Holiday Retail Sales Set to Slide Amid High Unemployment and Low Consumer Confidence

Holiday retail sales - which account for almost 40% of retail revenue, worth $453 billion in sales last year - are in jeopardy.

Consumer spending continues to be restrained by an unemployment rate that has stayed above 9% for 26 of the past 28 months. Furthermore, rising food and gasoline costs, fears of a new recession, the loss of equity from the housing collapse, and mountains of leftover credit card debt have prospective purchasers tightening their purse strings.

And adding to consumers' woes, income fell for the first time in almost two years in August, dropping a seasonally adjusted 0.1%, according to the U.S. Commerce Department.

Now the International Council of Shopping Centers (ICSC) said it expects holiday retail sales to be up 3% this year, down from the 4.1% increase last year, and markedly lower than the 5%-plus gains seen in prosperous economic times.

"This holiday season is going to be challenging," Ken Hicks, chief executive of Foot Locker Inc. (NYSE: FL), told The Wall Street Journal.

Consumers are definitely not in much of a spending mood. The 45.4 September reading of the Consumer Confidence Index, although it was up slightly from August, is far below the 70.4 level it had reached in February. The index usually is over 90 in a thriving economy.

Even more damning, Americans are almost universally pessimistic about the U.S. economy. In a recent CNN/ORC International poll, 90% of Americans said economic conditions were "poor," up from 81% in June.

Another survey, conducted last month by AlixParters LLP, found that 41% of consumers planned to spend less on holiday shopping this year. That's up from 31% last year.

"Consumers are very apprehensive and cautious in spending, and we expect that to continue," Diane Swonk, chief economist at Mesirow Financial, told USA Today.

Competing for Dollars

That means holiday retail! sales w ill be captive to bargains and deals more than ever this year, particularly at discount and mid-level retailers.

"There will be lots of promotions-that's become the norm," Jack Kleinhenz, chief economist with the National Retail Federation, told The Wall Street Journal.

Wal-Mart Stores Inc. (NYSE: WMT) this month announced a layaway program as a way to help cash-strapped shoppers spend. Sears, Roebuck & Co. (Nasdaq: SHLD) and Toys "R" Us Inc. already have such programs.

The competition for in-store customers figures to be intense. Foot traffic is expected to decline 2.2% this year, according to ShopperTrak, the result of the years-long trend toward online shopping.

Some segments will struggle more than others. Traffic at clothing and accessories stores is expected to drop by just 1.1%, but traffic at electronics and appliances stores is projected to decline 4.9%.

"Every shopper in a store will be more valuable than last year, and retail stores should be ready to convert their holiday shoppers into sales," Bill Martin, a ShopperTrak co-founder, told the Associated Press.

Rich Stores, Poor Stores

Holiday retail sales will not suffer universally, however. High-end retailers will fare better than low-end retailers, upholding a pattern evident in the retail sector for many months.

"The sales trends paint a continued picture of unevenness," Michael P. Niemira, ICSC's chief economist, told the Associated Press. "Luxury spending continues to be strong and consistent. Wholesale clubs are doing very well. The mid-tier retailers are seeing mixed performance. And the low-end retailers are a bit more challenged."

The ICSC expects a 7.5% increase in holiday retail sales for luxury stores open for one year or more, while discounters will see just a 2.5% gain in such stores this year.

Several high-end retailers, ! such as Saks Inc. (NYSE: SKS), which operates Saks Fifth Avenue and Nordstrom Inc., said they've already seen their customers picking up more expensive items -- and those customers are willing to pay full price for whatever they're buying.

Paul Lejuez, an analyst with Nomura Securities, said other luxury retailers that should see strong holiday sales include Tiffany & Co. (NYSE: TIF) and Coach Inc. (NYSE: COH).

Meanwhile, Lejuez predicts some mid-tier specialty retailers, such as Abercrombie & Fitch Co. (NYSE: ANF), The Gap Inc. (NYSE: GPS), and American Eagle Outfitters Inc. (NYSE: AEO) will have a tougher road as they fight for the same struggling customers.

"This year, we've seen the strong stay strong and the weak stay weak," Lejuez told Bloomberg News. "Nothing is going to change that this holiday season."

News and Related Story Links:

  • Money Morning: Threat of Stagflation Looms as Prices Rise Despite Bad Economy
  • Money Morning:
    June's Abysmal Jobs Report is Just the Beginning
  • Money Morning:
    Fed Interchange Fee Decision Shocks Retailers, But Consumers Will Pay the Price
  • Money Morning:
    U.S. Consumers Get Creative to Handle High Food and Fuel Prices
  • Money Morning: Don't Expect to See a Housing Market Rebound Anytime Soon
  • Money Morning:
    Rising Prices Mean Cautious Year Ahead for U.S. Household Spending
  • MarketWatch: Consumer confidence ticks higher - Economic Report
  • USA Today: Economists: Consumers won't save the economy
  • Houston Chronicle:
    For retailers, Christmas comes earlier
  • MarketWatch: Consumer sentiment rises in September
  • CNNMoney: 90% of Americans say eco! nomy sti nks

Toyota Financial Results: What Recall?

Toyota Motor Corp. (NYSE: TM) reported earnings for the quarter ending June 30–its fiscal first quarter–and the numbers were sterling even though it has recalled nearly nine million of its vehicles.

Revenue reached 4,872 billion yen, up 27% from the same period a year ago. Operating income was up to 406 billion yen. The company attributed the better results to improved sales and better financial results from its financial services arm. The profit was $2.2 billion when translated into dollars

Vehicles sales? jumped worldwide to 1.82 million up 419,000 units from the period last year.

Toyota raised its estimates for the balance of its fiscal year. It forecast total vehicle sales of 7.38 million up from 7.29 billion in the year earlier period. Toyota also experts revenue to move up to 19.5 trillion yen and operating income to increase to 330 billion yen.

The figures are doubly impressive because the April through June period occurred during the height of the company’s recall problems.

Global car sales are not expected to move up much worldwide, with the exception of China, so Toyota expects to do about as well as the worldwide market, if not better.

It is hard to give a reason the No.1 car company in the world could do so well. It must be, to some extent, the result of the brand loyalty it has built over nearly five decades, including nearly 30 years in the US market, which was the world’s largest until last year when its was bested by China. Toyota’s reputation for building quality cars put it at the top of customer satisfaction surveys for years.

Toyota may still face sanctions and liability suits because of its recall and defect problems, but its overall financial health seems fine.

Douglas A. McIntyre

Is Your Mutual Fund Making More From Your Investment Than You Are?

When it comes to mutual funds, you could be looking for love in all the wrong places according to the renowned bond fund manager, Bill Gross. In his August 2009 Investment Outlook, Gross compared his own industry to Madame Rue, the gold-toothed gypsy in the 1959 song "Love Potion No. 9."

Gross argues that mutual fund managers sell potion in the form of hope. But when it comes to delivering on performance, they fall short -- once their hefty management fees are siphoned out of the funds' returns.

The average annual fee for an equity mutual fund is about 1%. That doesn't sound like much when the market is up nearly +16%, as it was in 2006. And maybe the fees were just more salt in the wound after last year's -37% slide. But for many individual years -- and over the market's long haul -- that seemingly insignificant annual fee robs investors of substantial profits.

Gross wrote, "If investment returns gravitate close to 6% as envisaged in Pimco’s 'new normal,' then 15% of your income will be extracted [through management fees]."

Losing 15% of your profits to mutual fund fees may be an understatement.


•2,681 U.S. mutual funds have management fees that are double the average fee -- or higher.

• The S&P 500's annual total return has been less than +6% for 18 years since 1960.

•In the last ten years, the S&P 500's average annual return has been flat. Fees would have pushed an investor's return negative.

Mutual funds spent more than 50 years as the only way investors could easily access a diverse basket of stocks with just one purchase. They had to pay hefty fees for the privilege. But since 1993, investors have had another choice to add diversity to their portfolios, and one that's far cheaper,. Exchange-Traded Funds, or ETFs, are as easy to trade as stocks and offer the diversification! of mutu al funds, yet they have much lower fees. More than 800 ETFs trade on U.S. exchanges, each offering investors a cost-effective way to acquire a basket of securities. ETFs provide exposure to almost every country, region, industrial sector or commodity.

Results are the best way to see the real power of ETFs. I compared the returns of two similar emerging-market funds. One is the mutual fund Seligman Emerging Markets (SHEBX); the other is the ETF iShares MSCI Emerging Markets Index (NYSE: EEM). Not only does each have exposure to the same countries, each fund holds almost exactly the same stocks.

I used the Financial Industry Regulatory Authority's handy fund analyzer (found here). I used a $10,000 initial investment and assumed that both funds returned +5% a year.

QCOM, SWKS, ATML: Setting Up For In-Line Q3 Reports

There are a raft of notes out this morning covering what will be a raft of chip earnings reports this week.

