With the albatross of a credit card security breach still hanging around its neck, it is no wonder that retail giant Target (NYSE: TGT) is out of favor on Wall Street.  #-ad_banner-#In just the past week we’ve seen Cowen & Co.’s Consumer Tracking Survey report “meaningful decreases” in customer satisfaction. And Standard & Poor’s lowered the company’s credit rating a notch to A. But the charts tell a different story, and it is a good one.  We can attribute the February rally, following weak fourth-quarter results, to excessive pessimism. The news was bad, but not… Read More

With the albatross of a credit card security breach still hanging around its neck, it is no wonder that retail giant Target (NYSE: TGT) is out of favor on Wall Street.  #-ad_banner-#In just the past week we’ve seen Cowen & Co.’s Consumer Tracking Survey report “meaningful decreases” in customer satisfaction. And Standard & Poor’s lowered the company’s credit rating a notch to A. But the charts tell a different story, and it is a good one.  We can attribute the February rally, following weak fourth-quarter results, to excessive pessimism. The news was bad, but not as bad as expected, and shares soared. And now after a four-week slide, it looks as if TGT is ready to break out again. (My colleague Marshall Hargrave made a similar call in January.) The February rally pushed the stock above the 50-day moving average for the first time since the data breach was reported in December. And the March pullback found support back at the moving average in what chart watchers call a successful test of the initial breakout. Johnny-come-lately bulls had a second chance to buy — and they took it. On-balance volume, which keeps track… Read More

In some respects, this is a golden age for pharmaceuticals. Thousands of medical researchers are making major clinical progress in the fight to treat cancer, heart disease and other afflications.  #-ad_banner-#Yet another group of scientists are working to stop diseases before they emerge: The progress in vaccine research is likely to eventually be seen as one of the key breakthroughs of the early 21st century.  For companies that come up with breakthroughts, the rewards can be huge. Merck’s (NYSE: MRK) Gardisil, which prevents the spread of human papillomavirus (HPV), racked up more than $1 billion in sales last year. Pfizer’s… Read More

In some respects, this is a golden age for pharmaceuticals. Thousands of medical researchers are making major clinical progress in the fight to treat cancer, heart disease and other afflications.  #-ad_banner-#Yet another group of scientists are working to stop diseases before they emerge: The progress in vaccine research is likely to eventually be seen as one of the key breakthroughs of the early 21st century.  For companies that come up with breakthroughts, the rewards can be huge. Merck’s (NYSE: MRK) Gardisil, which prevents the spread of human papillomavirus (HPV), racked up more than $1 billion in sales last year. Pfizer’s (NYSE: PFE) Prevnar 13, which helps prevent invasive pneumococcal disease, is expected to surpass $5 billion in annual sales within a few years.   And that’s just the start. The World Health Organization estimates that the global vaccine market grew from $5 billion in 2000 to $24 billion last year — and could hit $100 billion by 2025. Though vaccines typically sell for a fraction of the cost of biotech drugs, the unit volumes can be tremendous. To be sure, the biggest drug companies, such as Merck and GlaxoSmithKline (NYSE: GSK), are committing… Read More

When it comes to retail stocks, the macro picture covers everything.  Slow consumer sales are restraining growth, and until consumers feel perkier, sector share prices are likely to only slowly merge from their current malaise. Yet in any given year, you can find a handful of retailers that have clear catalysts to deliver robust upside. A pair stands out for the year ahead, as each carries more than 50% potential upside. 1. Destination XL Group (Nasdaq: DXLG ) You may know this company by its former name, Casual Male.  Management decided to change the name a year… Read More

When it comes to retail stocks, the macro picture covers everything.  Slow consumer sales are restraining growth, and until consumers feel perkier, sector share prices are likely to only slowly merge from their current malaise. Yet in any given year, you can find a handful of retailers that have clear catalysts to deliver robust upside. A pair stands out for the year ahead, as each carries more than 50% potential upside. 1. Destination XL Group (Nasdaq: DXLG ) You may know this company by its former name, Casual Male.  Management decided to change the name a year ago to better reflect this retailer’s focus on extra-large men, also known as the “big and tall” crowd. Most retailers carry only a limited assortment of menswear catering to this demographic, making Destination XL the industry’s only pure-play on this niche.  The slow economy over the past five years has surely impacted results for this company. Annual sales, which used to exceed $450 million before the Great Recession, now hover around $400 million. While awaiting a better economy, management has done a great job of managing inventories. Gross margins have risen for five straight years, as this retailer has… Read More

A healthy lifestyle is becoming all the rage, and the trend has led to an increase in demand for natural and organic foods. Along those lines, there has been a lot of success in the organic grocery retail space. Whole Foods Market (Nasdaq: WFM) is up nearly fivefold over the past five years. There’s also been a rise in competition, such as Sprouts Farmers Market (Nasdaq: SFM), which had its IPO last year. #-ad_banner-#​However, it’s not always best to invest in the end supplier. For example, during the California gold rush of the 1800s… Read More

