Canadian Stocks For 2015: April 2014

Wednesday, April 30, 2014

Top Valued Stocks To Invest In 2015

Robert Olstein (Trades, Portfolio) is the chairman and chief investment officer of the Olstein Financial Alert Fund (OFALX). He is considered to be an expert in corporate financial disclosure and reporting practices.

A description of their investment philosophy can be found here.

Let�� take a look at his top three buys over the last quarter:

AT&T (T): This is a new holding for the fund. Olstein bought 146,000 shares at prices between $33.1 and $36.45. The current stock price is 33.01, i.e. a 5% to the average high-low price over the period. The stock has been in a bear trend for more than a year but counts Gurus James Barrow (Trades, Portfolio) and Brian Rogers (Trades, Portfolio) as biggest holders. AON (AON): The fund purchased 60,000 shares in the insurance company for a 0.75% impact to the portfolio. The stock is still trading at the upper bound of the high-low price ranges over the past quarter. Aon PLC provides risk management and human capital consulting services, delivering distinctive client value via risk management solutions, including insurance and reinsurance brokerage and workforce productivity solutions. It is also noteworthy that the stock saw a large insider buy of more than $2 million by one of the company�� director 10 days ago. International Game Technology (IGT): IGT is a global gaming company specializing in the design, manufacture and marketing of electronic gaming equipment and systems products. The Olstein fund added 246,000 shares of the company over the last quarter. The current price is at a 20% discount to the average of the price range over the period. It is noteworthy that Guru John Hussman (Trades, Portfolio) also bought 500,000 shares over the same period.
Also check out: Robert Olstein Undervalued Stocks Robert Olstein Top Growth Companies Robert Olstein High Yield stocks, and Stocks that Robert Olstein keeps buying

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Top Valued Stocks To Invest In 2015: Caterpillar Inc.(CAT)

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

Advisors' Opinion:

[By Rich Smith]
In this regard, Westport noted in its press release that it is collaborating with Caterpillar (NYSE: CAT ) to build next-generation LNG-powered locomotives, and expects to demo the first one in 2014.

Top Valued Stocks To Invest In 2015: Schlumberger N.V.(SLB)

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

Advisors' Opinion:

[By Monica Gerson]
Schlumberger (NYSE: SLB) is expected to report its Q1 earnings at $1.20 per share on revenue of $11.49 billion.

Danaher (NYSE: DHR) is estimated to report its Q2 earnings at $0.96 per share.
[By Tyler Crowe]
Even though the country has so much oil, it has struggled to keep up production growth and has asked for outside help. This week, Venezuela has signed financing deals with Chevron (NYSE: CVX ) , Schlumberger (NYSE: SLB ) , and Russia's Rosneft that will total $5.6 to expand production. The country hopes to increase production from 3 to 5 million barrels per day by 2015.
[By Paul Ausick]
Oilfield services giant Schlumberger Ltd. (NYSE: SLB) saw short interest rise 12.5% to 14 million shares, about 1% of Schlumberger�� float. The largest oilfield services company reported fourth-quarter results last week and posted higher EPS and revenues than it did a year ago.

Top Cheapest Stocks To Invest In Right Now: Dollar Tree Inc.(DLTR)

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

Advisors' Opinion:

[By ANUP SINGH]
Dollar Tree (NASDAQ: DLTR ) is among the most successful single-price-point retailers in the U.S. It operates more than 4,842 stores across 48 states in the U.S. and five Provinces in Canada. The chart below shows that the company has been performing consistently well over the past five years.
[By Rich Duprey]
Deep discounter Dollar Tree (NASDAQ: DLTR ) announced today that its current chief operating officer, Gary Philbin, will now also carry the title of president, a position previously held by company CEO Bob Sasser.
[By Brendan Byrnes]
Brendan: Not a problem at all. What about the surprising amount of dollar-store companies that are public? You have Family Dollar (NYSE: FDO ) , Dollar Tree (NASDAQ: DLTR ) , Dollar General (NYSE: DG ) . You mention, in particular, Family Dollar, which is the lowest market cap out of all of those, as doing the best, an exceptional company. Why?
[By Jon C. Ogg]
Deutsche Bank is making a change in its coverage of dollar store themes on Monday: Dollar Tree Inc. (NASDAQ: DLTR) was raised to Buy from Hold and Family Dollar Stores Inc. (NYSE: FDO)�was downgraded to Hold from Buy, but the price target was raised to $74 from $70.

Top Valued Stocks To Invest In 2015: Tupperware Corporation(TUP)

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

Advisors' Opinion:

[By Arie Goren]
After running this screen on May 21, 2013, before the markets' open, I discovered the following eight stocks: Sunoco Logistics Partners LP (SXL), Leggett & Platt Inc (LEG), Copa Holdings SA (CPA), RPC Inc. (RES), Tupperware Brands Corp. (TUP), Herbalife Ltd. (HLF), John Wiley & Sons Inc. (JW.A) and C.H. Robinson Worldwide Inc. (CHRW).

Monday, April 28, 2014

Pfizer bid just latest in series of industry…

Pfizer's $100 billion bid for AstraZeneca, the biggest and latest in a series of proposed big pharma mergers, makes sense for both drugmakers, but likely won't get done unless the offer is sweetened, analysts say.

Word of a possible merger between the British-based maker of cholesterol medication Crestor and New York-based Pfizer — marketer of erectile dysfunction treatment Viagra — propelled shares of both companies Monday. Pfizer rose 4.2% to $32.04, while AstraZeneca surged 12.2% to $77.01.

"The deal makes sense because the two companies end up quite a bit stronger,'' says Seamus Fernandez, manager director for Leerink Partners Equity Research. "But at the existing price, this is clearly not going to happen.''

An earlier Pfizer bid was spurned in January.

The latest cash-and-stock offer, worth about $76.60 a share, was rejected over the weekend. AstraZeneca said in a statement Monday that the latest offer "very significantly undervalued AstraZeneca and its prospects."

AstraZeneca is undergoing a major research and development re-organization to offset expirations of drug patents. It's also been reducing costs and attempting to boost productivity of research programs.

Merger mania has been sweeping the drug industry at its strongest pace since 2009, as cash-rich companies face slowing sales and rising costs and as blockbuster medications with expiring patents face competition from cheaper generics.

Earlier this month, Valeant Pharmaceuticals offered to buy Allergan in a deal valued at more than $45 billion, while Novartis sold and exchanged business units with Eli Lilly and GlaxoSmithKline. And Mallinckrodt bought Questcor Pharmaceuticals for $5.6 billion. On Monday, Forest Laboratories — which has been offered $25 billion by Ireland's Actavis PLC — said it would offer up to $1.5 billion for Furiex Pharmaceuticals.

Top 5 Construction Materi! al Companies To Watch In Right Now

Pfizer said it is confident of a deal with AstraZeneca. "We believe patients all over the globe would benefit from our share commitment to R&D, which is critical to the future success of the pharmaceutical industry, in the form of potential new therapies that help to fight some of the world's most feared diseases, such as cancer," Pfizer said in a statement.

Fernandez says Pfizer may have to sweeten the deal by another 15% to win approval, pushing what's already among the biggest ever bids for a drugmaker to nearly $115 billion.