Network processor maker Cavium (CAVM) reports this afternoon. Atmel (ATML) reports tomorrow after the bell. Qualcomm (QCOM) reports Wednesday after the bell, as does ON Semiconductor (ONNN). Wireless chip maker Skyworks Solutions (SWKS) reports on Thursday, as do Microchip (MCHP) and International Rectifier (IRF).

Most of the notes I’ve seen are talking about a more-or-less in-line reporting season, with some top line numbers that may miss consensus.

FBR Capital’s Craig Berger this morning writes that Atmel’s Q4 view will likely miss the consensus $487 million in revenue and 20 cents a share in EPS, but that it will probably be better than many fear, with “robust” shipments of its “maXTouch” products. He thinks the company will report lower average selling prices and lower margins and offer a “conservative” view on 2012, though there’s a prospect for unit upside on chipset shipments as a result of its involvement in Apple’s (AAPL) iPhone 4S.

Berger also sees ON Semi’s Q4 view being “less bad than feared.” Overall, Berger thinks ” a year-end semiconductor rally is likely.”

Berger rates Atmel and Qualcomm and ON Outperform.

Sterne Agee’s Vijay Rakesh, meanwhile, expects Qualcomm to just about meet consensus for Q3, at $3.95 billion and 80 cents, versus the consensus $3.99 billion and 78 cents. The “key,” he thinks, is the 2012 outlook, with perhaps $17.3 billion and $3.62 forecast, about in line with consensus. The company has “solid” traction with Apple and with the newly introduced Nokia (NOK) devices based on Microsoft’s (MSFT) Windows Phone 7, but there’s some risk from an inventory adjustment at Samsung Electronics (SSNLF).

Skyworks’s fiscal Q4 report will probably meet consensus, roughly, at $400.6 million and 53 cents a share, though that top line number is slightly below the average $400.8 million estimate. The company is gaining traction at Nokia, but iPhone shipments were down somewhat in calendar Q3.

“While the presence of 1 PA and a SiGe filter in the new iPhone 4S reveal that SWKS has not been completely replaced in the updated handset, content is down to ~$1.40-1.50, versus ~$3 content in the iPhone 4 with 3PAs. Also, we believe RFMD and AVGO have seen some solid design wins at Samsung and HTC, which could be a headwind,” writes Rakesh.

Rakesh rates Qualcomm a Buy and Skyworks, Neutral.

Susquehanna Financial Group’s Chris Caso, meantime, reiterates a “Positive” view on Qualcomm, although he writes that “tepid” unit growth at smartphone “licensees” in Q3 sets up for a weak Q4 view relative to estimates:

The Street has been worried about 3Q handset units (which affect 4Q QTL [Qualcomm Technology Licensing] revenue) since AAPL printed underwhelming units earlier this month. We expect a strong ramp for iPhone in 4Q, which has positive implications for QTL revenue in 1Q. We also had a weak report from LG, flat smartphone growth at NOK, and weakness at RIMM. Offsetting this were strong results from Samsung, where smartphone units were up over 40% Q/Q, and solid results from Sony Ericsson and HTC. All total, we estimate the top nine suppliers grew smartphone shipments by ~7% Q/ Q in 3Q. Our estimates currently reflect 11% Q/Q unit growth for QCOM’s FY4Q, so based on these reports, QCOM’s 4Q QTL guidance is likely to come in light.

Shares of the chip makers are mostly lower this mornin! g:

QCOM is down $1.13, or 2%, at $52.10; ONNN is off 18 cents, or 2%, at $7.64; MCHP is down 33 cents, or 0.9%, at $36.13; SWKS is off 37 cents, or 1.8%, at $19.92; ATML is down 36 cents, or 3%, at $10.79; CAVM is down 61 cents, or 1.8%, at $33.42; and IRF is

Hiring A Brisbane SEO Service

The goal of most online business owners is to rank high in the search engines, and in Brisbane, SEO services are available that can make this happen by employing the most powerful and current search engine optimization techniques in the industry. Anyone who lives in the area of Brisbane can easily find such a service to accomplish not only higher rankings, but also customer awareness, brand recognition and ultimately increased revenue.

Anyone looking to hire a company to assist with SEO should be aware that not all services of this nature are as legitimate as others. This is why it becomes necessary to know enough about the process on your own to be able to determine if the company you are dealing with is actually going to get you the results that they are promising.

Never hire someone who uses any methods that are unethical. Black hat approaches used to get ultra fast results could actually get you banned, so it’s just best that you stick to the rules in order to be able to continue making money online. Besides, the search engines are on to most of these methods now anyway, so they aren’t even going to work. Just be sure that you check around; maybe even ask for some references so you will know what kind of people you are dealing with before you get into doing any serious business with them.

Anyway, be sure that you know a little bit about who you are hiring before you make it official. It isn’t a good idea to go ahead and hire any Brisbane SEO service without properly checking them out first. It’s okay to inquire about their various SEO techniques. Anything that they do is going to directly affect your business, regardless of the end result. This is why you have a right to know exactly what they plan on doing in order to get you those rankings you seek. Also, see if you can find any reviews on them. This may tell you a little about what sort of results they can achieve for you.

After you have narrowed down the list to a few of your favorite ! services in Brisbane, start to supply some detailed information regarding your specific site. Include statistics and detailed analysis, and then find out what their exact strategy would be for your particular business. Additionally, don’t forget to discuss the matter of your budget. It isn’t necessary to spend outside of your budget to get this done, so watch your spending.

It generally takes a few months to see results, so if you get someone promising you results any quicker than that, you may want to just consider this a red flag. They may be using black hat techniques, so it’s probably best to find someone who is offering more realistic results.

Once you hire someone, keep tabs on what they are doing. In the event that they have submitted articles to directories, go take a look at them and see how they look. In most cases you will find that you can get some amazing results by hiring a Brisbane SEO service to handle your online optimization efforts.

Next, want to get the best clients and best leads thanks to your website? Start by going to: Brisbane seo serivce section.

Select Comfort: Is the Previous 63 Bagger in 3 Years Worth Being Considered?

Another large bagger has been spotted with the extreme swing in its stock price for the last 13 years. This stock was not just 25 baggers like Lululemon Athletica (LULU) or Crocs (CROX), but rather it was nearly 63 baggers in just a three-year span.

As it can be seen above, the stock price was high up at $22.6 in the beginning of 1999. Then it plunged to just $0.36 in the middle of 2001. Right after reaching that level, it began to rally to $20 per share in two years, then stayed at the $10 to $20 range for four years.

Like the majority of stocks during the financial crisis in 2008 �C 2009, it experienced a free fall, from $27.3 in middle of 2006 to $0.3 in the beginning of 2009, back to the same level eight years previous at $0.3 per share. Any investor who dared to take large position in this stock in January 2009 has been rewarded very generously. The stock reached $21.5 in October 2011 and it is staying at $18.8 level. At this current level, it would realize investors who bought at the depressed price in 2009 the return of 297% per year for three years. The company is called Select Comfort Corporation (SCSS).

SCSS was considered one of the nation��s leading bed manufacturers and retailers. It designs, manufactures, markets and distributes premium quality, adjustable firmness beds and other sleep-related accessory products. As of beginning of 2011, SCSS operated 386 company-owned stores in the US and expected to end the year by 380 stores. And it was reported in its annuals that unlike traditional mattress manufacturers, which mainly sell through third-party retailers, more than 90% of company��s net sales, were through one of three company-controlled distribution channels including retail, direct marketing and e-commerce. The channel of retail stores generated the most sales, taking 84% of total net sales in 2010.

It was always good to see companies with diversif! ied cust omers portfolios. In the case of SCSS, no single customer accounts for 10% of total net sales, with just a little bit of seasonality, lower sales in the second quarter and increased sales in the holiday and promotional period.

Regarding SCSS��s financial health, it has quite a liquid balance sheet with nearly 49% of total asset in cash. The D/A is at 53.67%, whereas the biggest item of liabilities is accounts payable, with no more long-term or short-term debt. In addition, as any retailer, the contractual obligations totaled nearly $120 million total, with payment due $37 million this year and $49 million for the next three years. The enterprise value would be roughly equal the market capitalization, as $116 million in cash is offsetting the $120 million in total contractual obligations.

Over the history of 10 years, it has had fluctuating but somehow consistent earnings, and a high level of return on equity.

It was quite interesting to note that the level of return on equity is increasingly high over time, reaching triple digits in 2007-2009, especially in 2008, with negative income, but return on equity is still positive up high. So the equity in 2008 must be the negative figure. Let��s look at the shareholders�� equity components for the last 10 years.

We can see that the stockholders�� equity has been subject to large fluctuations over time, resulting from the changes in the additional paid-in capital and the retained earnings. Normally the additional paid-in capital is not like the changing figures in other companies. What is the accounting standard here? Digging deeper in the notes of previous reports, especially in 2006, 2007 and 2008, it was because of stock repurchases. The cost of stock repurchases was first charged to additional paid-in capital. Once additional paid-in capital is reduced to zero, any additional amount would be charged to retained earnings.

The good thing is the company keeps generating p! ositive operating cash flow and free cash flow over time.

