Saturday, November 30, 2013

5 Big Stocks to Trade for Big Gains: Must-See Charts

BALTIMORE (Stockpickr) -- All eyes are on Janet Yellen this morning, as she sits for the biggest job interview of her life: her confirmation hearing for the Fed chairmanship.

But she's not exactly shocking anyone with her testimony. Yellen is in favor of QE? She supports Bernanke's policies? The faucet stays on for another four years? Quelle surprise.

Still, stocks are getting boosted as investors salivate over the prospect of more cash flowing into the system. As a trader, who am I to judge? Instead, I'm taking a technical look at five big names that look tradable this week.

If you're new to technical analysis, here's the executive summary.

Technicals are a study of the market itself. Since the market is ultimately the only mechanism that determines a stock's price, technical analysis is a valuable tool even in the roughest of trading conditions. Technical charts are used every day by proprietary trading floors, Wall Street's biggest financial firms, and individual investors to get an edge on the market. And research shows that skilled technical traders can bank gains as much as 90% of the time.

Every week, I take an in-depth look at big names that are telling important technical stories. Here's this week's look at five high-volume stocks to trade this week.

PetroChina

First up is Chinese oil and gas giant PetroChina (PTR). Saying PetroChina has seen a rough 2013 is an understatement. Year-to-date, shares of the $203 billion firm have slipped more than 22% at the same time that the S&P 500 has been in rally mode. But shareholders could be in store for a reprieve this winter thanks to a bullish setup that's been forming in shares of late.

PetroChina is currently forming an ascending triangle bottom, a trading setup that's formed by a horizontal resistance level to the upside at $118 and uptrending support below shares. Basically, as PTR bounces between those two levels, it's getting squeezed closer and closer to a breakout above the $118 price ceiling. When that breakout happens, it's time to be a buyer.

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

That $28 resistance level is a price where there has been an excess of supply of shares; in other words, it's a place where sellers had been more eager to step in and take gains than buyers were to buy. That's what makes this week's breakout above it so significant. The move means that buyers are finally strong enough to absorb all of the excess supply above that price level.

If you decide to take the Pandora trade, I'd recommend keeping a protective stop at the 50-day moving average.

Annaly Capital Management

There's no two ways about it: Annaly Capital Management (NLY) has gotten rocked this year. As I write, the $10 billion mortgage REIT is underperforming the S&P by 48% since the beginning of January. That's a pretty painful shortfall for investors -- but NLY could be near a turnaround right now.

That's because NLY is currently forming a double bottom pattern, a bullish reversal setup that's formed by two lows that bottom out around the same price level. They're separated by a breakout level to the upside at $12.25 -- a move through that price is our buy signal on this stock. As I write, NLY is still very close to the number-two bottom that it made just a few sessions ago, so while it's bullish that shares hit the brakes at their old support level, it's early to start getting too aggressive with this trade.

A move through $12.25 would be a pretty major trend reversal in NLY, but it's still a little while away. Still, the sheer underperformance at NLY means that it could try to play catch-up quickly. Put this trade in your watch list.

Discover Financial Services

The situation in shares of Discover Financial Services (DFS) is a little more pressing -- and you don't need to be an expert technical analyst to see why. This $25 billion payment network stock has been locked in a textbook uptrending channel since April, and with shares at support this week, it makes sense to buy the bounce.

The channel in DFS is important because it provides us with a high-probability range for shares to stay within both on the upside and the downside. More important, trendline support has halted shares' pullbacks perfectly on the last four touches of the level – now we're hitting touch No. 5. With a bounce in play in this morning's session, now's a perfect time to take on a position.

Buying off a support bounce makes sense for two big reasons: It's the spot where shares have the furthest to move up before they hit resistance, and it's the spot where the risk is the least (because shares have the least room to move lower before you know you're wrong). Remember, all trend lines do eventually break, but by actually waiting for the bounce to happen first, we're ensuring the DFS can actually still catch a bid along that line. Keep a tight stop in place under the channel if you decide to buy here.

Facebook

Hedge funds have been buying Facebook (FB) with both hands in the last quarter. But from a technical standpoint, it's starting to look like their timing could be off. Facebook has seen a stellar fun since the breakout back in July, but this stock is starting to look "toppy" now.

FB is currently forming a head and shoulders top, a bearish pattern that indicates exhaustion among buyers. The setup is formed by two swing highs that top out around the same level (the shoulders), separated by a higher high in between them (the head). The neckline, at $46 on the chart above, is the trigger level to watch. A slip below that neckline means that it's time to sell (or short) the social network.

RSI signaled a red flag for Facebook all the way back in September, when the uptrend in the momentum gauge stalled out and flipped to a downtrend. That was the signal that buying pressure was waning in shares -- a move through $46 is the signal that sellers are now in control.

To see this week's trades in action, check out this week's Must-See Charts portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

Friday, November 29, 2013

How to be a 401(k) millionaire

retirement calculator screen

Are you on your way to becoming a 401(k) millionaire? Click the image above to use our retirement calculator.

NEW YORK (CNNMoney) You don't have to make millions to become a 401(k) millionaire.

Fidelity Investments analyzed the savings habits of roughly 1,100 401(k) investors who earned less than $150,000 a year and had accumulated more than $1 million in 401(k) savings to determine how they reached the million-dollar mark.

Ultimate Guide to Retirement Getting started401(k)s & company plansInvestingAnnuitiesIRAsSelf-employment plansPensions and benefit plansSocial SecurityInsuranceEstate planningLiving in retirementGetting help How to reach $1 million What's the magic formula to becoming a 401(k) millionaire? Here's what Fidelity recommends.
Start: At age 25, with a salary of $40,000 that grows 1.5% a year
Save: Either 22% per year at a 5.5% nominal growth rate Or 16% per year at a 7% nominal growth rate
Retire: At age 67, with an ending salary of $73,650
Source: Fidelity Investments

The retirement plan provider found these savers, who were an average age of 59, had some key behaviors in common: they started young, always took advantage of the company match and saved a large chunk of their pay each year, a median of 14% (not counting the company match).

These workers put aside a median of $13,300 of their own cash each year and enjoyed a median employer contribution of $4,500, for a total of $17,800 in retirement savings each year.

As a result, the savers grew their median account balance from $426,000 in June 2000 to $1.2 million in June 2012.

"You have to start saving and start saving early," said Jeanne Thompson, Fidelity's vice president for market insights.

A 25-year-old earning $40,000 will need to save more than 20% of her salary each year to hit the million-dollar mark by age 67, assuming her salary grows by 1.5% a year and her investments gain 5.5% annually, according to Fidelity.

While saving $1 million may seem like hitting the retirement jackpot, you may want to hold off on booking that around-the-world cruise.

Take the widely used "4% rule," which dictates you withdraw 4% of your portfolio the first year of retirement and increase that amount each year by the rate of inflation over 30 years. Using that benchma! rk, a $1 million portfolio could provide about $40,000 a year in retirement income for 30 years -- not exactly enough for lavish lifestyle.

To get a basic idea of your savings needs, try a retirement calculator. Generally, you should assume you will need at least 70% of your pre-retirement income. If you were making $100,000 before retirement, for example, you will need at least $70,000 a year from your retirement savings and other income sources like Social Security.

Here are some more tips from the pros.

Start young: Thanks to compounding returns, the fact that your investments' returns will build upon themselves, the money you set aside in your 20s and 30s enjoys a snowball effect.

For example, a single investment of $5,000 would grow to more than $50,000 in 40 years, assuming an average annual return of 6%.

Max out your savings: Most planners recommend socking away at least 10% to 15% of your salary each year. But if you can't afford to do that, make sure to contribute enough to receive your full company match, said Anton Bayer, founder and CEO of Up Capital Management, which works with dozens of 401(k) plans.

Don't be overly conservative: Sticking all your money in "safe" investments is a surefire way to stall your savings potential.

Financial planners say stocks are still the best bet for retirement savers. Bonds or savings accounts simply don't offer high enough returns to grow an adequate nest egg on their own. "If you're 25 years old [those investments] might not get you there, " said Patrick Chu, a Newport Beach, Calif.-based financial planner.

One common rule of thumb to help you determine the percentage of your investments that should be in stocks is to subtract your age from 120. For example, a 35-year-old should have up to 85% of his portfolio in stocks.

Fidelity found that the 401(k) millionaires in their 40s invested 70% of their savings in equities, and earned a median annual return of 4! .8%.

! How I talk to my spouse about retirement   How I talk to my spouse about retirement

Keep emotion out of it: Once you've figured out the asset allocation that makes sense for your age and risk tolerance, stick to it. This will keep you from gambling with your savings during market highs or from pulling out during market lows.

Watch out for fees: Over the course of a career, the fees you pay can mean a difference of more than $100,000 in savings.

Index funds, which mirror overall market movements, tend to carry cheaper fees of less than 1%, while actively managed funds can charge twice as much or more. Smaller 401(k) plans tend to have the highest fees, but most plans still have a few cheaper options.

Work as long as you can: Staying on the job longer not only provides additional years to contribute and grow your investments, but it means your savings will need to sustain you through fewer years of retirement.

