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Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Last month, I showed you how lots of stocks had been participating in upside moves, not just the FANGMA – Facebook Inc. (Nasdaq: FB), Apple Inc. (Nasdaq AAPL), Netflix Inc. (Nasdaq: NFLX), Google/Alphabet Inc. (Nasdaq: GOOGL), Microsoft Corp. (Nasdaq: MSFT), and Amazon.com Inc. (Nasdaq: AMZN) – heavyweights.

Now, I’ve likened breadth, which I’ll tell you a little more about, to my “canary in the coal mine.” And by far my favorite way to see whether the canary starts to feel queasy is by watching the cumulative advance/decline line.

As a quick reminder, this indicator starts with a daily breadth number. Breadth is the number of stocks on the New York Stock Exchange that closed higher than yesterday minus the number that closed lower. That’s where the term advance/decline comes from.

When we add up that breadth number day after day, we “accumulate” the daily breadth numbers, giving us a cumulative advance/decline (A/D) line.

Most of the time, when the market goes up or down, the cumulative A/D line moves in lockstep.

Conceptually, the reason why this is an important metric is very straightforward as well. If only a few stocks are pulling the market up, then it only takes one of those stocks to fall hard to send the market spiraling.

So far, the market’s resisted doing that. But I’m seeing things that suggest we may be in for, if not a huge move down, then some decidedly more up-and-down action before long.

Have a look at these charts…

When the Line Starts to Split, Watch Out

I’ve shown charts in the past of how well the cumulative A/D pointed out major turns in the market:

It’s interesting that we saw a cumulative A/D line divergence in late 2015 before the big August correction in that year. I call it interesting because that was a “micro” case of the other big turns on the chart above, but it’s very illustrative.

That was a time when global financial markets, especially China, were struggling. China was down over 30% from its peak in just a matter of three to four months. And yet the U.S. markets continued to climb, fueled by the great run of the FANG (Facebook, Amazon, Netflix, and Google/Alphabet) stocks.

A look at the market breadth at the time shows that (unlike nowadays) those few stocks weren’t just leading the market – they made up almost all of the gains that summer.

The reckoning came in August when the S&P 500 dropped more than 15% in just five trading days. There was plenty of money to be made on big, bearish extremes.

Today’s FANG and Breadth Story

I’ve heard similar concerns recently – that the FANGMA stocks are all that are holding this market up. I’ve previously addressed these worries, but it’s worth a quick glance back before looking at what could be coming around the corner.

The short answer is that those six big tech stocks are leading the market. However, unlike August of 2015, lots of other stocks are following. So, breadth (number of stocks participating on the upside) is consistent with market returns and not as unbalanced as many have reported.

Let’s see how that plays out in our current cumulative A/D chart:

We see that breadth helped us form an expectation of more upside after the late March to early April retest of the February lows. And during this last push up into the last half of July, there is still broad market participation, even with Big Tech still leading the way.

I believe that right now there are more “yellow flags” signaling caution in the market than we’ve seen in many years. But the prudent course is to follow the trend and keep buying the pullbacks until breadth and other indicators tell us that the party is over.

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Source: Money Morning

Hot Stocks For Now: Bitcoin Investment Trust (GBTC)

I know what you’re thinking, “The Bitcoin Investment Trust (OTCMKTS:GBTC) has already fallen a ton!”

That’s true, as GBTC topped out around $35 back in December. Of course, it’s no surprise that that’s when bitcoin also hit its top, given that the GBTC tracks the price of bitcoin. While GBTC could soar should the cryptocurrency regain its momentum, investors should be leery of its near-50% rally over the past few weeks.

For starters, bitcoin has been highly volatile and under a lot of pressure so far this year. Bulls can make a case for owning it, but the GBTC shouldn’t be a way to do it. This fund trades at a more than 50% premium to its net asset value (NAV).

What does that mean? The price of the fund, which charges a way-too-high 2% annual management fee, trades at a 52.7% premium to the current bitcoin price. Were the fund to liquidate, its value would plummet.

Sorry crypto lovers, I’m not a buyer of GBTC.

