InterXion (INXN) Price Target Lowered to $69.00 at Credit Suisse Group

InterXion (NYSE:INXN) had its target price reduced by Credit Suisse Group from $70.00 to $69.00 in a report published on Thursday morning. They currently have an outperform rating on the technology company’s stock.

Separately, ValuEngine lowered InterXion from a strong-buy rating to a buy rating in a research note on Wednesday, January 2nd. One analyst has rated the stock with a hold rating and twelve have issued a buy rating to the company. The company currently has a consensus rating of Buy and an average target price of $73.82.

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Shares of NYSE:INXN traded down $1.04 during trading on Thursday, reaching $62.90. The stock had a trading volume of 12,891 shares, compared to its average volume of 458,448. The company has a debt-to-equity ratio of 2.04, a current ratio of 1.89 and a quick ratio of 1.89. The firm has a market capitalization of $4.57 billion, a PE ratio of 86.31, a P/E/G ratio of 5.41 and a beta of 1.05. InterXion has a 1-year low of $50.05 and a 1-year high of $68.95.

InterXion (NYSE:INXN) last issued its quarterly earnings results on Wednesday, March 6th. The technology company reported $0.11 earnings per share (EPS) for the quarter, missing the Zacks’ consensus estimate of $0.18 by ($0.07). The firm had revenue of $146.90 million during the quarter, compared to analyst estimates of $147.94 million. InterXion had a return on equity of 7.29% and a net margin of 6.27%. The business’s revenue was up 13.1% on a year-over-year basis. During the same period in the prior year, the firm earned $0.17 earnings per share. As a group, analysts expect that InterXion will post 0.85 earnings per share for the current year.

A number of hedge funds have recently added to or reduced their stakes in the business. LPL Financial LLC increased its holdings in shares of InterXion by 99.5% during the third quarter. LPL Financial LLC now owns 6,667 shares of the technology company’s stock worth $449,000 after buying an additional 3,325 shares in the last quarter. Standard Life Aberdeen plc grew its stake in shares of InterXion by 22.5% during the third quarter. Standard Life Aberdeen plc now owns 87,188 shares of the technology company’s stock valued at $5,868,000 after purchasing an additional 16,000 shares during the last quarter. SeaBridge Investment Advisors LLC grew its stake in shares of InterXion by 6.7% during the fourth quarter. SeaBridge Investment Advisors LLC now owns 10,668 shares of the technology company’s stock valued at $578,000 after purchasing an additional 668 shares during the last quarter. Virtus Alternative Investment Advisers Inc. bought a new stake in shares of InterXion during the third quarter valued at approximately $133,000. Finally, Assenagon Asset Management S.A. bought a new stake in shares of InterXion during the fourth quarter valued at approximately $756,000. Institutional investors own 89.35% of the company’s stock.

InterXion Company Profile

InterXion Holding N.V. provides carrier and cloud-neutral colocation data center services in France, Germany, the Netherlands, the United Kingdom, Austria, Belgium, Denmark, Ireland, Spain, Sweden, and Switzerland. The company enables its customers to connect to a range of telecommunications carriers, Internet service providers, and other customers.

Featured Article: Stock Symbols Definition, Examples, Lookup

Buybacks are under attack again as a senator pushes to restrict insider sales

Corporate insiders could be barred from selling stock within a certain time period after share buybacks are announced, if one Democratic senator has his way.

Sen. Chris Van Hollen of Maryland pointed to evidence from a Securities and Exchange Commission study indicating that share repurchases are benefiting corporate insiders at the expense of long-term investors.

As a result, he said he is preparing legislation that would direct the SEC to study the rule on buybacks, with hopes ultimately that a time frame can be established delineating the period during which sales would be prohibited.

"It could be a long period of time like several years, or maybe analysis would show another period of time that might be appropriate," Van Hollen said during a media call.

