Fuel Systems Solutions (Nasdaq: FSYS)
Makes the parts that allow medium-sized trucks and cars to run on natural gas – has had a rough couple of months. After trading below $13.50 in early March, shares rocketed near the $18 level before falling back below $14 last month.

The stock fell this morning after the company reported earnings below Wall Street expectations. Fuel Systems posted an earnings loss of $0.04-per-share in the first quarter. Analysts were expecting a $0.04-per-share profit.

The company is doing much better than the headline suggests. Fuel Systems has spent the past two years coping with tough conditions in Europe. At one point, FSYS shares were down 40%-plus over the previous 12 months. A closer look at the company's report reveals it is starting to turn things around. Sales were actually up 1% versus the same quarter last year. To put this in perspective, sales were down more than 10% in each of the previous two quarters.

Fuel Systems is growing its sales in North America and Asia. More important, the company is just starting to recover from a tough 12-month period. I expect earnings to stabilize in the coming quarters, and shares should soar as a result. Buy shares on this pullback. FSYS is a buy up to $18.50.

Brady Corp. (NYSE: BRC)
It's an elite, small-cap, dividend-paying stock. Most investors have never heard of Brady. It makes things like signs, labels, and name-tags. Even though few people pay attention to the company's products, they're everywhere; in store windows, on boxes, even inside cars and electronics.

Brady is the kind of business that will never disappear. More important, the company gives shareholders a big piece of its profits. It has raised its dividend every year for 27 straight years.

But shares have trailed the market badly over the past couple years. While the S&P 500 soared more than 20%, shares of Brady fell about 10%. In other words, the market forgot what a great business Brady is. That's good news for investors. We get to buy one of the best businesses in the world for a super-cheap 12 times forward earnings.

It looks like the market is starting to realize its mistake. Within the last several weeks, shares of Brady are up 7%-plus. Keep in mind, the company's business didn't suddenly improve in the last few weeks. The market is simply coming around to the fact that Brady will keep churning out profits and raising its dividends years into the future. It also means the company fits the criteria we need in an investment to successfully compound returns over the long term.

Brady shares are now trading above our buy-up-to price. If you haven't bought the stock yet, wait for a pullback below $34.50 before you buy. Remember, Brady is the kind of stock that will generate huge returns over years... not weeks. Being disciplined about the price you pay is an important part of a successful strategy. Brady Corp. is a buy up to $34.50.

RPM International (NYSE: RPM) and natural-gas equipment stock Chart Industries (Nasdaq: GTLS), both small-cap dividend-payers, jumped to new 52-week highs last week. Both stocks are up 10%-plus over the past month.

RPM sells specialty coatings, sealants, and building materials under a variety of brand names, including Rust-Oleum. Like Brady Corp., the company is the kind of steady business that rewards us with the chance to compound our wealth over the long term. RPM pays a safe, high yield – and it has raised its dividend for 38 straight years.

Chart Industries provides products and systems for liquefied-natural-gas (LNG) storage and transmission. You can find its tanks at natural-gas-fueling stations. Two weeks ago, Chart posted positive first-quarter earnings. Sales grew 27% versus the same period last year. More important, earnings are on track to grow 30%-plus this year. These results indicate the company is benefiting from the expanding role of natural gas around the world.

Chart Industries is up nearly 50% since last January. RPM is up 14% in less than five months. Both stocks are trading above their buy-up-to prices. For now, RPM and GTLS are "holds."

KKR increased its assets under management to $78 billion, up 18% from six months ago. The company has seen strong results from its existing portfolio over the past year. KKR is also raising more cash from pension funds and endowments.

In short, over the past few years, mutual funds and hedge funds have drastically underperformed benchmarks like the S&P 500 index. This is leading to a huge change in investment policy at pension funds. Pension fund assets topped a record $30 trillion last year. Management teams that help allocate this cash are turning to private-equity companies to increase their returns. This has created a major tailwind behind KKR. The company has a history of blowing away its benchmark year after year. And if the first quarter is any indication, it's on track to do it again this year.