Hot Stocks For Now: Fossil (FOSL)

Man, Fossil Group (NASDAQ:FOSL) has been on fire. The company has gotten its act together a bit and has been cutting down debt. But does it warrant a 500% rally?

Within the last 12 months, shares traded for as low as $5.50. Fossil stock recently topped out near $32 just last month and the 50-day moving average is acting as support as we speak. Trend-line support is also in play.

Look, I’m not saying I’d lever up on a short position in FOSL, but I would be questioning the run. The company is expected to lose money this year, before earning just 37 cents per share in 2019. That means FOSL stock trades for more than 70 times next year’s earnings. Further, sales are expected to decline this year and next year.

Fossil also does not pay a dividend.

It’s no wonder momentum traders are sticking with FOSL. The stock has the wind at its back and it’s a low-market-cap stock that’s easy to push. That said, I’d look for more quality investments for long-term holders.

Hot Stocks For Now: Netflix (NFLX)

Netflix (NASDAQ:NFLX) is certainly a controversial pick for this article. This FANG stud has outperformed Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN) and Alphabet(NASDAQ:GOOG, NASDAQ:GOOGL) this year and over the past 12 months. It’s taking over the world with its streaming platform and is disrupting one of the world’s largest industries.

So this isn’t to say load up a short position or don’t ever buy it. But it’s important to point out its flaws.

The stock is still up a whopping 132% over the past year and an insane 95% so far in 2018. However, on Monday Netflix reported quarterly results. Despite beating on earnings, it missed on revenue estimates. Even worse, second-quarter subscriber growth was worse than expected — far worse, actually.

That follows four straight quarters of obliterating subscriber expectations. This isn’t a case of analysts getting overzealous either. The guidance from Netflix management was similar to consensus estimates too. Even worse though? Management’s guidance for third-quarter subscription growth was well below expectations too.

At first, NFLX paid the price, down 14% in early trading following the results. But investors immediately bid up the stock, dismissing the miss-and-miss on estimates and guidance.

So what gives? Bulls used to argue that the story isn’t about earnings or cash flow right now. Instead, it’s all about subscriber growth. That’s what fueled shares higher more than 100% on the year, despite Netflix spending half of its expected revenue on content in 2018.

Now that subscriber growth is disappointing, we’re what, going to buy the dip again?

Maybe so. But Netflix just showed some cracks, even though the stock’s not acting like it. Maybe this is the wrong gut feeling to have, but I wouldn’t be surprised to see NFLX revisit its recent lows.

Hot Stocks For Now: Riot Blockchain (RIOT)

Riot Blockchain (NASDAQ:RIOT) thought it could change its name to something crypto and it would solve all of its problems. Unfortunately, some investors surely got taken for their money, as shares ran from ~$3.50 to more than $45 between August and December 2017.

Even worse, its CEO unloaded more than 30,000 shares near $28 in December too.

Some may dismiss Riot being on this list because it’s related to blockchain and crypto. They may argue ignoring it near $6 is a crime in itself. I am not one of those believers though, at least when it comes to RIOT.

While the stock fell 9% on Wednesday, it follows a near-40% one-day rally earlier this week. The technicals are still terrible, the company trades at a laughable 65 times its 2017 sales and makes no money.

So do you short this work of art? Of course not. Because a rally — however ridiculous it may seem — could more than double the stock. We’re looking for quality stocks to own, not lottery plays at the casino.

And some may wonder, “how is this a hot stock that could become a dud,” especially when RIOT has gone from $30 to $6 in the last seven months? Because it’s up 40% this week and its 52-week lows are still far below current levels.

Admittedly, a bitcoin rally could heat up RIOT. But if you want exposure, just stick to crypto.

Source: Investor Place

I recall the presentation vividly.

It was November 2007 and I was standing in front of a packed room at a really swank resort along the Mexican Riviera. Money Map Press was in its infancy, and I was making my first public appearance as its chief investment strategist.

The markets were rocketing higher, the money was easy, and investors were greedy.

Until I got on stage.

I dropped a financial bomb of epic proportions by telling my audience two things: 1) the rally they were counting on was about to come screeching to a halt; and, 2) they’d best shift their attention to harvesting profits.

