Thursday, February 28, 2013
By Zacks Investment Research
Unless the folks in DC act soon, then on March 1, 2013 a new round of government spending costs will take place. (aka The Sequester).
Right now the Republicans are saying they won't act until the Democrats put forward a new spending reduction plan that gets us on the way to a balanced budget 10 years from now.
The President and his fellow Democrats show no signs of putting that kind of plan together. Instead, the President is just doing speeches about how the sequester will be bad for the economy and employment. He hopes this will get the Republicans to the negotiating table . . . or at least agree to postpone the seqeuster.
What Do You Think Will Happen?
1) Will the sequester spending costs go through on March 1st?
2) If no to #1, then what will happen in its place? (New plan. Kick the can down the road. etc)
3) If yes to #1, then what happens after that?
4) And whichever path you predict will happen, what will be the effect on the economy and stock market?
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Tuesday, February 26, 2013
Click Here for the #1 Way To Profit During The Coming Global Financial Apocalypse
Unless you’ve been living under a rock then you know that the entire world is on the brink of a certified financial apocalypse, the likes of which we’ve never seen before.
Now, I don’t say this to scare you, but it’s important that you understand what’s going on, because there ARE some simple things I believe you need to be doing RIGHT NOW to both protect yourself from the impending collapse and also to potentially profit BIG TIME when things “hit the fan”.
And it doesn’t matter if you’re a stock trader, a forex trader, or an options trader. It also doesn’t matter if you’ve never traded in your life.
This important message is for anyone who’s concerned about protecting the money they have right now while also getting in on and potentially profiting from what could be one of the biggest transfers of real wealth the planet has ever seen.
In this short presentation, I’m going to show you the evidence behind why I and a lot of other financial experts all agree that things are going to get a lot worse before they get any better. Then, I’m going to show you what you can do about it.
All Currencies Are On A Race To Oblivion
Well, to begin with, all currencies are on a race to oblivion!
Because the governments of almost every developed country are spending money at unheard-of deficit levels. In other words, they’re spending money they don’t have and the result is that debt levels are increasing at an alarming, exponential rate.
And this level of spending can only be supported by “printing” new money, like the infamous Federal Reserve “Quantitative Easing” programs here in the U.S..
The governments of the world will have you believe that they have a plan to recover from this financial death spiral. At any given time, some politician is promising to suddenly embrace fiscal responsibility. Or someone comes forward with a new proposal to balance the budget.
Of course, there’s lots of talk about “debt ceilings”. And what if the Federal Reserves eliminated Quantitative Easing and stopped printing dollars?
Maybe the solution is to just increase tax rates while reducing spending.
REALLY?! Do you honestly believe ANY of that stuff would help?
Click here to review more gold and silver investing trading resources.
Monday, February 25, 2013
Click Here for a Free Trial of the "Profit Rockets" Stock Picks Service
3 Consumer Cyclical Names at Bargain Prices
Morningstar Investment Research reports despite headwinds from the payroll tax-cut expiration, the sky isn't falling on consumer spending, and these firms look undervalued.
Wal-Mart Stores (WMT), and consumer spending, has been in the spotlight the last few weeks. Earlier this month, Bloomberg News published internal emails from the retail giant which described early February sales as a "total disaster." And Wal-Mart's earnings released this week seem to confirm that the firm's core customers are under a fair amount of pressure at the moment. Morningstar's Michael Keara thinks the biggest culprit is the expiration of the payroll tax cut at the beginning of this year that is hitting lower - and fixed-income households the hardest. Is this a sign that consumer spending is about to be hit and that consumer cyclical stocks as whole look unattractive? We think not.
As Morningstar economist Bob Johnson has pointed out, some of Wal-Mart's short-term issues are idiosyncratic and the firm's anemic forecast is likely not the canary in the coal mine of consumer spending. Looking at the broader retail landscape, Johnson sees a murky picture, but one that appears to show the consumer soldiering on. Yes, the payroll tax increase, high gas prices, and delayed tax refunds are headwinds, but other factors, such as increased minimum wages in some states and higher Social Security payments, are helping mitigate the pain. To be sure, the consumer may very well come under increased pressure in the months to come, but the sky does not appear to be falling.
Against this consumer-spending backdrop, are there any values in the consumer cyclical sector? On the whole, the sector looks fairly valued today. The median price/fair value ratio is 1.04 compared with the median of 1.00 for the market as a whole. But there are still a number of values, particularly among the automakers and auto-parts suppliers. To find these values, we used Morningstar's
General Motors (GM)
We think GM's car models are of the best quality and design in decades. The company is already a leader in truck models, so a competitive lineup in all segments, combined with a much smaller cost base, leads us to think that GM will be printing money as vehicle demand recovers. We think GM's earnings potential is excellent because it finally has a healthy North American unit and can focus its U.S. marketing efforts on just four brands instead of eight. Dramatically better pricing has helped GM to be profitable at volume levels that would have meant billions in losses a few years ago.
