Top Penny Stocks To Buy For 2015: 2014

Tuesday, May 20, 2014

Market Wrap for May 19: Markets Finish Higher On M&A Monday

Related BZSUM Mid-Afternoon Market Update: Markets Drift Higher Amid A Flurry Of Weekend M&A Activity Mid-Day Market Update: Campbell Soup Slides After Weak Forecast; InterMune Shares Spike Higher

Markets moved higher Monday after a weak morning to recover lost ground from last week's sharp sell off.

Major Averages

The Dow Jones Industrial Average rose 20.55 points, or 0.12 percent, to 16,512.00.

The S&P 500 climbed 7.22 points, or 0.38 percent, to 1,885.00.

The Nasdaq Composite gained 35.23 points, or 0.86 percent, to close at 4,126.00.

Monday, May 19, 2014

Biotech of the Week: Ariad Pharmaceuticals, Inc.

Ariad Pharmaceuticals (NASDAQ: ARIA ) is the biotech of the week on the Fool's weekly biotech-focused show, Biotech Banter.

Shares of the biotech have been on a bit of a roller coaster over the last year as investors went from having high hopes for Ariad Pharmaceutical's leukemia drug Iclusig to seeing the drug getting pulled from the market because the drug is linked to blood clots. After returning to the market, Ariad's shares have more than doubled off their lows, but are still well off of where they were when investors thought Iclusig could compete with Novartis' (NYSE: NVS ) Gleevec and Bristol-Myers Squibb's (NYSE: BMY ) Sprycel as first-line treatments.

For now Iclusig is stuck as a treatment of last resort, mostly used on patients that can't take or have failed Novartis' and Bristol-Myers Squibb's drugs, but there's potential to increase sales if Ariad Pharmaceuticals can show that the risk-benefit profile is better at lower doses. Blood thinners might also help lower the risk of blood clots.

As senior biotech specialist Brian Orelli and health-care analyst David Williamson discuss in the video below, there's also potential for the drug to work in patients with solid tumors who might not have to take the drug for as long.

Our CIO thinks this stock will have a much better 2014
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Saturday, May 17, 2014

Amazon's Retail Strategy Needs a Soundtrack

NEW YORK (TheStreet) -- While I've never had a problem with Amazon.com (AMZN) ripping off other people's ideas, it's starting to get a bit old. And there's more than a halfway chance the approach could produce diminishing returns if it hasn't started to already.

Granted Jeff Bezos can claim the wholesale redefinition and disruption of retail, expanding Sunday delivery via the USPS and forthcoming package drops by drone as his own, but he's lifted pretty much everything else.

Amazon Fresh -- that's a Webvan knockoff.

Paying people to quit -- that's an aqui-idea (my word, trademark pending) courtesy of Zappos.com. Outside of the Kindle e-reader, Amazon's actual and rumored pieces of hardware have been little more than knockoffs. You can argue Kindle Fire came on the heels of the e-reader, but it was just a response to Apple's (AAPL) iPad. As much as I love Amazon's Fire TV, it's still an answer to Apple TV, the Roku player and similar devices. If Amazon does a smartphone, same deal. It's not much different in consumer-centric software and services. Online video -- Amazon's taking on Netflix's (NFLX). And -- soon -- Amazon will take pretty much the free world's lead and do some sort of streaming music service. The argument that these initiatives -- across hardware and software/services -- build Amazon's ecosystem, make Amazon Prime more attractive (in some instances) and ultimately drive e-commerce sales is a good one. I've made it so many times there's no need to provide a link. However, if you're a fan of Amazon -- as a consumer service, company and stock (I'm still long-term bullish) -- you've got to be longing for something more. Something that changes the game and, in turn, has an even bigger impact on Amazon's core revenue stream. There's an opportunity for Amazon to do this with its forthcoming streaming music service. We know it's coming. Amazon has sent out an Apple-like take-it-or-leave-it contract to independent record labels. And, in light of the potential Apple-Beats Electronics deal, it might make sense for Amazon to expedite whatever plans it has. I just want the result to be more exciting than what we saw with, say, Fire TV, where a couple extra features begin and end the hype. How can Amazon move the needle? Here's how ...

Stock quotes in this article: AMZN, AAPL, P

While it remains to be seen how effective it will be, the recent partnership that lets Amazon customers put items in their cart via Twitter (TWTR) provides hope that there's a modicum of thought at Amazon beyond kicking retail's losers while they're down and following pop technology trends. If there's any place where Amazon can continue to tunnel this trajectory to more innovative ground it's by using streaming radio for some other ends than to play music, pay royalties and add (perceived) value to Amazon Prime.

I provided some color earlier this year on how this might look in Amazon Music Could Be Songza: Songza aims to provide the perfect advertisement and, quite possibly, the ideal e-commerce opportunity for what you're doing, thinking, feeling. The idea is that music acts as the soundtrack for people's lives -- from big think, all-encompassing and day-to-day activity standpoints. That's at least how it was explained to me last year when I did some digging and talked to people about Songza's plans. It's not there yet, but that's the thought process behind the ongoing evolution. And what better way to get there than having Amazon put the full power of its beast behind you. Plus, if the aforementioned model isn't right up Amazon's alley, I'm not sure what is.

The looks less and less like that'll actually happen, the more and more I think about it and wonder why.

If you're Amazon and you're going to get into some flavor of music-driven streaming media, it seems to me you risk underwhelming both Wall Street and consumers with some tired iteration of Google (GOOG) Play on the on-demand side or Pandora (P) or Apple's iTunes Radio on the radio side. How much value is that really going to add to Prime? I can't imagine droves of people dumping whatever they're using now to use whatever Amazon puts out. However some will use Amazon's offering along with what they're already using -- especially if they're already Prime members -- and even more bodies will at least check it out if there's a distinctive wrinkle. This is probably the most boring video I'll ever embed in an article, but it's apropos to the conversation. In it the president of the Songwriter's Guild testifies before Congress in favor of better compensation for songwriters. I'm on board with him, but it's the music sells everything message he delivers at the beginning of this clip you need to pay attention to with respect to Amazon. It's only a few seconds long: Whether it's via Songza, doing something Songza-like (another knockoff!) or something all together different, it would be nice to see Amazon find some sort of e-commerce tie-in for its forthcoming streaming radio service. Something nobody has done yet. Something that creatively and respectfully marries the association between music as everything from a soundtrack to the background in our lives with our penchant to buy stuff online. Our tendency to make impulse purchases while surfing Amazon and listening to music. Some type of thoughtful integration of the Amazon e-commerce platform with its streaming radio interface. If anybody can pull this off, it might be Amazon. And it would make a much larger and more meaningful splash than the introduction of another Pandora killer that has zero chance of killing Pandora. Plus it might provide a different path for every type of Amazon customer (prospective, light, emerging, heavy Prime user, etc.) to buy stuff from the top dominator that doubles as an imitator in retail/technology. Follow @mynameisrocco --Written by Rocco Pendola in Santa Monica, Calif. >>Read More: Amazon and Netflix Are Going After Your Kids WWE Announces New Television Deal with NBC Universal Big Media Will Win With or Without Net Neutrality

Stock quotes in this article: AMZN, AAPL, P Rocco Pendola is a full-time columnist for TheStreet. He lives in Santa Monica. Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Friday, May 16, 2014

Top Undervalued Stocks For 2015

Top Undervalued Stocks For 2015: Tupperware Corporation(TUP)

Tupperware Brands Corporation operates as a direct seller of various products across a range of brands and categories through an independent sales force. The company engages in the manufacture and sale of kitchen and home products, and beauty and personal care products. It offers preparation, storage, and serving solutions for the kitchen and home, as well as kitchen cookware and tools, children?s educational toys, microwave products, and gifts under the Tupperware brand name primarily in Europe, Africa, the Middle East, the Asia Pacific, and North America. The company provides beauty and personal care products, which include skin care products, cosmetics, bath and body care, toiletries, fragrances, nutritional products, apparel, and related products principally in Mexico, South Africa, the Philippines, Australia, and Uruguay. It offers beauty and personal care products under the Armand Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo, and Swissgar de brand names. The company sells its Tupperware products directly to distributors, directors, managers, and dealers; and beauty products primarily through consultants and directors. As of December 26, 2009, the Tupperware distribution system had approximately 1,800 distributors, 61,300 managers, and 1.3 million dealers; and the sales force representing the Beauty businesses approximately 1.1 million. The company was formerly known as Tupperware Corporation and changed its name to Tupperware Brands Corporation in December 2005. The company was founded in 1996 and is headquartered in Orlando, Florida.

