Wednesday, April 30, 2014

Is Your Cash Trash? Eye-Popping Chart Raises Question

Click to enlarge. 1-year rolling correlation of returns between dollar index and 10-year Treasury note. Source: Axel Merk Investments/BloombergA provocative chart demonstrating a sharp negative correlation between 10-year Treasuries and the dollar appears to suggest the U.S. currency may be losing its safe-haven appeal.

The chart by currency fund manager Axel Merk of Merk Investments shows the 1-year rolling correlation between the U.S. dollar index and 10-year Treasury notes over the past 18 years, revealing a steep plunge from the summer of 2012 until today.

That drop-off means that while U.S. Treasuries are currently viewed as a safe haven, attracting investment, the U.S. dollar is not simultaneously rising but is in fact falling against a basket of currencies.

In other words, there is a flight out of the greenback at the same time as the flight to the safety of Treasuries. It’s not that the two assets are moving out of correlation; rather, the relationship is one of high and rising negative correlation (of close to -0.60).

A variety of conflicting approaches could explain this divergence. For example, Merk entertains the possibility that investors would turn to the dollar in a “real” crisis versus today’s “subtle” crises.

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But the veteran currency manager prefers a different explanation. He says the sharp selloff in the dollar began precisely when European Central Bank head Mario Draghi promised to do “whatever it takes” to save the eurozone.

The chart suggests to Merk that, as he puts it, “the euro has become a true competitor to the greenback.”

It remains to be seen whether the declining fortunes of the dollar are a temporary phenomenon or indicative of a loss of safe haven status. Merk clearly favors the latter view, writing “we have long argued that there may not be such a thing anymore as a safe asset and investors may want to take a diversified approach to something as mundane as cash.”

Indeed, just days ago Gluskin Sheff chief economist David Rosenberg, widely followed by financial advisors who read his popular daily economic report, Breakfast with Dave, observed that global investors have been flocking to the Canadian dollar, despite aggressive efforts by Ottawa to talk down the loonie.

Writing in Canada’s Financial Post, Rosenberg writes:

“Net foreign buying of Canadian equities has topped $27 billion over the past six months, which has only happened two other times on record.

“Global investors apparently see what I see: CAD weakness represents massive stimulus.”

Monday, April 28, 2014

Hot China Stocks To Buy For 2015

After suffering through one of the most trying periods in its history, US automakers have emerged financially stronger and stand to benefit from a number of tailwinds in the domestic market, observes Elliott Gue, editor of Capitalist Times.

At the end of 2012, the median age of passenger vehicles still on the road in the US touched a record high of 11.4 years; the rising age of the US auto fleet implies that many of these cars will need to be replaced in coming years.

Credit availability and affordability have also improved dramatically, which should continue to fuel sales of new cars. Although interest rates have ticked up slightly this year, the cost of financing the purchase of a new vehicle remains near a record-low.

The only major US automaker to avoid bankruptcy during the Great Recession, Ford Motor Company (F) boasts the best-positioned product lineup to take advantage of improving automobile sales in the US, and long-term demand growth in China, and other emerging markets.

Hot China Stocks To Buy For 2015: iSoftStone Holdings Limited(ISS)

iSoftStone Holdings Limited provides various information technology (IT) services and solutions in the Greater China and internationally. It offers an integrated suite of IT services and solutions, including consulting and solution services, IT services, and business process outsourcing (BPO) services. The company provides a range of consulting services for an overall engagement or discrete consulting services in conjunction with other services. It also develops industry-specific solutions, including treasury management, cash management, property and casualty insurance core, financial holding company business analysis, trust company core, and banking risk management solutions for banking, financial services, and insurance industries; supply chain management, enterprise information portals, business intelligence, business process integration, and management and e-commerce solutions for energy, transportation, and public sectors; mobile and embedded technology, next generati on platforms, business intelligence functionality, and network security products for the communications industry. In addition, the company offers various IT services consisting of application development and maintenance, research and development, and infrastructure and software services. Further, it provides a range of BPO services, such as securities trade processing services for the investment banking industry; digitization and archiving of policyholder information, as well as account processing and customer service for insurance industry; and cross-industry BPO services comprising finance and accounting, customer care, and human resources. The company was founded in 2001 and is headquartered in Beijing, the People?s Republic of China.

Advisors' Opinion:
  • [By Seth Jayson]

    iSoftStone Holdings (NYSE: ISS  ) reported earnings on May 17. Here are the numbers you need to know.

    The 10-second takeaway
    For the quarter ended March 31 (Q1), iSoftStone Holdings beat expectations on revenues and beat expectations on earnings per share.

Hot China Stocks To Buy For 2015: Inc.(NTES), Inc., an Internet technology company, engages in the development of applications, services, and other technologies for the Internet in China. It provides online game services to Internet users through the in-house development or licensing of massively multi-player online role-playing games, including Fantasy Westward Journey, Westward Journey Online II, Westward Journey Online III, Tianxia II, Heroes of Tang Dynasty, and Datang, as well as the licensed game, Blizzard Entertainment's World of Warcraft. The company also offers online advertising on its Web sites. In addition, NetEase has paid listings on its search engine and Web directory, and classified advertising services, as well as an online mall, which provides opportunities for e-commerce and traditional businesses to establish their own storefront on the Internet. Further, it provides wireless value-added services, such as news and information content, matchmaking services, music, and photos from the We b over SMS, MMS, WAP, IVR, and Color Ring-back Tone technologies. Additionally, the company offers community services, including instant messaging, online personal advertisements, matchmaking, alumni clubs, and community forums; and aggregates news content on world events, sports, science and technology, and financial markets, as well as entertainment content, such as cartoons, games, astrology, and jokes from over 100 international and domestic content providers., Inc. was founded in 1997 and is based in Beijing, the People?s Republic of China.

Advisors' Opinion:
  • [By Kevin Chen]

    Two companies that seem on an unstoppable path of profits are Giant Interactive� (NYSE: GA  ) and NetEase (NASDAQ: NTES  ) .�Meanwhile, Shanda Games� (NASDAQ: GAME  ) and Perfect World� (NASDAQ: PWRD  ) haven't done as well.

  • [By Victor Selva] hem. Ever since the Chinese gaming market exploded into a multi-billion dollar business, this online game operator has managed to reach its competitors SINA Corp. (SINA) and Inc. (SOHU), via an extensive brand portfolio of in-house and licensed games. Some of the core online games include Fantasy Westward Journey, Westward Journey Online II and Ghost II.

    With Founder and CEO William Ding holding the reigns, this company has taken flight, in particular with its efficient game publishing initiatives and in-house research capabilities. In this article I analyze NetEase Inc.'s past profitability, debt, capital and operating efficiency. I will also take a look at which institutional investors have recently bought stock shares in the last quarter, and based on this information, we will get an understanding of the company' revenues, operating metrics and quality of earnings.

    Profitability Analysis

    Profitability is a class of financial metric used to analyse a business��ability to generate earnings compared with expenses and other relevant costs incurred during a specific period of time. In this section I will study several profitability metrics, such as return on assets, quality of earnings, cash flows and revenues. By analyzing these four metrics, we will be able to elucidate if the company is really making money.

    In addition, I always compare a company's revenue growth and operating cash flow growth. Over the past three years, the company's operating cash flow has increased by 4%. The company augmented its operating cash flow from $4.073 to $4.224. I advise looking for companies with strong cash generation profiles.

    ROA - Return on Assets = Net Income/Total Assets

    ROA is an indicator of how profitable a company is relative to its total assets, and shows how efficient management is at using its assets to generate earnings. In simple terms, ROA tells you what earnings were generated from invested capital (assets).

Best Dow Dividend Stocks To Watch Right Now: 51job Inc.(JOBS)

51job, Inc. provides integrated human resource services primarily in the People?s Republic of China. . The company provides recruitment related advertising services, including print advertising services through 51job Weekly, which is a city-specific recruitment advertising publication that is published once a week and is distributed as an insert in local newspapers and/or on a stand-alone basis; and online recruitment services through its Website, It also offers other human resource related services, such as business process outsourcing, which consist of social insurance and welfare payment processing, regulatory compliance, and payroll processing; and executive search services, as well as conducts training seminars in the areas of business management, leadership, sales and marketing, human resource, negotiation skills, financial planning and analysis, public administration, manufacturing, secretarial, and other skills for the general public and corporate cl ients. In addition, the company provides campus recruitment services; conducts salary, employee retention, and other human resource related surveys; organize and host annual human resource conferences and events, which include lectures, seminars, workshops, and networking opportunities for human resource professionals; and provides assessment tools to assist human resource departments in evaluating capabilities and dispositions of job candidates and existing employees, aiding employee placement, and allocating employee resources, as well as hiring and support services to employers on select recruitment projects. It provides recruitment and other human resource related services to employers through its sales offices, as well as through its sales and customer service call center. The company was founded in 1998 and is based in Shanghai, the People?s Republic of China.

Advisors' Opinion:
  • [By Ben Rooney]

    51job (JOBS), an online job search website similar to (MWW), has surged more 60% this year.

    But there is one notable Chinese dot-com stock that's sitting out the big rally. Shares of Renren (RENN), the social network known as China's Facebook (FB, Fortune 500), are down 3% for the year.

Hot China Stocks To Buy For 2015: Bitauto Holdings Limited (BITA)

Bitauto Holdings Limited provides Internet content and marketing services for the automotive industry primarily in the People?s Republic of China. The company offers subscription services to new automobile dealers that enable them to list pricing and promotional information on its Website and partner Websites, and to interact with consumers through its virtual call center, as well as provides advertising service to dealers and automakers on its Website. It also offers listing services to used automobile dealers, which enable them to display used automobile inventory information through its Website and partner Websites; and advertising services to used automobile dealers and automakers with certified pre-owned automobile programs on its Website. In addition, the company provides digital marketing solutions, including Website creation and maintenance, online public relationship, online marketing campaigns, and advertising agent service s. Bitauto Holdings Limited was founded in 2000 and is headquartered in Beijing, the People?s Republic of China.