The only year which experienced negative FCF was in 2008. The reason was that the asset impairment charges occurred in 2008, making the loss of the operation up to $70 million, and the decrease in accounts payable as well as the income taxes payment makes the CFO around $3 million in 2008, pushing the FCF to negative figures. So it seemed to be a stock that worth considering, but it was all dependent on the price paid. Currently the market is valuing SCSS at 20.2x P/E, 14x P/CF and 9.6x P/B. The very high valuation in P/B is understandable, because of the large fluctuations and current low book value.

In terms of guru trades, this stock belongs to the holdings of Magic Formula stock-picking author, Joel Greenblatt. He has bought more than 50,000 shares of SCSS for the price of $15.9 the last three to four months before. In contrast with that, the insiders, including the president and CEO have kept selling shares in the price range of $20 to $21 per share.

With the historically wide fluctuations in its stock price, along with the double-digits earnings and cash flow multiples, plus the consistent selling of its insiders, I would not consider this stock at this price, but rather watch it until it dropped significantly to the undervalued zone.

This is the subjective viewpoint of the author, and it is not the recommendation to buy, hold or sell the stocks mentioned in this analysis. Anyone who wishes to buy, hold or sell the stocks has to do his/her own analysis at his/her own risk.

Don't laugh. Eddie Lampert's strategy could be seen as Buffett-like

A well-respected value investor buys an old American company in decline, promising to restore its fortunes. Alas, the recovery never comes. The industry’s economics have changed, and the company can’t compete with younger, nimbler rivals. It ceases operations, but the value investor holds on to the shell to use as an investment vehicle.

Could this be the future of Sears Holdings (NASDAQ:SHLD) under Eddie Lampert? Maybe; maybe not. But it was certainly the case for Warren Buffett��s Berkshire Hathaway (NYSE:BRK.A).

Unless you��re a history buff or a dedicated Buffett disciple, you might not have known that Berkshire Hathaway wasn’t always an insurance and investment conglomerate. It was a textile mill, and not a particularly profitable one. It was, however, a cash cow. And after buying the company in 1964, Buffett used the cash that the declining textile business threw off to make many of the investments he’s now famous for, starting with insurance company Geico.

So, when hedge fund superstar Lampert first brought Kmart out of bankruptcy in 2003, the parallels were obvious. With its debts discharged, the retailer would throw off plenty of cash to fund Lampert��s future investments. And even if the retail business continued to struggle, Lampert could — and did — sell off some of the company��s prime real estate to retailers in a better position to use it. Lampert sold 18 stores to Home Depot (NYSE:HD) for a combined $271 million in the first year.

That Lampert would use Kmart��s pristine balance sheet to purchase Sears, Roebuck & Co. — itself a struggling retailer — seemed somewhat odd, but his management decisions after the merger seemed to confirm that his strategy was cash-cow milking. Lampert continued to talk up the combined retailer��s prospects, of course. But his emphasis was on relentless cost-cutting, and he inves! ted only the absolute bare minimum to keep the doors open.

Sears Holdings didn��t have to compete with the likes of Home Depot or Wal-Mart (NYSE:WMT). It just had to stay in business long enough for Lampert to wring out every dollar before selling off its assets.

The strategy might have played out just fine were it not for the bursting of the housing bubble, which killed demand for Sears’ popular Kenmore appliances and Craftsman tools, and the onset of the worst recession in decades. With retail sales in the toilet (and looking to stay there awhile), competing retailers were hardly clamoring for the company��s real estate assets.

It��s fair to blame Lampert for making what was, in effect, a major real estate investment near the peak of the biggest real estate bubble in American history.

But investors frustrated by watching the share price fall by more than 80% from its 2007 highs have no one to blame but themselves. Anyone who bought Sears when it traded for nearly $200 per share clearly didn��t do their homework. They instead were hoping to ride Lampert��s coattails while somehow ignoring the value investor��s core principle of maintaining safety by not overpaying for assets.

Lampert is a great investor with a proven long-term track record, and there’s nothing wrong with paying a modest ��Lampert premium�� for shares of Sears Holdings. If you like Lampert��s investment style but lack the means to invest in his hedge fund, Sears may be the closest you can get.

However, at $200 per share — or even $100 — the Lampert premium had been blown completely out of proportion. The same is true of Buffett, of course, or of any great investor. As the Sage of Omaha would no doubt agree, at some price Berkshire Hathaway is no longer attractive either.

This brings us back to the title of this piece: Is Sears the Next Berkshire Hathaway?

I would answer ��yes,�� but not necessaril! y for th e reasons you think.

Everyone assumes that Buffett��s decision to buy Berkshire Hathaway was one of his typical strokes of genius. Nothing could be further from the truth. In fact, Buffett revealed in a video interview last year that Berkshire Hathaway was the worst trade of his career.

We like to think of Warren Buffett as the wise, elder statesman of the investment profession. But Buffett, too, was young once and prone to the rash behavior of youth. He had been trading Berkshire Hathaway��s stock in his hedge fund. He noticed that when the company would sell an underperforming mill, it would use the proceeds to buy back stock. Buffett intended to sell Berkshire Hathaway its own stock back for a small but tidy profit.

However, due to a tender offer that Buffett took as a personal insult, he essentially bought a controlling interest in the company so that he could have the pleasure of firing its CEO. And though it might have given him satisfaction at the time, Buffett called the move a ��$200 billion mistake.��

Why? Because Buffett wasted precious time and capital on a textile mill in terminal decline rather than allocate his funds in something more profitable — in his case, insurance. Berkshire Hathaway will still go down as one of the greatest investment success stories in history. But by Buffett��s own admission, he would have had far greater returns over his career had he never touched it.

So, in a word, ��yes.�� Sears probably is the next Berkshire Hathaway. And investors who buy Sears at a reasonable price will most likely enjoy enviable long-term returns as Lampert eventually realizes his plans. But Lampert himself will almost certainly come to regret buying the company — if he doesn��t already.

Follow the Energy Trends

As an energy analyst/investor, I like to keep an eye on what the big picture is telling me about the future of energy investments. Spotting trends early can be the difference between making a winning investment and investing in a dying energy source.

We know that political and environmental observers would like to see the U.S. transition to "cleaner" fuel, but is it happening? Are we really giving up coal for natural gas, and what's with this renewable-energy talk?

To give us an idea where trends are headed, I have provided some interesting statistics from the Energy Information Agency (EIA), which publishes monthly data that can give us a great idea about where our energy is coming from and where the trends are headed.

These stats are for January to August 2011 compared with the same time frame in 2010.

  • Total U.S. energy consumption was up 0.3%.
  • Coal usage was down 2.8% and power generation usage of coal was down 3%.
  • Natural-gas usage was up 2%, with power generation usage up 2.5%.
  • Nuclear-power generation was down 2.7%.
  • Renewable-energy usage was up 14%.

The numbers seem to suggest that we are indeed transitioning our electrical generation away from coal and toward natural gas and renewable energy. So how do we invest with this information?

Money blowing in the breeze
Although solar power gets most of the headlines, mostly because of Solyndra and other government-backed failures, wind was the driver of renewable energy's growth this year. Solar power accounted for just 78 trillion Btus of energy in the first 8 months of 2011, while wind accounted for 773 trillion Btus of energy. That's more than biofuels and is quickly gaining on hydroelectric power as the No. 1 source of renewable energy.

On the flip side, coal was the biggest loser, but that doesn't mean Arch Coal (NYSE: ACI  ) or Patriot Coal (NYSE: PCX  ) are going belly-up any time soon. A slow transition away from coal in the U.S. is being countered by growing demand for coal in emerging markets like China. Since we have an abundance of coal here, that means major exports going forward. That'll soften the blow for miners and help railroads such as Union Pacific (NYSE: UNP  ) , which transports coal.

Natural gas will probably continue its growth as a fuel source in the United States. Increasing supply from explorers such as Range Resources (NYSE: RRC  ) and Quicksilver Resources (NYSE: KWK  ) will continue to drive down the cost, and since natural gas burns cleaner than coal, it's a more desirable source of fuel. In the near term, natural gas is the biggest winner as a fuel for our electricity needs.

But don't miss out on the biggest shift happening in our energy infrastructure. Renewable energy, particularly wind and solar, will continue to make up a larger and larger portions of our energy picture as costs fall. Solar-module costs have fallen more than 20% since the beginning of the year, and with manufacturers such as SunPower (Nasdaq: SPWR  ) and First Solar (Nasdaq: FSLR  ) building massive power generation plants in the country's deserts, more of our energy will come from solar.

Take your pick
Do you want to invest in slowly dying energy sources such as nuclear power or even coal, or do you want to invest with natural gas or the fast-growing solar industry? I've made my pick and put my money down on solar.

What energy source are you investing in? Leave your thoughts in the comments section below.

Dion's Weekly ETF Winners and Losers

Here are this week's winners and losers.


iPath S&P 500 VIX Short Term Futures ETN(VXX) 18.7%

Fear fell back into vogue this week as October came to an end. Europe proved to a major spark reigniting investor fears, with troubled nations such as Greece and Italy in focus.

