Contrarian investors like to buy stocks other investors despise. This is how value investors find stocks with the potential to produce outsized returns. And it works, too. After all, Warren Buffet and Seth Klarman have made good livings finding and investing in value stocks. And if it works for them, it will work for investors with a lot less money to invest. But the problem is that U.S. stock markets sit near record levels, meaning even marginal companies have seen stock prices rise for no good reason. This is the result of several years of interventionist Federal Reserve policies. #-ad_banner-#This… Read More

Contrarian investors like to buy stocks other investors despise. This is how value investors find stocks with the potential to produce outsized returns. And it works, too. After all, Warren Buffet and Seth Klarman have made good livings finding and investing in value stocks. And if it works for them, it will work for investors with a lot less money to invest. But the problem is that U.S. stock markets sit near record levels, meaning even marginal companies have seen stock prices rise for no good reason. This is the result of several years of interventionist Federal Reserve policies. #-ad_banner-#This explains the nosebleed levels where many financial metrics reside. For example, the S&P 500’s price-to-earnings ratio (P/E) is 26.7 — a 70% premium to its average. A better predictor of valuation is the cyclically adjusted price-to-earnings ratio (CAPE). Presently, the CAPE ratio sits at 34.59 — more than 105% above its mean. Even the price-to-book ratio, at 3.58, is 30% higher than its long-term average. So what’s an investor to do? Value investors have little choice but to seek value plays outside of the United States. And that’s the reason I’m looking for value in an unusual place — Russia. Read More

Ten years from now, I am fairly certain we will look back at this bull market and wonder how it kept going up for so long. By then, we should have a better understanding of where the problems were hiding. But, for now, we don’t have the benefit of hindsight. Some experts believe the future will be disappointing.  —Sponsored Link— Other Publishers Think I’m Crazy… But I’m Giving Away My Best Trading Advice FREE! For the next few hours, I’m giving you a chance to get the very best trading ideas from an all-star line-up… Read More

Ten years from now, I am fairly certain we will look back at this bull market and wonder how it kept going up for so long. By then, we should have a better understanding of where the problems were hiding. But, for now, we don’t have the benefit of hindsight. Some experts believe the future will be disappointing.  —Sponsored Link— Other Publishers Think I’m Crazy… But I’m Giving Away My Best Trading Advice FREE! For the next few hours, I’m giving you a chance to get the very best trading ideas from an all-star line-up of six trading pros delivered to your inbox each and every trading day, FREE. There are no strings attached… you won’t pay one red cent-not ever-for these trades. Our one of a kind Trade of the Day service is truly 100% free. Sign up for Trade of the Day right now and get your first free trading tip tomorrow. Jeremy Grantham, a noted value investor with about $74 billion under management, has studied bubbles and believes we are about to see one in stocks.  He recently published a paper called “Bracing Yourself for a Possible Near-Term… Read More

When financial markets are on the upswing, it’s often said that a “rising tide lifts all boats”. That’s not exactly true.  Yes, many stocks go up during a broad market rally. But keep in mind that for an investor to buy a share of a stock another investor must be willing to sell that share of stock. The money has to go SOMEWHERE. That being said, certain groups of stocks just won’t participate in a rally for one reason or another. While the S&P 500 Index is enjoying a 6%-plus gain year-to-date, the S&P 500 Real Estate Sector Index doesn’t… Read More

When financial markets are on the upswing, it’s often said that a “rising tide lifts all boats”. That’s not exactly true.  Yes, many stocks go up during a broad market rally. But keep in mind that for an investor to buy a share of a stock another investor must be willing to sell that share of stock. The money has to go SOMEWHERE. That being said, certain groups of stocks just won’t participate in a rally for one reason or another. While the S&P 500 Index is enjoying a 6%-plus gain year-to-date, the S&P 500 Real Estate Sector Index doesn’t have much to celebrate. The index has given up around 3.4% so far this year, and has pulled back over 5% from its peak in November. What’s the reason? #-ad_banner-#One obvious concern is the much-hyped brick-and-mortar retail Armageddon. Last year, large retailers were shellacked as they lost market share to the likes of Amazon (Nasdaq: AMZN) and other virtual shopping entities.  Whether traditional retail’s death spiral is intensifying is up for debate. But, in typical crowd-driven market form, real estate stocks that focus on renting space to the retail industry experienced the fallout. And while that is a… Read More

Last Monday, President Trump added another notch to his “America First” belt with the announcement of a new 30% tariff on imported solar panels.  Companies that produce solar cells and panels will get to sell 2.5 gigawatts worth of those energy products to U.S. consumers, but they’ll have to pay a special tax on any sales above that amount. For the first year of this new policy, that extra tax is set at 30%, which will then decrease 5% each year over a four-year period. —Sponsored Link— This Is The Story Of Your Debt Enslavement —… Read More

Last Monday, President Trump added another notch to his “America First” belt with the announcement of a new 30% tariff on imported solar panels.  Companies that produce solar cells and panels will get to sell 2.5 gigawatts worth of those energy products to U.S. consumers, but they’ll have to pay a special tax on any sales above that amount. For the first year of this new policy, that extra tax is set at 30%, which will then decrease 5% each year over a four-year period. —Sponsored Link— This Is The Story Of Your Debt Enslavement — It’s No Accident The head of one of America’s largest independent financial research firms says the enslavement of millions of Americans is leading to a political event that is unlike anything we’ve seen in America in more than 50 years. And it has a surprising twist, that will dramatically affect you and your money. This looming crisis will threaten your way of life, whether you own any investments related to it or not. News of the tax triggered a small selloff in many solar companies, but this knee-jerk reaction is incorrect… The main impetus for… Read More

