UU Stocks For 2014: July 2014

Wednesday, July 30, 2014

Leith Wheeler Canadian Equity Q1 2014 Review

The first quarter provided very attractive returns for investors, as balanced funds performed well. The Canadian stock market led the way with a 6% return as the Materials sector rebounded from a weak 2013. The S&P500, in Canadian dollars, almost matched the S&P/TSX Composite with a return of 5.8% and the EAFE index, in Canadian dollars, was not far behind returning 4.6%. Bond yields retraced some of their 2013 increases in January, giving bond investors close to 3% returns for the quarter.

Over the past 12 months, bond markets have primarily been driven by expectations for the anticipated path towards interest rate normalization. On March 19, new Federal Reserve Bank chair Janet Yellen provided further clarity as to how that path could evolve. Her comments indicated that the current bond purchase program should end sometime this Fall. This was somewhat earlier than previous expectations that the program would end closer to December. In addition, during the press conference she explained that a reasonable expectation for the gap between the end of bond buying and the beginning of interest rate hikes should be approximately six months.

So where do we go from here? Assuming the Federal Reserve begins to hike interest rates in mid- 2015, we would expect this tightening cycle to be somewhat slower and end at a somewhat lower level than previous tightening cycles. The U.S. economy continues to struggle from the residual impact of debt deleveraging and labour market conditions that point to the challenges from having people unemployed for a long time and part time workers becoming more prevalent. With inflation remaining low, we expect a normal level of short term rates should be 3% and that this normalization process could take as long as three years.

In terms of bond markets, the most likely scenario will be a gradual increase in rates, but with longer term interest rates increasing much less than shorter term interest rates. Despite a gradual improvement in the economy, we do not expect to be in the position where borrowers can withstand a significant increase to the real cost of funds. In addition, the net borrowing of the U.S. government will have declined to the point that we expect the reduced bond buying by the Fed will be more than offset by purchases from households and foreigners.

In an environment of interest rate normalization, we expect stock markets to perform reasonably well. That being said, an environment of increasing interest rates will most likely put pressure on price earnings multiples for some companies, especially those that have been valued as "fixed income surrogates". Our main strength when managing equities for our clients is stock-picking, rather than forecasting the broad markets, and we continue to evaluate each company on its own merits. In some markets, such as the United States, we have found it more challenging to find as many bargain companies, but overall we continue to find value and believe it will become more of a stock picker's market.

Many of the investments in our U.S. Equity Fund are best-in-class companies with long established records of industry leading performance. In our view, the portfolio is well positioned for the inevitable economic and stock market vacillations to come and we view the portfolio risk as modest. Notably, in the last couple of weeks several high profile equities, such as Facebook (FB), Tesla (TSLA), LinkedIn (LNKD) and Amazon (AMZN) sold off sharply. We have no idea as to whether or not this will continue, but it is important to recognize that we do not own such names, either due to unestablished business performance or lofty valuations.

Our Canadian Equity Fund is similarly well positioned, with companies trading at valuations that we believe understate their true prospects. For example, Aimia (TSX:AIM), the brand loyalty business that runs Aeroplan, is a company whose value is not fully appreciated by the market today. The program has been reset and enhanced, two key credit card partners are in place, and risks have been reduced due to a more solid "runway" going forward with Air Canada.

We believe a balanced approach will continue to be rewarding for long-term investors.

Canadian Equity Fund

The TSX Composite Index began 2014 positively, rising 6.1% during the first quarter. Global equity market performances were mixed, with improving economic data out of the U.S. and Europe offset by weaker than expected growth in emerging markets and uncertainties surrounding the political state of affairs in Russia/Ukraine. Despite these market concerns, markets continue to move in a positive direction.

Our Canadian Equity Fund delivered a solid performance in the first quarter, gaining 6.0% after fees and expenses. While the performance was broadly based, with 25% of the companies in the portfolio gaining more than 10% in the quarter, stock selection in the Energy sector was particularly strong.

Three stocks that performed especially well were NuVista (TSX:NVA) (+34.2%), Cardinal Energy (TSX:CJ) (+32.7%) and Encana (TSX:ECA) (+23.5%).

In terms of sector exposures, our Fund's underweight position in the Telecommunications sector and overweight position in the Utilities sector helped relative performance in the quarter. Conversely, our fund's overweight position in Industrials and underweight position in the Materials sector hurt performance. Our Canadian Equity Fund's lack of exposure to gold stocks hurt performance in the first quarter, as the TSX Gold & Precious Metals sub-index rose 13.3% on a sharp bounce in gold bullion prices. After an abysmal performance in 2013, a relief rally in gold could have been expected, but we continue to believe that gold stocks are expensive and find better value elsewhere in our investment universe.

In summary, our Canadian Equity Fund had a good start to 2014. Despite its strong performance in 2013, we believe that returns from our fund should outpace fixed income alternatives over a three year investment time horizon.

Continue reading here.

Also check out: Leith Wheeler Canadian Equity Undervalued Stocks Leith Wheeler Canadian Equity Top Growth Companies Leith Wheeler Canadian Equity High Yield stocks, and Stocks that Leith Wheeler Canadian Equity keeps buying

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Tuesday, July 29, 2014

Grieving parents hit with $200,000 in student loans

Steve Mason and his wife Darnelle not only took in their daughter's three children when she passed away, they also inherited her $100,000 student loan bill. NEW YORK (CNNMoney) When his 27-year old daughter Lisa died suddenly of liver failure five years ago, Steve Mason was as devastated as any father would be.

He and his wife Darnelle immediately took in Lisa's three children -- ages 4, 7 and 9 at the time -- even though they knew it would be a huge struggle to support them. Steve earns less than $75,000 per year as a pastor, while Darnelle earns even less as a director at the same church.

Then the student loan bills started coming.

Mason had co-signed on the $100,000 in private student loans that his daughter took out for nursing school, and the lenders wanted their money.

Unable to keep up with the monthly payments on top of all of the other mounting expenses, the $100,000 balance ballooned into $200,000 as a result of late penalties and interest rates of as high as 12%.

"It's just impossible on a pastor's salary raising three kids to pay $2,000 a month on loans," said Mason, who has been searching for a second job.

If these had been federal student loans, Mason could have had the loans discharged or at least received some sort of financial assistance. But since they are private loans, he has little to no recourse.

He called each lender to explain his situation and beg for help, and while they sympathized with him, they told him they weren't required to do anything.

And they're right: private lenders aren't bound by any federal requirements to help borrowers -- or co-signers -- facing financial hardship, even when it's a parent whose child has passed away, says Deanne Loonin, an attorney at the National Consumer Law Center. Any loan forgiveness is up to the discretion of an individual lender.

Navient Corp., which manages several of Mason's loans, said it has reduced the balance and lowered interest rates and payments for Mason in the past, and provides relief to customers on a case-by-case basis.

Lisa Mason, left, with her mother, Darnelle, in 2007.

"We extend our deepest sympathies to the Mason family on the loss of their daughter," the company said in a statement to CNNMoney. "We're reaching out to Mr. Mason to offer further assistance as appropriate."

After being contacted by CNNMoney, Mason said Navient lowered his interest rate t! o 0% on three of four loans and reduced the total amount owed to $27,000 from nearly $35,000.

American Education Services, which handles the bulk of Mason's other loans, said as a loan servicer it's in charge of collecting payments and doesn't make the rules about forgiveness. Mason would therefore need to contact the original lender, National Collegiate Trust, directly. He did this, and says the lender refused to provide him with any relief. NCT could not be reached for comment.

