Bank of America Bear Case Bigger After UBS Settlement, Morgan Stanley Says

When UBS reached an $885 million settlement with the Federal Housing Finance Agency for selling it bad loans back in July, it was greeted as good news for the Swiss banking giant. That settlement, however, might not be good news for Bank of America (BAC).

AP

That’s the opinion of Morgan Stanley analysts Betsy Graseck Grasek and Michael Cyprys Cyprus, who note in a report published today that their base case remains unchanged, but their worst-case hit has been pushed higher. They write:

Looks like UBS settled for total estimated lifetime losses on the underlying securities. As a result, some investors have been concerned about BAC's potential exposure given Moody's estimated lifetime losses on the securities are $10b. We think that's too high and model $2b in our base case. Lifetime loss estimates from Moody's were last published in 2011 and since then prices of super senior and senior tranches of the 2006-2007 securitizations are up an avg 33%. Also, simply applying lifetime loss estimates assumes that BAC is fully responsible for legacy Countrywide claims (an argument in which one judge in this case has already rejected and has dismissed successor liability claims against BAC). Just because UBS seems to have paid full lifetime loss estimates, doesn't mean others will pay the same.

The analysts now believe that the worst-case would be a 3.54 billion hit from its own bonds and $40 million for bonds sold by Countrywide, whom it acquired at the height of the financial crisis. They also have a “super bear case” of $7 billion, which would include losses on both its own and all of Countrywide bonds. Still, Graseck Grasek and Cyprys Cyprus believe the stocks looks cheap trading at 0.59 its price-to-2015 book value.

Shares of Bank of America have fallen 1.8% to $14.34 today, while JPMorgan Chase (JPM), which is facing a mortgage probe of its own, has dropped 2% to $53.07. Citigroup (C) has declined 2.2% to $50.48, while Goldman Sachs (GS) is off 1.8% at 160.44. The Financial Select Sector SPDR ETF (XLF) has fallen 1.7% to $20.02 today.

Top 10 Warren Buffett Companies For 2014

Investing mastermind Benjamin Graham, Warren Buffett's teacher, tells us:

"[T]here are just two basic questions to which stockholders should turn their attention:

Is the management reasonably efficient? Are the interests of the average outside shareholder receiving proper recognition?"

I'm concerned that Las Vegas Sands (NYSE: LVS  ) fails the second test. Here are some issues that raise my concern.

An abundance of related-party transactions
Las Vegas Sands' 2013 proxy lists a large quantity of related-party transactions (i.e., business deals that took place between the company and individuals with whom insiders had a special relationship before the deal).

While some related-party transactions can be legitimate, they can create the potential for conflicts of interest and result in outcomes that put the interests of insiders directly ahead of the interests of shareholders. For this reason, cautious companies often try to avoid engaging in an abundance of related-party transactions to avoid the appearance of misconduct.

Top 10 Warren Buffett Companies For 2014: Lakeland Bancorp Inc.(LBAI)

Lakeland Bancorp, Inc. operates as the bank holding company of Lakeland Bank, which provides various commercial and consumer banking products and services to small and medium-sized businesses, professionals, and individuals primarily in northern New Jersey. The company's depository products include checking accounts, savings accounts, demand deposits, time deposits, NOW accounts, money market accounts, and certificates of deposit. It also offers short and medium term loans, lines of credit, letters of credit, inventory and accounts receivable financing, real estate construction loans, mortgage loans, merchant credit card services, secured and unsecured loans, consumer installment loans, and commercial and industrial loans. In addition, the company provides wire transfer, Internet banking, night depository services, and safe deposit services; cash management services, such as remote capture of deposits and overnight sweep repurchase agreements; and investment and advisory s ervices. It operates 47 banking offices in Bergen, Essex, Morris, Passaic, Sussex, and Warren counties in New Jersey. The company was founded in 1969 and is headquartered in Oak Ridge, New Jersey.

Top 10 Warren Buffett Companies For 2014: Gmg Global Ltd (5IM.SI)

GMG Global Limited, an investment holding company, engages in planting, growing, tapping, processing, marketing, and exporting of natural rubber in Singapore, Cameroon, Cote d�Ivoire, Indonesia, and Thailand. The company provides centrifuged latex grade rubber, which is used in gloves, condoms, and adhesives industry; tire grade rubber that is used in the manufacture of tires for cars, commercial trucks, and machineries; and block rubbers of latex and skim. It is also involved in the production and distribution of plastic products. The company is headquartered in Singapore. GMG Global Limited is a subsidiary of Sinochem International (Overseas) Pte Ltd.

Best Blue Chip Stocks To Watch For 2014: ATP Oil And Gas Corp (ATPO.MU)

ATP Oil & Gas Corporation, incorporated in 1991, is engaged in the acquisition, development and production of oil and natural gas properties. As of December 31, 2011, the Company had estimated net proved reserves of 118.9 Million barrels of crude oil equivalent (MMBoe), of which approximately 75.9 MMboe (64%) were in the Gulf of Mexico and 42.9 MMBoe (36%) were in the North Sea. The reserves consisted of 78.6 Million barrels (MMBbls) of oil (66%) and 241.5 billion cubic feet (Bcf) of natural gas (34%). Its proved reserves in the deepwater area of the Gulf of Mexico account for 62% of the Company�� total proved reserves and its proved reserves on the Gulf of Mexico Outer Continental Shelf account for 2% of its total proved reserves. During the year ended December 31, 2011, the Company acquired three licenses in the Mediterranean Sea covering potential natural gas resources in the deepwater off the coast of Israel (East Mediterranean). On August 17, 2012, ATP Oil And Ga s Corp filed for Chapter 11 bankruptcy protection.

The Company�� natural gas reserves are split between the Gulf of Mexico (57%) and the North Sea (43%). Of its total proved reserves, 8.3 MMBoe (7%) were producing, 19.0 MMBoe (16%) were developed and not producing and 91.6 MMBoe (77%) were undeveloped. The Company�� average working interest in its properties at December 31, 2011, was approximately 81%. The Company operates 92% of its platforms. At December 31, 2011, in the Gulf of Mexico, it owned leasehold and other interests in 38 offshore blocks and 49 wells, including 23 subsea wells. The Company operates 43 (88%) of these wells, including 100% of the subsea wells. In the North Sea, it also had interests in 13 blocks and two Company-operated subsea wells. As of March 15, 2011, the Company owned an interest in 13 platforms, including two floating production facilities in the Gulf of Mexico, the ATP Titan at its Telemark Hub and the ATP Innovator at its G omez Hub. It operates the ATP Innovator and the ATP Titan.!

Top 10 Warren Buffett Companies For 2014: Pacific Environment Ltd (PEH.AX)

Pacific Environment Limited engages in the provision of environmental consulting and technology services primarily in Australia. The company offers EnviroSuite that provides end to end managed environmental services, which include identifying emissions sources, collection and measurement of emissions, and managing emissions data; and environmental management and reporting systems to organizations for simplifying environmental reporting. It also provides various consulting services in areas, including air quality modeling and impact assessment; odor assessments; acute release incident modeling; applied meteorology; forensic meteorology; compliance reporting; works approvals, licensing, and regulatory compliance support; development of air quality and dust management plans; development and management of mitigation strategies; and design and management of monitoring programs. In addition, the company offers consulting services in noise, vibration, and acoustics areas that com prise of environmental noise impact assessments, operational noise predictions, building vibration and ground borne noise, transportation noise assessment, and occupational noise assessments; and in occupational and community health areas, including development of occupational health and safety programs, toxicological and human health risk assessments, indoor air quality assessments, monitoring programs for the workplace and community, and health and environmental risk assessment in indoor and outdoor environments. Further, it provides reports, advice, and reviews in toxicology, risk assessment, hazardous substance classification, exposure assessment, chemical registration, and litigation support. Pacific Environment Limited was incorporated in 2006 and is based in North Sydney, Australia.

Top 10 Warren Buffett Companies For 2014: Susser Holdings Corporation(SUSS)

Susser Holdings Corporation, together with its subsidiaries, operates convenience stores in Texas, New Mexico, and Oklahoma. The company operates in two segments, Retail and Wholesale. The Retail segment operates convenience stores that offer merchandise, food service, and motor fuel, as well as provides other services, including car washes, lottery, ATM, money orders, prepaid phone cards and wireless services, and movie rentals. As of January 1, 2012, it operated 541 convenience stores under the Stripes brand name. The Wholesale segment distributes motor fuel to its retail convenience stores, contracted independent operators of convenience stores, unbranded convenience stores, unattended fueling facilities, and other end users in Texas, New Mexico, Oklahoma, and Louisiana. The company also offers environmental, maintenance, and construction management services to the petroleum industry; and sells and installs motor fuel dispensers and tanks, as well as provides a range of environmental consulting services, such as hydrocarbon remediation, and Phase I and II site assessments for its stores and outside customers. Susser Holdings Corporation is based in Corpus Christi, Texas.

Top 10 Warren Buffett Companies For 2014: Petrobakken Energy Ltd. (PBN.TO)

PetroBakken Energy Ltd. operates as a light oil exploration and production company in western Canada. The company primarily engages in the exploration and development of oil and natural gas. It holds interests in various development drilling locations, including Bakken light oil resource locations and Mississippian light oil conventional locations, both in southeast Saskatchewan; Cardium light oil resource locations in central Alberta; and Montney and Horn River natural gas resource locations in northeast British Columbia. The company was incorporated in 2009 and is headquartered in Calgary, Canada. PetroBakken Energy Ltd. is a subsidiary of Petrobank Energy and Resources Ltd.