A 65-year-old with $1 million in his 401(k) can expect his nest egg to provide roughly $71,000 a year throughout a 25-year retirement if he retires at 65, according to Chu. But if he works five more years, investing just $4,000 more a year, and retires at the age of 70, he will be able to live on more than $100,000 a year until age 90, he said. To top of page

Thursday, November 28, 2013

Best Low Price Companies For 2014

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Nokia (NYSE: NOK  ) have gotten clobbered today, down by as much as 12% after the Finnish smartphone maker reported first-quarter earnings.

So what: Revenue in the first quarter totaled $7.7 billion, which missed the Street's forecasts. On the bright side, the company narrowed its loss to $0.07 per share. There was other good news, as Lumia shipments were strong and increased 27% sequentially to 5.6 million units. Nokia closed the quarter with $5.9 billion in net cash.

Now what: Total smartphones dropped precipitously as Nokia expectedly ramps down Symbian units, which were just 500,000. The company's Asha line of feature phones saw shipments of 5 million. Nokia's lower-end devices are under competitive pressure from Android devices targeting low price points. The networks business held up, and CEO Stephen Elop said that segment helped contribute to Nokia's cash position this quarter. However, investors were focusing on the weakness up top.

Best Low Price Companies For 2014: Atlas Pearls and Perfumes Ltd (ATP)

Atlas Pearls and Perfumes Ltd, formerly Atlas South Sea Pearl Ltd., is an Australia-based Company. The Company is engaged in the business of pearl production in Indonesia and distribution globally through the Company�� marketing operations in Australia. The Company also manufactures and sells pearl jewellery primarily in Bali, Indonesia. It segments include Wholesale Loose Pearl and Jewellery. Its wholesale business is a producer and supplier of pearls within the wholesale market. The retail business is the manufacture and sale of pearl jewellery and related products within the retail market. The Company's subsidiaries include Perl��co Pty Ltd, Tansim Pty Ltd, P.T. Cendana Indopearls and Aspirasi Satria Sdn Bhd.

Best Low Price Companies For 2014: Sulliden Explorati Com Npv(SUE.TO)

Sulliden Gold Corporation Ltd., together with its subsidiaries, engages in the acquisition, exploration, and development of precious metal properties in Peru and Canada. It principally holds a 100% interest in the Shahuindo gold and silver project that comprises 26 mineral claims covering an area of approximately 7,358 hectares in the Cajabamba Province in northern Peru. The company was formerly known as Sulliden Exploration Inc. and changed its name to Sulliden Gold Corporation Ltd. in October 2009. Sulliden Gold Corporation Ltd. is headquartered in Toronto, Canada.

Top 10 Dividend Companies To Buy Right Now: Asset Acceptance Capital Corp.(AACC)

Asset Acceptance Capital Corp. engages in the purchase and collection of defaulted and charged-off accounts receivable portfolios from consumer credit originators in the United States. The consumer credit originators primarily include credit card issuers, consumer finance companies, healthcare providers, retail merchants, telecommunications, and utility providers, as well as resellers and other holders of consumer debt; private brokers; and debt resellers. The company periodically sells receivables from these portfolios to unaffiliated companies. It also finances the sales of consumer product retailers; and licenses a collection software application. The company was founded in 1962 and is headquartered in Warren, Michigan.

Best Low Price Companies For 2014: Merrimack Pharmaceuticals Inc (MACK.W)

Merrimack Pharmaceuticals, Inc., incorporated in 1993, is a biopharmaceutical company discovering, developing and preparing to commercialize medicines paired with companion diagnostics for the treatment of serious diseases, with an initial focus on cancer. The Company�� product candidates include MM-398, MM-121, MM-111, MM-302 and MM-151. As of June 31, 2011, the Company owned approximately 74% interest of Silver Creek.

The Company�� Network biology is an interdisciplinary approach to drug discovery and development that enables the Company to build functional and predictive computational models of biological systems based on quantitative, kinetic, multiplexed biological data. The Company provides its scientists with insights into how the complex molecular interactions that occur within cell signaling pathways, or networks, regulate cell decisions and how dysfunction within these networks leads to disease. The Company applies network biology throughout t he research and development process, including for target identification, lead compound design and optimization, diagnostic discovery, in vitro and in vivo predictive development and the design of clinical trial protocols.

MM-398

MM-398 is a stable nanotherapeutic encapsulation, or enclosed sphere carrying an active drug, of the marketed chemotherapy drug irinotecan. MM-398 achieved its primary efficacy endpoints in Phase 2 clinical trials in pancreatic and gastric cancer. In an open label, single arm Phase 2 clinical trial of MM-398 as a monotherapy in 40 metastatic pancreatic cancer patients who had previously failed treatment with gemcitabine, patients treated with MM-398 achieved median overall survival of 22.4 weeks. Additionally, 20% of the patients in this Phase 2 trial survived for more than one year, and the Company observed a disease control rate, meaning patients exhibited stable disease or partial or complete response to treatment, of 47 .5% at six weeks.

The Company focuses on ini! ti! ating a Phase 3 clinical trial of MM-398 for the treatment of patients with metastatic pancreatic cancer who have previously failed treatment with gemcitabine. The trial is expected to enroll approximately 250 patients and is designed to compare the efficacy of MM-398 as a monotherapy against the combination of the chemotherapy drugs fluorouracil, or 5-FU, and leucovorin. There are multiple ongoing Phase 1 and Phase 2 clinical trials of MM-398. In July 2011, the United States Food and Drug Administration (FDA) granted MM-398 orphan drug designation for the treatment of pancreatic cancer.

MM-121

MM-121 is a fully human monoclonal antibody that targets ErbB3, a cell surface receptor, or protein attached to the cell membrane that mediates communication inside and outside the cell, that the Company�� network biology approach identified as a target in a range of cancers. A monoclonal antibody is a type of protein normally produced by cells of the immun e system that binds to just one epitope, or chemical structure, on a protein or other structure. MM-121 is designed to inhibit cancer growth directly, restore sensitivity to drugs to which a tumor has become resistant and delay the development of resistance of a tumor to other agents. In collaboration with Sanofi, the Company focuses on testing MM-121 in combination with both chemotherapies and other targeted agents across a range of spectrum of solid tumors, including lung, breast and ovarian cancers. The Company partnered MM-121 with Sanofi after it initiated Phase 1 clinical development of the product candidate.

MM-111

MM-111 is a bispecific antibody designed to target cancer cells that are characterized by overexpression of the ErbB2 cell surface receptor, also referred to as HER2. A bispecific antibody is a type of antibody that is able to bind simultaneously to two distinct proteins or epitopes. The Company�� network biology approach identif ied that ligand-induced signaling through the complex ! of Erb! B! 2 (HER2)! and ErbB3 is a promoter of tumor growth and survival than previously appreciated.

MM-302

MM-302 is a nanotherapeutic encapsulation of doxorubicin with attached antibodies that are designed to target MM-302 to cells that over express the ErbB2 (HER2) receptor. The Company is conducting a Phase 1 clinical trial of MM-302 in patients with advanced ErbB2 (HER2) positive breast cancer.

MM-151

MM-151 is an oligoclonal therapeutic consisting of a mixture of three fully human monoclonal antibodies designed to bind to non-overlapping epitopes of the epidermal growth factor receptor (EGFR). EGFR is also known as ErbB1. An oligoclonal therapeutic is a mixture of two or more distinct monoclonal antibodies. The Company has designed MM-151 to block signal amplification that occurs within the ErbB cell signaling network. The Company has submitted an investigational new drug application (IND), to the FDA for MM-151 in July 2011.

Best Low Price Companies For 2014: Johnson Outdoors Inc.(JOUT)

Johnson Outdoors Inc., together with its subsidiaries, designs, manufactures, and markets seasonal outdoor recreation products used primarily for fishing, diving, paddling, and camping. Its Marine Electronics segment offers battery powered fishing motors for trolling or primary propulsion; sonar and GPS equipment for fish finding and navigation; downriggers for controlled-depth fishing; leisure boat navigation technology; and lake charts. The company?s Outdoor Equipment segment provides consumer tents, sleeping bags, camping furniture, and other recreational camping products; commercial tents, such as party tents and accessories, including lighting systems, interior lining options, and mounting brackets; heavy-duty tents and lightweight backpacking tents for the military, including modular general purpose tents, rapid deployment shelters, and lightweight one and two person tents; and military tent accessories, such as fabric floors, as well as field compasses and digital instruments, and performance measurement instruments. This segment also acts as a subcontract manufacturer for other providers of military tents. It primarily serves camping and backpacking specialty stores, sporting goods stores, catalog and mail order houses, general rental stores, and tent erectors. Its Watercraft segment offers canoes, kayaks, accessories, paddles, and personal flotation devices. The company?s Diving segment manufactures and markets a line of underwater diving and snorkeling equipment, including regulators, buoyancy compensators, dive computers and gauges, wetsuits, masks, fins, snorkels, and accessories for technical and recreational divers. This segment also offers diving gear to dive training centers, aquariums, and resorts. Johnson Outdoors Inc. operates primarily in the United States, Europe, Canada, and the Pacific Basin. The company was founded in 1985 and is headquartered in Racine, Wisconsin.