Mason has considered declaring bankruptcy, but student loans are the only type of debt that generally can't be discharged through bankruptcy.

"People with other debt from splurging -- they can discharge that," he said. "Student loans should really be the one type of debt they do discharge because it's done to further an education and career. But somehow getting [my daughter] an education has encumbered me for the rest of my life."

Similar financial nightmares are haunting other grieving families.

Angela Smith, a mother from Chesapeake, Va., filed a petition on Change.org several years ago asking private loan provider First Marblehead Corp. to forgive the $40,000 in student loans that her husband had co-signed for their son Donte, who was shot to death in 2008.

"Shortly after Donte died, that's when the collection calls started. It was like a punch in the gut -- we didn't know what hit us," Smith wrote in the petition. "All of a sudden we not only had to deal with the police and attorneys investigating his murder, but we also had to deal with collectors constantly calling and reminding us of our son's death in the worst way."

The petition received more than 150,000 signatures from sympathizers but no action from the lenders. First Marblehead didn't respond to a request for comment, and Smith says the loan was recently sold to another company.

At least four other petitions from families in this situation have been started on Change.org. Th! ere's bee! n one success story so far, where the brother of a deceased borrower petitioned a bank to stop going after his grieving father for payments, and the loan was forgiven.

Legislation aiming to help people in these situations, including recent bills that would allow student loan debt to be discharged in bankruptcy, have been introduced over the years but have yet to pass in Congress.

Three ways to keep student debt down

For now, the only option parents really have is to propose a payment plan with the lender or try to prove undue financial hardship to the courts in order to get the debts discharged in bankruptcy -- which is rarely approved, said Loonin. And for anyone not already in this terrible situation, be very wary of taking out private loans -- always try to get as much federal aid as possible first.

As he approaches 60, Mason's dreams of retirement have been shattered. He's done the math, and he will have dependent children living under his roof until he is almost 70 years old. He hasn't taken a vacation with his wife since his daughter died, and doesn't realistically see that happening for many years to come.

"We've pretty much gone through our retirement [funds] already -- we didn't have a lot saved to begin with and now any extra money goes to the kids, as it should, and then whatever we can pay on the loans, we do," said Mason. "At my stage of life, I should have a very different lifestyle than I do."

Sunday, July 27, 2014

Is Apple Really a Threat to Sirius XM?

Ever since Apple (NASDAQ: AAPL ) made the shocking move to acquire Beats Music, the companies that deliver consumer audio programming like Pandora (NYSE: P ) , Spotify, and Sirius XM (NASDAQ: SIRI ) have had good reason to be on edge. Apple is a powerful company with a lot of customers and a lot of money to spend. Depending on its ambitions, it could wreak havoc in music and audio programming for years to come.

But is the tech giant and its newly acquired music company really that big of a threat to Sirius XM? Or has the satellite radio provider built itself a wide enough moat to withstand Apple's forays into Internet audio programming?

The answer to this question may come down to two things:

How deeply Apple establishes itself in the auto market. How badly Apple wants to get into the business of generating its own original content.

The auto market is crucial, for the simple reason that so many of our listening hours happen at the wheel, commuting to and from work, traveling, or just taking a Sunday drive.

Outside of terrestrial radio, Sirius owns the U.S. auto market. It had nearly 26 million paying subscribers as of the end of last quarter, and it has an aggressive plan in place to continue expanding that. It is pursuing deals with auto makers that get its technology into new cars and getting buyers signed up. It is upping its efforts to connect with buyers of used cars already equipped with Sirius radio technology, a market it expects to eclipse the new car market in the coming years. It is also looking at growing its subscriber base by offering special deals to households that already have one radio installed in a car, using discounts to add the partners or children of current subscribers at a relatively low cost of acquisition.

All those efforts should continue helping Sirius to expand its subscriber base by at least the current 5% annual rate into the near future.

The tech giants eye cars
Both Apple and Google are looking to establish themselves in cars -- Google with Android Auto and Apple with CarPlay. Apple so far has commitments from 25 auto makers, including major players in the U.S. such as Ford, Toyota, Honda, Dodge, Chevrolet, Mazda, and Nissan.

But so far, CarPlay's features are far from revolutionary. It essentially stretches out some of your iPhone's features like iTunes, talk, text and mapping, into your dashboard and automotive sound system. The immediate threat to Sirius isn't apparent, since CarPlay isn't allowing car owners to do anything more than they could with their iPhone already -- in fact, they can do less from the dashboard since iTunes is available, but streaming services like Pandora are not.

In the short term, that doesn't hurt Sirius, and it may even help it since those 64% of Sirius subscribers who are also Pandora users can't use CarPlay to use the popular music-streaming service.

The long-term picture will depend on what direction Apple and Google go with their car systems. Both are now trying to grow their own streaming services, so they will likely try to use their car players to that end.

Which brings us to original content
The biggest advantage Sirius has over competitors is its original content. CarPlay and MLB GameDay will allow baseball fans to listen to games in their cars. But it won't give them Howard Stern. CarPlay and iTunes will give them access to blues music, but it won't give them B.B. King in studio every weekend.

Sirius remains on the hunt for original programing, and as we've seen with Stern -- and a lesser extent with acts like Chris "Mad Dog" Russo and "Opie and Anthony" -- it isn't afraid to spend money to widen that moat.

That said, Apple happens to have a lot of cash. There was $140 billion in net cash on its balance sheet at the end of the last-reported quarter.

If it wanted to develop a richer audio-programming service, full of quality content not available anywhere else, it could. But that just doesn't seem worth it for the company, which earns its money selling iPhones, iPads, and Macs.

The Foolish bottom line
The audio-programming landscape is changing, and Sirius investors need to stay up to date on what key players like Pandora and now Apple and Google are doing. But the immediate threats that these companies pose are not worrisome. The long-term is still far too unclear for investors to make any hasty decisions.

Warren Buffett's worst auto-nightmare (Hint: It's not Tesla)
A major technological shift is happening in the automotive industry. Most people are skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to ride this megatrend. Click here to access our exclusive report on this stock.

Wednesday, July 23, 2014

S&P 500 Gains, Dow Slips: Blame Boeing?

It was a good day for stocks, unless you were the Dow Jones Industrial Average, then it wasn’t.

Reuters

Shares of the S&P 500 rose 0.2% to 1,987.01, while the small-company Russell 2000 gained 0.2% to 1,158.14 and the tech-heavy Nasdaq Composite advanced 10.4% to 4,473.70. The price-weighted Dow Jones Industrial Average fell 0.2% to 17,086.63, dragged down by Boeing, (BA) which fell 2.3% to $126.71 after releasing earnings that weren’t as good as they looked.

RBC’s Robert Sluymer and Anna Drotman think the market could be setting up for a push higher:

After a 3-4 week correction short-term indicators are again in oversold territory supporting a rebound…however…Short-term momentum indicators, tracking 2-4+ market swings have moved from overbought levels at the end of June back to suitably oversold levels to support another equity rally attempt. The Russell 2000 better illustrates the short-term 'oversold' condition of many higher beta names. However, we continue to highlight that small-cap relative performance versus the S&P 500 has been negatively diverging since last fall and is at risk of breaking below the April-May lows.

