IRA Investors Can Make Peer-to-Peer Loans Through Prosper, Millennium Trust

Investors who want to use their self-directed IRAs to invest in peer-to-peer loans through Prosper can use Millennium Trust Co. to custody those accounts, the company announced Thursday.

Investors can use IRA funds custodied with Millennium Trust to finance consumers’ loans and collect interest.

“We are an exchange for credit where people with cash and people with debt can meet,” Ron Suber, president of Prosper Marketplace, told ThinkAdvisor on Monday. “We’ve chosen Millennium Trust to be the IRA custodian to those lenders with cash that have IRA accounts that would like to make loans or investments in the borrowers’ debt.”

Suber said the decision to use Millennium Trust as the custodian was based on their “commitment to customer service and quality and very thorough documentation in a reasonable amount of time.”

Reggie Karas, managing director of the alternative solutions group at Millennium Trust, noted the firm has extensive expertise in that industry. “Self-directed IRAs are Millennium’s specialty,” she said on Monday. “We specialize in the custody of alternatives of all different asset classes; however, one of the things that we bring to the table is very early on we entered into the custody of electronic notes and loans. We have been working in that space for quite a while. We spent an awful lot of time learning and understanding the space and the business and the investors, both on the individual and the institutional side.”

IRAs are a popular way to fund these kinds of loans, Suber said. “The main reason is the income that the lender, or the investor, receives is ordinary income. By using retirement money, IRA money, that income that we report on the 1099 in an IRA structure is deferred income, and you don’t have to pay taxes every year. The return for IRA money is essentially much higher than taxable money.”

“For a lot of people, especially when we move to the institutional side, it’s a huge pool of investment funds that they have available to them, so the IRA makes a lot of sense,” Karas added.

Prosper originated $77 million in loans in March, and by mid-April, will have originated $1 billion, according to Suber. “The interest from borrowers is rapidly accelerating, given their increased awareness that there is a new source and a new exchange for credit, where they can refinance at a fixed rate and a lower rate, backed by people and not just banks.”

Historically, borrowers have had to choose between banks and credit cards, friends and family for loans, Suber said. Now they have a fourth source of potential funding that they can receive quickly — funds will arrive in a borrower’s checking account within three or four days, Suber said — easily and from the comfort of their own home. There are three main kinds of loans investors can finance. “The first is that debt-consolidation borrower who has credit card debt and wants a lower rate with a fixed rate and a fixed term,” Suber said.  “The second kind of borrower is the person who wants to buy something: An example might be home improvement or vacation, or some other special occasion, or a motorcycle or second car. That type of borrower is now actively coming to us. The third type of borrow is a person with good credit, a minimum 640 FICO, who has a small business and isn’t getting a business loan or the bank wants a personal guarantee or collateral.”

Suber said of the partnership with Millennium Trust, “Our clients have been very, very happy. We’ve had a lot of new business based on the partnership and the announcement.”

Report: Caterpillar avoided $2.4B in U.S. taxes

Construction machinery giant Caterpillar avoided $2.4 billion in U.S. taxes by negotiating a corporate deal with Switzerland and shifting profits to a wholly-owned Swiss subsidiary, according to a Senate report issued Monday.

The Peoria, Ill.-based company eased the tax bite through an agreement that transferred its international parts-distribution division to the subsidiary, the report by the staff of the Democratic majority of the Senate Permanent Subcommittee on Investigations showed.

Despite $8 billion profit shift, no Caterpillar personnel or business activities moved from the U.S. to Switzerland, and most of the firm's parts business remains in the U.S., said the report, issued as Americans prepare for the annual April 15 tax-filing deadline.

"Caterpillar is an American success story that produces phenomenal industrial machines, but it's also a member of the corporate profit-shifting club that has shifted billions of dollars of profits offshore to avoid paying U.S. taxes," said Sen. Carl Levin, D-Mich. who chairs the panel.

The subcommittee's reports typically are issued by the panel's top Democratic and Republican members. But in a sign of disagreement by Sen. John McCain, R-Ariz., the panel's ranking GOP member, the findings were issued as a report by staffers for the Democratic majority. McCain was scheduled to address the issue at a Tuesday hearing on Caterpillar's tax strategy.

Executives from Caterpillar and PricewaterhouseCoopers, the accounting giant that audits the manufacturer and was also paid approximately $55 million for working on the tax strategy, are scheduled to testify at the hearing.

In prepared written testimony, Julie Lagacy, a Caterpillar vice president, said the manufacturer "takes very seriously its obligation to comply with the tax laws enacted by the Congress, by the states" and other jurisdictions.

"Caterpillar's effective income tax rate averages about 29%," relatively high among U.S. firms, said Lagacy. The company has added ab! out 13,000 U.S. jobs in the last 15 years and "is proud to pay its fair share of taxes right here in the United States," said Lagacy.

PwC said its advice "helped Caterpillar evaluate how best to organize its expanding global operations" and align them "with carefully considered U.S. tax policies." The firm said it "maintained our independence with respect to Caterpillar at all times" and complied with all oversight rules.

The report is the latest in which the panel spotlighted strategies that Apple, Microsoft, Hewlett-Packard and other well-known U.S. corporations used sophisticated strategies to transform what would otherwise be substantial tax bills into major savings.

Many members of Congress have argued that such tax issues arise more from problems with the U.S. tax code than from corporate America. Tax laws allow U.S.-based companies to defer taxes on reported foreign income until they bring the profits home. As a result, domestic corporations collectively holds trillions of dollars overseas.

The subcommittee began examining Caterpillar after learning of a 2009 federal lawsuit by Daniel Schlicksup, an attorney who had worked on the firm's tax strategy. He charged that Caterpillar used a "Swiss Tax Structure" to shift profits overseas and a "Bermuda Tax Structure" to bring them back to the U.S. After Schickslup raised questions, Caterpillar retaliated by forcing him into an unwanted transfer, the lawsuit charged.

