Archives for August 2012

August 2012 - Page 7 of 20 - Money Morning - Only the News You Can Profit From

Oil Prices are Higher, But It Won't Be Much Help for Alternative Energy

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Normally, when gas and oil prices accelerate on both sides of the Atlantic, alternative energy sources come into focus and become a big part of that "energy independence" discussion.

Well, not this time.

During the run up to mid-$4 gas and $147 a barrel oil in 2008, many assumed these costs would continue to advance. That made alternative sources – especially renewables such as solar, wind, biofuels, and geothermal – more attractive to investors, politicians, and energy enthusiasts.

Alternative sources are more expensive than conventional oil, gas, or coal. They are, however, more environmentally friendly. Paying those higher costs was regarded as a tradeoff for cleaner energy sources and a reduction in emissions.

Today, that view has changed.

U.S. Oil and Gas Squeezes Alternative Energy Prospects

It's part of the reason why I've recently avoided alternative energy companies like First Solar (Nasdaq: FSLR), Canadian Solar (Nasdaq: CSIQ) or SunPower Corporation (Nasdaq: SPWR) in my Energy Advantage portfolio.

The economic downturn has made reliance on more expensive energy sources a difficult proposition to accept. Renewables are hardly a convincing argument anymore, especially during a sluggish economic recovery.

Yes, increasing oil and gas prices should reduce the spread between conventional and renewable, thereby providing stronger arguments for change. And proponents argue that alternatives provide an enhanced advantage given that they can also be domestically produced.

Just don't bet on these arguments holding up this time. Here's why.

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Chico's 2Q Profits Improve - Analyst Blog

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Chico's FAS Inc. (CHS) reported robust second-quarter 2012 earnings per share of 32 cents, surpassing the Zacks Consensus Estimate of 30 cents. Moreover, quarterly earnings surged 28% from the prior-year quarter's earnings of 25 cents per share. Sales Net sales climbed 16.4% to $641.7 million from the prior-year quarter and were almost in line with […]

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What to Do When Every Market Is Ponzi Scheme

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LIBOR, Bernie Madoff, MF Global, Peregrine Financial, zero-percent interest rates, the Social Security and Medicare entitlement funds, many state and municipal pension funds, mark-to-model asset values, quote stuffing and high frequency trading (HFT), and debt-based money?

What do the following have in common?…

The answer is that every single thing in that list is an example of market rigging, fraud, or both.

How are we supposed to make decisions in today's rigged and often fraudulent market environment?

Where should you put your money if you don't know where the risks lie? How does one control risk when control fraud runs rampant?

Unfortunately, there are no perfect answers to these questions.

Instead, the task is to recognize what sort of world we happen to live in today and adjust one's actions to the realities as they happen to be.

The purpose of this report is not to stir up resentment or anger — although those are perfectly valid responses to the abuses we are forced to live with — but to simply acknowledge the landscape as it is so that we can make informed decisions.

In this report I connect the dots on the fraud, noting both what we already know about and what we'd better prudently suspect is happening but not yet revealed. (If you'd like to jump straight to our conclusions about this Ponzi scheme click here.)

Swimming Naked

As Warren Buffet said, "It's only when the tide goes out that you learn who's been swimming naked."

What he meant was that poorly-run companies can appear healthy during boom times but are later exposed as hollow shells when the economic tide retreats. Naturally it's a lot easier to make money when times are booming, but much more difficult when the economic pie is stagnant or shrinking. The dot-com companies of the late 1990s are the poster children for this phenomenon.

My corollary to Buffet's naked swimming quote is this: It's only when the pie stops expanding that you find out who's been running a Ponzi scheme.

The global pie is no longer expanding, and the relentless parade of disquieting economic and financial news can be laid right upon that fact.

Sure, there are the prosecutable examples, such as Bernie Madoff, but state and municipal pensions and the Social Security entitlement program also fit the definition. So does the practice of expanding public debt at a faster pace than GDP, which many nations, provinces, and states have done for many years running.

These are all Ponzi schemes in the sense that they require constant growth to remain 'healthy' (or hidden, more accurately) and are therefore mathematically certain to fail. Now that the economic pie is no longer growing like it used to and most likely will not for decades to come (if ever), all of these schemes are rapidly falling apart.

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Eurozone Debt Crisis: Will The Grexit Finally Become Reality?

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The Eurozone debt crisis has long needed a "Grexit" or some other landmark event to occur to change the direction the beleaguered continent is headed.

When Mario Draghi announced that he would do whatever he can to preserve the euro, it seemed that moment was imminent. Since he uttered those words on July 26, the IBEX 35 in Spain has gained 17%, while Italy's FTSE Milano Italia Borsa is up 13%.

But the rally may quickly fade.

Draghi and the European Central Bank have not taken any drastic measures since then and investors will most likely have to wait until the September 6 meeting to hear what's next.

On Monday ECB policy maker Joerg Asmussen played to the sentiment felt by many German officials that it might be time to let Greece go from the euro.

"Firstly, my clear preference is that Greece should remain in the currency union," Asmussen said in Germany's Frankfurter Rundschau."Secondly, it is in Greece's hands to ensure that. Thirdly, a Greek exit would be manageable."

However, Asmussen warned that a Grexit would be costly, not just to Greece but to the entire continent as well. "It would be associated with a loss of growth and higher unemployment and it would be very expensive – in Greece, Europe as a whole and even in Germany," Asmussen said.

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Stock Market Today: Waiting On Clues From the Fed

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Here's what's making the headlines in the stock market today.

