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

Benchmark Stock

When you hear business news, benchmark indices like the Dow Jones Industrial Average and S&P 500 are usually mentioned as economic indicators for what happened on the stock market.

For example, the Dow Jones Industrial Average comprises 30 different companies that trade on the New York Stock Exchange (NYSE) or the NASDAQ. When investors hear “Dow Jones edges higher today,” it simply means that, on average, the companies which constitute the index showed a price increase.

Benchmark indices contain stocks from different industries and provide a gauge of the overall market sentiment.

That said, the Dow Jones Industrial Average and the S&P 500 are not the only benchmark indices—there are many more, including the NASDAQ Composite Index, Russell 2000, S&P Midcap Index, and the NYSE Composite Index.

No matter which stock market index an investor looks at, it is bound to contain stocks from different industries. Within each index are benchmark stocks—companies that are leading indicators for both their respective industries and the economy in general.

How is it possible that one benchmark stock can gauge the national and global economy? Some of the benchmark stocks sell a great amount of products or services to consumers and businesses, and based on the earnings growth or contractions of these companies, analysts often get an idea about the health of the economy.

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For example, Wal-Mart Stores, Inc. (NYSE/WMT), the world’s biggest retailer, is often referred to as a benchmark stock for retail sales. If profits and revenue at Wal-Mart are strong, consumer retail sales can be construed as healthy. At the same time, weak or strong Wal-Mart revenues point to how much discretionary income the average American has and their spending patterns. When consumers are buying goods from cheaper retailers, diverting sales from more expensive retailers, it means that they are hoping to save money.

Similarly, General Electric Company (NYSE/GE), which is really a portfolio of large diversified corporations, is also a benchmark stock and reflects general business sentiment. If General Electric (GE) is reporting strong earnings and sales, it means business activity is strong. In addition, it also suggests that customers aren’t as price-sensitive, and are more willing to spend money.

Another benchmark stock is Nucor Corporation (NYSE/NUE). The company manufactures and sells steel products around the world. If the company reports higher revenue growth and increasing profits, it means manufacturing and construction is picking up.

Another one of the benchmark stocks that Profit Confidential follows is Union Pacific Corporation (NYSE/UNP). Following this company is a great way to get a feel for the industrial economy. Union Pacific is the market leader among the railroads, which are also a key indicator for the stock market.

Following benchmark stocks is a great way to focus your stock market view. With benchmark stocks, you can look beyond the headlines and get a solid feel for how a business and industry is doing. Following benchmark stocks helps provide clarity through all the noise.

As the editors at Profit Confidential, we spend a significant amount of time researching benchmark stocks, and how they reflect both domestic and global economic sentiment. We regularly guide our readers and provide regular commentary on these benchmark stocks.

Keeping It Rolling—U.S. Energy Boom Good News for Railroad Stocks

By for Profit Confidential

U.S. Energy Boom Good News for Railroad StocksRailroad stocks as a group have returned to their 52-week highs. I like Union Pacific Corporation (NYSE/UNP) and Canadian National Railway Company (NYSE/CNI). They are the strongest of the group and are trading right at their all-time record highs.

These two companies are worth accumulating when they’re down. According to history, they are typically not down for long. Wall Street keeps edging their earnings estimates higher for 2013 and 2014. Railroad stocks are pretty good with their guidance.

Bakken oil (and natural gas) is a huge opportunity for the U.S. economy. The production boom is happening now, with all its benefits, disadvantages, and costs. But a lot of junior oil stocks playing this patch aren’t moving upward in the stock market in the face of weak oil prices. The Bakken oil boom itself is a counter play on rising prices.