Caterpillar denied all allegations in the case, which was settled in 2012.

Reaching some of the same conclusions as the lawsuit, the subcommittee report said Caterpillar negotiated an effective tax rate of 4% to 6% with Switzerland, and then created created a Swiss subsidiary called CSARL. New licensing deals enabled the subsidiary to sell Caterpillar's third-party manufactured replacement parts to non-U.S. dealers and customers without showing the proceeds as U.S. income, the report concluded.

"Caterpillar is shifting its parts profits to Switzerl! and, even! though most of its parts operations and work is done right here in the United States," said Levin, who argued the subsidiary deals might not represent arms-length transactions.

"Nothing changed in the real world," he said, "except Caterpillar's tax bill."

Separately, the manufacturer's annual report filed in February with the Securities and Exchange Commission disclosed that the IRS has issued preliminary notices that Caterpillar owes additional federal taxes involving "certain non-U.S. operations and foreign tax credits."

"We disagree with these proposed adjustments" and will "vigorously contest" them if the IRS finalizes the preliminary assessment, Caterpillar said.

Housing Starts up 7% for March

Housing starts jumped 7% to a seasonally adjusted annual rate of 1.036 million for March, according to a Commerce Department report (link opens in PDF) released today.

Market analysts had expected a slight 1.4% month-to-month increase. After a 7.3% dip in January and a 0.8% bump for February, these newest numbers tentatively put housing starts back on an upward trend.

Source: Census.gov. 

On a regional level, the South and Midwest carried the nation's starts, up 10.9% and 9.6%, respectively. Housing starts in the West bumped up 2.7%, while Northeast numbers came in 5.8% below February's.

Housing completions for March hit a seasonally adjusted annual rate of 800,000, 11% above February's numbers. March building permits fell a seasonally adjusted 3.9% to an annual rate of 902,000 after a 4.6% rise in February. Analysts had expected a rate of 942,000.

link

How 'Chained CPI' Will Hit Your Pocketbook

Getty Images President Obama's new budget proposal includes changing a couple of key inflation calculations to something called a "chained CPI." The shift is getting a lot of attention right now because of the expected effect it will have on individuals. There are two key places where a chained CPI -- short for consumer price index -- will have a direct impact on your pocketbook: income taxes and Social Security benefits. All else being equal, over time, your income taxes will be higher and your Social Security benefits will be lower than they are under current inflation calculations. The key difference between the chained CPI and the traditional consumer price index is how the index measures consumer behavior. The chained CPI assumes that as prices rise on one product, some portion of consumers will be willing to substitute less expensive alternatives for what they used to buy. That changes the product weightings used in the inflation calculation. By incorporating information from those new product weightings, the chained CPI typically produces a lower inflation level. Here's how it works. The Impact on Income Taxes If you pay income taxes, your tax bracket is determined by the amount of taxable income you make. The cutoffs for each bracket generally rise over time with inflation. The two charts below show the IRS "Schedule X" brackets for single taxpayers; the first is for 2012, and the second is what's currently expected for 2013: Chart for 2012 from the U.S. Internal Revenue Service Chart for 2013 from the U.S. Internal Revenue Service While the 39.6 percent tax rate is new for 2013, note that the other brackets have higher cutoffs for 2013 than they did for 2012. That's thanks to the inflation adjustment made to the tax brackets. If the law is changed so that the chained CPI is used, the tops of those brackets are expected to rise more slowly, exposing more of your income to higher tax rates than under current law. The Effect on Social Security Benefits Similarly, Social Security benefits are increased based on the inflation rate. By tying the payment increases to the chained CPI -- an inflation rate that grows more slowly than the current measure -- those benefit payments will grow less quickly as well. As a result, over time your Social Security checks will be smaller than they would have been under the old inflation calculation. The annual changes aren't too extreme -- they're estimated to be somewhere in the vicinity of 0.1 percent to 0.3 percent per year, depending on what the future brings. But over time, it adds up to real money for those who pay income taxes or receive Social Security checks, with official estimates in the neighborhood of $340 billion in higher taxes and lower costs over the next 10 years. Is It Better? Is It Fair? To some extent, the chained CPI is more effective at measuring the behavior changes that we all make whenever possible to save some cash. For example, if you've switched to generic medications whenever they're available, you're doing exactly what the chained CPI expects you to do. Likewise, if you started carpooling or taking the bus in response to higher gas prices, you're changing your behavior based on higher prices, just like the chained CPI projects. On the flip side, of course, not all costs are easily switchable, especially for the seniors who rely on Social Security. For instance, health care costs have been rising faster than the overall inflation rate for decades, and older folks generally have higher health care costs than younger ones do. As a result, the change to a chained CPI will very likely make the gap between income growth and health care spending growth even more painful for seniors on Social Security. The Big Picture Still, if slowing the rate of benefit increases puts off the day of reckoning for when the Social Security Trust Fund runs out of cash and slashes benefits by around 25 percent, it may be worth it. That date is currently estimated to be a mere 20 years away -- well within the expected life span of most current workers and even some early retirees. To make it worse, if the CBO's recent release on Social Security is any indication, the next Social Security Trustees' Report may even pull that date even closer. Given a choice between a slower rate of growth or a hard slash of 25 percent at some point in the not-too-distant future, neither option seems ideal. But still, a slower rate of growth is a lot less painful than waking up one day to find your sole source of income has shrunk by a quarter of its former value.

Your age when you collect Social Security has a big impact on the amount of money you ultimately get from the program. The key age to know is your full retirement age. For people born between 1943 and 1954, full retirement age is 66. It gradually climbs toward 67 if your birthday falls between 1955 and 1959. For those born in 1960 or later, full retirement age is 67. You can collect Social Security as soon as you turn 62, but taking benefits before full retirement age results in a permanent reduction of as much as 25% of your benefit.

