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Posts Tagged ‘investment’

17 Signs That Most Americans Will Be Wiped Out By The Coming Economic Collapse

June 25th, 2013

economyThe vast majority of Americans are going to be absolutely blindsided by what is coming.  They don’t understand how our financial system works, they don’t understand how vulnerable it is, and most of them blindly trust that our leaders know Read more…

Economy, Government, Markets

SmartStops.net Teams With TradeKing to Facilitate Risk Management

July 11th, 2012

San Francisco, California, July 11, 2012– SmartStops.net, an online service that helps investors of all levels manage investment risk, announced today that the SmartStops BrokerLink service is now available for clients of online broker Read more…

ETF, Mutual Fund, OPTIONS, Uncategorized

A Managed Approach For Investment Portfolio Risk

April 5th, 2012

Is your investment portfolio more like a roller coaster with no exit strategy, just going round and round and up and down, arriving right back to where it started? Don’t just go along for the ride, use a managed approach to limit downside risk Read more…

Commodities, ETF, Uncategorized

Tax Loss Harvesting – using sector ETFs to continue the exposure

November 28th, 2011
Many financial advisors use low-cost, liquid exchange traded funds in tax-loss harvesting strategies that can offset future gains and cut clients’ tax bills in the Read more…

ETF, Uncategorized

ETFs Turn Exotic – Protect yourself

October 17th, 2011

Investments that do not move in tandem with U.S. stocks present opportunities for diversification and potential performance Read more…

Commodities, ETF, OPTIONS, Real Estate, Uncategorized

Blue Gold…Still Shining

June 14th, 2011

About five years ago, I launched my investment service, Mayer’s Special Situations with a special report, entitled Blue Gold.

The report laid out the compelling long-term case for investing in water-related stocks. The stocks I recommended in that report have performed extremely well, far outpacing the S&P 500 Index. But the investment backdrop for the water sector has become even more compelling today than it was five years ago.

Nalco Holdings (NYSE:NLC), a water treatment company I recommended in the Blue Gold report has been an excellent performer. It is up about 60% since my recommendation, while the S&P 500 has gained no ground whatsoever. I expect this long-term outperformance to continue. Recently, The Financial Times interviewed CEO Erik Fyrwald, who had many interesting comments.

Fyrwald began by saying that water was the “No. 1 issue facing the world.” A few good excerpts:

“I travel about 50% of the time, often into the developing markets, such as China, India, parts of Africa, that are not only water starved today, but increasingly water challenged… their water consumption is rising, while they are water challenged already, and that makes a huge challenge for them…

“I have been going to China and India for 20 years, and 20 years ago – even 10 years ago – the focus on water was minimal. Water treatment and recycling didn’t exist significantly. It was there for industrial global companies that built operations in China or India. But the Indian companies, the Chinese companies, weren’t concerned about water, either cleaning it up for effluent or recycling it. Today, I can tell you that leading Chinese companies and leading India companies are very concerned about water and are starting to adopt very advanced techniques for both cleaning up the water and also the recycling and reuse of the water. That is why we are seeing tremendous growth in those countries…”

Sitting right there in the sweet spot of the Asian water story is Hyflux Ltd., another company I recommended in my report. The stock has done very well, and a big part of the reason is the company’s CEO, Olivia Lum.

She won Ernst & Young’s World Entrepreneur of the Year 2011. Her story is amazing.

She turned the mere $15,000 she started with into one of the largest water treatment companies in the world. The Financial Times profiled her, and included more personal details that I didn’t know.

For example, she was adopted at birth and lived with four other orphans in a tin-roof shack in Kampar, Malaysia. She avoided becoming a child laborer – the fate of many – at the peanut factories and rubber plantations. Instead, she sold papaya from a stall and paid for her own textbooks and bus fare to school. She went on to college in Singapore to study chemistry. Her job out of college was at GlaxoSmithKline, where she studied water treatment. To start Hyflux, she sold her car and small house.

It’s a remarkable story. And her company still is a great investment, as it has huge opportunities in China and India and across the Middle East and North Africa.

Nalco and Hyflux are two of the best companies in what may prove to be one of the very best investment sectors for the next five or ten years.

Regards,

Chris Mayer,
for The Daily Reckoning

Blue Gold…Still Shining originally appeared in the Daily Reckoning. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas.

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Blue Gold…Still Shining




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Commodities, Uncategorized

Don’t touch these stocks with a ten-foot pole!

June 13th, 2011

Martin D. Weiss, Ph.D.Major stock sectors are now in a race for the bottom.

These are stocks on a rendezvous with their lowest lows reached in the debt crisis of 2008-2009 … sinking back into the danger zone that came with red ink, bankruptcy, and financial ruin for millions of investors.

Hard to believe that could already be happening so soon after the market peaked?

Then consider the 25 stocks I’m going to list for you in a moment, starting with PMI Group, one of the nation’s leading mortgage insurers.

Two and a half years ago, at the height of the financial crisis, this leading mortgage insurer plummeted to a low of a meager 32 cents per share.

But in the weeks and months that followed, Washington worked overtime to inject trillions of dollars into the housing market and convince the world that the Great American Nightmare — the worst real estate crash of all time — was over.

