Archives for July 2013

July 2013 - Page 14 of 18 - Money Morning - Only the News You Can Profit From

Buy, Sell or Hold: The Remodel of Burger King

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It seems that at just about every intersection in America you will find a quick-service restaurant competing for your fast food dollar.

The competition is vicious as the saturation point for these types of restaurants has nearly reached its peak. There are a whole slew of restaurants in this category ranging from burger joints to vegetarian fare and from budget eateries to pricier higher-quality dining.

Each restaurateur tries to find a niche that he can exploit where he can make diners and shareholders happy. The burger niche is where all competitors were spawned and is still the one that garners the most attention.

The players in this arena are household names not only in America but worldwide – McDonald's (NYSE: MCD), Wendy's (NYSE: WEN) and Burger King (NYSE: BKE).

I'm going to focus on Burger King, its business strategy and how it hopes to differentiate itself from its competitors.

Burger King is the number two burger chain in the world with 13,000 restaurants in 86 countries. This is far behind dominant McDonald's and its 34,000 global locations. However, in the U.S., Burger King's situation is disconcerting as it has lost its second place slot to Wendy's with its 6,500 restaurants.

In 2010, Burger King was acquired by Brazilian private equity firm – 3G Capital. After a hiatus from the public markets, 3G Capital took Burger King public again in June of 2012.

When Burger King was first acquired it had a number of issues on its plate that included declining sales, lack of expansion and the same-old menu items. Basically, the company had no vision or dexterity to solve these problems.
Since 3G Capital's acquisition, Burger King has shown signs of new life and seems to have a plan to 'right the ship'. However, is it enough?

The plan can be summarized in one word – "Remodel". Burger King is remodeling its menu items, its stores and the way it does business.

The Only Tech Stock You'll Ever Need

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When it comes to cutting-edge science that will redefine how we live and work in coming years, there's no shortage of fascinating breakthroughs.

Every week brings dozens of new developments covering everything from bionic eyes to drones the size of humming birds.

Money Morning Exclusive: Meredith Whitney on Muni Bonds and Red State-Blue State Migration

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In 2010 Meredith Whitney made an earth shattering statement during a CBS's "60 Minutes" interview that rocked the municipal bond investment world.

"There is not a doubt in my mind that you will see a spate of municipal-bond defaults,"said Meredith Whitney on Dec 19. She continued, "You could see 50 sizable defaults, and 50 to 100 sizeable defaults, more. This will amount to hundreds of billions of dollars' worth of defaults."

The muni bond market fell far short of Whitney's prediction. But many today feel she was merely ahead of her time.

Recently Detroit has defaulted on its muni bonds leaving investors hoping to get 10% return on their original investment, but there are no guarantees.

As Detroit moves closer to bankruptcy California has 10 cities facing the same fate. The cities of Atwater, Azusa, Compton, Fresno, Hercules, Mammoth Lakes, Monrovia, Oakland, San Jose and Vernon are ready to file for bankruptcy following the now bankrupt Stockton's lead.

Money Morning's Shah Gilani recently talked to Whitney in an exclusive interview about her new book, The Fate Of The States:
The new Geography of American Prosperity

She believes that wealth and opportunity are moving away from the coasts and toward the central corridor. The states of California, Florida and Nevada benefited from the housing boom. However instead of budgeting wisely, local governments spent their windfall profits as fast as they came in on pay increases for public employees, pension increases and pay hikes.

When the housing boom ended, the money stream became just a trickle of new capital. The states were left with pensions they couldn't pay and employees they couldn't afford. They were forced to raise taxes for schools and essential public services.

In contrast a much different scenario was developing in the interior states: N. Dakota, Texas, Indiana. These states avoided the housing crisis. Because foreclosure was not a serious problem they found themselves rich in capital with money to offer tax incentives to companies to relocate and retrain new employees.

These central states are also positioned to reap the massive benefits of from the oil and natural gas boom.

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Recent Trends in U.S. Birth Rate Spell Trouble

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A couple weeks ago I came across an interesting article by Lauren Sandler called "The Economic Reason for Having Just One Child."

Many American women who choose to stop at one child experience pressure – and even harsh, negative judgment – from others. 

Mainly, mothers of only children can be seen as lazy or selfish.

But Ms. Sandler discusses how her decision to raise an only child has had economic and lifestyle benefits to her and her family. 

To her point, the University of Pennsylvania conducted a study on 35,000 mothers and found that those raising an only child were happiest; each additional child effectively reduced a mother's feeling of well-being.

It's frightening to realize that American mothers of fewer children are more contented, when you take a look at international demographics.

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Five Reasons Apple Stock is a Buy

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With Apple Inc. (Nasdaq: AAPL) bears feeling vindicated by the company's fall from grace and shares hovering in the $400 range, it might sound like a stretch to say Apple stock is a buy.

But given all that's happened, AAPL at $400 is a better deal than it may appear.

"It's obviously been hit, but it's bounced. It's held up," said Money Morning Capital Wave Strategist Shah Gilani. Pointing to the recent volatility in the markets, Gilani said, "The markets have been hit really hard and Apple has held up beautifully."

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Gasland Round II: Natural Gas Companies Under Fire Again (This Time, From a Hose)

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Documentaries frequently succeed in visually portraying the inconceivable better than any other form of story-telling. Eye-opening and shocking, many spark controversial conversations even before they air.

Such is the case with Josh Fox's Gasland Part II.

