Archives for August 2012

August 2012 - Page 3 of 20 - Money Morning - Only the News You Can Profit From

Zacks #1 Rank Additions for Thursday - Tale of the Tape

Here are 5 stocks added to the Zacks #1 Rank ("strong buy") List today: Acxiom Corp. (ACXM) Arctic Cat Inc. (ACAT) Ciena Corp. (CIEN) CONN'S, Inc. (CONN) Cornerstone Therapeutics, Inc. (CRTX) View the entire Zacks #1 Rank List.    ARCTIC CAT INC (ACAT): Free Stock Analysis Report ACXIOM CORP (ACXM): Free Stock Analysis Report CIENA CORP (CIEN): […]

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Hollysys Automation Technologies - Value

Hollysys Automation Technologies, Ltd. (HOLI) has gained nearly 12% since its quarterly results on August 14, which included an encouraging revenue outlook for fiscal 2013. With a price-to-book (P/B) ratio of just 1.6 and a Zacks #1 Rank (Strong Buy), this provider of automation and control technologies presents a true value option for investors. Strong […]

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What I Learned About Making Money

Thirty years is a long time to be doing anything; but it's a short time if you love what you do.

And the time spent is even sweeter if you're making a lot of money doing what you love to do.

I'm very lucky. I've been trading for 30 years. I love what I do. And I make money doing it.

The truth is, I didn't know what I wanted to do when I was growing up (some people say I'm still not grown up, I say thanks). I wasn't handed anything. I didn't go to college right out of high school. I didn't know what I wanted to do. I didn't know what to study.

So I worked, I travelled, I adventured. But the operative word there is "worked."

Don't get me wrong, I'm not lazy, I never have been, but I don't like to work.

I came to that realization after being a caddy, then a lifeguard, then a construction laborer, then a not-so-great carpenter, a dishwasher, then a not-so-great cook, tarring roofs in Arizona (in the summer) and working three jobs (at the same time) when I wanted to live in California and moved to San Francisco.

Then it hit me – all this stuff is work, and it feels like work.

I thought hard about what I really wanted to do. Something that was work, but could become a career, and it had to be something that wasn't really like work, at least the kind of work I had been doing.

I didn't have any money, but I had a plan. I figured that the best way to make money (when you don't have any, but know it takes money to make money) is to make money with other people's money.

That's exactly what they do on Wall Street, so that's where I was headed.

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T. Boone Pickens Blasts Romney Energy Plan

By Terry Weiss, Money Morning In a riveting interview on "CBS This Morning" billionaire oil investor T. Boone Pickens slammed presidential candidate Mitt Romney's energy plan, saying it focuses entirely on new oil drilling with no mention of natural gas. "The United States has more natural gas than any other country in the world… but […]

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How to Profit from QE3 When the Fed Pulls the Trigger

In one form or another, the U.S. Federal Reserve soon will introduce a third round of quantitative easing (QE3) or a related major economic stimulus program.

A statement from the most recent Federal Open Market Committee (FOMC) meeting of the Federal Reserve reported that, "Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery."

President of the Boston Federal Reserve, Eric Rosengren, called for an open-ended program to allow for the Federal Reserve to buy bonds like it did during Quantitative Easing 2. He pointed to the high unemployment rate as the main reason more stimulus is necessary.

"That calls for a more substantive action than we've taken to date," he said. "We need a pro-growth monetary policy," adding that the current state of the economy is "not sufficient."

Federal Reserve Chairman Ben Bernanke announced Quantitative Easing 2 at the August 2010 Jackson Hole economic policy summit. It consisted of the central bank buying $700 billion in U.S. Treasury bonds to finance the U.S. budget deficit.

Rosengren now wants the Federal Reserve to have an unlimited authority in that area, held in check only by the reaction of market forces.

Those market forces reacted very strongly to QE2, forcing the U.S. dollar down in value while prices for commodities such as oil, grains, gold and silver soared.

