Bes Stocks To Buy 2014, Best Stocks For 2014: 6/22/14

Friday, June 27, 2014

Nike scores a goal on Wall Street

Nike 1, Adidas 0 NEW YORK (CNNMoney) The World Cup is not just a battle for soccer supremacy. It's also a showdown between two global brands: Nike and Adidas.

On that front, it looks like Nike just scored a goal.

Nike (NKE) shares were up nearly 2% in late-morning trading Friday after the sports apparel company's latest financial results blew past expectations.

The world's leading athletic footwear brand said late Thursday that total revenue was up 11% in the fourth quarter to $7.4 billion.

For the full fiscal year, which ended May 31, Nike reported double-digit sales growth in its largest product lines, including running, basketball and women's training.

But the company's fastest growing division was football, a.k.a. soccer.

Revenue from Nike's soccer business rose 18% in the company's fiscal year to $2.3 billion.

"Our football business has never been stronger," Nike brand president Trevor Edwards told analysts in a conference call.

Nike, which started out making running shoes, is a relative newcomer when it comes to selling soccer gear.

World Cup retail is Christmas in June

While it is not an official World Cup sponsor, Nike is on a mission to generate as much buzz as possible at the World Cup, which is expected to break records in terms of viewership.

The Oregon-based company currently sponsors the most teams at the tournament. And there are more players in Brazil wearing Nike "boots" than all other brands combined, according to Edwards.

"Our comprehensive offense on the pitch and in the marketplace drives our leadership as the world's best football brand," said Edwards.

Nike sponsors the U.S. men's soccer team, which lost Thursday against Germany, but still scored enough points to advance to the next round of the tournament.

With Nike on offense, it seems that Germany's Adidas is playing defense, at least in the stock market.

Shares of Adidas (ADDDF), which trade in Fra! nkfurt and also have a small listing in the U.S., are down 7% since the World Cup started on June 12, though they were bouncing back Friday. Nike shares are up more than 5% over the same period of time.

Adidas has set a goal of generating 2 billion euros, or about $2.7 billion, in sales from its soccer business this year. The company will report results for the first half of 2014 in August.

Thursday, June 26, 2014

Investors Should Avoid This Shipping Stock

Despite being in a precarious situation, DryShips (DRYS) is still regarded as a leading player in the shipping sector. DryShips released its fourth-quarter earnings just recently, and the results were mixed as the company managed to beat the revenue estimate but missed out on the bottom line estimate.

What's even more worrying for investors is that the company's debt-to-capitalization ratio jumped from 0.52 to 0.58, which signifies that the company's debt is becoming unmanageable. In addition to that, DryShips also reported a year-over-year increment in expenses of 6.3%. The rising debt-to-capitalization ratio and increasing expenditure shows that the company might struggle to stay afloat and may even dilute its shares once more. On the bright side, DryShips' Oil Tanker segment's revenue increased by an impressive 190.5% from last year to $32.4 million.

Rising Debt and Not Generating Enough Money

DryShips has nearly doubled in 2013 due to optimism that the company is well positioned to capitalize on the recent revival in shipping rates. However, I don't think that the hike in shipping rates will help DryShips generate enough money to offset its gigantic debt, and it is one of the primary reasons why I will suggest investors to stay away from the stock.

As per Yahoo Finance, DryShips' debt currently stands at $4.55 billion. And given that the company only has $227 million in cash, this scenario is very daunting. While maturities of many of these debts have been extended to 2015, DryShips is still in a very precarious situation.

Moving on to the shipping segment, DryShips reported $13.4 million in EBITDA for this sector. However, the company has spent more than $33 million in debt payments. So, it is evident that DryShips is not generating enough money to keep up with its debt payments, and will need to triple its earnings just to remain on par with the debt payments. Therefore, it will be irrational to assume that the recent revival in shipping rates will turn around the company's fortunes.

