HE Auto Car: May 2014

Friday, May 30, 2014

EMC: This Stock Can Help You Profit from Enterprise Cloud Growth

EMC (EMC) is one of the leading companies in data storage solutions. It also extends its hands at various other solutions such as data warehousing, business intelligent, and virtualization. It was surprised to see that some of its products like EMC Atmos, Vblock, Mozy and Syncplicity have gained enough traction in the market while the business moving to cloud of late.

Solid Performance

EMC has displayed a decent performance in the second-quarter as it revenue surged 6% to $5.61 billion year-on-year basis. Also it was good to notice that EMC's domestic revenue rose 4% to $3 billion that contributes approximately 53% of the total revenue. EMC also attained 8% growth in international revenue that came in at $2.7 billion, driven by its information infrastructure business, pivotal and VMware (VMW).

VMware is a pioneer in virtualization software and a subsidiary of EMC. EMC holds around 80% stake of VMware. VMware registered revenue growth of 11% in its latest quarter from the year ago period and posted an income of $244 million, a 28% jump. This strong growth has indeed contributed generously to the top and bottom line of EMC.

Growth Prospects

Later, a new company, Pivotal, was established as an amalgamation of various divisions and products from EMC and VMware. Pivotal's product portfolio will have Pivotal Labs, Cloud Foundry, Greenplum, Gem Fire, Cetas, Greenplum and Vfabix Suit (product of VMware). This strategic move was initiated so that EMC can concentrate on emerging market opportunities such as cloud application, security applications system and large scale data management system, which are its core business areas.

Also the investment of $105 million in Pivotal by General Electric (GE) made the stock more attractive to pick as this strategic investment will certainly boost its growth in the future and increase shareholder's value as EMC is recording steady growth in global market. Its revenue grew 12% in Asia Pacific and Latin America, while North America revenue was up by 4% and significant 6% rise was observed in the EMEA regions. Also EMC's revenue grew 18% in the BRIC nations.

Fundamentals

EMC projects total revenue of $23.5 billion for fiscal 2013 and is expecting a rise of 25.5% rise in non-GAAP operating margin. Also, Non-GAAP net income of $4 billion is expected for fiscal 2013. It expects cash flow of $6.8 billion from operating activities, and the free cash flow target is $5.5 billion.

EMC is determined to repurchase a total of $6 billion worth of shares by 2015 and this should have a positive effect on the EPS. Also Looking at the growth trajectory of EMC, the company should be able to at least match its estimates going forward. Moreover, its strategic investment in businesses such as XtremIO, ViPR and Pivotal should also help EMC in attaining its targets and increase its profitability in the coming years.

Competition

Its potential peer like NetApp (NTAP) that specializes in IT-enabled business solutions such as data security, cloud solutions, and data management systems posted weak performance in the recently declared quarter. Also its growth prospects do not look very enticing as it registered net revenue of $1.71 billion, a marginal increase of 0.8% from the previous quarter.

Also its operating expense increased 7.7% to $827.8 million from the year-ago quarter, which had an impact on its earnings that dipped 7.7% to $204.4 million. In addition to this, NetApp's operating margin also declined to 11.9% as compared to 13% in the year ago quarter.

Also, NetApp is very expensive at current levels. The company trades at a price-to-earnings multiple of almost 29x, while in comparison, EMC trades at a trailing P/E of 20. With quarterly revenue growth slowing down and earnings dropping, the valuation looks rich and investors are advised to stay away from NetApp.

Brocade Communications (BRCD) is another company that provides solutions similar to EMC, but it is a smaller player. Brocade earns 50% of its total revenue from its core service of storage area networks (SAN). However, it faced a 7% decline in revenue in the second quarter from the prior year period. This can be concerning for investors. With major players like Cisco (CSCO), Brocade faces fierce competition for its core business and the company might be in for tough times.

It looks like the company's management is aware of this and that's why they have been selling shares. Wall Tyler, a vice president at Brocade, recently sold around 97,000 shares. Given the recent revenue decline and probability of stiff competition, it is not surprising that an insider sold shares.

Conclusion

EMC's stake in VMware and the constant adoption of the cloud are expected to drive its growth in the future. Moreover, as seen above, the company is cheaper than peers such as NetApp and has a lucrative share repurchase plan in place. So, investors should consider putting their money in this stock if they are looking for a play on the cloud.

Currently 0.00/512345

Rating: 0.0/5 (0 votes)

Subscribe via Email RSS Feeds

Subscribe RSS Comments Please leave your comment:
More GuruFocus Links

Latest Guru Picks	Value Strategies
Warren Buffett Portfolio	Ben Graham Net-Net
Real Time Picks	Buffett-Munger Screener
Aggregated Portfolio	Undervalued Predictable
ETFs, Options	Low P/S Companies
Insider Trends	10-Year Financials
52-Week Lows	Interactive Charts
Model Portfolios	DCF Calculator
RSS Feed	Monthly Newsletters
The All-In-One Screener	Portfolio Tracking Tool

Consumer Sentiment Falls in May, Wages Raise Concern

Nick Ut/AP NEW YORK -- A monthly gauge of U.S. consumer sentiment fell in May as a gloomy view on income growth clouded an otherwise positive economic outlook, a survey released Friday showed. The Thomson Reuters/University of Michigan's final May reading on the overall index on consumer sentiment came in at 81.9, down from 84.1 the month before. It was also below the expectation of 82.5 among economists polled by Reuters. However it did show a slight increase from the preliminary reading issued on May 16. "The slippage in consumer confidence came to a halt in late May," survey director Richard Curtin said in a statement. Curtin said the level may have declined by 2.2 points since April, but when averaging in the first four months of the year, the May figure was slightly above the average of 81.7. "At present, the economy was anticipated to be strong enough in the year ahead to produce the best change in job prospects since 2004," Curtin said, "The main concern expressed by consumers involved dismal prospects for wage growth, which for nearly half of all households meant anticipated declines in inflation-adjusted incomes and living standards during the year ahead," he added. Some 56 percent of consumers reported that the economy had improved, up from 49 percent in April. The survey's barometer of current economic conditions fell to 94.5 from 98.7 in April and below a forecast of 95.8. The gauge of consumer expectations slipped to 73.7 from 74.7 and fell short of an expected 74.0. The survey's one-year inflation expectation rose to 3.3 percent from last month at 3.2 percent, while the survey's five-to-10-year inflation outlook fell to 2.8 percent from 2.9 percent in April.

Does Lululemon Stock Have a Bright Future?

With shares of Lululemon (NASDAQ:LULU) trading around $69, is LULU an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Lululemon designs, manufactures, and distributes athletic apparel and accessories for women, men, and female youth. It operates in three segments: Corporate-Owned Stores, Direct to Consumer, and Other. The company''s line of apparel include fitness pants, shorts, tops, and jackets for healthy lifestyle activities, such as yoga, running, and general fitness. Its fitness-related accessories comprise bags, socks, underwear, yoga mats, instructional yoga DVDs, and water bottles.

Recently, Lululemon posted earnings and revenues figures that beat Wall Street's expectations. The revenue beat is a positive sign to shareholders seeking high growth out of the company. Christine Day, Lululemon's CEO, stated that, “2013 continues to be the most important and most productive year in Lululemon's history. We have not only worked our way back from the black luon setback, but have also added very talented people in important functions and have taken major steps forward on a number of key fronts, including the expansion of our international and men's businesses and many logistical initiatives. In addition, our exclusive partnership with Noble announced today and additional sources for luon will help to ensure that Lululemon remains a distinct leader in quality and innovation.”

T = Technicals on the Stock Chart Are Mixed

Lululemon stock has been trading in a range for most of the last few years. The stock is currently trading near the middle of this range so it may still need time before it stabilizes. 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, Lululemon is trading between its key averages, which signal neutral price action in the near-term.

LULU

(Source: Thinkorswim)

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

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Lululemon Options	31.45%	0%	0%

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
October Options	Flat	Average
November Options	Flat	Average

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

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

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Lululemon’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Lululemon 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)	0.00%	0.00%	48.21%	44.44%
Revenue Growth (Y-O-Y)	21.89%	21.03%	30.68%	37.50%
Earnings Reaction	-5.40%	-17.53%	1.28%	7.26%

Lululemon has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have expected more from Lululemon’s recent earnings announcements.

P = Weak Relative Performance Versus Peers and Sector

How has Lululemon stock done relative to its peers, Nike (NYSE:NKE), Under Armour (NYSE:UA), Gap (NYSE:GPS), and sector?

	Lululemon	Nike	Under Armour	Gap	Sector
Year-to-Date Return	-8.17%	32.00%	56.98%	35.15%	31.96%

Lululemon has been a poor relative performer, year-to-date.

Conclusion

Lululemon provides highly-demanded athletic apparel to consumers across the nation. The company recently reported strong earnings and revenue numbers, however, investors had higher expectations. The stock has traded sideways for most of the last several years and is currently near the center of its range. Over the last four quarters, investors have expected more from the company, though earnings and revenues have been rising. Relative to its peers and sector, Lululemon has been a weak year-to-date performer. WAIT AND SEE what Lululemon does this coming quarter.

Thursday, May 29, 2014

Baron Funds Comments on Citrix Systems

Citrix Systems, Inc. (CTXS) designs software and hardware products that allow users to connect with applications on any device, network or location. Citrix shares fell as the company had a challenging fourth quarter due to a management transition and product cycle execution. We exited our investment in the company.