Advisors' Opinion:

[By Jonathan Berr]
Multilevel marketing (MLM) groups such as Herbalife operate through independent sales representatives, who earn money both through the sales of product and by recruiting other people to join their team. This busine! ss model — which is used by scores of companies, including Pampered Chef, which is owned by Warren Buffett’s Berkshire Hathaway (BRK.B), Tupperware (TUP) and Mary Kay Cosmetics — is legal provided that actual products are sold.
[By Johanna Bennett]
Corporate earnings took a back seat today to the Fed's latest policy decision. Still, quarterly financial results, and other news sent shares of McCormick & Co. (MKC) and Tupperware (TUP), falling during regular market hours Here's a rundown of several of today's moves:

source from Top Stocks Blog:http://www.topstocksblog.com/top-undervalued-stocks-for-2015.html

Thursday, May 15, 2014

Deutsche Bank sells Vegas casino for $1.73B

LAS VEGAS (AP) — Deutsche Bank is cutting itself free of The Cosmopolitan of Las Vegas resort and casino, saying it's selling the swanky but unprofitable high-rise complex on the Strip to Blackstone Real Estate Partners VII for $1.73 billion.

The German investment bank said in a statement Thursday that the cash deal remains subject to regulatory approvals. The bank had intended to sell the property from before it even opened in 2010 and had placed The Cosmopolitan in a separate bank division devoted to winding down or selling unwanted investments.

Blackstone, which owns $81 billion in real estate assets globally and describes itself as the largest opportunistic real estate investment manager in the world, is in the business of buying underperforming property and re-selling it after making improvements. It owns nearly 1,000 homes in Nevada and the upscale Hughes Center office complex in Las Vegas, as well as a small portion of casino company Caesars Entertainment.

"Blackstone recognizes the value and potential in the Cosmopolitan and Las Vegas, and looks forward to working to build on the success to date," Tyler Henritze, the company's senior managing director, said in a statement.

The last major Las Vegas resort approved before the Great Recession, the $3.9 billion Cosmopolitan, was built by Deutsche Bank after its original developer defaulted on a loan. Initially conceived as a condo complex, it retains large rooms and kitchenettes even though the project morphed into a hotel after the housing market crashed.

The Cosmopolitan has branded itself as a "decidedly different" kind of casino, eschewing the kitschy themes common among its competitors and catering to a more urbane kind of gambler and club-goer with the tagline "just the right amount of wrong."

The casino is home to Marquee, one of the top-grossing nightclubs in the United States, and features a three-story bar enveloped by a giant chandelier.

But its emphasis on entertainment and celebrity-chef-run re! staurants over gambling, and a smaller database of regular gamblers than its casino chain competitors, hit the resort's bottom line.

"Optimally you want to use the food and beverage as a driver for gambling," said David G. Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas. "They've definitely struggled to establish an identity as a gaming destination on the Strip."

While gambling revenues citywide remain lackluster, tourism overall is on the rebound and hotel rooms are commanding higher rates. In March, the city's average daily room rate rose 21 percent from a year earlier, according to tourism officials.

"Hotels are hot again across the board," said Leo Leyva, an attorney who advises private equity firms on acquisitions and who wasn't involved in the Blackstone deal. "Deutsche was strong enough not to just dump it in the worst market. They've waited for the market to move. Hotels are now an investment that's rising."

Officials at the resort said they were "genuinely excited" to hear about the sale.

"This marks the beginning of the next chapter for The Cosmopolitan of Las Vegas and the thousands of dedicated CoStars who are committed to providing a compelling guest experience," CEO John Unwin said. "It is a testament to our unique approach to the Las Vegas market."

Associated Press writer David McHugh in London contributed to this report.

Tuesday, May 13, 2014

Union Pacific: Right on Schedule

The winter of 2013/2014 was one most transportation companies—including railroads—would probably like to forget.

As the so-called polar vortex lashed the Midwest, Northeast and much of Canada, many railways were forced to shorten their train lengths and their crews' exposure to the frigid temperatures. The weather also delayed numerous shipments, which weighed on some railways' first quarter profits.

CSX Corp. (NYSE: CSX), for example, cited the brutal winter as the main reason why its first quarter earnings fell 13.9% from a year earlier. The company said the weather cost it $0.08 to $0.09 a share in higher expenses and lost revenue.

Polar Vortex Couldn't Keep Union Pacific Down

One railway that managed to prosper despite the wild winter was Union Pacific (NYSE: UNP), a recommendation of our Personal Finance newsletter.

Union Pacific's roots go all the way back to the Civil War, when President Lincoln approved the Pacific Railroad Act of 1862 to encourage expansion in non-Confederate territories. Since then, it has grown through mergers and acquisitions, including the Southern Pacific, Missouri Pacific and Western Pacific railroads.

Today, the company operates a 32,000-mile freight network in the western two-thirds of the country, where it spans 23 states.

Union Pacific's revenue is well-diversified across six different categories of freight: intermodal, or containers that can be loaded onto ships, trucks or trains (20% of 2013 revenue); coal (19%); industrial products (18%); agricultural (16%); chemicals, including oil from U.S. shale plays like the Bakken, Permian and Eagle Ford (17%); and automotive (10%).

Despite the wintry blast—and an earlier caution from the company that the severe winter would affect its profits—its first quarter net income rose 13.7% from a year earlier, to $1.09 billion. Per-share earnings gained 17.2%, to $2.38, on a lo! wer share count due to Union Pacific's ongoing buybacks. That topped the consensus forecast by a penny.

Overall revenue rose 6.6%, to $5.64 billion, though that missed the Street's estimate of $5.70 billion. The company saw revenue gains across all of its segments except automotive, which was flat. Agricultural revenue rose 16%, followed by industrial (up 10%), intermodal (up 4%), coal (up 3%) and chemicals (up 2%).

A key metric of a railroad's health is its operating ratio, which measures operating costs against revenue (the lower the ratio, the better). Here, Union Pacific once again showed that it's among the most efficient railroads in the U.S., posting a record first quarter operating ratio of 67.1%, down from 69.1% a year ago.

"Union Pacific achieved record first quarter financial results, leveraging the strengths of our diverse franchise in the face of challenging weather conditions," said CEO Jack Koraleski. "We're proud of the efforts of the men and women of Union Pacific, who worked tirelessly to serve our customers despite these weather challenges and helped us achieve such a solid start to the year."

Geography Brings Special Advantages

Trains haul over 40% of America's intercity freight, and the railroad sector's prospects continue to look bright. Despite the unsteady start to the year, railroads are expected to post a 7.4% earnings increase over last year, according to an April 25 report from Zacks, while revenue is forecast to increase 4.4%.

There are a number of factors fueling the sector's ongoing growth. A major one is efficiency: according to the Association of American Railroads, shipping freight by rail is four times more fuel-efficient than doing so by truck. Moreover, railroad fuel efficiency is up 99% since 1980.

That, plus Union Pacific's concentration in the west, gives the company a significant edge over big rigs, according to Investing Daily analyst Benjamin Shepherd:

"In California, the toughe! st diesel! emission standards in the country come into effect this year, requiring the retrofitting of about one million trucks with smog filters," he wrote in the March 26 issue of Personal Finance.

"Many aging trucks will be forced to cease operation altogether. In another decade, no truck more than 13 years old will be able to operate in the state without extensive modification, requiring the trucking industry to replace much of its operating capacity. That will have a huge impact on West Coast freight rates for several years to come."

Intermodal Shipments Steaming Ahead

Many of the goods railroads ship are cyclical or seasonal in nature, but intermodal shipments continue to show steady growth. The American Association of Railroads recently reported that intermodal traffic rose 6.7% in the last week of April, compared to the same week a year earlier, while the 10-week moving average was up 8.5% from a year ago.

The long-term picture looks just as bright: according to the American Trucking Association's 2013 U.S. Freight Transportation Forecast, intermodal shipping will continue to be the fastest-growing freight mode, increasing by an average of 5.1% a year until 2018, before easing off to a 4.8% annual growth rate to 2024.

In response, Union Pacific has invested heavily in developing its intermodal capacity from the Port of Long Beach to Chicago. This year, it plans a total of $3.9 billion in capital expenditures, up from $3.6 billion in 2013.

Of that total, $1.1 billion will go toward projects that support the company's growth and improve its productivity, such as continuing to add a second line of track along the Sunset Corridor, which runs from Los Angeles to El Paso.

