Tuesday, April 29, 2014
Monday, April 28, 2014
Will Akamai Continue to Grow?
With shares of Akamai Technologies (NASDAQ:AKAM) trading at around $46.70, is AKAM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock's Movement
Akamai is a leader in web acceleration and content delivery. As CEO Tom Leighton likes to say, "We help the web be faster, and we help it be more secure."
Tom Leighton has done a tremendous job with Akamai over the years. He has seen many ups and downs, but he has weathered the storms well. Currently, Akamai is seeing revenue growth. It also has no long-term debt. Its customers also include AT&T (NYSE:T), Apple Inc. (NASDAQ:AAPL), and News Corp. (NASDAQ:NWS). Companies of this size and stature will only choose the best of the best when it comes to necessary products and services. This is a testament to Akamai's quality. It should also be noted that Akamai's company culture is strong. According to Glassdoor.com, employees have rated their employer a 4 of 5. In addition to that, 87 percent of employees would recommend the company to a friend, and 100 percent of employees approve of CEO Tom Leighton.
In regards to the question in the title, as long as the Internet keeps growing, Akamai should keep growing. The biggest growth area for Akamai at the moment is in security. With hackers targeting large commercial websites, including major U.S. banks, Akamai's services are in high demand. While the growth might not be as fast, there is also growth in content delivery speed, especially due to the increased popularity of mobile. Then there's China. Akamai has a good relationship with the Chinese government. This is a good sign considering the amount of consumers in China.
Akamai recently impressed with earnings. Revenue increased 15.20 percent year-over-year, and earnings increased 41.7 percent year-over-year. North American revenue increased 12 percent year-over-year, and international revenue increased 26.0 percent year-over-year. While there might be headwinds for the company, including increased competition and increased investment in R&D, it would be difficult to make a solid argument to be bearish on Akamai.
Akamai was given an OUTPERFORM rating in the column on March, 6, 2013 at $37.50, but should Akamai still receive the highest rating possible after its recent run? We'll get to that soon.
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The chart below compares fundamentals for Akamai, Level 3 Communications (NASDAQ:LVLT), and Limelight Networks (NASDAQ:LLNW).
| AKAM | LVLT | LLNW | |
| Trailing P/E | 36.77 | N/A | N/A |
| Forward P/E | 21.52 | 40.34 | N/A |
| Profit Margin | 16.33% | -5.69% | -17.07% |
| ROE | 10.13% | -29.95% | -10.20% |
| Operating Cash Flow | 540.94M | 660.00M | 16.96M |
| Dividend Yield | N/A | N/A | N/A |
| Short Position | 12.00% | 9.50% | 6.70% |
Let's take a look at some more important numbers prior to forming an opinion on this stock.
T = Technicals Are Strong
Akamai has performed exceptionally well over the past year.
| 1 Month | Year-To-Date | 1 Year | 3 Year | |
| AKAM | 31.88% | 14.15% | 49.82% | 18.47% |
| LVLT | 10.34% | 2.99% | -1.98% | 18.41% |
| LLNW | 3.59% | -9.01% | -21.09% | -52.69% |
At $46.70, Akamai is trading above its averages.
NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!| 50-Day SMA | 38.10 |
| 200-Day SMA | 38.11 |
E = Equity to Debt Ratio Is Strong
The debt-to-equity ratio for Akamai is stronger than the industry average of 0.30. Akamai has superb debt management.
| Debt-To-Equity | Cash | Long-Term Debt | |
| AKAM | 0.00 | 513.23M | 0.00 |
| LVLT | 7.75 | 610.00M | 8.59B |
| LLNW | 0.01 | 120.20M | 1.70M |
E = Earnings Are Steady
Akamai has shown increased revenue and earnings for several consecutive years. This is simply a well-managed company that knows how to maintain growth and deliver profits.
| Fiscal Year | 2008 | 2009 | 2010 | 2011 | 2012 |
| Revenue ($) in billions | 0.791 | 0.860 | 1.02 | 1.16 | 1.37 |
| Diluted EPS ($) | 0.79 | 0.78 | 0.90 | 1.07 | 1.12 |
When we look at the last quarter on a year-over-year basis, we see improvements in revenue and earnings.
| Quarter | Mar. 31, 2012 | Jun. 30, 2012 | Sep. 30, 2012 | Dec. 31, 2012 | Mar. 31, 2013 |
| Revenue ($) in billions | 0.319 | 0.331 | 0.345 | 0.378 | 0.368 |
| Diluted EPS ($) | 0.24 | 0.24 | 0.27 | 0.3757 | 0.39 |
Now let's take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?
T = Trends Support the Industry
The following are a few reasons why trends support the industry: cloud, security, mobile, streaming video.
NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!Conclusion
Akamai expects strong growth over the next four years. Thanks to its high quality services, it's an industry leader. There will likely be increased investments, which could impact the bottom line. Macroeconomic conditions and stock market manipulation also pose risks. However, potential rewards still outweigh risks for Akamai.
Saturday, April 26, 2014
Top Safest Companies To Own For 2015
Research by NSS Labs indicates that in its testing, Microsoft� (NASDAQ: MSFT ) �Internet Explorer and Google� (NASDAQ: GOOG ) �Chrome are the safest browsers.
NSS, which bills itself as "the world's leading information security research and advisory company," recenlty unveiled the results of its Browser Security Comparative Analysis: Socially Engineered Malware. Over the course of 28 days, from March 13 through April 9, the firm tested the five, most popular browsers against 754 samples of real-world malicious software. The browsers were�Apple� (NASDAQ: AAPL ) Safari 5,�Google�Chrome 25/26, Microsoft�Internet Explorer 10, Mozilla Firefox 19, and Opera 12.
The results revealed significant safety differences.
Blocking technologies used by browsers (higher is better).
Source: NSS-Browser Security Comparative Analysis
Top Safest Companies To Own For 2015: EMCORE Corporation(EMKR)
EMCORE Corporation, together with its subsidiaries, provides compound semiconductor-based products for the broadband, fiber optics, satellite, and solar power markets. The company operates in two segments, Fiber Optics and Photovoltaics. The Fiber Optics segment offers broadband products, including cable television, fiber-to-the-premises, satellite communication, video transport, and defense and homeland security products; and digital products comprising telecom optical, enterprise, laser/photodetector component, parallel optical transceiver and cable, and fiber channel transceiver products. This segment?s products enable information that is encoded on light signals to be transmitted, routed, and received in communication systems and networks. The Photovoltaics segment provides gallium arsenide (GaAs) multi-junction solar cells, covered interconnected cells, and solar panels for satellite applications; and concentrating photovoltaic (CPV) power systems for commercial and utility scale solar applications, as well as GaAs solar cells and integrated CPV components for use in other solar power concentrator systems. The company markets its products through its direct sales force, external sales representatives and distributors, and application engineers worldwide. EMCORE Corporation was founded in 1984 and is headquartered in Albuquerque, New Mexico.
Advisors' Opinion:- [By CRWE]
EMCORE Corporation (Nasdaq:EMKR), a leading provider of compound semiconductor-based components and subsystems for the fiber optic and solar power markets, reported that it is ramping production and shipping the Opticomm-EMCORE NEXTGEN OTP-1DVI2A1SU insert cards for the Optiva platform.
Top Safest Companies To Own For 2015: FelCor Lodging Trust Incorporated (FCH)
FelCor Lodging Trust Incorporated is a publicly owned real estate investment trust. The firm engages in investment and management of properties in the hospitality industry. It invests in the real estate markets of the United States. The firm primarily invests in hotels with a focus on the ownership of upper-upscale, full-service hotels and resorts. It was formerly known as FelCor Suite Hotels, Inc. FelCor Lodging Trust was founded in 1994 and is based in Irving, Texas.
Advisors' Opinion:- [By George Putnam]
Steve Halpern: Now, one of the positions that you've looked at is FelCor Lodging (FCH). Could you tell us a little about that?
George Putnam: Sure. Well, it grew fairly rapidly before the downturn in 2008 and didn't really have a great focus. With the new management team after 2008, they have sold off a lot of non-core properties and are focusing on more upscale properties and strong markets, and they've used the proceeds from asset sales to help the balance sheet. They have paid down a lot of high-priced debt, which also helps the bottom line.
Top 10 Small Cap Stocks To Watch Right Now: Petroleo Brasileiro Petrobras SA (PETR3)
Petroleo Brasileiro SA Petrobras (Petrobras) is a Brazil-based integrated oil and gas company. The Company divides its activities into seven segments: Exploration and Production; Refining, Transportation and Marketing; Gas and Power; Biofuel; Distribution and International. Directly or through its subsidiaries, Petrobras is engaged in the research, extraction, refining, processing, trade and transport of oil from wells, shale and other rocks, its derivatives, natural gas and other liquid hydrocarbons, as well as in activities related to energy, development, production, transport, distribution and commercialization of energy. The Company's offering comprises road transportation products such as Automotive Gasoline, Diesel Fuel, Natural Vehicular Gas, Lubrax; agriculture and cattle raising products such as Sunflower Meal, among others; Industrial products such as Solvents and Paraffins, among others. The Company provides its services both for individual and business clients. Advisors' Opinion:- [By Maria Levitov]
Brazil�� Ibovespa advanced amid speculation that a three-session slump for Brazil�� benchmark equity index was excessive. Usiminas, as Usinas de Minas Gerais is known, rose 7.5 percent, while oil company Petroleo Brasileiro SA (PETR3) contributed the most to the gauge�� advance.
