i Small Cap Stocks For 2013, Small Cap Stocks For 2013: January 2014

Friday, January 31, 2014

Nine surprising Social Security statistics

We're all familiar with Social Security -- with what it is and how it might help us in retirement. But there's still a lot we don't know about it, some of which is important and some simply interesting.

A great place to find data on the program is from the horse's mouth -- the website of the Social Security Administration, or SSA. Its 2013 "Fast Facts & Figures About Social Security" document, for example, tell us:

In 2012, 61.9 million people received benefits from the SSA. (That's about 20% of the entire U.S. population.)

Fifty-five percent of adult Social Security recipients are women. This makes sense, as women generally live longer. (Women in the U.S. recently averaged a lifespan of 81 years, versus 76 for men.)

For most elderly Social Security recipients, Social Security benefits make up the majority of their income. (As of 2011, that was so for 64% of aged beneficiaries.)

Employee income is taxed at 6.2% for Social Security. You may not realize it, but your employer coughs up a corresponding 6.2%. Those who are self-employed get hit with a whopping 12.4% tax rate, paying both the employer and employee portions.

That Social Security tax rate only applies to the first $113,700 of your income. If you make $1,113,700, the million dollars extra don't get taxed. Many reformers would like to see this cap eliminated, as it has most Americans being taxed on their full income, while wealthy folks are only taxed on a portion of their income.

The maximum monthly benefit that Social Security offered in 2012 to those who retired at their full retirement age was $2,533, offering an annual benefit of $30,396. Those who started collecting Social Security earlier or later than their full retirement age would collect smaller or larger sums, respectively.

We're used to thinking of Social Security as providing income in retirement. But it has a few other functions, too. In 2012, for example, of the 5.7 million folks who began collecting Social Security benefits, 48%! were retired workers, 17% were disabled workers, and 35% were survivors and dependents of deceased workers. Not all survivors, dependents, and disabled workers qualify for these benefits, but some do.

Those who worry about Social Security running out are focusing on data such as this: In 1955, there were more than eight workers paying into the Social Security system for every beneficiary. Today, that number is a bit less than three workers paying in, and it's projected to be close to two workers by 2031. (Those less worried about Social Security running out note that many changes to the system could strengthen it, such as eliminating the taxable income cap.)

It's projected that the Social Security trust fund will run out in 2033 – but that means we have 20 years in which to change and improve the system.

There's a lot to know about Social Security, even for young people. If you think and act strategically, you can maximize your benefits.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

Merrill Lynch team managing $700M moves to HighTower

A team of Connecticut advisers who manage $700 million for clients has broken away from Merrill Lynch Wealth Management.

The Andriole Group, based in Madison, is joining HighTower Advisors. Charles Andriole, the founder, is making the move along with the firm's other principals — Geoffrey G. Gregory, Robert A. DeLucca and Matthew J. Montana — who will all receive the title of partner and managing director at Chicago-based HighTower.

Three other advisers — Eric C. Hanson, Christopher P. McFadden and Alexandra J. Miele — and two senior client service associates are also part of the firm, which focuses on high-net-worth families, and related businesses and non-profit organizations.

Mr. Andriole was ranked in the top 10 Connecticut advisers by Barron's this year.

Ana Sollitto, a spokeswoman for Merrill's owner, Bank of America Corp., declined to comment on the departure.

The team is the 40th to join HighTower, founded in 2008, and is HighTower's only Connecticut outpost. Like what you've read?

American International Group Inc (AIG): Current Weakness Offers A Buying Opportunity

Shares of American International Group, Inc. (NYSE: AIG) were down more than 6 percent after CEO Bob Benmosche's "goals" versus "guidance" commentary that was a retraction on the company's plan to achieve a 10 percent plus return on equity (ROE) by 2015.

Benmosche stressed that the goals set in the 2011 re-IPO process--the centerpiece being a 10 percent plus ROE in 2015--were very much aspirational in nature, noting that the company still aspires to achieve them.

Management is unsure whether AIG can reach its aspirational goals by 2015, suggesting these goals may take longer to reach. Goals with time distant deadlines begin to look more like guidance as the deadline approaches, and AIG does not intend to give guidance to the investment community.

[Related -American International Group Inc (AIG): Buy This 'Hated' Company While It's Still An Incredible Bargain]

The knee-jerk reaction of investors is that AIG management is now concerned about its ability to meet its goals in a timely manner, and so they are retracting these goals. That's probably the worst-case interpretation of Benmosche's comments, and that is precisely the correct way investors ought to interpret them.

However, the question is whether this is actually problematic?

Investors should note that precise guidance is tough for an insurance company, which deals with events such as natural disasters. Insurance is not a business that operates under strict degrees of accuracy.

[Related -A Couple Of Facts About Small Bank Failures In The US]

Consensus 2015 EPS forecasts suggest a 2015 ROE range of 7-9 percent without a single analyst believing AIG is capable of achieving a 10%+ ROE in 2015.

" Essentially, AIG management is coming around to a view that investors have already widely shared. Our view has been and continues to be that AIG does not need to achieve a 10% ROE to be an attractive investment. We have and continue to forecast an 8% as attractive enough to buy the stock today," Deutsch! e Bank analyst Joshua Shanker said in a client note.

If AIG management has merely scaled back its guidance to a consensus view, there is some mystery as to why the stock is down over four days of trading. The market at times is subject to irrational dislocations.

It may be the case that there were some investors whose blue sky 2015 scenario has been reined in. However, for most investors, not much has changed.

The company proposed (and perhaps retracted) a lofty and likely unachievable goal of a 10 percent plus ROE in 2015. This involves execution, cost-cutting, capital management and high interest yields.

On the other hand, the company may be able to execute on some of these plans and achieve a stable 8 percent plus ROE instead. If the company is able to show quarterly consistency, implementation of a nominal dividend and deployment of cash into interest bearing investments, the stock can appreciate.

"We believe AIG shareholders will enjoy healthy double-digit appreciation in the stock with a mere 8% ROE in two years," Shanker added.

As the company monetizes assets for the purpose of share repurchase, the book value per share growth can be accelerated. There is additional upside associated with improved operations at its United Guaranty subsidiary, actualization of deferred tax assets and gains in its diminished derivatives portfolio.

In addition, under the leadership of Benmosche, the company has improved the results of all of its key segments. It has lowered its financing costs and spent heavily on infrastructure, which should help underwriting margins going forward.

AIG offers continued earnings growth, with EPS expected to increase at an average rate of 11.33 percent over the next five years. In comparison, the industry and sector growth rates are estimated at 11.09 percent and 10.54 percent, respectively. The S&P 500 is expected to grow 9.78 percent for the same period.

Further, AIG generates excess liquidity that should continue enhance it! s ability! to buyback shares at a discount to tangible book value, likely reducing downside.

Shares of AIG trade 11 times its 2014 consensus earnings estimate, and traded between $30.64 and $53.33 during the past 52-weeks.

As such, investors should take the current weakness in AIG shares as a buying opportunity, as AIG at $47 to $48 represents likely the best risk/reward opportunity.

Thursday, January 30, 2014

Two Abu Dhabi Lenders Post Sharp Profit Growth

The two biggest banks of Abu Dhabi, also the biggest lenders, recently posted considerable quarterly profit growth numbers, mainly as a result of an increase in business and individual loans, writes Mahmoud Kassem, of The National.

Abu Dhabi's two biggest banks reported sharp profit rises Monday, October, 28.

First Gulf Bank's (UH:FGB) third-quarter earnings grew 13% from the same period last year, while Abu Dhabi Islamic Bank's (ABU:ADIB) quarterly income climbed 20%.

Their performances were bolstered by the economic upswing, as more companies and individuals took out loans for business expansion and property purchases.

Third-quarter net income at FGB was Dh1.19 billion, and Dh395.5 million for ADIB.

Shares of FGB, which have rallied 42% this year, closed 0.9% lower to Dh16.45 a share.

ADIB's shares rose 0.2% to Dh4.81, bringing its gain this year to 51%.

The bank's chief executive, Tirad Al Mahmoud, said: "On the back of three quarters of sustained asset and profitability growth, our outlook for the full year is positive and we remain committed to our growth strategy."

Over at FGB, Abdulhamid Saeed, its managing director, said while the lender would always focus on the UAE, it was also reinforcing its global presence, especially in Asia.

Billionaires Hold Data Storage Companies on 52-week Low

Factoring in all of the stocks in the U.S., Canada, Europe, UK, Ireland, Asia and Oceania, GuruFocus research shows the most challenged industry sector worldwide is computer hardware, now number one in the world for the most companies on a 52-week-low. Based on 1,802 computer hardware companies around the world, the global sector shows 242 companies are at a 52-week low, with a low ratio for the industry of 0.13.

This week the U.S. computer hardware sector lists 26 stocks on a 52-week low out of 244 companies, only a fraction of companies worldwide. The low ratio is 0.11. Pulling from that sector, here's a look at two billionaire-held data storage companies and a printed circuit board manufacturer, all on a 52-week low.

