Best Growth Stocks For 2015, Top Growth Stocks For 2015: April 2014

Wednesday, April 30, 2014

Why This Telecom Colossus Is a Bright Investment Option

Telefónica Brasil SA (VIV) is in the spotlight of the Brazilian telecommunications industry. Its best-in-class mobile network and its dominant position in Sao Paulo's fixed-line market have enabled the firm to boast sustained growth in a market that has fallen over 8% year to date amid a weak economy and currency issues.

The company ended 2013 with a fourth-quarter revenue increase of 5.1% thanks to a 6% growth of its mobile business. A 7% expansion of its postpaid base augmented its market share in this segment to 39.8%, which in turn resulted in a 5.1% increment of its ARPU, mainly driven by data revenue from smartphones and modem sales. Also, postpaid churn decreased by 30 bps to 1.5%. Data and value-added services boosted by 3.8% and minutes of use remained in the upswing, with 8.1% growth relative to the year-ago period.

Competitive Positioning

Telefónica Brasil's integration of its fixed-line and mobile businesses has allowed the firm to expand its fixed-line offering throughout the nation and to offer bundled services, thereby boosting its profitability and competitive position.

On the mobile front, the company continues to expand its subscriber base and to lead the market in both data and postpaid segments showing attractive long-term opportunities. Thus, while competitor Claro (the Brazilian unit of Mexican America Móvil SAB de CV (AMX)) saw its market share reduce to 25.13% in March from 25.28% in February, Telefonica Brasil's share grew from 28.62% to 28.68% in the same period. Furthermore, while average revenue per user in the mobile sector has fallen for five consecutive years, the firm's mobile unit Vivo was the only carrier to generate ARPU growth in 2013.

On the fixed-line side, although total revenue fell 3.7% year over year, the company expects to resume growth in this segment through the expansion of video, broadband Internet and Pay-TV services. To this aim, the firm launched its IPTV platform in late 2013 and is growing its FTTH footprint. Along these lines, it will invest 18% to 19% of its revenue in deploying high-speed fiber optic cable in the state of Sao Paulo in order to cover 2.5 households in 2014. Thus, the company will be better positioned to compete with giants like cable operator Net Servicos de Comunicacao SA (NETC), which also offers bundled services and has aggressively expanded its Internet and TV subscriber base in the state.

Investing for Long-term Growth

Looking forward, Telefónica Brasil is investing in technology and network expansion to further empower its competitive position. The firm is expanding its 3G network based on CDMA EV-DO and HSPA technologies, which provide a great advantage over its peers. Further, it expects to benefit from the growth opportunities in the 4G market. Consequently, it has signed a deal with Ceragon Networks Ltd. (CRNT) to deploy the superfast 4G network nationwide.

A Valuable Stock

Telefónica Brasil has a healthy balance sheet with strong cash flow generation (up to 9,576 million in 2013 from 3,488 million in 2011) and reasonable debt levels. Its net debt-to-EBITDA ratio is of 0.17 times and it has a debt- to-equity ratio of 0.2 against its peers' average of 0.9. Its financial strength and a robust dividend have attracted investment gurus like Charles Brandes (Trades, Portfolio) and David Dreman (Trades, Portfolio), who have recently incorporated the company to its portfolio.

Considering the stock's trading price of 14.6x its trailing earnings compared to the peer group average of 16.90x, and a compelling dividend yield of 7.30 with a payout ratio of 1.1 (against its competitors' median of 3.53 and 0.62, respectively), I believe this stock is a worthy investment opportunity with excellent growth potential.

Disclosure: Vanina Egea holds no position in any stocks mentioned.

Also check out: Charles Brandes Undervalued Stocks Charles Brandes Top Growth Companies Charles Brandes High Yield stocks, and Stocks that Charles Brandes keeps buyingAbout the author:Vanina EgeaA fundamental analyst at Lone Tree Analytics

Visit Vanina Egea's Website

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Tuesday, April 29, 2014

Eaton's Conservatism Clashes With Street's Enthusiasm

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Wall Street badly wants to believe in the narrative of a strong second half recovery, and companies that don't toe that particular line are seeing their stock prices suffer. While I didn't hear much that was really very new in Eaton's (NYSE:ETN) comments after the second quarter report, the Street took the shares down almost 6% as management's comments took the high end of guidance off the table. Although I do expect Eaton to reap good revenue growth from the Cooper deal, as well as long-term cost benefits and lower taxes, the shares are still no bargain unless you're willing to go with pretty exceptional growth expectations.

Sluggish Growth Continues In Q2
Eaton's peer comps continue to suffer due to the company's particular industry/market exposures. Even so, though, an organic revenue contraction rate of 2% doesn't come off as very compelling relative to ABB (NYSE:ABB), Honeywell (NYSE:HON), and so on.

Revenue rose 38% as reported due to the Cooper deal, but organic/core growth was a negative 2% for the quarter. Aerospace was the strongest (up 3% core), but it's also far and away the smallest business. The Electrical business was up a bit overall on a core basis, with Products flat and Systems and Services up 1%. Vehicle revenue was down 3%, though, and hydraulics was down another 9%.

Eaton's margins were okay, but not as good as the Wall Street bulls were projecting. Gross margin ticked up just a bit (below averaged expectations), while reported operating income rose 34% and the margin declined about 30bp. On a segment level, though, profits were up 46% and only hydraulics saw a worse margin.

Plenty Of Weakness To Go Around
There's plenty to look forward to down the line with Eaton's new electrical business. Not only can the company benefit from cross-selling between the old segments and the Cooper units, but the LED cycle should offer worthwhile upside. What's more, Eaton management seems to believe that PLCs will be less important in the future of industrial automation, and that it is better-positioned for this transition than rivals like Emerson (NYSE: EMR) or Rockwell (NYSE: ROK).

In the meantime, though, there isn't all that much to stoke the business. Eaton's electrical business is growing at around the same pace as WESCO (NYSE: WCC) right now, and the lack of significant momentum in construction is certainly holding things back. Likewise, the hydraulics business has yet to definitively bottom (orders were down 12% this quarter), while the commercial vehicle market is likewise still soft.

Are There More Chairs To Be Moved?
Given Eaton's balance sheet situation and the company's move to a less-volatile business model, I expect chatter to continue as to whether the company will divest its Vehicle segment. Even great companies like Cummins (NYSE: CMI) see a lot of cyclicality in the commercial vehicle market and management may see more long-term advantage in selling the business, using the proceeds to pay down debt, and hoping that investors assign a stronger multiple to an incrementally less cyclical business.

SEE: Is Cummins Building For Bigger Things?

All of that said, the lawsuit with Meritor (Nasdaq: MTOR) likely complicates the process significantly. Meritor is pursuing an anti-trust suit against Eaton, claiming that the company's pricing agreements with truck OEMs is illegal and hoping to wrest significant damages from the litigation. While I think the long-term financial impact to Eaton is not as great as feared, the uncertainty and the drawn out process of courtroom arguments, motions, and appeals, could limit Eaton's flexibility with the Vehicles unit for years.

The Bottom Line
I though Eaton was too expensive after the last quarter and with the post-earnings reaction, the stock has underperformed a bit since then. I still have no real issues with the quality of the company; rather, my problem stems from the Street being too optimistic about how quickly Eaton will reap the benefits of the Cooper deal and how robustly Eaton's markets will rebound. To their credit, management hasn't been egging on analysts to be excessively optimistic.

Adjusting for the Cooper deal, I'm looking for long-term revenue growth of almost 5% and free cash flow growth of close to 12%. Even at that level of growth, though, it's hard to go much above $60 with the fair value and that suggests that the excess capital gains potential of Eaton shares is limited today.

Disclosure – At the time of writing, the author owned shares of ABB

Sunday, April 27, 2014

Can Sprint Nextel Continue This Bullish Run?

With shares of Sprint Nextel (NYSE:S) trading around $7, is S 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

Sprint Nextel offers wireless and landline communications products and services to individuals and businesses in the United States. Through its two segments, Wireless and Wireless, it offers voice and data transmission services to subscribers in all 50 states, Puerto Rico, and the United States Virgin Islands under the Sprint corporate brand, which includes its retail brands of Sprint, Nextel, Boost Mobile, Virgin Mobile, and Assurance Wireless. An increasing share of the population is opting for these communications products and services, fueling profits for Sprint Nextel. As the desire to connect with others continues to rise, profits and the stock price should follow.

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T = Technicals on the Stock Chart are Strong

Sprint Nextel stock has recently broken above a value range that extended back to 2008. The stock is now searching for value at higher prices so it may continue to move in a positive direction. 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, Sprint Nextel is trading above its rising key averages which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

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

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Sprint Nextel Options	42.49%	90%	90%

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

	Put IV Skew	Call IV Skew
July Options	Flat	Average
August 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 very significant 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 Sprint Nextel’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Sprint Nextel look like and more importantly, how did the markets like these numbers?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	27.59%	-1.22%	-160%	-64.29%
Revenue Growth (Y-O-Y)	0.68%	3.24%	5.16%	6.40%
Earnings Reaction	-0.14%	Top Food Stocks To Invest In Right Now -0.51%	-1.77%	20.17%

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

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P = Excellent Relative Performance Versus Peers and Sector

How has Sprint Nextel stock done relative to its peers, Verizon (NYSE:VZ), AT&T (NYSE:T), T-Mobile (NYSE:TMUS), and sector?