The senator had asked the SEC to look into stock performance after buyback announcements to determine the impact on individual stocks. What the study found, as reported in a letter from Commissioner Robert L. Jackson Jr., was that "firms that let insiders sell on buyback announcements perform worse over the long run," Van Hollen said.

"In other words, the executives' gain is at the expense of the other stock holders who are not insiders," he added. "It raises the concern that buybacks are used as a way to maximize executive pay."

The senator's comments come as share repurchases, announcements of which totaled more than $1 trillion in 2018, have come under bipartisan fire.

Earlier this year, Sens. Charles Schumer, a New York Democrat, and Bernie Sanders, a Vermont independent who is running for president on the Democratic ticket, unveiled a plan that would force companies engaging in repurchases to pay a living wage and provide health-care benefits.

Shortly after, Florida Republican Sen. Marco Rubio said he wanted to change tax laws that reward buybacks.

Jackson's letter indicates that momentum may be building within the SEC to revisit the buyback rules. In the missive, the commissioner said he found that studying buybacks from January 2017 through the end of 2018 showed that insiders sell more stocks right after buyback announcements, indicating the repurchases are geared toward their enrichment rather than the benefit of the company.

"Whether insider sales cause the stock to fall or simply reflect insiders' view that the buyback won't add value in the long run, the opportunity to cash out stock-based pay gives executives reason to pursue buybacks that do not produce long-term value," Jackson wrote.

The SEC declined comment on the matter. Jackson did not return a request for further comment.

Van Hollen indicated the next step is to reach out to the commission to get it to conduct a roundtable and hearing on the buybacks rule, and to use legislation to force it do so if necessary.

"I don't know exactly what the appropriate period is, whether it's a year, more than a year or less than a year" to restrict insider sales after buybacks, Van Hollen said.

Hot Growth Stocks To Invest In Right Now

tags:MED,BWLD,TBI,ISRG,

Investors in Science Applications International Corporation (NYSE:SAIC) had a bad week last week: Its stock plunged 8% in a single day after it reported earnings -- and ended the week even lower. SAIC shares are clawing back some losses this week -- but do they deserve to?

Let's find out.

SAIC beat earnings last week, but then its stock crashed. Why was that? Image source: Getty Images.

What SAIC said in the report

SAIC's first fiscal quarter of 2018 actually didn't look that bad on the surface, with:

Sales rising 7% year over year to $1.2 billion Operating profits up 5% at $66 million Net income per share up a similar 5% to $1.13 per share

That being said, there were considerable caveats contained in SAIC's news, if you read between the lines. Take earnings, for instance.

Yes, per-share profits increased, but only because SAIC reduced its share count through buybacks. Actual net income for the company from continuing operations remained flat at $49 million. Profits also didn't grow as fast as sales, a consequence of profitability per dollar of revenue (operating margin) slipping 10 basis points to 5.6%, which offset some of the sales growth. Free cash flow for the quarter also declined, down 2% year over year to $82 million.

Hot Growth Stocks To Invest In Right Now: MEDIFAST INC(MED)

Advisors' Opinion:

• [By Logan Wallace]

  MediBloc [QRC] (CURRENCY:MED) traded 11.6% lower against the US dollar during the 24 hour period ending at 20:00 PM Eastern on August 29th. One MediBloc [QRC] token can now be bought for about $0.0066 or 0.00000100 BTC on popular exchanges including Gate.io, Coinrail and Bibox. MediBloc [QRC] has a total market cap of $19.65 million and $279,707.00 worth of MediBloc [QRC] was traded on exchanges in the last 24 hours. During the last week, MediBloc [QRC] has traded 27.8% lower against the US dollar.

• [By Logan Wallace]

  State Board of Administration of Florida Retirement System raised its stake in Medifast Inc (NYSE:MED) by 12.4% during the second quarter, HoldingsChannel reports. The institutional investor owned 5,781 shares of the specialty retailer’s stock after buying an additional 640 shares during the period. State Board of Administration of Florida Retirement System’s holdings in Medifast were worth $926,000 at the end of the most recent reporting period.

