Friday, January 31, 2014
Workers, Customers: You Really Can Make Big Businesses Listen
Wednesday, January 29, 2014
6 Biotechnology Stocks to Buy Now
Popular Posts: 4 Pharmaceutical Stocks to Buy Now8 Oil and Gas Stocks to Buy Now5 Pharmaceutical Stocks to Buy Now Recent Posts: 6 Biotechnology Stocks to Buy Now 4 Commercial Services Stocks to Buy Now 33 Commercial Banking Stocks to Buy Now View All Posts The grades of six biotechnology stocks are better this week, according to the Portfolio Grader database. Every one of these stocks has an “A” (“strong buy”) or “B” overall (“buy”) rating.
Inovio Pharmaceuticals, Inc. () is making progress this week as its rating of C (“hold”) from last week increases to a B (“buy”) rating this week. Inovio Pharmaceuticals engages in the discovery and development of synthetic vaccines and immune therapies focusing on cancers and infectious diseases. In Portfolio Grader’s specific subcategory of Sales Growth, INO also gets an A. .
This week, KYTHERA Biopharmaceuticals, Inc. () pushes up from a C to a B rating. KYTHERA Biopharmaceuticals focuses on the discovery, development, and commercialization of prescription products for the aesthetic medicine market. .
This week, Alkermes Plc () is showing good progress as the company’s rating jumps from a B (“buy”) last week to an A (“strong buy”). Alkermes is a fully integrated biotechnology company committed to developing medicines that will improve patients’ lives. Shares of ALKS have increased 15.7% over the past month, better than the 1.3% decrease the Nasdaq has seen over the same period of time. .
Gilead Sciences, Inc. () gets a higher grade this week, advancing from a B last week to an A. Gilead is a research-based biopharmaceutical company that discovers, develops, and commercializes therapeutics to advance the care of patients suffering from life-threatening diseases. Wall Street has pushed the stock higher by 5.9% over the past month. .
PDL BioPharma, Inc. () shows solid improvement this week. The company’s rating rises from a C to a B. PDL BioPharma engages in intellectual property asset management and patent portfolio and related assets investment activities. Investors have pushed the stock price up 6.6% over the past month. .
Isis Pharmaceuticals, Inc. () is seeing ratings go up from a B last week to an A this week. Isis Pharmaceuticals discovers and develops novel human therapeutic compounds. Wall Street seems to agree with the upgrade and has propelled the stock up 17.2% over the past month. .
Louis Navellier’s proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results — with A being “strong buy,” and F being “strong sell.” Explore the tool here.
Tuesday, January 28, 2014
U.K. posts fastest growth since 2007
Gross domestic product expanded by 1.9% in 2013 -- compared with 0.3% in 2012 -- and there are signs that the recovery is extending beyond consumer spending and the housing market.
Economists are increasingly optimistic about the British economy's prospects, with many forecasting strong growth in the coming years.
Investec economist Philip Shaw notes that there is "a reasonable chance that growth will be recorded in excess of 3.0%" in both 2014 and 2015.
"Looking at general sectors, the recovery has been encouragingly broad based," said Shaw. "Manufacturing and services have expanded in each of the past three quarters, and while construction showed a small decline [in the fourth quarter], it has grown by 4.6% over the past year."
If the pace of growth is maintained, the U.K. economy should finally recover all the output lost since the financial crisis in the second quarter of this year.
The speed of the recovery has caught the Bank of England off guard, and prompted analysts to predict an interest rate rise as early as the fourth quarter of 2014.
Just a year ago, the country was teetering on the brink of a triple-dip recession. But unemployment is now falling fast, and the housing market is roaring, especially in London.
Last week, official data showed unemployment fell to 7.1% in November, just above the central bank's 7.0% threshold for considering a rise in interest rates.
Goldman exec: World needs faster growth Hot Performing Companies To Own For 2015
Governor Mark Carney said in August the bank did not expect to see that level for three years.
Speaking at the World Economic Forum in Davos last week, Carney stressed that there would be "no immediate need" for an increase in the cost of borrowing even when the threshold is reached, because the U.K. was still some way from achi! eving "escape velocity."
"A few quarters of above-trend growth driven by household spending represent a good start, but they aren't sufficient." 
Monday, January 27, 2014
Union Pacific vs. CSX - Which Is The Better Ride for 2014?
In the world of investing, there are literally thousands of companies, and dozens of industries, which qualify as great investments. Many of these may not have the same prestige as that of some other companies, and some may go entirely unknown to the public.
Railroad companies exemplify this perfectly, as they compose an entire industry that has very little name recognition by the general public.
Despite this handicap, railroad stocks have been excellent investment vehicles for years -- even Bill Gates is a major shareholder in a railroad. Let's take a look at how the stocks of two publicly traded railroad companies performed in 2013: Union Pacific (NYSE: UNP) and CSX (NYSE: CSX).
Union Pacific began 2013 trading at around $128 per share. The company had been on a serious upswing at the time, with the sock having gained over $60 per share in 2012. 2013 would see continued upward momentum for the stock.
Tracking a more or less steady climb upwards, Union Pacific ended 2013 on yearly highs of $168. Investors who held the stock through the entire year saw gains of 31 percent, just about in line with the S&P for the year, and slightly ahead of the Dow. Going into 2014 the stock has continued to gain, and is currently trading around $170 per share.
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CSX stock has had a bumpy ride over the past few years. But after starting 2013 at $20, the stock began to gain steam. CSX was able to pull above $26 per share thorough the spring, before pulling back under $23 in June. The stock did regain its footing, however, and moved higher to finish the year at $28.77, just under its yearly high. Despite the volatility, CSX stock was able to put together a 44 percent increase for the year.
Though CSX had the bumpier ride for the year, the company’s stock greatly out-gained that of Union Pacific in 2013. In 2014, the fates of both of these railroad stocks will be intimately tied to the U.S. economy. Simply put, the better the economy, the more people buy things that are shipped through these carriers, and the more companies make use of its services in order to ship supplies.
While it is still too early to predict exactly how the markets, and the economy in general, will develop in 2014, it is likely that the fates of these two companies will be tied to these factors.
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Posted-In: Railroads U.S. EconomyMarkets Best of Benzinga
(c) 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Most Popular Earnings Expectations For The Week Of January 27: Facebook, Google, Apple And More Apple Earnings Preview: A Return To Earnings Growth? Why Icahn Is Wrong On Apple Weekly Highlights: Gmail Crashed, iPhone XL Hype, Galaxy S5 Tease And More #PreMarket Primer: Monday, January 27: Markets Open The Week On Edge 5 Ways To Play The Hottest Trend In Cannabis Related Articles (CSX + UNP) Union Pacific vs. CSX - Which Is The Better Ride for 2014? Stocks Hitting 52-Week Highs UPDATE: Union Pacific Posts Higher Q4 Profit Earnings Scheduled For January 23, 2014 Are Railroad Stocks The Best Way To Benefit From The Remodeling Boom In The United States? UPDATE: Stifel Downgrades CSX Around the Web, We're Loving... Lightspeed Trading Presents: Thunder and Tubleweeds: Trading Techniques for the New Market Enviroment Pope Francis Rips 'Trickle-Down' Economics Come See How the Pro's Trade in this Exclusive Webinar Wynn, MGM, Other Casino Giants Vying For U.S. Turf What Should You Know About AMZN?Saturday, January 25, 2014
Jefferies Analyst Sees Possibility of Microsoft Bid on BlackBerry (MSFT)
According to Jefferies analyst Peter Misek, software company Microsoft Corporation (MSFT
On September 2, Microsoft announced that it had agreed to purchase Nokia's devices and services business. After this deal is finalized, the analyst sees Microsoft taking a closer look at BlackBerry.
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The analyst noted that having both the Nokia business as well as BlackBerry assets, MSFT would be “1) the definitive #3 handset player with better carrier access and production economies of scale; 2) the leader in enterprise mobile devices with support from the U.S. gov’t; 3) a key player in MDM, an area they would love to get into and purchasing private leaders in the space would be pricey.”