Janney’s Mark Luschini thinks “risk assets should continue to reward.” He explains why:

U.S. companies have high levels of cash, healthy balance sheets, and are recording record profits. U.S. equity markets are not cheap, but valuations have further room to expand. Priced off 12-month forward consensus earnings estimates, the S&P 500 trades at a 16x price-to-earnings ratio. The equity risk premium remains above historical trend, suggesting it could still compress toward 3%. Earnings will need to do the heavy lifting this year. Some valuation expansion may result from decreased macro uncertainty.

In other words, keep on keepin’ on.

Tuesday, July 22, 2014

Australiaâ€™s Dramatic Rise in Productivity

Sometimes it's easy to miss significant news when central bankers drone on about the economy. To be sure, the media carefully dissects official statements on monetary policy, parsing each sentence for subtle changes from previous announcements.

But lengthier remarks, such as speeches and testimonies, include numerous observations about the economy, not all of which lend themselves to glib headlines.

Indeed, as Sydney Morning Herald contributing editor Michael Pascoe recently observed, most of the news regarding Reserve Bank of Australia (RBA) Governor Glenn Stevens' speech before the Econometric Society Australasian Meeting and the Australian Conference of Economists in early July focused on his remarks about jawboning. In fact, we covered that aspect ourselves.

But as Pascoe notes, Stevens' speech also contained a kernel of good news about the economy that went largely unnoticed amid all the commentaries about the exchange rate: Australia's labor productivity is rising.

In his speech, Stevens said, " … the environment seems likely to be one in which a number of sectors are making serious efforts to contain costs and lift productivity."

Furthermore, he continued, "Perhaps more fundamentally, a better trend for productivity, if we can sustain it–and especially if it can be further improved–would be a reliable basis for optimism about the longer-run prospects for the economy and our living standards."

Overall labor productivity has grown at a pace of 2.0 percent per annum over the past three calendar years, a huge jump in contrast to the 0.9 percent annual rate that prevailed over the preceding six-year period ending in 2010.

Prior to that earlier period, Australia's labor productivity averaged around 2.1 percent annual growth over the long term, so the recent improvement is essentially a reversion to historic levels.

And the increase in produc! tivity has occurred despite stagnating wage growth, as the rate of inflation outpaces increases in real wages.

Of course, the resource sector is driving these gains, but even excluding mining and utilities, productivity is growing at a 1.6 percent annualized pace, compared with 1.0 percent over the prior period.

As Pascoe wrote in a previous report, the excesses that were tolerated during the commodities boom must now give way to cost-cutting and greater efficiency. So with mining investment on the wane, the resource sector is keen to wring greater productivity from existing assets.

At the same time, a substantial portion of the increase in productivity could be resulting from the natural evolution of the business cycle. Projects that were initiated during the boom are moving from their construction phase to their production phase.

Coupled with the high productivity that naturally results from the capital-intensive mining sector, overall productivity is likely to continue at a high pace at least for the next few years.

That's underscored by a recent presentation from Harvard economist Dale Jorgenson, as recounted by Morgans economist Michael Knox.

In analyzing the sources of economic growth among the G7, Jorgenson observed that Canada, a country similarly rich in resources, underwent a fall in productivity during its own resource sector boom.

Why did this occur? According to Jorgenson, it all comes down to how the national accounts are calculated. Although new construction increases the long-term productive capacity of the mining sector, it will create the appearance of a lag in productivity until these projects come on line.

As such, Jorgenson believes that now that Australia's mining sector is entering its production phase, the country will see a dramatic recovery in total productivity.

And that optimistic outlook is certainly something to keep in mind as we process the typically dour takes from Jorgenson's fellow practitioners of the so-call! ed dismal! science.

Friday, July 18, 2014

5 Stock Under $10 Making Big Moves

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>5 Stocks Set to Soar on Bullish Earnings

Stocks that are making large moves such as these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

>>5 Rocket Stocks to Buy for Summer Gains

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside.

Wave Systems

Wave Systems (WAVX) develops, produces and markets products for hardware-based digital security in the U.S. and internationally. This stock closed up 5.4% to $1.56 in Tuesday's trading session.

Tuesday's Range: $1.46-$1.62

52-Week Range: $0.69-$2.32

Tuesday's Volume: 2.45 million

Three-Month Average Volume: 1.54 million

From a technical perspective, WAVX ripped sharply higher here right above some near-term support at around $1.40 with strong upside volume flows. This stock recently broke out to the upside of its recent range, which saw the stock trend between $1.35 on the downside and right around $1.50 on the upside. Market players should now look for a continuation move to the upside in the short-term if WAVX manages to take out Tuesday's intraday high of $1.62 to some more near-term overhead resistance at $1.63 with high volume.

Traders should now look for long-biased trades in WAVX as long as it's trending above Tuesday's intraday low of $1.46 or above more support at $1.35 and then once it sustains a move or close above $1.62 to $1.63 with volume that hits near or above 1.54 million shares. If that move gets started soon, then WAVX will set up to re-test or possibly take out its next major overhead resistance level at $1.90. Any high-volume move above $1.90 will then give WAVX a chance to re-fill some of its previous gap-down-day zone from June that started at $2.30.

Whiting USA Trust I

Whiting USA Trust I (WHX), a REIT, closed up 1.3% to $2.22 in Tuesday's trading session.

Tuesday's Range: $2.19-$2.22

52-Week Range: $1.72-$6.33

Tuesday's Volume: 135,000

Three-Month Average Volume: 292,545

From a technical perspective, WHX trended modestly higher here right above its 50-day moving average of $2.12 with lighter-than-average volume. This stock has been trending sideways and consolidating for the last month, with shares moving between $1.95 on the downside and $2.25 on the upside. Shares of WHX are now starting to move within range of triggering a near-term breakout trade above the upper-end of its recent sideways trading chart pattern. That trade will hit if WHX manages to take out some key near-term overhead resistance levels at $2.23 to $2.25 with high volume.

Traders should now look for long-biased trades in WHX as long as it's trending above some key near-term support levels at $2.11 or at $1.95 and then once it sustains a move or close above those breakout levels with volume that hits near or above 292,545 shares. If that breakout starts soon, then WHX will set up to re-test or possibly take out its next major overhead resistance levels at $2.60 to $2.80, or even its 200-day moving average of $3.31.

Bona Film Group

Bona Film Group (BONA), through its subsidiaries, operates as a film distributor in the People's Republic of China and internationally. This stock closed up 4.3% to $6.91 in Tuesday's trading session.

Tuesday's Range: $6.60-$7.08

52-Week Range: $4.13-$8.92

Tuesday's Volume: 553,000

Three-Month Average Volume: 132,674

From a technical perspective, BONA ripped sharply higher here and broke out above some near-term overhead resistance at $6.80 with above-average volume. Market players should now look for a continuation move to the upside in the short-term if BONA manages to clear Tuesday's intraday high of $7.08 with high volume.

Traders should now look for long-biased trades in BONA as long as it's trending above some key near-term support levels at $6.50 or at $6.25 and then once it sustains a move or close above $7.08 with volume that hits near or above 132,674 shares. If that move begins soon, then BONA will set up to re-test or possibly take out its next major overhead resistance levels at $7.50 to $8, or even its 52-week high at $8.92.

Plug Power

Plug Power (PLUG), an alternative energy technology provider, is engaged in the design, development, manufacture and commercialization of fuel cell systems for the industrial off-road markets worldwide. This stock closed up 16% to $4.85 in Tuesday's trading session.

