Top Dividend StocksFor 2014, Top Dividend Stocks To Buy: May 2014

Saturday, May 31, 2014

Lockheed Martin Keen on Acquiring This Space Firm

American aerospace and defense giant Lockheed Martin (LMT) recently announced its plans of acquiring the satellite wing of Astrotech Corp. (ASTC), Astrotech Space Operations. Lockheed expects to close the deal by the third quarter of the current year. After the deal closes, Astrotech Space Operations would become the wholly owned subsidiary of Lockheed Martin and would operate under the company's Space Systems business segment.

The Deal

According to Astrotech, Lockheed Martin has made an acquisition proposal worth $61 million. But the Maryland-based company has not yet mentioned details regarding the pricing of the deal in the press release. Astrotech's headquarter is in Titusville, Florida. Its division Astrotech Space Operations' know-how lies in the area of "final stages of launch preparation", which would help balance Lockheed Martin's expertise in launching solutions with value added services, and satellite designs. Astrotech Space Operations offers launch services to commercial and government satellite, covering close to 90% of the satellite market in the U.S.

The company already has huge presence in this space with vast satellite operations, in comparison to the operations of Astrotech. But there definitely lies a good reason why Lockheed selected to acquire Astrotech, given that the company is extremely particular about businesses that it plans to takeover. In the press release Lockheed Martin mentioned that the acquisition proposal is subject to Astrotech shareholders approval.

Once that is done, the deal would close and Astrotech would become part of the aeronautics giant. Astrotech Space Operations' top bosses are quite positive about the deal, which is evident from the statement the company's Senior VP Don White made saying "joining Lockheed Martin will benefit our customers and our employees." Following the announcement of Lockheed's intension to buy the assets of the company, shares of Astrotech jumped from $2.25 to $4.59 intraday. The proceeds from the transaction would be used by the company to invest in growth areas such as developing the product line of detect mass spectrometer.

Growing Competition

The aerospace sector is increasingly becoming competitive. The acquisition proposal comes at a time when another Dulles-based industry player Orbital Sciences (ORB) plans to combine with the defense segment of Alliant Techsystems' (ATK) and emerge as a stronger new entity named Orbital ATK. The defense space has been vastly dominated by the United Launch Alliance, which is a joint venture between Chicago-based aircraft major Boeing (BA) and Lockheed Martin. However, after the $5 billion merger deal to form Orbital ATK is complete, the industry will grow more competitive.

The Astrotech deal would not add much in terms of revenue or profits to the company's financials, but it definitely portrays Lockheed's focus on developing its space operations.

Departing Thoughts

The acquisition is a tiny move made by Lockheed to strengthen its space operations, but from the point of view of Astrotech, the deal looks like a good one for its shareholders. Even Lockheed's space operations would get good support and streamline further. There have been worries regarding the cut in the U.S. defense budget in the recent past, but there's no stopping Lockheed's shares that rose more than 50% in the last one year. Overall, the deal might be a small one, but it looks like a well thought out move.

About the author:Quick PenA seasonal writer with a Management Degree in Finance and interests in automotive, technology, telecommunication and aerospace sectors.

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Has Technological Progress Made Peak Oil Theory Irrelevant?

In 1956, Marion King Hubbert, a prominent geologist for what is now Royal Dutch Shell (NYSE: RDS-A ) , made a bold prediction. Based on an extensive analysis of reserves and production data, he concluded that U.S. crude oil production would peak at some point in the late 1960s or early 1970s, after which it would begin an inexorable decline.

For decades, his dire prediction looked startlingly accurate. In 1970, U.S. oil production reached 9.6 million barrels a day -- a level that hasn't been equaled since -- and then began to decline. It fell steadily from 1970 to 1976, and then rose modestly until 1985, after which it once again slipped into a steady decline that lasted for more than two decades.

Hubbert's prediction laid the path for what has since become known as peak oil theory, a highly influential theory that argues that global oil production is rapidly approaching, or has already reached, a peak. Some advocates of the theory even warn that once oil runs out, chaos will ensue, leading to "war, starvation, economic recession" and perhaps "even the extinction of homo sapiens."

A line of cars at a gas station in Maryland in June 1979. Photo Credit: Wikimedia Commons.

But then something happened that almost no one had predicted. Starting in 2008, U.S. crude oil production began to grow, slowly at first and then much more rapidly after 2011. Last year, it averaged nearly 7.5 million barrels per day, the highest level since 1989, and recently reached 8.43 million barrels per day, a level not seen since October 1986. So what happened?

How technology changed the game
At the risk of oversimplifying, technology happened. Specifically, the widespread application of advanced drilling techniques, including horizontal drilling and hydraulic fracturing, allowed energy companies to tap vast deposits of oil and natural gas buried in shale formations thousands of feet below the ground.

Not only have technological improvements boosted U.S. crude oil production to levels not seen since the 1980s, but they've also helped boost crude oil reserves to their highest level since the 1970s. As of the beginning of 2013, U.S. proven crude oil reserves stood at 30.5 billion barrels. That represents an increase of 11.5 billion barrels, or 60%, from year-end 2008 levels, even as 8.4 billion barrels were produced over that time period.

Proven reserves are defined as those that can be economically extracted at current prices using existing technology with a reasonable degree of certainty, meaning a probability of at least 90%. The reason proven reserves have increased so sharply is a combination of new discoveries, more thorough appraisals of existing fields, and technological improvements that have improved recovery rates.

Shale resource potential continues to grow
Take North Dakota's Bakken shale, for instance, one of the largest shale oil discoveries in North America. As operators have improved their drilling techniques in the Bakken over the past few years, they've opened up an entirely new play called the Three Forks formation -- a deeper, separate formation that rests directly below the Bakken and extends much further out into parts of Montana and South Dakota.

An oil rig in North Dakota's Bakken shale. Photo credit: Ole Jorgen Bratland / Statoil ASA.

As a result, total reserves for the Bakken/Three Forks are now estimated to be almost 900 billion barrels, up from roughly 570 billion barrels in 2010. While only about 3.5% of this oil is currently thought to be recoverable, technological advances could drive that percentage significantly higher. Already, improvements in drilling efficiency and smarter well completion methods have allowed several Bakken operators to coax much more oil and gas from their wells.

For instance, Continental Resources (NYSE: CLR ) , the leading Bakken driller, has seen tremendous initial success from testing tighter spacing between its wells. The company recently drilled 14 horizontal wells spaced 1,320 feet apart in the in the southern part of its Three Forks acreage that produced 50% more oil and gas in their first three months of production than the company's average Bakken well.

This technique of spacing wells closer together -- known as downspacing -- is also yielding encouraging results for Kodiak Oil & Gas (NYSE: KOG ) , another Bakken driller that's currently evaluating 800-foot spacing and 600- to 650-foot spacing between wellbores as part of its Polar Pilot projects. Initial results from these pilot programs suggest that the company will be able to unlock additional drilling locations through tighter-density drilling without interfering with existing wells.

Is peak oil theory still relevant?
As these examples highlight, continued improvements in drilling technology have allowed energy companies to tap previously unreachable shale formations, resulting in a sharp increase in production and reserves. In the years ahead, operators may turn to enhanced recovery methods such as carbon dioxide injections to boost recovery rates even further.

Still, I don't think these developments render peak oil theory irrelevant. Even though technology has unlocked vast new reserves, fossil fuels are finite resources, after all, and will eventually run out. Technological improvements can merely extend the amount of time before that happens. Eventually, though, there's no denying that we must wean ourselves off fossil fuels.

OPEC is absolutely terrified of this game-changer
As the debate over peak oil theory highlights, America's domestic energy landscape is changing radically. U.S. oil production continues to surge as our country moves closer to energy independence. And there is one company front and center that is poised to make its investors rich. Warren Buffett has already committed to it, and you can too. Click here to learn about this company in the Motley Fool's special report: OPEC's Worst Nightmare.

Why Amira Nature Foods Ltd. Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Amira Nature Foods (NYSE: ANFI ) were looking healthier today, gaining as much as 11% after the company named a new chief financial officer last night.

So what: The maker of natural foods products announced that Bruce Wacha will take over as CFO on June 2. Wacha most recently served as a strategic adviser to Amira at Deutsche Bank, where he was previously a director in its global consumer group. Amira stock has been highly volatile in recent months as some short-sellers have accused it of fraud and nearly half of the company's shares have been sold short.