Today's 3 Worst Stocks

Despite calls for slowing growth by some economists, the market just couldn't help itself today. After posting its worst week of the year last week, the S&P 500 Index (SNPINDEX: ^GSPC  ) bounced back today ahead of earnings season's unofficial kickoff this afternoon. Although some estimates put earnings growth at 1.6% this quarter, others have S&P 500 company profits declining by nearly 2%. We'll see how it plays out, but what's certain today is that the following three stocks simply couldn't keep up with their peers.

There's an old Wall Street saying: "Never try to catch a falling knife." While I also try to heed that advice on a day-to-day basis, bearish momentum sure can develop some killer inertia in the stock market. Few investors know this better than Apollo Group (NASDAQ: APOL  ) shareholders, as its 2.4% slip today continued its horrific and extended slide. The company that runs the University of Phoenix is facing high dropout rates and the specter of losing its federal funding and accreditation if loan default rates climb. 

Dropping 1.5% Monday, BMC Software (NASDAQ: BMC  ) joins Apollo as a notable laggard after the business announced some big strategy changes. An SEC filing today revealed BMC is cutting its workforce, incurring pre-tax charges between $33 million and $38 million in the process. No word yet on how many of the company's 6,900 full-timers will be let go.

Lastly, Netflix (NASDAQ: NFLX  ) saw its shares slip yet again today, as its 1% loss brings its five-day stumble to more than 10%. With news last week that Time Warner's (NYSE: TWX  ) Warner Archive Instant will allow streaming of classic Warner Bros. content for $10 a month, Netflix investors have gotten squeamish. Not only is this stiff new competition for Netflix, but it also raises questions about whether Netflix will be charged more for the Warner Bros. content it shows on its site. 

Fiat 500L: Bigger, bug-ugly, but roomy

Fiat wanted a bigger car that would appeal to more people, but one it still could fob off as a 500, that name having gained some following in the U.S.

It wound up with the 500L that's bug-ugly, but roomy and a graceful driver.

Reasonable people often disagree on matters of taste, so you might like the appearance.

The 500L resembles, from afar, the Mini Cooper Clubman SUV. That car's about the same size as the L, but starts about $3,000 more. The Clubman also offers optional all-wheel drive (AWD), which the Fiat doesn't. Fiat's a Chrysler Group brand, as is Jeep, which the automaker believes ought to be the main AWD brand.

Unlike the 500 coupe (no "L") the new model isn't a style play. Instead, its airy interior with well-designed, nicely executed shapes and textures, and generally quiet personality, make it as well-suited for road trips and highway commuting as the coupe is for city be-bopping.

Even though the L is, by Fiat's tape measure, 27 inches longer than the 500, as well as 6 inches wider and taller, the bigger car's still not that big. And it has a tight 32-foot turning circle diameter, making it a parking marvel.

Fiat says about 20% of buyers choose the six-speed manual, a huge portion by U.S. standards. We found it easy to shift, quirk-free and not a hassle in traffic. Possible exception: the turbocharged 1.4-liter engine's lack of torque just off idle, combined with the clutch's easy-going feel, might trick you into killing the engine now and then.

The Euro clutch automatic that's in the other 80% of 500Ls is described by Fiat as a dual dry-clutch gearbox. That means it works internally like a manual, but there's no clutch pedal, and the gearbox software — not the driver — decides when to shift.

Because there's no drag-producing torque converter, the transmission delivers good fuel economy. But without torque convertor's power-flow smoothing, it isn't as pleasant at low speed as you might prefer.

A city-dwelling colleague found it unple! asant; in suburban environs it seemed OK.

Also of note:

The small four-cylinder engine, similar to one of the Dodge Dart's optional powerplants, feels surprisingly muscular, despite modest ratings of 160 horsepower and 184 pounds-feet of torque. Sounds good, too.

Driving dynamics are high-level. Steering's excellent at both keeping the car on-center and weaving through tight turns. Brakes respond quickly and aggressively to the pedal, which has a confidence-inspiring, firm feel.

The 500L's tall, but still manages to juke through turns without feeling tipsy.

The standard Chrysler Uconnect infotainment system links immediately to the too-hip Windows phone and the iPhone.

Seating is generous, giving all occupants unexpected space, especially considering the car's trim size. But not all will find the seats comfortable. We think the rear seats are too upright and padded in the wrong places. The rear seats do slide fore and aft to help meet cargo or people needs.

Instruments and controls are sensibly arrayed, though the red illumination won't be best for everybody. We found it very unhelpful when trying to read the temperature setting in the low-mounted climate controls.

The extra set of windshield pillars looks as if it'll be distracting, but isn't. The small buttress pillar just aft of the side mirror creates a triangle of glass that makes it easier to spot the likes of short pedestrians or baby carriages in crosswalks. No getting around the strange look though.

If you remember when cars had triangular vent windows, the layout might not seem strange.

The Insurance Institute for Highway Safety crash-tested the L last year and rated it a "Top Safety Pick" because it scored "good," the top rating, in the suite of tests. But the tests have changed and the car "doesn't meet the tougher criteria" to get the same rating now, IIHS says.

If the styling suits you, and you don't mind a gamble on a model that hasn't been on the road very long, you coul! d fall in! love with the 500L for its roominess, driving feel and plentiful features, even in the base Pop model.

ABOUT THE 500L

What? Four-door, five-passenger front-drive hatchback compact that shares little but name with the smaller 500. Fiat calls it a small multipurpose vehicle. Available in four trim levels: Pop, Easy, Trekking, Lounge.

When? On sale since June.

Where? Made in Kragujevac, Serbia, using Italian drivetrain.

How much? Prices range from $19,995 for Pop base model, including $800 shipping, to $28,545 for fully loaded Lounge.