Ocean Rig Myth

Many analysts and investors are of the opinion that DryShips' financial situation will improve because of drilling operations which it provides through its partially owned subsidiary, Ocean Rig. Quarterly revenues from drilling contracts jumped 15% from last year to $328 million, and even though DryShips owns a 59% stake in Ocean Rig, it has no control over the capital and resources of Ocean Rig. So, investors shouldn't believe that Ocean Rig's order backlog worth $5.8 billion will benefit DryShips in any way.

Dilution and Poor Management

To deal with these stringent financial conditions, DryShips' management decided to issue nearly 6 million shares for $20 million in the previous quarter. This isn't the first time the company has resorted to diluting shares to tackle the financial pressure and this just goes on to show that DryShips might never return a good yield in the long run because of poor management. The company's management has continued the dilution process to stay afloat, rather than sacrificing underperforming assets. Another example of poor management is when DryShips paid a buyer $21.4 million to take two unfinished ships off its hands.

Conclusion

There might be some who would be expecting DryShips to get better in the future. The stock has run up close to 100% this year on the back of investors' optimism, but facts and figures are against it. A huge debt load, poor cash position, and poor management decisions are some good reasons why investors should book their profits and consider selling DryShips.

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Sdnarra - 1 hour ago

It is not just this one. Many of the shipping companies habitually dilute their shareholders. I was a shareholder in NAT(Nordic american tankers) for some time and felt totally mistreated by the management. They issued dilutive shares repeatedly while shares were well below book value, continued to pay a dividend while they were cash flow negative, continuously misread the market they were in, and continued to pay themselved handsomely for their utter mismanagement. Having lost well over a third of my capital in a 2 1/2 yr period when the markets were rising and realising the interests of management were completely misalligned with mine, and deciding time is more potentially injurious to my capital, I exited in sheer disgust at them. Even a solid pristine balance sheet can't stand up to idiotic self serving management.

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Wednesday, June 25, 2014

'Poor' tweet by federal lender prompts backlash

NEW YORK (CNNMoney) For social media managers, reaching young audiences with irreverent memes and tweets is a dangerous endeavor.

The latest entity to end up with egg on its face is the Federal Student Aid office, which on Tuesday tweeted an image that many readers felt mocked the poor.

The image, a common meme derived from the 2011 comedy "Bridesmaids," features Kristen Wiig's character pouting about being sent back to her coach seat after sneaking her way into first class, with the caption "Help me. I'm poor."

It encouraged readers to fill out a Free Application for Federal Student Aid, or FAFSA, which gives students and would-be students access to the office's financial aid programs. FAFSA is also required by many colleges, universities and private financial aid providers.

"If this is you, then you better fill out your FAFSA," the tweet underneath the image said, according to screen shots that users took. (The tweet has since been taken down.)

Within minutes, almost universal condemnation of the tweet started spreading across the social networking site, calling it "offensive" and "tasteless" and mocking its attempts at outreach.

The Federal Student Aid office, which is part of the U.S. Department of Education, controls more than $150 billion in grants, loans and work-study money that is distributed to more than 15 million students each year.

Related story: These employers will pay for your tuition

It apologized for the tweet around ! 1 am on Wednesday morning.

In a statement, a spokeswoman for the Department of Education called the post "insensitive" and said it "flies in the face of our mission of opening doors of opportunity for every student."

"It was an ill-conceived attempt at reaching students through social media," the spokeswoman, Dorie Nolt, said. "We are reviewing our process for approving social media content to ensure it reflects the high standards we expect at the U.S. Department of Education."

The Federal Student Aid office is by no means alone in having goofed on social media recently.

On June 17, Delta Air Lines (DAL) posted images of the Statue of Liberty and a giraffe to celebrate the U.S. win over Ghana in the World Cup. Followers quickly pointed out that Ghana has no giraffes.

Back in March, a campaign launched on Twitter to cancel "The Colbert Report" after the show's verified account tweeted out a message that many felt was racist against Asians. The show's host, Stephen Colbert, denied involvement with the tweet.

