Friday, May 31, 2013
The Men Who Run Legal & General Group
LONDON -- Management can make all the difference to a company's success, and thus its share price.
The best companies are those run by talented and experienced leaders with strong vested interests in the success of the business, held in check by a board with sound financial and business acumen. Some of the worst investments to hold are those run by executives collecting fat rewards as the underlying business goes to pot.
In this series, I'm assessing the boardrooms of companies within the FTSE 100 (UKX). I hope to separate the management teams that are worth following from those that are not. Today, I am looking at Legal & General (LSE: LGEN ) , the U.K.'s second-largest life and pensions company.
Here are the key directors:
| John Stewart | (non-exec) Chairman |
| Nigel Wilson | Chief Executive |
| Mark Gregory | Executive Director (Savings) |
| John Pollock | Executive Director (Risk) |
| Mark Zinkula | Executive Director (LGIM) |
Reeling
John Stewart became chairman in March 2010, when L&G was still reeling from the impact of the financial crisis. He started his career with Woolwich Building Society, working his way up to become CEO.
After selling Woolwich to Barclays he became Barclays' deputy CEO. He was credited with turning around National Australia Bank, which he ran from 2004 to 2008. He is a member of the Court of the Bank of England.
Step up
Nigel Wilson was appointed finance director in September 2009. Previously he was deputy CEO and finance director of UBM. His previous career included management roles at Dixons and Guinness Peat Aviation, and consultancy with McKinsey.
He stepped up to the CEO role in June last year, replacing Tim Breedon, who had been CEO for seven years and an employee for 25. Wilson plans to grow the business, which is in a mature industry, through bolt-on acquisitions and is interested in overseas expansion, especially in Asia.
Indicative of that, the interim CFO was appointed Group M&A director last January. The search for a new finance director is ongoing.
Executives
Mark Gregory held several divisional finance director roles before joining the board in 2009. He joined the group in 1998 after working for Kingfisher and ASDA. John Pollock is a longer-serving company man, joining L&G in 1980, and the board in 2003.
Mark Zinkula was appointed to the group board in 2012, but he had been CEO of L&G Investment Management since 2011. He joined LGIM's U.S. arm at its inception in 2006 and became head in 2008. He previously was head of fixed income at Aegon Asset Management. His appointment to the group board was explicit recognition of LGIM's importance in L&G's international expansion strategy.
L&G's seven non-execs almost exclusively have financial services or finance director backgrounds.
LGIM has become one of the most vocal fund managers opposed to excessive boardroom pay. Breedon's £9 million payoff last year seems to have been uncontroversial, however. Executives have substantial shareholdings, though the formal requirement for a "voluntary shareholding of 50% of base salary" is weak.
I analyze management teams from five different angles to help work out a verdict. Here's my assessment:
| 1. Reputation. Management CVs and track record. Strong. | Score 3/5 |
| 2. Performance. Success at the company. Too soon to judge CEO. | Score 3/5 |
| 3. Board Composition. Skills, experience, balance Logical. | Score 3/5 |
| 4. Remuneration. Fairness of pay, link to performance. Uncontroversial. | Score 3/5 |
| 5. Directors' Holdings, compared to their pay. See above. | Score 4/5 |
Overall, L&G scores 16 out of 25, a middling result. The company has recovered well from its distress in the financial crisis, and the new CEO's plans look credible, but it's too soon to tell how successful they may be.
I've collated all my FTSE 100 boardroom verdicts on this summary page.
Buffett's favorite FTSE share
Legendary investor Warren Buffett has always looked for impressive management teams when picking stocks. His latest acquisition, Heinz, has long had a reputation for strong management. Indeed, Buffett praised its "excellent management" alongside its high-quality products and continuous innovation.
So I think it's important to tell you about the FTSE 100 company in which the billionaire stock-picker has a substantial stake. A special free report from The Motley Fool -- "The One U.K. Share Warren Buffett Loves" -- explains Buffett's purchase and investing logic in full.
And Buffett, don't forget, rarely invests outside his native United States, which, to my mind, makes this British blue chip -- and its management -- all the more attractive. So why not download the report today? It's totally free and comes with no further obligation.
Should I Invest in Associated British Foods?
LONDON -- To me, capital growth and dividend income are equally important. Together, they provide the total return from any share investment and, as you might expect, my aim is to invest in companies that can beat the total return delivered by the wider market.
To put that aim into perspective, the FTSE 100 has provided investors with a total return of about 3% per annum since January 2008.
Quality and value
If my investments are to outperform, I need to back companies that score well on several quality indicators and buy at prices that offer decent value. So this series aims to identify appealing FTSE 100 investment opportunities, and today I'm looking at Associated British Foods (LSE: ABF ) , the diversified food-production and retailing group.
With the shares at 1825 pence, the company's market cap. is £14.4 million.
This table summarizes the firm's recent financial record:
| Revenue (millions) | £8,235 | £9,255 | £10,167 | £11,065 | £12,252 |
| Net cash from operations (millions) | £553 | £833 | £1,172 | £736 | £1,240 |
| Adjusted earnings per share (pence) | 54.9 | 57.7 | 72.2 | 74 | 87.2 |
| Dividend per share (pence) | 20.25 | 21 | 23.8 | 24.75 | 28.5 |
With its curious blend of food production and clothes retailing, Associated British Foods has been flying. The recent half-year results trumpeted double-digit growth in revenue, earnings, and the dividend.
You've probably heard of the firm's brands, many of them household names in Britain. Perhaps the most unexpected brand in the stable, though, is Primark, the clothing retail chain, which delivered about 32% of the firm's profit last year. Meanwhile, sugar production earned 46% of profit, grocery 16%, agriculture 3%, and ingredients 3%.
The directors have lofty ambitions for sugar, aiming to be the world's leading sugar business. Meanwhile, Primark is enjoying a successful expansion program in continental Europe, which the firm identifies as having good potential. However, the U.K. is still important to the group, providing 59% of operating profit last year. Europe and Africa contributed 30%, the Americas 9%, and the Asia-Pacific 2%.
Associated British Foods is growing on a number of fronts, and that makes me optimistic about the firm's total-return prospects.
Total-return potential
Let's examine five indicators to help judge the quality of Associated British Food's total-return potential:
Overall, I score Associated British Foods 21 out of 25, which encourages me to believe the firm has potential to outpace the wider market's total return going forward.
Foolish summary
Associated British Foods scores well on my business quality indicators, and the full-looking valuation recognizes that. I'm keeping an eye on the company for an appealing entry point. It's on my list of attractive growth opportunities, along with a share that one of the Fool's top investment writers has uncovered.
He has put his money where his mouth is by investing and believes the share is the "Motley Fool's Top Growth Share for 2013." In this new Fool report, you can discover how the firm has reenvisioned itself to allow for tremendous growth along new horizons. Right now, the report is free to download and tells you exactly why our expert has invested in, and expects strong growth from, this changing company with a strong pedigree. To get your copy, click here.
Top 5 Safest Companies To Invest In 2014
It seems that every day a new press release comes out about a big oil or gas discovery, and increasingly these announcements have one thing in common: All the finds are in offshore fields.
As offshore exploration and development increase, oilfield service companies are in high demand. In this video, Fool.com contributor Aimee Duffy talks to Tyler Crowe about how offshore production has affected oilfield service companies, and what investors can expect going forward.
National Oilwell Varco is perhaps the safest investment in the energy sector due to its industry-dominating market share. This company is poised to profit in a big way; its customers are both increasing the number of new drilling rigs and updating aging fleets of offshore rigs. To help determine whether it could be a good fit for your portfolio, you're invited to check out The Motley Fool's premium research report featuring in-depth analysis on whether NOV is a buy today. For instant access to this valuable investor's resource, simply click here now to claim your copy.
Top 5 Safest Companies To Invest In 2014: Fluor Corporation(FLR)
Fluor Corporation, through its subsidiaries, provides engineering, procurement, construction, maintenance, and project management services worldwide. Its Oil & Gas segment offers design, engineering, procurement, construction, and project management services to upstream oil and gas production, downstream refining, chemicals, and petrochemicals industries. This segment also provides consulting services comprising feasibility studies, process assessment, and project finance structuring and studies. The company?s Industrial & Infrastructure segment offers design, engineering, procurement, and construction services to the transportation, wind power, mining and metals, life sciences, manufacturing, commercial and institutional, telecommunications, microelectronics, and healthcare sectors. Its Government segment provides engineering, construction, logistics support, contingency response, management, and operations services to the United States government focusing on the Departme nt of Energy, the Department of Homeland Security, and the Department of Defense. The company?s Global Services segment offers operations and maintenance, small capital project engineering and execution, site equipment and tool services, industrial fleet services, plant turnaround services, temporary staffing services, and supply chain solutions. Its Power segment provides engineering, procurement, construction, program management, start-up and commissioning, and operations and maintenance services to the gas fueled, solid fueled, plant betterment, renewables, nuclear, and power services markets. The company also offers unionized management and construction services in the United States and Canada. Fluor Corporation was founded in 1912 and is headquartered in Irving, Texas.
