It can take some companies many decades to grow large enough to merit a $28 billion market valuation. News that General Electric Co. (NYSE: GE) is transforming itself created that much shareholder value in just one day.   What has the market so excited? GE announced that over the next two years it would sell off almost all of GE Capital’s portfolio for an estimated $90 billion. Longtime investors remember the sordid history of GE Capital. After more than 100 years of being an industrial and manufacturing powerhouse, the GE of the early 2000’s scarcely looked like the same company. Read More

It can take some companies many decades to grow large enough to merit a $28 billion market valuation. News that General Electric Co. (NYSE: GE) is transforming itself created that much shareholder value in just one day.   What has the market so excited? GE announced that over the next two years it would sell off almost all of GE Capital’s portfolio for an estimated $90 billion. Longtime investors remember the sordid history of GE Capital. After more than 100 years of being an industrial and manufacturing powerhouse, the GE of the early 2000’s scarcely looked like the same company. The company had charged into real estate, commercial and personal lending. #-ad_banner-#And for a while, it looked like GE’s foray into finance was a rousing success. GE capital grew revenues 15% per year from 2003 to 2007 and the earnings from GE capital made up half of the parent company’s earnings in that final year before the crash. GE Capital’s aggressive financial practices came back to haunt it during the financial crisis. Its struggles strangled the parent company and necessitated a lifeline, which Warren Buffett and the U.S. government provided to stave off insolvency. But despite nearly bankrupting the company… Read More

If I asked you to name one of America’s greatest companies, then I would undoubtedly receive a wide range of responses. Many might say Apple (Nasdaq: AAPL) for the way it transformed our daily lives with its revolutionary mobile devices. Some would choose Exxon Mobil (NYSE: XOM), which generates a staggering $437 billion in annual sales. Still others might point to Walt Disney (NYSE: DIS), an iconic business whose beloved movies, characters and theme parks are enjoyed by millions. There is no right or wrong answer, merely opinion. The point is to provoke a… Read More

If I asked you to name one of America’s greatest companies, then I would undoubtedly receive a wide range of responses. Many might say Apple (Nasdaq: AAPL) for the way it transformed our daily lives with its revolutionary mobile devices. Some would choose Exxon Mobil (NYSE: XOM), which generates a staggering $437 billion in annual sales. Still others might point to Walt Disney (NYSE: DIS), an iconic business whose beloved movies, characters and theme parks are enjoyed by millions. There is no right or wrong answer, merely opinion. The point is to provoke a discussion of which attributes make a company “great.” Is it popular products? Dominant market share? Colossal sales? Sky-high profit margins? I, for one, would say none of the above. Let me explain… #-ad_banner-#In The 1927 New York Yankees baseball team is widely regarded as the best team in baseball history. For decades pundits have swooned over the team’s high winning percentage, massive number of home runs and a whole host of other absurd statistics. But none of those stats made the team great; they were simply the byproduct of a great… Read More

Health care stocks rank among the biggest winners of the current bull market, and one subsector that has shown significant outperformance in the past six months is medical equipment makers. Since many of the stocks in this group have already made big runs, I am on the lookout for fresh chart pattern breakouts. Aesthetic and medical device maker Cynosure (NASDAQ: CYNO) fits that bill. The company makes devices to treat various skin and vascular conditions, including tattoo removal and cellulite treatments. On the charts, Cynosure has been trading in a very wide long-term trading range between $21… Read More

Health care stocks rank among the biggest winners of the current bull market, and one subsector that has shown significant outperformance in the past six months is medical equipment makers. Since many of the stocks in this group have already made big runs, I am on the lookout for fresh chart pattern breakouts. Aesthetic and medical device maker Cynosure (NASDAQ: CYNO) fits that bill. The company makes devices to treat various skin and vascular conditions, including tattoo removal and cellulite treatments. On the charts, Cynosure has been trading in a very wide long-term trading range between $21 and $31.50, in round numbers.  On the last short-term leg up within the pattern, shares stalled at the upper border, but unlike previous attempts, they only pulled back by a small margin. This behavior leans bullish as it shows the bears could not drive the stock back down as they had done before. #-ad_banner-#​Earlier this month, CYNO poked its head above the upper border of the range and spent a few more days rallying, but then once again pulled back. It found support at the old range top.  What was once considered to be expensive was… Read More

