Saturday, December 29, 2012

5 Dow Stocks That Could Increase Their Dividends

The Dow Jones Industrial Average (INDEX: ^DJI  ) has come a long way since its start late in the 19th century. Heavy industrial companies have made way for technology and oil companies. The 30-company index is often used as a gauge of the U.S. economy as a whole, often in tandem with the S&P 500. But unlike the S&P 500, all 30 component companies of the Dow currently pay a dividend, from top yielder AT&T to nominal dividend payer Bank of America.

The Dow Jones publishes a list of the 10 highest-yielding companies in the Dow every year, fittingly called The Dow 10. But among the other 20 companies that get left out, many have plenty of room to increase their dividends:


Annual Dividend per Share


Payout Ratio

Alcoa (NYSE: AA  ) $0.12 1.3% 13%
Hewlett-Packard (NYSE: HPQ  ) $0.48 1.8% 15%
American Express $0.72 1.5% 18%
Cisco (Nasdaq: CSCO  ) $0.24 1.3% 21%
ExxonMobil (NYSE: XOM  ) $1.88 2.2% 23%

Sources: and author calculations.

Low payout = high potential
The two companies with the lowest payout ratios are also two stocks that I think shouldn't be on the Dow. But if either Alcoa or Hewlett-Packard decided to increase its current dividend, I think I could stomach keeping them on the Dow for a bit longer. Alcoa's dividend has been stuck at $0.03 a quarter since 2009, after a drastic cut from $0.17 per quarter. Increasing the dividend to $0.05 each quarter going forward wouldn't break the bank, and the stock's yield, at current prices, would rise above 2%.

Hewlett-Packard, as opposed to Alcoa, recently raised its quarterly dividend after paying the same $0.08 per quarter for more than a decade. It still has plenty of room to grow based on its low payout ratio, even with PC shipments falling. Increasing the dividend slightly will still leave the technology company plenty of cash to search for its next big thing, while simultaneously keeping investors happy.

American Express is another company that appears stuck in a rut of paying the same dividend, having kept its dividend at the same level since January 2008. With competitor Visa recently raising its own quarterly dividend 47% to $0.22 a share, American Express should seek to keep pace. The same increase for American Express would boost its dividend to $0.26 a quarter, which would still produce a payout ratio of only 27%.

New dividends can grow, too
Cisco has just completed its first year as a dividend-paying company, so it will be interesting to see whether it maintains the status quo going forward or whether it starts to increase its dividend this year. Analysts are bullish on Cisco's prospects this fiscal year, predicting $1.77 per share in earnings, a 50% increase over earnings from the past 12 months. To reach the dividend level that technology competitor Microsoft pays, Cisco would have to increase its dividend by 128%. While Mr. Softy's current yield could be a long-term target, a more modest $0.02-per-quarter increase would push the yield over 2% and still leave plenty of room for future growth.

Big Oil should mean big dividends
In my opinion, a company as large as ExxonMobil should be paying a bit more of its earnings as dividends. Fellow oil company and Dow compatriot Chevron yields above 3%, with a slightly higher 24% payout. ExxonMobil does have a history of increasing its dividend every year, having done so for the past 28 years. While the company has not yet indicated that it plans to stop, it would be nice to see an increase slightly larger than the 7% increase last year.

Not all dividends are created equally
While I don't expect every dividend-paying company to pay out a majority of its earnings as dividends, it sure is a lot nicer when they do. When they are paying out less than 25% of earnings as dividends, it makes me take a second look.

Companies included on the Dow Jones are some of the last "blue-chip" stocks that we have, so when they pay higher dividends, I notice. Despite its low payout ratio, one of the companies I mentioned here is included in our special free report, "Secure Your Future with 11 Rock-Solid Dividend Stocks." To find out which one made the cut, get your copy.

Gulf of Mexico True Believers on Pins and Needles as McMoRan completes Davy Jones

Davy Jones Production Platform

A lot is happening in the Shallow Water Ultra Deep drilling program that McMoran and its astute partners, Energy XXI and Tex Moncrief, have been pursuing for the last few years.  Now that the U.S. space shuttle program has come to an end, the scientific frontier in this country has moved to drilling miles into the earth�s crust instead of launching men to the moon.  Those over 50 are old enough to remember the tension everyone in America felt as the first U.S. spacemen disappeared around the back of the moon and were temporarily out of communication with the Mission Control Center in Houston. Nobody knew if they would continue past the moon and out into space or circle back around into view as planned. 

These days the exploration frontier is 30-35,000 feet below the mudline in the Gulf of Mexico.  Petroleum engineers are designing tools and rigs to control the 400 degree temperatures and 20,000 and more lbs. of pressure being encountered by drill bits and logging tools working 6 miles into the earth.  

On September 2, 2009, BP announced a massive oil discovery at its Tiber well in what was then one of the deepest wells yet drilled to a total vertical depth of 35,055� in 4132 feet of water in the Wilcox and Tuscaloosa formations 250 miles Southeast of Houston.  The discovery was described as having multiple pay zones in the �lower tertiary.�  Kaskida, another BP well was announced as having 800� of hydrocarbon bearing sands about 45 miles SE of Tiber.  Neither of these wells is in production and it is likely to be many years and many billions of dollars spent to build pipelines and solve lifting problems before they are.

In contrast, the Davy Jones 1 well was announced as a discovery by McMoRan and its partners in January 2010, just a few months after the Tiber discovery.  It is about to come online and into production almost any day now.  What�s the difference?  DJ1 is in 20 feet of water just off the coast of Louisiana. Drilling for oil and gas in the Louisiana almost swamp land has been going on for decades.  There are existing pipelines all over the place.  The production platform pictured above is in water that a tall NBA player could almost stand in and wave his arms above the surface.    

So everyone is waiting with great anticipation just as for those astronauts circling the moon for the first time decades ago.  McMoRan, the operator, had long ago announced expected completion of the well in mid-December 2011 with perforation of the well casing and a flow test to follow shortly thereafter before the end of the year.   

Davy Jones and the Ultra Deep wells don�t give up their booty without a fight.  This is no exception.  It is not certain how fast the reaming of the well will proceed. Might be before year end and it might not.  For sure, the goal is to move at the �proper� speed to successfully complete and test the well. No other course would make sense when the well has cost about $170 million so far. Other than satisfying Wall Street, whether the well is completed on December 20th or January 10th is irrelevant. In this case, slow and secure is the way to go. 

The real issue since this play began is that for years many of the other oil and gas exploration companies have disparaged the whole idea that anything worth pursuing would ever be found.  Once it was, the next group of naysayers were convinced that like BP�s Tiber and Kaskida, it would be impossible to produce them.  Earlier this year, in an astounding tip of the hat to a small E&P company like MMR, Chevron complimented MMR�s Jim Bob Moffett and elevated the Gulf of Mexico to its top three exploration zones.  Oil folks in the know are no longer putting down this concept that under the exhausted shallow fields in the Gulf and under the salt weld, more hydrocarbons would or could be found.  Now it is accepted that massive amounts might still be found altering our nation�s energy future.

 The expectation for Davy Jones 1 is that once the inside of the hole is smoothed (reamed)  new production liner will be placed into the hole. Next the well casing will be perforated to allow production to begin.  Gas and hopefully some liquids too, will come surging up the well. There is a range of estimates but some folks believe that as the well is perforated from the bottom up, the initially activated zones will begin producing 20 MMcf per day building to the 50-70 MMcf per day level MMR expects to produce.  Because this well is in a hole originally designed years ago to go to only a 20,000� depth, its small size limits production to a maximum of 75 MMcf per day. Those constraints will not apply to Davy Jones 2, drilled 2.5 miles away which was designed from the outset with much larger pipe and to go to a 30,000� depth. The second  well is due on stream in the second half of 2012, even less time than the two years it has taken to design the equipment needed to bring Davy 1 onstream.

In the world of exploration and production nothing is ever certain. However, MMR expects to have some additional good news to report before year end at either its Lafitte well or at Black Beard East. In all cases, Moffett is looking at both of these wells for the same Wilcox and Tuscaloosa sands such as the Frio which has previously been seen at Blackbeard East and which is a massive producer onshore Louisiana .  This zones have also been seen offshore at BP�s Tiber and Kaskida wells.  Good things are just around the bend but until then, nervous anticipation is the mood of the week.

 Joan E. Lappin CFA              Gramercy Capital Mgt. Corp. 

In these turbulent times, put our decades of experience to work for your portfolio.  Contact us at

Gramercy Capital, its clients and Mrs. Lappin own shares in McMoRan and Energy XXI.  They do not own shares in BP or Chevron, also mentioned in this article.

The Build-Up To Big Bank Earnings

The banking industry will take center stage on Thursday, when several of its biggest names check in with quarterly earnings. Strong results could get some of these companies off on the right foot for 2012. Since a significant amount of volatility is bound to come with these announcements, traders who are equipped with sound technical strategies are the most likely to profit from the results.

Under Siege

On Thursday, prior to the opening bell, Bank of America (BAC) will release its Q4 results. Wall Street is calling for EPS of $0.23 versus $0.04 in the company’s Q4 in 2010. Total revenue is expected to rise 7.5%.

