For any investors in search of yield, May 21, 2013, will be remembered for a long time to come. That’s the day that Federal Reserve released the minutes from a prior meeting, suggesting that the multi-year massive stimulus program known as quantitative easing would start to wind down. Though the Fed wouldn’t actually take such action for a few more quarters, the psychological blow against dividend-paying stocks had begun. Competing fixed-income investments began to rise, leading yield-producing stocks to be among the worst performers of the rest of 2013. #-ad_banner-#Perhaps no group took it quite as hard as… Read More

For any investors in search of yield, May 21, 2013, will be remembered for a long time to come. That’s the day that Federal Reserve released the minutes from a prior meeting, suggesting that the multi-year massive stimulus program known as quantitative easing would start to wind down. Though the Fed wouldn’t actually take such action for a few more quarters, the psychological blow against dividend-paying stocks had begun. Competing fixed-income investments began to rise, leading yield-producing stocks to be among the worst performers of the rest of 2013. #-ad_banner-#Perhaps no group took it quite as hard as the mortgage REITs (also known as mREITs). These firms had been making a killing on the wide spreads between low short-term rates and higher mortgage rates. And as interest rates begin to move higher, the profit margins at these firms may compress. For investors, there are two important questions to consider: Are these companies still capable of solid profits in the years ahead? And is it wise to wait the two to three years before the rising rate cycle has fully played out before they become safe to buy? The Road Ahead Make no mistake, the mREITs would be… Read More

Roughly a decade ago, technology futurists predicted we’d be living in a paperless world by now. It hasn’t happened as fast as they predicted, but with each passing year, digital publishing — from newspapers to utility bills to corporate invoices — is tightening its grip. #-ad_banner-#The executives at Xerox (NYSE: XRX) saw the writing on the wall, realizing that demand for its printers, copiers and fax machines did not have a bright future. So in 2009, they made an audacious $6.4 billion bid for Affiliated Computer Services (ACS), a leading provider of business process management and outsourcing services. Read More

Roughly a decade ago, technology futurists predicted we’d be living in a paperless world by now. It hasn’t happened as fast as they predicted, but with each passing year, digital publishing — from newspapers to utility bills to corporate invoices — is tightening its grip. #-ad_banner-#The executives at Xerox (NYSE: XRX) saw the writing on the wall, realizing that demand for its printers, copiers and fax machines did not have a bright future. So in 2009, they made an audacious $6.4 billion bid for Affiliated Computer Services (ACS), a leading provider of business process management and outsourcing services. The move delivered instant returns. Fast-forward to 2014, and those returns are still flowing in. Xerox is now one of the leading generators of “Total Yield,” which is a key investment strategy you should be tracking. Simply put, “Total Yield” stocks are companies that use the cash they generate to 1) pay steady dividends, 2) buy back large amounts of their own stock, and 3) pay down debt. Why should investors care about these three strategies? When companies execute on all three fronts, it beats the S&P 500 — as well as regular dividend investing — hands down. (To learn… Read More

For much of the past five years, many companies have been squarely focused on their own operations, using excess cash to pay dividends, buy back stock, or reduce debt — the three pillars of what we call Total Yield. #-ad_banner-#Look for more of the same in 2014, as companies continue to generate stunning amounts of cash flow.  And also look for a lot more deal-making in the year ahead. The conditions are ripe for a boom in mergers and acquisitions (M&A), and various sectors will really heat up as the deals flow.  On the face of it, companies appear… Read More

For much of the past five years, many companies have been squarely focused on their own operations, using excess cash to pay dividends, buy back stock, or reduce debt — the three pillars of what we call Total Yield. #-ad_banner-#Look for more of the same in 2014, as companies continue to generate stunning amounts of cash flow.  And also look for a lot more deal-making in the year ahead. The conditions are ripe for a boom in mergers and acquisitions (M&A), and various sectors will really heat up as the deals flow.  On the face of it, companies appear to continue shunning major mergers and acquisitions. The economic crisis in 2008 and 2009 left many firms feeling too cautious to make bold moves. But some of that caution was shed in 2013.   According to ThomsonReuters, the total dollar value of all M&A activity in the U.S. rose 11% last year, to more than $1 trillion. The sectors and industries that saw the most action were oil and gas ($227 billion), wireless telecom ($175 billion), commercial real estate ($161 billion), and metals and mining ($93 billion). Looking at the macroeconomic backdrop, a case can be made for even more… Read More

If you were a regular watcher of the business news channels in the spring of 2011, you couldn’t escape one of the hottest, most heavily hyped stocks we’ve seen in the modern investing era.#-ad_banner-#​ An out-of-nowhere company suddenly sported a billion-dollar market value, and analysts and hedge fund managers alike proclaimed that it was still sharply undervalued. Its smooth-talking CEO made the rounds with the financial media, casually claiming that his company was on the cusp of a mining revolution that would outshine the 1849 gold rush. Yet with each passing quarter, it became apparent that the whole… Read More