KKR recently announced it has adopted a new distribution policy where it will return more of its income to shareholders. It will return 40% of its realized investment income from its balance sheet. That's a big deal – and caught most of Wall Street by surprise. Based on the new distribution policy, KKR should pay at least a 6% yield for 2013 and 2014.

KKR is expected to increase its assets under management from $78 billion to over $100 billion over the next six to 12 months. This is an easy goal given the tens of trillions of retirement assets stuck in hedge funds and mutual funds that have been under-performing the market over the past five years.

If I'm right, KKR has at least another 50% upside from here. Meanwhile, you can sit back and collect the 6% yield, which is three times higher than what the average S&P 500 company pays.

Based on the fundamentals, KKR is cheap, trading at eight times forward earnings. But the stock is up 59% (including dividends) since July 2012. Shares are now above the recommended buy-up-to price of $17.  KKR is a hold.

On Tuesday, we looked at the surprising volatility of your bank account.   We saw how the U.S. dollar index is experiencing big, double-digit percentage moves in a matter of months... not years.  Our Japanese readers might have read our commentary and said, "Tell me about it!" 

Japan is a vital "cog" in the global economic engine.  It's also saddled with huge debts and sluggish growth. In an effort to pay those debts and stimulate its economy, newly elected Japanese leaders are devaluing their currency (the yen) like crazy.  

Below is a two-year chart displaying the handiwork of the new leaders. Late last year, the Japanese yen index sat at 127. Since Japan has cranked up its printing press, the value of the yen has plunged 23% against the dollar. One might think the "world of money" might be slow and boring... but in today's age of volatility, it's quite the opposite.

By Matt Badiali

A few years ago, I learned about a very clever strategy... one that allows you to protect the value of your current savings during a currency crisis like the one we are experiencing today...

It's a strategy that enables you to benefit from a unique set of assets that will do spectacularly well as the U.S. government continues printing and borrowing money. Now, this has nothing to do with gold or silver or any other type of precious metals investment. Also, you don't have to open up a foreign bank account, or speculate in foreign currencies. In fact, this strategy is extremely safe, and the investments are very easy to buy and sell from any regular broker.

What's more, some of the world's best investors and money managers have taken advantage of similar strategies to grow their own fortunes. They include Ken Fisher, Chris Davis, Ron Baron, and Monish Pabrai, to name a few. Perhaps you've never heard of these guys, but they are some of the richest and most powerful men in the financial sector.

Monish Pabrai, for example, is typically referred to as the "next Warren Buffett." He manages more than $500 million. After starting his fund in 1999, he earned 600%-plus gains for his investors (after fees and expenses) in just his first eight years in the business. Ron Barron is one of the 300 richest men in America according to Forbes. Chris Davis' business manages more than $93 billion.

In this report, I'm going to show you how to make a simple investment – right alongside some of these investors – that will help to protect and grow your savings during a currency crisis. Before I explain our strategy... I want to be clear about one thing...

The U.S. Is Facing an Imminent Currency Crisis.
This crisis will manifest itself as a period of blistering inflation and have a long-lasting impact on our standard of living. How did this happen?

President Richard Nixon set this con in motion in 1971, when he severed the U.S. dollar's last tie to gold. Ever since Nixon officially took America off the gold standard, the dollar has lost its anchor. Prior to 1971, dollars represented a claim on some portion of the Treasury's gold. That capped how many new dollars the government could circulate. Freed of that limit, politicians can now create new dollars whenever they want.

Let me be clear upfront... We can't escape the fact that macroeconomic trends like inflation and international monetary policies will cause huge swings in the price of resources like gold... I'm a geologist by trade. Analyzing geologic data, staying connected to industry insiders, and vetting management teams are my specialties.

However, no one speaks more clearly and eloquently about the threat of inflation and the value of gold than Stansberry & Associates founder Porter Stansberry. He describes the advent of the "paper dollar" – backed not by gold, but simply the "full faith and credit of the United States government" – as the most powerful factor in our economy...

