Archive for January, 2011

Market Wrap-Up for Jan.31 (MEE, CNX, WLT, DRI, FCX, POT, INTC, more)

As the market got started on this new week, market participants were keeping a close eye on the doings going on in Egypt, but a big coal merger put a bid into numerous energy-focused plays. Before we dig into that, I just want to remind everyone that we added a new name to our best dividend stocks list this morning, so be sure to check out the upgrade if you didn’t see the e-mail alert we sent out earlier to Dividend.com Premium subscribers. Looking at the big deal of the day, Massey Energy ( MEE ), which had long been a subject of ongoing takeover rumors, finally did catch a bid over the weekend. The company will be getting taken over by Alpha Natural Resources( ANR ) at a valuation that is about 30% below its all-time high levels hit in June of 2008. That news helped push shares like Consol Energy ( CNX ) and Walter Energy ( WLT ) nicely higher. We also saw seeing buying spread to other commodity names, including Freeport McMoran ( FCX ) and Potash Corp ( POT ). Darden Restaurant ( DRI ) shares were up on news the company is lifting its outlook. There has been a worry in the market when it comes to food/restaurant plays, and how they will be having to deal with higher commodity costs. We’ll keep an eye on the sector to see if other companies are able to dodge the rising food cost bullet as well. Lastly, Intel Corporation ( INTC ) managed to close unchanged despite news the company is cutting its earlier margins guidance, following a chip design glitch that will hit the semiconductor giant’s bottom line this coming quarter. Lots of gloomy headlines about Social Security possibly dissolving sooner than experts have been predicting last week, so I wanted to look for nuggets to write about retirement this morning. I wanted to focus on some baby boomer tips from a recent U.S. News & World Report, and add my own two cents to each. Baby Boomer Tip #1 – “Sign up for Medicare on time.” This is a no-brainer and who wouldn’t want to be able to free up money that can be saved or used for other necessities? As people continue to live longer, some of the savings from not having to pay for your own expensive plan can even go into quality dividend stocks that provide a nice yield each year. Baby Boomer Tip #2 – “Schedule your free physical…

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Buying Blood in the Streets: A How-To Guide

Filed in BP, Gold, Gold Market, o, target by on January 31, 2011 0 Comments
Buying Blood in the Streets: A How-To Guide

There’s no cash in the ATMs, there’s something like 5,000 prisoners roaming the streets and there’s no security. — May Sadek, man on the street, Cairo In my financial trading service Crisis & Opportunity , I seek maximum returns by buying stocks when fear is the highest, and selling them when the panic dissipates. It might sound crude and insensitive to buy stocks in places where people are literally dying, but it works; and by supporting the stock market when everyone is fleeing, you are reducing the panic— which is a positive for financial stability. Baron Von Rothschild is credited with saying, “The time to buy is when blood is running in the streets.” He’s been re-quoted by everyone from Mobius to Rockefeller. But through extensive research, I uncovered this bit from The New York Times circa 1931… It has been reported during the aftermath of the Franco-Prussian War, when the French had been defeated and the mob was looting Paris, a friend of his asked, “What are you going to do to protect your interests in this dreadful hour?” The Baron said to him, “Can you keep a secret?” He replied, “Yes.” The Baron said, “Well, if the truth must be told, I am protecting myself by buying real estate.” His friend responded, “Do you mean to say you are buying real estate with the gutters of Paris running with blood and the city in the hands of a mob?” Rothschild said, “Yes, my friend, I mean that very thing, and that is the only time, when the gutters are running with blood, that you can buy real estate at 50 cents on the dollar.” Istanbul to Constantinople Buying blood in the streets has become a hoary Wall Street platitude because it is extremely profitable. The thing about revolutions is that the countries don’t disappear… Sure, governments come and go, the names and lines on maps change and are redrawn— but the people and resources remain. I can name a number of countries off the top of my head that had post-revolution stock market booms: South Korea, Indonesia, Malaysia, Sri Lanka, Russia, South Africa… the list goes on. When you invest in foreign markets that are in crisis, you get a bounce-back on both the equity side and the currency side. Here is an example: In 1998, the people of Indonesia took to the streets and threw off long-term dictator Suharto. The market crashed, and the currency went from 350 to the dollar to over 15,000 before it stopped trading altogether. One of the Indonesian blue chips— P.T. Telecom — fell from the low $30s to $1.50. The currency now trades at 9,047 rupiah to the dollar. If you put $10,000 in TLK at $1.50 and held it to the top, you would have made $366,000 on the share price— plus another 30% or so on the currency…