Tuesday's Range: $4.58-$4.99

52-Week Range: $0.34-$11.72

Thursday's Volume: 43.40 million

Three-Month Average Volume: 18.45 million

From a technical perspective, PLUG gapped sharply higher here back above its 50-day moving average of $4.32 with monster upside volume. This move briefly pushed shares of PLUG into breakout territory, since the stock flirted with some near-term overhead resistance at $4.87. Shares of PLUG tagged an intraday high of $4.99, before closing just below that level at $4.85. Market players should now look for a continuation move to the upside in the short-term if PLUG manages to clear Tuesday's intraday high of $4.99 to some more key overhead resistance at $5.25 with high volume.

Traders should now look for long-biased trades in PLUG as long as it's trending above Tuesday's intraday high of $4.99 and then once it sustains a move or close above $4.99 to $5.25 with volume that hits near or above 18.45 million shares. If that move gets underway soon, then PLUG will set up to re-test or possibly take out its next major overhead resistance levels at $6 to $6.50.

FuelCell Energy

FuelCell Energy (FCEL), together with its subsidiaries, designs, manufactures, sells, installs, operates and services stationary fuel cell power plants for distributed baseload power generation. This stock closed up 3.2% to $2.22 in Tuesday's trading session.

Tuesday's Range: $2.20-$2.28

52-Week Range: $1.12-$4.74

Tuesday's Volume: 7.62 million

Three-Month Average Volume: 6.22 million

From a technical perspective, FCEL gapped up notably higher here with strong upside volume flows. This move briefly pushed shares of FCEL back above its 50-day moving average of $2.23, since the stock tagged an intraday high of $2.28. Shares of FCEL closed just below that level at $2.22 and just above its daily low of $2.20. Market players should now look for a continuation move to the upside in the short-term if FCEL manages to take out some key near-term overhead resistance at $2.30 with high volume.

Traders should now look for long-biased trades in FCEL as long as it's trending above Tuesday's low of $2.20 or above some more near-term support at $2.10 and then once it sustains a move or close above $2.30 with volume that hits near or above 7.62 million shares. If that move gets started soon, then FCEL will set up to re-test or possibly take out its next major overhead resistance levels at $2.47 to $2.63, or even $2.81 to $2.94.

To see more stocks that are making notable moves higher, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

Sunday, July 13, 2014

4 Stocks Rising on Big Volume

DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.

>>5 Rocket Stocks to Buy for Earnings Season

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."

Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.

>>5 Stocks Under $10 Setting Up to Soar Higher

With that in mind, let's take a look at several stocks rising on unusual volume recently.

Kandi Technologies

Kandi Technologies (KNDI), through its subsidiaries, designs, develops, manufactures and commercializes various vehicles. This stock closed up 6.2% at $14.87 in Monday's trading session.

Monday's Volume: 3.67 million

Three-Month Average Volume: 1.76 million

Volume % Change: 148%

From a technical perspective, KNDI gapped up sharply higher here with strong upside volume flows. This stock has been uptrending over the last month and change, with shares moving higher from its low of $10.85 to its intraday high of $15.58. During that uptrend, shares of KNDI have been making mostly higher lows and higher highs, which is bullish technical price action. Market players should now look for a continuation move to the upside in the near-term if KNDI manages to clear Monday's intraday high of $15.58 to more resistance at $16 with high volume.

Traders should now look for long-biased trades in KNDI as long as it's trending above Monday's intraday low of $14.65 or above more support at $13.80 and then once it sustains a move or close above $15.58 to $16 with volume that's near or above 1.76 million shares. If that move gets underway soon, then KNDI will set up to re-test or possibly take out its next major overhead resistance levels at $17.69 to $19

Gentex

Gentex (GNTX) is engaged in designing, developing, manufacturing and marketing automatic-dimming rearview mirrors and electronics for the automotive industry; variable dimmable aircraft windows for the aviation industry; and commercial smoke alarms and signaling devices for the fire protection industry worldwide. This stock closed up 0.9% at $30.27 in Monday's trading session.

Monday's Volume: 1.26 million

Three-Month Average Volume: 790,229

Volume % Change: 85%

From a technical perspective, GNTX trended modestly higher here right off its 200-day moving average of $29.63 with above-average volume. This spike higher on Monday is starting to push shares of GNTX within range of triggering a major breakout trade. That trade will hit if GNTX manages to take out Monday's intraday high of $30.31 to $31.13 and then once it clears some key resistance levels at $31.59 to $31.86 with high volume.

Traders should now look for long-biased trades in GNTX as long as it's trending above its 200-day at $29.63 or above its 50-day at $28.98 and then once it sustains a move or close above those breakout levels with volume that's near or above 790,229 shares. If that breakout begins soon, then GNTX will set up to re-test or possibly take out its 52-week high at $34.41.

Daqo New Energy

Daqo New Energy (DQ) manufactures and sells polysilicon and wafers in China. This stock closed up 2.3% at $31.04 in Monday's trading session.

Monday's Volume: 151,000

Three-Month Average Volume: 112,978

Volume % Change: 50%

From a technical perspective, DQ trended higher here back above its 50-day moving average of $30.88 with above-average volume. This stock recently formed a double bottom chart pattern $29.39 to $29.23. Following that bottom, shares of DQ have started to spike a bit higher and move within range of triggering a near-term breakout trade. That trade will hit if DQ manages to take out some near-term overhead resistance levels at $32.59 to $33.39 with high volume.

Traders should now look for long-biased trades in DQ as long as it's trending above those double bottom support zones and then once it sustains a move or close above those breakout levels with volume that's near or above 112,978 shares. If that breakout materializes soon, then DQ will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $36.40 to $37.50, or even $39.50.

Winnebago Industries

Winnebago Industries (WGO) manufactures and sells recreation vehicles primarily for use in leisure travel and outdoor recreation activities. This stock closed up 2.2% at $26.62 in Monday's trading session.

Monday's Volume: 374,517

Three-Month Average Volume: 263,373

Volume % Change: 50%

From a technical perspective, WGO jumped notably higher here back above its 200-day moving average of $26.55 with above-average volume. This stock recently broke out above some near-term overhead resistance levels at $24.60 to $25.29 with heavy upside volume. Market players should now look for a continuation move higher in the short-term if WGO manages to take out Monday's intraday high of $26.69 with high volume.

Traders should now look for long-biased trades in WGO as long as it's trending above Monday's intraday low of $25.69 or above $25 and then once it sustains a move or close above Monday's intraday high of $26.69 with volume that's near or above 263,373 shares. If that move gets started soon, then WGO will set up to re-test or possibly take out its next major overhead resistance levels at $28.43 to $28.90, or even its 52-week high at $32.41.

To see more stocks rising on unusual volume, check out the Stocks Rising on Unusual Volume portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

Saturday, July 12, 2014

Microsoft CEO Satya Nadella: Ready to Think Outside the "Devices and Services" Box

Just before stepping out of Microsoft 's (NASDAQ: MSFT ) CEO office, Steve Ballmer set the company to focus on a devices and services strategy. It's a carbon copy of the strategy that made Apple (NASDAQ: AAPL ) the most valuable company in the world, and Redmond has been making steady headway toward this goal. The traditional old software sales core is giving way to Microsoft-branded tablets and set-top boxes, with Nokia's mobile expertise thrown in for good measure.

