Motley Fool Top Stocks Advisors 2011:The third high-yield superstar
Annaly Capital Management (NYSE: NLY) is my final dividend pick for 2011. This mortgage real estate investment trust (REIT) currently pays out a 14% yield, and it could be a great play for next year if inflation doesn't rear its ugly head. Annaly makes its money on interest rate spreads, using short-term financing to buy longer-term mortgage-backed securities, largely issued by Fannie Mae and Freddie Mac.
Annaly thrives in a low-interest rate environment, making it a great countercyclical play, and we have every indication that low interest rates will continue for some time. The Fed has already said that it will maintain low rates for an extended period. And even with Quantitative Easing 2.0 in full gear, there are already rumblings of a third iteration of the program, which would push interest rates still lower. So if you believe in the disinflation or deflation hypothesis, this company could be for you.
Alternative ways to play the deflation hypothesis would include Annaly spinoff Chimera Investment (NYSE: CIM) and American Capital Agency (Nasdaq: AGNC), which are both REITs and have the same fundamental business model as Annaly. American Capital Agency pays out a trailing yield of 18.7%, while Chimera sports a 16.9% yield.
Motley Fool Top Stocks Advisors 2011:Alex Dumortier, CFA, Fool contributor
In this environment, you're much more likely to find 2011's best international stock in the old-world, slow-growth markets of Europe or Japan. Most investors are now chasing emerging market stocks and acting as if no valuation is too high to own a piece of companies in high GDP growth countries -- never mind that the link between GDP growth and stock returns is very weak. Meanwhile, Europe and Japan have been left for dead by investors, despite the fact that both can boast world-class companies, some of which derive substantial profits outside their domestic/regional markets.
If you are willing to consider buying foreign stocks trading on the pink sheets (which I strongly recommend), I urge you to take a look at Pargesa Holding (OTC: PRGAF.PK). This Swiss holding company is jointly controlled by a master capital allocator, Albert Frere (it is no exaggeration to call him the Belgian Warren Buffett).
Pargesa owns large shareholdings in a small number of European blue chips, including Total (NYSE: TOT), Lafarge, and Pernod Ricard, which are all global franchises. Pargesa's Swiss shares currently trade at a 23% discount to their adjusted net asset value, enabling investors to buy some of the world's greatest companies with a healthy margin of safety. However, the U.S.-traded shares are very illiquid and are suitable only for those who would be willing to hold them beyond 2011.
Motley Fool Top Stocks Advisors 2011:Gerard Torres, Fool contributor
Remember the story of the tortoise versus the hare? Well, Israeli wireless service provider Partner Communications (Nasdaq: PTNR) is a lot like the tortoise. It churns out steadily growing profits, which it willingly returns to its shareholders.
The Israeli telecommunications market is undergoing a makeover. Recent regulatory changes have been instituted to promote greater competition. Meanwhile, the wireless market has hit its saturation point and is only expected to grow modestly. That doesn't sound like ideal business conditions, but Partner will be able to overcome these obstacles and continue to build its intrinsic value.
Partner Communications has first-mover advantage. While any new competitors will have to build up their infrastructure, Partner is continually adding customers, particularly to its higher-margin data services. Sure, it's not going to win any awards for staggering growth, but new entrants will have an uphill battle over the next decade if they want to take market share.
In the meantime, Partner offers impressive profitability and strong growth of free cash flow. Better yet, it maintains a dividend policy in which it will pay out at least 80% of its net income to shareholders while carrying a tempting price-to-earnings ratio of 9.2. Just like the tortoise, bit by bit it will get you to the finish line.
Motley Fool Top Stocks Advisors 2011:Tim Hanson, advisor, Global Gains
Markel Chief Investment Officer Tom Gayner was speaking at Fool HQ recently and was asked why his portfolio doesn't have more international exposure. He responded to that question with a question, challenging his interlocutor to decide whether Peoria, Ill., industrial giant Caterpillar (NYSE: CAT), or Japanese auto manufacturer Honda (NYSE: HMC) was the more international firm. The answer is that based on where these companies do business, Caterpillar is the more international pick. As it turns out, just 32% of Caterpillar's revenue comes from the U.S. versus 45% for Honda.
Now keep that example in mind as I reveal that my top international pick for 2011 is Bentonville, Ark.,-based retail giant Wal-Mart (NYSE: WMT). Although Wal-Mart is America's largest retailer and employer, the company actually has a very international future -- with aggressive expansion plans in place in China and Brazil, a recent acquisition in South Africa, and a rumored acquisition in Indonesia looming. And while many emerging markets stocks are being valued at a premium at present given the outsized growth expectations in these markets, you can buy Wal-Mart's exposure at a sharp discount given the market perception that it's a low-growth domestic retailer. I expect that perception to change in 2011 and for investors in Wal-Mart to benefit as a result.
Motley Fool Top Stocks Advisors 2011:Telecom darlings
The wireline space has been a particularly good performer in 2010, with major players CenturyLink (NYSE: CTL), Windstream (Nasdaq: WIN), and Frontier Communications (NYSE: FTR) all moving up nicely and paying out nice dividends. Frontier's EBITDA margins are comparable to those of Windstream at around 50%, with both trailing CenturyLink's 54%. So they are all able competitors.
But I think Frontier still has a lot of room to run, especially since these companies should be valued on their dividends. Frontier now offers a 7.9% yield, compared to Windstream's 7.1% and CenturyLink's 6.2%. Why do these three companies have such disparate yields?
If the market were to give Frontier shares similar yields to either Windstream or CenturyLink, its stock could still have upside of 11% to 27%, respectively, in addition to that meaty dividend. Even better, Frontier's free-cash-flow payout in the latest quarter was just 59% -- leaving the company some room to boost its dividend, perhaps back to the $1 level that we saw before the recent acquisition of Verizon's lines.
One further kick to all the companies in the industry is the possibility of consolidation as the wireline space becomes even more competitive. We've already seen some of the effects of that in the past few years, and there well could be more of it. This would push up stock prices even further. So those are the reasons Frontier could be a nice winner in 2011, and they're why I own the stock myself.
Motley Fool Top Stocks Advisors 2011:Smokin' dividends
It's hard to argue with a company that has been a dividend darling for as long as Altria (NYSE: MO) has. Altria has one of the strongest brands in the world, in Marlboro, and the company has boosted its quarterly dividend three times in just the last six quarters. Given the company's commitment to pay out at least 80% of its earnings, the stock looks like a great place for 2011 and some time beyond. With that commitment, any earnings increase goes straight back into investors' pockets.
Like the wireline telecom space, the tobacco industry has come under pressure, but Altria the stock has plenty of puffs left in it. And using the simple mathematics that I described above, it still can make a lot of sense to buy into this market leader now.
Wednesday, March 2, 2011
How S&P Responds to 1275 Is Huge Market 'Tell'
The Dow [.DJIA 12066.80 8.78 (+0.07%) ]
suffered a triple digit sell off Tuesday and the S&P [.SPX 1308.44 2.11 (+0.16%) ]
closed sharply lower with investors running for the exits after crude hit $100 and comments from Ben Bernanke sparked inflation concerns.
Demonstrations overseas sent oil prices [CLCV1 102.45 0.22 (+0.22%) ]
surging with varying degrees of violence reported in Libya, Yemen, Bahrain, Oman, Iran and Iraq. Investors now worry that oil workers in some of these nations may strike.
Meanwhile, in testimony before Congress, Ben Bernanke showed little concern about the move in oil, and again called the risk of inflation ‘modest.'
The Street largely took his comments to mean the recent spike in oil and other commodities will not lead to a broad policy response from the Fed, at least for now. In other words the Fed had no plans to aggressively fight inflation by raising rates.
How should you position now? What should you be watching?
Instant Insights with the Fast Money traders
Considering these developments, Guy Adami is concerned that a sell-off may be brewing. “I’m not sure 1300 holds,” he says. And if the S&P tests 1275 it could be a huge market tell. “1275 was resistance on the way up late last year and support on the way down earlier this year. If we test that level, what happens will be telling.”
Mary Ann Bartels, Bank of America Merrill Lynch head of U.S. Technical Analysis largely agrees. She tells us 1270 is her key level on the S&P. And if we breech 1270 then we’re looking at 1220 to 1170, she counsels. "We'll be in for a deeper correction," she says.
Pete Najarian is also growing skeptical of the rally. He points to the Vix [VIX 20.70 -0.31 (-1.48%) ] which closed above 21. “That’s a huge concern,” he says "And when oil ticks above $99 people start to panic," he adds. “Oil can flicker above $100 and we can handle it,” he says, but Najarian needs to see oil really pullback before he can feel bullish.
Joe Terranova thinks the next big move has everything to do with oil. “The market is extremely sensitive to it right now,” he says. In other words, he expects an almost inverse correlation between the price action in crude and that of the S&P. As one goes higher the other likely goes lower.
Tim Seymour is focused on the negative action in energy stocks [XLE 77.51 0.44 (+0.57%) ] despite the stead climb in WTI. He finds the divergence notable.
suffered a triple digit sell off Tuesday and the S&P [.SPX 1308.44 2.11 (+0.16%) ]
closed sharply lower with investors running for the exits after crude hit $100 and comments from Ben Bernanke sparked inflation concerns.
Demonstrations overseas sent oil prices [CLCV1 102.45 0.22 (+0.22%) ]
surging with varying degrees of violence reported in Libya, Yemen, Bahrain, Oman, Iran and Iraq. Investors now worry that oil workers in some of these nations may strike.
Meanwhile, in testimony before Congress, Ben Bernanke showed little concern about the move in oil, and again called the risk of inflation ‘modest.'
The Street largely took his comments to mean the recent spike in oil and other commodities will not lead to a broad policy response from the Fed, at least for now. In other words the Fed had no plans to aggressively fight inflation by raising rates.
How should you position now? What should you be watching?
Instant Insights with the Fast Money traders
Considering these developments, Guy Adami is concerned that a sell-off may be brewing. “I’m not sure 1300 holds,” he says. And if the S&P tests 1275 it could be a huge market tell. “1275 was resistance on the way up late last year and support on the way down earlier this year. If we test that level, what happens will be telling.”
Mary Ann Bartels, Bank of America Merrill Lynch head of U.S. Technical Analysis largely agrees. She tells us 1270 is her key level on the S&P. And if we breech 1270 then we’re looking at 1220 to 1170, she counsels. "We'll be in for a deeper correction," she says.
Pete Najarian is also growing skeptical of the rally. He points to the Vix [VIX 20.70 -0.31 (-1.48%) ] which closed above 21. “That’s a huge concern,” he says "And when oil ticks above $99 people start to panic," he adds. “Oil can flicker above $100 and we can handle it,” he says, but Najarian needs to see oil really pullback before he can feel bullish.
Joe Terranova thinks the next big move has everything to do with oil. “The market is extremely sensitive to it right now,” he says. In other words, he expects an almost inverse correlation between the price action in crude and that of the S&P. As one goes higher the other likely goes lower.
Tim Seymour is focused on the negative action in energy stocks [XLE 77.51 0.44 (+0.57%) ] despite the stead climb in WTI. He finds the divergence notable.
Geneva 2011: Mini Rocketman Concept misses the Earth so much, misses its wife
Mini's new space-age Rocketman Concept previews what the future of urban mobility could look like for the BMW sub-brand. It's slightly smaller than the current Cooper, and we're big fans of the dual-hinged doors that pivot outwards, complete with the sills. In fact, the whole concept strikes us as totally cool, and is further proof that Mini's cheekiness can be further evolved to new types of vehicles.
The Rocketman's interior uses a space-efficient three-plus-one seating arrangement, and we're told that the car is powered by a highly efficient powertrain capable of returning 78 miles per gallon on the U.S. cycle. Mini's new Connected infotainment system is displayed via three-dimensional graphics on the interactive speedometer screen, and there's even a steering wheel-mounted joystick to operate the whole slew of functions.
There's a whole host of clever features found within the Rocketman, but above all, the concept's design is what really stands out.
The Rocketman's interior uses a space-efficient three-plus-one seating arrangement, and we're told that the car is powered by a highly efficient powertrain capable of returning 78 miles per gallon on the U.S. cycle. Mini's new Connected infotainment system is displayed via three-dimensional graphics on the interactive speedometer screen, and there's even a steering wheel-mounted joystick to operate the whole slew of functions.
There's a whole host of clever features found within the Rocketman, but above all, the concept's design is what really stands out.
Geneva 2011: 2012 Volkswagen Golf Cabriolet pops its top, just can't stop
What you are looking at is a Volkswagen Golf with no roof. It is also the first roofless Golf that will be offered for public consumption (in Europe at least, it's probably not coming to America) since 2003.
There's not really much else to say... except maybe that its windshield is raked further back than that of its hatchback siblings and that its updated fascia now boasts LED running lamps. See for yourself in our high-res image gallery below.
There's not really much else to say... except maybe that its windshield is raked further back than that of its hatchback siblings and that its updated fascia now boasts LED running lamps. See for yourself in our high-res image gallery below.
2012 Mercedes C63 AMG debuts in Switzerland
Mercedes has officially unveiled the C63 AMG facelift in Geneva.
Drawing inspiration from the SL63 AMG, the C63 has a prominent front splitter, a single-bar grille, and new headlights with LED indicators. Elsewhere, there's a new rear bumper and restyled 18-inch alloy wheels.
Inside, the cabin has been significantly improved thanks to a greater emphasis on material quality. Most notably, there's a new dashboard, a revised instrument cluster, and piano black trim on center console.
As before, power is provided by a naturally-aspirated 6.3-liter (6208cc) V8 engine that develops 451 hp (336 kW / 457 PS) and 443 lb-ft (600 Nm) of torque. It is connected to a new seven-speed 'SpeedShift MCT' transmission that enables the sedan to accelerate from 0-100 km/h in 4.5 seconds (4.6 seconds for the estate) and hit a limited top speed of 250 km/h (155 mph).
For the power hungry, the optional AMG Performance Package increases output to 480 hp (358 kW / 487 PS) and 443 lb-ft (600 Nm) of torque. With the extra power, the dash from 0-100 km/h takes just 4.4 seconds (4.5 seconds for the estate).
Lastly, to improve the car's handling, engineers installed a new steering system, revised spring / damper rates, and a thicker anti-roll bar. Thanks to these modifications, owners can expect "greater driving enjoyment and ride comfort at all times."
The 2012 C63 AMG will start arriving at European dealerships in July and German pricing starts at €71,340.
Source: Mercedes-Benz
Drawing inspiration from the SL63 AMG, the C63 has a prominent front splitter, a single-bar grille, and new headlights with LED indicators. Elsewhere, there's a new rear bumper and restyled 18-inch alloy wheels.
Inside, the cabin has been significantly improved thanks to a greater emphasis on material quality. Most notably, there's a new dashboard, a revised instrument cluster, and piano black trim on center console.
