In a fairly rapid time, the solar power industry has been able to tackle two major challenges that threatened to decimate the industry.#-ad_banner-# First, far much too capacity led to rapidly falling prices, which pushed the industry’s weakest players into bankruptcy and has left a few more of them struggling to stay afloat. Restrained capacity growth has become the theme of 2013, enabling demand to catch up, and prices on solar panels are no longer plunging at a rapid clip. Second, the steep fall in solar panel prices has pushed this technology a lot closer to “grid parity,” compared to… Read More

In a fairly rapid time, the solar power industry has been able to tackle two major challenges that threatened to decimate the industry.#-ad_banner-# First, far much too capacity led to rapidly falling prices, which pushed the industry’s weakest players into bankruptcy and has left a few more of them struggling to stay afloat. Restrained capacity growth has become the theme of 2013, enabling demand to catch up, and prices on solar panels are no longer plunging at a rapid clip. Second, the steep fall in solar panel prices has pushed this technology a lot closer to “grid parity,” compared to fossil fuels. If natural gas prices had not also plunged as well in recent years, demand for solar would really be booming. But gas prices have fallen, and it’s unlikely they will spike higher in coming years. Gas drillers will simply boost output any time prices rise, which is OK with an industry that has learned to become profitable with natural gas at $3.50 to $4 per thousand cubic feet (Mcf). Even as gas rallied to $5 per Mcf, solar still couldn’t compete, at least not without government tax credits (that are set to expire in the U.S. in 2016,… Read More

When chip equipment maker Applied Materials (Nasdaq: AMAT) surpassed $10 billion in annual revenue for the first time in fiscal 2011, its competitors could only sigh. The company’s industry leadership was never in doubt, but a series of acquisitions gave it such a broad suite of offerings that rivals wondered if they could ever take market share again. Applied Materials’ massive market presence eventually led its two biggest rivals, Lam Research (Nasdaq: LRCX) and Novellus Systems to join forces in 2011, but even that combined entity has yet to crack the $5 billion annual revenue barrier. KLA-Tencor (Nasdaq: KLAC) is… Read More

When chip equipment maker Applied Materials (Nasdaq: AMAT) surpassed $10 billion in annual revenue for the first time in fiscal 2011, its competitors could only sigh. The company’s industry leadership was never in doubt, but a series of acquisitions gave it such a broad suite of offerings that rivals wondered if they could ever take market share again. Applied Materials’ massive market presence eventually led its two biggest rivals, Lam Research (Nasdaq: LRCX) and Novellus Systems to join forces in 2011, but even that combined entity has yet to crack the $5 billion annual revenue barrier. KLA-Tencor (Nasdaq: KLAC) is also in Applied Materials’ rearview mirror, with only $3 billion in annual sales. And a handful of smaller companies bring up the rear, none of which have even $1 billion in annual revenue. (Note: Only U.S. companies have been considered here.) Lost in the crowd is little-known Axcelis Technologies (Nasdaq: ACLS), which had $400 million to $500 million in annual sales a decade ago, but has slumped badly in recent years, with sales falling to just $200 million in 2012. Rivals such as Applied Materials used their financial firepower to acquire or develop the products that Axcelis had been… Read More

Any time a company exceeds or lags quarterly profit forecasts by a big margin, the resulting share price action is quite predictable. Indeed, the list of stocks making recent 52-week highs are dominated by companies that posted stellar third-quarter results.#-ad_banner-# But the market action doesn’t always play out that way. On occasion, a company will handily surpass consensus profit forecasts, analysts will boost their outlook for the next year, and yet the stock price falls in value. How do you explain such a disconnect? Perhaps some investors were looking for even greater upside than the company delivered. Or perhaps investors… Read More

