Wednesday, December 31, 2014

Why Wix.com Ltd. Shares Popped Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of cloud-based web development specialist Wix.com Ltd.  (NASDAQ: WIX  ) jumped more than 10% Tuesday after the company announced its worldwide user base has surpassed 50 million registered users.

So what: The milestone admittedly seems a bit arbitrary, but it does serve to highlight just how rapidly users have embraced Wix's easy-to-use, function-rich web development platform. For perspective, as of March 31, 2014, Wix stated it had 46.2 million registered users, which itself represented a 45% increase over the same year-ago period.

Now what: At the same time, Wix is working to monetize that base. Last quarter's 45% user growth, for example, resulted in an 86% increase in revenue to $28.8 million, which translated to an $11.3 million adjusted net loss. To its credit, Wix did end the quarter with around $81.5 million in cash and equivalents to hold it over as it bustles for market share and grows its top line. As long as that growth continues with the hope of ultimately achieving sustained profitability, there should be little preventing Wix stock from rewarding long-term investors from here.

Warren Buffett's biggest fear is about to come true
Speaking of disruptive technology, Warren Buffett just called this emerging tech a "real threat" to his biggest cash cow. While Buffett shakes in his billionaire boots, only a few investors are embracing this new market that experts say will be worth over $2 trillion. It won't be long before everyone on Wall Street wises up. That's why The Motley Fool is releasing this timely investor alert. Click here to learn more about what's keeping Buffett up at night and the one public company we're calling the "brains" behind the technology.

Tuesday, December 30, 2014

Sell These 5 Toxic Stocks Before the Drop

BALTIMORE (Stockpickr) -- So much for yesterday's rally. Stocks faded all afternoon on Wednesday, shedding the gains that they earned to start the session. That one-day observation wouldn't be so noteworthy if not for the fact that Mr. Market has been on repeat mode for the last several weeks.

>>5 Big Charts Ready to Break Out in May

And while stocks continue to churn sideways, the worst thing you can do is sit on your hands. That's because the market's biggest gains often don't come from picking the right stocks, they come from not owning the wrong ones. That's especially true this week.

Today I'll show you five big "toxic" names you need to unload before the next leg down.

Just to be clear, the companies I'm talking about today aren't exactly junk. By that, I mean they're not next up in line at bankruptcy court. But that's frankly irrelevant; from a technical analysis standpoint, sellers are shoving around these toxic stocks right now. For that reason, fundamental investors need to decide how long they're willing to take the pain if they want to hold onto these firms in the weeks and months ahead. And for investors looking to buy one of these positions, it makes sense to wait for more favorable technical conditions (and a lower share price) before piling in.

>>5 Stocks Under $10 Set to Soar

For the unfamiliar, technical analysis is a way for investors to quantify qualitative factors, such as investor psychology, based on a stock's price action and trends. Once the domain of cloistered trading teams on Wall Street, technicals can help top traders make consistently profitable trades and can aid fundamental investors in better planning their stock execution.

So without further ado, let's take a look at five toxic stocks you should be unloading.

General Motors


First up is General Motors (GM), a widely owned name that's done nothing but disappoint in 2014. Since the calendar flipped to January, GM has dropped 14.7%, underperforming the broad market by a big margin. And as we get deeper into May, there's reason to believe that GM is setting up for another leg down.

Charts don't get much simpler than the one in GM -- the stock is currently bouncing its way lower in a textbook downtrending channel. The setup is formed by a pair of parallel trend lines: a resistance line above shares and a support line below them. Those two lines on the chart provide traders with the high-probability range for GM's shares to stay within. When it comes to trend channels, up is good and down is bad; it's really as simple as that.

This week, as GM presses up against to the top of the channel for a fifth time, it makes sense to sell (or short) its next move lower. For investors waiting on a buying opportunity in GM, I'd recommend avoiding shares until the downtrend gets taken out. This stock could still move a lot lower before that happens.

Republic Airways Holdings


We're seeing the exact same setup right now in shares of a much smaller name: regional airline Republic Airways Holdings (RJET).

During a broad rally in the rest of the airline industry, RJET hasn't just missed the upside -- it's actually dropped close to 30% since last July. And as RJET tests trend line resistance for a fifth time over the course of this downtrend, it makes sense to sell the next bounce lower.

Waiting for that move down before clicking "sell" is a critical part of risk management, for two big reasons: It's the spot where prices are the highest within the channel, and alternatively it's the spot where you'll get the first indication that the downtrend is ending. Remember, all trend lines do eventually break, but by actually waiting for the bounce to happen first, you're ensuring that sellers are still in control before you unload shares of RJET.

Yes, waiting for the bounce means leaving some money on the table in RJET, but it greatly increases the probability that you're putting yourself on the right side of the trade.

Brunswick


The last year or so has looked a lot stronger for shares of Brunswick (BC): The diversified mid-cap has rallied more than 24% since last summer. But that rally could be coming to an end for BC in May, and it's time to think about taking gains.

That's because Brunswick is currently forming a double top, a bearish reversal pattern that looks just like it sounds. The double top is formed by a pair of swing highs that max out at approximately the same price level. The sell signal comes when the trough that separates the two highs gets violated. For BC, that breakdown level is right at $40, a price level that's getting tested this week.

If shares are still hanging out below $40 early in today's session, consider it a confirmed sell signal. Momentum, measured by 14-day RSI, provides some foreshadowing for downside in BC. While price was steady over the two tops in Brunswick, our momentum gauge failed to do the same. That's a big red flag.

Towers Watson


Towers Watson (TW) is another name that's looking "toppy" after a big run higher in the past year. Shares of TW are up more than 44% over the trailing 12 months, besting the performance of the S&P 500 nearly three times over. But that rally could be coming to a screeching halt thanks to a classic technical reversal pattern in shares. Put simply, TW looks toxic right now.

Towers Watson is currently forming a textbook head and shoulders top, a bearish reversal pattern that indicates exhaustion among buyers. The setup is formed by two swing highs that top out at approximately the same level (the shoulders), separated by a higher high (the head). The sell signal comes on a move through TW's neckline, which is currently right above $100. If TW can't catch a bid above $100, it becomes a sell.

Another indicator, relative strength (not to be confused with RSI), is the side signal that's pointing to downside in TW in May. Relative strength has been trending lower since January, indicating that TW is woefully underperforming the broad market in 2014.

It's tempting, but don't discount the head and shoulders pattern just because of its name. After all, the only thing that matters is its efficacy: a recent academic study conducted by the Federal Reserve Board of New York found that the results of 10,000 computer-simulated head-and-shoulders trades resulted in "profits [that] would have been both statistically and economically significant."

Pfizer


Last up is Pfizer (PFE). The pharmaceutical giant is forming the exact same setup as the one in TW right now -- and while the chart may not be quite as pretty in PFE, the trading implications are exactly the same. Pfizer broke through its neckline at $29.50 earlier in the week. Now a pullback is giving shorts a second chance at a low-risk entry on this stock.

Why the significance at $29.50? Whenever you're looking at any technical price pattern, it's critical to keep buyers and sellers in mind. Patterns like head and shoulders setups and double tops are a good way to quickly describe what's going on in a stock, but they're not the reason it's tradable. Instead, it all comes down to supply and demand for shares.

That horizontal $29.50 neckline level in PFE is the spot where there's previously been an excess of demand for shares; in other words, it's a price where buyers have been more eager to step in and buy shares at a lower price than sellers were to sell. That's what makes a breakdown below support so significant -- the move means that sellers are finally strong enough to absorb all of the excess demand at the at price level.

For the best risk/reward tradeoff, wait for the next move lower before selling PFE.

To see this week's trades in action, check out the Toxic Stocks portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.


RELATED LINKS:



>>5 Stocks Insiders Love Right Now



>>Fight the Selling With These 5 Trades



>>5 Short-Squeeze Stocks Poised to Pop

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to

TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji


Monday, December 29, 2014

This Little E-Cig Startup Could Be a Big Problem for Big Tobacco (MO, LO, AHII)

Lorillard Inc. (NYSE:LO) and Altria Group Inc. (NYSE:MO) might want to take a look over their shoulder... or perhaps take another, longer look. Not only is the cigarette space as competitive as ever for the likes of LO and MO, but there are some new faces playing the game. And, their strategy is to play the game in a way that's never been played before. Even more alarming to the likes of Altria and Lorillard? These new players are already showing some great progress with this "new way", and are on pace to capture $10 billion of the current annual cigarette market by 2017, up from around $1.0 billion last year.

The latest and greatest of these new entrants is a little startup called American Heritage International Inc. (OTCBB:AHII)... a little company that could really rattle the cages of its bigger brothers.

