Deutsche Bank Raises PVH Corp. Price Target (PVH)

Deutsche Bank announced on Monday that it has raised its price target on PVH Corp. (PVH) from $125.00 to $145.00. The firm also maintained its “Buy” rating on the company.

According to analyst Dave Weiner, the increased price target is primarily based on the apparel retailer’s potential synergies from its Warnaco integration, its out-year payoffs to 2013′s investments, and its “high quality” play on global growth. Weiner noted “Despite a recent slowdown in the U.S. apparel consumer, including impacts to promotions and discounting within the department and specialty store sectors, overall, we believe that the positive themes for PVH remain very much on the table.”

PVH Corp. shares traded 1.62% higher during Monday’s session. Year-to-date, the stock is up 16.25%.

Analyst Blasts Upside Sears Move Report, Sees Only $20 per Share Value

Sears Holdings Corp. (NASDAQ: SHLD) is still an awful retailer, yet shares rose by 13% or so on Tuesday after a report opined that Sears could be worth more than $100 per share due to its vast real estate holdings. The reality is that we have heard this story a dozen times in what is about a decade now. One Wall Street analyst is canning the report and maintaining a very cautious stance despite the huge gains.

Credit Suisse’s Gary Balter reiterated his Underperform rating on Sears. As a real slap to Eddie Lampert, Balter’s price target is down all the way to $20.00 per share. This is the lowest official price target on Wall Street and implies that shareholders buying Sears now could face losses of up about 65% if his target comes true.

After closing at $56.64, its 52-week trading range is $38.40 to $68.77. Sears shares were as low as about $30 in the peak selling of late 2008 and again in late 2011 and early 2012. Again, Balter’s target price is $20 per share on the surface and around $38 in the mid-point of a value range. He believes that Tuesday’s rally was simply an extraordinary short squeeze.

Balter said:

Sears rallied as one of the front page owners of the stock put out a bullish 139 page analysis that purports to an asset value of well over $100 versus our midpoint of the range value, using more conservative assumptions, of $38, which is before ongoing operating losses. The material differences lie in four main buckets, real estate values, the value of the internet and warranty businesses, the liquidation value of working capital and the lack of inclusion of continued multi hundred-million dollar cash flow losses while the business operates.

In short, Gary Balter is calling the recent rally a case of seriously misguided fiction rather than fact. We would point out that this short squeeze call may have some serious merit because Tuesday’s gain was on a mere 3.77 million shares. Sears had more than 15 million shares in its short interest on the last reporting date, and that was the largest short interest in more than a year. That short interest is so large that it represents almost 17 days to cover.

Morgan Stanley's Gorman: Chance of another financial crisis 'close to zero'

Bloomberg

Morgan Stanley Chief Executive Officer James Gorman said there's almost no chance of another financial crisis like the one that endangered his firm five years ago.

“The probability of it happening again in our lifetime is as close to zero as I could imagine,” Gorman said in an interview on the “Charlie Rose” show, citing steps by banks and regulators. “The way these firms are managed, the amount of capital that they have, the amount of liquidity that they have, the changes in their business mix -- it's dramatic.”

Maybe there won't be another crisis, but markets will always be volatile. How can you convince clients to stay the course?

Morgan Stanley borrowed more than $100 billion from the Federal Reserve, received $10 billion in rescue funds from the U.S. government and sold a $9 billion stake to Japanese bank Mitsubishi UFJ Financial Group Inc. to survive the 2008 credit crisis. Since then, the New York-based firm has increased capital and liquidity and bought retail brokerage Smith Barney from Citigroup Inc. to rely more on a steady-fee business.

Similar steps taken by other large U.S. lenders to change their business offerings and improve their financial ratios have helped secure the health of the banking system, Gorman said. Banks also face increased scrutiny both from regulators and their own management and board of directors, he said.

“The largest financial institutions in the U.S. are as healthy now as they have ever been,” Gorman, 55, said. “Dramatically healthier.”

While Gorman said Wall Street banks should've had stronger clawbacks of bonuses in the 2008 crisis, he doesn't agree with assertions that executives should have gone to prison for their roles in the collapse.

“There's a difference between incompetence or mismanagement or poor judgment or excessive risk taking from actually breaking the law,” Gorman said. “There's nothing I've seen that would suggest that any of the major participants in the financial crisis should be in jail for their actions.”

(Bloomberg News) Like what you've read?

Good News Watch: Marijuana Marches On for Investors (MJNA, CBIS & PHOT)

Although its summer, there has been a steady stream of good news about medical marijuana even though important small cap marijuana stocks Medical Marijuana Inc (OTCMKTS: MJNA) and Cannabis Science Inc (OTCMKTS: CBIS) have been fairly quietly lately while Growlife Inc (OTCBB: PHOT), a more indirect play on the spread of legalized marijuana, has produced some news for investors:

Private Equity Funds Betting on Marijuana. Reuters has an article noting that while Wall Street remains wary of investing in marijuana, there are two small private equity funds bucking the trend. One firm, Privateer Holdings, has apparently just closed on a $7 million first round of fundraising plus it has named Michael Auerbach, an investor with ties to former U.S. Secretary of State Madeleine Albright, to its board of directors. Another round of fundraising for Privateer Holdings will begin in the fall and it won't be for less than $25 million. Aside from Privateer Holdings, the only other fund raising money with the sole purpose of cashing in on the marijuana industry is Emerald Ocean Capital, a division of Southern California-based venture capital firm Ghost Group. The High Cost of Marijuana. PolicyMic.com has a lengthy article about how much marijuana prohibition laws are costing taxpayers. The article quoted FBI figures that 43.3% of all "Arrests for Drug Abuse Violation" are for possession of marijuana and 6% of all drug-abuse violation arrests were for the "Sale/Manufacturing" of marijuana – meaning 49.5% of all drug-violation arrests are connected to the drug. With 757,969 individuals incarcerated for marijuana abuse at a cost of $21,006 a year, $15,921,896,814 is spent to keep these individuals imprisoned for one year. Over more than 30 years, the total bill comes to $585 billion.  Problems in Denver Which Need to be Addressed. Although the city of Denver is viewed as a national leader in its regulation of medical marijuana and the city has the most dispensaries in the state, however, the Denver Post has noted how a recently released audit found serious problems with how the city licenses, tracks and manages the industry in the city. Moreover, the lack of oversight can potentially cost the city millions in lost tax revenues and put neighborhoods and citizens at risk. With that said, Michael Elliott, the director of the Medical Marijuana Industry Group, said Denver has done the best it could with limited resources plus he added: "We think the recommendations in the audit are valid and a good path forward," Still Quiet With Key Small Cap Marijuana Stocks. Small cap Marijuana stocks Medical Marijuana Inc (which aims to be the premier cannabis and hemp industry innovator) and Cannabis Science Inc (which is focused on the development of cannabis-based medicines to satisfy unmet medical needs) are considered to be the most "legitimate" direct small cap marijuana stock plays. However, neither have really been producing any new news lately, but its also the middle of summer. Growlife Inc Hires a New Executive. Growlife Inc, a provider of indoor growing technologies and unique lifestyle brands along with Cannabis.org, an information portal for the medical marijuana industry, has just announced that Randy E. Breitman is joining the management team as the Director of Business Development. The press release stated that as a business owner, Breitman has more than a decade of executive experience for guiding technology and strategic planning and that he will be essential as GrowLife expands its business development activities on the East Coast and in the greater New York area - his base of operations for the company. Growlife Inc also recently announced the opening of a new retail location in Plaistow, New Hampshire, plus the company has announced an upward revision to its adjusted revenue guidance for the remainder of the fiscal year with $760,709 in revenue being reported for the first quarter and $925,000 expected for the second quarter, $1,810,000 for the third and $1,955,000 for the fourth. Lastly, Growlife Inc announced the completion of its acquisition of Rocky Mountain Hydroponics, LLC, Evergreen Garden Center(s), LLC and on-line portal 58Hydro.com to make the company the largest and most diversified conglomerate focused on indoor gardening in the USA.

In other words, it might be summer but the slow steady march of legalized marijuana goes on – something that is bound to benefit cap marijuana stocks Medical Marijuana and Cannabis Science along with Growlife Inc.

5 Diversified Utilities Stocks to Buy Now

Popular Posts: 6 Biotechnology Stocks to Buy Now3 Semiconductor Stocks to Buy Now17 Oil and Gas Stocks to Sell Now Recent Posts: 5 Media Stocks to Buy Now 5 Diversified Utilities Stocks to Buy Now 6 Tech Services Stocks to Buy Now View All Posts

Five Diversified Utilities stocks are moving up in their overall rating this week, according to the Portfolio Grader database. Every one of these is graded an “A” (“strong buy”) or “B” overall (“buy”).