The sequel, a follow up to Fox's 2010 documentary Gasland, a film that focused on U.S. communities impacted by natural gas companies' drilling – specifically fracking – debuts Monday night on HBO.

Critical reviews run the gamut from "lies" to "pure fiction."

The first film moved scores of eager environmentalists and "fracktivists" to speak out against natural gas drilling across the United States.

Natural gas companies/fracking supporters loudly lashed out in rebuttal.

They claimed many scenes in the film, including a Colorado landowner setting his tap water on fire in what has become known as the iconic flaming faucet scene, are misleading.

Critics cite studies claiming that area residents had reported flammable tap water for decades.

Reports claim that two years before the release of Gasland, Colorado regulators investigated that very case and determined hydraulic fracking and oil and gas development has nothing to do with it.

"There are no indications of oil & gas related impacts to water well," read the Colorado Oil and Gas Conversation Commission report.

Fox failed to inform viewers of that fact saying he didn't deem it relevant. But it is relevant when it questions the validity of the film's signature scene, and the entire film's credibility.

Following Gasland's release, COGCC stated yet again that the landowner's water well "contained biogenic gas that was not related to oil and gas activity."

The Next Famous "Flaming Faucet"

As for Gasland Part II's shocker, a man in Parker County, Texas is filmed lighting the end of a garden hose on fire. The implication is that gas drilling is to blame.

The image mimics the legendary short from the first one, but isn't apt to have the same impact if this court ruling gets out…

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Stock Market Today: Can Earnings Drive Market Higher in July?

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The bulls came out of the gate at full-speed at the opening of the stock market today.

Less than a half-hour into trading, the Dow Jones Industrial Average jumped 121.99, or 0.81%, to 15,241.40 The Standard & Poor's 500 Index climbed 12.19, or 0.75%, to 1,644.08. The Nasdaq added 14.01, or 0.41, at 3,493.60.

Optimistic investors appear to be betting the second quarter's earnings will come in ahead of scaled-down forecasts.

Pre-announcements have certainly been extremely negative. According to Thomson Reuters, the ratio of negative to positive comments is 6.5 to 1, more than two-and-a-half times the normal pace and the most negative reading since 2001.

Overall, S&P 500 earnings are projected to have grown 1.6% in Q2 from a year ago, while quarterly revenue is expected to increase 2.9%.

But those estimates could be on the light side.

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Egypt Ousts Morsi: Another Sign of Emerging Market Woes

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As widespread unrest spreads across Egypt after the ousting of President Morsi, investors need to be wary of a growing trend affecting broader emerging markets.

Much of the unrest around the world is caused by one thing: Uprisings against governments and their inabilities to provide basic services to citizens with rising income levels.

The Best Reasons to Own Gold NOW

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Whether you own gold or have been sitting on the sidelines, you must be wondering whether now is the time to buy more or to finally get in the game.

The answer is one of refreshing clarity in these uncertain times.

1. Gold prices are now at or below production costs.

With gold falling to its current levels, we are very near gold production costs ($1,000 – $1,100 an ounce) for many mining companies around the world.

You can now buy gold at or near the price it would cost a mining company to get it out of the ground. Buy now and you buy right.

And don't be afraid of further price dips. Here's the likely scenario: Any further falls in prices will cause miners to cease production and/or stop opening new mines.

Supply will have a harder time keeping up with demand. Prices will rise and you will sell right. Buy low, sell high and protect your portfolio from rapid fluctuation in the market value for your securities.

Your overall nest egg will be healthier by including gold, because you can wait out the market uncertainty in your stock and bond holdings.

How to Invest in the Best Commodity of 2013

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It's been hog heaven for commodity traders who have pigged out on pork – the best commodity of 2013.

Indeed, the $12 billion hog-futures market has gained 19% year-to-date, making it the biggest gainer among commodities in the Dow Jones Commodity Index, which fell 9.9% in the period.

Robust consumer demand, tight supplies and favorable prices compared to beef – which hit record retail prices this spring – were behind pork's healthy gains.

From January to April, pork sale volumes rose 4.3% from a year ago at 18,000 retail outlets tracked by market research firm Nielsen Co. In comparison, beef volumes dipped 1.9% and chicken volumes inched up a mere 0.2%.

Pork: Best Commodity of 2013's First Half

Pork trading volumes have also notably risen.

For the first time ever in the hog contract's 50-year history, the number of bets on lean-hog futures held by traders and investors were more than those for live cattle.

Last Thursday, hog futures finished at $1.01, just shy of their nearly two-year high of $1.20 a pound hit on June 14.

With a cache of commodities lagging, from gold – which has lost its luster to coffee and could use some perking up – money managers are poking around the hog market in a hunt for yield.

"Everybody's happy and making money and having fun," Dennis Smith, a Chicago-based broker for Archer Financial Services told The Wall Street Journal. "The U.S. consumer doesn't want beef anymore."

In the U.S., pork has long been regarded as a lesser quality alternative to beef. However, that's not the case in the rest of the world where pork enjoys equal footing with beef.

Hog futures traders were as happy as a pig in mud last month when Smithfield Foods Inc. (NYSE: SFD), the world largest pork processor and hog producer, agreed to be taken over by China's Shuanghui International Holdings Ltd. If approved, the $4.7 billion takeover would be the biggest Chinese takeover of a U.S company.

It's not just increased demand pushing prices higher…

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