You may have already seen them. In fact, you may have already seen them and not even known it. Seen what? An electronic cigarette, or an "e-cig" for short. Just like the name implies, an electronic cigarette is a battery-powered device that delivers the nicotine smokers crave, without delivering all the nasty chemicals and carcinogens that a dried-out, processed burning plant - tobacco - does.

There are more players in this space than an outsider and non-smoker might realize. American Heritage International joins names like Blu and Skycig, just to name a few; there are dozens of other, even smallercompanies in the electronic cigarette space too. In fact, it would be safe to say the industry is still fragmented.

Even in its fragmented state, however, these companies have already made a little trouble for the tobacco industry, so much so that Lorillard recently acquired the Blu brand. Altria, meanwhile, is now aiming to expand its Markten brand of e-cigs across the nation, after a limited test rollout last year. All of the major "big tobacco" names now have an electronic cigarettes presence, though again, the market remains highly fragmented, poised to cause more headache for the major, traditional names than not, despite the fact that they each have some presence in the market.

American Heritage International, however, is a name investors as well as big tobacco will want to keep an eye on. See, while other manufacturers make an admittedly solid product, AHII believes (and rightfully so) its product is one of the best - if not the best - on the market.

For starters, the product is 100% American-made, which the company explains is safer and worry-free. American Heritage's electronic cigarettes also look and feel like traditional cigarettes, rather than look and feel like a ballpoint pen hanging out of a smoker's mouth. Those two nuances may seem minor on the surface, but those little details have made a big difference in terms of marketability. In fact, in early market research studies, nine out of ten e-cig users who tried an American Heritage e-cig preferred it to the competitor's e-cig. This young company is positioned to be a disruptor once it launches nationwide, on a full scale.

It's also worth noting that even though electronic cigarettes are cheaper than real tobacco cigarettes, AHII still sees wide profit margins on its product.

With all of that being said, the most significant reason other names in the tobacco industry, like the aforementioned Lorillard or Altria, may want to worry about American Heritage isn't the superior product as much as it is the fact that AHII has a clear and thorough, top-to-bottom marketing plan... not to mention has the wherewithal to put it into action. The experienced management team recognizes that placement in convenience stores just isn't enough. It also aims to maximize online sales, while simultaneously aiming to maximize brand-awareness via sponsorship deals. It's also initiating an affiliate plan. Other players should be worried.

Bottom line? Though it was only a small order, the initial order of inaugural American Heritage electronic cigarettes sold out pretty quickly. The next order is apt to do the same. It's evidence of tremendous demand for this new product, much of which was created purely from buzz and publicity. The best thing going for investors right now is that most of the market still hasn't heard of AHII, but given the groundwork that's been laid on top of the exponential growth of the electronic cigarette market, that's not a condition that's going to last long. And once the word about American Heritage gets out, both its e-cigarettes and the stock may be hard to get.

For more on American Heritage, its investor presentation PDF offers the most insight. The coporate website can be found here.

Wall Street This Week: Time for Window Dressing

Financial Markets Wall Street Richard Drew/AP From Wall Street hoping to close out 2014 with a bang to the top dog in video streaming needing to prove that it's still magnetic to new subscribers, here are some of the things that will help shape the week that lies ahead on Wall Street. Monday -- Let the Sun Shine In The final trading week of the year is always the quietest, and that leaves China Sunergy (CSUN) as one of the few companies that will be making waves. The Chinese maker of solar cells and modules will host its annual shareholder meeting on Tuesday morning in its home market of Nanjing, but that translates into Monday night for stateside investors. There's plenty riding on the meeting. China Sunergy will discuss proposed board changes. Given the steep losses that it's been reporting, it's not a surprise that the stock has cratered in 2014. It will have to restore confidence at its meeting. Tuesday -- The Clock Is Ticking The next-to-last trading day of 2014 will find money managers scrambling to pick up some of the year's biggest winners. It's an unfortunate practice called "window dressing" as fund managers try to make it seem as if they owned the top performers in their year-end reports. It's a silly practice. After all, investors know that performance is everything. Dolling up a list of top portfolio holdings doesn't change where a fund ranks relative to its peers. Investors are smart enough to know that. Wednesday -- Last Call for Subs Wednesday will be a big day for Netflix (NFLX). The leading premium video service tumbled in October after falling short of its forecast for total streaming subscribers at the end of the third quarter. It can't afford to blow it again. Netflix expects to tack on 4 million net new accounts during the final three months of the year, so it had better hope that it winds up with more than 57 million subscribers on its rolls by the end of Wednesday. Thursday -- Auld Lang Syne The market's closed in observance of New Year's Day on Thursday. It will be a clean slate for some of the stocks that were hit hard in 2014, but they will have to wait until Friday to begin trading on the road to redemption in 2015. Friday -- "Black" Friday The big movie opening this weekend will be "The Woman in Black 2: Angel of Death." The original film raked in more than $54 million in domestic ticket sales two years ago. It will be a challenge to top that, especially since the sequel lacks the star power that Daniel Radcliffe brought on the original. More from Rick Aristotle Munarriz
•Last Week's Biggest Stock Movers: GoPro Soars, Ocwen Sinks •Customized Burgers Won't Save McDonald's and Wendy's •5 Tech Trends to Watch in 2015

Sunday, December 28, 2014

The Best of the T. Rowe Price Funds

The secret to T. Rowe Price's success is its corporate culture. Thomas Rowe Price Jr. founded the Baltimore investment firm in 1937 with just four associates. The company now has more than 5,000 employees scattered across the globe. But talk to any one of them and you'll get the sense that the firm still operates as if only a handful of people came to the office. It's collegial. It's collaborative. It's convivial.

See Also: Best of the Big Fund Families

And it works. The firm manages some $534 billion spread across 128 mutual funds. And of the 102 funds with five-year records, 56 portfolios boast returns that rank in the top 25% of their peer group and 86 rank among the top half. That's impressive. We sifted through the data to find the best offerings. Read on.

T. Rowe Price Blue Chip Growth (TRBCX). It has been more than 20 years since Larry Puglia launched Blue Chip Growth. Since then, he's turned in a 10.4% annualized return, outpacing Standard & Poor's 500-stock index by an average of 1.2 percentage points per year. (All returns are through January 16). A 1.2 point-per-year edge may not seem like much, but over 20 years it adds up to real money. An investment of $10,000 in an index fund that tracks the S&P 500 would be worth $63,730 today, but one in Puglia's fund would have grown to $80,320.

Puglia says he likes market leaders—"companies with a sustainable competitive advantage"—with above-average earnings growth, healthy balance sheets and seasoned executives. More specifically, he's looking for companies that can generate growth in earnings and free cash flow (cash that's left over after the capital expenditures needed to maintain the business) of at least 15% a year. "Stock prices follow earnings and free-cash-flow growth over time," says Puglia. "So we give ourselves the best chance of success if we focus on firms that are growing at double-digit rates."

When he finds a company that fits the criteria, he buys, then usually holds for a long time. The fund has an average turnover ratio of 24%, which implies that the typical stock stays in the fund for about four years. But some have been in the fund for much longer than that. Puglia has owned shares in the industrial conglomerate Danaher since his early days as manager. Energy-services giant Schlumberger has been in the fund since 2002, agricultural products firm Monsanto since 2005.

T. Rowe Price Capital Appreciation (PRWCX). This fund gets compared with other balanced funds, which typically hold 60% stocks and 40% bonds. But Cap App isn't your typical balanced fund. For sure, the objective is similar: to offer growth but without the spills and chills of most stock funds. And on that, manager David Giroux has delivered. Since he took over in mid 2006, the fund has earned 8.7% annualized, outpacing the S&P 500 by an average of 1.3 percentage points per year and doing so with one-fourth less volatility than the index. He has also beaten 98% of the fund's peers.

But here's one thing that makes this balanced fund different from most of its peers: Giroux isn't afraid to hold cash if he doesn't find good opportunities. In late 2012, the fund's cash reserves stood at 14% of assets. Giroux saw little value in most bonds, with interest rates so low. Now cash reserves sit in the "high single digits," says Giroux.

These days, the bond portion of the fund sits mostly in short-maturity investment-grade debt, high-yield bonds and floating-rate bank loans. But in the middle of 2013, after bond prices fell (and yields rose), Giroux added some ten-year Treasuries to the mix—for the first time since 2008. On the stock side—60% of the portfolio at last report--Giroux can invest in companies of any size, and he likes a good value. Top holdings include Danaher, medical-devices firm Thermo Fisher Scientific, and United Technologies, the maker of Otis elevators and Black Hawk helicopters, among many other industrial products.

