After many years in the trenches conducting investment research, I rarely get excited about mainstream public companies. However, every once in a while I’m surprised by an amazing success story and investment opportunity. And today I’ve found one such little-known, niche company.  With metrics revealing true longevity, like the steady 5% growth per year over the last half century, 16% compounded sales, and earnings growth since 1990, this company is a shocking find. Even better, it’s part of a growing $700 billion-plus market.  Add in the facts of the company being family run and that it only boasts around a… Read More

After many years in the trenches conducting investment research, I rarely get excited about mainstream public companies. However, every once in a while I’m surprised by an amazing success story and investment opportunity. And today I’ve found one such little-known, niche company.  With metrics revealing true longevity, like the steady 5% growth per year over the last half century, 16% compounded sales, and earnings growth since 1990, this company is a shocking find. Even better, it’s part of a growing $700 billion-plus market.  Add in the facts of the company being family run and that it only boasts around a 2% share of its market, and it paints a powerfully attractive long-term growth picture.  The company, Heico (NYSE: HEI), is a manufacturer based in Hollywood, Florida. It creates original equipment manufacturer (OEM) parts for the $700 billion plus aerospace sector.  According to Deloitte LLP’s 2017 Global Aerospace and Defense Sector Outlook, there is currently a backlog of 13,500 commercial aircraft, marking an all-time high. Deloitte analysts have forecasted commercial aerospace subsector operating earnings to grow 20.6%, while defense subsector’s operating earnings will likely rise 7.0%. Even defense returns are expected to increase at just over 3%… Read More

Imagine if you could have foreseen just how successful Apple (Nasdaq: AAPL) was going to be at changing the music industry with the introduction of the iPod, iPhone and iTunes ecosystem. Or that folks would no longer run down to their local Blockbuster to rent a movie, but instead stream it over the internet — rendering DVDs all but dead. Of course, there are countless stories like these that illustrate how technological innovations killed off old stodgy companies and industries. 8-track and cassette tapes, VCR and DVD players, 3.5-inch floppy disks and developing film (Kodak) just to name a few. Read More

Imagine if you could have foreseen just how successful Apple (Nasdaq: AAPL) was going to be at changing the music industry with the introduction of the iPod, iPhone and iTunes ecosystem. Or that folks would no longer run down to their local Blockbuster to rent a movie, but instead stream it over the internet — rendering DVDs all but dead. Of course, there are countless stories like these that illustrate how technological innovations killed off old stodgy companies and industries. 8-track and cassette tapes, VCR and DVD players, 3.5-inch floppy disks and developing film (Kodak) just to name a few. Heck, even the pound sign is being replaced with the hashtag. #-ad_banner-#In hindsight, it’s easy to spot these major trend changes, but of course forecasting the next major revolution is never that simple. Just take Sirius and XM radio, for example. These two companies aimed to change the radio industry by providing ad-free music to consumers across the nation. This novel idea seemed destined to kill off traditional radio as we knew it. After all, radio hadn’t seen any major advances in decades, plus it’s annoying to hear your favorite AM or FM radio station fade away as you traverse… Read More

What a fantastic year in the U.S. stock market. Bullish investors are jumping with joy as the bear brigade has gone into hibernation. The Federal Reserve, showing signs of slowing down its interest rate hike program, has removed a significant headwind to continued advances.  Despite the naysayers trying to tell you otherwise, I think the market will continue surging this year and the top performers will keep pushing higher. Even better, there’s a proven strategy for capturing profits from soaring stocks. What Is Trend Following? Trend Following is a simple yet highly effective method of earning huge returns in… Read More

What a fantastic year in the U.S. stock market. Bullish investors are jumping with joy as the bear brigade has gone into hibernation. The Federal Reserve, showing signs of slowing down its interest rate hike program, has removed a significant headwind to continued advances.  Despite the naysayers trying to tell you otherwise, I think the market will continue surging this year and the top performers will keep pushing higher. Even better, there’s a proven strategy for capturing profits from soaring stocks. What Is Trend Following? Trend Following is a simple yet highly effective method of earning huge returns in the stock market.  At its most elementary, trend following is buying new highs and technical breakouts with the expectation that the upside momentum will continue.  #-ad_banner-#The idea behind trend following is a lot like Newton’s first law of motion. That is, an object in motion tends to remain in motion unless acted upon by an outside force.  The object in this case is price, and the higher it goes, the more investment it attracts, reinforcing the upside momentum.  Buying breakouts and new highs are not the only way to trend follow. Many trend followers believe in waiting for a short… Read More

It was a lightly reported story. It didn’t even warrant more than a short blurb in your local newspaper. Unless you are an industry insider or Washington Beltway junkie, you may have missed it entirely. But last month, the White House orchestrated a landmark agreement paving the way for exports of liquefied natural gas (LNG) to China.  Right now, U.S. producers are largely shut out of this lucrative market. Most of China’s LNG deliveries come from Australia or Qatar. But that could be changing soon.  As with most commodities, China has a hungry appetite for LNG. In fact, it’s the… Read More

