Buying This Stock Is a Major Mistake

A glance at J.C. Penney's (NYSE: JCP  ) chart, illustrating the stock's recent action, should lead to one reaction: Have a bunch of investors gone absolutely nuts?

J.C. Penney shares spiked last week as the retailer promised major changes to the way it runs its business. For example, management has decided to utilize a low-price strategy all the time instead of boosting prices for later markdowns. Under that new framework, promotional sales will occur less frequently because the prices will already be low.

The retailer also plans a makeover, including adding more "stores with stores." It's been implementing such store-within-store arrangements with companies like Sephora and Martha Stewart Living Omnimedia.

CEO Ron Johnson, who is perceived as a magical hire for Penney because he previously oversaw style for Apple's retail floors, vowed that Penney's profit will hold up despite the major changes planned, and he's also vowed to pull this all off without borrowing a penny.

Anybody who's thinking about buying into J.C. Penney now needs to think long and hard before pulling the trigger. The stock's horribly overvalued, floated far too high on hopes and dreams. J.C. Penney has also decided to stop reporting monthly same-store sales and offering financial guidance; reducing transparency can signal rocky times ahead.

J.C. Penney shares are trading at 24 times forward earnings, with a PEG ratio of 1.86. That's far higher than many retail rivals; Wal-Mart's (NYSE: WMT  ) forward price-to-earnings ratio is 12, and its PEG ratio is 1.41, and Target's (NYSE: TGT  ) also trading at 12 times forward earnings, and a very reasonable 1.01 PEG ratio.

Value-oriented investors often view Costco (Nasdaq: COST  ) as an "expensive" discount retail stock, but heck, it's even trading at lower multiples than Penney. Costco's forward P/E is 19, and its PEG ratio is 1.60. Plus, Costco's actually been performing very well; unlike Penney, no turnaround's required.

J.C. Penney should be put in the same cautionary category as Sears Holdings (Nasdaq: SHLD  ) . Turnarounds are possible, but they're much easier said than done. Investors should look at stocks like these with major scrutiny, and focus on buying shares of far stronger retail stocks.

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Baidu Is Hungry for More

Shares of Baidu (Nasdaq: BIDU  ) soared 6% on Friday, but the pop had little to do with the Chinese dot-com giant's upcoming quarterly report.

A few global consumer-facing Internet companies took off after a Wall Street Journal report claimed that Facebook was just days away from filing to go public. A successful debut in the coming months by the social networking behemoth should boost valuations for the sector -- or so the theory goes.

Baidu isn't a social network. Its bread-and-butter business is manning China's most popular search engine. It has several Web 2.0 initiatives under that realm, but it's certainly not the Chinese social networking play that investors will find in Renren (NYSE: RENN  ) and SINA (Nasdaq: SINA  ) .

Renren runs the country's top social networking website. SINA operates the Twitter-like Weibo micro-blogging broadcasting platform. For those scoring at home, Renren and SINA shareholders were treated to 26% and 12% surges, respectively, on Friday.

The only real question is if Baidu will deliver monstrous growth or ridiculously monstrous growth when it reports in a few weeks. Analysts see revenue soaring 88% to nearly $700 million for the final three months of last year. They also see Baidu's earnings climbing 82% to $0.91 a share. Unlike global search leader Google (Nasdaq: GOOG  ) , for which Wall Street has been scaling back expectations in recent weeks, Baidu's targets continue to climb. The pros figured that Baidu would earn just $0.85 a share three months ago. The goal was net income of $0.88 a share just last month.

Bubbling expectations and a percolating share price can be a recipe for disappointment. Here is where Baidu will need to make sure that its numbers are closer to "ridiculously monstrous growth" than merely monstrous.

There will also be opportunities outside of the numbers for Baidu to impress or depress investors. Google has been hiring again in China, hinting at a renewed push for relevance in the restrictive yet promising Chinese Internet market. At the same time, Baidu itself is making its own plans to matter outside of China.

Things should get interesting tonight, and I know which side I'm on.

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A.O. Smith Beats Estimates on Top and Bottom Lines

A.O. Smith (NYSE: AOS  ) reported earnings on Jan. 27. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), A.O. Smith beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew significantly, and GAAP earnings per share increased significantly.

Gross margins improved, operating margins grew, net margins contracted.

Revenue details
A.O. Smith booked revenue of $475.8 million. The 10 analysts polled by S&P Capital IQ anticipated a top line of $460.1 million. Sales were 29% higher than the prior-year quarter's $370.2 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.68. The 12 earnings estimates compiled by S&P Capital IQ predicted $0.64 per share on the same basis. GAAP EPS of $3.91 for Q4 were 0.4% higher than the prior-year quarter's $0.69 per share.

Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 32.6%, 120 basis points better than the prior-year quarter. Operating margin was 10.3%, 210 basis points better than the prior-year quarter. Net margin was 6.7%, 200 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $462.7 million. On the bottom line, the average EPS estimate is $0.61.

Next year's average estimate for revenue is $1.94 billion. The average EPS estimate is $2.83.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 145 members out of 149 rating the stock outperform, and four members rating it underperform. Among 51 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 49 give A.O. Smith a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on A.O. Smith is outperform, with an average price target of $46.56.

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• Add A.O. Smith to My Watchlist.

Cintas Passes This Key Test

There's no foolproof way to know the future for Cintas (Nasdaq: CTAS  ) or any other company. However, certain clues may help you see potential stumbles before they happen -- and before your stock craters as a result.

A cloudy crystal ball
In this series, we use accounts receivable and days sales outstanding to judge a company's current health and future prospects. It's an important step in separating the pretenders from the market's best stocks. Alone, AR -- the amount of money owed the company -- and DSO -- the number of days' worth of sales owed to the company -- don't tell you much. However, by considering the trends in AR and DSO, you can sometimes get a window onto the future.

Sometimes, problems with AR or DSO simply indicate a change in the business (like an acquisition), or lax collections. However, AR that grows more quickly than revenue, or ballooning DSO, can also suggest a desperate company that's trying to boost sales by giving its customers overly generous payment terms. Alternately, it can indicate that the company sprinted to book a load of sales at the end of the quarter, like used-car dealers on the 29th of the month. (Sometimes, companies do both.)

Why might an upstanding firm like Cintas do this? For the same reason any other company might: to make the numbers. Investors don't like revenue shortfalls, and employees don't like reporting them to their superiors.

Is Cintas sending any potential warning signs? Take a look at the chart below, which plots revenue growth against AR growth, and DSO:

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. FQ = fiscal quarter.

The standard way to calculate DSO uses average accounts receivable. I prefer to look at end-of-quarter receivables, but I've plotted both above.

Watching the trends
When that red line (AR growth) crosses above the green line (revenue growth), I know I need to consult the filings. Similarly, a spike in the blue bars indicates a trend worth worrying about. Cintas' latest average DSO stands at 39.6 days, and the end-of-quarter figure is 39.9 days. Differences in business models can generate variations in DSO, and business needs can require occasional fluctuations, but all things being equal, I like to see this figure stay steady. So, let's get back to our original question: Based on DSO and sales, does Cintas look like it might miss it numbers in the next quarter or two?

I don't think so. AR and DSO look healthy. For the last fully reported fiscal quarter, Cintas' year-over-year revenue grew 8.8%, and its AR grew 11.2%. That looks OK. End-of-quarter DSO increased 2.2% over the prior-year quarter. It was about the same as the prior quarter. Still, I'm no fortuneteller, and these are just numbers. Investors putting their money on the line always need to dig into the filings for the root causes and draw their own conclusions.

What now?
I use this kind of analysis to figure out which investments I need to watch more closely as I hunt the market's best returns. However, some investors actively seek out companies on the wrong side of AR trends in order to sell them short, profiting when they eventually fall. Which way would you play this one? Let us know in the comments below, or keep up with the stocks mentioned in this article by tracking them in our free watchlist service, My Watchlist.

• Add Cintas to My Watchlist.

Did Obama really make government bigger?

NEW YORK (CNNMoney) -- President Obama = big government.

Or so say the Republican presidential candidates. Newt Gingrich has labeled him the "food stamp president" for expanding entitlements, while Mitt Romney has said the size of the federal government has "exploded" under Obama.

By many measures, the federal government has indeed grown during Obama's tenure. Spending as a share of the economy has gone up. The number of federal employees has risen. More Americans are relying on federal assistance.

But not all of those things were the president's doing.

CNNMoney takes a look at the facts.

Spending: Government spending as a share of the economy has hovered around 24% during the Obama administration, several percentage points higher than under President Bush, according to Congressional Budget Office data. It's also elevated from the historical average of 20.7% over the past 40 years.

Much of that increase has come from mandatory spending, including Medicare, Social Security and Medicaid. Those programs have expanded mostly because of the recession, which has prompted more people to apply for Medicaid and Social Security, as well as the growth in people hitting retirement age.

"How much do you lay at the recession's feet versus the president's policies?" said Josh Gordon, policy director at the Concord Coalition, a fiscal policy group. "The aging of the population can't be blamed on the president."

Many safety net programs, such as Medicaid and food stamps, automatically expand during economic downturns. And in the face of prolonged high jobless rates, Congress has authorized extending federal unemployment benefits to a record 99 weeks. The initial extension was passed under President Bush.

The conservative Heritage Foundation, which advocates for a reduced government role in society, acknowledges that much of the increase in federal spending originates in laws passed by this Congress and previous ones, but feels that Obama could do more to rein it in.

"He didn't do it alone," said Patrick Louis Knudsen, a senior fellow at Heritage. "But he tends to do little to reduce spending. He is taking the size of government to new levels and he's keeping it there."

Of course, Obama did press for a record $787 billion stimulus plan in 2009, as well as a bailout of the automakers in Detroit. But he also deserves credit for winding both of those down, said Stan Collender, partner in Qorvis Communications, a public affairs firm.

