5 Best Energy Stocks For 2014

America's shale gas revolution is already paying off big time. Not only has it been a boon to consumers and companies who use natural gas for heating their homes and offices, it also appears to be benefiting the environment. Let's take a closer look.

EIA reports lower CO2 emissions
Last week, the U.S. Energy Information Administration (EIA) reported that U.S. energy-related carbon dioxide emissions for 2012 fell to 5.3 billion tons ��the lowest level in nearly two decades. What's more is that since 2007, emissions have declined consecutively each year, with the exception of 2010. The reason?

The EIA attributed the decline in CO2 emissions primarily to the shift away from coal, the most carbon-intensive fossil fuel, and toward natural gas, the least carbon-intensive fuel, for electric power generation. Less demand for transportation fuels and relatively weak demand for winter heating also played a role in driving emissions lower.

5 Best Energy Stocks For 2014: CNOOC Limited(CEO)

CNOOC Limited, through its subsidiaries, engages in the exploration, development, production, and sale of crude oil, natural gas, and other petroleum products. The company?s oil and natural gas properties are located in offshore China, which include Bohai Bay, western south China Sea, eastern south China Sea, and east China Sea, as well as in Indonesia, Iraq, and other regions in Asia; and Oceania, Africa, North America, and South America. As of December 31, 2010, the company had net proved reserves of approximately 2.99 billion barrels-of-oil equivalent, including approximately 1.92 billion barrels of crude oil and 6,458.3 billion cubic feet of natural gas. It also provides bond issuance services; and has a joint venture with Bridas Energy Holdings. CNOOC Limited was founded in 1982. The company is headquartered in Central, Hong Kong, and is considered a Red Chip company due to its listing on the Hong Kong Stock Exchange. CNOOC Limited is a subsidiary of China National Of fshore Oil Corporation.

Advisors' Opinion:

• [By Dave Friedman]

  Institutional investors bought 1,474,410 shares and sold 1,532,340 shares, for a net of -57,930 shares. This net represents 0.00% of common shares outstanding. The number of shares outstanding is 44,669,199,980. The shares recently traded at $187.66 and the company’s market capitalization is $82,478,290,357.81. About the company: CNOOC Limited, through its subsidiaries, explores, develops, produces, and sells crude oil and natural gas.

5 Best Energy Stocks For 2014: PROS Holdings Inc.(PRO)

PROS Holdings, Inc. provides pricing and margin optimization software worldwide. It offers PROS Pricing Solution Suite, a set of integrated software products that enables enterprises to apply pricing and margin optimization science to determine, analyze, and execute optimal pricing strategies through the aggregation and analysis of enterprise application data, transactional data, and market information. The PROS Pricing Solution Suite consists of Scientific Analytics to gain insight into pricing performance; Price Optimizer to institute control of pricing policies; and Deal Optimizer to provide guidelines, additional context, and information to sales force. Its products also include PROS Revenue Management Solution Suite, a suite of industry specific revenue management software products for the enterprises in travel target markets. The PROS Revenue Management Solution Suite comprises PROS Analytics to identify hidden revenue leaks and opportunities, PROS Revenue Management product to manage passenger demand with leg- or segment-based revenue optimization, PROS O&D products to manage passenger demand with passenger name record or PNR based revenue optimization, PROS Real-Time Dynamic Pricing product to determine the optimal prices, PROS Group Revenue Management product to manage group request and booking revenues, PROS Network Revenue Planning product to deliver network-oriented fare class segmentation, PROS Cruise Pricing and Revenue Optimization for customers to understand consumers price sensitivities and track competitor behavior, PROS Hotel Revenue Optimization product that helps customers to enhance pricing decision. In addition, the company provides pricing and implementation professional, and ongoing support and maintenance services. It serves customers in the manufacturing, distribution, services, hotel and cruise, and airline industries primarily through its direct sales force. The company was founded in 1985 and is headquartered in Houston, Texas.

Advisors' Opinion:

• [By Fernandez]

  PROS Holdings, Inc. (NYSE: PRO), is a leading provider of pricing and revenue optimization software worldwide, in five major markets: airline, hotel, cruise, manufacturing and services.

  PROS has proprietary pricing algorithms and systems that have been developed and refined over many years of implementation and experience, that provide the company with a distinct competitive advantage over the many rivals that troll the pricing optimization space.

  When I recommended the purchase of PROS shares, I did not fully appreciate the potential severity of the downturn in IT spending, and the markets in which PROS operates.

  Even with the stock trading around $7.00 per share, I thought that there was more downside risk than upside potential.

  With shares now trading at $5.50 as of this writing, recommending selling shares at $7.00 when I did was indeed a prudent thing to do, as the shares are now down over 20% from where I recommended they be sold not too long ago.

  I detailed my exact reasons for selling shares of PROS here.

  The question now becomes, with the shares significantly lower than before, is PROS actually a bargain at these prices? (See page 2)

  I definitely think we are getting there, but wouldn’t venture to guess until after their next earnings announcement on 11-6-08.

Best Safest Stocks For 2014: National Fuel Gas Company(NFG)

National Fuel Gas Company, through its subsidiaries, operates as a diversified energy company primarily in the United States. The company operates through four segments: Utility, Pipeline and Storage, Exploration and Production, and Energy Marketing. The Utility segment sells natural gas or provides natural gas transportation services to approximately 727,000 customers in Buffalo, Niagara Falls, and Jamestown, New York; and Erie and Sharon, Pennsylvania. The Pipeline and Storage segment provides interstate natural gas transportation and storage services for affiliated and nonaffiliated companies through an integrated gas pipeline system; and 27 underground natural gas storage fields, as well as 4 other underground natural gas storage fields owned and operated jointly with other interstate gas pipeline companies. This segment also transports natural gas for industrial customers and power producers in New York State. It owns the Empire Pipeline, a 157-mile pipeline; and the Empire Connector, which is a 76-mile pipeline extension. The Exploration and Production segment engages in the exploration for, and the development and purchase of natural gas and oil reserves in California, in the Appalachian region of the United States, and in the Gulf Coast region of Texas and Louisiana. As of September 30, 2009, this segment had proved developed and undeveloped reserves of 46,587 thousand barrels of oil and 248,954 million cubic feet equivalent of natural gas. The Energy Marketing segment markets natural gas to industrial, wholesale, commercial, public authority, and residential customers primarily in western and central New York and northwestern Pennsylvania. The company also develops and operates mid-range independent power production and landfill gas electric generation facilities. National Fuel Gas Company was founded in 1902 and is based in Williamsville, New York.

Advisors' Opinion:

• [By Glenn]

  Director of National Fuel Gas Co., R D Cash, bought 2,000 shares on 9/15/2011 at an average price of $59.09. National Fuel Gas Co. is engaged in the business of owning and holding securities issued by its subsidiary companies. National Fuel Gas Co. has a market cap of $4.89 billion; its shares were traded at around $59.09 with a P/E ratio of 22.3 and P/S ratio of 2.8. The dividend yield of National Fuel Gas Co. stocks is 2.4%. National Fuel Gas Co. had an annual average earnings growth of 2.1% over the past 10 years.
  
  On August 4, National Fuel Gas Company announced consolidated earnings for the third quarter of fiscal 2011. Earnings for the third quarter were $46.9 million, or $0.56 per share, an increase of $4.3 million, or $0.05 per share, compared to the prior year’s third quarter earnings of $42.6 million or $0.51 per share.
  
  Production, Utility, and Energy Marketing segments, and the All Other category.
  
  In September, Director R D Cash bought 2,000 shares of NFG stock. Director Stephen E Ewing bought 1,700 shares in August. Director Rolland E Kidder sold 1,000 shares the same month.

5 Best Energy Stocks For 2014: Seadrill Limited(SDRL)

Seadrill Limited, an offshore drilling contractor, provides offshore drilling services to the oil and gas industries worldwide. It also offers platform drilling, well intervention, and engineering services. As of March 31, 2011 the company owned and operated 54 offshore drilling units, which consist of drillships, jack-up rigs, semisubmersible rigs, and tender rigs for operations in shallow and deepwater areas, as well as in benign and harsh environments. Seadrill Limited was founded in 1972 and is based in Hamilton, Bermuda.

Advisors' Opinion:

• [By Bryan Perry]

  SeaDrill Ltd. (NYSE: SDRL) is a unique opportunity for income investors seeking a pure play on deep-water drilling outside the post-BP spill in the Gulf of Mexico. The company was formed in 2005, and owns the most state-of-the-art drilling equipment in the entire industry that commands premium day rates. It is in big demand with utilization rates running near100% as big oil deposits become harder to find without going deep.

  These guys operate all over the world in 15 countries on four continents, owning 54 rigs with exposure to only one rig in the Gulf of Mexico. Most of their drilling activity is off the coast of Norway and South Asia, so it has no exposure to the now unstable Middle East. However, news of ARAMCO in Saudi Arabia upping drilling production is hugely positive news for the oil and gas drilling sector. It confirms the belief that the worldwide drilling rig count will rise as well as day rates for the balance of 2011.

  Shares of SeaDrill stand to trade significantly higher than its current price of $36.50, while paying a dividend yield of 7.5%. Buy SDRL under $40.

5 Best Energy Stocks For 2014: Exxon Mobil Corporation(XOM)

Exxon Mobil Corporation engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products, as well as transportation and sale of crude oil, natural gas, and petroleum products. The company manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and other specialty products. As of December 31, 2010, it operated 35,691 gross and 30,494 net operated wells. The company has operations in the United States, Canada/South America, Europe, Africa, Asia, and Australia/Oceania. Exxon Mobil Corporation was founded in 1870 and is based in Irving, Texas.

Advisors' Opinion:

• [By Hawkinvest]

  Exxon (XOM) is a must-own stock for many oil investors. This company has a strong balance sheet and a very significant reserve base, which grows in value with the price of oil. Exxon recently reported solid results with earnings for the fourth quarter of 2011 coming in at $1.97 per share. The company also reported that it bought back about $5 billion worth of shares. Weaker margins in the refinery business did impact results, but overall, the report shows that the company is poised for a solid year ahead. Exxon has a very strong balance sheet and it can afford to continue buying back shares which will help to boost future earnings. This stock was trading for about $80 per share in December, but has been trending higher. Exxon shares have recently been finding support around $83 per share, so buying on dips at that level are particularly attractive.< /span>

  Here are some key points for XOM:

  Current share price: $86.57

  The 52 week range is $67.03 to $88.23

  Earnings estimates for 2011: $8.25 per share

  Earnings estimates for 2012: $8.99 per share

  Annual dividend: about $1.88 per share which yields about 2.2%

• [By Dan Moskowitz]

  This article�has been�heavy on optimism, but please keep in mind that this pertains to the long haul. A deflationary environment is a possibility in the coming years. If this type of environment presents itself, then Exxon Mobil will have to deal with some challenging times. However, as�hinted at�several times earlier, Exxon Mobil is a long-term OUTPERFORM.

• [By Steven Goldberg]

  ExxonMobil (XOM, $88.00, 2.9%) is the world's biggest non-government-owned oil and gas company. Exxon's executives have long managed the company with an eye toward producing high profits for shareholders. In the past five years, Exxon has bought back $100 billion in stock and paid more than $40 billion in dividends. The stock, another Dow member, trades at 10 times estimated earnings (its yield is based on a recently announced increase in the dividend rate).

