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

Small Cap Stocks

While the exact definition of small-cap stocks can vary from brokerage house to brokerage house, small-cap stocks usually have stock market capitalization of less than $1.0 billion, but more than $400 million. Small-cap stocks sometimes see their stock market capitalization eventually exceed $1.0 billion, at which point they become large-cap stocks.

U.S.-Listed Israeli Companies the Next Big Buying Opportunity?

By for Profit Confidential

Three U.S.-Listed Israeli Growth Stocks Worth a LookIsrael has grown to become a key producer of technology and medical devices companies outside of the United States and Canada. We are talking about a very small country of less than eight million people, but which has become known as the “Silicon Valley of the Middle East.”

In fact, after China and Canada, Israel-based companies are the third-most-listed on U.S. stock exchanges as far as international listings, and they may be offering a buying opportunity.

Contrary to companies emerging out of China, Israeli companies have, so far, been quite clean as far as reporting reliability and confidence in the financial results, something that has escaped Chinese stocks that make them untrustworthy to investors. (Read “Chinese Stocks Promise Higher Potential Gains?”)

While there are major big-cap companies out of Israel, such as biotech Teva Pharmaceutical Industries Limited (NUSE//TEVA), there is also an excellent speculative buying opportunity in some of the small-cap stocks emerging from the country.

I have listed three speculative Israeli stock plays that are worth a closer look as a buying opportunity.

In the small-cap technology space, another buying opportunity is Israel-based Magic Software Enterprises Ltd. (NASDAQ/MGIC), which has been providing information technology services for more than 30 years. The company has built ventures with key software partners, including International Business Machines Corporation (NYSE/IBM), Microsoft Corporation (NASDAQ/MSFT), and Oracle Corporation (NYSE/ORCL).

In 2013, the company was ranked 37th on the Deloitte Israel Technology Fast 50 list.

Magic Software is profitable, with higher sequential earnings in six straight years, from 2006 to 2012, prior to a small decline in 2013. The valuation is reasonable at 14.66 … Read More

My Top Investment Strategy for a Stalling Stock Market

By for Profit Confidential

How to Guarantee a Selling Price for Your StockThe current stock market sentiment is bullish and based on the charts, there are indications that the market wants to go higher, especially technology and small-cap stocks.

The S&P 500 is eyeing another record-high and it may just reach it by the time you read this.

While stock market investor sentiment continues to display bullish new highs and new lows, there’s also a sense that the road to higher gains will not be an easy path.

The economic renewal is maintaining a muted pace, in part due to the harsh winter conditions, but what if the economy was actually showing signs of slowing?

Jobs growth in February improved over January, but the jobs market still has not reached a level of self-sufficiency without continued help from the Federal Reserve via low interest rates.

What I expect, after looking at the stock market indices, is that we will likely see new records broken on the horizon. (Read “Why I Believe the S&P 500 Could Easily Reach 2,000 in the Upcoming Months.”) However, the advance will be more hesitant than in 2013 and the past years, since the current bull market is into its fifth year and is very much absent of a major stock market correction, based on my technical analysis.

Given this, I’m somewhat nervous, but there are alternative investment strategies you can consider at this time.

If you feel the stock market may pause and trade in a sideways range through the spring and summer months, you may look at writing covered call options on some or all of your existing long positions that have associated options…. Read More

Why It’s Clear the Bulls Are Driving the Market

By for Profit Confidential

Investing in a Bull-Driven Stock MarketAt this time last month, the stock market was full of anxiety as we were heading for one of the worst Januarys in recent memory. The talk was about how the decline in January would trigger additional selling pressure in the stock market. The Stock Trader’s Almanac suggested there was a 47% chance the stock market would decline in 2014, but I was pretty confident on the other 53% that stocks would inevitably return positive gains this year, albeit at a slower rate.

As we enter into the final stretch of the first quarter, the month of February returned some strong gains in the stock market that I must admit caught me off guard.

Now I’m not suggesting the gains are not deserved, but I am somewhat perplexed with the rate of the rally despite what I feel is a lack of any fresh new catalyst to drive stocks higher.

The S&P 500 drove to a new record-high on February 25 and looks bullish, advancing more than 3.7% in February and into positive territory for the year. The chart of the index below displays a bullish “V” formation, which has been followed by a breakout to the record-high.