In addition, Union Pacific opened its $400-million intermodal facility in Santa Teresa, New Mexico, in April. The terminal, which is located along the Sunset Corridor, is near the Maquiladora industrial area in northern Mexico and will serve as a focal point for moving freight across ! the borde! r.

Thanks to rising trends in the industry and its own unique advantages, Union Pacific's revenue is expected to grow by more than $1 billion this year, to $23.5 billion. Earnings are forecast to jump from $9.42 a share last year to $10.91 in 2014, and analysts see profits continuing to climb, to $12.35 a share, in 2015.

With a lean operation and a strong presence in several growing markets, Union Pacific's growth looks set to chug along for years to come. Long-term investors should consider climbing aboard.

In the March 26 issue of Personal Finance, Benjamin Shepherd gave readers his very latest outlook for the railroad sector and revealed the names of two more railways that are primed for growth as the industry—and the U.S. economy—picks up steam.

Learn all about these proven winners when you road test Personal Finance risk-free for 90 days. Simply go here to sign up now.

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Monday, May 12, 2014

Cree Looks Like a Solid Long-Term Buy

LED specialist Cree (CREE) crashed after the company's guidance for the current quarter turned out to be weaker than expected. Cree's management is looking to capture more market for its LED products, a space where bigger players such as General Electric and Philips also operate.

This is the reason why Cree is stepping up its marketing efforts, but unfortunately, the Street doesn't seem to be recognizing this. Analysts put their earnings expectations for the ongoing quarter at $0.44 per share, but Cree's management guided in the range of $0.36 to $0.41 per share. This looks like a big miss, but the long-term prospects still look good.

A Huge Market and Solid Products

Cree operates in a market that's expected to see annual growth rates of 34% till 2016 and then 13% till 2020. By 2020, the LED lighting market is expected to be worth $94 billion, according to McKinsey, and Cree looks well-positioned to tap this opportunity through its products.

Cree's 40-watt replacement LED light bulb, which costs $9.97, is priced below rival products such as those from General Electric. In addition, Cree's bulb is more efficient, delivering the same 450 lumens as GE's light but consuming 50% less electricity. In addition, Cree's recently launched XSPR Series Street Light that costs $99 is expected to make replacing sodium street lights cost-effective and 65% more energy-efficient.

Cree has been seeing good order momentum for the past few quarters and the trend continued in the previous one as well. The company is expecting growth across all its business segments in the present quarter. Management believes that the company is in a great position to take advantage of the growing popularity of LED lighting and it certainly has the right products to tap this market.

Aggressive marketing moves should add momentum to Cree's already flourishing business. Its quarterly results weren't bad at all, as revenue grew 24% from the prior-year period while net income spiked 89%. But to remain competitive, Cree will have to keep churning out innovative products and also undertake efforts to make the public aware about them. And it seems to be progressing well on both counts.

Competition on the Way

However, Cree should brace for competition from the likes of Wal-Mart (WMT), which recently made an aggressive move into the LED light bulb market. Wal-Mart recently announced its "Great Value" range of LED bulbs that would retail for under $10 in all its stores in the U.S. and also Walmart.com. Wal-Mart claims that these bulbs would be 80% more efficient, discharge 40% less heat, and last 25 times longer than a traditional light bulb.

Wal-Mart is a behemoth with thousands of stores in the U.S., and its move into selling LED bulbs for a competitive price could hurt Cree. However, Cree's bulbs sell at home-improvement retailer Home Depot, which has a footprint of 2,258 stores in 50 states. This partnership has proven fruitful so far, as evidenced by the revenue jump in the previous quarter.

Catalysts Ahead

Cree's LED bulb won the 2013 Innovation Award at Home Depot last month and the home-improvement retailer is quite impressed by how Cree's offerings have been doing. According to Home Depot management, the Cree TrueWhite bulb "gives out some of the best natural color when compared to other LED bulbs in the market." Hence, Cree is finding good traction through Home Depot.

In addition, Cree has also earned the Energy Star qualification for its LED bulbs. This means that its bulbs now qualify for utility rebates through certain local utilities. This qualification and the accompanying rebate can further drive adoption of Cree's LED bulbs and help it compete against Wal-Mart's forthcoming challenge.

Another fact that could aid Cree's growth is the possible ban on traditional 40- and 60-watt bulbs. Last year, the government had banned 100-watt incandescent bulbs, and according to USA Today, a similar fate now awaits the smaller sizes. Cree offers a 10-year guarantee on its bulbs that could last as long as 22 years, apart from saving electricity.

Fundamentals

One thing that investors need to keep in mind is Cree's steep valuation. At a P/E ratio of 67, Cree is not the ideal pick for value investors. But those who are looking for growth should certainly take a closer look at it. The stock commands a premium because Cree's earnings are expected to grow rapidly.

This fiscal year, analysts are expecting earnings to grow 24%, followed by 35% next year. In the next five years, Cree's earnings are expected to grow at a CAGR of 15.5%. Due to such strong growth projections, Cree's forward P/E is just 26x. In the previous quarter, the company's earnings were up 89% year over year and this is why investors looking for growth shouldn't be scared of its steep valuation.

Conclusion

Cree has successfully grown its business in a market despite the presence of more illustrious players such as General Electric, Koninklijke Philips, OSRAM, etc. Cree's continuous focus on innovation has helped it gain lighting orders, and the company is also undertaking a series of cost-reduction programs to bolster its margins.

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Sunday, May 11, 2014

Australiaâ€™s Hiring Heats Up

Australia's employment streak has sustained itself for yet another month. According to the Australian Bureau of Statistics (ABS), the country's economy added 14,200 jobs in April, well ahead of economists' more conservative forecast of 8,800 jobs, and the fourth consecutive month of job gains.

In fact, over the past four months, overall employment has risen by 102,000 positions, with full-time employment accounting for more than 70 percent of the increase.

The unemployment rate remained unchanged, at 5.8 percent, which was one-tenth of a percentage point better than projected. However, the labor force participation rate declined by a tenth of a point, to 64.7 percent, just a tenth of a point off of the low for this cycle.

Also of note, the initial figure for March was revised higher, to a gain of 21,900 jobs from 18,100 jobs.

Full-time employment rose by 14,200 jobs, a stark contrast to last month's contraction of 22,700 full-time jobs. Meanwhile, part-time employment was essentially flat after last month's gain of 44,600 part-time jobs.

Full-time jobs are considered to be of higher quality than part-time jobs, since the latter tend to offer lower pay and less stability. Over the trailing year, full-time jobs have grown at an average 2,900 per month, while over the trailing six-month period the average has jumped to 10,600 positions per month. However, it should be noted that the latter number is skewed from February's blockbuster gain of 80,900 full-time jobs.

Growth in part-time employment has averaged 7,600 jobs per month over the trailing year and 5,900 jobs per month over the trailing six months.

The rise in employment was also mirrored by another increase in job advertisements. According to ANZ Research, which tallies the numbers of jobs advertised each month in the major daily newspapers and websites that serve Australia's capital cities, total job advertisem! ents rose 2.2 percent in April.

This marked the fourth consecutive month of rising jobs postings. In 2013, by contrast, there was a decline in job postings in 10 of the 12 months that year. According to ANZ, job ads are now 1.5 percent higher than a year ago, which compares quite favorably to the year-over-year declines of nearly 20 percent that occurred toward the middle of last year.

The improving trajectory is also evident when comparing medium-term periods with shorter-term periods. Over the past three years, the number of jobs advertised has declined at an average rate of 0.7 percent per month. However, that number has shown progressively greater strength over the near term, with total jobs advertised growing by 0.1 percent per month over the trailing year and by 1.2 percent over the past six months.

According to ANZ, job listings have historically proved to be a very good indicator of future labor market conditions and are often employed extensively when forecasting employment growth. Additionally, an ABS study of job advertisements concluded that rising trends in this data series tend to lead peaks in employment growth by one to three quarters, while falling trends precede troughs in employment by zero to two quarters.

ANZ Chief Economist Ivan Colhoun said, "The pick-up in hiring intentions suggests employment growth will continue to improve modestly in the near term, and the unemployment rate should be close to a peak around 6 percent or slightly lower."

The latest figures comport with a noteworthy shift in the Reserve Bank of Australia's latest monetary policy statement, which noted, "There has been some improvement in indicators for the labor market, but it will probably be some time yet before unemployment declines consistently."