• [By Max Byerly]

  MediBloc (CURRENCY:MED) traded 0.2% lower against the U.S. dollar during the twenty-four hour period ending at 16:00 PM Eastern on June 7th. MediBloc has a total market cap of $37.92 million and $586,074.00 worth of MediBloc was traded on exchanges in the last 24 hours. Over the last week, MediBloc has traded down 36% against the U.S. dollar. One MediBloc token can now be purchased for $0.0128 or 0.00000166 BTC on major exchanges including Coinrail, Bibox and Gate.io.

Hot Growth Stocks To Invest In Right Now: Buffalo Wild Wings Inc.(BWLD)

Advisors' Opinion:

• [By Peter Graham]

  A long term performance chart shows Dave & Busters Entertainment tripling in value before falling back while small cap upscale gentlemen's clubs and restaurant owner RCI Hospitality Holdings, Inc (NASDAQ: RICK) began taking off in 2016 and small cap Buffalo Wild Wings (NASDAQ: BWLD) is being acquired by Arby's Restaurant Group:

• [By Steve Symington]

  That's not to say it was a quiet day for every stock on the market. With earnings season ramping up, brewing giant Anheuser-Busch InBev (NYSE:BUD) and restaurant chain Buffalo Wild Wings (NASDAQ:BWLD) served as an exercise in contrast as investors reacted to their respective quarterly reports.

Hot Growth Stocks To Invest In Right Now: TrueBlue Inc.(TBI)

Advisors' Opinion:

• [By Motley Fool Transcribers]

  TrueBlue Inc  (NYSE:TBI)Q4 2018 Earnings Conference CallFeb. 07, 2019, 5:00 p.m. ET

  Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:

  Operator

• [By Logan Wallace]

  Media stories about Trueblue (NYSE:TBI) have trended somewhat positive on Monday, according to Accern Sentiment. The research firm rates the sentiment of news coverage by reviewing more than 20 million news and blog sources in real time. Accern ranks coverage of publicly-traded companies on a scale of negative one to one, with scores closest to one being the most favorable. Trueblue earned a media sentiment score of 0.09 on Accern’s scale. Accern also assigned media stories about the business services provider an impact score of 45.3296498009881 out of 100, meaning that recent news coverage is somewhat unlikely to have an effect on the stock’s share price in the near future.

• [By Stephan Byrd]

  Russell Investments Group Ltd. grew its stake in Trueblue Inc (NYSE:TBI) by 21.2% during the first quarter, HoldingsChannel reports. The fund owned 137,178 shares of the business services provider’s stock after purchasing an additional 23,951 shares during the quarter. Russell Investments Group Ltd.’s holdings in Trueblue were worth $3,553,000 at the end of the most recent quarter.

• [By Max Byerly]

  Connor Clark & Lunn Investment Management Ltd. lifted its holdings in Trueblue Inc (NYSE:TBI) by 18.2% in the 2nd quarter, according to the company in its most recent 13F filing with the Securities & Exchange Commission. The institutional investor owned 30,550 shares of the business services provider’s stock after purchasing an additional 4,700 shares during the period. Connor Clark & Lunn Investment Management Ltd.’s holdings in Trueblue were worth $823,000 as of its most recent filing with the Securities & Exchange Commission.

Hot Growth Stocks To Invest In Right Now: Intuitive Surgical Inc.(ISRG)

Advisors' Opinion:

• [By Motley Fool Staff]

  In the healthcare world, one of those has to be the impressive quarterly report from Intuitive Surgical (NASDAQ:ISRG). The company increased its revenue by 25%, and accelerated its sales of the da Vinci robotic surgical systems that made it famous. But it's not just the expensive hardware that is allowing it to prosper -- it's that every machine needs a steady supply of the disposable instruments and accessories used during its procedures. The Fools consider the recent numbers, the outlook, and the investment thesis for Intuitive Surgical stock. But in the, say, anti-healthcare space, cigarette slinger Philip Morris International (NYSE:PM) took a big hit as demand slackened in major foreign markets. Sales of its e-cig devices are also not growing the way management had hoped.

