Saturday, March 24, 2012

5 Superball Stocks

When stocks fall fast and far, they sometimes set themselves up for remarkable rebounds. The following equities suffered dramatic drops over the past week. With help from the 180,000 members of Motley Fool CAPS, we'll see whether any of them have the potential to bounce back.

It's been a while, but thanks to last week's sell-off, we once again have a chance to stand beneath Mr. Market's silverware drawer in hopes of snagging a bargain. Let's meet today's contenders:


How Far Below 52-Week High?

Recent Price

CAPS Rating
(out of 5)

VimpelCom (NYSE: VIP  ) (34%) $10.33 *****
Mobile TeleSystems (NYSE: MBT  ) (31%) $15.02 *****
NVIDIA (Nasdaq: NVDA  ) (43%) $14.90 ****
Hyperdynamics (NYSE: HDY  ) (58%) $3.23 *
Tesla Motors (Nasdaq: TSLA  ) (11%) $31.04 *

Companies are selected by screening on for abrupt 5% or greater price drops over the past week. 52-week high and recent price data provided by CAPS ratings from Mo! tley Foo l CAPS.

Five super falls -- one superball
Markets enjoyed a big bounce Friday. Sadly, it wasn't big enough, and didn't come quite soon enough, to save investors in more than 2,800 companies from ending the week poorer than they began it. So what went wrong?

In some cases, the answer is: "Nothing, really." (Or nothing but a downgrade.) Upstart electric-car maker Tesla Motors had no bad news to report last week -- or at least none I saw. And yet, unnerved by weak electric vehicle sales at Nissan and General Motors (NYSE: GM  ) , Morgan Stanley, in a fit of guilt-by-association, decided to downgrade Tesla Thursday. Investors followed instructions, and shaved almost 10% off Tesla's market cap that day. Similarly, I found no news at Hyperdynamics to explain the stock's weeklong 20% slide. (Nor the 7% bounceback Friday, for that matter.) Such is the fate of one-starred CAPS stocks: subject to the whim of investor opinion.

Meanwhile, on the other side of the opinion-meter, we saw two five-starred stocks suffer from a fit of political panic last week. Over in Russia, the natives are getting restless. Accusations of fraud at the ballot box have voters demanding a recount in the country's recent parliamentary elections, and investors seem worried that this could turn into a replay of 1991. Or 1905. Or 1917. Or 1993... You get the picture. Revolutions happen, and while I personally don't believe that even a radical change in government in Moscow will cause Russians to use their cell phones less, investors seem to be shorting first and asking questions later.

Fair enough. Russia's a scary place, and I can understand why people who aren't that familiar with the country might be leery of exposure to an ongoing political upheaval. So today, let's focus on a stock opportunity that's only a bit less-well-liked on CAPS -- but a whole lot closer to home.

The bull case for NVDIA
A we! ak Q4 fo recast from chip giant Texas Instruments (NYSE: TXN  ) spooked semiconductor investors Thursday, but here at the Fool, the sell-off that resulted only makes investors greedier to buy cheap chip stocks like NVIDIA. TI forecast or no TI forecast, CAPS member straightcashdawg still likes "the prospects for tablet/smartphone growth overseas."

Fellow Fool TMFNewCow says he, too, likes the chip maker's mobile moves, and argues that NVIDIA is "leading the pack in mobile processors with its quad-core Tegra 3."

Meanwhile, ace CAPS investor TSIF reminds us that just last quarter, "NVIDIA beat analysts forcasts" with "GROSS Margins ... slightly above 50% on better sales of the high end Quadro Professional chips."

Foolish final thought
TSIF argues that NVIDIA today "appears undervalued" -- and I agree. The stock sells for 14 times earnings, which on its face makes it look like a bargain based on 15% long-term growth expectations. When you consider further that NVIDIA has $2.8 billion in cash on its balance sheet, with more pouring in the door with each passing day (free cash flow at the company amounts to $818 million, or 28% ahead of reported net income), I'd say the stock not only looks cheap ... but is actually cheaper than it looks.

And I'm putting my (virtual) money where my mouth is. On Motley Fool CAPS, I have racked up a record of 73% accuracy by recommending quality stocks that have hit unreasonably cheap prices. I think NVIDIA is my next big winner -- and so I'm recommending the stock publicly to you today. Will I be proven right? Feel free to follow along (and jeer loudly if I'm wrong).

And if you're looking for more great tech picks, take a look at the Fool's new, free report: The Only Stock You Need To Profit From the NEW Technology Revolution.


If you watch underwritings�in stocks, it would be literally impossible not to pay attention to the waves of secondary stock offerings from companies in the last 48 hours.� Some of the key secondary offerings that have prices and been proposed�are as follows: Ares Capital Corporation (NASDAQ: ARCC), Spirit Airlines, Inc. (NASDAQ: SAVE), A123�Systems, Inc. (NASDAQ: AONE), Sequenom Inc. (NASDAQ: SQNM), Boardwalk Pipeline Partners LP (NYSE: BWP), Hercules Technology Growth Capital Inc. (NASDAQ: HTGC), Martin Midstream Partners LP (NASDAQ: MMLP), ZIOPHARM�Oncology, Inc. (NASDAQ: ZIOP), Francesca’s Holdings Corporation (NASDAQ: FRAN), and Nordic American Tankers Limited (NYSE: NAT).

Here is a link to each summary with much more detail from the wire:

Ares Secondary (ARCC) hits shares
Spirit Airlines (SAVE) insiders unloading stockA123�(AONE) has a direct share saleSequenom (SQNM) needs capitalBoardwalk Pipeline (BWP) Raising CapitalHercules (HTGC) raising new investment capital
Martin Midstream Partners (MMLP) buying analyst coverageZIOPHARM�(ZIOP) raising cashFrancesca’s (FRAN) shares held up
Nordic American Tankers (NAT) sells shares for more boat buying

What is funny is that this list is ten companies and it still leaves a few fresh filings out.


Broken budget process hurts Wall Street reform

NEW YORK (CNNMoney) -- President Obama is likely to propose a substantial funding increase for Wall Street regulators in his forthcoming budget.

But there won't be any cheering in the boardrooms and hallways of the Securities and Exchange Commission and the Commodity Futures Trading Commission.

That's because Congress will probably bypass the president's recommendation and instead set funding for the CFTC and SEC at a much lower level.

The agencies have been caught in an epic struggle over the implementation of the Dodd-Frank Wall Street reform bill, a conflict that has pitted the White House and congressional Democrats against Republican opponents.

Asked by Congress to increase regulation of Wall Street firms and the murky, multi-trillion dollar derivatives market after the financial crisis of 2008, the agencies say they need additional funding to beef up their staffs, technology and expertise.

But House Republicans have consistently voted to deny the SEC and CFTC that funding.

"It is a backdoor way of trying to starve the agency on the line," said Bart Chilton, a Democrat and one of five CFTC commissioners. "The people who don't want to fund us are the same sort of people who voted against Dodd-Frank to begin with."

The blending of political and budgeting priorities has made effective regulation near-impossible, and the bitter fight has become emblematic of a herky-jerky budgeting process that has defined appropriations during the Obama era.

Opponents say the SEC doesn't deserve any additional funding without significant reform, and point to a series of failures, including the Bernie Madoff Ponzi scheme, as evidence. They also say the agency does not pay enough attention to the cost of the regulations and rules it produces.

"Before we even think about giving this agency yet another funding increase, at minimum, the agency will need to show major progress in implementing recommended reforms," Republican Rep. Scott Gar! rett, wh o chairs the subcommittee that oversees the agency, said at a recent hearing.

Politics is also a factor. The Wall Street reform law is one of Obama's signature policy victories, and Republicans have not exactly been coy about their desire to slow down its implementation.

"You have the SEC begging for more money, a lot more money, and only receiving a little more," said Bruce Carton, a former attorney with the SEC's Division of Enforcement who now edits a website called Securities Docket. "This is where they find themselves every year."

There is a lot on the line.

"If the SEC does not receive additional resources, many of the issues highlighted by the financial crisis and which the Dodd-Frank Act seeks to fix will not be adequately addressed," SEC Chairman Mary Schapiro said in a December plea for more funds.

Because the agency's budget is funded by transaction fees levied on the firms it regulates, increasing its budget would come at no cost to taxpayers.

