Investors tend to steer clear of any company or industry with limited growth prospects. But there is money to be made if the rest of the market looks to shun such investments. After all, these largely matured businesses don’t need to invest much money to develop products and fuel new growth, so they can generate an outsized level of profits on their revenue streams. That’s why some investors love tobacco stocks. They’re unloved by many, but they typically offer very juicy dividends, making them a favorite among income-oriented investors. Friday morning, we were reminded… Read More

Investors tend to steer clear of any company or industry with limited growth prospects. But there is money to be made if the rest of the market looks to shun such investments. After all, these largely matured businesses don’t need to invest much money to develop products and fuel new growth, so they can generate an outsized level of profits on their revenue streams. That’s why some investors love tobacco stocks. They’re unloved by many, but they typically offer very juicy dividends, making them a favorite among income-oriented investors. Friday morning, we were reminded just how profitable these companies are: Lorillard (NYSE: LO), which makes Newport cigarettes, announced that an already juicy dividend would be boosted +12.5%, and the company plans to buy back another $1 billion in stock. Let’s take a deeper look to see if the sector should merit your investment dollars. Final spurt of growth Many of us (myself included) assumed that Big Tobacco is already in decline. Yet as the table below notes, the biggest industry players are still seeing a bit more revenue growth this year, thanks in part… Read More

One of the most fertile areas for investment research can always be found among stocks that trade for less than the price of a deluxe cheeseburger. When a stock is below $5 or $6, many mutual funds are prevented from owning them. Yet if these stocks can… Read More

The United States isn’t yet teetering on the brink of insolvency like Greece — but it’s not for a lack of trying. In fact, we’re on an eerily similar path. According to the U.S. Treasury, our national debt is currently more… Read More

Throughout the last winter and spring, solar stocks fell deeper and deeper out of favor. Investors fretted about a sharp slowdown in government subsidies right at a time when many companies were expanding their factories to boost output. Prices for solar panels and other components were in freefall as inventories piled up. But industry executives in China had a hunch that they could find ample demand for their rising output. They were right. Demand is better than many had expected, and this sector is now in rally mode. In the last three months, Jinko Solar (NYSE: JKS),… Read More

Throughout the last winter and spring, solar stocks fell deeper and deeper out of favor. Investors fretted about a sharp slowdown in government subsidies right at a time when many companies were expanding their factories to boost output. Prices for solar panels and other components were in freefall as inventories piled up. But industry executives in China had a hunch that they could find ample demand for their rising output. They were right. Demand is better than many had expected, and this sector is now in rally mode. In the last three months, Jinko Solar (NYSE: JKS), Solarfun (NYSE: SLF), ReneSola (NYSE: SOL) and Trina Solar (NYSE: TSL) have all risen by at least +40%. If you missed those moves, ample opportunities remain for some of the other industry players. Jinko sets the tone Little-known Jinko Solar has single-handedly established a more bullish tone for the entire sector. The May, 2010 IPO was flat-lining around $10 two months ago, but has since surged nearly +150% thanks to recent blowout earnings. The company turns re-processed and virgin silicon into solar panels and… Read More

Throughout the summer, a clear theme has emerged. High-tech companies have reported generally solid results, and yet shares in the sector keep drifting down toward 52-week lows. Despite their considerable cash balances, investors have grown increasingly concerned that sector growth will stall out. That’s why Intel’s (Nasdaq: INTC) just-announced decision to buy security software vendor McAfee (NYSE: MFE) is so important. It’s a clear sign that these tech titans will use their balance sheets to help alleviate those growth concerns. Short -term implications The fact that Intel is paying a… Read More

Throughout the summer, a clear theme has emerged. High-tech companies have reported generally solid results, and yet shares in the sector keep drifting down toward 52-week lows. Despite their considerable cash balances, investors have grown increasingly concerned that sector growth will stall out. That’s why Intel’s (Nasdaq: INTC) just-announced decision to buy security software vendor McAfee (NYSE: MFE) is so important. It’s a clear sign that these tech titans will use their balance sheets to help alleviate those growth concerns. Short -term implications The fact that Intel is paying a +60% premium to Wednesday’s close tells you that private market valuations are often far higher than the value these companies are getting as public entities. It’s also noteworthy that Intel’s offer of $48 a share is just above McAfee’s 52-week trading range. Generally speaking, buyout offers must exceed that threshold to avoid accusations that a company is being sold on the cheap while it is out of favor. Then again, McAfee’s shares haven’t seen $48 since the dot-com era of 1999. McAfee’s board would have been hard-pressed to reject this offer,… Read More

I’ve mentioned before that I often go off the beaten path to find the best income investments in my High-Yield Investing and High-Yield International newsletters. These days you have to — remember that the common stocks in the S&P 500 yield only 2% on average. Luckily, there… Read More

This is a tricky market for income investors. Bonds are selling at historically low yields and high prices. The 10-year Treasury bond currently pays a miniscule 2.6% and a three-year CD pays about 1.8% on average. Meanwhile… Read More

In times of crisis, investors invariably seek shelter in the almighty dollar. The perceived resilience of the U.S. economy has given the impression that we are simply too large a ship to sink. And although we are well past the scary times of 18 months ago, the global economy still feels dicey, and the dollar, which rallied sharply as the global economy crumbled, still remains fairly strong against the euro and the Chinese yuan. Yet as the global economy sputters back to life during the next year or two, the dollar… Read More

In times of crisis, investors invariably seek shelter in the almighty dollar. The perceived resilience of the U.S. economy has given the impression that we are simply too large a ship to sink. And although we are well past the scary times of 18 months ago, the global economy still feels dicey, and the dollar, which rallied sharply as the global economy crumbled, still remains fairly strong against the euro and the Chinese yuan. Yet as the global economy sputters back to life during the next year or two, the dollar is likely to resume its downward drift that had begun back in 2007 and 2008. If it weakens in a slow and steady fashion, it could help pave the way for a long-awaited export boom that finally reverses stubborn trade deficits and spurs a badly-needed employment surge in our nation’s heartland. Why the long-term bearishness on the dollar? Here are three reasons why… 1. For starters, our budget deficits for fiscal 2010 and 2011 are at record levels (on a non-inflation-adjusted basis). The amount of debt held by the public (that is, excluding intergovernmental… Read More

Super-investor Warren Buffett has made a big bet on Johnson & Johnson (NYSE: JNJ), adding more than 17.4 million shares to the portfolio of his holding company, Berkshire Hathaway (NYSE: BRK-B). His stake in J&J is worth about $2.4 billion at current prices. The move can be seen as a classic Buffett “value” play: J&J shares, at about $58, are well off their 52-week high of $66.20 and are down nearly -10% for the year. The company has annual revenue of more than $60 billion and consistently earns returns on… Read More

Super-investor Warren Buffett has made a big bet on Johnson & Johnson (NYSE: JNJ), adding more than 17.4 million shares to the portfolio of his holding company, Berkshire Hathaway (NYSE: BRK-B). His stake in J&J is worth about $2.4 billion at current prices. The move can be seen as a classic Buffett “value” play: J&J shares, at about $58, are well off their 52-week high of $66.20 and are down nearly -10% for the year. The company has annual revenue of more than $60 billion and consistently earns returns on shareholder equity of between 25% and 30%. It has posted an increase in earnings for at least the past 10 years, and 2010 profit forecasts imply a +188.3% increase in net earnings since 2000. (Earnings have surprised to the upside for the past five years, according to Bloomberg.) The J&J stake wasn’t the only health-care bet made by the 79-year-old Buffett, whom Forbes lists as the second-richest man in the United States, with an estimated net worth of $40 billion, second only to… Read More