The Old Gray Lady is looking a lot younger these days. Less than five years after desperately needing a costly $250 million capital infusion from Mexican billionaire Carlos Slim, The New York Times Co. (NYSE: NYT) has staged a remarkable rebound. Shares have nearly doubled in the past two years, handily surpassing the S&P 500 Index. Rival Gannett (NYSE: GCI), publisher of the USA Today, has fared even better. Give credit where it’s due. These companies took a machete to their expense structures, and they now appear to be on much more solid operational footing. Here’s a quick… Read More

The Old Gray Lady is looking a lot younger these days. Less than five years after desperately needing a costly $250 million capital infusion from Mexican billionaire Carlos Slim, The New York Times Co. (NYSE: NYT) has staged a remarkable rebound. Shares have nearly doubled in the past two years, handily surpassing the S&P 500 Index. Rival Gannett (NYSE: GCI), publisher of the USA Today, has fared even better. Give credit where it’s due. These companies took a machete to their expense structures, and they now appear to be on much more solid operational footing. Here’s a quick snap shot of the Times’ income statement in 2007 and 2012. More than a third of the Times’ revenue base has dried up (though a few asset sales also shrank revenues). But a tight control on costs and a huge cutback in capital spending has enabled the newspaper publisher to generate positive free cash flow. The company has even reinstated a modest dividend after getting rid of it back in 2008.#-ad_banner-# The turnaround for Gannett hasn’t been quite as impressive, and its share price gains are only so robust because shares were so depressed a few years back. Read More

Coming out of World War II, few Americans could have known about the great era of prosperity soon to arrive.#-ad_banner-# From 1946 through 1973, our economy expanded by a 3.8% annual pace. Sure, there were a few recessions along the way, but the rapid rise of the middle class, which enjoyed a rising standard of living, helped set the stage for the world’s greatest economy. Roughly one-fourth of all global economic activity takes place on U.S. shores. But as I noted last week, the U.S. is now in its sixth year of weak economic growth. Economists are growing increasingly concerned… Read More

Coming out of World War II, few Americans could have known about the great era of prosperity soon to arrive.#-ad_banner-# From 1946 through 1973, our economy expanded by a 3.8% annual pace. Sure, there were a few recessions along the way, but the rapid rise of the middle class, which enjoyed a rising standard of living, helped set the stage for the world’s greatest economy. Roughly one-fourth of all global economic activity takes place on U.S. shores. But as I noted last week, the U.S. is now in its sixth year of weak economic growth. Economists are growing increasingly concerned that we’ve entered into an extended period of anemic growth. Indeed, the sole purpose of the Federal Reserve’s massive stimulus programs was to revive the economy’s “animal spirits.” But the economy has yet to respond. The Fed is pushing on a string. Investors may have a hard time seeing this notion as the stock market moves steadily higher. Profits are still rising, thanks to lean corporate expenses, but fully half of the companies in the S&P 500 are expected to boost sales by less than 5% next year. Blame goes to a stagnant income picture for many Americans. Read More

It’s tough to watch the market rise sharply if your portfolio has been treading water.#-ad_banner-# That’s the reality facing many investors that stepped to the sidelines earlier this year after seeing their portfolios soar in value since the bottom in March 2009. But it could have been worse. You could have invested in some absolute duds. Morningstar keeps track of the performance of all major exchange-traded funds (ETFs) and calculates a major loss for hundreds of these funds in 2013. The key question for investors: Which of these 2013 duds will morph into 2014 heroes? Let’s take a closer look. Read More

It’s tough to watch the market rise sharply if your portfolio has been treading water.#-ad_banner-# That’s the reality facing many investors that stepped to the sidelines earlier this year after seeing their portfolios soar in value since the bottom in March 2009. But it could have been worse. You could have invested in some absolute duds. Morningstar keeps track of the performance of all major exchange-traded funds (ETFs) and calculates a major loss for hundreds of these funds in 2013. The key question for investors: Which of these 2013 duds will morph into 2014 heroes? Let’s take a closer look. Leveraged Gold? Yikes! It hasn’t paid to be bullish on gold this year, as the yellow metal lost its status as inflation hedge. But it’s proved to be downright foolhardy to buy leveraged ETFs that move at two or three times the rate of change in gold prices. These gold leveraged ETFs lost most of the money tied up in them and are clearly too risky to own. If you are bullish on gold for 2014, you may be better served by buying gold miners or straight-up gold funds that simply move in tandem with gold prices. No need… Read More

The Great Depression is an era few of us would choose to revisit. Though the economy isn’t especially perky these days, key measures of joblessness, poverty and hunger are nowhere near the levels seen back in the 1930s.#-ad_banner-# But by one key measure, the economy is actually in worse shape. From 1930 until 1933, the U.S. economy grew less than 3% each year. That was the longest such streak of the 20th century — and we’ve already broken it in the 21st century. We’re on pace for a sixth straight year of sub-3% GDP growth, and signs are pointing continued… Read More