• [By Logan Wallace]

  Sanford C. Bernstein began coverage on shares of Intuitive Surgical (NASDAQ:ISRG). Sanford C. Bernstein issued an outperform rating on the stock.

  Argus started coverage on shares of Integer (NYSE:ITGR). The firm issued a buy rating on the stock.

• [By Chris Hill]

  But there was more upbeat news elsewhere, with No. 3 airline United Continental (NYSE:UAL) beating on earnings and freight rail titan CSX (NASDAQ:CSX) delivering record first-quarter numbers. Also on the rapid growth train: Intuitive Surgical (NASDAQ:ISRG), whose da Vinci systems are selling at an impressive rate. And speaking of sales of tech products, the guys close out the episode by explaining why it's a win-win that Amazon.com (NASDAQ:AMZN) and Best Buy (NYSE:BBY) are joining forces to sell smart TVs.

• [By Sean Williams]

  The VISE acronym stands for:

  Visa (NYSE:V) Intuitive Surgical (NASDAQ:ISRG) Sirius XM Holdings (NASDAQ:SIRI) Electronic Arts (NASDAQ:EA)

  Each of these four companies brings clear-cut competitive advantages to the table that should allow it to handily outperform the broader market (and the FANG stocks).

Aareal Bank (ARL) – Analysts’ Recent Ratings Updates

Several analysts have recently updated their ratings and price targets for Aareal Bank (ETR: ARL):

3/1/2019 – Aareal Bank was given a new €29.00 ($33.72) price target on by analysts at Deutsche Bank AG. They now have a “neutral” rating on the stock. 2/28/2019 – Aareal Bank had its “neutral” rating reaffirmed by analysts at DZ Bank AG. 2/27/2019 – Aareal Bank was given a new €29.00 ($33.72) price target on by analysts at Independent Research GmbH. They now have a “neutral” rating on the stock. 2/27/2019 – Aareal Bank was given a new €32.90 ($38.26) price target on by analysts at Warburg Research. They now have a “buy” rating on the stock. 2/19/2019 – Aareal Bank had its “neutral” rating reaffirmed by analysts at DZ Bank AG. 2/7/2019 – Aareal Bank was given a new €32.90 ($38.26) price target on by analysts at Warburg Research. They now have a “buy” rating on the stock.

ETR:ARL traded up €0.16 ($0.19) during trading hours on Monday, reaching €28.83 ($33.52). The company’s stock had a trading volume of 275,911 shares, compared to its average volume of 359,447. Aareal Bank AG has a 12 month low of €33.35 ($38.78) and a 12 month high of €41.89 ($48.71).

Aareal Bank AG, together with its subsidiaries, provides financing solutions and services to the property industry in Germany and internationally. The company operates through two segments, Structured Property Financing and Consulting/Services. The Structured Property Financing segment offers property financing and refinancing solutions for office buildings, hotels, retail, logistics, and residential properties, and shopping centers in Europe, North America, and Asia.

Read More: Analyzing a company's cash flow statement

3 Top Solar Stocks to Watch in March

The solar industry has its ups and downs, which makes it tough to pick stocks in that sector. With so much to consider -- including government policy, foreign competition, technological advances, and competing green-energy sources -- it can be tough to know how a company will perform next month, let alone a few years from now. 

We asked three of our Motley Fool contributors what solar stocks they'd keep an eye on this month, and they came back with Enphase Energy (NASDAQ:ENPH), Applied Materials (NASDAQ:AMAT), and SolarEdge Technologies (NASDAQ:SEDG). Here's why they think you should keep these solar companies on your radar.

Solar energy holds a lot of promise, but industry stocks have been volatile. Image source: Getty Images.

Can Enphase finally become profitable?

