Micron Technology, Inc. (MU) Should Record Higher Margins, Profitability In 2014

Micron Technology, Inc.(NASDAQ:MU) should get increased returns in 2014 from its supplier deal with Inotera Memories, Inc., a leading Taiwanese DRAM memory maker. The deal should improve margins and profitability this year for Micron.

Based in Boise, Idaho, Micron Technology is one of the world's leading providers of advanced semiconductor solutions. Through its worldwide operations, Micron manufactures and markets a full range of DRAM, NAND and NOR flash memory.

Inotera contributes about 33 percent of Micron's DRAM, but starting 2014 100 percent of Inotera's output goes to Micron. For the December quarter, Inotera's gross margin were about 53 percent, but starting in the March quarter, its gross margin (GM) could step down about 500 basis points (bps) with increased GM contribution to Micron combined with the existing 35 percent of operating income contribution.

[Related -Micron Technology, Inc. (NASDAQ:MU) Q1 Earnings Preview: High Inventory and Low Prices = Uh Oh?]

Sterne Agee analyst Vijay Rakesh believes the increased GM and operating margin contribution could drive 5-10 percent EPS upside for Micron. Assuming flattish March quarter DRAM ASPs, Rakesh believe the increased 500bp GM contribution from Inotera should show up in the 33 percent DRAM revenues that Micron derives from Inotera.

Moreover, given the expanded Inotera DRAM revenues and profitability, the discount to the two-month average DRAM average selling price paid to Inotera will now expand significantly from the February quarter and through 2014 driving higher Inotera profit contribution.

[Related -Micron Technology, Inc. (NASDAQ:MU): Better Late Than Never]

Micron gets 35.5 percent of Inotera's operating income categorized as "other operating income." Inotera's operating income in the December quarter about $357 million. Micron's share of this operating income comes at about $127 million or 11 cents a share.

As a result, Micron should report February quarter "other operating income" of about $127 million versus the market estimate of about $55 million, assuming no more debt restructuring charges.

Rakesh said Micron also has an increased profit-sharing agreement based on the current month's DRAM ASPs and the two most previous months (rolling three months schedule) and structured on ASPs and EBITDA performance and has a collar component in place, with profit contribution depending on quarterly performance.

Inotera noted that the primary focus of the large DRAM producers is producing sustained profits and that the structure of this contract will provide health to the entire ecosystem. In this scenario, the increased 500bp contribution to Micron should lower Micron's quarterly cost of goods sold by $21 million to $25 million driving improved gross margins.

In addition, the overall first half-January DRAM contract pricing reset more flattish and better than the DRAMExchange contract pricing coming down about 3 percent, even with Wuxi and weak PC builds. This makes sense as there are only three DRAM suppliers, with net DRAM capacity still coming down as Micron converts DRAM capacity at its Singapore fabs.

Micron should benefit from DRAM ASP trending up 10-15 percent. Also, December DRAM pricing trends continue to improve. The Yen/$ at 103 should be a modest tailwind versus about 100 Elpida base.

Rakesh noted Micron potentially providing clean non-GAAP earnings should allow investors to get a clean annualized EPS figure, which could show a $2.50-3.00+/year EPS run rate. Also, the RMBS settlement lowers litigation expenses and lowers risk of any potential, future litigation in DRAM.

There has been a lot of concern on DRAM pricing post Wuxi DRAM capacity coming back on line in January-March. A look at 2014 shows 2014 DRAM wafer capacity down 3 percent and similarly while there is a lot of concern on NAND, 2014 wafer capacity in NAND up up 10 percent - overall a positive and constructive memory capacity picture.

Revenue from sales of DRAM products were 69 percent higher in the first quarter of fiscal 2014 compared to the fourth quarter of fiscal 2013 due primarily to an increase in sales volume resulting from the acquisition of Elpida. Revenues from sales of NAND Flash products were up 8 percent sequentially, primarily due to an 11 percent increase in sales volume.

The company's consolidated gross margin improved to 32 percent in the first quarter of fiscal 2014 compared to 25 percent in the fourth quarter of fiscal 2013 primarily due to an increase in volume of products resulting from the acquisition of Elpida and to product mix.

Micron is also focusing on reducing operating costs (reportedly planning to cut jobs in Italy), which could be an added tailwind for the February quarter, combined with an increased profit sharing with Inotera.