Any time a company exceeds or lags quarterly profit forecasts by a big margin, the resulting share price action is quite predictable. Indeed, the list of stocks making recent 52-week highs are dominated by companies that posted stellar third-quarter results.#-ad_banner-# But the market action doesn’t always play out that way. On occasion, a company will handily surpass consensus profit forecasts, analysts will boost their outlook for the next year, and yet the stock price falls in value. How do you explain such a disconnect? Perhaps some investors were looking for even greater upside than the company delivered. Or perhaps investors have begun rotating out of the company’s industry, selling off all stocks in the group on an indiscriminate basis. Whatever the reason, a combination of surging profits and falling share prices is a nearly perfect setup. I reviewed several hundred stocks that topped third-quarter profit estimates by at least 20%. Predictably, the vast majority surged higher in response. But I was able to come across three dozen companies that fit the backdrop of “good earnings/bad share response.” From there, I tossed out any stocks in which analysts lowered their 2014 profit forecasts after the quarterly conference call. If a company… Read More

I grew up in and still live in the South. During the dog days of summer in July and August, when folks say, “It’s not the heat, it’s the humidity,” believe me, it’s the heat AND the humidity. Everything wilts. People move more slowly. Business slows down a little, too. There’s a real and noticeable effect. The fixed-income markets — represented by Treasurys, corporate and municipal bonds, and other income-oriented investments — experienced the dog days firsthand this summer as investors fretted over the prospect of the Federal Reserve scaling back its bond purchases, also known as tapering. Look what… Read More

I grew up in and still live in the South. During the dog days of summer in July and August, when folks say, “It’s not the heat, it’s the humidity,” believe me, it’s the heat AND the humidity. Everything wilts. People move more slowly. Business slows down a little, too. There’s a real and noticeable effect. The fixed-income markets — represented by Treasurys, corporate and municipal bonds, and other income-oriented investments — experienced the dog days firsthand this summer as investors fretted over the prospect of the Federal Reserve scaling back its bond purchases, also known as tapering. Look what happened to the 10-year Treasury: #-ad_banner-#Over the summer, yields nearly doubled, shooting from 1.6% to almost 3%. Naturally, this caused plenty of chaos in the bond market. However, chaos always brings opportunity. When it comes to adding a fixed-income component to an investor’s asset allocation and providing an above-average income stream, preferred stocks are one of the most useful tools available. Preferred stocks are typically classified as part of the issuing company’s debt structure. However, unlike bonds, preferreds are issued in face values smaller than $1,000 and are junior to bank loans and bonds. Preferreds are, however, senior… Read More

Imagine pocketing checks from an investment throwing off 7% interest.  It’s not easy to picture in today’s low-interest environment with saving accounts paying less than 1% and the S&P 500 carrying a dividend yield just under 2%.  Now, imagine pocketing dividends from a company yielding 7% with rock-solid business income all but backed by, and coming directly from, the federal government. #-ad_banner-#Hard to believe, but an investment like this exists. Around the time that I first told High-Yield Investing readers about the company last month, one person was so excited about it, he was inspired to email me this question:  “I… Read More

Imagine pocketing checks from an investment throwing off 7% interest.  It’s not easy to picture in today’s low-interest environment with saving accounts paying less than 1% and the S&P 500 carrying a dividend yield just under 2%.  Now, imagine pocketing dividends from a company yielding 7% with rock-solid business income all but backed by, and coming directly from, the federal government. #-ad_banner-#Hard to believe, but an investment like this exists. Around the time that I first told High-Yield Investing readers about the company last month, one person was so excited about it, he was inspired to email me this question:  “I was recently reading about Government Properties Income Trust (NYSE: GOV). With monthly income plus special tax preference, it seems almost like a no-lose stock. Is it too good to ignore?” — David K. I wouldn’t call it a “no-lose” proposition, but GOV is definitely worthy of consideration.  As the name implies, Government Properties Income Trust owns buildings that are leased to state and federal government agencies. The company owns 82 properties from New York to California that hold more than 10 million square feet of rentable space. Virtually all (94%) of the income generated by these buildings comes from… Read More

