U.S. Leveraged Loan Volume Eases To $153B In Second Quarter

If the leveraged loan market used an avatar, Goldilocks would be an apt choice for the second quarter.

Technical conditions cooled slightly from the sauna-like levels of the first quarter, but remained just right for issuers to print new regular-way loans to support M&A trades and dividends. Retail flows, which turned negative for the first time since 2012, were largely responsible for the second quarter's less effusive tone.

With mutual funds reeling, CLO creation clicked into overdrive, keeping a floor under secondary levels and providing ample demand for new-issue supply.

Without souped-up repricing activity to goose the stats, new-issue volume tracked lower in the second quarter. In all, issuers tapped the market for $152.9 billion of new loans, including $113.5 billion of institutional tranches. That compares to $169.1 billion/$128.5 billion during the first three months of the year and $163.9 billion /$117 billion during the same period in in 2013

For the first half as a whole, the market also downshifted from the record pace of a year ago. For the first six months of 2014, leveraged loan volume came in at $322.0 billion total/$242.0 billion institutional, versus $352.9 billion/$266.1 billion during the same period last year.

U.S. vs. Germany: ‘No Contest,’ says LPL’s Canally

As the United States and Germany prepare to compete in a World Cup match on Thursday in Brazil, some sports commentators are saying that the Europeans – ranked No. 2 at the tournament – may have the advantage over the U.S., ranked 13th.

But off the soccer field, it’s really “no contest,” according to John Canally, economist and investment strategist for LPL Financial (LPLA), in a report shared Wednesday.

Figures in the chart posted here show the Americans have “Germany beat in nearly every key economic and demographic category,” he wrote. Also, the U.S. economy “is poised to outperform Germany in the years ahead thanks to better demographics, better productivity and a more focused central bank.”

“Today the U.S. economy is in far better shape than the German economy: Advantage USA,” Canally explained.

Equal Rivals?

In terms of size of their respective economies, the U.S. economy is over four times as large as that of Germany, measuring $17.1 trillion vs. $3.8 trillion.

Also, the U.S. economy has expanded 50% faster than Germany’s over the past five years.

“German banks’ lending to the private sector has dropped more than 4% over the past year. Meanwhile, the U.S. economy is benefitting from a 4.5% increase in bank lending to the private sector over the past year,” the LPL Financial expert said.

Though U.S. inflation rate is running at 2% vs. 0.6% in Germany, the United States has its own currency and central bank to wrestle with inflation. Germany, of course, shares its currency and central bank “with 17 other soccer-mad European neighbors,” Cannally joked.

Still, Germany’s unemployment rate, 5.2%, is lower than that of the U.S., 6.3%.

However, he notes, an agreement between the German government and German corporations “keeps the unemployment rate artificially low.”

Plus, the U.S. unemployment rate has fallen nearly four percentage points since 2010, while Germany’s has decreased less than three percentage points in recent years.

Soccer Stats

Germany has won three World Cups (1954, 1974 and 1990). It’s also been the runner up four times (1966, 1982, 1986 and 2002).

In contrast, the United States has never won and has reached the semi-finals only once, in 1930.

Canally says that all 23 German players are on club teams in the world’s top five professional soccer leagues (English Premier League, German Bundesliga, Spanish La Liga, Italian Serie A, and French Ligue 1).

Just nine of the 23 U.S. players are part of these leagues.

“One factor to consider is that both teams are coached by Germans. The U.S. coach, Jurgen Klinsmann, played for Germany’s 1990 World Cup winning team and coached Germany’s World Cup team in 2006. Germany’s coach, Joachim Low, never won the World Cup as a player and was Jurgen Klinsmann’s assistant coach in 2006,” the expert noted.

“On balance, while Germany may have the better soccer team, on paper at least, the U.S. economy is in far better shape than the German economy and is poised to outperform Germany in the years ahead thanks to better demographics, better productivity, and a more focused and flexible central bank,” he concluded. “Go USA!” 

---

Check out World Cup and World Prices ‘Heating Up’: LPL’s Kleintop on ThinkAdvisor.

Mid-Day Market Update: Nike Gains On Upbeat Earnings; Dollar General Shares Slip

Related BZSUM Stocks Mildly Higher To End The Week Nike Gains On Upbeat Earnings; Dollar General Shares Slip

Midway through trading Friday, the Dow traded down 0.15 percent to 16,821.34 while the NASDAQ surged 0.18 percent to 4,386.96. The S&P also fell, dropping 0.01 percent to 1,957.00.

Leading and Lagging Sectors

In trading on Friday, technology shares were relative leaders, up on the day by about 0.31 percent. Top gainers in the sector included Aware (NASDAQ: AWRE), up 15.4 percent, and Progress Software (NASDAQ: PRGS), up 7.7 percent.

Energy shares dropped around 0.22 percent in today’s trading. Top decliners in the sector included Daqo New Energy (NYSE: DQ), PDC Energy (NASDAQ: PDCE), and YPF SA (NYSE: YPF).

Top Headline

Finish Line (NASDAQ: FINL) reported better-than-expected fiscal first-quarter earnings.

Finish Line’s quarterly profit surged to $12.4 million, or $0.25 per share, versus a year-ago profit of $5.1 million, or $0.10 per share. Excluding certain items, it earned $0.28 per share.

Its sales climbed 16% to $406.5 million. However, analysts were projecting earnings of $0.21 per share on sales of $394 million.

Equities Trading UP

Progress Software (NASDAQ: PRGS) shares shot up 7.85 percent to $23.99 after the company reported stronger-than-expected fiscal second-quarter earnings and issued an upbeat outlook.

Shares of Nike (NYSE: NKE) got a boost, shooting up 1.55 percent to $78.05 after the company reported better-than-expected fiscal fourth-quarter earnings. Nike posted its quarterly earnings of $0.78 per share on revenue of $7.43 billion. However, analysts were expecting a profit of $0.75 per share on revenue of $7.34 billion.

The Manitowoc Company (NYSE: MTW) shares were also up, gaining 8.65 percent to $32.28 after Relational Investors bought an 8.5% stake in the company and urged for splitting it in two. Jefferies upgraded Manitowoc from Underperform to Hold and raised the price target from $24.00 to $33.00.

Equities Trading DOWN

Shares of Commercial Metals Company (NYSE: CMC) were 2.49 percent to $17.64 on FQ3 results. Commercial Metals posted a quarterly profit of $23.6 million, or $0.20 per share, versus a year-ago profit of $19 million, or $0.16 per share.

E. I. du Pont de Nemours and Company (NYSE: DD) shares tumbled 4.36 percent to $64.75 after the company cut its profit guidance for the second-quarter and year.

Dollar General (NYSE: DG) was down, falling 6.78 percent to $57.50 after the company’s CEO Rick Dreiling announced his plans to retire.

Commodities

In commodity news, oil traded down 0.20 percent to $105.63, while gold traded up 0.31 percent to $1,321.10.

Silver traded up 0.04 percent Friday to $21.17, while copper rose 0.06 percent to $3.17.

Euro zone

European shares were mixed today. The eurozone’s STOXX 600 rose 0.03 percent, the Spanish Ibex Index dropped 0.30 percent, while Italy’s FTSE MIB Index slipped 0.30 percent. Meanwhile, the German DAX climbed 0.11 percent and the French CAC 40 tumbled 0.06 percent while UK shares gained 0.42 percent.