- [By Julia Leite]
Brazil�� Ibovespa rose 1.2 percent, reversing a decline of as much as 0.9 percent, as Petroleo Brasileiro SA (PETR3), Brazil�� state-run crude producer, surged. The real added 1.5 percent.
Top Safest Companies To Own For 2015: Volcano Corporation(VOLC)
Volcano Corporation designs, develops, manufactures, and commercializes intravascular ultrasound (IVUS) and fractional flow reserve (FFR) products used in the diagnosis and treatment of vascular and structural heart disease. It offers multi-modality consoles, which are marketed as stand-alone units that can be integrated into hospital-based interventional surgical suites, such as catheterization laboratories. The company provides IVUS products, including single-procedure disposable phased array and rotational IVUS imaging catheters; and additional functionality options comprising virtual histology tissue characterization, and ChromaFlo stent apposition analysis. It also offers FFR products, such as pressure and flow consoles, and single-procedure disposable pressure and flow guide wires used to measure the pressure and flow characteristics of blood around plaque enabling physicians to gauge the plaque?s physiological impact on blood flow and pressure. In addition, the com pany develops and manufactures optical monitors for the telecommunication industry; laser and non-laser light sources; optical engines used in the medical OCT imaging systems and advanced photonic components; and sub-systems used in spectroscopy and other industrial applications. Its products under development include image-guided therapy device and micro and thrombectomy catheters. The company?s ongoing clinical studies comprise assessment of dual anti-platelet therapy with drug-eluting stents; vascular evaluation for revascularization; fractional flow reserve and intravascular ultrasound relationship study; adensonine vasodilation independent stenosis evaluation; and evaluation of XIENCE PRIME. It sells its products through direct sales force and distributors, as well as through third parties supply and distribution agreements primarily in the United States, Japan, Europe, the Middle East, Africa, and internationally. The company was founded in 2000 and is headquartered i n San Diego, California.
Advisors' Opinion:- [By Teresa Rivas]
Shares of Volcano (VOLC) were up 8% in afternoon trading, following the company�� better-than-expected second-quarter earnings report and a spate of positive analyst commentary.
The medical device company said it earned 3 cents a share, whereas analysts were expecting a one cent per share loss. Revenues of $101.3 million also topped consensus estimates of $97.9 million.
Volcano also issued mixed guidance for the full year, saying it expects to earn between 3 and 5 cents a share on revenue of $394 million to $400 million. Analysts are modeling for earnings per share of a nickel on $395.8 million in sales.
Analysts were also largely positive about the quarter. Canaccord Genuity�� Jason Mills and Jeffery Chu upgraded the stock from Hold to Buy and boosted their price target by $5 to $26 on the news. ��olid or improving revenue growth trends and margin expansion are tried and true drivers of small-cap med-tech multiples. However, since October 2010, VOLC has lost over 20% of its value amid declining growth (admittedly from a high level) and inconsistent gross margin performance, which drove multiple contraction to its current discount relative to the broad comp group. However, improving trends in the core IVUS business, easing Y/Y comps, strong margin expansion potential via manufacturing transition to Costa Rica in 2014, and several catalysts on the horizon (e.g., new products, clinical data), portend a more favorable risk/reward profile in the stock at current trading levels.��/p>
Raymond James analyst Jayson Bedford reiterated an Outperform rating on the stock and boosted his target price by $1 to $25. �� re-acceleration to double-digit constant currency growth and guidance that was maintained should help improve investor sentiment. At 2.5x EV/Sales, we do not believe investors are giving Volcano credit for its 9-11% top-line growth profile, with visibility into 70% gross margins. Additionally, we expect investor enthusiasm to inc
- [By Ben Levisohn]
Strategist Andrew Garthwaite and team explain why companies like Sprint (S),� American Water Works (AWK), Volcano (VOLC), Southern (SO) and Level 3 Communications�(LVLT) could get hit by the taper:
- [By Monica Gerson]
Volcano (NASDAQ: VOLC) shares dropped 15.89% to $20.49 in pre-market trading after the company reported Q3 revenue. JP Morgan downgraded the stock from Overweight to Neutral and lowered the price target from $29.00 to $24.00.
- [By Ben Levisohn]
Instead of an eruption, Volcano (VOLC) got an earnings-induced collapse instead.
Associated PressMedical-device maker Volcano said its third quarter profit would miss Wall Street forecasts, and 2013 sales would also disappoint. And 2014? Well, that didn’t look too exciting other.
JPMOrgan analyst Christopher Pasquale and team have had enough:
We are downgrading VOLC shares to Neutral from Overweight following the company�� negative 3Q preannouncement and disappointing initial 2014 growth outlook Monday after the close. While we continue to see significant long-term potential for Volcano�� technologies, we are concerned by persistent headwinds to its core IVUS franchise and slowing FFR growth. With our conviction in a pipeline-driven reacceleration reduced and visibility into meaningful new growth drivers unlikely for several quarters, we are moving to the sidelines.
Canaccord Genuity’s Jason Mills and Jeffrey Chu also cut Volcano to Hold–just a quarter after upgrading it–and even today’s drop might not make it worth buying. They explain why:
Our upgrade of VOLC last quarter was predicated on the improving trends in the core IVUS business, FFR continuing as a long-term growth engine, and the potential material gross margin expansion. While Q3 results included pockets of good news, adverse trends predominated.
While US IVUS rebounded modestly, driven by peripheral IVUS (+40% Y/Y), IVUS and FM results in Japan were very disconcerting to us (-19%, +8%, respectively), and portend share loss, in our estimation. Also, while we still expect significant gross margin expansion long term, it seems we may have to wait longer than expected.In sum, we would not aggressively buy weakness unless the stock is over-penalized on these results – i.e. below $20.
While shares of Volcano have dropped 15% to $20.74, large-cap medical device companies are having a solid day. Boston Scienti
Top Safest Companies To Own For 2015: Applied Nanotech Holdings Inc (APNT)
Applied Nanotech Holdings, Inc., incorporated on May 22, 1989, is engaged in nanotechnology research and development business. The Company's nanotechnology research involves performing contract research and development services for others to develop products and materials for new applications, and then leveraging this research by applying it to other similar applications in other industries. The Company also develops intellectual property (IP) around its products and technologies. The Company develops five technology platforms: nanosensor technology; nanocomposites, based on carbon nanotube composites; thermal management materials; nanoelectronics applications, and electron emission activities, primarily in the display area. The Company's electron emission IP is divided into display activities and non-display activities. Applied Nanotech Holdings, Inc. is the parent company. Applied Nanotech, Inc. (ANI) is a subsidiary of ANHI. During the year ended December 31, 2012, the Company formed EZDiagnostix, Inc., (EZDX).
Sensors
The Company develops sensors based on ion mobility sensor technology and differential mobility spectroscopy. The Company is involved in projects to develop Mercaptan and Methane sensors for uses in the natural gas industry. The Company is also applying this technology to other applications, including agricultural pathology, wound care, and breath analysis. The Company develops hydrogen sensor for use in the measurement of hydrogen in power transformer products. The Company develops carbon monoxide sensor that can last for 10,000 hours on a single battery. The Company's carbon nanotube technology is for use in biosensors. Sensors based on carbon nanotubes or other nanomaterials can be used to detect chemical, organic, or biological warfare agents, as well as explosives, hydrogen, ammonia and numerous other chemicals.
Nanocomposites
The Company is in the advanced stages of development of nanomaterials using carbon nanotube (CNT) and! other composites. Epoxies are used in industries with worldwide markets, with applications, including adhesives, paints, coatings, and composites. In addition to epoxy resins, the Company develops other types of resins, including polyesters and vinyl esters. Vinyl esters are used in a variety of industrial applications, including storage tanks, piping, and construction. The Company develops a process for coating nylon pellets with CNTs to improves electrical conductivity. Nylon 6 with improved electrical conductivity can be used for its anti-static qualities, electrostatic discharge, and electromagnetic/RF shielding.
Thermal Management
The Company markets thermal management material called CarbAl. CarbAl provides a passive thermal management solution for temperature control issues that plague electronics manufacturers. CarbAl is a carbon based metal nanocomposite comprised of 80% carbonaceous matrix and a dispersed metal component of 20% aluminum. The Company also develops a simplified version of CarbAl based on graphite.
Conductive Inks
The Company develops aluminum and silver inks and pastes that is ideal for use in the production of solar cells. The Company also develops aluminum paste that can be used in current solar cell production.
