One of the coolest things about the stock market is that money can be made regardless of the direction of a stock. I’ve often heard investors lament that they missed a sharp upward move. Often, these same investors will commit the investing sin of chasing stocks that have made extreme short-term moves to the upside in the hope of momentum carrying shares even higher. While upward momentum can and does take stocks higher, more often than not, prices will quickly retrace the upward spike.#-ad_banner-# This leaves the stock chasers jumping from one hot stock to the next, wondering why many… Read More

One of the coolest things about the stock market is that money can be made regardless of the direction of a stock. I’ve often heard investors lament that they missed a sharp upward move. Often, these same investors will commit the investing sin of chasing stocks that have made extreme short-term moves to the upside in the hope of momentum carrying shares even higher. While upward momentum can and does take stocks higher, more often than not, prices will quickly retrace the upward spike.#-ad_banner-# This leaves the stock chasers jumping from one hot stock to the next, wondering why many of their investments are losers. One solution to this dilemma is to learn how to short. Shorting allows investors to profit from downward moves in price. For those of you unfamiliar with shorting stocks, my recent article on shorting biotech stocks  describes the method. The same tactic can be applied to any stock, regardless of sector. Stocks that have spiked higher often drop in price. This is particularly true if the increase is due to questionable news, hype or other dubious reasons. Just like the stock chasers, short sellers scan the market for stocks that have soared higher in a… Read More

$388.5 billion is a staggering figure. It’s more than the entire economy of Thailand, Denmark, Colombia or the United Arab Emirates. And it’s how much operating cash flow was generated by America’s top 12 companies in 2012. Source: Thomson Reuters Of course, the old adage “It takes money to make money” applies. Many of these companies need to spend billions of dollars in research, infrastructure and other areas to generate that cash flow, and their actual take-home pay is a lot less. Exxon Mobil (NYSE: XOM), for example, spent more than $34 billion on capital expenditures last… Read More

$388.5 billion is a staggering figure. It’s more than the entire economy of Thailand, Denmark, Colombia or the United Arab Emirates. And it’s how much operating cash flow was generated by America’s top 12 companies in 2012. Source: Thomson Reuters Of course, the old adage “It takes money to make money” applies. Many of these companies need to spend billions of dollars in research, infrastructure and other areas to generate that cash flow, and their actual take-home pay is a lot less. Exxon Mobil (NYSE: XOM), for example, spent more than $34 billion on capital expenditures last year, sapping a considerable chunk of its $56 billion in operating cash flow. As a bit of silver lining, these companies spend much of that on goods and services offered by other companies, creating a virtuous circle of corporate spending. Here are the top 12 capex spenders of 2013. Source: Thomson Reuters The number of oil and gas firms in this group explains why an energy services provider like Schlumberger (NYSE: SLB) sports a $120 billion market value, but is not truly a household name. The True Measure Unfortunately, even as many Wall Street analysts wisely… Read More

One of the boldest energy predictions of the past 10 years is about to become reality. According to the International Energy Agency, the U.S. will eclipse Russia and Saudi Arabia and become the world’s top oil producer by 2015. And looking forward, that trend is going to accelerate, with the agency saying that booming production has the U.S. on track for energy independence in 20 years.#-ad_banner-# But while that bullish trend will give energy companies a big boost, it’s also going to have a huge effect on local and regional economies. High-production states such as North Dakota, South Dakota and… Read More

One of the boldest energy predictions of the past 10 years is about to become reality. According to the International Energy Agency, the U.S. will eclipse Russia and Saudi Arabia and become the world’s top oil producer by 2015. And looking forward, that trend is going to accelerate, with the agency saying that booming production has the U.S. on track for energy independence in 20 years.#-ad_banner-# But while that bullish trend will give energy companies a big boost, it’s also going to have a huge effect on local and regional economies. High-production states such as North Dakota, South Dakota and Nebraska already enjoy the lowest levels of unemployment in the country. And as energy companies continue to add tens of thousands of new employees, those strong local and regional economies will fuel record demand for temporary housing, permanent housing and commercial real estate. That’s why I’m bullish on a little-known group of real estate investment trusts (REITs) that are exclusively focused on strong regional economies in position to profit from the North American shale boom. Not only do these REITs have the ability to produce big gains, but they also carry some of the industry’s biggest yields that are more… Read More

