Why We're Bullish On Hewlett-Packard

Author: Jean-Luc Nouzille, Bristlecone Value Partners LLC
Covestor model: Large Cap Value

The best thing about September is that it is finally over. The S&P 500 index declined by 7.2%, and the Large Cap Value model portfolio dropped even further during the same period. Investors appeared to have a split personality throughout the month, alternatively showing signs of extreme pessimism and optimism, with the market registering frequent and large daily swings.

At the time of this writing, there does not appear to be any resolution yet of the situation in Europe. It seems that politicians across the pond are making the economic situation worse by prescribing a medicine, austerity, which keeps pushing the sickest patient, Greece, further into recession and fiscal deficits.

During the month, stocks that contributed positively to our portfolio's performance were Intel (INTC), Maxim Integrated (MXIM), and Motorola Solutions (MSI). The top detractors were Cemex (CX), Vulcan Materials (VMC), and Apollo (APOL).

The biggest decline by far during September was experienced by Cemex (-41%), due to a combination of increased recession fears driving down cyclical stocks and concerns that the company will not meet its debt covenants at the end of the year. As we commented last month, we continue to feel that the company has some flexibility in addressing this issue. On the most recent conference call, management outlined a $1bn divestiture plan to ensure compliance.

We'll keep monitoring the situation.

The well-documented missteps at Hewlett Packard provided us with what we feel is an opportunity to buy shares in a company that remains competitive in most of its business lines, generates a lot of free cash flow, and has a sterling balance sheet. The reasons for the stock price being cheap are mostly related to the clearly dysfunctional management team and board of directors. Just a few days after our September 16 purchase, a new CEO was announced. Although we reserve our judgment for now! , the se lection process was again less than satisfactory. However, with the stock trading at close to6times next year's estimatedearnings, we feel that we are more than adequately compensated for the risk that we are taking.

To make room for this new position, we decided to sell our investment in Motorola Mobility's stock, as its price-to-value discount had almost disappeared following the acquisition offer from Google.

As of September 30th, the US market is down almost 9% for the year. Depending on whether you adjust or not for the economic cycle, stocks today are either cheap or fairly valued on average. However, we feel that the stocks we own in the Large Cap Value portfolio are very cheap. We believe that this is a great time to own them, and we anticipate that a combination of rising earnings and valuation multiple expansion will provide us with very satisfactory returns over the next 3 to 5 years, but there is no question that the ride will be bumpy and test our conviction at times.

Disclosure: Long all stocks mentioned

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

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Weak German Bond Sale Mashes Markets

A German offering of 10-year debt failed to draw the robust support the country has been accustomed to as a safer haven than its European neighbors, and stocks tumbled Wednesday in response as spooked investors fled from any semblance of risk ahead of Thursday’s day off for Thanksgiving, Friday’s shortened session and the weekend.

Germany was barely able to sell more than half of a planned �6 billion auction of 10-year bunds, at a yield of 1.98%. While rates remain low, the failed auction is a worrying sign that Europe’s debt crisis is impacting demand for even the safer credits of so-called core countries at a time when yields in threatened peripheral countries Italy and Spain are trading at or near the 7% level.

The rocky German bund sale had stocks reeling from the opening bell in New York. With just over an hour to the close of trading the Dow Jones industrial average was down 196 points to 11,298, the S&P 500 fell 22 points to 1,166 and the Nasdaq lost 52 points to 2,469.

Bank stocks were trading lower, including Dow components Bank of America, down 4.1%, and JPMorgan Chase, down 3%. On Tuesday, the Federal Reserve revealed details of the scenarios it will require major U.S. financial firms to stress test their portfolios for, including a situation similar to the 2008 crisis with a dose of European meltdown for the six largest firms. (See “Fed’s 2012 Stress Scenario: 2008 Plus European Blowup.”)

Groupon was in the headlines after the daily deal site’s shares fell more than 15% to trade below the $20 level it priced an initial public offering of a sliver of its stock early in November. (See “Groupon’s Nosedive An Ominous Sign For Internet IPOs.”)

In U.S. economic news, the final November reading on consumer sentiment from the University of Michigan survey came in at 64.1, shy of estimates and the previous forecast earlier in the month. Initial jobless claims climbed in the late! st weekl y gauge, but remained below 400,000 at 393,000.

Deere & Co. was one of the few bright spots Wednesday ahead of the Thanksgiving holiday when U.S. markets close. The agriculture equipment maker reported a 46% gain in fourth-quarter profit and said it expects sales to rise 15% in 2012, even though business is likely to be flat in Europe. Shares of Deere were off their morning highs but still in positive territory, up 2.6%. (See “Deere Says Forget Europe, Growth Will Come From Elsewhere.”)

Sell-Off Continues

The stock market indices had a very, very difficult session, plunging at the opening on negative futures, and then basing out for the rest of the session. In the afternoon they tried to rally, backed off late in the day, but still it was a negative session for sure.

Net on the day, the Dow was down 248.02 at 11,548.14, and the S&P 500 down 22.02 to 1193.63, or 1.8%, about 10 points off the low. The Nasdaq 100 was down 42.81 at 2211.14, or 1.86%, and about 23 points off the low.

So, they did come back off the lows today.

TheTechTrader.com was mostly lower, but there were some gainers. Inhibitex Inc. (INHX) jumped 1.68 to 10.61, or 18.8%, on 10 million shares. BSD Medical Corp. (BSDM) advanced 44 cents to 3.06, or 17%. Regeneron Pharmaceuticals, Inc. (REGN) gained 5.19 to 55 even, and Transcept Pharmaceuticals, Inc. (TSPT) added 47 cents to 7.06.

Low-priced Pizza Inn Holdings, Inc. (PZZI) continued strong, up another 25 cents to 5.72. Global Cash Access Holdings, Inc. (GCA) jumped 24 cents to 4.24. Dendreon Corp. (DNDN) was up 39 cents to 8.73, Spectrum Pharmaceuticals, Inc. (SPPI) 68 cents to 12.85, Green Mountain Coffee Roasters Inc. (GMCR) 2.46 to 52.91, and Cooper Industries plc (CBE) 1.37 to 53.51.

Pharmasset, Inc. (VRUS) was the star of the day, sky-rocketing 61.47 to 134.14, or nearly 85% today.

The ultra-shorts did quite well today. The Direxion Daily Emrg Mkts Bear 3X Shares (EDZ) was up 2.09 to 23.49, the Direxion Daily Small Cap Bear 3X Shares (TZA) jumped 2.32 to 34.09, Direxion Daily Financial Bear 3X Shares (FAZ) up 3.16 to 49.49, VelocityShares Daily 2x VIX ST ETN (TVIX) 1.14 to 59.64, and the Direxion Daily Large Cap Bear 3X Shares (BGZ) 1.82 to 36.04.

On the downside, SodaStream International Ltd. (SODA) lost 1.96 to 30.49. Focus Media Holding Ltd. (FMCN) plummeted 10.07 to 15.43, or 40%. Goldman Sachs (GS) fell 61 cents to 91.30, and Spreadtrum Communications Inc. (SPRD) 3.56 to 23.65.

Google Inc. (GOOG) was down a whopping 13.94 to 5! 80.94, A pple Inc. (AAPL) 5.93 to 369.01, International Business Machines Corp. (IBM) 3.76 to 181.48, Amazon.com Inc. (AMZN) 7.89 to 189.25, Chipotle Mexican Grill, Inc. (CMG) 5.48 to 305.58, and Panera Bread Co. (PNRA) 1.59 to 132.39,

Direxion Daily Small Cap Bull 3X Shares (TNA) was down 3.09 to 49.58.

Stepping back and reviewing the hourly chart patterns, the indices were down sharply in the morning, based out midday, and early afternoon they had a rally that brought them back, but they still closed quite negative on the session.

The NDX has now dropped from about 2400 to about 2200 in the last several sessions, so we may see a snapback as early as tomorrow.

Good Trading!

Harry

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Hot Topic Inc. Earnings Cheat Sheet: A Return to Profitability

Falling revenue did not prevent Hot Topic Inc. (NASDAQ:HOTT) from reporting a profit boost in the third quarter. Hot Topic is a mall- and web-based specialty retailer.

Hot Topic Earnings Cheat Sheet for the Third Quarter

Results: Net income for Hot Topic Inc. rose to $3.1 million (7 cents per share) vs. $390,000 (one cent per share) in the same quarter a year earlier. This marks a substantial increase from the year earlier quarter.

Revenue: Fell 4% to $175.8 million from the year earlier quarter.

Actual vs. Wall St. Expectations: HOTT fell in line with the mean analyst estimate of 7 cents per share. Analysts were expecting revenue of $179.2 million.

Key Stats:

The company has now fallen in step with estimates for the last three quarters. It reported a loss of -8 cents in the second quarter, 0 cents in the first quarter and net income of 12 cents in the fourth quarter of the last fiscal year.

The company’s profit in the latest quarter follows losses in the three previous quarters. The company reported a net loss of $6.2 million in the second quarter, a loss of $7.7 million in the first quarter and a loss of $578,000 in the fourth of the last fiscal year.

