Can Lululemon Keep Up the Momentum?

With shares of Lululemon Athletica Inc. (NASDAQ:LULU) trading at around $76.88, is LULU an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock's Movement

Lululemon might be one of the most hated success stories in existence. To many investors, it's a fad that will eventually fade away. While that's not likely, there are potential dangers ahead, especially considering the company's premium pricing strategy.

While Lululemon has been hot for years, what happens when the economy sours? Okay, the economy has already soured. Therefore, the question should be rephrased: what happens when the stock market comes back down to reality? That answer is twofold. Once, it's an expensive growth stock and investors will want no part of it. Two, since Lululemon attracts a mostly affluent crowd, some of these shoppers will lose household income through investments. In all, a vicious cycle might present itself.

However, Luluemon does have a lot of momentum, and it's not ordinary momentum. Lululemon has more than just customers. It has created a family-like atmosphere for its customers. This has been accomplished through superb customer service and unique events. For example, customers can contact a local store to set up a Yoga Rave. The following is an example. Even if you don't like Lululemon and/or the stock, you might enjoy the video if you appreciate an energy boost. Or, since it's Friday, perhaps it can get your blood flowing for the weekend:

Sticking with the positive angle for now, Lululemon is confident in its future potential, considering its adding more locations. Analysts also tend to favor the Buy side: 11 Buy, 11 Hold, 3 Sell. Other positives for Lululemon include improved productivity, focused merchandising, consistent improvements in revenue on an annual basis, consistent improvements in earnings on an annual basis, strong margins, and an impressive recovery from its "pants crisis".

Now let's take a look at some numbers. The chart below compares fundamentals for Lululemon, Under Armour (NYSE:UA), and The Gap (NYSE:GAP).  Lululemon has a market cap of $10.96 billion, Under Armour has a market cap of $5.95 billion, and The Gap has a market cap of $17.62 billion.

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	LULU	UA	GPS
Trailing   P/E	41.03	49.89	16.28
Forward   P/E	29.65	30.83	12.92
Profit   Margin	19.74%	6.34%	7.25%
ROE	36.35%	16.07%	40.18%
Operating   Cash Flow	$280.11 Million	$198.27 Million	$1.94   Billion
Dividend   Yield	N/A	N/A	1.60%
Short   Position	37.00%	18.80%	3.00%

 

Let's take a look at some more important numbers prior to forming an opinion on this stock.

E = Equity to Debt Ratio Is Strong  

The debt-to-equity ratio for Lululemon is stronger than the industry average of 0.50.

	Debt-To-Equity	Cash	Long-Term Debt
LULU	0.00	$590.18 Million	$0
UA	0.07	$255.72 Million	$60.44 Million
GPS	0.43	$1.51 Billion	$1.25 Billion

 

T = Technicals Are Strong   

Lululemon has been one of the top performers throughout the broader market over a three-year time frame. That's saying a lot!

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	1 Month	Year-To-Date	1 Year	3 Year
LULU	23.36%	0.85%	1.09%	308.70%
UA	12.60%	17.31%	15.82%	237.40%
GPS	8.37%	22.89%	35.81%	63.65%

 

At $76.88, Lululemon is trading above all its averages.

50-Day   SMA	68.05
100-Day   SMA	69.56
200-Day   SMA	68.58

 

E = Earnings Have Been Strong               

Once again, earnings and revenue have consistently improved on an annual basis. When it comes to numbers, it's difficult to find negatives for Lululemon.

	2008	2009	2010	2011	2012
Revenue   ($)in   millions	353.49	452.90	711.70	1.00B	1.37B
Diluted   EPS ($)	0.28	0.41	0.85	1.27	1.85

 

When we look at the previous quarter on a year-over-year basis, we see an increase in revenue and earnings. Revenue and earnings have also increased on a sequential basis.

	1/2012	4/2012	7/2012	10/2012	1/2013
Revenue   ($)in   millions	Top 5 Insurance Companies To Invest In Right Now 371.52	285.70	282.63	316.54	485.49
Diluted   EPS ($)	0.51	0.32	0.39	0.39	0.75

 

Now let's take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

T = Trends Might Support the Industry

At the moment, Lululemon is enjoying the dedication of an extremely loyal customer base. However, there are some things that are out of the company's control. Is it possible that the stock market continues to trade higher? Yes. Perhaps this bull run can last a lot longer. Nobody knows. At the same time, anyone with a pulse and a brain knows that there's something ominous on the horizon. It might be a distant horizon, but it's there. We could look at the standard reasons, such as increased taxes, underemployment, and eventual deleveraging on an unfathomable scale, but it should also be noted that U.S. company profits relative to GDP are the highest they've been since 1945. Could there really be a lot more room to run? This is potentially bad news for Lululemon and the industry.

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Conclusion

Lululemon wouldn't withstand a steep market correction well. Premium pricing is the primary reason for this. If the consumer weakens, then customers will look for cheaper alternatives, regardless of how loyal they have been in the past. Other headwinds include increased competition, a narrow niche (unless the strategy changes), poor stock valuation, and a spike in the short position (rarely a good sign despite the potential for a short squeeze). On the other hand, Lululemon is now an established brand, which opens a lot of doors in the future.

Billionaire Investor Carl Icahn Tells Fox Business Apple 'Could Certainly Innovate as Much as They Want' and Still Launch His Proposed $150 Billion Stock Buyback

Billionaire investor Carl Icahn spoke with FOX Business Network's (FBN) Charlie Gasparino about his positions in Apple and Herbalife. He discussed his proposal for Apple to launch a $150 billion stock buyback, saying, "They could certainly innovate as much as they want and still do this buyback." When asked whether he could maintain a stake in Herbalife for years, Icahn said, "I could. I have no compunction the way Herbalife is going right now." Icahn also discussed his Twitter war with PIMCO Founder and Co-CIO Bill Gross, and said, "I certainly respect Bill Gross, but it's a little fun."

Excerpts from the interview are below.

Watch the latest video atvideo.foxbusiness.com On his proposal for Apple to launch a $150 billion stock buyback:

"Looking and studying these books and looking at the numbers, Apple, by giving back $150 billion, would be earnings that they have. The free cash flow they have is close to $50 billion a year, okay? They certainly could afford $5 or $6 billion of interest and not even notice it, relatively speaking. I know it's huge numbers. So, they could certainly innovate as much as they want and still do this buyback. And one has nothing to do with the other. And by the way, I'm with Tim Cook. I think he's doing a good job. I'm against what is going on financially. I don't think the board has any real understanding of it, and I don't mean that in a bad way about the board. I'm sure they're not bad guys. But what they should be doing -- and it makes no sense not to take the money that Tim Cook has told me on several occasions, and I think told the world, that he believes this company is very undervalued. Therefore, logically -- I was good in school in logic -- therefore, logically, if you have $ 150 billion or a lot of money, as I said -- if you have a lot of money, you go out -- I owned an oil well once, big oil well, and there was a partner. The partner decided at the wrong time, you know, things weren't going well, to go sell his share of th! e oil well. And he gave them to me, and I thanked him for coming to me, because he had a deal with somebody, he said but if you want to bid higher, Carl, be my guest. Why can't we do the same with the Apple stock?"

On Apple's Board of Directors:

"I don't respect many boards, and in this case I don't respect what they're doing here. And the fact that they're doing it doesn't make it right. In fact, the reason -- and I, you know, I'm patting myself on the back here but to make a point. The reason we've made 1400 percent since 2000 if you bought our stock is because we went against these kind of boards. We went against them, and we got involved, and I can't tell you how bad these companies are run, some of them. Not all of them. And even some companies we've gotten involved with like that, but we liked the board. But my point to you is that to say that the board wants to do it, it's like the divine right of kings. Is Henry VIII right in hanging all his wives or whatever he did? Chopping their heads off, I guess."

On whether he wants to get rid of the board:

"No, no, no. I've said it very plainly. This is not a fight I could ever win, nor would I even try it."

On how he would exit from Herbalife (HLF):

"Well, let's talk about exiting. I mean, I think people have the wrong impression about my exit. I've held companies 15, 20 years…I like holding a lot of these companies, and I think Herbalife is a very undervalued company. But I don't look at it week to week, month to month, sometimes even year to year. We hold things for many years. I think Herbalife will continue to grow. I think unlike some of the critics of Herbalife, I think it does make work for people. I don't think it hurts anybody. Anybody that buys their product if they want it, you know, the poor Spanish woman that Ackman refers to you know, they could give it back. They never do. So they're not losing."