S&P 500 Large Cap Index Chart

Chart courtesy of www.StockCharts.com

The upside bullish sentiment is holding, as we continue to see the number of new highs easily outpace the number of new lows, which is positive confirmation in an up-trending stock market, based on my technical analysis.

Even the number of S&P 500 stocks trading above their respective 200-day moving averages has been on the rise and is currently above 81%, as reflected by the chart below. In … Read More

Stock Market: Where the Real Risk Is in 2014…

By for Profit Confidential

Risk Returns to Earnings ResultsThe Dow Jones Transportation Average is still very close to its all-time high, and so are countless component companies. The airlines, in particular, have been very strong in a classic bull market breakout performance. Many of these stocks have roughly doubled over the last 12 months.

Commensurate with continued strength in the Russell 2000 index of small-cap stocks and year-to-date outperformance of the NASDAQ Composite, this is still a very positive environment for equities. The NASDAQ Biotechnology Index continues to soar.

While strength in transportation stocks is a leading indicator for the U.S. economy, so is price strength in small-caps. Smaller companies are more exposed to the domestic economy, and while it’s too early for many of these companies to report fourth-quarter earnings, the Russell 2000 has outperformed the Dow Jones industrials and the S&P 500 over the last five years, confirming the primary upward trend.

Instead of an actual correction in stocks, we’ve only experienced price consolidation; the latest being in blue chips since December.

This is very much a market in need of a pronounced price correction, if only to realign expectations with current earnings outlooks. Fourth-quarter numbers, so far, are mostly showing limited outperformance, and those companies that have beat consensus are still, for the most part, just confirming existing guidance, not raising it. If this is a secular bull market, it’s time for a break.

A meaningful price correction in stocks would be a very healthy development for the longer-term trend. Corporations are in excellent financial shape, and the short-term cost of money is cheap and certain.

In order for this market to turn in a … Read More

Why the NASDAQ Will Outperform the Other Major Indices in 2014

By for Profit Confidential

Why 2014 Bodes Well for Blue ChipsSo far this year, the NASDAQ Composite Index has outperformed the other large-cap averages, and this is a positive indicator.

At the beginning of last year, blue chips shot out of the gate with uncommon capital gains, and as confidence in the rally grew, investors slowly felt more comfortable with more speculative issues, which are often listed on the NASDAQ.

After a pronounced consolidation during the summer of last year, large-cap NASDAQ stocks, like Microsoft Corporation (MSFT), Juniper Networks, Inc. (JNPR), and even Intel Corporation (INTC), reaccelerated.

I view the price reacceleration in large-cap technology stocks as a combination of attractive valuations and yields and improved expectations for growth. Microsoft’s fourth-quarter sales are expected to grow some 10%.

While blue-chip strength is always helpful, large-cap technology stocks must be a big part of the long-term trend, as they are such a large part of the daily economy now.

The Russell 2000 Index of small-caps is also holding up extremely well and is another positive indicator for the broader market. While stocks are very much in need of a correction, it won’t happen without a major catalyst, and trading action among large-cap technology and small-caps is reason enough to expect more capital gains. The chart of the Russell 2000 Small Cap Index is featured below:

Russell 2000 Small Cap Index Chart

Chart courtesy of www.StockCharts.com

Also not to be forgotten is the Dow Jones Transportation Average, which is still just a hair off its all-time record-high. Transportation stocks are always a leading indicator, and if you attribute any worth to the performance of airline stocks, their year-to-date performance is also a positive signal.

Given current information, … Read More

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U.S.-Listed Israeli Companies the Next Big Buying Opportunity?

By for Profit Confidential

Three U.S.-Listed Israeli Growth Stocks Worth a LookIsrael has grown to become a key producer of technology and medical devices companies outside of the United States and Canada. We are talking about a very small country of less than eight million people, but which has become known as the “Silicon Valley of the Middle East.”

In fact, after China and Canada, Israel-based companies are the third-most-listed on U.S. stock exchanges as far as international listings, and they may be offering a buying opportunity.

Contrary to companies emerging out of China, Israeli companies have, so far, been quite clean as far as reporting reliability and confidence in the financial results, something that has escaped Chinese stocks that make them untrustworthy to investors. (Read “Chinese Stocks Promise Higher Potential Gains?”)

While there are major big-cap companies out of Israel, such as biotech Teva Pharmaceutical Industries Limited (NUSE//TEVA), there is also an excellent speculative buying opportunity in some of the small-cap stocks emerging from the country.

