When Slashing a Dividend is the Right Move

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• Deere Ploughs in the Dough

  By Tom Gibbs - May 16, 2012 | Tickers: CAT, CNH, DE, KUB

  Deere & Company (NYSE: DE), despite the release of its rather positive quarterly report, trades down nearly 2% this morning on high volume.  The corporation posted a year-over-year 12% and 23% jump, respectively, in quarterly revenues and net profits, with meaningful gains across all of its divisions.  Agriculture and Turf equipment sales (75+% of total) enjoyed a 10.5% revenue increase, and Construction and Forestry equipment sales (15+% of total) a more »

• Yahoo: Can it Get the Respect it Deserves?

  By Maxwell Fisher - May 16, 2012 | Tickers: MSFT, YHOO

  Yahoo! (NASDAQ: YHOO) seems to be stuck in a bad impression of a Rodney Dangerfield routine. No matter what it is does, it cannot seem to get any respect. Yahoo!’s lack of respect may be its own fault or simply the market’s refusal to see the value of the business. What is known is that the company has not helped its own cause. Its approach to the firing more »

• Showrooming and Sporting Goods

  By Chad Henage - May 15, 2012 | Tickers: AMZN, DKS

  There has been a lot made of the concept of showrooming. If you aren't familiar, showrooming is a new term where a customer shops for something in person at a retailer, and then goes online to make the purchase. This phenomenon has propelled companies like Amazon.com (NASDAQ: AMZN) to new heights in the stock market. As Amazon grows, the company is in theory hurting traditional brick and mortar retailers like Walmart and Target. One retailer that seems to be holding up pretty well against this threat is Dick's Sporting Goods (NYSE: DKS).

• Are Discount Stores Still Good Value?

  By Lee Samaha - May 15, 2012 | Tickers: DG, DLTR, FDO, ROST, TJX

  As Jamie Dimon just found out at JPMorgan, managing risk is a whole lot harder than it appears. What makes it difficult is that it is easy to be seduced into thinking we are managing risk if we accept the consensual view. Unfortunately, the ‘consensual view’ of managing risk is -- by definition -- one that many people hold and the price of carrying it tends to go up. If that position more »

• Time to Bakken to a Hess Position

  By Maxxwell A.R. Chatsko - May 14, 2012 | Tickers: HES, MRO, STO

  Despite the rosy projections heralding the Bakken formation as the United States’ Holy Grail of energy investors, we found a rare piece of bad news when Hess Corp. (NYSE: HES) announced that their wells would produce below the previously expected 60,000 barrels per day (bpd) by year end. The news kept shares downward in a slide that began in late February.

  That can be great news when you consider more »

• Looking Beyond the P/E

  By Stephen Benz - May 11, 2012 | Tickers: SWY, KR, WFM

  On 11 July 2011, I made what may be one of my dumbest CAPS calls: I predicted that Whole Foods Market (NASDAQ: WFM) would underperform the market.  I won't say it was a bad call based on the fact that Whole Foods has since outperformed by 34%.  I will say it was a bad call because it was based on one simple metric: the P/E.

  What is Overpriced more »

• Cisco's Weak Guidance: Is it a Company Issue or is Tech in Trouble?

  By Lee Samaha - May 11, 2012 | Tickers: CSCO, EQIX, FFIV, FTNT, XXIA

  Whenever a technology bellwether like Cisco Systems (NASDAQ: CSCO) reports results, the market takes immediate notice. With the dust now settling over a disappointing outlook statement, it's time to look in greater depth at Cisco and formulate some conclusions for the wider technology market.

  The broad-based sell-off was understandable and no self-respecting investor would ignore CEO John Chambers’ commentary, however, I think there is more to this than just more »

• From Cringe-worthy to Lust-worthy: Ford’s Sustainable Profits

  By Asit Sharma - May 11, 2012 | Tickers: F, GM

  In the 2012 Fortune 500 rankings published this week, Ford (NYSE: F) moved up one spot to number nine overall, based on 2011 revenue of $136.2 billion.  More impressively, the company generated $8.6 billion of pretax profits last year.  Fortune crowed that in addition to financial success, the company is “pumping out lust-worthy cars again.”

  Tired auto magazine jargon aside, it’s true that Ford’s recent performance more »

• A Second Chance at One that Got Away?

  By Keith Speights - May 11, 2012 | Tickers: AAPL, BRCM, INTC, QCOM, TXN

  It’s not a good idea to buy a stock on hearsay. But sometimes what someone has to say about a company is worth hearing. Back in 1994 an engineer with one of our vendors shared with me how much he enjoyed working for his employer and how excited he was about the company’s prospects. He didn’t divulge any insider information, but his enthusiasm clearly showed. Before he more »

• The Inexpensiveness of Energold Will Surprise You

  By Tom Gibbs - May 11, 2012 | Tickers: ABX, EGDFF.PK, NEM, AUY

  The “pick-and-shovel play,” which refers to corporations supplying mid-1800s gold rush prospectors with necessary mining tools/equipment, has recently been applied to players operating in non-mining industries.  Suppliers working behind the scenes of highly fragmented industries including consumer electronics and automobiles, for instance, often include corporations that are somewhat removed from the intense competition in the end-consumer market and are often less expensive investment picks.  

