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5 Stocks to Sell in March

Stocks to Sell in March: Big 5 Sporting Goods Corporation (BGFV)

Stocks to Sell in March: Big 5 Sporting Goods Corporation (BGFV)

Source: Shutterstock

When I think of stocks to sell, Big 5 Sporting Goods Corporation (NASDAQ:BGFV) comes immediately to mind. Unfortunately, BGFV suffers from two double whammies: a terribly poor retail environment for sports equipment, and rising outcry over gun violence.

My first point is obvious. A surefire way to fail in business is to open a sporting goods store. The more specific the endeavor — in this case, outdoors sports — the more likely you’ll fail. Consider that in the past few years, specialty retailers Golfsmith and Eastern Outfitters filed for bankruptcy. Additionally, big name stores like Sports Authority and Sport Chalet closed their operations.

As a forgotten side note, the upside to BGFV stock is extremely limited. Even worse, the company will have to deal with the stigma of selling guns and ammunition. That in and of itself wouldn’t be a significant problem if it weren’t for the fact that Big 5 sells boring guns at ridiculous premiums.

Whenever gun control fears spike, people buy out politically targeted firearms; namely, the maligned AR15 and Kalashnikov-style rifles. Unfortunately, Big 5 doesn’t sell these guns. Instead, they offer shotguns, bolt-action rifles among other firearms. Thus, they deal with the stigma without any of the “benefit.”

That’s bad news for BGFV stock, and I don’t think circumstances will improve.

Stocks to Sell in March: New York Times Co (NYT)

Stocks to Sell in March: New York Times Co

Source: Shutterstock

The bear case for New York Times Co (NYSE:NYT) is a tough pill to swallow for me. Last year, I stated that NYT stock will win big in the era of “fake news.” No matter what side of the political spectrum you belong, we can say that everyone loves drama. Despite the NYT obviously not liking President Trump, he ironically gave the Times a reason to exist.

Since I last wrote about NYT stock, shares have gone up a whopping 67%. On a year-to-date basis, the Times has, in my view, inexplicably gained nearly 34%. I was bullish on this iconic news organization, but I think enough’s enough. The rally has gone too far, too fast and it’s time for a pullback.

Supposedly, rising sales in digital advertising and digital-only subscriptions contributed heavily to NYT stock. I say big deal. Not only are we experiencing a media revolution in which mainstream outlets are falling behind, people simply don’t get their news from the news anymore. How else can you explain Alex Jones’ popularity?

We live in a world where conspiracy theorists are given a (generous) platform simply because they’re not mainstream. And while NYT benefits from Trump scandals, I think the American people have had enough.

NYT stock deserves to be up, but not by this much!

Stocks to Sell in March: Jack in the Box Inc. (JACK)

When I was growing up, eating a McDonald’s Corporation (NYSE:MCD) Big Mac was considered a rite of passage. Today, it’s rightfully considered child abuse. That’s why I was so shocked when I read our Will Ashworth’s latest piece on MCD. Mind you, I don’t care that he’s bullish on the company. Rather, I was floored when he gladly admitted to eating the stuff!

Joking aside, American public sentiment towards fast food is sharply declining. Most people are concerned about their health than ever before, particularly the younger generation. With several fast food companies having made strong gains in recent years, I think now is a great time to take profits. This goes double for smaller eateries like Jack in the Box Inc. (NASDAQ:JACK).

The McDonald’s eating Ashworth made strong points about MCD, noting their aggressive push into budget meals and food deliveries. You combine this with their overall image renovation, and you have an outperformer in a soon-to-be-declining industry. McDonald’s can afford to do this. I’m not so sure that JACK can pull it off.

While I appreciate Jack in the Box’s humorous commercials, the competition moving forward will be fierce. McDonald’s has the brand, the locations, and the resources. JACK has funny advertisements. Beyond that, its shares’ technical volatility concerns me.

JACK stock enjoyed a stellar run from 2016, but it’s time to take some profits off the table.

Stocks to Sell in March: Twitter Inc (TWTR)

Stocks to Sell in March: Twitter Inc (TWTR)

Source: Shutterstock

Admittedly, I’m not the social media platform’s biggest fan. Therefore, it’s no surprise that I’ve been rather dim on Twitter Inc (NYSE:TWTR). While TWTR stock’s recent meteoric rise has been nothing short of stunning, I don’t like to chase momentum. I especially don’t like to chase investments that are not fundamentally sound.

Say what you want about the nearer-term trading opportunities for TWTR; its organizational structure is pure chaos. As my InvestorPlace colleague Dana Blankenhorn explained, COO Anthony Noto left the company to seek greener pastures. We all know that head executive Jack Dorsey is a part-timer. Blankenhorn writes that “Twitter has lost its adult supervision.” I do not disagree.

A breaking Reuters story, though, offers a contrasting take. TWTR is gaining both subscribers and ad revenues in Japan. The implication is that Twitter can duplicate the Japanese success in other markets.

To that, I say, good luck. Things are different in Japan. Facebook Inc (NASDAQ:FB) isn’t the undisputed, dominant social media platform. The Japanese prefer the Yahoo search engine over Alphabet Inc’s (NASDAQ:GOOG,NASDAQ:GOOGL) ubiquitous Google.

Even if Twitter manages to turn Japan into its own powerhouse asset, one country won’t solve its problems. Specifically, its subscriber growth is stagnating and until they figure that out, TWTR is just floating on empty speculation.

Stocks to Sell in March: Dillard’s, Inc. (DDS)

Stocks to Sell in March: Dillard's, Inc. (DDS)

Source: Shutterstock

Business owners always fear market saturation, but in reality, saturation in and of itself isn’t a problem. Issues arise when the underlying industry cannot support the present number of competitors; that’s when market saturation rears its ugly head. I believe that head is turning quite aggressively against Dillard’s, Inc. (NYSE:DDS).

With e-commerce giants like Amazon.com, Inc. (NASDAQ:AMZN) tearing into market share, being a specialty department store was always going to be a challenge. What brick-and-mortars had to their advantage was the apparel industry: you don’t know if something is going to fit you until you try it. But because every other brick-and-mortar have rebranded their businesses, DDS looks ancient.

It lacks Nordstrom, Inc.’s (NYSE:JWN) pizzazz. More people recognize the Macy’s Inc(NYSE:M) brand than Dillard’s. Neither of the companies have investors aching to buy their respective shares. Unfortunately, the physical retail market is shrinking, and DDS is the odd man out.

But the most important point to consider is the technical argument. On a year-to-date basis, DDS stock is up nearly 36%. Does it, or any other specialty department store, deserve to be up this high so quickly? I seriously doubt it, which is why I placed DDS on this stocks to sell list.