I have listed three speculative Israeli stock plays that are worth a closer look as a buying opportunity.

In the small-cap technology space, another buying opportunity is Israel-based Magic Software Enterprises Ltd. (NASDAQ/MGIC), which has been providing information technology services for more than 30 years. The company has built ventures with key software partners, including International Business Machines Corporation (NYSE/IBM), Microsoft Corporation (NASDAQ/MSFT), and Oracle Corporation (NYSE/ORCL).

In 2013, the company was ranked 37th on the Deloitte Israel Technology Fast 50 list.

Magic Software is profitable, with higher sequential earnings in six straight years, from 2006 to 2012, prior to a small decline in 2013. The valuation is reasonable at 14.66 … Read More

My Top Investment Strategy for a Stalling Stock Market

By for Profit Confidential

How to Guarantee a Selling Price for Your StockThe current stock market sentiment is bullish and based on the charts, there are indications that the market wants to go higher, especially technology and small-cap stocks.

The S&P 500 is eyeing another record-high and it may just reach it by the time you read this.

While stock market investor sentiment continues to display bullish new highs and new lows, there’s also a sense that the road to higher gains will not be an easy path.

The economic renewal is maintaining a muted pace, in part due to the harsh winter conditions, but what if the economy was actually showing signs of slowing?

Jobs growth in February improved over January, but the jobs market still has not reached a level of self-sufficiency without continued help from the Federal Reserve via low interest rates.

What I expect, after looking at the stock market indices, is that we will likely see new records broken on the horizon. (Read “Why I Believe the S&P 500 Could Easily Reach 2,000 in the Upcoming Months.”) However, the advance will be more hesitant than in 2013 and the past years, since the current bull market is into its fifth year and is very much absent of a major stock market correction, based on my technical analysis.

Given this, I’m somewhat nervous, but there are alternative investment strategies you can consider at this time.

If you feel the stock market may pause and trade in a sideways range through the spring and summer months, you may look at writing covered call options on some or all of your existing long positions that have associated options…. Read More

Why It’s Clear the Bulls Are Driving the Market

By for Profit Confidential

Investing in a Bull-Driven Stock MarketAt this time last month, the stock market was full of anxiety as we were heading for one of the worst Januarys in recent memory. The talk was about how the decline in January would trigger additional selling pressure in the stock market. The Stock Trader’s Almanac suggested there was a 47% chance the stock market would decline in 2014, but I was pretty confident on the other 53% that stocks would inevitably return positive gains this year, albeit at a slower rate.

As we enter into the final stretch of the first quarter, the month of February returned some strong gains in the stock market that I must admit caught me off guard.

Now I’m not suggesting the gains are not deserved, but I am somewhat perplexed with the rate of the rally despite what I feel is a lack of any fresh new catalyst to drive stocks higher.

The S&P 500 drove to a new record-high on February 25 and looks bullish, advancing more than 3.7% in February and into positive territory for the year. The chart of the index below displays a bullish “V” formation, which has been followed by a breakout to the record-high.

S&P 500 Large Cap Index Chart

Chart courtesy of www.StockCharts.com

The upside bullish sentiment is holding, as we continue to see the number of new highs easily outpace the number of new lows, which is positive confirmation in an up-trending stock market, based on my technical analysis.

Even the number of S&P 500 stocks trading above their respective 200-day moving averages has been on the rise and is currently above 81%, as reflected by the chart below. In … Read More

Stock Market: Where the Real Risk Is in 2014…

By for Profit Confidential

Risk Returns to Earnings ResultsThe Dow Jones Transportation Average is still very close to its all-time high, and so are countless component companies. The airlines, in particular, have been very strong in a classic bull market breakout performance. Many of these stocks have roughly doubled over the last 12 months.

Commensurate with continued strength in the Russell 2000 index of small-cap stocks and year-to-date outperformance of the NASDAQ Composite, this is still a very positive environment for equities. The NASDAQ Biotechnology Index continues to soar.

While strength in transportation stocks is a leading indicator for the U.S. economy, so is price strength in small-caps. Smaller companies are more exposed to the domestic economy, and while it’s too early for many of these companies to report fourth-quarter earnings, the Russell 2000 has outperformed the Dow Jones industrials and the S&P 500 over the last five years, confirming the primary upward trend.