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On whether he could be in Herbalife for years:

"I could. I have no compunction the way Herbalife is going right now. You know, I'm certainly not at liberty to talk about their earnings, and I'm not talking about them, and, in fact, I, frankly, I'm not sure what they are to begin with, but that's not the issue. You know, we have people on the people on the board and all that. I'm talking generally, big picture. Herbalife has a great model. I think Herbalife actually, you know with all the criticism, you know, it is certainly not a pyramid scheme, in my opinion. And I think it does make work for people that are out of work. I mean it is absurd to say it doesn't. It is a way of retailing. Why do you have to retail to food stores necessarily? Why can't you retail this way?"

On his Twitter war with PIMCO Founder and Co-CIO Bill Gross:

"I certainly respect Bill Gross, but it's a little fun. He's out there telling me what I should be doing and I'm saying to him if you're so into doing good and you're so into this, why don't you step up to the plate and join the Giving Pledge like I and Bill Gates – he's talking about Bill Gates as a great hero so I said follow him and join the Giving Pledge instead of just talking about how good you want to be and give half your money away like I did and like Bill Gates did. Talk is cheap, you know? But I am not against Bill Gross, I respect him. I think he's accomplished a lot. I don't own any PIMCO but I still think he's a smart guy. But I sort of take umbrage a little bit to him going out and taking a gratuitous lap."

On being called a greenmailer:

"I'd like to say something about the greenmail. That was in the eighties and I don't consider it something that I have to defend because the companies would come to us and would say one hand we're going to kill you, we're gonna murder you - I had no money then, relatively little money - and we're going to put you! out of b! usiness and sue you forever or with the other hand here take it, we'll give you $20 million, it's their money. I never asked for it, they would come and give it to you. But obviously now that I have money I would never do it. I don't do it."

**CREDIT FOX BUSINESS NETWORK**

Cresud: Rare Value in Farmland

Argentina's largest farmland owner, owning more than 2.4 million acres, is a rare value, says Ian Wyatt of High Yield Wealth.

Cresud SA (CRESY) has 66% of those acres in Argentina; the rest are scattered through Brazil, Paraguay and Bolivia. In addition, it has extensive commercial property holdings in Buenos Aires.

Cresud CRESY is an exceptional value thanks to its depressed share price. For this, we can thank Argentina's dysfunctional government, led by President Christina Kirchner, who has overseen capital controls, foreign-owned asset seizures, and trade restrictions.

Investors, not surprisingly, are leery about investing in such a hostile political climate. But where other investors see fear, I see opportunity. I believe Ms. Kirchner has handed investors a gift.

Keep in mind-she won't be around forever. In fact, she may not be around past the October elections, as a backlash has set-in among her own supporters. In the meantime, I suggest investors focus on the value proposition. You know, see the forest through the trees.

The company has a proven record of growing revenue, cash flow and assets. Revenue over the past five years has soared to $665 million from $41 million, EBITDA per share has grown to $2.88 from $0.25 and book value per share has more than doubled to $11.70 from $5.

The value proposition is that Cresud offers the opportunity to invest in one of world's larger farmland owners at a 35% discount to book value.

The shares have historically traded at a premium to book value-frequently three to four times book value. Throw in the annual dividend, which yields 6%, and you have a unique value proposition in a popular asset class.

Keep in mind that Cresud has been around for more than 70 years, so the company has plenty of experience stepping around political minefields.

I fully expect that long after Ms. Kirchner has withdrawn from the political landscape, Cresud will still be plowing fields and raising cattle on Argentina's high plains.

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Is Ford a Buy After Earnings?

Victor Mora

With shares of Ford Motor (NYSE:F) trading around $17, is F an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Ford is a producer of cars and trucks. The company also engages in other businesses, such as financing vehicles. Ford operates in two sectors — automotive and financial services. Through its sectors, Ford provides a wide range of vehicles, vehicle parts, and services to a multitude of consumers and companies worldwide. The company's products saw declining demand in the past several years as gasoline prices took a major toll on pockets. Ford Motor is now revolutionizing its vehicles in order to compete on the world stage. Look for Ford to fuel a recovery in the American automobile industry and provide highly demanded vehicles, parts, and services.

Ford reported third-quarter results that beat estimates, and the Detroit automaker raised its full year outlook. Market stabilization in Europe in addition to Ford's recent overhaul of its European operations caused Ford to lose less money in the region than the company had previously expected. For the first time in over two years, Ford saw a profit in its other overseas operations. These results are evidence that CEO Alan Mulally's “One Ford” initiative is working. Earnings came in at 31 cents a share and revenue grew 12 percent to $36 billion.

T = Technicals on the Stock Chart Are Strong

Ford Motor stock has been rising in the last couple of years.The stock is currently trading near highs for the year. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Ford Motor is trading above its rising key averages, which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Ford Motor options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Ford Motor Options	26.42%	16%	14%

What does this mean? This means that investors or traders are buying a minimal amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
November Options	Flat	Average
December Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a minimal amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Ford Motor’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Ford Motor look like and more importantly, how did the markets like these numbers?

	2013 Q3	2013 Q2	2013 Q1	2012 Q4
Earnings Growth (Y-O-Y)	12.50%	15.38%	14.29%	-88.17%
Revenue Growth (Y-O-Y)	12.15%	14.71%	10.37%	5.34%
Earnings Reaction	1.94%*	2.53%	-0.22%	-4.64%

Ford Motor has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have had conflicting feelings about Ford Motor’s recent earnings announcements.

* As of this writing

P = Average Relative Performance Versus Peers and Sector

How has Ford Motor stock done relative to its peers, General Motors (NYSE:GM), Toyota Motor (NYSE:TM), Tesla Motors (NASDAQ:TSLA), and sector?

	Ford Motor	General Motors	Toyota Motor	Tesla Motors	Sector
Year-to-Date Return	37.53%	24.00%	39.37%	403.20%	34.63%

Ford Motor has been an average performer, year-to-date.

Conclusion

Ford is a well-established vehicle products and services producer distributed in a multitude of countries across the globe. A recent earnings release has investors upbeat about the company. The stock has been rising in the last couple of years and is currently at highs for the year. Over the last four quarters, earnings and revenues have increased, which has produced conflicting feelings among investors. Relative to its peers and sector, Ford Motor has been an average year-to-date performer. Look for Ford Motor to OUTPERFORM.

Icahn sells Netflix shares as CEO warns of euph…

SAN FRANCISCO -- Billionaire activist investor Carl Icahn sold some of his firm's stake in Netflix after CEO Reed Hastings warned that "euphoria" may be partly behind a huge run-up in shares of the streaming video company.

"Sold block of NFLX today. Wish to thank Reed Hastings, Ted Sarandos, NFLX team, and last but not least Kevin Spacey," Icahn wrote on Twitter late Tuesday.

Netflix shares dropped more than 9% on Tuesday and slid a further 2.2% to $315.44 in after-hours trading. The stock is up almost 400% in the past year.

Netflix reported impressive quarterly results late Monday, showing that the company's strategy of developing original TV shows, such as House of Cards starring actor Kevin Spacey, is attracting lots of new subscribers.

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However, CEO Hastings wrote a letter to shareholders warning them about the surge in Netflix shares.

"We had solid results compounded by momentum-investor-fueled euphoria," the letter said. "Some of the euphoria today feels like 2003."

In 2003, soon after Netflix went public, its shares soared from below $5 to more than $27.

Icahn still owns 4.5% of Netflix outstanding shares. But that is down from almost 10% in late 2012.

Icahn sold Netflix shares between Oct 10 and Oct 22 at prices well above $300. A year ago, the stock was trading near $60.

Sonoco Mulls Irish Plant Closure

While it's not a done deal just yet, consumer packaging specialist Sonoco  (NYSE: SON  ) announced yesterday it will consult with the workforce of its Carrickmacross, Ireland, facility regarding its closure come Nov. 1.

The plant, which makes thermoformed packages for food processors in Ireland and other parts of Europe, lost volume and profitability over the past several years, a pattern that continues in 2013. Sonoco says that leaves it with no viable option other than to consider closing the facility.

Saying it's not a reflection on the levels of commitment, safety, quality, and productivity of the workers, Jeff DiPasquale, Sonoco VP and GM of thermoforming, said shifting market conditions and a financially challenging competitive environment forced its hand in the decision.

"If a shut-down of the facility is the final outcome," DiPasquale said, "we will work diligently to ensure the closing of the Carrickmacross facility goes as smoothly as possible, not only for our employees, but also for our loyal customers, with minimal disruption to the quality and service they have come to expect."

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In the event the plant does shut down, Sonoco expects the layoffs won't begin until October, after which it will gradually scale back operations. The target for the plant closure is Nov. 1, but until the final decision is reached, operations will continue as normal. 

