When it comes to financial dealings, cash is still king, accounting for 85% of global transactions.  Still, credit card usage has been growing steadily for a decade. That has helped shares of Visa (NYSE: V) rise roughly 25% annually since the company’s 2008 initial public offering (IPO). Now, all eyes are on the mobile payments market. This industry is expected to grow from $50 billion in 2014 to nearly $150 billion by 2019, according to the research firm Forrester. That sets the stage for another investment opportunity in the financial transactions market. #-ad_banner-#In July, PayPal Holdings (Nasdaq: PYPL) was spun… Read More

When it comes to financial dealings, cash is still king, accounting for 85% of global transactions.  Still, credit card usage has been growing steadily for a decade. That has helped shares of Visa (NYSE: V) rise roughly 25% annually since the company’s 2008 initial public offering (IPO). Now, all eyes are on the mobile payments market. This industry is expected to grow from $50 billion in 2014 to nearly $150 billion by 2019, according to the research firm Forrester. That sets the stage for another investment opportunity in the financial transactions market. #-ad_banner-#In July, PayPal Holdings (Nasdaq: PYPL) was spun off from corporate parent eBay (Nasdaq: EBAY). The spin-off was long overdue. As long as PayPal was officially a property of eBay, there was little chance it would partner with Amazon.com (Nasdaq: AMZN), one of eBay’s largest competitors. Now that PayPal is independent, the partnership restrictions related to eBay are gone. A potential partnership with the largest online retailer is a huge market opportunity and could be a huge catalyst for the stock price. PayPal has been a phenomenal growth story. Launched in 1998, the company was one of the first to enter the electronic transfer space. In 2002, it… Read More

Although many investors like to see companies spend their cash on dividends, internal investments and acquisitions, share buybacks  are an equally valid use of cash. In fact, when share prices are falling, such repurchases may actually be the best use of cash. To my mind, buybacks in tandem with dividends (what we here at StreetAuthority call “Total Yield”), underpins one of the most profitable opportunities in investing. #-ad_banner-#Get A Total Yield From Your Investments Some investors are no fan of buybacks. They note that repurchases made when a stock is trading near 52-week highs appear ill-timed. But the main… Read More

Although many investors like to see companies spend their cash on dividends, internal investments and acquisitions, share buybacks  are an equally valid use of cash. In fact, when share prices are falling, such repurchases may actually be the best use of cash. To my mind, buybacks in tandem with dividends (what we here at StreetAuthority call “Total Yield”), underpins one of the most profitable opportunities in investing. #-ad_banner-#Get A Total Yield From Your Investments Some investors are no fan of buybacks. They note that repurchases made when a stock is trading near 52-week highs appear ill-timed. But the main purpose of buybacks is to reduce shares outstanding, and that always leads to a direct increase in earnings per share. Even when share prices are high, share buybacks can benefit the company. Companies are not like individual investors which measure their returns on the price of stocks compared to the price when they purchased. While companies are under no obligation to complete their authorized buyback programs when the market hits a rough patch, repurchase programs are typically instituted with a multi-quarter time horizon, and companies rarely cease such programs out of fear when the market is falling. Moreover, a fixed… Read More

Investors are thrilled to say goodbye to the month of August. Extreme levels of volatility and stunning market drops have given investors a sense of whiplash for the past few weeks. #-ad_banner-#But the chaos brought a silver lining: At least we now know which stocks will hold their own in a sharp market pullback, and which ones represent too much risk and volatility. Case in point: the relatively muted action in shares of Dow component 3M Co. (NYSE: MMM). This stock had been slipping out of favor before the market meltdown, thanks to a broader malaise among industrial stocks. A… Read More