Instead of an actual correction in stocks, we’ve only experienced price consolidation; the latest being in blue chips since December.

This is very much a market in need of a pronounced price correction, if only to realign expectations with current earnings outlooks. Fourth-quarter numbers, so far, are mostly showing limited outperformance, and those companies that have beat consensus are still, for the most part, just confirming existing guidance, not raising it. If this is a secular bull market, it’s time for a break.

A meaningful price correction in stocks would be a very healthy development for the longer-term trend. Corporations are in excellent financial shape, and the short-term cost of money is cheap and certain.

In order for this market to turn in a … Read More

Why the NASDAQ Will Outperform the Other Major Indices in 2014

By for Profit Confidential

Why 2014 Bodes Well for Blue ChipsSo far this year, the NASDAQ Composite Index has outperformed the other large-cap averages, and this is a positive indicator.

At the beginning of last year, blue chips shot out of the gate with uncommon capital gains, and as confidence in the rally grew, investors slowly felt more comfortable with more speculative issues, which are often listed on the NASDAQ.

After a pronounced consolidation during the summer of last year, large-cap NASDAQ stocks, like Microsoft Corporation (MSFT), Juniper Networks, Inc. (JNPR), and even Intel Corporation (INTC), reaccelerated.

I view the price reacceleration in large-cap technology stocks as a combination of attractive valuations and yields and improved expectations for growth. Microsoft’s fourth-quarter sales are expected to grow some 10%.

While blue-chip strength is always helpful, large-cap technology stocks must be a big part of the long-term trend, as they are such a large part of the daily economy now.

The Russell 2000 Index of small-caps is also holding up extremely well and is another positive indicator for the broader market. While stocks are very much in need of a correction, it won’t happen without a major catalyst, and trading action among large-cap technology and small-caps is reason enough to expect more capital gains. The chart of the Russell 2000 Small Cap Index is featured below:

Russell 2000 Small Cap Index Chart

Chart courtesy of www.StockCharts.com

Also not to be forgotten is the Dow Jones Transportation Average, which is still just a hair off its all-time record-high. Transportation stocks are always a leading indicator, and if you attribute any worth to the performance of airline stocks, their year-to-date performance is also a positive signal.

Given current information, … Read More

Why Investors Should Be Constantly Monitoring These Stocks

By for Profit Confidential

Why This Sector Requires Constant MonitoringAny investment portfolio is always well served with some exposure to healthcare, medical devices, and/or pharmaceutical stocks. You can own the sector for income, capital gains, or a combination of both. Regardless, it is an industry sector that is consistently good at making money for stockholders.

You can invest or speculate in large-cap, mid-cap or small-cap healthcare companies; the opportunities run the gamut and it’s not too difficult to find the right stocks to fit a particular risk tolerance level.

In the large-cap space, we previously looked at Becton, Dickinson and Company (BDX), which is a New Jersey-based medical instrument and supply company. (See “Why You Should Add Two Medical Stocks to Your Watch List.”)

This healthcare company has been a powerhouse wealth creator and one of many large-cap healthcare stocks that also pay dividends. Its current dividend yield is approximately two percent.

BDX has been soaring, especially since the beginning of last year, due to a solid financial performance and outlook for 2014.

According to the company, its revenues for the fourth fiscal quarter (ended September 30, 2013) were $2.1 billion for a 7.2% currency-neutral gain. Fiscal 2014 should see sales grow by four to five percent, and diluted earnings per share from continuing operations should grow between six and seven percent over fiscal 2013.

These aren’t growth stock-type gains, but we’re talking about a very mature enterprise.

Ten-times larger than BDX is Johnson & Johnson (JNJ). This is one of my favorite blue-chip healthcare stocks for long-term investors.

The company has a great, consistent track record of increasing its dividends over time, as well as … Read More

Stock Market’s Dependence on Easy Money Weakening?

By for Profit Confidential

Why a Storm May Be Brewing in the Stock MarketThere’s a significant cold spell out there in the Mid-East and Northeastern parts of the country. At the same time, the stock market has cooled down a little, beginning the year on a cautious note.

I recently discussed my views for the stock market going forward and while it’s early on, the ability to move higher will largely depend on the economic renewal and its impact on what the Federal Reserve does. New Fed Chair Janet Yellen will be the focal point as Ben Bernanke departs.