The VIX-tracking VXX has welcomed these rekindled jitters, recovering the losses it suffered last week. By the end of Friday's trading, the ETN had returned to its 50-day moving average.

In the week ahead, it will be interesting to see whether the EU woes will continue to command investor attention. If so, we could be in for rocky price action.

iShares Barclays 20+ Year Treasury Bond Fund(TLT) 4.8%

TLT suffered some losses during the second half of the week. This decline, however, was not enough to undo the gains witnessed heading into the start of November. Safe havens such as longer-dated U.S. Treasuries and the dollar could be popular next week if shaky investors continue to seek shelter from the ongoing EU economic crisis. As I mentioned in a previous article, even October's strength was not enough to dissuade investors from piling into TLT and other defensive ETFs.

iPath Dow Jones UBS Livestock Subindex Total Return ETN(COW) 2.9%

Livestock prices pushed higher this week, as indicated by the upward action seen from this futures-tracking ETN. Bloomberg noted on Friday that a combination of export demand and tightening supplies are helping to boost cattle prices.

COW has seen some interesting action over the past few months. Rather than tumbling along with many other corners of the global markets during September, this ETN actually powered higher. By the end of October, it had reached levels last seen in late-April.

Despite its defiant strength, investors should exerc! ise caut ion here. Continued upward action from COW and other agriculture ETFs will likely rely heavily on global economic growth prospects. If moods remain sour, shakiness could ensue.


iShares MSCI Italy Index Fund(EWI) -10.10%

Not surprisingly, given the drama surrounding the region, Europe-related ETFs including EWI, iShares MSCI Spain Index Fund(EWP) and iShares MSCI Sweden Index Fund(EWD) suffered big losses.

The Guggenheim Shipping ETF's(SEA) near-8% decline is worth noting as well. In the absence of a pure Greece ETF play, SEA's 12% exposure to the nation makes it an interesting alternative.

I encourage conservative investors to avoid troubled corners of the EU. Stick to the sidelines with SEA as well.

Market Vectors Solar Energy ETF(KWT) -8.2%

A three-day rally at the end of the week helped to offset some of the losses from KWT and Guggenheim Solar ETF(TAN). The gains, however, were not enough to keep the solar energy sector from scoring a spot near the top of this week's losers list.

Since the start of October, this industry has managed to stay above all-time lows. However, in the event that market fears flare up in the weeks ahead, clouds could gather over this slice of the alternative energy industry.

Market Vectors Brazil Small Cap Index Fund(BRF) -7.4%

As investors were reintroduced to the hurdles facing Europe and other corners of the globe, many opted to adapt a "risk-off" mentality. In fleeing volatile assets, investors shunned emerging-market ETFs.

With the past week's losses, BRF has retreated to its 50-day moving average. It will be interesting to see whether the fund slips lower. Ex! cluding this most recent breakout, the fund has struggled to break above this level since dipping below it in mid-May.


>>Daniel Loeb Wants Jerry Yang Off Yahoo! Board

>>Technicals Aren't Quite 'All Clear' for Stocks

>To order reprints of this article, click here: Reprints

(CRWE, KVHI, AMZN, OXBT) Stock under Consideration by

Crown Equity Holdings, Inc. (CRWE)

Crown Equity Holdings Inc. (CRWE) recently announced that it has entered into a joint venture to deploy VoIP (Voice over Internet Protocol) technology delivering voice, video and data services to residential and commercial customers. The joint venture company is Crown Tele Services Inc. which was a wholly-owned subsidiary of Crown Equity Holdings Inc. Crown Equity Holdings Inc. will own fifty percent (50%) interest in the joint venture.

Commenting on the joint venture, Kenneth Bosket, President of Crown Equity Holdings Inc., said: “We are excited to deliver VoIP communications solutions specifically designed to meet the business and residential market needs in this fast-growing global market.”

VoIP (Voice over Internet Protocol) services convert your voice into a digital signal that travels over the Internet. If you are calling a regular phone number, the signal is converted to a regular telephone signal before it reaches the destination. VoIP (Voice over Internet Protocol) can allow you to make a call directly from a computer, a special VoIP phone, or a traditional phone connected to a special adapter. In addition, wireless “hot spots” in locations such as airports, parks, and cafes allow you to connect to the Internet and may enable you to use VoIP (Voice over Internet Protocol) service wirelessly.

Crown Equity Holdings Inc. together with its digital network currently provides electronic media services specializing in online publishing, which brings together targeted audiences and advertisers. Crown Equity Holdings Inc. offers internet media-driven advertising services, which covers and connects a range of marketing specialties, as well as search engine optimization for clients interested in online media awareness.

For more information, visit

KVH Industries Inc. (Nasdaq:KVHI) reported financial results f! or the t hird quarter ended September 30, 2011. Revenue for the third quarter of 2011 was $25.6 million, down 8% from the quarter ended September 30, 2010. Diluted earnings per share for the quarter totaled $0.04 on net income of $0.6 million. During the same period last year the company reported net income of $0.6 million or $0.04 per diluted share on revenues of $27.8 million. Excluding transaction costs associated with the acquisition of Virtek Communication, and a change to the deferred income tax valuation allowance, 2010 quarterly adjusted net income was $1.6 million, and adjusted diluted EPS was $0.11.

KVH Industries, Inc. engages in the development, manufacture, and marketing of mobile communication products for the marine, land mobile, and aeronautical markets primarily in North America, Europe, and Asia. Inc. (Nasdaq:AMZN) announced financial results for its third quarter ended September 30, 2011. Operating cash flow increased 19% to $3.11 billion for the trailing twelve months, compared with $2.62 billion for the trailing twelve months ended September 30, 2010. Free cash flow decreased 17% to $1.53 billion for the trailing twelve months, compared with $1.83 billion for the trailing twelve months ended September 30, 2010. Common shares outstanding plus shares underlying stock-based awards totaled 469 million on September 30, 2011, compared with 465 million a year ago., Inc. operates as an online retailer in North America and internationally. It operates retail Web sites, including and

Oxygen Biotherapeutics, Inc. (Nasdaq:OXBT) announced that the SIX Swiss Stock Exchange has approved the application filed by the company on September 30, 2011, to remove the company’s shares from trading on the SIX exchange. This application was filed after the Company’s Board of Directors determined that the cost of maintaining the SIX listing was not justified in light of the low trading volume of the Company! ’s shares over the past 12 months. The last day of trading for the company’s common stock on the SIX will be January 30, 2012.

Oxygen Biotherapeutics, Inc. develops medical and cosmetic products that deliver oxygen to tissues in the body.

Should You Short the Times?

The New York Times (NYSE: NYT) is one of the most revered newspapers in existence. Covering everything from pop culture to global politics, millions of Americans read the Times everyday in order to keep up with current events. Despite thousands of competitors coming out, the Times seems to be a Stalwart in the journalism industry.

One thing that may hurt the New York Times Company, however, is that its email list may have been hacked. Security breaches are never a positive thing, although the Times' latest attack seems to be fairly benign. This morning, many users received spam emails stating that their subscriptions have been cancelled, even though they were just fine. The email told users to call a toll-free number, which ultimately led to silence. In what may be a data mining attack, New York Times' customers have to consider the implications.

If hackers have been able to mine their email addresses and phone numbers, is there a chance of more sensitive information being compromised? No one can tell at this point, but there will always be paranoid customers. It is likely that this event will spur a few cancellations, and if more unsolicited emails or calls are made, the momentum will likely continue.

The tough times don't stop there for the Times. Recently, the New York Times Company sold its Regional Media Group to Halifax Media Holdings. While it has not been officially revealed, many employees are scared about layoffs. Benzinga reached out to the New York Times Company, but it was unable to comment on the job situation.

The New York Times never explicitly stated why it was selling that division, either. While generic comments were made, the Times may have sold the division because it was unprofitable, because it desired additional liquidity, or because it wanted to pursue other unique opportunities.

Investors and customers alike have been fairly loyal to the New York Times. While printed publications have essentially been phased out, the company has been able to ada! pt and m aintain its stature as competitors have been emerging daily. At this point, given possible operational weakness and security problems, investors may want to consider distancing themselves from the company, or even making a profit from its problems. Only time will tell, but the Times may become a thing of yesterday, succumbing to negative consumer sentiment.

Follow me on Twitter at @MakinMarkets

Get our bullish and bearish ideas delivered to your inbox weekly.

Don't worry. You will stay on this page.


