Friday, May 31, 2013
Thursday, May 30, 2013
Hot Up And Coming Companies To Own For 2014
Here at The Motley Fool, I've long cautioned investors to keep a close eye on inventory levels. It's a part of my standard diligence when searching for the market's best stocks. I think a quarterly checkup can help you spot potential problems. For many companies, products that sit on the shelves too long can become big trouble. Stale inventory may be sold for lower prices, hurting profitability. In extreme cases, it may be written off completely and sent to the shredder.
Basic guidelines
In this series, I examine inventory using a simple rule of thumb: Inventory increases ought to roughly parallel revenue increases. If inventory bloats more quickly than sales grow, this might be a sign that expected sales haven't materialized. Is the current inventory situation at Buckeye Technologies (NYSE: BKI ) out of line? To figure that out, start by comparing the company's inventory growth to sales growth. How is Buckeye Technologies doing by this quick checkup? At first glance, OK, it seems. Trailing-12-month revenue decreased 8.8%, and inventory decreased 5.5%. Comparing the latest quarter to the prior-year quarter, the story looks decent. Revenue dropped 9.9%, and inventory shrank 5.5%. Over the sequential quarterly period, the trend looks OK but not great. Revenue dropped 4.3%, and inventory dropped 0.7%.
Hot Up And Coming Companies To Own For 2014: Dollar Financial Corp.(DLLR)
DFC Global Corp. provides retail financial services to unbanked and under-banked consumers, and small businesses. Its primary products and services include short-term consumer loans, single-payment consumer loans, check cashing services, secured pawn loans, and gold buying services. The company also provides other retail services and products comprising money order and money transfer products, foreign currency exchange, VISA and MasterCard branded reloadable debit cards, electronic tax filing, bill payment, and prepaid local and long-distance phone services. In addition, it offers military installment loan and education services, such as fee based services to enlisted military personnel applying for loans to purchase new and used vehicles. The company provides its products and services through storefront locations, as well as via the Internet. As of August 25, 2011, it operated through a network of approximately 1,300 retail storefront locations. It operates its locations principally under the Money Mart, The Money Shop, mce, Insta-Cheques, Suttons and Robertson, The Check Cashing Store, Sefina, Helsingin Panttism, Optima, and Money Now in Canada, the United Kingdom, the United States, Poland, the Republic of Ireland, Sweden, and Finland. The company was formerly known as Dollar Financial Corp. and changed its name to DFC Global Corp. in August 2011. DFC Global Corp. was founded in 1990 and is headquartered in Berwyn, Pennsylvania.
Advisors' Opinion:- [By Robert Holmes]
Company Profile: Formerly known as Dollar Financial, DFC Global offers financial services to unbanked and under-banked consumers and small business owners, many of whom receive income on an irregular basis or from multiple employers.
Share Price: $18.87 (Dec. 6)
2011 Return: -1.2%
Investment Thesis: William Blair analysts don't mince words when talking about DFC Global; They argue the market opportunity is "significant" and that business trends are strong and accelerating in the U.K. and Europe and remain solid in U.S. and Canada.
"We believe DFC is well positioned to provide alternative financial services to the 2.5 billion underserved/underbanked consumers worldwide (about 60 million in the United States) given its diverse product offering, geographic diversity, and strong balance sheet," the analysts write.
They add that DFC's recent acquisitions provide platforms for growth. "We believe DFC's acquisition pipeline remains active and that DFC will focus primarily on using its recent U.K. and Scandinavian pawn acquisitions as platforms for expansion in existing and adjacent European markets," they add.
Shares of DFC have fallen hard in recent weeks due to regulatory concerns in the U.K., although William Blair analysts say the selloff is overdone. "A November 2011 review published by HM Treasury increases our conviction that the U.K. government wants to make sure consumers have access to high cost loans with proper disclosures," they add.
Hot Up And Coming Companies To Own For 2014: Total Telcom Inc.(TTZ.V)
Total Telcom Inc., through its subsidiary, ROM Communications Inc., develops and provides Web to wireless products and services for commercial, industrial, and consumer applications in North America. The company offers various products based on MicroCom, a Web to wireless technology; and ROMTraX, a proprietary hardware and software. Its products comprise Remote Weather Station, a solution that provides picture of the weather trends; EnviroWatch Irrigation Flow Metering solution to track water consumption, inflow, and outflow; and Water Quality Monitor, a series of devices to offer data acquisition for various environmental monitoring or study applications, including water quality monitoring. The company also provides Vessel Monitoring System, a satellite based positional tracking system; ROMTraX asset tracking device to track the location and movement of vehicles or other mobile assets; Power Fault Trip Monitor, a fault monitoring solution for monitoring power underground and aerial circuit over-current faults for utility or other providers; and Remote Power/Utility Monitor, a power monitoring solution for modbus based power meters. In addition, it offers Remote Gas Flow Monitor, a solution to remotely connect to various electronic gas flow meters; MicroCom Remote Telemetry, a device with a combination of proprietary hardware and software; and EnviroWatch Remote Telemetry for the data acquisition of various environmental tracking or study applications. The company?s products are used in environmental, tracking, utility, oil and gas, and customized applications. Its solutions enable companies and organizations to remotely monitor, track, and control their fixed and mobile assets with a Web browser from any Internet enabled personal computer. The company is headquartered in Kelowna, Canada.
Top 10 Consumer Service Stocks For 2014: Aedes(AEDI.MI)
Aedes SpA operates in the real estate sector in Italy and internationally. The company owns buildings; manages owner-occupied urban and suburban retail malls, and offices; develops metropolitan and industrial areas, and commercial and residential properties; and purchases and resells apartment complexes. It also provides management services for various phases of real estate projects comprising asset management, fund management, advisory, finance and administrative, treasury, corporate governance, intermediation, and shopping mall management services. The company was founded in 1905 and is headquartered in Milan, Italy.
Hot Up And Coming Companies To Own For 2014: African Queen Mines Ltd (AQ.V)
African Queen Mines Ltd., together with its subsidiaries, engages in the acquisition, exploration, and development of mineral properties in Africa. It primarily explores for gold, diamond, and other metals in Botswana, Namibia, Mozambique, Kenya, and Ghana. The company was incorporated in 2008 and is headquartered in Vancouver, Canada.
Wednesday, May 29, 2013
4 Companies Seemingly Immune From Brand Label Disloyalty
Watch out, Oreos. You too, Sprite. Quit laughing, Fruity Pebbles. You aren't immune from this, either.
In the wake of the most recent recession, many consumers are rethinking past cavalier spending habits. And a recent study shows one way people are cutting back is by switching to private-label goods. Big brands, are your days numbered?
A shift in the way people shop
According to Deloitte's annual American Pantry Study, brand loyalty has dropped for the second year in a row, signaling a dwindling number of consumers who are staying loyal to their favorite brands. The study shows nearly nine in 10 consumers are swapping out big branded goods for private-label ones.
The survey also found that 94% of Americans indicate they'll remain cautious and keep their spending for foods, beverages, and household goods at current levels, despite the rising stock market and strengthening economy.
Shaking in their fancy packaging
Should the manufacturers of big-branded goods be scared? That depends. If they can find ways to differentiate their products and get them into consumers' fridges and pantries, then they'll come out OK. In fact, during the two years Deloitte's study has shown declining brand loyalty, some very big brands have gotten even bigger.
The "Best Global Brands" list, from brand consultancy firm Interbrand, gives us a Who's Who of the biggest brands in the beverage, food, and household-goods spaces. Here are the big four, with many of these brands having graced the list every single year since its 2001 inception.
| Coca-Cola (NYSE: KO ) | Coca-Cola | 10% | 35% |
| PepsiCo (NYSE: PEP ) | Pepsi | 18% | 23% |
| Kellogg (NYSE: K ) | Kellogg's | 9% | 20% |
| H.J. Heinz (NYSE: HNZ ) | Heinz | 2% | 41% |
Sources: Interbrand, The Motley Fool.
If consumers are reaching for private labels more often these days, someone forgot to tell these four big-branded manufacturers. All of the companies' respective Best Global Brands have increased in brand value during the past two years, according to Interbrand's proprietary formula. Shareholders have also profited handsomely, with each companies' stock returning on average at least 10% annually over this same period. And all four companies have enjoyed top-line growth over the past two years in the face of challenging global macroeconomic headwinds.
These companies successfully find ways to innovate and differentiate their brands year after year. Coca-Cola leverages its huge distribution system to roll out new products all around the globe. The cola giant boasts more than 500 brands, including 16 billion-dollar brands. PepsiCo, in conjunction with Yum! Brands' Taco Bell, has been incredibly successful with its innovative Doritos Locos Taco shell, with more than 500 million sold since its March 2012 launch. (Doritos are produced by Frito-Lay, which Pepsi owns.) Kellogg's emphasis on health-conscious offerings has strengthened its brand. And Berkshire Hathaway's acquisition of Heinz signals that Warren Buffett sees immense value in its brand.
