“Nothing under $5.” #-ad_banner-#That was often the message I was greeted with by mutual hedge fund managers as I sat down to discuss my latest picks with them. As a Wall Street analyst, it was my job to help these managers discover winning ideas. And unfortunately, many of them were restricted from buying any stocks priced below $5. It’s an arbitrary rule established by boards of directors at funds… but one that the rest of us can profit from. That’s because once a stock reaches $5, a lot of these same fund managers start to consider such stocks — and… Read More

“Nothing under $5.” #-ad_banner-#That was often the message I was greeted with by mutual hedge fund managers as I sat down to discuss my latest picks with them. As a Wall Street analyst, it was my job to help these managers discover winning ideas. And unfortunately, many of them were restricted from buying any stocks priced below $5. It’s an arbitrary rule established by boards of directors at funds… but one that the rest of us can profit from. That’s because once a stock reaches $5, a lot of these same fund managers start to consider such stocks — and if they like what they see, they’ll push shares yet higher as they take a stake. Here’s a look at three stocks with each trading under $3 that could reach and surpass that $5 threshold in the year ahead. 1. Ceragon Networks (Nasdaq: CRNT ) Just a few years ago, this provider of high-speed wireless network equipment to emerging-market countries was a popular choice among fund managers. Its sales had surged from $184 million in 2009 to $445 million by 2011. But the past few years have seen a pullback in capital spending by wireless service providers, and… Read More

Somewhere, comic book creator Chester Gould is smiling. #-ad_banner-#Though he passed away in 1985, he’d be thrilled to know that the smartwatch he created back in the 1940s for his most famous character, Dick Tracy, would finally land on consumers’ wrists in 2014. The first few of these watches have now hit the market and Apple (Nasdaq: AAPL) appears poised to launch its own version in coming months. In fact, smartwatches and larger smartphones (known as phablets) are likely to be the hottest consumer electronics products this coming holiday season. Whether these products deliver major share price gains for Apple… Read More

Somewhere, comic book creator Chester Gould is smiling. #-ad_banner-#Though he passed away in 1985, he’d be thrilled to know that the smartwatch he created back in the 1940s for his most famous character, Dick Tracy, would finally land on consumers’ wrists in 2014. The first few of these watches have now hit the market and Apple (Nasdaq: AAPL) appears poised to launch its own version in coming months. In fact, smartwatches and larger smartphones (known as phablets) are likely to be the hottest consumer electronics products this coming holiday season. Whether these products deliver major share price gains for Apple and its peers remains to be seen. For the most part, analysts are bullish. But in the consumer electronics space, winners can create losers. And few companies have as much to lose from these product categories as Garmin (Nasdaq: GRMN). For years, we’ve been buying stand-alone GPS devices from Garmin and others (which are known in the industry as personal navigation devices or PNDs). Garmin and its peers have managed to forestall any threat from increasingly functional smartphones, largely because such phones had smaller screen sizes. “Garmin has talked periodically over the past two years that its larger screen size… Read More

Here at StreetAuthority, we’re big fans of the theme known as “guru investing” because following the trading moves of proven money managers can yield outsized gains. There is actually proof of such a notion: The Global X Guru Index ETF (Nasdaq: GURU) which launched in June 2012, is up a solid 75% since then, outperforming the S&P 500 Index by more than 20 percentage points.  GURU data by YCharts #-ad_banner-#Though this ETF buys and sells stocks that have popped upon the mandatory Form 13F statement of ownership lists,… Read More

Here at StreetAuthority, we’re big fans of the theme known as “guru investing” because following the trading moves of proven money managers can yield outsized gains. There is actually proof of such a notion: The Global X Guru Index ETF (Nasdaq: GURU) which launched in June 2012, is up a solid 75% since then, outperforming the S&P 500 Index by more than 20 percentage points.  GURU data by YCharts #-ad_banner-#Though this ETF buys and sells stocks that have popped upon the mandatory Form 13F statement of ownership lists, the strong outperformance may be attributable to a proprietary twist: Thanks to an undisclosed methodology, this ETF’s managers are able to focus on the best ideas in their purview, what are considered high-conviction ideas. As an example, they give a strong bias to the picks by hedge fund managers that show a buy-and-hold style, and avoid those fund managers that simply zoom in and out of various stocks at a rapid clip.  The best fund managers know that winning stock ideas often take awhile to ripen, and the most patient among them are often rewarded for their far-sightedness.  There is… Read More

