With interest rates near 0% and traditional income investments, like savings accounts and certificates of deposits (CDs), earning next to nothing, blue-chip telecom stocks like AT&T (NYSE: T) and Verizon (NYSE: VZ) have become wildly popular. #-ad_banner-#That makes sense. Telecom is a “recession-proof” industry. Regardless of what’s happening with the economy, people will still need cell phones and cable TV. And with both stocks yielding around 5%, they look like a good choice for income investors in search of high yields. But there’s a problem. As with a lot of American blue chips, these… Read More

With interest rates near 0% and traditional income investments, like savings accounts and certificates of deposits (CDs), earning next to nothing, blue-chip telecom stocks like AT&T (NYSE: T) and Verizon (NYSE: VZ) have become wildly popular. #-ad_banner-#That makes sense. Telecom is a “recession-proof” industry. Regardless of what’s happening with the economy, people will still need cell phones and cable TV. And with both stocks yielding around 5%, they look like a good choice for income investors in search of high yields. But there’s a problem. As with a lot of American blue chips, these stocks look expensive right now. AT&T and Verizon sport price-to-earnings, or P/E, ratios of 29 and 21, respectively — well above the S&P 500s historical average of 15. And while a 5% dividend yield might seem like a lot, in the telecom industry, you can find much higher yields… and at a much better price. For example, I’ve found a telecom that’s currently yielding 7.7%. It enjoys the same competitive advantages as both AT&T and Verizon, and better yet, it’s trading at a P/E ratio of less than 12, making it a much better… Read More

When I arrived in Canada in 1970, one of the first investment maxims I was taught by the old pros was, “Put your money in the bank stocks, not the banks.” #-ad_banner-#The point was I would see far better returns holding bank shares than I would earning interest in a savings account. As this bull market rages on with the S&P 500 about 215% higher than its early 2009 low, I want to update the maxim. While this bull market continues, I say, buy the brokerage stocks. As the market trends higher, investors gain more confidence. With increased confidence, they… Read More

When I arrived in Canada in 1970, one of the first investment maxims I was taught by the old pros was, “Put your money in the bank stocks, not the banks.” #-ad_banner-#The point was I would see far better returns holding bank shares than I would earning interest in a savings account. As this bull market rages on with the S&P 500 about 215% higher than its early 2009 low, I want to update the maxim. While this bull market continues, I say, buy the brokerage stocks. As the market trends higher, investors gain more confidence. With increased confidence, they invest and trade more. As the market rises, there is more trading equity in their accounts and they can make bigger bets. Brokers benefit from this virtuous cycle. The ability to trade from virtually any mobile platform, anytime, anywhere is another reason trading activity at many online brokers is rising. One of the most innovative online brokers is Interactive Brokers (NASDAQ: IBKR). The company was rated highest in Barron’s survey of the best online brokerage for the third straight year. Ranked on categories such as trading cost, portfolio analysis and trading platform usability, the company scored 36.7 out of a… Read More

Rock bottom interest rates have driven income-seeking investors away from bonds and toward dividend paying stocks.   #-ad_banner-#Trouble is, the shift has pushed stock prices much higher and their valuations are getting rich. Shares of the SPDRS S&P Dividend ETF (NYSE: SDY) increased more than 12% over the last year and trade for 20.7 times trailing earnings.   As an income investor, I fear that rising rates will dim the appeal of dividend-paying stocks. As investors start to again look to bond yields for safety, the appeal of that quarterly paycheck may not be enough to support valuations. Read More

Rock bottom interest rates have driven income-seeking investors away from bonds and toward dividend paying stocks.   #-ad_banner-#Trouble is, the shift has pushed stock prices much higher and their valuations are getting rich. Shares of the SPDRS S&P Dividend ETF (NYSE: SDY) increased more than 12% over the last year and trade for 20.7 times trailing earnings.   As an income investor, I fear that rising rates will dim the appeal of dividend-paying stocks. As investors start to again look to bond yields for safety, the appeal of that quarterly paycheck may not be enough to support valuations.   Fortunately, there is another side of the cash yield equation.   Nearly three-quarters of the companies in the S&P 500 repurchased their own shares in the third quarter of 2014. On a trailing twelve month basis ended September 2014, $567 billion in stocks was bought back. That represented an increase of 27% over the same period in 2013, bringing the buyback yield over 3% and nearly a full percent above the dividend yield.   Companies that repurchased shares over the 10 years to 2014 outperformed both the S&P 500 and companies that did not make repurchases, according to Factset… Read More

