Times are pretty tough across most of the emerging world, but seem especially difficult in BRIC superstar Brazil. Falling commodity prices and slowing growth coupled with political and social unrest have sent shares of Brazilian firms downwards since the beginning of the year. Overall, broad measures- like the benchmark iShares MSCI Brazil ETF (NYSE:EWZ) –have lost about 25% of their value since the beginning of the year.
As investors have focused on the short-term headwinds facing the emerging market leader, longer term values are beginning to show themselves. One of which could be in Brazil's massive and growing consumer market. For investors, betting on Brazil's buying could be one of the better bets over the longer term and now could be a great time to do just that.
SEE: Investing In Brazil 101
Boom In Consumerism
The change in consumer behavior that is currently underway in Brazil can be compared to America's post-WWII period of the 1950s and 1960s. During this time, everything from durables, household products and personal care goods saw an increase in sales.
For Brazilian citizens, that trend is shaping up to be just as big.
While the previous decade helped bring many families out of poverty, the current decade is being marked by a growth in affluence. According to research conducted by Boston Consulting Group (BCG), some 5.3 million households will rise from the restricted to the emergent middle-class segment in Brazil over the next ten years. At the same time, an additional 1.6 million and 1.9 million families will enjoy established middle-class and affluent lifestyles, respectively. Overall, families in these middle class categories will make up 37% of Brazilian households by 2020. This compares to just 29% back in 2010 and 24% in 2000.
These newly emerged middle class residents will result in annual spending power of about 3.2 trillion Brazilian reals- $1.6 trillion by 2020. That massive spending power will mean that citizens will demand have more access to appliances, electrical goods and travel opportunities. Additionally, growth in personal/financial services, and private education will explode as more families move up to the affluent -more than $45,000 per year in earnings- category.
Already, this is holding true as Brazilian sales are growing four times faster than the U.S. Retail sales in the emerging market nation are increasing at 7 to 8% a year. Meanwhile, with high debt loads and stubbornly high unemployment, the U.S. is only seeing retail sales growth of about 2%.
Making A Brazilian Consumer Play
Given the long-term consumer story and the recent downturn in Brazilian stocks, investors may want to give those firms catering to its new middle class a buy. The most direct play is through the Global X Brazil Consumer ETF (NASDAQ:BRAQ). The fund tracks 35 different consumer plays including food manufacturer BRF S.A. (NASDAQ:BRFS) and sugarcane firm Cosan (NYSE:CZZ). However, while the ETF does hone in on the theme, trading volumes and asset under management continue to be anemic- despite launching in 2010. A better play could be the broad iShares S&P Global Consumer Discretionary ETF (NYSE:RXI). That fund features several firms- like Estée Lauder (NYSE:EL) –which are deriving a high percentage of their earnings from the nation.
Or Investors could go the individual Brazilian stock route.
A prime candidate could be fast food kingpin Arcos Dorados (NYSE:ARCO). The company offers a play on the nation's consumers appetite for more "American" style foods as it is the largest South American McDonald's (NYSE:MCD) franchisee with over 2000 restaurants in 20 countries. However, the bulk of them in Brazil at 735- with the nation contributing almost 48% of all of ARCO's sales. The stock continues to trade below its IPO price, despite paying a good dividend and offering much growth potential. Likewise, Companhia de Bebidas das Américas (NYSE:ABV) or AmBev is also a great play on growing beer consumption within the nation.
Operating more than 1600 hypermarkets, supermarkets, department stores across Brazil, Companhia Brasileiras de Distribuicao (NYSE:CBD) represents a direct play on rising spending. That rising spending is translating to rising earnings as the firm predicts that sales will grow by more than 10% throughout 2013.
The Bottom Line
With Brazilian stocks currently down in the dumps, long-term investors currently have the opportunity to load up on one of the biggest trends affecting the nation- its rising consumer wealth. For portfolios, the previous picks- along with bank Itaú Unibanco (NYSE:ITUB) –make ideal selections to play the $1.6 trillion potential.
Thursday, October 31, 2013
Wednesday, October 30, 2013
Is WebMD a Strong Play Here?
This column originally appeared exclusively first for Stock Investor Cheat Sheet premium subscribers on May 6th and has been updated to reflect current data changes.
With shares of WebMD Health Corp. (NASDAQ:WBMD) trading at around $29.72, is WBMD an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock's Movement
WebMD is making some changes, and these changes are likely for the better. It's apparent that CEO Cavan M. Redmond wasn't the ideal leader. According to Glassdoor.com, employees rated their employer a 2.6 of 5. Only 36 percent of employees would recommend the company to a friend, and only 22 percent of employees approved of Cavan M. Redmond. The Board of Directors has appointed David J. Schlanger to serve as Interim Chief Executive Officer.
Martin J. Wygod, Chairman of WebMD, said, "The change announced today will best position us to build on the momentum that our senior management team has created to date. Under David's leadership, we will accelerate the development and implementation of strategies to diversify our revenue base and capture the opportunities arising from the rapidly changing healthcare landscape."
All that said, Cavan M. Redmond must have done something right. In Q1, webmd.com averaged 132 million unique users per month, which was a 23 percent increase year-over-year. Regardless, company culture must be strong in order to achieve optimal results. Therefore, a change was necessary.
WebMD recently beat Q1 expectations and raised guidance. The company reported a loss of three cents per share whereas analysts expected a loss of 15 cents per share. Revenue also beat expectations by 5 percent. In regards to guidance, WebMD raised full-year expectations to -$0.26 to -$0.03. Analysts expected a loss of 30 cents per share. The raised guidance is mostly related to an improved outlook in the public portal advertising business. WebMD expects FY2013 revenue to come in between $450 million and $470 million, which is at best flat compared to 2012. For the current quarter, WebMD expects revenue to exceed $115 million. This would be a significant improvement on a year-over-year as well as sequential basis.
WebMD offers four services: WebMD Consumer Network, WebMD Professional Network, WebMD Private Portal Services, and WebMD Publishing Services.
WebMD Consumer Network consists of WebMD.com, MedicineNet.com, eMedicineHealth.com, and RxList.com. Through these sites, WebMD helps people take an active role in managing their health and wellness via timely written and video content provided by medical writers, physicians, and health educators. This is an interactive service.
NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!WebMD Professional Network consists of Medscape.com and theheart.org. This service offers continuous education and training for professionals. The goal of the service is to increase clinical knowledge, provide important medical opinions, and to report medical findings and the latest treatments. This service also includes WebMD Direct Services, which consists of a proprietary database of physicians and offers physician engagement solutions, targeted recruitment, and online distribution and delivery.
WebMD Portal Services is designed to offer employers and health plan members more informed decisions in regards to benefits, treatments, and providers. Members have an opportunity to access personal health information, which can help aid these decisions. This service also includes health risk assessments, lifestyle education, health coaching, and pertinent information regarding cost and quality of healthcare. The ultimate goals are to use the information to determine the best provider, and to estimate costs of future treatments and procedures.
WebMD Publishing Services publishes WebMD the Magazine, which can be found in approximately 85 percent of physician waiting rooms in the United States.
In all, WebMD is widely known as the most trusted and recognized brand of health information. It would be difficult to imagine a scenario where this suddenly changes.
The chart below compares fundamentals for WebMD, Computer Programs & Systems Inc. (NASDAQ:CPSI), and Merge Healthcare Incorporated (NASDAQ:MRGE).
| WBMD | CPSI | MRGE | |
| Trailing P/E | N/A | 18.26 | N/A |
| Forward P/E | 371.50 | 17.19 | 12.19 |
| Profit Margin | -2.97% | 16.60% | -13.29% |
| ROE | -2.83% | 53.38% | -39.06% |
| Operating Cash Flow | 70.66M | N/A | 5.88M |
| Dividend Yield | N/A | 4.10% | N/A |
| Short Position | 7.80% | 6.20% | 7.80% |
Let's take a look at some more important numbers prior to forming an opinion on this stock…
T = Technicals Are StrongWebMD has outperformed its peers by wide margins year-to-date.
| 1 Month | Year-To-Date | 1 Year | 3 Year | |
| WBMD | 26.09% | 107.3% | 38.36% | -37.44% |
| CPSI | -4.62% | 4.65% | -4.10% | 29.67% |
| MRGE | 3.12% | 33.60% | 24.53% | 36.93% |
At $29.72, WebMD is trading well above its averages.
NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!| 50-Day SMA | 24.92 |
| 200-Day SMA | 19.18 |
The debt-to-equity ratio for WebMD is weaker than the industry average of 0.50. This is one of the few negatives for WebMD at the moment. It is hopeful that new management can make an improvement.
| Debt-To-Equity | Cash | Long-Term Debt | |
| WBMD | 1.55 | 999.22M | 800.00M |
| CPSI | 0.00 | 17.50M | 0.00 |
| MRGE | 3.43 | 45.30M | 250.26M |
Annual earnings have been inconsistent, but based on current guidance, WebMD should be headed back in the right direction.
| Fiscal Year | 2008 | 2009 | 2010 | 2011 | 2012 |
| Revenue ($) in billions | 0.373 | 0.439 | 0.535 | 0.559 | 0.470 |
| Diluted EPS ($) | 5.88 | 2.07 | 0.88 | 1.25 | -0.40 |
When we look at the last quarter on a year-over-year basis, revenue and earnings have both improved.
| Quarter | Mar. 31, 2012 | Jun. 30, 2012 | Sep. 30, 2012 | Dec. 31, 2012 | Mar. 31, 2013 |
| Revenue ($) in billions | 0.107 | 0.113 | 0.118 | 0.133 | 0.113 |
| Diluted EPS ($) | -0.14 | -0.11 | -0.02 | -0.1241 | -0.03 |
Now let's take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?