Dodd-Frank, the law the agency is struggling to implement, suggested funding levels for the SEC of $1.3 billion in 2011 and $1.5 billion in 2012. But the agency was actually funded at around $1.1 billion in 2011. In December it received a bump to $1.3 billion for 2012 from Congress.

Washington's budget follies

Meanwhile, the SEC says trading volume in the securities markets has more than doubled over the past decade, and the agency has just about the same number of "cops on the beat" as it did in 2005, despite "enormous growth in the size and complexity of the securities markets since then."

James Cox, a professor of corporate and securities law at Duke University, said the games being played with the SEC budget amount to a "kind of kabuki dance."

"These are complex enterprises, and you have to pay for experience," Cox said. "It's pretty simple. If you don't pay for much regulation, you don't get much regulation."! ;

The story is much the same at the CFTC, where budgets have increased from $168 million in 2010 to $202 million in 2011. Late last year, the agency's funding for 2012 was finalized at $205 million, far below the Obama administration's request of $308 million.

"This means we won't do things," CFTC chairman Gary Gensler told Congress. "We won't have the people to oversee the market."

The CFTC is working to finish a regulatory framework that will allow it to police the massive over-the-counter derivatives market, which some experts estimate has ballooned to $700 trillion in size.

The 2012 tax and spending wars

"We can put the rules in place," Chilton said. "The question is can we oversee what we've put in place, and the answer to that is emphatically no."

The fight over funding at agencies tasked with regulating financial markets has played out against a backdrop of seemingly endless short-term budget measures called continuing resolutions.

In 2011, lawmakers passed seven continuing resolutions, a tactic that resulted in more than one close call with potential government shutdowns. The debate over funding levels also became entangled with the debt ceiling drama and subsequent super committee disaster.

The budget punt strategy has implications for effective governance. Continuing resolutions generally freeze spending at the prior year's levels. That forces federal agencies into a head snapping game of stop-and-go. Hiring is delayed, work is repeated, and agencies struggle to implement new legislation.

So try as the White House might, Monday's budget release won't mean too much. Ultimately, Congress has the responsibility to appropriate funds for the government to spend.

"The president's budget is one of the loudest policy announcements he can make," said Craig Jennings, a budget expert at the progressive think tank OMB Watch. "But he doesn't always get everything he wants."  

Buy These While They Are Cheap: SNTA, BELM, PSUN

Trends, Charts and Exclusive Opinion

Three SmallCaps to Buy When They are Cheap

SNTA: FDA Gives Thumbs Up to Drug Trail Renewal

BELM: Revenues Up; Operating Expenses Down

PSUN: Teen Retailer Numbers Next Thurs Could Surprise

Up first this morning is Synta Pharmaceuticals Corporation (SNTA) currently trading in the $4.38 range on a 3-Month average daily trading volume of 327,290 shares. �Looking somewhat like the Brooklyn or Golden Gate bridge, the SNTA chart below shows a $2 floor in March 09, then a jump in May to $5 followed by a quick fall to under $3. The stock essentially stayed and established a $3 for the next 5-Months. SNTA then shot up again in Nov, this time to the $7 range; where in the next 10-weeks it fell back to its current level.

SNTA has a 52-week high of $6.95 set on 12-18-09. SNTA has trailing twelve month revenues of $140+ million. The reason SYNTA is a short-term (6 Mo) �Buy� consideration for me is this: a trailing twelve month positive, diluted EPS of $1.77. And the bonus: hardly any short-sellers. I also like the fact that SNTA has a healthy pipeline of drug candidates in various Phases of trials.

On Tuesday, SNTA management announced the Company will restart development of its skin cancer drug candidate elesclomol. SNTA expects to start at least one new clinical trial in the second half of 2010. Management said it reached its decision after consulting with the FDA. Research on elesclomol in skin cancer was stopped in February 09.

SNTA 1-Year



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Trading Alerts on SNTA, BELM, and PSUN.


Gaining a whopping 15%+ yesterday is Bell Microproducts Inc., (BELM) currently trading in the $5.13 range on a 3-Month average daily trading volume of 147,459 shares. BELM is widely owned by insiders (38%+ of the public float- they are vested in good performance) BELM was trading under a $1 in April and May of 09, setting a $1 floor in the next 2-Months. The stock then staged a steady, 3-Month climb into the $3.50 range and it stayed at that level for 3-Months. In Jan, BELM shot up to $5 and has stayed in the $4.50 range for the last 6-weeks. BELM has a 52-week high of $5.20 set on 01-10-10. BELM has trailing twelve month revenues of $2.95 billion.� �

BELM rose yesterday on Q4 revenues rose and operating expenses fell. BELM earned $12.9 million, or 40 cents per share, in Q4 09. That compared with a loss of $33.5 million, or $1.04 per share, in Q4 08. What an improvement. Q4 09 sales rose 9% to $837 million, with sales of components and peripherals climbing 27% percent year over year. The company said that sales in Europe! climbed 14%. Guidance... for Q1 2010, the Company expects sales of $780 million to $815 million, which would be a jump of 9% to 14% when compared with Q1 09. Even near its high, BELM is undervalued and is a short-term �Buy� consideration for me. It will not stay in the $5 range for long.

One more note that influences my consideration; in early Feb, the SEC said that the investigation concerning the company's accounting and financial reporting matters has been completed and that no enforcement action has been recommended. BELM is clean.


And finally, a billion dollar revenue company for $5. That�s Pacific Sunwear of California Inc., (PSUN) currently trading in the $5 range on a 3-Month average daily trading volume of 885,600 shares. PSUN was trading under $2 in April of 09, then shot to $4 at the end of May (a pre-peak of its cyclical season). The stock flattened out; between $3-$4 for much of the summer and then in the fall, shot up to $7. PSUN staged a slow and steady fall back to the $3 range and in the last 10-weeks; it has staged a comeback.

PSUN has a 52-week high of $7.25 set on 10-23-09. I�ve suggested PSUN as a �Buy� consideration before and at this price, I stand by that (and for the record; I have never owned and don�t now own PSUN). This is a good cyclical company that reads the teen retail market like a book. Next Thursday, PSUN will announce its Q4 09 earnings after the market closes. Lots of shareholder anticipation out there. Buy low; sell high. As of Jan 31, 09, PSUN l! eased an d operated 932 stores in the United States and Puerto Rico.


If you'd like to receive further updates and any changes in our opinions of SNTA, BELM, and PSUN, be sure to Sign-Up for the SCN Newsletter today! It's FREE.

Is JinkoSolar the Perfect Stock?

Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?

One thing's for sure: You'll never discover truly great investments unless you actively look for them. Let's discuss the ideal qualities of a perfect stock, then decide if JinkoSolar (NYSE: JKS  ) fits the bill.

The quest for perfection
Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:

  • Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it's certainly a better sign than a stagnant top line.
  • Margins. Higher sales mean nothing if a company can't produce profits from them. Strong margins ensure that company can turn revenue into profit.
  • Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management's attention. Companies with strong balance sheets don't have to worry about the distraction of debt.
  • Money-making opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.
  • Valuation. You can't afford to pay too much for even the best companies. By using normalized figures, you can see how a stock's simple earnings multiple fits into a longer-term context.
  • Dividends. For tangible proof of profits, a check to shareholders every three months can't be beat. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.

With those factors in mind, let's take a closer look at JinkoSolar.


What We Want to See


Pass or Fail?

Growth 5-Year Annual Revenue Growth > 15% 117.3% Pass
1-Year Revenue Growth > 12% 157% Pass
Margins Gross Margin > 35% 21.4% Fail
Net Margin > 15% 12.7% Fail
Balance Sheet Debt to Equity < 50% 115% Fail
Current Ratio > 1.3 0.95 Fail
Opportunities Return on Equity > 15% 39.3% Pass
Valuation Normalized P/E < 20 1.65 Pass
Dividends Current Yield > 2% 0% Fail
5-Year Dividend Growth > 10% 0% Fail
Total Score 4 out of 10

Source: S&P Capital IQ. Total score = number of passes.

With a score of four, JinkoSolar isn't lighting up the room with its perfection. Along with most of the rest of its peers, the solar player has seen its shares plummet lately, and despite what may look like amazing value for the shares, the company's future is extremely uncertain.