As before, power is provided by a naturally-aspirated 6.3-liter (6208cc) V8 engine that develops 451 hp (336 kW / 457 PS) and 443 lb-ft (600 Nm) of torque. It is connected to a new seven-speed 'SpeedShift MCT' transmission that enables the sedan to accelerate from 0-100 km/h in 4.5 seconds (4.6 seconds for the estate) and hit a limited top speed of 250 km/h (155 mph).
For the power hungry, the optional AMG Performance Package increases output to 480 hp (358 kW / 487 PS) and 443 lb-ft (600 Nm) of torque. With the extra power, the dash from 0-100 km/h takes just 4.4 seconds (4.5 seconds for the estate).
Lastly, to improve the car's handling, engineers installed a new steering system, revised spring / damper rates, and a thicker anti-roll bar. Thanks to these modifications, owners can expect "greater driving enjoyment and ride comfort at all times."
The 2012 C63 AMG will start arriving at European dealerships in July and German pricing starts at €71,340.
Source: Mercedes-Benz
Report: Mitsubishi official says Evo franchise is dead
According to Gayu Eusegi, head of global product development for Mitsubishi, the Lancer Evolution X will be the last Evo the Japanese automaker ever builds. Eusegi says the move is part of a shift in strategy to put the company's product focus and ethos on leadership in EV technology.
To that end, Autocar indicates that Mitsubishi will release eight fully-electric or hybrid-electric cars by the time 2015 rolls around, and make a grab for a big portion of the CO2-reduction market share. It goes without saying that the fun-yet-fuel-swilling Evo just doesn't fit that mindset, particularly since it apes a rally car that no longer exists.
Despite the Evo's huge popularity, Mitsubishi apparently isn't scared of the step and says it's confident that consumers will glom on to the idea and rally behind the brand. By killing the Evo, they're making their intentions plain to an increasingly environmentally-conscious car-buying public.
Eusegi killed dead any notion that the brand would roll out a performance-oriented hybrid as well. "Maybe the world can change, and maybe someday we can do a motor race by electric vehicles. Maybe then we can enter the market agian," he said.
This report of the Evo's death would seem to stand in contrast to multiple reports that an Evo XI is in the works with a hybrid drivetrain. We're taking this latest Autocar missive with a few grains of salt, as we can see how Eusegi may have simply meant that an Evo that relies exclusively on internal combustion is dead – a hybrid Evo would seem to offer a nice technological bridge to Mitsubishi's more electrically minded future. Hat tip to Dennis!
[Source: Autocar]
To that end, Autocar indicates that Mitsubishi will release eight fully-electric or hybrid-electric cars by the time 2015 rolls around, and make a grab for a big portion of the CO2-reduction market share. It goes without saying that the fun-yet-fuel-swilling Evo just doesn't fit that mindset, particularly since it apes a rally car that no longer exists.
Despite the Evo's huge popularity, Mitsubishi apparently isn't scared of the step and says it's confident that consumers will glom on to the idea and rally behind the brand. By killing the Evo, they're making their intentions plain to an increasingly environmentally-conscious car-buying public.
Eusegi killed dead any notion that the brand would roll out a performance-oriented hybrid as well. "Maybe the world can change, and maybe someday we can do a motor race by electric vehicles. Maybe then we can enter the market agian," he said.
This report of the Evo's death would seem to stand in contrast to multiple reports that an Evo XI is in the works with a hybrid drivetrain. We're taking this latest Autocar missive with a few grains of salt, as we can see how Eusegi may have simply meant that an Evo that relies exclusively on internal combustion is dead – a hybrid Evo would seem to offer a nice technological bridge to Mitsubishi's more electrically minded future. Hat tip to Dennis!
[Source: Autocar]
De Tomaso is back with Deauville Concept in Geneva
Italian automaker De Tomaso has officially unveiled their latest concept, the De Tomaso Deauville. Previously referred to as the SLS, Deauville resurrects a old De Tomaso moniker form the 1970s. If produced, the car would be the first new model released by the firm since the 2000 De Tomaso Bigua, later taken over by Qvale and renamed it the Mangusta.
De Tomaso has not produced a single new vehicle unit since shortly after it entered liquidation in 2004.
The Deauville could enter production later this year. Customers would be able to choose between 550-horsepower (410-kW / 558-PS) V8 and 300-horsepower (224-kW / 304-PS) 2.8-liter turbo V6 engines. The automaker says they would be able to produce 3,000 units annually, each with all-wheel drive. 0-100 km/h would arrive in a respectable 6.7 seconds.
Another sedan and a coupe could also enter production in time. Each of the three models would be assembled with the Univis aluminum construction technology at the automaker's Italian factories in Grugliasco and Livorno.
Former Fiat CEO Gianmario Rossignolo bought the brand in 2009 during its 50 year anniversary. The brand was created by former F1 driver Alejandro de Tomaso, who passed away in 2003 at the age of 74.
Source: De Tomaso
De Tomaso has not produced a single new vehicle unit since shortly after it entered liquidation in 2004.
The Deauville could enter production later this year. Customers would be able to choose between 550-horsepower (410-kW / 558-PS) V8 and 300-horsepower (224-kW / 304-PS) 2.8-liter turbo V6 engines. The automaker says they would be able to produce 3,000 units annually, each with all-wheel drive. 0-100 km/h would arrive in a respectable 6.7 seconds.
Another sedan and a coupe could also enter production in time. Each of the three models would be assembled with the Univis aluminum construction technology at the automaker's Italian factories in Grugliasco and Livorno.
Former Fiat CEO Gianmario Rossignolo bought the brand in 2009 during its 50 year anniversary. The brand was created by former F1 driver Alejandro de Tomaso, who passed away in 2003 at the age of 74.
Source: De Tomaso
BMW Z4 Design Pure Balance goes topless in Geneva
BMW has introduced the new Design Pure Balance package for the Z4 roadster.
Created as a follow up to last year's Pure Design Impulse, the Balance edition features exclusive Mineral White metallic paint that "leaves a brilliant impression in the true sense of the word." However if you want another color, a variety of choices are available.
Interior changes are also minor but include new Cohiba Brown leather sport seats, a black leather dashboard, and Fineline Anthracite wood trim.
The Design Pure Balance package will be launched this summer, but pricing information hasn't been announced.
Source: BMW
Created as a follow up to last year's Pure Design Impulse, the Balance edition features exclusive Mineral White metallic paint that "leaves a brilliant impression in the true sense of the word." However if you want another color, a variety of choices are available.
Interior changes are also minor but include new Cohiba Brown leather sport seats, a black leather dashboard, and Fineline Anthracite wood trim.
The Design Pure Balance package will be launched this summer, but pricing information hasn't been announced.
Source: BMW
Monday, February 28, 2011
Bentley Continental Supersports ISR Convertible introduced in Geneva
To celebrate their new ice speed world record, Bentley has introduced a limited edition Continental Supersports Convertible.
Dubbed the ISR (Ice Speed Record), the unique model is available exclusively in Beluga, Quartzite and Arctica White. Additionally, the car features a Dark Grey Metallic soft top and 20-inch alloy wheels with ultra high-performance Pirelli tires.
Inside, the cabin boasts leather upholstery, diamond-quilted Alcantara accents, red carbon fiber trim, and the new infotainment system from the redesigned Continental GT.
Under the hood, the 6.0-liter W12 has been outfitted with a new air intake, an improved intercooler, and a sport exhaust system. Thanks to these tweaks, the engine produces 640 PS (471 kW / 631 hp) and 800 Nm (590 lb-ft) of torque - 10 PS (7 kW / 10 hp) more than the standard model. It is paired to a 'Quickshift' six-speed automatic transmission, which enables the convertible to accelerate from 0-60 mph in 3.8 seconds (0-100 km/h in 4.0 seconds) and hit a top speed of 202 mph (325km/h).
No word on pricing, but production is limited to 100 units.
Source: Bentley
Dubbed the ISR (Ice Speed Record), the unique model is available exclusively in Beluga, Quartzite and Arctica White. Additionally, the car features a Dark Grey Metallic soft top and 20-inch alloy wheels with ultra high-performance Pirelli tires.
Inside, the cabin boasts leather upholstery, diamond-quilted Alcantara accents, red carbon fiber trim, and the new infotainment system from the redesigned Continental GT.
Under the hood, the 6.0-liter W12 has been outfitted with a new air intake, an improved intercooler, and a sport exhaust system. Thanks to these tweaks, the engine produces 640 PS (471 kW / 631 hp) and 800 Nm (590 lb-ft) of torque - 10 PS (7 kW / 10 hp) more than the standard model. It is paired to a 'Quickshift' six-speed automatic transmission, which enables the convertible to accelerate from 0-60 mph in 3.8 seconds (0-100 km/h in 4.0 seconds) and hit a top speed of 202 mph (325km/h).
No word on pricing, but production is limited to 100 units.
Source: Bentley
Volkswagen Giugiaro Go! Concept previews MPV of the future in Geneva
Says Prof. Dr. Martin Winterkorn, Chairman of Volkswagen Group, "Italdesign is a figurehead of Italian design and engineering creativity. We have been working together closely in a spirit of partnership for many decades." In reality, that may be an understatement. After all, Giorgetto Giugiaro is credited with penning the original Volkswagen Golf/Rabbit and Scirocco – two classic shapes that went on to define the VW brand for the last few decades.
After a research study to determine what Volkswagen vehicles of the future may look like, Giugiaro (now owned by the Volkswagen Group) focused on two distinct concepts, one of which is the Go! that you see here (the other is the Tex, which we've already shown you). The design firm thinks of the Go! as a multi-purpose vehicle for urban areas, and as such, it measures just four-meters in length and runs solely on electricity using VW's proprietary Blue-e-motion EV technology. According to the automaker, the Go! is capable of traveling about 150 miles on electric power alone.
Like the Tex, the Go! concept uses VW's modular transverse architecture, which was designed to accomade a diverse range of powertrain options, including plug-ins, internal combustion engines and even hydrogen fuel cells. Despite the Go!'s relatively dimunitive exterior dimensions, its 106-inch wheelbase matches that of the larger Passat. The battery pack sits beneath the passenger compartment, covering the areas of both the front and rear-seat passengers.
VW and Giugiaro are keen to highlight the large glass area of the Go! concept. Such a configuration allows for plenty of natural light and offers maximum visibility. Interestingly, though, only the lower part of the glass is actually electrically lowered (have a look at the image gallery below to see what we mean), and the concept relies on video cameras to give the driver a view of his or her surroundings.
Other interesting design details include rear doors that push outwards and pull back parallel to the vehicle, a high seating position that caters to drivers who prefer the visibility of an SUV and the control panel that is placed at the base of the windshield, well back from its normal location behind the steering wheel. Want to know more? Feel free to click past the break to read VW's rather exhaustive press release, and be sure to peruse our high-res image gallery below.
[Source: Volkswagen]
After a research study to determine what Volkswagen vehicles of the future may look like, Giugiaro (now owned by the Volkswagen Group) focused on two distinct concepts, one of which is the Go! that you see here (the other is the Tex, which we've already shown you). The design firm thinks of the Go! as a multi-purpose vehicle for urban areas, and as such, it measures just four-meters in length and runs solely on electricity using VW's proprietary Blue-e-motion EV technology. According to the automaker, the Go! is capable of traveling about 150 miles on electric power alone.
Like the Tex, the Go! concept uses VW's modular transverse architecture, which was designed to accomade a diverse range of powertrain options, including plug-ins, internal combustion engines and even hydrogen fuel cells. Despite the Go!'s relatively dimunitive exterior dimensions, its 106-inch wheelbase matches that of the larger Passat. The battery pack sits beneath the passenger compartment, covering the areas of both the front and rear-seat passengers.
VW and Giugiaro are keen to highlight the large glass area of the Go! concept. Such a configuration allows for plenty of natural light and offers maximum visibility. Interestingly, though, only the lower part of the glass is actually electrically lowered (have a look at the image gallery below to see what we mean), and the concept relies on video cameras to give the driver a view of his or her surroundings.
Other interesting design details include rear doors that push outwards and pull back parallel to the vehicle, a high seating position that caters to drivers who prefer the visibility of an SUV and the control panel that is placed at the base of the windshield, well back from its normal location behind the steering wheel. Want to know more? Feel free to click past the break to read VW's rather exhaustive press release, and be sure to peruse our high-res image gallery below.
[Source: Volkswagen]
Ford debuting B-pillarless B-Max in Geneva
The Ford S-Max and C-Max have a new little sibling, and its name is B-Max. Making its global debut at the 2011 Geneva Motor Show, the very compact minivan rides on the same platform as the Fiesta and is just 4.3-inches longer than that model's five-door hatchback. Aiding in the action of ingress/egress, the B-Max ditches B-pillars entirely so occupants can easily glide past the dual sliding rear doors.
Ford B-MaxThe B-pillar appears to be completely removed but are in fact integrated into the front and rear doors. When closed, the two work together and behave in the same manner as a traditional pillar.
Doors closed and occupants protected, forward motivation is provided courtesy of a 1.0-liter three-cylinder turbocharged EcoBoost engine, the latest and smallest of Ford's EcoBoost engine family. With the aid of Start/Stop technology, the EcoBoost engine should even better fuel economy than a similarly powerful four-cylinder engine.
For more information on the Ford B-Max, follow the jump and peruse the press release. And stay tuned to our live coverage of the Geneva Motor Show, as we'll bring back live images of the B-Max just as soon as we can.
[Source: Ford]
Ford B-MaxThe B-pillar appears to be completely removed but are in fact integrated into the front and rear doors. When closed, the two work together and behave in the same manner as a traditional pillar.
Doors closed and occupants protected, forward motivation is provided courtesy of a 1.0-liter three-cylinder turbocharged EcoBoost engine, the latest and smallest of Ford's EcoBoost engine family. With the aid of Start/Stop technology, the EcoBoost engine should even better fuel economy than a similarly powerful four-cylinder engine.
For more information on the Ford B-Max, follow the jump and peruse the press release. And stay tuned to our live coverage of the Geneva Motor Show, as we'll bring back live images of the B-Max just as soon as we can.
[Source: Ford]
Hamann Guardian based on Porsche Cayenne debut in Geneva
German tuner Hamann will debut the Hamann Guardian at the Geneva auto show based on the Porsche Cayenne Turbo.
The extensive tuning job begins with a design-changing aerodynamic kit. That includes a front apron with large air inlets and integrated LED daytimers and fog lights, a lighweight carbon bonnet with a power dome slit for engine ventilation, and fender extensions and side skirts that widened the Cayenne by a 120 mm at the front axle and 160 mm at the back. At the rear is also a rear apron with integrated diffuser holding two massive centrally-mounted stainless-steel exhaust pipes - gaping at 120 mm in width each.
Power is boosted by means of a sport exhaust system, silencer, catalysts and air filter. All that hardware coupled with an ECU remap increases output on the 4.8 liter V8 twin-turbo unit to 550 PS (405 kW / 544 bhp) at 6,100 rpm with a torque rating of 770 Nm (568 lb-ft) between 2,300 and 4,600 rpm (series - 500 PS / 368 kW / 493 bhp). That makes for a 0 to 100 km/h (62 mph) sprint time of 4.6 seconds for the Cayenne and a top speed of 300 km/h (186 mph).