What makes it go? 1.4-liter turbocharged Multiair four-cylinder rated 160 horsepower at 5,500 rpm, 184 pounds-feet of torque at 2,500 rpm. Mated to six-speed manual or what Fiat calls Euro Twin Clutch six-speed automatic. Conventional automatic with torque converter available later this year.

How big? A few inches longer and an inch narrower than Kia Soul. Weighs 3,200 (manual), 3,260 (automatic) lbs. Passenger space: 98.8 cubic feet. Cargo: 22.4 cu. ft. behind rear seat, 68 cu. ft. rear seat folded. Turning circle diameter, 32.3 ft.

How thirsty? Rated 25 mpg in the city, 33 highway, 28 combined (manual), 24/33/27 (automatic). Pop manual transmission test car registered 22.3 mpg (4.48 gallons/100 miles), Trekking with automatic, 23.4 (4.27 gal./100 mi.), both in city/suburban mix. Premium recommended, regular acceptable. Tanks holds 13.2 gal.

Overall: Satisfying, graceful, roomy.

When the White House starts giving investment advice, we're all in trouble

Bloomberg, Getty Images, iStock, Gerardo Tabones

When the White House starts dishing out advice about investing in the global equity markets, apparently short-sellers don't listen. And why should they?

On March 18, press secretary Jay Carney said that the only investments worth making in Russian equities are wagers that the market will decline.

Anyone paying attention wisely wasn't really paying attention. The Russian equity market, as measured by the Market Vectors Russia ETF (RSX), the largest U.S. exchange traded fund tracking the Russian market, was down 8.7% since the start of the Crimean crisis in late February but since Mr. Carney's vague and somewhat confusing statement, it's up 2.4%.

In fact, some are even calling the “blood on the streets” of Russia's stock market a buying opportunity.

The Market Vectors Russia Small-Cap ETF (RSXJ) has fallen by 15.7% since Russia started its advance on Crimea, but has gained back 1.7% since Mr. Carney said investors should avoid the Russian market.

Over those same periods, the S&P 500 Index has been essentially flat.

To be fair, it was never clear whether Mr. Carney was suggesting that investors help the U.S. government punish Russia by dumping and/or shorting Russian stocks, or whether he was giving investors a friendly heads-up that U.S. and European sanctions could eventually hurt the Russian economy and, ultimately, its equity markets.

Whatever, it's clear that the short-sellers didn't take the bait.

According to Bloomberg, the percentage of shares of RSX borrowed for shorting has fallen to 14% of the total stock, which is down from 17% the day Mr. Carney spoke, and a record 21% on March 3.

“I don't believe whether a U.S. investor invests in Russia will have any impact on the Russian stock market, but telling people to get out of the stock market is manipulative,” said Bill Mann, portfolio manager at Motley Fool Asset Management.

Mr. Mann pointed out that in addition to being manipulative, such statements also expose a certain level of ignorance regarding the way equity markets work.

“Selling a stock is a derivative and largely neutral response, because the only way out of a stock is to sell it to somebody else who wants to buy it,” he said.

Mr. Mann generally avoids allocating to Russian equities in the two funds he manages because he isn't comfortable with the way a third of the country's public companies are owned by the government and another third are owned by Russian oligarchs.

But even if he liked specific Russian stocks, Mr. Mann said. he wouldn't avoid them based on a White House effort to whip up some populist campaign to punish Russia.

“The stock market ultimately f! ollows the performance of the businesses, and a stock price at any point is just an equilibrium,” Mr. Mann said. “If you can impact the performance of those businesses, you will deeply impact the stock, and if that's what the White House meant to say, maybe that's what should have been said.”

If what we're seeing is the start of regular theme of investment advice coming from White House spokespeople, maybe it's time for a new market barometer to basically do the opposite of what's being advised.

But, at the very least, it opens a new can of challenges for the White House.

“What are they going to do when things start to improve, tell short-sellers to cover their positions?” said Joseph Witthohn, vice president of product development at Emerald Asset Management.

“The White House should not ever be in the advice business on something this serious,” Mr. Witthohn added. “They shouldn't be looking for U.S. investors' help in manipulating the economies of other nations.”

Ask Matt: Don't let stock buybacks fool you

USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com.

Q: Do stock buybacks increase companies' profit?

A: Companies are going crazy buying back their own shares. And these buybacks create the mirage that earnings per share are rising. Savvy investors know how to look beyond this distortion.

Members of the Standard & Poor's 500 boosted the amount they spent buying back their own stock by 30.5% in the fourth quarter of 2013 versus the same year-ago period, says S&P Dow Jones Indices.

TRACK YOUR STOCKS: Get real-time quotes with our free Portfolio Tracker

In a positive development for investors, while companies were busily buying back stock, they didn't issue new shares as rapidly. The result? A major bump to earnings per share.

This happens because companies' net income is being cut into fewer slices. The effect is profound now. More than 100 stocks in the S&P 500 reported earnings per share growth that was 15% higher than net income growth last year, says S&P Dow Jones Indices.

But will the changes in share counts distort the profits reported by the entire S&P 500, the basis for many mutual funds and exchange-traded funds? No, says Howard Silverblatt of S&P Dow Jones Indices. The S&P 500 changes the weight holdings to adjust for changes in the shares outstanding. Doing so allows investors to more accurately measure how fast earnings are growing from year to year.

It's a different situation with the Dow Jones industrial average. The Dow is weighted by per share data. When a company has a decrease in the number of shares, which boosts earnings per share, the Dow's measured profitability will rise.

Traders say aging bull still has legs to run

NEW YORK — Is the Wall Street bull winded? No way, say traders surveyed by Charles Schwab.

The bull market that kicked into high gear in 2013 with a 30% gain, has paused a bit this year.

Heading into today's session, the market was virtually unchanged for the year. In Friday trading, the Standard & Poor's 500 was up about 1%.