Q2 Expectations Low, Guidance Key - Ahead of Wall Street

Tuesday, July 9, 2013

This is Mark Vickery, covering for Sheraz Mian while he records an early-morning interview.

Even though we've "unofficially" entered Q2 earnings season with Alcoa's (AA) top-line beat reported after the bell Monday, we're ramping-up to the busy time like an avenue in Chicago. Aside from earnings reports from Yum! Brands (YUM), JPMorgan (JPM) and Wells Fargo (WFC) in the latter half of the week, there is but a small handful of companies posting quarterly results otherwise.

Things pick up next week with many financials following JPMorgan and Wells Fargo this week. And because the financial industry is expected to be the biggest performer in Q2, we'll likely get a fairly articulate view of how the second quarter is coming along within the next two weeks or so… just not right now.

That said, expectations for Q2 are almost laughably low at the moment. With forecasts having come down drastically in the past three months from around 3.6% to 0.4% now, the question is not whether or not the quarter will outperform expectations -- at least, we all should certainly hope it won't be -- but by how much. The past two quarters, Q412 and Q113, posted actuals of 2+% -- a perfect definition of the "muddle-through" economy pretty much everyone agrees we're enduring. See here for the excellent synopsis by Zacks Director of Research Sheraz Mian:

Will Earnings Growth Bottom in Q2?

So with no particularly extreme headwinds over the past quarter, one might reasonably expect we will find ourselves back in the 2+% range once the dust settles on the quarter (and we can all go on vacation).

But even more interestingly, if you look at the graph in the link above, you'll see projected earnings literally skyrocket for Q3 and Q4 -- to 5.1% and 11.7%, respectively. And although these are year-over-year comparisons, they are anything but easy hurdles; the second half of 2012 was stronger than the first half, too. In fact, as Sheraz Mian points out, "[T]he level! of total earnings expected in 2013 Q3 and Q4 represent new all-time high quarterly records."

Clearly, this puts a premium not directly on Q2 earnings (they're going to be pretty crappy) but on company guidance for Q3 and the fiscal year. We might expect things to ratchet down from 11.7% earnings in the fourth quarter -- 11.7%! -- but unless the earth crumbles beneath the feet of about every industry, we can feel secure things will be looking up in the second half. Certainly we should not ignore particularly bad guidance from anyone in the next few weeks, but barring any major catastrophe we should be enjoying new record highs in the next couple+ quarters.

Mark Vickery
Senior Editor



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EnPro Reaches 52-Week High - Analyst Blog

Hot Stocks To Buy For 2014

Shares of EnPro Industries, Inc. (NPO) hit a new 52-week high of $57.04 on Jul 10 and eventually closed at $56.86. Shares of this industrial products company jumped 7.2% in a day, post the announcement of the recent decline in the estimated liability of pending and future asbestos-related claims.

Year-to-date, share prices have recorded a healthy return of 35.8%. The company's long-term estimated EPS growth rate is 15.0%. Average volume of shares traded over the last three months came in at approximately 130K.

EnPro announced the new development by Garlock Sealing Technologies LLC (GST) against whom the allegation of manufacturing asbestos which is causing cancer has been leveled. Garlock has submitted a pre-trial brief for the impending trial to estimate its aggregate charge for pending and future mesothelioma claims.

Garlock estimated claims of $270 million in Nov 2011, which is now estimated to be roughly $125 million, in the pre-trial brief issued recently. However, the Committee of Asbestos Personal Injury Claimants and the Future Asbestos Claimants' Representative estimate the claim to be $1.26 billion.

In May, another subsidiary of EnPro, Compressor Products International, entered into a contract to provide reciprocating compressor aftermarket goods and services for the next five years to Shell.

In April, GGB Bearing Technology enhanced the product portfolio of the company with the introduction of two new metallic bearing materials. We expect the growth trajectory to continue in the future based on new contracts as well as offerings.

Other Stocks to Consider

The company registered a negative earnings surprise in the previous quarter due to reduction in demand in most of its industrial markets. EnPro currently carries a Zacks Rank #4 (Sell). Other stocks to look out for in the industry are Lincoln Electric Holdings Inc. (LECO), ca! rrying a Zacks Rank #1 (Strong Buy). Chart Industries Inc. (GTLS) and Key Technology, Inc. (KTEC) carrying a Zacks Rank #2 (Buy) are worth a watch.

Hot Heal Care Stocks To Invest In Right Now

NextEra Energy (NYSE: NEE  ) reported earnings on Tuesday, underwhelming on revenue but exceeding on earnings expectations. As the largest renewable energy utility in the U.S., let's see if NextEra's newest report will put more wind in its sales.

Number crunching
Sales clocked in at $3.3 billion, 2.7% below Q1 2012's revenue and 7.6% less than analysts expected.

But even as the company's top line tumbled, it managed to make the most of bottom-line earnings: $475 million in adjusted net income translated to adjusted EPS of $1.12 for investors. That's a full 10% above 2012's first quarter and 10% above analyst estimates for this quarter's adjusted EPS.

For a peck of perspective, NextEra sales have increased 12% over the last five years, while adjusted EPS has managed a near-mirror image 13% drop.

Hot Heal Care Stocks To Invest In Right Now: Nuveen Select Tax Free Income Portfolio(NXP)

Nuveen Select Tax-Free Income Portfolio is an exchange traded fund launched by Nuveen Investments, Inc. It is managed by Nuveen Asset Management Inc. The fund invests in the fixed income markets of the United States. It primarily invests in long-term municipal obligations with investment-grade ratings (Baa and BBB or better). Nuveen Select Tax-Free Income Portfolio was formed on March 19, 1992 and is domiciled in United States.

Hot Heal Care Stocks To Invest In Right Now: Taseko Mines Ltd(TKO.TO)

Taseko Mines Limited, a mining company, engages in the acquisition, exploration, development, and operation of mineral properties in Canada. It holds a 75% interest in the Gibraltar copper-molybdenum mine covering approximately 113 square kilometers located in south-central British Columbia; and the New Prosperity project consisting of a mineral lease and 37 mineral claims covering the mineral rights for approximately 94.9 square kilometers southwest of the City of Williams Lake, British Columbia. The company also owns interests in the Aley project consisting of 104 contiguous mineral claims covering 43.3 square kilometers located in northern British Columbia; and the Harmony gold project comprising 58 mineral claims and 177 square kilometers located in the north-western coast of British Columbia. Taseko Mines Limited was founded in 1966 and is headquartered in Vancouver, Canada.

Top 5 Biotech Stocks To Own For 2014: Uranium Bay Resources Inc(UBR.V)

Uragold Bay Resources Inc., a junior exploration company, engages in the acquisition, exploration, development, and production of gold properties in Canada. The company also explores for uranium. Its properties are located in Canada in the Appalachian region of the province of Quebec. The company was formerly known as Uranium Bay Resources Inc. and changed its name to Uragold Bay Resources Inc. in July 2009. Uragold Bay Resources Inc. is based in Laval, Canada.

Mairs & Power Guru Bill Frels, Six Reductions

Guru Bill Frels is chairman of the board of Mairs & Power Inc., and lead manager of the Mairs & Power Balanced Fund. The firm recently reported that the Mairs & Power Balanced Fund paid a dividend of $0.45 per share and the Mairs & Power Growth Fund paid a dividend of $0.58 per share, both on June 27, 2013. The firm's recently updated portfolio lists 179 stocks, 11 of them new, with a total value of $5.23 billion and a quarter-over-quarter turnover of 3%.

According to GuruFocus research, Guru Bill Frels reduced or sold out 19 holdings in the second quarter. Here are the details of his six highest impact reductions, as of June 30, 2013.

Echo Global Logistics Inc. (ECHO): Reduced

Impact to Portfolio: -0.02%

Up 11% over 12 months, Echo Global Logistics Inc. has a market cap of $504.76 million; its shares were traded at around $21.42. The P/E ratio is 38.50.

Historical share pricing:

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Guru Action: As of June 30, 2013, Bill Frels reduced his position by 58.87%, selling 43,800 shares at an average price of $18.96, for a gain of 13%. Current shares remaining are 30,600.

He has averaged a gain of 16% on 74,400 shares bought at an average price of $18.49 per share. On shares sold, he has averaged a gain of 13% on 43,800 shares sold at an average price of $18.96 per share.

Cabela's Inc. (CAB): Reduced

Impact to Portfolio: -0.02%

Up 43% over 12 months, Cabela's Inc. has a market cap of $4.75 billion; its shares were traded at around $67.30. The P/E ratio is 23.50.

Historical share pricing:

[ Enlarge Image ]

Guru Action: As of June 30, 2013, Bill Frels reduced his position by 39.13%, selling 12,600 shares at an average price of $64.81, for a gain of 3.8%. Current shares remaining are 19,600.

He has averaged a gain of 53% on 32,200 shares bought ! at an average price of $44.08 per share. On shares sold, he has averaged a gain of 4% on 12,600 shares bought at an average price of $64.81 per share.

Hub Group Inc. (HUBG): Reduced

Impact to Portfolio: -0.01%

Up 28% over 12 months, Hub Group has a market cap of $1.45 billion; its shares were traded at around $38.55. The P/E ratio is 19.90.

Historical share pricing:

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Guru Action: As of June 30, 2013, Bill Frels reduced his position by 28.92%, selling

17,800 shares at an average price of $37.09, for a gain of 3.9%. Current shares remaining are 41,700.

He has averaged a gain of 12% on 59,500 shares bought at an average price of $34.44 per share. On shares sold, he has averaged a gain of 4% on 17,800 shares sold at an average price of $37.09 per share.

iShares S&P 500 Index (IVV) ETF: Reduced

Impact to Portfolio: -0.01%

Up 18% over 12 months, the iShares S&P 500 Index, an ETF, has a market cap of $37.07 billion; its shares were traded at around $167.54.

Historical share pricing:

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Guru Action: As of June 30, 2013, Bill Frels reduced his position by 21.4%, selling 1,930 shares at an average price of $162.02, for a gain of 3.4%. Current shares remaining are 30,600.

He has averaged a gain of 43% on 22,035 shares bought at an average price of $116.92 per share. On shares sold, he has averaged a gain of 23% on 14,945 shares sold at an average price of $135.99 per share.

Chart Industries Inc. (GTLS): Reduced

Impact to Portfolio: -0.01%

Up 69% over 12 months, Chart Industries has a market cap of $3.64 billion; its shares were traded at around $120.25. The P/E ratio is 49.10.

Historical share pricing:

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G! uru Actio! n: As of June 30, 2013, Bill Frels reduced his position by 21.7%, selling 4,600 shares at an average price of $87.43, for a gain of 37.5%. Current shares remaining are 16,600.

He has averaged a gain of 74% on 21,200 shares bought at an average price of $69.11 per share. On shares sold, he has averaged a gain of 38% on 4,600 shares sold at an average price of $87.43 per share.

PrivateBancorp Inc. (PVTB): Reduced

Impact to Portfolio: -0.02%

Up 50% over 12 months, PrivateBancorp Inc. has a market cap of $1.84 billion; its shares were traded at around $23.73. The P/E ratio is 18.90.