U.S. Industry Sector: Computer Hardware

Highlight: Fusion-io Inc. (FIO)

The current FIO share price is $9.54, or 64.0% off the 52-week high of $26.50.

Down 60% over 12 months, Fusion-io Inc. has a market cap of $976.12 million, and trades at a P/B of 1.80. The company does not pay a dividend.

First incorporated in 2005, Fusion-io Inc. is a provider of data-centric computing solutions, using a combination of hardware and software that results in improved performance and efficiency. The company's integrated solutions leverage non-volatile memory to significantly increase datacenter efficiency and offer enterprise grade performance, reliability, availability and manageability. The company sells products and services through its global direct sales force, OEMs including Dell, HP and IBM, and other channel partners.

Guru Action: The top guru stakeholder is Manning & Napier Advisors Inc. as of Sept 30, 2013, when the firm reduced its position by 8.69%, selling 12,340 shares at an average price of $13.18 for a loss of 27.6%.

The firm holds 129,670 shares or 0.13% of shares outstanding.

Over a five-quarter history, Manning & Napier Advisors Inc. has averaged a loss of 59% on 142,010 shares bought at an average price of $23.46 per sha! re. The firm has lost 28% on selling 12,340 shares at an average price of $13.18 per share.

Check out a number of guru stakeholders and very active insider selling.

Historical share pricing, revenue and net income:

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Highlight: OCZ Technology Group Inc. (OCZ)

The current OCZ share price is $1.11, or 59.9% off the 52-week high of $2.77.

Down 18% over 12 months, OCZ Technology Group Inc. has a market cap of $75.71 million, and trades at a P/S of 0.29. The company does not pay a dividend.

Formed in 2002, OCZ Technology Group Inc. is a provider of high-performance solid state drives and memory modules for computing devices and systems. The company develops flexible and customizable component solutions quickly and efficiently to meet the ever changing market needs and provide superior customer service.

Guru Action: The top guru stakeholder is Pioneer Investments as of June 30, 2013, with 824,837 shares.

In seven quarters of trading, the firm averaged a loss of 86% on 3,326,558 shares at an average price of $7.82 per share. The firm has averaged a loss of 79% on 2,501,721 shares sold at an average price of $5.39 per share. Pioneer Investments is one of two guru stakeholders. There is no recent insider trading to report.

Historical share pricing, revenue and net income:

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Highlight: Multi-Fineline Electronix Inc. (MFLX)

The current MFLX share price is $13.66, or 40.3% off the 52-week high of $22.88.

Down 35% over 12 months, Multi-Fineline Electronix Inc. has a market cap of $328.28 million, and trades at a P/B of 0.90. The company does not pay a dividend.

First incorporated in 1984, Multi-Fineline Electronix Inc. is engaged in the engineering, design and manufacture of flexible printed circuit boards along with related component assemblies. With! faciliti! es in California, China, Malaysia, England and Singapore, the company offers a global service and support base.

Guru Action: The top guru stakeholder is Jim Simons as of June 30, 2013. He holds 125,700 shares or 0.52% of shares outstanding. In the second quarter of 2013, he increased his position by 0.4% when he bought 500 shares at an average price of $15.29 per share. Over a five-year history, he has averaged a loss of 46% on 347,489 shares bought at an average price of $25.40 per share. Selling, Simons has also averaged a loss of 41% on 221,789 shares bought at an average price of $23.14 per share.

Jim Simons is one of four guru stakeholders. There is no recent insider trading to report.

Historical share pricing, revenue and net income:

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If you are not a Premium Member, we invite you for a 7-day Free Trial.

Rieder: Firing reporter for one mistake was ove…

Should a reporter, a highly respected one, be fired over a single mistake?

I'd have to say no.

Standards matter, and every error eats away a little at a news organization's credibility. Mistakes have to be taken seriously.

But the death penalty for one error is overkill.

Yet that's what happened to Bob Lewis, a veteran Associated Press political reporter based in Richmond, Va.

Lewis' made a big mistake, no doubt. And he deserved to be punished. So suspend him. But kicking him to the curb just isn't warranted.

And Lewis' error had collateral damage, the AP also fired two editors over the incident: Richmond-based Dena Potter and Atlanta-based Norman Gomlak. That also seems over the top.

OK, I guess the wire service, which always, to its credit, has taken accuracy extremely seriously, wanted to send a message. No doubt it has been a little sensitive over the issue since, speaking of high-profile mistakes, it falsely reported that a suspect had been arrested in the Boston Marathon massacre. But you can send a message without cleaning house.

The cardinal sins of journalism are plagiarism and fabrication. Certainly, they are reason enough for dismissal. That's what happened to such high-profile offenders as Jayson Blair of The New York Times and Stephen Glass of The New Republic.

But even those high crimes don't always lead to termination. There are many instances in which the culprits are suspended rather than jettisoned.

And, let's face it, mistakes happen often in journalism. It's built in. Journalism is carried out by human beings, who in most cases, last I heard, are not perfect. Journalists are often reporting on complicated events, and doing so in a hurry. Journalism wasn't labeled "the first rough draft of history" for nothing. With the emphasis on "rough." Those corrections sections exist for a reason.

And there's little doubt that the warp-speed world of journalism in the digital era has raised the stakes enormously. The pressure to ! post rapidly is intense in America's newsrooms. And speed is often the enemy of accuracy.

None of which is to say mistakes don't matter. They do, a lot. Reporters with a pattern of inaccuracy belong in a different business. And, no argument, some mistakes are far more serious than others.

The Lewis affair stems from an AP story on Oct. 9 that began, "Documents in a federal fraud case allege that Virginia Democratic gubernatorial candidate Terry McAuliffe lied to a federal official investigating a Rhode Island estate planner now imprisoned for receiving death benefits on annuities secured on terminally ill people without their knowledge."

Trouble is, the documents didn't. The AP rapidly retracted the story.

It seems there was mention that someone with the initials "T.M." had lied to the feds. The AP retraction said the indictment did not identify McAuliffe as the offending "T.M."

There were two big problems with this story. First, it sounds as if Lewis saw the initials and simply assumed they were McAuliffe's. That's never a good idea. Second, there was this troubling paragraph: "McAuliffe's campaign did not immediately respond to e-mail and phone requests for comment about the allegation."

A basic tenet of journalism is that when you are accusing someone of something, you do everything possible to give that someone a chance to respond. The scary word in the quote above is "immediately." This simply wasn't an "immediately" situation. You take serious time to get the other side. And in many cases, that saves you from major embarrassment.

So Lewis screwed up, big time. As I said, suspend him, sure. Give him a stern talking to. Warn him that something like this can never happen again. But don't fire him.

Asked about the AP's decision, Director of Media Relations Paul Colford said the wire service doesn't comment on personnel matters, adding only that the three were fired "after serious deliberation."

As for Lewis, he says he's constrained from saying m! uch abou! t the story and his interactions with the AP because the News Media Guild is contesting his ouster. But he does take full responsibility. "It was certainly no small error, and I certainly regret it," he says.

Many journalists were shocked by the severity of the AP's response. Lewis says he has been heartened by the outpouring of support he has received, not only from colleagues but from Virginia politicians as well, among them Gov. Bob McDonnell. He says he has had a number of job feelers, both in and out of journalism. He'd like to stay in the field if the right opportunity presents itself.

"The death penalty," he says, "was certainly not something I expected, was ready for or deserved."

Tuesday, January 28, 2014

Long-term budget deal? Advisers say 'slim chance'

Not likely: Although the sign says "Bipartisan Deal," most IN readers doubt Congress members, including Democratic leader Harry Reid, can reach a long-term budget deal. Bloomberg News

Financial advisers are expressing a general sense of disdain about the way Congress and President Barack Obama handled the most recent budget battle, which was wrapped up in an 11th-hour deal Wednesday with an agreement to fund the government until at least February.

An online survey of InvestmentNews readers after the deal was struck found that 92% of the respondents described themselves as either somewhat or very skeptical that Democrats and Republicans can forge a long-term budget plan.

(Don't miss: The results of IN's reader poll on the debt deal)

Asked about the actual budget deal, which lifted a three-week partial government shutdown and added a short-term increase to the federal government's $16.7 trillion borrowing limit, 78% of those surveyed said they are either somewhat or very dissatisfied with the agreement.

“My opinion of Washington can't get any lower at this point because it is zero, exactly zero,” said Paul Schatz, president of Heritage Capital LLC.

Mr. Shatz' views, while among the most critical of Washington's latest display of ineptitude, are clearly reflective of how the advice community is interpreting the national political process.

Of the 706 survey respondents — 15% of whom are Democrats, 42% independents and 43% Republicans — only 17% hold a more favorable view of their political party since the developments of the past few weeks.

A more detailed breakdown of the data shows that 38% of Democratic respondents now have a more favorable view of their political party, while 21% reported a less favorable view, with 41% unchanged.

Among Republican respondents, just 9% now have a more favorable view of their party, while more than 49% report a less favorable view and 42% are unchanged.

