Friday, November 15, 2013

All You Need to Know About Personal Finance, on 1 Index Card

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tall stack of booksAlamy We could argue that the best advice generally comes in 10 words or less. After all, the classic cliches -- "Don't count your chickens before they hatch," "neither a borrower nor a lender be," "don't hit on a 16 in blackjack" -- manage to pack worlds of wisdom into just a few words. But when it comes to financial wisdom, you need a lot more words, right? Like thousands of them, preferably contained in one of those bright yellow "Dummies" books. You need words like "collateral," "yellow sheet" and "debenture." The kinds of words that would make a banker sit up and take notice. Maybe not. Earlier this week, The Washington Post's Wonkblog took a shot at the financial brevity game when it highlighted the efforts of Harold Pollack, a University of Chicago social scientist who had a long conversation with a personal finance expert, then distilled the wisdom of the ages into 11 sentences that fit on one side of a 4 x 6 index card. He claims that he could have fit everything on a 3 x 5 card, but didn't have one handy. As you might have expected, most of Pollack's advice was pretty simple: he focused on saving money, being careful about transactions where you have insufficient information, and avoiding fees. Then again, unless you want to spend all your time managing your investments, most of your money moves will focus on simplifying -- and clarifying -- where your money goes and what it does. If you want to look at Pollack's card (and, perhaps, print it out!), here's his website.

New Housing Starts, Building Permits Hit Doldrums

The U.S. Census Bureau and the Department of Housing and Urban Development reported this morning that new housing starts in August rose to an annual seasonally adjusted rate of 891,000, an increase of 0.9% from the upwardly revised July rate of 883,000, and a gain of 19% above the August 2012 rate of 749,000. The consensus estimate from a survey of economists expected a rate of around 915,000.

The seasonally adjusted rate of new building permits fell to 918,000, which is 3.8% below the upwardly revised July rate of 954,000 and 11% higher than the July 2012 rate of 827,000. The consensus estimate called for 950,000 new permits.

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Single-family housing starts rose to an annualized rate of 628,000 in August, up 7% from the downwardly revised July rate of 587,000.

Permits for new single-family homes rose 3% in August to an adjusted annual rate of 627,000 from an upwardly revised total of 609,000 in July.

Information on multifamily housing is sketchy for August because the Census Bureau's data does not meet the agency's standards for reliability on buildings of two to four units. Starts on buildings with five or more units fell 9.4% month-over-month in August, but remain 22.9% higher than August 2012.

Thursday, November 14, 2013

PepsiCo: Why Strategy Matters

The long-waged soda wars between Coca-Cola (NYSE: KO  ) and PepsiCo (NYSE: PEP  ) have taken an interesting turn that investors should carefully consider. While it's easy to group the two soda juggernauts together as equals, there are stark differences in leadership direction forming, and each company has made a decision on its future trajectory.

Coca-Cola has decided that it wants to remain a pure-play sparkling beverage company, while Pepsi has decided to break out into food products. The strategic visions of each company are clear and distinct, and investors should weigh each carefully before making a decision to jump in to either stock.

Slow and stodgy? Not so much
It's tempting to assume Coca-Cola and Pepsi to be two lumbering giants, operating in a slow-moving industry with limited avenues for future growth. However, when it comes to growth, investors may well be surprised. Coca-Cola has grown its sales at a compounded annual rate of 10.7% since 2008. Pepsi, meanwhile, has grown revenue by 11%, compounded annually, over the same period.

This strong growth has allowed both Coca-Cola and PepsiCo to deliver outstanding shareholder rewards over the past five years. Both companies are among the market's premier dividend-paying stocks, and dividend growth in recent years has been no exception. Coca-Cola and PepsiCo maintain impressive dividend track records, having increased dividends for 51 and 41 years in a row, respectively.