Historical share pricing:

[ Enlarge Image ]

Guru Action: As of June 30, 2013, Bill Frels reduced his position by 22.89%, selling 27,700 shares at an average price of $19.30, for a gain of 23%. Current shares remaining are 93,300.

He has averaged a gain of 48% on 121,000 shares bought at an average price of $16.01 per share. On shares sold, he has averaged a gain of 23% on 27,700 shares sold at an average price of $19.30 per share.

Mairs & Power Inc. is a privately owned investment firm, established in 1931 in Minnesota. The investment advisory firm has earned its reputation based on more than 70 years of using a conservative approach to investing.

Here is the complete portfolio of Bill Frels.



Be sure to read:

1. Bill Frels's Undervalued Stocks
2. Bill Frels's Top Growth Companies
3. Bill Frels's High Yield stocks
4. Stocks that Bill Frels keeps buying

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GuruFocus Real Time Picks reports the stock purchases and sales that Gurus have made within the prior 2 weeks. The report time lag can be as short as 2 days after the date of the transaction. This feature is for Premium Members only.

Check out the GuruFocus special feature 52-week low screener to find the stocks hitt! ing new l! ows but are still held by top investor Gurus and Insiders.

First Titan Corp. Works to Increase Oil & Gas Holdings in Booming Texas Market (OTCBB:FTTN, ASX:TEX, OTCQX:TEXQY)

First Titan Corp. (FTTN)

Today, FTTN remains (0.00%) +0.000 at $.445 with 1,199 shares in play thus far (ref. google finance Delayed: 11:33AM EDT June 25, 2013).

First Titan Corp. continues its determined pursuit of Texas oil and gas this week, targeting assets in Waller County for potential acquisition.

Last week, FTTN finalized a letter of intent to acquire a working interest in the property. The Lone Star State, long known for its energy assets, has been a major region of focus in FTTN's aggressive acquisitions strategy. In addition to its assets in Terrell County, the company is also negotiating the possible acquisition of producing assets in Hardin County with development upside.

Known as the Minns asset package, the Waller County project contains a multi-well production package located in the Brookshire Field. According to a reserve report conducted this year, the proved developed producing reserves for the project include over 8,500 barrels of oil.

Take a look at First Titan Corp (FTTN) 5 day chart:

Target Energy Limited (TEXQY) (TEX)

Target Energy Limited (OTCQX:TEXQY, ASX:TEX) (http://targetenergy.com.au/) is an oil and gas exploration and production company listed on the Australian Securities Exchange and trading under ticker “TEX” and OTC Markets trading under ticker “TEXQY”.

Today (June 25), Target Energy Limited ticker (OTCQX:TEXQY) has remained (0.00%) +0.000 at $7.00 thus far (ref. google finance Delayed: 9:32AM June 25, 2013 – Close), and Target Energy Limited on the Australian Securities Exchange ticker (ASX:TEX) closed at (+2.99%) +0.002 at $.069 with 50,000 shares in play at the close (ref. google finance June 25, 2013 – Close).

Top 5 Penny Companies To Own For 2014

Target Energy Limited previously reported that the company is continuing drilling operations at the Pine Pasture #3 oil well on their East Chalkey Oil Field in Parish, Louisiana. The Company had independent studies which indicated that put upside recoverable reserves for Pine Pasture #3 range between 250,000 and 450,000 barrels of oil. In addition, the report also revealed that the East Chalkey Field has an upside estimate of 4 million barrels of oil.

To view Target Energy Limited video click link http://crwetube.com/media/target-energy-ltds-managing-director-laurence-roe .

Keep in mind, Target Energy Limited production increased by +320% in 2013 following successful Permian Basin drilling campaign. In April, the Company was generating in excess of $400,000 per month in net sales revenue. The Company's ongoing 2013 drilling programs in Permian Basin and Louisiana are likely to add significantly to their production and reserves.

Now take a look at Target Energy Limited (TEXQY) 5 day chart:

Most Advisors Say Alts Just as Crucial as Traditional Assets

Financial advisors and institutions continue to boost their interest and client assets invested in alternatives.

Nearly 65% of advisors allocated between 6% and 20% of their clients’ portfolios to alternatives, according to a recent Morningstar report, and 15% anticipated allocating more than 20% over the next five years. Only 4% of advisors said their typical client had no money in alternative investments, down from 17% in the research firm’s 2008 survey.

Plus, 56% of financial advisors say that alternatives are as important, somewhat more important or much more important than traditional assets, namely due to diversification.

Morningstar conducts its alternative-investment survey each year in cooperation with Dow Jones and Barron’s, and the most recent poll, conducted in March, included input from 471 advisors and 235 institutions.

More than 20% of institutions, compared with 17% last year, said they expected alternative investments to make up more than 40% of holdings over the next five years, while 43% allocated 10% of less to alternatives.  

In addition, Morningstar reports that all seven of its alternative mutual fund categories have seen inflows over the past five years. These categories include nontraditional bonds, multi-alternative, market neutral, managed futures, long-short equity, currency and bear market.

Alternative-themed mutual funds saw inflows of $19.7 billion in 2012, while Morningstar estimates that among funds in its database, $7.6 billion flowed out of single-strategy hedge funds.

Among the five alternative categories attracting inflows, nontraditional-bond mutual funds have gathered the most assets, though long-short equity and multi-alternative strategies are also gaining momentum.

Fund firms with products in the managed-futures and multi-alternative mutual fund categories launched 22 and 17 new funds, respectively, in 2012.

Alternative ETFs have received net inflows of $41 billion since 2010, according to Morningstar.

Advisors clearly want income-producing alternatives, the research firm point out, and advisors ranked private real estate as their top strategy when planning future investments in alternatives for clients.

In addition, master limited partnerships (MLPs) drove significant portfolio growth over the last five years, advisors said. Also, in response to investors’ search for income, funds in the nontraditional bond category experienced 2012 inflows of $5.9 billion.

Managed futures, however, have seen their appeal drops among advisors and their clients. Though commodities are the most popular alternative ETF category, advisors moved away from managed futures in 2012 — after citing them as their top pick in the two previous surveys.

Performance may have been a factor, as managed-futures ETFs and managed-futures mutual funds lost 15.6% and 7.4%, respectively, in 2012, where were levels similar to losses reported for these groups in 2011.

The survey also found that advisors and institutions are unhappy with the undisclosed performance fees that managed-futures funds frequently charge.

Long-short equity strategies, however, are among the most widely used, with inflows of $6.1 billion in 2012.

For the second year in a row, institutions ranked these strategies as their top choice for increased allocation; the strategy ranked second for advisors. While 61% of institutions said they accessed long-short strategies via hedge funds in 2010, only 26% indicated that they used hedge funds for that strategy in 2012.

More than 45% of institutions said they access long-short strategies via mutual funds in 2012 versus 38% in 2010. In addition, institutions are considering primarily long-short equity (and private equity) for increased allocation over the next five years.

***

For direct insights on the role of ETFs in client portfolios from multiple experts — including Rick Ferri, Ron Delegge, Skip Schweiss and more — we invite you to register for ThinkAdvisor’s premiere advisorcentric Virtual ETF Summit, which starts July 23 (and get multiple hours of CFP Board CE).

 

Top 5 High Tech Stocks To Own Right Now

If you've ever worked in retail like I have, you're probably well aware that there's nothing quite as fickle as the spending and buying habits of consumers. Shoppers are looking for that perfect balance of the newest fashion trends for themselves or their home at the lowest possible cost. It's a game of chicken that some retailers have balanced successfully, while others have fallen flat on their faces.

Luckily for us, Brand Keys came out with its 17th annual report on its Customer Loyalty Engagement Index earlier this year that breaks down 375 of the most well-known brands into 54 categories and ranks these companies against their peers to determine which are the best at driving brand loyalty.

Today, I want to focus specifically on the retail sector, which Brand Keys has broken down into six separate categories. Not only do I want to highlight the achievements of these six top-ranking companies, but I also want to examine what got them to the top in the first place, so that we may determine if there are long-term growth drivers and advantages that these businesses are exploiting that might make them solid investments.

Top 5 High Tech Stocks To Own Right Now: Smith & Nephew(SN.L)

Smith & Nephew plc develops, manufactures, markets, and sells medical devices in orthopaedics, endoscopy, and advanced wound management sectors worldwide. The company operates in three segments: Orthopaedics, Endoscopy, and Advanced Wound Management. The Orthopaedics segment offers reconstruction implants, including hip, knee, and shoulder joints, as well as ancillary products, such as bone cement and mixing systems used in cemented reconstruction joint surgery. This segment also provides trauma fixation products consisting of internal and external devices, and shoulder fixation and orthobiological materials used in the stabilization of fractures and deformity correction procedures; and clinical therapies products comprising bone growth stimulation, joint fluid therapies, and outpatient spine products. The Endoscopy segment develops and commercializes minimally invasive surgery techniques, educational programs, and value-added services for surgeons to treat and repair soft tissue and articulating joints. It offers specialized devices and fixation systems to repair damaged tissues; fluid management equipment for surgical access; digital cameras, digital image capture, scopes, light sources, and monitors to assist with visualization; radiofrequency wands, electromechanical and mechanical blades, and hand instruments for resecting damaged tissues. The Advanced Wound Management segment provides a range of initial wound bed preparation and full wound closure products. This segment?s products are targeted at chronic wounds associated with the older population, such as pressure sores and venous leg ulcers; and products for the treatment of wounds, including burns and invasive surgery. Its products include the ALLEVYN and DURAFIBER brand products; and infection management and negative pressure wound therapy products. The company primarily serves medical and surgical service providers. Smith & Nephew plc was founded in 1856 and is headquartered in Lo ndon, the United Kingdom.

Top 5 High Tech Stocks To Own Right Now: HCC Insurance Holdings Inc. (HCC)

HCC Insurance Holdings, Inc. underwrites non-correlated specialty insurance products worldwide. The company operates in five segments: U.S. Property & Casualty, Professional Liability, Accident & Health, U.S. Surety & Credit, and International. The U.S. Property & Casualty segment provides aviation, small account errors and omissions liability (E&O), public risk, contingency, disability, residual value, employment practices liability (EPLI), technical property, primary and excess casualty, and brown water marine insurance products, as well as title and mortgage reinsurance products in the United States. The Professional Liability segment offers directors� and officers� (D&O) liability, large account E&O liability, fiduciary liability, fidelity and bankers blanket bonds, and EPLI for the United States and International-based policyholders. The Accident & Health segment provides medical stop-loss, short-term domestic and international medical, HMO reinsurance, and medical excess coverages in the United States. The U.S. Surety & Credit segment offers contract surety bonds, commercial surety bonds, and bail bonds; credit insurance policies for export trade transactions and structured trade transactions; and political risk and letters of credit insurance products. The International segment provides energy, property treaty, liability, surety, credit, direct and facultative property, ocean marine, accident and health, and other smaller product lines for international customers. The company markets its products directly to consumers, as well as through a network of independent agents and brokers, producers, and managing general agents. HCC Insurance Holdings, Inc. was founded in 1974 and is headquartered in Houston, Texas.

