Economically sensitive seems to be a good thing this earnings season as the following companies blew through earnings expectations and dwarfed last year's results:
CN Rail (CNI): EPS = C$1.13 versus $0.76 last year
UPS: EPS = C$0.84 versus $0.44 last year
CAT: EPS = C$1.09 versus $0.72 last year
3M (MMM): EPS = C$1.54 versus $1.20 last year
These stocks are about as dependent on the economy as it gets. There is a strange feeling in the markets lately. There seems to be a large divide between how main street is looking and how corporations are performing. Earnings are looking quite good but yet unemployment remains high, housing is still in the toilet, and consumer confidence is weak. Costs that companies cut during the financial crisis are probably really paying off now as revenues come back to levels above 2009 but below prior years. The fact that most analysts and onlookers are worried and bearish is probably a sign that markets will rise from here. Typically in times like this the market climbs the wall of worry as expectations are low and upside surprise is more common. As usual it is hard to say where the market will go from here but stocks usually trade in line with earnings and for the time being earnings seem fine.
I will obviously continue to pick away at stocks that are already part of my portfolio but seem to be trading very cheap. I've noticed the following opportunities lately:
Walgreen (WAG) - I added on June 29 at $26.50. The stock has since recovered to $29.41.
Sun Life Financial (SLF) - Dividend investors have taken note recently as the shares traded down to under $26 yesterday resulting in a yield of about 5.5%.
Friday, August 31, 2012
The Divide Between Wall Street and Main Street
Has Johnson & Johnson Become the Perfect Stock?
Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?
One thing's for sure: You'll never discover truly great investments unless you actively look for them. Let's discuss the ideal qualities of a perfect stock, then decide if Johnson & Johnson (NYSE: JNJ ) fits the bill.
The quest for perfection
Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:
- Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it's certainly a better sign than a stagnant top line.
- Margins. Higher sales mean nothing if a company can't produce profits from them. Strong margins ensure that company can turn revenue into profit.
- Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management's attention. Companies with strong balance sheets don't have to worry about the distraction of debt.
- Money-making opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.
- Valuation. You can't afford to pay too much for even the best companies. By using normalized figures, you can see how a stock's simple earnings multiple fits into a longer-term context.
- Dividends. For tangible proof of profits, a check to shareholders every three months can't be beat. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.
With those factors in mind, let's take a closer look at Johnson & Johnson.
| Factor | What We Want to See | Actual | Pass or Fail? |
|---|---|---|---|
| Growth | 5-Year Annual Revenue Growth > 15% | 4.0% | Fail |
| � | 1-Year Revenue Growth > 12% | 5.6% | Fail |
| Margins | Gross Margin > 35% | 68.7% | Pass |
| � | Net Margin > 15% | 14.9% | Fail |
| Balance Sheet | Debt to Equity < 50% | 29.8% | Pass |
| � | Current Ratio > 1.3 | 2.46 | Pass |
| Opportunities | Return on Equity > 15% | 16.4% | Pass |
| Valuation | Normalized P/E < 20 | 22.21 | Fail |
| Dividends | Current Yield > 2% | 3.5% | Pass |
| � | 5-Year Dividend Growth > 10% | 9.1% | Fail |
| � | � | � | � |
| � | Total Score | � | 5 out of 10 |
Source: S&P Capital IQ. Total score = number of passes.
Since we looked at Johnson & Johnson last year, the health-care giant has lost three whole points. A pricier valuation, lower net margins, and a slower rate of increase for the dividend all conspired to cut J&J's score.
Last year, J&J was going through a very tough time. The company had seen two straight years of sales declines in the midst of seemingly countless product recalls, and some had wondered if the brightest days for the company were over.
But 2011 marked a nice turnaround for the company. Revenue rose 5.6%, thanks entirely to international growth, as the U.S. market remained stagnant. Much of the problem comes from those product recalls, which sent customers to products from Pfizer (NYSE: PFE ) and Merck (NYSE: MRK ) . Those companies have welcomed them with open arms, presenting J&J with a big challenge to try to get them back.
One way J&J has responded to competition is to look for strategic alliances. For instance, the company partnered with Gilead Sciences (Nasdaq: GILD ) on their third HIV drug partnership, giving Gilead the responsibility for developing and commercializing a four-drug combo pill that includes both Gilead and J&J drugs. The move should help the pair compete better against Pfizer and GlaxoSmithKline (NYSE: GSK ) , whose ViiV Healthcare joint venture also plays in the HIV space.
For J&J to get back its lost points, it needs to get past its product-recall problems and return to more solid growth. If it can do so, then J&J could get back to near-perfection in the years ahead.
Keep searching
No stock is a sure thing, but some stocks are a lot closer to perfect than others. By looking for the perfect stock, you'll go a long way toward improving your investing prowess and learning how to separate the best investments from the rest.
Johnson & Johnson is an impressive stalwart stock, but it's not the only one. Learn about three more promising stocks for the long haul in the Fool's latest special report. It's yours for the taking and is absolutely free, but don't miss out -- click here and read it today.
Click here to add Johnson & Johnson to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.
1 All-Star Stock for Your Future
When I began investing, I was starting from a knowledge base of zero. Nada. Absolute scratch.
One of the first books I read was The Motley Fool's Rule Breakers, Rule Makers. In it, Motley Fool co-founder and CEO Tom Gardner laid out specific criteria for crowning a company a "Rule Maker," i.e., a large, mature, consumer-facing company that's king of its market space, and an investment that can be confidently and profitably held onto for years with only quarterly check-ins.�
His step-by-step process for analyzing a business was an easily understandable way for a beginner like me to quickly get up to speed, but its back-to-basics methodology will benefit even advanced investors.
Today we're going to run semiconductor giant Intel (Nasdaq: INTC ) through Tom Gardner's merciless gauntlet and see exactly what it takes to make the Rule Maker grade. In the course of our analysis, we'll use quarterly earnings numbers for the period ending Oct. 1 of this year.
In 1965, Intel co-founder Gordon E. Moore proposed the notion that computing power doubles approximately every two years. This theory became known as "Moore's Law" and has accurately predicted the development of the computer ever since.
Since the Intel chip in your computer becomes obsolete essentially every two years, you're compelled to buy a new machine on about the same schedule. You might stretch it a bit, but probably not by much. So computers, and hence the semiconductors that drive them, are perfect examples of mass-market items that grow obsolete fairly quickly and will need to be replaced over and over. Intel easily makes the Rule Maker grade here.
Gross margin indicates pricing power and manufacturing efficiencies. Per Tom Gardner, the ideal gross margin for a Rule Maker is 60%. Intel's easily makes the grade at 63%.
Although having an unquestionably strong foothold in the semiconductor arena, the company does have some competitors -- for example, Advanced Micro Devices (NYSE: AMD ) . Its gross margin is 48%. �We can also consider Texas Instruments (NYSE: TXN ) as a peer, and its gross margin is a respectable 51%.
As Tom Gardner so aptly puts it in the book, "The reward of high gross margin is surpassed only by the treasures of high net profit margin." As a reminder, net profit margin tells us how much money a company gets to keep from every dollar of sales. Intel's is a whopping 24%. Well done.
Year-over-year sales growth counts even for big companies, where it will naturally slow with age, because it's an indicator of business momentum. Top-tier Rule Makers grow their sales by 10% every year.
Rule Maker Apple (Nasdaq: AAPL ) grew its revenue by a staggering 39%, but Apple is the Superman of tech companies. In a still-virile display of market-dominating position, Intel grew its revenue by an incredible 20% over the past 12 months. Kudos.����
Rule Makers should be cash-heavy and debt-light, ideally having at least 1.5 times as much cash as debt. A look at the asset side of the balance sheet shows us Intel has $22 billion in cash, cash equivalents, and short-term investments. On the liabilities side, it has a little more than $2 billion in long-term debt. This gives Intel a cash-to-debt ratio of 11. Bravo.
The Foolish Flow Ratio measures how well a company manages its inventory and cash. Specifically, a company should be keeping its inventory and accounts receivables low and its accounts payables high -- strong indicators of market-space dominance.
To calculate the Foolish Flow Ratio, take current assets minus cash, cash equivalents, and short-term investments and divide by current liabilities. The best companies have Foolish flow ratios of 1.0 or less; 1.25 is acceptable as the upper end. Intel's is exactly 1.0. Nicely done.
What's in a name, you ask? A lot. Your familiarity and interest help you understand exactly what a company does and how it makes money, thereby lowering your investing risk.
For a company that makes the internal part of a machine that, I'd wager, very few people outside the tech industry have ever actually seen, Intel has been remarkably savvy in getting its name known to the general public. Brand recognition isn't up there with fellow Rule Maker Starbucks (Nasdaq: SBUX ) , and it certainly isn't equivalent to Rule Maker Coca-Cola (NYSE: KO ) , but it might be equal to Procter & Gamble (NYSE: PG ) , another Rule Maker.
Moore's Law makes for a Foolish investor's dream
Beautiful top and bottom lines. Loads of cash and very little debt. A killer gross margin. Strong brand recognition in a mass-market, repeat business. An enviable Foolish Flow Ratio. Intel is a Rule Maker of the highest order. There's nothing not to like at the moment, but remember that the metrics used here should be applied to all of your Rule Maker investments each quarter.
In Rule Breakers, Rule Makers, Tom Gardner goes into even greater depth and detail about what exactly makes a Rule Maker a Rule Maker. So I suggest you pick up a copy for yourself and get the whole story from the man who literally wrote the book on it.