Economics

The final reading of Reuter's/University of Michigan's consumer sentiment index surged to 82.5 in June, versus a final reading of 81.9 in May. However, economists were projecting a final reading of 81.9.

Data on farm prices for June will be released at 3:00 p.m. ET.

Posted-In: Earnings News Eurozone Futures Commodities Economics Markets

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  Most Popular Regarding Afrezza, FDA Statement: Rackspace Down 7% On Rumor It Can't Find Buyer Apple TV Vs. Android TV Vs. Fire TV Vs. PlayStation TV UPDATE: Credit Suisse Reiterates On Schlumberger Limited Following Impressive Analyst Meeting Pfizer, Bristol-Myers Squibb Announce Positive Opinion For Treatments #PreMarket Primer: Friday, June 27: U.S. Data Fuels Fed Rate Hike Debate Related Articles (AWRE + BZSUM) Stocks Mildly Higher To End The Week Nike Gains On Upbeat Earnings; Dollar General Shares Slip Why Are Aware, Inc. Shares Up Over 15%? Mid-Day Market Update: Nike Gains On Upbeat Earnings; Dollar General Shares Slip Markets Edge Lower; Finish Line Earnings Beat Estimates

RIAs, Get With It: Here Comes ‘Generation Now’

A pair of Schwab Advisor Services studies released June 19 focus on the opportunities for RIAs among the members of “Generation Now,” affluent people ages 30 to 45 who already control $3.5 trillion in investable assets.

While Bernie Clark, executive vice president and head of SAS at Charles Schwab Corp. (SCHW), says “the research clearly shows that the RIA model is right for these individuals,” advisors who assume they can attract and service these younger prospective clients with the same tactics employed for baby boomer clients will be disappointed.

In an interview at ThinkAdvisor’s offices on June 17, Clark pointed out that those RIA firms who already are having success with ‘Gen Now’ “tend to have a next-gen advisor” on their staff. Gen Now wants “more connectivity” with their advisors, he said, and “on their terms.”

Clark said that “to appeal to Gen Now, you have to look like them,” and since they have “new centers of influence,” often tied to their social media networks, advisors must figure out “how do you get into those places?”

In addition, RIA firms that “embrace technology” see it not as “a distraction,” but rather a business model that improves their firms’ efficiency while also serving as an entrée into Gen Now’s networks. That’s yet another reason for advisors to “hire more younger people with social media” expertise, Clark argued.

The “Generation Now” study was conducted in March and April of this year with 40 participants ages 30 to 45 with investable assets of at least $500,000 or a household income of at least $150,000. Schwab Advisor Services also released the findings of its 15th semiannual Independent Advisor Outlook Study (IAOS), which surveyed 720 independent advisors (not all of whom custody with Schwab) from mid-April to early May. The findings of that study dovetailed with the opportunities presented by Gen Now, a term Schwab coined to reflect its belief that younger investors are a significant opportunity now, not in some ill-defined future, for advisors. 

Generation Now Findings

The Gen Now study found that these younger affluent individuals share many of the same goals-based planning needs as boomers, which is valuable because “fractional points of return haven’t been driving the relationship” between RIAs and their clients, Clark said. However, they also have different characteristics.

For one, they’re more anxious, based on the experiences they’ve had with terrorism, the Great Recession, the dot-com and housing bubbles and pervasive unemployment, especially among younger people. They also tend to distrust financial institutions, reflected in the high levels of cash they hold in their portfolios. They can’t differentiate between different types of advisors, distrust the profession in general and feel that advisors don’t understand them. However, they hope for financial freedom, which they define as not having to worry about the unexpected, and they mostly want to feel sure that their income and investments will cover the costs of health care, education, housing and elder care expenses.

Finally, Clark pointed out that their money goals do not revolve around acquiring ‘things’ and instead “they want experiences and travel.” In the investing realm, Clark suggested that socially responsible investing strategies will be important to the members of this generation.

The IAOS study, the findings of which were also presented at SAS’ Explore conference for advisors in Naples, Fla., on June 19, was tailored specifically to explore advisors’ attitudes about Gen Now. It turns out their attitudes are decidedly mixed over whether that generation represents a business threat or an opportunity.

Of the 720 advisors surveyed — who self-reported that they had $180 billion in aggregate AUM — 37% said they saw risk in the impending wealth transfers from older generations to younger, and said they needed to “develop new client relationships” that will allow them to maintain their current AUM and grow their businesses.

Another 40%, however, saw this big wealth transfer as “an opportunity to develop a model to meet the needs of emerging clients and smaller accounts.” Those findings are particularly telling, Clark said in the interview, since 40% of RIAs’ clients are now retired, with another 30% to retire in the next 10 years, with serious repercussions for the standard RIA business model of charging fees for managing assets, which will decline with so many clients drawing down their portfolios for income in retirement.

So how can RIAs attract that next generation of clients and their assets? Ninety-one percent of respondents said that demonstrating firm expertise and services will be the most important step they can take, followed at 83% by three different, but related, steps. The three are having a strong reputation “based on firm reviews and centers of influence relationships; offering a unique service or value proposition; and clearly communicating the benefits/differences of the RIA model.”

What about referrals, the lifeblood of new business for most advisors? While 32% of respondents said referrals were a formal and routine part of their firm’s culture, 55% said their referral process was informal. In two other findings, 53% said they believe reaching the next generation will require “engagement with entirely new” centers of influence, but only 32% said that social media were “vital to communicating with the next generation of clients.”

Responding to those findings, Clark said in the interview that as part of Schwab’s ongoing Insights to Action Program, it will launch a new program for advisors to help them “create the discipline” needed around referrals. That program, he said, will stress that in every firm “everybody is responsible for referrals, not just the rainmakers,” and that firms should institute “reward systems” that provide incentives for everyone in the firm — “advisors and support staff” — to get referrals.

The study found that such a system is already partly in place at 55% of respondents’ firms who said they “measure staff performance based on the amount of new assets they bring to the firm.”

4 Utilities Stocks Powered by Solid Fundamentals

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The Dow Jones Industrial Average hit its tenth record closing high of the year — and fifth in a row — while the S&P 500 ventured into uncharted territory when it hit new highs on June 5 that were above its record close. Looks like records were made to be broken.

It will seemingly take a lot to break the current rally, as the market only bent under the weight of political unrest in Iraq and the resulting higher oil prices yesterday. And stocks also largely shook off the disappointment of weaker-than-expected May retail sales.

But even with the market continuing to hit new highs, I believe there are still plenty of buying opportunities just waiting to be scooped up in the midst of any weakness. And some of the best opportunities out there are in the utility sector.

We’ve seen a lot of sector rotation amid the market volatility, as investors run to “safer” names that offer some downside protection. One industry that benefits from this is utilities, which are generally known for its defensive characteristics because their businesses will be necessary no matter the economic climate.

I have four picks in this space that I want to share with you now that offer solid fundamentals and attractive valuations. Let's take a closer look:

Consolidated Water (CWCO)

Consolidated Water (CWCO) is a utility with some innovative technology in its pursuit to treat and provide water in parched areas.

