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

Equities Market

The equities market, a public market, is the listing of shares of a company on an exchange. These shares then are available to all investors interested in buying a piece of the company. The stock exchanges regulate the listing of company shares by ensuring that the companies report all of their audited financial records for prospective investors to access. Investors then buy and sell shares, determining the value of the company based on the financial results and future prospects of the firm. Investors include the retail client (general public), mutual funds, hedge funds, corporations and other large institutions such as pension funds.

How Peter Lynch Got It Right 20 Years Ago

By for Profit Confidential

How Peter Lynch Got It Right 20 Years AgoThere’s always strength in numbers.

The equities market is definitely due for a prolonged break, but one subsector I always follow is restaurant stocks. These are key benchmark stocks, and the performance of these stocks offers up an unscientific survey on consumer spending and sentiment.

So many restaurant stocks experienced a breakout at the beginning of the year. Then they took a break and re-accelerated again.

If there is more confidence in the economic landscape, consumers spend money on eating out or ordering in food.

Restaurant stocks are a group where you can make good money as a stock market speculator. Peter Lynch (the famous manager of the Magellan Fund) always advocated for this sector, telling investors to look here for opportunities. He wrote a chapter on it in his book Beating the Street.

What Lynch advocated, and I agree with wholeheartedly, is that a successful restaurant company must have an experienced and capable management team, proper financing, and a deliberate and methodical approach to expanding the concept. He advocated that a company’s slow and steady business expansion is what wins the race at the end of the day.

The great thing about restaurant stocks is that they don’t have to have a brand-new concept to be successful.

Cracker Barrel Old Country Store, Inc. (NASDAQ/CBRL) is one of the many companies that have been hugely successful over the last few years.

Cracker Barrel has a price-to-earnings (P/E) ratio of approximately 18 and is yielding 2.3%. The position has doubled on the stock market since the fall of 2011.

The company’s revenues in its latest quarter grew 4.4% to … Read More

Why Nikkei Sell-Off May Foreshadow Things to Come

By for Profit Confidential

Why Nikkei Sell-Off May Foreshadow Things to ComeThe one-day sell-off last week in Japan’s equities market with the benchmark Nikkei 225 plummeting more than seven percent in one day should not be ignored; in fact, the drop may be a harbinger of things to come. I don’t have a crystal ball, but my market sense is tingling.

The reality is that the sell-off in the equities market was not a surprise, given that the Nikkei has advanced 70% over the past six months. And this advance was driven largely by Prime Minister Shinzo Abe’s aggressive 10-year stimulus strategy to jumpstart the dormant Japanese economy.

Yet what was more concerning was the lack of a follow-through by the Nikkei equities market after the sell-off, as the index rallied a mere 0.9% the following day.

Nikkei equities market

Chart courtesy of www.StockCharts.com

The market’s fear is that if the selling continues on the Nikkei, this could drive down confidence in the equities market and trigger deeper losses on the horizon, including declines in domestic trading.

The Japanese equities market could easily go lower, given the advance so far.

For Prime Minister Abe, should the Japanese equities market reverse course and decline, the move would likely erode confidence in Japan and test Abe and the country’s resolve.

In my view, as I have discussed in these pages in my previous commentary on Japan (read “Japan Not Home-Free Despite Strong GDP”), the country’s aggressive fiscal and monetary policy is not a sure bet to get Japan out of its economic abyss.

In fact, the aggressive printing of money in Japan will create a bloated national debt level on the country’s balance sheet, … Read More

Is Gold’s Near-Death Crisis Over-Exaggerated? Concerns of a Market Meltdown May Not Be

By for Profit Confidential

Is Gold’s Near-Death Crisis Over-ExaggeratedCommodity prices have been heading lower on the charts.

In fact, it has been an awful few days for gold as prices plummeted, failing to hold $1,500 an ounce.

Prices dove right through support at $1,400 to $1,385.62 on Monday—the lowest level since 2011.

The shiny yellow ore is in a bear market. Down 27% from its magical peak of $1,920 in September 2011, it has been nothing but turmoil for investors in the yellow metal.

As I said in a recent commentary, I have lost confidence in the metal as a safe haven investment at this point. I’m not even sure I would enter on the current weakness.

The price chart says “sell.” Follow the trend, and you may be able to squeeze out some profits on an oversold bounce trade; but extending the trend forward, things don’t look good for gold.