Now what: Amira has had its share of trouble. India's Commerce Ministry blacklisted it and two other companies for violating a rice export ban in 2008-09, though no criminal wrongdoing was found. A short-seller group, Arihaan Capital, has also attacked the company on several occasions, accusing it of misstatements in its SEC filings and failure to disclose a related third party, among other claims. None of its claims against Amira have been proven, however. Amira's volatility stems from being pushed by short-sellers and momentum traders, and it likely accounts for part of today's wild swing. However, investors also seem to be hoping that Wacha will help ease the fraud concerns. We should hear more from the company about these matters when Amira reports earnings sometime in June.

Amira was once a multi-bagger. Will this stock be your next one?
Give us five minutes and we'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Friday, May 30, 2014

Chuck Royce Q&A - Absolute Returns with Less Volatility

In stark contrast to last year's virtually correction-free bull market, 2014 has already seen two pullbacks large enough to give investors pause. Chuck Royceand Chris Clark discuss the current environment and how we as a firm have attempted to guard against the market's volatile behavior.View the video here.Chris Clark: Chuck, it seems that there's been a tonal shift in the market over the past sort of 12 to 14 months. What do you see as sort of the evolution of investor preferences in this recent time period?Chuck Royce (Trades, Portfolio): It's been rather dramatic, and it all started around May 1 of last year, May 2, when the ten-year bond reached its yield low of 1.5%. It rallied from there, and went up to almost 3%. There's been a dramatic shift in what the market seems to favor. The market is now favoring more traditional, more higher-quality companies. That's been good for us. We have a quality theme that runs throughout many of our products.CDC: 2013 was a year that was somewhat unusual, given the prior years, in that there was no significant correction. In 2014, we've already had two corrections of roughly 8%. What do you think is going on in the market, and is this a healthy pattern or does this bode poorly for the future for stock returns?CMR: It's a very healthy pattern. Last year was a straight-line market, and markets were up sharply. This year is going to be rockier—I think a more normal environment. We made a high in early March. Markets have come down since, and I think that's been a very positive experience, especially for our style of investing.CDC: One of the things that we've been very excited to see is our ability to preserve capital in this most recent down period, which has been pretty sharp. What do you attribute that to?CMR: It goes back to a premise of our firm. The premise is that we're in the risk management business. We want to deliver returns with less volatility.CDC: And why do you think we might have struggled with that prior to this sort of normalization that's tak! ing place in the yield curve and in interest rates?CMR: It's clear now, with hindsight, although I'm not sure it was clear then, that that kind of market, with its intense monetary stimulation, favored inferior companies. The inferior company did very well.CDC: Chuck, some market commentators have sort of expressed the view that we're seeing shades of the year 2000 in the current market experience. Do you think that there are some legitimate comparisons between now and that time period? And what do you think about some of the speculative influences that clearly have manifested themselves in the first quarter?CMR: I think there is some truth. We've had a speculative market here. We've had a speculative market in inferior companies and in highly speculative specialized areas, internet areas, certainly the social network area in particular, and in biotech. Those have had extraordinary runs, and other companies have lagged.CDC: How have we guarded against the typical experience of the market? These sectors have run very hard, and then they have corrected. So how have we behaved in this time period, and how have we protected our shareholders from this volatility?CMR: Our primary protection was not to get involved in these highly speculative securities. We're always looking at the risk factors around a company. So we're benefiting right now in the kind of "all other" category, where we are protecting shareholders' money in this decline.CDC: Obviously the concept of tapering that was introduced to your point back in May of 2013 is very high on investors' fears in terms of what could derail economic activity, what could derail the stock market, etc. What do you think is the significance of tapering, and how are we approaching our investments as it relates to what inevitably will be a higher interest-rate environment?CMR: I do think it's inevitable. I think it's very healthy. I'm sort of rooting for this to get going again, but I think the pace has been actually a very healthy one, and I think the market respons! e has bee! n minimal. So I do think we're entering into a very strong period for active management, which is going to be encouraged by normal interest rates.Important Disclosure InformationThe thoughts and opinions expressed in the video are solely those of the person speaking and may differ from those of other Royce investment professionals, or the firm as a whole. There can be no assurance with regard to future market movements.Please read the prospectus carefully before investing or sending money. You may obtain aprospectus on our website by clicking here. The prospectus includes investment objectives, risks, fees, charges, expenses, and other information that you should read and carefully consider before investing.Also check out: Chuck Royce Undervalued Stocks Chuck Royce Top Growth Companies Chuck Royce High Yield stocks, and Stocks that Chuck Royce keeps buying

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New BlackBerry buyout rumors include Google and Samsung

How BlackBerry fell so fast NEW YORK (CNNMoney) Who isn't on the list of rumored potential BlackBerry suitors that surfaced this weekend?

Two weeks after limping-along BlackBerry received a preliminary $4.7 billion buyout offer from Fairfax Financial, a new Reuters report says the list of possible suitors has expanded significantly.

According to the Friday report, potential buyers of all or part of BlackBerry include Google (GOOG, Fortune 500), Cisco (CSCO, Fortune 500), SAP (SAP), Intel (INTC, Fortune 500), LG, Samsung and private-equity firm Cerberus Capital.

Even if the rumors prove to be true, it's unclear if those companies are really interested in buying BlackBerry. The company wants "preliminary expressions of interest" by early next week, Reuters noted. But it's possible that the two sides are simply testing the waters.

Shares of BlackBerry (BBRY) gained about 4% on the news.

BlackBerry wouldn't confirm the rumors, saying simply that the company "is conducting a robust and thorough review of strategic alternatives."

Related story: BlackBerry's bleak quarterly results

An actual offer from one of these companies would put BlackBerry on much firmer ground, given that the announcement from Fairfax sparked a lot of skepticism. Fairfax's "offer" was really just a preliminary letter of intent to buy BlackBerry, and Fairfax hasn't received any financial backing for a deal. Cynics think Fairfax is simply trying to draw in other offers and cash out its 10% BlackBerry stake.

BlackBerry's appeal to a Google or a Samsung likely lies in its patent portfolio, which experts value at about $2 billion to $3 billion. Such patents are advantage in the competitive and highly litigious world of smartphones -- just look at the never-ending Apple (AAPL, Fortune 500) v. Samsung lawsuits -- though BlackBerry's patents generally aren't considered as essential as those in the portfolios of its rivals. Still, those patents could give BlackBerry a much-needed lifeline.

Beat 85% of Investors with These Steps

I want to start today's article with a quick survey.

Don't worry; it's going to be short, only a couple of questions, and you're the only person who is going to know your answers. So improve your investing savvy and answer honestly.

It might just help you make a lot of money - and sleep better at night...

First question: When the markets hit a rough spot this last March, did you start selling your stocks? If the answer to that question is "yes," what methodology did you use to justify your selling?

Second question: If you did sell your stocks, what methodology do you now plan on using to know when it's time to buy again?

Here's a quick hint: Unless you can quickly answer both of those questions without having to think about it, the answer may be "none" or "no methodology."

Don't feel bad; every investor (including yours truly) has, at one point or another, made an investment decision without a clear plan (or methodology behind the decision).

Here's why that can be such a bad idea, and here's how to tap into the tremendous profits out there if you break out...

What Most Investors Do Wrong

According to Barron's, a whopping 85% of all investor "sell" or "exchange" decisions are wrong. Yikes!

The cycle typically looks like this...

The market starts to sell off (for any number of reasons), investors get spooked and sell their stocks right at (or just before) the point of maximum pessimism (which usually is very close to the bottom).

Once they're out of stocks they take their cash and plow it into safe assets like bonds just in time to miss the beginning of the next leg up in stocks. Once their capital is invested in bonds, they have no idea when to shift back into stocks, mainly because of an emotional bias that leaves them too frightened to take on risk.

If that sounds familiar, again, don't worry - you're not alone. Everyone has made this kind of mistake at least once. We'll just make sure it doesn't happen again.

Instead of using market pullbacks as an excuse to bury your head in the sand and catch up on Dancing with the Stars episodes, you can step up your due diligence to create a buy list of your next investment targets.

At first it might seem uncomfortable to be preparing to buy stocks in the face of uncertainty - but don't worry - you're going to be in great company. Warren Buffett, Jim Rogers, and John Templeton all made their fortunes targeting stocks once they were put on sale by market volatility....so let's follow their lead.

Here are two steps you can take that will not only give you an answer to the questions at the top of the this article, but will also let you use market volatility to your advantage, which is exactly what professional traders do every day.

Step #1
Set Your "Sell" Plan, Before You Buy

The first step: Always make sure you have an exit strategy (or plan regarding when you'll sell) before you hit the "buy" button. This will ensure that you're always making predetermined strategic decisions rather than emotional decisions.