You could have heard a pin drop.

I made my case as simply as I knew how… a “compressed range since 2005 shows [the] market ready to snap just like [it did] in early 2000.”

Then, I threw the following chart up on the projector, knowing full well that a picture is worth a thousand words… or at least a few million dollars in the hands of savvy folks.

Pay particular attention to the yellow circle.

My analysis suggested that the S&P 500 would fall to 1,329.26 by March 1, 2008, before making a brief stand and collapsing further.

It was tough stuff made doubly so because conventional Wall Street analysts would have sugarcoated the news… that is, if they had even seen it coming in the first place. Most, as you know, did not… which is why the financial carnage that followed was so very painful for many.

In my capacity as chief investment strategist, though, I had no choice but to tell investors three things, even if they were unexpected and uncomfortable: 1) exactly what my analysis showed, 2) why it was happening, and most importantly, 3) how to profit from a market collapse that I believed was going to catch millions of unsuspecting investors by surprise.

You see, my success is derived directly from your success, not Wall Street’s special interests or corporate sponsors. That’s why I take the trust you place in me and in my team very, very seriously and why, today, we are the No. 1 independent financial research firm in the world.

But, getting back to the point, you know how the story ends just as well as I do.

The S&P 500 actually closed at 1330.45 on Feb. 29, 2008… before falling off a cliff as the Global Financial Crisis hit. Ultimately, the S&P 500 would tumble 56.4% from the peak it set on Oct. 9, 2007, and shave a staggering $15 trillion from global markets.

Investors who went to the sidelines – as I advocated – made “bank” by harvesting profits. More aggressive readers did even better by purchasing inverse funds like the Rydex Inverse S&P 500 Strategy – Investor Class (RYURX) and put options.

Critically, they also began redeploying those gains into rock-solid companies almost immediately. Choices I recommended like SPDR Gold Shares (NYSE Arca: GLD), Monsanto Co. (NYSE: MON), and ABB Ltd. (NYSE: ABB) would go on to triple-digit returns before subscribers were done with ’em.

Those who didn’t and who struggled to “buy the dips” may as well have been rearranging the deck chairs on the Titanic because their portfolios still got decimated.

You Must Act Now: America is headed for an economic disaster bigger than anything since the Great Depression. If you lost out when the markets crashed in 2008, then you are going to want to see this special presentation…

Could I have been wrong?

Absolutely.

I am NOT telling you this today to make myself look smart, nor to create the opinion that I am the greatest financial analyst since sliced bread. I am not – I put my shoes on one foot at a time, every day, just like you do.

The advantage I have is one drawn from 35 years of experience in global markets as a consultant, analyst, and trader and tens of thousands of hours studying the worldwide financial markets.

I could care less about being “right” (which is how most amateurs approach the markets). What I do care deeply about, though, is helping you find the world’s best investment opportunities and showing you how to profit handsomely in all kinds of market conditions (which is how legendary investors like Warren Buffett and Jim Rogers do things).

I’m telling you all this for a reason.

I recently updated that same chart I showed my audience more than a decade ago and, once again, I see a potentially very nasty turn of events ahead.

The compression that was present back in 2007 has reared its ugly head again. Technically speaking, prices have fallen off since January and are now trading just above a critical line of “last resort,” which I’ve highlighted in yellow.

At the same time, emotions are running high, which confirms a change in sentiment I noted during an appearance on “Varney & Co.” this past Monday morning, where I made the same point in response to anchor Stuart Varney’s question about the possibility of a correction.

The next stop is 2,476.79 in May if the markets cannot hold at the lows set Feb. 9, 2018. Or, sooner.

From there, chances are good it’ll be another white-knuckle ride… a “Great Reckoning,” if you will.

The vast majority of folks don’t see this coming, and those few who do are not preparing properly… nor profitably.

If you’re like me, you’ve felt a sense of market turmoil ahead. This chart should be all the proof you need to take action. The last time it looked like this it was just months before the epic 2008 crash that pushed our financial system to the brink.

Ask yourself, right now, in light of what I’ve just laid out: Are you where you want to be financially?

If the answer is yes, that’s great.