From Baron Funds' first quarter 2014 commentary.

Also check out: Ron Baron Undervalued Stocks Ron Baron Top Growth Companies Ron Baron High Yield stocks, and Stocks that Ron Baron keeps buying

Currently 0.00/512345

Rating: 0.0/5 (0 votes)

Subscribe via Email RSS Feeds

Subscribe RSS Comments Please leave your comment:
More GuruFocus Links

Latest Guru Picks	Value Strategies
Warren Buffett Portfolio	Ben Graham Net-Net
Real Time Picks	Buffett-Munger Screener
Aggregated Portfolio	Undervalued Predictable
ETFs, Options	Low P/S Companies
Insider Trends	10-Year Financials
52-Week Lows	Interactive Charts
Model Portfolios	DCF Calculator
RSS Feed	Monthly Newsletters
The All-In-One Screener	Portfolio Tracking Tool

Does JPMorgan Chase Support Rising Prices?

With shares of JPMorgan Chase (NYSE:JPM) trading around $52, is JPM 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

JPMorgan Chase is a financial holding company that provides various financial services worldwide. The company is engaged in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, asset management, and private equity. Financial services companies like JPMorgan Chase are essential for well-functioning economies around the world.

JPMorgan Chase is planning to spend another $4 billion on its risk and compliance issues, as the company remains under a number of investigations, The Wall Street Journal reports. The company also plans to hire 5,000 employees to bulk up its risk-control staff. The bank plans to spend $1.5 billion on better managing risk and making sure it’s complying with regulations, while the remaining $2.5 billion will go toward legal fees. "Fixing our control issues is job No. 1," CEO Jamie Dimon said to the Journal.

T = Technicals on the Stock Chart Are Mixed

JPMorgan Chase stock has been moving higher in the past several quarters. The stock is currently trading near prices not seen since before the financial crisis. 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, JPMorgan Chase 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 JPMorgan Chase options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
JPMorgan Chase Options	29.04%	93%	91%

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 Increasing Quarter Over Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on JPMorgan Chase’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for JPMorgan Chase 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)	32.23%	33.61%	54.89%	37.25%
Revenue Growth (Y-O-Y)	13.67%	-3.57%	10.16%	5.82%
Earnings Reaction	-0.30%	-0.60%	1.01%	-1.14%

JPMorgan Chase has seen increasing earnings and revenue figures over the past four quarters. From these numbers, the markets have had mixed feelings about JPMorgan Chase’s recent earnings announcements.

P = Weak Relative Performance Versus Peers and Sector

How has JPMorgan Chase stock done relative to its peers – Bank of America (NYSE:BAC), Citigroup (NYSE:C), and Wells Fargo (NYSE:WFC) — and sector?

	JPMorgan Chase	Bank of America	Citigroup	Wells Fargo	Sector
Year-to-Date Return	19.70%	46.52%	27.63%	23.76%	25.19%

JPMorgan Chase has been a poor relative performer, year to date.

Conclusion

JPMorgan Chase is a bellwether in the banking and financial space that forms an essential part of the United States financial system. The company has allocated more funds toward risk and compliance issues, as it is still under investigation. The stock has been moving higher in recent quarters and is now trading near prices not seen since before the financial crisis. Over the past four quarters, earnings and revenues have been increasing. However, investors have had mixed feelings about the company. Relative to its peers and sector, JPMorgan Chase has been a year-to-date performance leader. WAIT AND SEE what JPMorgan Chase does this coming quarter.

Wednesday, May 28, 2014

GM morale higher despite recalls, exec says

DETROIT -- General Motors global product chief Mark Reuss said morale at the automaker is up despite 30 recalls covering more than 15 million vehicles this year, including 2.6 million equipped with a defective ignition switch.

Reuss said Wednesday an internal study showed morale among global GM employees has risen from a comparable survey in 2012.

He attributed the gains to a renewed emphasis on transparency in the wake of the ignition-switch crisis.

"Honestly, the survey people said we've never seen improvement like what we saw here," Reuss told reporters after an event to promote the Chevrolet Detroit Belle Isle Grand Prix.

MORE: GM: Just 47K switches fixed, but pace picking up

Reuss and CEO Mary Barra will help wave the starting flag for the race this weekend.

"She needs some fun right now," Reuss told the crowd. "We both need some fun right now."

GM is facing investigations from the Justice Department, Congress and the National Highway Traffic Safety Administration after it failed to report and fix an ignition-switch defect now blamed for more than 13 deaths and at least 42 crashes.

The automaker hired outside lawyer Anton Valukas to conduct his own investigation. Results are due within weeks, but Reuss declined to comment on that report.

Reuss' appearance came as Google said it would build 100 prototypes of a driverless vehicle with no steering wheel. The company has discarded a previous design that required drivers to use a traditional steering wheel, gas pedal and brakes whenever the software couldn't handle a situation on the road. Instead, the new system does all the work. The car's maximum speed is 25 mph.

Reuss called Google's new driverless car "pretty cool," but said he believes autonomous vehicles will happen gradually, not immediately.

"I don't think you're going to see an autonomous vehicle take over a city anytime soon," he said, adding that Google can become a "very serious competitive threat" if it invested enough time a! nd money.

Reuss also said GM has already started work on the next-generation Chevrolet Corvette.

The company last year introduced the redesigned Corvette Stingray.

He also would not rule out a hybrid or electric 'Vette.

Tuesday, May 27, 2014

RadioShack – The Vultures Are Circling RSH Stock. Should You Be?

Popular Posts: The Best Ways to Buy the Alibaba IPO5 Cheap Stocks Under $10 to Buy Now5 Top Fidelity Mutual Funds to Own Recent Posts: RadioShack – The Vultures Are Circling RSH Stock. Should You Be? 7 Reasons to Believe in JCP Stock Again Could Yahoo Become the Next Berkshire Hathaway? View All Posts

RadioShack (RSH) just can't buy a break.

RadioShack185 RadioShack The Vultures Are Circling RSH Stock. Should You Be? RadioShack’s plans to close 1,100 stores over the next five years were scuttled by lenders in mid-May when the terms for allowing it to do so were deemed unacceptable by RSH management and board. As a result, it's closing fewer stores and will instead find other ways to cut costs.

The move ramps up RadioShack’s losses, hurting whatever life is left in RSH stock.

The vultures are circling.

Does RadioShack have any chance of avoiding bankruptcy? Credit default swaps protecting against non-payment of debt indicate there's an 86% chance of default by June 2015.

With the company's best option for reducing its cost structure gone and vendors holding all the cards, the odds of a recovery in RSH stock get slimmer by the day. Thing is, battered companies toying with destruction do, on occasion, reward the speculative bull. But is RSH stock one of those kinds of plays?

Here's how I see it.

How RadioShack Turns It Around

RadioShack closed at $1.21 heading into the Memorial Day holiday weekend. RSH stock hasn't been this low since 1978 — six presidents have served in the White House in that time.

While it only has to lose $1.21 to go to zero, a 100% increase in the value of its stock would put it at $2.42 — still 54% lower than its 52-week high of $4.36.

The upside is certainly much greater than the downside at this point.

Although RadioShack's slow death march has been ongoing for some time, it really didn't pick up speed until 2010. However, in 2013 — well after its demise had begun in earnest — RadioShack hired Joe Magnacca away from Walgreen (WAG) just a week after being promoted to executive vice president of the nation's largest drug store chain.

Magnacca was an up-and-comer at Walgreen, but he opted for a Herculean challenge over another promotion. It's that kind of determination and drive that could ultimately reignite RSH stock.

Magnacca has been at the job for 16 months now, and he continues to tinker with RadioShack's management to provide the best customer experience possible while generating a profit. Joe Magnacca's five-point plan is going to take time, however. One of the five pillars of the plan took a big hit with the decision to reduce the number of store closings, but otherwise not much has changed at RadioShack when it comes to its turnaround.

As long as liquidity remains, Magnacca et al. will continue to push its "do-it-together" mantra with customers. That's its best shot to win back customers and push RSH stock higher.

How RSH Stock Hits Zero

As I mentioned, there is a good chance RadioShack could default on its loans.

In addition to Bloomberg’s research, Markit research suggests that credit default swaps imply a 40% chance of default by the end of this year and a 95% chance by the end of 2019, according to Financial Times. Fitch recently downgraded RadioShack's credit rating to CC from CCC, stating that it's "increasingly concerned about the RadioShack's ability to operate beyond 2014 given the significant cash burn in the business … [there is] no apparent catalyst for a turnaround."

Any further downgrades would most certainly spell the end for RSH stock, as bankruptcy would be imminent.

With holiday 2014 only six months away, vendors are becoming increasingly scared that they won't be paid for merchandise shipped. That's going to hamper RadioShack's move to re-merchandise its stores. If it doesn't get the right mix to drive sales for the holiday season, it will most certainly run out of cash by the end of 2014. If that happens, you can be sure bankruptcy is just around the corner.

Once again, what's good for the lenders isn't necessarily good for shareholders and RSH stock.

Bottom Line

You shouldn't consider RSH stock and this speculative bet if you can't afford to lose every penny — because it has a very good chance of happening.

While it was admirable for Magnacca to take on this impossible task, he'll be compensated handsomely regardless of what happens. He's not going anywhere through the end of 2015.

