Saturday, September 29, 2012

Sirius XM, Research In Motion: 2 Charts Headed in Opposite Directions

I follow several stocks closely. (By "closely," I mean that these stocks are among 10 to 20 I view obsessively throughout the day). The other several hundred or so get quite a bit less attention. Lately I have spent significant amounts of time getting to know Sirius XM (SIRI) and Research In Motion (RIMM).

From a technical standpoint, a comparison of SIRI and RIMM resembles the twin sisters in high school headed in opposite directions vis-a-vis popularity, good looks, and 'most likely to succeed' designations. Both charts look 'bad'-- your perspective dictates the meaning you connote with one of our language's most versatile words.

(Charts courtesy of Schwab's StreetSmart Edge; Click all to enlarge)

I will spare you the obvious details, particularly about how SIRI and RIMM each violated their 50-day moving averages; both performances worthy of a late night slot on Cinemax.

The Williams %R, an indicator I use in my trading and investing, rides in oversold territory for RIMM and overbought territory for SIRI. However, investors should exercise caution when evaluating the Williams %R. When the Williams %R holds either oversold (under -80) or overbought (over -20) and sustains itself in that territory, the likely tip-off is that the trend might not actually be prepared to reverse. Instead, when a stock powers along as oversold or overbought, it takes sustained and intense selling or buying to keep it there. In another words, the trend is your friend.

As Seeking Alpha readers may have noticed, I believe in both technical and fundamental analysis. I probably use the former more often, but I tend to focus on fundamentals in many cases. At present time it's pretty clear that SIRI's fundamentals are lacking and RIMM's appear relatively sound. I have two problems with fundamental analysis in the here and now -- (1) It often takes what management tells us as gospel for informing future predictions and (2) It ignores 'the story'.

Like it or not, a story often drives stocks. What factor other than the story surrounding Steve Jobs' health and other noise could be keeping Apple (AAPL) down? It's almost a sin that AAPL does not trade at $400. Another prime example of a story driving a stock is Netflix (NFLX). It's almost like framing political debate. Right now, the bulls own the story on Netflix. It's the prominent line most institutions are running with. As with AAPL, big investors -- and presumably many at the retail level -- ignore reality and decide based on the story.

For SIRI and RIMM, it could very well be that the story drives the stock, as of today and the immediate past. However, the difference between SIRI, RIMM, AAPL, and NFLX is that investors likely have the story straight going forward.

While I think manipulation could be at play in SIRI's case and that RIMM bulls make a good case for a turnaround, the present story that drives each stock today should, largely, remain intact. Consider a comparison between the two companies.

  • Public performance. There's no question that Sirius XM CEO Mel Karmazin inspires Bezos-like confidence in investors. On the flip side, RIMM Co-CEOs Jim Balsillie and Mike Lazaridis look to be in a battle over who can inspire less confidence.
  • Expectations. The Amazin' Karmazin takes a page out of Steve Jobs' PlayBook (pun intended) by setting expectations low. He uses the Japan disaster as a wink and a nod to analysts to brace for less-than-stellar Q2 results. There's nothing better than a CEO who you can count on for under-delivering and over-performing. Meantime, in one breath Balsillie cannot tell you how many enterprise customers actually want RIMM products (Apple can for iPhone and iPad), yet, in the next, he sticks to absurd guidance for the company's FY2012.
  • Momentum. RIMM has none. SIRI has a whole bunch... and then some. I have made my case about RIMM's emerging irrelevance to consumers and increasing irrelevance to enterprise thanks to Apple and Android (GOOG). All we can really do now is wait to see how it plays out. I think it's safe to argue that RIMM has no momentum whatsoever. Karmazin, on the other hand, proves that he is moving Sirius XM's ship forward. He keeps investors chomping at the bit for the next step in his company's evolution -- SatRad 2.0 -- while dropping the carrot about Sirius XM's plans to capitalize on the massive Latino market. The difference between stagnant and dynamic is clear from a glance at the RIMM and SIRI charts.

Intuition leads me to believe that investors should prepare for the bottom to fall out of SIRI and RIMM to rebound. Sometimes, however, the trend is your friend. To guard against short-term burps in each stock's trajectory, I suggest playing SIRI's rise and RIMM's continued fall with LEAPS options. You can see how I suggest playing RIMM here. That strategy has no reason not to remain intact. This freefall has no end in sight, and it's not going to get better with Q2 results and an eventual guidance miss for the full year.

As for SIRI, out-of-the-money $2.00 LEAPS were once the stuff dreams were made of. To some extent, they still are. However, there's a certain allure to buying relatively cheap out-of-the-money calls on a stock like SIRI. It offers the illusion of massive richs if you're correct. I usually tend to urge caution with this strategy, but throwing a few dollars a month for the next few months at SIRI January 2013 $2, $2.50, and $3.00 LEAPS call options doesn't give me indigestion.

(Quotes courtesy of Yahoo! Finance - Click to enlarge)

Because time decay does not become a factor until we get into 2012, you have time on your side. If the stock pulls back, you can buy more options. Really, it's not much different from buying the stock itself on a dip. Given the performance Karmazin turned in last week, SIRI's momentum and the upside inherent in future and all-but-guaranteed developments, I have a hard time not seeing SIRI

past the $3.00 level come this time next year. Sadly, while it probably won't be $3.00, I see 3's in RIMM's future as well. Expect the stock to take out the $40 marker prior to the end of the 2011.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SIRI over the next 72 hours.

NYC Officials Take Notice of Astronomical Subway Construction Costs

New York City�s subway lines � the engines that keep the city�s real estate market moving � are notoriously expensive to build. Tunneling projects in New York routinely clock in at five to ten times the cost of their Asian and European counterparts, putting the city�s measly 20-30% aboveground union construction premiums to shame. New York has finally restarted work on the century-in-the-making Second Avenue Subway, but MTA capital construction president Michael Horodniceanu says that anything beyond the initial Upper East Side segment �will be for our children or grandchildren.� And Bloomberg�s 7 train to Secaucus, or those fabled Utica and Nostrand extensions? Keep dreaming.

Until recently the cost difference was only discussed in the nether reaches of the transit blogosphere, but Manhattan Borrough President Scott Stringer is finally speaking up. Both the Times and Capital reported on his recent transit conference, where in addition to the usual calls for more funding, Stringer discussed New York�s exorbitant subway construction costs. He cited union work rules and regulatory overload as the two main cost drivers, and pointed out that Subway projects have come in at three or four times as expensive as London�s Jubilee Line, which costed $700 million per mile.

So what accounts for Stringer�s sudden outburst of concern? He�s an (oft-forgotten) contender for mayor, but perhaps more importantly, the MTA�s contract with NYC Transit mega-union TWU Local 100 is up on January 15. MTA CFO Robert Foran already told Crain�s that their focus in negotiations will be winning work rule concessions rather than wage cuts, which is in line with Stringer�s statements. It will be incoming MTA Chairman Joe Lhota�s first big battle, and we�ll soon find out if he can bring prices down low enough that New York can afford to finish the Second Avenue Subway within our lifetimes.

This Just In: Upgrades and Downgrades

At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." Today, we'll show you whether those bigwigs actually know what they're talking about. To help, we've enlisted Motley Fool CAPS to track the long-term performance of Wall Street's best and worst.

Speak of the devil
And speaking of the best, two analysts have just come out with reports arguing that speech-to-text specialist Nuance Communications (Nasdaq: NUAN  ) is one of the best buys out there today. In twin buy recommendations, first Japan's Mizuho Securities initiated coverage of Nuance with a buy rating and a $28 price target. Within minutes, Canaccord Genuity -- already positive on the stock -- reiterated its support and went Mizuho one better, upping its $28 price target on the stock by $2, to an even $30.

Nuance has been in the news a lot lately, thanks to the supporting role its technology plays in Apple's (Nasdaq: AAPL  ) new Siri "virtual assistant" on the iPhone 4S. Stealing a march on Google (Nasdaq: GOOG  ) and its "Voice Actions" software, Apple took the mobile search game to a new level with its voice-activated Internet search feature. And analysts are already saying Google will need to respond with further advances, that Microsoft (Nasdaq: MSFT  ) (and its partner in smartphones Nokia (NYSE: NOK  ) ) must improve as well, and that unless Research In Motion (Nasdaq: RIMM  ) wants to rename itself "Irrelevance at a Standstill," it will need to come up with a similar product. All of this opens the possibility of additional licensing deals for Nuance, if not an outright acquisition.

Indeed, I've argued myself that a logical move for IBM (NYSE: IBM  ) might be to roll up Nuance into its "Watson" supercomputer and grab a commanding lead in this market for itself.

So clearly -- it's exciting times for Nuance these days. Still, at around 200 times earnings, the stock price does give one pause. Can even the multitude of possibilities opening up for Nuance today justify the stock's nosebleed valuation?

Future's so bright that Nuance should wear shades
Canaccord believes it does. As the analyst explains: "investors sometimes forget that SIRI is still in beta, so better functionality is yet to come [and] ... there is a literal scramble by competitors to catch up." Meanwhile, Canaccord reminds us that there's still the "'other' 70%" of Nuance's business, aside from Siri, to consider -- its health care, enterprise, and imaging businesses. These other facets of Nuance are "performing at least in line with consensus forecasts" -- and possibly better. But is even that enough to make the stock a buy?

Perhaps 200 times earnings is too much to pay for a 13% grower (the consensus forecast for Nuance). But according to Canaccord, superior performance from Siri, plus strong performance at its other businesses, could help Nuance grow organic revenues by as much as 18% and earnings by up to 20% in the 2012 to 2013 period. This, Canaccord says, justifies paying 20 times Nuance's forward earnings estimates.

