When shares of Big Data firm Splunk (Nasdaq: SPLK) crossed the $100 mark at the end of February, the company had just delivered its first $100 million quarter. That was more than 50% higher than a year earlier, helping to seemingly justify the company’s market value, which had just exceeded $10 billion.  #-ad_banner-#Analysts at FBN Securities noted that such a lofty valuation “shows that the stock is not for the faint of heart,” but they saw another 15% upside to their $115 price target. As it turns out, most have investors have lost heart. This stock has plunged 40% to… Read More

When shares of Big Data firm Splunk (Nasdaq: SPLK) crossed the $100 mark at the end of February, the company had just delivered its first $100 million quarter. That was more than 50% higher than a year earlier, helping to seemingly justify the company’s market value, which had just exceeded $10 billion.  #-ad_banner-#Analysts at FBN Securities noted that such a lofty valuation “shows that the stock is not for the faint of heart,” but they saw another 15% upside to their $115 price target. As it turns out, most have investors have lost heart. This stock has plunged 40% to around $60 over the past five weeks. What was once seen as an “own at any price” stock has quite suddenly become a “too hot to touch” stock.  And Splunk has esteemed company: Many richly valued tech stocks have been falling at a rapid pace in recent weeks, even though forward sales and profit estimates have remained largely intact. Make no mistake: If the market heads lower from here, these very same tech stocks have a lot more downside ahead. How do we know that? Many of them remain richly valued.  Splunk, despite its sharp, plunge, is one… Read More

The past month has been tough for tech stocks.  The Nasdaq composite index hit a recent peak of 4,358 on March 5 — but has slid more than 5% since then. That figure may be a bit deceiving. Many stocks in the tech index have managed to hold their ground, but some of the most richly valued tech stocks are now drifting quite far from their peaks.  Roughly three weeks ago, I took note of these slumps, and the selling has continued since then, with many of 2013’s hottest tech stocks now off 20% or more from their recent peaks. Read More

The past month has been tough for tech stocks.  The Nasdaq composite index hit a recent peak of 4,358 on March 5 — but has slid more than 5% since then. That figure may be a bit deceiving. Many stocks in the tech index have managed to hold their ground, but some of the most richly valued tech stocks are now drifting quite far from their peaks.  Roughly three weeks ago, I took note of these slumps, and the selling has continued since then, with many of 2013’s hottest tech stocks now off 20% or more from their recent peaks. #-ad_banner-#​To be sure, nobody would call these tech stocks bargains, even after they’ve sold off. But as these stocks grind lower, it’s time to assess which ones may be close to a floor and poised for a rebound. For example, Oppenheimer analyst Jason Helfstein, who previously rated Netflix (Nasdaq: NFLX) and Yelp (Nasdaq: YELP) as “perform” (meaning neutral), just boosted his ratings on these stocks to “outperform.” Regarding Netflix, he notes that the $120 plunge from a month ago is partially attributable to concerns that Amazon.com (Nasdaq: AMZN) will soon launch a set-top box suitable for video streaming,… Read More

This is a good time to run a large, publicly traded company.  Regardless of business conditions, most share prices remain well above the lows seen back in the Great Recession of 2008, and not far from all-time highs. In fact, nearly 98% of the 500 stocks in the S&P 500 are trading within 30% of their 52-week highs. #-ad_banner-#Yet a handful of companies would like to forget the past year. Their shares have plunged sharply, and they are now deeply out of favor with investors. But remember Warren Buffett’s investing maxim “The best time to buy… Read More

This is a good time to run a large, publicly traded company.  Regardless of business conditions, most share prices remain well above the lows seen back in the Great Recession of 2008, and not far from all-time highs. In fact, nearly 98% of the 500 stocks in the S&P 500 are trading within 30% of their 52-week highs. #-ad_banner-#Yet a handful of companies would like to forget the past year. Their shares have plunged sharply, and they are now deeply out of favor with investors. But remember Warren Buffett’s investing maxim “The best time to buy stocks is when they are hated.” That’s because these companies have a much greater capacity to win new converts — if they can improve operations — at least when compared with companies that are already firing on all cylinders and much-loved by investors. These eight companies all reside in the S&P 500 and have fallen more than 30% from their 52-week highs. The key issue for these broken stocks is “fixability.” Do they have the levers in place to improve operations? Or are broader industry conditions set to improve? If the answer is no to those questions, then these stocks… Read More

