Wednesday, December 31, 2014

4 Stocks Under $10 to Trade for Breakouts

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>3 Huge Stocks on Traders' Radars

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

>>5 Stocks With Big Insider Buying

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside.

Vringo

Vringo (VRNG), together with its subsidiaries, develops, acquires, licenses, protects and monetizes intellectual property worldwide. This stock closed up 1.9% to $3.62 in Wednesday's trading session.

Wednesday's Range: $3.45-$3.64

52-Week Range: $2.61-$5.45

Wednesday's Volume: 1.56 million

Three-Month Average Volume: 2.09 million

From a technical perspective, VRNG jumped modestly higher here right above its 200-day moving average of $3.36 and its 50-day moving average of $3.51 with decent upside volume. This spike higher on Wednesday is starting to push shares of VRNG within range of triggering a major breakout trade. That trade will hit if VRNG manages to take out Wednesday's intraday high of $3.65 and then once it clears some near-term overhead resistance at $3.69 with high volume.

Traders should now look for long-biased trades in VRNG as long as it's trending above its 200-day at $3.36 or above $3.20 and then once it sustains a move or close above $3.65 to $3.69 with volume that hits near or above 2.09 million shares. If that breakout materializes soon, then VRNG will set up to re-test or possibly take out its next major overhead resistance levels at $4.27 to $4.49. Any high-volume move above those levels will then give VRNG a chance to tag its 52-week high at $5.45.

Prana Biotechnology

Prana Biotechnology (PRAN) researches and develops therapeutic drugs for the treatment of neurological disorders in Australia. This stock closed up 4.2% to $2.10 Wednesday's trading session.

Wednesday's Range: $1.98-$2.15

52-Week Range: $1.47-$13.29

Wednesday's Volume: 1.86 million

Three-Month Average Volume: 1.97 million

From a technical perspective, PRAN spiked sharply higher here right above its 50-day moving average of $1.82 with decent upside volume. This spike higher on Wednesday pushed shares of PRAN into breakout territory, since the stock took out some near-term overhead resistance at $2.08. Shares of PRAN are now starting to move within range of triggering a much bigger breakout trade. That trade will hit if PRAN manages to clear Wednesday's intraday high of $2.15 to some more key overhead resistance at $2.24 with high volume.

Traders should now look for long-biased trades in PRAN as long as it's trending above its 50-day moving average of $1.82 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.97 million shares. If that breakout triggers soon, then PRAN will set up to re-test or possibly take out its next major overhead resistance levels at $2.47 to $2.70, or its gap-down-day high from March at $3.24.

PowerSecure International

PowerSecure International (POWR) provides products and services to electric utilities and to their commercial, institutional and industrial customers in the U.S. This stock closed up 2.6% to $8.49 in Wednesday's trading session.

Wednesday's Range: $8.22-$8.60

52-Week Range: $6.41-$27.44

Wednesday's Volume: 713,000

Three-Month Average Volume: 827,252

From a technical perspective, POWR spiked higher here right above some near-term support at $8 with decent upside volume. This stock recently formed a double bottom chart pattern at $7.40 to $7.59. Following that bottom, shares of POWR have started to spike higher and it's now moving within range of triggering a major breakout trade. That trade will hit if POWR manages to take out Wednesday's high intraday high of $8.60 to some more key overhead resistance at $9.16 with high volume.

Traders should now look for long-biased trades in POWR as long as it's trending above some near-term support at $8 or above those double bottom support levels and then once it sustains a move or close above those breakout levels with volume that hits near or above 827,252 shares. If that breakout begins soon, then POWR will set up to re-fill some of its previous gap-down-day zone from May that started above $20.

Turtle Beach

Turtle Beach (HEAR), an audio technology company, is engaged in developing, commercializing and marketing audio technologies under the Turtle Beach and HyperSound brands in the U.S., Europe, and internationally. This stock closed up 0.4% to $9.49 in Wednesday's trading session.

Wednesday's Range: $9.40-$9.64

52-Week Range: $7.58-$17.90

Wednesday's Volume: 57,000

Three-Month Average Volume: 191,992

From a technical perspective, HEAR trended modestly higher here right above some near-term support at $9 with lighter-than-average volume. This stock recently formed a double bottom chart pattern at $9 to $9.04. Following that bottom, shares of HEAR have now started to trend slightly higher and move within range of triggering a near-term breakout trade. That trade will hit if HEAR manages to take out some near-term overhead resistance levels at $9.89 to its 50-day moving average of $10.08 with high volume.

Traders should now look for long-biased trades in HEAR as long as it's trending above those double bottom support zones and then once it sustains a move or close above those breakout levels with volume that hits near or above 191,992 shares. If that breakout starts soon, then HEAR will set up to re-test or possibly take out its next major overhead resistance levels at $10.50 to $11.40. Any high-volume move above $11.40 will then give HEAR a chance to re-fill some of its previous gap-down-day zone from April that started near $13.50.

To see more stocks that are making notable moves higher, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.


RELATED LINKS:



>>5 Stocks Set to Soar on Bullish Earnings



>>5 Retail Stocks to Trade for Gains in June



>>3 Big-Volume Stocks to Trade for Breakouts

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com.

You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.


Tuesday, December 30, 2014

Less Energetic EPS in 2015, Citi

Corporate earnings estimates for 2015 are slipping, yet the S&P 500 recently hits new record highs. Sounds pretty counterintuitive.

Yesterday, the S&P 500 hit an intraday record high and last week the Dow rose above 18,000. Yet bottom-up consensus forecasts for per-share earnings growth by the S&P 500 next year have slipped to 6% from 8%.

