I never thought I’d get an investment idea from the movie “Wayne’s World.” I didn’t at first. It took me about 20 years to realize it. #-ad_banner-#A while ago, I was kibitzing with a money manager friend of mine about some of the names he was picking up. Tim Hortons (NYSE: THI), the Canadian coffee and doughnut shop chain, was at the top of his list. “Oh!” I said. “There was a scene there in ‘Wayne’s World.’ ” My friend smiled and corrected me: The scene I was thinking of was actually set at Stan Mikita’s Doughnuts, a fictional shop… Read More

I never thought I’d get an investment idea from the movie “Wayne’s World.” I didn’t at first. It took me about 20 years to realize it. #-ad_banner-#A while ago, I was kibitzing with a money manager friend of mine about some of the names he was picking up. Tim Hortons (NYSE: THI), the Canadian coffee and doughnut shop chain, was at the top of his list. “Oh!” I said. “There was a scene there in ‘Wayne’s World.’ ” My friend smiled and corrected me: The scene I was thinking of was actually set at Stan Mikita’s Doughnuts, a fictional shop based on Tim Hortons. An iconic brand in Canada, the real Tim Hortons was founded in Ontario in 1964 by pro hockey star Tim Horton and a retired police officer, Ron Joyce. Sadly, Horton died in a car crash in 1974 — before he could witness the chain’s unlikely rise. The company now boasts over 4,300 restaurants throughout Canada, the U.S. and the Middle East. The menu has stretched beyond doughnuts and coffee — to specialty coffee drinks, teas, homestyle lunches and other baked goods. And the stock has satisfied return-hungry investors: The stock has gained an average… Read More

Carl Icahn is a notoriously headstrong man. He never hesitates to shame, cajole and coerce CEOs until they start following his advice. Icahn’s cage-rattling approach has surely led to some impressive investment returns. #-ad_banner-#While Icahn still grabs many headlines when he browbeats companies like Apple (Nasdaq: AAPL) until they announce share buybacks large enough to satisfy him, an up-and-comer in the hedge fund industry has taken a very different approach.  Mark Rachesky, who worked for Icahn earlier in his career, has become known as a “passive activist.” He follows the Icahn playbook by pursuing undervalued companies that can take steps to… Read More

Carl Icahn is a notoriously headstrong man. He never hesitates to shame, cajole and coerce CEOs until they start following his advice. Icahn’s cage-rattling approach has surely led to some impressive investment returns. #-ad_banner-#While Icahn still grabs many headlines when he browbeats companies like Apple (Nasdaq: AAPL) until they announce share buybacks large enough to satisfy him, an up-and-comer in the hedge fund industry has taken a very different approach.  Mark Rachesky, who worked for Icahn earlier in his career, has become known as a “passive activist.” He follows the Icahn playbook by pursuing undervalued companies that can take steps to unlock value — but he takes those steps as an insider, not an outsider. Rachesky’s approach could be described by the adage “You can catch more flies with honey than vinegar.” The Studio Standoff Icahn and Rachesky actually squared off a few years ago over film studio Lions Gate Entertainment (NYSE: LGF). Icahn wanted the company to either take value-unlocking steps or sell him the company outright. Lions Gate was also being targeted by Rachesky, but in a much calmer manner.  After repeated pushbacks from Lions Gate, Icahn lost the will to fight and sold his shares in the… Read More

Stocks have been unable to gain any real upside traction and remain stuck below critical resistance areas. On Tuesday, the market once again tumbled, led by the consumer discretionary and financial sectors. #-ad_banner-#Year to date, financials are flat, lagging behind utilities, basic materials and health care stocks, but outperforming technology. As the largest industry in the economy, the financial sector — which includes brokers, banks and insurance companies — matters a great deal to the tone of the overall U.S. stock market. Taking note of how big financial stocks trade is important to understanding the trend in the… Read More

Stocks have been unable to gain any real upside traction and remain stuck below critical resistance areas. On Tuesday, the market once again tumbled, led by the consumer discretionary and financial sectors. #-ad_banner-#Year to date, financials are flat, lagging behind utilities, basic materials and health care stocks, but outperforming technology. As the largest industry in the economy, the financial sector — which includes brokers, banks and insurance companies — matters a great deal to the tone of the overall U.S. stock market. Taking note of how big financial stocks trade is important to understanding the trend in the broader stock market. On top of my watch list, Morgan Stanley (NYSE: MS) has a permanent spot on one of my eight monitors. It is one of my go-to stocks because it often gives me clues as to the broader market’s near- to medium-term direction. I check the trading action in MS at least three to four times a day, because more often than not, any sharp reversal or relative strength or weakness in the stock can quickly infect the broader market.  On an intraday basis, it rarely pays to short stocks when financials are strong, nor does it make… Read More