Misek also reported that other bidders may include International Business Machines (IBM
Friday, January 24, 2014
Is IBM Enticing After Recent News?
With shares of International Business Machines (NYSE:IBM) trading around $182, is IBM an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s MovementIBM is an information technology company. The company operates in five segments: Global Technology Services, Global Business Services, Software, Systems and Technology, and Global Financing. Technology products and services are in high demand worldwide, as consumers want to be up to speed and companies always need the latest and greatest to stay ahead of the competition. Cloud computing has been hot in recent times, which has not been good news for IBM. Should the company want to hold on to its market share, it needs to make moves quickly and provide the technology products and services that worldwide consumers and companies demand.
Chinese PC maker Lenovo Group Ltd. agreed to buy IBM Corp’s low-end server business for $2.3 billion in what is set to be China’s biggest technology deal. The long-awaited acquisition comes nearly a decade after Lenovo bought IBM’s loss-making ThinkPad business for $1.75 billion, eventually becoming the world leader in personal computers in 2012. The sale of the low-end server operation — which still needs U.S. government approval — will allow International Business Machines to focus on its decade-long shift to more profitable software and services.
T = Technicals on the Stock Chart Are MixedIBM stock has seen struggled to make significant progress in the last several years. The stock is currently trading sideways and may need time to stabilize before heading higher. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, IBM is trading between its rising key averages, which signal neutral price action in the near-term.
(Source: Thinkorswim)
Taking a look at the implied volatility (red) and implied volatility skew levels of IBM options may help determine if investors are bullish, neutral, or bearish.
| Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | |
| IBM options | 16.69% | 3% | 0% |
What does this mean? This means that investors or traders are buying a very small amount of call and put options contracts, as compared to the last 30 and 90 trading days.
| Put IV Skew | Call IV Skew | |
| February Options | Average | Average |
| March Options | Average | Average |
As of today, there is an average demand from call and put buyers or sellers, all neutral over the next two months. To summarize, investors are buying a very small amount of call and put option contracts and are leaning neutral over the next two months.
On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.
E = Earnings Are Mixed Quarter-Over-QuarterRising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on IBM’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for IBM look like and more importantly, how did the markets like these numbers?
| 2013 Q4 | 2013 Q3 | 2013 Q2 | 2013 Q1 | |
| Earnings Growth (Y-O-Y) | 11.63% | 10.51% | 11.40% | 3.45% |
| Revenue Growth (Y-O-Y) | Hot Value Stocks To Buy For 2015-5.46% | -4.15% | -3.33% | -5.11% |
| Earnings Reaction | -3.27% | -6.37% | 1.76% | -8.27% |
IBM has seen increasing earnings and decreasing revenue figures over the last four quarters. From these numbers, the markets have been optimistic about IBM’s recent earnings announcements.
P = Average Relative Performance Versus Peers and SectorHow has IBM stock done relative to its peers, HP (NYSE:HPQ), Oracle (NYSE:ORCL), Microsoft (NASDAQ:MSFT), and sector?
| IBM | HP | Oracle | Microsoft | Sector | |
| Year-to-Date Return | -2.53% | 4.90% | -0.16% | -4.17% | -1.49% |
IBM has been an average relative performer, year-to-date.
ConclusionIBM is a global technology company that provides essential products and services to companies and consumers worldwide. Chinese PC maker Lenovo Group agreed to buy IBM Corp’s low-end server business for $2.3 billion. The stock has been struggling over the last couple of years and is currently trading sideways. Over the last four quarters, earnings have been rising while revenues have been declining, which has left investors optimistic about IBM's earnings announcements. Relative to its peers and sector, IBM has been an average year-to-date performer. WAIT AND SEE what IBM does the rest of the quarter.
Thursday, January 23, 2014
Will Delta Air Lines Continue to Rise on Recent Earnings?
With shares of Delta Air Lines (NYSE:DAL) trading around $31, is DAL an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework.
T = Trends for a Stock’s MovementDelta Air Lines provides scheduled air transportation for passengers and cargo in the United States and internationally. Its route network is centered around a system of hub and international gateway airports. The company also provides aircraft maintenance, repair, and overhaul services for other aviation and airline customers as well as offers staffing services, professional security, and training services. As air transportation is becoming increasingly more popular, Delta Air Lines is poised to capitalize into the future.
Delta Air Lines on Tuesday reported financial results for the December 2013 quarter. "Our December quarter profit caps off a successful year for Delta with strong profitability and margin expansion, industry-leading operations and significant improvements in customer satisfaction. Across the board this was an outstanding year and all credit for these achievements goes to the 78,000 Delta employees worldwide," said Richard Anderson, Delta's chief executive officer. "We have a solid set of initiatives in place to improve our financial results, operational performance and customer satisfaction levels beyond 2013's record levels and remain focused on being the best airline for our employees, customers and shareholders."
T = Technicals on the Stock Chart Are StrongDelta Air Lines stock has been doing well in the last several years. The stock is currently trading near all-time highs and looks poised to continue. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Delta Air Lines is trading above its rising key averages, which signals neutral to bullish price action in the near-term.
Source: Thinkorswim
Taking a look at the implied volatility (red) and implied volatility skew levels of Delta Air Lines options may help determine if investors are bullish, neutral, or bearish.
| Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | |
| Delta Air Lines options | 34.77% | 10% | 8% |
What does this mean? This means that investors or traders are buying a minimal amount of call and put options contracts as compared to the last 30 and 90 trading days.
| Put IV Skew | Call IV Skew | |
| February Options | Flat | Average |
| March Options | Flat | Average |
As of Tuesday, there is average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a minimal amount of call and put option contracts and are leaning neutral to bullish over the next two months.
On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.
E = Earnings Are Mixed Quarter Over QuarterRising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Delta Air Lines’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Delta Air Lines look like and more importantly, how did the markets like these numbers?
| 2013 Q4 | 2013 Q3 | 2013 Q2 | 2013 Q1 | |
| Earnings Growth (Y-O-Y) | 98,800% | 14.63% | -500% | -93.33% |
| Revenue Growth (Y-O-Y) | 5.51% | 5.68% | -0.26% | 1.03% |
| Earnings Reaction | 2.25%* | 3.81% | 1.71% | 10.43% |
*As of this writing.
Delta Air Lines has seen mixed earnings and rising revenue figures over the last four quarters. From these numbers, the markets have been pleased with Delta Air Lines’s recent earnings announcements.
P = Excellent Relative Performance Versus Peers and SectorHow has Delta Air Lines stock done relative to its peers – Southwest Airlines (NYSE:LUV), United Continental (NYSE:UAL), and JetBlue (NASDAQ:JBLU) — and sector?
| Delta Air Lines | Southwest Airlines | United Continental | JetBlue | Sector | |
| Year-to-Date Return | 15.69% | 13.48% | 24.93% | 6.67% | 16.19% |
Delta Air Lines has been a relative performance leader, year to date.
ConclusionDelta Air Lines provides services that are seeing increased demand as travel for work or leisure becomes more important. The company today reported financial results for the December quarter. The stock has moved higher in recent years and is currently trading near all-time highs. Over the last four quarters, earnings have been mixed while revenues have been on the rise, which has pleased investors in the company. Relative to its peers and sector, Delta Air Lines has been a year-to-date performance leader. Look for Delta Air Lines to continue to OUTPERFORM.
Tuesday, January 21, 2014
Following in the Steps of John Templeton
Legendary investor John Templeton died in 2008, leaving behind a set of investing maxims that are still followed by the managers of Templeton funds. As an investor, Templeton was a contrarian by nature, notes Vaughan Scully, of S&P Capital IQ in The Outlook.
He moved his office from New York to Nassau, the Bahamas, in part, to get away from the groupthink that prevailed on Wall Street, and claimed his performance improved because of it.
One of his maxims exhorts investors to do the same: "If you buy the same securities as other people, you will have the same results as other people. It is impossible to produce superior performance unless you do something different from the majority. To buy when others are despondently selling and to sell when others are greedily buying requires the greatest fortitude and pays the greatest reward."