The Company competes with Zyvex Performance Materials, GSI Creos, Amroy Europe, Ltd., DuPont and Ferro
Advisors' Opinion:- [By Anuchit Nguyen]
India�� S&P BSE Sensex rose, holding at a three-year high, amid better-than-estimated corporate earnings. Engineering company Larsen & Toubro Ltd. (LT) rallied to a three-month high and Asian Paints Ltd. (APNT) surged about 6 percent after reporting profit that beat forecasts.
Top Safest Companies To Own For 2015: Questerre Energy Corp (QEC)
Questerre Energy Corporation (Questerre) is engaged in the exploration for, and the development, production and acquisition of oil and gas projects, particularly shale oil and gas. Questerre holds assets in British Columbia, Alberta, Saskatchewan, Manitoba and Quebec. Questerre has three core areas where it conducts the majority of its activity: Oil Shale Mining, Western Canada and the St. Lawrence Lowlands, Quebec. The Company has a 100% interest in two licenses covering approximately 100,000 acres in the Pasquia Hills area of east central Saskatchewan. The Antler area is approximately 200 kilometers from Regina in southeast Saskatchewan. The Vulcan area in Southern Alberta is prospective for natural gas and oil in multiple horizons. The Lowlands are situated in Quebec south of the St. Lawrence River between Montreal and Quebec City. As at December 31, 2011, the Company had an interest in 98 gross (55.2 net) producing and 40 gross (17.8 net) non-producing oil and natural gas. Advisors' Opinion:- [By John Udovich]
While the Bakken formation is already on most investor radars,�few American investors may realize that the formation stretches North into the oil and gas rich Canadian province of Saskatchewan where�stocks like Surge Energy Inc (TSE: SGY), Questerre Energy Corp (TSE: QEC), Crescent Point Energy Corp (TSE: CPG), Keyera Corp (TSE: KEY) and Centor Energy Inc (OTCBB: CNTO) have been pumping out a good flow of newsworthy news in recent weeks. I should mention that Canada�� oil reserves are ranked #3 after to Venezuela and Saudi Arabia with over 95% of these reserves being the oil sands of Alberta while the neighboring province of Saskatchewan (which the Bakken formation stretches into from South Dakota and Montana) along with offshore areas of Newfoundland also contain substantial production and reserves (Note:�Excluding oil sands, Alberta would have 39% of Canada�� remaining conventional oil reserves,�followed by�offshore Newfoundland with�28% and Saskatchewan with 27%).
- [By James E. Brumley]
What do Questerre Energy Corp. (TSE:QEC) and Crescent Point Energy Corp. (TSE:CPG) know about oil in Saskatchewan that Centor Energy Inc. (OTCBB:CNTO) doesn't? Absolutely nothing. All three companies know there's oil in the southern part of the Canadian province, and they know exactly how to go get it. The only difference between QEC, CPG, and CNTO is, Questerre Energy and Crescent Point Energy are further along the development of their operations there than Centor Energy.
- [By James E. Brumley]
Well, that answers that question. Questerre Energy Corp. (TSE:QEC) and Crescent Point Energy Corp. (TSE:CPG) likely knew they had some shale-oil mining neighbors in the Bakken Shale neighborhood in Saskatchewan, Canada, but they hadn't seen much of that competition. That's about to change soon. Adequately funded and eager to begin laying its final mining plans, Centor Energy Inc. (OTCBB:CNTO) is going to officially own 55% of a 21,000 acre shale oil property that's anywhere from just a few miles away to just a few meters away from and Crescent Point Energy's and Questerre Energy's operations in one of the oil-richest known areas in the Bakken formation. And to be clear, it's not like Centor Energy is just getting the ball rolling; the planning for this project has been underway for months. Once the property-acquisition deal is inked in mid-February, CNTO will likely finish up its feasibility study and begin the approval process for its facility later in the year. That's pretty quick, but as was noted, a great deal of the legwork has already been done.
Top Safest Companies To Own For 2015: Enduro Royalty Trust (NDRO)
Enduro Royalty Trust (the Trust) is a statutory trust. On May 13, 2011, the Trust was formed by Enduro Resource Partners LLC (Enduro Sponsor) to own a net profits interest representing the right to receive 80% of the net profits from the sale of oil and natural gas production from certain properties in the states of Texas, Louisiana and New Mexico (the Underlying Properties) held by Enduro Sponsor as of the date of the conveyance of the net profits interest to the trust. The business and affairs of the Trust will be managed by The Bank of New York Mellon Trust Company, N.A., as trustee (the Trustee). In addition, Wilmington Trust Company will act as Delaware trustee (the Delaware Trustee) of the Trust.
The Trust will enter into an administrative services agreement with Enduro pursuant to which Enduro will provide the Trust with certain accounting, bookkeeping, and informational services related to the Net Profits Interest. Enduro Sponsor is a privately-held limited liability company engaged in the production and development of oil and natural gas from properties located in Texas, Louisiana and New Mexico.
Advisors' Opinion:- [By Rich Duprey]
Statutory trust Enduro Royalty Trust (NYSE: NDRO ) announced yesterday its July monthly distribution of $0.128817�per unit; it has paid a monthly dividend since November 2011. The distribution announced in May was $0.096825 per unit.
Top Safest Companies To Own For 2015: Consumer Staples Select Sector SPDR (XLP)
Consumer Staples Select Sector SPDR Fund (the Fund) seeks to provide investment results that correspond to the price and yield performance of the Consumer Staples Select Sector of the S&P 500 Index (the Index). The Index includes companies that are primarily involved in the development and production of consumer products that cover food and drug retailing, beverages, food products, tobacco, household products and personal products.
The Fund utilizes a passive or indexing investment approach to invest in a portfolio of stocks that seek to replicate the Index. The Fund�� investment advisor is SSgA Funds Management, Inc.
Advisors' Opinion:- [By Ben Levisohn]
The exception to the strong defensive performance: consumer staples. The Consumer Staples Select Sector SPDR (XLP) has dropped 2.9% this year, making it the worst-performing sector in the S&P 500. Barclays’ Barry Knappexplains what’s gone wrong:
- [By Chris Versace, Editor, PowerTrend Brief and PowerTrend Profits]
That, to me, says they're going to favor inelastic goods over elastic ones, so when you think of the things that we need each and every day, toilet paper, toothpaste, deodorant, shampoo, household cleansers, that sort of thing, that's what brings me into (XLP) and (VDC).
- [By Markus Aarnio]
The Consumer Staples Select Sector SPDR ETF (XLP) was trading as low as $19.28 in March 2009. The index is currently trading at $41.57 or 115.6% above the low made in March 2009.
- [By Jon C. Ogg]
4. Cyclical stocks outperform defensive stocks – This puts consumer discretionary, energy, financials, industrials, technology and materials all doing better than consumer staples, healthcare, telecom, and utilities. Doll also prefers a free cash flow yield to dividend yield and dividend growth over dividend yield.
ETF Recommendation(s): Financial Select Sector SPDR (NYSEArca: XLF), Technology Select Sector SPDR (NYSEArca: XLK), Market Vectors Oil Services ETF (NYSEArca: OIH)… Avoid Consumer Staples Select Sector SPDR (NYSEArca: XLP) and Utilities Select Sector SPDR (NYSEArca: XLU).5. Dividends, stock buy-backs, capex, and M&A all increase at a double-digit rate – This is led by a lot of cash flow, underleveraged balance sheets, and possible great places to use cash. The argument for higher cap-ex is as follows: “Pent-up demand and aging of plant, equipment and technology argue for increases in those key areas.”
Top Safest Companies To Own For 2015: Community Bank System Inc (CBU)
Community Bank System, Inc., incorporated on April 15, 1983, which wholly owns five subsidiaries: Community Bank, N.A. (the Bank), Benefit Plans Administrative Services, Inc. (BPAS), CFSI Closeout Corp. (CFSICC), First of Jermyn Realty Company, Inc. (FJRC) and Town & Country Agency LLC (T&C). The Bank operates as a community bank providing a range of banking and financial services to retail, commercial, and municipal customers. As of December 31, 2012, the Bank operates 179 full-service branches throughout 35 counties of Upstate New York, where it operates as Community Bank, N.A. and five counties of Northeastern Pennsylvania, where it is known as First Liberty Bank & Trust, offering a range of commercial and retail banking services. BPAS provides administration, consulting and actuarial services to sponsors of employee benefit plans. In December 2013, the Company announced that it has acquired eight branch-banking locations across its Northeast Pennsylvania markets from Bank of America, N.A.Five of the branches are located in Luzerne County, one is located in Lackawanna County and two are located in Carbon County.
On July 20, 2012, the Bank completed its acquisition of 16 retail branches in Central, Northern and Western New York from HSBC Bank USA, N.A. (HSBC), acquiring approximately $106 million in loans and $697 million of deposits. On September 7, 2012, it completed its acquisition of three branches in Western New York from First Niagara Bank, N.A. (First Niagara), acquiring approximately $54 million of loans and $101 million of deposits.