Employees: The number of federal employees grew by 123,000, or 6.2%, under President Obama, according to the White House's Office of Management and Budget.

Much of the hiring increases came in the departments of homeland security, justice, veterans and defense.

The federal payroll has been expanding since President Bush took office, after declining during the Clinton administration. But it's still a tad smaller than it was in 1992, said Craig Jennings, a federal budget expert at the progressive think tank OMB Watch.

The federal government has been one of the few areas that's grown during the economic downturn. The private sector remains down 1.1 million jobs from the start of 2009, while state and local governments have shed 635,000 positions.

Regulation: While regulations have been proliferating since the Reagan administration, the pace of large-scale regulation has picked up under Obama.

There were 75 major regulations adopted in Obama's first two years in office, compared to 120 during Bush's entire term, according to the Heritage Foundation, citing Government Accountability Office statistics. Fiscal 2010 saw a record 43 rules adopted.

Major regulations are those that have cost or saved more than $100 million. They range from new rules concerning pipeline safety to air cargo screening to investment fee and expense disclosures.

"These new burdens are being put on and someone has to pay for them," said James Gattuso, a senior fellow at Heritage.

Regulatory activity is likely to pick up in coming years as agencies start implementing two of Obama's major initiatives -- the Affordable Care Act and the Dodd-Frank financial reform law.

Overall, however, the Obama administration has adopted roughly the same amount of regulations as Bush did, according to the White House. The administration says the "net benefit" -- savings plus other factors such as the economic value of lives saved -- of the regulations adopted in Obama's first two years in office exceeded $35 billion.

What's important to look at, according to OMB Watch's regulatory expert Jessica Randall, is the impact the regulations have had. Many have helped Americans, such as the health care reform act allowing children to remain covered under their parents' health insurance until age 26.

"The regulations issued under Obama have benefited people's lives more than they've cost them," Randall said. 

Top Stocks To Buy For 2012-1-31-1

AMERIGROUP Corporation (NYSE:AGP) shares were transacted unexpectedly with a volume of 2.48 million shares as compared to its average volume of 796,021.00 shares. AGP opened at $58.76 scored +3.64% closed $57.83. Its 52 week price range is $24.69 - $58.98.

AGP has earnings of $233.97 million and made $5.67 billion sales for the last 12 months. Its quarter to quarter sales remained 14.61%. The company has 49.57 million of outstanding shares and 49.04 million shares were floated in the market.

AGP has an insider ownership at 1.47% and institutional ownership remained 111.40%. Its return on investment (ROI) for the last 12 month was 18.34% as compare to its return on equity (ROE) of 22.98% for the last 12 months.

The price moved ahead +9.87% from the mean of 20 days, +18.58% from 50 and went up +41.30% from 200 days average price. Company�s performance for the week was +5.22%, +22.68% for month and yearly performance remained +109.38%.

Its price volatility for a month remained 3.13% whereas volatility for a week noted as 3.50% having beta of 0.65. Company�s price to sales ratio for last 12 months was 0.51 while its price to book ratio for the most recent quarter was 2.55 and its earnings before interest, tax, depreciation and amortization (EBITDA) remained 400.14 million for the past twelve months.

Weekly Market Outlook: Energy and Consumer Sectors Making Big Moves

The market managed to make a third straight week of gains, and the 20th weekly gain in the last 25. We’re now up 26% since the end of August thanks to what’s been a surprisingly persistent rally.

We’ll look at the upside and downside in a moment, but first, there’s quite a bit of economic data that actually matters that we need to work through first.

Economic Calendar

There’s too much info to detail all of it, so here are the highlights from last week’s economic data.

• Retail sales, with or without autos, were up 0.3%, though that was shy of December’s growth rate. Total retail sales levels for the U.S. are now back up to all-time peak levels.
• Housing starts were well up, from 520K to 596K, while building permits fell from 627K to 562K in January. Construction remains at mere maintenance levels.
• Producer inflation is starting to creep in. PPI was up 0.8% in January, while Core PPI was up 0.5%. Higher food costs and oil costs are the main culprits, and neither is going away anytime soon.
• CPI (regular inflation) was up 0.4% last month, while Core PPI was up 0.2%. The inflation "rate" is now 1.63%, which is the highest it’s been in a normal (not being compared to a deflationary environment) period since late 2008. While rattling, that’s actually not an unhealthy level.
• Industrial productivity was down 0.1% last month, while capacity utilization slumped from 76.2% to 76.1%. That’s not a surprising or problematic post-Christmas decline, and both data sets remain on long-term uptrends.

Economic Calendar

[Click all to enlarge]

As for the coming week, much less is in store:

• Tuesday’s consumer confidence is expected to have risen from 65.6 to 67.0 for February.
• Wednesday’s existing home sales likely slumped from a rate of 5.28 million to 5.23 million.
• Thursday’s durable orders for January should be up a whopping 3.0%, though that number will have only swollen by 0.6% not counting transportation orders.
• We’ll also get new homes sales levels on Thursday; analysts expect a slight decline to a rate of 310K.
• We’ll hear the final Michigan Sentiment number on Friday; it’s expected to roll in at 75.1.

S&P 500

The SPX gained 13.86 points last week (+1.0%), further extending an incredible – and unlikely – rally. Progress was made every day except Tuesday, even if it was minimal progress each day. In fact, those minimal daily gains may well be the reason the broad market has managed to keep making progress.

So far, we’ve yet to see the S&P 500 index close to, or barely even with/above, its upper Bollinger band throughout this five-month rally. Most major tops occur with a brilliant burst of bullishness that extends well above the upper band, and usually on a volume surge. The very moderated pace we’ve seen since August has pre-empted either of those two events occurring. Ergo, we’ve not seen a scenario where the majority of the market has decided it’s finally time to start taking profits.

On the other hand, in the shadow of a 26% rally, and when the index is now a stunning 15% above the 200-day moving average line (green), we may not see a blowoff top when the next top is made. Instead, the strength may just quietly fade away. Indeed, we may finally be seeing some evidence of such a scenario now.

Take a look at the daily chart of the S&P 500 below, for perspective.

S&P 500 – Daily

The rally appears even more impressive with the weekly chart below, but two subtle things become a little clearer on the weekly chart.

The buying volume is fading. The green (bullish) volume bars since early September had been steadily getting taller, but over the last three week they’ve been getting shorter and shorter. The number of buyers is shrinking now, and actually has been for over a month.
Though we don’t want to read too much into the VIX’s chart from last week (since it was potentially skewed by expiration), we’ve seen the VIX not budge under 15.1 since late December -- even though the market has continued to reach higher. The two should be inversely correlated. The fact that they’re not hints that traders aren’t nearly as confident as the index makes them appear to be. That’s often a bearish omen, even if it can’t pinpoint the turning point.

S&P 500 – Weekly

It’s tricky, to be sure, to reconcile the bullish momentum with the clear likelihood that the bulls could yield to the bears at any time.

While the trend remains bullish, this really isn’t a time to start adding new long or bullish trades. The key bear/sell signal, however, will likely be the VIX crossing above its falling resistance line (green) on the weekly chart, and a decisive reversal bar from the SPX on a weekly chart. Some strong selling volume behind that move would really seal the deal.

Until then, as uncomfortable as it may feel, the bulls technically remain in control.

Sector Performance

It would be difficult to say last week’s leadership from the consumer staples sector was a "flight to safety." Though staples were up 2.1%, utilities also appeared in the bottom half of the sector rankings. Telecom was up too, by 1.3% (better than average), while technology was near the bottom of the barrel with a 0.6% gain. There’s a glimmer of defensive thinking in there, but it’s not a strong enough hint yet.

Sector Ranking – One Week

As for the bigger sector picture, it’s clear energy was/is still the place to be. It took the lead in late January and hasn’t looked back since. Likewise, utilities being bottom-dwellers isn’t anything new either.

The only noteworthy emerging trend we’re seeing here on the comparative chart is the way the services sector has started to pass most others in the bottom half of performers. It’s a fairly non-descript sector, so if you’re going fishing, there’s still some homework to do to find the leaders. It’s clearly a stronger group though. (And yes, we know there's no "services" on the ranking grid ... a nuance of using two different data sources. Most of the service group overlaps with the consumer discretionary sector, if that helps narrow down which stocks are doing most of that work.)

Sector Comparison, since November 30th.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

UPS: Delivering Profits or Bad News?

What can brown do for you?� How about turbocharging a portfolio that is stuck in the red?� United Parcel Service, Inc. (UPS) has been caught up in the decline of the economy, but perhaps its fortunes are changing.

On Monday, Deutsch Post’s DHL announced that it was making significant reductions in its scope by cutting jobs and reducing air and ground operations in the United States.�The company will also reduce a joint venture with UPS that was announced last May.

Losing the breadth of the $1 billion in annual revenue deal looks to be a blow for UPS.� That may be true in the short run, but in the long run the reduction in competition should be a big bonus for both UPS and competitor Federal Express (FDX).

When this economy does indeed recover, UPS and FDX will be more easily able to raise prices with the exit of DHL domestically.

Less competition is always better for companies as profit margins tend to be higher.� Investors would agree as UPS was higher on Monday with the DHL news.� Given the potential loss in revenue from the joint venture with DHL, this reaction is surprising.

I guess that is the nature of UPS.� Investors stuck with the company even when high oil prices were threatening anything to do with transportation.� Instead, shares of UPS stayed even for the first six months of the year. (See also: "UPS Delivers Bad News.")

UPS did finally succumb in June when oil seemed to be going up a dollar or more every day.� Shares lost about $10 to trade at about $60 per share when oil prices peaked in early July.

The decline in oil led to a recovery in UPS, and by early September shares were nearly at $70.� Things were looking up until the credit crisis reared its ugly head.� The implication of the financial crisis would be a slowing economy.