Bank of America has benefitted in recent quarters from a decrease in its net charge-offs. It has also shored up its balance sheet by selling non-core assets and building its Tier 1 equity ratio. Despite these positive trends, the stock has been hammered in the marketplace. BAC shares have tumbled 56.7% over the course of the past year.

Morgan Stanley (MS) was also taken to the woodshed in 2011, but its stock price has been retracing lost ground. On Thursday morning, the company is expected to announce a Q4 net loss of $0.57 per share versus a profit of $0.43 in the prior year quarter. Shares of MS have declined 42.6% since this time last year.

Steadier Footing

One bank that has seen its stock price on more stable ground is BB&T (BBT). The consensus among analysts is that the company will report a 76.7% pop in Q4 EPS despite a 4.5% decrease in total revenue on a year-over-year basis when it announces its earnings before the market open on Thursday.

BB&T is coming off of its strongest quarter in three years, as credit quality and interest income both improved. The company has also succeeded in cutting its nonperforming assets by $900 million during the last two quarters. BBT shares are down 2.0% from a year ago.

One other stock for traders to keep an eye on going into Thursday is American Express (AXP). Analysts are calling for the company to weigh in with an 11.4% advance in EPS on an 8.2% uptick in total revenue when compared to the year ago quarter. Shares of AXP are up 7.6% over the course of the past 52 weeks.

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

Friday, December 28, 2012

4 Reasons to Fall in Love With Caterpillar

What a difference two years can make. When the Great Recession�s waves and breakers swept over cyclical stocks like steel and machinery a couple of years ago, earth-moving equipment giant Caterpillar (NYSE: CAT) started sinking in quicksand. As former Chairman and CEO Jim Owens said at the time, 2009 was “the worst year in Caterpillar�s history since the Great Depression.”

The numbers bore out his grim assessment: CAT had 2009 sales of $32.4 billion and earned only $1.43 a share � 75% lower than its earnings per share in 2008. The company laid off 19,000 full-time and 18,000 part-time and contract employees; between June 2008 and March 2009, Caterpillar shares fell more than 72% to $20.74.

But CAT stayed focused and disciplined, and as the global economy began to swing back from the brink, the company started to rebound. And Caterpillar stock, which has risen by a whopping 440% since March 2009, CAT stock morphed from earthbound worm into free-flying butterfly.

Here are four reasons to fall in love with Caterpillar stock:

The China Opportunity

Growth in China has cooled off a bit in recent weeks as the government has delayed major public works programs. Tighter credit also has dampened heavy machinery sales. Stiff competition from Japanese heavy-equipment manufacturer Komatsu�notwithstanding, CAT has staked a claim in China. And despite the near-term delays, China still plans to build 10 million public housing units in the next couple of years. CAT reportedly plans to spend $1 billion to increase its manufacturing capability in the country and has formed a joint venture with AVIC Liyuan Hydraulics for hydraulic pumps.

Fortescue Metals Deal

Last Tuesday, CAT announced it has inked a deal with Australia-based Fortescue Metals Group to implement an autonomous mining solution to boost performance and productivity in the latter�s Solomon iron ore mine. The two companies will work together to develop a solution that is tailored to the specific business needs of mining companies.

The Rebuilding of Japan

Recovering from the March 11 earthquake, tsunami and nuclear disaster in Japan will require a massive rebuilding effort that could rise above $210 billion. Even though Japanese competitors Hitachi (NYSE: HIT) and Komatsu will be favored sons in the bidding, there�s still a lot of work to go around. Caterpillar construction and heavy earth-moving equipment will be needed to rebuild from the disaster.

Solid Fundamentals

Caterpillar is trading about 85% above its 52-week low of $59.21 last July. With a market cap of $74.94 billion, the company pays a dividend yield of 1.70% and has a price-to-earnings growth ratio of only 0.73, indicating the stock still is undervalued. Quarterly earnings growth is a scorching 425% year-over-year, and analysts� growth estimates are off the charts: more than 60% for the current quarter, 40% for the next quarter and more than 66% for the full year.

Obviously, there are no �sure things� when it comes to investments. And cyclical stocks are unpredictable and erratic because they are tied to economic cycles that are unpredictable and erratic. CAT benefits from a strengthening economy, so as long as the recovery continues, investors should continue to be well rewarded.

As of this writing, Susan J. Aluise did not hold a position in any of the stocks named here.

European Crisis and the Difficulty in Learning From Past Mistakes

As predicted by Reinhart and Rogoff’s sequencing of the crisis, default on sovereign external and/or domestic debt is unfolding as expected. Despite this, EU political constituencies continue to be unable to formulate a viable rescue plan for Greece even with contagion to other weak countries already evident. As an aside, this lack of reaction is not dissimilar to initial the US Congressional rejection of the sub-prime bailout package not that long ago – in Sep 2008. Market reaction to each event is thus far similar: cautious optimism (about a viable solution) - increasing skepticism - disbelief - loss of confidence – mass sell-off. The market’s own five stages of dealing with tragedy.

Historically, the PIGS have had a poor experience following default or restructuring of external public debt. Amongst the four, Spain and Greece stand out in particular, with the latter having spent most of the 20th century mired in difficult times. According to Reinhart and Rogoff’s analysis, in comparison to all countries, Greece is bested only by Angola, Ecuador and Honduras.


Period covered (external public debt)

Share of years in default or rescheduling

Number of years in default or rescheduling

Number of banking crises


1920 – 1983





1850 - 2006





1851 – 1997





1880 – 2007




Source: Reinhart and Rogoff

A global financial crisis has been the lead-in to the current situation. Already weak economic conditions and metrics in their domestic markets are severely limiting their options. With their existing public debt levels already at high levels, increasing it further by only the average 86% based on past crises is unpalatable. Individual country options are limited due to the single currency and lack of political unity. And, as this crisis extends even further into personal balance sheets, unavailability of the personal bankruptcy option, particularly with respect to mortgage debt, will be another exacerbating feature.

From a financial sector stock selection perspective, during the sub-prime crisis, non-bank financials provided relative out-performance during 2008 and early 2009. A strong balance sheet and capital position were key. This time around, European non-bank financials do not look anywhere near as resilient.

Apparently, clear evidence from Reinhart and Rogoff’s rigorous analysis of eight centuries of financial folly has left political representatives unconvinced. We appear to be having difficulty learning from past mistakes. Here we go again.

Disclosure: Long C

Corporate Share-Buyback Programs Will Accelerate in 2010, Bringing More Profit Opportunity

The number of companies buying back their own stock has surged since slipping to the lowest level in more than a decade in the second quarter of 2009. That trend is likely to accelerate in 2010, which is a bullish sign for both the economy and stock market.

Stock buybacks among companies in the Standard & Poor's 500 Index totaled $34.8 billion in the third quarter of 2009, according to Standard & Poor's Financial Services LLC. That's a 43.8% increase from $24.2 billion spent on share buybacks in the second quarter, which was the smallest amount spent since early 1998.

In spite of the bounce, however, third-quarter share buyback totals represented a 61.2% decline from $89.7 billion in the same period a year ago, and a 79.7% drop from the record $172.0 billion corporations spent in the third quarter of 2007. But for many analysts the turnaround is a major milestone for the economic recovery.

"The financial crisis put the brakes on most share buybacks. Companies went into survival mode, trying to hold onto every last penny to weather the economic downturn and the lack of credit," said Louis Basenese, editor of The Takeover Trader. "Now, with the economy showing signs of recovery and the credit markets easing somewhat, it's only natural to see a modest up-tick in buyback announcements."

Basenese also said he expects the upward trend in buybacks to continue based on the current economic outlook, a projection validated by S&P, which forecast an additional 10% increase in new share purchase programs in the fourth quarter. S&P also noted a spate of recent actions by corporate boards giving management permission to execute buyback programs in 2010.

However, it cautioned that many of these are just authorizations, not actual buybacks, and that some were replacements for earlier authorizations that were never carried out because of the poor economy.

The size of the programs continues to lag, as well. None of the 195 repurchase plans approved in the third quarter made S&P's historical list of the 20 biggest buybacks. Exxon Mobil Corp.'s (NYSE: XOM) $4.233 billion program was the largest announced in the third quarter, but programs in every industry except for utilities were below year-ago levels.

However, Basenese said investors should still be encouraged by the upturn in activity, despite the smaller program sizes.

"When a corporation buys back its own stock, it's a strong vote of confidence from those who have the clearest view of future prospects for both the company and its industry," he said. "It's also a sign that management feels the company's shares are substantially undervalued."

Essentially, when a corporation decides to initiate a share-buyback program, it is telling investors that it has excess cash available, usually from retained profits, and believes that buying its own stock is the best way to utilize that money - better, for example, than investing in other securities or making capital improvements to plants, equipment, delivery systems, etc. However, several other considerations can also influence a buyback decision.

