioration in the U.S. dollar has buoyed large-cap stocks, which are once again outperforming small caps. This removes a large headwind for the capitalization-weighted major stock indices as a stronger dollar negatively impacts foreign profits. Second, sentiment has soured greatly despite the fact that the market remains near its all-time highs. Below is a chart of SPDR S&P 500 ETF (NYSE: SPY) with data from the American Association of Individual Investors (AAII) sentiment survey. We can see a major decline in bullish sentiment and increase in bearish sentiment. And the ratio of bulls to bears, shown in the bottom panel, is now at levels where previous rallies have started.  The AAII sentiment survey is a contrarian indicator — i.e., high bullish readings are bearish and high bearish readings are bullish. Therefore, the souring sentiment is a positive for the market.  Finally, the market trend is up. You can see the trend channel clearly in the chart above. #-ad_banner-#… Read More

When it comes to insider activities, actions speak louder than words. Too often, we see a company issue a bullish outlook while company executives and directors are unloading large blocks of stock. That kind of cognitive dissonance creates a big red flag. Yet when insiders speak bullishly and choose to buy rather than sell, the signal to investors is crystal clear.  Here are some companies that are noting bullish prospects, right at a time when insiders are getting more skin in the game.  (All data supplied by insiderinsights.com.) General Electric Co. (NYSE: GE) Insiders tend to spend a few… Read More

When it comes to insider activities, actions speak louder than words. Too often, we see a company issue a bullish outlook while company executives and directors are unloading large blocks of stock. That kind of cognitive dissonance creates a big red flag. Yet when insiders speak bullishly and choose to buy rather than sell, the signal to investors is crystal clear.  Here are some companies that are noting bullish prospects, right at a time when insiders are getting more skin in the game.  (All data supplied by insiderinsights.com.) General Electric Co. (NYSE: GE) Insiders tend to spend a few hundred thousand dollars when they are feeling bullish. Yet the directors at this conglomerate are taking much bolder action. William Beattie, a company director, acquired $20 million in stock in the open market in February.  #-ad_banner-#In early April, GE unveiled a far-reaching restructuring that would see the company exit the capital markets business and focus more squarely on the industrial side of the business. My colleague Chris Walczak recently predicted that “the long-term impact of divesting GE Capital’s assets will be a huge win for shareholders.” Insiders agree. Since April 20, four other directors have acquired another collective $2 million… Read More

THESE RETURNS ARE ALMOST TOO GOOD TO BE TRUE Before we get to the Market Outlook… Since Profitable Trading launched Profit Amplifier with Jared Levy three months ago, he has already closed trades with annualized returns of 220.9%, 508.6% and 2,201.6%. He truly is living up to his reputation as an options prodigy.  You can learn more about him and get his next eight trades without making any long-term commitment by clicking here. Sincerely,  Frank Bermea Publisher, Profitable Trading… Read More

THESE RETURNS ARE ALMOST TOO GOOD TO BE TRUE Before we get to the Market Outlook… Since Profitable Trading launched Profit Amplifier with Jared Levy three months ago, he has already closed trades with annualized returns of 220.9%, 508.6% and 2,201.6%. He truly is living up to his reputation as an options prodigy.  You can learn more about him and get his next eight trades without making any long-term commitment by clicking here. Sincerely,  Frank Bermea Publisher, Profitable Trading All major U.S. indices closed in positive territory for the second consecutive week. This broke the recent pattern of alternating positive and negative weekly closes, which has been the norm this quarter. Last week’s gains were led by the Nasdaq 100, up 0.8%, and Russell 2000, up 0.7%. I view this as a good sign heading into this week as technology and small-cap issues typically lead the broader market both higher and lower. It is disappointing that three of last week’s four strongest market sectors were defensive ones: consumer staples gained 1.2%, health care was up 1.1%,… Read More

On April 24, Starbucks Corp. (Nasdaq: SBUX) extended its history of matching or beating earnings expectations to nine consecutive quarters. No surprise there. After all, it owns one of the most recognizable brands in the world. Go to any given U.S. city and try walking a few blocks without seeing the Starbucks logo pasted across a green awning. It’s nearly impossible. Shares are already up 24% in 2015 and are poised to continue higher. That makes now the perfect time to execute my Income Multiplier strategy on Starbucks. It could earn you 5.4% in… Read More

On April 24, Starbucks Corp. (Nasdaq: SBUX) extended its history of matching or beating earnings expectations to nine consecutive quarters. No surprise there. After all, it owns one of the most recognizable brands in the world. Go to any given U.S. city and try walking a few blocks without seeing the Starbucks logo pasted across a green awning. It’s nearly impossible. Shares are already up 24% in 2015 and are poised to continue higher. That makes now the perfect time to execute my Income Multiplier strategy on Starbucks. It could earn you 5.4% in 64 days or allow you to buy the stock at a 9.5% discount. In the last 22 years, Starbucks has been one of the best-performing stocks in the S&P 500. Since going public in 1992, shares have increased nearly 16,000%, crushing the market’s 407% return. Although the company won’t repeat the same incredible performance, Starbucks still has plenty of room to grow. The company has more than 12,000 locations in the United States. This year, Starbucks plans to increase its store count by 650 in North America and by… Read More

SodaStream International Ltd. (Nasdaq: SODA) is a classic case of a widely anticipated initial public offering that didn’t pan out.  Since bursting onto the scene in a late-2010 IPO, the carbonated soda machine maker received considerable investor buzz before eventually succumbing to unrealistic growth expectations.  On many occasions, the firm’s stock rallied on turnaround hopes or buyout rumors. Yet as the chart below shows, SodaStream never evolved into a profitable long-term investment. But more than just an unfortunate tale, SodaStream provides a crucial lesson on how to avoid repeating history by being alert for other stocks… Read More

