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

Buying Opportunity

A buying opportunity in a stock occurs when a short-term fluctuation allows for the security to be mispriced. Value is relative to an investor’s own criteria. An example is a one-time problem, such as a strike at a mine, which results in the shares of the firm being sold off. This selloff might offer a long-term investor the opportunity to buy shares of the mining company at a favorable value. Buying opportunities occur for various reasons, but the goal of any investor is to accumulate assets at favorable levels. If an asset is selling at below market value and an investor believed that the business would recover, this would be a great example of a buying opportunity.

Big Growth Ahead for These Three Shale Oil Plays

By for Profit Confidential

Three Shale Oil Plays with Good UpsideI was listening to hedge fund guru and energy baron T. Boone Pickens on CNBC the other day and, as he always has, he wants to stop the flow of OPEC (Organization of the Petroleum Exporting Countries) oil into this country. This, folks, is not fiction; it is actually realistic, given the surging production of domestic shale oil and natural gas. Pickens wants to create a North American energy partnership through which the United States would align with Mexico and Canada to develop an energy conglomerate.

In my view, this makes sense, and it could perhaps drive oil prices lower, which could create a buying opportunity for investors (albeit I doubt the big oil companies would want such a thing to happen).

The oil patch is driving riches from Texas to North Dakota and Montana. The price of West Texas Intermediate (WTI) crude is holding above $100.00 per barrel.

The key to energy independence will be the ability to drive shale oil production higher. Consider that in 2012, shale gas represented 39% of total natural gas production in the United States, making it the top shale oil producer worldwide, according to the Energy Information Administration (EIA). Canada came in second at 15%. The numbers are estimated to get even bigger and with this, I see a buying opportunity.

Even the “cartel” OPEC realizes the impact of shale oil on its operations. In a report undertaken by OPEC in 2013, the cartel estimates a decline in its market share as shale oil production rises. (Source: Lawler, A., “OPEC to lose market share to shale oil in 2014,” Yahoo! Finance web site, … Read More

Small-Cap Industrial Play with Excellent Prospects into 2015

By for Profit Confidential

This Small-Cap Industrial Play Has Excellent ProspectsThe first-quarter gross domestic product (GDP) growth suggests some stalling in the economy, but this is expected to pass as we move forward into 2015 as the economic renewal picks up, which will generate a buying opportunity.

A small-cap stock I like as a buying opportunity and play on the economic renewal going forward is Horsehead Holding Corp. (NASDAQ/ZINC).

While the stock is up 70% from its 52-week low and has been easily outperforming the S&P 500 over the past year, I believe the stock still has decent upside potential and could be a buying opportunity, especially as the economy strengthens.

The company’s stock chart shows the steady upward trend in place since November 2012. Note the bullish golden cross with the 50-day moving average (MA) above the 200-day MA, as reflected by the blue oval. We are also seeing a bullish ascending triangle that could signal more gains ahead. A break at $18.00 could see a move to above $20.00, based on my technical analysis.

Horsehead Holding Corp Chart

Chart courtesy of www.StockCharts.com

Via its subsidiary Horsehead Corp., the company is a fast-growing producer of specialty zinc and zinc-based products made via the use of recycled materials.

In a move to improve output and efficiency, the company closed its old facility Monaca and opened a new facility named Mooresboro in North Carolina. The capacity at the new plant once it gets up to speed will be roughly 155,000 tons of zinc annually.

The opening of the new plant will aid the company in producing better fabricated steel products along with raw materials found in the manufacturing of rubber tires, alkaline batteries, paint, … Read More

As Stocks Brush Off Geopolitical Tensions, Here’s the Catalyst for a Correction

By for Profit Confidential

Where's the Catalyst for Correction in StocksCountless stocks are bouncing off their highs, and in many cases, a lot of these companies are due for share splits.

It’s a peculiar environment for investors in that the main market indices are right at their highs, yet the Main Street economy isn’t performing anywhere near as well.

