Archives for July 2012

July 2012 - Page 4 of 17 - Money Morning - Only the News You Can Profit From

Obamacare Brings Mega Growth To These Three Sectors

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Get ready…

In the next 18 months, the Patient Protection and Affordable Care Act – known informally as Obamacare – is going to completely overhaul the American healthcare system. And investors who aren't properly positioned for what's coming could miss one of the biggest profit opportunities of the decade.

"While almost everyone is hung up on the law itself and its economic sustainability," says Money Morning Executive Editor Bill Patalon. "Smart market-watchers are already moving to invest in the individual sectors poised to profit."

According to Patalon, Obamacare will add approximately 30 million new patients into the healthcare system – and pump $900 billion into healthcare spending.

And government forecasts show that total healthcare spending will grow at an average rate of 5.7% a year, far outpacing the predicted growth grate of GDP.

Those massive increases will have a profound effect on profits and bottom lines in the private sector.

But not all healthcare stocks will profit equally – or at all.

Obamacare is bringing a complex set of new taxes and penalties with its promise of higher sales and increased revenue. Some members of the healthcare sector could lose more than they gain under the new world order.

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Will a Weak Facebook Earnings Report Open Doors for these Competitors?

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We know investors will want a few key details from today's Facebook earnings report, like how much more user growth the site expects, if it can increase ad sales and how it'll tackle mobile usage.

But something people haven't questioned as much is if there are any competitors lurking in the shadows that could eat away at Facebook's online presence.

Turns out Facebook has reason to be concerned.

MarketWatch's David Weidner last week addressed some competition creeping into Facebook's world. In his article "Here's the app that could kill Facebook," Weidner detailed how an up-and-coming app could actually threaten Facebook's hold on social networking.

Tack this on to the list of reasons to avoid Facebook stock – in case you needed any more.

Path: A Facebook Threat?

The app in question is called Path.

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Here's a Glimpse into the Future

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If you've been following the worrisome and escalating South China Sea controversy, you know that China has been flexing its muscles laying claim to thousands of square miles of islands and ocean that other countries – Japan, Vietnam, Taiwan and the Philippines, to name the main ones – also claim to control.

This isn't some foreign skirmish that we can easily dismiss because of its distance, and because it doesn't affect us here at home.

The fact is, it affects the United States directly – and you could feel the fallout as soon as 2013.

Let me show you why.

As my Private Briefing subscribers know, I'm a regular listener to the world band radio broadcasts of the Voice of America, the BBC, NHK World/Radio Japan International, Radio Voice of Vietnam, China Radio International, and many others.

Granted, some of what they say is propaganda. But those broadcasts also include a lot of really excellent international and regional news and analyses – including viewpoints we don't often hear from monopolistic U.S. news outlets.

The South China Sea controversy is a terrific example of a story that's not getting much play in the U.S. media.

It should be, though, since the ramifications are huge: This region is flush with resources – as much as 213 billion barrels of oil (10 times the proven U.S. reserves) and 900 trillion cubic feet of natural gas (equal to all the reserves held by Qatar). There's also a rich fishing ground that feeds millions and employs thousands.

This "spat" has already resulted in naval standoffs between China and the Philippines, allegations that China sabotaged oil-exploration gear put in place by Vietnam, and an overt move by China to seek oil-exploration bids for areas that Vietnam says are part of its territorial waters.

In June, China even "formed" a city on islands that both Taiwan and Vietnam claim control over. And this month, China approved a military garrison for that island. It may be why Vietnam recently held "live-fire" exercises off its own coast – a move that Beijing interpreted as "an overt act."

Still say this doesn't affect the United States?

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Man-Made Proteins Put a New Twist on Evolution - And They Fight the Flu

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Man-made proteins. You may have never heard of them, but you will.

They are set to become huge change agents in the high-tech world of the very near future.

Some of you may have already heard the recent news that doctors believe they can use these compounds to help fight the flu.

The major media was all over this angle. And no doubt, it's an important advance.

In the U.S. alone, 200,000 people get so sick from the flu they have to go to the hospital each year. U.S. health officials say as many as 50,000 people die.

The version of synthetic protein that can help boost your immune system to fight the flu is called EP67.

