Oracle Flies Past Targets & Taking Share (ORCL, SAP, IBM)

Oracle Corp. (NASDAQ: ORCL) just posted earnings.  Its GAAP EPS was $0.25 but non-GAAP was $0.31 EPS on revenues of $5.3 Billion.  First Call had estimates at $0.27 non-GAAP EPS on revenues of $5.04 Billion.  Look at these metrics individually:

• software license revenues up 35%, the strongest growth of any quarter in ten years,
• software license sales up 38%
• applications new license sales grew 63% compared to SAP’s new license sales growth rate of 15%

QUOTES FROM OFFICERS:

• Charles Phillips, president, said, "We like our growth strategy of expanding beyond ERP into high-end industry specific vertical software in contrast to SAP’s strategy of moving down market to sell ERP systems to small companies."
• CEO Larry Ellison said, "Our database and middleware new license sales grew 28% in Q2. We continue to take market share from IBM in both product categories."

While the earnings guidance is not yet out, this last quarter was a phenomenal report and it is really hard to call anything bad so far.  When it offers guidance, First call has next quarter’s estimates at $0.29 EPS and $5.19 Billion in revenues and it has fiscal May 2008 shows estimates at $1.22 EPS on almost $21.5 Billion.
Oracle’s stock closed down 2.3% at $20.76 today, and shares are at $21.70 in after-hours trading.  The 52-week trading range is $15.97 to $23.00.
Jon C. Ogg
December 19, 2007
Jon Ogg can be reached at jonogg@247wallst.com; he produces the SPECIAL SITUATION newsletter and he does not own securities in the companies he covers.

The Global Debt Bubble Damns 2012

The curse of too much debt is playing havoc? with the presidential political campaign, with the threat of sovereign defaults in Europe, and with the strained financial condition of banks in Europe, the US, China, and causing a steep decline in takeover and merger activity here is the U.S.
Nations, banks and corporations are late in tackling? this problem for the reason it means deleveraging, less takeover activity, the need to pay off debt with more newer debt– and the absolute mandatory austerity, ie less growth, lower stock prices, higher unemployment all? this implies.
Example; JP Morgan CEO Jamie Dimon said publicly that JPM has $15 billion in lines of credit to Portugal, Ireland, Italy, Greece and Spain, and could under bad circumstances, lose $5 billion of that, a sum that seemed not to shake Dimon.
Example: It has been reported that BankAmerica would like to shift tens of trillions in derivative contracts from the books of its subsidiary, Merrill Lynch & Co, to the Federal Deposit Insurance Corp, so as to avoid the threat to its balance sheet from the possibility not being able to collect on these contracts. No one is confirming this need to pass off huge derivative liabilities? to the federal government.
Debt stands at the summit of the debate over what kind of capitalistic system we want. Because money cost near to nothing, deals were being done in 2006 that were bound to create huge nonperforming loans, losses for pension funds, a black eye for Wall Street– and a huge issue of the coming campaign about the money-making tactics of Republican candidate Mitt Romney.
This should trigger a rigorous debate about Wall Street’s role in the US economy– and its monied influence on the lawmakers in Washington.
Hardly anyone noticed a frank blunt speech by Carlyle founder David Rubenstein in Debai on October 15, 2008– at the very apex of the meltdown that threatened stability of gthe financial system. I wrote abo! ut it th en– and want to repeat its findings as a warning signal just as Carlyle is going to issue its shares publicly.
Credit the brainy Rubenstein for outing the rates of leverage in the financial system. Take Private Equity– the Mitt Romney issue– where most firms were dangerously borrowing $6.20 for every $1.00 in equity capital they had invested in a deal. That’s a? ratio of debt to equity of 6 to 1– meaning that if any deal lost more than 17% in value it was in effect insolvent and unless it sold assets could not pay its debt, or for that matter raise more.
Hedge funds in the fall of 2008, were borrowing on average about $ $4.00 in debt for every $1.00 in equity. The European banks like Deutsche Bank, UBS and Barclays were leveraged up 7 to 10 times more than the Private Equity Crowd– and the American investment banks were basically insolvent with debt to equity in some cases 6-7 times more than Carlyle and Blackstone. While Private Equity might have single transactions file for bankruptcy, entire banks like Lehman had to file for bankruptcy– and Merrill Lynch, Wachovia would have done so without shotgun marriages– and Citigroup and BankAmeriuca would have followed suit without federal bailouts.
Today, the stigma is in Europe. The Greek Prime Minister warned yesterday that $1 trillion? Euros must be refinanced in Europe by the end of March– and that hedge funds owned some 25% of Greece’s debt. Expect the fallout from too much debt everywhere to colr market action and part of gthe public debate about t he future of Capitalism.

Looking for a Fixer-Upper? Try Home Center Stocks

This is not the best of times to be in retail in general, or home-related retail in particular, but it may be the moment for investors to look at hardware store stocks.
Let's look at the hardware big boxes, where there is plenty of room for improvement in the market. Just in mid-November, Home Depot CEO Frank Blake was telling analysts: "Inventories remain high, pricing is under pressure and credit is still difficult."
That pretty much sums it all up for hardware stores. All the plastic, copper, and lumber you need for pipes, wiring, and two-by-fours is having commodity price pressures. And that means margin pressure. At the same time, the hardware chains are having to invest in improving store facilities after taking costs out to balance their books earlier in the recession.
Neither Home Depot (NYSE: HD  ) nor Lowe's (NYSE: LOW  ) is baking a housing recovery into its 2012 estimates, so if housing were to surprise even slightly on the upside, the effect on their stocks could be noticeable.
Housing: still in the doghouse
The biggest snag for home center chains has been simply that the housing slump has lasted longer than expected, leaving them no room for error. At first, they cut costs and moved focus from selling to construction pros to pushing moderately priced stuff such as paint and flooring to DIY homeowners fixing the homes they couldn't sell.
But by the end of 2011, they had made real structural changes, closing stores and investing in technology to make store operations more efficient. That meant higher capital expense at a time when inventory costs were also under pressure.
In Lowe's case, it added a fair amount of expenses as part of its latest restructuring, which included overhauling inventory and closing stores. The latest move was buying online retailer ATG at the end of the year. Like many retailers, Lowe's needed a ha! ndle on e-commerce and decided to buy instead of build.
However, there is good news as well. COO Robert Hull indicated Lowe's is expected to crank out about $2.1 billion in free cash flow during the next fiscal year. Lowe's managers also said they've laid out a five-year plan to get them to 2015 with no expectation of a "frothy housing market."
Lowe's is where Home Depot was a couple of years ago, trying to fix stores and boost sales, and its stock has been driven down by those issues, which gives it a bit more upside potential. Fool Austin Smith likes Lowe's over Home Depot as a better shareholder value for buying back far more of its shares.
And Home Depot has burned through quite a bit of upside potential already. It was one of the best performers in the Dow in 2011, as The Fool pointed out recently. It hit its 52-week high recently, and as fellow Fool Dan Caplinger mentioned, it's expensive and investing in it requires faith in the housing recovery, so the short-term upside is slim.
But Home Depot has been paying dividends regularly and accelerated its share repurchase plan last year. If you're a value investor, there are worse places to be in retail than a sector leader who pays regular dividends.
It's up to you whether you want to back the favorite or the scrappy upstart. But keep in mind, the U.S. is not Japan -- retail is not facing a lost decade. Housing and consumer spending will pick up, because Americans are shoppers and homeowners by nature. Saturday morning at the hardware store is not a ritual in danger of extinction.
So if you are hoping for a real retail recovery, invest in Home Depot, Lowe's, or even Orchard Supply Hardware -- these days, it beats putting your money on stocks of clothing chains or bookstores -- but keep a long horizon.
If you're interested in the Dow's top stocks on your quest for great dividend-paying stocks, The Motley Fool has compiled a special free report outlining our 11 favorite dependable dividend-paying stocks.! It's ca lled "Secure Your Future With 11 Rock-Solid Dividend Stocks." You can access your free copy today! Just click here to discover the winners we've picked.

Will Nordic American Tankers Whiff on Revenues Next Quarter?

There's no foolproof way to know the future for Nordic American Tankers (NYSE: NAT  ) 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 also 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 Nordic American Tankers 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 Nordic American Tankers 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. Nordic American Tankers' latest average DSO stands at 102.5 days, and the end-of-quarter figure is 117.3 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 Nordic American Tankers look like it might miss it 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, Nordic American Tankers' year-over-year revenue shrank 56%, and its AR grew 9.8%. That's a yellow flag. End-of-quarter DSO increased 149.3% over the prior-year quarter. It was up 186.6% 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.
What now?
I use this kind of analysis to figure out which investments I need to watch more closely as I hunt the market's best returns. However, some investors actively seek out companies on the wrong side of AR trends in order to sell them short, profiting when they eventually fall. Which way would you play this one? Let us know in the comments below, or keep up with the stocks mentioned in this article by tracking them in our free watchlist service, My Watchlist.

• Add Nordic American Tankers to My Watchlist.

Why Are Atheists So Obsessed With God?