The culprit? The energy sector. Per-share profits generated by the sector are expected to drop 20% in 2015 thanks to falling oil prices. Previously, sell-side estimates had the sector dropping roughly 3%.

But Citigroup strategist Tobias Levkovich sees the S&P 500 beating the sell-side estimates by delivering 7% profit growth in 2015 as other sectors step up to offset the impact of falling energy sector profits and corporate profit margins continue to expand.

As Levkovich writes:

One of the bear's fiercest arguments against the equity market and earnings is tied to corporate profit margins from the national income accounts data which is not that representative of the S&P 500 where operating margins are below 2007's highs. As a reminder, eight of the 10 S&P 500 sectors are reporting EBIT margins below their historical highs, undermining the record profitability contention.

Granted, the industrial and material sectors may be in for some estimate cuts in the first quarter of 2015, says Levkovich, citing falling commodity prices and curbed industrial demand in countries dependent on developing natural resources. Yet the consumer discretionary and staples sectors have not enjoyed any real pop in growth estimates, "suggesting that analysts have not adjusted numbers to reflect the new realities," Levkovich added.

As for healthcare, technology and financials, Levkovich has this to say:

All three sectors may have to generate double-digit gains in earnings to provide the needed boost and offset the challenge of energy weakness and a stronger dollar. In this context, the Street consensus on Financials could be too low especially if the Fed raises rates and allows for some net interest margin widening.

Monday, December 29, 2014

Why planes don't live stream data

Technology could've tracked missing AirAsia flight   Technology could've tracked missing AirAsia flight NEW YORK (CNNMoney) When AirAsia Flight QZ8501 disappeared on Sunday, its black box and any evidence of what went wrong may have vanished with it.

In a time when we stream Netflix on our laptops, get music instantly on our phones, and use Wi-Fi on airplanes, why isn't air flight data transmitted in real time?

The technology already exists.

One option for it is sold by Canadian company Flyht Aerospace Solutions.

The company's Automated Flight Information System automatically monitors data about a plane's location, altitude and performance. It can live stream information when something goes wrong -- from little problems that can be fixed when the plane lands to disasters that can cause a crash.

Flyht President Matt Bradley said his company's system was not on board the missing AirAsia jet. But if it had been, he added, it would be easier to locate the downed airliner.

On a normal flight, Flyht's system would send updates from the cockpit to the ground every five to 10 minutes. But it can be programmed to recognize when something is wrong, such as a deviation in a flight path, and automatically begin streaming data every second.

The potential benefits of live streaming were widely discussed after Air France Flight 447 crashed into the Atlantic Ocean in 2009. It took two years to recover the flight data recorder.

The conversation started up again after Malaysia Airlines Flight 370 disappeared in March. That plane has still not been located.

Since Flight 370 went missing, Canadian regional carrier First Air became the first to activate Flyht's streaming systems on all its planes.

But the technology is not catching on with major carriers.

Skeptics point to several reasons why. For starters, industry consultant Michael Boyd pointed out, planes rarely completely fall off the grid.

"Up until now, we haven't had a need to track all airplanes," Boyd said. "Why would we do it if we don't have to?"

Another problem: widespread use of live streaming technology would create an overload of information, making it hard to analyze properly.

Photos: AsiaAir flight goes missing

But in the end, it comes down to cost, experts said.

"[Airlines are] very cost sensitive," said former inspector ge! neral of the U.S. Department of Transportation Mary Schiavo, who is a CNN aviation analyst. "They simply will not add additional safety measures unless mandated by the federal government."

Flyht counters by saying that its system, which typically costs less than $100,000 to install, is designed to save carriers money.

The company says a carrier can recover its initial costs in a matter of months by using the technology to help cut fuel costs or troubleshoot mechanical problems.

"When you have better visibility on how you're burning your fuel and what's going wrong with the aircraft, you can be more proactive," Bradley says. "If something goes wrong, you get parts to the right place. You get mechanics to the right place. It's just a more efficient operation."

Given recent events, Boyd said he expects carriers to start adopting solutions soon.

"Within the next three years, I predict new airplanes will have something," said Boyd. "If my GPS in my car knows where I am, and my cell phone knows where I am, I think we can find a way of finding a 747."

Sunday, December 28, 2014

VMware Acquires AirWatch for $1.5B

NEW YORK (The Deal) -- VMware  (VMW) on Wednesday said it would acquire AirWatch for $1.54 billion, moving to boost its secure mobile computing offerings.

Atlanta-based AirWatch is a maker of tools that manage mobile devices, applications and content. The privately held company boasts more than 10,000 customers and 1,600 workers spread across nine offices. The company in February 2013 took in $200 million in equity funding from investors, including Insight Venture Partners and Accel Partners.

Terms of the deal call for Palo Alto, Calif.-based VMware to pay $1.175 billion in cash up front for AirWatch and about $365 million in installment payments and assumed unvested equity. Post-close AirWatch will continue to be run by company cofounder and CEO John Marshall. The company's Atlanta offices will become the base of VMware's mobile operations.

VMware, a maker of cloud infrastructure software, in a statement said the deal would build its expertise in mobile. The company said that the purchase would be funded via cash on hand and via $1 billion in new debt provided by VMware's majority owner, storage vendor EMC  (EMC). "With this acquisition VMware will add a foundational element to our end-user computing portfolio that will enable our customers to turbo-charge their mobile workforce without compromising security," CEO Pat Gelsinger said. VMware separately said it expects to report fourth-quarter sales of $1.48 billion, at the high end of guidance issued in October and an increase of 15% from the same three months of 2012. The company in October acquired Desktone for $120 million, and in the last year has shed four units for undisclosed terms. Alan Dabbiere, AirWatch's cofounder and chairman, in a statement said that as a part of VMware, "we now have an opportunity to bring our leading-edge solutions to an even broader set of customers and partners to help them optimize for the mobile-cloud world."