One of these is a desire to reward shareholders by returning capital to them, but without instituting or increasing dividends. If a cash-rich company declares a dividend, it is making a commitment - a promise to shareholders that it will continue paying that dividend in the future - no matter what. If times then turn bad and the company is forced to reduce or even eliminate that dividend - i.e., breaking its promise - enraged shareholders often dump the stock, driving prices sharply lower.

By contrast, companies have total flexibility with buyback programs. They can buy billions in stock from shareholders one year, then spend nothing the next two or three and no one will complain, or even notice - much less sell the stock in anger.

That is a primary reason share-buyback programs have gained in popularity over the past few decades. Not only did buybacks increase steadily among S&P 500 companies from 1998 (the first year S&P tracked them) until the third quarter of 2007, but another study reported in the Journal of Economic Perspectives found that annual buybacks among all U.S. stocks had risen from just $5 billion in 1980 to $349 billion in 2005.

Buybacks can also help more mature companies with limited opportunities for organic growth improve their financial numbers. When a company buys its own stock, it reduces the number of shares held by the public, - the so-called float - which means the earnings per share (EPS) will increase, even if revenue and profit are unchanged. That apparent improvement in corporate performance will often prompt a rise in share prices, particularly for issues considered undervalued, resulting in an increased return on investment.

Be aware, however, that such "improvement" may also trigger performance bonuses for management - a somewhat cynical view of why the buyback might have been executed in the first place. If that's the case and future financial results don't meet the expectations signaled by the buyback announcement, the related stock gains could evaporate quickly.

Companies also may repurchase shares for internal reasons: to distribute to employees via purchase plans, through stock-option incentives or as employer contributions to retirement plans. Additionally, buybacks can provide ammunition for mergers and acquisitions. The repurchased shares can be accumulated as "treasury stock" that can be exchanged for the shares of a target company in a takeover attempt.

From the individual shareholder's perspective, stock-buyback programs tend to be beneficial regardless of the company's motivation. As already noted, share prices generally rise when a repurchase plan is executed, though returns vary substantially, and a buyback may have no positive impact at all on the price of a "glamour" stock that's already overvalued.

That was the conclusion of a joint study of open-market repurchase plans (the manner in which 95% of U.S. buybacks are conducted) by professors at the University of Illinois, Rice University and the University of Limburg in the Netherlands. It found that the excess return from buying and holding stocks being repurchased by companies was just 12% over four years - and stocks with very low book value relative to their market value showed no gain at all. On the plus side, however, undervalued stocks - those with the highest book-to-market ratios - returned an extra 45.3% over four years.

Buyback programs tend to produce higher yields for shareholders of stocks that already pay a healthy dividend. For example, the dividend yield for the S&P 500 was 2.29% at the end of the third quarter 2009 and had averaged below 3.0% for most of the past two decades. But in its most recent report, S&P said the 10-year average dividend-plus-buyback yield was 4.74%, and the five-year combined yield was an even more robust 5.89%.

In spite of the potential benefits in terms of yield and return, Basenese advises against buying a stock solely on the basis of the announcement of a buyback program.

"The key should always be the underlying fundamentals," he said. "Plenty of companies with less-than-stellar fundamentals announce share buybacks, but that doesn't mean I want to own them. I typically just view share-buyback announcements as a confirmation that the stock of a fundamentally sound company I'm considering or already own is undervalued.

"Besides, it's essential to remember that announcement of a buyback program merely authorizes management to repurchase some of the company's shares; it doesn't obligate them to actually do so."

Options Traders Pile On After Apple Decline


Options traders piled on to the selloff in Apple Inc. on Wednesday morning, and trading indicates they see more big swings ahead.

The open positions in Apple options were more bearish than usual Wednesday, and a closely watched indicator of the options market’s outlook for sharp moves in the shares jumped by more than 15%.

Options trading indicates investors think this morning’s violent move could be repeated. Implied volatility in Apple shares, which reflects expectations for future stock moves, jumped more than 15%. That shows investors think the stock will see bigger swings over the next month–and it also boosted the price of options contracts. Implied volatility is a key element of options pricing.

2012: The Year Baidu Investors Got Bit

In these waning days of 2012, there's a chill in the air and snow in the forecast. What better time of year to curl up by the fire and ponder: What went wrong with the stocks you picked back in January? What went right? And should you keep these stocks in your portfolio, or go out and find something new?

That's what we aim to do today, as we flip back the calendar, and consider the year that was at Baidu (NASDAQ: BIDU  ) .

A few Foolish facts about Baidu

Year-to-Date Stock Return




Dividend Yield


1-Year Revenue Growth (YTD)


1-Year Profit Growth (YTD)


CAPS Rating (out of 5)


Source: Motley Fool CAPS.

What happened at Baidu this year?
After a topsy-turvy 2011, the company commonly known as "China's Google" (but more accurately known as the company that displaced Google (NASDAQ: GOOG  ) from China) came roaring into 2012. From the beginning of January to early April, Baidu shares ran up an impressive 30% -- a pace that, if continued, would have had the stock doubling by year end. But it was not to be.

The company's first quarter earnings report, which came out April 24, showed Baidu's revenue rising 75%, and earnings up 76%. Somehow, however, analysts had got it into their heads that Baidu was going to do even better than that. When Baidu failed to measure up, a lot of investors got to thinking that it might be time to take profits rather than letting their money ride.

Result: Baidu shares proceeded to lose 30% over the next three months.

When Q2's earnings rolled around in July, the company that grew earnings around 70% in Q1 just kept on growing, leading to an immediate pop. But as we've come to expect, it was short-lived. In August, worrywarts found their latest excuse to question the Baidu's success: browser and anti-virus software maker Qihoo 360 (NYSE: QIHU  ) , which announced plans to compete with Baidu on search.

Ever since then, Baidu's share price has been on the wane, recently testing a 52-week low. Investors continue to worry that Baidu will somehow fumble "the transition to mobile" -- a transition that Facebook (NASDAQ: FB  ) and Google seemed to manage just fine, but one that for some reason everyone seems to think Baidu will flub.

Well, maybe it might. Maybe Qihoo and its less than $300 million in annual revenue will beat Baidu and its $3.3 billion revenue stream... but I wouldn't bet on it. With 2012 drawing to a close, my money's still on Goliath to beat David in 2013.

Regardless of your short-term view on the Chinese economy, there may be opportunity in Baidu. Our brand-new premium report breaks down the dominant Chinese search provider's strengths and weaknesses. Just click here to access it now.

Zynga Users Decline as More Facebook Usage Goes Mobile, Says Cowen

Shares of online games provider Zynga (ZNGA) are down 55 cents, almost 10%, at $5 after Cowen & Co.’s Doug Creutz this morning reiterated a Neutral rating on the shares, writing that daily average unique users for its games, such as “Words with Friends,” declined by 4.8 million to 54.2 million between May 1st and June 8th, a sign, he thinks, that usage is declining for social games “across the board” as mobile gaming continues to rise.

Creutz lays out the relevant stats for Zynga:

Zynga saw significant declines in May from nearly all of its existing major games: Words With Friends had its third consecutive down month, losing 600K DAUs to 6.4MM (-8.6% m/m); CityVille lost 1.7MM DAUs to 4.5MM (-27.4% m/m); CastleVille lost 1.0MM DAUs to 4.4MM (-18.5% m/m); Hidden Chronicles dropped 1.8MM DAUs to 3.3MM (-35.3% m/m); FarmVille lost 600K DAUs to 4.0MM (-13.0% m/m); Zynga Slingo lost 600K DAUs to 3.1MM (-16.2% m/m); and Empires & Allies lost 400K DAUs to 1.3MM (-23.5% m/m), falling out of the top 20. Texas Holdem Poker only lost 100K DAUs to 6.8MM (-1.4% m/m). The lone bright spot for Zynga was the launch of Bubble Safari, which rocketed to the #3 slot by adding 5.7MM DAUs in four weeks. However, given the inverse-V trajectories of other recent Zynga launches, we are only moderately impressed by the early performance of the title.

Creutz suggests Zynga is being hit by the shift in Facebook (FB) usage from the desktop to mobile phones:

We believe that mobile devices may be siphoning off an accelerating number of gamers from Facebook. Facebook itself is increasingly being accessed by mobile devices, however it is not possible to play Facebook-native apps through Facebook on a smartphone. We believe that over the last two months, trends in the casual digital gaming space have swung decisively towards mobile and away from social, at least in Western markets.

Facebook shares today are up 39 cents, or 1.4%, at $27.40.


Thursday, December 27, 2012

The 2nd Best Performing Dow Stock Is What?

While Home Depot may have stunned as the second-best-performing Dow stock of 2012, it's time to look ahead, and one of the best ways to invest for the long run is with great dividends. You can start today and uncover "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so just click here and get your copy today.

Hey, Fools, Austin Smith here to look at Home Depot's (NYSE: HD  ) return in 2012, maybe take some lessons from it in how we can maybe profit in 2013.

So a review of what this stock has done: It's been an incredible performance. It's the second-best-performing stock in the Dow Jones Industrial Average (DJINDICES: ^DJI  ) , and I feel like the stock that most investors have missed.

