A surging stock price suggests a healthy company, and a flagging price portends even worse days ahead. Or so you’d think. In fact, the converse may be true. Out-of-favor stocks often represent the best upside simply because they have few fans, many of which may eventually become converts. That as surely the case a year ago, when Facebook (Nasdaq: FB) was becoming one of the most hated stocks on Wall Street. Fund managers that bought into this once-hot IPO began heading for the exits. #-ad_banner-#​Yet as I noted at the time, soon-to-be-released quarterly results should lead “many investors to… Read More

A surging stock price suggests a healthy company, and a flagging price portends even worse days ahead. Or so you’d think. In fact, the converse may be true. Out-of-favor stocks often represent the best upside simply because they have few fans, many of which may eventually become converts. That as surely the case a year ago, when Facebook (Nasdaq: FB) was becoming one of the most hated stocks on Wall Street. Fund managers that bought into this once-hot IPO began heading for the exits. #-ad_banner-#​Yet as I noted at the time, soon-to-be-released quarterly results should lead “many investors to give this moribund stock a fresh look.” Like clockwork, Facebook delivered solid quarterly results in July, and the once-hated stock has never looked back, climbing 160% since then. Why was upside for Facebook, in hindsight, so obvious? Because it was very easy to find fault with the company’s recent financial performance, and even easier to overlook the positive attributes that were beginning to bubble up. A year later, a very similar setup is in place for a once-hot social media IPO. Since Dec. 26, shares of Twitter (NYSE: TWTR) have fallen 56% while the Nasdaq has been roughly flat. And the… Read More

A long period of slow economic growth and dormant inflation has led to almost universal complacency.  #-ad_banner-#Everyone continues to repeat the same mantra that the Federal Reserve will continue to support the economy through ultra-low interest rates well into the future. Yet beneath the surface, the economy is beginning to rumble, and such a benign view can catch the market off guard. And as soon as June 6, the investor chatter may start to take on a very different tone. That day will bring the all-important monthly employment report, which is likely to produce a gain of at least 200,000… Read More

A long period of slow economic growth and dormant inflation has led to almost universal complacency.  #-ad_banner-#Everyone continues to repeat the same mantra that the Federal Reserve will continue to support the economy through ultra-low interest rates well into the future. Yet beneath the surface, the economy is beginning to rumble, and such a benign view can catch the market off guard. And as soon as June 6, the investor chatter may start to take on a very different tone. That day will bring the all-important monthly employment report, which is likely to produce a gain of at least 200,000 net new jobs for the fourth month in a row. The four-week moving average of weekly unemployment claims has moved to its lowest level in seven years, underscoring the improving health of the job market. Yet economists at Deutsche Bank think the forward view is more important. They looked at a series of recent economic data points and then took a fresh look at the current 6.3% national unemployment rate. Their conclusion: “Based on its current trajectory, the rate should fall significantly further over the next year and a half.”  Quite suddenly, the U.S. economy is shaping up to… Read More

The semiconductor industry is notorious for repeated boom and bust cycles. #-ad_banner-#Supply and demand for chips can have a rapid impact on industry profits. For example, when too many chips hit the market, a rapid price plunge can ensue that wipes all profits for that cycle. It’s no wonder such stocks deserve low price-to-earnings (P/E) ratios. Memory chip maker Micron Technology (NYSE: MU) is the poster child for such peaks and valleys: Micron has lost money in four of the past seven fiscal years, racking up a cumulative $1 billion in operating losses in that time. Still, Micron’s aggressive shift… Read More

The semiconductor industry is notorious for repeated boom and bust cycles. #-ad_banner-#Supply and demand for chips can have a rapid impact on industry profits. For example, when too many chips hit the market, a rapid price plunge can ensue that wipes all profits for that cycle. It’s no wonder such stocks deserve low price-to-earnings (P/E) ratios. Memory chip maker Micron Technology (NYSE: MU) is the poster child for such peaks and valleys: Micron has lost money in four of the past seven fiscal years, racking up a cumulative $1 billion in operating losses in that time. Still, Micron’s aggressive shift in 2011 away from deeply cyclical DRAM (dynamic random-access memory) chips and toward increasingly popular flash memory appeared poised to give a sharp boost to sales and boost to profits, and a path to consistent profitability. Roughly three years ago, I wrote that the advent of tablet computers, with their need for ample flash memory, would help finally push this stock out of doldrums. Fast forward to 2014, and Micron is now earning a record $3 a share annually, and shares are up 370% since I profiled them back in 2011. Micron also got a sharp boost by acquiring an Asia-based… Read More

Technology industry analysts sense a groundswell coming. #-ad_banner-#A series of factors have set the stage for a potentially very busy summer of deal-making. And with some creative thinking, you can get a sense of which smaller companies might soon become buyout fodder. You know that it’s a strange time in the tech sector when Apple (Nasdaq: AAPL), which almost always focuses on tiny tuck-in acquisitions, shells out $3 billion for Beats Audio. Around the same time that deal was being drawn up by lawyers and bankers, the rumor mill buzzed with… Read More