Lending Activities
As of December 31, 2012, the Bank�� loan portfolio included consumer mortgage loans, business lending, Consumer indirect, Consumer direct and Home equity. Consumer indirect and direct loans consist of personal loans originated both in the branch network and in automobile, marine and recreational vehicle dealerships. Approximately 68% of loans outstanding as of December 31, 2012, were made to consumers ! borrowing on an installment, line of credit or residential mortgage loan basis. The consumer mortgage portion of the Company�� loan portfolio is comprised of fixed (98%) and adjustable rate (2%) residential lending and includes no exposure to subprime, Alt-A or other higher-risk mortgage products. The combined total of general-purpose business lending, including agricultural-related and dealer floor plans, as well as mortgages on commercial property, is characterized as the Company�� business lending activity.
Investment Activities
As of December 31, 2012, the Bank�� investment securities included held-to-maturity, available-for-sale and Other securities. As of December 31, 2012, its held-to-maturity portfolio included U.S. Treasury and agency securities, Obligations of state and political subdivisions, Government agency mortgage-backed securities, Corporate debt securities and Other securities. Its Other Securities included Federal Home Loan Bank common stock, Federal Reserve Bank common stock and Other equity securities.
Sources of Funds
The Bank utilizes a variety of funding sources to support the earning asset base. Overall funding is comprised of three primary sources that possess a variety of maturity, stability, and price characteristics: deposits of individuals, partnerships and corporations (IPC deposits), municipal deposits that are collateralized for amounts not covered by FDIC insurance (public funds) and external borrowings. The various types of deposits offered by the Bank include Noninterest checking deposits, Interest checking deposits, Regular savings deposits, Money market deposits and Time deposits. Borrowing sources for the Company include the Federal Home Loan Bank of New York (FHLBNY) and Federal Reserve Bank of New York, as well as access to the brokered certificate of deposit (CD) and repurchase markets through relationships with primary market security dealers.
Subsidiary Activities
The Compan! y�� sub! sidiary, BPAS owns three subsidiaries, Benefit Plans Administrative Services LLC (BPA), a provider of defined contribution plan administration services; Harbridge Consulting Group LLC (Harbridge), a provider of actuarial and benefit consulting services, and Hand Benefits & Trust Company (HB&T), a provider of Collective Investment Fund administration and institutional trust services. HB&T owns two subsidiaries, Flex Corp. (Flex), a provider of administration, servicing and marketing of various flexible employee benefit programs and Hand Securities, Inc. (HSI), an introducing broker dealer. The Company also wholly owns two unconsolidated subsidiary business trusts formed for the purpose of issuing mandatorily redeemable preferred securities.
The Bank owns subsidiaries, such as CBNA Insurance Agency, Inc. (CBNA Insurance), CBNA Preferred Funding Corporation (PFC), CBNA Treasury Management Corporation (TMC), Community Investment Services, Inc. (CISI), First Liberty Service Corp. (FLSC), Nottingham Advisors, Inc. (Nottingham), Brilie Corporation (Brilie), and Western Catskill Realty, LLC (WCR). CBNA Insurance is a full-service insurance agency offering primarily property and casualty products. PFC primarily acts as an investor in residential real estate loans. TMC provides cash management, investment, and treasury services to the Bank. CISI provides broker-dealer and investment advisory services. FLSC provides banking-related services to the Pennsylvania branches of the Bank. Nottingham provides asset management services to individuals, corporate pension and profit sharing plans, and foundations. Brilie and WCR are inactive companies.
Advisors' Opinion:- [By GURUFOCUS]
Community Bank System Inc. (CBU) operates as the bank holding company for Community Bank, N.A. that provides banking and financial services to retail, commercial, and municipal customers. August 21st the company increased its quarterly dividend 3.7% to $0.28 per share. The dividend is payable October 10, 2013 to shareholders of record as of September 16, 2013. The yield based on the new payout is 3.3%.
Top Safest Companies To Own For 2015: eBay Inc.(EBAY)
eBay Inc. provides online platforms, services, and tools to help individuals and merchants in online and mobile commerce and payments in the United States and internationally. Its Marketplaces segment operates ecommerce platform eBay.com; vertical shopping sites, such as StubHub, Fashion, Motors, and Half.com; and classifieds Websites, including Den Bl�Avis, BilBasen, Gumtree, Kijiji, LoQUo, Marktplaats.nl, mobile.de, Alamaula, Rent.com, eBay Anuncios, eBay Kleinanzeigen, and eBay Annunci, as well as provides advertising services. The company?s Payments segment offers payment and settlement services for consumers and merchants on and off eBay Websites and other merchant Websites. This segment operates PayPal, which enables individuals and businesses to send and receive payments online and through mobile devices; Bill Me Later that enables the United States merchants to offer, the United States consumers to obtain, credit at the point of sale for ecommerce and mobile tra nsactions; Zong, which allows users with mobile phones to purchase digital goods and have the transactions charged to their phone bill; and BillSAFE that enables customers pay for purchases upon receipt of an invoice. Its GSI segment offers an ecommerce services suite for enterprise clients that operate in general merchandise categories, including apparel, sporting goods, toys and baby, health and beauty, and home; and marketing services comprising full-service digital agency, enterprise email marketing, mobile advertising, affiliate marketing, advertisement retargeting, and in-depth analytics services. The company also offers X.commerce platform that provides software developers access to the company?s applications programming interfaces to develop functionality for various merchants; and Magento Connect, which allows developers to market and sell add-on functionality and solutions to merchants that use a Magento storefront. eBay Inc. was founded in 1995 and is headquarter ed in San Jose, California.
Advisors' Opinion:- [By Rick Aristotle Munarriz]
Alamy You can never know in advance all the news that will move the market in a given week, but some things you can see coming. From a new tablet from Amazon to Microsoft giving Windows an overdue makeover, here are some of the items that will help shape the week that lies ahead on Wall Street. Monday -- Bank on It: We're just getting started with earnings season, but Monday will be relatively quiet on that front. One of the few companies kicking off the week with fresh financials will be Wintrust (WTFC), a financial holding company with $18 billion in assets. It operates 15 different community bank subsidiaries with 100 different locations. It may not be the same kind of snapshot of the financial industry that we got this past Friday when bigger banks reported, but we can't ignore the importance of community banks in gauging the state of the economic turnaround. Tuesday -- Pop Stars: Coca-Cola (KO) reports on Tuesday, and if that isn't enough we will have PepsiCo (PEP) checking in on Wednesday. Coke and Pepsi have been battling one another for years, but in some ways, they're united against common adversaries these days. Between the growing popularity of making sodas at home, and critics taking them on over the health implications of consuming too many sugary (or artificially sweetened) drinks, it's a whole different kind of cola war these days. Investors looking for growth may want to look elsewhere. Analysts see Pepsi's revenue inching just 2 percent higher when it reports. It's worse for Coca-Cola, with Wall Street targeting a 2 percent decline in sales. Wednesday -- Paypal Day: eBay (EBAY) reports its third quarter results on Wednesday. There was a time when eBay was strictly an online flea market, but these days we're seeing PayPal become a bigger part of the model. Yes, eBay also owns PayPal, the most popular way to settle online transactions outside of plastic. PayPal has started to expand its reach into traditional retailers, making it possible
- [By Motley Fool Staff]
In this video segment, Remer describes the platforms and ecosystems in use for money transfer, how they're evolving with each generation, and what he sees ahead for current giants such as MasterCard (NYSE: MA ) , Intuit (NASDAQ: INTU ) , and eBay (NASDAQ: EBAY ) .
- [By Steve Heller]
Under the rule of John Donahoe, eBay (NASDAQ: EBAY ) has undergone a massive transformation. Between all of its segments, the company expects that by 2015, it will enable more than $300 billion in global commerce, which represents an increase of more than 70% from 2012 levels. But like every great growth story, there are obstacles to overcome. In this video, Fool contributor Steve Heller weighs in on what will keep eBay from meeting its aggressive goal.�
Friday, April 25, 2014
5 Best Healthcare Equipment Stocks To Own For 2015
There’s been a lot of talk about General Motors (GM), maybe too much talk. This stock is not a rebel stock. It’s just going through lots of changes, especially when compared to competitors like Ford (F) and Toyota (TM). That’s what happens when you name a new CEO and the government sells its last shares of your stock.
Associated PressJPMorgan’s Ryan Brinkman and team say the choice of Mary Barra to head General Motors puts the focus back where it belongs:
Barra is an engineer by training who most recently led GM�� global product development effort. We expect her appointment to place product front and center ��where it belongs…One must go back 1992 to find an example of the last time automotive engineers were at the helm of General Motors (Robert Stempel, and Llyod Reuss…).
