Daily Gains Letter

income


How to Generate Premium Income in a Stalling Stock Market

By for Daily Gains Letter | Mar 6, 2014

Premium Income in a Stalling Stock MarketThe S&P 500 recently traded at a record-high, just before tensions in the Ukraine erupted and the global stock market declined as fear of an escalation and war intensified.

While the charts continue to show the stock market wanting to move higher after excellent gains in February, I still sense the upside moves will be more difficult to come by compared to what we saw in 2013. Even at this point, the Dow Jones Industrial Average and the S&P 500 are still negative this year.

If the stand-off between the Ukraine and Russia doesn’t escalate, I would expect the stock market to advance higher by year-end. If tensions erupt in the Eastern European region, we would likely see major selling across stocks worldwide; commodities such as gold, oil, and grains would edge higher.

If the stock market fails to find its footing—and especially a fresh catalyst—we could see mixed and volatile trading in the months ahead as the market looks for direction.

And if the stock market fails to get any positive leverage heading into the summer months, we could see some stalling in the stock market.

If the stock market does stall, an investment strategy to consider would be to write and sell some covered call options on your stocks in order to generate some premium income. This would also help to lower the average cost base of your positions, while also setting a selling price you would be willing to sell your stocks at. Of course, your goal would be to generate premium income and not look to sell stock, as I believe the stock market will head … Read More


Investing in These Collectibles a Better Bet Than Wall Street?

By for Daily Gains Letter | Nov 25, 2013

Investing in These CollectiblesNot all investing opportunities are created equal…

Thanks to Antiques Roadshow and American Pickers, everyone thinks investing in collectibles is a great idea. However, the truth is that few actually have anything worth more than the day they were first purchased.

That doesn’t prevent people from trying to guess what the next great cultural commodity is going to be. I remember (briefly) watching a home shopping channel years ago and listening to someone explain why “Beanie Babies” were the next big thing for those interested in investing in collectibles. He couldn’t guarantee they were a slam-dunk investment, but the prices on the secondary market had soared. Take that into consideration as you call in your order.

Interestingly, there is no Beanie Baby segment on any home shopping channel today.

Unlike stocks, there is no discernable way to say why, when, or if a collectible will ever increase in price; they also don’t provide a dividend. Investing in collectibles is as difficult as trying to time the stock market—it’s virtually impossible.

Collectibles can also be difficult to value, as it’s a subjective art. For example, on eBay (NASDAQ/EBAY), you can purchase a rare Princess Diana Beanie Baby bear for either $400,000 or get one from the same edition in similar condition for just $5,000. That’s quite a discrepancy for a really small target audience.

Here’s a hint: when it comes to investing in collectibles, look for the lowest-selling collectible you want, as that’s the bottom basement price no one is willing to pay. I’m not picking on Beanie Babies, I’m just using them as an example.

Investing in collectibles isn’t exactly … Read More


Time for Income-Starved Investors to Reconsider REITs?

By for Daily Gains Letter | Aug 23, 2013

Time for Income-Starved Investors to Reconsider REITsAfter a serious pullback in May, is it time for income-starved investors to reconsider real estate investment trusts (REITs)? Or will America’s favorite sugar daddy, Federal Reserve Chairman Ben Bernanke, tease investors with ongoing threats of tapering?

The North American REIT bull market was stopped dead in its tracks on May 22, after Bernanke hinted the central bank might begin tapering its massive $85.0-billion-per-month government bond-buying program.

By being the major purchaser of U.S. government bonds, the Federal Reserve has been able to keep interest rates artificially low. Tapering its bond-buying program would mean, in theory, that interest rates head higher. In an effort to protect their retirement portfolio, investors are selling stocks they see as being vulnerable to rising interest rates.

REITs are at the top of the list. That’s because REITs are in the business of purchasing property and higher interest rates on the heels of financing translates into lower profitability.

While artificially low interest rates are a godsend to REITs, they’re a nightmare for average Americans looking to generate retirement income on their long-term bonds.

Interestingly, since May and the ensuing market volatility, the Federal Reserve has said that inevitable tapering would not necessarily result in higher interest rates. That’s more good news for REITs—and more bad news for income-dependent investors.