Now we will need to see if the precious metal can hold $1,400.

As we move lower, there are now concerns of a meltdown in the gold sector, especially if prices continue to trend lower toward the $1,200 level.

Goldman Sachs, which recently turned bearish and advised shorting the metal, is fearful of gold prices dropping to the $1,200-an-ounce level—as this level also represents the cash cost to produce gold at this point. (Source; Cosgrave, J., “The Scary Number for Gold Investors: $1200,” CNBC, April 15, 2013.)

The $1,200-an-ounce cost of production is clearly an issue, especially for the smaller mining companies that are not as cost-effective or able to survive a cash crunch, compared to the mid- to large-tier producers, like Newmont Mining Corporation (NYSE/NEM). (Read … Read More

Rising Resistance to the Fed’s Easy Money: Time to Scale Back Bond Purchases?

By for Profit Confidential

Time to Scale Back Bond PurchasesThe equities market continues to edge higher, with no apparent evidence of a pending letdown by investors despite the multiyear topping action in the S&P 500.

Once again, I say the rise and support of the stock market is clearly driven by the Federal Reserve’s loose monetary policy. This has been the story behind the upward move in the current bull market. It’s true the domestic and global economies have improved since the Great Recession in 2008, but in my view, it’s nowhere near the level to which we should see the market rise.

The problem that lies ahead is not only the inflated market and a sense of vulnerability as investors let their guard down, but the demand for goods and services could result in higher prices due to the excess in demand over supply. (The rich sure like the easy money. [Read “Higher Taxes: Who Cares? Not the Rich.”]) The end result could be inflation surfacing down the road, and we all know that means higher interest rates.

So while Federal Reserve Chairman Ben Bernanke continues to buy $85.0 billion in bonds each month to drive down longer-term interest rates, enough is enough.

Witness that we are seeing more market watchers and Fed members coming out and expressing the need for the Federal Reserve to at least begin scaling back its bond purchases. The problem is that the Federal Reserve has already said it will not move on interest rates until the country’s unemployment rate falls to 6.5%, and this will not happen for a few years.

In an interview with CNBC, James Bullard, the … Read More

Investors Down-Shift Risk, Search for Safety Ongoing Theme for 2013

By for Profit Confidential

Search for Safety Ongoing Theme for 2013If the first-quarter earnings season turns out to be as bad as the experts expect, then it may be time to look for safety. That means lightening up the load on high-risk stocks and shifting your focus to companies that you know will be around 50 years from now.

The search for safety appears to be the ongoing theme this year, especially within the blue chip stocks that make up the Dow Jones Industrial Average. The index is up 11.2%, ahead of the broader S&P 500, along with the NASDAQ and Russell 2000.

Small-cap stocks, which have been sizzling on the chart, have been underperforming in the recent weeks, as investors shift to the safety of blue chips and large-cap stocks.

The chart below shows the recent superior performance of the Dow Jones versus the NASDAQ, shown by the blue line, and the Russell 2000, the green line.

$INDU Dow Jones Industrial Average stock chart

Chart courtesy of www.StockCharts.com

After the first week of April, blue chips have fared the best, down just 0.09% as of April 5, which is much better than the decline of 2.94% and 1.96%, respectively, in the Russell 2000 and NASDAQ. As the market risk rises—and I feel it is—I expect to see more money flow from higher-risk investments to lower-risk ventures, such as the blue chips.

The move to Dow blue chips is even more popular, given the dividends available on many of these stocks, which is attractive compared to historically low yields available with bonds.

When you are earning less than one percent on short-term bonds, the choice to look at dividend stocks and the equities market is easy.

The … Read More

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How Peter Lynch Got It Right 20 Years Ago

By for Profit Confidential

How Peter Lynch Got It Right 20 Years AgoThere’s always strength in numbers.

The equities market is definitely due for a prolonged break, but one subsector I always follow is restaurant stocks. These are key benchmark stocks, and the performance of these stocks offers up an unscientific survey on consumer spending and sentiment.

So many restaurant stocks experienced a breakout at the beginning of the year. Then they took a break and re-accelerated again.

If there is more confidence in the economic landscape, consumers spend money on eating out or ordering in food.

Restaurant stocks are a group where you can make good money as a stock market speculator. Peter Lynch (the famous manager of the Magellan Fund) always advocated for this sector, telling investors to look here for opportunities. He wrote a chapter on it in his book Beating the Street.

