Archives for July 2012

July 2012 - Page 8 of 17 - Money Morning - Only the News You Can Profit From

These Natural Gas Stocks Will Bounce Back As Demand Rises

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Now is the perfect time to invest in natural gas stocks.

To many investors, that may seem counterintuitive. After all, natural gas has been the red-headed stepchild of energy for years.

But prices for this plentiful alternative fuel are just beginning to turn higher after a four-year slide that saw values slashed by more than 80%.

That price decline – from a high of $10.38 per million British thermal units (BTUs) in July 2008 to just $1.83 in April of this year – was primarily the result of a decade-long increase in U.S. gas production, which climbed by 21.6% from 2002 to 2011.

That trend finally has begun to reverse, as the rate of inventory build-up has fallen steadily for almost three months. What's more, the size of the current natural gas surplus relative to year-ago levels has fallen by 23% since late March.

Three big reasons explain this shift:

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U.S. Stocks: Applied Materials (Nasdaq: AMAT) To Cash in On Mobile Growth

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Rising demand for chips in 2013 should give a much-needed boost to this U.S. stock.

I'm talking about the flagging stock of semiconductor equipment manufacturer Applied Materials (Nasdaq: AMAT).

Investors have been down on AMAT lately.

Applied Materials lowered its guidance for the year just last week, acknowledging concerns over a decline in technology spending. Such worries had already dinged the stock, which had fallen from a 2012 high of $13.21 on Feb. 16 to about $11 July 09.

Since the company announced its profits for the year would come in at 15 to 20 cents per share lower than previous projections, AMAT has slumped further to around $10.39.

But given the company's financial strength, solid position in its market and signs of a turnaround in chip demand for 2013, this pullback could represent a buying opportunity.

"[Applied Materials] is the biggest player in the industry, and it's got a deep and well-established economic moat," writes Jonas Elmerraji of The Street. "That means that once the semiconductor waiting game is over, AMAT should be able to deliver impressive numbers once again."

Santa Clara, CA-based Applied Materials makes most of its money from selling semiconductor chip-making equipment to foundries like Intel Corp. (Nasdaq: INTC) and Taiwan Semiconductor Manufacturing Co. (NYSE ADR: TSM).

Those companies sell chips to the companies that make the computer, tablets, smartphones and other electronic gear, such as Apple Inc. (Nasdaq: AAPL), Hewlett-Packard Co. (NYSE: HPQ) and Samsung Electronics Co. (PINK: SSNLF).

Applied Materials also sells equipment for the manufacturing of solar panels and LCDs, though both of those divisions are significantly smaller than the semiconductor division. Still, the troubles of the solar industry over the past year also have stung AMAT.

But as often happens, it's when things look most glum that investors need to pay closer attention.

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Why Wells Fargo Stock is a Buffett Favorite

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Investing in bank stocks has not been for the fainthearted over the past several years.

Many financial institutions are still dealing with the lingering effects of the 2008 financial crisis that left their reputations soiled and have kept scores of market participants at arm's length.

Now, day after day, these banks are still saddled with troubles as they struggle with Eurozone exposure, uncertain global markets, mounting regulatory measures , and the newest scandal — the Libor manipulation probe.

But there is one big bank that appears to be a bright spot in this otherwise dreary sector: Wells Fargo (NYSE: WFC).

"I like Wells Fargo better than anything by far. We have been buying Wells Fargo month after month for a lot of years. Among the big banks, I think it is the best," financial wizard and Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) CEO Warren Buffett told Bloomberg TV in a recent interview.

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These U.S. Stocks on the Move After Better-than-Expected Earnings

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U.S. stocks are trying to hold onto gains today (Wednesday) after another round of earnings reports and testimony by U.S. Federal Reserve Chairman Ben Bernanke.

Bernanke spoke before the House Financial Services Committee Wednesday and did not diverge from his non-committal message a day earlier on whether or not the Fed would provide more stimulus.

Economic reports today include housing starts for June, which rose 6.9% to a seasonally adjusted annual rate of 760,000 units, the highest level since October 2008. Thanks to record low interest rates, applications for mortgages rose last week as many homeowners try to refinance.

But, it was not all good news from the Commerce Department as new permits for building homes dropped 3.7% in June to a 755,000 unit pace.

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Libor Manipulation Scandal: Who Will Be Next?

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Barclays Plc (NYSE ADR: BCS) paid out over $450 million in fines for its role in the Libor manipulation scandal, but who will be the next guilty party?

One thing's for sure: Regulators are on the hunt.

The New York Federal Reserve last week confirmed that U.S. Treasury Secretary Timothy Geithner sent a memo to British regulators in 2008 over concerns of banks manipulating Libor.

Geithner maintained that he and the Fed sent a long list of recommendations to the Bank of England and the British Bankers' Association, which oversees the Libor-setting process.

In light of the scandal, U.S. Federal Reserve chairman Ben Bernanke was questioned about the Fed's inaction regarding Libor manipulation at his testimony before Congress on Tuesday.