Top 10 Warren Buffett Companies For 2014: RUUKKI GROUP OYJ NPV(RKKI.L)

Ruukki Group Plc operates as a natural resources company with mining and minerals business in southern Europe and southern Africa. It engages in the production and sale of ferrochrome and other metal alloys that are used as raw material in the steel industry. The company also involves in mining, beneficiation, smelting, and processing chrome ore and concentrate, silico manganese, and chromium-iron-nickel alloys in Turkey, Malta, Germany, and South Africa. Ruukki Group Plc was founded in 1985 and is headquartered in Helsinki, Finland.

Top 10 Warren Buffett Companies For 2014: Wildcat Exploration Ltd. (WEL.V)

Wildcat Exploration Ltd., an exploration stage company, engages in the identification, acquisition, exploration, and development of mineral resource properties in Canada. The company explores for precious and base metal deposits in the provinces of Manitoba, Ontario, and Saskatchewan. Its project portfolio includes the Jeep, Mike Power, Poundmaker, and Siderock gold properties, as well as Garner gold and base metal project located in the Rice Lake Greenstone Belt area in Manitoba; the McVicar gold project located to the west of Pickle Lake in northwestern Ontario; the Reed Lake copper-zinc project located in the Flin Flon Greenstone Belt area in Manitoba; the Burntwood nickel property located to the south southwest of Thompson, Manitoba; and the Foster River zinc-lead-silver project located on the eastern margin of the Wollaston Domain, Saskatchewan. The company was incorporated in 1998 and is headquartered in Winnipeg, Canada.

Top 10 Warren Buffett Companies For 2014: First Community Bancshares Inc.(FCBC)

First Community Bancshares, Inc. operates as a financial holding company of First Community Bank, N.A. that provides various commercial and consumer banking products and services. The company offers demand deposit accounts, savings and money market accounts, certificates of deposit, and individual retirement arrangements; commercial, consumer, and real estate mortgage loans, as well as lines of credit; various debit card and automated teller machine card services; and corporate and personal trust services. It also provides trust management and estate administration services; and investment advisory and management services. In addition, the company operates an insurance agency that offers life, health, and property and casualty insurance products. It serves individual consumers and various industries, including manufacturing, mining, services, construction, retail, healthcare, military, and transportation. As of June 28, 2011, the company operated through 56 banking offices in Virginia, West Virginia, North Carolina, and Tennessee. First Community Bancshares, Inc. was founded in 1989 and is based in Bluefield, Virginia.

Top 10 Warren Buffett Companies For 2014: Sandstorm Gold Ltd (SAND)

Sandstorm Gold Ltd. (Sandstorm Gold), formerly Sandstorm Resources Ltd., is a gold streaming company. The Company provides financing to gold mining companies that are looking for capital and in return, receives a gold streaming agreement. It is a non-operating gold mining company with seven gold streams in the portfolio, five of which are producing gold. The Company�� projects include the Aurizona Gold project, the Santa Elena project, the Summit Mine project, the Ming Mine project, the Black Fox Mine project, Bracemac-McLeod project and the Bachelor Lake Mine. It holds 17% interest in the mine gold production from Aurizona. Santa Elena Project, in which the Company holds 20% interest. It holds 12% interest in the mine gold production from Black fox mine project. The Summit Mine project, in which it has 50% interest, 25% interest in Ming mine project and 17.5% interest in Bracemac-McLeod project. Advisors' Opinion:

• [By Christopher Barker]

  Even following a standout performance during 2012 that left this Fool wishing he had initiated a position in the shares much earlier, I believe that gold streamer Sandstorm Gold holds the promise of continued outperformance based upon the same ingenious business model that has made Silver Wheaton (NYSE: SLW  ) one of the 21st century's more noteworthy stock performances. Founded by entrepreneurial Silver Wheaton alum Nolan Watson, Sandstorm has quickly amassed an attractive portfolio of assets with some of the more promising junior operators in the mining business (including Colossus Gold).

TC PipeLines: A Strong Buy - Analyst Blog

On Jul 2, Zacks Investment Research upgraded natural gas transporter TC PipeLines L.P. (TCP) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

We expect TC PipeLines' purchase of additional stakes in two major U.S. gas systems from parent TransCanada Corp. (TRP) to be immediately accretive to earnings and distributable cash. We also like TC PipeLines' steady cash-flow generating pipeline assets, which provide stability and financial capacity to deliver cash distributions in a disciplined manner.

Detailed Analysis

With its investments in low-risk energy infrastructure assets, TC PipeLines has been able to provide stable cash distributions. Over the last few years, the partnership has consolidated its business through a combination of organic efforts and accretive acquisitions.

Of particular significance is its stake in the Northern Border Pipeline, a key player in natural gas transportation from western Canada to the U.S Midwest. Northern Border's market share position enables it to maintain strong relationships with shippers. Coupled with continued robust demand for Canadian gas in the U.S., this should help the partnership with re-contracting its pipeline capacity.

TC PipeLines' recently concluded deal to increase its stake in two important U.S. gas pipelines – Gas Transmission Northwest LLC and Bison Pipeline LLC – to 70% from the pre-existing 25% is expected to improve the partnership's distributable cash flow immediately. The transaction will also lower its relative exposure to the Great Lakes, which is presently experiencing earnings and cash flow inconsistency.

Finally, TC PipeLines has established a track record of providing stable and growing cash distribution to unit holders. The partnership has a proven history of distribution growth with 13 hikes in as many years.

Other Stocks to Consider

In addition to TC PipeLines, there are certain other energy pipeline partnerships like Atlas Pipeline Partners L.P. (! APL) and Rose Rock Midstream L.P. (RRMS) that offer value and are worth buying now. All these firms sport a Zacks Rank #1 (Strong Buy).

Bet on Best Buy as it Hits New High - Analyst Blog

Shares of Best Buy Co., Inc. (BBY) surged to attain a new 52-week high of $30.35 on Jul 9, 2013, before closing at $29.73. Shares of this Zacks Rank #3 (Hold) stock have amassed a year-to-date return of roughly 155.2%.

Based on the current price, this consumer electronic retailer is 12.1% above the Zacks Consensus average analyst price target of $26.53. The company currently trades at a forward P/E of 13.03x, a discount of 5% to the peer group average of 13.72x.

Best Buy is undergoing a turnaround program including a price match policy, multi-channel strategy, multi-year cost reduction program and closure of some big box stores. In the first quarter of fiscal 2014, the company lowered its cost by $175 million, in addition to $150 million reduced in the fourth quarter of fiscal 2013.

Best Buy's online sales performance remains a positive. Domestic online sales jumped 7.1% during the quarter. We believe that the company is leaving no stone unturned in wooing consumers and capturing incremental revenue, as evident from its strategic initiative of opening "Samsung Experience Shops" within its stores.

It also entered into a similar agreement with Microsoft Corp. (MSFT) to roll out "Windows Store" across its 500 outlets in the U.S. with an additional 100 in Canada. For Best Buy, the deal adds more compelling products to its portfolio to better compete against discount giants such as Wal-Mart Stores Inc. (WMT) and online retailers like Amazon.com Inc. (AMZN).

Best Buy also entered into a contract to divest its 50% stake in Best Buy Europe to Carphone Warehouse Group, the joint venture partner in the same. The move would facilitate the company to concentrate more on its U.S. operations. We believe that the step to offload its stake in Best Buy Europe would augment its return on capital employed.

Meridian Funds' Commentary for Quarter Ended June 30, 2013

To Our Shareholders:

Stocks continued their positive performance during the quarter ended June 30, 2013. For the quarter, the S&P 500 gained 2.9%, the NASDAQ gained 4.2% and the Russell 2000, which includes smaller companies, gained 3.1%. Combined with the strong performance in the quarter ended March 31st 2013, stocks enjoyed a robust first half of 2013. Economic factors were mixed but relatively benign; optimism over the housing market continued to buoy the U.S., and economic declines in Europe appeared to be slowing if not stabilizing. Emerging markets fared poorly due to worries of slowing growth, particularly in China and Brazil, but did not appear to dampen the performance of U.S. domestic stocks. The yield on the ten-year U.S. Treasury bond jumped from 1.87% to 2.52% during the quarter as the economic outlook continued its gradual improvement and the market acknowledged potential endings for the Federal Reserve's quantitative easing programs. The best performing sectors during the quarter were financials, consumer discretionary and healthcare. The worst performing sectors were utilities, basic materials and energy. Financials performed well as rising rates and a steepening yield should improve the profitability of lending products. However, these same circumstances pressured the value of utility shares as higher rates are likely to simultaneously increase the competition for yield and reduce the value of dividends paid by these low growth companies.

GDP grew at 1.1% during the first quarter of 2013. This represented a meaningful appreciation from 0.4% in the previous quarter, but lagged traditional levels of GDP growth for a recovering economy. The increase in GDP was driven primarily by personal consumption expenditures, private inventory investment and residential fixed investment. This was offset by declines in government spending and exports. We are currently in the midst of second quarter corporate earnings reports and results to date are modestly encouraging for most of ou! r portfolio companies. However, we continue to be concerned about historically high corporate profit margins. Estimates for S&P 500 earnings show that the earnings of non-financial companies are expected to decline for the quarter ended June 30, 2013. This indicates that profit margins may have peaked, and if that is the case then we believe future earnings growth could be difficult to achieve without an acceleration in revenue growth.