CWCO is not your typical water utility. While its peers simply process and transport fresh water to customers, and collect the waste water that results post-use (and treats it), CWCO is in the business of desalination — converting unusable salt water into fresh water, and transporting it to some of the most underserved areas globally.

The company uses a process known as reverse osmosis, which implements a pressurized system to separate saline from fresh water and passing the water through a semi-permeable membrane that keeps the salt out. The process is used at CWCO’s 13 plants located throughout the Caribbean. The bulk of its 26 million gallons per day of capacity is located in the Cayman Islands and the Bahamas, with 92% of capacity located there.

CWCO fell after reporting disappointing first-quarter earnings of 4 cents per share and revenues of $16.3 million. Both numbers were shy of expectations — 9 cents per share and $17 million. The miss was largely due to a drop in profit-sharing from one of its affiliates in the BVI, as well as increased costs from the ongoing Baja, Calif. water desalination project.

However, it has since made a significant turnaround since its post-earnings low, rebounding nicely. As the company continues to broaden its geographic footprint, especially into important water-starved Mexico and California regions, revenues should strengthen and I expect the Street to take notice.

NRG Energy (NRG)

NRG Energy (NRG) is the second-largest independent retail energy provider in the United States. The company boasts more than 2 million customers thanks to some recent acquisitions.

Management has been snapping up solar projects around the country, and its new capacity for business has caught my eye. A recent purchase of Dominion Resources’ (D) retail business added half a million customers, while Edison Mission’s renewable assets also helped extend its reach. An agreement to buy residential solar company Rooftop Diagnostics has further cemented NRG’s foray into new markets.

The company posted first-quarter earnings that underscored the momentum NRG has going for it. For the March period, NRG reported a loss of $56 million, or 18 cents per share, which is a vast improvement over the loss of $332 million, or $1.03 pershare, from a year ago. Revenues jumped nearly 70% to $3.5 billion — far better than the $2 billion anticipated by the Street.

On the conference call, management mentioned a “drop down” of new projects in the renewables portfolio to NRG Yield, for $349 million in cash. These include two solar facilities and a gas-fired plant in California. Most importantly for the near-term outlook, management raised its 2014 guidance and now expects adjusted EBITDA of $3.2-$3.4 billion — up from its previous estimate of $2.7-$2.9 billion.

NRG could see strong upside from current prices within a year as it continues to execute on its long-term plan of moving beyond its traditional energy base. Rising electricity prices should also benefit unregulated utilities such as NRG, and we’re headed into the summer months when demand for electricity demand should be strong. That means that these utilities have some leeway in pricing, which should help margins going forward.

Covanta (CVA)

Covanta (CVA) is not tied to any of the instantly recognizable areas of greentech, such as solar or wind, but it still operates right in that niche. The company quite literally turns trash into treasure — or in this case, energy.

The company operates 45 facilities throughout the northeastern United States that convert garbage into steam, which is then used to power electricity at the utility level.

Having emerged from the bankruptcy of a previous incarnation in 2004, Covanta is the biggest company in its industry. Of its $1.6 billion in annual revenue, 63% comes from long-term contracts with municipalities (where it picks up trash) and another 26% is tied to energy revenues from utilities (where the steam generated from burning waste is used to create electricity). The remainder of its sales comes from a metals recycling business.

Management is currently in the midst of building out a few projects and generators, which is gaining Covanta more attention from the Street (it was initiated with a buy rating with a $23 target by an analyst at BB&T earlier this month).

CVA’s financials have improved with the project expansion, as operating cash flow in the latest quarter rose from $64 million to $102 million. The top line has been growing faster than expenses, at nearly 8% revenue growth last quarter with comparable growth expenses of a little more than 3%.

As new projects and operations come online, free cash flow could see a boost. According to management, if you exclude the working capital tied to those projects, the midpoint of its range moves to $230 million, or 10% yield. Assuming a meaningful compression of that yield, the shares are well positioned to move into the mid-$20s range. That’s in addition to a healthy 3.9% dividend yield, which puts cash in our pockets as we wait for new business streams to come online.

Plus, we’re in good company investing in Covanta. It’s no secret that I like to see noted investors with strong positions, and CVA has a heavy hitter holding a sizable stake in the company. Sam Zell, who you may be familiar with as the billionaire who built up and sold a commercial real estate empire several years ago, owns 11% of CVA stock and also serves as chairman.

With improving financials and future growth already well on its way, Covanta offers an attractive opportunity in this niche area of the greentech revolution, especially as electricity demand rises as we head into the summer months.

EnerNOC (ENOC)

EnerNOC (ENOC) is a play on the intersection between technology and energy. ENOC is a relatively small tech firm ($560 million market cap), and it operates in two revenue segments, providing what is known as “demand response” services to utilities and “energy management” services to enterprises. The biggest segment by far is utilities, which brings in 90% of revenue, while the remaining 10% comes from enterprises.

Key customers are found within the commercial and industrial segments, and all told the company helps manage more than 8,600 megawatts (MW) at nearly 13,700 sites across the U.S., the UK, Australia and New Zealand.

EnerNOC’s utility model connects electric utilities with commercial and industrial power consumers and helps to reduce the need to rely on peak power plants (which are expensive to build and operate). The company does this through software as a service (SaaS) offerings that help utilities track, manage and regulate demand response. Management estimates such energy intelligence software represents a $5 billion market. ENOC’s revenues last year were $383 million, so you can see the growth potential.

EnerNOC has been growing at a good clip over the past several years, and that trend is likely to continue, given energy demand and the need for regulation. ENOC will also benefit over the longer term from recent EPA proposals that would cut carbon pollution from the nation’s power plants. Though the details have yet to be finalized, and there will be at least a year before final rules take shape, it’s likely that any net impact to the “smart meter” and “smart grid” industries will be positive, as utilities will look for additional ways to cut power usage.

EBITDA margins are strong at mid-teen levels. Should the top line be able to grow at double-digit rates through 2015, pro forma earnings should be able to touch $1.80 per share by 2015, and current free cash flow yields at around 10% should also lend some support to ENOC. With a mid-teens forward multiple, ENOC stock could reach $27.

The stock hit its 52-week high of $24 in May, and it has since pulled back in the wake of the PJM 2016/17 capacity market auction, which saw a drop in demand response clearing as gas fired plants have come on line. However, pricing has remained stable, and as demand continues to rise, additional, incremental auctions would bring more revenues to ENOC.

Hilary Kramer is the editor of GameChangers.

Cellphone use causes over 1 in 4 car accidents

Drivers are constantly reminded not to use their phones while behind the wheel, but a new study reminds us just how dangerous it is.

The National Safety Council's annual injury and fatality report, "Injury Facts," found that the use of cellphones causes 26% of the nation's car accidents, a modest increase from the previous year. The 2014 edition of the report compares data from 2013 and earlier.

Only 5% of cellphone-related crashes occur because the driver is texting. The majority of the accidents involve drivers distracted while talking on handheld or hands-free cellphones.

The NSC report, combined with Texas A&M research institute's "Voice-to-Text Driver Distraction Study," warns drivers that talking can be more dangerous than texting while operating a vehicle, and the use of talk-to-text applications is not a solution.

