Over the past decade, we’ve spent a considerable amount of time researching master limited partnerships (MLPs). They’ve emerged as a popular way to benefit from our nation’s rapidly growing energy infrastructure. Most MLPs are focused on the energy sector, though some are involved in real estate and other entities (such as pro basketball’s Boston Celtics). #-ad_banner-#MLPs have soared in popularity as they’ve delivered stellar returns. According to the National Association of Publicly Traded Partnerships, the Alerian MLP Index (a proxy for almost all publicly traded energy MLPs) delivered a 16.5% annualized gain in the 10 years ended December 2012. That… Read More

Over the past decade, we’ve spent a considerable amount of time researching master limited partnerships (MLPs). They’ve emerged as a popular way to benefit from our nation’s rapidly growing energy infrastructure. Most MLPs are focused on the energy sector, though some are involved in real estate and other entities (such as pro basketball’s Boston Celtics). #-ad_banner-#MLPs have soared in popularity as they’ve delivered stellar returns. According to the National Association of Publicly Traded Partnerships, the Alerian MLP Index (a proxy for almost all publicly traded energy MLPs) delivered a 16.5% annualized gain in the 10 years ended December 2012. That beat the annualized gains of commodities (10.6%), small cap stocks (9.7%), the S&P 500 (7.1%) and hedge funds (6.8%). Many of our favorite MLPs continue to possess robust growth prospects in the years ahead as well, thanks to industry plans to dig for more oil and gas and to build more pipelines to transport these energy sources. The appeal of these MLPs is self-evident: They offer juicy dividend yields and are structured to avoid paying income taxes. That second factor can also be seen as a clear negative: Since they don’t pay taxes on their profits,… Read More

For the past few decades, oil refining has been a lousy business. An arcane set of regulations and fierce competition from abroad created lots of headaches with only small returns.#-ad_banner-#​ The U.S. shale boom changes all that. Our newfound abundance of oil and gas means U.S. refiners can produce gasoline, diesel and other distillates at cheaper prices than their foreign rivals. The U.S. has even begun to become a major exporter of these refined products.  The change in fortune has caught the industry off guard. Suddenly, leading firms are producing massive amounts of cash… Read More

For the past few decades, oil refining has been a lousy business. An arcane set of regulations and fierce competition from abroad created lots of headaches with only small returns.#-ad_banner-#​ The U.S. shale boom changes all that. Our newfound abundance of oil and gas means U.S. refiners can produce gasoline, diesel and other distillates at cheaper prices than their foreign rivals. The U.S. has even begun to become a major exporter of these refined products.  The change in fortune has caught the industry off guard. Suddenly, leading firms are producing massive amounts of cash flow, and they are scrambling for ways to reward investors. Many of the refiners I profiled back in August are now in the midst of massive share buyback programs, dividend boosts and debt reduction — the three components that make up impressive Total Yields. Simply put, “Total Yield” stocks are companies that use the cash they generate to 1) pay steady dividends, 2) buy back large amounts of their own stock, and 3) pay down debt. Why should investors care about these three strategies? When companies execute on all three fronts, it beats the S&P 500 — as well as regular… Read More

Oil production in the United States increased rapidly from the turn of the 20th century until 1970. It had a lot to do with making the country the richest on Earth. But production decreased just as steadily between 1970 and 2009. #-ad_banner-#Well, fortune is once again smiling on the U.S., and it seems America might have another chance at energy independence. The International Energy Agency (IEA) predicts the U.S. will become the world’s top oil producer by next year. While America’s new energy future is one of my favorite themes, I am not yet ready to… Read More

Oil production in the United States increased rapidly from the turn of the 20th century until 1970. It had a lot to do with making the country the richest on Earth. But production decreased just as steadily between 1970 and 2009. #-ad_banner-#Well, fortune is once again smiling on the U.S., and it seems America might have another chance at energy independence. The International Energy Agency (IEA) predicts the U.S. will become the world’s top oil producer by next year. While America’s new energy future is one of my favorite themes, I am not yet ready to bet on oil prices. The price of a barrel of crude was less than $30 for nearly two decades before prices surged in 2003. Easing tensions with big producers like Iran, combined with surging global production, could mean lower prices and trouble for some upstream companies like Exxon Mobil (NYSE: XOM).  That is why I am looking at one segment in particular that benefits from the volume of energy used, rather than prices.  Master limited partnerships (MLPs) are companies set up to manage energy infrastructure assets like pipelines, terminals and storage. These companies pay no taxes but pass their depreciation… Read More