	Sprint Nextel	Verizon	AT&T	T-Mobile	Sector
Year-to-Date Return	27.34%	11.74%	5.19%	3.57%	9.83%

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

Conclusion

Sprint Nextel offers communications technology, through the use of wireless and wireline systems, to consumers and companies across the United States and its territories. The stock has seen an impressive run over the last year and has recently broken-out in the search of value. Over the last four quarters, earnings have been mixed while revenue figures have increased, overall disappointing investors in the company. Relative to its peers and sector, Sprint Nextel has been a year-to-date performance leader. Look for Sprint Nextel to OUTPERFORM.

Did Fox Just Make the X-Men Relevant Again?

Comic book summer isn't over yet. This weekend brings The Wolverine, 21st Century Fox's (NASDAQ: FOX ) sequel to 2009's X-Men Origins: Wolverine. What can fans and investors expect? A return to relevance for the X-Men franchise, I think.

Studio artwork from Fox's The Wolverine. Source: 21st Century Fox.

Google says the film is the hottest search on the Web as I write this Friday afternoon. More importantly, 68% of critics and 81% of fans who've seen The Wolverine like it, reports Rotten Tomatoes. No one will be surprised if comic book fans come out for the film. But will everyday theatergoers? Competition could get in the way:

Source: Google.

If The Wolverine doesn't perform as well as Fox would hope -- unlikely, but anything is possible -- it may be because audiences don't know exactly how to package the film, which is set in Japan and comes off more as a moody martial arts epic than a superhero flick.

Sources: YouTube, 21st Century Fox.

Maybe that won't be an issue, but pure superhero movies have outperformed this summer while lesser-known comic-book adaptations have struggled. Walt Disney's (NYSE: DIS ) Iron Man 3 wowed audiences on the way to $1.2 billion in worldwide box office receipts. Time Warner's (NYSE: TWX ) Man of Steel earned $636 million at the global gate. Universal's $130 million adaptation, R.I.P.D., got zero boost from Comic-Con, having earned just $25 million worldwide in its first week.

Fox, too, has had its troubles turning Marvel's mutants into box office gold. Only 38% of critics liked Origins, which earned $373 million worldwide on a $150 million production budget. Not necessarily a bomb but not a winner, either. X-Men: First Class was a critical success but failed to win over audiences. The film, which cost $160 million to produce, earned $354 million at the global gate.

This time, Fox budgeted just $120 million to make The Wolverine, and looking at the data, it ended up with a better film that takes full advantage of Hugh Jackman's unquestioned skill at playing the troubled X-Man. I expect it to pay off.

Now it's your turn to weigh in. Will you see The Wolverine? Leave a comment to let us know what you think of the movie and Fox's efforts to revitalize the X-Men film franchise.

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Friday, April 25, 2014

Whatâ€™s Driving Growth for MLP Distributions?

Master limited partnerships (MLPs) historically have generated multiple benefits to investors including attractive yields, solid total returns and diversification from traditional asset classes.

New York-based Yorkville Capital Management gives some interesting insights into the value of the partnerships’ distribution increases in a recent study.

Yorkville points to three elements in MLPs’ total return: current income, growth of income and price appreciation.

Distributions influence all three factors, and provide several primary benefits, according to the report: (1) a hedge against inflation — preserving the purchasing power of the investment; (2) protection against rising interest rates — capital preservation; and (3) powers price appreciation — growing income streams increase the principal value of the investment.”

Looking at its universe of listed MLPs, Yorkville identifies and ranks the partnerships that showed the “highest quality distribution growth” from first quarter of 2008 through the fourth quarter of 2013.

The highest ranked securities became the components of the Yorkville Distribution Growth Leaders Index (YGMLP, YGMLPX).

The component MLPs are equally weighted in the index, and Yorkville will review the list quarterly and adjust it as needed on a regular basis.

Large and mid-cap partnerships represented 90% of the index as of the late 2013, and infrastructure MLPs accounted for 65% of it.

Growth Case

Yorkville compared the performance of the distribution-growth leaders with its overall MLP index.

The results of the study make a strong case for using distribution growth when evaluating a partnership’s investment potential.

When asked how financial advisors should use the information, Darren Schuringa, managing partner at Yorkville Capital, said: “The takeaway for advisors is that distribution growth represents the most productive way to evaluate the MLP asset class and underpins the investment thesis for MLP investing.

“MLP Distribution Growth Leaders provide more reliable income than the broad MLP universe, while growing income streams preserve purchasing power by serving as a hedge against inflation and protection against rising interest rates,” Schuringa added. “Growth MLPs offer optimal fundamental total return exposure to MLPs.”

(The report, “Yorkville MLP Distribution Growth Leaders Index: A Complete Study of Fundamentals, Returns, Risk, and Correlations,” is available online.)

Thursday, April 24, 2014

Procter & Gamble: Why Its Beat Doesn’t Matter

Investors haven’t expected much from Procter & Gamble (PG) and the consumer-staples giant has delivered much. That doesn’t look to change much after Procter & Gamble’s financial results today.

Associated Press

Shares of Procter & Gamble have dropped 3.2% during the past 12 months, lagging Unilever’s (UL) 2.5% rise, Colgate-Palmolive’s (CL) 8.7% advance and Kimberly-Clark’s (KMB) 3.1% gain.

The Wall Street Journal has the details on Procter & Gamble’s results:

For the latest quarter, P&G reported a profit of $2.61 billion, or 90 cents a share, up from $2.57 billion, or 88 cents a share, a year earlier. Excluding special items such as restructuring expenses, core earnings rose to $1.04 a share from 99 cents.

Sales fell slightly to $20.56 billion. Organic sales, which exclude impacts from currency movements and acquisitions and divestitures, rose 3%.

Analysts surveyed by Thomson Reuters had expected $1.01 a share in earnings and $20.68 billion in revenue.

Gross margin narrowed to 48.4% from 49.8% as input costs grew 2.5% to $10.6 billion.

The market, however, isn’t giving Procter & Gamble much credit for the beat, thanks to a big drop in its tax rate. Still, Citigroup’s Wendy Nicholson and team don’t understand what the market is worrying about:

While bears will fuss about the lower tax rate contributing to [Procter & Gamble's] EPS in the quarter, we think most folks should be marginally relieved that [Procter & Gamble's] organic sales growth and Core EPS growth was as solid as it was. Indeed, with the global marketplace still both sluggish in terms of overall growth (with marginally better growth in developed markets dragged down by EMs) and intensely competitive (both from a pricing/promotion and innovation perspective), we think the fact that [Procter & Gamble] is on track to deliver double-digit local currency EPS growth this year is pretty darned impressive.

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Shares of Procter & Gamble have dropped 0.9% to $79.91 at 11:27 a.m., while Unilever has gained 0.5% to $44.28, Colgate-Palmolive has fallen 0.5% to $66.05 and Kimberly-Clark has risen 0.4% to $108.83.

Wednesday, April 23, 2014

What Are Frontier Markets?

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Frontier markets refer to equity markets in small nations that are at an earlier stage of economic and political development than larger and more mature emerging markets. In other words, think of frontier markets as the smaller siblings of emerging markets. Frontier equity markets typically have modest market capitalization, limited investability and liquidity, and few market information sources. On the positive side, they generally possess favorable demographics and good long-term growth prospects. As these markets probably constitute the last frontier of investing in an increasingly interlinked global economy, investors should be aware of their risks and rewards, and the options available to invest in them.

Characteristics of Frontier Markets

The term "frontier markets" is widely attributed to the International Finance Corporation (IFC), which coined it in 1992 to refer to a subset of emerging markets. Standard & Poor's bought the IFC Emerging Markets Database in 2000 and subsequently established a frontier index in 2007.

As of September 2013, frontier indices had been established by four major providers – Standard & Poor's, MSCI, Russell Investments and FTSE. The number of frontier markets in these indices ranges from 25 in the MSCI index to 41 in the Russell Frontier Index. These frontier markets are generally concentrated in Eastern Europe, Africa, the Middle East, South America and Asia. The biggest frontier markets are Kuwait, Qatar, the United Arab Emirates (UAE), Nigeria, Argentina and Kazakhstan.

The criteria for inclusion in a frontier markets index are not rigid. The starting point in evaluating a nation for inclusion, of course, is that it should not already be a component of one of the numerous emerging market or developed market indices. Assuming that a nation is not, most in! dex providers evaluate parameters such as its economic development, market accessibility, liquidity and foreign investment restrictions. Overseas investor interest is also considered, since there is no point in going to the effort and expense of including a nation in a frontier markets index if there is little interest in it as an investment destination.

