Posted: December 31, 2010 4:51AM by Ryan C. Fuhrmann
In a sincere form of flattery, Chinese companies look to American ones for development ideas and to emulate U.S. business plans. Downright copying does occur, but in many cases an original idea by another firm is altered to reflect unique Chinese tastes and local customs. Copying is also widespread in cyberspace, as the barriers to entry are low and the businesses are very scalable once created. In this space, companies have a habit of copying each other across the globe. (For related reading, check out Top 6 Factors That Drive Investment In China.)
Posted: Dec 30, 2010 10:02 AM by Ryan C. Fuhrmann
Specialty retailer Bed Bath & Beyond (Nasdaq:BBBY) reported an impressive third quarter that saw sales and profits grow in the double digits. The company continues to fire on all cylinders and is benefiting from a more favorable spending environment as well as the demise of an archrival. Growth over the long haul is more uncertain, as is downside protection for investors given the current earnings multiple.
Posted: December 29, 2010 11:08AM by Ryan C. Fuhrmann
The end of the calendar year is frequently a time of reflection for events that occurred over the past 12 months. It is also a point at which predictions are made for the coming year and for trying to discern trends that will last over the coming few years. With that, here is an overview of five industries worth watching for 2011 and over the next couple of calendar periods. In terms of facts, figures and projected growth rates, many stem from The Economist’s Economic Intelligence Unit, which projects growth rates in the coming year for global economies and industries in one of its end-of-year publications. (For related reading, also check out Industries Where Fortunes Rise As The Snow Falls.)
Casual dining restaurant operator Darden Restaurants (NYSE:DRI) reported fiscal second quarter results on Tuesday that saw sales rise respectably and profits jump impressively. Favorable tailwinds are expected to continue as consumers start eating out again, but a recent share price rally leaves much of the upside already priced into the stock.
Posted: Dec 22, 2010 10:55 AM by Ryan C. Fuhrmann
Payroll and human resource service giant Paychex (Nasdaq:PAYX) posted second-quarter earnings on Monday that beat analyst expectations. Going forward, the company stands to benefit as employment trends improve along with the overall economy; unfortunately for shareholders, a strong share price rally since September means most of this improvement is already discounted into the share price. Let’s take a look at Paychex’s earnings report and what it could mean for the company going forward.
Food maker and marketer General Mills (NYSE:GIS) posted respectable second quarter results on Thursday. The company has a solid growth track record, which it achieves primarily through internal means and product innovation. Its overall investment appeal is decent as it represents a relatively safe way to achieve steady growth and decent dividend income.
By Ryan FuhrmannPublished 12/17/2010 – 12:00
Every year, The Economist magazine provides predictions for global economic growth for the coming year. This year, it projects the fastest-growing countries will be Qatar, Ghana, Eritrea, and Ethiopia. China and India won’t be far behind and are expected to grow GDP more than 8% next year. Below is a brief overview of each economy and potential ways to profit from impressive growth potential that will likely last well beyond 2011.
Posted: Dec 17, 2010 09:02 AM by Ryan C. Fuhrmann
Convenience store operator The Pantry (Nasdaq:PTRY) closed out its fourth quarter in disappointing fashion by posting profits below analyst expectations. The company also reported a loss for the full year, and though cash flow trends were positive, it fell from the previous year. Overall, the company lacks investment appeal and a competitor looks more appealing, though the competitor has also ratcheted up its debt levels.
Posted: December 16, 2010 2:08PM by Ryan C. Fuhrmann
John C. Bogle is the founder of Vanguard Investments and is one of the biggest proponents of low-cost investing. In his estimation, investors as a whole pay between 3 and 3.5% in costs on their investments. This collectively goes to the investment profession in terms of trading commissions, management fees and other charges that advisors and brokers charge for providing advice to their clients. (For related reading, also check out Earn More Profit With Less Trading.)
Electronics retail giant Best Buy (NYSE:BBY) reported a very disappointing quarter on Tuesday and the stock fell nearly 17% as a result. Sales and profits fell short of expectations while the company lowered its full-year profit outlook and said it lost market share to rivals. Despite the weak near-term outlook, the long term should continue to see solid growth and the company has a stellar track record of profitable expansion.