Yellen will receive her first piece of key economic data this Friday when the non-farm jobs report for December is due. A decline in the unemployment rate to below seven percent and the creation of 200,000-plus jobs will clearly drive the Fed to seriously continue to taper. What happens to the stock market this year will be dictated by the rate of jobs growth and the number of unemployed.

We also need to see corporate America deliver stronger revenue growth to drive earnings. In the past few years, aggressive cost cuts have driven earnings, which is not sustainable.

If the tapering continues, bond yields will continue to rise to levels that will be difficult for stock market investors to ignore. Look for an initial break at the three-percent level for the 10-year bond to gauge its impact on the stock market.

Should yields rise, I would look at the higher dividend paying stocks, especially those in the small-cap sector that offer great opportunities for dividends and capital appreciation.

The reality is that, given that the stock market was able to rise as much as … Read More

Time to Look at Chinese Stocks Again?

By for Profit Confidential

Time to Look at Chinese StocksThere are still many on Wall Street who frown on Chinese stocks and China. When word was spreading that the country’s real estate market was going to implode, China was a cesspool for capital.

Well, I don’t belong in that group of investors. Many of my readers will recall how I remain bullish on China and Chinese stocks in particular. Just take a look at many of the top-performing stocks over the past few weeks, and you’ll see that there are numerous Chinese small-cap stocks charging up on the charts. The buying has been driven by a move to seek more returns in regions, like China, that have largely not followed U.S. stocks higher.

Take a look at the S&P 500, as shown by the red candlesticks in the chart below, versus the Shanghai Composite Index, as reflected by the green line.

The obvious finding is that the S&P 500 has continued its upward move, while the Shanghai Composite Index has been unable to find any rhythm on the chart, based on my technical analysis.

S&P 500 Large Cap Index Chart

Chart courtesy of www.StockCharts.com

In my assessment, the divergence between the two indices has resulted in a buying opportunity for Chinese stocks.

Since making its initial acquisition in a 20% stake of specialty chemicals maker China National BlueStar in 2008 for $600 million, private equity firm The Blackstone Group L.P. (NYSE/BX) has been steadily involved in buying Chinese companies. Blackstone just signed a definitive merger agreement to buy China-based IT services firm Pactera Technology International Ltd. (NASDAQ/PACT) in a $600-million deal. Of course, the Chinese government, via its overseas investment fund, invested $3.0 billion in … Read More

Obamacare Bust a Buying Opportunity for Investors?

By for Profit Confidential

Obamacare Bust a Buying Opportunity for InvestorsObamacare is here after the Affordable Care Act was signed into law in March 2010. The Act dictates that all Americans, poor and rich, will need to have some form of insurance coverage.

Americans can select the appropriate level for them from the four levels of coverage—bronze, silver, gold, and platinum. The actual coverage in each plan is the same, with the difference being the deductable you have to pay. Moving from the bronze level to the platinum level, the deductable declines but the initial amount paid for the plan increases. Some Americans may be eligible for government assistance, depending on their financial situation, of course.

While Obamacare may seem complicated at first, making money from it is not; Obamacare makes a good buying opportunity.

The end result of Obamacare will be the addition of tens of millions of Americans who previously had little or no coverage to the healthcare system, now having access to basic healthcare. This means the demand for healthcare will increase across the board, providing a good buying opportunity.

Overall, Obamacare will be a positive catalyst for the healthcare sector, which will see demand rise for healthcare goods and services and provide a buying opportunity for healthcare stocks.

Big pharmaceutical stocks, such as Merck & Co., Inc. (NYSE/MRK), Pfizer Inc. (NYSE/PFE), Johnson & Johnson (NYSE/JNJ), and UnitedHealth Group Incorporated (NYSE/UNH), offer a possible buying opportunity, as they will be direct benefactors of Obamacare. Each of these stocks is excellent and is a possible buying opportunity for long-term growth.

If you’re looking for a buying opportunity in a variety of healthcare companies, then take a look … Read More

Why I Would Buy This $1,000 Stock Over a $10.00 Stock

By for Profit Confidential

Why I Would Buy This $1,000 Stock Over a $10.00 StockI was looking at the chart of priceline.com Incorporated (NASDAQ/PCLN) the other day, as the stock surpassed the $1,000 level. But why would I consider paying so much for a stock when there are cheaper comparables in the same online travel space?