But Satya Nadella, who took the reins from Ballmer in February, is ready to move beyond the simple "devices and services" thinking.

Microsoft CEO Satya Nadella is looking to make some big changes to his company. Source: Microsoft.

In an open letter to Microsoft employees today, Nadella started to narrow down his long-term focus. "While the devices and services description was helpful in starting our transformation, we now need to hone in on our unique strategy," Nadella wrote.

Working in this "cloud-first and mobile-first world," it's not good enough to simply sell a few products into the cloud and mobile markets. Instead, Nadella wants to rebuild the entire company so that every effort feeds into these two core opportunities.

Microsoft is launching this approach from a strong platform. "We help people get stuff done," Nadella wrote. Redmond's tools are already involved in everything from writing term papers and composing poetry to managing entire cities or fighting HIV infections. Put it all together: "This is an incredible foundation from which to grow."

Nadella promises to always put the customer first, and to equip them with whatever it takes to make a difference in the world. Lofty goals for sure, especially coming from a late starter and fringe player in the mobile space. When it comes to smartphones and tablets, Microsoft's market share is disappearingly tiny next to Apple and Android.

To get this done, Nadella's "customer-obsessed" culture will be paired with a leaner management structure and faster, more data-driven decision processes. It seems appropriate to build big data analysis into the very structure of a modernized business model.

"We will streamline the engineering process and reduce the amount of time and energy it takes to get things done," Nadella wrote. "You can expect to have fewer processes but more focused and measurable outcomes. You will see fewer people get involved in decisions and more emphasis on accountability." And in the end, "every team across Microsoft must find ways to simplify and move faster, more efficiently."

He didn't explicitly say that the buck stops at the top, but that's the vibe I'm getting out of this letter. If this cultural transformation is successful, Microsoft should end up with shorter and straighter decision routes from top to bottom. Nadella talked about large-scale retraining efforts, and a newfound appetite for experimentation.

At some point, the flatter organization he's investing in should also result in heads rolling among middle management. Again, no direct promises or threats to this effect, but headcount reductions must follow from this strategy. And Nadella did spend some ink on accountability, which should help him make the most of the coming cuts.

We'll know more concrete details on Nadella's emerging vision over the next few weeks. He plans to expand on this letter in two weeks, when Microsoft reports fourth-quarter results. Expect a steady stream of reorganization announcements for the rest of July, and then buckle in for the final details at the Microsoft Global Exchange conference near the end of the month.

I like Satya Nadella's open attitude toward trying new ideas, and I hope he can execute on the promises he made in this letter. Again, we'll know much more during the next few weeks. I, for one, can't wait to see Microsoft repainting its bigger picture.

Leaked: Apple's next smart device (warning, it may shock you)
The technology sector never stands still, and Microsoft will soon find itself chasing another runaway Apple invention. Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Friday, July 11, 2014

Wells Fargo Earnings Don’t Warrant Selloff in WFC Stock

Popular Posts: 5 Stocks to Buy for July5 Stocks to Sell for JulyThe Top 10 S&P 500 Dividend Stocks for March Recent Posts: Wells Fargo Earnings Don’t Warrant Selloff in WFC Stock Portugal: An Unusual Suspect for a Market Correction Left for Dead, Emerging Markets Are Having a Great 2014 (EEM) View All Posts Wells Fargo Earnings Don’t Warrant Selloff in WFC Stock

Wells Fargo (WFC) earnings were just fine on the top and bottom lines, but the market quibbled with some of what came in between, sending WFC stock lower in midday Friday trading.

WellsFargoLogo Wells Fargo Earnings Don't Warrant Selloff in WFC Stock Although Wells Fargo earnings per share rose to match Wall Street’s estimate — and revenue beat expectations by declining less than forecast — a key measure of Wells Fargo profitability continued to slip, and that was enough to ding WFC stock.

That doesn’t really affect the trajectory of WFC, however, which should continue to grind higher — at least as long as the market does.

Shares were up a market-beating 14% for the year-to-date heading into the Wells Fargo earnings release, but the immediate pullback on the earnings report doesn’t change the thesis.

WFC stock is a must-own if you’re bullish on the economy and the market. After all, Wells Fargo represents the nation’s largest mortgage lender and biggest bank by market cap.

It’s hard to see either the economy or the market going anywhere without WFC participating.

Wells Fargo Earnings – Nitpicking Over NIM

For the most recent quarter, Wells Fargo earnings rose 3.8% to $5.73 billion, or $1.01 a share, from $5.52 billion, or 98 cents, a year earlier. As noted above, earnings matched Street estimates. Revenue, meanwhile, slipped 1.5% to $21.07 billion, beating the Street view for a drop to $20.84 billion.

There were no big surprises in the broad strokes of the Wells Fargo earnings release. Revenue has been sluggish because higher interest rates pinched off the mortgage refinancing boom some time ago. Home lending originations totaled $47 billion in the second quarter, down from $112 billion booked a year ago.

Additionally, Wells Fargo earnings aren’t getting the same goosing from the release of loan-loss reserves as they once did because credit quality has improved to the point where it’s pretty much topped out. No surprise there, either.

That left the Street to worry about the nitty-gritty of basic banking, where rising costs and lower margins remain a Wells Fargo bugaboo.

For years now, historically low interest rates have made it tough for Wells Fargo earnings to show an improvement in net interest margin, or NIM. (That’s the bread-and-butter difference between what a bank pays for deposits and charges for loans.)

It’s tough to grow net interest margin when benchmark rates are plumbing the depths.

However, rates are no longer stuck at ultra-depressed levels, yet Wells Fargo earnings still showed contraction in this key measure of profitability. Indeed, Wells Fargo net interest margin fell to 3.15% vs. 3.4% year-over-year, and from 3.2% in the prior quarter.

If there was a blemish on the Wells Fargo earnings report, this was it.

Bottom Line

In the grand scheme of WFC stock, recalcitrant net interest margins amount to a pimple — not psoriasis. That makes the pullback in WFC stock more of a buying opportunity than a signal that’s something wrong.

As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.

Wednesday, July 9, 2014

Investors Gear Up For Wednesday's FOMC Minutes

The Federal Reserve’s FOMC minutes are scheduled to be released at 2:00 p,m. EDT on Wednesday.

Like any statement from the Federal Reserve, this release will have the potential to move markets.

Most investors are expecting no substantial change in the minutes, but everyone will be watching for any indication on a time frame for higher rates.

JJ Kinahan, chief strategist at TD Ameritrade, shared his expectations for the release.

“I am not really expecting much at all," he said, "but the reason they are so interesting is because you never know what people are going to say in those meetings. That’s their opportunity to object and you get a real insight into whose thinking what. Overall you expect everyone to play according to the script, but you never know.”

Related: 3 Reasons The 'Recovery' Will Be Challenged Through 2015

Kinahan also shared his thoughts on last week’s jobs numbers, a key metric the Federal Reserve looks at to make policy decision.

According to the Bureau of Labor Statistics, 288,000 jobs were added to the economy in June. “The absolute high end of the expectation was 230,000 and 288,000 jobs were created," he noted, "which is amazing.”

For the most part, the right jobs were created, such as in the services and healthcare fields, according to Kinahan. "Bars and restaurants were in the top four," he said, "but they were number three. You would expect that at this time of the year, because they are cyclical jobs. This goes back to the idea that we are creating careers and not jobs, and thats definitely what we want to see.”