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Source: Investor Place 

A Pure Marijuana Play for a Growing Market

Editor’s note: Today we’re running an article Adam wrote in March 2017. It’s about one of the only legitimate pure marijuana stocks in the world. When this article first went out, Canopy Growth Corp. shares were trading around $11. Today they’re more than $27, and the company received an investment from Constellation Brands, one of the largest liquor companies in the world. We think it’s worth keeping an eye on this one.


Dear Early Investor,

If you’re a longtime reader of Early Investing, you know I’m always on the hunt for great marijuana investments.

After all, it’s not every decade that a $141 billion global market goes from prohibited to legalized. That’s exactly what we’re seeing play out across the world.

Today I’m going to look at one of the most intriguing cannabis stocks I’ve found so far.

That company is Canopy Growth Corp. (TSE: WEED), and it has become a massive player in Canada’s booming medical marijuana industry.

Canopy is a vertically integrated cannabis company. It does it all: grow, process, market and distribute. It’s as “pure” of a play on cannabis as you’ll find.

Canopy is expected to produce revenue of $44.8 million in fiscal 2017, up roughly 180% from 2016. The company is not yet profitable, but that hasn’t stopped enthusiastic investors from pushing the company’s share price up from a 52-week low of $2.40 to $11.05 as of March 16, 2017. (Note: All financial numbers are in Canadian dollars.)

The company’s market capitalization has risen to an impressive $1.7 billion. And in a vote of confidence, its shares were recently added to the S&P TSX Composite Index, Canada’s benchmark stock index.

Canopy operates out of an abandoned Hershey factory in Ontario, which it purchased for the bargain price of $6.6 million. This is a massive facility with more than 500,000 square feet of space.

Canada’s Plan to End Marijuana Prohibition

As you can see, Canopy’s medical marijuana business is humming along nicely. But the real potential comes as early as next year, when Canada is expected to legalize pot for recreational use.

study by Deloitte estimates that Canada’s retail marijuana sales could grow to $8.7 billion annually as a result.

And when you factor in the entire market (growing, processing and testing), that number could grow to a massive $22.6 billion per year.

Canopy is positioned nicely to take advantage of this shift. The company is well-capitalized, with more than $90 million in cash and just $7 million in debt.

My primary concern with the stock, however, is a significant one. The price of marijuana is likely to crash once recreational pot is legalized in Canada.

In Colorado, for example, wholesale prices have dropped a whopping 48% since the state legalized weed back in 2014.

With cannabis becoming “commoditized,” Canopy and other producers will need to focus on efficiency.

If the company can grow sales sufficiently to survive the price shocks that are likely to hit in the near future, I’d say Canopy has a very bright future indeed.

Bottom line: This company has a good shot at becoming the “Philip Morris of cannabis.”

Have a great weekend, everyone.

Adam Sharp
Co-Founder, Early Investing

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Source: Early Investing 

These Snubbed Funds Crush the Market and Yield Up to 8.5%

Remember early February’s stock-market rout?

I know. Seems like a weird question. It was just a few weeks ago, after all. But many folks seem to have forgotten how stocks fell 10% from their 2018 high in a matter of days:

Amnesia Sets In

As you can see, the benchmark SPDR S&P 500 ETF (SPY) is already recovering, and stocks are now up 3.3% for 2018. That’s still well below the 8% climb we saw in January alone, but it’s a solid return, and it means more (formerly) skittish folks will likely trickle their cash into stocks, keeping the market buoyant.

But they aren’t putting their money in all sectors equally, and that’s where our opportunity comes in, starting with the 3 closed-end funds (CEFs) I have for you below, which are boasting some of their highest dividend yields ever—up to 8.5%!

What sector am I talking about? To answer that, we only need to look at this heat map of the S&P 500.

Where the Bargains Are

A quick glance tells us that consumer discretionary, financial and technology stocks are far outperforming the rest of the market, with year-to-date returns between 3.5% and 5.9%.

But we’re mainly interested in the red sectors—one in particular. And it’s not consumer staples.

That’s because the consumer staples selloff can best be understood as a “risk-on” move—staples, of course, are things people must buy all the time, so these stocks are attractive in tighter times. And since we’re in a time of growing incomes and falling joblessness, staples aren’t where you want to be.

That means the drop in consumer staples isn’t a great contrarian opportunity—it’s a falling knife. But when we compare ETFs benchmarking two other lagging sectors—the Energy Select Sector SPDR (XLE) and the Utilities Select Sector SPDR (XLU)—a terrific opportunity pops up.

Utilities Go Up, Energy Goes Down—Until Now

As you can see, it’s rare for utilities and energy to fall at the same time; they tend to be inversely correlated.

When you stop and think about this, it makes sense. Utilities sell energy they produce using fuels from oil and gas producers; higher profits in the oil patch, therefore, mean lower profits for utilities, and vice versa.

But as you can see, both sectors are headed down today—and that’s why utilities look so attractive: because they’re buying energy cheap while selling more of it into a surging economy!

And when you add in the fact that many utilities have something near a monopoly in their market, this opportunity gets better still.

3 Ways to Buy In

We could just buy XLU and call it a day. With a 3.5% dividend yield, we could feel satisfied that we’re getting utility exposure and a “set it and forget it” investment.

But you’d be leaving a lot of cash on the table when you stack up XLU next to those 3 high-yielding CEFs I mentioned off the top. They are the Reaves Utility Income Fund (UTG), the Cohen & Steers Infrastructure Fund (UTF) and the DNP Select Income Fund (DNP).

I’ve chosen these funds not only because of their strong historical returns, which I’ll get to in a minute, but also because of the quality of their management and their portfolios.

UTG, for example, has one of the best asset management teams in the utilities space, and UTF’s diversified portfolio across North American, Asian and European assets has protected investors from a major market downturn for years. Finally, DNP’s focus on high-yielding large cap US utilities and telecommunications companies provides stability and a dividend investors can count on.

Each one specializes in utilities and has beaten XLU’s dividend yield while matching—or even topping—the ETF’s performance since the 2014 commodity crash.

Topping the Benchmark—With Big Cash Payouts, Too

On a longer term basis, these funds have all crushed XLU.

Winning Out Over the Long Haul

But how do these funds’ dividend yields compare to that of XLU? Quite nicely.

The bottom line? Utilities have tremendous upside, and it’s only a matter of time till the market picks up on this. The 3 CEFs I just showed you are a great way to get in on the action.