Emerging to Frontier (and Vice Versa)

The subjectivity involved in classifying a market as a "frontier," rather than an emerging, market means that there are occasional inconsistencies in classification among the different index providers. For example, Pakistan is classified as a frontier market by S&P, MSCI and Russell, but is regarded as an emerging market by FTSE.

There is also some degree of migration between the frontier and emerging markets as their economic fortunes change. As an example, in 2009 MSCI re-classified the status of three countries from emerging market to frontier market – Jordan, Pakistan and Argentina. Morocco will be moved from the list of emerging markets to frontier markets in November 2013.

Movement from the ranks of frontier markets to emerging markets is also possible, as evidenced by the fact that Qatar and UAE will be making this transition in May 2014.

Sector Similarities, Economic Disparities

The biggest sector in any frontier market index by far is banking/financials, which generally accounts for more than 50% of the index. Other sectors with double-digit weights are industrials and telecoms. Sectors such as health care, utilities and consumer discretionary – which form a substantial portion of the benchmark index in bigger economies – typically have minimal representation in frontier market indices.

Despite the large number of Middle East nations and OPEC producers included in frontier markets, energy companies do not find much representation in these indices. This is because most of the big oil and gas companies in these nations are sovereign entities that ! are large! ly or wholly owned by the government, so they are not open to investment by the general public.

Another point worth noting is that since frontier markets include a number of prosperous nations, there is a great deal of disparity between the constituents of a frontier index. As an example, Qatar, with its huge energy reserves and rapid growth rate in recent years, had per-capita gross national income of $81,300 and a population of less than 2 million in 2011, according to the World Bank. In comparison, Bangladesh had per-capita income of $1,910 and a population of 153 million in 2011.

Comparing Frontier Market Indices

Here's a basic comparison of the four main frontier market indices (as of September 2013):

S&P Frontier BMI (Broad Market Index) Number of countries – 36

Number of companies – 556

Top five countries – Kuwait, Qatar, Nigeria, UAE, Argentina

Top three sectors – Financials (53.9%), industrials, consumer staples

MSCI Frontier Markets Index Number of countries – 25

Number of companies – 141

Top five countries – Kuwait, Qatar, Nigeria, UAE, Pakistan

Top three sectors – Financials (53.1%), telecom services, industrials

FTSE Frontier 50 Index Number of countries – 26

Number of companies – 50

Top five countries – Qatar, Nigeria, Argentina, Kenya, Oman

Top three sectors – Banks (51%), industrials, telecom

Russell Frontier Index Number of countries – 41

Number of companies – Not known

Top five countries – Kuwait, Nigeria, Qatar, Argentina, Pakistan

Top three sectors – Financial services, energy, utilities

Why Frontier Markets are Important

Frontier markets are worthy of considering for a number of reasons:

Growth potential due to demographics: While frontier market economies have a combined population of 2 billion people – or about 30% of the global population – they account for only 6% of the world's nominal GDP and just 0.4% of global market capitalization. The population of those living in frontier markets is relatively young, with 60% under 30 years of age and an average age of 30.2 years, a decade less than the 40.5 average age of the 1 billion living in developed nations. Labor costs in most frontier markets are also low compared with costs in other nations. This demographic advantage, combined with a debt-to-GDP that is much lower than in the developed world, means that frontier markets have better long-term growth prospects. In 2011, for instance, frontier markets posted an average GDP growth rate of 4.9%, three times faster than the 1.6% growth rate recorded by the 10 largest advanced economies, according to the World Bank. Frontier markets may improve portfolio diversification: While increasing global economy integration means that most developed and emerging markets move in sync with one another, frontier markets have a lower degree of correlation with them. As a result, frontier markets may be effective in improving a portfolio's diversification. Above-average returns: As of Sept. 25, 2013, eight of the 10 best-performing equity markets for the year were frontier markets, with an average gain of 41.5% in U.S.-dollar terms. While these are not typical returns, as they can gyrate wildly from one year to the next, a patient investor with a long-term investment horizon may be able to generate significant returns from frontier markets over time. How to Invest in Frontier Markets

Exchange traded funds (ETFs) offer by far the best way to invest in frontier markets. A summary of some of the leading ETFs follows (data as of Sept. 27, 2013):

iShares MSCI Frontier 100 (NYSE:FM): Tracks the MSCI Frontier Markets 100 Index. Top geographic allocations – Kuwait, Qatar, UAE, Nigeria and Pakistan

Top sector allocations – Banks, telecoms, oil and gas, real estate

Total assets = US$301 million

Guggenheim Frontier Markets (NYSE:FRN): Seeks investment results that correspond to the price and yield performance of the Bank of New York Mellon New Frontier DR Index. This index, in turn, tracks the performance of depositary receipts in ADR or GDR form for companies from countries defined as the frontier market in the LSE, NYSE, NYSE Amex and Nasdaq. Top geographic allocations – Chile, Colombia, Argentina, Egypt and Nigeria

Top sector allocations – Banks, oil and gas, electric utilities, food

Total assets = US$94 million.

PowerShares MENA Frontier Countries Portfolio (Nasdaq:PMNA): Seeks investment results that correspond to performance of the Nasdaq OMX Middle East North Africa (MENA) index. Top geographic allocations – Kuwait, UAE, Egypt, Qatar and Bahrain

Top sector allocations – Banks, real estate, telecoms, venture capital

Total assets = US$14 million.

Risks of Frontier Markets

Liquidity – Liquidity can be an issue for most markets during turbulent times, and especially for frontier markets due to their thin trading volumes. This lack of volume may result in limited liquidity and wide bid-ask spreads in volatile markets. Geopolitical and political risks – Many frontier markets are located in unstable areas, and as a result, geopolitical risk is a real concern. Political change is another issue that should be considered, since a change of government may be accompanied by significant unrest and instability. Inflation – This is a constant threat in some frontier markets, and it may erode investment returns substantially over the long term. Lack of transparency – Most frontier markets suffer from a lack of transparency and have inadequate information sources. Currency risk – The steep decline in some emerging market currencies like the Indian rupee in 2013 highlights the risk posed by investing overseas. While currency risk is a definite issue for frontier markets, it is less so for the Middle East nations such as Qatar and the UAE that peg their local currencies to the U.S. dollar. Conclusion

Despite their obvious risks, frontier markets offer investors the advantages of above-average returns driven by favorable demographics, as well as portfolio diversification. As these markets probably constitute the last frontier of investing in an increasingly interlinked global economy, investors should be aware of their risks and rewards, and the options available to invest in them.

Monday, April 21, 2014

CAMAC Energy Inc (CAK): A Shoebox Oil Stock With Insider Buying

Boardroom buyers fell to a monthly low based on the number of companies with purchase records. Only 60 publicly traded companies' executives and directors opened their checkbooks to buy their stock last week.

With so few companies to choose from, it is slim pickings for this week's insider buy candidate. There just wasn't much meat on the bone.

But, we'll take a look at CAMAC Energy Inc (NYSEMKT:CAK). Since the odds are you haven't heard of CAK, the company is an independent oil and gas exploration and production company focused on energy resources in Africa. Its asset portfolio consists of nine production and exploration licenses in four countries covering an area of 43,000 square kilometers (approximately 10 million acres), including existing production and other projects offshore Nigeria, as well as exploration licenses with hydrocarbon potential onshore and offshore Kenya, offshore Gambia, and offshore Ghana.

On April 9, 2014, Founder, Executive Chairman, Chief Executive Officer, Member of Nominating & Corporation Governance Committee and Director of CAMAC Energy Holdings Ltd. (How does he fit all that on his business card?), Dr. Kase Lukman Lawal bought 25,000 shares of CAK at $0.82 per share for a total investment of $20,500. The buy was in addition to a host of automatic purchases, of which there will be a lot more.

The last non-automatic purchase by the Doctor was in November 2012 at $0.65 per share - OK performance.

As we mentioned already, more automatic buy are coming. On April 1, 2014, it was announced, the CEO "has adopted a trading plan in accordance with the guidelines specified by Rule 10b5-1 under the Securities Exchange Act of 1934, to purchase up to two million shares in the open market at prevailing market prices and subject to conditions and restrictions relating to volume, price and timing."

Lawal says, "it is my responsibility to demonstrate management's commitment, leadership, and continued belief in the long-term prospects of this company. We are in a stronger position today than we've ever been in the history of CAMAC Energy. As we continue to develop the Oyo Field offshore Nigeria and generate strong cash flow, further our development and exploration prospects in Ghana, Kenya, and Gambia, and continue to pursue opportunities and partnerships, I am confident we will continue to create value for our shareholders."

Let's take a shot at determining just how much shareholder value could be created. From what we have been able to gather online, the company's long-term goal is the production of 7,000 barrels of oil per day. We'll use $100 per barrel, which works out to annual revenue of $2.555 billion. Since nothing works perfectly, we'll guesstimate 85% efficiency and target eventual, potential revenue of $2.172 billion.

Management believes full drilling capacity will be online by the end of 2016. So we aren't projecting somewhere out to the Jetsons.