Stock quotes in this article: VMW, EMC 

How Safe Is Universal Corp's Dividend?

Universal Corp (NYSE: UVV  ) has paid out and raised its dividend for 41 consecutive years. This puts the company in an elite club of dividend aristocrats. Aside from Altria (NYSE: MO  ) , which has been paying and increasing its payout for 43 years, Universal actually has the longest dividend history of any company within the tobacco sector.

Universal yields a very respectable 4% at present, but how much longer will this continue ?

What to look for in a sustainable payout
The first place you usually look when assessing the sustainability of a dividend payout is the company's financial statements.

Most of the time, a company's dividend cover or payout ratio is calculated using earnings per share. However, this can be an unreliable method of evaluation as earnings per share can be affected by non-cash and extraordinary items; this can provide a misleading overview of the company's financial situation.

Personally, I prefer to use the company's cash flows since in business, cash is king. If a company is paying out more cash through dividends than it makes from operations, then the company in question could be heading for trouble regardless of earnings per share.

For example, let's take a look at Philip Morris International (NYSE: PM  ) . Now for the last four quarters, Philip Morris has paid out $3.49 in dividends per share. For the same period, the company has earned $5.28 per share, which gives us a dividend cover of 1.5 times and a payout ratio of 66%.

However, if we look at Philip Morris' cash flows we get a different picture. For the same period, the company generated $10.1 billion in cash from operations and paid out $5.6 billion in dividends; this equates to a payout ratio of 55% and a dividend cover of 1.8 times. These numbers are slightly better than the figures above, which are based on earnings per share and indicate that Philip Morris' dividend is easily covered by cash flows with plenty of room for growth .

So how does Universal's payout look using the above method? Well, firstly we need to remember that due to the nature of Universal's business (farming), its profits are highly seasonal. Nevertheless, during the past four months, Universal generated $126 million in cash from operations. This cumulative figure includes a cash loss of $24 million reported during the second quarter (when the company lost out due to the timing of tobacco shipments.) From  this $126 million, the company paid out $61.3 million in dividends. That gives us a dividend cover of 2.06 times even with the loss reported for the second quarter; I would say that this indicates a fairly secure payout.

Enough of the numbers
Numbers don't tell the whole story, so what does Universal's outlook look like? Well, it would appear that Universal is gearing up for a period of growth. It recently announced that it was going to spend $50 million developing and expanding its leaf processing capacity within Mozambique. Additionally, the company announced that it was going to increase capacity within other regions to meet demand for tobacco, which is expected to rise during the next few years.

Universal's drive for growth is one-of-a-kind in the tobacco sector. Altria, for example, is having to rely on what can only be futile price increases to stop its revenue from sliding. When I say futile, I mean that customers are likely to be put off by higher prices. With the number of smokers within the U.S. declining, though, Altria has no choice but to raise prices to keep profits rising .

What's more, if we look at Altria's sales numbers then we can see that while sales of the company's premium brands such as Marlboro declined by several percentage points during the first nine months of this year, sales of the company's discount brands actually increased by nearly 5%. This trend is positive for Universal as the company benefits regardless of which brand of tobacco is sold .

Foolish summary
Universal has been paying out a dividend for more than four decades, and it looks as if this trend is set to continue. The company's payout was well covered by cash from operations during the last four quarters (and was actually better covered than that of Philip Morris) and there is plenty of room for further payout growth. What's more, Universal is gearing up for growth investing to boost output and this should lead to stronger cash flows and even more dividend flexibility.

Not interested in Tobacco's juicy yields?
Having said all of that, there is still the question of ethics when debating tobacco investment. To some, the affect that smoking has on people's health can put them off investing in the sector. Still, tobacco stocks offer some of the most impressive dividend yields available on the market but as I say, investing in the sector is not for everyone. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Saturday, December 27, 2014

On Turning Back Your Clock as Daylight Saving Time Ends

NEW YORK (TheStreet) -- Most people like the extra hour of sleep. Others relish having an extra hour of life to do one thing or another.

Turning back the clock to end daylight saving time has intrigued me ever since I was a young boy growing up in the small western New York hamlet of Niagara Falls. (It's actually not a hamlet.)

As a 38-year-old, I'll be as fascinated by it this weekend as I have ever been.

When I was a youngster, unable to stay up until two in the morning, I always thought something mysterious took place at 2:00 a.m. I just couldn't wrap my head around the notion of the one-o-clock hour going off twice. I used to say to my mother exactly what I say to my wife 30 years later: So it's one in the morning, but right when it hits two, it becomes one again. At some point in my pre-teen life, I stayed up until two, eyes focused on the television screen, to see if it would do a funky dance or self-destruct. Now, I'm enamored by the on-screen guide merely repeating the one-o-clock hour, but with a fresh slate of programming or infomercials. A year out of high school, I worked as a DJ at Q102, the Best Hits Without the Hard Rock and Rap, where, to avoid the obvious clash, I went by "Rich Pendola." I did weekend overnights. One year, on the night we had to turn back the clock, my program director, Rob Lucas, let me pick the music for that extra hour. The playlist went out the window, an oddity for what was, even back in 1993 or thereabouts, an over-programmed adult-contemporary radio station. The year after that, I spent the night we turn the clocks back as an underage drinker in the Allentown section of Buffalo at a famous watering hole called "Mulligan's Brick Bar." The place still exists, complete with a huge poster of Springsteen's The River album cover hanging on the wall. When the clock strikes two in Buffalo on this night, things get wild. At the Brick Bar, shots of Mad Dog 20/20 flowed for an extra hour till last call at four, which, because of the time switch was really five. Now, in my relative old age, I don't care much about the extra hour of sleep. I just like that it gets lighter faster and earlier on in the fall. It's actually light out when I wake up in the morning. Maybe it's my West Coast smug (I live in Santa Monica, just west of Los Angeles), but I relish darkness in the early evening hours. On LA's Westside, much like in my previous stomping grounds of San Francisco, there's just this cozy, cool feel that promotes a festive holiday mood. Of course, if you live on the East Coast or another place that experiences traditional winter you might go so far as feeling depressed when it's time to fall back. You prefer springing ahead, a sure sign that warmer weather is on the way. To each his/her own. In any event, just like there's no excuse for being an hour late to work or school on the Monday morning after we spring ahead, you'll look just as bad if you show up an hour too soon. With that in mind, whether you like or not, be sure to turn your clock back Sunday morning at 2:00 a.m. Follow @rocco_thestreet --Written by Rocco Pendola in New York City

