1 Way to Jazz Up This Pharma Stock

It was a year of change for Jazz Pharmaceuticals (NASDAQ: JAZZ  ) . The company merged with Azur Pharma and acquired EUSA to lessen its dependence on its lead drug, Xyrem. Jazz shares are trading up more than 30% year-to-date based on Xyrem's strength, but generic competition looms.

Jazz's other drugs face further competition from the likes of Novartis (NYSE: NVS  ) , Teva� (NYSE: TEVA  ) and Mylan (NASDAQ: MYL  ) . Should investors continue to love all that's Jazz?

Restructuring efforts
Near the end of 2011, Jazz had two products: narcolepsy treatment Xyrem and obsessive compulsive disorder treatment Luvox CR. Xyrem accounted for nearly 90% of the company's revenues, bringing in $233 million in 2011. But Jazz made a move that lessened Xyrem dependence while bringing in some additional sales.

Jazz and Azur merged early this year, bringing in a small portfolio of lower earning central nervous system products. Good drugs for diversification, not so much for revenues. Azur's women's health division, on the other hand, proved its worth. Jazz divested it to Meda AB in October for $95 million �in cash.

The summer acquisition of EUSA Pharma proved more useful than Azur at lessening the company's dependence on Xyrem's revenue. That deal garnered Erwinaze, an acute lymphoblastic leukemia treatment facing competition with Novartis' Gleevec and a pipeline project from Ariad. Gleevec brought in $4.7 billion last year, and, although this drug is approved for several indications, it demonstrates that this can be a lucrative market.

But Xyrem remains the company's star drug. In the company's third quarter report, Xyrem reported net sales of $102.6 million and Erwinaze reported $31.6 million. And It's a long drop down to the third highest seller.

Generic competition
Xyrem could become Jazz's Achilles' heel once generic competition arrives. Xyrem has numerous patent protections with expirations ranging from 2019 to 2024. But the drug lost its orphan drug market exclusivity in November. The company continues its legal battle with Roxane Labs over a potential generic Xyrem, which could make it to market next year if the court allows.

The drug also faces competition from a generic version of Teva's Provigil. Mylan brought the cheaper alternative to market this year. Xyrem does have an extra indication for a narcolepsy side effect, but that might not matter when a large price difference is at play.

Foolish bottom line
Jazz has no real standout catalyst coming in the near future for investors to jump in and wait out. The pipeline consists of different spins on existing products, including an intravenous form of Erwinaze. Though Xyrem remains strong for now, Jazz will probably remain in a holding pattern until it's able to demonstrate a stronger second drug.

While you can certainly make huge gains in biotech and pharmaceuticals, the best investing approach is to choose great companies and stick with them for the long term. In our free report "3 Stocks That Will Help You Retire Rich," we name stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of.�Click here now�to keep reading.

Kenneth Rogoff Asks: Is Modern Capitalism Sustainable?

History may teach that all forms of capitalism are transitional, but the best economic system for now—in the face of no other viable alternatives—is “today’s dominant Anglo-American paradigm,” says widely quoted Harvard University economics professor Kenneth Rogoff.

The former International Monetary Fund chief economist believes that continental Europe’s brand of capitalism is generous to workers and ensures a more equal distribution of wealth, but it’s unsustainable. At the same time, Rogoff (left) questions China’s “Darwinian” capitalism, with its weak social-safety net and fierce competition among export firms, saying it’s uncertain how far China’s political and economic structures will transform themselves and whether they can ultimately serve as a role model.

“Modern-day capitalism has had an extraordinary run since the start of the Industrial Revolution two centuries ago, lifting billions of ordinary people out of abject poverty. Marxism and heavy-handed socialism have disastrous records by comparison,” writes Rogoff in a column for the Project Syndicate newspaper association.

But, he warns, as industrialization and technological progress spread to Asia and Africa, contemporary capitalism’s numerous flaws may become more apparent, including its inability to address issues such as global climate change, the growing income gap between rich and poor, medical care distribution, and financial crises and the technological innovations that have made them worse.

“Today’s capitalist systems vastly undervalue the welfare of unborn generations,” Rogoff writes. “For most of the era since the Industrial Revolution, this has not mattered, as the continuing boon of technological advance has trumped short-sighted policies. By and large, each generation has found itself significantly better off than the last. But, with the world’s population surging above seven billion, and harbingers of resource constraints becoming ever more apparent, there is no guarantee that this trajectory can be maintained."

While none of Anglo-American-style capitalism’s problems is insurmountable, the system may become a victim of its own success in producing massive wealth, he concludes: “As pollution, financial instability, health problems, and inequality continue to grow, and as political systems remain paralyzed, capitalism’s future might not seem so secure in a few decades as it seems now.”

The Dec. 2 column, which went viral on the Internet after publication, drew a large number of comments from readers, many of whom complained that the world’s problems are due not so much to economics as to politics.

“All of our problems are solvable; however, we are becoming less able to adapt to our evolving society as we become more complacent and stubborn ideologically,” writes commenter Jake Lopata. “The political system will inevitably be capitalism’s undoing.”

Read about Rogoff’s book ‘This Time Is Different’ at AdvisorOne.com

Barron’s Mag: Utilities, Dow Chemical, America Movil

Herewith, a tour of some of the major articles in this weekend’s Barron’s print edition (subscription required to read Barron’s print articles):

With bonds fully priced, Andrew Bary argues it’s time to move into utilities and telecom stocks as two examples of high-yielding equities, while paring fixed-income holdings. The yield on U.S. 10-year Treasury notes actually slipped today to 3.44%. But some of Andrew’s notable utilities rose, including Kinder Morgan Energy Partners (KMP), up .7%, and his favored telecoms also rose, including Verizon Communications (VZ) and AT&T (T), both up about 2%.

Dimitra Defotis writesthat Dow Chemical (DOW) could benefit from $12 billion in potential asset sales, which may provide cash to pay down debt and put more of a focus on the faster growing specialty chemicals business, which is expected to receive a boost from Dow’s purchase of Rohm & Haas. Dow shares are up 82 cents, or 3%, this afternoon, at $28.31.

America Movil’s (AMX) American Depository Receipts may be the best way to invest in cell phone growth in emerging markets, writes Chris Williams. He notes Bill Gates’s charitable trust increased its stake in the shares “sharply” last quarter, to 1.5 million shares. AMX stock is up 15 cents, or .3%, today at $48.47.

Sprint Nextel (S) is “hitting its stride” writes Mike Santoli, and could appreciate 50% from a recent $3.70. For more on that, see Eric Savitz’s post over on Tech Trader Daily.

Will Stock Market Reverse Course in the Second Half?

The market as measured by the S&P 500 was up by only 4% in the first half of 2011, and it fell about 1% in the second quarter. A rally that has lasted two and a half years has stalled. The S&P rose from 683 in March 2009 to just below 1,400 two months ago.

It gets worse: A sell-off may be about to begin that would take the index lower for the full year. Here are half a dozen reasons why one of the most impressive stock market runs may have ended:

1. Markets can't rise forever. This may be obvious to most people. A market that more than doubles in two years is a market which requires significant support to go higher. Recent economic news shows that support to be lacking.

2. Corporate earnings have been pressured by an economic slowdown and margin drops. Many companies in the retail, transportation and manufacturing sectors counted on low commodities prices back in 2009 and 2010 to help profits. That help is gone. Oil has rallied from below $50 in mid-2009 to almost $100 recently. The price is down from $110, but it is still historically high. Prices on cotton and many agricultural commodities have also risen in the same period. The result: The cost of making and moving goods is higher, and margins on items like clothing have dropped.

3. Consumer sentiment has faltered. Recent data from from the Conference Board said"Consumer Confidence Index, which had declined in May, decreased again in June. The Index now stands at 58.5 (1985=100), down from 61.7 in May." Many retailers have posted slow same-store sales. Activity at the world's largest retailer, Walmart (WMT), has been down on a same store basis for its U.S. operations.

4. The improvement in unemployment has stopped. There were signs of a recovery in the job market in the first quarter and the unemployment rate dropped below 10%. May figures showed improvement in unemployment slowing as the economy added only 58,000 private-sector jobs. The carefully watched ADP data numbers confirmed the problem. Weekly initial jobless claims are still above 400,000 most weeks, a sign the June unemployment figures are likely to be poor. One of the worst drags on the economy -- long-term unemployment, which is measured by those out of work for more than 26 weeks -- has risen to over 6 million people. Most of these are close to the end of receiving unemployment payments, which means in a large sense, they will cease being consumers at all.

5. Housing prices are still falling. Americans counted on home equity to fuel their lifestyles in the 2004 to 2006 period. That ended as home prices fell sharply into 2010. S&P Case-Shiller data shows that home prices in the 10 largest and 20 largest cities continue to drop. Economist Robert Shiller expects the slide to continue into 2012. Over a quarter of U.S. mortgages are underwater, which means most of their owners cannot afford to sell them even if they need to as a way to cut living costs.

6. GDP rose less then 2% in the second quarter. It's the most comprehensive single measurement of the economy's health, and more and more economists have revised estimates for second-half growth down. The problem may be long-lived. The IMF just issued a report which said U.S. GDP growth will probably be below 3% through 2016.

Beyond those six negatives, there are not many reasons left to support an ongoing market rally. Instead, the signs say a sell-off is probable.