What Lynch advocated, and I agree with wholeheartedly, is that a successful restaurant company must have an experienced and capable management team, proper financing, and a deliberate and methodical approach to expanding the concept. He advocated that a company’s slow and steady business expansion is what wins the race at the end of the day.

The great thing about restaurant stocks is that they don’t have to have a brand-new concept to be successful.

Cracker Barrel Old Country Store, Inc. (NASDAQ/CBRL) is one of the many companies that have been hugely successful over the last few years.

Cracker Barrel has a price-to-earnings (P/E) ratio of approximately 18 and is yielding 2.3%. The position has doubled on the stock market since the fall of 2011.

The company’s revenues in its latest quarter grew 4.4% to … Read More

Why Nikkei Sell-Off May Foreshadow Things to Come

By for Profit Confidential

Why Nikkei Sell-Off May Foreshadow Things to ComeThe one-day sell-off last week in Japan’s equities market with the benchmark Nikkei 225 plummeting more than seven percent in one day should not be ignored; in fact, the drop may be a harbinger of things to come. I don’t have a crystal ball, but my market sense is tingling.

The reality is that the sell-off in the equities market was not a surprise, given that the Nikkei has advanced 70% over the past six months. And this advance was driven largely by Prime Minister Shinzo Abe’s aggressive 10-year stimulus strategy to jumpstart the dormant Japanese economy.

Yet what was more concerning was the lack of a follow-through by the Nikkei equities market after the sell-off, as the index rallied a mere 0.9% the following day.

Nikkei equities market

Chart courtesy of www.StockCharts.com

The market’s fear is that if the selling continues on the Nikkei, this could drive down confidence in the equities market and trigger deeper losses on the horizon, including declines in domestic trading.

The Japanese equities market could easily go lower, given the advance so far.

For Prime Minister Abe, should the Japanese equities market reverse course and decline, the move would likely erode confidence in Japan and test Abe and the country’s resolve.

In my view, as I have discussed in these pages in my previous commentary on Japan (read “Japan Not Home-Free Despite Strong GDP”), the country’s aggressive fiscal and monetary policy is not a sure bet to get Japan out of its economic abyss.

In fact, the aggressive printing of money in Japan will create a bloated national debt level on the country’s balance sheet, … Read More

Is Gold’s Near-Death Crisis Over-Exaggerated? Concerns of a Market Meltdown May Not Be

By for Profit Confidential

Is Gold’s Near-Death Crisis Over-ExaggeratedCommodity prices have been heading lower on the charts.

In fact, it has been an awful few days for gold as prices plummeted, failing to hold $1,500 an ounce.

Prices dove right through support at $1,400 to $1,385.62 on Monday—the lowest level since 2011.

The shiny yellow ore is in a bear market. Down 27% from its magical peak of $1,920 in September 2011, it has been nothing but turmoil for investors in the yellow metal.

As I said in a recent commentary, I have lost confidence in the metal as a safe haven investment at this point. I’m not even sure I would enter on the current weakness.

The price chart says “sell.” Follow the trend, and you may be able to squeeze out some profits on an oversold bounce trade; but extending the trend forward, things don’t look good for gold.

Now we will need to see if the precious metal can hold $1,400.

As we move lower, there are now concerns of a meltdown in the gold sector, especially if prices continue to trend lower toward the $1,200 level.

Goldman Sachs, which recently turned bearish and advised shorting the metal, is fearful of gold prices dropping to the $1,200-an-ounce level—as this level also represents the cash cost to produce gold at this point. (Source; Cosgrave, J., “The Scary Number for Gold Investors: $1200,” CNBC, April 15, 2013.)

The $1,200-an-ounce cost of production is clearly an issue, especially for the smaller mining companies that are not as cost-effective or able to survive a cash crunch, compared to the mid- to large-tier producers, like Newmont Mining Corporation (NYSE/NEM). (Read … Read More

Rising Resistance to the Fed’s Easy Money: Time to Scale Back Bond Purchases?

By for Profit Confidential

Time to Scale Back Bond PurchasesThe equities market continues to edge higher, with no apparent evidence of a pending letdown by investors despite the multiyear topping action in the S&P 500.