Tyler Crowe (Enphase Energy): Ever since the company went public in 2012, this manufacturer of solar energy components has posted net income losses. Even though it has been able to achieve gross margins in excess of 30% at certain times, operating expenses gobbled up any chances of posting a positive net income result. In the most recent quarter, though, the company reported earnings per share of $0.01. 

The turnaround in profitability is largely attributed to the company's seventh-generation microinverter (which converts direct current from sunlight to alternating current in a solar module), as well as the company's recent deal to be an exclusive provider of microinverters to SunPower. Having an anchor customer could be crucial for the company because manufacturing components for the solar power industry has been fiercely competitive over the past few years. Management noted that 84% of all microinverter sales in the fourth quarter were for its most-recent product offering. 

In the coming quarters, investors will likely be watching whether Enphase can maintain profitability. On top of its recent deal with SunPower, the company also recently announced it is launching an energy storage product as part of a partnership it announced during its analyst day last year. While adding energy storage will help to make the company's offerings more competitive, it will also come with higher costs. If the company can maintain profitability while rolling out these new products, it could be a game changer. That said, it is uncharted territory for Enphase that could cause headaches. 

Here's one "solar stock" you may not have heard of

Rich Smith (Applied Materials): Is Applied Materials a solar stock? I'd argue that at least in part it is. It's best known as a manufacturer of equipment used to make semiconductor chips. But its Applied Global Services (AGS) division also provides solutions for producers of solar products. And AGS accounts for nearly 22% of company revenue, according to data from S&P Global Market Intelligence.

Applied products and services for the solar industry include technology permitting solar manufacturers to produce solar cells more efficiently. Its metallization system is used to apply metals to bare wafers, while its inspection tools help keep tabs on photovoltaic wafer and cell product quality.

Earlier this month, Applied Materials reported strong fiscal Q1 2019 results. AGS sales in particular were up 9%, and operating profits were up 11% on a 70-basis-point improvement in profit margins.

Despite beating earnings, the stock sold off on worries about future quarters. With Applied Materials stock now selling for less than 10 times trailing earnings, pegged for continued 11% profits growth over the next five years, and paying a respectable 2% dividend, I'd say it is one "solar stock" worth watching after its February sell-off.

Solar stocks have been all over the place over the past year. SEDG data by YCharts.

Living on the edge

John Bromels (SolarEdge Technologies): Solar component manufacturer SolarEdge Technologies has taken investors on a wild ride lately. In November, after announcing solid third-quarter earnings, shares slid 12.5%. Another December slide put shares down about 6.5% for 2018. But in January, shares jumped nearly 25% as the company announced it was getting into the electric vehicle market through the purchase of a 57% stake in S.M.R.E., an electric vehicle powertrain company in Italy. But February saw another sell-off in the stock, with shares down about 5%. 

All this seesawing comes as the market tries to figure out what's going on with solar. Unlike many other solar companies, SolarEdge doesn't manufacture solar panels. Instead, it makes the components of photovoltaic systems. SolarEdge is the world's leading producer of solar inverters, a crucial system component.

But concerns about a slowdown in solar adoption by China, coupled with domestic concerns about tariff impacts on solar adoption, have investors spooked. In addition, as Tyler mentioned above, some panel manufacturers like SunPower have started to include microinverters on the panels they offer, removing the need for a system inverter. This is probably why investors were so pleased to see that SolarEdge is trying to branch out from its traditional role as a provider of solar system inverters. 

Thanks to the stock's volatility, I wouldn't necessarily recommend buying SolarEdge right now, but it's definitely a stock to keep on your watchlist as you wait for more clarity around the future of the industry.

$0.15 EPS Expected for Avid Technology, Inc. (AVID) This Quarter

Analysts predict that Avid Technology, Inc. (NASDAQ:AVID) will post earnings per share (EPS) of $0.15 for the current quarter, Zacks Investment Research reports. Two analysts have provided estimates for Avid Technology’s earnings, with estimates ranging from $0.11 to $0.19. Avid Technology also reported earnings of $0.15 per share during the same quarter last year. The business is expected to report its next quarterly earnings report after the market closes on Thursday, March 21st.