We continue to follow our long-established investment strategies and our stock selection discipline remains unchanged. History clearly shows that long-term investment results are improved by buying good companies or mutual funds consistently over an extended period of time.

As discussed further in the accompanying shareholder report, Aster Investment Management Co., Inc., the investment adviser to the Meridian Funds, entered into an agreement to sell its assets, including its rights with respect to the management of the Funds, to Arrowpoint AIM LLC. As a result of this agreement, shareholders of the Meridian Funds as of June 18, 2013 are being asked to approve an investment management agreement between Arrowpoint Asset Management, LLC ("Arrowpoint") and the Meridian Funds at a shareholder meeting scheduled for August 28, 2013. If the proposed management agreement is approved by shareholders, Arrowpoint would become the investment adviser to the Meridian Funds.

We welcome those new shareholders who joined the Meridian Funds during the quarter and appreciate the continued confidence of our existing shareholders.

Jamie England

William Tao

Larry Cordisco

Jim O'Connor

Meridian Equity Income Fund ® (MEIFX)

The Meridian Equity Income Fund's net asset value per share at June 30, 2013 was $12.35. This represents an increase of 14.1% for the calendar year to date. The Fund's total return and average annual compound rate of return since inception January 31, 2005 were 64.6% and 6.1%, respectively. At the close of the qu! arter, to! tal net assets were $28,697,158 and were invested 1.0% in cash and other assets net of liabilities and 99.0% in stocks. At the close of the quarter, there were 431 shareholders in the Equity Income Fund.

The Fund continues to invest in companies that we believe have the potential for capital appreciation and the ability to grow dividends. The Fund is diversified, with 49 holdings representing 44 different industry groups at June 30, 2013. At the end of the quarter ended June 30, 2013, the portfolio's average holding had a five-year average return on equity of 20.0% and an average dividend yield of 3.4%, both measures substantially higher than the average S&P 500 stock, with an average market capitalization of $46.2 billion and an average debt to capital ratio of 39.0%.

During the quarter, we purchased shares of Apple, Cisco Systems and Steelcase. We sold our shares in Cato, Digital Realty Trust and McDonalds.

Leggett & Platt (LEG) is a leading manufacturer of engineered products and components. As the pioneer of steel coil springs found in mattresses and furniture, the company continues to supply a variety of components to bedding and furniture manufacturers. Additionally, Leggett & Platt's broader product line includes retail store fixtures, office furniture components, automotive seating components and industrial steel wire and tubing. Customers choose Leggett & Platt as a supplier because the company's manufacturing scale and processes result in lower costs than customers can produce themselves. We believe earnings should grow based on the contribution of new products, cost reduction efforts and the improving housing market. Moreover, future dividend growth appears likely based on a 42-year record of dividend increases. We believe Leggett & Platt is an attractive investment based on its 3.8% dividend yield and positive growth outlook.

Meridian Growth Fund® (MERDX)

The Meridian Growth Fund's net asset value per share at June 30, 2013 was $44.31. This represents an i! ncrease o! f 11.4% for the calendar year to date. The Fund's total return and average annual compound rate of return since inception August 1, 1984 were 3,016.8% and 12.6%, respectively. At the close of the quarter, total net assets were $2,112,945,125 and were invested 6.0% in cash, cash equivalents and other assets net of liabilities and 94.0% in stocks. At the close of the quarter, there were 78,795 shareholders in the Growth Fund. We continue to follow the investment strategy that has served the Fund well for the past 29 years. Our portfolio remains diversified in mid-sized growth companies which in our opinion are predominantly market leaders, having strong returns on capital, solid growth prospects and that sell at reasonable valuations. The Fund is invested in 56 positions representing 31 industry groups along with Treasury Bills. Our heaviest areas of concentration continue to be the consumer and technology sectors.

During the quarter, we purchased shares of Brunswick, Genesee & Wyoming and QLIK Technologies. We sold our positions in Autodesk, Life Technologies, RPM International and Ritchie Bros.

Perrigo (PRGO) is a global manufacturer of over-the-counter (OTC) store brand and generic prescription pharmaceuticals, infant formulas, nutritional products and active pharma ingredients. The company is the dominant player in the OTC drug market with the largest distribution network and broadest range of product offerings. The OTC store brands have increased their market share by about 1-2% annually at the expense of national name product given their superior value proposition to both the consumer and retailers. Perrigo has numerous growth drivers over the next few years including the continued penetration of OTC store brands and introduction of new product categories. The stock sells at a reasonable valuation, in our opinion, given the company's strong management team, financial returns and long-term growth prospects.

Meridian Value Fund® (MVALX)

The Meridian Value Fund's net asset ! value per! share at June 30, 2013 was $37.20. This represents an increase of 13.2% for the calendar year to date. The Fund's total return and average annual compound rate of return since June 30, 1995 to date were 951.4% and 14.0%, respectively. At the close of the quarter, total net assets were $704,522,621 and were invested 5.2% in cash, cash equivalents and other assets net of liabilities and 94.8% in stocks. At the close of the quarter, there were 29,032 shareholders in the Value Fund.

We continue to seek out-of-favor companies, typically having experienced an extended period of declining earnings. Often these companies have experienced outsized declines in their stock prices as the market reacts to these earnings declines. We research these companies to determine the factors behind the earnings decline and evaluate the company's response. Ideal investment candidates are those that are poised to resume sustainable growth and that are trading at a reasonable valuation based on potential earnings. The Fund is invested in 60 positions, representing 36 industry groups along with Treasury Bills. We continue to invest in companies of all market capitalizations and our largest areas of concentration are technology, industrials and transportation.

During the quarter, we purchased shares of Chiquita Brands, First Niagara Financial Group, Genesee & Wyoming, Informatica, Itron, National Instruments, Nvidia, Occidental Petroleum, Tempur-Pedic and Ubiquiti Networks. We sold our positions in Aecon Group, Corning, GATX, Monsanto, Newmont Mining, Ritchie Bros., Ultra Petroleum, UTI Worldwide and Zebra Technologies.

Haemonetics (HAE) is the market leader in blood management products for collection centers and hospitals. The company's equipment and related consumables allow collection centers to separate blood into the components of plasma, red cells and white cells. Hospital-based products include blood diagnostics, devices to salvage patient blood during surgery and software to manage blood supply. Earni! ngs tempo! rarily declined due to two product quality issues that management of Haemonetics has stated have been remedied. In our opinion, earnings growth may be expected to accelerate in the next few years as Haemonetics rolls out its automated whole blood collection solution to collection centers. Relative to the existing manual process, the company's automated solution speeds up the collection process and reduces discard rates. Cost and efficiency gains become more important to collection centers as hospitals better manage their blood supply. We believe the company is a compelling value at 12x our $3.50 estimate of earnings power.

Miscellaneous

You can sign up for E-mail Alerts on our website at www.meridianfund.com. When you sign up for E-mail Alerts, you will receive notification of news items, shareholder reports, SEC filings and other information regarding the Meridian Funds.

The Meridian Funds are no-load and there are no transaction fees or commissions charged when you purchase shares directly through our transfer agent, BNY Mellon Investment Servicing (U.S.), Inc. This is a very cost-effective way to purchase shares of the Meridian Funds if you do not need the services of a broker-dealer or if you make multiple purchases. The information provided in this report should not be considered investment advice or a recommendation to purchase or sell any particular security. There is no assurance that any securities discussed herein will remain in a particular Fund's portfolio at the time you receive this report or that securities sold have not been repurchased. Securities discussed are presented as illustrations of companies that fit a particular Fund's investment strategy and do not represent a Fund's entire portfolio and in the aggregate may represent only a small percentage of a Fund's portfolio holdings. It should not be assumed that any of the securities transactions or holdings discussed were or will prove to be profitable, or that investment decisions Fund management makes in the fut! ure will ! be profitable or will equal the investment performance of the securities discussed herein. Management's views presented herein and any discussion of a particular Fund's portfolio holdings or performance are as of June 30, 2013 and are subject to change without notice.

WebMD Surges On Earnings Surge--Buy Or Sell?

Health information provider WebMD (Nasdaq:WBMD) announced second quarter earnings July 12 that included a surprise profit instead of a loss. Its stock jumped 27% on the news. If you currently own its stock, should you be selling? If you don't, should you be buying? I'll answer these two questions below.

Why The Jump?
You don't get eight times the usual average daily volume without a real catalyst of some sort. WebMD's jolt came as a result of a 5-cent profit in Q2 compared to an 11-cent loss in the same quarter a year earlier. Probably even more surprising was the fact analysts expected it to deliver a break-even quarter. Revenues are expected to come in around $124 million, a 10% increase year-over-year and $7 million higher than analyst expectations. In addition, it upped its full-year guidance for revenue to between $485 million and $505 million, its best yearly increase since 2010.

It's official. WebMD's stock has more than doubled year-to-date, up 138% through July 12. In comparison, the PowerShares NASDAQ Internet Portfolio (Nasdaq:PNQI) has gained 25% so far in 2013. WebMD was hot before its latest announcement which is good news for long time shareholders like Kensico Capital, which first made a $92 million investment in WebMD's predecessor company, HLTH Corporation, in Q2 2007. Today, Kensico owns approximately 5.69 million shares in WebMd, making the health information site the hedge fund's eighth largest holding out of a total of 36.