Thursday, December 25, 2014

Group Urges Retailers to Reject Card Settlement

WASHINGTON (AP) -- The National Retail Federation urged retailers on Tuesday to reject a settlement with major credit card companies over alleged fee-fixing, ahead of a court deadline next week.

Visa (NYSE: V  ) , MasterCard (NYSE: MA  ) , and other card companies agreed in July to settle a lawsuit brought by retailers that claimed card issuers conspired to fix the fees they charge stores for accepting credit cards.

The National Retail Federation, representing more than 9,000 retailers across the country, has rejected the settlement, in part, because it includes a provision barring retailers from filing future lawsuits over swipe fees. Retailers have also argued that the $7.2 billion settlement was far less than what retailers deserved and might have won at trial.

Visa called the settlement a "fair and reasonable compromise."

Retailers have until May 28 to opt out of the agreement, if they wish to pursue future legal action. Retailers who do not opt out by the deadline will automatically be considered to have accepted the settlement.

"No settlement at all would be better than this one-sided 'agreement' written by the card companies for the card companies that would tie retailers' hands for decades to come," said Mallory Duncan, the National Retail Federation's general counsel.

The suit was brought in 2005 by 19 trade associations and retail companies. The National Retail Federation is not a party to the lawsuit, but says its members would be affected by the terms of the settlement.

Why Marketo Shares Soared Again

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

What: Shares of software automation company Marketo (NASDAQ: MKTO  ) surged 12% today on continued enthusiasm for its long-term growth prospects.

So what: The stock skyrocketed 75% on Friday when Marketo launched its IPO, so today's follow-up rally suggests that investor interest in the space only increasing. In fact, software gorilla Oracle recently acquired Marketo's main rival, Eloqua, which is probably giving traders the justification they need to keep bidding up Marketo.

Now what: With such strong cloud-computing trends working in its favor, Marketo is certainly worth following. "Buyers really want to deal with category leaders," said CEO Phil Fernandez. "I think the real demand is for pure play companies in each segment. That really lets us shine as that company." Of course, given just how much growth is baked into the stock right now, I'd wait for a big hiccup before buying into that bullishness.  

Interested in more info on Marketo? Add it to your watchlist.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

Wednesday, December 24, 2014

Can Amazon and Netflix Bounce Back in 2015?

netflix.com Two of the market's biggest dot-com rock stars have had a rough 2014. Amazon.com (AMZN) -- the world's leading online retailer -- has seen its stock shed a quarter of its value this year. Netflix (NFLX) was the biggest gainer among the S&P 500 companies in 2013, but this year it's been a different story. The leading premium provider of streaming video has seen its shares slump nearly 10 percent so far this year. Netflix's slide may not seem so ominous, but keep in mind that the stock has shed nearly a third of its value since peaking just three months ago. That's a big drop in a short time, rivaling the disappointment Amazon investors have faced this year. Thankfully, history is on their side. Amazon hasn't posted back-to-back years of stock declines since 2001. Netflix has yet to post two consecutive years of negative returns since going public in 2002. This certainly doesn't guarantee that either company's stock will bounce back in 2015, but it does show that Amazon and Netflix have been able to bounce back from adversity. Bang a Gong, Amazon At least one Wall Street pro thinks the leading online retailer will bounce back in the year ahead. Piper Jaffray analyst Gene Munster put out a bullish note on Thursday, calling Amazon his favorite large-cap stock for 2015. He concedes that top-line growth may be decelerating, but argues that the market is being too hard on Amazon's recent margin crunch. The former dot-com darling is investing in everything from building out fulfillment centers offering speedier deliveries to establishing the server farms necessary to support its thriving Web services platform. The market also has ignored Amazon rolling out expensive Kiva robots at its warehouses that are reportedly at least three times as productive as humans without the downside of fatigue or rising labor costs. Munster has an ambitious $400 price target on the stock, suggesting nearly 35 percent of upside from here. Nothing but Netflix There wasn't a popular Wall Street analyst pounding the table for Netflix on Thursday, but a day earlier we did see DISH Network (DISH) announce a deal to integrate Netflix's streaming application into some of its set-top boxes. This is the first deal of this kind signed with a pay-TV provider, paving the way for more deals. At the very least, the integration validates the Netflix model. Unlike Amazon, which has been sliding through most of 2014, Netflix was holding up pretty well until its third-quarter results were announced in October. Netflix closed out the summer quarter with 3 million more subscribers than it had at the end of June. The market was hoping for more -- and perhaps more important, Netflix was forecasting for more -- but we still don't know if this was a fluke or if the historically conservative Netflix is starting to overestimate its appeal. Either way, you won't find too many premium subscription services tacking on a million net new users a month. Globe-Trotters One thing that ties Amazon and Netflix together is that they have become the two leaders of premium streaming video. Netflix is the undisputed top dog in this space, even if it has meant disrupting its own mail-based DVD rental business. Amazon has emerged as a legitimate competitor as it beefs up the digital smorgasbord that it makes available to Amazon Prime subscribers. The industry is paying attention. Earlier this month we saw Amazon ring up a pair of Golden Globe nominations for its original content. Netflix continues to build on the success of its proprietary content, landing seven nods this time around. More from Rick Aristotle Munarriz
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Tuesday, December 23, 2014