It was a lightly reported story. It didn’t even warrant more than a short blurb in your local newspaper. Unless you are an industry insider or Washington Beltway junkie, you may have missed it entirely. But last month, the White House orchestrated a landmark agreement paving the way for exports of liquefied natural gas (LNG) to China.  Right now, U.S. producers are largely shut out of this lucrative market. Most of China’s LNG deliveries come from Australia or Qatar. But that could be changing soon.  As with most commodities, China has a hungry appetite for LNG. In fact, it’s the world’s third-biggest consumer, behind only Japan and Korea. Last year, China imported 26 million tons of LNG, an increase of 33% — making it the world’s fastest-growing market.  Wood Mackenzie put pencil to paper and attached a potential dollar amount to this deal. Assuming current prices and projected usage, China could be importing $26 billion worth of LNG a year by 2030.  The question is, how do we get it there?  —Recommended Link— Pick & Shovel Investing For The 21st Century ‘Gold Rush’ From Russian gas and Saudi oil to the isolated cobalt mines of Central Africa — the… Read More

The surprising announcement last month of Amazon’s (Nasdaq: AMZN) intention to acquire high-end grocer Whole Foods Market (Nasdaq: WFM) conforms to the age-old notion that nobody can do it alone. Even Amazon — the original “if you build it, they will come” company… the company that never cared much about margins but was obsessed about volume (which turned out to be just the right solution for e-commerce) — couldn’t do it all without the help of others.  Quite often, this help has come in the form of an acquisition. Of course, the $13.7 billion purchase of Whole Foods, if it… Read More

The surprising announcement last month of Amazon’s (Nasdaq: AMZN) intention to acquire high-end grocer Whole Foods Market (Nasdaq: WFM) conforms to the age-old notion that nobody can do it alone. Even Amazon — the original “if you build it, they will come” company… the company that never cared much about margins but was obsessed about volume (which turned out to be just the right solution for e-commerce) — couldn’t do it all without the help of others.  Quite often, this help has come in the form of an acquisition. Of course, the $13.7 billion purchase of Whole Foods, if it goes through, would be the company’s largest acquisition to date. But Amazon has also used smaller acquisitions to help build its grand vision.  Since going public in 1997, all its acquisitions have resulted in the creation of the Amazon we know now. For example, in 1998, the company made a somewhat puzzling purchase of IMDB, a leading website for facts and information about TV and movies; now it serves as both a content provider and a marketing tool. Its 1999 purchase of Alexa, then just a web navigation service, is now a subsidiary for web analytics and search engine optimization… Read More

One of my first lessons in investing came from a physician who lived in the building where I worked as a doorman while in college. The year was 1981 and I was just finishing my sophomore year.  The job didn’t pay much, but it offered plenty of solitude to study during the week. But the weekends were a different story.  Saturdays brought lots of unsolicited advice from the residents — mostly about how to be successful in life. Years later I came to believe those Saturday afternoons were just as valuable as my formal education. One weekend, a doctor who… Read More

One of my first lessons in investing came from a physician who lived in the building where I worked as a doorman while in college. The year was 1981 and I was just finishing my sophomore year.  The job didn’t pay much, but it offered plenty of solitude to study during the week. But the weekends were a different story.  Saturdays brought lots of unsolicited advice from the residents — mostly about how to be successful in life. Years later I came to believe those Saturday afternoons were just as valuable as my formal education. One weekend, a doctor who lived in the building told me to buy stock in Chrysler. He said it was a great stock at its current price of $3 per share. I didn’t know much about investing, so I did my homework. I quickly learned that most analysts thought the company was heading to liquidation. In fact, just about everything I read told me to avoid the stock at all costs. But the doctor told me they were wrong… Trusting the doctor, I combined my next paycheck with a small loan from my dad. I bought 100 shares of Chrysler — my entire life’s savings… Read More

Here we are again at the halfway point in another trading year. What’s happened? What’s going to happen? I’m not sure of what will happen going forward. But we can look in the rearview mirror and try to position our investments as prudently as we can based on what we already know. A lot of variables can affect the outcome: Interest rates, the economy, and geo-political events just to name a few. Let’s dive right in… Stocks Are Still Cruising In The Stratosphere Midway through 2017, U.S. equity markets seem to be in the optimism business. Year-to-date, the S&P… Read More