Once again, I say the rise and support of the stock market is clearly driven by the Federal Reserve’s loose monetary policy. This has been the story behind the upward move in the current bull market. It’s true the domestic and global economies have improved since the Great Recession in 2008, but in my view, it’s nowhere near the level to which we should see the market rise.

The problem that lies ahead is not only the inflated market and a sense of vulnerability as investors let their guard down, but the demand for goods and services could result in higher prices due to the excess in demand over supply. (The rich sure like the easy money. [Read “Higher Taxes: Who Cares? Not the Rich.”]) The end result could be inflation surfacing down the road, and we all know that means higher interest rates.

So while Federal Reserve Chairman Ben Bernanke continues to buy $85.0 billion in bonds each month to drive down longer-term interest rates, enough is enough.

Witness that we are seeing more market watchers and Fed members coming out and expressing the need for the Federal Reserve to at least begin scaling back its bond purchases. The problem is that the Federal Reserve has already said it will not move on interest rates until the country’s unemployment rate falls to 6.5%, and this will not happen for a few years.

In an interview with CNBC, James Bullard, the … Read More

Investors Down-Shift Risk, Search for Safety Ongoing Theme for 2013

By for Profit Confidential

Search for Safety Ongoing Theme for 2013If the first-quarter earnings season turns out to be as bad as the experts expect, then it may be time to look for safety. That means lightening up the load on high-risk stocks and shifting your focus to companies that you know will be around 50 years from now.

The search for safety appears to be the ongoing theme this year, especially within the blue chip stocks that make up the Dow Jones Industrial Average. The index is up 11.2%, ahead of the broader S&P 500, along with the NASDAQ and Russell 2000.

Small-cap stocks, which have been sizzling on the chart, have been underperforming in the recent weeks, as investors shift to the safety of blue chips and large-cap stocks.

The chart below shows the recent superior performance of the Dow Jones versus the NASDAQ, shown by the blue line, and the Russell 2000, the green line.

$INDU Dow Jones Industrial Average stock chart

Chart courtesy of www.StockCharts.com

After the first week of April, blue chips have fared the best, down just 0.09% as of April 5, which is much better than the decline of 2.94% and 1.96%, respectively, in the Russell 2000 and NASDAQ. As the market risk rises—and I feel it is—I expect to see more money flow from higher-risk investments to lower-risk ventures, such as the blue chips.

The move to Dow blue chips is even more popular, given the dividends available on many of these stocks, which is attractive compared to historically low yields available with bonds.

When you are earning less than one percent on short-term bonds, the choice to look at dividend stocks and the equities market is easy.

The … Read More

Gold’s Decade-Long Reign Near an End?

By for Profit Confidential

Long Reign Near an EndI have been a major supporter of gold for the past decade during the run-up in prices, but I can’t say I’m that confident at this moment.

Of course, there are still the issues in the eurozone, tension in the Middle East, and the crazy man running North Korea, but I sense the party may be coming to a halt for gold investors.

This is sad, but the shining yellow metal has made money for investors for a decade, so perhaps it’s time to take a siesta.

Here’s my thinking.

The U.S. economy is on the mend. The global economy is recovering; albeit, there are some concerns in China and Europe. The world’s central banks have created a low interest rate environment that has helped to drive global economic renewal and recovery in stocks. It’s all about risk and return at this juncture. While I feel the eurozone could still offer a surprise and America continues to tread on massive debt accumulation, gold is not seen as a viable investment opportunity at this time. Unless the stock market reverses course to the downside, the immediate outlook for the yellow metal looks dull in my view.

Even the recent rally back above $1,600 an ounce on the Cyprus concerns was short-lived and void of any major momentum. There was no reason for the metal to hold above $1,600.

While just recently there was talk of gold retracing back to the high-$1,600 level witnessed earlier in the year, I now feel it could be a challenge for the metal to hold $1,500.

Just take a glance at the chart below. Note the … Read More

As Airline Sector Flies Higher, These Airline Supplier Stocks Look Interesting

By for Profit Confidential

As Airline Sector Flies HigherThe airline sector is sizzling, with rising demand from China and other emerging economies, based on my stock analysis. Revenues in the global airline sector are estimated at $671 billion this year, with profits of $10.6 billion, according to the International Air Transport Association. Plus, my stock analysis suggests that there are significant plane orders flowing in, which you can read more about in “Aerospace: The Only Way Left to Play Global Growth.”