For most phone-related tasks, Texas A&M's survey said manual texting took slightly less time than the voice-to-text method. Regardless, driver performance was almost equally affected during both tasks.

In early 2013, the nation's four biggest cellphone companies launched their first joint advertising campaign against texting while driving. Verizon Wireless, Sprint and T-Mobile united behind AT&T's "It Can Wait" advertising campaign, warning their customers against the misuse of their own devices.

However, hands-free cellphone use has become a driving force in cellphone-related distractions of those behind the wheel. Studies published as early as 2009, such as a report in the Journal of Safety Research, have said that driving performance while using a hands-free phone was rarely found to be better than using handheld devices.

In the full NSC report, the organization lists and rates different tasks in relation to the effect they have on a driver's mental workload, using data collected from a cognitive study. On the cognitive distraction scale, driving and talking on a handheld phone has a 2.45 workload rating, and driving while talkin! g on a hands-free cellphone has a 2.27 workload rating.

On the same scale, using the speech-to-text application while driving has a 3.06 workload rating.

According to NSC's website, there have been an estimated 245,358 car crashes involving drivers using cellphones so far this year. One effect cellphone use has on drivers is an increased reaction time, which is similar regardless of handheld or hands-free phone use.

Using data from 2011, NSC partnered with Nationwide Insurance to report the most accurate number of fatalities caused by cellphone-related vehicular accidents. National data show cellphones were involved in 350 fatal crashes in 2011.

The 2014 NSC report says the percent of drivers observed manipulating handheld electronic devices increased from 0.9% in 2010 to 1.3% in 2011.

The data collected on accidents and fatalities caused by cellphone use on the road is said to be under-reported due to the lack of drivers willing to admit to using their phones.

So far, 12 states, D.C., Puerto Rico, Guam and the U.S. Virgin Islands have made it illegal to use handheld devices while driving, according to the Governors Highway Safety Association. Out of the 43 states that have banned texting while driving, all but five have primary enforcement of their laws, meaning an officer may cite a driver for texting without any other traffic violation taking place.

13 Lucky Stocks To Buy On Dips

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Not again” is the sentiment I’m hearing from investors today.So if you’re feeling about the same, take heart that you’re not alone. Last Thursday marked the steepest drop in U.S. stocks in over a month, placing the S&P 500 in the red for 2014 so far.

The drops were driven by two primary factors: (1) Worries about Russia’s posturing over Ukraine and its Crimea region and (2) Weaker-than-forecast data from China for January and February. In both cases, Wall Street is simply reacting emotionally.

I know it can be worrisome (and even difficult) to experience a market day like that. If you’re feeling nervous, the best thing you can do is sit tight in your stocks. This is not the time to make a knee-jerk reaction, like selling out of your positions. That’s the fastest way to ensure you lose. Instead, here’s what you can do:

If you subscribe to any of my newsletters, you’re already on the right track. I test and retest all of my formulas and data daily in order to recommend only the top companies in anticipation that the market would begin to narrow and have emotional swings just like we experienced today.

I consider my Buy List stocks to be the best on the market, whether you’re looking to invest in blue chips, up-and-comers, or emerging market plays. If you’re not currently a subscriber or are invested in a stock that’s not on any of my Buy Lists, not to worry. My free Portfolio Grader stock screening tool rates some 5,000 stocks by fundamental health and quantitative strength and is a great resource during times of uncertainty.

So if you’re feeling nervous, run all of your positions through Portfolio Grader and take note of their letter grades. If one is an A-, B-, or C-rated stock, you should be in good shape to continue holding it. If it is a D- or F-rated stock, you should consider selling that position into strength. Like I said, I never advocate selling in a panic, but you can wait for the market to bounce back before taking profits.

If you’re more risk tolerant, a drop is a buying opportunity. What we saw was a kneejerk reaction to news that doesn’t really affect most top companies combined with profit taking. So I’m going to go out there and take this opportunity to pick up premium stocks on the cheap and I advise you do the same.

To get you started, here are 13 of the top-rated Portfolio Grader stocks that pulled back last week:

Chinese Banking Gets a Freer Hand

China’s chronic capital problem appears to be easing, which should boost the world’s second-largest economy and cheer emerging market investors.

Thanks to state involvement in the country's banking sector, state owned enterprises (SEO) are enjoying much easier access to capital. But this improved capital flow has primarily left non-state owned small- and medium-sized businesses out in the cold in terms of getting loans. It also has given rise to a huge shadow banking sector that the government is now trying to rein in.

In February, the People's Bank of China (PBOC) and other regulatory agencies discussed new rules for unofficial lenders, such as the upstart wealth management firms that have been popping up across the country. The PBOC also conducted a “reverse repo” operation that drained liquidity from the country's financial system, leaving less capital available for lending while also causing a jump in interest rates in order to price some participants out of the market.

A few days ago, the government announced the next step in the process. Under a pilot project, five banks owned entirely by private companies will be created in Shanghai and Tianjin and in the provinces of Guangdong and Zhejiang.

Zhejiang Alibaba E-Commerce Co., a subsidiary of Alibaba (Hong Kong: 1688) which operates the country's largest e-payment system, will partner with automobile parts manufacturer Wanxiang Group to create a bank using a "small deposit, small loan" model. Each client's deposit with the bank will be capped and the amount they're allowed to borrow will be capped, allowing Alibaba to tap into its huge user base of mostly small businesses.

Social networking company Tencent Holdings (Hong Kong: 0700) will partner with Baiyeyuan Investment to create a "big deposit, small loan" bank, requiring minimum deposits to open an account while capping loan sizes.

! Financial company Tianjin Shanghui Investment and copper producer Huabei Group are pairing up to create a bank to serve only corporate clients.

The strategy to be used by the remaining two pairs – investment companies JuneYao Group (which also operates an airline) and Fosun International (Hong Kong: 0656), and electrical equipment maker Chint Group and chemical company Huafon Group – has yet to be released.

The new banks aren't a done deal yet; final approvals must be issued by the China Banking Regulatory Commission (CBRC) before they can open for business. The regulator has said that each of the banks must demonstrate financial strength and the ability to absorb losses, be controlled by Chinese nationals with most of their assets inside China and they can’t incorporate in a tax haven. All of their banks will also be subject to the same regulations as the country's large, state owned banks but have a mandate to focus their services on small businesses and residential communities.

The program is a tacit acknowledgment that as currently constituted, the country's banking system is rife with inefficiencies and biases. But true to Chinese form, rather than instituting a massive overhaul the country is experimenting with different forms of banking institutions and seeing what works best. And while government interference in the capital markets is one of the main reasons that many of the country's problems have emerged, such as a huge level of questionable private debt, the level of government control is what allows such an incremental approach.

In addition to the new banks, the government has also said that it plans to introduce a deposit insurance system to protect consumers against bank failure and each bank will be required to produce a plan for an orderly wind down in case of trouble.

Shang Fulin, president of the CBRC, has also said that banks will be given more freedom to set interest rates this year with the goal of allowing nearly total autonomy t! o set dep! osit and lending rates within two years.

These reforms are in keeping with the government's desire to create a more consumer oriented economy. With small and medium sized enterprises accounting for more than half of the jobs in the country, particularly in the interior provinces where Beijing's control isn't quite as absolute, allowing market forces a greater role in the economy will ultimately generate more productive growth.