Many Americans, blinded by their faith in “almighty government,” actually fell for it: The housing market stabilized temporarily. The economy recovered a bit. Stocks rallied sharply. And PMI surged, reaching a peak of $7.10 per share last year.

But that was just the prelude to disaster …

Chart

In the ensuing months, all of the government’s housing support programs and all the government’s mortgage subsidy initiatives failed.

Nothing the government did could stop wave after wave of mortgage defaults and foreclosures.

And even the government’s massive injections of money into the mortgage market were unable to prevent PMI from crashing again, closing at a mere $1.12 per share in late trading hours this past Friday.

That’s down a sickening 84% from last year’s high!

If you had invested $10,000 in this dog at that time, you’d now have only $1,577 in your account right now.

An Unimportant Company? No!

PMI has historically been a huge player with a pivotal function in the housing finance industry — insuring mortgages against default. But now …

If big mortgage insurers like PMI go out of business or refuse to write new policies, most lenders will refuse to extend mortgage loans to anyone except those who are rich enough to buy a home for cash and don’t need a mortgage to begin with.

Moreover, PMI is on the frontline of the losing battle against a flood of bad mortgages in virtually every region of the United States.

So if this company is drowning and its stock is sinking to zero, you can be quite certain that many other companies downstream — lenders and banks, builders and realtors, REITs and other financials — are likely to face a similar fate.

As I illustrated here last week, nearly all bank and financial stocks are now in a race for the bottom — the only difference being, PMI is “winning” that race.

Just a Technical Correction?

If the housing and mortgage markets were holding up nicely, perhaps you could make that argument stick. But the fact is, all three key facets of this giant sector are coming unglued at the seams —

  1. The finances of homeowners who borrowed the money
  2. The finances of bankers who loaned them the money
  3. And the value of the home itself, the underlying collateral that’s supposed to be tapped when folks run out of money.

This is no small technicality. It’s a fundamental deterioration in the underpinnings of the entire sector.

“Why Can’t the Government Come
To The Rescue Again?” You Ask

For the simple reason that the government itself is ALSO running out of money.

But for argument’s sake, let’s say the government does somehow come up with more funds to pump into housing and mortgages.

OK. So what? What difference is that going to make?

Based on the recent history, the answer should be obvious: Not much!

Chart

Remember: No amount of government intervention has been able to prevent home prices from plunging to new lows — even lower than the bottom of March 2009, when homes were selling at deeply distressed prices. (See chart to left.)

Similarly, no amount of government intervention can prevent nearly every sector that touches housing and mortgages from suffering a similar fate.

“Martin’s Too Pessimistic.
Don’t Listen to Him!” Say My Critics

Harry Truman once said. “I never give them hell. I just tell the truth and they think it’s hell.”

That’s what my team and I do.

If anything, we’re optimists. We find the few companies that do have the wherewithal to survive and even benefit. And we see silver linings in this crisis that I’ll be glad to tell you more about in future issues.

Moreover, this is isn’t the first time we have given advance warnings about companies like PMI.

In our Safe Money Report of April 2005, well before the housing bubble peaked, we told our subscribers not to touch PMI Group and 24 other stocks with a ten-foot pole. Here they are:

Aames Investment, Accredited Home Lenders, Beazer Homes, Countrywide Financial, DR Horton, Fannie Mae, Freddie Mac, Fidelity National Financial, Fremont General, General Motors, Golden West Financial, H&R Block, KB Homes, MDC Holdings, MGIC Investment, New Century Financial, Novastar Financial, PHH Group, PMI Group, Pulte Homes, Radian Group, Toll Brothers, Washington Mutual, and Wells Fargo & Company.

(Want proof? Click here for the SMR issue of April 2005 and scroll down to page 10.)

Subsequently, 11 of these 25 companies filed for bankruptcy, were bailed out or bought out.

ALL 25 stocks plummeted, with an AVERAGE loss of 81.3%.

And even after more than two years of stock market rally, investors who bought and held these stocks are deep in the red.

(But whether they rallied or not, our advice to anyone who owns the surviving companies today is the same: Don’t touch them with a ten-foot pole!)

Later, in the financial crisis of 2008, we were the only ones who issued negative ratings and warned well ahead of time of nearly every major firm that subsequently collapsed. We warned about …

* Bear Stearns 102 days before it failed (click here for the proof)

* Lehman Brothers 182 days before (proof)

* Citigroup 110 days before (proof)

* Washington Mutual 51 days before (proof), and

* Fannie Mae 4 years before (proof).

That’s history. What counts most now is that …

It’s “Game Over” for the U.S. “Recovery”

Look. From the outset, we knew the U.S. economic recovery was rigged — bought and paid for by the greatest monetary and fiscal extravaganzas of all time.

We knew that no government, no matter how rich, can create corporate immortality: In the real world, companies are born and companies must die. I’m sure you understood that as well.

We knew that no government, no matter how autocratic, can repeal the law of gravity: When sellers are anxious to sell and buyers are reluctant to buy, prices fall. A no-brainer!

We also knew that no government, no matter how powerful, can stop the march of time: With every second that ticks by, more debts come due, more mortgages go into default, more homes are foreclosed.

And I think you knew, too. But still you ask:

“How Could This Recovery End So
Abruptly and Crumble So Dramatically?”