Most of the brand-name oil producers trade around 1.1 times sales. If we apply that price-to-sales (P/S) multiple to CAMAC Energy, a target price of $1.25 or 76.61% higher than the stock trades as we type.

Overall: iStock views speculative plays like CAMAC Energy Inc (NYSEMKT:CAK) as an option minus an expiration date. Aggressive investors stand to cash in – perhaps to a much larger degree than our price-target – but there will probably be plenty of ups and downs along the way.

CAK is what iStock terms a shoebox stock. If high risk/high reward stocks are your thing, put the certificates in a shoebox, open it every month or so to see how the stock is doing, and forget about it in between.

Sunday, April 20, 2014

Automakers unveil China-focused models in Beijing

BEIJING (AP) — Ford Motor on Sunday unveiled a new Escort sedan designed in China for global sale at a Beijing auto show that highlighted the growing influence of Chinese tastes on the industry.

Automakers are looking to China's biggest auto show this year to help boost sales in this huge but cooling market. Total sales last year reached 17.9 million vehicles, but growth is expected to slow from 15.7% to as low as 8%, even as newcomers including Lincoln and Tesla enter the market.

The new Escort, a compact sedan with a 1.4-liter, four-cylinder engine, was designed at Ford's development center in China with features to appeal to local tastes. They include a bigger back seat for children and grandparents, lighter colors and cup holders made to fit iced tea bottles.

The Escort goes on sale in China this year, expanding later to other markets, said CEO Alan Mulally.

"I think it will sell around the world," Mulally said. "But the real focus was led by the Chinese and what they wanted."

Ford joins a trend led by brands including General Motor's Cadillac unit that include features intended to appeal to Chinese tastes in models sold globally. Others such as Daimler Benz' Mercedes Benz are breaking from the industry trend of selling the same vehicles everywhere and are reworking models for sale in China with added back seat room and other features.

That is squeezing ambitious but inexperienced Chinese independent brands. Their first-quarter sales shrank 2.6% from a year earlier, while the overall market grew 7.9%.

Also this weekend, GM debuted a new version of the Chevrolet Cruze and displayed its Trax SUV, targeting China's booming sport utility market. Chinese SUV maker Great Wall Motors unveiled its latest model, the Haval 8.

China's annual auto shows, held in Beijing and Shanghai in alternating years, have grown into some of the industry's most important commercial events.

Relatively strong Chinese sales helped to support the global industry while the Un! ited States and Europe slumped following the 2008 financial crisis.

GM, with its Chinese joint venture partners, is in the midst of a $12 billion investment campaign through 2017 to expand production.

GM China President Matt Tsien said the company will open three new factories this year — two in Shenyang and one in Chongqing — and two more next year, including one for Cadillac production. He said that is expected to raise production capacity to 5 million units by the end of 2015.

GM President Dan Ammann said the company expects to double sales of Cadillac luxury cars next year to 100,000 vehicles.

"We are moving full speed to keep up with it," Ammann said of the company's approach in China. "We count on China for another record year in 2014."

Foreign brands are still piling into China, adding to already intense competition.

Last week, Ford launched its luxury Lincoln brand in the country. Lincoln says it plans to woo younger buyers with a service to allow them to make customized versions of any of its models.

On Saturday, Fiat and its Chrysler arm announced that their Jeep brand would begin manufacturing in China next year with Fiat's local partner, Guangzhou Automobile Group. That will allow Jeep to avoid steep import taxes.

At the auto show, Jeep displayed its Renegade model aimed at China's booming market for sport utility vehicles. Jeep CEO Mike Manley said the company plans to add about 50 dealerships this year to a network of about 250.

"It's clearly going to be the biggest market for SUVs in the world. And the good news is, that's all we do," Manley said. "China is going to continue to grow even if it may slow down in the short term."

Automakers in China face challenges including curbs imposed by Beijing, Shanghai and other cities on the number of new registrations they allow in an effort to reduce eye-searing smog. That has prompted manufacturers to shift emphasis to smaller cities and the countryside, promoting smaller and lower-co! st vehicl! es.

"We will see more cities with restrictive regulations," said Dietmar Voggentreiter, president of Audi China. "This we are reflecting in our planning."

Luxury manufacturers also are expanding their range to include more small vehicles for younger, well-heeled buyers.

On Sunday, Mercedes unveiled an extended version of its smaller C-series sedan.

"The new model is sure to be one of our growth drivers in China," said Hubertus Troska, chairman and CEO of Daimler Greater China.

Other global automakers also showed vehicles that highlighted the role of Chinese creative talent at their design centers in China as well as consumer demand.

Nissan Motor debuted a concept sedan, the Lannia, created by the Chinese staff of its Beijing design center. The company says China is a major element in its global turnaround plan.

"We're open to using Chinese people to design and shape the future of our cars, not just for China but for the world," said the company's chief planning officer, Andy Palmer.

Saturday, April 19, 2014

Why 3-D TV Has Been an Epic Failure

If ESPN can't make 3-D TV work no one can. That's why ESPN's announcement that it would drop 3-D later this year is such a big deal. The company, which is owned by Disney (NYSE: DIS ) , was one of the first to invest in 3-D, and is one of the first to throw in the towel, as well.

High hopes gone awry
3-D televisions made a big splash at the 2010 CES show, and both manufacturers and investors had high hopes for the industry. About 3.2 million 3-D TVs were sold in 2010, and in early 2011, DisplaySearch projected that over 90 million 3-D TVs would be sold in 2014.

No doubt there are a lot of 3-D TVs in living rooms around the world, but customers don't seem keen on paying for 3-D content to go along with them.

The interesting channel to watch now that ESPN is out of 3-D will be the fate of 3net, a partnership between IMAX, Sony, and Discovery. The channel was built to be focused on 3-D, and recently launched a production arm to create 3-D and 4K content. Presumably, the loss of ESPN will hurt demand for other 3-D channels like 3net, and it will be interesting to see what the fate of this venture is.

Top Low Price Stocks To Invest In Right Now

What does this mean for the big screen?
It's not only the small screen where 3-D has struggled. The big screen saw an explosion of 3-D content after the success of Avatar in 2010, as IMAX and RealD (NYSE: RLD ) expanded their offerings. But, since then, the industry has been more selective about how it uses 3-D. Batman director Christopher Nolan shunned 3-D, and hits like The Hunger Games and Skyfall weren't made in 3-D, meaning just one of last year's top four films were 3-D.

You can see below that the decline of 3-D has had a huge impact on RealD's revenue and income.

RLD Revenue TTM Chart

RLD Revenue TTM data by YCharts

The company was counting on 3-D TV technology to grow revenue, as well, so the loss of ESPN is another blow for RealD.

Foolish bottom line
3-D won't die completely, but it's apparent that it's hit a major wall right now. Consumers aren't willing to pay for 3-D TV, and the format isn't a huge success on the big screen right now, either. The huge projections people made about 3-D adoption appear to be completely wrong and, right now, this looks like an epic failure.

Thursday, April 17, 2014

Best Performing Stocks To Own Right Now

Despite all the political turmoil over health care and persistent Republican efforts to defund the Affordable Care Act, health care has been a top-performing sector in the mutual fund universe.

With an average return of 39.6 percent over the trailing one-year period, the health sector has been the third best performer, while topping the chart over the trailing three-year period with a total return just shy of 23 percent. Health care has also been one of the best performing US sectors for most of this year.

Nonetheless, many investors find the health care sector intimidating, having a tough time balancing more established players with cutting-edge biotechnology companies that have the potential promise of high profits but are extremely high risk. And while the health care sector as a whole is generally less volatile than the broader market, you can still find some shockingly high betas in a few niches of the sector.

Best Performing Stocks To Own Right Now: Lufkin Industries Inc.(LUFK)

Lufkin Industries, Inc. manufactures and supplies oilfield and power transmission products for use in energy infrastructure and industrial applications. The company operates through two segments, Oil Field and Power Transmission. The Oil Field segment manufactures and services artificial lift products, including reciprocating rod lift equipment, including air-balanced, beam-balance, crank-balanced, Mark II Unitorque, and hydraulic units. It also transports and repairs pumping units; and refurbishes used pumping units. In addition, this segment designs, manufactures, installs, and services computer control equipment and analytical services for artificial lift equipment, as well as operates an iron foundry to produce castings for new pumping units. Further, the Oil Field segment provides gas lift, plunger lift, and completion equipment. The Power Transmission segment designs, manufactures, and services speed increasing and reducing gearboxes. It also manufactures capital spa res for customers in conjunction with the production of new gearboxes, as well as produces parts for after-market service. In addition, this segment provides on and off-site repair and service for its own products, and also those manufactured by other companies. Further, the Power Transmission segment is involved in analysis, design, and manufacture of precision, custom-engineered tilting-pad bearings and related components for high-speed turbo equipment operating in critical duty applications, as well as services, repairs, and upgrades turbo-expander process units for air and gas separation. The company markets its products and services primarily in the United States, Europe, Canada, Latin America, the Middle East, and north Africa. Lufkin Industries, Inc. was founded in 1902 and is based in Lufkin, Texas.