Unfortunately, many REITs have failed to fully recover from the Federal Reserve’s May 22 comments. Those depressed prices have opened up a door of opportunity for savvy investors. That’s because, when prices for REITs (and dividend stocks) fall, yields rise. The volatility means investors can pick up quality REITs at depressed prices with higher returns.

REIT … Read More


Safe Stocks to Shield You from Fed’s Bad Decisions

By for Daily Gains Letter | Jun 28, 2013

 unemployment rateIt was just a week ago that the Federal Reserve, pointing to an improving economy, said it would continue its quantitative easing program—at least until America’s job market improves substantially. We weren’t, however, told what “substantially” looks like.

Many think that means an unemployment rate of 6.5%. And to get there, the U.S. would have to create somewhere in the neighborhood of two million jobs. That’s assuming all things remain equal—but, of course, they never do.

The Federal Reserve also said that, thanks to the economic rebound, it would consider tapering its monthly $85.0-billion purchase of Treasuries and mortgage-backed securities by the end of the year.

On top of that, the Federal Reserve said it could end its quantitative easing policies altogether in 2014.

Federal Reserve Chairman Ben Bernanke’s celebratory remarks may have been a little premature.

The Department of Commerce reported on June 26 that gross domestic product (GDP) in the first quarter of 2013 grew 1.8% over the fourth quarter of 2012. Previously, the Bureau of Economic Analysis (BEA) forecast first-quarter 2013 GDP growth of 2.4%. (Source: “National Income and Product Accounts Gross Domestic Product, 1st quarter 2013 [third estimate]; Corporate Profits, 1st quarter 2013 [revised estimate],” Bureau of Economic Analysis web site, June 26, 2013.)

Aside from home construction and government, the final 2013 first-quarter GDP report from the Commerce Department showed downward revisions. For example, consumer spending—which accounts for almost 70% of U.S. economic activity—increased by just 2.6%, much less than the forecasted 3.4%. That may not sound like much, but it means spending was 23% below forecast.

Granted, the numbers reflect the U.S. economy as … Read More


U.S. Retirement Confidence Way Down as Investors Flock to Products, Services That Reduce Risk

By for Daily Gains Letter | May 29, 2013

U.S. Retirement Confidence Way Down as Investors FlockRetirement confidence seems to follow the trends of the global economy. At least, that’s according to one recent survey that looked at 12,000 workers and retirees in 12 European, North American, and Asian countries, including France, Germany, Hungary, Japan, the Netherlands, Poland, Spain, Sweden, China, the United Kingdom, the United States, and Canada—making this one of the largest studies of its kind.

The study found that 65% of the participants believe future generations will be worse off in retirement than they are today; more than half of the American workers (55%) feel that way, while 80% of the workers from France and Hungary expect future generations to be worse off. The Chinese are the least pessimistic, with roughly one in five participants feeling the same way. Only nine percent of respondents believe future generations will be better off in retirement than those in retirement today.

Thanks to government cutbacks, 63% of employees think their government retirement benefits will be less reliable or helpful; American workers come in near the top at 65%. America’s retirement pessimism continues, with just 12% saying their personal retirement planning is “very well-developed.”

A further 37% of Americans don’t know if they can achieve their desired retirement income. Only 12% are very optimistic that they will have enough money to live on, and only another 12% are very optimistic that they will be able to choose when they retire.

Not surprisingly, you have to have a handle on what it takes to retire to actually be able to plan for a comfortable retirement. The current retirement-related risks have increased on the backs of “financial illiteracy”—with only … Read More


Three Ways to Have a Company Return Its Wealth to You

By for Daily Gains Letter | Apr 9, 2013

090413_DL_whitefoot

When it comes to the stock market, there are three ways a profitable, publicly traded company can reward its investors: 1) pay a dividend; 2) initiate a share buyback plan; or 3) invest it back into the company. All three of these are aimed at building shareholder wealth, though some are more popular than others.

1. Dividends

Investors looking for capital gains and an income stream in today’s economic climate can’t go wrong with fundamentally strong companies with a good history of paying out quarterly or monthly dividends.

In light of low interest rates, many dividend-yielding stocks outperform the historical avenues for investment income. Most banks begrudgingly doll out just 0.5% interest, while 30-year Treasuries come in near a mere three percent.