Answer: As we’ve been telling you all along, it was never a true recovery to begin with:

Sugar Outlook Sweetens

June 10th, 2011

Rudy MartinThe drop in sugar prices is over. In fact, prices have risen to an eight-week high after news broke that Brazilian production may fall short of expectations.

My indicators are telling me that sweet prices could get even sweeter.

Here are a few significant factors that could move this market:

India’s export threat has disappeared. For months, sugar prices have been held hostage to the idea that India would regain its position as a global sugar exporter; as India is the second-largest producer. Fearing a rise in domestic prices from a domestic crop shortfall, the country is unlikely to set a new quota until fall. The current gap is being filled by Thailand.

China needs sugar. Sugar imports by China, the second-biggest consumer after India, may advance to 2.3 million metric tons in the year ending September 30. With the export price from Brazil or Thailand about 25 cents a pound, that makes it more attractive to China, even with an import tariff of 50 percent. The higher import volume is 28 percent more than the U.S. government forecast!

The United States is short on sugar. The U.S. Department of Agriculture has projected decreased U.S. sugar supply for 2012 with lower imports offsetting higher beginning stocks and production. A potential drop in home-grown sugar coupled with government caps on imports could drive up prices, just before the peak Christmas season.

A harsh winter has caused headaches for U.S. sugar-cane and sugar-beet farmers. Record cold temperatures in December damaged sugar cane in Florida, taking about 260,000 short tons of raw sugar out of production, according to the USDA.

Currently, soil soaked by snow melt and ongoing cool and wet weather in the Midwest is delaying the planting of sugar beets, the source of more than half of U.S. sugar production. The delays could reduce yields because the sugar content of the root increases the longer it is in the ground

The European Union wants sugar too. A European Union (EU) committee recently voted to open a quota for 200,000 metric tons of duty-free sugar imports into the bloc. EU sugar prices surged to more than 1,000 euros a ton in some places earlier this year as the domestic market suffered a supply crisis that left refiners in Portugal, Greece and Poland struggling to access supplies.

Even Mexico increased import allowances, adding to signs that demand is strengthening.

Sugar’s Brazilian Factor: This pretty much puts control on sugar in the hands of the Brazilians, the primary exporters. But Brazil is not overflowing with sugar either. Conditions have been building up against the sugar crop.

The low sugar prices of 2008 and 2009, the financial crisis impact on capital, and recent unstable weather have all contributed to a financial squeeze on farmers. In turn, the investment in crops is less than it could have been.

Brazilian cane crops are older and less efficient than they should be. Sugar cane is now aged 4.2 years, on average, whereas the ideal would be 2 years of age. Ideally 20 percent to 25 percent of the new crop should be replanted. That’s not happening, so yields are lower.

Once the crop is ready, the main issues are crushing and processing. Today, with the higher use of sugar to meet Brazil’s rising need for ethanol, a larger part of the Brazilian sugarcane is being diverted into ethanol fuel production than in the past. This further diminishes sugar for food availability.

The state of S

Commodities, ETF, Mutual Fund, Uncategorized

Sugar Outlook Sweetens

June 10th, 2011

Rudy MartinThe drop in sugar prices is over. In fact, prices have risen to an eight-week high after news broke that Brazilian production may fall short of expectations.

My indicators are telling me that sweet prices could get even sweeter.

Here are a few significant factors that could move this market:

India’s export threat has disappeared. For months, sugar prices have been held hostage to the idea that India would regain its position as a global sugar exporter; as India is the second-largest producer. Fearing a rise in domestic prices from a domestic crop shortfall, the country is unlikely to set a new quota until fall. The current gap is being filled by Thailand.

China needs sugar. Sugar imports by China, the second-biggest consumer after India, may advance to 2.3 million metric tons in the year ending September 30. With the export price from Brazil or Thailand about 25 cents a pound, that makes it more attractive to China, even with an import tariff of 50 percent. The higher import volume is 28 percent more than the U.S. government forecast!

The United States is short on sugar. The U.S. Department of Agriculture has projected decreased U.S. sugar supply for 2012 with lower imports offsetting higher beginning stocks and production. A potential drop in home-grown sugar coupled with government caps on imports could drive up prices, just before the peak Christmas season.

A harsh winter has caused headaches for U.S. sugar-cane and sugar-beet farmers. Record cold temperatures in December damaged sugar cane in Florida, taking about 260,000 short tons of raw sugar out of production, according to the USDA.

Currently, soil soaked by snow melt and ongoing cool and wet weather in the Midwest is delaying the planting of sugar beets, the source of more than half of U.S. sugar production. The delays could reduce yields because the sugar content of the root increases the longer it is in the ground

The European Union wants sugar too. A European Union (EU) committee recently voted to open a quota for 200,000 metric tons of duty-free sugar imports into the bloc. EU sugar prices surged to more than 1,000 euros a ton in some places earlier this year as the domestic market suffered a supply crisis that left refiners in Portugal, Greece and Poland struggling to access supplies.

Even Mexico increased import allowances, adding to signs that demand is strengthening.

Sugar’s Brazilian Factor: This pretty much puts control on sugar in the hands of the Brazilians, the primary exporters. But Brazil is not overflowing with sugar either. Conditions have been building up against the sugar crop.

