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

Thursday, June 26, 2014

Royce Funds Commentary - Stock Picking Matters in the Current Market Climate

Has the current market environment begun to favor less speculative companies and investment managers with a more active orientation? Director of Investments, Managing Director, and Portfolio Manager Whitney Georgetalks about valuations, sectors and industries that he believes look promising, and some names in which he has high conviction.

Many of the portfolios you manage or co-manage have done very well so far in 2014. What conditions have helped to drive the rebound?

The market has definitely been improving for our style of investing—we'd like to think it's also normalizing; that is, returning to a more historically typical performance cycle in which company fundamentals matter. This started more than a year ago when taper talk began and interest rates started to rise.

Around that same time it became pretty clear that legislative agendas were being closed down in Washington, creating a gridlock that seems to have removed some uncertainty. Businesses no longer have to guess what might happen politically because it's become almost impossible to get anything done. This isn't likely to change until after this year's mid-term elections at the earliest. Correlation levels across all asset classes are also declining. It feels like a better market for active management overall.

What sectors or industries look most promising to you going forward?

One area that I like is Energy, which has done well so far in 2014 after bottoming out in 2012 and in general not being a significant contributor in 2013. Many of our holdings in the sector have done very well recently, especially following the cold winter in the Northeast. That brought a lot of renewed attention to Energy companies. With the slowly improving economy, some of the more economically sensitive cyclical areas have also improved, such as Industrials and Materials.

In addition, we've seen some more targeted themes that we like do well year to date, such as cheap protein producers, chicken stocks, and egg producers. Beef and pork prices have increased, so these other protein-producing areas have attracted new interest from investors. A recovery in demand for fast-food chains, driven in part by new breakfast menus, has helped to build a growing appetite. And feed costs, principally corn and soy beans, have moderated, creating an excellent fundamental backdrop. For example, Sanderson Farms—a long-term holding—saw its fiscal second-quarter profit more than double because demand for chicken was strong while costs for grain fell. M&A activity, which has been healthy through much of the equity market, has been very robust in these food-related areas.

Can you discuss a few stocks that you feel especially confident about right now?

I discussed Myriad Genetics in January, and I still really like the company. It's a molecular diagnostic company that specializes in genetic testing for cancer. After receiving a mixed ruling from a Supreme Court decision in June 2013 when it was decided that human genes can't be patented, its stock price began to fall. Many investors were concerned that Myriad would struggle to compete or be profitable in the light of the Court's decision. The stock later recovered; it enjoyed a terrific first quarter of 2014. Though its price has been a bit volatile more recently, we continue to believe in the company. It remains a leader in genetic testing with a variety of industry-standard tools for detecting hereditary cancer risk. Fiscal third-quarter revenues, announced in May, were up, helping to make fiscal 2014 nicely profitable.

I'm also confident in the prospects for Kennedy-Wilson Holdings, a real estate investment and services company that operates in the U.S., the U.K., Ireland, Spain, and Japan. The company focuses mainly on multi-family homes and commercial real estate, particularly in distressed areas, and we have liked their expertise in these places for a number of years. In February, the firm made a major investment in Europe in the form of Kennedy Wilson Europe Real Estate Plc, publicly traded on the London Stock Exchange, which one of the business's wholly owned subsidiaries will manage. I think the firm is looking increasingly like a very well-run asset manager.

Finally, I'm pleased to see RV maker Thor Industries revving up a bit so far in 2014. It's a stock that we've owned in some Royce portfolios for more than a decade. Like Myriad Genetics, its share price has been somewhat volatile in 2014, but I like its prospects for steadier improvement. After a difficult winter, the firm saw improvements in profits, margins, and earnings in the spring. It has steadily increased market share in the years since the financial crisis, expanded its operations into former competitors' factories, and successfully gained a greater presence in the high-end RV market. Its stock has done pretty well over the last couple of years, but I think it still has room to run.

What do you make of the current market climate?

I think valuations are a bit above average, but not unreasonably so given near-zero interest rates and low inflation. There are a lot of anomalies in the market, and I see a wide disparity between what looks to us like expensive stocks and those that look inexpensive on an absolute basis. The market seems to be in the process of sorting that out—certainly those areas of the market that don't interest us, and that did well in 2012 and 2013, have been far more volatile so far in 2014. We're still seeing companies that look attractively valued to us based on their fundamentals. All in all, I'd say we are in a stock-picker's market, and I feel really good about that.

Important Disclosure Information

Whitney George is Director of Investments, Managing Director, and a Portfolio Manager of Royce & Associates, LLC, investment advisor to The Royce Funds. He serves as portfolio manager for Royce Premier Fund (RPR), Royce Low-Priced Stock Fund (RLP), Royce Global Value Fund (RGV), Royce SMid-Cap Value Fund (RSV), and Royce Focus Trust (FUND). He also serves as assistant portfolio manager for Royce Micro-Cap Fund (RMC), Royce Value Fund (RVV), Royce Value Plus Fund (RVP), Royce Focus Value Fund (RFV), and Royce Capital Fund – Micro-Cap Portfolio (RCM). Mr. George's thoughts in this interview concerning the stock market are solely his own and, of course, there can be no assurance with regard to future market movements.

This material is not authorized for distribution unless preceded or accompanied by a currentprospectus. Please read the prospectus carefully before investing or sending money.Investments in securities of micro-cap, small-cap, and/or mid-cap companies may involve considerably more risk than investments in securities of larger-cap companies. (See "Primary Risks for Fund Investors" in the respective prospectus.) Investments in foreign companies may be subject to different risks than investments in securities of U.S. companies, including adverse political, social, economic, or other developments that are unique to a particular country or region. (Please see "Investing in International Securities" in the prospectus.)

Also check out: Chuck Royce Undervalued Stocks Chuck Royce Top Growth Companies Chuck Royce High Yield stocks, and Stocks that Chuck Royce keeps buying

Currently 0.00/512345

Rating: 0.0/5 (0 votes)

Subscribe via Email RSS Feeds

Subscribe RSS Comments Please leave your comment:
More GuruFocus Links

Latest Guru Picks	Value Strategies
Warren Buffett Portfolio	Ben Graham Net-Net
Real Time Picks	Buffett-Munger Screener
Aggregated Portfolio	Undervalued Predictable
ETFs, Options	Low P/S Companies
Insider Trends	10-Year Financials
52-Week Lows	Interactive Charts
Model Portfolios	DCF Calculator
RSS Feed	Monthly Newsletters
The All-In-One Screener	Portfolio Tracking Tool

Wednesday, June 25, 2014

Google Stock Split: In Larry And Sergey We Trust

In anticipation of Google Google's stock dropping by 50% on Wednesday (due to its 2 for 1 stock split) it is worthwhile to understand what this means to shareholders.

Stock splits have historically been used to decrease the amount an investor would have to spend in order to buy a "round lot" or 100 shares. This was important when brokerage firms made it more expensive to buy fewer than 100 shares or an odd lot. However, since it essentially costs $8.95 or less from most on-line brokerage firms whether you buy one share at $1,135 or 100 shares at $11.35 the investor doesn't need a stock split to invest $1,135 in Google and get the same return when the shares increase.

Another reason stock splits have been done is for management to show they believe the company will do well in the future. Overall these don't change the financials (except EPS will be half of what it was) and in theory the overall value of a company is not affected expect when investors are willing to place a higher valuation metric on future earnings. It makes everyone "feel good".

English: Left to right, Eric E. Schmidt, Sergey Brin and Larry Page of Google Polski: Od lewej do prawej: Eric E. Schmidt, Sergey Brin i Larry Page z firmy Google (Photo credit: Wikipedia)

This isn't why Google is splitting its shares

I believe this stock split is largely being done so that Sergey Brin and Larry Page can maintain voting control over everyone else.

Maybe it's a good thing that the two people who had the vision and technical expertise will be able to do whatever they want and since they have such huge wealth tied up in the company you would expect that they would run it for the long-term benefit of the other shareholders. However if they don't execute well they can't be "forced" to change by everyone else.