If You Own
Shareholders got 0.444 shares in WebMD for every share of HLTH Corp. Kensico Capital held 4.16 million shares in WebMD once the merger was completed on October 23, 2009. WebMD's share price is flat from the merger date through July 12's big move. How much they actually paid for those shares is a bit tricky to calculate because they've done a considerable amount of trading in and out of the position before and after the merger. An educated guess--they were bought for less than $34. Since the merger, Kensico's picked up an additional 1.53 million shares. Again, that's with a lot of trading in and out of WebMD's shares.

SEE: Friday's ETF Chart To Watch: XLY Rally In Focus

So let's assume that the average long-term investor bought just after the merger for $34 per share. Only now are they getting back to break-even. Should he or she ride the momentum of 2013? Or should they call it a day having recouped their initial investment? Four years is a long time to sit on an investment without any kind of return. Warren Buffett types might be able to hang in their but when you consider that its stock was as high as $58.55 only 18 months after the merger, it's really difficult to accept that you could have sold two years ago when you had the chance and didn't.

WebMD's business went off a cliff in the first six months of 2012 as its pharmaceutical customers held back its spending. In January 2012, former CEO Wayne Gattinella resigned just as the company projected its 2012 revenue would be as much as 8% lower than in 2011. It turns out that was a conservative estimate as revenues declined 16% year-over-year to $470 million with an operating loss of $25 million, $135 million worse than in 2011. At the end of May 2012, WebMD hired Pfizer (NYSE:PFE) executive Cavan Redmond to right the ship. In his first conference call in July of that year, Redmond indicated that the company's cost structure was out of whack given the patent expiration troubles many of its clients were facing. One year later it appears that revenues are growing again and more importantly, it's once again making money. In hindsight, Redmond clearly was a temporary hire (resigned May 7) meant to calm investors and influence Big Pharma into spending once again. On both fronts it appears to have worked.

If you already own its stock I think you have to see how this plays out. With the economy improving, advertising spend increasing and big product introductions by the pharmaceutical companies ramping up, all the signs point to a good future. I'd hang in there.

Should You Buy
Absolutely! If everything plays out as I've described in the previous paragraph, its all-time high of $58.55 isn't too far off. In the past rumors have cropped up that someone like Google (Nasdaq:GOOG) or Yahoo (Nasdaq:YHOO) would buy it. While that's unlikely, two or three more quarters with solid numbers and someone will step up--and not at $34.

If you've got some speculative dough, I'd seriously consider making a bet. However, be prepared for extreme volatility. A stock going up 25% in one day can also come down 25%. But other than that, you'll be fine.

Why It’s Time to Pay Attention to Europe Again

It has been almost a year since European Central Bank (ECB) President Mario Draghi brought temporary respite to Europe's debt crisis by pledging to do "whatever it takes" to save the euro.

Since then, the situation in Europe has improved. Draghi's efforts helped reduce the financial risks associated with a breakdown of the European banking system and a breakup of the euro. In addition, over the past year, European governments have made some progress in bringing their budgets in line and in achieving some modest structural reforms .

But while the region's situation is better than it was a year ago, Europe is not out of the woods. Much of the job of restructuring European economies remains unfinished, fiscal deficit targets have slipped and there has been little progress on broader supranational issues such as banking integration or the pooling of sovereign debt. In short, the ECB's actions were palliative and not a cure.

So what does this mean for global investors? Here are three reasons to pay attention to Europe now: 

1. Concerns over the region's financial situation can still disrupt global markets. This was evident during the March crisis in Cyprus and recent coalition government wobbles in Greece and Portugal have already, at least temporarily, pushed up European bond yields. Worsening political instability in these two countries, or elsewhere in the region, could still hurt the 2013 rally .

2. Europe is unlikely to help foster global growth in the near term. Growth in Europe continues to contract, albeit at a slower pace than a year ago, with unemployment around a record high. While I expect European growth to improve somewhat by year's end, a region representing roughly 20% of the global economy stuck in neutral means global growth will continue to be soft for the foreseeable future.

3. US growth – particularly for the export sector – will continue to be negatively impacted by Europe. One big reason why US manufacturing has ! been slow lately is that Europe is buying fewer US exports. Unfortunately, the European political calendar, including important German elections in September, suggests that few of the region's issues will be tackled this year .

And until Europe either turns the economic corner or addresses its lingering structural problems, I remain cautious on the region's stocks even though they are cheap by most metrics and offer some long-term value. For now, I believe there are better near-term investing opportunities in other developed markets such as the United States and Japan.



Russ Koesterich, CFA, is the iShares Global Chief Investment Strategist and a regular contributor to theiShares Blog.  You can find more of his posts here.

Is Bad News No Longer Good News? - Ahead of Wall Street

Friday, August 2, 2013

The disappointing jobs report runs counter to the market's run to milestone levels. This is particularly so since bad economic news may not be good news for the market, as today's report is unlikely to materially shift the Fed's thinking on the 'Taper' question.

July non-farm payrolls came in at +162K vs. expectations of about +183K and negative revisions to June and May. The June number got revised down to 188K from 195K and May got lowered 176K from 195K. Private sector jobs totaled 161K in July (government added 1K jobs) vs. 196K in June and 187K in May.

In another key negative, average hourly earnings dropped for the first time since October last year, down -0.1% in July vs. up +0.4% in June. A key contributor to the earnings drop is the fact most of the job additions were in industries that typically pay lower wages like retail and leisure and hospitality. The unemployment rate dropped to 7.4% from 7.6%. The drop in the unemployment rate was largely a function of lower labor force participation rate, the share of the U.S. population that is either working or looking for work, 63.4% in July vs. 63.5% in June.

A charitable view of this report can be that it isn't way off the past year's trend line. But the disappointing part is that this report runs counter to the positive tone of other recent economic data. Thursday's ISM survey, Wednesday's ADP report, and the persistent recent downtrend in weekly Jobless Claims had raised hopes of a strong jobs reading this morning, with 'whisper' numbers indicating expectations north of 200K.

Those data points had convinced investors that improved economic growth more than made up for the rising interest rates as a result of changes to the Fed's QE program. Wednesday's GDP report and today's jobs report leaves us in a bad situation. The Fed may be ok with this environment and will still move towards 'Taper' later this year, but the market wouldn't get the economic and ! earnings growth that it was pricing in.

Sheraz Mian
Director of Research



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Microsoft CEO Steve Ballmer to Retire Within a Year

Stephen Lam/Getty ImagesMicrosoft CEO Steve Ballmer Microsoft shares are soaring this morning on the news that longtime CEO Steve Ballmer will retire within 12 months. Shares have risen about 6% in trading this morning, in the process enriching the outgoing CEO by upwards of a half-billion dollars. In a statement, Microsoft (MSFT) said that Ballmer will retire once the board finds a new chief executive to replace him. The search process will be overseen by a special committee appointed by the board of directors, and will include Microsoft chairman and former CEO Bill Gates. "We have embarked on a new strategy with a new organization and we have an amazing Senior Leadership Team," said Ballmer in a statement. "My original thoughts on timing would have had my retirement happen in the middle of our company's transformation to a devices and services company. We need a CEO who will be here longer term for this new direction." That "new strategy" refers to a restructuring announced by the company last month, which will include dividing the company into four primary engineering divisions.

That organization shake-up came in response to what's been an undeniably tumultuous period for the company, which missed the boat on mobile and tablets and has struggled to play catch-up. It's seen a chilly reception for Windows 8, the latest iteration of its flagship operating system. And sales of its tablet, the Surface, have likewise been disappointing, leading the company to make radical price cuts earlier this month. And while it's kept its head above water on the strength of its Xbox and Office businesses, there are signs of danger ahead: Its next generation console, the Xbox One, didn't go over well with gamers when it was announced in the spring. We put Ballmer on our list of endangered executives for 2013, and now it seems the company's struggles have finally caught up to him. Microsoft shares are already soaring on the news, opening the morning up 8 percent. And much like Andrew Mason, who saw his holdings of Groupon stock soar in value upon his ouster from the company, Ballmer will also see a windfall from his retirement. According to one report, Ballmer has 333 million shares of Microsoft, so the share price bump resulting from his retirement has made him richer by more than $600 million -- though the share price is still bouncing around as the market processes the shake-up.

Cerebain Biotech Corp. Appointed Dr. Saini Chairman of Its Scientific Advisory Board (OTCBB:DDOO, OTCMKTS:CRWE)

Discount Dental Materials, Inc. (DDOO)

Last Friday, DDOO previously surged (+5.00%) up +0.05 at $1.05 with 10,200 shares in play at the close (ref. google finance June 28, 2013 – Close).

Bond Laboratories, Inc. previously reported NDS launched two exciting new products at the annual GNC® Global Franchise Convention.

Cerebain Biotech Corp. a subsidiary of Discount Dental Materials, Inc. previously reported the appointment of Dr. Surinder Saini as Chairman of its Scientific Advisory Board. The advisory board provides key clinical insight into the company's efforts to develop and commercialize a novel approach to the treatment for patients suffering from Alzheimer's disease. Dr. Saini is the lead scientist behind the development of the world’s first medical device specifically designed for the treatment of Alzheimer's disease utilizing the Omentum

Take a look at Discount Dental Materials, Inc. (DDOO) 5 day chart:

Crown Equity Holdings Inc. (CRWE)

Last Friday (June 28), Crown Equity Holdings Inc. (OTCMKTS:CRWE) (www.crownequityholdings.com ) had surged (+73.33%) up +0.0055 at $.0130 with 2,500 shares in play at the close (ref. google finance June 28, 2013 – Close).