Bullish View:
Traders who believe that the New York Times will recover in the future might want to consider the following trades:
  • Long the Times by purchasing shares or call options. If you go with the options strategy, you could purchase a straddle just to reduce risk associated with the bet.
  • Long the S&P Retail SPDR, which will most likely rally if hurt companies like the Times strengthen over time.
  • Long companies with operational advantages such as Ganett! Co (NYS E: GCI), which may also benefit if the rest of the sector outperforms.
Bearish View:
Traders who believe that the Times will continue to decline may consider the following positions:
  • Short equity markets via ETFs or futures as major earnings releases approach. Major companies like the New York Times are capable of moving overall markets downward.
  • Short the Retail SPDR over the long-term. You could also short specific companies and long the Retail SPDR as a hedge.
  • Long a competitor like News Corp (NASDAQ: NWSA), which may prevail regardless of Sears' decline.
Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Occupy Wall Street Goes to Washington: Occupy Congress Set for Jan. 17

Protesters affiliated with the Occupy Wall Street movement have filed paperwork with the National Park Service seeking permission to demonstrate on the National Mall in Washington, D.C., on January 17 in an event being billed as “Occupy Congress.”

The application was filed by Tuesday by “Occupy Congress and Occupy DC,” listing McPherson Square as the group’s address and “Peaceful 1st Amendment demonstrations, including holding signs and group speaking” as its purpose.

About 50 Occupy D.C. protesters took to Capitol Hill on December 6 to protest in what they called “Take Back the Capitol.” Occupy D.C. organizers are hoping for at least 2,000 marchers for the “Occupy Congress” event next month.

In its application, the group requests permission to demonstrate from 7 a.m. until 11 p.m. on the day Tuesday following a national holiday — Martin Luther King, Jr. Day. However, whether or not the group’s permit is approved may be irrelevant. Protesters living in the McPherson Square encampment since early October have never had a permit to stay, and have yet to be evicted as has been the case with so many other encampments around the country, including Occupy Wall St. in Manhattan’s Zuccotti Park.

��Submitted. .?.?. approved or not we��re coming. This will just make it easier to provide some basic necessities and structure to this event,�� reads an update posted to the ��Occupy Congress January 17, 2012�� Facebook page.

To contact the reporter on this story: Emily Knapp at

To contact the editor responsible for this story: Damien Hoffman at

Bank Failures Top 100, but Public Remains Confident in Deposits

Start saving up your money, couch potatoes. Apple's (Nasdaq: AAPL  ) new TV may hit the market as early as this upcoming summer.

According to DigiTimes -- the Taiwanese publication that has turned its connections with Apple's Asian supply chain providers into occasionally reliable rumor mill fodder -- the tech giant's new TVs will hit the market by the second or third calendar quarter of 2012.

Piper Jaffray's Gene Munster, who has been predicting Apple's move into full-blown high-def TVs for nearly three years, has been calling for a release in time for next year's holiday shopping season. If the DigiTimes report is to be believed, Apple doesn't want to even play it that close.

DigiTimes is reporting that Samsung began producing the chips that will power the smart TVs last month, and that Sharp will be making the displays. The initial TVs will come in 32-inch and 37-inch models.

The screen sizes may seem small to those considering home theater makeovers next year, but you can't blame Apple for starting with smaller displays. Staying in the sub-40-inch camp will allow Apple to keep production costs down. Logistically speaking, this will also make it easier to stock at its growing network of Apple Store locations. Can you really picture shoppers lugging out 46-inch flat screens or bringing them back for repair?

We still don't have a name for Apple's new line of televisions. Apple TV won't work because it will confuse consumers with the set-top boxes under that name that the company has been selling for years. The iTV name being bandied about -- including in DigiTimes -- is trademarked by another company.

The name won't matter. Many scoffed at the iPad name at first, and that obviously played out well for Apple. Regardless of the name, there's no denying that this rollout will be disruptive to the industry.

Television sales have been in a funk. Google (Nasdaq: GOOG  ) has largely flopped since its Google TV rollout late last year. Hoping to turn around its unprofitable television business, Sony (NYSE: SNE  ) just announced that it was bowing out of its joint-venture partnership for LCD displays with Samsung. Sluggish high-def TV sales have stuck consumer electronics giant Best Buy (NYSE: BBY  ) with more than a year of crummy results.

If there was ever a time for Apple to step into a moribund industry begging to be updated, this would be it.

Summer may seem to be a slow time for big-ticket entertainment gadgetry, but why wait if Apple is ready? The market's dying for a company to get it right.?

Apple won't be the only winner here, just as it's not the only victor in the smartphone and tablet wars. There's a new report detailing three hidden winners riding the coattails of Apple's success. It's a free report, but only for a limited time so check it out now.

Don't Get Too Worked Up Over Disney's Earnings

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Walt Disney (NYSE: DIS  ) , whose recent revenue and earnings are plotted below.


Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Walt Disney generated $3,435 million cash while it booked net income of $4,807 million. That means it turned 8.4% of its revenue into FCF. That sounds OK. However, FCF is less than net income. Ideally, we'd like to see the opposite. Since a single-company snapshot doesn't offer much context, it always pays to compare that figure to sector and industry peers and competitors, to see how your business stacks up.


TTM Revenue


TTM FCF Margin

Walt Disney $40,893 $3,435 8.4%
Viacom (Nasdaq: VIAB  ) $14,914 $2,489 16.7%
CBS (NYSE: CBS  ) $14,362 $1,568 10.9%
Time Warner (NYSE: TWX  ) $28,593 $2,334 8.2%

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. TTM = trailing 12 months.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collectio! ns so mu ch. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Walt Disney look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.


Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 21.2% of Walt Disney's operating cash flow coming from questionable sources, investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 15.7% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 50.9% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underapp! reciated home run stocks that provide the market's best returns.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

  • Add Walt Disney to My Watchlist.
  • Add Viacom to My Watchlist.
  • Add CBS to My Watchlist.
  • Add Time Warner to My Watchlist.

Vanguard to SEC: More Money Market Fund Reforms Should Be Weighed Carefully

Vanguard told the Securities and Exchange Commission (SEC) in a comment letter on Monday that while the agency’s recent regulation imposing new minimum liquidity levels on money market funds has had beneficial effects, any further action should be looked at with great caution.

Vanguard's letter said that the new regulations “greatly increased the funds’ liquidity and ability to satisfy large redemption requests,” and will help prevent a “future systemic market disruption” from threatening the liquidity of money market funds, as was the case in the financial crisis of 2008, further reforms to money market funds pursued by the Financial Stability Oversight Council (FSOC) should be weighed carefully.

In its comment letter, Vanguard said that the President’s Working Group on Financial Markets’ (PWG) report on money market funds that was released last October “appropriately underscores the complexity involved in further reducing money market funds’ potential susceptibility to runs, and demonstrates the very real danger that the potential ‘cure’ is worse than the ‘disease.’ It is important, therefore, Vanguard continued, that any reforms pursued by FSOC, created under Dodd-Frank, “carefully consider the consequences that such reforms may impose on the economy, financial markets, borrowers and investors.”

Careful and deliberate consideration of the downstream effects of any additional money market fund reform, Vanguard continued, “will help ensure that any changes will be positive and enduring, and will bolster rather than destroy a valuable cash management product for millions of investors and a much-needed source of financing for government, financial and corporate borrowers.”

The PWG stipulated that the SEC must assist the FSOC in its analysis of money market funds.

Vanguard went on to say that the fund firm does not believe that the “market-wide illiquidity that occurred in the 2008 market crisis resulted from money market fund activity, but rather from banking entities’ unwillingness to accept each others’ credit risk.” Nonetheless, Vanguard continued, “we understand that the PWG, [FSOC] and Commission believe more should be done to further mitigate the potential structural vulnerabilities of money market funds to runs.”

The SEC’s recent amendments to Rule 2a-7 and certain other rules that govern money market funds under the Investment Company Act of 1940, Vanguard said, “have made money market funds more resilient to credit and liquidity pressures, and will help reduce the likelihood of runs. We believe the amendments to Rule 2a-7 and related money market fund rules, which we strongly supported, significantly improve a fund’s ability to withstand unusually high redemption activity.”

Vanguard said it also supports the creation of a private emergency liquidity facility for prime money market funds, as laid out in the PWG report, as it “is the best alternative that directly addresses the liquidity issue and, therefore, would be the most effective and appropriate option to address the potential for a run.”

The proposals for a floating NAV, on the other hand, Vanguard said, “do nothing to make money market funds more robust in the face of adverse liquidity conditions. They merely change accounting mechanics and make investment in, and management of, money market funds more complex.”

Why This Dot-Com Stock is STILL a Good Investment

Considering how rough it's been for equity investors the past few years, I'm always somewhat amazed when I see a stock with a chart that looks like it came right out of the 1990s -- the line goes straight up, seemingly without end. I'm even more amazed when I find that, after a little research, the stock is easily capable of more of the same. I can just hear David Spade, formerly of "Saturday Night Live," saying, "The '90s called and they want their stock back."

In fact, one very well-known publicly-traded company has been posting '90s-like returns, delivering 30% a year, on average, for the past three years. Though they might seem out of place, I suppose these results shouldn't be such a surprise, since the company has been growing sales and earnings by about 20% for five years now. During that time, annual revenue nearly doubled from $5.9 billion in 2006 to almost $10.8 billion currently. Earnings per share (EPS) nearly doubled, too, from $0.80 to $1.40.


