Investors tend to steer clear of any company or industry with limited growth prospects. But there is money to be made if the rest of the market looks to shun such investments. After all, these largely matured businesses don’t need to invest much money to develop products and fuel new growth, so they can generate an outsized level of profits on their revenue streams. That’s why some investors love tobacco stocks. They’re unloved by many, but they typically offer very juicy dividends, making them a favorite among income-oriented investors. Friday morning, we were reminded… Read More

Investors tend to steer clear of any company or industry with limited growth prospects. But there is money to be made if the rest of the market looks to shun such investments. After all, these largely matured businesses don’t need to invest much money to develop products and fuel new growth, so they can generate an outsized level of profits on their revenue streams. That’s why some investors love tobacco stocks. They’re unloved by many, but they typically offer very juicy dividends, making them a favorite among income-oriented investors. Friday morning, we were reminded just how profitable these companies are: Lorillard (NYSE: LO), which makes Newport cigarettes, announced that an already juicy dividend would be boosted +12.5%, and the company plans to buy back another $1 billion in stock. Let’s take a deeper look to see if the sector should merit your investment dollars. Final spurt of growth Many of us (myself included) assumed that Big Tobacco is already in decline. Yet as the table below notes, the biggest industry players are still seeing a bit more revenue growth this year, thanks in part… Read More

One of the most fertile areas for investment research can always be found among stocks that trade for less than the price of a deluxe cheeseburger. When a stock is below $5 or $6, many mutual funds are prevented from owning them. Yet if these stocks can… Read More

Throughout the last winter and spring, solar stocks fell deeper and deeper out of favor. Investors fretted about a sharp slowdown in government subsidies right at a time when many companies were expanding their factories to boost output. Prices for solar panels and other components were in freefall as inventories piled up. But industry executives in China had a hunch that they could find ample demand for their rising output. They were right. Demand is better than many had expected, and this sector is now in rally mode. In the last three months, Jinko Solar (NYSE: JKS),… Read More

Throughout the last winter and spring, solar stocks fell deeper and deeper out of favor. Investors fretted about a sharp slowdown in government subsidies right at a time when many companies were expanding their factories to boost output. Prices for solar panels and other components were in freefall as inventories piled up. But industry executives in China had a hunch that they could find ample demand for their rising output. They were right. Demand is better than many had expected, and this sector is now in rally mode. In the last three months, Jinko Solar (NYSE: JKS), Solarfun (NYSE: SLF), ReneSola (NYSE: SOL) and Trina Solar (NYSE: TSL) have all risen by at least +40%. If you missed those moves, ample opportunities remain for some of the other industry players. Jinko sets the tone Little-known Jinko Solar has single-handedly established a more bullish tone for the entire sector. The May, 2010 IPO was flat-lining around $10 two months ago, but has since surged nearly +150% thanks to recent blowout earnings. The company turns re-processed and virgin silicon into solar panels and… Read More

Throughout the summer, a clear theme has emerged. High-tech companies have reported generally solid results, and yet shares in the sector keep drifting down toward 52-week lows. Despite their considerable cash balances, investors have grown increasingly concerned that sector growth will stall out. That’s why Intel’s (Nasdaq: INTC) just-announced decision to buy security software vendor McAfee (NYSE: MFE) is so important. It’s a clear sign that these tech titans will use their balance sheets to help alleviate those growth concerns. Short -term implications The fact that Intel is paying a… Read More

Throughout the summer, a clear theme has emerged. High-tech companies have reported generally solid results, and yet shares in the sector keep drifting down toward 52-week lows. Despite their considerable cash balances, investors have grown increasingly concerned that sector growth will stall out. That’s why Intel’s (Nasdaq: INTC) just-announced decision to buy security software vendor McAfee (NYSE: MFE) is so important. It’s a clear sign that these tech titans will use their balance sheets to help alleviate those growth concerns. Short -term implications The fact that Intel is paying a +60% premium to Wednesday’s close tells you that private market valuations are often far higher than the value these companies are getting as public entities. It’s also noteworthy that Intel’s offer of $48 a share is just above McAfee’s 52-week trading range. Generally speaking, buyout offers must exceed that threshold to avoid accusations that a company is being sold on the cheap while it is out of favor. Then again, McAfee’s shares haven’t seen $48 since the dot-com era of 1999. McAfee’s board would have been hard-pressed to reject this offer,… Read More

In times of crisis, investors invariably seek shelter in the almighty dollar. The perceived resilience of the U.S. economy has given the impression that we are simply too large a ship to sink. And although we are well past the scary times of 18 months ago, the global economy still feels dicey, and the dollar, which rallied sharply as the global economy crumbled, still remains fairly strong against the euro and the Chinese yuan. Yet as the global economy sputters back to life during the next year or two, the dollar… Read More