Hamann furbishes the Cayenne with a ceramic sport brake system too and fits it with ultra-light forged rims, 11J x 23-inch, wrapped in Dunlop Sport Maxx tires sized 315/25R23.
Also for the ride is a sport suspension module for the Cayenne's air suspension that lowers the Hamann Guardian by 35 mm over the series model.
For the interior finish, Hamann fits a full leather upholstery with stitched embroideries for the dash and seats. An ergonomically refined steering wheel with airbag is also part of the cabin tuning with carbon trims added to the instrument panel and center console.
Source: Hamann
The extensive tuning job begins with a design-changing aerodynamic kit. That includes a front apron with large air inlets and integrated LED daytimers and fog lights, a lighweight carbon bonnet with a power dome slit for engine ventilation, and fender extensions and side skirts that widened the Cayenne by a 120 mm at the front axle and 160 mm at the back. At the rear is also a rear apron with integrated diffuser holding two massive centrally-mounted stainless-steel exhaust pipes - gaping at 120 mm in width each.
Power is boosted by means of a sport exhaust system, silencer, catalysts and air filter. All that hardware coupled with an ECU remap increases output on the 4.8 liter V8 twin-turbo unit to 550 PS (405 kW / 544 bhp) at 6,100 rpm with a torque rating of 770 Nm (568 lb-ft) between 2,300 and 4,600 rpm (series - 500 PS / 368 kW / 493 bhp). That makes for a 0 to 100 km/h (62 mph) sprint time of 4.6 seconds for the Cayenne and a top speed of 300 km/h (186 mph).
Hamann furbishes the Cayenne with a ceramic sport brake system too and fits it with ultra-light forged rims, 11J x 23-inch, wrapped in Dunlop Sport Maxx tires sized 315/25R23.
Also for the ride is a sport suspension module for the Cayenne's air suspension that lowers the Hamann Guardian by 35 mm over the series model.
For the interior finish, Hamann fits a full leather upholstery with stitched embroideries for the dash and seats. An ergonomically refined steering wheel with airbag is also part of the cabin tuning with carbon trims added to the instrument panel and center console.
Source: Hamann
Audi A3 sedan concept leaked before Geneva unveiling
Volkswagen has unloaded almost all of their world debuts at the Geneva pre-show event this evening - except for one. The Audi A3 sedan concept isn't scheduled to debut until first thing in the morning, but tonight you get an early look.
Intended to recapture the glory of the original A4 (B5) that launched in 1994, the A3, shown for the first time as a sedan, features the familiar Audi family grille with LED lined headlamps. Elsewhere, Audi keeps things interesting with agressive bumper fascias, flared fender arches and big 20-inch wheels constructed of carbon fiber and aluminum.
Dressed like an future RS model, power arrives via the same 2.5-liter turbocharged five-cylinder engine found in the RS3 Sportback. However, the A3 sedan concept produces 68 PS (50 kW / 67 bhp) more at 408 PS (300 kW / 402 hp) through a seven-speed S tronic transmission and quattro all-wheel drive.
Performance is supercar good with the 0-100 km/h sprint taking 4.1-seconds in the 1540 kg (3400 lb) vehicle.
Watch this space as new details, photos and videos will be added later.
Intended to recapture the glory of the original A4 (B5) that launched in 1994, the A3, shown for the first time as a sedan, features the familiar Audi family grille with LED lined headlamps. Elsewhere, Audi keeps things interesting with agressive bumper fascias, flared fender arches and big 20-inch wheels constructed of carbon fiber and aluminum.
Dressed like an future RS model, power arrives via the same 2.5-liter turbocharged five-cylinder engine found in the RS3 Sportback. However, the A3 sedan concept produces 68 PS (50 kW / 67 bhp) more at 408 PS (300 kW / 402 hp) through a seven-speed S tronic transmission and quattro all-wheel drive.
Performance is supercar good with the 0-100 km/h sprint taking 4.1-seconds in the 1540 kg (3400 lb) vehicle.
Watch this space as new details, photos and videos will be added later.
2010 Chevy Camaro on 30-inch wheels
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Why $100 Oil Is No Big Deal
Forget the doomsday prophesies: triple-digit crude won’t slow us down much, writes Elliott Gue, editor of The Energy Strategist.
Every time crude oil nears $100 per barrel, you can count on the media to focus on how rising prices at the pump are pinching consumers. These days, pundits describe $100 oil as a major “tax” on the consumer that endangers the nascent economic recovery.
Although higher energy prices will weigh on consumer spending, $100 oil isn’t some wild card that will suddenly wreck household budgets. US consumer spending hasn’t returned to the robust levels witnessed during the credit boom, but American shoppers have exhibited few signs of concern about energy prices.
The Bureau of Labor Statistics (BLS) estimates that motor fuel accounts for just 4.5% of total US consumer expenditures. Household fuels—heating oil, natural gas, and electricity—account for another 5% or so of total consumer expenditures, but the number of consumers using oil for heat continues to decline. Meanwhile, natural gas prices are depressed, and December electricity prices were down from a year ago. Overall, household fuel costs rose just 0.8% year over year.
As much as Americans gripe about rising oil prices, the average urban consumer doesn’t spend much of his disposable income on gasoline. Individual circumstances vary from the averages used by BLS, but rising fuel prices aren’t the driving force of consumer spending that some assume them to be.
The average American consumes about 23 barrels of oil per year, including oil used for transportation and that used by industry in plastics and other products. If oil increases to $105 per barrel from $90 per barrel, that amounts to an additional $340 in annual spending per person—slightly less than 1% of the average American’s $37,000 in annual per capita disposable income. I’m not arguing that rising oil prices and imports are good for Americans or the country, but it’s hardly a death knell for spending.
The Real Tipping Point
Oil prices would need to jump to $120 per barrel—a distinct possibility later in 2011—to measurably affect US consumers’ spending habits. But oil would have to remain at this elevated level to have an adverse impact on the economic recovery.
Meanwhile, global oil demand is soaring. The graph below tracks it in millions of barrels per day from the mid-1990s to present.
Click to Enlarge
As you can see, the world consumed less than 70 million barrels of oil per day in 1995, a figure that has risen steadily to 87.7 million barrels per day in 2010. The International Energy Agency expects demand to reach 89.1 million barrels per day in 2011.
Within this 15-year period, 2009 marked the only occasion when global consumption shrank on a year-over-year basis. Oil demand growth was particularly strong between 2003 and 2007.
Global oil demand hit a new record in 2010, increasing by 2.7 million barrels per day. That’s the fastest pace of global oil demand growth since 2004, when oil demand rose by 2.75 million barrels per day.
And this year, consumption is expected to surge by a further 1.4 million barrels per day—if these expectations pan out, 2010-11 will mark the fastest two-year growth in global oil demand in at least three decades.
The Chinese Can Afford It
Higher oil prices are far more affordable to the average Chinese consumer than just a few years ago, thanks to rising incomes and currency appreciation. Disposable income has increased steadily in recent years in the developing world.
For example, since 2005 per-capita disposable incomes in China have increased at an annualized rate, in local currency terms, higher than 12%. In US-dollar terms, this pace jumps to almost 20%.
A rapid jump in disposable income always drives demand for energy. Because personal incomes are much higher than in 2008, Chinese consumers can better afford higher oil prices today than they could in 2008. A similar logic holds in most of the major emerging markets.
Every time crude oil nears $100 per barrel, you can count on the media to focus on how rising prices at the pump are pinching consumers. These days, pundits describe $100 oil as a major “tax” on the consumer that endangers the nascent economic recovery.
Although higher energy prices will weigh on consumer spending, $100 oil isn’t some wild card that will suddenly wreck household budgets. US consumer spending hasn’t returned to the robust levels witnessed during the credit boom, but American shoppers have exhibited few signs of concern about energy prices.
The Bureau of Labor Statistics (BLS) estimates that motor fuel accounts for just 4.5% of total US consumer expenditures. Household fuels—heating oil, natural gas, and electricity—account for another 5% or so of total consumer expenditures, but the number of consumers using oil for heat continues to decline. Meanwhile, natural gas prices are depressed, and December electricity prices were down from a year ago. Overall, household fuel costs rose just 0.8% year over year.
As much as Americans gripe about rising oil prices, the average urban consumer doesn’t spend much of his disposable income on gasoline. Individual circumstances vary from the averages used by BLS, but rising fuel prices aren’t the driving force of consumer spending that some assume them to be.
The average American consumes about 23 barrels of oil per year, including oil used for transportation and that used by industry in plastics and other products. If oil increases to $105 per barrel from $90 per barrel, that amounts to an additional $340 in annual spending per person—slightly less than 1% of the average American’s $37,000 in annual per capita disposable income. I’m not arguing that rising oil prices and imports are good for Americans or the country, but it’s hardly a death knell for spending.
The Real Tipping Point
Oil prices would need to jump to $120 per barrel—a distinct possibility later in 2011—to measurably affect US consumers’ spending habits. But oil would have to remain at this elevated level to have an adverse impact on the economic recovery.
Meanwhile, global oil demand is soaring. The graph below tracks it in millions of barrels per day from the mid-1990s to present.
Click to Enlarge
As you can see, the world consumed less than 70 million barrels of oil per day in 1995, a figure that has risen steadily to 87.7 million barrels per day in 2010. The International Energy Agency expects demand to reach 89.1 million barrels per day in 2011.
Within this 15-year period, 2009 marked the only occasion when global consumption shrank on a year-over-year basis. Oil demand growth was particularly strong between 2003 and 2007.
Global oil demand hit a new record in 2010, increasing by 2.7 million barrels per day. That’s the fastest pace of global oil demand growth since 2004, when oil demand rose by 2.75 million barrels per day.
And this year, consumption is expected to surge by a further 1.4 million barrels per day—if these expectations pan out, 2010-11 will mark the fastest two-year growth in global oil demand in at least three decades.
The Chinese Can Afford It
Higher oil prices are far more affordable to the average Chinese consumer than just a few years ago, thanks to rising incomes and currency appreciation. Disposable income has increased steadily in recent years in the developing world.
For example, since 2005 per-capita disposable incomes in China have increased at an annualized rate, in local currency terms, higher than 12%. In US-dollar terms, this pace jumps to almost 20%.
A rapid jump in disposable income always drives demand for energy. Because personal incomes are much higher than in 2008, Chinese consumers can better afford higher oil prices today than they could in 2008. A similar logic holds in most of the major emerging markets.
Hong Kong Markets Fumble
All Chinese markets dropped last week on fear that the rise in oil prices would reaccelerate inflation in China and weaken the global economy. Hong Kong was particularly sensitive to the oil market, the Hang Seng Index closing the week down 2.5% while the Hang Seng China Enterprises Index was down 3.5%, compared to 0.7% for the Shanghai Composite Index. Hong Kong's performance would have been much worse if not for the strong performance on Friday. The HSI is down 5.7% from the January's high and the HSCEI, down 7%.
INDICES 1 week 4 weeks YTD
Hang Seng Index -2.5% -2.6% -0.1%
HS China Enterprises -3.7% -2.3% -3.3%
FTSE/Xinhua A50 -1.4% 2.6% 1.6%
Shanghai Composite -0.7% 4.6% 2.5%
CSI 300 -0.4% 5.3% 2.2%
US ETFs
EWH -1.2% -3.2% -2.0%
FXI -2.1% -0.5% -2.9%
PGJ -2.9% 0.4% 1.8%
Since the beginning to the year, the main drag on the Hong Kong market has come from the property developers. Property prices are still moving up but investors have been anticipating new restrictive measures to be introduced by either the Hong Kong or the Chinese governments. For Hong Kong developers, the Hong Kong budget tabled Thursday though did not call for anything drastic and the sector rebounded almost 3% on Friday. But the weakest property stocks are among the "H" shares with China Overseas Land (CAOVF.PK) and China Resources Land down 15% respectively in the past six weeks.
While "A" shares are up for the year, "H" shares have been particularly weak. The HSCEI is down 3.3% year to date with BYD leading on the downside with a drop of more than 24% due to lower than expected sales. But on a weighted basis, the weakest performers were in the insurance sector: PICC Property & Casualty, down 15% YTD, Ping An (PNGAY.PK), down 11% (off 12% in Shanghai), China Life (LFC), down 9% (no change in Shanghai). With interest rates in China expected to keep rising, the environment for insurance companies may remain difficult.
The same goes for banks as more investors discount slower profits growth. For the first two months on the year, ICBC and Minsheng Bank are the only bank constituents out of 8 among HSCEI to be positive, both with a slightly above 1% rise. The worst being China Merchants Bank (CIHHF.PK), off 6.2% for the period (down 0.5% in Shanghai). Only one airline is a constituent of the index and the rising cost of fuel has certainly clipped the wings of Air China (AIRYY.PK), down 19% (down 15% in Shanghai). The airline stock was down 14% last week alone.
With banks and insurance companies representing 56% of the total assets of HSCEI and 44% of iShares FXI's assets, no rebound could be expected until these stocks start performing.
To the benefit of iShares FXI, some of the best performers among "H" shares have been China Telecom (CHA), up 10% YTD and China Unicom (CHU), up 21%. Both respectively represent more than 4% of FXI's assets Unfortunately China Mobile (CHL), which account for almost 10% of the ETF, has not done so well and is down 6% on the year.
SECTORS – CHINA 1 week 4 weeks YTD
CSI300 Energy -0.2% 5.1% -0.9%
CSI300 Materials 1.7% 12.5% 2.7%
CSI300 Industrials -1.6% 4.0% 6.2%
CSI300 Cons. Discretionary 1.7% 8.4% 6.0%
CSI300 Cons. Staples -0.7% 5.5% -0.9%
CSI300 Healthcare -0.6% 3.8% -4.9%
CSI300 Financials -1.5% 2.5% 1.0%
CSI300 Technology 2.6% 7.6% -0.0%
CSI300 Telecom 1.4% 5.9% 9.3%
CSI300 Utilities -0.2% 3.8% 2.2%
SECTORS – HONG KONG 1 week 4 weeks YTD
HS Financials -2.8% -0.5% 1.0%
HS Utilities 1.1% -0.1% -0.5%
HS Property -1.2% -7.9% -4.9%
HS Commerce & Industry -2.8% -3.8% -0.1%
On the mainland, heavy weighted sectors industrials and financials pulled the CSI300 down last week despite good performance by materials. For the first time this year, Beijing increased the price of retail gasoline and diesel. Despite the move, energy stocks lost slightly. The worst casualties were to be found among railway stocks: China Security and Surveillance (CSR) and China Railway (CWYCF.PK), down respectively 8.3% and 6.9% (both down 10% in Hong Kong). Despite the downbeat mood, materials did well lead by Jinduicheng Molybdenum, up 17% and Yantai Wanhua Polyurethanes, up 11.7%.