Jinko is a Chinese maker of silicon wafers and other solar products. For quite a while, solar stocks have been extremely! cheap, as investors weigh the impact of potential reductions in government subsidies and a glut in the silicon market. Although U.S.-based solar companies like First Solar (Nasdaq: FSLR  ) have seen big drops in their shares, Chinese companies including LDK Solar (NYSE: LDK  ) and Suntech Power (NYSE: STP  ) have a lot more uncertainty right now, as general concerns over the legitimacy of questionable Chinese small-cap businesses have spilled over even into legitimate companies based in the emerging market.

But Jinko has gotten hit by some much more alarming news. Earlier this year, Jinko finally responded to local criticism by shutting down one of its plants after allegations that toxic chemicals were leaking into a nearby river.

Meanwhile, results for the company have been discouraging. Even though it had favorable earnings reports earlier this year, Jinko reported last week that sequential quarterly shipments declined in the third quarter, with sales dropping 21% from the second quarter. Although Jinko avoided the loss that fellow solar stock Trina Solar (NYSE: TSL  ) had, it still saw net income drop 72% -- and the company's guidance looks equally troubling going forward.

For Jinko to try and get back toward perfection, it needs to resolve its environmental problems. But beyond that, the shadow over the entire solar industry looks like it may persist as long as global economic problems are around. Until things get clearer for the global economy, Jinko shareholders may need to get used to being in the dark.

Keep searching
No stock is a sure thing, but some stocks are a lot closer to perfect than others. By looking for the perfect stock, you'll go a long way toward improving your investing prowess and learning how to separate the best investm! ents fro m the rest.

Click here to add JinkoSolar to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Finding the perfect stock is only one piece of a successful investment strategy. Get the big picture by taking a look at our "13 Steps to Investing Foolishly."

Economic optimism to boost stocks

NEW YORK (CNNMoney) -- U.S. stocks were headed for a slightly higher open Thursday, on the back of strong European economic data.

The Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were up between 0.1% and 0.3% ahead of the opening bell. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.

While worries about Greece continue to loom in the background, investors were encouraged after a reading on Germany's business conditions rose for a fourth straight month in February -- the highest level since July, according to the Munich-based Ifo institute.

February's reading adds evidence that Germany, Europe's largest economy, avoid falling into recession during the first quarter, said Ben May, European economist at Capital Economics.

Meanwhile, the European Commission forecasts that the eurozone will likely face a mild recession in 2012, thanks to negative growth in Greece, Portugal, Spain, the Netherlands, Cyprus, Slovenia and Belgium.

79% of fund managers didn't beat the S&P

Prior to the start of trading, the U.S. Labor Department reported that the number of workers filing for unemployment in the U.S. was 351,000. That's slightly better than analysts' forecasts and unchanged from the week prior, which was revised up from 348,000.

U.S. stocks drifted lower Wednesday, amid doubts over the latest bailout for Greece and some negative indicators out of China and Europe.

Greece secured additional bailout funds earlier this week that will help it avoid default in the immediate term. However, analysts warn that the nation will eventually need more support. Greece's fate also depends on whether private-sector investors agree to a historic debt-reduction plan.

World markets: European stocks were mixed in morning trading. Britain's FTSE 100 (UKX) edged up 0.2% and France's CAC 40 (CAC40) slipped slightly, while the DAX (DAX) in Germany shed 0.5%.

Asian markets ended mixed. Th! e Shangh ai Composite (SHCOMP) rose 0.3% and Japan's Nikkei (N225) added 0.4%, while the Hang Seng (HSI) in Hong Kong fell 0.8%.

Economy: The Federal Housing Finance Agency is scheduled to release its Housing Price Index for December.

On Wednesday, the National Association of Realtors reported that the median home price in January fell 2% from December to $154,700 -- the lowest price reading since November 2001.

Companies: T-Mobile, owned by Germany's Deutsche Telekom (DT), said "not carrying the iPhone led to a significant increase in contract deactivations in the fourth quarter of 2011." The company lost 526,000 customers during the quarter, compared to adding 126,000 during the third quarter of 2011.

AT&T CEO pay docked $2 million for T-Mobile debacle

Meanwhile, AT&T's (T, Fortune 500) board cut CEO Randall Stephenson's 2011 pay by $2 million, as a direct response to the failed T-Mobile takover bid.

Kohl's (KSS, Fortune 500) posted fourth-quarter results in-line with Wall Street's estimates, but the retailer's first-quarter forecast fell short of expectations, sending shares lower. Kohl's raised its quarterly dividend by 28% to 32 cents per share.

Target (TGT, Fortune 500)'s stock moved higher after the company topped earnings and sales expectations and provided an upbeat outlook for 2012.

Sears Holdings (SHLD, Fortune 500) reported earnings that fell far short of forecasts and said it planned to sell of some of its stores in an effort to raise $400 million to $500 million. The retailer, which also owns Kmart as well as the Kenmore, Craftsman and Lands' End brands, has been struggling for months.

Target (TGT, Fortune 500) reported betterh-than-expected fourth-quarter earnings and said it expects profit growth of 3% to 8% this year.

As PC sales swooned, Hewlett-Packard (HPQ, Fortune 500) said late Wednesday that its profit fell by a dramatic 44% while sales sank 7% in its fiscal first quarter, ended Jan. 31. Rival Dell! (DELL, Fortune 500) suffered a similar fate over the past three months, posting earnings and an outlook on Tuesday that disappointed Wall Street investors.

Apple (AAPL, Fortune 500) holds its shareholder meeting in Cupertino, Calif., on Thursday.

Currencies and commodities: The dollar fell against the euro, the British pound and the Japanese yen.

Fear of Iran is inflating gas prices

Oil for April delivery rose 16 cents to $106.44 a barrel. Oil prices have climbed more than 5% in the last week, and are inflating gas prices too, amid rising nervousness over Iran's nuclear program.

The price of regular unleaded gasoline jumped 3.3 cents overnight to $3.612 a gallon, according to motorist group AAA.

Gold futures for April delivery rose $6.20 to $1,777.50 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 2.03% from 2% late Wednesday.  

Friday, March 23, 2012

These companies should brace for hits as consumer spending likely to fall

The debt ceiling debate remains unresolved, but the intense focus on the issue makes one thing clear: Whatever the solution, the pain of living within our means will be most felt by consumers. The pot is only so big, and when we are in the mode of paying off debts, spending suffers.

The consumer is such a big part of the economy, so any reductions in spending are likely to have negative consequences for companies that cater to the consumer. Such is the price to be paid for the last decade or so of binge spending.

What consumer stocks should investors sell today?

Here are six candidates that, when plugged into my models, scream to be sold:


Talk about a sinking ship. Carnival (NYSE:CCL) is a stock to be avoided in an environment of declining consumer spending. Already down 22% for the year, the cruise ship operator appears poised to give up more ground. Discretionary spending on cruising probably will evaporate as other expenses take a higher priority for most consumers.

Discounting fares heavily to keep cabins full will negatively impact earnings. At the same time, operating expenses are going up thanks to higher commodity prices. For now, the company has managed to keep pace with analyst expectations for profits, but that might change as early as the current quarter ending Aug. 31.

Shares currently trade for 15 times this year�s estimates for earnings. That is too high of a multiple for a company that easily could miss earnings in the near term. I would sell this stock if you have not already done so.


S!  ony Corp . (NYSE: SNE)The flat-screen television boom is over. If you haven�t noticed, all the action in electronic devices happens to be in the smartphone or tablet computer markets. Sony (NYSE:SNE) is a nonfactor in both areas. Instead, the company must rely on Blu-ray disc players and its game consoles — currently PlayStation 3 and the PlayStation Portable — to drive revenue and profit growth. I don�t see that happening.

Sony shares have sunk 26% so far this year. The March earthquake and tsunami in Japan has had a negative impact on manufacturing in the country, making it difficult to get a handle on where earnings will go from here. I would avoid this stock until the dust settles in Japan. The end result still is unclear.



Panasonic Corp. (NYSE: PC)Another Japanese electronic manufacture facing similar challenges is Panasonic (NYSE:PC). Japan�s economy is in complete disarray since the earthquake and tsunami, but the real damage for companies like Panasonic have more to do with maturing markets for key products and the inability to replace those products with new and exciting growth items.

