The  Top  12    Stocks  You  Should  Buy  

Right  Now    

By  Dr.  Mark  Skousen  

Editor,  Forecasts  &  Strategies  

 

By  Doug  Fabian  

Editor,  Successful  ETF  Investing  

 

By  Nicholas  Vardy  

Editor,  The  Alpha  Investor  Letter  

 

By  Chris  Versace  

Editor,  PowerTrend  Profits  

 

Eagle  Financial  Publications  •  300  New  Jersey  Ave.  NW  #500  •Washington,  DC  20001  

Copyright  2014  by  Eagle  Publishing  

All  rights  reserved  

IMPORTANT  NOTE:  This  special  report  is  for  informational  and  educational  purposes  only,  based  on  current  data  as  of  March  2014.  Do  not  buy  or  sell  these  investments  until  you  have  read  the  current  issue  of  the  publications  written  by  Dr.  Mark  Skousen,  Doug  Fabian,  Nicholas  Vardy  or  Chris  Versace.  

The Top 12 Stocks You Should Buy Right Now Copyright © 2014, by Eagle Publishing. All rights reserved. No quotes or copying permitted without written consent. Published by: Eagle Publishing, Inc. 300 New Jersey Ave. NW #500 Washington, DC 20001 800/211-7661 Websites: www.MarkSkousen.com www.Fabian.com www.NicholasVardy.com www.ChrisVersace.com www.EagleDailyInvestor.com

Introduction

The Top 12 recommendations offered in this special report give you one dozen of the best investment opportunities from our team of experts. Dr. Mark Skousen, Doug Fabian, Nicholas Vardy and Chris Versace contribute their substantial individual investment skills as each provides three picks. You will not want to miss out on these potentially highly profitable opportunities.

Dr. Mark Skousen’s Top Three Plays to Buy Now

1) Main Street Capital Corporation (MAIN)

2) Enterprise Products Partners L.P. (EPD)

3) Omega Healthcare Investors, Inc. (OHI)

Top Pick #1: Main Street Capital Corporation (MAIN)

Based in Houston, Main Street Capital Corp. (MAIN) is a business development company (BDC) that makes equity investments and loans money to small- and mid-sized companies. Typically, these businesses are cash flow positive, with revenue between $10 million and $100 million.

Main Street is well diversified. It had investments in 62 Lower Middle Markets for a fair market value of $635.8 million, with a total cost basis of $504.3 million, at the end of the third quarter of 2013. The company also had invested in 83 Middle Market companies, with a fair market value of $391.1 million and a total cost basis of $388 million, as of September 2013. In addition, the company had issued private loans to 13 companies, totaling $87.3 million in fair market value with a cost basis of $86.6 million. Those numbers show that Main Street has investments that exceed its cost basis in each of its three areas of financing.

Main Street’s dividend is paid monthly. It has only been cut once since the 2008 financial crisis and, in fact, the company raised its dividend twice in 2013 alone. The company is well positioned to take advantage of new opportunities. (Note: At the time of this writing, Q4 figures were not available.)

At the end of the third quarter of 2013, the company had $17.6 million in cash and $20 million in marketable securities. Main Street also amassed third quarter 2013 net investment income of $18.8 million, or $0.51 per share, to mark a 21% increase from the third quarter of 2012, after excluding $1.3 million of non-recurring, non-cash share-based compensation expense due to the acceleration of a retiring employee’s restricted shares.

Management continued to accumulate more shares of its own stock through 2013. Main Street’s management team and directors own more than 9% of the company. CEO Vince Foster alone owns 1.41 million shares, or 4.2% of total shares outstanding. The company’s President Todd Reppert owns at least 359,000 shares. These two executives are the largest shareholders in the company. Foster earns roughly $2.5 million in dividends per year on his holdings. That’s more than five times as much as his paycheck. Reppert is positioned to earn about $700,000 in annual dividends, more than twice his salary.

In December 2013, no fewer than 12 company directors, owners or board members executed 26 separate transactions to acquire additional shares – all of them at market price. That kind of insider buying affirms my confidence in the company’s outlook. The management team’s interests are clearly aligned with shareholders. If the business does well, and management is able to increase the dividend, that puts more money directly back into their pockets, the way it should be.

It is rare to find a stock with a high yield, growing dividend, a very solid management team, insider buying and bright prospects for the future. But that favorable situation is exactly what Main Street Capital offers. That’s why I still recommend that you pick up shares of MAIN at market, and look to the most recent issue of Forecasts & Strategies for our exit price. The chart below excludes dividends but still shows MAIN’s recent rise.

Data as of 2/14/2014 Source: Yahoo Finance

Top Pick #2: Enterprise Products Partners Fund (EPD) A nice way to diversify your holdings and profit from the energy boom is available through the Enterprise Product Partners (EPD), a Houston-based pipeline company that is America’s largest pipeline operator. It has a track record of acquiring new companies and additional natural gas assets, as well as a rising dividend policy. This master limited partnership (MLP) provides a range of services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, refined products and petrochemicals in the continental United States, Canada and Gulf of Mexico. This MLP has raised distributions for more than a decade and is a member of the dividend achievers index. As a master limited partnership, most profits flow straight through to unit holders untaxed as distributions. Investors then are responsible for paying the taxes on their share of MLP income, which involves a lot of paperwork. But it may be worth it. The MLP provides midstream energy services throughout the Midwestern United States and is highly recommended for income seekers. EPD only pays out about 80% of its distributable cash flow, a conservative policy that leaves a comfortable cushion to grow distributions and re-invest for growth.

Pipeline companies such as Enterprise are benefiting from the oil & gas boom in the United States, and enjoying a sharp increase in demand for the transportation of energy products. Enterprise has better metrics than its competitors — higher revenue growth, higher net margins and an enviable rising quarterly dividend policy. What a money machine. I have it in my portfolio and you should, too. The chart below excludes dividends but still reflects EPD’s advance during the past 12 months.

Data as of 2/14/2014 Source: Yahoo Finance

Top Pick #3: Omega Healthcare Investors (OHI)

Omega Healthcare Investors (OHI) is a Maryland-based owner of more than 400 nursing and assisted living facilities in 35 states. It’s a real estate investment trust (REIT), and there’s plenty of room for further acquisitions of health-related properties. It offers a healthy balance sheet and bottom line.