Currently everyone except Brin, Page, Eric Schmidt, Google's ex-CEO and Executive Chairman, and a few other people own Class A shares. Class A shares get one vote for each share. There were 279,883,488 Class A shares outstanding on January 30, 2014. Their trading symbol will be GOOGL after the split.

Class B shares are largely owned by Brin (23.2 million), Page (23.6 million) and Schmidt (4.6 million) and they get 10 votes per share. In total there were 56,167,343 Class B shares outstanding on January 30, 2014.

Class C shares will be given to the Class A and B shareholders but receive no votes on stockholder resolutions. Their trading symbol will be the historical GOOG after the split. These are the shares that the company will probably issue going forward for acquisitions or stock awards.

This means that Brin and Sergey have 468 million votes compared to the 280 million Class A shareholders, essentially complete control of the company as they have just over 55% of the total votes. Maybe the Board could exert enough pressure on either Brin or Page to step down if they thought it was being taken in such a wrong direction that it warranted action but otherwise the founders have complete control.

You can just sell your Google stock

One option is to sell your shares if you don't agree with their decisions. If you don't think they should be buying robot companies (such as Boston Dynamics) or funding research into using high altitude balloons to connect people in remote areas to the Internet (Project Loon) you can sell your shares and not have to worry about what they are doing. Note that it doesn't seem that they are spending a lot of money in these areas (at least yet) but it does diffuse their focus on the core business.

Follow me on Twitter @sandhillinsight. You can find my other Forbes posts here.

Tuesday, June 24, 2014

Buy These 5 Rocket Stocks to Beat the Market

BALTIMORE (Stockpickr) -- U.S. stocks are pointing flat this morning, holding their ground after the big S&P 500 index shoved its way to a new all-time high on Friday. Year-to-date, the S&P now sits on 6.2% gains in 2014, a number that's starting to look a whole lot more solid after a slow start to the year for stock performance.

>>5 Stocks Setting Up to Break Out

Despite the wide performance gap between this year and last (the S&P was up 16% by this time last year), nothing has changed from a big picture perspective in the big indexes. The S&P is still bouncing its way higher in the same well-defined uptrending channel that it's been in for the last 19 months or so. And while a small correction is starting to look more likely as the S&P approaches the top of that channel, we're still in a "buy the dips market."

To take full advantage, we're turning to a fresh set of Rocket Stocks worth buying to beat the market this week.

For the uninitiated, "Rocket Stocks" are our list of companies with short-term gain catalysts and longer-term growth potential. To find them, I run a weekly quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises to identify rising analyst expectations, a bullish signal for stocks in any market. After all, where analysts' expectations are increasing, institutional cash often follows. In the last 254 weeks, our weekly list of five plays has outperformed the S&P 500 by 78.17%.

>>5 Blue-Chip Stocks to Trade for Gains: Must-See Charts

Without further ado, here's a look at this week's Rocket Stocks.

Google

It's easy to forget that, ultimately, Google (GOOG) is an advertising company. The $382 billion tech firm might have its hand in a wide spectrum of different businesses ranging from searches to smartphones, but at the end of the day, the firm's goal is to get more eyes on the paid ads that contribute around 80% of Google's total sales. It's been a slow start to the year for GOOG: Since the calendar flipped to January, Google has effectively traded flat.

>>4 Huge Stocks to Trade (or Not)

Google currently captures approximately 60% of the world's Web search traffic, an astounding market share that gives Google some important advantages over the competition. Part of that success comes from the technology that Google has been able to deploy in a "post PC world." By giving users high quality experiences with apps and mobile devices, it's able to keep users playing within the Google sandbox, all the while serving them ads.

Desktop search remains the holy grail of Google's business. Unlike the ad networks, in which case Google must pay a royalty to content owners, sponsored search comes with huge margins and customer acquisition costs are effectively nil thanks to the strength of the Google brand. While any new investments will likely come with some level of margin dilution, high levels of profitability today and a whopping $59 billion cash and investment position help to offset the risks.

Make no mistake, Google isn't "cheap" right now -- but it's well-positioned to get even less cheap in the coming months.

Wells Fargo

All these years after the financial crisis, Wells Fargo (WFC) continues to stand out as the best-in-breed of the big banking stocks. The San Francisco-based financial firm boasts more than $1.5 trillion in assets, and with a market cap of $279 billion, it's the biggest U.S. bank by capitalization. Scale comes with some significant advantages in the banking business, and WFC should continue to benefit from its size in 2014.

>>4 Stocks Breaking Out on Big Volume

Wells stood out from its peers back in 2008 by holding on to a much larger commercial and retail banking business than most. The firm put less focus on exotic securities, and more focus on building fee-based businesses such as wealth management and credit cards, and the relatively simple state of the firm's balance sheet is evidence of that. In short, Wells Fargo benefits by lending money for more than it costs to borrow, so the firm's huge base of dirt-cheap deposits makes it a cash cow.

Prolonged low interest rates have put a ceiling on banks' profitability in the last several years. But with Janet Yellen hinting at forthcoming rate hikes, the potential for WFC to earn a bigger spread on its loan book is starting to look promising.

For now, with rising analyst sentiment in shares of WFC, we're betting on this Rocket Stock this week.

Garmin

Garmin (GRMN) is enjoying a spectacular run in 2014. Since the start of the year, shares of the GPS giant are up more than 30%, outperforming the S&P 500 by a factor of five. A lot of that outperformance has to do with the fact that investors have been getting this stock so wrong for so long.

>>2 Big-Volume Tech Stocks to Keep on Your Radar

Garmin is the biggest consumer GPS maker, operating in a business that's seen its main wares commoditized as rivals began offering cheaper car navigation units and GPS chips started becoming ubiquitous in cell phones and other devices. But Garmin's business isn't predicated on its lowest-moat product -- the real story starts at its most expensive offerings. Because Garmin spends considerable R&D dollars on its bigger ticket aviation and marine navigation systems, it's able to develop exciting technologies that can flow down to its lowest-common-denominator automotive GPS business at minimal cost.

Financially speaking, GRMN is in solid shape. The firm currently carries nearly $3 billion in cash and investments, enough to cover 25% of the firm's current market cap. Likewise, a 3.2% dividend yield makes this Rocket Stock a strong income payer at a time when investors are actively pursuing yield.

Phillips 66

Phillips 66 (PSX) is holding its own as a large independent oil refiner and natural gas processor. Among other assets, the firm owns 15 refineries, 61 natural gas processing facilities and more than 62,000 miles of natgas pipelines. Phillips 66 came about in 2012, after then-oil-and-gas-supermajor ConocoPhillips (COP) spun off its less margin-friendly downstream assets into PSX. While the move might have made a lot of sense at the time, this name has been a solid performer ever since it came into its own.

>>5 Stocks Under $10 Set to Soar

Diversification is the name of the game at Phillips 66. By owning a larger variety of assets than most other refiners (such as retail gas stations and a very robust chemical arm), PSX is able to avoid being overexposed to commodity prices, and it's able to generate much larger margins than a typical refiner could. In fact, calling the firm a refiner could soon be inaccurate: in the next three years and change, PSX expects the refining business to contribute less than a third of total revenues.

Despite a whopping 45% rally over the course of the last year, Phillips 66 still looks reasonably priced. The firm sports a P/E ratio of 16 times earnings, a 2.3% dividend yield and $9.1 billion in net cash -- so while it's no fire sale price tag, PSX could certainly rally materially from here without throwing off too many red flags.

With rising analyst sentiment in shares right now, we're adding Phillips 66 to our Rocket Stock list.

Wynn Resorts

Last, but far from least, is Wynn Resorts (WYNN), the $20 billion casino resort operator. Wynn has enjoyed a 54% rally of its own over the last 12 months, and while shares have cooled since the calendar flipped to 2014, this stock looks well-positioned for a second rally leg heading into the second half of this year.

