Sunday, December 29, 2013

Sharp declines in Asia pressure Wall Street

Wall Street was poised to start the last trading day of the week with modest losses as markets in Asia saw sharp declines.

Ahead of the start to regular trading, Dow Jones industrial average index futures fell 0.1%, Standard & Poor's 500 index futures fell 0.3% and Nasdaq 100 index futures dipped 0.1%.

On Thursday, the Dow rose 0.6% to 15,509.21. The S&P 500 added 0.3% to 1,752.07. The Nasdaq composite was up 0.6% to 3,928.96.

THURSDAY: Stocks close higher on positive earnings news

Asian stock markets were dragged down Friday by doubts about the durability of recoveries in the region's two biggest economies.

Japan released inflation figures that gave a mixed signal about the effectiveness of Prime Minister Shinzo Abe's economic revitalization strategy and Chinese central bank's failed to inject funds into money markets this week to curb frothy credit growth.

5 Best Warren Buffett Stocks To Buy For 2014

Japan's Nikkei 225 shed 2.8%, Seoul's Kospi fell 0.6%, Hong Kong's Hang Seng lost 0.6% and China's Shanghai composite index was down 1.4% at 2,139.80.

European shares moved lower, with benchmarks in Italy and Spain falling around 0.8%. There were more modest declines in the United Kingdom and Germany. The FTSE 100 index was down 0.1%. The DAX index lost 0.3%.

In energy trading, benchmark U.S. crude for December delivery was up 12 cents at $97.23 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 25 cents to $97.11 on Thursday.

Contributing: Associated Press

Friday, December 27, 2013

What's Beyond Fracking?

Today, Neil George, editor of By George, discusses the hot-button topic of oil fracking and explores alternative companies that offer alternative solutions.

SPEAKER 1:  My guest today is Neil George.  Thanks for joining us.  Neil thanks for being here.  It’s so good to see you again.

NEIL:  Nancy, it’s a pleasure.  I’m always thrilled to be on the network. 

SPEAKER 1:  Thank you.  Let’s talk about your recent columns about beyond fracking.  I mean fracking is kind of a hot spot with people these days.

NEIL:  It has been Nancy and a lot of people are making a lot of money, a lot of oil companies, especially smaller and mid-size firms have gone into areas throughout the country and therefore have been able to extract a lot more oil and gas.  A lot of these companies are in the master limited partnerships, MLPs.  They have been generating a lot of income, helping out investors, but at the same time, Nancy, we’ve also had a lot of concerns over some of the potential environmental impacts…

SPEAKER 1:  The transportation of it.

NEIL:  Well we have transportation of it, we also have the idea of fracking is potentially causing some seismic activity in Ohio.  The EPA has recently released a study looking at some of the methane contamination of ground water wells in Pennsylvania and while it’s not necessarily conclusive yet, there are enough concerns that people need to be thinking about the liability and the potential liability of what’s happening in the fracking market.

SPEAKER 1:  Plus it uses a lot of water, right?

NEIL:  It uses a lot of water and as we’ve also been seeing a lot more discussion, even though many parts of the U.S., particularly back in the east, have been seeing a tremendous amount of rain throughout so far this year, other parts of the country, particularly in the west and through the Colorado river basin have seen a lot of drought.  We’ve seen a dramatic drop in river traffic, and so as a result water is still very much one of those mispriced resources that are causing concern.  So the idea, if we can look at fracking and say okay that’s done well but we basically can also look at the idea that fracking is not necessarily the ultimate form of extracting oil.

SPEAKER 1:  Nor the only.

NEIL:  And nor the only.  There’s another way.  That is a technology that came from the 1970s that I think is going to replace a great deal of what the fanfare has been surrounding the fracking industry.

SPEAKER 1:  And what is that?

NEIL:  Well Nancy, the idea that if you call fracking is not a new technology, even though many of us see the near-term effects more recently, the idea that there is another technology that came out of the 1970s.  You remember 1974, although you were probably a little tike at that point.

SPEAKER 1:  I was just three.  I lied.

NEIL:  The idea of that in 1974 we had the OPEC Oil Embargo and in response to that the Nixon Administration put a price cap on oil and therefore we created a lot of scarcity, the long lines at the gas station, and odd and even purchasing rights.  It was a bad time, but the idea in the legislation there was a little bit of a loop hole in which Nixon told the oil companies if you find more oil that you don’t know about right now you can charge whatever you want for it and therefore a few oil companies including Amerada Hess and Occidental put their scientists out in the field and they said how can we get some more oil and they came up with this way of injecting carbon dioxide into various shale and rock formations and rather than breaking things up the C02 effectively kind of crept through into the various crevices of the rocks and the clay formation and it basically lubricates the oil, if you can picture this, therefore the oil just sort of seeps out from the cracks.

SPEAKER 1:  It’s not so thick.

NEIL:  Not so thick but back then the problem was it also brought a lot of water up to it and therefore you had this oily watery mix that was unusable.  They kind of said okay this was a great idea.  It didn’t work, let’s try something else.  Fast forward into the last few years.  There have been a handful of companies that have been experimenting with the so called de-watering of oil because there are other naturally oil formations that also have a lot of water with it, and because of that newer technology people have now gone back to what Amerada Hess and Occidental did back in the 1970s and now are starting to experiment with the CO2 extraction process.  The idea that we’re starting to see some of the first fields that are occurring in Texas and in through New Mexico and so forth and also potentially parts of Oklahoma with some of these newer field technologies and the idea that U.S. agencies kind of track the amount of oil that’s produced are saying this could potentially be significantly higher than our existing production.  It will be multiples of what we’re seeing in the fracking part as far as contributing to oil supplies.  This is going to be quite big.

SPEAKER 1:  And you don’t have the problems with fracking.

NEIL:  And you don’t have the problems.  On top of that, the idea that we can take CO2, which some people consider a pollutant and basically place it in the ground and gets more out of it, we’re going to make a lot of people happy that are believers in that whole global warming thing.

SPEAKER 1:  Sure and who are the leaders in that?

NEIL:  Well Nancy the key thing is that all of us create CO2.  I’m doing it right now speaking to you and I apologize for that, but the idea that CO2 is both a naturally sourced as well as its produced out of smokestacks.

SPEAKER 1:  Right, greenhouse gases.

NEIL:  Greenhouse gases, and so the idea is you want to look at companies that are involved in the extraction and the delivery process.  One of my favorites right now that is in the forefront of this industry is Kinder Morgan Energy Partners.  KMP is the symbol.  It’s a master limited partnership, pays about 6.4%, so it’s a dividend payer as well and it also has pipelines that deliver natural gas and oil, but what they also have is Arizona.  There is a massive dome of naturally occurring CO2.  They’ve hooked up a pipe to that and put that pipe into the fields that are using this now in Texas and they’re extracting every little molecule out of this thing and pumping it over.

SPEAKER 1:  Very interesting.

NEIL:  It’s basically working quite well.  They also are partnering with Southern Corp, the utility down in Georgia and so forth, along with Siemens to put some equipment on top of their smokestacks and build it, extract it, and process it, and pipe it.

SPEAKER 1:  Interesting.

NEIL:  And therefore they’re also working on getting some carbon credits from the Europeans and some goodwill with the EPA, and then lastly there’s one of the companies in the refining business and I know refiners had a good run now where there’s a little bit of concern right now, but Valero, VLO, the company is working some of their other operations along with Air Products Company to be able to in the refining process you create CO2 and so they can effectively capture that CO2, again get carbon credits, and be able to turn around and deliver that into the oil industry.  Those are some of the key players in this industry and I think a lot of your viewers are going to be learning more about in the coming year, but you can get in now and I think I would start with KMP first.

SPEAKER 1:  Wonderful.  Thank you, Neil.

NEIL:  Thanks Nancy.

SPEAKER 1:  Thanks for being with us on the Video Network. 

Wednesday, December 25, 2013

Ken Fisher and the Price to Research Ratio

Any investor that has followed the techniques of Kenneth Fisher, writer at Forbes magazine for over 25 years and investing guru, has discovered that Fisher's methodology is ever being refined. Aside from his P/S ratio introduced in his book, "Super Stocks," Fisher also introduced investors to a "price to research ratio." You will still discover Fisher occasionally talking about the P/S ratio, but the price to research ratio appears to have disappeared from the radar screen.

It is this ratio that I would like to revisit.

One finds his book "Super Stocks" still rewarding because Fisher lays out an investing methodology that still leads to satisfactory returns, even if he has personally strayed away and/or altered it to suit himself. In one of his latest books, "The Only Three Questions That Count," Fisher introduces investors to a little statistical lesson on casual correlations and the correlation coefficient. While the concepts sound complicated, they are actually easy and he teaches investors how to "credibly" disprove that any two events are related to one another. This lesson alone makes the book worthwhile once you grasp the concept. Perhaps it was the use of this concept that silenced Fisher on the price to research ratio. Whatever the case, it does not appear to raise its head again in his writings.