4 Must-Buy CEFs for 2018 (Huge Cash Dividends and 20%+ GAINS Ahead)

Utilities aren’t the only shockingly cheap corner of the market resulting from the selloff. There are 4 more markets that are even better places for your money now. But you won’t find them by looking at the S&P 500 “heat map” above—they’re well off most investors’ radar screens.

But these 4 obscure markets boast cash payouts 4 TIMES BIGGER than what the average S&P 500 stock pays!

They’re plenty safe, and even more undervalued than utilities are now.

That means one thing: we’re looking at massive upside here, especially if you buy my 4 favorite funds—one from each of these 4 unloved markets—today: I’m talking 20%+ price gains in a year or less!).

AND you’ll collect an outsized 7.6% average dividend payout while you watch these 4 incredible funds’ share prices arc higher.

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Source: Contrarian Outlook

How to Get Your Cut of Apple’s Money Coming Back to the US

Financial risks can seemingly come out of nowhere. Think about how many on Wall Street were caught off guard by the 2008-09 financial crisis or even the volatility of a few weeks ago. Yet the potential risk emanating from the packaging of bad mortgages was in plain sight, but ignored.

Today, there is another financial risk lurking in plain sight. It lies in the vast overseas holdings of technology giants like AppleAlphabetMicrosoft and many others. I discussed this topic to my subscribers in the October issue of Growth Stock Advisor. But since there is so much misunderstanding about the roughly $1 trillion (or possibly as high as $2 trillion) in funds held overseas by U.S. multinationals, I wanted to clear it up for you.

I know there is much misunderstanding about this subject just from gleaning the comments section on several recent articles published by The Wall Street Journal. Apparently, Americans are under the impression that this $1 trillion is just sitting in bank accounts overseas and that both the overseas banks and host countries don’t want to lose control of this money. Nothing could be further from the truth. Let me explain…

The New Force in Global Bond Markets

I want you to think about it for a moment, and it will make sense. Over the past decade, the largest U.S. companies have built up cash piles of as much as $2 trillion, rising more than 50% in that time period. Why would these firms let all that cash sit there idly, parked in a bank account?

Well, they haven’t. Instead, these aforementioned technology companies – they control about 80% of the overseas hoard – and other U.S. multinationals have put the money to work by snapping up all sorts of bonds. The purchases have mainly been the bonds of other corporations, but government bonds have also been bought.

In fact, companies like Apple, have actually issued their own low interest rate bonds and then used some of the proceeds to invest into the higher-yielding debt of other firms. In some cases, it has taken a large anchor position in certain offerings à la an investment bank like Goldman Sachs. In effect, it has become one of the world’s largest asset managers.

According to the Financial Times, thirty of the top U.S. companies have more than $800 billion worth (mainly short- and medium-term) of fixed-income investments. The breakdown is as follows:

  • $423 billion of corporate debt and commercial paper (very short-term corporate debt)
  • $369 billion of government and government agency debt
  • $40 billion of asset and mortgage-backed securities
  • $10 billion of cash

Those 30 aforementioned companies have accumulated more than $400 billion worth of U.S. corporate bonds. That is nearly 5% of the $8.6 trillion market. Apple itself owns over $150 billion of corporate bonds, more than most asset managers. And Microsoft owns over $112 billion in government securities.

This should not come as a shock to students of history. Some of the banking industry’s most venerable names started out in other businesses. The Rothschilds were merchant traders that became the most powerful banking empire in Europe. As Mark Twain is reputed to have said, “History doesn’t repeat itself, but it often rhymes.”

Related: 3 Stocks to Sell Under Trump’s New Tax Law

The Risk to the Bond Market

I now want you to think about this scenario… let’s say most of these companies bow to political pressure and bring “home” this overseas hoard.

That would mean selling a lot of corporate and government bonds. The likely result would be a massive spike higher in interest rates. Just look at how poorly the market acted when there was just a hint of a tapering of purchases by the Federal Reserve. A massive unloading of bonds could quickly turn into a nasty market event starting in the bond market and quickly spreading to the stock market.

Ironic, isn’t it? A massive tax cut and ‘patriotically’ bring money back to the United States could end up being the trigger event for a recession caused by much higher interest rates.

Luckily, from what most of the technology companies (with the exception of Apple) have said in their latest conference calls, they are making no major plans to sell their bond holdings.

Microsoft – with the second biggest pile held overseas – said it had already been able to make all the investments it wanted under the old tax regime, and didn’t expect anything to change as a result of the law. Alphabet said, “There’s no change in our capital allocation.”

What It Means to You

As market participants, I think we should all breathe a collective sigh of relief. As of the moment, nothing has changed and you should just stick to your current investment plan.

But what if the political pressure heats up and these tech companies wilt and decided to liquidate their bond holdings?

Then putting money into the ProShares UltraShort 20+Year Treasury ETF (NYSE: TBT) would make a lot of sense. This ETF uses futures and swaps to correspond to twice the inverse of the ICE U.S. Treasury 20+Year Bond Index. It is up 15% year-to-date thanks to the recent bond market scare, but is little changed over the past year.

Since most of the tech companies own a lot of corporate bonds, and if you have a high risk tolerance, you could short corporate bonds ETFs such as the Vanguard Long-Term Corporate Bond ETF (Nasdaq: VCLT), which is down 4.7% year-to-date and the SPDR Barclays High-Yield Bond ETF (NYSE: JNK), which is down 0.6% year-to-date.

But only think about these trades if and when the technology companies begin liquidating their holdings. I do not think that will happen any time soon, but stay tuned.

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Source: Investors Alley 

The Case for Selling a Stock That’s Seen a 72% Boost in Revenue

On the surface, the 72% surge in year-over-year revenue that Snap Inc. (Nasdaq: SNAP) – parent company of camera and video app Snapchat – notched in the fourth quarter is mighty impressive. The total $285.7 million beat expectations by $33 million.

The firm also added 8.9 million new daily active users (DAUs) during the quarter – up 18% year-over-year to 187 million. That beat projections, too. Revenue per user rose 46% year-over-year to $1.53.

Look beyond the numbers, though, and you’ll see an uglier picture (no pun intended).

For starters, the company had to spend big to get that user growth, with sales and marketing costs up 119% and R&D expenses soaring by 260%.

And while Snapchat may be popular with the kids, it ain’t profitable.

The company lost $350 million during the quarter, compared with a $170 million loss in Q4 2016. Operating income also tanked from $169.7 million to $361 million over the same period. Adjusted EBITDA and free cash flow also dropped. In fact, for the full year, Snap’s free cash flow sank by $819.2 million.

You don’t need me to tell you that losses that large are completely unsustainable over the long run.