The RBA's previous statements asserted that the unemployment rate was likely to continue rising in the near term. So even Australia's cautious central bank is finally seeing signs of a turn in the economy.

Thursday, May 8, 2014

The Dow Can't Hold New Highs as Merck, UnitedHealth Fall

On Thursday, the Dow Jones Industrials (DJINDICES: ^DJI ) rose 32 points, falling just short of setting another new high. Still, the Dow managed to do much better than the rest of the stock market, as both the S&P 500 and the Nasdaq lost ground on the day. A large set of earnings reports last night and this morning added volatility on several fronts, as a mixed earnings season begins to draw to a close. Within the Dow, though, Merck (NYSE: MRK ) and UnitedHealth Group (NYSE: UNH ) were the biggest decliners on the day.

Source: Army Medicine, Flickr.

In part, today's drop for Merck and UnitedHealth Group might simply have come from general investor disdain for health-care-related stocks. Falling biotech stocks were partially responsible for the decline in the Nasdaq, and many health-care stocks have seen massive runs during the past year as speculation rises about takeover battles and the need for larger players in the space to buy out smaller counterparts in order to add to their development pipelines. Indeed, M&A activity has risen to the highest levels of the industry, with deal proposals that, in at least one case, could well end up far above the $100 billion level.

Source: U.S. Navy, Wikimedia Commons.

Some of Merck's 1.8% decline today came from an analyst downgrade, with investors growing worried about the extent to which the drug company had seen share-price gains earlier in 2014. Merck has been held back during the past several years by its patent-cliff issues, but more recently, shareholders have wanted to move past those issues and focus more on Merck's growth opportunities. Nevertheless, Merck still has to deal with ever-present competitive forces that could jeopardize even its Januvia and Janumet complex of drugs. Moreover, as the need for mergers increases, Merck could well end up having to overpay just to keep even with its main rivals, and that could end up eating into a big part of the $14 billion payday Merck just got from selling off its consumer-products unit.

UnitedHealth Group's 1.3% drop, however, merely represented a pullback from yesterday's more extensive gains after one of its main rivals issued a favorable earnings report. On the whole, the implementation of the Affordable Care Act has met many of the expectations that UnitedHealth and other health-insurance companies had for the legislation, with a significant number of new enrollees and at least the potential for greater growth as a result. It'll take time to see whether the restrictions that Obamacare puts on UnitedHealth and its peers will outweigh that opportunity, but at the very least, investors appear to have missed what could have been cataclysmic drops in sales and profits as a result of the health-care law.

With the Dow just below record levels, it's anyone's guess whether it will set a new record tomorrow, next week -- or years from now. Focusing on the weaker members of the Dow Jones Industrials should give you a sense of how likely the average is to overcome their negative influence.

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Wednesday, May 7, 2014

Advanced Micro Devices (AMD) Has a New Partnership Plus Other Good News (INTC & NVDA)

Among the recent news from chip stock Advanced Micro Devices, Inc (NYSE: AMD) was a partnership with ARM Holdings plc (NASDAQ: ARMH) that's intended to give the company a leg up on rivals like Intel Corporation (NASDAQ: INTC) and NVIDIA Corporation (NASDAQ: NVDA). I should point out that we previously had an open position in Advanced Micro Devices in our SmallCap Network Elite Opportunity (SCN EO) portfolio from last summer up until late January when we locked in a small loss. We bailed not because we don't believe in the company's potential over the long term, but because our SCN EO is a trading portfolio rather than a long term buy and hold portfolio. Moreover, AMD's shares had sunk again after the company reported earnings – a repeat performance of what happened after three previous earnings reports. With that in mind, here is a quick look at some of the latest good news AMD is producing:

Licensing Deal With ARM Holdings. On Monday, Advanced Micro Devices announced a deal where it will license chip technology from ARM Holdings plc, whose low-power chip technology is widely used in smartphones, tablets and energy-efficient servers, as part of a strategy shift to gain more business outside the slowing PC market. AMD's licensing of ARM's 64-bit architecture for the development of custom high-performance cores for high-growth markets will be at the center of a new product roadmap with the 64-bit chips expected to debut in 2016. AMD's CEO commented:

"AMD now takes a bold step forward and has become the only company that can provide high-performance 64-bit ARM and x86 CPU cores paired with world-class graphics."

However, Wired magazine pointed out:

It's the kind of bet AMD needs to make in order to gain ground against its longtime rival Intel, which has been beating it soundly in the server market for the better part of the past decade. But it's also a risky bet. Calxeda, another startup with a similar idea, went out of business late last year, after burning through an estimated $90 million in VC money.

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An Interview With Rory Read. CEO Rory Read, who joined AMD from Lenovo in 2011, was recently interviewed by the Wall Street Journal's Digits blog. He noted that when he first joined the company, 95% of the business was centered on PCs while today, non-PC markets account for 30% of revenues with the goal of having 50% of revenues from non-PC markets by the end of 2015. Read noted:

"I see the PC market continuing to shrink in 2014, kind of settling in somewhere between a decline of 7% to 10%. I think sales were a bit stronger to commercial customers than people anticipated going into the year. The last piece I'll say is I think you'll see further consolidation in the PC segment."

AMD Celebrates 45 Years Since Groundbreaking. May 1st marked 45 years when a group of former executives from the then industry leader, Fairchild Semiconductor, broke ground on a company that would eventually become the second largest chip maker in the world.

Upcoming J.P. Morgan Presentation. Senior Vice President and General Manager, Global Business Units, Lisa Su is scheduled to present at the J.P. Morgan Global Technology, Media and Telecom Conference at 9:20 am EDT on Tuesday, May 20, 2014. There will be a real-time audio webcast of the presentation on the AMD Investor Relations homepage: http://ir.amd.com.

Share Performance. Advanced Micro Devices is up 4.2% since the start of the year, up 11.4% over the past year and up 5% over the past five years. Here is a look at the performance of Advanced Micro Devices verses the performance of Intel Corporation and NVIDIA Corporation:

Finally, here are the latest technical charts for Advanced Micro Devices, Intel Corporation and NVIDIA Corporation:

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

Tuesday, May 6, 2014

It's 'tumble Tuesday' for stocks

Click for more market data.

NEW YORK (CNNMoney) Tuesday has been a lucky day for stock market bulls, but this particular Tuesday is not working out for them.

The Dow Jones industrial average, the S&P 500 and the Nasdaq were all down at midday, calling into question the recent streak of winning Tuesdays. The Dow has been off around 75 points all day.

The S&P 500 has gained every Tuesday for the past eight weeks. So far this year, the index has advanced every Tuesday except for two.

The trend has been attributed to the Federal Reserve's bond buying program, mutual fund flows and trading algorithms. But at least one trader on StockTwits seemed skeptical that there was anything particularly special about Tuesday.

"$SPY Always up on Tuesday, nothing could possib-lie go wrong," read a post by NaveenB.

Another theory is that Tuesdays are merely a reversal of losses on Monday, though that was not the case this week. Stocks ended modestly higher yesterday, just days after the Dow hit an all-time high.

With the market at such lofty levels, investors seem skeptical about pushing stocks too high. The CNNMoney Fear and Greed index shows investors are still feeling fearful.

Twitter (TWTR) shares led the plunge, hitting a new low as the "lock-up" period for company insiders to sell the stock expired. Under federal securities law, company founders and executives must wait six months before selling any shares following an initial public offering.

The stock is now trading under $35 a share -- that's still above its IPO price of $26 -- but it's the lowest trading price for the social media giant.

"Must be gut wrenching to watch your insider shares plummet from 74 to 35 before you can sell them $TWTR #imaginaryweathvanished," read a post by LincolnList.

Apple (AAPL, Fortune ! 500) shares erased earlier gains, but managed to hold above $600. The stock closed above that level Monday for the first time since October 2012. Apple recently announced a stock split that will take place in early June.

"$TWTR If you want to recover from your losses, buy $AAPL: a real company," read a post by BlackBerril.

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Drugmaker Merck (MRK, Fortune 500) announced that it will sell its consumer care business to Bayer AG for $14.2 billion. It was the latest in a recent spate of larger mergers in the pharmaceutical industry. Merck stock is down today.

Target (TGT, Fortune 500)continues to drop. Shares are down more than 3% again today. Target's CEO announced he was stepping down yesterday, adding to concerns about the direction the company is headed.

