Saturday, June 30, 2012

Where to Invest Money in Bonds With $10,000 to Invest

You want to invest money in bonds in 2011 and earmark $10,000 to earn higher interest than your bank offers. Your best bond investment would be a bond fund because here you get diversification and professional management… for a price. Before you call a financial planner and rush into things, it’s best to know where to invest to get the best bond fund for your money.

If you invest $10,000 in the wrong bond fund in 2011 you could lose money in 4 different ways. First, up-front sales charges could eat up a few hundred dollars. Second, yearly fund expenses could cost you money every year to the tune of a couple hundred. Third, you could be talked into putting money into a risky bond fund. Fourth, even the best bond fund could lose money in 2011 and beyond. The first 3 money mistakes can easily be avoided.

Let’s start with the money basics. People invest in a bond fund to earn greater interest income, not to make their money grow. That’s what a stock fund is for. In the prevailing interest rate environment don’t expect more than 5% a year in interest income (dividends) for 2011 from even the best bond fund. We’ll describe the best fund later. For now focus on the 5% (or less) you might earn and the cost of investing mentioned above. A 3% to 4% sales charge and expenses of 1% to 2% the first year means that you give back your interest income for 2011. There is NO good reason to do this.

Now let’s look at the third way to lose money. Why would a securities salesman who calls himself a financial planner talk you into a riskier bond fund? He wants your money so he can make a commission. If he talks 7% or 8% vs. 3% or 4%… you are more likely to invest money with him and not pay attention to what it is costing you to invest. There are basically two ways you can earn significantly higher interest income in a bond fund, and both increase your risk. One, you can sacrifice quality. Two, you can go with a long-term fund that holds debt securities with average maturities of 20 years or more.

When you combine both lower quality and long-term maturities you get the best bond fund yields, or highest interest income potential. You also get more risk than you probably bargained for. Low quality increases the likelihood of default: interest and principal payments may not be paid by some of the issues in the bond portfolio. Long-term issues that mature in 20 or more years are the biggest risk in today’s low interest rate environment. When you invest money in a long-term bond fund you will live with higher “interest rate risk” than the best bond fund for 2011 has.

Here’s how to picture interest rate risk. A bond fund holds hundreds of debt securities and each pays a fixed interest income that never changes for the life of the security. Upon maturity interest payments stop and the owner (in this case the fund you invest money in) is paid back the principal that was borrowed. Now picture what happens to the value of these debt securities (that trade in the market like stocks do) when interest rates in general zoom upward. The price or value FALLS to adjust for the fact that higher rates are now available elsewhere. That’s interest rate risk and it applies to all marketable debt securities.

If you invest money in a fund that holds short-term maturities you won’t be greatly affected. But a bond fund that holds 20 or 25 year maturities will get clobbered when interest rates rise significantly. It’s got low interest rates locked in for many years, and the price (value) of their holdings will fall to adjust for this. If you have your $10,000 invested with them, you lose money. This is not the place to invest money in 2011, with interest rates near all-time lows.

Here’s where to invest money: the best bond fund for 2011 and beyond. You’ll cut costs, which directly increases the money you make and keep. You’ll also lower your risk. Some major no-load fund companies offer NO sales charges AND low yearly expenses. To get the best fund for you money put your $10,000 in a BOND INDEX FUND, where your total cost to invest can be less than �% a year. To keep risk moderate while earning a respectable interest income go with a medium to high quality fund that invests in corporate bonds. Go intermediate-term, with an average maturity of 5 to 7 years.

Where do you find all of the above? Go to the websites of the largest no-load fund companies: Vanguard, Fidelity, and T Rowe Price. What exactly do you want to invest your money in? The best bond fund for 2011, which is: A no-load, medium to high quality, intermediate-term, BOND INDEX FUND. When ready to invest just call the fund company of your choice toll-free and explain that you have $10,000 to invest in the above fund. They’ll gladly help you invest your money, and will give you good service in the future as well.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

Progress Software Beats Analyst Estimates on EPS

Progress Software (Nasdaq: PRGS  ) reported earnings on Jan. 3. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Nov. 30 (Q4), Progress Software beat expectations on revenues and beat expectations on earnings per share.

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

Margins contracted across the board.

Revenue details
Progress Software reported revenue of $136 million. The six analysts polled by S&P Capital IQ foresaw a top line of $134 million. Sales were 6.1% lower than the prior-year quarter's $145 million.

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

EPS details
Non-GAAP EPS came in at $0.34. The five earnings estimates compiled by S&P Capital IQ predicted $0.33 per share on the same basis. GAAP EPS of $0.18 for Q4 were 42% lower than the prior-year quarter's $0.31 per share.

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

Margin details
For the quarter, gross margin was 83.6%, 230 basis points worse than the prior-year quarter. Operating margin was 14.5%, 980 basis points worse than the prior-year quarter. Net margin was 8.6%, 610 basis points worse than the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods.

Looking ahead
What does the future hold?

Next quarter's average estimate for revenue is $121 million. On the bottom line, the average EPS estimate is $0.25.

Next year's average estimate for revenue is $519 million. The average EPS estimate is $1.24.

Investor Sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 39 members out of 49 rating the stock outperform, and 10 members rating it underperform. Among 16 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 11 give Progress Software a green thumbs-up, and five give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Progress Software is outperform, with an average price target of $24.

  • Add Progress Software to My Watchlist.

Verizon: Davenport Downgrades; Cites Concerns On Cash Flows

Davenport & Co. analyst F. Drake Johnstone today cut his rating on Verizon (VZ) to Neutral from Buy, citing concerns that cash flow constraints will make it difficult to increase its dividend payout.

Johnstone notes that the company at some point in the next two years will begin paying out 45% of the free cash flow from Verizon Wireless to joint venture partner Vodafone (VOD). Once that happens, he contends, the current dividend will consumer most of the company’s free cash flow, leaving little room for dividend increases. “We believe that investors will be more attracted to other telecommunications carriers such as Bell Canada and European carriers that have significant free cash flow and plenty of room to increase their dividend payments over the next several years,” he writes in a research note.

He also contends that VZ shares look expensive relative to other carriers. If you take out the 45% share of Verizon Wireless cash flows attributed to Vodafone, the company trades at 5.7x 2010 EBITDA, above Bell Canada at 4.8x and Telefonica at 5.1x. Ex Vodafone’s VZW stake, he adds, Verizon has only a 3.7% free cash flow yields, versus 6.8% for Bell Canada, 8.3% for Telefonica and 10% for Vodafone.

VZ today fell 47 cents, or 1.7%, to $27.49.

Earlier: AT&T Could Lose 40% Of iPhone Subs To Verizon, Davenport Says

Today in Commodities: Spring Break?

This does not feel like Spring Break to me as I need to be glued to the screens. The good news being that since I live in Fort Lauderdale, it may feel like Spring Break at the beaches this weekend.

A small victory today: we had a bearish engulfing candle in oil. As of this post prices are $2 off their intra-day highs. We were lucky enough to buy back our bottom legs this morning when oil was positive, and now clients own May $75 puts and should be able to profit on the trade as prices make their way closer to $77/76. $5 put spreads that were bought within the last few session stay put looking for lower trade.

It has been a long five weeks as natural gas lost another 15 cents this week. We are lonely in this trade as most people doubt we can turn around anytime soon, but clients remain long via futures and options as they believe, as do I, that we will be back over $5 within a month.

Clients still hold June puts in the ES and SP but as prices closed at a fresh high yesterday we advised them to cut losses on futures. We still think we could get a nasty correction, but until the markets tops there is no reason to fight the tape.

Next week will be key in sugar to see if the almost 35% correction was enough to attract fresh buying. We think it was, and expect a grind higher from here. Cotton rallied about 2% today; it was too good to be true down all five sessions this week. Clients are short, still looking for 75/76 cents in May.

Corn has been down for the last seven sessions but it has only dropped 20 cents in that time frame. We like being long via options and futures, and have advised clients to lift all their short hedges. I would favor July options to May and if interested in futures, we would trade the new crop December futures. May soybean oil is down 3.5% in the last 2 sessions; another 1-2% and we would look to book profits on shorts. Stay out of cattle’s path; April made a new high today, lifting prices to levels not seen since the fall of 2008. We feel we are close to a top, but like stocks, there is no reason to jump in front of a freight train. There will be a time and place to get short and we will advise when, but not yet.

April gold traded below $1100 but closed just above that level. We think more down side is likely and currently own NO gold for clients. Likewise with silver we feel we could get some pressure short term. Assuming the recent H/L, a 38.2% Fibonacci retracement is $16.40 and 50% is $16.10. The closer prices are to $15.75, the more aggressive a buyer we would likely be for clients. Copper prices really did not go anywhere but we did close down all five sessions this week. We are thinking if we see another leg down here or overseas, copper could get hit 10-20%.

The dollar closed down, and ended below the 34 day moving average for the first time since mid-January. If the dollar continues lower, look for all the currencies to temporarily gain. We are using the volatility to scalp intra-day for clients in the Pound and Yen. Clients remain short the Loonie via June puts and took some heat today but should be fine in the coming weeks.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Top 5 Penny Stocks to Buy for 2010

In the aftermath of the bear market, there is no shortage of companies priced under $3 per share, but to successfully take advantage of the abundance of opportunities, you need to pick stocks based on the following criteria:

  • Look for companies with market capitalizations that are less than $500 million. You want stocks trading on a U.S.
    exchange, not shell companies.
  • Find stocks with a reasonable business behind the stock.
  • From there, look at fundamental value combined
    with technical analysis. Volume is important, and you want to be buying on weakness and selling on strength. (See also: The6 Rules of Penny Stock Trading.)
  • Based on these criteria, then, here are five penny stocks that belong in any portfolio. Yes, there is a high degree of risk with these picks, but, so too, is the potential reward.