Revenues rose 20% in the past year to $367 million and earnings advanced 46% to $133 million. With 36% profit margins, OHI’s return on equity (ROE) is more than 13.5%. Omega has had a rising dividend policy for the past ten years. Today, Omega pays out a 46-cent per share dividend (6.5% annualized yield), the highest of its peers. Despite a rising stock price, Omega sells for 13 times estimated earnings in 2013 and has been beating estimates.

For the past three years, Wall Street has enjoyed an unprecedented growth spurt without experiencing as much as a 10% sell-off. Last year, the market rose more than 30%. But no bull market can last forever. So as we begin 2014, we need to keep that in mind, along with the possible “dangers” ahead as new Fed Chair Janet Yellen takes control. That said, I’m still confident that stocks like OHI will continue to hold up well. The company recently announced that it boosted its quarterly stock dividend by a penny to 49 cents per share, payable Feb. 17. Notably, this move represents the company’s 27th dividend hike since first-quarter 2004. With a payout ratio of 69%, Omega can afford to continue increasing its dividend.

Omega Healthcare has had earnings surprises for the past four quarters. Revenues are up 18% in the past year, and earnings rose more than 26% to $159 million. With these strong fundamentals, Omega Healthcare can continue to make decent dividend payouts in the coming quarters, too. If you don’t already own shares of Omega Healthcare Investors (OHI), purchase them at the market price and consult the most recent issue of Forecasts & Strategies for your stop price.

Data as of 2/14/2014 Source: Yahoo Finance

About Mark Skousen

Mark Skousen, Ph. D., is the editor of the monthly investment newsletter, Forecasts & Strategies, as well as three weekly trading services, Skousen High-Income Alert, Hedge Fund Trader and Fast

Money Alert. He also is a professional economist, investment expert, university professor, and author of more than 25 books. He earned his Ph. D. in monetary economics at George Washington University in 1977. He currently holds the Benjamin Franklin Chair of Management at Grantham University. He has taught economics and finance at Columbia Business School, Columbia University, Barnard College, Mercy College, Rollins College and Chapman University. He also has been a consultant to IBM, Hutchinson Technology and other Fortune 500 companies.

Doug Fabian’s

Top Three Plays to Buy Now

4) Global X Uranium ETF (URA)

5) Market Vectors Junior Gold Miners ETF (GDXJ)

6) WisdomTree Japan SmallCap Dividend (DFJ)

Top Pick #4: Global X Uranium ETF (URA)

I am always looking for sectors that I call “deeply depressed industry groups.” These are sectors that have become way out of favor as a result of the latest sell-off. Often what happens is that these sectors are the first to rebound when the next bull market takes place.

Sectors on the shortlist here are energy, oil equipment and services, as well as alternative clean energy such as wind, solar and uranium. These sectors all have seen big selling of late, particularly the clean energy and uranium sectors. The price of Global X Uranium ETF (URA) has been depressed for some time. So when buyers return to this segment, we are likely to see URA spring a lot higher.

URA is an exchange-traded fund (ETF) that is capable of energizing of your investment portfolio. Nuclear power serves as a key energy source around the world, and that means there is a strong base level of demand that exists for uranium as a fuel for power plants. Unlike solar and wind power, nuclear energy is not dependent on weather conditions. Furthermore, uranium is an efficient source of energy. For instance, one pound of uranium can generate as much energy as approximately 100,000 pounds of coal. In addition, uranium leaves behind a fraction of the carbon footprint that coal does. With demand for energy showing no signs of dissipating, especially as China and India continue relatively fast-paced economic growth, uranium prices ultimately should rise. However, interest in the energy source has diminished in countries such as Germany, and that’s largely due to the adverse consequences of the accident at Japan’s Fukushima nuclear power plant that was caused by the devastating effects of an earthquake and a tsunami. The incident brought recollections of the April 1986 Chernobyl nuclear plant accident in the Ukraine, which stalled development in the nuclear industry for a number of years. Yet, despite the fears generated from the Fukushima incident, there are ample reasons to believe uranium demand will remain high, and taking advantage of this can be accomplished with an investment in Global X Uranium ETF.

URA seeks to provide results, before fees and expenses, which correspond generally to the price and yield performance of an index designed to measure the broad-based equity market performance of global companies involved in the uranium industry. The non-diversified fund invests at least 80% of its assets in the securities of the underlying index.

Approximately 13% of the world’s energy needs currently are met by nuclear power plants, with leading users including Finland, Japan, South Korea, Switzerland and Ukraine. France gets three-quarters of its electricity from nuclear reactors. Uranium is the fuel used in conventional nuclear reactors.

Similar to other commodities, the price of uranium can be highly volatile. URA gained 135% in 2013, but that surge stemmed from prices sinking in November and December 2012, before they recovered sharply in February 2013. Since then, URA has followed a generally downward trend, albeit with periodic rises. Making profits in this sector is highly dependent on getting the timing right. When you hear about news that makes uranium seem attractive to buy, one way to invest in the commodity is Global X Uranium ETF (URA).

Data as of 2/14/2014 Source: Yahoo Finance

Top Pick #5: Market Vectors Junior Gold Miners ETF (GDXJ) Like its big brother, GDX, the Market Vectors Junior Gold Miners Index (GDXJ) is an ETF that holds gold and precious metals mining stocks. This fund is a great addition to GDX, because it offers exposure to the smaller mining companies that aren’t held in GDX. Think of it as holding both the S&P 500 and the Russell 2000.

While stocks soared in 2013, precious metals had a rougher year. This pullback in the prices of certain precious metals funds offers investors another chance to consider cheaply buying a fund that is tied to either gold or silver. GDXJ is designed to replicate, as closely as possible before fees and expenses, the price and yield performance of the Market Vectors Junior Gold Miners Index. The index is rules-based, modified market capitalization-weighted and float-adjusted. Basically, GDXJ gives investors exposure to small- and medium-capitalization companies in the gold or silver mining industry by holding gold and precious metals mining stocks. In contrast to its big brother Market Vectors Gold Miners ETF (GDX), which tracks big mining companies, GDXJ offers exposure to the smaller mining companies that aren’t held in GDX. You may want to hold both GDX and GDXJ, the way you might own both the Dow Jones Industrial Average and the Russell 2000. Both give you exposure to gold mining stocks, but GDXJ can be a bit more volatile because it focuses on the smaller public mining companies that tend to fluctuate more. I like GDXJ, and you always want to buy at a reasonable value rather than chase past gains. The strategy here with GDXJ points towards now, with 2013’s pullback in the rear-view mirror, as an enticing entry point.

