"USEC (NYSE: USU) is the nation's leading supplier of enriched uranium for use in commercial nuclear power plants -- in fact, it is the only supplier," notes value investor Nathan Slaughter.
In Half-Priced Stocks newsletter, he explains, "Low-enriched uranium is commonly used as fuel in nuclear reactors, and no other company in the U.S. provides it, giving USEC a dominant position in a key niche market." Here is his review.
"Its competitive advantage? USEC has the single best competitive advantage there is: zero competition -- at least in the United States. While the firm does have a handful of rivals overseas, it has reaped the benefit of being the lone U.S. supplier.
"The company has also been awarded lucrative contracts to perform work for the U.S. Department of Defense.
"The company also benefits from the nation's longstanding nuclear non-proliferation treaty with Russia. Specifically, it participates in the salvaging of old Soviet nuclear warheads under the 'Megatons to Megawatts' program, which essentially gives the firm a sharply discounted source of uranium.
In his Half-Priced Stocks newsletter, value investor Nathan Slaughter recently assessed stocks based on the general investment philosophy of Benjamin Graham, the noted value investor under whom Warren Buffett studied.
One issue that stands out in his view is Cabela's (NYSE: CAB), one of the world's largest specialty retailers of hunting and fishing gear, camping equipment, and outdoor apparel.
"The cornerstone to Graham's success and his enduring legacy to value investors was his 'margin of safety' concept. Specifically, he would take a hard look at dividend yields, price-to-book ratios, and other key metrics.
"Cabela's originated as a direct marketer and once primarily sold its products via catalog, but has since augmented that distribution channel with e-commerce operations and a growing chain of nearly 30 stores spread throughout 19 states.
Nathan Slaugher sees video game retailer GameStop (NYSE: GME) benefiting from several popular new video software titles. Here's the advisor's latest review from his Half-Priced Stocks newsletter.
"The shares of have staged an impressive rally, vaulting over 30% since the beginning of March. Most of those gains followed the firm's fourth-quarter earnings release, which showed more of the same phenomenal growth that we've grown accustomed to.
"Driven by brisk demand for popular software titles like Activision's Call of Duty 4 and Electronic Arts' Rock Band, same-store sales jumped 17.4%, pushing overall revenues ahead nearly 25% to $2.9 billion.
"Meanwhile, despite the quarter being one week shorter, earnings soared 46% to $190 million, or $1.14 per share -- ahead of optimistic guidance that had been raised not once, but twice.
"The indiscriminate sell-off in the financial sector has left some banks at valuations that haven't been seen in 20 years," says value investor Nathan Slaughter.
In his Half-Priced Stocks newsletter, the advisors looks to one out-of-favor favorite among banks: Minneapolis-based U.S. Bancorp (NYSE: USB). Incidentally, he notes that Warren Buffett recently added to his position in the banking stock.
"US Bancorp is the nation's sixth-largest bank in terms of assets, with nearly $238 billion at last count. The firm operates over 2,500 branches in 24 states, mostly in the western and midwestern parts of the country, including an established presence in key markets such as St. Louis, Denver and Seattle.
"Over the past year, the company has seen solid increases in both loans and deposits. More importantly, it paid out just 3.8% on those interest-bearing liabilities, far below what it earned on loans and other investments -- with the net interest margin expanding to 3.91%.
"And, that rate could move even higher in the coming months thanks to a more favorable interest rate environment. And as for credit quality, U.S. Bank remains at the very top of its peer group.
"MGM Mirage (NYSE: MGM) is arguably the world's top publicly traded casino gaming company; from budget-minded families at the Excalibur to high-rollers at the Bellagio, no segment of the market should slip through the cracks," says value investor Nathan Slaughter.
In Half-Priced Stocks, he explains, "But this is just the beginning: the firm has ambitious plans to leverage its brands and take its gaming/hospitality experience to other growing markets around the world."
"Thanks in part to a landmark merger with cross-town rival Mandalay Group several years ago, MGM is now the dominant player on the booming Las Vegas Strip. The merger also brought together two complementary property portfolios, adding Mandalay's low/mid-tier casinos to MGM's mid/high-end resorts.
"The company also has upscale resorts in other high-profile markets, including Atlantic City's Borgata, Detroit's MGM Grand, and the Beau Rivage on Mississippi's Gulf Coast. Combined, the firm operates around 20 properties featuring more than 42,000 hotel rooms.
"And looking ahead, a busy development pipeline and global expansion plans should keep both of those totals moving briskly forward. The company recently celebrated the introduction of MGM Grand Detroit last October, and that property has already hit the ground running and emerged as a market leader.
The advisor explains, "Enterprise is among the nation's largest pipeline operators, owning nearly 900 miles of crude oil pipelines and 33,000 miles of natural gas, natural gas liquids (NGL), and petrochemical pipelines." Here is his review.