In terms of placing blame for the partisan gridlock, 53% of respondents blame Mr. Obama, 41% blame congressional Republicans and 6% blame congressional Democrats.

Mr. Schatz, who described last year's fiscal cliff drama as the “biggest hoax since Y2K,” called the bitter political fight over the debt ceiling and partial government shutdown, which was resolved the day before the Treasury was set to hit its current $16.7 trillion debt limit, “an even bigger joke”

In terms of investing, he still thinks that the Dow Jones Industrial Average will gain another 675 points by January and he uses any short-term market pullbacks to buy more stocks.

“Obama is an idiot, and [House Speaker John] Boehner is a moron,” he said. “As an investment adviser you ignore those idiots, and! follow your process and do what's best for your clients.”

Across the financial advice industry, disgust for Washington's political bickering might be considered an understatement.

“Nothing they did over the past few weeks changes my opinion of Washington because I was disappointed in them before, during and after the shutdown and debt deal,” said Joseph Witthohn, vice president of product development at Emerald Asset Management.

In terms of where the political debate is headed from here, with the full debt-ceiling debate now pushed out until Feb. 7, he thinks that the fight will just drag on and possibly even get nastier.

“I'm afraid some factions are just sharpening their swords and trying to re-evaluate ways of getting some things done,” Mr. Witthohn said. “I don't know if this fighting will calm down over the next few months, but I do think we're headed toward another fight over the debt limit.”

Sam Jones, president of All Season Financial Advisors Inc., is expecting nothing to change between now and the next debt-limit deadline.

“I think the debate will just remain alive from now until February, although it might be a milder version of what we saw these past few weeks,” he said.

Looking ahead to the midterm elections next year, there is a good chance many Republicans in Congress could lose their jobs because of the tough stances they embraced in the debt-limit and government shutdown battles, Mr. Jones said, adding that he believes voters will support whichever side offers them the most benefits.

“This is exactly as it has been over the past five years, and it is indicative of a democracy that at this very late stage is continuing to vote for people who give out the most gifts from the Treasury.”

All eyes will now be on the Republicans' ability to hold on to the majority in the House next year, Mr. Schatz said.

“If the Republicans lose the House in November, then you lose all the checks and balances in D.C! . and tha! t will cause a pretty significant drop in the markets,” he said.

Theodore Feight, owner of Creative Financial Design, said that he was hoping for a longer-term agreement on the debt limit, which he thinks would have provided a stronger boost to the equity markets.

The short-term agreement does take some of the pressure off the markets, he said.

“I still think it's time to be cautious about investing but not as cautious as over the last three months,” he said.

Regarding his opinion of Washington politicians, Mr. Feight said that Mr. Boehner gave up too much power to the fiscally conservative Tea Party members in Congress.

“I think Congress will be able to pass something the next time around because the non-Tea Party Republicans will pass it through,” Mr. Feight said.

The frustration drove him to write letters to members of both political parties expressing his distaste for the political gamesmanship.

“This whole thing lowered my opinion of Washington a lot more,” Mr. Feight said. “I told them in my letters that they needed to get this done; they're costing my people money.”

Mr. Schatz echoed that sentiment in paraphrasing recent comments from Mr. Boehner and Mr. Obama.

“What really infuriates me is the Obama administration says they're winning, and Boehner said they fought a good fight,” he said. “Well, this is not a game and it's not supposed to be a war.”

Monday, January 27, 2014

3 Huge Tech Stocks on Traders' Radars

BALTIMORE (Stockpickr) -- Put down the 10-K filings and the stock screeners. It's time to take a break from the traditional methods of generating investment ideas. Instead, let the crowd do it for you.

>>5 Stocks Under $10 Set to Soar

From hedge funds to individual investors, scores of market participants are turning to social media to figure out which stocks are worth watching. It's a concept that's known as "crowdsourcing," and it uses the masses to identify emerging trends in the market.

Crowdsourcing has long been a popular tool for the advertising industry, but it also makes a lot of sense as an investment tool. After all, the market is completely driven by the supply and demand, so it can be valuable to see what names are trending among the crowd.

>>5 Big Trades to Take Now

While some fund managers are already trying to leverage social media resources like Twitter to find algorithmic trading opportunities, for most investors, crowdsourcing works best as a starting point for investors who want a starting point in their analysis. Today, we'll leverage the power of the crowd to take a look at some of the most active stocks on the market today.

These "most active" names are the most heavily-traded names on the market -- and often, uber-active names have some sort of a technical or fundamental catalyst driving investors' attention on shares. That's especially true now that earnings season is officially underway. And when there's a big catalyst, there's often a trading opportunity.

>>5 Short-Squeeze Stocks Ready to Pop

Without further ado, here's a look at today's stocks.

Facebook

Nearest Resistance: $50

Nearest Support: $49

Catalyst: News Feed Ads, Downgrade

>>5 Stocks Set to Soar on Bullish Earnings

Everyone's favorite social networking stock, Facebook (FB) is slipping on high volume this afternoon following news that the firm will start introducing ads for apps to users' news feeds. Analysts are reacting anxiously over the news, spurring a downgrade from Pivotal Research. Despite the downward pressure on shares in today's session, this stock is hardly in make-or-break mode right now.

Facebook has shown some serious relative strength in the last few months, rallying to new all-time highs after posting impressive fundamental improvements earlier this summer. Now, shares are consolidating in a tight range between $49 and $50. I wouldn't recommend buying FB here until it can crack resistance at $50.

BlackBerry

Nearest Resistance: $8

Nearest Support: $7.50

Catalyst: Cerberus Interest, Restructuring Costs

>>5 Stocks Insiders Love Right Now

2013 has been a rough year for BlackBerry (BBRY). Shares of the $4 billion handset maker have fallen more than 35% year-to-date, stomped down by horrendous market share losses that have left investors running scared. While recent interest from private equity firms has ensured that trading activity remains strong in BBRY right now, it hasn't spared shares from scraping along new lows. The latest rumors involve Cerberus Capital Management as a potential suitor for BlackBerry, but the news is doing little to stop selling after news that restricting costs had ballooned to $400 million.

From a technical standpoint, this chart is broken. Resistance at $8 is relatively weak, but support is even weaker -- lower ground looks likely in the interim. With so much headline risk surrounding a private equity buyout, there isn't a high-probability trade here.

Microsoft

Nearest Resistance: $34

Nearest Support: $32.50

Catalyst: Management Shakeup

>>5 Stocks in Breakout Territory With Big Volume

Microsoft (MSFT) is one of those perennial high-volume names that gets investor attention no matter what's going on in the broad market. But it's getting more attention than usual in today's market session thanks to uncertainty over management. With CEO Steve Ballmer's announced retirement creeping closer, the firm is looking for a replacement, and names such as Ford (F) CEO Alan Mulally are popping up. At the same time, an investor bid to remove Chairman Bill Gates from his role at Microsoft has been catching some attention of its own.

Failed execution has been a problem at Microsoft for a while now, and a major shift in management could change that (or make it much, much worse). But in the near-term, shares at least look constructive. Resistance is nearby at $34, and MSFT has been making higher lows. If you're looking for timing on this trade, you could do worse than buying a breakout through $34.

To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.  

-- Written by Jonas Elmerraji in Baltimore.

Sunday, January 26, 2014

Top 5 Recreation Companies To Invest In 2015

With shares of Nike (NYSE:NKE) trading around $66, is NKE an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let�� analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Nike is engaged in the design, development, and worldwide marketing and selling of footwear, apparel, equipment, accessories and services. The company sells its products to retail accounts, through retail stores and Internet sales, and through a mix of independent distributors and licensees around the world. Nike focuses its product offerings in seven key categories: Running, Basketball, Soccer, Men�� Training, Women�� Training, Nike Sportswear, and Action Sports. It also markets products designed for kids, as well as for other athletic and recreational uses.

Recently, Nike delivered earnings and revenue figures that beat Wall Street�� expectations.�Looking around, many consumers and companies are advocating and opting for a lifestyle that involves more outdoor and physical activity.�As this movement continues, Nike is a company that is poised to see increased demand.

Top 5 Recreation Companies To Invest In 2015: Smith & Wesson Holding Corp (SWHC.O)

Smith & Wesson Holding Corporation (Smith & Wesson), incorporated on June 17, 1991, is a manufacturer of firearms. The Company manufactures a range of handguns, modern sporting rifles, hunting rifles, black powder firearms, handcuffs, and firearm-related products and accessories for sale to a range of customers, including gun enthusiasts, collectors, hunters, sportsmen, competitive shooters, individuals desiring home and personal protection, law enforcement and security agencies and officers, and military agencies in the United States and globally. It sell its products under the Smith & Wesson brand, the M&P brand, the Thompson/Center brand, and the Walther brand. The Company manufactures its firearm products at its facilities in Springfield, Massachusetts and Houlton, Maine. On July 26, 2012, it sold all of the assets of Smith & Wesson Security Solutions, Inc.