MARKETS: Stocks trading higher Friday

WARNING SIGNS: Some see signs of caution flashing on Wall Street

So how much longer will the bull, which turned 5 earlier this month, live?

Findings from Charles Schwab's Trading Services Sentiment Survey from March found the following:

• 28% say the bull will continue for another three to six months.

• 25% say it will last through the end of the year.

• 42% say it will end at some point in 2015.

• 5% say the bull is already over.

The projection for a sustained bull market comes despite the fact that nearly 20% of traders say they have a bearish outlook for the next three to six months, up from 10% in December.

"Over the longer-term, traders surveyed are overwhelmingly optimistic that the bull will continue," says Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research.

The survey was conducted March 19 at Schwab's virtual trading event.

Wireless Towers Are the Golden Ticket for Your Investment

With smartphones now representing over 60% of U.S. handsets, increased data usage is leading to a growing demand for spectrum, which is a key component in carriers' race over market share. Thus, as an operator of wireless tower communications sites, Crown Castle International Inc. (CCI) will enjoy the benefits of being in the right place at the right time.

As a matter of fact, the company is the second largest independent operator of wireless tower communication sites in the U.S. and it is the leading tower owner, with roughly 40,000 sites domestically and over 1,700 in Australia.

The firm leases and licenses antenna spaces on its controlled towers to major wireless carriers such as AT&T Inc. (T), Sprint Nextel Corporation (S) and Verizon Communications Inc. (VZ). Moreover, it leases access to its distributed antenna systems for the transmission of wireless signals related to the transmission of voice, video and data.

Long Lasting Upsides with Low Risk

Crown Castle has many advantages running to its favor, which have carved the company a narrow economic moat. For one, it boasts great visibility stemming from the fact that its long term contracts have enabled the firm to have more than 97% of its coming year's revenue projections already assured.

Secondly, high switching costs make it unlikely for carriers to switch towers, since the costs of such a move would by far exceed the savings from changing to another operator. In addition, zoning regulations hinder carriers to do so. Third, its economies of scale allow the company great cost advantages that result in massive operating leverage.

And lastly, there is the upside of the network effect. Since each tower covers a specific area, multiple carriers will be willing to have presence in the same towers, given this is directly connected to their ability to compete over market share in the areas covered by each site.

Creating Shareholder Value

In early January 2014, Crown Castle began operating as a real estate investment trust. Upon the announcement of this decision, chief executive Ben Moreland stated that this conversion should "lower our weighed average cost of capital and provide additional opportunities for creating long-term shareholder value." In fact, REITs have to pay 90% of its taxable income to shareholders in the form of dividends every year.

A Solid Growth Projection

Immense growth in mobile Internet traffic compels carriers to improve their coverage and network quality in order to achieve a better transmission. Hence, carriers need more tower space. Consequently, increasing occupancy of space at the existing towers has become the company's main top-line growth driver.

In fourth quarter of fiscal 2014, site rental reported a 14% revenue growth, which encouraged the firm to raise its guidance for full 2014. Price escalations of 3% to 5% are another revenue booster.

Moreover, margin expansion is expected to accelerate in the coming years as its fixed costs spread over a growing number of tenants per tower. On the other hand, high switching costs benefit the company with recurring revenues, which create reliability in relation to its ability to generate cash flow, thereby increasing its access to credit financing.

Valuation

Crown Castle stock trades at a premium of 263.00 its trailing earnings compared to the industry median of 19.0. This high multiple reflects the increasing demand for this share, based on the projection of sturdy earnings growth in the future.

Its revenues are in a steady upswing, with a robust 15.5% growth compared to its peers' average of 3.30%. Investment guru Steve Mandel (Trades, Portfolio) continues to increase its holdings in the company, backing my strong feeling about the firm's unstoppable growth trajectory.

Disclosure: Victor Selva holds no position in any stocks mentioned.

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Counterpoint: Let's Restore the Hourly Wages Cut by Obamacare

Tom Williams/CQ Roll Call/GettyHouse Minority Leader Eric Cantor (R-Va.) On Jan. 31, a fry cook asked President Obama why his hours were being cut to part time because of Obamacare, and the President responded by saying he was pushing to raise the minimum wage. This moment between the fry cook and the President reveals the entire reasoning of the Democratic Party's push to raise the minimum wage. Rather than restore wages and hours lost by working middle-class Americans due to Obamacare, Democrats are hiding these losses behind a false debate about the minimum wage. Just look at the math. In 2013, President Obama supported a $9 minimum wage. This year, he proposed a $10.10 minimum wage, which at the federal level turns out to be an increase roughly equal to the amount of wages a minimum wage employee would lose if they had their hours cut by 25 percent, as is happening under one provision of Obamacare. Coincidence? Here's how Obamacare creates those wage cuts. Under the law, an employer is required to offer government-mandated health care plans to full-time employees if they have 50 or more employees. The law then goes on to define a full-time employee as someone working 30 hours or more per week. This added regulation makes it prohibitively expensive for many employers to keep all their employees working more than 29 hours, so hours are reduced, no new hires are made, and often jobs are simply cut. Many school districts near my hometown of Richmond, Va., are already implementing policies limiting part-time workers to less than 30 hours as a direct result. The added costs of government-mandated health care will strain their budgets and probably cause even more Obamacare-related job losses. A substitute teacher, Amy Harbert, told the Richmond Times-Dispatch: "The people that it's going to affect are the people that need or want to work every single day." Another substitute teacher, Norman Sulser told the paper: "Effectively, you've been laid off a day and a half. It's another impact [of the law] that people didn't see coming." In 21 states, the minimum wage is already higher than the federal minimum of $7.25. A substitute teacher in Washington state, for example, where the minimum wage is $9.32, could lose as much as $102.52 a week because of Obamacare. These wage cuts aren't fair to the fry cooks and substitute teachers who didn't see this coming and don't deserve to lose hard-earned money in their pocket. The President is attempting to distract people from these wage cuts by proposing a minimum wage increase, but that would only make matters worse. The CBO found that about 500,000 jobs would be lost under the President's proposal. One survey by staffing company Express Employment Professionals found that 54 percent of minimum wage employers would reduce hiring and 38 percent would lay off employees if the President's proposals were adopted. Several more surveys and polls found similar findings. So in response to lost jobs, hours and wages due to Obamacare, President Obama is proposing cutting more hours, and more jobs. The madness has to stop. America is not working when Washington is creating incentives for businesses to cut back the hours and reduce the wages of hardworking Americans. America is not working when Democratic policies, like Obamacare, encourage people to be fired rather than hired. An America that works encourages job growth and encourages employers to offer more hours to its employees. An America that works gets Washington out of the way so middle-class Americans can experience higher wages, more hours, more opportunity and greater prosperity. In 2009, then-Speaker Nancy Pelosi (D-Calif.) famously said of Obamacare: "We have to pass the bill so that you can find out what is in it." Now that Americans are experiencing first-hand what was in the bill, Democrats are doing anything they can to push these policies back under the rug until after the next Election Day. It won't work. All of the delays, all of the distractions and all of the political games cannot hide the devastating effects of Obamacare. And meanwhile, the victims of these Democratic tactics are the American people who deserve better. Democrats know the law they drafted is hurting people. Rather than hide the problem, let's solve it. Next week in the U.S. House of Representatives, we will vote to restore wages and hours by up to 25 percent for Americans impacted by Obamacare. Let's put the politics aside for once, and do what is right for the American people.