Intel isn't the only stock you can profitably and confidently hold onto for the long term. My fellow Fools have picked out -- and bought shares of -- five more companies they think will maintain their edge and outperform over the long term. You can get a free copy of their special report.
Thursday, August 30, 2012
Current account deficit widens to $137.3B
WASHINGTON�The U.S. current account trade deficit widened in the first three months to the largest imbalance since late 2008, reflecting a big increase in imports in oil, cars and machinery and a drop in U.S. earnings on overseas investments.
The deficit in the current account, the broadest measure of trade, jumped 15.7% to $137.3 billion, up from $118.7 billion in the final three months of last year, the Commerce Department reported Thursday.
U.S. exports of goods increased 1.6% to $388.5 billion, but imports rose a larger 2% to $583 billion.
America's surplus in services, things such as airline tickets and financial services, increased slightly to $43.5 billion but the U.S. surplus in investment income declined by $12.3 billion to $47.6 billion. This change reflected lower payments to Americans on their overseas investments and higher payments to foreigners on their U.S. investments.
The current account is the broadest measure of trade because it tracks the sale of merchandise and services between nations as well as investment flows.
Ttrade deficit gauge worseningData by YCharts
The deficit in 2011 rose to a revised $465.9 billion, up 5.4% from 2010 and the largest imbalance since 2008.
Economists think the current account deficit will keep rising in 2012. Europe's debt crisis has pushed many countries in that region into recession, meaning they will be buying fewer U.S. exports. In addition, some of America's other major export markets such as China and other emerging economies are seeing their growth slow this year, which will likely cut into U.S. export sales there.
Economists watch the current account as sign of how much the U.S. needs to borrow from foreigners. The deficit in the first quarter totaled 3.6% of the overall economy, up from 3.1% in the fourth quarter. However, it was still well below the all-time high of a deficit that was 6.5% of the total economy in the final three months of 2005.
In total figures, the current account deficit hit an all-time high of $800.6 billion in 2006. It then shrank after a deep recession reduced demand for imports. The gap began widening again after the recession ended in June 2009.
The economy grew at an anemic rate of 1.7% in 2011. Economists had hoped growth would improve this year but they have been marking down their forecasts recently after a string of disappointing reports have indicated that job growth and consumer spending have slowed.
MSFT: Cheers for Win 8; Disappointment For Nokia
Praise for Microsoft’s (MSFT) Windows 8 operating system continues to flow in after the company released a preview of the software yesterday.
Oppenheimer & Co.’s Brad Reback had indicated the trend yesterday with positive comments following the developer demo yesterday at the Mobile World Congress event in Barcelona, Spain.
This morning, Nomura Equity Research’s Rick Sherlund reiterates a Buy on Microsoft shares and a $37 price target, writing that the demo shown by Microsoft was “very stable” and that the user interface “has been finished and the fit and finish looked very good.”
“The adaptation for mouse and keyboard was better than we had expected, improving the potential upgrade opportunity for notebooks and Ultrabook touch devices,” writes Sherlund.
The only problem for Microsoft, he opines, is that the radical new “Metro” user interface, which has been adjusted to touch-based user interaction, will take some getting used to as it pops up on all manner of computing devices.
And Bernstein Research’s Mark Moerdler reiterated an Outperform rating on Microsoft, writing that the new software “delivers a superb user experience, and is competitive against iOS and Android.”
The redesign of Microsoft’s Internet Explorer browser is also “superb,” he writes, and Moerdler sees some advantages in how Microsoft has set up its online store for “apps” for the new system:
The store currently offers both third-party and Microsoft apps. These apps are available for free during the beta testing phase of Windows, which should aid in building demand once the general release is available. The Store offers personalized recommendations, which could be an advantage vs. the Android store, where users often complain about how difficult it is to discover apps.
On a side note, Sherlund’s colleague, mobile analyst Stuart Jeffrey, reiterated a negative outlook on Microsoft’s hardware partner in phones, Nokia (NOK), writing that the company got little mention at all at the Windows 8 event.
“Mobile World Congress has been a big disappointment for Nokia,” writes Jeffrey, “and now the demons of a very difficult Q1 are likely to haunt the share price.”
Microsoft shares today are up 15 cents, or half a point, at $31.89. Nokia shares are down a penny at $5.28.
Apple Inc. (AAPL) Rumors and News – iPhone Antenna Press Conference Set
Here is today’s Apple Inc. stock news and AAPL rumors for Friday, July 16. Apple Inc. (AAPL) goes on the offensive in the aftermath of Consumer Reports’ review bashing its iPhone 4 and antenna problems, announcing a press conference later today. Apple also updated the operating system of both the iPhone 4 and the iPad today. Finally, a new MacBook Air might just join that rumored new iPod Touch this September:
Apple to Hold iPhone 4 Press Conference on Friday: It’s about time. Rather than continue to offer up lame duck solutions to the iPhone 4′s notorious antenna problems, AAPL has announced that they will hold a press conference to directly address the issues plaguing their new smartphone. It is assumed that Apple will announce a detailed plan that will solve consumer complaints with the recently released device. Analysts predict that Apple will either provide free protective cases to existing iPhone 4 owners, set up a plan to replace or repair launch iPhone 4 devices, or even announce a costly recall of the device. Apple is also expected to announce that future manufacturing runs of the smartphone will include a non-conductive coating applied to the device casing in the hopes of easing reception issues. Whether the press conference will be enough to allay AAPL shareholder fears that developed following a 4% dip in share price earlier this week remains to be seen. The press conference will be streamed live online starting at 10 a.m. PT on July 16.
Apple Set to Release 11.6-inch MacBook Air: Get ready to see a whole host of new AAPL products ready for the back to school season. DigiTimes analyst Mingchi Kuo says that Apple will release a brand new, smaller version of their MacBook Air laptop computer in August or September. The new MacBook Air will sport an 11.6-inch screen and the low voltage Intel Core processor. Kuo points to discussions with component makers as evidence of the new laptop’s impending release. The new MacBook Air will be joined by the rumored new iPod Touch, which is said to be launching in the same window. The new iPod Touch will feature a 3-megapixel camera and other features to bring the media player more in line with the iPhone 4.
Apple Releases iOS Updates for iPhone 4 and iPad: Following up on their promise for a patch, AAPL has released an updated version of the iPhone 4′s operating system. iOS 4.0.1 features just one major fix, namely a corrected formula on how many signal strength bars display on the iPhone 4′s screen. Apple announced in a message on their homepage that said formula was at least partially responsible for the iPhone 4′s reception issues. The new formula in iOS 4.0.1 is based on the one used by AT&T (T) in their other phones. Apple has also released an update to the iPad’s operating system. iOS 3.2.1 is a bit more robust than the iPhone’s update, including improved Wi-Fi connectivity, a fix for an issue that caused video playback to freeze, and improved video-out when using a VGA adapter among others. Apple has been promising to address the iPad’s Wi-Fi connectivity problems since just after the device’s launch, a possible indicator that it may be some time yet before we see a permanent solution to the iPhone 4′s reception problems.
Top 5 Stocks to Own Now – These must-have companies are just hitting their stride and are poised to outperform the market in the short-term. Investing pro Louis Navellier reveals his top five picks to own now in this free stock guide — download your FREE copy here.
This "Forgotten" Tech Stock Could Have 30% Upside
It's safe to say that the Haloid Photographic Co., founded in Rochester, N.Y, in 1906, is a long forgotten American technology name. Originally, the company manufactured photographic paper and equipment. We've all seen where that business has gone in the new digital age. Luckily, Haloid changed its name to Haloid Xerox in 1958 (dropping the "Haloid" by 1961) and developed a little product called the Xerox 914, the first plain paper photocopier.
There's no arguing the rock-star status of Xerox's (NYSE: XRX) brand. In fact, the word "Xerox" has become the generic reference to photocopying, regardless of what brand of copier you're using. The legendary 914 was even a guest star on AMC's uber-cool show "Mad Men," when the ad agency that serves as the setting for the series purchases the copier, and a hapless junior copywriter shares office space with the technological behemoth. The 914 is even an artifact in the Smithsonian.
But as you read this article on your smartphone or on your computer, you may wonder whether the company is still viable and relevant today. Is the stock, which trades below book value, even worth a look?
Based on its current valuation and the steps the company has taken to adapt, it's worth a serious look.
The times they are a changing'… and Xerox changes with them...
Ironically, Bob Dylan penned the referenced anthem around the time when Xerox's revenue was knocking on half a billion dollars, which was serious bank for 1963. And while it could've been easy for the firm to do very little and go the way of peers such as Polaroid and, presently, Eastman Kodak (NYSE: EK), it hasn't. [My colleague David Sterman thinks Eastman Kodak is headed for big trouble. Read his take here.] Remember, Xerox developed what became the famous Apple (Nasdaq: AAPL) operating system and, although the company viewed it originally as a failure (it sold it to Steve Jobs like you'd sell a broken lawn mower to a hoarder), it's still testament to the company's spirit of innovation.
Xerox still manufactures copiers and printing systems. But, like fellow tech giant IBM, it realized long ago the REAL money was in services, which now represents half of the company's total revenue, mix bringing in more than $10 billion last year alone. Total revenue for the company clocked in at $21.63 billion for 2010, a 42.5% jump from 2009's $15.17 billion. This year, estimates call for $22.62 billion in revenue, not quite as dramatic a jump as the prior year, but going in the right direction, considering all the recession-predicting going on from the television punditry brigade.
While the revenue number is a bit underwhelming, earnings per share (EPS) growth is much more impressive. Third-quarter 2011 EPS came in at $0.26, which was an 18% bump from 2010's third-quarter report of $0.22 a share. Xerox's EPS forecast for the year is $1.10, which would be a stellar 155% jump from 2010's $0.43 per share.
