During the past two years, the Motley Fool has allowed the public to follow real-time stock picks by some of our top analysts absolutely free of charge.
Within the last couple of weeks, three of their picks have popped up on my radar. Read below to find out which companies they picked, and at the end, you'll get access to a special free report detailing three stocks to help you retire rich.
Before you call customer service asking what one of our analysts is doing by recommending this stock, take a deep breath. Fool Joe Tenebruso actually wrote the recommendation to short --or bet against -- the future potential of this company.
RadioShack has had a tough year, seeing its stock fall by over 75%, and having to suspend its dividend after 25 consecutive years of payouts. Recently, that string of bad news included the resignation of CEO James Gooch.
But Joe thinks there's still room for the company to fall. For starters, it simply can't compete with today's e-commerce giants, and the store's physical locations mean less and less every day. Second, the company is increasingly competing against also-struggling Best Buy (NYSE:BBY) for the scraps from many e-commerce giants. This is a battle that Joe sees RadioShack losing. Finally, the company's gross margins have been contracting for some time now, meaning RadioShack keeps less and less of every dollar it takes in -- not a friendly trend.
Investors who want to short a stock should be sure they understand the risks, as potential losses are unlimited. Joe admits there's a chance that a private buyout of the company would ruin his thesis, and he's only devoting 1% of his overall portfolio to the position.
Seaspan is a company that has built out a fleet of containerships and locked in long-term contracts with companies that want to use the fleet to distribute their products. But it's not just the business itself that got Fool Jim Royal interested in buying shares of the company. It was the large and growing dividend that the company offers.
As I showed with the case of Windstream (NASDAQ:WIN) and its potentially unsustainable dividend, a large dividend alone is hardly enough to convince you to buy a stock. But there's much more to the story with Seaspan.
For starters, the company increased cash available for distribution by 43% in the second quarter of this year alone. Taking that figure and extrapolating out, Jim sees a company that's only using 20% of its distributable cash flow on dividends -- leaving a lot of room for growth.
Throw in the fact that there's high insider ownership, and that there have been instances of insider buying recently, and you've got a company that's incentivized to increase its dividend payout well into the future.
Joy Global (NYSE:JOY)
Finally, we have Milwaukee-based Joy Global, which manufactures equipment used in the mining of coal, copper, iron ore, and other minerals. Fool Jason Moser recently doubled his position in the company for four key reasons.
First, Jason looks for management he can trust. In CEO Mike Sutherlin, he believes he's found it. Sutherlin guided Joy through the worst of the global recession, and was able to refrain from share buybacks while increasing the dividend over the same time.
Second, the company is relatively easy to understand, as Joy produces machinery that helps extract minerals from the earth.
Third, Jason sees a long-term trend favoring the mining industry. While he readily admits that coal use has hit lows recently -- and that this could continue for a while -- this actually creates a positive. Investors have become so focused on the negative news that they've forgotten about potential demand down the road from the growing economies in Asia.
Finally, Joe thinks today's price is more than fair, with the stock trading for just eight times earnings estimates for 2012.
Want to retire rich?
Hopefully these three recommendations give you some ideas, but they are just a starting place.
Fool contributor Brian Stoffel has no positions in the stocks mentioned above. The Motley Fool owns shares of Best Buy, Joy Global, RadioShack, and Seaspan and is short RadioShack. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.