The show survived the campaign, and despite the gaffe, Colbert was named as David Letterman's replacement a few weeks later.

Why Intel (INTC) Stock Is Up In Aftermarket Trading Today

NEW YORK (TheStreet) -- Intel Corp (INTC) experienced a jump in aftermarket trading, rising 0.4% to $24.

The jump came after the company was upgraded to "overweight" from "equal weight" at Piper Jaffray. The firm also assigned the stock a $30 price target.

Must Read: Warren Buffett's 10 Favorite Growth Stocks

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Piper points to the stabilization of the PC market as a reason for the upgrade.

"Recent industry data points suggest that 1Q notebook shipments are tracking roughly in line with expectations while commentary on direct server trends have been positive. We expect the trend of improving rate of year-over-year declines to continue in 2014," analyst Ruben Roy said in the note.

Separately, TheStreet Ratings team rates INTEL CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate INTEL CORP (INTC) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows: The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year. Despite its growing revenue, the company underperformed as compared with the industry average of 5.2%. Since the same quarter one year prior, revenues slightly increased by 2.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share. Although INTC's debt-to-equity ratio of 0.23 is very low, it is currently higher than that of the industry average. To add to this, INTC has a quick ratio of 1.75, which demonstrates the ability of the company to cover short-term liquidity needs. The gross profit margin for INTEL CORP is currently very high, coming in at 75.56%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 18.97% trails the industry average. You can view the full analysis from the report here: INTC Ratings Report STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Stock quotes in this article: INTC

Tuesday, June 24, 2014

Families put human face on massive GM recall

WASHINGTON — Laura Christian's daughter was 16 years old in 2005 when the Chevy Cobalt she was driving hit a tree. The airbag didn't deploy, and Amber Marie Rose was killed.

In the last two months, General Motors has recalled more than 2.5 million vehicles worldwide after linking defective ignition switches in similar cars to airbag failures — and to 13 deaths and 31 crashes. And there are indications GM approved the switches in 2002 even though it knew they did not meet specifications.

Family members who lost loved ones in those crashes, including Christian, turned a spotlight Tuesday on the human side of GM's deadly mistake. They held a press conference at the U.S. Capitol in advance of a House subcommittee hearing on what high-ranking GM officials knew and when they knew it.

The family members, many holding photos of their loved ones, said they were concerned about other families who may be harmed while driving GM cars that have not been recalled. And they pressed Congress to tighten rules to ensure that flawed vehicles are quickly recalled.

Christian used her time at the microphone to press Congress for legislation that would compel car companies to be more transparent about problems with their vehicles.

STORY: Questions stalk GM chief

STORY: GM takes case to Capitol Hill

STORY: Victims speak

"Corporate executives made a decision that fighting the problem was cheaper and easier than fixing the problem," said Christian, who is among those who say GM had plenty of warning over the years to recall the vehicles and fix the switches.

"Please help us pass legislation to make sure that this never happens again," Christian said.

Kelly Erin Ruddy was 21 when she burned alive in a car crash in 2010. Her mother, Mary Ruddy, said Kelly knew something was wrong with the car. Three months after the crash, the car was recalled for a power steering issue. She said GM "dismissed us."

"I kept thinking that my heart is so broken, but the one thing I! will see to is that this will never happen to another family," Ruddy said. "That's why we are here. It's the final thing we can do for Kelly."

Ken Rimer, whose stepdaughter, 18-year-old Natasha Weigel, died after a 2006 Cobalt crash, said GM knew years ago that it had made a big mistake. "Rather than fixing the problem, they chose to keep producing the Cobalt, with the ill-fated ignition switch, and selling it to an unsuspecting public," Rimer said.

Samantha Denti, of Toms River, N.J., survived the problems that plagued her 2005 Chevy Cobalt.