If the answer is no, then you are NOT alone, and you need to click here.

So, Now What?

As always, a little perspective is in order.

Millions of investors fear information like that which I’ve just shared with you because they have no idea what to make of it nor how to handle the fact that what I’m telling you is just around the proverbial bend.

Thankfully, you’re not in that crowd.

As a member of the Total Wealth family, you’ve got a number of significant advantages – not the least of which is a very different perspective from traditional investors who risk having their 401(k)s turned into 201(k)s for the third time in less than 20 years.

As we have discussed many times, the right perspective is also the most profitable perspective. Here’s what that means…

Right now, it means you’re still after profits, but you want to take a moment to don the psychological armor needed to protect your money against the emotional inputs that will destroy other investors as conditions deteriorate in the face of a trade war, increasingly tense international relations, and disjointed politics on both sides of the aisle.

This makes sense when you think about.

When the markets are running higher, our emphasis is on loss prevention because we want to make money with every stock we own, every day we own it. When they’re running lower or losing gas, as is the case now, your primary focus becomes harvesting profits – a subtle distinction lost on most investors.

To be clear, I am not suggesting you time the markets – doing so never works out the way people think, despite their best intentions.

A rules-based approach, like the one I advocate, is always more effective, which is why it’s at the heart of every investing service I offer and a crucial part of the Total Wealth investing process.

I want you to start taking profits as fast as the markets want to hand them to you by doing three things. Chances are good that you will have a bunch – of profits, that is – if you’ve been following along for any length of time:

• Use Total Wealth tactics like trailing stops and profit targets to calmly and systematically harvest profits like clockwork without the emotional interference that cripples most investors who sell in a panic when the you know what hits the fan. This guarantees that you are constantly raising cash you can put to work later, even as other unsuspecting investors burn theirs. Again, this is how legends like Warren Buffett and Jim Rogers approach markets and how Sir John Templeton, one of the greatest market masters in history, did.
• Buy a short-term 1:1 inverse fund like the Rydex Inverse S&P 500 Strategy – Investor Class (RYURX) or an ETF like the ProShares Short S&P500 (NYSE Arca: SH). Both will rise as the S&P 500 falls, which means you can profit from the sting that will devastate other investors. Buying put options is also a great way to go if you’re options-savvy, but what I’m talking about today is protecting your core investments, not speculating.
• Put new money to work in ONLY those holdings like the Triple Compounders we’ve talked about recently, or the world’s best Global Growth and Income plays like NextEra Energy Inc. (NYSE: NEE), Baidu Inc. (Nasdaq: BIDU), and Visa Inc. (NYSE: V), which still have solid business cases and even more solid profits ahead.

In closing, I know a column like this one can be scary.

Believe me, I certainly think twice every time I have to write one, which thankfully isn’t very often.

But, don’t let that stop you from investing.

Growth may slow but it will not stop.

Source: Money Morning

After topping 10 million barrels per day for the first time since 1970 in November, the U.S. Energy Information Administration (EIA) said that U.S. crude oil production hit 10.2 million barrels per day in January. That surpassed the previous record (10.04 million barrels) for any month that was set in 1970 during the final days of the first Texas oil boom.

This is a remarkable feat considering the United States hit its low point in oil production in 2008 at about five million barrels a day. And oil imports are down to only about 2.5 million barrels a day as compared to the peak of 13.4 million barrels per day in 2006.

The EIA also upped its forecast for U.S. crude production for this year to 10.6 million barrels per day and for 2019 to 11.2 million barrels per day. If the forecast is right, it will make the United States the world’s largest oil producer, surpassing both Russia and Saudi Arabia.

For the prime example of the change in U.S. oil fortunes, look no further than the Permian Basin, which is located in Texas and New Mexico. Output there in 2017 totaled 815 million barrels. The previous record was set in 1973 at 790 million barrels.

All of this is good news, right?

Yes, if you’re an oil consumer. But if you happen to own oil stocks, the answer is a resounding no.

Shale Oil Company Stupidity

And the reason is obvious. The last time oil prices rose into the $60s per barrel, the U.S. shale producers pumped oil out of the ground as fast as they could. The assumption was that demand from places like China would continue to soar exponentially.