UBS Smokes Walter Energy, Alpha Natural Resources With Mass Coal Downgrade

We’ve all heard of strip mining. Well UBS stripped the majority of the coal companies it covers, including Walter Energy (WLT) and Alpha Natural Resources (ANR), of their Buy ratings today.

Other impacted stocks include Consol Energy (CNX), Peabody Energy (BTU) and Arch Coal (ACI).

Agence France-Presse/Getty Images

UBS analyst Kuni Chen explains the reason for the mass downgrades:

We expect met coal fundamentals to remain challenged and see downside risk to Street met coal forecasts. In general, we see a "muddle through" scenario for the year ahead as coal companies have cut capital spending to maintenance levels and are primarily focused on preserving/enhancing liquidity…

We do not recommend investors buy met coal levered names like [Alpha Natural Resources, Arch Coal and Walter Energy] at this time. Fundamentally, we are positive on [Peabody Energy and Consol Energy] but see both as fairly valued based on our valuation metrics and commodity price deck.

In terms of price targets, Walter Energy and Alpha Natural Resources took the biggest hits. Chen lowered the price target of Walter Energy to $8 from $25–he sees no “compelling reason to accumulate the shares”–while Alpha Natural Resources goes from $12 to $5 thanks to its “very levered balance sheet and…significant cash burn in 2014.”

Shares of Consol Energy have dropped 0.7% to $40.79 at 3:15 p.m. today, while Walter Energy has plunged 5.3% to $7.36, Peabody Energy has fallen 2.6% to $15.81, Arch Coal has declined 2.2% to $4.56 and Alpha Natural Resources is off 2% at $4.25.

Never Mind Tronox, Anadarko Petroleum is Cheap

During the past 12 months, most energy exploration & production companies have gained in value. Noble Energy (NBL)? It’s up 20%. Apache (APA)? It’s gained 9%. EOG Resources (EOG)? It’s surged 55%. Chesapeake Energy (CHK)? It’s advanced 23%.

Reuters

The there’s Anadarko Petroleum (APC). It’s shares have dropped 5% during the past year of trading, thanks to the massive potential damages linked to its Kerr-McGee purchase. That underperformance, however, has left Anadarko looking cheap, no matter how you slice the Tronox liabilities. Deutsche Bank’s Stephen Richardson and Mimi Kong explain:

[Anadarko Petroleum] stands out in this analysis as a standalone domestic E&P business trading at wide discount (25-45%) to peers. While some of the 'perceived' value gap is likely driven by uncertainty surrounding Tronox, we note that assume a Tronox liability at the very high end of a potential range ($20 Bn post-tax) would value [Anadarko's] onshore business at a still discounted multiple of 4.9x our 2015e EV/EBITDAX (our NAV implied scenario)…The asset value at [Anadarko] is clearly apparent.

Shares of Anadarko Petroleum have gained 0.2% to $82.98 today at 12:52 p.m., while Noble Energy has risen 1.6% to $67.84, Apache has advanced 1% to $81.53, EOG Resources has climbed 1.4% to $192.26 and Chesapeake Energy is up 1% at $24.96.

MTNOY: The Emerging Market Rally Is Just Getting Started

Popular Posts: 3 ETFs to Profit from the Non-Crisis in UkraineThe Road to Retirement: 401ks, IRAs & More10 Potential Short Selling Candidates for 2014 Recent Posts: MTNOY: The Emerging Market Rally Is Just Getting Started 3 ETFs That Make the Most of Buybacks ‘Global Value’ by Meb Faber: A Must-Read for Any Investor View All Posts

As we reach the end of the first quarter, Tesla Motors (TSLA) is leading the pack with a massive 48% gain, followed by Emerge Energy Services LP (EMES) at 27%. Not too shabby given that the S&P 500 is barely positive on the year.

My pick for 2014 — South African mobile phone giant MTN Group (MTNOY) is off to a slower start, down about 2%. But with nine months left in 2014, I expect MTNOY stock to make a serious run for the top spot. And in fact, in the month of March, it has been the second-best-performing stock in the contest after EMES.

This year has been a rough one for emerging markets. First, there was the "mini-crisis" in the Argentine peso and waves of protests sweeping Venezuela. Then, there was the Ukraine political crisis that resulted in Russia effectively stealing the Crimean peninsula … and fears that China was about to have a "Lehman moment" that would see its capital markets collapse.