"Following a series of acquisitions, Enterprise is now one of the nation's largest publicly-traded energy partnerships. As a master limited partnership (MLP), the company is generally exempt from federal income taxes, provided it distributes the lion's share of its cash flows to shareholders (technically referred to as unitholders.)
"This special status allows MLPs to shell out generous payments, although these distributions typically don't qualify for the reduced 15% dividend tax rate.
"As opposed to the 'upstream' business of exploration and production, Enterprise is a 'midstream' energy player -- a sector coveted for its steady cash generation potential. Much of Enterprise's diverse revenue stream comes from pipeline charges, which are influenced more by volume flow than by volatile commodity prices.
For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
"Pool Corp. (NASDAQ: POOL) is my favorite speculative idea for 2008," says Nathan Slaughter, editor of Half-Priced Stocks. "Pool Corp. is the world's largest wholesale distributor of swimming pool supplies -- selling more than 100,000 different products from a nationwide network of 285 customer service centers.
'Sales have advanced 21% annually over the past decade, and earnings have more than kept pace -- climbing at a stellar 34% clip. Naturally, all of this has translated into hefty gains for shareholders, with the stock soaring almost 1,000% over the past ten years.
"In recent months, though, the company has been an indirect victim of the sluggish housing market, as a slowdown in new home construction in key markets like Arizona and California has forced management to trim back its full-year earnings guidance.
"However, don't let this short-term weakness cloud the sunny long-term outlook. The vast majority of the company's business is tied to maintenance for older pools. Only around one-third of its revenues stem from new pool construction -- and the bulk of that comes from existing homes, not new ones.
For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
"McGraw-Hill (NYSE: MHP) is my top conservative pick for 2008," says Nathan Slaughter, editor of Half-Priced Stocks. "If you want to beat the market in 2008, then you might start with the one company that actually owns the market, or at least the S&P 500 Index; McGraw holds the keys to the widely used stock barometer, as well as other benchmarks from the ubiquitous Standard & Poor's family.
"From futures contracts to ETFs, there is a staggering $5 trillion of investable assets linked to these indices -- which generate piles of recurring royalty and licensing revenues.
"Elsewhere, the firm is also a leading provider of textbooks and other supplemental learning materials. There are roughly 55 million students enrolled in grades K-12, and state governments currently spend more than $8,500 per student each year -- a total that is forecast to hit $11,000 within the next seven years.
"Warren Buffett's Berkshire Hathaway has disclosed that is has taken a 6.4% stake in CarMax (NYSE: KMX)," says value investor Nathan Slaughter.
CarMax, the used-car retailer, is a holding in Half-Priced Stocks, and the advisor sees Buffett's interest as an additional reason to stay bullish. Here is his review.
"Berkshire Hathaway is the insurance and investing conglomerate controlled by billionaire investor Warren Buffett, whose moves are widely followed by Wall Street.
"It's impossible to know for sure if Berkshire's stake is the result of Buffett's own buying or that of one of Berkshire's subsidiary companies, but either way it's a vote of confidence for CarMax. KMX has been sliding in recent months due to fears that a consumer slump would impact sales of used cars. But we continue to believe those concerns are overblown.
"You don't need to be a motorcycle enthusiast to be familiar with the powerful Harley-Davidson (NYSE: HOG) brand name," notes Nathan Slaughter in his Half-Priced Stocks newsletter.
"In fact," he adds, "Harley-Davidson doesn't have a single major U.S-based competitor -- something very few companies can claim."
The value investor explains, "For those that do enjoy riding on the open road, Harley-Davidson is practically a lifestyle unto itself. With over 1,300 dealerships in 60 countries around the world, the firm has carved out an impressive share of the heavyweight motorcycle market and delivered record revenues for 20 consecutive years."
Slaughter continues, "Founded in 1903, the company now boasts over one million members in the Harley Owners Group (HOG) and enjoys an intensely loyal customer base that few rivals have been able to penetrate.
"And like other companies with entrenched brand names, Harley-Davidson is able to command premium prices for its products. As a result, margins have expanded dramatically and earnings have consistently outpaced revenues -- climbing 23% annually over the past decade.
"This built-in competitive advantage also shows up in lofty returns on capital that currently stand above 30%. Better still, the shareholder-friendly management team isn't shy about returning excess cash to shareholders. In fact, the company repurchased 19.3 million shares last year, and dividends have been hiked in each of the past 13 years.
"Corning Inc. (NYSE: GLW) still offer great value," says Nathan Slaughter. In his Half-Priced Stocks newsletter, the advisor explains, "Corning is a 150-year-old company that is involved in some of today's most exciting cutting-edge technologies."