Should closure be the decision made, Sonoco will consider alternatives such as retirement, voluntary redundancies, and possible redeployment to other Sonoco operations to help minimize the impact.

Financial Times Article Bullish for Gold and Silver (GLD, SLV, ABX, GG)

"China and US lift global economy" was the banner headline this weekend for the Financial Times. While obviously bullish for the global economy, it is particularly so for gold and silver stocks such as Barrick Gold (NYSE: ABX), Goldcorp (NYSE: GG), and Wishbone Gold PLC (PINK: WISHY). That was shown by the exchange traded fund for gold, SPDR Gold Shares (NYSE: GLD), and the exchange traded fund for silver iShares Silver Trust (NYSE: SLV), both rising sharply for the week.

While SPDR gold shares was up more than 3% and iSharies Silver Trust jumped about 2.50% last week, it has not been that way for 2013. For the year, the SLV is off nearly 30%. Over the same period, the GLD is down more than 20%.

That has been registered in the performance of stocks such as Barrick Gold and Goldcorp.

For 2013, Barrick Gold is down more than 45%. Over the same time segment, Goldcorp is off by more than 30%. But both Goldcorp and Barrick Gold did very well last week in market action. Barron's recently had a bullish article on Barrick Gold. Wishbone Gold PLC also looks appealing, too, due to the recent developments.

The most bullish factor is the improving economic growth in China. As the world's second biggest consumer of gold, China drives much of the precious metals market, as it does for so other many commodities. As noted in the Financial Times piece by Ed Crooks, Ralph Atkins, and Jamil Anderlinj, "China's economy expanded by 7.8 percent...up from 7.5 percent in the previous three months..."

That is particularly bullish for Wishbone Gold PLC, which has substantial holdings in Australia. China and Australia have long had a rewarding commercial relationship focused around natural resources. With the Chinese economy growing, so will the demand for gold and silver, especially for firms like Wishbone Gold PLC that are ideally situated. Beaufort Securities recently recommended Wishbone Gold PLC, furthering the confidence of the investor community.

Has Washington Given Up on the Economy?

Washington Post columnist Neil Irwin stopped by to discuss his book, The Alchemists: Three Central Bankers and a World on Fire. It's a great read on the history of central banks, including how they responded to the financial crisis and the challenges they face in the future.

In this video segment, we look at the Federal Reserve's efforts to turn the economy around, and what Congress is -- or isn't -- doing to help make a difference for average Americans. A full transcript follows the video.

Morgan Housel: We have rising stock markets, rising debt markets, rising housing prices, but to the extent that the median American consumer doesn't own a tremendous amount of stocks, doesn't own a lot of corporate bonds; to the extent that that doesn't help them, what do we need to get middle American consumers back in the game?

Neil Irwin: It's funny. We have this debate around what the Federal Reserve should be doing and is doing, and are the policies that are currently in place, are they only supporting financial markets, not the real economy?

I would say it this way. It's the job of Congress and lawmakers. If they don't like the distributional aspects of what's happening in monetary policy, or in credit policy in the banking system, that's a job for politicians and elected leaders to say, "Well, we have different priorities."

"We acknowledge that these rising financial market prices are really benefiting the upper income people above the middle class. Well, we're going to deal with that through the tax system, through other methods, to try and make sure that there's a broad participation in whatever economic improvement we see."

Morgan: Ben Bernanke talks a lot about how he wishes Congress was doing more to take pressure off the Fed, from having to drive the recovery. What can you say about that?

Neil: This is deep-seated within the Fed, and certainly Ben Bernanke has said it in a number of settings, including just this morning.

Look, it's amazing the degree to which the Fed has been the only game in town, in terms of policy trying to drive the economy. My colleague Jim Tankersley just wrote, yesterday, a piece in the Washington Post saying, "Washington has given up on the economy."

If you go to Congress, they're talking about long-term entitlement reform and tax reform, and some different things they might want to do that would have economic impacts -- immigration reform -- and you can debate the merits of those policies one by one, but what they're not doing is saying, "You know what? We still have 7.5% unemployment, and that's unacceptable. We're going to look at what we can do in the short run to try and change that and enhance job growth."

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That being the case, the Federal Reserve has been the only game in town on trying to deal with the cyclical problem in the economy, and they've done that by round after round of buying bonds and printing money to do it. 

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Tea Party Has Wall Street Grudgingly Married to Democrats

NEW YORK (TheStreet) -- Investors around the world are weighing the implications of a Republican-engineered standstill on raising the U.S. Treasury's borrowing power, and it wouldn't be surprising if major financial market dealers on Wall Street are in the process of re-thinking their political allegiances.

Will America's largest banks, hamstrung by a new regulatory era imparted by the Obama administration, be forced to taper their support of the Republican party and embrace a Democratic caucus that has been accused of vilifying the financial services industry?

If the U.S. government's credibility survives the latest bout of budget brinkmanship with a last minute deal to raise the federal debt limit, financial heavyweights such as Goldman Sachs (GS), JPMorgan  (JPM), Bank of America  (BAC) and Citigroup  (C) may conclude it is in their self-interest to stand behind an often adversarial Democratic Party in upcoming mid-term and presidential elections.

Such a scenario, while counterintuitive, would actually be in line with recent trends in the political largess of Wall Street's most powerful players.

The last time major financial intermediaries were staring down an abyss of total collapse -- the 2008 financial crisis -- their lobbying budgets and employee contributions tilted decidedly toward the Democratic party and presidential candidate Barack Obama, who was running on a platform that counted financial regulation as a centerpiece issue.

There was a clear rationale at the time. While Obama and his Democratic colleagues made no secret of their intent to drive regulatory stakes through the heart of Wall Street's proprietary and derivative trading desks, at least there was a hope that those lawmakers could propel the industry from the brink of collapse. The alternative, after all, was a Republican party that voted down the first iteration of then-Treasury Secretary Hank Paulson's Troubled Asset Relief Program just days after the collapse of investment bank Lehman Brothers.

As weeks dragged on between the failure of Lehman Brothers and the eventual implementation of TARP, which included the support of a only small minority of Republican legislators, many lawmakers in the party took to the House and Senate floor to advocate balancing the federal budget and letting banks fail as an alternative to the extraordinary measures eventually taken by the Treasury and the Federal Reserve. 

Would a Republican ticket headlined by John McCain and Sarah Palin have the political will to get banks out of the crisis and the economy out of a free-fall? Political giving by banks and their employees indicates a decided "no" vote. Wall Street political spending went roughly 60% toward the Democratic party in the 2008 election.

The economy and banks eventually recovered and as expected, a Democratic majority took on Wall Street with strict legislation such as the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. In the 2010 mid-term and the 2012 election cycles, it is also no surprise Wall Street money moved back behind the Republican ticket, especially as a fiscally moderate ex-private equity heavyweight, Mitt Romney, headlined the party's ticket.

But nearly a year after Romney's decisive defeat in the 2012 presidential elections, the Republican party has moved far to the right. Junior lawmakers like Sen. Ted Cruz (Texas, R) and Sen. Mike Lee (Utah, R) are now torch bearers for a strain in the party that is willing to shut the federal government and put the U.S. Treasury on the verge of default as a means to negotiate a de-implementation of the Affordable Healthcare Act (ACA), otherwise known as "Obamacare."

Given signs of a deal on Wednesday, it seems that a default has been resolved for the near-term. Similar manufactured crises may re-emerge given the short-term accord that is emerging. Meanwhile issues such as tax and immigration reform, and a federal budget, appear to be legislation that is beyond the capacity of Washington.

Still, one wonders how big of a scare the debt limit was for Wall Street.

In recent days, firms such as Citigroup and Fidelity openly said they wouldn't hold Treasury debt due in coming weeks. Vocal CEOs such as Lloyd Blankfein of Goldman Sachs and Jamie Dimon of JPMorgan made trips to Washington to impress upon lawmakers that a default would be a calamity on par or worse than the 2008 crisis.

How close did the debt ceiling standoff come to metastasizing into a full-blown financial crisis?

Stock markets and bond markets proved resilient through a longer-than-expected standoff, as did overnight credit markets. Treasury Bill yields surged slightly, but prices remained near par and default protection on U.S. government debt remains priced to bear minimal risk. Banks, however, may have seen red flags internally given their Treasury holdings and counterparty ties. To be a fly on the wall at liquidity and enterprise risk management meetings on Wall Street this week may have shown an emerging panic.

If so, it wouldn't be surprising to see a pendulum of support swing decidedly toward a more organized and governable Democratic party. With heavy financing from libertarian billi! onaires like the Koch Brothers, it is also unclear whether Tea Party Republicans would even care.