As such, investors sold off stocks tied to business activity, including UPS.� At the bottom, UPS hit $43.32.� Things are looking bleak for UPS especially if the economy slows significantly.� A long and deep recession would not be good for business.

Interesting, UPS has rallied nearly $10 higher since the lows under the assumption that the worst was behind us.� That momentum continued today with the DHL news.

Shares of UPS now trade for a bit more than 15 times December, 2008 expected earnings.� Given that estimates now only show a small gain in profits for 2009, UPS appears to be fairly valued in the short term.

The biggest reason for UPS doing so well is the collapse in oil prices.� That isn’t enough justification to own the stock in the long run.� The DHL news is positive in the long run, but I would rather acquire shares of UPS at lower prices.

Check out Navellier’s PortfolioGrader.� He has UPS rated a C or hold.� You can rate any of your stocks using this incredibly valuable tool.

This article was written by Jamie Dlugosch, contributor to InvestorPlace.com. For more actionable insight like this, go to: www.InvestorPlace.com.

Stat of the Week: 2.8% Q4 GDP Growth

On Friday, the Commerce Department announced that its preliminary Q4 GDP estimate is 2.8% — the fastest growth rate in 18 months but below economists� estimates of 3%.

When you dig into the details of the GDP report, however, the number looks better, reflecting something like 4% growth in the private economy and -1% for government spending. Inventory growth added 2%, while an additional 2% came from consumer spending, but defense-spending cuts and lower government spending (mostly at the state and local level) subtracted about 1% from the overall GDP figure. The U.S. economy will keep growing this year, but due to the big distortion from inventory growth, gains are unlikely to exceed 3%.

Most of the other economic news last week was positive. The Conference Board announced on Thursday that its index of leading economic indicators (LEI) rose 0.4% in December, as seven of 10 LEI components were positive in December: the interest rate spread, jobless claims, manufacturing hours, stock prices, overall new orders, manufacturers� new orders for nondefense capital goods (excluding aircraft) and manufacturers� new orders for consumer goods and materials. One component remained unchanged (building permits), while two components — consumer expectations and a barometer of credit — declined.

On the bright side, one of those declining indicators, consumer expectations, has already turned sharply up in January. On Friday, the University of Michigan/Reuters consumer sentiment index surged to 75, up sharply from 69.9 in December, and a point above the economists� consensus forecast of 74. Consumer sentiment is now at its highest level in a year, which bodes well for future GDP growth.

Also on Thursday, the Commerce Department announced that December durable-goods orders rose by a stronger-than-expected 3%, for the third straight monthly rise. �Core� orders (nondefense capital goods, excluding aircraft) were up a very healthy 2.9%. For the full year of 2011, core orders rose 10%!

On the jobs front, we learned that new weekly jobless claims rose 21,000, to 377,000, but that increase was expected after the previous week�s sharp decline. More importantly, the four-week moving average of new claims fell by 2,500, to 377,500.

We�ll learn more about jobs in Friday�s January payroll report.

SM: Estate Planning Update for Singles

The 2010 tax cut extension package made beneficial changes to the federal estate and gift tax rules for 2012. That's good news, but your estate plan may need an update to take advantage of the benefits. Here's what unmarried individuals need to know.

The New Rules in a Nutshell

The federal estate tax exemption is now a whopping $5.12 million for estates of individuals who die in 2012. A flat 35% tax rate applies to the value of an estate in excess of the $5 million exemption.

The federal gift tax exemption is also set at $5.12 million for 2012. Gifts in excess of the $5.12 million exemption will be taxed at a flat 35% rate.

Single With Estate of Less Than $5.12 Million

If your estate is worth less than $5 million and you depart this world in 2012, everything you own can be left to relatives and loved ones without any federal estate tax hit.

However, your current estate planning documents may be out of date. For example, they might direct the executor of your estate to make enough charitable donations to get the value of your estate below the much-smaller federal estate tax exemption amounts that applied in bygone years ($2 million for 2006-2008; $3.5 million for 2009). If so, the bigger $5.12 million exemption that's now in place allows you to leave more to relatives and loved ones (and less to charity) without any federal estate tax hit.

Single With Estate of More Than $5.12 Million

You might want to change your estate planning documents to direct the executor to give away more to IRS-approved charities in order to get your taxable estate below the $5.12 million. Of course, increasing such donations means leaving less to relatives and loved ones.

Other things you can do to reduce your taxable estate include:

1. Make annual gifts of up to $13,000 to relatives and loved ones. Thanks to the annual federal gift tax exclusion ($13,000 for 2012 and probably the same for 2013), such gifts reduce your taxable estate but they don't reduce your $5.12 million federal estate tax exemption or your $5.12 million lifetime federal gift tax exemption. For example, say you have two adult children and four grandkids. You could give them each $13,000 in 2012 for a total of $52,000 (4 x $13,000). Then you could do the same thing next year. This strategy would quickly reduce your taxable estate by $108,000 with no adverse tax effects.

2. Pay college tuition expenses (not room and board) or medical bills for relatives and loved ones. You can give away unlimited amounts for these purposes without reducing your $5.12 million federal estate tax exemption or your $5.12 million lifetime federal gift tax exemption--as long as you make the payments directly to the college or medical service provider. You can do this yearly.

3. Give away appreciating assets while you're still alive. Thanks to the generous federal gift tax exemption for 2012, you can give away up to $5.12 million of appreciating (we hope) assets like stocks and real estate right now without triggering any federal gift tax hit. This can be on top of cash gifts that take advantage of the $13,000 annual exclusion and on top of cash gifts to directly pay college tuition or medical expenses. If you make gifts that chip away at your $5 million federal gift tax exemption, your $5.12 million federal estate tax exemption is reduced dollar-for-dollar. For example, say you give $100,000 worth of stock to a favorite relative this year. That would use up $87,000 of your $5.12 million gift tax exemption ($100,000 $13,000 annual gift tax exclusion) and $87,000 of your $5.12 million estate tax exemption. But making gifts that utilize your exemptions is OK if you're giving away appreciating assets--because the future appreciation will be kept out of your taxable estate.

Stay Tuned for Further Developments

As things now stand, the new taxpayer-friendly federal estate and gift tax rules will only be in place through the end of 2012. What happens in 2013 and beyond will probably depend on how the 2012 election turns out. If the current rules are allowed to expire, you'll be facing a confiscatory federal estate tax regime for 2013 and beyond--with only a $1 million exemption and a maximum estate tax rate of 55%. Similarly, the federal gift tax exemption would fall back to only $1 million, and the maximum gift tax rate would jump to 55%. Depending on what transpires, you may have to update your estate planning documents again to reflect the rules that will apply for 2013 and beyond. Meanwhile, you should huddle with your professional adviser to optimize your estate plan under the rules that apply right now.

7 Newly Issued Investment Grade Corporate Bonds

As I mentioned in "7 Newly Issued Bonds You Might Have Missed," there were numerous corporate notes newly issued over the past few weeks. Several of these notes, which can now be found trading in the secondary market, are listed below. Each of the following seven corporate notes has investment grade ratings from Moody's and S&P, maturities ranging from five to thirty years, yields ranging from 1.683% to 5.293%, and the spread to Treasuries ranging from 95.1 to 345.1 basis points.

HCP Inc.'s (HCP) senior unsecured note (CUSIP: 40414LAF6) maturing 2/1/2019 has a coupon of 3.75% and is asking 100.769 cents on the dollar (3.622% yield-to-call before commissions). It pays interest semi-annually, has a make whole call until 12/1/2018, and is thereafter callable at par. Moody's currently rates the note Baa2; S&P rates it BBB. It was originally offered at a price of 99.523, and the offer size was $450 million. The offer date was January 18, 2012. Currently, the 1/31/2019 U.S. Treasury note (CUSIP: 912828SD3) is yielding 1.273%, which means HCP's note is asking 234.9 basis points more than a corresponding Treasury note.

Goldman Sachs' (GS) senior unsecured note (CUSIP: 38141GGS7) maturing 1/24/2022 has a coupon of 5.75% and is asking 103.504 cents on the dollar (5.293% yield-to-maturity before commissions). It has conditional calls for tax law changes (see indenture) and pays interest semi-annually. Moody's currently has an expected rating on the note of A1; S&P rates it A-. It was originally offered at a price of 99.865, and the offer size was $4.25 billion. The offer date was January 19, 2012. Currently, the 11/15/2021 U.S. Treasury note (CUSIP: 912828RR3) is yielding 1.842%, which means Goldman Sachs' note is asking 345.1 basis points more than a corresponding Treasury note.

Kroger's (KR) senior unsecured note (CUSIP: 501044CP4) maturing 1/15/2017 has a coupon of 2.20% and is asking 101.975 cents on the dollar (1.782% yield-to-maturity before commissions). It has a make whole call and pays interest semi-annually. Moody's currently rates the note Baa2; S&P rates it BBB. It was originally offered at a price of 100, and the offer size was $450 million. The offer date was January 12, 2012. Currently, the 1/31/2017 U.S. Treasury note (CUSIP: 912828SC5) is yielding 0.732%, which means Kroger's note is asking 105 basis points more than a corresponding Treasury note.

JPMorgan Chase's (JPM) senior unsecured note (CUSIP: 48126BAA1) maturing 1/6/2042 has a coupon of 5.40% and is asking 103.919 cents on the dollar (5.141% yield-to-maturity before commissions). It is non-callable and pays interest semi-annually. Moody's currently rates the note Aa3; S&P rates it A. It was originally offered at a price of 99.835, and the offer size was $1.25 billion. The offer date was December 15, 2011. Currently, the 11/15/2041 U.S. Treasury bond (CUSIP: 912810QT8) is yielding 2.992%, which means JPMorgan Chase's note is asking 214.9 basis points more than a corresponding Treasury bond.