Aside from synergies and cost savings, there can also be huge tax breaks. A post-merger Pfizer would remain headquartered in New York, but would have a holding company based in Britain, where lower corporate taxes would save billions of dollars.

"The longer-term benefits you get reincorporating Pfizer in the United Kingdom and its tax system are considerable,'' Fernandez says.

Consumers aren't likely to see higher prices. "The biggest distributors don't have meaningful overlap to drive up prices,'' he says.

Still, some warn that suitors nearly always overpay for their targets.

PFIZER: More on its AstraZeneca bid

FOREST LABS: $1.5B deal for N.C.-based drugmaker

"It goes through phases," says Sam Stovall, chief investment strategist for Standard and Poor's Capital IQ. At its highest points — as in the 1980s — companies seek to outdo each other in making massive purchases. "It really is keeping up with the Joneses," Stovall says.

At their best, deals can align a drugmaker's strengths with another's. At their worst, massive mergers become synonymous with failure, such as the disastrous AOL-Time Warner deal in 2000, which set an M&A record of $350 billion. The companies eventually separated.

Contributing: Associated Press

Saturday, April 26, 2014

A French Company Being Taken Over by a U.S. Rival

The industrial conglomerates sub-industry includes major players that operate in several markets and draw a majority of revenue from overseas demand. The current trend is to focus on countries with higher growth potential.

In this article, let's take a look at a company that serves customers in more than 100 countries and try to explain to investors the reasons this is an apparently appealing investment opportunity.

The Biggest Acquisition

General Electric Co. (GE) operates as an infrastructure and financial services company worldwide. This company sells products ranging from aircraft engines and gas turbines to consumer appliances, railroad locomotives, medical equipment, business and consumer financing, media content and industrial products.

General Electric is one of the largest technology and financial services corporations in the world. It focuses on units that make jet engines, locomotives and industrial equipment and shrinking the finance division, called GE Capital. The firm expects to have a "double digit" growth in the coming years in countries like China. Few months ago, General Electric announced the joint venture with China XD Electric Co., which is one of the world's biggest transmission equipment makers.

Top Consumer Service Stocks To Watch Right Now

Furthermore, yesterday we found on the news that General Electric will buy Alstom SA (ALO), the French builder of power plants and transmission gear. The deal could consist on the separation of Alstom's transport business, which manufactures high-speed TGV trains, to make easier the approval of the French government. A potential value for Alstom at about $13 billion would be about 25 percent more than its current market value. As a consequence, stock price surged as much as 18 percent in Paris, the biggest jump in the last nine years. General Electric will gain control of Alstom's technology for power transmission and power plant maintenance.

Relative Valuation, Earnings and ROE

In terms of valuation, General Electric sells at a trailing P/E of 20.9x, trading at a slightly premium compared to the industry mean. Earnings per share (EPS) have increased by 19.5% in the most recent quarter compared to the same quarter a year ago. This year, Wall Street expects an improvement in earnings ($1.7 versus $1.47).

In the next graph we include the stock price because EPS often lead the stock price movement. As we can appreciate in the chart, the price performance showed an interesting upward trend in the last five years.

Finally, I always like to see one of the most important financial ratios applying to stockholders, the best measure of performance for a firm's management: the return on equity. The ratio has slightly decreased from the same quarter one year prior. This is a clear sign of weakness within the company.

Let´s compare the current ratio with the peer group in the next table:

Ticker	Company Name	ROE (%)
GE	General Electric	10
MMM	3M Company	26.24
DHR	Danaher Corp.	12.08
CSL	Carlisle Companies Incorporated	12.46
PHG	Koninklijke Philips N.V	10.44
RAVN	Raven Industries Inc.	18.14

General Electric has a current ratio of 10% which is lower than all the comps: 3M Company (MMM), Danaher Corp. (DHR), Carlisle Companies Incorporated (CSL), Koninklijke Philips N.V (PHG) and Raven Industries Inc. (RAVN).

Final Comment

As outlined in this article, under the General Electric-Alstom deal, strong synergies are going to surge as well as a good fit in the company´s growth strategies. These conclusions make me feel bullish on General Electric.

I would recommend investors to consider adding the stock for their long-term portfolios. Manning & Napier Advisors, Inc., which is the only manager that has beaten S&P500 for consecutive 10 years, has taken long positions on it on the first quarter of 2014.

Disclosure: Victor Selva holds no position in any stocks mentioned.

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Friday, April 25, 2014

Dividends make retirement less daunting

Everyone knows the myth of Sisyphus, a Greek king sentenced to an eternity of being a metaphor for endless tasks like doing laundry, filling out insurance forms or saving for retirement. Sisyphus was sentenced to roll a boulder uphill for eternity, only to have it roll back down just before it hit the top.

One reason that saving for retirement seems, well, Sisyphean, is the enormous amounts of money that financial services companies tell us we must save — typically, 10% to 12% of our income, starting with our first job and ending with our perpetually postponed retirement date.

And there's good reason for saving a great deal for retirement, the primary one being that inflation will force you to take ever-larger withdrawals from your account. You can combat that problem with dividend-paying stocks: But here, too, it pays to start early.

Last week, we looked at the plight of Ralph Btzflk, the luckless retiree who started taking withdrawals from stocks just as the second-worst bear market in history began in March 2000. Ralph discovered that taking withdrawals from stocks in a bear market sends your balances tumbling downhill.

But Ralph had an additional problem, aside from timing: inflation.

Ralph had decided to withdraw $50,000 a year — the amount he figured he'd need for a comfortable retirement. But each year, Ralph's $50,000 would have a little less spending power, because of inflation. Even though inflation averaged 2.22% a year for the period, the effects of inflation are cumulative. By last March, Ralph's $50,000 withdrawal would have had the buying power of $31,000. In 2000 dollars.

Sooner or later, Ralph would have to increase his withdrawals to account for inflation, and that would deplete his retirement savings even faster. Because of inflation, financial planners typically recommend that your initial withdrawal be 4% of your retirement savings, assuming you intend to adjust your withdrawals every year for inflation.

Starting with such a low withdrawa! l rate will probably keep your retirement kitty purring through your 90s or longer. The problem, of course, is that it's a low withdrawal rate. To get $50,000 in income, you'll need to start with $1.25 million.

You can offset the effects of inflation in several ways. Several readers suggested cutting your spending, which is far easier to suggest to other people than to do yourself. And you can add some inflation-fighting investments to your portfolio, such as Treasury Inflation-Protected Securities, or TIPS, which rise in value in lockstep with the consumer price index, the government's main gauge of inflation.

But TIPS pay precious little in income, which is what most retirees are seeking. In fact, most things that retirees traditionally relied upon — money funds, bank CDs, Treasury securities, corporate bonds — pay relatively little in interest. (To get $50,000 in income from the average money fund these days, you'd need to start with $500 million.)

And this is why we come to dividend-paying stocks. Dividends are cash payouts from companies to shareholders. Currently, the average dividend yield of the Standard and Poor's 500 -stock index is 2.1%. This may not seem like much, but the S&P 500 without dividends would have turned $10,000 into $42,000 in 20 years. With dividends: $61,700.

