#-ad_banner-#As countless companies have noted on recent conference calls, the surging U.S. dollar is creating a strong challenge for U.S.-based multinationals. It has risen roughly 12% against the euro since the fourth quarter of 2013. Companies with strong revenue overseas post lower sales when the foreign currencies they are holding are translated into dollars (i.e. it takes more of the currency to equal one dollar). Of the 11 companies in the Dow 30 that break out revenue from Europe, eight reported a year-over-year decline in fourth quarter sales, thanks to currency impact. Adding insult, foreign rivals are having an easier… Read More

#-ad_banner-#As countless companies have noted on recent conference calls, the surging U.S. dollar is creating a strong challenge for U.S.-based multinationals. It has risen roughly 12% against the euro since the fourth quarter of 2013. Companies with strong revenue overseas post lower sales when the foreign currencies they are holding are translated into dollars (i.e. it takes more of the currency to equal one dollar). Of the 11 companies in the Dow 30 that break out revenue from Europe, eight reported a year-over-year decline in fourth quarter sales, thanks to currency impact. Adding insult, foreign rivals are having an easier time selling goods and services in the United States, thanks to their weaker currencies. The bad news continues: among the 105 companies that warned the market of disappointing earnings ahead of the official Q1 release, 69 of them pointed to the stronger dollar as a key factor. As this chart shows, a rising number of U.S. companies have deep exposure to foreign markets.  A simple way to gauge the dollar fallout: Companies that derived 90% of their revenue from within the United States saw shares jump by 13% (in the six months ended February 2015), according to research… Read More

In the most recent weekly survey conducted by the American Association of Individual Investors, investor sentiment is at a multi-year low, thanks to soft first-quarter economic and earnings data. Sentiment may worsen even further if predictions of a weaker-than-expected second quarter prove accurate. With the mood souring, a bullish outlook might seem out of touch, especially coming from an economically sensitive industry like truck manufacturing. But I certainly wouldn’t characterize management at commercial truck maker Paccar, Inc. (Nasdaq: PCAR) as out of touch. In fact, they are very bullish. And why not? The nation’s second-largest producer of heavy-duty trucks (mainly… Read More

In the most recent weekly survey conducted by the American Association of Individual Investors, investor sentiment is at a multi-year low, thanks to soft first-quarter economic and earnings data. Sentiment may worsen even further if predictions of a weaker-than-expected second quarter prove accurate. With the mood souring, a bullish outlook might seem out of touch, especially coming from an economically sensitive industry like truck manufacturing. But I certainly wouldn’t characterize management at commercial truck maker Paccar, Inc. (Nasdaq: PCAR) as out of touch. In fact, they are very bullish. And why not? The nation’s second-largest producer of heavy-duty trucks (mainly the class 8 “big rigs” it sells under the well-known Kenworth and Peterbilt brands) has seen a robust rebound in sales trends in recent years. Sales approached $19 billion in 2014,  more than double the recession low of $8 billion and an all-time company record. Paccar is off to strong start this year. During the Q1 conference call in April, management reported sales and earnings that handily beat estimates. They also raised their full-year estimate for industrywide class 8 truck sales in the United States and Canada to 260,000-to-290,000 units, versus an earlier projection for unit sales of 250,000-to-280,000. That… Read More

May will be the 71st month of economic expansion for the United States. That seems like a long time, but it’s not abnormal. The last three expansions lasted an average of 95 months, with the longest lasting 10 years. Using this recent history as a guide, we can reasonably guess how far away we might be from the next recession (about two years). But we have no way of knowing for sure. Not even economists know when we’ll transition from one phase into the next. In fact, economists generally don’t know… Read More

May will be the 71st month of economic expansion for the United States. That seems like a long time, but it’s not abnormal. The last three expansions lasted an average of 95 months, with the longest lasting 10 years. Using this recent history as a guide, we can reasonably guess how far away we might be from the next recession (about two years). But we have no way of knowing for sure. Not even economists know when we’ll transition from one phase into the next. In fact, economists generally don’t know that we’re even in a recession until six-to-12 months after it begins. The same is true when a recession ends. Knowing that we’re most likely nearing a later stage of our expansion, my focus has turned to what comes next. #-ad_banner-#More specifically, I want to know whether the companies I’m investing in are prepared for a possible recession. While it’s not possible to know what’s happening with the economy in real time, we can work around that by investing in companies that perform well during both feast and famine. If a… Read More

Spotting emerging trends in the market is the best way I have found to make oversized returns in equities. By getting ahead of market sentiment for a particular sector, idea or theme, you can take advantage of the herd mentality without being part of the herd. This quarter, and potentially for much of the year, I am looking for two major themes to develop.  The first is a cooling or even reversal of the U.S. dollar’s rally, which began in force late last year and continued through March.  The second theme, which is indirectly related to the first, is a… Read More