Together with its digital network of Websites, CRWE offers advertising branding and marketing services as a worldwide online multi-media publisher. The company focuses on the distribution of information for the purpose of bringing together a targeted audience and the advertisers that want to reach them. Its advertising services cover and connect a range of marketing specialties, as well as provide search engine optimization for clients interested in online media awareness.

Recently (June 26), CRWE Files 10-Q. To view click URL http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=9371051

Recently (June 26), CRWE Files 10-K. To view click URL http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=9371048

Take a look at Crown Equity Holdings Inc. 5 day chart:

Schwab’s Leaders Talk of ‘Never Greater’ Opportunities for RIAs

Schwab Advisor Services’ annual Impact conference is the RIA custodian’s biggest event, but the impact of its invitation-only Explore conference for RIAs has grown more important over the years. That growth was evident at this year’s Explore, held in Tucson, Ariz.

In a telephone interview conducted during the conference, Schwab CEO Walt Bettinger and SAS’ head, Bernie Clark, provided an update on existing initiatives for advisors who custody with Schwab, along with a some insight into Schwab’s new corporate advertising campaign, which is meant to “re-establish Schwab as a challenger brand,” according to Bettinger.

In the wide-ranging interview on Thursday, Bettinger and Clark first spoke of the Explore attendees, who Clark said came from 158 RIA firms, 51% of which manage more than $1 billion in assets. Speakers at the show ranged from Schwab’s Liz Ann Sonders and Greg Valliere of the Potomac Research Group—speaking, respectively, of the state of the markets and the state of national politics—to Gen. Colin Powell and former Sen. Olympia Snowe.

Bettinger said the advisors at Explore were “upbeat and optimistic,” that their firms were showing strong growth, and that “to a person they are excited” about the business.

That growth and success, warned Clark, is “attracting competition,” mentioning in particular BloombergBlack, a nascent online wealth management service by the financial publisher that Clark said could be attractive to younger investors, many of whom will be the beneficiaries of the $16 trillion that will be transferred to younger generations by the boomers. However, Clark also argued that “the generations aren’t that different,” and that investors young and old “want people who speak their language” to provide financial advice.

As part of its efforts to help RIAs who custody with Schwab to continue to grow their firms, and to be able to reach those younger investors with advisors who speak their language, Clark and Bettinger announced several new initiatives and updates to previously announced programs.

First, as part of its RIA Stands For You initiative, Schwab will invite RIAs to participate in a service to be launched later this year: an online, searchable (by ZIP code) directory of RIA firms on the site. While Clark was quick to point out that this is “not a referral site,” he argued that it reflected Schwab’s commitment to RIAs and to educating investors about their advice options. Bettinger reiterated the importance of the RIA channel to Schwab, saying it remained “our primary strategy in the high-net-worth” space. “Anything we could do to help advisors is good for investors, good for advisors, and good for Schwab,” Bettinger said.

Clark also announced at the conference that Schwab’s Executive Leadership Program will launch in January 2014, under which Schwab will train about 25 participants as future leaders of RIA firms, using faculty comprising academics from leading universities, Schwab executives and leading RIAs themselves.

How to Prospect for Clients by Coordinating Social Security Benefits

While the vast majority of financial advisors believe they should educate clients about how Social Security will factor into their retirement finances, many are uncertain about how they should go about doing this – and they don’t realize that such knowledge can be an entry point for new lead generation.

So says PlanMyBenefit.com President and co-founder Seth Stewart, who is in the business of training a nationwide network of financial advisors to become Social Security counselors. The advisor program, available through PlanMyBenefit’s sister site pmbplanner.com, offers five 30-minute online modules, approved for CE credits in some states, along with a “maximization” calculator and FINRA-reviewed marketing materials. A total of 123 FA firms and independents in 40 states currently are members, according to Stewart.

“Most Americans spend more time planning a vacation than they do in planning one of the largest financial decisions of their lives: when to elect Social Security,” Stewart said Tuesday in New York during an interview with ThinkAdvisor. “We spend a lot of time educating advisors. It’s a disservice to your clients not to coordinate benefits.”

Stewart (left) pointed to a November 2011 Financial Literacy Center working paper, prepared for the Social Security Administration, which finds that nearly nine out of 10 professional financial advisors believe that it is their role to educate clients about Social Security, even though only 22% describe themselves as very knowledgeable about the topic.

PMB members have access to the Jeffersonville, Ind.-based firm’s prospect origination program, offered on a “pay as you go” system as a supplement to the workshops or separately.

New leads are generated on a daily basis, and some potential clients have already completed a first appointment fact finder. “Unlike other lead programs, our prospects are requesting to meet with an advisor that understands Social Security,” according to PMB’s marketing materials.

The end result for clients is thousands of dollars in additional Social Security payments, said Stewart, who admits to waking up in the middle of the night thinking about ideas for coordinating retirement income planning strategies that include Social Security, 401(k)s, IRAs, pensions and personal savings.

“I’ve spent hours and hours on the ssa.gov site,” Stewart said. “By not coordinating Social Security benefits, advisors could be costing their clients more than $100,000 over a lifetime in some cases.”

Currently, he added, he is urging advisors to look into Roth conversions over the course of three to five years to maximize clients’ tax brackets. “Unless you think taxes will be reduced in the future, it’s a no-brainer to convert.”

-----

Read law professors William Byrnes and Robert Bloink on Time Is Running Out for Social Security’s File and Suspend—Cash In Now at ThinkAdvisor.

Hot Undervalued Stocks To Watch For 2014

About a year ago, I attempted to value Berkshire Hathaway (NYSE: BRK-B  ) , and I found it to be at least 20% undervalued at $82�per B-share. Fast forward just over a year, and the B-shares have advanced 30% to almost $107. So, I figured it was time to sharpen up my pencil and reestimate the value.

My conclusion: It is just as undervalued, even at today's higher prices.

My valuation approach
Berkshire is a huge company, and notoriously difficult to value. Fortunately, Warren provides a pretty good framework for evaluating the intrinsic value. He laid it all out in his 2010 letter to shareholders. Basically, the value of Berkshire Hathaway shares comes down to two quantitative factors:

Investments per share Operating earnings per share

I've shown my math (and assumptions) below, and you're free to use this methodology, also known as the two-column approach, to create your own valuation.

Hot Undervalued Stocks To Watch For 2014: 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 Sam Collins]

  Household name Tupperware Brands Corp. (NYSE:TUP) is a global direct seller of products with multiple brands through an independent sales force of 2.4 million people. Its product line focuses on kitchen storage and serving solutions, as well as personal-care products. Over 60% of sales in 2011 are expected to come from Europe and Asia, and the stock has appeal as an emerging markets story.

  S&P estimates that 2011 earnings will increase to $4.54 versus $3.53 in 2010, and it increased its rating to a “five-star strong buy” with a recently revised 12-month target of $81, up from $73. The 2005 purchase of Sara Lee’s (NYSE:SLE) direct-sales business, which has a high growth rate, should be a long-term benefit. TUP’s annual dividend yield is 1.92%.

  Technically TUP had a pullback following a new high at over $70 and is currently oversold. Buy TUP at the current market price with a trading target of $70, but longer term a much higher target will likely be attained.

Hot Undervalued Stocks To Watch For 2014: Caterpillar Inc.(CAT)

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three lines of businesses: Machinery, Engines, and Financial Products. The Machinery business offers construction, mining, and forestry machinery, including track and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer loaders, underground mining equipment, tunnel boring equipment, and related parts. It also manufactures diesel-electric locomotives; and manufactures and services rail-related products and logistics services for other companies. The Engines business provides diesel, heavy fuel, and natural gas reciprocating engines for Caterpillar machinery, electric power generation systems, marine, petrol eum, construction, industrial, agricultural, and other applications. It offers industrial turbines and turbine-related services for oil and gas, and power generation applications. This business also remanufactures Caterpillar engines, machines, and engine components; and offers remanufacturing services for other companies. The Financial Products business provides retail and wholesale financing alternatives for Caterpillar machinery and engines, solar gas turbines, and other equipment and marine vessels, as well as offers loans and various forms of insurance to customers and dealers. It also offers financing for vehicles, power generation facilities, and marine vessels. The company markets its products directly, as well as through its distribution centers, dealers, and distributors. It was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquartered in Peoria, Illinois.

Advisors' Opinion:

• [By Ben Levisohn]

  For one day at least, this CAT is not a dog.

  Caterpillar (CAT) has gained 2% to $86.22 today, its largest gain since in a month and the largest gain among the Dow components. The machinery manufacturer has dropped 11% during the past six months, however, as a slowdown in China and cost-cutting at mining companies have hit its shares.

  Bloomberg

  Susquehanna’s Ted Grace offers reasons for optimism, even as he lowers his 12-month price target to $97 from $104:

  CAT remains Positive rated with 15% upside to our $97 price target and upside-downside of 1.2-to-1 (which, like most of our machinery names, is admittedly shy of the 2-to-1 or better ratio we prefer). Despite our 2014-15 EPS being ~6% below consensus, we view our updated estimates as closer to buyside expectations while noting that consensus appears to embed a low tax rate that explains over half of the variance. While there remains plenty of uncertainty on 2014/15, particularly in mining, we believe CAT shares currently discount reasonable top-line expectations while recent meetings with mgmt suggest potential for structural cost savings that could drive better than expected margins/ incrementals. While difficult to identify discernible catalysts, if CAT’s framework for flat-to-better RI revenue growth in 2014 proves correct (admittedly not assumed in our estimates), this would almost certainly debunk the core of the bear thesis and be meaningfully positive for shares.