The best part about dividends is that companies can — and do — increase them regularly. You may love your corporate bond to death, but you'll never get a boost in interest from it.

Standard and Poor's keeps a list of companies that have increased their dividend yields every year for the past 25 years — the Dividend Aristocrats. Companies that boost dividends consistently tend to have good financial strength. Wall Street likes a dividend cut about as much as it likes a cigar box packed with bees. Companies that increase their dividends, then, are tacitly saying that they don't plan to reduce those dividends.

One problem with the Aristocrats is that their yields aren't neces! sarily th! at high. If you're planning a permanent dividend hike, you want to make sure you won't raise the bar too high. So an Aristocrat such as Walgreen's has a 1.81% yield, and another Aristocrat like Johnson & Johnson has a 2.63% yield.

The ProShares S&P 500 Aristocrats ETF (ticker: NOBL), tracks the S&P Dividend Aristocrats index. It's too new to have a 12-month yield. But Vanguard's Dividend Appreciation Index ETF (VIG) follows the Nasdaq's dividend Achievers index, which requires a 10-year record of raising dividends. Yield: 1.9%.

Using a 10-year dividend record is fine, says Todd Rosenbluth, director of ETF research for S&P Capital IQ. "Anything that covers 2007-2009, when dividend cuts were popular, is good," he says. Companies that could raise their dividends through the worst bear market since the Great Depression are not only financially strong, but shareholder-friendly.

If you want higher yields, you might consider ETFs that follow the High Yield Aristocrats. These are the 50 or so companies in the broad-based S&P 1500 index that have raised their dividends for more than two decades. The SPDR Dividend ETF (SDY) tracks that index. Unlike Vanguard's offering, the SPDR Dividend ETF has a greater number of financial services stocks, particularly real estate investment trusts, Rosenbluth says.

Another favorite: Schwab Dividend Equity ETF (SCHD). While it has little exposure to financial stocks, it does have exposure to sectors that would benefit from a broad-based economic recovery, such as industrials and even technology, where dividends are becoming increasingly popular.

You should avoid companies with excessively high dividend yields. Companies don't offer fat yields because they're swell people who want to spread the wealth around. A dividend yield is the payout divided by the stock price. Most likely, companies with high dividend yields haven't hiked the payout: They have seen their stock price fall. In the most likely scenario, they will cut their di! vidend to! save money.

Dividends are just one part of a retirement investment strategy, but they're a key one. They won't entirely shield you from investing at the wrong time, or from inflation — but they'll help.

Thursday, April 24, 2014

Pentagon Awards 9 Contracts Worth $791 Million

Best Energy Stocks To Watch Right Now

The U.S. Department of Defense wrapped up the workweek Friday with the announcement of nine new contracts, worth more than $791 million in total. A series of tech firms took the big prize, a near-half-billion-dollar contract to revamp the U.S. Army's enterprise business systems. But there were smaller winners as well. Among them:

A joint venture between Europe's Thales and Raytheon (NYSE: RTN ) won an $83.5 million firm-fixed-price, multiyear contract to supply the Army with spare parts and components for its radar systems, and to make repairs thereon, on an as-needed basis. Northrop Grumman (NYSE: NOC ) was awarded a cost-plus-fixed-fee, multiyear contract worth up to $17.2 million to repair and calibrate certain "secondary items" in support of its Integrated Family of Test Equipment. IFTE is a series of systems used by the U.S. Army to test its electronic and electro-optic weapons devices, such as missile systems, vehicles, and aircraft. Lockheed Martin's (NYSE: LMT ) Space Systems unit won $9.6 million to install, test, accredit, certify, and deliver nuclear weapons security system equipment to U.S. Navy Installations. Optional extensions on this work could increase the contract's value to $10.9 million and extend the period for performance through March 31, 2016. General Dynamics' (NYSE: GD ) Bath Iron Works shipbuilding division won $7.5 million as a modification to a previously awarded task order for engineering and other "post-shakedown" work on the littoral combat ship it built, the USS Independence (LCS 2). General Dynamics is to complete this work by March 2014.

Wednesday, April 23, 2014

Faster Production Brings Boeing $965 Million 1Q Profit

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Earns Boeing Reed Saxon/AP Boeing's increased rate of commercial jet manufacturing is starting to pay off for shareholders. In the first three months of this year, 161 new airplanes rolled off the company's assembly lines -- more jets than the same period last year. That increased rate contributed to a $965 million profit for Chicago-based Boeing (BA) post in the first quarter. The net income was actually down 12.7 percent from last year's $1.1 billion first quarter profit, but that is because Boeing took a $330 million accounting write-off related to changes in its retirement plans. The company also noted that its 2013 earnings were inflated by a one-time research and development tax credit. Net income per share dropped to $1.28 from $1.44 during last year's first quarter. But adjusted to exclude the write-off, earnings were $1.76 a share, beating the estimate of $1.56 a share from Wall Street analysts surveyed by FactSet. Shares rose 2 percent to $130.15 in premarket trading. The company reported $20.47 billion in revenue, more than the $20.15 billion expected by Wall Street. That's up 8 percent from the $18.9 billion in revenue during the same period last year. Revenue at Boeing's commercial plane unit rose 19 percent. The business grew thanks to increased production rates on its 737 manufacturing lines. In April, the 737 program reached a production rate of 42 a month. Boeing hopes to increase that to 47 airplanes a month in 2017 to help feed a worldwide demand for the narrow-body jet. The company's much delayed 787 Dreamliner also showed progress, reaching a production rate of 10 a month -- although only 18 were delivered during the first quarter. Still, that's a major improvement over last year, when only one Dreamliner was delivered due to a worldwide grounding of the fleet over concerns about its lithium-ion batteries catching on fire. Boeing has backlog of 5,100 airplanes on order with a combined book value of $374 billion. On the defense side, revenue fell 6 percent and Boeing lowered its full year revenue guidance for military aircraft to $14.2 billion, down from $15 billion. Its global support and services revenue is expected to climb, however, from $7.8 billion to $8.6 billion. Both changes reflect a realignment within the defense unit. Boeing also repurchased 19.4 million shares for $2.5 billion during the first quarter.

Monday, April 21, 2014

3 Undervalued Companies to Watch This Week

NEW YORK (TheStreet) -- Earnings should be a key driver of any fundamental valuation. This week, a large number of companies will be releasing their quarterly earnings results. Here are three companies found to be undervalued by the ModernGraham valuation model and suitable for either the defensive investor (one who is not willing to undertake substantial research) or the enterprising investor (one who is willing to undertake substantial research).

Freeport-McMoRan Copper & Gold (FCX) is set to release its earnings premarket Thursday, and according to its latest ModernGraham valuation, the company does not pass the requirements of the defensive investor, as it has not consistently paid dividends over the last 10 years, and it has not shown earnings stability over the last 10 years. But it does pass the requirements of the enterprising investor, though it has a higher level of debt relative to current assets than the investor type likes to see.