Advisors' Opinion:
  • [By Jake L'Ecuyer]

    Leading and Lagging Sectors
    Technology stocks gained Tuesday, with Ku6 Media Co (NASDAQ: KUTV) leading advancers. Among leading tech stocks, gains came from Rubicon Technology (NASDAQ: RBCN), Bitauto Holdings (NYSE: BITA) and Sify Technologies (NASDAQ: SIFY).

  • [By Jake L'Ecuyer]

    Tech sector was the leading decliner in the US market today. Among the sector stocks, Bitauto Holdings (NYSE: BITA) was down more than 8.6 percent, while Ku6 Media Co (NASDAQ: KUTV) tumbled around 8.4 percent.

  • [By Jake L'Ecuyer]

    Leading and Lagging Sectors
    Technology stocks gained Tuesday, with Ku6 Media Co (NASDAQ: KUTV) leading advancers. Among leading tech stocks, gains came from Rubicon Technology (NASDAQ: RBCN), Bitauto Holdings (NYSE: BITA) and Sify Technologies (NASDAQ: SIFY). Utilities shares dropped by 0.11 percent in the US market today.

  • [By Kevin Marder]

    Chinese company Bitauto Holdings (BITA) offers car pricing and reviews on its site. The consensus of Wall Street analysts look for earnings growth of 71% in 2013 and another 30% in 2014. These estimates have been most recently revised upward. Revenue growth has come in at 36% or more in each of the last eight quarters.

Hot China Stocks To Buy For 2015: Home Inns & Hotels Management Inc.(HMIN)

Home Inns & Hotels Management Inc. develops, leases, operates, franchises, and manages a chain of economy hotels in the People?s Republic of China. The company operates its hotels under the Home Inn brand name. As of April 28, 2011, it had approximately 800 Home Inns in operation and 1,000 Home Inns sealed in franchise agreements. The company was incorporated in 2001 and is headquartered in Shanghai, the People?s Republic of China.

Advisors' Opinion:
  • [By Jim Jubak]

    We��e been down this road with Home Inns and Hotels Management (HMIN) before. Which doesn�� make it any less scary.

    The stock is down 22.2% in the last ten days��espite solid��ut certainly not spectacular��esults for the fourth quarter, reported on March 12.

  • [By Belinda Cao]

    The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. slumped 3.4 percent last week to a seven-month low of 89.04. The gauge traded at 13.5 times estimated earnings, 3.6 percent below the S&P�� valuation, data compiled by Bloomberg show. China Southern Airlines Co. (ZNH) and China Eastern Airlines Corp. (CEA) lost more than 6 percent April 5, while Home Inns & Hotels Management Inc. (HMIN) tumbled 16 percent in the week.

Hot China Stocks To Buy For 2015: CNOOC Limited(CEO)

CNOOC Limited, through its subsidiaries, engages in the exploration, development, production, and sale of crude oil, natural gas, and other petroleum products. The company?s oil and natural gas properties are located in offshore China, which include Bohai Bay, western south China Sea, eastern south China Sea, and east China Sea, as well as in Indonesia, Iraq, and other regions in Asia; and Oceania, Africa, North America, and South America. As of December 31, 2010, the company had net proved reserves of approximately 2.99 billion barrels-of-oil equivalent, including approximately 1.92 billion barrels of crude oil and 6,458.3 billion cubic feet of natural gas. It also provides bond issuance services; and has a joint venture with Bridas Energy Holdings. CNOOC Limited was founded in 1982. The company is headquartered in Central, Hong Kong, and is considered a Red Chip company due to its listing on the Hong Kong Stock Exchange. CNOOC Limited is a subsidiary of China National Of fshore Oil Corporation.

Advisors' Opinion:
  • [By Paul Ausick]

    Endeavor owns assets onshore in the U.S. and in the U.K. region of the North Sea. The company expects to begin production ��mminently��at the Rochelle field which will be operated by Nexen, the former Canadian firm that was acquired by China�� Cnooc Ltd. (NYSE: CEO) earlier this year.

Hot China Stocks To Buy For 2015: Trina Solar Limited(TSL)

Trina Solar Limited, through its subsidiaries, designs, develops, manufactures, and sells photovoltaic (PV) modules worldwide. The company offers monocrystalline PV modules ranging from 165 watts to 185 watts in power output; and multicrystalline PV modules ranging from 215 watts to 240 watts in power output that provide electric power for residential, commercial, industrial, and other applications. It also involves in the design and production of various PV modules, such as colored modules for architectural applications and larger sized modules for utility grid applications based on customers? and end-users? specifications. Trina Solar Limited sells and markets its products primarily to distributors, wholesalers, power plant developers and operators, and PV system integrators. The company was founded in 1997 and is based in Changzhou, the People?s Republic of China.

Advisors' Opinion:
  • [By Paul Ausick]

    But what does this resurrection mean for investors? With a couple of exceptions, solar stocks hit a peak in 2008. First Solar Inc. (NASDAQ: FSLR) topped $300 a share briefly, SunPower Corp. (NASDAQ: SPWR) topped $125 a share, JA Solar hit $120, Canadian Solar Inc. (NASDAQ: CSIQ) topped $40 and Trina Solar Ltd. (NYSE: TSL) reached its peak of more than $35 in mid-2007. At today’s prices one almost has to wonder if we are talking about the same companies. The only stock trading anywhere near its peak price of six years ago is Canadian Solar. JinkoSolar is near its all-time high again, but it was not publicly traded until mid-2010.

  • [By Travis Hoium]

    Why should an investor choose SunPower over SolarCity?
    SolarCity has definitely become a larger player in leasing but it gets supply from low-cost suppliers like Trina Solar (NYSE: TSL  ) and Yingli Green Energy, which we know it has contracted with in the past. Werner thinks this presents a risk for SolarCity long term (which I'll cover more in a moment) and allows SunPower to differentiate itself to both installers and customers.

  • [By Dan Caplinger]

    On Wednesday, Trina Solar (NYSE: TSL  ) will release its latest quarterly results. Given all the issues that have plagued the solar industry lately, can the company get past its lack of profitability to survive the shakeout among Chinese solar companies?

Hot China Stocks To Buy For 2015: Yanzhou Coal Mining Company Limited(YZC)

Yanzhou Coal Mining Company Limited engages in the underground mining, preparation, and sale of coal. It involves in manufacturing, washing, processing, and selling steam coal used in the electricity power sector; and metallurgical coal used with coking coal in the process of pulverized coal injection, as well as operates six coal mines. The company also engages in the provision of railway transportation services; production and sale of coal chemicals, primarily methanol; and generation of electricity and heat. In addition, it involves in the manufacture and sale of mining machinery and engine products; and development of integrated coal technology. Further, the company engages in the transportation via rivers and lakes; sale of construction materials; and trading and processing of mining machinery. It has operations primarily in China, Japan, South Korea, and Australia. The company was founded in 1973 and is based in Zoucheng, the People's Republic of China. Yanzhou Coal Mining Company Limited is a subsidiary of Yankuang Group Corporation Limited.

Advisors' Opinion:
  • [By MarketWatch]

    Treasurer Joe Hockey said Yanzhou Coal Mining Co. (YZC) no longer needed to meet a Dec. 31 deadline for reducing its stake in Yancoal Australia Ltd. (YAL.AU) below 70%, citing the downturn in global coal prices. Yanzhou, which owns 78% of Yancoal Australia, had made the commitment in 2009 to complete its 3.5 billion Australian dollar (US$3.2 billion) takeover of Felix Resources Ltd.

Hot China Stocks To Buy For 2015: TAL Education Group(XRS)

TAL Education Group, together with its subsidiaries, provides K-12 after-school tutoring services in the People?s Republic of China. It offers tutoring services to K-12 students covering various academic subjects, including mathematics, English, Chinese, physics, chemistry, and biology. The company provides tutoring services through small classes; personalized premium services, such as one-on-one tutoring; and online course offerings. As of May 31, 2011, it operated a network of 199 physical learning centers in Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Wuhan, Nanjing, Hangzhou, Chengdu, and Xi?an; and, an online education platform for online courses. The company also offers education and management consulting services, as well as sells software. It operates under the Xueersi brand. The company was founded in 2003 and is headquartered in Beijing, China.

Advisors' Opinion:
  • [By Louis Navellier]

    Education is a top priority in China and competition for the best schools are intense. TAL� Education Group (XRS) benefits form the focus on education by offering tutoring services for kids in grades k-12. They operate a network of 270 learning centers and 247 service centers in China and also have 5 call centers in Beijing, Shanghai, Tianjin, Guangzhou, and Shenzhen.

Hot China Stocks To Buy For 2015: Raptor Pharmaceutical Corp.(RPTP)

Raptor Pharmaceuticals Corp. operates as a biotechnology company in the United States. The company is dedicated to speeding the delivery of new treatment options to patients by working to improve existing therapeutics through the application of highly specialized drug targeting platforms and formulation expertise. Its clinical stage development products include DR Cysteamine, which is in phase IIb for the treatment of cystinosis; phase IIa for the non-alcoholic steatohepatitis; and phase II for the treatment of Huntington?s disease. Raptor?s clinical-stage products also include Convivia that is in Phase IIa stage for the potential management of acetaldehyde toxicity due to alcohol consumption; and Tezampanel and NGX 426, which completed phase I stage for the treatment of migraine and pain. Its preclinical product candidates comprise HepTide for the treatment of Hepatocellular Carcinoma and Hepatitis; WntTide for the treatment of breast cancer; NeuroTrans for the treatmen t of neurodegenerative diseases; and Tezampanel and NGX 426 for the treatment of Thrombosis and Spasticity Disorder. Raptor Pharmaceuticals Corp. is headquartered in Novato, California.