If you were a regular watcher of the business news channels in the spring of 2011, you couldn’t escape one of the hottest, most heavily hyped stocks we’ve seen in the modern investing era.#-ad_banner-#​ An out-of-nowhere company suddenly sported a billion-dollar market value, and analysts and hedge fund managers alike proclaimed that it was still sharply undervalued. Its smooth-talking CEO made the rounds with the financial media, casually claiming that his company was on the cusp of a mining revolution that would outshine the 1849 gold rush. Yet with each passing quarter, it became apparent that the whole story was mere smoke and mirrors. Rare earth miner Molycorp (NYSE: MCP) become a dirty name among the legions of investors that got caught up in the hype, and its stock has been tossed into the discard bin. In hindsight, about the only thing this company was good for was its ability to separate investors from their money. At the time of its IPO in the summer of 2010, Molycorp had roughly 38 million shares outstanding. A series of capital raises led to the issuance of 130 million more shares, and the company still… Read More

The start of a new year is a time of reckoning for retailers. A quick reassessment of the post-holiday landscape can reveal bloated inventories, unsustainably weak profit margins and a need to radically alter the business model.#-ad_banner-# Indeed, J.C. Penney (NYSE: JCP) has already started the process of shrinking its store base, and other retailers are likely to make similar moves in coming months. In the face of the Amazon.com (Nasdaq: AMZN) juggernaut and still-weak consumer spending, the nation simply has too many brick-and-mortar stores. But there is a contrarian case to be made for the nation’s retail sector. Many retail… Read More

The start of a new year is a time of reckoning for retailers. A quick reassessment of the post-holiday landscape can reveal bloated inventories, unsustainably weak profit margins and a need to radically alter the business model.#-ad_banner-# Indeed, J.C. Penney (NYSE: JCP) has already started the process of shrinking its store base, and other retailers are likely to make similar moves in coming months. In the face of the Amazon.com (Nasdaq: AMZN) juggernaut and still-weak consumer spending, the nation simply has too many brick-and-mortar stores. But there is a contrarian case to be made for the nation’s retail sector. Many retail stocks have stumbled badly and now sport solid value. More importantly, the slowing improving employment picture should help lift retail spending, perhaps moderately in 2014, and more robustly in 2015, when economists think the national unemployment rate may fall towards 6%. With that in mind, I’ve been tracking the retail stocks I’ve covered in the past six to 12 months. Here’s an update for those picks that are on my radar for the quarters ahead. 1. Best Buy (NYSE: BBY )​ I profiled this fallen retailer nearly two years ago, noting that it still generated impressive cash flow, even it had to… Read More

Exactly one year ago, analysts at Merrill Lynch raised their price target on little-known Intercept Pharmaceuticals (Nasdaq: ICPT) from $29 to $42, due to “an increased conviction that the company’s lead drug OCA will be approved by the FDA.” They were right to be bullish — but they missed on the magnitude of this stock’s potential upside. Bullish feedback from the FDA pushed this stock from under $75 on Jan. 8 to $445 on Jan. 10. It’s hard to recall the last time a stock went vertical like that.#-ad_banner-#​ But… Read More

Exactly one year ago, analysts at Merrill Lynch raised their price target on little-known Intercept Pharmaceuticals (Nasdaq: ICPT) from $29 to $42, due to “an increased conviction that the company’s lead drug OCA will be approved by the FDA.” They were right to be bullish — but they missed on the magnitude of this stock’s potential upside. Bullish feedback from the FDA pushed this stock from under $75 on Jan. 8 to $445 on Jan. 10. It’s hard to recall the last time a stock went vertical like that.#-ad_banner-#​ But the bloom is already off the rose, and shares opened trading this week with a more than $50 plunge. As the dust settles, it’s time to see if the pullback is just a bump in the road, or signs of more weakness to come. An Unmet Need Any biotech company that aims for glory should target an unmet medical need and a large patient population. It’s a swing-for-the-fences opportunity that rarely pays off, but Intercept appears to have succeeded with its key drug: obeticholic acid (OCA). OCA is derived from naturally occurring chemicals in the bile duct, which aids… Read More

One of the unremarked themes of the great bull market of 2013 was investors’ surging appetite for risk.#-ad_banner-# Stocks that were already trading at rich valuations caught fire, sometimes pushing their valuations into nosebleed territory. Case in point: Twitter (NYSE: TWTR), which surged from $40 in late November to more than $70 a month later.  Who would have the nerve to go against such a powerful run by selling shares short? Plenty of investors, as it turns out. According to short interest data released Jan. 10, the short interest in Twitter surged 24% in the two weeks that ended Dec. Read More

One of the unremarked themes of the great bull market of 2013 was investors’ surging appetite for risk.#-ad_banner-# Stocks that were already trading at rich valuations caught fire, sometimes pushing their valuations into nosebleed territory. Case in point: Twitter (NYSE: TWTR), which surged from $40 in late November to more than $70 a month later.  Who would have the nerve to go against such a powerful run by selling shares short? Plenty of investors, as it turns out. According to short interest data released Jan. 10, the short interest in Twitter surged 24% in the two weeks that ended Dec. 31, to 29.4 million shares.  The fact that shares have already plunged more than 20% since Christmas has likely emboldened short sellers to hike their positions further. Ratings downgrades from Morgan Stanley and Cantor Fitzgerald, along with bearish new coverage from Cowen, surely helped the short sellers with their cause. But these shorts are likely stepping up their positions for another reason: In a matter of weeks, Twitter will deliver fourth-quarter earnings and issue a 2014 outlook. The company is facing an extremely high set of expectations, and anything less than a blowout may lead still-bullish investors to take profits. Read More