So the question is whether you think he already has earned enough — $1 million signing bonus in 2013 plus $300,000 for getting its concept store developed and $1.3 million in non-equity cash compensation including salary — to stop caring about the 3.5 million shares of RSH stock he's been awarded and would forfeit in the event of a bankruptcy.

Personally, I don't think so, despite the fact RadioShack's bankruptcy could be deemed a change of control and worth $5.7 million to Magnacca in any subsequent termination. While the lenders are beyond his control, I believe Magnacca's going to do everything in his power to keep RSH stock afloat because he knows if it hits $10, he's worth considerably more than if it goes into the tank — regardless of his severance.

While I'm no expert on selling put options, the July 2014 $1 strike looks like a good way to play RSH stock. If it goes up over the next two months, you earn some very good income. If RSH gets put to you, you've bought its stock at a 17% discount to its May 23 closing price.

Although I do think there's a good possibility RSH stock won't be trading this time next year, I also believe hedge funds are buying at these prices. If you've got $5,000 to throw away, the upside rewards are much greater than the downside risk. If it goes to zero you've lost $5,000. If it goes to $10, you'll be sitting on eight times your original investment.

No risk, no reward.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.

Monday, May 26, 2014

Want Stability? Try 200 Years of Growth

Popular Posts: Buy These 3 Cheap Stocks Before It's Too Late3 Preferred Stocks Yielding More Than 8%4 Reasons to Buy Disney Stock NOW Recent Posts: Want Stability? Try 200 Years of Growth Buy These 3 Cheap Stocks Before It's Too Late 4 Reasons to Buy Disney Stock NOW View All Posts

Peter Lynch always said that boring companies are worth investigating because they are often underfollowed despite having solid businesses that have strong growth. And because they don't attract attention, they may be undervalued.

Dividend Increase Want Stability? Try 200 Years of Growth That brings us to The Valspar Corporation (VAL). As boring as it is, it has a pretty deep reach, due to its 206-year-old history. VAL stock is in the coatings and paints business. Most people attribute coatings to things like varnishes and stains, but coating applications involves rather sophisticated chemical techniques.

Coating aren't just applied to wood; they’re also used in the manufacturing space, as well as in agriculture, transportation, metals, and appliances. Even construction equipment requires various types of coatings. Paints are what you'd expect, and don't have quite the same depth of market penetration.

VAL stock manufactures materials, but it also handles the high-margin distribution business. Distribution is where the big money is, provided your operation is efficient and has multiple centers from which deliveries can be made with haste, and that you stock your products properly. In the last two centuries Valspar has had plenty of time to optimize its network.

The company reported solid earnings this week. Net income rose 12% year-over-year to $86 million (or 99 cents per share). However, if you back out one-time charges, it was actually $1.07 per share, which beat analyst estimates by three cents. The income jump came on a sizable 10% revenue increase.

The Coatings side drove the ship with a 12% sales increase. Some of this came as a result of continued improvement in housing, although I believe the housing market is seeing more strength from speculation. Not that it matters to Valspar. Coatings are coatings, no matter how the house sells. Over on the Paints side, revenues increased 8%. Some of this was driven by a new deal Valspar struck with Ace Hardware to offer its products in its 3,000 stores.

While gross margins increased to 33.7%, operating expenses increased 14%. I prefer to see those expenses increase no faster than sales, which makes that number something to watch for. VAL stock has $116 million in cash offset by about $1.1 billion in debt.

The company is also moving its "reserve interior and exterior paints" into Lowe's (LOW) exclusively. To quote the CEO, "Valspar Reserve outperforms competitive products at similar price points based on attributes that matter most to consumers. Reserve incorporates our most advanced color technology and offers best-in-class durability." He certainly seemed excited by this move, and I don't blame him. Getting shelf space at the second-largest home retailer in the country is a terrific move.

VAL stock trades at about 18 timesFY14 estimates of $4.08. Even accounting for the 1.4% yield, it's a tad bit pricey at 14% long-term EPS growth. But let's look at competitors. PPG Industries (PPG) trades at 21 times earnings on 11% long-term growth. Sherwin-Williams (SHW) trades at 24x earnings on 14.6% long-term growth. Akzo Nobel (AKZOY) trades at 16 times earnings on 11% growth.

Basically, if you want to get into the coatings and paint stock business, VAL is the least expensive and closest to fair value, with solid growth ahead.

As of this writing, Lawrence Meyers did not hold a position in any of the aforementioned securities. He is president of Asymmetrical Media Strategies, a crisis PR firm, and PDL Broker, Inc., which brokers financing, strategic investments and distressed asset purchases between private equity firms and businesses. He also has written two books and blogs about public policy, journalistic integrity, popular culture, and world affairs. Contact him at pdlcapital66@gmail.com and follow his tweets at @ichabodscranium.

Sunday, May 25, 2014

Morning MoneyBeat: Margin Debt Takes a Breather

Morning MoneyBeat is the Journal’s pre-market primer packed with market updates, insights and must-read news links. Send us tips, suggestions and complaints: steven.russolillo@wsj.com

Click here to receive this morning newsletter via email

MARKET SNAP: At 5:55 a.m. ET, S&P 500 futures up 0.1%. 10-Year Treasury yield higher at 2.54%. Nymex down 12 cents at $103.95. Gold 0.5% higher at $1294.70. In Europe, FTSE 100 up 0.03%, DAX up 0.1% and CAC 40 down 0.3%. In Asia, Nikkei 225 up 2.1% and Hang Seng up 0.5%.

WATCH FOR: Weekly Jobless Claims (8:30 a.m. Eastern Time): seen 310K; previously 297K. May Markit “Flash” PMI (9:45). April Existing Home Sales (10:00): seen +2.0% at 2.68M; previously -0.2% at 4.59M. April Leading Index (10:00): seen +0.5%; previously +0.8%. May Kansas City Fed Manufacturing Survey (11:00): seen 8; previously 7. Aeropostale, Best Buy(BBY), Borcade, Buckle, Dollar Tree(DLTR), GameStop(GME), Gap(GPS), Hewlett-Packard(HPQ), Marvell Tech(MRVL), Mentor Graphics(MENT), Ross Stores(ROST) and TiVo are among companies scheduled to report quarterly results.

THE BREAKFAST BRIEFING

Risk taking in the stock market is showing signs of cooling.

The latest example comes from the New York Stock Exchange’s April figures on margin debt, or the amount that investors borrowed against their brokerage accounts. NYSE reported margin debt dropped for a second straight month, falling to $437.2 billion. That’s down 6.1% from a record high $465.7 billion in February and the lowest level since November.

Falling margin debt over the past two months coincides with a drop in many of the speculative corners of the market. The small-cap Russell 2000 briefly hit correction territory earlier this month on an intraday basis. Social media, Internet and biotech stocks have been hit hard since early March.

The broad market, though, has weathered the storm. The Dow Jones Industrial Average jumped 158 points Wednesday and finished 1.1% away from its record high.

"It is good to see some of the leverage coming out of the stock market as frothy areas of the market correct," says Peter Boockvar, managing director at The Lindsey Group.

With margin debt, investors pledge securities—stocks or bonds—to obtain loans from their brokerage firm. The money doesn’t have to be used to just buy more investments. The funds can be used in whatever way the account holder wishes.

Margin debt had risen for eight straight months until February, which at the time raised concerns that the Fed’s easy-money policies were creating a bubble-mentality among stock investors. The last two times margin debt peaked–2000 and 2007–coincided with major tops in the stock market.

The question now is whether margin debt’s latest drop is a temporary pause before it takes another leg higher, or a sign of investor concern about the rally’s ability to continue marching higher.

The last time margin debt suffered a sustained pullback was in the second half of 2011, when the debt ceiling and European debt crisis sent tremors through the stock market. Few expect a repeat of that.

If anything, one could argue it’s better to see margin debt drop a bit from record levels as opposed to watching it soar in unabated fashion. The recent move is a sign of a healthy market, and one that could be poised for another leg higher.

Morning MoneyBeat Daily Factoid: On this day in 1992, Johnny Carson hosted "The Tonight Show" for the final time, ending a 30-year career.

-By Steven Russolillo; follow him on Twitter @srussolillo.

STOCKS TO WATCH

Best Buy is projected to report first-quarter earnings of 19 cents a share, according to a consensus survey by FactSet.

Dollar Tree is forecast to post first-quarter earnings of 66 cents a share, Hewlett-Packard is expected to report earnings of 88 cents a share in the fiscal second quarter.

GameStop is projected to post first-quarter earnings of 57 cents a share, while Gap is forecast to post earnings of 57 cents a share in the first quarter.

MUST READS (LINKS)

Russia, China Reach Major Gas Accord: “Moscow and Beijing signed a contract to supply China with hundreds of billions of dollars of Russian gas, in a long-stalled deal that could give Vladimir Putin a boost as his relations with the West have sharply soured.”

Thai Military Declares a Coup: “Thailand’s army chief announced a military coup in a televised statement Thursday, just days after declaring martial law. ”

Fed Officials Tussle Over Labor Market Slack: “Fed Chairwoman Janet Yellen has argued consistently in recent months that labor markets are abundant with slack that will hold inflation and wages down. But she hasn’t convinced all her colleagues.”