For the first half 2014, MobileDRAM will be key with potentially higher density Galaxy S5, China and iPhone6 ramp. PC-OEMs are still focused on securing DRAM supply and less focused on DRAM pricing. That said, DRAM pricing could be stable in the first quarter 2014. A continued industry supply discipline in memory in 2014 will be a tailwind for Micron.

Best Forestry Stocks For 2015

The Food and Drug Administration has granted Switzerland-based Novartis (NYSE: NVS  ) its "Breakthrough Therapy" (BT) designation for Novartis' acute heart failure (AHF) treatment RLX030 (serelaxin), the company announced today.

According to the FDA, a BT designation is intended to "expedite the development and review of drugs for serious or life-threatening conditions."

The decision came after reviewing evidence including the results of Novartis' Phase 3 RELAX-AHF trial in which there was a 37% reduction in mortality for patients using RLX030 for six months compared to traditional treatments. According to Novartis, RLX030 has the potential to be "the first breakthrough treatment for acute heart failure patients in 20 years."

In response to the FDA's decision, Division Head of Novartis Pharmaceuticals David Epstein was quoted as saying, "Commonly used medicines for AHF only improve the immediate symptoms, so the additional effect on survival observed with RLX030 offers hope to patients and physicians."

Best Forestry Stocks For 2015: Focus Ventures Ltd (FCV.V)

Focus Ventures Ltd., an exploration stage company, engages in the acquisition and exploration of mineral properties in Peru, Mexico, and Colombia. It primarily explores for gold, silver, copper, zinc, molybdenum, and phosphates deposits. The company is based in Vancouver, Canada.

Best Forestry Stocks For 2015: Rurban Financial Corp(RBNF)

Rurban Financial Corp. operates as the holding company for The State Bank and Trust Company that provides banking and financial services to individual and corporate customers in northwest Ohio and northeast Indiana. The company offers various deposit products, including checking accounts, passbook savings, money market accounts, time deposits, and certificates of deposit. Its loan portfolio comprises commercial, consumer, agricultural, and residential mortgage loans. The company also provides personal and corporate trust services, commercial leasing, bank credit card services, safe deposit box rentals, Internet and telephone banking, and other personalized banking services, as well as various financial services, including asset management and brokerage services. In addition, Rurban Financial Corp. provides software systems that offer a range of data processing and item processing services in an outsourced environment to community banks in Arkansas, Illinois, Indiana, Kansa s, Michigan, Missouri, Nebraska, Nevada, Ohio, and Wisconsin. As of April 7, 2010, it operated 19 banking centers in Allen, Defiance, Fulton, Lucas, Paulding, Williams, and Wood Counties, Ohio; and Allen County, Indiana, as well as operated a loan production office in Franklin County, Ohio. Rurban Financial Corp. has a strategic partnership with New Core Holdings, Inc. The company was founded in 1983 and is based in Defiance, Ohio.

10 Best Blue Chip Stocks To Invest In Right Now: Absolute Software Corp (ABT.TO)

Absolute Software Corporation develops, markets, and supports computer security and endpoint management services and products worldwide. It offers endpoint security products, such as Computrace, a software-as-a-service based security solution for endpoint data protection, tracking, investigative, and device recovery services, which enables customers to secure and track their IT assets in a single Web-based interface; and Absolute Secure Drive to manage self-encrypting hard drives. The company also provides endpoint management products, including Absolute Manage, a lifecycle management and mobile device solution that enables IT administrators to manage PC, Mac, iOS, Android, and Windows phone devices from a single console; mobile device management, mobile application management, and mobile document distribution solutions to alternative mobile devices, such as tablets and smart phones; power management ROI calculator to calculate annual power management savings and the payba ck period on Absolute Manage investments; and InstallEase that allows to create customized installer software packages for Windows and Mac OS X. In addition, it offers Computrace LoJack for Laptops to find and recover stolen laptops. Further, the company provides data protection, investigation, and recovery services comprising data delete, device freeze, persistent device messaging, remote file retrieval, location identification, end of life data delete, remote forensics, and theft recovery services; and professional and training services. It serves corporations, educational institutions, healthcare and government organizations, and individual consumers. The company markets its products through computer original equipment manufacturers, value added resellers, system integrators, distributors, and online and traditional retailers, as well as directly to customers. Absolute Software Corporation was founded in 1993 and is headquartered in Vancouver, Canada.