Advisors' Opinion:
  • [By Sean Williams]

    This week saw two new drugs approved by the FDA: Raptor Pharmaceuticals' (NASDAQ: RPTP  ) Procysbi and Merck's (NYSE: MRK  ) Liptruzet.

  • [By Jake L'Ecuyer]

    Raptor Pharmaceuticals (NASDAQ: RPTP) was down, falling 10.04 percent to $13.31 after the company reported Q4 results. Raptor Pharmaceutical posted a Q4 loss of $0.20 per share, versus the projected loss of $0.16 per share.

  • [By Jake L'Ecuyer]

    Equities Trading UP
    Raptor Pharmaceuticals (NASDAQ: RPTP) shot up 16.62 percent to $17.40 after the company announced positive clinical results with RP103 in Huntington's disease Phase 2/3 trial.

Fannie and Freddie Defy Obama, Look Invincible

Top 5 Dow Dividend Companies To Buy Right Now

NEW YORK (TheStreet) -- Just a couple of years ago it looked like no one in Washington wanted to let Fannie Mae (FNMA) and Freddie Mac (FMCC) live, but the government sponsored entities (GSEs) have lately found defenders in unlikely places and are even showing signs of being independent of the Obama Administration.

The surprising resilience of the mortgage giants comes ahead of a scheduled vote in the Senate Banking Committee Tuesday on legislation sponsored by Sens. Tim Johnson (D., SD) and Mike Crapo (R., ID) aimed at winding down Fannie and Freddie, a stated goal of President Obama.

While the bill is expected to pass the Senate Banking Committee with at least 12 votes, it will likely require approval from 15 of the 22 committee members to have a chance at passing the full Senate, argues FBR Capital Markets analyst Ed Mills in a report published Monday.

Even then, passage in the House is seen as a near impossibility given that House Financial Services Committee Chairman Jeb Hensarling (R., Texas) has sponsored his own housing reform legislation which, as Mills describes it "fully privatizes the housing industry." While the Johnson Crapo bill winds down Fannie and Freddie, it still leaves a large role for the government. An unusual combination of conservative and liberal groups have opposed the Johnson Crapo bill for various reasons. And a slowing home sales market appears unlikely to help matters. Moody's Analytics on Monday estimated the proposal will cause mortgage rates to rise by 0.41-0.58%. But opposition to the bill took a dramatic turn late on Friday, as The Wall Street Journal published a total of five separate documents from Fannie, Freddie and their regulator, the Federal Housing Finance Administration. Over 90 pages, single spaced, with small type, the documents (which were not intended for publication) listed a host of concerns. If the legislation were to pass, "the risk Freddie Mac would not be able to carry out its Core Policy Function is extremely high," read one of the documents, an April 16 letter from Freddie Mac CEO Donald Layton to FHFA Director Melvin Watt. A draft memo of "identified issues" from the FHFA to the Senate Banking Committee states the legislation could create "regulatory confusion and potential for arbitrage." The memo also argues Johnson Crapo would allow large banks to "further their dominance" in the housing finance market. "Large banks could (and do) play several roles (originator, aggregator, guarantor and servicer), thus dominating the housing finance market -- but they would be primarily regulated by the Federal banking agencies, whose regulatory focus is safety and soundness of individual institutions and not on the functioning of the housing finance system," the memo states.

FBR Capital Markets' Mills sees "long odds for the bill to become law this year." And next year could be even more difficult, since Johnson is retiring and the likely next Chairman of the Senate Banking Committee, whether Sherrod Brown (D., Ohio) or Richard Shelby (R., Ala.) are both seen as opponents of the legislation. Several giant hedge funds as well as mutual fund company Fairholme Funds have invested in Fannie and Freddie common and preferred shares. The Fannie and Freddie preferred shares, which were essentially worthless after they were put into government conservatorship, have now recovered nearly half their original value. The common shares in the two entities, which were also essentially worthless now have a market value of about $34 billion.

The securities sold off sharply when the Johnson Crapo legislation was unveiled, since it leaves little if any value for private shareholders. Still, private investors are suing the government and much of the value residing in the shares may be attributable to the potential success of the litigation. In any case, publication of the issues raised by the GSEs and their regulator appeared to have little impact in trading of the common shares on Monday. Fannie finished down 1.04% at $3.80, while Freddie shares gave up 0.51% to close at $3.88.

Follow @dan_freed    

Stock quotes in this article: FNMA, FMCC 

Sunday, April 27, 2014

Does Chesapeake Have More Upside Potential?

With shares of Chesapeake Energy Corporation (NYSE:CHK) trading at around $21.87, is CHK an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock's Movement

Everything covered in this article will be important in regards to the future potential for Chesapeake, but there is one factor that stands out above the rest, which is heavy insider buying over the past month. It's important to understand that there has been heavy insider selling throughout the broader market recently, not heavy insider buying. Furthermore, when insiders buy with conviction, it almost always leads to higher stock prices down the road. This factor alone makes Chesapeake appealing.

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Chesapeake has shown steady revenue improvements on an annual basis, but the bottom line has been inconsistent. A lot of this had to do with heavy spending. However, with a new CEO in place, Chesapeake is more focused on fiscal responsibility, mostly by paying a lot more attention to its most profitable assets. It should also be noted that management has promised to return more capital to shareholders as soon as possible.

Q1 is old news, but for a quick overview to show the direction of the company, below are several important points:

41.5 percent revenue increase year-over-year Average daily production increased 7.5 percent year-over-year Natural gas equivalent realized price increased 10.9 percent year-over-year Production expenses decreased 18.1 percent year-over-year Operation cash flow increased 237.2 percent year-over-year

It looks as though Chesapeake is heading in the right direction, and direction is everything on Wall Street.

The chart below shows some basic fundamentals for Chesapeake, Anadarko Petroleum Corporation (NYSE:APC), and Devon Energy Corporation (NYSE:DVN).

Trailing P/E N/A 64.65 N/A
Forward P/E 10.64 16.52 11.21
Profit Margin -5.13% 5.11% -22.15%
ROE -2.65% 3.43% -9.30%
Operating Cash Flow 3.49B 8.95B 4.93B
Dividend Yield 1.60% 0.40% 1.50%
Short Position 11.40% 2.00% 2.50%

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

T = Technicals Are Strong

Chesapeake has performed well over the past year, and it has outperformed its peers year-to-date as well over the past month.

1 Month Year-To-Date 1 Year 3 Year
CHK 14.46% 33.15% 43.34% -1.66%
APC 4.32% 19.16% 52.91% 102.6%
DVN 1.20% 10.54% 0.26% -8.89%

At $21.87, Chesapeake is trading above its averages.

50-Day SMA 20.01
200-Day SMA 19.13
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E = Equity to Debt Ratio Is Normal

The debt-to-equity ratio for Chesapeake is close to the industry average of 0.50. The debt-to-equity ratio is also likely to improve in the future.

Debt-To-Equity Cash Long-Term Debt
CHK 0.76 33.00M 13.63B
APC 0.66 3.74B 14.76B
DVN 0.62 6.52B 12.15B

E = Earnings Have Been Inconsistent

Earnings have been inconsistent over the years, which has had a lot to do with heavy spending. Chesapeake is now more focused on efficiency. As far as revenue goes, the pace has slowed, but there have still been annual improvements for three consecutive years. This is a positive considering many companies throughout the broader market suffered revenue setbacks in 2012.

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 11,629 7,702 9,366 11,635 12,316
Diluted EPS ($) 1.14 -9.57 2.51 2.32 -1.46

When we look at the last quarter on a year-over-year basis, we see improvements in revenue and earnings. However, revenue and earnings both declined on a sequential basis.

Quarter Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012 Mar. 31, 2013
Revenue ($) in millions 2,419 3,389 2,970 3,539 3,424
Diluted EPS ($) -0.11 1.24 -3.19 0.39 0.02

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


Chesapeake is the second largest natural gas producer in the United States, it has improved oil production, and the right management seems to be in place. At the moment, it looks as though it's all systems go. However, Chesapeake won't be resilient if a deflationary environment is ahead of us. Many people think inflation is the big threat, but the Federal Reserve has been fighting deflation for years for a reason.

S&P 500 Snaps 4-Week Gain Amid Earnings, Stimulus Concern

The Standard & Poor's 500 Index (VIX) snapped a four-week advance as investors weighed corporate earnings amid speculation that the Federal Reserve may reduce its asset purchases this year.

Caterpillar Inc. fell 4.2 percent after quarterly profit missed estimates and it cut its annual earnings forecast. McDonald's Corp. tumbled 2.2 percent after saying economic weakness would hurt results for the rest of the year. Homebuilders dropped 8.8 percent as a group as PulteGroup (PHM) Inc. and D.R. Horton Inc. lost more than 12 percent. Facebook Inc. (FB) surged 31 percent as mobile advertising helped profit.

The S&P 500 dropped less than 0.1 percent to 1,691.65, its first weekly decline since June 21. The benchmark index reached a record on July 22 and climbed within 3 points of 1,700 for three straight days before retreating. The Dow Jones Industrial Average (INDU) added 15.09 points, or 0.1 percent, to 15,558.83.

"The market is trying to figure out where we have some safety and where we have top-line and bottom-line growth," Samuel Lieber, the Purchase, New York-based chief executive officer at Alpine Woods Capital Investors, said in a telephone interview. His firm oversees $4.8 billion. "The underlying trend is being questioned."

The Fed has said economic data will determine the timing and pace of any reduction in its $85 billion in monthly asset purchases. A gauge of manufacturing in the mid-Atlantic region unexpectedly fell, while orders for durable goods rose more than forecast in June and consumer confidence unexpectedly increased in July to the highest level in six years.