I am a recent convert to the clean-energy revolution. #-ad_banner-#As I write this, solar panels are generating roughly five times the amount of energy my home is consuming (with two air-conditioning units blasting). Fast-forward a decade into the future, and more advanced solar panels and better battery technologies might just help make solar an obvious choice for almost any homeowner. But clean energy technologies obviously have drawbacks. As we’ve seen over the past five years, a wide set of variables have led to sales booms and profit busts, as industry capacity and pricing for both wind and solar fight to… Read More

I am a recent convert to the clean-energy revolution. #-ad_banner-#As I write this, solar panels are generating roughly five times the amount of energy my home is consuming (with two air-conditioning units blasting). Fast-forward a decade into the future, and more advanced solar panels and better battery technologies might just help make solar an obvious choice for almost any homeowner. But clean energy technologies obviously have drawbacks. As we’ve seen over the past five years, a wide set of variables have led to sales booms and profit busts, as industry capacity and pricing for both wind and solar fight to compete with low-cost natural gas. Right now, solar stocks are in favor. Tomorrow: Who knows? That’s why a more grounded investment in clean energy may be the wiser approach, focusing on companies that stand to prosper, regardless of the zigs and zags of clean-energy pricing and profits. And my favorite business model for such an approach remains Abengoa (Nasdaq: ABGB), which I profiled back in December. As a quick primer, this Spanish company, which only began trading in the U.S. last year, builds out the massive infrastructure to support new clean-energy production facilities, desalination plants, and energy-efficient electricity networks. Though… Read More

Throughout the spring, analysts at Lazard Capital and Leerink Swan kept pounding the table for little-known Insmed (Nasdaq: INSM).  The analysts kept telling clients that Insmed’s Arikace, which is an inhalable antiobiotic used in serious lung infections, was poised to be given a “breakthrough therapy” designation by the FDA. They even suggested such an event would come in June. Their clients should have listened. If they did, they would have scored quick gains when that scenario played out as planned. #-ad_banner-#As far as these analysts were concerned, an investment in Insmed was almost a sure thing. The clinical… Read More

Throughout the spring, analysts at Lazard Capital and Leerink Swan kept pounding the table for little-known Insmed (Nasdaq: INSM).  The analysts kept telling clients that Insmed’s Arikace, which is an inhalable antiobiotic used in serious lung infections, was poised to be given a “breakthrough therapy” designation by the FDA. They even suggested such an event would come in June. Their clients should have listened. If they did, they would have scored quick gains when that scenario played out as planned. #-ad_banner-#As far as these analysts were concerned, an investment in Insmed was almost a sure thing. The clinical data in support of Arikace were just that good. (For more on Insmed, read this profile from last year.) Of course, most other biotechs can never be considered a sure thing. Even when armed with robust efficacy and safety data, a key drug can still get the kibosh from the mercurial FDA. Still, as the Insmed example shows, biotechs that are approaching major clinical milestones, or will soon come before the FDA for final drug approval, can make for very profitable and timely trades. Even once a company has FDA approval for a key drug or… Read More

The rapid proliferation of the exchange-traded fund (ETF) industry has been a boon for investors. #-ad_banner-#Many folks now simply focus on a key sector or trend, and buy the most suitable ETF to hit their target. For these folks, the time and energy of individual stock research just isn’t worth… Read More

Investors who try to uncover value among companies with a lot of insider buying have their work cut out for them.   #-ad_banner-#First, they need to confirm that the buying activity is done with real money and not merely stock option conversions. Some folks will tell you that getting company stock for free and then hanging onto it is a vote of confidence, but it’s not.  You also need to separate the buying activity by officers and directors, rather than major investors, which can be classified as insiders if their stakes in the company are large enough. I sometimes track… Read More

Investors who try to uncover value among companies with a lot of insider buying have their work cut out for them.   #-ad_banner-#First, they need to confirm that the buying activity is done with real money and not merely stock option conversions. Some folks will tell you that getting company stock for free and then hanging onto it is a vote of confidence, but it’s not.  You also need to separate the buying activity by officers and directors, rather than major investors, which can be classified as insiders if their stakes in the company are large enough. I sometimes track the moves of such major investors, but at the end of the day, they aren’t truly insiders.  Lastly, you need to confirm that share prices still hover in the same area as when the buying took place. Shares often rise quickly on news of insider buying, and if that happens, it’s often too late to capitalize on the bullish insider activity. I’ve spent the past few days reviewing a broad range of insider buying activity that has taken place over the past month, and tossed out most candidates for further research, for the reasons noted above. But these six companies… Read More