The fact is, an improving standard of living is about all that allows the Chinese Communist Party to maintain its legitimacy and power. If the country's economy stalls, unrest is much more likely. So while China is nowhere close to becoming a truly free and open society, each step to greater economic inclusivity opens the door just a little wider.

This Ultimate Financial Meltdown Insider Is Worried… About Another One

Editor's Note: Shah spotted this crisis unfolding. It affects your money, so he wanted to let you know about it immediately. Here's Shah...

Do you remember the financial crisis of 2008?

The one caused by a meltdown in mortgages... trillions of dollars of which were owned and "guaranteed" by government-sponsored enterprises Fannie Mae and Freddie Mac?

Do you remember that Fannie and Freddie had to be bailed out by the government - I mean taxpayers - so their total implosion wouldn't trigger a global depression?

Well, the man behind their bailout, former Treasury Secretary Henry Paulson, remembers, and vividly.

He's now going public with his recollections because Congress is blocking theirs out... reaping the profits... and setting the table for a repeat performance...

The "Deadbeat Duo" Is Still on the Loose

The Washington Times recently conducted an exclusive interview with Mr. Paulson, the architect of the Fannie and Freddie rescue.

That rescue put them into a government "conservatorship" before they destroyed the financial world.

As Paulson said, "Every financial crisis has its roots in flawed government policies that lead to excesses in the markets that build up and build up, and then you get a bubble and it bursts."

Thing is, he wasn't talking about then. He was talking about now.

The interview precedes the release in theaters this week of Hank: Five Years from the Brink, a documentary collaboration by Bloomberg BusinessWeek Films and award-winning director Joe Berlinger. It's about the drama and debacle of the mortgage meltdown.

Paulson used the interview to express his fear of the increased dominance of both Fannie and Freddie since the crisis and how their still massive size and subsequent profitability (yes, they're very, very profitable now) has crowded out private mortgage insurance operations and once again puts the country and taxpayers at risk.

Paulson cites Congress' failure to break up the leviathans and instead their support of them to reap the billions of dollars in profits they now feed the Treasury. He believes that's the reason they're still around and the reason he's worried about another crisis.

Paulson believes, "Political leaders and the public have not focused as much on their critical role in the housing debacle, perhaps because he stepped in and took control over the Goliath's before a crisis occurred, in what he views as his single biggest move to stem the crisis."

"We took action before they started to unravel, before there was a failed auction. The public never saw that horror show," he said. "People never focused on what their failure or near-failure would have done," he said.

He suggested the ensuing crisis would have been much bigger than the financial collapse in the wake of the Lehman bankruptcy. They [FHLMC & FNMA] were collectively nine times bigger than Lehman Brothers "and the massive damage to the housing and mortgage markets could have been many times worse."

Paulson said, "It perplexes me that nothing has been done and both parties seem content to just allow the housing market to drift through yet another era of government dependence and dominance that potentially is creating even bigger market distortions."

The problem, which Paulson doesn't go into in depth, is that as of this week, Fannie and Freddie have collectively paid the U.S. Treasury more than $187 billion in "dividends" from operations. It's an amount larger than what the government said they used to bail out the deadbeat duo, because the payments include interest.

The Real Story

While that sounds good, it's really shady. The Housing and Recovery Act (HERA), passed in July 2008, authorized the newly minted Federal Housing Finance Agency (FHFA) to put both Fannie and Freddie into a statutory conservatorship and required FHFA to manage the assets of both corporations to facilitate their orderly return into private hands upon repayment of the government advances.

Under terms of the agreement that governed the conservatorship, each corporation had to issue a new class of senior preferred stock to the United States, which bore interest at 10% per annum. That sum increased to 12% if Fannie and Freddie chose to conserve cash instead of paying dividends.

But the deal changed in August 2012. An amendment called for a "net worth sweep" whereby the FHFA and Treasury converted all the net receipts of Fannie and Freddie into "dividends" to be paid to the government.

Now the two corporations will never pay off their debts to the United States, no matter how much money they pay, because they're paying dividends and not principal. The Wall Street Journal rightly charged the federal government with "astonishingly duplicitous behavior."

Paulson intimates that Congress is happy to let the Duo do their thing because their payments reduce the deficit and facilitates spending.

Without an alternative to Fannie and Freddie guaranteeing mortgages and warehousing them (before the crisis, they owned or guaranteed more than half all mortgages in the United States, and according to Paulson, have "increased dramatically their dominance"), there would be far fewer mortgages made, grossly impacting the nascent housing recovery.

But what Paulson points out, and in fact is worried about, is that the dominance of the two Government Sponsored Conservatorships are prone to listing and potentially keeling over again if another mortgage missile misfires and hits them broadside.

If Hank Paulson is worried, we ought to be worried too...

New Russia-Ukraine Gas Disruption: 3 U.S. Energy Companies to Keep an Eye On

Bad news is coming out of Eastern Europe. Russia just decided to cut natural gas supplies to Ukraine after demanding fuel payments to be made in advance. From now on, Russia will only provide enough gas to Ukraine's pipeline system to meet demand from European customers and not the country's domestic supplies. The tension between the two countries is rising, and this shakedown in the energy market could mean serious asset price movements that could benefit some American energy companies. In fact, prices are moving already. U.K. front-month gas increased 8.8% on the ICE Futures Europe exchange in London, reaching a record for the July contract.

The opportunity
Even though the warm weather reduces seasonal demand for gas, the European Union is highly dependent on Russian gas piped through Ukraine. In fact, about 15% of its supply comes from this source.

Negotiations between Ukraine and Russia are taking place, but if the two countries do not find a solution soon it is highly possible that we might see a disruption in gas piped to the EU. Under this scenario, a possible direct consequence would be an increase in liquefied natural gas (LNG) prices. LNG is already experiencing strong demand coming from Asia, the biggest importer, so extra demand coming from Europe will likely push prices up, and there are a couple of U.S. companies that could make extra cash.

Well positioned
Given this scenario, an interesting American company to pay attention to is Cheniere Energy (NYSEMKT: LNG  ) , which holds a first-mover advantage in the U.S. LNG export business. The booming shale oil and gas production pushed midstream operation firms like Cheniere, and the company has been enjoying good organic growth opportunities since then. Now Cheniere holds enough infrastructure capacity to profit from new exports to the E.U. As a matter of fact, the company is now a step closer to getting another LNG terminal approved located in Corpus Christi, Texas, as a draft review issued by the Federal Energy Regulatory Commission concluded that the project will not lead to widespread harm to the environment.

The gas price difference between the U.S. domestic market and the European market should make LNG exports very attractive for Cheniere. Check out the chart below -- the spread surpassing 50% is impressive!

European Union Natural Gas Import Price data by YCharts

Another power source
If gas supply to Europe is disrupted, there is another energy source that will experience price hikes. Recent history tells us that whenever gas has been expensive, the E.U. has burned greater quantities of coal to generate power, so American coal companies could seize this higher demand.

One example is Arch Coal (NYSE: ACI  ) , which is the second-largest coal producer in the U.S. The company holds thermal coal operations in its Central Appalachia mine, but unfortunately, this mine holds high costs and is in secular decline. This is why Arch Coal is shifting its focus toward metallurgical coal, particularly higher-quality coking coals that hold lower costs compared to other competitors in the region. Hence, in the event of higher thermal coal demand, we might not see Arch Coal making extra cash.