This week, Black Hills Corporation (NYSE:) is making solid headway. The company’s rating improves to an A (“strong buy”) from last week’s B (“buy”) rating. Black Hills is an energy company engaged in electric utilities and gas utilities segments, non-regulated energy group comprises oil and gas, power generation, and non-regulated energy groups. In Portfolio Grader’s specific subcategories of Earnings Momentum and Margin Growth, BKH also gets A’s. .

This is a strong week for DTE Energy Company (NYSE:). The company’s rating climbs to A from the previous week’s B. DTE Energy provides electricity and natural gas sales, distribution and storage services throughout southeastern Michigan. The stock’s dividend yield is 2.6%. .

This week, Public Service Enterprise Group Incorporated (NYSE:) is showing significant improvement as the company’s rating hops from a C (“hold”) to a B (“buy”). Public Service Enterprise Group is a public utility holding company. .

CenterPoint Energy, Inc. (NYSE:) gets a higher grade this week, advancing from a C last week to a B. CenterPoint Energy is a public utility holding company that operates electric transmission and distribution facilities, interstate pipelines, and facilities for gathering, processing, and treating natural gas. .

National Grid plc Sponsored ADR (NYSE:) boosts its rating from a C to a B this week. National Grid owns and operates the electricity transmission network in England and Wales, the gas transmission network in Great Britain, and electricity transmission networks in the Northeastern United States. The stock has a dividend yield of 4%. .

Louis Navellier’s proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results — with A being “strong buy,” and F being “strong sell.” Explore the tool here.

Is Royal Dutch Shell Undervalued at Current Prices?

With shares of Royal Dutch Shell (NYSE:RDSA) trading around $65, is RDSA an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Royal Dutch Shell operates as an independent oil and gas company worldwide. The company explores and extracts crude oil, natural gas, and natural gas liquids. It also converts natural gas to liquids to provide fuel and other products, as well as engages in manufacturing, supplying, and shipping crude oil. The company holds interests in approximately 30 refineries, 1,500 storage tanks, and 150 distribution facilities.

Royal Dutch Shell recently reported earnings, in which the company posted a 60 percent drop in profit for the quarter. The company faced a $2 billion write-down on shale oil drilling ventures in North America, showing that Shell's drilling efforts have come up much shorter than expected. The company's earnings were negatively affected by expensive exploration efforts and disruptions to oil production in Nigeria. In addition, the company also recently appointed a new CEO, Ben van Beurden, after Peter Voser decided to leave the company.

T = Technicals on the Stock Chart Are Mixed

Royal Dutch Shell stock has not made much recent progress. The stock is currently trading near the lower end of its yearly range. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Royal Dutch Shell is trading between its key averages, which signals neutral price action in the near-term.

Source: Thinkorswim

Taking a look at the implied volatility and implied volatility skew levels of Royal Dutch Shell options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Royal Dutch Shell Options	15.68%	43%	41%

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

	Put IV Skew	Call IV Skew
October Options	Steep	Average
November Options	Steep	Average

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

E = Earnings Are Mixed Quarter-Over-Quarter

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

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	-58.33%	-7.86%	1.82%	1.79%
Revenue Growth (Y-O-Y)	-4.62%	-6.67%	2.92%	-8.36%
Earnings Reaction	-5.75%	N/A	N/A	N/A

Royal Dutch Shell has seen mixed earnings and revenue figures over the last four quarters. From these numbers, the markets have not been pleased with Royal Dutch Shell’s recent earnings announcements.

P = Weak Relative Performance Versus Peers and Sector

How has Royal Dutch Shell stock done relative to its peers, Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), and BP (NYSE:BP), and sector?

	Royal Dutch Shell	Exxon Mobil	Chevron	BP	Sector
Year-to-Date Return	-3.79%	3.10%	16.07%	1.68%	4.28%

Royal Dutch Shell has been a poor relative performer, year-to-date.

Conclusion

Royal Dutch Shell is focused on oil and gas exploration and distribution, with operations all around the world. The company recently posted earnings that have not really pleased investors. The stock has struggled to make significant progress in recent years and is now trading near the low-end of its yearly range. Over the last four quarters, earnings and revenues have been mixed, which has not really pleased investors in the company. Relative to its peers and sector, Royal Dutch Shell has been a weak year-to-date performer. WAIT AND SEE what Royal Dutch Shell does this coming quarter.

What U.S. Investors Should Do About Syria

NEW YORK (TheStreet) -- The ineptitude of U.S. foreign policy in the Middle East is truly staggering. Following in the footsteps of former President George W. Bush's debacle in Iraq, President Obama seems hell-bent on a regime change in Syria, an eventuality that would make that Middle Eastern nation less stable, less humane, less democratic and more dangerous to U.S. national security. All the while, Obama's policy is damaging the U.S. economy and causing irreparable harm to U.S. influence and prestige in the Middle East region and around the world.

In the face of this situation, to speculate about potential damage to the S&P 500 or the Dow Jones Industrial Average almost seems vulgar. But, unfortunately, taking care of one's wealth will appear uncouth at times.

So let's get to it. The first step is to actually gain a reasonably objective (i.e., non-partisan) understanding of the situation. Then, one can strategize about what one should do as an investor. Remembering the U.S. Experience in Iraq I hate to repeat this hackneyed phrase, but it is so true, in this case: "Those who forget history are condemned to repeat it."

The U.S. intervened militarily in Iraq ostensibly on three grounds: 1) To eliminate a threat to U.S. national security. 2) To promote democracy and stability in the Middle East. 3) To promote human rights in Iraq, particularly of minority groups. [Read: Will Twitter Sell Its Soul Like Facebook Did?] So let us make a summary cost-benefit analysis of the U.S. policy in Iraq. On the cost side of the ledger, hundreds of thousands of Iraqi and American lives were ruined and trillions of dollars of U.S. and Iraqi wealth were lost. But what was the benefit? Regardless of political persuasion, the following are historical facts about whether -- and to what extent -- the U.S. obtained its stated objectives in Iraq: National security. Iraq was never a serious threat to U.S. national security -- even if it had been true that it possessed chemical weapons. So no benefit to U.S. national security could have been attained from a non-threat, even if everything had gone right. Tragically, Iraq actually poses a greater threat to U.S. national security today than it did before the invasion, as a result of the rise of extremism within Iraq as well as the relative strengthening of Iran's (America's declared arch-enemy) influence within Iraq and the region. Middle East stability. Iraq and the Middle East as a whole are demonstrably more unstable today than prior to the U.S. invasion. Democracy and human rights. Iraq is less of a liberal democratic society today than it was prior to the invasion. Elections do not guarantee liberty, justice or democracy in any meaningful sense. Never have; never will. Post-Sadaam Iraq is just one more case study, proving to be a humanitarian and democratic disaster for Iraq's minority groups including Christians, Jews as well as many Muslims. [Read: Does the iPhone 5S Fingerprint Tech Make You Safer?]

Obama Imitating Bush Obama apparently wants to imitate the Bush disaster. The parallels are uncanny.

The reasons stated for a military intervention in Syria are almost exactly the same: U.S. national security; Middle East stability; the promotion of a regime change in the direction of democracy and human rights. And it is already obvious that Obama is achieving the same sort of results that Bush did.

National security. Syria poses no serious national security threat to the U.S. The Assad regime and its weapons may pose a threat to opposition groups within Syria (including jihadists), but not to U.S. national security. Even if Assad were so stupid as to commit a hostile act against the U.S., America could very swiftly take care of this puny threat with full moral justification and backing from the international community.