The other thing that sets this fund apart from its peers: options. Giroux can sell covered-call options—a conservative strategy that trades away appreciation potential in return for more income. He currently has calls on 14% of the fund's stocks. He'll sell an option on a stock his fund owns when one of two things happen: Either a stock Giroux is holding has risen in price, but he isn't ready to sell; or a stock has a somewhat muted expected return, such as a utility stock.

T. Rowe Price Small-Cap Value (PRSVX). Preston Athey has managed Small-Cap Value, a Kiplinger 25 fund, since 1991. Since then, the fund has returned an annualized 13.0%, outpacing the Russell 2000 index by an average of 2.8 percentage points per year—and with less volatility, to boot. Athey's secret is simple: He likes unloved, undervalued and undiscovered stocks. And once he finds one, he buys and holds. He has owned both Markel Corp., a specialty insurance firm, and SVB Financial Group, a Silicon Valley-based bank, for more than 20 years.

But Athey is retiring in June, when associate portfolio manager David Wagner, who has been shadowing him for more than six months, is slated to take over. Wagner is no newbie; he built a solid five-year record managing a Price fund for European investors that invested in stocks of small and midsize U.S. companies. In the five-year period through September 2013, when he formally stepped down, Wagner's fund, SICAV US Smaller Companies, returned 15.7% annualized. That outpaced the fund's benchmark, the Russell 2500 index (which measures stocks of small and midsize companies), by an average of 3.1 percentage points per year. Still, we'll be watching Small-Cap Value closely as the changeover nears.

T. Rowe Price Personal Strategy Growth (TRSGX); T. Rowe Price Personal Strategy Balanced (TRPBX); T. Rowe Price Personal Strategy Income (PRSIX). The Personal Strategy funds at T. Rowe Price hold a blend of stocks and bonds in a static allocation. Growth, the most aggressive of the Personal Strategy funds, holds 80% stocks and 20% bonds. Balanced is a 60% to 40% mix of stocks and bonds. And Income is a portfolio of 40% stocks, 40% bonds and 20% money market securities.

But these funds don't hold other T. Rowe Price funds. They hold actual stocks and bonds picked by managers of other funds you've probably heard of, including some mentioned in this story. Larry Puglia, of Blue Chip Growth, manages the large-company growth allocation of the Personal Strategy funds, for instance.

An asset-allocation committee meets monthly to decide how to allocate assets in the funds over the next six to 18 months. The people who populate that committee include star managers such as Brian Rogers, the firm's chairman, chief investment officer and manager of T. Rowe Price Equity Income, and Capital Appreciation's David Giroux.

That might be the secret to the success of these funds. All three of the Personal Strategy funds have ten-year records that rank among the top 8% of their peer groups. Those stellar returns aren't due to one or two hot streaks. The funds look good on a year-to-year basis as well.

T. Rowe Price Retirement target-date funds. Target-date funds offer one-stop shopping. You pick a fund with the target year that's closest to your expected retirement, plunk your money in, and the managers invest it in stocks, bonds and other assets, adjusting the mix over time to make it more conservative as you near the target-date year.

The funds in T. Rowe Price's Retirement series have standout returns; they regularly rank among the top 10% of target-date funds over the long haul. The reason: the underlying funds. The Retirement series portfolios hold some of the firm's best funds: Growth Stock, New Horizons and Small-Cap Value. They hold some index funds, too, in part to keep expenses low.

One caveat: The Retirement target-date funds have a glide-path -- the stock-bond blend of investments over time — that tilts more toward stocks than bonds in any given year than the typical target-date fund. That results in a little more volatility than the typical target-date fund, but we think that's the right approach for most people.

(T. Rowe Price recently launched a second target-date series called "Target Retirement"—too recent to analyze for the purposes of this story. The series is supposed to be more conservatively positioned than the original target-date funds.)

Finally, a word about a few funds that didn't make the list this year. Two top-notch funds, T. Rowe Price New Horizons (PRNHX) and T. Rowe Price Mid-Cap Growth (RPMGX), are closed to new investors. And two sector funds have new managers. Kris Jenner, the manager of T. Rowe Price Health Sciences (PRHSX), left the firm in February; Taymour Tamaddon, an analyst with the fund, took over. And at T. Rowe Price Media & Telecommunications (PRMTX), Dan Martino left to run New America Growth, and Paul Greene, an analyst with the fund since 2006, took the top spot. Finally, Robert Bartolo recently resigned as manager of T. Rowe Price Growth Stock (PRGFX), the firm's first mutual fund, to move to the West Coast. We have full faith in Price's ability to groom new talent. But we must stick to our own form of discipline, just as any good fund manager would do. And that means we need to see a longer track record before we can confidently recommend these funds.



2 Stocks That Will Lead Europe Higher in 2014

Facebook Logo Twitter Logo RSS Logo Louis Navellier Popular Posts: 3 Under-the-Radar Triple-A Stocks to BuySIRI: Sirius XM’s Signal is Fading Fast4 Reasons Markets May Be Even Better in 2014 Recent Posts: BAC: Time For Caution in Bank of America Stock 2 Stocks That Will Lead Europe Higher in 2014 How to Play Housing Like a Stock Trader View All Posts

As we move into the New Year, I have noticed a lot of the pundits and gurus suggesting that the Europe is the place to be in 2014.

Europe-stocks-european-stocks Source: Flickr

Although many European markets had solid years in 2013, they did not keep pace with U.S. markets for the most part. The economy in Europe is just now starting to grind its way out of recession, and the European Central Bank is doing whatever it takes to get the continent moving again. A year-end poll of 350 strategist and analyst by Reuters found that most of them think that the European markets will be the best performer in the new year as the economy strengthens somewhat and the Euro falls against other leading currencies.

It is way too early for me to even consider what might be the best markets for the year — in Europe or elsewhere. But what I can tell is which stocks have the fundamental and quantitative characteristics that position them to be among the best performers no matter where on the globe they call home.

When I fire up Portfolio Grader and look at Europe, I see right away that the big stocks being talked about by the analysts like Deutsche Bank (DB) and Santander (SAN) receive poor grades from our ranking system and should be avoided by the majority of investors.

Core Labs NV (CLB) is an example of the type of company that is likely to lead any market rallies in Europe this year. The company is in the business of providing reservoir description, production enhancement, and reservoir management services to the oil and gas industry worldwide. This may sound complicated, but it simply means helping oil companies to enhance production and gain increased amounts of oil and gas from drilling locations.

Analysts have been raising their estimates for CLB earnings in the last quarter of 2013 as well as the full year 2014. Portfolio Grader spotted the strong fundamental performance of this company and upgraded the stock to an "A" back in October, and the Europe stock is still a "strong buy."

Fleetmatics Group (FLTX) is another Europe stock with the characteristics needed to be a leader in the European markets this year. The company makes software that allows operators of commercial vehicle fleets to track vehicles and learn about vehicle location, fuel usage, speed and mileage. The Irish company has seen earnings explode this year with growth of more than 700% in bottom-line profit increases.

Earnings are expected to accelerate over the next five years after posting more than 30% average annual gains in the preceding five. This type of performance was not unnoticed by Portfolio Grader, and the minute the stock had a one-year trading history in October the shares debuted in the system with an "A" ranking. The stock remains a "strong buy" at the current price.

In my experience it is almost impossible to predict which markets will perform the best in any given year. Using Portfolio Grader, however, we can identify those stocks with the superior fundamentals needed to lead any market higher.

Louis Navellier is editor of Blue Chip Growth, Emerging Growth and Platinum Growth.

Saturday, December 27, 2014

Microsoft Will Purchase Nokia, Then What?

After the big announcement earlier this week, that Microsoft plans to purchase Nokia's phone device business, lots of questions regarding the future are left up in the air, but now MoneyShow's Jim Jubak, also of Jubak's Picks, addresses them.

News on Tuesday, September 3 that Microsoft (MSFT) will buy Nokia's (NOK) phone handset business (and non-exclusive, 10-year licenses to Nokia's patents) for $7.2 billion, sent shares of Nokia soaring-up 31.28% as of the New York close-and shares of Microsoft tumbling-down 4.55%. Shares of Microsoft dropped again-and shares of Nokia moved up again-on September 4.

I think two things are behind the size and direction of these moves.

First, by selling its money-losing phone device business, Nokia has removed the biggest worry about its continued existence-that it would run out of cash before it managed to turn around its phone business (if it could). In 2011, Nokia showed a $1.07 billion EBIT cash flow loss. In 2012, that rose to $2.3 billion. With the removal of that worry, Wall Street has been busy changing its ratings for Nokia from underperform to market perform. Target prices have climbed to $5 or even $6 a share.