Toyota Motor Credit Corp.'s (TM) senior unsecured note (CUSIP: 89233P5S1) maturing 1/12/2017 has a coupon of 2.05% and is asking 101.733 cents on the dollar (1.683% yield-to-maturity before commissions). It has a make whole call and pays interest semi-annually. Moody's currently rates the note Aa3; S&P rates it AA-. It was originally offered at a price of 100, and the offer size was $1 billion. The offer date was January 9, 2012. Currently, the 1/31/2017 U.S. Treasury note (CUSIP: 912828SC5) is yielding 0.732%, which means Toyota Motor Credit Corp.'s note is asking 95.1 basis points more than a corresponding Treasury note.

Valspar's (VAL) senior unsecured note (CUSIP: 920355AG9) maturing 1/15/2022 has a coupon of 4.20% and is asking 103.909 cents on the dollar (3.717% yield-to-call before commissions). It pays interest semi-annually and has conditional puts for a change of control. It also has a make whole call and is continuously callable at par beginning 10/15/2021. Moody's currently rates the note Baa2; S&P rates it BBB. It was originally offered at a price of 99.854, and the offer size was $400 million. The offer date was January 10, 2012. Currently, the 11/15/2021 U.S. Treasury note (CUSIP: 912828RR3) is yielding 1.842%, which means Valspar's note is asking 187.5 basis points more than a corresponding Treasury note.

Amphenol's (APH) senior unsecured note (CUSIP: 032095AB7) maturing 2/1/2022 has a coupon of 4.00% and is asking 103.034 cents on the dollar (3.628% yield-to-call before commissions). It pays interest semi-annually and has conditional puts for a change of control. It also has a make whole call and is continuously callable at par beginning 11/1/2021. Moody's currently rates the note Baa2; S&P rates it BBB. It was originally offered at a price of 99.746, and the offer size was $500 million. The offer date was January 19, 2012. Currently, the 11/15/2021 U.S. Treasury note (CUSIP: 912828RR3) is yielding 1.842%, which means Amphenol's note is asking 178.6 basis points more than a corresponding Treasury note.

If you are interested in purchasing any of these securities but are nervous about counterparty risk wreaking havoc on your portfolio, learn how to hedge individual bonds in, "Protect Your Income Portfolio With Cross-Asset Hedging."

Please be aware that prices in the over-the-counter U.S. bond market may vary depending on the broker you use. I discuss this in my article, "Are You Paying Too Much For Your Bonds?" The current prices may also differ greatly from those listed at the time this article was written. For additional information on any of these notes, please contact your broker or read the indenture.

Also, please do your own due diligence on the financial profiles of the companies mentioned in this article. Only you can determine if taking the counterparty risk of purchasing individual bonds is suitable for you.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Iran Backs Off Threat Of Oil Export Ban, But Resource Imperialism Is Still On Its Way

Last week was an eventful one in the saga surrounding Iran and the corresponding tensions in the global economy. Before we get into where this is all headed, let's recap what's gone down:

1. Lots of saber-rattling has been going on in the Middle East for years now between the US and Iran; the game was taken up a notch with the passage of the National Defense Authorization Act (NDAA) in the United States, which contained provisions to place harsher sanctions on the Iranian Central Bank in an attempt to cut them off from the global dollar-based economy. Devaluation of the Iranian Rial ensues.

2. India proceeds to establish deal with Iran to buy oil using non-dollar currencies, including gold.

2. The EU imposes its own sanctions on Iran and freezes accounts of the Iranian Central Bank in the EU.

3. Iran responds with a threat to cut off oil exports to the EU immediately, but quickly backs off.

So here we are: oil is over $100 a barrel in the States and the geopolitical stage is tenser than it has been in some time - no small feat when one considers the past ten years.

So where is this all headed?

1. Well, I remain skeptical that a full-blown war will emerge. If it does, though, I think it could easily turn into World War III. I view global war as bearish for basically everything except gold bullion in your hand.

2. More likely, in my opinion, is the increasing onset of resource imperialism - the use of key resources to control the world. China, controller of 97% of production of rare earth minerals (REE), is the prime example of resource imperialism in action. However, this can clearly extend to oil (USO), as the sanctions placed this past week clearly illustrate.

3. Resource imperialism will be very bullish for speculators in the commodity market. I suspect speculators will be blamed if resources go up very high, as they already are. I don't share this view, as I think it is a great oversimplification of the matter, but I suspect popular sentiment will and restrictions on speculative activity may thus emerge.

4. Oil is the first and easiest commodity to be brought into the resource imperialism fray, but it is far from the last. China is a major trade partner of Iran and has already criticized EU sanctions. If China enters the resource wars, it could curb exports of silver (China is the third largest silver producer) as well as zinc and nickel (DJP), which China currently exports en masse to the US.

5. As this is another step towards the breakdown of the dollar-based global economy, resource imperialism is also bullish for gold (GLD) - though not all gold is created equal, and physical, allocated bullion remains advantageous.

6. It remains to be seen, though, to what extent resource imperialism will become the dominant paradigm in the global economy. The first step is being taken with oil, and higher oil prices will create greater demand for alternative energy. From the perspective of physics, there are only two sources of energy that have sufficient energy and power density to serve as a viable substitute for oil (excluding coal, whose polluting effects make it difficult to be economically viable): natural gas (GAZ) and nuclear (NLR, PKN, NUCL). The US has huge reserves of natural gas and it has become even more inexpensive, thanks largely to innovations resulting from hydraulic fracturing. Natural gas and nuclear are some of the most promising opportunities at this point in time, in my opinion.

Will resource imperialism be bullish or bearish for indices at large? I believe it depends on how severe this gets. If China steps in and curbs exports of industrial commodities, I think that could set off a new bear in the US. It is critical to note, though, that the US bond market is still under stress and capital will need to go somewhere - if not bonds, then likely stocks. Being in the right sector, and having significant exposure to real gold, will help investors immensely in their quest to navigate this turbulent environment.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Risk Management Options Strategies For Income Investors In Uncertain Times

Despite the recent rally in U.S. equities to start the year, we think investors should remain cautious due to the underlying economic headwinds the U.S. continues to face. We think that the economy will continue to see subpar growth that will hinder the employment market and continue to create uncertainty. The current headwinds include:

• High levels of unemployment

• Weak housing market

• Subpar economic growth

• Rolling European debt crisis

• Uneven growth rates in China

• Increasing polarization in U.S. politics

• Increasing cutbacks on state and local government spending

• European austerity measures

We think that while investors should remain cautious, an overweight position in cash and government debt is unwarranted given low nominal yields and valuations. Instead, we believe income investors should utilize option income strategies to generate additional income while mitigating downside price risk in their dividend stock portfolio.

We outline a few strategies below that investors can deploy in a low growth, uncertain environment.

In general, low beta dividend stocks are ideal for option income strategies. Stocks with low betas will tend to be less volatile than the general market and should hold up relatively well in a market downturn. Since you are selling volatility with these strategies, you want actual volatility to remain low after you execute your strategy. Low beta stocks are less likely to surge (in either direction), making the probability of assignment lower.

For this analysis, we focused on stocks in sectors that hold up well in a slow-growth economic environment.

• Health Care: Johnson & Johnson (JNJ)

• Consumer Staples: Altria (MO), Philip Morris Intl. (PM)

• Utilities: Southern Company (SO)

• Telecom: AT&T (T)

• Mortgage REITs: Annaly Capital (NLY)

• MLPs: Kinder Morgan Energy Partners (KMP)

Strategy 1: Sell Covered Calls into Market Strength

Investors can augment their dividends by selling out of the money calls on their existing dividend stock portfolio. With this strategy, investors can retain their stock and retain their dividend.

The total return on a dividend stock has two main components: (1) the dividend yield and (2) the change in stock price. Most of the time both of these components have a positive effect on your total return. However, a significant price decline can literally "wipe out" years of dividends, resulting in a negative total return.

The price fluctuation in a dividend stock cannot be ignored. While dividends have accounted for over 40% of the total annual return of the S&P 500 since 1926, over 100% of the returns over the past 10 years were attributed to dividends (meaning the return on the underlying stock was negative).

That said, dividend stock investors that would like to enhance the yield on their investments (to help offset the potentially negative fluctuations in stock price) should consider implementing a covered call strategy.

A covered call strategy will add a third component to the total return of a dividend stock and will increase the probability that the investment will have a positive total return over time.

Below are the specific call options that we would recommend selling on the candidates that we highlighted above. On average, the 6-month premium yield is 1.7%, with a margin of safety of 4.7% and upside potential of 8.7%.

Click to enlarge:

Strategy 2: Sell Cash-Secured Puts

We think that selling cash-secured puts on high-quality dividend stocks is a perfect strategy for a conservative income investor in a down market. It allows investors to generate income while patiently waiting for a better entry price.

If you sell a put, you have an obligation to purchase the stock at a predetermined price (strike price) on or before the expiration date (if the buyer of the put option wants to sell you the stock). Clearly, the risk is that the stock drops significantly below the strike and you are forced to buy the stock at a price above market.

Here are our two risk management rules of put selling:

Only sell put options on stocks that you want to own at the price you want to own them - With a put selling income strategy (focused on out-of-the-money puts), you get paid to wait for the price you want on a stock. If the price never drops to your strike, you get to keep the premium (income) as a consolation prize. Your downside is owning the stock at the strike price (keep that in mind as you analyze the ideas below).

Don't sell "naked" - Just because options offer you leverage, it doesn't mean that you have to use the leverage. We recommend securing your short put position with cash (i.e., don't sell on margin). If you aren't willing to risk the cash to back it up ... don't sell the put!

Below are the specific put options that we would recommend selling on the same stocks that we highlighted above. On average, the 6-month yield is 2.4% with a margin of safety of 11.4%.

Disclosure: I am long MO, NLY, T, JNJ, KMP, PM, SO.