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The Treasury Borrowing Advisory Committee Asks for $95 Billion More in Q1

The Treasury Borrowing Advisory Committe [TBAC] told the Treasury that it will need to borrow $95 billion more in the first quarter than had been estimated in the last TBAC report in early November. The increase is apparently due to the cut in payroll taxes, although the committee gave no specific reason for the increase in its report to the Secretary. The entire increase will be loaded into February and March. January borrowing was little changed from the November forecast. The Treasury market has been pounded over the past couple of days as it ponders the impact of the unexpected increase in supply.

I will have more details in the Wall Street Examiner Professional Edition Treasury update to be posted later. Below is the TBAC Report to the Secretary. It is filled with misinterpretations and misrepresentations of the meaning of current economic data, but it is an interesting read nevertheless for the perspective it provides on the policy makers, and major market movers and shakers. I will have additional comments in the Treasury Report.

Report to the Secretary of the Treasury from the Treasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association

Dear Mr. Secretary:

Since the Committee last met in early November, economic activity has picked up further, and the expansion appears to be more firmly entrenched. An improvement in the data and a turn toward more accommodative federal fiscal policy has supported expectations that the economy will grow above-trend in 2011. Job growth has remained tepid thus far, though some measures of labor market health have shown modest improvement lately.

Real GDP increased at a 3.2% annual rate last quarter, moderately quicker than the 2.6% rate experienced the prior quarter. Domestic final sales expanded at a similar 3.4% pace. Inventory accumulation slowed noticeably last quarter, as a decline in the volume of imports kept stockpiles relatively lean. The firming in business surveys at year-end suggests that industrial output is set to re-accelerate in the first half of this year, following a modest slowing late last year. The new orders index in the latest ISM manufacturing survey stood at 62.0, indicating the factory sector is benefiting from robust final demand growth.

Real consumer spending accelerated to a 4.4% annualized rate last quarter, the fastest pace so far in this expansion. A revival in demand for motor vehicles provided an important lift to consumer spending on durables. The rise in equity prices has bolstered household balance sheets, more than offsetting the decline in residential real estate values. The improved financial position of consumers has apparently fostered a modest firming in confidence, as saving rates drifted lower in the second half of last year. Households should receive a further boost early this year, as disposable incomes are lifted by the Social Security tax holiday.

Housing demand has picked up lately, but remains at low levels. Homebuilding activity has changed little and remains at depressed levels, as the inventory overhang limits the need for new housing units. Home price measures have continued to register modest declines, though the most recent data indicate some slowing in the pace of that decline.

Real business outlays grew at a 4.4% annual rate in the fourth quarter, well below the unsustainably strong rates experienced earlier in the year. Monthly spending data, as well as recent survey measures of capital spending intentions, point to continued good growth in capital outlays. Strong corporate profitability and the pent-up need to replace worn-out equipment continue to support capital expenditure growth. Financial conditions in capital markets remain favorable, and have been joined recently by increased bank lending to the business sector. Solid business capital spending has not yet translated into substantial gains in full-time hiring: The two labor market reports received since the last meeting point to continued slow growth in private employment and wages. However, the decline in jobless claims and the general rise in survey measures of business hiring intentions indicate that the long-awaited pick-up in private hiring may be getting nearer.

Low levels of resource utilization continue to put downward pressure on wage and price inflation. Measures of core consumer price inflation remain soft and the most recent reading of the core PCE is up a mere 0.7% from a year earlier. Some measures of rental inflation have firmed recently, though they have generally been offset by declining core consumer goods inflation. Rising prices for globally traded commodities, particularly for food and energy, could pass through to some degree into core consumer prices. However, most measures of inflation expectations remain well-contained.

Shortly after the Borrowing Committee last met, the FOMC instituted a $600 billion asset purchase program. Since then, Fed rhetoric has continued to emphasize that both employment and inflation are below levels consistent with their monetary policy mandate. This has reinforced market expectations that the Fed will follow through on the entire $600 billion plan, currently scheduled to be completed in June. At the same time, sharp public criticisms of asset purchases, as well as an improving economy, have both contributed to expectations that no further purchases will be instituted after the present program is completed.

The December change to tax policy has added to most estimates for federal fiscal deficits in coming years. CBO projects a federal budget deficit of $1.5 trillion in fiscal year 2011 year and $1.1 trillion for fiscal year 2012, with much of the improvement in the latter year owing to the lapsing of spending related to the 2009 stimulus package. State and local finances have come under increasing scrutiny, and actions taken to close budget shortfalls at this level of government have added to fiscal restraint on real economic activity. Longer-term fiscal challenges remain daunting. At the federal level, Social Security and Medicare face unfunded obligations of $66 trillion. Moreover, state and local governments also face substantial unfunded pension obligations.

Against this economic backdrop, the Committee’s first charge was to examine what adjustments to debt issuance if any Treasury should make in consideration with its financing needs. Given the recent extension of the 2001 and 2003 tax cuts, the Committee felt that nominal coupon issuance should be maintained at current levels. Taking into account the current deficit outlook, the Committee does not anticipate further reduction of coupon issuance in the near-term.

Although the average maturity of marketable debt has increased meaningfully from its 2008 low of roughly 48 months to a current average of approximately 59 months, the Committee felt strongly that the longer term fiscal challenges warranted further progress on this front. It was noted that without changes to issuance patterns, the average maturity would stabilize just below 62 months in 2013. The Committee intends to focus on these issues at future meetings. Lastly, the Committee members anticipated an orderly resolution to the challenge posed by the current debt ceiling limit.

The second charge was to broadly examine, on an exploratory basis, a variety of alternatives to Treasury’s current debt management program with the goal of minimizing borrowing costs, enhancing market liquidity, and expanding its investor base. The presentation, (attached), first examines the composition of outstanding Treasury debt holders and how substantial domestic demand may evolve over time. The presentation then focuses on potential new debt products, including, but not limited to, callable bonds, floating-rate bonds, and bonds longer than 30 years.

In the final charge, the Committee considered the composition of market debt for the remainder of the January 2011 to March 2011 quarter and the April 2011 to June 2011 quarter. The Committee’s recommendations are attached.

Respectfully,

Matthew E. Zames
Chairman

Ashok Varadhan
Vice Chairman

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

CES: And Away We Go

Whatever the actual influence or prominence might be of CES, it keeps drawing more press every year.

I’m at the very first session for press at this year’s Consumer Electronics Show in Las Vegas, inside the “Marcello” ballroom of the Venetian Hotel, where we are about to be treated to a State of the Union-style overview of how the industry is doing.

It’s standing-room-only here. Even though Microsoft (MSFT) has said this is their last year doing the keynote (Monday night), and there is chatter about the show losing some importance for major vendors, the press presence only seems to grow thicker and deeper with each passing year that I’m here. Many around me are wondering, I think, why they don’t get a bigger room.

I’ll be here all week, by the way, reporting on the events both official, and unofficial. Tomorrow is the main press day, with briefings by Intel (INTC), Samsung Electronics (SSNLF), and many others.

The Consumer Electronics Association’s Shawn Dubravac is at the podium to give the talk. He starts off by pointing out that the show has been going on since 1967. More than 20,000 new products will be introduced this week, he points out.

The big theme two years ago at the show, in 2010, was about “Beyond HD” in television sets, and a “plethora” of new screens for content, including the first “slate” computers that preceded the Apple (AAPL) iPad. Dubravac notes that 2010 also saw the introduction of Microsoft’s Kinect controller, and some larger-screen smartphones.

2011′s themes were “pocketable devices,” sensors in devices, and the rise of “apps.” Tablets were the big hardware story last year. Some sensors and apps let you control one device with another, such as using a smartphone to control a blood-pressure monitor. Wireless audio also made a splash, things trying for the effect of Apple’s “AirTunes.”

This year will be an even bigger year for wireless, with even more smartphone introductions, he opines.

Dubravac opines we are entering the second decade of the “Digital Transition.”

Dubravac offers some feedback on what buyers at CES said they think are the “hottest” trends. “Wireless,” and “Wireless devices,” as a single, combined category, got the most votes, followed by “lifestyle electronics.”

The top of the hot list was “apps,” and at the bottom, Netbooks (way not hot!)

Dubravac goes into the three trends he sees: “friction between pulling computing” out of traditional devices and shoving that computing power into non-computing devices. Think Internet TVs. Internet TVs were 12% of those shipped in 2010, this year over half will be Internet-enabled.

“Superphones“: quad-core phones, 4G phones , things that are more and more like pocketable fully-fledged computers.

There will another 50-plus tablets this year, and maybe 100 different models of “ultrabook,” the ultra-slim laptop design that Intel is pushing heavily.

“the story with computing is not the power aspect of the device but where it fits into the broader suite of products,” Dubravac remarked.

About fifty million units shipped last year of tablets worldwide, he notes. They don’t need to be radically different, just different enough, he concludes.

Dubravac mentions the “Nest” networked thermostat as an example of a different kind of computing devices.

Another big story will be “interconnectedness,” as opposed to power of individual devices. Think of “head units” for Pandora radio, to control more experiences from the smartphone. “From Verizon and Dish [network] I expect to see a real focus on the media server” to access content from a variety of devices.