But there's another coal producer that is better positioned than Arch Coal, Peabody Energy (NYSE: BTU  ) . The company holds an interesting asset that is located in one of the lowest-cost coal-mining regions in the world: the Powder River Basin. The geology in the area allows easier extraction and thus lower operation costs. So, with this abundant, low-sulfur, low-cost mine, Peabody could arrange coal shipments at competitive prices to meet a possible higher European demand.

Not so fast
Despite the turmoil, it seems that Europe could withstand some time without rushing to buy gas and or coal outside its borders. According to EU Energy Commissioner Guenther Oettinger, stocks in EU gas underground storage sites are larger compared to previous years, and the region should be able to cope with demand if problems escalate.

So, Europe could make it through a few weeks of gas interruption to the pipelines across Ukraine, assuming that other Russian gas keeps flowing.

Final foolish thoughts
Regarding the European gas market, two things must be taken into consideration. Although Europe is in a better position to handle a gas disruption than before, it cannot do without Russian gas. But at the same time, Russia cannot do without its European customers. So some way or another the two parties and Ukraine should find an agreement soon.

According to the Russian gas company, Gazprom, Ukraine owes $4.46 billion for gas already supplied. It is quite a sum for a country under serious problems like Ukraine. It is hard to know how things will evolve, but considering that Russia has cut gas supplies to Europe twice since 2006, a disruption scenario this time is clearly plausible -- especially when other political factors take place as well.

In the case of a disruption, Cheniere has approved LNG export infrastructure already functioning, so it should be one of the first energy companies to benefit from an event like this. Plus, the significant price difference makes exports to Europe very interesting.

Regarding Arch Coal, the company does not seem to be prepared to make a huge profit from higher demand of thermal coal. But Peabody Energy is in better shape and would be an interesting bet.

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Newly Blue: 5 Blue-Chip Stocks to Buy

Popular Posts: 9 Cheap Stocks to Buy Now for $10 or Less11 Best Cheap Stocks Under $10 to Buy Now10 Cheap Stocks to Buy Under $10 Recent Posts: Newly Blue: 5 Blue-Chip Stocks to Buy 5 Hot Stocks Getting Their Momentum Back 5 Robot Stocks to Buy View All Posts Newly Blue: 5 Blue-Chip Stocks to Buy

The broadest definition of a blue-chip stock is a large company with a market capitalization of many billions that is also the market leader in its sector and a big-time name.

Source: Flickr

To some, the term "blue chip" also comes with a certain risk profile — a company that has been around for a long time, pays a dividend and is stable even in the worst of times. Think picks like Procter & Gamble (PG) and Coca-Cola (KO).

But blue chip investors don't have to be limited to the same stodgy list of companies. After all, there are a bunch of companies that have grown explosively over the past decade or two and have carved out a very comfortable and established niche and a massive market size.

Even if they haven't been around for a hundred years, I think these picks still qualify as blue-chip stocks to buy based on their dominance, dividend and stability.

So if you're looking for blue chip stocks to buy, consider these new members of the club:

Blue-Chip Stocks to Buy: Starbucks (SBUX)

McDonald's (MCD) is a blue chip stock in the eyes of many investors, and it's time to add Starbucks (SBUX) to the list of stable dividend players who operate in the restaurant space.

SBUX stock has traded publicly for more than 20 years, and currently boasts an impressive market capitalization of $56 billion — right in the ballpark of General Motors (GM) and Prudential (PRU).

And while Starbucks only recently began paying dividends four years ago, its dividend growth has been amazing. Payouts are up 160% from 10 cents per share quarterly in 2010 to 26 cents currently. That might only translate to a 1.4% yield, but at only 40% of this year's earnings, that leaves plenty of room for future growth.

As for stability, Starbucks continues to expand its brand globally and is as entrenched as any restaurant in the U.S. Also the company has just $2 billion in debt and liabilities just shy of $3 billion — an amazing balance sheet for a company this size, and particularly one in the restaurant sector.

Oh yeah, and SBUX is sitting on $1.7 billion in cash and short-term investments.

While you may not think of Starbucks first when you think of blue-chip stocks to buy, give this coffee king a look. Because the stability and dividends are certainly there — and will be there in the years to come.

Blue-Chip Stocks to Buy: Intel (INTC)

Growing up in the computer age and only seriously investing in the 2000s, I have always thought of Intel (INTC) as a blue-chip stock, even while older investors scoff at the notion.

I mean, the company has a $148 billion market cap right now — bigger than Citigroup (C) and on par with Bank of America (BAC) — and it has traded publicly since the 1970s. INTC also boasts a 3.2% yield with a 20-year history of payouts and impressive dividend growth.

So … why is this not already widely accepted as a blue chip stock?

Sure, in the 2000s there was the dot-com hangover, and recently there has been hype about a "post-PC age." However, talk about the rise of e-commerce doesn't mean that Wal-Mart (WMT) must cancel its dividend and get summarily booted from the Dow Jones Industrial Average.

Intel is evolving with the times. And heck, even if it doesn't, there is zero chance of its entire semiconductor business evaporating overnight. Intel remains the No. 1 chipmaker in the world with a roughly 15% market share according to research firm IHS.

It may be a tech stock, and it may be facing risks right now. But Intel is assuredly a low-risk, dividend-paying blue chip that will survive no matter what the market throws its way.

Blue-Chip Stocks to Buy: China Mobile (CHL)

To some investors, only stocks in developed markets qualify as blue chip-stocks. And to others, even stocks like Swiss consumer giant Nestle (NSRGY) don't count because they are headquartered overseas.

However, we live in the age of globalization, and that kind of thinking is a bit naïve. After all, how is Chevron (CVX) all that much different than Royal Dutch Shell (RDS.A) because they are headquartered on different continents?

The next geographic step for blue chip stocks, then, is to go beyond Europe and even into some major emerging markets where the stocks there are even more entrenched than their American peers.

One stock that fits this bill is Chinese telecom China Mobile (CHL), a massive company worth about $200 billion that commands over 750 mobile subscribers — twice the population of the entire united states!

You don't get much more entrenched than that.

Furthermore, look at these dividend stats for CHL:

Current dividend yield: 4.4% (based on its total 2013 payouts of roughly $2.01) Dividend payout ratio: 41% of projected 2014 earnings Dividend growth: 550% in 10 years, from 30.8 cents per share in 2003 to $2.01 last year

Sure, China Mobile is still growing as rural China continues to get connected. However this stock is already so huge that even adding a few million extra subscribers here and there doesn't really move the needle dramatically on a percentage basis.

There is assuredly risk to all China stocks, but investors can take heart in the fact that CHL has largely been rangebound between $40 and $60 per share since the end of 2008 — and is currently in the middle of those bounds at just shy of $50 per share.

Don't be fooled by the China hype. CHL has stability, a robust dividend and blue chip status despite its presence in this emerging market.

Blue-Chip Stocks to Buy: Visa (V)

Visa (V) certainly meets the standard of a household name, with this company at the center of the credit card industry for decades. But to many investors, Visa is simply too young to trust with blue-chip stocks status because it only went public in 2008.