  Investors waiting for the stock to actually, you know, rise can take comfort in Caterpillar’s $2.40 dividend per share and its more than $3 per share in buybacks in 2013, Grace says.

  Caterpillar’s 2% gain has trumped the Dow Jones Industrial Average’s 0.04% rise, and United Technology’s (UTX) 0.1% drop, while competitor Deere (DE) has gained 1.9% to $83.22.

• [By Roberto Pedone]

  Caterpillar (CAT) is staging a textbook breakout in May. Shares of heavy equipment maker haven't exactly been kind to investors year-to-date; CAT has barely broken even during a time when the broad market has been in a historic rally. But a textbook breakout should change that.

  CAT started forming an inverse head and shoulders pattern back in early April. The inverse head and shoulders is formed by two swing lows that bottom out around the same level (the shoulders), separated by a lower low called the head; the buy signal comes on the breakout above the pattern's "neckline" level, which was just below $86 for CAT. That puts this stock's upside target right around $92.

  Even though CAT has nearly hit its upside target already (the post-breakout buying has been very quick), the longer-term implication for investors is a break of the downtrend that had been haranguing shares this year. Now, with that downtrend broken, CAT should have more room to move higher. I'd just expect some consolidation first.

10 Best Blue Chip Stocks For 2014: Schlumberger N.V.(SLB)

Schlumberger Limited, together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. The company?s Oilfield Services segment provides exploration and production services; wireline technology that offers open-hole and cased-hole services; supplies engineering support, directional-drilling, measurement-while-drilling, and logging-while-drilling services; and testing services. This segment also offers well services; supplies well completion services and equipment; artificial lift; data and consulting services; geo services; and information solutions, such as consulting, software, information management system, and IT infrastructure services that support oil and gas industry. Its WesternGeco segment provides reservoir imaging, monitoring, and development services; and operates data processing centers and multiclient seismic library. This segment also offers variou s services include 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management. The company?s M-I SWACO segment supplies drilling fluid systems to improve drilling performance; fluid systems and specialty tools to optimize wellbore productivity; production technology solutions to maximize production rates; and environmental solutions that manages waste volumes generated in drilling and production operations. Its Smith Oilfield segment designs, manufactures, and markets drill bits and borehole enlargement tools; and supplies drilling tools and services, tubular, completion services, and other related downhole solutions. The company?s Distribution segment markets pipes, valves, and fittings, as well as mill, safety, and other maintenance products. This segment also provides warehouse management, vendor integration, and inventory management services. Schlumberger Limited was founded in 1927 and is based in Houston, Texas.

Advisors' Opinion:

• [By Robert Holmes]

   Schlumberger has the most potential upside of any stock in this group of 50 that also makes the firm's Best Ideas list. Analyst Ole Slorer says Schlumberger has "what we consider the most advanced technology portfolio in the industry."

  "Its fundamentals are impressive, with what we think are some of the best field personnel, a pristine service and performance reputation, and leading market share in most of its product lines," Slorer writes.

  Though Slorer's price target is 42% above current levels, his most bullish scenario for Schlumberger over the next year would see shares climb a whopping 116%. On the downside, his most bearish scenario for the company would see shares slide 38% over the next 12 months.

• [By Rebecca Lipman]

   Together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. Market cap of $91.49B. EPS growth (5-year CAGR) at 24%. According to Morgan Stanley: "Thanks to an estimated $1 billion investment per year in R&D, Schlumberger has what we consider the most advanced technology portfolio in the industry."

• [By Brian Stoffel]

  This company has been a pick of both Jordan DiPietro and Bryan White. And both analysts have pointed to the company's opportunity for oil exploration abroad -- which is where much of the demand will soon be coming from as well.

  Bryan points out that three-fourths of the company's revenue comes from abroad, with "Brazil, the Middle East, and Africa [as] key regions where activity is expected to be robust and growing."

  Jordan adds, "[Schlumberger] has an important presence in high-growth regions of the world such as Iraq, Mexico, and Russia, and has the competitive advantage to be able to offer full services, from managing entire oil fields to drilling wells."

Hot Undervalued Stocks To Watch For 2014: Dollar Tree Inc.(DLTR)

Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Its stores offer merchandise primarily at the fixed price of $1.00. The company operates its stores under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant, and Dollar Bills. Its stores offer consumable merchandise, including candy and food, and health and beauty care, as well as household consumables, such as paper, plastics, household chemicals, in select stores, and frozen and refrigerated food; variety merchandise, which includes toys, durable housewares, gifts, party goods, greeting cards, softlines, and other items; and seasonal goods, such as Easter, Halloween, and Christmas merchandise. As of April 30, 2011, it operated 4,089 stores in 48 states and the District of Columbia, as well as 88 stores in Canada. The company was founded in 1986 and is based in Chesapeake, Virginia.

Advisors' Opinion:

• [By Sam Collins]

  Dollar Tree (NASDAQ:DLTR) is a leading operator of discount variety stores. The stock has hugged its 50-day moving average since mid-February. But a recent minor revision of earnings for this year by several analysts and the recent market sell-off have resulted in a fall from its high of the year at over $70 to under $66. However, Goldman Sachs (NYSE:GS) increased its price target to $73 from $69.

  Technically DLTR is oversold, according to MACD. A break below its 50-day moving average could result in a pullback to $64, but positions could be taken at the current market price. The trading target for DLTR is $72.

Are you making these common investment mistakes?

Investing is a process driven approach, and is far more sophisticated.  While invest, you should ideally ascertain your investment objective, and thereafter invest in appropriate investment avenues which help you attain the set objectives. Although this may sound a little difficult, it can be achieved by avoiding some very common investment mistakes. While there are galore of mistakes which investors do (while investing) and the list is endless; we have highlighted below the five most common mistakes and guided what investors' should actually do.

Investing without a plan: Well, the first and most critical step while investing as mentioned above, is to outline your investment objectives. Setting an investment objective simply means ascertaining why you would like to invest, along with the financial goal which you have in mind . And mind you, segregating your financial goals into short-term, medium-term and long-term, will help you to invest in a much systematic way. For instance, planning for vacation is short-term, planning to buy property is medium to long-term, planning for retirement is long-term.

But through experience we can say, very often investors stumble at the starting point while defining investment objectives; this in turn gets their financial plan in a tizzy.

Not diversifying well enough: Diversification is one of the basic tenets of investing. At PersonalFN, we regularly meet clients who have invested a large portion of their hard-earned money in a single asset like real estate for instance, or equity. While such investors may do well during a run-up of a respective asset class, the risk also gets elevated during the downturn of the respective asset class.

Thus this highlights the point of how vital it is to put your eggs in different asset classes (such as equity, debt, gold, and real estate). Moreover, diversification is also important within an asset class. So, say while you would like to invest in a respective companies stock (in the equity asset class) for all the robust fundamentals it holds, you should be diversifying your portfolio across stocks, thereby having a better sectoral diversification too.

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KLA-Tencor Hikes Dividend - Analyst Blog

KLA-Tencor Corporation (KLAC), the leading manufacturer of process control equipment, has announced its decision to hike quarterly dividend by 5 cents to 45 cents per share. This translates into a 12.5% increase from the prior dividend. The increased dividend is expected to take effect beginning with KLA-Tencor's quarterly dividend to be declared in August 2013. Prior to this announcement, KLA had been paying a quarterly dividend of 40 cents per share.

The strength of KLA's business model is reflected in the company's strong cash generation capabilities and its commitment to return value to shareholders. We believe that continued increase in dividends will inspire investor loyalty through higher returns from the stock.

KLA's strong balance sheet and cash flows provide financial flexibility in matters of incremental dividend, share repurchases and strategic acquisitions. During the last concluded quarter, KLA spent $68.3 million on share repurchases and $66.6 million on dividends. The cash and short-term investments balance was $2.88 billion, up $301.3 million at quarter-end. The debt to total capital ratio including long-term liabilities and short-term debt was just 17.8%. We remain encouraged by KLA's strong cash position and its ability to service its long-term debts.

KLA reported decent third quarter results, with both revenues and earnings per share surpassing our expectations. However, the company's fourth quarter non-GAAP EPS guidance of $0.66-$0.86 was below the Zacks Consensus Estimate of $0.86.

Regular dividend hikes are a good way of encouraging investor confidence as it returns shareholder value. Though the company's most important foundry segment remains under pressure, the underlying drivers (process node transition and strong demand for smartphones and mobile computing devices) should drive increased capex spending in the second half of the year.

Currently, KLAshares carry a Zacks Rank #3 (Hold). Other stocks that are performing well at cu! rrent levels include Applied Materials Inc (AMAT), FEI Company (FEIC) and Lam Research (LRCX), all carrying a Zacks Rank #2 (Buy).

The S&P May Be Closer To 2,000 Than You Think

Earnings are supporting higher stock prices, and new records for the S&P 500 seem within reach.

S&P 500 2,000?
SPDR S&P 500 (NYSE: SPY) ended the week virtually unchanged. Friday's close of $169.11 was only 6 cents below the previous week's close, a difference of 0.04%. It was a relatively dull week with the difference from the low to the high being only 1.38%. Since the bull market began in 2009, the average weekly range of SPY has been 3.38%.

Earnings continued to come in above expectations, and quarterly earnings for companies in the S&P 500 are on track to reach an all-time high. Analysts are optimistic that this trend in earnings should continue for at least the next year, expecting earnings per share (EPS) for the stocks that make up the S&P 500 index to grow 12% to 15%.

