Investment Contrarians

Market Sector

A market sector is a group of companies that offer a similar product or service. This allows investors the ability for investors to compare companies against their direct competition. Several market sectors include retail stocks and utilities stocks. As each industry has its own metrics, it is difficult to compare a technology company with an insurance firm. Having the various industries split amongst sectors allows for an easier method of comparison.

How to Profit from the Expected Obamacare Rally

By for Investment Contrarians | Oct 22, 2013

Profit from the Expected ObamacareSo a deal is done and, so far, it looks like Obamacare is here to stay, whether you like it or not. Regardless of your views on universal healthcare, you likely like to profit—and may be able to do just that from this new buying opportunity.

With the initiation of Obamacare, tens of millions of Americans who previously did not have coverage will be required to get coverage. And in the healthcare market sector, it will mean a new buying opportunity for investors to make money, as more than 32 million new entrants to the healthcare system will require more products and services. Obamacare will be a boon to the healthcare sector.

We will see a buying opportunity in the providers of health plans, along with pharmaceutical and medical device makers, who will market to a much larger user base.

An interesting requirement for the debt extension was a compromise by the House that will delay the tax on medical devices for two years. This should give this sector a boost over the next few years and likely beyond, which will also benefit investors with a buying opportunity in the healthcare area.

To play the move, there are numerous medical device companies that could benefit. An interesting company in the medical devices area is SurModics, Inc. (NASDAQ/SRDX), which could really benefit from Obamacare.

The company offers a technology that helps coat the surface of medical devices that makes them more effective. SurModics also provides this coating technology for the drug delivery process.

For SurModics, the company needs to prove to the market that it’s ready to deliver consistent results. I … Read More

Twitter IPO Coming; Should You Invest?

By for Investment Contrarians | Oct 8, 2013

Twitter IPO Coming Should You InvestWith news that Twitter Inc. is about to make an initial public offering (IPO), there’s already a lot of buzz and publicity surrounding the event.

And there’s one big question most investors are probably asking: should you consider investing in Twitter?

Generally speaking, investing in stocks after their IPO is extremely dangerous, and many investors have lost money doing so.

If one is fortunate enough to be allocated shares prior to the IPO, that is a different matter altogether. But for most of us, we are considering investing in stocks on the secondary market, once shares are publicly traded.

The social media technology market sector is extremely hot, as you’re probably aware of. The main reason is that the social media market sector is one of the few that is seeing a huge increase in growth in terms of users and revenues.

However, while Twitter is seeing growth in many areas, net income is not one of them. One of the issues when it comes to investing in stocks in the social media market sector is that growth is seen as the main target, while net income lags. With Twitter, the theory is build first, profit later; many investors are hoping that Twitter can turn a corner and start generating profits soon.

The company is looking to raise $1.0 billion, which will value the firm at an estimated $12.8 billion. For the first six months of 2013, Twitter generated revenues of $253.6 million, which is essentially double what the firm produced in 2012. On a trailing 12-month basis, Twitter’s valuation would be 28 times (X) its revenues, which is certainly … Read More

Are the Auto Stocks a Buy Now?

By for Investment Contrarians | Sep 6, 2013

Are the Auto Stocks a Buy NowWhen it comes to buying stocks, it’s important to know how each market sector is performing globally. Because we live in an internationally interconnected world, the events in one economic area can certainly affect a strategy when it comes to buying stocks.

One market sector that has been on fire in America is car sales. We all know that the low-interest-rate environment is now creating an extremely strong automotive market sector, driving the stock of many carmakers significantly higher.

However, not all parts of the globe have been strong contributors to this market sector, causing some investors to hesitate when it comes to buying stocks. It’s always difficult buying stocks with potential headwinds on the horizon; however, if the coast is all clear, then buying stocks at that point is usually too late.

One stock that I’ve discussed before is Ford Motor Company (NYSE/F). It’s clear that investors have been buying stocks in the automotive market sector, as Ford’s stock price has appreciated quite significantly.

One dark cloud over the entire automotive market sector, however, has been Europe. Europe’s economy has been weak, and most investors buying stocks in the automotive market sector have essentially written off the eurozone.

However, things might be changing within that region. The latest data from Markit Economics shows that the overall eurozone Purchasing Managers’ Index (PMI) for August reveals the second consecutive month of expansion, now the fastest growth rate in two years, although still very weak. (Source: Markit Economics, September 4, 2013.)

And according to the German Association of the Automotive Industry (VDA), in July, Western Europe saw an increase of four percent … Read More

Mounting Tensions in Middle East to Push Oil Prices Higher?

By for Investment Contrarians | Aug 22, 2013

Mounting Tensions in Middle East to Push Oil Prices HigherWhile many Americans might be disturbed by recent news of the ongoing mass violence in Egypt, it’s unlikely that many have considered the economic impact the growing violence could have on America. And if you think the impact won’t be all that significant, you would be wrong.

Oil prices are already seeing the effects of the violence, as the market sector is extremely sensitive to any increase in political uncertainty on the world stage.

While it is true that Egypt doesn’t actually produce much oil, there are two crucial factors that play into Egypt’s significance to this market sector: the Suez Canal and the Suez/Mediterranean pipeline.

Most people are unaware of how tight the supply of oil is globally. Any interruption in the supply chain will send oil prices up significantly.

We’re already seeing the impact the riots are having on the market, as oil prices have risen substantially over the past couple of months. This market sector doesn’t run with a lot of excess slack, and making up the shortage of supply is extremely difficult to do on a global basis.

According to the U.S. Energy Information Administration (EIA), approximately seven percent of all oil transported globally by sea went through the Suez Canal. If this route is affected, oil prices would have to rise, and this market sector would need to adjust to the lack of available routes.

The next available route from Saudi Arabia would be to go around the bottom of South Africa, which means a massive amount of additional miles. These increased costs borne out by this market sector would then translate to higher oil … Read More

Unique Investment Opportunity in a Market Dominated by Money Printing

By for Investment Contrarians | May 2, 2013

Investment OpportunityWith the introduction of monetary stimulus by many central banks around the world, a common question asked is: what’s a unique investment opportunity in a market sector that is not immediately obvious to the average investor?

If the global stimulus really begins to work, it should result in higher demand for commodities. If this occurs, an interesting market sector that might be an above-average long-term investment opportunity is the shipping industry.

Information just released shows that Greek shipping firms have recently ordered the most iron ore carriers since 2008. Greek shippers own a large number of vessels internationally. (Source: Sheridan, R., “Greeks Bet Ship Rout Ending With Most Orders Since 2008: Freight,” Bloomberg, April 30, 2013.)

While the average earnings per day for a Capesize ship (a type of cargo ship used to transport raw commodities) is only $4,900—a massive drop from the peak in 2008 of $229,000—many analysts are expecting this current level to be a bottom and are expecting earnings to increase to $17,500 per day next year.

Clearly, the Greek shipping market sector sees an investment opportunity over the next few years. From the time of ordering to delivery, the process of obtaining a carrier takes approximately two years. However, because of the economic slowdown, the costs of construction and secondhand sale prices have dropped precipitously.

As an example, a new ship that used to cost approximately $100 million to build in 2008, now costs only $47.0 million. Prices are even lower on the secondhand market sector for large ships, and some shipping firms see this time as an investment opportunity and are using the low prices … Read More