Michele Bachmann raised eyebrows again last weekend when she claimed that Hurricane Irene was God's way of sending a message to American politicians to listen to the American people. Although the allegation that God would kill Americans in order to get politicians to listen to those same Americans is strange enough (wouldn't he kill the politicians themselves or their first born sons, not the people whose voices he wished to be heard?), many were amused by the thought that one of the leading presidential candidates believes that God causes natural disasters in a show of support for her policies. Others agreed with her and one group in particular was pulling its hair out after hearing Bachmann's latest sound bite.
Atheists complain that religion is irrational, has no basis in fact and shouldn't play a part in national politics. Still, it's odd that they will condemn politicians like Bachmann for bringing God into a political discussion, yet they throw their support behind leaders like President Barack Obama, a Christian who says that he is opposed to gay marriage because "God is in the mix". (A weak attempt at making his Christianity sound cool). Hmm, Michele Bachmann is crazy for thinking that there is a God who backs her political agenda but President Obama is just fine even though he's against letting consenting adults who love each other marry because the same God says no?
Why is it that so many atheists who feel that anyone who believes in God is delusional and should seek help support leaders like President Obama? If believing in God is a sign of mental illness, would you really want a man who is suffering from this delusion to have a nuclear arsenal at his disposal?
One reason is that, like many Republicans, they don't really believe that Obama is a Christian. Not surprising, considering that this is the man who said that guns and God were something for bitter, small town Americans to fall back on when he said that "they get bitter, they cling to guns or religion or antipathy t! o people who aren't like them."
It never ceases to amaze me that besides religious fundamentalists it's the people who don't believe in God who want to push their religious views in your face the most. Of all the Christians, Muslims, Buddhists, Jews and agnostics that I personally know, none of them seem interested in making me accept their personal beliefs. Just as important, none of them go out of their way to insult members of other religious faiths. Most of them seem to believe that whatever faith you belong to is a personal choice and that if it brings comfort without harming others, than any religion can play a positive role in one's life.
However, it's always the atheists that seem to feel a need to insult others who don't share their views. I don't know if they realize it but when mocking anyone who happens to believe in God (they're criticism is usually aimed at Christians because criticizing other religions too much might mark them as racists or close-minded) atheists often sound much like the people they claim to despise the most: religious fundamentalists. Claiming that anyone who doesn't share your beliefs is misguided, delusional or just plain wrong is a tactic used by fundamentalists of every religion.
When they get on their soapbox, atheists don't sound much different than the Westboro Baptist Church members who enjoy protesting at the funerals of fallen soldiers, shouting insults about God's wraith at the people who are trying to comfort each other while mourning the loss of a loved one. An example of this is my fellow writer at Benzinga who thinks that anyone who believes in God is crazy. Another funny thing is that if you get away from talk of religion and ask them about the people they admire, most atheists will name many people of great faith such as Mohandas (Mahatma) Gandhi and Martin Luther King Jr.
While I understand the frustration caused by hearing a politician like Michele Bachmann claiming that a deadly natural disaster like Hurricane Irene is also a message f! rom God that just happens to be right in line with her own political opinions, there's no need to insult every member of every religious faith because of the words uttered by one headline seeking politician.

Has This Company's Luck Turned?

The following video is part of our "Motley Fool Conversations" series in which consumer goods editor and analyst Austin Smith and industrials editor and analyst Brendan Byrnes discuss topics across the investing world.
Boeing (NYSE: BA  ) was on an order hot streak in 2011, with a multibillion-dollar order seemingly every month. But Boeing's issue has never been securing the orders, but rather building and delivering the planes in a reasonable amount of time. To that end, Boeing recently announced that it will not hit its delivery goal for the year. How much does this hurt the aerospace giant, and what does it mean going forward?

While we still believe that 2012 could be a great year for Boeing, there is one specific stock that we believe will grow tremendously and take Latin American retail by storm. There is astounding growth potential for this company that we've dubbed our "Top Stock for 2012." ?The Motley Fool has compiled a special FREE report outlining this company. In it you'll discover the company hand-picked by our analysts that is positioned to be the titan of retail in the future. You can access the report -- 100% free of charge -- by clicking here. Fool on!

EXOU Exousia Continues Supplier Relationship with China United Engineering Corporation(DrStockPick.com News Report!)

EXOU, Exousia Advanced Materials Inc, EXOU.OB
DrStockPick News Report!

Dr Stock Pick HOT News & Alerts!

Exousia Continues Supplier Relationship with China United Engineering Corporation

Thursday August 13, 2009
DrStockPick News Report!
Exousia Continues Supplier Relationship with China United Engineering Corporation
Fifth Order Represents CUC’s Continued Confidence in Exousia as a Supplier
SUGAR LAND, Texas /CRWENEWSwire/ Exousia Advanced Materials, Inc. (OTC Bulletin Board: EXOU), a company that manufactures advanced industrial coatings for worldwide infrastructure applications and engineered composites for eco-friendly wood substitutes, proudly announces its fifth order from China United Engineering Corporation (CUC) for industrial coatings. Exousia Chairman & CEO, J. Wayne Rodrigue, explained, “The significance of this order is that it represents the ongoing cycle of business that Exousia is striving to achieve. Every day, we gain momentum as our order flow increases at our now established plant in China.”
CUC is a large-scale engineering, design, and construction enterprise headquartered in Hangzhou, China. CUC engages in numerous project categories including general contracting, infrastructure and industrial projects. “We look forward to expanding our relationship with CUC and to Exousia’s future growth throughout China,” conclud! ed Mr. R odrigue.
About China United Engineering Corporation
China United Engineering Corporation (CUC) is a large-scale scientific and technological enterprise headquartered in Hangzhou in China’s central region. CUC engages in numerous project categories including general contracting, infrastructure and industrial projects. More information on CUC can be found at http://en.chinacuc.com.
About Exousia Advanced Materials, Inc.
Exousia manufactures advanced resins, engineered particles, high-performance coatings and structural products. Exousia products enhance strength, durability, cost effectiveness and performance for a wide range of manufacturing, commercial and construction applications. The Company serves both domestic and international markets. Additional information on Exousia can be found at http://www.exousiacorp.com.
FORWARD-LOOKING STATEMENTS
Statements released by Exousia Advanced Materials, Inc. that are not purely historical are forward-looking within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the company’s expectations, hopes, intentions, and strategies for the future. Investors are cautioned that forward-looking statements involve risk and uncertainties that may affect the company’s business prospects and performance. The company’s actual results could differ materially from those in such forward-looking statements. Risk factors include but are not limited to general economic, competitive, governmental and technological factors as discussed in the company’s filings with the SEC on Forms 10-K, 10-Q and 8-K. The company does not undertake any responsibility to update the forward-looking statements contained in this release.
Source: Exousia Advanced Materials, Inc.

Keep a close eye on EXOU today, do your homework, and like always BE READY for the ACTION!

Duke Energy Corporation posted a Year Record Price - NYSE:DUK

Duke Energy Corporation (NYSE:DUK) achieved its new price of $20.89 where it was opened at $20.95 up 0.37 points or +1.81% by closing at $20.86. DUK transacted shares during the day were over 10.20 million shares however it has an average volume of 14.63 million shares.
DUK has a market capitalization $47.80 billion and an enterprise value at $45.53 billion. Trailing twelve months price to sales ratio of the stock was 1.91 while price to book ratio in most recent quarter was 1.20. In profitability ratios, net profit margin in past twelve months appeared at 12.89% whereas operating profit margin for the same period at 20.61%.
The company made a return on asset of 3.11% in past twelve months and return on equity of 8.21% for similar period. In the period of trailing 12 months it generated revenue amounted to $14.31 billion gaining $10.76 revenue per share. Its year over year, quarterly growth of revenue was 0.50% holding -29.60% quarterly earnings growth.
According to preceding quarter balance sheet results, the company had $2.18 billion cash in hand making cash per share at 1.64. The total of $20.11 billion debt was there putting a total debt to equity ratio 87.83. Moreover its current ratio according to same quarter results was 1.23 and book value per share was 17.11.
Looking at the trading information, the stock price history displayed that its S&P500 52 Week Change illustrated 1.19% where the stock current price exhibited up beat from its 50 day moving average price $20.46 and remained above from its 200 Day Moving Average price $19.30.
DUK holds 1.33 billion outstanding shares with 1.33 billion floating shares where insider possessed 0.25% and institutions kept 47.70%.

Searing Heat for Sears Stock (SHLD)

I recently wrote that consumer behavior was changing dramatically in the face of rising oil prices.  Demand is down and interest in smaller, more fuel efficient vehicles is growing. The great thing about capitalism is that if we fail to change our ways, markets will do it for us. What is just beginning to happen with oil and consumer behavior is happening on the corporate level dealing with a slowing economy.
That is to say, competition for a share of the consumer dollar is fiercer than at any other time in recent history. Corporations that adapt to the new field of play will survive.  Those that don’t won’t.

