Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

House Prices to Decline in 2015?

By for Profit Confidential | September 15, 2014

House Prices to Decline in 2015As we progress to the end of 2014, my skepticism towards the U.S. housing market increases. In fact, the fate of home prices in 2015 is in question.

I don’t expect an outright collapse of the housing market like the one we saw in 2007, but I see the momentum in housing prices that began in 2012 and picked up in 2013 dissipating for several reasons.

First, according to Fannie Mae’s August 2014 National Housing Survey, the number of Americans thinking “it’s a good time to buy a house now” has hit an all-time low!

The chief economist at Fannie Mae, Doug Duncan, explained it best when he said, “The deterioration in consumer attitudes about the current home buying environment reflects a shift away from record home purchase affordability without enough momentum in consumer personal financial sentiment to compensate for it. This year’s labor market strength has not translated into sufficient income gains to inspire confidence among consumers to purchase a home, even in the current favorable interest rate environment.” (Source: “Consumer Housing Sentiment Loses Momentum as Income Growth Remains Stagnant,” Fannie Mae, September 8, 2014.)

Secondly, while in 2012 and 2013 we saw a massive influx of financial investors enter the housing market—they bought entire city blocks and bid home prices higher—these investors are no longer as active in the housing market simply because all the “good deals” are gone.

Look at the red arrow I have drawn in the below chart of the S&P Case-Shiller Home Price Index.

S&P Case-Shiller Home Price Index Chart

Chart courtesy of www.StockCharts.com

In the chart, you see that since April (where the arrow appears), home prices in the U.S. housing market have actually declined. (As far as we know, Profit Confidential is the only place that has been predicting lower housing prices.)

While the mainstream media was adamant that the housing market was improving, the opposi… Read More

My Top Value Play in Bakken Oil

By for Profit Confidential

Top Value Play in Bakken OilThe weakness in oil prices was pretty sudden and has changed the financial dynamics for many producers. Typically, weaker oil prices are slow to translate into lower prices at the pumps.

Domestic junior oil stocks have been hot commodities until recently. Many of the market’s best growth stocks in this sector continue to be expensively priced and finding value has been a difficult endeavor.

One company we’ve considered before in these pages is Northern Oil and Gas, Inc. (NOG). (See “My Favorite Bakken Oil Play.”) This outfit is based in Minnesota and operates in North Dakota and Montana. The stock is not expensively priced, and the company is back online with solid sequential growth in production.

Northern has experienced infrastructure problems and weather-related issues that have hampered well completions, but the company’s latest quarter was a big success and full-year 2014 production guidance was upgraded to between 20% and 25% growth over 2013, compared to previous guidance of 15%.

According to Northern, its 2014 second-quarter production grew 17% sequentially and 41% year-over-year to 1.4 million barrels of oil equivalent (boe), averaging 15,369 boe per day.

The company’s total oil and gas sales in the second quarter of 2014 increased dramatically to $121 million, compared to $80.0 million in the second quarter of 2013.

But management incurred a significant loss on the mark-to-market of a derivative instrument and on the settlement of a derivative instrument, which resulted in actual second-quarter revenues being knocked down to $74.6 million, compared to $96.0 million in the second quarter of 2013.

As a result of the derivative loss (perhaps the reason why the stock is still a value), Northern incurred a second-quarter loss of $4.4 million, compared to earnings of $25.0 million in the same quarter last year.

On an adjusted basis, net income in the se… Read More

Why I’m More Excited About the Food Sector Than Apple’s Latest Products

By for Profit Confidential

This Food Company More Deserving of Your Attention Than AppleWhile the entire world was waiting for and anticipating the next-generation “iPhone 6” from Apple Inc. (NASDAQ/AAPL) on Tuesday, General Mills, Inc. (NYSE/GIS) announced it was acquiring organic and natural food company Annies, Inc. (NYSE/BNNY).

Okay, the launch of the iPhone 6 was clearly more exciting, but so what? The launch was more hype than substance, unless you consider a new and bigger iPhone earth-shattering.

But I’m not here to talk about Apple. What I will discuss is the food sector, especially the makers of organic and natural food products, which appear to be in play, based on my stock analysis.

If you owned Annie’s before it was acquired by General Mills, congratulations on your 38% jump in stock price on the news! Go treat yourself to some fine wine and a great meal. If you didn’t get to profit from this deal, there are still some stocks in the same sector as Annie’s that have great potential.

One small-cap natural food products company that I like based on my stock analysis, and this is one that I have been covering for a few years now, is Inventure Foods, Inc. (NASDAQ/SNAK). The small company produces and markets specialty food brands, concentrating on the snack food market. Some of its product lines include nutritional and natural snacks.

Inventure Foods sells products under its own brand and other licensed brands, including the following: “Boulder Canyon Natural Foods,” “Jamba,” “Seattle’s Best Coffee,” “Rader Farms,” “T.G.I. Friday’s,” “Nathan’s Famous,” “Vidalia Brands,” “Poore Brothers,” “Tato Skins,” “Willamette Valley Fruit Company,” “Fresh Frozen,” and “Bob’s Texas Style.” The company’s manufacturing plants are located in Arizona, Indiana, Washington, Oregon, and Georgia.

On the chart, the stock has edged lower since trading at a 52-week high of $14.50 on March 26, 20… Read More

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.

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