What about threats posed by Syria to Israel? Syria poses no more danger than virtually any other major Middle Eastern nation does to Israel (they all have conflicts with Israel), nor is it any more of a threat than it was one, five or 10 years ago. Furthermore, the current regime poses considerably less risk to Israel than virtually any Syrian successor regime that can realistically be imagined. Israel and the Assad regime have coexisted for many decades; there is nothing to suggest that the danger to Israel posed by the Assad regime has increased relative to historical norms. Middle East stability. As much as some Americans may not like to admit it, the Assad regime represents the best chance for the most stability that can be hoped for in Syria at the present time, given Syria's state of economic, social, cultural and political development. A post-Assad Syria would look much like the post-Sadaam disaster in Iraq today (sectarian and ethnic civil war) and the post-Mubarak catastrophe brewing in Egypt. The Assad regime represents the best chance of keeping this religiously and politically fractious nation together and avoiding a civil war and potential holocaust. Democracy and human rights. While the Assad regime is hardly model of modern sensibilities with regards to human rights, it represents the best chance that Syria's ancient Christian population, its Jewish population, political secularists and Muslim moderates have to evolve into an ethnically diverse liberal-democratic nation over time, based on the rule of law. It is unrealistic to think that the establishment of liberal democracy can occur in Syria in anything other than a gradual evolutionary fashion that will take at least two or three generations' time. The overthrow of the Assad regime will almost certainly represent a set-back on this path and entail the massacre and mass emigration of Syria's sizable Christian population, just as occurred in Iraq and is currently happening in Egypt. Gruesome attacks on Syria's Christian population by Islamist anti-Assad groups have already begun. [Read: Twitter Files for an IPO ] Obama is trying to draw a distinction between his Syria policy and Bush's Iraq policy by saying that he "won't put boots on the ground in Syria." This argument is so wrong-headed, it beggars belief. First, from the point of view of Syrian internal stability, it really does not matter whether the Assad regime is overthrown with the help of U.S. troops or with the help of cruise missiles. The destabilizing political consequences for the Middle East and the humanitarian cost for Syria's minority populations will be the same -- potentially even worse without the restraining influence of U.S. troops. Second, from the point of view of U.S. national security, not placing boots on the ground to secure Syria's chemical weapons (remember that securing WMD stockpiles was the prime justification for boots on the ground in Iraq) would gravely endanger U.S. national security, as those weapons will likely fall into the hands of U.S. and Israeli enemies in the event of the sort of chaotic civil war that is likely to follow the collapse of the Assad regime. Loss of U.S. Influence The U.S.'s inept handling of the situation in Syria is handing a major diplomatic victory to the Putin regime in Russia -- a regime which poses a far greater threat to U.S. national interests than the Assad regime ever has. It is also strengthening the hand of Iran and China, regimes that also pose a far greater threat to U.S. national interests than the Assad regime in Syria ever has. More general, the belligerent fumbling and bumbling of the Obama administration is causing massive damage to U.S. standing and prestige around the world. It also indirectly harms the political and social standing of U.S. companies such as Exxon (XOM), Chevron (CVX) and Schlumberger (SLB), which have important economic interests in the region. [Read: Fast-Food Workers Are Right: Raise the Minimum Wage]

Conclusion After ruining the lives of hundreds of Americans through death and injury, while squandering trillions of dollars' worth of U.S. wealth, America has evidently not learned its lessons from Iraq. The ongoing US-sponsored disasters in Egypt and Libya have apparently not provided enough warning either.

President Obama seems hell-bent on repeating the fundamental errors Bush made in Iraq and the ones he made in Egypt and Libya, making Syria less stable, less humane, less democratic and more dangerous to U.S. national security.

Obama is accomplishing all of this while handing out major diplomatic victories to regimes that truly threaten U.S. national interests, such as Russia, China and Iran. And to top it all off, the Obama administration is following in the tradition of George W. Bush by damaging the U.S. economy and causing massive harm to U.S. influence and prestige in the Middle East region and around the world.

What should Obama actually do, then? As far as the chemical weapons are concerned, Obama should hand the job over to the U.N. Assad will not dare use chemical weapons with bumbling U.N. inspectors supervising stockpiles and swarming the country with detective hats and magnifying glasses on the lookout for other WMD. As far as the desire for regime change, forget it. The alternatives are worse. The smartest policy for the U.S. would be one of deepening economic and cultural ties with the Assad regime in the hope that the U.S. can gradually influence political and societal change over time via the sort of incremental cultural changes that inevitably come with deeper economic and social ties. What should investors do? Nothing. [Read: Will Twitter Sell Its Soul Like Facebook Did?] Syria is not relevant to the value of the U.S. equity market. The only way Syria would matter at all is if one of three things happened: First, some sort of major terrorist reprisal against the U.S. or U.S. interests from a desperate Assad regime. Second, a devastating attack on Israel or some other major emergency situation that led to U.S. boots on the ground. Third, the spreading of military hostilities with other interested nations such as Iran or Russia. The probabilities of any of these scenarios materializing are minor, in my view. Therefore, from an expected return point of view, there is nothing that U.S. investors can, or should, do about this. For example, if you ascribe a probability of 20% to any one or more of the three risks mentioned actually materializing (which is way too high, in my view), and one hypothesizes a consequent hit to market value of as much as 20% (which is absurdly high), the impact on current expected market value would only be 4%. In practice, such an adjustment in a price target for the S&P 500 makes no sense, as it is indistinguishable from technical "noise."

Therefore, save your time worrying about the impact of Syria on your investments and write your congressman and the Obama's office instead. Tell them you are an independent voter that voted for them in the last election, that you are disappointed in them as a result of current Syria policy, and that you promise to definitely vote for the opposite party in the next election, if they do not reverse policy now.

That might have more beneficial impact on your portfolio than trying to speculate about how the highly volatile, unpredictable and relatively unimportant (from the point of view of market value) the Syrian situation will impact the U.S. stock market.

At the time of publication the author had no position in any of the stocks mentioned.

Follow @jameskostohryz This article was written by an independent contributor, separate from TheStreet's regular news coverage.

James Kostohryz has accumulated over twenty years of experience investing and trading virtually every asset class across the globe. Kostohryz started his investment career as an analyst at one of the US's largest asset management firms covering sectors as diverse as emerging markets, banking, energy, construction, real estate, metals and mining. Later, Kostohryz became Chief Global Strategist and Head of International investments for a major investment bank. Kostohryz currently manages his own investment firm, specializing in proprietary trading and institutional portfolio management advisory. Born in Mexico, Kostohryz grew up between south Texas and Colombia, has lived and worked in nine different countries, and has traveled extensively in more than 50 others. Kostohryz actively pursues various intellectual interests and is currently writing a book on the impact of culture on economic development. He is a former NCAA and world-class decathlete and has stayed active in a variety of sports. Kostohryz graduated with honors from both Stanford University and Harvard Law School. View Kostohryz's LinkedIn profile and connect with him here; follow him on Twitter here and Google+ here. When connecting, be sure to identify yourself as a reader from TheStreet.

Is WebMD a Strong Play Here?

This column originally appeared exclusively first for Stock Investor Cheat Sheet premium subscribers on May 6th and has been updated to reflect current data changes.

With shares of WebMD Health Corp. (NASDAQ:WBMD) trading at around $29.72, is WBMD an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock's Movement

WebMD is making some changes, and these changes are likely for the better. It's apparent that CEO Cavan M. Redmond wasn't the ideal leader. According to Glassdoor.com, employees rated their employer a 2.6 of 5. Only 36 percent of employees would recommend the company to a friend, and only 22 percent of employees approved of Cavan M. Redmond. The Board of Directors has appointed David J. Schlanger to serve as Interim Chief Executive Officer.

Martin J. Wygod, Chairman of WebMD, said, "The change announced today will best position us to build on the momentum that our senior management team has created to date. Under David's leadership, we will accelerate the development and implementation of strategies to diversify our revenue base and capture the opportunities arising from the rapidly changing healthcare landscape."

All that said, Cavan M. Redmond must have done something right. In Q1, webmd.com averaged 132 million unique users per month, which was a 23 percent increase year-over-year. Regardless, company culture must be strong in order to achieve optimal results. Therefore, a change was necessary.

WebMD recently beat Q1 expectations and raised guidance. The company reported a loss of three cents per share whereas analysts expected a loss of 15 cents per share. Revenue also beat expectations by 5 percent. In regards to guidance, WebMD raised full-year expectations to -$0.26 to -$0.03. Analysts expected a loss of 30 cents per share. The raised guidance is mostly related to an improved outlook in the public portal advertising business. WebMD expects FY2013 revenue to come in between $450 million and $470 million, which is at best flat compared to 2012. For the current quarter, WebMD expects revenue to exceed $115 million. This would be a significant improvement on a year-over-year as well as sequential basis.

WebMD offers four services: WebMD Consumer Network, WebMD Professional Network, WebMD Private Portal Services, and WebMD Publishing Services.

WebMD Consumer Network consists of WebMD.com, MedicineNet.com, eMedicineHealth.com, and RxList.com. Through these sites, WebMD helps people take an active role in managing their health and wellness via timely written and video content provided by medical writers, physicians, and health educators. This is an interactive service.

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WebMD Professional Network consists of Medscape.com and theheart.org. This service offers continuous education and training for professionals. The goal of the service is to increase clinical knowledge, provide important medical opinions, and to report medical findings and the latest treatments. This service also includes WebMD Direct Services, which consists of a proprietary database of physicians and offers physician engagement solutions, targeted recruitment, and online distribution and delivery.

