Daily Gains Letter

Earnings

Earnings are also known as ‘profits’. At the most basic level, a company’s earnings consist of what’s left over after all costs are taken out from the revenue generated. Earnings are also the basis for corporate taxes. Many corporations report EBITDA, or earnings before interest, taxes, depreciation and amortization. The most important thing to watch for when researching a company is where earnings are forecasted to move. Investors want to see that the future projections are for the earnings to grow over time.


Historical Trends, Global Economic Factors Say Stock Market at Risk



Stock Market RiskWhat if I told you the best six months for investing in the stock market are drawing to an end? Not good news, is it? As we enter the second quarter, there is optimism based on the price action of the stock market in 2014. Yet as I mentioned, what is historically recognized as the best six-month period during the year for investing in the stock market, particularly the S&P 500 and Dow Jones Industrial Average, according to the Stock Trader's Almanac, is coming to a close at the end of April. With the S&P 500 having returned only 0.44% in 2015 (better than the 0.26% decline in the Dow Jones Industrial Average), can we really expect much for the stock market following what was supposedly the historically ... Read More



Corporate Earnings Up 46% YOY for This Global Auto Stock



Corporate Earnings UpWhat does it take to develop a successful, long-term investment strategy? This is the correct question to ask, rather than asking simply which stock(s) to buy. To be successful over the long term, you need to have a comprehensive investment strategy that takes into account your goals and risk parameters. Having said all of that, at the end of the day, I’m looking for a company that has both an attractive valuation and the ability to increase corporate earnings at a rate above market expectations. One way to develop an investment strategy is to look at the factors driving corporate earnings for a specific industry and individual company. A great example is the automoti ... Read More



Why Gold Looks Good to Me in 2014



Gold Looks Good to Me in 2014Just the other day, I was talking to a friend of mine who seemed extremely cheerful. I asked why, and he said that his investments have performed well over the past few months and he saw no reasons to worry. This is a common problem with investor sentiment; people tend to become complacent and only look to the recent past as an indication of what tomorrow will bring. This is quite dangerous. Investor sentiment is often wrong and can be used as a contrary indicator, buying when others are dumping their stocks and taking profits when others are blissfully unaware of the changing land ... Read More



Why This Chart Should Worry Investors



U.S. Economy’s Setting Up for a Volatile 2014Every day it seems as though the S&P 500 makes a new high. This strong performance over the past year is creating complacency, as more retail investors are piling into the market. However, I would certainly urge caution, especially for any new capital being put to work at these lofty levels. With earnings season upon us, we’ve already seen several sectors in the S&P 500 get hit significantly, especially retail stocks. We keep hearing about resilience among Americans, but consumer sentiment is not as strong as many analysts believe. This is why I wasn’t surprised when retailers disappointed. One of ... Read More



Three Stocks to Watch as Activist Investors Unlock Value



Activist Investors Unlock ValueOne of the most hotly debated topics these days is the role of activist investors. Some people have the impression that an activist investor is not a positive factor when it comes to long-term investing. I disagree, as many times, the investment strategy recommended by these activist investors ends up benefiting all shareholders. Probably the most well-known, and certainly the wealthiest, activist investor is Carl Icahn. One of the things I like most about Icahn’s investment strategy is that he is willing to buy when others are selling and be vocal about his intentions. A pe ... Read More



Top Two ETFs for When Interest Rates Increase, Investor Sentiment Plummets



Top Two ETFsThis past weekend, a friend of mine made a statement that there must be a large amount of economic growth coming shortly because of the booming stock market, driven by investor sentiment. As I told him, the two are not necessarily tied together. Over the past few months, we have heard about how economic growth is about to accelerate here in America, and this has helped drive investor sentiment in the stock market higher. However, I think there are many questions that need to be answered before we can assume economic growth will reach escape velocity, and investor sentiment is heavily contaminated with a large addictio ... Read More



How a Giant Chinese Tech IPO Will Benefit These Other Top Stocks



technology stocksAs many people know, one of the hottest areas in the market right now is technology stocks. Investor sentiment has continued piling into this sector—with good reason in some cases. The danger for investors is when investor sentiment becomes too bullish—technology stocks might be entering this territory. The latest of the technology stocks that has announced it is going public is the Chinese powerhouse Alibaba Group. Started in 1999 by a former English teacher, the company has now grown to be the largest e-commerce company in China and will soon be a public firm with a valuation of more than $140 billio ... Read More



Two Underlying Factors You Need to Consider Before Buying Stocks



Don't Invest in McDonald'sWhen many investors think of blue chip stocks, a common name that pops up is McDonalds Corporation (NYSE/MCD). A blue chip stock is traditionally a well-established company generating stable corporate earnings and usually paying out an attractive dividend yield. McDonald’s certainly hits the bull’s-eye on these blue chip metrics, which is especially attractive in today’s low-interest-rates world with its forward dividend yield of approximately 3.3%. The real question to ask is what is McDonald’s potential for corporate earnings growth over the next few years? There are two underlying f ... Read More



This Foreign Market a Hidden Treasure for Growth Investors



Foreign Market Hidden Treasure for Growth InvestorsWhile the S&P 500 and Dow Jones Industrial Average race to new record-highs, there’s still a sense of caution and vulnerability on the side of investors towards the stock markets here in the U.S. In fact, a study I read in Bloomberg estimated that around 47% of stocks listed on the NASDAQ stock market are currently in a technical bear stock market, down 20% or more from the highs. On the small-cap Russell 2000, the story is even worse with more than 40% in a bear stock market. And the study shows that the S&P 500 had a mere eight percent of stocks in a technical bear stock ... Read More