    Penny Stock to Buy #1 – Oilsands Quest (BQI)

    I’ll start my list of Top 5 Penny Stock to Buy with a commodity play. A weak dollar and a strong economy suggest that oil prices will be going higher in the next year. The higher the price of oil, the more advantageous it is for the oil sands business.

    Oilsands Quest (BQI) shot up from August to October before subsiding to its previous level. While there is a high degree of risk with BQI (the company currently has no revenue), the value of its reserves and expected ability to extract such reserves on a profitable basis make this a reasonable speculation. And those expectations increase with higher oil prices. The potential reward could be in the form of a double in 2010.

    Penny Stock to Buy #2 – Sirius XM Radio (SIRI)

    Ever dream of owning a monopoly? You can with Sirius XM Radio (SIRI). After a brush with death at the end of 2008 and early 2009, the company obtained necessary funding needed to support the business during a brutal economy. Gone are the days of unnecessary spending due to competition with rival XM and in its place is a more friendly competitive landscape and ability to charge higher prices for its valuable services.With auto sales are recovering nicely and SIRI’s product now available in almost every new vehicle on the market, subscriber growth returned in the fourth quarter of 2009. That should continue in 2010 — and investors will be surprised by the earnings potential. This company will double from here in 2010.

    Penny Stock to Buy #3 – Denny’s (DENN)

    is primarily a stock picker’s market at the moment after an impressive rise that lifted most boats in 2009. Going forward the best returns will come from owning small companies that can grow earnings quickly and yet trade for multiples of earnings that are below earnings growth rates. Denny’s (DENN) fits that bill perfectly.

    According to one analyst, the company is expected to go from $0.25 per share in profits in 2009 to $0.34 in 2010. At its current price, investors can own that double-digit growth for less than 10 times expected earnings. Look for the company to follow its 2009 Super Bowl ad success with another big promotion for 2010. And a stronger consumer makes it likely that the company will indeed make $0.34 this year. If so, I expect DENN to approach my target of $11 within the next 12 months.

    Penny Stock to Buy #4 – MoneyGram International (MGI)

    The financial crisis has left many to scrounge for typical banking services like check cashing and wire transfers. Gladly filling the void are companies like MoneyGram International (MGI).

    Make no mistake, this is big business. American Express’ recent purchase of Revolution Money, a primarily online payment services provider, is an indication that big players are going after the under banked or less affluent customer. As for MGI, the company had been a big star until stumbling badly in 2008. The issues that caused the problem appear to be behind the firm. The market it serves has only gotten larger since. Look for big things from MGI in 2010. My target for MGI is $10.

    Penny Stock to Buy #5 – Majesco Entertainment (COOL)

    The video game market offers tremendous growth possibilities, and software developers like Majesco Entertainment (COOL) are producing titles to support this growing demand. Expectations are for a small profit in 2010, and shares trade for a paltry five times forward earnings estimates. As quarterly profits are recorded, shares should rise commensurately.

    It should be noted that for Q4 2009, the company reported an operating loss of $5.5 million. The loss was mostly due to accelerating impairment charges. The company did show impressive gains in sales, but those sales came with lower profit margins. On the surface, it would appear that the poor performance was directly due to poor management. Managing inventories requires strong management. Clearly COOL�s team dropped the ball here. Given that I expect inventories to be better-managed going forward, I am willing to cut management some slack here.

    At the end of the day, the company is growing, and with that growth profits are likely to follow. The company has a strong balance sheet, and its titles are doing well. I still like the stock and expect shares to recover over the next two quarters.

    Are the Earnings at Xyratex Hiding Something?

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

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

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

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

    To calculate the cash conversion cycle, add days inventory outstanding to days sales outstanding, then subtract days payable outstanding. Like golf, the lower your score here, the better. The CCC figure for Xyratex for the trailing 12 months is 55.6.

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

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

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

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

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

    On a 12-month basis, the trend at Xyratex looks less than great. At 55.6 days, it is 7.6 days worse than the five-year average of 48.1 days. The biggest contributor to that degradation was DIO, which worsened 8.0 days when compared to the five-year average.

    Considering the numbers on a quarterly basis, the CCC trend at Xyratex looks good. At 44.5 days, it is 6.7 days better than the average of the past eight quarters. With quarterly CCC doing better than average and the latest 12-month CCC coming in worse, Xyratex gets a mixed review in this cash-conversion checkup.

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

    • Add Xyratex to My Watchlist.

    Choose The Best Bad Credit Home Equity Plan

    The main benefit that a person can hope to derive from obtaining home equity credit is that they can make use of their home equity and not need to worry about paying closing rates. Making use of bad credit home equity is advantageous for you as you can use the money to improve your credit score though what is even more important is that when securing bad credit home equity you need to be especially very careful that you deal only with a reputable lender who is sure to be the one to offer you best rates and fees.

    You really want to make sure that you are aware of even the smallest details before going through with something like this, so that you know you are going to be making the wisest decision and that you are not going to be costing yourself one of your most precious and valuable assets, your home.It pays to understand the effects these fees have on you and so before signing on the dotted line you need to be sure that you do, for example, ask for removal of early payment fees, especially when you are sure that you can pay off the entire borrowed amount before its due date.

    So if you have gone through with a home equity conversion program and with this home equity conversion program you have figured that you are going to be okay and that it will be worth it for you to go through with this loan, then now it is really just a matter of you finding a lender. So, the more you compare one lender against the other the brighter are your chances that you can deal with a lender that offers you the best terms, conditions and rates.

    You do also have to realize that typically with a mortgage loan, the first few years that you spend paying your mortgage are really only paying off the interest portion and so in order to have a substantial amount of home equity you would need to have been paying your mortgage for at least four years or more. It is also easy to visit a lender’s website and get a quote and this is certainly an option that is worth trying out.

    You are able to get so that you can get more educated on them and find the one that is going to be right for you in this situation, this is the only way to go about it.For example, you need to know who benefits more from home equity and who benefits more from line of credit and the same is the case with interest rates (which one suits you better) and which type provides best repayment options for your particular needs.

    For more information on real estate management and pool fence, you can turn to the author.

    UBS in U.S.: Less Advisors, Improving Money Flows

    UBS wealth-management operations in the Americas reported declining client assets and financial advisors during the second quarter, but positive inflows when interest and dividends are included.

    The brokerage unit, which does business in the United States and Canada, is led by former Merrill Lynch executive Bob McCann

    Net new money outflows were 2.6 billion Swiss francs (about $2.5 billion), excluding interest and dividends, compared with 7.2 billion Swiss francs in the first quarter and 5.8 billion Swiss francs in the year-ago quarter.

    Last week, Morgan Stanley said the second-quarter outflows of its 18,000-plus advisors were $5.5 billion, including interest and dividends.

    UBS said it would have had net inflows of 1.7 billion Swiss francs - about $1.6 billion - this quarter for its U.S. advisors and net inflows of 2.0 billion Swiss francs - about $1.9 billion - for advisors in both the U.S. and Canada.

    "This marks the first quarter of net inflows on this basis since first quarter 2009," the company said in its full earnings report.

    The number of advisors in the unit stands at 6,760 - a 2% decline from the first quarter and a 15% decline from last year.

    The company, though, insists it is battling attrition and improving client flows.

    "Financial advisor retention initiatives resulted in lower outflows related to financial advisor attrition, while net new money inflows from financial advisors employed with UBS for more than one year declined slightly from the prior quarter, but remained positive for the second consecutive quarter," UBS explained in a report.

    Client assets are about 742 billion Swiss francs, down 3% from the first quarter but up 1% from a year earlier.

    The unit also posted a pre-tax loss of 67 million francs related to charges of 146 million francs related to layoffs and the closure of branches. Without these charges, UBS said this business would have posted a pre-tax profit of 79 million francs, more than double the 36 million francs it earned in the first quarter.

    The bank's average revenue per adviser was $793,000, up one third from the same quarter last year, according to Reuters.

    This puts UBS behind the $853,000 per adviser at Merrill Lynch but exceeds the production of Morgan Stanley advisors, which stands at $679,000.

    Each UBS Americas advisor has an average of $95 million in client assets, compared to $83 million at Morgan Stanley.

    UBS AG reported an overall second-quarter a profit of 2 billion Swiss francs ($1.9 billion), above analysts' forecasts of 1.34 billion francs, on July 27, when UBS Group CEO Oswald Gruebel told Reuters that he remains committed to the U.S. business.

    Last week, UBS AG nominated Joseph Yam, founder and former head of the Hong Kong Monetary Authority, for election to the board of directors at the bank's next annual meeting on April 28, 2011.

    2 Takeaways From the Arizona GOP Debate

    While the commentariat and pollsters may argue about who �won� Wednesday’s GOP debate in Arizona, let�s look more broadly down the road about how this Republican primary season will shape the general election.

    1. It won�t be �just the economy� in 2012

    One clear conclusion from this debate: This election won�t be fought only over the economy. While we all expected 2012 to be a referendum on President Barack Obama�s stewardship of the economy, the GOP candidates are ensuring that foreign policy and social issues will be front and center as well.