In this market, finding a stock with strong upside that also happens to have come down well off of its 52-week high isn’t as easy as it may seem.#-ad_banner-# But thanks to what I call the performance protection trade, there are high-fliers that have pulled back. Stocks such as Tesla Motors (Nasdaq: TSLA) and Facebook (Nasdaq: FB) fit this description well, as does auto and equipment rental giant Hertz Global Holdings (NYSE: HTZ). HTZ has rewarded shareholders with a 40% gain in 2013, easily besting the benchmark S&P 500 Index’s 24% year-to-date showing. However, at the time… Read More

In this market, finding a stock with strong upside that also happens to have come down well off of its 52-week high isn’t as easy as it may seem.#-ad_banner-# But thanks to what I call the performance protection trade, there are high-fliers that have pulled back. Stocks such as Tesla Motors (Nasdaq: TSLA) and Facebook (Nasdaq: FB) fit this description well, as does auto and equipment rental giant Hertz Global Holdings (NYSE: HTZ). HTZ has rewarded shareholders with a 40% gain in 2013, easily besting the benchmark S&P 500 Index’s 24% year-to-date showing. However, at the time of its 52-week high of $27.75 in mid-July, HTZ was up more than 70%. Shares sold off through the rest of the summer before retesting that high in September. Then, in late September, HTZ suffered a huge one-day sell-off that drove it below both the 50-day and 200-day moving averages. HTZ currently trades near $22.80, about 17% off its recent highs and right about where it traded in mid-April.   The massive sell-off in HTZ came swiftly following the company’s downward revision of guidance for 2013. The company said it now expects full-year revenue will be between $10.8 billion and… Read More

In the world of identity theft, it doesn’t pay to assume “it won’t happen to me.”#-ad_banner-# In fact, with an average of a new victim every three seconds in 2012 — and the rate of breaches seeming to increase at a faster pace than the national debt — you might as well assume that it will happen to you and be prepared when it does. Identity theft can dig you a debt ditch deeper than the Mariana Trench. But I’ve found a $1.4 billion company — a mere pollywog among the multi-billion-dollar big fish in this… Read More

In the world of identity theft, it doesn’t pay to assume “it won’t happen to me.”#-ad_banner-# In fact, with an average of a new victim every three seconds in 2012 — and the rate of breaches seeming to increase at a faster pace than the national debt — you might as well assume that it will happen to you and be prepared when it does. Identity theft can dig you a debt ditch deeper than the Mariana Trench. But I’ve found a $1.4 billion company — a mere pollywog among the multi-billion-dollar big fish in this sector — that’s throwing out lifelines to consumers and dishing out profits to investors. In fact, this little gem just reported record revenues and hundreds of thousands of new customers in the third quarter. Its IPO went for $9 just over a year ago, and newcomers to the stock are basking in 75% gains. We’ll take a closer look at the company in a moment, but first, let’s talk about what drives this crime today, how big the business of identity theft has become, and what is being done to protect people like you and me. A $21 Million Violation… Read More

Home furnishings retailer Restoration Hardware Holdings (NYSE: RH) hasn’t been publicly traded for long, but so far, the company has made the most of it. Since it went public on Nov. 2, 2012, the stock has rallied more than 200%. For its initial public offering, the company sold 5.2 million shares at $24 apiece, which valued the deal at about $124 million. Leading up to its IPO, the company saw double-digit revenue growth for 10 consecutive quarters, and over the past 12 months, top-line growth has continued. Many analysts have adjusted their price targets higher. Jefferies, for example, raised its… Read More