Earlier this month, a team from San Diego State University and the University of Nebraska Medical Center tested the substance on mice – with great results.

In a paper that ran in the journal PLoS One, they said mice given a lethal dose of the flu survived after getting an injection of the protein. What's more, it could be used to guard against other diseases, as well.

"Since EP67 works by stimulating local innate immunity, it should prove effective against viral, bacterial and fungal diseases," said Joy Phillips, the study's lead author. She noted said they still need to test the protein on larger mammals and humans.

There is a catch – you have to get a dose of EP67 within 24 hours of exposure to the bug for it to be effective.

Still, clearly, synthetic proteins could have a huge impact on public health.

Yet I believe the media missed the real story.

With a hot new field of science known as "directed evolution," scientists will do far more than treat disease.

They may just redesign our digital universe.

How Directed Evolution Works

The idea is pretty simple. Genetic engineers apply evolutionary design methods to biological systems.

In this way, they seek to "evolve" proteins and organisms that have unique aspects not found in nature. They can have useful applications in medicine, alternative energy, and the like.

Making sense of this new advance requires us to take a look at proteins from a unique point of view.

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Three Natural Gas Stocks Ready to Ride the Price Rebound

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Natural gas prices have gone from $1.85 per million British thermal units in April to $3.14 Tuesday – a seven-month high – for a 70% increase in three months.

Natural gas prices declined to a decade-low in 2012 thanks to oversupply. But with unusually mild winter weather followed by scorching summer heat, natural gas has seen a slight resurgence in prices over the last few weeks.

This gives investors hope natural gas has broken out of its rut.

The price change started last month. On June 14, natural gas futures saw a 12% jump, hitting $2.46 per million British thermal units (BTUs) after a surprising bullish storage report, according to CNBC.

At that time, CitiFutures energy analyst Tim Evans told CNBC that the U.S. Energy Information Administration (EIA) natural gas weekly storage report meant "there's not much reduction in coal-to-gas switching as had been anticipated or that production may have declined a bit in the latest period."

Regardless, Evans said, "it's a bullish surprise, and supportive" of prices.

Indeed, prices have continued rising as July has delivered record-breaking hot temperatures.

In its July Short-Term Energy Outlook on July 10, the EIA reported Henry Hub natural gas prices (NG-W-HH) in 2012 will have an average of $2.58 per million BTU; this comes in a little higher than June's $2.55 estimate, although still well below 2011's $4 estimated average.

But this is pushing natural gas toward a slight improvement in 2013 as the EIA has forecast prices increasing $0.64 (25%), to $3.22 per mm BTU.

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Fiscal Cliff 2013: Politicians Playing Chicken with Your Money on the Line

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Americans are caught in the crossfire as U.S. policy makers continue to battle over "fiscal cliff 2013."

Republican and Democratic lawmakers remain deadlocked over what to do regarding the expiring tax a nd spending cuts, but its taxpayers' money that's at stake.

On Dec. 31, if no action is taken, Bush-era tax cuts will run out, thrusting the struggling U.S. economy back to the lofty Clinton-era tax rates. Plus, steep spending cuts will kick in, hitting a broad range of sectors from education to national defense.

U.S. President Barack Obama and his administration want a tax extension for those making less than $250,000. They are also calling on the top 2% of earners to pa y higher rates on income exceeding $250,000, maintaining it's their duty to do so.

Republicans, however, want the tax breaks to remain intact for all.

So it goes, and so it has gone for months. If Democrats get their way and let some $600 billion worth of tax hikes and spending cuts go into effect in January, it will drive the nation back into a recession. But that can be avoided if Republicans back off on their opposition of higher taxes for our nation's wealthiest.

While the two parties clash, Americans of all tax brackets are stuck in a wait- and- see mode–waiting for action and not seeing much except their nest eggs getting fried.

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Three Reasons the Facebook Earnings Report Will Disappoint

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The Facebook earnings report for Q2 will be released Thursday after market close – meaning investors have a chance to see if concerns over Facebook's revenue and growth are warranted.

It's only been two months since Facebook's (Nasdaq: FB) long-awaited May 18 IPO. The day didn't exactly turn out as planned with Nasdaq's technical problems delaying trading and a measly one-day gain of 23 cents.

