Archives for May 2012

May 2012 - Page 8 of 15 - Money Morning - Only the News You Can Profit From

Target (NYSE: TGT) Stock Up on Earnings, But Slowdown Ahead

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Target (NYSE: TGT) stock was up 2% in early morning trading after the company delivered a strong earnings report before the bell today (Wednesday).

Target Corp. reported earnings Wednesday morning, with a net earnings per share of $1.04 compared to analysts' expectations of $1.01 per share. Adjusted earnings per share, a measure the company believes is useful in providing period-to-period comparisons of results of its U.S. operations, was $1.11 in the first quarter of 2012, up 11% from $0.99 in 2011.

Same store sales rose 5.3% in the quarter, the highest growth in six years as consumers took advantage of the warm winter in many regions.

"We're very pleased with our first quarter earnings, which benefited from better-than-expected sales," said Gregg Steinhafel, chairman, president, and chief executive officer of Target.

But a continued Target stock rally is in jeopardy as 2012 bears a feeble retail outlook and cautious investor sentiment.

"We're in a period where there's little conviction to buy," Richard Cripps, chief investment officer at Stifel Financial, told USAToday. "The road ahead is too uncertain because of European concerns and the presidential election later this year."

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Investing in Biotech Stocks: Why the "ASCO Effect" Rally Could Start Tomorrow

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Get ready to profit from the "ASCO Effect."

Each June, the American Society of Clinical Oncology (ASCO) hosts its annual meeting – an event that's attended by 30,000 people and the scene of 4,000 presentations.

And each May, just ahead of this crucial gathering, a select group of oncology stocks takes investors on a pretty wild ride – almost like clockwork.

That's the "ASCO Effect."

The catalyst for this big run-up – in which some stocks double, triple or quadruple in price (or more) – is well-known. A few weeks ahead of the meeting, ASCO posts drug-research abstracts of some of the presenting companies on its Website; investors look at the clinical-trial results contained in the abstracts, and key on the most-promising players – igniting share rallies so torrid that they're remembered for years.

This year's ASCO annual meeting is scheduled for June 1-5 in Chicago.

But, according to the latest reports we've seen, the abstracts are due out at 6 p.m. (EDT) today (Wednesday).

If that deadline is met, you can bet that investors will be scouring those abstracts all night.

If you want an example of the ASCO Effect in action, just look at what happened with OXiGENE Inc. (Nasdaq: OXGN) shares just 12 months ago. As May opened last year, OXiGENE was a relatively unremarkable biotech stock. Indeed, the company was juggling a lot of problems.

OXiGENE faced questions about its management turnover and its cash position. Shareholders were worried about its cancer-drug pipeline. And the stock was trading at less than $2 a share.

In fact, OXiGENE shares had been one of the biotech sector's worst performers in 2010, and the company had to endure the ignominy of a reverse stock split in February 2011.

Then came the ASCO Effect.

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Biotech Stock ETFs: How to Ride the Surge in Biotech Mergers & Acquisitions

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Innovations in biotechnology are evolving at the speed of light.

In fact, astonishing advancements in biotech have transformed the way we practice medicine. Leading-edge biotech products and breakthroughs are literally saving thousands of lives every day.

Needless to say, biotech stocks can be strong medicine for investors, too.

For instance, the Nasdaq Biotechnology Index rose 457% from the end of August 1998 to the end of February 2000. Going back even further to the early 1990s, biotech stocks have soared by 1,347%.

Think about it… for biotech investors every $10,000 invested turned into nearly $140,000.

The good news for investors is that after slumping during the recession, biotech stocks are making a comeback. In the first quarter of 2012 alone, the Nasdaq Biotech Index gained 18.2%

And conditions are setting up for even better gains in the future.

Here's why…

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Five with Fitz: What I See When I Look Over the Horizon

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When you've been working the markets as long as I have, you learn that the biggest dangers are always found in a place just over the horizon.

It's why I spend my time hunting for stories, news items and opinions that in the old days were considered far "below the fold."

Invariably, what I am looking for is the stuff that everybody else has missed.

Because I believe that's where the real information is — especially when it comes to uncovering profitable opportunities others don't yet see or understand.

It's the story behind the story that interests me. To find it, you need to go beyond the headline news.