    Iran

    With the notable exception of Ron Paul, the Republicans on Wednesday were vociferous in their attacks on President Barack Obama�s foreign policy, with a particular focus on Iran. Mitt Romney went so far as to say that if we re-elect Obama, Iran definitely will develop a nuclear bomb, whereas if we elect Romney, he just as assuredly will prevent a nuclear Iran. Rick Santorum seemed to be channeling George W. Bush as he talked at length about the need to go to war with Iran if neccessary.

    All of the candidates boldly claimed that Obama�s foreign policy record has been a disaster. This might play well to the most partisan Republicans but will go nowhere with general election voters. Obama has presided over the elimination of Osama bin Laden and the decimation of al-Qaida leadership by unmanned drones. Those two points alone should secure his �tough on terrorism� credentials for the general election. But the saber-rattling on Iran coming from the GOP assures us that foreign policy will not necessarily take a back seat to the economy this year.

    Social Issues

    Just when we thought the culture wars would be buried in a sea of bad economic news, social issues — namely birth control and abortion — have come front-and-center in this election. This happened for three reasons:

    • The economy is starting to show signs of real improvement.
    • The Obama administration made the controversial decision to force religious institutions to include contraception in their insurance plans.
    • Rick Santorum has gotten unexpected oxygen. His views on social issues are on the extreme right of his party, and they have made for great headlines and debate fodder.

    While we did not learn anything new from the candidates on these issues in tonight�s debate, the fact that they spent a significant amount of time talking about them and revisiting Obama�s policy positions gives the Democrats material to work with and voters something to think about.

    2. Because of Item 1, the GOP candidates missed an opportunity to discuss real economic policy

    What the candidates chose not to talk about was as interesting as what they did discuss. Obama released the broad details of his plan to for corporate tax reform Wednesday: lowering rates and eliminating some deductions. While we do not know all of the details, of course, the outline falls within the general ideas suggested by the Bowles-Simpson commission.

    The GOP candidates did not take the opportunity to discuss this new policy proposal from Obama at all. Perhaps their staff could not prepare a set of talking points in time for the debate, or maybe they realized they did not have much to say to distinguish themselves from Obama: All agree that corporate rates should be lower — and apparently, so does the president.

    In almost all of the previous debates, the candidates have fallen all over themselves to make clear that they would repeal the Dodd-Frank legislation that attempts to reform the financial system. The Economist has an excellent review this week of what a morass of red tape and uncertainty the bill has created. I thought for sure one of the candidates would reference this series of articles and again repeat calls for repeal. Unless I missed it, I did not hear the term “Dodd-Frank” at all.

    I cannot think of any reason they passed on these two opportunities except that they ran out of time. After all, planning another preemptive war in the Middle East and fighting with the Catholic Church does keep you busy.

    The opinions contained in this column are solely those of the writer.

    Want to share your own views on money, politics and the 2012 elections? Drop us a line at letters@investorplace.com and we might reprint your views in our InvestorPolitics blog! Please include your name, city and state of residence. All letters submitted to this address will be considered for publication.

    Top Stocks For 2012-1-8-17

    DrStockPick.com Stock Report!

    Monday August 17, 2009


    Acushnet Company, the golf business of Fortune Brands, Inc. (NYSE: FO), announced that on August 14, 2009, the United States Court of Appeals for the Federal Circuit granted the company’s request for a new trial and issued other favorable decisions in its patent dispute with Callaway Golf.

    Petroleum Development Corporation (Nasdaq: PETD) announced today that it has closed its public offering of 4,312,500 shares of common stock, including 562,500 shares issued upon full exercise of underwriters’ over-allotment option, at a price to the public of $12.00 per share. The net proceeds from the offering were approximately $48.6 million (after deducting underwriting discounts and commissions and estimated expenses). Petroleum Development Corporation intends to use the net proceeds of the offering to repay borrowings under its credit facility.

    Hertz Global Holdings, Inc. (NYSE: HTZ) announced it has acquired the assets of Automoti Group, Inc., an online marketplace for consumers to directly purchase used cars at discounted prices. Automoti’s end-to-end solutions are currently utilized by the Hertz Rent2Buy program which enables consumers to rent a car for up to three days prior to purchase. Terms of the acquisition were not disclosed.

    Standex International Corporation (NYSE:SXI) will announce its fourth-quarter fiscal 2009 financial results on Thursday, August 20, 2009 prior to the open of the market and will broadcast its conference call live over the Internet at 10:00 a.m. Eastern Time that day.

    SpongeTech(R) Delivery Systems, Inc. (”SpongeTech”) “The Smarter Sponge(TM), (OTCBB: SPNG) is pleased to announced that the Company has received approximately $13.5 million in new orders thus far in August. The Company has benefited from substantial reorders from existing customers as a result of the increased marketing campaign utilizing television, radio, six NFL teams, Major League Baseball teams and the World Football Challenge. The marketing campaign has been successful and recognized at the retail level with strong retail demand for all of SpongeTechs’ products. In addition, the Company has secured several important initial orders from major retail chains that should geographically diversify revenues. Management believes the drive in sales should continue as SpongeTech(R) brands its product line as The Smarter Sponge(TM).

    Shalov Stone Bonner & Rocco LLP announces that a class action lawsuit was filed on behalf of purchasers of Sturm, Ruger & Company, Inc. (NYSE: RGR) common stock between April 23, 2007 and October 29, 2007, inclusive, (the “Class Period”). The lawsuit is pending in the United States District Court for the District of Connecticut.

    Source: E-Gate System from Alphatrade.com

    Thinking Optimistically For The Year Ahead

    As 2011 comes to a close, the risk of a new economic recession in the U.S. looks low. Or at least lower than it was a few months ago. Not everyone agrees, but you'll have no trouble rounding up dismal scientists who think that better days are coming. For instance, 20 economists polled by CNN this week collectively estimate the odds of a downturn at 20%, or down slightly from 30% three months earlier. "Preliminary data is pointing to a solid fourth quarter of GDP growth that should carry the economy through the next six months," says Sean Snaith, a University of Central Florida economics professor.

    There's a fair amount of supporting data for thinking that the risk of recession is low for the near term. For instance, Macroeconomic Advisers estimates that U.S. GDP rose by a strong 1.3% in October. Data from various corners of the economy also looks encouraging. Bloomberg reports that "North American railroads’ freight volumes surged 17% last week, the most in a year, in an indication that the U.S. economy will avoid a second recession." Meanwhile, yesterday's update of the ISM Chicago Business Barometer held steady in December, just below November's seven-month high. "2011 is ending on a solid note," advises Ryan Sweet, a senior economist at Moody’s Analytics. “Manufacturing has some momentum and we’re starting to see some signs of life in housing.”

    The number of people poised to buy home, as tracked by signed contracts, rose to a 19-month high in November, the National Association of Realtors reports. This appears to be more than statistical noise given the encouraging rise in housing starts and newly issued building permits in recent months.

    Last week's rise in jobless claims pares the optimism, but for the moment the trend in new filings for unemployment benefits still looks favorable. The four-week moving average for this volatile series has been steadily declining for several months and is at its lowest level since the recession was formally declared at an end as of June 2009. The implication: Job growth will continue, and perhaps at a higher rate in the months ahead.

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    "Despite the rise in the weekly claims data, the longer-term trend ... suggests that the recovery in the labor market is maintaining its momentum," says Michael Gapen, an economist at Barclays Capital, in a research note to clients. An AP survey this month of 36 economists points to expectations for average monthly job growth of 175,000 next year, up from an average of 143,000 a month for the three months through November.

    The Labor Department will confirm, or deny, the optimism for employment with next week's release of payrolls data for December. Briefing.com sees a net gain in employment of 150,000, up from November's rise of 120,000.

    What could go wrong? Take your pick - there's plenty to worry about, although the leading hazard is probably Europe, which appears to be destined for recession. BBC reports that 34 U.K. and European economists who regularly advise the Bank of England "believe recession will return to Europe next year." Will there be a spillover effect for the global economy? Probably, but the degree of pain that awaits for the rest of the world is still open for debate.

    In the U.S., the single-biggest risk factor is jobs, or the lack thereof. If the recent fall in jobless claims is a head fake, and the anticipated pick-up in hiring doesn't materialize, much of the other revival news for the economy of late won't mean much. Another potential trouble spot is the recent weakness in personal income.

    Overall, there's a case for cautious optimism that moderate growth will roll on in 2012. But don't let the New Year's revelry cloud your judgment. The recovery is still held together with glue and feathers. It's looking better, but a strong wind could blow it all away.

    If you find yourself on the fence for deciding what comes next, you're not alone. The collective wisdom that is the stock market also is betwixt and between. The S&P 500 is basically flat on a year-over-year basis. In recent months, the equity market dipped to a slight loss vs. year-earlier levels. History suggests that when the market suffers a sustained bout of red ink in annual terms, a recession is near. By this standard, there's plenty of uncertainty to digest. Maybe January will bring us clarity.

    FreightCar America Leaving The Station

    If you believe you have missed out on the cyclical stock rally, there are still worthy stocks that haven't left the station. Consider Freightcar America, Inc. (RAIL). Freightcar is very cyclical, it manufactures railroad cars. Its revenues declined 90%, yes, 90%, from 2006 to 2010. Revenues declined to $143 million in 2010 from $1.445 billion in 2006. Amazingly, the company only suffered a small loss in only one year, 2010, due in part to its strong balance sheet. On December 31, 2011 it had no interest bearing debt and $102 million of cash.