Advisors' Opinion:

[By Marc Courtenay]
On April 8th, we learned that General Electric (GE) would be acquiring Lufkin Industries (LUFK). The deal is one of the three largest in the oilfield machinery and equipment industry during the past decade, and sets the stage for further acquisitions in this sector. Investors should start considering which companies might be next.

Best Performing Stocks To Own Right Now: Chemung Financial Corp (CHMG)

Chemung Financial Corporation, incorporated on January 2, 1985, is a financial holding company. The Company was organized for the purpose of acquiring Chemung Canal Trust Company (the Bank). The Company provides a range of financial services, such as insurance products, mutual funds, and brokerage services. The subsidiaries of the Company include Chemung Canal trust Company and CFS Group, Inc. CFS Group, Inc. offers a range of financial services including mutual funds, full and discount brokerage services, annuity and other insurance products and tax preparation services. Chemung Canal Trust Company is a full-service community bank with full trust powers. The Company manages its operations through two primary business segments: core banking and wealth management group services. The core banking segment provides revenues by attracting deposits from the general public and using such funds to originate consumer, commercial, commercial real estate, and residential mortgage loans, primarily in the Company�� local markets and to invest in securities. The wealth management group services segment provides revenues by providing trust and investment advisory services to clients.

The Bank is a New York chartered commercial bank, which engages in full-service commercial and consumer banking and trust business. The Bank's services include accepting time, demand and savings deposits, including negotiable order of withdrawal (NOW) accounts, savings accounts, insured money market accounts, investment certificates, fixed-rate certificates of deposit and club accounts. The Bank's services also include making secured and unsecured commercial and consumer loans, financing commercial transactions (either directly or participating with regional industrial development and community lending corporations), and making commercial, residential and home equity mortgage loans, revolving credit loans with overdraft checking protection and small business loans. Additional services include renting safe deposit faciliti! es and the provision of networked automated teller facilities and an Internet banking product featuring bill payment services. Wealth management services provided by the Bank include services as executor and trustee under wills and agreements, and guardian, custodian, trustee and agent for pension, profit-sharing and other employee benefit trusts, as well as various investment, pension, estate planning and employee benefit administrative services.

Lending Activities

At December 31, 2011, 22.5% of the Corporation�� loans consist of commercial real estate loans to borrowers in the real estate, rental or leasing sector. The major portion of this sector comprises borrowers that rent, lease or otherwise allow the use of their own assets by others. The Bank�� loan portfolio includes commercial, financial and agricultural loans, commercial mortgages, residential mortgages, indirect consumer loans, and consumer loans. As of December 31, 2011, the total loan portfolio of the Bank was at $796,915,000.

Investment Activities

The Bank�� investment portfolio consists of obligations of the United States Government and the United States Government sponsored entities; mortgage-backed securities, residential; obligations of states and political subdivisions; corporate bonds and notes; SBA (small business administration ) loan pools; trust preferred securities, and corporate stocks. As of December 31, 2011, the investment portfolio of the Bank was at $289,182,000.

Sources of Funds

The Bank�� source of funds includes non-interest-bearing demand deposits, interest-bearing demand deposits, savings and insured money market deposits, and time deposits. As at December 31, 2011, the total deposits of the Bank was at $965,183,000.

Advisors' Opinion:

[By Doug Hughes]
Steve Halpern: Okay, today we��e going to walk through two specific investment ideas that you find attractive in the banking sector. The first is Chemung Financial (CHMG), a New York-based operation that happens to be one of the oldest banks in the country. Could you tell us a little more about that?

Top Low Price Stocks To Invest In Right Now: Union First Market Bankshares Corp (UBSH)

Union First Market Bankshares Corporation is a bank holding company. The Company offers financial services through its community bank subsidiary Union First Market Bank and three non-bank financial services affiliates. The Company�� non-bank financial services affiliates are Union Mortgage Group, Inc., Union Investment Services, Inc. and Union Insurance Group, LLC. The Company operates in two segments: traditional full service community banking business and its mortgage loan origination business. The Company is a community banking organization based in Virginia and provides full service banking to the Northern, Central, Rappahannock, Shenandoah, Tidewater, and Northern Neck regions of Virginia through Union First Market Bank. Union First Market Bank (the Bank) is a full service community bank offering consumers and businesses a range of banking and related financial services, including checking, savings, certificates of deposit and other depository services, as well as loans for commercial, industrial, residential mortgage and consumer purposes. The Bank issues credit cards and delivers automated teller machine (ATM) services. The Bank also offers Internet banking services and online bill payment for all customers, whether retail or commercial. The Bank also offers private banking and trust services to individuals and corporations through its Financial Guidance Group. In January 2014, the Company acquired StellarOne Corporation.

As of December 31, 2011, Union First Market Bank operated 99 locations in the counties of Albemarle, Caroline, Chesterfield, Essex, Fairfax, Fauquier, Fluvanna, Frederick, Hanover, Henrico, James City, King George, King William, Lancaster, Loudoun, Nelson, Northumberland, Richmond, Spotsylvania, Stafford, Warren, Washington, Westmoreland, York, and the independent cities of Charlottesville, Colonial Heights, Culpeper, Fredericksburg, Harrisonburg, Newport News, Richmond, Staunton, Stephens City, Waynesboro, Williamsburg, and Winchester. Union First Market Bank a! lso operates loan production offices in Staunton, Winchester, and Tappahannock. Union Investment Services, Inc. provides brokerage services; Union Mortgage Group, Inc. provides a line of mortgage products, and Union Insurance Group, LLC offers various lines of insurance products. Union First Market Bank also owns a non-controlling interest in Johnson Mortgage Company, L.L.C.

Union Investment Services, Inc. provides securities, brokerage and investment advisory services. It has 11 offices within the Bank�� trade area and is a full service investment company handling all aspects of wealth management, including stocks, bonds, annuities, mutual funds and financial planning. Securities are offered through a third party contractual arrangement with Raymond James Financial Services, Inc., an independent broker dealer. Union Mortgage Group, Inc., (UMG) has offices in Virginia (seven), Maryland (three), North Carolina (three), and South Carolina (two). UMG is also licensed to do business in selected states throughout the Mid-Atlantic and Southeast, as well as Washington, D.C. It provides a variety of mortgage products to customers in those areas. The mortgage loans originated by UMG are generally sold in the secondary market through purchase agreements with institutional investors. Union Insurance Group, LLC (UIG), an insurance agency, is owned by the Bank and Union Mortgage. This agency operates in a joint venture with Bankers Insurance, LLC, an insurance agency owned by community banks across Virginia and managed by the Virginia Bankers Association. UIG generates revenue through sales of various insurance products, including long term care insurance and business owner policies.

Advisors' Opinion:

[By GuruFocus]
Reduced: Union First Market Bankshares Corp (UBSH)
Tom Gayner reduced to his holdings in Union First Market Bankshares Corp by 12.64%. His sale prices were between $18.24 and $20.59, with an estimated average price of $19.52. The impact to his portfolio due to this sale was -0.18%. Tom Gayner still held 1,658,339 shares as of 06/30/2013.

Best Performing Stocks To Own Right Now: Ferro Corporation (FOE)

Ferro Corporation, together with its subsidiaries, produces and sells specialty materials and chemicals in the United States and internationally. It operates in six segments: Performance Coatings, Electronic Materials, Color and Glass Performance Materials, Polymer Additives, Specialty Plastics, and Pharmaceuticals. The company provides electronic, color, and glass materials, including conductive metal powders, polishing materials, glazes, enamels, pigments, decoration colors, and other performance materials. It also offers polymer and ceramic engineered materials, such as polymer additives, engineered plastic compounds, pigment dispersions, glazes, frits, porcelain enamel, pigments, inks, and high-potency pharmaceutical active ingredients. The company provides its products for a range of applications in various markets, such as appliances, automobiles, building and renovation, electronics, household furnishings, industrial products, packaging, and pharmaceuticals. The com pany sells its products to manufacturers of ceramic tile, major appliances, construction materials, automobile parts, glass, bottles, vinyl flooring and wall coverings, and pharmaceuticals directly, as well as through agents and distributors. Ferro Corporation was founded in 1919 and is headquartered in Mayfield Heights, Ohio.

Advisors' Opinion:

[By alicet236]
President and CEO of Ferro Corp (FOE) Peter T. Thomas bought 20,000 shares on Aug. 7, 2013 at an average price of $6.8. The total transaction amount was $136,000.