At the trading desks in Sao Paolo, Brazil, you can hear a collective sigh of relief. The country’s Bovespa market index, which had fallen roughly 30% over the two years ended March 1, has finally reversed course. Since early March, this index has rallied more than 10% to above 51,000, boosting the prospects of a range of long-suffering exchange-traded funds (ETFs). #-ad_banner-#Before you can conclude that you’ve missed out on this impressive mini-rally, know that these funds remain far below their multi-year averages. That last ETF, for example, the ProShares Ultra MSCI Brazil… Read More

At the trading desks in Sao Paolo, Brazil, you can hear a collective sigh of relief. The country’s Bovespa market index, which had fallen roughly 30% over the two years ended March 1, has finally reversed course. Since early March, this index has rallied more than 10% to above 51,000, boosting the prospects of a range of long-suffering exchange-traded funds (ETFs). #-ad_banner-#Before you can conclude that you’ve missed out on this impressive mini-rally, know that these funds remain far below their multi-year averages. That last ETF, for example, the ProShares Ultra MSCI Brazil ETF (NYSE: UBR), has rebounded from $32 to $48, but stood above $140 back in 2011. Most of these ETFs trade for less than half of what they traded for back then (though some were launched since then). The real questions are: What’s driving this rebound, and what does it mean for Brazilian stocks for the rest of the year and beyond? The End Of Rate Hikes Brazil’s economy has been throttled by rising interest rates as the government works to halt the advance of inflation, which recently reached 6%. But the cycle of higher rates may… 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

As executives prepare to announce a major multi-billion-dollar acquisition to the public, they usually grow very excited about an enthusiastic response from key shareholders.  But when copper miner Freeport-McMoran Copper & Gold (NYSE: FCX) announced a pair of acquisitions in the oil and gas sector, worth an estimated $20 billion, investors did a spit-take.    #-ad_banner-#At the time, investors wondered why the world’s largest copper miner would diversify away into a completely unrelated industry. And they grew alarmed at the amount of debt taken on to complete the deal. More than a year later, shares remain… Read More

As executives prepare to announce a major multi-billion-dollar acquisition to the public, they usually grow very excited about an enthusiastic response from key shareholders.  But when copper miner Freeport-McMoran Copper & Gold (NYSE: FCX) announced a pair of acquisitions in the oil and gas sector, worth an estimated $20 billion, investors did a spit-take.    #-ad_banner-#At the time, investors wondered why the world’s largest copper miner would diversify away into a completely unrelated industry. And they grew alarmed at the amount of debt taken on to complete the deal. More than a year later, shares remain below where they were before the deal was announced, and many investors still see the deal as a head-scratcher. Yet in coming years, these bold strokes are likely to be seen in a much better light. Static Enterprise Value — Higher Market Value? Although Freeport-McMoran eventually announced plans to sell some assets to raise cash, the company’s long-term debt spiked from $3.5 billion at the end of 2012 to $20.7 billion at the end of 2013. In tandem with the current market value for its equity, FCX’s total enterprise value stands at around $53 billion. … 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

With the ink dry on 2013 financial results, investors can get a fresh gauge on how companies fared over the past year. #-ad_banner-#By and large, 2013 a very good year for corporate America, as profit margins hit all-time highs in many industries. Yet not every company manages to translate robust margins into cash in the bank. Many times, operating profits will be squandered and the actual free cash flow (operating cash flow minus capital expenditures) a company produces can be lacking. The real stars of 2013 are the companies that focused on delivering peak robust free cash flow (FCF), which… Read More

With the ink dry on 2013 financial results, investors can get a fresh gauge on how companies fared over the past year. #-ad_banner-#By and large, 2013 a very good year for corporate America, as profit margins hit all-time highs in many industries. Yet not every company manages to translate robust margins into cash in the bank. Many times, operating profits will be squandered and the actual free cash flow (operating cash flow minus capital expenditures) a company produces can be lacking. The real stars of 2013 are the companies that focused on delivering peak robust free cash flow (FCF), which sets the stage for a set of shareholder-friendly perks that we refer to as Total Yield. A company with solid FCF can boost the dividend, buy back stock, pay down debt — or all three. There’s often even enough money left over for acquisitions. Of course simply looking at FCF by itself isn’t always helpful. Google (Nasdaq: GOOG), for example, generated an impressive $11 billion in FCF in 2013, but that’s just a fraction of the company’s $376 billion market value. Instead, it’s wise to look at FCF in relation to a company’s value. If you can find a company… 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