The low sugar prices of 2008 and 2009, the financial crisis impact on capital, and recent unstable weather have all contributed to a financial squeeze on farmers. In turn, the investment in crops is less than it could have been.

Brazilian cane crops are older and less efficient than they should be. Sugar cane is now aged 4.2 years, on average, whereas the ideal would be 2 years of age. Ideally 20 percent to 25 percent of the new crop should be replanted. That’s not happening, so yields are lower.

Once the crop is ready, the main issues are crushing and processing. Today, with the higher use of sugar to meet Brazil’s rising need for ethanol, a larger part of the Brazilian sugarcane is being diverted into ethanol fuel production than in the past. This further diminishes sugar for food availability.

The state of S

Commodities, ETF, Mutual Fund, Uncategorized

Two "Alternative" Ideas for $100 Oil

June 10th, 2011

Two

“If you grow it, biofuel will come,” isn't much of a slogan. So let me be blunt: Biofuel is important because we need it.

My current prediction: Oil prices will hold fast and end 2011 above $100, and this will keep biofuel an important ongoing business and investment sector.

Whether the economic recovery is slower than expected or OPEC raises its production, ultimately it's a moot point — gasoline is finite and we now have affordable technology to “create” gasoline.

And while oil supplies won't dry up today, the next day or for a generation, it's not going to get any cheaper to find oil, refine it and distribute the finished product.

Leaner government means higher fuel prices

And while it might seem odd, I think a coming budget fight will help boost oil prices — and by extension, gasoline. Federal spending and the deficit will be the single most important issue going into the campaign season.

The less the federal government spends, the better. This is not politics, this is just business.

The answer from a practical, economic and even political standpoint is a greatly streamlined budget with far more disciplined spending. I think this will invigorate the economy, which will in turn push up the price of gasoline.

But don't think for a moment that thousands of scientists, engineers, and companies will sit idly by as they watch a market grow for a gasoline alternative.

Biofuel — renewable because it comes from plants — is an obvious solution, but not an easy one. Corn-based ethanol, which makes up 10% or so of the gasoline in your tank, hasn't been a resounding success, and some would argue it's becoming a boondoggle.

At this point, the United States can't meet the 15% maximum ethanol blend with corn-based ethanol alone and feed people for a reasonable price at the same time.
But other forms of biofuel change the game entirely.

Cellulosic ethanol is a strategic alternative

Current federal law (and more and more states) calls for a dramatic rise in sugar-based ethanol, which I refer to as cellulosic ethanol because it comes from the sugar trapped in the cell walls of plants. Other biofuel, including plant-based diesel, algae-based fuel and even higher-tech cellulosics like isobutanol, are chock-full of potential.

What matters here? The science, the process, scalability and, of course, the economics matter. A few technologies look to have mastered all these elements, and these are the ones investors must keep an eye on.

The market recently welcomed two cutting-edge players, Gevo (Nasdaq: GEVO) and Solazyme (Nasdaq: SZYM), and the stage could well be set for more.

Gevo derives isobutanol from cellulose. Isobutanol is a replacement for gasoline, with no special parts or engine modifications needed — something that ethanol is not. Solazyme has created a method to make algae-based fuel on a huge scale quickly, efficiently, and increasingly economically.

Action to Take –> The bottom line is the strong the recovery, the higher the price of oil, and the more interested Wall Street will be in a piece of the biofuel pie.

And while the future will no doubt be volatile, I renew my call on this sector. Biofuel has as much potential as anything I've seen.

Note: You can tell I'm excited about the investment opportunity in biofuels, but there are a number of game-changing ideas in the market. From tiny power plants that can be buried in your lawn, to revolutionary pain killers made from cobra venom, there are more game-changing ideas I think could be “the next big thing.” To get briefed on these opportunities, and several others that I think could return many times your money, please watch this video.


–Andy Obermueller

Disclosure: Andy Obermueller and/or StreetAuthority, LLC hold a position in NASDAQ:GEVO, NASDAQ:SZYM.

This article originally appeared on StreetAuthority
Author: Andy Obermueller
Two “Alternative” Ideas for $100 Oil

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Two "Alternative" Ideas for $100 Oil

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4 Stocks That Could Double Your Money

June 10th, 2011

4 Stocks That Could Double Your Money

In this current tough stock market, it pays to play defense with value-oriented stocks. But you should always make sure you have exposure to the more dynamic investment opportunities as well by holding at least a few names that carry major upside potential.

Taking this approach, I selected four stocks that qualify as “swing-for-the-fences” investments. They carry risk, but could also help power up your portfolio, despite the broader market's travails.

Here they are…

1. Exide Technologies (NYSE: XIDE)
I've been impressed with the far-reaching turnaround efforts of this car battery maker, yet shares always seemed a bit too pricey in relation to near-term cash flow prospects. This is not the case anymore. After a 40% pullback and a still-bright outlook, shares now look set to deliver 100% gains for those with a two to three-year time horizon.

Exide first came up on my screen in February 2010, when the company ended a supply relationship with Wal-Mart (NYSE: WMT). It's tough to lose a key customer, but management swallowed its medicine by foregoing ample revenue that carries low profit margins. That's the cost of doing business with Wal-Mart, so management wanted out. Exide posted negative gross margins in fiscal 2009 and fiscal 2010, and vowed to do better in the following fiscal year.