Margins contracted in the second quarter after expanding the quarter before. Gross margin fell 1.3 percentage points to 33.9% from the year earlier quarter. In the first quarter, the figure rose 1.6 percentage points to 32.2% from the year earlier quarter.

Over the last five quarters, revenue has fallen an average of 1.7% year over year. The biggest drop came in the most recent quarter, when revenue fell 4% from the year earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from 20 cents a share to 17 cents over the last thirty days. In th! e past m onth, the average estimate for the fiscal year has fallen from 20 cents per share to 17 cents abs.

Competitors to Watch: Zumiez Inc. (NASDAQ:ZUMZ), Urban Outfitters, Inc. (NASDAQ:URBN), Mecox Lane Limited ADR (NASDAQ:MCOX), Amazon.com, Inc. (NASDAQ:AMZN), dELiA*s, Inc. (NASDAQ:DLIA), American Eagle Outfitters (NYSE:AEO), Aeropostale, Inc. (NYSE:ARO), The Buckle, Inc. (NYSE:BKE), Pacific Sunwear of California, Inc. (NASDAQ:PSUN), and The Wet Seal, Inc. (NASDAQ:WTSLA).

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

 

Asian nation¡¯s hydrologic issues could slam production in Q4

It��s a scene reminiscent of the book of Genesis, only this time, Noah has to pilot the ark through Thailand. Since July, the southeast Asian nation has experienced heavy monsoonal rains that have caused severe flooding described as the country��s worst in more than 50 years. Months of intense rainfall and subsequent flooding already has claimed hundreds of lives, and now there is fear that additional rain and more flooding will paralyze the country. That paralysis could lead to a severe curtailing of production in several major industries, including automotive, cameras and, perhaps most significantly, hard drive and semiconductor chip makers.

Many Japanese and U.S. firms in these sectors call Thailand their home, and many have major production facilities that have been forced to shut down because of the flooding. A recent report from research firm IHS iSuppli said the Thai floods have been harmful to tech manufacturing, and in particular to the operations of disk-drive maker Western Digital (NYSE:WDC).

According to the report, the most direct impact will be felt by the hard disk drive business, which will see total shipments fall approximately 28%, to 125 million units from 173 million in the previous quarter. That would represent the biggest drop since the final quarter of 2008, when the sector was hammered with a 21% drop.

The production drop in HDDs might result in significant price increases that could cause consumer hard drive prices to rise as much as 10%. And while IHS iSuppli says the PC industry has enough drives on hand to make it through a temporary shortage, the effects of a long-term drive shortage could start to impact Q1 2012 notebook computer production. That��s not a positive for PC makers such as Dell (NASDAQ:DELL) and Hewlett-Packard (NYSE:HPQ).

On Thursday, analog chipmaker ON Semiconductor (NASDAQ:ONNN) CEO Keith Jackson was interview! ed on Fo x Business Network, and he said, ���� we don��t expect the (floods) to completely recede for another month. At that point, we��ll be able to get into the factories and really understand the damage and have a clear path to recovery.” Jackson said his company��s earnings guidance for Q4 2011 and Q1 2012 reflected the impact of the floods, but until the damage is fully assessed, the impact on the bottom line for chipmakers won��t be fully understood.

In addition to the hard drive shortage, the flooding is likely to slam Japanese camera manufacturers Nikon and Sony (NYSE:SNE), which also have halted production at Thai facilities because of the disaster. Both companies have manufacturing facilities that make digital single-lens reflex (DLSR) cameras, and both were directly damaged by the flood.

Then there��s the auto industry, which will be hit by production shutdowns from car electronics maker Pioneer Corp. (PINK:PNCOF). Honda Motor Corp. (NYSE:HMC) was forced to suspend production at its automobile plant in Ayutthaya, Thailand, because of ?flood waters. The latest casualty is Toyota Motor Corp. (NYSE:TM), which actually shut down production at U.S. facilities for one day because of a shortage of parts from Thai suppliers. Ford (NYSE:F) and General Motors (NYSE:GM) are having similar production shortage snafus due to impaired facilities in Thailand.

Given the potential for a serious production shortage in hard drives, as well as supply chain disruptions to varying degrees in sectors such as PCs, cameras and autos, smart investors need to consider the circumstances and their yet-unknown impact before putting money to work in stocks with exposure to the Thai flood zone.

As of this writing, Jim Woods did not own a position in any of the aforementioned stocks.

Builder’s Get Confident, But Why?

The beleaguered housing sector (NYSE:IYR) saw some good news with the release of the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), which indicated that builder confidence?(NYSE:XHB) for new, single-family homes saw a gain of four points to 18.

“Builder confidence regained some ground in October due to modest improvements in buyer interest in select markets where economic recovery is starting to take hold and where foreclosure activity has remained comparatively subdued,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev.

Investing Insights: Will Weak Bank Earnings Force Investors into Gold?

Incidentally, this was the largest one-month gain on the HMI index since April 2010, when tax credits gave a boost to the industry.

“This latest boost in builder confidence is a good sign that some pockets of recovery are starting to emerge across the country as extremely favorable interest rates and prices catch consumers’ attention,” said NAHB Chief Economist David Crowe.

Hayman Capital Bullish Deutsche Bank, Yahoo! and Other Shares in 3rd Quarter

Wall St. Watchdog reveals information regarding significant increase in shares for Hayman Capital Management��s holdings on the quarter ending September 30th, 2011. The firm is bullish on these stocks:

• Deutsche Bank Ag (NYSE:DB): On 06/30/2011, Hayman Capital Management reported holding 0 shares. On 09/30/2011, Hayman Capital Management reported holding 1,287,500 shares. The net increase in shares for this position is 1,287,500. About Company: Deutsche Bank AG is a global financial service provider delivering commercial, investment, private and retail banking. The Bank offers debt, foreign exchange, derivatives, commodities, money markets, repo and securitization, cash equities, research, equity prime services, loans, convertibles, advice on M&A and IPO’s, trade finance, retail banking, asset management and corporate investments.
• Mcmoran Exploration Co. (NYSE:MMR): On 06/30/2011, Hayman Capital Management reported holding 0 shares. On 09/30/2011, Hayman Capital Management reported holding 3,100,000 shares. The net increase in shares for this position is 3,100,000. About Company: McMoRan Exploration Co. explores for and produces oil and gas offshore in the Gulf of Mexico and onshore in the Gulf Coast area.
• Yahoo! Inc. (NASDAQ:YHOO): On 06/30/2011, Hayman Capital Management reported holding 0 shares. On 09/30/2011, Hayman Capital Management reported holding 1,075,000 shares. The net increase in shares for this position is 1,075,000. About Company: Yahoo! Inc. is a global Internet media company that offers an online guide to Web navigation, aggregated information content, communication services, and commerce. The Company’s site includes a hierarchical, subject-based directory of Web sites, which enables users to locate and access information and services through hypertext links included in the directory.
• Seahawk Drilling Inc. (HAWKQ.PK): On 06/30/2011, Hayman Capital Management reported ! holding 0 shares. On 09/30/2011, Hayman Capital Management reported holding 250,000 shares. The net increase in shares for this position is 250,000.
• Tessera Technologies Inc. (NASDAQ:TSRA): On 06/30/2011, Hayman Capital Management reported holding 0 shares. On 09/30/2011, Hayman Capital Management reported holding 188,700 shares. The net increase in shares for this position is 188,700. About Company: Tessera Technologies Inc. provides proprietary chip scale packaging technology. The Company’s technology accelerates demand for performance and miniaturization in wireless communications, Internet access, and computing and consumer electronics.

The Smartphone Market Has A New Contender: The Lumia

As if the smartphone war was not intense enough. Nokia has decided to wake up from their slumber and rather than introduce a smartphone of theirs, they gave us two. It looks like their alliance with Microsoft is beginning to pay off.

The Lumia

Stephen Elop, Nokia's CEO, displayed the Lumia 800, a �420 ($584) which has a flat screen and is obviously designed for more well-off customers. The Lumia 710, with a sticker price of $375 is designed more for the price conscious folks. They both will begin to be on sale in 6 different European countries later on in October of 2011 and then be available in certain countries in Asia. Microsoft has had a hand in this but most of the work seemingly has been delivered and engineered by Nokia. Executives from both companies have been strategically meeting in Iceland to insure both sides are on the same side. Nokia has it eyes on the iPhone and Android which have been dominating this former Nokia space.

Two-Horse Race

This has been a two-horse race between Google and Apple that has been raging for about 4 years now. Nokia, with these two offerings right before the holiday season, believes they can make this race a little more exciting. Nokia has high hopes for these Lumia smartphones and so does Microsoft. Microsoft created the Windows Phone OS but has not been able to make a dent in the mobile phone arena. Well, with Nokia's ingenuity and drive, this match may be one that was forged in heaven. Microsoft aims to increase is paltry 2% global market share in this sphere. ??

Apple's First Test Post-Jobs

Nokia even has less of a market share in America �C sitting at just 1.2%. Nokia plans on delivering an array of cellphones to America in early 2012. America, the planet's largest smartphone market, is the centerpiece in Nokia and Microsoft's global expansion plans. With Apple's! Steve J obs no longer in the picture, this may be the first real test for Apple to grapple with without their incredible co-founder. Only time will tell if Apple can carry the torch with lasting success without their marketing and visionary leader.