Weight Watchers International (WTW)
Weight Watchers has a reputable and differentiated product in an industry that is rife with false claims. The company benefits from a wide economic moat because we believe it would be extremely difficult for a competitor to replicate the brand recognition, comprehensive weight management approach, and sizable meeting infrastructure to compete with Weight Watchers in a significant way.
Kohl's has had great success with its conveniently located stores that cater to consumers in search of brand-name goods at value prices. Although the department store retailer was not immune to the slowdown in consumer spending during the recession of 2009, we think it has gained share as smaller competitors have been forced to close their doors and as consumers seek the convenience of Kohl's off-mall locations. We think Kohl's strong balance sheet, assortment of brands, and hard-to-replicate cost structure will enable it to outperform peers during the 10 years of our forecast period. Recently, the company has been able to hold gross margins and sales even as prices increased, suggesting some pricing power.
Wednesday, February 20, 2013
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Trading Beyond the Matrix: The Red Pill for Traders and Investors
In his new book, Van Tharp leads readers to dramatically improve their trading results and financial life by looking within. He takes his readers by the hand through the steps of self-transformation by incorporating "Tharp Think" — ideas drawn from his modeling work with several great traders. Making changes in oneself will lead you to adopt the beliefs and attitudes necessary to win when you stop making mistakes and avoid methods that don't work.
Buy his new book on Monday, February 25th (not before), and get up to $1,295 in bonus material and discounts!
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The Introduction; Transformation of the Trading Game: Understanding the Basics,
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A brief summation of each chapter of book, the table of contents, and free bonus offers.
You won't find this much content extracted and given away in most other newly released books. In fact, Dr. Tharp had to make a special deal with his publisher to allow this much free content; and it wasn't a point he was willing to negotiate, because his mission is to get his message through to traders. Once traders reach out to him they say, "Your work has changed my entire approach to trading," or even, "Your Work has changed my life." This motivates him to try harder to get this new book read.
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Real success stories of people who have changed their trading significantly as a result of adopting these concepts.
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How to determine whether or not your beliefs (programs) are useful.
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Nine steps to master yourself.
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More than just another collection of "sure-fire" trading strategies and techniques, Trading Beyond the Matrix takes the reader on a journey of self-discovery, through which they will come to understand who they really are, how their personal psychology affects their every decision, and what, with Dr. Tharp's guidance, they can become: whatever they desire, even a Super Trader.
In addition to the mini-book, you'll find many bonus offers from Van Tharp.
A Tharp Think Webinar from Van Tharp (a $495 value)
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Sunday, February 17, 2013
Click Here to Review and Avail of a Free Trial of the "Profit Rockets" Stock Picks Service
Morningstar Investment Research reports investors need not shun stocks, but security selection is becoming increasingly important.
Stock investors are faced with a growing problem: There just aren't that many attractively priced firms to buy right now. It isn't that we are on the precipice of another major economic decline and that stocks are painfully overpriced. It is simply that the market has run up and caught up with corporate fundamentals. Our analyst staff reckons that the median stock in the market is ever so slightly (1%) overvalued today. So does this mean that investors should abandon ship and start hoarding cash? We don't think so. But it does mean that security selection is becoming increasingly important.
In a very undervalued market (such as in March 2009) finding cheap stocks was like shooting fish in a barrel. Everything had sold off indiscriminately, leaving almost all sectors looking attractive. As it became clear that the economy was putting the credit crisis behind it, stocks of all stripes began to rally aggressively. Correlations between stocks were very high, and you could have made solid returns owning almost anything. Now that correlations are declining, individual security selection matters a lot more. But how do you know what stocks are going to hold up the best in this environment?
Look for Key Characteristics
Economic moats are a great place to start. Firms with sustainable competitive advantages have strong, proven business models. Their competitive positions are protected by structural factors that will in many cases take decades to erode. And they are generally less sensitive to the vagaries of economic cycles. These are the businesses that you want to own for decades to come and that are likely to hold up somewhat better in a downturn compared with lower-quality companies. For the more than 10 years Morningstar has been rating stocks, the largest peak-to-trough loss of a portfolio of all wide-moat stocks was 49% compared with 59% for all stocks. Taking valuation into account makes the difference even more dramatic. If you can't find any huge bargains, it makes sense to buy the best-quality fairly or slightly undervalued company you can.
The fair value uncertainty rating is another key metric. The uncertainty rating represents a Morningstar analyst's confidence in how tightly he or she can estimate the intrinsic worth of a company. Some firms have very predictable cash flows, and there is limited uncertainty about what the cash flows are going to look like during the next few years, while the future path of other firms is much less clear. Given that there are fewer prospects of something unexpected happening at firms with low uncertainty ratings, investors can feel more comfortable accepting a smaller margin of safety when buying stocks. Of course that doesn't mean you should accept no margin of safety at all. Buying a wide-moat, low-uncertainty firm that is trading an unrealistically high valuation isn't a great strategy. Even if stocks aren't incredibly cheap, finding shares that are at least somewhat undervalued remains important.