As a top destination for online shoppers, eBay, Inc. (Nasdaq: EBAY) is in a position to continue growing rapidly as it continues to evolve from an online auction site to a global e-commerce hub. With nearly 100 million active users and counting, I think it's plenty capable of returning 30% a year for at least another few years.


Don't expect online auctions to be the main driver of future growth, though. Although it'll probably generate substantial income far into the future, the auction business that made eBay so famous now only accounts for about 40% of total revenue. Online auctions everywhere, not just eBay's, have been gradually falling out of favor with consumers, so I fully expect to see that 40% figure drop even lower -- perhaps far lower -- over the next decade.

P! ayPal, I nc., the Internet payment service eBay acquired in July 2002 for $1.5 billion, is likely to be a progressively more robust income source. PayPal currently generates about 25% of revenue and, I wouldn't be surprised to see it grow much larger because of increased usage by eBay account holders and greater adoption by major retailers. "PayPal, which boasts more active accounts than Discover and American Express, is now accepted by 60 of the top 100 online retailers in the U.S., including Wal-Mart, Hewlett-Packard, and Home Depot," points out Morningstar analyst R.J. Hottovy. As a result, payment volumes have grown at a 24% compound annual rate (three times as fast as the online retail market) for the past three years, and analysts see this continuing for several more years.

The online sale of fixed-price items, currently about a third of total revenue, should become a progressively larger income source, too. eBay has been investing heavily in this area, most recently by acquiring e-commerce and interactive marketing services provider GSI Commerce for $2.4 billion on June 20. The acquisition gives eBay access to GSI's extensive e-commerce client base of 180 retailers, including high-profile names such as Ralph Lauren Corp. (NYSE: RL) and Dick's Sporting Goods, Inc. (NYSE: DKS). Mobile commerce via downloadable applications like eBay Mobile and PayPal Mobile should facilitate auction-based and fixed-price sales as consumers increasingly shop with smartphones and other mobile devices.

A key catalyst going forward will be further penetration into global markets -- particularly developing countries, where perhaps 5%-30% of the population has Internet access, depending on the country. eBay and other online retailers stand to benefit as Internet use in these areas gradually increases and eventually reaches levels similar to those in the developed world. Right now, eBay has a total worldwide audience (active customers plus those who've used eBa! y at som e point) of about 224 million, or 16% of all Internet users. An estimated 82% of these users reside in North America or Europe, so emerging markets represent a major growth opportunity.  

Risks to Consider: The e-commerce landscape constantly changes and is extremely competitive. For example, PayPal will be facing intense competition from Checkout, the Internet payment system of (Nasdaq: AMZN).

Action to Take--> From its beginnings as an online auction hub 17 years ago, eBay has morphed into one of the world's largest, most successful e-commerce companies. During the next three to five years, analysts project annual growth rates of 15% for sales and 18% for EPS. They also expect the stock to gain between 175% and 270% from the current price of around $31 per share.

Investment News Briefs

Both the iShares Dow Jones Select Dividend Index Fund(DVY) and SPDR S&P Dividend ETF(SDY) appear set to kick off the New Year on a strong note.

In the face of the seemingly persistent doom and gloom that plagued the latter half of 2011, the two funds have managed to handedly outpace broad-based ETFs like the SPDR S&P 500 ETF(SPY).

The real winner in the realm of dividend ETFs, however, has been the iShares Dow Jones High Yield Equity Fund(HDV). The new kid on the block, HDV powered past its veteran competitors, securing over 7% gains during the past six-month period. This was not an unusual occurrence for the fund, though.

Since its late-march unveiling, HDV has consistently trumped DVY and SDY. With this type of standout strength, came popularity. The fund's average trading volume currently stands at over 220,000.

HDV appears to have already cemented its place within the ETF universe. Now as we prepare to kick off 2012, the question remains: Will the fund maintain its lead in the New Year?

In order to answer to this question, one needs to look under the fund's hood. By uncovering the factors that separate HDV from its competitors, it becomes easier to see what has, and could continue to contribute to its remarkable divergence.

Upon initial inspection it becomes clear that HDV is very different from the elder DVY. In terms of style, the younger fund leans solidly into the large-cap category. In fact, according to Morningstar's style box, HDV can be seen flirting with a giant-cap designation.

DVY, though officially considered a large cap product, toes the line between a large- and mid-cap classification.

During periods of market euphoria, smaller and more-volatile companies like those comprising DVY tend to fall into favor as increas! ingly co nfident investors seek out upside potential.

In tumultuous environments, on the other hand, these same companies often lag as individuals flee from risk. In the event that the turmoil that defined 2011 persists into the New Year, HDV's dedication to stable large- and mega-cap companies will likely help the fund continue to outperform.

Further aiding HDV in 2011 was the fund's ample exposure to defensive sectors. Utilities comprise nearly one-third of DVY's index, making it an attractive play for those looking for protection from market headwinds. In terms of overall safety, however, the fund pales in comparison to HDV. Names hailing from non-cyclicals including utilities, consumer goods, healthcare, and telecommunications dominate the younger fund's index, representing over 80% of its assets.

At the same time that the fund designates the largest percentages of its portfolio to safety, it also shields itself from weakness. Lagging market corners, such as financials and materials, are among the least represented in the fund's breakdown, together accounting for less than 2% of its assets. Comparatively, these two sectors make up more than 20% of DVY's index.

As we prepare to close the book on 2011 and look to the opening weeks of 2012, I do not foresee HDV giving up its lead. In the New Year, the challenges facing retail investors remain great; the European Union is still plagued with turmoil and questions continue to linger regarding the growth status of leading emerging growth engines like China. This type of cloudy forecast has and will continue to benefit HDV.

That is not to say that investors should abandon DVY. Rather, in the event that skies clear, this fund should be on the radar. During periods of duress, the elder product will likely sell off harder than HDV. These magnified downturns may present attractive buying opportunities in the event that market conditions improve.

With challenges ! on the h orizon in 2012, investors need to maintain a level head. Whether you opt for DVY, SDY, or HDV, dividend-paying equity ETFs look like strong bets for the New Year.


>>Netflix's Biggest Bet in 2012

>>Kass: 15 Surprises for 2012

>To order reprints of this article, click here: Reprints

Detroit Ostrich Farm: Welfare Lines For Workers, Bonuses For Bosses

Ford’s (F) reputation for stupidity may not have been mitigated by Bill Ford stepping down as CEO and a senior executive’s decision not use the company plane for free to fly home to Florida. .

The company’s latest proposal is to give many of its white collar workers bonuses if the Ford reaches many of its cost-cutting goals.

Notice that the extra cash is not tied to rising sales, which is the only thing that will save the company.

The UAW leadership can read the papers and they are not terribly happy that Ford will be passing out its scarce cash while asking its factory workers to accept benefits cuts, buy-outs and layoffs.

It is a hell of a way to get the union in line before the big contract negotiations later this year.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

Green Mountain: 'Long runway for growth'

Geoffrey SeilerGreen Mountain Coffee Roasters (GMCR) remains one of the most-attractive names in the realm of growth stocks.

Bullish investors have been using the weakness to accumulate shares in recent sessions. It is a growth story we believe continues to have legs long term.

The company appears poised to ride some strong trends heading into the holiday season. Sales of its Keurig single-cup coffee makers have been solid all year and the Christmas season usually pumps up the results.

But Green Mountain will also benefit from the launch of K-Cup versions from two key brands, Dunkin' Donuts and Starbucks, this fall.

Analysts say Green Mountain will benefit from the advertising and promotion by both of these high-profile partners.

Company officials say the second leg of the value chain that is driving its rapid growth is the quality of the coffee it offers.
The Starbucks and Dunkin' Donuts brands add to that perception, but Green Mountain has its own brands and others that it has purchased over the years, plus other partners.

Some of those new products include Cafe Escapes, which is a line of cocoa and dairy products; and its Brewed Over Ice coffees and teas. This fall it will promote a new Hot Apple Cider offering and a coffee it is calling Barista Prima.

Green Mountain estimates that there are approximately 90 million households in the U.S. that have a coffee maker in the home and the Keurig is currently in 7 to 9 million of them.

We remain big fans of the Green Mountain story, with its razor and blade model.

The quality of the K-cup offerings is high and reasonably priced; certainly cheaper than grabbing a cup to go at a specialty coffee shop and often less waste with a pot of home brew. We continue to believe GMC! R has a long runway for growth.

The company just wrapped up its 2011 fiscal year and investors will be most keen to learn more about how the first quarter, which encompasses the holiday selling season, is shaping up.

GMCR is expected to more than double its revenue and profit for the final quarter and full year when it reports 2011 results.

The share traded to within a hair of $116, its high for the year, in mid-September before slumping to under $88 when the broader market retreated.

It's not a cheap stock, but given its growth potential we think it still worth accumulating, especially on any weakness.

A daily investment service that is committed to creating long-term wealth for its members,'s Recommended List of stocks was up +40% in '09 and over +20% in '10. As a subscriber, you'll receive actionable market commentary, real-time trade alerts, and access to 40+ stock ideas on the Recommended List.?

