WEEKLY MARKET WRAP 8-17-12
CPI FLAT FOR A SECOND CONSECUTIVE MONTH
In July, the federal Consumer Price Index showed no overall advance. That was the case in June as well, and that might just bolster the case for easing at the Federal Reserve. Consumer prices rose only 1.4% annually, the smallest increase since the November 2010 index. Core CPI (minus food and energy costs) rose 0.1% last month. As for wholesale prices, they rose 0.3% in July – the largest jump in five months, even as wholesale gas prices slipped 3.1%.
RETAIL SALES IMPRESS
American retail purchases soared 0.8% in July after a (downwardly revised) 0.7% retreat in June. It was a real sea change – the first positive month for the category since March. The monthly increase in retail gasoline sales was just 0.5%, which had little effect on the overall gain.
Housing starts DIP; permits hit 4-YEAR peak
U.S. builders broke ground on 1.1% fewer projects in July. The good news: permits for new construction hit a pace of 812,000, a high unseen since August 2008.
CONSUMERS ARE FEELING A BIT BETTER
Economists polled by MarketWatch expected a dip in August’s initial University of Michigan consumer sentiment index. Instead, it rose 1.3% to 73.6 – the best reading since May. The index’s gauge of current economic conditions improved to 87.6 in August from 82.7 in July.
THE SUMMER RALLY ROLLS ON
Feeling slightly bullish? You aren’t alone. The Dow and S&P 500 have now advanced for six straight weeks, and the CBOE VIX (the “fear index”) closed at 13.47 Friday, its lowest mark in five years. The numbers for the week: DJIA, +0.51% to 13,275.20; S&P 500, +0.87% to 1,418.16; NASDAQ, +1.84% to 3,076.59. Gold lost 0.21% on the COMEX for the week while oil soared 3.38% on the NYMEX. Gold settled Friday at $1,619.40, oil at $96.01.
THIS WEEK: On Monday, Lowe’s reports Q2 earnings. Tuesday, Best Buy, Dell and Meditronic follow suit. Wednesday brings the National Association of Realtors report on July’s existing home sales, the July 31 FOMC minutes and earnings from Hewlett-Packard. In addition to weekly jobless claims, Thursday offers July data on new home buying, a new FHFA home price index and Q2 results from Hormel. Friday, the report on July’s durable goods orders arrives along with the latest USDA outlook on food prices.
|% CHANGE||Y-T-D||1-YR CHG||5-YR AVG||10-YR AVG|
|REAL YIELD||8/17 RATE||1 YR AGO||5 YRS AGO||10 YRS AGO|
|10 YR TIPS||-0.43%||0.01%||2.45%||3.10%|
Sources: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov – 8/17/126,9,10,11
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.
IDEA OF THE WEEK
Get an 8% Yield from This Exclusive Stock
There are only 27 companies like this on the market. Yet investing this way has made a fortune for many Wall Street elites for years. Here’s how to get your 8% yield now…
As the economy continues to recover from the worst economic collapse since the Great Depression, many investors are growing restless with the wild swings of the stock market. Meanwhile, savvy companies are pulling out all the stops to either stay afloat or plan their next phase of growth.
That often includes finding a trusted financial solutions provider for many of their strategic plans — leveraged buyouts, recapitalizations, growth financing, employee stock option plans and acquisition financing, among others.
And there is one company that stands out as a high quality player.
You won’t hear about it in the financial press much — but that’s because it works behind the scenes, filling many of the needs of small and mid-size public companies that can’t be filled by the big banks on Wall Street.
In fact, it’s part of an exclusive club — only 27 of these companies are traded on the market. Yet the Wall Street elites who have used the same tactics this company uses have made a fortune this way for years. But now, regular investors like you and me can buy into this group of stocks. And best of all, they’re income machines, paying dividend yields of 8.7% on average.
I’m talking about business development companies (BDC). The one I’m specifically referring to, Triangle Capital Corp. (Nasdaq: TCAP), pays a very healthy 7.6% dividend.
The company specializes primarily in private equity and venture capital investments, offering a wide range of financing solutions, including subordinated debt with warrants, first- and second-lien loans, one-stop and unitranche structures, and equity co-investments. I know that all sounds like a mouthful, but suffice it to say, this company operates in a very profitable niche, financing the needs of lower middle-market companies.
The companies Triangle usually works with have a history of generating revenue and positive cash flows, an established market position and a disciplined management team. Furthermore, its target portfolio companies typically have revenue of $10 million to $200 million, and EBITDA of $3 million and up.
The company’s management team has a unique mix of finance and operating expertise in a wide range of industries. Its portfolio contains investments in many business sectors including manufacturing, distribution, transportation, energy, communications, health services and restaurants among others. Most important, it excels is in its ability to evaluate transactions quickly, follow through on commitments and close deals on time.
Triangle’s regional focus is primarily in the Southeastern region of the United States. Within its portfolio of companies, you will find:
• Ambient Air Corp., a leading design/build contractor for HVAC (heating, ventilation, and air conditioning) systems in the housing industry, with an emphasis on the Southeast.
• Ann’s, based in Columbia, Maryland, it’s the largest manufacturer and marketer of trail mixes in North America.
• AssetPoint, a pioneer in delivering integrated enterprise asset management and computerized maintenance management software and services that improve profitability and productivity for the process and manufacturing industries.
• FSI Frozen Specialties, a leading manufacturer of private-label frozen pizzas, sold primarily through grocery stores.
• Home Physicians, a provider of primary-care physician services and podiatry services in homes and assisted-living facilities.
• McKenzie, the largest designer and manufacturer of taxidermy forms and supplies used to mount hunting and fishing trophies in the United States.
• Technology Crops International, a company working with customers to develop and maintain supply chains for high-value, plant-derived oils and oil seeds used as manufacturing ingredients in the food, chemical, cosmetics and pharmaceutical industries.
As you can see, the company has a wide diverse group of customers in much needed industries. Because it’s a trusted partner, many small- and mid-sized businesses depend on Triangle Capital’s financial strength, along with its seasoned experience and operational expertise to create customized solutions to support growth, buyouts, recapitalizations or other financing needs.
Risks to Consider: Though Triangle’s portfolio is well diversified, it is still highly sensitive to the overall economy, particularly the Southeast United States where most of its customers are located. Because Triangle is dependent on new investments and developments, a further slowdown in the economy could impair financial results.
Suggested Action –> Buy Triangle Capital for up to $27 a share. With a well-diversified, solid portfolio of customers, this stock could easily hit $35 within the next 12 months. Best yet, it pays a nearly 8% dividend, so you will get paid a healthy dividend while waiting for appreciation.
Disclosure: TCAP is in the Global Income Portfolio strategy at faithbasedinvestor.com. Please do your own homework and research. This is not an offer to buy or sell securities. To learn more about our VIP newsletter CLICK HERE
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