Saturday, November 26, 2011

SeaDrill: High yield in drilling


Amy CalistriSeadrill (SDRL) is the second-largest offshore driller, with the second-largest ultra-deepwater fleet.

It operates the world over with 46 rigs, and it's clients include most of the oil and gas exploration heavyweights like Exxon Mobil, ConocoPhillip, the Norwegian company Statoil and Argentina's? Petrobras.

One of the advantages that Seadrill has over its competitors is its youth. The Bermuda-Norway based company was incorporated in 2005 and has the youngest fleet in the industry.

In many cases, this means its rigs are fitted with more advanced technology and safety features.
In the second quarter ended June 30, Seadrill earned $1.29 per share, compared with the $0.72 per share it earned in the same quarter a year earlier.

Seadrill's current earnings easily support its current dividend of $0.75 per share. At current prices, SDRL has a yield of 8.7%.

Seadrill has a very aggressive growth strategy that has so far served it well. A growing rig count can potentially translate into growing income for Seadrill's investors.

But these are incredibly expensive pieces of equipment, which requires Seadrill to carry a lot of debt. Keeping the growing fleet engaged will be key to Seadrill's success. A healthy credit market is also important as this is fuel for Seadrill's expansion plans.

With oil prices high and a number of large deep water discoveries driving demand, Seadrill's aggressive plans will likely be rewarded.

These sector fundamentals will ensure that energy-related companies such as Seadrill will have fewer difficulties securing credit in the foreseeable future, even in tight credit situations.? ?

Action to Take --> The energy sector is always volatile and risky, with investments churned by the fluctuating market pr! ice of o il and gas.

Offshore drillers also have to navigate a truly dangerous and challenging environment. Needless to say, an investor in Seadrill has to tolerate a lot of risk.

That being said, oil prices and the projected demand for drilling services appear to be favorable for the foreseeable future. And Seadrill's dividend looks to be well supported. I am going to start a small position in Seadrill.


Tags: 2012 Canadian Stocks ,2012 Growth Stocks ,BAC ,GR ,Growth Stocks To Hold For 2012 ,Growth Stocks To Hold In 2012 ,UTX ,U.S. Stocks Continue to Tumble After Global Sell-Off

Cramer's 'Mad Money' Recap: Taking Profits on Chipotle (Final)

"Even the best of the best companies can get too expensive," Jim Cramer reminded his "Mad Money" TV show viewers on Tuesday.

And that's exactly what happened to Cramer fav Chipotle Mexican Grill (CMG) as the stock's multiple approached two-and-a-half times its growth rate.

Cramer reminded viewers that despite its movie fame, greed is not good, which is precisely why Chipotle's stock soared up $10 a share today, only to come crashing back down to close down almost $3 a share. "Nobody ever got hurt taking a profit," said Cramer.

There's still a lot to like about Chipotle, which Cramer has championed since it traded at a scant $48.10 a share back in February 2009. Cramer said the company has great food, excellent service, a high-end concept and exceptionally long lines at practically every restaurant.

Coupled that with great management, measured growth, efficient execution and the ability to roll out multiple restaurant concepts and it's no wonder Chipotle shares now trade over $330 a share.

Cramer said even in the face of a Labor Department investigation and soaring commodity prices, he held fast to his belief that Chipotle was a winner worth holding onto. So what's Cramer's "beef" with investors buying Chipotle shares at today's prices? He said its simple, the stock has simply gotten too hot and is now trading at a multiple over 2.5 times his growth rate.

Cramer noted that Chipotle is certainly better than a company like Netflix (NFLX), which is seemingly imploding, but he reminded viewers that even great stocks can get ahead of themselves, and it's better to take profits while you have them than to not have them in the first place. Cramer's advise to investors: let Chipotle cool down some before buying back in.

Solar Power

In the "Executive Decision" segment, Cramer once again sat down with David Crane, presi! dent and CEO of NRG Energy (NRG), a company Cramer called one of the most forward-thinking utility companies on the planet.

Crane discussed the company's new partnership with the Washington Redskins football franchise to install a two-megawatt solar power array in the parking lot. He said the array is up and running and can power the stadium in its entirely on non-game days. In addition, Crane said the parking lot panels also provide shade for cars and even withstood the beating from hurricane Irene.

Crane went on further to say that solar is not just a public service any longer, it's a real business. He said the price of panels continues to fall and within three to four years, solar panels will be cheaper that grid power in about half of the country. Plus, he added, solar power will always be free, so there's no fear of inflation. Consumers are demanding renewable power, said Crane, and solar power can serve as a billboard for what companies stand for.

When asked about other energy sources, Crane said that a lot of pieces need to fall into place for offshore wind power to become viable, but his company is still hopeful. When talking nuclear, however, Crane was less optimistic about our country's nuclear future.

Finally when asked about the probability of providing a dividend, Crane said that while he's a fan of dividends, NRG is committed to buying back its stock at these low levels. Cramer said that he's still a fan of NRG, even without paying a dividend.

Nifty Moves

Continuing his "Time For Tech" series, Cramer highlighted Avnet (AVT), a component supplier that serves as the supermarket for tech, supplying over 100,000 customers.

Cramer said Avnet has always been his gauge for the health of the overall tech sector, which is why he was pleased to see the stock rally 9% over the past nine days, a signal that the slow summer season for tech is now behind us. Avnet currently trades at just 6.4 times earnings, ! an absur d level, said Cramer, when compared to the company's 12% long-term growth rate.

Cramer also gave a shout out to the company's monster stock buyback program. Cramer said while he despises most buyback programs, Avnet is set to purchase between 10% and 12% of the company's float, a meaningful amount that provides downside protection.

Avnet posted mixed results on Aug 10, posting a seven-cent-a-share beat on a 32% bump in revenues, slightly lower than Wall Street expected. The company also offered disappointing guidance and a cautious tone based mainly on fears about Europe.

But Cramer noted that Avnet still has a healthy business, and one that's only getting stronger now that the fall buying season has finally arrived. He said at these levels, Avnet has little downside risk and huge potential.

Off the Charts

In this segment, Cramer went head to head with colleague Richard Ross over the overall health of the markets.

According to Ross, there are several charts signaling an impeding bearish move in the markets. The first of which was the U.S. dollar, which Ross feels is gearing up for a major rally after trading sideways since April. Cramer reminded viewers that what's good for the dollar is bad for everything else, as companies that export goods make less money.

Ross also sees the Euro breaking down, with its chart signaling that the currency could head sharply lower towards its 2010 lows. He saw a negative outlook for copper as well, noting that the commodity's chart showed a nine-month rolling top, ending with a breakdown in a recent head and shoulders pattern.

Cramer said if this were true, a global recession would be likely as copper acts as a barometer for world's markets. Finally, Ross noted that even gold is signaling a bearish trend, one that could spell trouble for the precious metal.

Cramer said that while Ross paints a very negative view, his opinions should be noted as th! ey're fo llowed by many technicians. Cramer, on the other hand, said he's not as pessimistic on the market's outlook, especially when it comes to gold. Cramer said that everything doesn't crash at once, and while it may be true that the U.S. dollar and the Euro may be heading in the direction, sending copper with it, it's unlikely that gold will follow.

Cramer once again made the case that gold is the asset class that investors turn to when things go bad, so while Ross' opinions may hold some value, gold won't likely follow his lead.

Lightning Round

Cramer was bullish on Alcoa (AA), Exco Resources (XCO) and CenturyLink (CTL).

He was bearish onGT Advanced Technologies (GTAT) and Hudson City Bancorp (HCBK).

Illogical Oil Markets

In his "No Huddle Offense" segment, a passionate Cramer said that the recent moves in oil and the oil service stocks are illogical, stupid and unprofitable. He said traders are acting like its the end of the world, and the market continues to be manipulated by hoarders and ETFs that are controlling the entire market. Cramer said simply that the price of Brent crude is simply too high and it should have reacted to the global slowdown a long time ago.

But that doesn't mean that the price of oil service stocks should be heading lower, said Cramer. He said the need to drill more oil and gas is extraordinary, and companies like Range Resources (RRC) and others should be heading higher as they are indeed likely takeover targets. To contact the writer of this article, click here: Scott Rutt.

Tags: ARMH ,Great Stocks 2012 ,Great Stocks For 2012 ,Great Stocks To Buy For 2012 ,Great Stocks To Invest In ,MSFT ,TXN ,ARM - Benchmark Ups To Buy, $35 Target

The 10 Fastest Growers in Wireless Telecom

Why are investors willing to pay only 10 times earnings for some stocks, but 20, 50, even 100 times earnings for others?

The short answer: growth. Companies that can grow their earnings meaningfully could make lofty current P/E ratios look cheap in hindsight.

Of course, any company can promise a rosy, growth-rich future. Figuring out which companies can actually deliver is far trickier. In this series, I take the first step by identifying companies that have put up the best growth track records in their respective sectors.

