This week’s Danger Zone is a company that claims consistent profitability and continued success, despite years of shareholder value destruction. Misleading non-GAAP results, large losses, and an overvalued stock price land 8×8 in the Danger Zone.
The All Cap Growth style ranks sixth out of the twelve fund styles as detailed in our 3Q16 Style Ratings for ETFs and Mutual Funds report. It gets our Neutral rating.
Many investors saw the recent price decline as a time to buy, and the stock is up 30% since mid-May. With shares now greatly overvalued plus large profit losses and strong competition, FireEye (FEYE) is this week’s Danger Zone pick.
But what happens when a once profitable company makes the transition to the cloud and has become largely unprofitable? That company, Interactive Intelligence (ININ) is in the Danger Zone this week.
The Information Technology sector ranks fourth out of the ten sectors as detailed in our 2Q16 Sector Ratings for ETFs and Mutual Funds report. It gets our Neutral rating.
Thesis: Management can boost the market value of ORCL in the amounts provided by aligning the firm’s strategy and performance compensation with real cash flows or what we call return on invested capital.
This week’s Danger Zone hones in on another IPO from 2015 that may have been one of the last to capitalize on the easy money in the market. Post IPO, we believe it won’t take long for investors to realize this company is bleeding cash, has no profits, and faces stiff competition moving forward.
This week’s Long Idea not only pays a quality dividend, but when combined with aggressive share repurchases, provides investors a yield over 9%. Best of all, it is anything but a trap. With consistent profit growth, strong free cash flow, and the opportunity for share price appreciation, Brocade Communications Systems (BRCD) is this week’s Long Idea.
The All Cap Blend style ranks third out of the twelve fund styles as detailed in 4Q15. Last quarter, the All Cap Blend style ranked third as well. It gets our Neutral rating.
Our Most Attractive Stocks (-1.6%) underperformed the S&P 500 (-1.4%) last month. Our Most Dangerous Stocks (-3.6%) outperformed the S&P 500 (-1.4%) last month.
As hacks or data breaches seem to occur almost daily, the cyber security sector is receiving significant attention across the globe. When we focus on fundamentals and cut through the “sector theme” noise, we find some weak links in the cyber security industry. This week’s Danger Zone is one of those weak links.
The Information Technology sector ranks second out of the 10 sectors as detailed in our 3Q15 Sector Ratings for ETFs and Mutual Funds report. It gets our Neutral rating.
Companies are investing record amounts to protect themselves from system breaches. Investors can profit from this trend by investing in a global leader in cyber security.
Last week, we wrote about the riskiest stocks in the Dow Jones Industrial Average. We thought we’d be remiss to not mention our favorite stocks in the index as well. Not all of the blue chips are created equal, and the following are what we consider to be the most attractive investment opportunities in the Dow at the moment.
In this podcast, CEO David Trainer provides a pair trade for 2015 with two technology stocks that could not be more different from one another.
For most companies, we estimate the required amount of cash for normal business operations to be around 5% of sales. However, many companies hold cash or other liquid investments above and beyond this amount. We refer to this extra amount as excess cash. This surplus cash can be used for any number of purposes, including acquisitions, research and development, and cushioning the company against economic downturns. Excess cash is immediately available for distribution to shareholders, so we add a company’s excess cash to our calculation of shareholder value.
Most companies hold some cash—or cash equivalents in the form of investments—above this required amount. Companies hold excess cash in order to cushion against economic downturns, prepare for acquisitions, or any number of other reasons. Sometimes, past profits pile up on balance sheets and are a form of excess cash. Excess cash is not needed for the operations of a company. It is removed from our calculation of invested capital.
The word “index” in an ETF label does not always mean that investors are getting the specific exposure they seek. Diligence on ETF holdings is necessary despite what the providers might have you believe. Below I dispel the following myths concerning index ETFs.
If you bought Cisco Systems Inc (CSCO) last August when I recommended it to investors, or when I recommended it again in January, or any time between May 10, 2012 and now when the stock has had my Very Attractive rating, then today has been a good day for you.
Everyone wants diligence. The problem is that diligence is expensive. I make diligence cost-effective. See how my research paid off for clients last year.
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