Wynn operates luxury casino resorts in Las Vegas and in China. While the firm's name may be synonymous with Vegas, its profits aren't. Instead, around 70% of revenues actually come from Macau, the high-end Chinese gambling district. Macau is Wynn's crown jewel in large part because the firm is one of the few that's been granted a gaming license from the government. Wynn has two properties in Macau, with a third on the way in the region's Cotai strip.

Wynn's luxury positioning in Las Vegas is helping it to benefit better than most from the recovery that's been underway in Sin City for the past several years. Increasing consumer spending, coupled with record low interest rates, is fueling a resurgence in Las Vegas spending (last quarter notwithstanding), and Wynn's luxury positioning gives it exposure to the most free-spending clientele.

Look for earnings at the end of next month as a potential catalyst for this gaming stock.

To see all of this week's Rocket Stocks in action, check out the Rocket Stocks portfolio at Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

Sunday, June 22, 2014

Good Times To Continue For General Electric

On June 21, 2014, Alstom SA's board approved General Electric's (GE) bid to buy Alstom's gas and steam turbine-making operations for $17 billion. This article looks at the positives for GE from the deal and the other critical factors that make GE a good long-term investment.

The Deal And Its Positive Implications

The board of Alstom SA unanimously approved GE's $17 billion offer to buy Alstom's energy business. As a first positive, the transaction enhances GE's position as one of the most competitive infrastructure company. Alstom will bring complementary technology and global capability for GE, which will yield positive results in the long-term.

The transaction will result in an incremental EPS of $0.08 to $0.10 for GE by 2016 and this underscores the attractiveness of the deal. Further, on an immediate term, the deal is expected to have an incremental EPS impact of $0.04 to $0.06 on for GE.

The acquisition will also provide a cost synergies opportunity and GE expects cost synergies of $1.2 billion in the fifth year starting with cost synergies of $300 million in the first year.

In terms of capacity and revenue visibility, the acquired business has an installed base in excess of 350GW along with a $38 billion order backlog. Considering the acquired company's LTM revenue of $20 billion, the current order backlog gives a revenue visibility of 2 years.

Further, with 85% of the revenues outside North America and approximately 80% of the revenue from outside Western Europe, the acquisition provides emerging market footprint for GE. Therefore, the incremental EPS growth from the acquisition is likely to be robust over the long-term.

Strong Revenue Visibility And Financial Position

As of 2013, GE had an order backlog of $244 billion, which is 2.4 times the company's FY13 revenue. A robust order backlog ensures that the company's earnings remain stable in the foreseeable future.

GE is also well placed fundamentally with a strong cash position of $89 billion as of FY13. GE also generated an operating cash flow of $28.5 billion for FY13 and a robust cash inflow allows GE to create shareholder value through dividends and share repurchase, besides going for organic and inorganic growth.

For the period 2010-2013, GE has returned $26 billion to shareholders through dividends, $19 billion through share repurchase and has invested $23 billion in attractive merger and acquisition opportunities. This gives a sense of the strong shareholder value creation initiatives by the company.

In February 2013, GE authorized a share repurchase program of $35 billion through 2015. The company already made share repurchase worth $10 billion in 2013. With $25 billion still remaining under the share repurchase program, the EPS is likely to get a strong boost over the next two years.

In terms of dividend declared, GE's dividend payout has increased from a low of $0.46 per share in 2010 to $0.79 per share in 2013. At a current market price of $27, this translates into a good dividend yield of 3.3%. The dividend payout is likely to increase in the future considering the organic and inorganic growth expected.

Growth In The Oil & Gas Segment

GE has been exhibiting steady revenue trend across all segments of its business. However, I am very bullish on the company's oil & gas business segment.

The business segment revenue has increased from $9.6 billion in 2009 to $16.9 billion in 2013. The strong growth (organic and inorganic) is likely to continue for this segment over the next few years. Currently, the oil & gas segment has an order backlog of $19.7 billion, which gives one a one year revenue visibility.

The reason for the bullish outlook on the segment is the growth in the industry coupled with the company's offerings. The company's Oil & Gas segment supplies mission critical equipment for the global oil and gas industry throughout the value chain.

With the US shale boom coupled with an offshore oil & gas boom, the segment is well placed to grow at a robust pace over the next few years and have a significant incremental impact on the company's EPS.

Conclusion

General Electric is well placed in terms of fundamentals and in terms of industry leadership to grow and create shareholder value in the long-term. The company's recent acquisition of Alstom's energy business is another feather in the company's cap. With a strong order backlog and an equally strong cash position, GE will continue to create shareholder value and is a good stock to own for the long-term.

About the author:Faisal HumayunSenior Research Analyst with experience in the field of equity research, credit research, financial modelling and economic research

Currently 0.00/512345

Rating: 0.0/5 (0 votes)

Subscribe via Email RSS Feeds

Subscribe RSS Comments Please leave your comment:
More GuruFocus Links

Latest Guru Picks	Value Strategies
Warren Buffett Portfolio	Ben Graham Net-Net
Real Time Picks	Buffett-Munger Screener
Aggregated Portfolio	Undervalued Predictable
ETFs, Options	Low P/S Companies
Insider Trends	10-Year Financials
52-Week Lows	Interactive Charts
Model Portfolios	DCF Calculator
RSS Feed	Monthly Newsletters
The All-In-One Screener	Portfolio Tracking Tool

Watch How These 4 Crimea-Sensitive Dow Stocks are Moving

The Dow Jones Industrials (DJINDICES: ^DJI ) fell five straight days last week, with the prospect of the secession referendum in Crimea potentially becoming a powder keg in the region. In particular, four Dow stocks looked like potentially big movers if more severe problems arose after the referendum. Yet news of relatively orderly voting helped send the Dow up by 163 points as of noon EDT. Let's at how the four Dow stocks I highlighted on Saturday are reacting to the optimistic news today.

Boeing (NYSE: BA ) jumped 1.7%, with the aerospace giant facing plenty of other issues beyond the potential impact of the Crimean situation on its business. With Western nations contemplating their response to the vote, Boeing could still see greater defense spending in the long run resulting from the tension in the Black Sea region. Yet the disappearance of Malaysia Airlines Flight 370 continues to get far more attention, as authorities consider the need for a more extensive communications grid and measures to avoid allowing aircraft like the Boeing 777 from evading detection even with deliberate acts from pilots onboard the plane.

ExxonMobil (NYSE: XOM ) rose 0.6% despite the dual threat of economic sanctions against Russia and a decline in crude-oil prices to $98.25 per barrel this morning. Given the result of the Crimea vote, the likelihood of sanctions that could adversely affect the oil giant's partnership with Russia's Rosneft is higher than it was last week. Yet investors still hope that Exxon's massive investment in the nation will bear fruit in the long run, even if sanctions force delays. Equally important to Exxon's success is making sure that geopolitical issues don't disrupt the global economy enough to cause substantial drops in energy use, which could send oil prices plunging and produce real long-term problems for the company.

On the financial front, Goldman Sachs (NYSE: GS ) and JPMorgan Chase (NYSE: JPM ) were up 1% and 0.8%, respectively, as the benign activity in the Crimean region forestalled any deeper economic crisis in the region. As long as the conflict doesn't escalate into outright military action, most investors seem to think the impact on the global economy will be relatively muted even with sanctions against Russia. Moreover, both Goldman and JPMorgan are quite familiar with taking steps to protect themselves from volatile situations, given the ability to hedge against further trouble while still capitalizing on longer-term growth efforts. If they can help clients make money from the situation, Goldman and JPMorgan will preserve their reputations and should hang onto their gains.

At this point, it's still too early to guess what will happen in Crimea's future. For now, though, the Dow has evaded what could have been an explosive situation.

Find stocks that win in good times and bad
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Saturday, June 21, 2014

Fischer: Fed stimulus still needed

President Obama's nominee for vice-chairman of the Federal Reserve will be questioned closely about his views on how quickly the Fed should wind down its stimulus policies at his Senate confirmation hearing Thursday morning.