My stock analysis indicates that with the rise in demand, there is also a rise in the need for the materials used to build planes. A key material is carbon fiber—a compound used for applications that demand a high strength-to-weight ratio and rigidity, such as planes.

The global carbon fiber market is estimated to grow annually at 17% over the next five years to around 118,600 tonnes and a market value of about $7.3 billion by 2017, according to The Future of Carbon Fiber to 2017 report produced by Smithers Apex. From 2012 to 2020, the annual growth for carbon fiber-reinforced plastics is estimated at 16%. These metrics make carbon fiber plays an intriguing opportunity, according to my stock analysis.

My stock analysis indicates a potential play in the carbon fiber market for aggressive investors is small-cap special situations play Zoltek Companies, Inc. (NASDAQ/ZOLT), which is still attractive as it nears its 52-week high of $12.25. My stock analysis notes that Zoltek represents an above-average risk-to-reward opportunity in the equities market. (Please note: this is not a buy recommendation, but simply an example of a good investment opportunity for aggressive investors.)

Zoltek’s stock chart, featured … Read More

All of a Sudden, the Bank Stocks Look Good

By for Profit Confidential

Bank Stocks Look GoodThe results are in for the bank stress tests by the Federal Reserve, and they show, as I had expected, an improving banking sector that is more defensive to risk and much improved as far as their balance sheets, liability, and vulnerability to dire market conditions.

The banks were tested based on a worst-case scenario to see the impact on the bank stocks and their ability to handle a major financial crisis. The key assumptions include: the unemployment rate surging to 12.1% (read “What the Government Doesn’t Want You to Know About Jobs Creation”), a pullback in the equities market by over 50%, and home prices falling by over 20%. (Source: Board of Governors of the Federal Reserve System web site, last accessed March 18, 2013.)

The stress test resulted in 14 of the 18 banks passing with conditional approval given to The Goldman Sachs Group, Inc. (NYSE/GS) and JPMorgan Chase & Co. (NYSE/JPM); both have to deal with a few issues and submit new plans by September. Assuming approval, 16 of the 18 bank stocks will have passed the test, versus 15 of 19 in 2012 and well ahead of 2009, when half of the big banks failed. BB&T Corporation (NYSE/BBT) and Ally Financial failed.

“The nation’s largest bank holding companies have continued to improve their ability to withstand an extremely adverse hypothetical economic scenario and are collectively in a much stronger capital position than before the financial crisis,” says the Federal Reserve. (Source: Ibid.)

The results support my view that the banking sector is on the mend. Now we’ll see if some of the banks will … Read More

Aerospace: The Only Way Left to Play Global Growth

By for Profit Confidential

Only Way Left to Play Global GrowthThe Boeing Company’s (NYSE/BA) “787 Dreamliner” remains grounded, but the aerospace sector continues to deliver some excellent results and growth. In spite of its problems with the monstrous Dreamliner, Boeing managed to trade above $80.00 for the first time in nearly five years. News that Boeing had won a massive $18.0-billion deal from Ireland-based Ryanair Holdings plc (NASDAQ/RYAAY) is adding to the recent winnings of key contracts for Boeing.

Driving the buying over the next several decades will be steadily rising demand out of China and other global markets. Boeing estimates China will require 5,000 aircrafts valued at around $600 billion over the next 20 years. And that estimate may be conservative, especially if China continues to grow its income levels at a much faster pace. Boeing is looking at the new 787 Dreamliner as its big play on wide-bodied jet travel in spite of its current issues.

Chief rival Embraer S.A. (NYSE/ERJ) estimates the global demand will be around 28,000 new planes over the next two decades. There will be over 32,550 plans in the skies by 2031, up from the current 15,500, according to Embraer. The Asia-Pacific region will account for 35% of all plane purchases. The major airlines will operate in the U.S., China, Intra Western Europe, and India, according to Embraer. China will be the world’s largest domestic plane market in 20 years. The findings are not a surprise and will be driven by higher disposable income in the emerging global markets along with the desire for travel. My feeling is that strong wealth generation in the world’s largest emerging markets, including China and India, will … Read More

Two Emerging Markets Stomping U.S. Growth

By for Profit Confidential

Markets Stomping U.S. GrowthWhen the U.S. equities market crashes, most foreign stocks do as well. But when it comes to capital appreciation, the correlation ends. Domestic Chinese stocks experienced a small resurgence lately, but they are still well down from their peak in 2007. China is still very much an emerging market, but several other emerging markets are doing much better. These economies are experiencing growth in domestic demand and are also selling a lot of product to their neighbors, China and Japan.