Ultimately, Panasonic is becoming more like a consumer cyclical company instead of an innovative growth engine. Shares of Panasonic are down 16% in 2011, but the stock still is priced like a growth story. For the current year ending March 31, 2012, the average Wall Street estimate for earnings is 54 cents per share. At current prices, Panasonic trades for 22 times forward earnings.

I�d rather see Panasonic with a 10 multiple or lower. That puts Panason! ic at a value of $5.40. This stock could lose another 50% in value from here.


Target LogoThe recession and tepid recovery have greatly impacted the growth prospects of Target (NYSE:TGT). The consumer retailer with trendy products at low prices has been trumped by other retailers focusing on the bottom line. Efforts to adjust to the new reality have yet to prove Target can be the growth engine of years past.

Shares of Target are down 15% for the year as the consumer continues to struggle. The company beat earnings estimates in the last quarter, helping to keep losses this year at a minimum, but that trend is not likely to hold. More probable is earnings misses that could further depress shares. Analysts are looking for growth from this year to next at a very modest 6.5%.

With shares trading for 12 times current-year estimates, Target shares are likely to drift lower. I would be a seller of the stock at current prices.


Lowes (NYSE:LOW)How low can Lowes (NYSE:LOW) go? The homebuilder sector still is a mess. Big-box hardware stores, including Lowes, are struggling to grow profits. The big-box model requires huge volume to generate profits that will meet investor expectations. If those volumes are not there, the model deteriorates. Lowes is down 10% this year and falling.

As a result of the selling, Lowes� dividend is a solid 2.4%. If you are interested in income, Lowes might be an interesting play, but I�m interested in growth and I�m not convinced Lowes can deliver profit acceleration in the current environment. The company m! issed es timates by 2 cents per share in the last quarter. I expect similar disappointment when the company releases results for the next quarter in a month or so.

Earnings estimates still are too high, with Wall Street expecting 15% profit growth from the current year to the next. My expectation is for 10% profit growth or worse. I would sell this stock, which now trades for 14 times current-year earnings estimates.

Anheuser-Busch InBev

Anheuser-Busch InBev (NYSE: BUD)One might think that with consumers struggling so badly, more people would drown their sorrows in alcohol. Beer and liquor sales tend to do well in a recessionary environment. As such, stocks like Anheuser-Busch InBev (NYSE:BUD) are defensive plays during difficult times.

The fly in the ointment of those buying Anheuser-Busch is inflation. We already have seen restaurant stocks like Chipotle Mexican Grill (NYSE:CMG) and Cheesecake Factory (NASDAQ:CAKE) deteriorate this quarter thanks to rising prices. Without the ability to pass that expense on to the consumer, profits suffer. Anheuser-Busch works well because of its low-priced beer. It will be difficult to increase prices to offset higher input costs.

With shares of Anheuser-Busch up 3.5% this year, now is the time to sell. The company missed analyst estimates by 5 cents per share the last time it reported results. This quarter, with higher inflationary pressures, the miss could be even larger. Anheuser-Busch is a consumer stock to sell now.

Getting In on Big Performers: MRGE, CELM, PLXT

Trends, Charts and Exclusive Opinion

Merge Healthcare (MRGE) Vaults on Mass General Deal; China Electric Motor (CELM) Gains on IPO Momentum; PLX Technology (PLXT) Moves Up on Award.

Three SmallCaps that Perform Beyond Expectation

MRGE: New Partnership and a Possible Acquisition Pushes Shares�

CELM: Underwriters Google up extra-Allotment shares

PLXT: NEC Deal opens the Japanese LapTop Market

First up this morning, after a whopping 12%+ gain yesterday, is Merge Healthcare Inc., (MRGE) currently trading in the $2.27 range on a 3-Month average daily trading volume of 254,457 shares. MRGE is widely held by insiders and institutions. In March of 09 MRGE was trading under $1.50. In late-May, it staged a rally that took it past $4.50. MRGE then pulled a $4-$3-$4 classic �V� and in mid-Nov slowly began a drop that took it into the $2 range. MRGE has a 52-week high of $4.78 set on 07-07-09. MRGE has trailing twelve month revenues of $66+ million. MRGE is a short-term (6 Mo) �Buy� consideration for me. Growth is the reason why. Between partnerships and acquisitions; MRGE is positioning itself for new revenue streams. They will increase its price.

The vault yesterday came from Tuesday�s news that MRGE and Massachusetts General Hospital (that very famous place) have signed a partnership agreement to build a testing environment for new mobile healthcare applications. �The technology has arrived to push medical imaging review and reporting out to mobile devices, and free the radiologist from having ! to be ha ndcuffed in a dark reading room,� said a Mass General official. The �eFilm� product of MRGE fits the bill perfectly. A new application, currently approved for use on an Apple iPod Touch or iPhone, extends the popular eFilm technology into the pocket of a physician.

Also on Monday, MRGEs acquisition of Amicas, a radiology competitor, looked more likely as other bidders have not come forward to better the MRGE offer of $248 million, or $6.05 per share. The closest offer for Amicas was the Thoma Bravo agreement which offers $217 million, or $5.35 per share.



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Next up is China Electric Motor Inc., (CELM) currently trading in the $5.59 range on a 3-Month average daily trading volume of 152,436 shares. CELM just started trading in late-Jan and it seems to like $4.75 to $5 as a floor. It spiked yesterday towards $6 on news that the underwriters of its previously announced public offering of common stock have fully exercised their over-allotment option to purchase 750,000 additional shares of common stock from the Company. The exercise of the over-allotment option brings ! the expe cted total gross proceeds of the public offering to $25.9 million. The underwriters must see future value or they would pass or partially-pass on the extra share allotment. They didn�t. They bought them all. CELM has a 52-week high of $5.25 set on 02-22-10. CELM has trailing twelve month revenues of $77+ million and a corresponding, positive EPS of $088. CELM is a short-term �Buy� for me. Here�s why...

CELM builds micro-motors in China: Motors that operate everything from applications for automobiles, power tools, and home appliances, to consumer electronics. There is a huge market for micro-motors in the world and now with access to the U.S. capital markets, CELM can bring cash to its needs for supply. At the IPO, CELM was hoping to get $6 or $7 a share, but with a weak IPO market, it sold 5 million shares for $4.50 apiece.


Finally this morning is PLX Technology Inc.,(PLXT) currently trading in the $5.38 on a 3-Month average daily trading volume of 201,362 shares. PLXT is widely held by insiders and institutions. PLXT was trading in March of 09 in the $2 range and in April jumped to the $3.50 level. It climbed to $4 and held for about 6-weeks before falling back and essentially finding a floor at $3 through mid-Dec. PLXT then staged a 10-week rally into the $5.50 range. PLXT has trailing twelve month revenues of $82+ million. PLXT has a 52-week high of $5.46 set on 03-03-10. Even at its high, PLXT is a near-term (3 Mo) �Buy� consideration for me. PLXT is on a role... �

On Tuesday, PLXT, a ! global s upplier of software-enriched silicon for the enterprise and consumer markets, became a finalist for the Innovation award given by sector magazine EDN (the acclaimed technology publication read by design engineers worldwide for more than half a century). Even industry �insiders� like this Company. On Monday, PLXT announced that its USB Duet technology was chosen by NEC Personal Products Ltd. (NEC), a leading provider of PCs in the Japanese market. NEC will be first to market with USB Duet-enabled, full-size laptops, offering users unique product features and unprecedented connectivity.


If you'd like to receive further updates and any changes in our opinions of MRGE, CELM,�and PLXT, be sure to Sign-Up for the SCN Newsletter today! It's FREE.