This company's up 50% for the year, compared to the Dow's 8.4% return. It's sort of been this silent, very steady-building -- basically a linear trajectory from the beginning of the year. I believe this just speaks to the vindication of the strength of the housing market.

Home Depot has ridden it to aplomb, and this is reflected across the entire consumer goods space. We see Lumber Liquidators (NYSE: LL  ) up 190%, KB Homes (NYSE: KBH  ) up 114%, Whirlpool� (NYSE: WHR  ) �up 114%, and the list goes on. It's littered with stocks related to the housing recovery.

So, looking at this, when you see stocks up over 100%, investors of course assume that maybe the market has been too enthusiastic. You wonder how much room does it really have left to grow in 2013. It's been at double so far.

Well, I do think that there are a lot of opportunities in this space, but I don't think Home Depot's the best one. I think this company's a bit too expensive for the growth you're going to expect for the next 12 months.

They're trading for 22.7 times earnings. They have no real new store openings on the horizon, they've only got a 1.8% dividend, and I think they're suffering from the same thing that McDonald's did when it went from 2011 to 2012.

It was the best-performing stock in 2011 on the Dow Jones Industrial Average. It got bid up to a premium multiple that you just couldn't justify with its growth. Then in all of 2012 it languished, despite actually having a lot of great execution, but it just had to come back down to a fair multiple. I expect Home Depot to do the same thing.

That's not to say we can't profit from this space, though. There are still a lot of companies that have extra gas in the tank. So I'm looking at a report that came out of Renaissance Macro Research, LLC, which said that the average age of the appliance is now 4.6 years, the highest it's ever been since 1962.

It's the same trend we've seen going in the automobile space, where autos are the oldest they've ever been, and you have this huge pent-up demand as consumers were tightening their purse strings in this weak economic climate.

But as soon as that starts to rebound, as soon as unemployment starts to show steady gains downward, I believe you're going to unlock huge pent-up demand in both of these sectors, so Whirlpool�could be a tremendous way to play this.

They trade for only 16.5 times earnings, they've got a 2% dividend. Year to date, they may be up 114%, but they still only trade for 16.5 times cash and a pretty fair multiple, considering this potential demand you can unlock.

Lumber Liquidators, a company that looks pricy, but they're still growing that income at 80% over the last 12 months, and there's a lot of room left for them to run. They're still a small player in this space, and there's a huge dearth between the homes we're building and new households created.

Fellow contributor Morgan Housel has touched base on this extensively. That's a huge potential for Lumber Liquidators to continue putting up another 100% year, as crazy as it sounds.

So there are still a lot of great ways to play this space. I think Home Depot's done a tremendous job. I don't think a lot of people saw this performance coming at the beginning of the year, but I don't think they're the best stock for 2013 because I just think their multiples ran ahead of them a little bit.

That's not to say you can't profit, though. There are still great ways to play it. Fools, thanks for tuning in, and Fool on!

Concur FY Q2 Revs, EPS Edge Street Views; Names New CFO

Concur (CNQR), which makes employee spend management software, posted revenue for its fiscal second quarter ended March 31 of $72.8 million, up 8% sequentially, 17% from a year ago and ahead of the Street at $70.1 million. Non-GAAP profits of 20 cents a share beat the Street by two cents.

For Q3, the company sees non-GAAP EPS of 17 cents a share, which is below the Street at 20 cents. The company said the non-GAAP figure includes 4 cents a share of interest expense and fees related to a recent convertible note offer.

For the full fiscal year ending September, the company sees non-GAAP profits of 76 cents a share, below the Street at 80 cents; the forecast includes 8 cents a share in expenses related to the convert.

The company also said it has named Frank Pelzer as CFO, succeeding John Adair, who is retiring. Pelzer since 2007 has been a director in the software investment banking group at Deutsche Bank.

CNQR in late trading is unchanged at $43.27.

Startup whiz Ori Allon launches mysterious people-powered local startup - 02:53 PM

( -- Ori Allon, who sold his previous two startups to Google and Twitter, is stepping out of his comfort zone with his mysterious new venture called Urban Compass. Instead of relying wholly on algorithms, he’s building a human-powered, hyper-local startup that uses algorithms to mobilize a team of people on the ground. He’s taking on a partner for the first time and he just raised ahuge seed round of $8 million.

Allon isn’t saying what exactly New York City-based Urban Compass is trying to tackle. That will come around March when he starts rolling out Urban Compass in New York. The website says only that Urban Compass is trying to help people, “make their most important personal decisions.”

More from
  • Why 2012 hasn't been such a bad year for cleantech
  • PRO: Cloud computing 2013: how to navigate without a map
  • Swipely hits its stride combining payments, analytics and loyalty
  • Subscribe to

But there’s a number of reasons to keep track of what Allon is doing based on his track record, investors and his partner, Goldman Sachs banker Robert Reffkin. And I have a few thoughts on what Allon might be trying to tackle, which I’ll explain later.

First, a little background on Allon and Reffkin. Allon sold his Orion Search Engine to Google in 2006 after starting the project as a PhD student at the University of New South Wales in Sydney. Orion managed to return results on pages that didn’t necessarily relate to a searched keyword, something Google has integrated into its search engine. Allon then launched Julpan, a Microsoft-backed startup that parsed online social activity and surfaced fresh and relevant content to users. After Twitter bought Julpan last year, Allon became the head of Twitter’s New York engineering office and Julpan became the basis for Twitter’s discovery engine.

Six months ago, Allon got together with his friend Robert Reffkin, a banker with Goldman Sachs. The two had met years earlier at a conference when Reffkin was a fellow at the White House. The pair decided to start their own company, combining Allon’s engineering skill with Reffkin’s ability to mobilize people.

In addition to working at Goldman, Reffkin founded the Bronx Success Academy, an elementary charter school in 2006 and also established New York Needs You, a non-profit that provides mentoring to first-generation college students. While a couple stories on Urban Compasshave focused on Allon’s credentials, it’s actually Reffkin’s background that might be more telling about the company’s ambitions.

Allon said the company will be a mix of hardcore engineers in the office but Urban Compass workers on the ground who form a human network. Unlike his previous projects, Allon said the problem he’s tackling can’t be handled through technology alone. It’s something that requires individual workers, who can be called upon instantly, much like taxi drivers. Allon compared Urban Compass to transportation startup Uber, but said his venture will be even more complex.

“Mobilizing people is a big part of it. There are certain people that are needed at certain times. We can make it more efficient and optimize the process,” he said.

He said if all goes well, Urban Compass will be tackling a huge market that hasn’t had much innovation. He believes it could be something that could be worth billions some day. It will initially target big cities but could spread to the entire country at some point. The idea, along with Allon’s resume, has captured the imagination of some big name investors. Goldman Sachs is making its first seed investment in Urban Compass and is joining Founders Fund and Thrive Capital, Ken Chenault, the CEO of American Express and ZocDoc’s CEO Cyrus Massoumi.

So what exactly is Allon and Reffkin building? My best guess is it’s an education-related startup that provides on demand tutoring or mentoring services. That’s based on Reffkin’s work with Bronx Success Academy and New York Needs You. Reffkin is actually listed as the CEO of Urban Compass and he told me briefly that the company will benefit younger users first.

“In founding a charter school and a non-profit my passion was to build things for New York,” said Reffkin. “Six months ago, we got together to put (Allon’s) engineering talents and my strategy talents together. Our criteria is: what would help a lot of people in New York City and something we could build together. The reason why this is exciting is I believe this will improve the lives of a tremendous number of New Yorkers, particularly younger people.”

Another co-founder for Urban Compass, according to LinkedIn, is Michael Weiss, a former product and strategy guy at Airbnb who previously was a founding member of non-profit Pencils for Promise, which builds schools in the developing world.

If Urban Compass does go after the education market, it’ll have some competition. Companies like InstaEdu and  TutorSpree provide a mix of tutoring and mentoring services.

I’ll be curious to see what spin Allon can add to this idea. He said he was interested in making this a very local service, and he cited some of the innovation that went into Google Street View as one of his inspirations. He said hyper local to him means being everywhere, down to the “apartment level, restaurant level and street level.” Allon said the majority of Urban Compass’ workers will be full-time on the street workers rather than engineers in the office. He said the company’s product will not be mobile first but will be accessed on all kinds of devices though mobile devices will factor heavily in mobilizing Urban Compass’ employees. 

I may be completely off and Urban Compass may turn out to be something other than an education startup or tutoring provider. It could be something broader involving child care. Or it could be a local decision engine, helping people find services and information nearby. That would fit more with the company’s website, which offers visitors these words: “Search. Explore. Decide.”

I’ll be still be interested to see what Allon and Reffkin can come up with. This is a huge amount of seed money for a new startup and with Allon’s track record, there’s a good bet he’s got more good ideas up his sleeve. Also, there are a lot of growing opportunities in local and location-based services, from crowd-sourced employment apps and markets like Gigwalk and Zaarly to more traditional local search and recommendation services like Yelp, Google and Foursquare. We’re still early in the process of bridging the offline and online worlds, something Urban Compass sounds like it could help address.

Another Fat Cat Pay Revolt!