Phillips 66 (NYSE/PSX), a real winner since being spun off from ConocoPhillips (NYSE/COP), recently announced it will ship Bakken oil from North Dakota to New Jersey by rail. According to the Association of American Railroads, in 2008, U.S. Class I railroads originated 9,500 carloads of crude oil. In 2011, the number was 66,000 carloads. The final number for 2012 is expected to exceed 200,000 carloads, and railroads are also expected to deliver large amounts of frac sand to drill sites. This is a seriously good trend for railroad stocks. The stock chart for Phillips 66 is featured below:

PSX Phillips 66 stock market chart

Chart courtesy of www.StockCharts.com

Of course, the Bakken oil boom has its consequences, and we’re not even talking environmentally. Make no mistake: big oil is not interested in U.S. energy independence. Its … Read More

Benchmark Stocks Hitting New Highs—Stock Market Poised to Go Higher

By for Profit Confidential

Benchmark Stocks Hitting New HighsYou know which benchmark stock has turned things around? It’s General Electric Company (NYSE/GE), which used to be the ultimate conglomerate company. GE’s second quarter was pretty decent, and while management expects a more difficult third quarter, earnings estimates are going up for this year and next. GE just hit a new 52-week high on the stock market and is currently yielding 3.3%.

Another benchmark stock that’s doing well on the stock market right now is Merck & Co., Inc. (NYSE/MRK). In early July, the shares had a real breakout on the stock market, and this is another Dow stock that just broke through to a new 52-week high and has a 3.8% current dividend yield.

I realize that a lot of investors are unenthused about the prospects for the stock market, but I’m really starting to notice a lot of benchmark stocks breaking out and going up. In fact, there are quite a lot of them, and this is a really good sign.

Verizon Communications Inc. (NYSE/VZ) has been doing great on the stock market since April, up about 10.0% on the year not including dividends. With a hefty dividend yield of 4.4%, this stock is on the verge of a major breakout from its 10-year trading range. I hope it happens.

Even more pronounced in the telecom sector, there’s AT&T Inc. (NYSE/T), which is having a great year on the stock market, up about 27.0% so far this year not including dividends. The stock is fully priced, but with a dividend yield just under 5.0%, institutional investors will continue to be keen on the position.

All these benchmark … Read More

Benchmark Stocks Reporting Great Earnings—But the
Stock Market Bet on this Already

By for Profit Confidential

investor sentimentThe first thing that consumers do when a recession or financial crisis hits is cut discretionary spending. That’s why a benchmark stock like Harley-Davidson, Inc. (NYSE/HOG) feels the pain immediately. HOG’s stock market value plunged in the last half of 2008, as the recession took hold. Then the financial crisis hit and it took three years for the shares to recover. HOG used to be a stock market darling.

As a kind of benchmark stock for discretionary (luxury) spending, the company’s first-quarter earnings report was excellent. It reported a 20% increase in total retail sales of new Harley-Davidson motorcycles worldwide. In the U.S. market, retail sales grew an impressive 25.5% and more than a third of motorcycle sales were to riders who were new to the brand. First-quarter revenues grew 20% to $1.27 billion and net income grew 45% to $172 million.

On the stock market, HOG is trading at a new 52-week high, but is only now back to the price it was trading at in August 2000—that’s almost 12 years ago! As a benchmark stock in the consumer goods sector, the company’s earnings and visibility are positive indicators. International sales are a growing portion of revenues, but that’s the case with most large-cap companies nowadays.

Another benchmark stock that is worth following is Caterpillar Inc. (NYSE/CAT), which reported another record quarter for earnings and raised its guidance for the rest of this year. The company’s total revenues grew 23% in the first quarter to $15.98 billion and earnings grew 29% to $1.59 billion.

After reporting some softness in its business during the third quarter last year, the stock Read More

How Are You Going to Earn in the Age of Austerity?

By for Profit Confidential

market indicatorThe U.S. economy is generating economic growth, but not consistently and not all sectors are experiencing the same level of business activity. Parts of the industrial economy are holding up well, the financials are improving, and the technology sector has led the stock market. But what you might not know or have heard about is that Wall Street analysts are lowering their earnings outlooks. The trend took hold in the fourth quarter last year and it’s still happening. The continued reduction in earnings expectations reflects the current economic reality and it’s a key indicator to me that the stock market will have a difficult time accelerating higher from its current level.