Heard on the Street: Home Problems Hit the Fed: “Housing tops the list of things the Federal Reserve is worrying about right now. But all it may be able to do is stand back and hope the rest of the economy takes up the slack.”

Gold Bug Looks to Share the Buzz: “One of the biggest believers in gold is prospecting for outside investors after seeing the value of his personal holdings slashed in the metal’s steep fall.”

Despite Data Thefts, the Password Endures: “Passwords are a bane to computer and smartphone users and a security threat to companies. Yet even after eBay(EBAY) and others urge users to change them, few people are likely to heed the warning.”

NY Fed to Allow Credit Suisse(CSGN.VX) to Remain a Primary Dealer: “Credit Suisse Group AG’s ability to serve as a counterparty to the Federal Reserve Bank of New York hasn’t been affected by the bank’s criminal tax-evasion settlement.”

Dutch Firm to Buy Goldman Sachs(GS) NYSE Floor Trading Business: “MC Financial Markets, a Dutch high-speed trading firm, agreed on Wednesday to acquire Goldman’s rights to operate as a designated market maker in more than 600 NYSE-listed stocks.”

BofA Shuts Retail Electronic Market-Making Unit: “Bank of America is abandoning an electronic market-making unit it established last year to handle orders for its retail client base.”

KKR Error Raises a Question: What Cash Should Go to Investors?: “KKR has made several erroneous disclosures about its ties to an in-house consulting unit, a lapse that highlights a broader issue of private-equity firms’ duties to pass along fee income to investors.”

JD.com Prices Offering Above Expectations: “Chinese online retailer JD.com’s initial public offering priced above expectations Wednesday, even as investors continue to nurse their wounds from a selloff in high-octane technology stocks.”

Even in Scandinavia, a CEO Gender Gap: “Of 145 big Nordic companies, only 3% had a woman as chief executive, compared with 5% of the U.S. Fortune 500.”

Signs of a Suburban Comeback: “The long tug of war between big cities and suburbs in the U.S. is tilting ever so slightly back to the land of lawns and malls. After two years of solid urban growth, more Americans are moving again to suburbs and beyond.”

The Best Brands in Movies

BrandZ is out with its list of the world's most valuable brands. Most of the big names are tech titans or consumer products standouts. What of the geekier businesses we love and follow? What are the best brands in, say, movies?

Guest host Alison Southwick puts this question to Fool analysts Nathan Alderman and Tim Beyers in this episode of 1-Up on Wall Street, The Motley Fool's Web show in which we talk about the big-money names behind your favorite movies, toys, video games, comics, and more.

Nathan says that Walt Disney (NYSE: DIS ) tops the list right now. BrandZ agrees. Among dozens of tech titans, retailers, and banks ranked, Disney (23rd) was the only entertainment company in the researcher's list of the top 100 names.

Smart diversification is helping the story. Last year's Frozen has proved to be a runaway hit while changing expectations for a Disney Princess movie. Marvel Studios' Captain America: The Winter Soldier has generated over $700 million at the worldwide box office. And beginning next winter, we'll see regular entries in a new live-action Star Wars universe. No other studio can lay claim to so many bankable properties.

Guardians of the Galaxy opens August 1 in U.S. theaters. Credit: Marvel Entertainment.

Tim agrees, noting that even Disney's riskiest big-ticket properties -- such as Marvel's Guardians of the Galaxy -- are benefiting from uncommon enthusiasm for an unknown property. A new trailer featuring the talking, gun-toting raccoon Rocket and his various teammates has inspired more than 139,000 "likes" since appearing on Facebook (NASDAQ: FB ) on May 19. Another 85,000-plus had reshared that post over the same period, while 1.85 million tuned in via YouTube.

Now it's your turn to weigh in. Click the video to watch as Alison puts Nathan and Tim on the spot, and then leave a comment below tell us your picks for the best brands in movies. You can also follow us on Twitter for more segments and regular geek news updates!

How to get rich investing in top brands
In the stock market, betting on a team of lasting companies whose competitive advantages are so durable they feel like superpowers can make you rich. Which to choose from a market of more than 5,000 publicly traded stocks? Our analysts name a handful of their best picks in a special report that can you get right now, free. Click here for your copy and learn how to get started investing in life-changing stocks.

CSX Named Top Dividend Stock of the Dow Transports

CSX Corp. (CSX) has been named as the ”Top Dividend Stock of the Dow Transports”, according to Dividend Channel, which published its most recent ”DividendRank” report.

The report noted that among the components of the Dow Jones Transportation Average, CSX stock displayed both attractive valuation metrics and strong profitability metrics.

For example, the recent CSX share price of $28.29 represents a price-to-book ratio of 2.7 and an annual dividend yield of 2.3% — by comparison, the average dividend-paying stock in the Dow Transports yields 1.6% and trades at a price-to-book ratio of 4.3.

The report also cited the strong quarterly dividend history at CSX Corp., and favorable long-term multiyear growth rates in key fundamental data points.

The report also stated:

Dividend investors approaching investing from a value standpoint are generally most interested in researching the strongest most profitable companies that also happen to be trading at an attractive valuation. That’s what we aim to find using our proprietary DividendRank formula, which ranks the coverage universe based upon our various criteria for both profitability and valuation, to generate a list of the top most “interesting” stocks, meant for investors as a source of ideas that merit further research.

The Dow Jones Transportation Average, or ”Dow Transports” for short, actually predates the Dow Jones Industrial Average and is the most widely followed index covering the American transportation sector.

The current annualized dividend paid by CSX Corp. is 64 cents per share, currently paid in quarterly installments, and its most recent dividend has an upcoming ex-date of May 24.

START SLIDESHOW:
10 Top Ranked Dow Transports Components »

Below is a long-term dividend history chart for CSX, which the report stressed as being of key importance. Indeed, studying a company’s past dividend history can be of good help in judging whether the most recent dividend is likely to continue.

11397646784 CSX Named Top Dividend Stock of the Dow Transports

Friday, May 23, 2014

China’s World Quest for Energy

On Wednesday, China and Russia signed a 30-year natural gas deal that’s worth an estimated $400 billion. Starting in 2018, Russia is to export up to 1.4 trillion cubic feet of natural gas a year to China, equal to more than 15 percent of China’s current demand.

China would become Russia’s second-largest market for natural gas, after Germany. The deal, which came after about 15 years of talks, calls for at least $75 billion in spending on pipelines and other infrastructure on both sides of the Russia-China border.

The agreement seems to be a win-win. It enables Russia to both significantly boost gas exports and diversify away from Europe. The two fields expected to provide most of the gas to China are in Russia’s East Siberia region. Without China as a customer, the fields likely wouldn’t be developed. The deal also strengthens Russia’s hand amid the threat of European sanctions over Russia’s incursion into Ukraine, even though Russia is Europe’s largest single gas supplier.

For China, this is yet another way to meet its steadily rising demand for energy at what is likely an attractive price, while easing some of its dependence on unstable sources.

China’s agreement with Russia is just the latest in a long line of actions taken in recent years to secure new energy sources. China is willing to use a variety of methods to meet that goal. China now has operations, investments or projects all over the rest of the world, including Africa, the Middle East, Africa, North America and South America.

For example, China is Iraq’s biggest oil customer and a major investor in its oil fields. Yet China otherwise maintains a very low profile there. In contrast, China is actively involved with Venezuela and Ecuador, both with anti-U.S. governments. China also has significant properties in Africa.

In early May, China brought a huge, $1 bi! llion deepwater drilling rig to waters in the South China Sea that have long been the subject of a dispute with Vietnam. This happened only six months after the two countries announced that they would seek ways to jointly develop oil and gas fields.

Also along for the ride was a Chinese flotilla of support vessels, including several naval warships. Increasing tensions subsequently included ships from both countries ramming each other and the Chinese naval forces using water cannons against the Vietnamese.

In 2000, China used only half as much energy as the U.S. In 2009, it became the world's biggest energy user. It consumed 10.1 million barrels of oil per day last year, one-ninth of the world's total. Now China also is the foremost oil importer, and it now burns as much coal as the rest of the world combined.

Indeed, global energy demand, primarily from other emerging markets as well as China, continues to rise. Another source of potentially increasing energy demand is India, the world’s second most populous nation, not far behind China, but currently just the 10th largest economy.

Last week, voters in India ousted the long-dominant Congress Party from power. The winner in a landslide was the Bharatiya Janata Party (BJP). The BJP’s Narendra Modi, the nation's first Hindu nationalist prime minister, campaigned on a promise to revive India's economic growth. With a majority in parliament, he's expected to enact numerous pro-growth policies. Of course, the growth will take a while to develop. But growth inevitably increases demand for energy, particularly oil.

Meanwhile, many major oil-producing nations face various production constraints. Examples: Iran, Libya, Mexico, Nigeria and Venezuela. The U.S. is a dramatic exception: We’re responsible for more than half of the world’s total oil-production increase over the last five years. But we don’t export our crude oil, at least not yet.

The price China is paying for Russia’! ;s gas wa! s not disclosed. The agreement is said to include a pricing formula linked to crude oil. But some reports suggest that the new China-Russia agreement really only specifies the amounts of gas to be shipped, so that construction of the pipeline could begin.