Postulating $2.15 to $2.25 per share in earnings for fiscal 2014, the analyst argues Nuance could hit not just the $30 "price target" it's set for the stock, but perhaps as much as $44 per share within 18 months! And remember -- all this is just if Nuance continues to fly solo, with no need for an acquisition bid by IBM, Google, Apple, or anyone else to push up the stock price.

Can you believe Canaccord?
Could Canaccord be right? Yes. We've been tracking Canaccord's performance for more than five years now here at CAPS. And according to our records, this analyst does in fact get about 65% of its software recommendations right. Nuance could be another one of those times.

Consider: Buying a stock with a 200 P/E is a scary prospect. But if you dig deeper into Nuance's finances, the company looks cheaper than that. Run a traditional free cash flow calculation on Nuance, and its $357 million in trailing cash flow, minus capital expenditures of $35 million, gives the stock $322 million in trailing free cash flow -- and a price-to-free-cash-flow ratio of just 23. That's almost reasonable if Canaccord's right, and Nuance grows at 20% or thereabouts over the next five years.

My main worry here is that traditional FCF calculations don't capture the cost of Nuance's acquisition spree -- the vast sums this company spends to keep its growth going: $99 million in fiscal 2009, $204 million in 2010, $402 million this year. If we assume these cash outlays are integral to Nuance's business (as I believe they are), and not "one-time" in nature (as they clearly are not), then I'd argue they should be counted against Nuance's FCF. In which case, Nuance becomes free cash flow negative -- in the blink of an eye.

Foolish takeaway
Between Nuance's past success, Siri's future prospects, and the record of the analyst recommending it, I see many reasons to buy Nuance today. Regardless, the company's ceaseless acquisitions keep me from buying it.

I may not yet be convinced that the company is a dog. But I'm not brave enough to buy it, either.

Do the nuances of a triple-digit P/E and potential cash burn worry you? Fair enough. Maybe you'd prefer buying a few steady-eddy dividend payers instead? If so, read the Fool's new -- and free! -- report: "13 High-Yielding Stocks to Buy Today."

Bond Demand Grows

After vacuuming around $42 billion over the past 12-months, it's been a good year for managers of bond ETFs.

The credit market is slowly returning to some semblances of normal, which has rebuilt confidence. Several bond managers have added bond ETFs to fill gaps in their product lineup.

BlackRock introduced the iShares 10+ Year Credit Bond Fund (CLY) and the iShares 10+ Year Government/Credit Bond Fund (GLJ).

CLY tracks the BofA Merrill Lynch 10+ Year US Corporate & Yankees Index, which is designed to measure the performance of the long-term, investment-grade U.S. corporate and Yankee bond markets. Component securities include debt issued publicly by U.S. corporations and U.S. dollar-denominated, publicly-issued debt of non-U.S. corporations, foreign governments and supranational agencies.

GLJ follows the BofA Merrill Lynch 10+ Year US Corporate & Government Index. It's tied to the performance of the long-term, investment-grade U.S. corporate and government bond markets. Bonds inside the fund include publicly-issued U.S. Treasury debt, U.S. government agency debt, debt issued by U.S. and non-U.S. corporations, foreign government debt and supranational debt.

In December, BlackRock completed its merger with Barclays Global Investors and its iShares business. The combined firm now operates under the BlackRock name. Barclays Bank will continue managing its 30 iPath ETNs with around $5.5 billion in assets. According to the prospectus, both iShares bond funds have annual expense ratios of 0.20 percent.

In other bond ETF news, State Street Global Advisors has just added the SPDR Barclays Capital Short Term Corporate Bond ETF (SCPB) to its ETF lineup.

SCPB is linked to the price and yield of the Barclays Capital US 1-3 Year Corporate Bond Index, which includes corporate issues that have a remaining maturity of greater than or equal to one year and less than three years, are rated investment grade (average A2/A3 credit rating), and have $250 million or more of outstanding face value.

"As investors look to improve the diversification of their fixed income holdings, demand for precise access to the corporate bond duration curve has increased," according to Anthony Rochte, senior managing director at State Street Global Advisors.

"The SPDR Barclays Capital Short Term Corporate Bond ETF can help investors position their portfolios for a potential increase in interest rates, as short-term corporate bonds are historically less sensitive to interest rate movements than longer term issues," he adds.

Friday, September 28, 2012

Who Gets Burned By The Kindle Fire?

With a few hours to think about it, many in the tech press are having second thoughts about who might win, and who might lose, in the wake of the Amazon (AMZN) Kindle Fire announcement. It's vital, before you invest, that you understand all this.

Taken all-in-all, the Amazon announcements turn out to be as important in their way as Apple's (AAPL) original iPhone launch. They transform tech business models through a combination of hardware, software, services and commerce in ways that will help some companies, and destroy many others.

Ecosystems – As regular readers here know I called ecosystems the new buzzword for fall earlier this month. The Ecosystem Era is now fully upon us. Hardware, software, services and commerce are now combined in one package, and consumer electronics players must find ways to compete.

The Browser – The Fire features a new browser called Silk that compresses files on the server side, that is, in its EC2 cloud. What happens to users during the next EC2 outage?

There are also privacy implications here. Amazon must watch user traffic to maximize Silk's capabilities. And Amazon promises to deliver the “right size” file for your device. What if a user wanted the bigger file? And with Amazon caching so much content, are you really getting the latest news?

The Business Model – The long media tail now wags the hardware dog. If you don't have a cloud, if you don't sell media, how do you compete with Amazon on price? This doesn't just impact Research In Motiom (RIMM) but also Hewlett-Packard (HPQ) and Dell (DELL) as well. And given the hands-off nature of Amazon's business model (and the likelihood others will copy it), stores like Best Buy (BBY) now look like very bad buys indeed.

On the other hand, both Google (GOOG) and Microsoft (MSFT) can respond to this threat. A Google TV now makes a lot more sense, and if Microsoft can acquire Hulu (or another content play) their Azure cloud is much better-positioned to compete. After all, they're already serving Xbox game systems. Adding commerce, even if it's not on Amazon's scale, now makes sense for both companies. Overstock.com (OSTK) anyone? One of these companies might also make a nice home for Barnes & Noble (BKS). Expect Netflix (NFLX) stock to be hit hard, maybe hard enough for it to be worth buying.

China – Companies like Baidu (BIDU) and Alibaba, which have been toying with the idea of selling phones or tablets for months, may now need to accelerate their plans in order to match what Amazon (and in time others) offer. Given Yahoo's (YHOO) ownership of a big Alibaba stake, this makes them a better acquisition as well.

Apple (AAPL) - Apple has plenty of cash to respond fully to this threat. They could buy Overstock and B&N with seat cushion money, for instance, then add those channels to its online operations quickly. But here is the problem. Where it previously found itself the low-price leader in the space, it suddenly faces a foe with prices 50% lower. And how far behind might an Amazon phone be, really?

Clouds – There are major implications here for cloud infrastructure providers like Rackspace (RAX). While Dell is building its own cloud infrastructure, companies like Hewlett-Packard (and maybe even Samsung (SSNLF.PK) will definitely need branded services and commerce in order to compete with Amazon's prices. The cloud era is now fully on in consumer markets, so invest accordingly.

Disclosure: I am long GOOG.

Many Pointe Footwear is not really Made the same. Think about these Essential Ideas to help you Come across Just the Right Pointe Running shoe

<b>Dancing On Pointe</b>

Dancing inside pointe shoes or boots needs a wide range of energy along with many years of instruction. To stop damage, it is recommended that you don’t make an effort to dance inside pointe shoes or boots if you have not also been properly trained inside dancing. Furthermore, it’s not necassary to acquire pointe shoes or boots until you have also been made to do so by the educator.

Pointe shoes or boots are not designed with all the flexible along with ribbons sewed about. Normally, these items are offered separately. Before using the flexible along with ribbons, let your educator look at the in shape in the shoe. Once the particular ribbons along with flexible is sewed about, pointe shoes or boots are not delivered.

<b>Structure Is really a Difference</b>

Pointe shoes or boots include things like a number of areas, all of these are generally standard inside that this shoe satisfies. When trying to get the right pointe shoe, to be familiar with essential words to produce your option:

<b>�Box: leading, wide section of the pointe shoe</b>
The lamp could be either wide or even tapered. A tapered pack is slimmer toward the tip in the shoe along with will get bigger mainly because it approaches the particular drawstring. Shoes or boots with a tapered pack are perfect for ballroom dancers as their feet reduction in duration on the big toe or hallux towards the pinky feet. Shoes or boots with a bigger pack are fantastic for ballroom dancers as their feet are common towards the identical duration.

<b>�Vamp: the most notable section of the pointe shoe, which is a extension in the box</b>
Vamps can be “V” shaped or even “U” shaped. “V” shaped vamps are usually extended, which gives the particular ft . some extra assist.

<b>�Shank: the “spine” in the pointe shoe</b>
This shank will be the section of the shoe that must be “broken inside.” This shank supplies mid-foot assist within the shoe. Shanks can be found in distinct strong points: tough, medium, along with delicate. The majority of rookie pointe ballroom dancers should find medium or even tough shanks to make energy inside their archways.

<b>�Platform: the particular flat conclude in the pack that you simply relevee onto</b>

<b>�Throat: the open spot the place that the ft . fits into the particular shoe</b>

<b>Find the ideal Fit</b>

Pointe shoes or boots will need to have an exact in shape about the ft ., similar to some sort of sock. To acquire the right in shape, consider the following tips:

�There are numerous distinct models connected with pointe shoes or boots to select from; each are manufactured differently to fit different kinds of ft. Do not buy some kind of pointe shoe simply because your friend features all of them. Try to find the style that may be comfy along with satisfies your ft . very best.

�The dimensions connected with pointe shoes or boots is usually different from the particular dimensions connected with neighborhood shoes or boots. Some models connected with pointe shoes or boots work small compared to neighborhood shoes or boots although various other models work bigger neighborhood shoes or boots.