Bull Market

The S&P 500 (SPX) climbed 150 percent since March 2009 as the U.S. bull market has entered its fifth year, driven by better-than-estimated corporate earnings and three rounds of bond purchases by the U.S. central bank. The stock gauge is heading for a 5.3 percent advance this month, the most since October 2011. The gauge fell in June, after seven successive months of gains, as Chairman Ben S. Bernanke said on May 21 the Fed could reduce its bond purchases as early as September.

Equity valuations have climbed 16 percent this year, with the S&P 500 trading at 16.1 times reported operating earnings, close to the highest level since May 2010, data compiled by Bloomberg show.

The Chicago Board Options Exchange Volatility Index, or VIX, gained 1.4 percent to 12.72 during the week. The equity volatility gauge, which moves in the opposite direction as the S&P 500 about 80 percent of the time, is down 29 percent for the year.

More Clues

The coming week will offer more clues to the state of the economy. In addition to earnings reports will be data on U.S. gross domestic product and the monthly labor report, as well as monetary policy announcements by the Fed and the European Central Bank.

"The Fed is going to be meeting and there is speculation that maybe they will start to reduce their bond purchases in September," Peter Jankovskis, co-chief investment officer who helps manage $3.6 billion at Oakbrook Investments LLC, said via phone from Lisle, Illinois. "The reports that we have had and any statements they make are going to be the big lead-in to that story. The big driver really continues to be the employment statistics."

Exxon Mobil Corp. and Procter & Gamble Co. (PG) will be among 134 S&P 500 companies releasing results in the coming week. Of the 260 companies in the benchmark equity index that have posted quarterly results so far, 73 percent have exceeded analysts' estimates for profit and 57 percent have topped sales projections, data compiled by Bloomberg show.

Industrials lost 1 percent as a group for the week, the most among 10 industries in the S&P 500, followed by a 0.8 percent drop among energy producers.

Slower Demand

Caterpillar (CAT) slid 4.2 percent to $82.06 for the steepest loss in the Dow. Earnings for the world's largest maker of mining and construction machinery trailed analysts' estimates for a third straight quarter and cut its forecast as mining-equipment sales declined on slower commodity demand from emerging markets.

McDonald's fell 2.2 percent, the second-most in the Dow, to $98.03. The world's largest restaurant chain posted second-quarter profit and revenue that fell short of analysts' forecasts and said sales for the rest of 2013 would be hurt by economic weakness.

Expedia Inc. (EXPE) sank 27 percent to $47.20 for the biggest retreat in the S&P 500 as the online travel agency missed sales and profit estimates amid increased competition. Netflix Inc. slumped 6.9 percent to $246.31 on slower-than-estimated subscriber gains.

Homebuilders Tumble

An index of homebuilders fell 8.8 percent as PulteGroup and D.R. Horton reported lower-than-forecast orders, adding to concerns that higher mortgage rates will hamper the nation's housing recovery. PulteGroup plunged 16 percent to $16.36 for its biggest weekly decline in almost two years. D.R. Horton sank 12 percent to $19.33.

Health-care stocks and technology companies added at least 0.8 percent for the biggest gains of the week.

Facebook jumped 31 percent, its biggest weekly advance, to $34.01. The operator of the world's most popular social-networking service reported sales and profit that beat estimates. Chief Executive Officer Mark Zuckerberg's decision last year to bet big on mobile software is paying off, with sales of ads on wireless devices now on track to surpass revenue from desktop computers.

Apple Jumps

Apple Inc. (AAPL) rose 3.8 percent to $440.99. The world's most valuable technology company, which hasn't refreshed its iPhone and iPad since last year, managed to exceed analysts' earnings projections, even as profit declined from a year earlier and sales were largely flat.

Boston Scientific Corp. (BSX) soared 13 percent to $10.96. The second-biggest maker of heart-rhythm devices reported profit that beat analysts' estimates and raised its forecast amid signs that demand for defibrillators and stents is starting to stabilize.

Starbucks Corp. (SBUX) rose 6.6 percent to a record $73.36 after profits topped forecasts. Chief Executive Officer Howard Schultz's push into food is starting to pay off, driving traffic into U.S. stores and lifting sales and profit.

Friday, April 25, 2014

Goodwill proves to be a retail juggernaut

ST. PAUL, Minn. (AP) — While many big merchants are struggling to sustain their sales, one of the fastest growing retailers in Minnesota is a nonprofit.

Sales at the thrift stores of Goodwill-Easter Seals Minnesota have been soaring thanks to a surge in the opening of new stores beyond the urban core. Goodwill even has a store next to a Maserati dealership in Minnetonka.

Consumers' growing frugality is also boosting sales.

In the past three years, Goodwill's retail sales have jumped about 75% to $67 million, a growth rate any business executive would be happy to brag about, Minnesota Public Radio reported.

In St. Louis Park, Goodwill's Second Debut, caters to people shopping for goods from upscale brands. Inside, chandeliers hang from the ceiling, the floors are wood laminate, and the feel is full-price retail.

Leona Adams of Chicago was in town recently for a conference when she walked into the store.

"I thought I was in a boutique," she said. "Very nice. I was impressed. Pricing is good. It's excellent quality."

Second Debut carries men's and women's clothing, shoes and jewelry from high-end designers.

"Ralph Lauren, Polo, Chico and Ann Taylor and then we go all the way up to the fashion houses in Paris and Italy," said Cynthia Courtney, who manages the shop.

Courtney said everything is inspected for any flaws or stains and mended as needed — then priced at a quarter or third of the original price.

We put out 200-300 units a day," she said. "So, it's new stuff every day. Within a month's time, if it's still here, it goes down 25%."

Still, Second Debut is the exception for Goodwill. Its typical outlet is like the 17,600-square-foot store off Highway 100 in St. Louis Park, with its fluorescent lights and vinyl tile flooring. The store offers the usual eclectic mix of clothing, furniture, small appliances, housewares and other goods.

Michael Wirth-Davis, CEO of Goodwill-Easter Seals Minnesota, said sales at Goodwill stores provide! about 85% of the charity's revenue.

"The goal is to sell things, yes," he said. "But it's why we're selling things. And that's to produce revenue to provide services and programs for a wide variety of folks who are trying get work, keep work and advance in their careers."

The demand for such services is growing. In 2013, the organization provided employment and job-training services to more than 30,000 people.

Most of the store merchandise is from public donations. Other retailers also donate or sell inventory to Goodwill at a deep discount. Women's clothing dominates most stores. And the typical customer is a woman between the ages of 35 and 54. But Wirth-Davis says customers these days include a good number of men and come from across the economic spectrum.

"People often think that our stores are only for poor people, whatever that means for them. And we're saying we have stuff for everyone," he said.

Wirth-Davis said the Great Recession provided Goodwill with challenges and opportunities. Although more people needed its employment services, more consumers were eager to shop Goodwill. The hit to the retail industry made it easier and cheaper to lease good locations.

More than half of the nonprofit's 35 stores have opened since 2008, in outer ring Twin Cities suburbs like Chanhassen, Blaine and Hudson, Wis.

"When you have more outlets and it's convenient to donate your goods and shop, sales go up," Wirth-Davis said. "Also the look of a store. We're not your grandma's Goodwill, the traditional old thrift shop feel. We want it to be customer friendly and for people to have a great shopping experience."

Nationally, the portion of U.S. consumers saying they shop for used goods has doubled in the last decade to about 30%, according to Britt Beemer, an analyst for America's Research Group. He said a thrift store like Goodwill provides a handy way to recycle goods and stretch dollars. "There's no longer a stigma about buying there for consumers," he said. "If i! t's a goo! d deal and value, they're not ashamed to buy it there."

Beemer says many young people today are proud to boast about the bargains they find in thrift shops.

For Kari Peterson, of Minneapolis, Goodwill is a way to manage college debt. She's a music teacher, who graduated from Bethel University about four years ago.

"I ended up with more loans than I expected and switched my major as well," she said. "So, I ended up staying in college longer than I intended. Moving out on my own, I wanted to be thrifty and smart about money, not buying everything brand new."

Price isn't the only attraction. Peterson likens Goodwill to a treasure chest full of surprises, like the rare classical vinyl LPs she has found for $1 or less a record.

"Pretty cool," she said.

Now, Peterson said, she just needs to find an inexpensive record player to play them on.

An AP Member Exchange feature story shared by Minnesota Public Radio

VMware Earnings Aren't Growing Fast Enough

VMware (NYSE: VMW  ) will release its quarterly report on Tuesday, and on its face, expectations of double-digit percentage growth would seem to be more than adequate to keep investors happy. But in the high-growth world of cloud computing, investors demand much more, and without faster growth in VMware earnings, the stock could well keep trading near three-year lows well into the future.

VMware's expertise in virtualization software has given it a strong position in the cloud-computing space, as businesses seek to improve the efficiency of their IT systems. Yet the company has faced the tough task of defending its leadership role in the space against a rising tide of competition. Let's take an early look at what's been happening with VMware over the past quarter and what we're likely to see in its quarterly report.

Stats on VMware

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$1.23 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can VMware earnings finally perk up this quarter?
Analysts have actually gotten a bit more optimistic about VMware earnings in the past few months, holding their estimates for the June quarter steady but raising their full-year 2013 calls by a nickel per share. That hasn't done much to help the stock, though, as shares have fallen almost 8% since mid-April.

VMware faces huge amounts of competition in the virtualization and cloud space, as industry goliaths duke it out for the hosting niche that's (NASDAQ: AMZN  ) Amazon Web Services currently occupies. For its part, VMware and majority owner EMC (NYSE: EMC  ) announced more details in April about its Pivotal spinoff, with the venture formally starting April 1 and including assets from both VMware and EMC that will give users an alternative to being locked into proprietary systems from Amazon or other companies. General Electric (NYSE: GE  ) bought into the venture, buying a 10% stake at prices that value the company at roughly $1.05 billion.