Shortly before the deal was officially announced, it was reported that the two nations had failed to agree on price. But if Putin had left China without the expected agreement, his negotiating position with Europe would have been significantly weakened. Then the agreement was signed, with or without a specific price. According to some analysts, the implied terms will give China a steady supply of Russian gas at 25-40 percent less than the current cost of importing liquefied natural gas (LNG) from overseas.

The China-Russia agreement seems to offer good news and bad news for the global LNG market. The good news is that it suggests strong global demand for LNG.

The possible bad news is the future impact on global LNG prices, and therefore the viability of the many LNG export plants planned in the US, Canada and elsewhere to ship cheap natural gas to foreign markets, including Asia. There's a huge spread between the low prices of North American natural gas and the high-priced LNG that's shipped to Asia.

With ongoing global energy-demand increases, supply constraints and possibilities for production disruptions, China’s energy ambitions likely will have significant political, economic and other implications for the rest of us.

McDonald's not lovin' annual meeting spotlight

Over the next two days, the world's biggest fast-food chain — which spends billions painting an image of smiles and fun — will be walking across a public relations minefield.

On Wednesday, as many as 2,000 protesters from across the country will gather outside of McDonald's headquarters in Oak Brook, Ill., to call for worker wages of $15 an hour and the right to form a union without retaliation.

On Thursday, those protests are expected to continue outside McDonald's annual shareholder's meeting.

"This will be the largest labor protest that McDonald's has ever faced," says Kendall Fells, 34, the leader of Fast Food Forward, an activist group financed by the Service Employees International Union. "We know McDonald's is preparing for us to come."

The wage protesters promise to make themselves very visible to shareholders and McDonald's executives, including CEO Don Thompson. The movement has picked up steam in recent months as part of the larger minimum-wage debate and even gained global media coverage last week with protests organized in about 30 countries as well as several dozen U.S. cities. McDonald's actions — or inaction — over the next several days could be telling.

"We respect everyone's rights to peacefully protest," says McDonald's spokeswoman Heidi Barker Sa Shekhem, in an e-mail. "We are focused on welcoming our shareholders to McDonald's annual meeting."

But some shareholders may be surprised by the welcome. Among the protesters planning to be there are about 140 McDonald's workers from around the country, 500 other fast-food workers, up to 50 clergy and hundreds of community activists, says Fells. Some political figures also are expected to attend.

A McDonald's worker with six children who says that she's been on food stamps for the 10 years that she's worked at McDonald's, says she's taking a bus to Chicago with other protesters from Kansas City, Mo. "They're making billions ... but we sweep their floors; take out their trash and service! their customers," says Melinda Topel, 43, who typically works at the drive-thru cash register. "We don't deserve to live in poverty and to worry about our lights being cut off."

Fells gave no details of the protest plans and refused to say if protesters planned to break any laws — and, perhaps, face arrest. "We don't want McDonald's to know our plans ahead of time," he says. "But they know there will be activity."

For its part, McDonald's says it's making no special plans. "Our preparations, as always, go into providing a positive environment for shareholders visiting our campus and to listen to what's on their minds," says Baker Sa Shekhem.

Even as the broader stock market fell just under 1% on Tuesday, McDonald's was down about 0.6% to close at $101.53

One PR consultant suggests that CEO Thompson won't be able to ignore the wage issue.

Since the issue isn't going away, Thompson might at least consider noting that he's looking into it — and then do just that, says Katharine Paine, CEO of Paine Publishing, a PR measurement consulting firm. "You can't hide under the radar."

Thursday, May 22, 2014

Muni Bond Manager's Journal: Pay Attention To Bond Submarkets

The municipal bond universe is $3.7 trillion in size, and while it's often referred to as "a market"–as though it were singular and uniform–it's actually comprised of a variety of submarkets; each of these has its own characteristics, advantages and pitfalls that investors need to understand before they invest.

Investors tend to focus on a bond's coupon and maturity when investing and pay little attention to the bond's submarket. Yet the submarket influences many other key characteristics of the bond that should influence an investment decision, including credit risk, market risk, liquidity and valuation.

One of the largest submarkets is the 'specialty state' bond. These bonds are issued by states with high income tax rates, such as California and New York. For state residents who own these bonds the interest income is exempt from state income taxes; this gives residents a strong incentive to choose these bonds over out-of-state bonds, which are subject to income tax.

To reflect the greater after-tax value in the yield of the in-state municipal bond, valuations on these bonds tend to be greater than general market bonds. Bottom line: if you don't live in one of the states where you gain the after-tax benefit, generally steer clear of buying these bonds.

The municipal bond market also contains several 'maturity markets.' Historically, individual investors and their advisors tend to favor bonds maturing between 2 years and 10 years, while institutions tend to favor bonds maturing in 20 to 30 years. However, given the paltry yields at the low end of the curve, more individuals are being tempted to stretch into the longer-date maturity submarkets to pick up additional yield. After all, if the professionals are investing out there, why not put money to work where the professionals are?

But these maturity submarkets create perils for individuals. For starters, individuals don't have the same motivations or advantages as institutions. An insurance company may buy bonds to offset liabilities or capitalize on tax advantages that do not apply to individuals.

Mutual funds may buy for a short-term trade or portfolio balancing. And because they can buy millions of dollars of bonds at a time, institutional investors command both liquidity and price advantages that the individual investor cannot. Moreover, price volatility is more acute at the long end of the yield curve since an identical change in interest rates will affect prices more for long-term bonds than short-term bonds.

Special Offer: Introducing Forbes' newest income advisory. Let Forbes Premium Income Report show you how to safely boost your portfolio income.

High yield bonds represent another submarket that individuals must approach with care. While the higher income is enticing, there is the obvious credit risk. Institutional investors with experienced and trained analytic staffs and large diversified portfolios can take on this risk. However, the vast majority of individual investors do not have these advantages. And that's not the only concern. Investors also expose themselves to considerable liquidity constraints as well as the concurrent price volatility.

Most high yield bonds are smaller-sized borrowings (under $100 million), may be limited to 'sophisticated investors,' are issued by one-time or infrequent borrowers for specific purposes, and are viewed as buy-and-hold investments. Since the bonds don't have an active secondary market for trading valuations can be volatile and an investor may have trouble selling a position. Investors venturing into the high-yield market just for the higher coupon may quickly realize this submarket is inconsistent with either their risk parameters or investment goals—or both.

There are also institutional submarkets that individual investors may see from time to time, including 'bank qualified' bonds (BQ) and 'community reinvestment act' (CRA) bonds. BQ bonds offer specific tax benefits for the banks that invest in them. They tend to be high quality but small bond issues ($30 million or under) from municipal entities, such as towns, cities or school districts that issue bonds infrequently. Their liquidity is often very limited and their yields should be compared to other general market bonds. Investors may be able to purchase non-BQ bonds at more attractive rates.

CRA-bonds fund affordable housing and banks are big buyers of these bonds in order to meet regulatory requirements. However, the liquidity of these bonds varies depending on credit, debt structure and maturity. Just because there is general demand from banks for CRA bonds, individual investors must not assume there will be consistent demand for the specific CRA bonds they own. Institutional buyers usually buy in multimillion dollar sizes and in specific maturities.

As you consider which bonds best meet your investment needs and goals, also factor in what market or submarket the bonds are in. It will affect the value of the bonds and your ability to sell them.
—
Barnet Sherman is a director and the portfolio manager of the TIAA-CREF Tax-Exempt Bond Fund at TIAA-CREF, a national financial services organization.

Wednesday, May 21, 2014

Fed weighs how it will raise interest rates

With the economy and job market picking up, the Federal Reserve is beginning to study how it will raise interest rates even while the financial system is flush with Fed money, according to Fed meeting minutes released Wednesday.

The minutes of the April 29-30 meeting show the central bank is shifting its attention from a bond-buying stimulus program that is expected to be phased out this year to the challenge of raising interest rates as the economy and inflation accelerate.

"Participants generally agreed that starting to consider the options for normalization at this meeting was prudent," the minutes say.

Since the financial crisis, the Fed has bought more than $3 trillion in government bonds in an effort to inject money into the banking system and lower long-term interest rates to stimulate economic activity. Eventually, the securities will come off the Fed's balance sheet as they mature or the central bank sells them but that could take years.

Meanwhile, many Fed policymakers have predicted the central bank will begin raising its benchmark short-term interest rate — near zero since the crisis — sometime next year. But ensuring that those rate hikes succeed in controlling inflation by triggering increases in bond yields, bank interest rates and other borrowing costs can be challenging with so much cash sloshing around the banking system.

The Fed is weighing several tools to raise interest rates in the broader economy, including increasing the interest the central bank pays banks to park money at the Fed. Fed officials are also considering reverse repurchase agreements, or reverse repos, in which the Fed effectively borrows money from banks overnight at a fixed interest rate to sop cash from the financial system.

New York Fed chief William Dudley said in a speech Tuesday that reverse repos would put a floor under money market rates.

Another option is a "term deposit facility" in which the Fed would pay banks a higher interest rate to keep their money at the! central bank for a longer period.

The minutes indicate that the Fed made no decisions last month on which options it will choose.

"Because the Federal Reserve has not previously tightened the stance of policy while holding a large balance sheet, most participants judged that the Committee should consider a range of options and be prepared to adjust the mix of its policy tools as warranted," the minutes say.

Some policymakers said the Fed should better explain its plan to keep interest rates unusually low even after unemployment returns to normal levels, the minutes show. Fed Chair Janet Yellen has said that rates will remain low in part because the deep scars left by the recession may continue to hamper growth.