If earnings continue to meet or exceed expectations, the S&P 500 should trade at about 1,740 with a P/E ratio of 16. This indicates that there is little upside left in the market unless the P/E ratio expands.

If the P/E ratio rises to 17, the index would trade at about 2,000, which is a reasonable target for the next year. This could be a conservative estimate. Over the long term, since 1989, the average P/E ratio has been close to 19.

Earnings present one reason to expect higher stock prices, and relative strength (RS) analysis also makes a bullish case. In a healthy bull market, small-cap stocks usually outperform large-cap stocks because investors target larger gains with more speculative investments in a strong market.

The chart below is a ratio chart that shows that the iShares Russell 2000 Index Fund (NYSE: IWM) has been relatively stronger than SPY since the market bottom last year. A ratio char! t combines the daily changes of the funds into a single line. When IWM is outperforming, the ratio rises, and it declines when SPY is outperforming.

For now, the trend remains up and traders should be participating in the stock market on the long side.

Gold Continues Recovering
SPDR Gold Shares (NYSE: GLD) gained 2.9% last week, finishing 12.3% above its June low.

Volatility in GLD has reached a two-year high, and we should expect to see volatility fall. Volatility is shown with Bollinger bands in the chart below. Bollinger bandwidth measures the distance between the upper and lower bands. It follows a general pattern of expansion and contraction.

As volatility contracts, prices should drift slightly higher. The upper Bollinger band will serve as a price target, but that band will likely be falling in the next few weeks, which will lower the potential upside of the trade. The upside of GLD will be difficult to assess while volatility falls toward an average level, but the downside risk is still high -- although it should be limited to the June low.

This article originally appeared on ProfitableTrading.com:
S&P 500 2,000 May be Closer Than You Think

Santarus Continues to Soar - Analyst Blog

Riding on a strong growth momentum ahead of its second-quarter earnings release, the shares of Santarus, Inc. (SNTS) closed at $25.57 on Jul 12, 2013. Just last week, Santarus had hit a 52-week high of $24.07 and it touched $25.71 on Friday's trading session, representing an upside of 6.8%.

The Zacks Rank #2 (Buy) specialty biopharmaceutical company has consistently delivered positive earnings surprises for the last three quarters. In the first quarter of 2013, the company posted a surprise of 108.33%.

Santarus reported revenues of almost $80 million in the first quarter of 2013. Going forward, performance should be driven by Uceris (mild-to-moderate ulcerative colitis), Zegerid (heartburn and other symptoms of gastroesophageal reflux disease) and Glumetza (type II diabetes).

Uceris, which generated sales of $6.6 million in first quarter of 2013, should continue growing on a sequential basis over the rest of 2013. The Zegerid re-launch should aid revenues as well. Glumetza, targeting the lucrative diabetes market, is expected to witness sales growth from the second quarter of 2013.

Santarus also possesses a strong pipeline consisting of interesting candidates like Ruconest for hereditary angioedema (HAE). The US Food and Drug Administration (FDA) is reviewing the marketing application of Ruconest for the acute treatment of HAE and will render a decision by Apr 2014. Santarus also plans to develop the candidate for the prophylaxis treatment of HAE and acute pancreatitis.

On a price-to-sales basis, Santarus is trading at 7.7x, reflecting a huge premium of 133.3% compared with the peer group average of 3.3x. On a price-to-book basis, the stock is also trading at a premium to the peer group average. However, given the company's strong fundamentals, the premium valuation is justified.

At present, companies like Jazz Pharmaceuticals (JAZZ), Cadence Pharmaceuticals Inc. (CADX) and NPS Pharmaceuticals, Inc. (NPSP) look more attractive with a Zacks Rank #1 (Stro! ng Buy).

Hot Dividend Companies For 2014

While U.S. REITs couldn’t keep up with the S&P 500 in July and for the first seven months, some REIT sectors are keeping up and even topping the market benchmark, according to data released Wednesday. Plus, REITs are outperforming the S&P when it comes to dividend yields, the industry group NAREIT says.

On a total-return basis, the FTSE NAREIT All Equity REITs Index gained 0.8% last month, while the S&P 500 was up 5.1%. Year to date, the FTSE NAREIT All Equity REITs Index improved 6.7% vs. 19.6% for the S&P 500.

On a 12-month basis, the FTSE NAREIT All Equity REITs Index improved 8.9%, compared with 25% for the S&P 500.

In terms of dividend yields, the FTSE NAREIT All REITs Index yielded 4.3% as of July 31, and the FTSE NAREIT All Equity REITs Index was 3.5%. This performance tops that of the S&P 500, which had a dividend yield of 2.1%.

Hot Dividend Companies For 2014: Companhia Energetica de Minas Gerais Cemig (CIG)

Companhia Energetica de Minas Gerais (CEMIG), incorporated on May 22, 1952, is a Brazil-based holding company mainly engaged in the generation, transmission and distribution of electricity. In the generation segment, CEMIG operates through hydroelectric plants, thermoelectric plants and wind farms. In the transmission segment, as of December 31, 2008, CEMIG�� transmission network was comprised of 38 substations with a total of 94 transformers and an aggregate transformation capacity of 15,583 Megavolt amperes. In the distribution business, as of December 31, 2008, the Company owned and operated 451,539 kilometers of distribution lines, supplying electricity to approximately 10 million customers. CEMIG is also engaged in the natural gas distribution business in Minas Gerais, through its subsidiary Companhia de Gas de Minas Gerais - GASMIG, as well as in the telecommunications business, through its subsidiary Cemig Telecomunicacoes SA - Cemig Telecom, which provides optical fiber and coaxial cable network.

Power Generation and Trading

As of December 31, 2009, the Company generated electricity at 54 hydroelectric plants, three thermoelectric plants and two wind farms, and had a total installed capacity of 6,624 megawatts. As of December 31, 2009, it owned and operated 3,085 miles of transmission lines and 281,756 miles of distribution lines. It holds concessions to distribute electricity in 96.7% of the territory of Minas Gerais. Eight of CEMIG�� hydroelectric plants accounted for approximately 81% of its installed electric generation capacity during the year ended December 31, 2009. CEMIG operates the Ipatinga thermoelectric plant, through its subsidiary Usina Termica Ipatinga S.A. The plant has an installed capacity of 40 megawatts, generated by two units and that uses blast furnace gas as fuel. The Company operates the Sa Carvalho hydroelectric power plant, located on the Piracicaba River in the municipality of Antonio Dias in the State of Minas Gerais, through its subsid! iary Sa Carvalho S.A. The Company�� Rosal hydroelectric plant has an installed capacity of 55 megawatts. The Rosal plant is located on the Itabapoana River, which runs along the border between the states of Espirito Santo and Rio de Janeiro.

Cemig Capim Branco Energia S.A. is engaged in developing the Capim Branco Generating Complex in partnership with Companhia Vale do Rio Doce (CVRD), a mining company, Comercial e Agricola Paineiras, an agricultural company, and Companhia Mineira de Metais (CMM) a metallurgical company. Horizontes Energia S.A. was formed by the Company to generate and trade electricity, through the commercial operation of its hydroelectric plants: the Machado Mineiro Power Plant (located on the Pardo River in the municipality of Ninheira in the State of Minas Gerais with an installed capacity of 1.72 megawatts); the Salto do Paraopeba Power Plant (located on the Paraopeba River in the town of Jeceaba in the State of Minas Gerais with an installed capacity of 2.37 megawatts); the Salto Voltao Power Plant (located on the Chapecozinho River in the town of Xanxere in the State of Santa Catarina with an installed capacity of 8.2 megawatts), and the Salto do Passo Velho Power Plant (located on the Chapecozinho River in the town of Xanxere in the State of Santa Catarina with an installed capacity of 1.8 megawatts), as well as other generating projects.

Usina Termeletrica Barreiro S.A. holds the assets of the Barreiro thermoelectric power plant. The Irape Hydroelectric Power Plant, which has an installed capacity of 360 megawatts, is located on the Jequitinhonha River, in northern Minas Gerais. The Company�� wind farm, Morro do Camelinho is located in Gouveia, a municipality in northern Minas Gerais. It has a total generation capacity of 1 megawatt, powered by four turbines with a capacity of 250 kilowatts each. Central Eolica Praia do Morgado S.A is located in the county of Acarau, in the State of Ceara. Central Eolica Volta do Rio S.A is located in the county ! of Acarau! , in the State of Ceara.

Transmission

The Company�� transmission business consists of the bulk transfer of electricity from the power plants where it is generated to the distribution system, which carries the electricity to final consumers, and others consumer agents connected directly in the transmission grid. Its transmission system comprises transmission lines and step-down substations with voltages ranging from 230 kilovolt to 500 kilovolt. As of December 31, 2009, the Company�� transmission network in Minas Gerais consisted of 1,352 miles of 500 kilovolt lines, 1,244 miles of 345 kilovolt lines and 485 miles of 230 kilovolt lines, as well as 35 substations with a total of 94 transformers and an aggregate transformation capacity of 15,506 megavolt ampere. The Company transmits the energy that it generates and the energy that it purchases from Itaipu and other sources, as well as the energy for the interconnected power system. On December 31, 2009, the Company also had 13 industrial consumers, to whom it transported 4,103 gigawatt hour directly with high voltage energy, through their connections to its transmission lines. Nine of these industrial consumers accounted for approximately 66.9% of the transported total volume of electricity. The Company also transmits energy to distribution systems, through the south/southeast-linked system of the grid.

