Author: Andrew Packer

Commodities

Kitco: Silver Looks to Join Gold’s Bullish Trend

Posted on by Andrew Packer

After months of sideways trading, gold prices have been pushing higher. The metal has now moved past $2,000 per ounce in recent sessions. And that trend looks likely to continue for several reasons.

First, investors looking for a safe haven in declining markets can turn to gold. Second, with inflation holding higher than expected, the metal looks like it could benefit. And central banks continue to be net buyers of the metal.

When gold goes higher in a sustained trend, investors can get a better percentage return by investing in silver. The metal is more volatile, but, trading just over $23 per ounce, is easier to trade.

Silver prices are still down 50 percent from their 2011 peak. That’s even as gold prices are near their prior all-time highs. And silver is still off its 52-week high of about $25.70 per ounce.

However, it has fund strength and strong buyer interest when the price has gotten down to the $21 range.

A breakthrough for gold could lead to a “catch up” rally for silver. And it could mean that gold stocks with a heavy mix of silver could fare best.

Wheaton Precious Metals (WMP) is a major gold royalty operation with a sizeable exposure to silver. It’s fared well this year, with shares up over 30 percent.

It still has more room to run with gold prices trending higher. Currently, it’s also paying a 1.4 percent dividend.

 

To listen to the full podcast, click here.

Real Estate

Bigger Pockets: The Lesson Real Estate Investors Can Learn From WeWork and McDonald’s

Posted on by Andrew Packer

Despite the investment challenges facing investors today, there are plenty of opportunities around. Real estate may not see like one right now with today’s interest rates.

However, history shows that investing in real estate can lead to great returns over time. That’s not just true for investors. Companies that own real estate can benefit from that long-term trend. It may even prove more profitable than their underlying business over time.

For instance, co-working space company WeWork (WE), once valued at $47 billion in 2019, never actually ended up owning any real estate. That may be why shares lost 99 percent of their value following their IPO.

At its peak, the company ended up having over 850 locations, all of which were leased from commercial properties. Had the company started smaller and owned the buildings, it would have been able to better pivot as conditions changed.

In contrast, fast food chain McDonald’s (MCD) owns the land under its restaurants. And that land is often in high-traffic areas, leading to increased value over time.

In fact, company founder Ray Croc once quipped that he wasn’t in the burger business. He was in the real estate business. Owning the land allows the company to benefit from real estate, while the company’s franchisees do the real work of producing food.

Today, McDonald’s owns over 40,000 locations in over 100 countries. That shows the power of companies that own real estate.

 

To read the full details on real estate ownership, click here.

Income investing

Sure Dividend: The 10 Best Small-Cap Dividend Stocks You’ve Never Heard Of

Posted on by Andrew Packer

Income stocks can provide investors with lower market volatility and better returns over time. Most investors are aware of large, established companies only capable of slow growth.

But when it comes to dividends, many smaller companies are happy to reward shareholders with cash payouts too. That gives them some current income, as well as better growth potential than many major stocks. That includes many small-cap stocks, which includes any company valued under $2 billion.

For example, there’s Lindsay Corporation (LNN). This company provides water and road infrastructure management services in the United States.

Shares are down 25 percent over the past year, as irrigation services have declined following a surge in grain prices last year. However, it’s still a dividend growth stock.

The current yield of 1.1 percent sounds low. But over time, Linsday has managed to grow its payout. Most recently, the payout was increased by 3 cents annually.

There’s also Tennant Corporation (TNC). They’re a machinery company that makes tools and products for industrial cleaning services. They operate globally, and have a market leadership position.

Revenues are up 15 percent over the past year. And the stock pays a 1.3 percent dividend yield. More importantly, it’s raised that dividend for 52 consecutive years.

 

To read the full list of small-cap dividend stocks, click here.

Income investing

Joseph Calrson: It’s Finally Time to Buy Bonds

Posted on by Andrew Packer

It’s been a tough year for bonds. Technically, it’s been a tough three years. The bond market sold off in 2021, 2022, and is now on for a third consecutive decline. That’s the worst bond market performance in the United States since 1787.