DirecTV (DTV, Fortune 500) shares gained after the satellite TV company reported stronger-than-expected earnings, despite a quarterly slide in net profit year over year. It's one of the top performers in the S&P 500 today.

Office Depot (ODP, Fortune 500) shares also surged after announcing solid earnings and plans to close 400 stores.

Well known brands Groupon (GRPN), Disney (DIS, Fortune 500) and Whole Foods (WFM, Fortune 500) will report after the close.

For the rest of the week, analysts say the biggest market moves will be testimony from Federal Reserve Chairman Janet Yellen on Wednesday, a meeting of the European Central Bank on Thursday, and ongoing tensions in Ukraine.

In Europe, investors were parsing through major bank earnings from UBS (UBS) and Barclays (BCS).

Shares in Barclays fell after the British bank released worse-than-expected quarterly numbers.

Shares in UBS were! inching ! up after the Swiss bank said it would pay a special dividend.

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Credit Suisse (CS) was also in focus amid reports the bank could be hit with a criminal penalty as it negotiates with the U.S. government over charges it helped American clients avoid taxes.

Overall, European markets were mixed in morning trading. Barclays was dragging the London FTSE 100 index down.

Markets in Japan, South Korea and Hong Kong were closed Tuesday. But the other Asian markets made gains.

Monday, May 5, 2014

Potbelly Corp (PBPB) Earnings Report: Brace for More Indigestion? COSI, BAGL & PNRA

The Q1 2014 Potbelly Corp (NASDAQ: PBPB) earnings report is scheduled for after the market closes on Tuesday, May 6th, with investors and traders alike who follow either the sandwich restaurant chain stock (which debuted last October and is down some 44% for retail investors) or who are into potential small cap peers like Cosi Inc (NASDAQ: COSI), Einstein Noah Restaurant Group, Inc (NASDAQ: BAGL) and Panera Bread Co (NASDAQ: PNRA) should be paying attention. Aside from the Potbelly Corp earnings report, it should be said that the Q1 2014 Panera Bread Co earnings report was last Tuesday while the Q1 2014 Einstein Noah Restaurant Group, Inc earnings report came last Thursday and the the Q1 2014 Cosi Inc earnings report is likely scheduled for Monday, May 12. However, Potbelly Corp has attracted a bit of attention for its potential growth trajectory as well as its vision to be the "Neighborhood Sandwich Shop."

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What Should You Watch Out for With the Potbelly Corp Earnings Report?

First, here is a quick recap of Potbelly Corp recent earnings history:

Earnings History Sep 13Dec 13

EPS Est	N/A	N/A	0.09	0.04
EPS Actual	N/A	N/A	0.15	0.06
Difference	N/A	N/A	0.06	0.02
Surprise %	N/A	N/A	66.70%	50.00%

Last February, Potbelly Corp fell nearly 10% after an earnings report that left investors decidedly hungry when revenues came in at $74.8M (below expectations of $76M) and the company swung into a loss, blaming winter weather for weak same-store sales – the same excuse Panera Bread used when it reported earnings that also disappointed. Moreover, Potbelly Corp also warned that the same snow and ice had already cast a chill on first-quarter store traffic.

This time around and according to Yahoo! Finance analyst estimates page, the consensus expects revenues of $73.66M (note that this is the consensus of only 4 analysts) and EPS of zero - down from expectations of EPS of $0.01 some 60 days ago and EPS of $0.05 ninety days ago. Moreover and according to HighShortInterest.com, Potbelly Corp is the tenth most shorted stock on the Nasdaq with short interest of 35.70% – meaning its going to be interesting to see what happens right after earnings.

As for recent news, William Blair analyst Sharon Zackfia did upgrade the stock to Outperform from Market Perform in early April, saying the stock is unlikely to drop a great deal further as investors are already well aware of the cold weather that's lasted well into spring time.

What do the Potbelly Corp Charts Say?

The latest technical chart for Potbelly Corp shows that the stock has been a complete dud for retail investors:

However, the performance of potential peers like Cosi Inc, Einstein Noah Restaurant Group and Panera Bread has not exactly been great tasting either if you did not get in at the right time:

And for reference, here are the latest technical charts for Cosi Inc, Einstein Noah Restaurant Group and Panera Bread:

What Should Be Your Next Move?

Obviously when you have short interest of 35.70%, there is a very good chance of an outsized move in either direction. The real question for investors and traders alike is whether or not Potbelly Corp's share price will finally find a floor to stand on.

Sunday, May 4, 2014

Rent-a-Rolex? Luxe watches go timeshare

Looking wealthy has never been cheaper. Even if you can't afford the proverbial mansion and yacht—or Ferraris or Hermes bags for that matter—there are now countless businesses that will rent them to you for a fraction of the purchase price.

Now a new category has joined the rental-rich trend: luxury watches.

A start-up company called Eleven James has launched a timepiece timeshare that allows customers to get a new luxury watch every couple of months for an annual fee. The watches range in value from $7,000 to $50,000 or more, and include top names like Rolex, Audemars, Cartier and Patek Philippe.

Randy Brandoff, Eleven James' founder and a former executive at fractional-jet giant NetJets, said that today's wealthy want to be smarter about their spending. They prefer to rent rather than own when possible.

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"The vast majority of our target consumers have leased a car rather than buying it, rented a vacation home or enjoyed other prized possessions without purchasing them," he said. Watches, Brandoff said "are the next vanguard" in the luxury rental/timeshare world.

Eleven James has several different customer plans, depending on the value and number of watches a customer wants every year.

Its "Aficionado" plan offers watches valued at between $7,000 and $15,000, and clients pay $2,700 for three two-month long watch rotations per year, or $4,850 for six two-month long rotations per year. In other words, customers can either choose to have a different watch all of the time or some of the time.

The other plans work in similar fashion, but offer members the chance to have access to more valuable timepieces. The "Connoisseur" plan includes watches priced between $15,! 000 and $30,000, and costs $4,950 for three watch rotations a year or $8,950 for six watch rotations a year. The "Virtuoso" plan includes watches in the $30,000 to $50,000 range, and costs $9,700 for three watch rotations or $17,250 for six rotations per year.

Paying $9,700 to wear watches you have to give back sounds insane, of course. But Brandoff said that many of his customers want to try out different watches before they sink even more money into a purchase. Other customers, he said, have already spent fortunes on their watch collections and don't want to buy more—but they like the variety of wearing other watches.

"Most watch lovers follow the same pattern," he said. "The first six months after they buy a watch, they love it. The second six months, they don't love it as much. And by the third six months, it gets put on the pile and replaced by one or numerous others."

He said that "at any level of wealth, when you have six- or seven-figures worth of a certain asset that generally depreciates, it's going to give you pause to buy more."

To add to Eleven James' allure, Brandoff has also built a series of events and parties for clients. The company holds regular parties, for instance, so customers can come and exchange their watches. Customers who just want to do their exchanges by mail can use FedEx.

He said the company's goal is to have 1,000 members within the next year and "we're well on our way."

Asked if his clients also include wannabes and pretenders who just want to look like they're rich, Brandoff he said, "I would say all of our members can afford the watch and already own them, but they want the variety at a fraction of the price."

Of course, the watch companies may not be happy about Eleven James, since it turns possible buyers into renters. None have commented so far about the company.

But Brandoff said that once the company has 1,000 clients—and detailed data on their watch preferences—it could become attractive partners for the watc! h compani! es. For now, Eleven James buys the watches itself.

"But we get pretty good terms, because of our volume," Brandoff said.