Best Forestry Stocks For 2015: Asl Marine Holdings Ltd (A04.SI)

ASL Marine Holdings Ltd., an investment holding company, operates as a marine services company in the Asia Pacific, South Asia, Europe, Australia, and the Middle East. The company�s Shipbuilding segment is involved in building offshore support vessels, including heavy-lift cum pipelay, subsea operation, anchor handling towing supply, platform supply, offshore maintenance/accommodation, and rescue and standby vessels; cutter suction and water injection dredgers; accommodation, pipe laying, and work barges; and commercial vessels comprising chemical, bunkering, and product tankers. Its Shiprepair and Conversion segment provides ship repair and conversion services, such as retro-fittings, life-extensions, and repairs. The company�s Shipchartering and Rental segment charters its fleet to customers from various industries comprising offshore oil and gas, marine infrastructure, dredging, land reclamation, marine construction works, and cargoes transportation industries. This s egment operates a fleet of 156 vessels consisting of barges, towing tugs, anchor handling tugs, anchor handling towing/supply vessels, and other vessels; and rents plant and machinery. Its Engineering segment offers dredging engineering products and services, including cutting, suction, discharge, automation, and coupling systems. The company owns and operates four shipyards in Singapore; Batam, Indonesia; and Guangdong, China. ASL Marine Holdings Ltd. also operates 300,000 dwt graving dry dock accommodating vessels, such as Capesize bulk carriers, long range product tankers, container vessels, heavy-lift ships, floating storage and offloading vessels, and floating production, storage, and offloading vessels; and 60,000 dwt and 20,000 dwt graving dry docks each to cater for repair of medium-sized vessels, including Panamax and Handymax bulk carriers, and medium range products tankers. The company was founded in 1974 and is headquartered in Singapore.

Best Forestry Stocks For 2015: Pizza Inn Inc.(PZZI)

Pizza Inn, Inc., together with its subsidiaries, operates and franchises pizza buffet, delivery/carry-out, and express restaurants in the United States and internationally. Its buffet restaurants offer dine-in, carryout, and catering services, as well as delivery services. The company?s delivery/carryout restaurants provide delivery and carryout services and are located in shopping centers or other in-line retail developments. Its express restaurants serve its customers through various non-traditional points of sale and are located in convenience stores, food courts, college campuses, airport terminals, athletic facilities, or other commercial facilities. The company operates restaurants under Pizza Inn trademark. As of July 1, 2011, it owned and operated 5 restaurants; and franchised approximately 300 restaurants. Pizza Inn, Inc. was founded in 1958 and is based in The Colony, Texas.

Best Forestry Stocks For 2015: Parker Drilling Company(PKD)

Parker Drilling Company, together with its subsidiaries, provides contract drilling and drilling-related services in the United States, Latin America, Africa and the Middle East (AME), the Asia Pacific, and Commonwealth of Independent States (CIS). As of December 31, 2010, its fleet consisted of 11 rigs in the CIS/AME region; 10 rigs in the Americas region, including 7 land rigs and 1 barge rig in Mexico, and 2 land rigs in Colombia; 5 land rigs in the Asia Pacific region, including 2 rigs in Indonesia, 1 rig in Papua New Guinea, and 2 rigs in New Zealand; 13 barge drilling rigs in the inland shallow waters of the U.S. Gulf of Mexico; and 1 unassigned land rig held in New Iberia, Louisiana. The company also offers premium rental tools, including drill pipe, drill collars, tubing, high- and low-pressure blowout preventers, choke manifolds, junk and cement mills, and casing scrapers for land and offshore oil and gas drilling and workover activities. In addition, it provides non-capital intensive services, such as front end engineering and design; engineering, procurement, construction, and installation; operations and maintenance; and other project management services, which include labor, maintenance, and logistics for operators who own their own drilling rigs. The company serves independent and national oil and gas companies, and integrated service providers. Parker Drilling Company was founded in 1934 and is headquartered in Houston, Texas.

Advisors' Opinion:

• [By Rich Smith]

  Houston-based Parker Drilling Co. (NYSE: PKD  ) has a new CFO.