#-ad_banner-#If you’re a fan of old-time boxers, then you probably remember George Chuvalo. He was a sturdy Canadian heavyweight of the 60s and 70s who faced the best fighters of his time, including some extremely heavy hitters. In 93 hard-fought bouts, he came out on top far more often than not and wasn’t knocked down once. As an investor, Chuvalo reminds me of United Technologies Corp. (NYSE: UTX), a large conglomerate serving the aerospace, construction and other industries. Like Chuvalo, United Technologies has been the epitome of consistency, delivering decades of… Read More

#-ad_banner-#If you’re a fan of old-time boxers, then you probably remember George Chuvalo. He was a sturdy Canadian heavyweight of the 60s and 70s who faced the best fighters of his time, including some extremely heavy hitters. In 93 hard-fought bouts, he came out on top far more often than not and wasn’t knocked down once. As an investor, Chuvalo reminds me of United Technologies Corp. (NYSE: UTX), a large conglomerate serving the aerospace, construction and other industries. Like Chuvalo, United Technologies has been the epitome of consistency, delivering decades of solid growth in earnings, cash flow and dividends. And UTX proved that it can also take a punch. The firm faced unusual adversity in 2014, but powered through and went on to post solid financial results. Among last year’s troubles: —          Delays in meeting order deadlines for 28 Cyclone shipboard helicopters for the Canadian military. —          A couple big setbacks in the Pratt & Whitney division, including testing failures of a new commercial engine being developed for aircraft maker Bombardier, Inc. (OTC: BDRAF… Read More

With the exception of energy, 2014 was a good year for nearly all of the major market sectors. Healthcare, utilities, technology, consumer staples and other groups have all logged healthy double-digit gains. But when you examine performance by market capitalization rather than by sector, a different story unfolds. Read More

Some chart patterns are pauses that will eventually resolve in the direction of the preceding trend. Some are pauses that signal a change in trend. The trick is to wait for the market to tell us which it is before we act. To be sure, most patterns can go either way. That makes waiting for the breakout/breakdown a critical step, because even a pattern with a bullish name, such as an ascending triangle, can lose to the bears.  Right now, consumer products giant and member of the blue-chip Dow 30, Procter & Gamble (NYSE: PG), offers such a… Read More

Some chart patterns are pauses that will eventually resolve in the direction of the preceding trend. Some are pauses that signal a change in trend. The trick is to wait for the market to tell us which it is before we act. To be sure, most patterns can go either way. That makes waiting for the breakout/breakdown a critical step, because even a pattern with a bullish name, such as an ascending triangle, can lose to the bears.  Right now, consumer products giant and member of the blue-chip Dow 30, Procter & Gamble (NYSE: PG), offers such a setup.  Not only does it sport a very clear symmetrical triangle pattern, but it is now trading between trendline and moving average support and resistance levels. Indeed, it is at a crossroads with both long- and short-term implications (although today’s trade will be limited to the short term). As we can see in the chart, PG recently broke down sharply below the short-term rising trendline from July. However, it is also sitting just above a long-term trendline from the June 2012 bottom, which coincides with horizontal chart support from late last year. #-ad_banner-#In other words, the… Read More

Thanks to two mega trends sweeping the United States, the home improvement market is exploding in popularity all across the country. #-ad_banner-#With Americans beginning to rely more heavily on cost-savings options and push for greater sustainability, do-it-yourself (or DIY) projects have never been more popular. In 2014, the U.S. home improvement products market was worth an estimated $313.5 billion, up 5.9% from the prior year, according to market statistics firm Statista. Many investors would see this as a time to run out and buy shares of  big box-store company’s like Home Depot or Lowe’s. But with the two giants battling… Read More

Thanks to two mega trends sweeping the United States, the home improvement market is exploding in popularity all across the country. #-ad_banner-#With Americans beginning to rely more heavily on cost-savings options and push for greater sustainability, do-it-yourself (or DIY) projects have never been more popular. In 2014, the U.S. home improvement products market was worth an estimated $313.5 billion, up 5.9% from the prior year, according to market statistics firm Statista. Many investors would see this as a time to run out and buy shares of  big box-store company’s like Home Depot or Lowe’s. But with the two giants battling over home-improvement supremacy, there’s no telling which powerhouse retailer will ever come out on top. So instead, I’ve found three companies profiting from the DIY trend in a huge way. And these market-beaters have all the fundamentals necessary to keep showering you with big returns for years to come. The Sherwin-Williams Co. (NYSE: SHW) Sherwin-Williams is the largest producer of paints and coatings in the United States and the third largest in the world. The company estimates that more than 90% of the U.S. population lives within a 50 mile radius of one of its 3,654 domestic locations. While… Read More