Here are two of my favorite exit strategies: trailing stops and scaling out of a position.

Most people think of trailing stops as a way to protect their downside. While they are great at minimizing losses, they really shine in capturing profits. As your position increases in value, simply tighten up your trailing stop to increase your potential profit.

Strategy Note: Your initial trailing stop and the amount to which you tighten your trailing stop is entirely up to you and should be based on your own risk tolerance. Personally, one of my favorite strategies is to: 1) begin with a 25% trailing stop, 2) once my position is up 30% I like to tighten my stop up to a 19% trailing stop, which makes my stop 5% over my entry price, 3) once my position is up 40% I'll tighten my trailing stop to 15%, 4) and once my position is up 50% I'll settle in with a trailing stop of 12.5% for the remainder of the holding period - or until I get to a 100% gain, which is when I'll start scaling out of the position.

Legendary investor Jesse Livermore summed it up simply and eloquently when he said "you never go broke capturing a profit." Exactly right, and that's why I like to tighten up my trailing stop along the way - especially the first move, which puts my stop 5% over my entry price.

It's worth mentioning, though, that once you tighten up your trailing stop, you do increase the risk of getting stopped out - but I'm totally okay with that because the tighter trailing stop also reduces my odds of letting a winner turn into a loser.

Livermore's second strategy is to sell half of any position once it achieves a 100% or more gain. Professional traders call this "scaling out" of a position. Livermore would refer to this simply as "playing with the house's money" because you effectively take your initial investment off the table and what you're left with is all profit - or the house's money.

The beauty of this strategy is that the freed-up capital created by scaling out of the position can then be used to establish a new position. If you do this a couple of time in a row, your initial allocation of capital can turn into several positions. It's a great way to build multiple positions with a single tranche of capital.

Just like trailing stops, you can choose to start scaling out of a position at any time. The key is that you know, in advance, when you plan on tightening up your trailing stops and when you intend to begin scaling out of a position.

Step #2
Rebalance Your Profits

Moving on to the second step: rebalancing.

I can't emphasize enough how important it is to stay in the markets - and the best way to remain invested is to use the Money Map Report's 50-40-10 model.

In case you're not familiar with the 50-40-10, it is a risk-parity portfolio structure pioneered by Keith Fitz-Gerald, Chief Investment Strategist for the Money Map Report. Here's a quick rundown...

50% of your assets: invested in what we refer to as "Base Builders," which includes assets such as Vanguard Wellington Fund, sovereign debt, muni bonds, corporate debt, etc.

40% of your assets: invested in what we refer to as "Growth and Income," which are stocks with global exposure to some of the world's largest trends, solid cash flow, rock solid balance sheets, and an above average yield.

10% of your assets: invested in what we refer to as "Rocket Riders", which is where you'll find speculative positions such as small-cap stocks. History suggests that by limiting your speculative positions to just 10% of your overall capital, you maximize your potential return while at the same time keeping your overall risk to a razor-thin level.

Now let's get back to rebalancing.

If you're using a predetermined exit strategy like the example I discussed above (or any other predetermined strategy, for that matter), you will, at some point, find yourself with cash to re-deploy. When that happens, calculate the different allocations between the Base Builders, Growth and Income, and Rocket Riders to find out what portion of your portfolio is overweight and where it's underweight. Deploy your freed-up cash into whatever portion of your portfolio is underweight.

Let me give you a simple real-world example to clarify the above.

For the sake of this example, let's assume your entire portfolio is worth $1,000,000, with the following breakdown: $500,000 (or 50%) is currently in your Base Builders positions, $390,000 (or 39%) is currently in your Growth and Income positions, $100,000 (or 10%) in currently in your Rocket Riders positions, and $10,000 is sitting in cash due to your recent winning trade.

In the example above, both your Base Builders and Rocket Riders are in line, with 50% and 10% of your total portfolio, respectively - but your Growth and Income (at 39%) is a little below your target of 40%, therefore it's "underweight."

In order to bring your 50-40-10 structure back in line, you can redeploy your $10,000 worth of cash into an investment that qualifies as a Growth and Income asset and your portfolio structure will then be back to the desired 50-40-10.

If you don't want to redeploy the cash right away, that's fine. You can also wait for a predetermined time (quarterly, bi-annually, annually, etc.) and then rebalance all of your holdings at one time.

The key here is that it's a predetermined time - not a time based on your discretion, because that could leave you open to emotional biases, which typically work against you.

The beauty of rebalancing is that it takes all the guessing out of the equation because it forces you to sell the assets that have increased in value (and are subsequently overweight) and buy assets that have gone down in price (and are subsequently underweight).

That means you're following the golden rule of investing... buy low, sell high. And profit.

Thursday, May 29, 2014

Intercept Pharmaceuticals: Another Double?

Can a stock that has already more than tripled this year double from here? If it’s Intercept Pharmaceutcials (ICPT), then the answer could be yes, says Wedbush analyst Liana Moussatos.

Last night, Intercept reported that the FDA had granted fast-track status to its obeticholic acid, or OCA, for treating primary biliary cirrhosis, or PBC, in which the bile ducts in the liver are destroyed. Moussatos discusses the implications for Intercept Pharmaceuticals:

The FDA designates Fast-Track status to a therapy that treats a condition that has no current therapy or to a therapy that shows some advantage over available therapy, such as superior effectiveness or the ability to address an emerging or anticipated public health need. The company and we believe the designation signals that the FDA recognizes that OCA has the potential to address a significant unmet need. Currently, the only approved treatment for PBC is ursodiol, and about half of PBC patients who are unable to tolerate or have an inadequate response have no other treatment options except for liver transplant. With Fast-Track designation, Intercept is eligible for more frequent meetings and written communications with the FDA. Additionally, there is the potential for a faster review process (6 months vs. 10 months) for OCA.

Moussatos expects a third-quarter trial update to be the next catalyst for Intercept Pharma’s stock, which she says has an acquisition value of $493.

Shares of Intercept Pharmaceuticals have gained 2.9% to $240.73 at 10:17 a.m. today.

10 Best Penny Stocks To Own Right Now

This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, our headlines feature an upgrade for Thomson Reuters Reuters (NYSE: TRI ) , a new buy rating for Novavax (NASDAQ: NVAX ) -- but for Union Pacific (NYSE: UNP ) , a downgrade. Let's get that bad news out of the way first.

Union Pacific derailed
Two weeks after railroad operator Union Pacific reported Q3 earnings that topped analyst estimates�by a penny, the stock got its reward today: a downgrade at the hands of investment banker R.W. Baird.

Coming on top of the 4% slide the stock has experienced since reporting its "beat", Baird's recommendation seems a bit harsh -- like adding insult to the injury that Union Pacific shareholders have seen inflicted on their portfolios. And yet, when you look at the numbers, it's apparent that Baird's making the right call in downgrading to neutral.

Priced at 16.5 times earnings, Union Pacific shares sell for a valuation right in the middle of the pack�of North America's bigger railroad operators, where Canadian National Railway, for example, costs more than 18 times earnings -- but CSX sells for just a hair over 14 times.

10 Best Penny Stocks To Own Right Now: Service Corporation International(SCI)

Service Corporation International provides deathcare products and services in the United States, Canada, and Germany. Its funeral service and cemetery operations consist of funeral service locations, cemeteries, funeral service/cemetery combination locations, crematoria, and related businesses. The company provides various professional services relating to funerals and cremations, including the use of funeral facilities and motor vehicles, and preparation and embalming services. It also sells funeral related merchandise, including caskets, burial vaults, cremation receptacles, cremation memorial products, flowers, and other ancillary products and services at funeral service locations. The company?s cemeteries provide cemetery property interment rights, including mausoleum spaces, lots, and lawn crypts; and sell cemetery related merchandise and services comprising stone and bronze memorials, markers, merchandise installations, and burial openings and closings. It also sells preneed funeral and cemetery products and services whereby a customer contractually agrees to the terms of certain products and services to be delivered and performed in the future. As of December 31, 2009, Service Corporation operated 1,254 funeral service locations and 372 cemeteries, including 208 combination locations, covering 43 states in the United States, 8 Canadian provinces, the District of Columbia, and Puerto Rico, as well as 12 funeral homes in Germany. The company was founded in 1962 and is headquartered in Houston, Texas.

Advisors' Opinion:

[By Marc Bastow]
Deathcare services and products provider Services Corporation (SCI) raised its quarterly dividend 14% to 8 cents per share, payable March 28 to shareholders of record as of March 15.
SCI Dividend Yield: 1.73%
[By Rich Duprey]
In what is seemingly becoming a more acrimonious set of negotiations, the Teamsters representing directors and drivers accused management of Service Corp International� (NYSE: SCI ) of trying to force a strike vote by rejecting the union's "last and best" offer.