“2012 will be the year of the interface,” declared Dubravac. That involves the challenge of how to read email on a 50-inch television set. So far, that has been a “very bad” user experience. With more and more TVs becoming connected, the interface becomes the key area of focus.

This year will see a lot more of voice control and gesture control in devices. LG Electronics is rumored to be adding voice control to their remotes, and we’ll see tablets this week integrating gesture control.

Dubravac shoes off a very early, very simple Zenith remote. It was changed into today’s bewildering multi-button remote control. Simplicity becomes important as complexity threatens to take over.

Google’s (GOOG) GoogleTV has focused on search and discovery to make choices across all your distribution possibilities. The next big hurdle will be search and discovery, said Dubravac.

Dubravac’s final theme is “the prevalence of the personal.” in contrast to the early days of the show, which was about appliances shared by a group — a television, say — the trend is toward more personal devices, such as tablets and smartphones. Even with the exact same device and wireless carrrier, things such as apps let the user make them personal.

Dubravac notes how many articles leading up to the show always mention that Apple isn’t at the show, and says it’s not news, to much applause. “platforms come along at different points in time in the development of technology,” he observes. Standard platforms have always allowed others to build around them, developing accessories, etc.

“When I look at smartphones, the much broader story is that this hardware core has developed. In the history of platforms, it didn’t matter whether it was open or closed. What mattered was, Is it open enough that we can build industries around it?”. Dubravac concludes that wireless is the new “loss leader,” the thing that gets consumers in the store. It’s the leveraging of the Android and iOS “core” that will be leveraged in devices being shown this week.

Watch for examples of “indoor navigation,” and of integration of social networking into products, he advises.

As regards TVs, Dubravac concludes by going through the history of that technology. It took years for digital TVs to catch on. Same with hi-def TV. Then the wave of flat-panel TVs, some of which were not always successful. So, not every technology catches fire immediately, he argues.

Looking forward, Dubravac sees a big push to TVs without a bezel. Corning’s (GLW) new version of “Gorilla Glass” will be an important step in that direction. Organic light-emitting diode (OLED) TVs will be shown with bigger display sizes.

Also water-proofing technology, so you can have your smartphone operate underwater. And there’ll be lots more 3-D printing shown off this year. Some of those things won’t be mass-market anytime soon, but they’re important nonetheless.

Too Tired for Black Friday? Hire Someone Else to Shop

You've been scouring leaked circulars, scrolling through "deal" Web sites and message boards and catching bit of gossip from your friends who work in retail.

You know exactly what you want to buy this Black Friday, but there's just one problem: You have no desire to get up in the middle of the night (especially not after a huge turkey dinner), camp out or battle the mob that will charge through the doors.

Get alerts before Link and Cramer make every trade

Thanks to a combination of the unemployed looking to pick up extra holiday money and those who see a need waiting to be filled, this shopping season brings "personal shoppers" willing to do the dirty work for you.Time may be running short, but a scan of local want ads and sites such as Craigslist turn up pitches from people who will do your Black Friday shopping for you -- for a price.One such ad from Austin: "Don't pass up the awesome deals and opportunities to save hundreds of dollars just because you don't want to deal with the crowds and late hours. I will be Black Friday shopping at Wal-Mart(WMT). If you would like for me to pick something up for you, I can do it for a small fee."The ad cautions that there is no charge if they fail in the task: "Things go fast, but my helpers and I will do our best to ensure that we get good deals for you!" Home delivery is included in the transaction.

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In Boston there's a woman looking to "make some extra money for Christmas" by offering the same service of Black Friday personal shopper braving the crowds at Kohl's(KSS), Target(TGT) and Wal-Mart.

Most of the ads leave the cost of the service as negotiable; those that do set a price tack on $50 to $100.

Emily Vonder Schmalz of Philadelphia is among those being hired as a personal shopper this Black Friday via her Craigslist adHaving served in the Air Force, she credits her buying acumen -- and ability to "get in and get out" of Black Friday battlegrounds to her "logistics background" paired with "being a bit of a shopaholic." "It is a bit of a rush, to be honest," she says.Vonder Schmalz typically charges a flat fee for her customers, depending on the size and cost of the items sought. Usually, that charge is about 10%.She says its particularly gratifying to help out elderly customers who cannot make it out to the late night/early morning sales events -- and should not, given the crowds and shoving.Preparation, she says, is the key to a manageable Black Friday."It can be so easy. There's no reason to stand out in the cold or rain," she says. She scopes out stores and circulars ahead of the big day to streamline the process.Vonder Schmalz let us in on one of her secrets: Even if she cannot find a comparable sale price before Black Friday, she will buy an item anyway and merely ask the store for a price adjustment after the crowds diminish in a day or two. Many stores will honor such a request, she says."There is never a reason why you should pay full price for anything," she adds.Vonder Schmalz says she has seem her fair share of Black Friday chaos -- rushing crowds, arguments and fights. Some unscrupulous shoppers have followed her around a store, waiting for her guard to let down so they could snatch an item from her cart.Don't expect such a classless move from her."I believe in karma," she says, adding that more than the money she makes from the service, she gets a thrill from her role in ensuring holiday cheer.

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For those who fail to find a Craigslist shopper willing to risk life and limb for your Xbox Kinect or Lets Rock Elmo!, there are other sites that have found a niche in linking shoppers and buyers this holiday season.

The search for willing shoppers is right in the wheelhouse for TaskRabbit, whose community members request help with everyday chores and are paired with those willing to do them. Among the many tasks: shopping for dog food (the need that actually gave founder Leah Busque the idea), assembling Ikea furniture and delivering an In-N-Out burger.

According to spokesman Johnny Brackett, the site has seen numerous users outsourcingr Black Friday shopping.He cites, as an example, a woman in Boston looking for a shopper knowledgeable about digital cameras to help her pick one out for her husband and go secure the item. The shopper will be reimbursed through the site (as all its transactions are) and the requested fee was estimated at $32 or less.As of Tuesday, it looked as though she may have found a willing helper, provided they could make their schedules work.Another site pairing buyers and sellers with goods and services, Zaarly, is "seeing a spike in shopping-related requests" -- more than 50 for Black Friday shoppers this past weekend alone.In total, more than 175 people have offered their services to be personal shoppers, with Best Buy(BBY) being the most popular store mentioned and flat-screen TVs the most sought item.Its most unique Black Friday request thus far: Someone willing to pay for a reserved parking spot close to the entrance of a nearby mall.

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Currencies: Euro turns up from 2-year low on short squeeze

NEW YORK (MarketWatch) � The euro turned up sharply against the dollar on Friday, which analysts attributed to a big shift in traders betting against the currency after it touched technical levels near the lowest in two years.

Earlier, the U.S. dollar gained ground after a report showed U.S. wholesale prices unexpectedly rose last month, frustrating hopes that central bankers will ease policy further.

Still, the euro remained near a two-year low after Moody�s Investors Service cut Italy�s government bond ratings by two notches and the country sold new three-year bonds.

Click to Play China growth rates slows

The latest Chinese GDP data show that growth has decelerated to its slowest pace since the global financial crisis.

The euro EURUSD �fell as low as $1.2156, before rebounding to $1.2245, up from $1.2197 in North American trade late Thursday.

For the week, it�s still down 0.4%, having fallen for the past seven sessions, according to FactSet.

The dollar index DXY , which measures the greenback�s performance against a basket of major currencies, turned down to 83.324, from 83.666 Thursday. The move in the euro erased the index�s gain for the week, which was already weighed by a decline versus the Japanese yen.

Traders who are short the euro sometimes have to reverse those bets as certain levels are hit, analysts said.

Wednesday�It looks to be a technically driven move,� said Eric Viloria, senior currency strategist at Forex.com. European bonds are performing better, �equities are higher, and U.S. yields are higher, which all correlates to a higher euro-dollar.� Read story on U.S. yields.

The Dow Jones Industrial Average DJIA �jumped 1.6%, after falling for the prior six sessions � its longest losing streak since May.

Analysts also noted that Goldman Sachs analysts, led by Thomas Stolper, said in a note Friday that they were sticking with their 12-month forecast for the euro to rise to $1.40 � quite a far cry from the $1.20 or so that many others see being reached over a much shorter horizon.

Even Goldman itself lowered its three-month forecast to $1.25, from $1.33 previously, according to Dow Jones Newswires.

Reuters

Goldman saying the euro�s 12-month forecast was part of what triggered the euro�s gains, said Dean Popplewell, chief currency strategist at trading platform Oanda.

Earlier, the dollar rose after the U.S. Labor Department said its Producer Price Index rose 0.1% in June, while analysts had expected a decline of as much as 0.5%. Excluding food and energy, prices rose 0.2%, in line with forecasts. Read about PPI.

In recent days, the dollar has gained ground as hopes [by investors in riskier assets like stocks and commodities] have faded that the Federal Reserve may launch a third round of quantitative easing. That kind of policy typically involves buying assets to pump money into the financial system, and is seen by many as devaluing a currency.

EUrope in CRisis |Topics: Europe
��Reuters Italy bond sale fares fine, yet fears mount
High borrowing costs, contagion fears and signs of a comeback attempt by Silvio Berlusconi leave Italian markets vulnerable.
� Spanish ECB borrowing up
�Madrid protests heat up (blog)
� Euro turns up from 2-year low
� 4 key central-bank missives /conga/story/2012/06/euro_zone_crisis.html216403

�The uptick in inflation dampens the Fed�s scope to push through QE3,� said David Song, a currency analyst at DailyFX.