With that kind of poor performance, the contrarian view is that it may be time to buy. And several events are setting up that may indicate above-average returns in bonds in the next 12-18 months.

For starters, the market has been hyperfocused on the 10-year Treasury bond yield.

They see a 5 percent yield there as a pivot point for the market. Yields touched on that level, and other Treasury bonds also already pay over 5 percent.

With this key point reached, billionaire investor Bill Ackman dropped his short position on U.S. Treasury bonds.

Yields are now at their highest level since 2007. Crucially, those 5 percent yields are considered zero risk. As long as the bond is held to maturity, it can’t lose value.

Compared with the stock market’s volatility to earn an 8-10 percent annualized return, yields are high enough to make for a strong alternative.

Meanwhile, if the economy slows and the Federal Reserve cuts rates, bond yields will drop. But existing bondholders will have locked in their high yields.

Plus, their bonds will rise in price to match the drop in yields. That makes for a potential opportunity, especially for long-dated bonds.

 

To watch the full analysis, click here.

Stock market strategies

FX Evolution: Are Stocks About to Enter a Short Squeeze?

Posted on by Andrew Packer

Following a rough back-to-back drop for September and October, markets historically start to calm down in November. The month tends to see gains on average, and sets the stage for stocks to rally in the final weeks of the year.

The 2023 autumn decline has sent stocks into correction territory. That’s a bit more than the average of the past few years, but is in line with longer-term market trends.

However, that could set the stage for a quick and fast rally. It may even have the feel of a short squeeze.

For long-term investors, a correction tends to happen once every 1.5 to 2 years. That makes for an ideal entry point. This year, the market has heavily punished defensive stocks like utilities and consumer staples.

That could mean a reasonable buy for stocks that play to those sectors. They tend to have slow but steady growth, and also tend to pay above-average and growing dividends.

In the meantime, tech stocks, which have led the markets higher overall this year, aren’t looking like a clear buy yet. There could be some more down sessions next, particularly for the popular large-cap names.

However, once those stocks form a base, they could also join other sectors of the market and trend higher.

 

To watch the full analysis, click here.

Cryptocurrencies

Coin Stories: Cathie Wood on Investing Lessons, Spot Bitcoin ETF, $1 Million Bitcoin

Posted on by Andrew Packer

Although 2022 was brutal for bitcoin, 2023 has seen a strong rally. First, the bank failures in the spring provided a boost for bitcoin. Today, investors are starting to speculate that the asset is moving more mainstream.

That’s because there are nearly a dozen financial companies looking to create a bitcoin ETF. That would allow investors to buy and sell bitcoin without the hassle of a cryptocurrency broker. It would simply be one more asset in a brokerage account.

The rising demand that such an ETF would create could lead to bitcoin moving higher. The crypto would likely finally break $100,000 on the news. And it’s even possible for a bigger move higher.

Cathie Wood, founder of Ark Investment Management, sees bitcoin potentially moving to $1 million each. That’s due to rising demand for bitcoin, as well as its finite supply.

Ark has been an early investor holding bitcoin directly. Wood sees bitcoin as being both a store of value, and a unit of account.

Plus, global monetary policy is subject to different theories. That relates to how much money to create, where to set interest rates, and political concerns. Bitcoin avoids the politics that has impacted monetary policy and led to waves of inflation over the years.

That makes bitcoin and bitcoin-related stocks worth a potential look here.

 

To listen to the full podcast, click here.

Income investing

Dividend Growth Investor: Seven Dividend Growth Stocks Raising Dividends Last Week

Posted on by Andrew Packer

While markets set a new multi-month low, the companies behind those stocks have had a more mixed performance. Some are faring well, with growing sales and earnings.

Companies that can continually grow and have excess cash flows can use that capital to reward shareholders with dividends. Naturally, companies that can grow their dividends over time tend to see a steadily rising share price. That’s a great long-term prospect on top of the growing cash payouts.

Recently, seven companies with a history of dividend growth raised their dividends. And they’re mostly smaller companies that are well off the radar of highly-followed big-name stocks.