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Why Paul Krugman Is Wrong on the Austrians

The Austrians on Capital In contrast to mainstream macro models, which either do not possess capital at all or at best denote it as a homogenous stock of size “K,” Austrian theory explicitly treats the capital structure of the economy as a complex assortment of different tools, equipment, machinery, inventories, and other goods in process. Much of the Austrian perspective is dependent on this rich view of the economy’s capital structure, and mainstream economists miss out on many of the Austrian insights when they make the “convenient” assumption that the economy has one good. (Krugman will be glad to know that yes, I can spell all this out in a formal model — and one that referee Paul Samuelson grudgingly signed off on.) Krugman and other Keynesians stress the primacy of demand: they keep pointing out that the owner of an electronics store, say, won’t have the incentive to hire more workers, and buy more inventory, if he doesn’t expect consumers will show up with money to spend on new TVs or laptops. But Austrians point out that demand per se is hardly the whole story: Regardless of how many green pieces of paper the customers have, or how much credit the store can get from the bank, it will be physically impossible for the electronics store to fill the shelves with new TVs and laptops unless the manufacturers of those items have already produced them. And in turn, the manufacturers can’t magically create TVs and laptops merely because the demand for their products picks up; they rely on other sectors in the economy having done the prior preparation as well, such as mining the necessary metals, assembling the proper amount of tractor trailers needed to ship the goods from the factory, and so on. These observations may strike some as trivial, not worthy of the consideration of serious economists. But that’s only because normally, a market economy “spontaneously” solves this tremendous coordination problem through prices and the corresponding signals of profit and loss. If someone had to centrally plan an entire economy from scratch, there would be all sorts of bottlenecks and waste — as actual experience has shown. Without the guidance of market prices, we wouldn’t observe a smoothly functioning economy, where natural resources move down the chain of production — from mining to processing to manufacturing to wholesale to retail — as neatly depicted in macro textbooks. Instead, we would see a chaotic muddle where the various interlocking processes didn’t dovetail. There would be too many hammers and not enough nails, too much perishable food and not enough refrigerated railroad cars to deliver it, and so on. The Austrians on Interest When it comes to explaining the coordinating function of market prices, Austrians assign a very important role to interest rates, for they steer …

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PPG’s Estimates Boosted at Goldman Sachs (PPG)

Paint and coatings maker PPG Industries, Inc. ( PPG ) on Monday saw its earnings estimates raised by analysts at Goldman Sachs. The firm said it boosted its estimates for PPG through 2012, noting that recent acquisitions should bolster its earnings. Goldman also cited share buybacks as another positive catalyst for the company. The analyst maintained its “Buy” rating and $104 price target, which implies a 25% upside to PPG’s Friday closing price of $83.23. PPG Industries shares were mostly flat in premarket trading Monday. The Bottom Line We have been recommending shares of PPG Industries ( PPG ) since Oct.21, 2010, when the stock was trading at $77.46. The company has a 2.64% dividend yield, based on Friday’s closings stock price of $83.23. PPG Industries, Inc. ( PPG ) is a “Recommended” dividend stock, holding a Dividend.com DARS™ Rating of 3.5 out of 5 stars. Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

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Exxon Mobil Posts $9.25 Billion Q4 Profit, Easily Beating View (XOM)

Filed in dividend, Gold Investment, o, revenue, shares by on January 31, 2011 0 Comments

Oil behemoth Exxon Mobil Corporation ( XOM ) on Monday said its fourth quarter profit surged more than 50% from last year on higher oil prices, easily beating analyst estimates. The Irving, TX-based company reported fourth quarter net income of $9.25 billion, or $1.85 per share, compared with $6.05 billion, or $1.27 per share, in the year-ago period. Revenue jumped 17% from last year to $105 billion. On average, Wall Street analysts expected a smaller profit of $1.62 per share, on lower revenue of $99.1 billion. For the full year 2010, the company posted profits of $30.5 billion, or $6.22 per share, up sharply from $19.3 billion, or $3.98 per share, in 2009. Exxon Mobil shares rose 83 cents, or 1.1%, in premarket trading Monday. The Bottom Line Shares of Exxon Mobil ( XOM ) have a 2.23% dividend yield, based on Friday’s closing stock price of $78.99. The stock has technical support in the $73-$75 price area. If the shares can continue the recent run, we see overhead resistance around the $85 price level. Exxon Mobil Corporation ( XOM ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars. Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

