The long-awaited homebuilding recovery has yet to materialize, and new headwinds may be building. #-ad_banner-#This was supposed to be the year that homebuilders could finally celebrate. The rate of new-home construction has been well below average, thanks to still-low levels of new household formation. The Millennial generation has been shacking up with mom and dad — or renting — but many have expected a slowly improving U.S. economy to alter that dynamic. The fact that mortgage interest rates remain near generational lows has been seen as another positive catalyst. Yet the hoped for… Read More

The long-awaited homebuilding recovery has yet to materialize, and new headwinds may be building. #-ad_banner-#This was supposed to be the year that homebuilders could finally celebrate. The rate of new-home construction has been well below average, thanks to still-low levels of new household formation. The Millennial generation has been shacking up with mom and dad — or renting — but many have expected a slowly improving U.S. economy to alter that dynamic. The fact that mortgage interest rates remain near generational lows has been seen as another positive catalyst. Yet the hoped for rebound still isn’t here. The U.S. Commerce Department recently reported that construction levels were weaker than expected in May. If you’re bullish on the U.S. economy, then you know this sector needs to rumble back to life. Residential construction plays a huge role in the U.S. economy, supporting a wide range of ancillary industries, and a firmer pace of housing construction and sales would make a meaningful dent in our nation’s employment rate.  Housing needs to get busy. At some point, perhaps sooner rather than later, the benign interest rate environment may vanish, and rising mortgage rates… Read More

Every few years, a hot new hedge fund manager emerges on the scene. Today, that hedge fund manager looks to be Julian Robertson’s protege Chase Coleman. #-ad_banner-#One of Robertson’s “Tiger Cubs,” Coleman learned from his mentor to look for a “smart idea, grounded on exhaustive research, followed by a big bet.” My colleague David Sterman profiled Coleman in 2012 after his Tiger Global fund was the top-performing hedge fund for all of 2011, with a gain of 45%. In 2012, Coleman was buying shares of Facebook (Nasdaq: FB) when they were only $29. Read More

Every few years, a hot new hedge fund manager emerges on the scene. Today, that hedge fund manager looks to be Julian Robertson’s protege Chase Coleman. #-ad_banner-#One of Robertson’s “Tiger Cubs,” Coleman learned from his mentor to look for a “smart idea, grounded on exhaustive research, followed by a big bet.” My colleague David Sterman profiled Coleman in 2012 after his Tiger Global fund was the top-performing hedge fund for all of 2011, with a gain of 45%. In 2012, Coleman was buying shares of Facebook (Nasdaq: FB) when they were only $29. Now, Coleman manages about $14 billion at Tiger Global. Along the way, he has made himself a billionaire with a net worth of $1.6 billion, according to Forbes. Coleman is now turning his attention to retail, particularly shares of luxury home furnishings retailer Restoration Hardware (NYSE: RH). Tiger Global just increased its stake last month by 1.25 million shares and now owns 6.4% of the company. It’s easy to see why Coleman increased his stake in the company. The company is firing on all cylinders and outperforming the home furnishings industry and its competitors. In the first quarter, Restoration Hardware… Read More

Trading stocks is a fast business. One great earnings report, a big product announcement, or a high-profile analyst upgrade can send a stock soaring — and fast. The latter catalyst occurred this week for flash-sales e-tailer Zulily (NASDAQ: ZU). #-ad_banner-#Shares spiked 9% on Wednesday after Goldman Sachs (NYSE: GS) upgraded the stock to “buy” from “neutral.” The highly respected brokerage firm also raised its price target to $50 from $47, which is 24% higher than current prices. According to Goldman, the upgrade is based on what the brokerage firm calls the company’s “hyper growth” potential. So, what does Goldman consider… Read More