Judge Approves Bankruptcy Exit Plan for Detroit

Detroit Bankruptcy Paul Sancya/APDetroit skyline DETROIT -- A judge cleared Detroit to emerge from bankruptcy Friday, approving a turnaround plan that will require discipline after years of corruption, mismanagement and an exodus of residents brought this one-time industrial powerhouse to financial ruin. "What happened in Detroit must never happen again," Judge Steven Rhodes said in bringing the case to a close a remarkably speedy 16 months after Detroit -- the cradle of the auto industry -- became the biggest city in U.S. history to file for bankruptcy. The plan calls for cutting retiree pensions by 4.5 percent, erasing $7 billion of debt and spending $1.7 billion to demolish thousands of blighted buildings, make the city safer and improve long-neglected basic services. In signing off on the plan, Rhodes made a fervent plea to residents who expressed sorrow and disgust about the city's woes. "Move past your anger. Move past it and join in the work that is necessary to fix this city," he said. "Help your city leaders do that. It is your city."

Move past your anger. Move past it and join in the work that is necessary to fix this city.

The Motor City was brought down by a combination of factors, including misrule at City Hall, a long decline in the auto industry, and a flight to the suburbs that caused the population to plummet to 688,000 from 1.2 million in 1980. The exodus has turned entire neighborhoods into desolate, boarded-up landscapes. With more square miles than Manhattan, Boston and San Francisco combined, Detroit didn't have enough tax revenue to cover pensions, retiree health insurance and buckets of debt sold to keep the budget afloat. "Detroit's inability to provide adequate municipal services runs deep and has for years. It is inhumane and intolerable, and it must be fixed," the judge said. Rhodes praised decisions that settled the most contentious issues in the bankruptcy case, including a deal to prevent the sell-off of world-class art at the Detroit Institute of Arts and a consensus that prevented pension cuts from getting even worse for thousands of retirees. He said the pension deal "borders on the miraculous," though he acknowledged the cuts could still cause severe misfortune for some. Politicians and civic leaders, including Michigan Gov. Rick Snyder, hailed Friday's milestone. Museum leaders said it means "there are good days ahead for our city," while Detroit Regional Chamber President and CEO Sandy K. Baruah declared Detroit to be "on the cusp of a new era and primed to reinvent itself in a way many people did not think possible." "Exiting bankruptcy so effectively and thoughtfully has wiped out decades of mismanagement and created a historic opportunity to move the city without mortgaging its future," Baruah said. The case concluded in lightning speed by bankruptcy standards. The success was largely due to a series of deals between Detroit and major creditors, especially retirees who agreed to accept smaller pension checks after the judge said they had no protection under the Michigan Constitution. Also, bond insurers with more than $1 billion in claims dropped their push to sell off art and settled for much less. It took more than two years for a smaller city, Stockton, California, to get out of bankruptcy. San Bernardino, a California city even smaller than Stockton, is still operating under Chapter 9 protection more than two years after filing. Rhodes had to accept Detroit's remedy or reject it in full, not pick pieces. His appointed expert, Martha "Marti" Kopacz of Boston, said it was "skinny" but "feasible," and she linked any future success to the skills of the mayor and City Council and a badly needed overhaul of technology at City Hall. The most unusual feature of the plan is an $816 million pot of money funded by the state, foundations, philanthropists and the Detroit Institute of Arts. The money will forestall even deeper pension cuts and also avert the sale of city-owned art at the museum -- a step the judge warned "would forfeit Detroit's future."

Monday, December 22, 2014

4 M&A Deal Stocks That Could Cut You a Paycheck This Fall

BALTIMORE (Stockpickr) -- 2014 is providing a perfect storm for M&A deals -- and as markets start to become choppy, these big buyouts could get you paid in the final months of the year.

Must Read: Must-See Charts: 5 Big Stocks to Sidestep the Selloff

Record low interest rates and record high corporate cash have been a big driver of merger and acquisition volume, better known as M&A. With many firms struggling to find growth internally, acquisition targets are providing growth opportunities right now, and they're pricing in relatively stable returns for the rest of 2014.

That means that there are some hefty merger premiums left in some of the market's biggest deals today, particularly those with completion dates further out. So, for investors who aren't afraid of some added event risk, merger arbitrage is a viable strategy for regular investors in 2014.

And there's no shortage of individual deals to spread the risk across. So far in 2014, we've seen $3.2 trillion in global M&A deal volume, a 62% increase versus this time last year.

Too often, investors think that there's no money to be made once a deal has been announced, but that's just plain wrong; between merger arbitrage opportunities and value creation for acquiring firms, it's worth paying attention to Wall Street's deal book. So that's exactly what we're doing this week.

With that, let's take a look at four M&A deal stocks worth watching right now.

Must Read: 5 Stocks With Big Insider Buying

Alere

Up first is health care diagnostics stock Alere (ALR). Alere develops diagnostic devices spanning specialties ranging from cardiology to oncology to diabetes. Those point-of-care testing tools let doctors bypass medical laboratories for some testing, bringing a revenue center back into the practice, and cutting the time patients must wait for results. It's a business that former CEO Ron Zwanziger likes so much that he's offering to buy Alere for $46 per share in a cash deal.