That's just plain silly. Visa is a $130 billion company that operates in 200 countries and has been at the forefront of payments processing since it was created in the mid-1970s. The company's brand is synonymous with credit cards, Visa has deftly branched out into emerging markets and leadership continues to forge ahead with mobile payments to find even more growth in a digital age.

What's not "blue-chip" about Visa, aside from its relatively short presence on the NYSE?

Visa pays an admittedly disappointing dividend of just 0.8%, however the company has paid distributions since shortly after its IPO and has almost quadrupled payments from 10.5 cents quarterly to 40 cents currently. Furthermore, the dividend payout ratio is a highly sustainable 21% of earnings — and with those earnings consistently growing, the dividend should grow, too.

The stock is stable, the business is entrenched and the dividend has big upside … sounds like another winner on the list of blue-chip stocks to buy.

Blue-Chip Stocks to Buy: Cisco (CSCO)

Some investors are happy to place the label of blue chip stock on IBM (IBM), but for some reason similar enterprise technology companies don't enjoy the same status in their eyes.

That's nonsense. Even though IBM is (ostensibly) over 100 years old, a company like Cisco (CSCO) shouldn't be denied the same label just because it doesn't have the same age.

Consider that Cisco is worth over $125 billion in market capitalization, and has operated since the 1980s. Oh yeah, and after Citigroup (C) and General Motors (GM) were booted from the Dow Jones Industrial Average thanks to the financial crisis, they were replaced by this relatively young tech stock in the flagship stock market index.

And despite criticism in recent years about how the company foolishly chased consumer products like the Flip video camera and is losing out in the new era of tech, CSCO happened to be No. 1 in cloud computing infrastructure market share last quarter — beating out Hewlett-Packard (HPQ) and IBM.

Cisco only recently began paying dividends, starting in 2011. But those dividends have tripled in short order from 6 cents quarterly to 19 cents per quarter currently. That's good for a 3.1% yield.

Critics will say that CSCO stock has been very sleepy and has gone nowhere since its dot-com bust. But remember, blue-chip stocks are about stability and not explosive moves. The slow-and-steady nature of Cisco for the last 10 years actually proves pretty well why this stock should be included in the conversation of new blue chip stocks.

Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor's Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. 

Will Small Cap Obesity Stocks Orexigen Therapeutics (OREX) Gain Your Portfolio Some Weight? ARNA, ETRM & VVUS

Orexigen Therapeutics, Inc (NASDAQ: OREX), like Arena Pharmaceuticals, Inc (NASDAQ: ARNA), EnteroMedics Inc (NASDAQ: ETRM) and VIVUS, Inc (NASDAQ: VVUS), is a speculative small cap obesity drug stock that has the potential for coming up with the next big thing in the treatment of obesity that is increasingly a global problems. I should mention that we have recently added Orexigen Therapeutics to our SmallCap Network Elite Opportunity (SCN EO) portfolio as an extremely speculative biotech bet because its lead obesity drug candidate has the potential to be approved by September 11th of this year.

What is Orexigen Therapeutics, Inc?

Small cap obesity drug Orexigen Therapeutics is a biopharmaceutical company focused on the treatment of obesity whose lead product candidate is NB32 which is believed to reduce appetite, help control cravings, increase metabolism and improve control over eating behaviors. In previous clinical trials involving more than 4,500 people, NB32 has been shown to help people lose weight and keep it off for up to one year. In addition and in these studies, 53% of study participants taking NB32 and 21% of those taking placebo lost five percent or more of their body weight over the 12 month trial duration. Based on successful results of the Light Study, an ongoing cardiovascular outcomes trial, Orexigen Therapeutics's strategy for NB32 is to pursue approvals worldwide and pharmaceutical partnerships for global commercialization. The Company has submitted applications for marketing authorization in the United States and Europe, with potential approvals in 2014. If approved, North American partner Takeda Pharmaceuticals will commercialize NB32 in the United States. Orexigen Therapeutics's other product candidate, Empatic, has completed Phase 2 clinical trials as a second late-stage, investigational medication for weight loss.

As for potential obesity peers or performance benchmarks, Arena Pharmaceuticals, Inc is focused on commercializing BELVIQ as a monotherapy for chronic weight management and to explore its therapeutic potential in combination with other drugs and for other indications; EnteroMedics Inc has developed VBLOC® vagal blocking therapy, a first-in-class weight loss treatment for obesity and related co-morbidities that is delivered by a pacemaker-like device called the Maestro® Rechargeable System which is designed to control both hunger and fullness by blocking the primary nerve which regulates the digestive system; and VIVUS, Inc is a biopharmaceutical company developing innovative, next-generation therapies to address unmet needs in obesity, diabetes, sleep apnea and sexual health for US, European and other world markets.

What You Need to Know or Be Warned About Orexigen Therapeutics, Inc

Earlier in June, Orexigen Therapeutics announced that the FDA had extended its review of the resubmitted New Drug Application (NDA) for NB32 with the new Prescription Drug User Fee Act (PDUFA) action date being set for September 11, 2014. The FDA had indicated that the review extension is needed to reach agreement on the post-marketing obligation related to the previously agreed upon evaluation of cardiovascular (CV) outcomes for NB32. It should be noted that the FDA had refused to approve the drug in 2011, citing concerns about cardiovascular risk while the latest delay sent shares down as much as 20% in part due to the activities of options traders.

Nevertheless, the FDA approved the obesity drugs Qsymia from VIVUS, Inc and Arena Pharmaceuticals, Inc's Belviq even after both of those drugs were initially rejected. However, sales of both obesity drugs have been far below expectations due to limited insurance coverage and high out-of-pocket costs for patients.

That could be an issue for Orexigen Therapeutics because the company has only produced revenues of $3.43M (2013), $3.43M (2012), $4.40M (2011) and $1.23M (2010) for the past four years and net losses of $77.67M (2013), $90.09M (2012), $28.06M (2011) and $51.91M (2010). However, the company still ended March with $155.09M in cash and short term investments to cover $21.66M in current liabilities and $80.97M in long term debt – meaning it won't need to do an equity offering any time soon.  

Otherwise, it should be noted that according to HighShortInterest.com, Orexigen Therapeutics has short interest of 21.48% – meaning it can easily make an outsized move in either direction.

Share Performance: Orexigen Therapeutics, Inc vs. ARNA, ETRM & VVUS

On Wednesday, small cap obesity drug Orexigen Therapeutics fell 0.32% to $6.25 (OREX has a 52 week trading range of $4.59 to $7.84 a share) for a market cap of $727.05 million plus the stock is up 9..5% since the start of the year, down 0.95% over the past year and up 55.5% over the past five years. Here is a look at the long term performance of Orexigen Therapeutics verses other obesity drug stocks like Arena Pharmaceuticals, Inc, EnteroMedics Inc and VIVUS, Inc:

As you can see from the above performance chart, obesity drug stocks ate a good way for investors to quickly cause their portfolios to either gain or loose weight.

Finally, here is a look at the technical charts for Orexigen Therapeutics, Arena Pharmaceuticals, Inc, EnteroMedics Inc and VIVUS, Inc:

The Bottom Line. Again, we view Orexigen Therapeutics as a speculative bet on an FDA approval as shares are bound to jump. However and even if there is an FDA approval, investors will want to be cautious given the performance of obesity stocks in general and their ability to actually produce revenue – despite how many people are now obese. 