Foolish final takeaway
These four big-branded manufacturers continue to differentiate their products and find their way into consumers' kitchens. The companies' continued innovation spurs wildly sought-after products, building big brands into seemingly impenetrable blockbusters time and again.
Coca-Cola's wide moat has helped provide its shareholders with superior gains in the past, but the company faces some new threats to its continued market dominance. The Motley Fool recently compiled a premium research report containing everything you need to know about Coca-Cola. If you own or are considering owning shares in the company, you'll want to click here now and get started!
Tuesday, May 28, 2013
How Fannie and Freddie Became the Greatest Stock Story of the Year
Something very strange has been happening. Housing, in all regards, is actually turning around. Home prices are up. Housing starts are improving. Granted, this improvement leaves the housing market looking up at the pre-crash peak, but in relative terms and compared to earlier recessionary lows, it's been more than enough for optimism.
Source: Federal Reserve Bank of St. Louis.
Plenty of housing stocks have reaped the rewards of this recovery, such as it is:
XHB Total Return Price data by YCharts.
And this is just a small sample of the stocks you could have bought into during the great post-crash housing recovery. Investors have had no shortage of opportunities, from the materials going toward constructing and improving homes for sale, to homebuilders themselves, to the banks offering loans to prospective homeowners. However, one (well, two) of the most important links in the American housing chain remained locked to the ground, unmoving -- until this spring.
FNMA Total Return Price data by YCharts.
While the rest of the market was freaking out about solar stocks and electric cars, the common stocks of America's two most notable housing government-sponsored enterprises (GSEs) languished. Of course, this was almost certainly because both Fannie Mae (NASDAQOTCBB: FNMA ) and Freddie Mac (NASDAQOTCBB: FMCC ) were placed in conservatorship as the economy melted down in 2008, which has left common shareholders without a means of redress or indeed without any expectation of sharing in the fruits of recovery. But come March, the stocks began shooting up, and they've shot up again this month. What's going on?
The government owns about 80% of each GSE, which it obtained in 2008 in exchange for an influx of $187.5 billion in bailout funds. These two factors have kept the stocks depressed from the takeover until this spring, when Fannie Mae reported the expectation of "significant net income." That income turned out to be truly significant -- at more than $58 billion (most accrued through tax benefits), and Freddie Mac's $4.6 billion profit turned out to be the second-largest in its history as well. As a result of the great quarter, both GSEs are now closer than ever to zeroing out their bailout liability:
| Fannie Mae | $116.2 billion | $95.0 billion | $21.2 billion |
| Freddie Mac | $71.3 billion | $36.6 billion | $35.0 billion |
| Total | $187.5 billion | $131.6 billion | $56.0 billion |
Source: Reuters and Propublica.
* Includes announced second-quarter payments.
Make no mistake: This is still a hefty chunk of change. But it is far, far lower than the $128.4 billion outstanding that Propublica reported earlier this year. Now that both Fannie and Freddie have been profitable for several consecutive quarters (and by all regards appear to be on track for more profitability), we can see roughly how long it'll be before these two GSEs zero out their liability -- an event that's sure to bring a righteous firestorm of investor lobbying to bear on returning shares to the public.
The latest quarter was deliberately left off this graph to present a clearer picture of how much each GSE returned to the Treasury under "normal" circumstances. And what exactly are "normal" circumstances now? Let's take a look at pre-tax profits over the same time frame, while including the most recent quarter for a picture of progress closer to the present:
The GSEs have been making solid progress, and a trend toward greater profitability is becoming clear. Since the start of 2012, Fannie and Freddie's average quarterly pre-tax profits have been $5.1 billion and $3.4 billion, respectively. Under these new "normal" circumstances, the GSEs have been paying out substantially all (about 90% in Fannie's case and over 100% in Freddie's case) of their profit to the Treasury, which is more or less how the new conservatorship structure works.
If these averages hold up (under 90% payouts), Fannie Mae would be able to pay approximately $4.6 billion per quarter from here on out, and Freddie would be able to pay $3.1 billion. Based on the current level of outstanding bailout debt, this rate would zero out Fannie's liability in just five quarters, and Freddie's in 12 -- in either case, far faster than a reported 10-year timetable for full repayment set by the Obama administration. That's even if you count a hoped-for $50 billion profit, which would take another seven quarters of repayment between the two GSEs.
It should therefore come as no surprise that a number of major hedge funds are now taking up positions in Fannie and Freddie's shares and are lobbying hard for the government to spin off its stake, again making Fannie and Freddie the publicly traded companies they once were. Even erstwhile presidential campaigner (and GSE stockholder) Ralph Nader is up in arms at the government's apparent dalliance over returning a cash cow to private ownership. With at least one writer now claiming that the Federal Housing Finance Agency (the GSEs' conservator) has breached its fiduciary duty to shareholders, it seems likely that the Fannie and Freddie situation must be resolved far sooner than the government had hoped -- quite possibly in court, should Fannie and/or Freddie zero out their debts in the next two years or so.
Thanks to stricter lending requirements, higher fees, and a lack of real competition, Fannie and Freddie appear headed for record profitability, even when discounting the impact of tax charges. We're highly unlikely to see these two enterprises vanish from the American housing picture, considering that the vast majority of American mortgages now bear the Fannie or Freddie guarantee. If they do, there's a massive amount of assets (more than $5 trillion) to be wound down first and thus accrue to shareholders -- though preferred shareholders would get first crack-- another reason why institutional investors like the GSE story right now.
After an incredible rally, the remaining upside in Fannie and Freddie shares will depend largely on how effective large shareholders are in lobbying for the results they want. Fannie and Freddie didn't have the same strident voices in their favor as did the financial industry in 2008. Now they appear to. You might not like Wall Street, but do you really want to bet against it when it smells a good deal?
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Top 10 Performing Companies To Buy For 2014
LONDON -- Weir� (LSE: WEIR ) released its interim management statement for the four months between Dec. 29, 2012, to April 30, 2013, this morning, with its share price falling 1.3% in early trade following a mixed reaction by the market.
This followed the announcement of a lower opening order book in the first quarter, down 14% on a reported basis against the same period last year, with the oil and gas division particular underperforming and contributing to lower revenues. Management also stated that "operating profits were down on the prior year period, with margins also affected by one-off costs in relation to the continued restructuring of the pressure pumping operations".
Like-for-like input in the first quarter saw a 14% decline against Q1 2012 but an increase of 14% against Q4 2012, with growth seen in minerals and oil and gas.�Original equipment input was 23% lower than the comparative quarter last year, which saw a number of large project orders.
Top 10 Performing Companies To Buy For 2014: DigitalGlobe Inc (DGI)
DigitalGlobe, Inc. provides commercial earth imagery products and information services worldwide. It collects imagery products and services through its QuickBird, WorldView-1, and WorldView-2 satellites, as well as aerial and satellite imagery from third party suppliers. The company offers a range of online and offline distribution options, including desktop software applications; Web services, which provide direct online access to the company�s image library; file transfer protocol; physical media, such as CD, DVD, and hard drive; and direct access program that facilitates certain customers to task and download data from its WorldView-1 and WorldView-2 satellites. Its imagery products and services support various uses, including defense, intelligence and homeland security, mapping and analysis, environmental monitoring, oil and gas exploration, and infrastructure management. DigitalGlobe, Inc. serves defense contractors; civil government agencies; providers of location-b ased services; and various companies in energy, telecommunications, utility, forestry, mining, financial services, environmental, and agricultural industries through direct and indirect channels. The company was formerly known as EarthWatch, Incorporated and changed its name to DigitalGlobe, Inc. in August 2002. DigitalGlobe, Inc. was founded in 1993 and is headquartered in Longmont, Colorado. DigitalGlobe, Inc. operates as a subsidiary of Morgan Stanley & Co. LLC.
Top 10 Performing Companies To Buy For 2014: Quality Distribution Inc. (QLTY)
Quality Distribution, Inc., together with its subsidiaries, engages in the truckload transportation of bulk chemicals primarily in North America. The company involves in the bulk transportation of liquid and dry chemicals, including plastics, as well as bulk dry and liquid food-grade products. It also provides intermodal ISO tank container transportation and depot services; tank cleaning, heating, testing, maintenance, and storage services; and local and over-the-road trucking services. The company?s bulk service network consists primarily of independently owned third-party affiliate terminals, independent owner-operator drivers, and own terminals. As of December 31, 2010, it managed a fleet of approximately 2,900 tractors and 5,700 trailers; and operated 91 independent affiliate trucking terminals and 3 own trucking terminals. Quality Distribution also operates 8 ISO tank container transportation and depot service terminals. The company was formerly known as MTL, Inc. and changed its name to Quality Distribution, Inc. in 1999. Quality Distribution, Inc. was founded in 1984 and is headquartered in Tampa, Florida.
Best Income Companies To Invest In 2014: Vanoil Energy Ltd. (VEL.V)
Vanoil Energy Ltd., an oil and gas company, engages in the identification, acquisition, exploration, and evaluation of oil and gas properties in Kenya and Rwanda. The company owns 100% interests in the 3A and 3B blocks that cover approximately 24,912 square kilometers in Kenya. It also owns oil and gas concessions covering approximately 1,631 square kilometers in the northwestern part of the Rwanda. Vanoil Energy Ltd. was founded in 2009 and is headquartered in Vancouver, Canada.