Firearms

During the fiscal year ended April 30, 2012 (fiscal 2012), the Company intr oduced multiple new handgun and modern sporting rifle models, and one new bolt action rifle platform. The Company's rifle introductions included the addition of the M&P15 300 Whisper to the Company's line of modern sporting rifles. As of April 30, 2012, the Company participated in three categories of the long-gun market and both core categories of the handgun market.

Handguns

The Company manufactures an variety of handgun models that include revolvers and pistols. A revolver is a handgun with a cylinder that holds the ammunition in a series of rotating chambers that are successively aligned with the barrel of the firearm during each firing cycle. There are two general types of revolvers: single-action and double-action. The Company's small-frame revolvers have been carried by law enforcement personnel and personal defense-minded citizens. The Company's revolvers are available in a variety of models and calibers, with applications in virtually all pr ofessional and personal markets.

The Company� �! s M&P15 Series of modern sporting rifles are designed to satisfy the functionality and reliability needs of global military, law enforcement, and security personnel. These rifles are also popular as sporting target rifles and are sold to consumers through the Company's sporting good distributors, retailers, and dealers. The Company has a range of product portfolio of modern sporting rifles, which includes a lower price-point, sport model, a .22 caliber model, and a fully automatic model designed for the exclusive use of military and law enforcement agencies throughout the world.

Hunting Firearms

The Company manufactures three lines of bolt-action rifles under its Thompson/Center brand consisting of several models in each line. The Company's hunting rifles are offered in 16 different calibers. Bolt-action rifles operate by the cycling of a bolt handle that allows for both the loading and unloading of rounds through a magazine fed system.

< p>During fiscal 2012, the Company introduced the Dimension bolt action rifle platform. Under the Company's Thompson/Center brand, the Company also offers seven models of American-made single shot black powder, or muzzle loader, firearms. The Company offers eight models of interchangeable, single shot firearm systems that deliver numerous gun, barrel, caliber configurations, and finishes. These systems can be configured as a center-fire rifle, rim-fire rifle, shotgun, black powder firearm, or single-shot handgun for use across the entire range of big- and small-game hunting.

Handcuffs

The Company manufactures handcuffs and restraints in the United States. The Company fabricates these products from the carbon or stainless steel.

Smith & Wesson Academy

Through the Smith & Wesson Academy, the Company offers instruction designed to meet the training needs of law enforcement and security customers worldwide. Classes are conduct ed at the Company's facility in Springfield, Massachus! etts o! r! on loca! tion around the world.

Specialty Services

The Company's services include forging, heat treating, finishing, and plating. It provides services to third-party customers.

The Company competes with Ruger,Taurus, Beretta, Glock, Heckler & Koch, Sig Sauer, Springfield Armory, Bushmaster, Rock River, Stag Arms, DPMS, Browning, Marlin, Remington, Ruger, Savage, Weatherby, CVA, Traditions, and Winchester.

Top 5 Recreation Companies To Invest In 2015: Accell Group NV (ACCG.AS)

Accell Group NV is a Netherlands-based holding company. The Company and its subsidiaries divides its business into two segments: Bicycle & Bicycle Parts, active in the design, development, production, marketing and sales of bicycles, bicycle parts and accessories; and Fitness, providing fitness equipment. It sells bicycles under the Batavus, Bremshey, Ghost, Haibike, Hercules, Koga, Lapierre, Loekie, Redline, Sparta, Staiger, Tunturi, Winora, XLC and Raleigh brands via specialist bicycle retailers as well as bicycle parts under the Juncker Bike Parts and Wiener Bike Parts brands and fitness equipment under the Bremshey Sport brand. The Company�� main markets are the Netherlands, Germany, France, and European countries. The Company has production facilities in the Netherlands, Germany, France, Hungary and Belgium. As of December 31, 2011, it operated through 21 wholly owned subsidiaries. On May 22, 2012, the Company acquired Raleigh Cycle Limited.

Hot Biotech Stocks To Own Right Now: Smith & Wesson Holding Corp (SWHC)

Firearms

During the fiscal year ended April 30, 2012 (fiscal 2012), the Company introduced multiple new handgun and modern sporting rifle models, and one new bolt action rifle platform. The Company's rifle introductions included the addition of the M&P15 300 Whisper to the Company's line of modern sporting rifles. As of April 30, 2012, the Company participated in three categories of the long-gun market and both core categories of the handgun market.

Handguns

The Company�� M! &P15 Series of modern sporting rifles are designed to satisfy the functionality and reliability needs of global military, law enforcement, and security personnel. These rifles are also popular as sporting target rifles and are sold to consumers through the Company's sporting good distributors, retailers, and dealers. The Company has a range of product portfolio of modern sporting rifles, which includes a lower price-point, sport model, a .22 caliber model, and a fully automatic model designed for the exclusive use of military and law enforcement agencies throughout the world.

Hunting Firearms

During fiscal 2012, the Company introduced the Dimension bolt action rifle platform. Under the Company's Thompson/Center brand, the Company also offers seven models of American-made single shot black powder, or muzzle loader, firearms. The Company offers eight models of interchangeable, single shot firearm systems that deliver numerous gun, barrel, caliber configurations, and finishes. These systems can be configured as a center-fire rifle, rim-fire rifle, shotgun, black powder firearm, or single-shot handgun for use across the entire range of big- and small-game hunting.

Handcuffs

The Company manufactures handcuffs and restraints in the United States. The Company fabricates these products from the carbon or stainless steel.

Smith & Wesson Academy

Through the Smith & Wesson Academy, the Company offers instruction designed to meet the training needs of law enforcement and security customers worldwide. Classes are conducted at the Company's facility in Springfield, Massachusetts or o! n locatio! n around the world.

Specialty Services

The Company's services include forging, heat treating, finishing, and plating. It provides services to third-party customers.

Advisors' Opinion:

[By Hibah Yousuf]
What's moving: Smith & Wesson (SWHC) shares tumbled after the gun maker reported a disappointing outlook for the current quarter.

Facebook (FB) shares rose 3%. The social network's stock hit a new 52-week high of $44.61 and is inching closer to its all-time high of $45. The rise made Facebook the most talked about stock among StockTwits traders. But investors were divided on whether Facebook's gains are warranted.

Top 5 Recreation Companies To Invest In 2015: In Ovations Holdings Inc (INOH)

In Ovations Holdings Inc, formerly Marine Exploration, Inc., incorporated on June 27, 1996, is engaged in marine treasure hunting expeditions. Its operations are limited to providing funding to, and making approved capital expenditures for its joint venture partner, Hispaniola Ventures, LLC (Hispaniola). Hispaniola is engaged in the actual search for, diving to, and recovery of, the cargo and artifacts. In May 2012, the Company acquired Atmospheric Water Solutions, Inc. (AWS). The acquisition includes water making technology, inventory, and a distribution center. In January 2014, the Company announced the incorporation of of its Energy Services Company (ESCO), Electro Verde, Inc.

The Company is focused on the recovery of two vessels, named as Operation Mystery Galleon and Operation Abrojos which includes, without limitation, an operation to the Serranilla and Bajo Nuevo Banks in the Caribbean Sea. It is undergoing preliminary operations off the coast of the Dominican Republic. On December 11, 2008, Marine Exploration Inc's 128 ft operations vessel, the M/V Hispaniola, was launched for its primary missions, Operation Mystery Galleon and Operation Abrojos.

The Company competes with Odyssey Marine Exploration, Subsea Resources Ltd., Sovereign Exploration Associates International Inc. and Admiralty Holding Company.

Top 5 Recreation Companies To Invest In 2015: Accell Group NV (ACCEL)

Why Repros Is Still Risky Despite Stock's Ascent

THE WOODLANDS, Texas (TheStreet) -- This morning's Repros Therapeutics (RPRX) conference call was boring. There was no discussion of gay Cuban sex, no admission of fabricated clinical data. The closest we got to fun was Repros CEO Joe Podolski explaining men who took the experimental testosterone-raising drug Androxal were reporting "lower rates of abstinence" and therefore had low sperm counts. (Lots of ejaculations, understand?)

Repros reported results from a second pivotal study of Androxal on Tuesday which read very much like what the company said last March about the first study: Androxal, a pill, normalized testosterone levels in men with lower-than-normal testosterone and did not cause a statistically lower sperm count than placebo.

A lot of Androxal data wasn't reported Tuesday, just like it was omitted last March. Instead, Repros' Podolksi offered assurances about Androxal's efficacy and safety, even while remaining non-committal about presenting complete results from the two clinical trials at a medical meeting.