Below, I've listed the top publicly traded sales growers in wireless telecommunications services over the last five years. Here's how to interpret each data column.

  • Five-year sales growth: I rank each company's sales growth, to capture its pure trailing expansion without regard to the vagaries of earnings.
  • Five-year EPS growth: Since sales growth means nothing if it doesn't ultimately fall to the bottom line, I've also included each company's five-year trailing EPS growth rate.
  • Five-year analyst estimates: This column shows us how much EPS growth analysts expect over the next five years. Just keep in mind that analysts tend to grossly overestimate a company's prospects.
  • Five-year ROIC range: Return on invested capital basically shows you how efficiently a company is converting its debt and equity into profits. We want companies that can do a lot with a little. By looking at the five-year range, we can start to gauge both the power and the consistency of a company's profit engine.

Company

5-Year Sales Growth

5-Year EPS Growth

5-Year Anal! yst Esti mates

5-Year ROIC Range

VimpelCom (NYSE: VIP  ) 31.8% 5.0% 16.5% 7.3% / 18.2%
MetroPCS Communications (NYSE: PCS  ) 27.6% 21.1% 25.1% 5.8% / 7.7%
TIM Participacoes S.A. 26.0% 40.8% 9.7% 2.4% / 9.5%
NII Holdings 24.6% 5.3% 19.4% 8.0% / 11.6%
America Movil S.A.B. de C.V. 21.9% 11.8% 7.2% 12.9% / 32.8%
Leap Wireless (Nasdaq: LEAP  ) 21.8% NM 19.0% (0.3%) / 1.0%
Crown Castle (NYSE: CCI  ) 21.6% NM 24.7% 1.5% / 4.5%
Mobile Telesystems OJSC (NYSE: MBT  ) 15.8% 0% 11.1% 15.5% / 24.0%
SBA Communications (Nasdaq: SBAC  ) 15.8% NM 17.0% 0.9% / 2.1%
China Mobile (NYSE: CHL  ) 13.7% 15.2% 3.7% 16.0% / 21.8%

Source: S&P Capital IQ. NM = not meaningful; ! EPS grow th that is NM results from losses during the period.

Use the table above as a first step to help you generate ideas for your own further research. Once you identify stocks worth a closer look, the following three steps will help you further assess their growth prospects:

  • Carefully study the table for possible danger signs, such as high sales growth but low EPS growth, analyst growth expectations significantly trailing past growth, and low ROIC figures. Then follow the trail. For example, why does VimpelCom's EPS growth lag its sales growth so significantly?
  • Find out how the company achieved its prior growth: organically or via acquisition? Can it sustain that previous growth? For example, the weak returns on capital of Leap Wireless and SBA Communications are a sign that sales growth may not be quality growth.
  • Pay attention to how management plans to implement its growth plans. Does its strategy seem prudent and plausible to you?

Remember: The more profitable, efficient, and predictable growth a company can achieve, the more we investors should be willing to pay.

Learn more about any of the stocks that interest you by adding them to our My Watchlist tool. You'll get access to all the latest Motley Fool analysis, organized by company.

Tags: 2012 Asia Stocks ,ETF ,MSFT ,NTAP ,QQQ ,Top Stocks To Hold 2012 ,Top Stocks To Invest In ,Top Stocks To Invest In 2012 ,Putting Light on NASDAQ Gloomy ! Stocks ( QQQ, NTAP, MSFT)

Chrysler and UAW Reach Tentative Labor Agreement

Chrysler Group LLC and the United Auto Workers union have reached a tentative labor agreement that the union says will create 2,100 jobs. The proposed 4-year contract has Chrysler promising to invest $4.5 billion to produce new models and upgraded vehicles and components through 2015, necessitating the creation of new positions.

The UAW has already reached deals with both Ford (NYSE:F) and General Motors (NYSE:GM), which combined should create or retain about 12,000 jobs that would otherwise have been moved to plants in Mexico or overseas. Additionally, Ford previously announced plans to add 7,000 jobs in the U.S.

“This tentative agreement [with Chrysler] builds on the momentum of job creation and our efforts to rebuild America…to communities left in turmoil in the wake of the country’s economic collapse,” said UAW President Bob King.

Contract negotiations with Chrysler took longer than with the other two Detroit-area automakers because Sergio Marchionne, CEO of both Chrysler and Italian automaker Fiat, argued that the company couldn’t afford to match the deals made between the union and its bigger U.S. rivals.

Neither the union nor Chrysler have released any further details about the tentative labor agreement covering 26,000 workers. The deal still needs to be ratified by Chrysler’s UAW members in order for it to take effect. GM workers have already ratified their deal, but only 50.1% of production workers at Ford have approved the new contract, while only 45.2% of skilled trades workers have approved the deal.

Tags: 2012 Small Stocks ,Best Stocks 2012 ,Best Stocks To Invest In 2012 ,Best Stocks T! o Own In 2012 ,2 Stocks We Like Right Now

Friday, November 25, 2011

Whoa! My Stock Just Crushed the Market!

The market roared to life on the hope that Europe saved itself, but just because your stock strapped on a rocket pack and went even higher, resist the urge to high-five everyone in the cubicles next to you. Smart investors won't celebrate until they know that upward leap was justified. Without a fundamental basis for the bounce, these stocks can quickly make the return trip down.

Is now the time to lock in profits, or is this just the first step toward even higher valuations down the road? Let's examine several stocks that just hit the afterburners and see whether they're truly headed into orbit.

Stock

CAPS Rating (out of 5)

Thursday's Change

Suntech Power (NYSE: STP  ) **** 29.7%
VASCO Data Security (Nasdaq: VDSI  ) **** 29.5%
Terex (NYSE: TEX  ) **** 18.7%

With the markets soaring 339 points yesterday, or 2.9%, stocks that went appreciably higher are pretty big deals.

Shining a light on growth
The financial deal in Europe helped calm jittery nerves in the solar sector, helping push PV maker Suntech Power in particular higher because of its exposure to the continent, where it derives more than three-quarters of its revenues. First Solar (Nasdaq: FSLR  ) , which moved almost 15% higher yesterday, realizes a similar percentage of sales from Europe.

The news had a broad-based effect on the industry, t! hough, a s LDK Solar (NYSE: LDK  ) , which generates 35% of its sales in Europe, moved 23% higher on the day. Overall, the entire CAPS Solar Power sector ran up 6% yesterday, indicating the belief that there would be a wide trickle-down effect from economic stability overseas.

Suntech was also helped by published comments on Business Insider that the solar shop's CEO said that Suntech was still making profits, even after severing a long-term supply agreement with MEMC Electronic Materials. The claim refuted rumors of a possible bankruptcy for the company.

CAPS member cibient says the market depressed Suntech's stock by confusing it with the high-profile bankruptcy of a certain politically connected solar company.

Wow! Suntech is NOT Solyndra, Wall Street! Sure, I get that the macro global outlook is terrible, and oil prices are dropping. But so follows for raw materials. STP is well positioned to ride back up whenever energy is ready to make a move back up.

Add the solar specialist to?your watchlist, and let us know on the?Suntech Power CAPS page whether you think it will be able to rebound further.

Social security
After a subsidiary issued a digital certificate to an entity fraudulently claiming to be?Google? (Nasdaq: GOOG  ) but that may have been connected to the Iranian government, which some believe used the opportunity to spy on its citizens' computer usage, VASCO Data Security was all but left for dead. DigiNotar ceased operations in the tumult afterwards and ultimately declared bankruptcy, as it's difficult to attract customers if they can't trust your security systems.

Yet the data-security parent surprised the market by reporting better-than-expected profits and lifting its guidance for the year. VASCO was burned by the episode, but DigiNotar's contribution to the overall revenue picture was min! imal, an d the company will take a hit of less than $5 million from the episode (not including any lawsuits that might arise).

As VASCO noted, its customers discerned the difference between its business and DigiNotar's, something the markets failed to do. Highly rated CAPS All-Star member sehawk99 says the real risk facing it is a lack of a deep competitive moat.

Yes, the services they offer are, or should be, in high demand. The problem is that VDSI has no real moat to speak of. In their industry, I view them as competent but not formidable. ... All in all, I'm thinking the stock has a reasonable shot at a 50% gain in the next year or two.

Tell us in the comments section below or on the?VASCO Data Security CAPS page if you think an investment now is secure, and add it to your watchlist to watch its progress.

Walking the Cat-walk
After both Illinois Tool Works (NYSE: ITW  ) and Manitowoc followed Caterpillar in reporting better-than-expected earnings, it should have come as little shock that fellow heavy-equipment operator Terex would follow suit with its own strong showing. It also pushed its guidance for the year 16% higher, which outstripped analyst estimates as well.

Terex finds itself in the enviable position of being able to raise prices while further reducing its costs, a situation that lends itself to higher margins down the road. It is also unique in that rental companies comprise its sales outlet rather than having a network of dealers to push product through. It was large rental companies placing big orders for its aerial work platforms that helped segment sales jump 59% in the quarter.

