The Profit Sector

15/04/2023

As for how to from and , it is all about production, cost, and, ultimately, how profits are returned to .

Many companies are saddled with debt that has to be rolled over into higher . There is no way around that in this economy.

However, many are in an excellent position to continue to return excess profits to shareholders. A particularly useful investing style while the broader is in turmoil.

Of note, a company with a 12% is in a unique position to return a windfall as a buyout target and has the bargaining position to keep paying shareholders while they demand a premium markup to their share price.

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15/04/2023

Saudi Arabia and other major producers decided to cut oil production by over one million barrels per day, starting in May and running through the end of the year.

To put that in and cents, The Department of Energy predicts the summer seasonal increase at 32 cents per gallon on average.

Looking at a five-year chart, you can see why they'd want to protect current as much as possible.

Oil prices drop nearly two-thirds in the Brent Crude Oil Index within a couple of years, then soar upwards.

There has been a severe drop in prices, but that only reinforces a .

15/04/2023

We're going to talk about natural gas and oil. We have before, and the analysis holds up pretty well, but it's time to dig in yet again.

First, I'm going to “bury the lead” and ask you to look at this glorious monstrosity.

There are a pair of oil drums for scale upfront. They're a bit under 3 feet tall, so half a person.

What does that have to do with and ?

It's a prime example of a relic and role we can't ignore. That we still depend on.

How do you think a that can power 8,000 homes works? How do you charge and discharge power to it daily?

These are questions that should be at the forefront of any attempt to replace fossil fuels.

Their implications are already playing out in the and and will for years to come.

14/04/2023

Grainger has increased its dividend every year for the past 51 years, making it one of the newest kings.

That is an impressive and well-orchestrated feat that is continuing to this day.

Grainger has increased their quarterly dividends by about 6% per year over the past five years.

Most recently, they approved a quarterly cash dividend of $1.72 per share, payable on March 1, 2023, to shareholders of record on February 13, 2023. That has translated into a modest 1.07% yield.

While we may see slight swings in the heading into a , Grangier has proven for decades that it can “get it done” and deliver shareholders both capital appreciation and clockwork dividend payouts.

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14/04/2023

Grangier currently offers over 10 million unique items that they sell to everyone, from small mom-and-pop operations to massive industrial clients.

Their current pipeline will allow them to add another two million items per year for the next several years.

Add to that their renowned supply chain that allows next-day delivery for 99% of the U.S. postal codes.

In the maintenance, repair, and operations business (MRO), that reliability is critical.

For years it was thought that companies like Amazon would begin pulling a large chunk of Grainger's business away from them, but that simply hasn’t happened.

They’ve grown.

Another slogan for the company is “We Keep the World Working”.

14/04/2023

“For the ones that get it done.”

That’s the slogan for W.W. Grainger (NYSE: GWW), the famed industrial supply company.

It doesn’t matter where or what kind of business you’re in, the fact is that your tools are going to eventually break down.

You can’t “get it done” if your tools don’t work.

Grainger currently provides millions of customers around the globe with the tools to get the job done: tools, motors, lighting, plumbing, and safety supplies.

It’s a $32 billion dollar company and has recently been given the ultimate honor of “ king.”

05/04/2023

But heed my warning as a Baltimore Orioles fan – companies like Bluebird could end up in a Chris Davis situation, where they hit two big slams, get attention and a big contract, and immediately begin striking out half of the time going forward.

Make sure you have a balanced lineup if you seriously want to compete in this and against the competition for years to come.

As Hall of Fame baseball coach Tommy Lasorda once said,

“There are three types of baseball players — those who make it happen, those who watch it happen, and those who wonder what happens.”

The same goes for .

My advice? Make it happen.

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05/04/2023

Here’s how to grow your investments into a field of dreams…

Let’s start with the humble single. It’s the key to starting off a game and anchoring a portfolio. I’m going to recommend a safe dividend stock with a modest but sustainable yield.

💰 The Single: ProShares S&P 500 Dividend Aristocrats ETF (BATS: NOBL)

While NOBL is an easy bunt single, I’m looking at one of their newest holdings as an easy, stand-up double.

💰 The Double: Otis Worldwide Corporation (NYSE: OTIS)

The company is not only a dividend aristocrat; it’s also a dividend king. This means that it’s had over 50 years of consecutive dividend increases.

💰 The Triple: Illinois Tool Works (NYSE: ITW)

This stock would be your clean-up hitter, which is typically a big slugger that is as likely to strike out as he is to hit a home run.