Also, Moody�s cut Italy�s bond rating, but the country still managed to sell 3 billion euros in debt in a closely-watched auction. Read more on Italy.

Chinese GDP

In Asian trading hours, the U.S. dollar edged lower after Chinese economic data matched expectations, easing concerns of an overly-rapid slowdown in the world�s second-biggest economy.

Chinese data showed the nation�s economy expanded 7.6% in the second quarter -- still a sharp slowdown from the 8.1% growth in the first quarter. Read story on China GDP.

Among other major currency pairs, the dollar USDJPY �slipped to buy 79.29 yen, from �79.33 late Thursday. The greenback has declined 0.7% this week versus its Japanese counterpart.

The British pound GBPUSD �extended gains to $1.5578, up from $1.5429 Thursday. It�s gained 0.6% from last Friday.

The Australian dollar AUDUSD �climbed to $1.0227 from $1.0138 in the prior session, up 0.1% from the levels seen a week ago.

Best Stocks To Invest In 2012-1-17-1

 

WILMINGTON, NC, Dec. 14, 2011 (CRWENEWSWIRE) — TranS1 Inc. (Nasdaq:TSON), a pioneer in minimally invasive approaches to lumbar spine surgery, today announced that Palmetto GBA (”Palmetto”), a Medicare Administrative Contractor, has removed its Non-Coverage policy for AxiaLIF effective January 1, 2012.

In its letter, Palmetto indicated that its medical directors had reviewed the AxiaLIF clinical information and decided “…the benefits are well supported by high-quality evidence, and has clinical value.” Palmetto provides care to approximately nine million Medicare beneficiaries in California, Virginia, North Carolina, South Carolina, Nevada, West Virginia and Hawaii.

“We are very pleased with Palmetto’s decision to cover the AxiaLIF procedure, bringing total AxiaLIF payor coverage to approximately 23 million covered lives,” stated Ken Reali, TranS1’s President and CEO. “We believe that this decision further validates the safety and effectiveness of the AxiaLIF procedure and our ability to work with payors to adopt policies that support reimbursement for the procedure. We look forward to being able to work with spine surgeons to provide the minimally invasive AxiaLIF approach to Medicare beneficiaries in these covered states.”

About TranS1 Inc.

TranS1 is a medical device company focused on designing, developing and marketing products that implement its proprietary approach to treat degenerative conditions of the spine affecting the lower lumbar region. TranS1 currently markets the AxiaLIF family of products for single and two level lumbar fusion and the Vectre and Avatar posterior fixation systems for lumbar fixation supplemental to AxiaLIF fusion. TranS1 was founded in May 2000 and is headquartered in Wilmington, North Carolina. For more information, visit www.trans1.com.

Source: TranS1 Inc.

Contact:

Investors:
TranS1 Inc.
Joseph P. Slattery, 910-332-1700
Executive Vice-President and Chief Financial Officer
or
Westwicke Partners
Mark Klausner, 443-213-0501
trans1@westwicke.com

 

THIS IS NOT A RECOMMENDATION TO BUY OR SELL ANY SECURITY!

Insiders are Scooping up this Cash Machine

There are literally thousands of companies that have been built on how people behave. Most of the time, these companies exist to serve people's demands for something convenient, necessary or entertaining.

But some companies exist because everyone is prone to mistakes. These are the kinds of investments Peter Lynch always sought out, because they are seen as being somehow distasteful. One such "distasteful" investment is in household budgeting. Most people just plain stink at it. If they aren't prepared when disaster strikes, they need a helping hand.

That's where World Acceptance Corporation (Nasdaq: WRLD) comes in. The company has been around for more than 40 years and is one of the last remaining companies to offer unsecured installment loans. Some may remember companies like Beneficial or AVCO, which provided unsecured personal credit lines. All those companies got eaten up by larger financial entities, leaving players like World Acceptance to stay the course. It's done so in a very profitable manner.

 

World's success isn't just based on the fact that people fail to make ends meet -- poor budgeting gets them into World's offices. But what keeps them there are three great aspects to World's loan structures.

First, World offers loans that are large enough to make a difference. Unlike the payday lender, which offers loans of around $500 for a period of two weeks, installment loans last an average of nine months at World (although the term is usually twelve months), and the average principal is about a thousand bucks.

Second, World uses the "Rule of 78s" when calculating a borrower's payment. Under this model, the customer makes the same size payment each month, but the interest is front-loaded. For a 12 month loan, 12/78ths of the finance charge is assessed as the first month's portion of the finance charge, 11/78ths of the finance charge is assessed at the second month and so on until the 12th month, when 1/78ths of the finance charge is assessed.

This is important because it plays into the third great aspect of World's business -- frequent refinancing. More than 70% of World's customers refinance their loan in the first few months. So if a customer refinances after three months, World has collected 33/78ths (42%) of the interest on the original twelve-month loan and issues a new loan again with front-loaded interest.

World Acceptance has been aggresively expanding during the past few years, almost doubling the store count (from 579 to 949) and receivables portfolio (from $352 million to $770 million) since 2005. Management has been extremely cautious about opening stores in states that aren't friendly to the business from a regulatory standpoint, so it has faced very few legislative battles (and because payday lenders get all the attention). The company has also dipped its toe into Mexico and plans to open 15 offices there in 2011.

Management has deployed capital wisely and enjoys superior credit terms with its backers. The company has drawn down $99 million of a $238 million credit facility at a mere 4.25%. Considering it then turns around and lends this money to customers at APR's exceeding 100%, it's no wonder the company has pumped out $450 million in free cash flow during the past three years. World has also bought back $150 million of its own stock during the past 10 years. In fact, when the stock hit a speed bump in April and May, one insider scooped up more than 360,000 shares.

What Is The Bond Market Telling Us?

By David Berman

The widening gap between the S&P 500 and U.S. bond yields is attracting a lot of attention right now. No wonder: The gap suggests that the bond market and the stock market are taking two very different views on the future. Clearly, only one view can be right.

In the one camp, the S&P 500 slid last summer over concerns about Europe and the U.S. economy, but has since rebounded about 17 per cent since the start of October, suggesting that equity investors are upbeat.

In the other camp, the yield on the 10-year U.S. Treasury bond slipped with stocks last summer, when it yielded more than 3 per cent. However, since then, it has meandered below the 2 per cent threshold, suggesting that investors are very nervous about something and are looking to bonds as a store of safety. (As bond yields fall, bond prices rise.)

As MarketBeat points out, there is one other explanation: Federal Reserve monetary actions are holding down bond yields below levels where they would normally be. But it also notes that the bond market has had a tendency to be right in recent debates with the stock market, with stocks falling in the spring of 2011 and the early autumn after the bond market signalled trouble ahead.

And let’s not forget when the bond market inverted prior to the 2000 bear market and the 2008 financial crisis – with short term bonds yielding more than long-term bonds. Both times, the stock market seemed giddy even as bonds predicted big troubles ahead. Will this time be different?

Disclosure: None

European leaders hash out crisis deal

NEW YORK (CNN) -- A majority of European leaders agreed early Friday on a new deal to try to resolve the continent's debt crisis, but some countries including Britain refused to back a broader treaty change.

The 17 members of the eurozone, which share the embattled single currency, reached a deal for a new intergovernmental treaty to deepen the integration of national budgets.

Six other EU nations supported the deal. "We're doing everything we can to save the euro," President Nicolas Sarkozy of France said at a news conference in Brussels following a marathon summit meeting of EU leaders.

German Chancellor Angela Merkel called it a 'new beginning,' saying "We have achieved a breakthrough to a stability union. A fiscal union, or stability union as I call it, will be developed further, step by step in the years to come."

But the new plan, which leaders are aiming to have ready by March, did not get the backing of Britain.

"We would rather have reformed the treaty with 27 members," Sarkozy said. But Prime Minister David Cameron of Britain demanded an "unacceptable" opt out clause related to the financial services sector, Sarkozy said.

"I said before coming to Brussels that if I couldn't get adequate safeguards for Britain in a new European treaty, then I wouldn't agree to it," said Cameron.

The British waiver would have "undermined a lot of what we've done to regulate the financial sector," Sarkozy said.

Instead, the eurozone countries, along with "anyone who wants to join us," are pushing ahead with the new treaty, he said.

Short-term pain or long-term gain as UK says no - CNN

"What is on offer isn't in Britain's interests, so I didn't agree to it," Cameron said.

The new deal may raise concerns of the EU turning into a two-tier system, with some countries pursuing deeper integration than others. But leaders had to act.

The national debts of euro members, including Ireland and Greece, have pushed the common currency to the brink of collapse, forcing international lenders to swoop in with bailouts.

The budget cuts they have demanded have led to mass protests that brought down governments in both countries -- and they are not the only ones with worrying levels of debt.

Larger economies like Spain and Italy have both come under pressure in financial markets recently, with their borrowing costs spiking to painfully high levels.

The French minister for European affairs, Jean Leonetti, had warned Thursday ahead of the summit meeting that the euro could "explode" and Europe could "unravel."

That would be a "disaster not only for Europe but for the whole world," Leonetti told the French TV station Canal+.