Fisher's Price to Research Ratio was simply calculated by dividing the company's market capitalization by the amount of research and development shown on the income statement over the last full 12 months. He determined that if the:

Price to Research Ratio:

>15 = Fail

>10 or ≤ 15 = Pass (barely)

≥5 or ≤10 = Pass

Tuesday, December 24, 2013

5 Best Undervalued Stocks To Buy Right Now

As in last week's article, we've found another blue chip dividend stock with several attractive attributes: major dividend growth, strong recent and projected earnings growth, and, in addition, this stock looks undervalued. Although it's not a high dividend stock, you can goose the dividend yield via selling covered calls and cash secured puts - we've listed 2 trades further below.

London-based Ensco plc, (ESV), provides offshore contract drilling services to the oil and gas industry worldwide, and operates a drilling rig fleet of approximately 74 rigs, including 9 drill ships, 13 dynamically positioned semisubmersible rigs, 6 moored semisubmersible rigs, and 46 jackup rigs. ESV currently has the world's second largest offshore rig fleet, behind only Transocean, which has 95 rigs, and just ahead of Noble, (NE), which has 73 rigs. Ensco has the newest fleet of Ultradeepwater rigs, with 3, and, has 4 more on order, which are already contracted.

5 Best Undervalued Stocks To Buy Right Now: 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 Oliver Pursche]

    European large-cap pharmaceuticals like Novartis (NVS) �and Bristol Meyers Squibb (BMY) �count amongst some of our favorite stocks right now, as do U.S. multinationals that are growing revenue and margins in Asia ��Tupperware (TUP) �is a shining example. Stay away from utilities and energy stocks, as they are likely to be the laggards over the next year.

  • [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 Buy Right Now: 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 Mani]

    Dollar Tree, Inc. (NASDAQ:DLTR) is one of the companies that are set to exploit the ongoing trend of consumers' increasing focus on value with significant opportunity to grow its store base, and expand margins.

Top 5 Value Stocks To Buy 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 Travis Hoium]

    Second-quarter earnings have been fairly strong across the market, but that's largely due to cost-cutting and margin expansion, not revenue growth. As a global supplier to construction and mining industries, Caterpillar (NYSE: CAT  ) sees the foundation of economic expansion and is often considered an economic bellwether, particularly in emerging economies like China. That's why the company's cautionary words have helped drive the Dow Jones Industrial Average (DJINDICES: ^DJI  ) and S&P 500 (SNPINDEX: ^GSPC  ) down 0.26% and 0.39%, respectively, today. �

  • [By Eric Volkman]

    Caterpillar (NYSE: CAT  ) has increased its common stock dividend to $0.60 per share, the company announced Wednesday, to be paid Aug. 20 to shareholders of record as of July 22.

  • [By StreetAuthority]

    Gabriel Bouys, AFP/Getty ImagesBill Gates, Microsoft co-founder and co-chair of the Bill & Melinda Gates Foundation. $650 million is a lot of money -- even for Bill Gates. That's how much his investment firm has invested in what might be considered the best way to play China. It's not a software firm or even a computer hardware firm. It's mining giant Caterpillar (CAT). Gates started building a position in Caterpillar before the financial crisis, but he became a very aggressive buyer once the crisis hit and shares had fallen by half. Yet remarkably, Gates has kept on buying, even as shares steadily rebounded to previous peaks. But now that Caterpillar has come under pressure on concerns that China is slowing, is Gates locking in profits? No, he's been buying more, picking up another 500,000 shares in this year's second quarter. At current prices, his firm's stake of 10.76 million shares is worth a cool $650 million. The key question: Why does Gates continue to buy shares even after China's slowdown has signaled the potential end of a global commodities boom? After all, much of Caterpillar's growth in recent years has come from a strong surge in mining activity that uses the company's massive excavators. The simple answer is that Gates and his team of investment managers always focus on long-term winners and never buy or sell shares based on short-term economic shifts. We've seen him do it many times before. For example, even as Wall Street analysts focused on the near-term prospects for auto retailer AutoNation (AN), Gates saw an epic rebound coming, as I noted in this article. Shares of AutoNation have now risen 400 percent since early 2009. Caterpillar: The Long View

5 Best Undervalued Stocks To Buy Right Now: 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 Tyler Crowe]

    Talk to your CFO if you experience bloating
    This quarter, Nabors, Halliburton (NYSE: HAL  ) , and Schlumberger (NYSE: SLB  ) have all struggled in their pressure-pumping businesses because of oversupply in the current market. According to Nabors CEO Anthony Petrello, this has led to a very competitive market: "It is not unusual to bid frac jobs against 20 other pumpers, and sometimes as many as 35 show up. We have seen some instances of competitors winning bids with economics that at least from our perspective appear to be near cash break-even."

Monday, December 23, 2013

Is Tesla Motors Valuation Getting out of Hand?

When it comes to valuation, Tesla Motors' (NASDAQ: TSLA  ) stock price premium is second to none among auto manufacturers. The company trades at 142 times forward earnings estimates and about 15 times its trailing-12-month revenue. As if the six-month run-up of 188% since Jan. 1 wasn't enough, the stock has appreciated another 21% on top of that in the last month and a half. When is enough enough?

Tesla runs a lucrative operation
First, the positive. As Tesla Motors ramps up production, the company's manufacturing process benefits from greater economies of scale. This, of course, is no surprise -- it's a basic rule of thumb in business. But to what degree will Tesla benefit?

Already, the company has "reduced the hours required to build a car by almost 40% from December to March," asserts Tesla's first-quarter letter to shareholders.

Tesla Model S undergoing assembly. Source: Green Car Reports.

This, along with a number of other benefits associated with scale and $68 million in sales (12% of revenue) of its zero-emission vehicle credits, or ZEVs, helped the company double its gross margin from last quarter, to 17%.

In the first quarter, Tesla's gross margin of 17.15% outperformed a number of auto manufacturers. Ford (NYSE: F  ) , for instance, reported a gross profit margin of 16.21% during the same period -- and that was on sales of about 1.5 million vehicles. To make this comparison fair, however, it's important to note that Tesla's core auto business' gross margin was just 2% in the quarter, according to Morgan Stanley's Adam Jonas. ZEV credits were a major contributor to the company's 17% gross margin, says Jonas.

But here is where things get really interesting. In the first-quarter letter to shareholders the company reaffirmed its guidance for a gross margin of 25% by the fourth quarter of 2013, "assuming zero ZEV credit revenue".

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Can Tesla's improving gross profit margin save the company from the Street's lofty expectations? Probably not by itself, but it's definitely a start.

A gross margin of 25% is about 1.46 times the company's current gross margin of 17.15%. Taking Tesla's first-quarter gross profit of 96 million and multiplying it by 1.46, Tesla could earn a gross profit of 140 million every quarter at today's revenue levels and with a gross profit margin of 25% -- that's 560 million annually. In other words, Tesla trades at 25 times a very conservative estimate of 2014 gross profit. Conservative or not, 25 times 2014 gross profit is a significant premium. Ford trades at just three times its trailing-12-month gross profit. 

It's about expectations
Tesla will need far more than gross margin improvements to grow into its valuation. Fortunately, gross margin improvements are not the end of the story for Tesla. Last quarter alone the company's sales increased by 83% from the prior quarter. Can sales growth and gross margin improvement combined save the stock from its valuation?

The average analyst estimate for Tesla's 2014 revenue is 2.32 billion. Assuming a gross margin of 25%, Tesla's gross profit would equal 580 million in 2014. At today's price, that means Tesla is trading at about 23 times its 2014 gross profit, assuming a 25% gross profit margin and 2.32 billion in revenue (146% higher than Tesla's trailing-12-month revenue of 945 million). This is definitely a lofty expectation.

As Tesla's stock continues to rise, I'm withdrawing my buy recommendation. Importantly, however, I don't believe this means current investors should sell. I'm a big believer in holding onto companies as long as they are meeting or exceeding my original thesis -- and Tesla hasn't failed me on that front. In other words, I don't sell good businesses (no matter the valuation), but I do consider valuation when I make an initial buy decision.

As price increases relative to the underlying fundamentals, risk increases too. Tesla is too expensive to buy, but as a business firing on all cylinders I wouldn't sell it and pay taxes on my gain yet either.

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Sunday, December 22, 2013

Is Vodafone Group's Acquisition Talk Presenting a Buying Opportunity?

LONDON -- Vodafone  (LSE: VOD  ) (NASDAQ: VOD  )  is believed to have increased its offer for Kabel Deutschland following a rival bid from Liberty Global  (NASDAQ: LBTYA  ) .

This time last week, Vodafone confirmed it had made a preliminary approach regarding a possible offer for the company, though Bloomberg had claimed that formal talks between the companies were yet to start because the indicated bid of 80 euros to 82 euros per share was "too low."

However, days after the announcement, U.S. company Liberty Global made a firm offer of 85 euros per share, valuing Kabel Deutschland at 7.5 billion euros, or 6.4 billion pounds.

Bloomberg has now reported that Vodafone has matched Liberty's bid, as the boardrooms take up positions at either end of a tug-of-war with Germany's largest cable operator in the middle.

The plot takes another twist, when you consider that as recently as the beginning of last month, analysts at Citigroup declared that an acquisition of Liberty Global would be within Vodafone's reach, should it sell its 45% stake in Verizon Wireless.