Top 10 Performing Companies To Buy For 2014: Ryanair (RYAAY)
Ryanair Holdings plc (Ryanair Holdings), incorporated in 1996, is a holding company for Ryanair Limited (Ryanair). Ryanair operates a low-cost, scheduled-passenger airline serving short-haul, point-to-point routes between Ireland, the United Kingdom, Continental Europe, and Morocco. As of June 30, 2012, the Company offered approximately over 1,500 scheduled short-haul flights per day serving approximately 160 airports largely throughout Europe with an operating fleet of 294 aircraft flying approximately 1,500 routes. Ryanair sells seats on a one-way basis. The Company also holds a 29.8% interest in Aer Lingus Group plc. As of June 30, 2012, Ryanair�� operating fleet was composed of 294 Boeing 737-800 aircraft, each having 189 seats. Ryanair�� fleet totaled 294 Boeing 737-800s at March 31, 2012. As of June 30, 2012, Ryanair owned and operated four Boeing 737-800 full flight simulators for pilot training. Ryanair provides ancillary services and engages in other activities connected with its core air passenger service, including non-flight scheduled services, Internet-related services, and the in-flight sale of beverages, food, and merchandise. As part of its non-flight scheduled and Internet-related services Ryanair incentivizes ground service providers at airports it serves to levy correct excess baggage charges for any baggage, which exceeds Ryanair�� published baggage allowances. Excess baggage charges are recorded as non-flight scheduled revenue. Ryanair distributes accommodation services and travel insurance through its Website. For hotel services, Ryanair has a contract with Hotelscombined PTY Ltd. (Hotelscombined), which operates a price comparison Website, pursuant to which Hotelscombined handles all aspects of such services marketed through Ryanair�� Website and pays a fee to Ryanair. Ryanair also has contracts with other accommodation providers that enable Ryanair to offer hostel, bed-and-breakfast, guesthouse, villa and apartment accommodation to its customers. In addition Ryanair has a contract with Hertz, pursuant to which Hertz handles all car rental services marketed through Ryanair�� Website or telephone reservation system. Ryanair also sells bus and rail tickets onboard its aircraft and through its Website. Ryanair also sells attractions and activities on its Website. Ryanair sells gift vouchers on its Website, which are also redeemable online. The Company has an contract with Webloyalty International Ltd, which offers Ryanair�� customers who have a United Kingdom, German or French billing address a retail discount and cash-back program. Ryanair has agreements, pursuant to which the Company promotes Ryanair-branded credit cards issued by MBNA, GE Money, Access Prepaid and Banco Santander on its Internet site. The MBNA agreement relates to Irish residents only, the GE Money agreement relates to Swedish and Polish residents only and the Banco Santander agreement relates to United Kingdom residents only. During the fiscal year ended March 31, 2012, Ryanair rolled out handheld Electronic Point of Sale (EPOS) devices across its route network. These EPOS devices replaced manual and paper based systems on board the aircraft. The EPOS device enables cabin crew to sell and record their on-board sales transactions. The EPOS device also issues bus and rail tickets and tickets for tourist attractions. The Company also offers reserved seating in twenty-one extra legroom seats on each aircraft for a fee on certain routes. Ryanair provides its own aircraft and passenger handling and ticketing services at Dublin Airport. Third parties provide these services to Ryanair at other airports it serves. Servisair plc provides Ryanair�� ticketing, passenger and aircraft handling, and ground handling services at airports in Ireland and the United Kingdom(excluding London (Stansted) Airport where these services are provided by Swissport Ltd.), while similar services in continental Europe are provided by the local airport authorities, either directly or through sub-contractors. Advisors' Opinion:- [By Robert Holmes]
Analyst Penelope Butcher calls Ryanair "the best placed airline in our coverage universe," which she pins on the company's pricing power, competitor capacity withdrawals, and bargaining power with manufacturers and airports.
"On our forecasts, the company will still be in a position to match its record 2007 net income result for FY12, and continue to expand toward doubling this result by 2015, owing to modest capacity growth and stability/potential relief in its fuel cost base from calendar 2012 onward," Butcher writes.
While Butcher's base case calls for a 17% climb in share price next year, her most bullish view would have shares up 61% next year. On the downside, her most bearish outlook calls for shares of Ryanair falling 27% in 2012.
The chart above shows the American Depositary Receipts of Ryanair trading in the U.S., although Morgan Stanley recommends buying shares trading in London.
Top 10 Performing Companies To Buy For 2014: LML Payment Systems Inc.(LMLP)
LML Payment Systems Inc. provides payment processing solutions primarily to businesses and organizations that use Internet to receive or send payments in Canada and the United States. The company provides electronic payment and risk management solutions for mail-order and telephone-order call-centers, and online merchants and brick and mortar merchants, including government and financial institutions; and offers solutions that enable e-merchants to accept credit card and debit card payments, electronic funds transfers (EFT), and automated clearing house (ACH) payments. It also provides hosted solutions, including a connection between the merchant?s Website and its host system that provides the merchant with a shopping cart with secure payment processing for credit cards and debit cards, EFT, and ACH payments; a secure order management interface; multiple currency and shipping options; and reporting and reconciliation tools. In addition, the company offers authentication t ools for merchants to reduce the risk inherent in card-not-present credit card transactions; other authentication services that provide information related to the validation of credit card orders and fraud screening of applications by consumers; and various risk management tools. Further, it licenses its intellectual property estate, which includes five United States patents related to electronic check processing methods. Additionally, the company engages in primary and secondary check collection, including electronic check re-presentment. Its check processing services involve return check management, such as traditional and electronic recovery services to retail clients. The company sells its products and services indirectly through channel and technology partners; and directly through its Website and internal sales staff. It serves approximately 10,000 businesses and organizations. The company was founded in 1974 and is headquartered in Vancouver, Canada.
Top 10 Performing Companies To Buy For 2014: MHI Hospitality Corporation(MDH)
MHI Hospitality Corporation, a real estate investment trust (REIT), engages in the ownership and operation of upper upscale and midscale hotels in the mid-Atlantic and southeastern United States. As of March 15, 2006, the company operated seven upper upscale and midscale hotels with 1,673 rooms under the brand names ?Hilton? and ?Holiday Inn?. It also owns leasehold interests in the commercial spaces of the Shell Island Resort, a condominium resort property. The company has elected to be treated as a REIT for federal income tax purposes. As a REIT, it would not be subject to federal income tax, provided it distributes at least 90% of its taxable income to its shareholders. MHI Hospitality has strategic alliance agreement with MHI Hotels Services LLC. The company was founded in 1957 and is based in Williamsburg, Virginia.
Top 10 Performing Companies To Buy For 2014: China TechFaith Wireless Communication Technology Limited(CNTF)
China Techfaith Wireless Communication Technology Limited, together with its subsidiaries, operates as an original developed products provider that is focused on the original design and sale of mobile phones in the People's Republic of China and internationally. Its original developed products include multimedia phones, and dual mode dual card handsets of multiple wireless technology combinations; Windows-based smartphones and Pocket PC phones; and handsets with interactive online gaming and professional game terminals with phone functionality. The company also provides gaming content to the motion, mobile, and online PC gaming markets through its Web sites. In addition, it develops Middleware Application MMI/UI software packages on 2G/2.5G, 3G, and 3.5G communication technologies. The company was founded in 2002 and is based in Beijing, the People's Republic of China.
Top 10 Performing Companies To Buy For 2014: MakeMyTrip Limited(MMYT)
MakeMyTrip Limited, an online travel company, provides travel products and solutions in India and the United States. Its products and services include air tickets, hotels, packages, rail tickets, bus tickets, car hire, and ancillary travel requirements, such as travel insurance and visa processing. The company, through its Website, makemytrip.com, allow travelers to research, plan, and book a range of travel services and products in India and internationally. MakeMyTrip Limited also provides its products and services through other technology-enhanced distribution channels, such as call centers, travel stores, and travel agents? network. Its customers comprise leisure travelers and small businesses. The company was formerly known as International Web Travel Private Limited and changed its name to MakeMyTrip Limited in April 2010. MakeMyTrip Limited was founded in 2000 and is based in Gurgaon, India.
Top 10 Performing Companies To Buy For 2014: Lions Gate Energy Inc (LG.V)
Lions Gate Energy Inc., an exploration stage company, engages in the acquisition, exploration, and development of precious and base metal mineral deposits in Canada. It owns a 100% interest in the El Toro project, a copper-gold-silver property that covers an area of 34,356 hectares in the Omineca mining division of British Columbia. The company was incorporated in 1981 and is based in Vancouver, Canada.