Stocks are a leading indicator and share prices move in advance of anticipated corporate earnings, but it’s so difficult to be a buyer when most stocks have already gone up like they have. It’s not boom time at all in the real world.

So with this backdrop, I think it’s fair to conclude that an investor has to be extremely careful in the current environment.

I view investment risk in equities as being high because stocks are at their highs and Main Street is stagnant. It’s not a good combination. And with the real possibility of rising interest rates later this year or early 2015, the boom that hasn’t happened could easily turn into a bust.

For an investor looking to buy stocks right now, I would say to wait until second-quarter reporting season begins and we get the latest numbers from corporations before investing.

This market is so badly due for a material price correction, and with the right catalyst, it could happen near-term.

Given the current information, I would view a material price correction as a buying opportunity. A real stock market correction has eluded us for too long since the March of 2009 low.

And while there was a small sell-off at the beginning of this year, stocks have been moving consistently higher for two straight years.

I … Read More

How to Profit from China’s Shift in Consumer Spending

By for Profit Confidential

China's Consumers Eager Spend; How  Profit from RiseChina is facing some growth issues, but so are the majority of the countries in the Western Hemisphere.

The country’s new government leader, President Xi Jinping, came on board in March 2013 and is planning to change the landscape of China vis-a-vis a new focus on domestic consumption and a reduction in its dependence on exports and foreign demand.

This new plan will take some time to undertake, but if Jinping can mobilize the country’s massive potential consumer base into a spending machine similar to the United States, then we could see a spending revolution emerge behind the Great Wall.

But while investors in Chinese stocks have faced difficult times over the past few years due to fraud, I feel it’s not enough to avoid the country as a growth buying opportunity. (Read “Chinese Stocks Promise Higher Potential Gains?”)

While it may be true that the Chinese economy is stalling and that it may find it difficult to get back to its former double-digit growth, the gross domestic product (GDP) growth of 7.7% in 2013 was good. The Organisation for Economic Co-operation and Development (OECD) predicts the Chinese economy’s GDP growth will slow to 7.4% this year, compared to an earlier estimate of 8.2% in November. The slowing is attributed to the government’s move to control the credit risk and factory capacity in order to prevent a meltdown.

The fact you cannot ignore is the massive population, especially the more than 300 million middle-class consumers looking to spend their newfound wealth.

In April, retail sales grew by 11.9%, which is pretty darn good, given the growth we are … Read More

My Simple, Safe Investment Strategy for Playing Risky Stocks

By for Profit Confidential

Here's a Strategy to Play Momentum Stocks While Limiting RiskThere’s some hand-holding required out there in the stock market. We have seen destruction in the momentum biotech and Internet stocks that have corrected by more than 30%.

Now we are hearing some analysts on Wall Street saying to jump back in—but I’m hesitant at this juncture, as the downward risk is likely not over yet.

The reality is that, given the superlative gains recorded in 2013 by many of these biotech and technology momentum stocks, you shouldn’t be surprised to see the current malaise.

The fact that many of these highflying stocks in the stock market have more than doubled in a year should be a red flag. My simplest advice is to wait for the selling to subside in the stock market before you jump into these stocks.

You also need to be careful when hearing the bullish comments by Wall Street firms on these momentum stocks. Many of these firms have investment banking relationships with these stocks; it’s only natural to support your clients in the bad times.

Don’t get fooled by the stock market rhetoric. Instead, take a prudent approach to the stock market.

You don’t want to be caught exposed on this stock market unless you are fine with losing money should the selling intensify. Like I wrote at the beginning of the year, making money on the stock market will not be easy this year and capital preservation should be your objective.

Now, if you are willing to risk some capital and feel a stock market bottom is near, then what I suggest you do is consider using call options as a risk … Read More

« Older Entries

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.

This is an entirely free service. No credit card required.

We hate spam as much as you do.
Check out our privacy policy.