The Great Depression is an era few of us would choose to revisit. Though the economy isn’t especially perky these days, key measures of joblessness, poverty and hunger are nowhere near the levels seen back in the 1930s.#-ad_banner-# But by one key measure, the economy is actually in worse shape. From 1930 until 1933, the U.S. economy grew less than 3% each year. That was the longest such streak of the 20th century — and we’ve already broken it in the 21st century. We’re on pace for a sixth straight year of sub-3% GDP growth, and signs are pointing continued anemic growth in the years ahead (which I’ll expand upon in a moment). Frankly, anything near 3% GDP growth would be welcome. We appear to have approached that level in the third quarter, hitting 2.8%. But almost a full percentage point of that was due to a buildup in inventories, and such gains tend to reverse in the following quarter. Translation: Get ready for 2% GDP growth — at best — in the fourth quarter. The recent government shutdown means we may end up closer to 1.5%. Of course the stock market seems to be simply ignoring the economic travails. Read More

In a fairly rapid time, the solar power industry has been able to tackle two major challenges that threatened to decimate the industry.#-ad_banner-# First, far much too capacity led to rapidly falling prices, which pushed the industry’s weakest players into bankruptcy and has left a few more of them struggling to stay afloat. Restrained capacity growth has become the theme of 2013, enabling demand to catch up, and prices on solar panels are no longer plunging at a rapid clip. Second, the steep fall in solar panel prices has pushed this technology a lot closer to “grid parity,” compared to… Read More

In a fairly rapid time, the solar power industry has been able to tackle two major challenges that threatened to decimate the industry.#-ad_banner-# First, far much too capacity led to rapidly falling prices, which pushed the industry’s weakest players into bankruptcy and has left a few more of them struggling to stay afloat. Restrained capacity growth has become the theme of 2013, enabling demand to catch up, and prices on solar panels are no longer plunging at a rapid clip. Second, the steep fall in solar panel prices has pushed this technology a lot closer to “grid parity,” compared to fossil fuels. If natural gas prices had not also plunged as well in recent years, demand for solar would really be booming. But gas prices have fallen, and it’s unlikely they will spike higher in coming years. Gas drillers will simply boost output any time prices rise, which is OK with an industry that has learned to become profitable with natural gas at $3.50 to $4 per thousand cubic feet (Mcf). Even as gas rallied to $5 per Mcf, solar still couldn’t compete, at least not without government tax credits (that are set to expire in the U.S. in 2016,… Read More

When chip equipment maker Applied Materials (Nasdaq: AMAT) surpassed $10 billion in annual revenue for the first time in fiscal 2011, its competitors could only sigh. The company’s industry leadership was never in doubt, but a series of acquisitions gave it such a broad suite of offerings that rivals wondered if they could ever take market share again. Applied Materials’ massive market presence eventually led its two biggest rivals, Lam Research (Nasdaq: LRCX) and Novellus Systems to join forces in 2011, but even that combined entity has yet to crack the $5 billion annual revenue barrier. KLA-Tencor (Nasdaq: KLAC) is… Read More

When chip equipment maker Applied Materials (Nasdaq: AMAT) surpassed $10 billion in annual revenue for the first time in fiscal 2011, its competitors could only sigh. The company’s industry leadership was never in doubt, but a series of acquisitions gave it such a broad suite of offerings that rivals wondered if they could ever take market share again. Applied Materials’ massive market presence eventually led its two biggest rivals, Lam Research (Nasdaq: LRCX) and Novellus Systems to join forces in 2011, but even that combined entity has yet to crack the $5 billion annual revenue barrier. KLA-Tencor (Nasdaq: KLAC) is also in Applied Materials’ rearview mirror, with only $3 billion in annual sales. And a handful of smaller companies bring up the rear, none of which have even $1 billion in annual revenue. (Note: Only U.S. companies have been considered here.) Lost in the crowd is little-known Axcelis Technologies (Nasdaq: ACLS), which had $400 million to $500 million in annual sales a decade ago, but has slumped badly in recent years, with sales falling to just $200 million in 2012. Rivals such as Applied Materials used their financial firepower to acquire or develop the products that Axcelis had been… Read More

Any time a company exceeds or lags quarterly profit forecasts by a big margin, the resulting share price action is quite predictable. Indeed, the list of stocks making recent 52-week highs are dominated by companies that posted stellar third-quarter results.#-ad_banner-# But the market action doesn’t always play out that way. On occasion, a company will handily surpass consensus profit forecasts, analysts will boost their outlook for the next year, and yet the stock price falls in value. How do you explain such a disconnect? Perhaps some investors were looking for even greater upside than the company delivered. Or perhaps investors… Read More