Nokia has been Waiting for This

Nokia's cell phones designated for the U.S. will be 3G and CDMA compatible. That should satisfy major players such as Sprint, AT&T, Verizon, and Sprint.

Nokia's Aggravation

Smartphones are not only the key to the present they are the wave of the future. Nokia and Microsoft must make a dent in this market because the iPhone and the Android have become entrenched with businesses and consumers around the world. Playing catch up is no fun but it is better than watching billions of dollars of revenue stream into the coffers of your major rivals. For Nokia, this has been a humbling experience as the Google and Samsung pair has been hitting doubles and triples and the Apple's iPhone has been hitting as many home runs as the Cardinal's Albert Pujols.

This alliance fabricated between Microsoft and Nokia has been ongoing for about 8 months as the phone operators, which are the main sellers of all phones, pretty much ignored Nokia. This was pretty much because their operating system, Symbian, was just unimpressive. It is a harsh world.

European investors knocked up Nokia's shares to �4.88, about 1%. No one is giving this alliance anything for free, they must earn their stripes as Google, Samsung, and Apple have earned theirs. According to the CIO for Lee Munder Capital Group based out of Boston, he has not seen anything worth talking much about stemming from Nokia and Microsoft. Well, he may now; it has only been 8 months. He adds: ?"Android is winning the mind space on the consumer front. The business world will probably follow."

Nokia and Microsoft have Support

But there are many network operators hoping that Nokia and Microsoft prove they are as hard as steal and their phones become a commercial & enterprise success. This will give these operators more room to discuss prices with Google and Apple who been able to more clearly articulate the prices they prefer. Nokia would be much obliged to allow these operators do yield that type of newfound power. Nokia also aims to help itself out, regain some clout, and prove it is no longer a fading mobile phone conglomerate.

?

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Australia Leading Index Up Slightly But Fails To Support AUD

By Lujia Lin,

Chart generated using Strategy Trader

THE TAKEAWAY:Conference Board Australia Leading Index rises slightly >Markets looking ahead to European and US data later in the day> Aussieweakens

The Australian Dollar was lower despite a modest rise in an index of leading economic indicators as markets remain subdued ahead of data on European PMI and US durable goods orders. Immediately following the release, the Aussie was at 0.9833 versus the US Dollar from 0.9843.

The Conference Board reported late on Tuesday that its Leading Economic Indicators Index rose 0.1 percent in September, the first positive monthly change since July’s revised 0.1 percent increase. The monthly change for August was revised down from -0.1 percent to -0.2 percent. Tuesday’s positive reading was led by higher corporate profits, building approvals, and rural goods exports. Share prices on equity markets accounted for the biggest drag on the index.

Amid rising yields on European sovereign bonds and ongoing concern that the crisis is spreading beyond the GIIPS countries, the Aussie will remain highly susceptible to external event risk. However, domestic factors – especially rate expectations – will continue to play a role in shaping the currency. With the RBA earlier this month cutting its growth and inflation forecasts for 2011 and 2012, swap markets are now pricing in certainty that the central bank will continue to lower rates following a 25 bp cut on Nov 1, according to Credit Suisse data.

DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and broke! rage se rvices and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/market_alert/2011/11/22/Australia_Leading_Index_Up_Slightly_But_Fails_to_Support_AUD.html

The Highest-Rated Commercial Bank Stocks

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, the 10 stocks below are the highest rated in the commercial banking industry.

CAPS contains more than just the crowd's opinions. The votes of CAPS' best-performing members, known as All-Stars, count more in shaping each company's rating than do the picks of their poorer-performing peers. That way, the highest-rated companies are not just the most popular companies in the industry, in this case Wells?Fargo (NYSE: WFC  ) , but are the best of the best. You can then intelligently use members' collective wisdom to?make better decisions and find hidden gems you may never have otherwise heard of.

The commercial banking industry has been struggling as the Federal Reserve's decision to pursue low long-term interest rates limits the profits banks can earn.

The highest-rated commercial bank stock is...
Looking at the aggregate data, we see that our community rates First Republic Bank (NYSE: FRC  ) above the rest and for good reason. Fool contributor Rich Smith took a look at the stock this summer and decided First Republic Bank's numbers look cheap, although insider selling concerns and somewhat tepid growth made him reluctant to recommend the stock immediately.

Here are the rest of the 10 highest-rated companies in the industry along with their CAPS rating:

!

?	Company	CAPS Rating (out of 5)	Market Cap (in millions)
1	First Republic Bank	*****	$3,705
2	Southside Bancshares (Nasdaq: SBSI  )	*****	$334
3	MidWest One Financial Group	*****	$128
4	First Bancorp (Nasdaq: FNLC  )	*****	$137
5	Metro Bancorp	*****	$118
6	First Community Bancshares	*****	$220
7	Towne Bank (Nasdaq: TOWN  )	*****	$344
8	CNB Financial (Nasdaq: CCNE  )	*****	$178
9	Univest Corporation of Pennsylvania	*****	$254
10	Wilshire Bancorp (Nasdaq: WIBC  )	*****	$242

Source: Motley Fool CAPS as of Nov. 7.

Use the table as a first step to help generate ideas for further research. Having a watchlist of promising companies is a great place to start. We can help you keep tabs on these beloved companies with My Watchlist, our free, personalized stock tracking service. Click?here to start now.

A Hidden Reason That PPL's Earnings Are Outstanding

It takes money to make money. Most investors know that, but with business media so focused on the "how much," very few investors bother to ask, "How fast?"

When judging a company's prospects, how quickly it turns cash outflows into cash inflows can be just as important as how much profit it's booking in the accounting fantasy world we call "earnings." This is one of the first metrics I check when I'm hunting for the market's best stocks. Today, we'll see how it applies to PPL (NYSE: PPL  ) .

Let's break this down
In this series, we measure how swiftly a company turns cash into goods or services and back into cash. We'll use a quick, relatively foolproof tool known as the cash conversion cycle, or CCC for short.

Why does the CCC matter? The less time it takes a firm to convert outgoing cash into incoming cash, the more powerful and flexible its profit engine is. The less money tied up in inventory and accounts receivable, the more available to grow the company, pay investors, or both.

To calculate the cash conversion cycle, add days inventory outstanding to days sales outstanding, then subtract days payable outstanding. Like golf, the lower your score here, the better.

Here's the CCC for PPL, alongside the comparable figures from a few competitors and peers.

Company	TTM Revenue	TTM CCC
?PPL	$10,382	?21
?Exelon (NYSE: EXC  )	$19,427	?22
?FirstEnergy (NYSE: FE  )	$15,055	?! 29
?Dominion Resources (NYSE: D  )	$14,947	?43

Source: S&P Capital IQ. Dollar amounts in millions. Data is current as of last fully reported fiscal quarter. TTM = trailing 12 months.

For younger, fast-growth companies, the CCC can give you valuable insight into the sustainability of that growth. A company that's taking longer to make cash may need to tap financing to keep its momentum. For older, mature companies, the CCC can tell you how well the company is managed. Firms that begin to lose control of the CCC may be losing their clout with their suppliers (who might be demanding stricter payment terms) and customers (who might be demanding more generous terms). This can sometimes be an important signal of future distress -- one most investors are likely to miss.

While I find peer comparisons useful, I'm most interested in comparing a company's CCC to its prior performance. Here's where I believe all investors need to become trend-watchers. Sure, there may be legitimate reasons for an increase in the CCC, but all things being equal, I want to see this number stay steady or move downward over time.

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

Because of the seasonality in some businesses, the CCC for the TTM period may not be strictly comparable to the fiscal-year periods shown in the chart. Even the steadiest-looking businesses on an annual basis will experience some quarterly fluctuations in the CCC. To get an understanding of the usual ebb and flow at PPL, consult the quarterly period chart below.

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

On a 12-month basis, the trend at PPL looks very good. At 20.8 days, it is 10.7 days better than the five-year average of 31.4 days. The biggest contributor to that improvement was DSO, which improved 12.0 days compared to the five-year average. That was partially offset by a 1.9-day increase in DPO.

Considering the numbers on a quarterly basis, the CCC trend at PPL looks good. At 16.8 days, it is 7.8 days better than the average of the past eight quarters. With both 12-month and quarterly CCC running better than average, PPL gets high marks in this cash-conversion checkup.

Though the CCC can take a little work to calculate, it's definitely worth watching every quarter. You'll be better informed about potential problems, and you'll improve your odds of finding the underappreciated home run stocks that provide the market's best returns.

To stay on top of the CCC for your favorite companies, just use the handy links below to add companies to your free watchlist.

• Add PPL to My Watchlist.
• Add Exelon to My Watchlist.
• Add FirstEnergy to My Watchlist.
• Add Dominion Resources to My Watchlist.

Overenthusiastic S&P 500 Price Targets: Is The U.S. Still A Good Investment Destination?

The WSJ had an article about SPX price targets from brokerage firm strategists coming under scrutiny, or maybe fire is a better word. You probably heard that BofA fired its equity strategist about ten minutes (slight exaggeration) after he reaffirmed his year end target of 1,400. Some of the usual suspects are also mentioned for either sticking to their guns or giving up the ghost.