Gross margins indeed rose back up above 7% in fiscal 2011, helping to push operating profits up to $138 million (prior to restructuring charges) — the best showing in seven years. In addition, the company more than made up for the lost Wal-Mart business, eking out a 7% sales gain.

So why are shares coming under pressure? Because management recently decided to focus on customer relationships by temporarily absorbing big increases in the cost of lead, a key component in batteries. Exide will have to pass on these cost increases to customers in coming months, but wanted to give them time to adjust. “For the most part, we held pricing steady in the face of rising commodity and fuel costs with the intent of securing new volume,” noted CEO James Bolch in a company press release.

Looking ahead, management expects the eventual price hikes, coupled with a few new customer wins to push operating income at least 25% higher in fiscal (March) 2012 to a range of $160 to $170 million. Going one step further, rising sales of new vehicles (which are expected to grow at a 10% clip for the next few years, according to Goldman Sachs), coupled with replacement batteries from an aging fleet of existing vehicles, could push sales up 10% in fiscal 2013 and operating income to about $200 million.

Exide's market value currently stands at about $575 million. But as the company's turnaround continues, I expect shares to trade up to about six times my projected fiscal 2013 operating income target. This would value the company at about $1.3 billion (or $15 a share), roughly twice the current price. This multiple won't arrive this year, so patience will be required.

2. Assured Guaranty (NYSE: AGO)
I ran through my investment thesis for this municipal-bond insurer back in April.

Since then, an increasing number of states finally appear to be making real headway with their operating deficits. Therefore, the chances of a major bond default at the state or local level are starting to recede. Shares still trade for about five times projected 2012 profits of about $3 a share, even though the company's real earnings power is likely to move back up to the $4 to $5 range when the economy rebounds. My bullish profit view stems from the fact that Assured Guaranty now faces a lot less competition and should have real pricing power for its bond insurance going forward.

But forget my bullish profit view and focus on Assured Guaranty's book value instead. Current book value now stands at $27 a share with the possibility to hit $30 by the end of 2012 if present trends continue. Look for shares to trade up from a current $15 to book value by then — a 100% gain — once concerns about the possibility of state or local municipal-bond defaults have completely gone away.

3. Monster Worldwide (NYSE: MWW)
It's tough to be thinking about employment stocks when monthly job data has just cooled off. This is why shares of Monster Worldwide have been crumbling in recent sessions to just $13, a nine-month low. Yet if you believe the United States will avoid recession and employment trends will start to recover later in 2011 and into 2012, then shares of Monster Worldwide could be the best play on this theme, a topic I discussed in more detail in February.

Back then, I encouraged investors to focus on the prospects for $300 million in earnings before interest, taxes, depreciation and amortization (EBITDA) by next year. But I'm now looking at where this stock may go in a year or two. Projected 2013 EBITDA could approach $350 million. If that's the case and shares garner a multiple of 10 times that figure within a year or two, then you're looking at a stock approaching $30 a share, well above the current $13 price.

4. Winnebago (NYSE: WGO)

This looks like a tough stock to own this year. Gasoline prices remain too high and consumer spending remains too weak. Yet this is precisely the time to be looking at “out-of-favor” stocks such as Winnebago, whose shares have dropped from $16.50 to $10.50 in the past four months. In the middle of the last decade, shares routinely traded above $30.

To find this stock appealing, you have to assume the broader U.S. economy will get back on a steady growth path in a year or two. If that happens, then the ever-rising tide of aging baby boomers would create a powerful base of customers for Winnebago. The company earned an average of $1.65 a share from fiscal (August) 2004 through August 2007. If per-share profits simply rebound back to $1 a share in fiscal 2013, then investors will start to push up the multiple to about 20 times projected profits in anticipation of further profit gains in subsequent years. This would push the $10.50 stock north of $20.

Action to Take –> To bag a double, each of these companies needs a better economy. The outlook for 2011 remains pretty dismal, but an improving position in 2012 and 2013 would help these companies see rising profits and a rising multiples, leading to higher share prices.


– David Sterman

P.S. — Few investors realize that a 20-year energy agreement between the United States and Russia is about to expire. This deal supplies 10% of America's electricity. As broke as our government is, the situation is so serious that President Obama is asking for $36 billion to avert this crisis. And Republicans support him. Here's what's going on…

Disclosure: Neither David Sterman nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

This article originally appeared on StreetAuthority
Author: David Sterman
4 Stocks That Could Double Your Money

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4 Stocks That Could Double Your Money

Uncategorized

Buy This Fund Manager for 50% Upside Potential

June 8th, 2011

Buy This Fund Manager for 50% Upside Potential

In the 1990s, not owning a Janus mutual fund in any of your investment accounts was tantamount to having to carry a Waltons lunch box at an all boys school in fourth grade. Believe me, I know what the word “ostracized” means and I really don't want to talk about it anymore. Anyway, Janus was one of the hottest of the hot growth fund managers during the tech-bubble era. Its flagship Janus Fund and high octane growth Janus Twenty fund took in billions and billions of dollars.