Ever since the nation declared war on cancer, back in 1971 when President Richard Nixon signed the National Cancer Act, it’s been an uphill battle. Cancer is still the second-leading cause of death in the U.S., behind heart disease.#-ad_banner-#​ But a remarkable set of breakthroughs in medical research labs are giving doctors reason to believe that this long-standing battle may soon be won — and the credit goes to our own immune systems.  Scientists began to realize that if patients could produce more immune system cells, their bodies could overwhelm tumors. So these medical researchers began extracting these… Read More

Ever since the nation declared war on cancer, back in 1971 when President Richard Nixon signed the National Cancer Act, it’s been an uphill battle. Cancer is still the second-leading cause of death in the U.S., behind heart disease.#-ad_banner-#​ But a remarkable set of breakthroughs in medical research labs are giving doctors reason to believe that this long-standing battle may soon be won — and the credit goes to our own immune systems.  Scientists began to realize that if patients could produce more immune system cells, their bodies could overwhelm tumors. So these medical researchers began extracting these cells from patients’ blood, greatly multiplied them in medical research labs, and reinserted them back into the patient. Although this approach had been studied — with mixed results — for a number of years, a key breakthrough arrived last spring at the annual meeting held by the American Society of Clinical Oncology (ASCO).  That’s when Bristol-Myers Squibb (NYSE: BMY) stunned the conference with its release of powerful efficacy and safety data for nivolumab. Nearly a third of patients taking the experimental drug saw their tumors shrink by a significant margin, and further refinements for this drug… Read More

It’s never fun to start the new year with word that Congress is looking to attack your business model. For operators in the cable TV industry, the possibility of onerous legislation is just one of the headaches for industry executives. Rapid technological changes and growing consumer dissatisfaction also promise to bring plenty of misery to this remarkably profitable industry. Investors should consider repositioning their portfolios now to avoid the fallout to come.#-ad_banner-#​ Attacked from all sides As a recent article in The Wall Street Journal notes, three different prices of legislation are… Read More

It’s never fun to start the new year with word that Congress is looking to attack your business model. For operators in the cable TV industry, the possibility of onerous legislation is just one of the headaches for industry executives. Rapid technological changes and growing consumer dissatisfaction also promise to bring plenty of misery to this remarkably profitable industry. Investors should consider repositioning their portfolios now to avoid the fallout to come.#-ad_banner-#​ Attacked from all sides As a recent article in The Wall Street Journal notes, three different prices of legislation are being pursued in the halls of Congress. They would: •    force cable companies to keep their Internet lines fully available to rivals that aim to stream video and other TV content •    break up the all-or-nothing packaging choices that currently force consumers to pay upwards of $100 dollars per month, even if they watch just a few channels. (SNL Kagan estimates that consumers watch fewer than 10% of the channels they receive)   •    force cable companies to negotiate more favorable deals with broadcast networks It may be a while before any of these… Read More

From political unrest in Thailand to deepening fiscal strains in Indonesia to natural calamities in the Philippines, it’s been a season of discontent in Asia. Investors have taken note. The iShares MSCI Thailand Capped ETF (NYSE: THD) and the iShares MSCI Philippines ETF (NYSE: EPHE), for example, have both slid more than 30% since May, while the iShares MSCI Indonesia ETF (NYSE: EIDO) is off more than 40% in that time.#-ad_banner-# Farsighted investors are watching these markets closely, because such deep sell-offs only come once or twice every decade, and often represent profound buying opportunities. But bottom-fishing may be premature. Read More

From political unrest in Thailand to deepening fiscal strains in Indonesia to natural calamities in the Philippines, it’s been a season of discontent in Asia. Investors have taken note. The iShares MSCI Thailand Capped ETF (NYSE: THD) and the iShares MSCI Philippines ETF (NYSE: EPHE), for example, have both slid more than 30% since May, while the iShares MSCI Indonesia ETF (NYSE: EIDO) is off more than 40% in that time.#-ad_banner-# Farsighted investors are watching these markets closely, because such deep sell-offs only come once or twice every decade, and often represent profound buying opportunities. But bottom-fishing may be premature. Though these markets are now quite inexpensive by a range of metrics, conditions could worsen before they improve. Yet away from the spotlight, another emerging market is finally getting its act together, building a platform for sustained long-term growth. And its 90 million consumers represent one of most promising yet untapped consumer classes you’ll find. I’m talking about Vietnam, which I first profiled back in 2010 as part of a group of countries known as CIVETS (Colombia, Indonesia, Vietnam, Egypt and South Africa). Back then, I noted that “Vietnam has unfortunately been beset by a range of problems, most notably… Read More