Instagram goes to Washington

NEW YORK (CNNMoney) -- It's not everyday a startup founder gets an invite to one of the White House's most anticipated events.

Instagram co-founder Mike Krieger got the call last Friday. Krieger, a Brazilian native, was invited as First Lady Michelle Obama's guest to the President's Stateof the Union address.

"You don't say no to the White House," Krieger said. "I booked a flight and arrived Monday night."

Although President Obama's campaign actively uses photosharing tool Instagram, his presence was tied more to a larger policy initiative.

In Krieger's case, his attendance represented the need for legislation that would assist non U.S. citizen startup founders looking to build a company in America.

Krieger, who co-founded Instagram with Kevin Systrom in 2010, is currently working under an H1-B after his student visa came to an end. With $7.5 million in funding, 10 employees, and 15 million users, he's now looking to stay in the United States permanently and continue to grow the company.

In his State of the Union address, Obama alluded to the importance of immigration reform aimed at startup founders like Krieger who want to stay in the United States to build a company despite the upcoming election.

"We should be working on comprehensive immigration reform right now," Obama said. "But if election-year politics keeps Congress from acting on a comprehensive plan, let's at least agree to stop expelling responsible young people who want to staff our labs, start new businesses, and defend this country."

During his time in Washington, Krieger spent the morning with the White House's Chief Technology Officer Aneesh Chopra and CTO advisor on mobile and data innovation Brian Forde.

"We brought Mike in early to hear his story and learn about what he's done and get his feedback," Chopra said. "The president has acknowledged and is very supportive of the idea that we need an immigration policy that makes sense in today's economy and that is in part due to people like Mike who are choosing to come to our nation ... to hire and employ people to stay and grow jobs."

But reform must reflect the changes in the technology realm, Krieger said.

"A lot of the regulations were created before we got into this age where folks can start companies cheaply and bootstrap and get things started," he says. "Nowadays companies start with fewer people and less investments, so it's a matter of finding out what regulations can be updated to match that reality."

But Krieger feels optimistic.

"It feels to me that this issue is slightly less contentious than others," he said.

Before leaving the White House, Krieger snapped a picture of the First Lady on Instagram, added a photo filter, and posted it to Twitter. And like any entrepreneur, he's always looking for new users.

"Hopefully we can get Michelle on Instagram soon," he said 

S&P’s Loud ‘Buy’ Signal Has Crummy Timing

The good news: The S&P 500 has just given us a major technical buy signal that has a ton of historical “street cred.”

The bad news: The signal couldn�t have come at a worse time for investor psyches.

Click to Enlarge That signal is the so-called “Golden Cross,” where a major index�s 50-day moving average line crosses above the 200-day moving average line. The premise of the Golden Cross theory is that such a crossover — where a relatively lengthy trend line moves above an even longer trend line — serves as undeniable proof that the major trend by that point is indeed a bullish one.

But let’s say you�re not impressed by all that technical mumbo jumbo, since stocks trade based on perceived values rather than chart-based events. Fair enough. Just know that the last eight Golden Crosses (which go back as far as 1998) have all successfully marked a rally that could have made investors some money by jumping in for at least a few months at the time the hint was dropped.

Just to reiterate, that�s 8-for-8. If the Golden Cross were a baseball player, he’d be a Silver Slugger.

But What About Valuation?

How can the market possibly be going higher when clearly all hope is lost for global economy? After all, Europe is slipping into a financial abyss, the American economy is shrinking at an uncontrollable rate and earnings stink … right?

No.

A funny thing happened on the way to Armageddon — we didn�t get there. Europe�s financial woes still aren�t fixed (they actually might be getting worse). Yet the sun still rises for every country in the European Union. In Q3, America�s corporate earnings reached record levels. The GDP growth rate has improved three consecutive quarters now.

It might not have been pretty, but it�s still all on the positive side. More than that, though, it�s getting tough to keep arguing stocks aren�t worth owning unless you�re willing to ignore a bunch of data.

Indeed, although the market�s P/E is a hair above multi-decade lows hit in the latter part of 2011, it’s still hovering at stunningly cheap levels. In fact, valuations for U.S. equities have now remained under their 50-year average for as long as they have since the early ’70s.

Sure, stocks can lose value in anticipation of an economic contraction. But after 446 days of subpar valuation, it�s time to start acknowledging the possibility that maybe — just maybe — we�re not headed off a cliff after all.

Before You Jump to Conclusions

Just to put these Golden Cross signals in perspective, this is 50 days worth of market value dancing with 200 days worth of market value. Yet the media is apt to induce the masses into thinking this Golden Cross is a “now or never” kind of clue. It�s not. In fact, odds are good the market�s overextended condition now is an open invitation for a little profit-taking.

Of course, any pullback at this point will be used as “obvious evidence that such technical signals are hogwash.” The problem is, three or four days of bearish movement doesn�t unwind a buy signal that took at least 50 days to develop.

Translation: Don�t confuse the short-term trend with the intermediate-term trend (even if the media doesn�t care to denote the difference).

The fact is, we saw several short-term dips within long-term rallies following the last eight Golden Crosses, and they ended with moves to even higher highs. There�s no reason to think any pullback from here has to be a quick end to this technical buy signal. So don�t get psyched out at the first sign of trouble here.

Bottom Line

The S&P 500�s Golden Cross occurred right at 1,256, versus Monday�s close of 1,312.80. So the index could fall back to 1,256 — a 4.3% dip — and the uptrend still would technically be intact. It doesn�t even need to give up that much ground to give us a good reset of the longer-term uptrend, though. We simply need to burn off a little of the excess froth we�ve added in the middle of January before resuming the bigger-picture uptrend that�s just been confirmed by the 50-day average�s cross above the 200-day moving average line. A slide to the 1,280 could do the trick.

Either way, this crossover signal has been too good to dismiss now, whether you�re a believer in technical analysis or not. The funny thing is, the market�s actually justifying stronger price levels for the long haul.

Oil Price Rise Will Hit Cereal Markets: UN

The United Nations warned Thursday that with global food prices at a record high, more increases in the cost of oil and a drive by importers to stockpile food would cause problems on the cereal markets.

According to Reuters, the Food Price Index tracked by the U.N. Food and Agriculture Organization (FAO) set a second straight record in February, thanks to tight supply and higher costs for grains. It further warned that prices were likely to surpass the levels in 2008 that ignited food riots in many countries.

Abdolreza Abbassian, FAO economist, said in the report that prices are unlikely to drop at least until it is seen how the newest crops are faring. He added that further increases in the price of oil could hit grain markets hard. Those markets are already reeling under a 60% increase in U.S. benchmark wheat prices so far this year.

Abbassian said in the report, "Until we know about new crops, that means waiting at least until April, our view is don't expect any major corrections in these high prices; expect even more volatility now that oil has joined the crowd."

Oil hits the food market on both ends; farmers need oil to run their agricultural equipment, and shippers are big oil consumers in conveying goods to market.

Abbassian also warned about the hazards of stockpiling. Importers putting aside stores of grain "beyond countries' normal needs" has, rather than warding off unrest, contributed to the uncertainty in the marketplace. Abbassian said in the report, "Political instability in the regions and countries affects the markets by adding uncertainty: will a country buy or not buy, why it had bought so much now ... those things are disruptive to the normal trade."

A further complication in the markets is the use of corn and soybeans for biofuels. As a result, those two grains tend to track the rise and fall of oil. If oil continues to surge, Abbassian warned that biofuels could once again drive the cost of food upward, as it did in 2008.

UBS’ Santucci on Training, Recruiting

Paul Santucci is COO of the UBS Wealth Management Advisor Group for the Americas, which includes about 6,900 FAs. He joined UBS in 2003 from Wachovia and in February 2010 was promoted to his current post by Bob McCann.

He says that UBS Americas’ current advisor-training program was in place before ex-Merrill Lynch leader McCann came on board (to head the UBS wealth-management operations) in early 2009, though it was suspended for a period of time.

McCann and other executives have joined UBS over the past two year or so, like Bob Mulholland (another Merrill veteran, who joined UBS in early 2010), have given the training program more of “a common-sense approach.”

“Firms still hire 1,500-2,000 advisors a year hoping that some will stick,” said Santucci. The UBS approach is more successful than that of its peers, he says, because “we’re making sure the best managers have an opportunity to hire [new advisors] on to teams —and it’s working. We do not want to hire the most but the best, and so far we have been lucky.”

 Can you give us some more details about the UBS training program?

We hire up to 200 to 225 new financial advisors [a year], with 90 percent of them going onto teams and helping us create succession plan for our veteran advisors.

We’ve seen vast improvement within this program, and those within it are doing well. In contrast to other firms, we’ve had many — 75 percent — getting into the first- and second-quintiles in terms of performance vs. 15-20 percent at other firms over the past few years.

We believe we have more success through smaller groups. Branch managers can sit down and coach the new financial advisors and other team members.

Trainees are given guidelines … and certain goals of revenues and assets for say, at seven months, and branch managers decide to hang on to the advisors at the seven-month mark. Most are in the first and second quintile at this point.

 What types of people are hired into the training program?

Most individuals entering the program come in without a license and go through that process with us. They’re from all walks of life. Our numbers, in terms of diversity, have improved significantly with about 30-35 percent [in this category], including women.

We don’t have an age-range target but tend to hire those just out of business school and some who are making career changes, such as 45-50 years old who are apt to go on to be sole proprietors of a practice.

Those who are 25-30 are more likely to join teams, and we are really looking at those who want to be hired to join teams. They’re the majority of our [trainee] hires.

 Why is the team approach working for UBS?

Our branch managers realize how important it is for new financial advisors to enter the business and for there to be proper succession planning.

We are only giving new advisor-training tasks to those in branch managers who have done this work successfully in the past, meaning that they are able to help advisors perform at the level of those in the first and second quintiles.