A weak fourth-quarter earnings release sent shares of Procter & Gamble (NYSE: PG) tumbling 3% in the last week of January, and the stock has gone nowhere since the end of 2016. A competitive environment, eroding market share, and little pricing power have had investors questioning the safety of their money in the consumer staples giant. The $226 billion consumer goods behemoth reported just 2% growth in sales from the same quarter last year, and that was entirely driven by volume with no pricing upside. Despite a cost-reduction plan that trimmed off 1.9%, the operating margin still lost 0.1% on… Read More

A weak fourth-quarter earnings release sent shares of Procter & Gamble (NYSE: PG) tumbling 3% in the last week of January, and the stock has gone nowhere since the end of 2016. A competitive environment, eroding market share, and little pricing power have had investors questioning the safety of their money in the consumer staples giant. The $226 billion consumer goods behemoth reported just 2% growth in sales from the same quarter last year, and that was entirely driven by volume with no pricing upside. Despite a cost-reduction plan that trimmed off 1.9%, the operating margin still lost 0.1% on a year-over-year basis. Against this abysmal report by a bellwether of the sector, companies in the consumer products group still trade for a lofty 25.6 times trailing earnings.  But not all was half-empty in the company’s earnings call. Looking deeper to the segment-level presented a different picture.  #-ad_banner-#Using P&G as a guide for the larger sector may reveal opportunities for investors in consumer staples. P&G Earnings As A Preview For The 2018 Consumer Staples Procter & Gamble is so massive and so diversified across consumer-packaged products that it can be used as a guide to the sector. Even after… Read More

More than 50 years ago, Charlie Munger told his partner that, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” This would become a sort of guiding principle as Munger and Warren Buffett built their empire, Berkshire Hathaway. Like many fans of Munger and Buffett, I keep these sage words in mind when looking for my next investment. And of course, there’s no shortage of “wonderful businesses” in the stock market; the problem is that most of them are trading at a premium in today’s lofty market environment.  Last… Read More

More than 50 years ago, Charlie Munger told his partner that, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” This would become a sort of guiding principle as Munger and Warren Buffett built their empire, Berkshire Hathaway. Like many fans of Munger and Buffett, I keep these sage words in mind when looking for my next investment. And of course, there’s no shortage of “wonderful businesses” in the stock market; the problem is that most of them are trading at a premium in today’s lofty market environment.  Last August, I told my premium Top Stock Advisor readers about the numerous indicators pointing toward high market valuations. More specifically, I mentioned that the S&P 500 was sporting a forward 12-month P/E ratio of 17.7, which is higher than the five-year average of 15.4 and the 10-year average of 14. On top of that, the cyclically adjusted price-to-earnings ratio, or CAPE, had surpassed the levels of 2008 and was nearing Great Depression-era levels. —Sponsored Link— Trump’s Set To Send This $0.24 Stock Exploding Higher! Investors in this tiny company will love Trump for what he’s… Read More

A strange thing happens during roaring bull markets. When the economy and stock market are booming, investors seem to forget the fundamentals of stock picking. With nearly every stock being carried higher as the major indexes break record after record, investors think that value no longer matters.  But nothing could be further from the truth. Using fundamentals to locate value stocks works in any type of market. While it is more difficult to locate value during times of extreme bullishness, the extra effort can pay off in spades.  Even in the most overstretched market, value cases still exist. Sometimes a… Read More

A strange thing happens during roaring bull markets. When the economy and stock market are booming, investors seem to forget the fundamentals of stock picking. With nearly every stock being carried higher as the major indexes break record after record, investors think that value no longer matters.  But nothing could be further from the truth. Using fundamentals to locate value stocks works in any type of market. While it is more difficult to locate value during times of extreme bullishness, the extra effort can pay off in spades.  Even in the most overstretched market, value cases still exist. Sometimes a company or industry falls out of favor for no apparent reason. A weak quarterly earnings report or an external event can depress a company’s stock price for a short time, creating an opportunity for sharp investors.  Here are seven signs a stock could be undervalued. #-ad_banner-#​1. The Current Ratio The current ratio is simply a company’s current assets divided by its current liabilities. Value investors should look for a current ratio over 1.50. This assures that the company has enough assets to survive even when bear markets rear their ugly heads.  2. Watch The Debt When searching for… Read More

Stocks appear to be overvalued, but there is still room for additional gains. In part, that is due to all the uncertainty in the markets at the beginning of the year. Even analysts at Wall Street’s biggest firms find themselves trying to understand the new environment. Tax reform is now being factored into earnings estimates. And while analysts still aren’t sure what the full impact will be, there is consensus that earnings will be higher.  —Sponsored Link— The ‘Picks And Shovels’ Of Marijuana The real money during the Gold Rush was in the picks and… Read More

Stocks appear to be overvalued, but there is still room for additional gains. In part, that is due to all the uncertainty in the markets at the beginning of the year. Even analysts at Wall Street’s biggest firms find themselves trying to understand the new environment. Tax reform is now being factored into earnings estimates. And while analysts still aren’t sure what the full impact will be, there is consensus that earnings will be higher.  —Sponsored Link— The ‘Picks And Shovels’ Of Marijuana The real money during the Gold Rush was in the picks and shovels. With California legalizing recreational use and Canada coming online this year, pot stocks are up over 400% in months. But which are best long term? Where is the real money and how can we profit? Read the full story. You can see that consensus in the chart below, which shows earnings per share (EPS) estimates for the S&P 500 from three large financial firms. To develop these estimates, analysts weight the earnings of individual companies using the same weights used in the price index. Increases range from just $7 per share… Read More