Stanley Fischer, a former head of Israel's central bank, will testify that the economy has made "significant progress" since the recession but the central bank's stimulus policies are still needed, according to his prepared testimony.

Fischer, 70, is among three nominees for the Fed's Board of Governors who will testify before the Senate banking committee at the hearing, which starts at 10 a.m.

He will say that the 6.7% unemployment is still too high and inflation remains below the Fed's 2% target, his written testimony says.

"At present, achievement of both maximum employment and price stability requires the continuation of an expansionary monetary policy," Fischer's testimony says.

That's consistent with the views of Janet Yellen, who became Fed chair last month after Ben Bernanke stepped down.

The Fed recently reduced its monthly bond purchases to $65 billion from $85 billion and has said it will continue to gradually taper the program and end it later this year, assuming the economy and labor market continue to advance. The purchases are intended to hold down interest rates and spur growth.

Fischer endorsed the tapering as well as provisions in the Dodd-Frank financial reform act that require the biggest banks to hold more capital and devise plans to wind themselves down in a financial crisis. Critics such as Sen. Elizabeth Warren, D-Mass., say the rules don't go far enough in assuring markets that the government won't bail out the big banks, as it did during the 2008 crisis.

In Israel, Fischer was among the world's first central bankers to cut interest rates in the early days of the global turmoil and the first to raise them as that country's economy stabilized. He also was a top official at the World Bank and the International Mo! netary Fund.

The other Fed nominees who will testify Thursday are former Treasury under secretary Lael Brainard and current Fed Governor Jerome Powell.

Friday, June 20, 2014

Nomura Picked a Bad Day to Upgrade US Steel

I just wrote about iron miners getting pounded; now it’s time for the steel stocks like US Steel (X), AK Steel (AKS) and Steel Dynamics (STLD).

ASSOCIATED PRESS

US Steel has dropped 2.4% to $24.24 at 2:50 p.m., while AK Steel has fallen 0.9% to $6.26, Steel Dynamics has declined 3.4% to $17.11, and Nucor (NUE) is off 1.1% at $49.58. And yes, it’s for the same reason that iron miners are getting pounded: China.

The funny thing: Nomura’s Curt Woodworth upgraded US Steel to Buy from Neutral. He explains why:

[Free cash flow potential significant] as US Steel transformation elevates earnings profile. We are upgrading US Steel to Buy and increasing our PT to $32 from $27 to account for higher through-the-cycle EBITDA / FCF generation. After the stock's 18% correction since January (vs. S&P500 +2%), we see many reasons to own [US Steel]. After meeting with the CEO and CFO last week, we have increased conviction in the company's direction as well as the opportunity sets in the commercial, financial, and operating functions of the business. We see US Steel's cash flow significantly increasing in the coming years.

Well, after today’s drop, that would make US Steel an even better buy, wouldn’t it?

Best Consumer Stocks To Buy Right Now

After the long holiday weekend, market participants were given some great news this morning: Consumer confidence has hit a five-year high. Industry group The Conference Board claims that consumer attitudes jumped to 76.2 from a revised 69 in April. Most estimates had pinned the number at 71, so this was quite the surprise. �

As of 11:45 a.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI ) is up 159 points, or 1.04%. The S&P 500 has risen 19.62 points, or 1.19%, while the Nasdaq has gained 44 points, or 1.28%. Investors seem to have all but forgotten about the possible Fed slowdown, which everyone was so fearful of last week, and at this time all but one of the Dow's 30 components are moving higher.

Besides the consumer confidence number, a positive housing report also reached investors today, and is likely the reason shares of Home Depot (NYSE: HD ) rose 1.72%. The better-than-expected home price report showed that in March prices once again rose, and year-over-year gains have now risen 11%. With home prices continuing to climb, Home Depot should continue to see increased business levels, which will likely be followed by higher profits. �

Best Consumer Stocks To Buy Right Now: Winnebago Industries Inc.(WGO)

Winnebago Industries, Inc. manufactures and sells recreation vehicles primarily for leisure travel and outdoor recreation activities. The company offers motor homes, which are self-propelled mobile dwellings that provide living accommodations for approximately seven persons and include kitchen, dining, sleeping, and bath areas, as well as a lounge; and optional equipment accessories, such as generators, home theater systems, king-size beds, upholstery, and interior equipment. It manufactures motor homes constructed directly on medium- and heavy-duty truck chassis, which include engine and drivetrain components; and on van-type chassis onto which the motor home manufacturer constructs a living area with access to the driver's compartment under the Winnebago and Itasca brand names, as well as panel-type vans with sleeping, kitchen, and/or toilet facilities under the Era brand name. The company also produces original equipment manufacturing parts, including extruded aluminum and other component products for other manufacturers and commercial vehicles. Winnebago Industries markets its motor homes through independent dealers primarily in the United States and Canada. The company was founded in 1958 and is headquartered in Forest City, Iowa.

Advisors' Opinion:

[By Grace L. Williams]
Recreational vehicle maker Winnebago Industries (WGO), which makes, you know, Winnebagos, is trucking today after reporting strong revenue and increased demand in its fourth quarter.
AP
For the period ended Aug. 31, Winnebago reported profit of $10.6 million, or 38 cents a share, down from $40.9 million, or $1.41 a share, a year earlier, while sales rose to $214.2 million in the quarter. Analysts polled by Thomson Reuters recently predicted earnings of 28 cents a share and sales of $206 million.

Looking at the solid quarter and optimistic forecasts, Citigroup analyst Gregory Badishkanian raised estimates after noting several positive factors at the company including the current backlogs, which more than doubled, and dealer inventories, which were up 38%. He writes:

The company highlighted two issues that appear to be diminishing: 1) towables division was dilutive for the year, but headed in the right direction with a breakeven quarter 2) shortage in Class A Gas chassis, though the issue should be resolved by mid-winter…

Given strong margin and retail demand trends, we��e raising our 2014 and 2015 estimates by 26 cents each. We introduce our 2016 estimate of $ 1.60.

Shares of Winnebago have gained 4.4% to $28.47 today at 3pm. Thor Industries (THO), which also makes recreational vehicles, has ticked up 0.1% to $57.56, Drew Industries (DW) has risen 0.3% to $48.74, Arctic Cat (ACAT) has advanced 1% to $59.87 and Polaris Industries (PII) has fallen 0.3% to $132.08.
[By John Kell and Lauren Pollock var popups = dojo.query(".socialByline .popC"); ]
Among the companies with shares expected to actively trade in Thursday’s session are Citigroup Inc.(C), GameStop Corp.(GME) and Winnebago Industries Inc.(WGO)
[By David Sterman]
I took a close look at all of the companies that appeared in the first part of this series, and there were some great companies in the mix. If price were no object, I'd be a huge fan of:
Oceaneering (NYSE: OII), which is prospering form the ongoing trends toward undersea naval warfare and undersea oil drilling. Oceaneering is poised to grow at a sustained double-digit pace, which is something few other defense contractors can say. Cree (Nasdaq: CREE): LED lighting is a revolutionary game-changer, and Cree's heavy emphasis on R&D is leading the charge towards ever-lower prices for these low-energy light sources that also have remarkable longevity compared to regular bulbs. Still, profit margin gains may be tough in a very competitive environment. Polaris Industries (NYSE: PII): If Winnebago's (NYSE: WGO) recreational vehicles are suitable for retirees, Polaris has become the go-to name for activity-oriented vehicles. Notably, it has a revenue base that is four times larger than Winnebago as well. If S&P wants to position for future demographic trends, then Polaris is a great choice.
I love these companies, but I don't love their stock prices, and I'd prefer to wait for some sort of pullback before singing their praises. That said, there are two investment ideas that hold great appeal on their own. If they get added to the S&P 500, then they are also set up for a timely trade.