So when demand cooled a bit, the result was a crash that took the oil price into the 20s per barrel, which devastated the industry for several years.

Demand is still strong at the moment. For example, China is the second-largest market for U.S. crude oil, having imported 50 million barrels in the first nine months of 2017. But the oil storage facilities in China are nearing capacity, leaving an open question about the extent of future U.S. oil imports.

And since the recovery rate for oil from shale reserves remains very low, this suggests there is more potential for increased production as the technology to get at these reserves is improved.

Based on the history of absolutely no discipline from the U.S. shale industry, I expect an even greater flood of U.S. crude than the EIA forecast. That flood will likely send oil prices tumbling once again. And it’s not just the smaller shale companies that are solely to blame.

Energy giant ExxonMobil (NYSE: XOM) said in late January that it plans to increase its oil output in the Permian Basin fivefold by 2025 to 500,000 barrels per day. And Exxon is hardly alone among the majors.

Chevron (NYSE: CVX) also has said it will invest $2.5 billion in shale this year, with most of that investment going into the Permian Basin. For 2019, Chevron said it will invest a total of $4.3 billion into shale, with $3.3 billion of that going into the Permian Basin.

Oil companies continue to invest into shale even though most U.S. shale companies have struggled for profitability, and the industry as a whole has consistently lost money since the first successful shale oil wells were drilled in 2008-09. Exxon itself lost $439 million on oil and gas production in the US in the first nine months of 2017.

Other Considerations

While all of this is going, the smaller shale companies are also being adversely impacted by the change in the tax laws limiting interest deductibility.

Remember that many of the shale firms have heavy debt loads and now they will not be able to deduct all of their interest payments on that debt. According to Greensill Capital, if the limits on deductions in the 2018 to 2021 period had applied in 2016, companies would have been unable to claim tax relief on 39 % of their interest payments. The limit for 2022 onwards would have prevented relief on 97 % of those payments.

Consider too how quickly too oil dropped below $60 per barrel during just a few days of market turmoil, suffering its worst week in two years. That shows you will see how little firm support there is at the current price level. The steep price decline was likely the result of hedge fund liquidations – hedge funds had accumulated a record long position in crude oil.

Add this all up and I would avoid, or sell short if have a high risk tolerance, the oil producing sector as a whole.

Investment Implications

With the added consequences of the new tax law, I would definitely avoid the exploration and development companies that are carrying heavy debt loads. Two ETFs that have large exposure to these type of companies are the SPDR S&P Oil & Gas Exploration & Production ETF (NYSE: XOP) and the iShares U.S. Oil & Gas Exploration & Production ETF (NYSE: IEO). These two ETFs are down 12.88% and 9.05% respectively year-to-date. The former is off nearly 20% over the past year.

Even the Energy Select Sector SPDR Fund (NYSE: XLE), whose largest positions are Exxon (22.6%) and Chevron (17%), is actually a little in value over the past year. In other words, your money will be treated better elsewhere; especially in the light of these companies going in so heavily into shale and ramping up output that will very likely not be needed.

However, if you still wish to have some exposure to the oil sector, I would go with the Norwegian oil company Statoil ASA (NYSE: STO) whose stock is up 21% over the past 52 weeks. The company reported better-than-expected earnings in its latest quarter on the back of record production.

It also, in December, gave the go-ahead to its flagship Johan Castberg project in the Barents Sea after slashing costs by 50%. The breakeven for the project is now less than $35 per barrel. The Barents Sea is thought to hold about half of Norway’s undiscovered oil and gas. The company’s management also showed their savvy when they bought mature oil assets offshore Brazil for the equivalent of $10 per barrel in December.

Now don’t get me wrong. If oil falls in price, so will Statoil’s stock. But I like a management that is focused on squeezing costs and only going ahead with the most profitable long-term projects.

That is unlike some U.S. company managements that only know the words, “Drill, baby, drill!” No doubt due to the fact that some incentive packages for executives are still based on the amount of oil produced and not on bottom line profitability.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Source: Investors Alley 

It’s official. The latest correction in the markets has entered scary territory. If you’re one of the thousands of investors freaking out, you might want to consider these seven stocks to own should things get really ugly.