    What goes down in a recession and survives usually comes back up. Freightcar has enjoyed an extreme V shaped recovery starting in 2011. The company earned $0.71 in the fourth quarter of 2011, blowing away the analysts average estimate of $0.13 and last year's loss of $0.20. Earnings were $0.61 before a gain on the sale of railcars available for lease, arguably an operating income. Revenues in the fourth quarter of 2011 were estimated at $127 million. They came in at $187 million. Revenues have increased from $51 million in the fourth quarter of 2010 and $130 million in the third quarter of 2011. Railcar sales increased from 694 rail cars in the fourth quarter of 2010 to 1515 in the third quarter of 2011 to 2,489 in the fourth quarter of 2011.

    The real stunner was the new orders. These increased to 4,481 in the fourth quarter of 2011, 80% higher than actual sales in the quarter. The average revenue per railcar sold was $75,171 in the fourth quarter of 2011. This indicates a revenue run rate of $337 million per quarter based on the number of orders. That level of sales, when annualized, is just below the company's best year in 2006. That was the year the company earned $10.07 per share.

    What's more, the company is quite leveraged to improving earnings as revenues increase. Revenues in the fourth quarter of 2011 were up 267% from one year earlier. Yet SG&A expense was only up 29%. That's about a 9 to 1 increase for revenues over SG&A expense. Also the gross margin is rapidly improving. It went from 7.0% in the third quarter of 2011 to 8.9% in the fourth quarter. The gross margin was 16.1% in the peak year of 2006. Further the company appears to be gaining market share.

    Competitor American Railcar's (ARII) fourth quarter 2011 revenues were up 107% from the prior year quarter. This shows how strong the industry is. However, this was much less than Freightcar's 267% increase. Freightcar is a company that can reach its prior high of $10 per share, and do so quickly.

    The question then is how to value it. A company this cyclical does not deserve a P/E of 10 on peak earnings. However, the current stock price of $28 is well short value. Revenues and earnings appear on their way to surpassing the prior peak. Shouldn't the stock price follow? RAIL was trading over $70 back in 2006.

    Disclosure: I am long RAIL.

    Coca Cola: Attractive Upside at No Cost

    Our previous analyses of Dow Industrial members revealed that several companies are in a very good position to benefit from improving economic momentum. Coca-Cola (KO) is yet another stock poised to get a boost from the business cycle. Using a quantitative framework, we show that the stock offers a great mix of attractive return and a high margin of safety over the next 6-12 months.

    For those who did not have a chance to go through our previous articles, we briefly outlined the employed procedures. We analyzed stocks in the context of the business cycle or, in other words, in the context of fluctuations in output growth. In practice, our quantitative framework can be split into two major components:

  • Forecasting the U.S. business cycle using statistical models.
  • Simulating stock performance based on business cycle swings over the past 20 years.
  • Forecasting the U.S. business cycle is accomplished by means of statistical modeling. The main tool in our toolbox – the monthly US GDP model – suggests that economic growth is likely to reaccelerate by the end of the summer.

    click to enlarge images

    After the economic outlook is clarified, the next step is to quantify the impact of expected economic growth on Coca Cola's stock price. Using historical data, we find similar positions in past business cycles and collect evidence on how stocks reacted at that time. The data gathered are processed and used to generate possible outcomes. The process ends with price projections for the next six to twelve months.

    Our calculations suggest that Coca-Cola should enjoy a positive economic outlook. By the end of the year, Coca-Cola is expected to reach $80 per share. Under the best case scenario, stock prices may reach almost $100; however, the probability of such a scenario is rather low. Most interestingly, simulation suggests that Coca Cola can deliver gains even under the worst case scenario. Since this type of safety is hard to find, we add Coca-Cola to our best picks along with Caterpillar (CAT) and General Electric (GE).

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

    How Much Would You Pay For Sirius?

    Sirius XM Radio(SIRI) users have voted emphatically that the company's recent price hike is more than fair and that it will not cause them to cancel their subscriptions.

    Sirius recently raised its monthly subscription price to $14.49 per month, up from $12.95 per month. This was the first price hike in the company's history. When Sirius and XM Satellite Radio merged, the two companies agreed not to raise prices for three years.Of the nearly 1,600 readers who voted in a poll run by TheStreet, almost 68% said that $14.49 is "more than reasonable for all the programming the company provides." Almost 22% of readers said they are fine with paying $14.49, they but warned that another price hike would cause them to rethink their subscriptions.Only 10.2%, or just 162 of those who voted, said that the monthly price hike is too much to pay considering there are other free alternatives available.Sirius raised prices for the first time in its history in January. The $8 billion company has become free-cash-flow positive, and analysts expect that the price hike will continue to help free cash flow, potentially allowing the company to buy back stock or pay a dividend.Sirius shares have performed exceptionally well to start the year, gaining 17.9%, outpacing the 13.3% gain in the Nasdaq.Interested in more on Sirius XM? See TheStreet Ratings' report card for this stock.Check out our new tech blog, Tech Trends.>To submit a news tip, send an email to: tips@thestreet.com >To order reprints of this article, click here: Reprints

    Dominican Republic Peninsula Great for Beach Living

    The Samana peninsula in the Dominican Republic is a beautiful region with winding beaches, wonderful weather and quiet little beachside restaurants that serve cold drinks and delicious food. Las Terrenas is particularly attractive for anyone looking for the perfect place to buy a beach home. Located just under two hours from the capital of San Domingo, properties in the town are just minutes away from the beach sell for very reasonable prices. Condos can be found for as little as $80,000, while a new luxury townhouse can be had for $165,000. Expats who choose to buy will also find they’ve got an attractive rental property on their hands, and can defray costs by renting it when it’s not in use. For more on this continue reading the following article from International Living.

    Brilliant bright white sand reflects the warm early afternoon sunshine. Fresh breezes mean it’s pleasant to eat outside. On a peninsula like this you can rely on these breezes almost year round.

    The water is flat, clear and turquoise. The sand a rich tan. Surf breaks on the reef offshore, but it’s silent.

    Mojitos is the name of the Cuban beach restaurant and bar, from where I took the photo above.

    The Cuban American owners are dishing out plates of exquisite Cuban tapas. I’m told they serve the best mojitos in town…and this is the place to come for a happy hour sunset cocktail. That’s for later. Now, the food is excellent. French, Italians and the town’s chefs eat here while beautiful people pose on the beach in front.

    If you have preconceptions about the Dominican Republic, put them to one side. Particularly about the Samana peninsula and Las Terrenas.

    This isn’t manufactured beach or resort. Behind and between the palm trees are chic cafes and restaurants run by French and Italian expats.

    Here, 19 miles of beach is interrupted only by a couple of rocky points. It’s all walkable and public. The beaches don’t run in a straight line; they weave their way. It’s difficult not to walk for hours. Always wondering what’s around the next corner. Each twist and turn opens up a more stunning vista.

    This time of year the weather is perfect. Mornings start fresh with temperatures in the mid 70s. Perfect for long walks on the beach. Afternoon warms up to the 80s.

    A new excellent road means that Las Terrenas is now only an hour and forty five minutes from the capital Santa Domingo. The views over the water are stunning as you approach town on the new road. Flights come from North America to the El Catay airport 25 minutes from town.

    Las Terrenas on the Samana peninsula is a little piece of paradise. And a great place to have a beach home.

    Condos in town start from the $80,000s. Just on the edge of town and minutes from the beach you could buy a new luxury townhouse of more than 1,700 square feet for $165,000.

    Here’s the kicker: A beach home here could double as a nice income earner. The rental market is strong year-round. One home I visited nets the owner $25,000 a year when he isn’t using it. It lists for $285,000.

    Should You Buy or Sell Alcatel Right Now?

    If every investor always had perfect information and flawless insights, there'd be no point in investing. With the proper valuation obvious to everybody, there's nothing to gain in the free market. There'd be no real buyers, no sellers, no massive mistakes -- and no huge gains.

    Luckily, we don't have perfect information about everything, and the future is never obvious. Few stocks embody this reality more than network equipment maker Alcatel-Lucent (NYSE: ALU  ) . Let's run down the pros and cons of owning Alcatel. Maybe there's a great investment lurking in this stock -- or even a terrific short.

    Why buy?
    The main reason to go long on Alcatel is pretty obvious: The stock is insanely cheap.

    You can buy the French-American telecom infrastructure specialist today for 2.2 times trailing earnings and 0.2 times trailing sales. To put those numbers into perspective, a share of Juniper Networks (Nasdaq: JNPR  ) goes for 27 times trailing earnings and 1.9 times sales.

    Even the short-sellers have moved out of Alcatel because there's so little blood left to squeeze out of this stone. Less than 1% of the float is betting on further downside. The stock has plunged nearly 75% from yearly highs, but if there's a bottom to bounce off of, this could be it.

    CEO Ben Verwaayen still has some fight left in him, which gives his company a chance to recover. Over the last three years, he has slashed $1.25 billion out of Alcatel's operating costs. Margins are up across the board, 2011 was Alcatel's first profitable year since 2005, and the cash flows aren't as deeply crimson as they used to be.

    Finally, there's no doubt that the world is hungry for more, better, and faster networks. Tablets and smartphones drive bandwidth needs across the globe. Digital video is the ultimate data hog, and it's catching on in a big way. Now, Cisco Systems (Nasdaq: CSCO  ) and Juniper are more well-rounded players in the networking field, but Alcatel is still very relevant to the telecom industry -- where most of the high-speed networking growth actually happens right now. It's not a bad place to be.

    Reasons to sell
    So things are moving in the right direction, but Alcatel isn't quite there yet.