T = Trends Support the Industry
With baby boomers retiring in droves, there is going to be a significant increase in the need for health information. This simple fact should lead to a strong industry in the coming years.
NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!Conclusion
WebMD is making all the correct decisions and looks to be heading in the right direction. With trends supporting the industry and new management in place, WebMD is a long-term OUTPERFORM.
Tuesday, October 29, 2013
Cameco: Size Matters
Cameco (CCJ) was created in 1988 through the merger of two Canadian crown (government-owned) corporations. It's IPO debuted on the Toronto exchange in 1991 and a NYSE listing occurred in 1996. The McArthur River mine, the highest grade mine in the world (16.36% U3O8, 100 times the global average), began production in November 2000. Cameco's share of the proven and probable resources is 264 mil lbs. The mine has produced 230 mil lbs in the last 13 years. CCJ's current year share is over 13 mil lbs.
Cameco's produces around 14% of the world's uranium, with 2012 production of 21.9 mil lbs. They forecast output in 2018 of 36 mil lbs. Its total proven and probable reserves are about 465 mil lbs with another 531 mil lbs in the inferred/measured and indicated categories. That's one hell of a lot of uranium. CCJ's size and resources make it an attractive investment for the moderately conservative investor who is aware that mining is inherently risky.
Here's the good news
(all dollar amounts in Canadian currency)
2012 revenue of $2.321 bil, gross margin of 31%, net earnings of $266 mil (.67/share), adjusted earnings of $447 mil (1.13/share), cash from operations of $644 mil (1.63/share)Estimated profit for 2013 on Yahoo ranges from .53/share to 1.05 with the consensus at .80 corresponding to a P/E of 23. BMO Investorline shows the consensus at .91.Current year and next year estimates are declining slightly with the 2013 current versus 90 days ago dropping from 1.01 to .91 (BMO).2014 has dropped from 1.30 (90 day) to 1.15 . At 1.15 the P/E is a very attractive 16 given the long term demand for uraniumSales for the first two quarters of 2013: $826 milCash from operations through the first two quarters of 2013:$233 milCash position as at June 30/13 is $331 mil (.83/share)Current ratio, June 30/13 = 2.58Net debt to equity, June 30/13 = .20. Debt rated BBB+ (investment grade) by S&P.Tangible book value approximately $12/share, 1.54 x current share priceProfitable and cash flow posit! ive over the last 10 yearsHas paid a quarterly dividend continuously since 1996. Current payment of .39/share equals a 2.1% yieldThe share price is near the bottom of a 2 year range of $16.40-$25.00. Technically neutral, CMF (Chaikin Money Flow) has turned positive over the last 9 sessions, MACD crossover recently, 200 day moving average is above the 50 day. Obviously a beaten down stock, but not to the point of capitulation a la Nov. 2008 at $11.78. Those buyers are up 57% plus dividends. Not out of the park but a decent return over 5 years with some measure of safety.Uranium isn't like oil or copper. The demand is fairly constant and, in a Fukushima-free world, would be steadily, if slowly, rising. With 60+ reactors under construction and new mine supply a virtual no-show, the market should be a lot more buoyant than it is. But, long term, the uranium market looks strong.
And, Cameco is the way to play it with Mr. Graham's "margin of safety". It's large enough, strong enough and has a long history of dividend payments. The price here looks reasonable although certainly not in the bargain bin. I would scale in to this stock, with the possibility of getting more shares with the same amount of cash when the inevitable correction appears. (If anyone knows when this correction is going to happen, please e-mail me).
If it can go wrong, it will (maybe)
The Japanese reactor re-start is delayed. That surplus of uranium continues to weigh on the priceFukushima IIThe Cigar Lake mine suffers further lengthy delays. This is kind of a two-edged sword as it would probably move the spot price needle, boosting a portion of CCJ's revenue.Growing public opposition to nuclear power, from an environmental viewpoint and/or an objection to the high cost of constructionAnd, of course, the always present possibility of another financial panic, or least an ugly downdraft.I think the balance of probabilities is in Cameco's favour. For an investor with a longer view, CCJ offers the chance of truly ! superior ! gains or, at the very least, a reasonable return on one's money. For those of us who think uranium is going to be lively territory in 5 years, Cameco is the best bet, having some downside support while being leveraged to a rising U3O8 price.
My opinion of my opinion
The preceding is my opinion, of course. There are many other opinions. Some of them worthwhile, others just fluff. Read them, decide for yourself, then make an informed investment decision. The one opinion you might want to discard is your personal broker's. They get paid to make trades. If you make some money along with them, that's just a bonus.
Source: Cameco: Size MattersDisclosure: I am long CCJ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)
Monday, October 28, 2013
What to Watch on Wall Street This Week
Sunday, October 27, 2013
Time Is No Friend To Synta's Lung Cancer Drug
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LEXINGTON, Mass. (TheStreet) -- This weekend's update from Synta Pharmaceutical's (SNTA) ganetespib phase II study makes the experimental lung cancer drug look weaker and more irrelevant than ever before.
Synta insists the new ganetespib data are positive and "increases confidence" in a successful outcome from the ongoing phase III lung cancer study.
So far, the market hasn't bought Synta's spin job and it's hard to imagine this weekend's ganetespib data improve investor sentiment. 
The phase II "Galaxy-1" study randomizes 252 patients with advanced (second line) non-small cell adenocarcinoma to treatment with ganetespib and docetaxel or docetaxel alone. One-year follow-up results from the study are being presented at the 15th World Conference on Lung Cancer in Sydney, Australia. [Bristol-Myers Squibb (BMY) is presenting an update on its PD-1 inhibitor nivolumab at the same lung cancer conference, which is drawing the most attention and excitement.] The latest look at the study has ganetespib/docetaxel reducing the risk of death by 10% compared to docetaxel alone. (That's a hazard ratio of 0.90, not statistically significant.) At the median, patients treated with ganetespib/docetaxel are living 10.4 months compared to 8.4 months for patients treated with docetaxel alone -- a benefit of two months that is not statistically significant. Last June, with median follow up of six months, ganetespib/docetaxel reduced the risk of death by 18% compared to docetaxel alone. (Hazard ratio of 0.82, not statistically significant.) The median overall survival benefit last June was 2.4 months. In September 2012, the hazard ratio from the Galaxy-1 study was 0.69, or a 31% reduction in the risk of death favoring gantespib/docetaxel. Synta has now provided three significant updates of the Galaxy-1 study and each time, the benefit demonstrated by ganetespib wanes. Ganetespib's efficacy is deteriorating even in the cherry-picked subset of patients from the Galaxy-1 study which Synta's describes as "normal progressors." These are lung cancer patients who were stable (no tumor growth) following first-line treatment for at least six months. Synta limited enrollment in the ongoing phase III study to these "normal progressor" patients because the company claims they respond best to ganetespib. After one year of follow up, the overall survival hazard ration for these "normal progressor" patients is 0.75 -- a 25% reduction in the risk of death favoring ganetespib/docetaxel compared to docetaxel alone. The difference is not statistically significant. Last June, the overall survival hazard ratio for "normal progressors" was 0.61 -- a 39% reduction in the risk of death The median overall survival for "normal progressors" treated with ganetespib/docetaxel is 10.7 months compared to 7.4 months for "normal progressors" treated with docetaxel -- a median survival benefit of 3.3 months. But check this out, the median overall survival for "normal progressors" (10.7 months) in the ganetespib arm of the study is essentially the same as the 10.4 months for all patients. The only reason "normal progressors" appear to be benefitting more in the study is because the docetaxel control arm is performing worse (7.4 months vs. 8.4 months.) This is the flimsy evidence upon which Synta expresses confidence ganetespib and the ongoing phase III study. No wonder investors are skeptical. -- Reported by Adam Feuerstein in Boston. Follow @AdamFeuerstein
Saturday, October 26, 2013
Saudis Should Say "Thanks, but No Tanks"
Is General Dynamics (NYSE: GD ) about to land a $6.5 billion tank sale?
Newspapers believe it might. Last week, German daily Handelsblatt reported that Saudi Arabia is in the process of backing out of a deal to buy $6.5 billion worth of Leopard 2 tanks built by local defense contractor Krauss-Maffei Wegmann GmbH. Owing to the country's Nazi past, arms sales are a sensitive subject in modern Germany, and the tank sale has been the subject of hot debate locally, stalling its finalization. Handelsblatt notes that if the deal does in fact fall apart, the Saudis may reach out to General Dynamics and ask to buy more of that company's Abrams main battle tanks instead.
Asked about the report, General Dynamics declined to comment on the "speculation." But Reuters reported Friday that according to its sources, at least, General Dynamics is in fact already in talks with the Saudis about picking up where Krauss dropped the ball. General Dynamics is, after all, already in the process of upgrading the Saudi tank fleet of M1A1 and M1A2 Abrams tanks to the Saudi-preferred M1A2S configuration. Now, the speculation is that General-D could win a contract as much as 10 times as big as its upgrade deal, and build the Saudis a fleet of brand-spanking-new main battle tanks.
Or not.