Liberty is also currently negotiating a purchase of Virgin Media, which would instantly offer it a television service in the U.K. should it acquire the U.S. cable and telecoms company...

With neither firms currently commenting on the matter, there is little hard evidence to go on. But following Vodafone's ex-dividend date coming and going last week, combined with continued acquisition talk, the share price has been pushed down to 183 pence from a high of 200 pence less than a month ago. 

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With many City analysts still recommending Vodafone as a buy -- particularly with the situation over Verizon Wireless yet to be resolved -- then today's price could offer an attractive buying opportunity for those interested in a high-yield stock with potential to grow... Personally, I see more upside in the shares and will continue to hold until I hear further, firm news on the deal.

But if you are looking for alternative investment opportunities in the FTSE 100, then this exclusive wealth report reviews five particularly attractive possibilities. Indeed, all five opportunities offer a mix of robust prospects, illustrious histories, and dependable dividends, and have just been declared by the Fool as "5 Shares You Can Retire On"!

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Saturday, December 21, 2013

How Staples Plans to Crush Its Competition

On Wednesday, Staples (NASDAQ: SPLS  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk reaction to news that turns out to be exactly the wrong move.

Staples has been the giant in the office-products retail space for a long time, forcing its main competitors to combine forces in an attempt to present a bigger fight against the company. Yet Staples is still looking to defend its business against all the threats it faces from both bricks-and-mortar and online competition. Let's take an early look at what's been happening with Staples over the past quarter and what we're likely to see in its quarterly report.

Stats on Staples

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$5.91 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

How will Staples fare this quarter?
In recent months, analysts have marked down their views on Staples and its earnings, cutting estimates for the just-ended quarter by $0.04 per share and reducing their consensus for the current fiscal year by more than twice that amount. Yet the stock has done well, gaining almost 14% since mid-February.

The stock's strong performance hides some of the difficulties that Staples has suffered lately. In its last quarterly report back in March, the company posted revenue below expectations and guided its full-year 2013 results downward. Staples has faced many of the same headwinds that have hurt other big-box retailers, including weakness in Europe and high overhead.

But Staples is moving forward with several initiatives designed to make it more competitive. The company has been closing stores both domestically and internationally, following the same trend as electronics-retailer Best Buy (NYSE: BBY  ) in gravitating toward lower-cost smaller locations that have more of a focus on high-margin products like mobile devices and services. A new deal with Apple to stock products and accessories in its U.S. stores could bring a big increase in traffic for the retailer. More recently, Staples' partnership with 3D Systems (NYSE: DDD  ) to sell its consumer-focused Cube 3-D printer line could draw curious buyers into stores as well.

Moreover, Staples has a huge opportunity in the expected merger between rivals OfficeMax (NYSE: OMX  ) and Office Depot (NYSE: ODP  ) . The two smaller retailers believe that by merging, they'll be able to pose a more efficient and effective competitive threat to Staples. But in the process, investors expect that OfficeMax and Office Depot will end up closing stores, giving Staples room to expand with its smaller-store model and take advantage of its new strategic alliances.

In Staples' quarterly report, pay close attention to how the company is doing with its online revenue. As the threat on the Internet front becomes more significant, Staples will need to keep moving forward with its strong online presence in order to keep competitors at bay there. Nevertheless, Staples has an exciting future ahead of it, especially if it can make the most of the opportunities it has.

Staples hopes to gain from the coattails of 3D Systems, which is at the leading edge of a disruptive technological revolution, with the broadest portfolio of 3-D printers in the industry. To help investors decide whether the future of additive manufacturing is bright enough to justify the lofty price tag on the 3D's shares, The Motley Fool has compiled a premium research report on whether 3D Systems is a buy right now. In our report, we take a close look at 3D Systems' opportunities, risks, and critical factors for growth. You'll also find reasons to buy or sell the stock today. To start reading, simply click here now for instant access.

Click here to add Staples to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

9 “Triple A” Stocks to Buy

RSS Logo Portfolio Grader Popular Posts: 5 Oil and Gas Stocks to Buy Now17 Oil and Gas Stocks to Sell Now9 Biotechnology Stocks to Buy Now Recent Posts: 9 “Triple A” Stocks to Buy 16 Oil and Gas Stocks to Sell Now 7 Machinery Stocks to Buy Now View All Posts

This week, nine stocks get A’s (“strong buy”) in Portfolio Grader‘s three main grading categories, Total Grade, Overall Fundamental Grade and Quantitative Grade.

These are the best of the best in the entire Portfolio Grader database. This week, there are 4,279 stocks and only these nine get top marks in all categories to make the elite “Triple A” stocks list. Here they are:

AMN Healthcare Services, Inc. () recruits nurses, physicians, and other healthcare professionals for temporary or permanent positions in healthcare facilities in the United States. The price of AHS is up 21.2% since the first of the year. This is better than the S&P 500, which has seen a 12.1% increase over the same period. .

Alon USA Energy, Inc. () is an independent refiner and marketer of petroleum products operating mainly in the South Central, Southwestern and Western regions of the United States. .

Edwards Group Ltd. ADR () is an industrial technology company that manufactures and sells vacuum products and abatement systems. .

Geospace Technologies Corporation () designs and manufactures instruments and equipment used in the acquisition and processing of seismic data; and characterization and monitoring of producing oil and gas reservoirs. Since January 1, GEOS has jumped 1.4%. .

Liberty Media Corp. Class A () owns interests in a broad range of media, communications and entertainment businesses. The stock’s trailing PE Ratio is 2.10. .

AG Mortgage Investment Trust, Inc. () focuses on investing, acquiring and managing a portfolio of residential mortgage assets, and other real estate-related securities and financial assets. The current dividend yield is 2.4%. .

Par Pharmaceutical () develops, manufactures, and distributes generic and branded pharmaceuticals in the United States. .

Winnebago Industries, Inc. () is a manufacturer of motor homes, which are self-contained recreation vehicles used mainly in leisure travel and outdoor recreation activities. Since January 1, WGO has risen 92.1%. .


Louis Navellier’s proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results — with A being “strong buy,” and F being “strong sell.” Explore the tool here.

Wednesday, December 18, 2013

Big Oil Sees Big Opportunity in Mexico Oil Deregulation

The next frontier for big oil is just across the U.S. border, in Mexico.

As Bloomberg recently reported, the prospect of up to $20 billion a year in foreign investment prompted the Mexican Congress to overturn a 75-year old law banning foreign oil companies from drilling in the country.

If approved by Mexico's state legislatures, the law will give oil and gas companies such as Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX), Apache Corp (NYSE: APA), BHP Billiton (NYSE: BHP) and ConocoPhillips (NYSE: COP) access to the largest unexplored oil fields south of the Arctic Circle.

Mexico is the world's ninth largest oil producer, and oil production in Mexico is dominated by the government-owned oil company Pemex. Pemex's production has been falling in recent years.

Major U.S. oil and gas fields, such as the Permian Basin and the Eagle Ford Shale, have seen massive increases in drilling and production in recent years.They extend across the border into Mexico, BHP Billiton's head of petroleum Tim Cutt told Reuters. Billiton has been making major investments in North America gas and oil in recent years.

Political observers in Mexico, meanwhile, think state legislatures there will pass the required changes to Mexico's charter because most of them are controlled by allies of President Enrique Pena Nieto and his PRI party. Pena has made economic liberalization one of his main goals.

Posted-In: Enrique Pena Nieto. Mexico Mexican politics oil exploration oil industry PemexLong Ideas News Sector ETFs Emerging Markets Commodities Politics Psychology Events Global Markets Media Trading Ideas ETFs General Best of Benzinga

(c) 2013 Benzinga does not provide investment advice. All rights reserved.

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Tuesday, December 17, 2013

Rising Debt Keeps Older Americans Working Longer

Older Americans now shoulder a heavier debt burden, and it’s forcing them to stay in the labor force longer and delay claiming of Social Security. So found a research paper released by the Center for Retirement Research at Boston College.

The impetus of the study, written by Barbara A. Butrica and Nadia S. Karamcheva, was to ascertain whether indebted older adults would continue to work to settle their obligations, or claim Social Security sooner if they are unemployed or not earning enough to pay off their loans. Overwhelmingly, the researchers found, debt-burdened older workers are choosing to stay in the workforce longer rather than claim Social Security benefits as soon as they are eligible.

Before they came to that conclusion, Butrica and Karamcheva outlined some fairly startling statistics on household debt in the U.S. and how it’s increased in recent years. Citing data from the Federal Reserve System’s Board of Governors, the typical debt-encumbered family owed $70,600 in 2007, a significant jump from the $23,300 number charted back in 1989. By 2010, the median value of household debt was $70,700, with debt payments accounting for roughly 18 percent of their disposable income.

Those nearing retirement, in particular, are now more likely to not only carry debt, but have a heavier burdenas well. Between 1998 and 2010, the percentage of adults between 62 and 69 with any type of debt rose from 48 percent to 62 percent. What’s more, the median value of per-person indebtedness climbed from $19,000 to $32,100 in 2010. Accordingly, the average debt-to-asset leverage ratio increased from 10 percent to 18 percent.

The Impact

As these debt-burdened pre-retirees prepare for retirement, what are they more likely to do: work longer, or claim Social Security sooner? Their solution, according to Butrica and Karamcheva, is to stay employed and thus postpone claiming Social Security.