Top 10 Performing Companies To Buy For 2014: Blue Sky Uranium Corp (BSK.V)
Blue Sky Uranium Corp., a junior mineral exploration company, engages in acquisition, evaluation, and exploration of uranium properties in Canada and Argentina. The company holds interests in a 600,000-hectare land package in the Patagonia region of southern Argentina. Its properties include Santa Barbara and ANIT Uranium project located in the Rio Negro Province of Argentina. Blue Sky Uranium Corp. was incorporated in 2005 and is based in Vancouver, Canada.
Monday, May 27, 2013
The Great Undoing of Bank of America
The StressTest column appears every Thursday on Fool.com. Check back weekly, and follow @TMFStressTest on Twitter.
Bank of America (NYSE: BAC ) has been near-mortally wounded. But that may be good news.
B of A's evisceration came by its own hand. An unintentional seppuku attempt, if you will. You may have heard a bit about this already, but this all went down in January 2008, when the bank agreed to buy a little mortgage outfit known as Countrywide Financial.
Believe it or not, at the time, there was optimism around the deal. One asset manager at the time was quoted as saying, "Buying Countrywide was a gutty move ... The whole concern about housing and the economy has been greatly exaggerated." Bank analyst Dick Bove was on the same page, claiming that an ugly quarterly report around the time of the deal was a "clean-up" quarter for Countrywide, continuing, "Bank of America is asking them to look into every place they can find to take losses, so when they become Bank of America, we don't see similar impacts."
But it wasn't to be. The "whole concern about housing and the economy" wasn't, in fact, overblown, and the decision to buy Countrywide was an abysmal one.
Of course, I'm far from the first to say that Countrywide was essentially a bought-and-paid-for cancer for Bank of America. This has been said to such an extent that some investors may wonder if Countrywide is simply the scapegoat for an overall ailing bank. But, rest assured, that's not the case -- the Countrywide acquisition was every bit as bad as billed.
If you actually dig through B of A's annual report, you can find a helpful little table that shows the performance of the loan originations that were sold to the GSEs -- primarily Fannie Mae (NASDAQOTCBB: FNMA ) and Freddie Mac -- between 2004 and 2008. What's even more helpful is that the table breaks out the Countrywide originations versus the "other" originations -- principally, legacy Bank of America production.
As shown above, the numbers are pretty stark. On a percentage basis, 8.1% of "other" originations during that period have defaulted or are severely delinquent. It's 13.1% among the Countrywide originations. But the sheer size of the origination machine at Countrywide makes this gap even worse, because the total GSE originations from Countrywide during that period was nearly $850 billion versus just $272 billion at legacy Bank of America.
The felt impact of this at Bank of America was repurchase claims, lawsuits, multi-billion dollar settlements, and the like. Maybe, even more painfully, it was the growing perception that Bank of America itself was, and is, a terrible lender.
It's with that latter point that there's some silver lining in this sad story. The Countrywide acquisition highlights just how disastrous the wrong deal can be for a company. There's a solid argument to be made that the B of A-Countrywide tie-up was one of the worst in corporate history. But the recognition of the fact that a good deal of B of A's post-crisis troubles have been driven by the Countrywide cancer should give investors some hope that, as that mess continues to get cleaned up, there's a good, solid bank hiding out in there somewhere.
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Sunday, May 26, 2013
Boeing Wins $60.6 Million for F-18 Parts and Services
The Pentagon handed out $717.7 million worth of defense contracts on Monday, with Boeing (NYSE: BA ) capturing 10% (two) of the 20 contracts awarded. Specifically, Boeing won:
a $52.9 million modification of a previously awarded firm-fixed-price Navy contract to supply jumper bundles, pylons, and bomb racks for installation on F/A-18E/F fighter jets and EA-18G electronic warfare aircraft. The named parts are hardware to which ordnance is attached on a warplane. Boeing's estimated delivery date on the hardware is May 2016. a $7.7 million cost-plus-fixed-fee delivery order, placed under a previously issued basic ordering agreement. Boeing will supply provide equipment and services needed to support Follow-On Test and Evaluation work on the F/A-18E E66 Loads aircraft for the Navy. Delivery here is to be completed in May 2014.Boeing shares closed Monday trading down 0.2%, at $98.72.
Saturday, May 25, 2013
Why Tsakos Energy Navigation's Shares Popped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of energy transporter Tsakos Energy Navigation Limited (NYSE: TNP ) jumped 17% today after the company released earnings.
So what: Voyage revenues fell 4.4% to $97.7 million but that was far better than the $67.7 million analysts expected. The company was able to control costs as well, which resulted in a $1 million profit and earnings of $0.02 per share versus the $0.08 analysts expected it to lose.
Now what: Management thinks the product and crude markets have "turned the corner" and Tsakos is well positioned to take advantage. Management is focusing on keeping the fleet flexible so it is able to take advantage of higher rates for short and medium term contracts. This was a solid beat but the company barely made a profit, and until we see profit tick higher consistently, I'll sit on the sidelines of this stock.
Interested in more info on Tsakos Energy? Add it to your watchlist by clicking here.
Friday, May 24, 2013
Sluggish Dow Overshadowed by Stellar Hewlett-Packard Earnings
Battling conflicting indicators, the Dow Jones Industrial Average (DJINDICES: ^DJI ) slipped 12 points, or less than 0.1%, to close at 15,294 today. Down 120 points at one point in early trading, Wall Street struggled to come to terms with a decline in Chinese factory output. However, when U.S. new home sales in April rose by nearly 30% from a year ago, and blowout Hewlett-Packard (NYSE: HPQ ) earnings were considered, the Dow nearly clawed its way back to even ground.
HP rocketed 17.1% higher today, posting its largest single-day gain since late 2001. Even though sales slipped 10%, earnings beat estimates, as profit margins increased in the company's new business focuses, enterprise, and enterprise services, in particular. Shareholders couldn't ask for much more: At least four analysts raised their price targets on the stock as HP raised its guidance.
Aerospace giant Boeing (NYSE: BA ) also benefited from newfound analyst love, adding 1.9%, as at least five investment banks raised their price targets on the stock this week alone. Wall Street cheered news that China gave the thumbs-up to its national airlines to fly the Boeing 787 Dreamliner; today's clearance is the latest positive for Boeing's Dreamliner, which has been reworked after serious issues with its battery earlier this year.
Even with tech stocks leading the way, largely by virtue of Hewlett-Packard's earnings shocker, shares of Microsoft (NASDAQ: MSFT ) still slipped 1.3%. The company's release of the new Xbox One gaming console simply hasn't impressed investors. While the device offers new ways to multitask and interact via voice and motion controls, the price point is still unknown, making it harder to gauge how viable the product actually is.
The largest laggard in the Dow today was Alcoa (NYSE: AA ) , which lost 1.7% in trading. Materials companies always hate to hear anything even remotely neutral out of China, preferring, instead, projections of double-digit growth in all areas of the economy for centuries to come. With today's data showing industrial output actually slowing, Alcoa shares slumped, in anticipation of weaker demand for aluminum.
The massive wave of mobile computing has done much to unseat the major players in the PC market, including venerable technology names like Hewlett-Packard. However, HP's rapidly shifting its strategy under the new leadership of CEO Meg Whitman. But does this make HP one of the least-appreciated turnaround stories on the market, or is this a minor blip on its road to irrelevance? The Motley Fool's technology analyst details exactly what investors need to know about HP in our new premium research report. Just click here now to get your copy today.
Thursday, May 23, 2013
Top Promising Companies To Own In Right Now
For years, investors have relied on cheap money to fund high stock prices. Yet as promising as positive economic data has been lately, it also raises the question of when the Federal Reserve will stop needing to provide economic stimulus to support the economy. As the Japanese yen continues to plunge and bond yields around the world are on the rise, many investors fear that the end will be at hand a lot sooner than previously thought. Yet most of the damage was confined to international bond markets, as the Dow Jones Industrials (DJINDICES: ^DJI ) finished with a loss of only 27 points, while the S&P 500 actually gained a fraction of a point to hit another new record.
Within the Dow, though, it was easy to find stocks that bucked the trend and moved higher. Pfizer (NYSE: PFE ) was the biggest gainer in the Dow, jumping more than 2% as the company said it would present nearly a dozen different abstracts for its Xeljanz rheumatoid arthritis treatment at a European conference next month. With the drug having gotten a negative opinion from the European Medicines Agency lately, Pfizer clearly wants to give regulators there reason to reconsider their views on Xeljanz.