Boy, did it come out of the blue, or what?

The S&P 500 gained 5.7% in January. By the end of trading Feb. 7, it had lost more than 80% of those gains culminating with the index’s reversal of fortune.

Up 1.2% in the first few hours of February 7 trading, investors fled in droves, sending stocks for a 0.5% loss on the day, the fourth negative performance in five days of trading erasing more than a trillion dollars in market cap. 

Where to hide other than cash?

Here are seven stocks to own I believe can withstand whatever else this correction throws at investors.

You’ll note all seven have little or no debt, lots of free cash and as wide a moat as possible.

Happy investing.

Stocks to Own Should Latest Correction Get Really Ugly: Public Storage (PSA)

I recently moved from Toronto to Halifax, a thousand-mile change in residence. Not having moved in a while, my wife and I had accumulated a lot of junk.

It made me realize that people don’t like to part with their junk, hence the growth in self-storage facilities like the ones owned by Public Storage (NYSE:PSA).

There’s a two-step process. 

First, you realize your house is overloaded with stuff, so you rent a storage locker to declutter. Then after a few years, you forget why you had a storage locker in the first place, so you call someone like 1-800-Got-Junk to haul it away. And then you repeat the process over and over until you die.

I’m facetious, of course, but I’m sure there’s a grain of truth in what I’m saying. In good times and bad, people are always looking for storage space.

Last July, I called PSA a boring stock to own, which it is, because it operates in an industry that’s only going to keep growing as boomers downsize.

Since recommending its stock, it’s down a little more than 10%. At the time, I thought it was cheap; it’s even cheaper today. It yields an attractive 4.3%. 

Stocks to Own Should Latest Correction Get Really Ugly: Acuity Brands (AYI)

Consider this my contrarian pick of the bunch.

Acuity Brands, Inc. (NYSE:AYI) specializes in lighting solutions for homes and businesses. It has been in an awful funk in recent years after going on a big run that saw its stock deliver annual returns of 29%, 62%, 29% and 67% between 2012 and 2015.

In January, I called Acuity Brands one of the ten stocks that could surprise in 2018. That’s on top of recommending its stock on two occasions in 2017.

Since my article, it has lost another 20% on top of the 24% it lost in 2017.

A glutton for punishment, I can’t ignore the fact analysts expect it to earn $9.40 a share in 2018 and $10.23 in 2019. That’s less than 15 times its forward 2019 earnings.

Considering its P/E ratio hasn’t been this low since 2008, I see Acuity as a smart buy in a market that’s taking down overpriced stocks.

Stocks to Own Should Latest Correction Get Really Ugly: Hormel Foods (HRL)

When times get difficult, many people eat to forget their problems. A company like Hormel Foods Corp (NYSE:HRL) can help with that. Some of its brands have been around for years such as Spam, its mystery meat product in a can.

Hormel as increased its dividend for 52 consecutive years. In times of market volatility, it’s nice to know you’re going to get paid regardless of what happens to the stock price in the interim.

In October, Hormel announced that it was paying $850 million to acquire Columbus Manufacturing, Inc., a California business that specializes in premium deli meats under the Columbus brand. Together with its other deli brands Hormel and Jennie-O, it allows the company to provide a stronger offering to grocery stores in the refrigerated foods aisle.

Accretive to earnings in both 2018 and 2019, this is an excellent example of a strategic investment that will transform this segment of Hormel’s business.

Hormel stock has flatlined since early 2016. The Columbus acquisition should help get it unstuck. Until it does, a 2.3% yield isn’t a bad trade-off for a stock that’s trading at 17.5 times cash flow, its cheapest valuation since 2012.

Stocks to Own Should Latest Correction Get Really Ugly: Tractor Supply (TSCO)

Tractor Supply Company (NASDAQ:TSCO) serves the rural lifestyle. Its combination of product offerings provides a nice contrast to retailers like Walmart Inc (NYSE:WMT) and Home Depot Inc (NYSE:HD).

