Archives for July 2010

July 2010 - Page 3 of 11 - Money Morning - Only the News You Can Profit From

Buy, Sell or Hold: United Technologies Corp. (NYSE:UTX) is Really Taking Off

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We have already seen strength in industrial sales in many companies, but today's recommendation may be the most promising yet. United Technologies Corp. (NYSE:UTX) is hitting on all cylinders and is poised for both long and short-term gains.

The company reported earnings and hit it out of the ballpark.  UTC reported quarterly earnings of $1.20 per share – even including the loss of 12 cents a share due to restructuring charges.  That's 4 cents higher than analysts had expected – 16 cents higher, if you take out the one-time restructuring charges. 

The good news did not stop there, either. UTC raised its guidance and share repurchases for the year, despite new challenges in Europe. Sales beat expectations and profit margins were higher across the board.  Engine maker Pratt & Whitney and international elevator brand Otis were especially strong. That's remarkable considering the market's fear of a double-dip recession and the U.S. Federal Reserve's "uncertain" status about the strength of the economy.

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Gold Will Hit $5,000 an Ounce Long Term ... But the Near-Term Profit Prospects Are Even Bigger

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Longtime commodities guru Peter Krauth touched off a real media buzz earlier this year when he publicly predicted that gold would hit $5,000 an ounce in the next few years – a projection he stands behind.

But here's the irony.

While Krauth's prediction would represent a total return of about 320% over that multi-year span, he says the potential returns on some of the near-term profit plays he's looking at are even bigger.

"These near-term opportunities are significant because the companies that explore and/or produce gold are leveraged to the price of gold," Krauth said in an interview with Money Morning. "So a 10% to 20% rise in gold's price could cause the share prices of some of these firms to gain 20% to 60% – or more – in a matter of months."

To see why gold is set to soar, read on...

Ignoring Sovereign Default Damages Credibility of EU's Bank Stress Tests

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The European Union (EU) bank stress tests failed to account for a sovereign default, meaning results show a healthier banking sector than actually exists.

The tests results were released Friday with seven banks failing, but analysts say many more institutions could have failed if the tests simulated a sovereign default. Testing regulators from the Committee of European Banking Supervisors (CEBS) decided against testing securities held in lenders' banking books, where sovereign debt is held and only written down in the case of default.

"The long awaited stress tests do not seem to have been that stressful after all," said Gary Jenkins, an analyst at Evolution Securities Ltd. "The most controversial area surrounds the treatment of the banks' sovereign debt holdings."

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Money Morning Mailbag: Relief Wells Near Finish, But Oil Spill Blame Game Continues

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While BP PLC (NYSE ADR: BP) closed in this week on finishing relief wells to permanently plug the oil spill, stormy weather threatened to delay the final steps as clean up crews were called in to shore.

BP capped the blown-out Macondo well last week and has been conducting pressure tests to ensure the cap's strength. A relief well is close to completion but work has been halted until the storm passes. All work could be stopped for 10 – 14 days if the area is evacuated.

While the leak may finally be close to plugged, the financial aftermath is far from over. Corporate entities and the U.S. government continue to point fingers at each other.

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Special Report: How to Buy Gold

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As an analyst and editor who specializes in the natural-resources sector, I spend a lot of time writing about gold, gold mining, and gold investing. Those are popular – and even emotional – topics with investors, which means that the columns, essays and advisories I write tend to generate a lot of comments and questions.

I think that's great. After all, an engaged investor tends to be a successful investor.

Not surprisingly, one question dominates. And that's the question we're addressing in this special report.

The question: "How do I buy gold?"

As a service to the Money Morning readers who have asked that question, or who've had that same thought, I've put together this overview – or primer – that addresses the basic ins and outs of buying gold. In this feature, I address some of the more-common and more-timely questions that I've been getting.

To find out how to buy gold, please read on...

Hungary's Spat with the IMF and EU Could Signal Another Crisis to Come

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The biggest financial news story out of the Europe this summer is getting very little play in the U.S. mainstream press. However, it has the potential to torpedo the European Union (EU), and has disastrous implications for borrowing costs worldwide.

Basically, a miniature banking crisis is festering in Hungary. If it isn't contained, it could grow into a genuine crisis that infects the secondary lending markets around the world.

Hungary is supposed to have about $30 billion in domestic liquidity for exchange, the equivalent of about five months of capital in its national account.  But it won't be getting additional funds from the EU machine in Brussels, or the International Monetary Fund (IMF), anytime soon.

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Energize Your Portfolio With These Four 'Smart-Grid' Technology Plays

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Larry Fisher spends all his time lately designing new ways to conserve electricity.

As the research director of NextGen – the division of private, New York City-based ABI Research that tracks smart grids worldwide – Fisher has more and more on his plate these days. That's because the wave of new investment in this emerging sector is just beginning.

NextGen also serves as an incubator for brand-new approaches in electronics and smart-grid technology. Over the past several years, the groundwork for smart grids has emerged in a number of countries, Fisher says. For that reason, the rates of both investment and implementation are increasing.

In a brand new report, Fisher's research team estimates that we will spend some $45 billion worldwide between now and 2015 on smart-grid-related transmission-and-distribution (T&D) infrastructure, implementation of related components at the level of utility companies distributing the power to consumers, and smart meters. (These last ingredients allow you to measure usage and redistribute power on your own.)

When compared to the trillions spent on generation and transmission, $45 billion may seem like a pittance.

But it certainly does indicate that a change is approaching. And for certain companies that find themselves in the middle of this significant energy revolution, it's going to mean lots of profits.

Let's take a closer look...

What Can 1962 Tell Us About Today's Stock Market?

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We dove into market history a lot recently with studies of the 3%+ up day a couple weeks ago as well as a look at the growth rate of the index of Leading Economic Indicators. The takeaway: History suggests there are grounds for being optimistic about the stock market.

Now here's a new reason for optimism: The current situation bears a striking resemblance to the 1962 summer stock market rebound. 

Here's the scoop: In early 1962, a head-and-shoulders pattern emerged that looked very similar to the one that appeared to have taken shape in April-June this year. When the neckline of the pattern was violated in April 1962, stocks fell like a ton of bricks into a June low that was ultimately 27% lower than the January 1962 high. 

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MLPs Top the Yield Charts, but Don't Overlook the Risks

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With bank and money market rates bumping along between 1% and 2%, 30-year Treasury yields barely edging above 4%, and many old standby companies having slashed or eliminated their dividends, it's been a rough year or two for income-oriented investors.

As a result, many have turned an eye toward Master Limited Partnerships (MLPs), virtually the only game in town with the potential to give you a double-digit yield on your cash.

MLPs, for those not familiar with them, are tax-advantaged limited partnerships whose units are traded on stock exchanges, just like the regular common shares of corporations. MLPs provide very high yields – typically 5% to 12% – because U.S. law mandates that they pass most of their income on to unit holders. As such, it's not taxed at the partnership level.

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