Zwanziger made the offer on Sept. 15 with a handful of other shareholders. He's already Alere's largest individual shareholder today, with 4.73% of outstanding shares. The going-private transaction makes that bet a whole lot bigger.

More important, there's still money to be made on the deal. As I write, Alere trades for $39.69, a price tag that leaves a nearly 16% premium priced into shares. That hefty premium comes from a combination of two factors: anxiety over the possibility that the deal falls through, and an uncertain closing date. Zwanziger and company are taking a month for due diligence -- a task that shouldn't be that involved considering his intimate understanding of ALR's business from his four year stint as chairman and CEO.

Buying Alere here isn't without risks, but a lot of the merger premium is going to evaporate when the variables get pinned down over the next month. There's still a lot of cash left in this deal.

Must Read: 10 Stocks Billionaire John Paulson Loves in 2014

Lorillard

Big tobacco is undergoing its largest consolidation deal on record right now, with the pending deal for Reynolds American (RAI) to acquire Lorillard (LO) for $27 billion in cash and stock. The deal makes a lot of sense for both companies. The U.S. cigarette business is dying a slow death as fewer people take up smoking, and joining forces means lower costs and bigger scale. Even better for Reynolds, Lorillard has been a best-in-breed tobacco name thanks to the growing popularity of menthol cigarettes (led by LO's Newport brand).

The deal doesn't include Lorillard's Blu brand of electronic cigarettes, the sole category in the tobacco industry that's actually seeing growth in 2014 -- that's going to Imperial Tobacco. But the prospect of owning the menthol cigarette business is an attractive one for RAI, and they're happy to pay for the privilege.

Reynolds' buyout offer to shareholders is made up of $67.12 as of this writing -- $50.50 per share in cash, and another 0.29 shares of RAI for every share of Lorillard owned. At current price levels, the deal leaves 12.4% on the table.

Right now, the deal is expected to close next summer, pending approvals from both sets of shareholders and the Federal Trade Commission. All of those approvals are set to get knocked out by the first half of November, putting a very limited shelf life on the huge premium that you can get by buying LO and selling RAI. It's worth watching closely this week.

Must Read: 5 Hated Earnings Stocks You Should Love

International Game Technology

Walk into any casino in the U.S., and there's a good chance you'll find a gaming machine made by International Game Technology (IGT). The firm is one of the biggest manufacturers of video gambling systems, and it also sells hardware and software used by casinos' back offices. The firm also operates the online DoubleDown casino app on Facebook and mobile devices.

But IGT's days as a standalone company are numbered; the firm is in the process of being acquired by GTech (GTKYY) in a deal worth $6.2 billion. The buyout will pay International Game Tech. shareholders $13.69 in cash, plus 0.1819 shares of GTK for every share of IGT they own.

That means that investors can collect a 7% premium by the time the deal is expected to be completed next summer.

There's a lot of reason to like the gaming industry right now. More individual states are legalizing "Las Vegas style" casinos, which require big initial investments in gaming machines, particularly in places where table gaming isn't allowed. A similar piecemeal adoption of gaming rules for online services had the potential to drive revenues at IGT's DoubleDown unit.

For those reasons, IGT's acquisition price tag doesn't look particularly lofty right now. There was only a 15.8% premium in the deal when it was announced back in July, and half of that is still available to investors who go long IGT today.

Must Read: 10 Stocks George Soros Is Buying

Trulia

Last up is real estate site Trulia (TRLA), a name that's having a spectacular year in 2014. Shares are up 50% since the calendar flipped to January, boosted by a $2.3 billion acquisition deal from rival Zillow (Z). No, Trulia isn't the bargain that IGT is right now. Instead, this stock trades at a pretty lofty valuation. But that doesn't matter as long as Zillow's paying a lofty price tag to acquire shares.

Trulia's real estate search engine helps connect homebuyers with the properties they're looking for -- and it helps connect targeted service advertisers, like realtors, movers, and home inspectors, with those homebuyers too. That makes Trulia a logical acquisition target for Zillow right now, and Zillow is adeptly using its own status as a momentum stock to finance the deal.

Trulia shareholders will get 0.444 shares of Zillow for each share of TRLA they already down. At current price levels, there's a 5.75% risk premium baked into shares. That makes this the sole stock-only M&A deal on our radar today.

With a big shift away from momentum stocks this week, it's important to approach this merger arbitrage opportunity as a pairs trade. You want to offset your long position in Trulia with a short in Zillow in order to avoid the volatility and market risk that's been grabbing headlines in the tech sector. But with approvals set to be out of the way in a little over a month, the premium should narrow quickly for traders who take advantage now.

Must Read: Warren Buffett's Top 10 Dividend Stocks

To see these M&A plays in action, check out the M&A portfolio on Stockpickr.



-- Written by Jonas Elmerraji in Baltimore.


RELATED LINKS:



>>4 Breakout Stocks Under $10 for Your Trading Radar



>>5 Stocks to Trade for Big Breakout Gains



>>How to Trade the Market's Most-Active Stocks

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to

TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji


Saturday, December 20, 2014

How to Increase Gains by Analyzing Returns

Like in tennis, a good return is crucial to winning the game. Returns are a very important measure of a company's financial health. Its history, trend and forward estimates will affect the stock's price. Therefore, improving your Fundamental Analysis of a company's Returns should help you increase gains from your investments.

Returns

Please note that you should compare the company's return to its competitors', industry and sector when you are evaluating a company's returns. Each company operates in a different industry and sector. Therefore results across different industries and sectors carry different risks, returns and averages.