Many investors like to hear SPX price targets, so many financial firms oblige. I used to do a little more here myself with picking some number that was away from consensus that tried to incorporate some aspect of where I thought we were in the cycle. I was close to right a couple of times and too pessimistic a couple of times.

The simple issue here is that these forecasts tend to be wrong, a lot. We've gone over some of the dynamics of the perma bulls, the threat they pose and some of the conflicts they may have in "needing" to be bullish so it is somewhat surprising that BofA got rid of someone who appeared to be too bullish.

Price targets notwithstanding, if you zoom out a little, the US is a destination where the sovereign debt was downgraded, there is a demographics problem, the government is not functional, growth is below trend with no visibility for improving, there is too much debt and there might be a serious problem (I think there is a serious problem) with liabilities to retirees and future retirees.

If this description were about another country you would quickly move to research another investment destination.

Anyone capable of being able to think in terms of several years at a time (or even a little longer) would be better served looking to longer term trends that have a reasonable basis for working in the future or continuing to work as they have in the past. Obviously not all previous winners can continue to work out well.

Consider the above issues with the ! US (and any others you care to add) and ask yourself what is the simplest outcome. My answer to that question is not a Schiffian (as in Peter Schiff) implosion but instead an ongoing muddle where average growth rates are well below what we think of as being normal and continue being far inferior to many other countries in the world.

Economic Data, G-20 Meeting, Greece Drive Stock Market Lower

Markets dropped slightly lower today on G-20 news, mixed economic reports, and Grecian woes.

After the confusing market action on Wall Street this week, it seems that markets cannot make up their minds after last week’s euphoric rally and Euro-zone compromise. It appeared that markets were on a meteoric rise that could have possibly carried us into Christmas, however Prime Minister Papandreou’s referendum call for Greece and MF Global’s bankruptcy soured the mood.

The SPDR Gold Trust (GLD) dropped half a percent today; the fall likely represents the current troubles of MF Global Holdings (NYSE:MF), which filed for bankruptcy earlier this week. MF Global has major holdings in commodities, including gold. Despite the MF Global mess, however, the United States Oil Fund LP ETF (NYSEARCA:USO) registered a .4% increase.

Members of the G-20 did not come up with a compromise to help the Euro Zone’s new plan, I would imagine that Prime Minister Papandreou’s referendum call and vote of no confidence did not help the discussion along. It seems that policay makers across the world are stuck between doing the impossible and some very difficult choices.

And lastly, economic reports were mixed, at best, as unemployment dropped from 9.1% to 9% for October, and non-farm payrolls dropped from 158,000 in September to 80,000 in October. If one tenth of a percent less unemployment means improvement, then today’s reports were a mixed bag at best, and the light at the end of the tunnel might be flickering.

Bottom Line: It seems that the markets today and this week do not know how to respond to continued European woes and MF Global, and that the so-called “Santa Rally” that everyone wants to ride into the end of the year might have to wait a little longer.

Global Stock Market Summary:

S&P 500 SPDR (SPY): -0.77, -.061%

PowerShares QQQ! Trust ( QQQ)

SPDR DJ Industrial Average ETF (DIA): -.59, -.49%

Russel 2000 iShares (IWM): -0.37, -0.49%

SPDR Gold Trust (GLD) -0.87, -0.51%

United States Oil Fund LP (NYSEARCA:USO): +0.14, +0.39%

Disclosure: No positions in ETFs or stocks discussed in this article.

John Nyaradi is the author of The ETF Investing Premium Newsletter.

Morning Roundup: Today's Top Stories

At The Motley Fool, we know our readers like to be informed. Here's a quick look at today's most relevant financial news, boiled down to what you need to know.

Netflix issues debt offering
Subscription-based DVD and digital-streaming service Netflix (Nasdaq: NFLX  ) plans to raise $400 million in an effort to offset the rising costs of purchasing rights to video content. The company has agreed to sell $200 million in debt to Technology Crossover Ventures, and $200 million in stock to T. Rowe Price, in a deal managed by Morgan Stanley (NYSE: MS  ) and JPMorgan (NYSE: JPM  ) . Netflix shares opened down sharply on the news. Read the full story at Bloomberg.??

Pfizer buys skin-treatment company
Pharmaceutical giant Pfizer (NYSE: PFE  ) plans to purchase Excaliard, a biopharmaceutical company that together with Isis Pharmaceuticals (Nasdaq: ISIS  ) created a drug to treat skin fibrosis. The drug, EXC 001, will help Pfizer with product development on new treatments for fibrosis and tissue remodeling. Read the full story at Reuters.

B of A could face penalties by regulators
Bank of America (NYSE: BAC  ) is being pressured by regulators to strengthen the bank. If it doesn't, B of A could face a public enforcement action, which could mean greater restrictions for the company. Read the full story at Yahoo! Finance.

Campbell Soup reports upbeat earnings
Soup maker Campbell Soup (NYSE: CPB  ) posted first-quarter profits that beat analyst estimates despite coming in below year-ago levels. Lower advertis! ing expe nses helped the company pull in net profits of $265 million, down from $279 million the year prior. Read the full story at Reuters.

That's a wrap
So there you have it -- the top financial stories for this morning. If you are interested in getting all the news and commentary on these stocks, sign up to My Watchlist here --it's free!

• Add?Pfizer?to My Watchlist.
• Add?Netflix?to My Watchlist.
• Add?Morgan?Stanley?to My Watchlist.
• Add?JPMorgan?Chase?to My Watchlist.
• Add?Isis?Pharmaceuticals?to My Watchlist.
• Add?Campbell?Soup?to My Watchlist.
• Add?Bank?of?America?to My Watchlist.

Cramer's 'Mad Money' Recap: No Stopping Apple (Final)

"The United State of Apple is alive and well," Jim Cramer proclaimed to the viewers of his "Mad Money"TV show Monday. Cramer said that Apple (AAPL), a stock which he owns for his charitable trust, Action Alerts PLUS, was one of the leading drivers in today's rally off the lows.

Cramer explained that with so much negativity in the markets preparing for a slowdown or global recession, it's only natural that investors are looking for growth wherever they can find it. He said the most logical company that has growth, is Apple.

Consensus estimates are for Apple to earn $32 a share in fiscal 2012, but Cramer said those estimates are drastically too low. He said with the world clamoring for the next iPhone and the iPad still the only game in town, not to mention the downfall of rivals Hewlett-Packard (HPQ) and Research in Motion (RIMM), Apple could earn as much as $45 a share.

Back out the company's projected $150 a share in cash, and that leaves Apple trading at a mere five times earnings. That's five times earnings for Apple, compared to an average of 13 times earnings for the rest of the S&P 500, Cramer added.

Cramer said he expects to see analysts drastically revising their targets for Apple upward in the coming weeks, sending shares flying. He said so strong are Apple's prospects, that it's taking a host of other growth stocks with it, stocks like Deckers Outdoor (DECK), Green Mountain Coffee Roasters (GMCR), Wynn Resorts (WYNN), Polo-Ralph Lauren (RL) and VF Corp (VFC).

Cramer also gave the nod to other high fliers such as Whole Foods (WFM), Amazon.com (AMZN) Panera Bread (PN RA) and Chipotle Mexican Grill (CMG), a stock that was up over 5%.

Big Dividend Companies

"In this market, you need companies that will pay you to wait," Cramer told viewers, as he began a week-long series highlighting companies with big dividends as well as plans for continued growth. He started with paper giant International Paper (IP), which currently yields 3.85%.

Cramer said International Paper is being run better than ever. With new pricing controls and supply and demand in balance, the company has more control over inventory, and thereby pricing, than ever before, he said. According to Cramer, even in this miserable downturn, International Paper has been able to shine.

The company also has a great track record of acquisitions, as noted by the company's proposed $3.2 billion bid for Temple-Inland (TIN), a deal that is expected to close in early 2012. Cramer said that the company expects $300 million in synergies between the combined companies, but those estimates are likely far too low.

After many years of being more "domestic paper," Cramer said that International Paper now has a great international business, with growing assets in Russia poised to service all of China's growing paper needs. Cramer said that International Paper has a lot of room still to go in its international efforts.

International Paper last reported a 12-cent-a-share earnings beat, a feat Cramer said will likely be repeated when the company reports in October. Shares of the company trade at just 8.4 times earnings and Cramer said now is the perfect time to begin building a position, buying on any weakness.

Tech Value Play

Kicking off a new series entitled the "Time For Tech," featuring tech companies poised for breakouts to the upside after a horrible summer season, Cramer highligh! ted J uniper Networks (JNPR), another Action Alerts PLUS holding.

Cramer explained that Juniper is now off 55% from its March highs after posting an utterly horrible second quarter earlier in the year. He said the stock, now flirting with its 52-week lows, will be hard pressed to head much lower and it's almost impossible for the company to really disappoint amongst drastically lowered estimates.

Cramer liked the fact that just about everyone has lost faith in this network equipment provider, especially given that the back half of the year is usually the best time for corporate and government IT spending. He said Juniper still has a small market share, but a strong line of new products ahead of it, so it should be easy for the company to once again begin taking market share.

