I have to admit, this past Wednesday gave me a bit of a jolt.  All of the major indices were down sharply, as investors began to get nervous about news from Washington D.C. The S&P 500 suffered its largest one-day drop since September. Meanwhile, the Dow Jones Industrial Average lost 1.78% and the Nasdaq gave up 2.57%. All of a sudden, it seemed, investors were waking up from a haze of complacency. After all, prior to Wednesday, volatility in S&P 500 options (measured by the VIX) had reached a 24-year low. That’s usually a sign that the market is about… Read More

I have to admit, this past Wednesday gave me a bit of a jolt.  All of the major indices were down sharply, as investors began to get nervous about news from Washington D.C. The S&P 500 suffered its largest one-day drop since September. Meanwhile, the Dow Jones Industrial Average lost 1.78% and the Nasdaq gave up 2.57%. All of a sudden, it seemed, investors were waking up from a haze of complacency. After all, prior to Wednesday, volatility in S&P 500 options (measured by the VIX) had reached a 24-year low. That’s usually a sign that the market is about to crash. Would this be the day the shoe finally dropped and marked the end of the bull market?  Interestingly, the catalyst for Wednesday’s drop wasn’t from any revelations from Washington about tax policy, infrastructure spending, or the like. Rather, it was because of new reports about President Trump, the Russians, the FBI and the like.  I won’t get into further details — chances are, you’ve already formed your own opinions. But if you’re like me, you’re waiting until more information comes out before forming any judgments. Yes, things could get ugly — more bad news could come out that… Read More

Utility stocks can best be described as the four-door, mid-sized sedan of equity investing: boring. Nothing sexy about them — they get you from point A to point B. Investors own utilities for the steady, above-average dividends just as people buy bland, mid-size sedans because they need something that just works. But sometimes both can seem overpriced. In 1987, the base price of a new, Honda Accord was around $9,795. Today, that base price is around $22,455, which implies an annual price increase of 4.3%; 33.5% more than the average annual inflation rate of 3.22% for the same time period. Read More

Utility stocks can best be described as the four-door, mid-sized sedan of equity investing: boring. Nothing sexy about them — they get you from point A to point B. Investors own utilities for the steady, above-average dividends just as people buy bland, mid-size sedans because they need something that just works. But sometimes both can seem overpriced. In 1987, the base price of a new, Honda Accord was around $9,795. Today, that base price is around $22,455, which implies an annual price increase of 4.3%; 33.5% more than the average annual inflation rate of 3.22% for the same time period. So, while that mid-sized sedan may still seem like a bargain, it’s gotten slightly more expensive over the longer haul. Utility stocks also outperformed inflation during a similar run. The average yield of utility stocks over the last 25 years has been 3.96% while inflation has averaged around 2.11% for the same period. Over the long haul, dividend paying-utility stocks delivered exactly what they should which is to keep pace with inflation. But sometimes utility stocks, like that boring sedan, can look expensive. The sector has been dealing with this recently. After a post-election dip that coincided with… Read More

As I repeatedly scan the markets for the best opportunities, my searches all seem to lead to two areas. The first is the social technology sector — Google, Facebook, Amazon, etc. It contains some great stocks, but most are so heavily bid up that it’s hard to justify an entry here — at least, not until a pullback. The second, equally exciting area is defense and travel technology. This area is less popular and less understood than social tech, creating more potential value on average. There are several companies that thrive in this genre, but one keeps rising to the… Read More

As I repeatedly scan the markets for the best opportunities, my searches all seem to lead to two areas. The first is the social technology sector — Google, Facebook, Amazon, etc. It contains some great stocks, but most are so heavily bid up that it’s hard to justify an entry here — at least, not until a pullback. The second, equally exciting area is defense and travel technology. This area is less popular and less understood than social tech, creating more potential value on average. There are several companies that thrive in this genre, but one keeps rising to the top of my list: Rockwell Collins (NYSE: COL). My original thesis was centered on COL becoming more of a “household name,” but both of our recent wins had little to do with Rockwell’s broad recognition as a great company. The first rally was attributed to a boost in the entire defense group (thanks to action from North Korea) followed by a better-than-expected earnings report. Both of these events are certainly great news for the company, but I still feel that Rockwell’s true value is underestimated and that its recent acquisition of BE Aerospace isn’t getting the credit it deserves. Rockwell… Read More

