Articles

Articles Written by Validea Founder John Reese

7/15/2016

John Reese TheStreet.com Articles
TheStreet.com

3 Stocks to Rise From the Appetite for Healthier Foods

There is a growing trend in this country toward eating healthier in general and, specifically, toward eating organic, and investors should take note. Consumer demand in this segment has grown by double digits just about every year since 1990, according to the Organic Trade Association. Between 1997 and 2015, sales of organic products increased from $3.6 billion to $43.3 billion and don't show signs of slowing down.

7/15/2016

John Reese Forbes Articles
Forbes

When It Comes To High-Dividend Stocks: Caveat Emptor

As low interest rates continue to underwhelm investors, high-dividend-yield stocks seem to be just the ticket. But before pulling the trade trigger, you might want to listen to the voice in your head whispering "there's no free lunch." While high dividend yields (yield defined as dividend divided by stock price) are appealing, they become less so if they're a function of a low stock price that reflects underlying financial weakness. So, while announcements or news items that drive a stock price down may increase yield, an investor has to determine if it's a good time to buy or if the stock should be avoided.

7/13/2016

John Reese Globe and Mail Articles
The Globe and Mail

Valuable Lessons From Brexit, And Three Stocks For The Long-Term Investor

Last Friday's U.S. jobs report sent the markets skyward, and by Monday the Standard & Poor's 500 had returned to a new record high, dulling the memory of the decline that followed the June 23 vote by Britain to exit the European Union. The lesson: Short-term shocks don't necessarily lead to permanent damage. It is a predictable pattern, but one that jittery investors too often forget. Markets tumble at the hint of bad news, but more often than not they rebound. Look at the 2008 financial crisis to illustrate this point.

7/11/2016

John Reese NASDAQ Articles
NASDAQ.com

Do Good Things Still Come in Small-Cap Packages?

Over the past several years, small-cap fund performance has come under scrutiny and the credo of the "small-cap premium" has all but evaporated. The notion, that an investor should earn a premium for investing in smaller companies due to the increased risk associated with them, was not considered a violation of market efficiency but rather a compensation to the investor for investing in companies with vulnerabilities.

7/6/2016

John Reese Forbes Articles
Forbes

European Blue Chip Stocks On Sale

The wake of panic left by the unexpected U.K. vote to leave the EU has made the prospect of bargain hunting European stocks pretty enticing. According to Jason Zweig of the Wall Street Journal, those investors who can endure all the conjecture about the "Brexit" impact stand to gain the most. He says, "Investors hate uncertainty, but they despise surprise." In a recent interview with CNBC, Wharton School professor of finance Jeremy Siegel added, "Europe might seem cheap for a while. I think it's rewarding if people want to invest for 3 to 5 years."

7/4/2016

John Reese Globe and Mail Articles
The Globe and Mail

Nine U.S. stocks For Investors Waiting On The Sidelines

We've all been there: You're out on a date, the night has gone well, and now there's a pause in the conversation as you stand outside the restaurant and prepare to say good night. Eyes meet. Pulses pound. Should you move in for the goodnight kiss? You start to, but then hesitate, fearing rejection. You start again, stop again, and, before you know it, your date is gone and the opportunity has passed.

7/1/2016

John Reese AAII Articles
AAII

Going From Stock Screen to a Real Portfolio

Not all that long ago, "stock-picking" entailed tedious, relentless research. In order to get the complete financial picture of a firm and its shares, individual investors had to scour the pages of financial newspapers or pore over scores of thick, dull annual reports. You either spent hours upon hours in the local library or you turned your study into a repository for piles upon piles of financial documents.All that changed with the arrival of the Internet Age. Today, quantitative stock-picking screens are just about everywhere.

6/30/2016

John Reese TheStreet.com Articles
TheStreet.com

5 Top Stocks Investment Guru Joel Greenblatt Would Love

The term "magic" isn't often used in discussions concerning the stock market. Everyone knows or should know that there is no way to time the market or guarantee gains. At Validea, however, we have built our stock screening strategies on fundamental analyses employed by some of the most successful market gurus.

