Five Biotech Stocks Under $5

Over the long run, the biotechnology sector has been a consistent winner in the stock market. The chart below shows the biggest winners among sectors over the past five years and biotech is near the top of the list. This has often been the case for most of the past twenty years or so. As a group, biotechs have done well. There are always winners and losers within the group but the winners have usually done so well that the sector is consistently on the list of best performing sectors over the long run. Recently, that has not been the case. The next chart shows the worst performing se...
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Finding Stocks the Warren Buffett Way

Last week we reviewed the failed bid for Unilever that had Warren Buffett’s backing. As the world’s greatest investor, we find it useful to study not just what Buffett says but also what he does. His actions are, of course, more important than his words. Buffett’s actions are usually only known when a deal is announced. With Unilever, we had an opportunity to study a failed deal. The deal failed because Buffett was true to his word. In interviews, he has explained that combining the consumer brands of Unilever with those of Kraft Heinz looked like a good deal. A representative of Kraft Hein...
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Low Priced Energy Stocks Analysts Believe Are Undervalued

Even though we are in a bull market, not all sectors participate in the major trend at the same time. While financial stocks have been doing well lately, energy stocks have been underperforming the broad market. This pattern is almost always seen in the stock market and is the basis of a trading strategy known as sector rotation. To benefit from sector rotation, traders can look at stocks in sectors that are lagging the broad market, buying them when they are bargains expecting their sector to recover in time. Energy stocks have been beaten down for some time but there are some promising bu...
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A Look Over Warren Buffett’s Shoulder

Warren Buffett can be thought of the way Winston Churchill once described the Soviet Union, In 1939, Churchill said, “I cannot forecast to you the action of Russia. It is a riddle, wrapped in a mystery, inside an enigma; but perhaps there is a key. That key is Russian national interest." This sums up Buffett. No one can forecast what the great investor will do but there is value in trying to understand his actions. Buffett has attained a remarkable record of success with returns averaging more than 20% a year over a 50 year career. If we could understand his decision making process, we migh...
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Five Retailers on Sale for Under $10

Finding winners in the retail sector can be challenging. Target (NYSE: TGT) demonstrated this recently. The stock plunged more than 12% after the company reported sales and earnings that missed Wall Street's expectations. Missing earnings is usually bearish but it’s especially bad for a retailer to miss fourth quarter earnings since that is traditionally the strongest quarter for companies in the sector. Target compounded traders’ concerns by lowering its outlook for this year. Target’s CEO explained the problem, noting "Our fourth-quarter results reflect the impact of rapidly changing cons...
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If Trump Delivers, Stocks Are Cheap

Concerns are growing that the stock market overvalued. A number of indicators, including the price-to-earnings (P/E) ratio, are at historic highs. The chart below shows the P/E ratio now and at previous bull market highs. The average P/E ratio at market tops is 19.2. Now, the P/E ratio is 25.6, well above that average.   The current P/E ratio is higher than seen at any other market top since World War II except for the 2000 top that ended with the Internet bubble. P/E ratios are just one way to look at the market but they provide important insights into the market. Earnings, ...
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The Best Trades for March

Last month, for the second month in a row, we applied a simple seasonal strategy to find potential buys for January. Now, we can review the results of this strategy. Of the 8 stocks, six moved up, a win rate of 75%. As a group, the stocks in the strategy delivered a gain larger than the gain of the S&P 500 index, also for the second month in a row. The results are summarized in the table below. So far this year, we have a total return of 9.3% for the stocks in our seasonal strategy compared to a gain of 6.3% in the broad stock market. Once again, in February, this strategy outper...
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Here’s What Hedge Funds Are Buying and Selling

Hedge funds appear to be a secretive world and, to some degree, they are. Only high net worth individuals who meet the requirements defined by the Securities and Exchange Commission (SEC) and large institutions have access to these investments. Some funds set minimum investments of $25 million or more which limits the pool of potential investors even more. If you can get into a fund, there is no guarantee you will make money. Some funds are very successful but, as a group, hedge funds tend to deliver average or even below average returns. One reason for the poor performance could be the hig...
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The Charts Will Tell Us When To Sell

In recent days, the Dow Jones Industrial Average, the S&P 500 index and the Nasdaq Composite index have all hit all-time highs for at least five consecutive days. This was the first time a winning streak like that unfolded since January 1992. The Russell 2000, a benchmark index for small cap stocks, made a new high four days in a row. The last time these four major market indexes made new highs on four consecutive days was in June 1995. New highs generate emotional responses for many investors. Some enjoy seeing new highs, believing rising prices are bullish and that means a stretch of ...
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Stock Picks From Congress

Congress, for some reason, seems to be filled with wealthy individuals. The median net worth of a member of Congress is more than $1 million, compared with an average American household's median net worth of about $55,000. The majority of members of Congress are millionaires, with 51% reporting assets of at least $1 million. As a whole, about 1% of households in the country are millionaires. With so much wealth, most members of Congress almost certainly have access to great investment managers. But, members of the House and Senate also have an edge over average investors. They have a degree...
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