Best Low Price Companies For 2014: Regis Corporation(RGS)

Regis Corporation owns, operates, and franchises hairstyling and hair care salons in the United States, the United Kingdom, Canada, Puerto Rico, and internationally. It offers haircutting and styling, including shampooing and conditioning; hair coloring; and waving to men, women, and children. The company also owns and operates hair restoration centers, which provide hair systems, hair transplants, and hair therapy services, as well as hair care products. Its salons operate primarily under the Regis Salons, MasterCuts, SmartStyle, Supercuts, Cost Cutters, Sassoon, Promenade salons, Hair Masters, First Choice Haircutters, Magicuts, and Hair Club trade names in regional shopping malls, strip centers, lifestyle centers, Wal-Mart supercenters, department stores, mass merchants, and high-street locations. As of June 30, 2011, the company owned, franchised, or held ownership interests in approximately 12,700 locations. Regis Corporation was founded in 1922 and is headquartered i n Edina, Minnesota.

Advisors' Opinion:
  • [By Geoff Gannon]

    For example, a company involved in a mundane business like running hair salons ��like Regis (RGS), dentist offices ��like Birner Dental (BDMS), grocery stores ��like Village Supermarket (VLGEA), or garbage dumps ��like Waste Management (WM), may be easy to estimate as essentially a no-growth business.

Best Low Price Companies For 2014: Ritchie Bros Auctioneers (RBA.TO)

Ritchie Bros. Auctioneers Incorporated, an industrial auctioneer, sells various equipment to on-site and online bidders. The company, through unreserved public auctions, sells a range of used and unused industrial assets, including equipment, trucks, and other assets utilized in the construction, transportation, agricultural, material handling, mining, forestry, petroleum, and marine industries. It also provides Internet bidding services, which facilitate customers access to live and online auction participation. The company primarily serves buyers and sellers of equipment, trucks, and other industrial assets; rental companies and brokers; finance companies; and truck and equipment dealers. As of December 31, 2011, it operated approximately 110 locations in approximately 25 countries, including 43 auction sites worldwide. The company was founded in 1963 and is headquartered in Burnaby, Canada.

Best Low Price Companies For 2014: Cross Country Healthcare Inc.(CCRN)

Cross Country Healthcare, Inc. provides healthcare staffing and outsourcing services to the healthcare market in Europe, the United States, Canada, and Asia. The company?s Nurse and Allied Staffing segment provides nurse and allied staffing services; healthcare professionals in various specialties, such as operating room and radiology technicians, rehabilitation and respiratory therapists, radiation therapy technicians, nurse practitioners, and physician assistants; and registered nurses, licensed practical nurses, and certified nurse assistants for per diem assignments. This segment markets its nurse and allied staffing services primarily to acute care hospitals, health systems, public and private healthcare facilities, and for-profit and not-for-profit facilities under the Cross Country TravCorps, MedStaff Healthcare Solutions, NovaPro, Cross Country Local, CRU-48, Allied Health Group, and Assignment America names. Its Physician Staffing segment offers temporary physici an staffing services. The company?s Clinical Trial Services segment provides contract staffing and outsourcing, drug safety monitoring, and regulatory consulting services to pharmaceutical, biotechnology, and medical device companies, as well as contract research organization customers under the ClinForce, Assent, and AKOS brands. Its Other Human Capital Management Services segment offers education and training, as well as retained search services primarily related to physicians, allied health, and healthcare executives. The company was formerly known as Cross Country, Inc. and changed its name to Cross Country Healthcare, Inc. in May 2003. Cross Country Healthcare, Inc. was founded in 1996 and is headquartered in Boca Raton, Florida.

Cash Gushes Into Stock Funds

Inflows last week into U.S. stock mutual funds and exchange-traded funds were the most in two months, with investors pumping money into stock funds as the S&P 500 rose again to record highs.

Investors placed $11.5 billion into both U.S. stock mutual funds and ETFs in the week ended Oct. 23, according to fund tracker Lipper. Last week’s intake was the largest since Sept. 18, and compares with an inflow of $9.7 billion in week ended Oct. 16.

Traditional U.S. stock mutual funds, excluding ETFs, took in $4 billion, the largest single-week gain since the week of Jan. 9, towering over the $915 million that flowed in during the previous week.

Domestic stock ETFs received $7.5 billion, compared with $8.8 billion a week earlier.

The biggest takers among ETFs all are made up of U.S. stock funds. The market's behemoth, the $156 billion SPDR S&P 500 ETF(SPY5.LN) (SPY), took in $2.9 billion last week. Enthusiasm for tech stocks saw the Nasdaq-100 Index tracking PowerShares QQQ (QQQ) rake in $1 billion, while the SPDR S&P MidCap 400 (MDY) absorbed $750 million.

Demand picked up for funds made up of overseas stocks as well. International equity mutual funds and ETFs took in $4.2 billion last week, also the most in two months. Investors have been particularly keen on Europe, where signs of stability for are cropping up for the first time in years. Investors poured $5 billion into European stock mutual funds and ETFs last week, the most ever, according to Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch.

Europe-based stock funds have soaked up cash for 17 consecutive weeks.

The S&P is sitting less than one point beneath a new record. Stocks have been pushing higher since lawmakers averted a U.S. debt crisis earlier and as concerns that the Federal Reserve will start to cut back its stimulus efforts this year recede.

Wednesday, November 27, 2013

Strict SRI Leads to Superior Performance

Johnny would no doubt be proud.

Ask Bill Pekin what his Appleseed Fund does better than anyone else, and the portfolio manager has a ready answer.

“We’re a global all-cap value fund,” he responded at FPA Experience 2013 in Orlando on Sunday.

It doesn’t sound so special on the surface, but then again, it adheres to the precepts of socially responsible investing. As anyone in the SRI community will tell you, the vast majority of SRI funds are domestically-focused and growth, so it’s one of a handful of global SRI value funds available.

“We have one-third of the fund in global companies, one-third of the fund in domestic companies and one-third of the fund in gold and cash,” Pekin explained, when asked about his philosophy and strategy. “Its risk-averse nature means it tends to outperform in volatile markets and lag in robust markets.”

What that translates to is strong performance in 2008 and 2009, and weaker performance since. However, he noted the 4.5% yearly alpha average over the life of the fund.

The fund is a concentrated portfolio of approximately 30 stocks, each of which has a “margin of safety” of 50%, meaning there is significant upside to intrinsic value.

“We feel 30 stocks are the right number,” he added. “It’s better to know a lot about a few stocks than nothing about many.”

It has a holding period that usually lasts one market cycle, or about three to five years. To get a name into the portfolio requires four out of five votes of the portfolio management team, which has been together for 10 years.

And of course, there are the SRI screens.

“We employ both positive and negative screens,” he said. “We don’t allow for tobacco, weapon systems, pornography, alcohol and gaming. On the positive side, we look for companies that make an impact on their community and the environment.”

Thirty stocks, 50% upside, strict screens and a majority vote — it all adds up to “a very high bar” for any holding to be included in the fund, and one he feels helps with the aforementioned risk-averse nature of the fund.

As far as their sell discipline, the rules are just as strict. Pekin said the he sells when the stock price of a holding reaches the estimate of intrinsic value; the firm’s investment thesis or intrinsic value estimate changes; the management team believes it has better investment opportunities elsewhere, and/or; the responsibility assessment of a company changes.

“We benchmark to the S&P 500 and the MSCI World Index, we look globally and domestically and have a value focus,” he concluded. “All of it adds up to something we feel is pretty unique and effective for investors.”

---

Check out CalPERS’ Investment Beliefs Arouse Skeptics on ThinkAdvisor.

US Steel, Alliance Steel Drop, as UBS Picks Winners, Losers

“Steel demand is heating up” in the US, says UBS analyst Matt Murphy. Some steel stocks, however, are ready to cool down, he says

Reuters

When it comes to steel demand, the world is looking good. Murphy explains:

We anticipate strong steel demand growth in 2014, led by a pick-up in nonresidential construction as well as ongoing growth in automotive and manufacturing sectors. Growth will continue in 2015 and reach pre-recession levels by 2016.

Prices, however, do not:

On the supply side, the global steel industry will remain overcapacity, and given our falling iron ore price forecast we expect steel prices to fall from the current $650/t spot price to less than $600/t by H2/14 while metal spreads to scrap should generally be maintained near-term and begin expanding in 2016.

That dynamic means that companies that can benefit from construction strength and cut costs will outperform others. For that reason, Murphy keeps Nucor (NUE) and Steel Dynamics (STLD) at Buy. He wasn’t so kind to Reliance Steel (RS), US Steel (X) and AK Steel (AKS), which were all cut, though for different reasons.

When it comes to Reliance, it’s all about valuation. Murphy writes:

Its model of consolidating service centers has consistently been accretive, as RS normally buys smaller companies at lower multiples using low-cost debt. Within the metals service center industry, RS is a best-in-class operator with a top-tier management team, high inventory turns and EBITDA margins. However, we view the current stock price as fairly valued given our falling steel and aluminum price outlook and its impact on absolute profits. We rate Reliance Steel a Neutral and our $75 PT is based on an 8.0x EV/EBITDA (2015) multiple.

US Steel gets a downgrade to Neutral from Buy thanks to an increase in competition. Murphy explains:

As an integrated steel producer, X has been burdened by high fixed costs in the weak steel markets of recent years and high legacy liabilities due to low discount rates. We expect US Steel to benefit from reduced pension liabilities in 2014, while also improving margins through cost reduction and revenue maximization efforts currently underway. However, we remain concerned about increasing competition in X's most profitable segment, Tubular goods, and we only see sector capacity utilization reaching higher levels in 2016, meaning margins could remain weak in the medium term.

