2006 Article Archive
December 2006
Cadbury
Schweppes -- A Sweet Defensive Stock for Value Investors
London-based Cadbury Schweppes (NYSE: CSG)
may not be as familiar to American investors as it is to those on the other side
of the Atlantic. However, that lack of recognition can often work to the
advantage of value hunters. Read this article to see why CSG is a solid
stock trading well below its fair value.
How
to Steer Clear of "Value Traps"
How can you differentiate between a value stock and a "value trap"?
This is often the most important dilemma that value investors must consider.
Finding a way to separate the two can mean the difference between earning
extraordinary returns and suffering devastating losses. Here are several
attributes we look for in a compelling value stock.
November 2006
Louisiana-Pacific
Trades Almost 45% Below its Fair Value
The cooling housing market has battered the stocks of most homebuilders lately.
We are closely monitoring this sector for signs of a potential turnaround, and
there is one stock now trading at a huge discount -- Louisiana-Pacific.
POOL's
Growing Dominance Means Big Gains for Investors
Pool Corp. has grown from a tiny one store operation to a company with more
than 275 service centers. Profits have followed the same trajectory by
increasing more than +2000% over the last ten years. Now POOL garners 50% market
share and is poised for more growth.
Use
Credit Cards to Make Money Rather Than Spend it
Today, credit cards can be used anywhere from department stores to
fast-food restaurants. In fact, it is hard to remember a time when you couldn't
simply enter a few digits to buy an item online. Learn how you can get your cut
of this multi-billion dollar industry by investing in companies that benefit
from the growth in the use of credit cards.
October 2006
Waste
Management (WMI) is No Waste For Investors
In late October, trash hauler Waste Management posted across-the-board third-quarter improvements.
Clearly, the company looks to close out fiscal 2006 on a high note, which should help WMI extend its recent upward march and move closer to our $54 fair-value estimate.
AMD's
Chinese Market Share Has Quadrupled and Shows No Signs of Slowing
Three years ago, rival Intel
(INTC) enjoyed a near monopoly in China, but AMD continues to make substantial
inroads into the country -- projected by many to become the world's leading PC
market within the next few years.
Boyd
Gaming (BYD) Looks Enticing
Among those that don't closely
track the casino industry, Boyd Gaming is probably not a household name. But to
Boyd's growth strategy, that is rapidly changing.
September 2006
Bargain
Hunting Applies to the Stock Market Too
If you pay close attention to prices when you spend your money, you should
be even more vigilant when investing it. Curiously, our thought process
is suddenly reversed when it comes to investing and the price of a stock usually
plays second fiddle to other measures. Considering an investment portfolio can
often represent someone's largest single asset, this is clearly not the
time to disregard prices.
Legg
Mason Looks Poised to Rebound
Legg Mason (LM) has been one of the market's top-performing stocks,
returning an astounding +29% annually over the last ten years. A $10,000
investment made on August 31, 1996 would be worth $180,662 today -- a cumulative
gain of +1,706%. After watching the stock pull back sharply from its 52-week
high of $140 per share, we believe the time is right for value investors to take
a closer look at Legg Mason.
Searching
for Bargains in the Alcoholic Beverage Industry
All things considered, the major producers of wine and spirits have many
reasons to smile. Chances are virtually nil that consumers around the world will
suddenly lose their thirst for alcoholic beverages, so demand for their
high-margin products is all but guaranteed. With this in mind, conservative
investors who are drawn to steady, predictable revenues and cash flows might
want to sample something from the alcoholic-beverage group.
August 2006
Moody's
(MCO) Looks Like a Bargain
Moody's continues to deliver
outstanding results. Along with its recently quarterly earnings release, Moody's
also lifted its full-year guidance. Investors applauded the upbeat forecast, and
the shares have rallied nicely in recent weeks. However, this credit ratings
juggernaut still looks to trading well below its fair value.