But mainly, Cramer said Juniper is a value play, with shares trading at rock bottom prices. Juniper currently has $3.2 billion in cash on its books, the equivalent of $6 a share. That leaves shares trading at just 10 times earnings, despite the company's 16.9% growth rate and 20 times historical average.

Cramer said Juniper is likely to also report a weak third quarter, but that lackluster performance is already baked into its share price. He said that not much needs to go right for Juniper and even if the company reports inline numbers, the stock could rebound. Cramer said he sees three points of downside versus 10 points of upside.

Candid Talk

In an "Executive Decision" segment, Cramer sat down for a conversation with Chris Viehbacher, CEO of drug-maker Sanofi (SNY), another Action Alerts PLUS stock that's been hit hard thanks to the European contagion.

Viehbacher said that its clear that investors aren't paying close attention to the fundamentals at the moment, as none of the company's fundamentals has changed. He said that Sanofi is still comm! itted to rewarding shareholders, which is why the company increased its dividend payout ratio and why he personally as purchased Sanofi stock recently.

Regarding the company's upcoming patent expirations, Viehbacher said he's tired of playing the "cat-and-mouse" game with investors and has opted to tell it like it is. He said that patents do expire and they do hurt a company's bottom line, but there is nothing they can do about it. Viehbacher said this will be his fourth "patent cliff," and Sanofi will continue to grow, even through the decline.

Among the bright spots has been Sanofi's acquisition of Genzyme. Viehbacher noted that biotech products have a better probably of success through research and development and they also aren't as impacted by generics since the drugs they produce are difficult to produce.

Other bright spots for the company included Sanofi's diabetes business, where the company is one of only two major players in the insulin market, as well as a drug for MS, which is seeing success in trials with only eight treatments over an 8-week period, followed by three treatments a year later. Viehbacher said patients on that regiment are seeing no relapses 60% of the time.

Finally, when asked about how government price controls are affecting the company, Viehbacher said that less than a third of Sanofi's business is subject to price controls, and the company is working to further diversify into other areas to avoid such pressures.

Cramer continued his recommendation for Sanofi, calling the company's European-induced slide the perfect buying opportunity.

Lightning Round

Cramer was bullish on Deere & Company (DE), O'Reilly Automotive (ORLY), AutoZone (AZO) and Prudential (PRU).

Cramer was bearish onFirst Solar (FSLR), MetroPCS Communications (PCS)! and New York Community Bancorp (NYB).

Opportune Time

In his "No Huddle Offense" segment, Cramer said that every negative cloud has a gold lining, and today's weakness in the precious metal is the perfect moment to start building a position.

In addition to owning gold bullion and the SPDR Gold Shares (GLD), Cramer said the time is finally right to start owning some individual gold stocks as well. He said that Newmont Mining (NEM) is talking about a dividend increase, while Agnico-Eagle Mines (AEM) has made some smart acquisitions.

Meanwhile, other miners like Rangold Resources (GOLD) and Goldcorp (GG) should finally start seeing their huge investments in mine expansions begin to bear fruit. To contact the writer of this article, click here: Scott Rutt.

Trouble in Europe Spells Opportunity for These 3 Stocks

The end is near. That is to say, the deepening European crisis is coming to head. And when policy makers finally devise an effective strategy to tackle the banking mess in Southern Europe, the never-ending market selloff in Europe will likely come to an end.

This is also good news for investors in the United States for two reasons. For one, it should help stabilize global markets, including the United States, giving an air of certainty to what has been a tumultuous and uncertain market of late. And second, it should present opportunity to savvy investors.

A final debt package is likely to create headaches for leading banks, many of which will need to acknowledge the reality of underperforming loans to weak countries. Deeper austerity programs in places like Greece and Italy will also likely be a byproduct. Yet when the dust finally settles, investors will likely realize that German stocks -- heavily weighted to a solid economy as well as key emerging markets -- represent deep, deep bargains.

It may be a bit too early to start buying these Germany-focused stocks and funds, but the time is at hand to prepare a wish-list, so you can move quickly when the time comes. After all, the DAX, Germany's main stock index, has fallen from 7,500 to 5,000 in just two months. This is a sharply lower entry point for those that have neglected to gain exposure to this powerful economy in the past.

Perhaps the only group to be avoided is Germany's banking sector, which may feel the reverberations of any continent-wide settlement for a while to come. German banks will likely be asked to take big write-downs f! or loans to Greece and other struggling countries. Though they are unlikely to run short of capital, these banks may need to constrain any further new lending activity until their balance sheets are shored up.

Instead, investors should be focusing on what the Germans do so well: exports. You can buy American Depositary Receipts (ADRs) of a range of blue chip exporters.

Here's what I'm focusing on:

1. BMW (Pink Sheets: BAMXY)
Global car sales have been constrained in the United States and Europe for several years, but the beleaguered auto industry can point to two bright spots: emerging markets and higher-income buyers.

A deep economic slowdown would surely be felt at BMW. The automaker saw sales fall 5% in 2008 and again in 2009 before rebounding 20% in 2010 to €60 billion. Even in those slump years, the automaker remained profitable. And in 2010, profits rebounded strongly back up above €3 billion.

Still, fresh economic concerns have pushed BMW's ADRs down from $35 to $23 since the middle of the summer. The timing is auspicious. In addition to its still-popular slate of cars and SUVs, BMW is about to make a big push into advanced electric vehicles, with products aimed at the low and high end of this burgeoning market. This is the payoff from recent heavy capital spending (more than €10 billion during the past three years) that should enable BMW to take market share in coming years.

2. Infineon (Pink Sheets: IFNNY)
This chip maker may be seen as just another play in the boom-and-bust computing industry, but its end-market approach is much more diverse, focusing on chips used in cars, industrial equipment and passport/ID cards. A key theme behind the company's approach has been to focus on areas using an expanded level of technology. For example, today's cars use a lot more chips than ever, a trend expected to co! ntinue f or the foreseeable future.

For the full fiscal year slated to end this month, sales are expected to rise roughly 20% to around €4 billion. Assume sales will be flat or slightly down in the coming year as global economic pressures remain in place. But Infineon looks well positioned for shareholders with a long-term view that a wide range of industrial and consumer equipment will keep incorporating a wider range of electronics into their systems. The fact shares have lost more than 30% since early July opens the door for long-term investors.

3. New Germany Fund (NYSE: GF)
This closed-end fund (CEF) focuses on small, mid-sized and large German stocks, primarily focused on industrials (40%), materials (20%) and technology (15%). Many of these holdings have a very strong export orientation, both to Europe but also to Latin America and Asia.

For many of these firms, business may slow in coming months as the European banking crisis erodes confidence in spending. The fund's sharp drop from $18 to $13 in just two months already anticipates the slowdown yet to come. Stated Net Asset Value (NAV) is $15.64, more than $2 higher than the current share price.

Risks to consider: Though the recent sharp selloff in German equities already reflects expectations that Europe and/or the United States will slip into recession, a much deeper recession than is currently anticipated would push these securities down even lower.

Tips>> It's important to stay focused on good companies with strong track records. These investments play right to Germany's strength in advanced technology and export-focused business models. BMW is a great example.

Soros Fund’s Top Consumer Goods Stocks in Q3: RL, GM, KFT, SLE, MO, PM, MGA, CLW, CCE

Wall St. Watchdog reveals information regarding Soros Fund Management��s top holdings in the Consumer Goods sector for the quarter ending September 30th, 2011. The firm held 27 stocks in the Consumer Goods sector at the end of the quarter with an aggregate market value of $70.095 million.