Here are the numbers:

Other factors that weigh heavily in the decision to remain employed into their 60s and beyond is the amount of debt (an increase of $10,000 ups the likelihood of working by 0.7 percentage points and reduces the chance of claiming Social Security by 0.3 percentage points) and whether that debt comes in the form of a home mortgage. Nearly 65 percent of homeowners with mortgages are still working at age 64 compared to 54 percent of those without mortgages. Moreover, 50 percent of homeowners with mortgages have yet to claim Social Security by age 65, while only 35 percent of those without mortgages have not collected Social Security benefits.

Best Insurance Companies To Buy For 2014

Overall, having debt reduces the probability of fully retiring by 22 percent and the chance of claiming Social Security benefits by 14 percent.

The study’s authors conclude that working longer can bolster retirement readiness, especially for those with debt. However, they also point out that age and ill health could prevent many older Americans from working for a lengthier stretch. For those with debt, that may mean selling their homes, taking out a reverse mortgage or declaring bankruptcy. Optimally, pre-retirees should enter their retirement years debt-free.


Check out these related stories on ThinkAdvisor:

Monday, December 16, 2013

Annuities and Social Security: What Retirees Need to Know

For retirement planners, two of the most common concerns among clients involve annuities and Social Security. Our partner site LifeHealthPro recently spoke with three top producers about how they handle both topics. Here's their advice.

Q. Consumers continue to hear and read strong criticism of annuities, often criticism centered on their complexity. How do you combat that criticism in your own retirement planning discussions?

Curtis V. Cloke, CLTC, LUTCF, financial advisor and retirement income expert, trainer and speaker: I often espouse a strategy that follows what I call a “divide and conquer” approach. This involves separating the retirement income a client requires into two sub-categories: (1) an inflation-adjusted income floor and (2) everything else. The inflation-adjusted income floor is the money a client needs to cover expenses in retirement to live the lifestyle he or she wants. The “everything else” category covers assets that are left over to achieve legacy, growth and liquidity goals.

What I find is clients are more willing to allow a higher level of risk for assets that are intended to achieve goals that fall under the “everything else” category more than for those that will fund the income floor. Once they have come to that inevitable conclusion, I begin educating them about annuities.

I talk to them about how an annuity, being an insurance product, is a guaranteed source of income that is not subject to the caprice of the markets, an especially important benefit for those people who do not have pension plans. I explain how mortality credits add an extra source of investment return — Retirement Alpha — over what can be realized from traditional investments of comparable risk. I also explain that certain single premium immediate annuity — SPIA — and deferred income annuity — DIA — contracts come with optional riders that can provide valuable benefits, such as inflation protection. It all has to do with framing the problem and its solution correctly and clearly.

Randy L. Scritchfield, CFP, LUTCF, president of Montgomery Financial Group in Damascus, Md.: Something that will always provide job security for us advisors is the inherent complexity of products. The ability to translate complex products into simple — but still complete and accurate — terms will ensure that such an advisor will flourish. The sayings that we learned early in the business still apply: “People want to know what time it is; they do not want to know how the watch works.”

Of course, our new disclosure requirements and forms facilitate our explaining the products fully to clients, but we must still convey what it does for them, and that is provide a lifetime income.

I also tell clients, “When you were young, you needed life insurance in case you died too soon. Now, as part of retirement planning, an annuity — with living benefits — is what you need to insure against your living too long.” Paul S. Carpenter, CPA, CFP. Carpenter Financial Services: Knowledge is always the foremost way of overcoming ignorance. I educate my clients to better understand the differences between sequence of returns and a simple average rate of return. Nobody can accurately predict the sequence of returns of any given portfolio, other than a fixed account. Negative returns in the early years of the spending phase of a portfolio will sink an income plan beyond the point of recovery. An example goes a long way in helping clients understand this concept. Longevity is also an unknowable variable. An annuity solves this by promising lifetime cash flow of a certain amount, regardless of the sequence of returns experienced. This is a rather simple concept to understand, because it is similar to a defined benefit pension.

Usually, it is not complexity but cost that is a pressure point for an annuity. To me, this is a value proposition; all economics involve costs. When the cost is worth the value, I believe you have a fair trade. Annuities are never the entire solution. In a world where the defined benefit plan has gone the way of the leisure suit, I do not think you can ignore the fact that there is a need for a steady dependable core of predictable cash flow.

The underlying mechanics of an annuity can be complex, but you don’t have to know the physics of an internal combustion engine to safely drive a car, just the rules of the road and how to operate the vehicle. I think the average person can understand the rules of the road on what to expect from a particular annuity. I absolutely believe in full disclosure of costs, surrender tables, and limits to how cash will ultimately be disbursed. A client needs to know how to read the dashboard of their annuity — the quarterly and annual statements. I explain each of the gauges and what reading it shows — cash value, surrender value, benefit base, anniversary date, etc. We provide drivers ed and some refresher courses — periodic account reviews — along the way, so clients can safely navigate their annuity through retirement without crashing.

Q. Some advisors these days have begun to integrate Social Security planning into their retirement planning discussions. How do you handle the whole issue of Social Security benefits in your retirement planning discussions, and do you use specific tools to assist in that regard?

Scritchfield: I never tell clients that Social Security will not be there, per se, but rather, I tell them to minimize it for planning purposes. It has been interesting that, in recent years, the Social Security payment has been a pleasant surprise to many of my clients, as they were not counting on it and were otherwise adequately prepared.

Carpenter: We absolutely consider Social Security in our retirement plans. At my practice, we point out to clients that there is now a trust fund disclosure made by the Social Security Administration stating 100 percent funding only extends through 2034 or so. We believe some changes will occur before then, but we cannot ignore Social Security entirely, so we attempt to give it the proper weight and place in our plans.

Most boomers are convinced they need to begin Social Security income at age 62. We attempt to educate clients on the pros and cons of such an arbitrary decision, using Social Security calculators available from various sources as well as information available from SSA directly. We ask clients to bring any recent Social Security statements showing estimated benefits at full retirement age and early retirement age. We also have clients inquire about possible benefits available from former spouses to integrate those figures into our plans. There can be a lot of dynamics at play when trying to optimize Social Security benefits.

Cloke: I consider Social Security optimization to be of pivotal importance in my retirement planning solutions. The extra dollars you can squeeze out of those monthly checks by delaying benefits can mean a big difference in the lifestyle you can afford in your retirement years. For example, at age 62, a client can receive a maximum monthly benefit of $1,855. If he or she were to delay receiving those benefits until age 70, that maximum monthly benefit would be $3,266!

There are other valuable strategies to look into as well, such as filing and suspending, cashing in on spousal benefits, or taking advantage of certain divorce-related rules in statutes.

A full retirement income plan, however, needs to address shortfalls that can result from a Social Security optimization strategy. Clients will need to know how to bridge the income gap in between years they are eligible for Social Security and wish to receive benefits, or in between the years they receive reduced spousal benefits until they begin full benefits. A good advisor is going to address these questions with a holistic retirement plan.

I use a combination of online Social Security optimization software and specialized in-house analysis to arrive at my final conclusions. Sometimes I recommend annuities, and, other times, it is best to recommend they work an extra couple of years.



Sunday, December 15, 2013

Top 5 Financial Stocks To Own For 2014

Chris Ratcliffe/Bloomberg via Getty Images China now accounts for nearly a third of the daily bitcoin transactions in the world. The virtual currency's popularity in China has contributed to its shooting over $300 in value, but investors shouldn't be rash in buying bitcoins, experts said. At the end of September, the number of bitcoins traded every day in the Chinese market was 17,500, up 24 percent from three months before and accounting for 30 percent of the world's total transaction, a report from Genesis Block, a New York-based digital currency research group, said recently. The virtual currency has been gaining traction in China, but the latest surge in demand is widely seen as connected to the acceptance of bitcoins by Baidu Jiasule, a firewall service for websites co-developed by Baidu (BIDU), China's predominant search engine. By the end of October, on BTC China, the largest Chinese bitcoin trading platform, the price of a bitcoin has grown to around 1,270 yuan (about $209 based on Friday's exchange rates) from 800 yuan early that month, Caixin, a Chinese financial news outlet, reported Thursday. Baidu's prominence led many to speculate that other Chinese companies could follow suit and accept bitcoins as payment. "This is an extremely important moment," one investor said, if it leads to the acceptance of bitcoins in wider ranges of online payments. In addition, it could be a marketing ploy Internet companies employ to advertise new products, said Liu Xiao, an analyst with public policy think tank Anbound Consulting. Given that every payment for Jiasule only amounts to a small fraction of a bitcoin, the real impact on the market is negligible. "Every time the bitcoin market boomed, it was driven by a stunt and not backed by real transactions," Liu said, according to Caixin. Even so, the Chinese market has become an important driving force behind the virtual currency's increasingly wide use and may top all other similar currencies in terms of transaction volume, the Genesis Block report said.

