Today, I’d like to pass along a little update I wrote from members of my premium investing newsletter, Game-Changing Stocks. While I typically focus on lesser-known companies with triple-digit gain potential that are poised to disrupt the way companies do business and consumers live their lives, I simply think this opportunity is too good to pass up. Late last year, health officials traced an outbreak of E. coli to Chipotle Mexican Grill (NYSE: CMG). A few dozen people wound up getting sick, and shares of the popular burrito joint — known for fresh, high-quality food — dropped… Read More

Today, I’d like to pass along a little update I wrote from members of my premium investing newsletter, Game-Changing Stocks. While I typically focus on lesser-known companies with triple-digit gain potential that are poised to disrupt the way companies do business and consumers live their lives, I simply think this opportunity is too good to pass up. Late last year, health officials traced an outbreak of E. coli to Chipotle Mexican Grill (NYSE: CMG). A few dozen people wound up getting sick, and shares of the popular burrito joint — known for fresh, high-quality food — dropped precipitously. The shares are down nearly 10% for the year to date against a slight 0.3% gain in the benchmark S&P 500 index. #-ad_banner-#Chipotle’s fall from grace has erased any alpha from the past 12 months and even pushed its five-year performance below that of the S&P. Only extremely long-term investors have any real right to be pleased with how things have turned out: They’re up more than 600% versus a nearly 60% gain in the market during the past 10 years. Chipotle having a problem with food quality is like Volvo… Read More

I’m always inspired by the story of legendary investor Shelby Cullom Davis who borrowed some money from his father-in-law to buy deeply, deeply undervalued stocks of insurance companies, eventually growing his fortune to $800 million. His thesis was that the market was unwittingly discounting the stocks by completely disregarding the huge piles of cash the companies were sitting on (which all insurance companies have…mainly by mandate). Warren Buffett did the same thing with a little insurance company called GEICO. I’ve always liked to poke around stocks of life insurance companies. There are two reasons. First, they typically have and grow… Read More

I’m always inspired by the story of legendary investor Shelby Cullom Davis who borrowed some money from his father-in-law to buy deeply, deeply undervalued stocks of insurance companies, eventually growing his fortune to $800 million. His thesis was that the market was unwittingly discounting the stocks by completely disregarding the huge piles of cash the companies were sitting on (which all insurance companies have…mainly by mandate). Warren Buffett did the same thing with a little insurance company called GEICO. I’ve always liked to poke around stocks of life insurance companies. There are two reasons. First, they typically have and grow huge piles of money. Second, betting on the insurance company is the equivalent to betting on the house at a casino. It’s hard to beat the actuarial tables. Like John Maynard Keynes said: “In the end, we’re all dead.” #-ad_banner-#But lately, I’m rethinking that for two reasons. One, lower risk interest rates are horribly low, so the huge piles of cash the life insurers are sitting on aren’t earning very much. Two, there is a ticking demographic time bomb called “Baby Boomers” looming in the near future. I selected three large life insurers whose stocks seem to be trading and… Read More

Monday’s consumer spending report was lower than expected, but it didn’t stop the market from continuing to snatch up shares of consumer discretionary stocks. That makes sense: employment gains are coming in strong; personal income is rising; and energy prices have yet to rally. It all adds up to a pretty picture for companies dependent on Americans spending on nonessential goods and services this year. I advised in February that consumer discretionary stocks were starting to rally, presaging a market rebound. That turned out to be true, and the stocks I recommended then — Mohawk Industries (NYSE: MHK) and Disney… Read More

Monday’s consumer spending report was lower than expected, but it didn’t stop the market from continuing to snatch up shares of consumer discretionary stocks. That makes sense: employment gains are coming in strong; personal income is rising; and energy prices have yet to rally. It all adds up to a pretty picture for companies dependent on Americans spending on nonessential goods and services this year. I advised in February that consumer discretionary stocks were starting to rally, presaging a market rebound. That turned out to be true, and the stocks I recommended then — Mohawk Industries (NYSE: MHK) and Disney (NYSE: DIS) — have both performed well since then. But some market observers think the more recent rally in consumer discretionary stocks is somehow a bad sign, indicating a market top. I disagree. While disappointing earnings could derail the market in the short run (and create bargains for high-quality companies’ shares), so far the earnings season has been better than expected. And investors’ continued faith in consumer discretionary shares is a solid indicator that the economy remains on the right track. #-ad_banner-#I wouldn’t add to your holdings in Mohawk and Disney at this point, although both are certainly worthy of… Read More

When market bubbles form, they usually start for a reason. The tech boom was fueled by revolutionary opportunities with the internet, and the housing bubble achieved liftoff from historically low interest rates and relaxed loan standards. The problem is that investors quickly lose sight of reality and the enthusiasm for a sector becomes its own driver to more gains. Valuations are taken to the extreme and the market uses every excuse it can find to explain why fundamentals don’t matter. #-ad_banner-#Eventually, something happens to weigh on the exuberance and investors have to reevaluate the real value of the investment… sending… Read More

