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.
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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.
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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.
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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.
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