Thailand (the second largest economy in Southeast Asia) is actually an emerging market that is a better play than China itself. And, of course, you have lots of options as an investor if considering having some exposure to the region.

The iShares MSCI Thailand Capped Invstbl Mkt exchange-traded fund (ETF), symbol THD, has been on a tear lately, representing the broader stock market in Thailand. This ETF has about a billion dollars in net assets and is up approximately 38% year-to-date. Way better than China.

Things are really happening in Thailand. According to Thomson Reuters, this emerging market experienced 2012 fourth-quarter GDP growth of 3.6%, with strong domestic demand and an 18.2% increase in exports. Private consumption grew 12.2% during the quarter and both the government and central bank expect a solid increase in global trade this year.

Another emerging market experiencing a big increase in both domestic demand and exports to China is the Philippines. Pull up the iShares MSCI Philippines Invstbl Mkt Idx ETF, symbol EPHE, and you’ll see a huge spike over the last year. According to Bloomberg, that country’s 2012 fourth-quarter GDP grew 6.8% on … Read More

Why Near-Term Prospects in the Stock Market May Be Limited

By for Profit Confidential

Near-Term Prospects in the Stock MarketThe investment climate is at a crossroads. While the market bias is slightly positive, there’s still a sense we could be headed for a market correction. But it’s amazing how resilient the equities market has been in spite of the concerns regarding sequestration, the eurozone recession, debt risk in Italy, and potential stalling again in China. We are also still dealing with an unemployment rate of nearly eight percent, and it’s not looking like it will improve for several years.

The U.S. equities market suggests some near-term stalling. About 73.5% of U.S. stocks are above their respective 200-day moving averages (MAs), which is impressive, but it’s below the 77.4% a month ago. On a short-term basis, only 62.6% are above their respective 50-day MAs, well below the 84.5% a month earlier. A note of caution: there are now 47. 8% of U.S. stocks below their 20-day MAs, compared to 74.0% that were above their 20-day MAs a month earlier. The readings indicate a potential reversal or stalling in the equities market, based on my technical analysis.

On the charts, we have seen the Dow Jones Industrial Average close above 14,000 on four occasions since the first move on February 1, closing at a new record high of 14,286 yesterday. But the index has failed to hold on three occasions and could be at risk for its fourth setback on Monday. This is not a red flag for the equities market.

The S&P 500 is also facing a multi-year top just above 1,500. The S&P 500 has edged higher in four straight months, but be careful, as the index may be … Read More

Big Risk? Try This Strategy

By for Profit Confidential

Try This StrategyIn technical analysis, the chart tells a story. On Monday, the S&P 500 closed below 1,500 for the first time since February 4, driving fears of a multi-year topping, which I have discussed in the past. (Read “Alert: Bulls Should Be Careful Despite an Impressive January.”) The Dow Jones failed to hold above 14,000 for the third time over the past several weeks. With the decline, the NASDAQ, Dow Jones, S&P 500, and Russell 2000 are back in negative territory for February, with the final trading session taking place today. The trading is similar to what we saw in 2012 following a positive start, and 2012 turned out to be a year of caution, so you need a prudent investment strategy.

Currently, we have the sequestration budgetary cuts set to take effect tomorrow. The automatic $85.0 billion in annual budget cuts (the planned sequester will total $1.2 trillion over the next decade), could have a widespread impact on the country and the economy, including program cuts, job losses, and chaos. (Source: Cowan, R. and Lawder, D., “U.S. government won’t fall apart on “sequester” day of reckoning,” Reuters, February 20, 2013.)

Face it; the country’s money printing presses are stopping. The Federal Reserve suggested the possibility of needing to reduce or stop its $85.0 billion in monthly bond purchases. The Fed’s bond buying has added further liquidity into the economy to keep it going. This has also been the case with numerous central banks around the world. The problem is that the monetary easing has created an artificial economy that’s supported by the printing of money.

Then there’s the … Read More

Facebook the Next Big Winner?