With almost 1,300 CAPS members weighing in on the equipment specialist, 97% of them think it will continue to outperform the broad market indexes. Add Terex to the Fool's free portfolio tracker?if you'd like to rent a front-row seat to its future opportuniti! es.

< p>Tags: AXP ,DFS ,GOOG ,Great Stocks 2012 ,Great Stocks To Buy ,Great Stocks To Invest In 2012 ,RIMM ,S ,T ,V ,VZ ,Google Slips - Sprint First Carrier To Offer ‘Wallet’ E-Payments

Solarbuzz Let’s the Shine Out of Solar Stocks: TAN, FSRL, STP, YGE, LDK, CSIQ, JASO, WFR, SOLR, SPWRA, TSL

Solar market (NYSE:TAN) research and analysis firm?Solarbuzz released its quarterly report today, and unfortunately the report does not see solar industry woes ending anytime soon. Its 2012 forecast predicts manufacturing supply will continue to increase at twice the rate of projected growth in demand. The resulting over-supply is likely to lead to a shake-up in the solar industry, which is already facing pricing pressures.

Investing Insights:?Alternative Energy ETFs: The Top 10 Exchange Traded Funds for Investing in Alternative Energy.

The report states that production cutbacks are not likely to offset the supply from tier-one Chinese companies who continue to stick to their guidance for the second half of 2011. These shipments may exceed demand by a whopping 4.4 gigawatts. Yikes! Supply gluts suck.

Solar stocks to watch as the industry hits more hurdles: First Solar Inc. (NASDAQ:FSLR), Suntech Power Holdings (NYSE:STP), Yingli Green Energy Hold. Co. Ltd. (NYSE:YGE), LDK Solar Co. (NYSE:LDK), Canadian Solar Inc. (NASDAQ:CSIQ), JA Solar Holdings Co. (NASDAQ:JASO), MEMC Electronic Materials(NYSE:WFR), and GT Solar International Inc. (NASDAQ:SOLR), SunPower Inc (NASDAQ:SPWRA) and Trina Solar Limited (NYSE:TSL).

Don��t Miss:?Should Solar Stocks Fear a Weakening European PV Market?

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Top Stock Price Percentage Movers Nov. 15th

Wall St. Watchdog reveals information about 9 stocks showing big percentage moves on our trading screens:

Big gainers:

  1. Woodward Inc (NASDAQ:WWD): Up +14.71%. Get the most recent company news and stock data here >>
  2. Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR): Up +13.46%. Green Mountain Coffee Roasters, Inc. roasts Arabica coffees and offers various coffee selections. The Company’s products include single-origin, estate, certified organic, Fair Trade, signature blends, and flavored coffees sold under the Green Mountain Coffee Roasters brand. Green Mountain serves offices, supermarkets, and convenience stores, and operates a direct mail business. Get the most recent company news and stock data here >>
  3. Fusion-IO, Inc. (NYSE:FIO): Up +13.41%. iShares FTSE NAREIT Industrial/Office Capped Index Fund is an exchange-traded fund incorporated in the USA. The Fund seeks investment results that correspond to the FTSE NAREIT Industrial/Office Capped Index. Get the most recent company news and stock data here >>
  4. Focus Media Holding Limited (NASDAQ:FMCN): Up +11.82%. Focus Media Holding Limited operates an out-of-home advertising network in China. The Company uses audiovisual television displays which are placed primarily in high-traffic areas of commercial office buildings such as in lobbies and near elevators, as well as in large retail chain stores and other venues. Get the most recent company news and stock data here >>
  5. Chimera Investment Corporation (NYSE:CIM): Up +10.98%. Chimera Investment Corporation is a specialty finance company. The Company invests in residential mortgage loans, residential mortgage-backed securities, real estate-related securities and various other asset classes. Get the most recent company news and stock data here >>

Big losers:

  1. The Cooper Companies, ! Inc. (NYSE:COO): Down -13.52%. The Cooper Companies, Inc. through its subsidiaries, develops, manufactures, and markets specialty healthcare products. The Company’s products include contact lenses for the vision care market and diagnostic products, surgical instruments, and accessories for gynecologists and obstetricians. Get the most recent company news and stock data here >>
  2. Inergy, L.P. (NYSE:NRGY): Down -10.86%. Inergy, L.P. is an energy infrastructure and distribution company. Inergy operates a retail and wholesale propane supply, marketing and distribution business. The Company also operates a midstream business that includes a natural gas storage business, a liquefied petroleum gas storage business, a natural gas liquids business and a solution-mining and salt production company. Get the most recent company news and stock data here >>
  3. Medicis Pharmaceutical Corporation (NYSE:MRX): Down -7.48%. Medicis Pharmaceutical Corporation provides pharmaceuticals focusing on the treatment of dermatological, pediatric, and podiatric conditions, as well as aesthetics medicine. The Company has branded prescription products in therapeutic categories such as acne, asthma, eczema, fungal infections, hyperpigmentation, photoaging, psoriasis, and rosacea. Get the most recent company news and stock data here >>
  4. Ctrip.com International, Ltd. (NASDAQ:CTRP): Down -7.45%. Ctrip.com International, Ltd. is a consolidator of hotel accommodations and airline tickets in China. Get the most recent company news and stock data here >>

Tags: 2012 Silver Stocks ,Best Stocks 2012 ,Best Stocks To Invest In 2012 ,Best Stocks To Own In 2012 ,3Q Earnings Preview For Salesforce.com

Amazon Fires 7-Inch, $199 Tablet At Apple

By Matt Burns

Amazon’s not-so-secret project is finally unveiled and is the company’s first real tablet contender. The Kindle Fire is Amazon’s prize fighter in the battle for tablet dominance. But the new LCD-equipped Kindle isn’t in the corner alone. Amazon (AMZN) also took the wraps off of two new, more-traditional Kindles, including a $99 touchscreen model and a stripped-down $79 option.

The Fire itself is rather characterless and dull. It looks a lot like the 7-inch BlackBerry (RIMM) PlayBook (probably for good reason) and features just enough tech to pass as acceptable. There’s a two-point multitouch screen (the iPad has a 10-point screen), and an unspecified CPU although reports place a TI OMAP CPU at the core. There are no physical buttons on the black slate, along with little Amazon branding. The Fire doesn’t have a camera, microphone or 3G connectivity although it does pack WiFi. It’s all about the experience here.

The Kindle Fire marks a significant departure from Amazon’s norm. The most notable change is obviously the multitouch 7-inch LCD rather than an e-ink display, but moreover, the Kindle Fire is a complete storefront for the retailer rather than just an ereader. The tablet features apps for Amazon’s Android Appstore, Kindle store, Amazon MP3, and Prime Instant Video. Nearly all of Amazon’s recent news, Amazon Cloud Player, Amazon Cloud Drive, Kindle Cloud Reader, the streaming deals with Fox and NBCUniversal, were in preparation for the Fire. With these cloud services in place, the Kindle Fire is a legitimate iPad competitor.

But it’s more than just Amazon apps. Users are free to load apps from Amazon’s Android Appstore including Pandora (P)Twitter, Facebook, and, most notably, Netflix (NFLX).

The Fire runs a custom OS build that completely hides its Android 2.x underpinnings. Amazon built, without the help of Google (GOOG) we! ’r e told, an experience centered around all of Amazon’s retail and cloud services. This is an Amazon tablet and not just a Kindle.

Watch out, Apple (and B&N). Amazon is pricing this model aggressively. Bloomberg is reporting prior to Amazon’s official event that the Kindle Fire hits at just $199 and comes with 30-days of Amazon Prime.

It’s been said that Amazoninitially planned on launching a 10-inch tablet alongside this 7-inch model but the larger version was pushed back until early 2012. Reportedly, the 10-inch wasn’t going to be ready in time and Amazon choose to launch just the smaller version. It was a smart and timely move, too. Barnes & Noble (BKS) is said to be gearing up to launch the second generation of the Nook Color within the coming weeks. Had Amazon waited ’till after the new year to launch both, the Nook Color successor might had stolen Christmas and part of the Fire’s marketshare. But as it sits right now, this holiday season is set to play host to a tablet battle royal between the iPad, Kindle Fire and Nook Color 2.

Original post

Tags: 17.4 ,2000 ,2012 Top Performing Stocks ,21.7 ,9.4 ,DD ,FMC ,ROC ,SQM ,Top Performing UnderValue Stocks ,4-Star Stocks Poised to Pop - Rockwood Holdings

Germany Going Down with the Ship

Not even the rout in the bonds of its closest allies could convince Germany to alter its disastrous course, writes MoneyShow.com senior editor Igor Greenwald.

Can the markets persuade Germany it’s wrong before Germany wrecks Europe and the global economy? It’s been an exciting race, but right now the German death wish is pulling away in the stretch.

On Friday, the markets cheered the new governments (if not exactly new faces) taking charge of Italy and Greece. Now that optimism is ancient history.

