Companies have a number of ways to fund their operating needs. A company can sell shares of stock, such as in an IPO. Selling shares dilutes existing shareholders, so companies that regularly issue shares are likely to underperform. Otherwise, companies may want to go to the debt market. By offering debt, companies aren’t diluting shareholders. But that debt adds a cost to the balance sheet that needs to come from cash flows. Overly indebted companies can be poor performers. Companies that use either or both of these tools moderately and responsibly as needed, however, can use the ca...

Retail is typically a tough business. A retailer buys up goods that someone else has produced, and has to sell them at a profit. Competition keeps prices from moving too far higher from other sellers. And the costs to operate stores can be substantial. That kind of business model has made for great long-term returns in some of the biggest retailers. They’re able to get the lowest prices thanks to the volume of goods that they sell. But some retailers can do even better with a tweak to the model. By becoming a membership club and charging an entrance fee, they can earn revenue outside...

A business exists to serve the needs and wants of its customers. A successful business will often look for ways to expand into more goods and services that customers demand. But mistakes can be made. And ideas that sound great may not lead to additional profits. A great company will periodically evaluate its actions and get rid of unprofitable business lines to better focus on its profit centers. For instance, energy giantChevron (CVX), recently closed two clean fuel plants. These plants made fuel out of products such as soybeans and corn, but government regulations have made that bu...

A specific stock or sector will often move in or out of favor with the market. When a stock or sector is unloved, valuations can become attractive, even with the fear hanging over. And a stock moving from being unloved to loved can create a great momentum play for investors. Today, many retail stocks are trending higher, overcoming fears of a slowing economy that have weighed on the space for the past few years. One big retail player trending higher isTarget (TGT). They reported a beat on earnings and revenues for the fourth quarter of 2023, and see improvements moving into 2024 as t...

Great companies can offer long-term market outperformance. The downside? Investors often have to chase shares and buy near all-time highs. However, sometimes a company falls out of favor briefly and can make for a great buying opportunity. Today, a great company with massive cash flow and profitability is slightly out of favor. It’s at a solid long-term entry point for buyers. And there are some uncertainties which, once cleared, will allow shares to move higher. The company is consumer tech giantApple (AAPL). Shares are down about 13 percent from their 52-week high. Besides cance...

“Picks and shovels.” That’s the term used for companies that supply the hardware needed to support a boom. While it may have started with a gold rush, today’s picks and shovels are often the key pieces of hardware needed to run today’s software. As the AI Boom continues to roll out, pick-and-shovel plays can continue to benefit. The hardware sellers may not make the biggest profit margins or even get the headlines. But they stand to win. Specifically, they stand to make steady profits while other companies pop and then drop. One pick-and-shovel play for the AI Boom isDell Technolo...

AI stocks have been soaring over the past year and change. Most of the focus has been on big-cap tech companies. They have the big bucks to invest heavily in these technologies right away. But there are other ways to play the trend. While not every AI stock will be a winner going forward, companies seeing real returns already may continue to benefit, and reward shareholders moving forward. One potential winner here is developerC3.AI (AI). The software company posted better-than-expected results in its latest quarter. Subscription revenue even rose by 23 percent. While not yet prof...

Consumers have made some big shifts in recent years. The pandemic fueled spending on home goods and electronics. Then, consumers shifted away from buying those products in favor of services such as travel and tourism. Today, consumer spending is showing some signs of shifting. That shift indicates that consumers may be more price-conscious following inflation, meaning they’ll want to look for the lowest-priced bargains. That may explain whyeBay (EBAY) is faring well here. The online auction leader just beat earnings and increased its guidance for the year ahead. eBay profits from ...

While stocks are still near all-time highs, many sectors of the market have lagged. Part of that is simply the excitement in the tech space. Another part is that many non-tech companies have high production costs and lower profit margins. Several of these companies now trade at a compelling discount to the overall stock market. And many also pay generous dividends, reflecting the power of their brands and the moderate growth opportunities ahead. For instance,Whirlpool Corporation (WHR) have sunk 22 percent over the past year, a reverse trade compared to the S&P 500. However, t...

The rollout of artificial intelligence (AI) software over the past two years has led to a boom in those who create the software, as well as the hardware needed to run it. For the most part, the rollout has been based on cloud-based or computer services. However, the next iterations of AI will succeed because they’ll be usable on all sorts of devices, including mobile ones. That could mean a surge in chips capable of powering AI programs on smartphones. In this space, the likely winner isQualcomm (QCOM). They manufacture chips for wireless communications, which will be critical for po...