It’s true; there are less expensive online travel stocks than priceline.com. But when you are stock picking, you should look at the comparative valuation and growth metrics, and not simply stock prices. The problem is that many investors will tend to base their stock picking on the share price, but the reality is that determining which stock to buy is not like shopping for goods—you don’t always go for the lowest-priced item. It’s like the old adage, “You get what you pay for.” This also applies to stock picking.

Online travel provider priceline.com beat Google Inc. (NASDAQ/GOOG) to become the first company to break the $1,000-a-share barrier (excluding Berkshire Hathaway Inc.). This is an amazing accomplishment for a stock that debuted at $75.25 on March 31, 1999.

The key to priceline.com is that it was the first company to really drive the online travel segment and innovate its service offering along the way in spite of a growing number of competitors. This is why it is tops in the online travel sector.

Priceline.com Inc Chart

Chart courtesy of www.StockCharts.com

Of course, there are competitors such as Expedia, Inc. (EXPE) that you could consider when stock picking, but the company is over seven-times smaller than priceline.com, based on market cap.

Expedia Inc Chart

Chart courtesy of www.StockCharts.com

Based on comparative valuations, however, Expedia is more attractive, trading at 14.4X its 2014 earnings per share … Read More

With Continued Easy Money, Are Small-Caps Still the Way to Go?

By for Profit Confidential

Are Small-Caps Still the Way to GoThe stock market got what it wanted; the easy money will continue to flow into the economy and will help to support and possibly drive the stock market higher.

But while the economy continues to move along, the low interest rates and desire of the Federal Reserve to keep long-term rates down will give a boost to companies.

Small companies, which generally react quicker to changes in the economy and operating environment, will remain at the center of the Fed’s move.

While the stock market will face some tough upper resistance following its record breaks on Wednesday, it will not be easy to break through, as traders are likely feeling more anxious at the higher levels.

As I have said on many occasions, small-cap stocks remain the place to be this year, and they’ll likely stay that way into 2014 and 2015, as the economy picks up steam.

The small-cap Russell 2000 index continues to drive the gains this year, up an impressive 27% as of Thursday.

Some of the gains we have seen are staggering. The momentum in this market along with the easy money have fueled a massive appetite for assuming risk, which has pushed small-cap stocks higher, reaching record after record.

While you can earn steady returns from blue chips and big-cap stocks, for the quicker money, you need to have small-cap stocks in your portfolio. I’m not talking about the OTC/Pink Sheet stocks or those languishing under a dollar, waiting for a promoter to push them. When I look at potential small-cap stocks, I’m looking for real viable businesses with sound fundamentals.

These small-cap stocks are … Read More

Can These “Tricks” Keep the Stock Market High Much Longer?

By for Profit Confidential

key stock indicesRemember the famous words of Mark Twain: “Whenever you find yourself on the side of the majority, it’s time to pause and reflect.” As readers of Profit Confidential know, it was this kind of mentality that lead me to: 1) turn bullish on gold in 2001; 2) turn negative on housing in 2006; 3) turn bearish on stocks in late 2007; and 4) turn bullish on small-cap stocks in 2009 (when the talking heads on the TV were saying “we are heading lower—sell, sell, and sell”).

Fast-forwarding to today, when I look at the key stock indices, I see something similar happening, but the chants I hear now are “buy, buy, and buy even more.” It seems the majority consensus is bullish. They believe the key stock indices will continue to march higher. Even the worst-case scenarios look overly optimistic. Outright euphoria? Maybe not, but we are getting there.

From January to August of this year, the key stock indices have significantly increased in value. The S&P 500 has increased a little more than 14% in the first eight months of this year, and the performances of other key stock indices have been in a similar range. But historically, since 1970, the S&P 500 has risen only about 8.2% per year on average. (Source: “Past Data,” StockCharts.com, last accessed September 10, 2013.)

Some argue that the rise we have seen in key stock indices so far this year, we have seen in the past. However, those times were truly different. For example, in 1997, the S&P 500 increased 31.6% because our economy was booming that year. U.S. gross domestic … Read More

Creating the Ultimate Profitable and Diverse Portfolio

By for Profit Confidential

Creating the Ultimate Profitable and Diverse PortfolioI was having dinner with a friend the other day and the discussion moved to the concept of risk and reward.

