Tuesday, December 31, 2013

Disgraced ex-Tyco CEO Kozlowski gets parole

dennis kozlowski tyco

Kozlowski amassed a fortune of nearly a half-billion dollars prior to his arrest.

NEW YORK (CNNMoney) The curtain is falling on the Dennis Kozlowski saga.

The New York State Parole Board granted release Tuesday to the former Tyco (TYC) chief executive, convicted back in 2005 for stealing hundreds of millions of dollars from the manufacturing conglomerate.

Kozlowski received a sentence of 8-1/3 to 25 years in prison in one of the highest-profile corporate fraud cases of the new millennium. He spent lavishly with the stolen funds, infamously dropping $6,000 alone on a shower curtain and $2 million on a "Roman orgy" party in Sardinia featuring an ice sculpture of Michelangelo's David urinating vodka.

Kozlowski started his sentence at a medium-security prison in upstate New York, where he was reportedly dubbed "Koz" by rapper and fellow inmate Ja Rule. He has since been on work release with an e-learning company, held at Manhattan's Lincoln Correctional Facility with the opportunity to leave on some evenings.

The minimum-security site is located just north of Central Park, and not far from Kozlowski's former $31 million apartment on Fifth Avenue.

Kozlowski is tentatively set to be released on January 17.

"Mr. Kozlowski is grateful to the parole board for its decision to grant him parole," his lawyer, Alan Lewis, said Tuesday.

Kozlowski's first parole bid was denied last year, prompting him to sue challenging the decision. To top of page

5 Best Undervalued Stocks To Own For 2014

NEW YORK (TheStreet) -- It seems that every week includes companies of interest reporting quarterly results. Today I provide my buy-and-trade parameters for eight stocks in six sectors; one in the basic materials sector, one in the business services sector, one in the construction sector, two in the consumer discretionary sector and one in the consumer staples sector.

The basic materials sector is 1.1% undervalued, but has an underweight rating with 68.9% of the 402 stocks in this sector rated sell or strong sell.

The business services sector is 22.4% overvalued with an equal-weight rating.

The construction sector is 17.6% overvalued with an underweight rating with 60.9% of the 161 stocks in this sector rated sell or strong sell. The consumer discretionary sector is 23.5% overvalued with an equal-weight rating. The consumer staples sector is 16.7% overvalued with an overweight rating with 50.9% of the 265 stocks in this sector rated buy. The risk / reward for the stock market is not favorable in the fourth quarter, and today's monthly and quarterly closes will result in new monthly pivots / risky levels and new quarterly risky levels. This week's value levels lag at 14,696 Dow Industrial Average, 1641.5 S&P 500, 3695 Nasdaq, 6318 Dow transports and 1034.93 Russell 2000. The Nasdaq ended last week above my semiannual pivot at 3759 with the semiannual risky levels at 16,490 Dow Industrials, 1743.5 S&P 500, 7104 Dow transports and 1089.42 Russell 2000. The all time highs are 15,709.59 Dow Industrials set on Sept. 18, 1729.86 S&P 500 on Sept. 19, 6754.81 Dow transports on Sept. 20 and 1082.00 Russell 2000 on Wednesday. The Nasdaq set a multi-year high at 3798.76 on Sept. 20. [Read: Why Investors Shouldn't Panic if the Government Shuts Down] My annual value levels remain at 12,696 Dow Industrials, 1348.3 S&P 500, 2806 Nasdaq, 5469 Dow Transports, and 809.54 Russell 2000. [Read: How to Avoid the Tax Mandate on Obamacare] All eight stocks previewed today are overvalued with two overvalued by 25% and 60.6%. Two stocks have buy ratings with five rated hold and one rated sell. All have gains over the last 12 months with three having gains of 52.8% to 78.8%. All are trading above their 200-day simple moving averages, which reflects the risk of reversion to the mean.

5 Best Undervalued Stocks To Own For 2014: Schlumberger N.V.(SLB)

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

Advisors' Opinion:
  • [By David Smith]

    I noted in Part 1 that Schlumberger (NYSE: SLB  ) , easily the largest participant in the oilfield services space, is appropriate for subsea investing. The same can be said of seismic. The company's WesternGeco unit leaves its competition in the dust -- or water -- from the perspective of both size and technological sophistication.

  • [By Lee Jackson]

    Energy: Schlumberger Ltd. (NYSE: SLB)�crushed earnings by an astonishing 50.9% last quarter. With Mexico changing its policy on oil exploration, the oil field services leader may see continued strong earnings growth in the years ahead. The consensus price target for the stock is posted at $96. Investors are paid a 1.5% dividend.

  • [By Tyler Crowe]

    Many of the national oil companies in the Middle East do not have the experience to do EOR or production optimization on their own. This is where oil services specialists come into play. Both Core Laboratories and Schlumberger (NYSE: SLB  ) saw sizable upticks in revenue from the Middle East region. If Middle Eastern oil production trends were to continue, it would not be a stretch to see these two companies as well as other oil services grow their Middle Eastern business substantially over the next several years.

5 Best Undervalued Stocks To Own For 2014: Caterpillar Inc.(CAT)

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

Advisors' Opinion:
  • [By Jeremy Bowman]

    Elsewhere on the Dow, Caterpillar (NYSE: CAT  ) was the blue chips' biggest gainer as shares jumped 2.5%, seemingly on an interest rate cut by the Australian central bank. The rate cut could help spur capital investment in the Land Down Under, a mining-rich nation and a key market for Caterpillar.

5 Best Low Price Stocks To Invest In 2014: Tupperware Corporation(TUP)

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

Advisors' Opinion:
  • [By Monica Gerson]

    Tupperware Brands (NYSE: TUP) is expected to report its Q3 earnings at $1.03 per share on revenue of $623.34 million.

    Varian Medical Systems (NYSE: VAR) is projected to post its Q4 earnings at $1.12 per share on revenue of $779.02 million.

  • [By John Udovich]

    Everyone is familiar with�the Tupperware brand from�consumer products stock Tupperware Brands Corporation (NYSE: TUP) and you are probably familiar with the brands�of mid cap stock Jarden Corp (NYSE: JAH) along with small cap stocks Libbey Inc (NYSEMKT: LBY) and Lifetime Brands Inc (NASDAQ: LCUT); but what about the stocks themselves? Chances are, their brands or products are right under your nose at home and you probably don�� know anything about the mid cap or small cap stock behind them.

5 Best Undervalued Stocks To Own For 2014: Dollar Tree Inc.(DLTR)

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

Advisors' Opinion:
  • [By Rising Dividend Investing]

    Falling Stock Correlation: What It Says About Consumer Spending

    As we mentioned in the Take Aways from the August 26th Investment Policy Committee meeting, the correlation index has been steadily declining. In 2008-09, macroeconomic events drove nearly every stock downwards. Specific sectors and stocks moved in tandem with one another. Today, stocks and sub-industries within each sector are performing very differently – which indicates a return to a more normal stock market environment.
    The Consumer Discretionary (also known as Consumer Cyclicals) sector is an example of an industry that has been rewarded for its fundamental success over the past 12 months. As a whole, the sector grew sales 6.1% and earnings 9.2% in the second quarter - much better than the 1.4% sales and 3.3% earnings growth of the S&P 500. While the overall sector did well in the second quarter, the table below shows how differently the 5 sub-categories of Consumer Discretionary performed:

    (click to enlarge)
    As we drill down even further, sub-categories of sub-sectors differ even more dramatically. Below is a snapshot of the Retailing sub-sector and its notable components:

    (click to enlarge)
    Specific stocks within each sub-category are varying in performance as well. General Merchandise retailers were significantly differentiated in the second quarter. Target’s (TGT) adjusted EPS were up 6.1% from 2012, while Dollar General (DG) and Dollar Tree’s (DLTR) earnings were up nearly 12% and 9%, respectively.
    The differences in sales and earnings growth amongst these different industries tell a story. The economy is not improving enough that people feel like they can let go and spend money on pure pleasures, but it is improving enough that they can afford to replace their cars and fix the doors on their houses. As these items wear out and need to be replaced, we expect the pent up demand will drive increased economic activity from cons
  • [By Paul Ausick]

    Dollar General�� share price is up less than 6% in the past 12 months, but since the beginning of the year shares have risen more than 22%. And even then, Dollar General�trails Dollar Tree Inc. (NASDAQ: DLTR) in share price growth since January 1. Dollar Tree stock is up 30%.

Monday, December 30, 2013

EPA Reduces Ethanol Requirement, Archer Daniels Midland Falls

Hear that sound? That’s the sound of Archer-Daniels-Midland’s (ADM) shares running out of gas.