On a year to date basis, mainland banks have not been the drag on the CSI300 index as they have been on the HSCEI. The CSI300 Banks Index is up 1.9% on the year. Fujian's Industrial Bank clocked in a performance of 8% in the first two months of the year and China Construction Bank (CICHF.PK), which is down 4% in Hong Kong for the year, is up 6% in Shanghai. The divergence between banking stock prices in Hong Kong and in Shanghai seems to be a question of perception. Hong Kong and foreign investors may simply be more skeptical about the Chinese banks' good standing.
The Shanghai Composite Index is the broadest base index encompassing all listed A and B shares listed in Shanghai. The CSI300 comprises the 300 largest A shares listed in Shanghai and Shenzhen. The Hang Seng China Enterprises Index covers 40 “H” shares issued by mainland companies listed in Hong Kong.The Hang Seng Index currently covers the 43 largest Hong Kong listed companies by capitalization. These HK listed companies include a number of mainland Chinese companies. EWH tracks the MSCI Hong Kong Index which is substantially different from the Hang Seng Index. iShares FXI tracks the FTSE/Xinhua 25 Index which includes the 25 largest mainland companies listed in Hong Kong.
INDICES 1 week 4 weeks YTD
Hang Seng Index -2.5% -2.6% -0.1%
HS China Enterprises -3.7% -2.3% -3.3%
FTSE/Xinhua A50 -1.4% 2.6% 1.6%
Shanghai Composite -0.7% 4.6% 2.5%
CSI 300 -0.4% 5.3% 2.2%
US ETFs
EWH -1.2% -3.2% -2.0%
FXI -2.1% -0.5% -2.9%
PGJ -2.9% 0.4% 1.8%
Since the beginning to the year, the main drag on the Hong Kong market has come from the property developers. Property prices are still moving up but investors have been anticipating new restrictive measures to be introduced by either the Hong Kong or the Chinese governments. For Hong Kong developers, the Hong Kong budget tabled Thursday though did not call for anything drastic and the sector rebounded almost 3% on Friday. But the weakest property stocks are among the "H" shares with China Overseas Land (CAOVF.PK) and China Resources Land down 15% respectively in the past six weeks.
While "A" shares are up for the year, "H" shares have been particularly weak. The HSCEI is down 3.3% year to date with BYD leading on the downside with a drop of more than 24% due to lower than expected sales. But on a weighted basis, the weakest performers were in the insurance sector: PICC Property & Casualty, down 15% YTD, Ping An (PNGAY.PK), down 11% (off 12% in Shanghai), China Life (LFC), down 9% (no change in Shanghai). With interest rates in China expected to keep rising, the environment for insurance companies may remain difficult.
The same goes for banks as more investors discount slower profits growth. For the first two months on the year, ICBC and Minsheng Bank are the only bank constituents out of 8 among HSCEI to be positive, both with a slightly above 1% rise. The worst being China Merchants Bank (CIHHF.PK), off 6.2% for the period (down 0.5% in Shanghai). Only one airline is a constituent of the index and the rising cost of fuel has certainly clipped the wings of Air China (AIRYY.PK), down 19% (down 15% in Shanghai). The airline stock was down 14% last week alone.
With banks and insurance companies representing 56% of the total assets of HSCEI and 44% of iShares FXI's assets, no rebound could be expected until these stocks start performing.
To the benefit of iShares FXI, some of the best performers among "H" shares have been China Telecom (CHA), up 10% YTD and China Unicom (CHU), up 21%. Both respectively represent more than 4% of FXI's assets Unfortunately China Mobile (CHL), which account for almost 10% of the ETF, has not done so well and is down 6% on the year.
SECTORS – CHINA 1 week 4 weeks YTD
CSI300 Energy -0.2% 5.1% -0.9%
CSI300 Materials 1.7% 12.5% 2.7%
CSI300 Industrials -1.6% 4.0% 6.2%
CSI300 Cons. Discretionary 1.7% 8.4% 6.0%
CSI300 Cons. Staples -0.7% 5.5% -0.9%
CSI300 Healthcare -0.6% 3.8% -4.9%
CSI300 Financials -1.5% 2.5% 1.0%
CSI300 Technology 2.6% 7.6% -0.0%
CSI300 Telecom 1.4% 5.9% 9.3%
CSI300 Utilities -0.2% 3.8% 2.2%
SECTORS – HONG KONG 1 week 4 weeks YTD
HS Financials -2.8% -0.5% 1.0%
HS Utilities 1.1% -0.1% -0.5%
HS Property -1.2% -7.9% -4.9%
HS Commerce & Industry -2.8% -3.8% -0.1%
On the mainland, heavy weighted sectors industrials and financials pulled the CSI300 down last week despite good performance by materials. For the first time this year, Beijing increased the price of retail gasoline and diesel. Despite the move, energy stocks lost slightly. The worst casualties were to be found among railway stocks: China Security and Surveillance (CSR) and China Railway (CWYCF.PK), down respectively 8.3% and 6.9% (both down 10% in Hong Kong). Despite the downbeat mood, materials did well lead by Jinduicheng Molybdenum, up 17% and Yantai Wanhua Polyurethanes, up 11.7%.
On a year to date basis, mainland banks have not been the drag on the CSI300 index as they have been on the HSCEI. The CSI300 Banks Index is up 1.9% on the year. Fujian's Industrial Bank clocked in a performance of 8% in the first two months of the year and China Construction Bank (CICHF.PK), which is down 4% in Hong Kong for the year, is up 6% in Shanghai. The divergence between banking stock prices in Hong Kong and in Shanghai seems to be a question of perception. Hong Kong and foreign investors may simply be more skeptical about the Chinese banks' good standing.
The Shanghai Composite Index is the broadest base index encompassing all listed A and B shares listed in Shanghai. The CSI300 comprises the 300 largest A shares listed in Shanghai and Shenzhen. The Hang Seng China Enterprises Index covers 40 “H” shares issued by mainland companies listed in Hong Kong.The Hang Seng Index currently covers the 43 largest Hong Kong listed companies by capitalization. These HK listed companies include a number of mainland Chinese companies. EWH tracks the MSCI Hong Kong Index which is substantially different from the Hang Seng Index. iShares FXI tracks the FTSE/Xinhua 25 Index which includes the 25 largest mainland companies listed in Hong Kong.
Don't Bank on Big Banks:BAC,C
Banking giants Bank of America (BAC) and Citigroup (C) continue to lag, and with important technical levels nearby, current and prospective investors should use caution.
Since last fall, I have been concerned about the relatively poor performance of the financial sector, especially the big banks. Though many of the smaller, regional banks completed a significant bottom formation in early 2011, the recent actions of two widely held bank stocks suggest that shareholders should be monitoring their positions and definitely have protective stops in place.
Chart Analysis: Bank of America (BAC) formed a very nice short-term bottom the first week of December (point 1), dropping to a new correction low of $10.91 and then reversing to close the week higher. Positive volume action created an excellent buying opportunity the following week, but the rally now appears to be stalling.
* The 50% retracement resistance at $15.40 seems to have stopped the rally with the 61.8% resistance now at $16.42
* After the recent drop, there is now short-term resistance at $14.38-$14.67
* The sharp drop at the end of January took BAC back to $13.40, which is now important support
* Two weeks ago, BAC formed a strong candle chart reversal formation called a "doji" (point 2), which was a strong warning. The gap lower and the break of the weekly uptrend (line a) last week has further weakened the trend
* Key resistance is now at $14.95
* The weekly on-balance volume (OBV) is still above its weighted moving average (WMA) but has turned lower after testing its downtrend (line b). The daily OBV is negative
* One of the few positives from last week is that BAC was able to close well above the lows at $13.79
Citigroup Inc. (C) got the market's attention in the middle of December as it completed the weekly triangle formation, lines c and e. The triangle formation has upside targets at $6.30-$7.60, but was this a false breakout?
* The volume on the breakout was decent, but the setback after the breakout has lasted longer than I would normally expect
* A weekly close back above $5.00 would reassert the uptrend and project a move to the $5.50 area
* Last week's lows at $4.57 correspond to a retest of the breakout level (line c) as well as a test of the uptrend, line d, and the 38.2% support level
* The $4.57 level now becomes the first support with more important support at $4.40-$4.42 and the 50% support level. If these levels are broken, a decline to the weekly uptrend at $4.00-$4.10 (line e) is likely
* The weekly OBV is still positive as it is rising and above its weighted moving average, but it is not acting stronger than prices. A move of the OBV above resistance at line f would be positive
* The daily OBV is currently neutral, at best
What It Means: For a healthy stock market, the financial sector should be participating, and while some of the regional banks look good technically, these two big banks continue to lag the major averages. They appear to be reaching an important short-term juncture. For good portfolio performance, it is very important to avoid the big losers. I have looked at countless portfolios where the use of a well-chosen technical stop would have limited the losses on one or two stocks, and that would have significantly improved the overall performance.
How to Profit: There seems to be quite a bit of investor attraction to these two bank stocks, but the technical outlook suggests that both are vulnerable to further declines. This week's action should be important. If you are not long these two stocks, I would avoid new positions for the time being, and if you are already long, here are key levels to watch:
For BAC, the suggested stop depends on where your longs were established. If you have secured profits already, use a stop at $13.33, but if you bought BAC in 2011, I would suggest a stop at $13.61.
Citigroup does look better technically, but the $4.36 level should hold on further weakness. I would only consider buying C if it is able to prove itself on the upside and volume is heavy.
Since last fall, I have been concerned about the relatively poor performance of the financial sector, especially the big banks. Though many of the smaller, regional banks completed a significant bottom formation in early 2011, the recent actions of two widely held bank stocks suggest that shareholders should be monitoring their positions and definitely have protective stops in place.
Chart Analysis: Bank of America (BAC) formed a very nice short-term bottom the first week of December (point 1), dropping to a new correction low of $10.91 and then reversing to close the week higher. Positive volume action created an excellent buying opportunity the following week, but the rally now appears to be stalling.
* The 50% retracement resistance at $15.40 seems to have stopped the rally with the 61.8% resistance now at $16.42
* After the recent drop, there is now short-term resistance at $14.38-$14.67
* The sharp drop at the end of January took BAC back to $13.40, which is now important support
* Two weeks ago, BAC formed a strong candle chart reversal formation called a "doji" (point 2), which was a strong warning. The gap lower and the break of the weekly uptrend (line a) last week has further weakened the trend
* Key resistance is now at $14.95
* The weekly on-balance volume (OBV) is still above its weighted moving average (WMA) but has turned lower after testing its downtrend (line b). The daily OBV is negative
* One of the few positives from last week is that BAC was able to close well above the lows at $13.79
Citigroup Inc. (C) got the market's attention in the middle of December as it completed the weekly triangle formation, lines c and e. The triangle formation has upside targets at $6.30-$7.60, but was this a false breakout?
* The volume on the breakout was decent, but the setback after the breakout has lasted longer than I would normally expect
* A weekly close back above $5.00 would reassert the uptrend and project a move to the $5.50 area
* Last week's lows at $4.57 correspond to a retest of the breakout level (line c) as well as a test of the uptrend, line d, and the 38.2% support level
* The $4.57 level now becomes the first support with more important support at $4.40-$4.42 and the 50% support level. If these levels are broken, a decline to the weekly uptrend at $4.00-$4.10 (line e) is likely
* The weekly OBV is still positive as it is rising and above its weighted moving average, but it is not acting stronger than prices. A move of the OBV above resistance at line f would be positive
* The daily OBV is currently neutral, at best
What It Means: For a healthy stock market, the financial sector should be participating, and while some of the regional banks look good technically, these two big banks continue to lag the major averages. They appear to be reaching an important short-term juncture. For good portfolio performance, it is very important to avoid the big losers. I have looked at countless portfolios where the use of a well-chosen technical stop would have limited the losses on one or two stocks, and that would have significantly improved the overall performance.
How to Profit: There seems to be quite a bit of investor attraction to these two bank stocks, but the technical outlook suggests that both are vulnerable to further declines. This week's action should be important. If you are not long these two stocks, I would avoid new positions for the time being, and if you are already long, here are key levels to watch:
For BAC, the suggested stop depends on where your longs were established. If you have secured profits already, use a stop at $13.33, but if you bought BAC in 2011, I would suggest a stop at $13.61.
Citigroup does look better technically, but the $4.36 level should hold on further weakness. I would only consider buying C if it is able to prove itself on the upside and volume is heavy.
Sunday, February 27, 2011
The Worldwide Revolutionary Outlook: A Guaranteed Investment Strategy
We don't especially like numbers here at The Daily Reckoning. You can't trust them. But we follow a few of them anyway. Like these numbers...
107.01
12.70
The first number above is for the Dow. The second is for gold. They show us what happened in yesterday's trading. And yesterday, the first number was negative. The second was positive.
Not that there aren't a lot more interesting, provocative numbers around. But we only follow the big picture here. And those two numbers tell us most of what we need to know.
At least, they give us a good starting point.
The Dow number is going down because investors are worried. That's why the gold number is going up too.
What if these Cereal Revolutions get out of hand? What if they spread to Saudi Arabia? What if the price of oil keeps going up?
"Gasoline at $4 a gallon?" asked a headline yesterday.
What would gasoline at $4 a gallon do to the US economy? This is another of those pieces of the puzzle that we mentioned yesterday. Ben Bernanke, who would probably make a fine high school math teacher, knows nothing about economics. He thinks all he has to do is to add more money and the whole "recovery" picture will be complete. Investors will see their stocks go up. Employers will hire. Shoppers will shop. Bakers will bake more. Shoeshine boys will start slapping the leather. Wheelwrights will...well, never mind.
But then, the puzzle pieces change shape. He pumps in money. The price of oil goes up. And food. And the Arabs, who depend heavily on grain imports, get themselves worked up. And then the price of oil goes up more. And stocks begin to fall. And US consumers pay more for gasoline...
..and suddenly, the picture is not at all what the Fed chairman had hoped for.
But wait. It gets worse. Look at a third number: 220. It's what the big Japanese securities firm, Nomura, thinks the price of oil could reach, thanks to the Cereal Revolutions.
And maybe they're right. Gaddafi is no Mubarak, say the papers. When he says he'll fight...he could mean it.
And others are getting ready for a fight too. Saudi Arabia is trying to head off trouble. And reports tell us that China is worried and increasing its security measures.
And what about France? And the USA Stocks?
Has your editor lost his mind? Not completely.
"I'll give you a prediction," said a smart French woman with whom we dined last night. "What's happening in North Africa will soon be happening in France."
"And if you look at how wealth is distributed in the US," said a companion, "it is really amazing. Something like 95% of the population lives below what we would consider the poverty level here in Europe. I don't know how they live. It's only the extremely high earnings of the other 5% that makes the average seem normal. And almost all the new wealth created in the last 10 years has gone to a tiny percentage of the population.
"You and I may know that Ben Bernanke and the US monetary policies are largely responsible for the wealth has been concentrated in the hands of the rich. But the man on the street has no idea. He just thinks it is wrong. And unfair. What is really amazing is that he hasn't already begun a revolution..."