    Verwaayen will be the first to tell you so. Though the cost-cutting project is working, he told us in May's earnings call that "there's much more work we need to do." Lower costs don't do anything to shore up flagging sales. And the product mix in Alcatel's sales is skewing to the lower end, where margins are thin. Verwaayen argues that it's a temporary problem and "not fundamental at all," but that remains to be seen.

    Meanwhile, analyst firm Bernstein worries that the company might default on a substantial loan payment that's coming due in 2013. If that happens, we could have another Nortel-style meltdown on our hands. To avoid that grim fate, Bernstein says, Alcatel has to get those gross margins moving up.

    Hold your horses!
    This is hardly the kind of risk-free stock you should buy and stuff under your pillow for decades to come. A ham sandwich most definitely couldn't run this business. That being said, Alcatel's very large market opportunities and ultra-depressed share prices balance out the risk-reward equation in my eyes.

    This stock is certainly worth a nibble at today's prices, and some patience if you're already a shareholder. But just a nibble, not a buffet dive! I wouldn't mortgage my house and back up the truck here, but I also wouldn't lock in losses by selling Alcatel.

    Please use our Foolish watchlist feature to keep an eye on the company as Verwaayen battles toward positive cash flows and stable sales. The company can't afford to lose market share, and it must find a way to stay relevant as mobile networks move from 3G to 4G technologies. A recent installation of 4G micro stations for Telefonica (NYSE: TEF  ) shows that it can be done, but Alcatel is playing catch-up to other equipment vendors in this crucial segment.

    The smartest investors know that outsized gains go hand in hand with increased risk. That's why they buy when everyone else is selling. Read all about this market-beating contrarian mind-set in a free report on The Stocks Only the Smartest Investors Are Buying. Get your copy right now, because it won't be free forever.

    Not Knowing Which Way To Turn

    As I posted a month ago, I usually don't take much stake in consumer confidence, but the readings have been so horrid they are worth mentioning. We just had a reading of 44.5 versus 52.0 consensus. (July was 59.2.) Keep in mind a reading below 70 is considering recessionary. On the plus side, it's only the worst reading since the dark days of 2009. The expectations barometer tumbled to 51.9 in August -- the lowest since April 2009 -- from 74.9 in July, while the present-situation gauge fell to 33.3 from 35.7.

    Main Street and Wall Street continue to live separate lives. I was gasping at last month's figures; this one is simply amazing, considering we're in the recovery period of the economic cycle.

    As for the market, the 20-day moving average is now a light support, so if bulls can hold 1192ish and the mantra of bad news = more Fed heroes arriving to save us takes root, things should be okay. We're at that weird point where the market may actually like bad news, since it means more steroid injections.

    We've just seen a huge run off the lows the past week so some consolidation is healthy. That said, I'm quite neutral until I see how things play out. There are a ton of news events at the end of this week, and seeing how the market reacts to the news will be an important tell.

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    Friday, June 29, 2012

    Rio Tinto: The No. 1 Mining Stock To Own Now

    Much of the news headlines related to nuclear energy are concerned with either Iran or North Korea, and how these two countries are playing dirty games with the rest of the world in order to achieve their ulterior, and predictably evil, motives. That should not divert our attention from the fact that nuclear energy is clean, green and cheap when compared with conventional sources of energy. Countries like Japan, India, Norway and even the U.S. depend on nuclear energy sourced from enriched uranium for generating power and also for medicinal purposes.

    With that in mind, it is important to understand that uranium is extremely important in an era when oil and gas prices are skyrocketing and Middle Eastern tensions continue. Rio Tinto (RIO) is one of the largest producers of uranium, and its facility in Namibia has been doing well for the last few years. However, Rio reported that its uranium output declined by almost 41% to 2,148 metric tons. It not only missed the target, but also sent shock waves through the stock market.

    The Rossing mine has quite a lot of uranium left, but it may see a gradual decrease in the amount of uranium that will be unearthed in the future. Rio Tinto also mentioned that excessive rainfall, low grade uranium, maintenance shutdowns, and industrial strikes wreaked havoc on its uranium industry in Namibia. In fact, Rio Tinto revealed that the Rossing mine faced a loss of $57 million but was confident that it would make a profit in 2014. It may sound too optimistic in a world that is accustomed to pessimistic headlines and skepticism among analysts.

    However, there are many positive factors helping Rio. First, it has a very successful uranium industry elsewhere in the world as well. Rio does not just mine for uranium in Namibia, but also in Australia, where it runs a successful mine at Energy Resources of Australia. The mine is located 250 kilometers east of Darwin in Australia's Northern Territory. The Rossing mine may have seen bad days, but it still continues to be one of the largest uranium mines in the world and will continue to provide nuclear energy to several nations around the world.

    The Rossing mine produces 7.55% of the world's uranium requirements. If you are still not convinced about Rio Tinto's successful uranium business, there is better news. It is planning to acquire mining rights of Toro Energy in Namibia. Toro Energy controls 25% of Nova Energy, which produces uranium. If Rio Tinto grabs this deal, it would be able to secure mining rights for not only uranium, but also base and rare metals. This announcement shows that Rio is planning way ahead of its current status and is in great shape when it comes to securing prospective projects for the future. If Rio acquires Toro, it would become very easy for it to maintain its uranium production at optimum levels. The only hitch probably will be to develop the infrastructure in the same manner as it has developed the facilities at the Rossing mine. It needs to be seen how and when Rio Tinto will acquire Toro but when it does, its stock will surely become more valuable than it is at the moment.

    By acquiring Toro, Rio will be able to deal with its competitors who are doing rather well too. It would be able to sell its uranium to countries like Japan, India and certain European countries, which heavily depend upon nuclear energy for fuel purposes. Though it may seem like Rio is concentrating on uranium, it is not stopping at just that. It has gone ahead and sought complete control over Richards Bay Mining Holdings and Richards Bay Titanium Holdings. Should Rio win the case, it would stand to gain a lot of mining opportunities that are related to other metals like titanium.

    Meanwhile, competitors like Cameco are doing pretty well too. Cameco is planning to spend $8 billion in Saskatchewan in order to mine uranium. It would be really good if Rio manages to get hold of one of these mines in Canada, as that would help it to diversify its uranium business out of Namibia and Australia. Cameco (CCJ) seems confident that in spite of Fukushima disaster, the nuclear industry is kicking back again, and nuclear stock will likely become more attractive. With that in mind, Rio must make sure that it grabs every uranium opportunity that comes its way.

    BHP Billiton (BHP), on the other hand, is under pressure from Western Australian state officials to sell its underdeveloped uranium project. The government's argument is that if BHP does not intend to develop the mine, it should sell it to a company that can develop it efficiently. The first company that comes to my mind is of course, Rio Tinto. Rio may express interest in the coming weeks, if it chooses to acquire more uranium mines. Rio Tinto's other competitors, like Freeport-McMoRan (FCX) and Vale (VALE), do not really deal with uranium, leaving the road clear for Rio.

    Thus, Rio should concentrate on its attempts to secure newer uranium mines, engage in exploration activities and also work toward acquiring mines that are rich in metals. This would bolster the already strong stock that Rio boasts of. In fact, being the 3rd-largest mining company in the world, there is no doubt that it would continue to attract investors from all around the world. Even when it announces minor setbacks, like the Rossing mine's uranium production in 2011, we should take it in stride and understand that Rio is busy getting its business back, while media tries to sensationalize trivial issues that are common in mines.

    I believe Rio Tinto is the perfect mining stock to invest in at the moment. Excluding goodwill, it has revealed a return on invested capital averaging around 24% in the last 3 years. Companies that generate a cash flow margin of more than 5% are perceived to be great companies to invest in. With a free cash flow margin of 19.6% in the last 3 years, Rio Tinto's cash flow generation is very strong. It is also expected that the company's free cash flow margin is going to be around 22.1% in the coming years. By purchasing Toro, Rio Tinto has effectively proven to investors that its plans and schemes are going to be stable, bullish and ambitious.

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

    My Next Great Biotech Stock Pick Could Easily Triple

    Biotech investing is awfully tricky. For every stock pick that performs well, a number of others blow up. From increasingly tough hurdles with clinical trials to the mercurial rulings of the Food & Drug Administration (FDA), it's a field littered with landmines. And it often requires deep medical knowledge to gain an edge.

      That's why I generally steer clear of the biotech industry. On occasion though, I suggest biotech stocks that look to have major upside -- if the biotechnology is understandable, shows solid testing data and is getting close to possible FDA approval. These picks should never be a big part of your portfolio because of their high-risk nature, but they can be added on the margin to help juice gains when the occasional big gainer emerges.

    Right now, I'm focusing on a biotech stock I first discussed in October 2011. Back then, I profiled three oncology stocks that had major upside. How have they done? Well, Medivation (Nasdaq: MDVN) and Threshold Pharmaceuticals (Nasdaq: THLD) are both up more than 400%.  And as I noted back in February, I think Threshold has even more upside ahead, perhaps past the $10 mark.

    The laggard
    But what about my third pick, Celsion (Nasdaq: CLSN)? I recommended it at a price of $2.75 back in October, and it eventually fell below $2 this past winter. This just shows you the risk of putting a lot of money into just one biotech stock. Your money could evaporate quickly. 

    Yet this laggard now looks like it may have significant upside potential as well. In recent months, investors have started to see the strong potential for this company, and its shares are finally making headway, moving up roughly 50% since the month began.

    If you think you've missed the move in this stock, then don't fret. By my math, shares could double or even triple from here -- if the cards fall into place.