There’s a reason why some investors focus only on tech stocks. It’s the only sector that creates winners and losers every year — thanks to rapid technology change — creating an opening for investors in search of the next breakout stock. Last year’s laggard can be this year’s leader. #-ad_banner-#Case in point: Cisco Systems (Nasdaq: CSCO), which had lagged behind the broader tech sector for several years, but has now rallied 20% since mid-March (against the Nasdaq’s 7% gain in that time). The key catalyst for Cisco: a looming set of new product launches that are expected to help invigorate… Read More

There’s a reason why some investors focus only on tech stocks. It’s the only sector that creates winners and losers every year — thanks to rapid technology change — creating an opening for investors in search of the next breakout stock. Last year’s laggard can be this year’s leader. #-ad_banner-#Case in point: Cisco Systems (Nasdaq: CSCO), which had lagged behind the broader tech sector for several years, but has now rallied 20% since mid-March (against the Nasdaq’s 7% gain in that time). The key catalyst for Cisco: a looming set of new product launches that are expected to help invigorate growth. Analysts at Cantor Fitzgerald just boosted their target price to $31, noting that the company’s “bottom in the profit cycle dovetails with a ramp in the product cycle.” Indeed, the best time to catch a tech stock when it is on the cusp of new product releases, or is on the cusp of greater adoption for its technology. And it’s best to find such companies when they still represent solid value, as was the case with Cisco this past winter. That setup is now in place for one of my favorite tech stocks for the next few years: Universal… Read More

While many investors were headed to the beach or the mountains for the Independence Day weekend, they might have missed a doozy of a jobs report. Nearly 300,000 jobs were created in June, the national unemployment rate fell to just 6.1%, and the report showed such well-rounded strength that economists are increasingly convinced that the good times will last all year. By my math, a quickly firming labor market should lead to higher interest rates. I was surprised when interest rates failed to budge after Federal Reserve Chairman Janet Yellen’s comments during the release of the minutes from the June… Read More

While many investors were headed to the beach or the mountains for the Independence Day weekend, they might have missed a doozy of a jobs report. Nearly 300,000 jobs were created in June, the national unemployment rate fell to just 6.1%, and the report showed such well-rounded strength that economists are increasingly convinced that the good times will last all year. By my math, a quickly firming labor market should lead to higher interest rates. I was surprised when interest rates failed to budge after Federal Reserve Chairman Janet Yellen’s comments during the release of the minutes from the June meeting of the Fed’s Open Market Committee. Yet last week’s employment report may be the catalyst to get rates moving higher. #-ad_banner-#A rise in rates cuts both ways for U.S. stocks. They signal stronger economic activity, but also start to squeeze out comparable income-producing equity investments. For investors involved with some other major markets, rising rates are simply bad news. A mountain of fresh debt is the culprit, as these economies fell into a classic mistake. In a recent report, the Bank of International Settlements (BIS) explains: “Financial booms in which surging asset prices… Read More

The impressive early gains for camera maker GoPro (Nasdaq: GPRO) didn’t come in a vacuum. The company’s IPO was launched in the midst of a veritable frenzy of new issues.  #-ad_banner-#In just the past few weeks, a wide variety of companies have come public, and plans are in place to maintain the frenzied pace throughout July as well. Anytime you see such a large group of new IPOs in a short period of time, a trading opportunity invariably emerges: The stocks start trading, often shoot higher, and then momentum investors start to lose interest, leading shares to drift lower.  That’s where… Read More

The impressive early gains for camera maker GoPro (Nasdaq: GPRO) didn’t come in a vacuum. The company’s IPO was launched in the midst of a veritable frenzy of new issues.  #-ad_banner-#In just the past few weeks, a wide variety of companies have come public, and plans are in place to maintain the frenzied pace throughout July as well. Anytime you see such a large group of new IPOs in a short period of time, a trading opportunity invariably emerges: The stocks start trading, often shoot higher, and then momentum investors start to lose interest, leading shares to drift lower.  That’s where Wall Street analysts come in. If they are affiliated with the firm that underwrote the IPO, then these analysts can issue their new research coverage on these firms after an appropriate waiting period (25 calendar days after the IPO for companies with less than $1 billion in revenue and 40 days for larger firms).  Such research often gives new stocks a boost (known as the “quiet period bounce”) because the analysts’ target prices are often higher than the current trading price. Of course, any IPO that has already sharply surged in price may not see such a bounce. GoPro is… Read More