Plus, sign up for a free trial today and get instant access to Bull Market's invaluable Special Reports and Earnings Previews. Get aRisk-Free Trial to Bull Market Today!

2 Stocks I'm Buying, Peter Lynch Style

Following Peter Lynch's advice is a great way to make money. His bite-sized bits of wit and wisdom put everything is perspective. For instance:

  • Behind every stock is a company. Find out what it's doing. Check.
  • Time is on your side when you own shares of superior companies. Got it.
  • Know what you own, and know why you own it. Yes, sir.

That's timeless advice. Those quotes, along with three others, lay the foundation for my next stock purchases.

Before I share what they are, let me quickly review the types of companies I'm looking for in my Trends and Trades portfolio (follow along on Twitter). I want to own businesses with:

  • Tranformational technologies.
  • Nascent performance.
  • Talented management.

These are the companies that can generate multibagger returns. And I think both of my choices are up to the task.

A 2-for-1 deal
I draw inspiration from two more of Lynch's quotes. One's a classic. The other one is obscure but right on target.

  • The best stock to buy may be one you already own.
  • When even the analysts are bored, it's time to buy.

Optical-networking hardware maker Infinera (Nasdaq: INFN  ) satisfies both of Lynch's quips. The company has asked investors to be patient as the company prepares to roll out its next-generation product. And since there's no action, the stock has been tossed to the "uninterested" piles on sell-side analysts' desks. Just look at the breakdown of their recommendations.


Number of Analysts

Buy 1
Outperform 1
Hold 5!
Underperform 2
Sell 1

Source: S&P Capital IQ.

Yeah, analysts are bored stiff waiting for the catalyst to come in 2012. But Infinera has a differentiated technology compared with incumbents such as Ciena (Nasdaq: CIEN  ) and Alcatel-Lucent (NYSE: ALU  ) . TNT already owns shares. I still think it's a home-run stock and am willing to wait for the payoff.

I'm adding another 3% to the portfolio.

A bright future
Back to Lynch:

  • You can't see the future through a rearview mirror.

Lynch may have said that first, but I give David Gardner credit for encouraging me to dream about the possibilities companies can have. That's why I'm excited to invest 5% of the TNT portfolio in InvenSense (Nasdaq: INVN  ) . Let's look at this company in terms of what I look for in an investment.

Transformational technology: InvenSense is changing the way we interact with electronic devices. The company designs and builds micro-electro-mechanical systems (MEMS), namely accelerometers, gyroscopes, compasses, and pressure sensors. It all started with the Wii: InvenSense's MEMS are in the system's handheld, motion-sensitive controllers that gave users a fuller gaming experience. And InvenSense wants to take the resulting desire to be more closely connected with devices and have it spread like wildfire.

Nascent performance: At the same time, Wii controllers are quickly moving into the rearview mirror. But InvenSense is already on to the next big opportunity: smartphones and tablets. According to IHS iSuppi, smartphones and tablets with motion-control technology with increase from 37 million units in 2010 to 512 million uni! ts in 20 14. STMicroelectronics (NYSE: STM  ) will continue to put similar chips in Apple's (Nasdaq: AAPL  ) iPhones and iPads, leaving InvenSense to continue to supply sensors to many of the other big players, including Samsung, HTC, and Research In Motion (Nasdaq: RIMM  ) , which made up 40.8% of the shipments in 3Q 2011. InvenSense serves those customers, as well as LG Electronics.

InvenSense generated almost $130 million of revenue and nearly $23 million of free cash flow over the 12-month period ended October 2011. And the smartphone and tablet markets haven't even really taken off yet. There are also plenty of other opportunities for the company to explore: smart TVs, toys, navigation devices, cameras, and industrial tools, to name a few. Given the huge opportunity ahead of it, I think InvenSense could be three to five times as large in five years, delivering incredible performance to shareholders.

Talented management: Steven Nasiri has been and remains a critical part of the company's success. Nasiri founded InvenSense and developed the Nasiri-Fabrication platform, which puts motion sensors on microprocessors in a cost-effective manner. InvenSense made the most of the Wii opportunity, but its MotionApps ecosystem may be more important, as it opened the door to the smartphone and tablet market. MotionApps gives developers access to the sensors to create new applications. More applications should lead to higher adoption rates and more growth in the future. And with a 12% stake in the company, Nasiri has interests that are clearly aligned with shareholders.

2 today, more tomorrow
I believe investors need to kick the door down when opportunity knocks. That's why I'm adding to my Infinera position as well as bringing InvenSense into the fold. These companies not only have home-run potential but are! also bu sinesses I want to be a part of over time.

The Trends and Trades portfolio is just getting started. There's still plenty of cash left to go after these additional attractive opportunities. I have a number of them in mind and am writing about them all the time. You don't want to miss any of the action. The best way to stay up to date is to click the @trendsandtrades link to follow me on Twitter.

(KVHI, MJGCF, BOOT, OSTK) Stock Highlights by

KVH Industries Inc. (Nasdaq:KVHI) will announce its financial results for the third quarter that ended September 30, 2011, on Wednesday, October 26, 2011. In conjunction with the release, the company will conduct its investor conference call at 10:30 a.m. ET, hosted by Mr. Martin Kits van Heyningen, chief executive officer, and Mr. Patrick Spratt, chief financial officer.

KVH Industries, Inc. engages in the development, manufacture, and marketing of mobile communication products for the marine, land mobile, and aeronautical markets primarily in North America, Europe, and Asia.


MAJESTIC GOLD CORP (MJGCF.PK) engages in the exploration and development of mineral properties in China. The company focuses on its gold project located in the prolific gold region of Song Jiagou in eastern Shandong Province. Majestic Gold Corp. is headquartered in Vancouver, Canada.

MAJESTIC GOLD CORP (MJGCF.PK) has arranged a $10,000,000 loan to advance its Song Jiagou project in China. Nine million dollars ($9,000,000) from the proceeds from the loan will be used by the Company to in connection with its Song Jiagou project and the balance of one million dollars ($1,000,000) for general working capital purposes.

The loan will have a one year term and loan principal will be convertible at the option of the lender in whole or in part into common shares (”Shares”) of the Company until twelve months from the date of the loan advance at the price of $0.205 per Share. The loan will bear interest at the rate of 7.5% per annum, payable on maturity, and accrued and unpaid interest will be convertible at the option of the lender in whole or in part into shares of the Company until twelve months from the! date of the loan advance at Market Price at the time of conversion.

The lender is at arm’s length from the Company and will not become an insider as a result of any conversion of principal and interest. All shares issued on any conversion of loan principal or interest will be subject to a four month hold period from the date of advance of loan proceeds. The loan is subject to acceptance by the TSX Venture Exchange.

As additional consideration for the loan, the Company has agreed to forward at least $9 million to Majestic Yantai Gold Ltd., a British Virgin Islands company owned 94% by the Company to be used to further advance its Song Jiagou project. The Borrower has also agreed to a 90 day period for reciprocal due diligence reviews and discussions for the possible further involvement of the Lender in the Song Jiagou project.

In the event that no further agreement is reached between the Lender and the Company during the 90 day period, then the loan and a minimum of seven (7) months interest will automatically convert to shares in the Company at a price of $0.205 per share and the interest at Market Price respectively. In addition the Company is pleased to announce that it has arranged a non-brokered private placement of up to 15,000,000 shares to be issued at the price of $0.20 per share for gross proceeds of $3,000,000.

Gold has a lot of great features: it is soft and is easy to shape, it reflects light, and resists rust, and is an excellent conductor of heat and electricity. All these mean it can be used in a lot of different ways.
Gold is so popular for use in electronics because it is highly resistant to corrosion, is easy to work with, and is great for conducting heat and electricity … only silver and copper conduct electricity better, but don’t resist rust or tarnish well. Because it can withstand the effects of time so well, gold is vital in the modern electronics industry, making products we rely on-from mobile phones to credit cards-more reliable.

Fo! r more i nformation about MAJESTIC GOLD CORP. visit its website:

Lacrosse Footwear Inc. (Nasdaq:BOOT) reported results for the third quarter ended September 24, 2011. For the third quarter of 2011, LaCrosse reported net sales of $35.3 million, compared to $37.7 million in the third quarter of 2010. For the first three quarters of 2011, net sales were $87.5 million, compared to $98.5 million in the same period of 2010. The Company recently announced a new $15.4 million delivery order for the United States Marine Corps which it anticipates fulfilling during the fourth quarter of 2011 and the first quarter of 2012.

LaCrosse Footwear, Inc. engages in the design, development, manufacture, and marketing of footwear for the work and outdoor markets. Inc. (Nasdaq:OSTK) announced victory in its two-year patent infringement lawsuit with behemoth Alcatel-Lucent USA, Inc. The East Texas jury deliberated for less than two hours before returning a defense verdict., Inc. operates as an online retailer offering discount brand, non-brand, and closeout merchandise in the United States.

When Wall Street Loses Grads To Teaching: William D. Cohan

We are witnessing the decline andfall of the investment-banking profession as we have known itfor the past 40 years.