�If purchasing pointe shoes or boots on the internet, almost all websites supply size graphs which evaluate how big the particular pointe shoe towards the size some sort of neighborhood shoe.

�If purchasing pointe shoes or boots coming from a shop, it is advisable to allow member of staff measure your ft ., or even notify the worker how big your neighborhood shoe.

�When standing typically inside pointe shoes or boots, feet should achieve the conclude in the shoe, nevertheless mustn’t be done situps, bias, or even overlapped. When feet are generally done situps or even bias, consider the next size up. When feet are generally the overlap golf the other, get a bigger breadth or perhaps a shoe with a bigger pack.

�When browsing relevee, presently there should basically some sort of thumb’s breadth connected with nip at the back heel in the shoe.

�Make sure to take along with tie the particular drawstring in order for the shoe is really as snug as they can be. This will help to maintain the shoe via moving off.

Pampos gives a wide range of pointe shoes or boots along with add-ons for novices by way of experts to assist you to discover the perfect in shape. Order online or even contact us using inquiries you might have to be useful for finding the particular pointe shoe that may be suitable for your ft ..

Various of the simplest canon printers might always be found in this case, yet one may also come across printer cartridges along with denim shorts if you have a look at much of our internet site

Positive Sign for Investors: Analysts Initiate Coverage on Demand Media

It appears as if something came of Demand Media's (DMD) conference presentations last week. Several firms initiated coverage of the company on Monday, with generally positive comments across the board. The following information comes courtesy of Briefing.com's InPlay service.

  • Stifel Nicolaus initiates coverage on Demand Media with a buy and price target of $28. Analyst says "it is very difficult for any company to replicate what DMD has built, especially with the scale to produce millions of articles per year. Additional growth in traffic and monetization can come from social media (e.g., Facebook and Twitter) and the growth of branded ad sales.
  • UBS starts DMD with a buy rating and $29 price target. UBS contends "DMD is well-positioned to take advantage of the fragmentation of online media as consumers increasingly search for more specific long-tail topics."

  • Goldman opens coverage on DMD with a buy rating. (A conflicting report from Business Insider states that Goldman started DMD as a hold).

  • Jefferies begins coverage with a hold and price target of $22.

While I hardly live and die by analyst recommendations, investors should take this initial street coverage of DMD as a major positive sign. Until now, particularly during the company's IPO-quiet period, all investors could find when searching for news on DMD were uninformed hack jobs generated from individuals with scant understanding of the company beyond the tired eHow/Google (GOOG) search debate. The street seems to be looking past the Google squabble, opting instead to consider DMD's wider-ranging business model and future prospects, irrespective of Google.

As Stifel Nicolaus notes, Demand "says recent results confirm a payback horizon for content investment of less than 15 months..." Translation: After DMD pays overhead for an article (e.g., pay the freelancer, the editor, etc.), it takes less than 15 months for the company to start earning money on that article. Stifel Nicolaus goes on to say while "revenues and traffic from Google is high, the opportunity to extend its platform to mobile, social, and through third-party syndication partners should drive shares higher over the long term." Translation: Somebody at Stifel actually listened to DMD's first conference call and then at some point thereafter received reiteration from the company about its plans.

These plans will lessen DMD's reliance on Google for both traffic and revenue. As Stifel notes in its report, summarized by Briefing and at Business Insider, DMD hired away a Yahoo! (YHOO) executive to lead advertising efforts.

And it's not all about eHow, DMD-owned sites such as Cracked.com and Livestrong.com already generate promising revenue, which should continue to increase as the company rapidly builds out its direct sales efforts. In plain English, this means that going forward, DMD will be less reliant on viewers of its content clicking on Google ads to make the company money. Instead it will generate increasing amounts of revenue through the ads it sells directly. It's already doing this, however, the effort stands on the cusp of becoming a significant revenue generator that surpasses the numbers it produces thanks to Google.

Stifel also picked up on what Richard Roseblatt discussed on the company earning's call. While Google still drives a majority of traffic to DMD content, the growth the company is experiencing in social media referrals to its sites outpaces search referrals. UBS was listening when Rosenblatt noted that DMD attempts to fill gaps in online content. While eHow articles tend toward the obscure, Rosenblatt pointed out that thousands of people search for answers to the world's most seemingly useless questions to little or no avail. When DMD fills one of these holes with a targeted piece of content, it's at its best.

DMD shares actually dropped on the news. As of midday Monday, shares were trading at $23.79 after hitting an all-time high of $26.46 intraday Friday. For investors with a relatively long-term time horizon this might be the time to buy the dips and position yourself to take advantage of DMD's growth potential. Stifel expects DMD to post a profit of $55 million on revenues of $507 million in 2013.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Top Stocks For 6/17/2012-2

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Friday Jan. 29, 2010

DrStockPick.com Stock Report!

CSRH, Consorteum Holdings Inc, CSRH.OB

Consorteum Holdings, Inc. CEO will be Interviewed Today LIVE on Leading National Financial Radio Show

LAS VEGAS–(CRWENEWSWIRE)–Consorteum Holdings, Inc. (OTCBB:CSRH) today announces that CEO Craig Fielding will be interviewed LIVE today on the Big Biz Show � listen and watch live on radio, television and Internet.

Craig Fielding, CEO of Consorteum Holdings, Inc., will conduct an interview on the �Big Biz Show� between 4:00 p.m. and 5:00 p.m. EST. The interview will be aired across the country on radio via the CBS Radio Network, The Business Talk Radio Network and on television on Biz Television.

Mr. Fielding will be addressing Consorteum�s current status, business strategy for the upcoming year and the impact of the company�s recent announcements.

Consorteum Holdings, Inc., www.consorteum.com, a publically traded company under (OTCBB:CSRH), a cutting edge technology and transaction management company, will be featured in a LIVE radio interview today on �The Big Biz Show with Sully and Russ T Nailz.�

About Consorteum Holdings Inc.

Consorteum Holdings Inc. will build on its extensive expertise within the Payments and Transaction Industry in North America, Europe, and internationally by identifying new technologies and trends in the changing global marketplace. Consorteum Holdings Inc. aims to increase revenues in existing markets, enter new markets, and deliver unique products and services more effectively and efficiently. Each program and initiative launched is designed to drive additional transaction based, long-term revenues and increased shareholder value. Consorteum Holdings Inc. has built its reputation with one goal, �For our customers to look at us as partners, not just a technology provider.�

For more information, please visit: www.consorteum.com.

About the Big Biz Show

The “Big Biz Show” broadcasts out of San Diego, California. The show, recently named by TALKERS Magazine as one of the �Top 10 Most Influential Financial Shows� in the country, is highly recognized for discussing current business events, internet related issues, and other hot topics in the business world; doing so in an informative, laid back, and humorous manner. Craig Fielding’s interview is with Bob “Sully” Sullivan and Russ “T Nailz” Stolnack; both of which are renowned and experienced radio broadcast personalities. The “Big Biz Show” airs Monday through Friday, 4:00 p.m. to 6:00 p.m. ET. The show can be viewed live on the air by visiting the web site.

For further information please visit: www.bigbizshow.com.

Forward-Looking Statements:

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. In evaluating such statements, prospective investors should review carefully various risks and uncertainties identified in this release and matters set in the company’s SEC filings. These risks and uncertainties could cause the company’s actual results to differ materially from those indicated in the forward-looking statements.

Contact:

Consorteum Holdings Inc.
+1-866-824-8854
investors@consorteum.com

PPG Industries Beats on EPS but GAAP Results Lag

PPG Industries (NYSE: PPG  ) reported earnings on April 19. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), PPG Industries met expectations on revenue and beat slightly on earnings per share.

Compared to the prior-year quarter, revenue increased and GAAP earnings per share dropped significantly.

Gross margin expanded, operating margin expanded, and net margin contracted.

Revenue details
PPG Industries booked revenue of $3.75 billion. The nine analysts polled by S&P Capital IQ foresaw revenue of $3.78 billion on the same basis. GAAP reported sales were 6.2% higher than the prior-year quarter's $3.53 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $1.81. The 11 earnings estimates compiled by S&P Capital IQ forecast $1.78 per share on the same basis. GAAP EPS of $0.08 for Q1 were 94% lower than the prior-year quarter's $1.40 per share.

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 40.6%, 80 basis points better than the prior-year quarter. Operating margin was 11.8%, 80 basis points better than the prior-year quarter. Net margin was 0.3%, 620 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $4.19 billion. On the bottom line, the average EPS estimate is $2.33.

Next year's average estimate for revenue is $15.67 billion. The average EPS estimate is $7.82.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 338 members out of 363 rating the stock outperform, and 25 members rating it underperform. Among 102 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 100 give PPG Industries a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on PPG Industries is outperform, with an average price target of $96.86.

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  • Add PPG Industries to My Watchlist.

Opinion: The War on Fertility423 comments

If there is one word that captures the Orwellian nature of contemporary feminism, it is "choice." It's not just the word's wide use as a euphemism for abortion. You can understand why people on that side of the abortion issue prefer to frame their position in abstract terms, as a defense of liberty, rather than concretely discussing the specific freedom they are defending. Some of them are no doubt sincere in saying that they favor "the right to choose" in general and have no brief for abortion in particular.

But not all. People who claim to favor "reproductive choice" are often quite judgmental about the reproductive choices of others. This column has occasionally noted anecdotal examples, such as the lady at a party last year, a self-described feminist, who angrily described Sarah Palin as a "moron" for having encouraged her pregnant daughter to carry the child to term and "to marry the sperm donor" (feministspeak for the biological father). Another was the man who encouraged pregnant and unmarried Katie Roiphie, a feminist author, to get an abortion and have a "regular baby" later.