Let’s take a look at stock pick Walmart (WMT).  For most of the new millennium, WMT was getting taken to the cleaners by sleek rival Target (TGT).
Seen mostly as a bargain bin basement with little knack for style, WMT had trouble prying extra dollars away from the consumer.  TGT had little trouble increasing dollars spent at its stores as they focused on luxury brands and style at low prices.
That worked great in an expanding economy, but what happens when that growth disappears? (For more on Target’s recent share decline you’ll want to read, “Why are Target Shares Off Target?”)
We are seeing the results before our very eyes.  All of a sudden that bargain basement doesn’t look so bad with oil prices hitting $135 per barrel!
In fact, the ChangeWave Alliance has been showing tremendous strength for both Wal-Mart and Cosco since late February. For more details, check out Paul Carton’s recent article, “World Takeover By Wal-Mart and Costco (COST).”
Behavior is changing, and that change is benefiting WMT as they remain focused on pushing lower pr! ices to its consumers.
Target is not faring as well. Those little extra spending sprees by its customers are no longer the norm and as a result TGT results have been less than stellar. TGT will have to find a new formula that will work given the current and expected conditions moving forward.
With the game still being played, it will be interesting to see how things pan out for both companies.
One company that is not faring so well in the current environment is… Sears Holding (SHLD).  The star child of private equity guru, Eddie Lampert, SHLD has not fared well with the collapse in economic activity. Highly leveraged to the homebuilding cycle, sales of its large consumer items like dishwashers, refrigerators and laundry machines dropped hard as new home sales fell.
As a result of the slowing sales, shares of SHLD have lost more than $100 per share in just the last year alone.  What had been a former high flyer enjoying the benefits of monetizing real estate holdings is now simply a retail stock playing in a very difficult field under very difficult circumstances.
Does Eddie Lampert have it in him to change behavior in a way that generates positive results for shareholders? I’m not so sure. While Mr. Lampert has the skills as a financier, does he have what it takes to adapt to intense competition?
I would be worried if I were a SHLD shareholder. Just today, the company announced that it had lost $56 million in the first quarter coming fall short of Wall Street estimates.  Sales dropped 6% as the company blamed higher fuel and food costs for its woes.
The blame game is a natural reaction, but I think SHLD needs to look hard in the mirror.  There are retailers that are adapting well to the current environment and even those that may have had trouble in the early stages adjusting strat! egy in a way that is already showing results.
That is not happening at Sears.
Where we go from here is anyone’s guess.  I can give Lampert a free pass in the short term, but there needs to be a plan for going forward.
The bottom line: will the company better manage inventories improving its mix of products to enhance sales even in this difficult market?  If they do, SHLD will bounce back big. If not, it will be more pain for shareholders.
One market that is still growing and growing fast is China. And more importantly, competition is not nearly as fierce as it is in the United States. Check out Robert Hsu’s China Strategy letter for the companies that can be expected to prosper in that environment.
Jamie Dlugosch
Executive Editor, InvestorPlace

Join China Strategy risk-free today, and Robert Hsu bring you the latest news and developments from China. He’ll tell you how to profit from this extraordinary global opportunity and which companies and industries to avoid. Be among the first to know which companies to buy and when by joining China Strategytoday. Don’t miss out!

The market works back from an opening-bell selloff

With stocks and most commodities in retreat mode since the S&P 500 hit a 2011 high on April 29, ?the cumulative effect of having stocks fall eight of the 12 days since then has begun to infect investor sentiment.

On Tuesday, the market showed a little more fight than in recent days, but complacency (at best) has become the prominent theme.

The S&P 500 dropped less than a half-point to 1329, while the Nasdaq gained a point to 2783. Those relatively flattish results were more representative of the market than the Dow Jones Industrial Average, which fell 69 points, due largely to the selloff in shares of component (The market works back from an opening-bell selloff)Hewlett-Packard (NYSE:HPQ), which dropped?more than 7%?after its earnings report late Monday that included a weak forecast.

Volatility still reigned, as a strong dollar and some work European economic data had set U.S. stocks up for an opening-bell selloff, and at one point the S&P 500 dipped below 1320 for the first time since April 20, while oil, gold and silver all started lower.

However, like everything else market-related these days, swings in either direction are prone to do exactly the opposite, and the dollar’s sharp rally took a break, helping commodities recoup their losses.

Not entirely, however — oil, which had dropped as low as $95.02 a barrel, still settled under $97 a barrel, a drop of 0.5%, while gold and silver fell 0.7% and 1.6%, respectively.

While stocks continue to largely be at the mercy of the dollar-commodities complex, the corporate and economic data weren’t particularly inspiring, including dour notes on housing starts, building permits, and a tepid report from (The market works back from an opening-bell selloff)Wal-Mart (NYSE:WMT) (following one a day earlier from Lowe’s (NYSE:LOW) working as a pesky reminder that the housing market doesn’t seem to offer any short-term sanguinity.

Similarly, the action in bonds, which saw the 10-ye! ar note& #8217;s yield drop to 3.12% (extremely close to its 200-day average), doesn’t exactly dovetail with an optimistic take on what investors expect to gain elsewhere.

On the other hand, stocks did show some fight on an above-average day in trading volume and large-cap financials showed strength, outperforming the market on back-to-back days — a good sign for the bulls.

Given stocks have dropped 2% in a week, a flat-line finish certa

ECB Still Will Boost Rates in September

Emerging-markets valuations have made an extraordinary V-shaped move in the last six months, yet Brazil still looks almost as cheap as it did back in August.

Believe it or not, a big Brazil fund such as EWZ (NYSE:EWZ) has rebounded only about 6% since late August, when the Bovespa had been pounded to a forward P/E of 8.3.

As a result, the improvement in tone has barely brought EWZ back to a P/E of 9 — still far enough below the broad MSCI Emerging Markets valuation of 10 to tempt traders back to this healing-but-still-bruised market.

The question is, can those forward-looking earnings forecasts be trusted?

A slowing global economy will naturally drive analysts to downgrade their Brazilian earnings models to reflect reduced appetite in Asia for iron ore and pulp — China alone accounts for 15% of Brazil s exports.

The answer is to focus on stocks that are less exposed to China. So skip Vale (NYSE:VALE), the second-biggest company on the Bovespa and the largest miner of iron ore in the world. Besides, Vale s mines have been washed out by heavy rain, forcing it to leave 2 million tons of ore contracts unfilled.

We know China is still buying plenty of oil, though, which makes Petrobras (NYSE:PBR) a natural place to start looking. PBR is huge, but it s definitely on an upward trend — up 20% year to date and just cracking the 200-day resistance line in the last few days.

If we hold this line, there’s plenty of room for upside. Before collapsing in the August sell-off, PBR was moving in a comfortable range of $30 to $45 over the last few years.

To get back on that footing again, PBR will need to rally an additional 17%. Meanwhile, the stock is on the cheap side, with a P/E of 8.85, and even with its massive petroleum reserves, it s still priced at maybe 1.05 times book value.

PBR also stands to benefit from the ongoing shif! t in ins titutional portfolios, which were very underweight this stock for a long time. It takes a lot of buying to shift the needle here — we re talking about the fourth-biggest stock in the world — but the needle is definitely moving back in the right direction.

On the domestic side, banks are also relatively immune to the shifting export cycle and are best-positioned to benefit from the local central bank s recent efforts to relax some of the highest inflation-adjusted interest rates in the emerging world.

Still, Brazil seems to have won at least a temporary victory against inflation. The job market is tight, and despite the occasional problem for a fringe lender, credit quality is improving.

With conditions like these to work with, Banco Bradesco (NYSE:BBD) is probably our favorite name in the sector. BBD has it all: improving loan margins, net interest margins and a PEG ratio of just 0.50.

While the P/E is a little rich at north of 10, it still fails to reflect the true value of BBD s loan portfolio. Price to book is all the way down at 0.33.

Compare BBD with Itau Unibanco (NYSE:ITUB) and the choice is clear on just about every measure. ITUB is more richly valued, with a P/E of 11+, trades at 2.45 times book value and a PEG of 1 and even has much worse credit quality than its rival.

So why buy ITUB when you can get BBD? We have yet to hear a good answer.

On last note: Watch the Brazilian real for your next hints on where the Bovespa is headed. The real was one of the worst-performing currencies last year, printing a 10.5% decline against the dollar. But in the last three weeks, it has shaped up as one of the fastest-appreciating currencies in the world.

Institutional traders need to buy reais before they buy Brazilian stocks. If that s what s going on here, the long-looked-for rally could be on the way.

5 prolific Mercedes cars from years gone by

The Mercedes-Benz SSK. The name means Super Sport Kurz, or “Super Sport Short” in German, the model, which was built between 1928 and 1932, was capable of extreme performance, which it realised when it won numerous competitions. At the time, it was one of the most highly regarded sports cars although it was a wheelbase of an early Mercedes-Benz S.
The Mercedes-Benz W125 Rekordwagen was produced in the tail end of the 1930s derived from a recent car at the time. The significant difference was the engine as the Grand Prix race car had a lower engine, a V12, which was able to reduce drag.
The Mercedes-Benz SLR McLaren. This was a collaboration between Mercedes-Benz and McLaren Automotive. The grand tourer was built in England, more specifically Woking, Surrey and Portsmouth. Mercedes-Benz owned almost half of the McLaren Group at the time. The car sold between the years 2003 and 2009. Some commentators said they classed it as a GT.
The Mercedes-Benz S-Class. This series of luxury sedans was a introduced, along with the W116 S-Class in 1972. It continued on from former models who go a long way back, to the mid 1950s. The S-Class is Mercedes-Benz’s flagship and has introduced many of the brand’s technologies such as drivetrain technologies.
The Mercedes-Benz M-Class. This sporty, utility SUV was brought to the market in 1997. However, it was officially listed a 1998 model. Its success didn’t occur overnight but it eventually proved successful in the Us and Mexican markets. With regards to its size it is larger tan a GLK lass but smaller than a GL-Class, a model with a platform that it shares. At one point, it was also being built in Austria, with an eye on he European market. This was before it moved to a part of the US market.

