Forget Russia! Dow Rallies 181 Points on Strong U.S. Data

Hertz's spinoff boosts shares while Lions Gate struggles and Disney keeps running.

Mar 17, 2014 at 6:07PM

Wall Street finally shifted its focus from Russian President Vladimir Putin's twisted game of geopolitical chess on Monday, as surprising growth in the U.S. manufacturing sector became hard to ignore. The Federal Reserve's February industrial production numbers show rapid growth in the auto industry especially, as production rose nearly 5% from January. After falling for five straight days last week as Putin's antics regarding Ukraine sparked global outrage, the Dow Jones Industrial Average (DJINDICES:^DJI) jumped 181 points, or 1.1%, to end at 16,247. Walt Disney (NYSE:DIS) stock helped to lead the charge, tacking on 1.7%.

Shares of Lions Gate Entertainment (NYSE:LGF), although in the same industry as Disney, shed 5.1% today. But Lions Gate, let's be honest -- America knows Walt Disney. America grew up with Walt Disney. Walt Disney was a friend of ours. And Lions Gate, you're no Walt Disney. I'm not writing off Lions Gate, which is primarily known as the production company behind the money-printing Hunger Games franchise as well as the famed Mad Men and Orange is the New Black TV series. The company's finances are even solid enough to affirm its next quarterly dividend payment of $0.05 per share. Things are going well.

But Disney is an absolute wrecking ball, a brute force of nature in capitalism on planet earth. Its $142 billion market cap makes it 34 times larger than Lions Gate, which means that Mickey Mouse himself could probably acquire the smaller Disney rival without a loan or a credit check. That said, it's easy to get complacent when you're on top of the world like Disney is, and with a mediocre presence in the box office right now -- highlighted by Need for Speed and Peabody and Sherman -- Star Wars: Episode VII, expected in time for Christmas next year, can't come soon enough.

Lastly, shares of Hertz Global Holdings (NYSE:HTZ), primarily known to consumers for its rental car service, surged 4.8% today as investors cheered a reported spinoff. The Financial Times reported after markets closed on Friday that Hertz is planning to unwind its rental equipment business at a valuation approximating $4.5 billion. Spinoffs are commonly considered to unlock value for both the spinee and the spinner, as investors can more easily discern growth patterns in each business and management can maintain a narrower focus on pursuing core competencies. We'll get a better idea of how Hertz's equipment rental business is progressing tomorrow morning, when Hertz reports earnings.

The $2.2 trillion war for your living room begins now
You know cable's going away. So do smart companies like Disney, which are embracing distribution through streaming as we increasingly consume our entertainment on the Internet. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple.

John Divine owns shares of Apple and Google. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

The Motley Fool recommends Apple, Google, Netflix, and Walt Disney and owns shares of Apple, Google, Hertz Global Holdings, Netflix, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information