10 Best Penny Stocks To Own Right Now: PostRock Energy Corporation(PSTR)

PostRock Energy Corporation, an integrated independent energy company, engages in the acquisition, exploration, development, production, and transportation of oil and natural gas in the United States. It operates in two segments, Oil and Gas Production, and Natural Gas Pipelines. The Oil and Gas Production segment primarily focuses on the development of coal bed methane in the Cherokee basin and the Marcellus Shale in Appalachian Basin, as well as has oil properties in Central Oklahoma. As of December 31, 2009, it had approximately 51.9 billion cubic feet equivalent (Bcfe) of estimated net proved reserves; development rights to approximately 516,184 net acres; and operated approximately 2,849 gross wells in the Cherokee Basin. It also had approximately 44,507 net acres of oil and natural gas producing properties with estimated proved reserves of 18.9 Bcfe and approximately 498 gross wells in Appalachian Basin; and had 65 gross wells, development rights to approximately 1,4 80 net acres, and estimated net proved reserves, 3.9 Bcfe in Central Oklahoma. The Natural Gas Pipelines segment involves in transporting, gathering, treating, and processing natural gas. It owns and operates a natural gas gathering pipeline networks of approximately 2,173 miles in the Cherokee Basin and 183 miles in the Appalachian Basin; and a 1,120 mile interstate natural gas pipeline, which transports natural gas from northern Oklahoma and western Kansas to the metropolitan Wichita and Kansas City markets. The company is headquartered in Oklahoma City, Oklahoma.

Advisors' Opinion:

[By Eric Volkman]
LeBlanc is a veteran energy industry CFO. He has filled that role at East Resources -- now a unit of Royal Dutch Shell (NYSE: RDS-A ) -- as well as�PostRock Energy (NASDAQ: PSTR ) , and Range Resources, among others.

Hot Regional Bank Companies To Own In Right Now: Westell Technologies Inc.(WSTL)

Westell Technologies, Inc., through its subsidiaries, engages in the design, distribution, marketing, and servicing a range of broadband, digital transmission, remote monitoring, power distribution, and demarcation products used by telephone companies and other telecommunications service providers. It operates in three segments: Customer Networking Systems (CNS) equipment, Outside Plant Systems (OSP) equipment, and ConferencePlus services. The CNS equipment segment provides networking and high-speed transmissions products, such as modems, routers, versatile gateway devices, and wireless broadband home routers that allow service providers to deliver broadband services over existing copper, fiber, coax, or wireless infrastructures. The OSP segment offers next generation outdoor cabinets; enclosures; power distribution; fiber, Ethernet, and coax edge connectors; remote monitoring equipment; and DS1 and DS3 transmission plugs. This segment also markets and sells power distribu tion and remote monitoring solutions. The ConferencePlus services segment provides audio, Web, and video conferencing services to businesses and individuals. This segment sells its services directly to Fortune 1000 companies, and indirectly through its private reseller programs. The company offers its products through field sales organizations and selected distributors in the United States, as well as in Canada and Europe. Westell Technologies, Inc. was founded in 1980 and is headquartered in Aurora, Illinois.

Advisors' Opinion:

[By Geoff Gannon]
1. Steel Excel (SXCL)
2. FormFactor (FORM)
3. Imation (IMN)
4. Tuesday Morning (TUES)
5. Pacific Biosciences (PACB)
6. Maxygen (MAXY)
7. Westell (WSTL)
8. Volt Information Sciences (VISI)
9. Yasheng Group (YHGG)
[By Rich Smith]
On Friday, the diversified manufacturer named Brian S. Cooper�to replace interim CFO Braden Waverley on May 28. Waverly will remain acting CFO until Cooper joins the company next month. Cooper comes to Federal Signal by way of smaller telecommunications equipment maker Westell Technologies (NASDAQ: WSTL ) , where he has served as CFO since 2009.

10 Best Penny Stocks To Own Right Now: China Metro-Rural Holdings Limited(CNR)

China Metro-Rural Holdings Limited, through its subsidiaries, primarily engages in the development and operation of agricultural logistics and trade centers in northeast China. It also involves in purchasing, processing, assembling, merchandising, and distributing pearls and jewelry products. The company markets its pearls and jewelry products to wholesale distributors and mass merchandisers in Europe, the United States, Hong Kong, and other parts of Asia. In addition, it develops, sells, and leases residential and commercial properties in Hong Kong and the People?s Republic of China. The company is based in Tsimshatsui, Hong Kong.

Advisors' Opinion:

[By Katie Brennan]
Canadian National Railway Co. (CNR) added 0.9 percent to C$104.93 and Canadian Pacific Railway Ltd. rose 1.7 percent to C$131.73.

Niko Resources surged 3.4 percent to $8.64 after the company entered an agreement for a $60 million loan that will be funded by a group of institutional investors. Net proceeds from the loan will be used to fund working capital requirements.

10 Best Penny Stocks To Own Right Now: Gamestop Corporation (GME)

GameStop Corp. operates as a retailer of video game products and personal computer (PC) entertainment software. It sells new and used video game hardware; video game software; used video game products; and video game accessories, which primarily consist of controllers, memory cards, and other add-ons, as well as strategy guides and trading cards. The company also offers PC entertainment and other software across various genres, including sports, action, strategy, adventure/role playing, and simulation, as well as products that relate to the digital category comprising network point cards, prepaid digital and online timecards, and digitally downloadable software. GameStop Corp. sells its products through stores, as well as through its electronic commerce Web sites, including gamestop.com, ebgames.com.au, gamestop.ca, gamestop.it, gamestop.es, gamestop.ie, gamestop.de, and micromania.fr. As of July 12, 2011, its retail network and family of brands included 6,573 company-oper ated stores in 17 countries worldwide. The company also publishes Game Informer, a video game magazine in the United States; and operates the online video gaming Web sites kongregate.com and joltonline.com. GameStop Corp. was founded in 1994 and is based in Grapevine, Texas.

Advisors' Opinion:

[By Dan Moskowitz]
GameStop (NYSE: GME ) is about to enter an interesting and telling phase. What you see from GameStop over the next year will likely indicate the company's long-term potential. This is solely based on an upcoming event that hasn't taken place in six years.�
[By Rick Munarriz]
GameStop (NYSE: GME ) shares rallied -- sending the shares 8% higher on Tuesday -- before giving back nearly half of those gains on Wednesday. GameStop is the biggest beneficiary of a vibrant used-game market, and Sony's news was sweet.
[By Adam Levine-Weinberg]
Shares of GameStop (NYSE: GME ) have doubled since hitting a 52-week low near $15 last summer. However, GameStop stock dropped precipitously last week, from more than $39 on Monday to $32.35 by early Friday afternoon.

10 Best Penny Stocks To Own Right Now: Lexington Realty Trust (LXP)

Lexington Corporate Properties Trust operates as a self-managed and self-administered real estate investment trust (REIT). The company acquires, owns, and manages a portfolio of office, industrial, and retail properties net-leased to corporate tenants in the United States. It also provides investment advisory and asset management services to institutional investors in the net lease area. As of June 30, 2005, the company operated 185 properties and managed 2 properties. Lexington Corporate Properties Trust has elected to qualify as a REIT for federal income tax purposes. As a REIT, it would not be taxed on the portion of its income, which is distributed to shareholders, provided it distributes at least 90% of its taxable income. The company was founded in 1991 and is based in New York City.

Advisors' Opinion:

[By Eric Volkman]
Lexington Realty Trust (NYSE: LXP ) is acting like a relaxed landlord that doesn't want or need to modify the rent. The company is maintaining its dividend policy by declaring a $0.15-per-share distribution for its current quarter, to be paid on or about July 15 to shareholders of record as of June 28. That amount matches the firm's previous three distributions, the most recent of which was paid in April. Prior to that, the real estate investment trust dispensed $0.125 per share.
[By Brad Thomas]
Compared with the public REIT peers, I believe that Chambers Street will compare favorably to W.P. Carey (WPC) and Lexington Realty Trust (LXP). Both of these REITs own larger box assets and they both have conservative and well-positioned balance sheets. Here is a snapshot of Chambers Street's capitalization:

10 Best Penny Stocks To Own Right Now: Enstar Group Limited (ESGR)

Enstar Group Limited, through its subsidiaries, acquires and manages insurance and reinsurance companies in run-off. The company settles insurance and reinsurance claims. It also offers management and consultancy, claims inspection, and reinsurance collection services to its affiliates and third-party clients. The company operates in the United States, Bermuda, the United Kingdom, Europe, and Australia. Enstar Group Limited was formerly known as Castlewood Holdings Limited and changed its name to Enstar Group Limited. Enstar Group Limited was founded in 2001 and is based in Hamilton, Bermuda.

