At the risk of sounding like a broken record, I’ve found that companies you’ve never heard of often make the best investments.  #-ad_banner-#Unlike high-profile names such as Starbucks (Nasdaq: SBUX), Twitter (NYSE: TWTR), Apple (Nasdaq: AAPL), and others, lesser-known stocks tend to sink or swim mainly because of their fundamentals, with hype and speculation playing a much smaller role in their price movements. Frequently, these lesser-known names are in some of the most unglamorous businesses you can imagine. But they’re so good and dominant they almost can’t help but to put up big stock returns. One such company… Read More

At the risk of sounding like a broken record, I’ve found that companies you’ve never heard of often make the best investments.  #-ad_banner-#Unlike high-profile names such as Starbucks (Nasdaq: SBUX), Twitter (NYSE: TWTR), Apple (Nasdaq: AAPL), and others, lesser-known stocks tend to sink or swim mainly because of their fundamentals, with hype and speculation playing a much smaller role in their price movements. Frequently, these lesser-known names are in some of the most unglamorous businesses you can imagine. But they’re so good and dominant they almost can’t help but to put up big stock returns. One such company is a top health care products firm most investors probably don’t know about — even though it’s the world’s largest producer of less expensive but equally effective over-the-counter (OTC) medications sold as store brands. This company’s stock more than quintupled during the past five years, posting a 438% gain that would have turned $2,500 into nearly $14,000. I’m referring to Perrigo Corp. (NYSE: PRGO), a large-growth firm with an $18.6 billion market cap, three-quarters of the store brand OTC drug market and nearly 22,000 OTC products (allergy pills, pain relievers, cough/cold medicines and antacids, to name a few). The OTC… Read More

“GARP” — short for “growth at a reasonable price” — is an investing style you’ll hear about from many fund managers. These folks like to find solidly growing business models, yet with valuations that are respectable. In recent years, it was hard to be a GARP investor, as the best growth stocks began to trade up to valuations that were hard to justify. #-ad_banner-#Not anymore. The steady drawdown in tech stocks has left many of them squarely back in the “reasonably priced” camp. My favorite metric to find them: the PEG ratio, which is the price-to-earnings… Read More

“GARP” — short for “growth at a reasonable price” — is an investing style you’ll hear about from many fund managers. These folks like to find solidly growing business models, yet with valuations that are respectable. In recent years, it was hard to be a GARP investor, as the best growth stocks began to trade up to valuations that were hard to justify. #-ad_banner-#Not anymore. The steady drawdown in tech stocks has left many of them squarely back in the “reasonably priced” camp. My favorite metric to find them: the PEG ratio, which is the price-to-earnings ratio (P/E) divided by the earnings growth rate.  Ideally, you’ll find stocks with a PEG ratio below 1.0, which means that the P/E ratio is lower than the earnings growth rate.  Of course, growth investors come in two camps: those seeking out companies delivering torrid profit growth and moderate P/E ratios, or those seeking out tamer growth but even lower P/E ratios. I went scouring the basket of tech stocks, slicing and dicing them according to various GARP approaches. Every one of these firms is expected to boost earnings per share (EPS) by at least 20% in 2015 and again… Read More

I’ve been investing in stocks for decades. I’m just as excited about owning stocks today as I was when I was a secretary opening my first investment account on my lunch hour in 1987. #-ad_banner-#I’ve learned an awful lot about the stock market over the years. It’s just as hard to master an understanding of the investment world as it is to master engineering, or cooking, or psychology. There’s no substitute for the time and energy invested in studying your craft. Recently, people have said these exact words to me: • “There WILL be a 10% correction soon.”… Read More

I’ve been investing in stocks for decades. I’m just as excited about owning stocks today as I was when I was a secretary opening my first investment account on my lunch hour in 1987. #-ad_banner-#I’ve learned an awful lot about the stock market over the years. It’s just as hard to master an understanding of the investment world as it is to master engineering, or cooking, or psychology. There’s no substitute for the time and energy invested in studying your craft. Recently, people have said these exact words to me: • “There WILL be a 10% correction soon.” • “The market looks like it’s about to fall.” • “The market is down this year.” If I may gently address these fallacies, the market is not down this year. The S&P 500 Index is up 5.5%, and the Dow Jones Industrial Average is up 2.1%. The S&P 500 and the Dow have had bullish trading patterns over the past several months that have broken out to the upside in recent weeks. All in all, the market has formed a nice base — so no, the market does not look like it’s about to fall.   It has actually just begun… Read More

I don’t know about you, but I’ve been seeing more Red Lobster commercials than usual over the past few months. While it’s been many years since I’ve stopped in for LobsterFest, the marketing push did pique my curiosity. #-ad_banner-#What was going on at Darden Restaurants (NYSE: DRI), Red Lobster’s parent company? Were they trying to revive the struggling brand? Not exactly. Darden is selling the 46-year-old brand that gave the company its start for a mere $2.1 billion (roughly $1.6 billion net after taxes). Approximately $1 billion from the sale will be used to pay down a portion of its… Read More