And "a number" of Fed officials suggested the Fed should provide more information on how long it will maintain its unusually large balance sheet.

At the meeting, the Fed agreed to further cut its monthly purchases of Treasury bonds and mortgage-backed securities to $45 billion to $55 billion. Yellen recently told Congress she expects the purchases to be halted sometime in the fall.

In a post-meeting statement, the Fed said the economy had gained momentum after adverse winter weather slowed activity early in the year--a view echoed in the minutes. But the minutes indicate that some policymakers "remarked that it was too early to confirm that the bounceback in economic activity would put the economy on a path of sustained above-trend economic growth."

Tuesday, May 20, 2014

Consumer Satisfaction With TV, ISP Providers Falls Further

Customers Unhappy With TV, ISP services Andrew Burton/Getty Images Most of us couldn't imagine life without our cable or satellite TV, high-speed Internet access and wireless communications. They've become basic utilities, and we pay handsomely for them. Yet, we aren't very satisfied with the service we get. According to the latest American Customer Satisfaction Index, customer satisfaction with subscription TV (cable, satellite and fiber optic service) and Internet service providers continues to decline. Satisfaction with pay TV fell 4.4 percent, to an ACSI score of 65 (on a 100-point scale), while ISPs -- which include many of the same companies -- dropped 3.1 percent to 63. These are the lowest scores of all 43 industries tracked by ACSI. "Customers question the value proposition of both, as consumers pay for more than they need in terms of subscription TV, and get less than they want in terms of Internet speeds and reliability," said Claes Fornell, ACSI chairman and founder. The survey finds that customers are much more dissatisfied with cable TV than with fiber-optic and satellite service. Dish Network (DISH) at 67, the lowest-scoring satellite TV company, still rates higher than the best cable company, Cox Communications, with 63. Comcast (CMCSA) (parent company of CNBC) at 60 and Time Warner Cable (TWC) with 56 have the most dissatisfied customers. ACSI Managing Director David VanAmburg noted that for the last decade or so, the price of these communications services has been rising much faster than inflation. Some households, especially people living in an apartment, now pay more for TV and Internet service each month than they do for gas and electric. Another complaint: When there is a service issue, the customer service experience isn't very good. "These are not companies that do a very good job of providing good call center customer care or good face-to-face customer care," VanAmburg said. Wireless Service and a New Cellphone Favorite Americans aren't exactly thrilled with their wireless providers, but customer satisfaction is holding steady at 72 out of 100. Customers are much happier with their cellphone service than they were five years ago. "It's definitely an improving service, although it's still one of the least satisfying," VanAmburg said. Verizon's (VZ) ACSI score went up 3 percent to 75, which helped separate it from the other major wireless companies. T-Mobile (TMUS) rose 1 percent to 69, while Sprint (S), down 4 percent, and AT&T Mobility (T), off 3 percent, both scored 68. What Makes Customers Unhappy? Consumers don't like long-term contracts with early termination fees, even though that's why they get a huge discount on the price of the phone. And signal reliability is still an issue. Wireless companies have spent billions to build-out and improve their networks, but there are still dead spots and dropped calls. A growing issue is bandwidth: providing the capacity to handle all the things our more powerful smartphones let us do, like stream a movie or watch live TV. "Wireless carriers are constantly playing catch-up to try to keep up with the ever-increasing demand for more data and more streaming," VanAmburg explained. Satisfaction with the cellphone itself is up for a second-straight year, now at a new all-time high of 78. This is largely due to the steady switch to smartphones, which get very high customer satisfaction scores. And the favorite smartphones are now made by Samsung. With an ACSI score of 81 (up 7 percent from last year), Samsung beats Apple (AAPL) in overall customer satisfaction for the first time in this survey. Apple dropped for the second year in a row, down 2 percent to 79. Motorola Mobility and Nokia -- now Microsoft (MSFT) -- are both close behind at 77. "Samsung has gone from an up-and-comer to top-of-the-heap on the strength of its smartphone portfolio," he said. "Apple's magic isn't gone, but the luster has dulled on its older models." You'll find the full report on the telecommunications industry on the American Customer Service Index website. .

Monday, May 19, 2014

Top Integrated Utility Companies To Invest In Right Now

With shares of Netflix (NASDAQ:NFLX) trading at around $216.74, is NFLX an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let�� analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock�� Movement

The shorts recently lost more than their shorts when Netflix beat expectations. However, just as the Netflix movie has played out so far, there has been a recent twist. Google Inc.’s (NASDAQ:GOOG) YouTube has just announced that it�� launching a paid subscription service starting at just $0.99 per month. While that $0.99 number is being thrown around a lot, the average price will actually be $2.99 per month. That might be a big difference, but it�� still considerably cheaper than the $7.99 per month�for Netflix. On the other hand, Netflix crushes YouTube when it comes to content.

YouTube will begin with 30 partners and 500 channels, but it will roll out further in the coming weeks. As of right now, the two biggest launch partners are Sesame Street and Ultimate Fighting Championship. So, you can watch everything from Elmo singing ��he Bear Went Over the Mountain��to caged warriors attempting to inflict as much future brain damage as possible. For those parties who are potentially interested in YouTube�� service without wanting to make a commitment, there is a 14-day free trial.

Top Integrated Utility Companies To Invest In Right Now: Banco Santander Brasil SA (BSBR)

Banco Santander (Brasil) S.A. (Santander Brasil), incorporated on August 9, 1985, is a full-service bank in Brazil. The Bank operates its business along three segments: Commercial Banking, Global Wholesale Banking and Asset Management and Insurance. Through its Commercial Banking segment, the Bank offers traditional banking services, including checking and savings accounts, home and automobile financing, unsecured consumer financing, checking account overdraft loans, credit cards and payroll loans to mid- and high-income individuals and corporations (other than to its Global Banking and Markets clients). Its Global Wholesale Banking segment provides financial services and solutions to a group of approximately 700 local and multinational conglomerates, offering such products as global transaction banking, syndicated lending, corporate finance, equity and treasury. Through its Asset Management and Insurance segment, the Company manages fixed income, money market, equity and multi-market funds and offers insurance products complementary to its core banking business to its retail and small- and medium-sized corporate customers.

Lending Activities

As of December 31, 2010, the Bank�� total loans and advances to customers equaled R$160.6 billion (42.9% of its total assets). Net of allowances for credit losses, loans and advances to customers equaled R$151.4 billion as of December 31, 2010 (40.4% of its total assets). In addition to loans, it had outstanding R$93.5 billion as of December 31, 2010.

Substantially all of its loans are to borrowers domiciled in Brazil and are denominated in reais. Its commercial, financial and industrial loans include primarily loans to small and medium-sized enterprises (SMEs) in its Commercial Banking segment, and to Global Banking and Markets corporate and business enterprise customers in its Wholesale Global Banking segment. The principal products offered to SMEs in this category include revolving loans, overdraft facilities, installme! nt loans, working capital and equipment finance loans. Credit approval for SMEs is based on customer income, business activity, collateral coverage and internal and external credit scoring tools. Collateral on commercial, financial and industrial lending to SMEs generally includes receivables, liens, pledges, guarantees and mortgages, with coverage generally ranging from 100% to 150% of the loan value depending on the risk profile of the loan. Its Wholesale Global Banking customers are offered a range of loan products ranging from typical corporate banking products (installment loans, working capital and equipment finance loans) to more sophisticated products (derivative and capital markets transactions).

The Bank�� Real estate-construction loans include construction loans made principally to real estate developers that are SMEs and corporate customers in its Wholesale Global Banking Segment. Loans in this category are generally secured by mortgages and receivables, though guarantees may also be provided as additional security. Real estate-mortgage loans include loans on residential real estate to individuals. All loans granted under this category are secured by the financed real estate. Installment loans to individuals consist primarily of unsecured personal installment loans (including loans whose payments are automatically deducted from a customer�� payroll), revolving loans, overdraft facilities, consumer finance facilities and credit cards. Lease financing includes primarily automobile leases and loans to individuals. The vehicle financed acts as collateral for the particular loan granted.

Investment Activities

The Bank�� investments include Government securities-Brazil, Government securities-other countries and other debt securities. As of December 31, 2010, the book value of the investment securities was R$84.7 billion (representing 22.6% of its total assets). Brazilian government securities totaled R$55.8 billion, or 65.9% of the Bank�� investment! securiti! es as of December 31, 2010. As of December 31, 2010, the Bank held no securities of single issuers or related group of companies whose aggregate book or market value exceed 10% of stockholders��equity, other than Brazilian government securities, which represented 76.9% of its stockholders��equity.

Sources of Funds

The Bank offers its customers a variety of deposit products, such as current accounts (also referred to as demand deposits), which do not bear interest; traditional savings accounts, which earn the Brazilian reference rate for savings accounts (taxa referencial) plus 0.5% per month, as set by the federal government, and time deposits, which are represented by certificates of bank deposits (CDBs), which normally have a maturity of less than 36 months and earn interest at a fixed or floating rate. In addition, it accepts deposits from financial institutions as part of its treasury operations, which are represented by certificates of interbank deposit CDIs, and which earn the interbank deposit rate.