From a valuation perspective, the ModernGraham valuation is affected significantly by the large earnings loss in 2008, which has caused the EPSmg (normalized earnings) -- EPSmg is a 5 year weighted average of the annual earnings per share figures -- figure for 2009 to be very low in relation to 2013. As it stands, the EPSmg have grown from a loss of $1.67 to a gain of $3.48, indicating a high level of growth that would appear to significantly outpace the market's implied estimate of 0.45% earnings growth. This has led the model to return an intrinsic value estimate that is well above the market price, and the overall result that the company is undervalued is supported by the valuation based on only 3% growth. If the company can demonstrate earnings greater than cents for the first quarter, this valuation should be even better.

FCX Chart

FCX data by YCharts

Gannett (GCI) is scheduled to release its earnings premarket Wednesday, and in the latest ModernGraham valuation, the company was found to be suitable for Enterprising Investors, after having passed every requirement of the investor type except the debt to current assets requirement. The company does not qualify for defensive investors, however, because of the current ratio being too low, and the lack of earnings stability or sufficient growth over the 10 year period. From purely a valuation standpoint, the company appears undervalued, after growing EPSmg (normalized earnings) from a loss of $6.63 in 2008 to a gain of $1.94 for 2013. This level of growth significantly outpaces the market's current implied estimate of growth (2.70%), and the ModernGraham valuation model indicates a value around $74. If the company beats 44 cents, this valuation will be even higher.

GCI Chart

GCI data by YCharts KLA-Tencor (KLAC) will be releasing its earnings on Thursday after the market closes and according to the latest ModernGraham valuation, it is suitable for the enterprising investor, but is not suitable for the defensive investor. The company has shown insufficient earnings stability and trades at a PB ratio too high for the defensive investor; however, the company passes all of the enterprising investor's requirements. From a valuation side of things, the company appears to be significantly undervalued after growing its EPSmg (normalized earnings) from 45 cents in 2010 to an estimated $3.65 for 2014. This level of demonstrated growth outpaces the market's implied estimate of 4.81% earnings growth and leads the ModernGraham valuation model to return an estimate of intrinsic value that is well above the market price. If the company can beat $1.07 for the quarter, the valuation will improve further.

KLAC Chart KLAC data by YCharts

At the time of publication the author held no positions in any of the stocks mentioned. This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Stock quotes in this article: KLAC, FCX, GCI

Sunday, April 20, 2014

FTSE Shares That Plunged This Week

LONDON -- What a week the FTSE 100 (FTSEINDICES: ^FTSE ) has had! In line with most of the world's stock markets, the index of top U.K. stocks plunged on Thursday on news that the Federal Reserve is likely to start winding down its quantitative-easing policy later this year. The index crashed 189 points on the day of the announcement and slipped a further 43 points on Friday to end the week at 6,116, down 3%.

It was pretty much carnage across the whole of the index over the week. Here are four notable fallers.

Barclays (LSE: BARC )
Britain's banks were also hit by a report from the Prudential Regulatory Authority, which revealed a shortfall of 27.1 billion pounds in capital funding requirements across the sector. Barclays, short by 3 billion pounds, was hard hit, with its share price losing 13 pence (4.4%) on the day of the announcement, and 16 pence (5.4%) over the week, to end at 282 pence. Barclays says it is confident it can exceed the required 7% Tier 1 ratio by the end of the year.

Anglo American (LSE: AAL )
The hard-hit mining sector was again punished, as any let-up on economic stimulus is likely to hit demand for commodities. One of the biggest fallers this week was Anglo American, whose price dropped by a further 74 pence (5.2%) to 1,352 pence over the week. After a steady slide since the start of the year, shares in the diversified miner have now slumped by more than 30% over the past 12 months. Still, forecasts put Anglo American at a P/E of just 10, so could there be a recovery bargain there?

Burberry (LSE: BRBY )
Designer fashion firm Burberry had another poor week, with its price falling 80 pence (5.8%) to close at 1,290 pence. Having soared over the past five years with sales to the Asia Pacific region, particularly China, growing strongly, the stock has faltered of late as economic growth in the People's Republic starts to slow. Overall, the Burberry price has had an erratic year, and it is just in negative territory over the past 12 months while the FTSE 100 has gained 12%.

G4S (LSE: GFS )
Security company G4S is our fourth loser this week, sliding 9.8 pence (4.1%) to a 52-week closing low of 232 pence. The firm famously ran into problems over its London Olympics security contract, and in more recent drama at the end of May, CEO Nick Buckles stepped down to be replaced by Ashley Almanza. The G4S price is now down 26% from the year-high of 315 pence set on April 23.

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Saturday, April 19, 2014

Did Sony Just Save GameStop Stock?

GameStop's (NYSE: GME ) stock has undertaken an incredible rise over the past year, shooting up more than 83%. While investors have profited, however, this company has faced threats to its present and future. The video gaming industry has turned down as current-generation consoles show their age, and while next-generation consoles in Microsoft's (NASDAQ: MSFT ) Xbox One and Sony's (NYSE: SNE ) PlayStation 4 are set to be released later this year, even bigger challenges for this stock have arisen.

Microsoft's console won't block used game sales as earlier rumors had predicted, but the company has promoted a digital future for its games that could circumvent GameStop's reliance on the used games markets. All eyes turned to Sony on Monday at this year's Electronic Entertainment Expo, or E3, where the company was set to release new details about the PS4. Did Microsoft's rival take a similar action and pound another nail into GameStop stock's future?

Sony rides to the rescue
Sony released a number of details about its PS4 on Monday, but a few points hit home for GameStop investors. The company statedthat the device will support used games, much as Microsoft did, but Sony made an important distinction from its rival. The company announced full support for trading, lending, or reselling games, without releasing any sort of restrictions. Furthermore, Sony said that the PS4 won't have any sort of online verification system like Microsoft's Xbox One, which requires games to be connected to the Internet once every 24-hour period in order to continue working.

Why are these details such a big deal? Although Microsoft announced a murky support for used games, the company released stipulations: Customers can only lend each individual game out once and can only do so to others who have been on their online "friends" list for at least 30 days. Additionally, game publishers can choose to add in fees or other terms in regards to loaning out their games. All of that hurts GameStop's future with Microsoft's Xbox One.

Sony's announcement came as a breath of fresh air for GameStop. While the company could certainly release restrictions at a later date while not in the spotlight of E3, as for now, Sony's used games model is little more than a rehash of the current video game economy. That's appealing to change-averse customers looking to upgrade to the next generation with a minimum of adaptation, and maintains the environment that provides the foundation of GameStop's business.

Nintendo (NASDAQOTH: NTDOY ) has struggled mightily with its newest console, the Wii U, but its latest product also supports used games. That gives GameStop a route to continue its current business with two of the three major consoles of this next generation. However, investors shouldn't count on Nintendo being a huge player in the future once Microsoft and Sony launch their new systems. The Wii U sold just 75,000 consoles in April, a double-digit fall from March. Worse, the console, released just last year, sold less than half the number of Xbox 360s or PlayStation 3s sold during the month -- and each of those consoles are at least six years old.

Unless Nintendo releases something mind-blowing soon, the battle for next-generation dominance will be between Sony and Microsoft.