5 Best Small Cap Stocks To Invest In 2014: Mckay Secs(MCKS.L)

McKay Securities PLC, a commercial property investment company, engages in the development and refurbishment of buildings in central London and the southeast of England. The company?s portfolio consists of office, industrial, retail, and residential properties. As of March 31, 2008, its property portfolio comprised 38 properties. The company was founded in 1946 and is based in Reading, the United Kingdom.

Top 5 High Tech Stocks To Own Right Now: KeyCorp (KEY)

KeyCorp is a bank holding company for KeyBank National Association (KeyBank). Through KeyBank and certain other subsidiaries, the Company provides a range of retail and commercial banking, commercial leasing, investment management, consumer finance and investment banking products and services to individual, corporate and institutional clients through two business segments: Key Community Bank and Key Corporate Bank. As of December 31, 2011, these services were provided through KeyBank�� 1,058 full-service retail banking branches in 14 states, additional offices, a telephone banking call center services group and a network of 1,579 automated teller machines (ATMs) in 15 states. On January 17, 2012, the Company opened another national bank subsidiary.

In addition to the banking services of accepting deposits and making loans, the Bank and trust company subsidiaries offer personal and corporate trust services, personal financial services, access to mutual funds, cash management services, investment banking and capital markets products, and international banking services. Through its bank, trust company and investment adviser subsidiaries, the Company provides investment management services to clients that include corporate and public retirement plans, foundations and endowments, individuals and trust funds. The Company provides other financial services - both within and outside of its primary banking markets - through various nonbank subsidiaries. These services include community development financing, securities underwriting and brokerage. It is also an equity participant in a joint venture that provides merchant services to businesses.

Lending Activities

As of December 31, 2011, the Company�� Commercial, Financial and Agricultural loans, also referred to as Commercial and Industrial, represented 39% of its total loan portfolio. As of December 31, 2011, commercial real estate loans represented approximately 19% of its total loan portfolio. These loans include bo! th owner and nonowner-occupied properties and constitute approximately 27% of its commercial loan portfolio. Its commercial real estate lending business is conducted through two primary sources: its 14-state banking franchise, and Real Estate Capital and Corporate Banking Services. The Company conducts financing arrangements through its equipment finance line of business. Commercial lease financing receivables represented 17% of commercial loans at December 31, 2011. The home equity portfolio is the largest segment of its consumer loan portfolio.

Investment Activities

The Company�� securities portfolio totaled $18 billion at December 31, 2011. Available-for-sale securities were $16 billion at December 31, 2011. Held-to-maturity securities were $2.1 billion at December 31, 2011. At December 31, 2011, it had $2.1 billion in collateralized mortgage obligations (CMOs) in its held-to-maturity securities portfolio. At December 31, 2011, the Company had $15.9 billion invested in CMOs and other mortgage-backed securities in the available-for-sale portfolio. Federal Agency CMOs constitute most of its held-to-maturity securities along with foreign bonds and preferred equity securities. The investments in equity and mezzanine instruments made by its principal investing unit represented 61% of other investments at December 31, 2011. They include direct investments (investments made in a particular company), as well as indirect investments (investments made through funds that include other investors).

Sources of Funds

Domestic deposits are the Company�� primary source of funding. During the year ended December 31, 2011, these deposits averaged $58.5 billion and represented 80% of the funds it used to support loans and other earning assets. Wholesale funds, consisting of deposits in its foreign office and short-term borrowings, averaged $3.4 billion during 2011. At December 31, 2011, the Company had $4.7 billion in time deposits of $100,000 or more.

Advisors' Opinion:

• [By Alexandra Leigh]

  On Thursday, KeyCorp shareholders were disappointed as the Cleveland-based bank posted an unanticipated jump in expenses during the fourth quarter during the previous three months. Along with other banks trimming costs to outweigh the pressure on revenue from falling interest rates, KeyCorp has been doing the same, but it has also said that it will continue to invest in future growth, so it might take until the second half for expenses to start decreasing. Expenses increased by 5.4 percent year-over-year, and 3 percent from the third quarter to $756 million, while revenue rose by 9.8 percent to $1.1 billion for the same period but fell 4.4 percent from the third quarter.

Top 5 High Tech Stocks To Own Right Now: National American University Holdings Inc.(NAUH)

National American University Holdings, Inc., through its subsidiary, Dlorah, Inc., engages in the ownership and operation of National American University that provides post-secondary education services primarily to working adults and other non-traditional students in the United States. It provides associate?s, bachelor?s, and master?s degrees programs in business-related disciplines, such as accounting, applied management, and business administration, as well as information technology; and healthcare-related disciplines, such as nursing and healthcare management. The company also offers diploma programs consisting of a series of courses focused on a particular area of study, for students who seek to enhance their skills and knowledge in the areas of healthcare coding, practical nursing, therapeutic massage, and veterinary assisting. National American University Holdings offers its courses through educational sites, as well as online. As of May 31, 2010, the company had enr olled approximately 3,565 students in online programs, 3,742 students on-campus, and 1,451 students in hybrid learning centers. In addition, it manages apartment units, as well as develops and sells multi family residential real estate in the Rapid City, South Dakota area. The company was founded in 1941 and is headquartered in Rapid City, South Dakota.

Saks Accepts $16 - Is That Enough?

Saks (NYSE:SKS) announced July 29 that it was accepting the Hudson's Bay Company's (TSE:C.HBC) $2.9 billion dollar acquisition offer. Bringing Saks under the same roof as Hudson's Bay and Lord & Taylor, the trio will have annual revenues of $7.3 billion making it a formidable department store chain in both Canada and the U.S.

HBC is paying $16 per share. Is this enough? Could the price go higher? I'll have a look.

Go Shop
Saks has 40 days to find a better deal. The company says it's unlikely to find such a beast. However, Barron's featured a guest column July 30 from Maxim Group, a New York-based investment bank, that puts the value of its stock at $18.50 per share. Maxim gets to this number by projecting EBITDA all the way out to 2017 ($443 million) and then applying a multiple of seven times those earnings to arrive at an enterprise value (less $600 million for flagship real estate) of $3.28 billion, $375 million higher than the current deal.

And here's where it gets interesting.

Some experts value the Fifth Avenue location at $1 billion or more. In early 2012, I recommended Saks' stock when it was trading around $9. In that article I reminded investors that the flagship store on Fifth Avenue generates 22% of its overall annual revenue or approximately $700 million. It's a business unto itself. If you substitute Maxim's $600 million valuation on its flagship store for the billion-dollar figure being thrown around, its enterprise value jumps to $3.68 billion and a per share value of $21.33, 33% higher than Hudson's Bay's existing offer of $16 per share.

Who Might Bid
Well, if the news is to be believed, there weren't too many interested parties in the first place. Now that an offer is on the table, it does seem unlikely that someone new would put in a bid, but maybe they should. Perry Caicco, an analyst with CIBC World Markets told clients that the REIT Hudson's Bay is considering for some of its real estate as well as Saks' Fifth Avenue and Beverly Hills stores is absolutely essential to the financing of the deal. Currently, it has total debt that is 2.7 times EBITDA; buying Sakes takes this to 5.7 times EBITDA. In Caicco's words: "That's a big stretch for any retailer, especially one that has now hitched its future to the fickle U.S. luxury department store market and, as such, the U.S. economy." Despite this skepticism, Caicco has a price target of $20 for HBC.

SEE: Understanding Leverage Ratios

The problem that I see with Hudson's Bay buying Saks is that they both have a number of terrible locations mixed in with some very valuable retail properties. In Saks case, it really only has two that carry substantial value. HBC has 56 properties that it owns out of a total of 207, but even then many of the locations both in the U.S. and Canada don't carry as much value as HBC would like to think they do. Canaccord Genuity analyst Derek Dley puts the value of HBC real estate in a REIT at $13 per share. Add in another $8 per share for Saks' real estate and the company would reap $2.56 billion from the spin-off. If that were to come true, HBC's pro forma debt would be reduced to $640 million according to Caicco. I see the number a little higher at $1 billion. I'm skeptical that it can hit $2.56 billion but Richard Baker's pulled rabbits out of his hat before.

The most obvious choice to put in a last minute bid would be Dillard's (NYSE:DDS), who originally were interested in the company back in 1990 when British American Tobacco (NYSEMKT:BTI) put the luxury retailer up for sale. It ultimately was sold for $1.5 billion to Investcorp, a holding company located in Bahrain. It would be a stretch for the Arkansas-based, family-run, department store chain. But even if paid $18.50 and financed most of the purchase, its debt-to-EBITDA would still be less than HBC's on a pro forma basis. It's a long shot though. The Dillard family seem happy with the status quo.

As for private equity, unless there's a lot of growth on the table, most investment firms are steering clear of the big names. Saks has a name but its growth is limited. Otherwise, KKR (NYSE:KKR) would have bought it and merged it with Neiman Marcus.

Bottom Line
While I think Saks is worth more than $16, I just don't see another company stepping to the plate. Richard Baker will either become the King of North American retail or he'll fail in a less spectacular fashion than Robert Campeau, who bought Allied Stores in 1986 and then Federated Department Stores two years later, only to lose both to bankruptcy. Whatever happens, it sure will be interesting to watch.

General Dynamics Upped to Neutral - Analyst Blog

Top 10 Heal Care Stocks To Watch Right Now

On Jul 2, 2013 we have upgraded our recommendation on one of the major defense contractors General Dynamics Corp. (GD) to Neutral from Underperform.

Why the Upgrade?

General Dynamics engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation.

Even though the defense major reiterated its 2013 earnings guidance on flattish revenues, its first quarter results reflect some positive trends. Jet sales at the Gulfstream business are continuing to see traction even in the slowing defense sales scenario. The $60 million top-of-the-line G650 large cabin business jet is in high demand, with orders booked for the next five years. Gulfstream is expected to contribute more significantly to General Dynamics' earnings going forward.

General Dynamics has rewarded shareholders by returning a substantial portion of its free cash flow through share repurchases and incremental dividends over the years. During the last reported quarter, it has also boosted shareholder wealth via $70 million worth of buybacks and a 10% dividend hike. This dividend hike marks the 16th consecutive annual increase and has a dividend yield of 2.80%. Its practice of raising dividends consistently will benefit the stock and attract investor attention.

Although we remain a little apprehensive over its declining backlog, which witnessed a 5.5% sequential as well as 12.3% year over year fall during the first quarter, the company managed to clinch quite a few significant contracts in the recent past. On Jun 4, 2013, General Dynamics won a contract, worth $2.84 billion, from the Department of Defense (DoD) and the U.S. Navy to construct four Arleigh Burke-class destroyers.

With respect to the present valuation, General Dynamics also! looks attractive. The forward price/earnings (P/E) multiple of 11.8x is lower than the peer group average of 14.7x, reflecting a discount of 19.7%. The price/book (P/B) multiple of 2.4x is also lower than the peer group average of 3.1x. In addition, the company's operational efficacy is apparent in its Return on Investment (ROI) of 14.2%, which is higher than the peer group average of 12.5%.

Other Stocks to Consider

General Dynamics currently retains a Zacks Rank #3 (Hold). Other stocks from the sector that are presently performing well include Embraer SA (ERJ), The Boeing Company (BA) and Northrop Grumman Corp. (NOC), all with a Zacks Rank #2 (Buy).