When market bubbles form, they usually start for a reason. The tech boom was fueled by revolutionary opportunities with the internet, and the housing bubble achieved liftoff from historically low interest rates and relaxed loan standards. The problem is that investors quickly lose sight of reality and the enthusiasm for a sector becomes its own driver to more gains. Valuations are taken to the extreme and the market uses every excuse it can find to explain why fundamentals don’t matter. #-ad_banner-#Eventually, something happens to weigh on the exuberance and investors have to reevaluate the real value of the investment… sending share prices tumbling back to fundamentals and historic averages. One such bubble has been forming since stocks started to recover in 2009 and may be about to burst. In fact, this bubble has reached a point only seen twice in the last century… and both times turned out to be buying opportunities. Safety Stocks May Not Be So Safe Investors normally rush to low volatility and defensive stocks during market crashes, taking cover from uncertainty in other themes. The 30-year trend in lower interest rates, combined with historic monetary easing after the financial crisis, has brought a shift in… Read More

Recently I’ve noticed a disconnect in hotel stocks. Although the sector’s leading companies are performing admirably, their stocks fell sharply in 2015 and haven’t yet recovered in 2016. That’s creating a buying opportunity for on-the-ball investors today. The market has discounted hotel stocks for two main reasons. First, concern about economic growth in China and Europe has made many observers fearful that business travel will decline precipitously in the coming quarters, cutting into hotel companies’ profit margins. Second, the “sharing economy” — whose most famous exemplar, Uber, is transforming the taxi industry — has extended a prominent tendril into the… Read More

Recently I’ve noticed a disconnect in hotel stocks. Although the sector’s leading companies are performing admirably, their stocks fell sharply in 2015 and haven’t yet recovered in 2016. That’s creating a buying opportunity for on-the-ball investors today. The market has discounted hotel stocks for two main reasons. First, concern about economic growth in China and Europe has made many observers fearful that business travel will decline precipitously in the coming quarters, cutting into hotel companies’ profit margins. Second, the “sharing economy” — whose most famous exemplar, Uber, is transforming the taxi industry — has extended a prominent tendril into the lodging sector. Airbnb and other online home-rental services allow travelers to bypass hotels for homier, and often less expensive, lodgings. Some investors worry that Airbnb will disrupt the hotel business as much as Uber has rewritten the rules for taxis. #-ad_banner-#Both problems seem overblown. It’s true that China and Europe may not be growing as rapidly as the United States — which itself is hardly breaking economic growth records — but there’s no sign that hotel demand is slackening; instead, the long-term trend is still for growing business and leisure travel as emerging economies continue to grow the global middle… Read More

Two years ago, I wrote about why I disliked regional bank stocks using Regions Financial (NYSE: RF) as a glaring example. Two years later, the stock is 18% lower since despite slow but noticeable improvements in the U.S. economy and repair in the financial sector. Most banks have had enough time to adapt to the regulatory environment. So why the poor performance? I drilled down into Regions’ numbers and those of its peers and pulled out a comparison between CEO compensation growth versus stock performance. Here’s what I found.   CEO Pay 5yr Growth Stock Price 5yr Growth (Excluding Dividends) Regions… Read More

Two years ago, I wrote about why I disliked regional bank stocks using Regions Financial (NYSE: RF) as a glaring example. Two years later, the stock is 18% lower since despite slow but noticeable improvements in the U.S. economy and repair in the financial sector. Most banks have had enough time to adapt to the regulatory environment. So why the poor performance? I drilled down into Regions’ numbers and those of its peers and pulled out a comparison between CEO compensation growth versus stock performance. Here’s what I found.   CEO Pay 5yr Growth Stock Price 5yr Growth (Excluding Dividends) Regions Financial Corp (NYSE: RF) 13.8% annually 3.9% annually Wells Fargo & Co. (NYSE: WFC) 0% annually 14.4% annually SunTrustBanks Inc (NYSE: STI) (14.7%) annually 7.5% anually Regions’ CEO, O.B. Grayson Hall got paid the most for the worst performance. Granted, Wells Fargo (NYSE: WFC) is a much bigger institution and plays at a different level than Regions, which is strictly a regional entity. But Wells Fargo handsomely rewarded shareholders while keeping executive compensation in line. SunTrust (NYSE: STI) is a closer comparison, but as you can see, its CEO actually took a steady pay cut (I’m sure he’ll figure out… Read More

Two weeks ago, I made a major announcement about StreetAuthority’s premium newsletter lineup. In short, two of our leading analysts — Amy Calistri and Jimmy Butts — have teamed up to create a new premium newsletter. As I mentioned back then, the goal of this newsletter will be to feature the absolute best stock picks for investors to hold in their core portfolio. I also mentioned that two of our former publications, Stock of the Month and Top 10 Stocks, would fold into this exciting new letter. #-ad_banner-#Today, I’m happy to pass along word… Read More