Best Consumer Stocks To Buy Right Now: AEP Industries Inc.(AEPI)

AEP Industries Inc. engages in the production, manufacture, and distribution of plastic packaging products in the United States and Canada. The company offers a line of polyethylene, polyvinyl chloride, and polypropylene flexible packaging products for consumer, industrial, and agricultural applications. Its products include custom films for industrial applications, including sheeting, tubing, and bags; films that protect items stored outdoors or in transit, such as boats and cars; a range of shrink films, barrier films, and overwrap films; stretch film products for hand wrap and rotary applications; and pre stretch and high performance products for commodity and specialty uses. The company also provides food wraps products, including blown plastic film fold-top bags, twist-tie bags, and food containers under the Seal Wrap brand for the supermarket and industrial markets; a range of coextruded polyolefin films and monolayer films for food, pharmaceutical, and medical appli cations; and canliners product line comprising trash bags and institutional bags. In addition, it offers printed rollstock to the food and beverage industries, and manufacturing and distributing companies; and unplasticized polyvinyl chloride films for use in battery labels, twist films, and credit card laminates; and various film products with agricultural applications, such as silage, smooth mulch films, and fumigation films. Further, the company provides disposable consumer and institutional plastic products, which include table covers and skirts, aisle runners, aprons, bibs, gloves, boots, freezer/storage bags, saddle pack bags, locker wrap and custom imprint designs for the food service, party supply, and school/collegiate markets under the Sta-Dri brand. AEP Industries Inc. markets its products directly to end-users, as well as through distributors. The company was founded in 1970 and is based in South Hackensack, New Jersey.

Advisors' Opinion:

[By Victor Selva]
Competitors such as AEP Industries Inc. (AEPI) and Lockheed Martin Corporation (LMT) will be better options in term of ROE.

Final Comment
[By Bryan Murphy]
It's certainly not as big as Berry Plastics Group Inc. (NYSE:BERY). It's not even as big as Tredegar Corporation (NYSE:TG). There's one big way AEP Industries (NASDAQ:AEPI) can certainly compete head-on with BERY and TG right now, however... as an investment opportunity. Thanks to the bullish bump AEPI gave us last week, a long-standing selloff has been revered, and there's a whole lot of ground to make up.
[By Lisa Levin]
AEP Industries (NASDAQ: AEPI) shares touched a new 52-week low of $34.20. AEP shares have dropped 56.11% over the past 52 weeks, while the S&P 500 index has gained 15.91% in the same period.
[By Brian Pacampara]
What: Shares of plastic packaging manufacturer AEP Industries (NASDAQ: AEPI ) sank 14% today after its quarterly results and outlook disappointed Wall Street.

5 Best Cheapest Stocks To Invest In Right Now: Dorman Products Inc.(DORM)

Dorman Products, Inc. supplies automotive replacement parts, fasteners, and service line products primarily for the automotive aftermarket. The company offers approximately 128,000 products comprising original equipment dealer parts, which include intake manifolds, exhaust manifolds, oil cooler lines, window regulators, radiator fan assemblies, power steering pulleys, and harmonic balancers; and replacement parts, such as window handles and switches, door hardware, interior trim parts, headlamp aiming screws and retainer rings, radiator parts, battery hold-down bolts and repair kits, valve train parts, and power steering filler caps. It also provides application specific and general automotive hardware, such as body hardware, general automotive fasteners, oil drain plugs, and wheel hardware; a selection of electrical connectors, wires, tools, testers, and accessories; and a line of home hardware and home organization products designed for retail merchandisers. In addition, the company offers a brake and clutch program; remanufactured automotive replacement parts, such as transfer case modules and instrument clusters; and heavy duty aftermarket parts for class 4-8 heavy vehicles, including coolant tubes, door handles and other body parts, fluid reservoirs, headlights and lighting, hood components, window regulators, and wiper transmissions. It sells its products under the OE Solutions, HELP!, AutoGrade, FirstStop, Conduct-Tite!, Pik-A-Nut, and HD Solutions brand names through automotive aftermarket retailers; national, regional, and local warehouse distributors; specialty markets; and salvage yards in the United States, Mexico, Europe, the Middle East, Asia, and Canada. The company, formerly known as R&B, Inc., was founded in 1978 and is headquartered in Colmar, Pennsylvania.

Advisors' Opinion:

[By Seth Jayson]
Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Dorman Products (Nasdaq: DORM ) , whose recent revenue and earnings are plotted below.

Best Consumer Stocks To Buy Right Now: Tesla Motors Inc.(TSLA)

Tesla Motors, Inc. designs, develops, manufactures, and sells electric vehicles and advanced electric vehicle powertrain components. It offers Tesla Roadster, an electric sports car. The company markets and sells its vehicles directly to consumers through the phone and Internet, as well as through its network of Tesla stores. It operates 18 Tesla stores located in Boulder, Chicago, Los Angeles, Menlo Park, Miami, New York, Newport Beach, San Jose, Seattle, Washington, D.C., Copenhagen, London, Milan, Monaco, Munich, Paris, Tokyo, and Zurich. The company was founded in 2003 and is headquartered in Palo Alto, California.

Advisors' Opinion:

[By Alyce Lomax]
Even more exciting, SolarCity is looking to tackle one of solar energy's biggest obstacles. It has announced plans to develop a product that will store solar power, aimed for 2015. The battery packs in question are actually Tesla Motors' (NASDAQ: TSLA ) tech; Tesla's another environmentally friendly upstart, and another visionary Elon Musk join venture.

Best Consumer Stocks To Buy Right Now: MOJO Organics Inc (MOJO)

MOJO Organics, Inc., incorporated on August 2, 2007, engages in product development, production, marketing and distribution of CHIQUITA TROPICALS. CHIQUITA TROPICALS are a 100% fruit juice, produced under license agreement from Chiquita Brands. The Company�� product flavors include Banana Strawberry, Mango, Passion Fruit, and Pineapple.

The Company�� juices are produced without preservatives and without added sugar. The Company produces and packages the CHIQUITA TROPICALS products through production facilities and services on a contract basis.

The Company competes with The Coca-Cola Company and PepsiCo, Inc.

Advisors' Opinion:

[By Lisa Levin]
Catalog & Mail Order Houses: The industry gained 1.13% by 10:15 am. The top performer in this industry was Mojo Organics (OTC: MOJO), which gained 6.6%. Mojo Organics shares have jumped 361.54% over the past 52 weeks, while the S&P 500 index has gained 16.18% in the same period.

Best Consumer Stocks To Buy Right Now: Pernod Ricard SA (PDRDY)

Pernod Ricard SA is a France-based producer and distributor of spirits and wines. The Company offers such products as whiskies, aniseed spirits, liqueurs, cognacs and brandies, white spirits and rums, bitters, champagnes and wines. Its business is divided into three segments: Top 14 Spirits & Champagne, Priority Premium Wines and 18 key local spirits brands. Pernod Ricard SA�� flagship brands include ABSOLUT, Ricard, Havana Club, Ballantine��, Malibu, The Glenlivet, Chivas Regal, Beefeater, Kahlua, Martell, Royal Salute, Mumm, Perrier-Jouet and Jameson, among others. The wine category includes, Jacob�� Creek, Brancott Estate, Campo Viejo and Graffigna. It operates as a holding company, with the structure divided between brand owner subsidiaries, such as The Absolut Company, Havana Club International and Chivas Brothers and regional distribution subsidiaries, such as Pernod Ricard Europe, Pernod Ricard Americas and Pernod Ricard Asia, distribute local brands. Advisors' Opinion:

[By Charles Sizemore]
But its current valuation��t trades at 31 times earnings��akes me pause. At that price, you are implicitly expecting one of two things to happen:
The American whiskey boom continues unabated for years��nd isn�� replaced by something new and trendy. Brown-Forman will be acquired by a larger competitor (think Diageo or Pernod-Ricard (PDRDY)).
The first assumption is one I�� be hesitant to make given the whims of fashion. And the second is even less likely. Brown-Forman is family controlled, and in the past the company has very adamant about preserving its independence.