My 2014 has sort of fallen out of the opening gate. I’ve been battling a tough case of the flu, something that they’ve always told me grows harder as one gets older, which sure seems true. I refuse to let it get me too far down, though. This is a great time for investors to evaluate the past 12 months, review opportunities both exploited and missed, and look ahead to a fresh start.  The S&P 500 has just wrapped up a strong year. Wall Street’s benchmark average had price appreciation of 29.6%. Its total return, including reinvested dividends, was 32.4%,… Read More

My 2014 has sort of fallen out of the opening gate. I’ve been battling a tough case of the flu, something that they’ve always told me grows harder as one gets older, which sure seems true. I refuse to let it get me too far down, though. This is a great time for investors to evaluate the past 12 months, review opportunities both exploited and missed, and look ahead to a fresh start.  The S&P 500 has just wrapped up a strong year. Wall Street’s benchmark average had price appreciation of 29.6%. Its total return, including reinvested dividends, was 32.4%, according to Bloomberg. That makes it the third-best year of the past two decades.   Interesting stuff. But as a great mind of our generation once posited, “So what?” #-ad_banner-#Should we expect a gain of 24.3% or 31.2% in 2014? No one knows. The fact is, we can expect, forecast or do a rain dance for whatever return we like. It doesn’t matter. Some rational guesses can be made, but there are simply too many variables to say with any degree of certainty what the year is going to look like 365 days from now. We do know… Read More

In our go-go society, convenience is everything. This has extended to every part of our lives, including food and entertainment. #-ad_banner-#In fact, this trend has become so pronounced that we’ve taken to getting these items from kiosks. For example, for many consumers, the ability to avoid interactions with people by simply swiping a credit card at a kiosk to get the night’s entertainment is a valuable service.  Formerly known as RedBox, Outerwall (Nasdaq: OUTR) is the epitome of this convenience. Its RedBox DVD rental kiosks are popping up like Starbucks’ (Nasdaq: SBUX) back in the early 2000s, with… Read More

In our go-go society, convenience is everything. This has extended to every part of our lives, including food and entertainment. #-ad_banner-#In fact, this trend has become so pronounced that we’ve taken to getting these items from kiosks. For example, for many consumers, the ability to avoid interactions with people by simply swiping a credit card at a kiosk to get the night’s entertainment is a valuable service.  Formerly known as RedBox, Outerwall (Nasdaq: OUTR) is the epitome of this convenience. Its RedBox DVD rental kiosks are popping up like Starbucks’ (Nasdaq: SBUX) back in the early 2000s, with several on a single street corner. Meanwhile, its legacy coin-counting kiosk division, Coinstar, continues to be the industry leader for turning loose change into dollars.  Beyond its coin and movie kiosks, Outerwall also has electronics recycling (EcoATM) and product-sampling (Sampleit) kiosks.  Outerwall fell off a cliff last year after releasing poor quarterly results. It’s now back on track, but still only managed to perform in line with the S&P 500 Index for the year. As a result, Outerwall has garnered the support of a couple of major hedge funds lately, including TPG-Axon Partners, which owns 5% of the… Read More

For as good as 2013 was for stocks, it was equally bad for bonds. #-ad_banner-#Bonds posted their lowest return since 1994. Investment-grade bonds posted their lowest return since 1980 and first loss since 1999. Last year was the only third year in the past 34 that bonds closed the year with a loss. This bout of weakness was driven by the Federal Reserve, which in May announced its intention to taper its quantitative easing stimulus program. That sent many investors fleeing bonds trying to avoid rising rates.  But that would be a mistake. One group of bonds is… Read More

For as good as 2013 was for stocks, it was equally bad for bonds. #-ad_banner-#Bonds posted their lowest return since 1994. Investment-grade bonds posted their lowest return since 1980 and first loss since 1999. Last year was the only third year in the past 34 that bonds closed the year with a loss. This bout of weakness was driven by the Federal Reserve, which in May announced its intention to taper its quantitative easing stimulus program. That sent many investors fleeing bonds trying to avoid rising rates.  But that would be a mistake. One group of bonds is in position to continue bucking that bearish trend — and deliver more than double the yield of the 10-year Treasury. While most classes of bonds were suffering sharp losses last year, there was one group that was virtually immune from that weakness. In fact, these bonds actually finished the year in the green, making them the top-performing class of bonds in 2013.  While the iShares 20+ Year Treasury Bond (NYSE: TLT) has fallen nearly 10% in the past 12 months and iShares iBoxx Investment Grade Corp Bond (NYSE: LQD) is down almost 1%, the iShares iBoxx High-Yield Corporate Bond (NYSE:… Read More