Microsoft's policies will certainly crimp GameStop's sales of Xbox One games, but Sony chalked another point in the retailer's favor on Monday. Microsoft and Sony are locked in a tight battle for next-gen sales, and Sony's announcement that it will price the PS4 at $399 -- a full $100 below the Xbox One's price -- will win over a fair share of consumers. Any lead the PS4 gains over the Xbox One will indirectly help GameStop's own sales.

GameStop's not safe yet
Does that make GameStop a safe stock? Hardly. The company will still face major pressure from Microsoft's attempt to pivot away from used games. GameStop's sales will see a boost from new console sales late in the year, but that excitement will die down as the market becomes more familiar with the PS4 and the Xbox One over the long-term.

Additionally, the company's been unable to turn to mobile and digital sales as a pillar of its financial foundation. While such sales grew more than 21% last year, they still sharply trail game software and hardware sales as a portion of the company's total revenue. Even if GameStop manages to continue driving its mobile and digital business higher, it's hard to see that overcoming potential losses from Microsoft's push against used games.

That's all assuming Sony doesn't release any restrictions on used games between now and the release of its PS4. If it does, this stock's in even deeper trouble.

For now, Sony's E3 announcement breathed a little life back into this stock, but GameStop's future isn't secure just yet. The stock's recent run-up doesn't look sustainable with a cloudy future before it, and the company will have to count on Sony sticking to its commitment to used games. If you're looking to invest in the video game market, GameStop is anything but a risk-free pick.

Is Microsoft losing the battle for next-gen sales?
Sony's announcements offered another source of frustration for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

Friday, April 18, 2014

Longleaf Partners Q1 2014 Shareholder Letter

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Wednesday, April 16, 2014

Is Altisource Portfolio Solutions Going to Burn You?

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

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

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

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

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

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

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

Watching the trends
When that red line (AR growth) crosses above the green line (revenue growth), I know I need to consult the filings. Similarly, a spike in the blue bars indicates a trend worth worrying about. Altisource Portfolio Solutions's latest average DSO stands at 59.9 days, and the end-of-quarter figure is 66.1 days. Differences in business models can generate variations in DSO, and business needs can require occasional fluctuations, but all things being equal, I like to see this figure stay steady. So, let's get back to our original question: Based on DSO and sales, does Altisource Portfolio Solutions look like it might miss its numbers in the next quarter or two?

Investors should watch the top line carefully during the next quarter or two. For the last fully reported fiscal quarter, Altisource Portfolio Solutions's year-over-year revenue grew 7.0%, and its AR grew 75.3%. That's a yellow flag. End-of-quarter DSO increased 62.0% over the prior-year quarter. It was up 13.9% versus the prior quarter. That demands a good explanation. Still, I'm no fortuneteller, and these are just numbers. Investors putting their money on the line always need to dig into the filings for the root causes and draw their own conclusions.

Add Altisource Portfolio Solutions to My Watchlist.

Tuesday, April 15, 2014

Will â€˜Mad Menâ€™sâ€™ Split-Season Finale Approach Hurt it in the Long Run?

Nobody likes a long goodbye, but apparently nobody told the folks at AMC (NASDAQ: AMCX ) . The network's plan for an elongated final season of Mad Men got off to a rough start Sunday night ... which begs the question, are audiences still "mad" for Men?

Plunge

(Credit: AMC)

The numbers speak for themselves. The first of the final Mad Men episodes was viewed by only 2.3 million viewers, the lowest-watched premiere since season two in 2008. The comparison numbers are just as striking -- last year's opener had 3.4 million viewers, the largest premiere of the show's run.

It wasn't just Mad Men. Other Sunday night cable fare also struggled: lead-in Turn slipped to 1.9 million (down 200,000 week to week) and cable rival Silicon Valley fell to 1.7 million (down 300,000 week to week). While those declines are a little frightening for second-week swings, they were expected. Yet perhaps the scariest part is how close those numbers now are to Mad Men's own ratings. Normally there's a bigger separation, even if it's not a whole lot more.

To be fair Mad Men was never the ratings grabber The Walking Dead has become, but for a show entering its final season, it's a little shocking. Of course that 2.3 million doesn't count encore boosts (which ups the total to 4.4 million) or time-shifted viewing, but that's a nearly 30% drop (live viewing) season to season.

Split reaction

(Credit: AMC)

So why did the numbers fall and what does it mean? Let's start with the why. One of the prevailing theories is that audiences aren't fans of executives' decision to split the final season into two and may just wait to binge-watch the entire thing over the summer.

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You can point to the success of splitting Breaking Bad's last season as a reason for the move, but remember Bad was essentially forced into that split because of all the money was being poured into keeping Mad Men on the air.

The Men decline though shows audiences have gotten smarter and their viewing patterns are changing. Smart viewers know Mad Men still has another batch of episodes next year and they won't buy into this whole "the final season" buildup because they know it will come around again this time next year.

Quality control

Another element that helped Breaking Bad was the series had a "must watch live" appeal. This was a show where characters were going to die and you didn't want to go into work the next day and NOT have seen the episode. Mad Men doesn't regularly dispatch characters, which makes it a lesser priority to some viewers.

Truthfully you can't hold that again Mad Men as this is an entirely differently paced show and that timing (usually) works for it. Plus as easy as it is to want to point the finger at Mad Men's perfectionist creator Matthew Weiner for the split-season structure, it's not his fault. Reportedly the network approached him with the idea to split the season; it just so happen to work out that there was a natural breakpoint.

It's also important to note that to Weiner's credit (and despite what some critics have said), the show's quality hasn't suffered over the last few seasons as season 4's The Suitcase, season 5's Commissions and Fees, and last year's For Immediate Release are among some of the show's finest hours. Even if you disagree with AMC's strategy you have to respect Weiner, who meticulously crafts every aspect of the season and pours everything he has into the series.

Emmy fever

That brings up the Emmys. Simply put, Breaking Bad was split into two runs to allow time for producers to bring the show to a proper conclusion; Mad Mad was split into two runs to keep AMC in the awards race.

Academy voters are notorious for playing favorites and then casting aside their "chosen" ones for a shiner new toy. Two years ago voters shunned the then four time defending champ Mad Men for Homeland and last year Homeland got shelved for Breaking Bad. While voters have returned to shows during their final runs (i.e., The Sopranos), that's not a hard-and-fast trend and voters could be just as ticked off by the split-season approach and snub the show altogether.

For as good as the Emmys have been to Men with series win and writing/directing victories, the show has never won an award for any of its acting. This is an amazing ensemble headlined by Jon Hamm and full of respected and talented vets like John Slattery and Robert Morse...to not have rewarded any of them is questionable. In many cases, it's likely because all of their performances split the votes, but this new wrinkle won't help.

Personally I've always had a lot of respect for AMC and what its executives have accomplished. To go from a network airing old movies to a major powerhouse of top-notch original programming in such a short period of time is no small feat, but they have made a few missteps here and there...and this could down as one of them.

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Monday, April 14, 2014

Surprising Court Victory For EWâ€”But Legal Wrangling Remains: Analysts

Shares of Edward Lifesciences (EW) were climbing as high as 15% in Monday morning trading, after a federal court late Friday sided with the firm in its patent infringement lawsuit against Medtronic (MDT). The decision stipulated an injunction against the sale of Medtronic's Transcatheter valves, although the firm plans to appeal the ruling. (Medtronic, by contrast, was falling 4.2%.)