This is why I continue to harp on the dividends investment theme for most stock market investors. Dividends are critical in a slow growth environment and in the age of austerity. As consumers, we all know that the price inflation we experience is higher than the government reports. You might not have to spend more to buy a t-shirt, but you sure do for a good loaf of bread and a tank of gasoline. With declining expectations all around the world for economic and corporate earnings growth, dividends are one of the very few options available to investors, just to beat the prevailing inflation rate. And what you want to own are companies that not only pay a good amount of dividends to begin with, but also are increasing their dividends per share on an annual basis.

To me, a high-flying stock with upward price momentum is as attractive as a big, well-established company that has a track … Read More

U.S. Economy: What Freight Haulers Are Saying About It

By for Profit Confidential

U.S. EconomyI’d like to report on a benchmark stock that I consider an important market indicator for the U.S. economy. I’ve written about Union Pacific Corporation (NYSE/UNP) many times as a company to follow and its first-quarter numbers were just plain excellent. This company has been a real leader on the stock market and the stock still isn’t expensively priced. In my view, the continued strength in the railroad industry is a positive indicator regarding the health of the industrial U.S. economy.

The company’s 2012 first-quarter revenues grew 14% to $5.11 billion, up solidly over the first quarter of 2011. Earnings, however, improved a healthy 39% on a per share basis to $863 million, or $1.79. This earnings growth is particularly impressive considering the company’s average cost for diesel fuel grew 12% to $3.23 a gallon during the quarter.

Union Pacific reported that four out of its six business groups generated solid volume growth during the quarter. The company’s automotive freight revenues did the best growing 26%. Industrial products were up 25%, while chemicals grew 16% and intermodal grew 15%. Slower freight revenue growth occurred in agriculture shipments and energy products, at six percent and five percent, respectively.

As I expected, the company’s coal shipments were a bit soft. (See My Favorite Benchmark Stocks That Lead the Stock Market.) With natural gas prices extremely low, power plants don’t need to burn as much coal to generate electricity. This past winter was also unusually warm. During the first quarter, Union Pacific bought back 3.9 million of its own common shares at an average price of $110.64 per share, spending a … Read More

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Keeping It Rolling—U.S. Energy Boom Good News for Railroad Stocks

By for Profit Confidential

U.S. Energy Boom Good News for Railroad StocksRailroad stocks as a group have returned to their 52-week highs. I like Union Pacific Corporation (NYSE/UNP) and Canadian National Railway Company (NYSE/CNI). They are the strongest of the group and are trading right at their all-time record highs.

These two companies are worth accumulating when they’re down. According to history, they are typically not down for long. Wall Street keeps edging their earnings estimates higher for 2013 and 2014. Railroad stocks are pretty good with their guidance.

Bakken oil (and natural gas) is a huge opportunity for the U.S. economy. The production boom is happening now, with all its benefits, disadvantages, and costs. But a lot of junior oil stocks playing this patch aren’t moving upward in the stock market in the face of weak oil prices. The Bakken oil boom itself is a counter play on rising prices.

Phillips 66 (NYSE/PSX), a real winner since being spun off from ConocoPhillips (NYSE/COP), recently announced it will ship Bakken oil from North Dakota to New Jersey by rail. According to the Association of American Railroads, in 2008, U.S. Class I railroads originated 9,500 carloads of crude oil. In 2011, the number was 66,000 carloads. The final number for 2012 is expected to exceed 200,000 carloads, and railroads are also expected to deliver large amounts of frac sand to drill sites. This is a seriously good trend for railroad stocks. The stock chart for Phillips 66 is featured below:

PSX Phillips 66 stock market chart

Chart courtesy of www.StockCharts.com

Of course, the Bakken oil boom has its consequences, and we’re not even talking environmentally. Make no mistake: big oil is not interested in U.S. energy independence. Its … Read More

Benchmark Stocks Hitting New Highs—Stock Market Poised to Go Higher

By for Profit Confidential

Benchmark Stocks Hitting New HighsYou know which benchmark stock has turned things around? It’s General Electric Company (NYSE/GE), which used to be the ultimate conglomerate company. GE’s second quarter was pretty decent, and while management expects a more difficult third quarter, earnings estimates are going up for this year and next. GE just hit a new 52-week high on the stock market and is currently yielding 3.3%.