Microsoft, on the other hand, has lots of cash, so running out of the green stuff isn't a worry for that company. But still, investors aren't thrilled with the idea that Microsoft's best idea for what to do with its mountain of cash is to pour it into the smart phone business, and to assume the sole burden of building the market share of the Windows Phone operating system to a significant Number 3, behind Android and Apple (AAPL).

Second, the market wasn't convinced that Nokia could pull off a turnaround in its phone business and it's no more convinced that Microsoft is up to the task. (Maybe the most intriguing aspect of the deal is that Microsoft/Nokia CEO Stephen Elop, who left Microsoft to run Nokia three years ago, will return to Microsoft. With current Microsoft CEO Steve Ballmer announcing in August that he'd retire in 12 months, Wall Street is awash in speculation that Elop now has the inside track to be the next CEO at Microsoft. Given the task facing the next CEO at Microsoft, and Elop's less than awe-inspiring performance at Nokia, that seems unlikely to me.)

Yes, the deal will immediately give Microsoft an increased margin on each Windows Phone device sold-the company gets just $10 a share in gross profit now for every Windows device Nokia sold, and after the deal, that will go to $40 a unit, Microsoft told Bloomberg. But Microsoft will still face the huge task of clawing market share from Android and Apple phones. That would be a tough job, even for a company with a reputation for nimble innovation-and Microsoft doesn't have that reputation or track record.

If you own Nokia shares-as I do in my Jubak's Picks portfolio-the big question is, what is Nokia worth after the deal?

The company will have three major businesses:

1. The wireless network equipment business. Nokia bought out its partner Siemens (SI) in this joint venture last month and the business has recently broken into the black. On estimated sales of 11.8 billion euros in 2013 (and a 9% operating margin), this business is worth about 1.60 euros a share.

2. The HERE mapping and location services business. Sales for this unit, Credit Suisse estimates, will hit 950 million euros in 2013 with a very modest 2% operating margin. That values this business, Credit Suisse calculates, at 0.13 euros a share.

3. Licensing of patents to Microsoft and other companies. Nokia currently makes 500 million euros a year in licensing revenue with an operating margin of near 100%. Say the licensing business is worth 1 euro a share.

Add that valuation of 2.73 euros a share, to the 2.1 euros a share in cash that the company will receive from the sale to Microsoft, and you've got a sum of the parts valuation of 4.83 euros a share. At today's exchange rate, that works out to a valuation of $6.35. That's 15.2% above Nokia's share price as of 2:45 PM, New York time on September 5.

Whether you decide to hold, in hopes of that potential gain, or sell today, depends mostly on your view of the market over the next few months and your sense of your available opportunities for investing the cash from selling Nokia shares.

As I've noted, I think September and October are likely to bring significant market volatility and I'd like to have more cash, rather than less, to invest in any bargains that volatility might create. If the market is volatile over the next two months, it's unlikely that shares of Nokia will escape the turmoil. And with the deal not expected to close until 2014, I think you could be looking at more time, rather than less, before the stock worked its way toward that theoretical $6.35 target.

My choice was to sell the shares out of my Jubak's Picks portfolio on September 3 and to hold the cash in hand. At the September 3 close, I was looking at a 6.4% loss on the shares I bought for Jubak's Picks at $5.49 on March 30, 2012.

Full disclosure: I don't own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund, I liquidated all my individual stock holdings and put the money into the fund. The fund did own shares of Apple as of the end of June. For a complete list of the fund's holdings as of the end of June see the fund's portfolio here.

Friday, December 26, 2014

Fidelity IRA Assets Up 53% Since Financial Crisis

The average balance in Fidelity Investments’ IRA accounts grew by 53% to $81,100 in the five-year period to the end of the 2012 tax year.

Fidelity’s annual analysis of its approximately 7 million IRA accounts, released Tuesday, also showed that total contributions increased by 7.5% from tax year 2008 to 2012, with the average contribution reaching $3,920 in the last tax year.

“Age-appropriate asset allocation strategies, market appreciation, and annual contributions all played a part in driving balances higher,” Fidelity Investments vice president Ken Hevert said in a statement.

Fidelity said investors in their 60s continued to save the most in their traditional and Roth IRAs. For tax year 2012, they contributed on average $4,910 to Traditional IRAs and $4,840 to Roth IRAs.

As tax law changes were being debated on Capitol Hill in 2012, Roth IRA conversions increased by 12% year over year and by 52% year over year for the month of December.

Overall, Fidelity conducted more than 101,000 Roth IRA conversions with investors in 2012.

 

Fidelity IRA balance trends across all age groups:

 

Age Range

 

 

Average IRA Balance At End of 2012 Tax Year

 

 

Average IRA Balance At End of 2008 Tax Year

 

 

Percentage Increase

20-29

 

 

$9,300

 

 

$5,800

 

 

60%

30-39

 

 

$20,700

 

 

$10,100

 

 

105%

40-49

 

 

$42,500

 

 

$22,400

 

 

90%

50-59

 

 

$75,700

 

 

$41,900

 

 

81%

60-69

 

 

$127,800

 

 

$75,000

 

 

70%

70+

 

 

$164,300

 

 

$110,500

 

 

49%

All Ages

 

 

$81,100

 

 

$52,900

 

 

53%

 

 

 

 

 

 

 

Full contribution rates with age breaks:

Age Range

 

 

Average Roth IRA Contribution (2012 Tax Year)

 

 

Average Traditional IRA Contribution (2012 Tax Year)

 

 

Overall Average IRA Contribution (2012 Tax Year)

20-29

 

 

$3,260

 

 

$3,170

 

 

$3,170

30-39

 

 

$3,280

 

 

$3,900

 

 

$3,320

40-49

 

 

$3,480

 

 

$4,090

 

 

$3,590

50-59

 

 

$4,490

 

 

$4,780

 

 

$4,480

60-69

 

 

$4,910

 

 

$4,840

 

 

$4,710

70+

 

 

$4,750

 

 

$4,520

 

 

$4,640

All Ages

 

 

$3,830

 

 

$4,400

 

 

$3,920

----

Check out Where Does the Money Go in IRAs? on ThinkAdvisor.