The company intends to file Androxal for approval with the FDA in the middle of next year. Repros shares rose 21% to 25.62 Tuesday, so like last March, investors are brushing off the real risk FDA rejects Androxal. Androxal is a variant of the female reproductive hormone Clomid which Repros is developing as a treatment for men with low testosterone. Right now, men with "low T" are prescribed various testosterone-laden gels and creams -- Abbvie's (ABBV) Androgel, Auxillium Pharmaceuticals' (AUXL) Testim or Eli Lilly's (LLY) Axiron. The worldwide testosterone market is $2 billion annually and growing but these rub-on treatments are messy, carry the risk of transference and cause sperm counts to fall. (A big negative for men who still want to father kids.) As a pill, Androxal is designed to be much more convenient, can't be transferred to kids or women, and most importantly, doesn't lower sperm count. In the second phase III study disclosed Tuesday, Repros said 81% of Androxal-treated men reached normal testosterone range, which exceeded the 75% threshold requirement under the Special Protocol Agreement reached with the FDA. [Seventy-nine percent of men on Androxal reported normal testosterone in the first phase III study.] What was the rate of testosterone normalization for men treated with placebo in the phase III study? Repros did not disclose.

What were the baseline and end-of-treatment levels of testosterone for patients in both arms of the study? Repros did not disclose.

Was the testosterone normalization endpoint reached with statistical significance? Repros did not disclose. [The terms "statistical significance" or "statistically signifcant" do not appear in today's press release.]

The study's sperm count endpoint is similarly messy.

Twenty of 134 men on Androxal reported sperm counts that fell 50% below their baseline levels compared to 2 of 47 men on placebo. While numerically worse, Repros said the Androxal was statistically non inferior to placebo but only just barely. To meet the study's sperm-count endpoint, Androxal could be no more than 20% worse than placebo. The reported statistical difference was 18.3%. Last March, Repros admitted that one of the clinical trials sites fabricated baseline sperm counts for patients. As a result, the company analyzed the study omitting patients from that troubled site. Here, the statistical worsening in sperm count reduction was 19.6%, meaning the study came within a whisper of failing on this endpoint. Repros also slipped in a change to the reporting from the first phase III study. Tuesday, the company said 16 of 113 Androxal-treated men reported sperm counts lower than 50% from baseline. Last March, it was 15 of 113 patients. Under the SPA agreement, Androxal must meet both primary endpoints in both phase III clinical trials in order for the study to be considered successful. On Tuesday, Repros said it "believes" the sperm-count endpoint was met. Why not just make a definitive statement? Repros CEO Podolski blamed his lawyers for wanting to be conservative. Repros must complete an Androxal safety study plus finish some preclinical work before submitting for FDA approval in the middle of next year. The company is also still working through a messy challenge to the patents for Androxal by a New York urologist who claims Podolski stole the idea for the drug from him. -- Reported by Adam Feuerstein in Boston. Follow @AdamFeuerstein

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

Saturday, January 25, 2014

Share Buybacks: Invest the Right Way

In its long history, International Business Machines Corp. (NYSE: IBM) has been a pioneer in several technology areas. But the company surprisingly also has led the way when it comes to financial engineering. IBM has been actively and consistently buying its own stock for 20 years, foreshadowing a trend that became popular in the 21st century.

In 1993, IBM had 2.3 billion shares outstanding. Today, there are 1.1 billion, a reduction of more than 50 percent.

When companies repurchase their stock, it reduces the number of shares outstanding, thereby boosting earnings per share (EPS), even though actual profits don’t change. It also makes each remaining share more valuable and lowers the stock’s price/earnings (P/E) ratio.

Investors like companies that repurchase their own stock. The S&P 500 Buyback Index, an index that measures the performance of 100 stocks with the highest buyback ratios in the S&P 500, was up almost 42 percent in 2013, versus 32 percent for the Standard & Poor’s 500.

But that good news can mask negative underlying trends. IBM is an excellent example. Its annual revenues are lower than they were five years ago, and they’ve grown just 13 percent over 10 years. Plus, yearly capital spending and research & development have been roughly flat for nearly a decade, at between $10 billion and $11 billion.

On the plus side for IBM, its actual income, profit margins and dividend payouts all have increased significantly over 10 years. And EPS has jumped 335 percent. IBM evidently is focused more on profitability (and perhaps its stock price) than on growth.

IBM’s announcement this week that it will sell its low-end server business to Lenovo for $2.3 billion marks the latest step in the long-term strategy of moving away from low-margin hardware to increasingly focus on higher-margin services and software.

Over the last 10 year! s, IBM shares have returned an average of 7.5 percent per year, compared with 7 percent for the Standard & Poor’s 500. However, IBM has lagged the benchmark over one, three and five years.

Still, IBM has been a respectable long-term investment, although it has been notably weak over the last year or so, primarily because of concerns about its future growth prospects.

Unlike slow-growth IBM, some companies deliver it all: share buybacks and organic growth. Consider AutoZone Inc. (NYSE: AZO).

This leading automotive-parts retailer not only churns out consistent double-digit EPS. Revenues have climbed 64 percent over 10 years while net income has almost doubled, cash flow has soared and profit margins have expanded. Aided by a 58 percent shrinkage in shares over the 10 years, AutoZone’s EPS has jumped 438 percent.

Over 10 years, AutoZone stock has returned an average of 19.2 percent annually. It also has outperformed the S&P 500 by wide margins over one, three and five years.

Your Buyback Checklist

In 2013, total share repurchases of US companies exceeded $750 billion, an annual result exceeded only in 2007. Corporate America has been criticized for hoarding cash and using too much of it to buy back its shares (as well as boosting dividends) instead of investing for growth.

While buybacks may be a good way to please shareholders in the near term, the argument goes, they undermine the companies’ prospects and the economy in the long run.

The counterargument is that corporate managements are justifiably concerned about the relatively slow economy, and consequently it’s better to repurchase shares than make business investments that may not work out.

However, it must be noted that company decisions concerning investment vs. buybacks may be affected by self-interest: Management compensation often is linked to EPS and/or stock-price performance, both of which are enhanced by share buybacks. Of the 30 companies in the ! Dow Jones! Industrial Average, for example, 26 include EPS as a metric used to determine executive pay.

The Federal Reserve’s easy monetary program has encouraged many companies to borrow money at low rates to repurchase shares. This makes sense for companies with rising revenues and organic profit growth.

However, it’s more questionable for companies with less attractive fundamentals. Indeed, one reason for stock buybacks is that they help struggling companies to meet EPS targets. Shareholders can be left with a high-debt, low/no-growth company because management reached EPS targets by borrowing to shrink shares outstanding rather than developing new growth opportunities.

The environment for buybacks should remain healthy in 2014, given moderate economic growth, attractive borrowing rates and the benefits of higher EPS. Still, it must be recognized that the equity market is less attractively valued than it was a year ago. And rising interest rates would make it more costly to borrow money for stock repurchases.

If the economic recovery accelerates (still a big if), capital spending and other investments increasingly would replace some share-buyback activity.

If you’re looking for individual stocks that are benefiting from buybacks, put these three items on your checklist:

First and most importantly, scrutinize the company’s actual share count over time. You need to ensure that it’s actually declining. Second, be sure the company is generating real growth of revenues and profits, aside from share buybacks. Third, avoid shares of companies that are taking on excessive debt to fund buybacks.

Friday, January 24, 2014

Week's Winners and Losers: Netflix Shines; Icahn's Off Base

LEAR ICAHN AP/Shiho FukadaActivist investor Carl Icahn loves to give advice to public companies. But this week, his advice for eBay felt a couple of years behind the curve. Companies can make brilliant moves, but there are also times when things don't work out quite as planned. From a classy handbag maker carrying its latest financials to market, to a blowout report by the leading streaming video service, here's a rundown of the week's best and worst in the business world. Netflix (NFLX) -- Winner Netflix was last year's top performer among S&P 500 stocks, and it's off to another strong start in 2014. Shares of the leading video service hit another all-time high this week after it posted blowout quarterly results. Netflix closed out the year on a strong note with more than 44 million streaming subscribers worldwide and expanding profit margins. It expects to top 48 million streaming members by the end of March. Strong financial results naturally make you a winner, but Netflix also got the market excited by announcing that it will soon offer a variety of pricing plans. More importantly, it's suggesting that it may eventually increase the price of its basic $7.99 a month plan. Coach (COH) -- Loser Luxury handbags are still selling, but Coach totes aren't faring as well. The iconic maker of high-end purses and accessories posted disappointing quarterly results on Tuesday. Sales declined by 6 percent during the seasonally potent holiday quarter, and net income took an even bigger hit. Foreign currency translations weighed on the results, but sales still would have been lower if there weren't any currency fluctuations. Coach investors shouldn't be surprised. Sales, net income, and store-level comparable sales also slipped three months earlier. It's not the niche. Michael Kors (KORS) has been able to post healthy double-digit growth through the gradual fade in prominence at Coach. Beats Music -- Winner Music streaming has become popular, and that's big for the music industry. CD sales peaked more than a decade ago, and last year was the first year that we saw MP3 sales decline. Royalties from streaming music is a big driver for the industry these days, and on Tuesday we saw the debut of Beats Music. Beats Music is notable because of its celebrity execs. Dr. Dre, Nine Inch Nails' Trent Reznor, and iconic music producer Jimmy Iovine are some of the big names behind this platform, which aims to raise the bar by providing curated playlists based on highly customized preferences. It's not a free service, though naturally it's kicking things off with free trials. Beats Music is also teaming up with AT&T (T) to offer a discounted family plan for AT&T Wireless customers. That's one way to stand out in a crowd. Carl Icahn -- Loser Billionaire activist investor Carl Icahn took aim at eBay (EBAY) earlier this week, arguing that the online marketplace giant would be better off it if spun off PayPal. It's true that PayPal is the star at eBay. It has been for years. However, this suggestion would've made more sense a couple of years ago when eBay.com was struggling. Shortly after Icahn's suggestion, eBay reported healthy double-digit growth at both PayPal and its marketplace division. Yes, PayPal's 19 percent pop in revenue is better than the marketplace's 12 percent advance. However, Icahn is going to have a hard time convincing the market that eBay should divest itself of PayPal at a time when its two primary businesses are holding up just fine. On the bright side, Icahn also disclosed that he increased his stake in Apple (AAPL) by $500 million. That's not a bad idea at a time when Apple is getting ready to report quarterly results next week. Analysts see this as the first quarter in nearly a year that Apple grows its revenue and earnings per share. Chili's -- Winner Casual dining has had a rough holiday quarter. Between December's wintry blasts and the growing popularity of fast casual chains, traditional table service restaurants have been struggling lately. Brinker International's (EAT) bucked the trend by posting sales growth, positive comps, and expanding profit margins. These are three things that investors didn't see at Red Lobster or Ruby Tuesday (RT) in recent weeks. As a welcome bonus, Brinker's smaller Italian concept -- Maggiano's Little Italy -- posted another period of positive comps. The family-style restaurant has come through with 16 consecutive quarters of positive comparable restaurant sales growth. At least some of the casual dining chains are still cooking.