Another benchmark stock that’s doing well on the stock market right now is Merck & Co., Inc. (NYSE/MRK). In early July, the shares had a real breakout on the stock market, and this is another Dow stock that just broke through to a new 52-week high and has a 3.8% current dividend yield.

I realize that a lot of investors are unenthused about the prospects for the stock market, but I’m really starting to notice a lot of benchmark stocks breaking out and going up. In fact, there are quite a lot of them, and this is a really good sign.

Verizon Communications Inc. (NYSE/VZ) has been doing great on the stock market since April, up about 10.0% on the year not including dividends. With a hefty dividend yield of 4.4%, this stock is on the verge of a major breakout from its 10-year trading range. I hope it happens.

Even more pronounced in the telecom sector, there’s AT&T Inc. (NYSE/T), which is having a great year on the stock market, up about 27.0% so far this year not including dividends. The stock is fully priced, but with a dividend yield just under 5.0%, institutional investors will continue to be keen on the position.

All these benchmark … Read More

Benchmark Stocks Reporting Great Earnings—But the
Stock Market Bet on this Already

By for Profit Confidential

investor sentimentThe first thing that consumers do when a recession or financial crisis hits is cut discretionary spending. That’s why a benchmark stock like Harley-Davidson, Inc. (NYSE/HOG) feels the pain immediately. HOG’s stock market value plunged in the last half of 2008, as the recession took hold. Then the financial crisis hit and it took three years for the shares to recover. HOG used to be a stock market darling.

As a kind of benchmark stock for discretionary (luxury) spending, the company’s first-quarter earnings report was excellent. It reported a 20% increase in total retail sales of new Harley-Davidson motorcycles worldwide. In the U.S. market, retail sales grew an impressive 25.5% and more than a third of motorcycle sales were to riders who were new to the brand. First-quarter revenues grew 20% to $1.27 billion and net income grew 45% to $172 million.

On the stock market, HOG is trading at a new 52-week high, but is only now back to the price it was trading at in August 2000—that’s almost 12 years ago! As a benchmark stock in the consumer goods sector, the company’s earnings and visibility are positive indicators. International sales are a growing portion of revenues, but that’s the case with most large-cap companies nowadays.

Another benchmark stock that is worth following is Caterpillar Inc. (NYSE/CAT), which reported another record quarter for earnings and raised its guidance for the rest of this year. The company’s total revenues grew 23% in the first quarter to $15.98 billion and earnings grew 29% to $1.59 billion.

After reporting some softness in its business during the third quarter last year, the stock Read More

How Are You Going to Earn in the Age of Austerity?

By for Profit Confidential

market indicatorThe U.S. economy is generating economic growth, but not consistently and not all sectors are experiencing the same level of business activity. Parts of the industrial economy are holding up well, the financials are improving, and the technology sector has led the stock market. But what you might not know or have heard about is that Wall Street analysts are lowering their earnings outlooks. The trend took hold in the fourth quarter last year and it’s still happening. The continued reduction in earnings expectations reflects the current economic reality and it’s a key indicator to me that the stock market will have a difficult time accelerating higher from its current level.

This is why I continue to harp on the dividends investment theme for most stock market investors. Dividends are critical in a slow growth environment and in the age of austerity. As consumers, we all know that the price inflation we experience is higher than the government reports. You might not have to spend more to buy a t-shirt, but you sure do for a good loaf of bread and a tank of gasoline. With declining expectations all around the world for economic and corporate earnings growth, dividends are one of the very few options available to investors, just to beat the prevailing inflation rate. And what you want to own are companies that not only pay a good amount of dividends to begin with, but also are increasing their dividends per share on an annual basis.

To me, a high-flying stock with upward price momentum is as attractive as a big, well-established company that has a track … Read More

U.S. Economy: What Freight Haulers Are Saying About It

By for Profit Confidential

U.S. EconomyI’d like to report on a benchmark stock that I consider an important market indicator for the U.S. economy. I’ve written about Union Pacific Corporation (NYSE/UNP) many times as a company to follow and its first-quarter numbers were just plain excellent. This company has been a real leader on the stock market and the stock still isn’t expensively priced. In my view, the continued strength in the railroad industry is a positive indicator regarding the health of the industrial U.S. economy.