Data as of 2/14/2014 Source: Yahoo Finance

Top Pick #6: WisdomTree Japan SmallCap Dividend (DFJ)

WisdomTree Japan SmallCap Dividend Fund (DFJ) is a Japan-based ETF which seeks investment results that closely correspond to the price and yield performance, before fees and expenses, of the WisdomTree Japan SmallCap Dividend Index. That index is comprised of dividend-paying small capitalization companies based in Japan. The index is created by removing the 300 largest companies by market capitalization from Japanese companies that meet the underlying liquidity and size screens. Basically, DFJ gives exposure to more domestic-oriented Japanese stocks.

The Japanese market, reflected in DFJ, is being driven higher in large part by the Japanese government’s reflation efforts. Policymakers in Japan are intent on stimulating inflation, pushing the value of the yen vs. rival foreign currencies lower and, by extension, sending buyers into Japanese equities. Currently, Japan is trying to extricate itself from a deflationary stall in the economy, and the policies of Prime Minister Shinzo Abe are designed to stimulate inflation.

Well, so far, so good, as the policy that’s known as “Abenomics” (named after the prime minister) has helped DFJ move substantially higher during the past year. In the case of Japan, the big run higher could be fueled by another factor related to the Abe policies, a factor known as wage-push inflation. This is basically just another term for saying that when people get paid more, they tend to spend more. This spending ramps up prices for goods and services, and the result is reflected in the economy (and equity prices).

Recently, the biggest business lobby group in Japan, the Keidanren, which represents more than 1,200 of the biggest Japanese companies, agreed to raise workers’ base pay for the first time in six years. This wage hike shows growing momentum for wage increases in Japan. That could be the next bullish tailwind to propel Japanese equities higher in 2014. And DFJ is a great way to give your own income a boost.

Data as of 2/14/2014 Source: Yahoo Finance

 

About Doug Fabian Doug Fabian is the editor of the monthly investment newsletter Successful ETF Investing and is the host of the syndicated radio show, "Doug Fabian's Wealth Strategies." Taking over the reins from his dad, Dick Fabian, back in 1992, Doug has continued to

uphold the reputation of the newsletter as a top-ranked risk-adjusted market timer as ranked by Hulbert’s Investment Digest. Doug published the book "Maverick Investing" in 2002 and has appeared as a commentator on CNBC, Fox News and CNN. He also has been quoted in the Wall Street Journal, USA Today, Barron's and other publications.

Nicholas Vardy’s Top Three Plays to Buy Now

7) Las Vegas Sands (LVS)

8) The Blackstone Group (BX)

9) Icahn Enterprises, L.P. (IEP)

Top Pick #7: Las Vegas Sands (LVS)

Las Vegas Sands Corp. (LVS) taps into one of the most exciting and compelling growth stories in the world — the emergence of Las Vegas-style casinos and entertainment complexes in Asia, starting with Macau, and moving on to Singapore and other Asian locales. As one analyst summed it up, “From a macro perspective, we struggle to find a better long-term story.”

Founded in 1988 and headquartered in Las Vegas, most Americans know Las Vegas Sands as the operator of The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino and The Sands Expo and Convention Center in Las Vegas. Las Vegas Sands also operates the Sands Casino Resort Bethlehem, an integrated resort in Bethlehem, Pa.

But most visitors to The Venetian and The Palazzo would be surprised to learn that Las Vegas is a small (and shrinking) part of Las Vegas Sands’ business. Although it entered Asia only about a decade ago, already more than 95% of Las Vegas Sands’ profits come from outside of the United States. This includes properties in Macau, China, as well as the world’s most expensive casino, the $5.5-billion Marina Bay Sands in Singapore.

1 Macau = 7 Las Vegases

The name Macau has long been associated with gambling in Asia. But it always had more in common with seedy Chinese gambling dens than with the big, high-security gaming floors of the Las Vegas Strip. Organized crime was part of the fabric of its culture. Macau was the place to which “the Chinese went for the gambling and the Hong Kongers went for the brothels.”

That all changed when Macau opened up its centuries-old gaming market to foreign competition in 2002. This has transformed the face — and reputation — of Macau. While a decade ago most casinos were small, dingy and noisy, today The Venetian Macau even boasts Cirque du Soleil performances.

Las Vegas Sands was the first U.S. casino operator to spot Macau’s potential. By 2008, Las Vegas Sands had two casino resorts operating in Macau. Since then, Macau quietly became the world’s biggest gambling hub, overtaking the Las Vegas Strip in terms of revenues in 2006.

Last year, Macau raked in $45.2 billion in annual gambling revenues — nearly 20% more than in 2012. With the Las Vegas Strip’s more than 40 casinos generating $6.2 billion in 2013, the revenues of Macau’s casinos are now seven times that of Las Vegas. This year, Las Vegas will be lucky to hit $6.5 billion, or 15% of Macau’s total.

How Macau Trounced Las Vegas

With the benefit of 20/20 hindsight, Macau’s spectacular growth shouldn’t come as a surprise. With a population of half a million, Macau is the only city in the Chinese-speaking world that permits casino gaming. And for the Chinese, gambling is a serious affair. As one Chinese hedge-fund manager told me, gambling to the Chinese is what alcohol is to Westerners. The Chinese don’t drink. Instead, they gamble — a lot. Chinese gambling habits also differ from Americans’, making it both a different and more lucrative business.

• First, the Chinese like to bet big. The average wager in Macau is at least double that of Las Vegas, with a typical table minimum of about $30. While slot machines generate half of the gaming revenue in Las Vegas, they account for only a small portion of revenues in Macau.

• Second, in Las Vegas, more than half of the revenue comes from other sources, such as hotel rooms, restaurants, conventions and shopping malls. In Macau, two-thirds of casino operators’ revenue comes from gaming — in particular, at the VIP tables, where ultra high-stakes baccarat is the game.