Shareholders would certainly cheer the prospect of a $6.5 billion weapons deal for General Dynamics, which like other contractors has been slogging through a recent dearth of contract awards. But there is another possibility here -- that after the Leopard deal falls through, the Saudis may decide not to buy any tanks at all.
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After all, they're kind of running out of people to point tanks at. Shiite-dominated Iraq's in a bit of a shambles right now, and troublesome Syria's in even more dire straits. Jordan is friendly. Egypt, far away. Iran, a perpetual rival to Sunni Saudi Arabia, remains one rather large pond out of firing range for tanks of any manufacture. And as for Israel, The Wall Street Journal just reported that the Israeli Defense Forces are retiring ground units, cashiering officers, mothballing warships, and, in general, looking to cut military spending by some $830 million.
In such an environment, buying 270 new tanks to bolster a Saudi arsenal that already boasts nearly 1,100 main battle tanks may not make a whole lot of sense.
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Friday, October 25, 2013
IBM’s Q3 2013 Revenue Miss May Offer You a Profitable Bargain
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It is no longer news that International Business Machine (IBM) released disappointing 2013 third quarter results. It is also no longer news that the stock has taken a beating since then from $186.73 per share it traded at the close of business just before the third quarter financials were released to the investing public on Wednesday, Oct. 16. The negative reactions of investors to the third quarter results were noticed during the extended hours of trading on that same day when the stock took a dip from $186.73 to $175.99 per share. That sudden dip in IBM's stock price amounts to a loss of about 6% per share within a space of a few hours after the release of the third quarter results.
Really, IBM needs no introduction to a large number of the investing public because it is renowned as one of the blue chip companies with the best stock rating many love to own. In the last decade, IBM maintained a good rating as the only tech company that offered consistent yearly dividend increases. IBM is a tech company that has survived three eras of computing technology transitions. In the last two decades, the company has transitioned from the mainframe era to the PC era and now to the era of mobile computing technology where it is taking a foothold in the software and services line of business and declining its operations from being a pure hardware producing company.
In this article, I would try as much as I could to show to the investing public that IBM isn't such a disappointing company as many investors have come to believe even with its 2013 third quarter results that missed revenue target.
IBM's 2013 Third Quarter Results at a Glance
In the first instance, IBM's net income for the quarter rose by 6% to $4 billion. Also, the company's earnings per share (EPS) of $3.99 for the quarter exceeded consensus' estimate by 4 cents. Looking ! at the returns of IBM for the quarter under review, the revenues from two segments of the company [size=11.0pt;line-height:115%; font-family:"Calibri","sans-serif";mso-ascii-theme-font:minor-latin;mso-fareast-font-family: Calibri;mso-fareast-theme-font:minor-latin;mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman";mso-bidi-theme-font:minor-bidi; mso-ansi-language:EN-US;mso-fareast-language:EN-US;mso-bidi-language:AR-SA">— —
Wednesday, October 23, 2013
Canada Stocks Erase Gains as Commodities Offset Rates
Canadian stocks fell, erasing earlier gains after a six-day rally, as a slump in commodity shares overshadowed a Bank of Canada decision to remove its bias toward tightening monetary policy.
BlackPearl Resources Inc. and Suncor Energy Inc., the nation's largest oil producer, fell more than 2.2 percent as crude dropped to its lowest in almost four months. Teck Resources Ltd. (TCK/B) lost 1 percent as copper retreated after surging interest rates eroded the outlook for demand in China. Canadian National Railway Co. and Canadian Pacific Railway Ltd. rallied to all-time highs after posting better-than-estimated earnings.
The Standard & Poor's/TSX Composite Index (SPTSX) fell 4.74 points, or less than 0.1 percent, to 13,243.32 at 4 p.m. in Toronto, erasing an earlier advance of 0.5 percent. The benchmark Canadian equity gauge rallied 2.8 percent in the previous six days, reaching a two-year high.
"The attention is shifting to some concerns on the actual global economy, so that's definitely weighing on oil prices," Youssef Zohny, portfolio manager at Stenner Investment Partners of Richardson GMP Ltd., said by phone from Vancouver. Richardson GMP manages about C$16 billion ($15.4 billion). "Resources and commodities still make up almost half the index, so any weakness in the commodity space should feed its way into the TSX index."
Stocks rose earlier after Bank of Canada Governor Stephen Poloz dropped language about the need for future interest rate increases that has been in place for more than a year, citing greater slack in the economy.
Interest RatesPolicy makers maintained the benchmark rate on overnight loans between commercial banks at 1 percent for the 25th consecutive meeting today, as forecast by all 23 economists in a Bloomberg News survey. Inflation will remain below the 2 percent target until the end of 2015, two quarters longer than forecast in July, with the risks of further weakness taking on "increasing importance," the bank said.
Suncor lost 2.3 percent to C$36.64 and BlackPearl Resources slipped 3.5 percent to C$1.93. West Texas Intermediate crude slumped to its lowest level since June 28 as supplies rose more than expected in the U.S., the biggest oil-consuming country.
Centerra Gold Inc., the operator of the Kumtor mine in Kyrgyzstan, plunged 23 percent to C$4.10 after reports that the central Asian nation's parliament rejected a proposed agreement to give the government a 50 percent stake in the mine.
Teck Resources retreated 1 percent to C$29.42 as copper fell the most in 12 weeks.
China BanksChina's benchmark money-market rate jumped the most since July as the central bank refrained from adding funds to markets. The nation's largest banks tripled the amount of bad loans written off in the first half, ahead of a potential wave of defaults. China is the world's largest consumer of copper and Canada's second-largest trading partner.
"Rising interest rates certainly will have an impact on commodity demand and on Canada. It's indicative of an uneven recovery," said Anish Chopra, fund manager with TD Asset Management Inc. in Toronto. The firm manages about C$216 billion.
Canadian Pacific Railway jumped 10 percent, the most since July 2009, to C$148.53 and Canadian National Railway surged 4.4 percent to C$114.59. Industrials stocks rallied 3.2 percent as a group. Six of 10 industries advanced as trading volume was 20 percent higher compared with the 30-day average.
Rail RatiosCanadian Pacific posted an operating ratio of 65.9 percent in the third quarter, the lowest in company history, while adjusted earnings of C$1.88 topped analysts' estimates for C$1.71. Operating ratio is a measure of management efficiency with lower numbers preferred.
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Canadian National Railway said it will split its stock and plans for a C$1.4 billion share buyback.
Surge Energy Inc. added 2.5 percent to C$6.89 for its highest close since November 2012, after the oil and gas explorer boosted its 2013 exit production to 14,200 barrels of oil equivalent per day, compared with 12,000 previously. The company raised its 2014 production forecasts as well.
Surge yesterday reported two acquisitions in Saskatchewan and Manitoba for a combined C$282 million. The Calgary-based company also raised its dividend 19 percent to 50 Canadian cents a share annually.
Jamie Dimon Steers JPMorgan Through Rough Waters
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When word leaked about JPMorgan (NYSE:JPM) CEO Jamie Dimon's efforts to negotiate a whopping $13 billion legal settlement with the U.S. government that would resolve the civil litigation involving the sales of mortgage bonds. Investors were not put off in the least.In fact, some such as Home Depot (NYSE:HD) founder Ken Langone, were singing Dimon's praises. "The brunt of this misbehavior occurred before Jamie or JPMorgan had anything to do with these two companies," Langone, 78, told Bloomberg News on October 20. "I'm very, very comfortable as an investor in JPMorgan."
Whether other investors share Langone's view will become clear in the coming months. Shares of New York-based JPMorgan are up more than 23% this year, slightly underperforming rivals Goldman Sachs (NYSE:GS) (25%) and Citigroup (NYSE:C) (29%). The shares are trading about 15% below their average 52-week price target of $62.33. It is important to note that even though there has been no announcement that a settlement has been reached has been released at this point, media reports indicate that one could come within days. Most analysts expect the stock to outperform the market, a sentiment that will only be bolstered by news of the settlement.
Why?
Wall Street, like nature, abhors a vacuum. When it comes to bad news, the more investors know about it the better, even if involves a huge number such as $13 billion. That's a lot of money even for JPMorgan, equaling more than half its profit last year. However, thanks to its $205 billion market capitalization, JPMorgan can afford it. Besides, many investors feared that the settlement would be much worse.
Dimon certainly thought this might be the case, which explains why he took the extraordinary step of calling a top aide to U.S. Attorney General Eric Holder four hours before the Justice Department was ! set to announce civil charges against the bank. He even traveled to Washington to meet personally with Holder, according to the New York Times.
"Complicating matters for the bank, Mr. Dimon is inextricably linked to the settlement," the paper said. "With the government, he assumed the role of chief negotiator. And at the bank … he remains its chief cheerleader."
Dimon, who beat back efforts by some shareholders to split the roles of CEO and chairman, has survived the worst financial crisis since the Great Depression, which lead to the ouster of some of his peers such as Bank of America's (NYSE:BAC) Kenneth Lewis and Citigroup's Charles Prince. Indeed, Dimon's stature has grown over time, so much so that the Times dubbed him "The Teflon CEO."
He is well liked by both his board and the Obama administration where he had been discussed as a possible Treasury Secretary. About the only criticism that Wall Street has for Dimon is that he's taking the blame for things that weren't JPMorgan's fault because the proposed settlement includes securities from Washington Mutual and Bear Stearns, which the company acquired at the behest of the government in 2008.