Return on Equity (ROE):

If you had to teach a child about investment Returns, one of the first investing songs they may learn perhaps may be entitled, "ROE-ROE-ROE your Float." All kidding aside, ROE is one of Warren Buffett (Trades, Portfolio)'s measures of a healthy company.

Return on Equity (ROE) measures the efficiency with which a company uses shareholders' equity and is a great overall measure on returns on capital. (Note: A flaw in using ROE is a company can take on a lot of debt and boost ROE without becoming more profitable therefore you should look at Return on Invested Capital).

ROE = Net Income / Shareholder's Equity

Analyzing ROE is the father of Return ratios. There is a method called DuPont Analysis that breaks down ROE into subcomponents to better analyze why and how a company's ROE came about. In a future article, I will be writing about the DuPont Analysis, but for those interested in learning about it now you can find some information at the following:

http://en.wikipedia.org/wiki/DuPont_analysis

Return on Assets (ROA):

Return on Assets (ROA) measures how much income a company generates per dollar of assets. Investopedia define ROA as follows: "An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as 'return on investment'."

ROA = Net Income / Total Assets

Return on Invested Capital (ROIC):

Return on Invested Capital (ROIC) combines the best in both worlds by measuring the return on all capital invested in the firm (both debt and equity). Does the company show a consistently high return on total capital (above 12%)?

ROIC = (Net Income – Dividends) / Total Capital

Return on Capital (ROC):

ROC = EBIT / (Net Working Capital + Net Fixed Assets)

EBIT is used because companies operate with different levels of debt and differing tax rates. By using EBIT, you can compare the operating earnings of different companies without the distortions arising from differences in tax rates and debt levels.

Net Working Capital + Net Fixed Assets (or tangible capital employed) was used in place of total assets (used in ROA) or equity (used in a ROE). Figures out how much capital is actually needed to conduct the company's business. Net Working Capital is used because a company has to fund receivables and inventory. Net Fixed Asset is used because a company has to fund the purchase of fixed assets to conduct business (i.e. real estate, plant and equipment).

Return of Free Cash Flow (FCF) per Sales:

Free Cash Flow (FCF) = Cash Flow from Operations – Capital Spending

Return of Free Cash Flow (FCF) per Sales = FCF / Sales

Anything above 5% is doing a solid job at generating excess cash. Combining this ratio with ROE, you can divide companies into 4 categories.

 

High ROE

Low ROE

FCF / Sales > 5%

1

2

FCF / Sales <= 5%

3

4

Companies in Quadrant 1 are likely Wide Economic Moat companies; companies in Quadrants 2 and 3 are less desirable; while companies in Quadrants 4 likely the least desirable companies.

Conclusion

A healthy company will generate good returns. Understanding each of the Return ratios we discussed will help you better analyze a company's historical Returns and ability to generate future Returns. As a result, I hope this will help increase the Gains to your investment portfolio.

About the author:nnnguyen1221Experienced professional with expertise in financial statement analysis, value investing, and financial modeling. Past employment with the government (Internal Revenue Service), banking, insurance, and accounting service sectors. Licensed CPA with individual and corporate tax compliance experience and a 2014 Level II Candidate in the CFA Program.

Visit nnnguyen1221's Website

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Friday, December 19, 2014

Worst Performing Industries For July 14, 2014

Related AG Morning Market Losers First Majestic Silver (AG) in Focus: Stock Rises 5.9% - Tale of the Tape Related ARCI Top 4 Stocks In The Electronics Stores Industry With The Highest ROE Morning Market Movers

The Dow jumped 0.77% to 17,074.40, while the NASDAQ composite index rose 0.47% to 4,436.25. The broader Standard & Poor's 500 index gained 0.53% to 1,978.08.

The worst performing industries in the market today are:

Silver: This industry tumbled 2.09% by 10:35 am. The worst stock within the industry was First Majestic Silver (NYSE: AG), which fell 5.3%. The company announced the spin-out of non-core exploration properties. Total production at its five operating silver mines in Mexico reached a new quarterly record of 3,855,224 equivalent ounces of silver for the second quarter.

Appliances: This industry fell 1.07% by 10:35 am ET. Appliance Recycling Centers of America (NASDAQ: ARCI) shares dropped 1.3% in today's trading. Appliance Recycling Centers of America's trailing-twelve-month profit margin is 3.11%.

Long Distance Carriers: The industry dropped 0.71% by 10:35 am. The worst performer in this industry was Otelco (NASDAQ: OTEL), which declined 0.4%. Otelco is expected to release its Q2 financial and operational results on August 6, 2014.

Drug Related Products: This industry moved down 0.69% by 10:35 am, with Perrigo Company Public Limited Company (NYSE: PRGO) moving down 0.4%. Perrigo shares have gained 13.89% over the past 52 weeks, while the S&P 500 index has surged 16.94% in the same period.

Posted-In: Worst Performing IndustriesNews Movers & Shakers Intraday Update Markets

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

  Most Popular Earnings Expectations For The Week Of July 14: Big Banks, Tech Giants And More UPDATE: Barclays Upgrades Apple, Has High Expectations For Near Term Phone Arena Reports Apple's 5.5-inch iPhone 6 Could be Delayed Until 2015 Stocks To Watch For July 14, 2014 GT Advanced Technologies Down Sharply On iPhone Production Concerns #PreMarket Primer: Monday, July 14: Germany Wins World Cup 1-0 Related Articles (ARCI + AG) Worst Performing Industries For July 14, 2014 Morning Market Losers First Majestic Silver (AG) in Focus: Stock Rises 5.9% - Tale of the Tape First Majestic (AG) Enters Overbought Territory - Tale of the Tape Fannie, Freddie Sued by Massachusetts AG - Analyst Blog Why First Majestic Silver (AG) Could Be Positioned for a Slump - Tale of the Tape Around the Web, We're Loving... We're Now Hiring Real-Time Journalists for our Newsdesk! Create an Account With Options House and Get 150 Free Trades! How to Reinvest Your 401(k) to Buy a Business

Thursday, December 18, 2014

Sony downplays digital 'Interview' possibility

Movie theaters drop 'The Interview'   Movie theaters drop 'The Interview' NEW YORK (CNNMoney) "The Interview" got into trouble thanks to the Internet. But maybe the Internet can save it, too?