The new measures included handing over the running of the union's bailout funds to the European Central Bank and its new president, Mario Draghi, who voiced his approval of the plan but but made no mention of any additional bond-buying plans.

The ECB has been buying government bonds on a limited basis as part of an emergency program to keep yields in check and there has been growing pressure for the central bank to become more aggressive.

Now it's up to the ECB

Draghi has repeatedly said that the ECB's only mandate is to manage inflation. The central bank announced measures Thursday to try to revive the ailing European economy and ease credit conditions for troubled eurozone banks.

European markets had a mixed reaction to the news. Stocks in London (UKX) rose 0.8%, while markets in Germany (DAX) were up 1.9% and in France (CAC40), stocks jumped 2.5%.

At the same time, borrowing costs resumed their climb, with the yield on the 10-year Italian bond headed back toward 7%, trading at 6.36% early Friday. Just two days ago, that same yield was much closer to 5%. Yields in Germany, France and Spain were also moving higher.

EU leaders have also decided to add €200 billion to the resources of the International Monetary Fund, said Christine Lagarde, the head of the IMF.

The fund has assisted in the bailout of struggling European economies, like Greece and Portugal.

"The decisions taken today by European Leaders at their summit meeting are an important contribution to helping address the crisis facing the euro zone and strengthening the global economic recovery," Lagarde said in a statement.

Will this deal solve Europe's problems? - CNN

The new intergovernmental treaty will be easier to ratify than a change to existing treaties, said Herman Van Rompuy, the president of the European Commission.

Awareness of the urgency of taming Europe's debt woes extends beyond the continent's borders. U.S. Treasury Secretary Tim Geithner had been touring Europe ahead of the summit to underline the importance of the EU's bringing the crisis under control.

"I want to emphasize again how important it is to the United States and to countries around the world that Europe succeeds in this effort to build a stronger Europe, and I'm confident they will succeed," Geithner said in France on Wednesday.

On Thursday he met Prime Minister Mario Monti of Italy, who came to power when his country's government collapsed over its worsening debt crisis. Geithner assured Monti that Washington supported his efforts to balance his country's budget.

Monti said he would meet President Barack Obama in Washington next month.

-- CNN's Jethro Mullen and Pierre Meilhan contributed to this report.  

Apple: Moving Up the Market Cap Ladder

It's been a quite remarkable run by Apple (AAPL) - the most "teflon" stock in the market today. Considering that Apple might only be around due to a $150M investment by Microsoft (MSFT) in 1997... well, what can you say? On Wednesday, it passed Microsoft in terms of market capitalization to slide into the #2 spot amongst US-based companies. (It passed Walmart (WMT) not 3 months ago) All that is left is to surpass Exxon Mobil (XOM) and the crown goes to Steve Jobs. One wonders where it ultimately tops out. The growth is still there; the stock has doubled in the past 52 weeks. A doubling in value from current levels takes it over $450B market cap range.

• Since September 16, 1997, when Jobs returned as CEO and Apple shares traded at $5.49 per share, the stock has surged 4,346% and now trades at $244.11 per share. Over the last five years, Apple's stock has grown about 600% while Microsoft's managed a modest 5% growth. (Click to enlarge)

Exxon Mobil: $287B

Apple: $229B

Microsoft $227B

Walmart $190B

Market capitalization is calculated by multiplying the share price times the number of outstanding shares. It is often used as a public metric of a company's overall net worth.

Disclosure: No positions

Original article

2 Companies With Impressive Leadership

One of the most important things to look at when understanding if a company really makes sense to invest in or not is its leadership. Having the right long-term strategy can be the difference between two companies in the same space that either thrive, or disappear overnight. In this video, we hear from author Lisa Mcleod about two companies -- one airline, and one consumer goods company (and reliable dividend giant). Each company's leadership has both the ability, and the vision for the future, to stand out from the rest.

If you're looking for some long-term investing ideas, let me invite you to read the Fool's brand-new special repo, "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so just click here and get your copy today.

Make Money in Oil and Gas Exploration and Production the Easy Way

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the oil and gas industry to thrive due to our planet's growing demand for energy, the SPDR S&P Oil & Gas Exploration and Production ETF (NYSE: XOP  ) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. This oil and gas ETF's expense ratio -- its annual fee -- is a low 0.35%.

This ETF has performed very well, trouncing the market over the past three and five years, on average. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

What's in it?
Several of this ETF's components made strong contributions to its performance so far this year. Brigham Exploration (Nasdaq: BEXP  ) , up 34% in 2011, has been profiting from Bakken shale oil. It's been the fastest-growing company in that field, and appears to be well run: When companies such as Abraxis Petroleum (Nasdaq: AXAS  ) were significantly slowed by bad weather last winter, Brigham was not. Fellow ETF holding GeoResources (Nasdaq: GEOI  ) , up 15%, has also been doing well in the Bakken and enjoys fat profit margins.

Other companies haven't added as much to the ETF's returns in 2011 but could have an effect in the years to come. Northern Oil and Gas (AMEX: NOG  ) is down 16% this year. Yet it has been posting explosive growth in revenue and earnings, has been very successful with its drilling, and has many acres left to develop in Bakken and elsewhere. McMoRan Exploration (NYSE: MMR  ) , down 15%, has some worried about its focus on Gulf of Mexico exploration.

The big picture
Demand for oil and gas isn't going away anytime soon. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.

Learn about the best dividend ETFs. And if you're looking for some great investments beyond ETFs, consider these 10 stocks for your retirement portfolio.

Will This Deal Sink Markel?

It would appear that something went terribly wrong at�Markel (NYSE: MKL  ) today as the stock fell as much as 10% so far in today's trading.

The driver of the plunge was the announced acquisition of�Alterra Capital� (NASDAQ: ALTE  ) for roughly $3.1 billion. Markel -- which is often tagged a "baby Berkshire" because of similarities with Warren Buffett's�Berkshire Hathaway� (NYSE: BRK-A  ) (NYSE: BRK-B  ) -- is diversifying its book of business with the deal, as Alterra focuses on the reinsurance market. In fact, the deal probably makes Markel look even more like Berkshire since Buffett's conglomerate has a significant reinsurance practice.

To some extent, the market's negative reaction may be driven by the potentially dilutive nature of the deal -- it's a combo cash and stock deal, which means that Markel will be issuing new shares. A frosty reception from Wall Street analysts may be playing into the drop as well. Bloomberg spoke to�Stifel Financial's (NYSE: SF  ) Meyer Shields, who said:

Our initial reaction to the deal is negative. We have enormous respect for Markel's underwriting and investing expertise, but we think its [merger and acquisition] track record is frankly less impressive.

I'm not as convinced that long-term Markel shareholders should be concerned. The company is paying a modest premium on tangible book value to buy Alterra, which is still a serious discount to how the market values Markel. It's also diversifying its business which, if it makes sure that Alterra can match Markel's underwriting quality, could lead to better, more stable earnings. And given Markel's success not only on the insurance side of its business, but also on the investing side, I'm apt to give it the benefit of the doubt when it comes to making valuable purchases.�

That said, this isn't an open-and-shut case of market overreaction. Questions that should be on the forefront of investors minds as they look over this deal include:

• If Markel is using stock to pay for part of this deal, what does that say about its view of its own stock's valuation?
• Has growing through acquisition truly been a value-destroying strategy at Markel?
• Do the quality and results at Alterra provide confidence that this will integrate well and be a long-term contributor to Markel's business?

Markel's stock -- not unlike that of its larger model, Berkshire -- doesn't swing like this all that often. For investors that are comfortable with this deal and have had Markel on their radars, this could be a pretty sweet buying opportunity.

Of course, Markel may be small and mighty, but there's nothing quite like the original Berkshire. Is it possible that the giant Berkshire is a buy today? To help investors, The Fool's resident Berkshire Hathaway expert Joe Magyer has created this�premium research report�on the company. Inside you'll receive ongoing updates as key news hits, as well as reasons to both buy and sell the stock. Claim a copy by�clicking here now.

Dell, Toll Brothers Among Wednesday’s Post-Earnings Losers

A number of stocks were headed downward Wednesday following earnings reports.

Dell (NASDAQ:DELL) had lost almost 6% by mid-Wednesday trading following its earnings report out Tuesday. The company�s fourth-quarter earnings fell 17% from the year-ago period to $764 million (43 cents per share), falling short of Wall Street expectations. Dell did slightly grow revenues to $16.03 billion, but it said it expects Q1 2012 revenues to drop by 7%. The company also is expected to build a tablet for Microsoft�s (NASDAQ:MSFT) Windows 8 operating system later this year.

Luxury homebuilder Toll Brothers (NYSE:TOL) was down about 4% as fourth-quarter earnings dipped into the red. The company�s $2.8 million (2 cent per share) loss was the opposite of Street expectations for a 2-cent gain. Toll Brothers had earned $3.4 million in the year-ago period. Revenues of $322 million also fell $37 million short of expectations and were down from $334 million in 2010.

Shares of pizza chain Papa John�s International (NASDAQ:PZZA) were getting hammered to the tune of about 9% despite a slight earnings beat. The company�s $16 million (65 cent per share) profit topped EPS expectations of 62 cents and was up 27% from Q4 2010. However, a 7% revenue increase to $306 million still fell short of analyst expectations, as did a same-store sales increase of 1.7%. The company also maintained 2012 earnings guidance of $2.33 to $2.43 per share, slightly under expectations for $2.44.

