When a member of the blue-chip Dow Jones Industrial Average becomes a chronic underperformer, it often is at risk for removal from the index. Bank stocks after the financial crisis were prime examples. However, one laggard that should not worry about banishment right now is retail giant Wal-Mart (NYSE: WMT).  The world’s largest publicly traded employer has been lagging the domestic market since mid-2012 with a bout of strength seen in the fourth quarter of last year. Since notching its all-time highest close on Jan. 8 at $90.47, shares slid rather steadily to their March 11 closing low of $80.69. Read More

When a member of the blue-chip Dow Jones Industrial Average becomes a chronic underperformer, it often is at risk for removal from the index. Bank stocks after the financial crisis were prime examples. However, one laggard that should not worry about banishment right now is retail giant Wal-Mart (NYSE: WMT).  The world’s largest publicly traded employer has been lagging the domestic market since mid-2012 with a bout of strength seen in the fourth quarter of last year. Since notching its all-time highest close on Jan. 8 at $90.47, shares slid rather steadily to their March 11 closing low of $80.69. That was an 11% decline in eight weeks while the Dow was down just 1.5%.  With WMT sitting on top of a rather firm price floor, it may now be a great bargain. But it is more than just support on the chart that piques my interest.  The decline in shares this year seemed rather sedate — the steady erosion of a forgotten stock. And throughout the fall, on-balance volume did not budge, which is a bullish sign. #-ad_banner-# On-balance volume… Read More

The six year-old bull market is widely attributed to both stimulative policies from the Federal Reserve and a rebounding U.S. economy. Yet the Fed, the most powerful central bank in the world, may soon be taking the punch bowl away from the party.   #-ad_banner-#Does the Fed’s presumed move to begin lifting interest rates this summer mean it’s time to book profits and take a more defensive posture?  Then again, can you afford to do that when fixed-income investments earn just one or two percentage points above inflation? It’s a tough choice that many investors are pondering.  … Read More

The six year-old bull market is widely attributed to both stimulative policies from the Federal Reserve and a rebounding U.S. economy. Yet the Fed, the most powerful central bank in the world, may soon be taking the punch bowl away from the party.   #-ad_banner-#Does the Fed’s presumed move to begin lifting interest rates this summer mean it’s time to book profits and take a more defensive posture?  Then again, can you afford to do that when fixed-income investments earn just one or two percentage points above inflation? It’s a tough choice that many investors are pondering.   Bubble Or Rich Valuation  —  Bad For Investors Either Way One warning sign for risk-averse investors: The tech-heavy Nasdaq is now valued at 32 times trailing earnings, a premium of 68% to the stocks in the S&P 500.   Bond King Bill Gross recently joined the growing list questioning valuations saying that the index was in “a bit of a bubble,” and negative real interest rates have caused people to mindlessly pile into equities.   While the Nasdaq is nowhere near its 175 times earnings valuation it reached in 2000, a price-to-earnings of 32… Read More

  Investors often have difficulty letting go of outperforming growth stocks, even if there are clear signs it’s time to cash out. Case in point: the seemingly unstoppable rise in shares of The Kroger Co. (NYSE: KR), the nation’s largest supermarket chain by revenue.       With such bullish-looking technicals, Kroger may seem like an investment you can buy and hold, especially after the company’s recent quarterly report. In early March, Kroger announced that Q4 earnings grew 23% (from the year ago quarter), well ahead of consensus forecasts.   The quarterly report caps off an impressive… Read More

  Investors often have difficulty letting go of outperforming growth stocks, even if there are clear signs it’s time to cash out. Case in point: the seemingly unstoppable rise in shares of The Kroger Co. (NYSE: KR), the nation’s largest supermarket chain by revenue.       With such bullish-looking technicals, Kroger may seem like an investment you can buy and hold, especially after the company’s recent quarterly report. In early March, Kroger announced that Q4 earnings grew 23% (from the year ago quarter), well ahead of consensus forecasts.   The quarterly report caps off an impressive five-year surge, which saw revenues jump more than 40% to nearly $109 billion and net earnings soar more than 30-fold to $3.44 a share during the past five years.   #-ad_banner-#However, it would be unwise to assume Kroger will keep outperforming. With the company’s stock perched at record highs, now is a perfect time to determine if fundamentals can support current prices. And from where I’m sitting, this popular stock looks set to boil over.   Investor Overexuberance In the fiscal year ended February 1, earnings rose about 19%. Yet Kroger’s stock gained nearly 90% during the same period. This… Read More

#-ad_banner-#By now, even the most casual investor (and American taxpayer) is familiar with the American International Group, Inc. (NYSE: AIG) story.   The company’s financial products division drove the company to the brink of bankruptcy, and the largest private sector bailout in American history saved it.   But those who dismiss AIG as an investment opportunity today because of past mismanagement are missing an incredible turnaround opportunity.   The company has divested numerous assets in an effort to slim down and simplify. Most importantly, it no longer has the financial products division… Read More