The evidence is everywhere. The increasing regulations onWall Street -- as required by the Dodd-Frank law and still beingwritten by the Federal Reserve, the Securities and ExchangeCommission, the Commodities Futures Trading Commission andothers agencies in the U.S. and Europe -- will require theremaining companies to increase their capital, curb their risk-taking and reduce their principal investing.

Aside from the fact that investing principal andproprietary risk-taking per se had nothing to do with the recentfinancial crisis -- and that the ability of Goldman Sachs GroupInc. (GS) to make a huge proprietary bet against the mortgage marketprobably helped saved the firm -- these new rules will greatlycurb Wall Street��s revenue and profitability at a time when thebusiness itself is suffering a severe slowdown. (What sunk WallStreet in 2008 was the seemingly more conventional business ofbeing a middleman for the manufacture, packaging and sale ofincreasingly risky mortgage-backed and other debt securities.)

Not being able to make those big proprietary bets when yousee them developing -- in effect, the closing of the casino thatWall Street has become over the past few decades -- willseverely limit bankers�� money-making opportunities. It will alsoprotect the rest of us when those big bets go wrong or areperceived to be too risky. (For every Goldman Sachs actingbrilliantly, there is an MF Global Holdings Ltd. actingfoolishly).

Signs of Withdrawal

There is little debate anymore that Wall Street had becomehighly dependent on its trading operations. Something like 90percent of Bear Stearns��s profits in the years leading up to itsMarch 2008 demise came from its trading and debt-originationactivities. The percentages are not that much different atGoldman Sachs, where in 2010 its traditional investment-bankingoperations generated only $1.3 billion of $12.9 bi! llion in pretax earnings, about 10 percent. All but $1 billion or so ofthe rest of Goldman��s pretax earnings came from its trading,lending and investing businesses.

The slowdown in business, combined with the looming tradingcurbs, has resulted in job losses across Wall Street. MorganStanley (MS) recently announced it was firing 1,600 employees.Goldman Sachs has done its usual turn of eliminating the bottom10 percent of its workforce and a group of its long-servingpartners. Bank of America Corp. (BAC) announced that about 30,000employees would be chopped by the end of 2012, although a numberof the firm��s investment bankers lost their jobs in the pastmonth.

Yet those suffering the most are the foreign firms thatwere trying to break into Wall Street��s business. NomuraHoldings Inc. (8604) has pretty much scuttled its most recent WallStreet experiment (it bought Lehman Brothers Holding Inc.��sEuropean and Asian banking operations) and firms such as SocieteGenerale SA (GLE), UBS AG (UBSN), Credit Suisse Group AG (CSGN) and Royal Bank ofScotland Group Plc (RBS) are all cutting Wall Street bodies.

In November, Bloomberg News estimated that more than200,000 people who work in finance had already lost or wouldlose their jobs this year.

Not only will the head-count reduction on Wall Streetcontinue for the foreseeable future, but the vast sums overpaidto bankers and traders will inevitably continue to fall as well-- as many of them are finding out this bonus week. There issimply no easier and quicker way for Wall Street firms to keepup a modicum of profitability than by cutting pay for the peoplewho still work there. Needless to say, the inevitable decline inWall Street��s compensation will mean less tax revenue for NewYork City and New York State and fewer government services forthe rest of us (absent higher taxes).

Ivy League Doubts

The most reliable leading indicator of Wall Street��s futureprospects is the way recent graduates of Harvard, Princeton andYale -- supposedly our ! best and brightest -- choose to spendtheir time after graduating. For years, hordes of graduates fromthose schools beat a fast path to Wall Street. Now the road isfar more difficult to travel. For those who choose to make thejourney, there is the prospect of incurring the wrath and scornof fellow students who make up the various Occupy Wall Streetmovements -- a fact not likely to deter many -- and then thereare dimmer prospects for a job on Wall Street generally, whatwith the slowdown in business.

According to a Dec. 21 article in New York Times, whereasin 2006 some 46 percent of Princeton graduates who had jobslined up after graduation went to Wall Street, four years laterthat number had fallen to 36 percent. At Harvard, in 2006, aquarter of the class got jobs in finance; by 2011, that numberhad fallen to 17 percent. At Yale, in 2006, 24 percent of thegraduates had jobs in finance and on Wall Street, while in 2010,the number of graduates going to Wall Street had fallen to 14percent.

The word around Goldman Sachs, I��m told, is that even thoseoffered a still highly coveted entry-level job at the firm arehaving second thoughts about taking it. More and more, banks arelosing talent to Teach for America, a fact that may turn out tobe one of the most heartening consequences of the financialcrisis.

(William D. Cohan, a former investment banker and theauthor of ��Money and Power: How Goldman Sachs Came to Rule theWorld,�� is a Bloomberg View columnist. The opinions expressedare his own.)

Triple-Digit Profits from Down and Dirty Drilling

An increasing number of marginal exploration and production projects are being fired up, due to the expectation of a dwindling oil supply. As oil prices rise, it becomes extremely profitable to tease oil out of higher cost reservoirs and reserves. This is the bread and butter of oilfield service providers.

These companies include drillers and drilling rig operators, drilling equipment manufacturers, well service providers and a multitude of other companies tied to the production and distribution of oil—companies that have been sitting on the sidelines for years. Not being truly appreciated for their technologies. Now it is their time to step up to the plate and nail one out of the park.

Not Convinced?

My name is Jon Markman and for the past 16 years, I’ve been helping individual investors build their results with 26% annual returns no matter what the stock market throws at us or what is happening half a world away.

 All this is done by buying dominant companies in overlooked and profitable micro-niche sectors—before Wall Street takes notice and builds up the stock price.

I’ve been telling my subscribers about these types of micro-niche companies in my Strategic Advantage service. And I don’t want you to miss out on these profitable opportunities, because we’ve been raking in the gains.

Oilfield services providers is just one example of a micro-niche sector—but I have many others on my current buy list. But since there is so much money to be made in this area right now—before the rest of the world catches on—that’s where I want to focus today.

Just check out the gains in my top three oilfield services providers that subscribers to my Strategic Advantage service are already sitting on:

  • Oilfield Service Provider #1: 300% in just 11 months
  • Oilfield Service Provider #2: 58% in only one month
  • Oilfield Service Provider #3: 12% in two months

Start Digging

My favorite pick in this energy sector niche is a microcap oilfield service provider that is underappreciated and materially undervalued despite strong growth potential. In just two years, this company has grown revenues fivefold to $100 million and analysts forecast sales of $165 million for this year.

Many companies find one technology that works and build their whole business around it. And if it fails, the company goes under. This oilfield service provider isn’t one of those companies. There are five keys to its growth path and rising stock price:

  • Proprietary chemicals and proprietary “artificial lift” devices
  • Expansion of drilling tool rentals
  • The ability to grow both organically as well as through acquisition
  • The ability to grow its customer base both in number and geographically
  • An expansion of earnings multiple

This company has grown revenues at its chemical and logistics division to an estimated $95 million this year from $12 million in 2003. Most of that growth has been organic, which means it has come as a result of the hard work of its own R&D and sales teams — not from acquisitions. And it believes that it only holds 2% of a $3 billion market for oilfield chemicals, so, as you can see, there is plenty of room for more market share growth.

The company’s key products are called “microemulsion chemistry.” These chemicals help in acidizing, fracturing, cementing and drilling applications. They’re especially helpful to oil companies that are trying to recover more oil from mature fields. An independent study showed that this company’s chemicals improved production rates at 250 test fields by 40%.

One of the cool things about these chemicals is that their main feedstock is citrus oils, known as “terpinenes.” They are literally refined from orange, grapefr! uit, lem on and lime rinds, much like the ingredients that you will see in many household cleaning products. And because it is made from fruit, it is biodegradable, which means it is environmentally friendly at a time when even the down-and-dirty energy companies care about such things.

So, who uses this stuff? Mainly, it is the large pressure-pumping operators among the oilfield services companies. Halliburton is this company’s largest customer and reportedly uses its fracturing fluids as a key differentiator in its sales pitch to Eastern Hemisphere customers. Schlumberger (SLB) and BJ Services (BJS) are also said to have started using these chemicals after a long test period, and their ramp-up in application will be a big part of a real acceleration in this company’s sales over the next couple of years.

Just to give you an idea of how it’s going: chemical sales are already running $1.8 million per week, compared with $8 million in all of 2005! Plus the firm’s chemistry R&D team has grown to 15 professionals who are working with a budget that is expected to triple to $2.1 million this year.

So Who Is It Already??

My #1 pick in this area has raked in a sweet 300% gain in less than a year. Did we strike black god? You bet. The stock is trading at around $48 with we’re looking at growth expectations north of 50% in 2008. Please don’t be put off by the success we’ve had so far—this stock is still cheap and as more and more investors realize its golden potential, they’re going to pay a premium for its shares!

Click here to learn more about this profitable niche in the energy sector and the name of my favorite company that is gushing black gold!