LONDON -- The London-based international advertising agency�WPP�(OTC: WPPGY) -- the largest in the world -- has come under fire at this year's annual general meeting, as the top boss's pay award has been overwhelmingly opposed by shareholders.

The 9.7 billion pound company, ranked 27th in the U.K.'s flagship FTSE 100 index of top shares, released a trading update for the first four months of the year, showing a 7% rise in revenues in sterling, or 5% in U.S. dollars. That's $5.1 billion, which is not small change by any reckoning.

Like-for-like sales are up 4%, and profits and margins are ahead of plan and up on last year. So what was the problem?

Well, against an austere economic background, investors are already a little peeved that pay for FTSE 100 executives has grown 10% over the past year to an average package of 3.7 million pounds. That's over a period when the FTSE has been falling, most people's incomes are being squeezed, and stock portfolios are losing ground.

A 60% rise?!
That average rise for top bosses is dwarfed by the proposed pay deal for WPP chief executive Martin Sorrell. His basic salary rose by 30% to 1.3 million, but once all bonuses are included, he is in line for a massive 60% boost, taking his total remuneration for the year to 6.8 million pounds.

But a number of major investors have today voted against the award, as it is way in excess of the returns enjoyed by shareholders, who are in line for less than 4% in dividends this year and have seen the share price falling in recent months. At a price of 760 pence, the shares are on a forward price-to-earnings ratio of only 10.

Shareholder revolts at other companies have led to resignations, with�Trinity Mirror�boss Sly Bailey being forced out and banks like�Barclays�feeling serious discontent.

A massive rejection
With the support of chairman Philip Lader, the argument is that Mr. Sorrell needs to be paid in line with other top media company bosses in order to keep him at the helm, and the poor soul hasn't had a pay rise since 2007.

But that argument has now been rejected by a massive 60% vote at the AGM. Scandalously, shareholders votes are not binding on U.K.-listed companies, though there are signs they may be made so by 2014. So how is the WPP board going to react to this serious snub? According to the chairman, the board will carefully consider the result, consult, move forward, something about "the best interest of shareholders," etc. In other words, we have no idea.

But there are more ways to get your hands on millions than taking the helm of a major FTSE 100 company, as the Motley Fool's free report "10 Steps To Making A Million In The Market" explores.

Want to learn more about shares, but not sure where to start? Download our latest guide -- "What Every New Investor Needs To Know" -- it's free. The Motley Fool is helping Britain invest. Better.

Further investment opportunities:

  • Sainsbury Beats Tesco
  • A Rising Telecoms Dividend
  • 8 Shares Held By Britain's Super Investor

Top Stocks To Buy For 12/5/2012-5

GTx, Inc (NASDAQ:GTXI) witnessed volume of 672,357 shares during last trade however it holds an average trading capacity of 145,403 shares. GTXI last trade opened at $3.50 reached intraday low of $3.44 and went +20.36% up to close at $4.02.

GTXI has a market capitalization $252.29 million and an enterprise value at $161.34 million. Trailing twelve months price to sales ratio of the stock was 17.97 while price to book ratio in most recent quarter was 2.81. In profitability ratios, net profit margin in past twelve months appeared at -209.19% whereas operating profit margin for the same period at -205.51%.

The company made a return on asset of -26.80% in past twelve months and return on equity of -51.02% for similar period. In the period of trailing 12 months it generated revenue amounted to $14.04 billion gaining $0.30 revenue per share. Its year over year, quarterly growth of revenue was 75.90%.

According to preceding quarter balance sheet results, the company had $90.96 million cash in hand making cash per share at 1.45. The total debt was $0.00 billion. Moreover its current ratio according to same quarter results was 18.98 and book value per share was 1.43.

Looking at the trading information, the stock price history displayed that its S&P500 52 Week Change illustrated 4.11% where the stock current price exhibited up beat from its 50 day moving average price of $3.49 and remained below from its 200 Day Moving Average price of $4.24.

GTXI holds 62.76 million outstanding shares with 21.20 million floating shares where insider possessed 73.09% and institutions kept 19.50%.

Is Monster Worldwide Going to Burn You?

There's no foolproof way to know the future for Monster Worldwide (NYSE: MWW  ) 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 Monster Worldwide 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 Monster Worldwide 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. Monster Worldwide's latest average DSO stands at 132.8 days, and the end-of-quarter figure is 128.1 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 Monster Worldwide look like it might miss its numbers in the next quarter or two?

The numbers don't paint a clear picture. For the last fully reported fiscal quarter, Monster Worldwide's year-over-year revenue shrank 12.1%, and its AR grew 3.1%. That's a yellow flag. End-of-quarter DSO increased 17.3% over the prior-year quarter. It was down 3.2% versus the prior quarter. That demands a good explanation. 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 Monster Worldwide to My Watchlist.

Google kills 250,000 search links a week

NEW YORK (CNNMoney) -- It may surprise you that there is a rapidly growing number of websites Google intentionally hides from you. Google doesn't want that to be a surprise anymore.

The search giant said Thursday it would begin chronicling the thousands of requests it receives daily to take down search results that link to copyrighted material. Google (GOOG, Fortune 500) said it receives upwards of 250,000 requests to remove links to pirated content each week.

When Google receives notifications from copyright holders that it is linking to a website that violates their copyright, Google undergoes a process that usually results in the removal of search results that link to that website.

The number of requests to take down links has soared in recent years. In fact, Google said it is now receiving more removal requests each week than it received in all of 2009. Last month, Google got 1.2 million such requests from 1,000 copyright holders to remove links from 23,000 websites.

For the first time, the company added all of the removal requests for search since July 2011 on its online transparency report. The two-year old report initially just displayed government requests to take down content from Google's servers. But it now includes copyright holders' requests, which dwarf the number of take-down requests from governments.

It's a lot to keep track of, but Google has good reason to want the public to know about removal requests for pirated search links.

In January, the company fought hard -- and won -- against two congressional bills that would have cracked down on copyright infringement by forcing companies such as Google to refrain from linking to those sites.

The current U.S. anti-infringement law, the Digital Millennium Copyright Act, puts the onus on copyright holders to notify Google when it is displaying or linking to pirated material. The controversial Stop Online Piracy Act and Protect Intellectual Property Act would have shifted that onus to Google, putting it on the hook for content that it links to.

Google is trying to demonstrate that the current system works just fine. Despite the incredible ramp-up in requests, its average turnaround time for removing content that infringes on copyrights is 11 hours.

"We believe that the time-tested 'notice-and-takedown' process for copyright strikes the right balance between the needs of copyright owners, the interests of users and our efforts to provide a useful Google Search experience," said Fred von Lohmann, Google's senior copyright counsel.

When copyright holders believe there is content Google is linking to that violates their copyright, they first fill out a form on Google's website. Google's computers will then try to determine whether the claim is legitimate. After an automated review, a human will take a look at the request as well.

Google said it ultimately approves about 97% of the requests. But the company insists that it is working hard to weed out illegitimate claims.

For instance, Google said it recently rejected a request from a major entertainment company that asked the search leader to remove a result that linked to a newspaper's negative review of a TV show.

Determining what's kosher and what's not puts Google's team of copyright lawyers in a difficult position, especially as the requests grow astronomically. But the group, based in its Silicon Valley headquarters, would rather maintain the status quo than face government intervention.

"We've been working with copyright owners for years to make this an efficient process," said van Lohmann. "As policy makers look at potential copyright law changes, we want to make sure they have the benefit of actual data." 

How To Earn Money Buying And Selling Used Cars Part 3

In the first section of this mini series on how to make money buying and selling used cars, we looked at what personal skills someone wanting to be profitable in this business would have to have. In the second part we looked at the best sites to locate such a business and in this section, we will look into acquiring our stock – our cars or trucks.

So, where can you get second-hand cars or trucks from? You will probably get people coming in off the street trying to sell you their vehicles. That is usually a good supply of stock, if you carry out the necessary checks to make sure that they are not stolen, but this source will dry up from time to time – particularly in the summer.

Other sources to obtain stock are private auction houses, bankruptcies, bereavements and government auctions, where cars or trucks are often very heavily discounted.

At private auctions, anyone can bid for the lots that go under the hammer. Sometimes there is a minimum selling price, sometimes there is not, but the vendor must pay to put his car in the auction anyway, which means that he has a vested concern in selling it to recoup this cost. If a car does not reach the minimum bid, try talking to the seller privately, you might pick up a real bargain.

If you are oblivious of local car auctions where you live, try looking in the local paper under “Up And Coming Events” or in the Yellow Pages under “Actions” or “Car Auctions” or go on line and make the same query including your region.

Government auctions are great places to buy supply of any type, including vehicles and machinery. These goods are usually either government surplus (new and used) or assets seized from the public. In The USA, it is best to register your interest in the auction catalogues of the two main governments auctioneers: the Department of Defense and the General Services Administration (GSA). Other countries have similar bodies, which your local authorities can assist you to get in contact with.

These government departments auction off tens of thousands of cars or trucks or every imaginable description every year in the USA. Cars and other vehicles form a large percentage of these auctions in monetary value – you would honestly find it hard to comprehend how many cars or trucks the government owns in the name of the people, from limos to lawnmowers. They all have to be replaced on a regular basis according to a schedule and the old ones are sold off.