I don’t know about you, but I’ve been seeing more Red Lobster commercials than usual over the past few months. While it’s been many years since I’ve stopped in for LobsterFest, the marketing push did pique my curiosity. #-ad_banner-#What was going on at Darden Restaurants (NYSE: DRI), Red Lobster’s parent company? Were they trying to revive the struggling brand? Not exactly. Darden is selling the 46-year-old brand that gave the company its start for a mere $2.1 billion (roughly $1.6 billion net after taxes). Approximately $1 billion from the sale will be used to pay down a portion of its big debt load (total liabilities come in at close to $5 billion), while the remaining $600 million will be allocated to buy back shares in an effort to keep its dividend alive and improve earnings per share (EPS). This deal may be a lifesaver in the short term, but it also opens up many questions about Darden’s growth and stability. Red Lobster was Darden’s second-largest unit (in sales) next to Olive Garden, with Longhorn Steakhouse coming in third. All three units saw traffic decreases in 2013 and collectively saw a year-over-year decrease of 1.3% in 2013 sales. Its specialty niche… Read More

As is often the case with an extended bull market, value is now trumping growth.  #-ad_banner-#Many once-soaring tech stocks have come crashing downward in 2014, even as some once-loathed sectors are heating up. And few sectors were as disliked as the insurers, which have been among the deep value plays in this bull market. Back in April 2013, I noted that Protective Life (NYSE: PL), for example, sported a stunning 23% free cash flow yield.  And a month later, I noted that many insurers, including Protective Life, traded at a considerable discount to book value. This insurer is no longer a deep… Read More

As is often the case with an extended bull market, value is now trumping growth.  #-ad_banner-#Many once-soaring tech stocks have come crashing downward in 2014, even as some once-loathed sectors are heating up. And few sectors were as disliked as the insurers, which have been among the deep value plays in this bull market. Back in April 2013, I noted that Protective Life (NYSE: PL), for example, sported a stunning 23% free cash flow yield.  And a month later, I noted that many insurers, including Protective Life, traded at a considerable discount to book value. This insurer is no longer a deep bargain, now that Japan’s Dai-ichi has announced plans to buy it for $5.7 billion. Notably, Protective Life carries just $4.2 billion in tangible book value, implying a nice premium to book in this purchase price. Why would Dai-ichi pay such a stiff price? Because the Japanese financial services firm realizes that the U.S. insurance market is on the cusp of a cyclical upturn, thanks to rising insurance premiums. Insurers always have pricing power when companies start to feel more optimistic about business conditions. In fact, Dai-ichi intends to use Protective Life as a platform to acquire other, smaller… Read More

Although over-the-counter (OTC) stocks are growing in popularity, most investors avoid them because of their reputation for extreme risk. #-ad_banner-#Among the most common dangers of OTC stocks are poor transparency (since the underlying companies don’t have to file with the SEC), the inability to meet minimum financial and other requirements for listing on a major exchange, and increased susceptibility to “pump and dump” scams. What’s more, OTC stocks often display absolutely sickening price volatility. So once an OTC stock gets to where it can uplist to a major exchange like the Nasdaq or NYSE, many investors may get… Read More

Although over-the-counter (OTC) stocks are growing in popularity, most investors avoid them because of their reputation for extreme risk. #-ad_banner-#Among the most common dangers of OTC stocks are poor transparency (since the underlying companies don’t have to file with the SEC), the inability to meet minimum financial and other requirements for listing on a major exchange, and increased susceptibility to “pump and dump” scams. What’s more, OTC stocks often display absolutely sickening price volatility. So once an OTC stock gets to where it can uplist to a major exchange like the Nasdaq or NYSE, many investors may get the impression the stock is now “safe.” And this could be the case with one small stock that’s right in the thick of what may be the Next Big Thing — electronic cigarettes. After trading on the “pink sheets” for years, this tiny e-cigarette maker with a $92 million market capitalization has been trading on the Nasdaq since May 30. Its stock price is up 25% since the uplisting was announced on May 28. So to many investors, the company could be looking more and more like a legitimate and reasonably safe entry point into the emerging e-cigarette industry, especially… Read More

Following the moves of billionaire investors can be a great strategy — if you do it prudently.  #-ad_banner-#Many of the great money managers run concentrated portfolios, with the majority of their fund invested in a small number of stocks. That means these managers usually have a high degree of conviction when it comes to their picks.  One such fund is activist hedge fund Third Point, which Daniel Loeb founded in 1995. His $14 billion flagship fund returned 25% last year, and its success over the past couple of years has been driven by major investments in Yahoo (Nasdaq:… Read More

Following the moves of billionaire investors can be a great strategy — if you do it prudently.  #-ad_banner-#Many of the great money managers run concentrated portfolios, with the majority of their fund invested in a small number of stocks. That means these managers usually have a high degree of conviction when it comes to their picks.  One such fund is activist hedge fund Third Point, which Daniel Loeb founded in 1995. His $14 billion flagship fund returned 25% last year, and its success over the past couple of years has been driven by major investments in Yahoo (Nasdaq: YHOO), AIG (NYSE: AIG) and Delphi Automotive (NYSE: DLPH). During this year’s first quarter, Loeb and Third Point bought 2.5 million shares of drugmaker Actavis (NYSE: ACT), making it the hedge fund’s largest holding.  Actavis develops and manufactures branded and generic drugs, with a focus on urology and women’s health. Its generic drug portfolio should benefit from a shift toward cost-effective health care.  Actavis has been on an acquisition spree, which should help the company deliver an earnings growth rate in the high teens over the next few years. In less than two years, Actavis has already closed two acquisitions… Read More