• Finally, in Macau, junket operators bring customers to casinos, making travel arrangements for people from mainland China and even lending money to players. Casino operators pay these agents a percentage of the betting chips bought by high-rolling customers. And don’t forget, compared to Las Vegas, Macau is right next door. Furthermore, there are 2.3 million people with at least $10 million in the bank who are within “weekend trip” distance of Macau. More than 100 million people reside within a three-hour drive, and more than 1 billion people (that’s more than three times the population of the entire United States) live within a three-hour flight.

And the numbers are exploding. In 2008, residents in nearby Guangdong province, one of mainland China’s wealthier provinces, were allowed to visit Macau only once every three months. Today, they can visit monthly. The Border Gate — which connects Macau to mainland China — doubled its capacity to 500,000 visitors daily. The Hong Kong government is scrambling to build a bridge to Macau to service Hong Kong gamblers currently relying on a fleet of ferries to reach the territory.

Las Vegas Operators Descend On Macau

Since the government opened up the market in 2002, American giants Las Vegas Sands (LVS), Wynn Resorts (WYNN) and MGM (MGM) have bet the house on Macau.

Las Vegas Sands now has three properties in Macau: The Sands Macau, Venetian Macau and The Four Seasons Macau. Together, they generated $2.07 billion in revenue for the Sands China division in just Q2 of 2013 — a 40% increase over the same quarter a year ago. The completion of the Parisian by Las Vegas Sands in 2015 will signify the company’s total dominance of the Cotai Strip.

Las Vegas Sands’ management believes it can do for Macau what it and other operators did for Las Vegas: transform it into a multi-day destination for people who want to shop, see shows, eat in fancy restaurants and attend conventions — as well as gamble.

Asian Expansion — Singapore and Beyond

Macau will always continue to be an attraction for the Chinese as it morphs from a gambling center into a general entertainment hub. But for all of the focus on the potential of Macau, it is Las Vegas Sands’ $5.5-billion Marina Bay Sands in Singapore that may be the biggest single feather in its cap. Opened only in 2010, Marina Bay Sands is already acknowledged to be the most successful casino launch in history.

The Marina Bay Sands is one of two integrated resorts that is part of the Singapore government’s plan to help improve its international image as a tourist and entertainment destination. Las Vegas Sands shares this lucrative market with only one other competitor, Malaysian-based Resorts World Sentosa.

I had a chance to visit The Marina Bay Sands and the Resorts World on Sentosa this past year in May for the annual CFA (Chartered Financial Analyst) conference. And I must say, I left very impressed with both. And I’m not alone. After only three years of operation, Singapore’s two casinos — Las Vegas Sands Marina Bay Sands and Genting Singapore Resorts World Sentosa — generate about $6 billion in annual gross gambling revenue. This is expected to rise to $7 billion on 2014 and thereby surpass Las Vegas as the world’s second-most lucrative casino destination, behind Macau.

And this could be only the beginning… South Korea, the Philippines and Singapore have already started to open up their gaming markets. Additional sites in China and Japan may be next.

For example, Matsu is a small island that is actually closer to mainland China than it is to Taiwan. Given Matsu’s proximity to the mainland, the tiny resort area could one day become as important as Macau. U.S. casino companies, including Las Vegas Sands, are just waiting for the green light from its governments.

Japan’s market is also set to open up as soon as 2016. Although tables and slot machines are currently outlawed, Japan has long enjoyed gambling in the form of races and lotteries. Gambling already accounts for 30% of the country’s total leisure spending. With its extensive experience in Asia, Las Vegas Sands would be a top candidate to build an integrated casino resort in Japan.

2014: A Watershed Year

Analysts at Citi recently declared 2014 a watershed year for Macau. Here’s why… To begin, 2014 is the first year since 2005 with no major casino opening in Macau. The lack of a significant opening until mid-2015 provides an 18-month runway for existing players to grow their profitability. Metrics like revenue per available room and occupancy rates should soar.

Second, the largest hotel in China is opening up just across the border on Hengqin — an island that is a 10-minute drive from Macau. The hotel features a theme park and man-made beach and is forecast to

receive over 20 million visitors a year. If it is anything like Sentosa, which I saw in May, it is set to be very impressive.

Indeed, 2014 has already gotten off to a strong start. RBC Capital Markets said gaming revenue through the first five days of 2014 totaled $713 million. That implies a year-over-year increase for all of January of 31.4%. For the year, Nomura forecasts a 27% increase in mass revenues and an 8% increase in VIP spending. Visitors are expected to grow by 5%. Revenue growth should continue well into 2017 when the next round of new, fully integrated resorts will have opened on Cotai.

Las Vegas Sands: Betting and Winning Big

The fundamentals of Las Vegas Sands are strong — and improving. Year-on-year revenues rose by 24.20% in 2013. During the past fiscal year, Las Vegas Sands has increased its earnings per share to $3.01, up from $1.85 in the prior year. In 2014, earnings per share are expected to hit $3.69 — a solid 22.59% rise. What’s more, these estimates keep getting adjusted upward. Estimates for earnings per share stood at $3.44 about three months ago.

I also like that 52% of Las Vegas Sands’ stock is held by insiders — mostly Sheldon Adelson and his wife. In fact, Adelson owns more of the stock (by far) than any single institutional investor. Like Carl Icahn in Icahn Enterprise Partners (IEP), the man puts his money where his mouth is. As Sheldon Anderson himself has said, “the company today has never been in better shape.”

So buy Las Vegas Sands Corp. (LVS) at market today, and consult the most recent Alpha Investor Letter issue or Hotline for this investment’s stop price. (A word of warning: With a beta of 1.66, the stock is considerably more volatile than the overall market, as reflected in the chart below.)

Data as of 2/14/2014 Source: Yahoo Finance

Top Pick #8: The Blackstone Group (BX)

After getting pummeled more than most in the market meltdown of 2008, private-equity investing is back in vogue. Thanks to a combination of low interest rates, cash-rich corporate balance sheets and growing investor appetite for risk, private-equity funds have been shooting the lights out.

As a retail investor, you can’t invest directly in a private-equity fund at the click of a mouse. You can, however, invest in the firms that run them.