Where the growth is going forward
On the subject of future growth, there's a clear difference in the paths being charted by Coca-Cola and Pepsi. While Coca-Cola has remained steadfast in its position as a purely sparkling beverage company (evident by the fact that sparkling beverages make up approximately three-fourths of the company's revenue),Pepsi has meaningfully branched out into other product areas.

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Consider that Pepsi's revenue is almost evenly split between food and beverages. Last year, the food-beverage mix was 51% and 49%, respectively.Clearly, Pepsi has decided to be a diversified food and beverage company to take advantage of the ever-evolving consumer landscape. Pepsi now operates a broad snack and food business, with world-class brands such as Frito-Lay and Gatorade under its umbrella.

The company has even made strides in healthier product alternatives through its Quaker Oats brand and specialty products like Sabra hummus and Naked juices. All told, Pepsi now holds 22 brands that each account for at least $1 billion in annual sales.

Case volumes of sparkling beverages in the United States have flat-lined in recent years, which gives me pause about Coca-Cola's future. However, it's absolutely true that international growth remains strong, particularly in the emerging markets. This is where I believe Coca-Cola has a distinct advantage: Its premier brand, indicated by the fact that Coca-Cola and Diet Coke are the top-two selling sparkling beverages, optimally positions it to take advantage of above-average growth in developing economies.

A smaller industry player to consider
Similar to Coca-Cola in terms of product offerings is Dr. Pepper Snapple Group (NYSE: DPS  ) , which, like its big brother, relies exclusively on beverages. Even though Dr. Pepper Snapple is a much smaller competitor, with a $9 billion market capitalization, it offers a compelling investment case. That's because not only does Dr. Pepper Snapple offer more growth potential, due to its much smaller size, but it's also cheaper than its larger rivals on most valuation metrics.

While the S&P 500 index trades for a trailing earnings multiple in the high teens, Dr. Pepper Snapple exchanges hands for just 15 times earnings. It's attractively priced when compared to its industry competitors as well, as its multiple is significantly below Coca-Cola's 20 P/E and Pepsi's 18 P/E. And, Dr. Pepper's 3.5% dividend yield stands above its peers' payouts.

However, it appears Dr. Pepper Snapple trades for a measurable discount for a good reason, which is its underwhelming growth over the past five years. Since 2008, it's grown its sales by just 1.2% compounded annually.Moreover, its balance sheet has deteriorated: The company's shareholder equity and total assets have declined, while its debts have grown. As a result, investors would be wise to focus on its two larger peers.

Valuation and strategy make Pepsi the beverage stock to buy
Pepsi holds a more attractive valuation than Coca-Cola at recent prices, and in my estimation, a better outlook. Consumers are widely adopting healthier lifestyles, shying away from traditional high-calorie sparkling beverages. To be fair, Pepsi still holds many products that don't exactly cater to healthy living, but at the same time it isn't blindly denying the trend to the extent Coca-Cola is.

Pepsi has meaningfully split its business between food and beverages, and within each category, owns plenty of brands that appeal to calorie-conscious consumers. As a result, despite Coca-Cola's attractive emerging market growth potential, I believe the future to be brighter for Pepsi thanks to its visionary management. 

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Panera Bread CEO to Try Food-Stamp Budget

paneraBreadLogoRon Shaich, CEO of Panera Bread (PNRA), will live on a food-stamp budget of $4.50 a day for food for one week.

Shaich is living on the food-stamp budget as part of the SNAP challenge. SNAP is the system that replaced food stamps. Shaich started the challenge on Saturday and is documenting his challenge on LinkedIn (LNKD). Shaich took his $31.50, the average weekly budget for someone on SNAP, to a grocery store and bought cereal, pasta, lentils, chickpeas and some vegetables. He noted that it was a barren shopping cart and that he didn’t know if he would be able to sustain himself on the budget. Shiach spent $25.95 on the food he bought that day, which leaves him with $5.55 to buy food with for the rest of the week, reports Daily Finance.

“I haven't even felt the first pangs of hunger, and I'm already gaining a whole new perspective into challenges that so many people in this country face in dealing with food insecurity,” Shaich wrote on his blog.