  • The FOMC will release minutes from its July meeting at 2 p.m. EDT- Even though further additional stimulus measures were not announced at the last meeting investors will try to decipher what was said for clues that QE3 could be on the way. Many economists think that the Federal Reserve could announce the measure at the Jackson Hole, WY symposium which takes place next Friday and Saturday Aug 31- Sep 1.

    • Bernanke announced QE2 in Jackson Hole in 2010 but investors may be disappointed this time around. "There's not going to be enough data for him to say anything new," Catherine Mann, a finance professor at Brandeis University and former Fed economist who has attended the meeting twice told CNN. "It's possible he will make some reference to slowing global growth, increasing headwinds from Europe, and the slowing of the economy as the consequence of uncertainty related to fiscal cliff."

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Cisco Systems (Nasdaq: CSCO) is Looking More and More Like a Dividend Stock

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Since the height of the dot.com boom, the transformation of Cisco Systems (Nasdaq: CSCO) has been extraordinary.

These days, the Silicon Valley Internet giant looks more and more like a dividend stock rather than an explosive growth company.

In fact, last Wednesday, the San Jose-based behemoth increased its dividend rate by a whopping 75% (from 8 cents per share to 14 cents) starting with the present quarter. That gives shares of Cisco a new dividend yield of roughly 3% which among the highest of major tech stocks.

For investors seeking a reasonably safe return and a less volatile investment, a great deal of value can be found in Cisco these days since the company now plans to return half of its cash flow to investors by way of dividends and stock buybacks.

And while the company may not post eye-popping revenue growth year-after-year, Cisco does appear poised to post healthy results and robust cash flow for years ahead.

That means Cisco's dividend will be both safe and stable.

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Four of the Best Currencies to Invest in for 2012

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If you had to pick one word to describe the outlook for the world's major currencies heading into 2013, it would have to be "inconclusive."

Since late May, none of the leading currencies has managed to establish a prolonged trend, with choppy action being driven by continued economic instability in Europe, a sluggish recovery in the United States and slowing growth in the Far East.

Even the Japanese yen, which has been one of the strongest currencies the past few years and held fairly steady through most of the summer choppiness, has weakened in recent days in the wake of a slowing Japanese economy and falling export business, much of the latter blamed on the strong yen.

And the indications are the world's major currencies will likely stay that range bound for the remainder of 2012. Investors can expect price movements to be driven by short-term speculative reactions to each new economic report, unexpected developments in the U.S. election campaign and the continuing failure of European bailout proposals.

So, what's a currency-conscious investor to do?…

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Ann Beats, Ups Fiscal Guidance - Analyst Blog

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Driven by strong top-line performance along with improved margins, the upscale segment retailer, Ann Inc.’s (ANN) earnings of 63 cents per share for the second quarter of fiscal 2012 surged over 34% from the prior-year quarter’s earnings of 47 cents. Moreover, quarterly earnings beat the Zacks Consensus Estimate of 51 cents per share. Quarterly Details […]

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Just Another Summer on Wall Street

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Another week slipped by on Wall Street, and it was a quiet one. For summer, that is.

And thank goodness. All the scandals, all the negative news, all the time, always something. I'm getting tired of writing so much.

It's my summer too, you know.

So, when my extraordinary good fortune led me into the company of a spectacular woman this past week, I escaped the Street reality, enjoyed the beach, the Hamptons… and did I mention a spectacular woman?

But just because I was out of touch (from reality) last week doesn't mean the surreal wasn't spilling out all over the Street.

Okay, so it was little stuff, but it's still stuff. And it's still surreal…

Like finding out that Vikram Pandit, CEO of that little banking outfit Citigroup, got paid more last year than the bank paid in taxes.

That's news you ask? No. Granted, we know that all those poor banks that suffered deep losses on account of a lot of sore-loser homebuyers who got the Street mantra wrong (it's "buy high, sell low," right?) won't have big tax bills for a while because they saddled the good-guy banks with huge tax loss carry-forwards.

Besides, Vik (can I call you that?) deserves it.

Can you imagine all the negative press he gets? He deserves more; I say give it to him and the other banksters who have to work so hard to keep their jobs while their firms don't have to work nearly as hard to not pay taxes.

And then I heard that Jon Corzine was thinking about yet another career move.

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Six Ways to Win Big on Apple's (NASDAQ:AAPL) New iPhone 5

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So much for Apple Inc.'s (NASDAQ:AAPL) big earnings miss.

After coming under some brief pressure, Apple has since powered its way to new all-time highs.

Much of that rally stems from one key fact: Apple is set to release the hotly watched iPhone 5 as early as Sept. 21.

Make no mistake about it — this is a key product launch for the firm, its stock and the whole mobile computing food chain.

Based on the number of people who want to buy the new device the moment it comes out, I think the iPhone 5 launch promises to be another huge success.

Clearly, the market agrees or Apple shares wouldn't once again be on such a tear.

For investors, that means it's time to take a serious look at how to ride this trend as the iPhone 5 product launch unfolds.

In fact, I've found six ways investors can play the iPhone 5's release right now. They include:

iPhone Play Number 1: Apple Inc. (NASDAQ: AAPL)

No doubt, many investors wonder if Apple stock can go much higher. Yes, it sports a high sticker price. But take a look at the numbers.

AAPL trades at just 12 times forward earnings, in line with the overall market. It sports a PEG of just .65 and has an operating margin of 35%.

Talk about cash flow. It has $27 billion in cash on hand and an equal amount in free cash coming in. And earnings will likely continue to grow at 20% a year.

Not only that, but the iPad is still ripping the high-tech market to shreds. Shipments grew 44% to 17 million in the second quarter, giving Apple the lead in the fast-growing tablet market.

Now you know why Peter Misek, an analyst at Jefferies & Co., has raised his price target to $900 from $800 a share, for a potential upside of 38%.

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