Posts Tagged ‘IPOs’
It’s an amazing performance that few people predicted at the beginning of the year—this stock market might just keep on climbing right into the New Year.
Just recently we looked at Automatic Data Processing, Inc. (ADP) as it broke a new all-time record high of $77.00 a share. Now, the position has surpassed $80.00 a share, still boasting a 2.4% dividend yield. It was $60.00 a share in January.
The stock market should have experienced a major correction this year, but it consolidated during the summer and reaccelerated instead.
The huge price movements of so many large and mature enterprises are not unusual in the historical performance of the stock market. In the middle of 1998, ADP was $30.00 a share (split adjusted). Two years later, the position hit a new, all-time record-high around $60.00 before correcting with technology stocks.
ADP and so many other positions illustrate the power that monetary policy has on the stock market’s business cycle. Clearly, equities today are overbought, but institutional investors have to be buyers, because investors don’t pay fees to have money sitting in cash.
While I feel that the stock market can close this year out strongly, generally speaking, I am not enthusiastic about investors buying this market. The fundamentals are slowly coming together to support the case for rising equity prices, but all the good news in terms of balance sheets and earnings outlooks are already priced into this market. Anything can happen going forward, but expectations for investment returns have to be extremely low if one is buying a stock market that’s already gone up.
A profound and prolonged correction … Read More
As evidence of the fervor to which institutional investors are bidding this market, Johnson Controls, Inc. (JCI) jumped five percent on the day the company announced a new $3.65-billion share buyback program and a 16% increase to its dividends.
These are good times for corporations and equity investors. Companies can borrow on the cheap, and they are keeping shareholders happy with rising dividends and share buybacks.
Johnson Controls is based in Milwaukee and sells a great deal of equipment to the automobile and the heating, ventilation, and air conditioning (HVAC) industries.
The company’s dividends have been rising consistently, and for the quarter ended June 30, 2013, earnings per share grew an impressive 32%.
Not surprisingly, the stock’s been doing extremely well. At the beginning of the year, it was trading around $31.00 a share; now, it’s around $50.00.
This kind of capital gain has been very common among countless blue chips. It is a highly unusual and monetary policy-fueled rise. In my view, in the case of Johnson Controls, the company’s share price is overvalued, even with the recent news regarding its dividends.
While there is certainly a lot of liquidity in the stock market now—and there is good action to be had, generally speaking—I’m very reticent to be a buyer. At the very least, it is difficult finding attractive stocks to buy that haven’t already gone up tremendously.
I view equities as one big hold right now, and I do think that share prices will be able to finish out the year strongly, given current information.
Looking at the financial results of countless large-cap corporations, there is … Read More
If there was one non-resource, speculative sector of the stock market in which to devote a considerable amount of effort, I’d go with three-dimensional (3D) printing. This is a burgeoning new industry that will soon transition from industrial to retail use.
Stratasys Ltd. (SSYS) has had an exceptional last two years, finding its stride as a modeler and leading manufacturer of 3D printers. On the stock market, the position is up approximately six-fold over the last two years. This is an institutional favorite and likely to remain this way as the company’s growth has been exceptional.
According to Stratasys, for the three months ended September 30, 2013, total sales grew to $125.6 million, which compares to $49.7 million in the same quarter last year.
The company acquired “MakerBot,” whose numbers are included from August 15, 2013. Pro forma including MakerBot, the company shipped a cumulative 64,855 systems worldwide as of September 30, 2013.
During the most recent quarter, Stratasys sold 5,175,000 ordinary shares at $93.00 each for net proceeds of approximating $462.9 million. The company’s quarter end cash position was $616.5 million, or $12.65 per share, which provides a lot of resources for expansion.
Other 3D printing companies are also experiencing substantial financial growth in operations. The entire industry is therefore a worthwhile focus of substantial investment research.
3D Systems Corporation (DDD) doubled on the stock market since April and doubled again in value since April of 2012.
In the third quarter of 2013, the company’s shareholders’ equity and cash position soared. Revenues totaled $135.7 million compared to $90.5 million. Earnings were $17.7 million compared to $13.5 million.
Total … Read More
Profit Confidential — IT'S FREE!
"A Golden Opportunity for Stock Market Investors"