Polo Ralph Lauren Corporation (RL) Closes 2.73% Higher

Shares of Polo Ralph Lauren Corporation (NYSE: RL) jumped more than 3% in today's trading. The stock reached a high of $89.26 in trading, and closed 2.73% higher at $88.12. Volume was up from daily average of 1.01 million to 5.58 million.
Earlier today, Polo Ralph Lauren reported its fourth quarter and fiscal 2010 results. The company reported fourth-quarter net income of $114 million, or $1.13 per share, up from $45 million, or $0.44 per share reported in the fourth quarter of previous year. For fiscal 2010, the company reported net income of $480 million, or $4.73 per share, up from $406 million, or $4.01 per share reported in fiscal 2009. Revenue increased 9% to $1.3 billion in the fourth quarter. For the full fiscal year, revenue fell 1% to $5 billion. The decline has been mainly due to lower global wholesale shipment volumes. In the fourth quarter the company opened three directly operated freestanding stores, while it closed two directly operated freestanding stores. It also took over 16 freestanding stores and 75 concession shop locations in Asia.
Commenting on the results, Ralph Lauren, the company's chairman and CEO, said that in fiscal 2010, the company saw tremendous growth????????? and progress. Lauren said that the successful takeover Asian operations, development of accessories products and opening of several luxury stores were the highlights of fiscal 2010. With more than $1.2 billion in cash and investments on its balance sheet, the company is planning to accelerate investments in growth initiatives during fiscal 2011.
But where will this growth come from? The U.S. market is only just recovering. Consumer spending, the backbone of the U.S. economy, is seeing a rebound. But, it is still way below the pre-crisis levels. Europe is even worse. With all the troubles that the continent has been growing through, it looks like a recovery is a long way off. This leaves the company with just the Asian markets. In fiscal 2010, the company took contro! l of the Asian operations and this gives a signal that it is ready to focus more on these markets. This is a step in the right direction.
The stock has seen a lot of price fluctuations in the past year. It has a 52-week range of $48.07-$95.59. The stock has a beta of 1.60. Currently, the stock is trading above its 50-day and 200-day moving averages.
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Is FLIR's Stock Expensive by the Numbers?

Numbers can lie -- but they're the best first step in determining whether a stock is a buy. In this series, we use some carefully chosen metrics to size up a stock's true value based on the following clues:

• The current price multiples.
• The consistency of past earnings and cash flow.
• How much growth we can expect.

Let's see what those numbers can tell us about how expensive or cheap FLIR Systems (Nasdaq: FLIR  ) might be.
We'll look at the numbers against some competitors and industry mates: L-3 Communications Holdings (NYSE: LLL  ) , Lockheed Martin (NYSE: LMT  ) , and Honeywell International (NYSE: HON  ) .
The current price multiples
First, we'll look at most investors' favorite metric: the P/E ratio. It divides the company's share price by its earnings per share -- the lower, the better.
Then, we'll take things up a notch with a more advanced metric: enterprise value to unlevered free cash flow. This divides the company's enterprise value (basically, its market cap plus its debt, minus its cash) by its unlevered free cash flow (its free cash flow, adding back the interest payments on its debt). Like the P/E, the lower this number is, the better.
Analysts argue about which is more important -- earnings or cash flow. Who cares? A good buy ideally has low multiples on both.
FLIR has a P/E ratio of 18.5 and an EV/FCF ratio of 29.9 over the trailing 12 months. If we stretch and compare current valuations to the five-year averages for earnings and free cash flow, FLIR has a P/E ratio of 19.9 and a five-year EV/FCF ratio of 23.3.
A positive one-year ratio under 10 for both metrics is ideal (at least in my opinion). For a five-year metric, under 20 is ideal.
FLIR ! has a mi xed performance in hitting the ideal targets, but let's see how it compares against some competitors and industry mates.?

Company	1-Year P/E	1-Year EV/FCF	5-Year P/E	5-Year EV/FCF
FLIR Systems	18.5	29.9	19.9	23.3
L-3 Communications Holdings	7.1	7.4	7.7	7.7
Lockheed Martin	8.8	11.3	8.9	9.4
Honeywell International	15.7	25.0	18.3	14.5

Source: S&P Capital IQ.

Numerically, we've seen how FLIR's valuation rates on both an absolute and relative basis. Next, let's examine...
The consistency of past earnings and cash flow
An ideal company will be consistently strong in its earnings and cash flow generation.
In the past five years, FLIR's net income margin has ranged from 13.7% to 20.6%. In that same time frame, unlevered free cash flow margin has ranged from 8.2% to 22.2%.
How do those figures compare with those of the company's peers? See for yourself:

Source: S&P Capital IQ; margin ranges are combined.

Additionally, over the last five years, FLIR has tallied up five years of positive earnings and five years of positive free cash flow.
Next, let's figure out...
How much growth we can expect
Analysts tend to comically overstate their five-year growth estimates. If you accept them at face value, you will overpay for stocks. But while you should definitely take the analysts' prognostications with a grain of salt, they can still provide a useful starting point when compared to similar numbers from a company's closest rivals.
Let's start by seeing what this company's done over the past five years. In that time period, FLIR has put up past EPS growth rates of 16.5%. Meanwhile, Wall Street's analysts expect future growth rates of 14.8%.
Here's how FLIR compares to its peers for trailing five-year growth:

Source: S&P Capital IQ; EPS growth shown.

And here's how it measures up with regard to the growth analysts expect over the next five years:

Source: S&P Capital IQ; estimates for EPS growth.

The bottom line
The pile of numbers we've plowed through has shown us the price multiples shares of FLIR?are trading at, the volatility of its operational performance, and what kind of growth profile it has -- both on an absolute and a relative basis.
The more consistent a company's performance has been and the more growth we can expect, the more we should be willing to pay. We've gone well beyond looking at an 18.5 P/E ratio, and we see that its price multiples are elevated for companies linked to the defense industry. Its multiples are higher than each of its comps.
However, looking at margins and growth over the last five years, FLIR also beats L-3, Lockheed, and Honeywell. On an absolute basis, its margins are quite impressive.
Although FLIR's price multiples ! are expe nsive, its operational numbers could justify them. Our CAPS community rates FLIR four stars out of five despite the uncertainty of defense budgets. But these initial numbers are just a start. If you find FLIR's numbers or story compelling, don't stop. Continue your due diligence process until you're confident one way or the other. As a start, add it to My Watchlist to find all of our Foolish analysis.
I wrote about a stock that's flying under the radar in our brand new free report: "The Stocks Only the Smartest Investors Are Buying." I invite you to take a free copy to find out the name of the company I believe Warren Buffett would be interested in if he could still invest in small companies.

The Fed, The S&P 500, & Why Gold Is Shining Bright

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around (the banks) will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
~ Thomas Jefferson ~
Well here we are, caught between resistance in the S&P 500 around the 1,330 area and support around the 1,300 price level. My last two articles have discussed why I was expecting a top in the coming days and weeks ahead, but prices just continued to work higher.
One of the things that I pride myself in as a person who trades and writes about financial markets in public is that I am always honest. If I blow a call I fess up and admit it. When I have made mistakes in the past, I always try to learn something new from them and I discuss losing trades publicly with readers and members of my service.
This time is different. I honestly do not know if I am going to be right or wrong. The price action in the S&P 500 Thursday was certainly bearish short term, but a back test of 1,300 or possibly even 1,280 could give rise to a Phoenix. Granted, the Phoenix is nothing more than Ben Bernanke's pet, but that is a topic for a different time.
I have scanned through my list of indicators which discuss sentiment based on momentum, put/call ratio, the advance/decline line, Bullish Percent Indicators, and several ratio based indicators and they are all SCREAMING that a top is near. The interesting thing about the previous statement is that it would have been true a week ago and mostly true two weeks ago, yet prices have continued to climb.
The daily chart of the S&P 500 Index demonstrates the recent price action that has cont! inued to climb the "Wall of Worry" for several weeks:
S&P 500 Daily Chart
?
The culmination of the massive run higher for the S&P 500 was the dovish comments coming from Ben Bernanke during Wednesday's press release and press conference.
The U.S. & European Central Banks are seemingly in a perpetual race to debase their underlying fiat currencies. The race will not end well. In fact, this type of situation smells like a Ponzi scheme where Ben Bernanke and Mario Draghi (ECB President) are the wizards behind the curtains.
Their loose monetary policies and forced reflation are synthetic drugs that juice risk assets higher and ultimately Mr. Market will have his vengeance in due time.
At this point, it seems like Ben Bernanke will do anything to juice equity prices higher. I think his hope is that they will be able to artificially keep the game going until the recovery is on a more sound footing. However, when the entire recovery is predicated on cheap money and liquidity and is not supported by organic economic growth it just prolongs the inevitable disaster.
As an example, the daily chart of the Dow Jones Industrial Average is shown below. I would point out that that Dow came within 35 points (0.27%) from testing the 2011 highs. Furthermore, the Thursday high for the Dow was only 1,356 points (10.55%) from reaching the all-time 2007 October high.
Dow Jones Industrial Average Daily Chart
?
I have argued for quite some time that the economy and the stock market are two different things. If Bernanke and his cronies succeed in reflating the financial markets and the Dow reaches its October 2007 high in the near term, more retail investors will regard equity markets as being rigged.
Who could blame them for viewing financial markets as a giant rigged casino that stands to win while they continue to lose their hard earned capital? We all recognize t! hat the current economy is nowhere near as strong as it was in 2007. But alas, the regular retail investor does not recognize that the stock market and the economy do not portray the same meaning.
One specific underlying catalyst that has gone largely unnoticed by most of the financial media during this sharp run higher in stocks is the total lack of volume associated with the march higher. The NYSE volume over the past 2 months has been putrid when compared to historical norms.
As a trader, I am forced to take risk through a variety of trade structures. However, the idea that a crash could be coming seems hard pressed as long as Big Bad Ben is at the wheel.
If the Russell 2000 drops 10%, I am convinced that Ben will be out making announcements that the Fed stands ready to intervene with all of the supposed tools they have at their disposal. Let's be honest here, they really have one tool comprised of 3 separate functions which are all a mechanism to increase liquidity in the overall system.
To express this liquidity, the following chart from the Federal Reserve shows the M2 money supply levels:
Current M2 Money Supply
?
The 3 functions are the printing of currency, the monetization of U.S. Treasury debt (QE, QE2, QE2.5, Operation Twist), and exceptionally low interest rates (ZIRP) near 0 for an "extended period of time (2014)." Since monetary easing is all that the Federal Reserve has done since the financial crisis began, it begs to reason that the Federal Reserve has no other solutions or tools available. If they did, they seemingly would have used them by now.
The first bubble they created due to loose monetary policy was the massive bubble in oil in 2008. Fast forward to the present, and they are currently supporting another bubble in U.S. Treasury obligations. The bubble that they will create in the future when the game finally ends will be in precious metals. The precious metals bubble will be building while the Federal! Reserve and the U.S. Treasury attempt to keep the Treasury Bond bubble from bursting.
At this point in time, if we continue down this path stocks will not protect investors adequately from inflation should the Treasury bubble burst. I would argue that the central planning and monetary policy we have seen the past few years continues in the United States and Europe that gold, silver, and other precious metals are likely to begin their own bubble of potentially epic proportions.
As the weekly chart of gold futures illustrates below, gold has recently pulled back sharply and has broken out. I will likely be looking for any pullbacks in gold as buying opportunities as long as support holds.
Gold Weekly Chart
?
In closing, for longer term investors the stock market might have some serious short term juice as cheap money and artificially low interest rates should juice returns. However, eventually equities will start to underperform. At that point, gold will be in the final stages of its bubble and the term parabolic could likely be applied.
If central banks around the world continue to print money there are only a few places to hide. Precious metals and other commodities like oil will vastly outperform stocks in the long run if the Dollar continues to slide. The real question we should be asking is who will win the race to debase, Draghi or Bernanke?