"I don't think there's any way for Wall Street to punish the 25 to 50 hard core House Republicans. It's not like [Reps. Steve] Stockman and Tim Huelskamp are doing a lot of Goldman Sachs events. I don't think Justin Amash cares if Bank of America gives to him or not," a Republican staffer was quoted as saying to Politico.

It would also be interesting to see a splintering of support among financial heavyweights. Major banks appear to face the biggest risks of a U.S. debt default, while private equity firms and hedge funds would likely have a better time navigating a potential crisis. Those industries, meanwhile, have the most to lose by the legislation of a Democratic majority.

The private equity industry, in aggregate, employs over 20% of U.S. workers and is facing the economic realities of Obamacare and a relatively high corporate tax rate in the U.S. Those funds also continue to benefit from a "carried interest" tax treatment that lowers their overall rates rates compared to the ordinary income tax.

It is no surprise Tea Party Republicans with a de-regulatory bent like Sen Marco Rubio (Florida, R) have been spotted with PE luminaries such as Steve Schwarzman of The Blackstone Group (BX).

The debt ceiling crisis may be over for now, however investors may soon begin to see evidence of a financial impact. There also could be a political reckoning.

-- Written by Antoine Gara in New York. Follow @antoinegara

Tough Times For Intel Earnings Never Looked Better

Intel Corp. (NASDAQ: INTC) reported its third quarter earnings on Tuesday after the market close, and the set-up for earnings was that the sales would be dragged lower by a lack of PC sales. In short, processors for computers are not where the current trends are. So why is that even with caution that the stock is being so well received.

Earnings came in at $0.58 per share on revenue of $13.48 billion for the quarter. Where things are doing well is that Thomson Reuters was calling for a mere $0.53 EPS on sales of $13.46 billion in revenue. Intel did manage to keep sales flat from a year ago, and they were actually up 5% sequentially. That translates to earnings of about $3 billion, and gross margin was still shockingly high at 62.4%.

Intel called it a quarter of modest growth in a tough environment, The company also guided the following quarter to have margins at 61% and sales of $13.7 billion, plus or minus Intel’s usual couple of percentage points fudge room in either direction and a $500 plus and minus range on sales. We would point out that Intel’s sales for the fourth quarter of 2012 were $13.477 billion, so Intel could actually post year-over-year growth if things in Washington D.C. do not become too out of hand in the coming days or weeks. When things were dire in the past at Intel the guidance was for much more significant caution around future sales.

Top High Tech Companies To Watch In Right Now

The PC client sales came in at $8.4 billion (up 3.5 percent sequentially and down 3.5 percent year-over-year) and the data center group sales came in at $2.9 billion (up 6.2 percent sequentially and up 12.2 percent year-over-year). Where Intel is starting to make strides is that over 40 22nm products have been introduced for the ultra-mobile device, networking, storage, and server market segments. This is what has to drive Intel shares much higher, maybe even to $28 to $30 or much higher.

Intel shares closed down 6-cents at $23.39 against a 52-week range of $19.23 to $25.98, and shares were indicated higher by about 1.5% at $23.75 shortly after the earnings report in the after-hours trading session on Tuesday.

If you just listened to Apple lovers and smartphone and tablet users you might think Intel has a questionable future. If you consider that Intel’s rough patches have been there before, things sure seem great in reality versus such a tough perception.

Energy stocks end higher as deal in sight

SAN FRANCISCO (MarketWatch) — Energy stocks shook off early weakness to close higher on Monday, as investors hoped a solution for Washington's budget impasse was near.

The Wall Street Journal reported top Senate leaders on Monday said they are within "striking distance" of a deal to avert a government default and to reopen the government.

• Government shutdown: Track the latest news out of Washington »
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Stocks finished higher, with Dow industrials and S&P 500 index gaining for a fourth straight session, after lawmakers appeared to inch closer to an agreement to raise the debt ceiling.

The president warned against the default and its impact on the U.S. and global economies.

Investors have been worried about the debt-ceiling deadline and the government shutdown and over the weekend global leaders urged the U.S. to solve its debt impasse.

Reuters Energy stocks end higher after Senate leaders say they are near a deal on debt crisis.

Top gainers among energy companies with the S&P 500 index were coal producer Peabody Energy Corp. (BTU) , with shares up 3.1%, and WPX Energy Inc. (WPX) , which rose 2.7%.

Decliners included The Williams Companies Inc. (WMB) , with shares off 1.1%, and Murphy Oil Corp., off 0.8%.

Chesapeake Energy Corp. (CHK)  was down 0.1%.

The company completed a round of layoffs last week, with about 800 employees let go, and Chief Executive Officer Doug Lawler told The Oklahoman the company is done with layoffs for the time being and ready to focus on being a "sustainable, strong, growing enterprise."

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A blog about how to profit from the global energy market.
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Major oil companies also reversed course, with shares of Exxon Mobil Corp. (XOM)  up 0.8%. Shares of Chevron Corp. (CVX)  advanced 0.8% as well, while shares of ConocoPhillips (COP)  gained 0.4%.

U.S.-listed shares of Royal Dutch Shell PLC (RDS.A)  advanced 0.6%.

The SPDR Energy Select Sector (XLE) , an exchange-traded fund focused on energy names, rose 0.7%.

If Buffett Liked Tech, Here's What He'd Buy

Warren Buffett used to define a "margin of safety" as a company that was trading close to - or even below - "breakup value."

Of course, that metric doesn't work as well today - especially in the parts of the tech sector that we like to focus on: You just aren't going to find many high-growth companies trading at bargain-basement levels.

But with U.S. firms sitting on a record $1.7 trillion in cash, you can find some name-brand tech firms whose cash reserves can cover a decent portion of their share price - creating a nice "margin of safety" as we move into the fall. (Good timing, considering everything that's happening - or not happening - in D.C. right now.)

The Road to Wealth Is Paved by Tech...

The technology sector creates more billionaires than almost any other sector of the markets.

Tech outperforms real estate, gold, commodities, manufacturing, transportation... it even gives oil and energy a run for the money.

And right now, tech is set to get dramatically more lucrative.

Complex layers of "disruptive" technologies, paradigm-shifting changes, are coming together to create some of the biggest wealth-building opportunities of the last 50 years.

With Strategic Tech Investor, you won't miss a single one of these incredible opportunities. Editor Michael Robinson is one of the most visionary experts in the tech world.

Readers who followed his rare-earth metals recommendations, for instance, would've seen cumulative gains of 990% in just 16 months.

I like to refer to these as "Cash is King" tech stocks.

So let's look at three that even Buffett, who typically avoids this sector, would consider...

Why Cash Is Important Now

If you've followed Strategic Tech Investor, you know I put a lot of stock in my five-part strategy for finding high-growth stocks at the lowest-possible levels of risk.

That strategy is why, in fact, that I believe "the road to wealth is paved by tech."

And Rule No. 1 - which tells us that "great companies have great operations" - addresses this very situation. That rule tells us to focus on cash flow and profit margins and is the key part of a system that I've used for decades.

Companies that are sitting on a lot of cash provide a big margin of safety against a market decline. They give investors confidence that the company is on the right track and will succeed over the long haul. And that's why investors are less likely to sell in a panic at the first sign of trouble.

This isn't all about sentiment, either. Solid cash flow is a great way to lower what I consider to be the "true cost" of buying a stock. There's even a simple mathematical formula for figuring this out. Simply take the stock's "sticker price" - what it's selling for - and subtract its net cash per share.

Let me show you what I mean.

Let's say a stock is trading at $24 a share. But the company holds net cash of $6 a share. That means that your true cost is closer to $18.

In other words, if the company liquidated tomorrow (outside of bankruptcy court), as a shareholder you're entitled to that $6 a share because it's your money.

It's just like getting the stock at a 25% discount.

And that's an implied margin of safety.

And here's another great thing about cash-rich tech leaders. They can use that money to do three things that will only benefit you as a shareholder.

The company can:

Pay dividends or increase the payout ratio. Buy back shares, a move that can push the stock higher on its own. And buy other firms in a way that can improve future growth and help the company expand into new markets.

With strong cash flow as our guide, let's take a look three tech firms that have a huge amount of cash on hand already - and are most likely to add to their war chest with the hefty cash flows they generate.

The Internet Killer

Top Heal Care Companies To Own For 2014

Cisco Systems Inc. (Nasdaq: CSCO) is a big-cap tech leader that throws off a tremendous amount of cash. Then again, it's a leader in the web-based technology that is integral to today's tech-centric world.

The company sells the routers, switches, servers, optical components, and wireless controllers used to access the web and manage its content.