Top 5 Safest Companies To Invest In 2014: Petroleo Brasileiro S.A.- Petrobras(PBR)
Petroleo Brasileiro S.A. primarily engages in oil and natural gas exploration and production, refining, trade, and transportation businesses. The company?s Exploration and Production segment involves in the exploration, production, development, and production of oil, liquefied natural gas (LNG), and natural gas in Brazil. This segment supplies its products to the refineries in Brazil, as well as sells surplus petroleum and byproducts in domestic and foreign markets. Its Supply segment engages in the refining, logistics, transportation, and trade of oil and oil products; export of ethanol; and extraction and processing of schist, as well as holds interests in companies of the petrochemical sector in Brazil. The Gas and Energy segment involves in the transportation and trade of natural gas produced in or imported into Brazil; transportation and trade of LNG; and generation and trade of electric power. In addition, the segment has interests in natural gas transportation and d istribution companies; and thermoelectric power stations in Brazil, as well engages in fertilizer business. The Distribution segment distributes oil products, ethanol, and compressed natural gas in Brazil. The International segment involves in the exploration and production of oil and gas, as well as in supplying, gas and energy, and distribution operations in the Americas, Africa, Europe, and Asia. Further, the company involves in biofuel production business. Petroleo Brasileiro was founded in 1953 and is based in Rio de Janeiro, Brazil.
Advisors' Opinion:- [By David Sterman]
Market Value: $173 billion
Fall from 52-week high: 38%This Brazilian oil giant has lost $100 billion in market value since March 2011. That's a lot of dough. The sell-off is the result of a drop in oil prices, slightly stricter government policies regarding oil and gas royalties, and recent moves to issue more stock and debt to help fund business development. (Though the company now vows to stop issuing any more equity.)
Indeed, this company has been sucking in cash for quite some time, generating a cumulative $40 billion in free cash flow loss in just the past two years. Pretty soon, though, losses will morph into outsized profits when the company's heavy investments to tap massive offshore oil fields finally bear fruit. In 2007, 2008 and again in 2009, Petrobras discovered three new offshore oil fields, known as Tupi, Jupiter, and yet-to-be-named site off of the state of Sao Paolo.
It's the Tupi energy play that should pique your interest. It's the largest new find of oil since the Kashagan oil field was discovered in Kazakhstan in 2000 and instantly put Brazil's oil reserve base on par with industry giant Norway. Tally up all of its fields, and Petrobas' engineers estimate the country is sitting on more than 12 billion barrels of oil.
The recent sell-off has put shares of Petrobras deep into bargain territory, trading at just 7.3 times projected 2011 profits and 1.2 times tangible book value.
- [By ETF Authority]
Current Price: $47.68 12-month target: $80
PBR plans to invest $174 billion by 2013 to support the largest oil discovery in 30 years. PetroBras has both the backing of the Brazilian government who invested over $30 billion and the Chinese private investors who have pledged over $20 billion to PBR’s discovery. Brazils government proposed to make PBR the only operator of all new offshore pre-salt oil fields yet to be exploited. PetroBras expects oil production to increased from 2.4 million barrels a day to around 5.7 million barrels a day by 2020. PBR has long-term views and have been expanding renewable energy programs such as solar, biofuel, and energy. Biofuel production is expected to increase 18% by 2013. - [By Dave Friedman]
Institutional investors bought 78,663,680 shares and sold 101,125,380 shares, for a net of -22,461,700 shares. This net represents 0.23% of common shares outstanding. The number of shares outstanding is 9,872,826,100. The shares recently traded at $27.61 and the company’s market capitalization is $170,178,700,000.00. About the company: Petroleo Brasileiro S.A. – Petrobras explores for and produces oil and natural gas. The Company refines, markets, and supplies oil products. Petrobras operates oil tankers, distribution pipelines, marine, river and lake terminals, thermal power plants, fertilizer plants, and petrochemical units. The Company operates in South America and elsewhere around the world.
Hot Heal Care Stocks To Own Right Now: Under Armour Inc.(UA)
Under Armour, Inc. develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth primarily in the United States, Canada, and internationally. It offers products made from moisture-wicking synthetic fabrics designed to regulate body temperature and enhance performance regardless of weather conditions. The company provides its products in three fit types: compression (tight fitting), fitted (athletic cut), and loose (relaxed) extending across the sporting goods, outdoor, and active lifestyle markets. Its footwear offerings comprise football, baseball, lacrosse, softball, and soccer cleats; slides; performance training footwear; and running footwear. The company also provides baseball batting, football, golf, and running gloves, as well as licenses bags, socks, headwear, custom-molded mouth guards, and eyewear that are designed to be used and worn before, during, and after competition. Under Armour sells its products through retai l stores, as well as directly to consumers through its own retail outlets and specialty stores, Website, and catalogs. The company was founded in 1996 and is headquartered in Baltimore, Maryland.
Advisors' Opinion:- [By Roger]
Under Armour (NYSE:UA), a maker and designer of apparel, footwear and accessories that target sports enthusiasts, has more than doubled in one year. But despite the advance, many research firms still have a “strong buy” recommendation on the stock. And S&P recently revised its annual target to $93.
Technically UA has advanced on a series of stair steps, sometimes called “base moves.”? These are very bullish formations that resemble cups. UA reversed up recently following a signal from our proprietary Collins-Bollinger Reversal (CBR) indicator. If the recent pullback to its 50-day moving average (blue line) holds, then the next move up should break the prior high with a target of $85.
Traders could take risk positions now with a target of $85 to $90. But be careful and use stop-loss orders to protect against a violent reversal, which could drop prices back to support at $62 where this volatile stock could be bought again.
- [By Fernandez]
Under Armour designs, develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth primarily in the United States and Canada.
You’ve probably seen the company’s “Protect This House” or “Click-Clack” commercials, and probably seen anyone from the weekend warrior to professional sports teams wearing the company’s moisture-wicking synthetic fabrics, which are designed to keep perspiration away from the skin, and regulate body temperature regardless of weather conditions.
I must admit for full disclosure that I am an Under Armour nut, and own about 20 pairs of their shorts, shirts and shoes.
I can attest from personal experience as a natural bodybuilder and athlete that the Under Armour apparel are the best workout clothing I have ever worn, and they look pretty darn cool too.
Now let me make a clear distinction between a great company, and a great stock.
Up until recently, Under Armour was the former, but not the latter.
It has now entered into a zone where the valuation metrics, even in the face of a consumer slowdown, is looking more and more attractive.
In fact, Under Armour just released earnings Monday.
They were pretty much in line with analyst’s expectations, and then Under Armour slightly lowered their forward guidance for the remainder of 2008 based on those same consumer headwinds.
The market liked what it heard sending shares up 20% (of course, the overall market was up 10%, so…). Shares have since rebounded further are now up almost 50% from their lows just last week!
This leads me to my investment thesis in shares of Under Armour.
I believe that Under Armour represents one of the quintessential brands of this decade when it comes to sports apparel, the way Under Armour’s fiercest rival Nike (NYSE: NKE) dominated the 90’s.
Until now the valuation of the company was not commensurate with the! projected profit and growth, which I thought were way too high, and still might be, along with certain inventory related problems that the company now seems to be getting a handle on.
Still, with the spike in share price, along with the uncertainty in the market and overall economy, I feel that we will still be able to purchase shares of this great company at a great price in the near future and that we’re seeing a bit of a short squeeze in shares of Under Armour.
Why I Like the Company: One of the quintessential brands of this decade; Valuation is reaching reasonable to “cheap” levels depending on direction of consumer market and Under Armour’s stock price; Dedicated and fully invested founder with over 77% voting power via class B shares; Improved business fundamentals via better inventory controls and operational structure, and new product offerings; Further expansion available outside the U.S.; Relatively higher margins than competition
Top 5 Safest Companies To Invest In 2014: Goldman Sachs Group Inc.(The)
The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs; and underwriting securities, loans and other financial instruments, and derivative transactions. The company?s Institutional Client Services segment provides client execution activities, such as fixed income, currency, and commodities client execution related to making markets in interest rate products, credit products, mortgages, currencies, and commodities; and equities related to making markets in equity products, as well as commissions and fees from executing and clearing institutional client transactions on stock, options, and fu tures exchanges. This segment also engages in the securities services business providing financing, securities lending, and other prime brokerage services to institutional clients, including hedge funds, mutual funds, pension funds, and foundations. Its Investing and Lending segment invests in debt securities, loans, public and private equity securities, real estate, consolidated investment entities, and power generation facilities. This segment also involves in the origination of loans to provide financing to clients. The company?s Investment Management segment provides investment management services and investment products to institutional and individual clients. This segment also offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth individuals and families. In addition, it provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.
Thursday, May 30, 2013
Winning Investment Strategies for the Tech Age
If there's one thing to take away from Mary Meeker's annual "Internet Trends" report, it's that things change quickly in the tech industry. While the competitive advantages for older industries, such as industrials, allow market leaders to continuously outshine smaller competitors, the moats of Internet companies are easily crossed by upstarts with user bases that flock quickly from one service to another.
In this high tech, photo-sharing, mobile-advertising, social-gaming, and disruptive high-tech world, what are the best investment strategies for companies that can lose their appeal overnight?