Restaurant chain Cheesecake Factory (NASDAQ:CAKE) also was down, losing almost 7% after edging out earnings expectations in its Tuesday report. Profits of $29.4 million (53 cents per share) beat out Street EPS expectations by a penny and were well better than 2010�s 36 cents per share. Revenues also spiked almost 15% to $478 million. However, EPS forecasts for the Q1 2012 and the full fiscal year of 34-36 cents and $1.80-$1.90 were both below estimates for 45 cents and $2.12, respectively.

– Kyle Woodley, InvestorPlace.com Assistant Editor

The Unappreciated Awesomeness at AptarGroup

It takes money to make money. Most investors know that, but with business media so focused on the "how much," very few investors bother to ask, "How fast?"

When judging a company's prospects, how quickly it turns cash outflows into cash inflows can be just as important as how much profit it's booking in the accounting fantasy world we call "earnings." This is one of the first metrics I check when I'm hunting for the market's best stocks. Today, we'll see how it applies to AptarGroup (NYSE: ATR  ) .

Let's break this down
In this series, we measure how swiftly a company turns cash into goods or services and back into cash. We'll use a quick, relatively foolproof tool known as the cash conversion cycle, or CCC for short.

Why does the CCC matter? The less time it takes a firm to convert outgoing cash into incoming cash, the more powerful and flexible its profit engine is. The less money tied up in inventory and accounts receivable, the more available to grow the company, pay investors, or both.

To calculate the cash conversion cycle, add days inventory outstanding to days sales outstanding, then subtract days payable outstanding. Like golf, the lower your score here, the better. The CCC figure for AptarGroup for the trailing 12 months is 55.1.

For younger, fast-growth companies, the CCC can give you valuable insight into the sustainability of that growth. A company that's taking longer to make cash may need to tap financing to keep its momentum. For older, mature companies, the CCC can tell you how well the company is managed. Firms that begin to lose control of the CCC may be losing their clout with their suppliers (who might be demanding stricter payment terms) and customers (who might be demanding more generous terms). This can sometimes be an important signal of future distress -- one most investors are likely to miss.

In this series, I'm most interested in comparing a company's CCC to its prior performance. Here's where I believe all investors need to become trend-watchers. Sure, there may be legitimate reasons for an increase in the CCC, but all things being equal, I want to see this number stay steady or move downward over time.

Source: S&P Capital IQ. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Because of the seasonality in some businesses, the CCC for the TTM period may not be strictly comparable to the fiscal-year periods shown in the chart. Even the steadiest-looking businesses on an annual basis will experience some quarterly fluctuations in the CCC. To get an understanding of the usual ebb and flow at AptarGroup, consult the quarterly-period chart below.

Source: S&P Capital IQ. Dollar amounts in millions. FQ = fiscal quarter.

On a 12-month basis, the trend at AptarGroup looks very good. At 55.1 days, it is 40.9 days better than the five-year average of 96. days. The biggest contributor to that improvement was DPO, which improved 46.9 days compared to the five-year average. That was partially offset by a 3.1-day increase in DSO.

Considering the numbers on a quarterly basis, the CCC trend at AptarGroup looks good. At 58.9 days, it is 8.3 days better than the average of the past eight quarters. With both 12-month and quarterly CCC running better than average, AptarGroup gets high marks in this cash-conversion checkup.

Though the CCC can take a little work to calculate, it's definitely worth watching every quarter. You'll be better informed about potential problems, and you'll improve your odds of finding underappreciated home run stocks.

Looking for alternatives to AptarGroup? It takes more than great companies to build a fortune for the future. Learn the basic financial habits of millionaires next door and get focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report.

• Add AptarGroup to My Watchlist.

Two Different Mobile Home Park Business Models: Why One Is Working And One Is Not

In all industries, you have a mixture of business plans. Some succeed, such as Apple, and some fail, such as Wang. And the mobile home park industry is no different. There are 50,000 mobile home parks in the U.S., and just about every owner has their own approach to the business. The small moms and pops we rarely read about. But the largest park owners — especially those that are publicly traded — receive constant media attention. And the problem is that these public companies, which only represent a fraction of the mobile home parks in the U.S., all have very similar business models that are floundering right now. They are giving a bad name to those of us who have successful business models, and it’s time we set the record straight.

What are the two different basic business models?

There are two basic business models in the mobile home park business:  “lifestyle choice” and “affordable housing”. “Lifestyle choice” means that customers can afford other types of housing, but prefer the low-maintenance, carefree mobile home park lifestyle over other conventional forms of housing. Meanwhile, “affordable housing” means that customers have very little to spend on housing, and live in the mobile home park because they have been priced out of other conventional forms of housing. With the “lifestyle choice” model the customer is living in the mobile home park by choice, while with “affordable housing” the customer is living in the park by necessity.

Why is the “lifestyle choice” model failing right now?

The problem with the “lifestyle choice” business model is that it is a choice, and we find the premise a little sketchy. It’s hard to imagine that an individual, who has the option of buying a stick-built home or a fancy condominium, would chose a mobile home instead. Recent articles have highlighted a sudden weakness in the business model of some publicly traded mobile home park owners – as a result of the reduction in stick-built home prices and lower interest rates on mortgages. Quite frankly, we find it hard to believe that people would consider living in a mobile home park when they have the option of living in a brick home in a subdivision, regardless of subtle changes in interest rates and pricing. Another logical conclusion might just be that there are fewer and fewer buyers in these higher price points, based on the continual decline of the U.S. economy, and that this is starting to show up as a problemwith this business model.

Why does the “affordable housing” model consistently succeed ?

If you haven’t noticed, the U.S. is getting poorer every day. During the election, it was revealed that around 50% of U.S. households are on some form of government subsidy.  In addition, it was revealed that around 20% of U.S. households have a total income of $20,000 per year or less. And if that’s not enough, new data is showing that 10,000 baby boomers per day are retiring from the workforce, and picking up an average social security check of $14,000 per year. This does not even include the new trend of moving from high paying jobs to minimum wage jobs, and one of the highest unemployment rates in U.S. history. In short, we have a giant, growing number of Americans who need “affordable housing” – generally defined as total payments of $500 per month or less. At this price point, the only options for housing are mobile home parks and B and C-Grade apartments. Most everyone in this demographic prefers the dignity of having a detached dwelling with a small yard and community atmosphere to the dreary existence of having a neighbor on all sides and no outdoor space. The “affordable housing” business model is booming, and has been for a decade.

How will this all end up?

The “affordable housing” business model will continue to flourish, and represents the ultimate contrarian investment to the general decline of the U.S. economy. The only way that it would be jeopardized is if the U.S. suddenly became more prosperous and, even then, it would have to be an overnight rags to riches story that outpaces the giant quantity of poor Americans. Essentially, out with the Taco Bell jobs and in with the high-paying union jobs like the old days. We think this has around a zero percent chance of actually happening. And even then, we think the swelling baby-boomers retirements would wipe out all net gains. The “lifestyle choice” business model, on the other hand, we feel will continue to suffer as it is simply a bad and broken business model.

Conclusion

There’s nothing wrong with having two or more business models in any industry. We think that time will prove the “affordable housing” model was the winner, and the “lifestyle choice” model was the loser. But it’s time that everyone understands that the mobile home park business has these two distinct models, and not just one.

Chesapeake Sells Again

On Thursday, Plains All American (NYSE: PAA  ) announced that it will acquire Chesapeake Energy's (NYSE: CHK  ) crude oil and condensate gathering assets in the Eagle Ford shale. On a typical day, I would use this space to wax poetic on Plains' growth strategy, touting management's vision and the quality of the assets it's picking up -- throughput capacity of 50,000 barrels per day and 450,000 barrels of storage capacity -- but I've been doing that a lot lately, so today is all about Chesapeake.

Peanuts, popcorn, natural gas acreage
Desperate times call for desperate measures, and Chesapeake's balance sheet is a case in point. At the beginning of 2012, the company announced that it planned to sell approximately $12 billion in assets over the course of the year to meet a budget shortfall.

Here are the major asset deals the company has initiated this year:

• $125 million in the Plains deal.
• A $6.9 billion sale of its Permian Basin assets to Royal Dutch Shell (NYSE: RDS-A  ) and Chevron (NYSE: CVX  ) .
• A $2.6 billion sale, announced earlier this week, of most of its remaining midstream assets to Access Midstream Partners (NYSE: ACMP  ) , part of a larger $4.88 billion deal announced in June.

If the Plains deal closes by the end of the year as expected, Chesapeake will have reaped $10.8 billion this year from jettisoning assets, with another $425 million set to close early next year -- prompting at least one cynical investment writer to cry out, "What's left?"

Chesapeake's work isn't done yet. The company's debt load is such that it will have to sell another $4 billion in assets next year to plug its budget gap. Chesapeake has long employed a strategy of buying up incredible amounts of acreage early, before a play has proved itself. Sometimes, as is the case in the Eagle Ford, it pays off. Other times, in the case of its assets in Michigan, its investment doesn't quite pan out. Regardless, Chesapeake certainly has plenty of acreage to sell, and it shouldn't struggle to make $4 billion worth of asset sales next year.