Saturday, May 3, 2014

How to Find Live Entertainment for Less

How to Find Live Entertainment For Less WireImage/Getty ImagesArcade Fire in concert at the Starlight Theater last month in Kansas City, Mo. Live entertainment is often dismissed as too expensive. A quick search of ticket prices for the latest Broadway show or major band or pop star tour coming through town shows why. But before resigning yourself to watching yet another series on Netflix (NFLX), consider some of these frugal alternatives and savings strategies. Check the community calendar. From outdoor concert series in the summer to dramatic readings of Shakespeare at the local library, the amount of free and affordable live entertainment programming being offered by communities is fantastic. A quick web search of your town followed by the words "event calendar" is sure to yield a variety of results and options. Library and park websites, and of course, the local paper, are all great places to search. Subscribe to your local entertainment venues. Rather than checking the website of your favorite live music club or stand up spot each week, get on their mailing list. Not only will you learn about all the latest acts coming through, but you'll likely get a members or insider's discount for a being a subscriber. Get your entertainment included. Look for restaurants and bars that schedule live musicians and performers with no cover charge. Check out the high school and colleges. High schools and colleges are great places to enjoy entertainment for less. A football game, for example, will run you a lot less than a ticket to see the pros. As for the arts; in addition to their own programming, which is often excellent, particularly at universities with notable programs, schools often host wonderful guest performers and speakers. Ask for student or senior discounts. Always have ID on hand in case you qualify for a student or senior discount. Check the deal sites. Deal sites like Groupon (GRPN) and Amazon Local (AMZN) have expanded nationwide and live entertainment is increasingly part of the discount offerings. Search your town in the deal databases to see what options are available near you. Double check your Facebook. Social media events are the latest way of inviting people to concerts and shows. Check your events tab every so often to see what your friends and acquaintances are up to. Not only might you get some cheap entertainment, but you'll also be supporting a friend. Find out the big venue policies. When the big shows and concerts come through town they probably play the same one or two theaters or arenas. Check the website of those venues and search for their discount policies. Examples of common discount offerings include standing room tickets, student rush tickets, general rush tickets and lottery tickets. Standing room tickets are typically sold the day of an event if it is already sold out and the venue has a designated space for standing room only spectators. These tickets are generally a fraction of the full price ticket. On Broadway, for example, a standing room ticket generally sells for around $30 to a show where the average ticket price is over $100. Some venues will designate a limited number of seats to be sold at as student rush tickets. Student rush typically takes place when the box office opens on the day of the performance and requires a valid student ID. Depending on the venue's policy, each student can get one or two rush tickets at a steep discount. General rush tickets follow the same structure as student rush, but rather than being limited to students, the tickets are available to anyone, on a first come, first serve basis. Again, you'll have to check the policy of your venue. Similar to rush policies, some venues will designate a section of seats to be included in their lottery, which typically takes place a few hours before the show. Lottery tickets are priced similarly to standing room and rush seats, offering a great deal if you win. All of these discount tactics are quite popular, and the more popular the show, the more people you can expect to show up. Be prepared to arrive early and wait in line. In the case of the lottery, have a back-up plan if the lottery falls through. At the end of the day, live entertainment is largely accessible and can be affordable, if you know how and where to look. .

Thursday, May 1, 2014

Apple Found Guilty in E-book Trial - Analyst Blog

Apple (AAPL) found itself at the receiving end of an adverse ruling in the e-book pricing case filed by the U.S. Department of Justice (DOJ). U.S. District Judge Denise Cote ruled that the iPhone maker had conspired with five U.S. publishers to raise e-book prices.

In the civil antitrust lawsuit, the DOJ had charged Apple and five publishers for conspiring and manipulating e-book prices to make an average $2.0 to $3.0 extra on each book for a three-day period in early 2010. This resulted in consumers paying millions of dollars more for the e-books.

The accused publishers included Hachette Book Group, News Corp.'s (NWS) HarperCollins, Holtzbrinck Publishers, Pearson's Penguin Group and CBS Corp's (CBS) Simon & Schuster Inc. Though all the publishers have already settled with the DOJ, only Apple stood for the trial.

Apple entered the e-book market with the launch of its iBookstore app in 2010 and initiated an 'agency model' for pricing the e-books. Per the agency pricing model, publishers could set the retail prices of e-books and the retailer would earn 30% of the e-book price as commission. This assured a guaranteed income for the retailer and also enabled the publisher to raise e-book prices to more than 50% of the list price, which is what competitor Amazon (AMZN) was offering.

Amazon had a wholesale price model, under which the retailer paid the publisher half the listed price of the books, while it retained the option to charge any amount for the e-book. Amazon used to charge a maximum of $9.99 for e-books, making losses on the sales to promote its reader.

Many online retailers shifted to the new agency model. After some brief resistance, Amazon eventually gave in to the demand of publishers. This led to the e-book prices equaling the physical ones at times. Apple continues to deny any wrong doing in the case and stated that it would appeal.

The current ruling is likely to have a domino effect as it will open up other private lawsuits agai! nst Apple for alleged price-fixing. Separately, the company is facing lawsuits on possible damages to customers for charging higher e-book prices brought by 33 state attorney generals.

This judgment is a major blow to Apple as it may not only result in possible penalty payments but it also tarnishes Apple's image. Besides this unfavorable ruling, Apple continues to face a number of other legal headwinds, including pending patent infringement lawsuits against Samsung in different countries.

Recently, Apple had lost to Samsung at the U.S. International Trade Commission. Moreover, Apple withdrew its lawsuit against Amazon for using the "app store" word.

We, however, believe that since the e-book segment does not form a major part of Apple's business, it will not be a major overhang on the stock in the near term.

Currently, Apple has a Zacks Rank #3 (Hold).

Tuesday, April 29, 2014

Tesla Dips, Plug Power Plunges; Are Fuel Cells a “Complete Failure?”

Shares of Tesla Motors (TSLA) fell a little today; Plug Power (PLUG) plunged. Could it be because of a report from Global Equities Research’s Trip Chowdhry, which was bullish on Tesla and bearish on fuel-cell technology?

REUTERS

Chowdhry explains why he likes Tesla…

Competition, including General Motors (GM), Ford (F), BMW, Mercedes, etc. is completely clueless.

Just like any other technology startup company, the success i defined by focusing on a few select things and getting them right…

Just like any other successful technology startup, creating ecosystems is critical to the company’s continue success…

Vertical Integration is key to [Tesla's] success: Manufacturing of cars, Drivetrains Batteries (with Giga Factory), selling direct to customers.

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…and why Fuel Cell Cars are a “complete failure and non-event:”

Fuel Cell Infrastructure is non-existent.

For Battery–‐in–‐Motion scenarios (i.e. in Cars) the Hydrogen gas needs to be compressed to 5000 lbs pressure, so as to fit in the cylinder

The energy is spent to compress the Hydrogen Gas so as to fit it in a cylinder. A typical Hydrogen cylinder to power a Fuel cell car costs $40 and gives on an average 360 miles

Fuel Cell powered car lacks in power density, hence a typical Fuel Cell powered card will go 0 – 60 miles per hour in 11 seconds, which is much slowed than Tesla Model S, which goes 0—60 in 5.4 seconds.

That sounds, in some ways, like more of a dig at legacy automakers like Honda Motor (HMC), who continue pouring money into fuel-cell vehicles, than it does at Plug Power, but so be it. Plug Power’s the one that dropped 13% to $4.66 today.

Tesla Motor fell 0.7% to $198.51.

Monday, April 28, 2014

ADM Offsetting Weak Volume With Strong Ethanol

With ethanol margins improving in the second quarter and investors increasingly transitioning from the old (poor) crop to the new (good) crop, Archer Daniels Midland (NYSE:ADM) has caught investor attention again, and the stock is both near a 52-week high and up almost 50% over the past year. I do believe that the 2013 U.S. crop harvest will be good for ADM's 2014 handling, milling, and crushing operations, and I do believe ethanol is here to stay. That said, this is still fundamentally a volatile low-margin business and even with the opportunities added with GrainCorp, I would be careful about chasing the shares.

Good Performance In A Challenging Environment
Probably the best news for ADM going into this quarter was that expectations really weren't that demanding. Even so, the company delivered a small (two-cent) beat versus the average EPS estimate due to better execution within its operations.

Revenue declined 1% this quarter (about 2% below expectations), with ag services down 6% and oilseed processing down 3%. With oilseed processing volume down 10% (in line with an overall 10% or so decline in U.S. crush volumes), that's not such a bad outcome. Corn processing revenue jumped 29%, helped in large part by the ethanol business.

While the gross margin was flat with the year-ago level, ADM's segment profits rose 19% from the year-ago level. While oilseed profits were down 3% (as better crushing margins were offset by weaker cocoa) and ag services profits were down about one-third on weaker volumes, corn profits more than tripled. Within corn, better results in starches and sweeteners were almost completely offset by hedges, with radically improved ethanol margins providing all of the upside.

SEE: A Look At Corporate Profit Margins

Not Much To Do In Oilseeds Or Ag Services But Wait
There is a pretty simple explanation as to why ADM's crush volumes and ag services revenues were down this quarter – last year's lousy crop just hasn't left much to process. To that end, this is also where ADM's geographical exposure becomes an issue – ADM has a modest presence in Latin America compared to Bunge (NYSE:BG) and can't take as much advantage of Argentine and Brazilian oilseed crops produced by companies like Cresud (Nasdaq: CRESY) and Adecoagro (Nasdaq:AGRO).