Swift changes
First, if you haven't yet scanned Meeker's report, take a look. Here are just a few examples of how things have changed in a few short years:
What to look for when investing
A dynamic industry calls for several characteristics if a company is to survive and prosper.
First, a company should have visionary management that proves it has a pulse on coming trends. While a one-hit wonder company can make venture capitalists a tidy profit, when the company is publicly traded, the future opportunities need to be greater than the market believes for a regular investor to bank some gains. For example, ex-CEO of Groupon Andrew Mason created the entire industry of daily deals. However, as competition increased, Mason failed to innovate any new business that enticed investors while also failing to properly maintain Groupon's accounting books.
Second, look for a company with the ability to crush coming competition. Whether it's through patent battles, as with Apple and Samsung; acquisitions, as with Facebook and Instagram; or political lobbying, as with Amazon.com (NASDAQ: AMZN ) and sales taxes, tech companies need to proactively take down competitors. Amazon was once opposed to collecting sales taxes, carving out deals with states to delay tax collection in exchange for job creation. Now that Amazon's size can deal with the multitude of tax jurisdictions, collecting taxes puts it at an advantage over other smaller e-retailers that would have to work out the various tax codes without Amazon's legal resources. And so, Amazon supports the Marketplace Fairness Act.
Finally, any tech company needs to be spreading its bets across a variety of future platforms. Google (NASDAQ: GOOG ) is the epitome of this approach. While advertising remains Google's revenue generator, the company has its tendrils in self-driving cars and computerized glasses; $1 billion in renewable energy, including a recent acquisition of a kite-power start-up; and a growing presence in fiber TV and Internet. While many of these projects might flop, similar to Facebook's attempt at a smartphone operating system, diversifying in future research is as good of an idea as it is for your own investment portfolio.
Dynamic investing
With such quick changes in the industry, you need to keep an closer eye on tech-related companies as compared with, say, cereal makers. Especially take a look at a tech company's management, competitive strategy, and investments in future revenue generators. Next year's "Internet Trends" report could have any number of new companies -- just make sure the ones you invest in stick around. {%sfr%]
Hot Biotech Companies To Buy For 2014
With March Madness in full swing, we decided to stick with what we know here at The Motley Fool, trading our basketball picks in for stock picks. We formed our own bracket filled with the top Big Pharma and Big Biotech stocks in a winner take-all tournament as determined by the collective intelligence of our CAPS community.
This Final Four matchup is a heavyweight bout between Celgene�and�Johnson & Johnson. Watch and find out what J&J and embattled Rutgers University have in common and whether Celgene's style of play is enough to advance to the championship round.
Can Celgene continue to soar?
Every in-the-know biotech investor has an eye on Celgene. Shares have skyrocketed this year as the company outlined a plan to almost triple its profits in only a few years. But should you buy the story Celgene is selling? Make sure you understand the key opportunities and risks facing this company by picking up The Motley Fool's brand-new premium report on Celgene. To claim your copy today, simply click here now.
Hot Biotech Companies To Buy For 2014: Navidea Biopharmaceuticals Inc (NAVB.A)
Navidea Biopharmaceuticals, Inc. (Navidea), formerly Neoprobe Corporation, incorporated in 1983, is a biopharmaceutical company focused on the development and commercialization of precision diagnostic agents. As of December 31, 2011, the Company�� radiopharmaceutical development programs included Lymphoseek (Lymphoseek, Kit for the Preparation of Technetium Tc99m for Injection), a radiopharmaceutical agent for lymph node mapping; AZD4694, an imaging agent, and RIGScan, a tumor antigen-specific targeting agent. In January 2012, the Company executed an option agreement with Alseres Pharmaceuticals, Inc. (Alseres) to license [123I]-E-IACFT Injection, also called Altropane, an Iodine-123 radiolabeled imaging agent, being developed as an aid in the diagnosis of Parkinson�� disease, movement disorders and dementia. In August 2011, the Company sold its gamma detection device line of business (the GDS Business) to Devicor Medical Products, Inc.
Lymphoseek
< p>Navidea�� pipeline includes clinical-stage radiopharmaceutical agents used to identify the presence and status of disease. Lymphoseek (Kit for the Preparation of Technetium Tc99m for Injection) is a lymph node targeting agent intended for use in intraoperative lymphatic mapping (ILM) procedures and lymphoscintigraphy employed in the overall diagnostic assessment of certain solid tumor cancers. The lymph system is a component of the body�� immune system. The key components of the lymph system are lymph nodes-small anatomic structures that contain disease-fighting lymphocytes, filter lymph of bacteria and cancer cells, and signal infection in response to heightened levels of pathogens. In Navidea�� Phase III clinical studies of Lymphoseek, it detected over 99% of positive nodes identified by vital blue dye (VBD). As of December 31, 2011, Navidea, in co-operation with UC, San Diego affiliate (UCSD), completed or initiated five Phase I clinical trials, one multi-c enter Phase II trial and three multi-center Phase II trial! s ! involving Lymphoseek. Two Phase III studies were completed in subjects with breast cancer and melanoma. During the year ended December 31, 2011, data from NEO3-09 were released, which indicated that all primary and secondary endpoints for the study were met. As of December 31, 2011, third Phase III clinical trial for Lymphoseek in subjects with head and neck squamous cell carcinoma (NEO3-06) was in progress.
AZD4694
AZD4694 is a Fluorine-18 labeled precision radiopharmaceutical candidate for use in the imaging and evaluation of patients with signs or symptoms of cognitive impairment such as Alzheimer's disease (AD). It binds to beta-amyloid deposits in the brain that can then be imaged in positron emission tomography (PET) scans. Amyloid plaque pathology is a required feature of AD and the presence of amyloid pathology is a supportive feature for diagnosis of probable AD. Patients who are negative for amyloid pathology do not have AD. AZD4694 has b een studied in several clinical trials. Clinical studies through Phase IIa have included more than 80 patients to date, both suspected AD patients and healthy volunteers. No significant adverse events have been observed. Results suggest that AZD4694 has the ability to image patients quickly and safely with high sensitivity.
RadioImmunoGuided Surgery
As of December 31, 2011, RIGScan had been studied in a number of clinical trials, including Phase III studies. Navidea has conducted two Phase III studies, NEO2-13 and NEO2-14, of RIGScan in patients with primary and metastatic colorectal cancer, respectively. Both studies were multi-institutional involving cancer treatment institutions in the United States, Israel, and the European Union.
The Company competes with Pharmalucence, Eli Lilly, Bayer Schering, General Electric and GE Healthcare.
Hot Biotech Companies To Buy For 2014: Regeneron Pharmaceuticals Inc.(REGN)
Regeneron Pharmaceuticals, Inc., a biopharmaceutical company, discovers, develops, and commercializes pharmaceutical products for the treatment of serious medical conditions in the United States. The company?s commercial product includes ARCALYST (rilonacept) injection for subcutaneous use for the treatment of cryopyrin-associated periodic syndromes, including familial cold auto-inflammatory syndrome and muckle-wells syndrome in adults and children. Its products under Phase III clinical development stage consist of VEGF Trap-Eye, an aflibercept ophthalmic solution developed using intraocular delivery for the treatment of serious eye diseases; ARCALYST for the prevention of gout flares in patients initiating uric acid-lowering treatment; and Aflibercept (VEGF Trap), which is developed in oncology. The company?s earlier stage clinical programs include various human antibodies, such as REGN727 for low-density lipoprotein cholesterol reduction, REGN88 for rheumatoid arthritis and ankylosing spondylitis; REGN668 for atopic dermatitis and asthma; REGN421 and REGN910 for oncology; REGN475 for the treatment of pain; and REGN728 and REGN846. It also conducts preclinical research programs in the areas of oncology and angiogenesis, ophthalmology, metabolic and related diseases, muscle diseases and disorders, inflammation and immune diseases, bone and cartilage, pain, cardiovascular diseases, and infectious diseases. The company distributes its products through third party service providers. It has strategic collaboration with sanofi-aventis Group to discover, develop, and commercialize human monoclonal antibodies; and Bayer HealthCare LLC to develop and commercialize VEGF Trap. Regeneron Pharmaceuticals, Inc. was founded in 1988 and is based in Tarrytown, New York.
Advisors' Opinion:- [By Melly Alazraki]
Regeneron Pharmaceuticals (REGN)also had an impressive quarter, soaring 36.1% to $44.68 as of Wednesday's close, after setting an intra-day 52-week high of $45.11. This $3.88 billion market cap biopharmaceutical company has been on a tear with a yearly return of 67% as it continued to develop cancer, eye-condition and gout treatments.
In fact, Regeneron, which sells onlyone product-- Arcalyst (rilonacept), for the treatment of a rare, inherited, inflammatory condition -- last monthsubmitted an applicationto the Food and Drug Administration for its VEGF Trap-Eye for the treatment of the eye disorder that is the leading cause of blindness in patients older than 65 in the U.S. and Europe. If the treatment is approved, Regeneron hopes to take market share from Roche/Novartis's (NVS) Lucentis.
However, Regeneron'spipelinealsosuffered a setbackrecently. Aflibercept, its candidate drug for non-small-cell lung cancer -- a notoriously difficult-to-treat disease -- failed to increase overall survival time in a late-stage study. For now, analysts favor the stock with a consensus buy recommendation, but this setback follows others, making ongoing studies of aflibercept vital for Regeneron's future. The company co-developed aflibercept with Sanofi-Aventis (SNY).