By for Profit Confidential

260213_PC_leongGoogle Inc. (NASDAQ/GOOG) traded above $800.00 on February 19, and I still can’t believe I missed out on an early investment opportunity when the stock first debuted at $100.00 in August 2004. The company has become the king of the Internet space and the favorite of retail and institutional investors in the equities market. In fact, Google now appears to be the new Apple Inc. (NASDAQ/AAPL), which has disappointed investors and is sliding downward on the chart. (Read “Mr. Cook Better Have a ‘Plan B’ for Apple.”)

The comparative stock movement of Google versus Apple in the equities market is obvious on their stock charts. While Apple has continued to slide lower since trading at over $700.00 in September 2012, Google has moved in the opposite direction, with its recent breakout above $800.00, based on my technical analysis.

aapl-apple-inc

Chart courtesy of www.StockCharts.com

Going back to September 2012, Wall Street was so hyped up on Apple in the equities market that several analysts started to assign a $1,000 price target to the company, suggesting Apple would be the first $1.0-trillion company in the history of the equities market. Of course, it didn’t quite pan out that way.

On the other hand, just as we had seen with Apple in September, we are now seeing euphoric analysts jumping all over Google, highlighted by a $1,000 price target from Bernstein Research.

While I’m not convinced Google can reach this magical peak within a year, I do feel the stock will inevitably trade at $1,000, unless the company decides to split the stock. But then again, co-founders Lawrence Page and Sergey Brin … Read More

The Great Money-Making Opportunities You Can Find in Israel

By for Profit Confidential

The Great Money-Making OpportunitiesIsrael is the “Silicon Valley” of the Middle East. The country is not widely known as a place to find high-growth technology companies, but the reality is that this small and dynamic country of 7.9 million people, nestled on the Mediterranean Sea, is just that.

The country has the second largest number of start-up companies in the world, trailing only the United States. There are about 59 Israeli companies listed on the U.S. stock exchanges, trailing only China, with 153 companies, and Canada, with 152. (Source: NASDAQ web site, last accessed February 12, 2013.)

My stock analysis suggests that one of the best stocks and a top Israeli stock listed in the U.S. equities market is pharmaceutical giant Teva Pharmaceutical Industries Limited (NASDAQ/TEVA), a developer of generic and branded drugs and active pharmaceutical ingredients.

Technology and health care are some of the leading industries in Israel, based on my stock analysis. The country has seen a steady rise in technology companies that have performed well on the world stage, as my stock analysis also shows. (To see what’s on my radar in Internet stocks, read “Here Are My Favorite Internet Plays.”)

I will mention a few that I’m familiar with, but again these stocks are not to be construed as buy recommendations; rather, they’re more for information purposes.

A small-cap technology stock that has excellent long-term potential for above-average price appreciation is Petach Tikva, Israel-based ClickSoftware Technologies Ltd. (NASDAQ/CKSW), according to my stock analysis.

ClickSoftware creates solutions that allow companies to manage resources efficiently and effectively. The company develops and sells workforce management and service optimization solutions that … Read More

Michael Dell Finally Gets It!

By for Profit Confidential

Michael Dell Finally Gets ItFounder Michael Dell has done as much as he can with Dell Inc. (NASDAQ/DELL). In just over 25 years, he managed to grow the company he started out of his garage into the world’s third-largest maker of personal computers (PCs); but with the explosion of mobile devices, Dell needed a “Plan B,” according to my stock analysis.

The proposed $24.4-billion deal to take the company private will be the first step in the transformation of the company into a “mini IBM,” according to Wall Street pundits. Dell wants to focus on developing its business that caters to large companies and may include the possible divestiture of its struggling PC business. (Source: Gupta, P. and Damouni, M., “Dell to go private in landmark $24.4 billion deal,” Reuters, February 5, 2013.) Just go back nearly 10 years, and you’ll see that International Business Machines Corporation (NYSE/IBM) did the same after selling off its PC business to Lenovo in 2004 to focus on services to large companies.

The strategy shift for Dell is not a surprise, given the declining PC business, based on my stock analysis. Dell tried to produce tablets, hybrid laptops/tablets, and other mobile devices to compete in light of the declining PC market. But at the end of the day, Dell failed to keep up with the likes of Apple Inc (NASDAQ/AAPL) and Samsung Electronics Co., Ltd., according to my stock analysis.

Hewlett-Packard Company (NYSE/HPQ), under CEO Meg Whitman, is also trying to keep its sinking ship afloat. But with crippling declines in the demand for PCs and intense competition in printers and other areas of the sector, it has … 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.

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