Technology industry analysts sense a groundswell coming. #-ad_banner-#A series of factors have set the stage for a potentially very busy summer of deal-making. And with some creative thinking, you can get a sense of which smaller companies might soon become buyout fodder. You know that it’s a strange time in the tech sector when Apple (Nasdaq: AAPL), which almost always focuses on tiny tuck-in acquisitions, shells out $3 billion for Beats Audio. Around the same time that deal was being drawn up by lawyers and bankers, the rumor mill buzzed with a possible Google (Nasdaq: GOOG) purchase of Yelp (NYSE: YELP). Shares of Yelp zoomed just more than 30% to $68 in the last three weeks of May, but if no such deal is announced soon, shares may drift lower. Still, a Google/Yelp linkup makes ample sense.  Google loves to generate product and service reviews, which lead to great ad sales. Google did acquire restaurant ratings firm Zagat in 2011, though that deal hasn’t been able to derail Yelp’s torrid growth and segment leadership. Google allegedly tried to acquire Yelp for $500 million back in 2010 before it went public, though… Read More

After a century of paying bills through the mail, an increasing number of Americans have made the switch to online bill payment systems. Banks love the system because it reduces their transaction costs, but they now have a new competitor: Bitcoin. #-ad_banner-#Satellite TV provider Dish Networks (Nasdaq: DISH) has just announced plans to start accepting bitcoin. Overstock.com (Nasdaq: OSTK) and Virgin America also initiated a bitcoin payment option in the past year, and other major corporations may soon follow. That means you’re likely to start hearing a lot more about this virtual currency. For non-techies like me, two quick questions… Read More

After a century of paying bills through the mail, an increasing number of Americans have made the switch to online bill payment systems. Banks love the system because it reduces their transaction costs, but they now have a new competitor: Bitcoin. #-ad_banner-#Satellite TV provider Dish Networks (Nasdaq: DISH) has just announced plans to start accepting bitcoin. Overstock.com (Nasdaq: OSTK) and Virgin America also initiated a bitcoin payment option in the past year, and other major corporations may soon follow. That means you’re likely to start hearing a lot more about this virtual currency. For non-techies like me, two quick questions arose: How does bitcoin actually work? And is it a good idea, or just a flavor of the month? To find out, I did a little digging. Controversial, But Gaining Acceptance Bitcoin was launched in 2009 as an alternative to traditional payment systems. While digital payment systems such as PayPal conduct transactions in hard currencies (such as the dollar), bitcoin is an entirely new form of currency. The methodology underpinning bitcoin is both brilliant and absurdly complex. Here’s a quick primer: Bitcoins are created as rewards for its use as a payment,… Read More

Officers and directors of the nation’s smallest and youngest biotech companies can look up their stock quotes once again. Stocks in the sector were in such rapid freefall a few months ago that a glance at the stock price chart became too painful to bear. How painful was the sell-off?  I counted 30 biotech stocks that shed at least 40% of their value in the past three months, with half of them plunging by more than 50%. #-ad_banner-#​Yet it appears as if the worst of the storm has passed. Dicerna Pharmaceuticals (Nasdaq: DRNA), for… Read More

Officers and directors of the nation’s smallest and youngest biotech companies can look up their stock quotes once again. Stocks in the sector were in such rapid freefall a few months ago that a glance at the stock price chart became too painful to bear. How painful was the sell-off?  I counted 30 biotech stocks that shed at least 40% of their value in the past three months, with half of them plunging by more than 50%. #-ad_banner-#​Yet it appears as if the worst of the storm has passed. Dicerna Pharmaceuticals (Nasdaq: DRNA), for example, which has lost two-thirds of its value this year, is up roughly 5% since April 20. Most other stumbling biotechs have also stabilized in the past month or so. Of course, such sell-offs don’t necessarily invite buying opportunities. Instead, it is wiser to focus on the soundest business models, even if they are only off 25% or 35% in this recent pullback. I’ve been spending time the past few days with the most promising biotechs. I favor those with good science, strong testing data, potentially large market opportunities and healthy cash balances. Here’s a short list… Read More

For several decades, clean technology supporters have waited for the day when solar power truly achieved “grid parity.”  #-ad_banner-#Everyone understood that this promising renewable form of energy needed to eventually compete with nuclear, oil, coal and gas — without any government subsidies. Much faster than anyone expected, we’re almost there. The cost to produce solar panels has dropped so fast, and the energy conversion ratio of solar panels has risen ever higher, that government subsidies are beginning to phase out, which is unlikely to slow down the torrid growth for solar. Some of the juice created by solar power (and… Read More

For several decades, clean technology supporters have waited for the day when solar power truly achieved “grid parity.”  #-ad_banner-#Everyone understood that this promising renewable form of energy needed to eventually compete with nuclear, oil, coal and gas — without any government subsidies. Much faster than anyone expected, we’re almost there. The cost to produce solar panels has dropped so fast, and the energy conversion ratio of solar panels has risen ever higher, that government subsidies are beginning to phase out, which is unlikely to slow down the torrid growth for solar. Some of the juice created by solar power (and wind, geothermal and micro-turbines) will be fed back into the grid, especially where two-way power meters are installed, but much of the excess power we generate will simply be uncaptured and frittered away. That’s why engineers continue to work hard to develop new ways to store energy, tinkering with virtually every kind of known battery chemistry and coming up with unusual ways to bottle up power for future use.  How bad is the problem?  When clean energy sources such as solar or wind are producing peak power, they can create too much supply for grid operators, who essentially must give away… Read More