That includes Brown & Brown (BRO). They’re an insurance company that just gave shareholders a 13 percent increase in their dividend. Amazingly, that’s the 30th consecutive year they’ve raised the payout.

Today, shares yield a low 0.7 percent. While a low starting yield, increasing payouts over time will increase and provide a higher return.

Another dividend grower is Middlesex Water Company (MSEX). They’re a water utility company. They pay a 2.1 percent dividend.

The dividend growth has been a bit slower, rising just 4 percent in the most recent year. But Middlesex has raised its payout for 51 consecutive years now.

 

To view the other five companies that raised their dividends recently, click here.

Income investing

LeadLag Report: An Interview with Ophir Gottlieb on Bond Market Instability

Posted on by Andrew Packer

Bond yields have been rising for over three years now. The bottom was hit in March 2020, amid the pandemic crash as investors flocked to bonds. That pushed yields to historic lows.

Yields even started rising before the Fed announced it would raise interest rates. Fast forward to this year, and bond yields have jumped even higher with just the prospect of interest rates staying higher for a considerable amount of time.

The bond market is usually a sleepy one, where investors look for a safe place to park their capital. That makes the moves of the past few years an extreme one.

Assets don’t operate in a vacuum. Soaring yields in the bond market are starting to show up in other markets as well. The stock market’s recent decline has been closely tied to rising bond yields.

This is a sort of knock-on effect. Rising bond yields make bonds look more attractive, especially with the prospect of inflation further declining.

Meanwhile, stocks are selling off to reflect the competition from higher yields. Dividend stocks are taking some steep hits, with defensive stocks such as utilities marking multi-year lows.

If the moves in the bond market continue, investors should continue to expect other asset classes to make extreme moves.

 

To listen to the full interview, click here.

Stock market

The Compound and Friends: Entering Year Two of the Bull Market with Tom Lee

Posted on by Andrew Packer

The 2022 bear market hit its bottom about this time last year. Even with the recent drop, stocks are up substantially and remain in a new bull market.

With the market entering the second year of its bull run, chances are it won’t look the same as the first. Understanding the current market dynamics and how to best play them can provide investors with the best way to profit going into 2024.

Over the past decade, even with the major events that have riled markets, it’s paid to stay in stocks. The S&P500 has risen by 13 percent annually, and the Nasdaq by 18 percent.

Historically, the second year of a bull market has been positive in 19 out of 22 cycles. That’s 86 percent of the time. The last time it wasn’t true was 1960.

Plus, this year’s bull market has been weaker one by historical standards. That suggests a strong second year.

Investors may be skeptical. The current short-term selloff, and the current economic data suggest weakness. However, inflation has heavily collapsed compared to last year. And the Fed is about done raising interest rates this cycle.

Those data points suggest that markets can stabilize from their current fears and move higher from here. And that next year should bode well for investors.

 

To watch the full interview, click here.

 

Stock market

Elliott Wave Options: New Bearish Elliott Wave is Bad News

Posted on by Andrew Packer

Since the stock market peaked in July, it’s pulled back, making higher highs and higher lows. This type of zig-zag pattern is normal for a market selloff. And while seasonal trends suggest a year-end rally in November and December, it’s possible that investors are now in a final leg down.

As this plays out, the S&P 500 is likely to see some choppy trading in the weeks ahead before it can rally into the final weeks of the year.

The good news? There isn’t much more room for markets to drop. The market started to show some support this week, when the S&P 500 slid to around the 4,150 level.

A further drop from here would likely find much strong support at the 4,100 level. That’s a drop just under than 1 percent from current prices.  

Many investors may be fearful at that point, as the market has now made a 10 percent drop from the summer high. Chances are there will be a lot of talk about the end of the bull market, and the start of a bear market.

However, a 10 percent pullback likely represents a short-term buying opportunity, as they tend to be normal events in longer-term bull markets. From the bottom, stocks will likely see a rally, potentially in the 7-10 percent range.

So while the markets may have some bad news, it’s in the short-term. And it’s setting up for a high probability rally in the final weeks of the year.

 

To view the full analysis, click here.