 How are veteran advisors joining FAs as team members?

In terms of experienced advisors who want to come to UBS, our flow from the branch managers is at a peak. We are taking a long hard look at them, and those joining us come with a lengthy list [of clients.]

We do specific due diligence on new recruits. We ask if we are we the right firm for them, because we have to help them move over their business. And we ask if they are right for us — through a letter of understanding. We’re at a record level when it comes to doing this type of due diligence.

Again, the majority of veteran advisors are joining us from our natural competitors.

 Why do you believe the recruiting pipeline is so robust?

It’s my opinion that we have a turnaround story to tell. We are one of the best in wealth management. Our branch managers are out telling the story. They are good business coaches, and those recruiting for our organization are having success.

In any marketplace, like New York or elsewhere, people talk to each other, and they want to build [their practice] at best place, which makes people continue to want to talk to our organization. It’s been a great past two years. •

 

Top Stocks To Buy For 2012-2-1-3

Mead Johnson Nutrition CO (NYSE:MJN) witnessed volume of 30.64 million shares during last trade however it holds an average trading capacity of 1.14 million shares. MJN last trade opened at $74.79 reached intraday low of $60.62 and went -10.09% down to close at $68.76.

MJN has intra-day market capitalization $14.00 billion and an enterprise value at $14.77 billion. Trailing twelve months price to sales ratio of the stock was 3.92. In profitability ratios, net profit margin in past twelve months appeared at 14.64% whereas operating profit margin for the same period at 22.66%.

The company made a return on asset of 21.08% in past twelve months. In the period of trailing 12 months it generated revenue amounted to $3.57 billion gaining $17.44 revenue per share. Its year over year, quarterly growth of revenue was 15.30% holding 36.40% quarterly earnings growth.

According to preceding quarter balance sheet results, the company had $761.30 million cash in hand making cash per share at 3.74. The total debt was $1.53 billion. Moreover its current ratio according to same quarter results was 1.65 and book value per share was -0.75.

Looking at the trading information, the stock price history displayed that its S&P500 52 Week Change illustrated -0.28% where the stock current price exhibited down beat from its 50 day moving average price of $72.68 and remained below from its 200 Day Moving Average price of $70.45.

MJN holds 203.56 million outstanding shares with 203.24 million floating shares where insider possessed 0.09% and institutions kept 90.90%.

Kauffman Foundation Super Bowl ad calls on entrepreneurs

NEW YORK (CNNMoney) -- Not many people know the Kauffman Foundation, but after this Sunday a lot more will have an idea.

The $2 billion nonprofit that focuses on fostering U.S. entrepreneurship is running its first ever TV ad, and it's doing it during the Super Bowl.

So, sandwiched between commercials featuring scantily clad models and costumed dogs will be a plug for starting a business.

The animated 30-second commercial, which the foundation said cost it less than $400,000, is part of its campaign to inspire everyday Americans to launch their own businesses.

"The next great entrepreneur is out there. Will it be you?" a narrator asks, as a wide-eyed cartoon character with a lightbulb over his head becomes a successful business owner making the front page of a newspaper.

The commercial, which was uploaded to YouTube Jan. 25, will run in four major cities.

Super Bowl ad sneak peek

It directs viewers to WillItBeYou.com, a microsite that links to resources for aspiring and existing small business owners.

"We want people to understand anyone can have a great idea. And if you have great commitment and passion, you can try that idea out," said Wendy Guillies, a spokeswoman for the foundation. "The end goal is that we have more people who start businesses and succeed in them."

Directing a call to entrepreneurial arms toward nacho-munching Average Joes during a football game might sound strange, but Guillies said that's exactly who the foundation is targeting with its campaign.

Many successful entrepreneurs started off as Average Joes or Average Josephines.

Kauffman paid to run the commercial in four unique markets. New York City is the country's most populous. San Francisco is a tech hub. Washington D.C. is the workplace of legislators who Kauffman wants paying attention to small business. And Kansas City is the group's headquarters.

A considerable portion of the 172 million watching the game Feb. 5 will be in those cities. A quarter of that 172 million will be tuning in for the commercials, according to the Retail Advertising & Marketing Association's survey this month.

NBC's Super Bowl ads sell out at record prices

However, convincing people to become their own bosses will still be difficult. The economy continues to crawl at a snail's pace and access to credit is limited for small business owners.

But the message will likely receive much attention if it follows Volkswagen's (VLKAF) barking Star Wars dogs or the sexually suggestive commercials of web provider Go Daddy -- a successful company Guillies noted was once a tiny startup.

"All those commercials came from a company that likely started with one person," she said. 

To write a note to the editor about this article, click here.

Do Vehicle Sales Signal A Re-engaged Consumer?

Vehicle sales have registered an upside that is unexpected and have done so in a most delightful way. The unit sales jumped to 14.18 mu in January from 13.56mu where they had been stuck for several months. This gain brings the pace of sales to its strongest mark since May of 2008. It leaves sales still short of the 15mu plateau they had reached prior to the 2001 recession and, of course short of the 16mu-plus pace they had maintained between recessions from 2000 through 2007. Sales are not all the way back but they are a good deal of the way back and on a quite steady-looking trend.

click to enlarge

What makes the rebound so delightful is that the bulk of it is in terms of domestically made vehicles which means the sales will hit the bottom line of the GDP report and hard. When sales of imports are elevated we see increased consumer spending and possibly some investment spending on vehicles by businesses, but the impact on GDP is reduced when imports rise. When domestic demand is satisfied by imports they subtract off the gain made by consumption or investment and leave a net zero impact on GDP. But this month domestically made vehicle sales rose by 4.7%. Import sales were up by nearly as much in percentage terms rising by 4.3% but since domestic sales are three-times larger than imports the impact of the domestic sales is well over three-times larger.

Chrysler and Ford (F) posted sizable gains in sales while GM sales slipped partly on some issues concerning battery safety its popular Volt where GM continues to monitor demand. It has said it will keep production in line with demand there. GM also saw its large truck sales slip. Its market share fell in January and its year ago comparisons were weak owing partly to incentives that GM had in place then and does not have in place now.

All in all it was a good month for sales. US vehicle sales of autos were much stronger while truck sales slipped slightly. Auto sales tend to be more profitable. For imports, both car and truck sales had moderate gains.

The quarter is off to a good start with the January sales expressed as a growth rate over the Q4 level showing a 33% growth rate. Domestic sales have posted a 36% growth rate in the nascent quarter while imports are up by a strong 61% pace, led by a more than 100% rate of change for auto imports. Much of this is the ongoing rebound in sales of foreign cars after Japan's production disruptions took their toll. As the January data show, the sharp foreign growth rate quarter-over-quarter is caused more by the legacy effect of a week Q4 than by strong start to 2012-Q1.

In the broader context we have consumer spending picking up and autos sales of this magnitude could add nearly 1% point to monthly retail sales depending on fleet sales diversions which will still count as GDP but be treated as capital investment. In last month's personal spending and income report we saw that the savings rate was up and income gains were growing but spending had gone flat. Now we see that spending has picked up again. Be wary of playing this game each month of pairing off the spending growth rate with the income growth rate. Savings are volatile and that data series gets revised. When I see spending jump out ahead of income, as it had done several months ago, my first reaction is not to warn that it is unsustainable. These days, banks have been far more careful about doling out credit and people have been more careful about how to use it. That does not mean that credit mistakes won't be made. But there is another explanation to spending that seems stronger than income. Many people know their income before it is posted or paid and revealed in official data. If you get a bonus you likely know it before you see it. If you are a commission salesman you know what is due to be paid to you before you get it. There are many examples that allow us to look at increases in sales ahead of income trends as evidence that income is expected to pick up rather than as a spending excess.

We see another effect of that sort this month where spending and income again may be off kilter. It's too early to think we know what income gains will be this month but in the wake of better income last month spending on autos, at least has picked up one month later. So let's not let the sun rise and set on the monthly savings rate but let's look at its trend.

On balance we have some good news on the economy. The week's economic data are starting out to be relatively solid even if not exciting. And we have an employment report on tap amid several signs of improved labor market and consumer sentiment conditions. True we have has some mixed reports on the consumer, but when the consumer is talking with his wallet open or purse open it is good listen to the sound of spending instead of arguing with it.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

What’s Brewing Beneath the Market’s Surface?

Editor�s note: Serge Berger, the head trader and investment strategist for The Steady Trader, will be providing the Daily Market Outlook until Sam Collins returns on June 27.

Monday was a snoozer of a session if looked at from 30,000 feet, but underneath the surface, some interesting action could be detected. The broader indices closed flatish for the session, with the Nasdaq proving to be the underperformer. From a sector perspective, the financials came out ahead, while the energy complex was very weak.�

Speaking of the energy sector, there are two charts worth noting. Yesterday, the Energy Select Sector SPDR (NYSE: XLE) broke a four-month-long horizontal support level near $72.50 on a closing basis.

See full-size chart

The second chart is one I pointed out in yesterday�s Daily Market Outlook: oil via the United States Oil Fund (NYSE: USO). I highlighted the bearish flag pattern in development and mentioned that a breakout of this pattern could lead USO to the $35.50 area. Yesterday, USO broke out of this pattern to the downside and now sits exactly at the 200-day simple day moving average (red line). Historically, the 200-day SMA has been well respected by USO, which now presents us with a conundrum: Which do we believe, the breakout of the bearish flag pattern or the support of the 200-day SMA?

In my opinion, the breakout of the bearish wedge yesterday was not strong enough to initiate a short position quite yet. Given the overall market�s jitters, I would like to see a more pronounced confirmation or failure of USO out of the bearish flag pattern and below the 200-day SMA.