Years ago, as I was strolling on a beachside boardwalk, I looked around and realized I was the only person in my area not wearing Crocs (Nasdaq: CROX), the somewhat ugly plastic shoes that had become all the rage. Clearly, these folks were not alone: Sales of Crocs soared from $14 million in 2004 to $355 million in 2006. Even though sales would rise another 139% in 2007 (to $847 million), investors who bought in while growth remained above 100% learned a terrible lesson. All fashion fads end — sometimes very badly. #-ad_banner-#Yet every few years, investors repeat… Read More

Years ago, as I was strolling on a beachside boardwalk, I looked around and realized I was the only person in my area not wearing Crocs (Nasdaq: CROX), the somewhat ugly plastic shoes that had become all the rage. Clearly, these folks were not alone: Sales of Crocs soared from $14 million in 2004 to $355 million in 2006. Even though sales would rise another 139% in 2007 (to $847 million), investors who bought in while growth remained above 100% learned a terrible lesson. All fashion fads end — sometimes very badly. #-ad_banner-#Yet every few years, investors repeat this classic mistake, assuming strong growth can continue for a very long period. Even the best retail brands eventually cool off. Sales at Nike (NYSE: NKE) for example, have risen just 7% annually since 2005, despite a compelling international expansion strategy and a broadening line of products. The reason for Nike’s recent phase of slower growth: The company’s brand is no longer a fad, and management has had to work hard to play up the performance attributes of its products. It was a logical response for that phase of the company’s growth cycle. That’s also a strategy deployed by Under… Read More

Once upon a time, using an American Express card could be nearly impossible. For some consumers, it may have felt like rejection to hear a cashier say, “Sorry, we don’t take American Express.” However, as an AmEx cardholder myself, I always looked at it as a compliment — as though I and other AmEx cardholders were a member of an exclusive club. However, that club isn’t as exclusive anymore. Yes, American Express (NYSE: AXP) remains the pinnacle of credit cards, signifying success, exclusivity and financial freedom. But while MasterCard (NSYE: MA) and Visa (NYSE: V) have seen their card portfolios… Read More

Once upon a time, using an American Express card could be nearly impossible. For some consumers, it may have felt like rejection to hear a cashier say, “Sorry, we don’t take American Express.” However, as an AmEx cardholder myself, I always looked at it as a compliment — as though I and other AmEx cardholders were a member of an exclusive club. However, that club isn’t as exclusive anymore. Yes, American Express (NYSE: AXP) remains the pinnacle of credit cards, signifying success, exclusivity and financial freedom. But while MasterCard (NSYE: MA) and Visa (NYSE: V) have seen their card portfolios shrink over the past couple of years as many consumers have cut up their cards, American Express has seen its portfolio grow. #-ad_banner-# The number of merchants and venues that accept American Express has grown exponentially over the past half-decade. While some cardholders might consider this a form of brand dilution, investors in AXP should consider it great news. American Express’ merchant fees have been on the decline, narrowing toward what MasterCard and Visa charge and allowing more businesses to accept AmEx. Merchants are becoming increasingly more open to accepting American Express, especially in light of the fact that AmEx… Read More

Pairs trading, once mainly a strategy for institutions, became possible for individuals with the advent of the Internet, thus giving all traders access to a wealth of real-time information and online brokerages.#-ad_banner-# It is a market-neutral strategy that takes advantage of a certain imbalance in the stocks, funds, bonds, commodities or currencies in focus. In other words, it does not depend on the broader market making a directional move. Pairs trading involves a long position and a short position in a pair of highly correlated assets, and the strategy is thought to lower risk because it creates a natural hedge. Read More

Pairs trading, once mainly a strategy for institutions, became possible for individuals with the advent of the Internet, thus giving all traders access to a wealth of real-time information and online brokerages.#-ad_banner-# It is a market-neutral strategy that takes advantage of a certain imbalance in the stocks, funds, bonds, commodities or currencies in focus. In other words, it does not depend on the broader market making a directional move. Pairs trading involves a long position and a short position in a pair of highly correlated assets, and the strategy is thought to lower risk because it creates a natural hedge. Traditionally, investors would look for two stocks in the same sector, preferably in the same subsector, that showed good positive correlation. Therefore, if the two stocks were to diverge, a pairs trader would buy the stock of the underperforming company and sell short the stock of the outperforming company. The trade would be profitable if the spread between the two stocks narrowed (that is, the stocks’ prices again moved closer together). Looked at this way, pairs trades are simply market bets on a mean-reversion move. Another pairs trading strategy is to bet on the continued outperformance of one stock versus… Read More