Two weeks ago, I made a major announcement about StreetAuthority’s premium newsletter lineup. In short, two of our leading analysts — Amy Calistri and Jimmy Butts — have teamed up to create a new premium newsletter. As I mentioned back then, the goal of this newsletter will be to feature the absolute best stock picks for investors to hold in their core portfolio. I also mentioned that two of our former publications, Stock of the Month and Top 10 Stocks, would fold into this exciting new letter. #-ad_banner-#Today, I’m happy to pass along word Amy and Jimmy’s first Top Stock Advisor issue is out and available to current subscribers. Those readers can find it here. Now, rather than share their first pick with you (which wouldn’t be fair to current subscribers), I’d like to touch on an important point they made in their inaugural issue that I think is far, far more valuable than any one single stock pick. You see, Amy and Jimmy are of the same opinion I am when it comes to successful investing. It doesn’t take a genius-level IQ or any sort… Read More

Twitter (Nasdaq: TWTR) has been the worst social media stock to own over the past year. And that’s no easy feat.  Shares of LinkedIn (Nasdaq: LNKD) have fallen 54% over the past twelve months. Yelp (Nasdaq: YELP) is off 56% over the same period. The online advertising market has been unkind for these social-focused companies.  But none of those falls rival Twitter. Shares Twitter are down more than 65% in just the last year. They’re also off more than 33% from the 2013 IPO offer price of $26. As a Twitter shareholder myself, the journey has been especially painful. … Read More

Twitter (Nasdaq: TWTR) has been the worst social media stock to own over the past year. And that’s no easy feat.  Shares of LinkedIn (Nasdaq: LNKD) have fallen 54% over the past twelve months. Yelp (Nasdaq: YELP) is off 56% over the same period. The online advertising market has been unkind for these social-focused companies.  But none of those falls rival Twitter. Shares Twitter are down more than 65% in just the last year. They’re also off more than 33% from the 2013 IPO offer price of $26. As a Twitter shareholder myself, the journey has been especially painful.  However, after all the negativity surrounding the company — which has ranged from rumors of changes in character limits to an exodus of top executives — Twitter could finally be hitting a turning point.  #-ad_banner-#Twitter has been having issues attracting and keeping users. The changes it has made recently, including revamping the “Moments” tab and changing its timeline algorithm, won’t be enough to keep users engaged over the long-term. Instead, Twitter needs to be leveraging its own platform and unique ability to mesh live content with social to grow users and revenues. The Potential Game Changer … Read More

It’s earnings season. And the consensus on Wall Street, Main Street and beyond is that this quarter could be a bloodbath for corporate earnings in almost every industry. Analysts expect overall earnings for the S&P 500 to decline 9.1% from the first quarter of 2015. The main reason is fairly simple: energy and financial companies are having their worst quarters in many years. We all know oil and natural gas prices hit historic lows in February; though they’ve rallied, it won’t be enough to help them this quarter. For financial services companies, the stock-market volatility early in the quarter hurt… Read More

It’s earnings season. And the consensus on Wall Street, Main Street and beyond is that this quarter could be a bloodbath for corporate earnings in almost every industry. Analysts expect overall earnings for the S&P 500 to decline 9.1% from the first quarter of 2015. The main reason is fairly simple: energy and financial companies are having their worst quarters in many years. We all know oil and natural gas prices hit historic lows in February; though they’ve rallied, it won’t be enough to help them this quarter. For financial services companies, the stock-market volatility early in the quarter hurt trading profits and reduced demand for brokerage and other investment-related services; at the same time some banks suffered from loan defaults from the energy sector. #-ad_banner-#There are a couple of pieces of good news regarding earnings: One, consumer discretionary, healthcare and telecom companies are expected to post positive earnings overall. If you’ve followed my advice to add to your positions in these areas in recent months, those holdings should partly protect your portfolio from earnings-related drops. Two, and most significant, the gloomy earnings season probably will create buying opportunities among quality stocks that get beaten up — either because their… Read More

Ever get the feeling that you can’t get ahead, no matter how hard you try? That’s the case for many households across the country. In fact, a recent Pew Charitable Trusts research report crunched Bureau of Labor Statistics data, tracking expenditures and incomes of Americans for the last couple of decades. Per the report, median income is down over 10% from where it was just 10 years ago; meanwhile, household expenditures are up close to 15% over the same period.  #-ad_banner-#For the low-income households, it appears that the recession never really ended.  Discount retail leader Dollar General (NYSE: DG) highlighted… Read More

Ever get the feeling that you can’t get ahead, no matter how hard you try? That’s the case for many households across the country. In fact, a recent Pew Charitable Trusts research report crunched Bureau of Labor Statistics data, tracking expenditures and incomes of Americans for the last couple of decades. Per the report, median income is down over 10% from where it was just 10 years ago; meanwhile, household expenditures are up close to 15% over the same period.  #-ad_banner-#For the low-income households, it appears that the recession never really ended.  Discount retail leader Dollar General (NYSE: DG) highlighted that fact at its recent investor conference. The company also made a point to show that inflation is outpacing total wages as health care costs and rents continue to rise. But it’s not just about rising expenditures. The economy itself could be on shaky ground.  Duke’s Fuqua School Business surveyed some 1,600 CFOs this month, and found that their respondents believe there is a 31% chance the United States could enter a recession by the end of this year. If a recession does hit, low-income families will struggle even more, forcing them to turn to retailers that offer necessities for… Read More