5 Best Healthcare Equipment Stocks To Own For 2015: National Australia Bank Ltd (NAUBF)
National Australia Bank Limited is a financial services organization providing products, advice and services through its major Australian franchise and businesses. The Company�� segment includes Business Banking, Personal Banking, Wholesale Banking, UK Banking and NZ Banking, MLC and NAB, Great Western Bank (GWB), the Corporate Functions and Other segment. MLC is the wealth management division of the National Australia Bank (NAB). In January 2014, Sandfire Resources NL announced that National Australia Bank Limited and its associated entities have ceased to be the substantial holder of the Company. In January 2014, Commonwealth Property Office Fund announced that National Australia Bank Ltd and its associated entities have ceased to be a substantial shareholder in Commonwealth Property Office Fund. In February 2014, Fairfax Media Ltd announced that National Australia Bank Ltd and its associated entities ceased holding interest in the capital of the Company. Advisors' Opinion:- [By MARKETWATCH]
LOS ANGELES (MarketWatch) -- Stocks in Australia fell early Thursday, pressured by a drop in the country's currency to a three-month low below 90 U.S. cents, and by losses on Wall Street overnight on concerns about tapering of monetary stimulus. The S&P/ASX 200 (AU:XJO) fell 28 points, or 0.5%, to 5,246, led by losses in the heavily weighted financial sector. There, shares of Westpac Banking Corp. (AU:WBC) (WEBNF) lost 1.2%, National Australia Bank Ltd. (AU:NAB) (NAUBF) declined 1%, and Australia & New Zealand Banking Group (AU:ANZ) (ANEWF) shed 0.7%. Shares of Qantas Airways Ltd. (AU:QAN) (QUBSF) sank 14% after the company warned it expects to post an underlying loss before tax of $250 million to $300 million for the six months ending Dec. 31. The carrier said trading conditions saw a marked deterioration, particularly in November with both passenger loads and yields "below the already negative trends for the year to date."
5 Best Healthcare Equipment Stocks To Own For 2015: Roma Financial Corporation(ROMA)
Roma Financial Corporation operates as a holding company for Roma Bank and RomAsia Bank that provide traditional retail banking services primarily in New Jersey. The company offers current deposit products, including checking and savings accounts, money market, certificates of deposit accounts, and individual retirement accounts. It also provides one-to four-family residential mortgage loans; multi-family and commercial mortgage loans; construction loans; commercial business loans; and consumer loans comprising home equity loans and lines of credit. In addition, the company sells title insurance; performs title searches; and provides real estate settlement and closing services. It operates 23 branch offices in Mercer, Burlington, Camden, and Ocean Counties, New Jersey; and 2 branches in Monmouth Junction and Edison, New Jersey. The company was founded in 1920 and is headquartered in Robbinsville, New Jersey.
Advisors' Opinion:- [By Tim Melvin]
He also pointed out that the approaching completion of Roma Financial (ROMA) and Investors Bancorp (ISBC) has some interesting implications for bank stock investors. Both are mutual holding companies, and the newly formed bank is expected to complete the process and do a second-step conversion offering. That will be a fairly large deal, much larger than most second-step offerings, as the combined banks should be somewhere around $3 billion in market cap. There will be larger investment banks involved, complete with road shows and institutional meetings to promote the deal. The attention could well cause a revaluation of the mutual holding company and converted thrift sector of the banking market.
5 Best Sliver Stocks To Own Right Now: Renishaw PLC (RSW)
Renishaw plc is a metrology company. The Company is engaged in the design, manufacture and sale of advanced precision metrology and inspection equipment together with products for the healthcare sector, including Raman spectroscopy systems, dental systems, molecular diagnostic equipment and neurosurgical products. The Company operates in two segments: metrology and healthcare products. The Company�� metrology segment product include Machine Tool Probe Systems, Co-ordinate Measuring Machine (CMM) products, large scale metrology, fixtures, materials research, styli for probe systems, performance testing products, gauging and position encoders. Its healthcare products include Dental Scanners, Raman Microscopes, Dental CAD Software, Neurosurgical robot, Structural and Chemical Analyser, In situ monitors and Neurosurgical Implantables. Advisors' Opinion:- [By Inyoung Hwang]
Renishaw Plc (RSW) tumbled 5.7 percent to 1,580 pence, its lowest price since Aug. 7. The maker of precision tools said revenue for the quarter ended in September fell to 79 million pounds from 95.9 million pounds in the year-ago period.
5 Best Healthcare Equipment Stocks To Own For 2015: The Pantry Inc.(PTRY)
The Pantry, Inc. operates a chain of convenience stores in the southeastern United States. The company?s stores offer a selection of merchandise, fuel, and ancillary products and services. Its merchandise products include cigarettes, grocery and other tobacco products, packaged beverages, beer, and wine. The company operates stores under various selected banners, which primarily include Kangaroo Express. As of September 29, 2011, it operated 1,649 convenience stores located in Florida, North Carolina, South Carolina, Georgia, Alabama, Tennessee, Mississippi, Virginia, Kansas, Kentucky, Louisiana, Indiana, and Missouri; and 233 quick service restaurants. The company was founded in 1967 and is headquartered in Cary, North Carolina.
Advisors' Opinion:- [By Seth Jayson]
Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Pantry (Nasdaq: PTRY ) , whose recent revenue and earnings are plotted below. - [By Sean Williams]
Much of the same can be said about The Pantry (NASDAQ: PTRY ) , a predominantly Southeastern U.S. convenience store chain that operates under the Kangaroo Express name. Food inflation has been minimal, the weather hasn't been as cooperative, and consumer traffic fell 4.6% in its most recent quarter. But where other investors see weakness, I see an opportunity.
- [By Geoff Gannon]
For one thing, I can�� tell a great oil company from a not so great oil company. I can�� evaluate the company�� culture, management, etc. There was no way I was ever going to answer questions like that. But I can easily split Murphy�� U.S. retail business from its other operations. And I can compare that part of the company to other public companies like Pantry (PTRY) and Susser (SUSS). I can also ��this is much harder ��look at Murphy�� reserves and compare them to other oil companies��reserves. The SEC now requires a standardized way of reporting discounted net cash flows for all oil companies. So, there�� certainly a specific number available for every company. Whether it�� a very good number or not depends on the assumptions the method uses.
5 Best Healthcare Equipment Stocks To Own For 2015: Transportadora de Gas del Sur SA (TGS)
Transportadora de Gas del Sur S.A. (TGS) is engaged in the transportation of natural gas and production and commercialization of natural gas liquids (NGL). TGS�� pipeline system connects major gas fields in southern and western Argentina with gas distributors and industries in those areas and in the greater Buenos Aires area. The Company also renders midstream services, which consist of gas treatment, removal of impurities from the natural gas stream, gas compression, wellhead gas gathering and pipeline construction, operation, and maintenance services. The Company operates in three segments: natural gas transportation services through its pipeline system; NGL production and commercialization, and other services, which include midstream and telecommunication services.
During the year ended December 31, 2009, the Company�� gas transportation represented approximately 42% of total net revenues. During 2009, its NGL production and commercialization segment accounted for 50% of the total revenues of the Company. During 2009, its other services segment accounted for 8% of total revenues of the Company. Its other services segment consists of midstream and telecommunications services. Through midstream services, TGS provides integral solutions related to natural gas from wellhead up to the transportation systems. The services consists of gas gathering, compression and treatment, as well as construction, operation and maintenance of pipelines, which are generally rendered to natural gas and oil producers at wellhead. The customers��portfolio also includes distribution companies, industrial users, power plants and refineries.
During 2009, the Company provided a range of technical services to different customers. The services consisted of connections to the transportation system, engineering inspections, project management and professional technical counseling. Telecommunication services are provided through Telcosur S.A. (Telcosur), who renders services both as an independent c! arrier of carriers and to corporate clients within its area. Telcosur has a digital land radio connection system.
Advisors' Opinion:- [By Dividend]
Transportadora de Gas Del Sur S.A. (TGS) has a market capitalization of $308.26 million. The company employs 829 people, generates revenue of $466.44 million and has a net income of $43.33 million. Transportadora de Gas Del Sur�� earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $170.33 million. The EBITDA margin is 36.52 percent (the operating margin is 27.41 percent and the net profit margin 9.29 percent).
- [By Corinne Gretler]
TGS (TGS) slumped 7.4 percent to 176.90 kroner as Norway�� largest surveyor of underwater oil-and-gas fields lowered its forecast for full-year revenue to $920 million to $1 billion because of lower-than-expected demand from industry. It had projected sales of $970 million to $1.05 billion.
Thursday, April 24, 2014
Why Universal Forest Products Shares Popped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Universal Forest Products (NASDAQ: UFPI ) jumped as much as 10% today after reporting earnings.
So what: Revenue rose 24% to $738.4 million and was well ahead of the $714.8 million analysts expected. Earnings per share fell 10% from a year ago, but at $0.79 was still $0.12 ahead of expectations.
Now what: Each of the company's five segments delivered double-digit growth, driven by the housing recovery. Management was also able to handle falling lumber prices by increasing volume. The stock still trades at a hefty 16 times forward earnings, but if this growth continues across the board, and the housing market improves, it could end up being a steal in the long term.
Interested in more info on Universal Forest Products? Add it to your watchlist by clicking here.
Wednesday, April 23, 2014
Does The Street Have PetMed Express Figured Out?
PetMed Express (Nasdaq: PETS ) is expected to report Q1 earnings around July 15. Here's what Wall Street wants to see:
The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict PetMed Express's revenues will grow 1.3% and EPS will increase 10.0%.
The average estimate for revenue is $69.9 million. On the bottom line, the average EPS estimate is $0.22.