If a company looks fundamentally attractive, but is currently too pricey, it could make sense to put it on your watchlist. With stocks fully valued, an unexpected event like a flare-up of the European debt crisis, a slowdown in the United States, or some other shock could send stocks lower. It makes sense to be prepared for any potential downturn and to already have a clear idea of where to put to work any dry powder you might have.
Not completely shunning stocks because they are fully valued is easier because the alternatives are not very attractive right now. The Federal Reserve's zero-interest-rate policy has left rates on cash looking incredibly meager. And even if you don't believe we are in the midst of a bond bubble, the threat or rising rates and inflation mean that returns from fixed income during the next decade are unlikely to replicate the returns of the previous 10 years.
However, this doesn't mean you should avoid those asset classes either in favor of equities. A well-thought-out asset-allocation plan remains important to meeting short and long-term financial goals. Stocks are, by their nature, volatile assets; on any given day (or any given year) there is no way to tell if the market is going to go up, down, or sideways. Over the long run, you should be rewarded for taking on these riskier assets, but you can't count on it in the short run. Money that is needed for current living expenses or to pay for an upcoming event, such as college tuition or a down payment, needs to be in a more stable asset class.
To that end, we used Morningstar's Premium Stock Screener to find names that are good for the long haul. We looked for wide-moat, low-uncertainty stocks that currently have a Morningstar Rating for stocks of 3 stars or higher. Run the screen for yourself. Below are three stocks that passed.
In an industry plagued by stagnant growth, Novartis is well-positioned with diversified operating platforms and an industry-leading number of new potential blockbuster drugs. Strong intellectual property supporting multi-billion-dollar products, combined with an abundance of late-pipeline products, creates a wide economic moat. While the late 2012 patent loss on Diovan and manufacturing problems in the consumer division will weigh on near-term growth, the company's strong strategic position should lead to steady long-term growth.
Coca-Cola's wide economic moat is bolstered by its bevy of powerhouse brands and its extensive distribution network, which enables the company to deliver its products to consumers in more than 200 countries. While declining consumption of carbonated beverages in North America will serve as a near-term headwind for Coke, we believe international markets will provide plenty of growth opportunities in the long term. Absent any strategic missteps, we view Coca-Cola as a safe haven in an uncertain economic environment, given that the firm has one of the widest moats in our consumer coverage universe.
McDonald's remains resilient despite an increasingly challenging environment for restaurant operators. Although we doubt the firm can duplicate the almost 1,500 basis points of operating margin expansion it posted during the last five years, we are optimistic that it is capable of generating superior returns on invested capital over an extended horizon. Our confidence stems from unrivaled scale advantages, an incredibly strong brand, a cohesive franchisee system, and ample international growth opportunities. We don't expect these qualities to abate anytime soon, thus earning McDonald's the widest economic moat in the restaurant category.
Click Here for a Free Trial of Morningstar Investment Research
Friday, February 15, 2013
Click Here for a Chance to get the Course for FREE
Forex Trading Education that Actually Helps You
The Complete Currency Trader website is dedicated to teaching a realistic and reliable approach to trading Forex. Aspiring traders can find help & advice, tips, training, and all round worthwhile information that will improve and enhance your understanding of trading the Forex market. Get the facts and discover what it takes to become a consistently profitable trader, and then learn how to turn that knowledge to your own advantage. Complete Currency Trader aims to give you a refreshing insight in to the realities of Forex trading so that you have an increased probability of long term success!
Trading is simple but it isn't easy! Complete Currency Trader is here to help.
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Learning to trade is like learning to cook.
A trading system (the rules for entry and exit) is to trading, like a recipe is to cooking. Having a recipe does not make you a great chef, and having a system does not make you a great trader. It takes many years to learn to "cook" and it will take many years to learn to trade.
PIPS are meaningless and no measure of profitability.
Making 1000 pips is no more profitable than making 10 pips. Pips are not a measure of success or profitability. You can have lost more pips than you gain and still be in profit, and likewise you can gain more pips than you lose and still have lost money.
How important is your win rate in Forex trading?
Does a win rate really matter? Does having a higher win rate mean you will be more profitable? Everyone is concerned with filtering out losses and increasing there win rate as much as possible, but is it really the single most important factor in their trading.
Click here to review more forex trading resources.
Thursday, February 14, 2013
Income has been the main driver of returns for stocks and bonds throughout most of history. But interest rates have been stuck at zero for years, depriving investors of the sustainable income they enjoyed for decades. Even worse, rates have fallen just as many hardworking Americans are nearing retirement.