Distribution and Purchase of Electric Power

The Company�� distribution operation consists of electricity transfers from distribution substations to final consumers. Its distribution network consists of a network of overhead and underground lines and substations with voltages lower than 230 kilovolts. The Company supplies electricity to industrial consumers at the higher end of the voltage range and residential and commercial consumers at the lower end of the range.

Other Businesses

The Company holds approximately 55% of Gasmig and Petrobras, through its subsidiary, Gaspet! ro-Petrob! ras Gas S.A., holds 40%. In 2009, Gasmig supplied approximately 1.5 million cubic meters of natural gas per day to 276 consumers, including 175 industrial and commercial clients, 93 retail distribution stations for natural gas vehicles, two thermal power plants and six distributors of compressed natural gas (CNG). Gasmig supplied 0.2 million cubic meters of gas per day to thermal power plants and 1.3 million cubic meters of gas per day to retail consumers. In addition to, Gasmig also supplied eight customers with re-gasified liquefied natural gas (LNG). In 2009, Gasmig distributed approximately 4.1% of all natural gas distributed in Brazil.

The Company�� owns a 99.9% interest in Cemig Telecomunicacoes S.A., which has an optical fiber-based long-distance communications backbone installed along the Company�� power grid using optical ground wire cables. This communications backbone is connected to an access network that is based on hybrid fiber-coaxial cable technology and is deployed along its power grid. The telecommunication services provided by Cemig Telecomunicacoes S.A., through its network are signal transportation and access, both for point-to-point and point-to-multipoint applications, delivered to telecommunications operators and Internet service providers on a channel basis. Cemig Telecomunicacoes S.A. also provides intra-company data transmission services to the Company. CEMIG provides consulting services to governments and public utility companies in the electricity industry. The Company has a 100% interest in Efficientia S.A.

Hot Dividend Companies For 2014: Ziwo Holdings Ltd. (I9T.SI)

Ziwo Holdings Ltd., an investment holding company, engages in the research, development, manufacture, and sale of 30D terylene filament yarn, sandwich mesh fabric, styrene butadiene rubber (SBR), and other foamed materials primarily in the People�s Republic of China. It also offers foamed SBR, foamed ethylene vinyl acetate, and high foamed polyethylene, which are primarily used as raw materials in the production of sportswear and sports accessories, bags and luggage, furniture upholstery, automobile interior lining, and other lifestyle consumer products. In addition, the company is involved in the trade of foamed materials, textiles, sports and sports accessories, garments, and footwear. It sells its products to approximately 600 customers through a sales and marketing network in Fujian, Guangdong, Shandong, and Zhejiang Provinces, as well as in Shanghai and Tianjin municipalities. The company was founded in 2003 and is based in Quanzhou, the People�s Republic of China. Ziwo Holdings Ltd. is a subsidiary of Sky Upright Holdings Limited.

Top 5 Dividend Stocks To Buy Right Now: Skyepharma(SKP.L)

SkyePharma PLC engages in the research and development, manufacture, and sale of prescription pharmaceutical products worldwide. It offers Pulmicort PMDI, a hydrofluoroalkane metered dose inhaler for the treatment of asthma; and Solaraze, a topical gel treatment for actinic keratosis. The company?s oral products consist of Sular, a calcium channel blocker antihypertensive therapy; Triglide, an oral fibrate that reduces elevated plasma concentrations of triglycerides; Lodotra, an anti-inflammatory drug for treating the pain and stiffness caused by rheumatoid arthritis; Paxil Controlled Release, a selective serotonin reuptake inhibitor antidepressant; Xatral OD/Uroxatral, a selective alpha-blocker for treating the urinary symptoms of benign prostatic hyperplasia; Coruno for the oral treatment of chronic angina pectoris; Madopar Dual Release, which is indicated for the oral treatment of various forms of the Parkinson disease; diclofenac-ratiopharm uno for pain and inflammati on treatment; ZYFLO CR, a leukotriene synthesis inhibitor oral anti-inflammatory asthma drug; and Requip XL, a once daily formulation for Parkinson?s disease. Its inhalation pipeline products include Flutiform, which completed Phase-III clinical trials for the treatment of asthma; and Flutiform that is in Phase-III clinical trials for the treatment of asthma. The company?s oral pipeline products comprise Lodotra, which is in Phase-III clinical trials for the treatment of rheumatoid arthritis; SKP-1041 that is in Phase-II clinical trials for the treatment of sleep maintenance; and SKP-1052, which is in Phase-I clinical trial for the treatment of diabetes. The company was founded in 1910 and is headquartered in London, the United Kingdom.

Tyson Reaches 52-Week High - Analyst Blog

Shares of meat processor Tyson Foods Inc (TSN) reached a new 52-week high of $26.74 on Jul 8, following its acquisition of California-based Circle Foods LLC last month. The share price of the stock has been on the rise and gained 7.0% since the acquisition on Jun 3. In fact, this is the third time Tyson has attained a new 52-week high post-acquisition, with previous highs of $26.05 on Jul 1 and $25.92 on Jun 18.

Shares of this Zacks Rank #2 (Buy) stock closed at $26.57 on Jul 8, recording a healthy return of 33.5% on a year-to-date basis. The company's long-term estimated earnings growth rate is 8.5%. Average volume of shares traded over the last three months came in at approximately 3,180K.

Acquisition of Circle Foods

Tyson acquired Circle Foods from Montreal-based private equity firm Claridge Inc. to strengthen its presence in the Mexican food category. Circle Foods owns popular brands like Nuevo Grille and Tortillaland handheld Mexican products, Tortillaland uncooked tortillas and ROTILAND Indian flat breads. It also produces private brands for several customers.

Mexican food is becoming increasingly popular in the U.S. processed food industry. The acquisition will expand Tyson's food offerings with popular brands of Circle Foods.

The acquisition also includes Circle Foods' state-of-the-art facility in San Diego, which is known for its food safety management system. The plant produces burritos, enchiladas, chimichangas, tacos, quesadillas and tamales, as well as tortillas and Indian flat breads. Prior to Circle Foods, Tyson acquired the Mexican snacks and tortilla producer, Don Julio Foods of Clearfield, Utah in Apr 2013 to add Mexican cuisine to its portfolio.

Further, Tyson has bright prospects for 2013 with its constant focus on innovation. New product launches in 2013 are expected to drive Tyson's profitability. In addition, the expectation of reduced corn prices in 2013 will prove to be a boon for this meat producer as corn serves as the main! feed for chicken.

Tyson thus expects to achieve top-line sales growth of 3% to 4% every year. Value added sales are expected to grow within 6% to 8%, while international sales are expected to increase 12% to 16% during fiscal 2013. The company also aims to maintain bottom-line growth rate of 10% in the long term.

Other Stocks to Consider

Other meat producers in the industry that are worth considering include Sanderson Farms, Inc. (SAFM) and Pilgrim's Pride Corp. (PPC). Both the companies hold a Zacks Rank #1 (Strong Buy). Another company in the consumer staples sector that holds a Zacks Rank #1 is Flower Foods Inc. (FLO).

Want to invest in gold? Read before you take a decision

Also Read: Buy gold, silver & crude: Emkay Commodities   

Below is the verbatim transcript of the interview

Q: Which is the best way for people to buy and store gold over and above jewellery?

A: Primarily there are about four ways in which you can buy and own gold. First one is the physical gold which is in the form of coins that we have been all doing all this while. There are certain constraints that come along while buying physical gold. Firstly, there are purity issues most of the times. There is pricing concerns because we have different prices being offered by all different vendors. There is a coin making charge and the profit margin of each vendor is going to differ. So, this has been the earlier method of owning gold. Now we have new products available.

One of the forms is gold Exchange-Traded Fund (ETF). These are listed on the stock exchanges and they need to be bought through a broker. There are certain advantages of investing in gold through the ETF form. There is an absolute surety about the purity of gold that you would be getting. The pricing is more transparent. There is no coin making charges. The only cost associated with this is the brokerage that you would be paying to your broker. The third benefit is from the taxation perspective. If you hold gold for more than one year in ETF form, you get the benefit of long-term capital gains, against physical gold where you need to hold it for about three years to get the preferred tax rate. When you sell back gold in the ETF form, you get a better price than what you will be getting from your jeweller or from the bank. Most of the banks who have sold it to you do not even buyback the gold coins. Lastly, as they are into electronic form, just the way you owning shares these are also in an electronic form, so there are no storage issues, no worries about it getting lost or misplaced.

The third method is a gold fund. These are offered by mutual funds. It is basically to assist people who do not have a demat account or do not want to get into the hassles of opening a separate demat account or anything of this sort. Like you invest in regular mutual funds, you give your money to a gold fund which further invests into the gold ETFs. So, all other benefits remain the same. Just that there are two layers. So there is a cost associated with this which is about 1 percent.

The final way is an E-gold. E-gold is listed on National Spot Exchange and you have to have a separate commodities demat account for this. You can physically convert this electronic gold into physical mode if you have E-gold under the National Spot Exchange. From taxations perspective, it is same and at par with physical gold. So, you need to hold on for at least three years to get the preferred tax rate for the long-term capital gains.

Q: So ETF would be the preferred mode is what you are saying?

A: ETF is the most efficient manner. It's just that you do not get the gold in your own hand. That is the only disadvantage if at all. Otherwise, ETF is the most efficient manner of holding gold.

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No intent to control capital; fund-raising door open: FM

No intent to control capital; fund-raising door open: FM

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