Investors are thrilled to say goodbye to the month of August. Extreme levels of volatility and stunning market drops have given investors a sense of whiplash for the past few weeks. #-ad_banner-#But the chaos brought a silver lining: At least we now know which stocks will hold their own in a sharp market pullback, and which ones represent too much risk and volatility. Case in point: the relatively muted action in shares of Dow component 3M Co. (NYSE: MMM). This stock had been slipping out of favor before the market meltdown, thanks to a broader malaise among industrial stocks. A modest reduction in 2015 and 2016 consensus EPS forecasts hasn’t helped either, after 3M reported a pair of tepid quarters. But when true adversity struck, shares held their own, as if investors suddenly remembered all of the reasons why 3M is a stock to hold through thick and thin. As you can see below, 3M’s stock lost roughly 3% of its value at a time when the broader market, represented below by the S&P 500, fell more than twice as much, and many mid-cap and small-cap stocks fell by double-digits.   A Cash Generator With Growing Dividends Even in… Read More

The Obama Administration began August by proposing new rules for the EPA to cut carbon dioxide (CO2) emissions at U.S. coal-fired electricity plants by 32% from the 2005 levels through 2030. This was followed last week by another proposal to cut methane emissions from oil and gas drilling by 40% through 2025. Much of these emissions proposals depend on the development of some form of Carbon Capture & Storage (CCS) technology: the process of capturing the carbon dioxide released by burning fossil fuels could finally end the battle between the environment and a growing global economy hungry for cheap fuel… Read More

The Obama Administration began August by proposing new rules for the EPA to cut carbon dioxide (CO2) emissions at U.S. coal-fired electricity plants by 32% from the 2005 levels through 2030. This was followed last week by another proposal to cut methane emissions from oil and gas drilling by 40% through 2025. Much of these emissions proposals depend on the development of some form of Carbon Capture & Storage (CCS) technology: the process of capturing the carbon dioxide released by burning fossil fuels could finally end the battle between the environment and a growing global economy hungry for cheap fuel sources like oil and coal. #-ad_banner-#Besides the latest push from the United States, China has also said that it would build carbon capture coal plants to reduce emissions. A report by Schlumberger and the SBC Energy Institute projects commercial viability of CCS by 2020 with U.S. government commitments for 27 large projects. The technology has been expensive to develop, limiting the players that could be involved. And because of the expense to research and development and the uncertainty around CCS technology, few companies have built a name in the space. But one company has regularly been a recipient of government… Read More

 Investors don’t often encounter “heads-I-win, tails-you-lose” scenarios, where they can get large gains from a stock even if the underlying firm has a major setback.  But that’s the scenario now in place for venerable defense contractor Northrop-Grumman Corp. (NYSE: NOC). The company may or may not win a key new contract. In either case, this is a stock to own.  Northrop-Grumman, best known for the B-2 stealth bomber, is in a tight race for an estimated $90-billion contract to design and build a successor to the B-2. The Air Force wants a next-generation long-range bomber that incorporates the latest stealth technology, nuclear weapons capability and perhaps the ability to be flown without a pilot. A contract announcement should come any time now.  For Northrop-Grumman, a contract win would lead to strong sales and profits for many… Read More

 Investors don’t often encounter “heads-I-win, tails-you-lose” scenarios, where they can get large gains from a stock even if the underlying firm has a major setback.  But that’s the scenario now in place for venerable defense contractor Northrop-Grumman Corp. (NYSE: NOC). The company may or may not win a key new contract. In either case, this is a stock to own.  Northrop-Grumman, best known for the B-2 stealth bomber, is in a tight race for an estimated $90-billion contract to design and build a successor to the B-2. The Air Force wants a next-generation long-range bomber that incorporates the latest stealth technology, nuclear weapons capability and perhaps the ability to be flown without a pilot. A contract announcement should come any time now.  For Northrop-Grumman, a contract win would lead to strong sales and profits for many years to come.   A contract loss may spell trouble — but that would, paradoxically, be a good thing for NOC shareholders.   A Wide-Open Race  Northrup-Grumman is bidding for the contract against rivals Lockheed Martin Corp. (NYSE: LMT) and Boeing Co. (NYSE: BA), which have teamed up to jointly pursue the award. The race is likely neck-and-neck, although analysts at Goldman Sachs think Northrop-Grumman has an edge thanks to its long, successful history with the B-2, and a design team renowned for aircraft innovation.  Moreover, the firm often acts as a key supplier in other plane programs, even when it doesn’t act as the lead supplier. For instance, a portion of the fuselage… Read More