• Polo Ralph Lauren Corp. (NYSE:RL): On 06/30/2011 reported holding 994,612 shares with a market value of $131,895,498. This comprised 3.54% of the total portfolio. On 09/30/2011 reported holding 174,611 shares with a market value of $22,647,046. This comprised 1.09% of the total portfolio. The net change in shares for this position over the two quarters is -820,001. About Company: Polo Ralph Lauren Corporation designs, markets, and distributes men��s, women��s and children��s apparel, accessories, fragrances, and home furnishings. The Company��s products are sold under a wide range of brands. Polo��s operations include Wholesale, Retail and Licensing.
• General Motors Company Common Stock (NYSE:GM): On 06/30/2011 reported holding 642,500 shares with a market value of $19,506,300. This comprised 0.52% of the total portfolio. On 09/30/2011 reported holding 875,500 shares with a market value of $17,667,590. This comprised 0.85% of the total portfolio. The net change in shares for this position over the two quarters is 233,000. About Company: General Motors Co. manufactures and markets new cars and trucks. The Company offers features for special needs drivers, OnStar vehicle protection, service, parts, accessories, maintenance, XM satellite radio, features for commercial owners, and more. General Motors offers its vehicles and services worldwide.
• Kraft Foods Inc. (NYSE:KFT): On 06/30/2011 reported holding 8,200 shares with a market value of $288,886. This comprised 0.01% of the total portfolio. On 09/30/2011 reported holding 330,600 shares with a market value of $11,101,549. This comprised 0.53% of the total portfolio. The net change in shares for! this po sition over the two quarters is 322,400. About Company: Kraft Foods Inc. is a food and beverage company. The Company manufactures and markets packaged food products, including snacks, beverages, cheese, convenient meals and various packaged grocery products. Kraft sells its products throughout the world.
• Sara Lee Corp. (NYSE:SLE): On 06/30/2011 reported holding 0 shares. On 09/30/2011 reported holding 539,600 shares with a market value of $8,822,460. This comprised 0.42% of the total portfolio. The net change in shares for this position over the two quarters is 539,600. About Company: Sara Lee Corporation manufactures and markets brand-name products for consumers throughout the world. The Company is focused primarily on the meats, baking, beverage and household products categories.
• Pepsico Inc. (NYSE:PEP): On 06/30/2011 reported holding 0 shares. On 09/30/2011 reported holding 78,200 shares with a market value of $4,840,580. This comprised 0.23% of the total portfolio. The net change in shares for this position over the two quarters is 78,200. About Company: PepsiCo, Inc. operates worldwide beverage, snack and food businesses. The Company manufacture or uses contract manufacturers, market and sell a variety of grain-based snacks, carbonated and non-carbonated beverages and foods in countries throughout the world.
• Altria Group Inc. (NYSE:MO): On 06/30/2011 reported holding 35,500 shares with a market value of $937,555. This comprised 0.03% of the total portfolio. On 09/30/2011 reported holding 35,500 shares with a market value of $951,755. This comprised 0.05% of the total portfolio. The net change in shares for this position over the two quarters is 0. About Company: Altria Group, Inc. is a holding company. The Company, through subsidiaries, manufactures and sells cigarettes and other tobacco products, including cigars and pipe tobacco. Altria holds an interest in a brewery company.
• Philip Morris International Inc.! (NYSE:PM): On 06/30/2011 reported holding 11,800 shares with a market value of $787,886. This comprised 0.02% of the total portfolio. On 09/30/2011 reported holding 11,700 shares with a market value of $729,846. This comprised 0.03% of the total portfolio. The net change in shares for this position over the two quarters is -100. About Company: Philip Morris International Inc., through its subsidiaries, affiliates and their licensees, produces, sells, distributes, and markets a wide range of branded cigarettes and tobacco products in markets outside of the United States of America. The Company��s portfolio comprises both international and local brands.
• Magna International Inc. (NYSE:MGA): On 06/30/2011 reported holding 10,800 shares with a market value of $583,632. This comprised 0.02% of the total portfolio. On 09/30/2011 reported holding 13,100 shares with a market value of $431,907. This comprised 0.02% of the total portfolio. The net change in shares for this position over the two quarters is 2,300. About Company: Magna International Inc. designs, develops, and manufactures automotive systems, assemblies and components, and engineers and assembles complete vehicles. The Company sells its products primarily to original equipment manufacturers.
• Clearwater Paper Corp (NYSE:CLW): On 06/30/2011 reported holding 0 shares. On 09/30/2011 reported holding 12,100 shares with a market value of $411,158. This comprised 0.02% of the total portfolio. The net change in shares for this position over the two quarters is 12,100. About Company: Clearwater Paper Corp. manufactures consumer tissue, bleached paperboard, and wood products. The Company supplies private label tissue to major retail grocery chains and produces bleached paperboard that is used by printers and packaging converters.
• Coca-cola Enterprises Inc. (NYSE:CCE): On 06/30/2011 reported holding 12,500 shares with a market value of $364,750. This comprised 0.01% of the total portfo! lio. On 09/30/2011 reported holding 11,800 shares with a market value of $293,584. This comprised 0.01% of the total portfolio. The net change in shares for this position over the two quarters is -700. About Company: Coca-Cola Enterprises Inc. markets, sells, manufactures, and distributes non-alcoholic beverages. The Company provides refreshments, including sparkling waters, juices, isotonics, teas, and sodas. Coca-Cola Enterprises operates internationally.

We're Bottoming: Time To Accumulate

I've been bearish on risk for most of this year until the 9th of August, then I played the rebound and again went short on the 2nd of September. I changed my bias to net long Tuesday night.

The world sure is a risky place these days, but it is at times like these that things need to be put in perspective, and arguments from both sides carefully examined.

1. Sentiment

Sentiment is surely a fickle beast, but appears extremely bearish right now. One non-scientific measure is how often 2011 is compared to 2008 and how many analysts are expecting a Lehman-like event. Given the broad expectations of another calamity, its simple absence should generate a rally.

2. Europe

Yes, the situation is messy. But all evidence is pointing to the approval of the expanded (440bn) EFSF, which will ultimately obtain a bank license and have the buying power of ~2tn through leverage. Only a few more European parliaments have to vote on the expansion and prospects look good. Once that is in place, it will buy the continent time for institutional reforms and allow it to build firewalls to protect the rest from Greece - should it go down (not a scenario for this year in my opinion) - and evil speculators. It would also allow them to recapitalize banks. The longer-term outlook is only marginally better, but short-term disaster should be averted.

3. Recession risks

They have not substantially diminished, but neither have things gotten worse - at least in the US. Europe will in all probability experience a recession next year, but the US could avert it. It should be noted that the last series of PMIs came in better than expected in the US and Europe, and we're around 50 - not collapsing as we were in 2008.

click to enlarge

4. China

Recently, worries have emerged about a China hard-landing. (The definition of a hard-landing varies though: some say it's slow! ing to 2 -3% growth while others say it means sub-8% growth) The west is mostly out of monetary and fiscal bullets - not so China. They have the capacity to manage the slowdown. Inflation is slowing, and should allow the authorities to ease in the next 2-3 quarters. There may be a few corporate casualties (ie. in the real estate sector), but the economy will continue to operate at a decent pace.

The premium/discount on the A-Share ETF listed in China has been a good contrarian indicator. The recent retreat of capital suggests that Chinese equities should be higher in 6 months time.

5. Valuations

Valuations are for the most part attractive - especially in Europe, where the DAX and CAC trade on Case-Shiller P/E ratios not seen since the early 80s. I would argue that parts of EM equities (and credit!) are also very attractive. From a macro standpoint, countries which were overheating are buy candidates as a global slowdown will allow them to ease. In this category India comes first, China second, and maybe, maybe Argentina 3rd.

This chart shows MSCI Asia ex-Japan price-to-book and Book Value evolution

6. Technicals

I will just point to one - possibly arbitrary - measure. The reversal on the S&P Tuesday doesn't happen very often, and even if 1074.77 was not the bottom, we are in the process of bottoming. We made a new low and then closed 4% higher. Even if I am wrong and the cycle takes another leg down, it looks like a tradable bounce is building.

What to do?

Accumulate quality stocks that have sold off. There is a quick screen of stocks that have fallen by more than 10% in the last 3 months, yet generate substantial free cashflow, exhibit sales growth and have reasonable valuations (EV/EBIT<10).

My picks here would be Western Union in the US, Inmarsat in the UK and HTC in the tech space. I would take some profits on the long USD position but remain long against the EUR.! Also, i f you don't own it already, now is the opportunity to build a gold position.

At the very least, cut shorts and move to a more neutral risk positioning. Don't bet on a calamity now - too many people already are.

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

Ford Shares Rise as Credit Rating Boosted

Ford(F) shares were rising Friday, and that was even before Standard & Poor's boosted the automaker's credit rating.

Shortly before 11 a.m. EDT, the agency said it was boosting Ford's rating to BB plus from BB minus, a result of ratification of the new four-year-contract with the United Auto Workers.

"We believe the contract will allow for continued profitability and cash generation in North America," S&P said. "Ford has a two-year track record of profits and cash flow generation in its global automotive operations, supported by strong performance in North America. We believe Ford's global automotive operations will generate at least mid-single-digit EBIT margins and positive automotive operating cash flow of at least $5 billion in 2011."

The agency said it assigned a stable outlook to Ford credit and removed the ratings from CreditWatch, where they were placed with positive implications on Sept. 29.

The upgrade came despite S&P's expectation that "as the inventories of the Japanese automakers recover, we believe some modest market share losses by many non-Japanese automakers could occur in the U.S. over the coming quarters."

In mid-morning trading, shares of Ford were up 45 cents to $12.15, their highest level since early August, while General Motors(GM) shares were up 95 cents to $23.91, a level they had reached earlier this month.

Shares of Ford and GM were rising even before the S&P release at 10:51 a.m. In fact, Ford shares were up about 5% before the release.

A key factor was Ford's statement on Thursday that the new contract will increase its annual costs by less than 1%, and that the increase will be offset by new operating efficiencies..

Additionally, many auto analysts have been saying for months that investors are not seeing the value in Ford and GM shares, both are which are benefiting from rising automoti! ve sales , pent-up demand for new vehicles and lower costs as the result of better contracts as well as improved operating models.

The auto industry's operating model for decades had been to build too many cars at too high a cost and to sell them at too many dealers. Changes forced by the Obama administration in bankruptcy, and by Ford CEO Alan Mulally outside of bankruptcy, upended that model.

On a conference call Thursday to discuss the new labor pact with analysts and reporters, Ford Chief Financial Officer Louis Booth noted that credit rating agencies were "expected to look at us again after the contract completion."

"We think this will be favorably received, the competitiveness of the settlement," said Booth, who had been asked if Ford might restore a dividend as a means of encouraging improved ratings. He said that dividend restoration is "not directly related -- we're a little way from talking about that."