Earn
Consistent +15.9% Annual Returns with the Legg Mason Value Trust (LMVTX)
Out of thousands upon thousands
of domestic stock funds, just one single fund has outpaced the benchmark S&P
500 Index for the past fifteen consecutive years -- the Legg Mason Value Trust
July 2006
Undervalued
Shipping Stocks with Yields of up to 14.4%
With the increase in global trade, some shipping stocks are seeing their
daily revenues skyrocket. We think that this trend may last for awhile, and
cargo carriers offer you a way to profit from this increased activity.
Blue-Chip
Stocks Should Outperform in Today's Volatile Market
One of the best ways to
position your assets in a volatile market is to anchor your portfolio with the
safest stocks the market has to offer -- dividend-paying blue-chips. There are
many reasons to seek shelter in these safe havens when times get tough...
June 2006
Value
Investing Opportunity: Timberland (TBL)
With shares of Timberland (TBL)
having tumbled from a high of $41 down to recent lows in the mid-$20s, the stock
could make an excellent value play at current levels. Here's a closer look at
why we believe Timberland is likely to rebound off its recent lows . . .
Market
Update for Value Investors
If the next bear market does arrive, it is important to be prepared for
greater volatility. However, we are not suggesting that you need to liquidate
your holdings and hide the proceeds under a mattress until the storm has passed
-- only that you make your portfolio as watertight as possible.
Invest Like
Warren Buffett
Knowing Buffett's investing approach is one thing -- putting it into
practice is a different matter entirely. However, this is not to imply that
Buffett's accumulated wisdom should not be learned -- and applied. Following in
his footsteps might not make you a billionaire, but it could certainly help your
portfolio hit a few homeruns in the years ahead.
May 2006
How
to Calculate a Stock's Actual Fair Value
When searching for undervalued
companies, investors commonly rely on the most tried-and-true financial
measures: Price/Book, Price/Earnings, Price/Cash Flow, etc. To be sure, such
traditional valuation metrics can be useful, but they only tell part of the
story. What investors really need is the stock's fair value. Only then can they
tell if a stock is trading at a discount.
April 2006
Undervalued
Investing Idea: Oracle (ORCL)
Oracle is one of those rare
companies that possesses both growth and value attributes. Over the next year,
the company is expected to post solid top and bottom-line gains of +19% and
+17%, respectively. Yet despite these projections, the shares are trading at
just 17 times this year’s earnings -- rock-bottom for a software company.
March 2006
Undervalued
Investing Idea: Nutraceutical International (NUTR)
Nutraceutical is one of those unique companies that possess both growth and
value attributes. The stock was a highflier in 2001 and 2002, posting
back-to-back triple-digit percentage returns. However, the shares have cooled
off in recent years, and they are currently trading about 50% below their
five-year peak of $27.62. This discount looks attractive considering NUTR's
growth prospects.
February 2006
Profiting
from Mean Reversion
Studies have conclusively shown
that when stock prices get overextended to the upside, they eventually fall back
in line. And when they have been pushed sharply below their long-term averages,
they will soon begin to recover. We will show you how to profit from this
finding.
Undervalued
Investing Idea: National Home Health Care (NHHC)
After posting healthy double-digit top-line growth rates from 2000 to 2003,
National Home experienced a modest drop in 2004. The slowdown was short-lived,
however, and revenues have been climbing steadily since then. In fact, the
company recently reported record first-quarter revenues. Even so, the stock
still trades at a heavy discount compared to its peers.
January 2006
Marine
Products (MPX) Looks Poised to Rebound
Despite a weaker fourth-quarter outlook, the company is still on track to post
full-year earnings of $0.66 per share, which would represent an impressive +14%
improvement over last year's total.
Avoid
Common Investing Mistakes by Keeping Your Emotions in Check
Over the long haul, achieving
market-beating returns requires not only solid analytical skills, but also an
even temperament. It has been said that fear and greed rule the market, and any
investor who allows such emotions to dictate his or her decision-making process
will soon discover that they are an impossible handicap to overcome.