  On Thursday, Parker announced that it has hired away offshore driller Ensco plc's vice president and treasurer, Christopher T. Weber, to become its own senior VP and Chief Financial Officer. Weber will take office on May 20.

Best Forestry Stocks For 2015: Firstbank Corporation(FBMI)

Firstbank Corporation, through its subsidiaries, provides commercial banking products and services. It accepts checking, savings, and time deposits. The company also provides commercial, mortgage, agricultural, real estate, real estate mortgage, real estate construction, home improvement, automobile, and consumer loans. In addition, it offers trust, security brokerage, and title insurance services, as well as armored car services. The company operates 53 branch offices in central Michigan. Firstbank Corporation was founded in 1894 and is headquartered in Alma, Michigan.

Advisors' Opinion:

• [By Louis Navellier]

  A great example of these small banks with big potential is Firstbank Corp. (FBMI), a $155 million market-cap stock that operates 53 branch offices in central Michigan. Firstbank provides commercial banking products and services, including traditional deposit accounts and loans tailored to meet the needs of its business customers. FBMI also offers trust, security brokerage and title insurance services, and even armored car services. This bank stock has been rated an “A” all year, and the fundamentals just keep getting better. FBMI shares remain a “strong buy” at current prices.

Best Forestry Stocks For 2015: MedAssets Inc.(MDAS)

MedAssets, Inc. provides technology enabled products and services for hospitals, health systems, and other non-acute healthcare providers in the United States. It operates in two segments, Spend and Clinical Resource Management, and Revenue Cycle Management. The Spend and Clinical Resource Management offers a suite of cost management services, supply chain analytics, and data capabilities; medical device and clinical resource consulting, which includes implantable physician preference items, utilization management, and service line consulting; supply chain outsourcing and procurement services; capital equipment lifecycle management; lean process and workforce optimization solutions; process improvement consulting; business intelligence tools; and performance analytics and data management tools, such as service line analytics, spend analytics and strategic information services, e-commerce, client master item file services, electronic contract portfolio catalog, and decision support services. The Revenue Cycle Management segment provides a suite of products and services spanning the revenue cycle workflow from patient access and financial responsibility; case management, coding, and documentation; charge capture and revenue integrity; strategic pricing; claims processing; denials management and reimbursement integrity; revenue cycle and supply chain integration; revenue recovery and accounts receivable management; and outsourced services. It delivers technology-enabled solutions primarily through the company-hosted software, software-as-a-service, or Web-based applications. As of December 31, 2011, the company served approximately 4,200 acute care hospitals and 100,000 ancillary or non-acute provider locations. MedAssets, Inc. was incorporated in 1999 and is headquartered in Alpharetta, Georgia.

Best Forestry Stocks For 2015: Genterra Inc (GIC.V)

Genterra Capital Inc. engages in the investment and rental of real estate properties in Ontario, Canada. The company also invests in marketable securities. Its real estate investment portfolio comprises industrial single and multi tenant, multi tenant commercial, commercial residential redevelopment, and loft conversion properties. Genterra Capital Inc. is headquartered in Toronto, Canada.

Best Forestry Stocks For 2015: Cisco Systems Inc (CSCO.O)

Cisco Systems, Inc., incorporated on December 10, 1984, designs, manufactures, and sells Internet protocol (IP)-based networking and other products related to the communications and information technology (IT) industry and provide services associated with these products and their use. The Company provides a line of products for transporting data, voice, and video within buildings, across campuses, and around the world. Its products are designed to transform how people connect, communicate, and collaborate. Its products are installed at enterprise businesses, public institutions, telecommunications companies, commercial businesses, and personal residences. The Company has five segments: United States and Canada, European Markets, Emerging Markets, Asia Pacific, and Japan. The Emerging Markets theater consists of Eastern Europe, Latin America, the Middle East and Africa, and Russia and the Commonwealth of Independent States. In July 30, 2012, it acquired NDS Group Ltd. In October 2012, it acquired virtual networking company, vCider. In August 2011, the Company acquired Versly. In November 2011, it acquired BNI Video. In March 2012, the Company acquired Lightwire, Inc. In May 2012, the Company acquired ClearAccess. In December 2012, the Company acquired Cloupia. In December 2012, the Company acquired Cariden Technologies Inc. In December 2012, the Company acquired Meraki, Inc.