Although the 2013 U.S. crop is looking strong in terms of yield, it's hardly a done deal yet. In any case, investors are already transitioning to the next year's outlook where a surge of crop inventory should boost the crush and ag services operations.

Ethanol Boosting Corn, But Don't Count On It
While ADM and Ingredion (Nasdaq:INGR) are seeing pressures in the sweeteners and starches business from last year's crop (ADM's corn processing volume declined 1% this quarter), the bigger issue for ADM is the never-ending volatility in the ethanol industry.

SEE: The Buzz Around Ethanol

ADM is the largest ethanol producer in the U.S. at about 1.75 billion gallons or roughly 12% of U.S. production. All told, the top five producers (which includes Valero (NYSE:VLO)) account for about 40% of capacity, but it's not as though this scale offers much assurance of stability. Inventories are low, but Brazilian imports are cost-effective and the blend wall could start pressuring prices. Not unlike what happens in the conventional gasoline refining business, ethanol prices generally follow corn prices, but not in lockstep and there's really no way to know where margins are going more than a quarter or two from here.

The Bottom Line
The GrainCorp acquisition will improve ADM's position in Asia, but there's still room for the company to increase its global presence (in Asia, Latin America, and Africa). These opportunities have to be set against the cost of capital and so on, but the point stands that ADM still has room to grow its business. Still, this is a volatile business with razor-thin margins and cash flow generation, and that is unlikely to change.
With that in mind, I'm not in any hurry to chase ADM shares today. I like ADM just fine, but I think the stock is fairly-priced with respect to discounted cash flow and ROE/PBV. I'm happy to own ADM when Wall Street doesn't like it, but with the sentiment (and stock performance) having turned around, I think there are better opportunities elsewhere.

Disclosure: At the time of writing, the author did not own shares of any company mentioned in this article.

Sunday, April 27, 2014

Hate Bank Fees? Own Any Bank Stocks? Read This Now

The old saying that death and taxes are the only certainties in life should include a third certainty.

Eventually, every one of us is going to pay bank fees.

No matter how careful you are with your finances or how much effort you put into switching banks to avoid fees, eventually you will be hit with some kind of fee. It's one of the prime reasons that banks have become such financial powerhouses in the United States.

Sometimes these fees can be ridiculous. A friend of mine -- an accountant, no less -- recently had an episode in which the direct deposit to his checking account was delayed for a week. Not knowing the money wasn't available, he paid his major bills then started using his debit card for everyday small expenses like coffee and lunch.

Suddenly, his card was rejected at a sushi shop. Calling his bank, he discovered he was overdrawn by $900 -- with $530 of the overdrawn amount due to overdraft and insufficient fund fees. Needless to say, this made him tremendously upset, as it was through no fault of his own that a glitch had delayed the direct deposit.

My friend explained the situation to his personal banker at the local branch. He was credited back half of the fees, but he was warned that the credit was a one-time courtesy and that it wouldn't be granted again. Needless to say, my friend promptly switched banks and feels pretty bitter toward his original bank.

My friend isn't alone in his negative feelings toward his bank. A recent study by management consultancy CG42 revealed that these negative feelings may have an extremely negative effect on the bottom lines of the top 10 banks. CG42 surveyed nearly 3,700 customers and used the Brand Vulnerability Index (BVI) to measure consumer sentiment with each financial institution.

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The survey found that 26% of bank customers are not happy with their current institution. Among the top 10 banks, this level of dissatisfaction equates to a projected total of $627 billion in consumer deposits being in play -- that is, at risk of being pulled out of those banks. Out of that amount, $92 billion is expected to exit the coffers of the top 10 in the next year -- along with $5 billion in revenue.

Where's this money going to go? Clearly, it's not going into consumer's mattresses, and the majority will not be flowing to offshore institutions. The majority of these funds is likely to go into small regional banks and credit union-type institutions (such as one regional bank I'll be writing about this week).

Do investors need to worry about this potential capital shift among and out of the top 10 U.S. banks? Let's take a closer look at the study and the technical picture of the best, worst and the middle of the list.

The study ranked the most vulnerable banks in this order:

This list indicates that Citibank (NYSE: C) scored the worst in terms of the Brand Vulnerability Index. This means Citibank is expected to lose the most in deposits over the next year. TD Bank scored the best, meaning TD would be the least negatively affected by consumer frustrations and shifting deposits. In other words, TD has the least consumer dissatisfaction among the banks on the list, and Citibank has the most.

A look at the technical picture of Citibank reveals a near-perfect double top on the daily chart at $53. Price is descending from the far right top; support exists in the $45 range. Given the BVI ranking and the bearish chart pattern, I would avoid this stock unless resistance at $53 gets taken out on a daily close.

Choosing Capital One (NYSE: COF) as an example of the middle of the BVI rank, it has been trending strongly upward since mid-April. However, resistance has been hit in the $69 range. This is a very bullish chart pattern and buying on a daily break out close above $69 makes technical sense.

Not surprisingly, the best-ranked bank on the BVI shows the most bullish chart pattern. TD Bank (NYSE: TD) has also been trending sharply upward since June 24. The chart says there is more upside to go thus buying now at $86 makes sense.

Risks to Consider: The BVI study is only a snapshot of consumer banking sentiment. It should not be used by itself as a decision tool. In addition, the numbers cited are projections, and not fact. Regardless of the issues, the study does provide a starting point and guidance for starting your own research. Always consider the current fundamental and technical picture of stocks you're thinking about buying. In addition, always use position size and stop-loss orders properly.

Action to Take --> With reference to the technical picture and the BVI study, avoiding Citibank and buying TD Bank makes sense right now.

P.S. -- Banks might soon have a lot more than upset customers to worry about. Apple just made a little $256 million move that could have huge consequences on your wallet. Click here to find out how the tech giant is threatening the entire banking industry.

Friday, April 25, 2014

One Marijuana Stock Earns Some Legitimacy Plus Other Pot News (GWPH, ERBB & PHOT)

Its been a rather eventful week for news from the marijuana sector and small cap marijuana stocks like GW Pharmaceuticals PLC (NASDAQ: GWPH), Tranzbyte Corp (OTCMKTS: ERBB) and Growlife Inc (OTCMKTS: PHOT) as one of these stocks gets endorsed by Morgan Stanley while another appears on CNBC – more signs of legitimacy for an investment sector that's full of pumps, dumps and other unsavory types of activities. Just consider the following small cap marijuana stock or pot industry news:

GW Pharmaceuticals PLC Soars on Morgan Stanley Coverage. UK based GW Pharmaceuticals PLC, which is developing a product portfolio of cannabinoid prescription medicines, soared more than 32% on Tuesday after Morgan Stanley initiated coverage of the stock with an Overweight rating and $103 price target. Morgan Stanley also predicted that US sales of GW Pharmaceuticals PLC's Sativex, a treatment for MS spasticity and cancer pain, should grow over time. GW Pharmaceuticals PLC is up 47% since the start of the week, up 68.1% since the start of the year and up 656.1% since last May.

Cramer Endorses GW Pharmaceuticals PLC. For what his opinion might be worth, CNBC Mad Money host Jim Cramer called Morgan Stanley's recommendation "timely" and "bold," predicting the stock will quickly reach the target because:

"It's not a medical marijuana stock. They have a novel platform. It is an epilepsy company."

However, he still warned investors to stay away from other marijuana-related penny stocks, saying:

"Forget it! If you like cannabis, and I'm not necessarily speaking about 'liking' cannabis, it's GW Pharma."

Marijuana: A New Frontier for Silicon Valley. Mat Honan, senior writer at WIRED, has written a story entitled "High Tech: How Silicon Valley entrepreneurs are rushing to cash in on cannabis." Honan was then interviewed by The Daily Ticker where he talked about Stanley Brothers' Charlotte's Web marijuana strain that has therapeutic benefits without a big high for patients who have seizures. He also commented that there's been talk about pot businesses using bitcoin and other virtual currencies in their banking relations, but so far there haven't been any "large-scale solutions" to address the problem of banks continuing to avoid the sector.