The advisor notes that in the 1870s, the company developed the glass used in Thomas Edison's first light bulb. In later years, it was instrumental in advancements like the television cathode ray tube and even designed the surface of the Hubbell telescope.
Today, he points out, Corning is best known for the glass substrates used to make liquid crystal displays (LCD). In fact, the company dominates 50% of the global market for the thin glass panels used in computer monitors and televisions.
In addition, Corning does have a stake in a number of other fast-growing fields such as fiber optics, diesel engine pollution control, and scientific laboratory instruments. And, he adds, through its 50% ownership stake in Dow Corning, the firm boasts more than 7,000 silicone-based products that run the gamut from fuel additives to solar power cells.
"Alternative energies are not just a pie-in-the-sky dream," says Paul Tracy and Nathan Slaughter from the StreetAuthority Market Advisor. "Denmark generates as much as 30% of its power from wind, Iceland uses geothermal energy, and producers are bringing down the cost of solar power."
"Overall, companies involved in alternative power technologies, such as wind, solar, geothermal, and biomass, are getting plenty of attention from investors these days." Here, the advisors profile what they consider to the most attractive companies in the alternative energy space.
Suntech Power Holdings Co. (NYSE: STP), "which manufactures and sells photovoltaic (PV) solar cells, has two primary advantages: a low manufacturing cost base and highly efficient cells.
"For starters, Suntech is based in China, where labor costs (even for skilled research staff) are far lower than in the Western world. The Chinese government also subsidizes such research, further helping companies like Suntech.
"In addition, the firm's cells boast some of the highest conversion rates on the market, allowing the company to offer smaller panels that can produce as much electricity as far larger ones from competitors.
"Suntech has been ramping up its manufacturing capacity rapidly in recent years to keep pace with strong demand. Analysts are forecasting robust earnings growth of 45% annually over the next five years.
Motorola (NYSE: MOT) is a long-term holding in the "Deep Discount Portfolio" compiled by Nathan Slaughter. This portfolio from his Half-Priced Stocks newsletter focuses on what he believes are the "most undervalued stocks on the market."
Regarding Motorola, he explains, "When we first added mobile phone and wireless equipment manufacturer Motorola to our Deep-Discount Portfolio back in March, we knew the company was headed for a temporary business slump."
As expected, he states, Motorola has struggled since then, surrendering market share to Nokia (NYSE: NOK) and Samsung and reporting back-to-back quarterly losses.
Furthermore, he adds, Wall Street has been frustrated with the firm's lack of new product development, particularly given the excitement surrounding the successful iPhone launch from Apple (NASDAQ: AAPL).
In recent years, Slaughter contends, Motorola has posted impressive 40% growth in handset unit shipments, tops in the industry. However, he observes, since hitting a homerun with the wildly popular Razr phone, sales have cooled off, and the company now needs to reinvigorate its lineup.
Fortunately, the advisor argues, management has outlined plans to do just that. In fact, the firm is planning to unveil not just one follow-up product, but a whole wave of new phones.
"Since the first 'one-armed bandit' was introduced in the late 1800s, slot machines have become a thriving multi-billion dollar global industry," says says Nathan Slaughter. "And International Game Technology (NYSE: IGT) is the '800-pound gorilla' in the slot machine industry" he explains in his Half-Priced Stocks.
And while he notes that the earliest slot machines were crude mechanical devices, the latest are "technological marvels," equipped with rich high-resolution plasma monitors, stereo surround-sound speakers, live streaming video, and other features.
And looking ahead, Slaughter explains, there are other exciting developments on the horizon to look forward to -- such as server-based gaming, where entire banks of slot machines connected to a central server can be reconfigured instantly.
In Nevada, he notes, slot revenues surpassed those generated by blackjack and other table games in 1981 and never looked back. Last year, he observes, they accounted for 66% of total casino revenues statewide.
While media pundits and politicians debate the pros and cons of immigration, one thing is clear -- the number of immigrants both in the U.S. and worldwide is growing rapidly. And, according to Nathan Slaughter, these workers are using money transfers to send funds back to their home countries.
In his Half-Priced Stocks newsletter, the advisor turns to Western Union (NYSE: WU) as a beneficiary of this trend. He considers the company a "venerable blue chip" that is significantly undervalued.
Slaughter notes, "With more than 300,000 agent locations worldwide, Western Union is clearly the dominant player in the money-transfer industry -- it boasts a network three times as large as its closest rival."
Meanwhile, Slaughter points out that the firm recently announced that it had joined with financial services firm Checksmart to offer its services in 263 locations. This new partnership, he points out, follows a flurry of recent deals that have seen Western Union pick up more than 1,400 locations in Mexico, Italy, and Spain.