Tuesday came news that European GDP expanded just 0.2% quarter-over-quarter this summer. Germany and France did a bit better than that, but Spain stalled, the Netherlands shrank, and Portugal edged closer to Greece among the no-hopers.

Meanwhile, the European Central Bank revealed that it did pretty much fiddle while Rome burned last week, its purchases of  sovereign (mostly Italian and Spanish) bonds totaling just half of what they’d been the week before.

The $6.2 billion the ECB spent was dwarfed on Tuesday by the heavy institutional selling of sovereign European debt—and not just Italian and Spanish bonds but, more worrisomely still, those of France, Austria, and the Netherlands, all rated AAA but trading like the credit agencies are once again hopelessly behind the curve.

France’s ten-year yield is now up to 3.67%, from 2.57% on October 3; the spread between the French and German yields has doubled to nearly 2% in the last three weeks. The cost of credit-default swaps on French bonds has now topped that for junk-rated Indonesia; in the same market, Italy has been seen for months as a bigger risk than Egypt.

How bad was Tuesday in the bond market? Bad enough, writes SwissInvest Strategist Anthony Peters, that if it had happened to stocks, “every newspaper in the world would be headlining with ‘Meltdown!’ accompanied by pictures of chaps sitting in front of screens with their heads in t! heir han ds and telephone numbers of figures as to how much value had been wiped…”

European yields have been erratic Wednesday, propped up by more buying by the ECB, but pressured by the growing realization that there are few other obvious buyers in the current circumstances.

Meanwhile, the European banking system threatens to grind to a halt, amid capital flight out of banks on the periphery. Italian banks have turned into de facto wards of the ECB, dependent on loans from the central bank to meet their obligations.

The ECB’s see-no-evil rules for the collateral it currently accepts are no longer lenient enough for Italy’s UniCredit, which is asking for them to be loosened further.

And what’s Germany’s response to the shrill of all these alarms?

“The way we see the treaties, the ECB doesn’t have the possibility of solving these problems," Chancellor Angela Merkel said today. So, no soup for you, Europe, and no printing euros to buy sovereign debt, though the ECB will supply them liberally in exchange for much dodgier collateral from banks.

This ensures that the ultimate cost to the German taxpayer will be orders of magnitude greater when all those banks on the periphery can’t pay the ECB back.

It would be a lot cheaper if, as an Economist correspondent suggests, the ECB would simply guarantee a certain maximum level for Italian and Spanish yields from a given future date, in exchange for certain policies today. It would be better, of course, if those policies promoted growth as well as reforms, rather than deflationary austerity.

But in either case, chances are the yields would fall right away, as long as the markets found the commitment credible.

That’s a big if, of course, and would require Germany not only to endorse the policy but to co-sign it in blood just to prove it’s really ditched all of its reservations.

That could happen, only because the alternati! ves are so hideous. But it might not happen in time to matter.

Tags: 2012 Food Stocks ,ABX ,AG ,AUY ,EXK ,GDX ,GLD ,Great Food Stocks To Buy ,Great Stocks To Buy In 2012 ,SIL ,SLV ,Gold and Silver Fall, Despite New Inflation Data

Thursday, November 24, 2011

Bank of America Not Strong Enough, Goldman Sachs Execs Exposed to Insider Trading Case

Bank of America Corporation (NYSE:BAC): BofA — functioning under a memorandum of understanding since May 2009 –?is?trying to?assure regulators it has done what is needed to make the bank stronger. Regulators?admonish of a possible?public enforcement action?if BofA?does not?make further progress?on MOU compliance, say sources. BAC shares recently traded at $5.39, down $0.1, or 1.82%. Its market capitalization is $54.63 billion. They have traded in a 52-week range of $5.13 to $15.31. Volume today was 160,100,120 shares versus a 3-month average volume of 293,008,000 shares. The company’s trailing earnings are $-0.31 per share. Get the most recent company news and stock data here >>

The Goldman Sachs Group, Inc. (NYSE:GS): Testimony may be requested from Goldman Sachs?CEO Lloyd Blankfein and CFO David Viniar in the insider-trading case of?ex-board member Rajat Gupta. Charges were recently made against Gupta for?disclosing insider information to Raj Rajaratnam. Following a high-profile trial, Rajaratnam was sentenced in October to 11 years in prison. GS shares recently traded at $89.85, down $1.45, or 1.59%. Its market capitalization is $44.23 billion. They have traded in a 52-week range of $84.27 to $175.34. Volume today was 3,699,510 shares versus a 3-month average volume of 8,242,950 shares. The company’s trailing P/E is 13.67, while trailing earnings are $6.57 per share. Get the most recent company news and stock data here >>

Tags: Call Options ,Options Spread ,Options Trade ,Semiconductors ,Stocks to Buy ,Cover your

Tags: 2012 Penny Stocks ,Best Performing Stocks To Buy 2012 ,Best Performing Stocks To Invest In 2012 ,How Healthcare Stocks Are Being Impacted By Government Intervention

The Cons of Borrowing From Your 401(k)

I have accumulated about $40,000 in my 401(k) plan at work. Ive also racked up about $8,000 in credit card debt. Can I take a hardship withdrawal from my 401(k) to pay off my credit card bill?

Unless you are in dire financial straits such as facing foreclosure you probably wont qualify for a hardship withdrawal. But you may be able to take a loan from your 401(k). If your plan permits, you can borrow as much as half of your balance, up to $50,000. In most cases, you can take up to five years to repay the loan with interest, which goes back into your account. A loan, while not usually advisable, can make sense if the rate you are paying on your card debt is higher than what youre earning on investments.

Think long and hard before you tap long-term retirement savings to pay off a short-term debt. If you lose or leave your job, youll have to repay the loan within 60 to 90 days. If you dont, it will be treated as a distribution subject to income taxes, as well as a 10% early-withdrawal penalty if youre younger than 55 when you leave your job.

Tags: AEO ,ANF ,BKE ,CTRN ,GPS ,JWN ,ROST ,SMRT ,SPY ,SSI ,SYMS ,URBN , Ross Stores Inc. Third Quarter Earnings Cheat Sheet Sneak Peek

Newfield Exploration Retains Buy At Deutsche Bank

Analysts at Deutsche Bank reiterate Buy rating on the shares of Newfield Exploration Co. (NYSE: NFX) with a price target of $58. They state that following a fiscal 2011 third quarter characterized by a lack of execution in the Bakken and a trim to FY 2012 forecasts, expectations seem low.

DB analysts state before 2011 ends, they expect an update on Uinta takeaway, which will provide visibility on a production ramp for FY2013. They believe that Newfield Exploration can grow production 5 percent to 8 percent in 2012 versus current consensus of 9 percent. While gas volumes are likely to decline and NFX will embark on asset sales, oil volumes in bridge assets such as offshore Malaysia and the Bakken, as well as rising momentum from the Eagle Ford and Uinta, should fill the gap. Execution in FY2012 should lead to robust growth in 2013, when the Uinta should drive clear capital efficiencies. They also expect NFX and competitors to provide updates on the Uinta play and the deep Wasatch, potential horizontal results may be at hand in coming months.

On a year-to-date basis, Newfield Exploration has a share performance of -43.32 percent, and as compared to Standard & Poor's, it has an YTD share performance of -41.37 percent.

Newfield Exploration is an independent oil and gas company, engages in the acquisition, exploration, and development of oil and gas properties primarily in the U.S. It has a market capitalization of $5.50 billion with a P/E ratio of 9.730. It has more than 134 million outstanding shares.

Shares of NFX fell 0.83 percent, or $0.34, to trade at $40.44.

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Tags: AMZN ,BKS ,Top Hi-Tech Stocks ,Top Hi-Tech Stocks 2012 ,Top Stocks of 2012 ,Top Stocks To Watch For 2012 ,BKS - Tablet Arrives Just In The Nook Of Time, Says Barclays

Tags: 2012 Best Performing Stocks ,BBSI ,Best Performing Stocks To Buy For 2012 ,HHGP ,JOB ,KELYA ,KFRC ,MAN ,MHH ,RHI ,SFN ,TBI ,VISI ,ManpowerGroup Third Quarter Earnings Sneak Peek

Wednesday, November 23, 2011

Plump Monthly Dividend Stocks For 2012 Retirement

We all face retirement needs. As investors, we need to ensure our monthly income supports our lifestyle. My recommendation is to consider the 7 monthly dividend stocks below to supplement your income during your retirement years. The rate of annual returns in the respective tables below, assume the monthly dividends are not reinvested in additional shares. This assumption is realistic for many retirees as money is needed to fund living expenses during their retirement years.

Atlantic Power Corporation (AT)

Atlantic Power owns and operates a diverse fleet of power generation and infrastructure assets in the U.S. The power generation assets sell electricity to utilities under long-term contracts. The goal is to minimize the risk to commodity prices. Atlantic Power has 12 power generation sites across 9 states, but the company is purchasing new assets to increase corporate long-term growth potential.

