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Utility Sector: Check The Ingredients Before Buying

High dividend yields are NOT enough to warrant investing in the utilities sector. Too many investors put their hard-earned money in utility stocks with the assumption that relatively high-yielding dividends from stable business make a good investment. The real question that investors in any equity security must ask is: does my expected return from a stock justify the risk of investing in it?
by David Trainer, Founder & CEO
New Constructs
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Sell Starbucks (SBUX) – Still A Bad Stock

Similar to my prior interviews on SBUX, I found it easy to make the bear case for a stock that is as expensive as Starbucks (SBUX). As my regular readers know, when I say "expensive", I back that up with details such as: to justify its $40 stock price (closing price from prior day), SBUX had to grow profits at 10% compounded annually for more than 25 years.
by David Trainer, Founder & CEO
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Buy LRCX: More Value Than Meets the Eye

Most of my research and publishing tends to focus on companies manipulating accounting rules to make their reported earnings look better than the real economic cash flows of their business. It is unfortunately rare that I find a company whose economic earnings are outpacing the reported accounting results and whose stock is cheap. One such company is Lam Research (LRCX – very attractive rating). One of September’s most attractive stocks, LRCX offers investors hidden value.
by David Trainer, Founder & CEO
2Comments

Sell Citigroup Before The Earnings Bubble Pops

Citigroup is running out of accounting tricks and the stock will continue its slide as investors recognize the company is not as profitable as it wants investors to believe. Our analysis of the financial footnotes of more than 50,000 annual reports means we know more about which companies have the naughtiest and the nicest accounting. And Citigroup is definitely on the naughty list.
by David Trainer, Founder & CEO