6/27/2016

John Reese NASDAQ Articles
NASDAQ.com

Investors Should Get Down To (The) Business

To many investors, a stock is a piece of paper - one whose value goes up and down just about every minute of every day. They see investing as a game in which one tries to predict which direction that value will go in the short term, using intuition, hunches, and trendlines. Benjamin Graham knew better. Known as the "Father of Value Investing" - and the mentor of Warren Buffett - Graham essentially invented the field of security analysis. And he realized that trying to predict how stocks will behave in the short-term was an incredibly difficult, if not impossible, task.

6/24/2016

John Reese TheStreet.com Articles
TheStreet.com

5 Utility Stocks to Buy When the Markets Are Tanking (See: Brexit)

"During these dog days of low interest rates, utility stocks can offer the low risk of bonds without the paltry returns that fixed-income generates. Take Friday, for example. Major U.S. stock market indices are down 2%-3% on the Brexit vote results, but utility stocks are up. Investors are seeking lower volatility in this uncertain environment. And it's not just Friday. The Dow Jones Utility Average just hit an all-time high, and utility stocks are some of the best performers so far this year. The utility sector as measured by the Utilities Select Sector SPDR (XLU) is up 17% so far this year, vs. the 0.1% gain for the S&P 500.

6/20/2016

John Reese TheStreet.com Articles
TheStreet.com

5 Top Restaurant Stocks With Solid Prospects and Fundamentals

The restaurant industry has seen moderate growth for each of the past six years, a trend that is expected to continue this year, with sales reaching $783 billion, according to the National Restaurant Association. Market research firm NPD estimates that restaurant traffic will increase by 1% this year and growth will probably remain at that level for the next several years.

6/10/2016

John Reese Forbes Articles
Forbes

MetLife, Baxter And 3 Other Contrarian Value Opportunities

At Validea, many of the investment gurus we reference in our stock screening models have become successful by marching to a different market drummer. Rather than follow the crowd, these legends have focused on stocks that not only have fallen out of favor, but that no one will touch. One such guru is David Dreman, chairman and chief investment officer of Dreman Value Management and considered by many to be "the consummate contrarian."

6/7/2016

John Reese Globe and Mail Articles
The Globe and Mail

Three Solid Stocks That Should Hold Up in Good Times and Bad

Weak economic data in North America, continuing sluggishness in China, beaten-down commodity prices, the spectre of interest rate hikes, stumbling corporate profits - all of these factors (and others) have sparked fears among investors at one point or another this year. Throw in a bull market that is now more than seven years old and that, in the United States, has made stocks fairly pricey, and you can see why Google searches for "recession" and "bear market" have hit their highest levels in several years in 2016.

6/7/2016

John Reese TheStreet.com Articles
TheStreet.com

4 Value Stocks to Buy as the Cycle Reverses Away From Growth

Value stocks have under-performed growth stocks significantly since the 2008 financial crisis. The Federal Reserve's rock-bottom interest rate policy, along with anemic economic growth, are factors that have favored growth names and hurt value. For the past three and five years ended June 3, the Morningstar U.S. Growth Index has generated returns of 12.44% and 12.60%, respectively, compared with 8.87% and 10.65% for the Morningstar U.S. Value Index.

6/2/2016

John Reese TheStreet.com Articles
TheStreet.com

4 Stocks That Score High on Free Cash Flow and Other Fundamentals

Cash is the lifeblood of any business. That may seem obvious, but it is something that can be easy to forget. Companies that have lots of cash on hand can also be attractive targets for investors. In fact, some of the world's most successful investors focus on free cash flow. Generally, this is the amount of cash a company generates once the amount it takes to run its business is subtracted, including capital expenditures.

5/26/2016

John Reese NASDAQ Articles
NASDAQ.com

Don't Try To Beat The Market's Traffic Jams

It's been a topsy-turvy nine months for the stock market, with investors doing their best impression of a commuter trying to beat a traffic jam. They've been jumping in and out of stocks, trying to guess the market's next move the way that a frustrated driver weaves from lane to lane, trying to guess which section of the highway will open up. In August of last year, investors pulled out a net of more than $14 billion from stock mutual funds and exchange-traded funds, according to Investment Company Institute; over the next three months, they put nearly all of that back in; then, in December, January, and February, they yanked close to $22 billion out; in March they put more than $12 million back; and since then, they've pulled out a net of more than $35 billion.

5/26/2016

John Reese TheStreet.com Articles
TheStreet.com

5 Top Financial Stocks That Value Investor Chris Davis Would Love

Looking for financial stocks that over the long haul grind out great returns? These "compounding machines," as Chris Davis, chairman of the value investing money management firm David Advisors (and manager of multiple value-oriented mutual funds), calls them, are hard to find, but we've got them for you.