In the last couple of years, TSCO’s stock has missed out on the broader rally in the markets and now trades in the high $60’s, well off its all-time high of $97, hit in May 2016.

Its recent earnings results are encouraging — same-store sales up 4% in Q4 2017 compared to 3.8% a year earlier; transactions were up 2.7% and average ticket increased 1.3% — but it needs to work a little harder on keeping margins in check if it also wants to grow the bottom line.

A big reason for the 120 basis point increase in its Q4 2017 SG&A expenses is Tractor Supply continues to work on providing a better customer experience through technology and employee training and those things cost money.

In 2018, TSCO sees comps of at least 2%, net income of between $490 million and $515 million, and net sales of at least $7.69 billion.

In the past week, TSCO stock’s seen a 12% slide in its share price and is now trading at 16.7times its forward earnings, which is well below its average P/E ratio over the past decade. 

Perhaps, this too is a contrarian pick for a volatile market, but I see a stock that’s taken a beating for far too long and is ready to come to life.

Stocks to Own Should Latest Correction Get Really Ugly: Carter’s (CRI)

When it comes to buying clothes for babies and young children, Carter’s, Inc. (NYSE:CRI) has the upper hand on the rest of retail. Between the Carter’s and OshKosh B’gosh brands, many new parents make it a must visit, hence why it’s the largest branded marketer of apparel to these two age groups.

Sure, we might not be having kids at the same rate as in the past, but we’re definitely willing to spend money on those we do bring into the world. We’ll forego buying ourselves a nice pair of pants to buy that cute jumper for our newborn.

In Carter’s Q3 2017 results announced at the end of October, it had notably strong U.S. results. Retail same-store sales increased 2.6% on the strength of eCommerce comp growth of 20.9%, offset by a 3.2% decline in brick and mortar sales.

Interestingly, that’s not necessarily a bad thing for the company. As customers become accustomed to the fit of its clothes, it makes sense for returning buyers to purchase online saving themselves time.

Omnichannel means you’re sometimes going to see store comps contract as eCommerce grows. It’s a fact of life in the new retail.

Carter’s continues to drive margins higher generating record free cash flow which it uses to buyback shares, pay dividends and keep debt low.

As long as people have kids, it’s a great stock to own in volatile markets. 

Stocks to Own Should Latest Correction Get Really Ugly: Church & Dwight (CHD)

Church & Dwight Co., Inc. (NYSE:CHD) not only is a great stock to own should the markets get really ugly, it’s one of the most consistent performers trading on the NYSE.

Back in 2016, I wrote about the consumer packaged goods company’s perfect record over the past decade. It hadn’t experienced a single year in negative territory. It’s carried on with that tradition notching gains of 5.8% in 2016 and 15.3% in 2017. 

The gains over the past two years seem insignificant compared to the S&P 500, but over the long haul, Church & Dwight has delivered for shareholders. A $10,000 investment in CHD stock at the beginning of 2008 is worth approximately $42,000. The same investment in the index is worth approximately $23,000 or 40% less.

The company has a proven method for building its business through acquisitions and organic growth. By focusing on a few healthy brands, it’s able to grow market share over time.

If you’re going to buy only one consumer defensive stock for your portfolio, Church & Dwight ought to be it.

Stocks to Own Should Latest Correction Get Really Ugly: Jacobs Engineering (JEC)

While an infrastructure plan is said to be coming from the White House at any moment, Jacobs Engineering Group Inc (NYSE:JEC) is too busy to notice.

The professional services company just released its Q1 2018 results and they were very healthy with adjusted net earnings up 13% to $97 million or $0.77 a share with double-digit organic revenue growth from its professional services segment.

The company continues to integrate its 2017, $3.3 billion acquisition of CH2M, Colorado’s largest privately held company. Jacobs is excited about the future with CH2M a part of the company.

Jacobs raised its fiscal 2018 guidance for adjusted earnings from $3.75 a share to $4.05, almost a 10% increase, as a result of the lower corporate tax rate.

It finished the quarter with a backlog of $26.2 billion. As the company continues to focus on profitable growth, I would expect JEC stock to hold up well should the markets continue to correct.