Associated Press

Archer’s stock has dropped 3.1% to $40.70 after reports that the EPA would cut the amount of ethanol required to be added to gasoline. The Wall Street Journal has the details:

The Environmental Protection Agency on Friday proposed for the first time to ease an annual requirement for ethanol in gasoline, acknowledging that mandated levels specified in a 2007 law are difficult, if not impossible, to meet.

The EPA is asking refiners in 2014 to blend 15.2 billion gallons of renewable fuel—most of it ethanol—into U.S. gasoline supplies. That is about 16% less than what Congress specified in a 2007 renewable fuels law. The law gives EPA the ability to lower the requirement.

Archer isn’t the only stock being hit today. Bunge (BG) has dropped 0.3% to $81.91, while Andersons (ANDE) has fallen 2.2% to $81.55.

Archer was already weak after reports that Australia would block its takeover of GrainCorp.

Sunday, December 29, 2013

RiverNorth DoubleLine

I want income investors to buy a mutual fund that has been closed to new investors—but just recently reopened, advises Doug Fabian in Successful Investing.

It is the RiverNorth DoubleLine Strategic Income Fund (RNSIX). We originally recommended this uniquely managed mutual fund in our High Monthly Income service back in December 2011.

RNSIX is a joint venture between RiverNorth Capital and DoubleLine Capital, and it allocates its assets among three principal strategies: tactical closed-end fund income strategy, core fixed income strategy, and opportunistic income strategy.

RiverNorth manages the tactical closed-end fund strategy, while DoubleLine manages the core fixed income and opportunistic income strategies.

The $1.1 billion mutual fund had been closed to new investors since March, and that's one reason why we didn't include it in our current model Income Portfolio.

Recently, however, the growing concern over rising interest rates and the possibility that the Fed would taper its bond buying program prompted many RNSIX holders to sell.

That selling opened the fund back up to new money, and this is what has provided us with an opportunity to get back into this stalwart income-generating fund.

Subscribe to Successful Investing here…

More from MoneyShow.com:

High Yield and High Quality

Multi-Asset: Two Appealing Income ETFs

Buy-Write Funds: Better than Bonds

Friday, December 27, 2013

4 Stocks Under $10 to Watch for Breakouts

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>5 Stocks Set to Soar on Bullish Earnings

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

>>5 Trades to Take for October Gains

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside today.

Bazaarvoice

Bazaarvoice (BV) provides social commerce solutions that help its clients capture, display and analyze online word of mouth, such as consumer-generated ratings and reviews, questions and answers, stories, recommendations, photographs, videos and other contents. This stock closed up 6.5% to $9.66 in Tuesday's trading session.

Tuesday's Range: $9.02-$9.69

52-Week Range: $6.37-$15.99

Thursday's Volume: 483,000

Three-Month Average Volume: 520,019

>>5 Stocks Poised for Breakouts

From a technical perspective, BV surged higher here right above some near-term support at $8.93 with lighter-than-average volume. This stock recently formed a double bottom chart pattern at $8.74 to $8.93. Following that bottom, shares of BV have now started to move higher and push within range of triggering a big breakout trade. That trade will hit if BV manages to take out some near-term overhead resistance levels at $9.96 to its 50-day moving average at $10.28 with high volume.

Traders should now look for long-biased trades in BV as long as it's trending above some near-term support at $8.93 and then once it sustains a move or close above those breakout levels with volume that hits near or above 520,019 shares. If that breakout triggers soon, then BV will set up to re-fill some of its previous gap down zone from early September that started near $11.50. Any high-volume move above key resistance at $11.50 would then give BV a chance to tag $13.

Active Power

Active Power (ACPW) designs, manufactures and markets power solutions that provide business continuity and protect customers in the event of an electrical power disturbance. Its products deliver clean power, protecting customers from voltage fluctuations. This stock closed up 2% to $2.97 in Tuesday's trading session.

Tuesday's Range: $2.90-$2.99

52-Week Range: $2.82-$4.98

Thursday's Volume: 188,000

Three-Month Average Volume: 109,114

>>5 Rocket Stocks Worth Buying This Week

From a technical perspective, ACPW trended modestly higher here right above some near-term support at $2.82 with above-average volume. This stock recently formed a double bottom chart pattern at $2.85 to $2.82. Following that bottom, shares of APCW have started to uptrend and move within range of triggering a major breakout trade. That trade will hit if ACPW manages to clear some near-term overhead resistance levels at $3 to $3.12 with high volume.

Traders should now look for long-biased trades in ACPW as long as it's trending above some key near-term support at $2.82 and then once it sustains a move or close above those breakout levels with volume that hits near or above 109,114 shares. If that breakout triggers soon, then ACPW will set up to re-fill some of its previous gap down zone from early September that started near $3.60.

ARC Document Solutions

ARC Document Solutions (ARC) offers document management solutions to businesses, including non-residential segment of architecture, engineering and construction industry. This stock closed up 5.6% to $4.85 in Tuesday's trading session.

Tuesday's Range: $4.58-$4.88

52-Week Range: $2.12-$5.24

Thursday's Volume: 203,000

Three-Month Average Volume: 159,325

>>5 Stocks With Big Insider Buying

From a technical perspective, ARC ripped higher here right above some near-term support at $4.51 and back above its 50-day moving average of $4.79 with above-average volume. This stock has been uptrending modestly for the last month, with shares moving higher from its low of $4.22 to its recent high of $4.95. During that uptrend, shares of ARC have been making mostly higher lows and higher highs, which is bullish technical price action. That move is quickly pushing shares of ARC within range of triggering a big breakout trade. That trade will hit if ARC manage to take out some near-term overhead resistance levels at $4.92 to $4.95 and then once it clears its 52-week high at $5.24 with high volume.

Traders should now look for long-biased trades in ARC as long as it's trending above some near-term support levels at $4.51 or at $4.32 and then once it sustains a move or close above those breakout levels with volume that hits near or above 159,325 shares. If that breakout triggers soon, then ARC will set up to enter new 52-week-high territory above $5.24, which is bullish technical price action. Some possible upside targets off that breakout are its next major overhead resistance levels at $6.08 to $6.99.

Dynex

Dynex (DX) is a real estate investment trust that invests in mortgage loans and securities on a leveraged basis. This stock closed up 1.8% to $8.93 in Tuesday's trading session.

Tuesday's Range: $8.77-$8.93

52-Week Range: $7.71-$11.06

Tuesday's Volume: 609,000

Three-Month Average Volume: 452,008

>>5 Bargain Bin Stocks to Buy This Fall

From a technical perspective, DX trended modestly higher here right above some near-term support at $8.75 and above its 50-day at $8.57 with above-average volume. This stock has been uptrending strong for the last month and change, with shares moving higher from its low of $7.71 to its recent high of $8.99. During that uptrend, shares of DX have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of DX within range of triggering a major breakout trade. That trade will hit if DX manages to take out Tuesday's high of $8.93 and then once it clears more resistance at $8.99 with high volume.

Traders should now look for long-biased trades in DX as long as it's trending above its 50-day at $8.57 or above more support at $8.25 and then once it sustains a move or close above those breakout levels with volume that hits near or above 452,008 shares. If that breakout hits soon, then DX will set up to re-fill some of its previous gap down zone from July that started just above $9.75. Any high-volume move above 9.75 will then give DX a chance to tag its next major overhead resistance levels at $10.24 to $10.44.

To see more stocks that are making notable moves higher today, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.


RELATED LINKS:



>>5 Stocks Rising on Big Volume



>>5 Stocks Under $10 Set to Soar



>>5 Dividend Stocks That Want to Pay You More

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.


Barilla under pressure after exec’s gay remarks

Consumer pressure on pasta producer Barilla rose Friday after the president of the Italy-based food giant sparked a boycott of the firm by commenting that he would not show gay families in company ads.

"I would never make a spot with a homosexual family," Guido Barilla said on the Italy radio program La Zanzara (The Mosquito), according to Italian news agency ANSA. "Not out of a lack of respect but because I do not see it like they do. (My idea of) family is a classic family where the woman has a fundamental role."

ANSA reported that when the show's hosts noted that gays and lesbians eat pasta, Barilla responded, "That's fine if they like our pasta and our communication, they can eat them. Otherwise, they can eat another pasta."

Barilla, who with his brothers Luca and Paolo represent the fourth generation running the family-owned firm founded in 1877, also said, "I respect everyone who does what they want to do without bothering others," ANSA reported. He said he supported gay marriage "but not adoption in gay families."