Foolish takeaway
Chesapeake has been absolutely crushed by poor management and the bottom-dwelling price of natural gas. The price of gas will rebound eventually, and the company's share price may follow. Investors looking for an underdog natural gas play should consider it, but those keen on finding companies with good corporate governance should continue to look elsewhere.

Despite selling off its assets, Chesapeake is still producing a lot of natural gas. The growing production of natural gas from hydraulic fracturing and horizontal drilling is flooding the North American market and resulting in record-low prices for natural gas. Enterprise Products Partners, with its superior integrated asset base, can profit from the massive bottlenecks in takeaway capacity by taking on large-scale projects. To find out if Enterprise Products Partners is a buy or a sell today, click here now to check out The Motley Fool's brand new premium research report on the company.

Europe stocks mostly higher in choppy action

LONDON (MarketWatch) � A sudden late-day surge in Spanish bond yields to an all-time intraday high put sovereign fear and contagion risks back at center stage for the euro zone Tuesday, as Italian yields also climbed and stocks battled to stabilize after a volatile session.

The Stoxx Europe 600 index XX:SXXP closed 0.6% higher at 243.44, after an intense day of swinging between gains and losses.

Click to Play How Spain�s bailout affects the U.S.

Spain's request for a bailout for its banks represents yet another mixed success for the U.S. in its two-year-long effort to press Europe to get on top of its debt crisis.

Stock markets plunged briefly into negative territory in afternoon action as the yield on 10-year Spanish government bonds ES:10YR_ESP reached an all-time high of 6.85%, according to the electronic trading platform Tradeweb. A sovereign yield level of 7% is widely considered unsustainable and has prompted bailouts of euro-zone countries, beginning with Greece. Yields on the benchmark bonds ended at the highest closing level on record, up 21 basis points at 6.74%. A basis point equals 1/100 of a percentage point.

The IBEX 35 index XX:IBEX seesawed for most of the afternoon session but closed in positive territory, up 0.1% at 6,522.50.

Spanish stocks on Monday overall set the pace for a volatile day in Europe, with the main index shedding all of what at one point was a nearly 6% gain as investors increasingly expressed disappointment over a plan for the European Union to loan as much as �100 billion ($125 billion) to the troubled banking sector. Market Extra: Spanish bond yields, insurance hit records.

�This solution is still some way off,� analysts at Credit Suisse said in a note. �Spanish GDP could end up falling another 5% on account of fiscal tightening, private-sector leveraging, bank de-leveraging and falling wages. This will have a negative impact on the fiscal arithmetic and credit quality.�

Reuters A pedestrian walks past a London branch of the Spanish bank Santander.

�We think Europe is only halfway through resolving the crisis,� the analysts added. �In particular, we believe that we will need [a European Central Bank] deposit guarantee or a [long-term refinancing operation of �2 trillion over five years].�

Banks in Spain were lower, as Fitch Ratings lowered its rating on 18 Spanish banks following last week�s downgrade of Spain�s sovereign-debt rating. On Monday, Fitch Ratings downgraded two other banks, Banco Santander SA ES:SAN , whose stock was off 0.4%, and BBVA SA ES:BBVA BBVA , whose shares were 0.2% lower. Fitch lowers rating on 18 more Spanish banks �

Bankinter SA ES:BKT dropped 4.6%, Banco Popular Espa�ol SA ES:POP lost 3.6% and Bankia SA ES:BKIA fell 1.9%.

Italian banks were also lower: Banca Monte dei Paschi di Siena SpA IT:BMPS lost 5.9%, Intesa Sanpaolo SpA IT:ISP gave up 3.7%, while UniCredit SpA IT:UCG dropped 4%.�

The FTSE MIB index XX:FTSEMIB �slipped 0.7% to 12,979.69, as yields on 10-year Italian government bonds IT:10YR_ITA �surged 13 basis points to 6.17%.

�Markets are concerned that it�s not clear how the intervention for Spain will be financed, so they are afraid there will not be anything left for Italy if it needs help,� McLean from SVM Asset Management said. �The pool of potential contributors to the rescue funds narrows each time a new country runs into problems, and now Spain is asking for money. We�re left with Germany and to some extend France to contribute.�

�There�s belief that at some stage we�ll get a big intervention and the ECB will start printing money. There will be a recognition of the seriousness of the problems and that there�s a need for quantitative easing,� he added.

Movers

Defensives, such as food and beverage stocks, provided support for the pan-European Stoxx 600 gauge. Nestle SA NSRGY CH:NESN rose 1.3%. Drug manufacturers also lent support, with Roche Holding AG CH:ROG �up 1.6% and Novartis AG CH:NOVN �rising 1.1%.

Julius Baer Gruppe AG CH:BAER �rose 2.7%, after UBS lifted shares of the private bank to buy from neutral.

Amlin PLC UK:AML rose 1% after the insurance and reinsurance group was upgraded to buy from hold at Deutsche Bank.

Among other indexes, the FTSE 100 index UK:UKX �added 0.8% to 5,473.74, also helped by defensive stocks such as British American Tobacco PLC UK:BATS , 1.5% higher.

UK:BATS Miners such as BHP Billiton PLC,UK:BLT �BHP , up 1.5%, supported London, as most metals prices moved higher. Anglo American PLC UK:AAL �gained 1.3% and Fresnillo PLC UK:FRES �took on 2.4%.

Data for the U.K. showed the seasonally adjusted index of production was unchanged for April on a monthly basis, although the index dropped for a 14th consecutive month year on a year-over-year basis.

The French CAC 40 index FR:PX1 rose 0.1% to 3,046.91, with cement maker Lafarge SA FR:LG �adding 2.1% after it announced a plan to reduce costs by �1.3 billion by 2015. See: Lafarge to speed cost cuts, lift sales, cut debt

The German DAX 30 index DX:DAX �gained 0.3% to 6,161.24. E.ON AG DE:EOAN �rose 2% after the utility was upgraded to buy from neutral at UBS. Industrial conglomerate Siemens AG DE:SIE �took on 1.1%

TomTom NV NL:TOM2 �shares leapt 16.2% as the Dutch provider of navigation technology announced a mapping-data deal with Apple Inc. AAPL � See: TomTom shares leap on Apple deal.

RIM: FBR Cuts Target to $14; Sees In-Line FYQ4, Lower ’13

FBR Capital’s Scott Thompson this afternoon reiterates a Market Perform rating on shares of Research in Motion (RIMM) while cutting his price target to $14 from $17, writing that the company’s fiscal Q4 will probably meet expectations, but that things will continue to deteriorate in coming quarters before they get better.

Thompson expects “the business to deteriorate” for “several quarters” as the company competes with the growing presence of low-cost smartphones based on Google’s (GOOG) Android operating system in international markets.

What’s more, “it has become apparent that near-term M&A possibilities are off the table while RIM’s earnings power continues to deteriorate,” writes Thompson. On that score, he elaborates as follows:

We view a sale as unlikely until the business metrics become more predictable. We believe that RIM�s best chance of a takeout offer may be behind it due to the company�s rapidly deteriorating business metrics and lack of earnings power, which could make it difficult to attract a credible offer.

Thompson may have been making reference to recent rumors that Samsung Electronics (005930KS) might take a stake in RIM.

Turning to financials, the “lack of a preannouncement” for the fiscal Q4 that ended last month, writes Thompson, “leads us to believe that the quarter is likely tracking to the low end of guidance but within the company�s guided range.”

Thompson actually raised his estimate to $4.6 billion from $4.56 billion for Q4′s revenue, but cut his EPS estimate to 80 cents from 82 cents after slightly shaving his gross margin estimate to 37.9% from 38%.

For the current fiscal 2013, his estimate goes to $16.6 billion, down from $17.2 billion previously. He models $2.57 per share in profit, down from a prior $2.76 estimate.

The Street is modeling $4.55 billion and 82 cents last quarter, and $17.5 billion and $2.81 per share for this fiscal year.

Regarding the news on Friday from Bloomberg that the company may give developers a test version of its forthcoming “BlackBerry 10,” or BB10, handsets in May, Thompson is cautious:

While we believe a refreshed product and more competitive smartphone design would help stem the tide of defecting developers, investors are looking for a BBRY 10 device that is capable of competing with industry- leading devices. A soft device preview may send the stock to new lows as investors look to the next product cycle.

RIM shares today are 48 cents, almost 4%, at $14.14.

Fin

Top 5 Vanguard Mutual Funds of the Third Quarter

Pity the poor Vanguard investor trying to make sense out of the mutual fund landscape. With the recent launch of not just one or two, but 16 new Standard & Poor’s and Russell ETFs and over 150 existing funds, finding the right picks is more confusing for 401k investors and mutual fund investors than ever.

But make no mistake about it: While lists of the “best funds to buy now” remain strong sellers on the newsstand, these “best of” lists aren’t exactly the best way to go about building a Vanguard fund portfolio. In fact, these lists, which are generally based on performance for a single calendar period, have no predictive value at all.

So let’s take a closer look at the “best” funds of the third quarter at Vanguard, and see what’s under the hood.