These are great numbers, but the stock's valuation is even more compelling. Shares trade at 0.86 times book value and less than 0.5 times sales. So with the tailwinds of strong earnings growth and a strong brand name, why so cheap? There are a couple of reasons, some real, some not.
Last year, Xerox purchased Affiliated Computer Services for cash, stock and the assumption of debt. While this was a great acquisition for the company's service business (prior to that, Xerox was capable of addressing a $130 billion market. Now, this number sits at nearly a half a trillion), mergers rarely realize their implied synergy instantly. There are still some integration challenges, as is the case with any transaction. Secondly, the company is still having some problems adapting to the supply-chain disruption created by this year's massive Japanese earthquake. Lastly, and the most irrational reason buyers have avoided the stock, is fear of the effect a sluggish economy or even a double-dip recession could have on the company.
But, as always, the herd's medieval fear has created opportunity for smart investors.
When times are tough and companies are cutting everything they can, what's the first thing they do after firing the lower level of middle management? If you blurted out "outsource," you as the late, great Ed McMahon would say to Johnny Carson, "are correct sir!"
As I mentioned earlier, half of Xerox's business mix comes from services ranging from call-center functions to document and billing management. Best of all, the company's customer renewal rate in its service segment is 90%. That's an extremely predictable revenue stream. So, again, let the herd's stupidity work for you. This is a great business that's been priced very inefficiently.
Risks to Consider: While Xerox's revenue and earnings trends are encouraging, the company has a fair amount of debt, even prior to the ACS acquisition. This is primarily due to the company providing equipment financing to its customers. This is also an inherent risk. A slower economy means a challengin business environment, which will translate into a receivables portfolio that can become increasingly soured. Also, the macro picture for the business is worrisome as the world continues to shift toward digital documents, rather than hardcopies. Realizing this, the company is effectively evolving the business to the service segment organically and through acquisition.
> Last week, I was in a meeting with a couple of portfolio managers who referenced value investing as buying "cigar butt stocks," basically meaning stocks that have been thrown away and will eventually burn out completely, but have one or two puffs left in them. There's no denying Kodak was once a cigar butt. Xerox is a long way away from being thrown out on the sidewalk.
EyeIO: First Netflix, Then a World of Online Video to Compress
As popular as Netflix (NASDAQ:NFLX), Hulu, iTunes, and other video streaming services are, there’s a technical problem they all face. Delivering video over the Internet is a balancing act between quality and bandwidth use. Most consumers have download caps on their home Internet service and going over the cap costs them more money.
This has proven to be a real thorn in the side of Netflix and its $7.99 all-you-can-view streaming video service �which isn’t really unlimited if customers get charged extra for excessive bandwidth use by their ISP (Internet service Provider). StreamingMedia.com estimates that a standard-definition, two-hour Netflix movie would require streaming roughly 1.8GB of data, with a 720p high-definition version clocking in at 3.2GB.
How much bandwidth is enough?In the U.S., ISPs such as Comcast (NASDAQ:CMCSA) and AT&T (NYSE:T) offer 150GB and 250GB monthly download plans, which sounds like plenty. But consider�a�Nielsen study�that shows the average American watches 28 hours of TV per week, with the typical house having two or more TVs, and it becomes apparent that Netflix can quickly eat away at that cap. Add Web browsing on computers and tablets, online gaming, music downloads, e-mail, checking Facebook, and the multitude of other data downloads happening in most homes, and even 250GB download caps can become limiting.
In Canada, which is currently the second biggest market for Netflix, many homes have caps significantly lower, with midrange plans in the 20GB to 30GB area �that’s only a week’s worth of standard definition Netflix TV, assuming the Web isn’t used for anything else that month.
Customers have been complaining about bumping up against download caps. This led Netflix to introduce a lower-quality streaming option (which reduces the data requirement but offers a decidedly lower grade experience) while publicly fighting against ISPs and their download caps.
Based in Palo Alto, Calif., startup EyeIO launched at the end of December 2010. The privately held company boasts an impressive founder’s list: Rodolfo Vargas, a former Senior Program Manager of video at Microsoft (NASDAQ:MSFT); Robert C. Hagarty, the former CEO and Chairman of Polycom (NASDAQ:PLCM); and Charles Steinberg, a former Sony (NYSE:SNE) senior executive and recipient of three HDTV technology-related Emmy awards. EyeIO�s mission is to develop superior algorithms for compressing video content. Its first customer is Netflix.
No new video standard requiredUsing EyeIO technology, Netflix expects to gain the capability to stream video at lower bandwidth, without sacrificing quality and without requiring plug-ins or hardware upgrades. A key selling point of EyeIO is that it is fully standard-compliant and is not a proprietary video codec, meaning it’s fully backward-compatible with existing hardware and software. No one in the industry wants to try to sell consumers on a new video standard �no matter how superior it might prove to be � so playing nice with what’s already out there is critical for widespread adoption.
EyeIO claims that its encoding produces superior video with a 20% reduction in file size, and video that matches the quality of typical video streams at a 50% reduction. EyeIO also claims its videos are able to start playing after 2 to 3 seconds, compared to the 20 to 30 second lag that’s more the norm for high-quality streaming content.
Needless to say, this capability is extremely valuable to a company like Netflix that has no control over ISP bandwidth limitations.
If its compression algorithm is a success for Netflix, EyeIO will find its solution in high demand. Television networks are increasingly offering streaming clips and shows online, sporting events�including Sunday�s Super Bowl�are often streamed, as are trade-show events. �The International Consumer Electronics Show�streams keynote speeches, popular companies like Apple (NASDAQ:AAPL) stream key product announcements, and of course there’s Google’s (NASDAQ:GOOG) YouTube, which serves up 3 billion streaming videos every day.
Cutting bandwidth not only makes it more likely that customers will watch a streaming video, it cuts costs for the provider as well. Mobile is the next frontier, and with much stricter bandwidth caps on smartphones and tablets, even while consumers demand video on the go, look for EyeIO to have potential customers lined up out the door.
Bruce Berkowitz: The Invisible Giant
Bruce Berkowitz has not exactly been a household name (he apparently is not even Wikipedia-worthy). With his boyish looks, nasally voice, and slicked-back hair, one might mistake Berkowitz for a graduate student. However, his results are more than academic, which explains why this invisible giant was recently named the equity fund manager of the decade by Morningstar. It’s difficult to argue with long-term results, especially in the roller coaster market like we’ve experienced over the last ten years. The Fairholme Fund (FAIRX) fund earned a 13% annualized return over the ten-year period ending in 2009, beating the S&P 500 index by an impressive 14%.
Click here to view Bloomberg invterview with Bruce Berkowitz
How He Did It
Berkowitz states the stellar performance was achieved by
Ignoring the crowd and going towards stressed areas that many people are running from…We make our judgments based on the cash that securities generate.
Fairholme is effectively a “go anywhere” fund that adheres tightly to the value-based philosophy. Berkowitz’s portfolio is centered on equity securities, but his team has also shown willingness to go up and down the capital structure, if they find value elsewhere.
The Fund and its History
Berkowitz started the fund in 1999 as an extension of his separate account business, which was created in his previous life at Smith Barney and Lehman Brothers. The Fairholme fund tends to concentrate around 15 to 25 securities on average, with some holdings accounting for more than 10% of the portfolio. An example of Fairholme's concentration is evidenced by its favorably timed trade in the energy sector, which resulted in a 35% weighting in the fund. Fortunately Berkowitz redeployed that winning position – before energy prices cratered in 2008 – into unloved areas like healthcare and defense stocks.
Berkowitz models his investment style after Warren Buffett, focused on good businesses with prolific cash flows. Like many value investors, Berkowitz fishes for contrarian-based ideas residing in pockets of the market that are out of favor. He also likes to have a significant weighting in “special situations,” which are limited to about 25% of the portfolio. In order to take advantage opportunities, Berkowitz is not shy or bashful about carrying around a good chunk of cash in his pocket. He likes to keep about 15% on average to scoop up out of favor opportunities.
The Future of Fairholme
I commend Berkowitz for his admirable record, but I caution investors to not go hog wild over outperforming funds. He has crushed the market over an extremely challenging investment period, but investors need to remember that “mean reversion,” the tendency for a trend to move towards averages, applies to investing styles too. Concentrated, go-anywhere, large cap value, market timing funds that outperform for ten years at a time may underperform or outperform less dramatically over the next ten years.
Just ask Bill Miller (see also Bill Miller Revenge of the Dunce article), concentrated value manager at Legg Mason, about mean reversion. Miller beat the market for 15 consecutive years before recently ending up in the bottom 10-year decile (1-star Morningstar rated) after some bad concentrated bets and poor investment timing. Another challenge for Fairholme is size (currently around $10.5 billion in assets under management). Having managed a multi-billion fund myself (see also my book), I can attest to the complexities Berkowitz faces in managing a much larger fund now.
Regardless, Berkowitz’s performance should not be ignored given his sound philosophy and achievement over an unprecedented period. Already, just a few weeks into 2010, Fairholme is ranked #1 in its fund category by Morningstar.
This is one invisible man you should not let disappear off your radar.
DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds, but at time of publishing had no direct positions in FAIRX, LM, or MORN. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision.
Why Thermo Fisher Scientific May Be About to Take Off
Here at The Motley Fool, I've long cautioned investors to keep a close eye on inventory levels. It's a part of my standard diligence when searching for the market's best stocks. I think a quarterly checkup can help you spot potential problems. For many companies, products that sit on the shelves too long can become big trouble. Stale inventory may be sold for lower prices, hurting profitability. In extreme cases, it may be written off completely and sent to the shredder.