As a result, Cisco is targeting the high-growth market for the "Internet of Everything" (IoE). Simply stated, the Internet of Everything means that nearly every single object in the world will be connected via wireless chips and sensors to a vast computer network. Cisco CEO John Chambers says the IoE market will create a global supply chain that will generate $14 trillion in profits.

Cisco already has strong financials. For fiscal 2013, Cisco's earnings rose 24% on a year-over-year basis to $10 billion. And the fiscal year's fourth quarter represented the 10th in a row with record earnings, which were up 18%.

More to the point, Cisco generates about $8.6 billion in free cash flow (FCF) a year. It's now sitting on net cash of $34 billion, or about $6.30 a share. With a share price of $24.30, that gives us a "true cost" of about $18 - and a 25% "safety margin."

Chambers is using some of that cash to flesh out Cisco's franchise. He recently agreed to buy cybersecurity firm Sourcefire Inc. (Nasdaq: FIRE) for $2.7 billion. Last week, Chambers announced Cisco is buying WHIPTAIL, a maker of solid-state computer memory systems, for roughly $415 million.

Hard Cash at "Mr. Softy"

Another cash-rich heavyweight - and one that's been making headlines of late - is Microsoft Corp. (Nasdaq: MSFT).

Flush with cash, Microsoft recently said it's buying Nokia Corp's (ADR) (NYSE: NOK) devices and services business for $5.2 billion plus $2.2 billion in licensing fees.

The idea is simple - Microsoft is way behind in the mobile tech sector and needs to make a bold move to become a serious player. And now that CEO Steve Ballmer has announced his retirement, the software giant is about to embark on a turnaround plan. I expect that to include more acquisitions into areas with much greater growth than the stagnant PC market.

Microsoft has strong financials and a fortress balance sheet. In its recently concluded fiscal year, Microsoft reported an impressive $21.86 billion in net profits on revenue of $77.85 billion. The firm knows how to make a buck - it boasts operating margins of 34% and a return on equity (ROE) of 30%.

Talk about a mountain of cash...

Microsoft brings in $19 billion a year in free cash flow. At the end of June, it had nearly $60 billion in net cash and equivalents on its balance sheet. With a market cap of $273 billion, Microsoft trades at about $32.65. But it has net cash per share of $7.23. That lowers our true cost of buying the stock to $25.42 - creating a 20% margin of safety.

Mega-caps aren't the only companies that generate a lot of cash.

As Seen on TV

Take a look at Ambarella Inc. (Nasdaq: AMBA), a fast-moving, small-cap firm that is focused on the rapidly emerging market for ultra-high-definition televisions (UHDTV).

The company specializes in making semiconductors for high-resolution video cameras used in sports, which will be an early adopter of this technology that makes video images at least four times sharper than today's UHDTV.

Ambarella recently introduced a new chip for the consumer-digital-video market for what are called "4K cameras." The firm is already known for supplying chips used in wearable high-def video cameras like those that skiers attach to their helmets.

Founded in 2004, the firm went public in October 2012 at $6 a share. Today, the stock trades at about $19.90 a share - a 231% gain. Focused on a growth market and generating so much cash flow, Ambarella still has plenty of room to run.

With a market cap of $548.73 million, the company has zero debt and is sitting on nearly $190 million in cash. That means Ambarella has a net cash per share of $6.89. So your true cost of buying this stock is closer to $13 a share - meaning you can look at the current share price as "hiding" a 25% "discount" ... or a 25% "margin of safety."

So we've given you three cash-rich companies that also feature good businesses. That should translate into some big growth potential in the long run - and a limited downside during the uncertain stretch ahead.

And that's a formula that you have to like a lot ...

Panasonic Calls It Quits on Plasma TVs

Hot Undervalued Stocks To Own For 2014

Itsuo Inouye/APA Panasonic 150-inch high-definition plasma TV on display at a 2008 expo in Tokyo. TOKYO -- Panasonic will pull out of the plasma television panel business by the end of the financial year to March 2014, sources familiar with the situation told Reuters, marking a key milestone in the long-term decline of Japan's TV industry. Panasonic had been widely expected to back out of the unprofitable business, but the exit comes sooner than predicted and underlines President Kazuhiro Tsuga's determination to weed out weak operations as he focuses on higher-margin products to end years of losses at the consumer electronics conglomerate. Panasonic's TV division has been a major contributor to the electronics company's combined $15 billion (9 billion pounds) net loss in its two latest financial years. Its TV business posted an operating loss of 88.5 billion yen ($913 million) in the last financial year. With the closure of its sole plasma panel factory in western Japan, Panasonic will book an impairment loss of more than 40 billion yen on the last remaining factory building in operation, the sources added. The company set aside 120 billion yen to cover restructuring costs at the start of the current financial year. The move also signals the demise in Japan of a technology in which TV makers once invested heavily but has now been overtaken by advances in the liquid crystal display business. Plasma display TVs accounted for less than 6 percent of global shipments in 2012, compared with 87 percent for LCD TVs, according to research firm DisplaySearch. Squeezed by the strong yen in recent years, Japan's TV makers have also lost their innovative edge against nimbler rivals such as South Korea's Samsung Electronics, with deep resources to spend on research and development. Sony (SNE), Panasonic and Sharp combined had a less than 20 percent share of the worldwide flat panel TV market by revenue. Samsung had a 27.7 percent share, and LG Electronics had 15 percent. Panasonic said in a statement Wednesday that it continued to consider various options for the plasma display panel business but that nothing had been decided yet. The several hundred employees in Panasonic's plasma operation are expected to be deployed to other parts of the company, the sources said. The move is in line with the strategy adopted by company President Tsuga since he took charge in June 2012. Panasonic is trying to engineer a turnaround away from low-margin consumer electronics goods to products catering to automakers and other business clients. Tsuga has warned that he would weed out any division that fails to meet a 5 percent operating margin goal within three years. Non-core assets like its health care unit are also being sold as he overhauls the company. Panasonic agreed last month to sell the health care business, which makes blood sugar monitoring devices and electronic record-keeping systems, to U.S. private equity firm KKR & Co. (KKR) in a $1.67 billion deal. Shares in Panasonic were down 0.2 percent at 913 yen in morning trade in Tokyo, in line with a 0.3 percent slip in the benchmark Nikkei average.

5 Best Gold Stocks To Own For 2014

 Get out.

 

Don't wait for it to get better. Don't try to pick the bottom. Don't look for cheap stocks. Just get to the sidelines... because it could get worse.

 

Over the last few weeks, gold stocks are down 25%, as measured by the major gold-stock index (the "HUI"). As you can see in the chart below, it's a full-blown crash...

 

 

Investors are bailing out of gold stocks in droves. The stocks have gone from cheap to crazy-cheap. They've gone from oversold to crazy-oversold. And if you're a contrarian type, that has piqued your interest.

5 Best Gold Stocks To Own For 2014: First Majestic Silver Corp.(AG)

First Majestic Silver Corp. engages in the production, development, exploration, and acquisition of mineral properties with a focus on silver in Mexico. The company owns interests in La Encantada Silver Mine comprising 4,076 hectares of mining rights and 1,343 hectares of surface land located in Coahuila; La Parrilla Silver Mine consisting of mining concessions covering an area of 69,867 hectares; and San Martin Silver Mine comprising approximately 7,841 hectares of mineral rights and approximately 1,300 hectares of surface land rights located in Jalisco. It also holds interests in Del Toro Silver Mine consisting of 393 contiguous hectares of mining claims and an additional 129 hectares of surface rights located in Zacatecas; Real de Catorce Silver Project comprising 22 mining concessions covering 6,327 hectares located in San Luis Potosi state; and Jalisco Group of Properties consisting of mining claims totalling 5,240 hectares located in Jalisco. The company was founded in 1979 and is headquartered in Vancouver, Canada.

Advisors' Opinion:

• [By Doug Ehrman]

  It is no secret that precious metals companies have been taking a pounding for some time now. The SPDR Gold Trust (NYSEMKT: GLD  ) and iShares Silver Trust (NYSEMKT: SLV  ) , the gold and silver ETFs, have been hard hit and operating companies like First Majestic (NYSE: AG  ) and Barrick Gold (NYSE: ABX  ) have been hit even harder. Through all of these struggles, and in some cases because of them, one precious metals company continues to look attractive for the long term: Silver Wheaton (NYSE: SLW  ) .

• [By Doug Ehrman]

  Despite the weakness seen in precious metals a few weeks ago, silver has been relatively stable ever since mid-April, with the iShares Silver Trust (NYSEMKT: SLV  ) trading in a dollar-wide range ever since. With the presidents of the Chicago and Philadelphia Federal Reserve banks��releasing conflicting statements, turmoil may be just around the corner. Miners like Pan American (NASDAQ: PAAS  ) and First Majestic (NYSE: AG  ) are still facing operating challenges, while silver streaming darling Silver Wheaton (NYSE: SLW  ) struggles as well.