Or maybe not. On Wednesday night, after Sony (SNE) canceled the film's planned Christmas Day release of the controversial film, the embattled studio also discouraged speculation that it might release the film digitally.

"Sony Pictures has no further release plans for the film," a studio spokesperson said in response to questions about digital distribution.

It's understandable why the digital possibilities were considered. Sony could have pursued streaming services like Netflix (NFLX, Tech30) and video-on-demand cable services like the one operated by Comcast (CCV).

"Sony should fight fire with fire: Make 'The Interview' available online, for free, on every pirate site in the world. In HD," said Digital Disrupton author James McQuivey in a tweet to CNN's Brian Stelter.

Plenty of studios release straight to streaming and pay-TV all the time, but usually with smaller, low-budget films.

For instance, the sequel to the 2000 hit "Crouching Tiger, Hidden Dragon" is slated to be released simultaneously in theaters and on Netflix (NFLX, Tech30) in August 2015.

"The Interview" could have been a pioneer -- a landmark moment for digital distribution -- but Sony's comment on Wednesday night seemed to preempt the idea.

the interview sony vod

Monday, December 1, 2014

Your Webcam Could Be Spying on You

High Angle View|X40206|Cross-processed|Image Sequence|Video Still|Horizontal|Photography|Color Image|Outdoors|One Man Only|Stubb Getty Images If the past year has taught consumers anything, it's that identity thieves, fraudsters and scammers are on the prowl, going after any information they can use to make a buck. But the intrusions don't stop there. If the thought of being the unwitting star of your own prime time reality show gives you the willies, consider the recent revelation that more than 73,000 unsecured webcams and surveillance cameras are, as I write this column, viewable on a Russian-based website. The site lists the cameras by country. (Unfortunately, the U.S. is well represented.) In every case, victims ignored safety protocols and installed the cameras with their default login and password-admin/admin or another easy-to-guess combination findable on any number of public-facing websites. According to NetworkWorld, "There are 40,746 pages of unsecured cameras just in the first 10 country listings: 11,046 in the U.S.; 6,536 in South Korea; 4,770 in China; 3,359 in Mexico; 3,285 in France; 2,870 in Italy; 2,422 in the U.K.; 2,268 in the Netherlands; 2,220 in Colombia; and 1,970 in India. Like the site said, you can see into 'bedrooms of all countries of the world'. There are 256 countries listed plus one directory not sorted into country categories." Why It Matters You may remember the sextortionist who hacked into Miss Teen USA's computer camera and took compromising photographs. He tried to get money in exchange for not distributing the pictures, and got 18 months behind bars instead. That's a bit too lenient in my book. Unfortunately, there are thousands more slime-balls where these guys came from who are poking around, looking for ways to exploit the private moments of your life for their personal amusement or gain. The Internet of Things has arrived making homes smart, fitness totally interactive and tasks infinitely easier, but the devices we buy to streamline day-to-day life create vulnerabilities that, when exploited, could bring your day to a screeching halt, and the risks are much higher if you don't apply common sense during the setup of these password-protected devices. The rule here couldn't be simpler: Anything that hooks into a network must be locked down. Don't think it will happen to you? Consider this: There are websites that list the default passwords of all kinds of devices. If you have something wireless that's hooking up to your household router, it likely came with a pre-set password and login. And there's a good chance, whatever the device, there's a forum online where it's been figured out, hacked, cracked and hijacked for all stripe of nefarious purpose. Convenient ... for Everyone The added convenience provided by the Internet of Things is obvious, but the security issues may not be. Are your fitness records hackable by a third party? Are they linked to social media? How much information did that require? A login? A password? And what's to stop a hacker from opening your front door or turning off your heat during a blizzard or your lights during a home invasion: all with an app? Other common devices that are password protected should immediately come to mind here. Whether it is your household printer, your wireless router or your DVR, there are folks out there who are curious about you, not because they value you as a human being, but because they can create value from any plugged-in human-whether by fraud or extortion or (in a more old-fashioned mode) getting the information they need to rob you blind when you're not home. The number of people who don't change default passwords is staggering, as evidenced by the 73,000 wide-open webcams on that Russian website. There's a major disconnect here, and it's specific to the Internet of Things. On the Internet proper, it seems the message has finally seeped in and people are beginning to make themselves harder targets -- making sure their privacy settings are tight and their passwords are both strong and changed frequently. But when it comes the Internet of Things, there is still more learning to be done -- hopefully not Miss Teen USA-style. The solution, for this particular problem, is remarkably simple: Set a long and strong password on all devices. Whatever it is, it's your job to pick something easy for you to remember and hard for others to guess. The Bigger Problem The Pew Research Center released a statistic this month that showed 90 percent of Americans believe they have no control over their personal information-that the facts and figures and ciphers unique to them are simply in too many places, and essentially that the data cat's out of the bag. Breaches have crossed the Rubicam. Whether they are of the unavoidable variety or the product of carelessness, they will continue to happen apace. Now the third certainty in life, breaches have become the potholes on a bumpy road. What no one wants to deal with is the fact that the road ends abruptly -- jagged concrete and rebar sticking out -- and there's nothing but air after that, and a whole lot of it, between you and the endless crimes that can be committed against you.