SmallCap Network Elite Opportunity (SCN EO) has an open position in OREX. To find out what other open positions SCN EO currently has, and to learn why so many traders and investors are relying on this premium subscription service, click here to find out more.

Stocks Going Ex-Dividend on Friday, June 20 (PNY, AWH, More)

Ex-dividend dates are very important to dividend investors, since you must purchase a stock prior to its ex-dividend date in order to receive its upcoming dividend payout. For more information, check out Everything Investors Need to Know About Ex-Dividend Dates.

Below we highlight five big-name stocks going ex-dividend on Friday, June 20.

1. Piedmont Natural Gas

Piedmont Natural Gas (PNY) offers a dividend yield of 3.46% based on Wednesday's closing price of $37.03 and the company's quarterly dividend payout of 32 cents. The stock is up 13.97% year-to-date. Dividend.com currently rates PNY as “Neutral” with a DARS™ rating of 3.4 stars out of 5 stars.

2. Allied World Assurance

Allied World Assurance (

Warren Buffett Reveals His Latest Investing Secrets

Warren Buffett's annual letter to Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) shareholders is one of the most talked about pieces of financial literature every year.

This week, Fortune ran the narrative portion of Buffett's letter. In this segment of The Motley Fool's financials-focused show, Where the Money Is, banking analysts Matt Koppenheffer and David Hanson discuss the letter and Buffett's most recent words of wisdom. Referencing two real estate investments he's made over a few decades, Buffett reminds investors of the importance of projecting an asset's earnings potential and ignoring the daily price-changes of stocks and other assets.

In addition to giving his wise thoughts regarding the stock market, Buffett told investors what he plans to do with his money after he passes away. Instead of chasing "the next big thing," Buffett wants his cash to be allocated mostly to a low-cost index fund after he is gone. Matt explains why is this a smart idea, but also tell viewers he doesn't think this means Buffett doesn't believe great investors can beat the market.

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NBC, the Olympics, and the Value of Live Sports Broadcasting

If there is anything that could be considered a guaranteed revenue generator in the world of TV content it is live sports broadcasting. It retains its pricing power, while its screen of choice is the television set in the home. The latter is important because it commands higher advertising revenue from marketers.

This is why broadcasters like Comcast's (NASDAQ: CMCSA  ) NBC don't mind bidding huge amounts of money to cover the Olympics. The event not only generates significant revenue, it keeps the brand name of the company in front of the world for several weeks, including pre- and post-Olympic coverage.

This is also why the Walt Disney Company (NYSE: DIS  ) with its ESPN franchise and now 21st Century Fox (NASDAQ: FOXA  ) with its new Fox Sports 1 are focusing so strongly on that segment of the TV market.

Why live sports are different
The reason live sports are so in-demand is because of the fact that they are live. Live sports are not one of those pieces of TV content that someone will want to watch after the fact unless there is simply no other way of seeing the event. So on-demand access has little value for sporting events, which makes these events highly lucrative for those media companies that provide the live content.

This is a major reason why ESPN is so powerful and compelling for Disney, as the company has plenty of room to boost prices because of the willingness of sports fans to pay extra for the content.

So even in slow times Disney has as close to a guarantee of a predictable stream of income as there can be in the industry. This is a big moat for Disney because of its day-to-day dominance in that particular segment of the market. Fox, of course, is trying to change that going forward.

In its latest quarter the media networks unit of Disney, which includes ESPN, reported that operating income rose by 20%, with a lot of that coming from the increase in advertising and affiliate revenue from ESPN.

NBC and the Olympics
One major thing I wanted to point out concerning NBC and the Olympics is the fact that approximately 90% of those who watch the Olympics will do so on their television sets. While people generally don't mind watching TV content on smaller devices, they prefer to watch live sports on a bigger screen.

With that in mind, it is estimated that 90% of those who watch the Olympics see the event on a bigger TV in the home, and also that about 90% of the revenue connected to Olympic coverage comes from TV advertising on the big screen.

This means that even though NBC is expected to stream about 1,000 hours of Olympic live events online, only about 10% of the revenue from the event will come from digital viewers. NBC will broadcast 539 hours of the Olympics on television.

Fox Sports 1
While Fox Sports 1 will take some time to get off of the ground, it has a nice start with college football, NASCAR, UFC, and UEFA Champions league available at this time. Major League Baseball games are scheduled to debut in 2014, and coverage of the U.S. Open and FIFA will begin in 2015.

One strength of Fox in the past, which appears to remain with the company, is that it doesn't mind taking a significant amount of time in order to build out a brand. It did this with the original Fox brand, it is doing this with Fox Business, and it will no doubt continue to do this with Fox Sports 1.

Nonetheless, it is attempting to offer compelling content in the short term, such as the upcoming Daytona 500, where it will offer over 80 hours of
coverage. There can be no doubt that this is a showcase event for the new sports network, so the company is going all out to succeed with it. 

Again, the stakes are extremely high in live sports, and in my opinion the companies that win in this important market will be in the strongest positions in the TV industry in the years ahead.

Foolish outlook
Live sports are one of the most important and consistent performers for media companies. Even one-off events like the Olympics can bring in big money, along with the associated prestige.

Even more importantly are those companies that provide consistent, day-to-day coverage on a variety of sports. Advertisers love sports content because viewers don't tend to bypass commercials during these events in the way they do with scripted and reality TV content. This makes live sporting events the most valuable and desired content in the world.

When evaluating media companies, be sure to do your research on their exposure to live sports, as these events will be among the best revenue and earnings generators for these companies.

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Wednesday’s Analyst Moves: GNC Holdings Inc, Medtronic, Inc., Tyson Foods, Inc., More (GNC, MDT, TSN, More)

Before Wednesday’s opening bell, a number of big name dividend stocks were the subject of analyst moves. Below, we highlight the important analyst commentary for investors.

C.R. Bard Downgraded at Barclays

C.R. Bard, Inc. (BCR) has been cut to “Equal Weight” at Barclays. BCR has a dividend yield of 0.64%.

Franklin Resources Upgraded to “Buy”

Franklin Resources, Inc. (BEN) has been upgraded from “Neutral” to “Buy” at Goldman Sachs due to better flow trends driven by emerging markets. BEN has a dividend yield of 0.85%.

JP Morgan Downgrades GNC

JP Morgan has lowered its rating on GNC Holdings Inc (GNC) to “Neutral” as the company is seeing weak sales and its CFO has departed. GNC has a dividend yield of 1.82%.

The Gap Upgraded to “Buy”

The Gap Inc. (GPS) has been raised to “Buy” at Canaccord Genuity as the company can continue to expand margins. The firm has a $51 price target on GPS, suggesting a 24% upside from Tuesday’s closing price of $41.24. GPS has a dividend yield of 2.13%.

Barclays Upgrades Medtronic

Following several analysts’ upgrades on Tuesday, Barclays has upgraded Medtronic, Inc. (MDT) from “Equal Weight” to “Overweight.” The upgrade was due to the company’s deal to acquire Covidien (COV). MDT has