"As a father of multiple children, I believe it's very hard to raise kids in a same-sex couple," Barilla said, according to ANSA.

Barilla later issued an apology on his company's website, saying that while his comments were hurtful "they are not a genuine view of my opinion."

Saying he has "the utmost respect" for gay people and "for all loving marriages and families," Barila concluded "to all friends, family, employees and partners that I have hurt or offended, I am deeply sorry."

But the comments did little to ease rising calls for boycotts and petitions that drew thousands of signatures from angry protestors.

"We accept his invitation to not eat his pasta," said Aurelio Mancuso, president of gay-rights group Equality Italia, ANSA reported

"Here we have another example of homophobia, Italian style," said Alessandro Zan, an Italian parliament member with the left-wing SEL party, ANSA reported.

A worker holds a handful of mini rigatoni noodles at a Barilla pasta plant in Ames, Iowa.(Photo: Charlie Neibergall, AP file)

The controversy quickly spread internationally via Twitter, where the hashtags #boicottabarilla and #boycottbarilla prompted numerous tweets.

Playing off an ad that said "with a bowl of pasta in hand, life is good," @ReignofApril tweeted, "Unless you're gay, amirite?"

"I prefer my pasta bigotry-free and served with a nice Cabernet," tweeted @4lisaguerreo.

Dario Fo, the Nobel Prize winner and Italian actor and playwright who once appeared in a Barilla ad, issued an open letter asking the executive to reconsider his wounding of the lesbian, gay, bisexual and transgender community.

"Guido, your company has come to define Italy — an Italy that is also made of unmarried couples, extended families and families with LGBT parents," wrote Fo. "That's why I ask you to end this controversy, and be an ambassador of equality for all."

GLAAD, a U.S. advocacy group for the LGBT community, planned to contact U.S. supermarket chains and ask officials to speak out against Barilla's comments and in support of their own non-straight consumers, said Rich Ferraro, the group's vice president of communications.

Ferraro said GLAAD had also e-mailed Barilla an invitation to meet with LGBT community members "and get to know how traditional we really are." Ferraro's mother, Linda, launched a Change.org petition urging her neighborhood supermarket to drop Barilla from its shelves, said Ferraro.

Linda Ferraro's petition had already drawn more than 1,500 signatures Friday, said Mark Anthony Dingbaum, a Change.org spokesman. A separate petition in which Fo asked Barilla's firm to commit to a new ad campaign "where the family can finally! be repre! sented in all its infinite and wonderful shapes of our time" quickly won more than 10,000 signers, said Dingbaum.

According to the Barilla Group's website, the company employs more than 8,000 workers, owns 30 production sites and has 13 brands. The firm's factories each year produce 1.7 million tons of food products distributed to 100 countries under names that include Barilla, Mulino Bianco, Wasa, Vesta, Gran Cereale and others.

The Barilla controversy comes three months after Dan Cathy, president of Atlanta-based food chain Chick-fil-A, used Twitter to voice his opposition to the U.S. Supreme Court ruling that struck down the Defense of Marriage Act.

"Sad day for our nation; founding fathers would be ashamed of our gen. to abandon wisdom of the ages re: cornerstone of strong societies," Cathy wrote in a tweet that was later deleted.

USA TODAY reported earlier this month that Chick-fil-A appeared to be offering a moderated view.

"Our intent is not to support political or social agendas," said Steve Robinson, the firm's executive vice president for marketing. He added that the company's culture "is to treat every person with honor, dignity and respect — regardless of their belief, race, creed, sexual orientation or gender."

Thursday, December 26, 2013

8 Buy-Rated Retail-Wholesale Stocks Under $10

NEW YORK (TheStreet) -- The retail-wholesale sector may be 24.9% overvalued according to www.ValuEngine.com, but this sector of 360 companies has 80% of the stocks rated buy. With an overweight sector rating I decided to profile nine buy-rated stocks in the retail-wholesale sector that are trading below $10 a share.

All nine stocks profiled today are overvalued, six by more than 40%. Only one is lower in price over the last 12 months, while the others are up between 22.4% and 227.7%. Seven of nine are above their 200-day simple moving average, which reflects the risk of reversion to the mean. As you will observe one of the stocks in today's table ended above $10 on Tuesday and was downgraded to hold from buy.

Reading the Table OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine. VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy. Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage. Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months. Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual. Pivot: A level between a value level and risky level that should be a magnet during the time frame noted. Risky Level: Price at which to enter a GTC limit order to sell on strength. Casual apparel retailer Aeropostale (ARO) ($10.17) had been above $10 a share until Aug. 22 when they missed EPS estimates by 10 cents reporting a loss of 34 cents a share. The stock traded as low as $7.78 on Sep. 4. On Tuesday private equity firm Sycamore Partners purchased an 8% stake in the retailer and the stock quickly moved back above $10 to a day's high at $10.47. This puts the stock within the price gap between the Aug. 22 low of $10.88 and the Aug. 23 high at $9.55. This morning the stock has been downgraded to hold from buy. My weekly value level is $7.61 with a quarterly risky level at $12.11.

Family-style restaurant chain Denny's (DENN) ($6.22) set a new multi-year high at $6.25 on Monday. Each time this stock dropped to its 200-day SMA, now at $5.57 this key support held; on June 24 at $5.30, on July 30 at $5.40 and on Aug. 28 at $5.50. My quarterly value level is $5.52 with a semiannual pivot at $5.97 and monthly risky level at $6.40.

Fitness machines maker Nautilus (NLS) ($7.21) approached $10 a share on July 15 then traded as low as $6.15 on Aug. 12 holding its 200-day SMA, then at $6.22. Today the stock is between its 200-day SMA at $6.67 and its 50-day SMA at $7.63. My semiannual value level is $6.27 with a quarterly pivot at $6.93 and monthly risky level at $10.58.

Women's fashion retailer New York & Co (NWY) ($5.46) fell from $6.87 on July 11 to $4.64 into Sept. 10 but ended that day above its 200-day SMA at $4.76. Today the stock is between its 200-day SMA at $4.80 and its 50-day SMA at $5.81. My weekly value level is $4.41 with a semiannual pivot at $5.49 and semiannual risky level at $5.53.

Office supply retailer Office Depot (ODP) ($4.31) held its 200-day SMA at $3.94 on Aug. 21. The stock is on the cusp of its 50-day SMA at $4.29. My weekly value level is $4.22 with a monthly risky level at $4.97. Drugstore chain Rite Aid (RAD) ($3.70) traded to a multi-year high at $3.75 on Sept. 11 with the 50-day SMA at $3.25. Weakness so far this yea has held the 50-day going all the way back to April 5 when the 50-day SMA was $1.71. My semiannual value level is $2.60 with a weekly pivot at $3.76 and monthly risky level at $3.86. Wholesale food and grocery distributor Supervalu (SVU) ($7.70) traded to a 2013 high at $8.26 on July 18 and has been trading back and forth around its 50-day SMA at $7.50 since Aug. 20. My semiannual value level is $2.78 with a weekly pivot at $7.78 and monthly risky level at $9.48.

The operator of travel service centers catering to truckers along the interstate TravelCenters of America (TA) ($8.00) has been a focus company of mine since I frequently travel on I75 and I95 between Tampa Bay, Fla., and the New York area. This stock was above $10 until Aug. 6 following disappointing earnings. After trading as low as $7.35 on Aug. 27 the stock failed at its 200-day SMA at $8.55 on Sep. 10. My semiannual value level is $7.18 with a quarterly pivot at $8.04 and semiannual risky level at $9.32.

Fast food chain Wendy's (WEN) ($8.54) set a multi-year high at $8.75 on Sept. 16 and is well above its 50-day SMA at $7.48 after holding that support on July 5 at $5.89. My monthly value level is $7.79 with a weekly risky level at $9.01.

At the time of publication the author held no positions in any of the stocks mentioned.

Follow @Suttmeier This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at RSuttmeier@Gmail.com.

Test Drive: 2014 Mazda3 is strong but flawed up…

HELL, Mich. -- It's a real place, and it's where jurors who vote on the North American Car and Truck of the Year gather each fall for final wheel time in cars they've driven, fresh time in ones they haven't.

It's the perfect opportunity for the arrested-development types among otherwise high-minded auto scribes to get a dirty word into print, legitimately. Who could resist?

Sited at the Forbidden Wheels motorcycle club on a corner of the Hell Creek Ranch, the event features the year's array of new or significantly updated vehicles vying for the annual North American Car and Truck of the Year awards announced at the Detroit auto show in January.