Tranzbyte Gets CNBC's Attention. Stephen Shearin, the COO of Tranzbyte, recently appeared on CNBC to discuss his company's age verification marijuana vending machine for medicinal users that, by law, must sit inside a dispensary. When asked why someone would want to buy pot from a vending machine, Shearin commented:

Well, you know, at this point, it's very new, it's news, right? We're talking about this and people getting their cards and they're going in, experimenting, maybe they did it in the '60s and '70s, coming back to it, being treated for an ailment and they have a lot of questions and they should have those questions answered and take the time and be educated about it. If you know what you want, you don't want to stand behind somebody who is asking. Should i eat it? Should i dab? Should i infuse? Should i have a blend? There's a thousand questions they have. Somebody might know they love the dispensary. It's temperature controlled, 58 degrees and the thing right behind, they can bypass the whole conversation and be in and out in a few minutes. Most dispensary conversations and sales take 15 minutes. People stand in line for 45 minutes. We can speed that up so they can get in and back out.

Tranzbyte is up 2,000% since the start of the year, up 577.4% over the past year and down 53.3% over the past five years.

Growlife, Inc Trading Suspension is Scheduled to End as the Company Scrambles to Limit the Fallout. Growlife, which is focused on the specialty hydroponics industry (pretty much code for supplying what is needed to grow pot), was hit be an SEC temporary suspension lasting from at 9:30 am EDT on April 10 until 11:59 pm EDT on April 24. Yesterday, Growlife issued a press release to announce a new shareholder hotline and email communication system to address anticipated increases in shareholder questions over the next several days plus the company posted an open letter to shareholders from its Chairman and CEO, Sterling C. Scott, which stated:

The SEC has informed GrowLife through counsel that it is not the subject of an informal or formal investigation. The SEC has not requested any documents from the company or its Board. Nor have they issued GrowLife any subpoenas or broad requests for information.

It appears, from counsel's discussions with the SEC's staff, that the SEC suspension was prompted by concerns that some 3rd party holder(s) of GrowLife stock may have been planning to engage in some form of manipulative promotional activity. GrowLife does not have any more specific information regarding this matter.

The letter went on to state that the Board of Directors of GrowLife has been actively working with management to establish even higher levels of oversight and checks/balances in place throughout the company. GrowLife is up 253.5% since the start of the year, up 1,109.6% over the past year and down 44.8% over the past five years.

Nine Reasons Sanjay Sanjay Gupta Changed His Mind About Marijuana. Dr. Sanjay Gupta, CNN's chief medical correspondent, has nine reasons and one BIG unstated one for changing his views on pot. The nine stated reasons include: 1) Marijuana laws are not based on science; 2) Marijuana doesn't have a "high potential for abuse"; 3) In some medical cases, marijuana is "the only thing that works," 4) It's safer than a lot of prescription drugs; 5) Seventy-six percent of physicians surveyed would prescribe marijuana to ease the pain of women suffering from breast cancer; 6) It is still nowhere near as bad at drugs like heroin or cocaine, or even booze; 7) The medical and scientific communities have been studying medical marijuana since the 19th Century; 8) Only 6% of research on marijuana published in the last year analyzed benefits; and 9) The system is biased against research into pot. And unstated reason number 10? He or his bosses at CNN have read the polls about marijuana – and then looked at their ratings verses those of Fox and MSNBC…

Thursday, April 24, 2014

Winners and Losers: A Go for Amazon, Cheeri-Oops

Earns General Mills Paul Sakuma/AP From a cereal giant infuriating its fans to the leading online retailer boosting the pedigree of its catalog, here's a rundown of the week's smartest moves and biggest blunders in the business world. Apple (AAPL) -- Winner It's been a while since Apple produced blowout quarterly results, but that's what happened on Wednesday. The consumer tech giant moved higher after posting better than expected earnings, margins and iPhone sales. The report wasn't perfect. Bulls will point to the 17 percent spike in iPhone units sales, but bears can counter that Apple sold 16 percent fewer iPads than it did a year earlier. However, when you tack on Apple's declaration of a stock split and a beefed-up share buyback, it was clearly a quarter for the bulls. General Mills (GIS) -- Loser Sometimes it doesn't pay to update a company's privacy policy. Cereal giant General Mills came under fire earlier this month after introducing new legal terms. The updated policy going out to anyone interacting with General Mills online would "require all disputes related to the purchase or use of any General Mills product or service to be resolved through binding arbitration." It got called out in a New York Times article, suggesting that anyone doing something as simple as using an online coupon or liking the company's Cheerios page on Facebook would not be able to sue the company. General Mills argued that the policy was being misread and misunderstood, but it reversed the language. Judging by the comments on that Cheerios page, it seems that some irate consumers aren't so quick to forgive General Mills. Amazon.com (AMZN) -- Winner One of the knocks on Amazon's new Fire TV set-top media player is that it doesn't stream HBO Go content, but Amazon and HBO parent Time Warner (TWX) have agreed to remedy the situation later this year. However, the bigger deal between Time Warner and Amazon is that HBO will be making many older shows and earlier seasons of some current shows available on Amazon's Prime Instant Video platform. Come May 21, folks paying $99 a year for Amazon Prime -- which includes complimentary two-day shipping and monthly Kindle e-book rentals -- will be able to stream the entire runs of "The Sopranos," "Six Feet Under" and more. Some current shows -- including "Boardwalk Empire" and "True Blood" -- will be available for seasons that are at least three years old. It's a major win for Amazon at a time when it's getting hard to differentiate its streaming service from Netflix. McDonald's (MCD) -- Loser There hasn't been a McFlurry of activity at the neighborhood McDonald's these days. The leading burger flipper posted yet another disappointing quarter this week. U.S. comparable-restaurant sales declined 1.7 percent, making this the third consecutive period of negative comps. It conceded that there's no "silver bullet" to turn things around for the Golden Arches. It raised prices by an average of 3 percent toward the end of the quarter, but if it's having a hard time drawing customers now, it's hard to imagine passing on escalating foods costs can pay off in the near future. Hasbro (HAS) -- Winner Toy companies haven't been shining bright these days as kids find digital diversions away from traditional playthings. However, Hasbro still came through with a better than expected performance in its latest quarter on the strength of its toys for girls. Hasbro saw sales for its girls category soar 21 percent during the quarter. The continuing success of My Little Pony played a major part, but the same can also be said about Nerf Rebelle. The Nerf blasters with crossbow attachments were introduced late last year, and apparently they are selling briskly. The Hollywood success of "Brave" and "Hunger Games," with crossbow-packing heroine,s likely played a starring role in boosting interest for Hasbro's soft-dart launchers for girls. Nice aim, Hasbro.

Is This Apple's TV Game Changer?

Tim Cook has already confirmed that Apple (NASDAQ: AAPL ) has a "grand vision" of the TV. Jessica Lessin, who was The Wall Street Journal's top tech reporter before spinning off on her own last month, has an idea of what the Mac maker may be planning.

Apple wants to allow viewers to skip ads and commercials, and is willing to pay the media companies the difference. The company wants make a "premium" version of television service where users could skip ads. It's not clear if Apple would share these costs by charging a fee for the "premium" version, or if it would foot the bill itself.

Such a system would undermine the current economics of the industry, which still relies heavily on ad dollars and the TV ratings that drive those marketing budgets.

Time Warner Cable (NYSE: TWC ) has been named as one of the cable operators most willing to play ball with Apple, which entails ceding control of the interface to Apple. The countless number of interfaces that TV users currently have to cope with was always one of the biggest problems that Steve Jobs saw in the status quo, which he detailed in 2010:

Well, you just end up with a table full of remotes, a cluster full of boxes, a bunch of different UIs -- and that's the situation we have today. The only way that's ever gonna change is if you can really go back to square one and tear up the set-top box and redesign it from scratch with a consistent UI across all these different functions and get it to the consumer in a way that they're willing to pay for it. And right now, there's no way to do that.

That's why Apple's current set-top box mostly uses the same basic interface among all "apps," even with integrated third-party services like Netflix.

Cable operators like Time Warner aren't too keen on the idea of giving up advertising revenue, but it might be worth partnering with Apple to fight the trend of cord cutting. Service fees from customers are larger than advertising revenue, so if Apple can convey an ad-skipping value proposition that translates into higher service fees, it could be worth it. For example, Time Warner's video service revenue last quarter was $2.67 billion, much more than the $228 million in ad revenue.

Apple has quite a large following of loyal users, and if Time Warner can piggyback on the Mac maker's user base, it might be worth making some concessions.

Right now, the iPhone is Apple's greatest product. Even if an Apple TV becomes its show-stealer, the company will eventually destroy that, too. Apple has a history of cranking out revolutionary products... and then creatively destroying them with something better. Read about the future of Apple in the free report, "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.