I’m a pen and paper kind of guy. If I had my pick, I’d sit down with the newspaper or a book over reading from a screen any day.   #-ad_banner-#But this preference is becoming less and less common. Today, with Kindles, iPads, laptops and smartphones increasingly popular, we can now access entire libraries worth of information from a single, tiny device.   Newspapers and physical books have become — dare I say — inefficient. And it’s left me wondering, “What’s happening to traditional publishing? Is there still money to be made from physical publications?”   As it… Read More

I’m a pen and paper kind of guy. If I had my pick, I’d sit down with the newspaper or a book over reading from a screen any day.   #-ad_banner-#But this preference is becoming less and less common. Today, with Kindles, iPads, laptops and smartphones increasingly popular, we can now access entire libraries worth of information from a single, tiny device.   Newspapers and physical books have become — dare I say — inefficient. And it’s left me wondering, “What’s happening to traditional publishing? Is there still money to be made from physical publications?”   As it turns out, there is. But not in the way you might expect.   You see, when I started looking into this, I began with an assumption that turned out to be completely false.   These companies don’t rely on readers for revenue. Advertisers, not subscribers, drive their earnings.   And as I dug deeper into the business models of companies like The New York Times, The Wall Street Journal, and McGraw Hill to name a few, that insight helped me discover something even more important.   That is, the real reason the internet and mobile technologies have made it hard… Read More

Income investments are an important portion of any retirement portfolio. Historically, they’ve provided retirees monthly or quarterly income distributions to help cover expenses, healthcare and any other living expenses. #-ad_banner-#The other morning I was perusing a Morgan Stanley Smith Barney report that outlined four different 401(k) allocations. While there are many factors that go into an individual investor’s asset allocation, the portfolios range from 25% to 60% in income producing bonds. Along with bonds, the portfolios invest anywhere from 10% to 54% in large-cap stocks. Assuming that part… Read More

Income investments are an important portion of any retirement portfolio. Historically, they’ve provided retirees monthly or quarterly income distributions to help cover expenses, healthcare and any other living expenses. #-ad_banner-#The other morning I was perusing a Morgan Stanley Smith Barney report that outlined four different 401(k) allocations. While there are many factors that go into an individual investor’s asset allocation, the portfolios range from 25% to 60% in income producing bonds. Along with bonds, the portfolios invest anywhere from 10% to 54% in large-cap stocks. Assuming that part of the reason for investing in these types of assets is to add income-producing securities to your portfolio, a logical question to ask is: Do these models account for the lower yields that we’re seeing in the current environment? I doubt it. If you’re trying to earn income by investing in large-cap stocks and bonds, you face serious obstacles. Mainly that yields are down across the board…   The average yield in the S&P 500 is only 1.9%. At that rate, you’re not even keeping up with inflation. Read More

For the past two years, biotech has been one of the best places to put your money in this bull market. During that time, while the S&P 500 rose roughly 40%, the iShares Nasdaq Biotechnology (NASDAQ: IBB) trounced that impressive gain with a return of more than 125%. #-ad_banner-#But given the boom-or-bust nature of companies in this industry, where so much is dependent on science, trial results, FDA approvals and acquisitions, pinpointing the next breakout star can be tricky. A few weeks ago, I was alerted to a buy in biotechnology firm Pharmacyclics (NASDAQ: PCYC). In addition to showing huge… Read More

For the past two years, biotech has been one of the best places to put your money in this bull market. During that time, while the S&P 500 rose roughly 40%, the iShares Nasdaq Biotechnology (NASDAQ: IBB) trounced that impressive gain with a return of more than 125%. #-ad_banner-#But given the boom-or-bust nature of companies in this industry, where so much is dependent on science, trial results, FDA approvals and acquisitions, pinpointing the next breakout star can be tricky. A few weeks ago, I was alerted to a buy in biotechnology firm Pharmacyclics (NASDAQ: PCYC). In addition to showing huge revenue and earnings growth, the stock scored an amazing 184 out of a possible 200 on one of the most reliable indicators I’ve ever encountered in my portfolio management career. Pharmacyclics is dedicated to developing breakthrough treatments to cure serious life-threatening illnesses while improving quality and duration of life. Its primary product, Imbruvica, treats cancer by disrupting biochemical pathways in cancer cells, and is FDA approved to fight chronic lymphocytic leukemia and mantle cell lymphoma, a rare form of non-Hodgkin’s lymphoma. On Jan. 29, the FDA approved Imbruvica for treating a rare form of blood cancer with no… Read More