Advisors' Opinion:

[By Matt Koppenheffer and David Hanson]
In this segment from Thursday's Where the Money Is, Motley Fool financial analysts Matt Koppenheffer and David Hanson discuss Matt's stock pitch of the week, Enstar Group Ltd. (NASDAQ: ESGR ) . In the insurance world, insurers can start an insurance business, or a line of insurance, that ends up performing poorly. This can force the insurer to then put that line of insurance, or the entire business, into what is known as run-off. This means they are no longer selling policies, and will only continue to manage the existing policies for the life of those policies. That is where Enstar comes in.

10 Best Penny Stocks To Own Right Now: Advanced Cell Technology, Inc.(ACTC)

Advanced Cell Technology, Inc., a biotechnology company, focuses on the development and commercialization of human embryonic and adult stem cell technology in the field of regenerative medicine. Its embryonic stem cell research programs include cellular reprogramming, reduced complexity program, and stem cell differentiation research programs. The company?s cellular reprogramming involves in the development of therapies based on the use of genetically identical pluripotent stem cells generated by its cellular reprogramming technologies. Advanced Cell Technology, Inc. also generates stable cell lines with particular focus on blood lineage and vascular epithelial cell lines from hemangioblast cells. In addition, it is developing an autologous myoblast transplantation therapy to restore cardiac function in patients with advanced heart disease. The company?s stem cell-based therapy would provide treatment for a range of acute and chronic degenerative diseases. Further, it deve lops adult stem cell-based products that are specifically targeted at therapies for heart and other cardiovascular diseases. The company is headquartered in Marlborough, Massachusetts.

Advisors' Opinion:

[By CRWE]
Today, ACTC surged (+1.96%) up +0.0014 at $.0730 with 1,679,139 shares in play thus far (ref. google finance Delayed: 12:31PM EDT July 26, 2013).

Advanced Cell Technology, Inc. previously reported the Data and Safety Monitoring Board (DSMB), an independent group of medical experts closely monitoring the company�� three ongoing clinical trials, has authorized the company to move forward with enrollment and treatment of remaining two patients in the third cohort of each of the three clinical trials. The decision follows an interim review by the DSMB six weeks after the first patient was treated in the third cohort of each trial. ACT will proceed with screening and enrollment for the patients who, in keeping with trial protocol, will be injected with 150,000 retinal pigment epithelial (RPE) cells derived from human embryonic stem cells (hESCs).
[By John Udovich]
As the the year comes to end, there is still a steady flow of interesting news coming from small cap biotech stocks like Organovo Holdings Inc (NYSEMKT: ONVO), Advanced Cell Technology, Inc (OTCMKTS: ACTC) and TNI BioTech (OTCMKTS: TNIB)�plus still largely private biotech companies like Genocea Biosciences (NASDAQ: GNCA), Retrophin (OTCMKTS: RTRX), Auspex Pharmaceuticals (NASDAQ: ASPX) and GlycoMimetics (NASDAQ: GLYC) who have filed to become the next potentially hot biotech IPOs��presumably some time early�next year. Just consider the following biotech news:
[By John Udovich]
Summer and the slow news for the market that usually comes with it�is over with and both stem cell researchers or small� cap stem cell stocks like Advanced Cell Technology, Inc (OTCBB: ACTC), Neuralstem, Inc (NYSEMKT: CUR), NeoStem Inc (NASDAQ: NBS), International Stem Cell Corp (OTCMKTS: ISCO)�and BioRestorative Therapies (OTCBB: BRTX) having news for investors and traders alike. Consider the following:

10 Best Penny Stocks To Own Right Now: Nicholas Financial Inc.(NICK)

Nicholas Financial, Inc., through its subsidiaries, operates as a specialized consumer finance company. The company engages in acquiring and servicing contracts for purchases of new and used automobiles and light trucks. It also makes direct loans and sells consumer-finance related products. In addition, the company engages in developing, marketing, supporting, and updating industry-specific computer application software for small businesses located primarily in the Southeast United States. As of April 5, 2011, it operated 56 branch locations in 14 Southeastern and Midwestern states. The company was founded in 1986 and is headquartered in Clearwater, Florida.

Advisors' Opinion:

[By Lauren Pollock]
Prospect Capital Corp.(PSEC) said it agreed to buy Nicholas Financial Inc.(NICK) in a stock deal valued at about $199 million that the investment firm expects will expand its presence in the car-loan industry. Prospect Capital is offering $16 a share for Nicholas, a 4.5% premium over Tuesday’s closing price. Nicholas Financial shares edged up 2.8% to $15.70 premarket.

10 Best Penny Stocks To Own Right Now: Rowan Companies Inc.(RDC)

Rowan Companies, Inc. provides onshore and offshore oil and gas contract drilling services in the United States and internationally. The company offers its contract drilling services through its fleet of 28 self-elevating mobile offshore drilling platforms and 30 deep-well land drilling rigs. The company was founded in 1923 and is headquartered in Houston, Texas.

Advisors' Opinion:

[By Dimitra DeFotis]
Among energy stocks rising today: Producers of gas and gas liquids were higherm, including Devon (DVN) and�Consol Energy (CNX) rose about 2% each, while drillers�Nabors Industries (NBR) and�Rowan Companies (RDC) jumped more than 3% apiece. Oilfield services names Halliburton (HAL) and Baker Hughes (BHI) each rose nearly 2%.

Wednesday, May 28, 2014

Stocks in retreat mode Wednesday

NEW YORK (CNNMoney) It's been quite the climb for the stock market in recent days, but investors stopped to take breath Wednesday.

The S&P 500, Dow Jones Industrial average and Nasdaq all ended the day a shade under yesterday's closes.

Here are some highlights from the day's trading:

New record -- barely: The S&P 500 hit a record high on Tuesday of 1,911.9. There was no record close today, although the S&P 500 did tough a new intraday trading record of 1,914 in the afternoon before closing just shy of 1,910.

The Dow fell 42 points, and Nasdaq dropped just under 0.3%.

Although headlines have touted the record highs notched by the S&P 500 and other indexes, it's important to recall that the S&P 500 is about 10% off the frothy peaks of the dot-com era when adjusted for inflation.

Sunken Treasuries: Yield on the 10-year US Treasury note, a global benchmark from sovereign debt, hit 2.44%, the lowest yield in nearly a year. It could be a sign of investor trepidation or the expectation that the European Central Bank will soon take stimulus measures.

Tesla downgraded, Twitter upgraded: Tesla Motors (TSLA) got zapped with junk bond status by ratings agency Standard & Poor's, which pegged the electric carmaker's $3 billion in debt a few notches below investment grade. The ratings firm said Tesla's narrow focus and lack of track record were behind the ratings. Shares a flat in afternoon trading.

Tesla debt: An electric lemon?

Twitter (TWTR) shares, on the other hand, jumped over 10% following an upgrade from Nomura bank. The stock is still down nearly 50% for the year.

Retail stocks on the move: Sometimes the shoe really doesn't fit. DSW (DSW), a discount shoe outlet, lost more than a quarter of its market cap in early trading, as earnings came in at the lower end of expectations and same-store sales growth fell 3.7% from the year before.

"I've bought every pair of shoes/sneakers I own for the past 10 years at $DSW. ! Apparently, it hasn't been enough," wrote StockTwits user chicagosean.

Michael Kors (KORS) reported results before the opening bell. Profits were a bit better than expected and sales are up by more than half. Kors shares are up more than 17% since the start of the year as the brand seems to be winning the battle for upper middle class purse consumers. The stock jumped 1.3% today.

Revenue abroad is growing quickly as well. Sales in Europe were double the same time last year.

Homebuilder stocks picking up: Toll Brothers (TOL) reported surprisingly strong earnings before the open, bouncing back from a disappointing start to the year because of the winter weather. Revenue was closer in line with expectations. It was one of the few stocks enjoying a bounce with shares up over 2%.

A handful of other homebuilder stocks are also seeing some small gains as well, including D.R. Horton (DHI), Lennar (LEN) and PulteGroup (PHM).