Posted: Dec 16, 2010 10:17 AM by Ryan C. Fuhrmann
Sardar Biglari is not a household name, but he is making a name for himself by cobbling together a grouping of businesses in similar fashion to Warren Buffett’s Berkshire Hathaway (NYSE:BRK.B) (NYSE:BRK.A). His 2010 annual report even reads like a Berkshire Hathaway report, starting with the letter from the chairman that references similar concepts such as intrinsic value, capital allocation and even a sidekick by the name of Phil Cooley. Below is an overview of the full year results that were released on December 11, and a summary of the overall company.
Investing in large companies with diversified revenue streams is a strategy that can let you sleep soundly at night. Most firms in the Dow Jones Industrial Average, an index of 30 of the largest and most dominant firms in the world, use size to their advantage.
Size allows these companies to push for better deals with suppliers, which in turn can help them offer high quality products and services at a lower cost than smaller competitors. Geographic diversification is also important, as it can lessen overreliance on one economy or region. Large firms also use their dominance to expand into faster-growing overseas and emerging markets [1] that might be too risky for smaller rivals to enter.
Quick service restaurant operator Yum! Brands (NYSE:YUM) held its annual shareholder meeting last Wednesday and provided a detailed overview of its growth plans. Its ambitions remain firmly overseas, especially in China, and the company continues to target double-digit bottom line growth, as it has achieved for more than a decade now.
Any shareholder of a company that has been bought out can tell you that takeovers are often lucrative propositions, often delivering quick double-digit gains.
But overall, acquisitions have a reputation for destroying shareholder value at the acquiring company. Studies place the failure rate at between 60% and 70% of all deals. The main reason for this is that companies usually pay too much when buying another company and can stem from too much optimism on supposed synergies from a merger [1], getting caught in a bidding battle with another acquirer, or a target thinking their company is worth far more than the going rate for the business.
Posted: December 10, 2010 11:48AM by Ryan C. Fuhrmann
The term “masstige” refers to the mass market production of prestigious products that only the wealthy could previously afford. Examples include more affordable models of BMW vehicles, such as the 1 Series sedans and X3 SUVs, smaller versions and lower-priced Tiffany jewelry or more entry-level versions of fashionable purse and shoe models from the likes of Coach and Uggs. (Taxpayers should be wary when a new “temporary tax” is introduced. Sometimes these temporary taxes are anything but. To learn more, see “Temporary” Taxes That Stuck.)
United Natural Foods (Nasdaq:UNFI) started off the first quarter of its fiscal year on a very positive note as sales and earnings grew in the double digits. The stock multiple isn’t in the discount aisle, but is quite a bit lower than its primary customer and is still reasonable considering the products its distributes should be among the fastest growing in the food industry.
Posted: December 9, 2010 8:52AM by Ryan C. Fuhrmann
Venture capital is one of the primary means for start-up companies to get the funding (and many times, management expertise) to grow into a financially sound and successful business. While venture capital returns have been disappointing since the dotcom bubble burst, there have still been a handful of private companies that have made it big. Still, the online industry is one such area that has proven lucrative for entrepreneurs with vision and venture capital with the funds to back ambitious business plans. Below is a quick overview of five such firms that have captured a wide following and impressive user base in cyberspace today.
Rural convenience store operator Casey’s General Stores (Nasdaq:CASY) has spent most of this year fending off hostile offers for its business. A corporate recapitalization may have fought off these advances for good, and its second quarter results illustrate that the company will have no problem going it alone, though the higher debt leaves less downside protection for investors.
AutoZone (NYSE:AZO) holds a leading market share of the U.S. auto parts market and continued to build market share during its fiscal first quarter. The shares have performed admirably so far this year, and while this has increased the earnings multiple, the company fundamentals suggest there is further room for the stock to run.
During its fiscal first quarter, discount warehouse superstar Costco (Nasdaq:COST) experienced robust sales and profit growth. Trends were very encouraging for more discretionary merchandise, which bodes well for the all-important holiday season. The firm’s overall growth prospects look bright, but unfortunately are already largely discounted in the share price. This makes a lower-cost rival a more appealing investment.