Best Consumer Stocks To Buy Right Now: Monster Beverage Corp (MNST)

Monster Beverage Corporation, formerly Hansen Natural Corporation, incorporated on April 25, 1990,is a holding company. The Company develops, markets, sells and distributes alternative beverage. The alternative beverage category combines non-carbonated ready-to-drink iced teas, lemonades, juice cocktails, single-serve juices and fruit beverages, ready-to-drink dairy and coffee drinks, energy drinks, sports drinks, and single-serve still water (flavored, unflavored and enhanced) with new age beverages, including sodas that are considered natural, sparkling juices and flavored sparkling beverages. It has two reportable segments, namely Direct Store Delivery (DSD), whose principal products comprise energy drinks, and Warehouse (Warehouse), whose principal products comprise juice-based and soda beverages. The DSD segment develops, markets and sells products primarily through an exclusive distributor network, whereas the Warehouse segment develops, markets and sells products primarily directly to retailers. Corporate and unallocated amounts that do not relate to the DSD or Warehouse segments specifically, have been allocated to Corporate and Unallocated.

During the year ended December 31, 2012, it continued to expand its existing product lines and flavors and further develop its distribution markets. In particular, it continued to focus on developing and marketing beverages that fall within the category generally described as the alternative beverage category. During the year ended December 31, 2012, it introduced a number of new products, including Monster Rehab Tea + Orangeade + Energy, a non-carbonated energy drink with electrolytes, Monster Energy Zero Ultra, a carbonated energy drink which contains zero calories and zero sugar, bermonster Energy Brew, a non-alcoholic energy drink, manufactured using a brewed fermentation process, Hansen�� Coconut Water, in original and tropical flavors, packaged in re-sealable Tetra Prisma boxes, Peace Tea Cranberry, Pink Lemonade and Texas-Style Sweet ! Tea, ready-to-drink iced teas, Monster Cuba-Lima, a carbonated lime flavored non-alcoholic energy drink, Monster Energy Dub Edition Baller�� Blend, a carbonated punch + energy drink and Monster Energy Dub Edition Mad Dog, a carbonated punch + energy drink.

DSD Segment

Monster Energy Drinks offers products under the Monster Energy drink product line: Monster Energy, Lo-Carb Monster Energy, Monster Energy Assault, Monster Khaos, Monster M-80 (named Ripper in certain countries), Monster MIXXD, Monster Energy Absolutely Zero, Monster Energy Import and Import Light, Monster Energy Dub Edition Baller�� Blend, Monster Energy Dub Edition Mad Dog, M3 Monster Energy Super Concentrate energy drinks, bermonster Energy Brew, Monster Energy Zero Ultra and Monster Cuba-Lima.

Java Monster Coffee + Energy Drinks - A line of non-carbonated dairy based coffee + energy drinks. It offers products under the Java Monster product line: Java Monster Kona Blend, Java Monster Loca Moca, Java Monster Mean Bean, Java Monster Vanilla Light, Java Monster Irish Blend and Java Monster Toffee. Monster Energy Extra Strength Nitrous Technology Energy Drinks - A line of carbonated energy drinks containing nitrous oxide. It offer products under the Monster Energy Extra Strength Nitrous Technology product line: Super Dry, Anti Gravity and Black Ice.

-Presso Monster Coffee + Energy Drinks - A line of non-carbonated dairy based coffee + energy drinks. It offers products under the X-Presso Monster coffee + energy drinks product line: X-Presso Monster Hammer and X-Presso Monster Midnite.

Monster Rehab Tea + Energy Drinks - A line of non-carbonated energy drinks with electrolytes. It offers products under the Monster Rehab drink line: Monster Rehab Tea + Lemonade + Energy, Monster Rehab Rojo Tea + Energy, Monster Rehab Green Tea + Energy, Monster Rehab Protean + Energy and Monster Rehab Tea + Orangeade + Energy.

Worx Energy Energy Shots - A line of energy suppleme! nts which! contains zero calories and zero sugar. It offers products under the Worx Energy energy shot product line: Original Formula and Extra Strength.

Peace Tea Iced Teas - A line of ready-to-drink iced teas. It offers products under the Peace Tea product line: green tea, imported Ceylon tea, sweet lemon tea, razzleberry tea, cranberry tea, pink lemonade tea, Texas-style sweet tea and Caddy Shack tea + lemonade.

Warehouse Segment

Hansen�� brand sodas have been a natural soda brand on the West Coast of the United States for more than 30 years and are made with natural flavors. Hansen�� brand sodas, sweetened with cane sugar, and Hansen�� Diet Sodas, sweetened with Splenda no calorie sweetener and Acesulfame-K, contain no preservatives, sodium, caffeine or artificial colorings. It offers sodas under the Hansen�� brand name: Hansen�� Sodas, Hansen�� Diet Sodas and Hansen�� Natural Mixers, as well as Hansen�� Sparkling Waters, in a variety of flavors.

Its Blue Sky products contain no preservatives, artificial sweeteners, caffeine (other than its Blue Sky energy drinks) or artificial coloring and are made with sugar and natural flavors. It offers products under the Blue Sky product line: Blue Sky Natural Soda, Blue Sky Zero Calorie Sodas (sweetened with Truvia brand stevia extract, an all natural sweetener), Blue Sky Premium Sodas, Blue Sky Organic Natural Sodas, Blue Sky Seltzer Waters, Blue Sky Blue Energy drinks, Blue Sky Zero Calorie Blue Energy drinks, Blue Sky Caf Energy drinks and Blue Sky Recover Energy drinks.

Its original Hansen�� energy drinks compete in the functional beverage category, namely, beverages that provide a benefit in addition to simply delivering refreshment. It offers products under the Hansen�� energy drink product line: Hansen�� Natural Energy Pro, Hansen�� Energy Diet Red and Hansen�� Natural Stamina Pro.

Its fruit juice product line includes Hansen�� Natural Apple Juice, Ha! nsen�� ! Natural Grape Juice, White Grape Juice, Pineapple Juice, Apple Grape Juice, Apple Strawberry Juice, Orange Juice, Cranberry Juice, Cranberry-Apple Juice, Cranberry-Grape Juice, Ruby Red Grapefruit Juice, and Organic Apple Juice. In March 2012, it added Hansen�� Natural Apple Orange Pineapple Juice which contains 100% juice as well as 120% of the United States Recommended Daily Allowances (the USRDA) for vitamin C. It also offer Hansen�� Natural Lo-Cal juice cocktails, a line of all natural, low-calorie cocktails in four flavors. The Lo-Cal juice cocktails are sweetened with Truvia sweetener. Hansen�� juice products compete in the shelf-stable juice category.

It offers a number of aseptically packed boxed juice products, including its dual-branded multi-vitamin 100% juice line, which itsell in conjunction with Costco Wholesale Corporation (Costco) through Costco stores. It offers its Hansen�� Natural line of multi-vitamin 100% juices to other customers. These multi-vitamin juices contain eleven essential vitamins and six essential minerals and are available in a variety of flavors. In February 2012, it added Hansen�� Natural Organic Apple Juice, a 100% USDA Certified Organic Apple Juice with 100% of the USRDA for vitamin C.

Its Hansen�� Junior Juice product line is a 100% juice line targeted at toddlers and preschoolers. These juices have added calcium and all flavors contain 100% of the daily recommended allowance of vitamin C. It also offers organic juices as well as Hansen�� Organic Junior Water, a lightly flavored reduced calorie beverage, both of which contain 100% of the daily recommended allowance of vitamin C. In addition, it offers Junior Juice Coconut Water Twist, a line of fruit and coconut water juices containing 100% of the daily recommended allowance of vitamin C.

Its Hubert�� Lemonade is a line of premium ready-to-drink lemonades. Hubert�� Lemonade is sweetened with cane sugar and Truvia sweetener. Hubert�� Lemonade i! s all nat! ural and contains no preservatives, artificial sweeteners, caffeine, or artificial colorings. It offers products under the Hubert�� Lemonade product line: Strawberry Lemonade, Limeade, Mango Lemonade, Honey Lemonade, Raspberry Lemonade and Original Lemonade. It added Cherry Limeade and Blackberry Lemonade flavors to the product line in February 2012 and October 2012, respectively. In July 2012, it introduced 4-count multi-packs of select flavors.