The power to use this debt and to control the creation of new money is the most powerful factor in our economy. The government can now create unlimited amounts of credit to control the U.S. economy...

Without the tie to gold, the amount of economic mischief our government could engineer became practically limitless. No social goal was too absurd... no war too expensive... and no government insurance scheme too patently self-serving not to finance.

Today, when the government needs more money, it cranks up the printing presses and creates more. And every time the feds print a new dollar, the value of the dollars already in your bank account declines just a little bit. You can think of your wealth as a fraction of all the dollars in the world... like a piece of a giant pie. This creation of new dollars means your slice of pie becomes smaller.

And the problem of inflation has only just begun... America faces an enormous debt problem... Again, let me quote my publisher, Porter Stansberry (from the March 2011 issue of his Investment Advisory newsletter)...

Today, total debt in the United States stands at $56 trillion – 3.8 times GDP.

That's $180,000 in debt for every man, woman, and child in the United States. That's nearly $700,000 in debt per family in the United States. The interest on these debts is more than $3.5 trillion per year. To give you some idea how much money we're spending on interest alone... just consider the total budget of the U.S. federal government is also $3.5 trillion. Again, $3.5 trillion just covers the interest!

These debts are completely unaffordable. How many families in America do you know that can afford to finance and repay $700,000 in debt? Not many... certainly not the "average" family.

The U.S. government simply has no other way out. It has taken on too much debt... and made too many open-ended promises to too many people.

If it openly defaults... it risks collapsing the economy. The only way it can pay for these promises – and its incredible debts – is to print more and more dollars... debasing an already devalued currency.

The key to protecting yourself from this currency crisis is to keep your wealth in real, tangible assets that hold their value... the things that are going to require more and more dollars to purchase. That means gold and silver bullion...

It also means keeping a good portion of your wealth in shares of world-class resource deposits. I'm talking about giant gold deposits... billion-barrel crude oil deposits... large tracks of agricultural land... and vast stores of natural gas. These deposits often go by the nickname "trophies."

It's a strategy used by generations of rich investors... as well as some of the most successful Wall Street money managers... to protect wealth from the slow, invisible threat of inflation.
You see, when paper currencies lose value, as the U.S. dollar has done since 2001, the value of "trophy" resource deposits tends to skyrocket. These vital resources – including copper, crude oil, natural gas, gold, silver, and farmland – will rise in value by hundreds of percent over the coming years.

I realize many investors believe it's extremely difficult – if not impossible – to make money in natural resource stocks.  I can't say I blame them... The resource sector is one of the most volatile areas of the market. During the 2008 credit crisis, many of the world's best resource stocks fell more than 80%. The "not so best" resource stocks fell by 90%... even 99%.

There's also the fact that many resource stocks simply aren't worth the time it takes to investigate them. Out of the thousands of mining stocks out there, maybe 50 are worth knowing about. Plus, "knowing" these stocks well enough to trade them successfully requires extensive knowledge and industry contacts. Most people don't have the time for any of this. With such extreme volatility and work staring at you in the face, it's easy to "write off" the natural resource sector.

But what most people don't know is that buying trophies is an easy, safe method to making money in natural resource stocks. It's a clever strategy that allows you to protect the value of your current savings – and even see gains triple-digit gains – as the U.S. government digs itself deeper into a currency crisis.
Right now, you can make a simple investment in two stocks that are sitting on world-class trophy deposits. Investing in these companies today could set you up for hundreds of percent gains over the next few years.

Let's take a look at the first trophy stock...

Trophy No. 1:
Buying Two of the World's Best Trophy Assets
As legendary investor Warren Buffett said, "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

The next trophy stock we're buying is a wonderful company at a better-than-fair price – $30 billion copper, gold, and molybdenum producer Freeport-McMoRan (NYSE: FCX). Freeport was the world's second-largest copper producer in 2011, at 3.66 billion pounds of copper. It owns two of the world's best trophy assets: Grasberg and Tenke Fungurume.