WebMD Portal Services is designed to offer employers and health plan members more informed decisions in regards to benefits, treatments, and providers. Members have an opportunity to access personal health information, which can help aid these decisions. This service also includes health risk assessments, lifestyle education, health coaching, and pertinent information regarding cost and quality of healthcare. The ultimate goals are to use the information to determine the best provider, and to estimate costs of future treatments and procedures.

WebMD Publishing Services publishes WebMD the Magazine, which can be found in approximately 85 percent of physician waiting rooms in the United States.

In all, WebMD is widely known as the most trusted and recognized brand of health information. It would be difficult to imagine a scenario where this suddenly changes.

The chart below compares fundamentals for WebMD, Computer Programs & Systems Inc. (NASDAQ:CPSI), and Merge Healthcare Incorporated (NASDAQ:MRGE).

	WBMD	CPSI	MRGE
Trailing P/E	N/A	18.26	N/A
Forward P/E	371.50	17.19	12.19
Profit Margin	-2.97%	16.60%	-13.29%
ROE	-2.83%	53.38%	-39.06%
Operating Cash Flow	70.66M	N/A	5.88M
Dividend Yield	N/A	4.10%	N/A
Short Position	7.80%	6.20%	7.80%

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

T = Technicals Are Strong

WebMD has outperformed its peers by wide margins year-to-date.

	1 Month	Year-To-Date	1 Year	3 Year
WBMD	26.09%	107.3%	38.36%	-37.44%
CPSI	-4.62%	4.65%	-4.10%	29.67%
MRGE	3.12%	33.60%	24.53%	36.93%

At $29.72, WebMD is trading well above its averages.

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50-Day SMA	24.92
200-Day SMA	19.18

E = Equity to Debt Ratio Is Weak

The debt-to-equity ratio for WebMD is weaker than the industry average of 0.50. This is one of the few negatives for WebMD at the moment. It is hopeful that new management can make an improvement.

	Debt-To-Equity	Cash	Long-Term Debt
WBMD	1.55	999.22M	800.00M
CPSI	0.00	17.50M	0.00
MRGE	3.43	45.30M	250.26M

E = Earnings Are Inconsistent

Annual earnings have been inconsistent, but based on current guidance, WebMD should be headed back in the right direction.

Fiscal Year	2008	2009	2010	2011	2012
Revenue ($) in billions	0.373	0.439	0.535	0.559	0.470
Diluted EPS ($)	5.88	2.07	0.88	1.25	-0.40

When we look at the last quarter on a year-over-year basis, revenue and earnings have both improved.

Quarter	Mar. 31, 2012	Jun. 30, 2012	Sep. 30, 2012	Dec. 31, 2012	Mar. 31, 2013
Revenue ($) in billions	0.107	0.113	0.118	0.133	0.113
Diluted EPS ($)	-0.14	-0.11	-0.02	-0.1241	-0.03

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

T = Trends Support the Industry

With baby boomers retiring in droves, there is going to be a significant increase in the need for health information. This simple fact should lead to a strong industry in the coming years.

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Conclusion

WebMD is making all the correct decisions and looks to be heading in the right direction. With trends supporting the industry and new management in place, WebMD is a long-term OUTPERFORM.

Top 5 Cheap Companies To Invest In Right Now

The past few years haven't been kind to U.S. steelmakers, who have languished due to weak domestic demand, depressed prices, and heavy foreign competition, especially from China.

But cheap and plentiful supplies of natural gas could help revive profitability among some steelmakers by helping reduce costs. Indeed, a handful are already building or thinking about building plants that would use natural gas instead of coal to purify iron ore, the main ingredient in steel. Let's take a closer look.

Steelmakers' woes
Since�the global financial crisis five years ago, U.S. steel output has fallen about 3.5%, as compared to a 14% increase globally. Not surprisingly, U.S. steelmakers' profits have suffered and losses have become commonplace in the industry.

U.S. Steel (NYSE: X  ) , for instance, reported�a larger than expected loss of $73 million in the first quarter due to an 11% plunge in sales and a 3% drop in shipments, while AK Steel Holding (NYSE: AKS  ) , an integrated producer of flat-rolled carbon, stainless and electrical steels, and tubular products, reported�a net loss of $9.9 million, or $0.07 per diluted share, in the first quarter.

Top 5 Cheap Companies To Invest In Right Now: Emerson Electric Company(EMR)

Emerson Electric Co. operates as a diversified manufacturing and technology company. The company engages in appliance solutions, climate technologies, industrial automation, motor technology, network power, process management, professional tools, and storage solutions businesses. Its appliance solutions business provides appliance controls, appliance motors, heating products, and white-rodgers; climate technology business provides heating, ventilation, air conditioning, and refrigeration (HVACR) solutions for residential, industrial, and commercial applications; and industrial automation business offers bearings and power transmission products, electrical power generation products, electric motors, variable speed drives and servos, electrical products, material joining solutions, fluid automation products, and wind turbine systems. The company?s motor technology business provides appliance motors, HVACR motors, DC motors, fractional horsepower motors, integral horsepower a nd larger motors, and drives; network power business provides power, precision cooling, connectivity, and embedded solutions; and process management business provides various wireless related products from self-organizing field networks to wireless asset and people tracking. Its professional tools business offers pipe working and threading equipment, pressing technology, utility locating and visual diagnostics systems, drain maintenance tools, power tools, air tools, general purpose hand tools, wet/dry vacs, job site storage equipment, truck tool boxes and equipment, and van storage equipment; and storage solutions business provides shelving and storage products for residential, commercial, and foodservice needs, as well as offers specialized carts, mobile computer workstations, and cabinet fixtures. The company was founded in 1890 and is headquartered in St. Louis, Missouri.

Advisors' Opinion:

• [By Larry Gellar]

  Similar to Archer Daniels Midland above, Emerson Electric saw 52-week highs in February but has been down since to a current price of below $50. From a valuation perspective, Emerson is quite attractive – notably P/E and PEG are 15.55 and 0.99 respectively. This is lower than competitors like ABB (ABB) and Hitachi (HIT), and Emerson’s margins are also better than those companies. Specifically, Emerson currently has a gross margin of 39.58% and an operating margin of 17.04%. Aside from the companies listed above, this also beats out General Electric (GE), which has 36.79% and 11.15% for those same numbers respectively. On the other hand, there are also some concerns to be had with EMR. Total cash flow for the past 3 quarters has been a whopping negative $1.8 billion. Shareholders have also been wary of the company’s willingness to take on additional debt. Upcoming earnings for EMR have already been guided downward, and it seems likely that the stock price will fall once the actual results are posted. The wisest thing may be to wait for the stock to bottom out after earnings and then buy it before it creeps back upward. Some investors may find EMR attractive for its dividends; yield is currently at 2.8%.

Top 5 Cheap Companies To Invest In Right Now: Merck & Company Inc.(MRK)

Merck & Co., Inc. provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. The company?s Pharmaceutical segment provides human health pharmaceutical products, such as therapeutic and preventive agents for the treatment of human disorders in the areas of bone, respiratory, immunology, dermatology, cardiovascular, diabetes and obesity, infectious diseases, neurosciences and ophthalmology, oncology, vaccines, and women's health and endocrine. This segment also offers human health vaccines, such as preventive pediatric, adolescent, and adult vaccines. Its Animal Health segment discovers, develops, manufactures, and markets animal health products. This segment offers antibiotics, anti-inflammatory products, vaccines, products for the treatment of fertility disorders, and parasiticides for cattle, swine, horses, poultry, dogs, cats, salmons, and fish. The Consumer Care segment develops, manufac tures, and markets over-the-counter, foot care, and sun care products. Its over-the-counter product line includes non-drowsy antihistamines; treatment for occasional constipation; decongestant-free cold/flu medicine for people with high blood pressure; nasal decongestant spray; and treatment for frequent heartburn. This segment?s foot care products comprise topical antifungal, and foot and sneaker odor/wetness products; and sun care products include sun care lotions, sprays and dry oils; and sunburn relief products. The company serves drug wholesalers and retailers, hospitals, government agencies, physicians, physician distributors, veterinarians, animal producers, and managed health care providers, as well as food chain and mass merchandiser outlets in the United States and Canada. Merck & Co., Inc. was founded in 1891 and is headquartered in Whitehouse Station, New Jersey.

Advisors' Opinion:

• [By Dan Moskowitz]

  With competition from generics, revenue declines, and weak guidance, Merck isn�� the ideal investment candidate at the moment. Pfizer offers a better valuation, its profit margin of 26.95 percent demonstrates better efficiency, and it has outperformed Merck over the past three years. This pattern should continue.

• [By Sally Jones] Kahn�� Current Shares: 1,215,659
  
  Kahn Brothers also increased its position with Merck & Co. Inc. (MRK) by 4.38%, buying 50,998 shares at an average price of $46.81, for a 3.4% gain. For the 1,888,219 shares bought since the second quarter of 2005, Kahn�� average price was $41.90 per share with a 15% gain.
  