Wednesday, November 13, 2013

Can BP Surge Higher?

With shares of BP (NYSE:BP) trading around $46, is BP an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

BP is an integrated oil and gas company. The firm provides its customers with fuel for transportation, energy for heat and light, lubricants, and the petrochemicals products used to make items like paints, clothes, and packaging. It operates in two business segments: exploration and production, and refining and marketing. BP provides energy products to consumers and companies worldwide. Without the oil and gas products provided, many consumers and businesses would not be able to operate on a daily basis.

BP is reportedly in discussions to turn over control of a major oil and natural gas project in Libya, and is apparently negotiating a deal with Libya's state-owned National Oil Co. to transfer a stake of BP's two Ghadames blocks to its subsidiary, the Arabian Gulf Oil Co., and ultimately make it the operator of the venture. The move is a blow to the country, the Wall Street Journal reports, as it is trying to lure companies in to develop Africa's largest oil reserves.

T = Technicals on the Stock Chart Are Strong

BP stock has not made significant progress in recent years. The stock is currently trading near highs for the year. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, BP is trading above its rising key averages, which signal neutral to bullish price action in the near-term.

BP

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of BP options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

BP Options

17.43%

36%

34%

What does this mean? This means that investors or traders are buying a small amount of call and put options contracts as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

December Options

Flat

Average

January Options

Flat

Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a small amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on BP’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for BP look like and more importantly, how did the markets like these numbers?

2013 Q3

2013 Q2

2013 Q1

2012 Q4

Earnings Growth (Y-O-Y)

N/A

233.67%

192.30%

-78.97%

Revenue Growth (Y-O-Y)

-50.71%

-0.74%

10.06%

7.51%

Earnings Reaction

4.98%

-3.20%

2.28%

1.35%

BP has seen increasing earnings and mixed revenue figures over the last four quarters. From these numbers, the markets have mostly been pleased with BP’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has BP stock done relative to its peers, Chevron (NYSE:CVX), Exxon Mobil (NYSE:XOM), Royal Dutch Shell (NYSE:RDSA), and sector?

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BP

Chevron

Exxon Mobil

Royal Dutch Shell

Sector

Year-to-Date Return

10.57%

11.72%

7.09%

-3.67%

7.42%

BP has been a relative performance leader, year-to-date.

Conclusion

BP is an oil and gas company that supplies energy products and services worldwide. The company is reportedly in discussions to turn over control of a major oil and natural gas project in Libya, and is apparently negotiating a deal with Libya's state-owned National Oil Co. The stock has not made significant progress in recent years, however, it's currently trading near highs for the year. Over the last four quarters, earnings have been rising while revenues have been mixed, which has left investors mostly pleased about recent earnings announcements. Relative to its weak peers and sector, BP has been a relative year-to-date performer. Look for BP to OUTPERFORM.

Tuesday, November 12, 2013

Wednesday Closing Bell: Markets Open, Close Lower

Bull and Bear figuresSource: thinkstockAugust 21, 2013: Markets opened mixed this morning as traders and investors waited for the afternoon's release of the July FOMC meeting minutes. Existing home sales rose more than expected in July. A report on mortgage applications showed a decline, however, as interest rate increases continue to slow the number of refinancings. The U.S. crude inventory fell last week, and crude spot prices for October delivery dropped 1.2% today to $103.85.

European closed lower today, while Latin American and Asian markets markets closed mixed.

The FOMC minutes did not reveal anything unexpected. But then, they never really do. Markets reacted with a buying spurt on the inference that the Fed's asset purchases wouldn't stop next month, but the uptick was short-lived.

