Earnings season can create a tremendous amount of short-term noise. Companies tend to focus on 90-day sprints, rather than the long run, to keep Wall Street happy. But even with that short-term focus, a company can be working towards long-term goals and get hung up in the short run. That’s especially true when a company plays to long-term trends but hasn’t seen the cycle turn favorable for those trends yet. In the tech space, chipmakerAdvanced Micro Devices (AMD) took a hit after earnings. Specifically, the company provided weak guidance for the personal computer market in the quarte...

The stock market is an index of a number of companies. And it’s largely weighted by market cap. That index can change all the time, and for any number of reasons. One reason may involve the bankruptcy of an index member company. That’s the case with the S&P 500. First Republic Bank is no more, having been seized by regulators and having its deposits sold off. But it’s the S&P 500, not the S&P 499. The index needs a new member. Traders are betting thatBlackstone (BX) may fit the bill. It’s also a financial company of significant size. But it’s an asset manager, not a bank....

During a gold rush, most prospectors won’t find much, if any, gold. The real winners are those who supply prospectors with tools that they need, such as picks and shovels. Today, these suppliers don’t even need to provide a physical tool. And they can profit from selling a service with a recurring revenue. That’s where cloud service companies come into play. Spending is slowing, even as it’s grown 19 percent over the past year. Pick and shovel plays in this market are taking a hit. It likely won’t last. One name in the space isCloudflare (NET). Shares dropped over 20 percent on Fr...

Analysts spent the first few months of 2023 warning about an earnings recession. And so far, the data suggests that it’s here. Companies are slowing down overall. The good news? Analysts may have been too dour, so many companies have beaten the low expectations going into their earnings report. Nevertheless, the next few months may see the market trade sideways and see a selloff as this latest earnings season starts to slow down. Investors can use such a pullback to buy industry leaders at a reasonable price ahead of the next move higher. In this market, leadership is less about stoc...

Many technologies and economies function best due to a network effect. The larger the number of users in a network, the stronger and more robust it is. It’s less likely to have a single point of failure. For investors, finding companies with a strong network effect can earn great returns. Especially when investors take advantage of a weak market to buy companies with a strong network. One type of network is in shipping and logistics. A small company may only be able to serve a small town. But dominant players that can operate globally are likely to continue to be able to do so indefi...

As an investment, companies with few competitors are better than companies with many competitors. That’s because competition tends to keep prices low and innovation high. That’s good for consumers, but not healthy for companies – or their shareholders. That’s why companies with a handful of competitors tend to be more consistently profitable. That can keep share prices generally rising over time, and with lower volatility. These companies also tend to make for attractive income plays. When it comes to the oligopoly space, it’s tough to beat out the credit card providers. In that spac...

A great company can overcome any economic challenge. To be a great company, it’s necessary to have pricing power. That means avoiding having to cut prices during a slow period. And it means when inflation is running hot, prices can be raised over and above. Such companies are few and far between. But harnessing the power of a brand during a slow or sideways market can help lead to great returns over time, both from capital gains, and from growing dividend income. It’s no surprise thatCoca-Cola (KO) has been able to hike prices on consumers yet again. That helped the company’s earning...

While we’re coming up on the next Fed meeting, which could give a sign that the central bank’s interest rate hikes are finally over, we’re not out of the woods yet. Inflation has slowed over the past year, but it’s still running at 5 percent. That’s one of its highest levels in decades, and more than twice the central bank’s inflation target. Investors should still look for companies that can handle inflation by passing on the costs to their customers via higher prices. One place offering safety in that regard is consumer goods companies. We’ve seen that in the past week, with the ea...

Investors often take a current trend and extrapolate it to extremes. That’s why the end of a bull market has a lot of valuations that seem ridiculous in hindsight. And why there are many bargains at the end of a bear market. That trend can also play out with quarterly earnings. A company’s growth may slow or stall out in a quarter, but markets may try and extend that trend out indefinitely. That can create short and long-term opportunities. For instance, last week telecom giantAT&T (T) reported a slowdown in the rate of subscriber growth compared to the same quarter last year. ...

Consumer spending may be slowing… but it’s also a huge chunk of the economy. And no matter how bad things slow down, there are still many goods that people will need to buy. That may be bad news for those who make higher-end goods. Ultra-wealthy consumer unaffected by the economy can only buy so much for themselves. That leaves companies that offer the best bargains for consumers as the top way to play current economic trends. For the apparel space, off-price retailers offering quality fashions at a discount could continue to increase market share. That’s good news for companies like...