Five Bitcoin Predictions for 2014

After Bitcoin exploded onto the financial world last year, it immediately became enveloped in controversy, with just as many predicting its imminent doom as were declaring it a revolutionary form of money.

The Bitcoin news in 2014 will have less drama but will be far more important to the fate of the digital currency.

Last year Bitcoin prices endured not one but two crashes, in April and again in December, in gaining a reputation as an uncommonly volatile investment.

And Bitcoin shed some guilt by association when the U.S. government in October shut down the underground web site Silk Road, which allowed people to use Bitcoin to buy and sell illegal drugs.

While its growing pains are far from over, 2014's Bitcoin news will be mostly about the world coming to terms with the cryptocurrency as it gains wider acceptance.

Bitcoin News 2014: Five Predictions Bitcoin News Prediction No. 1: Merchant Acceptance Reaches Critical Mass

We saw several prominent merchants announce in 2013 that they would accept Bitcoin as payment: online retailer Overstock.com Inc. (Nasdaq: OSTK), game company Zynga Inc. (Nasdaq: ZNGA), dating website OKCupid, and blogging platform WordPress. In 2014, that trickle will become a flood as merchants realize the benefits of Bitcoin, such as more affluent techie customers as well as lower transaction fees compared to credit cards. Once the trend starts to accelerate, no one will want to be left behind.

Bitcoin News Prediction No. 2: Third Parties Make It Brain-Dead Simple to Use

One of the primary issues holding back more rapid adoption of the digital currency is that anyone who uses Bitcoin needs to be technically savvy. But such a problem invites innovation, and we're sure to see a lot of companies in 2014 coming up with ways to make Bitcoin easy and intuitive. We've already seen such companies as Coinbase and Robocoin (which has built a Bitcoin ATM) take the first steps in this direction.

Bitcoin News Prediction No. 3: Governments Make Their Peace With It

The governments of the world spent much of 2013 struggling to figure out what to do about Bitcoin, particularly in regard to regulation. Should it be treated as a currency? A commodity? And how should it be taxed? Or should it be banned altogether? Expect most developed nations to work out answers to these questions in 2014. And as the regulatory atmosphere surrounding Bitcoin gets more settled, it will reassure more people and businesses that it's safe to start using it.

Bitcoin News Prediction No. 4: Wall Street Will Jump In With Both Feet

Any investment that shows the kind of promise that Bitcoin did in 2013 - its value increased 60-fold over the past year - is going to get Wall Street's attention. Second Market already is running its Bitcoin Investment Trust, a private fund with a minimum $25,000 investment. And investing in Bitcoin will get easier for retail investors as well. First on tap is an ETF created by the Winklevoss twins, the Winklevoss Bitcoin Trust, which is awaiting SEC approval. And expect the Big Banks to start getting more actively involved in Bitcoin; Wells Fargo & Co. (NYSE: WFC) convened a meeting just last week of government officials and finance executives to determine the "rules of engagement" for the digital currency.

Bitcoin News Prediction No. 5: Less Volatile Bitcoin Prices

The days of gaining 1,000% in a matter of months only to plummet 80% (as happened in April) are pretty much over. Not that there won't be volatility in Bitcoin prices, but you'll see it trading in narrower ranges as the year progresses and the digital currency becomes more and more mainstream. Less volatility will help ease concerns over the use of Bitcoin as a currency, since it will reduce the risk of holding it for any length of time.

Time and time again, so-called experts have declared the death of Bitcoin. And yet not only has Bitcoin survived, its value has continued to rise and adoption continues to spread. Here's why governments, "experts" and skeptics everywhere have been so wrong about Bitcoin...

Wednesday, January 22, 2014

Is JPMorgan Chase Well-Positioned for the Future?

With shares of JPMorgan Chase & Co. (NYSE:JPM) trading around $57, is JPM 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

JPMorgan Chase is a financial holding company that provides various financial services worldwide. The company is engaged in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, asset management, and private equity. Financial services companies like JPMorgan Chase are essential for well-functioning economies around the world.

The global pool of prized rainmakers shrank further on Tuesday after one of JPMorgan Chase's longest-serving deal bankers said he would retire. Klaus Diederichs, a 34-year veteran of JPMorgan and a brand-name adviser during several merger booms, is stepping down as Chair of European investment banking in April. The German-born banker joined JPMorgan straight out of university in 1980 and has held several senior leadership roles in his time with the bank, most recently the head of investment banking for Europe, Middle East and Africa.

A traditional relationship banker, Mr Diederichs helped establish JPMorgan's European deals and advisory business in the early 1990s, hiring bankers just as rivals were cutting back and competing with leading London corporate finance houses SG Warburg and Morgan Grenfell. To compete with what were then better-known European advisers, he staffed the JPMorgan team with pan-European specialists. The bank is highly regarded by its rivals for the way it has translated existing corporate relationships into financial advisory mandates. He also persuaded some of the continent's more-conservative companies to hire JPMorgan for external merger advice.

T = Technicals on the Stock Chart Are Strong

JPMorgan Chase stock has done relatively well in the past couple of years. However, the stock is currently trading sideways and may need time to consolidate. 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, JPMorgan Chase is trading above its rising key averages which signal neutral to bullish price action in the near-term.

JPM

(Source: Thinkorswim)

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

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
JPMorgan Chase options	18.05%	3%	0%

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

	Put IV Skew	Call IV Skew
February Options	Flat	Average
March Options	Flat	Average

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

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

E = Earnings Are Mixed Quarter-Over-Quarter

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

	2013 Q4	2013 Q3	2013 Q2	2013 Q1
Earnings Growth (Y-O-Y)	-6.47%	-112.14%	32.23%	33.61%
Revenue Growth (Y-O-Y)	-7.02%	-7.67%	13.67%	-3.57%
Earnings Reaction	0.06%	-0.01%	-0.30%	-0.60%

JPMorgan Chase has seen mixed earnings and decreasing revenue figures over the last four quarters. From these numbers, the markets have had mixed feelings about JPMorgan Chase’s recent earnings announcements.

P = Weak Relative Performance Versus Peers and Sector

How has JPMorgan Chase stock done relative to its peers, Bank of America (NYSE:BAC), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), and sector?

	JPMorgan Chase	Bank of America	Citigroup	Wells Fargo	Sector
Year-to-Date Return	-1.17%	9.60%	-0.21%	2.49%	3.67%

JPMorgan Chase has been a poor relative performer, year-to-date.

Conclusion

JPMorgan Chase is a bellwether in the banking space that forms an essential part of the United States financial system. Klaus Diederichs, the company’s Chair of European investment banking, is stepping down in April. The stock has done relatively well in recent months, but is currently trading sideways. Over the last four quarters, earnings have been mixed while revenues have been decreasing which has produced mixed feelings among investors. Relative to its peers and sector, JPMorgan Chase has been a poor year-to-date performer. WAIT AND SEE what JPMorgan Chase does this quarter.

Saturday, January 18, 2014

Best Stocks To Buy For 2014

The financial world seems a more stable place as we enter 2014 than it has for several years. The intrinsic value of equities still appears reasonable, if no longer cheap, while government bonds still appear historically expensive. Not surprisingly, therefore, relative valuation arguments still favor equities. But as we near the end of quantitative easing and the extraordinarily easy monetary policy of recent years, we face new questions:

• Will monetary policy be tightened so slowly that the inflation genie will be let out of the bottle? Or is deflation the greater threat?

• What do we know about how asset prices perform in different inflationary environments?

