Daily Gains Letter

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1Q15 Earnings Season: Early Outlook and the Top Investment Opportunity

By for Daily Gains Letter | Mar 25, 2015

1Q15 Earnings Season Early OutlookWhile many seem to be comforted by continued stock market highs, bad news could be brewing for the first-quarter 2015 earnings season.

1Q15 Earnings Season to Affect the Markets?

The stock market continues to see record after record. We had the NASDAQ breaking back above the psychological 5,000 level last Friday; now it’s within distance of its all-time high, but we are heading into the key first-quarter earnings season of 2015.

Small-cap stocks, which had been the doormat in 2014, have regained their luster with a 2.4% advance in March, now sitting at a new record-high.

Everything appears to be firing on all cylinders for the long side, but let me remind you that there are still issues with the weak oil prices, a stalling Chinese economy, fragile growth in Europe and the eurozone, and domestically, a strengthening jobs market but a red flag on corporate growth.

The short-term direction of stocks will again shift its focus in a few weeks to the first-quarter earnings season, and it’s not looking good.

Early 1Q15 Earnings Outlook

The earnings outlook is especially a concern for the large multinationals that derive a big portion of their revenues from outside the U.S., given the massive run-up on the charts for the dollar against the euro and other foreign currencies. The result is higher-priced American-made goods, which will hurt exports and demand.

If the stock market is looking to the reporting season for reasons to move higher, I fully expect some disappointment. The S&P 500 is trading at around 17-times (X) its forward earnings. This isn’t a cheap valuation; in fact, it’s above the five- … Read More


Top Three Sectors to Profit from Weak Oil Prices

By for Daily Gains Letter | Mar 23, 2015

Oil PricesOil prices are on the downside, and we could see West Texas Intermediate (WTI) oil decline to the $40.00 level and below.

A few years ago, the mere mention of oil in the $30.00 level would have been viewed as silly, as many believed $100.00-a-barrel oil prices would be the norm.

But here’s the problem: the advanced fracking technique to squeeze out oil from the cracks in the rock led to a revolution in oil production, which inevitably is hurting oil prices. The good news: it’s creating an investment opportunity for aggressive investors.

Pressures Pushing Oil Prices Downward

Now, we have massive domestic oil production from the shale oil in Montana and North Dakota that has helped to produce a flood of oil inventory. So much so that the ability to store the excessive oil will likely not be possible, which means continued cuts in rigs and production.

So far, more than 800 rigs have been shut down. Based on the growing stockpiles, I fully expect hundreds of additional rigs to be axed. We could see thousands if oil prices stay at the $40.00 level.

The Organization of Petroleum Exporting Countries (OPEC) is continuing to maintain its production quota, trying to force U.S. oil producers to continue to cut rigs. This strategy appears to be working, but not at the faster rate the oil cartel wants to see.

At this juncture, we could see oil prices at the $30.00 range or even lower if the supply/demand imbalance continues and the global economy also continues to stall.

Investment Opportunities to Profit from Weak Oil Prices

A move of oil prices down … Read More


Europe the Best Short-Term Investment Opportunity Outside the U.S.?

By for Daily Gains Letter | Mar 18, 2015

Short-Term Investment OpportunityRegular readers of mine will know that I used to be bullish on China; I thought the Chinese economy offered a good contrarian investment opportunity. Now, I’m turning my sights to the eurozone for the top potential investment opportunity outside the U.S.

Here’s why…

Chinese Economy in 2015 Losing Steam

You don’t have to be behind the Great Wall of China to realize there are deeper issues brewing in the country of 1.3 billion people. Since assuming the role of the second-largest economy in the world, China’s economy has been caught in a downdraft, with weaker gross domestic product (GDP) growth and broad stalling across the board. There must be something about being number two. Prior to China, Japan held onto that position in 2010 and look what happened to its economy. Germany was third, but has been wallowing in the eurozone, as it spent its energy trying to save Greece and its poorer cousins in the PIIGS nations (Portugal, Italy, Ireland, Greece, and Spain).

As many of you know, I have long been a bull on China, but even my sentiment has been eroding. I expect my bullishness to continue to decline, too, at least for the foreseeable future, until the country can turn things around.

A few weeks ago, the Chinese government cut its GDP growth outlook for the country to seven percent, down from 7.5% in 2014. Now the real number is likely below seven percent, based on what we have been seeing in the Chinese economy. The two-month period of January to February pointed to more evidence of the slowing in China, with weaker-than-expected results in … Read More


Silver Spring Smart Grid Stock an Investment Opportunity to Watch?

By for Daily Gains Letter | Mar 2, 2015

Silver Spring Smart Grid StockOver the past few years, we have witnessed fewer loss of power situations on the electricity power grid. A big reason is that hydro operators are working proactively in monitoring the use of electricity on the residential and commercial power grids.

The adoption of devices at residences have helped hydro companies deal with the demands of a power grid and, in the process, lessen the chances of a grid meltdown.

Silver Spring: Smart Grid Hydro Developments an Attractive Investment?

A small-cap contrarian stock that piques my interest as a potential investment opportunity is Silver Spring Networks, Inc. (NASDAQ/SSNI), which has a share price of $9.93 and a market cap of $485 million. The stock has been a major underachiever, but it does offer a good example of a potential aggressive investment opportunity. Silver Spring debuted at $17.00 in March 2013 and traded at $33.00 in August 2013, prior to sliding to the current levels. Well off of its 52-week high of $18.40, the stock suggests a potential investment opportunity on price weakness.

Silver Spring Networks Chart

Chart courtesy of www.StockCharts.com

At the heart of the company’s business is its Internet-based “IPv6” networking platform and solutions, which allow hydro companies to monitor energy use at homes and businesses, thereby creating a “smart grid.” The company has about 23 million installed devices operating in the United States, Canada, Australia, New Zealand, South America, Asia, and Europe.

An interesting project in the works by the company is its “Streetlight Vision” solution to network streetlights. The solution allows a hydro operator to regulate the brightness of streetlights, as well as when the lights come on. The company’s venture … Read More


EZCORP and Green Dot to Profit from America’s Coming Reckoning?

By for Daily Gains Letter | Feb 25, 2015

EZCORP There’s a financial reckoning coming, folks. The easy money pushed through the financial system and economy by the Federal Reserve over the past several years may have given us this six-year bull stock market, but it has also allowed personal debt loads to amass. Heck, even the government has accumulated in excess of $18.0 trillion in debt. But there’s an investment opportunity that could emerge from this.

Investment Opportunity Coming as Interest Rates Rise?

For now, with interest rates near zero, everything is fine. But rates will likely begin to move higher by as early as halfway through this year. With higher rates come a heavier debt burden and financing costs, which will eat the disposable income consumers would otherwise use for spending.

Bankrate.com released a survey that pointed to the growing build-up of debt by Americans. In a survey of 1,000 adults, it was found that 37% have credit card debt that is equal to or greater than their emergency savings. This doesn’t even include other debts, such as mortgages or loans.

What this means is that we could see a financial collapse as interest rates rise. There are already 48 million Americans using food stamps, and this may increase. But while the situation could surely worsen, there will be an investment opportunity. To play this scenario, look for companies that can benefit from a declining middle class and those struggling with their finances.

How to Profit from Rising Interest Rates and Debt: Two Stocks to Watch

A good example of the type of stock to watch during this potential investment opportunity is EZCORP, Inc. (NASDAQ/EZPW), which has a … Read More


Cyber Defense Stocks a Boon for Investors in 2015?

By for Daily Gains Letter | Feb 13, 2015

Cyber Security Investment OpportunityThe growth of the Internet has been one of the top advancements in history. But with this good news comes the darker side, namely cyber attacks that cost billions of dollars in damages along with non-monetary impacts. Millions of Americans have gotten their personal data stolen over the past few years, and it will likely only worsen. There’s also the threat of cyber attacks on key government and intellectual assets.

But with the threat also comes a potential investment opportunity in cyber defense.

President Obama just requested another $14.0 billion to improve the government’s safeguards. Could you imagine foreign threats hacking into our nuclear installations and military? The threat is real.

Think about what happened to Sony Corporation (NYSE/SNE), when its database was broken into, costing the company about $100 million. There were also the major breaches to The Home Depot, Inc. (NYSE/HD) and Target Corporation (NYSE/TGT). And just last week, the database at Anthem, Inc. (NYSE/ANTM), the country’s second-largest insurer, was hacked, impacting its 80 million clients.

Cyber Security Stocks a Boon to Investors in 2015?

Cyber security companies are attracting focus as an investment opportunity. The catalyst that will drive up the share price of these stocks will be security attacks that continue to plague companies and governments around the world and cause excessive monetary damage.

In the mid-cap area, an investment opportunity to look at is FireEye, Inc. (NASDAQ/FEYE), which was just hired by Anthem to help protect against further attacks. The company has a current share price of around $39.00.

FireEye has been a favorite on Wall Street following its debut in September 2013. The stock … Read More


Greece and Eurozone to Fall Into Economic Turmoil? How to Profit

By for Daily Gains Letter | Feb 11, 2015

Greece and Eurozone Fall In Economic TurmoilThere is yet another Greek tragedy playing out across the Atlantic, where legendary poets, mathematicians, scientists, and thinkers once roamed. Fast-forward several thousand years and the country once known for its proud history is cracking at its foundation, burdened by tens of billions in debt and fiscal chaos. (There is a way investors can profit from Greece’s potential demise, but more on that later…)

Syriza Party to Negatively Change Economic Outlook in Eurozone?