Yield

Atlantic Power pays a nine cent per month dividend. This equates to an annual 8.3% dividend yield.

Positives

On November 5, Atlantic Power acquired Capital Power Income L.P. This acquisition is positive for Atlantic Power for the future. On November 15, Atlantic Power issued their 3rd quarter results. The annual dividend will increase slightly, but a solid 8.3% yield exists.

Atlantic Power is a utility company. This is an advantageous sector during a difficult economic environment.

Negatives

I believe Atlantic Power was less than opportunistic in obtaining adequate debt and secondary share offerings to fund the Capital Power Income L.P. acquisition. The company had ample opportunities to issue a secondary at the $15 - $16 per share range. Management waited and issued a secondary at sub $14 per share.

Atlantic Power, on October 26, issued $460 in U.S. debt. The coupon rate was at 9%. The debt offering matures on November 15, 2018. This is an extremely high yield b! ased upo n current interest rates.

(Click charts to expand)

Baytex Energy Corp. (BTE)

Baytex Energy (BTE) is a conventional oil and gas company. The business model is a growth and income strategy. Baytex acquires, develops, and produces oil and natural gas. The key location is in the Western Canadian Sedimentary Basin. Baytex is moving into the United States with new assets. Baytex changed from a trust to a corporation in 2011. This was due to the trust taxation laws in Canada.

Investors, from a November 16 presentation (pdf), can view Baytex's growth prospects and high oil production. Oil is 91% of Baytex's hydrocarbon production.

Yield

The annual dividend currently is an annual 4.6% yield. The strong growth prospects, however, make this one to watch for higher rates of dividend growth. The company pays a 19.7 cents per month dividend.

Positives

Baytex has strong institutional ownership. The company has provided an impressive total annualized rate of return of 29.2% over the past 5 years. This assumes dividends are not reinvested, which is only more impressive when looking in a rear view mirror.

The company continues to expand. Baytex has moved into the North Dakota, for additional growth prospects. The growth and income potential provide strong catalysts for the dividend investor.

Negatives

Retirement investors need high yield income. If these investors need high yield at the present time, a 4.6% yield may be too low to pay their living expenses. In the event you can establish a starter position, the dividend yield should be a good starting point until future dividend growth follows.

Enerplus Corporation (ERF)

Enerplus is the oldest trust, and now corporation, in the Canadian energy and production sector. Although growth in income lacks Baytex, Enerplus offers investors a solid income stream year in and year out.

Yield

The annual dividend yield is currently 8% per annum. The monthly dividend payments are 17.7 cents per share. The annual dividend is $2.13.

Positives

Enerplus management is savvy and aggressively moving into new production growth areas. One area, Marcellus (pdf), within the U.S. has been a key focal point to ensure the company has increased production for future quarters and calendar years.

Negatives

The company produces an 8% annual dividend yield. The dividend is based upon a Canadian currency exchange rate. Due to the euro sovereign debt crisis, investors have experienced a weak Canadian loon versus the U.S. dollar. This has negatively impacted the Canadian foreign exchange rate when calculating monthly dividends.

The Gabelli Global Gold, Natural Resources & Income Trust (GGN)

Gabelli Global Gold owns equity positions in gold, oil, and natural resource stocks. The fund sells covered calls against its equity positions.

Yield

Gabelli Global Gold, Natural Resources & Income Trust pays a 14 cent per month dividend. This equates to a $1.68 annual dividend yield. The annual 10.3% dividend yield has been a personal god send, for me, on an ongoing basis.

Positives

A 10.3% dividend yield, managed by competent Gabelli staff, is a highly desirable and reliable income. As U.S. Treasury Bill and U.S. Treasury Bond yields are sub 4%, a 10.3% yield is highly attractive to retirees.

Negatives

Some investors are not aware that covered calls are reported as return of capital. This requirement is due to SEC requirements. Gabelli Global Gold, Natural Resources & Income Trust has paid a monthly 14 cent dividend since June 2005. Investors have been rewarded a 14 cent monthly dividend for 6.5 years.

Main Street Capital Corporation (MAIN)

Main Street Capital pays a 13.5 cent monthly dividend. This equates to a $1.62 per year ! annual d ividend. The yield is an enticing 8.7% per year. I strongly recommend Main Street Capital as a business development corporation (BDC) to invest in.

Yield

The current yield an annualized 8.7% yield. This is based upon a 13.5 cent monthly dividend.

Positives

Main Street Capital has done an incredible job for shareholders. The company has provided a 12.8% total annualized rate of return versus the SP500. This was during an extremely difficult economic climate.

Negatives

I cannot say anything negative of the Main Street Capital performance. Investors are aware of the strengths, the success, and very healthy 8.7% dividend yield. I recommend this stock to all business development corporation investors.

Realty Income Corp. (O)

Realty Income's nickname is the "monthly dividend payer." The company operates 2,600 commercial properties in 49 states. The company has established long-term leases with large tenants. These tenants are blue-chip companies with the highest investment grade pedigree. Because of the selection process, Reality Income has a high occupancy rate. The company chooses what assets and what clients to do business with on an ongoing basis. Reality Income has a history of 42 consecutive years of monthly dividends paid.

Yield

The dividend yield is a solid 5.2% annually. The monthly 14.5 cent dividend is reliable and proven over 42 years.

Positives

The company has proven itself for 42 years. The clientele are blue chip. I highly recommend this equity.

Student Transportation, Inc. (STB)

Student Transportation provides school bus transportation services in the U.S. and Canada. The core Student Transportation services are contracted services to public and private school districts; special need transportation services; and charter transportation services. Charter services include field trips and ! sporting team transportation.

Yield

The yield is a solid 9% yield based upon a 4.6 cent per month dividend. Management is buying back shares and growing the company.

Positives

The company was able, per its November 10 quarterly filing, to sign a line of credit with a fixed 4.24% yield. Contrasting this yield to Atlantic Power's recent 9.2% effective yield is startling. Companies have purchased insider shares, including shares by CEO Gallagher, Denis Joseph.

The company continues to grow through acquisitions. On November 15, Student Transportation agreed to acquire "....Wisconsin-based Dairyland Bus, Inc. and related companies. The acquisition will add over 700 vehicles, annualized revenues of over US$36 million and five locations to the Company's existing Midwest operations...". Per the article, Denis Gallagher states revenue was expected to grow by 12% for the fiscal year. The Dairyland Bus will add an additional 6% revenue increase for the fiscal year.

Negatives

U.S. investors should recognize the tax consequences of owning Student Transportation. For a complete detail, this company link adds additional info for tax reporting. As April 15 approaches, investors need to know the U.S. tax reporting of owning Student Transportation shares.

Action Plan

I own all 7 names. My focus is to talk my book. My views are based upon my research. I use the income to pay for monthly bills. Money left over is reinvested in the above equities. Times change and companies can change for the better or worse. I monitor the above names and will change holdings if the company's business models change and dividends are not paid.

My personal number one selection is Baytex. The company is simply outperforming its peers and has solid investment returns ahead for future years.

I believe in choosing your spots to buy these stocks. Try to focus on down days to acquire shares. These are monthly income ! stocks. There is zero need to chase them. Wait for the price to come to you. I have a strong suspicion these companies will be around for awhile. If not, we will roll with the punches and adjust the names accordingly.

Diversify and make the monthly dividends serve your retirement needs.

Disclosure: I am long AT, BTE, ERF, O, STB, GGN, MAIN.

Tags: Best Gold Stocks ,Best Stocks of 2012 ,Best Stocks To Invest In ,Best Stocks To Invest In 2012 ,2 Stocks that Could Soar if Gas Reaches $4 a Gallon

Dow Falls Almost 200 on Eurozone Contagion Fears

The major stock averages all closed nearly 2% lower Wednesday on fears that eurozone debt troubles could impact U.S. bank ratings.

"Stocks are selling off suddenly on Fitch saying that U.S. bank ratings are threatened by eurozone contagion," said Marc Pado, U.S. market strategist with Cantor Fitzgerald, shortly before the markets closed. This is "causing this spike lower."

The Dow Jones Industrial Average tumbled 190 points, or 1.6%, to end at 11,906. The index, which has finished up three of the last four trading sessions, tacked on 17 points on Tuesday amid light trading volumes. The Nasdaq fell 47 points, or 1.7%, to 2640. The S&P 500 was down 21 points, or 1.7%, to 1237.

The Fitch report pushed major bank stocks lower, with Bank of America (BAC)and Citigroup(C) leading in trading volume on the NYSE. Bank of America closed 3.6% lower and Citigroup shares finished the day with a loss of 4.1%.

"Just like the movie Groundhog Day, the market is stuck in a repetitive loop," said Lou Brien, a market strategist at DRW Trading. "Volume continues to be very light in the stock market, which remains vulnerable to news out of Europe. As a result, it appears that few traders are willing to commit to a market opinion for very long. As has been the case frequently of late there is a strong correlation between the dollar/euro and the S&P, with the currency moves leading the way and the stocks dutifully following along, on an intra-day basis."