We are truly in the golden age of cash flow. #-ad_banner-#Corporate profit margins have been so strong in recent years that companies have been pulling in large sums of cash every quarter. In the first few years after the economic crisis of 2008, companies sought to hoard their cash, but starting around 2010, growing share buybacks and rising dividends became the name of the game. Companies now dole out almost as much as they take in, leaving cash balances fairly static. That’s fine: Companies are well-cushioned against the next (and inevitable) economic downturn. And with cash flow continuing to pour in… Read More

We are truly in the golden age of cash flow. #-ad_banner-#Corporate profit margins have been so strong in recent years that companies have been pulling in large sums of cash every quarter. In the first few years after the economic crisis of 2008, companies sought to hoard their cash, but starting around 2010, growing share buybacks and rising dividends became the name of the game. Companies now dole out almost as much as they take in, leaving cash balances fairly static. That’s fine: Companies are well-cushioned against the next (and inevitable) economic downturn. And with cash flow continuing to pour in as margins remain near peak levels, look for more dividend hikes and fresh buyback announcements. About the only thing that could derail the buyback-and-dividend freight train would be an increase in acquisitions — but most companies are continuing to eschew acquisitions and the risks they entail. In the context of solid dividends and buybacks, it’s fair to ask: Is it better to own a company that produces solid and predictable dividends, or one that plans on buying back stock? Let’s take a look at the pros and cons of each scenario, starting with dividends. Scenario 1: The Company Begins Issuing… Read More

Once a year, Warren Buffett and his right-hand man, Charlie Munger, take the stage of a packed arena for Berkshire Hathaway’s (NYSE: BRK-B) annual meeting in Omaha, Nebraska. #-ad_banner-#Held last Saturday, this year’s event drew a crowd of some 40,000 shareholders, financial journalists and analysts who had the chance to pick the brain of the Oracle and his vice chairman. A wide breadth of topics were covered — but what might they mean for your portfolio? Let’s start with a perennial question that has particular relevance if you’re a Berkshire stakeholder: When will Berkshire… Read More

Once a year, Warren Buffett and his right-hand man, Charlie Munger, take the stage of a packed arena for Berkshire Hathaway’s (NYSE: BRK-B) annual meeting in Omaha, Nebraska. #-ad_banner-#Held last Saturday, this year’s event drew a crowd of some 40,000 shareholders, financial journalists and analysts who had the chance to pick the brain of the Oracle and his vice chairman. A wide breadth of topics were covered — but what might they mean for your portfolio? Let’s start with a perennial question that has particular relevance if you’re a Berkshire stakeholder: When will Berkshire Hathaway pay a dividend? The company has not made a cash payout since 1967. So will 2014 be the year? “Don’t hold your breath” seems to be the collective notion from the shareholders who voted on the issue, as only 3% were in favor. There’s an overwhelming preference for excess cash reserves to be allocated for future investments, rather than making distributions. However, if you’re still craving a Berkshire-related dividend fix — and really, who isn’t? — you can look to some of its higher-yielding portfolio companies like Proctor & Gamble (NYSE: PG) or General Electric (NYSE: GE), which each… Read More

One of the challenges of managing your own individual stock portfolio is that you always have to be on guard. Ongoing research and review is necessary to keep abreast of developments that may relatively quickly render a stock undesirable. #-ad_banner-#This reminds me of one former superstar in particular, a stock I’m sure many investors became complacent about because it did so well for so long. Indeed, from the end of February 2009 to mid-May 2011, the price nearly quintupled from about $18 to just over $85. But since then, shares have taken an ugly dive, slumping more than… Read More

One of the challenges of managing your own individual stock portfolio is that you always have to be on guard. Ongoing research and review is necessary to keep abreast of developments that may relatively quickly render a stock undesirable. #-ad_banner-#This reminds me of one former superstar in particular, a stock I’m sure many investors became complacent about because it did so well for so long. Indeed, from the end of February 2009 to mid-May 2011, the price nearly quintupled from about $18 to just over $85. But since then, shares have taken an ugly dive, slumping more than 70% to the current price of about $22 a share. To this stock’s credit, the plunge wasn’t straight down. During the past several years, shares have staged multiple comebacks because the underlying company is well-known and still has many loyal customers. The latest rally occurred May 1, when the stock spiked about 20% after management reported quarterly sales and earnings that weren’t as bad as analysts expected. I’m referring to Weight Watchers International (NYSE: WTW), long a leading global provider of weight-management services through an extensive network of company-owned and franchise operations. My colleague Dave Goodboy was bullish… Read More