Making the situation even more uncertain for this poor cousin in the 19-country eurozone is the recent transformation in power with the left-wing Syriza party, under Prime Minister Alexis Tsipras, assuming control. The problem for the stability of the eurozone is that Tsipras’ party won on a platform to revise the country’s previous bailout requirements.

Greece wants to alter the austerity demands set by the previous government and lenders. Of course, the eurozone is refusing to do so and expects Greece to honor its original deal.

One of the revisions Greece wants is a cut in the country’s budget surplus to 1.5% of gross domestic product (GDP), rather than the set three percent. Simply put, Greece wants to spend more, which would impact the debt obligations to the eurozone.

Things like bringing back pensions, increasing wages, and other spending is clearly not what the eurozone wants Greece to do. The eurozone realizes that a steady return to lowering spending and debt in Greece is the way to reform and potentially strengthen the region.

Greece faces a big debt repayment this summer and all signs point to a refusal to play. This Greek drama could get messier, with … Read More


Declining Commodity Prices Ahead with Weak Global Economy

By for Daily Gains Letter | Jan 21, 2015

Profit from Weak Commodity PricesOil may be holding above $40.00 per barrel, but investors shouldn’t get too comfortable. The chart foreshadows oil prices could falter and maybe even drop below $40.00.

It’s true that speculation has influenced the direction of oil to some degree, but much of the negative sentiment has to do with a declining global economy that shows some despair. And while gross domestic product (GDP) growth in the U.S. is pretty decent, what we are witnessing in the global economy cannot be saved by what is happening domestically. That suggests weaker oil prices ahead—along with weaker commodity prices overall.

How Stalling in Global Economy, China Will Affect Commodities

The World Bank just cut its outlook for the global economy and the eurozone for this year. The reality is it could get much worse.

What investors have to understand is that the stalling in the global economy will impact not only oil demand and prices, but also other commodities that move in conjunction with the direction of the global economy.

Copper is declining to dangerous support levels not seen since the global economy was pulling out of its recession in 2009. Copper is dependent on GDP growth, which is at a crossroads.

Yet all eyes will be focused on China as the country gets set to deliver its fourth-quarter GDP. Based on what we are seeing in the country, the number could be ugly.

Of course, what we will likely see is a somewhat massaged version of the true GDP reading from Beijing. The government controls the flow of information it wants the world to see, so a steady decline is preferred … Read More


How to Play Weakness in Oil and Russian Stocks into 2015

By for Daily Gains Letter | Dec 22, 2014

Trading on Weak Oil and Russian Stocks for a Holiday ProfitWe are three days away from Christmas and just over a week from the New Year. This is the perfect time to look over your portfolio and holdings in the stock market.

To get set for trading in the stock market in 2015, take some winners if you haven’t already done so and dump some losers. Then consider what is occurring in the stock market and global economy (especially oil and Russian stocks) in relation to your economic outlook for the New Year.

Stocks were trading weak last Tuesday, with both the S&P 500 and DOW below their respective 50-day moving averages (MAs). We got an early Christmas present after the stock market surged on Wednesday and Thursday.

Now is a good time to consider taking this opportunity to realize some profits, as there are still uncertainties regarding oil prices and the tense economic and political situation in Russia that will surely affect stocks in the new year. On the plus side for aggressive traders, there’s actually a lot of money to be made in the stock market from the oil meltdown and the turmoil in Russia.

Russian President Vladimir Putin appears to be messing with the global economy after raising Russia’s interest rates to 17.0%, apparently in an attempt to combat the plummeting value of the ruble against the greenback and avert a mass exodus out of the German currency.

The end result has been a massive sell-off in Russian stocks listed on the MICEX and American depositary receipts (ADRs) on U.S. stock exchanges. The majority of Russian stocks are now trading as much as 70% lower from a … Read More


Rounding Out 2014: What to Look For and How to Profit

By for Daily Gains Letter | Dec 3, 2014

Investors Should Look for Moving into 2015As we enter the final month of 2014, it’s coming close to the time that you, as an investor, need to start to round out the year and take account of what to look for in the remaining weeks and how you can potentially turn a profit.

The stock market bulls continue to be in full control as we move into the final month of the year. Only the small-cap stocks are threatening to finish the year in the red should a “Santa Claus” rally fail to emerge over the next few weeks.

With QE3 gone and higher interest rates looming on the horizon in 2015, the stock market is looking for direction from retail sales during the next few weeks and the jobs reading this coming Friday.

While major retailers, such as Wal-Mart Stores Inc. (NYSE/WMT) and Target Corporation (NYSE/TGT), offered some positive metrics on Black Friday, the National Retail Federation (NRF) was not as positive. It suggested retail spending fell 11% on the weekend due to low store visits. While it’s not clear how valid these estimates are, the NRF also predicted strong sales in November and December.

Without help from the consumer, the stock market could pause and be vulnerable to downside moves.

What gives me some optimism, however, is the continued growth in the jobs numbers; the economy has managed to generate more than 200,000 new jobs monthly for the majority of 2014. On Friday, when the U.S. Department of Labor reports, consensus is calling for the creation of 225,000 new jobs, versus 214,000 in October. Yet what’s important is that the unemployment rate is expected … Read More


Two Small-Cap Plays for the Real Estate Rebound

By for Daily Gains Letter | Nov 21, 2014

Two Stock Picks for a Strong Housing MarketFor those who believe the housing market is set for a downfall after running higher for five years, you may want to rethink that.

The reality is that the housing market is faring quite well right now, boosted by decent jobs growth—more than 200,000 monthly for the majority of 2014—and an unemployment rate at 5.8%.

The fact that the financing costs for the housing market remain historically low translates into what has developed into a healthy demand for new home builds and resale.

In the housing market, the news continues to be good. The key housing starts metric came in at an annualized 1.009 million in October. This was slightly below estimates, but nonetheless a good number. Encouraging was the building permits reading at an annualized 1.080 million units, representing the highest in more than six years. This is a good indication that the housing market is strong.

Other than the homebuilders, we are seeing excellent results and investment potential in the home and commercial building supplies companies.

The “Best of Breed” in this area, The Home Depot, Inc. (NYSE/HD) delivered good results, while rival Lowes Companies, Inc. (NYSE/LOW) beat by a penny and raised its FY15 earnings-per-share (EPS) and revenue guidance to above the consensus. The positive outlook gives investors confidence to expect growth in the housing market going forward, as long as interest rates don’t rise too quickly.

Now you can add companies like the Home Depot and Lowe’s to a longer-term buy-and-hold portfolio, but you may also want to consider taking some money and looking to play the small-cap end of the housing market…. Read More

Investment Opportunity in


Aging Chinese Population Creating Investment Opportunity in Healthcare

By for Daily Gains Letter | Nov 14, 2014

Investment Opportunity in HealthcareChina is dealing with an aging population. By 2030, the number of Chinese citizens 65 years or older is estimated to come in at a whopping 240 million, or about 18% of the current population. (Source: “China Population 2014,” World Population Review web site, October 19, 2014.)

The rapid growth in this elderly demographic will clearly present issues for China’s health administrators and will, in the process, place a heavy burden on the country’s healthcare system.

Some estimate spending on the country’s healthcare sector will accelerate from about $357 billion in 2011 to a whopping $1.0 trillion by 2020. (Source: Le Deu, F., et al., “Health care in China: Entering ‘uncharted waters,’” McKinsey & Company web site, November 2012.) While the amount is staggering for China, the spending is still well below the $3.0 trillion or so spent on the U.S. healthcare system.

And we are not even looking at 2030, when some 240 million seniors will emerge.

The sheer growth of the Chinese healthcare system means a vast investment opportunity for companies and investors alike, both at this time and as we move forward.

U.S. healthcare blue-chip heavyweight Johnson & Johnson (NYSE/JNJ) has known about the superlative growth prospects in China for nearly three decades. Johnson & Johnson expanded into China about 28 years ago and has since become a major player in the country.

Operating through Johnson & Johnson China, the company is an excellent way to play the demand for healthcare as the country’s expenditure rises.

Johnson & Johnson Chart

Chart courtesy of www.StockCharts.com

Alternatively, for a domestic healthcare play on China, investors may want to take a look at a … Read More


Two Healthcare Stocks to Benefit from Growing Obesity Concerns

By for Daily Gains Letter | Nov 10, 2014

Benefit from Growing Obesity ConcernsIt’s headline news: America is getting bigger around the waistline and that means that there’s a greater potential for higher healthcare issues down the road—which isn’t a good sign for a healthcare system that is already struggling. (Maybe the government should offer monetary incentives, such as tax credits, for those who join gyms or pursue other healthy alternatives.)

Even though America is struggling with obesity, Americans realize the issues and consequencesthat go along with obesity and an unhealthy lifestyle.

And this is now happening on a worldwide scale. China, for instance, is beginning to see obesity issues surface and rates climb; more alarming is the fact that obesity is occurring withinChina’s youth demographic. While I’m not blaming the problems on the emergence of fast foods in China, you can’t ignore the fact that China currently has thousands of fast food outlets, such as McDonalds Corporation (NYSE/MCD) and the extremely popular Kentucky Fried Chicken (KFC),owned by YUM! Brands, Inc. (NYSE/YUM).