When companies are looking to spin off a division to shareholders, or merely looking to incorporate a new division, they will often call it “Newco.” #-ad_banner-#It’s not an imaginative name for “new company,” but it serves as a temporary placeholder for legal purposes until a better name can be found. These days, many companies are shifting to a new business model called “Yieldco.” Carving out a slice of a business to deliver a steady and growing dividend yield is suddenly becoming very popular. In just the past year, Yieldcos such as NRG Yield (NYSE: NYLD), and Pattern Energy (Nasdaq: PEGI),… Read More

When companies are looking to spin off a division to shareholders, or merely looking to incorporate a new division, they will often call it “Newco.” #-ad_banner-#It’s not an imaginative name for “new company,” but it serves as a temporary placeholder for legal purposes until a better name can be found. These days, many companies are shifting to a new business model called “Yieldco.” Carving out a slice of a business to deliver a steady and growing dividend yield is suddenly becoming very popular. In just the past year, Yieldcos such as NRG Yield (NYSE: NYLD), and Pattern Energy (Nasdaq: PEGI), have begun trading, and the early gains have been impressive. NRG Yield is up 50% since its July launch, and Pattern Energy is up 30% since its debut last September. Their yields have been pushed down 3% to 4% as the share prices have risen, but they were fairly robust when these Yieldcos started trading. So what exactly is a Yieldco?  To understand that question, it helps to examine NRG Energy Co. (NYSE: NRG), which spawned NYLD. NRG is a $14 billion (in revenue) independent power producer that owns nearly 90 fossil fuel and nuclear power plants, along with a growing… Read More

Companies are deep in the throes of buyback fever.  #-ad_banner-#Just released data from S&P Capital IQ suggest that the dollar value of buyback activity in the first quarter of 2014 was the highest in nearly seven years. Companies spent $158 billion on their own stock, which works out to an annualized pace of around $630 billion. This is a trend that keeps on recurring. Last summer, I noted that companies had spent $455 billion on buybacks in the 12 months ended June 30, 2013.  Back then, I recommended a pair of exchange-traded funds (ETFs) that were well-positioned to profit from this… Read More

Companies are deep in the throes of buyback fever.  #-ad_banner-#Just released data from S&P Capital IQ suggest that the dollar value of buyback activity in the first quarter of 2014 was the highest in nearly seven years. Companies spent $158 billion on their own stock, which works out to an annualized pace of around $630 billion. This is a trend that keeps on recurring. Last summer, I noted that companies had spent $455 billion on buybacks in the 12 months ended June 30, 2013.  Back then, I recommended a pair of exchange-traded funds (ETFs) that were well-positioned to profit from this trend. Both the PowerShares Buyback Achievers (NYSE: PKW) and the AdvisorShares TrimTabs Float Shrink ETF (NYSE: TTFS) have delivered great returns to investors, according to Morningstar.  The AdvisorShares fund lacks the long-term track record of the PowerShares fund, but we do know that since it opened for trading on Oct. 5, 2011, at a price of $26.44, it has risen 91%. In that time, the PowerShares fund has risen 86% while the S&P 500 Index is up 70%. Arguably, these two buyback-focused ETFs are equally suitable for investors. Or are they? A closer look reveals some key differences,… Read More

Some ideas just take a little time to germinate. #-ad_banner-#More than six years ago, Google (Nasdaq: GOOG) hinted at plans to roll out a nationwide network of free Internet portals, known as “Wi-Fi on steroids.” At the time, the press reports suggested that “ubiquitous wireless access for all Americans,” according to the company’s general counsel, might be coming to a town near you as soon as 2009. Though the idea of a Google Wi-Fi network popped up in the news in subsequent years, it never really got off the ground. It seems that the technology, or Google’s… Read More

Some ideas just take a little time to germinate. #-ad_banner-#More than six years ago, Google (Nasdaq: GOOG) hinted at plans to roll out a nationwide network of free Internet portals, known as “Wi-Fi on steroids.” At the time, the press reports suggested that “ubiquitous wireless access for all Americans,” according to the company’s general counsel, might be coming to a town near you as soon as 2009. Though the idea of a Google Wi-Fi network popped up in the news in subsequent years, it never really got off the ground. It seems that the technology, or Google’s basic strategy, needed more time in the shop before a broad public roll-out. Yet that roll-out may soon be at hand. According to recent reports, Google aims to provide free wireless equipment to a network of small and medium-sized businesses — if those businesses are willing to let the tech giant use that equipment as part of a nationwide network.  Why Google would pursue such a strategy is not yet fully clear. Presumably, the networked Wi-Fi gear would enable the company to deliver more targeted ads to anyone on its network. Few other companies would spend hundreds of millions of… Read More