Darden Restaurants, owner and operator of the Red Lobster, Olive Garden, Longhorn Steakhouse and three up-and-coming restaurant concepts, opened the first quarter of its fiscal year with strong sales growth. Higher food costs and Tropical Storm Irene hurt the bottom line, but the company’s consistent long-term track record remains fully intact. With a low valuation and 3.6% current dividend yield, the stock is worth a close look.
Fears over defense spending cutbacks from the Pentagon, and related government entities, have sent the stocks of the largest defense firms down considerably. On the flip side, this has meant that current dividend yields are up, and this is a positive development for income-minded investors. Better yet, as the name implies, defense firms have truly defensive investment characteristics, which stems from the fact that the need to spend on defending the U.S. and its allies is required regardless of the economic climate. They are also a good hedge against geopolitical tensions, be it terrorist activity or unstable political regimes. Below is a list of the three defense stocks with the highest current dividend yields.
The investing environment for individuals seeking income from their portfolio is grim these days. Fixed income options are extremely limited, with the 10-year U.S. Treasury yielding an unappealingly low 1.9% right now. Municipal and corporate bond yields of the highest quality with similar maturities are equally uninspiring at 1.87% and 2.57%, respectively.
So far in 2011, beverage and snack food giant Pepsico’s (NYSE:PEP) stock is badly lagging its peers. Its share price performance is firmly in negative territory and trending below the market for the year. This reflects a couple of near-term and overblown worries about its businesses. Longer-term, investors should be able to count on operating performance more in line with what Pepsi has reported over the past decade. (For more, read Using Historical Volatility To Gauge Future Risk.)
By Ryan FuhrmannPublished 09/28/2011 – 11:00
Financial media firm Forbes just came out with the Forbes 400, which ranks the 400 richest Americans. Bill Gates topped the list with an estimated net worth [1] of $59 billion. This impressive amount of wealth also qualified him for second in the world, behind only telecom mogul Carlos Slim of Mexico and his net worth of $74 billion.
Posted: September 28, 2011 3:44PM by Ryan C. Fuhrmann , CFA
Low-risk is a subjective term, but it generally indicates an investment that is unlikely to fall in price. Beaten-down investments can qualify as low-risk, as it suggests there is more upside potential in their prices as opposed to downside risk. With that said, here are five investments that could qualify as low-risk options for investors, as we wind down the calendar year.
Software giant Oracle (Nasdaq:ORCL) reported first quarter results after the market close on September 20 that suggested it is making an easy transition from acquiring market share to earning it by growing its existing businesses. Strong capital generation and a reasonable valuation are helping it further stand out from the competition.
Application software firm Adobe Systems (Nasdaq:ADBE) reported modest sales growth and a decline in earnings during its third quarter. However, the results masked what should still be strong full-year trends and profit growth by the company’s estimations. It also appears to be successfully introducing cloud-based services by which users pay for its software on a subscription basis.
On Tuesday, the news wires reported that Warren Buffett hired a second manager to help him run Berkshire Hathaway’s investment portfolio. Berkshire announced that Ted Weschler would be joining the firm in early 2012. In the meantime, Weschler will be winding down his hedge fund Peninsula Capital Partners. To get a better feel for Weschler’s investment style, based on filings with the Securities and Exchange Commission as of the end of the second quarter, these were his fund’s five largest holdings.
Since its founding in 1969, Cracker Barrel Old Country Stores (Nasdaq:CBRL) has specialized in serving home-style meals in a country-themed, family environment. An adjoining retail store also brings additional revenue and profit opportunities, though operating margins tend to lag the industry average. This and a tough end to its fiscal year have caught the attention of an activist investor.
By Ryan FuhrmannPublished 09/14/2011 – 13:00
The retail industry can be extremely competitive. It’s easy for rivals to swoop in and copy the strategies of a successful retailer — just think of what Wal-Mart (NYSE: WMT [1]) did to K-Mart by copying its low-cost approach and adding sophisticated information technology and logistics [2] savvy to lower its costs beyond what many rivals could even imagine. Yet despite the cut-throat competition, a number of companies have managed to foster sustainable strategies to keep loyal customers and fend off competitors, regardless of whether they operate stores or have online presences.
The recent market downturn has many investors on the lookout for companies that might be able to withstand a double-dip recession. Based on its stellar performance through the credit crisis and international focus, Tupperware (NYSE:TUP) may be one of those firms.
Shuffle Master (NYSE:SHFL) exists to help casinos run more efficiently and offer table and electronic games that gamblers will demand. Its basic shuffling devices sold well during its third quarter, as did a new PC-based slot machine game. With any luck, the solid sales trends will translate into steady profit growth going forward.
Back in 2009, in a fight for survival, beleaguered global insurance giant American International Group (NYSE:AIG) sold its majority ownership stake in reinsurer Transatlantic Holdings (NYSE:TRH). In February 2010, Transatlantic’s management team started considering partnering up with a rival to improve its competitive position. A year later, it started talking with a rival and, despite a couple of competing bids, including one from Warren Buffett’s firm, the company has decided to move forth with a merger. Below is an overview of the developments and what it will likely mean for shareholders.
Handbag and accessories retailer Vera Bradley (NYSE:VRA) went public last October and has since reported four straight quarters of rapid sales growth. The second quarter results released on Tuesday were no exception. Overall, Vera’s operating results have been impressive. The only thing not to like is the lofty share price valuation, though several more years of breakneck growth could greatly enhance Very Bradley’s investment appeal.
Dollar General (NYSE:DG) is a specialty retailer that sells discount consumer goods for a price generally between $1 and $10 per item. Its focus is on “everyday necessities” such as national brands in the consumable, seasonal, home products, and apparel product categories. Another important company distinction is that 70% of its store base exists in rural towns with a population of 20,000 or less. Even more importantly, the stock recently caught the attention of Warren Buffett’s Berkshire Hathaway. (For other Buffett investments, read Warren Buffett’s Best Buys.)
Fast-food restaurateur Wendy’s (NYSE:WEN) reported second quarter results earlier in the month that saw modest sales growth and minimal profit generation. The company has ambitions to grow its store base internationally, but still has work to do to build investor confidence that significant cash flow production and sustainable bottom-line growth is on the horizon. (For more check out How To Analyze Restaurant Stocks.)
Bookstore operator and Nook eReader provider Barnes & Noble (NYSE:BKS) reported first quarter losses that were worse than analysts expected. However, Nook sales jumped significantly and suggest the company is successfully competing with technology rivals in the battle over digital book content and related reading devices. Its business model remains in flux, but Barnes & Noble is increasing the likelihood that it doesn’t follow its erstwhile archrival into the recycle bin.
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