The company’s 2012 first-quarter revenues grew 14% to $5.11 billion, up solidly over the first quarter of 2011. Earnings, however, improved a healthy 39% on a per share basis to $863 million, or $1.79. This earnings growth is particularly impressive considering the company’s average cost for diesel fuel grew 12% to $3.23 a gallon during the quarter.

Union Pacific reported that four out of its six business groups generated solid volume growth during the quarter. The company’s automotive freight revenues did the best growing 26%. Industrial products were up 25%, while chemicals grew 16% and intermodal grew 15%. Slower freight revenue growth occurred in agriculture shipments and energy products, at six percent and five percent, respectively.

As I expected, the company’s coal shipments were a bit soft. (See My Favorite Benchmark Stocks That Lead the Stock Market.) With natural gas prices extremely low, power plants don’t need to burn as much coal to generate electricity. This past winter was also unusually warm. During the first quarter, Union Pacific bought back 3.9 million of its own common shares at an average price of $110.64 per share, spending a … Read More

My Favorite Benchmark Stocks
That Lead the Stock Market

By for Profit Confidential

U.S. employmentEarnings seasons are always the best times of the year to be researching stocks. I have a number of benchmark stocks that I very much look forward to reviewing and I enjoy reading up on these companies even if I’m not contemplating them for investment.

One of the benchmark stocks that I always review is Union Pacific Corporation (NYSE/UNP). Following this company is a great way to get a feel for the industrial economy. The railroads are also a key indicator for the stock market where Union Pacific is the market leader within the group. The company’s shares have been an amazing wealth creator since 2005. The stock got cut in half during the financial crisis (like the rest of the stock market), then tripled over the last three years with a solid dividend yield between two percent and three percent. I expect Union Pacific to report another great quarter, particularly as automobile shipments are accelerating. We could see some weakness in coal shipments due to competition from natural gas, but on balance, business at the railroads is very good.

Another one of the benchmark stocks that I always keep an eye on is International Business Machines Corporation (NYSE/IBM). The company reports shortly and its shares have been amazingly strong on the stock market for the last couple of years. Large-cap technology has definitely been the stock market’s leading sector this year and I always want to know what both IBM and Intel Corporation (NASDAQ/INTC) say about their businesses. If we get better-than-expected earnings results in large-cap technology, I think the stock market has a good chance of moving higher, … Read More

One of the Best Things Going in
the Main Street Economy Today

By for Profit Confidential

goldPrecious metals and oil have proven that commodities are in an upward price cycle. If you believe in the commodity price cycle like I do, you’ve got to have some exposure to the group as part of a balanced investment portfolio. Within the group, there are three main sectors for consideration: precious metals, energy, and agriculture. Precious metals and oil have already been big winners. Like all commodities, they’ve experienced substantial price corrections, but their price cycle over the last 10 years has been very significant and is still looking good. Now the commodity price cycle is moving into agriculture and, while this is inflationary for consumers (just ask your local baker), it’s a great opportunity for investors.

I still like precious metals like gold and silver, but I believe we’re on the cusp of another major new price cycle trend. If the U.S. economy gets better, precious metals will improve. If we have another recession, gold and silver precious metals shouldn’t go down very much. Precious metals, oil, and agriculture have the same primary price cycle trend—rising demand, stagnant supply.

 Agricultural land prices are going up in virtually all Western countries and especially in the U.S. Cash crop farmers, after decades of little to no income growth, are now making some money from their land. Agriculture futures have now broken a decades’ long price cycle of mediocrity. Of course, it is difficult for the average investor to go out and purchase good arable land and cultivate it, but an individual investor can invest in this new price cycle just like they do in precious metals, oil, and gas. There … Read More

Where the Stock Market’s Going:
The Benchmark Stocks That Will Tell Us

By for Profit Confidential

benchmark stockThere are a number of benchmark stocks that I follow and, even though I may not own them, these stocks are very good indicators either for a specific industry, the economy in general, or the stock market.