In addition, he noted, “hourly wages were up very slightly, which is a positive, and the revisions to the last two months were also very positive. So, everything about the job report today, I think can be taken as a positive for the trend that we’ve seen.”

Posted-In: Federal Reserve FOMC FOMC MeetingEconomics Federal Reserve Markets Trading Ideas Interview Best of Benzinga

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Tuesday, July 8, 2014

5 Worst Sectors to Avoid This Week

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This week, the reit, water utilities, independent power and renewable electricity producers, metals and mining and energy services sectors rank lowest on the Portfolio Grader database.

The reit sector is trailing behind others this week, with 79% of its stocks (125 out of 159) rated a “sell”. With an overall grade of F, Hatteras Financial (), DDR Corp. () and Health Care REIT, Inc. () are weighing down the sector. Hatteras Financial is the worst stock in its sector, with the company’s share price falling 28% in the last 12 months.

With 67% of its stocks (4 out of 6) rated “sell,” the water utilities sector is struggling this week. Among water utilities stocks, Companhia de Saneamento Basico do Estado de Sao Paulo SABESP Sponsored ADR (), SJW Corp. () and Aqua America, Inc. () are lingering near the bottom with grades of D. Over the last 12 months, Companhia de Saneamento Basico do Estado de Sao Paulo SABESP Sponsored ADR is the worst performer in this sector, with a 79.8% decline.

The independent power and renewable electricity producers sector looks weak, with 67% of its stocks (6 out of 9) rated a “sell”. TransAlta Corporation (), Empresa Nacional de Electricidad S.A. Sponsored ADR () and Calpine Corporation () are dragging down the sector overall, each earning a low grade of F. TransAlta Corporation is performing worst overall in the sector, with a 37.9% decline over the last 12 months.

The metals and mining sector is dragging, with 66% of its stocks (61 out of 92) rated a “sell”. Out of the metals and mining stocks, Newmont Mining Corporation (), Gold Fields Limited Sponsored ADR () and Schnitzer Steel Industries, Inc. Class A () are near the bottom with F’s. Overall, Gold Fields Limited Sponsored ADR is the poorest performer in this sector. Its share price has dropped 75.9% in the last 12 months.

The energy services sector is lagging this week with 60% of its stocks (38 out of 63) rated a “sell”. McDermott International, Inc. (), ION Geophysical Corporation () and Tidewater () are pushing the sector down with F grades. The worst performer in this sector is ION Geophysical Corporation, which saw its price sink 26% in the last 12 months.

Louis Navellier’s proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results — with A being “strong buy,” and F being “strong sell.” Explore the tool here.

Monday, July 7, 2014

3 Big Stocks on Traders' Radars

BALTIMORE (Stockpickr) -- Put down the 10-K filings and the stock screeners. It's time to take a break from the traditional methods of generating investment ideas. Instead, let the crowd do it for you.

>>5 Rocket Stocks to Buy for Earnings Season

From hedge funds to individual investors, scores of market participants are turning to social media to figure out which stocks are worth watching. It's a concept that's known as "crowdsourcing," and it uses the masses to identify emerging trends in the market.

Crowdsourcing has long been a popular tool for the advertising industry, but it also makes a lot of sense as an investment tool. After all, the market is completely driven by the supply and demand, so it can be valuable to see what names are trending among the crowd.

While some fund managers are already trying to leverage social media resources such as Twitter to find algorithmic trading opportunities, for most investors, crowdsourcing works best as a starting point for investors who want a starting point in their analysis. Today, we'll leverage the power of the crowd to take a look at some of the most active stocks on the market today.

>>5 Stock Setting Up to Soar Higher

These "most active" names are the most heavily traded names on the market -- and often, uber-active names have some sort of a technical or fundamental catalyst driving investors' attention on shares. And when there's a big catalyst, there's often a trading opportunity.

Without further ado, here's a look at today's stocks.

GT Advanced Technologies

Nearest Resistance: $20 
Nearest Support: $13 
Catalyst: Analyst Downgrades

A barrage of negative analyst actions is the catalyst for today's 12.8% drop in shares of GT Advanced Technologies (GTAT). This $2.3 billion technology stock is down on big volume following a note from Canaccord that indicates earnings upside is unlikely unless Apple (AAPL) uses GTAT's sapphire glass in all iPhone models and the yet-unannounced iWatch. The firm downgraded GTAT to hold. At the same time, UBS downgraded GTAT to neutral on their own guidance concerns.

While the pair of downgrades is to blame for the big drop in shares, the "double top" pattern that's emerging in GTAT is the bigger concern for investors right now. This stock has moved far and fast over the last year, and a breakdown below $13 is the signal that GTAT is suddenly exposed to significantly more downside. Sell the breakdown below $13.

King Digital Entertainment

Nearest Resistance: N/A 
Nearest Support: $20.50 
Catalyst: Analyst Upgrade

Analyst actions are having the opposite effect at King Digital Entertainment (KING). Shares of the Candy Crush maker are up 3.5% on big volume this afternoon, following an upgrade from Piper Jaffray. Piper's note focuses on the fact that King's hugely successful Candy Crush title may not be the firm's sole success; it's seeing momentum in other app titles now as well. Piper Jaffray raised their price target to $28 from $19, moving KING to overweight.

Technically speaking, the price action looks solid as KING pushes its way to a new high. New highs are significant from an investor psychology standpoint because they mean that everyone who has bought shares in the last year is sitting on gains. As a result, the "back to even" mentality is less of a concern than it would be for a name with a higher proportion of shareholders sitting on losses.

If you decide to buy here, keep a tight stop in place.

J.C. Penney

Nearest Resistance: $10 
Nearest Support: $8 
Catalyst: Technical Setup

Department store retailer J.C. Penney (JCP) is down 3% this afternoon, dragged lower for technical reasons as this big-name store chain attempts to test critical resistance at $10 for the third time since last fall.

Long-term, JCP is forming an inverse head and shoulders pattern, a classic bullish technical setup that triggers on a move through that $10 level. If buyers can muster the strength to drag shares above $10 this summer, then traders have a buy signal in this long-suffering stock.

To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.  

-- Written by Jonas Elmerraji in Baltimore.

Sunday, July 6, 2014

I'm Not Sold on Whole Life - and You Shouldn't Be Either

paper family in a businessman's ... Oktava/Shutterstock Many financial advisers love whole life insurance, and I'd love to offer a conservative investment to my clients that pays a safe return, but the numbers just don't jibe. I have a $2.5 million, 30-year term policy on myself, and I pay $1,790 per year. I priced a $250,000 whole life policy for a 30-year-old male, and the cost was $3,440 per year. For a tenth of the coverage, the annual premium almost doubles.

I can already hear whole life insurance zealots foaming at the mouth.