Dimon isn't completely blameless for the bank's woes. The company slashed his 2012 compensation 19% to $18.7 million. Longtime banking analyst Mike Mayo WHEN? told Bloomberg News "Dimon messed up with the Bear Stearns acquisition" only later to call him "the Iron Man of Wall Street."
That bullish sentiment, though, is not reflected in the value of JPMorgan. Its shares trade at a forward price-to-earnings multiple of 11, ahead of Citigroup's 10.9 and Goldman Sachs' 10.6.
The Bottom Line
Dimon has managed to keep his job amidst turmoil that probably would have cost most CEOs their jobs. JPMorgan should continue to do fine even as the economic recovery continues slower than many people would like. The shares are attractively valued and worth adding to most portfolios now. Even better, JPMorgan pays a dividend with a yield of 2.81%, surpassing its peers such as Citigroup and Goldman Sachs.
Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.
Tuesday, October 22, 2013
Can McDonald’s Find Support Post-Earnings?
With shares of McDonald's (NYSE:MCD) trading around $94, is MCD an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework.
T = Trends for a Stock’s MovementMcDonald''s franchises and operates McDonald's restaurants in the United States, Europe, Asia Pacific, the Middle East, Africa, Canada, and Latin America — so just about every part of the world. Its restaurants offer various food items, soft drinks, coffee, and other beverages as well as breakfast menus. The products provided by McDonald's fulfill cravings at competitive prices in convenient locations worldwide. The McDonald's craze shows no signs of slowing, so the company has continued its expansion to just about every nation on the globe. As consumers continue to enjoy McDonald's products, look for it to see rising profits.
McDonald's reported earnings on Monday morning that showed the fast food chain has performed better this quarter than many of its peers, according to Reuters. McDonald's reported a 4 percent rise in profit for the quarter with a net income of $1.52 billion, or $1.52 per share. In the third quarter of last year, McDonald's posted $1.46 billion, or $1.43 per share. Analysts from Consensus Metrix only expected an increase of 1 percent.
T = Technicals on the Stock Chart Are MixedMcDonald's stock has traded sideways in the last couple of years. The stock is currently trending lower and is getting closer to lows for the year. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, McDonald's is trading below its key averages, which signals neutral to bearish price action in the near term.
Source: Thinkorswim
Taking a look at the implied volatility and implied volatility skew levels of McDonald's options may help determine if investors are bullish, neutral, or bearish.
| Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | |
| McDonald's Options | 15.84% | 46% | 45% |
What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts as compared to the last 30 and 90 trading days.
| Put IV Skew | Call IV Skew | |
| November Options | Flat | Average |
| December Options | Flat | Average |
As of Monday, there is average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.
E = Earnings Are Rising Quarter Over QuarterRising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on McDonald's’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for McDonald's look like and, more importantly, how did the markets like these numbers?
| 2013 Q3 | 2013 Q2 | 2013 Q1 | 2012 Q4 | |
| Earnings Growth (Y-O-Y) | Best Small Cap Companies To Watch For 20146.29% | 4.55% | 2.44% | 3.83% |
| Revenue Growth (Y-O-Y) | 2.39% | 2.43% | 0.9% | 1.9% |
| Earnings Reaction | -0.64%* | -2.68% | -1.95% | 0.57% |
McDonald's has seen rising earnings and revenue figures over the last four quarters. From these numbers, the markets have not been happy with McDonald's’s recent earnings announcements.
*As of this writing.
P = Weak Relative Performance Versus Peers and SectorHow has McDonald's stock done relative to its peers – Yum Brands (NYSE:YUM), Burger King (NYSE:BKW), and Wendy’s (NASDAQ:WEN) — and sector?
| McDonald's | Yum Brands | Burger King | Wendy’s | Sector | |
| Year-to-Date Return | 6.92% | 0.36% | 16.91% | 83.72% | 9.43% |
McDonald's has been a poor relative performer, year to date.
ConclusionMcDonald's is a well-recognized company that fulfills cravings and demand for quick and delicious food choices that many consumers across the globe enjoy. A recent earnings release has not pleased the markets. The stock has been trading sideways in the last couple of years and looks be headed lower. Over the last four quarters, earnings and revenues have been rising. However, investors have not been happy with recent earnings announcements. Relative to its peers and sector, McDonald’s has been a weak year-to-date performer. WAIT AND SEE what McDonald’s does this quarter.
Sunday, October 20, 2013
The Fed Is Losing Control
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It's been a rough six weeks for bond investors. Since hitting a low of 2.8% in early May, the yield on the 30-year U.S. Treasury bond has spiked higher to more than 3.3%. And as interest rates go up, bond prices fall... You can see the effect in the iShares Barclays 20+ Year Treasury Bond Fund (TLT)... 
TLT is down more than 9% in just the past month and a half. It's now trading at its lowest price in the past year. And as rough as it has been for bond investors, the Fed is suffering worse. You see, for more than four years now, the Fed – through its multiple quantitative easing programs – has been the world's biggest buyer of Treasury bonds. So now with interest rates on the rise, the Fed is underwater on all of the purchases it made over the past year. Not only is the Fed printing money to buy up U.S. Treasury debt – a stupid thing to do anyway – it's now losing money on the bonds it bought. And by the look of the following chart, it may be about to get much worse... 
Since last August, rates have been steadily working higher in a series of higher highs and higher lows. That's a rising-channel pattern (the blue lines)... and it's the definition of an uptrend. The chart is now approaching resistance at about 3.5% (the first red line). The previous two times it touched that line occurred when rates were in a downtrend and momentum was working in favor of lower rates. The resistance line held and prevented interest rates from rising more. Today, the momentum is in favor of higher rates. The chart might not break through resistance on this current attempt since it's already extended. But if the chart pulls back and forms another higher high, rates will likely break out to the upside on the next rally attempt. The next resistance level is all the way up around 4.4%. At that point, the Fed will be losing money on most of the bonds it purchased over the past four years. That's not a good track record. I suspect Fed Chairman Ben Bernanke will do everything in his power to keep rates from rising. So don't look for any tapering of quantitative easing any time soon... no matter what Bernanke says. But in the end, the market is just too big to control. Maybe that's what the action over the past six weeks is trying to tell us. – Jeff Clark Saturday, October 19, 2013
Pep Boys - Manny, Moe & Jack Hits Estimates in Solid Quarter
Pep Boys - Manny, Moe & Jack (NYSE: PBY ) reported earnings on June 11. Here are the numbers you need to know.
The 10-second takeaway
For the quarter ended May 4 (Q1), Pep Boys - Manny, Moe & Jack met expectations on revenues and met expectations on earnings per share.
Compared to the prior-year quarter, revenue grew slightly. Non-GAAP earnings per share grew significantly. GAAP earnings per share expanded significantly.
Gross margins dropped, operating margins dropped, net margins increased.
Revenue details
Pep Boys - Manny, Moe & Jack reported revenue of $536.2 million. The three analysts polled by S&P Capital IQ expected to see revenue of $532.8 million on the same basis. GAAP reported sales were the same as the prior-year quarter's.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS details
EPS came in at $0.09. The three earnings estimates compiled by S&P Capital IQ predicted $0.09 per share. Non-GAAP EPS of $0.09 for Q1 were 125% higher than the prior-year quarter's $0.04 per share. GAAP EPS of $0.07 for Q1 were 250% higher than the prior-year quarter's $0.02 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
Margin details
For the quarter, gross margin was 22.7%, 160 basis points worse than the prior-year quarter. Operating margin was 0.7%, 110 basis points worse than the prior-year quarter. Net margin was 0.7%, 50 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)
Looking ahead
Next quarter's average estimate for revenue is $539.5 million. On the bottom line, the average EPS estimate is $0.19.
Next year's average estimate for revenue is $2.14 billion. The average EPS estimate is $0.43.
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Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 169 members out of 220 rating the stock outperform, and 51 members rating it underperform. Among 63 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 47 give Pep Boys - Manny, Moe & Jack a green thumbs-up, and 16 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Pep Boys - Manny, Moe & Jack is outperform, with an average price target of $12.33.
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Add Pep Boys - Manny, Moe & Jack to My Watchlist.Friday, October 18, 2013
3 FTSE Shares Hitting New Highs
LONDON -- With the FTSE 100 (FTSEINDICES: ^FTSE ) having spent the last two weeks steadily falling from the 13-year high of 6,876 points it set on May 22, we might be forgiven for thinking there would be no new records set by any of our big companies anytime soon. But even though the index has now fallen 446 points (6.5%) from its peak to 6,430 points as I write, we are indeed still seeing some companies reaching new heights.
Here are three from the various indexes that have set 52-week records this week.
ASOS (LSE: ASC )
Shares in online fashion supremo ASOS reached a 12-month high of 4,025 pence on Tuesday, lifting them by about 140% over the past 12 months. In the couple of days since, the price has dropped to 3,817 pence, but that's still a remarkable performance over the year.
Despite a fall in earnings per share last year after several years of double-digit rises, there's a return to earnings growth forecast for the year to August 2013, with a rise of about 60% predicted. But based on the current share price, that puts the shares on a P/E of a rather heady 80!
Kingfisher (LSE: KGF )
Kingfisher, the owner of the U.K.'s B&Q and Screwfix brands, is perhaps not the kind of company we might consider a highflyer. But the shares have gained nearly 30% over 12 months to reach a high of 354.5 pence on Tuesday before slipping back a bit to today's 341 pence.
With a 6% rise in EPS forecast for the year to January 2014, Kingfisher shares are on a less stratospheric forward P/E than ASOS of just 14.5, which is close to the FTSE long-term average of about 14. There's also a dividend yield forecast of about 3%.