Top 5 Financial Stocks To Own For 2014: 49 North Resource Fund Inc. (FNR.V)

49 North Resources Inc., through Limited Partnership intends to invest in a portfolio of flow-through shares of resource issuers, who engage in mineral, or oil and gas exploration and development in Canada. It focuses on resource issuers with exploration programs in Saskatchewan. 49 North Resource Fund, Inc. serves as the general partner of the partnership. 49 North Resources Inc. was formed in 2005 and is headquartered in Saskatoon, Canada.

Top 5 Financial Stocks To Own For 2014: Redwood Trust Inc.(RWT)

Redwood Trust, Inc., a real estate investment trust, together with its subsidiaries, engages in investing, financing, and managing real estate assets. The company?s investments include residential and commercial real estate loans; and securities backed by residential and commercial loans, including senior and subordinate securities. The senior securities are those interests in a securitization that have the first right to cash flows and are last to absorb losses; and subordinate securities are those interests in a securitization that have the last right to cash flows and are first in line to absorb losses. As of March 31, 2011, it had 77 real estate owned properties primarily in Arizona, California, Colorado, Florida, and Georgia. It would elect to be taxed as a real estate investment trust (REIT) for federal income tax purposes. As a REIT, the company would not be subject to federal income tax, if it distributes at least 90% of net taxable income to its stockholders. Red wood Trust, Inc. was founded in 1994 and is based in Mill Valley, California.

Advisors' Opinion:
  • [By Amanda Alix]

    Luxury market is doing just fine
    Jumbo loans are back, and these mortgages -- which start at $625,000 in some affluent areas -- are being given out like candy�to those with the wealth to back them up. Once considered risky because they are not backed by Fannie Mae or Freddie Mac, lenders are falling over themselves to make these loans, driven by a securitization market dominated by entities like Redwood Trust (NYSE: RWT  ) and JPMorgan Chase (NYSE: JPM  ) . Earlier this month, Redwood offered its seventh securitization backed by jumbos, and JPMorgan just recently announced�its second offering of the year, as well.

  • [By Rich Duprey]

    Real estate investment trust��Redwood Trust� (NYSE: RWT  ) announced today its third-quarter dividend of $0.28 per share, the same rate it's paid for the past two quarters after raising the payout 12% from $0.25 per share.

Top 10 Biotech Stocks To Watch For 2014: Landmark Bancorp Inc.(LARK)

Landmark Bancorp, Inc. operates as the holding company for Landmark National Bank that provides financial products and services to small and medium sized businesses and consumers. The company accepts various deposits, including non-interest bearing demand deposits, savings accounts, money market accounts, NOW accounts, time deposits, and certificates of deposits. Its loan portfolio comprises commercial loans for service, retail, wholesale, and light manufacturing businesses, including agricultural operations; commercial, residential, construction and multi-family real estate loans; and consumer loans that include automobile, boat, home improvement, and home equity loans. The company has main office in Manhattan, Kansas; and 20 branch offices in eastern, central, and southwestern Kansas. Landmark Bancorp, Inc. was founded in 1920 and is headquartered in Manhattan, Kansas.

Top 5 Financial Stocks To Own For 2014: Merchants Bancshares Inc.(MBVT)

Merchants Bancshares, Inc. operates as the bank holding company for The Merchants Bank that provides commercial banking products and services in Vermont. The company offers various deposit products, which comprise interest bearing and non-interest bearing checking accounts, money market accounts, club accounts, health savings accounts, and short-term and long-term certificates of deposit, including a flexible CD instrument. It also provides credit programs, such as secured and unsecured installment lending, home equity lines of credit, home mortgages, and credit cards; one-to-four-family residential mortgages, and residential construction and seasonal dwelling mortgages; and consumer loans, such as home improvement and home equity lines of credit, and various personal loans. In addition, Merchants Bancshares offers cash management services, which comprise investment sweep, line of credit sweep, multiple sweep, and funds concentration; and customary check collection service s, wire transfers, safe deposit box rentals, and automated teller machine services, and debit cards. Further, the company provides investment management, financial planning, and trustee services; commercial online banking services; bill payment services; and lock box services, night depository, coin and currency handling, and balance reporting services. As of December 31, 2009, it operated 34 full-service banking offices and 42 automated teller machines in Vermont. The company was founded in 1849 and is headquartered in South Burlington, Vermont.

Top 5 Financial Stocks To Own For 2014: Validus Holdings Ltd.(VR)

Validus Holdings, Ltd., through its subsidiaries, provides reinsurance and insurance coverage in the property, marine, and specialty lines markets worldwide. The company underwrites property catastrophe reinsurance, property per risk reinsurance, and property pro rata reinsurance products; and reinsurance on marine risks covering damage to or losses of marine vessels and cargo, third-party liability for marine accidents, physical loss, and liability from principally offshore energy properties. It also underwrites specialty lines of business, which include aerospace and aviation, agriculture, terrorism, life, accident and health, financial lines, nuclear, workers? compensation catastrophe, crisis management, political risks and violence, war, and contingency. The company was founded in 2005 and is based in Pembroke, Bermuda.

Friday, December 13, 2013

General Motors: New Leadership, New Dividend?

There’s been a lot of talk about General Motors (GM), maybe too much talk. This stock is not a rebel stock. It’s just going through lots of changes, especially when compared to competitors like Ford (F) and Toyota (TM). That’s what happens when you name a new CEO and the government sells its last shares of your stock.

Associated Press

JPMorgan’s Ryan Brinkman and team say the choice of Mary Barra to head General Motors puts the focus back where it belongs:

Barra is an engineer by training who most recently led GM's global product development effort. We expect her appointment to place product front and center – where it belongs…One must go back 1992 to find an example of the last time automotive engineers were at the helm of General Motors (Robert Stempel, and Llyod Reuss…).

Morgan Stanley’s Adam Jonas and team call the shakeup to management a boon for the company–and a pleasant surprise:

Recasting the mgmt team so soon is an unexpected bonus to start the 2nd stage of GM's reincarnation. GM's come a long way, but its full potential is not yet unlocked, in our view. The sun is still shining on US autos, but right out of the gate the new team faces a growing list of cyclical and competitive storm clouds outside of its control, particularly in the US. Tens of billions of dollars of value are up for grabs. The battle has already begun.

Susquehanna’s Christopher Jacobson looks at what the options market is saying about General Motors’ potential dividend now that the government is out of the way:

…if investors expect an announcement in the near-term and expect 4 dividends to be paid out over 2014, the Jan15 options appear to price in roughly $0.13 ($0.52 / 4) per dividend. To get a sense of expectations further out, we can apply the same exercise to the Jan16 options, although we note that the markets out this far are much wider, leaving much more room for changes in the dividend policy. Nonetheless, when we back out the Jan2016 dividend stream, we arrive at roughly $1.36 in cumulative dividends. Removing the $0.52 priced in to 2014, this would imply roughly $0.84 in dividends over 2015, or roughly $0.21 per dividend. In summary, if we were to assume 4 dividends in 2014 and 4 in 2015, the options would appear to price in a quarterly dividend around ~$0.13 in 2014 increasing to around ~$0.21 in 2015, although we again note that our numbers would change with changes in assumed interest rate, timing of the dividends, etc.

Shares of General Motors have dropped 0.5% to $40.19 today at 3:32 p.m., while Ford has fallen 1.1% to $16.34 and Toyota has declined 1% to $120.49.

Thursday, December 12, 2013

Survey finds more could benefit from electric cars

People who aren't buying electric vehicles because they think charging will involve too much hassle are wrong, says a new study from the Union of Concerned Scientists (UCS) and Consumers Union.

Four out of 10 households could use an electric vehicle with little or no change to their driving habits and vehicle needs, the study says. Yet less than 1% of drivers have gone fully electric, whether it is the Nissan Leaf at the low end or the Tesla Model S at the luxury end.

•Why would 42% of the respondents be a good match for an electric vehicle? The survey says they:

•Drive less than 60 miles on a typical weekday and have another car in the household for longer weekend jaunts.

•Have access to parking and an electrical outlet at home or work.

•Need to carry less than five occupants.

•Do not need hauling or towing capability.

More than a third said they would be more enticed to consider an electric vehicle if they had a charging station at their workplace.

"Consumers who might be shopping for a new vehicle this holiday season may be surprised to learn that an electric vehicle could be a good fit for their household," sayw Josh Goldman, policy analyst for the UCS Clean Vehicles Program, in a statement.

If all the drivers switched, the country could save 15 billion gallons of gasoline each year, as much as was burned last year in California, the nation's top motoring state. Also, the reduce gas use would cut greenhouse gas emissions and save $33 billion in gas costs.

Top 10 Value Stocks To Own Right Now

The telephone survey was conducted among 1,004 randomly selected adults over 18 years of age and carried out from Sept. 26 to 30. Of those surveyed, 914 respondents had at least one vehicle and were asked about driving and parking behaviors. All respondents were surveyed about attitudes toward electric vehicles. The margin of error is plus or minus 3.1! percentage points at a 95 percent confidence level.

Wednesday, December 11, 2013

E*TRADE Financial Corporation (NASDAQ:ETFC): Insider Buying: This Director Throws Darts.

Last week was another solid week of insider buying. Hopefully, the continued pace of insider buying is foretelling the future of the US/Global economy; many could use the holiday/2014 cheer. iStock's fingers are crossed for all of our readers looking for real work – good luck.