And as for that strong user growth… well, it’s not as strong as Instagram, which boasted 150 million DAUs in early 2017, but had ballooned the number to 500 million by September.

And speaking of Instagram, Snapchat may have caused itself a problem: Users hate the company’s redesigned app – and it’s pushing some of them to Instagram’s similar features instead.

A petition on Change.org received over one million people imploring Snapchat to scrap the new layout – an unusually large number, even for a social media platform.

And as if things could not get any worse for Snap, on Wednesday Kylie Jenner of Kardashian fame wiped out $1.3 billion in market value for Snap as shares plummeted from her short tweet:

“sooo does anyone else not open Snapchat anymore? Or is it just me… ugh this is so sad.”

That’s all it took for the stock to drop 6% in a matter of hours. And this is after it had already been on a downward slide since the beginning of the week. All told investors have lost close to 15% just this week. Ouch.

Snap may be improving its top-line numbers, but the company still isn’t anywhere near profitability. Until it manages to arrest the negative profit and cash flow trends, as well as add new users more cheaply (and not anger its existing base!), it’s an expensive and risky stock to own in a more volatile market.

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Source: Investors Alley 

5 Hot Stocks With Huge Revenue Drivers Ahead

Which five hot stocks have juicy growth prospects ahead? Look no further!

All five stocks covered below are primed for significant expansion in the coming months. Stocks are already recovering from the recent market pullback, and these stocks, in particular, boast big catalysts that can push prices higher.

And you don’t have to just take my word for it. Each of these stocks has serious backing from the Street’s top analysts. I used TipRanks to ensure that the analysts referred to here are the best-performing analysts on the Street.

That means a high success rate and average return. These are the analysts you can trust for their precise stock picking ability.

So without further ado, let’s dive in:

Hot Stocks to Buy: Amazon (AMZN)

Source: Shutterstock

Now at an eyebrow-raising $1,500, Amazon.com, Inc. (NASDAQ:AMZN) does not immediately strike you as a cheap stock to buy. However, the valuation becomes increasingly attractive when you think of the multiple revenue drivers ahead. “We continue to think Amazon is the best growth story of all the mega-caps over the very long term,” analyst Rob Sanderson wrote recently. He sees the stock reaching $1,750 in the coming months (17% upside potential).

For example, the company is now reportedly planning a new service to pick up packages from businesses and deliver them to consumers. According to the Wall Street Journal, “Shipping With Amazon,” is expected to start in LA and roll out more broadly within the year. And Baird’s Colin Sebastian says that with “just 1% of the market, Amazon could create a new $5B revenue stream.”

Meanwhile, Amazon’s content strategy is also blossoming. The company has just poached NBC Entertainment president Jennifer Salke for Amazon Studios. And maybe you haven’t heard of Twitch, but Amazon’s live streaming video platform is now apparently bigger than CNN. Macquarie analyst Ben Schachter says Twitch aggregate viewership continues to rise, and that display ads on properties like Twitch contribute significantly to Other revenue. Note that “Other revenue” soared 58% to $4.65 billion in 2017.

Overall, the stock has a very bullish outlook from the Street. Out of 36 analysts polled by TipRanks in the last 3 months, 34 are bullish on Amazon stock with just 2 left on the sidelines. These analysts have an average price target on AMZN of $1,664.


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Hot Stocks to Buy: T-Mobile (TMUS)

Source: Via T-Mobile

T-Mobile US, Inc. (NYSE:TMUS) is the third-largest wireless carrier in the US. The company is easily outpacing competitors, capturing most of the industry growth since 2013. This is down to: 1) a greatly improved network, and 2) targeted marketing for under-served urban and rural areas. In 2017, for example, TMUS opened 1,500 T-Mobile-branded stores and 1,300 MetroPCS-branded stores.

Encouragingly, top Oppenheimer analyst Timothy Horan sees no signs of growth slowing down. On the contrary: “T-Mobile’s revenue margin expansion, coupled with ongoing subscriber momentum, supports our Outperform rating. TMUS is expanding geographically and is aiming to aggressively deploy its 600 MHz spectrum for increased coverage/capacity.”

This aggressive expansion should mean significant cash flow generation for TMUS — and a corresponding rise in share prices. Horan has high hopes that these share gains and lower churn will drive core EBITDA growth of 10%+ per year. As a result, this five-star analyst has a $75 price target on the stock (25% upside potential).

Our data shows that TMUS scores straight As from the Street. Including Horan, nine analysts have published TMUS Buy ratings in the last three months. Moreover, the average analyst price target of $74 indicates big upside potential of almost 24%.


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Hot Stocks to Buy: Caesars Entertainment (CZR)

Source: Shutterstock

Global gaming empire Caesars Entertainment Corporation (NASDAQ:CZR) is back! After emerging from bankruptcy in 2017, the company has effectively restructured and reorganized.

Now the company is focusing on the critical task increasing revenue growth. “Our future appears bright with a much-improved balance sheet, approximately $2 billion in cash, and strong free cash flow” management stated recently.

Top Oppenheimer analyst Ian Zaffino gets the hype. He has just reiterated his CZR buy rating with a $15 price target (14.5% upside potential). “We continue to recommend CZR based on its impressive opportunity set” says Zaffino. He sees ‘numerous levers’ for the company to pull, from higher revenue for renovated rooms to real estate development and meaningful acquisitions (such as a potential casino license at the $8 billion Elliniko project in Greece).

Interestingly, hedge funds are also very bullish on CZR right now. Funds increased holdings in by over 360% in Q4 with the combined purchase of over 50 million CZR shares. The total value of CZR shares held by hedge funds now totals over $8.4 billion.

In the last three months only two top analysts have published ratings on CZR (both a Buy).


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Hot Stocks to Buy: UnitedHealth (UNH)

UnitedHealth (UNH)

Source: Shutterstock

One of the US’s largest insurance companies, UnitedHealth Group Incorporated (NYSE:UNH), makes a very compelling investing proposition right now. Analysts are excited about the “favorable growth opportunities” for UnitedHealth in Latin America markets due to its Banmedica acquisition in Brazil. The $2.8 billion deal closed on Jan. 31.

For five-star Oppenheimer analyst Michael Wiederhorn: “the opportunity from the International business should represent a new avenue of growth that could help drive impressive long-term returns.”

He calls the stock his Best Idea for Feb-March and explains that “UNH is well positioned by virtue of its diversification, strong track record, elite management team and exposure to certain higher growth businesses.” Meanwhile its lucrative Optum tech business continues to account for a large share of earnings. Wiederhorn (one of the Top 50 analysts on TipRanks) has a $260 price target on UNH (13% upside potential).