Only a bit less harshly, Washington Post columnist Lisa Miller puts such sentiments into writing:

Between them, Mitt Romney and Rick Santorum have as many children--12--as the tribes of Israel. Ron Paul has five of his own, and in an early debate, perhaps unwilling to be outdone by Michele Bachmann's fostering of dozens, Paul boasted that when he worked as a physician he delivered "4,000 babies." There's nothing wrong with big families, of course. But the smug fecundity of the Republican field this primary season has me worried. Their family photos, with members of their respective broods spilling out to the margins, seem to convey a subliminal message that goes far beyond a father's pride in being able to field his own basketball team. What the Republican front-runners seem to be saying is this: We are like the biblical patriarchs. As conservative religious believers, we take seriously the biblical injunction to be fruitful and multiply.

"We've come a long way from the days of the Bible, baby, and I don't want to go back there," Miller declares. She goes on to celebrate birth control, which enabled women "to take charge of their fertility, and in so doing, to take charge of their education, their earnings potential, and eventually, the planning of their families, and the loving, nurturing raising of their children."

"Family planning is good for families," she insists, ignoring the sharp rise in divorce and illegitimacy since 1960, when the Food and Drug Administration approved the pill for contraceptive use. In fairness, maybe she means to make a more modest claim--that for the subset of the population who have been able to form and sustain marriages despite the social dislocations of the past half-century, birth control has on balance been beneficial.

But in any case, why does it so bother Miller that the Romneys, Santorums and Pauls (and also the Palins, whom she mentions in another paragraph) made the choice to have large families? If she cared about choice, she would recognize it's none of her business. But contemporary feminism does not actually value choice, except as a means to an ideological end, which is the obliteration of differences between the sexes. The biggest such difference consists in the distinct and disparate demands that reproduction makes on women. Thus in order to equalize the sexes, it is necessary to discourage fertility. Implicit in contemporary feminism is a normative judgment that having children is bad.

If this were made explicit, of course, the whole project would fall apart. Feminism is politically unviable without the support of at least a substantial minority of women, and women (or at least most women) do have a maternal instinct. So feminism has to wage its war against fertility covertly, rationalizing it in terms of other goals. A revealing example comes from a CNSNews.com report on testimony that Kathleen Sebelius, the secretary of health and human services, gave to a House subcommittee the other day:

Sebelius told a House panel Thursday that a reduction in the number of human beings born in the United States will compensate employers and insurers for the cost of complying with the new HHS mandate that will require all health-care plans to cover sterilizations and all FDA-approved contraceptives, including those that cause abortions."The reduction in the number of pregnancies compensates for the cost of contraception," Sebelius said. She went on to say the estimated cost is "down not up."

We're skeptical that this prediction will pan out, because it assumes that the ObamaCare mandate will lead to a substantial increase in contraceptive use and thus a reduction in pregnancies and childbirths. But Sebelius's logic, as far as it goes, is unassailable: The pill is a hell of a lot cheaper than the medical costs (never mind the nonmedical ones) of prenatal care, childbirth, pediatric care and adult care until 26, the ObamaCare age of majority.

ObamaCare is just a start, argues Louise Trubek in today's New York Times. A retired law professor, she was a plaintiff in an unsuccessful 1950s lawsuit seeking the legal recognition of a right to contraception, a right the Supreme Court affirmed in Griswold v. Connecticut (1965):

We won the legal battle but not the war. Women are still not guaranteed control over their lives, because the necessary social supports were never secure. The initial goal of Griswold was to help women--and even though the precedent has helped with same-sex marriage laws, those initial needs, especially of poor women, have been left largely unmet. The universal coverage plan outlined in President Obama's Affordable Care Act is a good step forward, and we should do all we can to ensure it.

Sebelius's defense of the contraception mandate dovetails nicely with Trubek's call for even greater expansions of the entitlement state. Think of the money the government saves by preventing childbirth as a down payment on the next big package of benefits.

Enlarge Image

Close Taylor Dinerman

"One family, one child, four modernizations": a Red Chinese propaganda poster from 1987.

Perhaps you have spotted the flaw in the Sebelius logic. Yes, in the short term, contraception is cheaper than fertility. In the long term, however, a war on fertility is an act of cultural and economic suicide. Today's low fertility is tomorrow's shortage of productive citizens--of the taxpayers who would have to pay for the ever-expanding entitlement state.

The continuing collapse of European welfare statism is as much a crisis of demographics as of sclerotic government. Even communist China, which somewhat ironically lacks a Western-style welfare state, is having to reckon with the unintended long-term consequences of its one-child policy.

America has some hope for the future, though. Its fertility rate has not declined as sharply as in other Western nations, in part thanks to families like the Romneys, Santorums, Pauls and Palins. The polarization of American politics gives reason for hope about America's political future, too. As we posited years ago in "The Roe Effect," the left's war on fertility is likely to have its greatest success in reducing the fertility of left-leaning women, thereby ensuring that future generations are more conservative. Now you can see why Lisa Miller is in such a bad mood.

First, They Came for the Rich Why shouldn't middle-class Americans favor higher taxes on the rich? Without meaning to, Baroness Catherine Ashton look-alike Froma Harrop answers the question:

At some point, Americans will have to engage in a grown-up discussion about a value-added tax, which is a kind of national sales tax. . . .Expecting Obama to share stern truths before the November election may be unrealistic. And getting a useful conversation going among Republican candidates--all of whom say they'd refuse $10 of spending cuts for $1 of new taxes--is impossible.But one can hope that Obama will at least launch us on some baby steps toward understanding what must be done--considering a VAT, for example. And when talking about higher taxes, rather than saying "for the rich only," he should say, "The rich come first."

The rich don't have enough money to keep up with the massive growth of the government, especially as Harrop and her fellow baby boomers retire. But socking it to the rich would buy more time to keep promising more entitlements, which would have to be paid for down the road by massive new taxes on the nonrich.

Jim Pethokoukis writes that a new book by liberal journalist Noam Scheiber predicts Obama will do just that if elected to a second term:

Generating the tax revenue that Obama would need to finance all his spending would require sharply higher taxes on the wealthy--and everybody else. And according to Scheiber, Obama might well like to start the taxathon with a $3 trillion tax hike on all Americans [by allowing all the Bush tax cuts to expire at the end of this year]. Of course, that still wouldn't be enough, which is why the next step might be a value-added tax.

Obama's class warfare isn't really about defeating the rich. It's a divide-and-conquer strategy aimed at trapping the middle class in a much more powerful entitlement state.

The Enthusiasm Gap Good news for Republicans in a new Gallup poll:

By 53% to 45%, Republicans, including independents who lean Republican, are slightly more likely than Democrats and Democratic leaners to say they are "more enthusiastic than usual about voting" this year. Republicans have consistently led Democrats in voting enthusiasm since last fall, but to varying degrees.

More striking than the GOP's fairly modest enthusiasm advantage is the turnaround from February 2008, when the Democrats had a huge advantage, 79% to 44%. That's a nine-point rise in GOP enthusiasm and a 34-point fall-off for the donks.

One shouldn't overinterpret these figures. Democrats had a six-point enthusiasm advantage in February 2004 but lost that year's election clearly, while Republicans did 12 points better than Democrats in February 2000 and ended up barely winning. Changes in party identification may affect these numbers, too. Still, the GOP enthusiasm edge coupled with President Obama's continuing poor performance among true independents ought to be a tonic for depressed Republicans.

'Not Saddened' From a Los Angeles Times report on Andrew Breitbart's untimely demise:

His death produced polarizing responses online. Conservatives lamented the death of a visionary, and attacked the tweets of some liberals who were not saddened at Breitbart's death.

The problem isn't that the liberals "were not saddened" but that they gloated and vented their hatred for Breitbart. The way the Times turns that around to portray conservatives as aggressors is another point in favor of Breitbart's argument about the "Democrat-media complex."

Other Than That, the Story Was Accurate "Correction: The original version of this story referred to the Cato Institute as libertarian. Through the editing process, Cato was mislabeled as conservative. This inaccuracy was corrected and properly identifies the Cato Institute as libertarian."--Washington Post website, March 1

Homer Nods Yesterday we speculated that Janet Robinson, former CEO of the New York Times Co., may be paying her own insurance premiums now that she's out of a job. A reader points out that a Times Co. filing with the Securities and Exchange Commission discloses the company is to pay her premiums for 12 months as part of her multimillion-dollar severance package. So you can stop worrying.