Luck doesn't seem to be necessary for this week's purchase. E*TRADE Financial Corporation (NASDAQ:ETFC) director Rodger Lawson has an enviable track record.

In case you don't know, E*TRADE is the one with the talking baby commercials. They are a financial services company that provides online brokerage, related products, and services primarily to individual retail investors under the E*TRADE Financial brand in the United States.

[Related -How To Profit From The Shutdown Aftermath]

The director has purchased shares of the financial services company three previous times during the past two-years, and each time, the price went up immediately afterwards. He's also had success buying UnitedHealth Group Inc. (NYSE:UNH) as an insider. As readers of our weekly insider article know, we love us some past performance.

A quick review of Lawson's purchase might help illustrate his successful investing past.

February 27, 2012 – Bought 1,313 Shares of ETFC at $9.51 (up 12.72% one year later)August 13, 2012 - Bought 7,528 Shares of ETFC at $8.45 (up 73% one year later)May 13, 2013 - Bought 4,479 Shares of ETFC at $11.16 (up 62.72% since)January 13, 2013 - Bought 2,000 Shares of UNH at $54.42 (up 35.89% since)August 19, 2013 - Bought 1,000 Shares of UNH at $71.64 (up 3.2% since)

[Related -E TRADE Financial Corporation (ETFC): E*TRADE Put Options In Play As Shares Slide]

A ton of money managers that would love to have that sort of performance. Last week, the E*TRADE director bought 2,754 shares at $18.15 for a total investment of $49,994.70. The trade is so fresh that it hasn't made most newswire accounts, yet.

In iStock's view, the most important metric for discount brokerage firm is Daily av! erage revenue trades; otherwise known as DARTs. According to ETFC's most recent 10-Q, "DART volume increased 13% to 145,150 and 5% to 147,777 for the three and nine months ended September 30, 2013, respectively, compared to the same periods in 2012."

As you can see, the metric accelerated in the last three-months. As a result, "Trading and investing commissions increased 14% to $102.8 million and 6% to $309.8 million for the three and nine months ended September 30, 2013, respectively, compared to the same periods in 2012."

Not surprisingly, the company announced the following since it' last EPS report, "Daily Average Revenue Trades ("DARTs") for October were 159,703, a nine percent increase from September and a 29 percent increase from the year-ago period. The Company added 30,276 gross new brokerage accounts in October, ending the month with approximately 3.0 million brokerage accounts — an increase of 3,193 from September."

Our guess, educated, is that E*TRADE will release similar, maybe better numbers for November in the next few days. It's also likely the trend has continued through the early part of December, at least that's our connected dot theory.

Overall: Director, Rodger Lawson's history of getting it right with E*TRADE Financial Corporation (NASDAQ:ETFC), combined with accelerating DARTs makes ETFC a reasonable discount trade candidate.

Monday, December 9, 2013

‘Secrets’ of Warren Buffett’s Success Revealed in New Research

Warren Buffett has been showered with encomiums during his storied investment career.

Now, a new study by researchers at AQR Capital Management and the Copenhagen Business School calls his investment performance the best among all stock and mutual funds that have existed for at least three decades.

Looking at all U.S. stocks from 1926 to 2011 that have been traded for more than 30 years, the study found that between 1976 and 2011, Buffett’s Berkshire Hathaway generated a Sharpe ratio of 0.76, compared with the stock market’s 0.39.

The Sharpe ratio measures risk-adjusted returns.

In a similar vein, Buffett’s Sharpe ratio was higher than the median ratio of 0.37 for the 196 U.S. mutual funds in existence for more than 30 years.

The study’s authors noted that Buffett’s Sharpe ratio was lower than many investors might have imagined. Moreover, adjusting for the market exposure, his information ratio was 0.66.

“This Sharpe ratio reflects high average returns, but also significant risk and periods of losses and significant drawdowns,” they wrote.

Given Buffett’s “very good but not superhuman” Sharpe ratio, they explain that his success over the years has come from boosting his returns through use of leverage and adhering to a good strategy through good times and lean.

They estimate his leverage at about 1.6 to 1, enhancing both risk and excess return in that proportion.

“Thus, his many accomplishments include having the conviction, wherewithal and skill to operate with leverage and significant risk over a number of decades,” they write.

Hot Small Cap Companies To Invest In Right Now

The authors identified several general features of Buffett’s portfolio to reveal how he picks stocks to achieve a strong return stream that can be leveraged.

He buys stocks that are “safe,” “cheap” and of high quality. The stocks he buys have low beta and low volatility. They are value stocks with low price-to-book ratios. And they are profitable, stable and growing, and have high payout ratios.


Check out Buffett’s Bank Bets Are on the Money: Report on ThinkAdvisor.

Sunday, December 8, 2013

Japan stocks rally on weaker yen

LOS ANGELES (MarketWatch) -- Japanese stocks jumped at the start of trading Monday, with exporters finding support as the yen weakened against the U.S. dollar and the euro. The Nikkei Stock Average (JP:NIK) climbed 270 points, or 1.8%, to 15,570, and the broader Topix scaled higher by 1.3%. The dollar pushed back above the ¥103 level after a better-than-expected U.S. jobs report for November, while the euro topped the ¥141 level for the first time since October 2008, according to FactSet data. Auto stocks were stronger, with Mazda Motor Corp. (JP:7261) (MZDAF) surging 3.2%, Nissan Motor Co. (JP:7201) (NSANY) up 2.2% and Toyota Motor Corp. (JP:7203) (TM) gaining 1.1%. Techs also benefited from yen weakness, with a 1.3% rise in shares of Sony Corp. (JP:6758) (SNE) , and bounce of 1.1% for stock in Canon Inc. (JP:7751) (CAJ) .

Saturday, December 7, 2013

10 Stocks Under $20 to Buy in 2014

LinkedIn Logo RSS Logo James Brumley Popular Posts: GOOG vs. AMZN – Which Tech Titan Is Your Best Bet for 2014?4 Recent Fast Food Game-ChangersTSLA – Tesla Saga Won’t Have a Happy Ending Recent Posts: 10 Stocks Under $20 to Buy in 2014 Don’t Buy Orexigen on Diet Pill Hopes 3 Big Stocks to Watch After Black Friday 2013 View All Posts

It’s hard to believe, but the new year is right around the corner.

stocks-to-buyThat means now is the time to start thinking about any additions (or subtractions) you’ll want to make to your portfolio heading into 2014.

If you’re like many investors, you’d just as soon pick a stock with a low nominal price than a higher one. Granted, 100 shares of a $20 stock costs the same as 10 shares of a $200 stock or 10 shares of a $2,000 stock. Plus, a low nominal price doesn’t necessarily mean a cheap stock is a good value.

Still, it is easier to buy big, round lots of cheap stocks, especially if you don’t have much to invest with in the first place.

So if price does matter to you, here are 10 of the best sub-$20 stocks to buy as we get ready to usher out the old year and ring in the new one.

JCPenney (JCP)

JCP-JCpenney-stock12/2 Price: $10.10

That’s right: The world’s most-storied riches-(relatively)-to-rags story is a buy again.

Yes, Ron Johnson’s fame at Apple (AAPL) and Target (TGT) never translated into success at JCPenney (JCP), and in fact he steered the ship straight into the ground. However, JCP is (thankfully) at least trying “business as usual” again under Mike Ullman.

While it’s still not clear if the turnaround effort will take hold before JCPenney runs short of cash again, the market looks willing to at least give JCP the benefit of the doubt long enough to let the stock make progress — if that’s what’s indeed in the cards.

Radian Group (RDN)

radian-group-rdn12/2 Price: $14.37

Contrary to popular belief, the business of insuring mortgages and bonds isn’t a thing of the past, hindered by a lack of demand. Indeed, the industry is finally starting to find some stability again.

Radian Group (RDN) is the pick of the litter, largely driven by the fact that mortgage insurance revenue in the third quarter was the company’s second-strongest ever.

RDN also is on pace to swing back into the black during the coming year, which could be a huge catalyst.

Photronics (PLAB)

photronics-stock-plab12/2 Price: $8.65

Photronics (PLAB) is a semiconductor photomask manufacturer whose products are used in things such as semiconductors, data storage and flat-panel displays, putting PLAB in the technological sweet spot.

Don’t let the recent downgrade from Needham & Co., or the fact that sales and earnings have waned in 2013, turn you off of Photronics.

The past isn’t the future.

PLAB’s per share income is expected to double next year, from 2013′s profit of 30 cents per share to 60 cents per share in 2014.

Ur-Energy (URG)

ur-energy-stock-urg12/2 Price: $1.15

The nuclear reactor disaster at the Fukushima (Japan) power plant in March 2011 nagged and dogged uranium mining stocks like Ur-Energy (URG).

As of the middle of this year, though, URG has finally started to spend more time above the key 200-day moving average line than below it. That’s got to mean something.

In fact, that same 200-day line has been acting as technical support since September.

Xerox (XRX)

Xerox XRX12/2 Price: $11.56

For years now, the self-proclaimed experts have been calling for Xerox’s (XRX) death, explaining that the photocopier has gone the way of the Edsel.