SodaStream International Ltd. (Nasdaq: SODA) is a classic case of a widely anticipated initial public offering that didn’t pan out.  Since bursting onto the scene in a late-2010 IPO, the carbonated soda machine maker received considerable investor buzz before eventually succumbing to unrealistic growth expectations.  On many occasions, the firm’s stock rallied on turnaround hopes or buyout rumors. Yet as the chart below shows, SodaStream never evolved into a profitable long-term investment. But more than just an unfortunate tale, SodaStream provides a crucial lesson on how to avoid repeating history by being alert for other stocks headed down a similar path — such as The Container Store Group, Inc. (NYSE: TCS). Like SodaStream, the Container Store is a once-hot IPO that has become a perilous value trap. After much pre-IPO hype, The Container Store saw its shares double in its trading debut in 2013. The stock tacked on further gains in ensuing months, but has since fallen more than 60% from the January 2014 high.  As a business, The Container Store bears no resemblance to SodaStream, offering a range of household storage containers and organization systems. But it has the same problem. Read More

A turnaround specialist can help to deliver huge returns for investors. By cutting costs or re-orienting a company into more appealing markets, a money loser can steadily morph into a money-maker. That’s been the hope for Lourenco Goncalves, who became CEO of beleaguered miner Cliffs Natural Resources, Inc. (NYSE: CLF) last summer. #-ad_banner-#Under his watch, the company’s per ton mining costs have fallen, he’s slashed general overhead (with corporate headcount falling from a peak of 338 to a recent 139), and Goncalves reduced the company’s exposure to global markets. The re-focused business is directed more squarely on North America, which… Read More

A turnaround specialist can help to deliver huge returns for investors. By cutting costs or re-orienting a company into more appealing markets, a money loser can steadily morph into a money-maker. That’s been the hope for Lourenco Goncalves, who became CEO of beleaguered miner Cliffs Natural Resources, Inc. (NYSE: CLF) last summer. #-ad_banner-#Under his watch, the company’s per ton mining costs have fallen, he’s slashed general overhead (with corporate headcount falling from a peak of 338 to a recent 139), and Goncalves reduced the company’s exposure to global markets. The re-focused business is directed more squarely on North America, which has better pricing dynamics. Moreover, a series of asset sales has enabled Cliff’s to pare debt by more than $1 billion in recent years. All of these factors have bought the company ample breathing room to sustain an eventual potential turnaround. Had this company not taken such bold action, Cliff’s might have already declared bankruptcy by now. Trouble is, those moves won’t help the stark reality of an industry that has too much supply and not enough demand. And shares of this miner, despite a recent mini-rebound (in an otherwise extended slump), may fall to just $1. That represents more… Read More

Great opportunities in the stock market don’t come around too often and in those rare instance, they usually don’t last long. For example,  I highlighted three appealing real estate investment trusts a few months ago. My favorite industry pick at the time, Omega Healthcare Investors, Inc. (NYSE: OHI), has become an even more appealing value since then.   OHI is a pure-play REIT that focuses on skilled nursing facilities. A number of unique events in the last quarter have made investors uncertain about the stock and that uncertainty is contributing to the sell-off. First, Omega Healthcare… Read More

Great opportunities in the stock market don’t come around too often and in those rare instance, they usually don’t last long. For example,  I highlighted three appealing real estate investment trusts a few months ago. My favorite industry pick at the time, Omega Healthcare Investors, Inc. (NYSE: OHI), has become an even more appealing value since then.   OHI is a pure-play REIT that focuses on skilled nursing facilities. A number of unique events in the last quarter have made investors uncertain about the stock and that uncertainty is contributing to the sell-off. First, Omega Healthcare recently closed on the acquisition of Aviv REIT, announced last year. As partial payment, the REIT issued 9.5 million shares of common stock in February, and investors generally don’t like being diluted. However, with the purchase of Aviv, Omega Healthcare becomes the dominant player in skilled nursing facilities (SNF). Source: Company Presentation Omega Healthcare also used the proceeds of an equity offering to pay down debt and now has ample capital and credit to continue to add to its portfolio. The company notes that 87% of the $100 billion skilled nursing facility market is still privately-owned. As… Read More

There’s a dangerous idea in the world of finance that’s been floating around for years. The man who coined this idea won a Nobel Prize for his work, but even he has stated that there are “threats” to his theory. #-ad_banner-#Today, I’m going to tell you about one of those “threats,” and why it’s time to put this dangerous idea to bed for good. Because if you buy into it, you could miss out on some of the greatest opportunities the market has to offer. To frame our discussion, I’d like you to… Read More

There’s a dangerous idea in the world of finance that’s been floating around for years. The man who coined this idea won a Nobel Prize for his work, but even he has stated that there are “threats” to his theory. #-ad_banner-#Today, I’m going to tell you about one of those “threats,” and why it’s time to put this dangerous idea to bed for good. Because if you buy into it, you could miss out on some of the greatest opportunities the market has to offer. To frame our discussion, I’d like you to consider one thing: When an investor buys shares of a stock hoping that its value will rise, the person is often betting against the market — that other investors are wrong (about the stock’s value) and that his valuation is correct. It’s with this idea that theory called the “efficient market hypothesis” becomes important. The man behind the theory — economist Dr. Eugene Fama — is hailed as one of the fathers of modern finance. At its most basic, his hypothesis says that because the public has access to every bit… Read More