Advisors' Opinion:

[By Jake L'Ecuyer]
Banco Santander (Brasil) SA (NYSE: BSBR) shares were also up, gaining 15.74 percent to $6.69 on Q1 results. The company reported Q1 recurring net income of 1.427 billion reais ($637 million).
[By Rudy Martin]
We are buying Banco Santander (Brasil) S.A. (BSBR) to gain broad additional exposure to the Brazilian.

BSBR offers a full-service range of financial services, including individual and corporate banking. We also hope to benefit from the stock's 7.2% current indicated dividend yield.
[By Jake L'Ecuyer]
Banco Santander (Brasil) SA (NYSE: BSBR) shares were also up, gaining 12.46 percent to $6.50 on Q1 results. The company reported Q1 recurring net income of 1.427 billion reais ($637 million).

Top Integrated Utility Companies To Invest In Right Now: Nu Skin Enterprises Inc.(NUS)

Nu Skin Enterprises, Inc. develops and distributes anti-aging personal care products and nutritional supplements worldwide. The company sells its personal care products under the Nu Skin brand; and nutritional supplements under the Pharmanex brand. Its personal care product line includes core systems, targeted treatments, total care, cosmetic, and Epoch, a product formulated with botanical ingredients. The company?s nutritional supplements product line comprises micronutrient supplements, targeted solution supplements, and weight management products. It also sells Vitameal, which are nutritious meal products for starving children or purchased for personal food storage. In addition, the company offers other products and services consisting of digital content storage, water purifiers, and other household products. It sells its products primarily through a network of independent distributors in north Asia, the Americas, Greater China, Europe, and the south Asia/Pacific. The c ompany also operates retail stores to sell its products in China. As of December 31, 2010, Nu Skin Enterprises operated 40 stores throughout China. The company was founded in 1984 and is headquartered in Provo, Utah.

Advisors' Opinion:

[By Jeremy Bowman]
What: Shares of Nu Skin Enterprises (NYSE: NUS ) were looking refreshed today, gaining as much as 14% today after the company lifted its guidance significantly for the current quarter and full year.
[By Ben Levisohn]
Shares of Nu Skin (NUS) continue to plunge after the Wall Street Journal reported that China would investigate allegations that the multi-level marketer is a pyramid scheme.
Reuters
Yesterday, the People’s Daily ran a story accusing the company of using sales techniques that bordered on brainwashing. While the story can be easily dismissed–and was–the fact that China is investigating cannot.

So says Canaccord Genuity’s Scott Van Winkle and Mark Sigal, who downgraded Nu Skin to Hold from Buy today. They write:

While we found yesterday�� article to be the type of complaint multi-level marketers often face, we believe that any government investigation in China opens questions that we can�� forecast. Even with laws to provide a path, we don�� believe that anyone can predict the Chinese government in this instance.

Lowering rating to HOLD from Buy to reflect a new level of risk in China, which at roughly one-third of our 2013 revenue forecast is a large enough market to significantly impact not only the financial results but also the valuation.

Nu Skin has plunged 20% to $92.52 today at 10:51 a.m., and has dragged down other multi-level marketers with it. Herbalife (HLF) has dropped 5.9% to $74.74, while Usana Health Sciences (USNA) has fallen 9.1% to $59.77.

Maybe it’s because China is a heck of a lot bigger than Belgium? Remember, back in December, a Beligian court ruled that Herbalife was not a pyramid scheme, which had some bulls acting as if the debate was decided. China, however, is a much bigger beast, and if it come to the conclusion that Nu Skin is indeed a pyramid scheme, it’s not impossible that the issue will become front and center for other multi-level markers again.

I’ll leave you with a piece of a Citron Research report on Nu Skin from Oct 2013, that reminded investors that China’s newspapers were already looking into the case of Nu Skin even as
[By Sue Chang and Ben Eisen]
Shares of Nu Skin (NUS) � sank for a third day, losing another 6.3%. Chinese regulators are investigating allegations that the distributor of personal care products is operating an illegal pyramid scheme. In a statement, Nu Skin said it has launched its own review and plans to work with Chinese authorities to address any issues.

10 Best Beverage Stocks For 2015: Tanger Factory Outlet Centers Inc.(SKT)

Tanger Factory Outlet Centers, Inc. operates as a real estate investment trust (REIT). The company, through its subsidiary, Tanger Properties Limited Partnership, engages in acquiring, developing, owning, operating, and managing factory outlet shopping centers. As of September 30, 2005, Tanger owned and operated 33 factory outlet centers in 22 states totaling 8.7 million square feet of gross leasable area. It also provides development, leasing, and management services for its outlet centers. The company has elected to be taxed as a REIT under the Internal Revenue Code. As a REIT, it would not be subject to Federal income taxes provided it distributes at least 90% of its taxable income to its shareholders. Tanger Factory Outlet Centers was founded by Stanley K. Tanger in 1981. The company is headquartered in Greensboro, North Carolina.

Advisors' Opinion:

[By Rich Duprey]
Shopping center REIT�Tanger Factory Outlet Centers� (NYSE: SKT ) announced yesterday its second-quarter dividend of $0.225 per share, the same rate it paid last quarter after raising the payout 7%, from $0.21 per share.
[By U.S. News]
Linda Davidson/The Washington Post via Getty ImagesShoppers at the Tanger Outlet Mall in Oxon Hill, Md. There are few forms of shopping I enjoy more than outlet shopping. There is something about all of those discount stores packed so closely together that makes me super excited! But I am not going to tell you that all outlet stores are a good deal, because some of them are not. Also, brands sometimes create cheaper items to sell specifically in their outlet locations, and those are not always a smart buy. But for the most part, outlet malls are still an excellent way to save some money while picking up items for the entire family. Here are five ways to make the most of your trip to an outlet: 1. Figure out the outlet 'brand.' There are a couple of management companies that own quite a few outlet malls in the United States, including Premium Outlets (SPG) and Tanger Factory Outlet Centers (SKT). Before heading out, be sure to check the website for the entire outlet mall for any possible deals or coupons. Premium and Tanger Outlets also have Facebook (FB) pages where they will occasionally post coupons that you can print from home. 2. Look for an outlet discount card or VIP program. Many outlet malls have VIP savings programs that can save you big bucks throughout the year and also give you special access to new promotions and sales. The Fashion Outlets of Chicago opened last year and offer a Green Savings Card that costs $5 for a yearly membership. Those with a Green Savings Card receive extra discounts at a huge number of stores and restaurants in the mall, which is on top of the already low prices. 3. 'Like' the outlet store on Facebook. If there is an outlet store that you frequent, go ahead and like its Facebook page so that you will be one of the first to know about sales and promotions. The Kate Spade Outlet (KATE) will frequently post promotions to Facebook before emailing subscribers. The J. Crew Factory Store has offered special promotions th
[By James E. Brumley]
What do small cap stocks MKS Instruments, Inc. (NASDAQ:MKSI), Tanger Factory Outlet Centers Inc. (NYSE:SKT), and Kaman Corporation (NYSE:KAMN) have in common? Absolutely nothing, on the surface, and no, it's not a setup for painfully bad punchline. There is a common thread among KAMN, SKT, and MKSI right now, however... they're all three going into my mental (though publicly-tracked) portfolio this afternoon.

Top Integrated Utility Companies To Invest In Right Now: Platinum Group Metals Ltd (PLG)

Platinum Group Metals Ltd. (Platinum Group) is a platinum focused exploration and development company conducting work on mineral properties it has staked or acquired by way of option agreements in the Republic of South Africa and in Canada. The Company conducts its South African exploration and development work through its wholly owned direct subsidiary, Platinum Group Metals (RSA) (Proprietary) Limited (PTM RSA). PTM RSA holds the Company�� interests in the Project 1 platinum mine (Project 1) and Project 3. PTM RSA also holds 100% of Wesplats Holding (Proprietary) Limited (Wesplats), and a 37% interest in Wildebeest Platinum (Pty) Limited (Wildebeest), a company set up to hold prospecting rights for the exploration joint venture between the Company and Sable Platinum Mining (Pty) Ltd. (Sable) and Umnotho NREF Joint Venture. In September 2011, it purchased the Providence Copper-Nickel-Cobalt-Platinum Group Metals (Cu-Ni-Co-PGM) property from Arctic Star Exploration (Arctic Star). Advisors' Opinion:

[By Zacks Investment Research]
Investors hoping for a turnaround in precious metals prices and looking for exposure to precious metals miners could consider Platinum Group Metals (PLG), currently ranked #2 (Buy) by Zacks.

Top Integrated Utility Companies To Invest In Right Now: Westlake Chemical Corporation(WLK)

Westlake Chemical Corporation manufactures and markets basic chemicals, vinyls, polymers, and fabricated building products. It operates in two segments, Olefins and Vinyls. The Olefins segment provides ethylene, polyethylene, styrene monomer, and various ethylene co-products, such as chemical grade propylene, crude butadiene, pyrolysis gasoline, and hydrogen. The Vinyls segment offers polyvinyl chloride (PVC), vinyl chloride monomer, ethylene dichloride, chlorine, caustic soda, and ethylene. This segment also manufactures and sells products fabricated from PVC, including water, sewer, irrigation, and conduit pipes; window and door profiles; and fences. The company?s products are used in various applications, such as consumer and industrial markets comprising flexible and rigid packaging, automotive products, coatings, and residential and commercial construction, as well as in other durable and non-durable goods. Westlake Chemical Corporation provides its products for chem ical processors, plastics fabricators, construction contractors, municipalities, and supply warehouses in the United States, Canada, Singapore, and internationally. The company was founded in 1985 and is headquartered in Houston, Texas.