In addition to a speech from Dallas Fed President Richard Fisher, Thursday's calendar includes a number of data releases:

8:30 a.m. – New claims for unemployment benefits 8:58 a.m. – Flash PMI manufacturing index 9:00 a.m. – FHFA house price index 10:00 a.m. – Leading indicators 10:30 a.m. – EIA weekly natural gas storage report 11:00 a.m. – Kansas City Fed manufacturing index 1:00 p.m. – 5-year TIPS auction 4:30 p.m. – Fed balance sheet and money supply

We also broke out the top Wall Street calls with analyst upgrades and analyst downgrades. Here are the closing bell levels for Wednesday:

S&P500 1,642.80 (-9.55; -0.38%) DJIA 14,897.55 (-105.44; -0.70%) NASDAQ 3,599.79 (-13.80; -0.38%) 10YR TNOTE 2.893% (-0.625) Gold $1,370.10 (-2.50; -0.02%) Oil $103.85 (-1.26; -1.2%) Dollar/Euro: 1.3347 (-0.0070; -0.52%)

Big earnings winners: Incyte Corp. (NASDAQ: INCY) up 34.4% to $36.02 on a successful drug trial, Target Corp. (NYSE: TGT) down 3.5% to $65.54 on weak earnings and lowered outlook, and Lowe's Companies Inc. (NYSE: LOW ) up 4.4% at $46.01 on strong earnings and an improved outlook.

DJIA stocks on the move: Lions Gate Entertainment Corp. (NYSE: LGF) hit a new 52-week high of $35.13 on Wednesday. Trina Solar Ltd. (NASDAQ: TSL) rose more than 15% after posting better than expected earnings on Tuesday, Aeropostale Inc. (NYSE: ARO) put up a new 52-week low of $11.40, and another teen retailer, and American Eagle Outfitter Inc. (NYSE: AEO) also put up a new low of $14.33.

In all, 146 stocks put up new lows today, while only 29 stocks posted new 52-week highs.

UBS to Boost China Computer Trading on Institutional Demand

UBS AG (UBSN)'s China venture plans to offer more computerized-trading services as it bets on a surge in demand from institutional money managers in the biggest emerging market.

Stock-trading volumes from institutional investors will more than double within five years, spurred by regulators' efforts to reduce market volatility and reform capital markets, Qu Hongjie, executive director of China equities at UBS Securities Co., a venture of Switzerland's largest lender, said in a Nov. 8 interview from Shanghai.

"We foresee in the next 3 to 5 years institutional trading flows will increase from the current 20 percent to over 50 percent," Qu said. "As institutional investors have higher demands for better execution services, more powerful and sophisticated electronic trading platforms will become a key factor for brokerage firms to win market share."

The government is targeting more capital from both large domestic and foreign investors to revive a stock market that has been among the world's worst performers over the past three years. The Shanghai Composite Index has fallen 36 percent since the start of 2010.

Communist leaders are holding a four-day gathering that ends today to map out an economic blueprint to sustain growth. The plenum is likely to release structural and financial reform plans, including capital account liberalization and increases in the size of investment schemes for foreigners, Zhang Zhiwei, Nomura Holdings Inc.'s China economist, wrote on Nov. 7. China almost doubled investment quotas for the qualified foreign institutional investors program to $150 billion in July.

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Institutional investors account for 60 to 70 percent of trading volumes in developed markets, Qu said. In China, that's only about 20 percent, he said.

China will continue expanding the types of contracts traded on local exchanges, Qu said. The China Financial Futures Exchange started mock trading of options on CSI 300 stock-index contracts on Nov. 8. The options will help improve price discovery and market efficiency, according to the exchange.

Some local brokers are also testing the use of stock options with the exchange that would allow investors to hedge their holdings in specific companies, Qu said.

Institutional clients are moving away from traditional brokerages to electronic-trading platforms because they are cheaper and allow for more anonymous trading, Qu said. UBS currently provides algorithmic-trading services, or "passive" strategies where the client sets up rules in advance and then lets the computer trade, Qu said. The firm wants to start quantitative trading services, where computers identify trading opportunities for clients, he said.