Investors hoping to maintain a comfortable retirement need to find better income streams—and for many, it’s in high-yield dividend stocks. Consumer goods company Altria Group Inc.’s (NYSE/MO) share price is up almost 200% since the beginning of 2009, and it currently provides an annual dividend of 5.1%. And business equipment provider Pitney Bowes Inc. (NYSE/PBI) provides an annual dividend of 10.1% and is up 35.5% since the beginning of 2013.

Getting quarterly checks from a company for simply being an investor is a great way to generate additional income. But are there any downsides? Cutting or eliminating a dividend can significantly impact a company’s share price. Paying out dividends decreases the amount of money a company has, meaning it may not be able to operate as efficiently if an unforeseen situation arises—like one did in 2008, when the markets crashed. Companies that didn’t have enough cash to operate … Read More


Risk Alert: Business Cycles About to Collide

By for Daily Gains Letter | Apr 9, 2013

090413_DL_clark

It’s time for all stock market investors to re-evaluate their portfolio risk.

If a new bull market happens to develop, it’s easy to jump on the bandwagon. But with so much uncertainty and risk out there—risk that is 100% beyond your control—equity investors need to be safe.

There is always room for speculation with play money, but when it comes to money being used to save for retirement or dividend income being used while in retirement, capital preservation is absolutely key.

Utility stocks immediately come to mind when I think about capital preservation and the stock market. This is a sector that is often used to generate income for those who are in retirement.

Surprisingly, some utility stocks have actually been very good wealth creators in terms of capital appreciation. Like always, which individual companies you own matters. This is why the returns from mutual funds can be so mediocre. Diversification works, but always has a cost.

Looking at utility stocks, trends are important—trends in population growth, migration, or in things like power usage from industrial customers. Just look up a utility stock index and the stock market charts of those companies. You can see which companies are the standout players, and why they are because of migration trends in demand.

Another stock market sector that offers some safety and the opportunity for capital gains and decent dividends is energy. But in the oil and gas business, size counts.

A company like Chevron Corporation (NYSE/CVX) has proven to be a reliable stock market performer and dividend payer. It is an ideal retirement stock. And even with the amazing growth taking … Read More


Two Questions You Need to Ask Yourself to Determine if Your Asset Allocation Is Effective

By for Daily Gains Letter | Mar 22, 2013

220313_DL_zulfiqarInvestment management is considered to be one of the most critical aspects when it comes to investing for the long term. At the end, the goal is to have enough savings to retire comfortably and be stress-free in your golden years. Proper investment management can help individuals achieve their goals while taking adequate risk.

While there are many techniques a person can employ when it comes to investment management, asset allocation is arguably the most discussed one. The myth among investors is that if they keep a certain portion of their portfolio in a specific asset class and hold it, over time, they can produce the optimal return—for example, 50% of their savings in stocks and 50% in bonds.

Asset allocation, at the end of the day, is simply spreading your savings across different asset classes to reduce risk.

It can certainly reduce volatility in an investor’s portfolio and help shield them from major losses; but unfortunately, it can also hinder performance—and over time, it will affect their end goal. Consider this: you have a portfolio consisting of 50% stocks and 50% bonds. Now, if the bond market declines by eight percent and stocks increase by five percent—what’s your portfolio return? The answer: negative three percent.

Fixed asset allocation doesn’t work! There isn’t a number attached when it comes to asset allocation. It depends on an investor’s risk tolerance and their time horizon. Instead of holding a certain percentage of savings in a specific asset, they should focus on constantly balancing their portfolio. Sometimes, one asset class might have higher risk over the others.

In order to check the effectiveness … Read More


Why There’s Life in Real Estate for Retirees

By for Daily Gains Letter | Mar 20, 2013

200313_DL_whitefootIn the aftermath of the housing bubble that ran from 2000–2006, U.S. real estate tanked, plummeting almost 35% percent from its peak levels. If you lived in Florida or Las Vegas, it was even worse.

For retirees looking to supplement their retirement investments, pensions, and Social Security with their real estate holdings, the housing crash was a brutal blow.

Hopefully, times have changed.