If you wanted aggressive growth back then, Janus was the go-to shop. Then, like an angry DJ pulling the record player arm off of the L.P., the music stopped…

Janus Capital Group Inc. (NYSE: JNS) was born in the late 1960s as Stillwell Financial, a subsidiary of Kansas City Southern Industries (NYSE: KSU), the parent company of the Kansas City Southern Railroad. l don't know about you, but when I think “railroads,” mutual funds always come to mind. But such was the fancy of 1960s and 1970s industrial conglomerates. (Remember Gulf and Western?) Anyway, the firm, so named for its flagship Janus Fund, switched to its current moniker permanently in 2003.

A 400% dividend hike and a tradition of superior growth management
One of my favorite sayings that can be applied to investing comes from hockey legend Wayne Gretzky: “I skate to where the puck is going to be!” Everyone who fancies themselves as an investment picker should have that tattooed on the palm of their hand and look at it at least 10 times daily. Back in the day, it seemed that Janus was always in scoring position.

The company turned in stellar numbers in the 1990s and produced rock-star fund managers, most notably Tom Marsico, who went on to fame and fortune at the helm of his own firm, Marsico Capital Management.

However, when the bubble burst, Janus experienced plenty of the associated heartache that included investor flight and participation in a Securities and Exchange Commission investigation into market timing for favored clients in 2003. The punishment came down in the form of Janus shelling out a cool $262 million in fines. Ouch.

But after the downturn of 2000-2002, large-cap growth (Janus' core competency) was out of style. Oil, gold, emerging markets, real estate, bonds and other asset sleeves have outperformed for nearly a decade. Still, all the while Janus has still been able to produce superior results: 42% of Janus' funds have either a four- or five-star ranking from Morningstar.

But all that may be changing. In the past few months, the broader equity markets have seen a significant shift from commodity-related stocks and international names to domestic (U.S. equity) industrials, transports, consumer staples, even utilities. The larger theme here, though, is that things are tilting toward U.S. large-cap equities, which is definitely in Janus' wheelhouse.

Is it Janus' time to rise?

At the end of March, Janus had about $173.5 billion under management compared with $165 million in 2010. In 2010, revenue recovered to $834.5 million, better than its 2008 level of $826.7 million and way better than the anemic 2009 revenue number of $684 million. This year is on track to improve on that number. First-quarter revenue came in at $265.4 million and is projected by analysts to total $922 million for the whole year, good for an increase of nearly 10.5% from last year. With its recent first-quarter report, the company also delivered a nice annual dividend boost from $0.04 to $0.20. This would put the current yield at around 2.1%. I'd say a 400% dividend hike is a good sign.

When tech stocks cratered, so did Janus. About 11 years ago, Janus was a $50-plus stock. The popping of the tech bubble and the economic slowdown attributed to 9/11 brought shares down to around $10 (see chart below). There was some nice movement back up to $30 during the highest period of the 2005-housing boom. However, thanks to the financial crisis of 2008, shares are back to their post-9/11 level.

Mutual Fund, OPTIONS, Real Estate, Uncategorized

Beryllium…Even Sexier Than it Sounds

June 7th, 2011

The young Marine sniper lays motionless in a shallow bed of sand and broken rock on the mountainside in Afghanistan. The sun blazes down, and he’s sweating. He’s spent the morning scanning a valley for Taliban fighters who keep a low profile in their maze of spider holes.

After a while, another Marine – the spotter – says, “I’ve got him. Just next to the tree, to the left of that stone house.”

The sniper stares down through the optics of his rifle. Yes, indeed. The image is perfect from over 1,000 meters away. There’s a very shallow footprint in the dirt, and next to it is a telltale cigarette butt. This Taliban has just smoked his last one. Hey, they’re called coffin nails for more than one reason.

The sniper turns a small knob on the gun sight. The image holds steady. There’s no vibration at all. Clear view. Eyeballs on target. Confirmed bad guy. Fire at will. Squeeze the trigger, and… Wham! Round traveling downrange. Kill shot.

Later that day, an unmanned aerial vehicle (UAV) flies over the site of the morning’s activities. The pilot is faraway, in a “cockpit” in Nevada, USA, where he’s linked by satellite communications to the battlefield.

In a routine maneuver, the pilot sets the UAV in a circling pattern. The aircraft is so high up that no one on the ground even knows that it’s there. The pilot slews a camera on the bottom of the UAV, down toward that stone house. The image is crystal clear. It’s like the pilot is looking out of a plate glass window next door.

Down below, the pilot sees about a dozen Taliban assembling and wiring bombs. He wonders to himself, “Why are they still there, next to that house? Didn’t they learn anything when their buddy got shot this morning? Oh, well. Those bombs they’re building will soon find their way to sites along roads in the nearby valley. We need to do something, and do it now.”

The UAV pilot – assisted by a backup team of observers in Nevada and Afghanistan – quickly alerts the chain of command. There’s a well-drilled procedure in this circumstance. Signals flash between orbiting satellites, linking people in Nevada with a command center near Kandahar.

Numerous sets of eyeballs review the imagery. There’s no doubt on this one. Heck, you can positively identify some of the Taliban men based on facial features. There’s simply no vibration in the camera on the UAV. It’s a positive ID – enough to satisfy even the staff of flinty lawyers who look over every shoulder these days.

“Take them out,” comes the order. “Authorization granted. Weapons clear.”