The World Health Organization (WHO) estimates there are more than 500 million people worldwide who are considered obese. (If you count those who are classified as “overweight,” that number skyrockets.)And the numbers in the U.S. are staggering.

Perhaps it’s the rush to have dinner ready and on the table that calls for the need for fast foods, or maybe it’s simply that it’s more convenient. Whatever the reason, obesity is a national and global issue.

But what does this have to do with you, the investor? Well, there may be an investment opportunity or two in it for you.

A small-cap investment opportunity in the weight control area that is worth … Read More


Six Dividend-Paying Blue Chips Selling at a Discount

By for Daily Gains Letter | Nov 3, 2014

Six Dividend-Paying Blue Chips Selling at a DiscountOne of the key tenets to success in the stock market, as I have learned from more than 20 years of trading, is the need to make sure you have a system in place to actively monitor your outstanding positions. Any major changes to the underlying fundamentals are critical.

Unless you invest in mutual funds or are happy with a buy-and-hold strategy, ignoring your positions is not prudent and will likely result in damage to your portfolio—and maybe even your quality of life.

In early October, when the Russell 2000 and the NASDAQ were down 14% and 100%, respectively, the thing to do was not to rush to the exits and liquidate everything. Making rash decisions at a time when stocks are selling off is dangerous. You could have sold some positions while waiting to see if the stock market could rally, which was the case.

For the majority of investors, you don’t need to be constantly staring at the screen, scanning every chart. What you need to do is be on the alert for any major changes in the sector, a company rival, or the company itself. Failure to recognize changes and red flags could result in major losses.

The risk for small-cap stocks is more intensified, as displayed by the Russell 2000 weeks earlier. Since then, the bounce has been good, with the index performing at its best in October. However, despite the rally in small-cap stocks, I would continue to be careful.

If you are in it for the longer-term, blue chips make the most sense, especially for the more conservative investors who look for steady long-term … Read More


Three Plays to Benefit When OPEC Cuts Oil Production

By for Daily Gains Letter | Oct 27, 2014

How to Profit from Low, Low Oil PricesOil prices are struggling to hold above $80.00 a barrel for West Texas Intermediate (WTI) crude. Even the more widely traded Brent oil prices are hovering around the $80.00 level.

Excess supply—especially from the fracking for oil in the United States and the gush of oil that will come from the tar sands in Canada—is helping to drive oil prices lower. Then add in the slowing in Europe and China, and you have concerns on the demand side.

In Economics 101, when demand declines and supply rises, a downward pressure on prices surfaces and that is exactly what is happening to oil prices.

The oil cartel, the Organization of the Petroleum Exporting Countries (OPEC), from the Middle East has said it will not cut its oil production given the decline in oil prices. You have to wonder how valid this is, though, especially when oil prices fall to below $80.00 a barrel.

The reality is that oil prices will need to be artificially pushed higher by cutting production, as many countries in the Middle East and elsewhere require higher oil prices to break even. So it’s likely OPEC won’t have much of a choice.

Moreover, an escalation of the conflict in Syria and Iraq could also offer oil prices some support.

And oil will move higher on evidence of a recovery in the global economy.

If you believe this premise, then it’s time to look at some of the many downtrodden oil plays that have been sold off on the declining oil prices.

On the small-cap driller side, take a look at battered-down Parker Drilling Company (NYSE/PKD) out of Houston, … Read More


Fear of Ebola Now Creating Weakness in U.S. Stocks?

By for Daily Gains Letter | Oct 22, 2014

Ebola Scare Is Affecting U.S. StocksThe fear of Ebola has caused an increase in pressure towards the U.S. stock markets, particularly in the travel sector and aviation stocks. The concern is real, and if it is allowed to grow in the United States, Asia, or Europe, we could see a significant decline in travel demand that could impact the next few quarters, as my stock analysis would suggest.

The impact on the aviation space has been evident already, as we have seen travel-related stocks come off their tops; albeit, much of this also has to do with the current stock market risk, based on my stock analysis.

However, a big plus to the travel sector has been the major decline in oil prices to the $80.00 level for both West Texas Intermediate (WTI) and Brent crude. My stock analysis indicates this has translated into lower costs for jet fuel and gasoline—which would help to drive up demand for travel, if not for the Ebola fears, so travel by plane is likely to be most affected.

My stock analysis suggests that the market weakness is an investment opportunity to accumulate travel-related stocks, whether they are the airlines, chain hotels, or online travel operators—but the online travel operators are what I’m most interested in.

The following are what I believe to be good examples of the kind of top online travel operators you can put on your stock investment radar, based on my stock analysis.

The “Best of Breed” in the space is the granddaddy of the online travel sector—The Priceline Group Inc. (NASDAQ/PCLN). For some of you who have been active in the stock market for … Read More


Why You Need to Stick with the Big Guys Right Now

By for Daily Gains Letter | Oct 17, 2014

Proven Companies the Place to Be at This TimeFor investors in small-cap stocks, this year has been quite a different experience from 2013, when the sector was raging and sizzling on the price charts.

Small-cap stocks are the laggards this year, with the benchmark Russell 2000 down nearly 14% from its peak and established in a bear market. The selling may be somewhat extreme at first glance but consider that the Russell 2000 surged an excessive 33% in 2013.

The reality is that gains like what we witnessed in 2013 were unwarranted; they were driven solely by the easy monetary policy put forth by the Federal Reserve and excessive froth in the stock market. We are now paying for the euphoria small-cap stocks encountered in 2013.

Now, while I continue to feel small-cap stocks are excellent longer-term plays, the short-term looks weary, given the technical breakdown on the chart of the Russell 2000.

Dumping higher-risk small-cap stocks is clearly the line of attack this year. But if the economic renewal holds into 2015 and the global economy doesn’t tank, we could see small-cap stocks rally next year. Keep this thought in mind, but know that at this time, it’s safer to shift your money to the large-cap or blue-chip stocks that have been battered this year.

Buying mature, consistent large-cap stocks on weakness makes sense as these companies have proven themselves to be steady players over time.

Think about it this way: Small companies will tend to struggle if the economy declines. Compared to the larger companies that can deal with several quarters or even years of underperformance, small-cap stocks would have a much more difficult time.

For … Read More


Is This the Discount Sale Investors Have Been Waiting For?

By for Daily Gains Letter | Oct 15, 2014

Discount Sale Investors Have Been Waiting ForOctober has provided the usual bouts of anxiety that have characterized the month in past years. I warned that we could see volatility and so far, this has been the case.

From small-cap stocks to world-class blue-chip companies, we are seeing some selling capitulation emerge in the stock market.

All of the major key stock indices are below their respective 50-day and 200-day moving averages (MAs). As I said in a recent commentary, the chart risk is high.

Bearish investor sentiment continues to grip the stock market. We saw 354 new lows on the NYSE on Friday, followed by 308 new lows on Monday.

The DOW has reported four triple-digit-loss days over the past five sessions and in that period, it has declined nearly 600 points. The blue chip index is down 1.54% this year.

Technology has led the losers so far in October with the NASDAQ down 6.24% and off 6.08% from its peak.

The S&P 500 breached its 200-day MA for the first time since 2012. The index has corrected 5.89% from its record, so we could realistically see more selling in the weeks ahead; be careful. A decline to 1,792 would represent a 10% correction, based on my technical analysis.

S&P 500 Large Cap Index Chart

Chart courtesy of www.StockCharts.com

A death cross remains intact on the Russell 2000’s chart, with the index down 13.56% from its peak as of Monday’s close.

Now, we could see further weakness should the earnings season disappoint. And Germany and Europe are already seeing contraction in their economies.

You should begin to look at investment opportunities to buy into weakness. Over the past two years, the S&P … Read More


The Stocks to Watch This Earnings Season

By for Daily Gains Letter | Oct 8, 2014

Earnings SeasonThe country’s gross domestic product (GDP) growth and jobs creation has been edging higher and providing some optimism for the stock market as we head into the third-quarter earnings season that begins officially with Alcoa Inc. (NYSE/AA) today.

A strong earnings season could likely be enough to drive stocks upward towards new highs. But as long as the outlooks from companies look good, the stock market will be heading northward.

The results from Alcoa will be closely watched, as the company is considered a barometer of the global economy due to the use of aluminum in many applications and across many sectors.

I want to see some leadership from the financials and technology sectors in the earnings season to help drive the broader market.

Over the past several earnings season quarters, the revenue side has been muted and earnings have been driven by cost-cutting rather than strong revenue growth. Based on the current estimates for the third-quarter earnings season, it looks like much of the same this time around as revenue growth is predicted at 3.7% for the S&P 500 companies versus 3.5% as of June 30, according to research from FactSet. (Source: “Earnings Insight,” FactSet web site, September 26, 2014.) The growth in this earnings season, while not earth-shattering, does show some promise, as it’s slowly rising, which is what we want to see.

Earnings are estimated to advance 4.7% in the third-quarter earnings season, which is well below the 8.9% estimate provided as of June 30. Again, this isn’t great, but it would be higher on a sequential basis.