In addition to the commodities price rise, select stocks performed well during QE2 as consumers spent more and emerging markets enjoyed a heavy growth period. These are the companies investors should buy ahead of QE3, which is on its way.

How to Profit from QE3

The most important factor to consider when hunting for stocks to buy ahead of QE3 is a robust dividend framework.

With the Fed keeping interest rates low as it tries to repair the U.S. economy, dividend yield is crucial.

Or, as Money Morning Global Investing Strategist Martin Hutchinson put it, "In Ben Bernanke's rotten world, a few select high-yield investments are practically a necessity these days."

According to investing legend Jack Bogle, founder of the Vanguard Group of mutual funds and creator of the first mutual fund, dividend income has provided more than 40% of the historic total return of a stock.

Besides money in your pocket, dividends represent a commitment of the management to return capital to investors. Dividend income also proves that the company is sound enough to reward its shareholders without hindering the future growth prospects of the business operations.

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Higher Gas Prices a Sure Bet Due to Hurricane Isaac, Fire

Production halts due to Hurricane Isaac and a deadly explosion at a Venezuelan refinery have pushed U.S. gas prices to a near four-month high.

As the hurricane hit land yesterday (Tuesday), oil and gas production in the Gulf of Mexico had virtually shut down. Oil companies now must wait out the storm before they can assess any damages.

Energy firms in the region have suspended 93% of the typical U.S. oil production and 67% of natural gas in the gulf, according to a report released Tuesday by the Bureau of Safety and Environmental Enforcement. Companies have evacuated 503 platforms and 49 rigs in the region.

In addition, gasoline refiners have shut down approximately 6.7% of total U.S. refining capacity, a move that will lead to reductions in gasoline inventories and short-term price increases. Exxon Mobil Corp. (NYSE: XOM),Phillips 66 (NYSE: PSX)and Valero Energy Corp. (NYSE: VLO)all reported yesterday that they have temporarily shuttered Gulf Coast refining operations.

But Hurricane Isaac's disruptive presence isn't the only strain on the U.S. refining network. There's another major catalyst triggering higher gas prices.

Over the weekend, tragedy struck the second-largest refinery in Venezuela.

An explosion and fire on Saturday at the Amuay refinery in Venezuela killed 48 people, wounded hundreds, and destroyed hundreds of nearby homes. It is the deadliest refining accident in more than a decade.

The government-run Petroleos de Venezuela (PDVSA) owns the plant, which can process 645,000 barrels of oil a day but has been forced to suspend operations.

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Stock Market Today: GDP, Home Sales Fail to Lift Market

Here are the major headlines in the stock market today.

  • GDP revised slightly higher in second quarter– Even though U.S. gross domestic product (GDP) was adjusted to 1.7% from 1.5% during the second quarter, the fact remains that it was depressingly low. Since the U.S. officially exited the recession in mid-2009, GDP growth levels have been stagnant and economists do not expect the rest of 2012 to be any different. The U.S. is projected to grow 2.0% in the third quarter and 1.9% in the final three months of the year. The government will issue its third and final estimate of second quarter GDP in several weeks. "It shows slightly better government spending and consumer spending but overall the data suggest the economy stays in slow growth mode and is not likely to change," Peter Cardillo, chief market economist at Rockwell Global Capital in New York told Reuters." This certainly strengthens the hands of the Fed to aid the economy."
  • Gas prices rise 5 cents nationwide- AAA reported that gas prices will be a nickel higher on average when consumers head to the pump Wednesday, sparked by the destruction of Hurricane Isaac. Prices on average are $3.804, the highest level since May. Today's spike is the biggest one-day move since February 2011 when concerns over Libya caused prices to rise. Some states, particularly those in the Midwest who receive most of their oil or gas from the Gulf, saw the largest increases. Ohio had the largest rise with a 13.9 cent increase, followed by a 13.2 cent rise in Indiana and a 12 cent rise in Michigan.