My Investing “Shopping List” for a Tough Retail Environment



The Diamonds Dogs Current Retail SectorThe retail sector is clearly undergoing some duress early on in 2014 as there is a worrisome feeling that the country’s economic growth may be stalling. The first quarter’s gross domestic product (GDP) growth was muted. Retail sales were also soft in April. The core reading showed spending contracted by 0.1% in April after 1.3% growth in March. Of course, economists are not concerned, suggesting the first-quarter retail sales will rise. The winter weather may have wreaked havoc with consumer spending in the retail sector, but it’s now show time; the retailers need to begin to deliver as t ... Read More



Three Ways to Profit from an Exhausted Stock Market



How Play Uneasy Market ProfitWhen I’m looking at the screens each day, I notice there’s some selling capitulation occurring that makes me think back to 2000, when the technology stocks imploded. Now, while I doubt we are seeing a repeat of 14 years ago, you have to wonder about the mad dash to the exits for many of the high-momentum technology stocks along with small-cap stocks. The small-caps are under threat, with the Russell 2000 down nearly eight percent in 2014 so far and close to five percent in April alone. Watch as the index is just above its 200-day moving average (MA).

  Read More



Should You Be Prepared for a Bullish Run in Gold Bullion?



Bullish Run in Gold BullionAfter 12 years, gold bullion’s glorious bull run ended with a thud in 2013, retracing 30% and locking in the biggest annual decline since 1981. Many speculate that gold bullion prices melted in 2013 as investors tried to figure out when the Federal Reserve was going to be cutting its generous $85.0-billion monthly bond purchases. Investors lean toward gold bullion and other precious metals as a hedge against both a weak U.S. dollar and inflation. A tapering of the Federal Reserve’s monetary policy suggests that the U.S. economy is getting stronger. While there was no real sign of sustained ... Read More



Why Investors Should Prepare for a Rebound This Spring



Should Investors Rebalance Their Portfolios for the Spring ThawThe winter storm that recently tore across the northeastern United States will, no doubt, take the blame for the continuing weak economic news and data that have been coming out of Wall Street.  Having been the economic scapegoat since December, there’s no reason to change tactics. But the raft of ongoing disappointing economic news and data suggests there’s more to the nation’s weak economic news than cold weather. After all, it’s not as if the U.S. economy had been red-hot and then suddenly hit a brick wall in December. If there’s one thing t ... Read More



More Economic Indicators Show Next to Nothing Has Changed for U.S. Investors



More Economic Indicators Show Next to Nothing Has ChangedTwo things have been consistent this winter: bad weather and bad economic news. And both just keep on rolling. With spring just around the corner, the weather will clear up; the U.S. economic news, on the other hand, might not be so lucky. Over the course of the last week or so, a raft of weak economic news and earnings has welcomed the markets. For starters, a higher number of Americans filed applications for unemployment benefits for the week ended February 8. Jobless claims climbed by 8,000 to 339,000; the four-week moving average for new claims increased to 33 ... Read More



How to Profit from the S&P 500—Even if Earnings Disappoint



Profit from the S&P 500I was reading an article that suggested investors are underestimating the extent that U.S. corporate profits could grow in 2014. And that the only reason the U.S. economy reported disappointing retail sales and weak jobs numbers and manufacturing data was because of the harsh winter weather. (Source: Shmuel, J., “Are EPS estimates currently too low?” Financial Post, February 18, 2014.) Fortunately, so the story goes, the economy is so red-hot that once the snow thaws, investors will be rewarded with solid quarter-over-quarter corporate earnings growth. This suggests the weather has not j ... Read More



This Tech Sector About to See Explosive Growth?



Tech Sector About to See Explosive GrowthThe 3D-printing sector may be currently in an impasse but trust me folks, when I say the sector will be significant going forward and a buying opportunity as the price of the 3D-printing machines fall. My stock analysis is that 3D printers will become a common sight on the desk of many homes. Recall what happened when the laser printer first debuted in May 1984 with Hewlett-Packard Company’s (NYSE/HPQ) desktop laser printer. The initial cost was staggeringly high at more than $3,000, but now a laser printer sells for less than $100.00. The same thing will happen for ... Read More



As Investors Grow More Skeptical Toward Stocks, Time to Move to Safe Haven ETFs?



Safe Haven ETFsWe see there’s a significant amount of economic news mounting against the argument that key stock indices will go higher this year. We see major companies on the key stock indices reporting corporate earnings that are dismal to say the very least. We see indicators of prosperity suggesting the opposite is likely going to be true for the U.S. economy. Lastly, we also see troubles developing very quickly in the global economy. First on the line are the corporate earnings of companies on the key stock indices—which is hands down one of the main factors that drive these indices higher. We see companies showing signs of stress. Consider G ... Read More



Profit from Share Buybacks with This ETF



Share Buybacks with This ETFIn the fourth quarter of 2012, companies on key stock indices purchased $93.8 billion worth of their own shares back from investors. This represented an increase of 9.6% compared to the same period in the prior year. For the entire year of 2012, companies spent $384.3 billion to buy back their shares. (Source: “S&P 500 buyback activity flat quarter-over-quarter,” FactSet, April 3, 2013, last accessed May 8, 2013.) This year looks to be the same—companies on key stock indices are announcing share buybacks. For example, International Business Machines ... Read More