ResMed Inc. Earnings: Keeping the Profitability Streak Alive

ResMed Inc. (NYSE:RMD) reported net income above Wall Street’s expectations for the second quarter. ResMed is a developer, manufacturer and distributor of medical equipment for treating, diagnosing and managing sleep-disordered breathing and other respiratory disorders.
ResMed Earnings Cheat Sheet for the Second Quarter
Results: Net income for ResMed Inc. rose to $62.9 million (42 cents per share) vs. $58.5 million (37 cents per share) in the same quarter a year earlier. This marks a rise of 7.6% from the year earlier quarter.
Revenue: Rose 8.7% to $332.7 million from the year earlier quarter.
Actual vs. Wall St. Expectations: RMD beat the mean analyst estimate of 38 cents per share. It fell short of the average revenue estimate of $339.6 million.
Quoting Management: Peter C. Farrell Ph.D, chairman and chief executive officer, commented, “On a regional basis, revenue in the Americas increased by 12% to $182.5 million over the prior year’s quarter. Revenue outside the Americas was $150.2 million, an increase of 5% over the prior year’s quarter, on both a GAAP and constant currency basis. Our global operating profit for the December quarter was $67.3 million and cash flow from operations was a record $110.6 million, demonstrating excellent operating performance. During the quarter, we also repurchased 4.1 million shares, at a cost of $110.5 million, as part of our ongoing capital management program.”
Key Stats:
Gross margin shrank 1.1 percentage points to 59.7%. The contraction appeared to be driven by increased costs, which rose 11.7% from the year earlier quarter while revenue rose 8.7%.
Revenue has risen the past four quarters. Revenue increased 11.6% to $314.8 million in the first quarter. The figure rose 17.3% in the fourth quarter of the last fiscal year from the year earlier and climbed 12.4% in the thi! rd quart er of the last fiscal year from the year-ago quarter.
The company topped expectations last quarter after falling short of forecasts in the first quarter with net income of 33 cents versus a mean estimate of net income of 35 cents per share.
The increase in profit last quarter comes after net income fell in the previous quarter. In the first quarter, net income declined 10.9% to $50.5 million.
Looking Forward: Expectations for the company’s next quarter results are lower than they have been. Over the past sixty days, the average estimate for third quarter has fallen from 40 cents per share to 39 cents. In the past month, the average estimate for the fiscal year has fallen from $1.55 per share to $1.54 abs.
Competitors to Watch: Allied Healthcare Product (NASDAQ:AHPI), Masimo Corporation (NASDAQ:MASI), Electromed, Inc. (NASDAQ:ELMD), Medtronic, Inc. (NYSE:MDT), Dynatronics Corporation (NASDAQ:DYNT), Thermo Fisher Scientific Inc. (NYSE:TMO), Covidien plc (NYSE:COV), Dehaier Medical Systems Ltd (NASDAQ:DHRM), and CareFusion Corporation (NYSE:CFN).

Woz loves Android, but iPhone is still good for most in 2012

(gigaom.com) -- My primary phone is the iPhone. I love the beauty of it. But I wish it did all the things my Android does, I really do.
Speaking to Dan Lyons in an article comparing the iPhone to Android devices, Apple co-founder, Steve Wozniak points out the relative limitations of Apple’s iPhone. Woz makes the case made by many smartphone power-users, suggesting the iPhone is still a great device for most people, but with a little effort and understanding, more can be done to an Android phone. Greater customization and user control have always been key selling points for Android devices; both the high-end smartphones and even the low-cost units.

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Another interesting tidbit from Lyons’ article: unlike me, Woz prefers the Motorola Droid Razr over the Samsung Galaxy Nexus. Really, Woz? Are you running a custom ROM or are you suggesting that Android 4.0 isn’t as good as its predecessor? Oh well; that’s the beauty of Android: To each his or her own!
Related research and analysis from GigaOM Pro:
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• Connected world: the consumer technology revolution

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Darden Drops As Olive Garden’s Troubles Continue

Olive Garden is a simple restaurant concept that has turned into to be a serious problem for Darden Restaurants (DRI), which owns the chain along with others like Red Lobster and LongHorn Steakhouse.
Today, Darden lowered its EPS projection for the second quarter to 41 cents per share, below analysts’ expectations for 54 cents. The company also lowered its sales and profit forecast for 2012; it now expects EPS to grow 4% to 7%, down from 12% to 15% previously. Sales growth is now projected to come in at 6% to 7%, down from 6.5% to 7.7% previously. Shares fell 11% in morning trading.
Olive Garden’s same-restaurant sales have continued to fall, and the chain is expected to post a 2.5% drop for the current quarter. Same-restaurant sales actually fell 5.7% in November, accelerating from a 2.5% drop in October, according to a Darden release.
“At Olive Garden, we’re addressing the erosion in one of the brand’s essential attributes, its value leadership in casual dining,” said Chairman and CEO Clarence Otis. “In working to re-establish that historical value advantage, Olive Garden more strongly emphasized containing check growth this quarter than in prior periods, and that was reflected in its promotion and in-restaurant merchandising tactics. This helped temper the guest count decline for the quarter, but not as much as expected.As a result, there was more earnings pressure than anticipated.”

Favorite Large Bank Picks For Jan-2012

Yesterday, major regional banks (fourteen in number) sported gains of almost 1.16 percent, collectively. Among these banks, Bank of America's share price gained the least ($0.18), while? M&T Bank Corp's share price gained the most ($3.8).

Share price gains were surprising given that the Federal Reserve proposed steps to strengthen regulation and supervision of large bank holding companies with consolidated assets equal to or greater than $50 billion or those designated to be systemically important. The proposals include risk-based capital and leverage requirements implemented in two phases that would include subjection to the Fed's capital plan rule that requires firms to develop annual capital plans, conduct stress tests, and maintain adequate capital ratios, as well as a proposal issued by the Fed to implement a risk-based capital surcharge based on the framework and methodology developed by the
Basel Committee on Banking Supervision. Firms would also be subjected to annual stress tests. Credit exposure of a covered financial firm would be limited to a single counterparty as a percentage of the firm's regulatory capital. The Fed noted that it is proposing that firms would need to comply with many of the enhanced standards a year after they are finalized. Requirements related to stress tests would take effect shortly after the rule is finalized.

Compliance with Fed's proposals would not only increase regulatory costs but would also limit strategic options for these banks. So Fed's announcement should have had a negative impact. Yesterday that didn't happen but would surely happen as the market digests the import of Fed's proposals. This should lead to adjustments, positive on some and negative on some other, in the share prices of these fourteen banks. Though I am not giving the workings of the detailed share price impacts, nevertheless I will pick my favorite stocks among these fourteen.

Fifth Third Bancorp? (NASDAQ:FITB)

Fifth Third! 's capit al position is already well in excess of established standards, likely standards, and most peers. Holding company cash is currently sufficient for more than 2 years of obligations. Minimal holding company or bank debt maturities until 2013, so need for new capital at above peer average cost of marginal capital is minimal. Fifth Third has completely exited all crisis-era government support programs and it is one of the few large banks that
have no TLGP-guaranteed debt to refinance in 2012. In addition, it has no direct European sovereign exposure; total exposure to European peripheral borrowers is less than $0.2 billion and gross exposure to European banks less than $0.3 billion.

I expect FITB share to test $15.5 and establish $15 in January 2012.

State Street Corporation? (NYSE:STT)

STT has two powerful platforms for growth namely State Street Global Services ($21.5 trillion in assets under custody and administration), and State Street Global Advisors (1.9 trillion in assets under management). Nearly 78 of its top 100 clients use both asset servicing and asset management and they account for about 35% of total management fee revenue (YTD 2011).