In times of crisis, investors invariably seek shelter in the almighty dollar. The perceived resilience of the U.S. economy has given the impression that we are simply too large a ship to sink. And although we are well past the scary times of 18 months ago, the global economy still feels dicey, and the dollar, which rallied sharply as the global economy crumbled, still remains fairly strong against the euro and the Chinese yuan. Yet as the global economy sputters back to life during the next year or two, the dollar is likely to resume its downward drift that had begun back in 2007 and 2008. If it weakens in a slow and steady fashion, it could help pave the way for a long-awaited export boom that finally reverses stubborn trade deficits and spurs a badly-needed employment surge in our nation’s heartland. Why the long-term bearishness on the dollar? Here are three reasons why… 1. For starters, our budget deficits for fiscal 2010 and 2011 are at record levels (on a non-inflation-adjusted basis). The amount of debt held by the public (that is, excluding intergovernmental… Read More

One of the benefits of closely monitoring stocks month after month is that you get to identify great companies to put on your watch list. And when these companies temporarily fall out of favor, you can take advantage. During the past decade, I have always been very impressed with the… Read More

General Electric (NYSE: GE) is back. Its shares have more than doubled from the early 2009 swoon to near $16 and profits have begun to rebound. Then again, maybe not. Shares never traded below $30 in the middle part of the… Read More

It’s been an absolutely brutal summer for the for-profit education stocks. In late June, the Senate began investigating whether for-profit academic institutions such as Apollo Group (Nasdaq: APOL) were a worthwhile use of taxpayer funds for student loans when their students have higher-than-average loan default rates. Senate investigators also questioned whether all of these institutions even offered academic benefits of sufficient value to justify such a high number of student loans. Then, in early July, the Department of Education (DOE) began to look into these issues as well, as rumors swirled that some of these firms might… Read More

It’s been an absolutely brutal summer for the for-profit education stocks. In late June, the Senate began investigating whether for-profit academic institutions such as Apollo Group (Nasdaq: APOL) were a worthwhile use of taxpayer funds for student loans when their students have higher-than-average loan default rates. Senate investigators also questioned whether all of these institutions even offered academic benefits of sufficient value to justify such a high number of student loans. Then, in early July, the Department of Education (DOE) began to look into these issues as well, as rumors swirled that some of these firms might run into trouble if the scrutiny got even more intense. Well, that day has arrived. The DOE has just released data that show a number of these institutions are seeing their students default on loans at an alarming rate. The DOE established a 45% payback rate as the threshold that is deemed acceptable. As the chart below indicates, one can guess which schools passed the test simply by seeing what stocks are rising and which are falling in Monday trading. Several institutions exceeded that threshold, and are seeing their shares move… Read More

When a trade turns sour, smart investors stand by their convictions and use any share price weakness to build a bigger position. And that’s just what George Soros is doing with his investment in electronics retailer Best Buy (NYSE: BBY). Shares touched a new intra-day low on Monday, but Soros is holding firm. According to TickerSpy.com, he owns more than three million shares, and his last move was as a buyer of another 299,000 shares. Soros isn’t looking like much of a market timer these days, as shares of Best Buy… Read More

When a trade turns sour, smart investors stand by their convictions and use any share price weakness to build a bigger position. And that’s just what George Soros is doing with his investment in electronics retailer Best Buy (NYSE: BBY). Shares touched a new intra-day low on Monday, but Soros is holding firm. According to TickerSpy.com, he owns more than three million shares, and his last move was as a buyer of another 299,000 shares. Soros isn’t looking like much of a market timer these days, as shares of Best Buy have fallen by nearly -25% during the past three months. But the legendary fund manager is focused on an important basic fact. This retailer isn’t hurting from increased competition (and indeed now has far less competition with the demise of Circuit City). Instead, demand for consumer electronics has hit a flat spot thanks to a weak economy and a lack of compelling new consumer electronics to buy. That flat spot should come to an end in a few quarters, and Soros will likely end up with a… Read More

When communications software firm VirnetX Holdings (AMEX: VHC) released quarterly results last Monday, investors may have thought the company’s press release had a glaring error. Sales, which had never exceeded $21,000 in any prior quarter, suddenly exploded to $200 million. It was no misprint. VirnetX finally got a nice payoff after several years of lawsuits regarding patent infringements. Other companies that sue to get royalties are also hopeful for similar windfalls. And when these companies prevail, profits can grow quickly, as patent and royalty income often flow straight to the… Read More

When communications software firm VirnetX Holdings (AMEX: VHC) released quarterly results last Monday, investors may have thought the company’s press release had a glaring error. Sales, which had never exceeded $21,000 in any prior quarter, suddenly exploded to $200 million. It was no misprint. VirnetX finally got a nice payoff after several years of lawsuits regarding patent infringements. Other companies that sue to get royalties are also hopeful for similar windfalls. And when these companies prevail, profits can grow quickly, as patent and royalty income often flow straight to the bottom line. So how can investors profit from companies with potentially lucrative patents? I’ve uncovered three companies sitting on potential gold mines in terms of their intellectual property. 1. VirnetX Holdings In the next 12 months, consumers should see an array of new smart phones offering super-fast download speeds. [See: The Time is Ripe to Short this Wireless Upstart] Yet as more and more personal and corporate information is sent out over the mobile broadband airwaves, the risk of data theft also rises. To… Read More