Also for years now, Xerox has not only survived but even thrived, as it’s very much not just a photocopier maker anymore.

Xerox is waist-deep into digital document management… which is the future of the typical corporate office. It might not be a high-growth story, but what it lacks in firepower it makes up for in consistency.

Value fans also will love XRX’s forward-looking P/E of roughly 10.

Manitex International (MNTX)

manitex-stock-MNTX12/2 Price: $13.28

There might be nothing special about an obscure crane manufacturer at first glance, but a closer inspection of Manitex International (MNTX) reveals this company is driving some serious sales and earnings growth now that it has found its niche. Profits should be up 33% next year.

Manitex certainly has gotten the attention of Forbes, which in October put Manitex on its list of America’s best small companies.

Huntington Bancshares (HBAN)

huntington-bancshares-hban12/2 Price: $9.23

Anybody expecting to make a quick buck with a position in Huntington Bancshares (HBAN) is going to be sorely disappointed. On the other hand, HBAN has more pop-potential than some investors may be giving it credit for.

The Midwest-servicing bank has topped earnings estimates in 12 of its last 15 quarters, and some of them were pretty significant beats. Meanwhile, HBAN is expected to grow earnings less than 5% annually over the next five years — an awfully low bar to climb over.

The dividend yield of 2.2% isn’t too shabby, either.

D.R. Horton (DHI)

D.R. Horton Inc. (NYSE: DHI)12/2 Price: $19.65

In retrospect, the 37% dip that shares of homebuilder stock D.R. Horton (DHI) suffered between May and September didn’t make a lot of sense — earnings continued to grow in the meantime, and the company had no trouble meeting or beating estimates.

The market’s starting to realize the selloff was an errant one, as DHI shares are perking up again. There’s still a ways to go before the stock’s back to where it started, though.

American Capital Ltd (ACAS)

american-capital-acas12/2 Price: $15.29

Don’t sweat it if you haven’t heard of private equity and asset management outfit American Capital Ltd (ACAS) — most people haven’t. That doesn’t mean it’s not a compelling investment though, especially given the organization’s budding refocus on debt investments rather than equity holdings.

Equity investments provide little to no consistent cash flow, so new buyers can look forward to more debt-income in the future than previous buyers have enjoyed.

Exelis (XLS)

exelis-stock-xls12/2 Price: $17.85

Defense contractor Exelis (XLS) is on pace to post its fifth straight year of declining revenue, and earnings haven’t fared much better. The pros say 2014 is going to be a sixth straight year of weaker revenue, though per-share income is at least expected to improve a bit (from this year’s $1.51 to $1.59 next year).

So what, pray tell, has run the stock up from less than $11 per share in May to the current price of more than $17?

Because Exelis has been winning contracts at a rapid pace of late, and the market recognizes the forward-looking estimates underestimate the opportunity … and at a forward-looking P/E of 11.1, there’s already plenty of value packed in here.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

Thursday, December 5, 2013

5 Best Oil Stocks To Watch For 2014

LONG BEACH, Calif. (AP) ��The oil production technique known as fracking is more widespread and frequently used in the offshore platforms and man-made islands near some of California's most populous and famous coastal communities than state officials believed.

In waters off Long Beach, Seal Beach and Huntington Beach ��some of the region's most popular surfing strands and tourist attractions ��oil companies have used fracking at least 203 times at six sites in the past two decades, according to interviews and drilling records obtained by The Associated Press through a public records request.

Just this year in Long Beach Harbor, the nation's second-largest container port, an oil company with exclusive rights to drill there completed five fracks on palm tree-lined, man-made islands. Other companies fracked more than a dozen times from old oil platforms off Huntington Beach and Seal Beach over the past five years.

5 Best Oil Stocks To Watch For 2014: EXCO Resources NL(XCO)

EXCO Resources, Inc., an independent oil and natural gas company, engages in the exploration, exploitation, development, and production of onshore North American oil and natural gas properties with a focus on shale resource plays. The company holds interests in various projects located in East Texas, North Louisiana, Appalachia, and the Permian Basin in west Texas. As of December 31, 2010, it had proved reserves of approximately 1.5 trillion cubic feet equivalent; and operated 7,276 wells. The company was founded in 1955 and is based in Dallas, Texas.

Advisors' Opinion:
  • [By Rich Smith]

    Chesapeake Energy (NYSE: CHK  ) continued its efforts to get its balance sheet in order this week. On Wednesday, the company announced it has signed agreements to sell to an EXCO Resources (NYSE: XCO  ) subsidiary:

5 Best Oil Stocks To Watch For 2014: Valero Energy Corporation(VLO)

Valero Energy Corporation operates as an independent petroleum refining and marketing company. The company operates through three segments: Refining, Ethanol, and Retail. The Refining segment engages in refining, wholesale marketing, product supply and distribution, and transportation operations. It produces conventional gasoline, distillates, jet fuel, asphalt, petrochemicals, lubricants, and other refined products. This segment also offers conventional blendstock for oxygenate blending, reformulated gasoline blendstock for oxygenate blending, gasoline meeting the specifications of the California Air Resources Board (CARB), CARB diesel fuel, low-sulfur and ultra-low-sulfur diesel fuel. The Ethanol segment produces ethanol and distillers grains. The Retail segment sells transportation fuels at retail stores and unattended self-service cardlocks; convenience store merchandise and services in retail stores; and home heating oil to residential customers. Valero Energy Corpora tion markets its refined products through bulk and rack marketing network; and sells refined products through a network of approximately 6,800 retail and wholesale branded outlets under the Valero, Diamond Shamrock, Shamrock, Ultramar, Beacon, and Texaco names in the United States, Canada, the United Kingdom, Aruba, and Ireland. As of December 31, 2011, it owned 16 petroleum refineries with a combined throughput capacity of approximately 3.0 million barrels per day; and operated 10 ethanol plants with a combined nameplate production capacity of approximately 1.1 billion gallons per year. The company was formerly known as Valero Refining and Marketing Company and changed its name to Valero Energy Corporation in August 1997. Valero Energy Corporation was founded in 1955 and is based in San Antonio, Texas.

Advisors' Opinion:
  • [By Ben Levisohn]

    Sometimes we forget that it’s not just what’s happening here that matters. Case in point: Cliffs Natural Resources (CLF) has gained 4.1% to $21.52 after China’s prime minister said his nation’s economy grew by more than 7.5% during the first nine months of the year. Refiners, too, are rallying today, with Tesoro (TSO) up 4.3% to $45.39 and Valero Energy (VLO) up 3.2% to $36.71.

Top Value Companies To Invest In 2014: Gran Tierra Energy Inc (GTE)

Gran Tierra Energy Inc. (Gran Tierra) is an independent international energy company engaged in oil and gas acquisition, exploration, development and production. Gran Tierra owns oil and gas properties in Colombia, Argentina, Peru and Brazil. During the year ended December 31, 2011, the Company focused on development of producing fields and generation of exploration prospects in Colombia, including the acquisition of three blocks in the Petrolifera acquisition and the acquisition of a working interest in the Llanos 22 Block. It delivers its oil to Ecopetrol S.A. (Ecopetrol) through its transportation facilities, which include pipelines, gathering systems and trucking. On March 18, 2011, the Company acquired of all the issued and outstanding common shares and warrants of Petrolifera Petroleum Limited (Petrolifera). Advisors' Opinion:
  • [By Eric Lam]

    Bankers Petroleum Ltd. and Legacy Oil & Gas Inc. climbed at least 4.1 percent as the price of crude advanced. Gran Tierra Energy Inc. (GTE) added 4.7 percent after boosting its 2013 production forecasts. Bank of Montreal added 0.6 percent after naming a chief operating officer. Argonaut Gold Inc. dropped 6.5 percent to pace losses among metals miners. SNC-Lavalin Group Inc. sank 4.5 percent after cutting its earnings forecast for the year.

5 Best Oil Stocks To Watch For 2014: Noble Corp (NE)

Noble Corporation is an offshore drilling contractor for the oil and gas industry. The Company performs contract drilling services with its fleet of 79 mobile offshore drilling units and one floating production storage and offloading unit (FPSO) located globally. As of December 31, 2011, its fleet consisted of 14 semisubmersibles, 14 drillships, 49 jackups and two submersibles. Its fleet includes 11 units under construction, which include five ultra-deepwater drillships, and six jackup rigs. As of February 15, 2012, approximately 84% of its fleet was located outside the United States in areas, which included Mexico, Brazil, the North Sea, the Mediterranean, West Africa, the Middle East, India and the Asian Pacific. During the year ended December 31, 2011, it completed construction on the Noble Bully I, a drillship, owned through a joint venture with a subsidiary of Royal Dutch Shell plc; completed construction on the Noble Bully II, a drillship, and it completed construction of Globetrotter-class drillship. As of February 15, 2012, it had 10 rigs under contract in Mexico with Pemex Exploracion y Produccion (Pemex).