As of end September 2011, STT's tier 1 common ratio was 16 percent,which is significantly higher than 12.5 percent for The Bank of New York Mellon Corporation? (NYSE:BK), and 11.8 percent for Northern Trust Corporation? (NASDAQ:NTRS). Moreover, even under Basel III, STT's tier 1 common ratio was 11.7 percent, which is significantly higher than 6.5 percent for The Bank of New York Mellon Corporation (NYSE:BK), and 11.8 percent for Northern Trust Corporation (NASDAQ:NTRS).

I expect STT share to test $50 and establish $49 in January 2012.

Other stocks that I think could benefit include SunTrust Banks, Inc.(NYSE:STI), U.S. Bancorp (NYSE:USB), and JPMorgan Chase & Co. (NYSE:JPM).{$end}

SEC to appeal rejected Citigroup settlement

NEW YORK (CNNMoney) -- The Securities and Exchange Commission is appealing a federal judge's decision last month to toss out a proposed $285 million mortgage securities fraud settlement between the agency and Citigroup.
Federal judge Jed Rakoff ruled on Nov. 28 that the deal between the SEC and Citi was "neither fair, nor reasonable, nor adequate, nor in the public interest" and ordered the case to proceed to trial in July 2012.
He said that the settlement announced in October, under which Citigroup (C, Fortune 500) neither admitted nor denied the SEC's allegations, deprived the public "of ever knowing the truth in a matter of obvious public importance."
The SEC argued in a statement Thursday that the ruling "inadvertently harms investors by depriving them of substantial, certain and immediate benefits."
"We believe the court was incorrect in requiring an admission of facts -- or a trial -- as a condition of approving a proposed consent judgment," said the agency. It argued Rakoff's ruling would set a new standard for settlements that would be difficult to reach and that it is at odds with established practice.

Big bank SEC settlements: Toothless face-savers?

"Courts have routinely approved settlements in which a defendant does not admit or even expressly denies liability, exactly because of the benefits that settlements provide," said the agency.
The SEC said the $285 million proposed settlement, "while less than investor losses, represents most of the total monetary recovery that the SEC itself could have sought at trial. An SEC settlement does not limit the ability of injured investors to pursue claims for additional relief."
Rakoff said in his ruling that given the damage done to financial markets by the alleged actions by Citigroup, a greater level of transparency is needed.

JPMorgan pays $153 million to settle mortgage case

"[I]n any case like this that touches on t! he trans parency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth," Rakoff, a U.S. district judge in Manhattan, wrote in his decision.
The SEC's pattern of allowing big banks to reach settlements without admitting or denying wrongdoing, Rakoff added, has been "hallowed by history, but not by reason."
Citigroup did not have an immediate reaction to the SEC's appeal. At the time of Rakoff's ruling, a spokeswoman for the banking giant said it respectfully disagreed with the decision.
"In the event the case is tried, we would present substantial factual and legal defenses to the charges," she added.
The SEC alleged that in 2007, Citi created and sold a mortgage-related collaterialized debt obligation, or CDO, called Class V Funding III.
According to the SEC complaint, one CDO trader characterized the asset group in internal communications as "a collection of dogshit" and "possibly the best short EVER!"
Can Wall Street thrive again?
In marketing materials, however, the assets were described as "attractive investments rigorously selected by an independent investment adviser," Rakoff's decision said.
After marketing the CDO, Citi then took a short position -- or bet against -- the security as the housing market deteriorated, bringing in a net profit of $160 million for the bank. Meanwhile, investors lost more than $700 million.
The SEC has settled a string of similar complaints in recent months, including agreements with Goldman Sachs (GS, Fortune 500) and JPMorgan Chase (JPM, Fortune 500).
Rakoff, though, has been a thorn in the agency's side in recent years, rejecting a proposed $33 million settlement in 2009 between the SEC and Bank of America (BAC, Fortune 500) over allegations that BofA lied about bonuses for Merrill Lynch & Co. employees following the firms' merger.
That settlement ! was late r revised upward to $150 million, which Rakoff reluctantly approved, calling it "half-baked justice at its best."
Shares of Citi (C, Fortune 500) closed down 0.5% in trading Thursday.

Buy, Sell or Hold: The Clorox Co. (NYSE:CLX) Is Cleaning Up

The Clorox Co. (NYSE:CLX) on Thursday reported net earnings of $171 million on sales of $1.52 billion for the fourth quarter of fiscal year 2010 ended June 30, compared to net earnings of $170 million on net sales of $1.5 billion the year prior.

This continued the company's trend of improvement. But more importantly, the bulk of Clorox's profit and margin growth came from its international unit, and the firm projected an expansion in earnings per share of at least 10% to 14% for next fiscal year.

Boring is beautiful when you're dealing with consumer staples, since share prices improve with incremental increases in sales and margins. In Clorox's case, this has meant taking advantage of low rates and dependable cashflow to finance expansion plans. But the good news is that the high financial leverage results in an exorbitant return on equity. 

Clorox's strong cashflow affords the company very comfortable debt coverage ratios. Its level of debt to earnings before income tax, depreciation and amortization (EBITDA) has declined in the last three years from 3.3-times to 2.2-times, improving its creditworthiness.  Clorox's interest coverage ratio (EBITDA to interest expense) also has improved strongly, to 8.96-times from 6.27-times.  This trend has warranted an improvement in the firm's credit rating outlook, which in the investment grade is BBB+ to stable. 

There is no question that this is a sound strategy with interest rates so low.  A few years from now, as interest rates normalize and the cost of debt goes up, this strategy will be more costly.  But, by that time, the company's effort to improve its earnings/debt ratio will have put it in a better position to face higher borrowing costs.

Of course, there's more to Clorox's recent success than shrewd borrowing.

In the past two years the company has set out to recover the slight profit ! margin e rosion brought on by the economic disaster.  And in that time, Clorox has recovered much its lost market share through disciplined cost cutting, better pricing power and lower commodity prices.  You see, in this business, little differences add up. That means careful marketing, advertising, distribution and cost controls, as well as an optimal financing structure are of paramount importance.  And that's precisely where Clorox has excelled.

For example, Clorox is already number two in U.S. market share, behind The Procter & Gamble Co. (NYSE: PG).  In fact, Clorox is ranked in the top two in almost every one of its key brands.  And those brands represent 88% of the company's total portfolio. 

While double-digit earnings growth is achievable via growth in both its core U.S. operations and in its international units, do not expect miracles.  The likely range for outperformance or underperformance is relatively small at first sight.  Yet, the relatively low weight of international sales within the company and a proven capacity for successful and profitable innovation make its objectives achievable.  There is some room for upside surprises with both new products and developments in fast-growing emerging economies.

Clorox concentrates some 71% of its international presence in home cleaning and bleach and laundry products in Latin America.  And the fact that Asia today represents only 5% of sales is actually a plus, since it leaves lots of room for improvement in the long term. So, we have a superbly managed marketing company, with plenty of room to grow internationally. 

This success is the result of a carefully managed process that prioritizes margin and market share expansion, allocating resources based on economic profit.  We expect continued margin improvement through the continuation of relentless cost savings initiatives, information technology investment, and innovation.  In addition, market s! hare imp rovement will come from the launching of carefully targeted products - the emphasis being in value and superior customer perception.

Health and wellness are key themes that will drive future growth.  Clorox has very sophisticated market segmentation, product positioning and overall marketing strategy in these sectors.  It is bound to deliver results, based on their proven track record.

Earnings momentum is at its back due to a mix of carefully tested marketing and financial initiatives.  The stock is valued at 13-times earnings at a nice discount to the Standard & Poor's 500 Index. Its Price/Earnings/Growth (PEG) ratio is high at 1.43, though not disqualifying. 

We can overpay a little for growth that we are pretty certain lies ahead. And Clorox offers an attractive 3.4% dividend yield.  That dividend is easily sustainable at a dividend payout ratio of only 47%. In fact, it was just raised by 10% in May.

Technically, the stock is almost "boringly" bullish.  Its 200-day moving average shows a very steady upward slope. At just over $64 a share Clorox is sitting right near its 50-day moving average and in the middle of the Bollinger bands, in an oversold condition.  This bodes very well for an entry point.

However, the stock also is approaching the 2007 all-time high, so it should start showing some short-term resistance. So what is the investment proposition? 

With this type of stability and high dividend yield, Clorox should be a core holding in any portfolio that is not purely speculative.  Rather than sitting in ten-year U.S. Treasury bonds, we can sit on Clorox stock, get paid much more and have the upside of a first-class equity that can actually adjust prices up if inflation becomes a problem. 

If we see some resistance here, we could run a short-term covered-call strategy: Buy the stock and sell some out of the money calls on it.  The one-month calls we sell lower our entry poi! nt in th e stock by the amount of premium we collect and would probably expire worthless.  The traditional risk-minimization strategy is to dollar-cost average into the stock over the next couple of months.

Recommendation: Dollar-cost average into The Clorox Co. (NYSE:CLX) on a weekly basis over the next two months (**).

(**) - Special Note of Disclosure: Horacio Marquez holds no interest in The Clorox Co.

[Editor's Note: Horacio Marquez knows how to make a market call. It was Marquez who told investors that lithium was going to be big - a year before other "experts" made the same call. Now Marquez has isolated the major profit opportunities being created by the possible broadband breakdown - a situation that the news media is only just now starting to understand. To find out all about those top profit opportunities, check out this new report.]