And AK Steel? It gets cut to Sell from Neutral:

The company has suffered from weak margins and high leverage, compounded by debt and high legacy liabilities. AKS is benefitting from an improving US auto sector; however, it will be some time before it can realize any benefit from its raw materials integration strategy, which is underway. The largest issue we see for AKS is the cash drag from required pension payments notwithstanding an improving economy and rising interest rates

Nucor has gained 1.2% to $51.32 and Steel Dynamics has risen 0.6% to $18.40, while Reliance Steel has dipped 0.5% to $75.11, US Steel has dropped 2% to $23.52 and AK Steel has fallen 2.7% to $3.95.

Tuesday, November 26, 2013

Can Google Continue to Trend Higher?

With shares of Google (NASDAQ:GOOG) trading around $1045, is GOOG an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Google is a global technology company focused on improving the ways people engage with information. The business is based on the following areas: search, advertising, operating systems and platforms, and enterprise. The company generates revenue primarily by delivering online advertising. Google is a search giant with most of the market share, largely because of its execution and delivery. An increasing number of consumers and companies worldwide are coming online, which will surely increase the amount of eyes on the company's ads and, in turn, advertising revenue. At this rate, look for Google to remain on top of the Internet world.

Google agreed to pay $17 million to 37 states this week for evading cookie-blocking controls in Apple's (NASDAQ:AAPL) Safari browser, but industry experts suggest that the effect the settlement will have on the privacy debate is more significant that than the money penalty itself.

T = Technicals on the Stock Chart Are Strong

Google stock has has been exploding to the upside in the past several years. The stock is currently trading near all-time highs and looks poised to continue. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Google is trading above its rising key averages, which signal neutral to bullish price action in the near-term.

GOOG

(Source: Thinkorswim)

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

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Google Options

18.44%

53%

53%

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

Put IV Skew

Call IV Skew

December Options

Flat

Average

January Options

Flat

Average

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

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

E = Earnings Are Increasing Quarter-Over-Quarter

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

2013 Q3

2013 Q2

2013 Q1

2012 Q4

Earnings Growth (Y-O-Y)

21.08%

-5.53%

13.60%

17.06%

Revenue Growth (Y-O-Y)

11.94%

15.52%

31.23%

24.87%

Earnings Reaction

13.79%

-1.55%

4.43%

5.49%

Google has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have had conflicting feelings about Google’s recent earnings announcements.

P = Average Relative Performance Versus Peers and Sector

How has Google stock done relative to its peers, Yahoo (NASDAQ:YHOO), Microsoft (NASDAQ:MSFT), Baidu (NASDAQ:BIDU), and sector?

Google

Yahoo

Microsoft

Baidu

Sector

Year-to-Date Return

47.88%

82.46%

40.98%

56.27%

57.89%

Google has been an average relative performer, year-to-date.

Conclusion

Google is an Internet giant that provides valuable search and advertising services to a growing user base worldwide. The company agreed to pay $17 million to 37 states this week for evading cookie-blocking controls in Apple's Safari browser. The stock has been exploding higher in recent years and is currently trading near all time high prices. Over the last four quarters, earnings and revenues have been increasing. However, investors have had conflicting feelings about recent earnings announcements. Relative to its strong peers and sector, Google has been an average year-to-date performer. Look for Google to OUTPERFORM.

No Default, No Doubt: S&P 500 Hits Record High as Standoff Ends

When I was growing up, a new movie starring Sylvester Stallone or Arnold Schwarzenegger alone would have been a box office hit. The two of them together? That would have been mana from heaven for Hollywood. These days, not so much. The roll out of their new film, Escape Plan, is drawing little more than shrugs.

AFP/Getty Images How happy were markets that Washington made a deal? Almost as happy as the Afghanistan soccer team after beating Pakistan in August.

Still, Escape Plan seems like an appropriate film for this week’s stock market. Stallone plays a security expert who is paid to break out of jail–but gets stuck in a CIA prison…forever. The government shutdown and debt-ceiling fiasco had that feel. Like being stuck in jail with a hint of release or having to watch Arnold and Sly ham it up in 2013. Either way. Take your pick.

So when the deal was struck, the government reopened and the debt ceiling raised, stocks celebrated. The S&P 500 gained 2.4% to 1,744.50, a new record high and the 28th this year. The Russell 2000 rose 2.8% to 1,114.77, also a record high–its 54th this year. The Dow Jones Industrial Average rose just 1.1% to 15,399.65.

The short-term nature of the deal–the government is funded only through Jan. 15 and the debt ceiling extended until Feb. 7–means there’s a good chance we’ll be doing this all over again in three months. Won’t that be fun? RBC Capital Market’s Tom Porcelli and team explain why the short-term deal could push off tapering far into the future:

The timing on the debt ceiling extension in particular is interesting from a monetary policy perspective. Fed officials have been rather clear that the reason they decided against tapering in September was based on fear political negotiations would generate an adverse outcome. Our original stance was tapering had been pushed off to March, but this needs to be re-thought in light of the Feb 7 debt ceiling extension. In reality, thanks to the Treasury Department's ability to employ extraordinary accounting measures, we will not hit the ceiling until at least mid March and perhaps even as late as June. In the context of a Fed that decided to unload a massive surprise on the market by not tapering in September, if political turmoil awaits us early in the new year, perhaps we need to begin thinking of tapering as a Q2 event.

Earnings were a mixed bag this week. Thomson Reuters Greg Harrison explains:

20% of the S&P 500 companies have reported Q3 2013 EPS. Of the 98 companies in the S&P 500 that have reported earnings to date for Q3 2013, 62.2% have reported earnings above analyst expectations, 13.3% reported earnings in line with analyst expectations and 24.5% reported earnings below analyst expectations. In a typical quarter (since 1994), 63% of companies beat estimates, 17% match and 21% miss estimates. Over the past four quarters, 66% of companies beat estimates, 10% matched and 24% missed estimates.

Citigroup’s Tobias Levkovich argues that there is “more upside in the next year beyond EPS
growth.” He writes:

The approach taken to normalize the multiple by using cyclically adjusted P/E ratios and the futures contract on the bond yield provides an intriguing set of statistics that supports further equity index gains beyond the expected 6%-like profit growth. Indeed, the probability of a respectable upward market move is better than 90% while the P/E bull's-eye work also shows that stocks are poised for incremental appreciation.

Stocks have escaped Washington. Can they achieve escape velocity?

Some individual stocks certainly did this week. Chipotle Mexican Grill (CMG) rose 19% to $509.74–a new all-time closing high–despite missing earnings forecasts. Strong same-store sales will do that. Baker Hughes (BHI), meanwhile, gained 11% to $55.55 after the oil-services company reported far stronger earnings than analysts had expected thanks to its business in the Middle East and Asia Pacific. Advance Auto Parts (AAP) gained 20% after purchasing a competitor and making itself the largest auto-parts supplier by revenue.

Others, however, gave back six months of gains in one week. That was the case for Select Comfort (SCSS), which plunged 29% to $18.60 this week after missing earnings forecasts and cutting guidance for the second time in 2013. Stanley Black & Decker (SWK), meanwhile, fell 15% to $77.16 after it beat earnings but lowered its guidance. It blamed weak margins in its security business, emerging markets and…wait for it…the government shutdown.

There is no escape.

Monday, November 25, 2013

Hilton IPO: A Safer Way to Invest in China

NEW YORK (TheStreet) -- The IPO of Blackstone (BX)-owned Hilton Worldwide could create an opportunity for investors looking to gain exposure to the Chinese economy, while minimizing some of the risks that are associated with the country's credit and real estate-fueled economic growth.

Since Blackstone Group bought Hilton Worldwide for $26 billion in a 2007 leveraged buyout that has been used by some as an example of the peak of the pre-crisis buyout bubble, the international hotel and timeshare chain has undergone a significant, if subtle, change to its business. 

Hilton Worldwide took billions of dollars in buyout financing when Blackstone made its 2007 investment, just ahead of a sharp downturn in the global economy and credit markets. Given what seemed like crushing debts, few would have expected Hilton to emerge from the crisis as the fastest growing hotel brand in the world. The company's redoubled commitment to franchisees for hotel growth, however, has allowed Hilton brand to expand rapidly without putting up much money by way of real estate purchases or construction.

In its franchise business, Hilton receives royalty revenue from developers who seek to profit from the company's iconic brand. Franchisees, not Hilton, purchase and develop the real estate. Under its PE owners, Hilton Worldwide has used third-party franchisees to grow its overall room count by 36% in an over five-year stretch without taking on the financial burdens generally associated developing real estate. Ninety-nine percent of Hilton's new rooms under its PE-owners have come from third party franchisees, the company advertises in its S-1 IPO documents filed with the Securities and Exchange Commission. The benefit to Hilton's earnings is striking. It also compares favorably to competitors such as Starwood Hotels (HOT), Marriott Worldwide (MAR), and Hyatt (H). Hilton's franchise business now contributes over 50% of the company's overall earnings before interest, taxes, depreciation and amortization (EBITDA) according to its S-1, and adjusted franchise EBITDA has grown by 25% from 2007 through 2012. It is Hilton's fastest source of earnings and hotel growth. So what about China?