Thursday, December 25, 2014

Marshmallows Can Teach Us Better Retirement Planning

Marshmallows Christina Kennedy Many of us are like kids when it comes to squirreling away for retirement. Our more short-term money needs -- like that new car we've been eyeing -- tend to take precedence over long-term saving, causing us to miss out on the benefits of compound growth. The secret to success comes down to self-control, which is the subject of "The Marshmallow Test: Mastering Self-Control," a new book by Columbia University psychologist Walter Mischel. Mischel was the lead scientist behind the iconic "marshmallow test," a series of psychological studies from the 1960s that explored how well the promise of future rewards could motivate preschoolers to control themselves. In a nutshell, Mischel placed marshmallows in front of preschoolers, who were told they could enjoy the treats immediately. But if they waited 15 minutes before indulging, they'd be rewarded with bonus marshmallows. In the end, up to 70 percent of the children couldn't help but gobble up the marshmallow immediately. Fast-forward a few decades: the researchers followed up with the participants and found that the kids who were able to delay gratification were generally more successful, earned higher SAT scores and maintained healthier body-mass indexes. The test became a classic tale of the real-world value of self-control-a concept that Mischel says can be applied to various areas of your life, including retirement. Three money pros share their insights on how to apply four crucial lessons from the experiment to your long-term nest-egg savings strategy. Lesson 1: Visualize Yourself Reaping Future Rewards One of the key reasons why so many of the kids in Mischel's study ate the marshmallow quickly is because they didn't feel a connection to their future selves-the one eating twice the number of marshmallows. And this doesn't appear to be something we outgrow. One Stanford University study measured the brain activity of adults after asking them to think about their present self, a total stranger and themselves 10 years into the future. After comparing the scans, the researchers found that the most similar brain activity happened when someone was thinking about the stranger future self. Translation: The participants thought of their future selves as, essentially, someone they didn't know-which also goes to show how it's possible to dissociate ourselves from our retired lives. "Retirement is a very abstract idea that doesn't resonate with the emotional parts of the brain that actually motivate us to action," explains Brad Klontz, a certified financial planner and clinical psychologist. The Retirement Takeaway According to Mischel, the children in the study who had the self-control to wait were able to do so because they formed a mental image of their future selves enjoying more marshmallows. A similar mind trick can work for grown-ups too. A 2011 study revealed that when undergrads were shown avatars of what they'd look like at retirement age, they decided to devote 30 percent more of their paychecks to their 401(k)s than those shown current images of themselves. Seeing their grayer, wrinklier selves cued the students to think as if retirement was just around the corner, compelling them to act accordingly. You can do the same through creative visualization. "To keep people focused on the future, it helps to have an image of what your retirement will really look like," says Scott Bishop, director of financial planning at STA Wealth Management. "Saving 10 percent of your salary in a 401(k) isn't visual. But being able to take two vacations a year, own a lake house and spend $5,000 per month in today's dollars ." Klontz agrees. "The more vivid and specific you can make the images, the more motivated you will be to achieve your goal," he says. And if you're not sure where to start, begin by asking yourself questions like: Where am I living? What am I doing? Who am I with? Am I traveling the world? Hanging out at a family vacation home? Once you've fleshed out this image, stay focused on what you'd like to achieve by revisiting it frequently, Klontz recommends. "Try placing it on a picture board you keep in your office and see each day," he suggests. "Or meditate on those images and feelings of your ideal retirement." Lesson 2: Steer Clear of Temptation In the study, even the preschoolers knew that "out of sight, out of mind" was the path of least resistance to exercising self-control. As the treats sat in front of them on a tray, "the temptation was great, and it was hellish for the kids to wait," Mischel writes. But when the researchers placed the marshmallows the tray, obscuring them from clear view, self-control came more easily. When it comes to retirement, your paycheck is akin to that marshmallow: The easier you have access to your money, the more likely you'll want to spend it to satisfy your more immediate wants. The simplest way to troubleshoot this temptation? Keep any money earmarked for retirement out of the checking account that you use to cover day-to-day bills. The Retirement Takeaway "If you can set aside money before it lands in your bank, you won't take it into account when you make spending decisions," Klontz says. Of course, the most obvious way to put that into motion is to participate in a company 401(k), so contributions are automatically deducted from your paycheck. Or set up an automatic transfer to your IRA every month, if your employer doesn't offer a 401(k). Klontz suggests implementing another rule of thumb: Whenever you receive a windfall, such as a raise or a bonus, automatically kick a portion of it to your retirement savings before mixing it into your checking. You can apply the same rule to other "found money," like your tax refund or the cash-back rewards from your credit card, notes Christina Povenmire, a certified financial planner at CMP Financial Planning in Ohio. Once you get into the habit of saving, it'll get a lot easier to compartmentalize the uses for your money, as opposed to viewing it as all up for grabs. In fact, the preschoolers who exhibited self-control adopted a similar strategy: Even when they did have a marshmallow in front of them, they mentally removed the temptation by pretending the treats they were looking at were just pictures. The participants who told themselves the marshmallows were fake were able to wait as long as 18 minutes-while most children failed after just six. In other words, pretending part of your paycheck was never game for spending in the first place-by automatically diverting it toward your financial goals-can make saving easier. Lesson 3: Get Happier About What You Already Have Many of Mischel's successful subjects employed an interesting tactic that helped them stave off their marshmallow cravings: They were able to physically and mentally distract themselves by focusing on the positive things that surrounded them. Just before beginning the experiment, the researchers encouraged one group of children to brainstorm fun thoughts or memories of happiness. Some examples were as simple as being pushed on a swing by their moms-but the effect on their self-control was astonishing. "When happy thoughts were suggested, children waited for more than 10 minutes, on average -- even when the rewards were exposed," Mischel writes. At other points during the study, they took to singing and playing by themselves-anything not to have to think about the sweet treat. "Don't look at what you are waiting for," one 9-year-old wrote at the end of the study. "Use what you have at the moment to entertain yourself." The Retirement Takeaway So how do we practice the preschoolers' wisdom in the day-to-day? Financial pros recommend harnessing the power of a simple gratitude journal, or an ongoing list of the people, experiences and things you are thankful for. What you jot down can be as simple as the invigorating morning run you had with your dog or the peppermint latte you enjoyed for an afternoon pick-me-up. These small but invaluable experiences can have a positive effect on your money by encouraging delayed gratification. In one Northeastern University study, participants who reflected on experiences that made them feel grateful were as much as 12 percent more likely to forgo receiving $55 up front, in exchange for $85 in three months. Practicing the power of gratitude can also be achieved through what psychology experts call "savoring" your spending, or prolonging positive emotional experiences. "It's so easy to keep buying things," Povenmire says. "The key is to focus on the stuff you've already got rather than think about that next new purchase." So the next time you get an itch for an iPhone 6, take a moment to look at the Tuscan vacation photos on your perfectly good iPhone 5 -- you'll not only feel better but you will have saved yourself a few hundred dollars that could then be funneled into your retirement savings. Telling yourself no to every single indulgence can actually lessen your ability to use self-control the next time you come across a temptation. Lesson 4: Reward Yourself -- Within Reason To most people, self-control probably conjures up feelings of deprivation and denial. But rewarding yourself now and then can be an effective strategy for staying on track with your goals. Mischel chalks this up to the "tired will." "Self-control is like a muscle," he writes. "When you actively exert volitional effort, 'ego depletion' occurs, and the muscle soon becomes fatigued." In other words, constantly telling yourself no to every single indulgence can actually your ability to exercise self-control the next time temptation crosses your path. "Everyone has to allow something in their budget that makes them feel good," Povenmire says. But what's the fine line between treating yourself ... and getting waylaid on your way to paving a financial future? The Retirement Takeaway Bishop recommends what he calls "backing into your budget," or setting up dedicated contributions toward your expenses and priority goals first-and then allowing yourself to enjoy the rest guilt-free. It's as simple as taking your monthly take-home pay and then subtracting your fixed costs (things like your rent or cell phone bill), goal contributions (such as retirement or emergency savings) and non-monthly savings contributions (money to, say, cover holiday gifts or home maintenance). The leftover amount is called your flex-spending number, which you can use on whatever you'd like. And since you know you've already covered your big financial goals, you won't feel guilty spending that money-which means you get to have your marshmallow and eat it too. More from LearnVest
•Ready to Buy a Home? 7 Key Questions to Ask Yourself First •HSAs 101: What You Need to Know About How HSAs Work •I'm a Secret Santa Who's Given Away $750,000

Wednesday, December 24, 2014

Winners, Losers from the West Coast Port Slowdown

Cowen’s Oliver Chen considers the winners–TJX (TJX) and Burlington Stores (BURL)–and the losers–Lululemon Athletica (LULU) and Macy’s (M)–from a slowdown at West Coast ports:

Reuters

Negotiations are occurring between ILWU (representing West Coast port workers) and port employers to complete contract (no contract since July 2014). Just over 50% of total US container traffic comes through the West Coast (just under 50% on East Coast/Gulf of Mexico). We est. apparel/consumer goods typically rely more on West Coast vs. East…

Specialty Retailers Most At Risk Given Time Sensitive Product: In our view, fashion driven specialty retailers are most at risk (Lululemon Athletica), quantified misses are running ~2% of quarterly revenue; and broadlines (Macy’s, Target (TGT)) could have greater risk in 1Q & 2Q if their suppliers/vendors experience problems in 4Q. Quarterly EPS impact is tracking ~2-5% and delays are on average 7-14 days.

Off-price retailers, such as TJX/Ross Stores (ROST)/Burlington Stores, could have upside benefit on inventory dislocation. Delays are likely to increase availability of compelling product supply, given late product could yield excess inventory. Our favorite ideas are TJX and Burlington Stores. TJX keeps high open-to-buy levels given lean inventories (+3%/store @ end of 3Q vs. comps +2%), and their $23bn+ buying pencil provides ample flexibility to capitalize on advantageous product opportunities. We are raising our Burlington Stores price target to $54 (from $52) given structural tailwinds behind the Off-price group as it relates to inventory availability and Burlington’s already improving inventory position. Burlington’s recently opened west coast buying office should be helpful in acquiring inventory. We see upside to consensus merch margin estimates through next year given current inventory position.

Shares of Lululemon have gained 0.4% to $53.74, while Macy’s has risen 0.4% to $62.86, Burlington Stores has ticked up 0.2% to $46.95 and TJX has risen 0.9% to $66.66.

Tuesday, December 23, 2014

China Air Agrees to Purchase 60 737 Aircraft from Boeing Co (BA)

Before Monday’s opening bell, aerospace company Boeing Co (BA) announced that it has received a $6 billion order for 60 of its 737 aircraft. 

This order includes Next-Generation 737 and 737 MAX airplanes. In total, the agreement is worth approximately $6 billion.

Ihssane Mounir, vice president of Boeing’s Sales and Marketing, Northeast Asia commented: “Our long-standing and productive partnership with Air China dates back to the airline’s beginning and we are proud the 737 has been part of their success. We are excited to see that the 737 family will play a significant role in Air China’s continued success.”