The Hell drive — all those nifty new models — starts a craving for the perfect blend of attributes, some from this car, some from that one, a few in the one over there.

In this case, the compact 2014 Mazda3, a full-scale redesign, on sale since September, has you wishing for a mix that would include the Mazda's own exceptional steering and brakes, the redesigned Toyota Corolla's general roominess and interior serenity and Ford Focus' outstanding chassis. Even though good handling is part of Mazda's "zoom-zoom" schtick, the Focus is nonpareil among mainstream compacts.

But never mind, you quickly decide that Mazda3's about right as-is. At least for the warm-blooded, elevated-pulse folk the brand targets, and perhaps quite a few others.

It's available as a four-door sedan and a "five-door" hatchback. Interestingly, the hatchback is about 5 inches shorter than the sedan. Otherwise they're the same.

Models with the 2-liter engine are designated "i" and those with the optional 2.5-liter are "s."

The Mazdas driven here were a 2-liter, four-door Grand Touring sedan ($25,085) and a 2.5-liter Grand Touring hatchback ($29,185), both with six-speed automatics.

A 2-liter Grand Touring sedan with six-speed manual ($24,035) was tested back home in Northern Virginia suburbs.

The drawbacks we see are:

Roa! d noise. Tires on test cars here sent up an awful racket on the coarsest local roads, even though other vehicles didn't. Nor did the Mazda3 tested in Virginia.

Seems obviously road-related, but your path won't always be well-paved, so it's useful to caution about the tire noise.

Tight back seat. Illogical. The car's bigger for 2014. The wheelbase — distance between front and back wheels, which dictates how much leg and knee room is available — grew 3 inches. But Mazda lists 0.4 of an inch less rear legroom in the new one. And it feels tighter than that.

Front visibility. It'll depend a bit on where you position the front seat, but for many drivers, the windshield pillar, called the A pillar, can block your view of pedestrians and cars angling from the side.

But the good things are quite enriching.

The six-speed manual on the Virginia car awakened the 2-liter four-cylinder dramatically. That's the same engine that's marginal in the CX-5 small SUV and, when hooked to an automatic in the 3, is willing but unexciting.

The 2.5-liter is to get a manual next year.

What makes it a good manual? Smooth, quick shift mechanism with enough mechanical feel to let you know you're not operating a wimpy electronic selector. A clutch that doesn't require an artist to operate smoothly. Pedal positioning that lets you sit far enough from the steering wheel and still hit the floor with the clutch pedal when shifting.

Mazda says 12% to 15% of 2-liter buyers will choose the manual, and 15% to 20% of 2.5-liter buyers will opt for a stick shift.

Typically, just 3% to 7% of compact buyers ask for a manual on other brands.

Chassis tuning blends responsive, firm-feeling brakes, snappy handling that makes you seek "S" corners and tempts you to take them faster than you probably should, and excellent steering. It is responsive without being twitchy, and holds straight-ahead without constant little steering motions.

You pay for the crisp cornering with ! a ride th! at's bumpier than on, say, a Sentra or Corolla.

Interior layout and comfort are exceptional. The console-mounted infotainment joystick control on the Grand Touring test models wasn't the easiest to use, however.

The navigation/backup-camera/everything-else screen is big and stands tall rather than being sunk into the dashboard, same as in a Mercedes-Benz CLA. It's easy to read. But it'll look like an aftermarket add-on to some folks.

The new Mazda3's good mpg, well-tuned chassis, and some upmarket interior touches should broaden the car's appeal outside Mazda-loyal driving enthusiasts, without disappointing that group.

MAZDA3 DETAILS

What? Re-do of the brand's best-seller, a front-drive, four-door, five-passenger compact. Available as four-door sedan or "five-door" hatchback. 2-liter engine models designated "i"; 2.5-liter as "s."

When? On sale since September.

Where? Made at Hofu, Japan.

How much? Starts at $17,740 including $795 shipping, for i SV base model with six-speed manual. 2.5-liter models, $25,390-up. Most popular, the i Touring, 2-liter, automatic, starts at $21,440.

What makes it go? 2-liter, four-cylinder gasoline engine rated 155 horsepower at 6,000 rpm, 150 pounds-feet of torque at 4,000 rpm. Six-speed manual is standard, six-speed automatic optional.

2.5-liter four-cylinder rated 184 hp at 5,700 rpm; 185 lbs.-ft. at 3,250 rpm. All have six-speed automatic; manual planned next year.

How big? About 1 inch bigger all around than Honda Civic sedan. Hatch, about 5 inches shorter than Mazda3 sedan, otherwise identical. Weight, 2,781- 2,982 lbs.

Trunk (four-door), 12.4 cubic feet. Cargo space (hatchback), 20.2 cu. ft. behind rear seat, 47. 1 cu. ft. with rear seat folded.

How thirsty? 2-liter rated 29 or 30 mpg in the city, 40 or 41 highway, 33 or 34 combined city/highway. 2.5-liter: 27 or 28 city, 37 or 39 highway, 31 or 32 combined.

Test cars: 2.5-liter, automatic go! t 32 mpg ! (3.13 gallons per 100 miles) in hard driving on rural two-lanes. 2-liter, automatic: 30.8 mpg (3.25 gal./100 mi.) similar driving but more wide-open throttle. 2-liter manual, 25.9 mpg (3.86 gal./100 mi.) in vigorous suburban driving.

Burns regular, holds 13.2 gal.

Overall: Stylish, quick, fun. Noisier, stiffer-riding than others.

Wednesday, December 25, 2013

4 More Things You Didn't Know About Starbucks

In my last article on the topic of Starbucks Corporation (NASDAQ: SBUX  ) , I discussed four interesting things about the world's largest coffee chain that you probably don't know. However, while I was writing the article, I discovered that there are many things that make Starbucks such an interesting corporation. So, in an effort to do the company, and its investors, justice I wrote this follow-up article. I hope you all enjoy!

The coffee chain didn't start with Starbucks
Ten years after the founding of Starbucks in 1971, Howard Schultz, the company's current CEO, began working at the coffee chain. Following a trip he made to Italy, where he fell in love with the "espresso bar" culture there, he proposed that the company, which as of that time sold only coffee beans instead of brewing them, sell specialty coffees.

Much to his chagrin, the two remaining partners of the company turned down the idea. Frustrated, Schultz quit the company and eventually went on to start his own coffee company in 1986; II Giornale.

In less than a year, II Giornale expanded from one to three locations and, in 1987, acquired the six Starbucks stores and its roasting plant. This acquisition allowed the company to fuel its growth even more, increasing its number of locations to 17 by the end of 1987.

Starbucks has grown quicker than you might think
If you take 1986 as the year the Starbucks "concept" was put into implementation, only then can you fully appreciate how fast the company has grown. As of the company's most recent fiscal quarter, the number of stores across the globe has risen to 19,209. By dividing this number by the number of years that the company has been in operation, we arrive at an average store addition of 711.4 per year. Converting this to a daily basis, we arrive at an exciting conclusion about the company's growth; it has added nearly two Starbucks locations per day, on average, since 1986.

In truth, this growth is impressive. What is even more impressive though is that the company has been able to maintain a high level of growth. Between its 2008 fiscal year and its 2012 fiscal year, Starbucks has averaged approximately 0.76 new stores opened per day. Although this performance is significantly below the company's historic average growth, readers should keep in mind that this growth occurred throughout a global recession.

In an effort to make up for the past few years, the company has picked up the pace a bit, adding about 2.91 stores per day between 2011 and 2012, and racking up another 1,143 stores between September 2012 and June 2013.

International markets are key to the company's future growth
So, by now, we understand that Starbucks is a fast-growing and innovative company that currently sits at the pinnacle of its industry. However, do you know exactly how global the company is? For starters, I mentioned in my previous article that the company has about 68.5% of its stores located in the United States. However, I did not mention that the company, which began growing internationally in 1996 when it opened its first Starbucks in Tokyo, Japan, is seeing phenomenal growth in its international operations.

As of the company's most recent fiscal quarter, the growth rate of stores within the United States has only amounted to 4.7% compared to the same quarter a year ago. However, the company's Europe, Middle East, and Africa (EMEA) segment has seen higher growth which amounted to 5.7% over the same time horizon.

Still not impressed? Well then, how about the attractive 16.5% growth rate the company saw in its China/Asia Pacific segment? Now that's growth! Even more extreme is the growth (albeit, with a small base of 96 locations in the same quarter a year ago) in its Other segment of 347.9%.