Top 5 Recreation Stocks To Watch For 2014: Savient Pharmaceuticals Inc(SVNT)
Savient Pharmaceuticals, Inc., a specialty biopharmaceutical company, focuses on developing KRYSTEXXA, a biologic PEGylated uricase in the United States. The KRYSTEXXA is being developed as a treatment for chronic gout in patients refractory to conventional therapy. The company also sells and distributes branded and generic versions of oxandrolone, a drug used to promote weight gain following involuntary weight loss. It sells its products directly to drug wholesalers. The company, formerly known as Bio-Technology General Corp. and changed its name to Savient Pharmaceuticals, Inc. in June 2003. Savient Pharmaceuticals, Inc. was founded in 1980 and is headquartered in East Brunswick, New Jersey.
Hot Biotech Companies To Buy For 2014: ARIAD Pharmaceuticals Inc.(ARIA)
ARIAD Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the discovery, development, and commercialization of small-molecule drugs for the treatment of cancer. The company?s lead cancer product, ridaforolimus is being studied in multiple clinical trials in patients with various types of cancers, including metastatic sarcomas, breast cancer, endometrial cancer, prostate cancer, and non-small cell lung cancer. Its product pipeline also includes ponatinib, a pan BCR-ABL inhibitor in phase 2 clinical trial for applications in various hematological cancers and solid tumors; and AP26113, an anaplastic lymphoma kinase inhibitor in preclinical studies for the treatment of various cancers, including non-small cell lung cancer, lymphoma, and neuroblastoma. In addition, the company focuses on a drug discovery program centered on small-molecule therapies that are molecularly targeted to cell-signaling pathways implicated in cancer. Further, it licenses its ARGENT cell-sign aling regulation technologies to pharmaceutical and biotechnology companies to develop and commercialize therapeutic products, and to conduct drug discovery research. The company has collaboration and license agreements with Merck & Co., Inc. for the development, manufacture, and commercialization of ridaforolimus; and license agreements with Medinol Ltd. and ICON Medical Corp. to develop and commercialize stents and other medical devices to deliver ridaforolimus to prevent restenosis of injured vessels. ARIAD Pharmaceuticals, Inc. was founded in 1991 and is based in Cambridge, Massachusetts.
Advisors' Opinion:- [By Hilary Kramer]
Ariad Pharmaceuticals (NASDAQ:ARIA) is developing novel cancer treatments, and it has three promising drugs in its pipeline: ridaforolimus (which I expect to get FDA approval shortly), ponatinib (recently reported good Stage I/II results), and AP-26113 (a compound with strong potential that just started clinical testing). The stock is up nearly 50% since the early October lows, and while concerns over the possibility that Ariad will raise money could be a short-term overhang on the stock, I look for share prices to continue to climb as the company’s drugs move through the approval process.
- [By Peter Leeds]
Based on percentages coming in from 9 battle ground states, and the number of electoral college votes from each, it appears that Obama would win if the election were held today. I expect his lead to increase as the campaign enters full swing.
One company that could benefit from a few more years of a Democratic president would be Ariad Pharmaceuticals (ARIA 0.00%). It is a pharmaceutical company that earned $13.9 million in the third quarter (10 cents per share), and sits on an impressive $86 million in cash. The Bush administration fought against stem cell research, which is a big part of Ariad's approach, and the company and its shares were hammered. Now, after several years of friendlier policies, and the prospect of another four, Ariad is building momentum and gobbling up market share. I think it could trade up to $16.20.
Hot Biotech Companies To Buy For 2014: Organovo Holdings Inc (ONVO)
Organovo Holdings, Inc. (Organovo), formerly Real Estate Restoration & Rental, Inc., incorporated in 2007, is a development-stage company. The Company has developed and is commercializing a platform technology for the generation of three-dimensional (3D) human tissues that can be employed in drug discovery and development, biological research, and as therapeutic implants for the treatment of damaged or degenerating tissues and organs. On December 28, 2011, Real Estate Restoration and Rental, Inc.�� (RERR) entered into an Agreement and Plan of Merger, pursuant to which RERR merged with its, wholly owned subsidiary, Organovo (Merger Sub). On February 8, 2012, the Company merged with and into Organovo Acquisition Corp. (Acquisition Corp.), a wholly owned subsidiary of Organovo, with the Company surviving the merger as a wholly owned subsidiary of Organovo Holdings (the Merger). As a result of the Merger, Organovo acquired the business of Organovo, Inc.
The Company has collaborative research agreements with Pfizer, Inc. (Pfizer) and United Therapeutic Corporation (Unither). As of March 31, 2012, it has five federal grants, including Small Business Innovation Research grants and developed the NovoGen MMX Bioprinter (its first-generation 3D bioprinter). The Company is engaged in the development of specific 3D human tissues to aid Pfizer in discovery of therapies in two areas of interest. In addition, in October 2011, it entered into a research agreement with Unither to establish and conduct a research program to discover treatments for pulmonary hypertension using its NovoGen MMX Bioprinter technology. Additionally, under the research agreement with Unither, the Company granted Unither an option to acquire from the Company a worldwide, royalty-bearing license in certain intellectual property created under the research agreement solely for use in the treatment or prevention of pulmonary hypertension and all other lung diseases.
The Company�� NovoGen MMX Bioprinter is an automate! d device that enables the fabrication of three-dimensional (3D) living tissues comprised of mammalian cells. A custom graphic user interface (GUI) facilitates the 3D design and execution of scripts that direct precision movement of the dispensing heads to deposit cellular building blocks (bio-ink) or supporting hydrogel. The Company is using a third party manufacturer, Invetech Pty., of Melbourne, Australia, to manufacture its NovoGen MMX Bioprinter. Its bioprinting technology and surrounding intellectual property and commercial rights serve as a platform for product generation across multiple markets that employ cell- and tissue-based products and services.
The Company competes with Organogenesis, Advanced BioHealing, Tengion, Genzyme, HumaCyte and Cytograft Tissue Engineering.
3 FTSE Shares Crashing to New Lows
LONDON -- The FTSE 100 (FTSEINDICES: ^FTSE ) may be down from the 13-year record high of 6,876 points it set on May 22, but it's also a long way from its 52-week low of 5,230 points. In fact, standing at 6,650 points as of 8:30 a.m. EDT today, the FTSE is up a strong 27% since its June 2012 nadir.
Sadly, there are quite a few companies of which the same cannot be said. Here are three doing pretty much the opposite of the FTSE.
Anglo American (LSE: AAL )
Mining shares have been having a hard go of it lately, but few of the big ones have suffered so badly as Anglo American, whose price hit a 52-week low of 1,512 pence yesterday. It has picked up to 1,557 pence today, but over the past 12 months it has dropped more than 20%. Anglo American has suffered more than most due to its high exposure to the iron ore market, where prices have fallen.
There's a small fall in earnings forecast for the year to December 2013, with a 16% rise penciled in for 2014 -- but forecasts for that far ahead based on commodities prices can be little more than guesswork. Still, with a P/E for this year of 11 and a well-covered 3.7% dividend expected, is this a bargain? That's up to you.
G4S (LSE: GFS )
G4S shares have a habit of regularly crashing to new lows. It happened in July last year, then again in November, and we've had another slump this month. This time it hasn't quite fallen to a record low, but with prices around 247 pence it has come pretty close.
The recent crash was triggered by the security firm telling us on May 7 that first-quarter margins were hurting and that pressure was "expected to continue for the full year." And just two weeks later, G4S announced that chief executive Nick Buckles will leave the group at the end of the month.
FirstGroup (LSE: FGP )
Full-year results from FirstGroup shocked the markets on May 20 with a profit warning, a dividend cut, and a rights issue. The result was a 30% fall in the share price, which ended the day on 156 pence. Since then, things have got even worse, and the price fell further to a 52-week low of 116 pence yesterday. Today it's back up to 125 pence, but that's still a 44% fall since results day.
With the final dividend suspended and no interim dividend due for 2014, the latest post-result forecasts suggest a 2014 full-year payment of only about 3 pence per share for a yield of just 2.4% even after the price crash.
What's the best way to deal with share price falls? One way is to focus on dividends, which can be spent or reinvested, according to your needs. Whether you're investing for income or growth, good old cash is always welcome. And that's why I recommend the brand-new Fool report "The Motley Fool's Top Income Share For 2013," in which our top analysts identify a share they believe will provide handsome dividend income for years to come. It will only be available for a limited period, so click here to get your copy today.
Top 10 Shipping Stocks For 2014
This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, three new ratings in the shipping sphere are grabbing headlines, as investment banker RBC Capital Markets upgrades UPS (NYSE: UPS ) to outperform, but cuts both FedEx (NYSE: FDX ) and shipping facilitator Expeditors International (NASDAQ: EXPD ) to underperform.
Buy UPS
RBC's outperform call on UPS is essentially a buy rating, as this analyst sees the $82 stock heading to $100 over the course of the next 12 months. And RBC could be right about that.