Best Performing Stocks To Own Right Now: Elecsys Corporation(ESYS)

Elecsys Corporation provides data acquisition systems, machine to machine (M2M) communication technology solutions, and custom electronic equipment for critical industrial applications in the United States and internationally. The company designs and manufactures wireless remote monitoring and telemetry solutions to the energy infrastructure sector, as well as other industrial markets under the Pipeline Watchdog and NTG brand names. It also provides process monitoring, data communication, and cyber security solutions under the SensorCast, Director, and zONeGUARD brand names; smart asset tagging solutions based on radio frequency identification (RFID) technologies, which include custom tags, readers, and software under the brand name of eXtremeTAG; custom electronic design and manufacturing services (EDMS) under the DCI brand name; and ultra-rugged handheld computing solutions, as well as handheld computers, printers, peripherals, and application software under the brand na me of Radix. In addition, the company designs, manufactures, and tests a range of electronic assemblies, including circuit boards, high-frequency electronic modules, microelectronic assemblies, and turn-key products; and provides liquid crystal displays (LCDs) devices and modules, and hardware and software design services to its original equipment manufacturers (OEMs) partners, as well as offers integrated data collection and reporting solutions. It primarily serves energy infrastructure, safety and security systems, industrial controls, irrigation and water management, transportation, military, and aerospace markets. Elecsys Corporation was founded in 1991 and is headquartered in Olathe, Kansas.

Advisors' Opinion:

[By John Udovich]
Small cap machine-to-machine (M2M) stock Elecsys Corp (NASDAQ: ESYS) jumped 8.99% yesterday and is up 254% over the past year, meaning it might be time to take a closer look at the stock and its performance verses other small cap M2M stocks like Digi International Inc (NASDAQ: DGII), Numerex Corp (NASDAQ: NMRX) and Sierra Wireless, Inc (NASDAQ: SWIR). First of all though, I should mention that machine-to-machine (M2M) broadly refers to technologies that allow both wireless and wired systems to communicate with other devices of the same type and this can be through any type of technology ranging from instruments to networks to applications that create connections between devices.

Best Performing Stocks To Own Right Now: Publicis Groupe SA (PUB)

Publicis Groupe SA (Publicis Groupe) is a France-based company engaged in the provision of advertising services, specialized agencies and marketing services (SAMS) and media services. Its primary activities include communications, media agency, and digital and healthcare communications. Publicis Groupe offers local and international clients a complete range of advertising services through three global advertising networks: Leo Burnett, Publicis, Saatchi & Saatchi, and two multi-hub networks, Fallon and 49%-owned Bartle Bogle Hegarty. In August 2013, the Company acquired Engauge Marketing LLC. In November 2013, it announced the acquisition of ETO. In November 2013, it acquired majority of shares of Walker Media from M&C Saatchi PLC. In December 2013, Publicis Groupe SA acquired Synergize Digital Pty Ltd. In December 2013, it acquired Verilogue Inc. In January 2014, it acquired Qorvis Communications. Advisors' Opinion:

[By Jonathan Morgan]
European stocks climbed to a six-week high as Publicis (PUB) Groupe SA posted increased profit, London Stock Exchange Group Plc reported higher revenue and fewer Americans than forecast filed jobless-benefit claims.

Wednesday, April 16, 2014

2014 Will Be Flat Time For Equities

By Chris Haley

This year and early next is going to be a relatively flat time for equities. My Target for the S+P is 1950 at year end, but we'll be going up and down in between. This April correction will take us down to near 1700, but in May I guess we'll be near 1900, then back down June, up in July, Down In Aug/Sept then Oct to year end a rally to take us to 1950. Early next year we'll rally over 2,000, only for a fed funds increase pull back to 1850 by the summer and so we'll have gone nowhere for 18 months, but it's a monthly traders dream! Expect after Summer 2015 that the US economy and earnings will pick up for a big rally 2015-2017 to S+P 3,000.

Top 10 Internet Companies To Invest In Right Now

Regards.

Chris Haley is a full time investor with thirty years experience and used to making around 50% a year in equity capital returns, having worked previously for financial investment firms JP Morgan's Save and Proper in the UK and Royal Insurance.

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Markets Trading Ideas

Originally posted here...

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Tuesday, April 15, 2014

Despite Strong Earnings, Citigroup Stock Is Still a Sell

Popular Posts: NOK Restructuring Leads to a Buy on Nokia StockTime to Rinse Away Your Procter & Gamble Stock HoldingIt’s Time to Hang Up on Verizon Stock (VZ) Recent Posts: Despite Strong Earnings, Citigroup Stock Is Still a Sell Hold on to Bed Bath and Beyond (BBBY) … at Least for Now JPM Stock is Feeling Down on Disappointing Earnings View All Posts

Welcome to the Stock of the Day.

Citigroup Despite Strong Earnings, Citigroup Stock Is Still a Sell Let’s take a moment to review Citigroup (C), which is rising following this morning’s first-quarter earnings announcement. Citigroup shares have had a rough year so far, but is this a sign of better times to come? Or is it time to take profits?

Find out today.

Company Profile

Headquartered in Manhattan, Citigroup is the third-largest bank in the U.S. in terms of total assets. While the company’s roots stretch back over two hundred years, Citigroup as we know it was formed in 1998 through the merger of bank Citicorp and financial conglomerate Travelers (TRV).

Notably, Citi holds more Spanish debt than any other U.S. bank, and it was hit particularly hard during the 2008 financial crisis. This year is shaping up to be a lukewarm year for the bank, with sales expected to decline 0.6% over 2013 and earnings forecast to rise just 7.3%.

Earnings Buzz

Before the opening bell today, Citigroup reported that net income rose 4% year-over-year to $3.96 billion. Adjusted earnings weighed in at $1.30 per share, which beat the $1.14 consensus estimate by 14%.

Over the same period, adjusted revenues declined 1% to $20.12 billion. Excluding special items, revenue came in at $20.12 billion, topping the $19.37 billion consensus estimate. While the company’s markets and securities revenues fell 12% and investment banking revenues declined 10%, equity markets revenue jumped 13%.

Shares of C opened up following the earnings announcement, and stayed strong throughout the time of this writing.

Current Ratings

Before you buy any stock, you should always run it through my free Portfolio Grader ratings system. This Conservative ranked stock has declined significantly in my rating tool over the past several months. As recently as August this stock was a buy.

However, since then Citigroup has deteriorated in terms of both fundamentals (C Fundamental Grade) and buying pressure, which measures the stock’s risk-to-return ratio (F Quantitative Grade). When it comes to fundamentals, Citigroup has a mixed track record. It earns As on operating margin growth, earnings growth and cash flow, but it fails on sales growth, earnings surprises and analyst earnings revisions.

The other two metrics (earnings momentum and return on equity) receive Cs.

Bottom Line: As of this posting I consider Citicorp stock a D-rated Sell. It may be upgraded to a hold once I plug the latest earnings data in, but I wouldn’t count on a buy recommendation anytime soon.

Would you like to check the fundamentals backing up one of your stocks? For more stock grades, please visit my Portfolio Grader website!

Monday, April 14, 2014

Don't Worry So Much About Government Debt

There are legitimate worries for the short term regarding the government debt, like how Washington will handle its next chance to agree on a spending bill and raise the debt ceiling.

But the long-term fears regarding the debt can probably be filed away in the archives along with the other doomsday scenarios of 2008.

There was the certainty that the government's massive bailout of banks and automakers would not work. At worst the money was being thrown down a bottomless pit, and the banks and auto firms would fail anyway. And at best it would result in the U.S. owning (nationalizing) the largest banks and automakers and running them as continuing money-losing operations, like the postal service.

Instead they came back stronger than ever, paid back the loans (plus interest); the government made profits on the temporary investments, and is now beginning to receive additional tens of $billions in fines from banks and other financial firms for the wrongdoings that contributed to the financial meltdown.

But there is still the remaining popular scenario that the resulting record government debt will eventually either sink the nation, or at least result in huge cuts in the safety nets of social security and Medicare, and leave the next generation struggling for decades with the unmanageable debt burden.

By looking through the rear view mirror it's easy to reach that conclusion.

The alarming situation is that U.S. government debt had already almost doubled from $5.7 trillion in 2000 to $10.0 trillion in 2008. And since then it has almost doubled again, reaching $19 trillion in 2013.

If we extend that trend endlessly into the future, which many analysts and critics are, obviously there could be nothing but catastrophe down the road.

But it's like most doomsday scenarios. They are created by extending past trends in a straight line into the future, without consideration of how conditions change. And there are now dramatic changes taking place related to the government debt.

It is true that the debt is still growing, since the government is still spending more than it's taking in. However, the annual deficit is shrinking dramatically.

According to the most recent Treasury Department report, the deficit, at $680.3 billion for fiscal year 2013 (ended September 31), has fallen to its lowest level in five years, as government spending has declined, while tax revenues increased to $2.77 trillion, a record high.

5 Best Net Payout Yield Stocks To Buy Right Now

The reversal of the trend is not unprecedented.

In the 1980s and early 1990's government debt reached then record levels, and for similar reasons. The Reagan administration had undertaken massive government spending programs to pull the economy out of the 1970's malaise; the 1970's string of recessions, stagflation, and repeated cyclical bear markets during that long 1965-82 secular bear market.

The huge government spending efforts worked that time too, even though at the time the popular opinion was also that there would be no way to escape the consequences. Economists competed with each other in the 1980's with dire forecasts of how the nation was headed inevitably into bankruptcy.