I can already hear whole life insurance zealots foaming at the mouth, waiting to shout things like, "whole life insurance offers great returns," and "it's much safer than the stock market." And I've heard it all before, but every scenario I have ever encountered where an individual has been paying on a whole life policy for an extended number of years, what they were told they would have accumulated by that point has never been even close to what they actually have. When I wrote about that elsewhere, the article generated this comment: "Whole life policies don't really start kicking in until retirement. Your clients that have those policies have usually just gotten past the insurance cost and won't see their cash value compound rapidly until they're 35 years in ... unless the policy was designed to do so." Did you catch that? This whole life enthusiast wants me to wait until I start seeing my cash value accrue. No thanks. Still wanting to believe that whole life insurance can make sense, I polled several other certified financial planners. Here's what they had to say. The Difference Between Term and Whole Life At its core, life insurance is about replacing a person's income in case of their untimely death. If you're only interested in income replacement, then term life insurance will generally suffice: You are insured for a certain period, generally 10 to 30 years. Whole life insurance (also known as permanent or universal life insurance) doesn't expire like term insurance does, unless you let your policy lapse. Whole life insurance is a great deal more expensive than term insurance. For that reason alone, individuals who earn less than $200,000 or so per year, according to certified financial planner Joshua Thompson, should stick to low-cost term life. Benefits of Whole Life Insurance

Friday, July 4, 2014

British Gas to pay out £1 million over misselling

LONDON (MarketWatch) -- British Gas will pay 1 million pounds ($1.7 million) in compensation for misselling energy deals to customers, a U.K. regulator said Friday. Staffers at British Gas "made exaggerated savings claims to prospective customers," between February 2011 and March 2013, said regulator Ofgem. The sales took place at grocer Sainsbury's and at a shopping mall in London. "In some cases, customers were told that they would save money by switching, but in fact they paid more with Sainsbury's Energy or British Gas than they would have paid if they had remained with their current supplier," said Ofgem. The package to be paid by British Gas will bring £566,000 in direct compensation to affected customers, and £434,000 for "vulnerable customers" through the British Gas Energy Trust. Shares of British Gas parent Centrica PLC (UK:CNA) shed 0.1% in London trade Friday.

The Best Is Yet to Come for FleetCor (FLT)

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Editor's note: This column is part of our Best Stocks for 2014 contest. Louis Navellier's pick for the contest is FleetCor Technologies (FLT).

BestStocks2014size185 The Best Is Yet to Come for FleetCor (FLT) I'm a big believer in diversification, so when folks ask me for my top stock pick, I usually proceed with caution. But when given the opportunity to pit my top pick for 2014 against nine other experts last December, I jumped at the chance.

That's because I had already spotted a stock that surpassed my high standards for growth projections.

I chose FleetCor Technologies (FLT). If you didn't catch my recommendation earlier, FleetCor is best known as a fuel cards provider, but also deals with other specialized payment products such as food cards and corporate lodging discount cards. FleetCor serves more than half a million commercial accounts and millions of cardholders in 43 countries across North America, Europe, Africa and Asia.

That's a lot of plastic.

FleetCor's fuel cards are used by commercial and government fleets of all sizes, so expanding into the fleet management business was a natural fit. To this end, the company has been scooping up companies left and right. Last year, FleetCor acquired Epyx, which helps U.K.-based fleets manage vehicle maintenance and repair, and NexTraq, which offers real-time vehicle tracking, route optimization and fuel monitoring. And just last month, FleetCor bought a minority stake in U.K.'s Masternaut Group Holdings Ltd., a telematics company with more than 300,000 vehicles in its system.

This year so far, FLT has outperformed the S&P 500's 6.5% gain by 2-to-1. If you would have asked me back in December, I would have expected a bigger beat. But when you consider the headwinds that FleetCor faced during that time, a 2-to-1 beat is remarkable.

First, FleetCor's Russian business, particularly with its major oil partners, was disrupted by the Ukraine violence and an unfavorable ruble. At home, the company contended with a bitterly cold winter that disrupted commercial, business and personal travel. Meanwhile, the company's effective tax rate increased, weighing on margins.

Despite all this, FLT stock has climbed 13% year-to-date, also trouncing the business services industry's average of a 2%-plus loss.

I'm sticking with FleetCor because the second half of the year is shaping up to be spectacular. In the U.S., the company's fleet solutions business is going strong. With the recent acquisition of NexTraq, FleetCor has a firm handhold in the fast-growing trucking industry. Last year, trucks moved nearly 70% of all U.S. freight and this year has been an even busier one for trucking companies.

Looking outside U.S. borders, FleetCor's expansion into three promising markets — Brazil, Germany and Canada — is going smoothly. Just a few weeks ago, it appointed three industry veterans to head operations in each of these international markets and the recent investment in Masternaut will increase FleetCor's exposure across the pond.

This all translates to robust top- and bottom-line growth for the foreseeable future.

This quarter, FleetCor is expected to post 25% annual EPS growth and 23.8% sales growth. That's nearly double the 13.7% industry average for forecast earnings growth. For FY 2014, we're looking at 24.4% estimated earnings growth and 22.8% sales growth.

FLT stock is currently trading at just more than 22 times forecast earnings, which is right around the industry average. So there is plenty of upside left for this business services company.

For FleetCor, outperformance is the name of the game. With the cold winter weather and Russian disruptions largely behind us, I expect its lead to only widen as we round out 2014.

Louis Navellier is the editor of Blue Chip Growth.

Thursday, July 3, 2014

3 ETDs Great for Fixed-Income Portfolios

Popular Posts: 3 Covered Calls for Forever Hold Stocks (DIS, CVX, T)5 Best Funds for Your Retirement Portfolio3 ETDs Great for Fixed-Income Portfolios Recent Posts: 3 ETDs Great for Fixed-Income Portfolios 3 Covered Calls for Forever Hold Stocks (DIS, CVX, T) Value Stock Guide – How to Invest Like a Pawn Star View All Posts 3 ETDs Great for Fixed-Income Portfolios

A few weeks ago, I told you about exchange-traded debt. These securities are very interesting because they provide the safety of bonds, but the yields of preferred stock and liquidity of equities.

eliminate debt save money e1311959608244 3 ETDs Great for Fixed Income Portfolios Companies issue debt to finance operations, and that debt is usually in the form of bonds. There is a market for bonds, but they can be difficult to trade, they trade without much liquidity and often in $10,000 bunches. The advantage of debt is the regular interest payments the company must make to holders, and that debt holders have top position in the event of bankruptcy. They are first in line to receive back principal.

Preferred stock is a stock-bond hybrid that often pay dividends instead of interest, in the 5% to 9% range. It has an advantage in being behind debt for principal recovery but ahead of common stock. It tends to trade in a limited range, but often lacks liquidity as well. Preferred stock dividends also only get cut after common dividends, so that's another advantage.

Exchange-traded debt fits right between bonds and preferred stock in the capital stack. ETD is next in line to bonds, and if it happens to be senior secured ETD, then its actually in first position. Exchange-traded debt pays interest, so it does get taxes as ordinary income, rather than at the 20% qualified dividend rate. However, ETD tends to be much more liquid.

Here are three ETDs that I think are good additions to a fixed-income portfolio:

Entergy Louisiana 6% First Mortgage Bonds

Entergy185 3 ETDs Great for Fixed Income Portfolios Entergy Louisiana 6% First Mortgage Bonds (ELB) are secured by a first mortgage lien on all of the company's property, so its strongly backed by real estate. Entergy is a $14 billion electric public utility in Louisiana.

The common stock has strong free cash flow, pays a 4.1% dividend, and the company carries $6 billion in cash and long-term investments. It's $12 billion in debt is easily serviced by cash flow. The 6% yield is perfect for income investors, especially considering the solidity of its real estate holdings.

Note the current price is $25.31 and the company can redeem the Notes at $25 beginning next March. It doesn't mean they will, just be aware of it. Best of all, S&P rates this debt at “A-” — meaning it has "Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances."