Trading stocks is a fast business. One great earnings report, a big product announcement, or a high-profile analyst upgrade can send a stock soaring — and fast. The latter catalyst occurred this week for flash-sales e-tailer Zulily (NASDAQ: ZU). #-ad_banner-#Shares spiked 9% on Wednesday after Goldman Sachs (NYSE: GS) upgraded the stock to “buy” from “neutral.” The highly respected brokerage firm also raised its price target to $50 from $47, which is 24% higher than current prices. According to Goldman, the upgrade is based on what the brokerage firm calls the company’s “hyper growth” potential. So, what does Goldman consider “hyper growth”? Goldman wrote that it expects the retailer, created to sell children’s apparel and accessories to moms who shop for deals online, will eclipse the $1 billion sales milestone this year. That feat would indeed be significant, especially considering the company has only been around for the past five years.  “If achieved, [Zulily] will join the company of Amazon (NASDAQ: AMZN) and Old Navy as the fastest retailers to reach this key milestone,” Goldman analysts wrote in their report. That’s high praise indeed, and extremely impressive for a retailer that does things much differently than either Amazon of Old… Read More

As expected, the economy shrank in the first quarter, a recent U.S. Commerce Department report confirmed. However, the shrinkage is proving worse than originally thought, with revised GPD data showing a 2.9% annualized rate of contraction versus the 1.7% rate economists predicted. #-ad_banner-#But this could actually be really good news for investors. Indeed, the dismal first quarter has created a prime chance to get deals on high-quality stocks that are most vulnerable to economic downturns. And since unusually cold weather, not poor fundamentals, are widely considered mainly to blame for the bad first quarter, it may not be long until… Read More

As expected, the economy shrank in the first quarter, a recent U.S. Commerce Department report confirmed. However, the shrinkage is proving worse than originally thought, with revised GPD data showing a 2.9% annualized rate of contraction versus the 1.7% rate economists predicted. #-ad_banner-#But this could actually be really good news for investors. Indeed, the dismal first quarter has created a prime chance to get deals on high-quality stocks that are most vulnerable to economic downturns. And since unusually cold weather, not poor fundamentals, are widely considered mainly to blame for the bad first quarter, it may not be long until these beaten-down stocks rebound — especially since there are already signs the economy has been gaining steam in the second quarter. One beaten-down stock I like a lot is off more than 30% this year and much of the carnage occurred after this national retailer reported a 14% decline in first-quarter profits.  Like the overall economy, the firm did poorly mainly because of the severe winter, which clearly hurt business at 135 of its 331 locations. At these stores, first-quarter net sales dropped an average of 3.8%. But at the other 196 outlets where winter weather wasn’t an issue, first-quarter… Read More

If you’re like most investors, then you probably repeatedly made the same mistake as you learned the rules of the game.  #-ad_banner-#You likely spotted a great bargain stock, bought shares and waited for something to happen. Shares likely stayed stuck at bargain levels, testing your patience. And you finally gave up waiting and sold shares, only to discover a year or two later that the stock did eventually rebound in a big way. What’s the lesson learned from that experience? That you should simply wait an indefinite period and stick around long enough for the eventual rebound? No. Such a strategy… Read More

If you’re like most investors, then you probably repeatedly made the same mistake as you learned the rules of the game.  #-ad_banner-#You likely spotted a great bargain stock, bought shares and waited for something to happen. Shares likely stayed stuck at bargain levels, testing your patience. And you finally gave up waiting and sold shares, only to discover a year or two later that the stock did eventually rebound in a big way. What’s the lesson learned from that experience? That you should simply wait an indefinite period and stick around long enough for the eventual rebound? No. Such a strategy will lead you to tie up all of your investor dollars in a bunch of dud stocks, leaving you with no funds to pursue new ideas. The better strategy: Create watch lists and track these stocks. Checking in on them frequently (I prefer daily) allows you to finally hop on board when these stocks start to become timely. Let me cite a few examples. Shares of Maxwell Technologies (Nasdaq: MXWL), a maker of ultra-capacitors, slumped sharply in the spring of 2012 as the company noted a slowdown in sales and a set of potentially fraudulent actions by some key… Read More