Charles Blow Learns a Lesson? "Head Lice Changes Lead to Head Scratching"--headline, CBC.ca, March 1

With DNC in MInd, City Bans Carrying Urine, Feces "Kirstie Alley Has New Role as Poise Light Bladder Leakage Fairy"--headline, AdAge.com, March 1

That Didn't Work for Larry Craig "Mayor Clarifies Reason for Stance"--headline, Windsor (Colo.) Beacon, March 1

Can We Have Your Liver Then? "Dutch Mobile Euthanasia Units to Make House Calls"--headline, Guardian website (London), March 1

Cause and Effect

  • "Sarkozy Hides in Bar After Insults, Eggs Fly"--headline, Agence France-Presse, March 2
  • "Something to Cluck About: Major Oeuf Shortage in France"--headline, Newscore, March 2

'Does Anyone Know zee combinaison?' "Sarkozy: French Journalists Trapped in Syria Safe"--headline, Associated Press, March 1

So Much for the War on Drugs "Illinois Town All Too Versed in Taking a Hit"--headline, New York Times, March 2

Mere Alcohol Doesn't Thrill Me at All "Michigan Drops Illinois in Champaign"--headline, BTN.com, March 1

Another Victory in the War on Obesity "AT&T Ends All-You-Can-Eat"--headline, The Wall Street Journal, March 2

At Least Dad Works Out "Muncie Teenager Accidentally Shot by His Father in Good Condition"--headline, Star Press (Muncie, Ind.), March 2

Math Is Hard "Charles Barkley's Criticisms Don't Add Up"--headline, NewsOK.com (Oklahoma City), March 2

Questions Nobody Is Asking

  • "Buying Your House From Ikea? Swedish Furniture Maker Launches $86,000 Flat-Pack DIY Home"--headline, Daily Mail (London), March 2
  • "Does Rush Limbaugh Owe America a Sex Tape?"--headline, New York magazine website, March 2

Answers to Questions Nobody Is Asking

  • "Dating After Divorce: Why I'm Never Remarrying"--headline, Puffington Host, March 2
  • "Olympia Snowe: Why I'm leaving the Senate"--headline, Washington Post, March 2

It's Always in the Last Place You Look "Radical Theory of first Americans Places Stone Age Europeans in Delmarva 20,000 Years Ago"--headline, Washington Post, March 1

Too Much Information "Wilt Chamberlain 'Could've Scored 100 Many a Night,' Former Referee Says"--headline, Patriot-News (Harrisburg, Pa.), March 2

Someone Set Up Us the Bomb "Man Shot in Face Is Angry Judge Lowered Alleged Shooter's Bond"--headline, AnnArbor.com, March 2

Breaking News From 1562 "Witchcraft Is Growing Threat to Children in Britain, Warn Police"--headline, Daily Telegraph (London), March 2

Bottom Stories of the Day

  • "PRSA Announces the Final Definition of 'Public Relations' "--headline, Ragan.com, March 2
  • "Unions to Push to Block 'Right to Work' in Michigan"--headline, Detroit News, March 1

Is That an Empty Promise or an Empty Threat? With Anthony Weiner having been shamed out of public life, The Atlantic's Jeffrey Goldberg is the leading public example of Weiner's awkward type: the fervent supporter of Israel who is also a fervent supporter of Barack Obama. It's not surprising, then, that the president would choose an interview with Goldberg to deliver what is supposed to be a message of reassurance to the Jewish state:

In the most extensive interview he has given about the looming Iran crisis, Obama told me earlier this week that both Iran and Israel should take seriously the possibility of American action against Iran's nuclear facilities. "I think that the Israeli government recognizes that, as president of the United States, I don't bluff." He went on, "I also don't, as a matter of sound policy, go around advertising exactly what our intentions are. But I think both the Iranian and the Israeli governments recognize that when the United States says it is unacceptable for Iran to have a nuclear weapon, we mean what we say."

Two points: First, How credible is it for Obama to say, "I don't bluff," when last summer he told the House majority leader: "Eric [Cantor], don't call my bluff," when he turned out to be playing an exceptionally weak hand?

Second, just how gullible is Goldberg? Does it not occur to him that "I don't bluff" is exactly the kind of thing people say who do bluff?

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(Carol Muller helps compile Best of the Web Today. Thanks to Rick Wiesehan, Bill Kicak, Michele Schiesser, Chas. Hamilton, July Linett, Hillel Markowitz, Eric Jensen, R.M. Amrine, Michael Segal, Mark Finkelstein, Ed Grinberg, Leiv Lea, Daniel Mullen, Bruce Goldman, John Sanders, Mark King, Jim Sharp, David Hallstrom, John Bobek, Doug Black, Zack Russ, T.K. Smyth, Jeryl Bier, Clint Okerlund, Bill Briggs, Larry Pollack, Loren Allred, Nick Kasoff, Nathan Wirtschafter and Ed Lasky. If you have a tip, write us at opinionjournal@wsj.com, and please include the URL.)

ADTRAN Beats Analyst Estimates on EPS

ADTRAN (Nasdaq: ADTN  ) reported earnings on Jan. 18. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), ADTRAN met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue increased, and earnings per share dropped.

Margins dropped across the board.

Revenue details
ADTRAN booked revenue of $175 million. The 19 analysts polled by S&P Capital IQ anticipated revenue of $175 million. Sales were 6.0% higher than the prior-year quarter's $165 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
EPS came in at $0.48. The 16 earnings estimates compiled by S&P Capital IQ anticipated $0.46 per share. GAAP EPS of $0.48 for Q4 were 12% lower than the prior-year quarter's $0.55 per share.

Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 56.6%, 200 basis points worse than the prior-year quarter. Operating margin was 23.5%, 360 basis points worse than the prior-year quarter. Net margin was 17.8%, 400 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $177 million. On the bottom line, the average EPS estimate is $0.47.

Next year's average estimate for revenue is $805 million. The average EPS estimate is $2.26.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 166 members out of 185 rating the stock outperform, and 19 members rating it underperform. Among 57 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 53 give ADTRAN a green thumbs-up, and four give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on ADTRAN is outperform, with an average price target of $35.59.

  • Add ADTRAN to My Watchlist.

Are Tablets Bad for Lexmark?

Lexmark International (LXK) manufactures and sells laser printers and cartridges, primarily to business customers in North America and Europe. It competes with HP (HPQ), Xerox (XRX), Canon (CAJ), and Kyocera (KYO) in the printer business.

The recent rise in popularity of tablets, e-readers and other mobile devices has led to more and more people opting to go paperless and shift their content consumption to the digital stage. As Lexmark’s core business is the sale of printers and cartridges, this could spur downside to our $47.40 price estimate for Lexmark’s stock. Our price estimate currently stands about 30% ahead of market price.

(Chart created by using Trefis' app)

Slowdown in Printer Sales

Over the years, increasing digital communication (e.g. emails, PDFs, and digital forms) has slowed printer demand. People opt to send forms and letters over email rather than printing and mailing a hard copy. Concurrently, greater availability of wireless broadband Internet, shared network printers, and mobile computing has made it easier for groups to share printers, putting additional downward pressure on demand for printers.

More recently, the surge in demand for tablets, e-readers and smartphones has provided a reliable means for users to access their documents anytime and anywhere, further reducing need for printers. With an increasing number of organizations looking to equip their employees with these devices going forward, printer sales could decline considerably.

We currently estimate that global laser printer sales will increase from around 46 million units in 2010 to 72 million by the end of our forecast period. But if the trends towards reduced printer need take hold, and printer unit sales increase at a slower rate to 60 million units, it would imply 5% downside to our $47.40 price estimate for Lexmark.

(Chart created by using Trefis' app)

Fewer Cartridges per Printer

While the number of cartridges per laser printer has historically increased, lower paper consumption in the future could alter the trend. We currently forecast that the number of cartridges per laser printer will remain constant going forward, at around 7. However, a reduction in demand to 6 cartridges per laser printer over our forecast period would imply 5% downside to our $47.40 Trefis price estimate for Lexmark’s stock.

You can drag the trend lines in the interactive charts above to see how various scenarios for laser printer units sold and cartridges per laser printer affect Lexmark’s stock value.

Disclosure: No position

Green Investments, the Way of the Future Or Not?

Green funds or green investment are basically certain investment channels, such as stocks, ETFs and mutual funds, wherein green investment are made to business organizations that work towards improving the environment. Now, there is a vast range of green investment, such as developing alternative fuels (e.g.: biofuels), solar planes, green cars, green buildings, reforestation, etc. Simply put, green funds are those that invest mainly in companies working for the environment or industries that work for amending the current environmental situation. These Green funds repel companies that pollute and only support those that are environmentally friendly and help in the wellbeing of our planet. Most green investment are made through Green Mutual Funds. Green Mutual Funds are the funds invested in companies or organizations that have a high level of activity of projects that are beneficial to the environment. Basically, there are two models of such companies – one that is actively involved in helping the environment, and the other which follows certain guidelines that are environmentally friendly.

Exchange traded funds, commonly abbreviated to ETFs, are bought and sold in much of a similar manner as any other stock is. However, there are certain criteria to consider while choosing a green ETF. These may include: turnover, expense ratio, and index weighing and composition. Several green ETFs are available, most preferred being renewable energy ETFs and water sector ETFs. Lately, the green stock market has been flourishing. With the shocking increase in oil consumption, natural disasters as well as the perilous effects of global warming on our planet, more and more people are opting for green investment. It’s not only a means of investing wisely, but also a means of ensuring the safety of our planet. Recycling, reforestation, renewable energy, organic food, agriculture, green cars, energy efficiency, waste water treatment, etc., all are areas of green investment. Money may be invested in any of the above green industries. However, investing in green funds is a no child’s play. The trick is to invest, in what one would call, “safe green funds”. Take Allianz, for example. It is not the only green mutual, but it is one of the few that offers a wide diversity of green investment in eco-friendly companies, such as hybrid vehicles, water filtration systems, desalination plants, and pollution solutions. Going green has never been this easy before. Start with baby steps. Switch from fossil fuels (i.e. diesel and petrol) to alternative energy. True, alternative energies like biomass, solar energy, wave power are unconventional, but they are known to have a minimal effect on the environment. Green investment can also be made in alternative energy mutual funds, which are like any other green mutual fund company.

The difference is that these funds extract money solely from investors looking for capital returns in alternative energy sector companies. The funds are then invested in companies that deal with this particular area of green investing. However, as with every ethical and moral issue, controversies also run amok in the field of green investment. What one individual may consider a green investment, another may not. And since there is no particular definition of a green investment, green investors are making sure that they do a bit of research to ascertain whether the company they are investing in fits the bill of what they would consider “green”. The future of green funds as well as its corresponding stock market seems to have more potential than earlier assumed. The green stock market has never bloomed so much as it has the past couple of years. People are now realizing the importance of protecting our planet and no longer care much about profits or returns. The benefits of planet Earth have been exploited enough.