Not surprisingly, UNH has 100% support from the Street. In the last three months, the company has received 11 buy ratings from analysts. So no pesky hold or sell ratings here. The $267 average analyst price target suggests just over 16% upside potential from the current share price.


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Hot Stocks to Buy: Alphabet Inc (GOOGL)

Source: Shutterstock

Last but not least, we have Alphabet Inc (NASDAQ:GOOGL), the umbrella company for Google and YouTube. If you think that GOOGL has already peaked, think again. Top Robert W. Baird analyst Colin Sebastian spies several exciting catalysts ahead as the company moves more aggressively in key markets. He adds the stock as one of Baird’s ‘Fresh Picks’ with a $1,300 price target (vs the current $1,128 share price).

A key catalyst lies in Amazon’s monster cloud business, Google Cloud. For the first time, GOOGL CEO Sundar Pichai has just disclosed that Google Cloud makes about $1 billion quarterly. That’s a massive $4 billion for GOOGL in annual revenue. However, this is still well behind Amazon’s AWS cloud unit and Microsoft’s Azure.

As a result, Sebastian sees big growth potential here.

He asks: “Will it take Google the 12 years it took Amazon?” No, Google will probably have a $20 billion cloud business in five years. And from an Amazon perspective, probably $150 billion of its market cap is probably AWS. [Cloud] is not recognized within Alphabet’s valuation — I think transparency will go a long way.”

TipRanks reveals that Sebastian is an analyst worth tracking. He is ranked as one of the site’s Top 10 analysts out of over 4,700 due to his impressive stock picking ability.

Overall, GOOGL boasts a firm ‘Strong Buy’ analyst consensus rating. In the last three months, analysts have published 24 buy ratings on the stock vs just 3 hold ratings. On average, these analysts see GOOGL spiking 16% to reach $1308.


Click to Enlarge

 

 

 

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7 Buffett Stocks to Buy

Source: Shutterstock

If you’re looking for good Warren Buffett stocks to buy, there’s no better option than Buffett’s former money guy. I’m talking, of course, about Lou Simpson, the long-time Geico portfolio manager, who retired at the end of 2010 after 31 years at the company, more than a third of them spent under Berkshire Hathaway Inc. (NYSE:BRK.A, NYSE:BRK.B) ownership.

It’s hard to believe that the legendary investment manager, who outperformed the S&P 500 in 18 out of 25 years between 1980 and 2004, has been retired for more than seven years. Boy does time fly.

Simpson grew bored of retirement very quickly, so the veteran money set up SQ Advisors, an investment advisory firm with $200 million in assets under management that would handle money for friends, family and some charities.

Charging 1% annually with no performance fees, Simpson was just happy to have something to do every day that he enjoyed and could help people. Fast forward to the end of 2017 and Simpson’s managing $3.1 billion in assets invested in just 14 stocks.

Although all 14 companies in SQ Advisors’ portfolio are good investments, here are what I think are the seven stocks to buy from Lou Simpson’s portfolio:

Buffett Stocks to Buy: Brookfield Asset Management (BAM)

This alternative asset manager is easily one of my favorite stocks anywhere in the world. Up until mid-2017, long-time Brookfield Asset Management Inc (NYSE:BAM) CEO Bruce Flatt flew under the radar of most investors.

However, it decided it needed to tell its story to more people, and so the company went on a bit of a PR tour that culminated in Flatt appearing on the cover of Forbes magazine’s May issue.

Most people probably couldn’t pick Flatt out of a police lineup but Simpson could.

Brookfield is SQ Advisors’ largest holding at $335 million, or 10.9% of its multi-billion portfolio. He knows that delivering a cumulative return of 1,350% over the last 15 years, as Flatt and company have done — more than seven times the S&P 500 — is no easy feat.

Lou Simpson investing in Brookfield, especially in such a focused portfolio, is the ultimate form of flattery. If you can only own one of these stocks, I’d make it Brookfield.

Buffett Stocks to Buy: Liberty Global (LBTYK)

Buffett Stocks to Buy

Source: Shutterstock

Liberty Global PLC (NASDAQ:LBTYK) is one of John Malone’s many interests. Malone holds 25.7% of Liberty Global, the world’s largest international TV and broadband company with $15.5 billion in annual revenue operating in 12 European countries under brands such as Virgin Media and Unitymedia.

In case you’re wondering, Warren Buffett’s company controls 5.4% of Liberty Global’s votes; SQ Advisors about half that amount. Simpson acquired his position in the second half of 2014 at prices between $40 and $43. Today, it trades around $32.

But before you question my sanity, it’s important to remember that Liberty Global spun off its Latin American business — operations in Chile, Puerto Rico, the Caribbean and other parts of Latin America — in early January.

Shareholders got one share in the newly independent business for each Liberty Global share. Together, they’re worth $55.

Simpson holds his businesses for the long haul, so unless the story drastically changes I’d expect him to continue to make Liberty Global one of his biggest positions.

Buffett Stocks to Buy: Berkshire Hathaway (BRK)

Buffett Stocks to Buy

Source: Shutterstock

It would be darn near impossible not to include the stock of Simpson’s former boss on my list of seven stocks to buy.

Interestingly, Berkshire Hathaway is not one of SQ Advisors’ top five holdings. In fact, Simpson only owns a little over one million Class B shares, which represent 6.7% of the $3.1-billion portfolio.

Although Buffett and Simpson have a similar investing style, the former Geico money manager is far more likely to invest in smaller companies than Buffett, making a more significant position in Berkshire Hathaway an unlikely occurrence.

“What we do is run a long-time-horizon portfolio comprised of ten to fifteen stocks. Most of them are U.S.-based, and they all have similar characteristics. Basically, they’re good businesses,” saidSimpson in a rare 2017 interview. “They have a high return on capital, consistently good returns, and they’re run by leaders who want to create long-term value for shareholders while also treating their stakeholders right.”

That sounds an awful lot like Berkshire Hathaway, doesn’t it?

Simpson bought a big chunk of BRK stock back in early 2012 at prices between $76 and $82, an annualized return of 17.1% over six years.

Buffett Stocks to Buy: Tyler Technologies (TYL)

Buffett Stocks to Buy

Source: Shutterstock

While this is one of Simpson’s smaller holdings representing just 5.2% of SQ Advisors’ portfolio, I just love the niche aspect of its business. Tyler Technologies, Inc. (NYSE:TYLfocusesexclusively on the public sector providing a wide range of software and solutions to local governments and schools.