A Hard Asset to Buy for This Market

Stock market pundit and noted permabear Jeremy Grantham has called it his favorite long-term investment and has revealed that in the past, up to 20% of his personal portfolio may have been invested in the stuff.

?Grantham's investment firm, Grantham, Mayo, & Van Otterloo (GMO), also expects it to outperform all other asset classes over the next seven years, projecting a real return of 6%. According to Grantham, this asset is known to be a great inflation hedge and it's countercyclical, having retained its value during both the Great Depression and the 1970s. Best of all, it tends to have a low correlation with other asset classes, which makes it a great portfolio diversifier.

Drumroll...
At this point, I'm sure you're expecting some sort of diatribe about the commodity investment du jour, gold, but what I'm talking about is a completely different type of hard asset: timberland.

The great thing about timberland is that if it is properly managed, it increases in value yearly as the trees grow, and you only have to harvest the wood if the price is right, unlike other commodity crops that spoil. In fact, as trees grow bigger, they actually start to increase in value at a faster clip because larger logs can be sawed for premium lumber products, rather than lower-priced wood pulp. Additionally, with timberland there is the option to strategically sell sections of the land for development when the housing market recovers and possibly capture a much higher value for the land than if it were sold as timberland.

As an individual investor, it's difficult to get direct exposure to timberland unless you have a bankroll big enough to buy large tracts of land or to invest in timber investment management organizations (TIMOs). That leaves us smaller investors with a handful of publicly traded REITs that specialize in managing timberland.

Out of the group that includes timber pure plays like Plum Creek Timber (NYSE: P! CL  ) and Deltic Timber (NYSE: DEL  ) , and diversified forest products companies like Rayonier (NYSE: RYN  ) and Potlatch (NYSE: PCH  ) , my current favorite is Weyerhaeuser (NYSE: WY  ) , which has been in the forest products business for more than 110 years, and looks to be a great value today.

The business
In 2010, Weyerhaeuser reorganized as a timberland real estate investment trust (REIT), but you'll see that label doesn't accurately describe the variety of Weyerhaeuser's operations. The company owns and manages more than 6 million acres of timberland across some of the most productive forest in the United States. About 4 million acres are found in the Southeast, where the company grows primarily loblolly pine. The company's crown jewels are the 2 million acres in the Pacific Northwest that the company uses primarily to grow Douglas fir, which is highly prized for its use in structural lumber products.

Unlike many other timberland REITs, Weyerhaeuser actually derives the majority of its revenue from its ancillary businesses. These include the manufacture of wood products, like lumber, plywood, and structural joists that the company sells to homebuilders and building supply companies like Home Depot (NYSE: HD  ) and Lowe's (NYSE: LOW  ) ; a homebuilding and land development operation; land leasing for mineral and petroleum exploration; and production of specialty cellulose fibers. It should be noted that though Weyerhaeuser's timber business has the favored tax status of a REIT, the other business segments are considered "taxable REIT subsidiaries" and pay full corporate taxes.?

Why buy
Even though We! yerhaeus er's business isn't as concentrated in timber as some of its competitors', there are a number of other reasons I like the company better than the other timber REITs as an investment. One big advantage is Weyerhaeuser's strong position in the Pacific Northwest, which is one of the most productive growing areas in North America. Its proximity to West Coast ports gives the region a distinct advantage for shipping logs to Asian markets where they receive premium pricing.

The lack of forestland in some Asian markets (like Japan, China, and Korea) leads to high demand for imported lumber. Weyerhaeuser has been shipping logs to Japan for more than 25 years and has developed strong relationships in the region. In 2010, 19% of its timberland revenue came from Japan, China, and Korea, and I expect this figure to increase as Japan continues to rebuild after its earthquake and tsunami and China's economy continues to grow.

Also, many of Weyerhaeuser's ancillary businesses are operating at depressed levels thanks to the down cycle in the housing market. (The cellulose fiber business is one exception because of steady demand for its specialty absorbent products.) With just a moderate recovery in demand for new housing, these businesses should see significant operating leverage as mothballed capacity comes back online. Over the past few years, new home construction has been below historical norms and also below the level needed to keep up with population growth. Once the excess inventory from record foreclosures works its way through the market, I expect new home construction to return to historical norms, which should lead to a surge in profits for Weyerhaeuser at some point in the future.

The art of the deal
Weyerhaeuser is difficult to value because of the complex nature of its REIT conversion in 2010 and the company's exposure to the housing market. Rather than project when housing is going to recover and how that might affect all the company's business units, I think a quick b! ack-of-t he-envelope calculation can show that Weyerhaeuser's stock is attractively valued right now.

The company's biggest asset is the 5.4 million acres of timberland it owns, divided between the Pacific Northwest and the Southeast. At its current stock price of $16.00 a share, Weyerhaeuser's market capitalization is equal to about $1,550 an acre. According to recent transaction activity reported by the National Council of Real Estate Investment Fiduciaries (NCREF), it looks like timberland in the South has been selling for about $1,500 an acre, while timberland in the Northwest has been trading hands for more than $2,500 an acre. Based on just the breakdown of Weyerhaeuser's land holdings, this amounts to a composite value of $1,870, or about 15% higher than the current market capitalization of the stock. This looks like an opportunity to buy some prime timberland at a discount to its private market value, and get any future success of the other operating segments for free.

The Foolish bottom line
Weyerhaeuser looks like a great way to add exposure to timber to your portfolio with a free option on a recovery in the U.S. housing market. The company is still establishing credibility as a timber REIT and should be able to grow its dividend as business stabilizes in coming years. The location of Weyerhaeuser's infrastructure in the Pacific Northwest and its proximity to ports provide a considerable advantage for supplying growing Asian markets for years to come. I'll be starting a position in Weyerhaeuser for the Total Realty Portfolio with a $1,000 purchase a day after this article is published.

Follow Jeremy on Twitter @TMFTotalRealty.

11 Large Cap Stocks Score 52-Week Highs as Dow Jones Rises 180 Points

Wall St. Watchdog reveals information about 11 stocks that hit 52-week highs in today��s trading. Note that this list excludes all stocks with a market capitalization less than $10 billion:

1. Southern Company (NYSE:SO): Down 0.05% to $42.89. Southern Company is a public utility holding company. The Company, through its subsidiaries, generates, wholesales, and retails electricity in the southeastern United States. The Company also offers wireless telecommunications services, and provides businesses with two-way radio, telephone, paging, and Internet access services as well as wholesales fiber optic solutions.
2. National Grid plc (NYSE:NGG): Up 1.07% to $50.94. National Grid PLC owns, operates and develops electricity and gas networks. The Group’s electricity transmission and gas distribution networks are located throughout the United Kingdom and in the north-eastern section of the United States. They also own liquefied natural gas storage facilities in Britain and provide infrastructure services to the mobile telecom industry.
3. Starbucks Corporation (NASDAQ:SBUX): Up 3.13% to $42.45. Starbucks Corporation retails, roasts, and provides its own brand of specialty coffee. The Company operates retail locations worldwide and sells whole bean coffees through its sales group, direct response business, supermarkets, and on the World Wide Web. Starbucks also produces and sells bottled coffee drinks and a line of ice creams.
4. Kimberly-Clark Corporation (NYSE:KMB): Up 0.79% to $71.78. Kimberly-Clark Corporation is a global health and hygiene company that manufactures and provides consumer products. The Company’s products include diapers, tissues, paper towels, incontinence care products, surgical gowns, and disposable face masks. Kimberly-Clark’s products are sold in countries around the world.
5. Enbridge Inc. (NYSE:ENB): Up 2.53% to $34.42. Enbridge Inc. provides energy transp! ortation , distribution, and related services in North America and internationally. The Company operates a crude oil and liquids pipeline system, is involved in international energy projects, and is involved in natural gas transmission and midstream businesses. Enbridge also distributes natural gas and electricity, and provides retail energy products.
6. El Paso Corp. (NYSE:EP): Up 0.86% to $24.66. El Paso Corporation operates natural gas pipeline and storage facilities, transports natural gas, and imports liquefied natural gas. El Paso also explores for and produces natural gas. The Company has operations in the United States, Brazil, and Egypt.
7. Chemical & Mining Co. of Chile Inc. (NYSE:SQM): Up 0.49% to $55.35. Sociedad Quimica y Minera de Chile SA produces and markets specialty fertilizers including potassium nitrate, sodium nitrate, and potassium sulfate for the agricultural industry. The Company also produces industrial chemicals, iodine and lithium. SQM markets its products in over 100 countries.
8. Dollar General Corporation (NYSE:DG): Up 1.83% to $40.04. Dollar General Corp. operates a chain of discount retail stores located primarily in the southern, southwestern, midwestern and eastern United States. The Company offer a broad selection of merchandise, including consumable products such as food, paper and cleaning products, health and beauty products and pet supplies, and non-consumable products such as seasonal merchandise.
9. Motorola Mobility Holdings, Inc. (NYSE:MMI): Up 0.26% to $38.92. Motorola Mobility Holdings Inc. provides advanced mobile media solutions and multi-screen technologies. The Company develops products that include consumer mobile phones, business-ready smartphones accessories, cordless phones, and home networking products.
10. W.W. Grainger, Inc. (NYSE:GWW): Up 7.23% to $166.30. W.W. Grainger, Inc. distributes maintenance, repair and operating supplies, and related inf! ormation to the commercial, industrial, contractor, and institutional markets in North America. The Company’s products include motors, HVAC equipment, lighting, hand and power tools, pumps, and electrical equipment.
11. Nordstrom Inc. (NYSE:JWN): Up 3.88% to $51.97. Nordstrom, Inc. is a fashion retailer of apparel, shoes, and accessories for men, women, and children. The Company operates through multiple retail channels, discount stores, boutiques, catalogs, and on the Internet. Nordstrom, Inc. also offers, through a subsidiary, private label card credit and debit cards.