After all, if it's true that UPS shares cost 99 times earnings, recently hit their 52-week high, and could theoretically be expected to slump back a bit, it's also true that relative to the rest of the stock market, UPS has been a pretty weak performer of late. The shares are only up 3% over the past 12 months, versus a 12% gain on the Dow. Now could be the time for UPS to begin catching up.
Top 10 Shipping Stocks For 2014: Threshold Pharmaceuticals Inc.(THLD)
Threshold Pharmaceuticals, Inc., a biotechnology company, engages in the discovery and development of drugs targeting the microenvironment of solid tumors for patients living with cancer. The company?s products include TH-302, a novel drug candidate which is in Phase 1, Phase 1/2, and Phase 2 clinical trials for cancer. It has a license agreement with Eleison Pharmaceuticals, Inc. to develop and commercialize glufosfamide for the treatment of cancer in humans and animals. The company was founded in 2001 and is headquartered in Redwood City, California.
Advisors' Opinion:- [By Vodicka]
Threshold Pharmaceuticals Inc. (THLD) engages in the discovery and development of drugs targeting the microenvironment of solid tumors for patients living with cancer and has a market cap of $85.36 million.
Net institutional shares purchased over the current quarter come in at 1.2 million, which is 4.31% of the company’s 27.81 million-share float.
The stock’s longest winning streak over the last month was six days, while the longest losing streak was one day, or a win streak/lose streak ratio of 6.0.
The stock has had a couple of great days, gaining 15.23% over the last week.
Top 10 Shipping Stocks For 2014: National Financial Partners Corporation (NFP)
National Financial Partners Corp., together with its subsidiaries, provides advisory and brokerage services to corporate and high net worth individual clients in the United States and Canada. It operates in three segments: Corporate Client Group, Individual Client Group, and Advisor Services Group. The Corporate Client Group segment operates as corporate benefits advisor in the middle market, offering independent solutions for health and welfare, retirement planning, executive benefits, and property and casualty insurance; and offers property and casualty insurance brokerage and consulting services. It serves corporate clients by providing advisory and brokerage services related to the planning and administration of benefit plans that take into account the overall business profile and needs of the corporate client. The Individual Client Group segment delivers independent life insurance, annuities, long term care, and wealth transfer solutions; and wholesale life brokerage, retail life, and investment advisory services. It serves wealth accumulation, preservation, and transfer needs, including estate planning, business succession, charitable giving, and financial advisory services. The Advisor Services Group segment provides broker-dealer and asset management products and services to independent financial advisors. In addition, the company provides IndeSuite, a wealth management platform for the independent registered investment advisor market. National Financial Partners Corp. was founded in 1998 and is headquartered in New York City, New York.
Best Clean Energy Stocks To Invest In 2014: BG Group(BG.L)
BG Group plc operates as an integrated natural gas company worldwide. It operates in three segments: Exploration and Production, Liquefied Natural Gas, and Transmission and Distribution The Exploration and Production segment engages in the exploration, development, production, and marketing of natural gas and oil. This segment has proved reserves of 3,247 million barrels of oil equivalent. The Liquefied Natural Gas (LNG) segment is involved in the development and use of LNG import and export facilities; and purchase, shipping, and sale of LNG and regasified natural gas. The Transmission and Distribution segment develops, owns, and operates pipelines and distribution networks to supply natural gas to co-generation plants, natural gas vehicle filling stations, and gas-fired power stations, as well as industrial, commercial, and residential customers. The company was founded in 1972 and is headquartered in Reading, the United Kingdom.
Top 10 Shipping Stocks For 2014: Alliant Energy Corporation (LNT)
Alliant Energy Corporation operates in electric and gas utility businesses in the United States. The company, through its subsidiary, Interstate Power and Light Company, engages in the generation and distribution of electric energy; and the distribution and transportation of natural gas in Iowa and southern Minnesota. As of December 31, 2009, it supplied electric and gas service to approximately 525,334 and 233,841 retail customers. Alliant Energy Corporation also provides steam services, and various other energy-related products and services to customers in Iowa. The company, through its other subsidiary, Wisconsin Power and Light Company (WPL), involves in the generation and distribution of electric energy; and the distribution and transportation of natural gas primarily in south and central Wisconsin markets. As of December 31, 2009, WPL supplied electric and gas service to 453,573 and 177,968 retail customers. In addition, Alliant Energy Corporation has investments in environmental consulting, and engineering and renewable energy services businesses. It also engages in transportation business, which includes a short-line railway for the provision of freight services between Cedar Rapids and Iowa City in Iowa; barge terminal and hauling services on the Mississippi River; and other transfer and storage services. The company was founded in 1917 and is based in Madison, Wisconsin.
Top 10 Shipping Stocks For 2014: MAKO Surgical Corp.(MAKO)
MAKO Surgical Corp., a medical device company, markets its advanced robotic arm solution and orthopedic implants for orthopedic procedures in the United States and internationally. The company offers MAKOplasty, a restorative surgical solution that enables orthopedic surgeons to treat patient specific osteoarthritic disease. It also provides robotic arm interactive orthopedic system (RIO) consisting of a tactile robotic arm utilizing an integrated bone cutting instrument; and a patient specific visualization component, which offers pre-operative and intra-operative guidance to the orthopedic surgeon, enabling tissue sparing bone removal, and accurate implant insertion and alignment. The company?s MAKOplasty partial knee arthroplasty solution enables resurfacing of one or two specific diseased compartments of the joint, preserving more soft tissue and healthy bone of the knee; and MAKOplasty Total Hip Arthroplasty, a surgical solution that enables orthopedic surgeons to pe rform total hip arthroplasty. In addition, it offers tactile guidance system, which allows orthopedic surgeons to treat degenerative knee osteoarthritis from early-stage unicompartmental degeneration through mid-stage multicompartmental degeneration with a modular knee implant system; and RESTORIS family of implants for use in single and bicompartmental knee resurfacing procedures. The company markets its products through direct sales force, as well as through independent orthopedic product agents and distributors. MAKO Surgical Corp. was founded in 2004 and is headquartered in Fort Lauderdale, Florida.
Advisors' Opinion:- [By Hilary Kramer]
Mako Surgical (NASDAQ:MAKO) is adding to its game-changing knee-replacement surgery with a hip-replacement procedure that will soon be sold to surgeons. While the company has yet to achieve profitability, MAKO is gaining scale at a rapid rate, with revenues expected to grow 80% in 2011 to $79 million and another 60% in 2012.
Top 10 Shipping Stocks For 2014: Alliance Financial Corporation (ALNC)
Alliance Financial Corporation operates as the bank holding company for Alliance Bank, N.A., which provides various financial products and services to commercial, retail, government, and investment management customers in New York. Its deposit products include interest and non-interest bearing checking accounts, money market accounts, savings accounts, time deposit accounts, and individual retirement accounts. The company?s loan portfolio comprises residential and commercial mortgage loans, business lines of credit, working capital facilities, and business term loans, as well as installment loans, home equity loans, and personal lines of credit to individuals. It also provides personal trust, employee benefit trust, investment management, custodial, and financial planning services; financial counseling and brokerage services; and equipment lease financing services, as well as involves in residential real estate activities. In addition, Alliance Financial offers safe deposi t boxes, wire transfers, collection services, drive-up banking facilities, night depositories, automated teller machines, telephone banking, and Internet banking services. As of April 14, 2010, it operated 29 offices in Cortland, Madison, Oneida, Onondaga, and Oswego counties, as well as a trust administration center in Buffalo, New York. The company was founded in 1984 and is based in Syracuse, New York.
Top 10 Shipping Stocks For 2014: Nabi Biopharmaceuticals(NABI)
Nabi Biopharmaceuticals, a biopharmaceutical company, develops vaccines for nicotine addiction in the United States. It is developing NicVAX, a proprietary investigational vaccine under Phase III clinical trials for the treatment of nicotine addiction and prevention of smoking relapse. The company also engages in the contract development of PentaStaph, a pentavalent vaccine to prevent S.aureus infections. It has license agreements with National Institutes of Health and Brookhaven National Labs. The company was founded in 1967 and is based in Rockville, Maryland.
Top 10 Shipping Stocks For 2014: National Technical Systems Inc.(NTSC)
National Technical Systems, Inc., a diversified technical services company, provides engineering and compliance testing services to the defense, aerospace, telecommunications, automotive, energy, consumer products, and industrial products markets worldwide. The company offers product life-cycle product integrity support services, including design engineering, compliance, testing, certification, quality registration, and program management. It provides conformity assessment and management system registration services, as well as technology services for product certification, product safety testing, and product evaluation. The company also offers management registration and certification services. The company was founded in 1961 and is based in Calabasas, California.