💰 The Home Run: Bluebird Bio (NASDAQ: BLUE)

05/04/2023

I’ve been coaching my son’s little league baseball team for several years now.

For my , there are few things as pure and invigorating as playing ball on a spring evening with a group of 11-year-olds with only a firm grasp of fundamentals and an endless well of energy.

It is also a reminder that vital skills like patience, attention, and retention allude not just to kids playing a game but to at large.

Much as I’ve advised my readers to take slow and steady with positions like , I’ve also advised my son that a single or a double is monumentally better than risking a strikeout for that rare home run.

But once in a while, if you see a good pitch to hit, we’ll take a swing at a home run .

In baseball and , it’s always better to take a walk than strike out.

04/04/2023

Each fiat currency has its own rate based on many factors.

Prices of goods, energy, food, rent or mortgages, vehicles and their repairs, healthcare, etc. They all add up to a headline number.

The most notable of which is CPI-U in the USA. It's the estimate of the consumer price index for urban areas.

It is far from exact, but it's about the best we've got to work with for a majority of the population.

This is an advantage of indexing – using a broad measure of as many of the most relevant data sources as possible – to get an idea of what's going on with inflation.

Is it perfect? Certainly not.

Know more about its pros and cons here http://ow.ly/Mimk50NzqNM

04/04/2023

are a form of stablecoins that have been around for many years and have some well-documented flaws.

, as they've existed up until today, are backed almost exclusively by fiat currency. Over 90%, as of the start of 2023, have values pegged to fiat currencies.

Of that total, 99% of the value is backed by the US dollar.

This is a fundamental problem with the entire concept. Why should a system be so dependent on one fiat currency?

It simply adds one more step to all transactions.

One more buy-in, one more sale, and a middleman system – which may or may not have fees and delays – complicating everything involved.

04/04/2023

The wild ride that comes with is far from over.

and systems chug along, as volatile as they have always been.

A series of collapses in exchanges and some coin types are also in the not-too-distant past.

, in particular, stands out, with a pair of coins failing because of the shenanigans of FTX interacting with .

Yet cryptocurrencies are evolving in intriguing ways. The underpinning technology and systems shouldn't be dismissed.

31/03/2023

After the collapse of SVB, the Fed swooped in to arrange a bailout for the worst suffering banks. Treasury Secretary Janet Yellen has also announced the federal government could step in to protect depositors at additional banks if needed.

It was welcome news to the banking industry and seems to have steadied further declines

The bank crisis – and the Feds intervention – appears to have been just what the market needed.

Instead of focusing solely on inflation, the Fed stabilized the market with their emergency actions, and investors are piling back into stocks.

But the biggest banks have all experienced a haircut:

With this happening, we have a bank with the best value right now. Know more about it here http://ow.ly/9CMy50NwCuH

31/03/2023

If Leslie had been robbing banks this month, he would probably be rather disappointed when he cracked the safe and realized that there was a lot less in there…

Earlier this month, after the collapse of Silicon Valley Bank scared the bejeezus out of the entire world, and the four biggest U.S. banks lost $52 billion in a day.

📉 JPMorgan lost about $22 billion in market value
📉 Bank of America lost roughly $16 billion
📉 Wells Fargo's market capitalization dropped $10 billion
📉 Citigroup's was down $4 billion

That’s one bad day for banking. I’m sure the banks would have preferred an old fashioned bank heist to the bloodbath that happened to their share prices.

All told, the banking industry has more than $600 billion in unrealized losses on its securities holdings, according to the FDIC.

So with all of the uncertainty, why would anyone want to buy a bank right now?

31/03/2023

When you think about the all time greatest robbers, George Leonidas Leslie may not be the first that comes to mind…

That’s because Leslie wasn’t a gun wielding outlaw, he was a well-to-do New York architect that relied on his wit instead of a pistol.

He was methodical in his approach, and it paid off big time. An astounding 80% of all bank robberies from 1869 to 1878 are attributed to Leslie.

His final heist is still considered the largest in history. Leslie and his gang spent three years casing the Manhattan Savings Institution and planned the robbery for October of 1878.

The gang pulled in $80 million in today’s dollars in one fell swoop.

If Leslie had been robbing banks this month, he would probably be rather disappointed when he cracked the safe and realized that there was a lot less in there…

See our next post

28/03/2023

Through this whole rigamarole of competing narratives and stock manipulation, GameStop suddenly seems to have done what companies ultimately need to do – make .