In that spirit, here's my take on five things that I'm thinking about right now.

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Mobile Wallet Technology: The New Barbarians are at the Gate

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As I discussed in Part One, the sky is the limit when it comes to mobile wallet technology.

The big brand credit card issuers: American Express, MasterCard, Visa, and Discover Card, along with every other card issuer and wannabe credit extension intermediary are all already into the mobile wallet space.

Their offerings vary and competition between them will be as brutal as it always has been. And that's good for consumers.

Creating choices for consumers to drive business will lead to more innovation and more services offered at more competitive prices. At least, that's the way the free market is supposed to work.

But, traditional credit card issuers that are forcing banks to compete to offer credit to card borrowers, aren't the "disintermediators" I talked about in Part One.

They help spread banking relationships across the spectrum, they do not remove banks from the equation. And because banks are all in the present equation, pricing pressures aren't prevalent and fees and costs remain stubbornly high.

But as you'll see, that's about to change.

The Greater Fear for the Banks

What banks fear most in the burgeoning mobile wallet world are New Barbarians breaking down the gates that traditionally walled off banks from meaningful interlopers.

The biggest, baddest New Barbarians at the gate are some of the biggest names in the Internet world, the social media world, and the telecom world.

If you want to make a fortune on the mobile wallet future the giant players and Barbarian disintermediators to watch and invest in include: Google, Yahoo (yes, Yahoo), Microsoft (believe it or not), Facebook (when it goes public), Nokia, Research in Motion (yes, I am advocating buying Nokia and RIMM), Apple, Verizon, and Vodafone.

There will be other giants worth buying, but until the ground shakes from their emergence, these giants have a giant head start in the mobile wallet world of the future, starting now.

Of course, keep in mind that the scope of this series is intentionally broad.

So, it's not the place to give specific reasons to buy specific companies. My purpose is to explain to readers the extraordinary opportunities inherent in the mobile wallet future.

But, if you want to know why these specific companies will be huge winners in mobile transactions and what they are doing to warrant their own exceptional futures, as well as when you should buy them, take heart. Keep reading Money Morning.

As it takes shape I will follow this report with specific recommendations accompanied by all the reasons and metrics you'll need to make informed investment decisions.

In the meantime, here's why these businesses are primed to rake in profits on the digital wallet phenomenon.

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Target's (NYSE: TGT) Earnings Follow Weak Reports

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Investors looking for clues on the struggling U.S. retail landscape should tune in to Target Corp.'s (NYSE: TGT) earnings when the company reports today before the bell.

April marked the slowest growth in retail sales of the year, growing at a morbidly slow 0.1% compared to 0.7% in March. The major categories that led to the decline were building materials, clothing, and department store sales.

Economists cite the drop off from record warm weather during the previous three months as a catalyst for the sluggish growth.

However, it seems like Washington is taking the easy way out by blaming the weather and possibly an early Easter for the decline.

What seems to be more of an issue here is the fact that the consumer environment remains a very tough arena to sustain growth in right now.

That sets the stage for Target.

When Target reports its earnings this morning it will give investors a better idea of where consumer spending is headed following a slow spring.

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JPMorgan (NYSE: JPM) CEO Jamie Dimon Can Wallow in $23 Million

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JPMorgan (NYSE: JPM) CEO Jamie Dimon continued his apology and damage control roadshow Tuesday when he addressed shareholders at the bank's annual meeting.

Even amidst regrets over the massive $2 billion trading loss, the merciful bunch of investors approved Dimon's $23 million pay package.

The repentant Dimon briefly addressed the group after the meeting began, requesting forgiveness.

"This should never have happened. I can't justify it. Unfortunately these mistakes were self-inflicted," Dimon admitted.

According to preliminary votes, an overwhelming 91.5% of shareholders approved Dimon's $23 million in salary and bonus for his 2011 performance, the same amount the 56-year-old CEO received in 2010.

Good news considering the Justice Department has started a probe into the $2 billion trading loss at JPMorgan, The Wall Street Journal reported. With few details about the investigation, The Journal noted that the inquiry has yet to zero in on what legal infractions may have been committed.

Nell Minow, co-owner and board member of research firm GMI Ratings, told Bloomberg News that the majority of votes regarding compensation and other topics were most likely cast before the loss was announced.