Revenue details
Last quarter, PetMed Express reported revenue of $51.1 million. GAAP reported sales were 8.6% lower than the prior-year quarter's $55.9 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS details
Last quarter, EPS came in at $0.23. GAAP EPS of $0.23 for Q4 were 21% higher than the prior-year quarter's $0.19 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
Recent performance
For the preceding quarter, gross margin was 35.7%, 180 basis points better than the prior-year quarter. Operating margin was 14.2%, 300 basis points better than the prior-year quarter. Net margin was 9.0%, 190 basis points better than the prior-year quarter.
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Looking ahead
The full year's average estimate for revenue is $231.4 million. The average EPS estimate is $0.87.
Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 873 members out of 902 rating the stock outperform, and 29 members rating it underperform. Among 234 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 229 give PetMed Express a green thumbs-up, and five give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on PetMed Express is hold, with an average price target of $11.92.
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Add PetMed Express to My Watchlist.Tuesday, April 22, 2014
Stocks Bounce Back But Risk Appetite Slips
Stocks snapped back from brutal declines last week, as deeply oversold conditions and some surprisingly good earnings reports from companies like Goldman Sachs and previously recommended Coca‐Cola and Intel Intel helped markets recoup nearly all of the prior week's losses.
The put‐call ratio, which we noted was at elevated levels one week ago, began to turn lower and stocks rose as fear unwound. Markets were closed Friday in observance of Good Friday.
Market breadth, measured by new highs/new lows and advance/decline ratios, was overwhelmingly positive, although risk appetite appears to be waning with large caps outperforming small caps. During the four‐day week the S&P 500 Index gained 2.71%, outpacing the 2.38% gain for the Russell 2000 Small Cap Index.
After the violent spasms of the stock market this past week, our lead over the S&P 500 is widening, providing more confirmation that a simple strategy of purchasing reliable dividend-payers when they're cheap is the way to go. I've sent out 266 recommendations to buy dividend-paying stocks, MLPs, REITs and BDCs since July 11, 2012, when this newsletter started as Forbes Dividend Stock Daily. Buying each one when instructed, and following subsequent sell recommendations, produced a total return of 25.2% with a 5.7% average yield at time of purchase. Substituting the SPDR S&P 500 (SPY) at each of the same times earned 20.9%.
The Top 25 listed below are considered stocks that are "good to buy" and to be held until violation of a 10% trailing stop loss. The idea is to preserve profits by bailing out when something you owns drops 10% from the highest price it's closed since you bought it. Other recommendations may also be suitable for fresh buying, but these 25 stocks rank highest along the criteria by which they were originally chosen. The three columns on the far right show percentage discounts to five-year average multiples of price to sales (P/S), book value (P/BV) and earnings (P/E). – JD
Monday, April 21, 2014
Review: What's Ouya's Place in the Suddenly Crowded Video-Game Space?
The following video is from Friday's installment of The Motley Fool's Weekly Tech Review, in which host Chris Hill and analysts Eric Bleeker and Jason Moser take a look at the biggest stories driving the tech sector this week.
In this segment, Eric gives a review of the $99 Ouya gaming console, powered by a modified version of Google's (NASDAQ: GOOG ) Android operating system. He discusses the system's massively enthusiastic Kickstarter crowd-funded beginnings, many of the niche features that will be particularly attractive to gaming enthusiasts, and some of the main problems with the system as well. He then tells us to what extent this could be a disruptor for the game console space.
Finally, Jason chimes in on whether video games are more interesting for consumers than for investors. Mobile gaming companies with big hits are priced to perfection, while laggards who have fallen behind aren't exciting investing ideas. Meanwhile, larger stalwarts in the space such as Activision Blizzard have seen trouble with their hit franchises such as World of Warcraft. Is there any safe haven for video-game investors?
The full video is available here.
Interested in tech investments that have the growth rates of top video-game companies without the risk of losing a hit game? Then you'll need to learn about the radical technology shift some say forced the mighty Bill Gates into a premature retirement. Meanwhile, early in-the-know investors are already getting filthy rich off it, by quietly investing in the three companies that control its fortune-making future. You've probably heard of one of them, but probably not of the other two. To find out what they are, click here to watch this video presentation!
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The relevant video segment can be found between 11:38 and 17:13.
Saturday, April 19, 2014
Why Citigroup Is Trading Down Today
Except for Wells Fargo, all of the Big Four banks are trading in the red today, with Citigroup (NYSE: C ) down 0.50% about two hours after the opening bell. Thank general investor nervousness over Ben Bernanke's looming speech to the markets today.
The beginning of the end?
The subject of the Fed chairman's remarks will be the results of the two-day Federal Open Market Committee meeting, ending today. Investors are fearing the beginning of the end of quantitative easing, the bond-purchase program the Fed put in place last September to boost the nation's economy.
By most accounts, it has worked: The rate of unemployment is down; GDP growth is solid, if not stellar; and the housing market is booming again, which has traditionally contributed as much as 18% to the country's GDP. With results like that, I understand why investors are worried, though I don't believe they should be.
Foolish bottom line
There's also the (so-far) small matter of a Citi trader in London being criminally charged with rate rigging of the LIBOR, or London Interbank Offered Rate. The LIBOR is the basic rate used around the world for trillions of dollars in transactions: from car loans, to mortgages, to derivatives.
Last year, scandal erupted over the rigging of this rate for financial gain. But so far, this issue isn't gaining wider traction as a general problem for the bank itself. And truly, today's down stock performance revolves around the fate of the Fed's direction on interest rate policy more than anything else.
Analysts are mixed as to whether or not Bernanke will announce the tapering off of monthly bond purchases, but in the end, it really doesn't matter. What does matter is the state of the particular companies you're invested in. So long as their fundamentals are solid, and your investing thesis for them remains intact, there's no reason to sell off regardless of what the Fed announces. And Citi investors are on solid ground, I think.
The company has come a long way since the financial crisis and only continues to improve its overall situation. It's balance sheet is healthy, much healthier than Bank of America's (NYSE: BAC ) . And look what investors in that superbank are facing: the threat of being hit with tens of billions more in payouts as a result of bad mortgage-backed securities issued by its Countrywide Financial unit.
On top of everything else, I believe the recovery has enough legs to stand at least a little on its own right now, and that's all a Fed taper would ask of it. So don't worry about what the Fed has to say. And I wouldn't worry about this London trader, at least for right now. Citi is a good place to be invested, and that's what counts.
Looking for in-depth analysis on Citi?
Then look no further than our new premium report. Inside, Motley Fool senior banking analyst Matt Koppenheffer cracks the superbank's code: revealing how it makes money, how profitable it is, and what areas investors need to watch going forward. He'll also give you three reasons to buy and three reasons to sell. And with quarterly updates included, this premium report could quite literally be the last source of investment research you'll ever need on Citigroup. For immediate access, simply click here now.
Friday, April 18, 2014
The reverse world of retirement investing
If you've ever found yourself trying to do something in a mirror — surgery, for example — you've probably discovered that it's shockingly difficult to do. You think you're going for the appendix, and you find yourself wandering in the Isles of Langerhans instead.
Investing for retirement often turns many of the investment lessons you've learned and turns them upside down — in some ways, investing while you're taking money out of your account is starkly different from investing while you're putting money into your account.
We'll be visiting the subject of managing your portfolio in retirement over the next few weeks. But today, let's talk about why some rules are reversed when investing in retirement.
Let's start with an entirely fictional example of Ralph Btfsplk, the luckless retiree. Ralph managed to roll up a $1 million retirement kitty. Ralph read a great deal about retirement, and used several retirement calculators. Using that advice, Ralph decided he could start retirement with a 5% annual withdrawal. He puts his $1 million into a fund that tracks the Standard & Poor's 500 stock index.
Ralph left work at the end of March 2000, and withdrew $4,167 for his living expenses. (Five percent of $1 million is $50,000, and $4,167 is $50,000 divided by 12.) He took out that amount every month.
By the end of March 2014, the S&P 500 had gained 63%, including reinvested dividends. But Ralph's account stood at $336,708 — a 66% decline. What happened?
First, of course, is that Ralph has withdrawn $700,000. Nevertheless, large-company stocks, such as those in the S&P 500 have, historically, gained about 10% a year since 1925, according to Ibbotson & Associates. Ralph, our luckless retiree, figured he'd be fine if he just withdrew 5% and banked the rest.
But Ralph had two problems. The first was that the long term can be very long indeed, and that the long term can be punctuated by periods like 2000-2009, which were the fiscal equivalent of a gall! stone. The S&P 500 has gained an average 3.56% a year since March 2000, well below the long-term average returns.
And, in fact, had Ralph enjoyed steady, 3.56% gains every year, he'd be in better shape: He'd be sitting on about $743,000 today, which brings us to Ralph's second problem.
The world turns upside down when you're taking withdrawals. Most people are used to putting money into the stock market at regular intervals, typically via 401(k) savings plans. It's a smart, time-tested method of investing called dollar-cost-averaging. You're buying more shares with each purchase, and when the market rebounds, you have more shares at a cheaper cost than if you'd bought them all at once.