The unbelievable fact that works so well in the business person’s favour, is that the government is more engrossed in clearing out their sheds of all this gear to make room for more than it is in turning a profit on it. All you need to do is register with the Department of Defense and the GSA and they will send you their auction catalogues automatically. This way you will have time to inspect the goods before you bid.

The next part in this mini series will discuss how you can work out the value of the items that are being auctioned off.

Owen Jones, the writer of this piece writes on a variety of topics, but is currently involved with remote car alarms. If you would like to kcurrently more, please visit our website at Laser Temperature Gun.

Wednesday, December 26, 2012

Hawaiian Airlines Takes Off on Earnings

Hawaiian Airlines (HA) jumped 10% after-hours as the company beat earnings expectations as it struggled with high fuel costs, and saw demand begin to pick up in Japan.

The airline posted 59 cents of EPS, 14 cents better than expectations. Operating income rose 55% year over year even though the company’s average fuel costs jumped 61%.

“Strong demand in each of the major geographies we serve, continued cost control and some small but welcome easing of fuel prices all played a part,” said CEO Mark Dunkerley. “Particularly noteworthy has been the return of traffic on our services to Japan.� Our results on these routes would qualify as good in any year, let alone the year in which an earthquake and tsunami took such a large human and economic toll.”

4-Star Stocks Poised to Pop: AVX

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, electronic component manufacturer AVX (NYSE: AVX  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at AVX's business and see what CAPS investors are saying about the stock right now.

AVX facts

Headquarters (Founded)

Fountain Inn, S.C. (1972)

Market Cap

$2.19 billion


Electronic components

Trailing-12-Month Revenue

$1.67 billion


Chairman/CEO John Gilbertson
CFO Kurt Cummings

Return on Equity (Average, Past 3 Years)



$741.3 million / $0

Dividend Yield



Amphenol (NYSE: APH  )
Molex (Nasdaq: MOLX  )
TE Connectivity (NYSE: TEL  )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 94% of the 129 members who have rated AVX believe the stock will outperform the S&P 500 going forward. These bulls include Motley Fool co-founder Tom Gardner (TMFTomG), who is ranked in the top 10% of our community, and FoolSolo. �

Earlier this month, Tom Gardner listed several of AVX's positives: "Strong financials. Dividend payor. Serving growing markets. Well managed. Double-digit ROE. Tough year for the stock renders it cheap for long-term investors."

In fact, AVX currently sports a P/E of 8.7. That represents a discount to competitors like Amphenol (14.8), Molex (14.0), and TE Connectivity (11.1).

CAPS member FoolSolo expands on the outperform argument:

I honed in on AVX Corp. because it has some compelling numbers, and it is one of with a dividend. ... Judging by other news about the company, they appear to be one of the leaders in various technologies, including surface mount capacitors, ultra low-profile LED lighting connectors, and other passive and interconnect components. But they appear to be getting dumped along with the bath water.

What do you think about AVX, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Want to see how well (or not so well) the stocks in this series are performing? Follow the new TrackPoisedTo CAPS account.

Top Stocks For 3/5/2012-13

PositiveID Corporation (Nasdaq:PSID) a developer of medical technologies for diabetes management, clinical diagnostics and bio-threat detection, announced that it has been awarded a new international patent (WO2006/029387) “Handheld and Portable Microfluidic Device to Automatically Prepare Nucleic Acids for Analysis,” by the World Intellectual Property Organization. The new patent, awarded to the Company’s MicroFluidic Systems (”MFS”) subsidiary, covers the rapid, automated, and portable sample preparation of nucleic acids, such as DNA and RNA. This technology can be applied to the detection of pathogens in both field and clinical environments to quickly purify a patient or environmental sample for accurate diagnosis. The technology purifies samples to be run on commercial PCR instruments.

PositiveID Corporation develops unique medical devices and biological detection systems, focused primarily on diabetes management, rapid medical testing and airborne bio-threat detection.

Crown Equity Holdings Inc., (CRWE)

Crown Equity Holdings, Inc. together with its digital network, currently provides electronic media services specializing in online publishing, which brings together targeted audiences and advertisers. Crown Equity Holdings Inc. offers internet media-driven advertising services, which covers and connects a range of marketing specialties, as well as search engine optimization for clients interested in online media awareness.

Crown Equity Holdings, Inc. announced that it has extended its CRWENEWSWIRE global platform web presence and is now publishing online news and information to the following countries: Argentina, Australia, Brazil, China, France, Germany, India, Ireland, Italy, Japan, Malaysia, Mexico, New Zealand, Russia, Singapore, South Africa, South Korea, Spain, Taiwan, United Arab Emirates and the United Kingdom, using their specific country code domain and native language.

Web costs are usually very cheap, which makes it a very good market place for companies. Money spent on it is very minimal and saves on a lot of cost. This is a very good starting place for companies with little capital or those who are new in the market and need to be popular. The internet gives you the power to make money for almost no investment. The best part is that it allows your business to be seen by potentially everyone in the whole world, not just the customers that happen to walk right into your brick and mortar location.

For more information, visit

ICU Medical, Inc., (Nasdaq:ICUI), a leader in the development, manufacture and sale of innovative medical technologies used in I.V. therapy, oncology and critical care applications, announced results for the second quarter and six months ended June 30, 2011. Second quarter of 2011 revenue increased 13.0% to $77.8 million, compared to $68.9 million in the same period last year. Net income for the second quarter of 2011 was $9.5 million, or $0.67 per diluted share, as compared to net income of $7.7 million, or $0.56 per diluted share, for the second quarter of 2010.

ICU Medical, Inc. develops, manufactures and sells innovative medical technologies used in I.V. therapy, oncology, and critical care applications.

Cleantech Transit, Inc. (CLNO)

Cleantech Transit 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.

The most efficient way for an industry to make use of energy from waste biomass is to install cogeneration units. Cogeneration means electricity generation together with some other use of the energy. The industry burns the biomass for purposes such as heating buildings or boilers. In addition, it uses any excess heat to generate electricity. It may use the electricity itself or sell it to the local utility company.

The simplest way to get energy from biomass is to burn it. To generate electricity, the heat has been traditionally used to produce steam that powers a steam turbine. However it is more efficient to use hot gases from burning biomass directly to power a gas turbine. Improved gas turbines are now being produced, and some experts believe that they will revolutionize the production of energy from biomass.

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.

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

StemCells, Inc. (Nasdaq:STEM) announced that it has relocated its corporate headquarters and U.S.-based research and development operations to 7707 Gateway Blvd, Newark, CA 94560, USA. The new facilities comprise newly constructed, custom designed laboratory and office space, and will house the majority of the Company’s U.S. workforce. The Company’s new main telephone number is (510) 456-4000.

StemCells, Inc. is engaged in the research, development, and commercialization of cell-based therapeutics and tools for use in stem cell-based research and drug discovery.

Tuesday, December 25, 2012

This Is 1 Incredible CEO

The Motley Fool readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I've decided to make it a weekly tradition to also point out corporate leaders who are putting shareholder interests and those of the public first and are generally deserving of kudos from investors. For reference, here is last week's selection.

This week, we'll take a closer look at how CEO Gregory Wasson of Walgreen (NYSE: WAG  ) has waded through a sea of bad news yet still continues to deliver for both shareholders and the American workforce.

Kudos to you, Mr. Wasson
Go ahead and scratch your head, because that's going to be the initial reaction for most investors who are familiar with Walgreen and its recently ended spat with pharmacy-benefit-management services company Express scripts (Nasdaq: ESRX  ) .

Express scripts sued Walgreen over breach of contract last year for purportedly disparaging the company and attempting to lessen the amount of new enrollees in Express scripts' network. Although Express scripts dropped the suit in early June, the damage has been done. Millions of consumers within Express scripts' network have been forced to find new prescription homes with CVS Caremark (NYSE: CVS  ) and Rite Aid (NYSE: RAD  ) , both of which have recently noted pharmacy growth thanks to the Walgreen-Express scripts dispute.

Despite all of this, Walgreen still has a solid plan to grow its business, a plan to reward shareholders for the patience, and a way to get America moving again.

Walgreen's plan to boost growth once again was outlined last week when it formed a strategic partnership with Alliance Boots to become the world's first pharmacy-driven health and well-being retailer, as well as a large purchaser of prescription medicines. Wall Street might be iffy about this deal's prospects, but given managements' insistence that cost synergies would run $100 million-$150 million and earnings would be accretive by $0.23-$0.27 within the first year, I'd say I'm sold on its success. This deal has the potential to invigorate growth beyond what it lost from Express scripts with promises of $1 billion in cost synergies by 2016.

A step above his peers
But I'm not done! Not only does Mr. Wasson have a plan to get Walgreen back on track, but he plans to boost shareholder morale by putting more money in their pockets yet again. Considering the exodus of Express scripts customers, Walgreen could very easily have maintained its dividend and conserved its cash. Instead, Walgreen raised its dividend by 22% to $0.275 quarterly, marking the fourth major dividend increase in just the past three years. Just take a look at this nearly exponential dividend growth in recent years:

Source: Dividata. *Estimated payments assuming $0.275 quarterly payout.