After years of holding the economy back, housing has been rebounding on the heels of nearly record-low interest rates, attractive prices, and lower inventory levels. In December 2012, U.S. housing prices rose to their August 2004 level. In January, 2013, sales of new single-family homes climbed to a level not seen for over four years. (Source: “New Residential Sales in January 2013,” U.S. Census Bureau web site, February 26, 2013, last accessed March 19, 2013.)

While the U.S. housing market continues to be one of the few bright spots, thanks to weak underlying economic indicators, the outlook remains uncertain. For a long-term, sustained pickup in housing, the U.S. will have to experience stronger jobs growth, fewer foreclosures, and easier access to credit. So it’s hard to say whether housing is going to move upward, downward, or sideways.

Regardless, the silver lining around the industry means retirees can, for the first time in years, look to their real estate as a legitimate source for additional retirement income. If the increases can be sustained over the long term, retirees could be the ones that benefit the most.

One of the easiest and most obvious ways for retirees to generate additional income is to leverage currently held real estate by … Read More


Top Tax-Deferred Savings Tips for Retirees

By for Daily Gains Letter | Mar 18, 2013

180313_DL_whitefootRetirement isn’t the finish line when it comes to retirement savings; it’s just another stage, and it’s one that retirees need to adjust to. After decades of contributing to tax-deferred retirement savings plans that reduce taxes, you’re now withdrawing from those accounts and paying taxes at the regular rate.

For those on the cusp of retirement, there’s more to making smart financial decisions than just making money. At this stage, there are a number of unique tax-planning opportunities that can help you save money over the long run.

What’s next for your 401(k)? Workers about to retire should do everything they can do increase or max out their contributions to tax-deferred retirement plans, like individual retirement accounts (IRAs), 401(k)s, or 403(b)s. In 2013, you can contribute a maximum of $17,500, or $23,000 if you’re over age 50.

Depending on your tax bracket, every dollar deposited into a 401(k) could save you anywhere between $0.10 and $0.40 in income taxes for the year in which the contributions are made. For example, if you contribute $5,000 to a 401(k) the year before you retire, it would be taxed at 35%. Withdrawn in retirement, the funds are taxed at 15%, meaning the 20% difference in tax rates translates into a savings of $1,000.

Should You Delay Claiming Social Security?

For those already retired, you can consider delaying your Social Security checks. One benefit of waiting to collect Social Security until you’re older is that your checks will be larger. Even though you can start collecting Social Security any time between 62 and 70 years old, for every year you wait, your check will … Read More


Retirees Tired of “Slow and Steady” Income Need to Check This Easy Strategy Out

By for Daily Gains Letter | Mar 15, 2013

150313_DL_whitefootRetirement planning doesn’t end once you retire. It just moves into a different phase. One of the safest paths to building wealth for those already in retirement is through big blue-chip stocks that provide consistent quarterly dividends.

Slow and steady isn’t good enough for some investors, though. Some retirees need to build wealth more quickly. A recent report shows that Americans’ confidence in their ability to retire comfortably is at historic lows.

Just 14% of Americans say they are “very confident” they will have enough money to live comfortably when they retire, while 23% say they are “not at all” confident. Almost 60% of middle-class retirees will likely run out of money if they maintain their pre-retirement lifestyle and don’t cut spending by at least 24%. (Source: Helman, R., et al., “The 2012 Retirement Confidence Survey: Job Insecurity, Debt Weigh on Retirement Confidence, Savings,” Employee Benefit Research Institute web site, March 2012, last accessed March 14, 2013.)

In fact, the fear of outliving retirement income is actually greater than the fear of dying. An astounding 61% of baby boomers fear outliving their money in retirement more than death. (Source: “Outliving Your Money Feared More Than Death: Allianz Life Study Reveals Boomers Guessing at Retirement Needs,” Allianz Life Insurance Company of North America web site, June 17, 2010, last accessed March 14, 2013.)

Those already enjoying their golden years, unhappy with the measly returns that bonds, Treasuries, certificates of deposit (CDs), and banks are providing and impatient with the small gains made on blue-chip stocks, may want to consider one of the more lucrative areas for investing—small-cap dividend stocks.