The reduction in earnings isn’t impacting any of the … Read More


The Sector That Continues to Benefit from Low Interest Rates

By for Daily Gains Letter | Oct 7, 2014

Benefit from Low Interest RatesA sector that has truly benefited from the low-interest-rate environment over the last several years has been the automobile sector, which could now be an investment opportunity.

Armed with financing rates as low as zero or free money, car buyers have been rushing to the dealers looking for a new set of wheels.

Rising per-capita income levels around the world, especially in the emerging markets in China, Asia, and Latin America, have all combined to drive up demand.

Investment guru Warren Buffett just announced last week that his fund Berkshire Hathaway, Inc. (NYSE/BRK-A) would add a majority stake in Van Tuyl Group, which is the fifth largest auto dealership group in the country. Clearly, Buffett is positive on the auto sector as an investment opportunity.

The price chart of the S&P 500 Automobiles & Components Industry Group Index shows the recovery in the sector from mid-2012 to its peak in mid-2014, prior to the recent bout of selling that drove the index below its 50-day moving average (MA). Despite this, I continue to like the sector as a possible longer-term investment opportunity and would advise buying on weakness.

S&P 500 Automobiles & Components Industry Group Chart

Chart courtesy of www.StockCharts.com

In addition to the obvious low financing rates, the U.S. auto sector is on much better footing now as an investment opportunity than it was prior to the recession in 2008. After undergoing major structural changes over the past few years since the bankruptcy of General Motors Company (NYSE/GM) in June 2009, the sector has become more efficient and cost-conscious. It’s also more in tune with the needs of its customers, whether it’s through the development of more … Read More


Market Risk Rising; Where to Invest for the Best Potential Return

By for Daily Gains Letter | Sep 24, 2014

Market Risk RisingDon’t let the new records by the Dow Jones Industrial Average and S&P 500 trick you into thinking everything is fine in the stock market.

Just take a look…

We have the rising military actions against ISIS in Syria and Iraq that involve five Arab countries, which could really increase the geopolitical risk worldwide.

China is continuing to deliver muted economic results and suggested there would be no additional monetary stimulus at this time. Meanwhile, the slowing in the eurozone and Europe, given the economic sanctions on Russia, will impact the demand for Chinese-made goods.

And while the domestic economy is holding, the Organisation for Economic Co-operation and Development (OECD) recently cut its gross domestic product (GDP) growth estimates for the United States to below two percent this year.

The Federal Reserve is helping to support the stock market via the likely extension of its near-zero interest rate policy into mid- or late 2016, but this will help only so much.

The stock market risk is evident on the charts.

Technology and small-cap stocks are attracting the most selling, with investors dumping high-beta stocks as overall stock market risk rises.

The small-cap Russell 2000 lost 1.6%, moving back below its 50-day and 200-day moving averages (MAs) on Monday. The index is now down nearly four percent in September. Considering the risk, I would be careful when looking at small-cap stocks in the stock market at this time.

Technology is also at risk in the stock market despite the NASDAQ continuing to lead the major indices this year with an advance of close to nine percent. Higher-beta stocks are generally the … Read More


This Foreign Market a Hidden Treasure for Growth Investors

By for Daily Gains Letter | Sep 19, 2014

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 market.

There’s even talk of the S&P 500 reaching 2,300 by the year’s end, according to some of the optimistic bulls on Wall Street. I feel it’s pure fantasy that the index will rise by another 15% by year-end.

The reality is that the stock market is stalling. Without any fresh and inviting reasons to buy, I sense the stock market risk is quite high.

An alternative would be to invest in a foreign market, and while I like China, Israel is fast becoming the favorite for growth investors. Israel has produced some top companies in the past, especially in the technology and medical devices sectors.

Israeli stocks are the third most listed stocks on the U.S. stock markets. (China is second.) As a country, Israel may be small, but an excellent investment opportunity can usually be found there. Moreover, the risk for fraud is much lower than with U.S.-listed Chinese stocks. I can’t say that I have ever heard of fraudulent … Read More


Top Metal for Profits Right Now

By for Daily Gains Letter | Sep 12, 2014

How to Get In On the Bullish Move in ZincA look at precious metals shows gold and silver are devoid of any momentum at this time, while copper has been steadily retrenching from its recent highs.

Copper is playing off of the global economic growth, but a metal that is surging on the charts and catching the imagination of metal traders on the London Metal Exchange is zinc.

Zinc is used in numerous industrial and consumer applications. Steel companies use zinc as a rust inhibitor, so it’s quite important to manufacturing. The United States Mint also uses zinc to make pennies.

The problem is that the world supply of zinc is contracting.

However, zinc is currently around a three-year high and looks good as an investment opportunity at this time.

An intriguing small-cap zinc play that has been sizzling on the chart and is an investment opportunity in the global economic renewal and supply issues is Horsehead Holding Corp. (NASDAQ/ZINC). The company’s share price is up 62% from its 52-week low and has easily outperformed the S&P 500 over the past year with a 45% advance. But despite the company’s advance, Horsehead seems to still have upside potential, which suggests the company could offer a good investment opportunity.

Operating via its Horsehead Corp. subsidiary, the company produces specialty zinc and zinc-based products that are made from recycled materials.

The company closed an old plant and replaced it with a newer, more advanced facility that will produce better fabricated steel products along with raw materials found in the manufacturing of rubber tires, alkaline batteries, paint, chemicals, pharmaceuticals, and stainless steel.

Products include zinc metal used as a protective coating to … Read More


This Sector Will Drive the Market for the Next Decade

By for Daily Gains Letter | Aug 20, 2014

This Sector Will Drive the Market for the Next DecadeIt was just a few months ago that the technology sector stocks, specifically the momentum stocks, were getting bashed around and sold off by the stock market.

Since then, the selling has subsided and we have seen a nice rebound in technology stocks to the point where the NASDAQ is the top gainer in the stock market with a 6.88% advance as of Monday. By contrast, blue chips are hurting, with the Dow Jones Industrial Average down 0.55%.

What the stock market is suggesting to us is that the appetite for risk and higher-beta stocks continues to be prevalent as investors seek the potential for higher gains.

During the past five years of the stock market advance, technology has been one of my top areas for finding a growth investment opportunity. (Health care is another.) This remains my view.

The caveat I’d add, however, is that I would continue to be very careful when buying or trading social media stocks, as the inherent risk continues to be quite high.

I suggest continuing to focus on the Internet sector, as this will remain the dominant area going forward over the next decade as technology advances. Here I’m talking about online retail along with the developers of software and solutions for companies.

The benchmark NASDAQ stock market index is at its highest point in more than 13 years and is within 13.4% of its all-time high at just over 5,100. In hindsight, it’s amazing that it took this long to retrace the steps, but then the technology stock market was extremely overvalued and trading at insidious valuation levels back then.

The chart … Read More


Alternative Energy the Next Big Play?

By for Daily Gains Letter | Aug 18, 2014

My Top Stocks in the Alternative Energy SectorAlternative energy plays have been around for decades, including Ballard Power Systems Inc. (NASDAQ/BLDP), a maker of hydrogen fuel cells that went public in 1993. The stock traded as high as $100.00 as a speculative investment opportunity in early 2000 but was unable to break into the automotive market. It is currently drifting at the $4.00 level.

However, what Ballard was hoping for is now materializing for battery-powered automaker Tesla Motors, Inc. (NASDAQ/TSLA), which has built a superhighway of charging stations across the U.S. and is expanding into Europe and China. Tesla is a great story and a decent possible investment opportunity.

Yet it’s not only vehicles that demand alternative sources of energy; we also see demand coming from numerous applications and, in some cases, manufacturing facilities.

The demand for alternative energy can be based on wind, solar, or water and has led to the development of a strong solar industry as an investment opportunity.

A small-cap that has been exciting the stock market while producing sizzling gains for speculators has been Plug Power Inc. (NASDAQ/PLUG), a developer of hydrogen fuel cells that power forklifts and other devices. The stock traded as low as $0.32 over the past 52 weeks, surging to $6.37 on Thursday morning after reporting strong results. Plug Power has been on my technical analysis screens for some time, as the stock consistently breaks higher. If interested, I would suggest investors look to this stock on weakness for a volatile speculative investment opportunity.

Plug Power Inc Chart Chart courtesy of www.StockCharts.com

Another possible investment opportunity that may interest investors in the alternative energy space is FuelCell Energy, Inc. (NASDAQ/FCEL), which has … Read More


China a Game-Changer for This U.S. Automaker

By for Daily Gains Letter | Aug 11, 2014

China an Especially Lucrative Move for This AutomakerThe superhighway that Tesla Motors, Inc. (NASDAQ/TSLA) is building across the United States appears to be taking shape with consumers and investors.

The maker of the quick-charge electric-battery vehicle has recovered since taking a hit on growth and valuation concerns. The stock is still not cheap, but based on what is developing and its longer-term prospects, a stock like Tesla may be worth a closer look as an investment opportunity.

Back in April, I suggested picking up some shares of Tesla as an investment opportunity at a price tag of $193.00. The stock closed at $253.00 last Wednesday, representing a hefty quick gain of 28%.