"I don't think that the vote will be indicative of shareholder concerns on this issue. It's unusual to have such shocking and bad news come in after most of the votes have been cast," Minow said.

Dimon, no doubt anxious to exit from the piercing eyes of concerned shareholders, moved the meeting along quickly, with the official assembly lasting just shy of an hour.

But Dimon left the pow-wow only to be greeted by a crowd of protesters, making its presence loud and clear with signs that criticized the $2 billion loss as well as the bank's actions in the housing market.

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Facebook's IPO Price Too High? Not For The Woz

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The Facebook IPO just got big-name support from the tech world.

Apple Inc. (Nasdaq: AAPL) co-founder Steve "The Woz" Wozniak said in an interview with Bloomberg Television that he would invest in Facebook, regardless of the price.

Wozniak, who built the first Apple computer with Steve Jobs and co-founded the company with him in 1976, also commented in the May 12 interview that he thought Facebook founder Mark Zuckerberg combines the talents of the late Jobs and of Wozniak himself.

"I was thankful to have a partnership with Steve Jobs and I see Mark Zuckerberg closer to the combination of us," said Wozniak. "When he speaks he speaks with a lot of idealism for the users and a lot of good ideas for the product overall."

The favorable Facebook fodder came just as Facebook upped its projected IPO price from $28 – $35 per share to $34 – $38 per share. That gives the social networking company a valuation exceeding $100 billion.

Facebook stock (Nasdaq: FB) is slated to start trading Friday.

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Groupon (Nasdaq: GRPN) Stock Soars - But Red Flags Are Flying

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Groupon Inc. (Nasdaq: GRPN) stock soared Monday after the close when the company reported its first quarterly profit ever.

The world's largest daily deal company earned 2 cents per share in the first quarter of 2012, versus a net loss of 41 cents a share in the same quarter a year earlier. Revenue was $559.3 million, an 89.3% year-over-year increase compared with $295.5 million in the first quarter of 2011.

North American sales leapt 74.6% to $238.57 million, while international sales climbed 101.8% to $320.72 million.

The numbers handedly beat Wall Street's expectations. The consensus estimate from Thomson Reuters was for the company to post earnings of a penny per share on revenue of $531 million.

Following the earnings announcement, Groupon stock skyrocketed nearly 18% in extended hours trading to $11.735.

In morning trading Tuesday, Groupon shares rose more than 20% to $14.93.

CEO Andrew Mason gushed in a statement, "We are pleased to report a record quarter that demonstrates our progress in unlocking the opportunity in local commerce for merchants and customers worldwide."

Looking forward, the Chicago-based company projected second-quarter revenue of $550 million to $590 million, rendering a 40% to 50% year-over-year leap. The Street expects revenue to hit $558.7 million.

The announcement and the stock's ascent comes after shares hit an all-time low of $9.63 during last Friday's trading session. That marked a 52% drop from the company's November 2011 initial public offering price of $20.

But not everyone was sold on Groupon's turnaround.

"While Q1 results are a step in the right direction, we want to see more evidence of sustainability in the model," wrote Herman Leung of Susquehanna.

Jordan Rohan of Stifel Nicolaus, among other analysts, also expressed concern over the expiration of the post-IPO lockup on Groupon's shares. The company said on Monday that those lockups expire on June 1, affecting about 620 million shares.

Skeptics abound and one good quarter does not ensure another.

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Special Report: How to Buy Silver

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In late December, silver dipped to a 12-month low near $26 an ounce, and traders who responded to the barrage of "buy" recommendations were quickly rewarded as the metal soared to a high of $37.18 just two months later.

Today, silver has pulled back below $29 an ounce, giving investors another chance to establish a position before the metal makes its next move higher.

After all, the fundamental case for silver prices remains as strong as ever.

The U.S. dollar continues to weaken, inflation remains a concern, silver demand from industry and emerging markets remains strong even as supply shrinks – plus we're facing growing uncertainty over the outcome of the 2012 elections.

It's a perfect recipe for higher silver prices – most likely even higher than last year's peak at $50 per ounce.

But what's the best way to play the next upmove by the "poor man's precious metal"?

For the purist seeking to hold metals as a long-term store of value and a hedge against inflation and global turmoil, the first choice is always the physical silver itself.

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