Top 10 Shipping Stocks For 2014: Hertz Global Holdings Inc(HTZ)
Hertz Global Holdings, Inc., through its subsidiaries, engages in the car and equipment rental businesses worldwide. It operates in two segments, Car Rental and Equipment Rental. The Car Rental segment engages in the ownership and lease of cars. This segment operates car rental locations at or near airports, as well as in central business districts and suburban areas of cities in the United States, Canada, France, Germany, Italy, the United Kingdom, Spain, the Netherlands, Switzerland, Belgium, Luxembourg, the Czech Republic, the Slovak Republic, Australia, New Zealand, China, and Brazil. It also operates retail used car sales locations in the United States and France. The Equipment Rental segment rents earthmoving equipment, material handling equipment, aerial and electrical equipment, air compressors, generators, pumps, small tools, compaction equipment, and construction-related trucks. In addition, this segment sells new equipment, and consumables, such as gloves and ha rdhats. The company also offers claim administration services, such as investigating, evaluating, negotiating, and disposing of various claims, including third-party, first-party, bodily injury, property damage, general liability, and product liability. Hertz Global serves various industries, such as construction, petrochemical, automobile manufacturing, railroad, power generation, and shipbuilding. The company was founded in 1918 and is headquartered in Park Ridge, New Jersey.
Top 10 Shipping Stocks For 2014: Avino Silver & Gold Mines Ltd. (ASM.V)
Avino Silver & Gold Mines Ltd. engages in the acquisition, exploration, and development of mineral properties in Canada and Mexico. It primarily explores for gold, silver, copper, zinc, and lead deposits. The company holds interest in the Avino Silver mine covering approximately 4,364 hectares located in Durango, Mexico. It also owns 100% interest in the Eagle property located in the Yukon, Canada; and the Aumax, Olympic-Kelvin, and Minto properties situated in British Columbia, Canada. Avino Silver & Gold Mines Ltd. was founded in 1968 and is headquartered in Vancouver, Canada.
Wednesday, May 29, 2013
Bank of America and Citigroup: How Stable, Really?
The debate over whether the nation's largest banks are too big to fail rages on, as does the question of just how much in implicit subsidies these banks enjoy because of this notion. When it comes to Bank of America (NYSE: BAC ) and Citigroup (NYSE: C ) , the two megabanks have been found to be much more dependent on TBTF-generated backstops than peers JPMorgan Chase (NYSE: JPM ) and Wells Fargo (NYSE: WFC ) , particularly when it comes to profits -- which would dip into the negative zone for both B of A and Citi if funding subsidies were removed.
Indirect TBTF support aids debt ratings, too
Not surprisingly, tacit advantages exist when it comes to ratings on the biggest banks' debt, as well. A new report by Bloomberg shows that, without such backup, the debt of Wells and JPMorgan would be much less attractive for investors -- and, for Bank of America and Citi, pretty much its entire debt load would make even the pluckiest of investors run for the hills.
What constitutes this particular subsidy? Much as the belief that none of these huge banks will be allowed to fail gives them a funding advantage -- since investors are willing to take lower yields in exchange for lower risk -- a similar boost occurs when it comes to corporate debt. So certain are bank bondholders that the government will always be at the ready to step in if problems arise, that they are willing to accept lower bond yields.
According to World Bank economist Deniz Anginer, the author of a new study that highlights this particular phenomenon, this subsidy has infused an extra $82 billion into the coffers of Goldman Sachs (NYSE: GS ) and Morgan Stanley (NYSE: MS ) , as well as B of A, Citi, JPMorgan, and Wells. That's a lot of extra dough, and it's notable that, without it, Moody's estimates that essentially all of Bank of America's and Citigroup's holding company debt would sink below junk status. Things are less dire for Morgan Stanley's and Goldman's debt, but still pretty dicey; JPMorgan would suffer, as would Wells, but they both would still have plenty of investment grade debt to float.
On the plus side, both B of A and Citi got some good news when The Wall Street Journal reported that the cost of insuring against a default at the two bank holding companies dropped this month to its lowest point since the financial crisis. But, as the Bloomberg articles shows, these two banks still have a long way to go.
Wells Fargo's dedication to solid, conservative banking helped it vastly outperform its peers during the financial meltdown. Today, Wells is the same great bank as ever, but with its stock trading at a premium to the rest of the industry, is there still room to buy, or is it time to cash in your gains? To help figure out whether Wells Fargo is a buy today, I invite you to download our premium research report from one of The Motley Fool's top banking analysts. Click here now for instant access to this in-depth take on Wells Fargo.
How Supply in the Bond Market Is Inflating Stocks
Investors are stuck between a rock and a hard place. At the same time that bonds are offering historically low yields, stocks are trading for a healthy premium over their 60-year average. According to the most widely cited estimate, the current premium on the S&P 500 (SNPINDEX: ^GSPC ) is upwards of 24%.
Given the sluggish economic recovery, what's causing asset prices to inflate?
The obvious, though incomplete, answer is that there's been an increase in demand for debt securities from the Federal Reserve. Since the fourth quarter of last year, the central bank has purchased $85 billion each month in long-term treasuries and agency mortgage-backed securities. The effect has been to hold long-term interest rates at their current low levels -- indeed, had you told someone 10 years ago that the yield on the 10-year treasury would go below 2%, they would have called you crazy.
The Fed's actions are also a proximate cause for the recent ascent in equity prices. The connection here was discussed by Warren Buffett in a famous speech he gave at the height of the dot-com bubble (if you've never read it, I strongly encourage you to do so).
[Interest rates] act on financial valuations the way gravity acts on matter: The higher the rate, the greater the downward pull. That's because the rates of return that investors need from any kind of investment are directly tied to the risk-free rate that they can earn from government securities. So if the government rate rises, the prices of all other investments must adjust downward, to a level that brings their expected rates of return into line. Conversely, if government interest rates fall, the move pushes the prices of all other investments upward. The basic proposition is this: What an investor should pay today for a dollar to be received tomorrow can only be determined by first looking at the risk-free interest rate.
Consequently, every time the risk-free rate moves by one basis point -- by 0.01% -- the value of every investment in the country changes. People can see this easily in the case of bonds, whose value is normally affected only by interest rates. In the case of equities or real estate or farms or whatever, other very important variables are almost always at work, and that means the effect of interest rate changes is usually obscured. Nonetheless, the effect -- like the invisible pull of gravity -- is constantly there.
What Buffett is implying is that stocks and bonds are substitute goods. If one gets too expensive -- say, bond yields goes down (and, thus, bond prices go up) relative to stocks -- then investors will substitute away from one in favor of the other, and vice versa.
Not coincidentally, the chairman of the Federal Reserve Ben Bernanke touched on this issue in a recent speech about the bank's stepped-up efforts to monitor the financial system. "In light of the current low interest rate environment, we are watching particularly closely for instances of 'reaching for yield' and other forms of excessive risk-taking, which may affect asset prices and their relationships with fundamentals."
Adding to this substitution effect is leverage, which acts as an accelerant in the demand for stocks. Take a look at the chart below, which shows the amount of margin debt used to buy equities on the New York Stock Exchange. As you can see, there have been three distinct periods of excessive leverage over the last 15 years, all of which correspond to periods of inflated stock prices: the dot-com bubble, the housing bubble, and today.
But, again, even this should come as no surprise to investors. Just last week, The Wall Street Journal published an article titled "Investors Rediscovering Margin Debt." As the author noted, "In March, the level of margin debt stood 28% higher than one year earlier, a time frame that saw the [S&P 500] rise 11.4%."
What I'm getting at is that there's more to this story than meets the eye. That is, the pressure on asset values is not limited to the demand side of the equation; there are issues on the supply side as well.
As the following chart shows, between 1981 and 2007, the size of the overall bond market (which includes the aggregate outstanding value of government and corporate bonds as well as multiple types of asset-backed securities) grew at an average rate of 10% a year. Since the financial crisis, however, the growth rate has slowed to an average of only 3%, as banks such as Goldman Sachs (NYSE: GS ) , JPMorgan Chase (NYSE: JPM ) , Morgan Stanley (NYSE: MS ) , and Bank of America (NYSE: BAC ) have ratcheted back the production of private-label asset-backed securities.
The deceleration in growth is even more interesting when we look at the absolute dollar values at issue. Since the beginning of 2008, the total value of outstanding bond market debt has increased by $3.5 trillion -- no small amount, to be sure. But over the same time period, the Fed's balance sheet has expanded by nearly $2.5 trillion – and it's done so through the purchase of securities in the bond market. The central bank, in other words, has absorbed the equivalent of 71% of all new bond issues. If you net this out, that leaves an adjusted annual growth rate in outstanding bonds of less than 1%, or roughly a tenth of the analogous rate over the preceding two and a half decades.
The point is this: While there's no question that the Federal Reserve is stoking the proverbial flames when it comes to stock prices, the financial industry also shares some of the responsibility, as it controls the pipeline of securities that reach the market. So long as the demand for substitutable securities (i.e., stocks and bonds) continues to exceed the supply, there's no reason to think that either will descend from their current heights.
More expert advice from The Motley Fool
During the financial crisis, Goldman Sachs did so well pivoting to avoid the worst of the fallout that it had to downplay its success to duck public ire and conspiracy theories. Today, Goldman is still arguably the powerhouse global financial name, and yet its stock trades at a valuation of less than half what it fetched prior to the crisis. Does this make Goldman one of the best opportunities in the market today? To answer that question, I invite you to check out The Motley Fool's special report on the bank. In it, Fool banking expert Matt Koppenheffer uncovers the key issues facing Goldman, including three specific areas Goldman investors must watch. To get access to this report, just click here.
More Expert Advice from The Motley Fool
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.
Tuesday, May 28, 2013
Show Me the Money, Babcock & Wilcox
Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.
Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.
Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Babcock & Wilcox (NYSE: BWC ) , whose recent revenue and earnings are plotted below.
Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.
Over the past 12 months, Babcock & Wilcox generated $177.9 million cash while it booked net income of $214.9 million. That means it turned 5.3% of its revenue into FCF. That sounds OK. However, FCF is less than net income. Ideally, we'd like to see the opposite.
All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).
For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.
So how does the cash flow at Babcock & Wilcox look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.
Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.
When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.
With 44.8% of operating cash flow coming from questionable sources, Babcock & Wilcox investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 26.3% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 32.1% of cash from operations.
A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.
Looking for alternatives to Babcock & Wilcox? 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.
We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.
Add Babcock & Wilcox to My Watchlist.3 Things to Love About Lloyds Banking Group
LONDON -- There are things to love and loathe about most companies. Today, I'm going to tell you about three things to love about Lloyds Banking Group (LSE: LLOY ) (NYSE: LYG ) .
I'll also be asking whether these positive factors make the biggest of Britain's bailed-out banks a good investment today.
Return to profitability
Lloyds has made a bottom-line loss in each of the last three years, the loss for the latest year to December 2012 being 1.3 billion pounds. However, the group posted a profit for the first quarter of 2013, and at its recent AGM, chief executive Antonio Horta-Osorio told shareholders: "We expect us to return to profitability this year."
The improving situation at the bank has seen the shares hit a two-year high of 63 pence during May, 125% up on where they were this time last year. As the break-even price on the taxpayer's 39% stake in the company is 61 pence, Lloyds' directors are starting to talk about the prospect of the government selling its shares and the bank returning to full health as a regular PLC.
Extra capital sorted
There has been more good news for Lloyds' shareholders this month. Back in March, the Bank of England had said the banking sector needed to raise an additional 25 billion pounds of capital to guard against future losses on loans.
The extra capital needed by each bank hasn't been disclosed, but Lloyds said last week it expects to meet the requirements from cash generated within the business and more disposals of non-core assets, "without recourse to further equity issuance."
Dividend moving closer
While the possibility of a dilutive rights issue for shareholders has receded, the prospect of Lloyds resuming dividends has moved closer.
Horta-Osorio told the Sunday Telegraph earlier this year that as the bank's legacy issues are overcome and profitability increases, "it is obvious that Lloyds will be a high dividend-paying stock in the future, as it has been in the past." At the recent AGM, chairman Sir Win Bischoff told shareholders the bank would resume paying dividends "as soon as we are able."
A good investment?
Few investors will have made such a large return in such a short period on a FTSE 100 stock as those brave souls who backed Lloyds when the shares were trading below 25 pence a year ago.
A government sale of the taxpayer's stake in the bank would likely put a brake on share-price momentum in the short term, although much will depend on the appetite of institutions, and the timing and level of the restarted dividend.
I don't expect to see a repeat of last year's gains in the next 12 months. But in the longer term, Lloyds' shares could still outperform the market from their current level.
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A Bad Week for Bad Retailers
It's been more than a year since I wrote about five retailers that will be gone in five years.
None of the five chains are gone. In fact, four of the five stocks are trading nicely higher. This doesn't mean that the fundamentals are any better, despite the 17% to 64% gains in the shares of the four winners. The loser has shed 58% of its value. As a whole, the five stocks have an average gain of 25%, less than the S&P 500's 33% surge in that time.
None of the companies are in better shape than they were then. In fact, the fundamentals have deteriorated.
The market seemed to come to that realization last week when four of the five stocks took sizable hits.
Let's go over last week's carnage.
| GameStop (NYSE: GME ) | $32.11 | (19%) |
| Sears Holdings (NASDAQ: SHLD ) | $50.25 | (13%) |
| RadioShack (NYSE: RSH ) | $3.88 | (7%) |
| Best Buy (NYSE: BBY ) | $26.03 | (3%) |
| Barnes & Noble (NYSE: BKS ) | $22.16 | 11% |
Source: Yahoo! Finance.
GameStop was the biggest loser, shedding nearly a fifth of its value after posting uninspiring quarterly results.
Net income tumbled 25% on a 7% slump in sales. GameStop did boost the bottom end of its same-store sales and earnings-per-share guidance ranges for the entire fiscal year, but investors are noticeably concerned about the continuing slide in GameStop's high-margin resale business. Earlier in the week the new Xbox gaming console was announced -- and like the upcoming PlayStation 4 it won't play discs from earlier systems. Both new systems come with beefy hard drives and vibrant online ecosystems blurring the role of physical retail in the future of software sales.
Sears Holdings fell sharply after posting another terrible quarter. Comps have been sliding for roughly a decade, so another 3.6% decline in same-store sales for the parent company of Sears and Kmart isn't really a shocker. Both chains have lacked the necessary investments to turn the concepts around. A quarterly loss of $1.29 a share was also more red ink than analysts were projecting.
RadioShack is the only retailer trading lower since my original five-year death sentence, and it's off a sharp 58% in that time. There was no crummy quarterly report to accompany the stock's 7% dive. The only actual news involving RadioShack was a positive development where it will now begin accepting PayPal at its registers as yet another payment option.
However, RadioShack's fundamentals are lousy. The small-box retailer of consumer electronics with an emphasis on mobile products is losing a lot of money. It joins Sears and Barnes & Noble as three retailers that are expected to continue to lose money on an annual basis in the near future. The rub for RadioShack is that while Sears has its real estate and Barnes & Noble has its potentially valuable Nook business, RadioShack has little in the way of positive catalysts to break its fall.
Best Buy joined GameStop and Sears in putting up sloppy financials. Adjusted net income plunged 58% and the consumer electronics superstore chain's top line clocked in 10% lower. The chain blames the timing of the Super Bowl (there's a spike in TV and home entertainment sales in the week leading up to the NFL's big game) and the company's decision to stop selling musical instruments for the softness, but in reality most categories outside of mobile, tablets, and appliances fell during the period.
Barnes & Noble was the lone winner for the week.
Reports of Mr. Softy making a play to acquire the retailer's Nook business earlier this month have failed to pan out, but the shares still shot higher on Monday after Barron's argued that the value of its parts could still be worth as much as $30 a share. That's a little hard to believe, especially since Barnes & Noble's namesake store sales have slipped despite the liquidation of its closest rival two years ago. Nook has also turned out to be a fading rival to market-leader Kindle in digital books and e-readers. Let's not get started on the company's fleet of college bookstores at a time when textbooks have gone digital.
All five of these chains continue to show little signs of life. Best Buy and GameStop may outlive the others. They're at least still profitable, and Best Buy's new CEO is doing a decent job of slashing costs and making Best Buy's pricing more competitive.
However, at the end of the day -- or in this case, the end of four more years -- the models just aren't viable anymore.
Retail the right way
The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.
Why Rent-A-Center's Earnings May Not Be So Hot
Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.
Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.
Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Rent-A-Center (Nasdaq: RCII ) , whose recent revenue and earnings are plotted below.
Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.
Over the past 12 months, Rent-A-Center generated $98.2 million cash while it booked net income of $178.0 million. That means it turned 3.2% of its revenue into FCF. That sounds OK. However, FCF is less than net income. Ideally, we'd like to see the opposite.
All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).
For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.
So how does the cash flow at Rent-A-Center look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.
Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.
When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.
With questionable cash flows amounting to only 7.3% of operating cash flow, Rent-A-Center's cash flows look clean. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 2.4% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 49.1% of cash from operations.
A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.
Can your retirement portfolio provide you with enough income to last? You'll need more than Rent-A-Center. Learn about crafting a smarter retirement plan in "The Shocking Can't-Miss Truth About Your Retirement." Click here for instant access to this free report.
We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.
Add Rent-A-Center to My Watchlist.Monday, May 27, 2013
Will You Be Back at the Banana Stand Today?
The Bluths are back! Beginning today, Netflix (NASDAQ: NFLX ) is airing a new 15-episode season of Arrested Development. More than 5 million have rated earlier seasons of the show, which also merits 1.8 million "likes" on Facebook.
Will that translate into a rush of new subscribers? I would say so, if only because Netflix's outsized first-quarter member gains appear to have been influenced by February's airing of acclaimed original series House of Cards.
George Sr., Lucille, Gob, Michael, Buster, Lindsay, Tobias, Maeby, and George Michael could be as big a draw, if not bigger. And that's in spite of Amazon.com's (NASDAQ: AMZN ) substantial but thus-far ineffective efforts to create competing originals.For example, Alpha House has just 2,839 customer reviews as of this writing, versus more than 385,000 mostly good ratings for horror series Hemlock Grove.
"I would say Arrested sort of fits in an interesting category because it's got a very, very loyal fan base established," said Netflix Chief Financial Officer and Chief Accounting Officer David Wells at JPMorgan Chase's 41st Annual Global Technology, Media, and Telecom Conference earlier this month.
"So there's an acknowledgment on our part that it might have an impact on Q2 and that we otherwise would have felt like we had lower year-over-year net additions for Q2 based on a seasonal pattern. But Arrested is a wild card. So I would say, in general, we're excited about it," Wells said.
Season 4 trailer. Sources: Netflix, YouTube.