There is more awareness today and green investment is a huge step towards an attempt to make Planet Earth a safe place to live in. The future of these stock markets can be guaranteed bright as many companies are finally realizing its importance and working towards saving the planet before filling their own pockets and not caring about the harm their companies are causing to the environment. Hence, one can be sure that by the rate at which this is growing, it is sure to make a mark and bring about a global revolution that hopefully will save us from the environmental plight we are facing right now.

Mark H. is an expert on green investment and you can read more of his work at http://www.safegreenfunds.com

Thursday, September 27, 2012

Hedge Rising Interest Rates With TBT

ProShares UltraShort 20+ Year Treasury Fund (NYSE:TBT) — The economy appears to be improving, and �real� interest rates are on the rise with bond prices falling. On Wednesday, the benchmark 10-year note fell to its lowest price since October.

TBT seeks daily investment results that correspond to twice the inverse (opposite) of the daily performance of the Barclays Capital 20+ Year U.S. Treasury Bond Index. It invests in derivatives that ProShares Advisors believe should have daily returns similar to twice the inverse of the daily return of the index. It usually invests the rest of its assets in money-market instruments.

The fund is non-diversified and is not rated by Morningstar. Its net expense ratio is 0.93%.

If interest rates rise, bond prices should fall and TBT should rise, because it is designed to move in the opposite direction of the 20-Year U.S. Treasury Bond. So this trade is suggested as a long-term purchase and a hedge against rising interest rates.

Bears Remain Hungry for YUM

With its ownership of KFC, Taco Bell, Pizza Hut, and other iconic brands, Yum! Brands (NYSE:YUM) has built up a strong grip on the fast-food industry. This has served the conglomerate well: The shares have more than doubled in value over the past five years. The short-term hasn�t been too treacherous for YUM, either, with the stock rising 35% over the last 12 months and 7% since the beginning of 2012.

Yet the options-trading community appears to be targeting some short-term downside in the shares. In Tuesday�s trading, the March 60-strike put saw more than 7,500 contracts cross the tape. This option gives a buyer the right to sell the shares at $60 at any point up until the March options expiration on March 16. (The seller, meanwhile, is obligated to buy YUM shares at the same strike price).

Three large block trades transpired around 2:30 pm EST yesterday, and a total of 6,000 contracts traded for 98 cents apiece. These blocks were likely initiated by the same party (or related in some way), given the similarity in timing and size.�It looks as though buyers were responsible for these orders since they traded at the ask price. If YUM were to breach the breakeven point of $59.02, gains are theoretically unlimited down to zero should the shares continue to tumble. Losses for a purchased put, on the other hand, are capped at 100% of the premium paid.

This wasn�t the first time 60-strike puts have been popular among YUM traders. Just last Tuesday, the February 60 put saw almost 24,000 contracts trade as midsize blocks changed hands throughout the trading session. These puts also provided buyers with the right to sell YUM shares at $60 but only until the February options expiration (Feb. 17).

Because these February puts have less time value than their March counterparts, they traded for a lower premium, changing hands at an average price of 80 cents per contract last Tuesday. One week later (at yesterday�s close), these same puts were trading at 57 cents apiece thanks to a slight gain in YUM shares and five days� worth of time decay.

Last week, some analysts hypothesized that the bearishness on YUM sprung from a�mixed earnings report from McDonald�s (NYSE:MCD). The fast-food giant said that while earnings per share topped estimates, revenue retreated year-over-year. MCD also warned that 2012 profits could lag at the hands of exchange rates and increased costs. MCD shares dropped roughly 2.2% on the news.

YUM will report earnings after the market closes on Tuesday, Feb. 6. Analysts are expecting per-share results of 74 cents, compared with year-ago earnings of 63 cents. The investors buying up these 60-strike puts may be expecting the company to articulate similar revenue risks, prompting a short-term sell-off in the shares. From its Tuesday close of $63.33, however, YUM is a 5.3% drop to the 60 strike and more than that before the breakeven point is hit.

Top Stocks For 4/3/2012-15

Merck is committed to building on its strong legacy in the field of viral hepatitis by continuing to discover, develop and deliver vaccines and medicines to help prevent and treat viral hepatitis. In hepatitis C, company researchers developed the first approved therapy for chronic HCV in 1991 and the first combination therapy in 1998. Extensive research efforts are underway to develop oral therapies that bring innovation to viral hepatitis treatment.

VICTRELIS� (boceprevir) Unanimously Recommended for Approval by FDA Advisory Committee for Treatment of Chronic HCV Genotype 1 Infection

Merck (NYSE:MRK) (known as MSD outside the United States and Canada) announced that the Antiviral Drugs Advisory Committee of the U.S. Food and Drug Administration (FDA) voted unanimously that the available data support approval of Merck’s investigational medicine VICTRELIS� (boceprevir) for the treatment of patients with chronic hepatitis C virus (HCV) genotype 1 infection in combination with current standard therapy. VICTRELIS is one of a new class of medicines known as HCV protease inhibitors being evaluated by the FDA for the treatment of chronic HCV genotype 1 infection in adult patients with compensated liver disease who are previously untreated or who have failed previous therapy.

The committee�s recommendation will be considered by the FDA in its review of the New Drug Application for VICTRELIS. The FDA is not bound by the committee�s guidance, but takes its advice into consideration when reviewing investigational medicines. The company anticipates FDA action on VICTRELIS by mid-May.

�The positive recommendation brings us one step closer to bringing VICTRELIS to men and women who need it, and reinforces our ongoing commitment to developing innovative therapies to treat chronic hepatitis C,” said Peter S. Kim, Ph.D., president, Merck Research Laboratories. “We’re pleased with the panel’s decision and look forward to working with the FDA as it continues to evaluate the application for VICTRELIS.”

The FDA granted priority review status for VICTRELIS, a designation for investigational medicines that address unmet medical needs. Additionally, the European Medicines Agency (EMA) has accepted the Marketing Authorization Application (MAA) for VICTRELIS for accelerated assessment.

The panel reviewed the results from the Phase III clinical study program for VICTRELIS; the clinical trials HCV SPRINT-2 and HCV RESPOND-2 included approximately 1,500 patients with chronic HCV genotype 1 infection, the most common form of the virus in the United States and most difficult to treat. Data that were discussed involved 1,097 treatment-na�ve patients (HCV SPRINT-2) and 403 patients who failed previous therapy (HCV RESPOND-2). HCV SPRINT-2 included a separate analysis of results in African-American patients, a patient population that typically does not respond well to standard therapy. Results from HCV SPRINT-2 and HCV RESPOND-2 were published in the March 31 issue of the New England Journal of Medicine.

For more information, visit www.merck.com.

National Health Partners, Inc. (NHPR)

There are three primary reasons health care costs so much:
The impact of inflation
The amount of price increases above inflation related to the higher cost of health care labor and technologies
The increased amount of demand for and consumption of health care services.

National Health Partners, Inc. is a national healthcare savings organization that provides discount healthcare membership programs to uninsured and underinsured people through a national healthcare savings network called “CARExpress.” CARExpress is one of the largest networks of hospitals, doctors, dentists, pharmacists and other healthcare providers in the country and is comprised of over 1,000,000 medical professionals that belong to such PPOs as CareMark and Aetna.

Prescription drug spending increased about three times as much as overall health care spending, while hospital care spending increased at a rate slower than overall spending. (This may have been offset by pharmaceutical interventions that helped keep people out of the hospital for conditions that previously would have required hospital care.) Physician care spending kept even pace with the increase of overall health care spending.

The company’s primary target customer group is the 47 million Americans who have no health insurance of any kind. The company’s secondary target customer group includes the millions of Americans who lack complete health insurance coverage. The company is headquartered in Horsham, Pennsylvania.
National Health Partners, Inc. recently announced that it has signed a new agreement with a major marketing company that will significantly enhance the growth of its CARExpress membership base.

According to the Company, this deal, in combination with the previous partnership with Xpress Healthcare, will enable the company to build its membership base exponentially, initially generating in excess of an additional 2,000 new members per month. The new campaign is set to launch within the next few weeks and will provide a material positive impact on the company’s 2nd quarter sales.

National Health Partners anticipate that this new marketing agreement will provide a major impact on their overall sales not only for the 2nd quarter, but more importantly for the year. They look forward to building on the profits that they anticipate generating in 2011 that will be driven by substantial growth in sales of their CARExpress health discount programs. The combination of their substantial growth with their low price-to-equity ratio should reflect itself in the price of their stock over the coming months.

For more information about National Health Partners, Inc visit its website www.nationalhealthpartners.com

Fiserv, Inc. (Nasdaq:FISV) the leading global provider of financial services technology solutions, reported financial results for the first quarter of 2011. GAAP revenue in the first quarter of 2011 was $1.05 billion compared with $1.01 billion in the first quarter of 2010. Adjusted revenue increased 3 percent to $982 million in the first quarter compared with $954 million in 2010. GAAP earnings per share from continuing operations for the first quarter of 2011 was $0.77, which includes severance expenses of $0.08 per share, compared with $0.80 in 2010. Adjusted earnings per share from continuing operations in the first quarter of 2011 increased 7 percent to $1.02 compared with $0.95 in 2010.

Fiserv, Inc. and its subsidiaries provide various financial services technology solutions. Its solutions include electronic commerce systems and services, such as transaction processing, electronic bill payment and presentment, business process outsourcing, document distribution services, and software and systems solutions.