Advisors' Opinion:

[By Rich Duprey]
Specialty chemicals producer�Westlake Chemical� (NYSE: WLK ) �has acquired�the PVC pipe, fittings, profiles, and foundation business of CertainTeed now that�all the closing conditions, including a regulatory review, have been met.
[By Louis Navellier]
To get to the point, here are five companies that have the analyst community buzzing, and they should be on your radar as well.
Facebook (FB): In the past three months, estimates have been revised up 23%. Analysts now expect 47.5% annual sales growth and 58.8% earnings growth this quarter. . Melco Crown Entertainment (MPEL): In the past three months, estimates have been upwardly revised 12%. Analysts now expect 19.9% sales growth and 85% earnings growth. MPEL is a strong buy. Netflix (NFLX): In the past three months, estimates have been upwardly revised 41%. Analysts now expect 23.5% sales growth and 400% earnings growth. NFLX is a strong buy. Westlake Chemical (WLK): In the past three months, estimates have been revised up 13%. Analysts now expect 15.6% sales growth and 50% earnings growth this quarter. . Nu Skin Enterprises (NUS): In the past three months, estimates have been revised up 17%. Analysts now expect 78.1% sales growth and 97.9% earnings growth. NUS is a strong buy.
To put these earnings estimates into perspective, analysts forecast that the average S&P 500 company will grow earnings by 8.8% this quarter. This means that each of the five buys above are well-positioned to win this earnings season.

Top Integrated Utility Companies To Invest In Right Now: Denny's Corporation(DENN)

Denny's Corporation, through its subsidiaries, engages in the ownership and operation of a chain of family-style restaurants. The company operates traditional American-style food restaurants under the Denny?s brand name. As of December 28, 2011, it had 1,479 franchised/licensed restaurants and 206 company-owned and operated restaurants in the United States, Canada, Costa Rica, Mexico, Honduras, Guam, Puerto Rico, and New Zealand. The company was founded in 1980 and is headquartered in Spartanburg, South Carolina.

Advisors' Opinion:

[By Michael Lewis]
Family-style restaurant chain Denny's (NASDAQ: DENN ) delivered earnings early this week, and the numbers weren't so shabby, but they also weren't much to rally behind. Denny's as a concept has long been considered dated, and many of its peers are finding it difficult to attract new customers. But the largely franchised chain is actually seeing more customers coming through the doors and higher transactions, if only slightly. Of course, there is much more data to digest and analyze beyond one period's store-level sales growth, but investors should keep in mind that this is a chain that's looking toward 2,000 locations -- making it one of the largest of its kind. Here's what investors need to know.

Top Integrated Utility Companies To Invest In Right Now: Oak Ridge Energy Technologies Inc (OKME)

Oak Ridge Energy Technologies, Inc., formerly Oak Ridge Micro-Energy, Inc., incorporated on August 15, 1986, is a development-stage company. The Company licenses thin-film, solid-state batteries for industrial, government, and medical applications. The Company�� thin-film battery is rechargeable, lithium-based, and the active battery layers are thinner than common plastic wrap.

The Company�� batteries are intended for applications, such as wireless smart sensors, which operate in harsh environments, security cards, radio frequency identification (RFID) tags, semiconductor non-volatile memory chips, and implantable medical devices. Its prototype cells on ceramic substrates supplied to customers are 0.024 of an inch (0.62 millimeters) thick. Thin-film lithium and lithium-ion batteries are ideally suited for a variety of applications where a small power source is needed.

The Company competes with Infinite Power Solutions, Inc., Front Edge Technology, Inc., Cymbet Corporation, Teledyne Electronic Technologies, Excellatron and Planar Energy Devices, Inc.

Advisors' Opinion:

[By CRWE]
Today, OKME has surged (+6.67%) up +0.050 at $.800 with 10,090 shares in play thus far (ref. google finance Delayed: 10:52AM EDT July 18, 2013).

Oak Ridge Micro-Energy, Inc. previously reported a strategic US $2.5M investment by Precept Fund Management SPC�� on behalf of Prescient Fund SP into the revitalised US battery company Oak Ridge Micro-Energy.

Mr. Steve Barber, Principal of Precept Investment Management Limited, the investment manager of Precept Fund Management SPC said:

��lobally the energy storage sector is projected to be a US$60 Billion market by 2020. Precept�� $2.5m placement into OKME is a strategic move by the fund to secure a significant share of this exciting company and the growth potential of the battery market. Our opinion is that OKME has a world leading technical and commercial team, a focused business development strategy and the reputation to be a key player in the US and global battery market. OKME is one of only two investment targets the Fund identified after an in-depth analysis of the energy storage market. The other is a Swiss battery company named Leclanche. Precept is a long-term, active participation, value investor, and we look forward to a long and rewarding relationship with OKME.��/p>

Top Integrated Utility Companies To Invest In Right Now: Kelly Services Inc.(KELYA)

Kelly Services, Inc., together with its subsidiaries, provides workforce solutions to various industries worldwide. The company offers trained employees who work in word processing, data entry, and as administrative support staff; staff for contact centers, technical support hotlines, and telemarketing units; substitute teachers; support staff for seminars, sales, and trade shows; technicians for the technology, aerospace, and pharmaceutical industries; maintenance workers, material handlers, and assemblers; and temporary and full-time placement services, as well as direct-hire placement and vendor on-site management services. It also provides scientific and clinical research workforce solutions; chefs, porters, and hospitality representatives; manual workers to semi-skilled professionals in trade, non-trade, and operational positions; engineering professionals for various disciplines, such as aeronautical, chemical, civil/structural, electrical/instrumentation, environmen tal, industrial, mechanical, petroleum, pharmaceutical, quality, and telecommunications; and employees for creative services positions. In addition, the company offers professionals for corporate finance departments, accounting firms, and financial institutions; talent management solutions; healthcare specialists and professionals for hospitals, ambulatory care centers, HMOs, and other health insurance companies; information technology specialists; legal professionals, such as attorneys, paralegals, contract administrators, compliance specialists, and legal administrators; and mid- to senior-level search and selection services, as well as consulting services. Further, it provides recruitment process and contingent workforce outsourcing, independent contractor solutions, payroll and business process outsourcing, career transition and organizational effectiveness, and executive search services. The company was founded in 1946 and is headquartered in Troy, Michigan.

Advisors' Opinion:

[By David Milstead]
One such outfit is Kelly Services (KELYA). The Troy, Mich., company places temporary employees in a variety of fields, such as law, health care, computing and finance. Although recent job reports have been strong, S&P Capital IQ analyst Michael Jaffe sees employers ��emaining cautious in their hiring practices��and using the kind of temporary workers Kelly specializes in. Jaffe says Kelly is his top pick in the staffing sector, and he rates the stock a ��trong buy.��/p>
[By Rich Duprey]
Investors have taken notice of the trend with shares of ManpowerGroup (NYSE: MAN ) rising 59% over the past year, Kelly Services (NASDAQ: KELYA ) up almost 46%, and Robert Half International (NYSE: RHI ) some 15% higher.
[By Dan Burrows]
Staffing stocks like Manpower Group (MAN), Robert Half International (RHI) and Kelly Services (KELYA) have put up market-beating to market-crushing gains over the last year, boosted by accelerating strength in the job market.

Top Integrated Utility Companies To Invest In Right Now: Consolidated Communications Holdings Inc.(CNSL)

Consolidated Communications Holdings, Inc., together with its subsidiaries, provides telecommunications services to residential and business customers in Illinois, Texas, and Pennsylvania. Its telecommunications services include local and long-distance services, high-speed broadband Internet access, standard and high-definition digital television, digital telephone services, custom calling features, private line services, carrier access services, network capacity services over its regional fiber optic network, and competitive local exchange carrier (CLEC) services. The company also offers telephone directory publishing services, wholesale transport services on its fiber-optic network in Texas, billing and collection services, inside wiring services, and maintenance services. In addition, it provides automated calling services for correctional facilities; and sells and supports telecommunications equipment, such as key, private branch exchange, and IP-based telephone system s to business customers in Texas and Illinois. The company serves residential customers, and universities and hospitals, as well as retail, commercial, light manufacturing, and service industry accounts in Illinois; manufacturing and retail industries, hospitals, local governments, and school districts in Texas; and small to mid-sized businesses, educational institutions, and healthcare facilities in Pennsylvania. As of December 31, 2011, it had 227,992 local access lines, 110,913 digital subscriber lines, 34,356 Internet protocol digital television subscribers, 9,199 voice over Internet protocol, and 89,774 CLEC access line equivalents. The company was founded in 1894 and is headquartered in Mattoon, Illinois.

Advisors' Opinion:

[By David Dittman]
Answer: I�� leery of the rural telecoms right now. I do recommend Consolidated Communications Holdings Inc (NSDQ: CNSL) in the UF Income Portfolio, but it benefits from a JV with Verizon Communications Inc (NYSE: VZ) that generates substantial cash flow and sets it apart from its peers, who are otherwise struggling against declines in traditional wireline businesses as well as intense competition from bigger, better-funded national players in broadband and business service.