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Prestige Brands - Value

Earnings momentum for Prestige Brands Holdings, Inc. (PBH) has been gaining since this over-the-counter healthcare and household cleaning products company reported strong fiscal first quarter results. The Zacks #2 Rank (Buy) has delivered surprises over the last three quarters despite the tough economic and retail environment. The stock is significantly undervalued, with a forward price-to-earnings […]

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Liquid Robotics is About to Grab a Big Piece of a Gigantic But Little-Known Market

Technology investors should keep an eye on Bill Vass. He's making a big splash in robotics.

You may not have heard of him but he used to run a $1.4 billion unit for Sun Microsystems that dealt with federal contracts. When Oracle Corp. (Nasdaq:ORCL) later acquired Sun, Vass' work there played a major role.

Before that, Vass served as an information technology (IT) honcho at the Pentagon. He had major input into some 6,800 defense IT systems with a budget of more than $35.5 billion.

As one of the nation's most senior high-tech experts, Vass now serves as CEO of a small but well-funded startup.

It's called Liquid Robotics.   

And its self-propelled water bots can travel from California to Hawaii without using a single drop of fuel.

But here's where the big payoff comes in for investors: each bot is packed with sensors that can gather a wide range of critical data about the world's oceans.

Believe it or not, that opens up a gigantic but little-known opportunity.  

According to Vass, that potentially puts Liquid Robotics at the forefront of a $40 billion market.

And from what I can see, Vass is making all the right moves.

One to Keep an Eye On

In fact, Vass recently launched a new unit that will target the Pentagon for sales at a time when the Navy desperately needs cheaper sources of data.

Meanwhile, just a few weeks earlier, Liquid Robotics snared both a contract and an investment from Schlumberger Ltd. (NYSE:SLB), the oil services giant with a market cap of about $100 billion.

As I see it, that means Liquid Robotics is now on a clear path to issuing shares to the public in as little as three years.

Along the way, Vass is making quite a name for himself and his firm.

For investors that's a good thing, since it helps build the brand, keeping potential competitors at bay while adding value to any IPO down the road.

Turns out, Vass is in high demand these days.

While I was on the phone with one of his reps to arrange a chat with Vass, Liquid Robotics was juggling the details of a special about tracking great white sharks that ran on the Discovery Channel.

The TV show featured the firm's Wave Glider, the wave-powered marine robot that looks like a high-tech surfboard. The autonomous device has already set world records by covering some 13,000 nautical miles on the high seas.

His PR rep also was working out the details of an interview with Time magazine. All of this follows recent stories in both The New York Times and Forbes.

So, I'm glad to report that Vass was able to fit me in to his crowded schedule.

After all, Liquid Robotics is one of those startups you need to know about as a key player in what I call the Era of Radical Change.

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Options Trading Strategies: How to Protect Your Gains in Today's "Toppy" Markets

With so little enthusiasm, this summer's "slow-motion" rally may be coming to an end.

In fact, both the S&P 500 and the Dow Industrials lost ground last week, marking their first weekly declines since early July.

What's more, the number of individual stocks making new 52-week highs has also fallen sharply. Only 72 issues on the New York Stock Exchange (NYSE) marked new tops last week, compared to 188 the week before and 215 in the week ending August 3.

That begs the question about how investors can protect their gains–particularly in stocks that have been looking a bit "toppy" of late.

Typically, nervous investors choose one of two approaches:

  • They simply sell their shares, taking the profits they've built up over the past few months. However, that action can often have undesirable tax consequences – plus, it eliminates the opportunity for added profits if the markets keep on rising.
  • They buy protective put options locking in their paper gains- essentially creating an "insurance policy" against future losses. The problem is that can also be quite expensive.

Fortunately, there's another options trading strategy that is a much cheaper way to protect your gains on individual stocks and ETFs (exchange-traded funds). What's more, it also allows you to add a little more profit if share prices continue to rise.

All you do is turn your long stock position into what's known as an "option collar." Here's how it works.

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