We were quoted in The Wall Street Journal last week. "Gold is a bet against the Fed," we said.
Gold Price is now firmly over $1,400 an ounce. The correction seems to be over.
Frankly, we were disappointed. We were hoping for a deep correction that would shake out the speculators and discourage the Johnny-come- lately investors.
Didn't happen. Instead, the price barely went down at all. Less than 10% (from vague memory). Hardly a correction.
We wanted lower prices so we could buy more. Because, if there were ever a sure-fire, under-priced wager here's one: betting that the Fed will err.
You can understand the power of that bet just by taking the other side for a moment. Who, in his right mind, would bet that the Fed won't err? Thanks largely to the Fed and other central banks, the crisis that began 4 years ago with the bankruptcy of subprime lender Countrywide Financial was never resolved. Instead, the problems were largely increased. The private sector still has far too much debt. Now, the public sector is headed for bankruptcy too. It is only a matter of time before new crises arise and intensify.
Ben Bernanke has never given the slightest indication, hint or wink to suggest that he has any idea of what is really going on or that he understands how an economy really works. At every point over the last 5 years, his analysis has been incorrect. His predictions have been wrong. And his policies have made things worse.
You want to bet on Ben Bernanke? Yes, thanks...we'll take that bet. We'll take your money!
*** Was there ever a problem so intractable...or a situation so awful...that government planning couldn't make worse? Here's the latest. With food prices soaring, the feds move into the market.
They need to go back and read the Old Testament. An ancient Mubarak in the land of the pyramids was faced with famine. But he had the good sense to save up grain when it was cheap...and release it to the people when it was dear. These morons are doing the opposite. A pox on their houses! May their beer be always flat!
Feb. 21 (Bloomberg) - Governments worldwide will increase their role in global food markets and may boost stockpiles and subsidies or impose trade curbs to head off the protests that have rippled through the Middle East, commodity traders said.
"Greater political intervention in food matters is only to be expected," Alan Winney, chairman of Emerald Group Australia Pty Ltd., said in an interview at a sugar-industry conference in Dubai. "Governments will be careful to take preemptive measures to prevent increases in food prices," said Winney.
The higher costs of wheat, sugar and dairy products sent the United Nations' World Food Price Index to an all-time high last month. The jump has contributed to democratic revolts in Tunisia and Egypt, as well as other Arab nations. Saif al-Islam Qaddafi said in a televised address Libya is "not Tunisia and Egypt" after thousands demonstrated in the city of Benghazi.
107.01
12.70
The first number above is for the Dow. The second is for gold. They show us what happened in yesterday's trading. And yesterday, the first number was negative. The second was positive.
Not that there aren't a lot more interesting, provocative numbers around. But we only follow the big picture here. And those two numbers tell us most of what we need to know.
At least, they give us a good starting point.
The Dow number is going down because investors are worried. That's why the gold number is going up too.
What if these Cereal Revolutions get out of hand? What if they spread to Saudi Arabia? What if the price of oil keeps going up?
"Gasoline at $4 a gallon?" asked a headline yesterday.
What would gasoline at $4 a gallon do to the US economy? This is another of those pieces of the puzzle that we mentioned yesterday. Ben Bernanke, who would probably make a fine high school math teacher, knows nothing about economics. He thinks all he has to do is to add more money and the whole "recovery" picture will be complete. Investors will see their stocks go up. Employers will hire. Shoppers will shop. Bakers will bake more. Shoeshine boys will start slapping the leather. Wheelwrights will...well, never mind.
But then, the puzzle pieces change shape. He pumps in money. The price of oil goes up. And food. And the Arabs, who depend heavily on grain imports, get themselves worked up. And then the price of oil goes up more. And stocks begin to fall. And US consumers pay more for gasoline...
..and suddenly, the picture is not at all what the Fed chairman had hoped for.
But wait. It gets worse. Look at a third number: 220. It's what the big Japanese securities firm, Nomura, thinks the price of oil could reach, thanks to the Cereal Revolutions.
And maybe they're right. Gaddafi is no Mubarak, say the papers. When he says he'll fight...he could mean it.
And others are getting ready for a fight too. Saudi Arabia is trying to head off trouble. And reports tell us that China is worried and increasing its security measures.
And what about France? And the USA Stocks?
Has your editor lost his mind? Not completely.
"I'll give you a prediction," said a smart French woman with whom we dined last night. "What's happening in North Africa will soon be happening in France."
"And if you look at how wealth is distributed in the US," said a companion, "it is really amazing. Something like 95% of the population lives below what we would consider the poverty level here in Europe. I don't know how they live. It's only the extremely high earnings of the other 5% that makes the average seem normal. And almost all the new wealth created in the last 10 years has gone to a tiny percentage of the population.
"You and I may know that Ben Bernanke and the US monetary policies are largely responsible for the wealth has been concentrated in the hands of the rich. But the man on the street has no idea. He just thinks it is wrong. And unfair. What is really amazing is that he hasn't already begun a revolution..."
We were quoted in The Wall Street Journal last week. "Gold is a bet against the Fed," we said.
Gold Price is now firmly over $1,400 an ounce. The correction seems to be over.
Frankly, we were disappointed. We were hoping for a deep correction that would shake out the speculators and discourage the Johnny-come- lately investors.
Didn't happen. Instead, the price barely went down at all. Less than 10% (from vague memory). Hardly a correction.
We wanted lower prices so we could buy more. Because, if there were ever a sure-fire, under-priced wager here's one: betting that the Fed will err.
You can understand the power of that bet just by taking the other side for a moment. Who, in his right mind, would bet that the Fed won't err? Thanks largely to the Fed and other central banks, the crisis that began 4 years ago with the bankruptcy of subprime lender Countrywide Financial was never resolved. Instead, the problems were largely increased. The private sector still has far too much debt. Now, the public sector is headed for bankruptcy too. It is only a matter of time before new crises arise and intensify.
Ben Bernanke has never given the slightest indication, hint or wink to suggest that he has any idea of what is really going on or that he understands how an economy really works. At every point over the last 5 years, his analysis has been incorrect. His predictions have been wrong. And his policies have made things worse.
You want to bet on Ben Bernanke? Yes, thanks...we'll take that bet. We'll take your money!
*** Was there ever a problem so intractable...or a situation so awful...that government planning couldn't make worse? Here's the latest. With food prices soaring, the feds move into the market.
They need to go back and read the Old Testament. An ancient Mubarak in the land of the pyramids was faced with famine. But he had the good sense to save up grain when it was cheap...and release it to the people when it was dear. These morons are doing the opposite. A pox on their houses! May their beer be always flat!
Feb. 21 (Bloomberg) - Governments worldwide will increase their role in global food markets and may boost stockpiles and subsidies or impose trade curbs to head off the protests that have rippled through the Middle East, commodity traders said.
"Greater political intervention in food matters is only to be expected," Alan Winney, chairman of Emerald Group Australia Pty Ltd., said in an interview at a sugar-industry conference in Dubai. "Governments will be careful to take preemptive measures to prevent increases in food prices," said Winney.
The higher costs of wheat, sugar and dairy products sent the United Nations' World Food Price Index to an all-time high last month. The jump has contributed to democratic revolts in Tunisia and Egypt, as well as other Arab nations. Saif al-Islam Qaddafi said in a televised address Libya is "not Tunisia and Egypt" after thousands demonstrated in the city of Benghazi.
Top Stocks Paying Dividends In 2011
Top Stocks Paying Dividends In 2011: Medtronic
by Jim Stack, editor InvesTech Market Analyst
For over 50 years, Medtronic (MDT) has been the premier medical device manufacturer in the marketplace.
With the invention of the battery-powered pacemaker in the mid 1950s, Medtronic began a long string of technological innovations. Over time, that one breakthrough was transformed into a company that now holds over 21,000 filed patents and employs over 9,000 scientists and engineers.
Success has allowed Medtronic to develop a very healthy financial position. Without jumping into too many details, the company's Free Cash Flow Margin - the percentage of sales that end up as actual "free cash" - has averaged a remarkably consistent 22% over the past 10 years.
Not only is this an impressive amount of cash generation, but the consistency with which the firm generates cash is even more amazing - it hardly deviates more than a percent or two from the mean.
There are very few businesses that have such a strong track record. To put this cash back in shareholder's hands, management pays out a healthy 2.5% dividend. Even better, they have been aggressively increasing the dividend an average 20% per year for the past 5 years.
Today, Medtronic is bringing its knowledge of treating chronic ailments to a rapidly expanding worldwide middle-class.
Currently, international sales account for 41% of total revenue. In the most recent quarter, sales in China increased 24% year-over-year, while Latin America sales and Middle East & Africa sales each grew 19%.
Market share potential in emerging markets has many analysts forecasting double-digit earnings growth well into the future. For investors, Medtronic is being o"ered at valuation levels rarely seen and, in our opinion, levels that won't last long.
This "discount" valuation is being driven by concerns over long-term growth potential in key areas - including the core cardiac rhythm segment. For reasons noted above, we think these concerns are overdone. Instead, we feel the current market gives us an opportunity to buy shares of a world class company at 11X earnings.
Compare the current valuation to Medtronic's 10 year median P/E ratio of 27.8X and you get a sense of the value we see in this company.
As an added bonus, shares have come under pressure in recent weeks from year-end tax loss sellers. For new buyers, this provides a terrific entry point. Bottom line, Medtronic certainly fits our mold of finding good companies at attractive prices. It has the technical expertise, financial strength, growth potential, and valuation of a great investment.
Top Stocks Paying Dividends In 2011:ChemTrade Logistics (CGIFF)
By Roger Conrad
Roger Conrad, editor of The Canadian Edge, is a leading specialist in the niche investment area of high-income Canada-based trusts.
For his top investment idea for the company year, he turns to chemical company, ChemTrade Logistics (TSX: CHE-U, OTC: CGIFF).
"ChemTrade Logistics is a major producer of specialty chemicals, particularly sulphuric acid. It's also a Canadian income trust yielding over 12% with most of its operations overseas. That adds up to a unique triple play for investors in 2011.
"First, is the high yield, paid monthly. Even with the market for specialty chemicals chronically weak in 2011, Chemtrade was able to generate cash flow to cover its distribution by a healthy margin.
":Second, cash flow is set to surge as demand from industry rebounds for sulphuric acid. Second half results already show improvement and that trend is set to continue into the new year.
"Third, Chemtrade management expects to pay the same level of distribution in 2012, when Canada's trust tax kicks in. If it succeeds, investors will receive a windfall capital gain, since a big cut is already priced in.
"At a recent conference call, CEO Mark Davis stated 'the e?ect of the new tax would not be significant' since 'Chemtrade receives a large portion of its earnings from non- Canadian sources.
"Accordingly, in 2012 we believe that the new SIFT tax will apply to less than one-third of the Fund's income, resulting in an e?ective tax rate of less than 10 percent.' Buy ChemTrade up to $11."
Top Stocks Paying Dividends In 2011:Scientific Games
by Jason Shade, editor Texting Trader
As is the case with most of my trades and recommendations, my stock prediction for 2011 is a company that many of my peers are not giving much attention.
Scientific Games (SGMS) is a turnaround story that intrigues me and I select owning it as my top stock idea of 2011.
SGMS is an $882 million global leader in providing customized, end-to-end gaming solutions to lottery and gaming organizations worldwide.
Scientific Games' integrated array of products and services include instant lottery games, lottery gaming systems, terminals and services, and internet applications, as well as server-based interactive gaming machines. Scientific Games serves customers in approximately 50 countries.
After peaking at a high of $40 in 2007, this legalized gaming services provider has seen its shares collapse during the recent economic crisis.
The stock bottomed out earlier this year at $6.58 following a weak quarterly earnings report in which the company reported a .04 a share miss with revenues that also were on the light side.
Whether it was this earnings report or the prior three years of underperformance, the board and investors decided to reinstate SGMS's Chairman and former CEO Lorne Weil as CEO of the company.
Weil was at the helm during the stock's last major run from 2000 to 2005 and his returning to lead the firm is a positive catalyst for the success of SGMS and its potential return to prosperity.
Investors also can take heart in the recent binge of insider buying that accompanied Weil's return to the C-suite.
In December, management and insiders accumulated more than 4 million shares of company stock between the prices of $7.89 and $9.75 a share. One buyer of particular interest is long-time Wall Street investor Ron Perelman. Perelman now owns more than 30 million shares of the company stock. Most of his ownership is at much higher prices, including a large purchase of 400,000 shares at $14.26 a share last March.
Finally, you can't have a good corporate turnaround story without improving business fundamentals. Herein lies the challenge to management, the company and its stock. The last earnings report was anemic, but there are encouraging signs demonstrating that SGMS is committed into cleaning up its balance sheet and positioning the firm for sustainable growth in the coming years.
At the end of November, the company retired nearly $80 million in short term debt by issuing Senior Subordinated Notes due in 2018.
SGMS already boasts an 80% market share in the U.S. lottery market. Thus, the real growth engine for the firm will come from emerging markets.
SGMS is already focusing on growing these markets by working on gaining a larger footprint in the China market where its instant ticket retail sales have posted an impressive 28% gain in the latest quarter.
Following this success is a recent agreement signed between SGMS and China Sports Lottery Printing which o"ers great growth opportunities for this fast-expanding market. I find this even more intriguing as we have seen gaming stocks such as Wynn Resorts and Las Vegas Sands provide investors with huge gains based on their sales growth in Macau.
At some point, I expect analysts and investors alike to begin waking up to the Asian growth story happening at SGMS.
Like all companies, SGMS does face competitive pressures in all markets. In fact, last year the firm reported operating margins of 23%, a 5 year low for the company. This will need to be monitored over the next couple of quarters along with EPS and revenue growth.
Nevertheless, I see the recent management shakeup, swell of insider buying and market expansion in Asia to o"er investors a compelling turnaround story worth gambling on. I have a 12-month price target of $17 on SGMS.
Top Stocks Paying Dividends In 2011:Emerson Radio (MSN)
By Bill Matthews
"Emerson Radio (NYSE: MSN) is an atttractive, low-priced stock," says Bill Matthews, a specialist in lower-priced issues.
The advisor, who has been publishing The Cheap Investor for nearly 3 decades, suggests, "The stock has the potential for significant appreciation in 2011."
"In this market, we wanted to recommend a quality low priced stock that is relatively safe, has good increasing revenues and outstanding earnings. We are also looking for a stock that is selling at an attractive low price, and has the potential for significant growth and stock appreciation in 2011. Emerson Radio fits these criteria.
"Emerson Radio is a household name. Together with its subsidiaries, it engages in designing, marketing, selling, and licensing various consumer appliance, electronic and house ware products.
"It products are sold in the United States and internationally. Emerson Radio Corp. markets its products under the Emerson and HH Scott brands.
"The company distributes its products primarily through mass merchandisers, discount retailers, toy retailers, and distributors and specialty catalogers in the United States.