This is shaping up to be one of the most tumultuous earnings seasons in quite some time. #-ad_banner-#Stocks as diverse as Whole Foods (Nasdaq: WFM), AOL (NYSE: AOL) and Intuitive Surgical (Nasdaq: ISRG) are being hammered in the face of tepid quarterly results. The Nasdaq has been especially wobbly in recent weeks, posting sharp drops every few trading sessions. It’s times like these that companies must prove their mettle, providing investors with solid reasons to hang on to their shares and avoid the temptation to lock in profits in what has been an extended bull market. And one of the… Read More

This is shaping up to be one of the most tumultuous earnings seasons in quite some time. #-ad_banner-#Stocks as diverse as Whole Foods (Nasdaq: WFM), AOL (NYSE: AOL) and Intuitive Surgical (Nasdaq: ISRG) are being hammered in the face of tepid quarterly results. The Nasdaq has been especially wobbly in recent weeks, posting sharp drops every few trading sessions. It’s times like these that companies must prove their mettle, providing investors with solid reasons to hang on to their shares and avoid the temptation to lock in profits in what has been an extended bull market. And one of the best ways to show support for a flagging stock is through share buybacks.  Many believe that buybacks pave the path to higher upside. Indeed, a portfolio of companies buying back shares, as reflected by the PowerShares Buyback Achievers ETF (NYSE: PKW), which has handily outperformed the S&P 500 in this bull market. Yet you should also consider buyback stocks for their defensive characteristics. Buyback plans provide demand for shares at times when buyers are scarce. And if buyback programs are large enough, they can help boost earnings per share (EPS) by a solid margin, even when income growth… Read More

When selecting companies to trade, I’m a big believer in having as many positive metrics in your favor as you can. Past price performance certainly is one of the biggest drivers of a stock, and that’s something we can assess using charts and technical analysis. There’s also the… Read More

Although the car radio was introduced back in 1930, it’s still a timeless tradition. While the mechanics of the car radio have changed drastically through the years, radios still come standard in every car.  #-ad_banner-#One type of radio that continues to gain traction is satellite radio, and Sirius XM (Nasdaq: SIRI) is by far the largest player in the satellite radio market.  Shares are down nearly 10% over the past two months amid the broad sell-off in momentum stocks. But the pullback could be presenting an enticing buying opportunity.  Sirius has an agreement with every major automaker, so… Read More

Although the car radio was introduced back in 1930, it’s still a timeless tradition. While the mechanics of the car radio have changed drastically through the years, radios still come standard in every car.  #-ad_banner-#One type of radio that continues to gain traction is satellite radio, and Sirius XM (Nasdaq: SIRI) is by far the largest player in the satellite radio market.  Shares are down nearly 10% over the past two months amid the broad sell-off in momentum stocks. But the pullback could be presenting an enticing buying opportunity.  Sirius has an agreement with every major automaker, so the continued rebound in U.S. auto sales are only helping the company expand its already impressive subscriber base. And the other major opportunity for Sirius is that it’s becoming a bigger player in what’s known as the “connected car.” This involves bringing together radio, navigation and other electronics within the car.  Sirius expects the number of new cars sold with satellite radio will reach 11 million this year, up from 10.7 million in 2013. The auto market in the U.S. is strengthening — auto sales were up 8% year over year in April — and should only continue to do… Read More

John Maynard Keynes famously said that “The market can remain irrational longer than you can stay solvent.”  Short sellers are also aware of that painful axiom, and many of them lost money in 2013 betting against some of the market’s most popular stocks. And perhaps no single stock defied the logic and reason of short sellers as much as 3D Systems (NYSE: DDD). Back in September, I took note of emerging concerns about the health of this company’s financial statements and suggested that aggressive accounting would be this stock’s undoing. Still, shares of this and other 3-D printers rose ever higher,… Read More

John Maynard Keynes famously said that “The market can remain irrational longer than you can stay solvent.”  Short sellers are also aware of that painful axiom, and many of them lost money in 2013 betting against some of the market’s most popular stocks. And perhaps no single stock defied the logic and reason of short sellers as much as 3D Systems (NYSE: DDD). Back in September, I took note of emerging concerns about the health of this company’s financial statements and suggested that aggressive accounting would be this stock’s undoing. Still, shares of this and other 3-D printers rose ever higher, and 3D Systems was valued at roughly 125 times trailing earnings. That’s what happens when a stock surges 4,000% in five years. #-ad_banner-#​Of course, when momentum investors lose interest, stocks such as 3D Systems can’t fall back on any sort of intrinsic value, and a nearly 50% plunge thus far in 2014 has been equally sobering. The question now is: Should you buy it? The short answer: More boulders may lie ahead, and you should wait for an even better entry price. Organic Vs. Inorganic Growth 3D Systems has been dogged by its… Read More