Houston, we are go for rewarding our shareholders! Walgreen has now raised its dividend for 37 consecutive years and has made it evident that rewarding shareholders with a payout ratio of 30% to 35% of its earnings is part of its growth plans. Walgreen's new yield of 3.7% absolutely trounces its peers'. CVS yields only 1.4%, Rite Aid is too busy trying to dig its way out of nearly $6 billion in net debt to worry about rewarding its shareholders with a dividend, and even consumer do-it-all Wal-Mart (NYSE: WMT  ) , whose low-cost pharmacy business is a primary stop for low-to-moderate income families, only offers a yield of 2.4%.

Two thumbs-up
Finally, with unemployment figures running above 8% and employment growth slowing, I wouldn't have been surprised to see Walgreen reducing its staff to conserve money. Oh how wrong I would have been. Although Walgreen has seen sporadic layoffs in Florida, its new store additions in Chicago that added 600 jobs in 2011 more than offset the jobs it has jettisoned recently. Add Walgreen to the list of employers helping to put America back to work.

Wasson may be unpopular given that Walgreen's stock is near a new 52-week low, but he has a plan to get Walgreen growing again, has more than enough cash to reward shareholders for sticking around, and is putting Americans back to work. I'd call that a resounding two thumbs-up to you Mr. Wasson.

Do you have a CEO you'd like to nominate for this prestigious weekly honor? Shoot me an email and a one- or two-sentence description of why your choice deserves next week's nomination, and you just might see your nominee in the spotlight.

Here at the Fool, we love management teams that have strong track records of rewarding their shareholders, which is why I invite you to download a copy of our latest special report, "Secure Your Future With 9 Rock-Solid Dividend Stocks." This report contains a wide array of companies and sectors that are likely to keep your best interests in mind, just like Walgreen, whether the market is up or down. Best of all, it's completely free for a limited time, so don't miss out!

Top Stocks For 4/3/2012-12

RG Barry Corp. (Nasdaq:DFZ) plans to announced its third quarter/nine-month operating results and conduct a conference call and Webcast on Tuesday, May 10, 2011. The Company will issue a news release detailing its performance prior to the market open. Senior management will then discuss its operating results and business outlook during a conference call/webcast planned for 9 a.m. Eastern Daylight Time. To listen via the Internet, log on to

R.G. Barry Corporation, together with its subsidiaries, engages in designing, sourcing, marketing, and distributing accessory footwear products in North America. R.G. Barry Corporation was founded in 1945 and is headquartered in Pickerington, Ohio.

Majestic Gold Corp. (MJS.V)

Since the beginning of recorded history, gold has been used in ornamentation, jewelry, and sculptures around the world. However, gold is not just used to make jewelry; it also has plenty of lesser known uses. For example, gold is used to make dental fillings, coins, circuitry, and much more.

Majestic Gold Corp. engages in the exploration and development of mineral properties in China. The company focuses on its gold project located in the prolific gold region of Song Jiagou in eastern Shandong Province. Majestic Gold Corp. is headquartered in Vancouver, Canada.

The industry uses of gold include making thread for embroidery, special reflective layers on expensive CDs, and insulation for automobiles. In photography, gold toners are used to alter the color of prints. Gold is used to make a protective coating on many artificial satellites because it is a good reflector of electromagnetic radiation. It is also used to make thermal protective faceplates for astronauts.

Majestic Gold Corp. is pleased to provide a progress update on the new mill construction for the company’s flagship Song Jiagou project.

The mill is in the commissioning stage and has begun running ore through the mill in order to access the efficiency of the mill. Majestic expects to run at an initial throughput rate of 3,000 tonnes per day and progressively move upwards towards full capacity of 6,000 tonnes per day once the mill is running at optimal efficiency.

In medicine, gold salts can be used to treat conditions like arthritis due to their anti-inflammatory properties. In dentistry, gold alloys are used for restorations like crowns and permanent bridges. Owing to its malleability, gold produces results that are more satisfactory than those produced by porcelain crowns. Colloidal gold is used in research in the fields of medicine, biology, and materials science.

Ore that has been stockpiled at the new mill in order to streamline the commissioning process is currently being processed as part of the commissioning stage. In addition, Majestic is pleased to announce that the tailings dam is fully completed and all tailings lines and water return systems are in place and now in use.

They are excited by the prospect of getting the new mill on line and being in a position to significantly increase production levels. This represents a significant milestone in their transition from exploration to production.

For more information about Majestic Gold Corp. visit its website:

National Health Partners, Inc. (NHPR)

Health care costs have been rising for several years. As health care costs continue to rise, there has been steady erosion in the proportion of workers covered under employer-based plans, as well as in the adequacy of such coverage. Workers forced to turn to the individual insurance market often find coverage unaffordable or unavailable, while families with employer coverage face ever-rising deductibles and other cost-sharing burdens.

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

The runaway cost of health care has long been a concern, largely because of the huge number of Americans — estimated at 47 million — who are uninsured. But health-care costs are re-emerging as an economic and political issue in part because of the role they play in the stubborn problem of stagnating wages.

The company’s primary target customer group is the 47 million Americans who have no health insurance of any kind. The company’s secondary target customer group includes the millions of Americans who lack complete health insurance coverage. The company is headquartered in Horsham, Pennsylvania.

National Health Partners, Inc. recently announced that it has signed a new agreement with a major marketing company that will significantly enhance the growth of its CARExpress membership base.

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

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

For more information about National Health Partners, Inc visit its website

Hollysys Automation Technologies, Ltd (Nasdaq:HOLI) a leading provider of automation and control technologies and applications in China, announced that it will report financial results for its fiscal 2011 third quarter ended on March 31, 2011 before the market opens on Tuesday, May 10, 2011. The Company will host a conference call at 9:00 a.m. ET /9:00 p.m. Beijing Time on May 10, 2011, to discuss the financial results for the fiscal 2011 third quarter and its business outlook.

Hollysys Automation Technologies Limited provides automation and control technology and applications in the People�s Republic of China. The company was founded in 2006 and is headquartered in Beijing, the People�s Republic of China.

Sapient Corp. (Nasdaq:SAPE) announced that it will release results for the first quarter ended March 31, 2011 on Thursday, May 5, 2011 after the close of regular market hours. Following the release, Alan J. Herrick, Sapient’s president and chief executive officer, and Joseph S. Tibbetts, Jr., senior vice president and chief financial officer, will discuss the results in a conference call beginning at 4:30 p.m. ET, which will also be broadcast live via the Internet.

Sapient Corporation helps clients to leverage marketing and technology to transform their businesses. Sapient Corporation was founded in 1990 and is headquartered in Boston, Massachusetts.

Qiagen Beats on EPS but GAAP Results Lag

Qiagen (Nasdaq: QGEN  ) reported earnings on Jan. 31. Here are the numbers you need to know.

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

Compared to the prior-year quarter, revenue improved significantly and GAAP earnings per share shrank to zero.

Margins contracted across the board.

Revenue details
Qiagen notched revenue of $334.4 million. The 22 analysts polled by S&P Capital IQ anticipated a top line of $321.9 million. Sales were 17% higher than the prior-year quarter's $286.0 million.

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

EPS details
Non-GAAP EPS came in at $0.31. The 19 earnings estimates compiled by S&P Capital IQ forecast $0.28 per share on the same basis. GAAP EPS dropped to zero from the prior-year quarter's $0.15.

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

Margin details
For the quarter, gross margin was 62.8%, 370 basis points worse than the prior-year quarter. Operating margin was 19.0%, 530 basis points worse than the prior-year quarter. Net margin was -0.1%, 1,280 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $285.1 million. On the bottom line, the average EPS estimate is $0.20.

Next year's average estimate for revenue is $1.24 billion. The average EPS estimate is $1.01.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 110 members out of 120 rating the stock outperform, and 10 members rating it underperform. Among 40 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 38 give Qiagen a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Qiagen is outperform, with an average price target of $17.22.

  • Add Qiagen to My Watchlist.

Apple: Bloomberg Relates Latest Cook Trip to China

Bloomberg’s Edmond Lococo this morning reports from Beijing on a visit over the weekend by Apple’s (AAPL) chief executive Tim Cook, who apparently promised to increase Apple’s investment in China, according to a local Apple spokesperson.

Despite a small number of retail stores, just six, Lococo quotes a marketing consultant based in China, David Wolf, as saying Apple “has done a great job” replicating in China the retail success it’s had in the U.S.

Wolf opines perhaps increased investments by Apple may include the company owning manufacturing or R&D facilities in China.

Apple shares today are up 13 cents at $596.18.


Does big data mean big risks for businesses? - 12:42 PM

( -- As big data becomes a potential game-changer for businesses, the security risks become even greater. Now that businesses have collected and stored all of this data, what are they going to do with it? How are they going to protect it? And most importantly, how are they going to use if safely and legitimately?