Hubert�� Half & Half is sweetened with cane sugar and Truvia sweetener, and contains no preservatives, artificial sweeteners, or artificial colorings. Its Fruit and Tea Stix product line is an all-natural, low-calorie powder drink mix line, sweetened naturally with Truvia sweetener. Its Angeleno Aguas Frescas is a line of premium ready-to-drink aguas frescas. Angeleno Aguas Frescas are sweetened with cane sugar and real fruit juice and contain no preservatives, artificial sweeteners, caffeine, or artificial colorings. It offers flavors under the Angeleno Aguas Frescas product line: Mango, Melon, Pineapple, Jamaica (Hibiscus) and Tamarindo. Its Hansen�� Natural PRE products include a line of prebiotic and probiotic digestive wellness ready-to-drink beverages and powder drink mixes, containing specially formulated blends by Jarrow Formulas. PRE prebiotic ready-to-drink beverages are sweetened with either cane sugar or stevia. PRE probiotic powder drink mixes are sweetened with cane sugar and stevia. In March 2012, it introduced Hansen�� Natural Coconut Water, a line of premium 100% Coconut Waters available in Pure and Tropical flavors.

The Company competes with TCCC, PepsiCo, Inc. (PepsiCo), The Dr. Pepper Snapple Group, Inc. (the DPS Group), Red Bull Gmbh, Kraft Foods, Inc., GlaxoSmithKline plc, Nestle Beverage Company, Tree Top Inc. (Tree Top), Ocean Spray Cranberries Inc. (Ocean Spray), Red Bull, Rockstar, Full Throttle, No Fear, Amp, Adrenaline Rush, NOS, Venom, Redline, 180, Red Devil, Rip It, Xenergy, 5-Hour Energy ! Shots, Mi! O Energy, Stacker 2, VPX Redline Energy Shots, Red Bull, Rockstar, Burn, V-Energy, Lucozade, Adrenaline Rush, Power Play, Mother, Hell, Shock, Tiger, Boost, Gladiator, TNT, Shark, Hot 6, Nalu, Battery, Bullit, Flash Up, Black, Non-Stop, Bomba, Semtex, Starbucks Frappuccino, Starbucks Double Shot, Starbucks Double Shot Energy Plus Coffee , other Starbucks coffee drinks, Rockstar Roasted, Seattle�� Best, illy issimo coffee, Full Throttle Coffee, Arizona, Lipton, Snapple, Nestea, Xing Tea, Honest Tea, Gold Peak Tea, Fuze Tea, the DPS Group, Cott Corporation and National Beverage Corporation, Jones Soda Co., Crystal Geyser, J.M. Smucker Company, Reeds, Inc., Zevia, Tree Top, Mott��, Martinelli��, Welch��, Ocean Spray, Tropicana, Minute Maid, Langers, Apple , Eve, Seneca, Northland, Juicy Juice, Old Orchard, Calypso, Simply Lemonade, Minute Maid, Cabana, Tropicana, Newman�� Own, Vita Coco, ZICO and O.N.E.

Advisors' Opinion:

[By Sue Chang and Ben Eisen]
Monster Beverage Corp. (MNST) �shares slid 3.2%. The energy drink company was recently sued by the Beastie Boys for using music by the band for a Internet video without authorization. ��onster in good faith believed it had obtained the rights to use a compilation of certain Beastie Boys music for an Internet video,��said the company in a statement last week.
[By Sean Williams]
Energy drink maker Monster Beverage (NASDAQ: MNST ) ascended to the heavens, up 10.5%, following comments from CEO Rodney Sacks, who reiterated the safety of the company's energy drinks in the wake of an ongoing Food and Drug Administration probe into their safety and noted that sales trends are improving. Sacks was quick to point out that this isn't necessarily indicative of a long-term improvement in sales trends, but investors are nonetheless thrilled to see sales picking up. I, however, would suggest exercising caution as the regulatory cloud over the energy drink sector is growing and Monster isn't growing at nearly the same rate it was even a year ago.

Best Consumer Stocks To Buy Right Now: Verifone Systems Inc.(PAY)

Verifone Systems, Inc. designs, markets, and services electronic payment solutions in North America and internationally. It provides system solutions, including countertop electronic payment systems that accepts magnetic, smart card, contactless/ radio frequency identification(RFID) cards, and near field communication(NFC) enabled mobile phones; secure PIN pads that support credit and debit transactions; and wireless system solutions that support Internet protocol-based code division multiple access, general packet radio service, bluetooth, and wireless fidelity technologies. The company also offers products for consumer-activated functionality at the point of sale; contactless/NFC payment solutions consisting of contactless readers primarily for consumer-activated transactions with contactless cards, tokens, and NFC-enabled mobile phones; and Gemstone family of products comprising integrated electronic payment systems for petroleum companies. In addition, it provides serv er-based payment processing software and middleware; unattended and self-service payments hardware and software integration modules, such as vending machines, ATMs, ticketing kiosks, petroleum dispensers, public transportation turnstiles and buses, self-checkout, bill payment, and photo finishing kiosks; retail bank branch solutions; mass transportation solutions; and network access solutions. Further, the company offers client services, customized application development, advertising publishing, taxi payments and advertising, cardholder data security, annual software maintenance program, and repair services. It serves financial institutions, payment processors, petroleum companies, large retailers, taxi fleets, government organizations, healthcare companies, independent sales organizations, and advertisers. The company was formerly known as VeriFone Holdings, Inc. and changed its name to VeriFone Systems, Inc in May 2010. VeriFone Systems, Inc. is headquartered in San Jose, California.

Advisors' Opinion:

[By Paul Ausick]
Big Earnings Movers: Specialty retailer Quiksilver Inc. (NYSE: ZQK) is up 31.7% at $6.85. Smith & Wesson Holding Corp. (NASDAQ: SWHC) is down 10.2% at $10.31 after issuing weak guidance. Mattress Firm Holding Corp. (NASDAQ: MFRM) is down 14.6% at $35.59. Korn/Ferry International (NYSE: KFY) is up 11.2% at $20.81 after posting a new 52-week high of $20.93 earlier. VeriFone Systems Inc. (NYSE: PAY) is up 10.1% at $22.81. Zumiez Inc. (NASDAQ: ZUMZ) is up 11.2% at $28.11.
[By Monica Gerson]
Breaking news
Energy XXI (NASDAQ: EXXI) and EPL Oil & Gas (NYSE: EPL) today announced the signing of a definitive merger agreement pursuant to which Energy XXI will acquire all of EPL's outstanding shares for total consideration of $2.3 billion, including the assumption of debt. To read the full news, click here. Achaogen (NASDAQ: AKAO) announced today the pricing of its initial public offering of 6,000,000 shares of its common stock at a price to the public of $12.00 per share. To read the full news, click here. Geron (NASDAQ: GERN) announced today that the company has received verbal notice from the U.S. Food and Drug Administration (FDA) that its Investigational New Drug (IND) application for imetelstat has been placed on full clinical hold, affecting all ongoing company-sponsored clinical trials. To read the full news, click here. VeriFone (NYSE: PAY) jumped 9.5% in pre-market trading after the company reported its first quarter results. The firm reported a Q1 EPS of $0.31 versus the Street estimate of $0.27. To read the full news, click here.
Posted-In: Credit Suisse US Stock FuturesNews Eurozone Futures Global Pre-Market Outlook Markets
[By Roland Head]
VeriFone (NYSE: PAY ) may fall this morning after the firm revealed a second-quarter loss of $0.54 per share after markets closed last night, down from a $0.03 per-share profit for the same period last year. The firm blamed high legal costs for the loss, but its shares closed down by 5% last night and are down by almost 15% in premarket trading this morning. Vera Bradley may also fall after reporting a 27% fall in first-quarter profit and cutting its full-year guidance; the handbag designer's share price is down 11% in premarket trading this morning.