  Despite the applicability of the more »

• Rackspace and Equinix, a Tale of Two Cash Flows

  By Lee Samaha - May 11, 2012 | Tickers: DLR, EQIX, INXN, RAX

  Superficially, Equinix (NASDAQ: EQIX) and Rackspace (NYSE: RAX) have a lot in common. Both are high growth plays in the cloud computing sector. They also seem to be in similar stages of development in their industry life cycle. In other words, they are generating high revenue growth, but little cash flow. However, I would argue that they have different business models and, going forward, we could see divergence in some more »

• Despite Film Division Debacle, Disney Shines

  By Tom Gibbs - May 10, 2012 | Tickers: CBS, SNE, TWX, VIAB, DIS

  Disney's (NYSE: DIS) crew seems to have pulled out its wands once again, as the corporation trades up nearly 2% following the conjuring of another magical performance in the second quarter.  Total company revenues and net profits were up 6% and 21%, respectively, compared to the same quarter in 2011, and the performance was boosted with strong gains across all of Disney’s segments.

  Significant operating efficiency gains were more »

• Forget Solar, Let's Talk about Wind!

  By Stephen Benz - May 10, 2012 | Tickers: AMSC, GE, KDN, SI, ZOLT

  I like to think I’m an investor with a conscience.  I’ll stay away from owning cigarette companies, even knowing that if I had invested in Altria Group back when I became old enough to buy their products I’d be a rich man. 

  Then there are companies I’d like to own because I want to be a part of achieving what I consider moral imperatives.  To this more »

• Skullcandy is Sounding Sweet

  By John Divine - May 10, 2012 | Tickers: BBY, SKUL

  Skullcandy (NASDAQ: SKUL), the innovative and colorful audio accessories company, reported its first quarter earnings on May 2^nd after the market close. Investors were underwhelmed, and since closing at $16.65 minutes before the earnings conference call, shares have lost nearly 20% of their value, and the stock closed the week on May 4^th at $13.30. Shares currently trade at around $13.70.

  Did SKUL post a more »

• Digging Through the Remains of Earnings Season

  By Matthew DiLallo - May 10, 2012 | Tickers: GMCR, ISRG, MAKO, PANL

  Earnings season can bring out extreme reactions in the prices of stocks.  But, did the underlying value of the company really change as dramatically as prices would indicate?  Sometimes the market overreacts and true bargains emerge.  I want to dig through some stocks in my portfolio to see if I should be adding to them or whether I should be as concerned as the market is and toss them back more »

• There is Reason to Believe in Meritor

  By Tom Gibbs - May 10, 2012 | Tickers: VOLVY.PK, DDAIF.PK, MTOR, NAV, VLKAY.PK

  There has been a considerable amount of newfound focus on the global automotive industry as sales volumes revamp alongside the rise in discretionary income spending, players within the industry continue to right-size their operations and become more profitable, and emerging markets become increasingly more competitive.  The consumer market for light cars and trucks, however, is not the only niche that is experiencing dramatic post-recessionary growth.  The commercial market for heavy more »

• Buffett is Right: Berkshire is Undervalued

  By Andrés Cardenal - May 10, 2012 | Tickers: BRK-B, BRK-A, IBM, KO

  Warren Buffett announced last September that Berkshire Hathaway (NYSE: BRK-B) (NYSE: BRK-A) will be buying back its own stock if the price to book value ratio falls below 1.1. Buffett has never done something like that before, so he must have good reasons to believe that at those levels Berkshire is materially undervalued.

  In fact, he provides a great explanation about book value and how to interpret it for more »

• What is Really Guiding this Stock's Performance?

  By Lee Samaha - May 10, 2012 | Tickers: CSCO, GE, GS, LOW, HD

  I’m a big fan of George Soros and his theory of reflexivity. I thought it would be interesting to explore some of the themes within it and, expand upon them in order to see how it might manifest itself into specific investments.  Before engaging in this, here's a quick primer on what my take is on Soros’ reflexivity theory and, a key issue within it.

  Essentially, Soros’ idea more »

• How Google got Bigger by Getting Better

  By Matthew DiLallo - May 9, 2012 | Tickers: AAPL, GOOG, MSFT, RIMM, YHOO

  There is a story about Chick-fil-A founder Truett Cathy that I think provides a good foundation for any company that wants to grow. Back in the 1980’s when then upstart Boston Market was growing at a very fast clip and starting to creep into Chick-fil-A’s territory, the management team spent much time discussing how they too could get bigger in order to fend off the competition.  After hearing more »

• Potential Power Plays for Summer

  By Keith Speights - May 9, 2012 | Tickers: AEP, DUK, EXC, PPL, SO

  Power companies could be worth a look for investors who might otherwise sell in May and go away. There are three factors that could make the utilities attractive:

  1. Lower fuel costs
  2. Potential higher demand
  3. Resiliency in turbulent markets

  These factors will play in some companies’ favor more than others, of course. Let’s examine five major power generation utilities using these factors to determine which could be good prospective investments more »

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