    ThermoDox
    As I noted back in October, Celsion's biotechnology -- known as ThermoDox -- helps in the treatment of cancer tumors by heating them up, enabling existing cancer drugs to work more effectively. ThermoDox has always delivered solid results in clinical trials, but this company was always a bit short on cash, repeatedly raising fresh funds to keep clinical trials going. Shares outstanding rose from 10.7 million in 2009 to a recent 33 million, bringing painful dilution to existing investors. Who wants to own a stock like that?

    The good news: Celsion is getting closer to the finish line with its clinical trials and further dilution for this stock may be a lot more modest. Equally important, the company's current $100 million market value sharply discounts the potential market opportunity for ThermoDox.

    Targeting Hep C
    Although ThermoDox could conceivably be used to target a wide range of cancer tumors, clinical trials have been focused on hepatocellular carcinoma (HCC), also known as liver cancer, which is often the result of a longstanding diagnosis of Hepatitis C. There are roughly 750,000 diagnoses of HCC worldwide annually, of which one-third could be treated with ThermoDox. The heat treatment is especially important in the HCC market because liver cancers are often right near major arteries, so cutting out a tumor brings the risk of major arterial damage. Indeed, a heavy amount of bleeding is the biggest cause of mortality after liver cancer surgery. 

    Getting timely
    Celsion continues to conduct Phase III trials, with stated plans to complete them by the fourth quarter. Analysts at Brean Murray note that "due to the potential ability of ThermoDox to reduce the recurrence rate in intermediate HCC patients, we are optimistic about its adoption as the future standard of care." In effect, they say that if the FDA approves of the drug, then it could quickly gain traction among liver cancer surgeons. In addition, ThermoDox has "orphan drug" status, which means Celsion will be able to avoid generic competition for seven to 10 years.  

    If ThermoDox hits the market, then sales could be in the tens or even hundreds of millions annually. As a rough guess, based purely on rates of HCC in various countries, ThermoDox could reach $20 million in annual sales in Japan later this decade. Europe and the United States could have about 50% more sales than that. 

    Yet it's China that could be the blockbuster market, simply because it has a much higher rate of liver disease. There are more than 400,000 new cases of liver cancer in Asia every year, so the revenue opportunity from that region could equal all other regions combined. 

    A drug pre-approval test involving 200 patients is underway in China, and Celsion signed a deal with China's  Zhenjian Hisun Pharmaceutical in May to manufacture ThermoDox in that country. Zhenjian Hisun is also funding the initial production of ThermoDox, which is being handled as a loan to Celsion. 

    Brean Murray's analysts have tallied up the potential revenue streams and say Celsion could earn more than $1 a share by 2015, even if further stock dilution takes the share count above 50 million. The forecasted growth in shares outstanding appears to incorporate a worst-case scenario, and the share count could end up closer to 40 million, pushing that earnings per share forecast higher.

    In the past few sessions, this stock's momentum had been blunted. We subsequently learned that the company has entered into a $10 million credit facility (which some investors must have had knowledge in advance). Shares always weaken whenever investors find out a company is raising capital, but often find a floor once the capital-raising is announced. The good news: the loan will not dilute the share count, highlighting management's confidence that other, less painful ways to raise cash will likely be available in due time, whether through a licensing agreement or a share sale at a higher price.

    Risks to Consider: Many drugs have looked like a "slam dunk" as they moved through clinical testing, only to have the FDA decline to grant final approval. As such, ThermoDox's current strong testing data should be taken with a grain of salt. 

    > After a strong run throughout June, shares of Celsion have seen a bit of profit-taking recently, falling more than 10% in the past few sessions. For those not yet in this stock, its recent $2.75 stock price is an even better entry point than before.

    GM to stop advertising on Facebook

    NEW YORK (CNNMoney) -- General Motors said Tuesday that it will stop paid advertising on Facebook.

    The automaker says it will still be on the social networking site, it just won't be spending money to buy ads.

    "We regularly review our overall media spend and make adjustments as needed," GM said in a statement. "This happens as a regular course of business and it's not unusual for us to move things around various media outlets."

    GM (GM, Fortune 500) has fan pages for its various brands, such as Buick, Chevrolet and Opel, as well as for General Motors itself. Those pages will continue to be updated, according to the company.

    But the social media paid ads simply weren't delivering the hoped-for buyers, according to a report in the Wall Street Journal Tuesday.

    GM had been spending $10 million on paid Facebook ads, according to the Journal report.

    A spokesman for GM would not confirm how much money GM spent on Facebook ads. Facebook, also, did not immediately respond to a request for comment.

    GM's advertising represents a tiny part of the $3.7 billion Facebook brought in in advertising revenue last year, but the move does indicate that ads placed on the site have proven disappointing for at least one major advertiser.

    GM rival Ford (F, Fortune 500), meanwhile, says it is accelerating its advertising efforts on Facebook and other social media platforms.

    "We've found Facebook ads to be very effective when strategically combined with engagement, great content and innovative ways of storytelling," Ford spokeswoman Kelli Felker said in an e-mail.

    Facebook will soon launch an initial public offering. 

    Credit Repairs

    Your credit score influences decisions that banks, lending institutions and even employers make about approving loan, finance and even job applications. If your score is 600 or less, you should consider repairing your credit. Every time you miss or skip a payment, your credit score suffers.

    It may or may not mean that you can’t get a loan or finance, but you will have higher interest rates.

    The easiest way to repair your credit is to pay the outstanding debts. Unfortunately, this can take months if not years, depending on how much debt you have.

    Your first step should be to get a copy of your credit report, so you can assess the problem before deciding how best to fix it. There are three major companies that can give you your credit report, being Equifax, Experian, and Trans Union.

    If your report shows that you have debts that you know you have paid, provide documentation to support that. If you have outstanding debts, you need to pay them off in full to get a settlement letter. You may have the option of a debt consolidation package so that you can get all your debts into a single loan. You’ll still need to repay the loan, but your debts will be paid. This will give you lower interest rates, and you can repay it quickly if you pay regularly each month.

    A credit counselor might can help you if you don’t want to apply for a loan. It is generally recommended to settle any accounts in collections first. Most places will accept lower repayment over a longer time. Next, pay off credit cards. If not already done, ask the company to suspend cards.

    If the recent recession has done nothing else, it has certainly taught us all to be more careful with our money. You must repair old debts, even if you’ve already decided to change your ways of spending. Then you need to focus on avoiding a repeat of the situation. Keep credit cards for emergencies only – and that is not the last pair of shoes in your size on sale! Start buying with cash and closing store cards. This way, you know for sure that you can afford it.

    Repairing your credit may take a while, but it will be well worth it. You will need to finance things in the future, but you must repair your credit to get the loan.

    When you’re searching for cold spring mn real estate, get the help you need including relocation, moving and financing options.

    Short Ideas: 4 Companies Cutting Guidance With Rising Receivables

    The following list includes four companies that have lowered earnings guidance below analysts’ estimates within the past month. Additionally, these companies have recently seen accounts receivable growth exceeding revenue growth, an accounting trend that raises a flag.

    Does this mean the customers of the companies mentioned below cannot pay their bills? Or is this simply an indication of a structural business change?

    There may be several explanations for these accounting trends. Please use this list as a starting point for your own analysis - check out the 10-Q and related management discussions to find out more.

    Financial data sourced from MSN Money, short float and performance data sourced from Finviz, recent developments sourced from Reuters.

    Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.

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    1. Anadigics, Inc. (ANAD): Semiconductor Industry. Market cap of $359.41M. Guided Q1 at a loss between -$0.07 to -0.08 vs. estimate of a gain of $0.04.

    MRQ Revenue grew by 44.06% on a y/y basis, while accounts receivable grew by 76.41%. Accounts receivable, as a percentage of current assets, increased from 16.14% to 22.56% (comparing 3 mo. ending 12/30/2009 vs. 3 mo. ending 12/30/2010).

    Short float at 5.25%, which implies a short ratio of 2.57 days. The stock has gained 27.17% over the last year.

    Recent developments: Announced joining the Global Select Market of the NASDAQ Stock Market (Jan. 2011).

    2. TriQuint Semiconductor, Inc. (TQNT): Semiconductor Industry. Market cap of $2.27B. Guided Q1 at $0.14-0.16 vs. estimate of $0.19.

    MRQ Revenue grew by 31.06% on a y/y basis, while accounts receivable grew by 57.78%. Accounts receivable, as a percentage of current assets, increased from 24.56% to 25.11% (comparing 3 mo. ending 12/30/2009 vs. 3 mo. ending 12/30/2010).

    Short float at 7.83%, which implies a short ratio of 2.78 days. The stock has gained 98.47% over the last year.

    3. Parexel International Corp. (PRXL): Medical Laboratories & Research Industry. Market cap of $1.38B. Guided FY11 at $1.17-1.23 (down from $1.23-1.31) vs. estimate of $1.26.

    MRQ Revenue grew by 7.71% on a y/y basis, while accounts receivable grew by 21.78%. Accounts receivable, as a percentage of current assets, increased from 73.58% to 78.47% (comparing 3 mo. ending 12/30/2009 vs. 3 mo. ending 12/30/2010).

    Short float at 9.02%, which implies a short ratio of 5.62 days. The stock has gained 14.26% over the last year.

    Recent developments: Announced opening logistics facilities in Singapore and Russia (Dec. 2010).

    4. Intersil Corporation (ISIL): Semiconductor Industry. Market cap of $1.59B. Guided Q1 at $0.13-0.16 vs. estimate of $0.17.