The Company�� product offerings fall into three categories: its core technologies, routing and switching; advanced technologies, and other products. In addition to its product offerings, the Company provides a range of service offerings, technical support services and advanced services. The advanced services program supports networking devices, applications, solutions, and complete infrastructures.

Routing

The Company offers a range of routers, from core network infrastructure for service providers and enterprises to access route rs for branch offices and for telecommuters and consumers a! t! home. Key products within its routing category are the Cisco ASR 901/903, Cisco 1000, 5000, and 9000 Cisco Aggregation Services Routers (ASR), as well as the Cisco ASR 800, 1900, 2900 and 3900 Cisco Integrated Services Routers (ISR):; Cisco CRS-1, 7600 and Cisco CRS-3 Cisco Carrier Routing Systems (CRS). During the fiscal year ended July 31, 2010 (fiscal 2010), Cisco introduced the Cisco CRS-3 Carrier Routing System (CRS-3) and Cisco 7600 Series Routers.

Service Provider Video

The Company�� end-to-end, digital video distribution systems and digital interactive set-top boxes enable service providers and content originators to deliver entertainment, information, and communication services to consumers and businesses around the world. Key product areas within its Service Provider Video category are: Set-Top Boxes, IP set-top boxes (both High-Definition (HD) and Standard Definition (SD)); Digital cable set-top boxes (both HD and SD); Cable Modem CP E (Data, EMTA, and Gateways); Videoscape Software Products and Headend Equipment (Encoders, Decoders, and Transcoders).

Switching

The Company�� switching products offer many forms of connectivity to end users, workstations, IP phones, access points, and servers, and also function as aggregators on local-area networks (LANs), metropolitan-area networks (MANs), and wide-area networks (WANs). Its switching systems employ several widely used technologies, including Ethernet, Power over Ethernet, Fibre Channel over Ethernet, Packet over Synchronous Optical Network, and Multiprotocol Label Switching. Many of its switches are designed to support an integrated set of advanced services, allowing organizations to be more efficient by using one switch for multiple networking functions rather than multiple switches to accomplish the same functions.

Cisco offers a family of Ethernet switching solutions from fixed-configuration switches for small and medium-sized businesses to modular switches for ente! rpr! ises! and ! service providers. Its fixed-configuration switches are designed to provide a foundation for converged data, voice, and video services. Key products within its switching category are the Cisco Catalyst 2960, 3560, 3750, 4500 and 6500 Series; the Cisco Nexus 2000, 3000, 5000 and 7000 Series switches; and MDS Series: MDS 9000.

Fixed-configuration switches are designed to cover a range of deployments in small and medium-sized businesses. It fixed-configuration switches are designed to provide a foundation for converged data, voice, and video services. They range from small, standalone switches to stackable models that function as a single, scalable switching unit. Modular switches are typically utilized by enterprise and service provider customers. Fixed-configuration and modular switches also include products such as optics modules which are shared across multiple product platforms.

NGN Routing

Routing technology is fundamental to the Internet, and this technology interconnects public and private IP networks for mobile, data, voice, and video applications. The Company's NGN Routing products are designed to enhance the intelligence, security, reliability, scalability, and level of performance in the transmission of information and media-rich applications. It offers a broad range of routers, from core network infrastructure and mobile Internet network for service providers and enterprises to access routers for branch offices and for telecommuters and consumers at home. Key product areas within its NGN Routing category are, Cisco Aggregation Services Routers: Cisco ASR 901/903, Cisco ASR 1000, Cisco ASR 5000 and Cisco ASR 9000. Cisco Integrated Services Routers: Cisco ISR 800, Cisco ISR 1900, Cisco ISR 2900 and Cisco ISR 3900. Cisco Carrier Routing Systems: Cisco CRS-1, Cisco CRS-3 and Cisco 7600 Series Routers.

Security

Cisco security solutions deliver identity, network and content security solutions designed to enable customers to r! educe t! ! he impact! of threats and realize the benefits of a mobile, collaborative, and cloud-enabled business. The products in this category span firewall, intrusion prevention, remote access, virtual private networks (VPNs), unified clients, network admission control, Web gateways, and email gateways. Its AnyConnect Secure Mobility Client solution enables users to access networks with their mobile device of choice, including laptops and smartphone-based mobile devices, while allowing organizations to manage the security risks of networks. Its cloud-based Web security service is designed to provide real-time threat protection and to prevent malware from reaching corporate networks, including roaming or mobile users. It focuses on a proactive, layered approach to counter both existing and emerging security threats. During the fiscal year ended July 28, 2012, it introduced the Cisco ASA 5500-X Series Midrange Security Appliance, Cisco Security Manager 4.3, the IPS 4500 Series, and Prime Securit y Manager.