Daily ETF Roundup: VGK Pops On Greek Deal, VXX Slips Lower

Euphoria returned to Wall Street once again as encouraging development from the overseas currency bloc gave the bulls a reason to stampede. Investors cheered on the debt swap in Europe as Greek�bondholders�pushed�forward with the proposed bailout helping to ease many of the looming uncertainties. The Nasdaq took the lead, gaining 1.18% on the day, while the Dow Jones Industrial Average lagged behind, creeping higher by 0.55% [see also 3 ETF Trades For The Next Euro Zone Debt Crisis].�

Worse-than-expected economic news on the home front was overshadowed by optimism spilling over from the Euro zone. Investors brushed aside the less-than-stellar weekly jobless claims report; 362,000 people filed for�unemployment benefits versus the previous reading of only 354,000.��Aside from the Greek debt deal news, the other major developments overseas included two key central bank meetings. The Bank of England and the European Central Bank both held interest rates steady, keeping their benchmark rates unchanged at 0.50% and 1.0% respectively.�

The Vanguard European ETF (VGK) was one the strongest performers, gaining 2.71% on the day, bolstered by positive news out of Greece. Markets soared as the majority of private investors agreed to move forward with the Greek debt swap, paving the way for the biggest sovereign restructuring in history. The swap aims to help Greece reduce its towering debt from 160% of GDP down to 120% by 2020��[see�Euro Free Europe ETFdb Portfolio].

The S&P 500 VIX Short-Term Futures ETN (VXX) was one of the weakest performers, shedding 3.76% on the day, as the cloud of uncertainty looming over the Euro zone has shrunk considerably. The Volatility Index sank towards the 18 mark right from the opening bell as encouraging�fundamental�developments helped ease concerns and restore confidence back in the markets [see Fund Managers Turn Bullish As "Risk Appetite" Increases].�

[For more! ETF ana lysis, make sure to sign up for our�free ETF newsletter�or try a�free seven day trial to ETFdb Pro]

Capital Waves Investing: How to Profit From the "New Normal"

Buy-and-hold investing is dead.

In the aftermath of the global financial crisis, the fact is that there are far too many strong financial institutions and armies of traders manipulating the financial markets. And that has relegated buy-and-hold investing - a hands-off strategy that for decades was a mainstay for retail investors - to the rubbish heap.

Today's investor has to employ a hands-on approach that uses so-called "capital waves" - the huge swaths of cash that flow from one market to another around the globe - to generate quick profits, says Money Morning Contributing Editor Shah Gilani, a former trader and hedge-fund manager whose trading service, the Capital Wave Forecast, has kicked off 2011 with 17 straight winners.

"Trading is the new normal," Gilani said in an interview. "Capital movement is the benchmark of normalcy."

Gilani recently sat down with Money Morning Executive Editor William Patalon III to discuss the recent successes of his trading service - and to give readers a glimpse of what's to come in the financial markets.

"There were several capital waves that ebbed and flowed in the first quarter that created opportunities for us," said Gilani. "There was money moving in and out of Treasuries, the euro, stocks, and commodities."

Identifying and understanding "capital waves" is the first step to unlocking massive amounts of wealth and not getting beached by Wall Street, according to Gilani. The second step is to avoid trying to fight the tides of investment capital that are swirling from market to market in the modern world. Instead, investors should ride their momentum to big-time gains.

What follows is a full transcript of Gilani's Money Morning interview. In it, he discusses the areas in which he's had success predicting profit-making! opportu nities this year, as well as his current investment prospects.

William Patalon (Q): Shah, congratulations on a very fine start to the New Year. I understand that you've notched 17 straight winning trades. Let's start with that.

You're known for identifying capital waves, and then developing strategies that enable your subscribers to profit from them. What waves were involved here, and how did you profit from them? Are you optimistic this streak can continue, at least in a general sense?

Gilani: There were several capital waves that ebbed and flowed in the first quarter that created opportunities for us. There was money moving in and out of Treasuries, the euro, stocks, and commodities. The usual suspects were involved: fear and greed, perception and possibility.

As far as optimism and the markets are concerned, I have never been more optimistic in my life. That's because we've never been "here" before - not in my 30 years trading, and not ever in the history of the markets, or the world. It's really exciting.

Trading is the new normal. Capital movement is the benchmark of normalcy. And there's nothing normal about how fast capital now moves. But what's truly great is that if you embrace rapid capital movement across the globe as the new normal, you can't help but be optimistic that positioning opportunities are coming in waves.

(Q): After identifying these capital waves, how were you able to "decode" them for profit? Perhaps you could use one or two trades as specific examples?

Gilani: We made some quick money on volatility, for example. I believe we made about 52% on our VIX position in less than a fortnight. [Editor's Note: VIX is the ticker symbol for the Chicago Board Options Exchange Market Volatility Index, a popular! measure of the implied volatility of Standard & Poor's 500 Index options.]

We are in and out of the VIX - often. We don't always make a killing; sometimes we use the VIX as a hedging device against our other holdings. There are several ways to employ the VIX.

Another example - perhaps an even better one, as it pertains to capital waves - is a technology play we made.

I'm always reading. And the great thing about reading a lot is that as you read a wide range of materials you start to detect trends and shifts in sentiment. Those are the very essence of capital waves.

Well, what I came to realize in this particular instance was that all these papers, articles, trade journals, et cetera, were pointing to a particular set of technologies that were being increasingly relied upon for transactional business at point-of-sale terminals and via mobile devices.

So we bought into VeriFone Systems Inc. (NYSE: PAY), an electronic-payments-solutions company, and made a quick 82% on select options as the stock itself rose a very healthy 27%. [Editor's Note: Gilani did an excellent analysis of VeriFone for Money Morning as well, recommending it as a straight stock play; readers who followed his mid-December guidance were up 31% as of Monday's close at $52.96.]

That's how you find capital waves; you just have to look for them and they're there.

(Q): Are any or all of these aforementioned capital waves still in force? Or are you looking at new ones?

Gilani: Are they still in force? Absolutely. That is, until capital reverses course and moves elsewhere. But that's the whole deal. It's about dealing in capital movement; it's like being dealt a hand in poker or blackjack. It's only one hand; there are always more hands to play as long as you don't blow all of your chips. Or, as I always say: If we miss a trade ! or an o pportunity, no worries.

(Q): Are there new capital waves developing? What are they, and what's driving them?

Gilani: There are too many to mention. Well, actually, how much time do you have? I can go on for days about what's coming our way, but I'll keep it short.

We're going to see intense, massive movement into and out of commodities, stocks, and currencies. As far as the credit markets, they are on a rollercoaster like they've never seen before. What's about to unwind over the next two years is going to make what we saw from 1972 to 1987 look like a flat line.

(Q): What's your outlook for the U.S. economy right now? What are the reasons to be upbeat? What are the causes for concern?

Gilani: My outlook is cautious but optimistic. My optimism is predicated on politics, so that's like buying a pig with a poke, as my Scottish mother used to say. If we get our act together, and don't merely address - but actually fix - the debt issues facing this country, look out. Otherwise, we're Japan 2.0.

What we have to do domestically is kill the goose that laid the rotten egg. I'm talking about financial services. That sector has become nearly 25% of our gross domestic product (GDP).

That's sick.

For decades now, bankers have been shuffling paper to enrich themselves. They're using other people's money to gamble and counting on taxpayers to bail them out.

Don't get me started here. This really makes me sick.

We need to innovate. And not on paper, but with paper - predicated on leveraged paper tigers; we need to get back to what America is made of. I'm talking here about real people, and a real middle class emerging to make real things and make this country great again.

(Q): What's your outlook for the U.S. stock ma! rket ri ght now? What sectors do you favor? What sectors do you feel should be avoided?

Gilani: I love to hate banks right now - but that's going to change. I'm watching and I know that when the time is right, American banks will be a great opportunity. I love technology. And commodities. I love international businesses and global reach. I am a little scared that the politicians we are counting on will end up being bought by lobbyists and sell out America, as they have done for too many years now.

We'll see.

(Q): A lot of our readers are major fixed-income investors. What is your outlook for the U.S. and worldwide bond markets? What kinds of bonds, if any, do you like right now? Which classes of bonds worry you?

Gilani: That's a great question, but a difficult one. There's no easy answer.

The outlook this year for U.S. Treasuries and municipal bonds is not good. They're going to take a bath in cold water. It may take 18 months, but it's coming.

I like all classes of bonds right now, but they all worry me. It's that fluid. Of course, that makes bonds - Treasuries, munis, emerging markets... all of them - a great opportunity to trade right now. I love to trade fixed income and we are going to make a lot of money in fixed-income opportunities over the next few years.

(Q): Silver continues to draw huge interest from our readers. What is your view of silver right now? Where do you think it goes from here, in terms of price? How about gold?

Gilani: I love both silver and gold. That is, until they crash again.