On January 1, 2018, a new law goes into effect that has the potential to wipe out a large portion of the 6,000 medical testing labs in the United States. And as smaller labs give up the ghost, large, publicly traded lab-testing companies will take much of the business of those smaller labs. That’s because changes to Section 216 of the Protecting Access to Medicare Act of 2014 (PAMA) will result in the single most disruptive event to hit the clinical laboratory industry in the past quarter-century. Medicare currently pays roughly $7 billion a year to laboratories performing more than… Read More

On January 1, 2018, a new law goes into effect that has the potential to wipe out a large portion of the 6,000 medical testing labs in the United States. And as smaller labs give up the ghost, large, publicly traded lab-testing companies will take much of the business of those smaller labs. That’s because changes to Section 216 of the Protecting Access to Medicare Act of 2014 (PAMA) will result in the single most disruptive event to hit the clinical laboratory industry in the past quarter-century. Medicare currently pays roughly $7 billion a year to laboratories performing more than 1,300 different lab tests. And the majority of those tests haven’t seen updated fee schedules since the last major change in 1984.  #-ad_banner-#But that’s about to change.  The PAMA update will cut the testing fees payable under Medicare’s Clinical Laboratory Fee Schedule (CLFS) by more than $5.4 billion over the next decade. This will significantly reduce the revenues of most of the small independent labs.  And since 40%-60% of lab-testing volumes at small labs are exclusively Medicare patients, these labs will struggle to stay in business with the lower fee schedules. That’s because they have fewer customers and relatively high… Read More

One year later and the story has completely changed… As we enter the traditional seasonally weak six-month period of the year, you will no doubt read and hear about the debate over whether the old Wall Street axiom “Sell In May And Go Away” is relevant this year. Of course, no one can predict what the market will do this summer, but one of the reasons that this old saying is still around is because it does have some validity to it, which I’ll touch on in a moment. Readers of my Maximum Profit premium newsletter know that this time… Read More

One year later and the story has completely changed… As we enter the traditional seasonally weak six-month period of the year, you will no doubt read and hear about the debate over whether the old Wall Street axiom “Sell In May And Go Away” is relevant this year. Of course, no one can predict what the market will do this summer, but one of the reasons that this old saying is still around is because it does have some validity to it, which I’ll touch on in a moment. Readers of my Maximum Profit premium newsletter know that this time last year, I was quite cautious regarding the market outlook. I cited a decline in corporate earnings, the trouble my system was having finding companies with exceptional cash flow growth and the sideways trading market as reasons for concern. This was the chart I showed my readers last May:   As you can see — by the shaded green line — earnings were in a decline and the market wasn’t sure what to do. And for the most part we dabbled in and out of a handful stocks, but mainly kept dry powder on hand for when… Read More

The eurozone is experiencing a perfect storm of bullish catalysts. Tremendous profits are available for risk-embracing investors who heed the clear economic signals.  The Risk Make no mistake, political risk, although improving, remains high in Europe. The eurozone has experienced quite a bit of volatility this year. Greece, Brexit, and fears of a nationalist French state following Brexit out of the European Union added tremendous political uncertainty to the financial markets.  The Bullish Case Fortunately, many of these fears have proven unfounded. The recent French election resulted in the victory of the pro-eurozone candidate, improving sentiment across the… Read More

The eurozone is experiencing a perfect storm of bullish catalysts. Tremendous profits are available for risk-embracing investors who heed the clear economic signals.  The Risk Make no mistake, political risk, although improving, remains high in Europe. The eurozone has experienced quite a bit of volatility this year. Greece, Brexit, and fears of a nationalist French state following Brexit out of the European Union added tremendous political uncertainty to the financial markets.  The Bullish Case Fortunately, many of these fears have proven unfounded. The recent French election resulted in the victory of the pro-eurozone candidate, improving sentiment across the board.  Due to the political uncertainty, on a price-to-book ratio European equities are nearing levels equivalent to U.S. equities’ 40-year lows. Eurozone equities have severely underperformed the U.S. market since the 2008 rout. As a result, full value has not been realized and opportunities exist for profit-seeking investors.  Analysts are forecasting EU stock earnings growth of 11 percent in 2017 due to the commodity recovery, small margins, and improved currency environment. When compared to expected growth of just 9 percent in the United States, it’s obvious where the opportunity lies. 5 Ways To Ride The European Bull Market 1. Federated… Read More