The Blackstone Group (BX) is just such a firm. Founded in 1985 as a mergers and acquisitions boutique investment bank by Peter G. Peterson and Stephen A. Schwarzman, over the course of the last 25 years Blackstone has evolved from a tiny startup into one of Wall Street’s most dominant players. Based on Private Equity International’s annual ranking, Blackstone is the world’s third-largest private-equity firm by committed capital. Blackstone is now also the largest alternative investment firm in the world, with total assets under management hitting a record $258 billion in October 2013.

Blackstone was the first private-equity firm to open up the secretive world of private equity to mom ‘n pop investors when it went public on the New York Stock Exchange in June 2007. Its initial public offering (IPO) was the biggest in the United States since 2002. Listed at $31 per share, Blackstone became the first major private-equity firm to list shares in its management company on a public exchange. Skeptics point out that no private-equity firm got its market timing better in terms of selling out investors. Remember, back then was the time that Merrill Lynch CEO Chuck Prince was “still

dancing” just before the Bear Stearns bankruptcy in September 2007 stopped the music. Before it was over, Blackstone’s share price eventually tumbled over 90% to a low of $3.00 in February of 2009.

But since then, Blackstone’s share price has soared almost 10-fold to its current level at just over $28 a share. By way of comparison, the S&P 500 is up 170% over the same time period. And although Blackstone today still trades below its IPO price, its track record over the past five years tops all of its publicly traded private-equity rivals.

For all of the ups and downs of Blackstone’s stock, you can’t fault the founders for not having skin in the game. Steve Schwarzman, a classmate of George Bush at Yale who also backed Republican Mitt Romney in last year’s U.S. election, has over 80% of his $7.7 billion net worth wrapped up in Blackstone stock.

From Startup to Wall Street Titan

Truth be told, Blackstone’s array of investments today are so wide-ranging and complex, it’s hard to get your head around them. Unless you’re well versed in the technical aspects of law and finance, Blackstone can seem literally like a Rube Goldberg-style money machine.

Blackstone today operates in five major segments: Private Equity, Real Estate, Hedge Fund Solutions, Credit and Financial Advisory. Blackstone’s own investors are largely private-equity funds, pension funds, insurance companies, endowments, fund of funds, high net worth individuals, sovereign wealth funds and other institutional investors. So Blackstone is not exactly a mom ‘n pop investment shop. As I noted above, Blackstone’s early days were spent as a mergers and acquisitions advisory boutique investment bank. Among its most notable corporate and mergers and acquisitions advisory clients have been Microsoft, Procter & Gamble, Verizon, Comcast, Sony and AIG.

But from the very outset in 1985, Schwarzman and Peterson planned to enter the private-equity business. Blackstone’s private-equity investments in the late 1990s included AMF Group (1996), Haynes International (1997) and Centennial Communications (1999). More recently, in July 2008, Blackstone, together with NBC Universal and Bain Capital, agreed to purchase The Weather Channel from Landmark Communications. In October 2009, Anheuser-Busch InBev announced the sale of its Busch Entertainment Corporation theme parks division to Blackstone for $2.7 billion. More recently, Blackstone raised $2.4 billion in its U.S. initial public offering of Hilton Worldwide Holdings Inc. (HLT), the most ever for a hotel company.

Blackstone and Warren Buffett’s Favorite Investment

With a real estate portfolio of $69 billion, Blackstone today is one of the largest real estate investors in the world. A global operation with 122 investment professionals in the United States, Europe and Asia, Blackstone has committed $8.4 billion to purchase real estate during the past nine months alone. In 2009, Blackstone acquired 50% of Broadgate, the largest office complex in London’s financial district, where I worked as a portfolio manager in the late 1990s and early 2000s.

Back in February 2012, Warren Buffett famously told CNBC that he’d buy up “a couple hundred thousand” single-family homes if it were practical to do so. If held for a long period of time and

purchased at low rates, Buffett said that houses were an even better bet than stocks, advising buyers to take out a 30-year mortgage and refinance as rates went down. Sadly, Buffett noted that Berkshire Hathaway (BRK-B) itself had become too big to take advantage of this opportunity.

Well, Blackstone apparently agreed with Buffett’s advice. Over the past few years, Blackstone has built a massive portfolio to buy single-family homes, spending billions of dollars snapping up houses out of foreclosure. Today, Blackstone is the largest owner of single-family homes in the United States, having invested more than $5 billion in more than 31,000 houses in 14 markets. At one point, Blackstone was buying $100 million in houses a week, which at $150,000 per house would be more than 2,500 houses a month.

At first, investors thought that either these houses would be rehabbed for sale or the huge portfolios of houses would be spun off into single-family home real estate investment trusts (REITs) and pay dividends from their steady cash flow. In that way, they would mimic the success of The Brixmor Property Group (BRX), a real estate investment trust owned by Blackstone which went public in October and boasts the United States’ largest wholly owned portfolio of shopping centers.

Instead, the ever-creative financial engineers at Blackstone came up with a securitization plan which sold bonds backed by U.S. rental homes where monthly rent checks from 3,207 properties will be used to service $479.1 million of debt.

The Numbers Please…

A review of Blackstone’s financial statements over the last three years confirms that it has not only turned the corner but is also now firing on all cylinders. In 2010, Blackstone’s net income was negative $370 million. In 2011, it was negative $168 million and then in 2012, it was positive $219 million. By the end of 2013, net income is expected to hit $656.36 million. (At the time of this writing, full 2013 figures were not yet available.)

The turnaround is due to a combination of improving financial markets, as well as rapidly expanding assets under management (AUM). Blackstone’s total AUM reached a record $210 billion by 2012. This was up $44 billion, or 26%, from 2011. By the third quarter of 2013, Blackstone attracted $12 billion of organic capital inflows, along with $53 billion in total inflows over the past year. Total assets under management grew by 21% year over year to a record $248 billion.

Even after its big run up this year, Blackstone trades at a price-to-earnings (P/E) ratio of 24.54 and a forward P/E of 9.57. It is expected to grow earnings per share (EPS) by 24.90% in 2013 and 21.30% in 2014. By way of comparison, Blackstone’s forward P/E ratio is in line with Kohlberg Kravis Roberts & Co. L.P.’s (KKR) forward P/E ratio of 9.34. In my view, that makes Blackstone cheap and why I believe the stock has plenty of upside in a recovering U.S. economy.