To try to drive new business, VMware has also looked to some smart strategic partnerships. Joining with partners including Intel (NASDAQ: INTC  ) , Red Hat, and Dell back in March, VMware become part of a project to let hospitals use Linux servers to implement IT solutions. The project hits at the key health-care segment, which has huge potential especially for smaller hospitals that often escape the notice of more dedicated IT services companies.

VMware also took steps to streamline its operations. The company sold off its Zimbra unit to privately held Telligent Systems last week, saying that Zimbra's email and collaboration products needed a different owner in order to maximize their potential.

Still, the key for VMware is to find new ways to differentiate itself from the growing pack of competitors serving the cloud-computing and virtualization space. Especially as new initiatives like Big Data start to emerge, VMware needs to stay relevant to hold its position.

In the VMware earnings report, watch for the company to flesh out its growth strategy not just for the immediate future but for years to come. Without a strong vision of where the company's going, VMware is vulnerable to the same doubts that have held its growth back in recent quarters.

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Wednesday, April 23, 2014

Apple Jumps on Earnings Beat, Stock Split

Updated from 4:08 p.m. to include comments from the conference call and updated share price.

NEW YORK (TheStreet) -- Apple (AAPL) shares jumped after the tech giant posted fiscal second-quarter earnings that beat Wall Street estimates, and announced a 7 for 1 stock split.

Apple reported second-quarter earnings of $11.62 a share, generating $45.6 billion in revenue. The company shipped 43.7 million iPhones, 16.4 million iPads, and shipped 4.1 million Macs during the quarter. Gross margin, a highly watched level for Apple, came in at 39.3%. On the conference call, Apple noted there are more than 800 million iTunes accounts, up from a previous number of around 600 million.

Apple CEO Timothy D. Cook noted on the call that Apple has sold more than 20 million Apple TV set-top boxes since the product was introduced. For the fiscal third quarter, Apple said it expects revenue between $36 billion and $38 billion, with gross margins between 37% and 38%. Operating expenses will be between $4.4 billion and $4.5 billion, and it will have a tax rate of 26.1%. Shares were soaring in after-hours trading, gaining 7.7% to $564.99.
WATCH: More market update videos on TheStreet TV | More videos from Kori Hale "We're very proud of our quarterly results, especially our strong iPhone sales and record revenue from services," said Cook in the earnings press release. "We're eagerly looking forward to introducing more new products and services that only Apple could bring to market." "We generated $13.5 billion in cash flow from operations and returned almost $21 billion in cash to shareholders through dividends and share repurchases during the March quarter," said Peter Oppenheimer, Apple's CFO, in the release. "That brings cumulative payments under our capital return program to $66 billion." Analysts surveyed by Thomson Reuters were expecting the Cupertino, Calif.-based Apple to report earnings of $10.18 a share on $43.53 billion in revenue, as Apple continues to promise new products and new categories. Apple also announced that it was upping its capital allocation program to over $130 billion by the end of calendar year 2015. As part of the program, the Board increased its share repurchase authorization to $90 billion from $60 billion, and boosted its quarterly dividend by 8% to $3.29 a share. "The Company also plans to increase its dividend on an annual basis. With annual payments of $11 billion, Apple is among the largest dividend payers in the world," the company said in the release. From August 2012 through March 2014, Apple has spent $66 billion in cash on its capital return program. Apple will access the public debt markets this year to help paying for the program, and raise an "amount of term debt similar to what the Company raised during 2013." "We are announcing a significant increase to our capital return program," Cook said, when discussing the allocation program. "We're confident in Apple's future and see tremendous value in Apple's stock, so we're continuing to allocate the majority of our program to share repurchases. We're also happy to be increasing our dividend for the second time in less than two years." "We believe our current stock price does not reflect the true value of the company," both Cook and new CFO Luca Maestri said on the call. The Board of Directors also announced a seven-for-one stock split, effective June 2, 2014. Shares will will begin trading on a split-adjusted basis on June 9, 2014. On the conference call, Cook noted Angela Ahrendts, the former CEO of Burberry, would be joining Apple's executive team next week, as she helps to lead Apple's retail stores.

Shares of Apple closed the regular session lower, falling 1.3% to close at $524.75. --Written by Chris Ciaccia in New York >Contact by Email. Follow @Chris_Ciaccia

Stock quotes in this article: AAPL 

Tuesday, April 22, 2014

Hot Blue Chip Stocks For 2015

The market got a helping hand from Europe -- of all places -- today, while positive news on the domestic front combined to send stocks higher. The European Central Bank's decision to cut rates to historic lows in just a few days put equities on firmer ground, coupled with rising consumer spending and a jump in real estate sales. When all was said and done, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) ended up 106 points, or 0.7%, at 14,818.

But as much as those macroeconomic developments were responsible for the rise of the blue chips, it was tech stocks that really lifted the index. Hewlett-Packard (NYSE: HPQ  ) was one notable beneficiary of tech's popularity surge Monday, adding 2.6%. Since HP has seen its stock slip at the expense of a move to tablets from PCs, today's report showing an uptick in consumer spending doesn't hurt things.�

Although also heavily reliant on the declining PC market, Microsoft (NASDAQ: MSFT  ) tacked on 2.6% as well. While Microsoft's Surface tablet has had some trouble gaining traction and its new Windows 8 operating system hasn't blown anybody away, the company is making legitimate progress in the cloud computing landscape. Its Azure business division just crossed the $1 billion annual sales mark, with subscriptions to its service rising nearly 50% in the last six months alone.

Hot Blue Chip Stocks For 2015: Visa Inc.(V)

Visa Inc., a payments technology company, engages in the operation of retail electronic payments network worldwide. It facilitates commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities. The company owns and operates VisaNet, a global processing platform that provides transaction processing services. It also offers a range of payments platforms, which enable credit, charge, deferred debit, debit, and prepaid payments, as well as cash access for consumers, businesses, and government entities. The company provides its payment platforms under the Visa, Visa Electron, PLUS, and Interlink brand names. In addition, it offers value-added services, including risk management, issuer processing, loyalty, dispute management, value-added information, and CyberSource-branded services. The company is headquartered in San Francisco, California.

Advisors' Opinion:
  • [By DailyFinance Staff]

    Stocks rallied again on Friday, completing one of the market's best weeks of the year. This rally is tied to growing signs that the pace of U.S. economic growth is finally picking up. The government reported a 4.1 percent jump in GDP over the summer. That was much stronger than expected, and substantially higher than the previous estimate. That came on top of strong reports this month on jobs, manufacturing and housing. At a news conference, President Obama said 2014 could be "a breakthrough year" for the U-S economy. On Wall Street, the Dow Jones industrial average (^DJI) rose 42 points, and the Standard & Poor's 500 index (^GPSC) gained 9 -- both ending at record highs yet again. The Nasdaq composite index (^IXIC) rallied 46 points. For the week, the Dow was up about 3 percent. Some retail stocks bounced higher as stores brace for the final weekend before Christmas. J.C. Penney (JCP) rose 4.5 percent, Urban Outfitters (URBN) gained 2 percent and American Eagle (AEO) gained 1.5 percent. And Target (TGT) edged higher, one day after acknowledging a massive security breach that exposed the personal information of millions of customers to hackers. It was also a good day for online retailers. Amazon (AMZN) and eBay (EBAY) both rose by about 2 percent and (OSTK) gained 3 percent. And how do we pay for all of those last minute gifts? Credit cards, of course. MasterCard (MA) and American Express (AXP) each gained 1.5 percent, and Visa (V) edged higher. One of the day's best gainers was Blackberry (BBRY). It shares soared 15 percent even though the smartphone maker posted a bigger loss than expected. But the company's new CEO forecast a profit by 2016 and announced a partnership with the Taiwanese phone maker Foxconn. A big green arrow for software maker Red Hat (RHT). It rallied 14 percent as earnings jumped, easily beating expectations. Textron (TXT) gained 10 percent. The Financial Times reports the company is on the verge of buying the a

  • [By David Hanson]

    In the following video, Motley Fool financial analyst David Hanson takes a question from a Fool reader, who writes, "Bought Visa (NYSE: V  ) on a 'Hold' report at $178.54. Wish I would have picked it up when in the $140-$145 range. What is your opinion going forward on this stock?"

  • [By Dan Burrows]

    VeriFone has 60% of the global market share of EMV-enabled payment terminals — EMV stands for Europay, Visa (V) and MasterCard (MA) — and has wide reach on the web with VeriShield protect, among other products and services. But competition has eaten away at its business, while fast-growth mobile payments services have attracted attention from behemoths like Facebook (FB) and Google (GOOG).

  • [By Ben Levisohn]

    Stocks bucked their recent Monday weakness today as Visa (V), International Business Machines (IBM), United Technologies (UTX), Micron Technology (MU) and Vertex Pharmaceuticals (VRTX) gained. But your view of today likely depended on the index you were watching.

    Agence France-Presse/Getty Images

    The S&P 500 gained 0.5% to 1,872.34, while the Dow Jones Industrial Average rose 0.8% to 16.457.66. Those benchmarks were trumped by the Nasdaq Composite, which advanced 1% to 4,198.99, and the small-cap Russell 2000, which finished up 1.8% at 1,173.04.

    The price-weighted Dow was given a boost by its big weightings in Visa, which rose 1.8% to $215.86, International Business Machines, which advanced 1.1% to $192.49 after Morgan Stanley named it a top alpha generator among mega-cap stocks, and United Technologies, which gained 1.8% to $116.83. United Technologies’ Sikorsky division agreed to pay $3.5 million to settle claims that it charged too much for spare parts. Micron Technology gained 8% to $23.66 after a positive report at RBC Capital Markets and Drexel, and Vertex Pharmaceuticals (VRTX) rose 4.3% to $70.72.