With the European Central Bank still refusing to act as a lender of last resort, contagion in Europe's bond market threatens to engulf the eurozone's largest economies. Yields on Italian 10-year bonds were back above 7% after an intervention by the European Central Bank to buy up sovereign debt pushed yields briefly below the key threshold in the morning.

Investors! are ner vous that the debt crisis has entered a new, more dire stage given the rising borrowing costs in France and Spain. A downgrade of France, which currently holds a triple A credit rating, would further erode the market's confidence in Europe's emergency rescue fund.

Meanwhile, German Chancellor Angela Merkel reiterated on Wednesday that Germany will resist pressure for the central bank to take a bigger role in stemming the debt crisis. Also weighing down sentiment was a grim outlook for economic growth in the U.K. from the Bank of England.

Bank of England Governor Mervyn King said Britain's economy could remain flat until mid-2012 and that he did not know how Europe would resolve its debt crisis. Bank of Japan Governor Masaaki Shirakawa said that Europe's woes are affecting emerging nations and Japan.

Signs that Italy is taking its debt problems more seriously did little to lift stocks. Italy's Mario Monti formed a new government on Wednesday, bringing the country closer to staving off a potential default. However, investors are hoping that Italy will show further political willpower than a shift in leadership.

On Wednesday, oil prices climbed back above $100 a barrel for the first time since early June. "The WTI-Brent spread should collapse and U.S. oil should be at $110 in the next few months," said Chesapeake Energy(CHK) CEO Aubrey McClendon at the Stephens Fall Investment Conference at the New York Palace Hotel on Wednesday.

The December crude oil contract gained $3.22 to finish at $102.59 a barrel. In other commodities, gold for December delivery fell $7.90 to settle at $1,774.30 an ounce.

"Most of the talk today is about higher oil prices," said Detrick at Schaeffer's, adding that airline companies were facing pressure. United Continental(UAL), Delta Air Lines(DAL) and US Airways(LCC) fell by 5.6%, 5.3% and 5.9%, respectively.Bette r than expected economic data out of the U.S. kept losses in check, as did a Dow Jones report that Federal Reserve Bank of Boston President Eric Rosengren indicated that there could be some coordinated efforts between the U.S. and European central bankers to ensure that the global markets remain liquid as Europe's debt crisis continues.

Industrial production rose 0.7% in October, the Federal Reserve said Wednesday. The reading was better than the 0.4% increase analysts expected, although the previous month's production figure was revised from a 0.2% gain to a 0.1% decline. Capacity utilization came in at 77.8%, slightly higher than forecast and up from 77.4% in the prior month.

Confidence among U.S. homebuilders rose in November, according to the National Association of Home Builders' housing market index, which rose to a level of 20 in November. The reading, although still low, was the best since May 2010 and surpassed the consensus forecast for the level to stick at 18.

The consumer price index edged down 0.1% in October, a welcome surprise given that economists expected the level to sit tight after increasing 0.3% in September. Excluding food and energy, inflation rose 0.1%, in line with expectations.

Signs of easing inflation may give the Federal Reserve more leeway to further stimulate the economy if needed. Market participants often meet the possibility with enthusiasm but as David Semmens, economist with Standard Chartered Bank, notes, "this is Fed friendly data but is going to do little to sway the market one way or the other right now given the focus on Europe."

"Good economic data, especially the 0.7% rise in industrial production, helped lift stocks on the back of a better domestic picture," said Cantor's Pado. But "heading into the end of the day, we fade on fear that we'll have to live through another negative open tomorrow."

European stocks closed lower with London's FTSE off 0.15% and Germany's DAX slipping 0.33%. Overnight, Asian stocks fell for a second d! ay. Japa n's Nikkei Average lost 0.92% and Hong Kong's Hang Seng closed down 2%.

In corporate news, Target(TGT) rose 0.5% after its third-quarter profit topped estimates. The department store retailer posted third-quarter earnings of 87 cents a share, exceeding the average analyst estimate of 74 cents.

Abercrombie & Fitch(ANF) tumbled 13.6% after reporting third-quarter earnings of 57 cents a share, below the average analyst estimate of 71 cents a share.

Dell(DELL) lost 3.2% after it beat third-quarter earnings estimates but failed to meet analysts' expectations on revenue. Dell, the world's third-largest PC maker, reported adjusted earnings of 54 cents a share on revenue of $15.4 billion. Analysts were expecting earnings of 47 cents on revenue of $15.7 billion.

Citigroup(C) slipped 4.1%. The bank is preparing to eliminate 900 jobs in its securities and banking division, or about 5% of the unit's worldwide staff, according to the The Wall Street Journal.

Apple(AAPL) appointed Art Levinson as its new chairman, a role held by Steve Jobs before his death last month. Levinson, the chairman of Genentech, has been a co-lead of Apple's board since 2005, but will now serve as non-executive chairman. Apple also said Walt Disney(DIS) CEO Robert Iger will join its board. Shares fell 1%.

American Airlines parent AMR(AMR) lost 5.2% after failing to reach a cost-saving agreement with its pilots. The lack of a deal raises the possibility that AMR will file for bankruptcy.

Chipmaker Micron(MU) gained 23.4% after chip technology company Rambus(RMBS) lost its antitru! st case against Micron and chipmaker Hynix Semiconductor. Rambus had been seeking $4 billion in direct damages.

The euro was falling to a five-week low against the dollar which strengthened by 0.6% compared to a basket of currencies. In the bond market, 10-year Treasuries added 13/32, diluting the yield to 2.005%.

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Tags: 2012 Top Performing Stocks ,Top Performing Stocks To Invest In ,Top Performing Stocks To Invest In 2012 ,Three-Year High For Industrial Production And Capacity Utilization

Differences and nuances must be considered

Most traders confine the universe of their options trading to two broad categories of underlyings: one group consists of individual equity issues and the similar group of exchange-traded funds (ETFs), while the other group is composed of the various broad-based index products.?

These two groups are not entirely mutually exclusive since a number of very similar products exist in both categories; for example, the broad-based SPX index and its corresponding ETF, SPY.

Individual Equities & ETFs

The first category, the individual equities and ETFs, trade until the close of market on the third Friday of each month for the monthly series contracts. These contracts are of American type, and as such, can be exercised by the owner of the contracts for any reason whatsoever and at any time until their expiration.?

If the contract is in-the-money at expiration by just one cent, clearing firms will also exercise these automatically for the owners unless specifically instructed not to do so. The settlement price against which these decisions are made is the price of the underlying at the final bell of the life of the option contract.

When this first group we are discussing settles, it is by the act of buying or selling shares of the underlying equity/ETF at the particular strike price.?As such, the trader owning a long call will acquire a long position in the underlying, and the owner of a put will acquire a short position.?

Conversely, the trader short these options will incur the offsetting action in his account. Obviously, existing additional positions in the equity/ETF itself may result in different final net positions.

Cash-settled Index Options

The second category, the broad-based index underlyings, are also termed ‘cash-settled index options.’?This category would include a number of indices, for example, RUT and SPX.

As the name implies, these series settle by movement of cash int! o and ou t of the trader’s account. The last day to trade these options is the Thursday before the third Friday; they settle at prices determined during that Friday morning.

One critically important nuance with which the trader needs to be intimately conversant is the unusual method of determining the settlement price of many of the underlyings. It is not the same as settlement described above.?

Settlement for this category of underlyings have the following two characteristics that are important for the trader to understand:

1. The settlement value is a calculated value published by the exchange and is determined from a calculation of the Friday opening prices of the various individual equities

2. This value has no obligate relationship to the Thursday closing value for the underlying

Many option traders choose never to allow settlement for the options they hold, either long or short.?For those who do allow positions to settle, careful evaluation of the potential impact on capital requirements of the account must be routinely monitored to avoid unpleasant surprises.

Tags: BAC ,BCS ,COF ,Good Stocks 2012 ,Good Stocks To Buy For 2012 ,Good Stocks To Invest In ,GS ,HBC ,LYG ,Is HSBC the Right Stock to Retire With?

Investors getting stingy amid down economy, IPO duds

At a recent event in Silicon Valley, I asked a venture capitalist, ��Do you think the market volatility and lack of IPOs will hurt your business?�� While it was clear he had too much to drink, his answer was clear: ��We are focused on the long term. So we��ll win in the end.��

You have to love VCs’ optimism. It��s what has led to the emergence of great companies.

Yet my venture capitalist friend should be somewhat worried. You see, it really does not matter what he thinks about the future. What matters is what his own investors think. These include pensions, endowments and institutions that are looking for strong returns. For the most part, they make up most of the funding for VC funds. And unfortunately, they are getting careful with their wallets.