James Harper, one of five managers currently running the Templeton World Fund (TEMWX), cites this maxim in explaining how the fund is managed and the philosophy behind it.
"We are completely bottom-up driven, five-year time horizon, value-oriented stock pickers," he says. "We tend to buy when people are selling, and sell when people are buying. That, I think, gives you the best long term performance."
Templeton sold his fund company in 1992 to what is now Franklin Templeton Investments, but the Templeton funds are still managed in Nassau according to John Templeton's unique style.
The Templeton World Fund opened in 1978 and has long been team managed. In 2011, however, after a period of inconsistent performance, the team was restructured, to give each of the five managers one fifth of the fund's assets and have them invest independently.
In addition to managing the World Fund assets, Harper and the firm's other portfolio managers, are also fundamental sector analysts, with Harper covering global insurance and information technology hardware. These analysts produce a Bargain List that portfolio managers use to initiate new positions.
Currently, the fund has 102 different holdings, a number Harper says managers try to keep from growing much larger. The team tries to keep every holding at least 0.50% of total assets; the largest holding, Citigroup (C) is 2.4% of the assets under management.
The bottom-up driven management sometimes leads the fund to have significantly different weightings on, both a sector, and a geo-graphic basis than its benchmark, the MSCI World Index. Harper says the managers just let their bottom-up, value style take them wherever it leads.
As of July 31, the fund had about 42% of its assets in Europe and just 39% in North America, compared with the MSCI World index, which has almost 55% of assets in the US.
Three of the fund's top 10 holdings—ING Groep (ING), BNP Paribas (Paris:BNP) (US:BNPQY), and Credit Suisse Group (CS)—are European financials that came into the fund beginning in early 2012, when the team began to sense the pessimism regarding the European banking sector was too extreme.
"We took a pretty aggressive stance on financials 18 months ago." Harper says. "In May 2012, there were valuations that were effectively unprecedented. European financials were trading at 30% of book value. That's a good example of us saying 'the market is clearly concerned.' We didn't believe that was the case and saw amazing opportunities. A lot of those companies have doubled. That's what we're trying to do on an ongoing basis."
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Sunday, January 19, 2014
Investors Become Complacent; Volatility Drops
Volatility in bond and equity markets is back down to levels that would have been familiar to investors back in 2007. Bond and share prices have all moved relentlessly higher, often into uncharted territory.
The only things that have changed for the worse are economic fundamentals.
Growth across developed economies remains subdued and though forecasters are hopeful next year turns out better than this one, that’s still a long way short of the unshakeable optimism most observers felt in the year or two before the financial crisis.
Economic gloom might support high sovereign debt prices, but it’s not so good for equities and corporate bonds. And yes it’s true that a greater share of GDP is accruing to companies than to workers, which at first light is supportive of both corporate debt and share prices. But ultimately the less money people earn the less there is to be recycled into demand, which is bad for firms generally.
Central banks are clearly stitching the whole web together. Weak economies mean central bank liquidity, which supports asset prices, fundamentals notwithstanding.
The problem is that investors have grown convinced nothing can possibly go wrong for them. The VIX, which measures S&P 500 volatility and is popularly called a fear index, is broadly back down to where it was during the boom years–if not quite to those lows. Ditto for the VStoxx volatility index which measures European equity market volatility.
The MOVE index, which measures bond market volatility, has dropped back from the summer’s highs when debt markets were rocked by fears the Federal Reserve would start trimming its bond purchase program by the autumn, and isn’t far off 2007 levels again.
To judge from central banks’ reaction functions, maybe investors have a point. The Fed relented on tapering when equities and bonds wobbled. In effect, the central bank was saying that it is putting a floor under asset prices. As long as investors believe this can be achieved, asset prices will keep climbing.
The key question then is to what degree can central banks achieve this promise? Eventually there will be enough growth to dictate higher interest rates for fear of inflationary consequences. Central banks have to consider where asset prices might be at that point if they maintain their current asymmetric response. Will they abandon price stability for fear of upsetting asset markets? Or will they accept another collapse on the assumption that it won’t be as catastrophic?
Recent history suggests that when asset markets spin out of control–in either direction–central banks find it hard to control them. What investors now have to consider is what might cause asset markets to lose control. Economic fundamentals might yet trump central banking liquidity and government interventions in pricing assets. As they’ve regularly done in Japan over the past two decades.
Saturday, January 18, 2014
Collect Income While The Dreaded 'Triple Top' Destroys Wealth
There is a lot of discussion lately that we are reaching the peak of a dreaded "triple top."
Here are just a couple of the many warnings from market experts...
-- If the S&P 500 and other major U.S. indexes are turned back at today's critical, even historic, juncture, we could see a significant upcoming decline in the U.S. stock market as history repeats and also rhymes. - MarketWatch, "Is this the biggest triple top ever?"
-- A third top has now formed, and a 60% stock market drop is inevitable - and it could strike at any moment. - MoneyNews, "Market Collapse Predicted By Scientist"
That's just a sampling of the reports that are being released almost every day.
In 2000 and 2007, the S&P 500 peaked near current levels. The market then plummeted, causing long and agonizing bear markets. These crashes eliminated trillions of dollars in wealth and eroded investor confidence. J.P. Morgan Asset Management recently published this chart highlighting the S&P 500's inflection points over the past 16 years.
As you can see, the market ballooned from 1997 to 2000 and from 2002 to 2007. But both increases were answered with sharp tumbles from both the tech bubble burst (-49%) and the financial crisis (-57%). And the latest uptick is even sharper -- 132%. That holds the potential for an even steeper drop.
But I'm not worried. In fact, you can reap immediate income without worrying about the market -- because you won't have to own any shares to profit. In other words, Mr. Market can watch the news. He can watch the blog posts. He can soar to new highs or sink to new lows.
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But this volatility won't make us panic or pull out of the market -- in fact, this volatility should increase our returns.
I am talking about selling options.
I know many people are hesitant to dabble in the options market. After all, statistics show that 80% to 90% of investors lose money trading options. It's hard to blame anyone for avoiding options given this statistic... but it's actually not true.
What is true is that 80% to 90% of options buyers lose. But, if 80% to 90% of buyers lose money, then 80% to 90% of options sellers make money.
When we sell an option, we get money deposited in our brokerage accounts. It's called a premium, but I like to call it "Instant Income." We get paid upfront for options that more than likely will expire worthless. That may sound like a bad thing, but it's actually what makes my strategy successful. When an option I am selling expires worthless, that means I keep that "Instant Income." And so far, all of my trades have been winners.
And this is just one part of my strategy. There is a lot more I want to tell you about options and the potential triple top that could send the stock market tumbling. But regardless of what the market does, I'm confident my "Instant Income" strategy will continue to deliver winners. My team and I put together a new report to explain exactly how selling options works and how you can get started today.
P.S. -- Since I've started telling people about my strategy, I've helped investors make thousands of dollars. One reader said: "When I first started using [Amber's] picks, my goal was to earn $500. Then I quickly realized I can earn at least $1,000 per month." So far, every single one of my suggested trades has made investors money. I hate to brag, but a 100% track record is nearly unheard of. To learn everything you need to know about selling options, click here.
Thursday, January 16, 2014
Bet on Best Buy as it Hits New High - Analyst Blog
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Shares of Best Buy Co., Inc. (BBY) surged to attain a new 52-week high of $30.35 on Jul 9, 2013, before closing at $29.73. Shares of this Zacks Rank #3 (Hold) stock have amassed a year-to-date return of roughly 155.2%.Based on the current price, this consumer electronic retailer is 12.1% above the Zacks Consensus average analyst price target of $26.53. The company currently trades at a forward P/E of 13.03x, a discount of 5% to the peer group average of 13.72x.
Best Buy is undergoing a turnaround program including a price match policy, multi-channel strategy, multi-year cost reduction program and closure of some big box stores. In the first quarter of fiscal 2014, the company lowered its cost by $175 million, in addition to $150 million reduced in the fourth quarter of fiscal 2013.