In business, progress doesn’t occur in a vacuum. Innovation arises out of need, and is often adapted from concepts or technologies initially developed in unrelated industries. For instance, who could have guessed that Netflix Inc. (Nasdaq: NFLX) would inspire the creation of an emerging leader in digital education? That company, Chegg, Inc. (NYSE: CHGG), is a fast-evolving small-cap with an online education platform for high school and college students. Streaming media has become this company’s “killer app.” Chegg’s roots go back to 2001, when several students at the University of Iowa launched a textbook rental website. With the help of… Read More

In business, progress doesn’t occur in a vacuum. Innovation arises out of need, and is often adapted from concepts or technologies initially developed in unrelated industries. For instance, who could have guessed that Netflix Inc. (Nasdaq: NFLX) would inspire the creation of an emerging leader in digital education? That company, Chegg, Inc. (NYSE: CHGG), is a fast-evolving small-cap with an online education platform for high school and college students. Streaming media has become this company’s “killer app.” Chegg’s roots go back to 2001, when several students at the University of Iowa launched a textbook rental website. With the help of outside investors, the founders expanded on that premise, deploying a Netflix-type business model. By 2010, Chegg had rented more than two million textbooks through a mail-based distribution system and was generating $149 million a year of revenue: The key virtue: students found that simply renting textbooks was cheaper than owning them. These days, Chegg does much more than rent textbooks (though that service still accounts for roughly half of the company’s $300 million annual revenue base). Over the past several years, the company has made a big push into the dynamic digital education space. Chegg now offers a series of… Read More

When picking stocks, I favor established leaders — typically larger companies that have solid balance sheets and can dominate in flourishing industries. Stick with those types of stocks, and it’s tough to go wrong. #-ad_banner-# Tough, but not impossible. Indeed, there’s a distinct danger to this strategy in the electronic payments space, where industry front-runner PayPal Holdings Inc. (Nasdaq: PYPL) generated lots of buzz with its July spin-off from e-commerce stalwart eBay Inc. (Nasdaq: EBAY). Many market watchers probably see PayPal as a virtually bulletproof investment. After all, it has been number one in electronic payments for nearly two decades… Read More

When picking stocks, I favor established leaders — typically larger companies that have solid balance sheets and can dominate in flourishing industries. Stick with those types of stocks, and it’s tough to go wrong. #-ad_banner-# Tough, but not impossible. Indeed, there’s a distinct danger to this strategy in the electronic payments space, where industry front-runner PayPal Holdings Inc. (Nasdaq: PYPL) generated lots of buzz with its July spin-off from e-commerce stalwart eBay Inc. (Nasdaq: EBAY). Many market watchers probably see PayPal as a virtually bulletproof investment. After all, it has been number one in electronic payments for nearly two decades and currently has nearly 170 million active users in 200 countries. PayPal’s market capitalization of more than $45 billion already exceeds that of eBay by nearly $13 billion.       Plus, recent performance is promising. In the second quarter, PayPal accounted for about half of eBay’s $4.4 billion of revenue and reported large increases in key growth metrics such as the number of active customer accounts and transactions per account. Analysts foresee revenue of nearly $11 billion next year and a 17% pace of earnings growth in the coming five years.   Mobile Payments: A Breeding Ground For Competition… Read More

For some companies, specialization is the path to success. For others, it is diversification. One fast-growing mid-cap that favors the latter approach is global consumer products distributor Jarden Corp. (NYSE: JAH). #-ad_banner-# Thanks to a steady slate of acquisitions over the years, this company now has a diverse product portfolio of 120 leading brands. These range from Bicycle playing cards and Coleman camping equipment, to Sunbeam home appliances and Rawlings baseball gear. The company’s distribution channels are extensive as well, and include buying clubs, retail chains, mass merchants and direct-to-consumer channels (such as the Internet). By continually adding top brands… Read More