Airline companies continue to soar: Delta Airlines (DAL, Fortune 500)ended the day 2% higher. It continues to be one of the top performers in the S&P 500 this year. Delta recently announced more routes in and out of Seattle as it grows it presence there, going head-to-head in the "Battle for Seattle" with Alaska Air. Southwest Airlines (LUV, Fortune 500) is also up more than 2% today.

Rieder: Time to pass shield law for journalists

Last summer, supporters were confident that at long last the federal shield law for journalists would be enacted.

After a number of false starts, they were convinced that the stars were aligned and that a measure to ensure that journalists wouldn't have to choose between protecting confidential sources and going to jail would make it over the finish line.

The key factor was widespread revulsion at the Obama administration's treatment of journalists in overly zealous leak investigations. In September, by a 13-5 vote, the bill was approved by the Senate Judiciary Committee.

Since then, nothing. And news media organizations and First Amendment groups backing the bill fear the momentum of the summer of 2013 may have waned.

That would be bad. It's an important piece of legislation that's vital not only to journalists but, more important, to American citizens.

Confidential sources can be problematic. The transparency of attaching a name to information is obviously preferable. But in some cases, when sources may put their lives in jeopardy or risk losing their jobs by revealing information that's critical to the public interest, anonymity is a defensible cost of doing business. And a journalist should be able to protect that confidentiality without heading to the slammer.

REM RIEDER: Drop effort to make Times reporter testify

This is hardly an academic debate. Last July, the U.S. Court of Appeals for the 4th Circuit ruled that New York Times reporter James Risen would have to testify in the prosecution of former CIA analyst Jeffrey Sterling. If the U.S. Supreme Court rejects Risen's appeal, which would hardly come as a shock, the journalist will have to pick between giving up the source or heading to prison, as then-New York Times reporter Judith Miller did for 85 days in 2005.

Last July, Senate Judiciary Committee Chairman Charles Schumer, D-N.Y., assured me that the measure would "become law relatively quickly, by congressional standards." When I asked Schu! mer spokesman Matt House on Wednesday if his boss was still "confident," he responded, "We remain hopeful it will pass this year." Which is not quite the same thing.

He said he wasn't sure when the bill would be taken up. "Senate Republicans have been blocking bipartisan bills over non-related issues, but we're hopeful that won't happen with the media shield bill," House said.

Everyone seems to agree that more than 50 senators, a majority, are in favor. The problem, as Kevin Goldberg, legal counsel for the American Society of News Editors, points out, is that's not good enough these days. You need 60 votes to cut off debate if opponents try to block a measure.

Goldberg says the leadership wants to make sure those 60 votes are there. But finding out has been a challenge. (ASNE is a key part of the coalition of groups pushing the shield law).

It's the old chicken and egg conundrum. When you ask some senators if they will back the bill, they respond that they'll focus on it when it's heading for the floor. But Senate leaders, who don't want to see the bill tie up the world's greatest deliberative body, are reluctant to give it the green light until they are sure those 60 votes are locked up, Goldberg says.

Support tends to crest when something happens that underscores the urgency of the measure, as was the case last summer. But with time that support ebbs. That's why quick action at a flashpoint is key. The next such moment may come if the Supreme Court rejects Risen's appeal.

It's not like this is a radical idea. Forty-eight states and the District of Columbia have similar protection for journalists.

It's hardly a get-out-of-jail-free card. The law includes a balancing test, which means in some instances national security concerns will trump the shield law and a journalist will be required to testify.

And the Judiciary Committee did a good job of sorting out who is covered, a thorny issue in an era in which traditional journalists are hardly the only peopl! e carryin! g out the craft.

So let's stop fooling around. It's time for both houses of Congress to pass the law.

Defense seeks lenient sentence for Martoma

NEW YORK — Lawyers for Mathew Martoma have asked a federal judge to impose a lenient sentence on the former SAC Capital trader for his conviction on what prosecutors called history's most profitable insider-trading conspiracy.

Martoma, an ex- financial lieutenant to billionaire hedge fund executive Steven Cohen, deserves punishment less harsh than the 15.7-year to 19.6-year prison term proposed by probation officials, defense attorney Richard Strassberg argued in legal memo filed late Tuesday.

Calling such punishment "irrational," Strassberg argued the recommendation was wrongly based on total SAC Capital gains from the insider trading, rather than Martoma's personal profits.

The attorney urged U.S. District Court Judge Paul Gardephe to weigh Martoma's devotion to his family and history of helping others. He also argued against any financial fines, and filed more than 100 support letters from the former trader's relatives and friends.

"Mr. Martoma is not perfect, but he is a good man," wrote Strassberg. "To prevent a sentence disparity; to recognize his lower level of culpability relative to other insider trading cases; to credit his lifetime of volunteer and charitable work ... we respectfully request leniency in his sentence."

Martoma, 40, was convicted in February of conspiracy and two counts of securities fraud. Prosecution evidence showed he ingratiated himself with two doctors who gave him secret and disappointing information from tests on an experimental drug to treat Alzheimer's disease.

Martoma then called Cohen, setting in motion an SAC Capital sell-off that allegedly generated $276 million in profits gained and losses avoided, prosecutors charged.

The verdict, handed up by a seven-woman, five-man jury in Manhattan federal court, theoretically means the Florida father of three faces up to five years in prison term on the conspiracy count, and up to 20 years on each securities fraud charge. But the sentencing decision rests with Gardephe, who presided! over the nearly month-long trial.

Federal prosecutors are scheduled to file their punishment recommendation before Martoma's scheduled June 10 sentencing.

Martoma was the eighth SAC Capital employee found guilty on insider-trading charges. The convictions played a central role in the hedge fund's guilty plea to similar charges in a record $1.8 billion November settlement that permanently bars it from handling investments for outsiders.

Martoma, who did not testify at trial, maintained he did nothing wrong. But prosecutors charged he obtained an illegal trading edge between 2006 and 2008 by getting secret evidence from drug trials on a drug being developed by pharmaceutical firms Elan and Wyeth.

Dr. Sidney Gilman, an Alzheimer's disease expert and the prosecution's star witness, told jurors he met regularly with Martoma through a company that linked matched financial professionals with expert researchers. Gilman, who chaired the safety monitoring committee for the Alzheimer's drug trial, admitted he gave inside information to Martoma because he came to regard the trader as a friend.

Dr. Joel Ross, a clinical investigator on the drug trial, similarly testified that he shared confidential information from the drug testing with Martoma.

Martoma's defense focused on challenging both doctors' credibility and accuracy. In particular, cross-examination questioning by Strassberg showed Gilman initially had no recollection of a key meeting in his University of Michigan office to discuss the drug trial results.

But federal prosecutors presented records of cell phone calls and other evidence that appeared to buttress the testimony of Gilman and Ross.

Cohen was not charged in the case — though Gilman testified that federal investigators once told him the SAC Capital founder was their ultimate target.

Cohen instead faces an administrative proceeding by the Securities and Exchange Commission for allegedly failing to provide proper supervision of Martoma and o! ther empl! oyees who became involved in insider trading.

Tuesday, May 27, 2014

AutoZone: When Good News Isn’t Good Enough

AutoZone (AZO) is firing on all cylinders. It beat earnings forecasts. Its same-store sales were strong. Its gross margins improved. And AutoZone’s stock has dropped nearly 2% today as growing inventories raised concerns among investors.

Bloomberg

AutoZone reported a profit of $8.46 a share, beating forecasts for $8.44 a share, on sales of $2.34 billion, in line with the Street consensus. Same-store sales, meanwhile, rose 4%, while inventory rose 12%.

Raymond James analysts Dan Wewer and Aziz Pirbhoy believe that AutoZone’s “bullish theme remains intact” but worry about the payoff from increasing inventory:

While AutoZone's F3Q14 results were of mixed quality, the long-term investment themes underlying our Strong Buy rating remain intact, including a continued gross margin expansion cycle and a shareholder friendly capital allocation policy. AutoZone has now achieved 10%+ EPS growth for a 31st consecutive quarter – a further testament to our bullish long-term view…

AutoZone's gross inventory investment increased 12.0% in F3Q14 (or 8.2% per foot) – the fourth straight quarter of an 8%+ increase. Unfortunately, inventory yield (amount of gross profit generated from $1 of inventory) declined 1.4% y/y. This could raise concerns of diminishing returns from AutoZone's latest parts availability initiatives.

Shares of AutoZone have fallen 1.7% to $531.87 at 11:52 a.m., while Advance Auto Part (AAP) has dropped 1.6% to $121.27 and O’Reilly Automotive (ORLY) has declined 0.9% to $147.25. Pep Boys (PBY), however, has bucked the selling–its shares have gained 1.9% to $10.57.