Just look at the latest VC report from Thomson Reuters and the National Venture Capital Association. In the third quarter, 52 operators raised $1.72 billion, which was down 53% from the same quarter a year ago.

Now it��s true that 2011 still has seen a strong gain of 26% in capital raised, for a total of $12.2 billion. But the Q3 figure — it was the worst quarterly performance since 2003 — could be a turning point. Keep in mind that since the middle of August, the IPO market has slammed shut. Even high-profile companies, like Zynga and Groupon, have had to pull back their offerings.

At the same time, this year��s deals have been mostly duds. Take a look at Pandora (NYSE:P), Demand Media (NYSE:DMD) and Skullcandy (NASDAQ:SKUL), which are all well below their IPO prices.

Some IPOs have hung around, including LinkedIn (NYSE:LNKD) and?HomeAway (NASDAQ:AWAY). But hanging around doesn’t equal success. Without more successes, if the market does not expand much, it could mean a prolonged contraction in VC funding.

Tom Taulli is the author of ��All About Sho! rt Selli ng�� and ��All About Commodities.�� You can also find him at Twitter account @ttaulli. He does not own a position in any of the stocks named here.

Tags: BMC ,CA ,CPWR ,HPQ ,IBM ,MSFT ,NOVL ,ORCL ,QSFT ,RHT ,SPY ,SYMC ,CA Inc. Earnings Cheat Sheet - Powering Ahead

U.S. Market Remain Volatile As Investors Remain Skeptical On Economic Growth; Hot Stocks Of The Day: HRL, PFE, JASO, HPQ, CPB

The U.S. market traded in a volatile note during the mid-day session as persistent concerns over Europe and a weaker reading on economic growth kept investors on edge.

The Dow Jones industrial average fell 0.15 percent or 17.71 points to trade at 11,529.60. The Nasdaq Stock Market Inc. composite index slipped 0.58 percent or 14.47 points to trade at 2,508.17. The Standard & Poor's 500 index was down 0.61 percent or 7.24 points to trade at 1,186.03. Among other major indices, the New York Stock Exchange composite index lost 0.68 percent or 48.64 points to trade at 7,085.83. The American Stock Exchange composite index was down 0.48 percent or 10.45 points to trade at 2,177.41.

Hot Stocks of the Day: HRL, PFE, JASO, HPQ, CPB

Homel Foods Corp. (NYSE: HRL) reported 3 percent decline in its fiscal 2011 fourth quarter net profit to $117.3 million, or $0.43 per share, that's down from $121.1 million, or $0.45 per share, a year earlier. But the results beat the $0.42 per share that analysts forecasted. Revenue edged up 2 percent to $2.1 billion from $2.06 billion but missed Wall Street's $2.13 billion estimate. Shares of HRL added 0.97 percent, or $0.28, to trade at $29.11.

Pfizer Inc. (NYSE: PFE) agreed to acquire privately owned biopharmaceutical company Excaliard Pharmaceuticals Inc., which focuses on developing drugs to treat skin scarring, as the pharmaceutical giant looks to boost its product pipeline. Shares of PFE were down 0.16 percent, or $0.03, to trade at $18.93.

JA Solar Holdings Co., Inc. (Nasdaq: JASO) announced operating loss of 2011 was $43.3 million in its FY 2011 Q3, compared with operating income of $104.9 million in the third quarter of 2010. Loss per diluted ADS in the third quarter of 2011 was $0.36, compared with earnings per diluted ADS of $0.49 in the third quarter of 2010. Analysts had estimated a net loss of $0.02 per ADS for the company. Revenue in the third qu! arter of 2011 was $388 million, a decrease of 31.6 percent from $567.4 million reported in the third quarter of 2010. Shares fell 2.63 percent, or $0.04, to trade at $1.48.

Hewlett-Packard Co. (NYSE: HPQ) posted a net profit of $239 million, or $0.12 a share in its FY 2011 Q4, down from $2.54 billion, or $1.10 a share, earned in the final three months of fiscal 2010. Quarterly revenue fell to $32.12 billion from the prior year's $33.28 billion.

On an adjusted basis, income for the latest quarter would have been $1.17 a share. Analysts had been looking for HPQ's earnings to come in at $1.13 a share on revenue of $32.05 billion. Shares of HPQ were down 4.10 percent, or $1.10, to trade at $25.76.

Campbell Soup Co. (NYSE: CPB) said on Tuesday that its first-quarter profit slipped to $265 million, or $0.82 a share, compared with $279 million, or $0.82 a share a year ago. Revenue for the quarter was $2.16 billion, compared to $2.17 billion a year ago. Analysts had expected the firm to earn $0.79 a share on revenue of $2.21 billion. Shares fell 2.44 percent, or $0.82, to trade at $32.79.

Currencies and Commodities:

In the world of currency, the US dollar gained 0.12 percent against the Japanese yen, and 0.05 percent against the British pound. The dollar lost 0.26 percent against the euro.

Commodities traded in a positive note today with oil adding 0.82 percent to trade at $97.71 per barrel. Gold prices were down 0.17 percent to trade at $1,675.40 per ounce. Among major indices, the DJ-UBS Commodity rose 0.74 percent, and the Reuters-Jeffries CRB gained 0.46 percent.

Global Market:

The European markets traded in a mixed note today following the failure of lawmakers in the U.S. to reach an agreement on spending cuts. Great Britain's FTSE 100 rose 0.31 percent or 16.34 points to 5,238.94. France's CAC40 added 0.30 percent or 8.72 points to 2,903.66. However, ! Germany' s DAX was down by 0.27 percent, or 15.08 points to 5,590.92.

In the Asian market, China's Shanghai Composite closed lower by 0.10 percent, or 2.50 points to 2,412.63. Hong Kong's Hang Seng rose 0.14 percent or 25.74 points to 18,251.59. Japan's Nikkei 225 was down 0.40 percent or 33.53 points to close trading at 8,314.74. India's BSE 30 Sensex rose 0.75 percent or 119.32 points to close at 16,065.42.

Sector Scan:

The basic materials sector emerged as the market's best performing sector by the afternoon session after adding 0.51 percent during the session. Among major movers in the sector, Ultrashort Basic Materials ETF (NYSEArca: SMN) fell 0.96 percent or $0.20 to trade at $20.43. Dow Jones U.S. Basic Materials ETF (NYSEArca: IYM) was up 0.60 percent or $0.38 to trade at $63.43. Among major stocks, shares of Mosaic Co. (NYSE: MOS) rose 0.13 percent or $0.07 to trade at $53.22. Shares of CF Industries Holdings, Inc. (NYSE: CF) gained 1 percent or $1.50 to trade at $150.85. Shares of Stillwater Mining Co. (NYSE: SWC) were up 1.69 percent or $0.17 to trade at $10.25.

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Dell Passes This Key Test

There's no foolproof way to know the future for Dell (Nasdaq: DELL  ) or any other company. However, certain clues may help you see potential stumbles before they happen -- and before your stock craters as a result.

A cloudy crystal ball
In this series, we use accounts receivable and days sales outstanding to judge a company's current health and future prospects. It's an important step in separating the pretenders from the market's best stocks. Alone, AR -- the amount of money owed the company -- and DSO -- the number of days' worth of sales owed to the company -- don't tell you much. However, by considering the trends in AR and DSO, you can sometimes get a window onto the future.

Sometimes, problems with AR or DSO simply indicate a change in the business (like an acquisition), or lax collections. However, AR that grows more quickly than revenue, or ballooning DSO, can also suggest a desperate company that's trying to boost sales by giving its customers overly generous payment terms. Alternately, it can indicate that the company sprinted to book a load of sales at the end of the quarter, like used-car dealers on the 29th of the month. (Sometimes, companies do both.)

Why might an upstanding firm like Dell do this? For the same reason any other company might: to make the numbers. Investors don't like revenue shortfalls, and employees don't like reporting them to their superiors.

Is Dell sending any potential warning signs? Take a look at the chart below, which plots revenue growth against AR growth, and DSO:

anImage

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. FQ = fiscal quarter.

The standard way to calculate DSO uses average accounts receivable. I prefer to look at end-of-quarter receivables, but I've plotted b! oth abov e.

Watching the trends
When that red line (AR growth) crosses above the green line (revenue growth), I know I need to consult the filings. Similarly, a spike in the blue bars indicates a trend worth worrying about. As another reality check, it's reasonable to consider what a normal DSO figure might look like in this space.

Company

LFQ Revenue

DSO

?Dell $15,365 40
?Qualcomm (Nasdaq: QCOM  ) $4,117 20
?NetApp (Nasdaq: NTAP  ) $1,507 37
?EMC (NYSE: EMC  ) $4,980 49

Source: S&P Capital IQ. DSO calculated from average AR. Data is current as of last fully reported fiscal quarter. LFQ = last fiscal quarter. Dollar figures in millions.

Differences in business models can generate variations in DSO, so don't consider this the final word -- just a way to add some context to the numbers. But let's get back to our original question: Will Dell miss its numbers in the next quarter or two?