Best Buy's online sales performance remains a positive. Domestic online sales jumped 7.1% during the quarter. We believe that the company is leaving no stone unturned in wooing consumers and capturing incremental revenue, as evident from its strategic initiative of opening "Samsung Experience Shops" within its stores.
It also entered into a similar agreement with Microsoft Corp. (MSFT) to roll out "Windows Store" across its 500 outlets in the U.S. with an additional 100 in Canada. For Best Buy, the deal adds more compelling products to its portfolio to better compete against discount giants such as Wal-Mart Stores Inc. (WMT) and online retailers like Amazon.com Inc. (AMZN).
Best Buy also entered into a contract to divest its 50% stake in Best Buy Europe to Carphone Warehouse Group, the joint venture partner in the same. The move would facilitate the company to concentrate more on its U.S. operations. We believe that the step to offload its stake in Best Buy Europe would augment its return on capital employed.
Tuesday, January 14, 2014
Free Admission to National Parks on MLK Day
Take advantage of the opportunity to soak up some history or explore the great outdoors at any of the 401 national parks for free. The National Park Service is waiving entrance fees January 20 for Martin Luther King Jr. Day. Considering that 2014 marks the 50th anniversary of King's receiving the Nobel Peace Prize and the passing of the Civil Rights Act of 1964, the long holiday weekend would be a good time to visit any of the many parks that honor the civil rights leader and that celebrate African American achievements.
SEE ALSO: Fabulous FreebiesSites associated with King include the Martin Luther King Jr. National Historic Site in Atlanta, the National Historic Trail in Alabama where he led the 1965 Voting Rights March, and the Martin Luther King Jr. Memorial and the Lincoln Memorial -- where he spoke of his dream for America -- in Washington, D.C.
Among the parks associated with African Americans are Booker T. Washington National Monument in Virginia, George Washington Carver National Monument in Missouri and Tuskegee Airmen National Historic Site in Alabama. The park service has We Shall Overcome: Historic Places of the Civil Rights Movement and Aboard the Underground Railroad travel itineraries that list places associated with African American history.
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Visit the National Park Service site for a state-by-state list of parks that will waive fees January 20. Normally, 133 national parks charge entrance fees ranging from $3 to $25.
Wednesday, January 8, 2014
Fast-food deals go long and wide in January
No month spells cheap eats like January, when customer-hungry fast-food chains often see their steepest monthly sales declines and will do just about anything to lure budget-conscious consumers back. Many folks are still smarting from spending — and eating —- too much back in December. So fast-food chains from Burger King to Pizza Hut to Subway are working overtime to coax them in the door.
"The challenge is to convince the consumer that the deal is so good that it simply cannot be passed up," says Derek Farley, president of DFPR, a restaurant specialty public relations firm, who notes that many big restaurant chains typically see sales drop about 3% in January vs. an average month. "Dining is the first and easiest thing to resist when you're being cautious with your wallet and your gut."
Among this month's deals:
• Free coffee. Through Jan. 29, Burger King is giving away a free small cup of coffee with the purchase of a breakfast sandwich.
• Pizza bargains. At Pizza Hut, any medium or large pizza ordered online is 50% off through Jan. 10 — its best-ever online deal, says Carrie Walsh, chief marketing officer.
Papa John's is celebrating its 30th anniversary with a 30 cent pizza deal through Jan. 26. Folks who order any large pizza online at the regular menu price get a large one-topping pizza for 30 cents.
• All-you-can-eat. IHOP, through Feb. 9, is bringing back its "All You Can Eat" pancakes. Customers who order combos with eggs, hash browns and sausage, bacon or ham can keep requesting pancakes. "As long as you can keep eating them, we'll keep serving them," says Natalia Franco, senior vice president of marketing.
• $5 subs. All foot-long subs are $5 at Subway in January.
• 99 cent deals. Wendy's is selling two of its spicy sandwiches for 99 cents: Spicy Chipotle Crispy Chicken and Spicy Chipotle Jr. Cheesebu! rger.
• $1 snacks. At most Taco Bell locations, beginning Jan. 23, all Loaded Grillers will be priced at $1 all day for a limited time, as two new flavors, Chipotle Ranch Chicken and Chili Cheese Fries, will be added.
• $5 lunch. For lunch at Dairy Queen, a cheeseburger, fries, soft drink and sundae go for $5.
• Cheap chili dogs. Participating Carl's Jr. restaurants in Southern California are re-introducing Jumbo Chili Dogs at two for $3.
• Get paid to sample. From Jan. 16-19, Starbucks baristas will sample new Via Lattes and offer $1 off a handcrafted beverage for customers who participate.
But even these might not be the best fast-food deals consumers will see in 2014, says Farley. Sure, the January deals look good as a group, he says, but most chains "save their best for unplanned, desperate times."
Tuesday, January 7, 2014
Pentagon Watch: Where Did Your Tax Dollars Go This Week?
The U.S. military has a reputation as a somewhat secretive organization. But in one respect at least, it ranks among the most "open" of our government agencies. The Department of Defense is positively sunshine-y in the frequency and clarity with which it describes the contracts it issues to private companies, updating them daily on its website.
So what has the Pentagon been up to this week?
The Department of Defense requested $614 billion in total funding for the current fiscal year 2013. Spread over 52 weeks, that works out to $11.8 billion in spending. And with about 47% of that money, historically, going to personnel costs, that leaves about $6.2 billion a week to spend on military hardware (planes, trains, and main battle tanks), infrastructure projects (such as resiting a VA hospital, dredging a river, or constructing an air base), services (engineering and software design work), and military supplies.
Last week, the Pentagon awarded contracts worth a combined $6.226 billion -- putting it right on target to spend all the money it's been allotted for this fiscal year, "sequester" notwithstanding. Where did the money go?
To Russia with cash
Well, probably the biggest news of the week, and certainly the most controversial, was a contact issued Monday to pay a Russian defense contractor, Rosoboronexport, $572.2 million (later revised down to $553.8 million) for 30 Russian Mi-17 transport helicopters -- that we will promptly hand over to the Afghan National Securities Forces. This follows on a decision one week earlier to hand a Brazilian company, Embraer (NYSE: ERJ ) a $1 billion contract to build fighter planes for the Afghan Air Force.
Afghan military Mi-17 helicopters in flight. Source: Wikimedia Commons.
In one respect, therefore, it appears that sequestration of defense spending may be having an effect on U.S. defense contractors -- it's forcing the Pentagon to be more careful about how it spends its cash, and to give more business to low-cost defense contractors from other countries.
Nor is the Pentagon the only actor pinching its pennies. Last week, Boeing (NYSE: BA ) also headed to Brazil to sign a deal cooperating with Embraer on the global marketing of the latter's KC-390 aerial refueling tanker.
Heavily into helicopters ...
Boeing also made news this week when it landed its second multibillion-dollar contract in as many weeks, for the sale of Chinook heavy lift helicopters. Two weeks ago, the U.S. Army ordered up $4 billion worth of the whirlybirds. This week, Boeing won a $3.4 billion contract to sell more Chinooks to the militaries of Turkey and the United Arab Emirates, with the U.S. government acting as the middleman.
U.S. Army CH-47 Chinook. Source: Wikimedia Commons.
... and softly into software
Another big winner for the week was Microsoft (NASDAQ: MSFT ) . The Pentagon granted Mr. Softy a contract worth up to $412.2 million for Microsoft Blue Badge cardholder support. This contract, whereby Microsoft will assist the Defense Information Technology Contracting Organization with software design work, costs a lot -- in part because Microsoft is being asked to license access to its proprietary source code as part of the work.
Galaxy still flying
A smaller contract win, but still significant, was Lockheed Martin's (NYSE: LMT ) receipt of a $27.9 million indefinite-delivery/indefinite-quantity contract to do software work upon Air Force C-5 Galaxy transport aircraft. The Pentagon has caught some flak over continued support for the Galaxy, whose basic design is now close to 45 years old. But the Galaxy remains the largest transport aircraft in the U.S. fleet, capable of carrying a half-dozen MRAPs, or five combat helicopters within its capacious cargo hold.