Hilton's use of franchised hotels for growth has helped the company map out an international growth strategy that is shielded from many of the risks associated with investing in foreign markets. Hilton won't be taking on direct credit or real estate exposure to markets in China, Southeast Asia and the Middle East. It means that Hilton is fairly insulated if China's real estate market or its credit system hits a snag, an issue that has generally muted investor interest in the world's second largest economy in recent years. As a result, Hilton has been happy to increase its presence in international markets, even as post-crisis economic challenges make investing in foreign markets a big risk. According to Hilton's S-1, its pipeline of rooms in development outside of the U.S. now account for 60% of total new rooms in development. Prior to Blackstone's 2007 buyout, the figure stood at just 20%. In China, Hilton has increased its total hotels from just six as of 2007 to 171 hotels currently open or in development. China, as it turns out, has led the world in revenue per available room (RevPAR), a key metric in the hotel industry. "In the Americas, RevPAR has increased at a CAGR of 6.9% over the past three years and demand has returned to pre-economic crisis levels. The Asia Pacific region also has experienced high RevPAR growth during the last three years, primarily fueled by China and to a lesser degree Southeast Asia. Weaker economic conditions in Europe dampened RevPAR growth, but recent trends show improvement," Hilton states in its S-1. Still, Hilton's growth push in the U.S. and internationally through franchise businesses doesn't come completely without risk. Were franchisees to dilute Hilton's brand, it could undermine the company's ability to maintain existing relationships and grow new ones. Such a scenario would impact Hilton's franchise earnings, now the lion's share of the company's overall EBITDA.

Hilton also isn't entirely insulated from deteriorating economic fundamentals such as a fall in real estate prices, a slowdown in credit or a rise in mortgage defaults. If Hilton's franchises in the U.S. or international markets like China are unable to cover the financial burdens of owning and maintaining real estate, they could be forced to terminate management or franchise relationships.

Still, Hilton's financial exposure is relatively minimal compared with a business model that invests and owns hotels directly. For those looking for a way to invest in China's growth without taking all of the risks associated with the country, Hilton could be a compelling IPO.

The company plans to use IPO proceeds to pay down some of its $7.5 billion in outstanding term loan borrowings, the leftover debt from Blackstone's 2007 leveraged buyout.

--Written by Antoine Gara in New York Follow @antoineGara

Sunday, November 24, 2013

Congress Votes to End Shutdown, Avoid U.S. Debt Default

WASHINGTON (AP) — Up against a deadline, Congress passed and sent a waiting President Barack Obama legislation late Wednesday night to avoid a threatened national default and end the 16-day partial government shutdown, the culmination of an epic political drama that placed the U.S. economy at risk.

The Senate voted first, a bipartisan 81-18 at midevening. That cleared the way for a final 285-144 vote in the Republican-controlled House about two hours later on the legislation, which hewed strictly to the terms Obama laid down when the twin crises erupted more than three weeks ago.

The legislation would permit the Treasury to borrow normally through Feb. 7 or perhaps a month longer, and fund the government through Jan. 15. More than 2 million federal workers would be paid — those who had remained on the job and those who had been furloughed.

After the Senate approved the measure, Obama hailed the vote and said he would sign it immediately after it reached his desk. "We'll begin reopening our government immediately and we can begin to lift this cloud of uncertainty from our businesses and the American people."

Later, in the House, Rep. Harold Rogers, R-Ky., said, "After two long weeks, it is time to end this government shutdown. It's time to take the threat of default off the table. It's time to restore some sanity to this place."

The stock market surged higher at the prospect of an end to the crisis that also had threatened to shake confidence in the U.S. economy overseas.

Republicans conceded defeat after a long struggle. "We fought the good fight. We just didn't win," conceded House Speaker John Boehner as lawmakers lined up to vote on a bill that includes nothing for GOP lawmakers who had demand to eradicate or scale back Obama's signature health care overhaul.

"The compromise we reached will provide our economy with the stability it desperately needs," said Senate Majority Leader Harry Reid, declaring that the nation "came to the brink of disaster" before sealing an agreement.

Senate Republican leader Mitch McConnell, who negotiated the deal with Reid, emphasized that it preserved a round of spending cuts negotiated two years ago with Obama and Democrats. As a result, he said, "government spending has declined for two years in a row" for the first time since the Korean War. "And we're not going back on this agreement," he added.

Only a temporary truce, the measure set a time frame of early this winter for the next likely clash between Obama and the Republicans over spending and borrowing.

But for now, government was lurching back to life. Within moments of the House's vote, Sylvia Mathews Burwell, director of the Office of Management and Budget, issued a statement saying "employees should expect to return to work in the morning."

After weeks of gridlock, the measure had support from the White House, most if not all Democrats in Congress and many Republicans fearful of the economic impact of a default.

Boehner and the rest of the top GOP leadership told their rank and file in advance they would vote for the measure. In the end, Republicans split 144 against and 87 in favor. All 198 voting Democrats were supporters.

Final passage came in plenty of time to assure Obama's signature before the administration's 11:59 p.m. Thursday deadline.

That was when Treasury Secretary Jacob Lew said the government would reach the current $16.7 trillion debt limit and could no longer borrow to meet its obligations.

Tea party-aligned lawmakers who triggered the shutdown that began on Oct. 1 said they would vote against the legislation. Significantly, though, Texas Sen. Ted Cruz and others agreed not to use the Senate's cumbersome 18th-century rules to slow the bill's progress.

In remarks on the Senate floor, Cruz said the measure was "a terrible deal" and criticized fellow Republicans for lining up behind it.

McConnell made no mention of the polls showing that the shutdown and flirtation with default have sent Republicans' public approval plummeting and have left the party badly split nationally as well as in his home state of Kentucky. He received a prompt reminder, though.

"When the stakes are highest Mitch McConnell can always be counted on to sell out conservatives," said Matt Bevin, who is challenging the party leader from the right in a 2014 election primary.

More broadly, national tea party groups and their allies underscored the internal divide. The Club for Growth urged lawmakers to vote against the congressional measure, and said it would factor in the organization's decision when it decides which candidates to support in midterm elections next year.

"There are no significant changes to Obamacare, nothing on the other major entitlements that are racked with trillions in unfunded liabilities, and no meaningful spending cuts either. If this bill passes, Congress will kick the can down the road, yet again," the group said.

Even so, support for Boehner appeared solid inside his fractious rank and file. "There are no plots, plans or rumblings that I know of. And I was part of one in January, so I'd probably be on the whip list for that," said Rep. Thomas Massie of Kentucky.

The U.S. Chamber of Commerce came out in favor of the bill.

Simplicity at the end, there was next to nothing in the agreement beyond authorization for the Treasury to resume borrowing and funding for the government to reopen.

House and Senate negotiators are to meet this fall to see if progress is possible on a broad deficit-reduction compromise of the type that has proved elusive in the current era of divided government.

Additionally, Health and Human Services Secretary Kathleen Sebelius is to be required to produce a report stating that her agency is capable of verifying the incomes of individuals who apply for federal subsidies under the health care law known as Obamacare.

Obama had insisted repeatedly he would not pay "ransom" by yielding to Republican demands for significant changes to the health care overhaul in exchange for funding the government and permitting Treasury the borrowing latitude to pay the nation's bills.

Other issues fell by the wayside in a final deal, including a Republican proposal for the suspension of a medical device tax in Obamacare and a Democratic call to delay a fee on companies for everyone who receives health coverage under an employer-sponsored plan.

The gradual withering of Republicans' Obamacare-related demands defined the arc of the struggle that has occupied virtually all of Congress' time for the past three weeks.

The shutdown began on Oct. 1 after Cruz and his tea party allies in the House demanded the defunding of the health care law as a trade for providing essential government funding.

Obama and Reid refused, then refused again and again as Boehner gradually scaled back Republican demands.

The shutdown initially idled about 800,000 workers, but that soon fell to about 350,000 after Congress agreed to let furloughed Pentagon employees return to work. While there was widespread inconvenience, the mail was delivered, Medicare continued to pay doctors who treated seniors and there was no interruption in Social Security benefits.

Still, national parks were closed to the detriment of tourists and local businesses, government research scientists were sent home and Food and Drug Administration inspectors worked only sporadically.

___

Associated Press writers Donna Cassata, Alan Fram, Andrew Taylor, Henry C. Jackson, Bradley Klapper, Laurie Kellman, Julie Pace and Jim Kuhnhenn contributed to this story.

What debt deadline? Stocks soaring

NEW YORK — With the government shutdown now in its 16th day and Congress still at odds over how to end the debt impasse, U.S. stocks opened sharply higher, a sign that Wall Street still remains convinced Washington will avert a debt default.

With a debt limit deadline less than 14 hours away, the Dow Jones industrial average was up more than 180 points, or 1.2%, in early trading. The S&P 500 was up 1.1% and the Nasdaq composite was 1% higher and trading at a fresh 13-year high.

Investors are betting a deal gets done.

WARNING: Fitch issues warning on U.S. credit rating

The reason: the fallout of a U.S. default would be so unpredictable and potentially damaging to the financial system that few people on Wall Street think Congress would let such a self-inflicted wound occur.

"We have to assume that it is in no one's interest for the government to default," says Rob McIver, co-portfolio manager at Jensen Quality Growth Fund.

The short-end of the U.S. bond market, however, continues, to shows signs of distress. The yield on the Treasury bill that comes due on Oct. 31, dubbed "The Halloween Bill," has seen its yield jump to 0.60% in trading today, despite trading in a normal range of 0.05% to 0.10% for most of the year before moving higher and higher this month, according to a Bloomberg chart supplied by UBS.