  Up 9% over 12 months, MRK has a market cap of $146.12 billion, and trades at a P/E of 24.80, a P/B of 2.70 and a P/S of 3.22. The current share price is $48.39.
  
  [ Enlarge Image ]
  
  Merck announced its second quarter 2013 financial results highlighting $11 billion in revenue, a decrease of 11%. The company had non-GAAP EPS of $0.84, and GAAP EPS of $0.30. The company reaffirmed its full-year non-GAAP EPS target of $3.45 to $3.55, excluding certain items and a revised GAAP EPS range of $1.84 to $2.05. Merck has seen growth in key franchises including vaccines, diabetes and immunology, and a continued return of cash to shareholders, including the $5 billion accelerated share repurchase announced in May, according to a company press release.
  
  New York Community Bancorp Inc. (NYCB)
  
  Kahn�� Current Shares: 4,006,237
  
  In second quarter 2013, Kahn Brothers also increased its position with another long-time holding, New York Community Bancorp Inc. (NYCB) by 3.74%, buying 144,329 shares at an average price of $13.51, for a 13.8% gain. For the 4,006,237 shares bought since the second quarter of 2005, Kahn�� average cost was $13.48 per share with a 14% gain.
  
  NYCB reported second quarter 2013 GAAP earnings of $122.5 million, or $0.28 per diluted share, and $241.2 million, or $0.55 per diluted share for the six months ending June 30, 2013. The company�� balance sheet shows assets of $44.2 billion as of June 30, 2013. The company had a net income of $501.1 million in 2012.
  
  Up 17% over 12 months, NYCB has a market cap of $6.78 billion, and trades with a P/E of 13.30, a P/B of 1.20, and a P/S of 4.62. The current share price is $15.37.
  
  [ Enlar! ge Image ]
  
  New York Community Bancorp Inc. is the 20th largest bank holding company in the nation and a leading producer of multi-family loans in New York City, with an emphasis on apartment buildings that feature below-market rents. NYCB operates two bank subsidiaries��ew York Community Bank, a thrift, with 239 branches in Metro New York, New Jersey, Ohio, Florida and Arizona--and New York Commercial Bank, with 35 branches in New York City, Westchester County and Long Island, including 18 branches that operate under the name Atlantic Bank.
  
  Nam Tai Electronics (NTE)
  
  Kahn�� Current Shares: 3,736,917
  
  Irving Kahn also increased his position with components manufacturer Nam Tai Electronics (NTE) by 9.24%, buying 315,981 shares at an average price of $8.96, for a 14.5% loss. For the 3,828,873 shares bought since the second quarter of 2008, Kahn�� average price was $9.90 per share with a 23% loss.
  
  Up 15% over 12 months, Nam Tai has a market cap of $343.2 million, and trades with a P/E of 4.70, a P/B of 0.80 and a P/S of 0.27. The current share price is $7.66.
  
  [ Enlarge Image ]
  
  For the second quarter of 2013, Nam Tai Electronics reported sales of $167.9 million, up 64%, with a net income loss of $31.9 million. The company�� gross profit margin was at 9.4%, compared to 15% in the same quarter a year ago. The company�� net income for first quarter 2013 was reported at $4.9 million, compared to a loss of $3.6 million in the same quarter a year ago.
  
  More Second Quarter Action
  
  Guru Irving Kahn also reduced ten of his positions in the second quarter of 2013.
  
  Here are the trade details.
  
  Irving Kahn, along with brothers Alan and Thomas, founded Kahn Brothers & Company Inc., in 1978, which later became Kahn Brothers Group. The company portfolio lists 46 stocks, none of them new, with a total value of $648 million and a 1% quarter over quarter turnover, according to the recent GuruFocus update.
  
  
  
  GuruFocus Real Time P! icks repo! rts 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. If you are not a Premium Member, we invite you for a 7-day Free Trial.

5 Best Penny Stocks To Buy Right Now: UnitedHealth Group Incorporated(UNH)

UnitedHealth Group Incorporated provides healthcare services in the United States. Its Health Benefits segment offers consumer-oriented health benefit plans and services to national employers, public sector employers, mid-sized employers, small businesses, and individuals; and non-employer based insurance options for purchase by individuals. It also provides health and well-being services for individuals aged 50 and older; and for services dealing with chronic disease and other specialized issues for older individuals, as well as health plans for the beneficiaries of acute and long-term care Medicaid plans. This segment offers its services through a network of 730,000 physicians and other health care professionals, and 5,300 hospitals. Its OptumHealth segment provides health, financial, and ancillary services and products that assist consumers through personalized health management solutions; benefit administration, and clinical and network management; health-based financi al services; behavioral solutions; and specialty benefits, such as dental, vision, life, critical illness, short-term disability, and stop-loss product offerings. The company?s Ingenix segment offers database and data management services, software products, publications, consulting and actuarial services, business process outsourcing services, and pharmaceutical data consulting and research services. Its Prescription Solutions segment provides integrated pharmacy benefit management services comprising retail network pharmacy contracting and management, claims processing, mail order pharmacy services, specialty pharmacy, benefit design consultation, rebate contracting and management, drug utilization review, formulary management programs, disease therapy management, and adherence programs to employer groups, union trusts, managed care organizations, Medicare-contracted plans, Medicaid plans, and third party administrators. The company was founded in 1974 and is based in Minne tonka, Minnesota.

Advisors' Opinion:

• [By Victor Mora]

  UnitedHealth Group is a health and well-being company that provides essential healthcare services during a critical time in the United States. The stock has witnessed a promising move higher that has taken it to all-time high prices, where it may consolidate before coasting higher. Over the last four quarters, earnings and revenue numbers have been on the rise, but investors have not been too pleased with the company’s reports. Relative to its peers and sector, UnitedHealth Group has been a year-to-date performance leader. Look for UnitedHealth Group to OUTPERFORM.

• [By Jon C. Ogg]

  UnitedHealth Group Inc. (NYSE: UNH) is the newest of the DJIA components, now that Kraft Foods has split itself up. The health insurance giant closed out 2013 at $54.24, and that was well off the 52-week high, as its range in the past year was $49.82 to $60.75. Analysts believe that the stock will rise some 23.4% to $66.97 by the end of 2013. The insurer has a lower dividend than most DJIA stocks, at only about 1.6%, and its market value is close to $55 billion. UnitedHealth so far has recovered only about half of its losses from last summer.

Top 5 Cheap Companies To Invest In Right Now: Aegon NV(AEG)

AEGON N.V. provides life insurance, pensions, and asset management products and services worldwide. The company?s life insurance products include traditional, term, universal, whole, and other life insurance products sold as part of defined benefit pension plans, endowment policies, post-retirement annuity products, and group risk products; supplemental health insurance products comprise accidental death, other injury, critical illness, hospital indemnity, medicare supplement, and student health; specialty lines consists of travel, membership, and creditor products; and long term care insurance products for policyholders who require care due to a chronic illness or cognitive impairment. It also offers a range of savings and retirement products and services, including mutual funds, and fixed and variable annuities, savings accounts and investment contracts, segregated funds, guaranteed investment accounts, and single premium immediate annuities, as well as investment advice to individuals. In addition, the company offers employer solutions and pensions, such as retirement plans, pension plans, and pension-related products and services; investment products, including onshore and offshore bonds, and trusts; reinsurance products and solutions to life insurance and financial services companies; general insurance products comprising house, car, and fire insurance; and asset management products and services, including general account assets, unit-linked funds, and third party activities. AEGON N.V. markets its products through independent and career agents, financial planners, registered representatives, independent marketing organizations, banks, broker-dealers, benefit consulting firms, wirehouses, affinity groups, institutional partners, independent managing general agencies, and specialized financial advisors, as well as through online, direct, and worksite marketing. The company was founded in 1900 and is headquartered in The Hague, the Netherl ands.

Advisors' Opinion:

• [By seekingalpha.com]

  Shares of this life insurance company are trading at $4.25 at the time of writing, and at the low end of their 52-week trading range of $4.18 to $8.07. At the current market price, the company is capitalized at $7.50 billion. Earnings per share for the last fiscal year were $0.69, placing the shares on a price-to-earnings ratio of 6.13.

  These earnings are expected to rise through the next couple of years, hitting $0.73 this year, and then rising to $0.89 the following year. AEG received Dutch government aid in the 2008 financial crisis, and has been selling operations to repay its debts. The latest sale, Guardian Life in the U.K. for $451 million, takes it a step closer to achieving this goal. It will continue to manage Guardian’s assets of £7.5 billion (approximately $11 billion).