I don't think so. AR and DSO look healthy. For the last fully reported fiscal quarter, Dell's year-over-year revenue shrank 0.2%, and its AR grew 4.4%. That looks OK. End-of-quarter DSO increased 4.6% over the prior-year quarter. It was up 1% versus the prior quarter. Still, I'm no fortuneteller, and these are just numbers. Investors putting their money on the line always need to dig into the filings for the root causes and d! raw thei r own conclusions.

What now?
I use this kind of analysis to figure out which investments I need to watch more closely as I hunt the market's best returns. However, some investors actively seek out companies on the wrong side of AR trends in order to sell them short, profiting when they eventually fall. Which way would you play this one? Let us know in the comments below, or keep up with the stocks mentioned in this article by tracking them in our free watchlist service, My Watchlist.

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Tuesday, November 22, 2011

Closed-End Funds: Intriguing Option

At a time when money-market funds yield almost nothing, some closed-end funds offer an intriguing option for income-oriented investors.

The closed-ends aim to pay fixed annual yields. In a typical arrangement, a fund announces its intention to pay out 5% or more of its assets annually. Investors can spend the cash payments or reinvest the money.

The Closed-End Fund Association tracks 36 funds with managed distribution policies. Funds on the list include Gabelli Equity(GAB), which seeks to pay out at least 10% of its assets annually, and Royce Micro-Cap Trust(RMT), which pays out 5%. Other funds that have distributed more than 5% include Cohen & Steers Dividend Majors (DVM), H&Q Healthcare Investors(HQH), and John Hancock Bank & Thrift(BTO).

Should you buy funds with fat managed distributions? Perhaps. For retirees and other income-oriented investors, the funds offer a steady source of cash that can be used to cover bills. But the funds can be hazardous. When distributions are too steep, they can quickly erode long-term returns.

Like conventional mutual funds, closed-end funds hold portfolios of stocks or bonds. In an ideal situation, the portfolio holdings generate dividend income and capital gains, which can be distributed to shareholders.

Say a fund has a 6% managed distribution. During a bull market, the fund can easily cover the distribution by paying out capital gains and income. But if the fund suffers big losses in a market downturn, then there might not be enough income and capital gains to cover the distribution. In that case, the portfolio manager would be forced to liquidate fund assets in order to obtain cash for the distribution. This is known as a return of capital, and shareholders should not welcome it, says John Cole Scott, a portfolio manager with Closed-End Advisors, an invest! ment adv isor. "It makes no sense to own a fund that is just going to return your own money to you," he says.

Scott says some investors buy funds with big distributions and don't understand that much of the cash represents a return of capital. "If you see a fund with a 13% distribution, then you have to wonder where the money is coming from," he says.

A fund that habitually returns capital to shareholders is Cornerstone Total Return(CRF). Last year, the fund distributed about 16% of assets, including return of capital.

A fund that Scott likes is Adams Express(ADX), which recently instituted a managed distribution of 6%. Scott says that Adams Express has a record of generating income and capital gains. If that continues, the fund will be able to maintain its distribution without resorting to returns of capital.

Besides providing steady cash payouts, managed distributions can also boost the value of fund shares, says Scott. This can occur because of the peculiar structure of the funds. Closed-end funds issue a fixed numbers of shares that trade on stock exchanges. When a fund is out of favor with investors, the shares can sink and sell for a discount to the value of the assets in the portfolio. Say a fund sells at a 10% discount. Shareholders may be frustrated because they can only sell their holdings for 90% of the value of the portfolio assets. By offering managed distributions, funds hope to attract more investors. That may boost share prices and reduce discounts.

Adams Express, which has $1 billion in assets, introduced its distribution because the fund hopes to eliminate a persistent discount. One of the oldest funds, Adams was founded in 1929 and has long focused on buying blue-chip stocks. The goal has been to outdo the S&P 500 slightly while taking less risk. During the past 10 years, the fund's portfolio holdings have ac! hieved t he target.

The net asset value of the portfolio has gained 2.7% annually, edging out the benchmark, according to Morningstar. But shareholders haven't necessarily gotten the full benefit of the good returns. The problem is that a decade ago, the shares sold for a discount of around 10%. Since then the fund has fallen out of favor, and the shares dropped to a discount of around 16%.

Angry at the discount, an activist shareholder proposed liquidating the fund. If that happened, the fund would have gone out of existence, and shareholders would receive 100 cents for each dollar of assets. Most shareholders recently voted against liquidating. But the fund management decided to offer a 6% managed distribution, hoping to boost the share price and quell dissent.

Will the new distribution by Adams Express help boost the share price? Probably, says John Cole Scott. "Over time the discount could hit 14%, and that will help shareholders," he says.

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Here's How hhgregg May Be Failing You

Margins matter. The more hhgregg (NYSE: HGG  ) keeps of each buck it earns in revenue, the more money it has to invest in growth, fund new strategic plans, or (gasp!) distribute to shareholders. Healthy margins often separate pretenders from the best stocks in the market. That's why we check up on margins at least once a quarter in this series. I'm looking for the absolute numbers, comparisons to sector peers and competitors, and any trend that may tell me how strong hhgregg's competitive position could be.

Here's the current margin snapshot for hhgregg and some of its sector and industry peers and direct competitors.

Company

TTM Gross Margin

TTM Operating Margin

TTM Net Margin

hhgregg 29.9% 3.7% 2.1%
Target (NYSE: TGT  ) 29.9% 7.8% 4.3%
Best Buy (NYSE: BBY  ) 25.0% 4.3% 2.3%
Sears Holdings (Nasdaq: SHLD  ) 26.7% (0.1%) (0.8%)

Source: S&P Capital IQ. TTM = trailing 12 months.

Unfortunately, that table doesn't tell us much about where hhgregg has been, or where it's going. A company with rising gross and operating margins often fuels its growth by increasing demand for its products. If it sells more units while keeping costs in ch! eck, its profitability increases. Conversely, a company with gross margins that inch downward over time is often losing out to competition, and possibly engaging in a race to the bottom on prices. If it can't make up for this problem by cutting costs -- and most companies can't -- then both the business and its shares face a decidedly bleak outlook.

Of course, over the short term, the kind of economic shocks we recently experienced can drastically affect a company's profitability. That's why I like to look at five fiscal years' worth of margins, along with the results for the trailing 12 months, the last fiscal year, and last fiscal quarter. You can't always reach a hard conclusion about your company's health, but you can better understand what to expect, and what to watch.

Here's the margin picture for hhgregg over the past few years.

anImage

Source: S&P Capital IQ. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Because of seasonality in some businesses, the numbers for the last period on the right -- the TTM figures -- aren't always comparable to the FY results preceding them. To compare quarterly margins to their prior-year levels, consult this chart.

anImage

Source: S&P Capital IQ. Dollar amounts in millions. FQ = fiscal quarter.

Here's how the stats break down:

  • Over the past five years, gross margin peaked at 31.2% and averaged 30.8%. Operating margin peaked at 5.4% and averaged 4.9%. Net margin peaked at 2.6% and averaged 2.2%.
  • TTM gross margin is 29.9%, 90 basis points worse than the five-year average. TTM operating margin is 3.7%, 120 basis points worse than the five-year average. TTM net margin is 2.1%, 10! basis p oints worse than the five-year average.

With recent TTM operating margins below historical averages, hhgregg has some work to do.

If you take the time to read past the headlines and crack a filing now and then, you're probably ahead of 95% of the market's individual investors. To stay ahead, learn more about how I use analysis like this to help me uncover the best returns in the stock market. Got an opinion on the margins at hhgregg? Let us know in the comments below.

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El-Erian: European Banks are in Major Trouble

Pimco’s Mohamed El-Erian says Europe could be thrown into a banking (NYSE:KBE) crisis. “(There) are signs of an institutional run on French (NYSE:EWQ) banks. If it persists, the banks would have no choice but to delever their balance sheets in a very drastic and disorderly fashion,�� reports the Financial Times.

The report sent chills through Wall Street today and gave traders another reason to simply dump stocks.

��There has been a significant increase in the financial requirements of international intervention,�� El-Erian said. ��You need a lot more firepower in order to be a circuit breaker. Look at how much the ECB has put in and ask yourself the question: has it created a circuit breaker? The answer is no, even though the amounts involved have been massive.��

El-Erian’s statement comes after the IMF estimated the debt woes that have engulfed peripheral EU Nations could mean losses of over $410 billion for European banks with exposure to this debt. The banks will need to shore up capital adequacy to the extent of over $200 billion. Many banks will probably not be able to implement this without government help, says the IMF.

Keep your eye on European banks UBS (NYSE:UBS), Deutsche Bank (NYSE:DB), Barclays (NYSE:BCS), Royal Bank of Scotland (NYSE:RBS), Lloyd��s (NYSE:LYG), and Credit Suisse (NYSE:CS).

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