Grasberg is a giant copper and gold deposit in Indonesia. It is the world's largest gold mine and third-largest copper mine. Tenke Fungurume is one of the world's largest copper and cobalt deposits. It covers nearly 580 square miles in the Democratic Republic of Congo.

Freeport also owns a large portfolio of copper mines in North and South America – three in Chile and one in Peru. And it owns another nine operations in the U.S. – two in Colorado, two in New Mexico, and five in Arizona. Freeport is also the world's largest molybdenum producer.

In 2012, it made about 32% of its operating income from its mines in North America, 20% from Grasberg, 36% from its mines in South America, and 9% from Tenke Fungurume. It generated 2% of operating income from molybdenum sales.

These mines are good businesses... Freeport had a 52% profit margin in 2011. It was 42% in 2012, due to lower metal prices and an 18% production decline at Grasberg. But that is still good for a mining company. And if the price of copper rises in 2013 – as I suspect it will – we could see big profit margins like this again.

The average copper price was about 5% lower in 2012 than it was in 2011. And that pushed Freeport's share price down along with the rest of the sector. But a recent acquisition sent its shares falling even farther.

On December 5, FCX announced the acquisition of oil and natural gas explorers McMoRan Exploration (MMR) and Plains Exploration (PXP) for a total of $9 billion. Both companies work as partners on an "ultradeep gas" discovery in the shallow Gulf of Mexico. The market reacted poorly to the news. And as you can see in the chart below, shares fell 21% over the next two days.

By Brian Hunt

As we expected, financial-stock investors are enjoying one of the biggest trends in the entire market.
In the June 18, 2012 Growth Stock Wire, analyst Larsen Kusick noted how banking stocks were cheap, hated by most investors, and putting in a tradable bottom.  

The fundamental case for owning bank stocks is simple: In its bid to pump up the economy, the Fed is keeping borrowing rates very low. This allows banks to pay just a little to borrow money... and then lend it out at higher rates.   In late 2011, the euro debt crisis led investors to dump their bank stocks.

The big financial-stock fund (NYSE: XLF) fell from $15.50 per share to nearly $11 in just a few months (a 28% loss).   But the Fed's pro-bank policies helped XLF recover. By the spring of 2012, it had made its way back to the $15-per-share area.   As you can see from the chart below, things keep getting better for bank stocks. XLF has "broken out" of a sideways trading range in the $15 area. Shares now change hands for more than $18.    

But Gross says the fun in bonds is now over. On Friday, he wrote on Twitter that the "30-yr bull market in bonds likely ended 4/29/2013."

When the Bond King speaks, I listen. It's hard to argue with his track record. But in this case, I will argue
that personally, I'm not betting against bonds… at least not yet. Here's why…

We're in a unique moment in history – we're seeing a "mini bubble" in central bank powers.
In short, investors believe central bankers – like Ben Bernanke from the U.S. Federal Reserve – have incredible powers to manipulate markets… Investors believe that central bankers can make bond prices go up or down at will.

As long as investors continue to believe that, it becomes true – a self-fulfilling prophecy. The thing is, it's not true… Investors as a whole can move dramatically more money than any government or central bank can. And someday, they will realize that. They'll shift their thinking and that is when interest rates will finally soar.

But I think that day could be a long way away. Central banks can fool people for a very long time, keeping interest rates very low for a very long time and causing crazy booms in stocks and real estate.

Japan is an interesting example of what I mean.
In Japan, interest rates on government bonds are below 1% and stock prices are soaring. Yet relative to the size of its economy, Japan has much more government debt than the U.S. does.

The Japanese government and Japan's central bank have successfully fooled the people of Japan. The bond market has not crashed and the stock market has soared. Bill Gross may be right. The 30-year bull market in bonds may have ended on April 29. He should know – he knows bonds better than anyone on the planet. But I'm not putting any chips on the idea of a bond-market bust. Just to be clear, I'm not betting in favor of bonds either.