My friend Sam couldn’t understand why he was underperforming the S&P 500 despite owning shares like The Procter & Gamble Company (NYSE/PG), General Electric Company (NYSE/GE), Wells Fargo & Company (NYSE/WFC), and Intel Corporation (NASDAQ/INTC).

My immediate response was that his portfolio lacked growth stocks, instead focusing on large-cap dividend paying stocks. These are excellent long-term companies, but for that added push in returns, you need to look at small-cap stocks and the risk and reward growth opportunities.

Sam said he added Intel for growth. Of course, my response was that Intel was dead money at this time and is not the growth stock it used to be prior to the drive in the mobility space that it missed. I suggested I would be adding tech plays that focused on the mobility market, as that is where the money will likely be made over the next few years as the sector blossoms.

So I told Sam to add some NASDAQ 100 stocks for some added risk and reward growth, along with some small-cap stocks to help drive an otherwise boring portfolio.

Diversification and risk and reward are key to a good portfolio, regardless of the market conditions. I don’t really like mining stocks or gold, but you should have some nonetheless, especially now with the threat of the war intensifying in Syria.

Sectors like the housing market and the big banks have made the easy money, so you need to be selective and search for market opportunities in … Read More

Why Chinese Stocks Are Taking Off All of a Sudden

By for Profit Confidential

Chinese stocksThe comparative advance in the Shanghai Composite Index may be subpar and well below the moves in the S&P 500 and Dow Jones Industrial Average, but that doesn’t mean you should ignore Chinese stocks. Recall a few weeks back when I discussed the upward moves in Chinese stocks. (Read “They’re Not Popular, But These Stocks May Offer Opportunity After All.”)

While there are the non-believers who feel that China and Chinese stocks are going down the toilet and that everything with the country was fabricated by the communist government, I simply say—good luck.

Just take a look at the price charts, and you’ll notice a somewhat resurgence in Chinese stocks, especially small-cap stocks, over the past weeks, with many advancing to new 52-week highs.

Now, I’m not saying you should welcome Chinese stocks into your portfolio with open arms, but there’s clearly an increased appetite for risk and bigger potential returns, versus the current flatness in U.S. stocks.

Take a look at China-based Qihoo 360 Technology Co. Ltd. (NYSE/QIHU), a developer of Internet and mobile security solutions to the Chinese market. You can think of Qihoo as the “Norton Antivirus” of China, and with 1.3 billion people, that’s a massive market opportunity. I recommended Qihoo in one of my past publications, and it has been a massive winner, up four-fold from its 52-week low of $20.01.

Based on my technical analysis, the chart of Qihoo below is a beautiful example of a stock in an uptrend. The stock also just recorded a bullish upside trading gap.

QIHOO 360 Technology Co Ltd Chart

Chart courtesy of www.StockCharts.com

What I advise is not to just … Read More

They’re Not Popular, But These Stocks May Offer Opportunity After All

By for Profit Confidential

150813_PC_georgeChinese stocks listed on the Shanghai Composite Index (SCI) are down over seven percent this year, and unless things change, it will be the third year since 2010 that the index moves lower.

These are clearly not the best of times for Chinese stocks, but that doesn’t mean there is not a buying opportunity out there for some Chinese stocks trading on U.S. exchanges.

For instance, just the other day, I discussed the added benefits from small-cap stocks and talked about China-based Phoenix New Media Limited (NYSE/FENG). This stock has had a nice run up this year, surging 129%, including a 14% pop on Monday. While situations like FENG are not the norm with Chinese small-cap stocks this year or in the recent few years, they are also not as rare as you might think.

In the Chinese education space, TAL Education Group (NYSE/XRS) has been one of many Chinese education plays that have sizzled on the charts this year—up 34%.

In China’s often talked about real estate sector, where some have been calling for a bubble to materialize for years now, there have been some excellent Chinese stocks. One of these companies, Xinyuan Real Estate Co., Ltd. (NYSE/XIN), which I highlighted here in February (read “Why the Money May Be with China’s Real Estate”) is up over 70% since.

PC_Aug15_Graph1Chart courtesy of www.StockCharts.com

In the social media space, a stock that looks interesting on the chart is Renren Inc. (NASDAQ/RENN), which is appearing to be forming a bullish cup and handle and could break higher.

PC_Aug15_Graph2Chart courtesy of www.StockCharts.com

Another China-based business to consumer e-commerce play … 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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