5 Best Gold Stocks To Own For 2014: Northgate Minerals Corporation(NXG)

Northgate Minerals Corporation, together with its subsidiaries, engages in exploring, developing, processing, and mining gold and copper deposits in Canada and Australia. Its principal producing assets include 100% interests in the Fosterville and Stawell Gold mines in Victoria, Australia; and the Kemess South mine located in north-central British Columbia, Canada. The company was formerly known as Northgate Exploration Limited and changed its name to Northgate Minerals Corporation in May 2004. Northgate Minerals Corporation was founded in 1919 and is headquartered in Toronto, Canada.

Best Low Price Companies To Own For 2014: Claude Resources Inc.(CGR)

Claude Resources Inc. engages in the acquisition, exploration, and development of precious metal properties, as well as production and marketing of minerals in Canada. It primarily explores for gold in northern Saskatchewan and northwestern Ontario. The company holds interests in the Seabee gold mine located at Laonil Lake, northern Saskatchewan; and the Madsen property that consists of 6 contiguous claim blocks totaling approximately 10,000 acres, located in the Red Lake Mining District of northwestern Ontario. It also holds interest in the Amisk Gold project, which covers an area of 13,800 hectares in the province of Saskatchewan. The company was founded in 1980 and is based in Saskatoon, Canada.

5 Best Gold Stocks To Own For 2014: Goldcorp Incorporated(GG)

Goldcorp Inc. engages in the acquisition, exploration, development, and operation of precious metal properties in Canada, the United States, Mexico, and Central and South America. It produces and sells gold, silver, copper, lead, and zinc. The company was founded in 1954 and is headquartered in Vancouver, Canada.

Advisors' Opinion:

• [By Matt DiLallo]

  Shares of Goldcorp (NYSE: GG  ) are down after the company reported a $1.93 billion loss on the second quarter. A record drop in gold prices during the quarter was combined with a big asset write-down, leading to the loss. However, digging deeper into the numbers, it wasn't all bad.

• [By Ben Levisohn]

  Gold miners, however, are not participating in the rally today. Newmont Mining (NEM) has dropped 1.8% to $32.62, Goldcorp (GG) has gained 0.1% to $31.30 and Barrick Gold (ABX) has fallen 1.6% to $19.50. The Market Vectors Goldminers ETF (GDX) has fallen 1.1% to $30.09.

• [By Eric Volkman]

  Goldcorp (NYSE: GG  ) is continuing to turn its gold into investor cash. The company has declared its latest monthly dividend, which is to be $0.05 per share paid on July 26 to shareholders of record as of July 18. That amount keeps Goldcorp's payout in line with the six preceding monthly payments of 2013. Before that, the company paid $0.045 per share every month for over a year.

5 Best Gold Stocks To Own For 2014: Agnico-Eagle Mines Limited(AEM)

Agnico-Eagle Mines Limited, through its subsidiaries, engages in the exploration, development, and production of mineral properties in Canada, Finland, and Mexico. The company primarily explores for gold, as well as silver, copper, zinc, and lead. Its flagship property includes the LaRonde mine located in the southern portion of the Abitibi volcanic belt, Canada. The company was founded in 1953 and is based in Toronto, Canada.

Advisors' Opinion:

• [By vaninaegea]

  In august, the Association of Equipment Manufacturers (AEM) published the mid-year review for the agricultural sector. Their findings point to a slowdown for the industry, highlighting a 9.5% decline on exports through the first half of 2013. Also, late soybean planting in the USA is expected to compound the industry�� slowdown. So, what are the prospects for AGCO (AGCO), CNH Global (CNH), and Deere & Co. (DE) under such conditions?

• [By Hebba Investments]

  Even with rising Q2 costs, GG still has lower true all-in costs than many of its larger competitors' Q1FY13 costs. Compared to Q1FY13 numbers of competitors such as Yamana Gold (AUY) (costs just over $1300), Kinross Gold (KGC) (costs above $1350), Silvercrest Mines (SVLC) (costs below $1100), Newmont Gold (NEM) (costs around $1300) Agnico-Eagle (AEM) (costs around $1400) and Barrick Gold (ABX) (costs around $1200).

• [By Holly LaFon]

  He increased his holdings in gold companies in the fourth quarter accordingly. Gold stocks he found attractive in the fourth quarter are: Novagold Resources (NG), Randgold Resources (GOLD), Iamgold Corp. (IAG), Barrick Gold Corp. (ABX), Agnico Eagle (AEM) and International Tower Hill (THM).

Obama to Meet With Treasury Officials Over IRS

WASHINGTON (AP) -- President Barack Obama will discuss the Internal Revenue Service's targeting of conservative groups with Treasury Secretary Jacob Lew Wednesday afternoon. White House press secretary Jay Carney says Obama expects people to be held accountable.

The meeting comes in the aftermath of an investigation by a Treasury inspector general that found that the IRS, in examining applications for tax exempt status, improperly selected conservative groups for further review.

Also part of the Wednesday discussion will be Deputy Treasury Secretary Neal Wolin. Lew was to participate by phone because he was out of town observing the Jewish holiday of Shavuot.

Carney sidestepped a question about whether Obama still had confidence in Acting IRS Commissioner Steven Miller, saying he wouldn't discuss personnel matters. He said Obama has expressed his overall view that IRS personnel had acted inappropriately.

Top Cheap Stocks To Buy For 2014

"He wants to see that the actions taken, as revealed by the Treasury report, that are inappropriate, are met with consequences," Carney said. "He will make clear to Treasury Department leaders that he expects action."

Carney says Obama wants the public to "understand and believe that the IRS applies our tax laws in a neutral and fair way to everyone."

Men's Wearhouse Rejects Jos. A. Bank Takeover Offer

5 Best Stocks To Own For 2014

Alamy Jos. A. Bank Clothiers' offered to buy bigger rival Men's Wearhouse for about $2.3 billion to create a men's apparel heavyweight with more than 1,700 stores -- a proposal that Men's Wearhouse swiftly rejected. The offer of $48 a share in cash is a 36 percent premium to the closing price of Men's Wearhouse shares on Tuesday. Men's Wearhouse (MW) shares opened at $43.35 on the New York Stock Exchange, after hitting $47 before the bell. Jos. A. Bank's (JOSB) shares were up 5.4 percent at $43.90 on the Nasdaq. The offer, which comes at a time of intense competition in the men's suit market, would be funded by a combination of cash-on-hand, debt and new equity, including a $250 million investment by Golden Gate Capital, Jos. A. Bank said. However, Men's Wearhouse said the non-binding offer undervalued the company and could raise anti-trust issues. The "highly opportunistic" proposal also didn't reflect the company's growth strategy and upside potential, Bill Sechrest, lead director of the Men's Wearhouse board, said in a statement. "The challenging second quarter results led to a 12 percent decline in Men's Wearhouse's stock price, which Men's Wearhouse believes doesn't fairly reflect the intrinsic value of Men's Wearhouse shares," the company said. Men's Wearhouse shares, which hit a year-high of $41.02 in August, last traded above the offer price exactly six years ago. The Fremont, Calif.-based clothier had a market value of about $1.68 billion, compared with Jos. A. Bank's $1.17 billion, as of Tuesday's close. The company sells discount suits through 1,137 stores, its website shows. Jos. A. Bank, with more than 600 stores, is a century-old seller of men's tailored and casual clothing, according to its website. 'I Guarantee It' Men's Wearhouse was founded in 1973 by George Zimmer, known to U.S. TV audiences for his advertising catchphrase "you're gonna like the way you look -- I guarantee it". The company fired Zimmer in June, saying he had pushed to take the company private and effectively demanded to be reinstated as the company's sole decision-maker. Zimmer denied he had pushed for a sale, insisting he only presented that suggestion to the board as an option Men's Wearhouse struck a deal the following month to buy designer brand Joseph Abboud for about $97.5 million. Zimmer owned about 3.7 percent of Men's Wearhouse as of July 22, making him the eighth-biggest shareholder. Net income at Men's Wearhouse more than doubled to $130.4 million over the four years to Feb. 2, while Jos. A. Bank's earnings seesawed over the period to reach $79.7 million. Men's Wearhouse cut its full-year earnings forecast last month, saying weak economic conditions were hurting sales. Jos. A. Bank, which makes heavy use of promotions, also reported a drop in quarterly sales, but said it expected results to improve. Its shares have fallen about 2 percent so far this year, while those of Men's Wearhouse have risen about 13 percent. Jos. A. Bank, based in Hampstead, Maryland said in June it was considering strategic opportunities to enhance shareholder value, including acquisitions. The company said a deal with Men's Wearhouse would "immediately and significantly" add to earnings. Jos. A. Bank is being advised by Goldman Sachs (GS) and Financo. Its legal advisers are Skadden, Arps, Slate, Meagher & Flom, and Guilfoil Petzall & Shoemake.