Most income-seekers are not navigating these unusual waters as well as they could. Many are settling for lower income streams and investing in low-yielding government and corporate-bond funds or stuffing cash in low-rate CDs. Others don't want to compromise on their income needs; they're snapping up high-yield bonds and dividend-paying stocks of questionable quality. This unconventional environment demands an unconventional strategy.
As editor of Morningstar ETFInvestor, I do not promise a road to easy riches. There is no such thing. But I strongly believe that exchange-traded funds offer income-seeking investors viable global alternatives--alternatives that were not available just a few years ago. I deliver my ideas to investors each month in the pages of my newsletter.
The biggest mistake in income investing is targeting a yield level. The path to sustainable income generation is constructing a portfolio focusing on total return--a total return that you can tap into for income. Doing "income" right isn't just about finding the most attractive yield opportunities today. It's also about focusing on total return and being disciplined enough to walk away when the prospective rewards aren't rich enough.
My investing strategy at ETFInvestor is simple: Buy discounted assets with improving fundamentals across the globe. I think boring happens to be beautiful, so don't expect me to make crazy bets. Instead, expect me to lean on the world-class fundamental research conducted by Morningstar's bench of more than 150 stock, bond, and fund analysts, as well as data you likely won't find anywhere else.
I manage two portfolios, backed by a sizable stake of Morningstar's money and much of my own personal wealth. Both strategies are the result of distilling the most robust drivers of outperformance to be found in academic and practitioner research. My pain is your pain, so you can be sure I'll be watching our nest egg like a hawk.
The ETF Income Portfolio features a high-quality collection of income-generating ETFs with the goal of earning 5% in excess of the 30-day T-bill rate over a full business cycle. In this portfolio, I'm seeking real absolute returns--returns you can use as income to pay bills, take a vacation, or do whatever you need to.
The ETF Global Asset-Allocation Portfolio, on the other hand, doesn't have an absolute-return goal, nor is it expressly income-oriented. Here, I'm looking to outperform the 60/40 MSCI ACWI/Barclays US Aggregate benchmark over a full business cycle with the least risk possible. I invest this portfolio in ETFs representing undervalued asset classes, sectors, and markets around the world with improving fundamentals.
In addition to providing you with portfolio updates each month, I provide a bird's-eye view of valuations around the globe, portfolio construction advice, and data on the 350 biggest and most popular ETFs. Subscribers also receive my intra-issue emails, which keep you updated on trades and news events as they happen, as well as access to our real-time website.
There are plenty of charlatans out there promising high yields with low risk and little work. The reality is that investing is hard work. And income investing in a low-yield world is extra hard and demands unconventional thinking.
Whether you're an income-seeker or are simply looking for new total return ideas, give Morningstar ETFInvestor a try. Click the link above for a free trial.
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Wednesday, February 13, 2013
China Exchange Traded Funds Investing by Zacks Investment Research
Make no mistake about it, China is back on track.
The nation suffered through weak stretch in 2012, but the economic outlook appears brighter for this year and beyond. Growth is expected to be at 8% for the calendar year as exports pick up thanks to a solid U.S. market, and a much more stable situation in China’s biggest trading partner, the EU.
This trend has once again rekindled American investor interest in the world’s second biggest economy, causing many to tilt portfolios to stocks, or funds, that have high levels of exposure to the nation.
How to Buy China
Investors can access China directly via a few companies already. Some Chinese mega caps are already listed on American exchanges such as China Mobile (CHL) or China Petroleum & Chemical (SNP).
Meanwhile, plenty of American firms are largely driven by their Chinese growth prospects, so these could be considered ‘tangential’ plays on the Chinese economy, such as Yum Brands (YUM) or Coach (COH). But, in my opinion, both of these strategies pale in comparison to an ETF approach for the China marke.
That is because an ETF allows investors to buy up shares in a variety of Chinese companies in a single ticker, many of which wouldn’t be investable by Americans outside of the fund world. These funds also help to reduce on the risk of a single blowup in the Chinese market, as the diversification benefits inherent in ETFs helps to cut down on the pain from company specific issues.
Furthermore, ETFs usually offer up decent liquidity, something that may not be there with some Chinese ADRs. This can be very important in the fast-moving Chinese market, as the country can still see large bouts of volatility in short time periods.
Usually, when investors think of ‘China ETFs’ the one that comes to mind is the iShares FTSE China 25 Index Fund (FXI - ETF report). This product is easily the most popular and well-known in the space, as it sees average volume of about 17 million shares a day with assets of over $9 billion.
The fund is by far the oldest China ETF on the market, having made its debut in 2004. However, while the product might have impressive volume levels and widespread investor interest, it makes many ETF analysts like myself cringe.
Why FXI is a Weak Choice
While the product has done a great service in opening up China, and getting the nation into many investor portfolios, it has outlived its usefulness. There are plenty of better choices out there for most investors, and for a variety of reasons (see The Key to International ETF Investing).