A healthy lifestyle is becoming all the rage, and the trend has led to an increase in demand for natural and organic foods. Along those lines, there has been a lot of success in the organic grocery retail space. Whole Foods Market (Nasdaq: WFM) is up nearly fivefold over the past five years. There’s also been a rise in competition, such as Sprouts Farmers Market (Nasdaq: SFM), which had its IPO last year. #-ad_banner-#​However, it’s not always best to invest in the end supplier. For example, during the California gold rush of the 1800s, the shovel merchants made a lot more money than the actual miners. In this case, rather than buying shares of Whole Foods, or trying to guess which grocer will have the most success in the industry, investors might be best served by investing in the company that sells the natural and organic products grocers stock their shelves with. The best choice here is United Natural Foods (Nasdaq: UNFI), which is the top distributor of natural and organic foods in the U.S. Upside In Organics A couple of years ago, the Organic Trade Association found that 80%… Read More

In a sure sign that the U.S. eocnomy has finally broken free from the lingering effects of the Great Recession, the IPO market is scorching hot. The dollar value of U.S. IPOs in 2013 jumped 40% to $59 billion, according to Thomson Reuters.  #-ad_banner-#Thus far in 2014, the action is showing no sign of letting up. As IPO tracker Renaissance Capital notes: “The US IPO market showed more activity than any other first quarter (of 2014) since 2000 as 64 companies raised $10.6 billion. That is more than double the number of IPOs in the first quarter of 2013, a year… Read More

In a sure sign that the U.S. eocnomy has finally broken free from the lingering effects of the Great Recession, the IPO market is scorching hot. The dollar value of U.S. IPOs in 2013 jumped 40% to $59 billion, according to Thomson Reuters.  #-ad_banner-#Thus far in 2014, the action is showing no sign of letting up. As IPO tracker Renaissance Capital notes: “The US IPO market showed more activity than any other first quarter (of 2014) since 2000 as 64 companies raised $10.6 billion. That is more than double the number of IPOs in the first quarter of 2013, a year that also had the most public offerings in over a decade.”  Analysts at PricewaterhouseCoopers figure that deal-making actually exceeded $11 billion in the quarter. For any investment firms that make multiple investments in private firms, this is great news. The ability to monetize their investments is made a lot easier when bankers are circling to do deals. Investors can get in on the trend by investing in three pre-IPO specialists.  1. Harris & Harris (Nasdaq: TINY )​ With roots extending back to 1981, this firm has made many investments in… Read More

“This is the coolest store I have ever seen,” said my pre-teen son as we left a discount retailer recently. We were loading up on summertime sports gear, and the store was packed with consumers purchasing all sorts of products. #-ad_banner-#I was struck by how bright and clean the store was — and particularly by its prices for well-made backyard sporting gear. I was able to purchase an entire suite of gear for what two basketballs would cost at the local chain sporting goods store.  Sure, the basketballs and backyard gear from the sporting goods chain may have… Read More

“This is the coolest store I have ever seen,” said my pre-teen son as we left a discount retailer recently. We were loading up on summertime sports gear, and the store was packed with consumers purchasing all sorts of products. #-ad_banner-#I was struck by how bright and clean the store was — and particularly by its prices for well-made backyard sporting gear. I was able to purchase an entire suite of gear for what two basketballs would cost at the local chain sporting goods store.  Sure, the basketballs and backyard gear from the sporting goods chain may have the endorsements of professional athletes and nice packaging, and perhaps be made from slightly better materials — but who cares? Most of this stuff will probably be worn out or lost in a year or two anyway.  The discount retail store was also stocked with a wide assortment of toys, snacks and portable electronic accessories. Everything was reasonably priced, and the shopping experience was enjoyable. This company looked to me like it could be a great investment, so I took a closer look. This company is in the same category as other discount retailers such as Dollar General (NYSE: DG),… Read More

With the worst of the U.S. government’s budget “sequester” behind us, there will be some big winners as government spending rebounds. One little-noticed area pinched during the crisis was the government’s spending on office furniture.  #-ad_banner-#When the government budget was in the spotlight, certain expenses, such as new office furniture, were put on the back burner. However, government employees still need a place to work, and the U.S. government has historically been a big customer of the major office furniture companies. One company that’s already seeing the benefits of a loosening of the government’s purse strings is Herman… Read More

