There are many ways to earn a great return in the stock market. One way is to look at special situations, such as a merger announcement. There’s also a less-well-known way to profit by buying up a company about to split into multiple companies. Such moves happen with less fanfare than an acquisition. But it can be a way for a company to unlock the value of a line of business that may not fit into the stock market’s perception of the company. For instance,Johnson & Johnson (JNJ) is looking to spin off its consumer health division as a separately-traded company. The move will take ...

Following the market’s big drop last year and bounce so far this year, it’s likely that markets will continue to bounce around as economic data points a mixed picture. That’s a good trading environment—and it can also be a good one for long-term investors. The way to take advantage is to look for stocks that are cheap, ignored or even hated by the market in general, and capable of moving higher thanks to strong financial performance. The life insurance industry is cheap right now, as insurance stocks have dropped following the increase in interest rates over the past year. And the ma...

Most economic activity is driven by consumer spending. That’s why changes in consumer spending can cause stocks to rise or fall. Some areas can hold up well, particularly those consumer goods or services that offer reasonable quality at a reasonable price. That’s because a slowing economy will cause consumers to shift to lower-price options rather than stop spending entirely. That may not be good news for upscale brands or services, but for some companies, it may indicate higher share prices ahead.Darden Restaurants (DRI) fits the bill for this phenomenon. The owner of Olive Garden, Cap...

Many things in life have a first-mover advantage. However, in investing, the first company to come to the marketplace with a product isn’t always the winner. A company that follows up with a better product or a far lower price point can end up grabbing the most market share. That’s particularly true in the tech space. Today’s successful tech companies prefer to either buy a company on its way to winning, or wait until they can overtake the early movers. That makesAmazon’s (AMZN) move into artificial intelligence (AI) so compelling. The company has managed to become a tech conglomerat...

In a bull market, traders can profit by buying companies with an exciting story behind them. Those stocks tend to be runaway winners. But when the market is trading flat or down, the slow-and-steady, boring businesses can be the better winners. That’s because these companies can be more recession resistant. And they tend not to get as overvalued on the way up. That makes for a solid value play, and often one that pays out a solid source of growing income. One such boring company isFerguson (FERG). The U.K.-based industrial manufacturer for plumbing and HVAC products is a slow-and-ste...

When an industry starts out, there may be dozens, if not hundreds of competitors. But, much like the automotive industry, eventually the space will consolidate into a few big players. Sometimes, that consolidation will occur through acquisitions. Other times, an economic crisis or two will also help to shake out weaker competitors. And consumer tastes and preferences may make it easy for a big player to stay big, even if newer companies try and grab market share. The shakeout in the cryptocurrency broker market over the past year has seen several companies go bankrupt. Others have...

When a growth trend is underway, nearly every company that plays to that trend will rally. At least, at first. However, weaker companies will get squeezed out by competition, leading to only a few big players. Of those players, a few will win based on quality. Others will cater to a lower-end market. When a sector is still new, chances are the higher-end product will perform better than the lower-end one until a few iterations of the technology are worked out. Right now, the market’s current interest in artificial intelligence (AI) is leading to a number of companies moving higher. B...

Some market sectors are cyclical. Others tend to be slow and steady. The financial sector has characteristics of both. It tends to be slow and steady most of the time, but fears hitting the financial sector can lead to big losses quickly. Investors who can sort through real dangers and find undervalued companies capable of growing their market share can win when the sector shifts back to slow and steady. One niche of the financial service space is asset management. This space can fare well during trouble in the banking sector. In the space,Morgan Stanley (MS) has fared well, having p...

Markets will likely remain uncertain for some time. That means daily swings will occur, punctuated with moments of extreme fear or greed. Traders can take advantage of the swings in both directions. And investors can use drops to buy great companies at a fair price. A great company, such as one with a strong brand and a history of consistent dividend growth, will rarely trade at a great price. But they’re also usually overpriced, and it takes market fear to knock it down to a fair one. A combination of a falling share price amid a slight rise in revenues has takenConstellation Bra...

Wall Street is fond of saying that investors shouldn’t look to catch a falling knife. However, once a stock has had a big drop, fears of a further decline tend to leave investors on the sidelines. That can mean missing out on the early part of a rally off extreme lows, which can be a big part of a total bull rally. That means it’s often ideal to buy when there’s still some lingering fear. Right now, the regional banks are teetering. However, it’s been a few weeks since any bank failures. And it’s clear that big banks are willing to store excess deposits with smaller institutions to a...