High-Frequency Trading

While UBS has the technologies for high-frequency trading, barriers prevent their use in the Chinese market, Qu said. These include a stamp duty on stock sales and prohibitions on buying and selling the same stock on the same day, or the "T+1" rule.

High-frequency trading, which allows hedge funds and institutional investors to use computers to execute orders in milliseconds, has come under scrutiny by regulators in the U.S. Disruptions in electronic markets have garnered increased attention since the May 2010 flash crash, when the Dow Jones Industrial Average fell almost 1,000 points in minutes before rebounding.

In China, faulty trading software used by Everbright Securities Co.'s proprietary-trading desk, which specializes in high-frequency trades, sent 26,082 unintended buy orders in just two seconds on Aug. 16. The mistake, which the securities regulator characterized as unprecedented in China, led the Shanghai Composite to swing more than 6 percent.

"In bad market conditions, people tend to look for alternative ways to invest for stable returns and lower risks," Qu said. "This can be a good opportunity for us to step up and provide well-established quant trading models for our clients."

Monday, November 11, 2013

The Real Issue of the Beige Book: Modest Versus Moderate Growth!

Another month has started, and another report from the Federal Reserve is out to give investors new reason to cheer or shudder from much of the same observations that have been known for weeks now. Wednesday brought the so-called Beige Book from the Federal Reserve and it was prepared by the San Francisco Federal Reserve. We would highlight here that the data was collected on or before August 26, 2013.

This is likely going to be one of the last Beige Books under the Ben Bernanke-led regime and 24/7 Wall St. wants to signal one key issue here for the Federal Reserve in the years ahead. We do not think that the public, whether a Main Street consumer or a well-to-do Wall Street professional, can really differentiate between the constant uses of “moderate” versus “modest” in the references. Sure, there is a slight variation when the two terms are used together or in comparison, but it is actually much closer than comparing the terms “decimated” and “destroyed” which are now improperly interchanged by the media and public.

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The combined reports from the twelve Federal Reserve districts showed that the broad economy continued to expand at a modest to moderate pace in the period of early-July through late-August. Before you get too excited, some eight of the Fed districts characterized growth as moderate. Of the other four districts, it was modest growth reported by Boston, Atlanta, and San Francisco. Chicago indicated that its general business activity had improved.

Some general comments were as follows:

Consumer spending was said to be up with strong demand for automobiles and housing-related goods. Travel and tourism sector expanded in most areas. Nonfinancial services demand for professional and transportation services increased slightly. Manufacturing expanded modestly. Residential real estate activity increased moderately in most Districts, with demand for nonresidential real estate gaining in total. Lending activity was mixed, with lending standards largely unchanged even while credit quality improved. Demand for agricultural products was strong during the reporting period even with conditions and production in some areas weak due to extreme weather. Demand for natural resource products was stable or up slightly, and extraction increased in anticipation of further demand growth. Hiring “held steady or increased modestly relative to the prior reporting period” for most occupations and industries. Wage pressures continued to be modest overall. Upward price pressures remained subdued, and prices increased slightly during the reporting period.

Here is the full Beige Book if you want to see a region by region breakdown. We would point out that the so-called Beige Book is no secret codename. it has often been called The Tan Book historically. The reason for its name is simply the color of its cover.

Bloomberg denies it spiked stories on China

Bloomberg News denied Sunday reports that the global news service killed stories on Chinese corruption out of concern that its journalists might be kicked out of the country.

The New York Times, in a story by its Beijing correspondent, reported on Friday that Bloomberg News editor-in-chief Matthew Winkler last month ordered Asia-based journalists last month to spike a story that they had been working for months on financial ties between a wealthy Chinese businessman and the families of top Chinese leaders. Bloomberg subsequently also halted another story -- about the children of senior Chinese officials employed by foreign banks -- the Times reported.

"As we were very clear with the Times, it is absolutely false that we postponed these stories due to external pressure," Bloomberg News said in a statement. "We are disappointed that they chose to publish a piece that claims otherwise."