It might not be glamorous, but providing the tools needed by public sector operations pays the bills; more importantly, it keeps America moving. A storied history that dates back to 1938, Tyler committed to serving the public sector in 1997; it’s been uphill ever since.

The company finished 1997 with a profit of $1.2 million on $76.4 million in revenue. Nineteen years later, in its most recent fiscal year ended Dec. 31, 2016, it generated net income of $109.9 million on $756.0 million in revenue.

A $100 investment at the end of 2011 was worth $474.16 five years later, more than double the performance of the S&P 500 in the same period.

It’s not a fast-growing business but it sure is consistent, increasing revenues in nine out of the last ten years. No wonder Simpson likes it.

Buffett Stocks to Buy: Cable One (CABO)

Buffett Stocks to Buy

Source: Shutterstock

One of the portfolio’s smallest holdings by market cap, Simpson added 125,094 shares of Cable One Inc (NYSE:CABO) in Q4 2017, boosting it from the tenth-largest position in the previous quarter, to the fifth largest by the end of the year.

Representing 8.2% of the portfolio, Cable One is one of the ten largest cable companies in the U.S. with more than 800,000 residential and business customers across 21 states. 

Why Cable One?

It’s got a simple business plan that focuses on higher-growth, higher-margin products that generate positive cash flow while keeping a lid on costs. It doesn’t want the most customers; it wants the most profitable ones.

Looking to find more profitable customers, Cable One acquired NewWave Communications in 2017 for $735 million. NewWave was the 19th largest cable company in the U.S. with customers in seven states. Still, in growth mode, Cable One’s focus on the profit and loss statement will deliver higher returns from NewWave under its management.

Simpson likes owning good businesses. Cable One fits that to a tee.

Buffett Stocks to Buy: Charles Schwab (SCHW)

Buffett Stocks to Buy

Except for the recent return of volatility, the nine-year bull market has been good news for Charles Schwab Corporation (NYSE:SCHW), who’ve seen operating profits grow from $1.1 billion at the end of 2009 to $3.7 billion this past year while operating margins increased 16 percentage points to 43%.

The wealth management industry’s been good to Schwab and Schwab shareholders. Over the past five years, SCHW stock’s delivered an annualized total return of 26.3% to shareholders.

Now Simpson’s third-largest holding, it’s clear he’s not afraid to buy and sell Schwab stock, as the number of shares held has ebbed and flowed since first buying in 2011.

Currently trading near $53, Schwab had a very healthy 2017, with revenues and income up 15% and 25%, respectively. An amazing stat highlighted in its Q4 2017 press release gives you an idea of the runway it has heading into 2018 and beyond:

Schwab’s Retail business rose by 49% versus 2016; 54% of these households were age 40 or younger.”

Need I say more?

Buffett Stocks to Buy: Allison Transmission (ALSN)

Buffett Stocks to Buy

Source: Shutterstock

 Allison Transmission Holdings Inc (NYSE:ALSN) might be the ultimate Warren Buffett stock if it were only a little bigger.

 Simpson’s fourth-largest holding at 10.0% of the portfolio. While the money manager trimmed SQ Advisors’ holdings slightly in Q4 2017, the manufacturer of heavy-duty commercial vehicle transmissions and hybrid-propulsion systems for city buses is a relatively new purchase for Simpson; he first acquired shares in 2016.

As long as the U.S. economy continues to chug along, investors can expect Allison Transmission to continue to do well. In Q4 2017, the company increased its North America On-Highway revenue by 24% to $270 million. Outside North America, Allison’s On-Highway business increased sales by 18% year over year to $98 million.

In fiscal 2017, revenues and operating profits increased by 22.9% and 44.3%, respectively. The company expects 2018 net sales to increase by as much as 7% on strong On-Highway results.

Unless something happens to the economy, this guidance seems conservative. I see good things in store for Allison in 2018.

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Source: Investor Place

5 Sin Stocks to Sell Your Soul For

Source: Shutterstock

Are you looking up to spice up your portfolio in these uncertain times?

Some investors may think that it is morally wrong to invest in the companies below. These are companies that are involved in addictive vices like alcohol and gambling. But others will disagree — and to those people, I say, read on!

“Various studies have investigated the historical performance of sin stocks and observed that they have delivered significantly positive abnormal returns” says David Blitz, co-head of quantitative research at Robeco. One popular explanation is that these stocks are systematically underpriced because so many investors shun them.

So with this in mind, I set out to find five of these “sin stocks” that all share backing from the Street’s top analysts. I used TipRanks to double-check that these stocks all have a “strong buy” top analyst consensus rating. This is based only on ratings from the last three months, and looks at analysts with the highest success rates and average return.

Without further ado, let’s delve in and take a closer look at these 5 top sin stocks now:

Top Sin Stocks: Raytheon (RTN)

Defense giant Raytheon Company (NYSE:RTN) is the world’s largest producer of guided missiles.

“Strong broad order momentum, a large Patriot backlog, and untapped financial firepower give RTN extended EPS and cash flow per share growth potential” cheers five-star Cowen & Co. analyst Cai Rumohr.

Foreign sales are booming, with sales increasing for the last 14 years. Now Rumohr sees 2018 foreign orders exceeding 2017’s $8.5B, with healthy foreign revenue growth extending out into 2019-20. These include Patriot awards from Romania ($450 million-$500 million initial order in 2018; $2 billion total), Sweden ($1 billion), Poland ($4 billion-$5 billion but could slip into 2019), and a new unidentified European customer ($1.5 billion but in 2019).

Closer to home, rising defense spending means RTN also has ample domestic opportunities lined up. Most notably, the Harpoon replacement missile bid, an $8 billion opportunity, could be decided as soon as fall 2018.

All in all, it’s not surprising that RTN scores a first-class “strong buy” Street consensus rating. We can see from TipRanks that the average analyst price target of $231 works out at 6% upside from the current share price.

Top Sin Stocks: Philip Morris (PM)

Is Marlboro-maker Philip Morris International Inc.(NYSE:PM) still a sin stock?! The company is turning over a new leaf and committing to a more smoke-free future. This may sound like an oxymoron for one of the world’s largest cigarette companies, but PM now wants to build its future “on smoke-free products that are a much better choice than cigarette smoking.”

The result is a new focus on developing vapes and e-cigarettes that contain nicotine but don’t burn tobacco.

And it looks like the Street approves of this dramatic decision. In the last three months, PM has received only buy ratings from analysts. These analysts have an average price target on PM of $123.75, suggesting big upside potential of almost 19%.

Indeed, Philip Morris is currently a top pick for Morgan Stanley in the food/protein/tobacco sector.