The pilot in Nevada has by now positioned the UAV into a firing position. He makes his attack run. With numerous witnesses in attendance, the UAV pilot hits a red button on the control stick. He feels nothing, but half a world away, a rocket motor ignites inside a Hellfire missile. The weapon slides effortlessly off a lightweight rail, accelerates like greased lightning and moves down out of the sky, toward the aim point.

The missile moves so fast, in fact, that it strikes the ground before its sound reaches the eardrums of any of the Taliban fighters. When it hits, there’s a sudden flash and a blast wave moving at over 25,000 feet per second engulfs the area. Within a few thousandths of a second, several of the bombs that the Taliban were building cook off as secondary explosions.

The operational commander requests that a nearby Navy aircraft, an F/A-18F Super Hornet, fly over the site. She needs an independent battle damage assessment to determine if a follow-up strike is necessary.

Within a few moments, there’s the crackling sound of powerful jet engines above the mountains. A haze-gray aircraft takes its vector from the air controllers and moves toward the target scene. The flight officer in the back seat of the Super Hornet slews a camera that’s part of an imagery pod hanging from one of the wings.

The gimbal system of the imagery pod tracks down to the exact global position on the ground where the missile hit. There’s no vibration in the camera, none at all. Again, a crystal-clear image transmits from the aircraft and bounces off a series of satellites and back to command centers across Afghanistan, to ships at sea and to Nevada.

The imagery indicates that the first strike by the Hellfire missile did the job, with the secondary explosions delivering any necessary coup de grace. The next decision for the battlefield commander is whether or not to send in a team of Special Forces to pick up the pieces… And so it goes.

The fictional story I just recounted is based on the facts of modern warfare. These kinds of things happen out on the modern battlefield.

How is it that things work so well in a complex battle space? Why doesn’t that gun sight vibrate? Why do those UAV cameras work so nicely? Why does that missile rail shoot so straight? And what about those satellite systems that bounce the signals between Afghanistan and Nevada?

The short answer is “rare earths.” The longer answer is a specific rare earth known as beryllium, the magic metal.

In my investment service, Energy & Scarcity Investor, I’ve been following beryllium since February 2008. That was when I recommended Brush Engineered Materials, which changed its name and stock ticker in March 2011 to Materion Corp. (NYSE:MTRN).

Here’s a bit of what I told you a couple years ago: Beryllium is a silvery white metal, No. 4 on the periodic table of elements. Beryllium is one of the lowest-density metals there is. It is very lightweight. Yet beryllium has six times the specific stiffness of steel. Here are some more impressive points about beryllium:

  • Beryllium resists oxidation, even at high temperatures.
  • It has a high melting point.
  • It holds its mechanical properties up to extremely high temperatures.
  • At the same time, you can freeze beryllium to incredibly low temperatures and maintain its strength and stiffness.
  • It has high thermal conductivity, plus the highest specific heat of any metal.
  • Beryllium has what is called superior “thermal diffusivity,” so it radiates heat away.
  • It has superb acoustic damping characteristics.
  • And it has the highest X-ray transparency of any metal material.

So what does all this mean? It means that beryllium has an incredible combination of properties that occur in no other metal. And it means that super-smart people have figured out how to use beryllium in all sorts of applications.

Rocket scientists use beryllium…literally…in rockets. Beryllium goes into satellites and space structures, aircraft, optical systems, semiconductors, medical imaging and nuclear systems. And as the story up top demonstrates, there’s beryllium in gun sights, rocket launch rails, camera gimbal systems and more.

When designers have to come up with products that work at the extreme edges of performance – from the dirt of a mountainside sniper position to the depths of outer space – they specify beryllium.

The robust and growing demand for beryllium inspired my recommendation of Brush-Materion three years ago. The stock took a hit in the market crash of 2008 and 2009, but has since recovered and is up nicely. Business is good, and Materion shares are holding their own. Today, Materion has a strong position within the beryllium market.

But Materion is not the only compelling beryllium play, nor is beryllium the only compelling rare earths play. I recently recommended a second beryllium play to the subscribers of Energy Scarcity and I continue to monitor the fast-moving rare earths sector very closely.

I would advise all Daily Reckoning readers to do likewise. The rare earths are one of the very few industries that possess robust long-term, growth potential, even if global economic activity continues to disappoint.

Regards,

Byron King,
for The Daily Reckoning

Beryllium…Even Sexier Than it Sounds originally appeared in the Daily Reckoning. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas.

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Beryllium…Even Sexier Than it Sounds




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Commodities, Uncategorized

Don’t Buy These High-Flying Stocks Until You Read This

June 7th, 2011

Don't Buy These High-Flying Stocks Until You Read This

If you're a skeptic, then you probably get a little nervous when you see lots of headlines about a stock or industry that are all positive. To the skeptical investor, this suggests an investment has peaked and is set to drop. Well, it's like that right now in one popular segment of the energy sector. These stocks have gotten lots of press lately because, as a group, they've risen nearly 60% in the past 12 months. The best ones have doubled or tripled during that time.

Investment dollars have been flowing to this energy source because many people consider it the best available alternative to oil. It has enjoyed high demand globally, particularly in China, where it accounts for as much as 70% of energy consumption.

I'm referring to coal, and I think it's an investment to be wary of right now.