Top 10 Safest Stocks To Buy Right Now

The old adage of risk equaling reward couldn't be truer. It was 2008, and the stock market was in chaos.

 

Great rewards went to investors who took the risk of stepping into the fray to buy the lows. But during the same time, many investors were practically wiped out because they failed to manage their risks wisely in the highly volatile environment.

The stock market today isn't as volatile as it was during the financial crisis. However, the same investing maxim still holds: The greater the risk, the greater the rewards. 

Many investors shun risk. These risk-averse investors pile into the safest possible investments in an effort to preserve principal at all costs. This attitude will most likely preserve your portfolio, but it will also greatly decrease your potential for market-beating rewards. 

Top 10 Safest Stocks To Buy Right Now: Goldman Sachs Group Inc.(The)

The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs; and underwriting securities, loans and other financial instruments, and derivative transactions. The company?s Institutional Client Services segment provides client execution activities, such as fixed income, currency, and commodities client execution related to making markets in interest rate products, credit products, mortgages, currencies, and commodities; and equities related to making markets in equity products, as well as commissions and fees from executing and clearing institutional client transactions on stock, options, and fu tures exchanges. This segment also engages in the securities services business providing financing, securities lending, and other prime brokerage services to institutional clients, including hedge funds, mutual funds, pension funds, and foundations. Its Investing and Lending segment invests in debt securities, loans, public and private equity securities, real estate, consolidated investment entities, and power generation facilities. This segment also involves in the origination of loans to provide financing to clients. The company?s Investment Management segment provides investment management services and investment products to institutional and individual clients. This segment also offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth individuals and families. In addition, it provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.

Top 10 Safest Stocks To Buy Right Now: Petroleo Brasileiro S.A.- Petrobras(PBR)

Petroleo Brasileiro S.A. primarily engages in oil and natural gas exploration and production, refining, trade, and transportation businesses. The company?s Exploration and Production segment involves in the exploration, production, development, and production of oil, liquefied natural gas (LNG), and natural gas in Brazil. This segment supplies its products to the refineries in Brazil, as well as sells surplus petroleum and byproducts in domestic and foreign markets. Its Supply segment engages in the refining, logistics, transportation, and trade of oil and oil products; export of ethanol; and extraction and processing of schist, as well as holds interests in companies of the petrochemical sector in Brazil. The Gas and Energy segment involves in the transportation and trade of natural gas produced in or imported into Brazil; transportation and trade of LNG; and generation and trade of electric power. In addition, the segment has interests in natural gas transportation and d istribution companies; and thermoelectric power stations in Brazil, as well engages in fertilizer business. The Distribution segment distributes oil products, ethanol, and compressed natural gas in Brazil. The International segment involves in the exploration and production of oil and gas, as well as in supplying, gas and energy, and distribution operations in the Americas, Africa, Europe, and Asia. Further, the company involves in biofuel production business. Petroleo Brasileiro was founded in 1953 and is based in Rio de Janeiro, Brazil.

Advisors' Opinion:

• [By Jim Jubak]

  The auction news isn't good for investors in Brazil's Petrobras (PBR), but it could well be a boon for China and Chinese oil companies such as PetroChina (PTR) and CNOOC (CEO).

Top 5 Clean Energy Stocks To Watch Right Now: Fluor Corporation(FLR)

Fluor Corporation, through its subsidiaries, provides engineering, procurement, construction, maintenance, and project management services worldwide. Its Oil & Gas segment offers design, engineering, procurement, construction, and project management services to upstream oil and gas production, downstream refining, chemicals, and petrochemicals industries. This segment also provides consulting services comprising feasibility studies, process assessment, and project finance structuring and studies. The company?s Industrial & Infrastructure segment offers design, engineering, procurement, and construction services to the transportation, wind power, mining and metals, life sciences, manufacturing, commercial and institutional, telecommunications, microelectronics, and healthcare sectors. Its Government segment provides engineering, construction, logistics support, contingency response, management, and operations services to the United States government focusing on the Departme nt of Energy, the Department of Homeland Security, and the Department of Defense. The company?s Global Services segment offers operations and maintenance, small capital project engineering and execution, site equipment and tool services, industrial fleet services, plant turnaround services, temporary staffing services, and supply chain solutions. Its Power segment provides engineering, procurement, construction, program management, start-up and commissioning, and operations and maintenance services to the gas fueled, solid fueled, plant betterment, renewables, nuclear, and power services markets. The company also offers unionized management and construction services in the United States and Canada. Fluor Corporation was founded in 1912 and is headquartered in Irving, Texas.

Advisors' Opinion:

• [By Louis Navellier]

  Fluor Corporation (FLR) is one of the world�� leading heavy construction and engineering firms. I don’t want to imply that this is a bad company because it is actually a very good one. However, Fluor has divisions including Oil & Gas, Industrial Infrastructure, Government, Global Services and Power. Virtually all of them are seeing limited spending as a result of the global slowdown and reduced government spending around the world. The stock is up more than 23% this year, but earnings are actually down on flat revenues. Analysts have been lowering their estimates for the rest of this year as well as 2014, and the stock is currently rated as a by Portfolio Grader. When the economy recovers, I expect will see this company’s fundamentals improve substantially … but until that happens investors should avoid the stock.

Top 10 Safest Stocks To Buy Right Now: Under Armour Inc.(UA)

Under Armour, Inc. develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth primarily in the United States, Canada, and internationally. It offers products made from moisture-wicking synthetic fabrics designed to regulate body temperature and enhance performance regardless of weather conditions. The company provides its products in three fit types: compression (tight fitting), fitted (athletic cut), and loose (relaxed) extending across the sporting goods, outdoor, and active lifestyle markets. Its footwear offerings comprise football, baseball, lacrosse, softball, and soccer cleats; slides; performance training footwear; and running footwear. The company also provides baseball batting, football, golf, and running gloves, as well as licenses bags, socks, headwear, custom-molded mouth guards, and eyewear that are designed to be used and worn before, during, and after competition. Under Armour sells its products through retai l stores, as well as directly to consumers through its own retail outlets and specialty stores, Website, and catalogs. The company was founded in 1996 and is headquartered in Baltimore, Maryland.

Advisors' Opinion:

• [By Jon C. Ogg]

  Under Armour Inc. (NYSE: UA) was raised to Neutral from Underweight at J.P. Morgan.

  Here are the iPhone 5 suppliers getting a solid boost in demand.

• [By Johanna Bennett]

  Investors also�bid up shares of Under Armour (UA) to $80.31, a 1.5% rise. And athletic-gear retailer Finish Line (FINL) jumped 7.3% to $24.02 following their own earnings homerun.

Nasdaq focus on resiliency, "robustness" in wake of outage

Nasdaq CEO Robert Greifeld says exchange needs to focus on defensive driving after three-hour outage. Bloomberg News

Nasdaq OMX Group Inc. halted trading for three hours yesterday to protect the integrity of markets as a technology malfunction left some investors without stock quotes, Chief Executive Officer Robert Greifeld said in his first public remarks since the incident.

The exchange operator was in constant communication with rivals during the outage and decided to halt trading of listed stocks to prevent “information asymmetry” among traders, Greifeld said in interviews at Nasdaq's offices with Bloomberg Television's Betty Liu and Andrew Ross Sorkin on CNBC. Greifeld said he supports developing a backup data feed to prevent the issue from happening again.

“The general theme we're focused on going forward is that we have to improve our defensive driving ability,” Greifeld told Bloomberg TV. “This system has been around for 20 years, it works and it works remarkably well. Then things happen in the external environment that causes a problem.”

Hot Gold Stocks To Watch For 2014

A faulty connection between the two biggest operators of U.S. stock exchanges brought half of the world's largest equity market to a standstill, the second time this week U.S. trading was shaken by a computer malfunction.

Connectivity was disrupted between NYSE Arca (NYX), where about 11 percent of American share volume occurs, and the data processing subsidiary of Nasdaq Stock Market, home to 2,150 U.S. companies, according to a person with direct knowledge of the matter. That led Nasdaq to freeze thousands of stocks from Apple Inc. to Facebook Inc. (FB) that trade on about 50 markets from Kansas to New Jersey for more than three hours.