Is stock market movement making you a trader?

No matter what made them enter equity market, most of them were driven by feedback that they got through different sources, regarding potential of equity market to generate quick returns. The influence of peer group behavior in this case was extremely strong. Looking at colleagues in the office who remained glued to online portal, these investors also thought of trying their luck. This was the stage when seeds of greed were sown. The greed, which later on went on to dominate the logic of investment and overwhelmed these investors. Once they had started investing they were also helped by occasional good experiences that these investors had when they got better than anticipated return on some stocks. For a first time investor in equity, the previous benchmark of return was around 8 percent to 9 percent as most of the bank deposits and investment instruments like PPF and NSC provide this kind of return only.

Now the same investor who was used to 8 to 9 percent return suddenly found himself confused as his first investment in equity gave him 6 percent return in just two days because of favourable market condition for a particular stock. However, he got good returns in some other stocks as well which were too good to be true and was based on the randomness rather than any logic or study. What will be the impact of this experience on the mind of the investor? The impact obviously will have two dimensions.  One it will make an investor feel that he is an expert and understands the pulse of the market. After all, his judgment had gone right. So the natural desire to invest more in equity market will increase. Two, this will build a mindset that equity is a route to make quick buck and it is better to be a trader than investor because if good returns can be generated in a short period of time, there is no point in remaining an investor. Who will like to wait for long term when money can be made just like that?  Actually, this is the stage when a gullible investor is most likely to get converted into trader. And practically this is what happens. Investors turn into traders only to curse equity market for the so-called evils that it has.

Once an investor becomes traders, a series of wrong decisions follow. As a trader he will start buying stocks which are meant are speculative in nature and are not driven by business potential. After investment if the investor makes loss, he will start averaging so that when the stock price goes up he will be able to reduce the loss. But in most of the cases it does not happen. If the loss continues, he will wait for next source of cash inflow like salary and invest more in the same stock. At this stage sometimes it becomes difficult to differentiate between trader and gambler, because by now investment decisions get completely driven by theory of probability which is at the core of gambling.

One of the most unfortunate for an investor who has turned into trader in stock market is that he stops looking at value and starts believing in rumors. Penny stock and stocks driven by tips become his favourite investment decision. This is when the bitter experiences of equity market become his companion and his dislike for equity market starts. Very often, these traders leave equity market forever. This means end of an opportunity for wealth creation forever. Some of them, who don't leave, continue to lose money. It is very important that an investor does not lured by the market and gives up the temptation of making quick money. Stock market is after all not a casino though some of its traits may show it to be one.

Top Value Companies For 2014

Dear SA Pro subscriber,

This is your Insider's Report for Friday, August 9, with today's high-conviction long and short ideas available only to SA Pro subscribers.

Exclusive Alpha-Rich Ideas

Gain Capital Redux: Increasing Volatility Is An Opportunity, by Intangible Valuation. With Q2 earnings suggesting headwinds were only temporary, GCAP may be an even better buy. 100% potential upside. Exclusive until 2:30 PM today. Altera: 20-40% Upside As Intel Foundry Deal Drives Market Share Gains And Sentiment, by Ashraf Eassa. ALTR should soon be able to gain share in a duopolistic market. 35%+ potential upside. Exclusive until 3:15 PM today. Loral Space & Communications: Special Situation Presents Upside In Potential Liquidation, by Mike Arnold. Loral's intrinsic value is likely 30% above the current market price. A potential liquidation could serve as a catalyst. Exclusive until 9:50 PM today.

Stock Movers and Great Calls
Alpha-Rich long and short ideas regularly move stocks and identify stocks that are about to move. Some notable recent calls subscribers had early access to:

Top Value Companies For 2014: Caterpillar Inc.(CAT)

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three lines of businesses: Machinery, Engines, and Financial Products. The Machinery business offers construction, mining, and forestry machinery, including track and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer loaders, underground mining equipment, tunnel boring equipment, and related parts. It also manufactures diesel-electric locomotives; and manufactures and services rail-related products and logistics services for other companies. The Engines business provides diesel, heavy fuel, and natural gas reciprocating engines for Caterpillar machinery, electric power generation systems, marine, petrol eum, construction, industrial, agricultural, and other applications. It offers industrial turbines and turbine-related services for oil and gas, and power generation applications. This business also remanufactures Caterpillar engines, machines, and engine components; and offers remanufacturing services for other companies. The Financial Products business provides retail and wholesale financing alternatives for Caterpillar machinery and engines, solar gas turbines, and other equipment and marine vessels, as well as offers loans and various forms of insurance to customers and dealers. It also offers financing for vehicles, power generation facilities, and marine vessels. The company markets its products directly, as well as through its distribution centers, dealers, and distributors. It was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquartered in Peoria, Illinois.

Advisors' Opinion:

• [By Roberto Pedone]

  Caterpillar (CAT) is staging a textbook breakout in May. Shares of heavy equipment maker haven't exactly been kind to investors year-to-date; CAT has barely broken even during a time when the broad market has been in a historic rally. But a textbook breakout should change that.

  CAT started forming an inverse head and shoulders pattern back in early April. The inverse head and shoulders is formed by two swing lows that bottom out around the same level (the shoulders), separated by a lower low called the head; the buy signal comes on the breakout above the pattern's "neckline" level, which was just below $86 for CAT. That puts this stock's upside target right around $92.

  Even though CAT has nearly hit its upside target already (the post-breakout buying has been very quick), the longer-term implication for investors is a break of the downtrend that had been haranguing shares this year. Now, with that downtrend broken, CAT should have more room to move higher. I'd just expect some consolidation first.

Top Value Companies For 2014: Schlumberger N.V.(SLB)

Schlumberger Limited, together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. The company?s Oilfield Services segment provides exploration and production services; wireline technology that offers open-hole and cased-hole services; supplies engineering support, directional-drilling, measurement-while-drilling, and logging-while-drilling services; and testing services. This segment also offers well services; supplies well completion services and equipment; artificial lift; data and consulting services; geo services; and information solutions, such as consulting, software, information management system, and IT infrastructure services that support oil and gas industry. Its WesternGeco segment provides reservoir imaging, monitoring, and development services; and operates data processing centers and multiclient seismic library. This segment also offers variou s services include 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management. The company?s M-I SWACO segment supplies drilling fluid systems to improve drilling performance; fluid systems and specialty tools to optimize wellbore productivity; production technology solutions to maximize production rates; and environmental solutions that manages waste volumes generated in drilling and production operations. Its Smith Oilfield segment designs, manufactures, and markets drill bits and borehole enlargement tools; and supplies drilling tools and services, tubular, completion services, and other related downhole solutions. The company?s Distribution segment markets pipes, valves, and fittings, as well as mill, safety, and other maintenance products. This segment also provides warehouse management, vendor integration, and inventory management services. Schlumberger Limited was founded in 1927 and is based in Houston, Texas.

Advisors' Opinion:

• [By Kathy Kristof]

  Headquarters: Houston
  
  52-Week High: $79.38
  
  52-Week Low: $56.86 
  
  Annual Sales: $39.5 bill.
  
  Projected Earnings Growth: 18% annually over the next five years 
  
  
  Energy-services giant Schlumberger is the prototypical multinational. The company derives roughly 85% of its revenues from overseas, including developing markets in Africa, Brazil and Asia. 
  
  With particular expertise in deep-water drilling, Schlumberger is well-positioned to compete in a world where oil is harder to find, says Argus Research analyst Philip Weiss. Admittedly, oil exploration is a cyclical business, driven largely by crude prices. And weak prices for natural gas have hit the company’s stock, Weiss says. But the price of natural gas has little to do with Schlumberger’s profits, so Weiss just sees this as an opportunity to get the shares at a more reasonable price.

• [By Robert Holmes]

   Schlumberger has the most potential upside of any stock in this group of 50 that also makes the firm's Best Ideas list. Analyst Ole Slorer says Schlumberger has "what we consider the most advanced technology portfolio in the industry."

  "Its fundamentals are impressive, with what we think are some of the best field personnel, a pristine service and performance reputation, and leading market share in most of its product lines," Slorer writes.

  Though Slorer's price target is 42% above current levels, his most bullish scenario for Schlumberger over the next year would see shares climb a whopping 116%. On the downside, his most bearish scenario for the company would see shares slide 38% over the next 12 months.

• [By Rebecca Lipman]

   Together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. Market cap of $91.49B. EPS growth (5-year CAGR) at 24%. According to Morgan Stanley: "Thanks to an estimated $1 billion investment per year in R&D, Schlumberger has what we consider the most advanced technology portfolio in the industry."

• [By Brian Stoffel]

  This company has been a pick of both Jordan DiPietro and Bryan White. And both analysts have pointed to the company's opportunity for oil exploration abroad -- which is where much of the demand will soon be coming from as well.

  Bryan points out that three-fourths of the company's revenue comes from abroad, with "Brazil, the Middle East, and Africa [as] key regions where activity is expected to be robust and growing."

  Jordan adds, "[Schlumberger] has an important presence in high-growth regions of the world such as Iraq, Mexico, and Russia, and has the competitive advantage to be able to offer full services, from managing entire oil fields to drilling wells."

Top 10 Undervalued Stocks To Watch Right Now: Dollar Tree Inc.(DLTR)

Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Its stores offer merchandise primarily at the fixed price of $1.00. The company operates its stores under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant, and Dollar Bills. Its stores offer consumable merchandise, including candy and food, and health and beauty care, as well as household consumables, such as paper, plastics, household chemicals, in select stores, and frozen and refrigerated food; variety merchandise, which includes toys, durable housewares, gifts, party goods, greeting cards, softlines, and other items; and seasonal goods, such as Easter, Halloween, and Christmas merchandise. As of April 30, 2011, it operated 4,089 stores in 48 states and the District of Columbia, as well as 88 stores in Canada. The company was founded in 1986 and is based in Chesapeake, Virginia.

Advisors' Opinion:

• [By Sam Collins]

  Dollar Tree (NASDAQ:DLTR) is a leading operator of discount variety stores. The stock has hugged its 50-day moving average since mid-February. But a recent minor revision of earnings for this year by several analysts and the recent market sell-off have resulted in a fall from its high of the year at over $70 to under $66. However, Goldman Sachs (NYSE:GS) increased its price target to $73 from $69.

  Technically DLTR is oversold, according to MACD. A break below its 50-day moving average could result in a pullback to $64, but positions could be taken at the current market price. The trading target for DLTR is $72.

Top Value Companies For 2014: Tupperware Corporation(TUP)

Tupperware Brands Corporation operates as a direct seller of various products across a range of brands and categories through an independent sales force. The company engages in the manufacture and sale of kitchen and home products, and beauty and personal care products. It offers preparation, storage, and serving solutions for the kitchen and home, as well as kitchen cookware and tools, children?s educational toys, microwave products, and gifts under the Tupperware brand name primarily in Europe, Africa, the Middle East, the Asia Pacific, and North America. The company provides beauty and personal care products, which include skin care products, cosmetics, bath and body care, toiletries, fragrances, nutritional products, apparel, and related products principally in Mexico, South Africa, the Philippines, Australia, and Uruguay. It offers beauty and personal care products under the Armand Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo, and Swissgar de brand names. The company sells its Tupperware products directly to distributors, directors, managers, and dealers; and beauty products primarily through consultants and directors. As of December 26, 2009, the Tupperware distribution system had approximately 1,800 distributors, 61,300 managers, and 1.3 million dealers; and the sales force representing the Beauty businesses approximately 1.1 million. The company was formerly known as Tupperware Corporation and changed its name to Tupperware Brands Corporation in December 2005. The company was founded in 1996 and is headquartered in Orlando, Florida.