Based on this historical growth, it can be reasonably inferred that much of the company's future growth will take place outside of the United States. The positive side to this is that it will allow the company greater market presence, but at the cost of lower margins. While the company posted an impressive operating margin of 21.4% domestically in its most recent fiscal quarter, it was only able to eek out a 13.4% operating margin abroad, which should caution investors who expect both significant growth and high margins.

Starbucks isn't just about coffee anymore!
In 2006, Starbucks took a bold step that, to some, may not make much sense; it created Starbucks Entertainment. This concept allowed the company to expand into the motion picture world. The first film that Starbucks Entertainment worked on was Akeelah and the Bee, which was released in 2006. As a result of the company's partnership with Lions Gate Entertainment and 2929 Entertainment, it was able to heavily promote the DVD release of the film in its stores.

On top of motion picture endeavors, Starbucks has a history of being involved in the world of music. In 1999, it acquired Hear Music, a former catalog company that traces its roots back to 1990. By 2002, Starbucks used its resources to produce its first opera album. In 2007 it signed Paul McCartney on as the first artist whose music would be featured in its stores.

Foolish takeaway
Irrespective of whether or not Starbucks makes for a good investment for the Foolish investor, no one can deny that the company has been innovative and a high-growth prospect. Moving forward, I don't know what will become of the coffee chain, but if it keeps pressing on with its growth ambitions (both in the realm of drinks and in entertainment and social activism), it appears that the future will likely be bright.

Starbucks isn't the only top growth stock out there
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High risk = high return mantra: Does it always hold true?

In an interview to CNBC-TV18, Harsh Roongta, Apnapaisa.com says if you want low risk, it is necessarily accompanied by low return. "If I want the low risk of an SBI fixed deposit, I am not going to get high returns. If I want high returns, it is invariably going to have much higher risk. There is no instrument that can defy this economic principle. It is a very basic economic principle," he adds.

Hidden gems: Ashish Chugh's 2 low risk bets

Below is the edited transcript of his interview on CNBC-TV18.

Q: In your experience, do you think this always holds true because we have seen a lot of investments into the infrastructure, real estate space, in the equity markets not yielding with high returns at all?

A: Any investment has three parameters — risk, return and liquidity. If you want low risk, it is necessarily accompanied by low return. If I want the low risk of an SBI fixed deposit, I am not going to get high returns. If I want high returns, it is invariably going to have much higher risk.

Obviously infrastructure or the other investments, which people have made, were high risk investments. So far, they have not paid off. So, I think that actually goes to prove the fact that when the returns expected are high, it is accompanied by a high risk. There is no instrument that can defy this economic principle. It is a very basic economic principle.

Q: Investor says that she has received an offer to invest in a pre-sale property wherein she has been promised a guaranteed buyback at double the price after four years under a proper stamped and registered agreement with the company. She now wants to know if this is a possibility in terms of an investment option for her. Would you like to comment on that?

A: I think this is a perfect example. Doubling of your money in four years, it's roughly 18 percent per annum compounded return. You do not get that kind of return without some risk. The return of the money as she says is guaranteed. There is a proper agreement. There are probably lawyer stamps all over the paper, but who is guarantying the guarantor? Obviously, if it was so safe, they would not be offering 18 percent. So, I think the point that she needs to realise is that this is an investment that is riskier.

She needs to evaluate the risk. She should not get in saying because it is guaranteed, it is low risk. It is guaranteed by somebody who you need to evaluate. As long as she goes into it with her eyes open and on a certain percentage of your portfolio, you could probably take higher risk, especially if your portfolio is higher. But I think like any other lay consumer she is unlikely to have the stomach for high risks. If she does not have that stomach, I do not think this would be the right investment for us.

Tuesday, December 24, 2013

Daily ETF Roundup: Stocks Close Mixed, IEO And IGV Rise

U.S. equities finished the session narrowly mixed, closing out the rather lackluster month of July. At today's highly anticipated Fed policy statement, the central bank said it will continue to purchase $85 billion in mortgage and Treasury securities per month. The Fed indicated that modest growth rates, higher mortgage rates and low inflation were the primary factors behind their decision to keep its easy-money policies. In other economic news, the U.S. economic growth rate unexpectedly accelerated in the second quarter with GDP growing at a 1.7% annual rate. In a separate report, private employers added 200,000 jobs in July, beating economists' expectations .



Global Market Overview: Stocks Close Mixed, IEO And IGV RiseFollowing today's upbeat economic reports and the Fed's policy statement, only one major U.S. equity index managed to close in positive territory. The tech-heavy Nasdaq ETF rose 0.11% after its underlying index hit its best level since October of 2000 earlier in the session. The Dow Jones Industrial Average ETF fell 0.05%, while the S&P 500 ETF finished 0.07% higher (though its underlying index closed down 0.01%).

In Europe, markets rose for a third straight session following an upbeat reading on unemployment in the eurozone; the Stoxx Europe 600 rose 0.1%. Meanwhile, Japan's Nikkei Stock Average fell 1.5% on a stronger yen, and China's Shanghai Composite gained 0.2% after the Communist Party said it would keep economic growth steady in the second half of the year.

Bond ETF Roundup

U.S. Treasuries rose following the Federal Reserve's policy-setting committee statement. Yields on 10-year notes fell 3 basis points, while 30-year bonds and 5-year note yields fell 4 and 1 basis point, respectively .

Commodity Roundup

Crude oil futures traded higher today, settling above $105 a barrel and closing out the month of July up 9%, as better-than-expected U.S. GDP and labor data pushed the commodity higher. In other en! ergy trading, natural gas and gasoline futures traded higher. Meanwhile, gold futures fell 0.9% to settle at $1,312.40 a troy ounce.

ETF Chart Of The Day #1: The U.S. Oil & Gas Exploration & Production ETF was one of the best performers today, gaining 0.83% during the session. Though Phillips 66 (PSX) reported earnings that were below analyst expectations, shares of the company rallied more than 5%, allowing this ETF to jump higher at the open. IEO eventually settled at $75.05 a share .

Click To EnlargeETF Chart Of The Day #2: The North American Tech-Software ETF also posted a strong performance, gaining 0.87% during the session. After Symantec (SYMC) posted better-than-expected earnings and revenues, this ETF gapped higher at the open. IGV inched higher throughout the day, eventually settling at $73.32 a share .

Click To EnlargeETF Fun Fact Of The DayThe best-performing retirement strategy year-to-date has been the 30 Years Til Retirement Portfolio, which has gained 10.95%.

Disclosure: No positions at time of writing.

Is Electronic Arts Really the Worst Company in America?

With shares of Electronic Arts Inc. (NASDAQ:EA) trading at around $22.80, is EA an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock's Movement

To immediately answer the question in the title, absolutely not. EA might have had several missteps over the past several years, and it's no secret that revenue has been a major problem, but the worst company in the world doesn't have a positive profit margin, a strong balance sheet, increased revenue guidance, a decent product pipeline, increased online exposure, increased social and mobile exposure, consistent annual earnings improvements, and a 75 percent increase in the stock price over the past year.

The big news for Electronic Arts right now is Fuse, which is a sci-fi shooter. The PS3 and Xbox 360 versions of Fuse have received mixed reviews. Below is a very quick breakdown of the most commonly reported positives and negatives:

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Positives:

Weapons

Co-Op Action

Negatives

Team A.I.

Confusing Tone

Yeah, that was quick. In regards to weapons, gamers have greatly appreciated the creativity, such as a mag shield that can absorb bullets and then fire them back at enemies.

While Fuse's potential success is still a guessing game, there is no doubt that Electronic Arts landing a deal with The Walt Disney Company (NYSE:DIS) for video gaming rights to Star Wars was a big splash. Star Wars has been a massively popular franchise for decades. What most people don't realize is that the franchise still has potential to grow, especially under Disney's leadership.

Electronic Arts is facing competition from free-to-play games, but its PopCap Games is now offering Plants vs. Zombies Adventures on Facebook (NASDAQ:FB). This is free-to-play, but in-game items are being sold. Other PopCap Games include Bejeweled, Bookworm, and Zuma. There are 42 other games as well.

The chart below takes a look at some basic fundamentals for Electronic Arts, Activision Blizzard (NASDAQ:ATVI), and Take-Two Interactive Software (NASDAQ:TTWO).

EA ATVI TTWO
Trailing P/E 74.10 13.21 N/A
Forward P/E 16.29 13.92 15.09
Profit Margin 2.58% 24.38% -2.43%
ROE 4.15% 11.09% -5.27%
Operating Cash Flow 324.00M 1.52B -4.57M
Dividend Yield N/A 1.30% N/A
Short Position 5.30% 1.90% 17.40%

Let's take a look at some more important numbers prior to forming an opinion on this stock.