Wireless

The Cisco Unified Wireless Network aims to harness the network to solve business problems, uniting high-performance wireless access across campus, branch, remote and outdoor environments. Its offerings include wireless access points (including the Cisco Aironet product family), controllers, antennas, and integrated management. The Company�� offerings provide users with simplified management and mobile device troubleshooting features which are designed to reduce operational cost and maximize flexibility and reliability. It is also investing in custom chipsets to deliver functions such as CleanAir proactive spectrum intelligence, ClientLink acceleration for mobile devices and VideoStream multicast optimization technology.

Data Center

The Company�� data center product category has been its major product category for the past two fiscal years. Cisco Unified Computing System (UCS) and Server Access Vi rtualization form the core of the Data Center pr! oduct cat! ego! ry. Key p! roduct areas within its Data Center product category are: Cisco UCS B-Series Blade Servers, Cisco UCS C-Series Rack Servers and Cisco UCS Fabric Interconnects.

Other Products

The Company�� other products category primarily consists of Linksys home networking products, certain emerging technologies, and other networking products. In addition to its product offerings, it provide a range of service offerings, including technical support services and advanced services.

The Company competes with Alcatel-Lucent; ARRIS Group, Inc.; Aruba Networks, Inc.; Avaya Inc.; Belden Inc.; Brocade Communications Systems, Inc.; Check Point Software Technologies Ltd.; Citrix Systems, Inc.; D-Link Corporation; LM Ericsson Telephone Company; Extreme Networks, Inc.; F5 Networks, Inc.; Force10 Networks, Inc.; Fortinet, Inc.; Hewlett-Packard Company; Huawei Technologies Co., Ltd.; International Business Machines Corporation; Juniper Networks, Inc.; LogMeIn, Inc.; Meru Networks, Inc.; Microsoft Corporation; Motorola, Inc.; NETGEAR, Inc.; Polycom, Inc.; Riverbed Technology, Inc.; and Symantec Corporation.

Best Forestry Stocks For 2015: Mindoro Resources Ltd. (MIO.V)

Mindoro Resource Ltd. engages in the acquisition, exploration, and development of mineral properties in the Philippines. The company primarily explores for nickel, copper, and gold. It holds 75% interest in the Agata nickel-cobalt project located in the Surigao district, Mindanao; and 100% interest in the Batangas properties covering a complex of porphyry related gold and copper-gold prospects at Kay Tanda (Archangel) and Lobo. The company also has 75% interest in the Pan de Azucar project located near Panay Island, as well as 10 porphyry copper-gold prospects at varying stages of advancement. Mindoro Resource Ltd. is headquartered in Calgary, Canada.

The Five Things That Have To Happen Before Emerging Markets Look Interesting

This year started off with emerging markets in the gutter. On the flip-side of that, the U.S. was expected to outperform.

Predictions are never perfect. Indonesia and Thailand markets have outperformed the S&P 500, even though the MSCI MSCI Emerging Markets is down over 6% this year. Then there's the forecast that the U.S. would start the year even stronger. Notes Jan Dehn, an analyst at Ashmore Group in the U.K.:U.S. manufacturing dropped sharply following two quarters of significant inventory accumulation. Non-farm payrolls disappointed for the second month in a row.

"If this run of bad data continues the markets will soon begin to ask why the Fed began to taper," Dehn said on Tuesday. Meanwhile, money is still flowing out of emerging markets, especially among the so-called "odd lot" investor. You know, the retailer who likes to buy at the top and sell at the bottom. They've been selling out off mutual funds dedicated to EM all year, according to EPFR Global in Cambridge, Mass.

Ashmore Group, a $70 billion asset manager in London specializing in emerging market bonds, outlines five conditions before investors return to emerging markets.

"The real importance of these weak U.S numbers is that they help to restore rationality. The irrational selling of emerging markets over the past 10 months has only been equaled by the build-up of irrational exuberance about the US," says Dehn.