So buy The Blackstone Group (BX) at market today, and consult the most recent Alpha Investor Letter issue or Hotline for this investment’s stop price.

(Keep in mind a couple of additional things as you invest in Blackstone. As Blackstone is a publicly traded partnership, you will get a K-1 form for your taxes. And with a beta of 2.07, Blackstone is also more than twice as volatile as the S&P 500.)

Data as of 2/14/2014 Source: Yahoo Finance

Top Pick #9: Icahn Enterprises, L.P. (IEP)

This recommendation is a bet on one of the top “Alpha Investors” ever — the infamous “activist investor” Carl Icahn. Thanks to bets on Netflix and vitamin maker Herbalife, Forbes listed Icahn as one of the 40 Highest-Earning hedge fund managers in February 2013. A month later, he crept into the top 20 of the Forbes 400 and is now reckoned to be the wealthiest man on Wall Street, with an estimated net worth of $20 billion. That makes him richer than hedge fund icon George Soros.

My subscribers have already profited handsomely alongside the world’s #1 investor, Warren Buffett. Although Buffett has still outperformed the S&P 500 over the past few years, even he admits that he is limited by his size. Managing a much smaller amount of money, in part through publicly listed Icahn Enterprises, L.P. (IEP), Carl Icahn doesn’t have that problem.

So Who Is Carl Icahn?

If Buffett plays up his “white hat” avuncular, “awe shucks” Midwestern image, Carl Icahn wears the “black hat” among U.S. investment titans. The Queens, N.Y., native had an unlikely start, earning a

degree in philosophy at Princeton and attending medical school at New York University before dropping out after two years. Icahn began his career on Wall Street in 1961 when his uncle got him a job as an options broker. In 1968, he formed Icahn & Co., a securities firm that focused on risk arbitrage and options trading. Icahn began doing small-time buyouts of individual companies in 1978.

By the 1980s, Icahn had developed a reputation as a ruthless “corporate raider.” He made a fortune for himself launching hostile bids for companies ranging from TWA to Uniroyal, Texaco and RJR Nabisco. He first offered retail investors the opportunity to profit from his activism when he listed Icahn Enterprises, L.P. (IEP) in 1987.

Headquartered in New York City, Icahn Enterprises invests in a wide range of industries from the investment, automotive, gaming, railcar, food packaging, metals, real estate and home fashion businesses in the United States and internationally. But with its philosophy of activist investing, the best way to describe Icahn Enterprises is “opportunistic.”

What is ‘Activist Investing?’

With their names splashed regularly across headlines, activist investors are the highest-profile investors around. And no one has a higher profile than Carl Icahn. Icahn’s name has been synonymous with titanic corporate battles on Wall Street as long as most Wall Streeters can remember.

Icahn Enterprises, L.P. (IEP) does exactly the kind of investing Icahn is renowned for: it takes minority stakes in public companies and typically pushes for new management or restructuring of the companies. Activism as a whole is on the rise on Wall Street, and the current environment is ideal for Icahn’s style of activist investing. Both Icahn and corporate America are awash in cash, as cheap credit and uncertain markets have pushed companies to pull in their horns.

Carl Icahn puts the active in activist investor. In just the last 24 months, Icahn has taken positions in and then launched campaigns against 15 companies. Icahn had a particularly busy 2013, losing out to Michael Dell in his bid to buy the PC maker. On August 13, 2013, Icahn announced via Twitter a stake in Apple. Apple shares surged 9% in the week after the tweet. Just last week, Icahn took to Twitter again to announce his latest investment, a 61.6-million-share stake in Talisman Energy. He also announced he would seek a seat on the board of the company. The stock, which had a lousy 2013, jumped immediately. For Icahn, happiness means pursuing his activism, actively.

“We’re at the top of our game,” Icahn said in March 2013. “There’s never been a better time to do what we do.”

Icahn’s Investment Philosophy

Despite his famous moniker as a corporate raider, Icahn describes his investment philosophy as Graham & Dodd value investing with “a kick.” But unlike Buffett, Icahn’s philosophy is to get in and out for a quick buck through a big stock buyback, asset spinoffs or ousting the CEO to pop the stock.

More specifically, Icahn looks for companies where the value of their assets far exceeds the total value of their shares, or market cap. He focuses on “hard assets” like real estate, oil reserves and timberland

that are relatively easy to value and resell. With the notable exception of Apple (AAPL), he avoids high-tech companies that have to reinvent themselves each year.

Icahn has a knack for picking the right targets. With his reputation, he’s almost destined to make money from the day he buys the shares — as he has with his recent investment in Apple (AAPL). After that, it’s all about squeezing management to augment the inevitable gains.

Icahn thinks of himself as a contrarian to the bone. He loves to buy at the worst possible moment, when prospects are darkest and no one agrees with him. As Icahn put it, “The consensus thinking is generally wrong. If you go with a trend, the momentum always falls apart on you. So I buy companies that are not glamorous and usually out of favor. It’s even better if the whole industry is out of favor.”

Like Buffett’s fund, Icahn Enterprises, L.P. (IEP) is all but a one-man show. The most prolific source of candidates is Icahn himself, and 50% to 60% of the ideas come from Icahn scribbling ideas on a yellow notepad.

Icahn: ‘Showing You the Money’

In the 2000s, Icahn ran a hedge fund, investing his own money alongside large institutions willing to pay a hefty 2.5% management fee, plus 25% of their profits — a premium to the normal 2% and 20% of profit structures. Icahn closed the hedge fund in 2011 and returned the $1.76 billion of outside capital. Why the revamp? Icahn can now wage proxy battles and issue tender offers without answering to outside investors. The money he manages is under his complete control.

The only way outsiders can access his expertise today is through publicly traded Icahn Enterprises (IEP). Today, Icahn’s nearly 90% stake in Icahn Enterprises is worth more than $8.5 billion.