Top Promising Companies To Own In Right Now: Servotronics Inc.(SVT)
Servotronics, Inc., together with its subsidiaries, engages in the design, manufacture, and marketing of technology and consumer products primarily in the United States. It operates in two segments, Advanced Technology Group (ATG) and Consumer Products Group (CPG). The ATG segment designs, manufactures, and markets various servo-control components that convert an electrical current into a mechanical force or movement, and other related products. Its servo-control components include torque motors, electromagnetic actuators, hydraulic valves, pneumatic valves, and similar devices that are principally sold to commercial aerospace, missile, aircraft, government related, medical, and industrial markets. This segment also produces metallic seals in various cross-sectional configurations that are used to fit between two metal surfaces to produce a secure and leak-proof joint. The ATG segment markets its products primarily through its professional staff to the United States Govern ment, government prime contractors, government subcontractors, commercial manufacturers, and end users. The CPG segment designs, manufactures, and sells various cutlery products, including steak, carving, bread, butcher, and paring knives for household use and for use in restaurants, institutions, and private industry; pocket and other types of knives for use in hunting, fishing, and camping; and machetes, bayonets, and other types of knives for military use. This segment also produces and markets other cutlery items, such as specialty tools, putty knives, linoleum sheet cutters, field knives, and other edged products. The CPG segment markets its products through sales personnel and independent manufacturers? representatives to hardware, supermarket, variety, department, discount, gift, and drug stores, as well as to various branches of the United States Government primarily under the ?Old Hickory? and ?Queen? brand names. Servotronics, Inc. was founded in 1959 and is based in Elma, New York.
Top Promising Companies To Own In Right Now: FARO Technologies Inc.(FARO)
FARO Technologies, Inc., together with its subsidiaries, designs, develops, manufactures, markets, and supports software-based three-dimensional measurement and imaging systems for manufacturing, industrial, building construction, and forensic applications. The company?s articulated electromechanical measuring devices include FaroArm, a combination of six or seven-axis, instrumented articulated measurement arm, a computer, and CAM2 software programs; FARO Laser ScanArm, a FaroArm equipped with a combination of a hard probe and non-contact line laser probe to measure products without touching them and offers a seven-axis contact/non-contact measurement device with an integrated laser scanner; and FARO Gage, an accuracy version of the FaroArm product. Its laser-based measuring devices comprise FARO Laser Tracker ION that combines a laser measurement tool, a computer, and CAM2 software programs; FARO Focus3D to measure and collect data points; and FARO 3D Imager AMP, a non-c ontact 3D Imager capable of collecting millions of points to generate infinitely-focused fringe patterns. The company also provides CAM2 Software, a proprietary CAD-based measurement and statistical process control software comprising CAM2 Q, CAM2 Measure X, Soft Check Tool, FARO Gage Software, and FARO Focus3D Software. In addition, it offers extended warranties, as well as support, training, and technology consulting services. The company sells its products through direct sales and distributors. It serves the automobile, aerospace, and heavy equipment markets, as well as law enforcement agencies in the Americas, Europe, Africa, and the Asia Pacific. FARO Technologies, Inc. was founded in 1981 and is headquartered in Lake Mary, Florida.
Best Life Sciences Stocks To Invest In 2014: Validus Holdings Ltd.(VR)
Validus Holdings, Ltd., through its subsidiaries, provides reinsurance and insurance coverage in the property, marine, and specialty lines markets worldwide. The company underwrites property catastrophe reinsurance, property per risk reinsurance, and property pro rata reinsurance products; and reinsurance on marine risks covering damage to or losses of marine vessels and cargo, third-party liability for marine accidents, physical loss, and liability from principally offshore energy properties. It also underwrites specialty lines of business, which include aerospace and aviation, agriculture, terrorism, life, accident and health, financial lines, nuclear, workers? compensation catastrophe, crisis management, political risks and violence, war, and contingency. The company was founded in 2005 and is based in Pembroke, Bermuda.
Top Promising Companies To Own In Right Now: Niocan Inc Com Npv(NIO.TO)
Niocan Inc. engages in the exploration and development of mineral properties in the province of Quebec, Canada. It holds interest in the Niobium mining property consisting of 49 claims covering 1,604 acres and surface rights on 231 acres located in Oka, Quebec. The company also owns a 100% interest in the Great Whale Iron property that includes 71 claims covering 17,098 acres in Hudson Bay and 69 claims. Niocan Inc. was incorporated in 1995 and is headquartered in Oka, Canada.
Wednesday, May 22, 2013
Tuesday, May 21, 2013
How Will Silvercorp Metals Overcome Silver's Decline?
On Wednesday, Silvercorp Metals (NYSE: SVM ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
Silvercorp Metals was already making its investors suffer before April's big swoon for the gold and silver markets. Now, narrowing profit margins due to low silver prices could further squeeze silver miners and eventually threaten their profitability. Let's take an early look at what's been happening with Silvercorp Metals over the past quarter and what we're likely to see in its quarterly report.
Stats on Silvercorp Metals
| Analyst EPS Estimate | $0.04 |
| Change From Year-Ago EPS | (33%) |
| Revenue Estimate | $52.21 million |
| Change From Year-Ago Revenue | 18% |
| Earnings Beats in Past 4 Quarters | 1 |
Source: Yahoo! Finance.
Can Silvercorp Metals boost its earnings?
Analysts have gotten a lot more nervous about Silvercorp Metals in recent months, cutting their earnings estimates for the just-ended quarter by $0.02. But they see the real damage coming in the next fiscal year, having slashed their fiscal 2014 estimates by nearly half, and that's largely responsible for the 40% plunge in the stock since mid-February.
We've already gotten a sense of what Silvercorp expects in its future results, as the company issued guidance for its fiscal 2014 year back in February. With increases in ore production at the Canadian company's Chinese mines to 1.5 million tons, Silvercorp hopes to produce 6.7 million ounces of silver, 20,800 ounces of gold, and almost 105 million pounds of lead and zinc, among other base metals and byproducts.
Yet the big problem that lies ahead for Silvercorp is the plunge in commodities that occurred in April. Although that won't get reflected in Wednesday's numbers, they could definitely play a big part in its future guidance going forward. Fortunately, Silvercorp's costs are relatively low, with the company actually posting negative cash costs in the Ying Mining District in its most recent quarter, but nevertheless, even it can't avoid the impact of falling market prices for its products.
If the plunge persists, then it could eventually pressure Silvercorp to cut its dividend. Silver Wheaton (NYSE: SLW ) reduced its payout from $0.14 to $0.12 per share in its most recent quarter, noting the decline in cash flow that falling silver prices produced as the main contributing factor in the decision. Still, Pan American Silver (NASDAQ: PAAS ) kept its dividend steady earlier this month, and even with lower projected earnings in light of silver's drop, it has ample profits to cover its dividend, and Silvercorp appears to have the same advantage.
In Silvercorp's quarterly report, watch closely for signs that lower prices might spur the company to change its planned capital expenditures or other critical business functions. If Silvercorp starts battening down the hatches with cost cuts, it could be a sign that the crash in commodities is more serious than some investors currently believe.
If you are looking for a company whose success is determined by the metals market, but without involving itself in the risks of physically mining the metals, then Silver Wheaton provides a unique play on the future of silver. Silver Wheaton chooses to finance the mining of silver; it has grown sales and net income every year since 2008, and also has increased competitive advantages over its limited peer group. To learn more about Silver Wheaton, click here now to access The Motley Fool's premium research report on the company.
Click here to add Silvercorp Metals to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.
#pitch{ margin-bottom: 15px; }Why Northwestern's Earnings May Not Be So Hot
Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.
Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.
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 Northwestern (NYSE: NWE ) , whose recent revenue and earnings are plotted below.
Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.
Over the past 12 months, Northwestern burned $70.3 million cash while it booked net income of $104.3 million. That means it burned through all its revenue and more. That doesn't sound so great. FCF is less than net income. Ideally, we'd like to see the opposite.
All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).
For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.
So how does the cash flow at Northwestern look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.
Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.
When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.
With 13.2% of operating cash flow coming from questionable sources, Northwestern investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 2.4% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures.
A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.
Looking for alternatives to Northwestern? It takes more than great companies to build a fortune for the future. Learn the basic financial habits of millionaires next door and get focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report.
We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.
Add Northwestern to My Watchlist.Monday, May 20, 2013
5 Reasons Not to Worry This Week
It's not a perfect world out there for investors, but things may be starting to get better.
The market's coming off another week of hearty gains, and falling commodity prices may help keep inflation in check in the near term.
I recently went over some of the companies that are expected to post lower quarterly profits when they report this week. Thankfully, they're the exceptions and not the rule.
Let's go over some publicly traded companies that are expected to stand tall this week by posting year-over-year improvement on the bottom line.
| NetApp (NASDAQ: NTAP ) | $0.68 | $0.66 |
| 8x8 (NASDAQ: EGHT ) | $0.06 | $0.03 |
| Foot Locker (NYSE: FL ) | $0.89 | $0.83 |
| Ross Stores (NASDAQ: ROST ) | $1.07 | $0.93 |
| salesforce.com (NYSE: CRM ) | $0.10 | $0.09 |
Source: Thomson Reuters.
Clearing the table
Let's start at the top with NetApp. The data storage and data management solutions specialist continues to take steps in the right direction. Sure, these are baby steps that we're talking about here. Analysts see revenue and earnings merely inching higher at a 3% pace when it reports tomorrow. However, NetApp has managed to beat Wall Street's profit targets in each of its four previous quarterly outings. In other words, it won't be much of a surprise if Netapp earns more than $0.68 a share.
8x8 is a fast-growing provider of PBX telephony, video conferencing, and other Web-based communication services. I singled out 8x8 in my monthly "5 Stocks Under $10" column, impressed by its margin expansion and healthy double-digit revenue growth.