 One company that I feel is an important benchmark stock to follow is Automatic Data Processing, Inc. (NASDAQ/ADP). This well-known payroll and human resources outsourcing company provides a great barometer on the Main Street economy and the U.S. employment picture specifically. The stock corrected along with the broader stock market to $45.00 per share in the third quarter of last year, then recovered smartly back above $50.00 per share. Now the stock is trading at approximately $55.00 per share and it recently hit a new 52-week high of $57.10 per share. As a benchmark stock, this performance is telling.

 Automatic Data Processing’s quarterly results last year were very solid considering the state of the economy and earnings held up well. Just in the last 30 days, a number of Street analysts increased their earnings estimates for Automatic Data Processing’s next two quarters and its upcoming fiscal year. If a benchmark stock like Automatic Data Processing is trading right near its 52-week high, then, in my mind, it’s one more sign that the U.S. economy is moving in the right direction, albeit slowly.

Another benchmark stock that’s always worth keeping an eye on is IBM Corporation (NYSE/IBM), which has proven to be an outstanding wealth creator on the stock market, especially recently. It truly is impressive to see a $200-billion-dollar company appreciate so much on the stock market. This stock has been going up, … Read More

Are We in a Sucker’s Rally?

By for Profit Confidential

Another benchmark stock reported good corporate visibility for 2012 and it’s another small but positive sign of economic recovery, as well as the health of corporate America. United Parcel Service, Inc. (NYSE/UPS) reported 2011 fourth-quarter revenues that grew six percent to $14.2 billion. U.S. revenues grew seven percent to $8.7 billion during the quarter and adjusted earnings grew 21% to $1.28 per diluted share. The company reported that it expects “modest” revenue growth this year, but corporate earnings should improve at a percentage rate in the low double digits. To me, this outlook is impressive.

If the stock market doesn’t appreciate much this year, it will clearly be undervalued considering the similar corporate visibility we’re hearing from most large-cap companies. The stock market is already trading at a valuation that’s well under its mean and corporate earnings are robust considering GDP growth.

I think it’s likely that the S&P 500 Index will finish its head-and-shoulders formation, probably later next year. When there is another recession (some say 2013/2014), then this would be the time to consider investing in the stock market as a whole. As I’ve written previously, I wouldn’t buy the market at this point in time, even though corporate earnings are solid. (See Dividend Paying Stocks for Income and the Real Estate Market for Capital Gains.)

The financial health of corporate America continues to improve, but this doesn’t mean that share prices will appreciate. It’s going to take a lot of positive economic news to make the stock market appreciate in a meaningful way, not just good corporate earnings. As we know, the employment and housing sectors … Read More

Stock Market…What More Does It Want?

By for Profit Confidential

Stock Market ... What More Does It Want?Probably as good a benchmark stock for the global economy as you can get is Caterpillar Inc. (NYSE/CAT). If an economy is doing well, it’s building new roads and buildings and that takes heavy equipment. The company’s fourth-quarter corporate earnings blew past Wall Street’s consensus, growing 60% to $1.55 billion on a 24% jump in sales. Caterpillar guided 2012 above current consensus. In addition, the stock market has bid Caterpillar’s shares up some 40 points from last October, to its current price, which is right around its all-time record high. When Caterpillar’s corporate earnings are doing well, that’s a really good sign for everything else.

The stock market has some decent price momentum now, and news from the Federal Reserve that it plans to keep interest rates at their current level going in 2014 is the kind of certainty that investors like. The stock market has accommodative monetary policy, good corporate earnings, and a reasonable valuation to go on. What it needs to take itself to the next level are better economic data. Recent news on durable goods showed a three-percent gain in the month of December, on top of an upwardly revised 4.3% gain in November. Clearly, there is momentum out there. Let’s hope it keeps going.