Best Consumer Stocks To Buy Right Now: Toyota Motor Corp Ltd Ord(TM)

Toyota Motor Corporation engages in the design, manufacture, assembly, and sale of passenger cars, minivans, and commercial vehicles. It offers conventional engine vehicles, including subcompact and compact cars under the Corolla, Yaris, micropremium iQ, Passo, Ractis, Vitz, and Etios brand names; mini-vehicles, passenger vehicles, commercial vehicles, and auto parts under Toyota brand name; mid-size cars under the Camry, REIZ, Avensis, and Mark X brand names; luxury cars under the Lexus and Crown brands; Century limousine; sports cars under the Scion tC and Lexus brands; sport-utility vehicles under the Sequoia, 4Runner, RAV4, Highlander, FJ Cruiser, and Land Cruiser brands; pickup trucks under the Tacoma and Tundra brands; minivans under the Alphard, Vellfire, Corolla Verso, Wish, Hiace, Regius Ace, Estima, Noah, Voxy, Sienta, Isis, Passo Sette, and the Sienna brands; cabwagons; large, medium, and small trucks; and large, small, and micro-buses. The company also provides hybrid cars under Prius and Crown brands. In addition, it offers a range of financial services comprising retail financing, retail leasing, wholesale financing, and insurance; and credit cards and housing loans. Further, the company designs and manufactures prefabricated housing, as well as involves in the information technology related businesses, such as an e-commerce marketplace known as GAZOO.com; and sales promotions for KDDI communication related products, primarily the au brand. It sells its vehicles in approximately 170 countries and regions, including Japan, North America, Europe, and Asia. The company was founded in 1933 and is headquartered in Toyota City, Japan.

Advisors' Opinion:

[By Michael B. Sauter]
Not surprisingly, most of largest automakers have multiple cars among the top-sellers. Ford has three separate vehicles in the top 10, as does Honda (NYSE: HMC), while Toyota (NYSE: TM) has two. Nissan and General Motors — through Chevrolet — have one model each.

Thursday, June 19, 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.

Budget-Friendly Wedding Advice From Around the Web

Wedding budgets are at an all-time high, according to TheKnot.com's annual "Real Weddings Study." This top wedding-resource site's survey of 13,000 brides and grooms found that couples spent, on average, a record $30,000 in 2013. I've been to some wonderful weddings that cost at least that much or more. But I speak from experience when I say that you don't have to spend a lot to make your marriage celebration special.

SEE ALSO: Get Financially Ready for Wedding Season

My husband and I took the easy -- and cheap -- way out when we got married years ago. Just a few family members attended our nuptials on the beach, then we had a party with friends and extended family months later at the home of one of my parents' friends. As a result, we avoided the stress of planning a big event and spent only a small fraction of what many couples shell out. My husband still thanks me for taking a low-key, low-cost approach.

If you're planning a wedding for this summer (or any time), here are several tips from some of our favorite personal finance bloggers about ways to save money:

Your All-Inclusive Guide to Saving Money on Weddings [ReadyForZero]
"If you're planning a wedding this summer, taking part in one, or just attending one (or a few), then sit back and relax while I take you through all the ways to save this wedding season."

Unconventional Ways to Save Money on Your Wedding [And Then We Saved]
"Years of debt isn't worth one day of extravagance. Keep it simple and you'll be just fine."

Savvy Ways to Slash the Cost of Your Wedding Venue [Mint Life]
"The wedding venue can eat up a big slice of your wedding budget, so you might want to figure out ways to shrink that bill."

23 Cheap Wedding Reception Food & Drink Menu Ideas on a Budget [Money Crashers]
"There are plenty of ways to save money on food and drink at your wedding, without sacrificing style or having guests leave with an empty stomach."

7 Ways to Save on Your Wedding Cocktail Tab [Savvy Sugar]
"We're serving up a few ideas on how to keep your beverage budget in line so that your dream wedding doesn't become the wet blanket for your big day!"

Wednesday, June 18, 2014

Beware state premium taxes on annuities

annuities, taxes, state taxes, tax planning

(iStock)

Don't be alarmed, but did you know that a handful of states slap premium taxes on carriers for annuities — and that some of that expense is being passed onto clients?

The practice has been ongoing for years, but it's largely been taking place under clients' noses. It's modeled into the quote investors receive.

It's not all that different from the tax nearly all states currently levy on life insurance premiums — and that's been going on since the 1800s, according to Leonard Wright, a certified public accountant and personal finance specialist.

There are currently eight jurisdictions that apply state premium taxes to clients' deposits into annuity contracts: California, Florida, Maine, Nevada, Puerto Rico, South Dakota, West Virginia and Wyoming. The tax applies based on the residence of the buyer.

“Life insurers aren't taxed on net income but on the gross premiums in each state,” said Jim Hall, regional vice president at the American Council of Life Insurers, an industry advocacy group. “The annuity tax works like a premium tax on the gross amount received.”

(Don't miss: New annuities offer exposure to equities and downside protection)

Naturally, life insurance and annuities are priced with the expectation that the state in which the client resides will take its slice of the premium dollars. This way, the company pays the tax and the expense is subsequently deducted from the client.

Rates for non-qualified annuities, according to the ACLI, include: California: 2.35%; Florida: 1%; Maine: 2%; Nevada 3.5%; Puerto Rico: 1%; South Dakota: 1.25%; West Virginia 1% and Wyoming: 1%.

For qualified annuities, California taxes insurers at a 0.5% rate. In Florida, Puerto Rico and West Virginia, they are taxed at 1%. The remaining jurisdictions — Maine, Nevada, South Dakota and Wyoming — do not tax qualified annuities.

In Florida, insurers are exempt from the annuity premium tax if they can show that they've passed the savings onto the policyholders in that state.

The extent to which an insurer passes the expense tied to the premium tax to the client varies from one insurer to another. Some companies pass on the full tax amount to the client.

“It's a matter of competition,” Mr. Hall said. “Some companies may incorporate it more. Others, less so.”

The timing of when the insurer passes on the expense can also vary. Insurance law statutes in California, Nevada and West Virginia permit the carrier to remit the tax to the state either when the client makes the deposit or when the! contract is annuitized. In the remaining states, however, the carrier pays the tax on the front end, according to Mr. Hall.

When a company decides to assess the tax expense on the customer is generally up to the carrier, however. “A company may be required to pay the tax on the front end, but they might assess it [to the customer] after annuitization,” Mr. Hall said.

But there are real planning implications for annuity purchasers in the eight jurisdictions. Mr. Wright specializes in the tax as it applies to contracts for residents in California and Nevada. What advisers need to bear in mind is whether the annuity is being held in a qualified account or in a non-qualified account.

The tax impact can be huge. In California, an annuity in a qualified account will be taxed at a rate of 0.50%. But if it's in a non-qualified account, the levy climbs to 2.35%.

“It forces you into a decision: Where should the annuity be held in the first place?” asked Mr. Wright. “Is it in a qualified plan where your distributions are considered ordinary income?”

Another factor to weigh, particularly with clients who may retire outside of states that tack on high levies: Should you hold off on the annuity purchase until you've relocated, since the annuity premium tax is based on residency? “If you want to move to Texas from Nevada, you'll pay less in taxes if you wait a year,” said Mr. Wright.

Regardless of how a client decides to proceed, it's important that advisers ensure that the annuity decision is the right call for the investor in the first place. The application of the annuity premium tax is just one consideration.

“If it is the right decision, don't let the tax tail wag the dog,” Mr. Wright added.

How I Dodged a Phony IRS Tax Scam

One morning last week when I answered the phone, a woman at the other end of the line told me she was with the IRS and that I was being investigated. My immediate reaction was panic. But as the caller started telling me why I supposedly was in trouble, I quickly realized that scammers -- not the IRS -- were targeting me.