It's probably going to happen again. Wall Street sees earnings doubling on a 17% increase in revenue.
Foot Locker reports on Friday. The athletic footwear retailer is expected to post marginal improvement on both ends of the income statement. Consumers are apparently not flinching at the high prices of branded athletic footwear these days.
Foot Locker merely met expectations in its most recent quarter, but it beat Wall Street's projections by double-digit percentage margins in each of the three periods before that.
Ross Stores steps up in a week that will be loaded with earnings reports out of leading discount retailers. The "dress for less" apparel retailer will join the parent companies of Kmart, T.J. Maxx, Target, and Marshalls in reporting, giving investors a great snapshot of the state of value-minded retail.
Estimates have been creeping higher for Ross Stores. Analysts were banking on a profit of $1.04 a share two months ago, $1.05 a share last month, and $1.06 a share a week ago. Now the pros are perched at $1.07 a share, well ahead of the $0.93 a share it earned last year.
Finally, we have Salesforce. The poster child of cloud computing has been able to grow at a healthy clip over the years by offering companies cost-effective and scalable cloud-based enterprise software solutions. True to its CRM ticker symbol, customer relationship management applications are its strength.
Margins have historically fluctuated at Salesforce, blurring the heady growth. We're seeing that again this time around, as Wall Street's targeting profitability to inch marginally higher on a 28% top-line pop.
Cross those fingers, but know the fundamentals
Investors in these five stocks have a right to be excited. They are all improving their financial situations. They are worthy of the gains that the market rally has bestowed upon them over the past year.
I wouldn't be uncomfortable owning any of these companies. They're doing the right thing, regardless of Mr. Market's mood swings.
The expectations may be high, but these five stocks wouldn't have it any other way.
The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.
Sunday, May 19, 2013
Top 5 Performing Stocks To Invest In Right Now
The famed hedge fund manager George Soros, known for breaking the British pound in 1992, shocked the world on Friday by announcing a 7.91% stake in J.C. Penney (NYSE: JCP ) . The news sent shares of the ailing retailer sharply higher, making it the best-performing stock on the S&P 500 (SNPINDEX: ^GSPC ) that day.
Besides throwing J.C. Penney a much-needed lifeline in the equity markets -- its shares are down nearly 50% over the past year alone -- the move reaffirms one of Soros' central tenets: "The worse a situation becomes, the less it takes to turn it around, and the bigger the upside."
The stake, valued at $295 million, makes J.C. Penney the third largest holding of Soros Fund Management, the privately owned hedge fund that's largely responsible for managing its founder's wealth. It also adds to an increasingly diverse portfolio of stocks. Among the fund's other large holdings are companies as disparate as AIG (NYSE: AIG ) , Johnson & Johnson (NYSE: JNJ ) , and Google (NASDAQ: GOOG ) :
Top 5 Performing Stocks To Invest In Right Now: Polaris Industries Inc. (PII)
Polaris Industries Inc. designs, engineers, and manufactures off-road vehicles. It offers all terrain vehicles and side-by-side vehicles for recreational and utility use; snowmobiles; and on-road vehicles, including motorcycles and low emission vehicles. The company also provides replacement parts and accessories, including winches, bumper/brushguards, plows, racks, mowers, tires, pull-behinds, cabs, cargo box accessories, tracks, and oil for off-road vehicles; covers, traction products, reverse kits, electric starters, tracks, bags, windshields, oil, and lubricants for snowmobiles; and saddle bags, handlebars, backrests, exhaust, windshields, seats, oil, and various chrome accessories for motorcycles. Polaris Industries sells its products through dealers and distributors primarily under the RANGER, RANGER RZR, RANGER Crew, Victory Vision, Victory Cross Roads, Polaris RUSH, and Cross Country trade marks. In addition, it markets helmets, jackets, bibs and pants, leathers, a nd hats through dealers and distributors, as well as online under the Polaris brand name. The company principally operates in the United States and Canada. Polaris Industries Inc. was founded in 1987 and is headquartered in Medina, Minnesota.
Top 5 Performing Stocks To Invest In Right Now: Mediaset(MS.MI)
Mediaset S.p.A. engages in the television (TV), advertising, free and pay digital TV, transmission network management, contents production, Internet, and mobile TV businesses primarily in Italy. It is involved in the provision of advertising sales and program scheduling for the three national channels and broadcasts three free-to-air channels using DVB-T technology; and production of game shows, quizzes, events, light entertainment, infotainment programs, reality shows, and soft news. The company also engages in the purchase, development, production, and management of television rights; provision of linear and non-linear content in the digital terrestrial sector; and planning, construction, hosting, and maintenance of network infrastructure and related services. In addition, it develops television sales channels and client services; provides publishing products, including books, digital versatile disks, and compact discs; and distributes Italian and foreign films, as well as offers its services and content on various platforms, such as Internet, teletext, mobile phones, and land-line phones. Mediaset S.p.A. was founded in 1978 and is based in Milan, Italy.
5 Best Paper Stocks To Watch Right Now: Gildan Activewear Com Npv (GIL.TO)
Gildan Activewear Inc. engages in the manufacture and sale of apparel products primarily in the United States, Canada, and Europe. It sells T-shirts, fleece, and sport shirts to wholesale distributors under the Gildan brand name. The company also provides its activewear products for work and school uniforms and athletic team wear, and other purposes to convey individual, group, and team identity. In addition, it offers apparel, which includes socks, underwear, and activewear products primarily to U.S. retailers; and athletic, casual, and dress socks for U.S. retailers. Further, the company holds contractual licensing relationships for the Under Armour and New Balance brands for socks; and manufactures and distributes activewear products for consumer brands, including T-shirts and sport shirts under the Anvil brand. It markets its sock products under the various brands, including Gold Toe, PowerSox, SilverToe, Auro, All Pro, GT, and Gildan brands. The company was formerly k nown as Textiles Gildan Inc. and changed its name to Gildan Activewear Inc. in March 1995. Gildan Activewear Inc. was founded in 1984 and is headquartered in Montreal, Canada.
Top 5 Performing Stocks To Invest In Right Now: Aceto Corporation(ACET)
Aceto Corporation engages in the sourcing, regulatory support, marketing, and distribution of pharmaceutical intermediates and active ingredients, finished dosage form generics, nutraceutical products, agricultural protection products, and specialty chemicals worldwide. The company operates in three segments: Health Sciences, Specialty Chemicals, and Agricultural Protection Products. The Health Sciences segment supplies raw materials used in the production of nutritional and packaged dietary supplements, including vitamins, amino acids, iron compounds, and bio chemicals used in pharmaceutical and nutritional preparations. The Specialty Chemicals segment provides various chemicals used in plastics, surface coatings, textiles, fuels, and lubricants; organic intermediates used in the production of agrochemicals; and dye and pigment intermediates used in the color-producing industries, such as textiles, inks, paper, and coatings. This segment also offers diazos and couplers to the paper, film, and electronics industries. The Agricultural Protection Products segment sells herbicides, fungicides, insecticides, and other agricultural chemicals that control weed growth, as well as control the spread of insects and other microorganisms that can damage plant growth. This segment also provides sprout inhibitor for potatoes and an herbicide for sugar cane. It serves pharmaceutical, nutraceutical, agricultural, coatings, and industrial chemical consuming industries. Aceto Corporation was founded in 1947 and is headquartered in Port Washington, New York.
Top 5 Performing Stocks To Invest In Right Now: ChinaCast Education Corporation(CAST)
ChinaCast Education Corporation, together with its subsidiaries, provides post-secondary education and e-learning services in China. The company operates in two segments, E-learning and Training Service Group and Traditional University Group. The E-learning and Training Service Group provides post secondary education distance learning services that enable universities and other higher learning institutions to provide nationwide real-time distance learning services. It also provides K-12 educational services, such as broadcast multimedia educational content services to primary, middle, and high schools; and vocational/career training services. The Traditional University Group segment operates private residential universities that offer four-year bachelor?s degree and three-year diploma programs in finance, economics, trade, tourism, advertising, IT, music, foreign languages, tourism, hospitality, computer engineering, law, and art. The company also provides logistic service s. ChinaCast Education Corporation was founded in 1999 and is headquartered in Central, Hong Kong.
Saturday, May 18, 2013
How Northeast Utilities is Bringing Bucks Home More Quickly
It takes money to make money. Most investors know that, but with business media so focused on the "how much," very few investors bother to ask, "How fast?"
When judging a company's prospects, how quickly it turns cash outflows into cash inflows can be just as important as how much profit it's booking in the accounting fantasy world we call "earnings." This is one of the first metrics I check when I'm hunting for the market's best stocks. Today, we'll see how it applies to Northeast Utilities (NYSE: NU ) .
Let's break this down
In this series, we measure how swiftly a company turns cash into goods or services and back into cash. We'll use a quick, relatively foolproof tool known as the cash conversion cycle, or CCC for short.