Telsa Motors Inc Chart

Chart courtesy of www.StockCharts.com

Now after reporting a decent quarter, Tesla has been receiving kudos from Wall Street. Brad Erickson at Pacific Crest issued an Outperform rating and assigned a price target of $316.00. This price is high, given the stock is already trading at 80-times (X) its 2015 earnings per share (EPS) and an extremely high price-to-earnings growth (PEG) ratio of 5.34. For Internet and social media stocks, the valuation likely wouldn’t be given a second look, but for an automaker, there clearly are some heads shaking.

While I continue to like Tesla as an investment opportunity, I would be more likely to accumulate shares on price weakness than to chase the stock price higher.

In my view, Tesla needs to produce more unit sales of its vehicles in order to reduce the fixed overhead charges per vehicle made, thereby pushing up the operating margins.

We are seeing Tesla vehicle sales steadily rise, but the numbers still pale in comparison to the major automakers, … Read More


A Compelling Case for This Retail Discounter

By for Daily Gains Letter | Aug 1, 2014

While Others Flee This Discounter, It Tops My ListThere is a lot of hurt out there in the retail sector as consumers have yet to come back in full force. The soft consumer sentiment has impacted retailers across the board, from the specialty retailers to department stores. Even the discount and big-box stores, which are pretty resilient when spending declines, are hurting at the register.

Consequently, we saw a consolidation in the discount sector after Dollar Tree, Inc. (NASDAQ/DLTR) decided to snap up rival Family Dollar Stores, Inc. (NYSE/FDO) in a cash and stock deal valued at $8.5 billion, or about $74.00 per share.

I last talked about picking up a company like Family Dollar Stores in April as an investment opportunity when the stock was trading at $58.31.

Now for both companies, the merger makes a whole lot of sense, especially at a time when consumers are tighter with their spending habits. The merger will likely mean eliminating overlapping stores in the same vicinity, since there will be 13,000 stores in the network.

At the smaller end of the spectrum, a discounter that is an investment opportunity and worth a look is Five Below, Inc. (NASDAQ/FIVE), which has a share price of $35.27 and a market cap of $1.94 billion. The stock debuted on July 19, 2012 at $26.05, but has reported several soft quarters, which drove some investors to the exits. Yet at just above its 52-week low of $33.94, the stock offers a decent contrarian investment opportunity for speculators.

With Five Below down over the past 52 weeks, compared to a 17.39% advance by the S&P 500, there could be a good investment opportunity here…. Read More


Why This Company Will Fare Well as the Economy Stutters

By for Daily Gains Letter | Jul 28, 2014

My Investment Solution for Tight TimesIf you think Americans are firmly comfortable in the economy and jobs, think again. Yes, the stock market has returned strong gains and has been an investment opportunity over the past five years (since the end of the Great Recession in 2008), but much of it was artificially driven by the lax monetary policy put forth by the Federal Reserve. Now that the quantitative easing is dissipating and interest rates are set to edge higher sometime in mid-2015, I’m not all that comfortable.

The jobs numbers are improving, but they are still well below the 500,000 per month that some pundits deemed to be a sign of a healthy jobs market. We are generating about 200,000 jobs each month, which is well below what we want to see. In fact, we have only recovered the jobs lost during the recession—and we still need to build on that.

Given that there are still approximately 46 million Americans collecting food stamps, you’d understand why I still feel uneasy about the so-called economic growth in progress.

Consumers are still not spending at a rate many are hoping for. This is especially true in durable goods, which are not required for everyday living, so their buying can be bypassed.

As far as I’m concerned, the retail numbers still stink and don’t point to an investment opportunity in retail. Just take a look at the metrics at the big multinationals, such as Wal-Mart Stores Inc. (NYSE/WMT) and other retailers. While retail sales grow at a muted pace here, the growth is around 12% in China, where there is an investment opportunity in retailers.

Dick’s Sporting … Read More


What Makes This Beaten-Down Stock So Attractive

By for Daily Gains Letter | Jul 24, 2014

A Better Investment Opportunity Than My Top Restaurant StockChipotle Mexican Grill, Inc. (NYSE/CMG) showed why it’s the hottest restaurant stock out there at this time. The stock has been a favorite of mine since declining to the mid-$200.00 level in October 2013. On Tuesday, the stock surged to above $650.00. Now that’s growth and an excellent investment opportunity.

The company easily destroyed estimates in both revenue and earnings. Chipotle beat the consensus earnings per share (EPS) estimate by a whopping $0.41 per diluted share and surpassed the $1.0-billion quarterly revenue mark for the first time. Easily beating expectations, the key comparable restaurant sales metric rose a staggering 17.3%, which is incredible. The maker of burritos, tacos, and wraps has attracted a loyal following for good healthy food from consumers who may have gone to McDonalds Corporation (NYSE/MCD) or Taco Bell in the past.

Chipotle Mexican Grill Inc Chart

Chart courtesy of www.StockCharts.com

While Chipotle continues to be my top restaurant play, the acceleration in its share price has made it somewhat top-heavy, so it’s more of an investment opportunity on price weakness.

A key driver for the restaurant sector is the growing jobs numbers. The more confident people are about their jobs, the more willing they are to go out for meals and spend.

A contrarian restaurant investment opportunity that looks intriguing right now is Noodles & Company (NASDAQ/NDLS), a provider of noodle and pasta dishes.

The stock debuted at $32.00 on June 28, 2013, surging to $49.75 on October 15, 2013, prior to the recent decline to $27.20 on July 17, 2014. In my estimation, the current price weakness offers aggressive investors a good investment opportunity.

Noodles & Company Chart

Chart courtesy of www.StockCharts.com

Noodles & … Read More


How to Profit from Russia’s Eventual Demise

By for Daily Gains Letter | Jul 23, 2014

The "Good" News Coming Out of Russia for InvestorsSimply put, if Russia is held accountable, the downing of Malaysian Airlines flight ML17 in eastern Ukraine could destabilize the situation in the region and filter into the eurozone and Europe. That’s bad news.

When the conflict first surfaced regarding the possible annexation of the Crimea region and the influence of Russia, there were concerns after economic sanctions were levied on Russia. The following vote in Crimea that indicated a desire to leave Ukraine has further raised the geopolitical stakes in the volatile area and intensified the fighting between the pro-Russian rebels and Ukraine.

It’s a mess, and the shooting down of ML17 made the situation much worse. We are seeing increased economic sanctions on Russia, and this will likely impact the eurozone and Eastern Europe. There is also news of a Russian steel company selling some properties in the United States.

Of course, we are also hearing that the rich Russians who count on business in Russia and the global economy are also feeling the economic pinch and are not happy. The problem is that they won’t say anything towards the situation, assumedly due to their fear of President Putin and the Kremlin.

And while Europe is intensifying the pressure on Russia to do something, there’s also a need for the flow of oil and natural gas to continue into the eurozone and Europe, which gets about 40% of its energy needs from Russia.

While the impact on the Russian embargo has yet to be fully felt by the eurozone and Europe, it could worsen if the Ukraine conflict intensifies. In the first quarter, gross domestic product (GDP) growth … Read More


How Apple Has Launched Itself to the Top of My Favorite Stocks

By for Daily Gains Letter | Jul 21, 2014

How Apple Is Making a Believer Out of Me—And Topping My Favorites ListApple (NASDAQ/AAPL) may have finally come up with the killer apps that could vault the company ahead in the global race against Google Inc.’s (NASDAQ/GOOG) “Android” phones. Now, Apple could gain mobile supremacy, based on my stock analysis.

In an unexpected move, Apple’s CEO, Tim Cook, inked a valuable partnership with International Business Machines Corporation (NYSE/IBM) to co-develop apps that will focus on the lucrative enterprise segment.

Based on my stock analysis, the deal is gigantic for Apple, as the company has had issues breaking into and advancing in the enterprise market, where BlackBerry Limited (NASDAQ/BBRY) continues to dominate.

As my stock analysis indicates, the venture with IBM makes a whole lot of sense, as IBM is a trusted leader in developing enterprise solutions, and in addition, IBM has extremely strong alliances around the world with top global companies. This means that Apple, with its new enterprise solutions, could accelerate in this space, especially with corporate clients making Apple their mobile and applications provider. Of course, the need to provide a more secure platform, such as BlackBerry’s, is likely the focus of the venture with IBM, as my stock analysis suggests.

Now, that’s not to say that Apple will eventually beat BlackBerry in yet another segment, but it will open up opportunities. My stock analysis is that it could take years for the venture to deliver tangible enterprise solutions, so BlackBerry does have some time to counter and try to strengthen its position under CEO John Chen, who is offering some hope for suffering BlackBerry investors.

For Apple, the enterprise apps will increase the revenue stream from this segment, which … Read More


Why I Like This Food Company the Best Right Now

By for Daily Gains Letter | Jul 17, 2014

An Attractive Investment Opportunity You Won't Want to OverlookThe market for natural foods is getting tighter as major supermarket and big-box chains, such as Wal-Mart Stores Inc. (NYSE/WMT), The Kroger Co. (NYSE/KR), and Costco Wholesale Corporation (NASDAQ/COST) invade the territory that had been dominated for years by market leader Whole Foods Market, Inc. (NASDAQ/WFM).

While you cannot ignore the moves by Wal-Mart and Costco, let me be clear: shoppers who generally buy their goods at Whole Foods or some of the smaller chains will not necessarily shift their shopping preference and suddenly go to Wal-Mart. What will happen is that pricing will likely become more competitive with the added rivals entering into the mix.