"Emerson has an excellent balance sheet with $29 million or $1.06 per share in cash, a book value of $2.25 per share and less than $6 million in debt. Insiders own 65% of the 27 million total shares outstanding and 22 institutions own 17% of the float.
"Emerson has excellent financials for the six-month period ended September 30. Revenues are $107 million up from $97 million a year ago. Net income is $4.3 million or $0.16 a share up from a loss of ($242,000) or (.01) a share verses a year ago.
"If you look at Emerson’s stock chart between June 2002 and June 2003, you’ll see that the price soared from $1.50 to $7.50 because of excellent revenue and earnings increases. We believe, that if Emerson continues its earnings growth, the price could skyrocket again."
Top Stocks Paying Dividends In 2011:Timberline Resources
by Gene Arensberg, editor Got Gold Report
Timberline Resources (TLR) is a soon-to-be gold producer that we believe has been overlooked by the market. However, we doubt it will remain overlooked for much longer.
Overall, I consider this a strongly undervalued stock that is highly likely to have a string of excellent news in 2011.
Not exactly a household name, Timberline's management teamed up with the premier underground mining and development company in North America, Small Mine Development (SMD), to develop the Butte Highlands gold deposit just south of Butte, Montana.
Timberline provided the project; SMD provides the development funding and knowhow to bring the gold ore out from under Nevin Hill.
When we visited the future mine in June of 2010, the 16-foot tall and 14-foot wide development ramp had already been excavated nearly 1,000 feet down. Timberline shareholders benefit from the SMD partnership because the company did not have to heavily dilute the share structure in order to raise the development capital
to get the gold ore out of the ground.
In addition, the company will spare investors the cost of building an expensive processing mill because the ore can be hauled to nearby existing third-party processing facilities already permitted and operational in Montana. Once the development capital has been recovered through production, the partners will share the net proceeds of the gold mined at Butte on a 50/50 basis.
Timberline estimated in 2010 that the cost of production for the gold would be less than U.S. $500 the ounce given the richness (high grade) of the deposit. With gold above $1,300 the ounce that means that the Butte Highlands project should enjoy significant positive cash ?ow once production, estimated to be about 50,000 to 70,000 ounces per year, begins.
The mine could be operational for approximately ten years at that production level, perhaps longer if there are additional resources discovered just ahead.
Top Stocks Paying Dividends In 2011:FPL (FPL)
By Vita Nelson
Vita Nelson is well-known as a leading expert on dividend reinvestment plans.
With the caveat that she always recommends portfolio diversification, the editor of The MoneyPaper looks to utility stock FPL (NYSE: FPL) as a top selection for 2011.
"We make a point of recommending that people don't pin their hopes on just one stock (which might underachieve in the short-run).
"Nevertheless, as a top pick for the comin year, I like FPL Group is the parent of Florida Power & Light, a utility that engages in the generation, transmission, and distribution of electricity to 4.5 million customers in a 27,650 square mile area of eastern and southern Florida.
"Its NextEra Energy Resources subsidiary is a non-regulated power generator that produces electricity from nuclear, natural gas, solar, and wind generation.
"It owns 48 wind farms in 15 states producing 4,100 megawatts and could double that output within the next four years.
"The company is expected to earn about $4.15 per share this year and $4.57 in 2011, compared with $3.84 in 2008.
"The dividend has been increased for 15 consecutive years and the annual payout now stands at $1.90 per share, for a yield of about 3.4%."
Top Stocks Paying Dividends In 2011:Allot Communications
by Ian Wyatt, editor Small Cap Investor PRO
The smartphone revolution -- with web-browsing, video-watching, music-streaming mobile devices -- has made bandwidth a scarce resource.
That's where Allot Communications (ALLT) comes in. Allot is an Israeli company that develops deep packet inspection (DPI) technology specifically designed to manage bandwidth use Consumers want phones that let them listen to music, surf the web, watch video, and access a wide array of applications. Maybe even occasionally make a call or two. Allot's solutions are critical for Internet Service Providers (ISP), cable companies, landline operators, mobile phone companies, businesses and governments.
The company has consistently grown overseas in Europe, Asia, and South America. The U.S. still represents a huge growth market, if and when regulations permit carriers to implement Allot's technology. Allot's third quarter was a good one. The company increased revenue by 36 percent to $14.7 million year-over-year.
Quarter-over-quarter revenue also increased, by 8 percent, marking the sixth consecutive quarter of sequential revenue growth. On a GAAP basis, Allot earned $0.03 per share, a nice improvement over a $0.10 loss in the third quarter of 2009.
But what I really like here is that the company ended the quarter with $56.2 million in cash and essentially zero debt. Allot is a play on the future growth of smartphones, and the near certainty that service providers will segment bandwidth in order to design service plans tailored to customer behavior.
What's more, this tiny company is a potential takeout candidate and management has shown an ability to orchestrate acquisitions in the past.
Top Stocks Paying Dividends In 2011:PepsiCo (PEP)
By Jim Stack
"PepsiCo (NYSE: PEP), my top pick for 2011, remains underrated by the market," says Jim Stack.
The money manager and editor of InvesTech Market Analyst suggests, "All too often, it’s viewed as a stodgy soft drink company, fully reliant on its namesake soda line. That's a misconception." Here, the sets the record straight.
"In reality, PepsiCo owns some of the most sought after brands in the world, including Gatorade, Tropicana, Frito-Lay, and Doritos. It does business in more than 200 countries worldwide, including key emerging market economies like China and India.
"Perhaps most important of all, it’s a growth company with analysts expecting long-term future earnings growth of 10-12% per year.
"In recent months, PepsiCo has taken another major step forward with the pending acquisition of its two primary bottlers – Pepsi Bottling Group and PepsiAmericas.
"The acquisition provides the potential to eliminate an estimated $500 million to $1 billion in redundant costs. If those cost savings are transferred directly to the bottom line, shareholders could see a significant increase in net income of 10% to 20%.
"Of perhaps even greater benefit, the purchase brings 80% of North American beverage distribution 'in-house.' This move will bring management one step closer to its final customers – injecting a level of flexibility into operations not often seen with a company of PepsiCo’s size.
"The acquisition further ties together the Pepsi story – a well run company with market leading growth positions and an attractive valuation.
"The executive suite neatly combines the beverage 'megabrands' such as Pepsi, Gatorade, Tropicana, and Mountain Dew with the world’s largest snack food company, Frito-Lay.
"Management then leverages these brands into international growth markets such as Latin America and Asia where sales volume increased more than 20% in 2008, and despite the most challenging world economy in decades, has seen high single-digit growth so far in 2011.
" On top of all this, Pepsi is currently trading at valuation levels not seen in 15 years. And although it’s a growth company, Pepsi still o?ers the dividend yield (3.0%) of a stalwart.
"Bottom line, Pepsi remains underrated by the market in general, and the bottler acquisition only enhances the company’s outlook."
Top Stocks Paying Dividends In 2011:United States Oil Fund
by John Nyaradi, editor Wall Street Selector
Oil prices have been on a roller coaster ride during 2010, and as we look ahead to 2011, "black gold" looms as one of the potentially most lucrative markets for investors around the world.
For bullish investors wanting to participate in this market, my top pick for 2011 is United States Oil Fund (USO).
Oil is a confusing market because the bulls argue that as the recovery in the United States and around the world gathers force, there will be growing demand for oil and energy.
On the other side of the argument, bears say that demand is still weak, global supply is high and unemployment will be an inevitable drag on the price of oil going forward. United States Oil Fund is an Exchange Traded Fund that tracks the price of West Texas Intermediate Crude Oil, "light, sweet crude."
It's a widely traded ETF with daily volume in the millions and widely used by both institutions and retail investors.
USO gives retail investors the opportunity to participate in the commodities markets without actually buying futures contracts directly.
The fund buys oil futures contracts, forwards and swaps and is organized as a limited partnership and so has some tricky tax implications that you need to understand before investing.
Almost everyone agrees that the long term outlook for energy prices is higher as the emerging markets build out and their demand for oil increase.
Short term trends are more challenging; commodity trading isn't for the faint of heart or unprepared and the same holds true for exchange traded funds that track commodities and commodity indexes.
However, oil is one of the largest and most important markets as energy makes the world go 'round; in 2011 oil could be a place to look for fast paced profits. Learn more about this financial newsletter at John Nyaradi's Wall Street Selector.
Top Stocks Paying Dividends In 2011:ImmunoGen (IMGN)
By John McCamant
"Out top stock pick for 2011 is ImmunoGen (NASDAQ: IMGN)," says biotech specialist John McCamant.
In his The Medical Technology Stock Letter, he explains, "The company’s potent cancer-cell killing antibodies were developed for targeted delivery to tumor cells.
"Specifically, IMGN’s TAP technology uses antibodies to deliver one of the company's proprietary cancer-cell killing agents specifically to tumors. These agents are 1,000 –10,000-fold more potent than standard chemotherapeutics and are designed to be attached to antibodies using one of the Company’s engineered linkers "IMGN’s lead drug candidate is T-DM1 which is Genentech’s Herceptin with the addition of IMGN’s powerful TAP technology.
"The company recently delivered positive Phase 2b data for TDM-1 in breast cancer patients that have failed all previous treatments. This positive data should allow the drug candidate to be filed for FDA approval in the first half of 2011.
"Adding to our enthusiasm is that Roche is also starting a single agent T-DM1 trial in adjuvant mBC, the biggest and most lucrative breast cancer market.
"This exceeds the expectations for most of Wall Street as they only expect sales for late-stage breast cancer, a much smaller market. We believe that Roche's ultimate goal is to gain approval of T-DM1 for all lines of HER2+ mBC, similar to Herceptin.
"In addition to T-DM1, five other compounds that make use of ImmunoGen’s TAP technology are in clinical testing.
"In addition to the company’s product pipeline, compounds utilizing the TAP technology are in clinical testing through IMGN’s collaborations with Genentech (a wholly owned member of the Roche Group), sanofi-aventis, Biogen Idec and Biotest.
"IMGN’s powerful platform technology is in itself a significant asset. In the past few years, there have been numerous premium buy-outs of companies that also have monoclonal antibody platforms.
"These buyouts have been sparked by the huge growth of anticancer antibodies such as Avastin, Rituxan, and Herceptin, all multi-billion dollar drugs.
"We believe there is a strong chance that someone steps up and buys IMGN at a premium in 2011 as they have what we believe to be the most attractive antibody platform available.
" T-DM1 is the cornerstone of IMGN’s value and is likely be approved by the end of next year.Additionally, the market for T-DM1 appears larger than expected and the most recent data represents a major transformative and de-risking event for IMGN.
"IMGN is poised to create significant shareholder value in 2011 which will either drive the stock price higher or result in a premium buyout."
Top Stocks Paying Dividends In 2011:Range Resources
by Geoffrey Seiler, editor Bullmarket.com
We have selected Range Resources (RRC), which is on our recommended buy list, as our top investment idea for 2011.
The natural gas producer recently posted a loss of 5 cents per share, versus a loss of 19 cents, a year ago. Adjusted EPS was 12 cents, topping the 10-cent consensus.
Cash ?ow from operating activities totaled $138.4 million, while cash how from operations before changes in working capital fell -18% to $140.8 million. Revenues rose 11% to $227.0 million. Natural gas, NGL and oil sales climbed 9% to $219.6 million, while natural gas, NGL and oil sales including all cash-settled derivatives declined -4% to $245.4 million.
As previously announced prior to earnings, Q3 production volumes rose 15%, and 7% sequentially, to an average of 503 Mmcfe net per day. Production was 77% natural gas and 23% natural gas liquids (NGLs) and oil.
The company said the growth came from its e"orts in the liquids-rich portion of the Marcellus Shale play in Pennsylvania, as well as the Midcontinent and Permian Basin regions.
The company drilled 78 net wells and 5 net recompletions in the quarter with a 99% success rate.
Realized oil, gas and NGL prices, after adjusting for realized cash-settled hedges and cash-settled derivatives, averaged $4.97 per mcfe for the third quarter.
This was generally below analyst estimates, and lower than the $6.35 per mcfe last year and $5.07 per mcfe for Q2.
On the hedging front, the company has 335,000 Mmbtu per day of natural gas production hedged at an average ?oor price of $5.56 and an average cap of $7.20. Meanwhile, it increased its hedge position for both 2011 and 2012. For 2011, Range has now hedged its natural gas position to 408,200 Mmbtu per day at an average ?oor price of $5.56 and an average cap of $6.48.
For 2012, Range has increased its natural gas hedges to 119,641 Mmbtu per day at an average ?oor of $5.50 and an average cap of $6.25.
In conjunction with its earnings announcement, Range also announced that it was putting up its Barnett Shale assets for sales. The assets include 53,000 acres with 360 producing wells that average approximately 120-130 Mmcfe per day. "Divesting of our Barnett Shale properties re?ects Range's strategy of focusing on per-share growth," CEO John Pinkerton said in statement. While a sale of our Barnett Shale properties will provide substantial capital, it will not inhibit our per-share production and reserve growth outlook. We currently anticipate that we can grow production and reserves in 2011 on both an absolute and per-share basis, despite losing the production and reserves associated with the planned sale."
BMO Capital analyst Dan McSpirit believes a sale could gross around $1.6 billion based on recent asset sales in the area.
by Jim Stack, editor InvesTech Market Analyst
For over 50 years, Medtronic (MDT) has been the premier medical device manufacturer in the marketplace.
With the invention of the battery-powered pacemaker in the mid 1950s, Medtronic began a long string of technological innovations. Over time, that one breakthrough was transformed into a company that now holds over 21,000 filed patents and employs over 9,000 scientists and engineers.
Success has allowed Medtronic to develop a very healthy financial position. Without jumping into too many details, the company's Free Cash Flow Margin - the percentage of sales that end up as actual "free cash" - has averaged a remarkably consistent 22% over the past 10 years.
Not only is this an impressive amount of cash generation, but the consistency with which the firm generates cash is even more amazing - it hardly deviates more than a percent or two from the mean.
There are very few businesses that have such a strong track record. To put this cash back in shareholder's hands, management pays out a healthy 2.5% dividend. Even better, they have been aggressively increasing the dividend an average 20% per year for the past 5 years.
Today, Medtronic is bringing its knowledge of treating chronic ailments to a rapidly expanding worldwide middle-class.
Currently, international sales account for 41% of total revenue. In the most recent quarter, sales in China increased 24% year-over-year, while Latin America sales and Middle East & Africa sales each grew 19%.
Market share potential in emerging markets has many analysts forecasting double-digit earnings growth well into the future. For investors, Medtronic is being o"ered at valuation levels rarely seen and, in our opinion, levels that won't last long.
This "discount" valuation is being driven by concerns over long-term growth potential in key areas - including the core cardiac rhythm segment. For reasons noted above, we think these concerns are overdone. Instead, we feel the current market gives us an opportunity to buy shares of a world class company at 11X earnings.