U.S. Air Force C-5 Galaxy hold. Source: Wikimedia Commons.
The Air Force is currently in the process of upgrading more than four dozen Galaxies under a comprehensive Reliability Enhancement and Re-engining Program. Once completed, the planes will be dubbed "Super Galaxies" -- C-5Ms, equipped with more power, a faster rate of climb, and the ability to operate off of runways 30% shorter than their predecessors require.
Opportunities on the horizon
That's about it for the highlights of last week's Pentagon contracting news, but now what should we be on the lookout for in the future? Well, probably the most interesting bit of news on that front was the announcement Thursday that the U.S. Defense Security Cooperation Agency has informed Congress of plans to sell $4 billion worth of services and equipment to the government of Saudi Arabia, as part of a plan to modernize the Saudi Arabian National Guard forces.
The contractor in charge of the project, Vinell Arabia, isn't exactly a household name here. But as it turns out, Vinell is a subsidiary of marquee defense contractor Northrop Grumman (NYSE: NOC ) .
The upshot: Northrop Grumman's about to land a contract worth 16% of its annual revenue haul for a whole year. The contract hasn't been announced yet. No one knows about it -- except that now, you do.
Boeing operates as a major player in a multitrillion-dollar defense market in which the opportunities and responsibilities are absolutely massive. However, emerging competitors and the company's execution problems have investors wondering whether Boeing will live up to its shareholder responsibilities. The Fool's premium research report on the company provides investors with the must-know issues surrounding Boeing. They'll be updating the report as key news hits, so don't miss out -- simply click here now to claim your copy today.
Monday, January 6, 2014
10 FTSE 100 Shares Trading Near 52-Week Lows
LONDON -- I've just trawled the market to find FTSE 100 shares trading at no more than 8% above their lowest price of the 12 months -- and found 14 names.
Here are the 10 largest and my thoughts on five of them.
| Royal Dutch Shell (LSE: RDSB ) | 2,187 | 138,086 | 4.5 | 8.1 | 5.5 |
| BHP Billiton | 1,833 | 97,554 | 7.3 | 11.5 | 4.1 |
| Rio Tinto | 2,808 | 51,890 | 6.0 | 7.9 | 4.1 |
| Imperial Tobacco (LSE: IMT ) | 2,346 | 22,888 | 5.5 | 11.2 | 4.9 |
| Anglo American | 1,463 | 20,391 | 2.3 | 11.0 | 3.7 |
| Carnival (LSE: CCL ) | 2,147 | 16,651 | 6.5 | 20.4 | 3.3 |
| Tullow Oil | 1,004 | 9,117 | 7.8 | 21.5 | 1.2 |
| Antofagasta (LSE: ANTO ) | 922 | 9,090 | 7.3 | 13.1 | 2.7 |
| Wm. Morrison Supermarkets (LSE: MRW ) | 263 | 6,111 | 6.3 | 10.2 | 4.8 |
| Aggreko | 1,658 | 4,453 | 7.1 | 17.7 | 1.6 |
| Petrofac | 1,301 | 4,429 | 3.8 | 10.5 | 3.3 |
| G4S | 245 | 3,432 | Top 10 Energy Stocks To Watch Right Now3.1 | 11.3 | 3.8 |
| Amec | 1,000 | 2,970 | 7.7 | 11.3 | 3.9 |
| EVRAZ | 128 | 1,708 | 0.6 | 60.5 | 2.5 |
Royal Dutch Shell
Titan blue chip Shell has trailed the market in the last 12 months. While the FTSE 100 is 18% up during that period, Shell has risen just 3%.
Shell, however, pays a substantial dividend. The total payout for 2012 was $1.72 per share, which supports a 5.1% yield at today's price. The average FTSE 100 share yields just 3%.
There has been a little weakness in the price of crude oil this year. A barrel of brent crude costs 2% less than it did at the start of the year and is 4% cheaper than it was three months ago.
Shell is forecast to earn $4.21 per share this year. That's a P/E of 8.1 at today's price.
Antofagasta
Resources companies need favorable changes in the metal markets to help grow their revenues. So, although Antofagasta's recent Q1 results confirmed its copper and gold volumes were up, the fall in realized prices led to a 15% sales decline.
Fears over a slowdown in the Chinese economy are being blamed for the hit to metal prices and the shares of resources companies in general. The effect of lower prices on profits is clear from Antofagasta's last announcement: A 20% fall in the price of copper, combined with an increase in costs, produced a 30% decline in EBITDA.
This performance leaves forecast earnings per share for the year of $1.10 looking unlikely. If the outlook for metal prices does not improve then Antofagasta shares will likely fall further in 2013.
Imperial Tobacco
Cigarette companies are finding it increasingly difficult to market and sell cigarettes in their long-standing markets. Plain-pack cigarettes are expected to be mandated in Ireland in the New Year, while Canada is monitoring the effectiveness of plain-pack legislation in countries where it has already been introduced. I expect the U.K. government is doing likewise.
If you believe that Big Tobacco can sidestep this legislation by selling to emerging markets, then think again. Anti-tobacco laws are catching on fast. Jamaica is moving toward a ban on smoking in public places, while lawmakers in Botswana and Tanzania are taking steps to protect the public from the risks of tobacco consumption.
Imperial shares trade on a P/E of 11.2 times forecast earnings for the year.
Wm. Morrison Supermarkets
News that Morrisons has moved into online and convenience sales has not provided the fillip to the share price that I had expected. With the shares today back down at around 260 pence, they are showing attractive value characteristics again.
Morrisons' shares are currently priced at 10.2 times forecast earnings for the year. They also come with the prospect of a 4.8% dividend yield.
The supermarket's proposed online and convenience operations will help revenues, and bring Morrisons' offering to the same channels as its competitors.
However, Aldi and Lidl are still taking sales from Morrisons at the cheap end of the market. Meanwhile, J Sainsbury and Waitrose are doing likewise at the top. Those trends will have to be arrested for Morrisons' shares to rise significantly from here.
Carnival
Shares in cruise operator Carnival have fallen 15% in the last three months alone. Unfortunately for shareholders, the shares don't look attractive value yet.
According to the available forecasts, Carnival shares are today priced at 17.1 times last year's earnings and 20.4 times the forecasts for 2013. The decline in profitability is forecast to be followed by large growth next year, putting the shares on a 2014 P/E of 14.4 times the average estimate.
The forecast dividend yield for Carnival is 3.3%, close to average for a FTSE 100 share.
Noises from the company will have to improve to prevent further falls. Meeting the 2014 estimate I feel is key to this share's current valuation.
Investing in out-of-favor shares can yield big returns if their fortunes improve.
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Sunday, January 5, 2014
Microsoft Slams Apple -- Again
After rolling out an attack ad last month -- crashing a wedding of Apple (NASDAQ: AAPL ) and Samsung fans -- Microsoft (NASDAQ: MSFT ) is throwing another punch.
The software giant's new television commercial ruthlessly attacks Apple's iPad.
A side-by-side comparison of an iPad with a Windows 8-powered ASUS VivoTab Smart tablet is peppered with a voiceover narrative mimicking Siri, Apple's digital assistant.
"Sorry, I don't update like that," Siri says, highlighting Apple's lack of automatic app updates -- something that even Senator John McCain called out in questioning Apple CEO Tim Cook earlier this week.
The ad then goes on to take the iPad to task for its inability to multitask with a split screen while watching a video. Then comes the rub about the iPad being unable to run Microsoft's PowerPoint.
"Should we just play Chopsticks?" Siri concludes with someone clumsily playing a virtual piano on the iPad.
It's always been socially acceptable to roll out attack ads if you're the underdog, and Microsoft certainly qualifies in the tablet space. Apple had no problem kicking Mr. Softy when the world's largest software company was down, rolling out the "I'm a Mac" ads that repeatedly trashed Windows Vista.
The unique thing about Microsoft's strategy is that it isn't gunning for just one particular product. April's ad skewered the iPhone cult, hoping to make a name for its partnership with Nokia (NYSE: NOK ) in putting out Lumia smartphones.