Analysts were weighing in on the decision today. Canaccord Genuity's Jason Mills and Jeffery Chu reiterated a Buy rating and $84 price target on the stock, calling the court victory surprising and important:

While we believe EW has a better chance than we previously thought of being granted a permanent injunction against MDT, we still expect EW to ultimately cash in via other forms of equitable relief in lieu of a final injunction: (1) lump-sum future damages; and (2) continuing royalties. Importantly, none of these potential outcomes are factored into our forward model.

What's more, EW will have at least one more shot at winning further concessions from MDT, as EW filed a motion seeking a permanent injunction against MDT following a mid-January finding that MDT willfully infringed EW's Cribier TAVR patent. A jury awarded EW $393M at that time in this case. We had expected this award to be tied up in appeals for several years; however, EW could use its increased leverage to push MDT to pay sooner.

Stifel Nicolaus's Robert Wise and his team were more cautiously positively: While maintaining a Buy rating and $75 price target on the stock, they note that they don't want to adjust their numbers, as the saga of appeals and counterappeals will likely drag on through the court system for some time (although, if upheld, they note that Friday's victory would help Edward LIfesciences maintain greater-than-expected market share).

Their thoughts on the two names:

MDT Next Steps: Seeking Emergency Stay and Decision Appeal.Medtronic will seek an emergency stay in the Delaware courts — the judge hearing the stay request is not the same judge (Judge Sleet) that rendered the PI judgment. If the request for an emergency stay is rejected, the injunction will be enforced by the end of the week. The process of appeal will likely take 12-24 months. In parallel with the appeal, MDT and EW are expected to negotiate carve-outs whereby CoreValve will be made available to certain patients sub-sets that are not adequately addressed by Sapien.

EW: Early But Important Legal Win. Factors that we expected to play into the decision on CoreValve carve-outs include: different valve labels, sizes, and delivery approaches and the likely “near-term” XT approval. On one hand Sapien has no 29MM valve, therefore patients with larger size annulus will need CoreValve. Complicating the negotiation is that EW has both a high risk and an inoperable indication vs. MDT’s extreme risk label alone. Also, the lack of a 29MM Sapien valve would be obviated with XT approval. We would expect EW to err on the side of generosity to not lose the PR battle and alienate doctors and patients.

As for Medtronic, Citigroup's Matthew Dodds and Nicholas Nohling maintained a Buy rating and $71 price target. They too found the decision a surprising one, as they had thought an injunction would be very unlikely.

Their thoughts:

There is Room for Carve Outs, But No Specific Mechanism – As part of the public interest component of the decision, Judge Sleet is allowing for "carve out" usage of Corevalve in existing centers (no new centers can be trained) and as part of ongoing clinical trials. While MDT and EW were ordered to immediately enter into discussions on potential carve outs, there is no specific mechanism in place to get an agreement done – only a hearing set for 5/21. We believe that this means if an emergency stay is not granted, the company will have to cease all US Corevalve sales until an agreement occurs.

MDT's Move to Stay the Injunction Makes the Decision Messy – MDT will file a motion to the Delaware Federal Circuit Court of Appeals to stay the injunction. This is expected to go in front of a 3-judge panel and while there is no guarantee on timing – a stay till 4/22 was granted for this filing – MDT believes the odds are high a ruling will occur within time. As we noted above, the lack of a mechanism to come to an agreement on carve outs should aid MDT's case.

Worst Case Scenario is $0.06 EPS Hit in F2015, $0.08 in F2016 – The Andersen patent is currently extended to 5/15 and a final PTO ruling could take the patent to 3/16. If we assume MDT is completely off the US market until 4/16, our sales forecast would drop by $160MM in F2015 and $225MM in F2016 (it's likely too late for this ruling to have any impact on F2014). Assuming a 50% incremental OM contribution and a 30% tax rate, we arrive at a $0.06 EPS hit in F2015 and a $0.08 hit in F2016 which would represent just a 1% and 2% hit to our EPS forecasts, respectively, which would suggest a roughly $1 decline in the stock based on our valuation of 16x 2015E EPS.

Sunday, April 13, 2014

Is This Netflix's iPhone 5 Moment?

Yesterday's debut of Arrested Development will surely be a big winner for Netflix (NASDAQ: NFLX ) . The leading video service has a couple of advantages here that it lacked in its three earlier forays into first-run exclusive content.

For starters, Arrested Development already has a built-in audience. That's a slam-dunk for Netflix. Even with the star power of Kevin Spacey and David Fincher for February's House of Cards, there was always a question of whether folks would tune in. People didn't know those characters. Lots of people know the Bluth family.

Another major advantage Netflix has -- and this is something that only Netflix has -- is that it knows the cult fave's growing popularity better than anyone else. It's been streaming the first three seasons for a long time. It knows viewership trends. It knows whether the folks who watch stick around more than those who don't. It knows what other shows they watch, making other connections to arrive at folks who will probably be fans in the future.

Everything is falling into place before we even get to the first wave of reviews of the actual quality of the fourth season. All is good at Netflix after its shares more than quadrupled since bottoming out last summer.

But what if Arrested Development is its iPhone 5 moment?

Most investors know that Apple (NASDAQ: AAPL ) stock peaked at $705.07 late last year. It has shed a brutal 37% of its value since then, even as consumer tech stocks have been generally rallying. What most investors don't know is that Apple's stock hit that high on the morning of Sept. 21, 2012 -- the day the iPhone 5 hit retailers.

Is Netflix another "sell on the news" investment? Will the big gains that have been building ahead of a highly anticipated event -- the iPhone 5 for Apple last September, and Arrested Development for Netflix now -- get wiped out after the catalyst has run its course?

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Probably not.

The downside of upside
It certainly wouldn't be a surprise to see Netflix take a breather here. The stock has had a huge run since last summer, and we're now two months away from the next likely upside catalyst, when the company turns in what should be another strong quarterly report in late July.

However, there's little reason to expect an Apple-esque collapse here. Margins and analyst estimates have been heading lower at Apple in recent months, and the exact opposite is happening with Netflix.

Two months ago, analysts thought Apple would earn as much this fiscal year as it did in fiscal 2012. Now those same pros don't even see Apple earning as much in fiscal 2014 as the consumer-tech giant earned last year. Netflix estimates are going in the other direction.

Apple's iPhone 5 peak came when an onslaught of competition was on the way. New Android, Windows, and even BlackBerry devices have blurred the marketplace. Netflix, on the other hand, has no real competitor. There's no other service approaching a billion hours of streamed content, and Netflix's lead will continue to grow as it keeps parlaying the revenue being generated by more than 33 million global subscribers into more licensing deals.

That doesn't mean Netflix investors can rest easy. The stock could take a hit from these heights based on valuation concerns. Apple was never expensive by valuation metrics. It was the graying fundamentals that tripped it up. Netflix isn't exactly cheap these days, even if you back out the operating losses overseas.

However, until we can see the ceiling for Netflix's model -- and we don't appear to be there just yet -- it would be premature to expect a post-Arrested Development collapse. A correction? Sure. A full-blown Bluth calamity? No way.