  Well on the way to achieving its target of full repayment to the Dutch government, and continuing to shed non core assets, for Aegon it is deals like the Guardian one that will push it to a better-managed profit stream. When the company has fully repaid its debts, it is likely to reinstate dividend payments. This will help the stock price near and long term.

Top 5 Cheap Companies To Invest In Right Now: TII Network Technologies Inc.(TIII)

Tii Network Technologies, Inc., together with its subsidiaries, designs, manufactures, and sells products for use in the networks to service providers in the communications industry in the United States. It provides network interface devices (NID), including overvoltage surge protectors, digital subscriber line (DSL) service splitters, and customer bridge modules; building entrance terminals; and accessories comprising station protectors, customer wiring modules, electro-magnetic interference filters, and line test modules. The company also offers broadband products, such as DSL electronic products that include xDSL plain old telephone service splitters to isolate voice and data signals; Outrigger, an outdoor intelligent residential gateway; HomePlug technology that enables networking of voice, data, and audio devices through the consumers? AC power lines. In addition, it provides connectivity products consisting of connector block and terminal block products; voice over I nternet protocol products; switchable voice NID products; voice intercom systems for use in multi-dwelling units; and wire terminals and other connectivity products. Further, the company offers fiber optic products which comprise wall mount enclosures, rack mount enclosures, OSP fiber enclosures, cable assemblies, miscellaneous fiber accessories, and optic network terminals installation accessories. Additionally, it offers overvoltage surge protection products, including two and three electrode gas tubes; station overvoltage surge protectors; protector modules; and protector packs and cat 5 cat 6 protection products, as well as other surge protection products comprising a 75 ohm coaxial protector for cable networks; a 50-ohm coaxial protector for wireless service providers? cell sites; a gel-sealed Ethernet data protector; and power line/data line protectors for personal computers and home entertainment systems. The company was founded in 1964 and is headquartered in Edgewoo d, New York.

Advisors' Opinion:

• [By John Reese]

  Tii Network Technologies (NASDAQ: TIII) helps protect expensive telecom equipment with its overvoltage surge protection devices. This is especially useful during lightning strikes and power surges. Its Total Failsafe products offer modular station protectors, while its In-Line products protect broadband coaxial cables.

  Naturally, large telecom carriers like Verizon Communications (NYSE: VZ) are big customers and account for 34% of sales. DIRECTV (NASDAQ: DTV), Power & Telephone Supply and Tyco Electronics (NYSE: TEL) are also customers. With Verizon and other cell phone providers upgrading to 4G, Tii’s sales should remain very strong.

  The stock is a good buy, but it is thinly traded, so use a limit order within 10 cents of the previous day’s closing price. Buy TIII under $3.

What Do the Cycles Say About September?

Although the trek through Provence, the Cote D'Azur and France's Château Country over the past couple weeks left little time for big-picture analysis of the stock market, the time spent on planes, trains and automobiles returning across the Atlantic certainly did.

And while the list of topics to discuss in future morning missives is long at the moment (including: has a new secular bull begun?, the 3 ways to beat the stock market, the importance of D.R.P. (having a definable, repeatable, process), diversification is for dummies, the economic model isn't happy, absolute return strategies are really bond funds in drag, and target date funds are for fools), probably the most timely topic for this morning is the state of the stock market cycles.

"September Is the Cruelest Month"

While October is technically the worst month for the stock market on a statistical basis due to the propensity for stocks to have crashed during the month, September is actually the month that investors should fear the most.

According to Mark Hulbert, since 1896 (when the Dow Jones Industrial Average was created), the venerable index has lost an average of 1.07 percent during the month of September. And since 1929, the Dow has lost an average of 1.3 percent each time September rolled around. For the record, the average gain for all other months is 0.71 percent. And for those keeping score at home, that's a spread of 1.78 percentage points, which, statistically speaking, is meaningful.

Hulbert also pointed out that during each of the last nine decades, September's rank relative to other months in terms of performance has never been higher than ninth. Ugh!

So, with Syria, the Fed talking taper, and the U.S. slated to run out of money again as early as next month, friends in the bear camp are currently pretty excited about their prospects for the rest of the month. And since sometimes market traditions tend to become self-fulfilling prophecies, it would be a good idea to check in with the cycl! e composite to see if there is hope for the bulls.

Since this is the ninth time this year that we've done a review of the cycle composite, let's dispense with all the disclosures and disclaimers about not using cycle work in a vacuum, but it is an important input into models. And to review, the cycle composite is a combination of the one-year seasonal, the four-year presidential and the 10-year decennial cycles [size=11pt; line-height: 115%; font-family: Calibri, sans-serif]— [/size] all going back to 1928. So, with that out of the way, let's get to it, shall we?

Question 1: Is The Market in Sync with the Cycle Projections?

The first thing to do each month is to get a feel for whether or not the cycle projections are "on" or not at the present time. Looking at last month, the cycle composite didn't do so well. In sum, the composite called for a modest rally, and instead we got a modest decline. As such, we'll have to say that the composite is a bit out of whack with the price action at the present time.

But from a longer-term point of view, the market (as defined by the S&P 500) is staying pretty close to where the composite projection says it should be in 2013. And in looking at the market versus the projections since 2009, the S&P is fairly close to where the cycles say it should be. However, it should be noted that the cycles have been calling for a stronger rally than we've actually seen this summer. Although it is a safe bet that all the "taper talk" may have been a factor.

Question 2: What Does September Look Like?

Next, let's take a look at what the cycle projections are calling for during the month of September:
One-Year Cycle: The bottom line is the picture painted by the one-year seasonal cycle is not pretty as after the first week or so, the cycle suggests it will be all downhill.

Four-Year Cycle: Ditto for the four-year Presidential cycle - only worse. This cycle basically points straight down for the entire month. The only appropriate a! djective ! to be used here is ugly.

10-Year Cycle: The saving grace appears to be the 10-year cycle, which looks a bit different from the one- and four-year cycles. In short, the 10-year suggests the month will be more of a sideways affair. However, the bad news is: (a) the month is projected to end lower and (b) there is no real rally projection to speak of during the entire month.

Cycle Composite: Given that two of the three component cycles are down and down hard, it isn't surprising to see that the cycle composite also paints a less than optimistic picture of the month of September.
The good news is (a) the cycle composite can remain "out of sync" for extended periods of time and (b) the composite is only one of 10 inputs in our market environment model.

However, it is important to note that this particular input will have an overall negative bias this month. Again, this analysis should NEVER be used in a vacuum and is NOT a reason to be negative toward stocks overall. But, should the market continue to struggle in the near term, traders should know that such action would be pretty "normal" for this time of year.

So... as a risk manager, while the bulls could always get something going should the situation in Syria subside quickly, the cycles suggest that it might be a good idea to be careful out there for a while.

Are Target Investors Aiming Too High?

With shares of Target Corp. (NYSE:TGT) trading at around $70.17, is TGT an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock's Movement

As most investors already know, Target mostly blamed the weather for its mixed to disappointing Q1 performance. In most cases, a company blaming the weather is absurd and nothing more than an excuse. If the weather is an issue, then the company complaining should get some products on the shelves that match the current environment. However, Target's excuse is at least somewhat justifiable because the weather seemed to affect the majority of the industry opposed to just Target. Seasonal items such as gardening equipment and spring apparel didn't sell as well as anticipated. High-priced electronics have also been performing poorly, but this has been more a long-term problem, and it might serve as a warning sign that the consumer isn't as strong as advertised, but that's a story for another time.

Target saw 1.0 percent sales growth year-over-year, but sales for stores open at least one year declined 0.6 percent. Therefore, this is one of those stories that are a bit challenging to figure out. Then again, those stories are the most fun. It's possible that Target is provided the answer by lowering its full year earnings expectations to $4.70-$4.90 from $4.85-$5.05. However, if that's the case, then how come the stock hasn't been hit? It's likely because savvy investors realize that uncooperative weather is always a temporary problem, and that lowered expectations have the potential to lead to future upside surprises. On the other hand, the consumer isn't exactly strong at the moment, so there is still risk.

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Optimists will say that Target attracts consumers looking for a bargain, which makes a weak consumer less of a concern. Pessimists will say that Wal-Mart Stores Inc. (NYSE:WMT) and dollar stores are better options for those looking for bargains. The reason Target has been such a tug-of-war story is because both camps have valid points. Yes, Target is a good option for budget-conscious consumers, and yes, there are better options out there. A lot depends on location (as always).

Speaking of location, Target is in attack mode in Canada. It opened 24 stores in Q1, and it plans on opening 124 stores total in 2013. This will lead to a short-term cost that will hurt earnings, but it should be a winning investment over the long haul.