First, investors should note that despite having an enormous asset base, FXI is actually one of the more expensive China ETFs on the market today. The product charges 72 basis points a year in fees even though it holds large cap stocks, the same fee that PEK charges although this China fund focuses on harder-to-obtain local A-Shares and swaps for its exposure.
If that wasn’t enough, the product is heavily concentrated into a few sectors, namely financials and energy. In fact, of the limited 25 stock portfolio, over 50% goes to financials, while another 20% goes to the oil and gas sector.
Telecom, basic materials, and real estate round out the rest of the fund, meaning that a number of key sectors receive no weight at all in the product. Think about that for a second. FXI offers nothing to either consumer sector, health care, utilities, or industrials, putting a full 95% of assets into large cap stocks.
While this strategy certainly promotes safety, one can easily argue that it misses out on what many investors believe will be the more dynamic corners of the Chinese economy going forward. It also zeroes in on China’s biggest state-owned firms which probably don’t have a whole lot of growth left anyway, meaning that investors may not tap into the real China growth story with FXI.
Plenty of Better Choices
Fortunately, the explosion of ETFs over the past few years has given investors a number of other options to use in the China ETF world. Many of these products address the severe issues in FXI highlighted above, and thus could be better picks for China ETF investors, including the following three funds:
SPDR S&P China ETF (GXC)
This ETF is the second most popular China fund on the market today with over $1.2 billion in AUM. The product has solid volume of about 200,000 shares a day so liquidity should be ample in this product.
GXC is also a bit cheaper than FXI, charging investors just 59 basis points a year in fees. This makes it one of the lowest-cost choices in the space, while still having great liquidity (read Three Excellent Dividend ETFs for Safety and Income).
Its portfolio consists of a robust 200 stocks, stretching across all the industries. Financials and energy do make up the top two in this product, but technology (12%) and industrials (9%) round out the top four spots.
Guggenheim China Small Cap ETF (HAO)
For a focus on smaller firms in China, HAO could be the ticket. This product tracks the AlphaShares China Small Cap Index, which charges investors 70 basis points a year in fees.
Assets under management for this product are approaching $400 million, while the average daily volume is a solid 200,000 shares a day as well. This suggests that despite the focus on small caps, the fund should see high levels of liquidity for most investors.
The ETF holds over 240 firms and it doesn’t put more than 2% in any single security, so company specific risk is pretty much non-existent. The sector exposure is pretty solid as well, as energy and financials account for just 5% of total assets.
Instead, industrials, consumer cyclical, and basic materials make up half of the fund, giving this product a very different tilt. Investors should note, however, that the mid and small cap focus of HAO does make it a bit volatile, so risk averse investors should be cautious with this product.
Global X China Consumer ETF (CHIQ)
For those seeking a pretty big departure from what is in FXI, this Global X fund could be an interesting alternative. The product only buys Chinese consumer stocks, making it a great pairing for an FXI investment, or a targeted play on one of China’s key growth segments.
This is done by focusing on the S-BOX China Consumer Index, a benchmark that has about 40 stocks in its basket. It is tilted towards cyclical consumer stocks (48%), while mid caps dominate from a cap perspective.
In terms of sectors, food products take up roughly 18%, while automotive, and specialty retail account for the rest of the top three. Assets are relatively well spread out, as no one company makes up more than 6.5% of assets, although automotive and food firms do dominate much of the top ten holdings.
The approach has been relatively popular with investors, as the ETF has over $200 million in assets and average volume above 130,000 shares a day. The total cost is pretty competitive too, coming in at 65 basis points a year, which is surprising given the targeted exposure in the fund.
The Bottom Line
Why anyone is still holding FXI is beyond me. The product is overly concentrated, expensive, and has no holdings in some of the country’s key growth sectors. The only saving grace of the ETF is that it is very liquid, so maybe it can be argued to be a good pick for short-term traders.
Anyone else though would be better off looking at some of the aforementioned ETFs instead. Not only are they cheaper, but their exposure seems poised to make them better picks for most investors over the long haul, which is probably what you should be focused on when investing in China ETFs anyway.
Click Here for More Exchange Traded Fund Resources
Tuesday, February 12, 2013
If you're not using candlestick charts in your trading, you should probably start right away.
And if you DO use them, chances are you're not using them correctly.
Which means that you are leaking profits.
But don't worry - even the best traders leak profits.
It's just that the smartest ones try to plug those leaks.
Fortunately, this can be an easy fix for any trader.
Steve Nison is the world's top candlestick expert.
And he's hosting a special webcast to show you how to plug the profit leaks by using candlesticks correctly.
These little changes can make a massive improvement in your results.
You'll discover how to ride the good trades longer . . . how to avoid bad trades . . . and how to cut your losses fast to keep your trading account healthy.