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Saturday, April 12, 2014

Marriott's loyalty program ranks No. 1

Marriott's frequent-guest program ranks No. 1 among hotel loyalty programs, shows a new consumer survey released Friday.

Marriott Rewards received an overall customer satisfaction score of 707 on a 1,000-point scale, according to the first hotel-program survey by market research company J.D. Power.

Consumers like Marriott's program because, among other reasons, it includes thousands of hotels that "provide a lot of opportunity to earn and redeem points," and there are no blackout dates when redeeming points for free rooms, says J.D. Power's Rick Garlick.

Marriott has more than 3,900 hotels affiliated with 18 brands.

The online survey, which was sent by e-mail March 11-25, ranks 15 hotel loyalty programs and is based on responses of more than 3,800 consumers who are in at least one loyalty program.

Customer satisfaction was measured by five factors: loyalty account maintenance/management; ease of redeeming points/miles; ease of earning points/miles; reward program terms; and customer service.

InterContinental Hotels and Resorts' IHG Rewards Club ranks No. 2, and Delta Hotels and Resorts' Delta Privilege program is No. 3.

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John Muehlbauer, InterContinental's loyalty programs director, says the ranking is "a reflection" of the hotel chain's work to provide what IHG Rewards members want.

Last year, the program announced free Internet service for all members at all hotels — "an industry first," he says. The program also provides a free night at more than 70% of the chain's hotels for 20,000 points or less, he says.

The Best Western Rewards program scored lowest of the 15 programs with 635. The second-lowest score was Hyatt Gold Passport's 638.

The low scores don't indicate that Best Western and Hyatt are poor programs, Garlick says.

"It just shows the competitive nature of! the loyalty program landscape," he says.

Garlick says the Best Western Rewards program ranked No. 2 behind Marriott in a U.S. News & World Report analysis last year.

Best Western did not comment about the J.D. Power survey.

Hyatt spokeswoman Stephanie Sheppard says the Gold Passport program "is committed to providing value for its members." They value "the numerous in-hotel benefits and the personal care that they experience at our hotels and resorts around the world."

The J.D. Power survey revealed that the largest percentage of hotel guests — 43% of survey respondents — became aware of the loyalty programs from a hotel employee during check-in or check-out. Twenty-five percent became aware of them at hotels' websites.

Recommendations of friends and family play an "important role" in selection of loyalty programs, J.D. Power says. Nearly one-fifth of survey respondents said such a recommendation was why they joined.

Friday, April 11, 2014

Ketchumâ€™s WSJ Comments on SRO Defeat Arenâ€™t the Final Words, Watchers Say

Comments made by Richard Ketchum, CEO of the Financial Industry Regulatory Authority, to The Wall Street Journal Thursday that FINRA has “done the Sisyphus climb” to be given authority over investment advisors, and that FINRA doesn’t “perceive any likelihood that [such SRO attempts] would be successful” seemed to signal a new declaration of defeat by Ketchum.

But industry officials opine that Ketchum was merely addressing the lack of support in the current Congress for FINRA to become the self-regulatory organization for advisors, and that FINRA will indeed assess Congress’ appetite for such support in future legislative sessions.

Industry watchers keyed on Ketchum’s comment in the WSJ article that FINRA isn’t pursuing being the SRO for advisors “at the present time.”

“I think most folks watching this [SRO] issue would say it’s dead in this Congress,” says Duane Thompson, senior policy analyst at fi360. “Ketchum’s qualifying statement, ‘at the present time,’ suggests that the time may not be ripe for an SRO bill to advance this year in Congress, but that in future legislative sessions FINRA will continue to closely monitor the mood of Congress and its appetite for a new advisor SRO.”

Neil Simon, vice president for government relations at the Investment Adviser Association, agrees. “By stating that FINRA is not pursuing efforts to gain authority over advisors ‘at the present time,’ it is evident that FINRA has not abandoned its long-sought goal of extending its regulatory reach to advisors.”

Although FINRA may not be “actively lobbying on Capitol Hill right now,” Simon adds, the self regulator “is in for the long haul and it’s only a matter of time before they’ll be back.”

Ketchum told the Journal that Congress should provide the SEC with the resources necessary to boost advisor exams. The SEC has said it now can examine investment advisory firms once every 10 years on average. Ketchum told the Journal that scant oversight "creates issues from the standpoint of everything from classic Ponzi schemes to abuse."

Chris Paulitz, senior vice president of membership and marketing at the Financial Services Institute, adds that “as we have said for two years, Rick is right, and there is no political consensus on how to allocate greater resources towards increased investment advisor examinations.”

SEC Chairwoman Mary Jo White said in late March that there was “a crying need” for more resources to help the agency boost its examination of the nation’s investment advisors, and the agency has asked Congress for more money to do so.

Thursday, April 10, 2014

Fed Minutes Show Extended Debate on Rate Guidance

Federal Reserve Board Holds Open Meeting As Banks Get Two More Years to Meet Volcker CLO Standards Andrew Harrer/Bloomberg via Getty ImagesFederal Reserve Chair Janet Yellen WASHINGTON -- The Federal Reserve struggled last month over how to convey to investors the pace at which it will raise short-term interest rates once it increases them from record lows. Two weeks before the Fed's regular meeting March 18-19, it held an unusual and previously unannounced videoconference to debate the issue, according to minutes of the meeting released Wednesday. In the end, the Fed settled on an open-ended approach: That even after employment and inflation are nearly back to normal, short-term rates may need to stay unusually low for a while because the economy isn't fully healthy. Stock and bond investors read the minutes to signal that the Fed plans to favor low short-term rates longer than many had assumed. Stocks rose sharply after the minutes were released, and bond yields fell. The Dow Jones industrial average, which had risen modestly before the minutes were released, was up 154 points 30 minutes later. Investors have been intensely following the Fed's guidance on rates because higher short-term rates would elevate borrowing costs and could hurt stock prices. The minutes covered the first Fed meeting at which Yellen presided as well as the March 4 videoconference. At both sessions, the issue of the language the Fed uses in its statements to signal the timing of future policy actions was a topic of extended debate. The Fed has kept its key short-term rate at a record low near zero since December 2008. It made no change to that rate at the March meeting. But it dropped language from its statement that had previously said this rate would likely remain low "well past" the time unemployment fell below 6.5 percent. Instead, the Fed said it would review a "wide range of information" before starting to raise rates. It repeated language that it expected to keep rates low for a "considerable time" after it stops buying bonds. Also at the March meeting, the Fed approved another cut in its monthly bond purchases of $10 billion to $55 billion a month. Those purchases are intended to keep long-term loans rates low to spur borrowing, spending and economic growth. The monthly purchases had been held at a level of $85 billion a month all last year. The Fed announced an initial $10 billion cut in December and another in January. Many economists think the Fed will keep reducing the bond purchases by $10 billion at each meeting this year before ending them altogether late this year. Asked at a news conference after the Fed's meeting last month to define a "considerable time," Yellen said it "probably means something on the order of six months." Her remark jolted markets. It seemed to signal that the first rate hike could occur next spring, sooner than many investors had been expecting. But in a speech March 31, Yellen made clear that she thought the job market was still far from healthy and would need the help of low rates "for some time" to come. The minutes issued Wednesday seemed to confirm that short-term rates will likely remain low for a considerable time, even after the Fed has begun to raise rates.

