By: Michael Kahn of Street Authority
Trading countertrend moves can be profitable but risky, so it pays to line up as many factors as possible in our favor before putting money to work.
When a stock sports a price-to-earnings (P/E) ratio that even a technical analyst such as me thinks is low, it's worth a look. When it is oversold at support, I'll get interested. And when the price of its main input commodity starts to fall, I'll consider a quick snapback trade.
This is the case with American Airlines (Nasdaq:AAL).
I will admit that as a chartist, looking at fundamentals gives me the willies, but AAL has a trailing P/E ratio of just 3.1. That's not only insanely low compared to the SP 500, which has a P/E ratio of 19.1, but it's less than half of the industry average of 6.3. Even based on next year's earnings, AAL trades at just 5.7 times estimates.
The stock has fallen more than 20% in the past month and a half, but the recent drop in oil prices following a multimonth rally could result in a short-term pop in AAL.
Oil prices cratered 2.5% Tuesday on expectations that U.S. crude inventories hit a new record high. This was the third straight session of losses, and oil prices are now more than 5% off their 2016 highs made last week. But AAL's action on Tuesday leads me to believe this could be a great spot to enter a quick bullish trade. Continue reading "Oversold Airline Ready For A Quick Rebound"
Article source: http://www.streetauthority.com/node/30678423
Long-term value investors understand that truly profitable trends can take time to build up. Stock market sectors wax and wane with the economy and flow along the curvature of the business cycle, but others don't necessarily obey the same rules.
There's an old saying by Mark Twain, “buy land – it's the one thing they’re not making any more of.” Value investors can take it one step further, though. Arable land is limited, and the global population is growing. That makes food production a critical industry that will continue to be relevant regardless of economic direction.
Low oil prices translate into higher consumer spending which benefits food production companies as well. As a defensive non-cyclical industry, demand stays relatively constant regardless of how the economy is performing.
A rising tide lifts all boats, and the food industry is getting quite a lift lately. Several companies have raised guidance for the next quarter, and a number of analysts have upgraded the industry's outlook going forward. Continue reading "This Stock Could Feed Profits Into Your Portfolio"
Technical analyst Jack Chan has examined the charts and says that if we are in a new bull market, prices in both gold and gold equities should begin to pull back and consolidate soon.
As suggested in our previous analysis, we need to see a couple of things happening in order to welcome a potential new bull market:
#1. COT data to return to bull market values.
#2. Gold price to exceed the 2015 high at $1,302.
Nobody can predict when this will happen, but we can prepare by looking at the past bull and bear markets so that we can recognize a new bull market if and when it materializes.
The Bear Market From 1981 to 2001
After topping above $700 in 1981, gold lost more than half of its value in just over a year, followed by two sharp bear market rallies, and then died a slow death over the next 12 years. Continue reading "Are We or Are We Not in a New Gold Bull Market?"
Article source: http://feedproxy.google.com/~r/theaureport/Ajgh/~3/3zd7EIrHwcw/16953
Value investors know that the long game is important when picking a stock. Short term gains fluctuate, but solid fundamentals mean that a company will outperform over the long-term regardless of temporary ups and downs in the market.
A few decades ago the field of technology was in its infancy and the computer space was considered highly risky and volatile. Of course, anyone who bought into companies like Apple or Intel back then are certainly reaping the rewards today.
Technology is still an investor's best bet for finding the next breakout industry. Right now IoT (Internet of Things) is the frontrunner with advances being made in data storage, infrastructure, and other forms of "smart" tech. Big data stocks and chipmakers have already seen big gains in the past couple of years and should continue to thrive. But there's another industry that looks very much like computers did back in the late 70's and early 80's – spaceflight.
The introduction of commercial space agencies is brand new. Richard Branson helped kick off the new space race with his Virgin Galactic company and now Elon Musk and Jeff Bezos have joined in with their SpaceX and Blue Horizons companies.
While still privately owned entities, there are still ways for investors to hop aboard this exciting new enterprise. Satellite telecommunications hasn't been an industry in focus for Wall Street analysts, but rapidly growing interest in spaceflight and space-related technology means that these companies may be about to enter a new bullish environment that could last decades. Continue reading "A Value Stock That's Out Of This World"
Almost two months into 2016 and the stock market isn't sending investors much news to cheer about. The S&P 500 is down roughly 6% year-to-date and global economic concerns regarding a lack of growth and record low oil prices means that volatility is high and investors are skittish.
While high growth sectors like energy and industrials are suffering, defensive sectors finally have their moment to shine. But not all defensive sectors are performing as well as expected in the current environment. Consumer staples, generally a sector that does well when the broader averages are doing poorly, doesn't have much to offer investors. The Consumer Staples Select Sector SPDR ETF (PACF:XLP) is up marginally at only 1%. However, there's another defensive sector is enjoying the performance spotlight. Continue reading "Ride The Prevailing Winds With This Utility Play"