Plus, you will also learn how you can get additional free training to:
* Take a trading "stress test" to determine your trading health
* Discover how you can learn the same secret strategies Steve has taught at the world's most prestigious trading firms
* Find out how to plug those profit leaks in your own trading
This brand new webcast is called . . . "CANDLESTICKS UNLEASHED"
As a special favor, Steve is waving any fees to attend.
This special session is for you no matter what you trade, and all time frames.
You will get valuable new insights you may have never heard before.
Click Here for Full Details and Registration
Monday, February 11, 2013
This weeks stock pick comes from "Profit Rockets" Stock Pick Service. Its a momentum trade setup so in case the momentum in this currently overbought market dies out, stick to stop-loss to live and trade another day.
Buy - PPG Industries - Ticker PPG
Sector: Basic Materials Specialty Chemicals
Buy Entry: 139.29 Price Breakout
Take Profit Areas: 149.43 to 150.75, 155.49 to 156.87, 167.90 to 169.28
Recommended Trade Management: Use ATRStop as a trailing take profit stop in case of extended gains beyond our take profit price area targets. 1.7% annual dividend yield.
Zacks Investment Research reports PPG Industries Inc (PPG) has wrapped up the sale of its commodity chemicals business to Georgia Gulf Corporation, a leading maker of chlorovinyls and aromatics. The transaction cosummated through the merger of its fully owned subsidiary, Eagle Spinco Inc., with a unit of Georgia Gulf.
Eagle Spinco Inc., which operated PPG Industries’ commodity chemicals unit prior to the merger, is now a wholly-owned subsidiary of Georgia Gulf. The closing of the deal followed the expiration of the related exchange offer and the satisfaction of other specific conditions.
Following the merger, the integrated entity was named “Axiall Corporation” and began trading on the NYSE under the ticker symbol “AXLL” effective Jan 29.
PPG Industries, in July 2012, announced a definitive agreement with Georgia Gulf, under which, it agreed split its commodity chemicals unit and merge it with Georgia Gulf for roughly $2.1 billion (including debt).
In the merger, each Eagle Spinco share was converted into the right to receive one Georgia Gulf share. As such, shareholders of PPG Industries, who tendered their shares as part of the exchange offer, received 3.2562 Georgia Gulf shares for each PPG Industries share exchanged and accepted by the company.
PPG Industries accepted 10,825,227 shares of its common stock in exchange for 35,249,104 Eagle Spinco shares. In connection with the merger, the company also received around $900 million in cash.
PPG Industries said that it will report the results of the divested business for Jan 2013 and record a net gain resulting from the sale of the unit when it will release its results for first-quarter 2013. The company, in its fourth-quarter 2012 call, noted that it expects to incur additional charges associated with the deal in the first quarter.
PPG Industries currently holds a short-term Zacks Rank #2 (Buy).
Click Here for a Free Trial of "Profit Rockets"
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Wednesday, February 06, 2013
Click Here to Review and Register for Steve Nison "Candlesticks Unleashed" Free Webinar February 07 or 09
Smart traders are always fine-tuning their skills.
Because no matter what they trade, there's always money left on the table.
You may get out of good trades too early . . . or get into bad trades that drain your account.
I call them "profit leaks."
Yes, every trader has them.
Fortunately, fixing most of those profit leaks can be fast and easy for anyone.
One of the world's top analysts is now focusing on helping the average trader plug those leaks.
His name is Steve Nison of Candlecharts
You probably know him as the premier candlestick charting guru.
For more than 30 years traders have been flocking to Steve to learn his unrivaled candlestick strategies.
That's because using candlesticks the right way can help you plug those profit leaks.
Steve just posted a new video that shows you how you can start benefiting from his proven candlestick strategies overnight.
Click here to watch Steve's video.
You will also learn how you can get additional free training to:
* How to take a trading "stress test" to determine your trading health
* Discover how you can learn the same secret strategies Steve has taught at the world's most prestigious trading firms
* Find out how you can plug those profit leaks in your own trading almost overnight
Click here to review more Candlestick trading resources and software.
Monday, February 04, 2013
Zacks Investment Research reports Conn’s (CONN) can trace its roots back to 1890 where it started life as a plumbing company in Beaumont Texas. In the early to mid 20th century, Conn’s began selling refrigerators and ranges and the rest is history.
Since coming public less than a decade ago, Conn’s has continued to expand (conservatively) and now operates 68 retail locations in Texas, Louisiana, Oklahoma, New Mexico, and Arizona. The specialty retailer sells everything from home appliances and consumer electronics to computers, furniture, mattresses and even lawn and garden equipment.
Conn’s also offers customers flexible in-house credit options instead of farming them off to outside banks. Their unique in-house financing allows them to capture more customers, sell higher margin product to consumers with less than perfect credit and also control approval rates and credit limits. It also allows Conn’s to capture fees and interest on accounts that are performing.