Compare the current valuation to Medtronic's 10 year median P/E ratio of 27.8X and you get a sense of the value we see in this company.
As an added bonus, shares have come under pressure in recent weeks from year-end tax loss sellers. For new buyers, this provides a terrific entry point. Bottom line, Medtronic certainly fits our mold of finding good companies at attractive prices. It has the technical expertise, financial strength, growth potential, and valuation of a great investment.
Top Stocks Paying Dividends In 2011:ChemTrade Logistics (CGIFF)
By Roger Conrad
Roger Conrad, editor of The Canadian Edge, is a leading specialist in the niche investment area of high-income Canada-based trusts.
For his top investment idea for the company year, he turns to chemical company, ChemTrade Logistics (TSX: CHE-U, OTC: CGIFF).
"ChemTrade Logistics is a major producer of specialty chemicals, particularly sulphuric acid. It's also a Canadian income trust yielding over 12% with most of its operations overseas. That adds up to a unique triple play for investors in 2011.
"First, is the high yield, paid monthly. Even with the market for specialty chemicals chronically weak in 2011, Chemtrade was able to generate cash flow to cover its distribution by a healthy margin.
":Second, cash flow is set to surge as demand from industry rebounds for sulphuric acid. Second half results already show improvement and that trend is set to continue into the new year.
"Third, Chemtrade management expects to pay the same level of distribution in 2012, when Canada's trust tax kicks in. If it succeeds, investors will receive a windfall capital gain, since a big cut is already priced in.
"At a recent conference call, CEO Mark Davis stated 'the e?ect of the new tax would not be significant' since 'Chemtrade receives a large portion of its earnings from non- Canadian sources.
"Accordingly, in 2012 we believe that the new SIFT tax will apply to less than one-third of the Fund's income, resulting in an e?ective tax rate of less than 10 percent.' Buy ChemTrade up to $11."
Top Stocks Paying Dividends In 2011:Scientific Games
by Jason Shade, editor Texting Trader
As is the case with most of my trades and recommendations, my stock prediction for 2011 is a company that many of my peers are not giving much attention.
Scientific Games (SGMS) is a turnaround story that intrigues me and I select owning it as my top stock idea of 2011.
SGMS is an $882 million global leader in providing customized, end-to-end gaming solutions to lottery and gaming organizations worldwide.
Scientific Games' integrated array of products and services include instant lottery games, lottery gaming systems, terminals and services, and internet applications, as well as server-based interactive gaming machines. Scientific Games serves customers in approximately 50 countries.
After peaking at a high of $40 in 2007, this legalized gaming services provider has seen its shares collapse during the recent economic crisis.
The stock bottomed out earlier this year at $6.58 following a weak quarterly earnings report in which the company reported a .04 a share miss with revenues that also were on the light side.
Whether it was this earnings report or the prior three years of underperformance, the board and investors decided to reinstate SGMS's Chairman and former CEO Lorne Weil as CEO of the company.
Weil was at the helm during the stock's last major run from 2000 to 2005 and his returning to lead the firm is a positive catalyst for the success of SGMS and its potential return to prosperity.
Investors also can take heart in the recent binge of insider buying that accompanied Weil's return to the C-suite.
In December, management and insiders accumulated more than 4 million shares of company stock between the prices of $7.89 and $9.75 a share. One buyer of particular interest is long-time Wall Street investor Ron Perelman. Perelman now owns more than 30 million shares of the company stock. Most of his ownership is at much higher prices, including a large purchase of 400,000 shares at $14.26 a share last March.
Finally, you can't have a good corporate turnaround story without improving business fundamentals. Herein lies the challenge to management, the company and its stock. The last earnings report was anemic, but there are encouraging signs demonstrating that SGMS is committed into cleaning up its balance sheet and positioning the firm for sustainable growth in the coming years.
At the end of November, the company retired nearly $80 million in short term debt by issuing Senior Subordinated Notes due in 2018.
SGMS already boasts an 80% market share in the U.S. lottery market. Thus, the real growth engine for the firm will come from emerging markets.
SGMS is already focusing on growing these markets by working on gaining a larger footprint in the China market where its instant ticket retail sales have posted an impressive 28% gain in the latest quarter.
Following this success is a recent agreement signed between SGMS and China Sports Lottery Printing which o"ers great growth opportunities for this fast-expanding market. I find this even more intriguing as we have seen gaming stocks such as Wynn Resorts and Las Vegas Sands provide investors with huge gains based on their sales growth in Macau.
At some point, I expect analysts and investors alike to begin waking up to the Asian growth story happening at SGMS.
Like all companies, SGMS does face competitive pressures in all markets. In fact, last year the firm reported operating margins of 23%, a 5 year low for the company. This will need to be monitored over the next couple of quarters along with EPS and revenue growth.
Nevertheless, I see the recent management shakeup, swell of insider buying and market expansion in Asia to o"er investors a compelling turnaround story worth gambling on. I have a 12-month price target of $17 on SGMS.
Top Stocks Paying Dividends In 2011:Emerson Radio (MSN)
By Bill Matthews
"Emerson Radio (NYSE: MSN) is an atttractive, low-priced stock," says Bill Matthews, a specialist in lower-priced issues.
The advisor, who has been publishing The Cheap Investor for nearly 3 decades, suggests, "The stock has the potential for significant appreciation in 2011."
"In this market, we wanted to recommend a quality low priced stock that is relatively safe, has good increasing revenues and outstanding earnings. We are also looking for a stock that is selling at an attractive low price, and has the potential for significant growth and stock appreciation in 2011. Emerson Radio fits these criteria.
"Emerson Radio is a household name. Together with its subsidiaries, it engages in designing, marketing, selling, and licensing various consumer appliance, electronic and house ware products.
"It products are sold in the United States and internationally. Emerson Radio Corp. markets its products under the Emerson and HH Scott brands.
"The company distributes its products primarily through mass merchandisers, discount retailers, toy retailers, and distributors and specialty catalogers in the United States.
"Emerson has an excellent balance sheet with $29 million or $1.06 per share in cash, a book value of $2.25 per share and less than $6 million in debt. Insiders own 65% of the 27 million total shares outstanding and 22 institutions own 17% of the float.
"Emerson has excellent financials for the six-month period ended September 30. Revenues are $107 million up from $97 million a year ago. Net income is $4.3 million or $0.16 a share up from a loss of ($242,000) or (.01) a share verses a year ago.
"If you look at Emerson’s stock chart between June 2002 and June 2003, you’ll see that the price soared from $1.50 to $7.50 because of excellent revenue and earnings increases. We believe, that if Emerson continues its earnings growth, the price could skyrocket again."
Top Stocks Paying Dividends In 2011:Timberline Resources
by Gene Arensberg, editor Got Gold Report
Timberline Resources (TLR) is a soon-to-be gold producer that we believe has been overlooked by the market. However, we doubt it will remain overlooked for much longer.
Overall, I consider this a strongly undervalued stock that is highly likely to have a string of excellent news in 2011.
Not exactly a household name, Timberline's management teamed up with the premier underground mining and development company in North America, Small Mine Development (SMD), to develop the Butte Highlands gold deposit just south of Butte, Montana.
Timberline provided the project; SMD provides the development funding and knowhow to bring the gold ore out from under Nevin Hill.
When we visited the future mine in June of 2010, the 16-foot tall and 14-foot wide development ramp had already been excavated nearly 1,000 feet down. Timberline shareholders benefit from the SMD partnership because the company did not have to heavily dilute the share structure in order to raise the development capital
to get the gold ore out of the ground.
In addition, the company will spare investors the cost of building an expensive processing mill because the ore can be hauled to nearby existing third-party processing facilities already permitted and operational in Montana. Once the development capital has been recovered through production, the partners will share the net proceeds of the gold mined at Butte on a 50/50 basis.
Timberline estimated in 2010 that the cost of production for the gold would be less than U.S. $500 the ounce given the richness (high grade) of the deposit. With gold above $1,300 the ounce that means that the Butte Highlands project should enjoy significant positive cash ?ow once production, estimated to be about 50,000 to 70,000 ounces per year, begins.
The mine could be operational for approximately ten years at that production level, perhaps longer if there are additional resources discovered just ahead.
Top Stocks Paying Dividends In 2011:FPL (FPL)
By Vita Nelson
Vita Nelson is well-known as a leading expert on dividend reinvestment plans.
With the caveat that she always recommends portfolio diversification, the editor of The MoneyPaper looks to utility stock FPL (NYSE: FPL) as a top selection for 2011.
"We make a point of recommending that people don't pin their hopes on just one stock (which might underachieve in the short-run).
"Nevertheless, as a top pick for the comin year, I like FPL Group is the parent of Florida Power & Light, a utility that engages in the generation, transmission, and distribution of electricity to 4.5 million customers in a 27,650 square mile area of eastern and southern Florida.
"Its NextEra Energy Resources subsidiary is a non-regulated power generator that produces electricity from nuclear, natural gas, solar, and wind generation.
"It owns 48 wind farms in 15 states producing 4,100 megawatts and could double that output within the next four years.
"The company is expected to earn about $4.15 per share this year and $4.57 in 2011, compared with $3.84 in 2008.
"The dividend has been increased for 15 consecutive years and the annual payout now stands at $1.90 per share, for a yield of about 3.4%."
Top Stocks Paying Dividends In 2011:Allot Communications
by Ian Wyatt, editor Small Cap Investor PRO
The smartphone revolution -- with web-browsing, video-watching, music-streaming mobile devices -- has made bandwidth a scarce resource.
That's where Allot Communications (ALLT) comes in. Allot is an Israeli company that develops deep packet inspection (DPI) technology specifically designed to manage bandwidth use Consumers want phones that let them listen to music, surf the web, watch video, and access a wide array of applications. Maybe even occasionally make a call or two. Allot's solutions are critical for Internet Service Providers (ISP), cable companies, landline operators, mobile phone companies, businesses and governments.
The company has consistently grown overseas in Europe, Asia, and South America. The U.S. still represents a huge growth market, if and when regulations permit carriers to implement Allot's technology. Allot's third quarter was a good one. The company increased revenue by 36 percent to $14.7 million year-over-year.
Quarter-over-quarter revenue also increased, by 8 percent, marking the sixth consecutive quarter of sequential revenue growth. On a GAAP basis, Allot earned $0.03 per share, a nice improvement over a $0.10 loss in the third quarter of 2009.
But what I really like here is that the company ended the quarter with $56.2 million in cash and essentially zero debt. Allot is a play on the future growth of smartphones, and the near certainty that service providers will segment bandwidth in order to design service plans tailored to customer behavior.
What's more, this tiny company is a potential takeout candidate and management has shown an ability to orchestrate acquisitions in the past.
Top Stocks Paying Dividends In 2011:PepsiCo (PEP)
By Jim Stack
"PepsiCo (NYSE: PEP), my top pick for 2011, remains underrated by the market," says Jim Stack.
The money manager and editor of InvesTech Market Analyst suggests, "All too often, it’s viewed as a stodgy soft drink company, fully reliant on its namesake soda line. That's a misconception." Here, the sets the record straight.
"In reality, PepsiCo owns some of the most sought after brands in the world, including Gatorade, Tropicana, Frito-Lay, and Doritos. It does business in more than 200 countries worldwide, including key emerging market economies like China and India.
"Perhaps most important of all, it’s a growth company with analysts expecting long-term future earnings growth of 10-12% per year.
"In recent months, PepsiCo has taken another major step forward with the pending acquisition of its two primary bottlers – Pepsi Bottling Group and PepsiAmericas.
"The acquisition provides the potential to eliminate an estimated $500 million to $1 billion in redundant costs. If those cost savings are transferred directly to the bottom line, shareholders could see a significant increase in net income of 10% to 20%.
"Of perhaps even greater benefit, the purchase brings 80% of North American beverage distribution 'in-house.' This move will bring management one step closer to its final customers – injecting a level of flexibility into operations not often seen with a company of PepsiCo’s size.
"The acquisition further ties together the Pepsi story – a well run company with market leading growth positions and an attractive valuation.
"The executive suite neatly combines the beverage 'megabrands' such as Pepsi, Gatorade, Tropicana, and Mountain Dew with the world’s largest snack food company, Frito-Lay.
"Management then leverages these brands into international growth markets such as Latin America and Asia where sales volume increased more than 20% in 2008, and despite the most challenging world economy in decades, has seen high single-digit growth so far in 2011.
" On top of all this, Pepsi is currently trading at valuation levels not seen in 15 years. And although it’s a growth company, Pepsi still o?ers the dividend yield (3.0%) of a stalwart.
"Bottom line, Pepsi remains underrated by the market in general, and the bottler acquisition only enhances the company’s outlook."
Top Stocks Paying Dividends In 2011:United States Oil Fund
by John Nyaradi, editor Wall Street Selector
Oil prices have been on a roller coaster ride during 2010, and as we look ahead to 2011, "black gold" looms as one of the potentially most lucrative markets for investors around the world.
For bullish investors wanting to participate in this market, my top pick for 2011 is United States Oil Fund (USO).
Oil is a confusing market because the bulls argue that as the recovery in the United States and around the world gathers force, there will be growing demand for oil and energy.
On the other side of the argument, bears say that demand is still weak, global supply is high and unemployment will be an inevitable drag on the price of oil going forward. United States Oil Fund is an Exchange Traded Fund that tracks the price of West Texas Intermediate Crude Oil, "light, sweet crude."
It's a widely traded ETF with daily volume in the millions and widely used by both institutions and retail investors.
USO gives retail investors the opportunity to participate in the commodities markets without actually buying futures contracts directly.
The fund buys oil futures contracts, forwards and swaps and is organized as a limited partnership and so has some tricky tax implications that you need to understand before investing.
Almost everyone agrees that the long term outlook for energy prices is higher as the emerging markets build out and their demand for oil increase.
Short term trends are more challenging; commodity trading isn't for the faint of heart or unprepared and the same holds true for exchange traded funds that track commodities and commodity indexes.
However, oil is one of the largest and most important markets as energy makes the world go 'round; in 2011 oil could be a place to look for fast paced profits. Learn more about this financial newsletter at John Nyaradi's Wall Street Selector.
Top Stocks Paying Dividends In 2011:ImmunoGen (IMGN)
By John McCamant
"Out top stock pick for 2011 is ImmunoGen (NASDAQ: IMGN)," says biotech specialist John McCamant.
In his The Medical Technology Stock Letter, he explains, "The company’s potent cancer-cell killing antibodies were developed for targeted delivery to tumor cells.
"Specifically, IMGN’s TAP technology uses antibodies to deliver one of the company's proprietary cancer-cell killing agents specifically to tumors. These agents are 1,000 –10,000-fold more potent than standard chemotherapeutics and are designed to be attached to antibodies using one of the Company’s engineered linkers "IMGN’s lead drug candidate is T-DM1 which is Genentech’s Herceptin with the addition of IMGN’s powerful TAP technology.
"The company recently delivered positive Phase 2b data for TDM-1 in breast cancer patients that have failed all previous treatments. This positive data should allow the drug candidate to be filed for FDA approval in the first half of 2011.