Warren Buffett's company Berkshire Hathaway sold $1 billion worth of new bonds last week at its lowest yields ever. Buffett is 'short' the bond market.

Buffett is no dummy about money. He borrowed money for 30 years, at a record-low rate for Berkshire. He's borrowing for the long run because he knows that rates this low likely won't last for 30 years. "Anybody who's borrowing money now should borrow out for a long period of time," Buffett said on Bloomberg News.

By borrowing for 30 years, you are locking in a low rate. If inflation shows its head any time in the next 30 years, you could come out way ahead. Interest rates are so low today, Buffett actually said he feels sorry for bond investors now.

During Saturday's Berkshire Hathaway annual meeting in Omaha, Nebraska, Buffett said he felt sorry for people holding on to fixed-dollar investments. He said holding cash and Treasurys has been 'brutal.'

Buffett and I agree that one of the very best inflation hedges is blue-chip stocks.  The Dow Jones index is full of good values in classic names right now. The exchange-traded fund for the Dow (DIA) is trading at a forward price-to-earnings ratio of 13.6. That is cheap!

Instead of bonds, my chips are on the idea that central banks will be able to fool investors for years and keep interest rates low. In that situation, the right trade is to be in stocks and real estate.

The S&P 500 is the broadest measure of the U.S. stock market, representing about 75% of the United States' entire market capitalization. In other words, if you want to judge the performance of the U.S. stock market, you look at the S&P 500, not the Dow or the Nasdaq. The bear market is history.

By Frank Curzio, editor, Small Stock Specialist
Friday, May 17, 2013

One of my favorite sectors is just starting to make gains... I expect much more to come...

These companies make the "chips" that go into computers, smartphones, video-game consoles, and other electronic devices. They were one of the few great "bargains" left in the stock market. And they had a big-picture tailwind working in their favor. This sector is still cheap and has huge upside potential. Let me explain...

Chip stocks have spent the past two years drastically underperforming the S&P 500. Most of the weakness was due to a massive drop in personal computer (PC) sales. Despite the growth in sales of tablets – like Apple's iPad and Microsoft's Surface – the PC slowdown left most chip companies stuck with inflated inventory levels.

Also, investors were terrified things would get worse for the global economy. If the economy is slow and folks aren't buying electronics, semiconductor makers suffer. So the market dumped chip stocks. The big semiconductor fund (NYSE: XSD) fell 25% in five months. The sell off left the sector full of cheap, low-risk, high-reward opportunities. And now, the market is starting to turn around. As you can see in the chart below, chip stocks are finally breaking out.

Since March, the sector is up 12%. And this move higher is just beginning...

Chip companies have been cutting inventory levels over the past 12 months. According to investment firm Goldman Sachs, inventory is down 17% for the sector. This means supplies are shrinking and chip companies can ramp up production.

Plus, according to consulting firm Infonetics Research, global telecom companies like AT&T, Verizon, and China Mobile will spend more than $300 billion this year to upgrade equipment and improve wireless infrastructure. In fact, telecom spending is expected to surpass $1 trillion over the next three years. Telecom companies are some of chip stocks' biggest customers.

A few companies that will benefit from this tailwind are Altera, Xilinx, and LSI. These chip stocks are cheap based on conservative earnings estimates. They have strong balance sheets and just bounced off their recent lows. But my favorite play on the sector is Cypress Semiconductor (NASDAQ: CY).

Cypress is a leader in touchscreen-chip technology. The company is well-positioned to benefit from telecom's massive spending spree. It has contracts with 80% of the companies in the telecom industry, including AT&T, Verizon, and T-Mobile. It also supplies international telecom companies, including China Mobile.

The stock is dirt-cheap, trading at 13 times forward earnings. Plus, Cypress pays a 4% yield. This dividend is safe thanks to the company's ability to generate huge cash flow. Chip stocks like Cypress still have a big picture tailwind working in their favor. If you haven't already, I recommend taking a position today.