Hot Low Price Companies To Buy Right Now
Now Microsoft is taking aim at the iPad.
The Nokia Lumia ad was more about style than substance. It didn't really sell the Lumia as much as it put down the iSheep and CopyBots carrying around iPhone and Samsung mobile products. There was no breakdown of Lumia-specific features that would woo a potential buyer to Nokia's handset. This time the spot is spelling out specific reasons why a Windows 8 tablet is the better choice.
The effectiveness of Microsoft's attack ads remain to be seen. Clearly Microsoft sees Apple as vulnerable -- something that investors have realized since the consumer tech giant's stock peaked when the iPhone 5 hit the market. Will the market begin to attach negative feelings to Apple products, or will viewers interpret the ad as more sour grapes on Microsoft's behalf for missing out on the smartphone and tablet revolutions?
Either way, it's good to at least see Microsoft hungry and attacking. Complacency isn't a good look on an underdog.
Brace for battle
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Should I Buy British American Tobacco or Imperial Tobacco Group?
LONDON -- Tobacco giants British American Tobacco (LSE: BATS ) (NYSEMKT: BTI ) and Imperial Tobacco Group (LSE: IMT ) (NASDAQOTH: ITYBY ) sell more than 1 trillion cigarettes every year.
Both companies own portfolios of leading cigarette brands, and have consolidated and optimized their large operations so that they are extremely profitable and cash generative -- making them top favorites with income investors.
Despite this, there are some big differences between the two firms. So which would I buy to add to my portfolio?
British American Tobacco vs. Imperial Tobacco
I'm going to start with a look at a few key statistics that can be used to provide a quick comparison of these two companies:
| Trailing dividend yield | 3.7% | 4.7% |
| 5-year average dividend yield | 4.5% | 4.2% |
| 5-year dividend growth rate | 15.3% | 11.9% |
| 5-year share price return | 79% | (5.5%) |
I've selected the figures above because they tell two different stories. BAT has a stronger presence in emerging markets than Imperial, and these markets have delivered superior growth in recent years when compared to the relatively mature markets of Europe, where Imperial's business is focused.
In the wake of the financial crisis, investors bought into BAT's high yield and growth potential. The firm's share price has risen by 79% over the last five years, driving down its yield to a more modest 3.7% -- well below its five-year average of 4.5%, and below the 4.7% offered by Imperial.
Imperial's share price has edged lower this year, and in its first-half results last week, the firm reported a 5.9% drop in cigarette volumes, a 9.7% fall in operating profit, and a 22.7% fall in reported earnings per share. However, some of this was due to one-off factors, and the firm expects to deliver modest earnings-per-share growth over the full year.
What's next?
So far this year, BAT's shares have risen by 15%, while Imperial's have dropped 2%. Can BAT continue to outperform its smaller rival, or is now the time for new investors to look again at Imperial?
Analysts' forecasts are notoriously unreliable, but FTSE 100 companies generally get the benefit of the most comprehensive analysis and tend to deliver fewer surprises than smaller companies.
With that in mind, let's take a look at some forward-looking numbers for BAT and Imperial. These apply to the companies' current financial years:
| Forecast P/E ratio | 15.7 | 11.0 |
| Forecast dividend yield | 4.2% | 5% |
| Forecast dividend growth | 11% | 10% |
| Forecast earnings growth | 12% | 9% |
Both companies are expected to deliver similar earnings and dividend growth this year, but British American Tobacco's premium is the price you have to pay for access to its higher-growth markets.
Imperial Tobacco, on the other hand, offers a higher yield at a lower earnings multiple, but comes with the risk that there may be a long-term decline in sales in some of its more mature western European markets.
Which share should I buy?
Imperial's greater exposure to developed markets, where smoking is in decline and the tax and regulatory regime is more hostile, looks like a growing risk to me.
I think that investors seeking a long-term, inflation-beating income are likely to be better served by investing in British American Tobacco. This firm's dividend yield remains above the market average, and further growth looks very likely.
The best FTSE 100 dividends?
British American Tobacco and Imperial Tobacco are both tempting income buys, but there are a number of other attractive, high-yielding alternatives elsewhere in the FTSE 100 you may also want to consider.
Indeed, I can tell you that the tobacco sector wasn't chosen by The Motley Fool's team of analysts for their latest special report, "5 Shares to Retire On." If you would like to know the identity of these five top-rated dividend investments, click here now to download your copy of this report -- it's free, but availability is strictly limited, so don't delay.
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Friday, January 3, 2014
Will Netflix's Recovery Survive Earnings Season?
Next Monday, Netflix (NASDAQ: NFLX ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise.
Few stocks have given investors a bumpier ride over the past several years than Netflix, which went from euphoria to heartbreak in late 2011 only to post huge gains over the past quarter. Now that investors are excited again, can Netflix deliver the results they want? Let's take an early look at what's been happening with Netflix over the past quarter and what we're likely to see in its report.
Stats on Netflix
| Analyst EPS Estimate | $0.18 |
| Year-Ago EPS | ($0.08) |
| Revenue Estimate | $1.02 billion |
| Change From Year-Ago Revenue | 17% |
| Earnings Beats in Past 4 Quarters | 4 |
Source: Yahoo! Finance.
Will Netflix stream higher this quarter?
Analysts have gotten a lot more optimistic about Netflix in recent months, reversing initial estimates for continued losses in the just-finished quarter, and more than tripling their full-year 2013 consensus earnings estimates. The stock has responded with unbridled enthusiasm, soaring more than 70% since mid-January.
Netflix surprised investors back in January with a profitable quarter: Streaming margins expanded sharply, the company logged much higher streaming subscriber counts, and it noted better-than-expected retention of legacy DVD subscribers. Since then, Netflix has continued moving forward, reporting that viewers streamed 4 billion hours of content during the quarter, suggesting both continued subscriber growth and increased viewer engagement.
But not everyone is convinced that Netflix can produce the growth it needs to justify its valuation. Even CEO Reed Hastings has said that the company needs to make its service more compelling in order to reach its goals of having 50% to 75% of households subscribing to Netflix. In order to accomplish that, Netflix made a new content deal in January with Time Warner (NYSE: TWX ) , giving it access to popular television series that will add to its expanding library of streaming options. It has also turned to Facebook to help bolster its social presence, building a Facebook app to allow viewers to share more easily what they're watching or putting on their queues.
Still, Netflix's competitors haven't been standing still. Amazon (NASDAQ: AMZN ) remains a huge threat to Netflix, with Amazon's content deal with CBS to stream episodes of a new Stephen King-based drama just days after their initial airing. It's also bulking up its own video library. Scoring the exclusive rights to stream PBS hit Downton Abbey is another Amazon victory in the long content wars to come.
In Netflix's quarterly report, watch for a status report on how its international expansion efforts are faring. As the U.S. market gets more saturated, finding more subscribers overseas will become a much larger part of Netflix's business in the long run.
Learn more about how Netflix's domestic battles and international growth aspirations will affect the company by reading The Motley Fool's premium report on Netflix. Inside, you'll learn about the key opportunities and risks facing the company, as well as reasons to buy or sell the stock. The report includes a full year of updates to cover critical new developments, so make sure to click here and claim a copy today.
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Thursday, January 2, 2014
The Five Best ETFs for 2014
Exchange-traded funds are terrific tools for investing. ETFs are generally much less expensive than ordinary actively managed mutual funds. Unlike most actively managed funds, ETFs rarely make capital-gains distributions, so they are more tax-friendly than all but the best-run index funds.
See Also: 24 Stock Picks for 2014For the uninitiated, ETFs are just like regular mutual funds in that they own a bunch of securities. But they trade just like stocks — almost always at or very near their net asset value. Almost all ETFs track specific indexes, although many of these indexes are esoteric, and some were created solely to launch an ETF.
Too many ETFs are ridiculous. You can buy leveraged ETFs or ETFs that move inversely from their indexes. You can also buy ETFs that invest in incredibly narrow sectors, such as nuclear power, semiconductors or agribusiness. Steer clear of this type of nonsense.