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Source: Investor Place 

Stock market crashes always seem to come out of nowhere. But, in hindsight, we realize that all the elements for a crash were in place months before prices fell. There will, of course, be another crash, and we can already see many of the black swans lining up to cause the crash.

A black swan is a rare event that no one seems to be able to predict. It could be a housing crash after prices soar to unsustainable levels and are propped up by lax mortgage-underwriting standards. Or a black swan could be a surge in inflation or a geopolitical crisis.

When we study the black swans after the fact, they seem obvious. There were clues, but investors ignored the clues because they were caught up in “irrational exuberance.” Sometimes, investors can remain irrational for years. That’s what happened in 1996, the last time Alan Greenspan issued a warning.

Greenspan was chairman of the Federal Reserve at the time. He famously asked: “How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?”

Analysts at the time thought Greenspan was warning of a stock market bubble. He was, but the bubble lasted until early 2000, and the S&P 500 more than doubled before the bubble popped. Internet stocks recorded even bigger gains.

This time, Greenspan thinks we’re in a different kind of bubble…

For now, Greenspan thinks the stock market is in good shape. But he believes higher interest rates will cause a bear market someday.

Greenspan recently spoke to Bloomberg and confirmed what almost everyone who isn’t in the Fed believes: “By any measure, real long-term interest rates are much too low.”

In his view, the bond-market is in a bubble. And like all bubbles, the bond-market bubble will end badly.

“The real problem,” he said, “is that when the bond-market bubble collapses, long-term interest rates will rise. We are moving into a different phase of the economy — to a stagflation not seen since the 1970s. That is not good for asset prices.”

Many of us are too young to remember what the stock market was like in the 1970s. The chart below shows Greenspan was right. It was not a good time for asset prices, and investors suffered large losses.

The early 1970s was a time of relatively low inflation. The annual change in the Consumer Price Index is the red line in the chart below. The blue line shows the interest rate on 10-year Treasury notes.

Inflation jumped suddenly in 1973, and the Fed was slow to react. It kept interest rates too low for too long, and inflation roared toward 15%.

(Source: Federal Reserve)

Eventually, the Fed raised interest rates and broke the inflationary spiral. But consumers endured high unemployment and high inflation while the Fed learned to battle inflation.

Maybe this time is different, and the Fed won’t allow inflation to accelerate. But that seems unlikely. We already have half of the stagflation formula in place with a stagnant economy.

Greenspan is warning that an unexpected spark will set off inflation. He’s probably right, because the Fed is in uncharted territory and has created a bubble in bonds. The bubble will burst … we just don’t know when. We do know, as Greenspan notes, that that will not be good for asset prices.

Regards,

Michael Carr, CMT
Editor, Peak Velocity Trader

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Source: Banyan Hill 

As the Federal Reserve is set to see a new leader, the one area all eyes will continue to watch is the diversion between the S&P 500 and rates on U.S. Treasuries, specifically the 10-year.

The two, historically, have moved in tandem, meaning as the S&P 500 rose, so did the yield for the 10-year Treasury. And when the S&P 500 declined for a prolonged period, the yield for the 10-year Treasury declined.

This can be explained rationally.

As stocks march higher, investors want greater returns, and therefore sell Treasury bonds and buy stocks. Selling bonds pushes those prices down and the yields up.

Likewise, when investors are experiencing losses in stocks, they look to find safety in Treasury bonds, pushing those prices higher and the yields lower.

It is a rational process, but one we haven’t seen for nearly a decade. Take a look:

This uncorrelation can be explained as well.

After the 2008 global financial crisis, the trend arrows indicate the general trend for both ends. That’s when central banks sent interest rates to historic lows, keeping pressure on the 10-year Treasury yield to remain subdued even as investors fled — the Fed has been a big enough buyer to make up for the selling of bonds by investors.

But, as the Fed gets set to normalize interest rates and its balance sheet, this correlation will be renewed.

And considering the wide disparity thus far, we can expect this to be an occurrence that sends shocks in both the bond and stock market. This would bring back volatility, which has been gone for many years as well.

Regards,

Chad Shoop, CMT
Editor, Automatic Profits Alert

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Source: Banyan Hill