IG Group (LSE: IGG )
Volatile markets are good for firms like IG Group Holdings, the financial-markets bookmaker, and it shows. The share price is up 35% over the past 12 months to a new peak on Tuesday of 605 pence -- and today it's not far behind that, on 591 pence.
Third-quarter figures released on March 12 were solid, with revenue growing 18% and ahead in all regions -- U.K. revenue was up 15%, with Europe providing growth of 22%. The firm did offer a caution that "a degree of uncertainty exists around consumer sentiment more broadly." We should have our next update on June 11 and full-year results on July 23.
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Thursday, October 17, 2013
Werner Enterprises Reports 15% Drop In Q3 Earnings; Meets EPS Estimates (WERN)
Werner Enterprises (WERN
The Omaha, NE-based logistics and transportation company announced Q3 revenue of $511.73 million, which was up slightly from last year’s $506.50 million revenue figure. WERN reported net income for the quarter of $21.53 million, or 29 cents per diluted share, which was down from last year’s Q3 earnings of $25.13 million, or 34 cents per diluted share.
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The company was able to meet analyst views of 29 cents EPS, and slightly surpass the revenue estimate of $503.82 million.
WERN shares were up 21 cents, or 0.90%, at Thursday’s market close, but were edging lower in after-hours trading. YTD, the company’s stock is up just over 4%.
Wednesday, October 16, 2013
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LONDON -- Dividend income accounts for around two-thirds of total returns, the actual rate of return taking into account both capital and income appreciation. Given that share prices are often volatile and unpredictable, the potential for plump dividends can give shareholders much-needed peace of mind for decent returns.
I am currently looking at the dividend prospects of�Diageo� (LSE: DGE ) (NYSE: DEO ) and assessing whether the company is an appetizing pick for income investors.
How does Diageo's dividend history stack up?
� 2009 2010 2011 2012 FY Dividend Per Share 36.1 pence 38.1�pence 40.4 pence 43.5 pence DPS Growth 5.10% 5.50% 6.00% 7.70% Dividend Cover 1.8x 1.9x 2.1x 2.2xSource: Diageo company accounts.
Top Growth Companies To Invest In 2014: Intuitive Surgical Inc.(ISRG)
Intuitive Surgical, Inc. designs, manufactures, and markets da Vinci surgical systems for various surgical procedures, including urologic, gynecologic, cardiothoracic, general, and head and neck surgeries. Its da Vinci surgical system consists of a surgeon?s console or consoles, a patient-side cart, a 3-D vision system, and proprietary ?wristed? instruments. The company?s da Vinci surgical system translates the surgeon?s natural hand movements on instrument controls at the console into corresponding micro-movements of instruments positioned inside the patient through small puncture incisions, or ports. It also manufactures a range of EndoWrist instruments, which incorporate wrist joints for natural dexterity for various surgical procedures. Its EndoWrist instruments consist of forceps, scissors, electrocautery, scalpels, and other surgical tools. In addition, it sells various vision and accessory products for use in conjunction with the da Vinci Surgical System as surgical procedures are performed. The company?s accessory products include sterile drapes used to ensure a sterile field during surgery; vision products, such as replacement 3-D stereo endoscopes, camera heads, light guides, and other items. It markets its products through sales representatives in the United States, and through sales representatives and distributors in international markets. The company was founded in 1995 and is headquartered in Sunnyvale, California.
Advisors' Opinion:- [By David Williamson]
Exact Sciences' (NASDAQ: EXAS ) phase 3 trial for its colon cancer detection test passed, but the stock dropped 20%. What gives? In this video, David Williamson goes into the details of Exact Sciences' DNA-based test. The overall effectiveness of the Cologuard test was 92%. However, the detection rate was 42%, less than colonoscopy, and the 87% overall accuracy rate leads to a higher false positive rate than most doctors would like to see. Is Exact Sciences doomed? Not really -- it has $100 million in the bank. It may be a takeover target, and David sees Intuitive Surgical� (NASDAQ: ISRG ) as a possible buyer.
- [By Joseph Hogue]
Enter Intuitive Surgical (Nasdaq: ISRG) and Da Vinci, a robotic arm that allows surgeons to operate with just a single incision less than an inch in size.
Top Growth Companies To Invest In 2014: Nordstrom Inc.(JWN)
Nordstrom, Inc., a fashion specialty retailer, offers apparel, shoes, cosmetics, and accessories for women, men, and children in the United States. It offers a selection of brand name and private label merchandise. The company sells its products through various channels, including Nordstrom full-line stores, off-price Nordstrom Rack stores, Jeffrey? boutiques, treasure & bond, and Last Chance clearance stores; and its online store, nordstrom.com, as well as through catalog. Nordstrom also provides a private label card, two Nordstrom VISA credit cards, and a debit card for Nordstrom purchases. The company?s credit and debit cards feature a shopping-based loyalty program. As of September 30, 2011, it operated 222 stores, including 117 full-line stores, 101 Nordstrom Racks, 2 Jeffrey boutiques, 1 treasure & bond store, and 1 clearance store in 30 states. The company was founded in 1901 and is based in Seattle, Washington.
Advisors' Opinion:- [By Caroline Bennett]
Brad Smith, president and CEO of Intuit, is joining the board of directors for fashion specialty retailer Nordstrom (NYSE: JWN ) .
Smith brings the total number of Nordstrom directors up to 12, and has served in previous leadership positions for a number of technology-based companies. He will serve for one year, and will be subject to an annual election following his first term.
- [By Marshall Hargrave]
Worth noting is that the average remaining tenure for the Calvin Klein licenses is eight to nine years. Other tailwinds for GIII include:
The team sports business is now a $100 million business and was nonexistent 5 years ago. Sales makeup is 50% sportswear and 50% coats. We see this business continuing to grow as the overall popularity of sports teams continues.Dresses from Eliza J continue to be a top seller at Nordstrom's (JWN) and other high-end retailers.Ivanka Trump showrooms will be opening in Q4. The line will be launching dresses, suit separates and swimwear.The biggest business for GIII remains outerwear and the company started shipping product at the end of Q2. GIII has approximately 30 licensed, owned and private label brands and a covers the entire spectrum of retailers from mass market to luxury.Vilebrequin was acquired in August of last year and the addition helped grow non-licensed revenues to $70 million in Q2 compared to $48 million last year without Vilebrequin. Vilebrequin sells swimwear, resort wear and related accessories through a network of company-owned and franchised shops. To grow Vilebrequin, the company will be adding footwear to its shops, in particular flip-flops in all of the stores by November. The company is planning to grow Vilebrequin's presence in the U.S. and has been adding buildouts in key department stores. Furthermore, Vilebrequin's e-commerce site should be live in the next 60 days.GIII's entry into the footwear market is well in line with its long-term plans to become a men's and women's head-to-toe apparel maker.
- [By Ben Levisohn]
Other department stores, such as Nordstrom (JWN) and Kohl’s (KSS) are also dedicating more space to active wear, the analysts say.
As a result, Boss and McCormick upgraded Under Armour to Neutral from Underweight. They write:
Best Low Price Companies To Watch In Right Now: MEDIFAST INC(MED)
Medifast, Inc., through its subsidiaries, engages in the production, distribution, and sale of weight management and disease management products, and other consumable health and diet products in the United States. The company?s product lines include weight and disease management, meal replacement, and vitamins. It also operates weight control centers that offer Medifast programs for weight loss and maintenance, customized patient counseling, and inbody composition analysis. The company markets its products under the Medifast and Essential brand names, including shakes, appetite suppression shakes, women?s health shakes, diabetics shakes, joint health shakes, coronary health shakes, calorie burn drinks, calorie burn flavor infusers, antioxidant shakes, antioxidant flavor infusers, bars, crunch bars, soups, chili, oatmeal, pudding, scrambled eggs, hot cocoa, cappuccino, chai latte, iced teas, fruit drinks, pretzels, puffs, brownie, pancakes, soy crisps, crackers, and omega 3 and digestive health products. Medifast Inc. sells its products through various channels of distribution comprising Web, call center, independent health advisors, medical professionals, weight loss clinics, and direct consumer marketing supported via the phone and the Web; Take Shape for Life, a physician led network of independent health coaches; and weight control centers. The company was founded in 1980 and is headquartered in Owings Mills, Maryland.
Advisors' Opinion:- [By Holly LaFon] ast produces, distributes and sells weight and health management products with the brand names Medifast, Take Shape for Life, Hi-Energy Weight Control Centers and Woman�� Wellbeing.
Its return on assets in the third quarter of 2011 was 19.6%, which has been increasing in the past several years. The average return on assets for the specialty retail industry is 10.48% for the trailing 12 months.
The company�� total assets amounted to $94 million in 2010, which increased from $62.8 million in 2009. Net income also increased to $19.6 million in 2010 from $12 million in 2009.
Boston Beer Inc. (SAM)
Boston Beer Inc. is the largest brewer of handcrafted beers in America. Boston Beer is a growing company that recently saw a large increase in its return on assets. It increased from 19.3% in 2010 to 29.7% in 2011, and was negative as recently as 2008. The average return on assets for the beverages industry in the trailing 12 months is 9.47%.
In 2011, the company�� total assets increased to $272.5 million from $258.5 million in 2010. Net income increased to $66 million from $50 million.