Advisors' Opinion:

• [By Sam Collins]

  Household name Tupperware Brands Corp. (NYSE:TUP) is a global direct seller of products with multiple brands through an independent sales force of 2.4 million people. Its product line focuses on kitchen storage and serving solutions, as well as personal-care products. Over 60% of sales in 2011 are expected to come from Europe and Asia, and the stock has appeal as an emerging markets story.

  S&P estimates that 2011 earnings will increase to $4.54 versus $3.53 in 2010, and it increased its rating to a “five-star strong buy” with a recently revised 12-month target of $81, up from $73. The 2005 purchase of Sara Lee’s (NYSE:SLE) direct-sales business, which has a high growth rate, should be a long-term benefit. TUP’s annual dividend yield is 1.92%.

  Technically TUP had a pullback following a new high at over $70 and is currently oversold. Buy TUP at the current market price with a trading target of $70, but longer term a much higher target will likely be attained.

Top Heal Care Companies To Own In Right Now

I am always on the hunt for "forever" stocks.

These are stocks that can weather the storm and grow even during the market's darkest days. In fact, StreetAuthority co-founder Paul Tracy has built a very successful portfolio using this strategy.

It's easy to find stocks that can capture the upside of a rising bull market, but what happens when we hit the next financial downturn? How do you find stocks that can not only weather the storm but also actually make you money while the economy falls apart?

For many investors, 2008 was a year that will not be forgotten. Between Oct. 9, 2007, and March 5, 2009, the Dow Jones industrial average lost more than half its value. Not only were the financial markets collapsing, but scandals were rampant, and consumer trust hit all-time lows. It truly was a time of panic.

Top Heal Care Companies To Own In Right Now: Pacira Pharmaceuticals Inc.(PCRX)

Pacira Pharmaceuticals, Inc., a specialty pharmaceutical company, engages in the development, commercialization, and manufacture of pharmaceutical products for use in hospitals and ambulatory surgery centers. The company develops pharmaceutical products based on its proprietary DepoFoam drug delivery technology. Its product portfolio includes EXPAREL, a long-acting non-opioid postsurgical analgesic for postsurgical pain management; DepoCyt for the treatment of lymphomatous meningitis, a cancer of the immune system; DepoDur for controlling post operative pain; DepoNSAID, which is in preclinical trials for the relief of acute pain; and DepoMethotrexate that is in preclinical trials for the treatment of rheumatoid arthritis oncology. The company was formerly known as Pacira, Inc. and changed its name to Pacira Pharmaceuticals, Inc. in October 2010. Pacira Pharmaceuticals, Inc. was founded in 2006 and is headquartered in Parsippany, New Jersey.

Top Heal Care Companies To Own In Right Now: Ezra Holdings Limited(5DN.SI)

Ezra Holdings Limited, together with its subsidiaries, operates as an integrated offshore support solutions provider for the oil and gas industry. The company operates in four divisions: Subsea Services, Offshore Support Services, Production, and Marine Services. The Subsea Services division provides offshore seabed-to-surface construction services to the oil and gas industry. Its services include subsea, umbilicals, risers and flowlines installation, subsea inspection, maintenance and repair, floater and floating production storage and offloading (FPSO) installation, flexible and rigid pipelay and heavy lift, floatover installation, decommissioning and removal, and well intervention and drilling. The Offshore Support Services division owns, manages, and operates a diverse fleet of anchor handling, towing and supply vessels (AHTS), anchor handling tugs (AHT), platform supply vessels (PSV) and fast crew utility boats. The Production division, through its 46.5% interest in E OC Limited, owns and operates FPSO facilities, as well as offers services, such as FPSO conversion management, and the operation and maintenance of production facilities. The Marine Services division engages in the provision of marine supplies, fabrication, engineering, and design services to the company and clients in the offshore oil and gas industry. These services comprise ship design and building services, including engineering, construction and/or conversion, ship and rig repair, and overhaul services; fabrication and assembly of jack-ups, topsides, and platforms and other specialized offshore equipment; and FPSO turret design and engineering. The company offers its services in Singapore, Thailand, Brunei, Malaysia, the Philippines, Vietnam, the Americas, Australia, Africa, India, the United Arab Emirates, Norway, and the United Kingdom. Ezra Holdings Limited was founded in 1992 and is based in Singapore.

Top Oil Stocks To Own For 2014: Monster Uranium Corp(MU.V)

Monster Uranium Corp. engages in the acquisition, exploration, and development of natural resource properties. It holds a 50% interest in the Broken-Hill Leo property that comprises 53 mineral claims in the Kamloops mining division of British Columbia. The company was formerly known as VMX Resources Inc. and changed its name to Monster Uranium Corp. in September 2007. Monster Uranium Corp. was founded in 1986 and is headquartered in Vancouver, Canada.

Top Heal Care Companies To Own In Right Now: USG Corporation(USG)

USG Corporation, through its subsidiaries, engages in the manufacture and distribution of building materials worldwide. The company offers gypsum and related products, including gypsum wallboard, joint compounds used for finishing wallboard joints, cement boards, glass mat sheathing, gypsum fiber panels, poured gypsum underlayments, ultra light panels, and various construction plaster products. Its gypsum products are used in various building applications to finish the interior walls, ceilings, and floors in residential, commercial, and institutional constructions, and repair and remodel constructions. The company also produces gypsum-based products for agricultural and industrial customers to use in various applications, including soil conditioning, road repair, fireproofing, and ceramics. In addition, it manufactures ceiling grid and acoustical ceiling tile for electrical and mechanical systems, and air distribution and maintenance applications. USG Corporation distribut es its gypsum products through specialty wallboard distributors, building materials dealers, home improvement centers and other retailers, contractors, and a network of distributors. Further, it distributes other manufacturers? gypsum wallboard, joint compound and other gypsum products, as well as drywall metal, insulation, and roofing products and accessories. The company sells its products under SHEETROCK, DUROCK, FIBEROCK, SECUROCK, LEVELROCK, RED TOP, IMPERIAL, DIAMOND, SUPREMO, AURATONE, ACOUSTONE, DONN, DX, FINELINE, CENTRICITEE, CURVATURA, and COMPASSO brands. The company was founded in 1901 and is based in Chicago, Illinois.

Advisors' Opinion:

• [By seekingalpha.com]

  USG is a worldwide producer of building materials, primarily gypsum wallboard, which is used for repair and construction.
  
  Shares are trading at $8.17 at the time of writing, at the lower end of their 52-week trading range of $7.88 to $19.91. At the current market price, the company is capitalized at $860.22 million. Earnings per share for the last fiscal year were -$3.87, and it paid no dividend.

  These earnings are expected to remain negative through the next couple of years, though the loss per share is expected to reduce to $1.60 in 2012. Revenue during this time is forecast to increase to around $3.25 billion.

  The story with USG is all about its debt. With $2.31 billion of debt under its belt, it has very little room to maneuver. With a patchy economy going forward, the company may find it hard to cut its loss per share by the amount that it needs to. Consequently, it may struggle to return to profitability. Given its debt, the book value of the shares is $5.01. Action looks to be time critical now. With S&P (MHP) recently cutting USG’s credit rating, it may soon be time for the company to go to the market to raise cash.

  If the company can address its burgeoning debt, then it may look attractive. Until then, avoid.

Top Heal Care Companies To Own In Right Now: Steiner Leisure Limited(STNR)

Steiner Leisure Limited provides spa services and personal care products for men, women, and teenagers worldwide. The company offers beauty care products, including cleansers, toners, moisturizers, lotions, waxing products, cleansing accessories, and other skin care and body products, as well as aromatherapy oils and beauty tools; and hair care products, such as shampoos, conditioners, styling products, and related items. Its services include massages, facials, microdermabrasion, waxing, aromatherapy treatments, seaweed wraps, aerobic exercise, yoga, pilates, hair styling, manicures, pedicures, and teeth whitening, as well as various other beauty and body treatments and services; acupuncture; and medi-spa services comprising BOTOX Cosmetic, Dysport, Restylane, and Perlane. In addition, the company operates approximately 12 post-secondary schools, which provide education in massage therapy, beauty, skin care, and related areas at 30 campuses in 14 states. Further, it provid es procedures for the removal of unwanted facial and body hair in a clinical setting. The company offers its products and services under the Elemis, La Th�apie, Bliss, Rem�e, Laboratoire Rem�e, Mandara Spa, Mandara, Jou, and Chavana brands through department stores; third party retail outlets; distributors; salons; mail orders; and company owned Websites, including www.timetospa.com, www.timetospa.co.uk, www.blissworld.com, www.blisslondon.co.uk, and www.bodyworkmall.com, as well as through the QVC home shopping television channel. As of February 13, 2012, it served 152 cruise ships representing 19 cruise lines; and operated 54 resort spas, 11 urban hotel spas, 6 day spas, and 59 ideal image laser hair removal centers. Steiner Leisure Limited was founded in 1934 and is based in Nassau, the Bahamas.

Seattle Genetics Pipeline Should Keep Its Bull Run Charging

A number of analysts believe the stock of the biotech company Seattle Genetics (SGEN) has risen too high too quickly to support its current price, and have issued much lower target prices on the stocks than where it currently sits. On Thursday August 1st Analysts at Cantor Fitzgerald issued a target price of $24 dollars a share with a "sell" recommendation as they see the potential downside of the stock could drop 40.77% from its July 31st close. Previously, on June 10th Zacks downgraded the stock and placed a price target of $41.20 per share. In May analysts at UBS AG issued a price target from $30.00 to $36.00 giving the stock a "neutral" rating, while analysts at Leerink Swann issued a price target of $42.00. So far the analysts have been wrong as Seattle Genetics has blown past their price targets, and as of August 2ed the stock continued to rise, closing at $43.28 per share.

Recently however, some analysts have raised their price target for Seattle Genetics as the company posted higher than expected second quarter earnings. On Aug 2nd analysts at RBC Capital raised its price target from $40.00 to $44.00 per share. Separately, Analysts at Jefferies Group raised its price target from $41.00 to $45.00 per share and have issued a "buy" rating on the stock.

ADC TECHNOLOGY

Seattle Genetics develops its own drug pipeline as well as a large number of collaborations with other pharmaceutical companies based mainly on its antibody-drug conjugates (ADC). The lead program that the company developed with its ADC technology is the cancer drug, Adcetris (brentuximab vedotin) currently approved in the U.S., Canada, and the 27 member states of the European Union as well as Norway, Liechtenstein and Iceland for the treatment of Hodgkin's lymphoma (HL). In addition, under a collaboration with Millennium: The Takeda Oncology Company, Adcetris received conditional approval from the European Commission and orphan drug status in the U.S. for trea! tment of mycosis fungoides, a type of T-cell lymphoma. Millennium additional received approval for Adcetris and continues to pursue regulatory approvals in other countries, including Japan. Thus far, Adcetris has been approved in 35 countries.