But in the early 1990's, as the economy began to recover, although like now very anemically, the fractional improvement in the economy and increase in tax revenue from improving employment, rising stock market profits, etc., had the annual budget deficits trending lower each year. Like now, even though the annual deficits were smaller, the national debt was still rising, but at a much slower pace.

As we know now those annual deficits continued to come down until they disappeared, actually turning into increasing annual surpluses by the late 1990's.

Sunday, April 13, 2014

Best Logistics Stocks To Invest In 2015

National supermarket chain Kroger (NYSE:KR) appears to be running off the playbook that says strong companies should leverage that strength to put even more distance between them and their rivals. In buying Harris Teeter (Nasdaq:HTSI), Kroger is not only buying a growing, high-quality grocery chain in the Mid-Atlantic, but also positioning itself to take advantage of even more leverage in purchasing, distribution, and logistics. Provided Kroger doesn't interfere with what made Harris Teeter stand out from the crowd, this looks like a deal with good long-term return prospects.

Paying Up For A Good Property
Harris Teeter was widely known to be for sale, with multiple speculations in the financial press about which private equity groups had, or had not, placed bids for the growing mid-Atlantic chain of supermarkets. Accordingly, it's no great surprise that Kroger had to pay up to get a deal done.

Kroger will pay $49.38 per share in cash, and assume $100 million in Harris Teeter debt. Not only is that per-share price about one-third higher than where Harris Teeter was before word spread that the company was exploring a scale, but the EV/revenue and EV/EBTIDA multiples are well ahead of industry averages.

Best Logistics Stocks To Invest In 2015: Green Dot Corporation (GDOT)

Green Dot Corporation operates as a bank holding company. It offers general purpose reloadable prepaid debit cards, and cash loading and transfer services in the United States. The company�s products include Green Dot MasterCard, Visa-branded prepaid debit cards, and various co-branded reloadable prepaid card programs; Visa-branded gift cards; and MoneyPak and swipe reload proprietary products that enable cash loading and transfer services through its Green Dot Network. Its Green Dot Network enables consumers to use cash to reload its prepaid debit cards or to transfer cash to any of the company�s Green Dot Network acceptance members, including competing prepaid card programs, and other online accounts. The company markets its cards and financial services to banked, underbanked, and unbanked consumers. Green Dot Corporation offers its products and services through retail distributors, including mass merchandisers, drug store and convenience store chains, and supermarket chains; the Internet; and relationships with other businesses. Its prepaid debit cards and prepaid reload services are available to consumers at approximately 60,000 retail locations nationwide and online at greendot.com. The company was formerly known as Next Estate Communications, Inc. and changed its name to Green Dot Corporation in October 2005. Green Dot Corporation was incorporated in 1999 and is headquartered in Pasadena, California.

Advisors' Opinion:

[By Sean Williams]
It also might make sense for Visa to pick up one of the small but established names in the prepaid card sector, such as Green Dot (NYSE: GDOT ) . Green Dot is in the process of diversifying the number of retailers it's partnered with -- as it used to be skewed heavily toward Wal-Mart -- but will find the going tough if it needs to use its $358 million in net cash to promote its brand against the likes of American Express and MasterCard. With NetSpend agreeing to be purchased by Global Payments, I see Green Dot putting up the "For Sale" yard sign as the next logical step.
[By Sean Williams]
But not every prepaid company offered what TSYS was looking for. Green Dot (NYSE: GDOT ) , for example, directly competes with NetSpend, but has a good chunk of its revenue tied solely to Wal-Mart. With the introduction of new competitors within Wal-Mart, Green Dot was left scrambling for new retail outlets last summer and has yet to fully recover. TSYS made the wiser decision to scoop up the pricier NetSpend, which had considerably better retail outlet diversity.

Best Logistics Stocks To Invest In 2015: UnitedHealth Group Incorporated(UNH)

UnitedHealth Group Incorporated provides healthcare services in the United States. Its Health Benefits segment offers consumer-oriented health benefit plans and services to national employers, public sector employers, mid-sized employers, small businesses, and individuals; and non-employer based insurance options for purchase by individuals. It also provides health and well-being services for individuals aged 50 and older; and for services dealing with chronic disease and other specialized issues for older individuals, as well as health plans for the beneficiaries of acute and long-term care Medicaid plans. This segment offers its services through a network of 730,000 physicians and other health care professionals, and 5,300 hospitals. Its OptumHealth segment provides health, financial, and ancillary services and products that assist consumers through personalized health management solutions; benefit administration, and clinical and network management; health-based financi al services; behavioral solutions; and specialty benefits, such as dental, vision, life, critical illness, short-term disability, and stop-loss product offerings. The company?s Ingenix segment offers database and data management services, software products, publications, consulting and actuarial services, business process outsourcing services, and pharmaceutical data consulting and research services. Its Prescription Solutions segment provides integrated pharmacy benefit management services comprising retail network pharmacy contracting and management, claims processing, mail order pharmacy services, specialty pharmacy, benefit design consultation, rebate contracting and management, drug utilization review, formulary management programs, disease therapy management, and adherence programs to employer groups, union trusts, managed care organizations, Medicare-contracted plans, Medicaid plans, and third party administrators. The company was founded in 1974 and is based in Minne tonka, Minnesota.

Advisors' Opinion:

[By Amanda Alix]
It's a beautiful day for the Dow Jones Industrial Average (DJINDICES: ^DJI ) so far, as the index continues its climb following some excellent news on the trade deficit and a sweet upgrading of health insurer UnitedHealth Group (NYSE: UNH ) from Deutsche Bank.
[By Anders Bylund]
Let's start with the day's biggest winner. Shares of health insurance giant UnitedHealth Group (NYSE: UNH ) have jumped 6.8% today on a combination of strong earnings and in-line sales. In the second quarter, revenue rose 12% year over year to $30.4 billion. Diluted GAAP earnings jumped 10% to $1.40 per share. Analysts were expecting sales of $30.5 billion and earnings of $1.25 per share.
[By Dan Carroll]
Earnings season marches on, and two big reports have shaken up the stock market today. The Dow Jones Industrial Average (DJINDICES: ^DJI ) is down 79 points, or 0.54%, as of 2:10 p.m. EDT. Today's earnings releases from Dow components Verizon (NYSE: VZ ) and UnitedHealth (NYSE: UNH ) have investors headed in opposite directions with these stocks, while one major disappointment from earlier in the week continues to haunt the market. Let's check out what you need to know.

Top 10 Retail Stocks To Buy Right Now: Volterra Semiconductor Corporation(VLTR)

Volterra Semiconductor Corporation engages in the design, development, and marketing of analog and mixed-signal power management semiconductors for computing, storage, networking, and consumer markets. The company?s products include integrated voltage regulator semiconductors, integrated power protection and distribution semiconductors, and scalable voltage regulator semiconductor chipsets that transform, regulate, deliver, and monitor the power consumed by digital semiconductors. Its analog and mixed signal power management semiconductor products are primarily used in applications that require voltage regulating performance, such as data networking equipment, desktop and notebook computers, digital televisions, digital video recorders, game consoles, enterprise storage equipment, graphics cards, hard disk drives, printers, raid cards, servers, telecommunications equipment, base stations, and workstations. The company sells its products primarily to original equipment man ufacturers, original design manufacturers, contract equipment manufacturers, and merchant power supply manufacturers directly through its internal sales force, as well as indirectly through distributors and outsourced suppliers. It has operations in the United States, China, Singapore, Japan, Taiwan, and Germany. Volterra Semiconductor Corporation was founded in 1996 and is based in Fremont, California.

Advisors' Opinion:

[By Sally Jones]
Volterra Semiconductor Corp. (VLTR)
Up 30% over 12 months, Volterra Semiconductor Corp. has a market cap of $575.49 million; shares trade with a P/E of 41.20.

Best Logistics Stocks To Invest In 2015: Austin Engineering Ltd (ANG)

Austin Engineering Limited is engaged in the manufacture, repair, overhaul and supply of mining attachment products, general steelwork structures and other associated products and services for the industrial and resources-related business sectors. The Company operates in four segments: Australia, which includes mining equipment, other products and repair and maintenance services; Americas, which includes mining equipment and other products, consisting of North America and South America; Asia, which includes Indonesia for mining equipment and other products, and the Middle East, which includes aluminum smelter equipment and products. In October 2013, Austin Engineering Limited completed the acquisition of the business of Servigrut. Advisors' Opinion:

[By Julia Leite]
South African miners rallied after a recovery in gold prices. The FTSE/JSE Africa All-Share Index climbed 1.5 percent in Johannesburg, with Harmony Gold Mining Co. (HAR) and AngloGold Ashanti Ltd. (ANG) adding at least 5.2 percent.