BA Dividend Snapshot

As of Market Close on December 19, 2014

BA upcoming dividend payouts next ex-dividend date

Click here to see the complete history of BA dividends.

Boeing shares were mostly flat during pre-market trading Monday. The stock is down 7.52%.

Monday, December 22, 2014

Cheap Gas Prices Can Only Help Retailers So Much

Gas Prices Matt Rourke/AP Gas is cheap! And U.S. retailers are cheering. Over the past six months, global oil prices have fallen 45 percent. Gas prices are plunging in tandem (sort of), with the price of petrol off more than 30 percent over the same time period. And to hear the pundits tell it, that must mean good things for retail store sales this year -- and perhaps retailer stocks year. After all, if all you had in your wallet in June was $50 and a hankering to go shopping, that might have been enough to fill up your gas tank and get you to the store -- but you'd have no money left to shop with. By Black Friday, though, that same tankful of gas cost only $40 -- and it's just $35 today. All of which suggests that this Christmas season, shoppers should have significantly more post-gas station cash in their wallets. Big Savings = Big Spending? For a while, that's how things seemed to be working out. While "Black Friday" numbers weren't all that had been hoped for, retail sales for all of November climbed 5 percent over November 2013 levels. And the good times could keep on rolling. Citing data from the National Retail Federation, the Los Angeles Times recently reported that with spending on gas purchases down 0.8 percent year over year, Black Friday spending on electronics and appliances was up an almost-equal 0.9 percent. Department store sales rose a full 1 percent, building materials and garden supplies jumped 1.4 percent, and overall, spending increased in 11 out of 13 categories. Quoting an analyst at the Economist Intelligence Unit, the Times predicted that if gas prices continue to fall, U.S. consumers could save as much as $100 billion on their automotive fuel bills next year. As much as "half of that windfall" could be pumped into the consumer economy. Nearer-term, Experian (EXPN) Consumer Services (a unit of the credit ratings giant) just issued a report showing that 36 percent of shoppers expect to spend more this holiday season than last, versus only 25 percent who expect to cut back on spending. On average, Experian found that shoppers are planning to spend about $758 apiece on Christmas presents, up 5 percent from last year. Big Numbers and Littler Numbers But hold on just a sec -- gas is 30 percent cheaper, but retail sales were up only percent in November? And Experian's saying the whole holiday shopping season will see only a similar 5 percent rise? Maybe we shouldn't look a gift horse in the mouth, but a 5 percent shift in shopping patterns doesn't seem like a lot to get excited about, relative to the big drop in gasoline. So what's going on? The answer could be that, according to the Bureau of Labor and Statistics' Consumer Expenditure Survey, the average U.S. household spent about $2,600 on gasoline in 2013. On one hand, that was near an all-time high for gasoline costs. On the other hand, it amounts to only about 5 percent of U.S. median household income ($51,900 in 2013, according to the Census Bureau). As a result, even when gasoline prices fall 30 percent or more, this only adds, at most, 1.5 percent (30 percent of 5 percent) of household income to the average shopper's total disposable income. And if The Economist is right, and only half these gas savings will make it into the consumer economy -- then we're talking about just a fraction of 1 percent of household income becoming true disposable income. Where Does the Money Go? What's more, according to gas price information specialist GasBuddy.com, even The Economist's view might be too rosy: "A GasBuddy survey of more than 100,000 respondents finds that 83 percent of us say we will save or pay off debt with the extra savings, while only 14 percent say we'll spend it on holiday presents." So is it possible that retail sales will jump like the analysts predict, generating a big boom in consumer spending and leading to massive profits for investors in retail stocks? Sure, it's possible. But so far, it doesn't seem to be happening. More from Rich Smith
•Is the Recession Over for the Poorest Americans? •Even More Than Men, Women Love Their Jobs, Hate Their Pay •Do Loyalty Card Programs Really Generate Loyalty?

The Single Biggest Risk in Retirement -- and How to Avoid It

The path to a comfortable retirement is fraught with peril, but none so great as volatility. Image: Wikimedia Commons user Ondrej Zvacek.

I want you to imagine two different scenarios with me. For the first, let's assume you're 40 years old and want to retire by age 65. Here are two different views of what market returns could look like over the next quarter-century

We'll oversimplify for the sake of this article and say that you start with $100 invested and add $100 every year. In the end, which scenario would you rather have?

Knowing that you won't be touching that money until you retire, you would likely choose the volatile returns. Your nest egg would be over twice as large.

What if you were in retirement?
Now let's take a different view. Let's say the market's returns -- both steady and volatile -- will be the same as they were in the above scenario. The only difference is that now you've reached age 65, and you need the money to last you until age 90.

We'll say you were a diligent saver and have amassed $1 million. In the first year, you'll withdraw 4% of your nest egg for living expenses, and then adjust that number by 3% per year to keep up with inflation.

Remember, the market returns are exactly the same as above. Which scenario do you choose now?

It's almost mind-boggling how differently these two situations play out -- to the point that you might believe I've made a serious error with my math. But I assure you this is correct. If you opt for volatile returns in retirement, you'll end up broke by age 90!

How in the world can we explain this?

The difference between volatility and risk
I could talk until I'm blue in the face about the difference between risk and volatility, and I still probably wouldn't be able to emphasize it enough.

When you are working, you are in the accumulation phase of your investing life. Volatility not only doesn't hurt you, but can actually juice your returns. That's because you are a net buyer of stocks. So long as you aren't selling when the market goes down, volatility is absolutely not a risk to you.

However, once you hit retirement, the scenario flips. You are now in the distribution phase of your investing life, and market volatility is not your friend. In fact, it's an enormous risk. That's because you are a net seller of stocks. So even when stocks are low, you still have to sell some of your holdings to live off them. And that's the absolute worst time to be forced to sell.

You will never recover the money you lost by selling out. And if those downwardly volatile years occur at the beginning of your retirement, it's a blow from which you might never recover.

How to avoid volatility in retirement
Hopefully, this makes it clear that as you enter retirement, controlling for volatility is important. In many ways, once you retire, you become a quasi-short-term investor; you know you'll be selling some stocks every year.

Fortunately, there are several ways to mitigate the effects of volatility.

One of the most tried-and-true approaches is to shift your holdings from stocks to bonds. Though the payout over the long run is lower, the returns from bonds are generally positive after inflation and are much less volatile than stocks.

But that doesn't mean you need to abandon stocks altogether. A portion of your holdings should be dedicated to solid, dividend-paying blue-chip stocks like Coca-Cola (NYSE: KO  ) , Procter & Gamble (NYSE: PG  ) , and Johnson & Johnson (NYSE: JNJ  ) . These three companies all pay dividends yielding more than 2.8% and have betas under 0.54, meaning they are far less volatile than the overall market. These three are also considered noncyclical holdings, which means that people tend to buy their products -- beverages, soaps and shampoos, and Band-Aids, for example -- no matter the economic climate.

Investors nearing and in retirement need to make sure their holdings are diverse enough -- not only between stocks and bonds, but also within the types of stocks they hold -- to ensure they limit overexposure to highly volatile assets such as commodities and speculative plays.

In the end, that approach will help you enjoy your retirement in comfort, rather than spending the last years of your life worrying about where your next paycheck might come from.

How to get even more income during retirement
Social Security plays a key role in your financial security, but it's not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.

Saturday, December 20, 2014

Westport Select Cap Fund Comments on IPG Photonics Corp

IPG Photonics Corp. (IPGP) fell 11.4 %, costing 81 basis points as investors continue to be concerned about second half demand from China for the company's precision laser products. From Westport Asset Management (Trades, Portfolio)'s Westport Select Cap Fund Second Quarter 2014 Commentary.Also check out: Westport Asset Management Undervalued Stocks Westport Asset Management Top Growth Companies Westport Asset Management High Yield stocks, and Stocks that Westport Asset Management keeps buying

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Xerox Corp Selling IT Outsourcing Unit for $1.05B (XRX)

Before the opening bell on Friday morning, it was announced that French company Atos SA will buy Xerox’s (XRX) IT outsourcing unit for $1.05 billion in cash.

Atos SA is a computer services firm, and its purchase of this Xerox unit will give the France-based company a stronger foothold in the U.S. Xerox’s IT outsourcing unit has annual revenues of $1.5 billion. The deal is expected to close during the first half of 2015.

Xerox stock was up 52 cents, or 2.59%, in pre-market trading. YTD, the stock is up 14.13%.

XRX Dividend Snapshot

As of Market Close on December 18, 2014

XRX dividend yield annual payout payout ratio dividend growth

Click here to see the complete history of XRX dividends.

