Wyatt Research Week in Review: May 10-16

Has it really been 15 years since AOL Inc. (NYSE: AOL) – then still known as America Online Inc. – announced a “strategic merger of equals” with Time Warner Inc. (NYSE: TWX)?
According to the Jan. 10, 2000 joint press release from the two soon-to-be uneasy bedfellows, the merger was supposed to create “the world’s first fully integrated media and communications company for the Internet Century in an all-stock combination valued at $350 billion.”
You probably know how that marriage turned out. After eight stormy years of boardroom bickering and unrealized synergies, the divorce was finalized in May 2009, when Time Warner announced that it would spin off AOL as an independent company.
Today, the AOL Time Warner transaction is known as arguably the worst merger in American corporate history. But when the merger was announced, AOL was Internet royalty. Anyone who “surfed the Web” during its nascent days will recall when AOL Instant Messenger was the preferred means of communication among teens, or when the AOL email catchphrase, “You’ve got mail!” was so pervasive that it inspired a Tom Hanks-Meg Ryan romantic comedy hit.
So investors couldn’t help but recall the ill-fated AOL Time Warner “megamerger” when it was announced Tuesday that Verizon Communications (NYSE: VZ) is acquiring the current incarnation of AOL for $4.4 billion.
For a company with a market cap of more than $200 billion, AOL’s price tag is chump change for Verizon. But is the digital media company known today for its Huffington Post and TechCrunch brands even worth $4.4 billion?
Ian Wyatt, president and chief investment strategist of Wyatt Investment Research, has his doubts. In fact, in an article he penned this week, Ian suggested that the AOL acquisition is “a sign that Verizon’s core business faces real challenges.”
Ian was also involved this week in a webinar event, “A Simple Strategy for Doubling Your Money in ANY Sector,” which was led by Wyatt Research growth stock expert Tyler Laundon. A former residential contractor, Tyler zeroed in on specific growth opportunities in today’s construction market, and he also revealed two pure-play stocks to capitalize on the construction rebound.
If you missed the presentation, don’t worry. Just click here to watch it in its entirety.
And if you didn’t have time this week to read all of the articles on wyattresearch.com, here are a few of my favorites to check out:
Beat REITs with These High-Yield MLPs – There are a couple things currently working against real estate investment trusts. One is the threat of rising interest rates, while the other looks to be a rebound in oil prices. And with oil prices turning a corner, it might be time to trade in your REITs for these higher-yielding master limited partnerships.
A Must-Read for GE Shareholders – Forty-five percent of General Electric (NYSE: GE) shares are owned by investors 65 and older – a demographic that typically seeks more income than people still building their nest egg. And Wyatt Research options expert Andy Crowder has an income strategy that has generated a return of 13.2% since he added GE stock to his High Yield Trader service 18 months ago.
A Hidden Health Care Gem for Dividend Income – The health care sector is thriving due to the aging population in the U.S. But there’s a subsector that is doing particularly well: pet health care. And this stock is capitalizing on the boom in pet health care, while also offering a 4.4% dividend yield.
Warning: Beware China’s Stock Market Surge – China’s stock market is in the midst of an incredible bull run. Over the last year, the Shanghai Composite Index is up an astounding 119%. Yet at the same time, China’s economic growth is slowing. Just five years ago, China’s gross domestic product growth was around 12%. Today it’s just 7%.
Hidden in Plain View: The South Korean Bull Market – It was a stock market almost forgotten by global investors for three years. Even this year, it’s been overshadowed by stronger performances in the Chinese and Japanese markets. But the South Korean stock market is up roughly 10% so far this year and is trading at levels not seen since 2011. And unlike the Chinese market, it’s still cheap: the Korea Composite Stock Price Index price-earnings ratio stands at just 11.1 times projected earnings for the next 12 months.
The Best Consumer Staples Value Stocks to Buy Now – A whirlwind of merger and acquisition activity, along with income-starved investors chasing dividends, has pushed the valuations of consumer staples stocks to historical highs. However, there are a handful of consumer staples stocks out there that are still relatively cheap, with P/E ratios below 20 and growth opportunities to fend off a broad selloff in the sector.
GoDaddy Earnings Fail to Impress – On Tuesday, GoDaddy (NYSE: GDDY) released its first quarterly earnings report since its initial public offering on April 1. And while the event certainly wasn’t the unmitigated disaster it could have been following such a hot IPO, there was some bad news.
Cisco Earnings Beat Estimates as Chambers Waves Goodbye – In its final quarterly earnings release with CEO John Chambers at the helm, Cisco Systems (NASDAQ: CSCO) topped analyst expectations. When 17-year Cisco veteran Chuck Robbins takes the chief executive reins in July, he’ll inherit a company that has increased its dividend nearly fourfold in the past four years.
Which Stocks Win and Lose in the Interest Rate Lottery? – A rise in interest rates leads to a rise in the frequency of a recurrent income question: “How will rising interest rates impact dividend-paying stocks?” There’s no definitive answer to that question, but top analyst Steve Mauzy offers historical perspective and several stock categories for investors to keep an eye on.
Leon Cooperman’s Top Stock Picks – It’s always interesting to see what ideas hedge fund billionaire Leon Cooperman comes up with at the annual Sohn Investment Conference. This year was no different, with three stock picks in particular standing out.
Have a great weekend!