See full-size chart

As for the financials, they built on their bounce attempt from Friday, leading the Financial Select Sector SPDR (NYSE: XLF) to close up 1% and Citigroup (NYSE: C), highlighted here, to close up 3.3% for the day. The $15 area has served as an important level for the XLF during the past 12 months, and until XLF either decisively trades above or below it, we remain skeptical. Nonetheless, the financials� relative strength over the past two days should not be entirely discounted.

See full-size chart

When all was said and done, not much changed by yesterday�s closing bell rang. The financials have not yet shown all they have to in order to push this market higher, and the energy sector also has to show more muscle to break support levels that could give way to lower levels.

This week promises to be filled with important economic news and events both in the United States and Europe, as Greece just received a long-term debt downgrade from B to CCC.

The Nasdaq 100 has now exactly arrived at its 200-day moving average after having failed miserably out of the upward trending cone (blue lines).

See full-size chart

For one stock that is soaring despite the market�s downtrend, see the Trade of the Day.

Top Stocks For 2012-2-1-4

CSRH, Consorteum Holdings Inc, CSRH.OB

DrStockPick Stock Report!

DrStockPick News Report!

Consorteum Holdings Inc. (OTC BB: CSRH) Providing Government Agencies

a Streamlined Benefits Payment Solution.

 

DrStockPick Stock Report!

Tuesday September 8, 2009

Consorteum Holdings Inc. (OTC BB: CSRH) Providing Government Agencies a Streamlined Benefits Payment Solution.

-Social Security may be more secure than ever-

Prepaid benefit cards have been developed to allow federal, state, municipal, and provincial governments to deposit Social Assistance and other government Benefit payments directly onto a prepaid card instead of issuing millions of manual checks.

These cards provide recipients, (many of whom are �unbanked� or �underbanked�) which comprise approximately 30 million of us, with immediate access to their social assistance payments. These unbanked recipients are swelling in numbers as the economy continues to slide.

Upon enrolment into the program, individuals will receive a personalized, re-loadable prepaid social assistance/benefits card. Each payment period, the recipient�s funds are automatically deposited into their individual card account.

Cardholders will be able to use their card, to access money, at any participating ATM (Automatic Teller Machine), pay for purchases at retail locations, or pay bills online.

Benefits cards are often issued under one of the major card association brands (Visa/MasterCard) and are welcome everywhere credit cards are accepted, worldwide.

Consorteum Holdings Inc. (OTC BB: CSRH) generates residual monthly revenues by charging the end user monthly account fee, transaction fees and other fees based on usage of the card. Because the card is reloaded on an ongoing basis with the benefits payment, Consorteum will be assured long-term repeat revenues.

Quent Rickerby, President & COO of Consorteum Holdings Inc., stated, �Consorteum generates recurring transactional revenues on every program we implement. By maintaining full control of all products and services launched, Consorteum is enabled to increase its revenue opportunity by an additional 10 to 15 percent.�

Mr. Rickerby added, �All of our programs establish a direct long-term relationship with our customers by providing them robust, secure and reliable solutions. Consorteum will continue to expand our list of new and innovative products and services to our customer base that will drive increased revenues for the company.�

For more information on Consorteum Holdings, Inc. visit: www.consorteum.com

Contact:

Consorteum Holdings Inc.

2900 John Street, Suite 202,
Markham, Ontario, Canada L3R 5G3

Telephone: +1 866 824 8854

investors@consorteum.com

Keep a close eye on CSRH, do your homework, and like always BE READY for the ACTION!

Whirlpool: Not Interesting At This Point In The Cycle

One of the biggest gainers in yesterday's session was Whirlpool (WHR) which announced some decent fourth quarter earnings and at the same time issued a rosy outlook for 2012 despite a slowdown in its European operations. The market responded very favorably to the announcements of the maker of Bauknecht, Maytag and Whirlpool and sent shares up 13% to $61. This is the highest level since October 2011 when the company announced weaker growth and aggressively lowered its 2011 earnings target.

Fourth quarter results
Despite a 2.5% drop in revenue to $4.9 billion, the company saw its earnings rise 20% to $205 million or $2.62 per share. Analysts expected a slight drop in earnings to $1.96 per share. The increase in earnings is entirely attributable to its US business which saw a strong margin improvement and slight revenue growth for the quarter. Other regions, notably Europe, saw their revenues decline and Whirlpool mentioned specifically a lack of demand for this region in the final months of the year.

Full year results
For the entire year of 2011 revenue was actually up 1% to $18.6 billion with net profits down 37% to $390 million or $4.99 per share after a disappointing second quarter. All regions saw their revenues rise for the full year except the US business which comprises about half of Whirlpool's revenue. For the final quarter things reversed and the US saw its revenue increase on an annual basis while all other regions (Europe, Asia and Latin America) saw a decline in year-on-year revenue.

Outlook
Management is upbeat for the year 2012 and expects net earnings to come in at $5.00-$5.50 despite restructuring costs which could total about $1.50 a share or $120 million and a markedly slowdown in Europe. It expects revenue growth in all other geographic regions with continuing pricing initiatives and an increase in productivity. Whirlpool is concerned about cost inflation as many of its raw materials are tied to oil prices.

Volatile business, low earnings visibility
Whirlpools business is extremely cyclical and the low-margins provide extreme fluctuations in profitability and thereby in the share price. During the global recession in 2009 shares hit $15 per share, to rise to over $100 in 2010. In 2011 shares slumped back to $45 in December, now exchanging hands at $60. With no structural growth in revenue and margins over the last years, shares are not obviously cheap at 12 times 2011 earnings. While a $2.00 annual dividend might provide some stability in the long run shares are not interesting enough at this point in the cycle.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Exclusive Interview With Sumo Logic Co-Founder Kumar Saurabh

Personal finance site Mint.com was one of the breakout web products for data analysis — and a key architect of the technology was Kumar Saurabh.

Mint.com was sold to Intuit (NASDAQ:INTU) in 2009, and in 2010, Saurabh co-founded Sumo Logic, which is focused on helping companies analyze enormous amounts of data to deal with application problems and security.

IPOPlaybook.com recently had an opportunity to talk to Saurabh about “Big Data,” the cloud and more:

Q: What is “Big Data,” and how does your company deal with it? How large is the market opportunity?

A: From our vantage, Big Data is best defined as a vast subset of data, which has thus far not been amenable for analysis, but is extremely rich. Our focus is on the largest subset of Big Data within the average enterprise: log data.

It is growing at an exponential rate, but the technology to analyze the data has not kept up. We have developed technology that leverages the cloud to address the problem.

Q: What is “collective intelligence,” and how is the cloud driving it?

A: The real power of Google (NASDAQ:GOOG) always has been its ability to ingest the entire Internet, rank pages based on a measure of their soundness, then ultimately understand which links people actually click on in the search results to intelligently re-rank results.

Netflix (NASDAQ:NFLX) is another example. Assume you could run its recommendation engine with just a roster of your friends participating — the recommendations would be very poor, or at least very skewed, as you and your friends likely have similar tastes. In other words, collective intelligence is enabled by smart algorithms and a lot of data — a lot of data. In fact, even a simple algorithm with access to a lot of data will be more effective than a sophisticated algorithm with very limited data.

The only place this approach has been applied in the enterprise with great results is spam filtering. Until now, no one has applied the power of data to IT and security management and monitoring. Fundamentally, on-premise products cannot solve the problem because they constrain their customers into silos. Ultimately, our vision is that every customer will derive learning from other customers across our service. It�s about bubbling up insights and trends that benefit everyone.

Q: How important is dealmaking in your space?

A: As with ArcSight�s IPO in 2008, it�s important validation for the market and speaks to the significant opportunity presented by the data explosion within the enterprise. The space will continue to evolve, however. There�s a new wave of technology and innovation on the way.

Tom Taulli runs the InvestorPlace blog�IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of��All About Short Selling��and��All About Commodities.��Follow him on Twitter at�@ttaulli. As of this writing, he did not own a position in any of the aforementioned securities.

3 Ways to Invest in the Coming Rebound in Natural Gas

As I laid out in my deep look at the changing dynamics in the natural gas sector (click here for Part 1), the entire industry may soon start to rebound as a falling rig count eventually leads to falling output, which in turn should help bring supply down to a level where natural gas prices firm up.

What kind of snapback can investors expect?
 

Well, a return to the glory days of 2008, when natural gas briefly touched $13 per thousand cubic feet (MCF) seems nigh on impossible. It's simply hard to envision a scenario where natural gas is once again scarce -- at least in terms of any reasonable investing time horizon. Still, a clear case can be made that supply and demand will be in rough equilibrium, perhaps as soon as a few quarters from now if the falling rig count finally starts to curtail output.

 

Natural gas currently trades for around $2.70 per MCF.

As a rough framework:

• A sharp drop in temperatures in the U.S. Northeast in the second half of this winter would quickly push gas above $3.
 
•  A drop in the rig count to around 725 or even 700 is probably good for another $0.50 move.

• Further conversions in multi-fuel power plants from coal to natural gas is another clear, but hard-to-quantify catalyst.

• And legislation that advances the opportunity for natural-gas powered vehicles  could add $1 to natural gas prices.

Add it all up, and natural gas prices could be trading between $3.50 per MCF and $4.50 per MCF a year from now. Goldman Sachs believes an inflection point is at hand and sees a slow rebound in natural gas prices to $3.75 by the end of this year, $4.25 next year, and $5.50 by 2014 as supply finally drops to appropriate levels.

In case you're wondering where the downside exists, industry-wide cash costs average about $2.30 per MCF. Any price below that and production would HAVE to fall. In any event, prices appear to have already bottomed in the current $2.60 to $2.70 range.

If the upside scenario plays out according to plan, here are three stocks that would surely benefit...

1. Chesapeake Energy (NYSE: CHK)
No one would be happier to see gas prices rebound than Aubrey McClendon, CEO of this beleaguered industry giant. McClendon pushed this company to the edge in 2008, believing high gas prices would provide the cash flow to pay for a massive buying spree on key shale formations. McClendon spent the next two years walking that strategy back, ling up partners to provide cash in exchange for a share of many of the company's energy fields.