The Times' story followed an animated video by Hong Kong-based Next Media, released on Nov. 7, that portrayed Bloomberg News as acquiescing to the Chinese government's pressure.

Winkler denied that the stories were permanently shelved, telling the Times that they're still "active." Other Bloomberg editors also told the Times that the reporters have been asked to collect more evidence.

In an e-mail sent to Bloomberg staffers on Sunday, Winkler also said "there has been no change in policy on how and when we publish our stories."

"There have been several misleading reports over the last few days by rival news organizations about our reporting in China," he wrote. "Our mandate is to provide definitive coverage of economies, markets, companies and industries worldwide, and we will continue to hold all reporting to the highest standards possible."

The Times reported that Winkler was moved to intervene on the stories because he feared China might revoke the Bloomberg reporters' working visas.

"He said he was looking at the example of how news organizations worked in Nazi Germany, how! they were able to stay there, how they were able to write in that environment," a Bloomberg employee told the Times.

In 2012, Bloomberg News published a series of stories revealing the personal wealth of the families of Chinese leaders. The New York Times also ran stories on the subject.

Sunday, November 10, 2013

Will CBS Continue this Bull Run?

With shares of CBS (NYSE:CBS) trading around $51, is CBS an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

CBS operates as a mass media company in the United States and abroad. The company operates in segments that include entertainment, cable networks, publishing, local broadcasting, and outdoor. Consumers seek entertainment of various forms and through an array of platforms at an increasing rate. Through its segments, CBS is able to fulfill consumer needs as it continues to release content that excites the masses. Consumers around the world always seek varied forms of entertainment, and CBS is dedicated to delivering that media, which can only lead to growth and rising profits well into the future.

CBS and Time Warner Cable's (NYSE:TWC) battle over retransmission fees is now being mediated by the Federal Communications Commission. Three million Time Warner customers have not had access to CBS programming since August 2, as the two companies can't seem to reach an agreement. The FCC has been reluctant to intervene, but negotiations between the companies have deteriorated to the point that government intervention seems to be the only solution.

T = Technicals on the Stock Chart Are Strong

CBS stock has been surging higher over the past several years. The stock is currently consolidating slightly below all-time high prices. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, CBS is trading above its rising key averages, which signals neutral to bullish price action in the near term.

CBS

Source: Thinkorswim

Taking a look at the implied volatility and implied volatility skew levels of CBS options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

CBS Options

30.11%

86%

84%

What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

September Options

Flat

Average

October Options

Flat

Average

As of Wednesday, there is average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

E = Earnings Are Increasing Quarter Over Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on CBS’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for CBS look like and more importantly, how did the markets like these numbers?

2013 Q2

2013 Q1

2012 Q4

2012 Q3

Earnings Growth (Y-O-Y)

16.92%

27.78%

9.32%

20.00%

Revenue Growth (Y-O-Y)

6.42%

6.43%

2.99%

1.58%

Earnings Reaction

3.86%

2.04%

3.95%

1.05%

CBS has seen increasing earnings and revenue figures over the past four quarters. From these numbers, the markets have been upbeat about CBS’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has CBS stock done relative to its peers – Comcast (NASDAQ:CMCSA), 21st Century Fox (NASDAQ:FOXA), and Walt Disney (NYSE:DIS) — and sector?

CBS

Comcast

21st Century Fox

Walt Disney

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Sector

Year-to-Date Return

35.74%

12.82%

42.99%

22.37%

28.37%

CBS has been a relative performance leader, year to date.

Conclusion

CBS is one of the largest nationwide providers of entertainment and mass media services. The company’s dispute with Time Warner Cable is now being mediated by the FCC because the companies have not been able to reach an agreement. The stock has been soaring and is now consolidating slightly below all-time high prices. Over the past four quarters, earnings and revenues have been rising, which has left investors excited about the company. Relative to its peers and sector, CBS has been a year-to-date performance leader. Look for CBS to OUTPERFORM.