Home furnishings retailer Restoration Hardware Holdings (NYSE: RH) hasn’t been publicly traded for long, but so far, the company has made the most of it. Since it went public on Nov. 2, 2012, the stock has rallied more than 200%. For its initial public offering, the company sold 5.2 million shares at $24 apiece, which valued the deal at about $124 million. Leading up to its IPO, the company saw double-digit revenue growth for 10 consecutive quarters, and over the past 12 months, top-line growth has continued. Many analysts have adjusted their price targets higher. Jefferies, for example, raised its price target from $68 to $88 in September. The company’s next earnings announcement is scheduled for mid-December. The fact that a company selling high-end home furnishings can flourish in a slowly recovering economy is a good sign not only for Restoration Hardware, but also for the housing market. While certainly not sporting as spectacular gains as RH, other home furnishings retailers have also rallied. Bed Bath & Beyond (Nasdaq: BBBY) and Williams-Sonoma (NYSE: WSM) have seen their share prices rise about 25% to 30% in the past year, reflecting improvements in the housing market.    Restoration Hardware caught the attention… Read More

It goes without saying that the stock market is an extremely competitive arena. Money management firms spend millions to find profitable niches, strategies and tactics. Where short-term trading is concerned, the advent of high-frequency trading has made speed more important than ever. This niche has become so competitive that some firms have relocated their operations to their stock exchange’s facilities to get their orders to the exchange before the competition’s.#-ad_banner-# Fortunately, long-term investors don’t have to concern themselves with the arms race in high-frequency trading. While large firms fight it out for microsecond advantages, long-term investors can exploit time-tested niches. Read More

It goes without saying that the stock market is an extremely competitive arena. Money management firms spend millions to find profitable niches, strategies and tactics. Where short-term trading is concerned, the advent of high-frequency trading has made speed more important than ever. This niche has become so competitive that some firms have relocated their operations to their stock exchange’s facilities to get their orders to the exchange before the competition’s.#-ad_banner-# Fortunately, long-term investors don’t have to concern themselves with the arms race in high-frequency trading. While large firms fight it out for microsecond advantages, long-term investors can exploit time-tested niches. One such niche outperformed the S&P 500 Index by an average of 13% from January 1995 to July 2012, including a period of 45% outperformance between 2000 and 2005. However, the success of this strategy hasn’t captured investors’ interest. One reason, to be frank, is that it’s a little boring in comparison to other investing strategies. Another is that after the catalyst for this strategy occurs, shares often trade lower for the first month or so. A third is that this strategy was decimated during the 2008 financial crisis. These factors appear to work in unison to spook many investors… Read More

Who says that the market doesn’t trade off of inside information? The short interest in glass and fiber maker Corning (NYSE: GLW) more than doubled in the two weeks ended Oct. 31, to 83 million shares. (Data were released Nov. 11.) The short-interest surge came just days before Apple (Nasdaq: AAPL) said Nov. 5 that it was going to work with GT Advanced Technologies (Nasdaq: GTAT) in the production of touch screens at an Apple manufacturing facility. To be sure, the deal was a great win for GTAT, as my colleague David Goodboy noted a few… Read More

Who says that the market doesn’t trade off of inside information? The short interest in glass and fiber maker Corning (NYSE: GLW) more than doubled in the two weeks ended Oct. 31, to 83 million shares. (Data were released Nov. 11.) The short-interest surge came just days before Apple (Nasdaq: AAPL) said Nov. 5 that it was going to work with GT Advanced Technologies (Nasdaq: GTAT) in the production of touch screens at an Apple manufacturing facility. To be sure, the deal was a great win for GTAT, as my colleague David Goodboy noted a few days ago. But GTAT’s win shouldn’t be seen as a real impediment to Corning. And short sellers, even as they traded on this news early, will still likely get burned — because Corning is shaping up to be both a deep value play and a growth play. Merrill Lynch’s Wamsi Mohan was one of the first analysts to weigh on the Apple/GTAT linkup: “This announcement does not change our opinion of the current limitations of Sapphire (or of) the price and feature advantage of Gorilla Glass. In our view the applications are likely to be more niche and Gorilla’s position… Read More