It's one thing to say that a company is undervalued even when it's on a downward slide. It's more complex to say the downward slide is overdone and force a short squeeze.

It's another thing when it starts making money.

Is this meme stock even a meme anymore? When does it transition to being a contrarian or even a rebound play?

If GameStop maintains profitability, will continued pressure from short sellers remain?

If GameStop continue registering shares directly and short-selling interest subsides, will they move on to other companies facing similar plights?

Continue reading to know what will happen

GameStop Corp (NASDAQ: GME) just didn't something it hasn't in years. It made some money. What does it mean for a meme stock? Let's dig back and look forward.

28/03/2023

In January 2021, share prices soared between 20 and 30 times over as share prices moved beyond the terms these agreements would tolerate without the borrowers, those with short positions, putting up cash.

That meant closing out the positions at a loss which, in turn, meant buying at far higher prices to return borrowed shares.

That resulted in a chain of liquidity problems that ultimately led to the collapse of several funds. White Square Capital and Melvin Capital, in particular.

It also exposed some previously poorly documented agreements between popular online brokers and some massive market makers and clearing houses, along with the relationships between them.

Robinhood took a big blow as it halted trading in the stock with no advance notice.

28/03/2023

Most of this should sound familiar since it was such a big story a couple of years ago.

GameStop Corp (NASDAQ: GME) was feeling the weight of a massive short squeeze. It was a retail when retail businesses were essentially shut down.

It also had plenty of issues to juggle. It was renting retail space that was not driving sales.

It had a physical presence when both computer and console gaming had transitioned to online sales and downloadable content.

What happened next shouldn't have seemed possible.

The short positions – those that borrowed shares at the time with the promise to return them later, hoping to make money on a drop in share prices over time – had reached what should seem like impossible levels.

27/03/2023

President Biden announced that the federal government would retroactively designate SVB and Signature Bank as “systemic risks to the American system” and would thereby guarantee all of the deposits.

Gee, I wish you could put out fires after the building has burned down.

Unlike the TARP program during the last banking crisis, this one is supposedly not taxpayer funded. That’s a good thing.

However, we’ll all be paying for it in the future as the FDIC will certainly have to raise insurance fees on banks, who will, in turn, raise fees and raise interest rates on loans to you and me.

There's no such thing as free government money — it's our .

are the ones paying the price for these incendiary actions by both parties.

Continue reading here: http://ow.ly/QQat50NqQPU

The Fed is acting as firefighter and arsonist at the same time. That's what led to the most recent bank collapse...

27/03/2023

The recent bank meltdown is a similar situation to Mr. Orr's: the Fed was supposed to be the firefighter, but their rate hikes became the incendiary device.

Regional banks provided the dry brushfire.

Both sides are complicit in different ways…

By continuing to raise interest rates at a rapid pace – in order to combat inflation quickly after ignoring it for far too long – the Fed put over-leveraged banks in a dangerous situation.

Banks like Silicon Valley Bank had been so used to the dry powder of zero interest rates that they weren’t properly prepared when the sparks of those interest rate hikes came fast and furious.

By the time the Fed warned them that they were in a dangerous position, it seemed far too late.

27/03/2023

Let me introduce you to a fellow named John Leonard Orr. He is the most prolific arsonist in U.S. history. At his peak in the 80s and 90s, he was known to be responsible for 2,000 fires in Northern California.

Orr was shrewd enough to place his devices in places known to be very flammable.

This included hardware stores, craft boutiques, cars, and… most prominently, dry, grassy hillsides. Orr's fires caused millions of in damages and cost four people their lives.

Oh, and did I mention he was a firefighter? In fact, many of the fires he set were on the way to or from an arson investigators convention. I can imagine him laughing maniacally at the irony.

A different kind of brushfire has engulfed California — and a different kind of arsonist is on the loose — causing billions of dollars in damage in its wake…

See next post

26/03/2023

The fundamental risks to should be obvious, but how we should consider them with clarity is nearly impossible, and governments and central banks are falling over themselves to obfuscate.

rates are up and have risen at an alarming speed. Deposits aren't keeping up.

The in vogue just a couple of years ago are creating massive losses and liquidity problems today.

In short, the risk to miners is they're operating in a rising interest rate environment like every other company out there.

While their product is worth nearly as much as ever, their balance sheets are being watched for weakness.

Read more about it here http://ow.ly/T4Ky50NqPof

26/03/2023

It should come as no surprise that depositors are moving their elsewhere.

