Tag: stocks

Investors Should Watch Out For This Breakout Stock

Posted on by Daniel Cross

Daniel Cross - INO.com Contributor - Equities


If you're an advocate of EMH (Efficient Market Hypothesis), then you likely assume that markets are rational and bargain pickups are hard to come by. Stocks that take off without notice shouldn't happen since investors, whether institutional or everyday, have access to the same information. However, there are some cases that simply defy the rules.

Stealthy stocks that are relatively unknown can surprise investors. These types of companies might have few or no analysts covering its stock letting it easily slip through investors sights. But once it starts hitting new highs, it makes waves.

Many have immortalized investors like Benjamin Graham and Warren Buffett. The value investor style of stock trading has been a winner for decades, but a look back at recent history tells a different story. It's growth stocks that have outperformed value stocks over the past decade. Advances in technology and a the globalization of the world's financial markets have led to an aggressive bull market that undervalued stocks just haven't been able to keep up with. Continue reading "Investors Should Watch Out For This Breakout Stock" →

This Company Is Making Moves That Investors Might Want To Pay Attention To

Posted on by Daniel Cross

Daniel Cross - INO.com Contributor - Equities


Companies aren't static entities that hit maturity and simply stop growing. No successful business model calls for a reduction in innovation or a strategy that consists of “just keep doing what we're doing.” Great companies find ways to keep growing and keep building. They challenge themselves to develop new products or services and are never satisfied with the status quo.

Merger and acquisition activity is back on Wall Street – a good sign that the bull is coming back. Companies that are looking to expand look to M&A's as a long play for success. The initial cost can often have a short term temporary negative impact on earnings, but once its complete and overlaps are eliminated, the company can greatly increase its profits.

Some sectors are known for more of this kind of activity than others like technology and healthcare. These industries change so rapidly that a constant turnover is just part of the business model. But when sectors like industrials or retailers start to see that kind of activity, it's a sign that those companies see opportunities for growth on the horizon. Continue reading "This Company Is Making Moves That Investors Might Want To Pay Attention To" →

WSJ Takes A Leap Too Far In Assigning Causation To Energy Sector Valuations

Posted on by Adam Feik

Adam Feik - INO.com Contributor - Energies


The WSJ Morning MoneyBeat blog post for Tuesday, March 22, was entitled, “Energy Stocks Are the Most Expensive in S&P 500.”

Are they really?

As I read the WSJ’s post, I decided I really have to use this as an opportunity to help dispel some widely – nay, almost universally held – notions about using P/E ratios to predict stock price movements.

How Not To Use P/E

Almost all investors, in my experience, routinely fall into the trap of misusing the P/E. In fact, I admit I fell into the same bad habit for many years myself. Until a couple of years ago (more on that later).

Don’t get me wrong. It’s not that the ratio can’t be useful. On the contrary, when properly interpreted, P/E can be an indication of sentiment, which is always important for an investor to understand. When P/Es are low (remembering to mentally adjust absolute P/E figures to account for differences in interest rates, inflation, and other market conditions in order to accurately assess whether P/Es are truly “low” or not), sentiment is probably somewhat sour, generally speaking. High P/Es (all things considered) generally mean investors feel willing to “pay up” for earnings, growth, dividends, and/or other perceived benefits of owning stocks. And again, having a feel for what the market’s sentiment is can be helpful (often in a contrarian sort of way).

Beyond the ratio’s use as a rough sentiment gauge, however, I’ve learned several things in the last couple years about using (or misusing) P/E ratios (for individual stocks and for the broad markets), which I’ll summarize as follows: Continue reading "WSJ Takes A Leap Too Far In Assigning Causation To Energy Sector Valuations" →

Political Posturing Continues To Pummel Biotech

Posted on by Noah Kiedrowski

Noah Kiedrowski - INO.com Contributor - Biotech


As the political cycle matures in 2016, the political posturing continues to plague the entire healthcare cohort. Utilizing the biotech sector and drug pricing as a scapegoat for political gains has translated into the sector posting sharp declines over the past year. Using the iShares Biotechnology Index ETF (PACF:IBB) as a proxy for the biotechnology sector, this cohort has fallen from $401 in July of 2015 to $240 in February of 2016 or alternatively a 40% decline. This sharp decline coincided with heated political rhetoric aimed at the collective cohort of healthcare and more specifically biotech-related companies. This cynical sentiment by political frontrunners was largely rooted in the pricing of drugs. It’s noteworthy to highlight that this specific segment of the industry (i.e. drugs) comprises less than 10% of the total cost of healthcare. As candidate threats via legislative action geared towards reining in the costs of drugs unfolded, these actions negatively reverberated through healthcare and biotech stocks alike. The political posturing surrounding potential plans to reign in drug costs are now largely priced into many stocks within the healthcare umbrella. I contend that after the roughly year-long political sell-off the biotech cohort looks attractive at these levels. Once the political cycle is complete later this year, these stocks will likely benefit from the mere absence of political headwinds. Taken together along with the difficulty of enacting any legislative action to regulate the industry this may represent a buying opportunity that’s been presented by extraneous political events. Continue reading "Political Posturing Continues To Pummel Biotech" →

How You Can Profit From Those Annoying Political Campaign Ads

Posted on by Matt Thalman

Matt Thalman - INO.com Contributor - ETFs


With the Presidential Election just nine months away, now is a good time to start considering how 'you' the average American can benefit from this once every four-year circus event. I recently spoke about how it's likely firearm stocks could see a boost from this event, today I would like to discuss another industry likely to see revenues increase.

But, before we jump into how you can make money this election season, let's take a look at what is making this all possible.

During the 2008 Presidential Election more than $7 billion were spent according to Borrell Associate's estimates. In 2012, election spending was estimated to hit $9.8 billion. But as of now, the 2016 election cycle is expected to see $11.4 billion spent. Now these figures are not just for spending on Presidential campaigns, but all political office's votes will be held for this year. Continue reading "How You Can Profit From Those Annoying Political Campaign Ads" →