Best Logistics Stocks To Invest In 2015: Pacira Pharmaceuticals Inc.(PCRX)

Pacira Pharmaceuticals, Inc., a specialty pharmaceutical company, engages in the development, commercialization, and manufacture of pharmaceutical products for use in hospitals and ambulatory surgery centers. The company develops pharmaceutical products based on its proprietary DepoFoam drug delivery technology. Its product portfolio includes EXPAREL, a long-acting non-opioid postsurgical analgesic for postsurgical pain management; DepoCyt for the treatment of lymphomatous meningitis, a cancer of the immune system; DepoDur for controlling post operative pain; DepoNSAID, which is in preclinical trials for the relief of acute pain; and DepoMethotrexate that is in preclinical trials for the treatment of rheumatoid arthritis oncology. The company was formerly known as Pacira, Inc. and changed its name to Pacira Pharmaceuticals, Inc. in October 2010. Pacira Pharmaceuticals, Inc. was founded in 2006 and is headquartered in Parsippany, New Jersey.

Advisors' Opinion:

[By Lisa Levin]
Pacira Pharmaceuticals (NASDAQ: PCRX) shares moved up 6.48% to $69.69. The volume of Pacira Pharmaceuticals shares traded was 350% higher than normal. Pacira Pharmaceuticals priced its public offering of 1,600,000 shares at $64.00 per share.
[By Selena Maranjian]
Pacira Pharmaceuticals (NASDAQ: PCRX ) surged 81%, and one of its directors might be thinking that it's overvalued, too, as he sold more than $2 million worth of shares recently. (He might simply have been generating cash for some other purpose, however. While insider buying is a bullish sign, insider selling can mean many things.) Several other insiders have also sold shares, though not quite so many. The company has a pain management treatment, Exparel, which is being studied to treat additional conditions, with promising results so far. Pacira's last quarter featured growing revenue but disappointing earnings. The stock has been downgraded by Wall Street, due in part to its debt, which is coupled with net losses and negative free cash flow.

Best Logistics Stocks To Invest In 2015: Pebblebrook Hotel Trust(PEB)

Pebblebrook Hotel Trust, through Pebblebrook Hotel, L.P., operates as a real estate investment trust. The company acquires and invests primarily in hotel properties located in the United States. It holds interests in the Doubletree Bethesda Hotel and Executive Meeting Center located in Bethesda, Maryland; Sir Francis Drake Hotel located in San Francisco, California; and InterContinental Buckhead Hotel located in Atlanta, Georgia. As a REIT, the company is not subject to federal income tax to the extent that it distributes at least 90% of its taxable income to its shareholders. The company was founded in 2009 and is based in Bethesda, Maryland.

Advisors' Opinion:

[By Marshall Hargrave]
The other key benefit for Strategic is that it enjoys industry-leading earnings before interest, taxes, depreciation and amortization (EBITDA) per available room. For 2012, Strategic generated $81 per room of EBITDA. Compare this to top comps LaSalle Hotel (NYSE: LHO) at $74 per room and Pebblebrook Hotel Trust (NYSE: PEB) at $71. The reason for this is that Strategic is much less reliant than its peers on rooms, with much greater exposure to food and beverages. Strategic earns 53% of its revenue from rooms, while its peers get around 66% of revenues from rooms.
[By Jonas Elmerraji]
Small-cap hotel investment REIT Pebblebrook Hotel Trust (PEB) is setting up a similar pattern to the one in EXR -- with a few exceptions.

PEB isn't forming an ascending triangle; support isn't in the same sort of uptrend in this stock. Instead, PEB is forming a rounding pattern with resistance at $28. Rounding patterns look just like they sound -- they indicate a shift in control from sellers to buyers. While this setup is most common as a "bottoming" pattern, PEB's price action doesn't change the implications if shares can break out above $28. That's our buy signal.

Whenever you're looking at any technical price pattern, it's critical to think in terms of buyers and sellers. Triangles, rectangles and other price pattern names are a good quick way to explain what's going on in this stock, but they're not the reason it's tradable. Instead, it all comes down to supply and demand for shares.

That resistance line at $28 is a price where there's an excess of supply of shares; in other words, it's a place where sellers have been more eager to take recent gains and sell their shares than buyers have been to buy. That's what makes the move above it so significant -- a breakout indicates that buyers are finally strong enough to absorb all of the excess supply above that price level. Wait for that signal to happen before you jump into this stock.
[By Rich Duprey]
Hotel operator�Pebblebrook Hotel Trust (NYSE: PEB ) announced today its second-quarter dividend of $0.16 per share, the same rate it paid last quarter after raising the payout 33% from $0.12 per share.
[By James E. Brumley]
In a perfect world, an investor could simply look at a company's history and its plausible earnings forecasts, and jump in (or out) knowing the stock's current price basically made sense with respect to past and future performance. We don't live or trade in a perfect world though. In the world we're actually in right now, most stocks, sectors, and industries have run up far beyond a justifiable value... perhaps except for hotel and lodging REIT stocks Host Hotels and Resorts Inc. (NYSE:HST), Strategic Hotels and Resorts Inc. (NYSE:BEE), and Pebblebrook Hotel Trust (NYSE:PEB).

Best Logistics Stocks To Invest In 2015: Imperial Holdings Inc. (IFT)

Imperial Holdings, Inc., through its subsidiaries, operates as a specialty finance company in the United States. The company operates in two business segments: Life Finance and Structured Settlements. The Life Finance segment comprises life settlements and finance loan businesses. The Structured Settlement segment purchases structured settlements at a discounted rate and sells such assets to third parties. This segment primarily markets its products through the Internet and television. Imperial Holdings, Inc. was founded in 2006 and is based in Boca Raton, Florida.

Advisors' Opinion:

[By Whopper Investments]
Note: This is my response to the recent short case on Imperial Finance (IFT). Obviously, all humans are fallible, and I'm sure someone can find just as much to argue with my long case as I found to argue with his short case. Please read for yourself, do your own research, and make your own decision. I am long IFT and plan on fully participating in the rights offering.

Best Logistics Stocks To Invest In 2015: Adecco SA (ADEN)

Adecco SA is a Switzerland-based holding company and provider of human resource services, including temporary staffing, outsourcing, permanent placement, outsourcing, outplacement and career management, training and consulting. The Company divides its activities into two main sectors: General Staffing and Professional Staffing. The General Staffing sector, which is the Company's prime segment, is divided into two business lines: Adecco Office, which includes Adecco Office and Office Angels brands, and Adecco Industrial, including Adecco, Adecco Industrial and Tuja brands. The Professional Staffing sector is divided into four business lines: Information Technology, including Modis and Computer People brands; Engineering & Technical, including Adecco Engineering & Technical, Entegee and euro engineering brands; Finance & Legal, including Badenoch & Clark and Accounting Principals brands, and Medical & Science, including Soliant and Adecco Medical brands. Advisors' Opinion:

[By Corinne Gretler]
��decco fulfilled expectations on all levels,��Patrick Hasenboehler, an analyst at J. Safra Sarasin in Zurich, wrote in a report to clients. ��he outlook statement is quite promising. Adecco (ADEN)�� strategy of focusing on profitability will continue to pay off.��

Best Logistics Stocks To Invest In 2015: Take-Two Interactive Software Inc.(TTWO)

Take-Two Interactive Software, Inc. publishes, develops, and distributes interactive entertainment software, hardware, and accessories worldwide. The company develops and publishes software titles for various gaming and entertainment hardware platforms, including PlayStation3 and PlayStation2 computer entertainment systems, PlayStation Portable system, Xbox 360 video game and entertainment system, and Wii and DS systems, as well as for the personal computer and games for Windows. It offers products through its wholly owned labels Rockstar Games and 2K, which publishes titles under 2K Games, 2K Sports, and 2K Play. The company, through its subsidiary, Jack of All Games, also distributes software, hardware, and accessories in North America. Its proprietary brand franchises include Grand Theft Auto; Sid Meier's Civilization; Max Payne; Midnight Club; Manhunt; Red Dead Revolver; Bully; BioShock; Sid Meier's Railroads!; Sid Meier's Pirates!; Carnival Games; and Top Spin, as wel l as licensed brands comprise the sports games Major League Baseball 2K; NBA 2K; and NHL 2K. The company sells its software titles to retail outlets through direct relationships with large retail customers and third party distributors. Its customers include mass merchandisers, specialty retailers, video stores, electronics stores, toy stores, national and regional drug stores, and supermarket and discount store chains. The company was founded in 1993 and is headquartered in New York, New York.

Advisors' Opinion:

[By Michael Calia]
Take-Two Interactive Software Inc.(TTWO) dramatically increased revenue and profit in its fiscal third quarter, as continuing strong demand for “Grand Theft Auto V” and other titles helped overcome problems that have hurt competitors. But the company gave a disappointing outlook, which dragged shares down 5.8% to $17.80 premarket.
[By Kurt Avard]
Fool Rick Munarriz�wrote about four video game stocks to watch this past December. While two of these companies,�Activision (NASDAQ: ATVI ) and Take-Two Interactive Software (NASDAQ: TTWO ) , are priced notably higher than when that article was published, detractors note that the burst in stock prices means very little in the long run.