Top computer hacker gets leniency

NEW YORK — A top computer hacker who helped investigators disrupt at least 300 cyberattacks on targets ranging from the U.S. armed forces and Congress to a TV network and a video game maker was spared additional prison time Monday after prosecutors argued for leniency.

Hector Xavier Monsegur could have faced more than 26 years behind bars for his confessed cyberattacks as a former member of the Anonymous and LulzSec hacking collectives.

But U.S. District Judge Loretta Preska imposed a term of seven months behind bars — the exact equivalent of what he'd already served — which means Monsegur was a free man after his sentencing hearing in Manhattan federal court.

Federal prosecutors argued Monsegur merited the far lesser punishment because he "was an extremely valuable and productive cooperator" whose help led to the arrest and conviction of eight co-conspirators.

They did not specifically name the targets saved from potentially crippling cyberattacks as the result of Monsegur's cooperation. But they estimated in a government sentencing memorandum filed Friday that his actions "prevented at least millions of dollars in loss to these victims."

"Monsegur's cooperation was complex and sophisticated, and the investigations in which he participated required close and precise coordination with law enforcement officers in several locations," Manhattan Assistant U.S. Attorney James Pastore wrote in the memo.

Among other specifics, Pastore credited Monsegur's assistance in the 2012 arrest of Jeremy Hammond, who at the time was the FBI's number one cybercriminal target. Hammond pleaded guilty and was sentenced to a 120-month prison term in November 2013.

Monsegur's assistance was invaluable because he was a trusted member of hacking groups involved in numerous hacking episodes. Using the online alias "Sabu," he was known for analyzing computer code for vulnerabilities that could be exploited, Pastore wrote.

Some of those cyberattacks listed in the sentencing memo ! included the hack that compromised the database of the Fox reality TV show X-Factor, and attacks on PBS, Sony Pictures, Nintendo and Infragard Unveillance, an FBI affiliate in Atlanta.

Monsegur pleaded guilty to computer-hacking crimes in August 2011 as part of a government cooperation deal after FBI agents confronted him about his online activities. He served the seven months imprisonment because the government moved to revoke his bail in 2012 after he made unauthorized online postings.

Under federal sentencing guidelines, Monsegur could have faced 259 months to 317 months imprisonment. But the U.S. Probation Office recommended in a pre-sentence report that he not spend additional time behind bars.

Selling Your Business? 3 Ways To Cut The Tax Bite

The 10 Highest Capital Gains Tax States

A lot of small business owners accelerated sales of their companies into 2012 in anticipation of the new higher tax rates for 2013, but for those who are thinking of selling now, don't despair.

"There are things you can do to minimize—or with the right set of facts—eliminate taxes," says Timothy Jessell, a tax lawyer with Greenberg Traurig in Tysons Corner, Va. whose client base is people buying and selling companies. In one case, a client who is selling his consulting company will save $3.8 million in taxes "simply by filing a piece of paper," he says.

What's the tax picture if you're selling a business? The American Taxpayer Relief Act lifted the top rate on long-term capital gains from 15% to 20% and allowed the return of a gotcha provision that adds another 1.2% to the tax bite as of Jan. 1. Plus, a new 3.8% Medicare surtax (one of the Obamacare taxes) on investment income for couples earning more than $250,000 kicked in—raising the total top capital gains rate from 15% to 25%.

And don't forget that there are state capital gains taxes to contend with in 41 states—which are taxed at ordinary income rates in most states—that's up to an additional 13.3% bite in California, for example.

No wonder business owners are exploring ways to lessen the government's take. Here's help.

The ESOP Plan. If you own a C Corp., by setting up an employee stock ownership plan, you can roll over the proceeds from the sale of your business on a tax-deferred basis. You receive cash on the sale and reinvest it in a diversified portfolio (it's called a 1042 rollover after the Internal Revenue Code section that allows the move). It's basically a deferral play; you pay capital gains taxes on distributions. But if you hold onto the securities until you die, you get a step-up in basis and you avoid the capital gains tax altogether.

About two-thirds of ESOPs are used to provide a market for the shares of a departing owner, according to the National Center for Employee Ownership. http://www.esop.org/

The Qualified Small Business Stock Exception. If you sell stock that counts as small business stock, you qualify for lower tax rates: a 50% or 100% exclusion on gain in certain circumstances. The trick is meeting the definition, easier if you set up a business with that in mind: you can't be in the services business, for example. But it's possible to separate out part of an existing business that would count and treat it as a separate business.

Jessell has a client, a computer hardware reseller, who is considering spinning out the computer hardware portion of his business, separating it from the services side of the business, so it counts as qualified small business stock when he sells later this year.

Convert A C Corp To An S Corp. This is how Jessell's consulting company owner stands to save $3.8 million. While the 3.8% Medicare surtax pretty much always applies when you sell a C Corp., if you convert to an S Corp. and you're an active business owner and sell your stock in the business, you don't pay the 3.8% surtax. In this guy's case, his business tax year ends Oct. 31. He'll switch to S Corp. status in November, sell the business which is worth $100 million, and voila, no surtax.

That's $3.8 million in tax savings. "He said, 'Geez! Why didn't anyone else say this to me?'" Jessell says.

Can't say we didn't tell you.

Monday, May 26, 2014

Should You Sell Your Microsoft Stock on the Ballmer Bounce?

Steve Ballmer, Microsoft Chief Executive Officer, during his speech at the 2009 HYSTA conference in Santa Clara, California. Alamy Microsoft CEO Steve Ballmer is heading for the exit. Should Microsoft (MSFT) shareholders follow suit? Shares of the software giant soared 7 percent on Friday on news that it would be replacing Ballmer as CEO within the next 12 months. The market's opinion of the news must sting Ballmer (though it also made him a few hundred million dollars richer), but investors expecting that Microsoft's next leader will be able to return the company to its former glory may be in for a rude awakening. Why would consumers and businesses want to return to a time when they were dependent on a stodgy operating system that was expensive and slow to adapt? What if Microsoft doesn't find the right CEO? What if there is no such thing as the CEO? Those are just a few of the heavy questions that Microsoft's stockholders face in light of Ballmer's pending departure, and they may not like the answers. You Can't Go Home Again First, let's talk fundamentals. Does Microsoft's business make it a good buy for forward-thinking investors? Well, in the past dozen years, Microsoft has gone from being the world's most valuable company to one that is worth less than two-thirds of what current leader Apple (AAPL) is today. Microsoft and Google (GOOG) commanded nearly identical $290 billion market caps at the kick off of this trading week, and the search engine giant wasn't even publicly traded when Ballmer was tapped to be Microsoft's CEO in 2000. In fact, Google had only been founded 16 months earlier. Tech babies grow so fast these days. And that, at least in part, is the root of Microsoft's problems. Computing hasn't merely evolved -- it has metamorphosed. Consumers aren't buying PCs like they used to. Desktop and laptop sales have fallen sharply for five consecutive quarters, which has never happened before. That's not a lull. That's not a bad stretch. That's a trend. And it isn't just a Windows woe. Apple's Mac sales have also been sliding in recent quarters. Most PC buyers never needed the full processing power their machines had under the hood, and that's even more true today. A large percentage of us just want to surf the Web, check email, and stream media. We don't need a desktop or laptop for that; all we need is an Internet connection. We live in a world of mobile apps and browser-based software, which increasingly means means that we can be operating system agnostic: Windows, iOS, Android, Linux -- it all looks and feels mostly the same once you get started. Those are painful shifts for Microsoft: Its two primary cash cows are its Windows operating system and its Office productivity suite. Windows has only managed to claw out a 4 percent share of the market in smartphones and tablets, and that's after throwing billions of dollars at mobile computing. Google's Android has become the operating system of choice for smartphone and tablet users, and Apple's iOS is a distant second worldwide. That leaves Microsoft with a nearly insurmountable amount of ground to make up, even assuming it can figure out how to compete with the freely available open-source Android. Microsoft used to command premium prices for its Windows updates; soon, it may not even be able to give them away. The outlook for Microsoft Office is a bit more secure, largely because Google's competing cloud-based software hasn't exactly stormed the market -- yet. However, it's really just a matter of time before the productivity business succumbs to the allure of free, cloud-based applications. The Good News And yes, there some good news. Microsoft is still growing despite the headwinds. Server and tools software products continue to sell briskly. Microsoft's Xbox 360 has been the country's top gaming console for months, and after a few initial missteps, excitement is building for November's debut of Xbox One. Bing has been able to hold its own in search, fortified by a deal struck with Yahoo (YHOO) to handle the dot-com pioneer's search business. Microsoft is growing overall, and analysts see revenue and earnings per share climbing in the 4 percent to 6 percent range in fiscal 2014. The tech bellwether isn't reeling, but it's certainly not growing fast enough to satisfy today's growth stock investors. Meet the New Boss ... Finally, let's talk leadership. We can safely assume that Microsoft won't hire its next CEO from the inside. Promoting from within is often a smart move, but investors didn't send Microsoft's stock $20 billion higher in value because they hoped Ballmer was going to be replaced by someone already helping call the shots in Redmond. Microsoft is going to need a seasoned outsider with a big name, and don't be surprised if it's a former Google or Apple executive. Hiring Google execs has worked well for many of the Internet's meandering companies. Yahoo shares have nearly doubled in value since ex-Googler Marissa Mayer took over 13 months ago. Facebook (FB) certainly hasn't suffered since Sheryl Sandberg stepped in as COO. Then we have Apple. Executives from the iEverything company used to be untouchable, but a slumping share price since last October's iPhone 5 release and a corporate shake-up shortly after that could drive a big name from Apple to accept the Microsoft challenge. So Microsoft may actually wind up with a name that the market likes, which could give it a short-term bounce -- but that still doesn't mean that you buy Microsoft here. No matter who is running the show, its attempted transformation from a software dynamo into a tech firm that specializes in products and services will be long, expensive, and likely unsuccessful. Microsoft isn't going away: It has far too much money. However, it hasn't been able to buy or build its way into relevance in the markets that are growing. The ultimate question for investors here is, will Microsoft will be more relevant in five years than it is now? You can hope for a transformational figure as its next CEO, but deep down inside, you know the answer.