Open Text Corp. (Nasdaq:OTEX) announced unaudited financial results for its third quarter ended March 31, 2011. (1) Total revenue for the third quarter of fiscal 2011 was $263.0 million, up 23.6% compared to $212.8 million for the same period in the prior fiscal year. License revenue for the third quarter of fiscal 2011 was $67.8 million, up 37.0% compared to $49.5 million for the same period in the prior fiscal year. Adjusted net income for the third quarter of fiscal 2011 was $52.5 million or $0.90 per share on a diluted basis, up 30.3% compared to $40.3 million or $0.70 per share on a diluted basis for the same period in the prior fiscal year. Net income in accordance with U.S. generally accepted accounting principles (”US GAAP”) was $35.8 million or $0.61 per share on a diluted basis, compared to $13.1 million or $0.23 per share on a diluted basis for the same period in the prior fiscal year. (2). Operating cash flow in the third quarter of fiscal 2011 was $82.3 million, compared to $78.0 million for the same period in the prior fiscal year. The cash and cash equivalents balance as of March 31, 2011 was $237.7 million. Accounts receivable as of March 31, 2011 totaled $150.2 million, compared to $132.1 million as of June 30, 2010 and Days Sales Outstanding (DSO) was 49 days in the third quarter of fiscal 2011, compared to 52 days in the third quarter of fiscal 2010.

Open Text Corporation develops, markets, sells, licenses, and supports enterprise content management (ECM) solutions primarily in North America and Europe. The company was founded in 1991 and is headquartered in Waterloo, Canada.

Green Mountain Coffee Roasters Inc. (Nasdaq:GMCR) a leader in specialty coffee and coffee makers, announced that the Company plans to announce financial results for its fiscal 2011 second quarter in a results to be issued following the close of the financial markets on Tuesday, May 3, 2011. In conjunction with, and at the same time as this announcement, GMCR will publish management’s prepared remarks on its quarterly results in a Current Report on Form 8-K filed with the Securities and Exchange Commission and also posted under the events link in the Investor Relations section of the Company’s website at www.GMCR.com. The Company will host a conference call with investors and analysts on Tuesday, May 3, 2011 at 5:00 p.m. ET. As a result of publishing prepared remarks in advance of the live call, the conference call will include only brief remarks by management followed by a question and answer session.

Green Mountain Coffee Roasters, Inc. operates in the specialty coffee industry in the United States and internationally. It sells approximately 200 whole bean and ground coffee selections, cocoa, teas, and coffees.

Market Volatility = Biotech Opportunity

On a volatile day when the Dow Jones Industrial Average (INDEX: ^DJI ) fell nearly 250 points as the feckless Congressional supercommittee left no doubt that partisan intransigence would supersede any debt deal, significantly large moves happened in the health-care sector. For instance, a week after after announcing the elimination of its stem-cell program, Geron (Nasdaq: GERN  ) jumped 12%, while Alexa Pharmaceuticals (Nasdaq: ALXA  ) fell 13% on double its normal trading volume.

Let's focus on three biotechs that made moves because of breaking news.

Spectrum Pharmaceuticals (Nasdaq: SPPI  ) announced that the FDA is playing nicely by allowing patients taking lymphoma treatment Zevalin to skip a scan after starting treatment. Management is hoping the increased ease of use will attract additional patients, because so far sales have been disappointing. In fact, in its most recent quarter, sales of Zevalin declined from a meager $7.7 million a year ago to $6.9 million today. The stock has been buoyed by a shortage of leucoverin, a generic that competes with Spectrum's branded drug Fusilev, but investors shouldn't expect that situation to last forever.

Speaking of which, Pharmasset (Nasdaq: VRUS  ) knows how to go out in style. Shares closed up 85% as Gilead Sciences (Nasdaq: GILD  ) announced an $11 billion buyout, a 59% premium above Pharmasset's all-time high.

Gilead is getting PSI-7977, an oral treatment that doesn't require interferon injections and their nasty side effects. Oral-drug candidates such as Pharmasset's PSI-7977, Inhibitex's INX-189, and Achillion's ACH-1625 are the potential future backbone of drug cocktails used for attacking hepatitis C. Gilead has a host of hep-C drugs in its pipeline, and its work with HIV shows that it's adept at creating effective drug combinations. The multibillion-dollar race for hepatitis C treatment supremacy is well under way.

Finally, Regeneron (Nasdaq: REGN  ) received FDA approval for wet age-related macular degeneration treatment Eylea last Friday evening. Shares were up more than 10% on the news. Eylea is priced aggressively compared with Roche's Lucentis, and it shouldn't run into the same infection issues that caused the VA to discontinue off-label use of Avastin use. By presenting a cheaper and safer option, Regeneron investors are hoping Eylea will be positioned to take a sizable bite out of Roche's market share.

The best way to track the latest developments surrounding the companies mentioned above is to add them to our free My Watchlist feature:

  • Add Pharmasset to My Watchlist.
  • Add Gilead Sciences to My Watchlist.
  • Add Vertex to My Watchlist.
  • Add Spectrum Pharmaceuticals �to My Watchlist.
  • Add Regeneron to My Watchlist.
  • Add Geron to My Watchlist.
  • Add Alexa Pharmaceuticals to My Watchlist.

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DAFs on the Carpet: Should They Have Mandatory Payout Rates?

Should Congress impose mandatory payout rates on donor-advised funds, similar to those required of private foundations?

Ray Madoff, a professor at Boston College Law School, says yes. In a recent New York Times op-ed article, she urged Congress to require DAFs “to distribute all of their assets to real public charities within seven years of their contribution.”

Absent such a requirement, she argued, assets in DAFs “can languish in these charitable holding pens for decades or even centuries (these funds are frequently marketed for their ability to allow donors to create a legacy for future generations).”

Madoff identified Fidelity, Schwab and Goldman Sachs as large institutional sponsors of DAFs.

A different perspective on commercial sponsors’ payout rates emerged from a study by The Nonprofit Quarterly last year. It suggested that DAFs managed by large commercial firms pay out at a much faster rate than the 5% required of private foundations, and faster than community foundations.

In an article published Tuesday, the Quarterly quoted from its study: “Between 2003 and 2007, Fidelity’s payout was 23%, Calvert’s 14%, Schwab’s around 20%, and Vanguard’s 21%, compared with an average payout of community foundations surveyed by the Council on Foundations (COF) of 13.1% and a median payout of 9%.”

The article said that a payout floor of 5% for DAFs may be worth examining, but an even higher rate for private foundations should also come under the microscope, as these “control much higher levels of assets than the cumulative assets of DAFs controlled by commercial firms, community foundations, and others.”

Moreover, their payout rate is “laughably small” compared with those of their commercial DAF competitors, it said.

Thursday’s biggest gaining and declining stocks

NEW YORK (MarketWatch) � Shares of the following companies made notable moves in Thursday�s U.S. stock market:

Advancers

3D Systems Corp.�s DDD � shares jumped 11.3% after the manufacturer of 3-D printers forecast 2012 revenue that topped Wall Street�s expectations.

Angie�s List Inc�s. ANGI � shares rose 7% after the consumer-reviews website late Wednesday reported fourth-quarter projected first-quarter revenue that topped analysts� expectations.

Denbury Resources Inc.�s DNR � shares rose 5.5% after the oil producer reported a fourth-quarter profit that topped estimates.

Exterran Holdings Inc.�s EXH � shares advanced more than 19%.

MetroPCS Communications Inc.�s PCS � shares climbed almost 14% after the wireless operator reported improved fourth-quarter earnings and revenue.

QEP Resources Inc.�s QEP � rallied almost 8% a day after the oil-and-gas developer reported quarterly revenue that beat expectations.

Sears Holdings Corp.�s SHLD �shares gained nearly 19% after the retail-store operator said it would spin off some stores and sell others to raise cash.

Smart Balance Inc.�s SMBL � shares leapt 22% after the maker of lower-cholesterol cheese and butter reported fourth-quarter earnings that topped market expectations.

Vivus Inc. VVUS � shares shot 77.5% higher after a regulatory panel recommended Vivus� weight-loss pill Qnexa be approved. Orexigen Therapeutics Inc. OREX �, which is also seeking regulatory approval for its weight-loss drug, also rose 14%.

Decliners

First Solar Inc.�s FSLR �shares retreated 8% after Germany said it would cut solar power incentives a month earlier than anticipated. Others solar companies were also hit, with Trina Solar Ltd. TSL � sliding 11.6%, Suntech Power Holdings Co. STP �off 8.3% and Renesola Ltd. SOL � dropping almost 6%.

GrafTech International Ltd.�s GTI �shares slid 14% after the maker of graphite electrodes used in steel production projected 2012 earnings below analysts� estimates.

Hewlett-Packard Co.�s HPQ �shares declined 6.5% after the computer maker reported a steep drop in quarterly earnings and projected second-quarter profit beneath expectations. Read more about H-P results

Polypore International Inc.�s PPO �shares fell more than 11% after the battery-technology provider late Wednesday offered cautionary comments on its first quarter.

Safeway Inc.�s SWY �shares slid 7.6% after the grocery-store operator reported lower net income in the fourth quarter.

MFA Financial Issues 30 Year Debt

MFA Financial (MFA) is marketing new 30 year debt via Morgan Stanley (MS), UBS (UBS) and Wells Fargo (WFC). The terms of the debt are as follows:

Issuer: MFA Financial
Maturity: April 15, 2042
Par: $25
Amount: $75,000,000
Ranking: Senior Unsecured
Optional Redemption: April 15, 2017
Use of Proceeds: MFA Intends to use the net proceeds to acquire additional MBS and for working capital, which may include, among other things, the repayment of repurchase agreements.

Covenants:

Change of Control: If a Change of Control Repurchase Event (someone acquiring greater than 50% of the voting power, the occupation of the majority of board seats who were not nominated by the directors) occurs, unless they have exercised their option to redeem the Notes as described above, they will make an offer to each holder of Notes to repurchase all or any part (in a principal amount of $25 and integral multiples of $25 in excess thereof) of that holder's Notes at a repurchase price in cash equal to 101%.

Consolidation, Merger and Sale of Assets: Typical language stating either the company will be the surviving entity or the successor company will assume the obligations. Of course the "all or substantially all" clause has yet to be determined legally as to how (on what basis) "all or substantially all" is defined.