When it … Read More


Dow Jones Industrial Average at Record High; Defensive Plays for the Bottom 99% of Americans Who Missed the Bull Market

By for Daily Gains Letter | Mar 11, 2013

110313_DL_whitefootThe Dow Jones Industrial Average hit an all-time high of more than 14,400 last Friday, soaring past the 2007 pre-recession record of 14,164. Thanks to the Wall Street hoopla, most Americans probably believe the economic recovery is firmly entrenched and the good times will keep rolling.

Those on Wall Street are certainly cheering, as are those privileged few who were already rich before the markets took middle-class American down five years ago. Unfortunately, the rest of the country doesn’t have reason to celebrate.

If you’re the Federal Reserve, this disconnect doesn’t make sense. After all, higher stock prices boost consumer wealth and confidence, which translates into increased spending.

Over the last five years, we’ve learned that unlike water, wealth trickles upward.

During the first two years of the Great Recession (2007–2009), average real income per family plummeted by more than 17%, the largest two-year drop since the Great Depression. (Source: Saez, E., “Striking it Richer: The Evolution of Top Incomes in the United States,” Berkeley University of California web site, January 23, 2013.)

But surely things got better for the average American after the so-called “economic recovery” kicked in? Not quite. Between 2009 and 2011, the top one percent of households by income reeled in 121% of all gains. How can anyone grab more than 100% of anything? It’s easy when you factor in inflation. The top one percent became 11.2% richer, while the bottom 99% became 0.4% poorer.

In 2010, the first full year of the economic recovery, the top one percent claimed 93% of all income gains.

The top one percent didn’t just do better than the bottom … Read More


Why Bonds and Treasuries Are the Worst Places to Park Your Retirement Fund

By for Daily Gains Letter | Mar 8, 2013

DL_Mar_8_2013_JohnWith the bull market celebrating its fifth anniversary and the Dow Jones Industrial Average reaching record levels (and erasing losses from the financial crisis), it’s not a surprise to see some investors questioning whether or not they’ve missed the boat.

For those who think they missed the recovery, it’s probably a little unnerving to consider the present market a bull market. While the markets may be performing well, the average American isn’t. Unemployment remains high, as does household debt. Gross domestic product (GDP) is essentially flat. And housing remains fragile.

Those that think they have missed out or don’t want to risk jumping back in at this late stage will have to be content with what they’re getting from the banks (0.5%) or with bonds (3.1%). Neither one is worth celebrating.

How did we get here?

In an effort to stem the economic slide of the U.S. housing collapse that first surfaced in 2005, the Federal Reserve unveiled three different rounds of quantitative easing (QE). Since 2008, the Federal Reserve has printed off trillions of dollars, and it continues to add to that number at a staggering rate each month.

But America isn’t alone. Central banks from around the world are flooding the markets with QE.

The extra dollars pumped into the economy are supposed to spur growth. But they also have the reverse effect, shrinking the buying power of each dollar, which is the driving force of inflation. While inflation is good for businesses and Wall Street, it’s bad news for interest rates and everyday Americans and their retirement funds.

If investors aren’t willing to take some of their … Read More


A Super-Stock You Can Bank On?

By for Daily Gains Letter | Mar 1, 2013

010313_DL_clarkThe best companies have a tendency to remain just that—the best. But it is true that a business cycle exists, and this is the case for individual corporations economy-wide. As a stock market investor, many corporations have proven historically to be attractive buys when their share prices retreat. And that’s the key—getting the business cycle correct and investing in those corporations that are market leaders, even during recessions.

If you are saving for retirement or are retired and living on a fixed income, dividend income from the stock market likely plays a role in your life. Because interest rates are so artificially low right now, countless retirees have to have exposure to the stock market, even if they would prefer not to. The fact of the matter is that you can’t beat the rate of inflation with today’s interest rates. Nowadays, we have to get dividend income from corporations, which is a riskier investment strategy.

One of many blue chip corporations that are doing very well in this economy is 3M Company (NYSE/MMM). How do you describe this diversified company that makes tape, coatings, medical supplies, cleaning products, and electronic equipment? Well, it’s a company with a lot of interests, and in spite of what you hear in the news, business is pretty darn good. The company’s long-term stock chart is featured below:

dl_0301_image001Chart courtesy of www.StockCharts.com

Even among large-cap, blue chip corporations, 3M’s long-term track record on the stock market is outstanding. The stock has proven that it is worth buying when it’s down, which according to its chart, isn’t usually for long.