"Adding to our enthusiasm is that Roche is also starting a single agent T-DM1 trial in adjuvant mBC, the biggest and most lucrative breast cancer market.
"This exceeds the expectations for most of Wall Street as they only expect sales for late-stage breast cancer, a much smaller market. We believe that Roche's ultimate goal is to gain approval of T-DM1 for all lines of HER2+ mBC, similar to Herceptin.
"In addition to T-DM1, five other compounds that make use of ImmunoGen’s TAP technology are in clinical testing.
"In addition to the company’s product pipeline, compounds utilizing the TAP technology are in clinical testing through IMGN’s collaborations with Genentech (a wholly owned member of the Roche Group), sanofi-aventis, Biogen Idec and Biotest.
"IMGN’s powerful platform technology is in itself a significant asset. In the past few years, there have been numerous premium buy-outs of companies that also have monoclonal antibody platforms.
"These buyouts have been sparked by the huge growth of anticancer antibodies such as Avastin, Rituxan, and Herceptin, all multi-billion dollar drugs.
"We believe there is a strong chance that someone steps up and buys IMGN at a premium in 2011 as they have what we believe to be the most attractive antibody platform available.
" T-DM1 is the cornerstone of IMGN’s value and is likely be approved by the end of next year.Additionally, the market for T-DM1 appears larger than expected and the most recent data represents a major transformative and de-risking event for IMGN.
"IMGN is poised to create significant shareholder value in 2011 which will either drive the stock price higher or result in a premium buyout."
Top Stocks Paying Dividends In 2011:Range Resources
by Geoffrey Seiler, editor Bullmarket.com
We have selected Range Resources (RRC), which is on our recommended buy list, as our top investment idea for 2011.
The natural gas producer recently posted a loss of 5 cents per share, versus a loss of 19 cents, a year ago. Adjusted EPS was 12 cents, topping the 10-cent consensus.
Cash ?ow from operating activities totaled $138.4 million, while cash how from operations before changes in working capital fell -18% to $140.8 million. Revenues rose 11% to $227.0 million. Natural gas, NGL and oil sales climbed 9% to $219.6 million, while natural gas, NGL and oil sales including all cash-settled derivatives declined -4% to $245.4 million.
As previously announced prior to earnings, Q3 production volumes rose 15%, and 7% sequentially, to an average of 503 Mmcfe net per day. Production was 77% natural gas and 23% natural gas liquids (NGLs) and oil.
The company said the growth came from its e"orts in the liquids-rich portion of the Marcellus Shale play in Pennsylvania, as well as the Midcontinent and Permian Basin regions.
The company drilled 78 net wells and 5 net recompletions in the quarter with a 99% success rate.
Realized oil, gas and NGL prices, after adjusting for realized cash-settled hedges and cash-settled derivatives, averaged $4.97 per mcfe for the third quarter.
This was generally below analyst estimates, and lower than the $6.35 per mcfe last year and $5.07 per mcfe for Q2.
On the hedging front, the company has 335,000 Mmbtu per day of natural gas production hedged at an average ?oor price of $5.56 and an average cap of $7.20. Meanwhile, it increased its hedge position for both 2011 and 2012. For 2011, Range has now hedged its natural gas position to 408,200 Mmbtu per day at an average ?oor price of $5.56 and an average cap of $6.48.
For 2012, Range has increased its natural gas hedges to 119,641 Mmbtu per day at an average ?oor of $5.50 and an average cap of $6.25.
In conjunction with its earnings announcement, Range also announced that it was putting up its Barnett Shale assets for sales. The assets include 53,000 acres with 360 producing wells that average approximately 120-130 Mmcfe per day. "Divesting of our Barnett Shale properties re?ects Range's strategy of focusing on per-share growth," CEO John Pinkerton said in statement. While a sale of our Barnett Shale properties will provide substantial capital, it will not inhibit our per-share production and reserve growth outlook. We currently anticipate that we can grow production and reserves in 2011 on both an absolute and per-share basis, despite losing the production and reserves associated with the planned sale."
BMO Capital analyst Dan McSpirit believes a sale could gross around $1.6 billion based on recent asset sales in the area.
Safe Dividend Stocks for an Unsafe Market
A Better Investing Strategy
After practically ignoring geopolitical events an pushing higher despite the unrest in Egypt, U.S. markets finally succumbed to heavy selling this week as protests in Libya and the Middle East erupted, and oil surpassed $100 per barrel. But there’s a much better way to manage your investments than by reacting to the latest headlines. You need a strategy that works in fair weather and foul, 365 days a year. It’s a strategy that can be summed up in two simple words: safe and cheap.
Our high-income experts have put together a list of top dividend stocks to buy that offer investors just that. The yields these steady stocks are throwing off can help to cushion your portfolio if the market continues to react negatively to world events or if the economy continues to struggle. And the recent sell-off is providing you a stellar opportunity to pick up these already discounted dividend stocks at an even cheaper price.
Here are your top dividend stocks for March:
In the past 12 months, low-risk Hormel Foods (NYSE: HRL), with a beta of 0.547, has outperformed the S&P 500 by 5.4 percentage points. When personal incomes drop, people strip out the luxuries — eating out less and trading down from ham to SPAM.
Personal income growth has slowed from a peak of 14% in July of 1981, to a sluggish 3.8% in December 2010. With continued 9% unemployment and millions of Americans out of work, don’t expect them to show up at Whole Foods looking for organics; expect them to be hitting classic American favorites like Dinty Moore, Saag’s, Hormel and SPAM.
My long-term trend chart shows Hormel reverting to trend. Buy before it does. Current yield: 3.8%.
Dividend Stock #2 – Nestle (NSRGY)
The envy of every other processed-food maker in the world, Swiss-based Nestle (OTC: NSRGY) boasts top-of-class manufacturing and marketing, as well as a widely diversified product line — from chocolates and cocoa to milk products (including ice cream), juices, coffees and teas, pasta, seasonings and frozen entrees.
The stock, a true long-distance thoroughbred, has more than doubled in the past 10 years, compared with a miserly 12% increase in the Dow. Yet NSRGY finds itself today about 8% below its December peak. You’re getting a rare discount on a premium franchise.
Buy NSRGY at $55 or less. Current yield: 3.5%.
Dividend Stock #3 – Pepsico (PEP)
More than just an all-American soft-drink company, Pepsico (NYSE: PEP) also produces snacks (Lays, Doritos) and breakfast cereal (Quaker Oats). Like most food makers, Pepsico has faced a margin squeeze lately, thanks to the steep run-up in commodity prices. Eventually, however, I’m confident PEP will manage to do what it has done ever since 1898 — raise prices enough on its finished products to recoup input costs.
Meanwhile, at 14 times estimated 2011 earnings, the shares are trading 35% below the valuation the fetched at the October 2007 market top. PEP also has a record of 38 annual dividend increases in a row. A stock this cheap should easily outpace the broad market indexes over the next 10 years — just as it has done over the past 10.
Buy PEP at $66 or less. Current yield: 3%.
Dividend Stock #4 – Cheniere Energy (CQP)
Cheniere Energy Partners LP (AMEX: CQP) is the operator of the largest liquefied natural gas (LNG) terminal in the United States. The company is striking more deals with new energy customers, setting up the eventual export of natural gas overseas.
The chart of CQP is very constructive, setting up for a big move higher on the next set of headlines.
Buy CQP up to $23. Current yield: 7.44%.
Dividend Stock #5 – Alexander & Baldwin (ALEX)
Alexander & Baldwin (NYSE: ALEX) operates in transportation, real estate and agribusiness industries in the United States. In the fourth quarter, container trade at the port of Long Beach, Calif., rebounded, and increased 24% compared to the year before. ALEX has added a second leg to its China-Long Beach Express route, to expand its position in container-trade shipping business. During 2010, ALEX recorded an 81% increase in its volume of China container shipping business compared to 2009.
My price chart shows ALEX’s powerful breakout above $40. Buy on that bullish signal. Current yield: 3.06%.
Dividend Stock #6 – California Water Service (CWT)
Water utility stock California Water Service (NYSE: CWT), which supplies water and related services in California, Washington, New Mexico and Hawaii, has increased its dividend for 44 consecutive years — even during the Great Recession of 2008, which hurt the Golden State more than most.
At 16 time estimated 2011 earnings, CWT is noticeably cheaper than competitor Aqua America (NYSE: WTR), which commands 24 times. The valuation gap could prompt WTR — or some other acquisitive party — to make a bid for CWT.
Buy CWT at $36.50 or less. Current yield: 3.4%.
Dividend Stock #7 – NuStar Energy (NS)
The fourth quarter was a breakout for NuStar Energy (NYSE: NS), with record-setting earnings and cash flows distributable to limited partners. NuStar’s storage facilities segment led the way, selling storage in 275 tanks across the United States and Mexico, with a combined capacity of 18.7 million barrels of petroleum and refined petroleum products. For comparison, that’s equal to a full day’s worth of U.S. consumption. After falling flat on its back in relative-strength terms, my chart shows NuStar picking up strength.
Buy NS at market. Current yield: 6.26%.
Dividend Stock #8 – Ship Finance (SFL)
Ship Finance International Limited (NYSE: SFL) recently reported fourth-quarter numbers that came in 5 cents short of estimates, but raised the quarterly dividend and provided a rosier outlook for 2011, sending its shares higher following earnings.
Global trade is rebounding, which, in turn, should provide stronger profits ahead for cargo operators. When a stock shrugs off short-term disappointment at the expense of a better-looking future, it pays to buy the shares.
Buy SFL up to $23. Current yield 6.95%.
After practically ignoring geopolitical events an pushing higher despite the unrest in Egypt, U.S. markets finally succumbed to heavy selling this week as protests in Libya and the Middle East erupted, and oil surpassed $100 per barrel. But there’s a much better way to manage your investments than by reacting to the latest headlines. You need a strategy that works in fair weather and foul, 365 days a year. It’s a strategy that can be summed up in two simple words: safe and cheap.
Our high-income experts have put together a list of top dividend stocks to buy that offer investors just that. The yields these steady stocks are throwing off can help to cushion your portfolio if the market continues to react negatively to world events or if the economy continues to struggle. And the recent sell-off is providing you a stellar opportunity to pick up these already discounted dividend stocks at an even cheaper price.
Here are your top dividend stocks for March:
In the past 12 months, low-risk Hormel Foods (NYSE: HRL), with a beta of 0.547, has outperformed the S&P 500 by 5.4 percentage points. When personal incomes drop, people strip out the luxuries — eating out less and trading down from ham to SPAM.
Personal income growth has slowed from a peak of 14% in July of 1981, to a sluggish 3.8% in December 2010. With continued 9% unemployment and millions of Americans out of work, don’t expect them to show up at Whole Foods looking for organics; expect them to be hitting classic American favorites like Dinty Moore, Saag’s, Hormel and SPAM.
My long-term trend chart shows Hormel reverting to trend. Buy before it does. Current yield: 3.8%.
Dividend Stock #2 – Nestle (NSRGY)
The envy of every other processed-food maker in the world, Swiss-based Nestle (OTC: NSRGY) boasts top-of-class manufacturing and marketing, as well as a widely diversified product line — from chocolates and cocoa to milk products (including ice cream), juices, coffees and teas, pasta, seasonings and frozen entrees.
The stock, a true long-distance thoroughbred, has more than doubled in the past 10 years, compared with a miserly 12% increase in the Dow. Yet NSRGY finds itself today about 8% below its December peak. You’re getting a rare discount on a premium franchise.
Buy NSRGY at $55 or less. Current yield: 3.5%.
Dividend Stock #3 – Pepsico (PEP)
More than just an all-American soft-drink company, Pepsico (NYSE: PEP) also produces snacks (Lays, Doritos) and breakfast cereal (Quaker Oats). Like most food makers, Pepsico has faced a margin squeeze lately, thanks to the steep run-up in commodity prices. Eventually, however, I’m confident PEP will manage to do what it has done ever since 1898 — raise prices enough on its finished products to recoup input costs.
Meanwhile, at 14 times estimated 2011 earnings, the shares are trading 35% below the valuation the fetched at the October 2007 market top. PEP also has a record of 38 annual dividend increases in a row. A stock this cheap should easily outpace the broad market indexes over the next 10 years — just as it has done over the past 10.
Buy PEP at $66 or less. Current yield: 3%.
Dividend Stock #4 – Cheniere Energy (CQP)
Cheniere Energy Partners LP (AMEX: CQP) is the operator of the largest liquefied natural gas (LNG) terminal in the United States. The company is striking more deals with new energy customers, setting up the eventual export of natural gas overseas.
The chart of CQP is very constructive, setting up for a big move higher on the next set of headlines.
Buy CQP up to $23. Current yield: 7.44%.
Dividend Stock #5 – Alexander & Baldwin (ALEX)
Alexander & Baldwin (NYSE: ALEX) operates in transportation, real estate and agribusiness industries in the United States. In the fourth quarter, container trade at the port of Long Beach, Calif., rebounded, and increased 24% compared to the year before. ALEX has added a second leg to its China-Long Beach Express route, to expand its position in container-trade shipping business. During 2010, ALEX recorded an 81% increase in its volume of China container shipping business compared to 2009.
My price chart shows ALEX’s powerful breakout above $40. Buy on that bullish signal. Current yield: 3.06%.
Dividend Stock #6 – California Water Service (CWT)
Water utility stock California Water Service (NYSE: CWT), which supplies water and related services in California, Washington, New Mexico and Hawaii, has increased its dividend for 44 consecutive years — even during the Great Recession of 2008, which hurt the Golden State more than most.
At 16 time estimated 2011 earnings, CWT is noticeably cheaper than competitor Aqua America (NYSE: WTR), which commands 24 times. The valuation gap could prompt WTR — or some other acquisitive party — to make a bid for CWT.
Buy CWT at $36.50 or less. Current yield: 3.4%.
Dividend Stock #7 – NuStar Energy (NS)
The fourth quarter was a breakout for NuStar Energy (NYSE: NS), with record-setting earnings and cash flows distributable to limited partners. NuStar’s storage facilities segment led the way, selling storage in 275 tanks across the United States and Mexico, with a combined capacity of 18.7 million barrels of petroleum and refined petroleum products. For comparison, that’s equal to a full day’s worth of U.S. consumption. After falling flat on its back in relative-strength terms, my chart shows NuStar picking up strength.
Buy NS at market. Current yield: 6.26%.
Dividend Stock #8 – Ship Finance (SFL)
Ship Finance International Limited (NYSE: SFL) recently reported fourth-quarter numbers that came in 5 cents short of estimates, but raised the quarterly dividend and provided a rosier outlook for 2011, sending its shares higher following earnings.
Global trade is rebounding, which, in turn, should provide stronger profits ahead for cargo operators. When a stock shrugs off short-term disappointment at the expense of a better-looking future, it pays to buy the shares.
Buy SFL up to $23. Current yield 6.95%.
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