I have always enjoyed unearthing and profiting from unusual investments. From unique niche stocks to rare antiques, locating under-the-radar investments is part of my DNA. #-ad_banner-#Recently, I was reminded of one such unusual investment — Fifth Street Finance (Nasdaq: FSC) — by my colleague, Joseph Hogue, who covered it for our sister site, StreetAuthority.com. The stock appears to be setting up for a profitable trade and has a double-digit dividend yield to boot. This business development company (BDC) specializes in financing small and mid-sized companies. BDCs typically pays out most of their income in the form of dividends, and FSC… Read More

I have always enjoyed unearthing and profiting from unusual investments. From unique niche stocks to rare antiques, locating under-the-radar investments is part of my DNA. #-ad_banner-#Recently, I was reminded of one such unusual investment — Fifth Street Finance (Nasdaq: FSC) — by my colleague, Joseph Hogue, who covered it for our sister site, StreetAuthority.com. The stock appears to be setting up for a profitable trade and has a double-digit dividend yield to boot. This business development company (BDC) specializes in financing small and mid-sized companies. BDCs typically pays out most of their income in the form of dividends, and FSC currently pay $0.083 monthly for a 10.4% annual yield. The current environment makes commercial financing difficult for many businesses. A recent survey by the Federal Reserve showed that while demand for business loans was increasing, just 10% of banks were willing to decrease their lending criteria for small businesses, and 3% of banks increased their standards.  The stringent criteria of traditional banks and lending institutions open the door for alternative financing provided by business development companies like Fifth Street Finance.   FSC and other BDCs have struggled this year, in part because investors are worried about the effect of rising… Read More

One of the richest men in the world is finding value in one of the dirtiest industries in the world.  #-ad_banner-#With a net worth of over $75 billion, Bill Gates loves the railroad industry — but he’s also heavily invested in another “must-have” business.  The railroad industry is instrumental in moving products from one region to another, but there are substitutes available, such as planes and ships.  However, there are virtually no alternatives for garbage disposal.  This is truly a must-have industry. It’s a business that performs well regardless of the broader economy. Gates has recognized this long-term… Read More

One of the richest men in the world is finding value in one of the dirtiest industries in the world.  #-ad_banner-#With a net worth of over $75 billion, Bill Gates loves the railroad industry — but he’s also heavily invested in another “must-have” business.  The railroad industry is instrumental in moving products from one region to another, but there are substitutes available, such as planes and ships.  However, there are virtually no alternatives for garbage disposal.  This is truly a must-have industry. It’s a business that performs well regardless of the broader economy. Gates has recognized this long-term trend and owns two of the industry’s largest players.  Waste Management (NYSE: WM) is the leader in the industry, with Republic Services (NYSE: RSG) coming in second. The low-yield environment, coupled with a market that’s trading at lofty valuations, makes high-yield defensive stocks attractive. Waste Management and Republic Services pay solid dividend yields and are quite defensive.  The Bill & Melinda Gates Foundation owns 18.6 million shares of Waste Management, equal to 4% of the company. The private investment fund that manages Gates’ personal wealth, Cascade Investments, owns 90.9 million shares of Republic Services, a staggering 25% of the company. … Read More

Dollar stores have been on a tear since the financial crisis. Consumers flocked to the low-price stores in an effort to pinch pennies. #-ad_banner-#But even as the economy has rebounded, many of these companies have continued to perform fairly well. It appears they have integrated themselves into the lives of shoppers to the point that dollar stores are becoming one-stop shops.  This comes as they have expanded into tobacco and consumer staples. Dollar stores are also typically much smaller and easier to navigate than the likes of big-box merchants like Wal-Mart (NYSE: WMT) or Target (NYSE: TGT), which… Read More