Basic guidelines
In this series, I examine inventory using a simple rule of thumb: Inventory increases ought to roughly parallel revenue increases. If inventory bloats more quickly than sales grow, this might be a sign that expected sales haven't materialized.
Is the current inventory situation at Thermo Fisher Scientific (NYSE: TMO ) out of line? To figure that out, start by comparing the company's figures to those from peers and competitors:
| Company | TTM Revenue Growth | TTM Inventory Growth |
|---|---|---|
| Thermo Fisher Scientific | 7.8% | 16.4% |
| Qiagen (Nasdaq: QGEN ) | 2.8% | 10.9% |
| Waters (NYSE: WAT ) | 14.1% | 18.2% |
| Agilent Technologies (NYSE: A ) | 21.5% | 25.4% |
Source: S&P Capital IQ. Data is current as of latest fully reported quarter. TTM = trailing 12 months.
How is Thermo Fisher Scientific doing by this quick checkup? At first glance, not so great. Trailing-12-month revenue increased 7.8%, and inventory increased 16.4%. Over the sequential quarterly period, the trend looks OK but not great. Revenue grew 2.6%, and inventory grew 4.1%.
Advanced inventory
I don't stop my checkup there, because the type of inventory can matter even more than the overall quantity. There's even one type of inventory bulge we sometimes like to see. You can check for it by examining the quarterly filings to evaluate the different kinds of inventory: raw materials, work-in-progress inventory, and finished goods. (Some companies report the first two types as a single category.)
A company ramping up for increased demand may increase raw materials and work-in-progress inventory at a faster rate when it expects robust future growth. As such, we might consider oversized growth in those categories to offer a clue to a brighter future, and a clue that most other investors will miss. We call it "positive inventory divergence."
On the other hand, if we see a big increase in finished goods, that often means product isn't moving as well as expected, and it's time to hunker down with the filings and conference calls to find out why.
What's going on with the inventory at Thermo Fisher Scientific? I chart the details below for both quarterly and 12-month periods.
Source: S&P Capital IQ. Data is current as of latest fully reported quarter. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.
Source: S&P Capital IQ. Data is current as of latest fully reported quarter. Dollar amounts in millions. FQ = fiscal quarter.
Let's dig into the inventory specifics. On a trailing-12-month basis, raw materials inventory was the fastest-growing segment, up 23.3%. On a sequential-quarter basis, raw materials inventory was also the fastest-growing segment, up 13.2%. Although Thermo Fisher Scientific shows inventory growth that outpaces revenue growth, the company may also display positive inventory divergence, suggesting that management sees increased demand on the horizon.
Foolish bottom line
When you're doing your research, remember that aggregate numbers such as inventory balances often mask situations that are more complex than they appear. Even the detailed numbers don't give us the final word. When in doubt, listen to the conference call, or contact investor relations. What at first looks like a problem may actually signal a stock that will provide the market's best returns. And what might look hunky-dory at first glance could actually be warning you to cut your losses before the rest of the Street wises up.
I run these quick inventory checks every quarter. To stay on top of the inventory story at your favorite companies, just use the handy links below to add companies to your free watchlist, and we'll deliver our latest coverage right to your inbox.
- Add Thermo Fisher Scientific to My Watchlist.
- Add Qiagen to My Watchlist.
- Add Waters to My Watchlist.
- Add Agilent Technologies to My Watchlist.
Stocks to watch Thursday: Groupon, Pepsi
CHICAGO (MarketWatch) � Among the stocks that could see active trade in Thursday�s session are Groupon Inc., Dunkin� Brands Group Inc., Lorillard Inc. and PepsiCo Inc.
Late Wednesday, shares of Groupon GRPN �slumped 15% after the company posted a quarterly loss of 2 cents a share as opposed to an expected profit of 3 cents a share. It was not only Groupon�s first earnings report as a public company, but was also supposed to be its first profitable quarter in two years.
Diamond Foods Inc. DMND �plunged more than 40% after the company announced that the audit committee of its board of directors concluded that the company�s financial reports for fiscal 2010 and 2011 need to be restated as about $80 million worth of payments made to walnut growers were not properly accounted for.
Click to Play Should you invest 100% in stocks?Despite the mantra of diversification, some are arguing for full investment in stocks, as Treasury rates will likely remain low. (AP Photo/Richard Drew)
The same committee also found that there are �material weaknesses� in internal accounting controls. In addition, the board is replacing both the chief executive officer and chief financial officer.
And News Corp. NWS �slipped about 1% after reporting that its fiscal second-quarter profit rose 65% on higher earnings from cable TV networks and film studios.
The company also said that while it still expects fiscal 2012 operating-income growth to be in the low- to mid-teens percentage rate, that excludes legal fees and other costs tied to a phone-hacking scandal that led to the closure of its News Of the World tabloid in the U.K. last summer.
News Corp. is the owner of MarketWatch, the publisher of this report.
Dunkin� DNKN �is slated to release its fourth-quarter financial report before the opening bell. The chain is expected to earn 28 cents a share on revenue of $160.6 million, according to the average estimate of analysts polled by FactSet Research.
Lorillard LO �is also up in the morning and should earn $1.94 a share with revenue of $1.08 billion, according to forecasts.
PepsiCo PEP �will post a profit of $1.13 a share on sales of $19.89 billion, according to estimates.
Other companies scheduled for earnings reports included Philip Morris International Inc. PM �, Sirius XM Radio Inc. SIRI �and Thomson Reuters Corp. TRI �.
Visa Inc. V �gained about 2% in after-hours action Wednesday after it posted a better-than-expected increase in quarterly profit and said it would buy back $500 million worth of its stock.
What Sets Denbury Resources Apart
The world is starting to take notice of Denbury Resources (DNR) a Canadian corp. organized under the Canada Business Corp Act engaged in the acquisition, development, operation and exploration of oil and gas properties primarily in the Gulf Coast region of the U.S. through its wholly-owned subsidiary, Denbury Management, Inc. Denbury's production is primarily from developed fields close to major pipelines or refineries and established infrastructure. As a result, Denbury has not experienced any difficulty in finding a market for all of its product as it becomes available or in transporting its product to these markets.
Beside its price momentum, the factor that sets this company apart from most of the other oil exploration and development companies is its use of enhanced oil recovery where carbon dioxide is pumped into the oil field in an attempt to get every last drop of oil without many of the environmental concerns of some other recovery systems.
click to enlarge
Technical Factors:
- 96% Barchart technical buy signal
- Trend Spotter (tm) buy signal
- 12 new highs and up 18.79% in the last month
- Relative Strength Index is 72.36% and rising
- Price around 24.34 with a 50 day moving average of 20.53
Fundamental Factors:
- Wall Street brokerage analysts have issued 13 buy and 7 hold recommendations for this stock
- Revenue is projected to increase by 2.40% this year and 12.50% next year
- Earnings are estimated to increase by 56.50% this year, 14.40% next year and 14.33% annually for the next 5 years
Investor Sentiment:
- CAPS members on Motley Fool vote 859 to 20 that the stock will beat the market
- All Stars agree by a vote of 340 to 2
- Fool notes that the last 9 articles about the stock have all been positive
- And a big bonus - Value Line has began coverage of this stock which will expose it to additional investors
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Wednesday, August 29, 2012
5 Stocks Investors Are Currently Adding to Their Portfolios
By Max Magee
When researching stocks, it can be pretty common to wonder what your fellow investors are up to. It's not always a great idea to follow the crowd when investing in equities, but peeking into the activity of other investors may reveal fresh names for consideration, and new story ines that may not have been on the radar.
The stocks we'll consider today, for example, include recent IPOs, a private equity firm, a thinly traded chemicals stock, and a household brand name that's been on a tear.
To compile our list, we'll look at the aggregated recent activity of our member watchlists and portfolios. Our "most added" metric measures how quickly stocks are being added to member portfolios in relation to the expected rate based on historical trends. A value greater than one indicates a greater than normal number of adds over the last seven days, and a value less than one indicates a less than normal number of adds.
We'll limit our search to stocks with a market cap above $500 million to weed out penny stocks and micro caps. The full list is available here (please note that this list updates regularly, so new names may replace those discussed below).
Arcos Dorados Holdings (NYSE: ARCO) and CVR Partners (NYSE: UAN) are recent IPOs in two very different industries that have jumped out from the recent bumper crop of IPOs to draw the most investor interest. In many ways, these firms are in "boring" segments. Arcos, operating primarily in Latin America, is the world's largest McDonald's (NYSE: MCD) franchisee. Arcos, based in Argentina, is a member of the Argentina Stocks and ADRs, a group that has lagged badly over the last month. (only the South Africa Stocks and ADRs Index has fared worse across 22 international Indexes.) Arcos has been added to tickerspy portfolios at 54.4x the expected rate over the last seven days.
Meanwhile, CVR is a fertilizer MLP spun off from CVR Energy (NYSE: CVI) that is boasting an expected yield of 14.8%. This compares very favorably with the MLPs Index, where the current average yield is 6.1%. CVR has been added to tickerspy portfolios at 42.3x the expected rate over the last seven days.
KKR & Co (NYSE: KKR) is a well-known name in the private equity world and the stock has been strong of late, up about 25% so far in 2011, a performance that no doubt helps account for the investor interest. But what really had investors adding it to watchlists last week was likely a mention by CNBC guru Jim Cramer, who in response to a viewer question about American Capital (NASDAQ: ACAS) said "Too risky for me. I don't know what they own. I'm going to send you to Kohlberg Kravis Roberts."