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This type of short-term bond is typically referred to as a risk-free asset, but investors are selling these bills because they are the most likely government security to be hit by a U.S. default, according to Boris Rjavinski, an interest rate strategist at UBS.

Global markets are in waiting and watching mode.

In overseas trading, the Nikkei 225 Stock Index closed up 0.18% to 14,467.14, however Hong Kong's Hang Seng fell 0.46% to 23,228.33.

Similarly, key European stock indexes were trending lower, with Britain's FTSE 100 index down slight! ly 0.40% to 6,522.37. Germany's DAX 30 index was down 0.10% to 8749.72, while France's CAC 40 index was down 0.70% to 4,224.39.

Still, in the U.S., investors are nervous. And financial markets are in limbo as they wait to see if Congressional Democrats and Republicans can strike a budget deal in time to avoid a debt crisis that could cause the U.S. to default on its debts for the first time.

The clock is ticking closer to the key Oct. 17 deadline -- that's tomorrow -- that will either return sanity to Wall Street or cause potential chaos. When the deadline comes the U.S. won't be able to borrow any more unless lawmakers act to extend the debt ceiling. Barring an agreement, the U.S. won't be able to pay all its bills.

The biggest risk is if sometime after Oct. 17, the U.S. misses interest or principal payments on government debt it has already issued. Such a default could undermine the world's confidence in a financial asset that's long been viewed as the safest investment on Earth.

Due to political brinkmanship, after last night's market close Fitch Ratings cited the potential hit to confidence due to a potential default as a reason it placed the USA's AAA rating on "rating watch negative."

Standard & Poor's, of course, downgraded U.S.debt to AA+ in the summer of 2011 after the last debt-ceiling fight. And John Chambers, chairman of S&P's sovereign debt committee told "CBS This Morning" today that if the U.S. does not pay its bondholders on time and defaults, the reaction in financial markets would "probably be an event that would be much worse than (the bankruptcy) of Lehman Brothers" back in the fall of 2008.

Still a Q&A research note put out yesterday by credit rating agency Moody's Investors Services that downplayed the odds of a credit rating downgrade for the U.S. has provided a sense of balance to the ratings downgrade debate.

Memories of the bad market reaction to the last debt-ceiling fight in Congress back in 2011 has some investors worrie! d. As the! talks dragged on in July of 2011 before ending in a last-minute deal to avoid default, the Dow suffered an eight-day losing streak in late July and early August. The blue-chip gauge then plunged 635 points, or 5.6%, on Aug. 8, 2011, the first day of trading after the S&P credit downgrade.

"The problem with the U.S. not paying investors on time is that it can destroy the very special status of Treasuries as a super-safe, liquid investment," says Rjavinski. "Treasuries are like an invisible glue that binds all of the world's financial markets. We can have a pretty bad chain reaction if there's a default."

The stock market has navigated Washington gridlock nicely so far. Despite a 133-point drop for the Dow Jones industrials on Tuesday after Congress failed to sign a deal, the Dow was still up 0.25% during the 15-day government shutdown. If the deadline passes without a deal, however, stocks would likely suffer a "strong negative reaction," says McIver. If a deal gets done, the market will refocus its attention on corporate earnings and economic growth, he adds.

But there have been more concrete signs of worry in the U.S. government bond market, especially one-month Treasury bills that will come due between Oct. 17 and early November, when the nation is expected to run short of cash.

Many banks and big investors have been selling these short-term instruments that could be hit by a potential default, says Bill Hornbarger, chief investment strategist at Moneta Group.

"Everyone is selling stuff that matures in October," he says.

A Treasury bill that matures on Oct. 24, seven days after the nation's ability to borrow ends, has seen its yield jump from roughly 0% in mid-September to more than 0.40% in recent days, according to a Bloomberg chart supplied by Rjavinski.

Similarly, a government auction of 3-month bills Tuesday also saw yields rise as high as 0.13%, vs. a high of 0.035% at last week's auction.

The issue isn't that investors don't think they wi! ll get pa! id back eventually, says Rjavinski; it is that they won't get paid on time.

"It's telling us investors are getting nervous," says Rjavinski.

Intel was down 0.99% to 23.18 in premarket trading despite topping Wall Street's estimates Tuesday by reporting a 49% increase in quarterly profit of $3 billion, or 58 cents a share.

Mike Snider contributed.

Saturday, November 23, 2013

Stocks Hitting 52-Week Highs

Santarus (NASDAQ: SNTS) shares surged 37.64% to touch a new 52-week high of $31.96 after Salix Pharmaceuticals (NASDAQ: SLXP) announced its plans to buy Santarus for around $2.12 billion. Santarus and Pharming also announced new data from open-label repeat treatment study with RUCONEST.

Kona Grill (NASDAQ: KONA) shares rose 2.76% to reach a new 52-week high of $14.95. Kona Grill shares have jumped 66.10% over the past 52 weeks, while the S&P 500 index has gained 26.62% in the same period.

Salix Pharmaceuticals (NASDAQ: SLXP) shares jumped 15.26% to touch a new 52-week high of $82.19 after the company announced its plans to buy Santarus for around $2.12 billion. Janney Capital upgraded Salix from Neutral to Buy and lifted the price target from $60.00 to $95.00.

KeyCorp (NYSE: KEY) shares gained 3.61% to create a new 52-week high of $12.91. KeyCorp's trailing-twelve-month revenue is $4.04 billion.

Posted-In: 52-Week HighsNews Intraday Update Markets Movers

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Friday, November 22, 2013

SEC Investor Advisory Committee Approves Fiduciary, User Fee Plans

The Securities and Exchange Commission’s Investor Advisory Committee approved Friday two of its subcommittee’s recommendations: one on how the SEC should move forward on crafting a fiduciary rule for brokers, and a second proposal requesting that the SEC ask Congress to allow the agency to impose user fees on advisors to fund their exams.

The recommendations were put forth by the Investor as Purchaser subcommittee, which is chaired by Barbara Roper, director of investor protection at the Consumer Federation of America.

The subcommittee recommendation on how brokers should be put under a fiduciary mandate sailed through the full committee Friday in little time and with much praise. Committee member Steve Wallman, founder and CEO of FOLIOfn and a former SEC commissioner, said that as the only “broker-dealer in the room,” he thought the subcommittee’s plan was “an excellent approach,” and that it “would be a terrific step forward” in informing the SEC fiduciary rule as well as the one being crafted by the Department of Labor.

While committee members supported assessing user fees to help boost advisor exams, they voiced concern with how the user fees would ultimately be assessed and whether the cost would trickle down to investors.

The subcommittee believes that the SEC should request legislation that would allow it “to impose user fees on SEC-registered investment advisors to enhance advisor exams, including more frequent onsite exams,” said Craig Goettsch, director of Investor Education and Consumer Outreach at the Iowa Insurance Division.

The subcommittee noted the support among industry groups for the user-fees bill that was introduced during the current Congress by Rep. Maxine Waters, D-Calif., ranking member of the House Financial Services Committee.

H.R. 1627, the Investment Adviser Examination Improvement Act of 2013, "enjoys support from many investment advisor industry associations," the subcommittee said. No companion legislation has been introduced in the Senate.

Roper told ThinkAdvisor that while the subcommittee recommendation "doesn't specify a legislative vehicle, the Waters bill would be consistent with our recommendation."

As SEC Chairwoman Mary Jo White noted in a recent speech, five years after the financial meltdown, approximately 40% of SEC-registered investment advisors (who collectively manage $50 trillion) still have not received their first SEC examination.

“We’re going to tread water if we’re looking for an appropriation” from Congress to help boost advisor exams, Goettsch said. “I’m guessing the [user-fees] cost will be passed on to clients eventually, but we’re talking about firms with more than $100 million” in AUM. The lack of advisor exams “is a ticking time bomb if we don’t address it.”

Indeed, Roper added that the legislation “allows fees to be assessed so that it adjusts the burden of the fees to the size of the firm.” While the investor subcommittee “supports any number of different ways to solve this [advisor exam] problem, this user fees [legislation] seems like the most doable of the options. There’s no reason it should be a partisan issue.”

Andrea Seidt, president of the North American Securities Administrators’ Association, noted in a statement after the Investor Advisory Committee meeting that “by authorizing the SEC to use revenue derived from the self-funding of examinations to augment [the Office of Compliance Inspections and Examinations'] exam program, the legislation recommended by the IAC would permit the SEC to establish and maintain a robust advisor examination program that periodically adjusts to correspond to changes in its examination responsibilities.”

While the SEC has requested that Congress provide the agency more funding so that it can add 250 more examiners, which Seidt says is “the easiest and least expensive way” to address the problem, a user-fees bill “would appear to create a viable, long-term solution to a problem that has plagued the SEC for decades.”

While the SEC is not bound by any recommendations of the Investor Advisory Committee, Section 911 of the Dodd-Frank Act requires the SEC to “promptly issue a public statement assessing the finding or recommendation of the committee,” and to disclose any action the commission intends to take regarding that recommendation.

White said in brief comments before the meeting that she looked “forward to hearing about the [committee’s] additional recommendations, both of which I consider very important.”