I would think that these bonds will price around 8% given where recent specialized financial firms have priced (think KKR's (KKR) 30NC5 at 7.50%). The MFA-A preferreds currently yield 8.28%, making this issue attractive relative to the preferreds as it is more senior in the capital structure. The additional 5% offered on the equity is steep, but as we enter a new yield curve environment, the risk premium relative to the bonds is appropriate.

Bottom line: From a pricing standpoint, if the bonds come at 8% or North, they are attractive. Keep in mind, this is not a credit recommendation, but a pricing analysis.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Wednesday, September 26, 2012

HCA Holdings Beats on Both Top and Bottom Lines

HCA Holdings (NYSE: HCA  ) reported earnings on May 3. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), HCA Holdings beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue expanded and GAAP earnings per share grew significantly.

Margins expanded across the board.

Revenue details
HCA Holdings recorded revenue of $9.20 billion. The six analysts polled by S&P Capital IQ predicted revenue of $8.93 billion on the same basis. GAAP reported sales were 14% higher than the prior-year quarter's $8.06 billion.

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 $1.18. The 23 earnings estimates compiled by S&P Capital IQ averaged $0.98 per share. GAAP EPS of $1.18 for Q1 were 127% higher than the prior-year quarter's $0.52 per share.

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 44.0%, 70 basis points better than the prior-year quarter. Operating margin was 15.2%, 120 basis points better than the prior-year quarter. Net margin was 5.9%, 290 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $8.82 billion. On the bottom line, the average EPS estimate is $0.80.

Next year's average estimate for revenue is $35.25 billion. The average EPS estimate is $3.58.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 43 members out of 51 rating the stock outperform, and eight members rating it underperform. Among 15 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 13 give HCA Holdings a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on HCA Holdings is outperform, with an average price target of $32.20.

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  • Add HCA Holdings to My Watchlist.

Use GLD and SLV Options to Beat Inflation

Sometimes — no, if you are trading, the word should be always — you need to trade perception and not reality. It is time to hook onto the current trade on inflation — it picked up this week after Federal Reserve Chairman Ben Bernanke said he is not raising interest rates anytime soon.

The Reality � the thought there could be real inflation in the U.S. is laughable.

Perception � traders are increasingly fearful of Fed created inflation. Therefore, you should think precious metals, and options trading on ETFs on gold and silver, such as the SPDR Gold Trust (NYSE:GLD) and the iShares Silver Trust (NYSE: SLV).

That’s my recommendation. First, let’s consider some background on reality versus perception.

First, the reality. Inflation is the upward movement in prices created by too much money available to buy too few goods.

Historically, when the Fed lowers interest rates, capital is cheap so people buy too many homes and stuff, and businesses build too many factories. This time, consumers are broke and not spending, and business is awash with capacity and is not building.

Wait a second, you say, what about the $4 a gallon and rising I�m paying at the pump? Energy is a very small portion of GDP so it has little impact on the core rate of inflation.

Now, let�s get into the perception. Many believe low interest rates MUST mean extra liquidity created by the Fed MUST mean inflation is coming. These folks are very loud, indeed they are screaming � and that is creating fear among traders and many foreign investors.

Forget reality and trade the perception.

What trades are best for this next leg of the inflation trade? Precious Metals.

Everyone says that precious metals are too hot and are in a bubble. Nope. They are a key long-side play on the inflation trade. They may have run too far too fast but that does not mean the run will end. It may pause, but it should continue. And in addition to inflation fears, silver is actually used in electronics and medical treatments.

First, do not play the commodities themselves, play the exchange-traded funds, such as the SPDR Gold Trust and the iShares Silver Trust.

Look at two different trades depending on your appetite for risk.

Straight Calls: The metals may be taking a pause — SLV sure will as it nears $50 — so either look at late summer out-of-the-money calls or buy Weeklies to minimize your exposure to a correction.

A Buy-Write: Think about buying the GLDETF and immediately writing covered calls, either to average down the price you paid or to generate some cash. You can do this every week if you want to, these ETFs have Weekly options. Always sell out-of-the-money calls.

There are many other plays against inflation but why stray from great charts and the current attitude towards precious metals. And think about the price of gold and silver is something nasty happens in Saudi Arabia? Or if Egypt�s new leaders make too much noise about Israel? Traders will switch from inflation to geopolitical fears, and you win that way as well.

Three ETFs To Watch This Week: EWJ, IAU, SOCL

After another choppy week of trading, investors will be on their toes for the coming week, as a number of factors have created high anxiety in the financial world. Perhaps the biggest piece of news is the threat of Greece exiting the euro, as it seems more and more likely each day that the indebted European nation will be forced to abandon the currency bloc. Many are worried that this move may not stop here, as other nations like Portugal, Spain, and Italy are all facing tough debt scenarios of their own. Though the coming week will be somewhat slower than previous sessions, there will still be plenty of headlines for investors to keep a close eye on.

MSCI Japan Index Fund (EWJ)

Why EWJ Will Be In Focus:�This fund seeks to replicate the performance of the Japanese equity market and is home to over $5 billion in total assets. Top holdings include household names like Toyota, Honda, and Canon. With the Japanese economy struggling in recent years, this ETF has had trouble getting going, as it has lost more than 30% over the trailing five year period. Its focus this week will come on Wednesday and Thursday when the central bank rate and a key economic report will be released, giving a good indicator of how the Japanese�economy�will fare moving forward [see also Ex-Japan ETFs In Focus].

COMEX Gold Trust (IAU)

Why IAU Will Be In Focus:�This fund measure physical gold bullion and has been making strides in recent months as its expense ratio is a full 15 basis points lower than the mega-popular GLD. This fund has slid more than 8% in the past three months, as gold futures have had an increasingly hard time establishing any kind of upward momentum. But last Thursday saw the precious metal turn things around as technical buyers stepped in at low levels to gobble up the commodity. Some are calling it a dead cat bounce while others expect gold to continue to rally. Either way, IAU will be an important product to watch throughout this week [see also Why Warren Buffett Hates Gold].

Social Media Index ETF (SOCL)

Why SOCL Will Be In Focus:�This fund is a one-of-a-kind offering, as it invests in the most liquid companies in the social media space. Some of its top holdings include big names like LinkedIn among other popular web-based companies. Its focus this week will come as Facebook (FB) debuted its IPO on Friday as the biggest tech IPO of all time. Investors will be using this fund to play FB, as the stock will likely be incorporated into the fund before the end of this week. Keep a close eye on SOCL as it will likely enjoy high trading volumes and a nice jump in assets [see also Updated: Which ETFs Will Own Facebook (And When)].

Follow me on Twitter @JaredCummans

How to Invest in Junk (Without Buying Risky Bonds)

A handy fellow can still pick his own car parts at the local salvage yard.

Meanwhile, the rest of us pay a markup for parts and service because we have neither the inclination nor the time to hunt down that gently used bumper, paint it and rig it to the family van. Ironically, many of the parts installed by professionals come from the same junkyards.

But today’s salvage business is not your grandfather’s pick-your-own-parts shop for shade tree mechanics. The market for recycled automobile parts has consolidated as bigger firms service a multibillion-dollar industry with tens of thousands of customers in auto insurance, collision repair, mechanical repair and scrap recycling.

 

Recycled parts can sell for -20% to -50% less than the original equipment manufacturer (OEM) parts, which is a big reason many automobile insurers are bullish on recycled parts. Each year, about 11 million cars are recycled by salvage yards. It’s a truly sustainable industry that doesn’t get a lot of recognition for being green.

LKQ Corp. Corporation (Nasdaq: LKQX) is the leader in the market for recycled and aftermarket parts – also known as alternative parts – used in the $30 billion collision-repair industry. While the service departments at most major dealerships use new OEM parts for replacement, there are many more independent collision-repair shops – at least 32,000 – that are open to using recycled OEM and aftermarket parts.

Chicago-based LKQ Corp. became the largest provider of alternative parts by consolidating many of the country’s mom-and-pop salvage yards during the past decade. After dismantling salvage vehicles, LKQ salvage yards will inventory fenders, doors, quarter panels, bumpers, hoods and light housings for sale to repair shops.

The alternative parts industry is usually unaffected by economic downturns. However, LKQ’s growth slowed during the recent recession in response to fewer insurance claims and the tendency of motorists to use settlement checks for bills instead of repairing dented vehicles.

LKQ is projecting 2009 organic revenue growth at a rate of +6% to +8%, compared with +8.8% for 2008. Net income in 2009 is projected to be about $120 million, compared with $99.9 million in 2008. Joseph M. Holsten, CEO and president of LKQ Corp., has attributed earnings to growth in its same store aftermarket sales, and an improved inventory management system.

Before consolidation, regional repair shops had limited options for finding quality recycled and aftermarket parts. If the salvage yard in town didn’t have it, the repair shop often had no choice but to purchase the new, more expensive part from manufacturers.

Now, if a local LKQ yard doesn’t have the part, its employees can try to track it down through the company’s vast network. The company has an even better chance of finding replacement parts since it began selling aftermarket parts in 2004.

New OEM account for 68% of parts used in the collision-repair industry, while alternative parts make up 32%. Alternatives can be controversial, though. Repair shops at major dealerships prefer new OEM parts, but the aftermarket industry is making strides in quality control with limited warranties and certified parts.

LKQ hopes healthier economic conditions in 2010 will provide motorists – who might still be too cautious to purchase new vehicles – with extra cash to replace those dented bumpers and quarter panels on currently owned cars.

And LKQ Corp. is moving ahead with its ambitious consolidation plans. The company recently acquired Greenleaf Auto Recyclers, a wholesale recycling business with about $114 million in annual revenue. It also acquired Green Superior Collision Parts, an aftermarket supplier with $11 million in revenue.