The firm also reported earnings last week that beat analyst estimates by a wide margin. Clearly, private equity is seeing a more favorable environment in which to generate big returns, and so the sector may be worth watching. KKR has been added to tickerspy portfolios at 29.1x the expected rate over the last seven days.
Sparsely followed NL Industries (NYSE: NL), which makes pigments and components for locks, furniture and gauges is the mystery on this list. The stock spiked 12% on no news on May 2 and was able to hold the gains after reporting earnings on May 4. The stock has been on the move, up 61% so far this year. According to its website, NL owns "a significant interest" in Kronos Worldwide (NYSE: KRO), another stock on the move, and that may account for NL's strength. NL has been added to tickerspy portfolios at 22x the expected rate over the last seven days.
Finally, a better known name attracting a lot of investor interest is weight loss products firm Weight Watchers Intl (NYSE: WTW), which is up an incredible 144% this year. Blowout earnings in February sent the stock sharply higher. The stock dipped on a new earnings report last week, but rebounded sharply after Wall Street digested the numbers. On Monday, Wedbush raised estimates on the name, citing the successful launch of the new Weight Watchers PointsPlus program.
Weight Watchers' strength has helped push the Fitness and Dieting Stocks Index higher, and the Index was charging ahead again yesterday following a strong earnings report from Medifast (NYSE: MED). Weight Watchers has been added to tickerspy portfolios at 20x the expected rate over the last seven days.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Will The Oil Boom End With A Bang Or A Whimper?
Oil is being priced to disaster right now. Yet the economy keeps moving forward. What might happen if the price were to fall?
That depends on how it falls.
If it falls slowly, with a whimper, then adjustments will be easy to make. Economic growth will accelerate and that could slow the fall. It could really be "all good" in that it would be unlikely to fall below production costs, on either fossil fuel or alternative energy, and a slow fall would moderate demand increases.
A slow fall would provide a boost to both the U.S. economy and the developing world, especially big energy importers like India and China. It would be of less benefit to countries like Brazil, which is increasing its own production, but unlikely to hurt too much.
The biggest loser would be Canada, whose tar sands are expensive to turn into oil, and whose ancillary costs (pollution) are still not being factored into the price. Major oil exporters, in both the Gulf and the Gulf of Mexico, would also suffer somewhat.
But what if the price fell suddenly? What if the oil boom ended with a bang? Given the nature of our oil auction market this is the more likely scenario.
The fall of the Iran's present government, an outbreak of peace, or even rapid introduction of new supplies from Libya or Kenya could quickly cut prices on the futures markets by as much as 25% - markets often overshoot news.
A sudden wash of $75/barrel oil might sound like good news, but it would raise the risk of instability in Gulf oil states that are dependent on high prices to maintain social peace, and could knock the underpinnings on U.S. drillers and exploration companies.
We're already getting a taste of what that might look like in the U.S. natural gas sector, where prices have fallen 60% since 2009. Drilling has slowed, and drillers like Chesapeake (CHK) are taking it on the chin. Those drillers could get another hit from an oil price collapse, as could majors that have been driving the drilling boom, including ExxonMobil (XOM).
But that's not all. Lower prices will create pressure to shut-in high-priced plays like the Canadian tar sands, and put enormous pressure on alternative energy companies - solar, wind, geothermal, algae and ethanol.
An un-managed fall in the price of oil could actually prove bearish for the economy as a whole, setting off a round of deflation, reducing the premium American manufacturers now have for efficiency, and putting China's economy back into hyper-drive at our expense.
While most analysts are looking at a bullish case for oil, of prices remaining stable or even increasing dramatically, I'm reminded of a talk I heard over 30 years ago, when the Houston oil boom was at its height and I was writing for the Houston Business Journal. An economist measured the impact of stable prices, higher prices and falling prices on the local economy, and found in all three cases a recession could be ahead.
That economist was ignored, and the result - in Houston at least - was a depression after an oil price crash that was actually worse than the one we have just gone through.
Managing falls in oil prices as well as increases will be key to sustaining the recovery.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
The Sizzle Of Chipotle
Denver based fast-casual food restaurant Chipotle (CMG) has seen it shares double over the past year. This new social hotspot now has a market value of just under $10 billion, and shares are only $30 off its 52-week high of $337. Despite the huge run up in the past year, this stock remains hot! And it could be the best pure growth play in its industry.
Forbes has an excellent report out on the company, but the story is even better than they tell it. According to Forbes, Chipotle has 1,150 restaurants in 38 U.S. That means 12 states don't have Chipotle, and 14 states as well as Washington, D.C., have just 8 locations or less. About 2/3 of their locations are represented by just 9 states. And according to Forbes, another 135 or so restaurants will open this year, including their second European one. A nice target in the U.S. might be Connecticut, a state that's got some good money but only 3 Chipotle locations. In contrast, Mcdonald's (MCD) has about 30 times the number of locations as Chipotle. Imagine if Chipotle was as visible.
I'm not the only one that likes this stock. According to Thomson, of the 25 analysts covering the stock, 8 have buys, 14 have holds, and 3 have sells. The average price target is $322, but the median one is $332, only implying about 5-8% growth from here, but let's see what happens after their next quarterly earnings report. I have a feeling that a couple of those targets might be bumped up to the $400 level.
Now, the valuation may seem lofty with its current P/E of 50 and forward P/E of 35. But remember, you are paying for the 22% revenue growth this year and 18% next year, with EPS growth in a similar range this year and expected to grow more than revenues next year. That is at least double the revenue growth of the more established fast-food locations such as McDonald's, Wendy's (WEN), and Yum Brands (YUM). Now, we know that Chipotle isn't directly competing with those per se, but even Qdoba is only growing revenues in the mid single digits this year, as stated by their parent Jack in the Box. Chipotle is expecting high single to low double digit comps this year. And if you think the economy is going to start growing again, people will definitely pay $10 for a Chipotle meal over a $6 extra value meal.
Chipotle's financials have been improving as well, which is always the sign of a well run company. You can access their statements here if you want do calculate your own numbers. It is pleasing to see the current ratio increase in the past year from 3.37 to 3.76, and the quick ratio from 3.09 to 3.33. Working capital also increased by $85 million to $324 million. Strangely, the debt ratio stayed constant at 25.68% as the company's assets and liabilities grew by the same percentage. Don't see that very often. The company also had $125 million in positive cash flow over the first half of 2011, compared to a negative $17.5 million over the same period last year. Cash is king, especially if you want to repurchase your own stock. The only negative was that margins came down, as food prices increased from a year ago. However, this was mostly offset by leverage from comparable restaurant sales growth.
Chipotle is firing on all cylinders right now, and there's more growth ahead for those who are willing to take the risk. In an industry where revenue growth is in the low to mid single digits, Chipotle is growing 2-3 times as fast. That spread will probably increase even more as Chipotle opens even more locations. Some say the valuation is too high, but I think it's fair to pay for growth. This is a company that is certainly growing.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Dear Occupy Wall Street: Will You Stand with Me?
Let me start by saying that I applaud your initiative. Grassroots protests are the essence of democracy. And as we've seen with the Tea Party movement and the Arab Spring, nonviolent protests are a powerful way to effect meaningful change.
Yet even though I'm 100% behind you in spirit, I can't fully support your cause.
Don't get me wrong, I want to join you. But I can't - not yet, anyway.
And the reason why I can't support your ultimate goals is a simple one: I don't know what they are.
So how about this? I'm going to tell you what I stand for. I'm going to tell you what my goals are. And if you agree, then we can stand together. And i f you agree with me, I won't wait another minute before joining you whenever and wherever I'm needed.
So here it goes.
The reason I'm already leaning towards your side is that the fountainhead of your disgust seems to be "Wall Street."
Now, I don't know what Wall Street means to you. But to me, it means all the crony capitalists and market manipulators whose calculators and spreadsheets say the present value of their self-serving greed is worth discounting all of America's future.
That's the Wall Street that I'm committed to fighting - the Wall Street that's littered with greed and corruption.
But to me, the "Wall Street" we're fighting against is not synonymous with capitalists. The enemy we share doesn't include the entrepreneurs and self-starters that have built this country up brick by brick.
So if you think socialism is better than capitalism, you can count me out. If you think that redistributing earned income from hard working Americans to support lazy, self-indulgent, able-bodied crybabies is fair, count me out. If you think that making a lot of money, fairly and honestly, is un-American, count me out. And, if you're thinking about violence or destroying other people's property, count me out.
But if you're mad that Wall Street money has bought our Congress; if you're mad that there's an oligarchy of banker puppeteers pulling the strings of the U.S. Federal Reserve; if you're mad that Wall Street is hell-bent on toying with the stock market and turning the screws on fixed-income investors, parents, and retirees to expand their profit margins; and, if you are mad that "too-big-to-fail" banks can wreck the economy and get bailed out, only to become bigger bullies while tens of millions of Americans lose their homes, jobs, and retirement savings, then I am solidly with you.
And, if you're with me, we agree that we need to tear down Wall Street to rebuild Main Street!
That's where we stand, hopefully united.
Now let me offer up a list - a manifesto, if you will - that you may or may not choose to adopt. But remember, I'm not trying to hijack your movement. I just want to offer some vision and clarity.
So these are the goals I'd like for us all, as fed-up Americans, to undertake:
There's one last thing. I'm certain that with thousands of supporters you'll find a broad spectrum of ideas and beliefs. That we may be united in belief does not necessarily mean we are all alike .