And finally, in the most bizarre of the lot, there is the corruption scandal engulfing Turkish Prime Minister Recep Tayyip Erdogan in which Erdogan responded to his attackers by threatening to "eradicate" Twitter, Facebook and YouTube.

MTNOY's home country wasn't immune either. South Africa is in the midst of an election season that has seen President Zuma raked over the coals for using excessive public funds to upgrade his personal residence. The African National Congress is facing its most difficult election in the post-Apartheid era.

Yet an interesting thing happened. While the news stories have gone from bad to worse, most emerging markets have been quietly enjoying a rally since early February. The iShares MSCI Emerging Markets ETF (EEM) is up about 7%, and the iShares MSCI South Africa ETF (EZA) is up fully 17%.

So, what gives? Did the problems plaguing emerging markets — unsustainable current account deficits, unstable governments, weak domestic demand, etc. — spontaneously resolve themselves?

Not exactly. A more reasonable explanation is that the selling simply exhausted itself and that the bad news has already been priced in. Fund outflows from emerging markets are at their highest levels since the 2008 crisis.

As an asset class, emerging markets are cheap and underowned and, for the most part, still completely despised by the investing public — making them a virtual textbook example of the perfect contrarian investment opportunity.

I believe that emerging markets are the single best asset class for the remainder of 2014. And as a leading mobile carrier in Africa — one of the fastest-growing regions in the world — MTN Group is in excellent position to ride that wave.

Let's review the bullish arguments for MTNOY:

It's the dominant mobile provider in the last great frontier market: Africa. It provides a service that is essential to the lives of the new African middle classes. Its markets are far from saturated, and it has virtually unlimited growth potential due to the inevitable shift to smartphones and higher-margin data plans; only about a third of MTN's subscribers currently use data It's very reasonably priced and pays a high and growing dividend; MTNOY stock has a dividend yield of 4.8% MTNOY stock trades at a reasonable price/earnings ratio of 14

If you haven't picked up MTNOY stock yet, it's not too late. Though it has rallied off its recent lows, I believe we are still in the early stages of a multi-year rally in emerging market stocks.

Charles Lewis Sizemore, CFA, is the chief investment officer of the investment firm Sizemore Capital Management. As of this writing, he was long EZA and MTNOY. Check out his new premium service, Macro Trend Investor, which includes a free copy of his e-book, The New Megatrend Investor: The Ultimate Buy-and-Hold Strategy That Will Make You Rich.

Rieder: Happier news about the news business

What a difference a year makes.

Each year the Pew Research Center offers up its annual report on the state of the news media.

It's generally a grim document, packed with depressing statistics about plummeting ad revenue and shrinking rosters of reporters at legacy news outlets.

But the latest version released early Wednesday has a radically different tone. While hardly declaring the embattled field has turned the corner and found the elusive formula for surviving and thriving in the digital age, it sees lots of reasons for hope.

It's not quite the irrational exuberance of Internet pioneer Marc Andreesen, who thinks we may be entering a golden age of journalism. But it's not gloom and doom.

"In many ways, 2013 and early 2014 brought a level of energy to the news industry not seen for a long time," the report states. "Even as challenges of the past several years continue and new ones emerge, the activities this year have created a new sense of optimism – or perhaps hope – for the future of American journalism."

Why the happy face? For one thing, Pew is excited about the digital players who are plunging deeply into the serious side of the news business. BuzzFeed, identified with such fare as "Which Rock Star Should You Hook Up With?" has a news staff of 170 and has plunged into investigative reporting, foreign news and longform journalism. Vice Media has 35 foreign bureaus. Vox Media is launching a website for explanatory journalism under the leadership of highly regarded policy wonk Ezra Klein, formerly of The Washington Post. Tech site Mashable has 70 news staffers in the lineup.

For the first time, the project tried to quantify the number of journalism positions at digital-only news organizations. It found about 5,000 working for 30 major digital news outlets and 438 smaller ones.

The study's authors also are encouraged by the fact that very wealthy new players, some form the trendy world of tech, are entering the news game. Amazon.com founder and CE! O Jeff Bezos bought The Washington Post. Boston Red Sox owner John Henry purchased The Boston Globe. And eBay founder Pierre Omidyar is creating a brand new player from scratch, First Look Media, to the tune of $250 million.

Philanthropists and venture capitalists are also getting into the mix.

The report makes clear that problems persist at traditional news outlets. Newspaper newsroom jobs declined by 6.4% in 2012 and there were doubtless more losses in 2013, it says, adding that despite all the cool new kids in the game, "the vast majority of bodies producing original reporting still lie within the newspaper industry."

The document reminds us that "a year ago, the State of the News Media report struck a somber note, citing evidence of continued declines in the mainstream media that were impacting both content and audience satisfaction." And many of those problems persist.

"Still," it continues, "the level of new activity this past year is creating a perception that something important, perhaps even game-changing, is going on. If the developments in 2013 are at this point only a drop in the bucket, it feels like a heavier drop than most."

I share the authors' enthusiasm about the promising green shoots. The fact that so many new players see a value in powerful journalism is good news indeed. Particularly heartening is the substantial investment in investigative reporting and foreign coverage.

But there's one serious area of concern: Who is going to pay for local reporting? Many local outfits continue to decline. Many digital start-ups are doing fine work at the local level, but they are largely complementary to the big dog in town rather than large enough to fully cover an entire region.

And first-rate local journalism is critical in a democracy.

I look forward to one year reading in Pew's annual report that we've got that one covered as well.

Utility and energy stocks performed well for the portfolio

By Ironwood Investment Management

The Ironwood SMID Cap Value portfolio had a strong February. The strategy advanced 6% for the month. The strategy's materials and processing, producer durables, utility and energy stocks drove the strong performance.