T = Technicals Are Strong

For the worst company in the world, Electronic Arts sure is beating expectations when it comes to stock performance.

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1 Month Year-To-Date 1 Year 3 Year
EA 27.60% 57.78% 75.29% 44.91%
ATVI -6.39% 35.56% 23.58% 38.56%
TTWO 2.93% 46.59% 48.07% 46.33%

At $22.80, Electronic Arts is trading above its averages.

50-Day SMA 20.13
200-Day SMA 17.16

E = Equity to Debt Ratio Is Strong

The debt-to-equity ratio for Electronic Arts is stronger than the industry average of 0.30.

Debt-To-Equity Cash Long-Term Debt
EA 0.25 1.68B 559.00M
ATVI 0.00 4.62B 0.00
TTWO 0.57 402.50M 335.20M

E = Earnings Have Improved

Earnings have consistently improved on an annual basis. However, revenue has been very inconsistent.

Fiscal Year 2009 2010 2011 2012 2013
Revenue ($) in millions 4,212 3,654 3,589 4,143 3,797
Diluted EPS ($) -3.40 -2.08 -0.84 0.23 0.31

Looking at the last quarter on a year-over-year basis, revenue and earnings both declined. On the other hand, revenue and earnings made substantial improvements on a sequential basis.

Quarter Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012 Mar. 31, 2013
Revenue ($) in millions 1,368 955 711 922 1,209
Diluted EPS ($) 1.20 0.63 -1.21 -0.15 1.05

Now let's take a look at the next page for the Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

Conclusion

Investors are frustrated with Electronic Arts due to its inability to come up with new titles. Retail gaming sales have also been weak. Another negative is that Electronic Arts is trading at 74 times earnings whereas the industry average is only 7 times earnings. That said, all the positives mentioned earlier should also be considered.

Monday, December 23, 2013

LinkedIn Wants Your Time

Bill Gates, President Barack Obama, Sir Richard Branson, and the Prime Minister of Japan, Shinzo Abe, are among LinkedIn's (NYSE: LNKD  ) impressive list of Influencers. Taking just six weeks to develop, the Influencers feature now stands out as a key differentiating product for LinkedIn. Even better, it gets the company one step closer to its ultimate goal of grabbing a larger chunk of your time.

What is Influencers?
The first eight years of LinkedIn's existence was about connecting people with each other. In the last two years, the company's focus has been to connect people with insights. With Influencers, LinkedIn has leaped onto the scene.

LinkedIn's Influencers product gives renowned professionals an outlet and an audience to publish original essays -- with no compensation from LinkedIn.

People are responding to the product. Every blog post gets about 100 comments, according to LinkedIn's executive editor Dan Roth, who spearheads the program. And these comments are of a rare type: With each user profile representing members' professional identities, comments are thoughtful and engaging.

Engagement is the goal
Influencers is just one facet of evidence behind the company's goal to become far more than an address book. Its more than 300 Influencers allow the company to contribute significant original content to the Internet. Even so, this content is still dwarfed by its 1.2 million publishers that feed into LinkedIn Today -- another effort by LinkedIn to drive engagement. Driven by algorithms built to match appropriate headlines to respective professionals, LinkedIn Today attempts to steal your attention, and keep you coming back to the website.

In an effort to grow engagement, the professional social network wants you to not only check in every morning, but eventually, rely on LinkedIn's content before a meeting or before you enter a business deal, Dan Roth explains.

"Unlike Twitter or Facebook, which are hives of message activity that attract constant monitoring, LinkedIn for years warranted little more than an intermittent update to a resume, or a check on a job search," said The New York Times journalist Leslie Kaufman.

LinkedIn's launch of LinkedIn Today, and the subsequent launch of Influencers, are among the company's responses to this problem.

It's working
LinkedIn's efforts to grab members' attention is paying off. Roth says that Influencers is helping transform viewer engagement, and traffic for all of its news products is up significantly..

In LinkedIn's first quarter, page views increased 63% from the year-ago quarter. Some of the prominent posts boast considerable traffic in and of themselves, with top posts regularly generating more than 100,000 views. 

Increased engagement obviously offers a number of benefits. Here are two:

Increased engagement makes the professional social network more useful -- that's the power of a network effect. Increased engagement will likely boost ad revenue and the sales of its services.

Unsurprisingly, the company's revenue was up substantially in the first quarter. At $324.7 million, LinkedIn's revenue was 72% higher than in the year-ago quarter. Though it's tough to gauge how much of this is a result of LinkedIn's successful launch of its Influencers product, it undoubtedly had a positive impact.

 

A rare opportunity
LinkedIn is growing 2x as fast as Google and Facebook, and more than 3x as fast as Amazon.com and Apple. Watch our jaw-dropping investor alert video today to find out why The Motley Fool's Chief Technology Officer is putting $117,238 of his own money on the table. And why he's so confident this will be a huge winner in 2013 and beyond. Just click here to watch!

Sunday, December 22, 2013

This Metric Says You're Smart to Own Allscripts Healthcare Solutions

There's no foolproof way to know the future for Allscripts Healthcare Solutions (Nasdaq: MDRX  ) or any other company. However, certain clues may help you see potential stumbles before they happen -- and before your stock craters as a result.

A cloudy crystal ball
In this series, we use accounts receivable and days sales outstanding to judge a company's current health and future prospects. It's an important step in separating the pretenders from the market's best stocks. Alone, AR -- the amount of money owed the company -- and DSO -- the number of days' worth of sales owed to the company -- don't tell you much. However, by considering the trends in AR and DSO, you can sometimes get a window onto the future.

Sometimes, problems with AR or DSO simply indicate a change in the business (like an acquisition), or lax collections. However, AR that grows more quickly than revenue, or ballooning DSO, can, at times, suggest a desperate company that's trying to boost sales by giving its customers overly generous payment terms. Alternately, it can indicate that the company sprinted to book a load of sales at the end of the quarter, like used-car dealers on the 29th of the month. (Sometimes, companies do both.)

Why might an upstanding firm like Allscripts Healthcare Solutions do this? For the same reason any other company might: to make the numbers. Investors don't like revenue shortfalls, and employees don't like reporting them to their superiors.

Is Allscripts Healthcare Solutions sending any potential warning signs? Take a look at the chart below, which plots revenue growth against AR growth, and DSO:

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. FQ = fiscal quarter.

The standard way to calculate DSO uses average accounts receivable. I prefer to look at end-of-quarter receivables, but I've plotted both above.

Watching the trends
When that red line (AR growth) crosses above the green line (revenue growth), I know I need to consult the filings. Similarly, a spike in the blue bars indicates a trend worth worrying about. Allscripts Healthcare Solutions's latest average DSO stands at 89.3 days, and the end-of-quarter figure is 91.2 days. Differences in business models can generate variations in DSO, and business needs can require occasional fluctuations, but all things being equal, I like to see this figure stay steady. So, let's get back to our original question: Based on DSO and sales, does Allscripts Healthcare Solutions look like it might miss its numbers in the next quarter or two?

I don't think so. AR and DSO look healthy. For the last fully reported fiscal quarter, Allscripts Healthcare Solutions's year-over-year revenue shrank 4.8%, and its AR dropped 4.9%. That looks OK. End-of-quarter DSO decreased 1.2% from the prior-year quarter. It was up 3.3% versus the prior quarter. Still, I'm no fortuneteller, and these are just numbers. Investors putting their money on the line always need to dig into the filings for the root causes and draw their own conclusions.

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Hot Undervalued Stocks For 2014

Shares of Vail Resorts, Inc. (MTN), an operator of ski resorts, increased 12.8% in the third quarter as investors became excited about the installation of the company's summer activities. Summer activities, including the zip line installed in August, could cut the company's seasonal losses in half. We continue to believe the acquisition of the Canyons ski resort in Utah should further help increase season pass sales and earnings. (David Baron)

From Ron Baron's Baron Funds third quarter 2013 commentary.


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

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Hot Undervalued Stocks For 2014: Schlumberger N.V.(SLB)

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

Advisors' Opinion:
  • [By David Smith]

    As June came to an end, the company finalized a joint venture, OneSubsea, with Schlumberger (NYSE: SLB  ) . The intriguing partnership -- in which Cameron has a 60% interest, with the remainder Schlumberger's -- will develop products, systems, and services for the subsea oil and gas market.