On average, analysts expect that Avid Technology will report full year earnings of $0.16 per share for the current fiscal year, with EPS estimates ranging from $0.12 to $0.19. For the next fiscal year, analysts anticipate that the business will report earnings of $0.70 per share. Zacks Investment Research’s earnings per share averages are an average based on a survey of sell-side research analysts that that provide coverage for Avid Technology.

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Several equities research analysts recently commented on the company. Zacks Investment Research raised Avid Technology from a “hold” rating to a “buy” rating and set a $5.25 target price on the stock in a report on Thursday, January 24th. BidaskClub cut Avid Technology from a “strong-buy” rating to a “buy” rating in a report on Tuesday, December 18th. BWS Financial lowered shares of Avid Technology from a “hold” rating to a “sell” rating and set a $5.00 price target on the stock. in a research report on Friday, November 16th. Dougherty & Co upgraded shares of Avid Technology from a “sell” rating to a “neutral” rating in a research report on Wednesday, January 30th. Finally, ValuEngine upgraded shares of Avid Technology from a “hold” rating to a “buy” rating in a research report on Thursday, February 7th. Five research analysts have rated the stock with a hold rating and one has issued a buy rating to the company’s stock. The stock currently has a consensus rating of “Hold” and an average price target of $5.50.

NASDAQ:AVID traded up $0.04 during midday trading on Friday, hitting $4.79. 67,421 shares of the stock were exchanged, compared to its average volume of 116,131. Avid Technology has a one year low of $4.26 and a one year high of $6.99. The stock has a market cap of $196.29 million, a price-to-earnings ratio of 11.98, a PEG ratio of 0.94 and a beta of 1.73.

A number of institutional investors have recently bought and sold shares of AVID. Royce & Associates LP grew its position in Avid Technology by 31.9% in the third quarter. Royce & Associates LP now owns 1,507,181 shares of the technology company’s stock worth $8,938,000 after buying an additional 364,438 shares during the last quarter. JPMorgan Chase & Co. grew its position in Avid Technology by 163.6% in the third quarter. JPMorgan Chase & Co. now owns 145,870 shares of the technology company’s stock worth $865,000 after buying an additional 90,530 shares during the last quarter. RMB Capital Management LLC acquired a new position in Avid Technology in the fourth quarter worth approximately $311,000. Squarepoint Ops LLC acquired a new position in Avid Technology in the fourth quarter worth approximately $224,000. Finally, Two Sigma Investments LP grew its position in Avid Technology by 300.2% in the fourth quarter. Two Sigma Investments LP now owns 46,611 shares of the technology company’s stock worth $221,000 after buying an additional 34,964 shares during the last quarter. Hedge funds and other institutional investors own 54.55% of the company’s stock.

About Avid Technology

Avid Technology, Inc develops, markets, sells, and supports software, hardware, and integrated solutions for video and audio content creation, management, and distribution worldwide. The company's video products and solutions include the Media Composer product line that is used to edit film, television programming, news broadcasts, commercials, and other video content; Avid shared storage systems and Avid Interplay asset management solutions, which provide complete network, storage, and database solutions to enable users to simultaneously share and manage media assets throughout a project or organization.

Read More: Net Income

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3 Reasons You Should Be Investing in Index Funds

Index funds have long been considered one of the smartest investments you can make. They're affordable and well diversified, and they tend to generate solid returns over time, outperforming actively managed funds from the top investment firms. In 2007, Warren Buffett made a $1 million bet that an S&P 500 index fund would beat the returns of an actively managed hedge fund over ten years -- and he won in a landslide. 

Buffett's victorious bet may be reason enough for some to start adding index funds to their portfolio, but if you need more convincing, read on to understand what index funds are and what makes them so popular.

How do index funds work?