Now, perhaps, we can begin to hope for a return to rationality in both.

For emerging market investors, Dehn points out five signs though remains cautious in calling an actual turning point.

Five Signs EM is a Buy

1. The technical position in the market has to turn. This is largely achieved, though Ashmore does not rule out that outflows continue for a bit longer.

2. Fundamentals have to look okay. For the most part, emerging markets are expected to grow faster this year than last year. All eyes will be on China as the dragon in the living room for the time being. Declining PMI in services and manufacturing last month has investors thinking the No. 2 economy is going to grow less than expected. Fundamentals still part of the equation.

3. Better news has to flow from the "Fragile Five". These are South Africa, Turkey, India, Indonesia and Brazil, with Brazil and South Africa being the most iffy. All of these countries have raised rates, devalued their currencies, implemented fiscal adjustment where needed, and so on. None of these countries have a crisis per se, meaning unsustainable debts, running out of reserves, experiencing collapsing banking systems, or suffering wholesale corporate defaults. They face mainly macroeconomic disequilibrium and they are fixing these issues.

4. Valuations have to be attractive. With credit spreads twice pre-crisis levels for external debt and corporate debt and local currency bonds yields above 7%, Dehn thinks there is value and he is not alone. Bryan Carter, an emerging markets fund manager at Acadian in Boston, and Mauro Ratto, head of emerging markets at Pioneer across the pond in London both told FORBES last week that they agree. There's gold to be dug out of them thar hills, Yankee.

5. Opportunity cost. The loss of opportunity of not being invested in emerging has to become less attractive at some point. This also appears to be happening, judging by the latest U.S. data.

"We are not in the business of calling turning points," says Dehn. "The sensible way to approach the uncertainty
about timing is to decide on the allocation one wants to make to the trade and then chop it into a number of
bite sized pieces. This way one is sure to get invested when it is cheap, without risking shooting all of the
powder too early."

See: Fragile Five Is Latest Emerging Markets Club In Turmoil – The New York Times

Why PetSmart Is A Buy

Traditional brick and mortar retailers seem to face more intense online competition every year. Given the challenging consumer spending environment—particularly during the highly promotional holiday shopping period—2013 was an especially tough year for many.

The weak holiday sales have resulted in numerous downgrades of retail stocks. Among them was PetSmart (PETM), the leading retailer of pet products and services in North America, which was downgraded by several analysts last month, citing weaker holiday traffic trends and expectations for increased online competition ahead.

However, PETM has been fairly unscathed by the growing dominance of online retailers over the years. The simple reason for this is the fact that no one has been able to stay in the business of selling 50 pound bags of dog food at a discount while also providing free shipping for very long. Additionally, demand for its products tends to be fairly inelastic and less affected by consumer spending trends.

That's why I believe the stock is undeserving of the sharp sell-off it has had so far this year and why I expect the strong growth the company has enjoyed over the past several years to continue in 2014.

PetSmart's 1,314 stores, which are strategically located at sites co-anchored by strong destination mass merchandisers, sell high-quality pet supplies consisting of roughly 11,000 distinct items. Through its Web site it sells an additional 10,000 items. PETM complements these product offerings with a wide selection of pet and veterinary services that promote repeat visits to its stores and creates cross-selling opportunities.

PETM has three business segments. The merchandise segment (88.5% of third quarter net sales) sells pet products that generally fall into three main categories: The consumables category (54.5%) includes pet food, treats and litter with an emphasis on super-premium, premium and therapeutic dog and cat foods, many of which are not available in grocery stores or warehouse clubs. The hardgoods category (32.4%) consists of pet supplies such as collars, leashes, health care items, grooming and beauty aids, toys and apparel, pet beds, pet carriers, aquariums and habitats. The live pets category (1.5%) is comprised of fresh-water fish, small birds, reptiles and small pets.

The services segment (10.9% of third quarter sales) provides a range of pet services, including full-service grooming (such as precision cuts, baths and nail trimming), pet training, and daycamp and boarding at its PetsHotels.

Through its 21% equity stake in Banfield Pet Hospital, PETM also offers routine examinations and vaccinations, dental care, pharmacy services and surgical procedures in many of its stores. The other segment (0.6% of third quarter sales) consists of license fees and reimbursements for specific operating expenses charged to Banfield.