I was in the silver market in 1980, when the Hunt brothers tried to squeeze silver. I rode it up and I took profits, but then I gave it all back. It was silver that taught me about capital waves and how nothing goes up forever. It taught me how traders play the pu! blic, an d how manipulation is everywhere.

As far as silver today, we'll ride it up and we'll ride it down and we'll ride it back up again. The same is true with gold.

I don't fall in love with anything anymore. Nothing lasts forever.

(Q): What else do you feel investors need to watch and keep in mind? Why is that so?

Gilani: Investors have to watch their time horizons. Take profits and don't get greedy. Get back in if you've made money and you still love the position. Keep ringing the register. That's the new normal. We're not going back to slow and steady - ever.

(Q): It seems as if your service, the "Capital Wave Forecast," is made for this kind of an environment. Do you agree? If so, why do you feel that way?

Gilani: That's right. The "Capital Wave Forecast" is the culmination of all the life lessons I've learned as a trader and money manager. Basically, we have to be more fluid. We have to be elastic. And we have to adapt our investment strategy to new truths - a new reality - that continues to evolve.

[Editor's Note: As a former hedge fund manager and Wall Street insider, Shah Gilani made a living tracking - and profiting from - capital flows. Now his "Capital Wave Forecast" newsletter has kicked off 2011 with 17 straight winners. These winning stock picks have racked up a stunning 554% in combined gains in a matter of months. And you can become a part of Gilani's next success story by clicking here.]

Congressional Insider Trading Ban Passes, With a Caveat

The House of Representatives passed a bill Thursday morning to ban insider trading by members of Congress and the executive branch. The bill also makes lawmakers publicly disclose trades they’ve made. The bill passed 417 to 2. John Campbell (R-California) and Rob Woodall (R-Georgia) voted against it.

But House Republicans stripped a provision from the Senate version of the bill that would have made people who gather intel from Congress for the financial community register as lobbyists and disclose their activities. Critics say that change weakens the bill. The House version instead asks for a congressional study of the proposal. The final law could change once the House and Senate bills are reconciled.

Thursday, March 22, 2012

At the Races, In the Money

Apart from the beautiful horses, racing can be an ugly business, and because of the beautiful horses no sport is more heartbreaking. So be warned: HBO's addictive new drama, set at and around the Santa Anita racetrack near Los Angeles, is designed to pull you into this tortured world and hold you there until you see the light. It's hard to look away.

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tv review

Dennis Farina and Dustin Hoffman in 'Luck.'

The cast is large and the show drops us into the stream of each character's life without much explanation. Go with the flow until it begins to make sense. It will.

One main story revolves around "Ace" Bernstein (Dustin Hoffman), a crime boss just out of prison; his chauffeur of many talents, Gus Demitriou (Dennis Farina); and the Irish-bred horse Ace has stabled at the track with trainer Turo Escalante (John Ortiz).


Sundays at 9 p.m. ET on HBO

Ace is bent on revenge against former associates, and his plan includes an investment in the track. The rest is left murky, however, so that when Ace hires the young financial whiz Nathan Israel (Patrick J. Adams), we cannot! anticip ate the young man's real purpose in the story. Ditto the shy woman (Joan Allen) looking to start a center where prison inmates help rehabilitate sick or injured horses. Is that all she is?

The other central character in "Luck" is trainer-owner and breeder Walter Smith (Nick Nolte), who has poured all his hope and plenty of fear into a big, fast colt who is linked to Smith's clouded past. This is a great role for Mr. Nolte, who gets to put a different spin on a character he portrayed in the movie "Affliction" and show us a battered man whose soul and capacity for love, or at least kindness, are still intact.

But the glory of "Luck" is that almost everyone in it has dramatic appeal. Usually, this is because we can see into their hearts. Take the novice jockey Leon. Played by Tom Payne, he's a gentle innocent whose happiness only requires the opportunity to ride. Yet nature has given him a body that is bigger than it should be. The agony of his weight-loss running sessions in the California sun is so pitiable that it plays like tragedy.

On the upside is cheerful Rosie (Kerry Condon), an Irish workout rider who has a magical rapport with horses but is still struggling to get mounts as a race jockey. Her grace even in disappointment is more touching because her competition for a coveted job is Ronnie (real star jockey Gary Stevens), an alcoholic and drug-snorting former champ now trying to make a comeback.

Racing is still a man's world, and track veterinarian Jo (Jill Hennessy) must be strong to stay honest in a business where a lot of people will do anything for an edge. Her job also means delivering bad news, a constant reality in thoroughbred racing, about a horse's health. Jo is so tough, in fact, that when she does cry, we can hardly watch. And then there is jockeys-agent Joey, played to perfection by Richard Kind as a Pagliacci whose depression makes him seem pathetic but also sinister.

One of the series' most remarkable achievements comes with the four characters who fu! nction a s racing's typical degenerate gamblers. Four men who live for the track, for the bet, and without hope of escape from the degrading boom and mostly bust nature of their addiction. At first, they appear in broad outline: the bitter and mean wheelchair-bound Marcus; the excitable and slow-witted Renzo; the ambitious and frustrated Lonnie; and the formerly handsome Jerry (Jason Gedrick), a masterful handicapper whose gambling addiction is terrible to behold.

As "Luck" progresses, however, this bedraggled gang, almost Shakespearean in its dramatic form and function, reveals a key to the entire series. The revelation begins when the men, watching a race, see an unfamiliar horse gallop to the finish with the strides and speed of a true champion. Such an animal is the miracle, the holy grail of the sport. All at once, the hard-core gamblers smile, their ravaged faces transformed by the joy of the moment. Watching a thing of beauty, able to appreciate its majesty, they themselves look beautiful.

There are many more moments of humanity discovered or restored in "Luck." The most bizarre incident involves a suicide attempt gone wrong that rekindles a lust for life in a person who barely seemed worth saving. In another instance, a man compelled to commit murder signals regret with a redemptive flicker of his eyes.

There is much in this series that is gorgeous, like the sight of steam rising from a horse's back while it is being soaped and washed after an early morning workout. There is a lot that is not pretty. After one scene of stunning violence, the possibility of more can't be forgotten.

Strong writing and acting ensure that we soon become so sensitive to the characters that we feel for them the way they feel for their horses. This is a predictably searing experience in a venue like racing, where big dreams must usually be followed by crushing disappointment. When Nick Nolte's character is watching his beloved colt run, Mr. Nolte's body rises and sinks with the rhythm of its hoofbeats, a! nd we ar e moved by the sight but filled with worry.

Yet most everybody keeps going. They rise every morning and, as one gamblers says, "step up to the plate" in the hope that one day will be better than the last. That is what "Luck" is really about. When all is said and done, the series is an invitation to play the game of life.


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Sorority officers Devan, Arianna, Amelia, Dominique and Hannah in 'Sorority Girls.

Sorority Girls

Tuesdays at 9 p.m. on TLC

Take five perky and pink-clad sorority sisters from America (think "Legally Blonde"). Send them to England to recruit members of the first-ever sorority in the U.K. from among the denizens of a grimy industrial city and.... "Sorority Girls" is what reality television was made for. The setting helped guarantee a number of applicants with inelegant accents, heavy makeup and hard-drinking habits. Leeds is a site of the proverbial 19th-century dark, satanic mills of "Chariots of Fire" fame.

As rush interviews begin, the Americans can barely conceal their horror, for instance when a prosp! ective n ew member of Sigma Gamma turns out to be a human pin cushion, with piercings on one hip, two nipples and various other parts. But they give other applicants high marks for trying: "Normally I'm not a fan of someone's bra showing," one American sister says. "But hers was cute and it did match her shirt."

Techs up even as Texas Instruments slips

SAN FRANCISCO (MarketWatch) � Shares of Texas Instruments slipped Friday after the company cut its outlook, but the tech sector got a lift from gains semiconductor companies led by Intel and Advanced Micro Devices.

The Nasdaq Composite Index COMP �moved up 0.6% to close at 2,988, ending the week with a fractional gain. The Philadelphia Semiconductor Index SOX �added 1%, while the Morgan Stanley High Tech 35 Index MSH �rose a fraction.