Resiliency, Robustness

“We have to make sure no matter what happens, the system stays up and the system has a resiliency and a robustness that we did not exhibit yesterday,” Greifeld said on Bloomberg TV.

President Barack Obama was told about the malfunction and Mary Jo White, the chairman of the Securities and Exchange Commission, plans to convene market officials to discuss ways of making trading more reliable. Just three days ago, Goldman Sachs Group Inc., which made $5.8 billion from stock trading in 2012, flooded options markets with unintentional orders.

“For three hours not a single person in the world could trade any Nasdaq-listed stock,” Manoj Narang, the chief executive officer of Tradeworx Inc., a high-frequency trading firm in Red Bank, New Jersey, that designed a system to monitor markets for the SEC, said in a phone interview. “That's not acceptable, especially for something as simple as a quote feed not working.”

Electronic Markets

The disruption is the latest to signal unreliability in electronic markets just as individual investors who withdrew from stocks after the global economic crisis have shown signs of embracing equities. About $30 billion poured into exchange-traded funds! that own U.S. shares in July, the most since 2008 and the second-highest ever, according to data compiled by Bloomberg since 2000.

Failures are increasing as global markets get more fragmented. U.S. equity trading, which began on Wall Street more than two centuries ago and was dominated by the New York Stock Exchange for most of that period, has become dispersed among more than 50 electronic platforms accessible around the world.

It's the latest challenge for Greifeld, the 56-year-old leader of Nasdaq OMX, which was criticized for mishandling the initial public offering of Facebook in May 2012. Nasdaq agreed to pay $10 million to settle SEC charges related to the IPO as regulators cited “poor systems and decision-making.”

Exchange Fragility

While Nasdaq's closure yesterday kept brokers from executing client trades and raised fresh concerns about exchange fragility, investors praised the decision to stop activity before chaos snowballed.

Nasdaq's own shares, which were covered by the halt, fell 3.4 percent to $30.46 in New York yesterday. That was the biggest drop in four months and trimmed the 2013 advance to 22 percent. The stock rose 0.6 percent at 10:58 a.m. in Frankfurt trading today.

The Nasdaq Composite Index (CCMP), which didn't move during the outage, gained 1.1 percent to 3,638.71 yesterday. The Nasdaq 100 Index of the biggest companies listed on the exchange climbed 1 percent to 3,101.82.

“It's a good thing to halt the data before the trades go crazy because it could have easily turned into a flash crash,” said James Angel, a finance professor at Georgetown University in Washington. “It certainly doesn't make them look good when their market went down but they pulled the switch before the market went crazy.”

Transactions Frozen

Nasdaq froze transactions in all of its shares just after noon, stopping the buying and selling on its platform and dozens of others where the securities trade. Bad connectivity between an exchange that wasn't ident! ified and! Nasdaq's securities information processor, or SIP, led to a “degradation in the ability of the SIP to disseminate consolidated quotes and trades,” according to a Nasdaq release.

The exchange was NYSE Arca, according to the person with direct knowledge, who asked not to be identified because the matter is private. Rob Madden, a Nasdaq spokesman, declined to comment on the matter, as did Rich Adamonis, a spokesman for NYSE Euronext.

Nasdaq and NYSE, which almost all U.S. companies use to go public, each operate SIPs. The units receive quotes and trades from around the country and disseminate them in three groups, known as tapes. NYSE operates the Tapes A and B and Nasdaq runs Tape C.

Can't Trade

“In order for the trade to be consummated, it has to hit the tape,” said Sayena Mostowfi, senior analyst at Tabb Group LLC based in New York. If it doesn't, “you can't really trade,” she said. “That's why the entire market goes out.”

The Nasdaq SIP processed about 85.4 million quotes and 6.25 million trades per day in the fourth quarter of 2010, according to a consolidated exchange data report. NYSE's handled 311.3 million quotes and 20.1 million trades daily in the same period. During peaks, Nasdaq saw an average of 58,585 quotes and 14,030 trades a second.

Nasdaq's malfunction shows that not enough redundancy is built into the quote processing system, according to Jerome Dodson, president of San Francisco-based Parnassus Investments, which oversees about $9 billion. His firm submitted equity trades around noon New York time that weren't completed.

“The traders said: 'There's nothing filling! There's nothing filling!'” said Dodson, who oversees the Parnassus Fund that has beaten 93 percent of its peers in the past five years. “No doubt there should be a backup system.”

Strain Signs

Signs of strain appeared shortly after 10 a.m. when NYSE Arca began alerting traders to problems, saying it was having issues routing orders in ! certain N! asdaq-listed securities, according to emails the exchange sent to subscribers. Although the exchange said it resolved the issue within about 10 minutes, live orders for those securities were canceled 20 minutes later and quoting didn't resume until 11:16 a.m., status updates show.

About 30 minutes later, Nasdaq sent an alert that its SIP was having “momentary interruptions” disseminating quotes, and exchanges began halting Nasdaq-listed security data shortly after noon. NYSE Arca stopped at 12:14 p.m. at the request of Nasdaq, according to alerts.

Nasdaq equity indexes didn't update during the outage and volume in stocks listed on the New York Stock Exchange also dwindled as liquidity dried up around the country. As happened after Goldman Sachs's mishap, traders said losing access to so many stocks would expose trading positions to losses.

'Real Fear'

“The real fear is that we get stuck wearing some kind of risk because of an interruption that is not of our doing,” Max Breier, a senior equity derivatives trader at BMO Capital Markets Corp. in New York, said in a phone interview. “Any halt in information or ability to trade is going to hinder our ability to manage our risk and take positions.”

Obama was briefed on the disruption by his chief of staff, Denis McDonough, according to an e-mail from Josh Earnest, deputy White House press secretary, to reporters traveling with the president in upstate New York.

A meeting of exchange leaders will be convened in Washington to “accelerate ongoing efforts to further strengthen our markets” by the SEC's White, according to a government statement.

The SEC and the Commodity Futures Trading Commission have stepped up scrutiny of trading since the so-called flash crash of May 6, 2010, when $862 billion in equity value was erased in 20 minutes before prices recovered. The CFTC, the top U.S. derivatives regulator, is poised to announce a range of potential methods for overseeing automated and high-frequency t! rading, a! ccording to four people with knowledge of the matter.

Direct Edge

The decision to freeze stocks halted dozens of other markets around the country that trade securities. Exchanges from Bats Global Markets Inc. in Lenexa, Kansas, to Jersey City, New Jersey-based Direct Edge Holdings LLC published notices saying they were following the main exchange.

Nasdaq “has to recommit to making sure they are delivering their core value proposition, which is reliable, transparent and effective market making,” Brad McMillan, chief investment officer for Waltham, Massachusetts-based Commonwealth Financial Network, said in a phone interview. His firm has more than $71 billion under management.

“If it gets to the point of, 'Oh, yeah, Nasdaq went down again, and that's not news,' that's when they lost their ability to deliver their core function.”

Volume Drops

The disruption resulted in the second-fewest shares changing hands on U.S. exchanges in at least five years during a full-day session. About 4.4 billion shares traded yesterday, 30 percent below the three-month average. Volume was lower only on Oct. 8, 2012, excluding holiday trading, according to data Bloomberg began compiling in 2008.

About 740 million exchange-listed shares changed hands during the three hours through 3:20 p.m. in New York following the suspension, or a third of the total transactions over the first three hours, data compiled by Bloomberg show.

American stock markets regularly shut down as share volume rose in the late 1960s before computers were in widespread use. According to the Depository Trust & Clearing Corp.'s website, exchanges closed every Wednesday and shortened trading hours as daily share volume of 10 million to 12 million shares meant “brokers were literally buried in paperwork.” Volume has averaged more than 6 billion shares a day in 2013.

Squirrel Shutdown

Yesterday's outage was longer than an approximately 40-minute shutdown in 1994 that was triggered when a squirrel chewed th! rough a p! ower line in Shelton, Connecticut, disrupting electricity near a Nasdaq computer facility in Trumbull. That same year, a communications-software error shut the exchange for two-and-a-half hours. Another squirrel was to blame for a 1987 outage that lasted 82 minutes, according to a New York Times report at the time.

Investors in China were whipsawed by a computer malfunction last week. State-controlled brokerage Everbright Securities Co. reported a trading loss of 194 million yuan ($32 million) and apologized to investors after errors in order-execution systems on Aug. 16 sparked the biggest intraday swing in China's benchmark index since 2009.

Yesterday's halt “is not a Nasdaq issue, this is a much broader issue,” Sal Arnuk, a partner and co-founder at Themis Trading LLC in Chatham, New Jersey, said in a phone interview. “This is a black eye and an egg on the face of the structure of all the exchanges.”

(Bloomberg News) Like what you've read?