For any stock market portfolio, consistency … Read More


Utility’s Acquisition Strategy Paves Way for Increased Profitability

By for Daily Gains Letter | Mar 1, 2013

010313_DL_whitefootUtility stocks are companies that deliver essential services, such as gas, water, and electricity. These stocks tend to be more stable, as consumers need water, gas, and electricity, regardless of the direction the economy is headed.

Algonquin Power & Utilities Corp. (TSX/AQN) is a growing renewable-energy company that owns and operates a diversified portfolio of $3.0 billion of regulated and non-regulated utilities in North America. Algonquin Power & Utilities (APUC) actively invests in hydroelectric, wind, and solar power facilities, and sustainable utility distribution businesses (water, electricity, and natural gas) through its two operating subsidiaries: Algonquin Power Company (APCo) and Liberty Utilities.

APCo owns direct and indirect equity interests in 20 hydroelectric generating facilities, five wind-energy facilities, and seven thermal-energy facilities, with a total average power purchase agreement life of 13 years.

Liberty Utilities provides water, electricity, and gas utility services to communities across the United States, with operations in Arizona, California, Illinois, Iowa, Missouri, New Hampshire, and Texas.

APUC has a market cap of $1.5 billion, a forward price-to-earnings (P/E) ratio of 27.3, and $16.4 million in cash. The company also provides a 3.7% annual dividend.

The company announced that third-quarter revenues increased 50% year-over-year to $99.0 million. The company reported a third-quarter net loss of $200,000, or breakeven per share, compared to a net income of $19.6 million, or $0.16 per share, for the same period in 2011. (Source: “Algonquin Power & Utilities Corp. Announces Third Quarter 2012 Financial Results,” Algonquin Power & Utilities Corp. web site, November 14, 2012, last accessed February 28, 2013.)

For the nine months ended September 30, 2012, APUC reported total revenues of $229 … Read More


No Dividends Here, but Smartphone Companies Are Where the Future Is

By for Daily Gains Letter | Mar 1, 2013

010313_DL_zulfiqarSmartphones and personal gadgets have gained some extra attention these days. With that said, many investors only focus on the makers of these phones, and not on the other things associated with them—such as accessories.

A report by ABI Research, a market intelligence firm, indicated that the market for mobile device accessories will grow at a 10.5% compounded annual growth rate from 2012 through 2017, due to the growth in smartphone sales. (Source: “Aftermarket Mobile Accessory Revenues to Reach $62 Billion by 2017 as Market Value Moves to Smart Accessories,” ABI Research web site, November 14, 2012, last accessed February 28, 2013.) The firm expects revenues for mobile device accessories to reach $62.0 billion by 2017.

The report also indicated that products like protective cases and stereo-wired headsets are predicted to show the highest growth rates of 18.2% and 15.6%, respectively. ABI Research tracks 13 accessory product segments.

As I have been saying in these pages, when there is a gold rush, a person selling the shovel can make the most money.

In that case, look at companies like ZAGG Inc. (NASDAQ/ZAGG). Please note: this is not a specific buy recommendation; rather the following information is meant to serve as an example of the type of opportunity you should look for.

ZAGG designs, manufactures, and distributes protective coverings and other products for electronic devices. Its flagship product, “invisibleSHIELD,” is a thin, scratch-resistant covering that’s custom-cut to fit invisibly on the screens and displays of Apple “iPhones” and other smartphones, laptops, GPS devices, and so on. The company also offers additional accessories, including headphones for “iPods” and MP3 players, and decorative … Read More


Transit Company Could Drive Portfolio Growth

By for Daily Gains Letter | Feb 28, 2013

280213_DL_whitefootDuring the Great Depression, America built the Hoover Dam and the Golden Gate Bridge. After World War II, it connected Americans across the country by building a system of highways.

In an effort to bolster economic growth and create jobs during the Great Recession, President Obama earmarked $74.0 billion for the Department of Transportation in the fiscal 2013 budget, a two percent increase above 2012. (Source: “Budget Highlights: Fiscal Year 2013,” U.S. Department of Transportation web site, January 24, 2012, last accessed February 27, 2013.)