Best Stocks To Buy For 2014: Westwood Holdings Group Inc(WHG)

Westwood Holdings Group, Inc. manages investment assets and provides services for its clients. It operates through two subsidiaries, Westwood Management Corp. and Westwood Trust. The Westwood Management Corp. provides investment advisory services to corporate retirement plans, public retirement plans, endowments and foundations, mutual funds, individuals, and clients of Westwood Trust. The Westwood Trust provides trust and custodial services to institutions and high net worth individuals, and participates in common trust funds that it sponsors. The company was founded in 1983 and is based in Dallas, Texas.

Advisors' Opinion:

[By Will Ashworth]
Even though APAM stock has been hitting its 10-month high in recent days, its yield is still 2.6% — 50 basis points higher than BLK, WDR and WETF. If you like asset managers that handle big chunks of institutional money while still playing the retail mutual fund game, this is the smart choice.
Westwood Holdings Group (WHG)
I first became aware of the Dallas-based asset manager Westwood Holdings Group (WHG) when I read about its founder, Susan Byrne, in an article that appeared in Fortune magazine several years ago. Her firm has been doing great things outside the bright lights of Manhattan ever since.

Best Stocks To Buy For 2014: Sun Hung Kai & Co Ltd (86)

Sun Hung Kai & Co. Limited is an investment holding company. Through its subsidiaries, it operates in five segments: wealth management and brokerage, capital markets, asset management, consumer finance and principal investments. The Wealth Management and Brokerage segment provides financial planning and wealth management services; broking services and insurance broking; online financial services and online financial information; securities margin financing, and dealing in securities, funds, bullion, commodities, futures and options. The Capital Markets segment provides corporate finance services and structured finance. The Asset Management segment provides asset management, including funds marketing and management. The Consumer Finance segment provides consumer financing. The Principal Investments segment includes strategic investments, properties holding and rental.

Hot Gold Companies To Watch For 2014: MyEcheck Inc (MYEC)

MyECheck, Inc. (MyECheck), incorporated on May 18, 2005, is an electronic transaction data processor. The Company provides an alternative payment solution to paper checks, cards or ACH payments. MyECheck utilizes a method of clearing check data for payments. MyECheck offers implemented solutions that enable real-time payments by authorized electronic check. MyECheck�� electronic check service creates and clears checks using only customer account data without the hassle and delays of paper checks. MyECheck's system enables more payers - any authorized signor on any United States checking account, for any amount. MyECheck's transactions can even be payment guaranteed.

Electronic Check Service

Payer check data is collected by the Merchant either at customer registration, or on their Website, through a mobile device, or over the telephone, and is transmitted in real-time, or in batch to MyECheck for processing. MyECheck uses technology to generate electronic checks in accordance with the Federal Reserve Check 21 specification, and transmits the items to clear through the electronic check clearing system to the Merchant's account at one of its partner banks.

Check Authorization Service

MyECheck offers Check Authorization Service that enables merchants to verify consumer provided data, check the status of their customer�� bank account, provide evidence that the consumer has authorized the check and predict the likelihood of a check being returned unpaid. Transactions are immediately and automatically evaluated and approved or declined based upon the real time results of multiple fraud control tools. Businesses that accept MyECheck payments can use this service to provide an automated real time check authorization to mitigate returned items.

Check Guarantee Service

The check guarantee provider warranties all approved checks and reimburses the Payee (Merchant) for financial losses incurred as a result of returned checks. The C! heck Guarantee Provider buys the returned checks that have been warranted from merchants for the full face value of the returned checks. MyECheck merchants utilize Check Guarantee Service so that they can ship products or provide services immediately without having to wait to determine if the check will be returned unpaid. The Check Guarantee Service also eliminates the need for Merchants to collect on returned checks from their customers.

Advisors' Opinion:

[By Peter Graham]
Small cap stocks Rewards Nexus Inc (OTCMKTS: ERNI), MyEcheck Inc (OTCMKTS: MYEC) and ITonis Inc (OTCMKTS: ITNS) fell 29.6%, 18.92% and 9.09%, respectively, last Friday. Moreover, some of these small cap stocks are already making big moves again this morning - perhaps in part because they have all been the subject of recent paid promotions. So where are these small cap heading this week and for the long term? Here is a quick reality check:

Best Stocks To Buy For 2014: Ivrnet Inc (IVI.V)

Ivrnet Inc., an application service provider, provides eBusiness applications on an outsource basis through the Ivrnet eServices network. The company offers call monitoring and processing applications comprising Call Trak, Call Monitor, Virtual Attendants, and a collection of interactive voice response (IVR) applications; managed services consisting of IT services, email and Web hosting, application services, and spam filtering; and custom application development and hosting services. It also provides reporting and survey automation tools; booking and reservation systems; workflow and business process automation services; connectivity solutions that comprise phone trunks and IVR routing applications; and contact services/call center tools, including automated outbound calling services, digital dialers, customer outbound calling for clients, and voice activated password resets for help desks. In addition, the company offers business communications tools, such as fax to emai l, unified messaging, and email hosting; disaster recovery planning services; and tactical and short term communications systems, which consist of IP based short term solutions for temporary offices, political campaigns, and similar other needs. It develops applications to facilitate automated interaction that are accessible through voice, phone, fax, email, texting, and the Internet in North America. The company serves various industry and business categories, including airline, automotive, business center, call centers, campaigning, communications, community associations, distribution/logistics, energy and resources, financial, geomatic, golf, government, health and safety, industry associations, insurance and claim services, legal, maintenance, management consulting, marketing, medical, property development, real estate, retail, sales, sports and entertainment, staffing and human resources, telecommunications, trade unions, and utilities. Ivrnet Inc. is based in Calgary, Canada.

Best Stocks To Buy For 2014: ZST Digital Networks Inc.(ZSTN)

ZST Digital Networks, Inc. engages in supplying digital and optical network equipment and providing installation services to cable system operators in China, as well as in providing GPS location and tracking services to local logistics and transportation companies in China. It offers a line of IPTV devices that are used to provide bundled cable television, Internet, and telephone services to residential and commercial customers. The company has assisted in the installation and construction of approximately 400 local cable networks in approximately 90 municipal districts, counties, townships, and enterprises. ZST Digital Networks has also launched a commercial line of vehicle tracking devices utilizing its GPS tracking technologies and support services for transport-related enterprises to track, monitor, and optimize their businesses. The company was founded in 1996 and is based in Zhengzhou City, the People?s Republic of China.

Best Stocks To Buy For 2014: American Tower Corp (AMT)

American Tower Corporation is a holding company. The Company conducts its operations through its directly and indirectly owned subsidiaries and joint ventures. It is a wireless and broadcast communications infrastructure company that owns, operates and develops communications sites. Its primary business includes leasing antenna space on multi-tenant communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities and tenants in a number of other industries. This business is its rental and management operations, which accounted for approximately 98% of its total revenues during the year ended December 31, 2011. It also offer tower-related services domestically, including site acquisition, zoning and permitting services and structural analysis services, which primarily support its site leasing business and the addition of new tenants and equipment on its sites. In January 2012, the Company merged with and into American Tower REIT, Inc.

During 2011, the Company acquired additional 125 communications sites from Telefonica Colombia. On February 1, 2011, the Company acquired 140 communications sites from VTR Banda Ancha (Chile) S.A. and its affiliates. On December 30, 2011, the Company purchased 100% interest of a subsidiary of Telefonica Moviles Chile S.A. that owned 558 communications sites. On December 14, 2011, the Company acquired control of an additional 76 existing communications sites from Cell C. On March 1, 2011, the Company acquired 100% interest of a company that owned 627 communications sites in Brazil. During 2011, the Company acquired a total of 179 communications sites and equipment in the United States. In December 2011, it announced the launch of operations in Uganda.

In the United States during 2011, the Company included the acquisition and construction of approximately 430 towers, the acquisition of approximately 2,150 property interests, the installation of approximate! ly 40 in-building and outdoor DAS networks and the installation of approximately 680 shared generators on its sites. During 2011, it expanded its international footprint, as it acquired and constructed approximately 3,230 communications sites in two new countries, Ghana and South Africa. During 2011, it also included the acquisition and construction of approximately 6,770 communications sites in its markets in Brazil, Chile, Colombia, India and Mexico. In addition, during 2011, it also acquired property interests, which it leases to communications service providers and third-party tower operators under approximately 1,810 communications sites.

As of December 31, 2011, there were approximately 21,320 towers domestically and approximately 23,900 towers internationally. The Company�� portfolio also includes approximately 260 DAS networks, which it operates in malls, casinos and other in-building applications, and select outdoor environments. In addition to the communications sites in its portfolio, the Company manages rooftop and tower sites for property owners. It also holds property interests, which is leases to communications service providers and third-party tower operators under approximately 1,810 communications sites. It conducts its international operations through its subsidiary, American Tower International, Inc., which in turn conducts operations through its various international operating subsidiaries and joint ventures. Its international operations consist of its operations in Brazil, Chile, Colombia, Ghana, India, Mexico, Peru and South Africa. It holds and operates certain of its assets through one or more taxable REIT subsidiaries (TRSs).