Over the past four years, Icahn’s investment funds have outperformed the S&P 500 Index, averaging returns of more than 25% a year. That’s a feat very few hedge fund managers match. Icahn also had one of his best years ever in 2013, with Icahn Enterprises up 85.51% through Oct. 11. No wonder Icahn increasingly compares himself with Warren Buffett.

And it’s hard to argue with the numbers. If you look at the last three years, Icahn has more than doubled the “Oracle of Omaha’s” investment returns.

Icahn Enterprises, L.P. (IEP) Top Holdings

Each hedge fund with more than $100 million in U.S. equity investments is required to publish its holdings in a publicly available document called the 13F every quarter. And thanks to 13Fs, we can get a glimpse into Icahn’s portfolio.

At the end of Q413, Icahn Enterprises, L.P. (IEP) held long positions in 19 different companies. Icahn’s highest-profile current position is Apple (APPL). Estimated at more than $1 billion, Apple is Icahn’s latest foray into the technology sector after he failed to derail a leveraged buyout of Dell (DELL) by its founder.

In a sign of his influence, Carl Icahn lifted Apple’s market cap by $20 billion in less than two days of trading last month, following his call for Apple to increase its buyback program to $150 billion. During a dinner with Chief Executive Officer Tim Cook on Oct. 1, Icahn “pushed hard” for Apple to increase its share repurchase program from $100 billion, after a quarter in which it already repurchased $16 billion of buybacks.

Perhaps surprisingly, most of Icahn’s current bets are in the U.S. small-cap space. Small-cap picks have the highest potential to outperform the market over a sustained period of time. They were a particularly good place to be in 2013, with the Russell 2000 index trouncing the S&P 500 last year.

Here are Icahn’s three largest small-cap positions based on the latest public data:

1. CVR Energy (CVI) This is Icahn’s largest small-cap holding. Icahn first took a position in the oil refining company in January 2012, and by the summer he owned 82% of its shares and had replaced its Board of Directors. Icahn has made at least $2 billion as the stock doubled and more oil flows to CVR’s refineries. At first, Icahn wanted to sell the company to a larger buyer. Once this failed, he persuaded CVR to spin off its refining subsidiary in January. In his last 13F filing, Icahn held $3.6 billion in CVR Energy stock and $138 million in the spinoff, CVR Refining (CVRR). 2. Federal Mogul (FDML) IEP’s second-largest small-cap holding is Federal Mogul (FDML). Icahn established his original position in this auto-parts maker in the summer of 2012 and he has held a controlling interest ever since. Shares of Federal Mogul are up a whopping 186% in the past six months on the back of a massive earnings beat last quarter and an extensive restructuring program. 3. Herbalife (HLF) IEP’s third-largest holding is this infamous multi-level marketer. The biggest short position of rival activist investor Bill Ackman, Pershing Square’s manager, Herbalife has more than survived Ackman’s “pyramid scheme” accusations, and shares have just about doubled since the start of 2013. Icahn has been aggressive in calling out Ackman for being “totally wrong” and “ridiculous.” Indeed, Ackman has recently reduced his short position in Herbalife. Icahn thinks Herbalife is still cheap at current levels.

The Numbers, Please…

Icahn Enterprises has a trailing price-to-earnings (P/E) ratio of 22.55 and a very low forward P/E of 12.33. The price-to-cash ratio is very low at 1.85, and the price-to-sales ratio is also very low at 0.51. With a beta of 1.48, however, an investment in Icahn is a much more volatile ride than betting on Buffett — and the stock market as a whole.

But you should take comfort in the fact that with Icahn owning 88.28% of the stock, you are literally a junior partner to one of the world’s greatest investors.

So buy Icahn Enterprises (IEP) at market today, and consult the most recent Alpha Investor Letter issue or Hotline for more on this investment.

Data as of 2/14/2014 Source: Yahoo Finance

About Nicholas Vardy Nicholas Vardy is currently editor of The Global Guru, a free weekly e-newsletter, and a monthly investment newsletter, The Alpha Investor Letter, which provides longer-term global investments. He

also writes two weekly trading services, Triple Digit Trader and Bull Market Alert, which focus on making short-term profits in the hottest markets in the world. A former mutual fund money manager, he is also chief investment officer of Global Guru Capital LLC, where he manages separate accounts for high net worth individuals. A graduate of Stanford University and the Harvard University Law School, he has a unique background that has proven his knack for making money in different markets around the world. He also is a chartered financial analyst.

Chris Versace’s

Top Three Plays to Buy Now

10) The KEYW Holding Corporation (KEYW)

11) Utilities Select Sector SPDR (XLU)

12) II-VI Incorporated (IIVI)

Top Pick #10: The KEYW Holding Corporation (KEYW)

As last November’s assault on Target department store’s database underscored, cybersecurity is – and will continue to be – a never-ending PowerTrend. In fact, it virtually exists in a vacuum. Regardless of what the Fed does with stimulus dollars, or with its perpetual printing press, there will always exist a need for improved cybersecurity.

And that’s what we’re banking on with KEYW Holding Corp. (KEYW). This publicly traded company provides cybersecurity and geospatial intelligence solutions for U.S. government, intelligence and defense customers, as well as commercial enterprises.

As we move more and more of our lives into the digital frontier, we are exposed to a different set of risks. Whether you are a person, a business or a government, the way in which you need to secure yourself is far different than it was two to three years ago, let alone 20 years ago.

What I just described is the downside of my Always On, Always Connected PowerTrend. Cyber attacks, including Website and email hacking, malware infection and targeted denial of service, are being increasingly reported by private users and government departments.

As you know just by glancing at the headlines, cybersecurity is a huge and growing problem. Does it come as a surprise that the Department of Homeland Security awarded a $6 billion contract to 17 companies to protect the government against cybersecurity threats? No it doesn’t, and while that’s bad news for those entrusted with maintaining our security... it’s good news for KEYW.

While its list of intelligence community customers may sound like a lot of alphabet soup, it’s important to realize that its clientele includes NSA, NRO, NGA, AGC and other agencies within the intelligence community and Department of Defense (DoD).

Winning business from those customers and others led KEYW to deliver revenues of $243 million in 2012 — that’s up 22% from 2011’s $190 million and up substantially from the $39 million in revenue from 2009. More recently, during the last several weeks, KEYW shares have fallen nearly 10% and management has been buying the stock at or near current levels. Here’s why...