    Deutsche Bank’s David Bianco notes that small-caps and non-mega caps need interest rates to stay low…

    On 2014E EPS, Russell 2000 (R2000) PE is 23.6 and S&P 500 PE is 15.6. The relative forward PE of the R2000 vs. the S&P at 1.5x is amongst the highest since 1995. Within the S&P, the PE at non-mega caps is also demanding vs. history. The median trailing PE of S&P 500 stocks at 18.5x is 2 points higher than its average since 1983 and is well into the late 1990s range. EPS growth, while expected to accelerate, is unlikely to reach the mid to low teens pace of the last two cycles. Hence, we think small and non mega-cap stocks are more dependent on interest rates staying below historical norms to justify current valuations and are more susceptible to moderation in growth expectations.


Hot Blue Chip Stocks For 2015: Chevron Corporation(CVX)

Chevron Corporation, through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. It operates in two segments, Upstream and Downstream. The Upstream segment involves in the exploration, development, and production of crude oil and natural gas; processing, liquefaction, transportation, and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and transportation, storage, and marketing of natural gas, as well as holds interest in a gas-to-liquids project. The Downstream segment engages in the refining of crude oil into petroleum products; marketing of crude oil and refined products primarily under the Chevron, Texaco, and Caltex brand names; transportation of crude oil and refined products by pipeline, marine vessel, motor equipment, and rail car; and manufacture and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. It a lso produces and markets coal and molybdenum; and holds interests in 13 power assets with a total operating capacity of approximately 3,100 megawatts, as well as involves in cash management and debt financing activities, insurance operations, real estate activities, energy services, and alternative fuels and technology business. Chevron Corporation has a joint venture agreement with China National Petroleum Corporation. The company was formerly known as ChevronTexaco Corp. and changed its name to Chevron Corporation in May 2005. Chevron Corporation was founded in 1879 and is based in San Ramon, California.

Advisors' Opinion:
  • [By Dan Carroll]

    Outside the defense sector, Chevron's (NYSE: CVX  ) among the only Dow stocks making any headway today: The oil giant's shares are up about 0.2%. Chevron agreed to sell its retail network in Egypt to French competitor Total (NYSE: TOT  ) in a deal announced by the latter today. With more than 1.4 million tons of annual sales in a network consisting�of 66 service stations and other assorted infrastructure, it's a big move for Total as it looks to develop its reach outside of Europe.

  • [By Matt Thalman]

    Shares of Chevron (NYSE: CVX  ) are down 1% today as the price of crude sinks. Just yesterday the stock was up 1.1% for the session, and I commented on how even at their current price, shares look rather cheap. The company is trading at less than 10 times earnings and pays a healthy 3.2% dividend yield. When we look at the company from a growth perspective, it doesn't look like a big winner with a market cap of $245 billion, so it's unlikely the stock will more than double in the coming years. But the strong dividend, combined with increasing worldwide demand for oil and energy, will make Chevron a stable winner for the years to come.

  • [By Travis Hoium]

    Shares of Chevron (NYSE: CVX  ) are up 1.6% despite a 1% drop in the price of oil today. Competitors BP and Statoil were raided by EU regulators over possible oil-price fixing today. Chevron hasn't been implicated yet, so that's a good sign for now. Another factor in the pop today is that Chevron's stock goes ex-dividend tomorrow, meaning that if you hold the stock after the market closes tonight, you'll receive the $1 dividend. This can cause abnormal short-term moves in stocks.

Top 5 Recreation Stocks To Watch Right Now: Apple Inc.(AAPL)

Apple Inc., together with subsidiaries, designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. The company sells its products worldwide through its online stores, retail stores, direct sales force, third-party wholesalers, resellers, and value-added resellers. In addition, it sells third-party Mac, iPhone, iPad, and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and other accessories and peripherals through its online and retail stores; and digital content and applications through the iTunes Store. The company sells its products to consumer, small and mid-sized business, education, enterprise, government, and creative markets. As of September 25, 2010, it had 317 retail stores, including 233 stores in the United States and 84 stores internationally. The company, formerly known as Apple Computer, Inc., was founded in 1976 and is headquartered in Cupertino, California.

Advisors' Opinion:
  • [By Rick Aristotle Munarriz]

    Alamy The market may have rallied remarkably this year, but there are plenty of stocks that never got the memo. Dozens of stocks are hitting fresh 52-week lows these days, and some of them aren't as bad as their low stock prices would seem to suggest. Last week, I took a look at five stocks that didn't deserve to be hitting new 52-week highs. Now it's time to flip things around and look at five stocks that hit new 52-week lows last week that are prime candidates to bounce back. Dice Holdings (DHX) 52-Week Range: $6.83-$10.43 Dice operates several industry-specific career and employment websites, including the namesake for tech jobs, for jobs that require security clearance, and for jobs in the oil industry. It's a novel approach to helping folks in specific sectors network, and naturally this is magnetic to potential employers. The success of LinkedIn (LNKD) may have taken some of the shine off Dice, but the company's still finding ways to grow. Analysts see revenue climbing at a slightly better than 6 percent clip this year and again in 2014. Kinder Morgan (KMI) 52-Week Range: $32.30-$41.49 Kinder Morgan watches over the country's largest network of natural gas pipelines. Thanks to its reputation as a cleaner energy source than coal or petroleum (and the massive upsurge in U.S. production thanks to the fracking boom), natural gas is a growing source of domestic energy. Even commercial vehicles are starting to be powered by liquefied natural gas. Kinder Morgan is growing, but it has missed Wall Street's profit targets in each of the three past quarters. That's been enough to scare off some investors. However, the falling share price has also made Kinder Morgan's healthy dividend that much more compelling. The stock's yield of 4.6 percent is too rich to ignore here. Liquidity Services (LQDT) 52-Week Range: $20.37-$44.40 Liquidity Services prides itself as a problem solver. It runs a marketplace for items that need to b

  • [By Rahul Chattaraj]

    The mighty Apple (AAPL) has greatly reaped benefits from its epic innovation ��Phone. Smartphones have been around us in various forms since early 2000. But, right from its introduction in 2007, till the present day Apple has made millions by revolutionizing the smartphone experience, the latest and the greatest contribution being made by the iPhone 5S.

  • [By Evan Niu, CFA]

    Well, Samsung has released a new ad again targeting Apple (NASDAQ: AAPL  ) directly, showcasing some of these new features while demonstrating two indisputable instances where the Galaxy S4 will always triumph over the iPhone 5.

  • [By Sue Chang]

    Icahn took to Twitter recently to renew his campaign to push for a bigger stock repurchase program despite a lack of positive response from the company. In a series of tweets that simultaneously talked up the company but criticized the board for its ��isservice��to shareholders, Icahn continued to apply pressure in his bid to get Apple (AAPL) �to use more of its cash hoard to boost shareholder value.

Hot Blue Chip Stocks For 2015: Colgate-Palmolive Company(CL)

Colgate-Palmolive Company, together with its subsidiaries, manufactures and markets consumer products worldwide. It offers oral care products, including toothpaste, toothbrushes, and mouth rinses, as well as dental floss and pharmaceutical products for dentists and other oral health professionals; personal care products, such as liquid hand soap, shower gels, bar soaps, deodorants, antiperspirants, shampoos, and conditioners; and home care products comprising laundry and dishwashing detergents, fabric conditioners, household cleaners, bleaches, dishwashing liquids, and oil soaps. The company offers its oral, personal, and home care products under the Colgate Total, Colgate Max Fresh, Colgate 360 Advisors' Opinion:

  • [By Dan Caplinger]

    Moreover, it's starting to appear that Clorox has weathered a tough part of its business cycle. Throughout the industry, Procter & Gamble (NYSE: PG  ) , Colgate-Palmolive (NYSE: CL  ) , and Clorox all had to deal with rising costs for the inputs they needed to make their respective products. The companies responded by implementing price-cutting measures and passing on part of their higher costs to their customers. For its part, Clorox was able to expand its gross margins by a full percentage point, with a worse-than-normal flu season contributing to sales. Now that input-cost inflation is easing, P&G and Clorox expect to see better profitability, with growth starting to approach the faster rates that Colgate has enjoyed.

  • [By Travis Hoium]

    Toothpaste and toothbrushes may not be exciting business, but it's consistent and consumers tend to develop habits they rarely break. Once they find a toothpaste brand they like, it could be years before they try another one. That leads to another incredibly consistent business for Colgate-Palmolive (NYSE: CL  ) , one that has paid back investors with a dividend since 1895. �

  • [By Dan Caplinger]

    Lately, Johnson & Johnson has presented two different faces to investors. On one hand, the company has faced the challenge of dealing with a weak consumer-products business, as multiple recalls and close regulatory oversight of its production facilities have exacerbated J&J's problems. With its more focused consumer-goods business, Colgate-Palmolive (NYSE: CL  ) has worked harder at taking advantage of international growth opportunities than many of its rivals, and Colgate's strong overseas sales, in comparison to J&J's international weakness, show the effectiveness of that strategy. In particular, Asia has been a focus point for Colgate, with revenue from the region having risen 9% year over year compared with less than 3% growth overall. Moreover, Latin America represents Colgate's biggest region for sales, with more than half again the revenue its U.S. segment produces.

  • [By Kashafa Investment Research]

    What works in P&G�� advantage is the fact that the company is already ahead of its peers in the emerging markets. As of 2012, P&G had sales of $33 billion in developing markets as compared to $24 billion for Unilever (UL) and $10 billion for Colgate (CL). This competitive edge over peers will sustain as P&G has product quality, innovation and has a significant marketing budget given its comfortable cash position.