Real estate prices are rising, and in many cities, are back to where they were before the 2007-2008 housing market crash. And mortgage rates are still quite low on a historical basis. American Capital Agency Corp. (Nasdaq: AGNC) invests in residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by the U.S. government or a government-sponsored agency. Structured as a real estate investment trust (REIT), it distributes at least 90% of its taxable income to its shareholders. Here is what AGNC looks like over the past year: The… Read More

Real estate prices are rising, and in many cities, are back to where they were before the 2007-2008 housing market crash. And mortgage rates are still quite low on a historical basis. American Capital Agency Corp. (Nasdaq: AGNC) invests in residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by the U.S. government or a government-sponsored agency. Structured as a real estate investment trust (REIT), it distributes at least 90% of its taxable income to its shareholders. Here is what AGNC looks like over the past year: The stock is now above its 20-day (red line) and 50-day moving averages (blue line). Also notice that the red line has started to penetrate the blue line, which tells us momentum is currently on the upswing. Next is a chart comparing AGNC (green line) with the Dow Jones Equity REIT Index: #-ad_banner-#As you can see, the sector exchange-traded fund (ETF) is also on the upswing, but at a faster rate than AGNC. Therefore, AGNC has the potential to catch the index’s momentum. On the fundamental side, the consensus earnings per share (EPS) estimate for next year is $2.58,… Read More

Have you ever loved a particular product — but had no clue about the company that made it? #-ad_banner-#​ It’s easy to identify the companies behind some beloved consumer products, such as Apple’s gizmos or Coach’s leather goods. It’s just as easy to look up those companies and invest in their stocks.  Yet there are tons of great companies that make a variety of great products — but get little respect because investors fail to connect the products with the product makers.  Ever wonder who owns the Sharpie brand? Parker pens? Liquid Paper? Calphalon cookware?… Read More

Have you ever loved a particular product — but had no clue about the company that made it? #-ad_banner-#​ It’s easy to identify the companies behind some beloved consumer products, such as Apple’s gizmos or Coach’s leather goods. It’s just as easy to look up those companies and invest in their stocks.  Yet there are tons of great companies that make a variety of great products — but get little respect because investors fail to connect the products with the product makers.  Ever wonder who owns the Sharpie brand? Parker pens? Liquid Paper? Calphalon cookware? Even the popular baby products company Garco?  Newell Rubbermaid (NYSE: NWL) is one such overlooked company. Most investors know Newell Rubbermaid for its Rubbermaid brand of trash cans and food storage containers, but this diversified consumer products company makes a variety of other products that make the company itself a compelling investment.  Writing products is the company’s top segment when it comes to revenue generation, with home solutions in a close second, generating 30% and 28%, respectively. Making up the rest of its revenue are its tools, commercial products, and baby and parenting products segments.      … Read More

In the investing world, one shareholder’s disappointment is often another’s opportunity. #-ad_banner-#The stock I have in mind sold off nearly 6% after the company reported that its 1% year-over-year increase in third-quarter revenue fell just shy of analysts’ estimates.  Granted, growth has slowed in recent times for this… Read More

$1,265,836,000,000. This is the amount of cash that S&P 500 companies (excluding banks and other financial institutions) are currently sitting on. As of the beginning of the third quarter in 2013, the largest U.S. companies collectively held $1.27 trillion. That’s about 13.5% more than a year earlier.  Remember, this is just the 500 members of the S&P. The number also excludes the cash held by the other 9,500 public companies that don’t belong to the index.  As you can see from the chart below, corporate America has never been as flush with cash as it is right now. If you… Read More

$1,265,836,000,000. This is the amount of cash that S&P 500 companies (excluding banks and other financial institutions) are currently sitting on. As of the beginning of the third quarter in 2013, the largest U.S. companies collectively held $1.27 trillion. That’s about 13.5% more than a year earlier.  Remember, this is just the 500 members of the S&P. The number also excludes the cash held by the other 9,500 public companies that don’t belong to the index.  As you can see from the chart below, corporate America has never been as flush with cash as it is right now. If you converted all this money into $100 bills and stacked them up, the pile would stretch 800 miles high. And if it was spent at the rate of $250 million a year, it would take 5,100 years to exhaust the supply.   Where is this cash coming from? Well, borrowing accounts for some of it. But mostly, companies are simply generating cash faster than they are spending it. The widening difference between cash inflows and outflows has allowed businesses to sock away $150 billion over the past twelve months. As a result, cash stockpiles have ballooned from $1.11 trillion… Read More