August 20, 2014
FROM THE EDITOR
Nancy Zambell

by Nancy Zambell
Editor of Dividend Digest and Investment Digest
from Investment Digest, Issue 760

All of us at Cabot would like to thank those of you who joined us last week at our second annual Cabot Investors Conference in Salem, Massachusetts. We shared some great ideas and conversation, and appreciate your suggestions and the camaraderie you offered all of us, as well as your fellow attendees—we had a great time!

One of the main topics of conversation was, of course, the volatility of the S&P 500. After an incredible rise the last year or so, the Index has seen increased volatility, declining during the first few weeks—as a result of the increased strife in Ukraine, Gaza and Iraq—but the markets have since shrugged off the hostilities, and begun another leg up. Although valuations are climbing, the P/E ratio for the S&P 500 remains under 20—getting lofty, but not outrageously high.

The economy continues to improve, with unemployment slowly declining, but fairly significant jumps in housing starts and building permits.

As well, 469 companies in the S&P 500 Index have reported second-quarter earnings, and 73% have reported earnings, and 64% have reported sales, above the mean estimate. The earnings growth rate was excellent, coming in at 7.6% for the quarter.

Our Spotlight Stock is a homebuilder that’s moving into new markets, taking advantage of a climate of lower interest rates to expand, and should do well in a recovering economy. My editorial this month follows up with a few more insights into the building industry.

With the economic recovery heating up, our contributors found a wide variety of growth stocks for you this month, including an upscale hotel operator, a railroad, a low-cost retailer, a carton manufacturer and a major communications company.

Our high-yield picks include companies in the energy, communications, infrastructure, funeral and financial businesses.

In the growth/technology/biotech arena, you’ll find several names with which you will be familiar, as well as a few up-and-coming tech/biotech companies.

Our financial recommendations are a little out-of-the-box, highlighting a South Korean bank as well as the leading pawn shop operator in Mexico.

For value stocks, you won’t be disappointed with the interesting range of companies, including a TV network, a restaurant supplier, a tire retailer, a major insurance company, a sportswear maker and a premier event site.

We’ve also included a company in the midst of a turnaround, a gold miner, an emerging markets Internet player and a nice selection of energy companies.

Lastly, you’ll find some enticing international picks, as well as an energy fund in our funds and ETFs section.

EDITOR'S PICK

August 21, 2014
Union Pacific (UNP)
Richard C. Young

Richard C. Young

from Richard C. Young’s Intelligence Report

Shipping via highway has become more difficult thanks to increased congestion, higher costs for fuel, shortages of drivers, and increased regulation of motor carriers. According to Intermodal Association of North America CEO Joni Casey, America’s rail companies have stepped in to fill the void by developing world-class efficiency. From 2000 to 2013, intermodal freight volumes increased over 50%. Read More »


FEATURED INCOME INVESTMENT

August 14, 2014
StoneMor Partners (STON)
Jason Kelly

Jason Kelly

StoneMor Partners  from The Kelly Letter

StoneMor Partners (STON) is the second-largest owner and operator of cemeteries in the United States, with 278 cemeteries and 90 funeral homes in 28 states and Puerto Rico. It’s steadily acquiring new properties to create a stronger moat around its business.

Revenue is derived from products and services related to its cemeteries and funeral homes, sold both pre-need (prior to a person passing away) and at-need (when a person has passed away); and income from its two trust funds, the Perpetual Trust and the Merchandise Trust, worth $318M and $450M respectively. The Perpetual Trust provides funding for the upkeep of cemeteries and receives additional capital as a percentage of interment right sales. The Merchandising Trust is funded with cash from a percentage of sales the company has collected for services or merchandise not yet provided to the customer. An outside investment company manages the trust funds with a goal of providing low-risk income. Read More »


INCOME INSIGHTS

Nicholas Curzio

Nicholas Curzio

from FXC Newsletter – Dividend Digest Issue 263 – dated August 13, 2014

The U.S. economy grew at a 4% annual rate in the second quarter, according to the government’s first stab at calculating the gross domestic product. The estimate for the first quarter of this year has been particularly volatile, and today the first quarter was revised upward to a decline of 2.1%.

Aside from the revisions, the numbers suggest that the economy is strong. People are taking jobs, but for less money, which is a concern for the Fed and Janet Yellen. The Fed over the past 8 years under Bernanke and President Obama ingeniously manipulated the markets and saved America’s economy. They lowered interest rates and forced investors to buy equities. Then they methodically brought the equity markets higher by over 70% creating enormous wealth. Read More »