Archives for September 2010

September 2010 - Page 6 of 9 - Money Morning - Only the News You Can Profit From

Prosperity Piquing Investor Interest in India

In the investment world, there's often so much talk about China in the United States that the tremendous success in India gets short shrift. But business there is booming.

The world's third-fastest growing economy is set to expand by 8.5% this year, the most in the past half-decade. Such rapid growth has compelled the central bank to lift interest rates four times in the past six months.

Compare that with the U.S. Federal Reserve, which has made clear it intends to keep rates low through at least the middle of next year due to limp demand and negligible inflation.

While American consumers are burdened by high levels of debt and joblessness, India's urban middle class and farmers – who have enjoyed a year of ample but not over-abundant rainfall and rising prices – are eager to spend their newfound wealth.

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Hot Stocks: Hewlett-Packard Continues its Business Makeover with ArcSight Acquisition

Hewlett-Packard Co. (Nasdaq: HPQ) yesterday (Monday) took another step toward becoming a more diverse software-based company by agreeing to buy ArcSight Inc. (Nasdaq: ARST) for about $1.5 billion in cash.

Palo Alto, California-based H-P will pay ArcSight investors $43.50 a share, a 24% premium over the stock's closing price on Sept. 10. ArcSight makes security software to help companies identify suspicious activity on their corporate networks.

The deal is the latest in a string of acquisitions designed by H-P to lower its reliance on lower-margin computers and servers.

"HP wants to expand from their traditional hardware offerings — printers and computers and servers — and they've gone into more services and software," Dave Novosel, an analyst at corporate-bond research firm Gimme Credit in Chicago, told Bloomberg News. "This is something that's a little bit different for H-P. This is not where they've had a strength in the past."

H-P in April kicked off the spending spree by buying 3COM for $2.7 billion and smartphone-maker Palm Inc. for $1.2 billion. H-P also acquired Fortify Software Inc., another security firm, and Stratavia Inc., a database and application automation company based in Denver. Terms for those purchases weren't disclosed.

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Buy, Sell or Hold: Exelon Corp. (NYSE: EXC) Can Energize Your Portfolio with a High-Powered Dividend

With the yield on U.S. Treasury bonds sitting well below 3%, income investors have to get creative. Those seeking dividend-based cash flow must to be willing to look in less traditional places to find a safe yield.  And what could be less traditional than nuclear power?

After the Three Mile Island disaster of 1979, nuclear energy became the forgotten carbon-free source of electricity.  However, a small renaissance in nuclear power is happening as we speak, and Exelon Corp. (NYSE: EXC) gives us a great tool to capture the upside from this renaissance – with some solid income, to boot. 

Exelon is the largest operator of nuclear power plants in the United States, with 10 plants operating a total of 17 individual reactors.  It's the third-largest operator of nuclear plants in the world, and it has a massive barrier to entry around its niche market.
 

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Nokia Needs More Than New CEO Stephen Elop to Reverse Its Steep Market Decline

Nokia Corp. (NYSE ADR: NOK) on Friday announced it was replacing its chief executive with Microsoft Corp.'s (Nasdaq: MSFT) Stephen Elop, in an effort to reverse its steep decline in the U.S. smartphone market.

The world's largest mobile phone maker said Chief Executive Officer Olli-Pekka Kallasvuo will step down and Elop, head of Microsoft's business software unit, will take the reins Sept. 21. The move represents a drastic shift for Nokia, which until Canadian Elop had never hired a non-Finnish executive for the top spot. But the company needs a strategy and management overhaul to compete in the profitable future of smartphones.

The move should appease Nokia's frustrated investors who have watched its market value slip 70% in the past three years as Apple Inc.'s (Nasdaq: AAPL) iPhone, Research in Motion Ltd.'s (Nasdaq: RIMM) BlackBerry, and phones using Google Inc.'s (Nasdaq: GOOG) Android platform stole the smartphone spotlight.

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Why Investors Need to Pay Attention to These Emerging Markets

The U.S. market showed improvement last week, but is still falling short of the continued growth and profit opportunities that emerging markets have to offer.

Stocks inched higher on Wall Street over the past week, taking heart from news of a modest improvement in jobs and a narrowing of the U.S. trade deficit.  Both acted to counter the argument that the U.S. economy is speeding for a cliff in a foreign-badged car.

Bonds finished down slightly, crude oil rose 2.6%, and gold was down slightly.

A tad dull, sure. But the fact that there wasn't a rout after the big gains of the first week of the month, though, has to be considered a win for the bulls. 

And some updates from the corporate world and overseas markets should keep investors cheering this week.

To read why investors have reason to celebrate — and what opportunities they can't ignore — click here.

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China Trade Surplus Reignites Tensions Over the Yuan

China in August posted its third straight trade surplus of more than $20 billion, putting friction with the United States over the nation's currency back in the spotlight.

Exports rose 34.4% in August and imports climbed a greater-than-expected 35.2%, leaving the country with a $20.03 billion surplus, a customs bureau report showed Friday.

But a sustained trade gap with the United States could embolden American lawmakers who are pushing to penalize China for what they consider unfair trade practices.

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Three Ways to Brace for a Double-Dip Recession

Economists are torn… Is the U.S. economy on the upswing? Or are we facing the dreaded "double dip recession"? Either way, there are a few things every smart investor needs to do now to protect their nest eggs. Find out what you should do in this free report.

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Money Morning Mailbag: Market Volatility, BP's Blow Out, and Obama's Agenda

As the first full week of September ends and the summer draws to a close, many investors are still looking for answers to questions first asked back in May, notably:

  • What's behind the recent market volatility?
  • Can we put BP behind us?
  • And what effect will President Obama's political agenda have on investments?

One reader writing into the Money Morning mailbag touched on all three of those topics. Wrote Ron, from Toronto:

Could it be that George Soros has finally dumped all of his equity holdings and that alone has cause a rebound in the futures and stock prices because there is simply less selling?

BP may be the next shoe to drop if that blowout preventer proves to be functional.

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August's Insider Trading Augurs Well for Stocks

The stock market as a whole just turned in its worst August performance since 2001, with the major indexes posting losses ranging from 4% to 6%. Yet despite those negative numbers, there was one group that didn't act bearish at all – corporate insiders.

Insiders – the officers, board members and major shareholders of America's corporations – are required by law to almost immediately report to the Securities and Exchange Commission (SEC) any time they buy or sell the shares of their own companies. As such, insider transactions are tracked by a number of organizations and Wall Street analysts as a gauge of current market sentiment and future prospects for stock prices.

The theory underlying this practice is simple. As the people with the most intimate knowledge of what corporations are actually doing to grow their businesses, as well as the results those strategies are producing, insiders are in the best position to judge whether the fortunes of their companies are looking bright – or dismal. When they like what they see, they buy their company's shares – and when they don't, they sell.

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