    MRQ Revenue grew by 9.17% on a y/y basis, while accounts receivable grew by 20.47%. Accounts receivable, as a percentage of current assets, increased from 13.32% to 14.54% (comparing 13 weeks ending 1/1/2010 vs. 13 weeks ending 12/31/2010).

    Short float at 10.54%, which implies a short ratio of 4.64 days. The stock has lost -14.22% over the last year.

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

    Booz Allen Hamilton Increases Sales but Misses Revenue Estimate

    Booz Allen Hamilton (NYSE: BAH  ) reported earnings Feb. 3. Here are the numbers you need to know.

    The 10-second takeaway
    For the quarter ended Dec. 31 (Q3), Booz Allen Hamilton missed estimates on revenues and beat expectations on earnings per share.

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

    Margins grew across the board.

    Revenue details
    Booz Allen Hamilton reported revenue of $1.44 billion. The eight analysts polled by S&P Capital IQ looked for a top line of $1.48 billion. Sales were 3.9% higher than the prior-year quarter's $1.39 billion.

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

    EPS details
    Non-GAAP EPS came in at $0.40. The nine earnings estimates compiled by S&P Capital IQ forecast $0.39 per share on the same basis. GAAP EPS of $0.44 for Q3 were 144% higher than the prior-year quarter's $0.18 per share.

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

    Margin details
    For the quarter, gross margin was 23.7%, 200 basis points better than the prior-year quarter. Operating margin was 6.8%, 140 basis points better than the prior-year quarter. Net margin was 4.4%, 270 basis points better than the prior-year quarter.

    Looking ahead
    Next quarter's average estimate for revenue is $1.57 billion. On the bottom line, the average EPS estimate is $0.43.

    Next year's average estimate for revenue is $5.89 billion. The average EPS estimate is $1.61.

    Investor sentiment
    The stock has a four-star rating (out of five) at Motley Fool CAPS, with 42 members out of 45 rating the stock outperform, and three members rating it underperform. Among seven CAPS All-Star picks (recommendations by the highest-ranked CAPS members), seven give Booz Allen Hamilton a green thumbs-up.

    Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Booz Allen Hamilton is outperform, with an average price target of $20.00.

    Over the decades, small-cap stocks, like Booz Allen Hamilton have provided market-beating returns, provided they're value priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.

    • Add Booz Allen Hamilton to My Watchlist.

    Inside the Life of a Stock Flipper

    Inside the July 2012 Issue
    • Why Mutual Fund Guardians Are Failing
    • Pack Mentality: Traveling With Pets
    • A Look Inside Professional Day Trading
    • 10 Things Divorce Attorneys Won't Say

    It makes up roughly 70 percent of the trading volume on the New York Stock Exchange -- and makes an even greater percentage of people nervous. High-frequency trading, which is dominated by financial firms using computers capable of moving millions of shares per minute, now accounts for the lion's share of the market and is expected to get even bigger in coming years. But competing with these machines are a host of independent trading outfits that let individuals get into the game, matching wits -- and button-pushing reflexes -- with Wall Street's algorithms.

    In his new book, "Man Made: A Stupid Quest for Masculinity," national columnist and TV pundit Joel Stein decides to try his hand at trading with the big boys. Stein persuades Matt Nadell, a day trader at one of these firms, to spot him $100,000 to trade for a day. Along the way, Stein learns about day trading's Battle of the Bulge (aka the flash crash of 2010), the value of embracing risk -- and how hitting one wrong key can cost you $15,000.

    Great Point Capital, one of Chicago's biggest day-trading firms, is on the 14th floor of a building just across the street from the city's Federal Reserve Bank and next to the Chicago Board of Trade. It's located in a large, empty office space filled with long desks where badly dressed men sit next to one another and work on computers that are each hooked up to many monitors.

    This is, I think, a nice office. But I'm not sure, since it's really dark in here. All the time. No one ever turns on the lights in the office, because it would cause a glare on their screens. Which adds to the empty feeling of this giant space, where most of the desks are empty -- abandoned since the market's downturn a few years ago.

    Matt Nadell, a clean-cut 26-year-old who's already made a small fortune as a day trader, greets me with a power smoothie and a protein bar. He's decided to put me through a day of training before he hands over the $100,000 tomorrow. He's cautious that way.

    He starts with the basics. Like what day traders do. Before this morning, I assumed it had to do with analyzing sales figures and doing math and talking to China. That is not what they do at all. They gamble. When Matt decides to buy stock in a company, he has no interest in the price/earnings ratio, who the CEO is or what the sales figures are. He's only going to own these shares for a few seconds before selling them, hopefully, for 5 or 20 cents more than he paid. All he cares about is how the stock price is moving. At one point, Matt gestures at one of his lists of companies' fluctuating stock prices: "I'm watching SINA, Sina Corp., which is -- I don't even know."

    An enormous part of our financial system is just dudes making straight-up bets against one another. "This is gambling. It's educated guessing with an edge," Matt says. "It's just more prestigious than being a poker player." Day-trading firms are called proprietary trading firms by the people who work there. Everyone else in finance calls them arcades.

    Studies have proved that you can't beat the stock market over time, and the more you trade, the less you'll make, because of fees. The best policy, as my dad taught me, is to buy boring index funds that mimic the entire market and hold them. But making 2 percent, the return on Standard & Poor's 500-stock index last year, isn't for Matt, who makes more than 400 percent on his money. He is doing something that's supposed to be impossible.

    And he's going to teach me how, or lose a hundred grand trying. I pull up a chair next to his computer before the markets open, and Matt teaches me that the simplest and most important day-trading move is "trend following": If a stock is shooting up, buy some and ride it up until it falls. "Fading a move" is where you think a stock has ridden far enough up, so you bet against it by shorting it, hopefully predicting its downward movement. You can look for another person's large upcoming order at a specific price that hasn't been reached yet and use it as a buffer, so that if you're wrong and the stock hits that guy's price, you'll have time to get out while his big order is filled at that price. I cannot believe that no one has invented a more efficient system than capitalism.

    Someone has, however, built a more efficient system than day traders. Guys now program computers to do the exact same thing Matt does, coming up with algorithms to find what day traders spot through intuition and experience. In 2010, 70 percent of all purchases and sales of all stocks and bonds in the world were made by high-frequency-trading programs, called algo-bots. And that figure has increased since then. Algo-bots place way more orders than they do purchases, canceling 90 percent of them nearly instantly, making their actual plans hard to read. Computer programs have also created ways to hide large purchases -- called dark pools of liquidity -- giving them another advantage.

    Most important, the algo-bots can buy a stock in less than a millisecond. The usual amount of time the human brain takes to see something and tell a finger to hit a button is 250 milliseconds, I'm told by Doyle Olson, the president of Great Point Capital. "Some guys here are below 200 milliseconds," he says. But it's not nearly fast enough. Two years ago, a hundred guys sat in this office. Now there are 40. It's not only that the Great Recession caused America to stop investing in the stock market, severely limiting the action to gamble on. It's also that these 40 guys are getting replaced by technology.

    That's why the day traders here talk about the flash crash like it was the Battle of the Bulge. On the afternoon of May 6, 2010, the Dow Jones Industrial Average suddenly dropped nearly 1000 points -- losing about $1 trillion in value in its biggest intraday plunge ever. Then it gained nearly all of it back 20 minutes later. Several large companies had their stocks drop all the way to 1 cent for no reason. The high-frequency programs got triggered to either sell or stop trading, but the day traders soaked up the money the computers spit up. It was the day when the computers got their asses kicked.

    During the market's free fall that day, Matt kept buying as he saw some blue chip stocks lose nearly half their value. At one point, in those minutes when the market was falling irrationally and Matt was buying, he was $90,000 down. "I get a little sick still, just thinking about it," he says. He ran to the desk of Adrian Nico, the firm's risk manager, and begged for more leverage, which Adrian gave him, allowing Matt to put $20 million of the company's money into the market. "It seemed like it was the end of the world. No one was buying," Matt says. "I feel really proud of what I did that day. I stepped in when no one was willing to." He made $220,000. Another guy at the firm made more than $2 million. Another guy was at the dentist.

    When you first start working here, Great Point Capital lets you invest with its money. The firm gives you a salary and lets you keep a percentage of your winnings. If you keep losing, Adrian -- a chubby, smiley guy in a button-down shirt -- comes to your desk and sends you home. If you do well, you eventually get the deal Matt has: He invests his own money, keeps all his winnings, sucks up all his losses and pays the firm about $4 for every thousand shares he trades. In return, he gets to play with a lot more money than he puts in -- the firm gives him leverage of 25 times his investment. It also gives him a great proprietary computer program to trade with (when you punch in your password, instead of seeing "******" you see "$$$$$$"), a bunch of other guys sitting near him to give him advice and that four-buck trading fee, which is lower than what he could negotiate alone.

    It's 8:30 a.m. in Chicago when the opening bell goes off in the New York markets, and everyone in this quiet, dark room instantly gets an unprintable case of Tourette's.

    The stock prices on Matt's screen are scrolling down so quickly, I cannot read them. All I know is that when he's ahead, one number is green; when he's behind, it's red. Matt is punching buttons hard and fast. I cannot figure out why his keys still look so new.

    It's because, after an hour, the pounding stops. All the real action is in the first hour of trading, and the last half hour. In between, guys go to the gym, get lunch, surf the Web, throw around a Nerf football, or just go home and skip the last half hour of trading. But that first hour is intense.