“Looking ahead to 2018, we now believe PM will set expectations for an EPS in line with its +8-10% long-term target as the company reinvests to protect its first-mover advantage in heated tobacco and launches nationally in a broader range of markets outside Japan/Korea” stated the Morgan Stanley team recently. The firm has a $120 price target on PM.

Top Sin Stocks: Constellation Brands Inc (STZ)

Constellation Brands STZ

Constellation Brands, Inc. (NYSE:STZ) is an international producer and marketer of beer, wine and spirits. Constellation is the largest beer import company measured by sales and has the third-largest market share of all major beer suppliers. Investing in STZ means betting on Modelo, Corona and Pacifico.

Shares in Constellation have exploded over the last year from just $160 to the current share price of $220. Luckily for investors, there appears to be plenty of further growth potential ahead. BMO Capital’s Amit Sharma has just initiated STZ with a bullish $275 price target. This translates into big upside potential of over 25%.

He says the alcohol beverage sector will remain “one of the largest and fastest-growing consumer staples segments” with an ongoing “premiumization” trend. And the analyst singles out Constellation Brands as “one of the most compelling growth investments in the staples universe.” He believes it is trading at a significant discount to peers.

Sharma is now plotting sales growth of 7%-8% and EPS growth of 15%-16% over the next three years for Constellation. Overall, we can see that this “strong buy” stock has scored seven recent buy ratings vs two hold ratings. Furthermore, the average analyst price target suggests upside potential of over 13%.

Top Sin Stocks: Melco Resorts (MLCO)

Top Sin Stocks: Melco Resorts (MLCO)

Source: Shutterstock

Melco: Your winning hand. So goes the slogan of top gaming operator Melco Resorts & Entertainment Ltd(ADR) (NASDAQ:MLCO). The company owns several casino resort facilities in Asian gaming capital Macau, including the famous City of Dreams (home to the world’s largest HK$2 billion water-based extravaganza!).

From a Street perspective, Melco scores a royal flush, with only recent buy ratings. Indeed, if we dig further into the ratings, we can see that the stock has received two rating upgrades in the last three months. One of these upgrades comes from top JP Morgan analyst Joseph Greff.

According to Greff, the stock’s valuation discount to peers is compelling and he is confident that a dividend raise can further narrow the gap. Looking forward, he projects rising VIP and premium mass growth in 2018. As a result Greff boosts his price target from $27 to $32 (11% upside potential). This falls just under the average analyst price target of $33.97 (18% upside from current share price).

Top Sin Stocks: Mondelez (MDLZ)

The sweetest of all naughty stocks right now is Mondelez International Inc (NASDAQ:MDLZ). This multinational corporation owns all the best billion-dollar brands, from Ritz and Oreo to Toblerone and Cadbury. Mondelez may not be a traditional sin stock, but given rising obesity levels, MDLZ is veering dangerously close to the dark side.

But chocolate aside, Mondelez is looking pretty appealing from an investing perspective. Not only is Mondelez a sustainable dividend growth stock, but it is also primed for a robust 2018.

So says five-star RBC Capital analyst David Palmer. He argues that “outperformance is the norm for Mondelez” and “forecasts 2018 to be a year of steady topline improvement and double-digit total returns with additional stock upside potential through M&A.”

He ramped up his price target to $56 (28% upside potential) at the beginning of February.

Overall, this “strong buy” snack giant scored five recent buy ratings vs one solitary hold rating. The average price target indicates upside potential of just over 17%.

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A Simple Way to Assess Startup Risk

Dear Early Investor,

Startup valuations are tricky.

This is due to the difficulty of assessing illiquid young companies with measly track records but exciting technologies and/or business models.

But you still have to pay attention to them. Why?

The valuations you begin with heavily influence the profits you end up with.

Which is why I always ask founders what their company’s valuation is… and how they arrived at it.

The wrong answer – an inflated valuation – is a deal breaker.

Enter the Berkus Method

Last Friday, I was talking to a founder who was telling me why his social engagement company was such a great investment.

Its value? “Five million dollars,” he said.

The startup was pre-revenue. And it was ramping up downloads at an impressive rate.

When I asked him how he arrived at a $5 million valuation, he said he used the “Berkus Method.”

I’ve heard of the DCF method, Risk Factor Method, Scorecard Valuation Method, Comparable Transaction Method, First Chicago Method and Venture Capital Method.

But the Berkus Method?

That was a new one.

When the founder explained it to me, it sounded pretty simple. Rather elegant, actually.

But I needed to know more. A company’s valuation is too important to depend on somebody’s two-minute explanation.

So I did some digging.

And you know what? The Berkus Method is worth knowing.

It’s a four-factor valuation formula. These same factors also give you a nice framework to assess the investment opportunity in terms of current risk and chances of future success.

This is what I found out…

Version No. 1

Dave Berkus created the first version.

Dave is a startup investor and author. He came up with his method in the mid-1990s, he said, to “help with the imprecise problem of how to value early-stage companies.”

His method gained prominence when it was published in the book Winning Angels in 2001.

It identifies four major risks that startups face: technology, execution, market and production. A startup can be credited in each of these areas with a maximum of $500,000 for reducing risk.

Plus, the startup automatically gets $500,000 for the idea itself.

If it earns a perfect score, its valuation tops out at $2.5 million.

Here’s the Berkus Method summed up in a chart…

Version No. 2

In 2005, Berkus’ method was tweaked by Alan McCann. He visualized the Berkus Method this way…

McCann replaced technology risk with investment risk and replaced production risk (making a product) with development risk (developing a product).

He also added the cohort responsible for each. “A nice touch,” Berkus said.

Its Current Use

The Berkus Method is meant for pre-revenue companies.

In the mid-1990s, when the method was created, that mostly meant seed companies.

Times have changed, though.

Nowadays, seed-stage companies usually generate revenue.

Used to determine seed valuation, the methodology yields valuations that are too low.

In a November 2016 blog post, Berkus agreed. He said that his method should create valuations that users “are willing to accept in a perfect situation.”

In our First Stage Investor portfolio, the lowest startup valuation is $2.7 million. That startup – Court Innovations – is one that Adam and I consider a huge bargain.

Most of our seed company valuations fall between $4 million and $10 million.

The Berkus Method is best suited for pre-revenue, pre-seed companies.

Take, for example, the founder I was talking to last week. He used the Berkus Method pre-seed. He was seeking his first angel investments and used the max $2.5 million valuation.

Now he’s raising again – in a seed round. And he’s upped the valuation to $5 million based on the progress his company has made in the four risk areas Berkus identified as key.

Rather than have each category be worth $500,000, he doubled them.

Sounds about right to me.