Precious Metals & Mining (MUTF: VGPMX), Up 23.2%

Sell. Putting a Sell on this fund isn’t good enough. I should probably label it “Toxic.” It’s not that I don’t have a high regard for the manager, Graham French, or Vanguard’s parsimonious, low-cost ethic. I just can’t find the long-term investment glitter in gold, which is the main driver of this slightly more diversified metals fund. Despite the occasional glimmers of hope and bursts of outperformance that come when every other financial asset in the world is sinking, precious metals have not, on the whole, been good investments.

Is the fund a “store of wealth” or a safety valve? Not really. Remember the stock market meltdown from 2007-2009? While Vanguard’s Total Stock Market Index (MUTF: VTSMX) chalked up a new maximum cumulative loss (MCL) of 50.9% over 16 months, Precious Metals fell a whopping 68.9% in just 6 months!

And, don’t forget, there’s one other consideration you have to make here. Exactly how big a portion of your portfolio are you willing to allocate to this fund or sector of the market? Unless you make a major bet here, the outperformance on the upside probably won’t make a big difference in your short-term returns, and losses could well hurt your long-term performance. Precious Metals & Mining also charges a 1% back-end load when you redeem shares held less than one year, which really hurts if you are selling the fund at a loss. I say stay away.

World ex-US SmallCap ETF (NYSE: VSS), Up 21.7%

Buy. This fund is providing some strong competition for International Explorer (MUTF: VINEX), which had the foreign, small-cap arena to itself for a long time. Tracking the FTSE Global SmallCap ex-US index, this fund holds over 2,500 stocks with more than half its assets in companies in Canada, the U.K., Japan, Taiwan and Australia.

As is true in the U.S., smaller companies can be faster growers, and hence are a good component in a growth-oriented portfolio. Another important factor is that, along with Emerging Markets Index and International Explorer, it has one of the lowest correlations with U.S. markets out of all of Vanguard’s funds. That improves our diversification and lowers our risk over the long haul.

Should International Explorer remain in a relative performance funk, this ETF could be just the ticket to finding high growth rates outside our shores. Bonus: Now that Vanguard is offering free trades in all its ETFs, you can avoid not only the 0.75% front- and back-end loads (Vanguard calls them “purchase” and “redemption” fees) on this fund’s Investor shares (VFSVX, up 20.2% in Q310), but also brokerage commissions.

European ETF (NYSE: VGK), Up 21.2%

Hold. The problems in Europe’s smaller and satellite countries are legion, but Germany’s growing, and France, believe it or not, is also.

European Index tracks an MSCI index that pretty much covers the continent. More than two-thirds of this fund’s assets are invested in Europe’s four largest markets: the U.K., France, Germany and Switzerland. Big markets and big companies dominate here.

If you want to bet on the benefits of European unification, this is one way to do it, but remember that the relationship between the dollar and the euro will have an impact on your returns. The euro�s gains certainly worked to investors� advantage in 2009 and the last few months. Whether that�s the case going forward is another story entirely.

Also, the Investor share class (VEURX, up 20.3% in Q310) has a 2% back-end load (Vanguard calls it a “redemption fee”) for shares held less than 2 months. If you want this fund, the ETF shares (VGK), which have no back-end load and trade free at Vanguard Brokerage, are more economical than the Investor shares, but I’d leave my Europe over- and underweights to an active manager.

International Growth (MUTF: VWIGX), Up 19.8%

Buy. I always considered this fund’s former lead manager Richard Foulkes one of the best of the breed among international investors. Since he retired in late 2005, Virginie Maisonneuve has taken over Foulkes’ approximately 45% portion of this $15 billion portfolio. With a few bumps along the way International Growth has consistently outperformed the EAFE Growth index.

The fund has three managers, with Baillie Gifford handling another 45% of assets and M&G Investment Management handling about 10% or so. What’s encouraging about this trio is that the portfolio hasn’t exploded to hold hundreds of stocks�it currently has about 180 or so, despite the fact that it, at one time, had over 200. Also, while concentration among the top stocks has declined with the addition of managers, it isn�t at index fund levels, with the top 10 holdings representing about 17% of assets.

With growth stocks presenting some decent opportunities, this fund is a good option as a core foreign holding, particularly given its almost 25% stake in emerging markets, where the managers boosted holdings as prices there tumbled. That kind of contrarian thinking should make the fund a long-term winner.

Emerging Markets ETF (NYSE: VWO), Up 19.7%

Buy. It’s risky, and volatile, with a maximum cumulative loss of 62.7% over 16 months during the latest bear market and a more than 90% rally from the market bottom, but the emerging markets are the growth engines of the global economy, showing increased economic firepower, hungry consumers and the ability and willingness to take advantage of newly aggressive importers, exporters, manufacturers and entrepreneurs.

The index this fund tracks has changed over the years with countries added and eliminated. Stocks in Brazil, China, India, South Korea and Taiwan represent more than 65% of the fund’s assets at present.

And foreign “big-oil” is a major influence on the index, with major producers among the top holdings. In fact, this fund provides tremendous exposure to the energy business without having to invest in an energy sector fund.

Remember, if you buy this fund’s Investor shares (MUTF: VEIEX, up 18.7% in Q310), you pay a 0.50% front-end load. If you sell it, you will also pay a 0.25% back-end load, so you had better really want this fund before you buy in. The ETF shares (VWO) are a superior alternative for those with larger sums to invest, or if you buy through Vanguard Brokerage, where it’s free.

The Best-Kept Secrets at Vanguard Revealed. If you�re ready for the inside help that gives you special advantages over other investors at Vanguard, sign up now for Dan Wiener’s free newsletter, Fund Focus Weekly. Each week you’ll get independent information on Vanguard’s best mutual funds to buy and sell, advance announcements of new funds, changes in management, plus much more! Sign up and get started today!

Usiminas reshuffling staff: union

RIO DE JANEIRO (MarketWatch) -- Brazilian steelmaker Usinas Siderurgicas de Minas Gerais (USIM5.BR, USZNY), or Usiminas, is reshuffling employees in the interests of efficiency but isn't firing en masse, a union leader representing workers at the company's Ipatinga works said Wednesday.

Usiminas's new management has decided to move about 1,400 maintenance workers from its capital-goods subsidiary Usiminas Mecanica, or Usimec, at Ipatinga in Minas Gerais state to the Ipatinga steelworks, Luiz Carlos Miranda, president of the Ipatinga Metalworkers' Union Sindipa, said in an interview.

Around 800 of the total have already been transferred and around 200 jobs will be lost as a result of the move, mainly by natural wastage including employees entering retirement, Miranda said.

Brasil Economico newspaper reported Tuesday that Usiminas was preparing to fire 1,300 people, of which 300 had already left the company with the remaining 1,000 to leave the steelmaker in coming months. Usiminas said it had no comment on the report and Sindipa said the report was untrue.

In 2009, when Brazilian steelmakers Usiminas, Companhia Siderurgica Nacional SA (CSNA3.BR, SID) and mining company Vale SA (VALE, VALE5.BR) all laid off workers as steel markets slumped amid the global economic crisis, Usiminas decided to shift 1,300 maintenance workers from Usiminas to Usimec, Miranda said.

Because this move wasn't entirely successful, according to the unionist, Usiminas's new management has decided to move the maintenance workers back to Usiminas's Ipatinga steelworks, where they will basically be doing the same jobs as before. Usiminas currently has 7,200 employees at Ipatinga and 6,500 at Usiminas Mecanica, Miranda said.

The workforce is protected from layoffs by a accord between the union and the company, Miranda said.

A Usiminas spokesman said he was unable to speak on labor questions at the steel company.

Sindipa's Miranda said Usiminas's employees are reasonably satisfied with the new management at the steelmaker, following Latin American steelmaker Ternium SA's TX entry into Usiminas in January as a controlling shareholder.

"The last four months have been better than the last four years," he remarked.

Miranda said he understood plans may be proceeding to open Usimec's capital so that it may be traded on the Bovespa stock exchange as a separate company. Usimec is "doing well" because of new orders for capital goods and equipment needed for infrastructure work in the run up to Brazil's hosting of events including the World Cup in 2014, the union leader said.

PANL Drops 12%: Canaccord Skeptical Apple Will Use OLED

Shares of organic light-emitting diode (OLED) technology maker Universal Display (PANL) are down $6.39, or 12%, at $45.58 after Canaccord Genuity’s Jonathan Dorsheimer this morning reiterated a Hold on the stock and a $48 price target, writing that it seems unlikely Apple (AAPL) will use the technology in its i-devices any time soon.

Dorsheimer believes, too, that a European patent license hearing in Germany last week, which was mentioned negatively by CNBC, will “be an increasing focus going forward” for PANL.

Dorsheimer was responding to a patent filing by Apple on that was written about last week covering a novel kind of OLED display. Patently Apple had a nice summary of the filing last Thursday. It was among factors that helped drive up PANL shares 17% on Friday.

But Dorsheimer thinks nothing in the way of Apple’s use of OLED is imminent:

Apple’s recent patent filing seems to have gone viral among investors; however, we feel it�s an irrelevant data point. We feel that Apple has always wanted to use OLEDs but performance and sourcing has limited the choices. With Samsung providing 90% of the world’s capacity, we don’t see this changing until adequate second sourcing evolves (LGD, AUO, CMI), likely in 2013. We do not see Apple entering manufacturing of the screens, and thus there would be no direct royalty implications from Apple adopting OLEDs.