White noted that since the committee’s last meeting and recommendation, the committee has gotten a letter from SEC staff regarding its proposal to require “glidepath” illustrations in target-date funds. In recent months, White said, the Division of Investment Management has said it would be useful to request additional comments on the advisory committee’s proposal. “I’m hopeful that target date funds will be included in the commission’s rulemaking in the coming year,” she said.

---

Check out SEC Investor Committee Issues Fiduciary Plan on ThinkAdvisor.

What Sets These German Auto Giants Apart and Why China Might Be Crucial

German car manufacturers such as Volkswagen AG (VLKAY) and Daimler AG (DDAIF) have a great reputation in the global auto industry. As the U.S. economy recovers and China experiences great demand for imported vehicles, both these firms anticipate huge benefits. However, while Daimler is on a straight path to success, Volkswagen has been struggling as of late.

Sluggish Sales in Europe and North America

Volkswagen has been disputing the position of largest car manufacturer with General Motors Co. (GM) and Toyota Motors (TM) for years. Its global strategy has delivered great results over the years, especially due to its manufacturing system, which enables great cost savings. However, the third quarter of 2013 saw revenue drop 6.4% in one of its most important markets, the U.S., with unit volume decreasing by 13.5%. The company's Volkswagen brand was especially weak, with sales dropping by 30%.

The relative strength of the euro versus the U.S. dollar has been troublesome for Volkswagen, shrinking revenue even further. The decline in sales, which extends to Latin America, might be temporary. With free cash flow taking on negative values, and debt levels rising, the company could be facing a difficult start to 2014.

In addition to the reduction in sales volume, Volkswagen had to recall 2.64 million vehicles in 2013, in order to fix drive system and electronic issues, most of them stemming from China. This will surely not look good on the German car manufacturer's resume, in a country that is expected to balance the negative results of other operations. As market leader in China, with a market share above the 15% mark, the company already has a strong foothold. Yet there is much work required, in order to obtain the necessary results to offset the poor performance in Europe and the Americas.

Volkswagen was expected to perform better, especially due to the firm's $45 billion investment in expansion projects since 2007. Production rose steadily at it's now more than 100 pl! ants, yet car sales didn't rise as anticipated, leaving the company to foot the bill. The stock is currently trading at 0.3 times its trailing sales, which means shares are available at a 49% price discount relative to the industry average. Nevertheless, the discount is also indicative of the firm's slow growth and lack of opportunities for shareholders to make a profit. Overall, I feel bearish regarding this stock.

A Luxury Car Manufacturer at a Price Discount

Daimler AG is highly diversified car manufacturer, with a product offering ranging from small vehicles, to luxury cars, and heavy trucks. Mercedes-Benz, the firm's premium brand, is not only world renowned, but has been enjoying high sales volumes in China and the U.S. As the sustained demand for the luxury vehicles moves forward globally, the rise in Chinese demand has led the firm to invest $2.7 billion, in order to increase local production.

Unlike Volkswagen, the recovery of the U.S. market has been highly beneficial for Daimler, with sales increasing by over 9%. Things are looking great for Chinese operations as well, as China is now the largest S-Class market. By upping the local production, excise duties of 25% can be evaded, making cars more affordable for customers, and thus increasing revenue for the company.

Brand recognition is important, yet offering new products is also a great way to drive sales forward. The new CLA, for example, has lowered the entry level price for Mercedes vehicles, while helping the firm compete in a new car segment. Likewise, the new GLA-Class will allow the firm to compete in the subcompact SUV sector, a new profile for the German manufacturer's portfolio. These new introductions come as part of Daimler's overall product offensive, a strategy the firm intends on pulling through, in order to become a huge auto manufacturer such as Volkswagen.

Even though the firm has been performing very well this year, stock prices are still very low, entailing a 45% price discount rel! ative to ! the broader German auto market. Also, the 2.6% annual dividend yield is very rare in the car manufacturing industry, making this a savvy long-term investment opportunity. When investment guru Tom Russo sold his entire stake in the firm, one thing was clear, he did so to cash in on the profit, and not because he felt bearish regarding the stock. As share prices have already increased by around 39 percent so far this year, cashing in was not a bad move for the guru. I for one, feel very bullish regarding this stock's future, as there is no end in sight to its growth.

Being Smaller Is Sometimes Useful

Whereas Volkswagen may have jumped the gun with its $45 billion investments over the past years, Daimler was more prudent. Slowly gaining track in the Chinese market, it will just now invest the sum required to increase local production, and only to 2/3 of demand. A smart product offensive, which was accompanied by increases in revenue in the U.S., have not only offset negative sales in Europe, but have driven earnings forward. I feel very optimistic regarding this stock's future and the low price tags suggests a hefty profit can be made in the long run.

Disclosure: Patricio Kehoe holds no position in any stocks mentioned.


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Thursday, November 21, 2013

5 Best Dividend Stocks To Watch For 2014

LONDON -- BAE Systems� (LSE: BA  ) (NASDAQOTH: BAESY  ) and�Vodafone Group� (LSE: VOD  ) (NASDAQ: VOD  ) �operate in completely separate industries, but both companies have an attractive track record of providing high dividend yields.

The two firms also have another similarity -- both depend quite heavily on the substantial income they receive from their American businesses, without which they might struggle to fund their coveted dividend payouts.

I own both shares myself, but am looking top up some of my holdings -- so which of these two high yielders looks the best buy today?

Vodafone vs. BAE Systems
I'm going to start with a look at a few key statistics that can be used to provide a quick comparison of these two companies, based on their most recent annual results:

� Vodafone BAE Systems Price to earnings ratio 14.2 11.7 Dividend yield 6.9%
(4.9% without special dividend) 5.1% 5-year average dividend growth rate 7.1% 8.8% Net gearing 32% -10% (net cash)

Vodafone plunged into a loss in the first half of this year, thanks to a hefty 5.9 billion pounds impairment on the value of its operations in Spain and Italy.

5 Best Dividend Stocks To Watch For 2014: Public Storage(PSA)

Public Storage operates as a real estate investment trust (REIT). It engages in the acquisition, development, ownership, and operation of self-storage facilities in the United States and Europe. The company?s self-storage facilities offer storage spaces for lease on a month-to-month basis for personal and business use. Public Storage also has interests in commercial properties containing commercial and industrial rental space; facilities that lease storage containers; and ancillary operations, which include reinsurance of policies against losses to goods stored by its self-storage tenants, retail operations comprising merchandise sales and truck rental operations. As of December 31, 2008, the company had interests in 2,012 self-storage facilities with approximately 127 million net rentable square feet in 38 states; and 181 self-storage facilities with approximately 10 million net rentable square feet in 7 western European nations. It also had direct and indirect equity int erests in approximately 21 million net rentable square feet of commercial space located in 11 states in the U.S. As a REIT, the company would not be subject to federal income tax to the extent that it distributes at least 90% of its taxable income to its shareholders. Public Storage was founded in 1971 and is based in Glendale, California.

Advisors' Opinion:
  • [By Laura Brodbeck]

    Friday

    Earnings Expected From: Chevron Corporation (NYSE: CVX), OM Group, Inc. (NYSE: OMG), Public Storage (NYSE: PSA) Economic Releases Expected: �US ISM manufacturing index, Canadian manufacturing PMI, British manufacturing PMI, Norwegian unemployment rate

    Posted-In: Bank Of England Federal ReserveNews Eurozone Commodities Previews Global Economics Federal Reserve After-Hours Center Markets Trading Ideas Best of Benzinga

  • [By Lauren Pollock]

    Public Storage's(PSA) third-quarter profit rose 7.7% on the strength of higher occupancy and rents. Meanwhile, the real estate investment trust’s funds from operations, an important metric in the sector, grew during the period.

  • [By Amanda Alix]

    Is it risky to be putting so much money into an as-yet unproven business model? Some may think so, including investors. Noting the tumble in stock price that newbies like Silver Bay and American Residential have suffered recently, Colony Capital (NYSE: CLNY  ) chief Thomas Barrack postponed�the IPO of his new single-family rental company, Colony American Homes. Similarly, Public Storage (NYSE: PSA  ) has filed for an IPO, too, hoping to take its American Homes 4 Rent unit public -- at some unannounced, future date. In the meantime, American Homes can rely on its $500 million credit facility�with Wells Fargo, which may be bumped up to $1 billion if necessary.

5 Best Dividend Stocks To Watch For 2014: Laboratory Corporation of America Holdings(LH)

Laboratory Corporation of America Holdings operates as an independent clinical laboratory company in the United States. The company offers a range of testing services used by the medical profession in routine testing, patient diagnosis, and in the monitoring and treatment of disease, as well as specialty testing services. Its routine tests include blood chemistry analyses, urinalyses, blood cell counts, thyroid tests, Pap tests, HIV tests, microbiology cultures and procedures, and alcohol and other substance-abuse tests. The company?s specialty tests and related services comprise viral load measurements, genotyping and phenotyping, and host genetic factors for managing and treating HIV infections; cytogenetic, molecular cytogenetic, biochemical, and molecular genetic tests for diagnostic genetics; oncology tests for diagnosing and monitoring certain cancers and treatments; clinical trials testing for pharmaceutical companies, which conducts clinical research trials on diag nostic assays; forensic identity testing used in criminal proceedings and parentage evaluation services, as well as testing services in reconstruction cases; allergy testing; and occupational testing for the detection of drug and alcohol abuse. Its customers include independent physicians and physician groups, hospitals, managed care organizations, governmental agencies, employers, pharmaceutical companies, and other independent clinical laboratories. The company operates a network of 51 primary laboratories and approximately 1,700 patient service centers. In addition, it delivers a co-branded electronic health records Lite solution for physician practices. The company works with university, hospital, and academic institutions, such as Duke University, The Johns Hopkins University, the University of Minnesota, and Yale University to license and commercialize new diagnostic tests. Laboratory Corporation of America Holdings was founded in 1971 and is headquartered in Burlingto n, North Carolina.