Take me, for example. In some ways, I am a "Wall Street" guy, and in other ways I am one of the 99% you claim to represent. I want an opportunity to make a good living, honestly and fairly. But, like all of you, like all of America, I am sick and tired of the powerful, moneyed oligarchy that runs America profiteering off the backs of hard working Americans.
That's why we need strong, transparent and fair capital markets and honest, smart leaders. The two aren't incompatible.
So what I'm saying is that I'm ready to join your revolution, if you're ready to accept a Wall Street insider who's determined to restore the system's integrity - not destroy it.
And that's why you're going to hear more from me every week, as I call Wall Street's biggest players onto the carpet. And I can promise you this: Some of the indictments I make are going to shock you.
Sincerely,
Shah Gilani
P.S. - Sign up now for Shah's Free Report "Blast Profits In the Eye of the Storm: 5 Ways To Trade the Coming EU Crisis - And Make A Killing" and join him on his new website Wallstreet Insights and Indictments
Tuesday, August 28, 2012
Jobless Claims Bounce Back Up
The Labor Department's weekly read on initial jobless claims rose by 24,000 to 399,000. The latest report was a disappointment given that claims had been coming in more comfortably below the 400,000 mark in recent weeks. According to a poll by Thomson Reuters, analysts were looking for 375,000. The prior week's figure was upwardly revised to 375,000 from 372,000.
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Hope was building that the recovery in the U.S. jobs market might pick up pace and that claims would continue to decline."We are pretty confident that the underlying trend in claims is now declining again, as fears of a consumer meltdown have faded since the fall, but anything can happen in any given week," wrote Ian Sheperdson, chief U.S. economist at High Frequency Economics, before Thursday's report. "By the end of the first quarter, though, we expect to see the trend established below 350,000."The recent read in claims opens up the question of whether improvements seen recently are due to seasonal factors, such as temporary improvement in the jobs market around the holiday season.However, Paul Dales, U.S. economist with Capital Economics said that one shouldn't read too much into the rebound in claims. "There are always problems in seasonally adjusting the weekly data around the turn of the year," he said. "As it stands at the moment, the trend in claims remains downwards.""We'll dismiss claims as part of the seasonal volatility, but do ponder if we're seeing layoffs post-holiday hiring," wrote David Ader, strategist with CRT Capital, in response to the government's report. >To follow the writer on Twitter, go to: @chao_deng >To submit a news tip, send an email to: tips@thestreet.com.
>To order reprints of this article, click here: ReprintsTips For Dressing A Bay Or Unusual Shaped Window And Getting A Great Look For Your Home
One of the best things about a house is when it has odd shaped windows. These windows can make a house unique and provide an interesting environment of the people that live their and their guests. The only downside to having odd shaped windows is that you sometime have a difficult time with dressing them in a way that will enhance their unique style and at the same time complement the look of your rooms. This can be a point of frustration for those who are having to deal with the problem. Here are a few Tips for dressing a bay or unusual shaped window that should be of help you in getting a window treatment that is perfect for your odd shaped windows.
Shutters are Classic
Shutters are a great option when trying to decide how to handle and odd shapes window. They are especially good for those who are dealing with bay windows. One of the best choices for this type of situation is plantation shutters. These are the types of shutters Toronto that are split top and bottom and usually have louvered slats that can be adjusted to control the flow of light into the room. Other types of shutters are “grill” shutters, paper panel shutters, solid panel shutters and screened shutters.
Blinds are Modern and Sleek
If you have a window that is very small or one that is very large or very tall and thin, then the best choice may be to use blinds. Blinds are often considered to be very conservative, but at the same time they are also very modern and sleek and go well in hip and contemporary room settings. The best thing about blinds is that they can be custom made to fit any size windows and in some cases you can even get them custom made to fit odd shaped windows such as round, oval or octagon shaped.
Blinds are at the most effective when they are matched well to the overall look of the room. They are also best for use in rooms that are very simple or are conservative in their decor. There are many type of blinds that are available including metal, fabric covered, wooden and plastic. There are also blinds systems that are motorized and allow you to open and close or raise and lower the blinds with a simple touch of a button via a remote control.
Draperies are a Great Choice No Matter What
The thing about draperies is that not matter what the size, shape or style of window you are dealing with you can easily dress it well with the use of draperies. Draperies are the universal solution to odd shaped window problems due to the fact that fabric can be manipulated to do anything that you want it to and if you cant get the right look with manipulating then you can always resort to cutting and sewing to get the effect that you want.
The best styles of draperies to use for odd shaped windows are swags and droops. Thee are some of the most interesting and unique drapery styles and add a new dimension to the already intriguing look presented by the window. The use of a proper drapery technique will make and odd shaped window go from out-of-place to centerpiece. Don’t be afraid to get creative with your odd shaped windows and draperies.
Shades are Traditional But Can Have an Upbeat and Modern Twist
In the old days blinds were limited to simple pull down and roll up styles that were basically used for filtering light during the day and preventing peeping toms at night. Today this is not the case, blinds have found a renascence in the fact that they are now available with a wide range of exciting features and styles. New fabrics, new designs and new ideas have brought a fresh life to the classic shade and have given i a new place in our homes.
Hopefully with the advice that you have gained here regarding Tips for dressing a bay or unusual shaped window, then you are better prepared to address the issues regarding the proper treatment of these windows in your home. Many people are afraid of these odd shaped windows due to the fact that they do not know how to properly address their unique needs. Now that you have the knowledge that you need you can approach your odd shaped windows and create beautiful and effective treatments for them. You will end up with great looking windows in your home not in spite of the odd shaped window but because of it.
Summer has arrived in Toronto! It’s the perfect time to inject some life into your living room. Take time to furnish your windows, and make them a centrepiece. Shop for drapes in Toronto, or consult a Toronto shutters specialist about adding some french culture to your windows.
TMF World Energy Map: Australia
Australia is a hotbed for natural resources, particularly fossil fuels used to generate energy. The country exports nearly two-thirds of its energy production, ranking first in the world in coal exports and fourth for liquefied natural gas exports.
Renewables
Renewables exist in Australia, but not on a meaningful scale. The country increased its solar capacity more than 135% in 2011 to 1,345 megawatts, just shy of 2% of the global total. The country's wind capacity at the end of 2011 was much higher, at 2,476 MW, but that only accounts for 1% of the global total. When it's all said and done, fossils fuels account for 95% of Australia's energy consumption and 92% of electricity generation.
Australia has a goal to produce 20% of its electricity from renewable resources by 2020. Ambitious yes, but Australia's incentive to reach the goal is higher than in other places. The country generates more pollution per person than any other developed nation -- including the United States.
Nuclear
As of 2010, Australia was estimated to hold just under half of the world's recoverable uranium resources. Somewhat inexplicably, the country does not have a single nuclear reactor. Two of the world's largest mining companies, BHP Billiton (NYSE: BHP ) and Rio Tinto (NYSE: RIO ) are headquartered in the country; both produce uranium.
Coal
Over the past 20 years, coal production in Australia has increased nearly 100%. The country is the world's fourth-largest producer, and the No. 1 exporter. Australia produced 449 million short tons of coal in 2010, and exported about 322 MMST of that. Top destinations for Australian coal are Japan (43%), South Korea (15%), China (14%), and India (11%).
Oil
Australia is not a big player on the world oil scene. Its proved reserves are estimated at 3.32 billion barrels, and production in 2011 averaged just over 464,000 barrels a day. Though it doesn't have much oil, it does have the sort of oil that everyone wants. Australian crude is a low-sulfur light crude that is easy and cheap to refine, and thus more desirable than heavy crudes.
Natural gas
Natural gas is crucial to Australia's future. The country has proven reserves of 110 trillion cubic feet of natural gas, the 12th-largest in the world. Those are just conventional resources; Australia also has an estimated 396 TCF of shale gas reserves. Natural gas production reached 1.6 TCF in 2010 and is expected to increase four times over by 2035.
Australia is the world's fourth-largest exporter of liquefied natural gas. LNG exports brought in $10.5 billion in 2010-11, an increase of 34% over the previous year. With at least two major LNG export facilities slated to come online in the next five years, expect that number to increase.
Geopolitical risk
Australia is really as innocuous as it gets. Unlike many regions of the world, there are no nationally owned energy companies here. The government has no stake in the oil and gas industry, which limits risk for foreign companies targeting Australian resources.
Similar to the U.S., Australian states have the ability to govern energy production in their territory, to a point. �In theory, this set up could affect energy development on a case-by-case, regional basis.
Finally, Australia relies heavily on exporting energy to economies in Asia. If that market faced a significant downturn, the effect on Australia would be tremendous. Conversely, growing energy demand in that region could buoy export revenues to new levels.
Players
Chevron (NYSE: CVX )
Chevron is a dominating player in Australia's LNG business. The company is the operator of two LNG export facilities currently under construction. The Gorgon project on Barrow Island, off the northwest coast of Australia, is expected to come online in 2014. The Wheatstone facility, also off the coast of Western Australia, is expected to go into production in 2016.
Apache (NYSE: APA )
Apache has been in Australia since the early 1990s. In 2011, the company produced 38,228 barrels of oil per day, and 185,079 cubic feet of natural gas per day. The company's estimated proven reserves are 330 million barrels of oil equivalent.
Perhaps most importantly, Apache has a 13% stake in Chevron's Wheatstone LNG export facility.
BHP Billiton
BHP Billiton operates the largest individual coal production site in New South Wales. The Mount Arthur coal mine produces 20 million tons each year. The company expects its expansion plans to increase that number to 24 million tons.
The company mines uranium at its Olympic Dam mine in South Australia. The mine is the largest known uranium deposit in the world. BHP recently purchased four exploration licenses for $3 million for acreage surrounding the mine.
