Entries filed under 'Value Investing'

    Big Pharma on Steroids

    March 27, 2015 12:20 PM by Lavina Talukdar

    Relentless innovation and ongoing mergers and acquisitions have created significant investment opportunities in the pharmaceuticals and biotechnology sectors. 

    Prescription drugs may be a relatively small significant chunk of national healthcare expenditures each year (see Chart 1), but ongoing innovation and consolidation in the sector has had a powerful effect on valuations. 

    Read More »

    Research in Action:
    Riding Herd on Changing Consumer Patterns

    March 23, 2015 11:18 AM by Lord Abbett Editorial Staff

    While big corporations are struggling to retain customers, nimbler enterprises are seizing the opportunity to steal loyal consumers. Three Lord Abbett analysts assess the opportunities.

    One overarching theme in recent research discussions has been consumer spending, which has been on a healthy trajectory since the financial crisis, especially in recent quarters thanks to rising employment and declining fuel prices. (See Chart 1.) But with many consumers underemployed, cautious and/or continuing to deleverage, the outlook is a mixed bag. Rising employment and lower fuel costs may help beverage makers and innovative restaurant chains, but auto companies face considerable headwinds. 

    Read More »

    SMID Cap Value: Lessons Learned in 2012

    March 18, 2015 4:50 PM by Lord Abbett Editorial Staff

    Changes in the market prompted process enhancements that allowed our stock pickers to shine.

    It’s no secret that even the best-managed portfolio can hit a bad patch once in a while. In 2008, one highly acclaimed value manager lost more than 55%, lagging the market by more than 1,800 basis points and ranking in the 99th percentile of his peer group, according to Morningstar.1 The portfolio, which had beaten the S&P 500® Index 15 years in a row, was often known to hold fewer than 50 stocks. How is it possible for such an accomplished manager to miss the mark so badly? For an answer to that question, click here.

    More important, when a strategy with a strong record appears to go off the rails, should investors abandon it, or wait to see if it can get back on track?

    Read More »

    Research in Action: Why Defense Stocks May Still Help Growth and Value Investors

    May 15, 2014 8:58 AM by Rama Bondada

    Do defense stocks still work when the world's biggest consumer of military products, services, and technology is cutting back? The answer may surprise you.


    Don't let declining defense spending fool you. Defense stocks still have the potential to advance.

    Among my top picks are a Fortune 100 company that is leading a $220 billion program with nine other countries to develop fighters that can perform ground attacks, reconnaissance, and air-defense missions with stealth capability; a diversified technology and innovation leader that is seeing increased demand for stronger missile-defense systems from U.S. allies; and a top Pentagon supplier that he likes more for its very popular and very profitable line of business jets. (See "Quality Stocks in Three Flavors.")

    Read More »

    Research in Action: Changing Flights on Aerospace Stocks

    May 9, 2014 12:32 PM by Rama Bondada

    Now that some of the world's leading aircraft manufacturers have had quite a run over the last two years, certain aftermarket companies appear more attractive.  

    For an aerospace and defense analyst, there's nothing like watching mega cap stocks jump 80%. That's what two leading aerospace companies did over the last two years, thanks to sharply higher demand from emerging markets; a healthier airline industry; and dramatic improvements in lightweight composite materials, fuel efficiency, and avionics.

    While the order backlog for major aerospace companies remains strong, the two biggest manufacturers have held the rate of production flat to give the rest of the supply chain a chance to catch up. As a result, I’ve shifted my focus to aftermarket companies that supply a wide variety of high-margin products that remain very much in demand. 

    Read More »