I am worried that corporate earnings will slow in the bottom half this year. Without growth in employment, U.S. incomes cannot grow and the consumer, Main Street economy will be stuck. A lot of the great earnings we’re getting form large-cap companies are due to their international operations generating the growth. While demand is improving domestically, it’s nowhere near where it was…. Read More

Not Interested in Large-cap Stocks? Why You Should Be

By for Profit Confidential

Large-cap StocksIf you want to see an outstanding performance from a large-cap stock, all you have to do is pull up a long-term chart on McDonald’s Corporation (NYSE/MCD). It’s kind of odd to think that a mature business like burger flipping could be so profitable, but this company has rewarded shareholders tremendously well. This stock market performance should be studied in business schools.

For a large-cap stock and Dow Jones component, McDonald’s has appreciated steadily and with remarkable consistency since 1980. Put a ruler underneath the company’s share price and you’ll see how extraordinary its performance has been. This large-cap stock struggled in 2002/2003, but that’s about it. When the stock market collapsed in 2008 and then hit a low in March of 2009, McDonald’s basically traded flat, just below $60.00 a share. This week, it hit an all-time record high of over $101.00 per share, with a current dividend yield of 2.8%. Not bad at all if you ask me. The stock split seven times since the early 80s and is now due for another split.

A stock market performance like McDonald’s makes me think that bothering with the rest of the stock market is mostly just a waste of time. Financial markets are like a casino where the odds are stacked against you and your win is only the result of someone else’s loss.

I’ve always been a fan of investing in large-cap stocks, especially those that pay dividends. Even though I spend most of my time researching smaller companies, I’ve seen stock market portfolios with a handful of large-cap stocks create a lot of wealth for people. Read More

Right Now We Investors Know a Lot—Stock Market Has Stability & Hope

By for Profit Confidential

The stock market is showing real strength at this time. A lot of stocks that were hit hard during the market’s recent correction are fighting back and making good progress in their share prices. Consider Caterpillar Inc. (NYSE/CAT), which is an important benchmark stock to follow. The company’s second quarter came in slightly below expectations, then the market began to correct. The stock was around $112.00 and dropped like a stone to $82.00 per share. After experiencing a recovery to just over $90.00 a share, it dropped again to the $80.00-per-share mark. Now the stock has broken past the $93.00-per-share level and its near-term price momentum looks to be intact.

Good Companies Trading at Their 52-week Lows — Time to Pay Attention!

By for Profit Confidential

One of the strongest groups of stocks prior to the recent market selloff that began in the last week July was semiconductors. This sector got a strong boost from Intel Corporation’s (NASDAQ/INTC) second-quarter numbers, which were quite strong. Only now are a number of other stocks in the semiconductor group pulling back with the broader market. It was a good trade that looks now to be over. Over for the entire group.

Intel is a good benchmark stock to follow, because so much of today’s economy uses semiconductors — computers, cell phones, consumer electronics, and cars. The company’s stock price had been holding up very well until it announced that it would purchase security company McAfee, Inc. (NYSE/MFE) for $7.7 billion. The market just isn’t sure about Intel’s corporate strategy with this purchase. Investors don’t have a sense as to whether this acquisition will be a good fit.

The company is also rumored to be interested in purchasing the wireless semiconductor business of Infineon Technologies AG (NYSE/IFX), which is Europe’s second largest chip-maker. This acquisition would allow Intel to manufacture chips for Apple’s “iPhone.” This is one area where Intel’s been lacking in operations. As we all know, smart phones have been tremendously popular.

Investors seem to like Intel’s strategy with Infineon Technologies, but not the acquisition of McAfee. It’s understandable, because investors don’t like to see companies purchase other businesses that operate outside of their core competency. McAfee has an existing alliance with Intel, but the company operates to secure corporate and consumer computers, an area quite unfamiliar for Intel.

Once all this acquisition dust settles, I think that … Read More

Finally, Some Top-line Growth in the Real Economy

By for Profit Confidential

Finally there’s some good news on the corporate revenue front. A lot of big companies reported solid earnings growth in the second quarter, but revenues haven’t been inspirational. The Dow Chemical Company (NYSE/DOW) just reported very solid numbers and this is a good sign for the industrial economy.

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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