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

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

Advisors' Opinion:
  • [By Dan Carroll]

    Finally, Caterpillar (NYSE: CAT  ) shares have fallen 1.9% today, putting it near the bottom of the index as well. This company's earnings also disappointed investors, and the international slowdown in Europe, China, and other leading economies has crippled Caterpillar's outlook. While there are signs of hope for the firm in the U.S. housing rebound, until China's economy picks up steam from its current lackluster growth -- or until some other economic mover and shaker fills the void -- Caterpillar will continue to feel the pressure.

  • [By Dan Carroll]

    Komatsu has seen its sales fall in China, where the company leads the manufacturing industry. However, despite China's recent slowdown, Komatsu leadership still sees demand picking up between 5% and 10% in the world's second-largest economy as the Chinese government contemplates its own stimulus plans. The weak yen will mean that Komatsu's sales matter all the more, particularly as top competitor Caterpillar (NYSE: CAT  ) , which has been hammered by the mining industry's decline, ramps up its own China operations. Caterpillar lags Komatsu in China, but it increased its Chinese sales year over year in the first quarter.

  • [By Arjun Sreekumar]

    General Electric (NYSE: GE  ) and Caterpillar (NYSE: CAT  ) , the biggest manufacturers of locomotives in the world, are all too eager to take part. If the transition gains momentum, it could mark the most radical change in the industry since the 1950s, when diesel replaced steam as the fuel of choice.

10 Best Performing Stocks To Watch For 2014: Dollar Tree Inc.(DLTR)

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

Advisors' Opinion:
  • [By Rich Duprey]

    Deep discounter Dollar Tree (NASDAQ: DLTR  ) announced today that its current chief operating officer, Gary Philbin, will now also carry the title of president, a position previously held by company CEO Bob Sasser.

  • [By Lawrence Meyers]

    As a convenience store, it doesn’t have direct competition from�Dollar Tree (DLTR) or Family Dollar (FDO) because these dollar stores aren�� exclusively focused on food (and they have no gasoline or cigarette sales), and they��e targeted at the folks who are trying to save money over convenience, not vice versa. The convenience angle is another reason why�Walmart (WMT) and Costco (COST)�aren’t competitors, since those behemoths are about a total shopping experience.

  • [By Ben Eisen]

    Perpetually struggling department store J.C. Penney Co. (JCP) �said it expects a sales boost this holiday season as it returns to a promotional strategy. But for the most part, retailers including Dollar Tree Inc. (DLTR) �, GameStop Corp. (GME) � and Abercrombie & Fitch Co. (ANF) � gave dour outlooks in their earnings reports.

Hot Undervalued Stocks For 2014: Tupperware Corporation(TUP)

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

Advisors' Opinion:
  • [By John Udovich]

    Everyone is familiar with�the Tupperware brand from�consumer products stock Tupperware Brands Corporation (NYSE: TUP) and you are probably familiar with the brands�of mid cap stock Jarden Corp (NYSE: JAH) along with small cap stocks Libbey Inc (NYSEMKT: LBY) and Lifetime Brands Inc (NASDAQ: LCUT); but what about the stocks themselves? Chances are, their brands or products are right under your nose at home and you probably don�� know anything about the mid cap or small cap stock behind them.

  • [By Dan Caplinger]

    Where growth will come from
    One area that Newell Rubbermaid still has to tap fully is emerging markets. The company has done a good job of expanding overseas, with 17% annual growth in Latin America. But with barely a quarter of its sales coming from outside the U.S. and Canada, the company has a lot further to go. Storage rival Tupperware (NYSE: TUP  ) gets fully 60% of its total revenue from emerging markets, and it too has seen impressive gains in South America as well as the Asia-Pacific region.

Is That a Light at the End of the Tunnel for Best Buy?

Surprise, surprise. After the dust settled, Best Buy (NYSE: BBY  ) accomplished what many assumed was impossible: It beat earnings estimates, and handily. For a company that's been through what Best Buy's been through the past year -- a fight over ownership with founder Richard Schulze, a new CEO last fall, and weak consumer demand for electronics -- the better-than-expected net income from operations results should have had investors cheering. But with Best Buy shares down 5%, clearly there's more to this picture.

The bright spots
When Best Buy CEO Hubert Joly committed to matching online prices with the likes of Amazon and Wal-Mart, he stepped into the ring with the big boys. Wal-Mart grew its online sales more than 30% last quarter in a concerted effort to drive this area of its business. And of course, Amazon remains the top online retailer in the world, selling over $13 billion in online products alone last quarter.

To Best Buy's credit, domestic online sales grew 16% compared to fiscal first quarter 2013. That pales in comparison to Amazon and Wal-Mart, but is certainly a step in the right direction. While revenues dropped to $7.98 billion – a decline of 9.6% from last year – there are a couple of caveats worth noting. One, the first quarter of last year had an additional week, which added an estimated $660 million to the top line. If you remove the extra week, revenue declined a more tolerable 2.2%. Also, after shuttering 49 large-format stores, it stands to reason that gross revenues would be squeezed.

Similar to Best Buy's drop in revenue, its 1.1% same-store sales decline also comes with an asterisk. Of the drop in same-store sales, Best Buy estimates 0.80% of the 1.1% is attributable to the Super Bowl -- historically a good week for electronics sales -- landing in its fourth quarter instead of in the first quarter as it did last year. A stretch? Maybe, but these seem like legitimate arguments rather than the usual CEO-speak after a tough quarter.

Joly's continued cost-cutting saved Best Buy another $175 million in fiscal first quarter, on top of $150 million in expenses cut last quarter. The agreement reached with Samsung to put up its "Experience Shops" inside Best Buy stores could prove profitable as the mobile computing king continues to generate ridiculously solid sales results.

It has been confirmed that it is getting out of its European deal with Carphone Warehouse, and this a good move for Best Buy as it continues cost-cutting initiatives and focuses on its core business. Best Buy will receive about $775 million, more than 80% in cash and the balance in Carphone Warehouse stock, less $45 million to settle outstanding obligations.

The not-so-bright spots
Matching the prices of online retailers like Amazon as well as Wal-Mart's website, and making those price cuts permanent, is hurting margins. This year's fiscal first-quarter gross profit margins of 23.1% is down from the year-ago period's 24.9%, and that's likely to get worse, not better.

As Best Buy's EVP, CAO, and CFO Sharon McCollam put it, "We believe that the ongoing investment in price competitiveness that contributed to our gross profit and EPS declines in the first quarter will continue into the second quarter. Additionally, disruptions caused by the physical deployment of the Samsung Experience Shops and the optimization of our retail floor space are expected to have operational impacts during the second quarter."

A question for Best Buy investors
The margins are particularly painful when combined with a drop in revenue -- Best Buy can't afford both as it attempts to claw its way back to relevancy. So how does Joly walk the line between cranking up revenue and maintaining even so-so margins, all while fighting off Amazon and Wal-Mart (among others)? Best Buy can offset margin pressures by continuing to aggressively cut expenses, but even that may not be enough, at least in the foreseeable future.

It's been a great run for Best Buy shareholders, who've enjoyed a year-to-date return of over 110%. If you're a new investor, don't expect much in the near-term; the obstacles are many. But give Joly his due: His proactive steps to sever the Carphone relationship, cut overhead, and ramp up online sales may still shed light on the Best Buy tunnel yet.

The Motley Fool has released a premium research report detailing the opportunities -- and the risks -- in store for Best Buy. Simply click here now to claim your comprehensive report today.

Saturday, December 21, 2013

Is Tesla Overvalued?

The following video is from Tuesday's MarketFoolery podcast, in which host Chris Hill and analysts Jason Moser and Andy Cross discuss the top business and investing stories of the day.

Shares of Tesla (NASDAQ: TSLA  )  rose again on Tuesday. Morgan Stanley raised its price target from $47 to $103. Shares of the electric car maker have doubled in the past month. How much of Tesla's recent upswing is because of a short squeeze? In this installment of MarketFoolery, our analysts take stock in the future of Tesla.

Near-faultless execution has led Tesla Motors to the brink of success, but the road ahead remains a hard one. Despite progress, a looming question remains: Will Tesla be able to fend off its big-name competitors? The Motley Fool answers this question and more in our most in-depth Tesla research available for smart investors like you. Thousands have already claimed their own premium ticker coverage, and you can gain instant access to your own by clicking here now.

The relevant video segment can be found between 9:09 and 14:57.

For the full video of today's MarketFoolery , click here .