The global population continues to expand at a steady pace, and agronomists believe that crop yields will need to double by 2050 to meet rising food demand. That should be leading to rising demand for fertilizer producers, but these firms haven’t seen much benefit from the trend in recent years.   Blame goes to a weakening Chinese economy and lower commodity prices, which reduce farm incomes.  The knockout punch came in July 2013 when Russian potash miner Uralkali decided to abandon cartel-like pricing policies and favor sales volumes over pricing. Potash is one of the three key compounds, along with nitrogen… Read More

The global population continues to expand at a steady pace, and agronomists believe that crop yields will need to double by 2050 to meet rising food demand. That should be leading to rising demand for fertilizer producers, but these firms haven’t seen much benefit from the trend in recent years.   Blame goes to a weakening Chinese economy and lower commodity prices, which reduce farm incomes.  The knockout punch came in July 2013 when Russian potash miner Uralkali decided to abandon cartel-like pricing policies and favor sales volumes over pricing. Potash is one of the three key compounds, along with nitrogen and phosphate, in organic fertilizers. #-ad_banner-#Until that seismic event, global potash prices had been set by two trading companies: the Belarusian Potash Company and Canpotex. The former is a joint venture between Uralkali and Belaruskali. The latter is controlled by Potash Corp. of Saskatchewan, Inc. (NYSE: POT), Agrium, Inc. (NYSE: AGU) and The Mosaic Co. (NYSE: MOS). By limiting potash production, the group kept prices higher than natural supply and demand would allow. When Uralkali decided to produce at full capacity in 2013, the publicly-traded companies saw 30% of their market capitalization erased in a single… Read More

Although new consumer technologies can capture a great deal of buzz, they are often just the tip of the tech iceberg. Many of the sector’s most lucrative developments occur completely behind the scenes. For instance, many investors are unaware of the groundbreaking advances being made in machine vision systems. These relatively new, camera-based technologies essentially endow robots with the superhuman vision necessary for high-speed manufacturing, often with extremely small components. Coupled with the appropriate software, the technology enables robots to identify, assemble and inspect products far too fast for the human eye to follow. The development of machine vision systems… Read More

Although new consumer technologies can capture a great deal of buzz, they are often just the tip of the tech iceberg. Many of the sector’s most lucrative developments occur completely behind the scenes. For instance, many investors are unaware of the groundbreaking advances being made in machine vision systems. These relatively new, camera-based technologies essentially endow robots with the superhuman vision necessary for high-speed manufacturing, often with extremely small components. Coupled with the appropriate software, the technology enables robots to identify, assemble and inspect products far too fast for the human eye to follow. The development of machine vision systems began more than half a century ago, but has only taken off in the past decade or so. In 2005, it was a $1.3 billion industry. Since then, machine vision has ballooned into a $4.5 billion market and is projected to more than double to $9.5 billion by 2020. The best way to play the trend: Cognex Corp. (Nasdaq: CGNX). Shares of this technology leader have posted robust gains and still have plenty of room left to run. Founded in 1981, Cognex sells machine vision systems that facilitate the production of cars, mobile devices, drugs and packaged foods,… Read More

Talk about a lousy way to start the day. Each morning, even when he’s on vacation, the President of the United States sits with top intelligence officials to review the President’s Daily Brief, a comprehensive list of new intelligence on threats and international crises affecting the country. These bureaucrats literally have to sit around a conference table every day and ask, “What could go wrong?” Sure there are hurricanes, earthquakes or volcanic eruptions. But as they say in the insurance industry, these are known as “acts of God.” They don’t include violent crimes or acts of terrorism, which are studied… Read More

Talk about a lousy way to start the day. Each morning, even when he’s on vacation, the President of the United States sits with top intelligence officials to review the President’s Daily Brief, a comprehensive list of new intelligence on threats and international crises affecting the country. These bureaucrats literally have to sit around a conference table every day and ask, “What could go wrong?” Sure there are hurricanes, earthquakes or volcanic eruptions. But as they say in the insurance industry, these are known as “acts of God.” They don’t include violent crimes or acts of terrorism, which are studied by other agencies. But thousands of dedicated Americans are working all over the world to keep U.S. citizens safe from an entirely different threat altogether. And in order to address it, the government will need to rely on a burgeoning industry that investors like you can capitalize on today. Let me explain. The order of the President’s Daily Brief has changed from year to year — counterintelligence jumped two spots to No. 2 this year, while weapons of mass destruction dropped a spot to No. 3. But one risk in particular — the No. 1 threat facing America — has… Read More