Dollar stores have been on a tear since the financial crisis. Consumers flocked to the low-price stores in an effort to pinch pennies. #-ad_banner-#But even as the economy has rebounded, many of these companies have continued to perform fairly well. It appears they have integrated themselves into the lives of shoppers to the point that dollar stores are becoming one-stop shops.  This comes as they have expanded into tobacco and consumer staples. Dollar stores are also typically much smaller and easier to navigate than the likes of big-box merchants like Wal-Mart (NYSE: WMT) or Target (NYSE: TGT), which makes them ideal for consumers who are short on both time and money.  But not all dollar stores have continued to perform well throughout the strengthening economy. One of the biggest players in the market, Family Dollar (NYSE: FDO), has come under fire from billionaire activist Carl Icahn.  Family Dollar’s net income has grown at an annualized 7.4% over the past three years, which is impressive on a stand-alone basis. But when stacked up against industry leader Dollar General (NYSE: DG), which has seen annualized growth of 17.7% over the same period, it appears Family Dollar is in need of… Read More

A favorite strategy among investors is to look and see what Warren Buffett and Berkshire Hathaway (NYSE: BRK-B) are buying. After all, if the Oracle of Omaha is buying a company’s stock, chances are it’s a great value. #-ad_banner-#Well, one of the most underrated stocks is “baby Berkshire” Leucadia National Corp. (NYSE: LUK), which, like Berkshire, is a diversified holding company that’s run by a great stock picker — in Leucadia’s case, CEO Richard Handler. Handler is a great stock picker. He has built a company with interests in investment banking, meat processing, real estate lending,… Read More

A favorite strategy among investors is to look and see what Warren Buffett and Berkshire Hathaway (NYSE: BRK-B) are buying. After all, if the Oracle of Omaha is buying a company’s stock, chances are it’s a great value. #-ad_banner-#Well, one of the most underrated stocks is “baby Berkshire” Leucadia National Corp. (NYSE: LUK), which, like Berkshire, is a diversified holding company that’s run by a great stock picker — in Leucadia’s case, CEO Richard Handler. Handler is a great stock picker. He has built a company with interests in investment banking, meat processing, real estate lending, auto dealerships, liquefied natural gas and other publicly traded companies. Thanks to the fact that Leucadia must disclose its investments, we get to peek at what Handler and Leucadia are buying.  One company that Leucadia is buying is Harbinger Group (NYSE: HRG), another diversified conglomerate. It has been growing its business by acquiring and growing businesses that generate substantial free cash flow. Leucadia is one of Harbinger Group’s largest shareholders with a 12% stake.  Besides Leucadia, billionaires Michael Dell and Leon Cooperman have stakes in Harbinger Group, owning 4.5% and 8.3%, respectively.  Looking Past Harbinger’s CEO Debacle… Read More

I’m a huge fan of science fiction novels and films. Having grown up on Star Wars movies and books by authors like Alastair Reynolds and Philip K. Dick, I marveled at the possibilities and envisioned living in a similar world.  #-ad_banner-#Fast-forward to 2014, and the very things I thought were the stuff of fiction have become modern-day technologies. Any proper fan of sci-fi will note certain similarities in near-future stories — hand-held computers, holograms and self-driving cars.  Many of these things have already come to pass or are on the verge of doing so. Smartphones… Read More

I’m a huge fan of science fiction novels and films. Having grown up on Star Wars movies and books by authors like Alastair Reynolds and Philip K. Dick, I marveled at the possibilities and envisioned living in a similar world.  #-ad_banner-#Fast-forward to 2014, and the very things I thought were the stuff of fiction have become modern-day technologies. Any proper fan of sci-fi will note certain similarities in near-future stories — hand-held computers, holograms and self-driving cars.  Many of these things have already come to pass or are on the verge of doing so. Smartphones have many times the computing power of those used by the Apollo astronauts, a holographic keyboard is available for some hand-held devices, and Google’s (Nasdaq: GOOG) campus is known to house a self-driving car. Looking to the future, technologies across many industries will undoubtedly surprise us all with inventions that will amaze us — and that our children and grandchildren will take for granted.  However, investors are more interested in futuristic developments with real-world applications.  Telecommunications has received the most attention from futurist investors, which shows in the sector’s average price-to-earnings (P/E) ratio of 37. Value-minded shoppers look to other sectors… Read More