"I was your typical 20-year-old," she said, talking about how much she loved her car and the freedom it signified. But she said that one day she was driving and "all of the sudden my car went from 45 miles per hour to zero." Months later that same thing happened again.

With just a single ignition key and a house key on the key chain, it happened again.

"This car was surely a death trap," Denti says. "Driving this car was like playing a game of Russian roulette."

MORE: GM recalls 1.3M vehicles to fix power steering

Some members of Congress also took part in the press conference.

"Two dollars. That's how little this ignition switch could have cost to repair," said Sen. Ed Markey, D-Mass. "Two dollars that could have saved priceless lives. That was apparently $2 too much for General Motors.

"This recall is a decade late and dozens of lives and injuries short," he said. Markey joined Christian and others in urging Congress to pass a bill to require more transparency from car manufacturers and the traffic and safety departments.

On Monday night, General Motors CEO Mary Barra met with the families of several people who died in crashes involving the recalled vehicles. According to people there, she cried at one point, as families showed her pictures of the victims and told their stories.

Christian said she wanted to meet with Barra, "so she could not turn away from the human side of this." She said Barra ! said she ! was sorry many times during the meeting at GM's Washington offices.

Renee Trautwein was unimpressed. Trautwein's daughter Sarah was killed in 2009 after losing control of her 2005 Chevy Cobalt.

"It was a waste of time," Trautwein said of the meeting with Barra. "I think she was doing it for PR. Nothing came out of it."

The family only learned of the recall a few weeks ago.

"People are not aware," Trautwein said. "How many recalls do we hear of every day? No one takes it seriously."

She said her daughter loved the University of South Carolina, her cats and her dogs. "She left me with a grand pup," Trautwein said. "Sarah was the love of my life. She was bubbly and happy and beautiful.

"Since we found out about the recall, we are all in a whole new mourning process. "

In her testimony filed in advance of Tuesday's hearing, Barra promises the U.S. House Energy and Commerce Committee's Subcommittee on Oversight, "When we have answers, we will be fully transparent with you, with our regulators and with our customers."

The fault that triggered the recall allows the ignition switch to slip unexpectedly from the normal "run" position into "accessory." That shuts off the engine and kills power to a number of systems, usually including airbags.

GM's own chronology says the problem first was noticed at GM in 2001.The recall has emerged in three stages:

• Feb. 7, GM recalled 778,562 of its 2005-2007 Chevrolet Cobalts and 2007 Pontiac G5s, 619,122 in the U.S. to replace the switches.

• Feb. 25, it expanded that by another 842,103, to include 2003-2007 Saturn Ion, 2006-2007 Chevy HHR, 2006 Pontiac Solstice, 2007 Saturn Sky. Of those, 748,024 are U.S.-market vehicles.

• March 28, it again expanded the universe of recalled cars, this time by 873,288 U.S. models, to include newer versions of the already recalled vehicles that had the redesigned – safer – switches from the factory, but might have gotten a faulty switch during repairs. Only a! bout 5,00! 0 of those are likely to have gotten a bad switch, but GM can't tell which 5,000 because some old and new switches have the same part number.

According to a timeline the automaker has filed with the National Highway Traffic Safety Administration in connection with the recall, GM first noted a problem with the ignition switch moving out of "run" in 2001, during development of the 2003 Saturn Ion.

An unidentified mechanic reported the problem in 2003 on a customer's car. And in 2004 a GM engineer finalizing the new 2005 Chevy Cobalt experienced the switch problem.

A new switch design was approved in 2006, the timeline says, but without a new part number. If that was done to fix a safety problem, but federal safety officials weren't told, it could be a violation of federal law. GM did not recall the cars in 2006 to install the redesigned part.

On March 18, in her first interview since taking over as CEO in January, Barra acknowledged, "Clearly, this took too long." Pledging to ensure there's never a repeat, Barra said, "We will fix our process."