But Ralph, as you have probably noticed, started taking money out of his account just as the second-worst bear market since the Great Depression began. Taking money out of your account is the reverse of dollar-cost-averaging, and has the same effect as bleeding a patient with anemia. Each time you sell, you have to sell more shares to get the same dollar amount. And, because you're selling in a down market, your account falls more than the market does because of your withdrawals. To make matters worse, withdrawals also reduce your account gains when the market rallies.
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These are just two of Ralph's woes.Taxes on any dividends and gains would have sliced his returns further. And eventually, he would have had to increase his withdrawals for inflation. The government's consumer price index has risen 38% since Ralph first started taking withdrawals, meaning that his $4,167 would have had 38% of its buying power removed by March 2014.
You can't reverse the upside-down world of retirement investing. But you can take some steps to ease its suffering.
• Diversify. If Ralph had invested in a balanced fund, rather than ! in the S&! amp;P 500, he'd be doing fairly well. Balanced funds have a mix of 40% bonds and 60% stocks. Bonds often — although not always — rise when stocks fall, and vice versa. A typical balanced fund would have left Ralph with about $784,000.
• Seek income. You don't have to construct a portfolio of bank CDs and utility stocks, but income makes your life a great deal easier. Dividends not only cushion downturns, but typically rise every year, giving you some protection from inflation. A steady diet of stocks whose companies consistently increase dividends could never hurt, nor could an occasional dose of utilities.
• Keep a cash reserve, especially in your first years. A big downdraft in your first years of withdrawal can be catastrophic. If the market is plunging, you can dip into cash instead of selling stocks at their lows.
• Start small. Financial planners typically argue that starting with an initial annual withdrawal of 4% of your retirement kitty will see you through most hard times, especially if you plan to give yourself regular "raises" for inflation. That's not easy advice to follow. If you're aiming for $50,000 of income a year, a 4% initial withdrawal means you'll need $1.25 million to start.
Bear in mind, too, that Ralph is a worst-case scenario. Life presents pleasant surprises too, such as last year's 30% gain in the S&P 500. But it never hurts to carry a little extra medicine.
Thursday, April 17, 2014
Aussies love Mustangs too
The appeal of the Ford Mustang isn't limited to the United States. Just ask Aussie Andrew Matthews.
"Everybody loves Mustangs,'' he says.
Matthews, of Queensland, brought his wife, Amanda, and twins, Ella and Claire, 5, for a month-long U.S. holiday with the 50th anniversary of the Mustang as their vacation focal point. They attended the celebration at Las Vegas.
He owns an early-production Mustang, marketed as a 1964 and a half, and while he couldn't bring it with him, he had a tablet computer filled with pictures to show as he and his family chatted with other owners of early Mustangs and searched for those with similarly featured cars.
His car was first purchased in California and later shipped to Australia. He found it in Adelaide and bought it six years ago. It's one of the most memorable color schemes of the day, Wimbledon White over a red interior, with a 289-cubic-inch V-8 engine, four-barrel carburetor and a stated 225 hp.
"This was the high-performance model in '64,'' he says.
It has a tachometer and clock mounted on either side of the steering column, an upgrade Ford called the "rally pack.'' It also has a generator, rather than alternator, which was unique to the very first cars, he says. And it is nearly original, though it had a repaint before he bought it.
Since arriving in the United States earlier this month, Matthews and his family have driven a rental Ford up the Pacific Coast Highway to San Francisco from Los Angeles, a route any car enthusiast loves, before heading to Las Vegas.
"We've just come over for a month and made an adventure out of it,'' he says. "We wouldn't want to miss this.''
Mustangs from Utah and Idaho line up for the 50th anniversary of the Ford Mustang celeb! rated at the Las Vegas Speedway.(Photo: Robert Hanashiro, USA TODAY)
Wednesday, April 16, 2014
BofA Posts Loss as Litigation Charges Weigh
Tuesday, April 15, 2014
Finra gets arbitration process back on track in Puerto Rico
Finra has expanded its pool of arbitrators and is ready to move forward with the hundreds of complaints related to collapses in Puerto Rico bond funds, according to an announcement posted on its web site Monday.
After several months of deliberation, Finra said it will resume processing investor complaints now that it has about 700 arbitrators from Southeastern U.S. and Texas who are willing to fly to Puerto Rico.
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The Financial Industry Regulatory Authority Inc. has also resolved issues related to the language barrier as UBS AG and Bank of America Merrill Lynch agreed to pay fees for translators.
“I'm confident that we will have enough arbitrators and enough staff that we will be able to process those that go forward,” said Linda Fienberg, the president of dispute resolution at Finra.
(See also: Finra freezes new arbitration cases in Puerto Rico)
Finra, which had received around 200 complaints from investors, had stopped assigning arbitrators to new cases and was trying to determine how it would address a number of challenges, including the language barrier and the fact that there were only nine arbitrators in Puerto Rico.
One month ago, the regulator said it had heard from only 60 arbitrators on the mainland who said they would be open to flying to Puerto Rico to hear
Sunday, April 13, 2014
Why Amazon Stock Is My Largest Personal Holding
Some people believe it's important to never let any stock position grow too large. While I understand that reasoning, I have no problem letting Amazon.com (NASDAQ: AMZN ) stock continue to grow as a part of my portfolio. Currently, it's my largest personal position, accounting for 9% of all my real-life holdings.
There are two big reasons every investor should consider owning Amazon stock -- and two threats every investor needs to know about before buying in.
An equation for greatness
Wide moat + innovation = excellence. That represents the DNA of the world's greatest companies. By a wide moat, I mean that a company has sustainable competitive advantages that will make it nearly impossible for any serious competition to arise.
Amazon's moat comes from its laser focus on customer satisfaction. The company's network of fulfillment centers across North America, Europe, and China ensures that when you order something online, it will arrive at your doorstep just 48 hours later. Each of these centers costs billions to build, stock, and man.
To get an idea for how large each of these centers is, take a look at this one, located in Chattanooga, Tenn.
Source: Chattanooga Area Chamber of Commerce.
If you look at the breadth of these fulfillment centers, with locations spread across the world, you can understand that it would cost the GDP of a small country to try to match Amazon's scope.
Source: Amazon.com.
If that's not enough, Amazon is selling its products for such razor-thin margins, and offering such a great shipping deal to Amazon Prime customers, that no one could make money competing with Amazon no matter how hard they tried.
And when it comes to innovation, I consider Amazon second to none. CEO Jeff Bezos has been able to take the company from primarily selling books, to creating e-readers that offer higher margins, to supplying the world with cloud computing solutions, and -- most of all -- to being a one-stop shop for e-commerce.
When you combine this wide moat with innovation pushing the company forward, you have a recipe for stellar business. The best way to measure is by the astonishing growth in Amazon's revenue. Back in 2008, the company brought in $19 billion in sales. Fast-forward just four years, and that number jumped to $61 billion. That's a 34% increase per year, and with online purchases accounting for less than 10% of all purchases, there are still tons of room for growth.
Some will criticize Amazon for spending so much money on technology and building out infrastructure, to the point where it's barely profitable. That's fair, but I think now, while e-commerce is still in its infancy, is exactly the time to forgo short-term profits in search of long-term dominance.
Two big red flags
Of course, an investment in Amazon stock isn't foolproof. For starters, if Bezos were to leave, I would have to seriously reconsider my investment. While Amazon's wide moat would survive his departure, I would be wary that the culture of innovation could continue to the same extent. Bezos has been a visionary driver for the company; his influence cannot be underestimated.
Secondly, in a few decades, I could see 3-D printers presenting a serious threat to Amazon. Industry leaders Stratasys and 3D Systems have already developed machines that can make several products within your own house -- given that you have the specs available.
If, over the next 20 years, 3-D printing technology continues to develop, and prices for these printers fall to an affordable level, people might find no need to order things from Amazon. Instead of buying the latest piece of furniture online, people could print out the requisite parts at home and assemble them for a fraction of the cost.
Move ahead Foolishly
I don't see the threat from 3-D printers as being serious for quite some time. That's why I own shares of Stratasys, but it occupies only 3% of my holdings.
When it comes to Amazon stock, I think it's a must-own for many investors, depending on how familiar and comfortable you are with the company. Shares are certainly a little pricey right now, so buying a little while waiting for a pullback, or becoming more familiar with the company, would be a good idea.
If you'd like to continue your research, our premium report will tell you what's driving the Amazon's growth, and fill you in on reasons to buy and reasons to sell Amazon. The report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.
Saturday, April 12, 2014
Bad News For Big Banks: Profit Falls At JPMorgan Chase
JPMorgan Chase JPMorgan Chase & Co., the nation's biggest bank, kicked off big bank earnings season in a bad way on Friday, reporting net income of $5.27 billion, or $1.28 per share, missing analyst expectations of $1.40 per share. The bank's first quarter profits in 2014 dropped sharply from the previous year, when JPMorgan Chase Chase reported $6.53 billion in earnings, or $1.59 per share.