Whenever cybersecurity is mentioned in the media, we hear one of two very generalized things: Cybersecurity problems have greatly exacerbated a situation, or cybersecurity efforts are much better and reducing a problem. Now here’s the reality: Only 26% of cybersecurity professionals say they are completely prepared for an international attack.

Aside from the continued threat of cyber attacks, management buying the stock and the drift lower in the share price… There’s another reason that I have warmed up to KEYW shares: The company is turning the corner on its commercial product subsidiary Hexis and even announced commercial availability in early October of HawkEye G, a new enterprise security product.

Not only has initial customer response for HawkEye G been favorable, but it was a Silver Award winner in the 2013 Golden Bridge Awards for Innovation in Information Security and Risk Management. As expenses associated with these products wane and revenues ramp up in the coming quarters, KEYW will generate stronger earnings growth.

For these reasons, I want you to purchase shares of KEYW Holding Corp (KEYW) at the market – it offers us a compelling entry point. Place a sell stop at 20% less than what you pay per share. Please see the chart below for the past year’s share price action.

Data as of 2/14/2014 Source: Yahoo Finance

Top Pick #11: Utilities Select Sector SPDR (XLU)

One investing strategy that dates back to legendary fund manager Peter Lynch is to invest in the companies that provide products and services that you buy. I’ve spoken with Peter a few times in my career while he was running Fidelity’s Magellan Fund, and I want you to profit from his sound advice.

Through thick and through thin, we know that honest people will continue to pay their bills, particularly their utility bills. I’m sure that each month you’re sure to pay your bill to Duke Energy Corp. (DUK), Southern Energy (SO), Dominion Resources (D) or another electric utility. I know I do.

It’s one of those things that no matter how bad the economy gets, even the Cash Strapped Consumer still will need heat in the winter and air conditioning in the summer. The companies that compose the Utilities SPDR ETF (XLU) will continue to collect revenue each month. That business model lets XLU line our pockets with a fat dividend each quarter.

As people struggle through cold winters and forecasts for a dry, hot spring, people will continue to need utilities. Investing in XLU is a great way to capitalize on that pain point. No matter what the weather brings, utilities are a safe haven in times of uncertainty in the stock market.

Data as of 2/14/2014 Source: Yahoo Finance

Top Pick #12: II-VI Incorporated (IIVI)

The name of II-VI, Inc. (IIVI), which is pronounced “two-six,” stems from the high-technology materials it works with to deliver optics and other precision products for the industrial, military, telecommunications, photovoltaic, medical and aerospace applications. The company works with compound semiconductors and other exotic materials found on the periodic table, particularly those in the II and the VI columns (hence the name), to serve a number of different end markets

This New Demand, New Solutions PowerTrend opportunity is a quality company that always is looking to wring more costs out of the business while exploring long-term growth opportunities. It also helps that the management team is conservative by nature. Insiders hold roughly 7.6% of the total outstanding share count. The latter information signals to me that the company’s board of directors and management team are inclined to run the company for the long term and have the best interests of shareholders in mind. Further proof is found in the company’s strategy to constantly re-evaluate its manufacturing footprint and shift what production it can to its lower-cost facilities, be they in China or Vietnam, as well as target other cost reduction and yield improvements.

Improving global manufacturing in China, Vietnam and other markets, not only in Asia but in South America and in select domestic markets (automotive, for example), bodes well for II-VI’s (IIVI) higher-margin aftermarket laser optics business. While the overall U.S. manufacturing sector is challenged, IIVI’s optics used in laser manufacturing systems are benefiting from rising automotive production levels.

Generally speaking, the company’s industrial business has benefitted from the shift away from cutting, stamping, blow-torching and related manufacturing activities toward laser-based manufacturing. Again, generally speaking, pricing and margins on aftermarket solutions are rather favorable.

On the military/defense side of the company, II-VI customers include Northrop Grumman Corporation (NOC), Lockheed-Martin Corporation (LMT) and Raytheon Company (RTN).

In spite of the military/defense market, IIVI’s share prices are far more closely correlated to the global industrial economy. With 48% of the company’s revenues derived from that market and nearly all of its operating profits derived from its non-military/defense businesses in recent quarters, it’s not surprising. Despite fancy talk about the company’s products and solutions, investors need to recognize the company is a growth-cyclical one. That is, its products capitalize on the shift toward laser-based manufacturing in cyclical markets — automotive, construction, agricultural equipment and so on. Because the bulk of IIVI’s revenues and profits are tied to industrial manufacturing, we have to remember to look at the company like a cyclical stock. That focus means scooping up the shares when they look expensive because earnings are depressed and waiting for the rebound that delivers margin leverage and robust earnings growth.

Data as of 2/14/2014 Source: Yahoo Finance

 

About Chris Versace Chris Versace is the editor of PowerTrend Brief -- a FREE, weekly electronic newsletter. He also writes PowerTrend Profits, a paid monthly newsletter that helps individual investors profit through buying shares of companies poised to win big in the 8

PowerTrends. In addition, Chris writes two trading services, PowerTrader, which seeks to deliver short-term gains using stocks, exchange-traded funds and options, and PowerOptions Trader, a fast-paced, options-only trading service combining the advantages of options with the profit potential of PowerTrends to deliver quick gains. He also hosts the weekly interview series PowerTalk. Chris has been ranked an All Star Analyst by Zack's Investment Research. He appears regularly on radio and has been quoted in The Wall Street Journal, Investor's Business Daily and many other publications.

Conclusion

The Top 12 recommendations highlighted in this report are intended to tap ripe opportunities to help you to profit. You can choose Dr. Mark Skousen’s use of economic trends to make his picks, the focus on international markets by “The Global Guru” Nicholas Vardy, Doug Fabian’s time-tested, moving stock average investment approach, or Chris Versace’s innovative use of potent PowerTrends. The four unique perspectives of our seasoned investment professionals give you the opportunity to assemble a well-diversified portfolio.

Sincerely,

Roger Michalski Publisher, Eagle Financial Publications www.EagleDailyInvestor.com

 

Eagle Publishing • 300 New Jersey Ave. NW #500 • Washington, DC 20001

800/211-7661 • www.eaglepub.com/EagleFinPubs

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