Alliances Resources Partners (ARLP)
Alliance Resources Partners is a coal producer and marketer primarily in the eastern U.S. Its ROA has been increasing since 2008 and increased to 22.5% in 2011 from 21.4% in 2010. The average return on assets for the oil, gas & consumable fuels industry in the trailing 12 months is 24.47%.
In 2011, its total assets increased to $1.7 billion from $1.1 billion in 2010. Its net income increased to $389 million from $321 million.
Factset Research Systems Inc. (FDS)
Factset researches global market trends and develops analytical tools for investors. Of all of GuruFocus��5-star predictable companies, it has the highest return on assets at 27%. ROA has been increasing over the past several years. The average return on assets for the software industry for the trailing 12 m
- [By Jon C. Ogg]
Medifast Inc. (NYSE: MED) saw its stock down 5% in evening trading on Tuesday after the weight loss player had soft sales and guided expectations lower. Shares were still indicated down about 5%, but volume has not yet started.
Top Growth Companies To Invest In 2014: Sara Lee Corporation(SLE)
Sara Lee Corporation engages in the manufacture and marketing of a range of branded packaged meat, bakery, and beverage products worldwide. Its packaged meat products include hot dogs and corn dogs, breakfast sausages, sandwiches and bowls, smoked and dinner sausages, premium deli and luncheon meats, bacon, beef, turkey, and cooked ham. It also offers frozen baked products, which comprise frozen pies, cakes, cheesecakes, pastries, and other desserts. In addition, Sara Lee provides roast, ground, and liquid coffee; cappuccinos; lattes; and hot and iced teas, as well as refrigerated dough products. The company sells its products under Hillshire Farm, Ball Park, Jimmy Dean, Sara Lee, State Fair, Douwe Egberts, Senseo, Maison du Caf
Top Growth Companies To Invest In 2014: TrueBlue Inc.(TBI)
TrueBlue, Inc. provides temporary blue-collar staffing services in the United States. It supplies on demand general labor to various industries under the Labor Ready brand; skilled labor to manufacturing and logistics industries under the Spartan Staffing brand; and trades people for commercial, industrial, and residential construction, and building and plant maintenance industries under the CLP Resources brand. The company also provides mechanics and technicians to the aviation maintenance, repair and overhaul, aerospace manufacturing, and assembly industries, as well as to other transportation industries under the Plane Techs brand; and temporary drivers to the transportation and distribution industries under the Centerline brand. It primarily serves small and medium-size businesses. The company was formerly known as Labor Ready, Inc. and changed its name to TrueBlue, Inc. in December 2007. TrueBlue, Inc. was founded in 1985 and is headquartered in Tacoma, Washington.
Advisors' Opinion:- [By Jonathan Yates]
For those looking to invest in real estate stocks, highly recommended is the Dr. Housing Bubble blog. In a recent posting, the "Dr." pointed out that there was a "Lost Generation" when it came to household income. That has not happened for those investing in staffing industry stocks such as Paychex (NASDAQ: PAYX), Robert Half International (NYSE: RHI), TrueBlue, Inc. (NYSE: TBI), and Labor SMART (OTCBB: LTNC).
- [By Jonathan Yates]
Even though the stock market rallied on Federal Reserve Chairman Ben Bernanke's remarks with the Dow Jones Industrial Average (NYSE: DIA) and Standard & Poor's 500 Index (NYSE: SPY) surging, the long term winners will be stocks in the staffing industry such as Paychex(NASDAQ: PAYX), TrueBlue (NYSE: TBI), Robert Half (NYSE: RHI), and Labor SMART (OTCBB: LTNC).
Top Growth Companies To Invest In 2014: Checkpoint Systms Inc.(CKP)
Checkpoint Systems, Inc. manufactures and markets identification, tracking, security, and merchandising solutions for the retail and apparel industry worldwide. The company operates in three segments: Shrink Management Solutions, Apparel Labeling Solutions, and Retail Merchandising Solutions. The Shrink Management Solutions segment provides shrink management and merchandise visibility solutions. It offers electronic article surveillance systems, such as EVOLVE, a suite of RF and RFID-enabled products that act as a deterrent to prevent merchandise theft in retail stores; and electronic article surveillance consumables, including EAS-RF and EAS-EM labels that work in combination with EAS systems to reduce merchandise theft in retail stores. This segment also provides keepers, spider wraps, bottle security, and hard tags, as well as Showsafe, a line alarm system for protecting display merchandise. In addition, it offers physical and electronic store monitoring solutions, incl uding fire alarms, intrusion alarms, and digital video recording systems for retail environments; and RFID tags and labels. The Apparel Labeling Solutions segment provides apparel labeling solutions to apparel retailers, brand owners, and manufacturers. It has Web-enabled apparel labeling solutions platform and network of 28 service bureaus located in 22 countries that supplies customers with customized apparel tags and labels. The Retail Merchandising Solutions segment offers hand-held label applicators and tags, promotional displays, and queuing systems. The company serves retailers in the supermarket, drug store, hypermarket, and mass merchandiser markets through direct distribution and reseller channels. Checkpoint Systems was founded in 1969 and is based in Thorofare, New Jersey.
Advisors' Opinion:- [By Rich Smith]
Three months after settling upon a new chief executive officer, it looks like Thorofare, N. J.-based Checkpoint Systems (NYSE: CKP ) will soon have itself a new CFO as well.
Top Growth Companies To Invest In 2014: Buffalo Wild Wings Inc.(BWLD)
Buffalo Wild Wings, Inc. engages in the ownership, operation, and franchise of restaurants in the United States. The company provides quick casual and casual dining services, as well as serves bottled beers, wines, and liquor. As of July 26, 2011, it had 773 Buffalo Wild Wings locations in 45 states in the United States, as well as in Canada. The company was founded in 1982 and is headquartered in Minneapolis, Minnesota.
Advisors' Opinion:- [By Roberto Pedone]
Buffalo Wild Wings (BWLD) is an owner, operator and franchiser of restaurants featuring a variety of boldly-flavored, craveable menu items. This stock closed up 6% to $103.58 in Wednesday's trading session.
Wednesday's Volume: 1.55 million
Three-Month Average Volume: 402,120
Volume % Change: 319%From a technical perspective, BWLD ripped higher here back above its 50-day moving average of $98.38 with heavy upside volume. This move is quickly pushing shares of BWLD within range of triggering major breakout trade. That trade will hit if BWLD manages to take out its intraday high on Wednesday of $105.32 and then once it clears is 52-week high at $106.03 with high volume.
Traders should now look for long-biased trades in BWLD as long as it's trending above its 50-day at $98.38 and then once it sustains a move or close above those breakout levels with volume that hits near or above 402,120 shares. If that breakout triggers soon, then BWLD will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $110 to $120.
Top Growth Companies To Invest In 2014: Eastern Insurance Holdings Inc.(EIHI)
Eastern Insurance Holdings, Inc., through its subsidiaries, provides workers compensation insurance and reinsurance products in the United States. The company?s Workers Compensation Insurance segment provides traditional workers compensation insurance coverage products, including guaranteed cost policies, policyholder dividend policies, retrospectively-rated policies, deductible policies, and alternative market products to employers. This segment distributes its workers? compensation products and services through its independent insurance agents primarily in Pennsylvania, Delaware, North Carolina, Maryland, Indiana, and Virginia. Its Segregated Portfolio Cell Reinsurance segment offers alternative market workers compensation solutions comprising program design, fronting, claims administration, risk management, segregated portfolio cell rental, asset management, and segregated portfolio management services to individual companies, groups, and associations. Eastern Insurance Holdings, Inc. is headquartered in Lancaster, Pennsylvania.
Advisors' Opinion:- [By Lauren Pollock]
ProAssurance Corp.(PRA) agreed to acquire Eastern Insurance Holdings Inc.(EIHI) for about $205 million, expanding the insurance company’s casualty insurance offerings. Eastern Insurance is a domestic casualty insurance group specializing in workers’ compensation products and services, among other things. ProAssurance plans to pay $24.50 in cash for each outstanding Eastern share, a 16% premium over Monday’s closing price.
Tuesday, October 15, 2013
Apple Taps Burberry CEO Angela Ahrendts for Retail Chief
Monday, October 14, 2013
Ram’s diesel pickup named ‘Truck of Texas’
The diesel version of the Ram 1500 pickup has been crowned the Truck of Texas by the Texas Auto Writers Association.
It was the second year that the Ram won. But this time, it had a diesel engine.
That's a big deal if you're automaker hawking pickups. Texas is the top market for pickups and the 'makers spend a lot of time trying to get attention for this award. Judging took place Friday and Saturday at the 23rd Truck Rodeo, where trucks are tested on and off road and for trailer-pulling prowess.
As usual, the pickup portion pitted Ram against Ford F-150, Chevy Silverado and the San Antonio-made Toyota Tundra. Interestingly, neither Silvarado or Tundra won even though they both sported new trucks this year.
Though the Ram truck itself isn't new for 2014, the powertrain is: the first new diesel engine in a light-duty truck in years.
Here's a full list of the auto writers' winners:
•Truck of Texas: Ram 1500 (diesel)
•SUV of Texas: Jeep Grand Cherokee (diesel)
•Crossover of Texas: Hyundai Santa Fe
•Truck line of Texas: Ram
•Heavy duty pickup truck: 2014 Ram 2500 Heavy Duty Longhorn
•Best commercial vehicle: 2014 Ram Promaster Cargo
•Luxury pickup truck: 2014 Ram 1500 Laramie Longhorn
•Off-road pickup: 2014 Ford F-150 SVT Raptor (fifth year in a row)
•Full-size pickup: 2015 Ram 1500
•Midsize pickup: 2013 Nissan Frontier PRO4X
•Best technology: Ram Five-link Coil Rear suspension.