Click to Play

U.S. adds 227,000 jobs

The U.S. added 227,000 jobs in February, and the unemployment rate stays unchanged at 8.3%, providing the economy with one of its best stretches of the recovery,

TI�s TXN �stock shed 1% to close at $32.27 after the Dallas-based company on Thursday reduced its earnings and sales forecast citing weaker demand for its wireless products, including its applications processor, called OMAP, widely used in smart phones, e-readers and tablets.

TI said the revenue miss was due to some customers adjusting inventories for the processor following strong sales in the fourth quarter.

In a call with analysts, TI Vice President Ron Slaymaker noted, �Whenever there�s a new product introduction by a customer, there�s also an associated one-time surge of revenue as those customers fill their channels with product.�!

But he also added, �Although we had anticipated lower sequential revenue associated with that non-recurrence of the fourth quarter channel fill, demand for OMAP is lower than what we had originally expected, as our customers are now rationalizing both their expectations for ongoing demand, as well as the associated inventory.�

While TI did not offer details on its customers, some analysts pointed to AMZN �as the likely key factor for the shortfall. The company rolled out its Kindle Fire tablet late last year, immediately becoming a hot seller.

�Demand for OMAP came in weaker than expected as customers that contributed to strong growth in recent quarters (primarily Amazon) began to rationalize their sales forecasts and inventories post holiday season,� Needham analyst Vernon Essi said in a note.

Shares of AMZN �slid 1.8% to close at $184.32.

But the tech sector was mostly in positive territory, getting a boost from other chip shares.

AMD AMD �was up 1.5%, closing at $7.58, while Intel INTC �rose nearly 1% to close at $27.07. Gains also came from Cisco Systems CSCO �, Apple Inc AAPL �and eBay Inc EBAY ! �.

On the downside, shares of Hewlett-Packard HPQ �, Dell Inc DELL �and Google Inc. GOOG �were in the red.

(PTX, H, LOW, CLNO) Stock in Focus by

Pernix Therapeutics Holdings, Inc. (AMEX:PTX), a specialty pharmaceutical company primarily focused on the pediatric market, and ParaPRO, LLC announced the commercial launch of Natroba� (spinosad) Topical Suspension, 0.9%, an FDA-approved prescription treatment for head lice in patients four years of age and older.

Pernix Therapeutics Holdings, Inc., a specialty pharmaceutical company, engages in the development, marketing, and sale of branded and generic pharmaceutical products primarily for the pediatric market.

Hyatt Hotels Corporation (NYSE:H) announced the opening of Hyatt Regency Chennai, introducing the Hyatt Regency brand to the booming south Indian market. Catering primarily to the business and leisure traveler, Hyatt Regency Chennai is centrally located on the city’s iconic Anna Salai (Mount Road), 20 minutes from Anna International Airport and the IT Corridor. The hotel is also in close proximity to important government institutions, consulates, corporate hubs and prime residential areas in Chennai.

Hyatt Hotels Corporation and its subsidiaries engage in the management, franchising, ownership, and development of Hyatt-branded hotels, resorts, and residential and vacation ownership properties worldwide.

Lowe’s Companies Inc. (NYSE:LOW) reported net earnings of $830 million for the quarter ended July 29, 2011, essentially flat from the same period a year ago. Diluted earnings per share increased 10.3 percent to $0.64 from $0.58 in the second quarter of 2010. For the six months ended July 29, 2011, net earnings decreased 2.2 percent from the same period a year ago to $1.29 billion while diluted earnings per share increased 6.5 percent to $0.98.

Lowe’s Companies, Inc., together with its subsidiaries, operates as a home improvement retailer in the United States, Canada, and Mexico.

Cleantech Transit, Inc. (CLNO)

Cle! antech T ransit Inc. was founded to capitalize on technology advances and manufacturing opportunities in the growing clean energy public transportation sector. The Company has expanded its focus to invest directly in specific green projects. Recognizing the many economic and operational advances of converting wood waste into renewable sources of energy, Cleantech has selected to invest in Phoenix Energy ( This project could benefit the Company’s manufacturing clients worldwide.

Cleantech Transit, Inc. (CLNO) is pleased to announce it has met its funding requirement to secure the Company’s ability to earn in 25% of the 500KW Merced Project.

The Company is in the final stages of closing its initial interest in the Merced Project and is currently working on completing the necessary documentation and expects closing the transaction soon. As previously announced Cleantech has the option to earn up to 40% of the Merced Project and the Company plans to continue to work towards increasing its interest in the Merced Project as they move ahead.

Of all the forms of renewable energy, only hydropower exceeds the amount of electricity produced by bio energy; wind produces similar amounts of electricity to bio energy. Biomass electricity has a significant advantage in that it is the only established renewable resource which can provide baseload power. Hydropower and wind power are generated with lower capacity factors because the supplies of water and wind are irregular.

For more information about Cleantech Transit, Inc. visit its website

Popular Science reports a spike after Apple Newsstand's launch

Here is your daily Apple (NASDAQ:AAPL) stock news and rumors for Friday.

Apple Newsstand Is a Boon for Popular Science: It’s been difficult to judge whether tablets and e-readers will be the savior of print periodicals. Will people really be willing to drop a few bucks on electronic magazines when a Web browser is sitting right there on the iPad?

Here’s a hopeful sign: Bonnier’s Popular Science magazine released digital readership numbers, and the spike following the opening of Apple’s Newsstand digital storefront in October is significant to say the least. Bonnier’s tablet software publishing Mag+ (via All Things Digital) said in a new report that the tablet edition of Popular Science saw one-week sales increase 13% immediately following Newsstand’s opening.

Better news still is that weekly sales, which have been steadily rising since February 2011, increased at a greater rate, thanks to Newsstand. These are just Popular Science‘s numbers though, and the weekly readership is hitting above just 40,000 at this point. Print circulation is still above 1.3 million for the magazine so digital editions have a long way to go.

Apple Reveals International Availability of iTunes Match and iTunes in the Cloud: Since opening its cloud services for business earlier this fall, there’s been no small amount of confusion on where Apple’s iTunes Match service is available and where it’s yet to launch. Apple posted an official statement on its website on Thursday to clarify. It said its cloud-based iTunes service iTunes Match is now available in 17 countries, and iTunes in the Cloud is available in 120 countries, but only the U.S., Canada, Australia and the U.K. support all media (TV, film, books) and not just digital music.

Apple Website Among the Most Trafficked: A new Com! Score re port released Thursday said Apple’s website is the 13th most-trafficked U.S. website, and one of only three retailers in the top 15. The company’s 79 million unique visitors placed it well ahead of Wal-Mart (NYSE:WMT), which came in at 18th. iTunes and its numerous sub-businesses, like the App Store and iBookstore, provide the bulk of Apple’s retail traffic rather than the company’s online store for products. The two retailers ahead of Apple are eBay (NASDAQ:EBAY) and Amazon (NASDAQ:AMZN).

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at�@ajohnagnello�and�become a fan of�InvestorPlace on Facebook.

Making Quick Money on the Internet

If you’re going to be flipping through Facebook, perusing Pinterest, or just wasting time on the web, why not get paid for it? There are several sites that offer payment for relatively mindless computer work. Whether you’re looking for a serious chunk of change, or just some extra spending money, these online employment opportunities may work well for you. The best part is that you can get started right after you read this article.

Mechanical Turk

Amazon Mechanical Turk, or MTurk for short, is a crowdsourcing marketplace. It’s a way for programmers to get real people to do simple tasks that computers can’t do yet. “I’m a big fan of Mechanical Turk,” says� Robert Farrington of “Especially for students looking for some quick, easy money.” At his peak, Robert says he was able to earn an average of about $40 per month, “but as a college student doing it in class and when bored, I thought that this was great.” The tasks are so simple that workers only get paid a few cents for completing them. Available jobs may include transcribing podcasts, commenting on blogs, or writing product descriptions.


If you’ve spent time liking companies on Facebook, rating YouTube videos, or sending tweets, those are all things you could be getting paid for through Microworkers. Here’s a sample of available jobs, the pay rate, and the estimated time it would take to complete the job:

  • Vote for YouTube Video: $.10 (one minute)
  • Post on a Facebook: $.24 (two minutes)
  • Follow someone on Twitter: $.12 (one minute)
  • Fill out an insurance sign-up form: $1.50 (five minutes)


The slogan at Minuteworkers is “where time really is money.” Minuteworkers is similar to MTurk and Microworkers. The tasks are simple and the pay is low, but the jo! bs take just minutes to complete. The pay here starts at a minimum of $.10 per task, workers have unlimited payment potential, and the payout minimum is just $2. This means you can withdraw your money through PayPal, allowing you to get paid quickly.