Wednesday, April 9, 2014

Financial literacy education has lasting impact

The effects of financial literacy education in high school continue to influence attitudes and behaviors toward money management for students well after graduation, according to newly released study.

The study of 65,000 college students was given exclusively to USA TODAY by EverFi and Higher One, organizations that help implement financial literacy programs.

First-year college students required to take a financial literacy course in high school are significantly more likely than their peers who didn't take class to be financially responsible, the study found. Just 17 states require a course.

Students who took a class did better on the survey's financial knowledge questions, were found to be more averse to debt, more likely to pay credit card bills on time, and less likely to go over their credit limit.

The study, which is in its second year, is the first comprehensive analysis of the impact of high school financial literacy education on not only knowledge but attitudes and behaviors.

"This at least shows some evidence for the first time that high school preparation does make a difference," says Mary Johnson, director of financial literacy for Higher One.

The majority of students surveyed were college freshmen. After just a semester at college, students were more likely to have at least one credit card and have paid the bill late, the study found.

EverFi and Higher One hope the results of the study, which will be presented at a panel discussion on Capitol Hill today, help convince policymakers and educators of the importance of building financial literacy programs into high school and college curriculum.

As student loan debt continues to rise and finances remain the number one reason students drop out of school, making sure students know how to budget and handle debt is seen as critical.

"We're hoping colleges and universities will make financial literacy part of their mission," Johnson says. "They have a captive audience."

Some already have, but! engaging students from the beginning of their college career is difficult.

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Several schools have implemented peer counseling programs, so students can learn skills from fellow students, usually upperclassmen. Others are building financial literacy sessions into freshman orientation, to help educate both students and parents about how to read financial aid offers and set up payment plans.

Samantha McKinley is a peer counselor at Sam Houston State University's Student Money Management Center in Huntsville, Texas. The 21-year-old banking and finance major imparts her budgeting skills and answers other personal finance questions in one-on-one sessions with other students.

Still, she says, "so many students I talk to say they don't need to budget because they don't have any money. It's hard right now to get our students interested initially."

Financial literacy education needs a holistic approach from a young age to influence behavior over time, says Dan Zapp, associate director of research at EverFi. He hopes the scope of the survey shows school administrators that financial literacy is worth investing resources into.

"We're certainly hoping that this opens (their) eyes to some of the longterm effects we can see to mandating high school financial literacy education for students. It supports lasting differences in their...level of conscientiousness in personal finance behaviors."

Tuesday, April 8, 2014

The Fool Looks Ahead

There's never a dull week on Wall Street. Let's go over some of the news that will shape the week to come.

Monday
The market kicks off a new trading week with TiVo (NASDAQ: TIVO ) stepping up to report its quarterly results. Actual TiVo DVRs are hard to come by these days, but the patent-rich company gets a piece of the action on most high-end DVRs being sold today. Still, analysts see a quarterly deficit for the period.

Tuesday
Diana Containerships (NASDAQ: DCIX ) sails in on Tuesday. This Greek shipper sold one of its older vessels for demolition earlier this month, leaving it with a fleet of nine Panamax container vessels. Wall Street sees margins contracting on a 20% surge in revenue for the quarter.

Wednesday
Workday (NYSE: WDAY ) was one of last year's hottest IPOs. The provider of cloud-based enterprise software solutions has seen its stock more than double since going public in October. Analysts are forecasting a loss of $0.18 a share when it reports on Wednesday, but Workday has managed to post narrower deficits than Wall Street has been targeting in its first few quarters as a public company.

Thursday
Sears Holdings (NASDAQ: SHLD ) is one of the many retailers reporting this week. The parent company of Sears and Kmart has struggled to woo shoppers in recent years, and it probably isn't a surprise to find that analysts see the red ink deepening at Sears. Wall Street's still waiting for Sears to show signs of growing again, but it's hard for an out-of-favor chain -- or in this case, two fading chains -- to regain their swagger.

Friday
Abercrombie & Fitch (NYSE: ANF ) reports on Friday morning, and it will be interesting to see whether CEO Mike Jeffries addresses the firestorm that has erupted recently as comments resurfaced that he made in 2006, explaining why he only wants cool and thin shoppers wearing his store's clothing.

Retail will rule next week
The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only the most forward-looking and capable companies will survive, and they'll handsomely reward investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.

Saturday, April 5, 2014

Third Point's Letter to Sotheby's Stockholders

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FOR IMMEDIATE RELEASE

Third Point (NYSE: TPRE; LSE: TPOU LN) Urges Sotheby's Stockholders to Support Its Slate of Independent and Highly Qualified Nominees: Vote the White Proxy Card Today!

NEW YORK, NEW YORK, April 4, 2014: Third Point released this letter to its fellow Sotheby's shareholders, calling on them to vote for the Shareholder Slate Director Nominees Daniel S. Loeb, Harry J. Wilson, and Olivier Reza at this year's Annual Meeting:

Dear Fellow Shareholders:

Sotheby's (the "Company") is a leading brand in the art and collectibles market. Despite strong global tailwinds from rising art prices and increasing consumption of luxury goods, Sotheby's has lost market share in highly profitable areas like Contemporary Art while its margins have badly deteriorated. We believe the Company's slide is a consequence of failed leadership by a Board of Directors who collectively own a scant 0.87% stake in the Company. Their lack of "skin in the game" has led to a dysfunctional corporate culture overly focused on short‐term metrics such as auction volumes at the expense of long‐term investment in key areas including: talent development and securing key relationships in the art world; maintaining and modernizing the entry and exhibition spaces at its headquarters; and technological infrastructure, both in terms of digital presence and database management. Most recently, Sotheby's Board has spent shareholders' money on legal shenanigans designed to disenfranchise them rather than on developing and articulating a clear long‐term growth strategy. Third Point's intention is to reinvigorate the Board with our Shareholder Slate –Daniel S. Loeb, Harry J. Wilson, and Olivier Reza –and to restore Sotheby's to meet its substantial potential.

Sotheby's current challenges are well‐known consequences of poor corporate governance and malfunctioning board processes. Our view is that Sotheby's sorely lacks innovation and creativity at its most senior levels and requires an infusion of leadership, accountability and transparency. The Company must fill the void at the top that has created a listless corporate culture characterized by disregard for shareholder interests, irresponsible cost expenditures, and many missed opportunities for growth.

Our diagnoses are not merely speculative. For example, Sotheby's has repeatedly referred to 2013 as a "record year". In fact, this statement is misleading and demonstrates the risk of having a Board asleep at the switch and disengaged from measures of profitability that drive shareholder value. While relative to Sotheby's prior peak in 2007, the Company sold a greater dollar value of art, the much more meaningful metric is that it generated less revenue and spent more money to do so. The bottom line is that earnings per share were down 40% versus the prior peak. What does it say about a Board of Directors that trumpets a "record year" when profits are not even close? Why is the Board not asking itself the question many shareholders have –what is wrong with this picture?

Continue reading here.

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