Bernanke also made clear that the Fed was not aware that Barclays was manipulating the rates for its own profit. Instead the Fed believed the bank was simply manipulating rates to maintain the appearance that everything was fine with the company (which surely wouldn't affect a bank's profit…).

Bernanke insisted the Fed followed up on the disclosures and that in cases like this there is not much more U.S. regulators can do than make suggestions.

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Fiscal Cliff: Bernanke Urges Congress to Take Action

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U.S. Federal Reserve Chairman Ben Bernanke on Tuesday once again reiterated Congress' need to prevent the economy from succumbing to the "fiscal cliff" that as of now will hit taxpayers and the country in 2013.

The fiscal cliff refers to the numerous tax increases and steep spending cuts slated to go into effect Jan. 1, and will throw the already struggling U.S. economy back into a recession.

In his semi-annual monetary report to the U.S. Senate, the chief voiced his concerns. What was missing though was what Congress should actually do to hammer out a budget deal that would prevent a fiscal cliff.

"I don't have a specific recommendation, other than to think not just about the individual policies, but of the collective impact. Congress is in charge here," Bernanke said.

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Six Dividend Stocks to Hold Forever

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Investor. Now there's a word you don't hear much these days. "Buy and hold," they tell us, has gone the way of the dinosaur.

Today, it's all about the fast money. In the market, out of the market… this stock, that stock…

Of course, that's perfectly fine for traders. The good ones earn small fortunes that way. But for folks who don't have that kind of experience, being nimble is simply an invitation to be whipsawed by the markets.

You may be one of them.

For instance, are you fed up with stock recommendations that only seem to last a couple of weeks?

Or do you constantly find yourself buying on a day when the market is hot, because you feel enthusiastic, only to end up selling on a bad day, because the same stock suddenly looked less attractive?

If so, there's a solution to all this day-to-day madness. Despite the rumors of its demise, there are still stocks you can buy and hold forever.

Of course, seasoned income investors have known this for years. That's why the truly rich don't spend their days watching the financial news and trading stocks. They're too smart for that.

They know that investing in steady-income producing dividend stocks is just as rewarding over the long haul.

How to Pick the Long-Term Winners

However, picking successful dividend-paying stocks is not as simple as buying only the stocks with the highest yield. In fact, the stocks with the highest yields are often the ones that trip up investors the most.

When it comes to buying stocks you can truly hold forever, what's important is the company's track record.

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Why Gas Prices are Heading Higher

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With "Big Ben" testifying over the next two days on Capitol Hill, the indices will be bouncing around.

I always find it curious that the same Street urchins who criticize government for interfering in the "free market" are nonetheless the same ones pouting in the corner when the Fed doesn't propose a new bailout to improve their portfolio values.

When my children would pull a stunt like that, they would be sent to bed early… not given a seven-figure salary and benefits.

In any case, that's not the only pouting going on…

A few weeks ago, pundits were claiming U.S. gas prices could be moving down to as low as $3 a gallon nationwide.

Well, these same guys have been quiet lately.

That's because the price has been moving, all right, but in the opposite direction.

The RBOB near-month futures price was up again yesterday (Monday) at market's open. This is the contract traded on the NYMEX for blended gasoline. The price has increased 5.6% in the past week and 11.6% for the month. As of Monday's open, the price had recovered 13% from the recent low, just three weeks ago.

Gasoline is now tracking ahead of the rise in crude oil futures prices.

The reasons are rather straightforward.

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How the Fiscal Cliff will Deal a Blow to U.S. Defense Industry

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The fiscal cliff is taking down more than U.S. taxpayers – it will tear through the U.S. defense industry.

At the end of this year, current tax policies are set to expire and new ones will go into effect at the start of 2013. What Americans can expect if the policies are not extended is a painful combo of tax increases and spending cuts that will thrust the struggling U.S. economy back into a recession.

If U.S. lawmakers fail to act, scores of economists agree what we'll get is a $600 billion drag on the already sluggish economy. The tax implications have been widely discussed, but there has been little chatter about the impact on the defense sector, which stands to sorely suffer since it is subjected to half of the proposed spending cuts.

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U.S. Stocks: Discount Retailers Bank Triple-Digit Gains in Troubled Economy

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The changing shopping habits of a pressured middle class continue to boost the fortunes of one group of U.S. stocks in particular – discount retailers.

Almost all discount retailers have profited from the Great Recession, but those on the lowest rungs, such the dollar stores, have gained the most.

The recent same-store sales retail report for June confirmed this trend as the U.S. economy continues to falter.

Same-store sales for several mid-tier retailers got hit hard, while most discount retailers outperformed. Notably, most high-end retailers, such as Nordstrom Inc. (NYSE: JWN) and Saks Inc. (NYSE: SKS) also continued to do well.

"The high-end consumer has fared particularly well throughout this recovery,"Ken Perkins, president of Swampscott, MA-based Retail Metrics, told Bloomberg News. "On the low end, a lot of middle-income consumers have traded down."

As a result, two discount retailers fared better in June than analysts expected.

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