There are always themes underlying the stock market. Earlier in the year, it was biotechnology. Then oil services offered nice gains.  When we can combine two themes, we can often multiply their benefits, and right now that is what I see with consumer staples stocks and Latin America. At first glance, the consumer staples sector appears flat and is slightly lagging the broader market so far in 2015. But beneath the surface, the Consumer Staples Select Sector SPDR ETF (NYSE: XLP) is enjoying solid demand. #-ad_banner-#The on-balance volume study, which keeps a running tally of volume traded… Read More

There are always themes underlying the stock market. Earlier in the year, it was biotechnology. Then oil services offered nice gains.  When we can combine two themes, we can often multiply their benefits, and right now that is what I see with consumer staples stocks and Latin America. At first glance, the consumer staples sector appears flat and is slightly lagging the broader market so far in 2015. But beneath the surface, the Consumer Staples Select Sector SPDR ETF (NYSE: XLP) is enjoying solid demand. #-ad_banner-#The on-balance volume study, which keeps a running tally of volume traded on up days minus volume on down days, is rising. This is a proxy for money flow and is also an indication of supply and demand. When it is rising, we surmise bulls are more aggressive than bears and demand is beating supply. Latin American stocks, as represented by the iShares Latin America 40 (NYSE: ILF), are also enjoying rising on-balance volume. Many emerging markets struggled last year as commodities tumbled, led lower by the precipitous decline in crude oil. However, ILF stabilized in December and has been moving sideways in a range since then.  This month,… Read More

What kind of companies can you count on to generate value, even when the rest of the market is in a slump? If history is any guide, then one class of stocks consistently enjoys solid demand from consumers. In fact, this sector is considered by many to be full of great “rainy day stocks.” The sector in question: consumer non-discretionaries, otherwise known as consumer staples. Here’s just one example of their resilience. Between January 1, 2007 and January 1, 2010, the S&P 500 plummeted, returning negative 21% over that period. In contrast, one of these stocks — which I’ll describe shortly… Read More

What kind of companies can you count on to generate value, even when the rest of the market is in a slump? If history is any guide, then one class of stocks consistently enjoys solid demand from consumers. In fact, this sector is considered by many to be full of great “rainy day stocks.” The sector in question: consumer non-discretionaries, otherwise known as consumer staples. Here’s just one example of their resilience. Between January 1, 2007 and January 1, 2010, the S&P 500 plummeted, returning negative 21% over that period. In contrast, one of these stocks — which I’ll describe shortly — went up 51%. In other words, if you owned it during the recession, then this stock would have earned you money. Not many companies can make that claim. Because of the products they sell — basic foodstuffs and household essentials like toothpaste and soap — these companies resist the cyclical swings of the market at large. Unlike their luxury counterparts, people can’t give up buying their products, even when the economy goes downhill. Cars and travel are the perfect counterexamples: people spend more on them during bull markets, but cut back when income gets tight. So in the case… Read More

We often write about a group of stocks known as the “Dividend Aristocrats.” These stocks have a long track record of dividend payment increases, which make them among the most reliable income-producing investments you can find. But these stocks have one clear drawback: they are so loved by so many investors that their share prices often get pushed up to levels that translate into a mediocre dividend yield. Among the more than 50 stocks that qualify for Dividend Aristocrat status, only three of them — AT&T, Inc. (NYSE: T), HCP, Inc. (NYSE: HCP) and Consolidated Edison, Inc. (NYSE: ED) —… Read More

We often write about a group of stocks known as the “Dividend Aristocrats.” These stocks have a long track record of dividend payment increases, which make them among the most reliable income-producing investments you can find. But these stocks have one clear drawback: they are so loved by so many investors that their share prices often get pushed up to levels that translate into a mediocre dividend yield. Among the more than 50 stocks that qualify for Dividend Aristocrat status, only three of them — AT&T, Inc. (NYSE: T), HCP, Inc. (NYSE: HCP) and Consolidated Edison, Inc. (NYSE: ED) — have dividend yields above 4%. The 30-day SEC Yield on the ProShares S&P 500 Dividend Aristocrat ETF (NYSE: NOBL) is just 1.96%. Yet there is another group of stocks that have no shot at ever joining the Dividend Aristocrats. They are simply ignored by any investor that craves dividend stability. These companies, by the very nature of their business models, are simply in no position to guarantee that dividends will remain constant and growing. In fact, from time to time, these companies decide not to pay a dividend at all. Let me use Northern Tier Energy LP (NYSE: NTI) as… Read More