5/20/2016

John Reese TheStreet.com Articles
TheStreet.com

5 Stocks Warren Buffett Would Love

Billionaire investor and Berkshire Hathaway Chief Executive Warren E. Buffett may sing the praises of S&P 500 index funds, but his enthusiasm could be intended for the average investor who lacks the wisdom and experience needed for active investing. A look at Berkshire Hathaway's holdings shows the stocks of companies that fit into a value approach, much like that of his mentor and quintessential active investor Benjamin Graham. The holdings also include high-quality firms, many of which have protective moats around their businesses that help defend profitability and the returns that they can generate.

5/18/2016

John Reese Forbes Articles
Forbes

The Market Presents Small (Cap) Opportunities

It's hard to argue that stocks as a group are not expensive. The price/earnings ratio, price/sales ratio, stock market/GDP ratio, Tobin's Q, cyclically adjusted P/E ratio-all of these are currently showing the market to be anywhere from slightly to significantly overvalued. Given that we're now more than seven years into a bull market, that shouldn't be a big surprise. But what may surprise you is the source of that overvaluation.

5/17/2016

John Reese CNBC Articles
CNBC

Apple Was a Classic Berkshire Stock Long Before The Firm Bought It

Berkshire Hathaway's purchase of $1 billion of Apple stock surprised many in the investment world this week, and it's not hard to see why, given some of Warren Buffett's past tech-sector comments. "We share the general view that our society will be transformed by [technology companies'] products and services," Buffett wrote in his 1999 letter to Berkshire shareholders. "Our problem - which we can't solve by studying up - is that we have no insights into which participants in the tech field possess a truly durable competitive advantage."

5/16/2016

John Reese TheStreet.com Articles
TheStreet.com

5 Defensive Stocks with Big Upside Potential

Defensive stocks have gotten expensive as a group, but by using my guru-based stock selection system, I have identified five "low volatility" stocks that still look attractive and should offer benefits if investors continue to favor this category of names. What's the reason for the lofty multiples for low beta stocks? Simple supply and demand principles at work. Investors have added billion to funds that focus on these types of stocks so far this year. Last month alone, the iShares MSCI USA Minimum Volatility ETF (which owns S&P large caps that fluctuate less than the stock market as a whole) took in $1.2 billion in new money, bringing its total assets to a whopping $12.5 billion and making it one of the most purchased ETFs so far this year.

5/15/2016

John Reese Globe and Mail Articles
The Globe and Mail

Should You 'Sell in May and Go Away?' That Depends

'The trend is your friend." "Buy the rumour, sell the news." "Dance while the music is playing." Catchy old adages abound on Wall Street. Often these maxims hold at least some truth, though they are usually too vague to use as clear, actionable investment advice. But one of the oldest of these adages has some impressive data supporting it - though that doesn't mean you should embrace it.

5/2/2016

John Reese Globe and Mail Articles
The Globe and Mail

Three North American Stocks That Meet My Multiple-Strategy Approach

The recent rise of "smart beta" and "factor investing" strategies - both of which involve investing in companies that meet specific balance sheet, profitability, valuation or fundamental criteria - has opened up a world of possibilities for investors. You can now choose from among scores, perhaps hundreds, of quantitative strategies that target specific types of stocks.

5/2/2016

John Reese NASDAQ Articles
NASDAQ.com

Finding Growth In A Low-Growth World

The American economy grew at a lackluster 0.5% pace in the first quarter, according to new government data - a disappointing but not entirely surprising figure. Sluggish growth has been one of the defining characteristics of the economic expansion that began back in mid-2009. The highest annual growth rate measured in the expansion: a mere 2.5%, back in 2010.

4/22/2016

John Reese Forbes Articles
Forbes

It's Time To Consider These Five Oil Stocks

It's hard to catch a falling knife. That's what a lot of energy investors have found since mid-2014, when oil and gas prices started to tumble. When oil prices fell below $80, some said it was time to buy oil stocks; surely prices wouldn't go much lower. When they fell below $60, many oil stocks really starting to look like bargains - after all, prices couldn't possibly get much lower, right? Then prices fell below $40. Then, briefly, below $30.