Here at StreetAuthority, we’re constantly on the lookout for stocks worthy of our Top 10 Stocks advisory — and a stock doesn’t attain that status by accident. One energy company in particular is a perennial Top 10 Stocks favorite. I profiled this company two years ago, calling it “the safest oil stock to buy.” The results since then haven’t been bad at all. Including dividends, investors who held shares of ConocoPhillips (NYSE: COP) enjoyed a compound annual growth rate of 31.8%, handily outperforming the S&P 500 Index’s rate of 27.3%. One might think that COP’s chart indicates its run is… Read More

Here at StreetAuthority, we’re constantly on the lookout for stocks worthy of our Top 10 Stocks advisory — and a stock doesn’t attain that status by accident. One energy company in particular is a perennial Top 10 Stocks favorite. I profiled this company two years ago, calling it “the safest oil stock to buy.” The results since then haven’t been bad at all. Including dividends, investors who held shares of ConocoPhillips (NYSE: COP) enjoyed a compound annual growth rate of 31.8%, handily outperforming the S&P 500 Index’s rate of 27.3%. One might think that COP’s chart indicates its run is done. Quite the contrary. Still The Safest Hands down, ConocoPhillips’ proven reserves are in some of the most accessible — both physically and politically — on the planet. At the end of last year, 78% of its proven reserves (oil or gas known to be in the ground in areas the company drills) were in North America or Western Europe. Now, “safe oil” is also expensive oil. More hospitable and developed countries mean political stability but more regulation. That’s the trade-off for uninterrupted flow. (There’s still money to be made on cheaper, less safe oil, such as… Read More

“There’s no shame in holding cash.” It’s a refrain you hear from many fund managers these days after witnessing the market grind ever higher. And no hedge fund manager has uttered that phrase more than Baupost Capital’s Seth Klarman. The legendary value investor has actually started returning money to clients, finding few real bargains in this market.#-ad_banner-# But when Klarman does spot an investment opportunity, he goes big. Lately, he’s been building sizable stakes in a pair of young companies that few would consider to be deep value plays. They are contrarian plays from a contrarian investor. Idenix: A Blockbuster… Read More

“There’s no shame in holding cash.” It’s a refrain you hear from many fund managers these days after witnessing the market grind ever higher. And no hedge fund manager has uttered that phrase more than Baupost Capital’s Seth Klarman. The legendary value investor has actually started returning money to clients, finding few real bargains in this market.#-ad_banner-# But when Klarman does spot an investment opportunity, he goes big. Lately, he’s been building sizable stakes in a pair of young companies that few would consider to be deep value plays. They are contrarian plays from a contrarian investor. Idenix: A Blockbuster Or A Blowup? An estimated 150 million people are infected with hepatitis C, making it one of the most widespread diseases in the world for which current treatments are considered to be inadequate. Though there are current treatments such as Interferon, a recent Wall Street Journal article noted that “a growing number of people infected with hepatitis C are putting off therapy, choosing instead to roll the dice and wait for a new generation of drugs to become available.” First out of the gate is Gilead Sciences (Nasdaq: GILD) and its sofosbuvir drug, which got… Read More

For a landlord, there’s absolutely no better tenant than this one. Every year, the 12,000 employees at the U.S. government’s General Services Administration (GSA) are tasked with spending roughly $66 billion dollars on all of the goods and services needed to keep our government running. The biggest expense: real estate. Although Uncle Sam owns nearly 10,000 buildings, he’s also the nation’s largest renter. The government never bounces a rent check, and tends to look for long-term, stable leases. And as it turns out, renting to the government is quite profitable. A top landlord to Uncle Sam throws off sterling cash… Read More

For a landlord, there’s absolutely no better tenant than this one. Every year, the 12,000 employees at the U.S. government’s General Services Administration (GSA) are tasked with spending roughly $66 billion dollars on all of the goods and services needed to keep our government running. The biggest expense: real estate. Although Uncle Sam owns nearly 10,000 buildings, he’s also the nation’s largest renter. The government never bounces a rent check, and tends to look for long-term, stable leases. And as it turns out, renting to the government is quite profitable. A top landlord to Uncle Sam throws off sterling cash flow, which translates into a rock-solid 7% dividend yield for investors. That’s a lot of reward for little risk.  I’m talking about Government Properties Income Trust (NYSE: GOV), a real estate investment trust (REIT) that leases more than 10 million square feet spread across 82 buildings, mostly to the public sector. (Roughly 68% of revenues are derived from the U.S. government, another 20% from state governments, 7% from the private sector, and 5% from the United Nations).  A sample of tenants includes: — The Centers for Disease Control (CDC) in Atlanta — Many of the Federal Bureau of Investigation’s… Read More