Why does the CCC matter? The less time it takes a firm to convert outgoing cash into incoming cash, the more powerful and flexible its profit engine is. The less money tied up in inventory and accounts receivable, the more available to grow the company, pay investors, or both.
To calculate the cash conversion cycle, add days inventory outstanding to days sales outstanding, then subtract days payable outstanding. Like golf, the lower your score here, the better. The CCC figure for Northeast Utilities for the trailing 12 months is 16.6.
For younger, fast-growth companies, the CCC can give you valuable insight into the sustainability of that growth. A company that's taking longer to make cash may need to tap financing to keep its momentum. For older, mature companies, the CCC can tell you how well the company is managed. Firms that begin to lose control of the CCC may be losing their clout with their suppliers (who might be demanding stricter payment terms) and customers (who might be demanding more generous terms). This can sometimes be an important signal of future distress -- one most investors are likely to miss.
In this series, I'm most interested in comparing a company's CCC to its prior performance. Here's where I believe all investors need to become trend-watchers. Sure, there may be legitimate reasons for an increase in the CCC, but all things being equal, I want to see this number stay steady or move downward over time.
Source: S&P Capital IQ. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.
Because of the seasonality in some businesses, the CCC for the TTM period may not be strictly comparable to the fiscal-year periods shown in the chart. Even the steadiest-looking businesses on an annual basis will experience some quarterly fluctuations in the CCC. To get an understanding of the usual ebb and flow at Northeast Utilities, consult the quarterly-period chart below.
Source: S&P Capital IQ. Dollar amounts in millions. FQ = fiscal quarter.
On a 12-month basis, the trend at Northeast Utilities looks very good. At 16.6 days, it is 2.5 days better than the five-year average of 19.2 days. The biggest contributor to that improvement was DSO, which improved 12.2 days compared to the five-year average. That was partially offset by a 20.0-day increase in DPO.
Considering the numbers on a quarterly basis, the CCC trend at Northeast Utilities looks good. At 9.6 days, it is 9.8 days better than the average of the past eight quarters. With both 12-month and quarterly CCC running better than average, Northeast Utilities gets high marks in this cash-conversion checkup.
Though the CCC can take a little work to calculate, it's definitely worth watching every quarter. You'll be better informed about potential problems, and you'll improve your odds of finding underappreciated home run stocks.
Looking for an alternative to Northeast Utilities? By investing in this multibillion-dollar energy company, you can get in before its stock rebounds, when natural gas prices eventually do turn upward. And until natural gas prices do rebound (which a top Motley Fool analyst expects will happen by 2014), you can cash in on its stable 5.7% dividend. Click here for instant access to this free report.
Add Northeast Utilities to My Watchlist.Friday, May 17, 2013
New Zealand Describes Defense Goals for 2013-2016
The New Zealand Ministry of Defence only just finished awarding a $120-million contract to buy 10 SH-2G(I) Super Seasprite anti-submarine/anti-surface warfare helicopters from Kaman Corporation (NYSE: KAMN ) a week ago, but already the MoD is busy planning out its next series of acquisitions.
On Thursday, the MoD published its Statement of Intent describing the island nation's key defense objectives over the next three years. Among other subjects, the MoD described it will be upgrading combat systems aboard New Zealand's ANZAC-class frigates, and introducing upgraded Lockheed Martin (NYSE: LMT ) C130 Hercules transport aircraft and P-3 Orion surveillance aircraft, and NH90 medium utility helicopters (built by Eurocopter joint venture NH Industries), into service.
The Statement also envisions the MoD making other unspecified "new acquisitions and upgrades" over the next three years, within its annual budget of "around $2.3 billion" -- roughly $1.9 billion in U.S. Dollars.
Thursday, May 16, 2013
Tesla to Raise Up to $830 Million in Stock and Bond Offerings
Tesla Motors (NASDAQ: TSLA ) -- Elon Musk's super-charged electric car company -- is making another pit stop, and asking investors to fill up its tank with cash.
On Wednesday after close of trading, Tesla issued a press release announcing plans to sell 2.7 million shares of common stock, and float $450 million worth of convertible senior notes (i.e. bonds) in a pair of underwritten public offerings. Assuming demand is strong -- as demand for the shares has been in recent weeks -- underwriters will have the option to buy an additional 405,454 shares of stock and $67.5 million in bonds.
In all, the stock and bond offerings promise to raise as much as $780 million for Tesla, before deduction of costs. A further $55 million may be raised subsequently, when Musk makes a promised purchase of Tesla stock directly from the company in a private placement -- resulting in a net cash haul for Tesla of as much as $830 million after costs. (Musk says he will also buy $45 million in stock at the offering, so in total, he will be putting another $100 million of his own money into the company he founded).
Between the stock offering, the private placement to Musk, and the convertible nature of the bond offering, these multiple cash-raising moves could dilute Tesla shareholders by as much as 9.2 million shares, or 8%. However, Tesla promised to offset the effect of the convertible note offering's dilution, at least, by "up to 100% over the offering stock price" by hedging the notes and warrants attached thereto. Tesla did not provide specific details on how it will accomplish this hedge.
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Top 5 New Companies To Own In Right Now
It's been a bumpy ride for the Dow Jones Industrial Average (DJINDICES: ^DJI ) this morning, which is down 57 points at 11 a.m. EDT. Following another record close yesterday, the index has been fighting to stay close to those new heights after disappointing economic and international news generated concerns among investors. And with earnings season under way, new records are being set in the financial sector, but shareholders may be looking for quality over quantity.
Economic concerns abound
Retail sales fell 0.4% last month, disappointing analysts and investors, who had expected a flatline trend for March. On top of the weakened retail news, the University of Michigan's Consumer Sentiment Index fell to a nine-month low, with many consumers feeling concerned about the economic recovery stalling. The index tumbled from 78.6 down to 72.3,�while analysts had expected a measly 0.1-point drop. While the question remains as to how consumer spending will ramp up in the future, the current news signals a slowing thanks to increased taxes and forced unpaid furloughs for government employees.
Top 5 New Companies To Own In Right Now: WaterFurnace Renewable Energy Inc (WFIFF)
WaterFurnace Renewable Energy, Inc. specializes in the design, manufacture and distribution of geothermal and water-source systems. It�� the United States subsidiary companies are WaterFurnace International, Inc. (WaterFurnace) and LoopMaster International, Inc. (LoopMaster). In December 2010, it incorporated two Australian subsidiaries: WaterFurnace International Asia Pacific Pty. Ltd. (WaterFurnace Asia Pacific) and Hyper WFI Pty. Ltd. (Hyper WFI). WaterFurnace designs, manufactures and distributes geothermal water source heating and cooling systems for residential, commercial and institutional buildings. LoopMaster installs geothermal loops for residential applications, does commercial conductivity testing and provides design and installation assistance. Hyper WFI designs, develops and builds devices that limit the inrush current, which electric motors draw upon start up. On January 21, 2011, the Company acquired inventory and fixed assets from Binary Engineering Pty. Ltd. Advisors' Opinion:- [By Tom Konrad]
Waterfurnace has appeared in my annual picks several times over the years because they are a pure-play leader in geothermal heat pumps, which the US EPA calls "the most efficient way to heat and cool a building." Heat pumps have a high up-front cost, and so they benefit from low interest rates and a high price of heating alternatives, such as natural gas. Recent low natural gas prices have been hurting Waterfurnace's business, which has recently driven the stock price down and brought the dividend yield up to a very attractive 6.74%.
Top 5 New Companies To Own In Right Now: SunPower Corp (SPWR)
SunPower Corporation, incorporated in April 1985, is a vertically integrated solar products and services company that designs, manufactures and delivers solar electric systems worldwide for residential, commercial, and utility-scale power plant customers. The Company operates in two business segments: the Utility and Power Plants (UPP) Segment and the Residential and Commercial (R&C) Segment. The UPP Segment refers to its solar products and systems business, which includes power plant project development and project sales, turn-key engineering, procurement and construction (EPC) services for power plant construction, and power plant operations and maintenance (O&M) services. UPP Segment also sells components, including huge volume of sales of solar panels and mounting systems to third parties, sometimes on a multi-year, firm commitment basis. The R&C Segment focuses on solar equipment sales into the residential and small commercial market through its third-party global dealer network, as well as direct sales and EPC and O&M services in the United States and Europe for rooftop and ground-mounted solar power systems for the new homes, commercial and public sectors. In May 2012, K Road Power Holdings, LLC (K Road) and SunPower Corp announced that K Road acquired the 25-megawatt (AC) McHenry Solar Project, which the Company designed. In January 2013, the Company MidAmerican Solar acquired the 579-megawatt Antelope Valley Solar Projects (AVSP), two co-located projects in Kern and Los Angeles Counties in Calif from SunPower.
In January 2012, the Company completed its acquisition of the wholly owned Total SA subsidiary Tenesol SA, a global solar provider. In September 2011, NRG Energy Inc. acquired 250 megawatt California Valley Solar Ranch (CVSR) project from SunPower. In June 2011, the Company introduced SunPower E20 Series Solar Panel (E20) series. The Company�� customers in its UPP Segment include investors, financial institutions, project developers, electric utilities, and independent po! wer producers in the United States, Europe, and Asia. In its R&C Segment, the Company primarily sells its products to commercial and governmental entities, production home builders, and its third-party global dealer network serving residential owners and small commercial building owners.