Investing for Beginners: 4 Low-Stress Ways to Get Started

If you've never invested before, the stock market can seem like the most intimidating thing in the world. But some simple, easy-to-follow investment strategies can make investing for beginners a lot less scary. Let's take a look at four ways beginners can get started in their investing careers.

1. Target-date mutual funds
Target funds are a relatively new financial concept, having become popular just in the past decade. But as a one-stop shop, they're perfect for beginners seeking to invest without doing a lot of legwork.

Target funds are tailored for particular time horizons, with most funds specifying a target date that matches up with when investors will need to start spending down their savings. With a mix of stocks, bonds, and other investments, target funds start out investing aggressively when the target date is long in the future but then get more conservative as the target date approaches. With this automatic risk reduction over time, you don't have to make any adjustments of your own along the way. Understanding exactly how your target fund works is important, but as a low-stress way for beginners to invest, target funds are hard to beat for simplicity.

2. Index mutual funds
An only slightly more complicated method of investing for beginners to consider is a portfolio of index funds. Unlike target funds, most index funds focus on a particular type of investment. That leaves you with the decision of how much money to allocate across various investments, but they still give you broad exposure to entire markets or submarkets rather than requiring you to pick individual stocks. Their flexibility gives you greater latitude than target funds to adjust your exposure to your own risk tolerance and views of the markets, making index funds a good second step for beginners once they start getting comfortable with investing.

3. Exchange-traded funds
Most ETFs are essentially the same as index mutual funds, except that the mechanism for buying and selling shares is different. ETFs trade like regular stocks, so you need a broker in order to use them. However, many brokers offer ETF trading at no commission, often giving them a cost advantage even compared to similar index mutual funds. Moreover, although broad-based ETFs Vanguard Total Stock Market (NYSEMKT: VTI  ) and SPDR S&P 500 (NYSEMKT: SPY  ) cover entire swaths of the stock market, more narrowly focused ETFs target smaller sectors and subsectors, giving you even greater investing flexibility.

4. Low-volatility stocks
Beginners often shy away from individual stocks because of their higher risk. But there are steps you can take to help you sleep better at night. To start out with, focusing on less volatile stocks with stable business models will get you used to investing in individual companies.

For instance, consumer giant PepsiCo (NYSE: PEP  ) has well-known brands like Pepsi and Frito-Lay in its stable of popular products. For investors, the company has huge potential for international growth and has boosted spending on marketing and brand awareness in an effort to drive sales higher. But despite that promise, on average, its shares have been only about a third as volatile as the overall stock market. That means you might not get the full benefit of a strong bull market run in stocks, but you might also see smaller declines if the market turns downward. Looking at holdings lists of ETFs like PowerShares S&P 500 Low Volatility (NYSEMKT: SPLV  ) can give you ideas for other low-volatility stocks to consider.

Don't be afraid!
With the market at new highs, it's natural for would-be new investors to be afraid of what could come next if they buy stocks now. But the primary appeal of these low-stress strategies on investing for beginners is that they should be able to help you break through your fears and get your money working harder for you for the long haul.

PepsiCo is a great beginners' stock, but some worry about whether recent slow growth will jeopardize Pepsi's future. Learn more about the stock in The Motley Fool's premium report on the company, which guides you through everything you need to know about PepsiCo, including the key opportunities and threats facing the company's future. Simply click here now to claim your copy today.

Tuesday, December 17, 2013

5 Commodity-Driven Stocks to Trade for Gains

BALTIMORE (Stockpickr) -- With the breakneck rally in stock prices in 2013, it's been easy to ignore commodities (or even commodity-focused stocks). While the S&P 500 has climbed more than 25% since the start of the year, the iShares S&P GSCI Commodity Index ETF (GSG) has managed to lose around 3% since the start of the year.

So no, commodities haven't exactly been earning a place in most investors' portfolios. But that could be about to change. As I write, scores of commodity-centric names are getting close to some pretty meaningful breakout levels. The timing's pretty good too: These names are nearing key levels just as investors are starting to get antsy about stocks this December.

That's why we're taking a technical look at five commodity-driven names to trade this month.

For the unfamiliar, technical analysis is a way for investors to quantify qualitative factors, such as investor psychology, based on a stock's price action and trends. Once the domain of cloistered trading teams on Wall Street, technicals can help top traders make consistently profitable trades and can aid fundamental investors in better planning their stock execution.

Without further ado, let's take a look at five technical setups worth trading now.

Barrick Gold

First up is a pretty unlikely name: Barrick Gold (ABX). The $19.9 billion gold miner has gotten shellacked in 2013, dropping more than 51% since the first trading session of the year. But shares could be in for a turnaround thanks to a bullish setup that's showing its face in ABX right now.

Barrick is currently forming an ascending triangle bottom, a price pattern that's formed by a horizontal resistance level above shares at $21 and uptrending support to the downside. Basically, as ABX bounces in between those two technically important price levels, it's getting squeezed closer and closer to a breakout above $21. When that happens, it's time to be a buyer.

Just to be clear, what's going on in Barrick isn't going on in spot gold. Gold miners such as ABX are prone to diverge from the metal itself, and that's what's happening here. Spot prices haven't broken their downtrend yet this year, but Barrick has. I still think that gold looks in store for more long-term downside. But that doesn't mean Barrick can't make a short-term move higher.

Spectra Energy Partners

Gas pipeline company Spectra Energy Partners (SEP) is showing traders the exact same setup right now -- albeit slightly more textbook than Barrick's. Spectra is another ascending triangle with resistance at $46. A breakout above the $46 level is the signal that it's time to be a buyer in this nat gas transporter.

Whenever you're looking at any technical price pattern, it's critical to think in terms of those buyers and sellers. Triangles and other pattern names are a good quick way to explain what's going on in a stock, but they're not the reason it's tradable. Instead, it all comes down to supply and demand for shares.

That $46 resistance level is a price where there has been an excess of supply of shares; in other words, it's a place where sellers have been more eager to step in and take gains than buyers have been to buy. That's what makes a breakout above it so significant -- the move means that buyers are finally strong enough to absorb all of the excess supply above that price level.

Don't be early on this trade.

Praxair

It doesn't get any more straightforward than what's going on in shares of industrial gas supplier Praxair (PX). Praxair has been bouncing higher in an uptrending price channel since all the way back in April, which is creating a buyable opportunity in shares this week.

The uptrending channel in Praxair has done a good job of defining the high-probability range for shares since that time. Logically, then, it makes sense to become a buyer as close to trendline support as possible; in short, you want to "buy the bounce." And shares are certainly bouncing now.

Buying off a support bounce makes sense for two big reasons: it's the spot where shares have the furthest to move up before they hit resistance, and it's the spot where the risk is the least (because shares have the least room to move lower before you know you're wrong). Remember, all trend lines do eventually break, but by actually waiting for the bounce to happen first, you're ensuring PX can actually still catch a bid along that line.

The 50-day moving average has been a good proxy for support lately, so it's a solid place to put a protective stop if you decide to be a buyer at this point.

Alcoa

Even though 2013 started off pretty slow, things are finally heating up for aluminum giant Alcoa (AA) -- the $10 billion firm is up close to 20% in the last three months alone. But even if you missed the recent run in Alcoa, it may not be too late. This stock looks primed for a breakout move in the next week or two.

Alcoa is currently forming an inverse head and shoulders pattern, a bullish pattern that indicates exhaustion among sellers. The pattern is formed by two swing lows that bottom around the same level (the shoulders), separated by a deeper low (the head). The buy signal comes on a move through the neckline, which is right at $9.80. While the setup in Alcoa is far from textbook (this setup is typically a reversal setup that comes at the end of a selloff), the trading implications are all the same on a move through $9.80.

I mentioned that Alcoa's been showing some strong buying lately. That's quantifiable on the lower subchart of relative strength -- the higher lows in that performance gauge are a very bullish indicator. In fact, positive relative strength trends are historically likely to be followed up by more outperformance over the next 3-to-10 months. That's good reason to pay attention to a $9.80 breakout in AA.

Globe Specialty Metals

Last up is Globe Specialty Metals (GSM), a chart that may look somewhat similar to the Alcoa chart at first glance. Both stocks have rallied hard lately -- GSM is up more than 50% in the last six months, in fact. But there's are some key differences that make GSM look "toppy." Shareholders may want to start thinking about taking gains.

GSM is currently forming a double top, a bearish reversal pattern that's formed by two swing highs that top out around the same price level. The sell signal comes on a break below the trough that separates the two tops. For GSM, that support level comes into play at $16.50. If shares slip below that $16.50 level, we've got a sell signal.

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At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.


Follow Jonas on Twitter @JonasElmerraji