Former SEC Exam Chief Walsh: SEC Whistleblower Program 'Showing Traction'

The former chief counsel at the Securities and Exchange Commission’s exam division, John Walsh, has formed a Whistleblower Response Team with several of his colleagues at the law firm Sutherland Asbill & Brennan to help firms develop whistleblower response programs as Walsh says the SEC’s “initiative is beginning to show traction.”

Walsh, a 23-year veteran of the SEC where he played a key role in creating the Office of Compliance Inspections and Examinations (OCIE), including serving as OCIE’s chief counsel, said in a statement that the SEC’s Whistleblower program, which the agency expanded under Dodd-Frank, is beginning to “see results.”

Walsh cites the November report issued by the SEC detailing the first seven weeks of the Whistleblower program that found that between Aug. 12 and Sept. 30, the SEC received 334 whistleblower tips, an average of nearly 48 per week.

The SEC report notes that the most common complaint categories were market manipulation (16.2%), corporate disclosures and financial statements (15.3%), and offering fraud (15.6%). The commission received whistleblower submissions from individuals in 37 states, as well as from several foreign countries, including China (10) and the United Kingdom (nine).

“Senior SEC officials have stated publically that they are now receiving high-quality information,” Walsh said. “As a result, we believe it is critical that companies receive the most up-to-date information and proper counsel to effectively respond to whistleblower claims as they emerge.”

Other members of Sutherland’s Whistleblower response team are Cynthia Krus, Allegra Lawrence-Hardy, and Holly Smith. The legal team will help clients create effective whistleblower response programs, respond to whistleblower claims, and defend against SEC enforcement actions and civil litigation.

Walsh, the former associate director and chief counsel at OCIE, retired from the agency at the

end of September, and joined Sutherland’s Financial Services Group and Securities Enforcement and Litigation Team in Washington, D.C., on Oct. 1.

In August, the SEC launched a web page that allows individuals to report a violation of the federal securities laws and apply for a financial award. The whistleblower program provides a monetary incentive of between 10% and 30% of sanctions the SEC collects for whistleblowers who voluntarily provide the agency with original information that leads to a successful SEC action with sanctions exceeding $1 million.

While 170 applicable enforcement judgments and orders issued from July 21, 2010 through July 31, 2011 included the imposition of sanctions exceeding the statutory threshold of $1 million, the SEC explained in its report, because the 90-day application period had not passed with respect to any of these actions as of the end of the fiscal year, applications for awards had not yet been processed. Accordingly, the commission did not pay any whistleblower awards during fiscal year 2011.

Stocks Attractive to Traders Today in 2012: BLK, JCI, UNP, MS, UNH, KCG, EGHT

CEO Laurence D. Fink of BlackRock, Inc. (NYSE:BLK), wants corporations to adopt shareholder friendly practices, according to Bloomberg. The company holds at?a minimum?5% of the shares of 2,400 companies worldwide. In letters to 600 of the firm’s biggest holdings,?Fink wrote?that BlackRock seeks to “engage in dialogue” with management to address issues that will be raised this year at shareholder meetings.
Shares of Johnson Controls, Inc. (NYSE:JCI) are trading 8.09% lower today, with consensus?of $44.03B. Johnson Controls lowers their Euro assumption to $1.30 from $1.35,?having seen Europe auto production at 20.1M units, +1.5%.
Versus a consensus of $5.06B,?Union Pacific Corporation (NYSE:UNP) reports Q4 revenue of?$5.1B.
Shares of Morgan Stanley (NYSE:MS) are trading 4.5% higher today, as the company is rumored to be cutting senior banker and trader pay 20%-30%, according to?Bloomberg. Sources with knowledge of the plan were cited.
Shares of UnitedHealth Group Inc. (NYSE:UNH) are trading 2.97% lower today, after?FY12 revenue $107B-$108B vs. consensus $108B is being projected.
Shares of Knight Capital Group Inc. (NYSE:KCG) are trading 9.28% higher today, following reports of Q4 revenue $341.3M vs. consensus $312.47M. Q4 Electronic Execution Services projects revenue $40.6M vs. $37.1M. And Market Making revenue is projecting?$187.4M vs. $111.0M.
Shares of? 8×8, Inc. (NASDAQ:EGHT) are trading 24.11% higher today, after it was revealed that business customer churn decreased to a record low of 2.0%, compared to a churn rate of 2.2% in the same period in 2011 and 2.1% in the 2012. Ending Q3 with 27,677 business customers, 8×8 reported Q3 revenue $23.3M vs. consensus $22.09M.

Credit Crisis Update: U.S. Stocks Skid as Bailout Bogs Down, President to Address the Nation

NEW YORK (CNNMoney) -- Greece and its private sector creditors remain mired in deep negotiations over a deal to reduce the nation's crushing debt load.
Institute of International Finance director Charles Dallara, who represents the private sector investors and banks that hold Greek debt, said "it's not entirely clear" how close the parties are to a deal.
"I wouldn't say I'm confident, but I'm hopeful we'll reach agreement," Dallara told CNN International's Richard Quest in a phone interview from Athens.
The talks ended Wednesday without an agreement. They will resume Thursday and Dallara said final terms could be reached in the days ahead.
The IIF has been in discussions with the Greek government over an agreement to voluntarily write down the value of Greek government bonds by 50%.
The private sector holds over €200 billion worth of Greece's total debt load -- estimated at €350 billion.
Dallara said the group intends to follow through on the 50% writedown, which was announced following a summit of European Union leaders in December.
That would result in significant losses for the private sector. But it would also help reduce Greece's debt load to 120% of economic output by 2020.
In addition, Dallara said 15% of the remaining amount that Greece owes the private sector would be paid in cash. Another 35% would be restructured, or replaced with loans that have longer maturities and lower interest rates.
The talks broke down last week amid demands for even larger write downs, and Greek Prime Minister Lucas Papademos' call for a private sector participation rate of 100%.
Dallara told CNN he's confident the group can "mobilize a high participation." But that doesn't mean 100%, he added.
The deal is a key condition for Greece to receive additional bailout funds from the European Union and International Monetary Fund. Without additional financial support, Greece may not be able to make a €14 bill! ion paym ent it owes on bonds coming due March 20.
Dallara stressed that both sides are interested in finding "common ground."

World Bank warns on risk of global recession

He said the creditors recognize that a portion of Greece's debt needs to be written off in order to avoid a "disorderly" default, which could have severe repercussions for the global economy. But he acknowledged that some investors may be worried that other euro area governments could extract similar concessions.
All governments have an interest in resolving Greece's debt problems "in a cooperative manner" so that investors will be confident that issues this extreme can be resolved "in a mutually satisfactory way," said Dallara.
-- CNN's Jim Boulden contributed to this report from London.

Best Stocks To Buy Right Now

Best Stocks To Buy Right Now: Constellation Brands (NYSE: STZ)

Constellation Brands (NYSE: STZ), the largest wine company in the world by revenue and the largest premium wine company, offers a value-priced play on the potential growth of the US wine market.
Constellation also owns 50% of Crown Imports, the joint venture that distributes Corona Extra and Corona Light, the best selling imported beer in the US. As well, Constellation owns Svedka Vodka, one of the fastest growing premium vodkas.
The company’s well-known wine labels include Woodbridge and Robert Mondavi (acquired in 2004), Vendange (2001), Franciscan Oakville Estate, Estancia, Ravenswood, Arbor Mist (1998), and Clos du Bois (2007).
If you notice a number of acquisitions on this list, that is because Constellation spent the decade between 1998 and 2007 building up its position as the largest premium wine maker in the US, with sizeable positions in the UK, Canada, Australia and New Zealand as well.

Best Stocks To Buy Right Now: ETJ

High food prices aren’t helping either, for the same reasons. US consumers spend less of their total income on these two items than their counterparts in the developing world, where higher food prices will cause social disruption.
Covered-call funds typically give investors the advantage of producing income in flat markets, but don’t do well in quickly rising or falling markets. We like the idea that gently rising or falling markets can be profitable for such funds.
One such fund we’ve previously recommended is the Eaton Vance Risk-Managed Diversified Equity Income (ETJ). Its advantage is in the risk-managed part of its title. The fund sells calls like most covered-call funds, but also buys puts to guard against a market decline.
Today the fund trades at a steep discount of 9.5%, and offers a yield of 10.1%. We think their new policy of buying protective put spreads is a prudent strategy, although it may have scared off some current holders, depressing the price.
The largest holdings are in information technology at 18.04%, financials at 15.58%, health care at 11.82% and consumer staples at 11.45%.

Best Stocks To Buy Right Now: Zalicus (ZLCS)

Zalicus (ZLCS)—my top pick for a biotechnology stock breakout in 2011—is proving its worth, based on fourth-quarter results.
The company burned $2.1 million in cash during the quarter, and ended the period with $46.5 million in cash and equivalents. As is usual with development-stage biotech companies, aside from cash levels and cash burn, the accounting numbers were less important than management’s program update.
Zalicus has one product on the market: Exalgo, for chronic pain, marketed by a subsidiary of Covidien (COV).
When Covidien reported their results, they mentioned “good sales of our new Exalgo” product. I had forecast $400,000 in Exalgo royalties to Zalicus in the December quarter, so I was pleased to learn that they hit that right on the button.
With the initial distributor inventory back in balance, from here on Exalgo royalties should track prescription growth.
This year, I expect Covidien to target 12,000 frequent prescribers and sell about $50 million in Exalgo, yielding around $4 million to Zalicus at my 8% royalty estimate. Sales should increase to $100 million in 2012, $200 million in 2013 and level off at around $300 million in 2014.
The associated royalties of at least $8 million, $16 million and $24 million will help fund research and clinical trial expenses, with no stock dilution. Zalicus says the royalty rate is “tiered,” so my 8% estimate is conservative.