The Best Candidate for the Job

If you’ve got a full-time day job, you probably shouldn’t forego it for the dream of completing these tasks while sitting on the couch in your pajamas all day. Farrington says the ideal candidate for a job like this is someone looking for some extra income or a student with free time. “I don’t think you could live off doing Mechanical Turk full-time,” he says, “but it is a great way to supplement your income.”

Don’t Expect Riches

As you can see, the tasks on these sites are simple but the pay is low. At only $.10 a minute, even if you completed an hour’s worth of tasks you’d still only walk away with $6. According to the US Department of Labor, minimum wage is $7.25. Then again, you probably aren’t currently making any money checking out Facebook or commenting on blogs. So, if you enjoy those types of tasks and you’ve got time to spare, sites like Mechanical Turk, Microworkers and Minuteworkers might be a great resource.


SunPower: J.P. Morgan Downgrades To Underweight; Cuts Target

J.P. Morgan analyst Christopher Blansett this morning resumed coverage of SunPower (SPWRA), reducing his rating on the shares to Underweight from Neutral, with a new price target of $16, down from $25. Blansett had suspended coverage of the stock while Morgan’s bankers were participating in the company’s recent acquisition of SunRay. He notes that the downgrade follows completion of that deal, and is consistent with his recent downgrade of a variety of other solar stocks in March. Blansett continues to think that the solar industry is headed for a period of excess supply and lower prices.

“While SunPower is less exposed to Germany where we see most risk than many of its peers, we believe intensifying pricing pressure later this year, coupled with a continued degradation in margin leverage and relatively expensive valuation based on our estimates, positions SPWRA to underperform” versus other alternative energy stocks, he writes.

SPWRA today is down 37 cents, or 1.9%, to $18.71.

Wednesday, March 21, 2012

New York Life, Ibbotson Develop Wealth Management Tools

New York Life Insurance Company recently teamed up with Ibbotson Associates to help develop a new set of tools it is calling Lifetime Wealth Strategies, aimed at helping advisors account for their clients' total economic wealth and optimize their portfolios by making forward-looking insurance and investment decisions together.

"When clients are asked about their wealth, or what they are worth, they immediately think of cash, stocks, bonds, and real estate," Michael Gordon, first VP of New York Life, said in a statement. "But they often need to be prompted to consider another aspect of their worth: their human capital."

That, Gordon said, means the worth of a paycheck to a family over a lifetime, and to determine this, clients would need to fill out a questionnaire put together by Ibbotson, based on the firm's research on asset allocation strategies. This would then allow the advisor to provide the client with different proposals: Investments only, insurance only, or an integrated investment and insurance solution. The proposal could include investments only, insurance only, or an integrated investment and insurance solution which takes into account each person's human capital, financial capital, and risk tolerance.

The financial crisis has changed the way people think about their wealth and risk-taking, Gordon said, and now more than ever, "clients are seeking a financial strategy that balances protection needs with goal achievement." While "human capital cannot be traded like a stock," Gordon noted, "it is a vital component of wealth that must be diversified and protected."

Why Philip Morris International's Earnings Are Outstanding

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Philip Morris International (NYSE: PM  ) , whose recent revenue and earnings are plotted below.


Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Philip Morris International generated $9,632.0 million cash while it booked net income of $8,591.0 million. That means it turned 31.0% of its revenue into FCF. That sounds pretty impressive.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and! replica ble in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Philip Morris International look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.


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

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With questionable cash flows amounting to only 1.1% of operating cash flow, Philip Morris International's cash flows look clean. Within the questionable cash flow figure plotted in ! the TTM period above, changes in taxes payable provided the biggest boost, at 2.2% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 8.5% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home run stocks that provide the market's best returns.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

  • Add Philip Morris International to My Watchlist.

World Bank: Emerging Markets Will Take Brunt of First Global Economy Decline Since WWII

For many folks, a cold beer or a fizzy cola is the definition of a consumer staple. This doesn�t just go for Americans but also for emerging-market consumers who are part of a rising middle class. As folks get a little more cash to spend, soft drinks and alcohol are some of the first things they add to their shopping lists.

I watch more than 5,000 publicly traded companies with my Portfolio Grader tool, ranking companies by a number of fundamental and quantitative measures. And this week, I’ve highlighted six beverage stocks to buy.

Each one of these stocks gets an �A� or �B� according to my research, meaning it is a �strong buy� or �buy.� Here they are:

Anheuser-Busch (NYSE:BUD) is the world-famous brewing company that has more than 200 beer brands. BUD stock has posted a gain of 26% in the last year, compared to a 10% gain for the Dow Jones. BUD stock gets a �B� grade for operating margin growth, an �A� grade for earnings growth, a �B� grade for earnings momentum, an �A� grade for its ability to exceed the consensus earnings estimates on Wall Street, a �B� grade for the magnitude in which earnings projections have increased over the past months, a �B� grade for cash flow and a �B� grade for return on equity. For more information, view my complete analysis of BUD stock.

Diageo (NYSE:DEO) is the producer of Smirnoff, Johnnie Walker, Baileys Original Irish Cream, Captain Morgan, Tanqueray and Guinness. In the past year, DEO has posted a gain of 27%. Diageo stock gets a �B� grade for the magnitude in which earnings projections have increased over the past months, a �B� grade for cash flow, and an �A� grade for return on equity. For more information, view my complete analysis of DEO stock.

Companhia de Bebidas das Americas (NYSE: ABV) is a Brazilian beverage company that has posted a gain of 48% since last March. ABV stock gets a �B� grade for operating margin gro! wth, a � B� grade for the magnitude in which earnings projections have increased over the past months and an �A� grade for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of ABV stock.

Coca-Cola (NYSE:KO) is perhaps the most famous international beverage company, and it licenses more than 500 nonalcoholic beverage brands. In the past year, Coca-Cola stock has climbed 10%. KO gets an �A� grade for return on equity. For more information, view my complete analysis of KO stock.

Fomento Economico (NYSE:FMX) is a Mexican holding company that is integrated by a Coca-Cola bottler, OXXO convenience stores and its investments in Heineken. FMX stock has outpaced the broader market with a gain of 33% in the last 12 months. FMX stock gets a �B� grade for operating margin growth, a �B� grade for the magnitude with which earnings projections have increased over the past month and a �B� grade for cash flow. For more information, view my complete analysis of FMX stock.

Brown-Forman (NYSE:BF.B) is best known for its brands Jack Daniels, Finlandia and Southern Comfort, among others. Brown-Forman rounds out the list with a 19% gain in the last year. BF stock gets a �B� grade for operating margin growth and an �A� grade for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of BF.B stock.

Get more analysis of these picks and other publicly-traded stocks with Louis Navellier�s Portfolio Grader tool, a 100% free stock-rating tool that measures both quantitative buying pressure and eight fundamental factors.

National Oilwell Varco Passes This Key Test

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

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

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

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

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


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

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

Watching the trends
When that red line (AR growth) crosses above the green line (revenue growth), I know I need to consult the filings. Similarly, a spike in the blue bars indicates a trend worth worrying about. National Oilwell Varco's latest average DSO stands at 69.1 days, and the end-of-quarter figure is 71.1 days. Differences in business models can generate variations in DSO, and business needs can require occasional fluctuations, but all things being equal, I like to see this figure stay steady. So, let's get back to our original question: Based on DSO and sales, does National Oilwell Varco look like it might miss its numbers in the next quarter or two?

I don't think so. AR and DSO look healthy. For the last fully reported fiscal quarter, National Oilwell Varco's year-over-year revenue grew 34.3%, and its AR grew 35.7%. That looks OK. End-of-quarter DSO increased 1.1% over the prior-year quarter. It was down 7.0% versus the prior quarter. Still, I'm no fortuneteller, and these are just numbers. Investors putting their money on the line always need to dig into the filings for the root causes and draw their own conclusions.

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

  • Add National Oilwell Varco to My Watchlist.