One target is money market funds. Assets held by -market funds have hit highs not seen since the pandemic's start.

have performed exceedingly well, while the broader stock has suffered.

The US dollar hasn't been strong as of late but has held up over the last several years.

The recent banking uncertainty has renewed interest in a classic hedge against all of these.

A more interesting perspective comes from comparing gold versus a US dollar index because it includes activity and compares how is priced – in US dollars – against a basket of relatively stable currencies.

26/03/2023

The most insidious aspect of what is happening right now with banks is how we're all being lumped in together.

I'd bet my bottom that you do not have more than $250,000 in a traditional bank account.

The odds are overwhelming with me on this one, and if you do, I'd bet you can put the excess in “cold storage” of sorts in a high-yield account.

Here's the thing, though.

Businesses and banks are not bound to the quarter million dollar limit for guarantees. Nothing stops a bank from guaranteeing deposits beyond the FDIC limit.

We heard about the risk to small tech companies meeting payroll. It's a ruse to hide unsecured lending. Nothing stopped SVB or other banks from offering other terms.

Yet the Federal has guaranteed deposits far beyond that limit.

25/03/2023

These three will deliver you a monthly for as long as you hold them. Depending on your situation, you may want to use that for day-to-day expenses.

However, I would seriously consider reinvesting those to supercharge your returns.

It’s very satisfying to watch your monthly compound in your .

You can easily set up dividend reinvestment through your broker to ensure your best return.

No matter what you choose, every portfolio should be loaded with dividend stocks, and the monthly ones give you more flexibility.

Don't miss this opportunity; check out these three stocks at:

Here are my three top stocks that will pay you every month... Tired of waiting for quarterly dividend payments?

25/03/2023

You’ll notice that many of the following companies are and which have similar requirements.

But not all of them are created equal.

For example, Alpine Summit Energy Partners (NYSE: ALP) is an and exploration company whose is currently yielding a staggering 33%.

That is simply unsustainable. The stock is down to under a buck after topping out at $6.00 over the past year.

Global Water Resources (NYSE: GWRS), however, yields much less at 2.4%.

That’s because it is a very predictable utility company that can easily maintain a dividend of that size and send you a monthly check. It just won’t be as large as some of the other options.

You can get the best of both worlds with these three safe, -yielding that deliver distributions each month.

25/03/2023

When someone needs money, they tend not to like being kept waiting. What if your boss told you that your paycheck would only come every couple of months instead of every other week? It probably wouldn’t go over too well…

We all have bills to pay and would appreciate a timely payment schedule – preferably as often as possible.

That’s one common complaint about . Most of them typically pay quarterly – and some bi-annually – so only see those checks hit their account a couple of times a year.

But there are actually over 60 stocks that will deliver those checks every month like clockwork.

However, you can’t just toss a dart at one of them and expect the checks to start flying in.

24/03/2023

You should ask yourself why there is such a steep difference between the national average for traditional bank savings account interest rates and high-yield savings account interest rates.

It isn't just that the big banks can muscle you around and have largely abandoned any benefits for relatively small account holders.

However, that certainly is the case and has dramatically worsened over the years.

Here are the pitfalls of high-yielding savings
👉 Withdrawal Limits
👉 Withdrawal Isn't as Easy
👉 Rate Fluctuation

There are plenty of other options out there. Just be careful and read through the terms and conditions if you shop around.

Learn more about High-yielding savings here:

We all have to hold money in a bank account. High-yield savings accounts offer a chance to make some money while protecting it. Here are the perks, pitfalls, and three solid options.

24/03/2023

Higher-yielding accounts offer more than traditional savings and checking accounts.

They come with caveats, but with rates up to 5% and beyond, it can add up to a lot of over time while you maintain padding for bills and emergencies.

Let's look at the perks, pitfalls, and some of the highest-yielding accounts available now.

First, the obvious perk we've covered is that you gain significantly higher by holding money in high-yield savings accounts than others.

Plus, deposits are FDIC insured, so balances up to $250,000 are safe.

The effect of compound growth in these accounts might not be immediately apparent.

24/03/2023

There are plenty of options that can make for you if – and how – you want to .

The classic is appreciation. Buy now, sell for more later.

A more traditional but hybrid approach involves stock appreciation and or disbursement .

Buy now, and some of the company's or free cash flow is returned to you as a shareholder, and hopefully, you sell for more later.

But ultimately, we all have to hold money in a bank account.

Whether it is the money we use for everyday or recurring expenses or extra funds we want to save as emergency funds, there is always a need.