#-ad_banner-#By now, even the most casual investor (and American taxpayer) is familiar with the American International Group, Inc. (NYSE: AIG) story.   The company’s financial products division drove the company to the brink of bankruptcy, and the largest private sector bailout in American history saved it.   But those who dismiss AIG as an investment opportunity today because of past mismanagement are missing an incredible turnaround opportunity.   The company has divested numerous assets in an effort to slim down and simplify. Most importantly, it no longer has the financial products division that destroyed shareholder wealth in 2008 and 2009. Despite these positive steps, the company’s turnaround is still in the early stages and offers a lot of upside for patient investors.   If you’ve been hesitant to believe in and invest in the post-crisis AIG, then most of Wall Street agrees with you. AIG’s share price has barely budged these last 18 months, while the rest of the market has shot to new highs.   AIG’s lackluster stock performance, while share prices of rivals have surged, has created striking valuation differences among property and casualty insurance industry stocks. Competitors, like the… Read More

#-ad_banner-#If you’re a fan of old-time boxers, then you probably remember George Chuvalo. He was a sturdy Canadian heavyweight of the 60s and 70s who faced the best fighters of his time, including some extremely heavy hitters. In 93 hard-fought bouts, he came out on top far more often than not and wasn’t knocked down once. As an investor, Chuvalo reminds me of United Technologies Corp. (NYSE: UTX), a large conglomerate serving the aerospace, construction and other industries. Like Chuvalo, United Technologies has been the epitome of consistency, delivering decades of… Read More

#-ad_banner-#If you’re a fan of old-time boxers, then you probably remember George Chuvalo. He was a sturdy Canadian heavyweight of the 60s and 70s who faced the best fighters of his time, including some extremely heavy hitters. In 93 hard-fought bouts, he came out on top far more often than not and wasn’t knocked down once. As an investor, Chuvalo reminds me of United Technologies Corp. (NYSE: UTX), a large conglomerate serving the aerospace, construction and other industries. Like Chuvalo, United Technologies has been the epitome of consistency, delivering decades of solid growth in earnings, cash flow and dividends. And UTX proved that it can also take a punch. The firm faced unusual adversity in 2014, but powered through and went on to post solid financial results. Among last year’s troubles: —          Delays in meeting order deadlines for 28 Cyclone shipboard helicopters for the Canadian military. —          A couple big setbacks in the Pratt & Whitney division, including testing failures of a new commercial engine being developed for aircraft maker Bombardier, Inc. (OTC: BDRAF… Read More

Thanks to two mega trends sweeping the United States, the home improvement market is exploding in popularity all across the country. #-ad_banner-#With Americans beginning to rely more heavily on cost-savings options and push for greater sustainability, do-it-yourself (or DIY) projects have never been more popular. In 2014, the U.S. home improvement products market was worth an estimated $313.5 billion, up 5.9% from the prior year, according to market statistics firm Statista. Many investors would see this as a time to run out and buy shares of  big box-store company’s like Home Depot or Lowe’s. But with the two giants battling… Read More

Thanks to two mega trends sweeping the United States, the home improvement market is exploding in popularity all across the country. #-ad_banner-#With Americans beginning to rely more heavily on cost-savings options and push for greater sustainability, do-it-yourself (or DIY) projects have never been more popular. In 2014, the U.S. home improvement products market was worth an estimated $313.5 billion, up 5.9% from the prior year, according to market statistics firm Statista. Many investors would see this as a time to run out and buy shares of  big box-store company’s like Home Depot or Lowe’s. But with the two giants battling over home-improvement supremacy, there’s no telling which powerhouse retailer will ever come out on top. So instead, I’ve found three companies profiting from the DIY trend in a huge way. And these market-beaters have all the fundamentals necessary to keep showering you with big returns for years to come. The Sherwin-Williams Co. (NYSE: SHW) Sherwin-Williams is the largest producer of paints and coatings in the United States and the third largest in the world. The company estimates that more than 90% of the U.S. population lives within a 50 mile radius of one of its 3,654 domestic locations. While… Read More

  On Monday, March 9, investors will celebrate the sixth anniversary of the current bull market. After a brief pullback in January, the S&P 500 and Dow Jones Industrial Average have resumed their upward move and are now far above previous peaks.   #-ad_banner-#Even the tech-heavy Nasdaq is almost back at levels seen during the dot-com bubble of 2000.     Yet while many portfolios have staged an impressive rebound, consumers’ balance sheets have not. By one measure, more than a third of the population is at high risk of a personal financial crisis.   Nearly a quarter (24%) of… Read More