The Department of Transportation budget set aside $580 million for fiscal 2013 to continue improving motor carrier safety. This represents the first year of a six-year, $4.8-billion proposal. This increase will improve the safety and security of commercial motor vehicles and buses.

That’s good news for cash-strapped municipalities. It’s great news for transit equipment makers, many of which are already reporting improving market conditions.

New Flyer Industries, Inc. (OTC/NFYEF) is the leading manufacturer of heavy-duty transit buses in the United States and Canada with over one-third of the market share. Twenty of the 25 largest transit systems in North America are New Flyer customers. (Source: “Best Bus Value and Support for Life,” New Flyer Industries, Inc. web site, last accessed February 27, 2013.)

The company offers the broadest product line in the industry, including drive systems powered by clean diesel, trolleys powered by liquid or compressed natural gas or electricity, and energy-efficient diesel-electric hybrid vehicles.

New Flyer has delivered over 30,000 heavy-duty buses in the United States and Canada and has manufacturing facilities in St. Cloud, Minnesota; Crookston, Minnesota; and Winnipeg, Manitoba, Canada. The company … Read More


Look to Infrastructure for Portfolio Protection

By for Daily Gains Letter | Feb 27, 2013

270213_DL_whitefootWith the global economy in disarray, it probably doesn’t sound like the best time to add an infrastructure company to your investment portfolio. But it is.

In spite of a weak U.S economy, record debt, the eurozone slipping back into recession, and a weak outlook, pressure continues to mount for countries around the world to build and upgrade their infrastructure (i.e., hospitals, toll roads, airports and ports; utilities and communications infrastructure) in an effort to help stimulate the economy.

And the timing couldn’t be better. In spite of the dramatically changing environment, the global infrastructure has not kept pace. In fact, the world faces an infrastructure deficit estimated at $20.0 trillion over the next two decades, with Brazil, China, India, and the U.S. leading the way. The U.S. infrastructure deficit totals $40.0 billion a year in the roads sector alone. (Source: Thompson, C., et al., “The problem is more than money: Global Infrastructure Crisis,” Deloitte web site, last accessed February 26, 2013.)

Ultimately, the development of a strong infrastructure is essential to manage growth and drive productivity. To achieve this, cash-strapped governments around the world have turned to the private sector for help.

Aecon Group Inc. (TSX/ARE) provides international construction and infrastructure services to customers in the private and public sectors worldwide. The company operates in three of the most lucrative sectors: transportation, energy, and natural resources. The company’s infrastructure branch constructs public and private infrastructure, including roads and highways, hydroelectric power projects, office buildings, airports, marine facilities, and transit systems. The company’s industrial segment engages in the construction of alternative and fossil fuel power plants; in-plant construction at nuclear … Read More


Semiconductor Play for Portfolio Growth, Diversification, and Income

By for Daily Gains Letter | Feb 27, 2013

270213_DL_zulfiqarWhen you are building a portfolio and saving for retirement, a financial planner usually suggests that you diversify as much as you can—to protect your capital and reduce your risk. The last thing investors want when they are saving for retirement is to lose what they have.

When you diversify, your risk decreases. Even if you are investing in the same industry, investing in different companies reduces your risk significantly.

One way to do this is to look for companies that are operating in multiple regions and industries. Why? This is simple: if one country is witnessing economic slowdown, the other country might be performing well. The same goes for industries—some industries might excel at times of economic growth, and others might suffer.

STMicroelectronics N.V. (NYSE/STM) is a perfect example of this kind of company—well diversified in different regions around the world and in multiple industries. This company is based in Switzerland, and it has research and development centers in 10 countries, 12 manufacturing sites, and global exposure with sales offices around the world. (Source: STMicroelectronics N.V. web site, last accessed February 25, 2013.)

STMicroelectronics N.V. (STM) is one of the largest semiconductor companies and has products for different industries. The company is a leader in serving integrated device manufacturers (IDM) with products, including microcontrollers, smartcard products, standard commodity components, micro-electro-mechanical systems and advanced analog products, application-specific integrated circuits, and application-specific standard products for analog, digital, and mixed-signal applications. STM also offers subsystems and modules for the telecommunications, automotive, and industrial markets, comprising mobile phone accessories, battery chargers, ISDN power supplies, and in-vehicle equipment for electronic toll payment. (Source: Yahoo! … Read More