City Targets should also help growth because these stores will simply attract more consumers thanks to convenience.

As far as online goes, digital sales growth is in the high teens, but according to Alexa.com stats, the past three months haven't been that impressive. Over that time frame, pageviews-per-user has declined 3.71 percent to 5.19, time-on-site has declined 2.0 percent to 4:44, and the bounce rate (only one pageview per visit) has increased 10.0 percent to 29.50 percent. None of these are good numbers, but the latter is the most alarming. Why aren't people staying on the page? There has to be a problem somewhere. That said, a bounce rate of 29.50 percent is still low, which is good.

Target's REDcard has been a success so far. A REDcard gives shoppers a 5.0 percent discount. Who wouldn't want that? In Q1 2012, 12 percent of Target transactions were made using a REDcard. In Q1 2013, 17 percent of transactions were made using a REDcard. While the 5.0 percent discount sounds like a negative, it's driving more traffic to the store. That said, how many times have you been to a Target and been made aware of a REDcard? If you're like most people, then this has never happened. Target would have more potential with the REDcard if it was more focused on exposure – without annoying shoppers.

For those who don't already know, Target is now selling wedding gowns. This is a very interesting play by Target. It might work, and it might not, but if it works, it has some serious potential. The reason for that is because the average expected price paid for a wedding gown this year will be $1,228, and Target wedding gowns begin at only $69.99. In an economy where the consumer is constantly looking for a bargain, there is potential in this space. The big concern is that most brides won't want to say they got their wedding gown from Target. Target will have to come up with a way to solve this problem.

In regards to valuation, Target is currently trading at 16 times earnings whereas Costco Wholesale Corporation (NASDAQ:COST) is trading at 24 times earnings and Wal-Mart is trading at 15 times earnings. Valuation isn't a factor at the moment. However, it should be noted that Target and Costco aren't as resilient as Wal-Mart in bear markets. For example, Target and Costco declined more than 45 percent in late 2008/early 2009 while Wal-Mart only declined about 20 percent.

Those looking for safety are likely looking for yield as well. Target currently yields 2.10 percent whereas Wal-Mart yields 2.50 percent and Costco yields 1.10 percent.

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The chart below takes a look at some basic fundamentals for Target, Wal-Mart, and Costco.

	TGT	WMT	COST
Trailing P/E	16.49	14.83	23.61
Forward P/E	12.88	12.93	21.58
Profit Margin	3.83%	3.62%	1.94%
ROE	17.29%	23.62%	17.30%
Operating Cash Flow	7.25B	25.05B	N/A
Dividend Yield	2.10%	2.50%	1.10%
Short Position	2.40%	1.70%	1.30%

Let's take a look at some more important numbers prior to forming an opinion on this stock.
T = Technicals Are Strong

Target has been a steady performer for several years. It has underperformed its peers over a three-year time frame, but it’s doubtful that investors are crying.

	1 Month	Year-To-Date	1 Year	3 Year
TGT	0.03%	19.87%	24.63%	41.73%
WMT	-4.49%	11.65%	16.71%	60.92%
COST	-0.25%	11.18%	36.56%	115.7%

At $70.17, Target is trading above its averages.

50-Day SMA	69.86
200-Day SMA	65.17

E = Equity to Debt Ratio Is Normal

The debt-to-equity ratio for Target is close to the industry average of 0.70. It might not be as strong as peers, but it’s not a concern, either.

	Debt-To-Equity	Cash	Long-Term Debt
TGT	0.86	1.82B	14.21B
WMT	0.75	8.86B	57.08B
COST	0.46	6.51B	4.94B

E = Earnings Have Been Solid

Earnings and revenue have consistently improved on an annual basis. To see this type of consistency is somewhat rare and always a good sign.

Fiscal Year	2009	2010	2011	2012	2013
Revenue ($) in millions	64,948	65,357	67,390	69,865	73,301
Diluted EPS ($)	2.86	3.30	4.00	4.28	4.52

Looking at the last quarter on a year-over-year basis, revenue improved and earnings declined. Both earnings and revenue declined on a sequential basis. Earnings have been affected by investments that are likely to lead to increased revenue growth in the future.

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Quarter	Apr. 30, 2012	Jul. 31, 2012	Oct. 31, 2012	Jan. 31, 2013	Apr. 30, 2013
Revenue ($) in millions	16,537	16,451	16,929	22,726	16,706
Diluted EPS ($)	1.04	1.06	0.96	1.47	0.77

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

Conclusion

Target has been a long-term winner, and that's not likely to change. However, a significant hit to the stock price is possible if the market suffers a steep correction. The good news is that Target would most likely recover.

Pandora Earnings Can’t Calm Fears of New Competitors

Pandora Media Inc. (NYSE: P) reported second-quarter fiscal 2014 results after markets closed today. The Internet radio company posted adjusted diluted earnings per share (EPS) of $0.04 on revenues of $162 million, which includes $4.7 million in the company's subscription return reserve. In the same period a year ago, the company reported adjusted EPS of $0.01 on revenues of $33.5 million. Second-quarter results also compare to the Thomson Reuters consensus estimate for EPS of $0.02 on $156.35 million in revenues.

On a GAAP basis, the company reported a quarterly diluted EPS loss of $0.04. Adjusted earnings excluded $10.5 million in stock-based compensation expense.

For the third quarter, Pandora is guiding revenue non-GAAP revenue at $174 to $179 million and adjusted EPS in a range of $0.03 to $0.05. For the full 2014 fiscal year, Pandora raised its revenue guidance from a range of $615 to $635 million to a new range of $640 to $655 million and adjusted EPS in a range from breakeven to a profit of $0.05. The company lowered the top end of its EPS guidance by $0.03.

The company's CEO said:

Strong momentum in our mobile business, with non-GAAP total mobile revenue growing 92% year-over-year to $116 million, clearly demonstrates the leverage in Pandora’s business model. To drive future growth, we are accelerating investment in new technologies, channels and capabilities that maximize the value Pandora delivers.

Listener hours totaled 3.88 billion in the quarter up from 3.3 billion in the same period a year ago, but down from 4.18 billion in the first quarter.

Sequentially, quarterly ad revenues rose, from $105 million in the first quarter to $128.5 million. Subscription and other revenue rose as well, from $20.36 million to $28.84 million sequentially as well.

Pandora's lowered earnings outlook is likely due to expected Internet radio competition from both Apple Inc. (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG). The third quarter EPS outlook is also well below the consensus estimate of $0.08.

Shares are trading down about 5.2% in the after-hours market, at $20.59 in a 52-week range of $7.08 to $21.98. The consensus target price for the shares was around $21.20 before today's report.

Is Cliffs Natural Resources Undervalued?

With shares of Cliffs Natural Resources (NYSE:CLF) trading around $21, is CLF an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Cliffs Natural Resources is a mining and natural resources company that engages in the production of iron ore pellets, fines and lump ore, and metallurgical coal. It operates several iron ore mines, five metallurgical coal mines, and a couple of thermal coal mines across various countries around the world. Basic materials have not seen significant strength this year, although economies around the world are growing at explosive rates. Infrastructure development and constructions worldwide should fuel a surge in basic materials and in turn, a rise in Cliffs Natural Resources stock. As countries continue to grow and improve, look for companies like Cliffs Natural Resources to see rising demand.

T = Technicals on the Stock Chart are Weak

Cliffs Natural Resources stock has seen a significant decline over the last several years and is now trading at prices not seen since early 2009. A recent positive earnings reaction has propelled the stock higher so rising stock prices may be ahead. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Cliffs Natural Resources is trading below its declining key averages which signal neutral to bearish price action in the near-term.

(Source: Thinkorswim)

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

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	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Cliffs Natural Resources Options	59.03%	6%	5%

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

	Put IV Skew	Call IV Skew
June Options	Steep	Average
July Options	Steep	Average

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

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

E = Earnings Are Decreasing Quarter-Over-Quarter

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

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	-74.90%	-976.54%	-85.78%	-38.01%
Revenue Growth (Y-O-Y)	-5.93%	-4.23%	-26.05%	-9.96%
Earnings Reaction	14.98%	-19.99%	-10.51%	-6.26%

Cliffs Natural Resources has seen decreasing earnings and revenue figures over the last four quarters. From these figures, the markets have been mostly dissatisfied with Cliffs Natural Resources’s recent earnings announcements.

P = Poor Relative Performance Versus Peers and Sector

How has Cliffs Natural Resources stock done relative to its peers, Alpha Natural Resources (NYSE:ANR), Consol Energy (NYSE:CNX), Peabody Energy (NYSE:BTU), and sector?