The day will come when a public company becomes worth $1 trillion. It’s a big number to swallow, but I think it’s possible…
When I say a company will one day become “worth $1 trillion,” I’m referring to when a company reaches a market capitalization [1], or the number of shares outstanding multiplied by its stock price, of $1 trillion. Frequently, record-breaking market capitalizations coincide with a huge market run up or stock market bubble. Many Japanese firms had the largest market caps in the world when the Nikkei exchange reached its peak in December 1989. After that, it started a steady downward slide.
Kroger (NYSE:KR) is the largest pure-play grocery store chain in the country. This provides the company with considerable purchasing power and allows it to offer lower prices than many smaller chains. However, a couple of larger rivals with even greater buying clout continue to muscle into the industry. And ironically, an improving economy may now work in Kroger’s favor. To bearish investors, the current quarter offered a glimpse that these two factors may be in play.
Gildan Activewear (NYSE:GIL) just closed out its fiscal year in fine fashion. The company’s results were impressive and growth was well ahead of others in the industry. Additionally, the firm overall has a number of appealing investment characteristics.
In a recent column [1] on billionaire activist investor Carl Icahn, I detailed that tracking the moves of a high profile investment manager can be an extremely valuable strategy for individual investors. At the end of the day, coming to your own conclusion on whether an investment makes sense is most important, but there is certainly nothing wrong with leaning on other astute money masters in getting to your own buy, hold, or sell decision.
Tupperware Brands (NYSE:TUP) is best known for its Tupperware parties, where its kitchen preparation and storage products are sold outside traditional retail channels. This business model is seeing stable trends in more mature markets in the U.S. and Europe but stands out for its appeal in faster-growing emerging markets. A reasonable multiple means shareholder returns could be quite appealing going forward.
Posted: December 3, 2010 11:31AM by Ryan C. Fuhrmann
If Santa invests, he would probably marvel at just how many products exist to commemorate the Christmas holiday and just how commercial the entire season has become. Without the ability to have Santa respond to interview requests or other solicitations regarding his shopping habits or valuable consumer insight, here is an attempt to identify stores and products that Santa would be most likely to endorse. (Here’s our investing adaptation of an old holiday classic. Check out ‘Twas the Night Before Christmas.)
Posted: December 2, 2010 11:55AM by Ryan C. Fuhrmann
After a couple of very difficult years, the current holiday shopping season is expected to be quite strong. Retailers have been building inventory and hiring temporary staff over optimism that consumer spending is again on the upswing. The season officially gets underway the day after Thanksgiving and is known as Black Friday, which is meant to indicate that this is the period where retailers earn their profits for the year or go from operating in the red to the profitable black on the income statement. (What people buy and where they shop can provide valuable information about the economy, see Using Consumer Spending As A Market Indicator.)
Posted: Dec 02, 2010 09:22 AM by Ryan C. Fuhrmann
Book retailer Barnes & Noble (NYSE:BKS) reported second-quarter earnings on Tuesday before the market open that fell short of analyst expectations. This wasn’t a big deal as the firm relies on the holiday season for most of its sales and profits. What is a big deal is the company’s market is rapidly shifting to digital content, and management is acting as quickly as possible to evolve along with the industry.
Posted: Dec 01, 2010 10:27 AM by Ryan C. Fuhrmann
China Finance Online (Nasdaq:JRJC) is a leading financial portal in China and owns the highly popular web portals of jrj.com and stockstar.com. It also has ambitions to be a leading broker in the country through its subsidiary Daily Growth. The problem is rapid revenue growth appears to have stalled out for the time being. Profit trends have also been murky, though the firm should end the year in the black.
China hogs most of the headlines these days, given it represents an extremely compelling growth market for investors. I recently explained why investing in other countries can make more sense, naming India as an example of a country that may have more compelling long-term prospects [1] for investors. But it doesn’t just stop with India. There are a number of countries I think could deliver better returns for investors.
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