They also offer competitive third-party financing programs and third-party rent-to-own payment plans.
Conn’s is not only expanding their stores (Conn’s added 3 new “HomePlus” locations in the last quarter), but their earnings are moving in the right direction. Their last earnings report was a record breaker; here are some highlights:
Total revenues increased 10.6% to $206.4 million;
Retail gross margin was 35.5%;
Same store sales rose 12.6% over the prior quarter, on top of same store sales growth of 18.9% vs. a year ago
Adjusted retail segment operating income was $12.9 million, up $13.8 million on an adjusted basis over the prior-year quarter;
Credit segment operating income totaled $11.6 million, compared to adjusted operating income of $5.6 million for the prior-year period;
Conn’s earned $0.35 per share on a reported basis, versus a loss of $0.40 per share the year prior, which is a huge turnaround for the company.
They also raised 2013 earnings guidance to $1.55 to $1.60 on an adjusted basis. Year over year revenue grew by 10.6% and inventories shrank by 20.22% during the same time period.
The company has managed to increase profits quarter over quarter for the last year and beat the Zacks consensus over those last 4 reports by an average of 16.73%.
Analysts have been upping their estimates leading into their next report in April and even though sales are expected to be flat, cost cutting, margin and financing profits are expected to add 15% to earnings over the next year.
Consumers Holding On
It’s fair to say that the most recent initial GDP reading was a disappointment, but when you look at the employment trends and couple that with consumer spending, durable goods and home sales, the consumer is alive and well. Employment growth has also been stable and sentiment is improving after a three month decline.
The earnings momentum and macro economic data provides a firm foundation for Conn’s to continue to grow.
Their unique store layout, aggressive pricing and buy-here, pay-here type financing makes them an option for the many consumers who may not have the perfect credit to go elsewhere.
The fact that they are only trading at 17 times earnings makes their stock an easier pill to swallow and one that’s worth a look, especially since they are a Zacks Rank #1 stock.
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Friday, February 01, 2013
Zacks Investment Research reports the telecommunications industry has emerged as a key driver of the global economic recovery. The unprecedented growth of high-speed mobile Internet traffic, particularly for wireless data and video, has transformed the industry into the most evolving, inventive and keenly contested space.
In addition, the emergence of mobile broadband technology has created several new service areas, which potentially offer huge growth potential. This includes IPTV, collaboration and cloud computing, videoconferencing and mobile payments, to name a few.
Research firm Ovum reported that worldwide revenues of telecom sector were more than $2 trillion in 2012, an improvement of 2% year over year. Mobile service providers account for nearly 60% of the total revenue.
A major characteristic of the telecommunications industry is the high barriers to entry due to scarcity of public airwaves (spectrum). The U.S. telecom market is controlled by just four ational players, as regional low-cost operators are not eligible to compete with these large carriers.
Furthermore, it is not easy to establish a new telecom carrier since it will require government permissions to transmit voice, data and video on public airwaves. Spectrum licenses are limited and therefore quite expensive. Moreover, deployment of network infrastructure, whether high-speed wireless (3G/4G) or wireline (fiber optic), requires significant capital expenditure, which very few entities can afford.
We remain of the view that the overall economic dynamic will remain favorable to telecommunications industry, primarily due to its key attribute of being a major infrastructure product for both the emerging and the developed nations.
The telecommunications industry encompasses myriad technology-related businesses. Besides the legacy local and long-distance phone services, the telecommunications industry also includes wireless communications, Internet services, fiber optics networks, cable TV networks and commercial satellite communications.
Telecommunications is one of the very few industries which witnessed massive technological improvement even under recession. The major thrust of the telecommunications sector is backed by continuous network and product upgrade and invention by the industry players.
For the last 15 years, the U.S. wireless sector had been investing an enormous $300 billion to install the most efficient seamless communications networks in the world. The telecommunications industry as a whole generates over 2.6 million jobs in the U.S., which is expected to continue its momentum in 2013 due to increasing adoption of next-generation 4G LTE networks.
According to ABI Research, 103 million LTE-compatible handsets were shipped globally in 2012. Matured markets of North America and emerging Asia-Pacific markets purchased 95% of those phones.
Moreover, growing demand for technically superior products has been the silver lining for the telecommunication industry in an otherwise tough environment. Metro Ethernet, IPTV, cloud computing, managed IP services are some of the major innovation in recent times. These developments are also helping telecom equipment manufacturers, infrastructure solutions providers, and mobile phone makers to consolidate their finances.
Wireless Is the Key
Despite the massive growth in fiber-to-the-home networks, we believe wireless networks will be the key player in the telecom industry growth story. In addition, the sector is witnessing a fundamental change. Earlier, it was voice calls that brought money to the operators. Currently, data and video have become the focus. New network standards aim at faster data connectivity, quick video streaming with high resolution, and rich multimedia applications.