Hot Blue Chip Stocks For 2015: Philip Morris International Inc(PM)

Philip Morris International Inc., through its subsidiaries, engages in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States. Its international product brand line comprises Marlboro, Merit, Parliament, Virginia Slims, L&M, Chesterfield, Bond Street, Lark, Muratti, Next, Philip Morris, and Red & White. The company also offers its products under the A Mild, Dji Sam Soe, and A Hijau in Indonesia; Diana in Italy; Optima and Apollo-Soyuz in the Russian Federation; Morven Gold in Pakistan; Boston in Colombia; Belmont, Canadian Classics, and Number 7 in Canada; Best and Classic in Serbia; f6 in Germany; Delicados in Mexico; Assos in Greece; and Petra in the Czech Republic and Slovakia. It operates primarily in the European Union, Eastern Europe, the Middle East, Africa, Asia, Canada, and Latin America. The company is based in New York, New York.

Advisors' Opinion:
  • [By Dan Caplinger]

    The name change reflected the company's wish to have consumers and investors see beyond its tobacco business, which at the time was plagued by more substantial legal battles with billions in potential liability hanging in the balance. Shareholders approved the name change in 2002. The irony, of course, is that Altria has since spun off both Kraft and its Philip Morris International (NYSE: PM  ) global tobacco divisions, leaving Altria holding the old core Philip Morris USA division.

  • [By Editor , Dividend Growth Investor]

    Philip Morris (PM), through its subsidiaries, manufactures and sells cigarettes and other tobacco products. The company has paid and consistently increased dividends every year since being spun-off from Altria Group (MO) in 2008. The last dividend increase was in September 2013, when the Board of Directors approved a 10.60% dividend increase in the quarterly distribution to 94 cents/share.

  • [By Fede Zaldua]

    Imperial trades cheaply and pays a great, sustainable and for-ever-growing 4.5% cash dividend yield. The company's 2014 10.4 times P/E multiple represents a 40% discount to what most European consumer staples sell for. Besides, the owner of brands such as Davidoff and Gauloises, trades at a much more conservative level than its direct tobacco peers. Philip Morris International (PM) and British American Tobacco (BTI) sell for 2014 15 and 14.2 times earnings, respectively.

Hot Blue Chip Stocks For 2015: McDonald's Corporation(MCD)

McDonald?s Corporation, together with its subsidiaries, operates as a worldwide foodservice retailer. It franchises and operates McDonald?s restaurants that offer various food items, soft drinks, coffee, and other beverages. As of December 31, 2009, the company operated 32,478 restaurants in 117 countries, of which 26,216 were operated by franchisees; and 6,262 were operated by the company. McDonald?s Corporation was founded in 1948 and is based in Oak Brook, Illinois.

Advisors' Opinion:
  • [By Alex Planes]

    Mcdonald's (NYSE: MCD  ) is a 27-year veteran of the Dow and is based in Southern California. It's the world's largest publicly traded restaurateur, with more than 34,000 restaurants staffed by more than 1.8 million employees, serving 69 million people in 119 countries every single day. It is the only restaurateur to ever gain a place on the Dow, and this status is reflected by its incredible brand recognition overseas. The company's first grand openings in Russia and China were attended by thousands, and those restaurants remained among the entire company's top producers for many years afterwards.

Hot Blue Chip Stocks For 2015: International Business Machines Corporation(IBM)

International Business Machines Corporation (IBM) provides information technology (IT) products and services worldwide. Its Global Technology Services segment provides IT infrastructure and business process services, including strategic outsourcing, process, integrated technology, and maintenance services, as well as technology-based support services. The company?s Global Business Services segment offers consulting and systems integration, and application management services. Its Software segment offers middleware and operating systems software, such as WebSphere software to integrate and manage business processes; information management software for database and enterprise content management, information integration, data warehousing, business analytics and intelligence, performance management, and predictive analytics; Tivoli software for identity management, data security, storage management, and datacenter automation; Lotus software for collaboration, messaging, and so cial networking; rational software to support software development for IT and embedded systems; business intelligence software, which provides querying and forecasting tools; SPSS predictive analytics software to predict outcomes and act on that insight; and operating systems software. Its Systems and Technology segment provides computing and storage solutions, including servers, disk and tape storage systems and software, point-of-sale retail systems, and microelectronics. The company?s Global Financing segment provides lease and loan financing to end users and internal clients; commercial financing to dealers and remarketers of IT products; and remanufacturing and remarketing services. It serves financial services, public, industrial, distribution, communications, and general business sectors. The company was formerly known as Computing-Tabulating-Recording Co. and changed its name to International Business Machines Corporation in 1924. IBM was founded in 1910 and is based in Armonk, New York.

Advisors' Opinion:
  • [By Ben Levisohn]

    Stocks are surging today following a benign inflation reading that has helped soothe investor worries over imminent Fed rate hikes. E.I. Dupont de Nemours (DD), ExxonMobil (XOM), Home Depot (HD), International Business Machines (IBM) and Caterpillar (CAT) gained.

  • [By Trustamind]

    ��y own preference -- and you knew this was coming -- is our third category: investment in productive assets, whether businesses, farms, or real estate. Ideally, these assets should have the ability in inflationary times to deliver output that will retain its purchasing-power value while requiring a minimum of new capital investment. Farms, real estate, and many businesses such as Coca-Cola (KO), IBM (IBM), and our own See's Candy meet that double-barreled test. Certain other companies -- think of our regulated utilities, for example -- fail it because inflation places heavy capital requirements on them. To earn more, their owners must invest more. Even so, these investments will remain superior to nonproductive or currency-based assets.��/p>

Monday, April 21, 2014

No longer able to blame winter weather, economists see real weakness in housing

As the winter weather melts away, economists are starting to see another problem behind a slowing housing market. The short answer is lackluster demand. Early-spring sales season “decidedly tepid”

U.S. markets will hit the decks running Monday as earnings season picks up where it left off before the Easter weekend. On the docket, Netflix and Kimberly-Clark are scheduled to report. Later this week the market will be looking for the Alibaba IPO. Meanwhile, Ukraine is still simmering

Contrary to all the fairness noise coming out of the White House, the economic recovery has been setting the table for the rich to keep getting richer. More than 80% of the post-recession rise in household income has been concentrated in the top 20%. Unevenly distributed income gains

The average stock is more expensive than it was at the dotcom bubble peak, according to Henry Blodget's math. The world according to Henry

Hedge funds continue to have all the fun. Compared to investment bankers, hedge fund employees get better pay, better hours and much better perks. A well-stocked bar, three meals a day, and an in-house psychiatrist

Sunday, April 20, 2014

Does Europe Really Affect the Dow?

When it comes to early-morning market predictions, U.S. investors often turn to overseas markets as a guide for how U.S. stocks will fare. For instance, this morning, European markets were mixed as of 7:30 a.m. EDT, with the FTSE 100 (FTSEINDICES: ^FTSE  ) up slightly following a report that U.K. GDP increased a minor 0.3% last quarter, while the German DAX (DAXINDICES: ^DAX  ) was flat despite declining unemployment in Germany. That, in turn, led to a rise of about 0.3% in U.S. market futures.

But even though national economic prospects are increasingly linked by the growing global nature of the world economy, you can't always count on European stocks to tell the whole story of what will happen with the Dow Jones Industrials (DJINDICES: ^DJI  ) when trading begins every morning in New York.

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When correlations break down
Under ordinary circumstances, stock markets around the world tend to trade in fairly similar directions. Investors definitely saw that phenomenon play out during the financial crisis, when no major stock market provided refuge from the massive declines that resulted from threats to the entire global financial system.

But the premise for high correlations across stock markets is that the fundamental economic conditions affecting countries throughout the world are similar. Lately, though, that premise hasn't held true, as the European economy has faced unique challenges that reflect regional political considerations as much as global economic effects. Problems in smaller eurozone nations like Greece have spread to more economically important countries such as Italy and Spain, and relatively healthy nations like France and even Germany are feeling the impacts of European sluggishness.

In part because of the recessionary conditions in Europe, European stock markets have seen their correlations with the rest of the world fall to their lowest levels in five years -- all the way back to the fall of Lehman Brothers, which some investors identify as the true beginning of the financial crisis. With little sign of a quick recovery for Europe, prospects in the U.S. look favorable enough that the stock market has drawn attention not only from domestic investors but also from investors outside the U.S.

Can the U.S. go its own way?
The other reason to question Europe's influence on the Dow has to do with the overlapping hours during which markets on both sides of the Atlantic are open. Quite often, economic news in the U.S. that gets released before the U.S. stock market opens has an influence not only on U.S. stock futures, but on active European markets. By the time trading begins in New York, Europe has already reflected the news in share prices, but to the casual observer, it can appear that Europe led the Dow lower. In reality, though, news that would have primarily influenced the Dow got a head-start with European markets, producing a misleading implication about causality.

If anything, the biggest influence Europe has on the Dow is at the individual-company level. For instance, last year, Coca-Cola (NYSE: KO  ) got only 10% of its revenue from Europe, but the segment provided well over a quarter of its pre-tax profit. Margins in Europe were similar to the high levels Coke enjoyed in Latin America and far above the core North American market. Johnson & Johnson (NYSE: JNJ  ) got a quarter of its sales from Europe, maintaining a substantial asset base on the Continent as well. The company hasn't seen the growth it would like in the region, but J&J's revenue from Europe has avoided the big declines that its U.S. business has seen.

Put Europe in perspective
Ignoring European stock markets entirely is clearly a mistake, as much of what happens in Europe has an impact on the U.S. as well. But giving too much credit to Europe for driving U.S. stocks is also a mistake. Despite the rise of emerging markets, the U.S. is still the largest economy in the world, and its influence makes investors around the world take notice of conditions here.

If you're looking for some long-term investing ideas, you're invited to check out The Motley Fool's brand-new special report, "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now and get your copy today.

Saturday, April 19, 2014

Charlie Munger's 18 Biases That Cause You to Fool Yourself and Make Bad Decisions

Gary King, WikiMedia Commons 

Almost 20 years ago, Berkshire Hathaway (NYSE: BRK-B  ) vice-chairman Charlie Munger gave a talk called "The psychology of human misjudgment" at Harvard. He's given dozens of talks since, but I don't think any match its wisdom and usefulness.