On the small-cap end, you may want to take a look at a company like The Fresh Market, Inc. (NASDAQ/TFM, $31.74, Market Cap: $1.54 billion), which is looking attractive after declining to a 52-week low of $28.60 on May 22. The stock could decline further, but I like the risk-to-reward investment opportunity in the stock market.

The Fresh Market isn’t new; it’s been around since 1982. The specialty food grocery chain operates a network of approximately 157 stores in 26 states as of May 22, 2014. There are also plans to open another 23 to 24 new stores.

As I said, the stock is an investment opportunity following the recent selling, down 41.65% over the past 52 weeks versus a 17.95% advance by the S&P 500.

The company is growing its sales. Estimates are calling for sales to expand 15.2% year-over-year to $1.7 billion in FY15, followed by 14.8% to $2.0 billion in FY16, according to Thomson Financial. Earnings are predicted to come in … Read More


What the World Cup and the Stock Market Have in Common This Year

By for Daily Gains Letter | Jul 14, 2014

How to Make Some Premium Income This SummerLast Wednesday, I had fun watching the World Cup game between Argentina and the Netherlands. As strange as it may sound, I actually found that the tension and apprehension throughout the match reminded me of the stock market.

Despite the Dow Jones Industrial Average recently trading above 17,000 and the S&P 500 at another record-high, I still sense the stock market is vulnerable to selling. I think this will be especially true if the second-quarter earnings season pans out as expected, devoid of any major growth in earnings or revenues.

Alcoa Inc. (NYSE/AA) offered up a nice report, but I’m not sure how much it counts, as the company really is not a major bellwether as to the health of the global economy.

The reality is that consumer spending drives the economy and the stock market. I would rather look at what’s happening at bellwether global retailer Wal-Mart Stores Inc. (NYSE/WMT) than Alcoa. The “Death Star” of the retail sector is struggling for growth around the world—and that cannot be good news. Even discount stores, which tend to be more immune to slowing, are showing signs of weakness.

In other words, while the stock market has edged higher, I still wouldn’t get too comfortable at this time. I think we could see another minor stock market correction should earnings tank. Of course, this would provide us with an investment opportunity to buy shares on weakness in the stock market.

Now there’s some optimism following the Federal Reserve’s dovish remarks from its June meeting, as there’s a sense that interest rates will not ratchet higher until after mid-2015, depending on the … Read More


Why This Beaten-Down Stock Is Worth a Closer Look

By for Daily Gains Letter | Jul 11, 2014

This Beaten-Down Stock Deserves a Closer LookSmall-cap stocks made a sweet rebound in June after the Russell 2000 previously declined below both its 50-day and 200-day moving averages. The index actually had been down 10% earlier in the year, prior to staging a nice rally, based on my technical analysis.

While the risk with the higher-beta growth and technology stocks continues to be higher than the S&P 500, the weakness has provided a decent trading investment opportunity for the more aggressive speculators looking for above-average risk-to-reward trades.

In my view, there is no better area as an investment opportunity for speculative trades than technology due to the immense upside; but at the same time, the associated risk is also higher due to the downside.

If you are searching for a beaten-down small-cap technology investment opportunity that could return some quick money, take a look at a stock like Extreme Networks, Inc. (NASDAQ/EXTR), which currently sits at a stock price around $4.27 and a market cap of $412 million. The stock traded as high as $8.14 in January, but it has lost nearly half of its value since then, so I see an investment opportunity here.

Extreme Networks Inc Chart

Chart courtesy of www.StockCharts.com

Some see Extreme Networks as a stay-away stock, but I view it as a contrarian investment opportunity at a time when the stock has been beaten up and tossed around by the stock market. Now, I’m not saying it’s easy money, but I like the trade risk to reward here; there’s more upside potential than downside risk, which makes it a good investment opportunity.

Extreme Networks develops network infrastructure equipment and services that cater to enterprises, data … Read More


Stocks vs. Bonds: Finding the Best Investment Opportunity Right Now

By for Daily Gains Letter | Jul 9, 2014

Why You May Be Stuck with Stocks for NowThe bulls are continuing to ride the stock market higher with minimal resistance from the bears. After some weakness earlier in the year, stocks continue to want to edge higher.

We are not seeing the mass market participation we want to see in a rallying stock market, but this divergence is clearly not a big deal for traders.

The first half of 2014 saw mixed trading, but the stock market managed to edge higher. We saw multiple records set by the DOW and S&P 500, with both indices closing higher for the fifth straight month in June. Not bad given that historical records suggest muted action.

On the charts, the sense is that the stock market is aiming higher. The DOW broke 17,000 last week, while the S&P 500 is eyeing 2,000 and looking higher on the charts, based on my technical analysis. The DOW is riding consistently above its 50-day and 200-day moving averages.

Dow Jones Industrial Average Chart

Chart courtesy of www.StockCharts.com

On the plus, small-cap stocks made a strong rally in June as we saw some money flow back into the higher-risk assets, which technically bodes well for the broader stock market. We are also seeing buying return to the technology sector and the high-momentum plays.

But as is always the case after a rally to new heights, many are calling for a stock market correction.

The chart of the S&P 500 shows the potential of a small correction of approximately five percent. I would view this as an investment opportunity to buy on weakness.

S&P 500 Large Cap Index Chart

Chart courtesy of www.StockCharts.com

The reality is that the stock market is heading higher, but we could … Read More


How to Profit from the Improved Jobs Numbers

By for Daily Gains Letter | Jul 7, 2014

How Investors Can Benefit from the Jobs RecoveryThe stock market is looking higher. The DOW and the S&P 500 closed up for the fifth straight month as we enter into the second half of what has largely been a mixed and cautious year.

For growth investors, the good news is that small-cap stocks came back in June with a 5.15% advance and are easily leading the broader market. Technology also fared well with the NASDAQ up 3.9% in June. Blue chips and large-caps trailed the growth side. In the first half, the S&P 500 leads with a 6.07% gain followed by the 5.54% advance in the NASDAQ.

And while stocks are edging higher towards new records, we are also seeing positive gains in the critical jobs numbers. This is essential for the economy and consumer confidence.

We saw strong non-farm payroll jobs numbers for June last Thursday with the creation of 288,000 new jobs, which easily beat the consensus 215,000 estimate and the 244,000 jobs in May. Better yet, the unemployment rate also fell to 6.1%, the lowest level in nearly six years.

The growth in the jobs numbers will gain more traction in the stock market when the reading can surpass the 300,000 level, which could trigger heightened optimism.

What the higher jobs numbers mean is more business for the jobs placement firms, from the everyday jobs to management and executive positions.

A contrarian and speculative play on the jobs numbers recovery is Monster Worldwide, Inc. (NYSE/MWW), which currently sits around $6.85 per share with a market cap of $623 million.

Monster Worldwide runs the widely known job search web site Monster.com and was the first … Read More


If I Had to Pick One Stock Outside of the United States…

By for Daily Gains Letter | Jun 25, 2014

Top U.S.-Listed Foreign Company with Growth PotentialThe recent selling in small-cap stocks has provided numerous investment opportunities to accumulate on price weakness, albeit the stock market could see more weakness.

A high-potential region that I have discussed in the past is Israel, which has turned into the technology incubator of the Middle East and is an investment opportunity.

I have been following Israeli companies for years, and in that time, I have come across numerous high-growth and rewarding technology and healthcare companies that make the country an excellent investment opportunity.

Israel ranks third as far as foreign companies on the NASDAQ, trailing only China and Canada.

What makes Israeli companies intriguing as an investment opportunity is the strong trust from this region. You actually never hear about financial irregularities out of Israel, which makes the country a solid investment opportunity.

A small-cap technology Israeli company that I’d watch as an investment opportunity for the speculative investor is EZchip Semiconductor Ltd. (NASDAQ/EZCH), which has a share price of $25.44 and a market capitalization of $745 million.

The company is a fabless semiconductor company, meaning it doesn’t manufacture anything; rather, it simply develops the chip and produces it via a third party. EZchip designs ethernet network processors for networking equipment companies, such as carriers, along with cloud, data center, and enterprise network equipment. The company will soon be launching its newest and most powerful network processors that will drive revenues higher.

The risk with EZchip has been with the mounting concerns that some of its clients are developing their own in-house chips. So far, it has not been a factor, but it could be if EZchip began to … Read More


My Top Four Internet Stocks for Years to Come

By for Daily Gains Letter | Jun 23, 2014

The Four Pillars of the Internet SectorSince its debut in the early 90s, the Internet sector has become probably the top discovery and investment opportunity since the computer and microchip.

My four stock pillars of the Internet sector, which I feel will be the top stocks going forward for years to come, include The Priceline Group Inc. (NASDAQ/PCLN), Facebook, Inc. (NASDAQ/FB), Google Inc. (NASDAQ/GOOG), and Amazon.com, Inc. (NASDAQ/AMZN). All four stocks are tops in their respective areas and offer an investment opportunity at this time.