The Adcetris drug program focuses on a broad clinical development program to investigate its use in earlier lines of therapy for HL and mature T-cell lymphomas and in other CD30-positive diseases, including cutaneous T-cell lymphoma and diffused large B-cell lymphoma. The primary growth driver for Adcetris in the U.S. in the second quarter was an increase in market share across multiple lines of therapy in HL and ALCL. According to the company's recent market data, the penetration rates in all of the on-label indications exceed 70%, meaning that Adcetris has become the standard of care in its approved settings, and Physician interest in Adcetris continues to be strong.

Seattle Genetics is also evaluating Adcetris in multiple types of T- and B-cell non-Hodgkin lymphoma, most notably, diffused large B-cell lymphoma, and have been very encouraged by interim DLBCL data from its ongoing Phase II trial, which showed a 44% response rate and 81% of patients achieving tumor reduction. The company has added 2 additional arms to the trial that are enrolling relapsed DLBCL patients. One arm is assessing activity and safety of the combination of Adcetris and Rituxan. Another arm is evaluating single-agent Adcetris in patients whose tumors do not express detectable CD30, using standard immunohistochemistry methods.

SEA TECHNOLOGY

Seattle Genetics is also working on a second technology, a Sugar Engineered Antibody (SEA) which the company is evaluating in its internal early-stage pipeline. SEA is a novel approach to increasing the potency of monoclonal antibodies through enhanced effector function. Monoclonal antibodies drugs are so specific, and unlike numerous other cancer treatments, they generally have only mild side effects. This technology comprises ! modified ! sugars that inhibit the incorporation of fucose into the carbohydrate chains of monoclonal antibodies, resulting in is an enhanced antibody-dependent cellular cytotoxicity (ADCC), one of the critical mechanisms underlying the clinical efficacy of therapeutic antibodies. Seattle Genetics sees the SEA technology as a simpler and more cost effective compared to existing technologies for enhancing antibody effector function because it can be applied to existing cell lines without cell line re-engineering, and can be applied across a range of antibodies and antibody-producing cell lines.

DRUG PIPELINE

Brentuximab vedotin currently is in 6 different clinical trials, four in phase 3, four in phase 2, and one in phase 1. The company also has 6 other ADC drugs in its pipeline in early stages of testing including the drug SGN-CD33A) targeting CD33, a protein that is expressed on most acute myeloid leukemia (AML) cells. Also submitted for an investigational new drug (IND) application to the FDA is the breast cancer drug SGN-LIV1A where a phase 1 trial is expected to begin sometime in 2013.

ADC COLLABORATIONS PIPELINE

Seattle Genetic is currently collaborating on 22 different ADC drug trials in various stages of testing with twelve different pharmaceutical companies, including nine with Genentech (RHHBY.OB), two with AbbVie (ABBV), two with Agensys (ALPMY.PK), and one with Pfizer (PFE). To date these ADC collaborations have generated more than $225 million for Seattle Genetics and have the potential to generate more than $3.5 billion in milestone payments plus royalties.

In June Seattle Genetics announced it entered into a collaboration with Bayer HealthCare (BAYRY.PK) for access to its Seattle Genetics' auristatin-based ADC technology to create cancer drugs that home in on tumors and then deliver a toxic dose to their cells. The collaboration will generate upfront and option exercise fees of up to $20 million. Seattle Genetics is also eligible to receive up to approximately $500 milli! on in pot! ential milestone payments, as well as royalties on worldwide net sales of any resulting products under the multi-target collaboration.

COMPANY FINANCIALS

For the second quarter of 2013 Seattle Genetics reported a net loss of $6.9 million or 6 cents per share, far better than the $17.2 million loss or 15 cents per share the same quarter the previous year. The company also trounced Zacks consensus estimate of a loss of 18 cents per share. Total revenues for the second quarter came in at $73.6 million, while year-to-date total revenues were $130.9 million. Net sales of Adcetris increased to $35.7 million reflecting a growth of 3% in vials sold, and for the year Adcetris net sales climbed to $69.7 million. The company's second quarter collaboration revenue totaled $34.3 million including $12 million in revenue related to the initial payment received under its new ADC collaboration with Bayer, and the company has increased its collaboration revenue guidance for 2013 from $85 million to $95 million. Royalty revenue came in at the second quarter at $3.5 million and $5.9 million for the year-to-date from international sales of Adcetris by Takeda/Millennium. Seattle Genetics currently has reserves of $338 million in cash and investments.

However, R&D expenses rose in the second quarter to $52.3 million, an increase from $42.8 million the same period the previous year. The company says the rise was due to increased spending for Adcetris development activities and other ADC programs.

CONCLUSION

Though Seattle Genetics does have its detractors the company and the stock continues to roll. Seattle Genetics has positioned itself strongly with its collaboration deals and with its own pipeline of drugs in various stages of testing. The company's ADC technology program continues to grow, and if its SEA technology proves to be successful it will have a second solid drug line for the market. Though the stock has risen significantly, 86% YTD, given the positive direction of its ADC technolo! gy and th! e potential of its SEA technology I think the stock has additional growth potential.

Source: Seattle Genetics Pipeline Should Keep Its Bull Run Charging

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. (More...)

Stocks Retreat From Records

Stock ended mixed on Monday, with the Dow and S&P edging down from Friday's records.

The Dow Jones Industrial Average lost 46.23 points, or 0.3%, to 15,612.13, backing off its all-time closing high.

The Nasdaq rose 3.36 points, or 0.1%, to 3,592.95.

The S&P 500 slipped 2.53 points, or 0.2%, to 1,707.14.

The Russell 2000 however gained 0.3% to its 48th record high closing of 2013.

Investors were noncommittal ahead of the bell this morning, although a positive July ISM report brightened their moods somewhat.

Winners included U.S. Airways (LCC) and American Airlines parent company AMR (AAMRQ), which gained ground after the European Commission cleared their merger.

Top 5 Growth Stocks To Watch Right Now

Tesla (TSLA) also touched on a new all-time high; an analyst note today brushed aside concerns about recent price increases and the potential competition from BMW's electric models.

Fossil (FOSL) stumbled 6% as Barclays slashed it to Sell. Potash names ended mixed on further comments from Uralkali's CEO, takeover rumors about Mosaic (MOS) and a downgrade for Agrium (AGU).

1 Thing Microsoft Stock Investors Need to Watch

It's not a great time to be a Microsoft (NASDAQ: MSFT  ) stock investor. The stock has taken a few hits over the past six months, Windows 8 has received plenty of negative feedback, and the company is still trying to find its bearings in mobile.

On the heels of Microsoft's latest quarterly earnings release last week, the company is about to pursue a new area that will hopefully help Microsoft stock investors -- a smaller tablet. It's anything but a sure bet for a company that's struggled in the mobile space, but it's definitely a move in the right direction.

Betting on small
IDC came out with some numbers earlier this month showing that PC sales had dropped almost 14% year over year, almost double what had been forecasted. It was the fourth consecutive quarter of year-on-year declines and the worst PC sales quarter since the company started tracking the data in 1994.

Obviously, things aren't looking good for the PC industry, but that's not really news.

What Microsoft investors need to be concerned about is how the company is going to pivot away from a dying PC trend into a solid tablet position. So far, the company is making some slow progress. The Surface RT launched back in October, followed by the Pro in January, and estimates for Surface shipments in Q1 2013 are at about 3 million.

But while the Redmond company has been busy trying to sell its full-sized tablets, small tablets have become the mobile market's latest trend. IDC numbers show that half of all tablets shipped in Q4 2012 were smaller than 8 inches. Apple (NASDAQ: AAPL  ) launched the iPad Mini back in October 2012 and has sold about 12.5 million units in Q2 2013 alone. Devices running on Google's (NASDAQ: GOOG  ) Android OS also dominate the tablet market, and Google itself even sells its own Nexus tablet. Amazon.com's (NASDAQ: AMZN  ) modified Android tablets currently take third place for tablet shipments.

Here's a look at the latest tablet market share figures (including both regular tablets and small tablets) from Strategy Analytics:

Tablet OS

Q1 2013

Apple iOS	48.2%
Android	43.4%
Windows	7.5%
Others	1%

Source: Strategy Analytics.

Although Microsoft is making some inroads in the tablet operating system market, it's clear that it has a long way to go. Microsoft executives said on the latest investors conference call that a new device will be available in the coming months. Meanwhile, the major tablet players have already solidified their positions. Microsoft stock investors shouldn't be pleased that the company is behind yet another mobile trend.

With the company's forthcoming release of Windows Blue in addition to a smaller tablet, it's possible Microsoft could lure more consumers away from Android and iPad tablets, but investors will need to see improvements to Microsoft's mobile OS to see that happen. Software sells mobile devices, and despite the company's strong history in software, Microsoft is still falling far behind Apple and Google's operating systems. The smaller tablet market isn't a lost cause for the company, but it's going to pose yet another challenge to the company's upward mobile battle.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged among the five kings of tech. Click here to keep reading.

 

 

 

The Intelligent REIT Investor Was Not Swayed By Mr. Market This Time

Investopedia defines risk as:

The chance that an investment's actual return will be different than expected. Risk includes the possibility of losing some or all of the original investment.

To address risk in a modern sense, the noted "margin of safety" author and investor, Howard Marks (in his book, The Most Important Thing) wrote:

Great investing requires both generating returns and controlling risk. And recognizing risk is an absolute prerequisite for controlling it.

Marks went on to explain:

When you boil it all down, it's the investor's job to intelligently bear risk for profit. Doing it well separates the best from the rest.

The Intelligent REIT Investor Recognizes Mispriced Risk

Two weeks days I wrote a Seeking Alpha article (3 Healthcare REITs With Mispriced Risk) in which I warned that several REITs were becoming risky based in underlying income fundamentals. As I explained:

It's clear to see that these "higher risk" assets are also driving the returns, and it's important for investors to understand the risks and the value proposition of investing in lower quality vs. higher quality assets. Simply said, OHI, MPW, and AVIV have all turned in outstanding total returns in recent months; however, there is reason to believe there is a lower margin of safety when there is mispriced risk.

I went on to explain:

I'm not a trader. I'm an investor and I claim to be an "Intelligent REIT Investor." I have written detailed articles on both MPW and OHI and I have loved watching the performance records of both REITs. However, I am feeling like the risk of owning lower quality assets (that means higher cap rates) does not adequately reflect the premium of the risk-adjusted shares, especially when compared with the higher quality peers.

In a follow-up article I warned about mispriced risk again when I wrote:

Often mispriced risk can be a signal that it's time to rebalance your portfolio. That process ! of selling your winners can be driven by instinct or analytics, or a combination of both. For some, rebalancing can be as simple as a gut check since nobody wants to sell stocks when they're soaring or buy them when they're plunging.

It's wise to resist the urge to plow money taken from mispriced REIT stocks into higher-yielding REITs since the mispriced REITs have already had a big run, and investors should consider rebalancing out of the riskier holdings. Conversely, intelligent investors should consider a safer strategy of taking advantage of the mispriced risks of the REIT preferred sector.