Users are increasingly alarmed by the amount of data being collected, with whom the data is being shared and how it is being used. Clearly, there needs to be better engagement among key stakeholders and joined-up thinking throughout organizations — from the chief marketing officer to the IT department — to develop guidelines and best practices for the usage, storage and transfer of data both inside and outside the business.

More from
  • A database to help the military share its airwaves
  • 955 Dreams tackles music discovery with Band of the Day
  • 10 ways to deal with cybersecurity in a smart grid world
  • Subscribe to

From the information security standpoint, the key issues surrounding big data tend to fall into the following five areas:

Data aggregation and big data analytics promise businesses a treasure trove of marketing intelligence. The ability to target customers based on the combination of past buying patterns, sentiment and previously “private” preferences are the Holy Grail for marketers. But business leaders eager to adopt these new technologies for business benefit will be well advised to understand the legal and other restrictions that may apply across multiple jurisdictions. They should also implement privacy best practices and design them into the analytics programs, build in transparency and accountability, and never lose sight of big data’s effect on people, processes and technology.

It goes without saying that securing both the data inputs and big data outputs present a key challenge that can impact not just potential business campaigns and opportunities, but also have far reaching legal implications. The answer? Stay agile and ideally anticipate changes to regulation rather than being caught when they suddenly appear.

That being said, it is still early days and we have not yet seen a tremendous amount of external requirements mandating that businesses assure information integrity. However, the sheer scale of information processed by businesses remains on the increase and with big data analytics bringing business decisions closer and closer to raw data, the quality of information has become increasingly important. If the same sophisticated analysis can be applied to relevant security data, big data may even be used to improve information security.

While such solutions may not yet appear to be widespread, you can be assured they are well on the way with big data analytics already being used for fraud prevention, cyber security detection, social analysis and real-time multimodal surveillance.

Steve Durbin is global vice president of the Information Security Forum (ISF). His main areas of focus include the emerging security threat landscape, cyber security, consumerization and outsourced cloud security. Previously, he was senior vice president at Gartner. 

Image courtesy of Flickr user KellBailey.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

  • NewNet Q4: Platform mania and social commerce shakeout
  • Connected world: the consumer technology revolution
  • Social media in Q1: commerce and discovery dominated

Retail Winners and Losers; Sales Rising, But At What Price?

Mall traffic was strong over Christmas weekend, but lots of stores were offering the kinds of discounts that don’t bode well for margins, writes FBR Capital Markets analyst Anna Andreeva in a note. In fact, Andreeva noticed numerous things that raised concerns.

“While traffic levels seemed strong, more than ever consumer shops were on sale, and inventory levels in the channel continue to look elevated. Despite easier comparisons, we think December to date has decelerated versus a very strong November for retailers (we think Black Friday was the peak, and mall traffic levels have been running in the negative 1% to negative 3% range since then). In addition, warm weather across most markets has been a negative for sales of seasonal categories such as outerwear and sweaters (especially in the Northeast, although weather finally broke over the weekend with potentially some pent-up demand).”

Andreeva was nonetheless impressed by what she saw at a couple of retailers. American Eagle Outfitters (AEO) appeared to have run through its relatively high second-half 2011 inventory during the holiday season and could post big comps. And Abercrombie & Fitch (ANF) should be able to match or beat Street expectations for 4.1% same-store-sales growth in the fourth quarter.

Aeropostale (ARO), however, was less impressive: Andreeva saw the company offered a 70%-off post-Christmas sale and thinks its traditional price advantages could be narrowing. Also, Children’s Place (PLCE) could see margins shrink.

Examining the Chances of a Market Crash Before the Mid-Term Elections

If history is any guide, the U.S. stock market will continue falling right into the November elections, decimating any Democratic argument that their party has energized the economy. Given this potential for an electoral drubbing, we can expect massive intervention to prop up the market.

Will the stock market tank heading into the 2010 mid-term election? History suggests yes, but my contrarian sense has some doubts.

Correspondent/analyst B.C. recently posted a chart on his excellent weblog Imperial Economics which shows that historically, stocks decline in the second year of presidential terms: (Click to enlarge)

A second chart maps the Nikkei stock index from its 1989 bubble top, the Great Depression-era S&P 500, the NASDAQ dot-com bubble and pop, and the Shanghai stock index's 2007 peak and decline. Once again, this chart suggests that the 2010 election will occur in a stock market trough:

The black line is the NASDAQ, which peaked in early 2000 (around month 115) and hit bottom in March 2009 about nine years later (around month 225). It topped out in late April 2010 and has been sliding since. If it tracks the other historical indices shown, it will decline for another 36 months (mid-2013).

I have annotated the following chart of the great Bear Market of 1966-1982 to show the presidential elections and the mid-term elections. Rather strikingly, the stock market reached peaks around each presidential election and fell to lows around each mid-term election:

None of this is carved in stone, of course, but it is an interesting correlation to consider.

Meanwhile, the U.S. economy is tanking. B.C. kindly offered up this chart of the ECRI's WLI growth rate, which is dropping to recession levels.

This is the backdrop for either a mini-crash or a full-blown crash of the stock market--something which occurred with alarming regularity in the last Great Bear Market, and even earlier Bear markets, around mid-term elections.

On the other hand, the Obama Administration and the Democratic Congress have faithfully carried Wall Street and the "too big to fail" money-center banks' water since taking office in 2009. Treasury Secretary Geithner, Federal Reserve Chairman Ben Bernanke, Wall Street and the big banks have gotten everything they wanted, with only modest window-dressing of "reforms" for public consumption.

While the Democratic lackeys did the heavy work, the Republican toadies were content to run interference for the bankers, proclaiming their resistance to any reform which would place a burden on business as usual. (Not to Repub obstructors: exactly what were the consequences to the U.S. economy of the financial deregulation you lauded so warmly over the past decade? It crashed.)

Just as gasoline prices magically subside right before elections--at least they did during elections when Republicans held the White House and the majority in Congress-- I have to wonder: what's the point of being able to print hundreds of billions of dollars if you don't goose the stock market to help out your political lackeys in their hour of need?

Don't the Democrats deserve some small consideration from the Fed, the Treasury and Wall Street for providing them everything they wanted in a difficult political environment? Does the Fed really care if the Republicrats or Demopublicans are in the majority? Perhaps they prefer some form of stalemate, as this leads to a comfortable deadlock in which no meaningful regulatory legislation gets passed.

As it stands, the Democrats face a potential wipeout in November. If the stock market crashes in July, August and September, that would seal a Democratic defeat of potentially epic proportions. If I were in the Fed (or Treasury), and my compliant political lackeys were facing an electoral defeat of epic proportions, then I might conclude that a crashing stock market might be a wee bit more disruptive than would be good for the status quo.

Look how bearish and choppy the market looks now. If there was ever a market issuing a high, keening plea for massive intervention to stave off a collapse, it's this one:

This is one ugly chart.

About the only bullish technical here is a mildly positive divergence in MACD, which is trending higher even as price declined to new lows. But divergences can continue for quite some time, and that one factor is not much of a bulwark against the tide of bearish technicals.

If I were in the Power Elite tasked with saving the Democrats from a complete rout in the November elections, I would choose to intervene right here, during the low-volume days of summer when intervention has more bang for the buck. I would also choose to intervene right here for technical reasons; if the market is allowed to notch a lower low and break the 1,000 level, then that would very likely trigger a cascade of selling that would be tough to stop.

A much better strategy would be to flood the market with futures buying to drive it up to a marginally higher high--that is, above 1,100. Technically, that would break the downtrend line and create the illusion (if nothing else) of a new uptrend.

Right now would be the perfect time to jab a big fat needle in the market because sentiment is almost universally bearish. Hobby Bears are piling in, grinning with delight at the prospect of such an "easy" trade (piece of cake profits, just go all in short!), while weak long hands are folding their cards and selling.

Nothing would stun this market more than a nice little 50-point rally in the SPX that forced overly-confident shorts to cover. Countering a massive wave of selling is almost impossible, but if the Powers That Be can nip this decline in the bud, so to speak, and force Bears to cover their shorts, then a more orderly decline can be arranged after the election.

Is it really too much to imagine Geithner et al. getting private calls from the White House along the lines of, "Guys, we could really use a hand here with the stock market." After all, propping up the market as a proxy for the U.S. economy has been the strategy all along, and the worst time for the strategy to collapse in a heap is right before the mid-term elections.

The key target, if it were my job to engineer a rally that would last longer than a few days, would be the 1,110-1,130 level of the SPX. Juicing the market above those levels would cause all but the hardiest Bears to cover, and it would trigger gigantic waves of black-box buying as the key levels of resistance would be broken.

If you could print unlimited sums and intervene at will in the market via proxies, how hard would it be to engineer a 50-point rally in the SPX in low-volume July? If you waited until the market fell to new lows, it would be too late and the momentum would gather on the downside. SPX 1,040 to 1,060 is the Rubicon; now is the moment to call in the legions and defend the market with everything you have.

We know intervention is a reality, and we know these key technical levels are in danger of being breached. Put those facts in an election context which is looming as a disaster for the party in power and you get a scenario which should give overly enthused Bears pause.