Best Stocks To Buy Right Now: Cloud Peak Energy (CLD)

One company is likely to take advantage of Asia’s long-term growth without bearing its share of risks. It’s Cloud Peak Energy (CLD), the fourth-largest thermal coal miner in the US.
Unlike base metals, thermal coal (which is used to generate electricity) is highly leveraged to long-run GDP growth.
Despite all the imbalances in Asia, the continent still benefits from an increasingly educated workforce, millions of people moving to cities, and so on. I believe Asian economic output and electricity demand will be much higher in 2021 than in 2011.
Of course, generating all that electricity will require a lot more thermal coal, even if nuclear and renewable energy become much more prevalent. Moreover, China and India have both become significant coal importers in recent years amid soaring demand.
Cloud Peak has not fully taken advantage of these trends and is trading for an exceptionally low valuation. We believe both are poised to change.

Best Stocks To Buy Right Now: UPS (NYSE: UPS)

UPS delivers economies of scale, operational efficiency, and an attractive dividend approaching 3%, write Josh Peters and Keith Schoonmaker of Morningstar DividendInvestor.
UPS (NYSE: UPS) is the colossus among global transportation companies, and powerful barriers to entry guard its economic profit. Its $45 billion of revenue in 2009 exceeded the combined sales of the four largest North American railroads.
The stock looks about fairly valued here, but we’re encouraged that the company’s recent 10.6% boost to its dividend will be the first of several handsome increases as the global economy revives.
Despite its extensive unionization and asset intensity, UPS produces returns on invested capital about double its cost of capital and margins well above those of its competitors. We credit the firm’s leading package density and outstanding operational efficiency, enhanced by extensive investment in information systems.
UPS and its competitors have turned to Asia and developing nations for growth, and we think UPS has a lot of runway left to build speed. Even existing operations have revenue expansion potential because of the firm’s rare pricing power.
While rapid changes in shipping demand during 2009 demonstrate the potential for short-run uncertainty because of macroeconomic factors, we are only optimistic about UPS’ future—and expect solid, if not record, results for 2011.
No Letup in Sight
UPS is in fine shape, financially speaking, with a Morningstar credit rating of A-. The firm has increased its use of debt in recent years, both to satisfy pension obligations and repurchase shares, but debt burdens remain fairly modest. In 2010, the dividend represented 53% of earnings, and the indicated payout ratio for 2011 looks to be around 50%.
While UPS operations are cyclical thanks to the high fixed costs of supporting its worldwide network, profits covered the dividend with room to spare even in the trough year of 2009 (per-share earnings of $2.31), and free cash flow remained strong.
While the cyclical nature of its business has kept UPS from raising its dividend every year, it has either increased or maintained its dividend for more than four decades, and the dole has risen in ten of the 12 years since the stock’s 1999 debut on the public market. (This probably has a lot to do with the fact that an impressive 36% of outstanding shares are Class A stock owned by employees, retirees and descendants of founders.)
The compound growth rate for dividends over the past decade has been a handsome 10.6%, although this pace includes an upward drift in the payout ratio (which averaged 39% from 2002 to 2007).

We believe overall global parcel-shipping market expansion and consistent price increases will enable UPS to grow at a compound annual rate of 8% during the next five years, a pace we expect the dividend to match.
At the stock’s current yield of 2.8%, we think UPS can deliver average total returns approaching 11% a year.

Best Stocks To Buy Right Now: TAL International Group (TAL)

TAL International Group (TAL) is one of the world’s largest lessors of containers and chassis. The company buys intermodal containers that can be transported on ships, trucks, and railcars—enabling containers full of goods to travel great distances with a minimum of handling.
TAL’s operations include buying, leasing, and subsequently selling multiple types of intermodal containers. TAL is also involved in reselling containers to container traders and users, as well as financing port equipment, such as container cranes, reach stackers, and so on. The company owns 856,000 intermodal containers.
Full Speed Ahead for Trade
Demand for containers dwindled in 2009, but rebounded with a vengeance in 2010. TAL’s utilization rate reached a record 98.6% at the end of 2010, even though the company added 180,000 containers during the year.
Container purchases are primarily financed by the company’s bond offerings. TAL’s bonds are rated “A” by Standard & Poor’s, and carry an interest rate of 4.8%.
Strong demand is causing a global shortage for containers, which is driving leasing rates and resale prices significantly higher—all to the benefit of TAL. Part of the stronger demand can be attributed to reduced direct container purchases by TAL’s shipping customers, which are trying to avoid new capital expenditures.
TAL has ordered another 180,000 containers for delivery in 2011, many of which have already been committed to leases. As a result, the company expects profits to accelerate during the next several quarters.
Sales increased 7%, and earnings per share catapulted from $0.72 in 2009 to $2.32 in 2010.

Best Stocks To Buy Right Now: Pfizer (NYSE: PFE) & Abbott Laboratories (NYSE: ABT)

Those are Pfizer (NYSE: PFE) and Abbott Laboratories (NYSE: ABT). Maybe I’ll take those in order.
Pfizer is a stock where everyone’s worried about the Lipitor patent expiring later in 2011. But there’s much more to Pfizer than just Lipitor.
If you look to 2012—which will be the first full year after the Lipitor is gone from Pfizer—the company should earn somewhere north of $2 a share, by our estimates as well as the guidance of the company.
The stock is trading at $19 or thereabouts, so you’re looking at a company that’s trading at roughly nine times earnings once you’re past this one negative event. That just seems way too cheap a price for that stock.
Looking at Abbott, it’s in a very similar situation in that they have one blockbuster drug, Humira, and people are thinking that Abbott today is going to be like Pfizer was a couple years ago where they’re just dependent on this one blockbuster.
Abbott is also just trading at a very cheap price. They should earn somewhere just below $5 a share, and the stock is in the mid 40s. So again you’re looking at a stock trading at about nine times earnings.
Or, if you want to strip away Humira and just assume that that falls off the planet a year from now, you’re looking at a stock that’s trading ex-Humira at about twelve times [earnings], which is still—even if that drug was gone—a very low price for a company of Abbott’s quality.

Tesoro Shares Plunged: What You Need to Know in 2012

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 Tesoro (NYSE: TSO  ) are plunging today, down by as much as 10%, after the company updated its fourth-quarter guidance.
So what: The company expects to report a net loss between $0.55 and $0.80 per share, compared to the $0.65 profit analysts are looking for. Tesoro cited an extremely weak margin environment in California and the collapse of the West Texas Intermediate (WTI) to Brent crude oil spread.
Now what: The Tesoro Index for the California area was a negative $0.05 per barrel, down over $6 compared to the sequential and year-over-year prices. The WTI to Brent spread fell from $26 per barrel in September to just $8 per barrel in December. The decline reduces benchmark margins at Tesoro's refineries and the margin on long-haul foreign crude oil barrels indexed to WTI. When you're in the oil business, volatility is simply the name of the game.

As Fidelity Re-Opens Magellan Fund, Investors Review Top Holdings (FMAGX, NOK, GLW, GOOG, SLB, CNQ, SPLS, T, AGN, MON)

It’s official.  Fidelity’s Magellan Fund (FMAGX) is being re-opened for new investors.  This fund at one point in 1997 became so large that the fund closed itself to new funds and outside investment commitments.  As of the last seen date Fidelity’s Magellan Fund had some $43.3+ Billion in assets under management.

• Fidelity says that as the investor base is now 10 years older, they have had adequate redemptions and portfolio manager Harry Lang says: "We believe that the time is right to make Magellan available to a new generation of investors………… We believe that generating new sales to offset future redemptions will help stabilize the fund’s cash flows and assist Harry in most effectively directing investment strategies for the benefit of fund shareholders. It’s effectively the inverse of the reason why we limited new purchases of the fund 10 years ago. At that time, we were seeing strengthening cash inflows, and we expected that trend to continue."

• More importantly, Harry Lang also noted, "I’ve been fortunate to find great stocks here in the U.S. and abroad to include in the portfolio. If we’re able to achieve a better balance of cash flows in the fund going forward, I’ll regularly have the cash on hand to capitalize on attractive investment opportunities as I find them."

Fidelity noted that some 85% of the funds assets are deemed for retirement (IRA, 401K etc.), and therefore the fund would seem to take more of a longer-term view.  The top 10 Holdings are unfortunately as of September 30, 2007, so we’ll have another two weeks or so before we know what the real holdings are:  The TOP 10 as of then are as follows:

• Nokia (NOK, Corning (GLW), Google (GOOG), Schlumberger (SLB), Canadian Natural Resources (CNQ), Staples (SPLS), AT&T (T), Allergan (AGN), Monsanto (MON), Renewable Energy Corp. AS (overseas).  This list was posted! on Dece mber 30, 2007, so it might be more updated than some of the aggregator financial news and data web sites that take time to update.

If you want to see the full holdings the list on their site is here.  With more than $43 Billion in assets this could create quite a lot of buying in stock names where Fidelity wants to put capital to work.  We would surmize that the fund might not add as much to some of its key holdings if it can put capital to work in some of the names it owns less of that might like to own more of. 
Also be advised that the full holdings list is 45 days old and we know for certain that many of the positions and many of the weightings have already changed from November 30, 2007.  We’d actually start screening out some of the smaller holdings off of that master list to see which are attractive in growth and/or value that will still do well in a slowing economy or even a recession.  If you were opening a decade-long closed fund, you might be tempted to disperse more of the new inflows into other names that might be under-owned or under-weighted in the fund.