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Illinois Tool Works Q4 Profit Falls, Narrowly Missing View (ITW)

Filed in dividend, earnings, Gold Investing, Gold Investment, o, revenue, shares by on January 31, 2011 0 Comments

Industrial products and equipment maker Illinois Tool Works Inc. ( ITW ) on Monday said its fourth quarter profit fell 23% from last year, just falling short of analyst expectations. The Glenview, IL-based company reported fourth quarter net income of $392.8 million, or 79 cents per share, compared with $507.4 million, or $1.01, in the year-ago period. Excluding a special tax benefit from last year, adjusted earnings actually rose 30% year-over-year. Revenue rose 11% from last year to $4.17 billion. On average, Wall Street analysts expected a slightly higher profit of 80 cents per share, on lower revenue of $4.09 billion. Looking ahead, the company predicted first quarter profit to range from 81 to 87 cents per share, on a 12% to 15% revenue gain. For the full year 2011, it expects adjusted earnings of $3.60 to $3.84 per share on 11.5% to 14.5% higher revenue. Illinois Tool Works shares were mostly flat in premarket trading Monday. The Bottom Line Shares of Illinois Tool Works ( ITW ) have a 2.49% dividend yield, based on Friday’s closing stock price of $54.71. The stock has technical support in the $50-$52 price area. If the shares can firm up, we see overhead resistance around the $56-$60 price levels. Illinois Tool Works Inc. ( ITW ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars. Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

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AT&T’s Estimates Cut at Morgan Stanley (T)

Filed in dividend, earnings, Gold Investing, o, shares, target, ubs by on January 31, 2011 0 Comments

Telecom giant AT&T Inc. ( T ) on Monday saw its earnings estimates lowered by analysts at Morgan Stanley. The firm said it cut its estimates for T 2012, citing negative effects of higher smartphone subsidies. Wireless carriers often pony up substantial sums to subsidize the cost of expensive smartphones in order to lure in customers. Still, Morgan Stanley left its “Overweight” rating and $32 price target on T unchanged. That target implies a 12% upside to the stock’s Friday closing price of $27.49. AT&T shares were mostly flat in premarket trading Monday. The Bottom Line We have been recommending shares of AT&T ( T ) since Mar.12, 2009, when the stock was trading at $23.35. The company has a 6.26% dividend yield, based on Friday’s closing stock price of $27.49. AT&T Inc. ( T ) is a “Recommended” dividend stock, holding a Dividend.com DARS™ Rating of 3.5 out of 5 stars. Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

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Kraft Foods’ Estimates Cut at Credit Suisse on Cost Concerns (KFT)

Filed in dividend, earnings, EPS, Gold Bullion prices, o, outperform, shares, target by on January 31, 2011 0 Comments

Packaged foods maker Kraft Foods Inc. ( KFT ) on Monday saw its earnings estimates lowered through 2012 by analysts at Credit Suisse. The firm said it cut its 2011 and 2012 EPS estimates for KFT to $2.23 and $2.45, respectively. Credit Suisse cited rising costs for the move, as many food sellers have been feeling the crunch. Still, the analyst maintained its “Outperform” rating and $35 price target on KFT, which implies a 15% upside to the stock’s Friday closing price of $30.53. Kraft Foods shares were mostly flat in premarket trading Monday. The Bottom Line We have been recommending shares of Kraft Foods ( KFT ) since May 5, 2009, when the stock was trading at $24.26. The company has a 3.80% dividend yield, based on Friday’s closing stock price of $30.53. Kraft Foods Inc. ( KFT ) is a “Recommended” dividend stock, holding a Dividend.com DARS™ Rating of 3.5 out of 5 stars. Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

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CBS Upgraded to “Buy” at Deutsche Bank (CBS)

Filed in CBS, dividend, earnings, EPS, G 20, Gold, Gold Bullion prices, o, shares, target, upgrade by on January 31, 2011 0 Comments