8 Trending Stocks Hitting Our Trading Screens as the Dow Plummets 1.5%

Wall St. Watchdog reveals information about 10 hot stocks that have hit our trading screens here at Wall St. Watchdog in the morning:

1. Prana Biotechnology Limited (NASDAQ:PRAN): Shares of Prana Biotechnology Limited are trading higher today after The Journal Of Neurochemistry?said one of the biotech firm’s experimental drug is able to restore cognition in Alzheimer’s patients. Prana Biotechnology Limited is an Australian biotechnology company which researches and develops therapeutic drugs used for treatment of Alzheimer’s Disease and other age-related degenerative disorders such as Parkinson’s Disease and cataracts.
2. Goodrich Corporation (NYSE:GR): Shares of Goodrich Corporation are trading higher today on more United Technologies buy-out chatter. Goodrich Corporation supplies aerospace components, systems, and services to customers located worldwide. The Company manufactures various aerostructures, aircraft evacuation systems, passenger restraint systems, sensor systems, pump and engine controls, de-icing systems, and other products. Goodrich serves the commercial, military, general aviation, and space industries.
3. Tyco International Ltd. (NYSE:TYC): Shares of Tyco International Ltd. are trading higher today after the conglomerate said it will split into three separate companies:?security, fire protection and flow control. Tyco International Ltd. provides security products and services, fire protection and detection products and services, valves and controls, and other industrial products.
4. Lennar Corporation (NYSE:LEN): Shares of Lennar Corporation are trading higher today after the home builder announced earnings in line with Wall Street estimates. Lennar Corporation constructs and sells single-family attached and detached homes, and to a lesser extent multi-level buildings as well as buys and sells r! esidenti al land. The Company also provides mortgage financing, title insurance, closing services and other ancillary services (including personal lines insurance, high-speed Internet and cable television).
5. Sangamo Biosciences, Inc. (NASDAQ:SGMO): Shares of Sangamo Biosciences, Inc. are trading lower today despite announcing, “The data obtained in our treatment interruption studies are very exciting and represent significant progress toward a ‘functional cure’ for HIV/AIDS.”?Sangamo BioSciences, Inc. researches and develops transcription factors in the regulation of genes. These transcription factors are the proteins that turn genes on and off and regulate gene expression by recognizing specific DNA sequences.
6. JinkoSolar Holding Co., Ltd. (NYSE:JKS): Shares of JinkoSolar Holding Co., Ltd. are trading lower today after news of a toxic chemical disaster at JinkoSolar��s plant in China. JinkoSolar Holding Company Limited manufactures solar products. The Company produces silicon wafers, solar cells and solar modules.
7. AutoZone, Inc. (NYSE:AZO): Shares of AutoZone, Inc. are trading flattoday ahead of earnings. Don’t Miss: AutoZone Fourth Quarter Earnings Sneak Peek. AutoZone, Inc. is a specialty retailer of automotive replacement parts and accessories. The Company offers an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. Autozone operates in United States and Puerto Rico, and Mexico.
8. The Coca-Cola Company (NYSE:KO): Shares of The Coca-Cola Company are trading lower today as investors sell stocks across the board. The Coca-Cola Company manufactures, markets, and distributes soft drink concentrates and syrups. The Company also distributes and markets juice and juice-drink products.! Coca-Co la distributes its products to retailers and wholesalers in the United States and internationally.

Is Whole Foods Still Relevant?

Every year for Thanksgiving, I find myself going to multiple stores to get the items I need. I head first to Whole Foods (Nasdaq: WFM  ) , where I buy my free-range turkey, quinoa, organic produce, and the like; and then head to Safeway (NYSE: SWY  ) or Kroger (NYSE: KR  ) to buy canned goods, paper products, and the traditional fare favored by my non-foodie friends. For years, it's seemed a fact of life: You just couldn't get everything in one place.

But with companies like Target and Safeway carrying more organic items, and healthy lifestyle brands like SmartBalance (Nasdaq: SMBL  ) available at both places as well as a score of others, it appears those days are disappearing. When they're gone, will Whole Foods still be left standing?

Organic growth
If imitation is the highest form of flattery, Whole Foods spends a lot of time blushing. More and more traditional grocery stores are offering in-house organic lines or sub-lines, including Stop N Shop's Nature's Promise, Safeway's O Organics, Target's Archer Farms and Kroger's Naturally Preferred and Private Selection Organic. Whole Foods also offers its own in-house organic line, 365 Organics, in addition to a wide variety of brand-name organics.?

Traditional grocers are also attempting to mimics the Whole Foods shopping experience. Safeway has been remodeling its existing stores int! o "lifes tyle" stores, with wood-like flooring, relaxing earth-toned decor and subdued lighting with spotlights on featured products. Several locations include expanded deli, floral, and bakery departments, with sushi bars, Starbucks (Nasdaq: SBUX  ) kiosks, and seating. Some offer free Wi-Fi.

Target remodeled 341 stores in 2010 and is continuing that trend in 2011, with revamped and expanded grocery and produce sections in many stores. But is it enough to steal Whole Foods' niche market share?

Apples and oranges and bananas
Sure, it's tough to compare a wholesale store with a traditional grocery with a niche market. But let's try anyway, shall we?

?	Number of Stores	Same-Store Sales	Revenue	P/E
Whole Foods	310*	+8.7%	2.4b	32.83
Safeway	1,681 stores**	+1.5% (excludes fuel)	10b	12.29
Target	1750 (includes 240 w/grocery)	+4.3%	16.1B	12.07
Kroger	2400	+5.3%	20.9B	11.37

*Includes six U.K. stores. **U.S. and Canada. (All numbers for most recent quarter, comparisons to same quarter last year.)

In size alone, Whole Foods can't compete, and its P/E is multiple times higher than the competitors here. But Whole Foods customers have always been willing to pay a little more.

Shopping for values
Whole Foods was one of the first non-independently owned markets to promote its sustainability and corporate responsibility initiatives. Now, it's become nearly commonplace. SUPERVALU (NYSE: SVU  ) , the retail and distribution giant based out of Minnesota, owns 2,500 retail locations including Acme, Albertons, Farm Fresh, and Hornbachers. Under! the "Ab out Us" section of the company's website are prominent links to its policies on its animal welfare policy, corporate social responsibility report, sustainability initiatives, and carbon footprint, available to any customer for whom such things are a factor.

But is such awareness on the part of customers and retailers enough to put Whole Foods out of business?

Free-range copycats
I asked Libba Letton, a national media representative for Whole Foods, if the company was worried about its competitors encroaching on its turf. Letton's answer? Not especially. "I think folks have been trying to copy us for a while, and we're aware of it. We spend a lot of focus and energy on it. We spend a lot of time on what's fresh and new, finding what our customers want and giving it to them."

But it's a tactic Safeway and Target are also taking. Take SmartBalance (the company that makes buttery spreads, mayonnaise, peanut butter and other items without hydrogenated or partially hydrogenated oils or trans fat). A few years ago, SmartBalance products were difficult to find at traditional grocers. Today, I ran a search on the company's product locator, and turned up more than 100 locations within 25 miles of my home, at stores including Walgreen (NYSE: WAG  ) , Giant, Safeway, Harris Teeter, and Target. I suspect there are more, but the list seemed to cap at 100.?

Soup to nuts
The availability of organic and health-conscious goods will continue to expand, which is a great thing for customers and pricing. But I don't believe Whole Foods isn't in any immediate danger. The changes to Saf! eway, SU PERVALU, and Kroger will allow them to be more competitive with each other for customers who see their stores as interchangeable. And while organic and healthy eating is becoming more mainstream, it's not the mainstream. Whole Foods will keep its current share, even if it means additional shopping trips for its customers. Foolish colleague Alyce Lomax says, "Don't Panic About Whole Foods." I have to agree. I've given it a thumbs up in CAPS.

Want to keep tabs on how Whole Foods will continue to fare against traditional grocers? Add these companies to My Watchlist.

Do you shop at Whole Foods, your local supermarket, Target, or all? Let me know below. I may use your comments for an upcoming article.

4 Big Toy Stocks & The 1 Great Toy No One Is Talking About

The following video is part of our nationally syndicated Motley Fool Money radio show. This week's guest is toy expert Chris Byrne. In this audio clip he discusses the most dominant players in the toy industry and shares the best toy for 2011 that most people are missing.

McDonald's is one of the companies highlighted in The Motley Fool's report on dividend stocks that are your best bet to beat inflation. It's called "13 High-Yielding Stocks to Buy Today" and you can get access to it right now at no cost. Simply click here �C it's free.