Rental and Management Operations

During 2011, the Company�� rental and management operations accounted for approximately 98% of its total revenues. Its tenants lease space on its communications site infrastructure, where they install and maintain their individual communications network equipment. The Company�� r! evenue is! primarily generated from tenant leases, and the annual rental payments. Its tenant leases are non-cancellable and have annual rent escalations. Its domestic rental and management segment consists of its nationwide network of communications sites that enables the Company to address the needs of national, regional, local and emerging communications service providers in the United States. Its domestic rental and management segment also includes property interests, which it leases to communications service providers and third-party tower operators. During 2011, its domestic rental and management segment accounted for approximately 72% of its total revenues.

The Company�� international rental and management segment consists of communications sites in Brazil, Chile, Colombia, Ghana, India, Mexico, Peru and South Africa. During 2011, its international rental and management segment accounted for approximately 26% of its total revenues. The Company�� rental and management operations include the operation of wireless and broadcast communications towers and DAS networks, rooftop management and the leasing of property interests. It owns and operates communications towers in the United States, Brazil, Chile, Colombia, Ghana, India, Mexico, Peru and South Africa. During 2011, approximately 98% of revenue in its rental and management segments was attributable to its communications towers.

The Company leases space on its communications towers to tenants providing a diverse range of communications services, including personal communications services, cellular, broadcasting, enhanced specialized mobile radio, worldwide interoperability for microwave access (WiMAX), paging and fixed microwave. Its domestic and international tenants include AT&T Mobility, Sprint Nextel, Verizon Wireless and T-Mobile USA, Iusacell (Mexico), Nextel International, Telefonica, MTN Group Limited and Vodafone. In addition to its communications sites, it also owns and operates DAS networks, provide communications s! ite manag! ement services to third parties and manage and/or lease property interests under carrier or other third-party communications sites.

The Company owns and operates approximately 260 DAS networks in malls, casinos and other in-building applications in the United States, Mexico and Brazil. It obtains rights from property owners to install and operate in-building DAS networks, and it grants rights to wireless service providers to attach their equipment to its installations. It also offers outdoor DAS networks as a complementary shared infrastructure solution for its tenants, and operates such networks in the United States. It provides management services to property owners in the United States. It obtains rights to manage a rooftop by entering into contracts with property owners pursuant to which it receives a percentage of occupancy or license fees paid by the wireless carriers and other tenants. It owns a portfolio of property interests in the United States under approximately 1,810 carrier or other third-party communications sites, which provides recurring cash flow under leasing arrangements.

Network Development Services

Through the Company�� network development services segment, it offers tower-related services domestically, including site acquisition, zoning and permitting services and structural analysis services, which primarily support its site leasing business and the addition of new tenants and equipment on its sites. During 2011, this segment accounted for approximately 2% of its total revenues. It engages in site acquisition services on its own behalf in connection with its tower development projects, as well as on behalf of its tenants. The Company offers structural analysis services to wireless carriers in connection with the installation of their communications equipment on its towers.

The Company competes with Crown Castle International Corp., SBA Communications Corporation, Indus Towers, Viom Networks and GTL.

Advisors' Opinion:

[By Scott Moritz]
American Tower Corp. (AMT) fell 1.1 percent to $73.87 yesterday, the smallest first-day drop ever in a stock after a report from Muddy Waters Research, which built its reputation with bearish calls on Asian companies. New Oriental Education & Technology Group Inc., Focus Media Holding Ltd. and Sino-Forest Corp. lost at least 20 percent after previous Muddy Waters notes.

Best Stocks To Buy For 2014: Thermon Group Holdings Inc.(THR)

Thermon Group Holdings, Inc. offers heat tracing solutions for process industries worldwide. The company?s solutions provide an external heat source to pipes, vessels, and instruments for the purposes of freeze protection, temperature and flow maintenance, environmental monitoring, and surface snow and ice melting. Its products comprise a range of electric heat tracing cables, steam tracing components, and tubing bundles. The company also offers instrument and control products, including self-regulating and power limiting heating cables; mineral insulated cables; heat traced tube bundles for environmental gas sampling systems; heat transfer compounds and steam tracers for steam tracing solutions; control and monitoring systems for electric tracing of pipes, tanks, hoppers, and instrument sampling systems; and hopper heating modules. In addition, it provides various turnkey solutions for heat tracing, such as design, front-end optimization, product supply, engineering deli verables, system integration, installation, commissioning, and maintenance services. The company offers its solutions to the energy, chemical processing, power generation, and industrial and commercial infrastructure, as well as engineering, procurement, and construction companies. It serves customers through a network of sales and service professionals, and distributors in approximately 30 countries. The company is headquartered in San Marcos, Texas.

Advisors' Opinion:

[By CRWE]
Thermon Group Holdings, Inc. (NYSE:THR), will issue a press release reporting its fourth quarter and full fiscal 2012 consolidated financial results before the market opens on Friday, June 1 2012.

Best Stocks To Buy For 2014: Ku6 Media Co. Ltd.(KUTV)

Ku6 Media Co., Ltd. operates as an online video company in the People?s Republic of China. It operates ku6.com, an online video portal that provides news, reports, and other interactive entertainment programs for its users, as well as offers a video platform for sharing and watching user-generated content. The company also operates juchang.com that provides copyrighted content, such as movies, television series, and other video programs sourced from its content partners. In addition, it offers Internet audio solutions, including online radio channels, built-in radio for online games, and other services to customers through its online audio advertising business. The company is based in Beijing, China.

Advisors' Opinion:

[By Bryan Murphy]
There's little doubt that merely suggesting it will enflame some traders, but truth is truth - Ku6 Media Co Ltd (NASDAQ:KUTV) is overbought and ripe for a pullback, soon. Anyone worried about not having a place to park those proceeds, however, need not fret. There's a brand new breakout finally underway that still has plenty of proverbial meat on the bone... Star Scientific, Inc. (NASDAQ:STSI), which just blasted past a key resistance line around $2.11 today. In so doing, it became free to rally without restraint.

UBS Improves Profits 32%; U.S. Advisors Top $1M in Average Fees

UBS (UBS) said Tuesday that its second-quarter profit improved 32% to 690 million Swiss francs ($742 million), or 0.18 Swiss francs per share, from 524 million Swiss francs ($563 million), or 0.14 Swiss francs per share, a year ago. (In the first quarter, profits were 988 million Swiss francs–about $1.06 billion–or 0.26 Swiss francs a share.)

Sales across the company grew 15% year over year to 7.4 billion Swiss francs ($8 billion), though they dropped 5% from the earlier quarter.

"I am very pleased with our performance this quarter. The results show that our strategy is right, and we're ahead on execution,” said Group CEO Sergio P. Ermotti, in a statement. “Every quarter since we set the strategy in 2011, we have executed it in a very clear and disciplined way building an unmatched capital position and delivering for our clients.”

The non-U.S. Wealth Management operations delivered their “highest profit in four years excluding charges related to the Swiss-UK tax agreement and restructuring costs” while drawing “robust inflows,” the company said.

Wealth Management Americas

The group’s financial-advisor headcount grew by 34 from last quarter and by 78 from last year to 7,099.

Invested assets per financial advisors stand at $126 million, close to last quarter’s results and up 11% from $114 million in the year-ago period.

Average annualized fees & commissions per financial advisor are $1,012,000–an improvement of 3% from $984,000 in the first quarter and up 12% from the second quarter of 2012.

(Rival Merrill Lynch (BAC) said that its advisors also have yearly production levels of over $1 million, though Morgan Stanley’s reps (MS) have annual fees & commissions of $866,000 as of June 30.)

In Wealth Management Americas, net new money totaled 2.7 billion Swiss francs ($2.8 billion), a drop from 8.6 billion Swiss francs ($9.2 billion) in the first quarter and from 3.7 billion Swiss francs ($4 billion) in the prior quarter. (The unit has had 12 consecutive quarters of net inflows, and its results exclude interest and dividend income.)

“The second quarter result mainly reflects outflows related to financial advisors employed with UBS for more than one year and included client withdrawals of around 2.2 billion Swiss Francs or $2.5 billion associated with annual income tax payments as well as seasonal declines compared with the first quarter,” the company explained in a report.

As a result, the annualized net new money growth rate for the second quarter was 1.3% vs. 4.4% in the prior quarter and below the target range of 2% to 4%, according to UBS.

Overall, the unit had a pretax profit of $258 million, up 3% from $251 million in the prior quarter and a jump of 21% from $214 million a year ago.

Assets stood at $892 billion as of June 30, a slight increase from $891 billion on March 31 and an increase of 12% from $797 billion last year.

Revenues for the unit expanded 13% year over year and 3% from last quarter to nearly $1.8 billion.

In other news, UBS says it plans to acquire SNB StabFund’s equity in the fourth quarter, which should improve its BIS Basel III CET1 capital ratio by an additional 70 to 90 basis points.