•Best connectivity: Chrysler Group's Uconnect Acccess via Mobile
•Best powertrain: Ram/Jeep 3.0-liter EcoDiesel V-6
•Off-road utility vehicle: 2014 Jeep Wrangler
•Full-size luxury SUV: 2013 Land Rover Range Rover
•Mid-size luxury SUV: 2014 Jeep Grand Cherokee Summit Diesel 4x4
•Compact luxury SUV: 2013 GMC Terrain Denali AWD
•Full-size SUV: 2014 Dodge Durango (sole entry in category)
•Mid-size SUV: 2014 Jeep Grand Cherokee Limited Diesel
•Compact S! UV: 2014 Jeep Cherokee
•Full-size CUV: 2014 Nissan Pathfinder SL 4x4
•Mid-size CUV: 2013 Hyundai Santa Fe
Compact CUV: 2013 Nissan Juke (sole entry in category)
Luxury CUV: 2014 Acura MDX Advance
Sunday, October 13, 2013
Volatility Decline Evokes 2010 Kospi Rally of 28%: Korea Markets
The last time share-price swings in South Korea fell this low versus peers in emerging markets was May 2010, when the Kospi index surged 28 percent in 12 months.
Volatility in the nation's benchmark equity gauge has halved since July, with a measure of 30-day swings falling to 8.6 on Oct. 11 versus 14 for the MSCI Emerging Markets Index, data compiled by Bloomberg show. The International Monetary Fund says South Korea is among nations best placed to weather a cut in U.S. monetary stimulus because policy makers have room to boost government spending and reduce interest rates.
Growing demand for the most-stable equities has spurred a record 31 straight days of foreign inflows into South Korean shares, while concern over Federal Reserve tapering and America's debt-ceiling debate sent the benchmark gauge of U.S. stock volatility to a three-month high on Oct. 8. Credit Suisse Group AG (CSGN), UBS Wealth Management and Bank Julius Baer & Co. say they're bullish on South Korea as smaller price swings lure investors to companies from SK Hynix Inc. (000660) to LG Chem Ltd. (051910)
"Korea is our biggest overweight market," Sakthi Siva, a strategist at Credit Suisse in Singapore, said in an Oct. 7 e-mail. "I always suggest buying on dips."
The Kospi's 30-day volatility is 59 percent below the five-year average, according to data compiled by Bloomberg. The South Korean gauge outperformed the MSCI emerging markets index by about 7 percentage points when price swings fell this low versus the 21-country measure in 2010.
Relative ValueThe Kospi trades at 1.1 times net assets after gaining 1.4 percent last week to 2,024.90. That's a 33 percent valuation discount compared with the MSCI Emerging Markets index, which has a multiple of 1.6. The South Korean index fell less than 0.1 percent to 2,024 at 12:08 p.m. in Seoul trading today.
International investors purchased a net $1.1 billion of South Korean shares last week, bringing inflows to about $10.4 billion since the buying streak began on Aug. 23. SK Hynix, the world's second-biggest maker of memory chips, attracted a net $1.4 billion. That's the most after Samsung Electronics Co. (005930), South Korea's largest company by market value. LG Chem, the biggest chemicals producer, had $170 million of net purchases.
"The problems in the U.S. and the weakness of equity markets in general provide a good buying opportunity" in South Korea, Gary Dugan, the Singapore-based chief investment officer for Asia and the Middle East at Coutts & Co., said in an e-mail interview on Oct. 8. "The market will break to the upside."
Yields RiseSouth Korean shares outperformed government bonds last week. Yields on the nation's 10-year notes climbed 10 basis points, or 0.10 percentage point, to 3.52 percent while the won was little changed at 1,071.40 per dollar. The cost of protecting the country's sovereign debt against nonpayment using credit default swaps fell about 6 basis points to 68 basis points, according to data provider CMA.
Further gains in stocks this year may be limited amid investor concern that the world economy will slow, Kwon Hyuk Sang, the Seoul-based chief investment officer at Hanwha Asset Management Co., which manages $48 billion, said on Oct. 10.
The IMF reduced its global growth forecast for this year to 2.9 percent from 3.1 percent on Oct. 8 and warned that a U.S. government default could "seriously damage" the world economy. South Korea's exports dropped 1.5 percent in September, following a 7.7 percent jump in August.
Global economic risks will fail to derail South Korea's growth, Finance Minister Hyun Oh Seok said in an interview in Washington on Oct. 10. He's sticking with a forecast for 3.9 percent expansion in 2014, which would be the fastest pace since 2010.
Profit GrowthCorporate profits will probably climb as much as 15 percent next year, according to Nam Dong Joon, the head of equities at Samsung Asset Management Co., the nation's biggest private money manager with $118 billion of assets.
"It's one of the most-preferred markets for investors that want to shun high risks," said Nam, who predicts the Kospi may climb as much as 14 percent next year. "We're seeing more long-term investments coming into the Korean market."
The Kospi 200 Volatility Index, a gauge of expected swings in South Korean shares derived from options prices, has declined 20 percent during the past three months. The Chicago Board Options Exchange Volatility Index, the benchmark gauge of U.S. options known as the VIX (VIX), climbed 12 percent in the same period.
Stable MarketHealthy government finances will support South Korea's financial markets, according to Yonghao Pu, the Hong Kong-based regional chief investment officer for Asia Pacific at UBS's wealth management unit, which oversees about $1.9 trillion.
South Korea's gross government debt this year will amount to 36 percent of GDP, in line with the 35 percent level for emerging markets as a group, according to IMF estimates. The nation's current-account surplus will grow to 4.6 percent of GDP, compared with 0.8 percent for developing countries, IMF projections show. South Korea's foreign exchange reserves surged by $5.8 billion to a record $336.9 billion last month.
The country's inflation rate fell to the slowest pace in 14 years in September, while the central bank left its benchmark interest rate at 2.5 percent, the lowest level since 2010, for a fifth consecutive meeting this month.
Bank Julius Baer's Mark Matthews favors companies whose profits are most tied to economic growth, including LG Chem, as valuations remain depressed. The chemical maker trades for 15 times earnings, compared with a median of 19 for global peers.
"It makes sense to buy" South Korean shares, Matthews, the head of Asia research at Bank Julius Baer, which has about $336 billion of client assets, said in a phone interview on Oct. 8. "A stable market is a positive factor."
Saturday, October 12, 2013
Costa Concordia Salvage Highlights Higher Risks to Maritime Insurers
Ships are getting bigger and bigger. Both cruise ships and cargo ships are constantly pushing the envelope of what’s considered prudent and possible on the high seas, but some of that daring is coming home to roost for maritime insurers. As the ships grow ever larger, so do potential losses for both insurers and reinsurers—something investors might want to keep in mind.
A case in point is the wreck and subsequent salvage operation that raised the Costa Concordia from the bottom of the sea off the coast of the Italian island of Giglio. The final tally is still not in, but it’s expected to be the most expensive insured maritime loss ever for the 30 or more insurers who had a piece of the action and top $1 billion. According to Allianz, overall losses may reach up to $1.7 billion, with $900 million of that chalked up to the salvage operation.
“The issue of salvage has been highlighted by both the Costa Concordia and the [container ship] MV Rena losses, which have provided complex salvage issues in the recovery of the vessels and, in the case of the Rena, the cargo on board,” according to Jon Guy, spokesman for the International Union of Marine Insurance. “Naturally the bigger the vessels, the more difficult the salvage operation.”
A recent Lloyd’s of London report, “The Challenges and Implications of Removing Shipwrecks in the 21st Century,” detailed a number of the reasons the cost of salvage is running so high: “a massive vessel wrecked at a difficult location, rocky ground above deeper water, combined with environmental concerns leading the authorities to require a complex, heavily engineered solution.”
“Removal of [the] wreck following a maritime casualty has become a very costly problem for liability underwriters over the last decade,” according to Guy. “The International Group of Protection & Indemnity (P&I) Clubs representing over 90% of the tonnage underwritten worldwide has taken the brunt of this. However, the impact has also been felt by commercial underwriters as reinsurers of the International Group and other P&I insurers, as they ultimately pay the lion’s share of wreck claims for the major casualties.”
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The 1989 loss of the Exxon Valdez, in contrast to the Costa Concordia, only cost insurers $500 million. The third most expensive insured loss in maritime history, which Guy referred to, was the sinking of the container ship MV Rena off the New Zealand coast in 2011. That also involved a massive oil spill, and was the target of a $300 million salvage operation by owners and insurers two years after its loss as they decided to remove the ship’s accommodation block from where the hulk had come to rest on the Astrolabe Reef.
The magnitude of the Costa Concordia loss is due to the size of the ship and the potential for environmental damage—the former requiring extraordinary measures for salvage, and the latter partly because when the Costa Concordia sank in January of 2012, it did so in an environmentally sensitive area.
At more than twice the size of the Titanic, the Costa Concordia was required by Italian law to be raised and hauled away in one piece to protect the environment—something that, with a ship that size, is risky business in and of itself. There was only one option: a process known as parbuckling, which was carried out just this past September and took 19 hours.