Rio Tinto
Severe weather in Australia affected production at each of Rio Tinto's four Queensland mines in 2011. However, high prices for coal led to $1.24 billion in earnings for its Australian coal sector, which was a 32% increase over 2010. The company expects coal production to increase in 2012 via expanded capacity at its mines. Expansion projects should also increase its output of uranium.
Royal Dutch Shell (NYSE: RDS-B )
Shell is pushing the LNG envelope with its implementation of a floating LNG facility. FLNG allows gas to be produced and processed in remote offshore locations, as the FLNG facility sits right above the field. Last spring, Shell's board gave the go-ahead on the project. Once constructed, the Prelude FLNG facility will be the largest floating structure ever built. The company has not alluded to the cost or completion date for the structure, but it can be noted that production in the prelude field is slated to begin in 2017.
Suggestions for further reading:
- How Oil Companies Plan to Spend Their Cash in 2012
- Three Ways to Play Australia's Booming Economy
- BHP Billiton Crushes Earnings
8 Ways to Safeguard Your Money With ETFs in Turbulent Markets
While the situation is Greece is approaching some semblance of a resolution, the global economy is far from out of the woods. We may continue to see bumps on the road back, but with these exchange traded funds (ETFs), you can help protect your assets.
Blue-chips. No one’s really worried about their blue-chip stocks during the recent upheaval, and any volatility is usually temporary.
- iShares DJ U.S. Consumer Goods (IYK)
- SPDR Dow Jones Industrial Average (DIA)
Look for yield where you can find it. The debt crisis in Europe will likely keep European Central Bankers from raising rates, and this will put pressure on the Fed to follow suit. The average money-market account is paying about 0.76% interest and a one-year certificate of deposit is just 1.2%. With inflation at 2.4%, you’re losing money just by saving.
Mortgage. As rates remain low, homeowners may find cheaper mortgages. The rate on a 30-year conforming loan is down to 5.07%. The yield on 10-year Treasury bonds has also fallen 3.4% from 4% a month ago.
- iShares Lehman 7-10 Year Treasury Bond Fund ETF (IEF)
Dividends. Dividend-paying stocks are providing decent yields, with many a stock dishing out yields of 3% or greater.
- iShares Dow Jones Select Dividend Index Fund (DVY)
- SPDR S&P Dividend (SDY)
Big European companies. The long-established European names have plummeted in value in the wake of the recent events. The drop in European stocks won’t continue forever and it is a good idea to keep an eye out on the situation.
- SPDR STOXX Europe 50 (FEZ)
High-yield bonds. Investors were quick to dump anything “risky,” which included high-yield/junk bond ETFs. However, the funds have made some small gains after the exodus.
- iShares iBoxx $ High Yield Corporate Bond (HYG)
- SPDR Barclays High Yield Bond (JNK)
Beware of “safety.” Long-term Treasury bonds like the 30-year Treasuries only pay 4.1%. Investors turn toward them in times of uncertainty but inflation could hurt you in the long run. Bond coupons don’t adjust to reflect rising prices.
- Direxion Daily 30-Yr Treasury Bear 3x Shares (TMV)
- iShares Lehman 20+ Year Treasury Bond Fund (TLT)
TIPS. Treasury Inflation-Protected Securities, or TIPS, don’t offer much at current levels. The “real” yield on 10-year TIPS is just 1.25% and the 30-year is 1.73%. Figures well above 2% will be a decent deal for investors.
- iShares Barclays TIPs Bond ETF (TIP)
- SPDR Barclays Capital TIPS (IPE)
- PIMCO 1-5 Year U.S. TIPS (STPZ)
Lastly, you can insulate yourself from turbulence by having a trend following strategy with a pre-determined point at which you sell when the markets decline. Our strategy is to sell when a fund drops below its 200-day moving average or 8% off the recent high.
Disclosure: No positions
Top Stocks For 3/28/2012-1
National Health Partners, Inc. (NHPR)
National Health Partners, Inc. is headquartered in Horsham, Pennsylvania. National Health Partners, Inc. Currently offer five standard CARExpress membership programs that provide benefits that range from prescription drug and vision care to comprehensive physician, hospital, vision, dental and other care.
National Health Partners, Inc. is a national healthcare savings organization that provides discount healthcare membership programs to uninsured and underinsured people through a national healthcare savings network called “CARExpress.” CARExpress is one of the largest networks of hospitals, doctors, dentists, pharmacists and other healthcare providers in the country and is comprised of over 1,000,000 medical professionals that belong to such PPOs as CareMark and Aetna. The company’s primary target customer group is the 47 million Americans who have no health insurance of any kind. The company’s secondary target customer group includes the millions of Americans who lack complete health insurance coverage.
National Health Partners, Inc. recently announced the launch of a new network marketing program by one of its strategic partners, Xpress Healthcare, LLC. Xpress Healthcare has teamed up with CARExpress in an effort to revolutionize the discount healthcare industry while at the same time bringing financial freedom to families across the nation. By the end of the second quarter of 2011, Xpress Healthcare anticipates adding over 100 new brokers both participating in and promoting National Health Partners’ CARExpress program and should enroll over 2,500 new members.
Xpress also expects its growth to accelerate in the 3rd quarter as it anticipates recruiting an additional 200 new brokers which should generate over 10,000 new CARExpress sales. According to National Health Partners, Inc.s Offering tremendous growth potential, Xpress Healthcare is well positioned to become the leading marketing arm for its CARExpress and now Strong Sales are projected for 2nd Quarter from this new strategic partnership.
The rate of increase in health care costs has held steady for the past three years, it is still nearly twice the inflation rate, and that is prompting many employers to rethink their benefit strategies. Rising costs are also shaking employers’ confidence in their ability to provide health benefits 10 years from now. Just 62% said they are very confident in their ability provide such benefits 10 years from now, down from 73% a year ago.
About two-thirds of employers, 67%, cite the poor health habits of their employees as a major challenge to their ability curbing health care cost increases, while 42% cite underuse of preventive care services, 36% attribute the problem to the high cost of catastrophic and end-of-life care and 30% blame poor employee understanding of how to use their health plans cost-effectively.
For more information about the National Health Partners, Inc. visit its website: www.nationalhealthpartners.com
Global Hunter Corp. (BOB.V)
Global Hunter exploration and development teams are on the ground rapidly advancing the La Corona de Cobre property near La Serena, Chile and the Rabbit South property in British Columbia, Canada. Either one of these projects could carry the company forward on a stand-alone basis, but together they bring the company additional stability, strength and value.
Copper is among the few metals that can be found as metallic form in nature and has high thermal and electrical conductivity and its machining and formability specifications are very good and therefore in the industry is considered as a base metal. Copper alloys, zinc, tin, aluminum, and other metals and get much higher mechanical properties than pure copper. Therefore copper alloys widely used in industry today. Copper-Aluminum and copper-zinc alloys have many applications in industry. Also copper alloys with other metals such as, silicon, Beryllium, lead, nickel have a variety of applications.
Copper minerals in nature are found in three forms that respectively as their importance are sulfides, carbonates and silicates. Metal production process divides to two overall processes; pyrometallurgy and hydrometallurgy. Except mine production, copper scrap recycling also provides an important role in copper production.
Global Hunter Corp. (BOB.V) is also pleased to announce that it has retained the services of Vicarage Capital Limited of London, England to advise it on M&A and corporate finance issues. The key objective is to secure additional financial resources to advance its Corona de Cobre project through any of the following options: negotiating a strategic alliance with a company with significant financial resources; entering into a joint venture, or negotiating a possible merger. The Company has agreed to pay Vicarage a total of $150,000 CAD over the one-year term of the contract. Vicarage may also be entitled to certain success fees subject to TSX Venture Exchange approval.
For more information please visit their website: http://www.globalhunter.ca/homeabout.html
Immersion Corporation (Nasdaq:IMMR) announced the addition of new licensees of its technology for implementation into a wide variety of markets and applications. New licensees include: GoodBetterBest Ltd.: The manufacturer of the industry-leading Giotek brand in Europe, GoodBetterBest has recently licensed Immersion’s haptic technology for use in console gaming peripherals. Giotek was recently named the UK’s top Peripheral & Accessories brand at the MCV Industry Excellence Awards.
Immersion Corporation develops, manufactures, licenses, and supports a range of hardware and software technologies and products that enhance digital devices with touch interaction.
Hawthorn Bancshares Inc. (NASDAQ:HWBK) reported consolidated financial results for the Company for the quarter ended March 31. The Company also announced a 4% stock dividend and continuation of its quarterly $0.05 per share cash dividend payable July 1, 2011 to common shareholders of record June 15, 2011.
Hawthorn Bancshares, Inc. operates as the holding company of Union State Bancshares, Inc., which provides general banking and trust products and services. It offers checking and savings accounts, Internet banking, debit cards, certificates of deposit, trust services, brokerage services, and safety deposit boxes.
Naugatuck Valley Financial Corp. (Nasdaq:NVSL) announced the receipt of conditional approval from the Office of Thrift Supervision to reorganize from the two-tier mutual holding company structure to the stock holding company structure and to commence a “second-step” stock offering of shares of common stock by the Bank’s proposed new holding company, a recently formed Maryland corporation also known as Naugatuck Valley Financial Corporation (”New Naugatuck Valley Financial Corporation”).
Naugatuck Valley Financial Corporation operates as the holding company for Naugatuck Valley Savings and Loan that provides various financial services to consumers and businesses in Connecticut.