For some companies, specialization is the path to success. For others, it is diversification. One fast-growing mid-cap that favors the latter approach is global consumer products distributor Jarden Corp. (NYSE: JAH). #-ad_banner-# Thanks to a steady slate of acquisitions over the years, this company now has a diverse product portfolio of 120 leading brands. These range from Bicycle playing cards and Coleman camping equipment, to Sunbeam home appliances and Rawlings baseball gear. The company’s distribution channels are extensive as well, and include buying clubs, retail chains, mass merchants and direct-to-consumer channels (such as the Internet). By continually adding top brands and broadening their sales channel exposure, Jarden has posted one the best expansion records of the past decade. Since 2005, sales have nearly tripled to $8.3 billion, and profits jumped nearly ten-fold to $0.98 per share. Not surprisingly, shares of the firm are crushing the market.     After such a steep run-up, it’s also no surprise that Jarden now sports a frothy price-to-earnings (P/E) ratio. At 57, it’s more than twice the stock’s five-year average of 27. While this could indicate that shares are topping out, I believe they still have market-beating gain potential in the coming 12 months,… Read More

Here at StreetAuthority, we repeatedly stress the importance of compounding. It’s the best way we know to leverage small investments into major gains — if you have the patience to ride them out over the long haul. You’ll often find such opportunities among small cap stocks. According to Morningstar, small caps outperform large-caps by two percentage points per year over the long term. #-ad_banner-# One of my favorite compounders is Heico Corporation (NYSE: HEI), a mid-cap aerospace and defense company which has a compounding record that blows away its peer group. Over the past 20 years, this… Read More

Here at StreetAuthority, we repeatedly stress the importance of compounding. It’s the best way we know to leverage small investments into major gains — if you have the patience to ride them out over the long haul. You’ll often find such opportunities among small cap stocks. According to Morningstar, small caps outperform large-caps by two percentage points per year over the long term. #-ad_banner-# One of my favorite compounders is Heico Corporation (NYSE: HEI), a mid-cap aerospace and defense company which has a compounding record that blows away its peer group. Over the past 20 years, this stock has delivered 22% annualized returns. Heico operates two business segments: its Flight Support Group, with makes parts and components for aircraft accounts for roughly two-thirds of revenue; and its Electronic Technologies Group, which makes electrical components in the aviation, defense, and healthcare industries. Heico’s past success can be tied to a terrific management team, which has identified and successfully integrated a string of acquisitions. Acquisitions are tough to get right. The Harvard Business Review notes that 70% to 90% of acquisitions fail to meet revenue and profitability targets that were laid out prior to the acquisition. On Heico’s most… Read More

In search of the next great growth stock, investors typically seek out innovative technology companies. Yet one of the most appealing growth stocks in recent memory is a  140 year-old company that makes water tanks and heaters for residential and commercial buildings. Indeed a savvy expansion into new markets has helped A. O. Smith Corp. (NYSE: AOS) generate impressive top- and bottom-line growth. And the business momentum appears set to continue. During the recent domestic housing crisis,  A. O. Smith predictably struggled. This is a stock that will always be correlated with the U.S. housing market, which accounts for more… Read More

In search of the next great growth stock, investors typically seek out innovative technology companies. Yet one of the most appealing growth stocks in recent memory is a  140 year-old company that makes water tanks and heaters for residential and commercial buildings. Indeed a savvy expansion into new markets has helped A. O. Smith Corp. (NYSE: AOS) generate impressive top- and bottom-line growth. And the business momentum appears set to continue. During the recent domestic housing crisis,  A. O. Smith predictably struggled. This is a stock that will always be correlated with the U.S. housing market, which accounts for more than 40% of total company sales. As the U.S. housing market recovered, so too has A.O. Smith. The company has grown its earnings per share 38% annually since 2010. Yet even as the housing market has bounced back from formerly depressed levels, there is still plenty of slack in the housing market. New housing starts bottomed out in the recession and are still below historical averages. At around 1.2 million housing starts per year, the current pace of new home construction is only around half of new household formation. Housing construction still has a lot of… Read More