She hired a global safety chief with access to her and other top executives, a first for GM and rare in the car business. And the automaker began to accelerate its own product and safety reviews.

Since then, GM has recalled:

• Full-size GMC and Chevrolet full-size commercial vans because they don't provide a front passenger enough protection from head injuries.

• An array of crossover SUVs because seat-mounted side airbags might fail.

• Cadillac XTS sedans because an obscure brake system flaw ignited two of them at dealerships.

• A number of small and mid-size cars – including some that were recalled for switch problems -- because they also could have faulty steering. That recall also includes some cars previously repaired, but possibly with faulty parts.

• Its Cruze sedan -- its best-selling car -- for axles that can break.

• All its newest pickup trucks and full-size SUVs for a! n oil lin! e that can leak and create a fire risk.

Spangler writes for the Detroit Free Press. Contributing: John Bacon

Monday, June 23, 2014

Why Leidos Holdings, Inc. Shares Plunged Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Leidos Holdings, (NYSE: LDOS ) or formerly Science Applications International -- fell more than 18% Thursday after the national security, health, and engineering solutions company turned in better-than-expected fiscal 2014 fourth-quarter results, but followed with disappointing guidance and announced the departure of its Chief Operating Officer.

So what: Quarterly revenue fell 18% year over year, to $1.3 billion, or just ahead of analysts' expectations for sales of $1.27 billion. This translated to earnings of $0.52 per diluted share (including a $0.04 per share loss from discontinued operations). Analysts, on average, were modeling earnings of just $0.43 per share.

However, Leidos also called for fiscal 2015 revenue of $4.9 billion to $5.1 billion, with adjusted earnings per diluted share from continuing operations of $2.35 to $2.55. The midpoints of both ranges stand significantly below analysts' expectations for fiscal 2015 sales of $5.46 billion, and earnings of $2.85 per share.

On a more positive note, Leidos does expect to generate healthy cash flow from continuing operations at or above $350 million this fiscal year.

Finally, Leidos announced current president and COO Stu Shea will step down on April 6, 2014. The departure was a mutual decision between Shea and Leidos' board.

Now what: Leidos CEO John Jumper didn't sugarcoat it, saying, "In our fourth quarter, we continued to encounter headwinds from sequestration, unclear funding on awarded programs, delayed award decisions, high levels of protest activity, and continued commercial health and engineering revenue declines."

Still, he insists Leidos will focus on strategies to "increase returns and deepen our market penetration, especially in markets where we no longer face organizational conflicts of interest." Leidos will also continue returning capital to shareholders through share repurchases and its 3% annual dividend.

While it's tempting to stay far away given Leidos' outlook, I find myself intrigued. Keep in mind that, taking the midpoint of that guidance, the stock seems to reflect much of investors' pessimism trading at just 0.6 and 14 times this year's expected sales and earnings, respectively. In the end, while I wouldn't jump in with both feet, today's pullback could provide a reasonable opportunity for patient investors to open a small position.

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Sunday, June 22, 2014

Stock Focus: CalAmp Corp. and Splunk

There are two different ways to play the Internet of Things: vertically and horizontally. CalAmp (NASDAQ: CAMP ) is the vertical strategy; Splunk (NASDAQ: SPLK ) is horizontal.

CalAmp has a couple of industries it knows really well, and it wants to use the Internet of Things as a tool to optimize those industries. For its mobile resources management offering, CalAmp can promote to its customers their returns on investments by saving fuel and optimizing routes if CalAmp's telematics devices are installed in their heavy industry vehicles.

Meanwhile, Splunk is looking at unstructured machine data. Any device that can transmit a signal, whether it's a cell phone or an airplane, can use Splunk to better monitor its performance -- and therefore allow those in charge to make better managerial decisions for their businesses.

In this episode of The Next, Motley Fool tech analyst Eric Bleeker and Rule Breakers analyst Simon Erickson break down the stock performances of CalAmp and Splunk in 2014 and what they might hold for the future.

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