5 High-Growth Stocks to Believe In

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There's a lot of talk these days about the death of momentum stocks.

FinancialGrowth185 5 High Growth Stocks to Believe In Whether it be the flame-out of biotech stocks earlier in the year, the meltdown in trendy sectors like cloud computing or 3D printing companies, or just the crash of big tech names, it's clear that the pain can be just as acute as the gain in momentum stocks. All it takes is a change in direction, and momentum works against investors in a big way.

Still, in this environment you can't afford to shy away from all high-growth, high-risk opportunities. After all, FactSet estimates that Q1 profit growth was a meager 2.1% — with weak guidance to boot.

Even if it means flirting with super-high valuations, investors have to look somewhere if they want to find growth.

So to help you avoid the momentum stocks that are melting down and find the high-growth opportunities that have the most upside, here are five picks that are seeing impressive earnings expansion and sales growth, and deserve your attention despite volatility and valuation concerns.

High-Growth Stocks to Buy #1: Visa (V)

visa 5 High Growth Stocks to Believe In Surprised that Visa (V), the payments processor that has been a household name for decades, is a high-growth stock?

Well just look at the numbers yourself:

Revenue has grown from $8.1 billion in 2010 to a projected $12.8 billion this year and $14.2 billion in fiscal 2015 — tracking sales growth of 75% in five years.

Profits also have soared from $3.65 billion in net income for fiscal 2011 to roughly $5 billion at the end of fiscal 2013 — 37% growth in just two years — with a forecast of double-digit growth in earnings both this year and next.

The reason? Well, America has long gone cashless with the rise of debit cards and online banking … but emerging markets are still very much moving into the age of payments using Visa-branded plastic. As the middle classes continue to grow in Latin America and Asia and more global residents start using banks, Visa is seeing increasingly brisk business.

After all, Visa is not a financial company that worries about lending. It is simply the toll-taker, earnings a few pennies each time someone uses a credit or debit card with its logo.

And with the decline of cash and the rise of digital payments, those transactions are becoming more common at home and abroad with each passing day.

Visa has pulled back a bit this year, but I like the stock at or around $200 per share.

High-Growth Stocks to Buy #2: Amazon (AMZN)

amazon1 5 High Growth Stocks to Believe In Sure, Amazon (AMZN) has hit a serious wall in 2014 as momentum has crumbled. Shares of AMZN stock are down more than 20% year-to-date, and investors are finally showing serious concerns about whether Amazon is committed to growing profits instead of simply growing sales.

But the reality is that even simply growing sales is an impressive feat in this troublesome market.

Amazon has grown its revenue from $34.2 billion in fiscal 2010 to a projected $90.8 billion this year — an amazing 165% growth rate.

Furthermore, Standard & Poor's analysts project $1.09 in earnings per share for fiscal 2014, and an even more impressive $4.24 projected for fiscal 2015. That still gives AMZN stock a pricey forward P/E ratio of more than 70, but shows the company — and Wall Street — expects significant improvement to the bottom line going forward, even if profits weren't there in the past.

If you're a longer-term investor, there is a lot of potential in Amazon stock. I'd feel comfortable buying this high-growth play at or a bit below $300 per share after the correction, with the hope and expectation that growth materializes as planned — or even better than expected.

High-Growth Stocks to Buy #3: Facebook (FB)

Facebook185 5 High Growth Stocks to Believe In Unlike Amazon, Facebook (FB) has actually outperformed nicely in 2014; The stock is up about 8% vs. a flat S&P 500.

Furthermore, the longer-term performance of Facebook is impressive with FB stock up more than 130% in the past 12 months.

Part of that is because Facebook is the dominant Internet property of the age, with over 1.3 billion visitors. But it's not just reach that has grown — FB recorded $3.7 billion in revenue in fiscal 2011 and is on track to record $11.8 billion in sales this year and $15.6 billion in fiscal 2015.

Think about that. Facebook is pacing 320% growth in five years while the rest of Wall Street is struggling to budge the top line at all!

Profits continue to stack up, too, and FB continues to see improvement in its revenue-per-user metrics as it gets smarter about turning its audience into actual money.

It's always risky to pile into a stock that has doubled in short order, but Facebook stock actually has cooled off a bit since March; shares have rolled back about 15% from all-time highs.

This might be a good time to consider jumping in if you believe in the long-term prospects of this social media behemoth at or under $60.

High-Growth Stocks to Buy #4: Priceline.com (PCLN)

priceline 185 5 High Growth Stocks to Believe In Priceline.com (PCLN) is one of those Internet stocks that many investors talk about, and many investors are afraid of thanks to volatility and steep valuation.

Oh, and a sticker price of $1,180 per share doesn't help PCLN stock reach the top of many investors’ lists, either.

But the performance of shares speaks much more than anything else. Consider these returns:

Up 90% since January 2013 Up 151% since January 2012 Up 195% since January 2011

This is surely a momentum stock, but the momentum continues to be pointed higher — unlike some other players that are breaking down in 2014.

It's not just the value of PCLN that's growing impressively. Revenue more than doubled from $3.1 billion in fiscal 2010 to $6.8 billion in fiscal 2013, and earnings per share tripled in the same period from $10.35 in EPS for 2010 to $36.11 last year.

You can understand why so many investors are high on PCLN stock … and in fact, recent data showed that among top hedge funds, Priceline is the most popular stock to own. Insider Monkey estimated that at the end of Q1, 67 hedge funds were long Priceline stock, with Lone Pine Capital alone plowing $1.2 billion into Priceline shares. All in all, institutional and mutual fund investors own a staggering 98% of PCLN stock.

If you want to buy what the smart money is buying, you probably won't find a more popular holding on Wall Street than Priceline.com.

I like PCLN stock under $1,200.

High-Growth Stocks to Buy #5: Baidu (BIDU)

Baidu 5 High Growth Stocks to Believe In Keeping with the Internet theme, Baidu (BIDU) should be no stranger to momentum investors out there. The stock has long been crowed about as being the "next Google (GOOG)" because of its dominance in Chinese search and advertising, among other things.

And thanks to the rather heavy-handed nature of Beijing's media regulations, it's safe to say that nobody is going to be challenging BIDU anytime soon.

The big thing to note, however, is that Baidu is not simply a big company supported by Chinese autocrats. The company is growing briskly, as is Internet use across China.

For instance, according to Baidu financials, the company's fiscal 2010 revenue was roughly $1.3 billion but fiscal 2013 revenue was nearly $5.1 billion — for a top-line growth rate of nearly 300% in three years! Equally impressive is that net income tripled, from $534 million in fiscal 2010 to more than $1.73 billion in 2013.

No wonder Baidu stock is up about 300% since January 2010, and up more than 70% in the past year.

Shares have rolled back slightly from recent 52-week highs, but I'd be a buyer of BIDU in the $150s.

Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor's Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.