Coal's on my “watch list” not just because it seems overly popular, but because of a disturbing trend — high-priced, potentially unprofitable acquisitions. The coal industry has been steadily consolidating for the past several years, and the price tags for the companies being acquired are often excessive. This type of dealmaking is a bearish indicator because it can severely hinder the bottom line for a company.

Here's a prime example: On May 2, the second largest coal producer in the United States, Arch Coal Inc. (NYSE: ACI) bought West Virginia-based International Coal Group Inc (NYSE: ICO) for $3.4 billion, or 11 times International Coal's projected 2011 earnings before interest, taxes, depreciation and amortization (EBITDA). Arch probably far overpaid for this acquisition, shelling out $14.60 a share for International Coal when its stock was only trading for $11 a share (more than a 30% premium). Moreover, the deal was based on optimistic EBITDA estimates International Coal will only be able to achieve if it has its best year ever. Mind you, this is a company that lost money in three of the past five years leading up to 2010.

Here's another example… On January 29, the third largest U.S. coal producer, Alpha Natural Resources (NYSE: ANR), bought Massey Energy (NYSE: MEE) for $69.33 per share — more than a 20% premium at the time. The deal totaled $7.1 billion, or about eight times Massey's 2011 EBITDA, a multiple that initially seems a bit more reasonable than the one paid in the Arch Coal-International Coal deal. However, it's based on a very ambitious 2011 EBITDA projection of $924.6 million. To achieve that, Massey will have to more than triple EBITDA from $267.3 million last year.

That doesn't seem terribly likely, especially now that overall economic growth appears to be slowing — or that Massey slashed its 2011 guidance barely a month after the merger.

Post-deal stock performance for Arch Coal and Alpha Natural Resources suggests a downturn in coal is already underway. On May 2 when the Arch Coal-International Coal deal was announced, Arch Coal was trading for $33.53 per share. Now? Not even $27 a share — about a 20% loss in just over a month. Since the January 29 acquisition of Massey Energy, Alpha Natural Resources is down from $57.88 per share to about $51 a share — a 12% drop. The industry as a whole is off 7% in the past month.

ETF, Uncategorized

Bank Stocks Plunging! What’s next …

June 2nd, 2011

Bank stocks have just crashed through key support zones … broken down to new lows for the year … and started on a beeline for their worst levels of 2010.

That’s what my KBW Bank Index chart is showing you — in aces and spades. It’s telling you that the 24 major banks it tracks — including Bank of America, Citigroup, Wells Fargo, and JPMorgan Chase — are getting slammed.

But this is more than just about banks. It’s also a stark warning for other financial stocks, housing stocks, and ultimately, most of the U.S. stock market.

Why do bank stocks matter? Because banks are the heart and soul of our economy. They make the loans that consumers use to buy houses, cars, and computers. They provide the liquidity to businesses who want to finance inventories, build factories, and construct office towers.

Problem: They’re loaded up with millions of foreclosed homes, lousy real estate loans, and other bad assets.

Yes, the Fed managed to paper over the banks’ problems for a while. But now, the jig is up. House prices have just set new lows, and the bust is back with a vengeance.

Many investors are going to lose fortunes … just like they did the LAST few times bank stocks crashed. But YOU don’t have to take this lying down! You can go on the offense.

Heads Up:
Major New Investment Recommendations
Coming THIS COMING MONDAY, June 6!

When blockbuster news like this explodes into the headlines, you really have only two choices: You can either run for cover or come out fighting and by doing so, grab huge profit potential.

The last time this happened, savvy investors who went on the offensive could have made fortunes with investments that are designed precisely for this situation. For example,

  • Between October 11, 2007 and November 21, 2008, an investment that surges when real estate stocks plunge jumped 166% in value …
  • Between October 11, 2007 and March 6, 2009, an investment that soars when banking stocks sink jumped 241.9% …

Needless to say, not all investments can go up that far in such a short period of time. Nor can we go back in time to grab them now. But just look at how a couple of my latest recommendations are doing right now:

Yesterday, even as the Dow cratered, an inverse investment I had recommended shot up almost 4% in value.

Another ETF I recommended first thing in the morning closed the day up more than 6%.

IN A SINGLE DAY!

Can they always do this well? Of course not! Just bear in mind that this is what’s possible without shorting, futures, options or any complex strategies — all strictly with ETFs that you can simply buy low and sell high like any ordinary stock!

Now, with bank stocks plunging and the housing bust striking anew …

I’m getting ready to go for similar kinds of opportunities, using the same exact investment vehicles that surged the last time around.

This coming Monday, June 6, I am going to issue a set of new trading recommendations to seize the moment. If you’d like to get them, you need to jump on board with me before then.

Your deadline: Sunday, June 5!

Plus, by joining me now, you can still take advantage of our $400 Charter discount.

But you will have to hurry: This new phase of the crisis isn’t waiting for you, me or anybody else. We must move quickly.

Once I issue these new recommendations, you will have missed your opportunity to save $400 total per year on your membership — and more importantly, you will have missed one of the greatest profit opportunities I’ve seen in a long time!

Click here for my video where I give you my strategy and show you how to join.

Best wishes,

Mike

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Bank Stocks Plunging! What’s next …

Commodities, ETF, Mutual Fund, OPTIONS, Real Estate, Uncategorized