    Somehow, in the first 31 minutes, Matt loses $2,926. He is completely calm. He doesn't care much about money. He rents an apartment that he shares with his girlfriend, he doesn't own a car, and his diet consists mostly of protein shakes and chicken wraps. He could live the same exact way on the salary of the loser reading the stock news over the speakers. Though he's gambling his own money, it's only about 20 percent of what he's amassed; the rest is either in cash or in an indexed mutual fund. If he's bothered by the $2,926 he lost, it's not because it's $2,926, but because it shows that he played badly.

    "I like this job because of the number aspect, the competition," he says. It's why he liked debate and poker in college, and why he's into first-person-shooter video games and has a fantasy football team.

    Matt has six screens in front of him, the second-most in the office. The number of screens you have at a day-trading firm is a good approximation of how much money you make. A better approximation is this database Matt has of exactly how much money he makes. Over the past 200 days, Matt has somehow made about $3,000 a day in profits; after fees, he's taken home an average of $2,114 a day -- which is about $528,500 a year. There were a lot of days when he lost $30,000 or $40,000, but his big days make up for it. Right now, though, he's having his worst month since he started day trading, down an average of $465 a day. It's only his third losing month since he started in January 2008. It sucks to come into work early every morning, do a really stressful job, and go home with a weekly paycheck of negative $2,325.15. It is even worse, Matt says, to try to explain that to your live-in girlfriend.

    The last half hour of trading doesn't go much better for Matt. But after the market closes, Apple announces its quarterly earnings, and they're big. Matt pounds on his keyboard for 30 minutes of after-hours trading and erases all his losses, making more than $1,000 on the day. We talk for a while and leave the office at 5:30 p.m., the latest he has ever been there. That's the thing about day trading -- there's no boss, no paperwork. Matt has never gotten a work e-mail, been on a business trip or worked a weekend.

    At 7:45 the next morning, I sit in front of the computer next to Matt, who has the eager chipperness of a man who went home in the black yesterday, not the dread of a man who is about to lose $100,000.

    I am about to find out if I can use just my instincts and my guts to take money from other men sitting in front of some other computer with nothing but their instincts and guts. Matt flows the cash into an account on my computer and I instantly feel the pressure. I want to ask for less money, maybe just a couple of thousand, but I know that won't prove anything about my ability to handle the stress. And there's no time to change it now anyway.

    The opening bell goes off on the TV screen showing CNBC above us, and Matt tells me to hold tight and avoid investing for the first few fastest minutes. But then I notice on one of the lists Matt set up on my screen that Teva Pharmaceuticals is hitting record highs. I want to just dip in and quickly ride the trend while it's going up. Only I press Shift+S to sell instead of Shift+B to buy and accidentally short 100 shares of Teva Pharmaceuticals. But my guess was wrong, and it's going down, so I actually make some money before I find the Buy button to get rid of it. But in my panic, I press Shift+B twice instead of once, so I actually do buy 100 shares of Teva Pharmaceuticals, and it's suddenly going up now, so I make some money that way, too. I'm good at this. And I don't even know the right buttons. Or how they can make pharmaceuticals out of hippie shoes.

    Matt is too busy to notice what I'm doing, and in just a few minutes, I have swapped back and forth more than $150,000 of Teva and have made $40.70. It's a rush. I can't follow nearly as many stocks at the same time as Matt does, but I keep track of two of the ones on the lists Matt has set up for me: Abbott Laboratories and BorgWarner, which I assume is Time Warner's division that makes cyborgs. Unfortunately, I can't even handle watching two stocks at once. I think my cursor is in the Abbott box, but it's really over at BorgWarner when I press Buy. And suddenly I own 100 shares of BorgWarner. I try to sell but accidentally press Buy again, so I've got more than $15,000 invested in cyborg manufacturing. I make $1.50 on the cyborgs overall.

    I love this. I trade BAX, CPX, ILMN, ISS, PCP, TSLA and WLT -- without knowing what any of them are. It is exactly the thrill I was hoping it would be. And then it stops. The first-hour morning action is over, and I've made Matt close to $100. Now I just have to wait until the closing half hour. Yesterday, Matt taught me the day-trading mantra: The best trade made in the middle of the day is the one not made at all.

    Everyone in the office starts talking about the Chinese cloud-computing initial public offering. Matt tells me to stay away. It's going to be fast, hard to follow, and I could lose a lot of money. His money. But come on. China? Cloud computing? IPO? I am going to be rich! I buy a hundred shares at $20.50 each, and the numbers move so fast, I can't see if I'm up or down. I'm down -- $100 down in five seconds. Matt tells me to sell, get out as soon as I can. It's the first day-trading rule I was taught: Get out when you're losing. But China! Cloud computing! IPO! I hear my heart beat. My investment is $300 down, and it comes back a little, and I Shift+S, so I wind up a little more than $200 down.

    Now I'm down for the day. I hate computers and China and clouds.

    I need to make up for my Chinese cloud-computing errors. I hear some guys in the row ahead of me talking about Quepasa, a Latino social-networking company, and I know from experience that Latinos are a particularly social people. I buy in as it shoots up. Then I hear the newsreader guy say something from the speakers above me about Microsoft, so I buy $16,000 worth of shares, riding it for a tiny spike. But I'm still in the hole when the closing bell rings.

    I did fine. Matt still has nearly all his $100,000. I didn't freeze up when things moved fast. I didn't avoid the big chances. If anything, I took too much risk. Better yet, I liked it.

    As I'm starting to pack up my stuff, Matt tells me he's not done for the day. A few companies are going to be announcing their earnings after the markets close. And for some reason, we can still trade those stocks in after-hours trading. I do not understand the concept of after-hours trading. What's the point of closing markets if you're going to let people trade afterward? Is that loud clanging bell just a suggestion bell? If so, instead of a bell, shouldn't a middle-aged woman come to the floor of the exchange and say that it's starting to get dark out?

    SanDisk, the leading manufacturer of flash memory cards, is about to announce its earnings. Matt says I definitely cannot trade it. It's too unpredictable, too fast, too dangerous. It's going to make that cloud-computing IPO look like an abacus IPO. Matt looks at me and realizes I am going to trade it. So he tells me I can only buy and sell in increments of 10 shares instead of 100.

    I'm in the zone. I cannot go wrong with SanDisk, which is insanely volatile, fluctuating by more than $3 a share for nearly 20 minutes. I'm buying when it's going up, selling while it's going down, riding wave after wave. I manage to trade 1,040 shares -- nearly $50,000 worth -- possibly by not following Matt's 10-share rule. Thanks to SanDisk, I'm up $76.36 on the day, though, after my trading fees, that's just $20.60. Still, that's better than Bank of America made this quarter. Matt, however, has lost several thousand dollars today. Though it's several thousand minus $20.60.

    At 3:30, I walk outside. After a day in the dark, the sun is blinding. I'm in the middle of Chicago, but everything feels slow. I want to trade more, gamble on the ponies, put so much of my savings into SanDisk and BorgWarner that they could buy spaces in their names. Maybe I have more desire for danger than I thought.

    Adapted from "Man Made: A Stupid Quest for Masculinity," by Joel Stein, published by Grand Central on May 15, 2012. Copyright by Joel Stein. Printed by arrangement with Grand Central.

    Oil Services: Up, Up And Away?

    Isn't it crazy to avoid investing in oil stocks? After all, don't we all know that energy prices are going up in the long term? As large, developing countries continue to grow, demand for oil is sure to skyrocket, right? Furthermore, as a non-renewable resource, the world's oil supplies reduce every single day. Unfortunately, these stories don't tell the whole tale, and the reasons for value investors to stay away from investing in commodities like energy have never been stronger.

    Energy prices are volatile, and the direction of price changes is hard to predict. While the factors described above (emerging economies, non-renewable resource) will play an important role in the future price of energy, they are over-emphasized by the media and those who are bullish on the price of oil. Under-emphasized, however, is the market reaction to the high (even relative to recent history) prices.

    First of all, high oil prices result in increased exploration and increased production. But neither of these occur overnight. Instead, they take place over a period of several years, as labour and capital is shifted to the energy sector in order to derive strong returns. We saw this effect taking place in the early 1980s, and we are seeing it again.

    Second, high oil prices result in consumer and business shifts towards conservation and the development of technologies that increase energy efficiency. As an example, consider the increase in energy efficiency of new American passenger vehicles sold in the last few years:

    Source: Bureau of Transportation Statistics

    Note that the last time efficiency was jumping by this magnitude was in the early 1980s, when oil prices last spiked significantly. When oil prices were low, there was no need to purchase fuel-efficient cars and there was no need to invest in technologies that would increase efficiencies.

    But once again, changes in efficiency don't happen overnight, which is why oil demand is relatively inelastic in the short term (e.g. one still has to fill up his car to get to work, no matter what the price) but elastic in the long term (e.g. the car-owner will consider fuel efficiency the next time he buys a car). Over the next several years, as higher efficiency vehicles replace older relatively inefficient vehicles, oil demand in this country will start to decline.

    Will this offset emerging market growth and supply constraints? It is difficult to tell. This will depend on how fast developing countries grow, how quickly new supplies are found and at what cost, and the rate at which technologies that improve energy efficiency are brought to market. Simultaneously sorting through these variables to come up with a forecast is a difficult exercise riddled with traps.

    The safest bet for the value investor is not to make one at all, since being wrong on the future price of oil is too easy to do. With the number one priority of value investing being "Never Lose Money", value investors should stay away from making investments that are heavily reliant on the price of energy, either on the cost or the revenue side. Instead, investors should focus on companies that face stable pricing of their products and have flexible cost structures.