Solar Cells
The A-300 solar cell is a silicon solar cell with a specified power value of 3.1 watts and a conversion efficiency averaging between 20.0% and 21.5%. The Company�� A-330 solar cell delivers 3.3 watts with a conversion efficiency of up to 22.7%.
Solar Panels
The Company�� SunPower solar panel series include solutions, such as SunPower E18 Series Solar Panel (E18), SunPower E19 Series Solar Panel (E19), and SunPower E20 Series Solar Panel (E20). Available in a 72-cell configuration, the E18 series panel uses its A300 all back-contact solar cells and delivers a total panel conversion of 18.1% to 18.5%. Available in a 72, 96, and 128-cell configuration, the E19 series panel uses its A300 all back-contact solar cells and delivers total panel conversion of 19.3% to 19.7%. Available in a 96-cell configuration, the E20 series panel uses its A-330 all back-contact solar cells and delivers total panel conversion of up to 20.1%.
Inverters
The Company sells a line of SunPower branded inverters. The inverters are manufactured by third parties.
Roof Mounted Products
The roof mounted products include SunPower T-5 Solar Roof Tile System (T-5), SunPower T-10 Commercial Solar Roof Tiles (T-10), PowerGuard Roof System (PowerGuard) and SunTile Roof Integrated System (SunTile). Tilted at a 5-degree angle, the T-5 roof tile is a non-penetrating photovoltaic rooftop product that combines solar panel, frame, and mounting system. The T-5 solar roof tile systems are primarily sold through its R&C Segment.
Tilted at a 10-degree angle, the T-10 commercial solar roof tiles is a non-penetrating panel interlock system! . Dependi! ng on geographical location and local climate conditions, this can allow for the generation of up to 10% more annual energy output than traditional flat roof-mounted systems. The T-10 commercial solar roof tile is primarily sold through its R&C Segment.
PowerGuard is a non-penetrating roof-mounted solar panel that delivers electricity while insulating and protecting the roof membrane from ultraviolet rays and thermal degradation. The PowerGuard roof system is primarily sold through its R&C Segment. SunTile solar shingles are designed to replace multiple types of roof panels, including the common concrete flat, low and high profile S tile and composition shingles. The SunTile roof system is also sold through its R&C Segment.
Ground Mounted Products
The ground mounted products include SunPower T-0 Tracker (T-0) & SunPower T-20 Tracker (T-20), SunPower Oasis Power Plant (SunPower Oasis), SunPower C-7 Tracker (C-7), and Fixed Tilt and SunPower Tracker Systems for Parking Structures. The T-0 and T-20 trackers are single-axis tracking systems that automatically pivot solar panels to track the sun's movement throughout the day. This tracking feature increases the amount of sunlight that is captured and converted into energy by up to 30% over flat or fixed-tilt systems, depending on geographic location and local climate conditions. A single motor and drive mechanism can control 10 to 20 rows, or more than 200 kilo watts of solar panels. The T-0 and T-20 trackers have been installed in a range of geographical markets principally in the United States, Germany, Italy, Portugal, South Korea, and Spain. The T-0 and T-20 trackers are sold through both its UPP and R&C Segments.
The Oasis is a solar power block that scales from 1 mega watts distributed installations to central station power plants. Oasis provides a way to deploy utility-scale solar power systems, streaming the development and construction process while optimizing the use of available land. The SunPow! er Oasis ! is sold through its UPP Segment. The C-7 combines a horizontal single-axis tracker with rows of parabolic mirrors, reflecting light onto linear arrays of its solar cells. The C-7 tracker is sold through its UPP Segment. SunPower has developed designs for solar power systems for parking structures in multiple configurations. These dual-use systems typically incorporate solar panels into the roof of a carport or similar structure to deliver onsite solar power while providing shade and protection. They are suited for parking lots adjacent to facilities. Fixed Tilt and SunPower Tracker Systems for parking structures are sold through both its UPP and R&C Segments.
Other System Offerings
SunPower�� metal roof system is designed for sloped-metal roof buildings, which are used in some winery and warehouse applications. This solar power system is designed for rapid installation. It also offers other architectural products, such as day lighting with translucent solar panels.
Balance of System Components
Balance of system components are components of a solar power system other than the solar panels. It includes SunPower branded inverters, mounting structures, charge controllers, grid interconnection equipment, and other devices depending on the specific requirements of a particular system and project.
The Company competes with Canadian Solar Inc., JA Solar Holdings Co., Kyocera Corporation, Mitsubishi Corporation, Q-Cells AG, Sanyo Corporation, Sharp Corporation, SolarCity Corporation, SolarWorld AG, Sungevity, Inc., SunRun, Inc., Suntech Power Holdings Co. Ltd., Trina Solar Ltd., Yingli Green Energy Holding Co. Ltd., Abengoa Solar S.A., Acconia Energia S.A., AES Solar Energy Ltd., Chevron Energy Solutions, EDF Energy plc, First Solar Inc., NextEra Energy, Inc., OPDE Group, NRG Energy, Inc., Recurrent Energy, Sempra Energy, Skyline Solar, Inc., Solargen Energy, Inc., Solaria Corporation, SolFocus, Inc., SunEdison and Tenaska, Inc.
Top Income Stocks To Buy Right Now: Alterra Power Corp (MGMXF.PK)
Alterra Power Corp., formerly Magma Energy Corp., is a global renewable power company. It operates six power plants totaling 570 megawatt of capacity, including two geothermal facilities in Iceland, a geothermal plant in Nevada, British Columbia�� run of river hydro facilities and the province�� wind farm. As of June 30, 2011, its share of this production capacity was 315 megawatt. The Company also has a portfolio of exploration and development projects. The Company owns two geothermal power generation plants (the Svartsengi and Reykjanes Plants) and two geothermal exploration projects in Iceland (Eldvorp and Krysuvik) through its interest in HS Orka. In addition, it owns one geothermal power generation plant in Nevada (the Soda Lake Operation). In May 2011, it acquired Plutonic Power Corp. During the fiscal year ended June 30, 2011 (fiscal 2011), it sold a 25% interest in HS Orka to Jardvarmi slhf (Jardvarmi), which is a company-owned by a group of Icelandic pension f unds.
Top 5 New Companies To Own In Right Now: WaterFurnace Renewable Energy Inc (WFIFF.PK)
WaterFurnace Renewable Energy, Inc. specializes in the design, manufacture and distribution of geothermal and water-source systems. It�� the United States subsidiary companies are WaterFurnace International, Inc. (WaterFurnace) and LoopMaster International, Inc. (LoopMaster). In December 2010, it incorporated two Australian subsidiaries: WaterFurnace International Asia Pacific Pty. Ltd. (WaterFurnace Asia Pacific) and Hyper WFI Pty. Ltd. (Hyper WFI). WaterFurnace designs, manufactures and distributes geothermal water source heating and cooling systems for residential, commercial and institutional buildings. LoopMaster installs geothermal loops for residential applications, does commercial conductivity testing and provides design and installation assistance. Hyper WFI designs, develops and builds devices that limit the inrush current, which electric motors draw upon start up. On January 21, 2011, the Company acquired inventory and fixed assets from Binary Engineering Pty. Ltd.
Top 5 New Companies To Own In Right Now: Alterra Power Corp (MGMXF)
Alterra Power Corp., formerly Magma Energy Corp., is a global renewable power company. It operates six power plants totaling 570 megawatt of capacity, including two geothermal facilities in Iceland, a geothermal plant in Nevada, British Columbia�� run of river hydro facilities and the province�� wind farm. As of June 30, 2011, its share of this production capacity was 315 megawatt. The Company also has a portfolio of exploration and development projects. The Company owns two geothermal power generation plants (the Svartsengi and Reykjanes Plants) and two geothermal exploration projects in Iceland (Eldvorp and Krysuvik) through its interest in HS Orka. In addition, it owns one geothermal power generation plant in Nevada (the Soda Lake Operation). In May 2011, it acquired Plutonic Power Corp. During the fiscal year ended June 30, 2011 (fiscal 2011), it sold a 25% interest in HS Orka to Jardvarmi slhf (Jardvarmi), which is a company-owned by a group of Icelandic pension funds. Advisors' Opinion:- [By Tom Konrad]
Alterra is another hold-over from 2012, which I also expected to remove from the list until the stock unexpectedly declined over the last few weeks. Alterra owns a portfolio of run-of-river hydroelectric and Wind projects in Western Canada, as well as geothermal projects in the Western US, Iceland, and Chile. With its diverse and growing portfolio of operating renewable energy projects, Alterra is one of the most stable of the small renewable energy developers, but not yet so big that its assets are fully valued.
A recent agreement with Philippine utility EDC could easily lead to significant price appreciation if the companies jointly develop Alterra's projects in Peru and Chile as envisioned in the agreement.