  On Monday, March 9, investors will celebrate the sixth anniversary of the current bull market. After a brief pullback in January, the S&P 500 and Dow Jones Industrial Average have resumed their upward move and are now far above previous peaks.   #-ad_banner-#Even the tech-heavy Nasdaq is almost back at levels seen during the dot-com bubble of 2000.     Yet while many portfolios have staged an impressive rebound, consumers’ balance sheets have not. By one measure, more than a third of the population is at high risk of a personal financial crisis.   Nearly a quarter (24%) of Americans have more credit card debt than emergency savings, according to a recent report by Bankrate, a financial publisher. Another 13% have no credit card debt, but also don’t have any emergency savings either. That is 37% of the population that would be thrown into severe financial stress were they to lose their employment or another recession were to occur.   Those approaching retirement may be even worse off. As I wrote in December, many investors may be unable to live on the traditional 4% withdrawal rule.   While the U.S. economy has been the success story… Read More

It seems like ancient history, but consumers were in an awfully good mood a decade ago. Back then, price pressures were relatively contained and unemployment levels were fairly low. Taken together, these two measures of consumer health created a powerful tailwind for spending on a wide range of goods and services. #-ad_banner-#Of course, the good times couldn’t last. The Great Recession of 2008 led to massive increases in the unemployment rate and consumers are still feeling the lingering psychological effects to this day. For example, consumers are now wary of taking on debt. Total household debt (mortgages, credit… Read More

It seems like ancient history, but consumers were in an awfully good mood a decade ago. Back then, price pressures were relatively contained and unemployment levels were fairly low. Taken together, these two measures of consumer health created a powerful tailwind for spending on a wide range of goods and services. #-ad_banner-#Of course, the good times couldn’t last. The Great Recession of 2008 led to massive increases in the unemployment rate and consumers are still feeling the lingering psychological effects to this day. For example, consumers are now wary of taking on debt. Total household debt (mortgages, credit card balances, car loans, etc.) has fallen by nearly $20 billion over the past five years, according to the Federal Reserve. With consumer balance sheets now in better shape, consumers are likely to respond to remarkable turnabout in what is known as the “misery Index.” This index combines the national inflation rate and the national unemployment rate. It was often cited back in the 1970s, when the index was synonymous with “stagflation.” These days, we should call the misery index the “relief index,” because it hasn’t been this low since the good old days of 2007. Read More

Most people know the name Wayne Gretzky. #-ad_banner-#For years he was nearly universally regarded as the best hockey player in the world. Yet his astounding success had very little to do with superior athletic abilities. “A good hockey player skates to where the puck is,” Gretzky would say. “A great hockey player skates to where the puck is going.” Although investing doesn’t require the same physical prowess as hockey, this same principle is key to identifying stocks at the cusp of a big upward move. You see, the… Read More

Most people know the name Wayne Gretzky. #-ad_banner-#For years he was nearly universally regarded as the best hockey player in the world. Yet his astounding success had very little to do with superior athletic abilities. “A good hockey player skates to where the puck is,” Gretzky would say. “A great hockey player skates to where the puck is going.” Although investing doesn’t require the same physical prowess as hockey, this same principle is key to identifying stocks at the cusp of a big upward move. You see, the key lies in spotting big picture themes that are likely to unfold, and then understanding the likely winners or losers based on these long-established relationships in the global market. Let’s be clear: I’m not talking about localized events that could be gone tomorrow, but big-picture developments that could take months or years to play out. For example, when the world began recognizing the potential of fracking and horizontal drilling to optimize the extraction of natural resources from shale rock formations, it was obvious that well-positioned oil and gas producers would benefit. But, those who… Read More

  Acquisitions can be a sure-fire way to supercharge growth. But when a major buyout attempt falls through, prospects for rapid expansion may suddenly look slim.   #-ad_banner-#At first glance, that may characterize the outlook for discount merchandiser Dollar General Corp. (NYSE: DG).   On further inspection, this retailer has ample room for organic growth. DG hoped to acquire rival Family Dollar Stores, Inc. (NYSE: FDO), but was outbid by Dollar Tree, Inc. (NASDAQ: DLTR). With the competitive landscape now altered, Dollar General now has further incentive to accelerate its growth plans.   Dollar Tree will be a pretty even… Read More

  Acquisitions can be a sure-fire way to supercharge growth. But when a major buyout attempt falls through, prospects for rapid expansion may suddenly look slim.   #-ad_banner-#At first glance, that may characterize the outlook for discount merchandiser Dollar General Corp. (NYSE: DG).   On further inspection, this retailer has ample room for organic growth. DG hoped to acquire rival Family Dollar Stores, Inc. (NYSE: FDO), but was outbid by Dollar Tree, Inc. (NASDAQ: DLTR). With the competitive landscape now altered, Dollar General now has further incentive to accelerate its growth plans.   Dollar Tree will be a pretty even match for Dollar General once the Family Dollar acquisition closes next month. At that point, Dollar Tree will have as many as 12,700 locations and annual revenue of about $18 billion, compared with a pro forma 11,700 stores and $18.5 billion in sales for Dollar General. This includes the roughly 300-to-500 stores Dollar Tree will have to divest to appease antitrust regulators.   But even without Family Dollar in the fold, Dollar General could eventually boost its store count by 14,000, more than doubling its current footprint. This expansion goal is feasible because smaller stores (the kind Dollar General typically… Read More