	Cliffs Natural Resources	Alpha Natural Resources	Consol Energy	Peabody Energy	Sector
Year-to-Date Return	-44.72%	-33.26%	8.61%	-23.07%	-8.56%

Cliffs Natural Resources has trailed in performance year-to-date.

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Conclusion

Cliffs Natural Resources provides essential materials to companies participating in a multitude of industries worldwide. The stock has been on a steady decline over the last several years but a recent positive earnings report may possibly fuel a move higher. Earnings and revenue figures have decreased over most of the last four quarters which has not made investors too happy. Relative to its peers and sector, Cliffs Natural Resources has been a year-to-date underperformer. WAIT AND SEE what Cliffs Natural Resources does this coming quarter.

The 20 Most Important Things Proposed by Howard Marks (Part III Of IV)

11. The Most Important Thing Is… Contrarianism

"To buy when others are despondently selling and to sell when others are euphorically buying takes the greatest courage, but provides the greatest profit." – Sir John Templeton

Howard describes most investors very simply: trend followers. The above average investors must be insightful, skillful, second level thinkers and diverge from the consensus portfolio. Sometimes following the crowd or herd can be profitable, but at other times it my prove to be very unwise and the most unprofitable. At certain inflection points as value investors we must diverge from the crowd, due to fear and skepticism or hope and greed (be greedy when others are fearful and fearful when others are greedy).

Take the lemming as an example. If only this creature had the foresight to stop and leave the warmth of the herd before running over the cliff to its demise for the sake of following. A simple contrarian policy is to buy when they hate them and to sell when they love them, but it may be simpler to say than to do. You have to have the ability to ignore conventional wisdom (as Buffett says, long on conventional short on wisdom) and stick your neck out telling the market it is wrong, as it occasionally is. Contrarians may be strong believers in reversion to the mean and have a strong sense of "intrinsic value" and "a margin of safety" to last through the emotional roller coaster of cycles and swinging of the market pendulum discussed in part II.

Although, as a value investor there is a large difference between "it is over priced" and "it is going down tomorrow." Or, as the famous Keynes quote says, the market may remain irrational longer than one can remain solvent. But if you believe what everyone else believes, you will do what everyone else is doing, and end up with the same results. Howard says in short, two key primary elements to investing are: "A) seeing some quality that others don't see or appreciate (and that isn't refle! cted in price) and B) having it turn out to be true (or at least accepted by the market)."

By definition to be a contrarian is to "oppose or reject popular opinion; going against current practice." As Yogi Berra had said famously, "Nobody goes to that restaurant anymore; it's too crowded." Over course logically it does not make sense, just like the statement "everyone knows that investment is a bargain"; if they did then it would no longer be a bargain as the price would be bid up.

Sometimes when bargains arise, investors are unsure of what to do or how to interpret certain information and will tell themselves that they will wait until the dust settles. I have heard numerous times the dangers of "catching a falling knife" from friends and colleagues — a t which point, shortly after, the knife has been picked up and taken away by other investors, or as the dust settles there is no longer a bargain to be had.

It is important to weigh what might happen in any given situation against the probability of it happening and act accordingly. The unfortunate truth about being a contrarian at times is that it can be quite lonely, or as Howard Marks said in "Everyone Knows, " "It should be clear from the first element that the process has to begin with investors who are unusually perceptive. Unconventional, iconoclastic or early. That's why successful investors are said to spend a lot of their time being lonely."

12. The Most Important Thing Is… Finding Bargains

Bargains may be found when perception is exceptionally worse than reality. A process where every investor should start is having a list of potential investments, estimates of their intrinsic value, a sense of how large or small the margin of safety is in regard to price and an understanding of the risks involved with each or the correlation among the various asset classes. When you research an investment, if it is fairly valued or richly valued, ask yourself at what price you would buy. As ! Peter Lyn! ch famously said, "My philosophy has always been, the one who turns over the most rocks, wins the game."

It is important not to reach for yield or to buy at euphoric parts of the cycle, waiting patiently for bargains to come to you. I think of it much like a garage sale or auction where there are many willing buyers participating, but most participants know very little about the value of the items they are buying and are simply buying because they "want" them. Buying regardless of price is no way to prosper financially in the investment world or in everyday life. We must distinguish the difference between price and value clearly, as bargains usually involve irrational behavior or participants not knowing something about them. Being prepared and working hard are the keys to finding bargains.

Howard says these following places are a great place to start to look or turn over rocks. "A) Unknown areas or not fully understood, B) fundamentally questionable on the surface, C) controversial, unseemly or scary and finally D) deemed inappropriate for respectable portfolios."

13. The Most Important Thing Is… Patient Opportunism

"The market is not a very accommodating machine; it won't provide high returns just because you need them." – Peter Bernstein

As talked about briefly throughout part I, part II and above, the best strategy is often sitting on your hands waiting patiently for bargains to present themselves. Think of the pendulum if you wish as a boomerang that is more accurately caught waiting for it to return to you rather than chasing it down and trying to catch it. Oaktree says one of their mottoes is exactly that, "We don't look for investments; they find us." Marks' tells an intelligent story about the early rise of Japanese culture in business (brought about by William Deming). He talked about the word mujo embedded in the Japanese culture. It means cycles will rise and fall, things will come and go, and our environment will change ! in ways b! eyond our control. We must be prepared and we must be patient.

Insightfully provided are two keys during a crisis. A) You must be insulated from forces that require selling and B) be positioned to be a buyer instead. To be able to do so, an investor must have "a staunch reliance on value, little or no use of leverage, long-term capital and a strong stomach."

14. The Most Important Thing Is… Knowing What You Don't Know

"It's frightening to think that you might not know something, but more frightening to think that, by and large, the world is run by people who have faith that they know exactly what is going on." – Amos Tversky

There are things in the world that you know you know, there are things you know you don't know, there are things you don't know you know, and there are things you don't know you don't know. Understanding what you don't know and focusing on the things you may be able to control or "knowing the knowable" can provide valuable insight, save time and suppress anxiety. Taking an agnostic view combined with skeptical optimism is a healthy way to live in my opinion, as I do. It can lead to confrontations and arguments, or as I call them, "informative debates."

The most important aspect is second thinking everything, taking an abstract view of how it is conveyed and the incentives behind the proposals, or even more importantly knowing what you cannot know. Big problems may arise when investors forget that there is a difference between probability and actual outcomes and can be caught up in the dogma of others. Staying within your circle of competence, as Warren Buffett says, will lead to better investment results and more importantly, steer you clear of investment mistakes. Are you part of the "I know" school or the "I don't know" school?

Howard Marks provides a way to identify the "I know school" below.

1) They think knowledge of the future direction of economies, interest rates, markets ! and widel! y followed mainstream stocks are essential for investment success.
2) They're confident it can be achieved.
3) They know they can do it.
4) They're aware lots of other people are trying to do it too, but they figure either a) everyone can be successful at the same time or b) only a few can, but they're among them.
5) They're comfortable investing based on their opinions regarding the future.
6) They're glad to share their views with others, even though correct forecasts should be of such great value that no one would give them away gratis.
7) They rarely look back to rigorously asses their records as forecasters.

If you are a part of the "I don't know," you will be tired of saying, "I don't know" to friends, colleagues and family. As Mark Twain said, "It ain't what you don't know that gets you into trouble. It is what you know that just ain't so."

15. The Most Important Thing Is… Having a Sense of Where We Stand

"We may never know where we're going, but we'd better have a good idea of where we stand."

Markets cycles have a profound influence on the performance of investors and are both inevitable and unpredictable. As investors the questions we most often ask, and the answers we most often receive, are obvious, and more often then not, they are not the correct ones. We must be both proactive in controlling risk, (thus minimizing mistakes) and reactive in approaching opportunities, bargains and investor sentiment or attitudes towards the present situation. Knowing where we stand much relates to part II, being aware of the pendulum as well as being attentive to cycles.

Howard Marks talks about "taking the market's temperature" through various questions like, "Are investors optimistic or pessimistic? Do the media talking heads say the markets should be piled into or avoided? Are novel investment schemes readily accepted or dismissed out of hand? Are securities offerings and fund openings being treated as oppo! rtunities! to get rich or possible pitfalls? Has the credit cycle rendered capital readily available or impossible to obtain? Are P/E ratios high or low in context of history, and are yield spreads tight or generous? Is too much money chasing too few deals? Has the number of deals increased and the ease of them being done less prudent?"

Understanding where we are should be attentively pursued to a certain extent, the same extent in which you would look at the weather outside when deciding what to wear on any given day. Of course the weather outside is more of an objective matter, where as understanding of where we are in a market cycle may be more objective. This business is the art in which investors must practice and gain from experience, like many other areas of the investment process.

Further reading:

"It is what it is"