Mass media giant CBS Corporation ( CBS ) on Monday saw its rating, price target, and earnings estimates all boosted by analysts at Deutsche Bank. The firm said it upgraded CBS from “Hold” to “Buy” while lifting its price target from $18 to $23. That new target implies a 19% upside to the stock’s Friday closing price of $19.28. A Deutsche analyst commented, “CBS’s shares have had a terrific two years given the company’s high exposure to advertising and high financial leverage at the trough (3.5x). Nevertheless, from here we see 19% upside to $23, worthy of a Buy rating. We believe the street is too low relative to strong 1H11 ad pacings, the CBS Network should see 10% upfront CPM gains, margin efforts are kicking in, int’l syndication is growing > 10%, and M&A risk is reduced given the large buyback plan. Stock at 8.6x ’11E FCF and 7.0E ’12E, too low, in our view.” Continuing, “After reviewing 2011 by qtr, we are raising our EBITDA estimate by $91m to $2.791b (+17% yoy), EPS by $0.07 to $1.51 (+37% yoy, and vs. street’s $1.38) and FCF by $219m to $1.504b (-17% yoy). Our FCF/share estimate is now $2.24 for ’11E, growing to $2.74 in ’12E, $2.92 in 13E, and $3.42 in ’14E.” CBS shares were mostly flat in premarket trading Monday. The Bottom Line Shares of CBS Corporation ( CBS ) have a 1.04% dividend yield, based on Friday’s closing stock price of $19.28. The stock has technical support in the $16-$17 price area. If the shares can continue to firm up, we see overhead resistance around the $22-$23 price levels. CBS Corporation ( CBS ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars. Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

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Goldman Sachs Upgrades Home Depot, Downgrades Lowe’s (HD, LOW)

Filed in dividend, downgrade, earnings, Gold, goldman sachs, o, shares, target, upgrade by on January 31, 2011 0 Comments

Analysts at Goldman Sachs on Monday downgraded Lowe’s Companies, Inc. ( LOW ), but upgraded rival home improvement warehouse operator The Home Depot, Inc. ( HD ). The firm said it cut its rating on LOW from “Buy” to “Neutral” with a $28 price target. That target implies an 11% upside to the stock’s Friday closing price of $25.25. Goldman noted that a transitional period in Lowe’s management structure could limit the stock’s upside. Meanwhile, the analyst upgraded HD from “Neutral” to “Buy” and boosted its price target from $37 to $42. That new target suggests a 14% upside to the stock’s Friday closing price of $36.70. Goldman also raised its 2010, 2011, and 2012 earnings estimates for Home Depot as part of the upgrade, noting the company has well-planned strategies that could drive further profits. Lowe’s shares fell 26 cents, or -1%, in premarket trading Monday, while Home Depot shares rose 60 cents, or +1.7%. The Bottom Line Shares of Home Depot ( HD ) have a 2.56% dividend yield, based on Friday’s closing stock price of $36.70. Shares of Lowe’s ( LOW ) have a 1.74% dividend yield, based on Friday’s closing stock price of $25.25. Lowe’s Companies, Inc. ( LOW ) and The Home Depot, Inc. ( HD ) are both rated “Neutral,” with both stocks holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars. Be sure to visit our complete recommended list of

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Stanley Black & Decker Downgraded to “Hold” at KeyBanc (SWK)

Toolmaker Stanley Black & Decker, Inc. ( SWK ) on Monday saw its shares downgraded by analysts at Keybanc. The firm said it cut its rating on SWK from “Buy” to “Hold,” citing the stock’s fair valuation. A KeyBanc analyst commented, “With Stanley’s success in 2010 and robust sales guidance of 5-6% organic growth in 2011, we see little upside near-term given its valuation at roughly 15x our $4.96 estimate ($4.75-$5.00 guidance), supporting our downgrade to HOLD. We raised our 2011 from $4.55 to $4.96 and expect free cash flow of $1.1 billion in 2011 (9% yield) to solidify investors’ confidence in management’s ability to execute further cost savings and or accretive acquisitions into the 2H, offering the stock momentum in time.” Stanley Black & Decker shares fell 72 cents, or -1%, in premarket trading Monday. The Bottom Line Shares of Stanley Black & Decker ( SWK ) have a 1.87% dividend yield, based on Friday’s closing stock price of $72.72. The stock has technical support in the $65 price area. The shares are trading at all-time highs and have little overhead resistance. Stanley Black & Decker, Inc. ( SWK ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars. Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

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Queensland bracing for monster tropical cyclone Yasi

Filed in Bank Gold, Gold, o by on January 31, 2011 0 Comments
Queensland bracing for monster tropical cyclone Yasi

Flood ravaged Queensland is preparing for a monstrous South Pacific Ocean Tropical Cyclone Yasi.  Forecast to reach Category 4+ strength on the familiar Saffir-Simpson scale, there really is nothing inhibiting this storm from explosively intensifying and reaching 135 knots+ in … Continue reading →

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