Which ones are worthy of your investment dollars in 2014? With the stock market fully valued and shares of most small companies overvalued, employ caution. For me, that means owning a lot of high-quality large companies. I'm not worried about keeping up with the indexes in the current bull market; I'm worried about getting killed in the next bear market — and blue chips tend to hold up relatively well in lousy markets. (For the record, I don't expect a bear market in 2014.) The one exception to my defensive posture is emerging markets, which albeit volatile and troubled are, in my view, too cheap and have too much long-term promise to pass up.
In no special order, here are my five favorite ETFs for 2014.
Schwab U.S. Dividend Equity (SCHD) is similar to an old favorite, Vanguard Dividend Appreciation (VIG). Both ETFs invest only in large companies that have paid dividends in each of the past ten years and that have passed other screens designed to ensure their financial health. Schwab considers cash flow, debt and return on equity (a measure of profitability), as well as dividend growth. Vanguard looks at virtually the same measures but invests only in stocks that have raised their dividends in each of the past ten years. The Schwab ETF owns stocks such as Exxon Mobil, Microsoft and Coca-Cola. The Vanguard ETF is superb, but its asset base has swelled to more than $19 billion, making it harder for the fund to buy and sell stocks efficiently. Schwab charges 0.07% annually, compared with 0.10% for Vanguard. The Schwab ETF, which you can buy through any broker, won't keep pace in bull markets but ought to outperform the broad stock market in downturns. From the ETF's inception in late 2011, it has returned an annualized 22.4%, compared with 20.7% for the Vanguard ETF and 23.7% for Standard & Poor's 500-stock index. (All returns are through December 26.)
Market Vectors Wide Moat ETF (MOAT) is a collection of picks from Morningstar's 100-plus stock analysts. Known for its fund research, Morningstar has far more stock analysts than fund analysts, and they have quietly built a superior record. Every quarter, this ETF buys in equal amounts the 20 stocks judged by Morningstar analysts to have the strongest sustainable competitive advantages and to trade at the deepest discounts to their estimates of the companies' fair value. So, assuming the analysts are right, you'll get high-quality stocks at cheap prices. The ETF was launched only in 2012, but a virtually identical exchange-traded note, Elements Morningstar Wide Moat Focus (WMW), returned an annualized 22.5% over the past five years — an average of 3.9 percentage points per year better than the S&P 500. (I suggest avoiding ETNs because they are in effect debt instruments of the firm that issues them and so add an extra layer of risk.) MOAT's annual expenses are 0.49%.
iShares MSCI EAFE Minimum Volatility (EFAV) invests in developed foreign stock markets and holds no emerging-markets stocks. Developed markets are a little cheaper than the U.S. market, but they also face more economic headwinds. Still, if you want a well-diversified portfolio, you can't ignore overseas markets. Samuel Lee, an ETF expert at Morningstar, says that low-volatility strategies beat high-volatility strategies over the long term — and, no surprise, exhibit lower volatility. This ETF and other low-volatility ETFs tend to own stocks of big, boring companies and so lag in strong markets but hold up relatively well in poor ones. This ETF should be about one-third less volatile than the MSCI EAFE index. It holds few economically sensitive stocks — such as energy and basic materials — and owns a lot of consumer staples, health care and financial stocks. Annual expenses are 0.20%. Since its inception in late 2011, the ETF has returned an annualized 12.0% — an average of 5.0 percentage points per year less than the MSCI EAFE index.
Vanguard FTSE Emerging Markets (VWO) is my pick for emerging markets. It's a twin of Vanguard Emerging Markets Stock Index (VEIEX), one of my best stock mutual funds for 2014. Emerging-markets stocks have lost money in two of the past three years. Although they are risky, I think they are a good buy today. Many ETFs employ rules-based indexes — that is, the ETF selects stocks according to preset quantitative criteria. But the Vanguard ETF employs a traditional indexing strategy, weighting stocks according to their market value. The ETF lost 6.0% in 2013, but over the past five years it returned an annualized 14.5%. Expenses are 0.18% per year.
Vanguard Short-Term Corporate Bond ETF (VCSH) promises merely to tread water in a bond market that offers little, if any, value. It yields just 1.4%, but it should lose little if interest rates continue to rise, which is likely. Should yields rise by one percentage point, this ETF should lose 3% in price, nearly half of which would be offset by the fund's yield. Plus, there's not much credit risk. The fund's bonds boast an average credit quality of single-A. To be honest, I think bond investors will do better with one of the actively managed mutual funds mentioned in my piece on the best bond funds for 2014. In an overvalued bond market, I prefer a good manager's judgment in picking bonds. But the Vanguard ETF will keep you out of trouble. And as yields rise, the income it throws off will grow.
How did my picks for 2013 do? My domestic stock ETFs returned an average of 30.6% over the past year, compared with 32.5% for the S&P. As for my foreign stock picks: Vanguard FTSE Developed Markets ETF (VEA), which tracks stocks of developed foreign countries (and changed its name and benchmark index from Vanguard MSCI EAFE ETF in mid-year), returned 21.0% over the past year. And Vanguard FTSE Emerging Markets ETF (which changed its name and index twice in 2013) lost 4.4%. My bond ETFs lost 2.5%, on average, compared with a 2.0% loss for the Barclays Aggregate U.S. Bond index.
Steve Goldberg is an investment adviser in the Washington, D.C., area.
Best Cheap Companies To Invest In 2014
There's an enormous amount of buzz surrounding the oil-production explosion in the Bakken shale formation in North Dakota. But in this video, Motley Fool energy analysts Joel South and Taylor Muckerman call to investors' attention the fact that this explosive growth is slowing, and that there might be newer, more exciting plays. Joel discusses a more recent area of enormous growth, the Eagle Ford formation in Texas, and gives investors a few advantages that this area has over the Bakken, including cheaper drilling and higher takeaway capacity resulting from a more robust pipeline infrastructure in the area. He then gives us his picks for which companies could make the best investments for those looking to capitalize on Eagle Ford oil.
There are many different ways to play the energy sector, and The Motley Fool's analysts have uncovered an under-the-radar company that's dominating its industry. This company is a leading provider of equipment and components used in drilling and production operations and is poised to profit in a big way from it. To get the name and detailed analysis of this company that will prosper for years to come, check out the special free report: "The Only Energy Stock You'll Ever Need." Don't miss out on this limited-time offer and your opportunity to discover this company before the market does. Click here to access your report -- it's totally free.
Best Cheap Companies To Invest In 2014: SMTC Corporation(SMTX)
SMTC Corporation provides advanced electronics manufacturing services to original equipment manufacturers (OEMs) worldwide. The company?s services include product design and engineering services, printed circuit board assembly production, enclosure fabrication, systems integration, testing, and configuration services. It also provides enclosure and precision metal fabrication, cable assembly, interconnect, and engineering design services. The company offers its integrated contract manufacturing services to OEMs and technology companies primarily in the industrial, computing and networking, communications, consumer, and medical market segments. SMTC Corporation was founded in 1985 and is based in Markham, Canada.
Best Cheap Companies To Invest In 2014: Capstone Turbine Corporation(CPST)
Capstone Turbine Corporation develops, manufactures, markets, and services turbine generator sets and related parts for use in stationary distributed power generation applications. Its stationary distributed power generation applications include cogeneration combined heat and power (CHP), integrated (CHP), resource recovery, and secure power, as well as combined cooling, heat, and power; and its products are used as battery charging generators for hybrid electric vehicle applications. The company primarily offers microturbine units, subassemblies, and components. It also provides various accessories, including rotary gas compressors with digital controls, heat recovery modules for CHP applications, dual mode controllers that allow automatic transition between grid connect and stand-alone modes, batteries with digital controls for stand-alone/dual-mode operations, power servers for multipacked installations, and protocol converters for Internet access, as well as frames, ex haust ducting, and installation hardware. Further, it remanufactures microturbine engines; and provides after-market parts and services, scheduled and unscheduled maintenance, and factory and on-site training services. The company?s microturbines can be fueled by various sources, including natural gas, propane, sour gas, landfill or digester gas, kerosene, diesel, and biodiesel. It primarily sells its products directly to end users, as well as through distributors in North America, Asia, Australia, Europe, the Russian Federation, and South America. Capstone Turbine Corporation was founded in 1988 and is based in Chatsworth, California.