Spotting emerging trends in the market is the best way I have found to make oversized returns in equities. By getting ahead of market sentiment for a particular sector, idea or theme, you can take advantage of the herd mentality without being part of the herd. This quarter, and potentially for much of the year, I am looking for two major themes to develop.  The first is a cooling or even reversal of the U.S. dollar’s rally, which began in force late last year and continued through March.  The second theme, which is indirectly related to the first, is a stabilization of oil prices and improved sentiment in the space. Oil prices have bounced off their March lows, and near-term catalysts could help support them and bring investors back into the space. If even one of these two themes plays out, it could mean strong upside for today’s pick. If both themes develop, as they should, it could mean up to 56% returns for traders. Oil’s Rebound and Europe’s Turn for Growth The European Central Bank (ECB) was slow to adopt quantitative easing, the kind of bond-buying program that spurred growth in the United States, instead opting for… Read More

Dear readers, A team of researchers at EarthRisk Technologies made a shocking discovery. They created an amazing “prediction tool” that can accurately predict the weather up to 40 days out. This same kind of technology is also being used to “predict” future share price movements — with stunning results. BlackRock used a prediction tool to largely avoid the 2008 market crash. Researchers at the University of California used a similar tool to beat the market by 10% over a four-month period. And since creating our own in-house tool in 2013,… Read More

Dear readers, A team of researchers at EarthRisk Technologies made a shocking discovery. They created an amazing “prediction tool” that can accurately predict the weather up to 40 days out. This same kind of technology is also being used to “predict” future share price movements — with stunning results. BlackRock used a prediction tool to largely avoid the 2008 market crash. Researchers at the University of California used a similar tool to beat the market by 10% over a four-month period. And since creating our own in-house tool in 2013, it’s spotted 33 stocks right before they soared up to 242% in 11 months. Check out the fascinating story behind this amazing prediction technology here.  Sincerely, Frank Bermea Publisher, Profitable Trading All major U.S. indices, except for the tech-heavy Nasdaq 100 and Composite, closed in positive territory last week, reversing the previous week’s negative close as the stock market continues its recent pattern of alternating positive and negative weekly closes. This back-and-forth action indicates investor indecision as the market continues to handicap… Read More

#-ad_banner-#For some investors, the current bull market has dubious underpinnings. That’s because “financial engineering,” where firms pour cash into oversized share repurchase and dividend payment programs, are creating an artificial boost to core growth rates. Yet such moves often means sacrificing equipment upgrades, product development and other crucial long-term investments. Sooner or later, firms that underinvest in their businesses risk serious underperformance. That’s why I seek innovators with a demonstrated commitment to research and development. These firms tend to display the solid, consistent organic growth necessary to evolve into an Apple, Inc. (Nasdaq: AAPL) or 3M Co. (NYSE:… Read More

#-ad_banner-#For some investors, the current bull market has dubious underpinnings. That’s because “financial engineering,” where firms pour cash into oversized share repurchase and dividend payment programs, are creating an artificial boost to core growth rates. Yet such moves often means sacrificing equipment upgrades, product development and other crucial long-term investments. Sooner or later, firms that underinvest in their businesses risk serious underperformance. That’s why I seek innovators with a demonstrated commitment to research and development. These firms tend to display the solid, consistent organic growth necessary to evolve into an Apple, Inc. (Nasdaq: AAPL) or 3M Co. (NYSE: MMM). Along with these stalwarts, one of my favorite firms using R&D to generate strong organic growth is Autoliv, Inc. (NYSE: ALV), a mid-size auto safety products maker with annual sales of $9.1 billion. Autoliv doesn’t neglect dividends and share repurchases, but keeps such efforts in check. At this firm, innovation is a top priority, which has been rewarded by investors with a nearly 100% gain during the past three years, far outpacing the S&P 500’s roughly 50% gain. Founded more than six decades ago, Sweden’s Autoliv is the leading provider of “passive” auto safety products… Read More

As long-time readers may know, back in December 2009 I began an ambitious experiment. My mission: take $200,000 of StreetAuthority’s money and invest it in a stable, growing portfolio of dividend-paying securities. I would take the dividends I earn from these investments, reinvest them, and then build my portfolio into a robust income-generating machine. We built an entire newsletter advisory around this experiment. And during this time, I’m happy to report that I’ve been able to grow my portfolio value to more than $320,000. And depending on the needs of my Daily Paycheck subscribers,… Read More