 

 
The decision to lighten the company's debt burdens initially appeared brilliant, and shares rallied in 2011 as it increasingly appeared as if Chesapeake retained the most prized assets and had the cash flow to fully exploit them. But plunging natural gas prices have raised fresh liquidity concerns, and McClendon is again scrambling to raise cash to be able to meet current development plans.

Rising natural gas prices would be a sure-fire panacea. Not only do firmer prices enable Chesapeake to generate more cash flow from existing wells, but they remove the risk that the company hits a liquidity crunch in coming quarters.

At this point, Chesapeake is the poster child for "high-risk/high reward." If the chips fall the right way and firmer gas prices remove the risk concerns, then this stock would likely quickly move to $35 or $40, simply because the company's real estate acreage is so valuable (the stock is currently around $21). In a best case scenario, my colleague Nathan Slaughter, chief strategist of Scarcity & Real Wealth, sees shares moving closer to $60, nearly 200% above current levels.

Chesapeake may be too risky for some investors. After all, the company's funding gap may cause it to scramble to raise funds, which is never a pleasant event to watch. Instead other investments options to consider include...

2. Southwestern Energy (NYSE: SWN)
Although this company has exposure to both oil and gas production, it has considerable upside if natural gas prices rise because it would boost the company's cash flow and fund development of many areas in the Marcellus shale (Pennsylvania) that remain untapped. In effect, the company is doing a nice job of restraining spending in an era of weak gas pricing, which is leading to respectable cash flow. This means Southwestern won't need to scramble to raise funds if gas prices remain weak. Reflecting the current sobering pricing environment, shares have fallen by roughly a third in the last six months to a recent $31. A move back to the 52-week high of $49 would be the likely outcome if gas prices started to percolate.

3. Apache Corp. (NYSE: APA)
This company also has exposure to both oil and gas, and it's the oil end of the business that is fueling big profits right now. But Apache has assembled a very impressive slate of gas-oriented properties that would prove quite valuable in an era of firming gas prices.

Even with gas prices in a funk, the company's assets appear quite undervalued. Citigroup estimates Apache's energy holdings are worth around $177 a share. That's far above the current $99 share price. (Citigroup's actual $150 price target takes a more conservative approach to Apache's ability to monetize its holdings.)

Risks to Consider: A rising tide would surely lift all boats, but if you look to purchase selective stocks now, it may be wise to assume that industry conditions remain weak and be wary of other firms that have funding gaps to meet their 2012 capital spending plans. Besides Chesapeake Energy, companies like Devon Energy (NYSE: DVN), EOG Resources (NYSE: EOG), and Noble Energy (NYSE: NE) will all need to raise at least $1 billion this year -- or curtail current plans if gas prices don't pick up.

> Firms with the greatest exposure to natural gas would surely see the biggest gains from a rebound in the commodity's price. Beyond Chesapeake Energy and Southwestern Energy, each of which have greater than 80% of their revenue from natural gas (as opposed to crude oil), other gas-focused firms include Anadarko Petroleum (NYSE: APC) (57%), Devon Energy (66%), Endeavour International (NYSE: END) (66%), Newfield Exploraiton (NYSE: NFX) (61%), Range Resources (NYSE: RRC) (77%) and Canada's Encana (NYSE: ECA) (96%).

Top Stocks For 2012-2-1-1

 

QU�BEC CITY, Aug. 30, 2011 (CRWENEWSWIRE) - Aeterna Zentaris Inc. (NASDAQ:AEZS) (TSX:AEZ.TO) (the “Company”) today announced favorable top-line results of its completed Phase 3 study with AEZS-130 as the first oral diagnostic test for Adult Growth Hormone Deficiency (AGHD). The results show that AEZS-130 reached its primary endpoint demonstrating >90% area-under-the-curve (AUC) of the Receiver Operating Characteristic (ROC) curve, which determines the level of specificity and sensitivity of the product. The Company is currently proceeding with further detailed analyses of the data and preparing for a pre-New Drug Application (NDA) meeting with the U.S. Food and Drug Administration (FDA) in the upcoming months, which would be followed by the filing of a NDA for the registration of AEZS-130 in the United States.

The parameters of the study, as defined below under Study Design, were achieved as agreed to with FDA under our Special Protocol Assessment (SPA). Importantly, the primary efficacy parameters show that the study achieved both specificity and sensitivity at a level of 90% or greater. In addition, 8 of the 10 newly enrolled AGHD patients were correctly classified by a pre-specified peak GH threshold level. The use of AEZS-130 was shown to be safe and well tolerated overall throughout the completion of this trial.

“We are pleased with the results obtained and we therefore expect to meet with the FDA and work out the content of a submission for an NDA. We believe that AEZS-130 could become the first approved oral test for the diagnosis of AGHD, providing patients with a potentially safer, accurate and more convenient alternative to the current injectable tests”, stated Juergen Engel, Ph.D., President and CEO at Aeterna Zentaris.

Study History

The study titled, “A Multi-Center Study Investigating a New, Oral Growth Hormone Secretagogue (AEZS-130, formerly ARD-07) as a Growth Hormone (GH) Stimulation Test in Terms of Safety and Efficacy”, was originally initiated to compare the performance of AEZS-130 against the then-available diagnostic growth hormone-releasing hormone (GHRH) Geref Diagnostic� + Arginine (ARG) standard test. Geref Diagnostic� was subsequently withdrawn from the market, worldwide, in 2008; the trial’s sponsor, Ardana Biosciences (Ardana), discontinued the study for financial reasons before it was completed. In 2009, Aeterna Zentaris entered into an agreement with administrators of Ardana and regained the rights to AEZS-130, and with the FDA, established the best way forward to complete this Phase 3 study and continue to utilize the data already obtained, in light of the loss of the original comparator. A Special Protocol Assessment (SPA) granted by the FDA, resulted in a modification of the original study, without altering the basic study design so that the completed portion of the study and the new part of the study would provide one, complete, Phase 3 study.

Study Design

The first part of the study conducted by Ardana was a two-way crossover study involving 42 patients with confirmed AGHD or multiple pituitary hormone deficiencies and a low insulin-like growth factor-I. A control group of 10 subjects without AGHD were matched to patients for age, gender, body mass index and (for females) estrogen status.

Each patient received two dosing regimens in random order, while fasting, at least 1 week apart. One regimen consisted of a 1 �g/kg (max. 100 �g) dose of GHRH (Geref Diagnostic�, Serono) with 30 g of ARG (Ar-Gine�, Pfizer) administered intravenously over 30 minutes; the other regimen was a dose of 0.5 mg/kg body weight of AEZS-130 given in an oral solution of 0.5 mg/ml.

As a result of the SPA reached with the FDA in order to complete the trial, the second part of the study contained the following revisions/additions to the first protocol:

An additional 30 normal control subjects were to be enrolled to match the AGHD patients from the original cohort;
Further, an additional 20 subjects were to be enrolled: 10 AGHD patients and 10 matched normal control subjects;
The above brought the database to ~100 subjects;
All subjects received a dose of 0.5 mg/kg body weight of AEZS-130;
As a secondary endpoint, the protocol required that at least 8 of the 10 newly enrolled AGHD patients be correctly classified by a pre-specified peak GH threshold level.

About AEZS-130

AEZS-130, a ghrelin agonist, is a novel orally active small molecule that stimulates the secretion of growth hormone. The Company has completed a Phase 3 trial for use as a simple oral diagnostic test for adult growth hormone deficiency (AGHD). AEZS-130 works by stimulating a patient’s growth hormone secretion, which normally only occurs during sleep, after which a healthcare provider will measure how well the body responds to that stimulation based on the patient’s growth hormone levels over a period of time. Low growth hormone levels, despite giving an effective stimulating agent, confirm a diagnosis of AGHD. AEZS-130 has been granted orphan-drug designation by the FDA for use as a diagnostic test for growth hormone deficiency. Aeterna Zentaris owns the worldwide rights to AEZS-130 which, if approved, would become the first orally administered diagnostic test for AGHD.

About AGHD

AGHD affects 35,000 adult Americans, with 6,000 new adult patients diagnosed each year. Growth hormone not only plays an important role in growth from childhood to adulthood, but helps promote good health throughout life. AGHD is usually characterized by low energy levels, decreased strength and exercise tolerance, increased weight or difficulty losing weight, emotional changes, anxiety and impaired sleep. Available diagnostic tests for AGHD are complex and can produce significant side effects.

About Aeterna Zentaris Inc.

Aeterna Zentaris is a late-stage oncology drug development company currently investigating potential treatments for various cancers including colorectal, multiple myeloma, endometrial, ovarian, prostate and bladder cancer. The Company’s innovative approach of “personalized medicine” means tailoring treatments to a patient’s specific condition and to unmet medical needs. Aeterna Zentaris’ deep pipeline is drawn from its proprietary discovery unit providing the Company with constant and long-term access to state-of-the-art therapeutic options. For more information please visit www.aezsinc.com.

Forward-Looking Statements

This press release contains forward-looking statements made pursuant to the safe harbour provisions of the U.S. Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that could cause the Company’s actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, among others, the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of the Company to take advantage of business opportunities in the pharmaceutical industry, uncertainties related to the regulatory process and general changes in economic conditions. Investors should consult the Company’s quarterly and annual filings with the Canadian and U.S. securities commissions for additional information on risks and uncertainties relating to forward-looking statements. Investors are cautioned not to rely on these forward-looking statements. The Company does not undertake to update these forward-looking statements. We disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments, unless required to do so by a governmental authority or by applicable law.

 

 

THIS IS NOT A RECOMMENDATION TO BUY OR SELL ANY SECURITY!