I recently came found the talk on video. You can listen to the whole thing here, and I highly encourage you to if you have an hour to spare.

For the impatient, the talk discusses about 18 separate biases that cause people to fool themselves make bad decisions. I've summarized them here, along with a few comments from Munger.

1. Under-recognition of the power incentives. "I think I've been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life I've underestimated it. Never a year passes that I don't get some surprise that pushes my limit a little farther."

2. Simple denial. "If you turn on the television you find the mothers of the most obvious criminals that man could ever diagnose and they all think their sons are innocent. The reality is too painful to bear so you just distort it until it's bearable. We all do it to some extent. It's a common psychological misjudgment that causes terrible problems."

3. Incentive-caused bias. "Both in one's own mind and that in one's trusted advisor ... It causes perfectly terrible behavior. Take sales presentations of brokers of commercial real estate businesses. I'm 70 years old and I've never seen one that I thought was even within hailing distance of objective truth."

4. Bias from consistency and commitment tendency. "The human mind is a lot like the human egg, in that the human egg has a shut-off device. One sperm gets in, and it shuts down so that the next one can't get in. The human mind has a big tendency of the same sort ... According to Max Plank, the really innovative and important new physics was never really accepted by the old guard. Instead, a new guard came along that was less brain-blocked by its previous conclusions. And if Max Plank's crowd had this consistency and commitment tendency that kept their old conclusions intact despite disconfirming evidence, you can imagine what the crowd that you and I are a part of behaves like ... What people are shouting out they are pounding in."

5. Bias from Pavlovian association. "Practically three-quarters of advertising works on pure Pavlov. Just think how pure association works. Take Coca-Cola (NYSE: KO  ) , where we're the largest shareholder. They want to be associated with ever-wonderful images -- heroics, the Olympics, music, you name it. They don't want to be associated with presidents' funerals. The association really works ... at a subconscious level, which makes it very insidious. The Persians really did kill the messenger that brought the bad news. Do you think that is dead?"

6. Bias from reciprocation tendency. "The human mind, on a subconscious level, can be manipulated and you don't know it. I always use the phrase, 'You're like a one-legged man in an ass-kicking contest.' ... A guy named Zimbardo had people at Stanford divide into two pieces: one were the guards and the other were the prisoners. And they started acting out roles as people expected. He had to stop the experiment after about five days. He was getting into human misery and breakdown and pathological behavior ... What you think may change what you do, but perhaps even more important, what you do will change what you think."

7. Bias from over-influence by social proof. "Big-shot businessmen get into these waves of social proof. Do you remember some years ago when one oil company bought a fertilizer company, and every other major oil company practically ran out and bought a fertilizer company? And there was no more damned reason for all these oil companies to buy fertilizer companies, but they didn't know exactly what to do, and if Exxon was doing it, it was good enough for Mobil, and vice versa. I think they're all gone now, but it was a total disaster."

8. Bias from contrast-caused distortions of sensation, perception, and cognition. "In my generation, when women lived at home until they got married, I saw some perfectly terrible marriages made by highly desirable women because they lived in terrible homes. And I've seen some terrible second marriages which were made because they were slight improvements over an even worse first marriage. You think you're immune from these things, and you laugh, and I want to tell you, you aren't."

9. Bias from over-influence by authority. "They don't do this in airplanes, but they've done it in simulators. They have the pilot to do something where an idiot co-pilot would know the plane was going to crash, but the pilot's doing it, and the co-pilot is sitting there, and the pilot is the authority figure. Twenty-five percent of the time, the plane crashes. I mean this is a very powerful psychological tendency."

10. Bias from deprival super-reaction syndrome. "Take the Munger dog, a lovely, harmless dog. The only way to get that dog to bite you is to try and take something out of its mouth after it was already there. If you've tried to do takeaways in labor negotiations, you'll know that the human version of that dog is there in all of us. I have a neighbor, and his next-door neighbor put a little pine tree on it that was about three feet high, and it turned his 180 degree view of the harbor into 179 and three-quarters. Well they had a blood feud like the Hatfields and McCoys. People are really crazy about minor decrements down."

11. Bias from envy and jealousy. "I've heard Warren [Buffett] say a half a dozen times, 'It's not greed that drives the world, but envy.' And you go through the psychology survey courses, and you go to the index: envy, jealousy, in a 1,000-page book -- it's blank! There's some blind spots in academia, but it's an enormously powerful thing."

12. Bias from chemical dependency. "We don't have to talk about that. We've all seen so much of it. But it's interesting how it'll always cause this moral breakdown if there's any need, and it always involves massive denial."

13. Bias from misgambling compulsion. "You have a lottery where you get your number by lot, and then somebody draws a number by lot, it gets lousy play. You have a lottery where people get to pick their number, you get big play. People think if they have committed to it, it has to be good. The minute they've picked it themselves it gets an extra validity. After all, they thought it and they acted on it."

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14. Bias from liking distortion. "The tendency to especially like oneself, one's own kind and one's own idea structures, and the tendency to be especially susceptible to being misled by someone liked."

15. Bias from the non-mathematical nature of the human brain. [I'm paraphrasing this one] A boss catches an employee stealing from the cash register. The employee says, "I've never done it before and I'll never do it again." What are the odds that they've never done it before? Very small. But you biasedly ignore that probability because you like them. Munger says: "In the history of the See's Candy Company they always say, 'I never did it before, and I'm never going to do it again.' And we cashier them. It would be evil not to, because terrible behavior spreads."

16. Failure to obtain deserved influence caused by not properly explaining "why?" "We all know people who've flunked, and they try and memorize and they try and spout back. It just doesn't work. The brain doesn't work that way. You've got to array facts on the theory structures answering the question 'Why?' If you don't do that, you just cannot handle the world."

17. Bias from stress-induced mental changes. "[Pavlov] had all these dogs in cages, which had all been conditioned into changed behaviors, and the great Leningrad flood came and it just went right up and the dog's in a cage. And the dog had as much stress as you can imagine a dog ever having. The water receded in time to save some of the dogs, and Pavlov noted that they'd had a total reversal of their conditioned personality. And being the great scientist he was, he spent the rest of his life giving nervous breakdowns to dogs, and he learned a helluva lot that I regard as very interesting."

18. Development and organizational confusion from say-something syndrome. "A honeybee goes out and finds the nectar and he comes back, he does a dance that communicates to the other bees where the nectar is, and they go out and get it. Well some scientist decided to do an experiment. He put the nectar straight up. Way up. Well, in a natural setting, there is no nectar where they're all straight up, and the poor honeybee doesn't have a genetic program that is adequate to handle what he now has to communicate. And you'd think the honeybee would come back to the hive and slip into a corner, but he doesn't. He comes into the hive and does this incoherent dance. All my life I've been dealing with the human equivalent of that honeybee. It's a very important part of human organization so the noise and the reciprocation and so forth of all these people who have what I call say-something syndrome don't really affect the decisions."

Watch the whole video here. It's well worth your time. 

And if you're interested in more on Berkshire Hathaway, check out The Motley Fool's premium report on the company, written by Berkshire expert Joe Magyer. Just click here. 


Thursday, April 17, 2014

Can Taco Bell Take On McDonald’s?

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McDonald's (MCD), the leading brand of food chain with its innumerable outlets running successfully across the globe, serves the palate of a variety of people through the various specialties in their menu. The quick service restaurant giant has been the ruling king of breakfast for years. But there could be a twist in the tale as close foe Yum! Brands (YUM) owned Taco Bell intends to invade this space.

Breakfast is the most important meal of the day, giving a refreshing start, and this "breakfast" has now intensified the rivalry between the two leading brands of food chain, taking it to the next level.

Arch Rivalry & Stiff Competition

McDonald's is facing fierce competition from fellow competitor Taco Bell that after the launch of its new breakfast series is attracting daily hoggers. In this calculative world where a good number of people depend on the leading food chains for their breakfast because of less time and economical value meals, it helps in earning big bucks to these companies.

Taco Bell after releasing the new taco waffle to their breakfast menu is trying to defeat the king of breakfast, McDonald's. The latter used to earn a fifth of revenue from its breakfast series. But the launch of the taco waffle has turned out to be a big threat to the company.

The other leading food chain brands like Burger King (BKW) too is trying to enter the domain of McDonald's by introducing chicken and waffle sandwiches. Even coffee major Starbucks (SBUX) launched its new series of breakfast sandwiches, while Dunkin Donuts (DNKN) unveiled its Egg Benedict sandwiches and is trying to attract customers by offering meals for as low as a dollar. All this has become the main concern for the Big Mac maker as this has been its prime territory.

Taco Bell's Open Attack

Taco Bell has declared an open war with McDonald's through its advertisement where a guy is eating an egg muffin with the "old Mc Donald" rhyme buzzing in the background, but after he tries the taco waffle he gets transformed into a boy of this era and gets a smartphone and a mullet. The mentioning of the egg muffin denotes that they are clearly competing with McDonald's, and not any other food chain brand.

McDonald's too retorted to the advertisement by addressing it as an imitation and declaring it on a social site that "imitation is the sincerest form of flattery." In addition to this, McDonald's has started offering free coffee to its customers to fight the growing rivalry with Taco Bell.

Carry On Taco

The breakfast zone was dominated by McDonald's and entry into that dominion may not be an easy a task for Taco Bell. It will take time as the set meal of McDonald's is low on pocket and appetizing for their taste buds too. McDonald's gets sizable business from the breakfast sector and it too will not let its rule go down so easily. Maybe the company will set up a new menu in the breakfast zone. However, with time and more alluring menus and value offers Taco Bell might attract customers towards itself.

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The All-In-One Screener Portfolio Tracking Tool
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