Valuations Matter

Progress and valuation: Alone, they’re impossible to decipher.

Taken together, one gives meaning to the other.

Nice progress at an exorbitant price isn’t a great investment.

A good price for mediocre progress isn’t such a great deal either.

Berkus says his valuation method only works if the startup reaches at least $20 million in revenue within five years.

Let’s say, conservatively, that this translates into a $100 million company (five times revenue).

That would place the startup in the upper third percentile of exit valuations. Two-thirds of startups do worse…

What can a $20 million-in-revenue company do for you?

If you invested in the company at a $2.5 million valuation, your profit would be 40X without dilution and roughly 20X including dilution.

Remember, only one out of three of your holdings would reach at least $100 million.

In a portfolio of nine holdings (to keep the math simple), with one out of three of your holdings reaching at least $100 million, you’d have three big winners.

If you invested $1,000 in each holding (again, keeping the math simple), you’d net a minimum of $51,000 for a portfolio of startups that cost you $9,000.

That’s nearly 7X in profits – or more.

At a $5 million valuation (which I think is more realistic), your total return would be cut in half. The profits from your three winners would go from 20X each to 10X each (counting dilution).

That’s exactly what Berkus had in mind. He said…

There is no question that startup valuations must be kept at a low enough amount to allow for the extreme risk taken by the investor and to provide some opportunity for the investment to achieve a 10-times increase in value over its life.

I agree.

Extreme risk should beget extreme rewards.

The math says when it’s used to invest at the right valuations, the Berkus Method does just that.

Invest early and well,

Andy Gordon
Co-Founder, Early Investing

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Source: Early Investing 

2 Construction Stocks to Buy Even if Trump’s Infrastructure Plan Never Happens

Once again President Trump has brought to the fore the sorry state of infrastructure in the United States, which is the end result of decades of neglect from governments on all levels.

A White House report said, “Our infrastructure is broken. The average driver spends 42 hours per year sitting in traffic, missing valuable time with family and wasting 3.1 billion gallons of fuel annually. Nearly 40% of our bridges predate the first moon landing. And last year, 240,000 water main breaks wasted more than 2 trillion gallons of purified drinking water—enough to supply Belgium.”

 

The report did not exaggerate. You need to look no further than the 2017 report card on infrastructure from the American Society of Civil Engineers (ASCE). It gave an overall grade of D+ for U.S. infrastructure, continuing the persistent D grades seen since 1998.

This is a serious matter if we want to have a 21st century economy. As the ASCE report stated, “The cost of deteriorating infrastructure takes a toll on families’ disposable household income and impacts the quality and quantity of jobs in the U.S. economy.” This is a true statement because infrastructure effects how efficient and productive companies are, which in turn effects the country’s GDP.

 

The ASCE report estimated that through 2025, every U.S. household will lose $3,400 a year in disposable income thanks to infrastructure deficiencies. As a whole, the ASCE estimate is that the U.S. economy will lose almost $4 trillion in GDP by 2025.

Trump’s Infrastructure Plan: All Hat, No Cattle

The problem is that to fix our country’s infrastructure woes a lot of money will be needed. And that’s where the President’s proposed plan falls down.

 

The target for his infrastructure plan has been raised to $1.5 trillion, but the federal government will only kick in $200 billion over a 10-year period. In Texas, they would call that plan “all hat and no cattle.” Keep in mind that we have an almost $5 trillion shortfall in infrastructure, according to ASCE. Apparently, the days of federally-funded projects like the Hoover Dam and the interstate highway system are long gone.

One major flaw in the Trump plan is that it expects greatly increased contributions from cash-strapped cities and states. These entities already furnish the bulk of government spending on infrastructure, including three-quarters of the national spending on transportation and water systems.

States’ ability to borrow what’s needed to fund very large, multi-decade infrastructure projects is limited. And most states will be wary of raising taxes, since the Trump administration’s new tax plan limits the ability to deduct local and a state taxes from federal tax bills.

But what about the much talked about public-private partnerships?

Private Equity Says Fuhgeddaboudit

The Wall Streeters sitting of hundreds of billions for infrastructure investments gave Trump’s plan a cold reception. And it’s not just because of doubts about the politicians on the local and national levels.

FYI – there was a record $33.7 billion raised last year for North American infrastructure investments. The total since the end of 2015 is about $70 billion.

Infrastructure fund managers are mainly looking for assets that are already privately owned, such as railroads, utilities and pipelines. They are little interested in the deteriorating government-owned infrastructure like roads and bridges. And to the extent they are interested in publicly-owned infrastructure, their focus is much more on the privatizing of existing infrastructure rather than on new development – the core of Mr. Trump’s push.

As pointed out by the Wall Street Journal, one prime example is the Blackstone Group L.P. (NYSE: BX). It has plans to raise as much as $40 billion (not included in the previous figures) for U.S. infrastructure investments. But a mere 10% will be devoted to public infrastructure assets. The story is similar with almost all infrastructure funds.

Infrastructure Investments

Despite our country yet to get its act together on infrastructure, it still can be a good sector for you to invest in. You just have to pick and choose carefully. Here are two examples.

The company at the top of my infrastructure investment list has to be Caterpillar (NYSE: CAT), the world’s leading manufacturer of construction and mining equipment. It also makes diesel and natural gas engines as well as industrial gas turbines.

A big plus is that Caterpillar is truly a global company with more than half its sales generated outside the U.S. In its latest quarter, CAT reported a 34% rise in sales globally, with strength across all regions. This was a level last seen in August 2011. The company specifically noted that in North America the gains were led by construction. Adjusted earnings surged 160% in the quarter.

As of the end of fiscal 2017, Caterpillar’s order backlog was at $15.8 billion, driven by higher backlog in its resources-related industries business. The strong global macroeconomic background led management to guide its adjusted earnings per share to a range of $8.25-$9.25 for fiscal 2018. The midpoint of the guidance range reflects 27% year over year growth.

If you are looking for more pure U.S. exposure, there is Martin Marietta Materials (NYSE: MLM), which is a leading supplier of construction materials (such as aggregates) for highways, infrastructure and other building projects.

The company posted impressive results in the latest quarter, beating consensus estimates on both earnings and revenues. Adjusted earnings were up 21.3% from the year ago quarter to $1.88, while revenues were 2.3% higher to $970.5 million. For 2018, management guided revenue estimates to between $4.2 billion and $4.4 billion.

And if anything happens on the public infrastructure front, MLM is a sure beneficiary. Infrastructure construction accounts for about 37% of the company’s total aggregate product line shipments.

So even if the politicians dither (as usual), infrastructure investments can still be money-makers for you.

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