With the worst of the U.S. government’s budget “sequester” behind us, there will be some big winners as government spending rebounds. One little-noticed area pinched during the crisis was the government’s spending on office furniture.  #-ad_banner-#When the government budget was in the spotlight, certain expenses, such as new office furniture, were put on the back burner. However, government employees still need a place to work, and the U.S. government has historically been a big customer of the major office furniture companies. One company that’s already seeing the benefits of a loosening of the government’s purse strings is Herman Miller (Nasdaq: MLHR). Shares of Herman Miller made a new 52-week high after releasing third-quarter earnings last month. The company’s strong order book appears to have investors excited, and rightfully so. The best news is that the company saw order growth from the U.S. government for the first time in 10 quarters. To boost its specialty and consumer segment, Herman Miller purchased textile maker Maharam last year. This boosted sales of the consumer segment 35.5% in the third quarter. New orders for the segment more than doubled to $71.5 million. The Maharam acquisition is key for Herman Miller. It positions… Read More

Although Apple (Nasdaq: AAPL) is widely lauded for its ability to crank out great new products, its management team deserves a lot more credit than that. Operating in the consumer electronics space, where cutthroat pricing leads to wafer-thin profits, Apple has shown a proven knack to convert a sizable amount of its sales into cash. Apple’s profit margins, along with other key metrics, are simply remarkable. #-ad_banner-#Though Apple’s key metrics appear to have stopped advancing any higher, the company’s current operating model of 30% operating margins and return on equity (ROE), and net profit margins exceeding 20%, are… Read More

Although Apple (Nasdaq: AAPL) is widely lauded for its ability to crank out great new products, its management team deserves a lot more credit than that. Operating in the consumer electronics space, where cutthroat pricing leads to wafer-thin profits, Apple has shown a proven knack to convert a sizable amount of its sales into cash. Apple’s profit margins, along with other key metrics, are simply remarkable. #-ad_banner-#Though Apple’s key metrics appear to have stopped advancing any higher, the company’s current operating model of 30% operating margins and return on equity (ROE), and net profit margins exceeding 20%, are the stuff of envy. That level of ROE is especially impressive when you consider that Apple has more than $140 billion in net cash in the bank. ROE would be a lot higher were it not for that massive chunk of cash, as cash is an asset that delivers scant returns these days. These kinds of metrics are the hallmark of great companies, and more rare than you think. Of the 1,500 companies in the S&P 400, 500 and 600, only 12 of them are in the same league as Apple. The question for investors: Can any of… Read More

Nothing has had such a profound effect on the history of mankind as technology. From Gutenberg’s printing press to the Big Data and Internet of Things today, technology has improved our lives in immeasurable ways.  #-ad_banner-#However, there is a dark side to our technological society, and a backlash is building around the world. Big Data and the Internet of Things have begun to chip away at the privacy of individuals and small groups. Individuals are starting to demand tools to protect what’s left of their privacy. Investors who act upon this trend by investing in companies already profiting… Read More

Nothing has had such a profound effect on the history of mankind as technology. From Gutenberg’s printing press to the Big Data and Internet of Things today, technology has improved our lives in immeasurable ways.  #-ad_banner-#However, there is a dark side to our technological society, and a backlash is building around the world. Big Data and the Internet of Things have begun to chip away at the privacy of individuals and small groups. Individuals are starting to demand tools to protect what’s left of their privacy. Investors who act upon this trend by investing in companies already profiting from the technological backlash stand to reap great rewards.  The Internet of Things (which I wrote about last year) refers to the widespread connection of machines and devices to the Internet. Although the Internet of Things is now in its infancy, it’s growing exponentially, and it’s estimated that over 30 billion devices will be connected to the Internet by 2020. Within the next five years, the average family is projected to have 10 Internet-connected devices in their home. The orange juice pitcher in your refrigerator may be able to alert you when it’s nearly empty and automatically place an order… Read More

When people want to express a lack of enthusiasm about something, they sometimes compare it to cardboard.  #-ad_banner-#We’ve all heard someone say something like “This cereal is so bland, I might as well be eating cardboard,” or “This movie is about as exciting as a cardboard box.” But after I’ve told you about one company that produces cardboard boxes and other types of packaging, you may see these sorts of products in a whole new light. Indeed, they could be among the most lucrative investments you ever encounter. The firm I’m referring to is the fourth-largest player in… Read More

When people want to express a lack of enthusiasm about something, they sometimes compare it to cardboard.  #-ad_banner-#We’ve all heard someone say something like “This cereal is so bland, I might as well be eating cardboard,” or “This movie is about as exciting as a cardboard box.” But after I’ve told you about one company that produces cardboard boxes and other types of packaging, you may see these sorts of products in a whole new light. Indeed, they could be among the most lucrative investments you ever encounter. The firm I’m referring to is the fourth-largest player in the U.S. containerboard and corrugated packaging industry, with a 10% market share. Its products come in all shapes and sizes from big shipping containers and multicolored boxes to retail displays and food packaging. The company also produces white paper, newsprint and wood pulp. It has 15,000 customers in many industries like food and beverages, retail, and appliances. Production capability is about 3.4 million tons of containerboard and 46 billion square feet of corrugated products annually. Bored yet? Then consider this: The firm’s stock is up fivefold in the past five years. And it could triple again during the next five… Read More