The result has been a lingering frustration among investors who hoped they were buying the next big tech stock – and are now in the red.

Since then, Facebook stock has fallen 24%.

A lot of expectations and answers should come with the Q2 earnings Thursday, but we're not so sure they'll be the answers investors have hoped to hear.

Here are three reasons we think the Facebook earnings report will disappoint.

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Check Out What's Leading the Stock Market Today

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The stock market today is battling with mixed earnings reports from some of the world's biggest companies.

Yesterday (Tuesday) was the third triple-digit decline in a row for the Dow Jones, and any upward movement today may seem temporary, driven by hopes of QE3.

The main economic indicator today was new home sales, which fell 8.4% in June to an annual pace of 350,000. Analysts had expected the sales rate to be closer to 380,000.

While home prices and permits to build new homes have risen lately, this report could put a damper on the housing market's turnaround.

In Washington, U.S. Treasury Secretary Timothy Geithner appeared before the House Financial Services Committee Wednesday morning to testify on the economy. He appeared as part of his duties as chief of the regulatory group the Financial Stability Oversight Council.

His opening statement drilled home the point that Europe is the biggest threat to the U.S. economy, but that the banks are in much better financial shape than they were four years ago.
Geithner is expected to be questioned regarding his role in the Libor manipulation scandal while he served on the Federal Reserve Bank of New York.

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Apple Earnings Miss Points to Slowing Growth

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Now that the Apple earnings report missed missed Wall Street expectations for the second time in a year, it has some questioning whether the company is finally coming back to earth.

Revenue for Apple Inc.'s (Nasdaq: AAPL) third quarter was $35.2 billion, missing the consensus of $37.1 billion and only showing year-over-year growth of 23.2%. That growth rate was far below the 82% in reported for Q3 2011.

Profit growth slowed as well. Apple earned just $9.32 per share in the June quarter compared to analyst expectations of $10.38. That put Apple's bottom-line growth at 27.5% year over year, little more than a quarter of last year's eye-popping 125%.

Disappointed investors sent AAPL down 5% in after-hours trading.

The Apple earnings miss was driven mostly by lower iPhone sales of 26 million, while analysts had expected 29 million, although Mac sales also were short of expectations.

Several Wall Street analysts had lowered their expectations for iPhone sales in recent weeks, but Apple even missed those reduced numbers.

The bleak news carried over to gross margin as well, which came in at 42.8%, short of the consensus number of 44%.

The only positives were the iPad and iPod. Sales of the iPad were 17 million, beating the consensus of about 15 million. Sales of the iPod, which have been slowing for years, were actually up 10% to 6.8 million.

But it was the bad news that dominated this Apple earnings report.


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If Anyone Knows How to Make Money It's This Hot Tech IPO

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You can't see them… but they're there – waiting to steal key data from your mobile phone or tablet.

It's a world where hackers and thieves will do anything to get access to your bank account, social security number, home address, lists of contacts and other secret data.

And the truth is every time you head onto the Internet you are vulnerable-especially when using a mobile device.

That's why I have my eye on a small, fast-growing tech leader that is about to capitalize on the security threats that are targeting the huge increase in mobile commerce.

Because if anyone knows how to make money in mobile security it's the leaders of AVAST Software.

Based in Europe, AVAST now protects about 160 million mobile phone users against viruses, malware, hackers and other cyber thieves. With clients in nearly every single country in the world, AVAST is the leader in this growing sector.

In fact, in just the last 30 days alone, AVAST says it has blocked 118 million wireless attempts to access infected Websites.

Now you know why so many tech observers have their eyes on AVAST's upcoming IPO….

Unlocking the Value Of the AVAST IPO

The firm expects to go public tomorrow morning on the Nasdaq, priced between $9 and $11 a share under the ticker AVST. At the midpoint of the pricing range, that would give AVAST a market cap of about $850 million.

But here's what I like about AVAST: It has an ingenious way to attract its clients. It employs the "freemium" business model. Using free offers it captures millions of users and converts them to high-margin paid products.

So far, this "freemium" approach has worked like a charm. Over the last six quarters, AVAST has had an average operating profit margin of 37.5%.

For Avast, this much is clear — the company has found a niche with a lot of room for more growth.

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