You can have your $100,000 electric cars or $8 organic burritos…  #-ad_banner-#For my part, “boring” is exciting.  Judging by his portfolio, Warren Buffett would probably agree. Look at some of the top holdings of his Berkshire Hathaway (NYSE: BRK-B), such as Procter & Gamble (NYSE: PG), Coca-Cola (NYSE: KO) or Wells Fargo (NYSE: WFC). Soap, soda and banking… hardly cutting-edge.  Buffett’s portfolio of smaller companies that he’s purchased is also similarly mundane. The Oracle of Omaha likes businesses that are simple to understand, like See’s Candy or Dairy Queen, that are well run and produce consistent results. When… Read More

You can have your $100,000 electric cars or $8 organic burritos…  #-ad_banner-#For my part, “boring” is exciting.  Judging by his portfolio, Warren Buffett would probably agree. Look at some of the top holdings of his Berkshire Hathaway (NYSE: BRK-B), such as Procter & Gamble (NYSE: PG), Coca-Cola (NYSE: KO) or Wells Fargo (NYSE: WFC). Soap, soda and banking… hardly cutting-edge.  Buffett’s portfolio of smaller companies that he’s purchased is also similarly mundane. The Oracle of Omaha likes businesses that are simple to understand, like See’s Candy or Dairy Queen, that are well run and produce consistent results. When I was looking for a story idea to pitch to my editors here at StreetAuthority, I went back to an obscure stock that I look at from time to time: Oil-Dri Corporation of America (NYSE: ODC). As I was doing my research, Oil-Dri struck me as a company Berkshire might like to gobble up. So what does Oil-Dri do? Innovative waterless fracking or maybe some kind of specialized environmental cleanup? Not exactly. Oil-Dri is the world’s largest manufacturer of cat litter.  Oil-Dri makes cat litter under the Johnny Cat and Cat’s Pride brands as well as private-label brands. The company… Read More

At many companies, a key window is about to close…#-ad_banner-# Several weeks before a quarter ends, insiders are blocked from conducting any more transactions in company stock. It’s a smart move that helps reduce the chance that an insider will profit (by buying or selling) in the face of quarterly results that are better (or worse) than outsiders are expecting.  Yet before the insider trading activity slows sharply, these folks have sure been busy: The past 30 days has seen a tremendous amount of selling, as you’d expect in a stock market hitting all-time highs, but also a large amount… Read More

At many companies, a key window is about to close…#-ad_banner-# Several weeks before a quarter ends, insiders are blocked from conducting any more transactions in company stock. It’s a smart move that helps reduce the chance that an insider will profit (by buying or selling) in the face of quarterly results that are better (or worse) than outsiders are expecting.  Yet before the insider trading activity slows sharply, these folks have sure been busy: The past 30 days has seen a tremendous amount of selling, as you’d expect in a stock market hitting all-time highs, but also a large amount of insider buying. Here are the recent buys that have caught my eye. (All data supplied by InsiderInsights.com.) 1. Clean Energy Fuels (Nasdaq: CLNE ) In early March, three directors bought a combined $250,000 of this stock, and in early June, director Warren Mitchell followed that up with another $180,000 purchase. This has been a vexing story for investors, as the company’s base of natural gas filling stations is not yet large enough to push the company into profitability. Shares have slid from the mid-$20s two years ago to a recent $10.  The good news: The business is… Read More

Whenever a stock is in the middle of a short squeeze, you can hop on board for quick gains. It’s certainly unwise to short such a stock while in this trading phase. But once the dust settles, and shorts have bought back a lot of stock, fresh opportunities may emerge to capture renewed downside. That appears to be the very straightforward setup for struggling retailer J.C. Penney (NYSE: JCP). Back in February, while shares were halfway through a rebound move from $5 to $9, I suggested you could profit from the short squeeze.  Three months later, this trading window has now… Read More

Whenever a stock is in the middle of a short squeeze, you can hop on board for quick gains. It’s certainly unwise to short such a stock while in this trading phase. But once the dust settles, and shorts have bought back a lot of stock, fresh opportunities may emerge to capture renewed downside. That appears to be the very straightforward setup for struggling retailer J.C. Penney (NYSE: JCP). Back in February, while shares were halfway through a rebound move from $5 to $9, I suggested you could profit from the short squeeze.  Three months later, this trading window has now closed. The size of the short position has shrunk from 128.5 million shares back then, to 91 million by the end of April, to 78 million by the middle of May — but don’t look for the short position to fall much further. A fresh view of quarterly results suggests there are ample reasons to suspect that the remaining shorts will stand their ground. Downside exists toward the all-time low of $4.90 a share. To see why that is, I should first make clear that J.C. Penney is no longer a candidate for bankruptcy, as many… Read More