Any time a company exceeds or lags quarterly profit forecasts by a big margin, the resulting share price action is quite predictable. Indeed, the list of stocks making recent 52-week highs are dominated by companies that posted stellar third-quarter results.#-ad_banner-# But the market action doesn’t always play out that way. On occasion, a company will handily surpass consensus profit forecasts, analysts will boost their outlook for the next year, and yet the stock price falls in value. How do you explain such a disconnect? Perhaps some investors were looking for even greater upside than the company delivered. Or perhaps investors have begun rotating out of the company’s industry, selling off all stocks in the group on an indiscriminate basis. Whatever the reason, a combination of surging profits and falling share prices is a nearly perfect setup. I reviewed several hundred stocks that topped third-quarter profit estimates by at least 20%. Predictably, the vast majority surged higher in response. But I was able to come across three dozen companies that fit the backdrop of “good earnings/bad share response.” From there, I tossed out any stocks in which analysts lowered their 2014 profit forecasts after the quarterly conference call. If a company… Read More

Who says that the market doesn’t trade off of inside information? The short interest in glass and fiber maker Corning (NYSE: GLW) more than doubled in the two weeks ended Oct. 31, to 83 million shares. (Data were released Nov. 11.) The short-interest surge came just days before Apple (Nasdaq: AAPL) said Nov. 5 that it was going to work with GT Advanced Technologies (Nasdaq: GTAT) in the production of touch screens at an Apple manufacturing facility. To be sure, the deal was a great win for GTAT, as my colleague David Goodboy noted a few… Read More

Who says that the market doesn’t trade off of inside information? The short interest in glass and fiber maker Corning (NYSE: GLW) more than doubled in the two weeks ended Oct. 31, to 83 million shares. (Data were released Nov. 11.) The short-interest surge came just days before Apple (Nasdaq: AAPL) said Nov. 5 that it was going to work with GT Advanced Technologies (Nasdaq: GTAT) in the production of touch screens at an Apple manufacturing facility. To be sure, the deal was a great win for GTAT, as my colleague David Goodboy noted a few days ago. But GTAT’s win shouldn’t be seen as a real impediment to Corning. And short sellers, even as they traded on this news early, will still likely get burned — because Corning is shaping up to be both a deep value play and a growth play. Merrill Lynch’s Wamsi Mohan was one of the first analysts to weigh on the Apple/GTAT linkup: “This announcement does not change our opinion of the current limitations of Sapphire (or of) the price and feature advantage of Gorilla Glass. In our view the applications are likely to be more niche and Gorilla’s position… Read More

A steady scan of the financial headlines these days implies that it’s the golden era of dividend investing. But it’s not true.#-ad_banner-# Though many companies are boosting their dividends at a solid pace, dividend yields remain far below the levels seen back in the 1970s. Back then, companies earmarked the vast majority of their profits for dividends. Today, payout ratios usually hover below 35%. If one investment theme is surely at a high point, it’s stock buybacks. As I noted two months ago, companies have bought back more than $1 trillion since 2009, and the pace of buyback activity has… Read More

A steady scan of the financial headlines these days implies that it’s the golden era of dividend investing. But it’s not true.#-ad_banner-# Though many companies are boosting their dividends at a solid pace, dividend yields remain far below the levels seen back in the 1970s. Back then, companies earmarked the vast majority of their profits for dividends. Today, payout ratios usually hover below 35%. If one investment theme is surely at a high point, it’s stock buybacks. As I noted two months ago, companies have bought back more than $1 trillion since 2009, and the pace of buyback activity has actually grown stronger in 2012 and 2013. The timing is curious. The market has posted impressive gains since bottoming out more than four years ago, and many stocks are trading near all-time highs. In the past, companies would only pursue large stock buybacks when their shares were in the doghouse. Still, it’s worth tracking any buybacks plans that promise to retire 10% or even 15% of the current share count. And in the current earnings season, we’ve seen a fresh batch of hefty plans that fulfill that mandate. Here are a dozen companies, each sporting a market value of at… Read More

As the market continues to flirt with all-time highs, a considerable amount of churn is taking place beneath the surface. Investors are increasingly flocking to companies that are seemingly big and safe, while shedding exposure to smaller and riskier names. It’s a logical move, considering the current bull market is getting along in years. Indeed, I extolled the virtues of mega-cap stocks back in August, and you can still find some great bargains among America’s largest companies. Yet if the market is going in this direction, it also means that smaller stocks are falling to levels that hold real appeal. Read More

As the market continues to flirt with all-time highs, a considerable amount of churn is taking place beneath the surface. Investors are increasingly flocking to companies that are seemingly big and safe, while shedding exposure to smaller and riskier names. It’s a logical move, considering the current bull market is getting along in years. Indeed, I extolled the virtues of mega-cap stocks back in August, and you can still find some great bargains among America’s largest companies. Yet if the market is going in this direction, it also means that smaller stocks are falling to levels that hold real appeal. And in no sector is this divergence more apparent than in biotechs. The biggest biotech stocks appear fully priced — while their smaller brethren are now far from their 52-week highs. #-ad_banner-#These large biotechs have posted very strong gains over the past few years, and no longer sport the low price-to-earnings (P/E) ratios that they did a few years back. New drug launches are expected to help some of them post solid sales growth in 2013 and 2014, but it’s hard to find a combination of impressive growth and in-check valuations in this group. Of course, smaller biotechs… Read More