Kellogg Grabs Pringles For $2.7B, Diamond Foods Loses Out
Procter & Gamble will sell its Pringles product line to cereal-maker Kellogg for $2.7 billion, prompting Kellogg shares to rise Wednesday. P&G was virtually unchanged.
�Kellogg shares similar values and principles to us,� P&G Chairman and CEO Bob McDonald said a news release, �and we are confident that the Pringles business will thrive under Kellogg�s leadership.�
Kellogg decided to purchase Pringles to complement its growing snacks division, which already include Keebler, Cheez-it, and Special K crackers.
The acquisition more than doubles Kellogg snacks� presence abroad, Citi analyst David Driscoll wrote in a note to investors. �Moreover, the deal provides a platform for Kellogg to further grow its snacking business globally through leveraging the scale and capabilities of the Pringles franchise, which should drive future revenue synergies for the combined businesses and enhance growth,� Driscoll wrote.
The two companies expects to finish the deal by this summer. All told, it could mean an after-tax gain between $1.4 and $1.5 billion for P&G or 47 to 50 cents per share.
This is about equal to what P&G would�ve gained from its deal with Diamond Foods. In April last year, Diamond Foods and P&G agreed to a $1.7 billion deal for Pringles, but the deal fell through after an accounting scandal hit Diamond Foods. P&G and Diamond Foods officially called off the deal Wednesday.
For Kellogg, the deal is expected to dilute its 2012 EPS between 11 and 16 cents and generate one-time costs between $160 and $180 million. Most of these costs will impact the company this year, and to a less extent, the next two years, Kellogg said.
The global snacks market has seen considerable change in the past year. Kraft spun off its snacks division, which includes Oreo, Cadbury, Milka, Tang, and Trident, from its North American grocery business last August to take advantage of emerging markets growth. It expects to have the plan completed by the end of this year. Meanwhile, PepsiCo CEO Indra Nooyi has been criticized for trying to move the company toward healthy snacks, like Quaker granola bars and baked Frito-Lays potato chips, and away from its soda lines. Some anaylsts have suggested she divest Pepsi�s snack line. To satisfy critics and turn the company around, Nooyi has embarked on an ambitious multi-year plan that includes 8,700 job cuts.
Kellogg closed at $52.84, 5.1% increase, and P&G was at $64.55, a 0.1% increase, in early morning trading. Diamond Foods was up 5.2% at $23.46.
Top Stocks For 6/14/2012-18
Crown Equity Holdings, Inc. (CRWE)
Advertising on the internet means that you aren’t just reaching people who find themselves within the county, but you are as an alternative reaching folks from all around the world. When compared with other forms of advertising, it’s simple to see why web marketing can be preferred.
Crown Equity Holdings Inc. offers internet media-driven advertising services, which covers and connects a range of marketing specialties, as well as search engine optimization for clients interested in online media awareness.
Another good thing about internet advertising is that it is comparatively inexpensive. Now, it does go without saying that not all online advertising methods are inexpensive.
Crown Equity Holdings, Inc. together with its digital network currently provides electronic media services specializing in online publishing, which brings together targeted audiences and advertisers.
CRWE’s selection of CoreLink reflects recent diversification beyond CRWE’s original charter as a provider of services and knowledge to small business owners taking their own companies public. In addition to these services, CRWE has transitioned into a multifaceted media organization that publishes clients’ news online; sells advertising adjacent with its digital network targeted at a high-income audience; designs, hosts and maintains websites; produces marketing videos from concept to final product; crafts press releases and articles for maximum SEO; develops email campaigns; and forges branding campaigns to bolster client company images.
Crown Equity Holdings, Inc. has creative resources to dramatically enhance one’s company’s corporate identity with its in-house advertising and name-branding services. This includes creating, designing, implementing logos, and other strategies which rapidly increase one’s company’s credibility and value. As many people know, brand strength is a good indicator of the strength of a company and its financial value.
Crown Equity Holdings, Inc.’s mission is to profitably disseminate a variety of information as a worldwide online media publisher in an environment that has a positive effect.
For more information about Crown Equity Holdings, Inc. visit its website
http://www.crownequityholdings.com
Cleantech Transit, Inc. (CLNO)
Biofuels can provide a number of environmental advantages over conventional fossil fuels-most notably a reduction in greenhouse gas (GHG) emissions. Since the transportation sector accounts for about a third of total U.S. emissions of carbon dioxide (an abundant GHG), cleaner transportation fuels can play an important role in addressing climate change.
Cleantech Transit, Inc. was founded to capitalize on technology advances and manufacturing opportunities in the growing clean energy public transportation sector. The Company has expanded its focus to invest directly in specific green projects.
The level of GHG (greenhouse gas) emissions associated with a particular biofuel depends on the energy used in growing and harvesting the feedstock, as well as the energy used to produce the fuel (e.g., coal, natural gas, and biomass). On a full fuel-cycle basis, corn ethanol has the potential to reduce greenhouse gas emissions by as much as 52% over petroleum-based fuels. Even better, ethanol made from cellulosic feedstocks, such as switchgrass, or agricultural residues such as corn stover, has the potential to reduce greenhouse gas emissions by as much as 86%, compared to gasoline.
Recognizing the many economic and operational advances of converting wood waste into renewable sources of energy, Cleantech has selected to invest in Phoenix Energy (www.phoenixenergy.net). This project can generate shareholder returns as well benefit the Company’s manufacturing clients worldwide.
Biofuels have the added benefit of providing a “carbon sink.” As crops grow to produce the feedstocks for making the biofuel, they absorb carbon dioxide from the atmosphere.
Cleantech Transit, Inc. original aim was to develop opportunities utilizing advances in technology and manufacturing processes in order to develop significant market share in the growing clean energy public transportation sector.
With the growth in the green sector as a whole CLNO has expanded its focus to invest directly in specific projects. Recent advances in the technology of converting wood waste into power have so greatly enhanced the economic value of their systems they have launched the biomass division as a separate company, Phoenix Energy, to focus exclusively on generating greater returns for manufacturing clients worldwide.
For more information about Cleantech Transit, Inc. http://www.cleantechtransitinc.com
Sara Lee Corp. (NYSE:SLE) its board of directors declared a regular quarterly dividend of $.115 per share on the corporation’s common stock, payable on July 8, 2011. The dividend is payable to stockholders of record at the close of business on June 1, 2011. Sara Lee Corp. has paid quarterly dividends to its stockholders continuously for more than 65 years, and this announcement represents the 261st consecutive quarterly dividend declared by the corporation.
Sara Lee Corporation engages in the manufacture and marketing of a range of branded packaged meat, bakery, and beverage products worldwide. Its packaged meat products include hot dogs and corn dogs, breakfast sausages, sandwiches and bowls, smoked and dinner sausages, premium deli and luncheon meats, bacon, beef, turkey, and cooked ham.
Walgreen Co. (NYSE:WAG) is donating $100,000 to the American Red Cross in response to the deadly storms and tornadoes that recently hit the Southeast. Assistance will help meet the immediate needs of individuals and families in affected communities. In addition, Walgreens is providing non-perishable food, medical supplies and water directly to local shelters and first responders in Alabama and Georgia. Cleaning supplies and three truckloads of water have also been donated. With nearly 300 Walgreens locations serving communities across these states, local team members have offered their support with cleanup and recovery efforts.
Walgreen Co., together with its subsidiaries, engages in the operation of a chain of drugstores in the United States. The company’s drugstores sell prescription and non-prescription drugs, and general merchandise. Its general merchandise comprises household products, convenience foods, and seasonal items, as well as personal care, beauty care, candy, and photofinishing products.
Forest Oil Corp. (NYSE:FST) announced financial and operational results for the first quarter of 2011. The Company reported the following highlights for the three months ended March 31, 2011: Net sales volumes of 425 MMcfe/d organically increased 6% from the first quarter of 2010, pro forma for 2010 divestitures, Liquids net sales volumes of 16,500 Bbls/d organically increased 9% from the first quarter of 2010, pro forma for 2010 divestitures, Adjusted net earnings of $22 million decreased 54% from the corresponding 2010 period primarily due to lower average realized prices, Adjusted EBITDA of $149 million decreased 13% from the corresponding 2010 period primarily due to lower average realized prices and Adjusted discretionary cash flow of $113 million decreased 15% from the corresponding 2010 period primarily due to lower average realized prices.
Forest Oil Corporation engages in the acquisition, exploration, development, and production of oil, natural gas, and natural liquids primarily in North America.
Goldman Cuts Chesapeake to “Neutral”
In a 50 page note to clients today, Goldman Sachs energy analyst Brian Singer upgraded shares of Ultra Petroleum (UPL) and endorsed a couple of other medium-cap oil and gas names, and downgraded Chesapeake (CHK) to “Neutral” from “Buy.
Despite the big joint venture announced today with Total SA (TOT), which is a positive for the company, Chesapeake is about fairly valued after a 71% rise this year. The company’s got to grapple with how much acreage it will sell in its natural gas portfolio, which will affect cash flow this year, writes Singer. That’ll keep investors cautious on the name, he suggests.
But smaller players such as UPL ($7.9 billion market cap) and $6.61 billion Newfield Exploration (NFX) and $7.5 billion Questar (STR) can all benefit despite constrained natural gas prices this year. That’s because all-three have access to low-cost natural gas fields, with UPL mining the Marcellus Shale and Pinedale Anticline, Newfield exploring the Granite Wash and Woodford Shale, and Questar having multiple low-cost sources, writes Singer.
UPL shares are up $2.36, or 5%, at $52.22. Newfield stock is up $1.69, or 3.5%, at $49.92. Questar is up $1.45, or 3.5%, at $43.02.