Does Netflix figure into your holiday plans? Don't just sit there. Come on! Vote in the poll below, and then leave a comment to let us know whether you signed up for Netflix to get access to the new season of Arrested Development.
Stream on
For further analysis of how Netflix is changing entertainment, tune into our newest premium research report, in which we take you inside Netflix's entertainment empire and tell you what the streaming sensation is really worth, and whether the stock deserves a place in your portfolio. Access your report now by clicking here.
What Brooks Has Learned Working With Buffett
Berkshire Hathaway (NYSE: BRK-A ) (NYSE: BRK-B ) subsidiary Brooks Sports is drawing quite a bit of attention from Buffett devotees these days. The running shoe maker has sprinted to 34% volume growth in both 2011 and 2012, with U.S. sales growth hitting the tape at 43% by the end of last year.
Our roving reporter Rex Moore caught up with Brooks CEO Jim Weber at the recent Berkshire shareholder meeting in Omaha. In this segment of a multipart series, Jim says working under the Berkshire umbrella has taught him a lot about the power of the brand.
Is Berkshire for you?
Thanks to the savvy of investing legend Warren Buffett, Berkshire Hathaway's book value per share has grown a mind-blowing 586,817% over the past 48 years. But with Buffett aging and Berkshire rapidly evolving, is this insurance conglomerate still a buy today? In The Motley Fool's premium report on the company, Berkshire expert Joe Magyer provides investors with key reasons to buy as well as important risks to watch out for. Click here now for instant access to Joe's take on Berkshire!
Hot Up And Coming Companies To Buy For 2014
With the�SPDR S&P Biotech Index�up 31% over the trailing-12-month period, it's evident that investment dollars are willingly flowing into the biotech sector. Keeping that in mind, let's have a look at some of the rulings, studies, and companies that made waves in the sector last week.
Earlier this week looked as if it could be the most uneventful week of the year for the biotech sector, but a flurry of mid-to-late week clinical data and advisory panel rulings changed that in a flash.
You can thank the Committee for Medicinal Products for Human Use, or CHMP, for the majority of this week's news. CHMP, which is Europe's equivalent of the Food and Drug Administration's advisory panel, took a closer look at three drugs this past week, divvying out two positive and one negative recommendation.
Hot Up And Coming Companies To Buy For 2014: Stifel Financial Corporation(SF)
Stifel Financial Corp., a financial holding company, operates as a retail and institutional brokerage, and investment banking company in the United States and internationally. The company?s Global Wealth Management segment offers securities transaction, brokerage, and investment services, including equity securities; fixed income securities, which comprise municipal, corporate, and government agency securities; preferred stocks; and unit investment trusts. This segment also provides managed fee-based products; and insurance and annuity products, as well as securities-based lending services. In addition, it offers retail and commercial banking services to private and corporate clients, including personal loan programs, such as fixed and variable mortgage loans, home equity lines of credit, personal loans, loans secured by certificates of deposit or savings, and securities-based loans; and commercial lending programs, such as small business loans, commercial real estate loa ns, lines of credit, credit cards, term loans, and inventory and receivables financing. As of December 31, 2011, this segment operated a network of 1,833 financial advisors located in 291 branch offices in 44 states and the District of Columbia; and 154 independent contractors. Its Institutional Group segment offers research, equity, and fixed income institutional sales and trading, investment banking, public finance, and syndicate services. This segment distributes equity research products to institutional investors; provides financial advisory services principally with respect to mergers and acquisitions, and the execution of public offerings and private placements of debt and equity securities; and coordinates marketing, distribution, pricing, and stabilization of managed equity and debt offerings. It serves individual investors, corporations, municipalities, and institutions. The company was founded in 1890 and is headquartered in St. Louis, Missouri.
Hot Up And Coming Companies To Buy For 2014: S&P 500/Barra Value(SU)
Suncor Energy Inc., together with its subsidiaries, operates as an integrated energy company. The company involves in the development of petroleum resource basins in Canada's Athabasca oil sands; acquisition, exploration, development, production, and marketing of crude oil and natural gas in Canada and internationally; transportation and refining of crude oil; and marketing of petroleum and petrochemical products primarily in Canada. Its Oil Sands segment produces bitumen recovered from oil sands through mining and in-situ technology, and upgrades it into refinery feedstock, diesel fuel, and by-products. This segment?s products include gasoline and distillates. The company?s Natural Gas segment acquires, explores, develops, and produces natural gas, natural gas liquids, oil, and by-products from reserves located primarily in western Canada, the Northwest Territories, Alaska, and the Arctic Islands. Its International and Offshore segment engages in the exploration and pro duction of oil and gas in offshore Newfoundland and Labrador, in the North Sea, and in Libya and Syria. The company?s Refining and Marketing segment refines crude oil at Suncor's refineries in Edmonton, Alberta; Montreal, Quebec; and Sarnia, Ontario in Canada, as well as in Commerce City, Colorado into a range of petroleum and petrochemical products for sale to retail, commercial, and industrial customers. It also transports crude oil through pipelines in eastern and western Canada, as well as through wholly-owned pipelines in Wyoming and Colorado; and produces specialty lubricants and waxes. In addition, this segment operates retail sites in Canada under the Petro-Canada brand; and in Colorado under Phillips 66 and Shell brands. Suncor Energy Inc. also engages in third-party energy trading activities. The company was formerly known as Suncor Inc. and changed its name to Suncor Energy Inc. in April 1997. Suncor Energy Inc. was founded in 1953 and is headquartered in Calgary , Canada.
Advisors' Opinion:- [By Lowell]
Suncor produces conventional and unconventional oil and owns the PetroCanada and Sunoco brands in Canada. It recently successfully completed the acquisition and integration of the old Petro Canada – and now manages all of Petro Canada’s assets. It took some time for the markets to react favorably to the integration, but Suncor is finally back in the game. The shares have already run up a good 20% over the past six months. Expect them to continue to do so if oil prices climb into the high nineties. Trust me, you don’t want to be caught in the cold when this train takes off again.
- [By Sam Collins]
The recent merger with Petro-Canada made Suncor Energy (NYSE: SU) one of Canada’s largest oil and gas producers. It is focused on Alberta’s vast Athabasca oil sands, making it independent of operations outside of North America.
Compared with other international oil companies, SU is not only safe from problems in the Middle East, but its profit margins increase greatly when oil rises above $80 per barrel, making it a hedge against rising prices due to Middle East tensions.?
Technically, SU broke from a saucer formation on Friday, with a long-term target of $50 and a trading target of $45.?
- [By Stephen]
Suncor Energy (SU, $26.61). Largest energy producer in Canada's oil sands has very good cost structure, production upside and is cheap vs. earnings.
Top Regional Bank Companies For 2014: Changyou.com Limited(CYOU)
Changyou.com Limited develops and operates online games in the People?s Republic of China. It involves in the development, operation, and licensing of massively multi-player online role-playing games (MMORPGs), which are interactive online games that might be played simultaneously by various game players. The company operates seven MMORPGs that include its in house developed Tian Long Ba Bu; and licensed Blade Online, Blade Hero 2, Da Hua Shui Hu, Zhong Hua Ying Xiong, Immortal Faith, and San Jie Qi Yuan. As of December 31, 2010, Changyou?s games in China had approximately 111.4 million aggregate registered accounts; 1.0 million aggregate peak concurrent users; and 2.7 million aggregate active paying accounts. The company was founded in 2003 and is based in Beijing, the People?s Republic of China. Changyou.com Limited is a subsidiary of Sohu.com Inc.
Hot Up And Coming Companies To Buy For 2014: RPM International Inc.(RPM)
RPM International Inc., together with its subsidiaries, manufactures, markets, and sells various specialty chemical products to industrial and consumer markets worldwide. The company?s Industrial segment offers waterproofing and institutional roofing systems used in building protection, maintenance, and weatherproofing applications; sealants, tapes, and foams; residential basement waterproofing systems; specialized roofing and building maintenance and related services; specialty industrial adhesives and sealants; and concrete and masonry additives, and related construction chemicals. It also offers polymer flooring systems, and offshore and marine structures; industrial and commercial tile systems; fiberglass reinforced plastic gratings and shapes; heavy-duty corrosion-control coatings, fireproofing products, and containment linings; specialty construction products, including bridge expansion joints, bridge deck and parking deck membranes, curb and channel drains, highway markings, protective coatings, and concrete repairs; and fluorescent colorants and pigments, waterproofing and flooring products, exterior insulating finishing systems, and shellac-based-specialty coatings for industrial and pharmaceutical uses, edible glazes, and food coatings. The company?s Consumer segment provides professional use and do-it-yourself products for a range of consumer applications, including home improvement and personal leisure activities. Its products include coating products; specialty products; deck and fence restoration products; metallic and faux finish coatings; hobby paints and cements; and caulks, sealants, adhesives, insulating foam, spackling, glazing, and other general patch and repair products. The company offers its products under the Carboline, DAP, EUCO, Fibergrate, Flecto, Flowcrete, Hummervoll, Universal Sealants, illbruck, Rust-Oleum, Stonhard, Tremco, Watco, and Zinsser brand names. RPM International was founded in 1947 and is headquarte red in Medina, Ohio.
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