Thursday, December 18, 2014

The Week's Winners and Losers: GoPro Pops, Aereo Drops

APTOPIX Wall Street GoPro IPO Seth Wenig/APCEO Nick Woodman holds a GoPro camera in his mouth as he celebrates his GoPro's IPO. There were plenty of winners and losers this week, as the leading premium coffeehouse chain expanded its carbonated beverage offerings, and a disruptive video-streaming service got disrupted itself. Here's a rundown of the week's best and worst. GoPro (GPRO) -- Winner The initial public offering market got some fresh meat on Thursday when GoPro went public. The company behind the popular namesake cameras that extreme sports enthusiast like to wear was a hit. It priced at $24 a share -- at the high end of its initial range -- and that still wasn't enough. The stock opened at $28.65, closing out its first day of trading with a 31 percent gain. GoPro's growth has been stellar. Sales soared 87 percent last year to nearly hit $1 billion. However, there was a surprising decline in revenue during this year's first quarter. New GoPro investors are assuming that the most recent quarter's dip was a fluke. If it isn't a fluke, they can record their stumble in glorious high-def. Aereo -- Loser Sometimes it's the disruptor that gets disrupted. Aereo, the start-up service that offers local TV channels as a streaming platform, was pummeled by the U.S. Supreme Court. In a 6-3 decision, the court ruled that Aereo violated the copyrights of major TV networks by streaming their content without paying transmission fees. The move isn't the end for Aereo, but its prognosis has clearly deteriorated. Aereo thought that incorporating tiny remote antennas that subscribers can access online was similar enough to actual HD antenna ownership by individuals that its business model would be found to be legal. That didn't pan out, and consumers are unlikely to get a break this way from their ever-increasing cable and satellite TV bills. Starbucks (SBUX) -- Winner If you need to cool down in the Sun Belt, Starbucks has a few fizzy options. The java giant this week introduced its Fizzio line of carbonated beverages at 3,000 of its stores in the South. Fizzio is a line of handcrafted sodas that launched with three flavors (root beer, ginger ale and lemon ale), at 100 calories or less for 16 ounces. (Half as many calories as a Pepsi, and with cane sugar as the sweetener.) Starbucks is also letting customers pay 50 cents to have their iced teas and Refreshers beverages carbonated with the Fizzio machine. It's a smart call, giving non-coffee drinkers a new reason to walk into Starbucks. Steelcase (SCS) -- Loser Office furniture sales can be a good proxy by which to gauge the state of corporate America, but investors better hope that Steelcase is the exception.

Thursday, November 6, 2014

Mid-Day Market Update: Nu Skin Dips On Weak Forecast; EOG Resources Shares Jump

Related BZSUM Mid-Morning Market Update: Markets Open Higher; Time Warner Earnings Top Estimates #PreMarket Primer: Wednesday, November 5: Democrats Lose Control Of The US Senate

Midway through trading Wednesday, the Dow traded up 0.46 percent to 17,463.41 while the NASDAQ surged 0.16 percent to 4,631.15. The S&P also rose, gaining 0.45 percent to 2,021.13.

Leading and Lagging Sectors

In trading on Wednesday, utilities shares were relative leaders, up on the day by about 0.94 percent. Top gainers in the sector included NRG Energy (NYSE: NRG), up 3.2 percent, and NextEra Energy (NYSE: NEE), up 2.6 percent.

Technology shares rose by just 0.05 percent on Wednesday. Top losers in the sector included Pegasystems (NASDAQ: PEGA), down 13.4 percent, and HomeAway (NASDAQ: AWAY), off 11 percent.

Top Headline

Time Warner (NYSE: TWX) reported upbeat earnings for the third quarter.

The New York-based company posted a quarterly net profit of $967 million, or $1.11 per share, versus a year-ago profit of $1.18 billion, or $1.26 per share. Adjusted EPS rose to $1.22 from $0.91. However, adjusted earnings, excluding tax benefit, came in at $0.97 per share.

Its revenue climbed 3% to $6.24 billion. However, analysts were expecting earnings of $0.94 per share on revenue of $6.16 billion.

Equities Trading UP

Coupons.com (NYSE: COUP) shares shot up 28.09 percent to $15.94 after the company reported upbeat quarterly results.

Shares of Callidus Software (NASDAQ: CALD) got a boost, shooting up 14.16 percent to $15.56 after the company reported better-than-expected Q3 results and issued a strong revenue forecast.

EOG Resources (NYSE: EOG) shares were also up, gaining 6.67 percent to $96.30 after the company reported better-than-expected quarterly earnings and raised its production growth forecast.

Equities Trading DOWN

Shares of Albany Molecular Research (NASDAQ: AMRI) were down 22.34 percent to $17.61 after the company reported a Q3 loss of $0.02 per share on revenue of $62.47 million.

FireEye (NASDAQ: FEYE) shares tumbled 15.15 percent to $29.06 after the company reported downbeat third-quarter revenue.

Nu Skin Enterprises (NYSE: NUS) was down, falling 16.43 percent to $42.13 after the company issued a weak forecast for the current quarter.

Commodities

In commodity news, oil traded up 1.10 percent to $78.04, while gold traded down 1.70 percent to $1,147.90.

Silver traded down 2.68 percent Wednesday to $15.53, while copper fell 0.38 percent to $3.01.

Eurozone

European shares were higher today. The eurozone’s STOXX 600 climbed 1.65 percent, the Spanish Ibex Index climbed 1.14 percent, while Italy’s FTSE MIB Index jumped 2.60 percent. Meanwhile, the German DAX rose 1.63 percent and the French CAC 40 jumped 1.89 percent while UK shares climbed 1.32 percent.

Economics

The MBA reported that its index of mortgage application activity declined 2.60% in the week ended October 31, 2014.

Private-sector employers added 230,000 jobs in October, versus 225,000 in September. However, economists were expecting an addition of 220,000 jobs.

The final reading of Markit services PMI fell to 57.10 in October, versus a prior reading of 57.30. However, economists were expecting a reading of 57.10.

The ISM non-manufacturing PMI fell to 57.10 in October, versus a prior reading of 58.60. However, economists were expecting a reading of 58.00.

Posted-In: Earnings News Guidance Eurozone Futures Commodities Econ #s Markets

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Tuesday, November 4, 2014

Herbalife: ‘Messier Than Expected and We Had Expected Messy’

Even those who weren’t expecting great news from Herbalife appear taken aback by its results last night. Canaccord Genuity’s Scott Van Winkle and Mark Sigal, for instance, call Herbalife’s earnings “messier than expected.” They explain:

Bloomberg News

The Q3 results and guidance revisions were messier than we expected and we had expected messy. We expected that more pronounced headwinds in the US and a Venezuela devaluation could materialize and saw these items as the risks to the quarterly report. However, the negative surprise relative to our estimates wasn't confined to these two markets. Similar to Q2, China continues to drive strong growth (China was the only market to meet our revenue forecast), while underlying strength in EMEA (+15% in constant currency) is being masked by foreign exchange. Beyond these two regions, growth is modest or disrupted. The impact of the Herbalife business model debate has clearly impacted the US, but major markets outside of the US, such as Mexico and Brazil, were softer than we would have thought. The net result was a 5% miss in sales and volume points vs. us that was several percentage points worse than we expected, even after adjusting for Venezuela. Moreover, Q4/14 and F2015 guidance came in significantly softer on a volume point basis.

Van Winkle and Sigal also explain the impact of changes to Herbalife’s business that were made following allegations by Pershing Square’s Bill Ackman:

The guidance is set partly as a reflection of a phased implementation of changes to the global compensation plan (fully effective by February 2015) that are anticipated to temper near-term growth. The plan changes include a first order limitation (previously in 18 markets, now to be global), a sales leader qualification restriction whereby all volume for qualification must be purchased directly from Herbalife rather than from upline distributors (implemented November 1), and a lower threshold for supervisor qualification (4,000 volume points over a 12- month period rather than the historic 5,000-point qualification where large volume purchase were front-end loaded). The net result of these changes is greater line of sight on distributor purchases, as well as more gradual and sustained distributor participation; but of course it's a slower build. The prior roll-out of the 12-month volume point qualification program in the original market resulted in ~60% gains in distributor activity and retention for new qualifying supervisors a year later, but impacted initial volumes. Near term, these plan changes will create a sales headwind until fully anniversaried in Q1/16. But also, any compensation plan change carries disruptive risk.

Despite the disappointment, Van Winkle and Sigal maintained their Buy rating on Herbalife’s stock, though they did slash their price target to $60 from $73.

Shares of Herbalife have plunged 18% to $45.75.