Last Friday, Seeking Alpha reported the following:

A Bank of America (BOA) downgrade sends Medical Properties Trust (MPW) tumbling. The bank cut the shares to Underperform from Neutral citing the REIT's YTD outperformance relative to the sector overall (it has outpaced healthcare REITs two to one). Put simply, funds from operations "multiple expansion has exceeded fundamental trends." SA contributor Brad Thomas claims MPW is an example of mispriced risk.

As Howard Marks wrote (in The Most Important Thing):

Successful investors manage to acquire that necessary "trace of wisdom" that Benjamin Graham calls for.

What Caused the Recent Medical Properties Trust Pullback?

Back in November (2012) I wrote an article on Medical Properties Trust (or MPW) and I recommended the stock at a price of $11.40 per share. Since that time and up until my article (on April 4th), the shares grew by 41.57%.

(click to enlarge)

Then last week, shares of MPW fell from a high of $17.00 to a Friday close of $15.00 - a 12% pullback.

(click to enlarge)

Clearly, BofA analyst Jana Galan felt that MPW! had beco! me a riskier priced stock as her downgrade from Neutral to Underperform was reflected in her report (source: benzinga.com):

We are downgrading MPW to an Underperform rating from a Neutral rating based on valuation. Year to date, MPW has been one of the best performing stocks in the REIT sector, returning +38% compared to +19% for health care REITs and +13% for all REITs. We now expect 0% total return from our $16 price objective. We think FFO multiple expansion has exceeded fundamental trends. MPW is now trading at 14.8x for 2013 FFOx, near its peak FFO multiple, compared to its 5-year and 10-year averages of 10.7x. In addition, expectations for accretive acquisitions are very high for the stock.

Also, MPW had some tough news later in the day when one of its tenants, Florence Hospital at Anthem, filed for Chapter 11 reorganization. The 96,000 square foot hospital facility has 36 beds and was built by MPW for around $30 million in 2010 (source: SNL Financial). The Florence facility represents around 1.3% of MPW's total assets.

The Florence Hospital at Anthem facility, owned by MPW and operated by Visionary Health, filed bankruptcy reorganization (in early March) and it appears that all rents have been paid up to filing and is seems that rents are still being paid. In addition, MPW has several months collateral if rents are halted or if company needs to transition to new tenant.

The troubled hospital's CEO David Wanger explained (source: Casa Grande Disptach) that the hospital has never missed a payment on its secured debt nor has it missed a payment to its landlord and he added that

We've never been an hour late paying the landlord.

Florence Hospital at Anthem is hoping to control costs and increase its profit margins; however, this is a "black eye for MPW as the Arizona facility - used by prisoners and civilians - was built just around 2 ½ years ago and has barely produced a return on investment.

Let's Dig Deeper Into MPW

As noted above, I prev! iously wr! ote an article on MPW so there is no need to provide a detailed analysis on the company. However, I want to take a closer look at some of the latest trends.

Let's start with properties. As of the latest quarter (Q4-12), MPW owned 68 properties.

(click to enlarge)

In previous years, MPW had never acquired more than $425 million in any one year (and averaged around $300 million a year) however, in 2012, MPW's acquisitions and commitments exceeded $800 million - producing a 34% increase in assets from 2011 to 2012. (snapshot below in $US billions):

(click to enlarge)

As the only health care REIT with a "hospital-focused" platform, MPW is a relatively new REIT that was formed (in 2004) to lease from many of the nation's leading hospital operators, including Prime Healthcare Services, Kindred Healthcare (KND), HealthSouth (HLS), Health Management Associates (HMA), Community Health Systems (CYH), Vibra Healthcare, Ernest Health Inc., and IASIS Healthcare.

(click to enlarge)

MPW's focus is its differentiated platform on the most critical components of U.S. healthcare delivery - general acute care, long-term acute care, and inpatient medical rehabilitation. Accordingly, the "pure play" investment strategy produces recession resistant income that provides durable predictability of cash flows and dividends.

(click to enlarge)

Here is a snapshot of MPW's "pure" hospital exposure compared with its peer group:

(click to enla! rge)

Here is a snapshot of MPW's "pure" hospital assets compared with its peer group (in $US millions):

(click to enlarge)

In a previous article I explained MPW's "wide moat" investment strategy:

A critical component for every community is an area hospital which provides essential services. There are over 5,000 hospitals in the U.S. and less than 1% closes in any year (source: MPW Oct. 2012 Investor Presentation). In addition, hospitals have exceptionally long life spans - many decades old. Accordingly, hospitals have tremendous "barriers to entry" as a new hospital today requires various regulatory approvals, permits, certificate-of-need, and of course, funding.

One other unique characteristic with hospital properties is that the license goes with the facility, not the operator. Consequently, other service providers and doctors cluster near the facility making relocation extremely difficult. Conclusively, MPW's lease structure provides for a "wide moat" protection of earnings and dividends.

Although we have seen tremendous cap rate compression among most asset sectors (see my article here in triple net cap rate compression), the hospital sector has not seen much compression in rates. The reason is that there is less demand for owning hospitals simply because the facilities involve substantial risk related to permitting and highly intensive capital allocation.

Last year MPW acquired several facilities leased to subsidiaries of Ernest Health, Inc. pursuant to a master lease agreement. These leases had 20-year terms with three five-year extension options and were acquired for an initial cap rate of 9%, with consumer price-indexed increases, limited to a 2% floor and 5% ceiling ann! ually the! reafter.

So, in a nutshell, we have seen MPW grow in less than ten years from around $300 million to around $2.179 billion (Q4-12). So let's see how the earnings have grown…

You Are Right Because the Data and Reasoning are Right

The prominence of overall income risk for MPW boils down to the company's tenant-level risk. Specifically, I believe that MPW's tenants pose the greatest risk associated with reimbursements in long term acute care hospitals (or LTACHs).

LTACHs appear to be the most vulnerable due to changes in Medicare reimbursements because they typically generate about 60% of revenue from Medicare. Consequently, the uncertainty of federal efforts to reduce health care spending subjects several of MPW's tenants to federal regulatory risk.

Although many of MPW's tenants are private, I did look over several of the publicly-traded tenants to assess balance sheet risk. Here are a few of the individual company S&P ratings that I located:

During the company's recent earnings call (Q4-12), MPW's CFO, Steven Hamner, explains:

We think it's important to point out what maybe obviously and that is because we are continuing to make significant amounts of acquisitions at average cash rates of return between 9% and 11%. And because our cost of capital is substantially lower than that, each dollar we invest in new assets immediately increases our per share results and improves our dividend payout ratio even further. We made a single small RIDEA-type investment in the fourth quarter, our only such investment in 2012, other than the Ernest investment. That brings to eight the number of these investments in operations that we have made including Ernest.

So now you can see how MPW has been able to increase its funds from operations. The leading hospital landlord is continuing to building up a consistent earnings machine o! f acquiri! ng sub-investment grade hospitals and leasing them back at some attractive risk-adjusted yields.

(click to enlarge)

But what about dividend increases? MPW has a current dividend yield of 5.3%. How does that compare with the peer group?

(click to enlarge)

But this time last year MPW was paying an 8.99% dividend yield. That is a 41% compression in yield. As I mentioned earlier, MPW shares have increased substantially over the last twelve months - but so have many other health care REITs. Let's compare the dividend compression of the peer group:

(click to enlarge)

The above chart is a clear indicator that MPW's shares are mispriced. The dividend yield fell by over 41% (in a year) and the cap rates for the properties haven't. Also, MPW has not increased its dividend in a long time…

(click to enlarge)

As the FAST Graphs™ below demonstrates, MPW cut its dividend (shaded blue area) from $1.08 per share to $.80 in 2009 and since that time the company has NEVER increased its dividend. However, the share price (solid black line) began to accelerate in 2012 as the company began to ramp up its acquisition pipeline (and FFO - the orange line marked "F").

(click to enlarge)

During 2012 it became apparent that Mr. Market was warming up too and that is reflected in the current 16.3 P/FFO multiple. Although! MPW was ! acquiring lower credit quality properties, the market began to accept the fact that hospital-based income was durable and that owning hospitals with "high barrier to entry" characteristics could generate sound earnings.

(click to enlarge)

Does MPW Have More Room To Run?

As Steven Hamner, CFO of MPW explained during the recent (Q4-12) earnings call:

We have positioned MPW from our inception over nine years ago to take advantage of high real estate returns from hospital real estate, assets which are truly critical necessary assets to the communities they serve, very similar to other infrastructure assets that a population cannot live without and additionally to earn incremental outsized returns from limited, prudent investments in operations.

It seems that Mr. Market has seen the mispriced risk associated with MPW's differentiated higher risk value proposition. Simply said, it makes no sense to invest in a REIT that pays out a dividend yield of 5.3% when its acquiring properties at 9%. In other words, I can buy shares in Realty Income (O) today ($47.73) and get a 4.7% dividend yield with much less risk.

MPW shares are off around 10% (from last week), but at an implied yield of 5.8% versus the 9%-12% yields that MPW acquires or builds hospital assets for remains considerably expensive. (The implied yield essentially values MPW hospital assets on par with and in some cases above assets at healthcare REITs). In addition, compared with MPW's implied yield and 10-year treasuries, MPW shares trade at a spread of 400bps, or about 260bps narrow of its historical spread. This signals that MPW shares are overpriced and are possibly the most overpriced small cap healthcare REIT today.

As Ben Graham believed, when selecting sound securities, one needed some kind of buffer to protect against market fluctuations. That buffer is the margin of ! safety - ! the difference between the real or intrinsic value of the business underlying the security and the price assigned to that security at the moment.

As I weigh in on the risk-adjusted pricing for MPW, I believe that a dividend yield of 7% is more prudent given the underlying credit characteristics of the portfolio. In addition, I believe that the MPW's management team has been stingy with increasing its dividend and that is evident with the fact that the company has not increased its dividend since 2007. For potential new investors, I recommend a target entry price of $13.50 per share. My justification for that price is based upon the risk-adjusted dividend yield of MPW's portfolio compared with the peer group.

For current investors, I still think the recent 10% price reduction still represents a premium valuation - of mispriced risk - and I would consider a rotation into a more risk-aligned heath care REIT like Healthcare Trust of America (HTA) yielding 4.82% or Ventas, Inc. (VTR) yielding 3.47%. (See my HTA article here and my VTR article here).

Ben Graham said:

We all know that if we follow the speculative crowd we are going to lose money in the long run.

As Warren Buffett believed, understanding mispriced risk means that an investor should "not be swayed by what other people thought or how the world was feeling that day or anything of the sort." It simply comes down to pursuing a risk-averse investment decision based on sound facts. I'm not a fortune teller; however, it was good that I was able to forecast the mispriced risk of Medical Properties Trust. The secret to investing is simple and I will sum it up with these select words from my mentor investor (Benjamin Graham):

An investment operation is one which, upon thorough analysis, promises safety of principal and satisfactory return. Operations not meeting these requirements are speculative.

10 Best Stocks To Own For 2014

Sources: SNL Financial, ! FAST Grap! hs, MPW Investor Presentation

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)