During 2011, the Company conducted offshore contract drilling operations, which accounted for over 98% of its operating revenues. It conducts its contract drilling operations in the United States Gulf of Mexico, Mexico, Brazil, the North Sea, the Mediterranean, West Africa, the Middle East, India and the Asian Pacific. During 2011, revenues from Shell and its affiliates accounted for approximately 24% of its total operating revenues. During 2011, revenues from Petroleo Brasileiro S.A. (Petrobras) accounted for approximately 18% and 19% of its total operating revenues. Revenues from Pemex accounted for approximately 15%, 20% and 23% of its total operating revenues.


Semisubmersibles are floating platforms which, by means of a water ballasting system, can be submerged to a predetermined depth so that a substantial portion of the hull is b! elow the water surface during drilling operations. As of December 31, 2011, the semisubmersible fleet consisted of 14 units, including five Noble EVA-4000 semisubmersibles; three Friede & Goldman 9500 Enhanced Pacesetter semisubmersibles; two Pentagone 85 semisubmersibles; two Bingo 9000 design unit submersibles; one Aker H-3 Twin Hull S1289 Column semisubmersible, and one Offshore Co. SCP III Mark 2 semisubmersible.


The Company�� drillships are self-propelled vessels. These units maintain their position over the well through the use of either a fixed mooring system or a computer controlled dynamic positioning system. Its drillships are capable of drilling in water depths from 1,000 to 12,000 feet. The maximum drilling depth of its drillships ranges from 20,000 feet to 40,000 feet. As of December 31, 2011, the drillship fleet consisted of 14 units, including four drillships under construction with Hyundai Heavy Industries Co. Ltd. (HHI); three Gusto Engineering Pelican Class drillships; two Bully-class drillships to be operated by it through a 50% joint venture with a subsidiary of Shell; one dynamically positioned Globetrotter-class drillship that left the shipyard during the fourth quarter of 2011; one Globetrotter-class drillship under construction; one moored Sonat Discoverer Class drillship capable of drilling in Arctic environments; one NAM Nedlloyd-C drillship, and one moored conversion class drillship.


As of December 31, 2011, the Company had 49 jackups in its fleet, including six jackups under construction. The rig hull includes the drilling rig, jacking system, crew quarters, loading and unloading facilities, storage areas for bulk and liquid materials, helicopter landing deck and other related equipment. All of its jackups are independent leg and cantilevered. Its jackups are capable of drilling to a maximum depth of 30,000 feet in water depths up to 400 feet.


The Company has two su! bmersible! s in the fleet, which are cold-stacked. Submersibles are mobile drilling platforms, which are towed to the drill site and submerged to drilling position by flooding the lower hull until it rests on the sea floor, with the upper deck above the water surface. Its submersibles are capable of drilling to a depth of 25,000 feet in water depths up to 70 feet.

Advisors' Opinion:
  • [By Double Dividend Stocks]

    London-based Ensco plc, (ESV), provides offshore contract drilling services to the oil and gas industry worldwide, and operates a drilling rig fleet of approximately 74 rigs, including 9 drill ships, 13 dynamically positioned semisubmersible rigs, 6 moored semisubmersible rigs, and 46 jackup rigs. ESV currently has the world's second largest offshore rig fleet, behind only Transocean, which has 95 rigs, and just ahead of Noble, (NE), which has 73 rigs. Ensco has the newest fleet of Ultradeepwater rigs, with 3, and, has 4 more on order, which are already contracted.

  • [By Paul Ausick]

    Two oil field services companies announced on Tuesday that they plan to spin off parts of their businesses into separately traded companies. National Oilwell Varco Inc. (NYSE: NOV) will hive off its distribution business, and Noble Corp. (NYSE: NE) plans to spin off its standard specification (shallow-water) drilling units.

  • [By Travis Hoium]

    The question for investors is if the industry can handle all of this new capacity over the long term. Transocean (NYSE: RIG  ) �has seven new ultra-deepwater rigs under construction,�Ensco (NYSE: ESV  ) �is building four, and Noble (NYSE: NE  ) �will add five in coming years. Adding that much capacity means that $600,000 daily rates may not last forever, which would lower return on investment for everyone.�

  • [By Ben Eisen]

    Oil company Pioneer Natural Resources Co. (PXD) �fell 3%. Drilling company Noble Corp. PLC (NE) �fell 4.1%. Oil firm Newfield Exploration Co. (NFX) �slipped 3.5% and Halliburton Co. (HAL) �fell 3.3%.

5 Best Oil Stocks To Watch For 2014: Fleetcor Technologies Inc (FLT)

FleetCor Technologies, Inc. (FleetCor) is an independent global provider of specialized payment products and services to businesses, commercial fleets, oil companies, petroleum marketers and government entities in countries throughout North America, Latin America and Europe. During the year ended December 31, 2011, the Company processed more than 215 million transactions on its networks and third-party networks. The Company operates in two segments: North American and International segments. The Company provides its payment products and services in a variety of combinations to create payment solutions for its customers and partners. In August 2011, the Company acquired Mexican prepaid fuel card and food voucher business based in Mexico City, Mexico. On December 13, 2011, the Company acquired Allstar Business Solutions Limited, a fleet card company based in the United Kingdom. In July 2012, the Company acquired a Russian fuel card company. In July 2012, the Company acquired CTF Technologies, Inc.

The Company uses third-party networks to deliver its payment programs and services. In order to deliver its payment programs and services and process transactions, it owns and operates closed-loop networks through which it electronically connects to merchants and captures, analyzes and reports information. The Company also provides a range of services, such as issuing and processing. The Company markets its payment products directly to a range of commercial fleet customers, including vehicle fleets of all sizes and government fleets. Among these customers, it provides its products and services to small and medium commercial fleets. The Company also manages commercial fleet card programs for oil companies, such as British Petroleum (BP) (including its subsidiary Arco), Chevron and Citgo, and over 800 petroleum marketers.

The Company sells a range of fleet and lodging payment programs directly and indirectly through partners, such as oil companies and petroleum marketers. It provides it! s customers with various card products that function like a charge card to purchase fuel, lodging and related products and services at participating locations. The Company supports these cards with issuing, processing and information services that enable it to manage card accounts, facilitate the routing, authorization, clearing and settlement of transactions. The Company provides these services in a variety of outsourced solutions ranging from an end-to-end solution (consisting issuing, processing and network services) to limited back office processing services.

In addition, the Company offers a telematics solution in Europe that combines global positioning, satellite tracking and other wireless technology to allow fleet operators to monitor the capacity utilization and movement of their vehicles and drivers. The Company offers prepaid fuel and food vouchers and cards in Mexico that may be used as a form of payment in restaurants, grocery stores and gas stations. Approximately 10.4% of its revenue during the year ended December 31, 2011 came from its lodging and telematics products.

During 2011, the Company owns and operates eight closed-loop networks in North America and internationally. Fuelman network is the Company�� primary fleet card network in the United States. Corporate Lodging Consultants network (CLC) is the Company�� lodging network in the United States and Canada. The CLC Lodging network covers more than 17,700 hotels across the United States and Canada. Commercial Fueling Network (CFN) is the Company�� members only unattended fueling location network in the United States and Canada. Keyfuels network is the Company�� primary fleet card network in the United Kingdom.

CCS network is the Company�� primary fleet card network in the Czech Republic and Slovakia. Petrol Plus Region (PPR) network is the Company�� primary fleet card network in Russia, Poland, Ukraine, Belarus, Lithuania, Estonia and Latvia. Mexican network is the Company�� fuel! and food! card and voucher network in Mexico. Allstar network is the Company�� fleet card network in the United Kingdom. In the United States, the Company issues corporate cards that utilize the MasterCard payment network, which includes 176,000 fuel sites and 398,000 maintenance locations across the country. The networks of locations owned by the Company�� oil and petroleum marketer partners in both North America and internationally are utilized to support the card programs of these partners.

UNION TANK Eckstein GmbH & Co. KG (UTA) operates a network of over 46,000 fleet card-accepting locations across 38 countries throughout Europe, including more than 31,000 fueling sites. DKV operates a network of over 45,000 fleet card-accepting locations across 36 countries throughout Europe, including more than 30,500 fueling sites. In Mexico, the Company issues fuel cards and food cards that utilize the Carnet payment network, which includes approximately 8,700 fueling sites and 78,890 food locations across the country.

The Company competes with Wright Express Corporation, Comdata Corporation, U.S. Bank Voyager Fleet Systems Inc., Edenred and Sodexo, Inc.

Advisors' Opinion:
  • [By Rich Smith]

    Moving quickly to establish synergies on its Australian purchase of Fleet Card from General Electric (NYSE: GE  ) last month, Norcross, Ga.-based FleetCor (NYSE: FLT  ) is buying another fuel card-issuing and payment-processing business right next door.

  • [By Seth Jayson]

    Calling all cash flows
    When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on FleetCor Technologies (NYSE: FLT  ) , whose recent revenue and earnings are plotted below.

  • [By Steve Sears]

    New stocks in what Goldman calls the “Hedge Fund VIP list,”�include Actavis (ACT), Baidu (BIDU), Berkshire Hathaway (BRK.B), Crown Castle International (CCI), Entergy Louisiana (ELB), �Equinix (EQIX), Facebook (FB), Fleetcor Technologies (FLT), W.R. Grace (GRA), MetLife (MET), Macquarie Infrastructure (MIC), Micron (MU), Time Warner Cable (TWC), and Time Warner (TWX).