First on the agenda was the removal of some 500,000 gallons of fuel. That was delayed, as were other stages of the salvage operation, by rough seas and bad weather—factors that can compound the costs. Then it took a long time to prepare the operation that would raise the ship from its resting place in the shallower waters off the island’s coast, and in the meantime the ship began to collapse in on itself from sheer weight—something that would have raised environmental costs dramatically had it continued.
When the salvage operation itself, finally took place, the ship was rolled over onto a false bottom that is actually a stabilizing platform. It must remain on the platform for some time, where it will be stabilized for eventual flotation and then towed to its final destination. While it’s there, strand jacks are used to tighten cables that are attached to caissons—watertight platforms—so that the ship can finally be pulled out to sea. That too will be a time-consuming process.
In the case of cargo ships, of course, the increase in vessel size means that not only are insurers dealing with hazards from large and costly salvage operations in case of trouble, but also that far more cargo is at risk of loss. In fact, Maersk has a new ship, the Triple E, which can hold 18,000 TEU (twenty-foot equivalent units, the standard measure of cargo volume—think 18,000 of the sort of 20-foot containers you see in railyards or stacked up at ports, or, if you prefer, consider that that many containers can hold 36,000 cars). There is also the complication of whether the cargo itself presents an additional hazard, and whether it can be recovered.
Guy said of the trend, “One of the additional concerns for the insurance market is the rising aggregation risks which are apparent with the new breed of large container vessels. With the new vessels able to take 18,000 TEU the value of the cargo they are potentially able to carry will increase significantly and the market needs to look at the potential exposures this creates in the case of a loss and the ability to remove the cargo from and recover the vessel.”
With 163 cargo ships currently afloat with a capacity of more than 10,000 TEU each, and 120 more on the way, including 20 Maersk Triple Es, the risks are not going away—and neither is the cost.
Friday, October 11, 2013
5 Stocks Ready to Break Out
DELAFIELD, Wis. (Stockpickr) -- Trading stocks that trigger major breakouts can lead to massive profits. Once a stock trends to a new high, or takes out a prior overhead resistance point, then it's free to find new buyers and momentum players that can ultimately push the stock significantly higher.
One example of a successful breakout trade I flagged recently was renewable energy player Hanwha Solarone (HSOL), which I featured in Sept. 26's "5 Stocks Ready to Breakouts" at around $4.10 a share. I mentioned in that piece that shares of HSOL were uptrending strong over last few months, with shares making mostly higher lows and higher highs, which is bullish technical price action. That move was starting to push HSOL within range of triggering a big breakout trade above its 52-week high at $4.28 a share.
Guess what happened? Shares of HSOL didn't wait long to take out its former 52-week high and trigger that breakout, since the stock cleared $4.28 a share with monster volume on September 30. Shares of HSOL have continued to soar higher since triggering that breakout, with the stock hitting a recent high of $5.66 a share. That represents a solid gain of over 30% from the time of my article for anyone who played this technical setup. I don't think shares of HSOL are done going higher either, so traders should look for more upside in this stock if it clears its new 52-week high at $5.66 with strong volume.
Breakout candidates are something that I tweet about on a daily basis. I frequently tweet out high-probability setups, breakout plays and stocks that are acting technically bullish. These are the stocks that often go on to make monster moves to the upside. What's great about breakout trading is that you focus on trend, price and volume. You don't have to concern yourself with anything else. The charts do all the talking.
Trading breakouts is not a new game on Wall Street. This strategy has been mastered by legendary traders such as William O'Neal, Stan Weinstein and Nicolas Darvas. These pros know that once a stock starts to break out above past resistance levels, and hold above those breakout prices, then it can easily trend significantly higher.
With that in mind, here's a look at five stocks that are setting up to break out and trade higher from current levels.
Arotech
One stock that's quickly moving within range of triggering a big breakout trade is Arotech (ARTX), which is a defense and security products and services company. This stock is off to a booming start in 2013, with shares up big by 82%.
If you take a look at the chart for Arotech, you'll notice that this stock has just started to trend back above its 50-day moving average of $1.86 a share with strong upside volume. Volume so far today has already registered over 600,000 shares, which is well above its three-month average action of 226,678 shares. This spike back above the 50-day is starting to push shares of ARTX within range of triggering a big breakout trade.
Traders should now look for long-biased trades in ARTX if it manages to break out above some near-term overhead resistance levels at $1.97 to $2.24 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 226,678 shares. If that breakout hits soon, then ARTX will set up to re-test or possibly take out its 52-week high at $2.71 a share. Any high-volume move above $2.71 will then give ARTX a chance to trend north of $3 a share.
Traders can look to buy ARTX off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $1.74 a share. One can also buy ARTX off strength once it takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
FX Energy
Another energy player that's starting to trend within range of triggering a major breakout trade is FX Energy (FXEN), which is an independent oil and gas exploration and production company with principal production, reserves and exploration in Poland and oil production, oilfield service and exploration activities in the U.S. This stock is off to a slow start in 2013, with shares off by 14%.
If you take a look at the chart for FX Energy, you'll notice that this stock has been trending sideways inside of a consolidation chart pattern for the last two months and change, with shares moving between $2.93 on the downside and $3.98 on the upside. Shares of FXEN are now starting to bounce higher off its 50-day moving average of $3.36 share, and it's quickly moving within range of triggering a major breakout trade above the upper-end of its recent range.
Traders should now look for long-biased trades in FXEN if it manages to break out above some key near-term overhead resistance levels at $3.62 to $3.71 a share and then above more resistance at $3.98 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action 377,632 shares. If that breakout hits soon, then FXEN will set up to re-test or possibly take out its next major overhead resistance levels at $4.50 to $4.76 a share. Any high-volume move above those levels will then give FXEN a chance to tag or trend above $5 a share.
Traders can look to buy FXEN off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $3.15 or $2.93 a share. One could also buy FXEN off strength once it takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
Ebix
One software player that's rapidly moving within range of triggering a big breakout trade is Ebix (EBIX), which provides a series of application software products for the insurance industry ranging from carrier systems, agency systems and exchanges to custom software development for all entities involved in the insurance and financial industries. This stock has been slammed hard by the bears so far in 2013, with shares off by 28%.
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If you look at the chart for Ebix, you'll notice that this stock has been uptrending for the last month, with shares moving higher from its low of $9.25 to its intraday high of $11.65 a share. During that uptrend, shares of EBIX have been consistently making higher lows and higher highs, which is bullish technical price action. That move is quickly pushing shares of EBIX within range of trigger a major breakout trade that could push the stock into a massive gap down zone from last June.
Traders should now look for long-biased trades in EBIX if it manages to break out above some near-term overhead resistance levels at $11.74 to $12 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 1.06 million shares. If that breakout triggers soon, then EBIX will set up to re-fill some of its previous gap down zone from June that started near $20 a share. Some possible upside targets if EBIX gets into that gap with volume are $14 to $16 a share.
Traders can look to buy EBIX off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $10.87 a share or around more near-term support at $10.39 a share. One can also buy EBIX off strength once it takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
Amedisys
Another stock that looks poised to trigger a big breakout trade is Amedisys (AMED), which is engaged in delivering personalized health care services to patients and their families. This stock has been on fire so far in 2013, with shares up a whopping 61%.
If you look at the chart for Amedisys, you'll notice that this stock has been trending sideways inside of a consolidation chart pattern right above its 50-day moving average at $16.92, with shares moving between $16.04 on the downside and $18.70 on the upside. Shares of AMED are now starting to spike higher right above its 50-day, and it's quickly moving within range of triggering a big breakout trade above the upper-end of its recent range.
Traders should now look for long-biased trades in AMED if it manages to break out above some near-term overhead resistance levels at $18.05 to its 52-week high at $18.70 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 444,954 shares. If that breakout triggers soon, then AMED will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $25 to $27 a share.
Traders can look to buy AMED off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $16.92 a share or below more near-term support at $16.62 a share. One can also buy AMED off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
Pain Therapeutics
My final breakout trading prospect is Pain Therapeutics (PTIE), a biopharmaceutical company that develops novel drugs. It has four drug candidates in clinical programs, including Remoxy, Oxytrex, PTI-202 and a novel radio-labeled monoclonal antibody to treat metastatic melanoma. This stock is off to a slow start in 2013, with shares up just 3% so far.
If you look at the chart for Pain Therapeutics, you'll notice that this stock has formed a major bottoming chart pattern over the last month and change, since shares have found buying interest each time it has pulled back to around $2.50 a share. This stock is now starting to spike higher off its 50-day moving average of $2.61 a share, and its flirting with its 200-day moving average at $2.83 a share. That move is quickly pushing shares of PTIE within range of triggering a major breakout trade above some key near-term overhead resistance levels.
Traders should now look for long-biased trades in PTIE if it manages to break out above some near-term overhead resistance at $3.05 a share with high volume. Look for a sustained move or close above $3.05 a share with volume that hits near or above its three-month average action of 280,177 shares. If that breakout triggers soon, then PTIE will set up to re-test or possibly take out its next major overhead resistance level at $3.45 a share. Any high-volume move above $3.45 will then give PTIE a chance to re-fill some of its previous gap down zone from May that started near $5.50 a share.
Traders can look to buy PTIE off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $2.58 to $2.46 a share. One could also buy PTIE off strength once it takes out $3.05 a share with volume and then simply use a stop that sits a conformable percentage from your entry point. I would add to either position once PTIE takes out $3.45 a share with solid upside volume.
To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr.
-- Written by Roberto Pedone in Delafield, Wis.
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