Index funds are mutual funds -- bundles of other investments, like stocks and bonds -- that track the performance of a market index, like the S&P 500. These indexes are metrics that measure the value of a group of stocks over time. Each stock is weighted, usually based on its market value, so larger companies' stock prices affect the value of the index more than smaller companies' stocks.

Some indexes are tailored to specific sectors, geography, and stock exchanges. The funds that track these indexes contain the same investments in approximately the same proportion as the index itself. This way, when the index as whole performs well, the value of the fund increases alongside it, which boosts the balance of your portfolio.

Image source: Getty Images.

Benefits of index funds

There are three key benefits to investing in index funds: broad diversification, low costs, and solid returns. 

1. Broad diversification

The most obvious benefit of investing in index funds is that your portfolio becomes instantly diversified, minimizing the chances you'll lose your money. 

For instance: An index fund that tracks the S&P 500 has 500 different investments. The performance of these different stocks will vary and fluctuate over time, but when your money is spread out among so many assets, these ups and downs are smaller.

If you put all your money in a couple of stocks and they both drop in value, you could lose your initial investment. But when you have 500 different investments, a single stock that loses value won't decimate your portfolio, as 499 others are picking up the slack.

2. Low costs

An expense ratio is an annual fee that all mutual funds, including index funds, charge their shareholders, usually a percentage of the total assets you have invested. If you have $1,000 in a mutual fund with a 1% expense ratio, you pay $10 per year to own it.

Actively managed mutual funds often have expense ratios between 1% and 2% because portfolio managers are responsible for picking the investments in the mutual fund and actually doing the buying and selling. 

Index funds, on the other hand, are passively managed.  Due to their design of tracking an index, investments within the fund rarely change, so there's little work for portfolio managers to charge you for. Index funds pass these savings on to you in the form of lower expense ratios. Many charge somewhere between 0.05% and 0.07%, and some have expense ratios as low as 0.03%. If you invest $100,000 in a mutual fund with a 0.03% expense ratio, you will pay only $30 per year, versus the $1,000 you'd owe annually if you invested in a mutual fund with a 1% expense ratio. Not small potatoes.

Naturally, index funds have a lower turnover ratio than actively managed funds. Turnover ratios measure the percentage of a mutual fund's holdings that are replaced in a single year. For example, if the fund had 100 stocks and 10 were swapped out for new ones this year, the turnover ratio is 10%. If those assets are worth more when they're sold than when you bought them, the difference between the two prices is considered a capital gain and you'll pay taxes on this amount, costing you even more money. This isn't as much of a concern with index funds, though thanks to their low turnover, about 1% to 2% per year, compared with 20% or higher for some actively managed mutual funds.

3. Solid returns

As Buffett knew when he made his $1 million bet, even the smartest and most diligent portfolio managers can't make actively managed mutual funds beat index funds. Only 23.51% of actively managed mutual funds outperform the S&P 500 over five years, according to the latest date from Standard & Poor's, and other studies have supported this. Index funds have generally high returns and low costs, which make them an excellent value for investors trying to keep expenses low and profits high, which should be everyone.

How to get started

You can purchase index funds through a brokerage firm or a mutual fund company. Look at the index funds offering and whether there are investment or account minimums. Some may require a minimum investment of several thousands of dollars and a recurring monthly investment after that. If you don't plan to invest a lot right away, you may be better off going with a company that doesn't have an account minimum.

Then, choose an index fund. The S&P 500 and the Dow Jones Industrial Average (DJIA) are two of the best-known indexes for U.S. stocks, and index funds that track them are good choices for beginning investors.

But there are many more options. Look at how the index fund you're interested in has performed historically. Don't be unnerved by temporary dips in value, but try to choose one that has pretty consistent growth over time. You should also check its expense ratio. Calculate how much it will cost you based on how much you plan to invest, and make sure you feel comfortable paying that amount.

Whether you're new to investing or not, an index fund is a great asset to add to your portfolio. It takes a little time to find the right index fund for you, but once you do, you can sit back and let your money grow.