I have talked about Google, Facebook, and Priceline as an investment opportunity in the past, so today I’m going to talk about the investment opportunity that Amazon.com has to offer. This stock has made millionaires out of many investors in the stock market. Think back to May 16, 1997, when Amazon.com closed at $20.75. I kind of wish I had taken the investment opportunity then and put my $40,000 in Amazon.com stock instead of my SUV. That money would now be worth around $600,000, with the stock now trading above $330.00 a share.

Amazon.com, Inc Chart

Chart courtesy of www.StockCharts.com

But there is always an investment opportunity surfacing in the stock market. You just need to be able to recognize it. This is what makes investing and trading such a dynamic and intriguing process.

As far as Amazon.com, despite the superlative rise in the price, I still feel the stock has plenty of upside potential going forward as an investment opportunity; albeit, as in the case of my other three top Internet stocks, the easy money has already been made.

Now, while Amazon.com looks expensive, trading at 103 times (X) its estimated 2015 earnings … Read More


So Long, U.S. Consumer: Why I’m Looking to China for Profits

By for Daily Gains Letter | Jun 20, 2014

How You Can Still Profit from Consumer SpendingIt’s amazing how analysts try to spin numbers that are horrible. For instance, retail sales edged up 0.3% in May, which is not something to get excited about; however, analysts have been spinning this news, saying that the poor May reading is simply a result of the upward revision in the April reading to 0.5%.

Now, I’m not sure what your thinking is, but my view is that both numbers stink and they foreshadow an economy in which consumer spending is scarce.

My excitement lies 10,000 miles across the Pacific Ocean in China, where the country’s government, under President Xi Jinping, is aggressively trying to encourage consumers to spend. This is contrary to what has happened in past decades, when the massive Chinese economic engine was fueled by manufacturing and foreign investment. Both are still prevalent, but the government also understands that it must drive up domestic consumer spending in order to lessen the impact of slower growth around the world, which has a direct impact on China.

In other words, China wants its consumers to spend the country out of the current stalling, which, at around 7.5% gross domestic product (GDP) growth, is still way ahead of the U.S. and other Western countries. The reality is that with a population of 1.3 billion people and a middle class of approximately 300 million, the potential is significant. Plus, the middle class in China has money to spend, unlike here in America, where people are struggling, just making ends meet.

In May, China’s retail sales surged 12.5% year-over-year to $349 billion, according to the National Bureau of Statistics. This followed growth … Read More


Why I Don’t Believe This Struggling Film Stock Is Dead Yet

By for Daily Gains Letter | Jun 19, 2014

Why This Contrarian Investment Opportunity in Film Has Caught My EyeGenerally speaking, my go-to trading strategy involves looking for a contrarian investment opportunity, a stock that is out of favor with the stock market but may be deserving of a chance.

I mean, why always buy a stock when everyone else wants to? It’s akin to buying something that is priced higher because it’s popular, but the market demand is greater than the supply.

In contrarian investing, you wait for the supply to exceed demand to take advantage of the investment opportunity.

The company should have a solid foundation, business strategy, and competent leadership. This is why I generally only buy blue chip stocks when they plummet, because I realize it’s only an aberration and the stock will bounce back as an investment opportunity.

Now having said that, the associated risk of contrarian investments is also higher than average, as the company may fail to turn things around or the turnaround could take years to pan out, which would mean your capital is not being effectively used.

If you are mindful of the risk, then contrarian stocks could return some tidy profits as an investment opportunity.

One such company that I have been following ever since its initial debut years ago is DreamWorks Animation SKG, Inc. (NASDAQ/DWA), the maker of such animated film classics as Shrek, Madagascar, and Kung Fu Panda.

The 3D (three-dimensional) rage helped to drive DreamWorks to stardom and become a Wall Street sensation in early 2010, when the stock was trading hands for more than $42.00 a share. That was then, but the stock has since been trading erratically and is at the mid-$20.00 level, trying … Read More


Why Apple Stock Looks More Intriguing Now

By for Daily Gains Letter | Jun 9, 2014

Apple's Revamp an Investment OpportunityApple Inc. (NASDAQ/AAPL) gave investors some optimism after introducing its so-called “Android” killer—its “iOS8” operating system—at the Worldwide Developers Conference.

The upcoming update to Apple’s operating system incorporates some great changes, including advanced healthcare, music, and home monitoring applications.

Yet while there’s definitely some excitement from Apple users towards the new operating system, the reality is that it will likely still not be enough to knock Android off its perch as the top mobile operating system in the world, powering about 85% of all phones worldwide, based on my stock analysis.

Apple is clearly working on improving its platform and is expected to introduce a bigger screen on its “iPhones,” but my stock analysis indicates that the problem is that the cost of the phones remains prohibitive to buyers, especially in the emerging markets in Asia and Latin America.

As my stock analysis suggests, the company is still so set on protecting its margins that its iPhones remain relatively expensive versus Android and other phones. Just go to your local mobile dealer, and you will see that while the iPhone has come down in price, the associated contract continues to be quite expensive versus that of other smartphones.

I experienced this firsthand after I just switched from the iPhone to the Samsung “Galaxy.” I bought the “S4,” which is a slightly older model versus the new “S5,” but it’s an excellent phone. It uses the Android operating system, which I actually like more than “iOS7.” The only problem is that my “iPad” refuses to acknowledge my S4 as a hotspot via the Bluetooth connection, which is not surprising, given how … Read More


“Discount Aisle” Retailer the Best Investment Opportunity?

By for Daily Gains Letter | Jun 6, 2014

Underpriced Retailer for the Contrarian Investor's RadarThe retail sector is hurting at this time from the discounters to the luxury brands, with just a few exceptions. Even the dollar stores are facing slower growth.

Yet with the sector down, it’s time to look at picking up some of the damaged retail stocks as an investment opportunity.

A retailer that I feel has declined to an attractive level as an investment opportunity is small-cap Texas-based Stage Stores, Inc. (NYSE/SSI). A seller of reasonably priced brand and private-label apparel, accessories, cosmetics, and footwear to women, men, and kids, Stage Stores is languishing just above its 52-week low, where I see an investment opportunity.

Stage Stores runs approximately 883 stores that are situated mainly in small and mid-sized towns in 40 states. The stores’ sizes vary, from as small as 5,000 square feet to as large as 54,000 square feet. Small towns comprising fewer than 50,000 people account for 65% of the company’s store locations; mid-sized towns with between 50,000 and 150,000 people account for 18%; and the remaining 17% are found in large cities.

I view Stage Stores as a contrarian investment opportunity, given the stock is down 21.4% over the last 52 weeks versus a 16.26% advance by the S&P 500. The stock price should rally if the company can deliver better, consistent results.

Stage Stores reported higher sequential fiscal sales growth from FY05 to FY08 and FY11 to FY13. Sales growth is estimated to continue into FY14 and FY15.

The company does make money, with profits in nine of the last 10 fiscal years. The growth is estimated to continue into FY14 and FY15.

The stock … Read More


Three Alternatives to One of My Best Stock Picks Since 1999

By for Daily Gains Letter | Jun 5, 2014

Saving on Cost Isn't a Good Thing in This SectorThe airline sector is flying higher, as the global economy strengthens and income levels in the emerging markets steadily improve, based on my stock analysis.

Yet unlike what you or your parents might have done when booking a vacation decades ago, we are now seeing a massive migration of travellers looking to the online space to book their next flight.

While there are numerous operators in the Internet travel space, the “Best of Breed” and the company that started it all is The Priceline Group Inc. (NASDAQ/PCLN). I distinctly recall reviewing this company in late 1999 and recommending it at under $20.00. Since then, the stock has been one of my top performers, as it currently trades at more than $1,200 per share and has a market cap of roughly $67.0 billion.

The price of the stock puts it out of the reach of many investors, but the company deserves its place at the top of the online travel segment, based on my stock analysis. Priceline has superior growth metrics and a comparative valuation to its peer group, which makes it the market leader and a top investment opportunity.

Priceline.com Chart

Chart courtesy of www.StockCharts.com

Now, if you cannot afford the high stock price of Priceline, then there are several companies that I view as the next best opportunities in this market space.

The second leading online travel company, based on my stock analysis, is Expedia, Inc. (NASDAQ/EXPE). This stock is still large, but it has a market cap that’s approximately seven-times smaller than Priceline. The valuation of Expedia is also more attractive at 16.47 times (X) its 2015 earnings per share … Read More


Cashing In on America’s Obesity Epidemic

By for Daily Gains Letter | Jun 2, 2014

How to Play America's Obesity EpidemicI would be the first to admit that on occasion, I have a craving for donuts, fries, and junk food. Luckily, it’s not that often, and I manage to stick to a fitness program.

Yet overindulgence and rising obesity levels have become a crisis not only in America, but in many countries around the world. It seems as though as people get wealthier, they also become fatter.

I recently read that about a third of the world is now considered overweight, based on a study by Christopher Murray of the Institute for Health Metrics and Evaluation at the University of Washington. (Source: Cheng, M., “30 percent of world is now fat, no country immune,” Yahoo! Finance, May 29, 2014.) The research suggests that Americans are the fattest people in the world, accounting for a whopping 13% of the total. This shouldn’t be a surprise, given the amount of fast food people tend to eat.

Now, while the rising obesity levels are clearly an issue for the healthcare sector down the road, there are companies that are in the business of helping people shed the pounds—this is a sector you can play as an investment opportunity at this time.