Advisors' Opinion:
  • [By Rich Smith]

    This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, our headlines include upgrades for both AMC Networks (NASDAQ: AMCX  ) and Bankrate (NYSE: RATE  ) , but a downgrade for LabCorp Holdings (NYSE: LH  ) . Let's dive right in.

  • [By Daniel Lauchheimer]

    EXAS began their pivotal DeeP-C trial earlier this year, with 10,000 patients enrolled around the USA. Success in this trial formed a pivotal fulcrum for EXAS -- success would mean commercialization, and revenue, but failure means, well failure. In April, EXAS submitted the final module of this trial, and it reported significantly worse results than expected causing the company to sink 40%. Additionally, as reported in a detailed five part series, Seeking Alpha Contributor Alpha Exposure reported on the inflated numbers both in terms of scientific research data and market projections -- yet another reason to give investors pause before they decide to invest in EXAS. Additionally, EXAS has not formed a meaningful partnership with other molecular diagnostic companies. True, it formed a partnership with LabCorp (LH), but this partnership doesn't focus on the heart of EXAS product (and thus provide it with a measure of validation), but on a commercialization post approval.

  • [By Monica Gerson]

    Laboratory Corp. of America Holdings (NYSE: LH) is expected to report its Q3 earnings at $1.80 per share on revenue of $1.45 billion.

    Schlumberger (NYSE: SLB) is estimated to report its Q3 earnings at $1.24 per share on revenue of $11.58 billion.

  • [By Seth Jayson]

    Laboratory Corp. of America Holdings (NYSE: LH  ) reported earnings on July 19. Here are the numbers you need to know.

    The 10-second takeaway
    For the quarter ended June 30 (Q2), Laboratory Corp. of America Holdings met expectations on revenues and met expectations on earnings per share.

Best Performing Companies To Own For 2014: NextEra Energy Inc. (NEE)

NextEra Energy, Inc., through its subsidiaries, engages in the generation, transmission, distribution, and sale of electric energy in the United States and Canada. As of December 31, 2010, NextEra Energy had approximately 43,000 mega watts of generating capacity. The company involves in the generation of renewable energy from wind and solar projects. It also generates electricity through natural gas, nuclear, oil and coal, and hydro power plants. The company serves approximately 8.7 million people through approximately 4.5 million customer accounts in the east and lower west coasts of Florida. In addition, it leases wholesale fiber-optic network capacity and dark fiber to telephone, wireless carriers, Internet, and other telecommunications companies. The company was formerly known as FPL Group, Inc. and changed its name to NextEra Energy, Inc. in May 2010. NextEra Energy, Inc. was founded in 1984 and is headquartered in Juno Beach, Florida.

Advisors' Opinion:
  • [By Justin Loiseau]

    NextEra Energy (NYSE: NEE  ) reported earnings on Tuesday, underwhelming on revenue but exceeding on earnings expectations. As the largest renewable energy utility in the U.S., let's see if NextEra's newest report will put more wind in its sales.

  • [By Maxx Chatsko]

    Such a tax would act as the ultimate motivation for power generation companies and dirty industrial processes to invest in cleaner, perhaps renewable technologies. Consider that the production tax credit -- a relatively modest subsidy aiding renewable power sources gain market share -- allowed companies such as NextEra (NYSE: NEE  ) to boost American wind generation from just 6 billion kilowatt hours (kWh) in 2000 to 140 billion kWh in 2012. NextEra now has more than 10,000 megawatts (MW) of wind capacity, which makes up 55% of its total portfolio. Imagine what a carbon tax would force the industry to do.�

  • [By Dan Caplinger]

    What's arguably more troubling is the relative lack of a firm growth strategy for Exelon. Rival NextEra Energy (NYSE: NEE  ) expects to spend an average of almost $6 billion per year over the next four years on projects designed to increase earnings and therefore dividend payout potential, while Dominion (NYSE: D  ) is aiming to produce 5%-6% earnings growth per year by spending $3 billion annually on new utility projects. By contrast, Exelon's spending on solar is relatively small and its investment on wind is almost nonexistent.

5 Best Dividend Stocks To Watch For 2014: Snap-On Incorporated(SNA)

Snap-on Incorporated provides tools, equipment, diagnostics, repair information, and systems solutions for professional users. Its products include hand tools, such as wrenches, screwdrivers, sockets, pliers, ratchets, saws and cutting tools, pruning tools, and torque measuring instruments; power tools, including pneumatic, hydraulic, cordless, and corded tools; and tool storage products comprising tool chests, roll cabinets, and tool control systems. The company?s diagnostics and repair information products include handheld and PC-based diagnostics products, service and repair information products, diagnostic software solutions, electronic parts catalogs, business management systems, business services, point-of-sale systems, integrated systems for vehicle service shops, original equipment manufacturer purchasing facilitation services, and warranty management systems and analytics to manage and track performance. Snap-on Incorporated?s equipment products comprise solutions for the diagnosis and service of automotive and industrial equipment, such as wheel alignment, collision repair, air conditioning service, brake service, fluid exchange, transmission troubleshooting, and safety testing equipment, as well as wheel balancers, tire changers, vehicle lifts, test lane systems, battery chargers, and hoists. The company also provides financial services, including business loans and vehicle leases to franchisees; loans to the franchisees? customers; and loans to its industrial and other customers for the purchase of tools, equipment, and diagnostics products. Snap-on Incorporated sells its products and services through mobile vans, franchisees, company-direct sales, distributors, and the Internet in approximately 130 countries, including the United States, the United Kingdom, Canada, Germany, Australia, France, Japan, Spain, Italy, Sweden, the Netherlands, Argentina, China, and Brazil. Snap-on Incorporated was founded in 1920 and is based in Kenosh a, Wisconsin.

Advisors' Opinion:
  • [By Seth Jayson]

    Snap-on (NYSE: SNA  ) reported earnings on April 18. Here are the numbers you need to know.

    The 10-second takeaway
    For the quarter ended March 30 (Q1), Snap-on met expectations on revenues and beat expectations on earnings per share.

  • [By Lisa Levin]

    Snap-on (NYSE: SNA) shares gained 0.60% to create a new 52-week high of $106.62. Snap-on's PEG ratio is 1.78.

    Posted-In: 52-Week HighsNews Intraday Update Markets Movers

5 Best Dividend Stocks To Watch For 2014: ConAgra Foods Inc.(CAG)

ConAgra Foods, Inc. operates as a food company primarily in North America. It operates in two segments, Consumer Foods and Commercial Foods. The Consumer Foods segment provides branded, private label, and customized food products, which are sold in various retail and foodservice channels. It offers products in various categories, such as meals, entrees, condiments, sides, snacks, and desserts in frozen, refrigerated, and shelf-stable temperature classes. This segment?s principal brands include Alexia, ACT II, Banquet, Blue Bonnet, Chef Boyardee, DAVID, Egg Beaters, Healthy Choice, Hebrew National, Hunt?s, Marie Callender?s, Orville Redenbacher?s, PAM, Peter Pan, Reddi-wip, Slim Jim, Snack Pack, Swiss Miss, Van Camp?s, and Wesson. The Commercial Foods segment provides commercially branded foods and ingredients that are sold to foodservice, food manufacturing, and industrial customers. Its primary products consist of specialty potato products, milled grain ingredients, a ran ge of vegetable products, seasonings, blends, and flavors. This segment sells products under brands, such as ConAgra Mills, Lamb Weston, and Spicetec Flavors & Seasonings. The company was founded in 1919 and is headquartered in Omaha, Nebraska.

Advisors' Opinion:
  • [By Nicole Seghetti]

    Private-label pressures
    Regardless, private labels are becoming a bigger problem for companies such as Kraft and, to a lesser extent, Mondelez. According to an industry profile compiled by First Research, these brands typically cost 20% to 40% less than name-brand products. Couple that with the fact that more consumers are ditching big brands, and we can easily see why ConAgra (NYSE: CAG  ) , Cott (NYSE: COT  ) , and others are continually strengthening their private-label positions.

  • [By Jon C. Ogg]

    ConAgra�Foods Inc. (NYSE: CAG) was raised to Buy from Neutral at Goldman Sachs.

    E*TRADE Financial Corp. (NASDAQ: ETFC) was reiterated as Buy, but the price target was raised to $19.50 from $16.50, at Sterne Agee, making the third or fourth such price target upgrade in as many days, but what stands out here is that this appears to now be a “street-high” price target.

  • [By Dan Caplinger]

    But the consumer side of the business is much more profitable, and there,�McCormick has faced more competitive issues. The rise of private-label brands has taken the retail food industry by storm, with ConAgra's (NYSE: CAG  ) purchase of Ralcorp Holdings giving the food company a big edge in private-label area and showing its margin-boosting value. For McCormick, however, its success in helping customers build their own store brand spices arguably comes at its own expense, although retaining customers in some capacity is obviously better than losing them entirely.