Stanley Black & Decker 5.75% Jr. Subordinated Debentures

StanleyBlackDeckerLogo 3 ETDs Great for Fixed Income Portfolios Then we have Stanley Black & Decker 5.75% Jr. Subordinated Debentures (SWJ), which I love because it is tied to one of America's greatest companies. S&P rates these as “BBB+” — meaning they have more than adequate capacity to meet their obligations, although they are somewhat subject to economic conditions. I'm not terribly worried considering the company has been around this long, through all kinds of economic turmoil. The effective yield is 5.93% as the ETD trades at $24.24, about 3% below par.

When you look at the underlying stock itself, Stanley Black & Decker (SWK), you understand why an ETD offering feels like a safe bet with a high yield. SWK stock has $433 million in cash, and $3.8 billion in debt, costing less than 5% annually. Even after all these years, the venerable brand still grew Q1 revenues almost 7% YOY, in a Q1 where retail generally got hammered. It also boosted its operating margins from 9% to 11%. That kind of increase is outstanding.

Verizon Communications 5.9% Notes

VerizonLogo e1282588394281 3 ETDs Great for Fixed Income Portfolios I also like Verizon Communications 5.9% Notes (VZA). Like its telecom counterparts, Verizon (VZ) generates a lot of free cash flow from its existing business — from $13 billion to $22 billion each year. That's ample enough to pay the common stock yield of 4.3%, as well as the interest on this debt. The yield is 5.71%, reflecting the above-par trading price of $25.85. It is also rated BBB+ by S&P.

But the yield isn’t the only difference between VZ and VZA. The fact that ETDs tend to trade in tighter ranges is why they are better for income investors, who may not want to risk their capital to volatility.

A Verizon ETD sits well with me, beyond all the FCF, because it sits snugly into the Peter Lynch stalwart category. It continues to grow in the 6% to 10% EPS range. It isn't resting on its laurels. It continues to expand its operations modestly. That common stock yield is also ample enough to continue to attract retirement and income investors. That's why the stock isn’t likely to crater.

As of this writing, Lawrence Meyers did not hold a position in any of the aforementioned securities. He is president of Asymmetrical Media Strategies, a crisis PR firm, and PDL Broker, Inc., which brokers financing, strategic investments and distressed asset purchases between private equity firms and businesses. He also has written two books and blogs about public policy, journalistic integrity, popular culture, and world affairs. Contact him at pdlcapital66@gmail.com and follow his tweets at @ichabodscranium.

Wednesday, July 2, 2014

Your commute could get even worse

Transportation chief Anthony Foxx warns that the federal government is going to delay payments for state projects fixing highways and bridges next month. WASHINGTON (CNNMoney) Gridlock on Capitol Hill may yield more gridlock for American commuters who have to navigate congested, pothole-filled roads and highways, rundown rails or bad bridges.

The nation's top transportation chief warned governors in all 50 states this week that the federal government will start delaying payments for projects that are currently underway to fix the nation's roads and bridges.

The federal Highway Trust Fund, which finances transportation projects, is about to run out of money.

If Congress doesn't act by Aug. 1, the Department of Transportation will trim and postpone payments to states. That could lead to interruptions in highway construction late this summer, according to the Committee for a Responsible Federal Budget.

"People will see it in traffic and they'll see it in the condition of our roads," said Transportation Secretary Anthony Foxx at a breakfast with media on Tuesday. "I think they'll see it in our lack of authority to fix our bridges and to put new capacity in place that this country needs."

The highway fund gets its money mostly from the federal gas tax, but it has been spending more than it takes in for the past decade. So Congress has periodically transferred money from general U.S. tax revenue into the fund -- a total of $54 billion so far.

Starting Aug. 1, the federal agency will have less than $4 billion in its trust fund and will stop making "same-day" reimbursements to states that are improving highways and bridges, the agency warned.

States will instead get money in two installments in August -- some on Aug. 11, and then again two weeks later when gas tax revenue comes in, according to the letters.

At the end of August or early September, the fund will reach zero. And if there's no bill by Sept. 30, even if the highway fund has gas tax money, it will have no power to spend it, Foxx said.

Foxx couldn't put a specific number on how many projects will be halted, because the decision rests with state governors and local transportation agencies.

New smart car tech already saving lives

There's bipartisan support for improving transportation infr! astructure, since it's good for the economy. Better roads and rails mean less wasted time, safer travels and efficiency for trucks and freight trains delivering vital goods across the country.

And infrastructure improvement projects can mean hundreds of thousands of jobs.

So what's the hold up?

Lawmakers don't agree on how much money is needed or where to find it.

Lots of ideas have been proposed. But as yet, there's no common ground in sight.

Tuesday, July 1, 2014

Envestnet to Acquire UMA Firm Placemark for $66 Million

Envestnet Inc. announced Tuesday that it has agreed to acquire Placemark Holdings Inc. for $66 million in cash, giving the Chicago-based firm a stronger presence in the regional broker-dealer market, balancing Envestnet’s already strong presence in the SMA and UMA space among independent BDs and RIAs.

“Placemark has been very successful in helping firms that have successful SMA programs,” like regional BDs that “didn’t have the capital to build their own UMA solutions, which are now more of a core offering in fee-based programs,” said Envestnet (ENV) President Bill Crager in an interview.

Stressing that unified managed accounts, or UMAs, are “not a product, but an infrastructure,” Crager said Placemark has succeeded in “helping those full-service broker-dealer firms to transition” from traditional SMA offerings to UMAs.

Placemark Chairman and CEO Lee Chertavian will join Envestnet as Group President of Envestnet|Placemark. The “most senior members” of Placemark’s management team—including Chertavian, Ron Pruitt and Richard Dion—“will remain in impactful roles” at Envestnet, Crager said.

The integration of Placemark, including its portfolio overlay and tax ptimization offerings, onto the Envestnet platform will be done slowly and deliberately, said Crager, saying final integration could happen by late 2015 or early 2016. “We won’t rush the integration,” Crager said, since a “slower process” with plenty of time for planning will be “very helpful” to Placemark’s clients. He said by that time it will be “clearly an accretive acquisition.”

Envestnet has had much experience over the past few years in integrating firms onto its platform, from which it learned that such integration “is an extended process; we want to make sure the client has plenty of time to transition.”

As for the SMA and UMA strategies, Crager said “we have 1,500 strategies; they have 2,000,” so “there’s massive overlap,” and that even with duplicate strategies removed, “the superset together will be the largest in the industry,” which will make it easier as well for employee brokers to maintain access to their preferred managers should they go the independent advisor route.

Crager said that in acquiring Placemark — the deal is expected to close by early in the fourth quarter — it did so because it expects “down the road [that] firms will look beyond the UMA” offering alone to integrated features like performance reporting, rebalancing and due diligence on a wealth platform like Envestnet’s.

For some BDs, he said, “it will make sense” to adopt “a cloud-based, highly flexible, nuanced” integrated platform like Envestnet’s that delivers the flexibility needed in fee-based programs. Total UMA assets at the combined firm will be about $25 billion; Envestnet alone had $572 billion in assets as of the end of Q1 2014.

Are there more acquisitions in the offing? “We continue to look for opportunities," Crager said. "We evaluate a lot more opportunities than we follow through on.

"This one ticked all the boxes,” he said, referring to Placemark and its culture, people and offerings.

“We’ll be focused on how advisors’ practices are evolving, and what they expect in the next generation. Some of that we’ll build ourselves,” he concluded, while some will be provided by “strategic” moves.

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