The news was bad for big banks, suggesting that the weakness that had hit the shares of some big financial firms in recent weeks like Goldman Sachs, Morgan Stanley Morgan Stanley, and Citigroup Citigroup, would move to other large banks that are either more diversified or have not been hit by recent scandal like Citigroup's Mexico unit. Shares of JPMorgan fell by 3% in pre-market trading.
JPMorgan and its chief Jamie Dimon are coming off a tough year in which the bank agreed to pay some $20 billion in legal settlements, taking some big hits from both the federal government and private litigants. Dimon recently called it "the most painful, difficult and nerve-wracking experience that I have ever dealt with."
Jamie Dimon, CEO of JPMorgan Chase (Photo credit: jurvetson) Now, Dimon has to deal with weakness across his bank's business, from fixed-income trading to even loan growth as the economic environment for banking appears to have become tougher. JPMorgan reported that first quarter fixed income revenue had tumbled by 21% from a year ago to $3.76 billion in the first quarter of 2014. Mortgage originations dropped by 68% from the first quarter of 2013 to $17 billion. Corporate banking revenue dropped 8% from the prior year to $2.7 billion and profits from consumer and community banking fell by 25% to $1.9 billion due to lower net revenue and higher provisions for credit losses.
There was some good news for Dimon and JPMorgan, out of their investment bank for example. But it looks like it could be a tough week for big bank stocks.
Friday, April 11, 2014
Herbalife whacked on word of federal probe
Nutritional supplements marketer Herbalife shares slumped 14% Friday on a report that the company is under a Justice Department criminal investigation.
Shares wilted $8.36 to $51.48 after the Financial Times reported the probe - which Herbalife said it had no knowledge of late Friday.
"We have not received any formal nor informal request for information from either (the Justice Department or the FBI),'' the company said in a statement. "We take our public disclosure obligations very seriously."
Friday's slide was on par with the 15%, March 12 tumble Herbalife suffered after the company said it was was being investigated by the Federal Trade Commission.
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At the time, Herbalife said it "welcomes the inquiry given the tremendous amount of misinformation in the marketplace," and said it would fully cooperate with the FTC.
The company's business plan has been criticized for months by Pershing Square hedge fund investor Bill Ackman, who made a $1 billion bet on the stock's collapse in December 2012 and had lobbied regulators and members of Congress to investigate the company's business practices.
Ackman has repeatedly called Herbalife's multilevel marketing and sales practice a pyramid scheme and charged that the company was violating Chinese labor laws. Herbalife has denied Ackman's accusations.
Ackman's efforts to bash Herbalife have drawn criticism and protracted exchanges from activist investor Carl Icahn, who aligned himself with management and amassed a 13% stake in the company last year. Icahn has said Herbalife is undervalued.
Herbalife had 2013 sales of $4.8 billion, up from about $4.1 billion in 2012. It markets energy and fitness snacks, drinks, vitamin supplements and skin-care products through 3 million distributors in more than 90 countries.
Thursday, April 10, 2014
Fidelity Guru Goes Global
In his latest review of the holdings in his Fidelity Investor model portfolio, fund expert Jim Lowell highlights a diverse trio of global favorites.
Global High Income (US:FGHNX)
Fund manager John Carlson and I go way back to when he taught me my first emerging market investment lesson: if you don't want to own the debt, you won't want to own the stocks. That lesson can be applied globally.
And today, while I'm not sanguine about emerging markets' near term prospects, I remain "Carlson Confident." He leads a group of managers that invest in stocks, bonds, and convertible securities from around the globe; here, the emphasis is on kinds of debt needed to finance growth.
The current tilt toward the established marketplace of the US, and the scant tidbit in emerging China, reflects his sense of where to find reward and avoid risks.
It began trading in May 2011 and has a market value of approximately $330 million. The top five country representations are the US (56.6%), Netherlands (4.8%), China (3.4%), UK (3.1%), and Italy (2.9%).
Nordic (US:FNORX)
Not to be underestimated nor overlooked, manager Per Johansson invests in companies from Denmark, Finland, Norway, and Sweden, as well as companies tied to the Nordic region economically.
Better banking systems, highly educated work forces, and little brain drain translates into a robust marketplace inside Europe's overall mall. It began trading in November 1995 and has a market value of $525 million.
The top five country representations are Sweden (46.9%), Finland (22.9%), Denmark (14%), the US (7.5%), and the UK (4.9%). The top three sectors are industrials (23.7%), financials (22.4%), and consumer discretionary (14.9%).
International Growth (US:FIGFX)
You know, I began to wade back across the pond to the established markets of Europe last year and increased our stake there this year.
While it is true that Europe is really only on the cusp of recovering, it is also true that their economy overall has been expanding since mid-year 2013 and seems to be picking up the pace by a hair's breadth. I would expect fits and starts along the path to more recovery.
I also wouldn't be surprised to get a round of slowdown reports that create potential potholes; but I like knowing we have manager Jed Weiss at the wheel. He invests in companies from around the world that he thinks have an above average potential for growth with reasonable valuations at the outset.
It began trading in November 2007 and has a market value of approximately $470 million. The top five country representations are the US (17.4%), Japan (16.3%), UK (15.3%), Switzerland (11.9%), and Sweden (6%).
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Wednesday, April 9, 2014
Judge has questions about SAC Capital plea deal
NEW YORK — The federal judge deciding whether to approve a record $1.8 billion insider-trading settlement by one of Wall Street's largest hedge funds has asked prosecutors and defense lawyers for more information about illegal profits made and losses avoided by the firm and its subsidiaries.
U.S. District Judge Laura Taylor Swain also asked both side whether the totals reflect activities "of all culpable persons" at SAC Capital, the fund run by billionaire Steven Cohen, plus those who acted on illicit information "provided by the culpable persons."
The late Tuesday order signaled concern that the calculations so far may have been based solely on illicit trading by eight former SAC Capital portfolio managers and other employees who have been convicted at trial or pleaded guilty to insider trading-related violations.
The judge told attorneys preparing for a Thursday hearing on the deal to be prepared to address whether the proposed payments "are properly taken into account in satisfaction of the criminal forfeiture obligations."
Additionally, she sought more information about the duties of Bart Schwartz, the former prosecutor tapped to monitor compliance with the agreement. Referring to that oversight, Taylor Swain asked whether the monitoring would be sufficient "to promote respect for the law, protect the public and deter re-offense."
The requests raised the potential for legal objections to the November agreement prosecutors and defense lawyers reached to settle the 2013 criminal insider-trading indictment of the hedge fund.
Prosecutors have said the $900 million fine included in the deal represents the largest financial penalty ever imposed in a criminal insider-trading case.
The indictment accused SAC Capital and its subsidiaries of illegally reaping hundreds of millions of dollars in tainted gains from a 1999-2010 insider-trading scheme that involved stocks of at least 20 publicly traded companies.
The agreement terms required the hedge fund to cease ! handling investments for outsiders. As a result, SAC Capital is completing its official transformation to Point72 Asset Management, a family office that will manage Cohen's personal fortune.
Prosecutors wrote in a sentencing memorandum filed last week that the penalties and other settlement terms constituted "an appropriate punishment for the criminal conduct at SAC Capital." An SAC Capital attorney argued in a defense sentencing memo that the proposed penalties "send a strong public message about the costs of the conduct" behind the scheme.
But the decision rests with Taylor Swain, the judge who presided over the trial that recently concluded with guilty verdicts against five former Bernard Madoff employees accused of aiding the financier's massive Ponzi scheme.
21Vianet Group Misses Where it Counts
21Vianet Group (Nasdaq: VNET ) reported earnings on May 16. Here are the numbers you need to know.
The 10-second takeaway
For the quarter ended March 31 (Q1), 21Vianet Group beat slightly on revenues and missed estimates on earnings per share.
Compared to the prior-year quarter, revenue grew significantly. Non-GAAP earnings per share dropped significantly. GAAP earnings per share increased.
Gross margins shrank, operating margins dropped, net margins increased.
Revenue details
21Vianet Group logged revenue of $70.8 million. The six analysts polled by S&P Capital IQ expected revenue of $69.9 million on the same basis. GAAP reported sales were 28% higher than the prior-year quarter's $54.9 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS details
EPS came in at $0.08. The five earnings estimates compiled by S&P Capital IQ forecast $0.09 per share. Non-GAAP EPS of $0.08 for Q1 were 33% lower than the prior-year quarter's $0.12 per share. GAAP EPS were $0.03 for Q1 versus -$0.05 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
Margin details
For the quarter, gross margin was 26.6%, 180 basis points worse than the prior-year quarter. Operating margin was 5.6%, 370 basis points worse than the prior-year quarter. Net margin was 2.7%, 740 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)
Looking ahead
Next quarter's average estimate for revenue is $75.6 million. On the bottom line, the average EPS estimate is $0.08.
Next year's average estimate for revenue is $329.0 million. The average EPS estimate is $0.33.
Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 28 members out of 34 rating the stock outperform, and six members rating it underperform. Among five CAPS All-Star picks (recommendations by the highest-ranked CAPS members), four give 21Vianet Group a green thumbs-up, and one give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on 21Vianet Group is outperform, with an average price target of $13.79.
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