Total third quarter net sales rose 4% year-over-year to $1.7 billion, benefiting from persistently strong demand for natural foods, grooming services and PetsHotels. Comparable store sales grew 2.7%. The merchandise, services and other segments saw sales increases of 3.9%, 5.2% and 7.4%, respectively, to$1.50 billion, $184.2 million and $10.5 million. Due to better sales mix, the operating margin expanded 45 basis points to 9%. Net income grew 12.0% to $92.2 million or 88 cents per share, which beat the consensus estimate by 2 cents.

PETM's stock has not had a good start to the year. First, it could not escape the sell-off in retail stocks earlier this month spurred by the wave of disappointing sales reports over the holiday shopping season. It was also downgraded by several analysts primarily on concerns over slowing store traffic trends and the expectation for increased competition from Internet-based retailers such as Amazon.com Amazon.com. As a result, shares are down about 10% since the end of 2013.

PETM is certainly not immune to weak consumer spending trends. In fact, coupled with the negative impact of unfavorable weather conditions across the nation—especially in the past month—I would not be surprised if its fourth quarter results fall slightly shy of the consensus estimate.

Furthermore, I concede that the potential for greater competition from the Web is an ever present threat. This has already taken down well-known retailers, such as Blockbuster and Circuit City, while also grabbing substantial market share from other brick and mortars, including Staples Staples, Radio Shack and Best Buy Best Buy.

But I strongly believe that investors are overestimating the impact of these concerns. The sale of pet food and supplies tends to be less discretionary in nature, resulting in relatively inelastic demand. This is likely due to the fact that spending on pets typically represents a small portion of total household budgets and is centered on food and other consumables, which must be purchased regularly. As such, I think the negative impact of the softer holiday sales trends will be less significant than the stock's recent drop implies.

In terms of online competition, I want to note that the Internet retail market is fairly mature with well entrenched players in virtually every product category. However, pet supplies has been one area where this is not the case. A key reason for this: the economics just aren't there. That is, it has been very difficult to make a profit selling pet food at a price competitive enough to sway consumers while also offering free shipping. Many have tried and failed. While the economics of this business may have improved somewhat over the past several years, I believe this remains largely true today.

Furthermore, PETM has been placing more emphasis on growing its own Internet site as part of a larger omnichannel strategy aimed at simplifying the overall customer shopping experience and driving traffic to its stores. For example, it added real-time online inventory availability information for consumables so customers can find out if a specific item is available at their local store. For this reason, I view the threat of online competition as fairly muted.

At the same time, I am optimistic on the prospects within PETM's services operations, which have continued to grow at a faster pace than its overall core business and represent a key competitive advantage over both online and traditional retailers that sell pet merchandise, such as Target Target and Costco.

Bullishness Jumps to Three-Year High

Individual investors were feeling especially cheery about stocks this holiday week.

The percentage of bullish individuals rose to 55.1%, the highest level in nearly three years, in the week ended Dec. 25, according to the American Association of Individual Investors. That was a jump from the 47.5% of investors who said they were bullish the previous week.

The last time that more investors said they were bullish was during the week ended Jan. 6, 2011, when 55.9% said they were bullish.

The year-end rise in holiday spirits doesn't appear to be a seasonal phenomenon. Historically, the holiday change in investor sentiment is just about evenly split. Bullishness rose during the last full week of the year in 10 of the past 20 years, and fell the other 10, according to historical AAII data.

With last week's reading, an average 39.7% of investors have said they bullish each week this year, according to AAII data. That marks a rise from last year's average of 36.5%, and remains above the average 38.1% of investors who said they were bullish each week in 2011. Individuals were more bullish in 2010, however, when an average 40.5% of investors said they thought stocks would rise in the next six months.

On the surface, the AAII reading may seem like another piece of good news for a stock market that is on track for its 50th record high in the Dow. But for many traders, the AAII is often used as a short-term contrarian indicator, with the thinking that by the time mom and pop jump in the rally, it's mostly played out.

Individuals aren't putting on their rally caps quite yet, either. Over recent years, the steadiest rise has been in the number of investors who say they are neutral on stocks. Even with last week's jump in bullishness, an average 30.7% of investors were neutral on stocks each week this year. That is a rise from last year's 30.1%, and the highest since 1999, when 35% of investors said they didn't expect big moves from stocks.