Currently, the U.S. has approximately 300 million wireless subscribers. Mobile broadband has become the most lucrative source of revenue for the wireless operators. Massive growth of data buoyed by smartphone revolution is the main reason for this favorable scenario. Global revenue from mobile broadband is expected to reach $123-$125 billion in 2016.
Spectrum Crunch & Market Saturation
The U.S. wireless industry is facing acute spectrum shortages, sometime resulting in data packet dropping. Carriers are investing heavily for more effective utilization of their existing spectrum holding and are trying hard to add more spectrums to their portfolio. In addition to the four nationwide carriers, all the smaller pre-paid wireless operators are also opting for a sound LTE network to offer hassle free broadband video streaming and data transmission.
Meanwhile, smartphone penetration has crossed more or less half of the total U.S. post-paid wireless subscribers. Recently, pre-paid carriers have decided to offer high-end smartphones, such as iPhone 5.
Severe spectrum crunch coupled with gradual smartphone market saturation is forcing the wireless operators to look for other options to raise revenue. These include new pricing plan, a shift from unlimited data usage to tier-based data usage, and higher upgrade fees for smartphones in order to offset handset subsidies. In fact, the average revenue per user for most of the wireless carriers is rising over the last two years and is expected to grow in the long term primarily due to massive growth in mobile data usage.
As smartphone users are now increasingly downloading multimedia contents, video has become the primary network traffic. What is more interesting, in addition to download, the smartphone and tablet users are up-linking more and more video content and, in turn, becoming broadcasters in their own right. Several industry researchers predicted that video may account for 60% of total network traffic by the end of 2012.
Mergers and Acquisitions to Continue
Despite the failed merger agreement between AT&T (T) and T-Mobile USA, we believe the U.S. telecom industry will witness more M&A deals in 2013. AT&T needs spectrum to compete with its bigger rival, Verizon Wireless (VZ).
Verizon bought spectrum from major cable MSOs including Comcast Corp. (CMCSA), Time Warner Cable Inc. (TWC) and Bright House Networks. Prepaid wireless operator MetroPCS (PCS) is currently undergoing FCC review for a merger deal with T-Mobile USA.
Softbank of Japan has decided to buy a majority stake in Sprint Nextel Corp. (S - Analyst Report). DISH Network Corp. (DISH), which holds a large wireless spectrum, has already declared that it is not averse to a deal as an acquirer or an acquired entity.
The telecommunications industry as a whole offers a number of attributes that are difficult to ignore from the standpoint of investors.
Telecom is a necessary utility: The need for telecom in both rural and urban areas, and its role in the infrastructure of both developed and developing markets, will continue to grow. In addition, economic stimulus plans in the U.S. and throughout the world should boost select service providers and equipment manufacturers.
Spectrum Auction: On September 28, 2012, the FCC decided to free up spectrum currently used by TV broadcasters for commercial wireless networks and to deploy a nationwide interoperable public-safety broadband network. Huge proliferation of smartphones, tablets, and several other pocket-sized mobile devices significantly raised the demand for bandwidth for seamless wireless connectivity. The spectrum auction is expected to shore up $15 billion in the U.S. government exchequer.
Strong Demand: A recovering economy speeds up the demand for real-time voice, data and video manifold. The FCC has estimated that within the next five years, mobile-data demand will grow 25-50-fold from its current level. These latest developments are enabling the telecom service providers to undertake large network extension while upgrading plans.
The companies that match well with the aforementioned considerations include AT&T Inc. (T - Analyst Report), Verizon Communications Inc. (VZ - Analyst Report) and MetroPCS Communications Inc. (PCS - Analyst Report).
Generally, telecommunications companies that were under pressure have high debt levels and large financial leverage ratios, or are unable to cope with the recent market trends. Other risks that remain are as follows:
Potential business slowdown: Lower overall top-line sales among carriers are expected to continue to weigh on capital spending decisions -- a major problem faced by equipment vendors. The companies are expected to remain focused on improving their balance sheet, financial discipline and free cash-flow generation.
Product Overlapping: We may see more product sharing deals between telecom, cable TV and satellite TV operators as each of these players are trying to get a foothold into another’s territory. Even pay-TV services, offerings to business enterprises and mobile backhaul and metro-Ethernet segments may witness more convergence. Mobile phone makers are now gradually offering tablets (small laptops); chipset manufacturers are offering personal computers and mobile phones are frequently interchanging their areas of operations.
Increased competition: Technological upgrades and breakthroughs have resulted in a cut throat price competition. Product life-cycle and upgrade-cycle have been reduced drastically as several firms are coming out with new types of products and services within a short span of time. Increasing competition is actually forcing each and every player to offer heterogeneous and bundled services.
Showing signs of the above mentioned weaknesses include SK Telecom Co. Ltd. (SKM), Telefonica Brasil S.A. (VIV) and NII Holdings Inc. (NIHD).
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