Stocks To Buy

While earnings are the most important part of earnings season, they’re simply a yardstick that considers different accounting measures across different sectors. A different measure, cash flow, can give a sense as to a company’s ability to start and grow a dividend, buy back shares, or otherwise reward shareholders. That cash flow may not always pass down to earnings. But for a poor investment, it’s often true that earnings will look higher than cash flow indicates. With a slowing economy and slow ...
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A company can have a great product. Or a great marketing team. But if management isn’t good… the company will falter. Even a manager who knows to step aside for the team is better than an executive who makes the wrong decisions and ignores what the staff has to say. This can translate into great stock returns… or poor ones. So all said and done, company management is a key factor, even though it doesn’t show up on the balance sheet. Investing ...
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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, chipmaker Advanced Micro Devices (AMD) took a hit ...
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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 ...
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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 ...
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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 ...
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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 ...
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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, ...
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