Monday, November 3, 2014

OPEC Chief Warns Against Oil Price Panic

This article was written by Oilprice.com, the leading provider of energy news in the world. Also check out these related articles:

OPEC & Russia's Vulnerability and America's Ingenuity
Saudi Arabia: Producing More Crude, Selling Less?

OPEC Secretary-General Abdalla Salem el-Badri says he doesn't expect demand for the cartel's oil or its production levels to change in the coming year, and he is urging member states not to be alarmed by oil's current low prices.

"Don't panic," el-Badri said Oct. 29 at an impromptu news conference in London, where he was attending a conference. "I am sure the market will balance itself."

The concern, if not the panic, already is present. The price of the global petroleum benchmark, Brent crude, plunged a little more than $87 a barrel the day he made those comments -- nearly $30 less than it was in June, a loss of about one-fourth of its value.

Al-Badri shrugged off this loss, saying he wasn't worried because price fluctuations don't reflect "the fundamentals" of the oil market. "Demand is still growing, supply is also growing. OPEC is reviewing the situation," he said. "There is nothing wrong with the market."

Current production limits for OPEC members probably will stay in place in 2015, he said, adding that the cartel isn't likely to lower that cap at its next meeting in Vienna on Nov. 27. He also said he expects individual members won't produce significantly below that cap in the coming year.

El-Badri said the expected demand for OPEC's oil in 2015 also will be about the same as in 2014: between 29.5 million and 30 million barrels of oil per day.

One reason why OPEC members shouldn't panic, el-Badri said, is that persistent lower prices hurt the cartel's members far less than they affect companies extracting shale oil with new, costly technologies such as horizontal drilling and hydraulic fracturing, or fracking. As a result, he said, OPEC has a competitive edge over most of the overall oil market.

"If prices stay at $85, we will see a lot of investment, a lot of oil, going out of the market," el-Badri said. "About 65 percent of the producers, they have high costs. Not OPEC."

Some oil executives have challenged that view. Marianne Kah, the chief economist of ConocoPhillips, said the price of oil would need to plummet to $50 a barrel "to really harm [shale] oil production." Bob Dudley, BP's CEO, said the cost of using the new extraction techniques has come down recently, and noted that the biggest victim of low prices are Russian oil companies, which have been caught in the middle of a dispute with Moscow and the West over the Ukraine crisis.

The European Union and the United States have imposed sanctions on Russia and its oil sector over Moscow's suspected meddling in Ukraine's internal affairs. While they've had an effect, Dudley said, the sanctions alone aren't a concern to Russia.

"It is the lower oil price that puts more pressure on Russia than the sanctions themselves," Dudley said.

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Saturday, November 1, 2014

The Global Impact Of Decentralized Banking

Stocks rose sharply in Japan last night, the Nikkei-225 jumping almost 5 percent, thanks to a somewhat surprising move by the Bank of Japan (BoJ) to expand its stimulus program, while Japan's largest pension fund, in a clearly coordinated move, boosted its buying of Japanese equities.

The Nikkei jumped to a multi-year high on the news and helped extend the rally that has its roots in a U.S. rebound. Japan, whose economic policies have been ineffective at boosting growth and warding off deflation, are finally beginning to make sense in the context of both domestic and global economic realities.

The real launching pad for Japanese stocks will come if the Abe Administration decides to forgo the second leg of a planned consumption tax early next year. That would add rocket fuel to the BoJ's easing and give Japanese stocks a real chance to enjoy a sustained stock market rally, which has not occurred despite long-held hopes that Japan was finally on the mend.

The new policies have also had the desired effect of weakening the Japanese yen, now at a seven-year low against the dollar. A weaker yen helps Japanese exporters and also helps to lift inflation toward what has, to date, been an unmet 2-percent target in Tokyo.

A Yen For Global Action

The BoJ's move, meanwhile, has had a global impact, raising expectations of a more forceful round of quantitative easing by the European Central Bank (ECB).

Related Link: Japan's Improving Economy Shows That Inflation Is No Longer An Enemy

So far this week, Poland and Sweden have slashed interest rates in Sweden all the way to zero as northern and eastern Europe join the deflation fight, putting even more pressure on Continental Europe to become a more significant ally in the world's war on deflation.

One has to expect the ECB to become a more muscular force in that fight if it desires a weaker Euro and an end to the deflation invasion.

European stocks are clearly now discounting an expanded QE program from the ECB, while British markets may also be suggesting that the Bank of England could reverse course soon and provide some additional protection to Europe's western flank by cutting interest rates there as well.

From Russia With Love

Moscow, meanwhile, is moving in the other direction, cut off from the world by economic sanctions and effectively crippled by plunging oil prices. Its central bank has just raised interest rates to defend the falling ruble, which will only serve to further weaken Russia's recession-prone economy and put Putin into a deeper corner. While remaining wary of the geopolitical consequences, investors who might otherwise worry about the impact on Europe will likely continue to shun Europe's biggest kleptocracy, keeping their money in safer havens elsewhere in the world.

There is no money to be made there, unless one wants to short the often illiquid Russian markets -- a game of investment roulette, to be sure.

There's Still No Place Like Home

U.S. stocks, meanwhile, are now within striking distance of record highs, aided by stronger than expected economic growth here at home and solid third quarter corporate profits. About 75 percent of companies reporting Q3 results have beaten Wall Street expectations, offsetting any concerns about the Federal Reserve's move to wind down its own QE program earlier this week.

The U.S. has become the engine of global economic growth as other parts of the world try desperately to achieve the successes the U.S. has enjoyed, from enlightened monetary policies that laid the foundation for recovery, to resilient corporate and household balance sheets, to falling fiscal and trade deficits.

The U.S. has gotten it right in the post-recession environment, while the rest of the world is playing catch-up. Domestic equities remain quite attractive, but the catch-up game being played by global central bankers may mean that some overseas markets, like Germany and Japan, could add supplemental upside to a domestically-focused portfolio.

The investment focus should remain on the good ol' USA, but some incremental alpha could be added by taking advantage of the economy-envy that may drive some central bankers to emulate their American counterparts.

Posted-In: Bank of JapanGlobal Top Stories Economics Markets Best of Benzinga

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Friday, October 31, 2014

Why Stratasys is the Best Pick in the 3D Printing Industry

Due to its superior presence in the industrial market, and a strong market share, Stratasys (SSYS) has outperformed 3D Systems (DDD) in every way this year. Although Stratasys is down 5% this year, it still has strong prospects and has delivered better quarterly reports than its rivals. On the other hand, 3D Systems has plunged almost 60% in 2014 and has lowered its guidance twice in the span of a few months. The company didn't satisfy the analysts estimates in the previous quarter and has been subjected to multiple downgrades in the past few weeks. Therefore, I think Stratasys is the best bet for investors looking to profit from the 3D printing industry. Let's take a look at the reasons why I think Stratasys will perform nicely in the long run.

Optimistic analysts

The stock was upgraded by several analysts firms like Morgan Stanley and Stephens in the last few months. Analysts at Gartner said Stratasys has an advantage over its peers and the shipment of 3D printers is poised to more than double every year from 2015 to 2018. Gartner expects overall end-user spending on 3D printers to grow from $1.6 billion in 2015 to $13.4 billion in 2018.

Advantages

Stratasys should do nicely in the future as it has a robust position in the industrial 3D printing sector. While the company concentrates on the industrial 3D printing business sector, different organizations are going for the consumer market, which is yet to receive this have a huge impact. The company, in Q1, proclaimed its new frameworks called Objet500 and Connex3, Color Multi-material 3D printer. This is the first and last 3D printer to join shade and multi-material 3D and gimmicks an extraordinary triple plane innovation that permits the client to consolidate color with different consolidations of adaptability and transparency.

Great initiatives

The Stratasys-Objet merger yielded great revenue growth. The acquisition of Makerbot, an organization officially heading internationally in the 3D printing market, has also helped Stratasys. Makerbot increased Stratasys' share in the overall consumer sector, likewise adding to its productivity, which will turn out to be advantageous for its long haul development.

The Makerbot stage incorporates three new fifth era Makerbot replicator 3D printers - the Makerbot Replicator Desktop 3D printer, Makerbot Replicator Mini Compact 3D printer, and Makerbot Replicator Z18 3D printer. The Makerbot Replicator Mini won the CES 2014 Editors' Choice Award from Popular Mechanics, the CES 2014 Best in Show honor by Digital Trends and Zdnet and was named the Best of CES 2014.

Conclusion

Given the factors mentioned above, Stratasys is set to dominate the 3D printing industry. The company has performed very nicely this year and has a strong presence in the industrial sector. The company is also expanding its footprints in the customer segment as well. Thus, I think Stratasys is the best pick in the 3D printing industry.

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