Advisors' Opinion:- [By Dan Caplinger]
On Thursday, Capstone Turbine (NASDAQ: CPST ) will release its latest quarterly results. But lately, investors have already anticipated some huge results from the company, having bid the shares up by about 50% in just the past several weeks. Can Capstone deliver on what investors want to see?
- [By Rick Munarriz]
Capstone Turbine (NASDAQ: CPST ) -- $1.30
Things are finally starting to happen for the microturbine maker. Revenue is growing at a healthy clip, and analysts see Capstone finally turning a quarterly profit later this year. - [By Tyler Crowe and Aimee Duffy]
Over the past couple weeks Capstone Turbine (NASDAQ: CPST ) shares have launched into orbit on the news that the company had secured several orders for its microturbines. But 40% in a month? On the surface, it seems a bit silly that a company could gain that much on a couple news stories about sales. For a company like Capstone, which has struggled with sales, this kind of news is exactly what shareholders were looking for.
Top 10 Growth Stocks For 2014: Kimber Resources Inc(KBX)
Kimber Resources Inc., a junior mineral resource company, engages in the acquisition, exploration, and development of mineral resource properties in Mexico. The company primarily explores for gold and silver deposits. Its principal property includes the Monterde Property, which consists of 35 mineral concessions totaling approximately 29,296 hectares located in the Sierra Madre mountains of southwestern Chihuahua State. Kimber Resources Inc. was founded in 1995 and is headquartered in Vancouver, Canada.
Best Cheap Companies To Invest In 2014: First Busey Corporation(BUSE)
First Busey Corporation operates as the bank holding company for Busey Bank that provides various retail and commercial banking products and services to individual, corporate, institutional, and governmental customers in the United States. It accepts noninterest-bearing demand, interest-bearing transaction, savings, money market, and time deposits. The company?s loan portfolio includes commercial, agricultural, and real estate loans; individual, consumer, installment, first mortgage, and second mortgage loans; and commercial real estate, residential real estate, and consumer loans. It also provides money transfer, safe deposit, fiduciary, automated banking, and automated fund transfer services. In addition, the company provides asset management, brokerage, and fiduciary services, including financial planning, investment management, retirement planning, brokerage, and trust and estate advisory services to individuals; investment management, business succession planning, an d employee retirement plan services to businesses; and investment management, investment strategy consulting, and fiduciary services to foundations. Further, it offers pay processing solutions, such as walk-in payments processing for payments delivered by customers to retail pay agents; online bill payment solutions for payments made by customers on a billing company?s Website; customer service payments for payments accepted over the telephone; direct debit services; electronic concentration of payments delivered by the automated clearing house network; money management software and credit card networks; and lockbox remittance processing of payments delivered by mail. The company has 33 locations in Illinois, 7 locations in southwest Florida, and 1 location in Indianapolis, Indiana. First Busey Corporation was founded in 1868 and is headquartered in Champaign, Illinois.
Best Cheap Companies To Invest In 2014: Wendy's/Arby's Group Inc.(WEN)
The Wendy's Company operates as a quick-service hamburger company in the United States. The company, through its subsidiary, Wendy's International, Inc., operates as a franchisor of the Wendy's restaurant system. As of December 26, 2011, the Wendy's system comprised approximately 6,500 franchise and company restaurants in the United States and the United States territories, as well as in 26 other countries worldwide. The company was formerly known as Wendy's/Arby's Group, Inc. and changed its name to The Wendy's Company in July 2011. The Wendy's Company was founded in 1884 and is headquartered in Dublin, Ohio.
Advisors' Opinion:- [By Lauren Pollock]
Among the companies with shares expected to actively trade in Thursday’s session are J.C. Penney Co.(JCP), Wendy's Co.(WEN) and�Activision Blizzard Inc.
- [By Jeff Reeves]
Burger chain Wendy�� (WEN) has soared almost 60% so far in 2012, but remains under $10 a share and is still a decent buy for investors looking at low-priced options right now.
- [By Rupert Hargreaves]
Using this method to value Ruby Tuesday against its sector peers, we get an interesting result. Wendy's (NASDAQ: WEN ) is the largest company in the restaurant sector. During the last 12 months, the company generated $62 million in cash, excluding financing activities. On a per-share basis, this is worth around $0.16, or a price-to-cash-flow ratio of 53.5. In comparison, Ruby trades at a price-to-cash-flow per share ratio of 8.1.
- [By Sean Williams]
The last fast-food chains standing
If Jack in the Box (NASDAQ: JACK ) and Wendy's (NASDAQ: WEN ) can manage to go a few weeks without sticking their foot in the their mouth, they both have a shot at picking up market share based on these PR gaffes from McDonald's and Burger King.
Best Cheap Companies To Invest In 2014: Partner Communications Company Ltd.(PTNR)
Partner Communications Company Ltd. provides various telecommunications services in Israel. It offers cellular telephony services on GSM/GPRS and UMTS/HSDPA networks. The company also provides basic services, including domestic mobile calls, international dialing, roaming, voice mail, short message services, intelligent network services, content based on its cellular portal, data and fax transmission, and other services. In addition, it offers Internet services provider services that provides access to the Internet, as well as home WiFi networks; value added services, such as anti-virus and anti-spam filtering; and transmission services; and Web video on demand services, music tracks, and games. Further, the company provides voice over broadband and primary rate interface fixed-line telephone services; and data capacity services. Additionally, it offers content services comprising voice mail, text, and multimedia messaging, as well as downloadable wireless data application s, including ring tones, music, games, and other informational content; and sells handsets, phones, routers, and related equipment. The company markets its products through its sales centers, business sales representatives, traditional networks of specialized dealers, and non-traditional networks of retail chains and stores under the Orange brand name. Partner Communications Company Ltd. was founded in 1997 and is headquartered in Rosh Ha-ayin, Israel.
Advisors' Opinion:- [By Roberto Pedone]
Another under-$10 wireless telecom player that's starting to move within range of triggering a major breakout trade is Partner Communications (PTNR), a telecommunications company, provides cellular and fixed-line telecommunication services in Israel. This stock is off to a strong start in 2013, with shares up sharply by 29%.
If you take a look at the chart for Partner Communications, you'll notice that this stock has been trending sideways for the last month, with shares moving between $7.28 on the downside and $7.96 on the upside. Shares of PTRN are bucking the overall market weakness today as the stock starts to move within range of triggering a breakout trade above the upper-end of its sideways trading chart pattern.
Market players should now look for long-biased trades in PTNR if it manages to break out above some near-term overhead resistance levels at $7.80 to $7.85 a share and then once it clears its 52-week high at $7.96 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average volume of 107,303 shares. If that breakout triggers soon, then PTNR will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $10 to $12.20 a share.
Traders can look to buy PTNR off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $7.38 to $7.28, or below its 50-day at $6.97 a share. One can also buy PTNR off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
Best Cheap Companies To Invest In 2014: Sprott Resource Lending Corp.(SILU)
Sprott Resource Lending Corp., a natural resource lender, provides bridge and mezzanine financing to precious and base metal mining, exploration, and development companies, as well as energy companies worldwide. The company was formerly known as Quest Capital Corp. and changed its name to Sprott Resource Lending Corp. in September 2010. Sprott Resource Lending Corp. was incorporated in 1980 and is based in Toronto, Canada.
Best Cheap Companies To Invest In 2014: Cowen Group Inc.(COWN)
Cowen Group, Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides alternative investment management, investment banking, research, and sales and trading services for its clients. It manages separate client focused portfolio through its subsidiaries. Through its subsidiaries, the firm invests in equity and fixed income markets. It also invests in alternative investments markets through its subsidiaries. Cowen Group, Inc. was founded in 1994 and is based in New York, New York with additional offices in Boston, Massachusetts, Chicago, Illinois, Cleveland, Ohio, Dallas, Texas, and San Francisco, California.