Here we are again at the halfway point in another trading year. What’s happened? What’s going to happen? I’m not sure of what will happen going forward. But we can look in the rearview mirror and try to position our investments as prudently as we can based on what we already know. A lot of variables can affect the outcome: Interest rates, the economy, and geo-political events just to name a few. Let’s dive right in… Stocks Are Still Cruising In The Stratosphere Midway through 2017, U.S. equity markets seem to be in the optimism business. Year-to-date, the S&P 500 index has climbed 7.6% on a price basis. Annualized, that puts us on track for better than 15% return. But will we get there? Good question! The forward P/E of the S&P 500 currently sits at 18.7 — not too terribly overvalued. If we can get through the summer doldrums without any surprises (more on that in a bit), we could at least get close. #-ad_banner-#The real story in stocks, though, is international. The MSCI EAFE index, one of the best measures of developed market performance, has turned in an impressive 12.3% year-to-date, leaving the S&P in the dust. Read More

During the June press conference of the Federal Open Market Committee (FOMC), Federal Reserve Chair Janet Yellen downplayed the recent slowdown in inflation. She even went so far as to call attention to cell phone service pricing as a temporary factor affecting inflation expectations.  Fed watchers had started to doubt whether the central bank would further increase rates this year as inflationary pressures ebbed. Yellen’s statements sent rates on the 10-year Treasury plunging as most see little evidence that the Fed will be able to reach its inflation target of 2% this year. But what if… Read More

During the June press conference of the Federal Open Market Committee (FOMC), Federal Reserve Chair Janet Yellen downplayed the recent slowdown in inflation. She even went so far as to call attention to cell phone service pricing as a temporary factor affecting inflation expectations.  Fed watchers had started to doubt whether the central bank would further increase rates this year as inflationary pressures ebbed. Yellen’s statements sent rates on the 10-year Treasury plunging as most see little evidence that the Fed will be able to reach its inflation target of 2% this year. But what if Yellen is right? What if pricing pressures are heading higher? A return to inflation after years of subdued pressure would have far-reaching effects on the economy and different assets. Not only would increased inflation send bonds reeling, but it could also derail the eight-year bull market by slowing price growth via higher interest rates. With the unemployment rate nearing 4% and economic growth pulling people back into the labor force, the Fed is firmly in disagreement with the market on the outlook for inflation.  Only one of them can be right. So Who Is Right? The markets do not… Read More

Around this time last year, shares of a little-known small-cap company — Fleetmatics (NYSE: FLTX) — jumped 40% in one day. Over the prior weekend, the company agreed to be bought by Verizon (NYSE: VZ) for $60 per share in cash — a massive premium to the previous day’s closing price. A 100-share stake that was worth $4,296 on one day was now worth $5,959. Only a month earlier, Medtronic (NYSE: MDT) bought HeartWare (Nasdaq: HTWR), a maker of surgical implants for the heart, for $1.1 billion, a 93% premium to the previous day’s closing price. #-ad_banner-#These deals signify… Read More

Around this time last year, shares of a little-known small-cap company — Fleetmatics (NYSE: FLTX) — jumped 40% in one day. Over the prior weekend, the company agreed to be bought by Verizon (NYSE: VZ) for $60 per share in cash — a massive premium to the previous day’s closing price. A 100-share stake that was worth $4,296 on one day was now worth $5,959. Only a month earlier, Medtronic (NYSE: MDT) bought HeartWare (Nasdaq: HTWR), a maker of surgical implants for the heart, for $1.1 billion, a 93% premium to the previous day’s closing price. #-ad_banner-#These deals signify a fact of life that corporate executives — and successful game-changing stock investors — know too well: it’s easier to buy something than to build it from scratch. In the case of Fleetmatics, for instance, Verizon was looking to instantly enhance its IoT (Internet of Things) portfolio. Instead of having to develop its own surgical implants that mimic the heart’s blood-pumping function, all Medtronic will have to do is sign the dotted line (and fork over the cash).  Companies that possess disruptive or proprietary technologies, or those that have made inroads into a new,… Read More

Entropy, the second law of thermodynamics, says that all closed systems will tend to greater disorder. It’s also a quickening process. The greater the disorder becomes, the faster the system breaks down completely. In a nutshell, things just tend to fall apart.  That systemic law may be just as true outside the world of physics, as several forces look to be ushering us to an age of disorder. Eurasia Group, the political think tank, has warned that the world is entering a year of geopolitical recession in 2017.  Strategists at Goldman Sachs… Read More

Entropy, the second law of thermodynamics, says that all closed systems will tend to greater disorder. It’s also a quickening process. The greater the disorder becomes, the faster the system breaks down completely. In a nutshell, things just tend to fall apart.  That systemic law may be just as true outside the world of physics, as several forces look to be ushering us to an age of disorder. Eurasia Group, the political think tank, has warned that the world is entering a year of geopolitical recession in 2017.  Strategists at Goldman Sachs told CNBC last week that it may take either a war or recession to shock the stock market out of its low-volatility range. While the investment bank estimates only a 25% chance of recession over the next two years, the risk of a geopolitical conflict could be just around the corner. The world seems to be turning to a more uncertain and hostile future, one where geopolitical and economic events may cause a spike in stock volatility. Instead of buying general protection or shifting money to safety assets, there are investments that can thrive in the environment. Are We Heading… Read More