As long-time readers may know, back in December 2009 I began an ambitious experiment. My mission: take $200,000 of StreetAuthority’s money and invest it in a stable, growing portfolio of dividend-paying securities. I would take the dividends I earn from these investments, reinvest them, and then build my portfolio into a robust income-generating machine. We built an entire newsletter advisory around this experiment. And during this time, I’m happy to report that I’ve been able to grow my portfolio value to more than $320,000. And depending on the needs of my Daily Paycheck subscribers, they can “flip the switch” from dividend reinvestment and live off of their income stream at any time. But let’s face it, not everyone gets $200,000 thrown in their laps. Take Matthew Michaels, for example. #-ad_banner-#Matt is a young father who works at StreetAuthority. He doesn’t have thousands of dollars to invest at the moment. But even so, he and his wife recently began using the Daily Paycheck strategy to build a portfolio for their two young daughters’ future. That’s the beauty of my strategy: anyone can take… Read More

There is one simple rule about earnings season: have plenty of cash on hand. That’s because a few dozen stocks will fall sharply on tepid results or cautious forward outlooks and real bargains can emerge. Of course, many stocks that have been punished deserve to stay in the penalty box for quite some time. Their near-term problems are unlikely to dissipate any time soon. So you need to dig deep to find the rare diamonds in the rough that have been unfairly punished. When the dust settles on earnings season, these are precisely the kinds of stocks that value investors… Read More

There is one simple rule about earnings season: have plenty of cash on hand. That’s because a few dozen stocks will fall sharply on tepid results or cautious forward outlooks and real bargains can emerge. Of course, many stocks that have been punished deserve to stay in the penalty box for quite some time. Their near-term problems are unlikely to dissipate any time soon. So you need to dig deep to find the rare diamonds in the rough that have been unfairly punished. When the dust settles on earnings season, these are precisely the kinds of stocks that value investors will seek out. I’ve looked at a few dozen earnings season casualties and have found two of them that appear poised to claw back recent losses. SUPERVALU, Inc. (NYSE: SVU) This operator of several grocery chains was in deep distress just a few years ago. Yet a series of asset sales managed to trim the company’s debt load from around $7.6 billion in fiscal (February) 2010 to a recent $2.7 billion. And the company has managed to generate profits in each of the last two fiscal years, after generating losses in the prior three years. Cost cuts and better… Read More

Value investing can be tough. It means thinking in a contrarian manner, while the investing herd stampedes in another direction. Value opportunities usually occur when something is going wrong for a company. Recognizing a headwind that is temporary or fixable, especially when it affects an otherwise healthy company, is what value investors dream of. Aflac, Inc. (NYSE: AFL) is a specialty insurer that offers disability and supplemental medical insurance products in the United States and Japan. Although famous for a talking duck mascot, this is a spectacularly run company. Aflac has raised its dividend for 33 consecutive years, making it… Read More

Value investing can be tough. It means thinking in a contrarian manner, while the investing herd stampedes in another direction. Value opportunities usually occur when something is going wrong for a company. Recognizing a headwind that is temporary or fixable, especially when it affects an otherwise healthy company, is what value investors dream of. Aflac, Inc. (NYSE: AFL) is a specialty insurer that offers disability and supplemental medical insurance products in the United States and Japan. Although famous for a talking duck mascot, this is a spectacularly run company. Aflac has raised its dividend for 33 consecutive years, making it a member of the “Dividend Aristocrats.” In each of the past 10 years, even during the financial crisis of 2008, it has achieved a 15% or better return on equity. This company controls a very specific niche in the market and is the undisputed leader in supplemental insurance products. Despite the fact that it’s headquartered here in the United States, most of Aflac’s business comes from Japan. In 2014, Japanese operations accounted for more than 70% of Aflac’s revenue.  In Japan, the company is performing well, consistently adding policies and growing premium income year in and… Read More

Millions of Americans remain absent from the workforce, and even those with jobs are wrestling with stagnant income growth. That helps explain why retailers have experienced a half decade of subpar sales growth. Yet that bleak recent history may soon be coming to an end. Wages, job openings and retail spending are inter-locking variables, and for a change, these factors are pointing to brighter days ahead. Of course it all starts with jobs. As we saw with the most recent employment report, the national unemployment rate stands firmly below 6%, a threshold that seemed almost inconceivable just a few years… Read More

Millions of Americans remain absent from the workforce, and even those with jobs are wrestling with stagnant income growth. That helps explain why retailers have experienced a half decade of subpar sales growth. Yet that bleak recent history may soon be coming to an end. Wages, job openings and retail spending are inter-locking variables, and for a change, these factors are pointing to brighter days ahead. Of course it all starts with jobs. As we saw with the most recent employment report, the national unemployment rate stands firmly below 6%, a threshold that seemed almost inconceivable just a few years ago.     Favorable Employment Trends Source: Bureau of Labor Statistics​ Despite the robust period of job creation, employees still lacked any leverage when it came time to seek wages. Yet that dynamic may be changing. Wages in the private sector grew 2.8% in the first quarter, the best showing since 2008. That may not seem like a big jump, but the trend is encouraging. Early signs of wage growth may be having an impact on consumers. According to the University of Michigan, consumer sentiment just rose to… Read More