A small-cap stock that is worth a look as an investment opportunity in this area is Medifast, Inc. (NYSE/MED), which has a share price of $31.14 and a market cap of $409 million. Medifast is a producer and seller of weight and disease management products, along with consumable health and diet products. The company’s product line is sold under the Medifast brand and includes meal replacements and vitamins for those trying to … Read More


Profit from America’s Move Towards Oil Independence

By for Daily Gains Letter | May 30, 2014

How to Benefit from the Rise in Domestic Oil ProductionTechnology and growth stocks may not be looking that good at this time, but the same cannot be said for the oil sector, which is an investment opportunity.

We are seeing significant profits emerge in the oil patch, as the price of West Texas Intermediate (WTI) is holding above $100.00 per barrel.

The presence of the higher oil prices is driving energy companies, from the drillers to producers, both upstream and downstream, to report strong results.

America has become a major producer of oil, which is lessening the country’s dependence on oil from the oil cartel in the Middle East, the Organization of Petroleum Exporting Countries (OPEC).

As many of you know, the trigger that has driven up the domestic production of oil has not been the opening of protected land in Alaska or the incoming flow of friendly oil from the Tar Sands in Canada, but the aggressive efforts to develop shale oil via fracking technology, which has become an investment opportunity.

The impact of shale oil on OPEC was made evident in a report produced by the cartel in 2013 that predicts the decline in its market share due to the influx of shale oil. (Source: Lawler, A., “OPEC to lose market share to shale oil in 2014,” Reuters, July 10, 2013, last accessed May 29, 2014.) This is making shale plays an investment opportunity.

Make no mistake about it: the growth of new oil drilling technologies, such as the horizontal drilling incorporated in the fracking process, will only expand as an investment opportunity. North Dakota is now the Mecca of shale oil and is the second-largest producer … Read More


How Godzilla’s Box Office Success Could Offer Your Portfolio the Same

By for Daily Gains Letter | May 28, 2014

Portfolio Popping Capital Gains It Could Be with This StockGodzilla (2014) is running wild at the box office, as this classic B-movie remake has delivered a record opening weekend for specialized movie theater operator IMAX Corporation (NYSE/IMAX).

If you have ever had the IMAX experience, you likely agree that Godzilla was probably as life-like as possible through the big-screen format of an IMAX theater, surrounded by about 12,000 watts of mind-blowing sound via a network of more than 40 speakers.

The screening of major Hollywood blockbusters on IMAX screens has been a big winner for the company and an excellent investment opportunity. IMAX has shown such major movies as The Hunger Games series, The Avengers, the newest Batman series, and The Hobbit: An Unexpected Journey.

Yet the appeal of IMAX has not only been its expansion in North America, but its ability to grow rapidly worldwide in places such as Western Europe, Japan, China, and Russia, which makes the stock a good investment opportunity. As of March 31, 2014, there were 840 IMAX theater systems installed in 57 countries worldwide.

The expansion into China is especially intriguing as an investment opportunity. With more than 1.3 billion people and the ongoing debut of Hollywood films in China, the investment opportunity is tremendous. At this time, there are about 150 IMAX theater systems in the country with contracts to open another 400 or so. In fact, if IMAX catches on, we could easily see hundreds more theater systems installed.

Fundamentally, the company reported higher annual revenue growth in 2009, 2010, 2012, and 2013. Revenues are estimated to grow 5.7% to $304.46 million in 2014, followed by 15.2% to $350.64 million in … Read More


This Single Stock as Lucrative as a Tech ETF?

By for Daily Gains Letter | May 23, 2014

This Stock a Better Buy Than a Tech ETFIf you hold Google Inc. (NASDAQ/GOOG) in your portfolio, you own one of the best companies in the world and a top investment opportunity.

The company just surpassed Apple Inc. (NASDAQ/AAPL) to become the most valuable brand worldwide with an overall value of $158.84 billion, compared to the $147.9 billion assigned to Apple in the Millward Brown’s 2014 BrandZ rankings. (Source: “BrandZ Top 100 Most Valuable Global Brands,” Millward Brown web site, last accessed May 22, 2014.)

Apple’s decline in brand perception was attributed to the lack of new products by the “iPhone” and “iPad” maker, something that has previously hurt Microsoft Corporation (NASDAQ/MSFT) over the past decade. Apple has been modifying its products, but there has not been an earth-shattering new product for quite some time. If Apple wants to avoid the same fate that trumped Microsoft when it only had its MS operating system, then it needs to act.

Meanwhile, Google continues to show investors and Wall Street why it deserves to be the top technology play and investment opportunity in the stock market, bar none.

Google recently split its shares on a two-for-one basis to make the stock more available as a mass market investment opportunity. The stock still trades for more than $530.00 a share, but trust me when I say that Google has excellent long-term potential as an above-average investment opportunity.

Unlike Apple at this time, Google is highly innovative and is thinking outside the box. No longer simply looking at itself as a search engine, Google has been working on numerous advanced technologies in both hardware and software, which makes it a better investment … Read More


My Top Stock for the Coming Healthcare Boom

By for Daily Gains Letter | May 14, 2014

Top Stock for Playing Obama's Healthcare BoomAs the country moves forward in providing medical coverage for all Americans, the healthcare sector will be one of the top growth areas for investment opportunity going forward.

As I recently discussed in these pages, there are ways investors can benefit from Obamacare, whether you believe in the new healthcare strategy or not. The reality is that there will be tens of millions of Americans added to the list of those needing healthcare solutions, and that will definitely provide an investment opportunity and a catalyst for growth in the sector.

What I believe is that there will be a tremendous investment opportunity for investors over the next few decades, as the Baby Boomers, Generation Jonesers, and early Generation Xers move into retirement and the demand for healthcare solutions accelerates across the country.

We will see an investment opportunity among the providers of health plans, along with the pharmaceutical and medical device makers that will market to a much larger user base.

Besides the rising demand for drugs as America increases its health coverage and its citizens age, I also expect a significant increase in the demand for medical devices. Today, you can already get replacements for hips and knees, along with other extremities. I expect the range of products and demand to continue to rise as American seniors grow older and research and technology advance.

There are numerous medical device companies that could benefit from the shifting healthcare space. An interesting contrarian investment opportunity on medical devices may be SurModics, Inc. (NASDAQ/SRDX), which has a share price of $21.25 and a market cap of $287 million.

SurModics develops a technology … Read More


This Health Food Giant’s Issues Growing Profitable for Investors

By for Daily Gains Letter | May 9, 2014

investment strategiesFor years, Whole Foods Market, Inc. (NASDAQ/WFM) was the top of the food chain in the sale of natural and organic groceries. Yet with success often comes competition.

Whole Foods is now finding itself in a fierce battle with new rivals, established grocers, and big-box stores all looking for a piece of the action in this higher-margin business, based on my stock analysis.

Whole Foods’ stock was devastated on Wednesday after the reporting of weak first-quarter results that clearly displayed the negative impact of competition on the company.

Whole Foods was also hurt by margin pressures, as the company cut prices in response to the competition, as my stock analysis indicates. Given the squeeze on margins, my stock analysis suggests that Whole Foods will have to come up with some innovative strategies to attract customers and stop them from venturing over to its rivals’ outlets.

Yet as my stock analysis indicates, this will not be easy as the market for natural and health food is crowded. You not only have the smaller, emerging players, but Whole Foods also needs to watch the established big-box stores, such as Wal-Mart Stores Inc. (NYSE/WMT) and Costco Wholesale Corporation (NASDAQ/COST).

If you are looking for a small-cap natural and health food play, take a look at Natural Grocers by Vitamin Cottage, Inc. (NYSE/NGVC). I have been following this company for years, watching it rise to a high of $44.60 prior to its subsequent collapse.

The stock has retrenched to the low $20.00 level, where I see a contrarian investment opportunity, based on my stock analysis. (I liked the stock in the $30.00 range—but I … Read More


Profitable Investment Opportunities in a Fragile Housing Market

By for Daily Gains Letter | May 8, 2014

Housing Market  Fragile Investment OpportunitiesThe housing market continues to hold. But there are some warning signs. Famed investor Warren Buffett suggested the housing market was overvalued and due for an adjustment.

Now, while there are some indications of an overhyped housing market, I’m not convinced it’s bubble-like quite yet. But be warned: mortgage rates and interest rates are heading higher. This means it will become more expensive to finance mortgages going forward.

We are already seeing some fragility in the housing market on nearly all fronts. Home prices continue to edge higher across the nation, but that’s because of the limited inventory in the housing market.

Pending home sales, a good indicator of what is to happen on the horizon, fell eight percent in March based on data from the National Association of Realtors (NAR).

Housing starts were weaker than expected in March, with 946,000 annualized starts in the month, below the consensus 970,000. Worse yet was the March building permits reading that showed an annualized 990,000 in the pipeline, below the consensus estimate of 1.01 million and the 1.018 million in February. The soft showing is a red flag that points to some stalling ahead.

Of course, the horrible winter conditions across the country were largely blamed, but with the warmer months ahead of us, there will be little excuse if we see weaker numbers. This is especially true since the jobs market is showing some increasing strength.

Given what we’re seeing in the housing market, I would be hesitant to jump in and buy the homebuilders. A good alternative in the housing market would be to play the companies in the area … Read More