Within those sectors some of the better performing stocks were Platform Specialty Products (PAH), Carrizo Oil & Gas (CRZO), Weatherford International (WFT), Xylem (XYL), Zynga (ZNGA) and Dynegy (DYN). The one thing all of these stocks have in common is that the management team is executing on the transition strategy that we outlined when we first purchased the stock.

We did not initiate any positions in February. Here are the positions eliminated in February.

Itron (ITRI): We owned Itron as of our January 1, 2013 inception date as we believed the new CEO Philip Mezey, hired in November 2012, would renew the company's focus on advancing its technology and rationalizing its cost structure after a series of mergers. This transition was needed as the company was facing a period of reduced levels of new orders.

However, increased competition, leading to pricing and unit volume pressure particularly in the electric metering business (40% of revenues), is worse than we expected and will likely impair the long-term value of Itron overall.

Further, the size and pace of improvements the company will likely make to its overall cost structure is more limited than we expected, and we were too optimistic around the timing and likelihood of meaningful increases in overall revenues. Given the combination of these factors, we determined the transition story was impaired and sold the stock in February.

DISCLAIMER:  The investments discussed are held in client accounts as of February 28, 2013.  These investments may or may not be currently held in client accounts.  The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.  Past performance is no guarantee of future results.

The post Utility and energy stocks performed well for the portfolio appeared first on Smarter Investing

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

Ironwood Investment Management

Ironwood Investment Management is an employee-owned investment management firm based in Boston that formed in 1997. It invests in undervalued…

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Commodities Markets

Originally posted here...

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Microsoft Stock at 14-year High

It didn't take very long for Microsoft Corp. (NASDAQ: MSFT) to erase the $100 price premium it charged for the new Xbox One compared with Sony Corp.'s (NYSE: SNE) PlayStation 4. All it took was a good excuse and that showed up with the release of Titanfall, the new shooter game published by Electronic Arts Inc. (NASDAQ: EA).

When Titanfall was first released it cost $60 as a standalone purchase or it came free with the purchase of a new Xbox One, effectively reducing the price of Microsoft's new console from $499 to $439. On Friday, big-box retailers Wal-Mart Stores Inc. (NYSE: WMT) and Best Buy Co. Inc. (NYSE: BBY) began selling the same bundle for $449, effectively lowering the price of the new console to $389. The PlayStation 4 costs $399.

Microsoft claims that it has not lowered its suggested retail price and that the Walmart and Best Buy price cuts are special promotions offered by the two retailers. A Microsoft spokesman also said the company did not lower its wholesale price to either Walmart or Best Buy. According to nowinstock.com, the $449 bundle is out-of-stock at Walmart, but according to Engadget.com the discounted price is applied at checkout time. The price also applies to the bundle purchased at the physical store.

Availability of the PlayStation 4 is much spottier, with stores like Target Corp. (NYSE: TGT) and GameStop Corp. (NYSE: GME) shown as out of stock. Only Best Buy among the big-box stores appears to have the PS4 in stock, although two bundles priced at $576 and $635 are available from Walmart.

Since both new game consoles were launched in November the PlayStation 4 had sold more than 6 million units by early March while the Xbox One is estimated to have sold somewhere around 4 million units. Neither company has updated those figures yet, but the gap is expected to have closed since the introduction of Titanfall.

Sony introduced a new game for PS4 on Friday as well: inFamous: Second Son. Like Titanfall, which is exclusive to Microsoft, the new game will be an exclusive on PS4.

Microsoft's stock posted a new 52-week high of $40.94 on Friday before sinking with the rest of the markets to close at $40.16. Microsoft stock has not closed above $40 since July 2000.

Petrobras’ Pasts Mistakes and Current Outlook Facing Years to Come

Petroleo Brasileiro (PBR), headquartered in Rio de Janeiro Brazil, was founded in 1953 and remained as a legal oil monopoly for the country until 1997. It is the largest company in the Southern Hemisphere by market capitalization and the largest in Latin America measured by 2011 revenues. The company owns oil refineries, oil tankers, is a major distributor for oil products and a leader in developing technology for deepwater and ultra deepwater oil production.

In 2010, the company conducted the largest share sale in its history, selling over $72.8 billion shares. The stock was sold in the BM&F Bovespa stock exchange market, becoming the fourth largest company in the world by market capitalization.

Though the company has been in decline in the last few years, it has recently launched a plan to reduce costs by $8 billion per year in the next four years. However, this being an election year, it is possible that the government won't want to update domestic prices to international ones, thus causing huge losses for the company.

Petroleo Brasileiro SA Petrobras ADR Profitability Analysis

Looking at profitability is a very important step in understanding a company. Profitability is –essentially – the reason behind a company's existence, and a key component in deciding whether to invest in or maintain your investment in a company. In this article I will look at Petroleo Brasileiro SA Petrobras ADR (PBR)'s earnings and earnings growth, profit margins, profitability ratios and cash flow. In addition, I will evaluate which institutional investors bought the stock in the recent quarters.

If you go back through the history of the stock market, there is a recurring theme among those stocks which have had some of the strongest price appreciation, and it's related to their earnings growth. If you plot a chart of earnings growth versus a company's stock price there is usually a strong relationship between the two of them. So, the first step when analyzing Petroleo Brasileiro SA Petrobras ADR is evaluating its earnings potential.

The company generated -15% EPS growth last quarter compared to the same quarter in the past year.

I am looking for growth stocks that generate more than 15% quarterly EPS growth. It is essential to evaluate why Petroleo Brasileiro SA Petrobras ADR generated less than that.

Sell-side analysts just upgraded EPS projections for the company, increasing EPS estimates by -46.16% for the current year.

I also look at the three-year annual average EPS growth rate to get a perspective on how the company grew in the recent years. PBR generated -21.69% annualized average EPS growth in the past three years.

I do not like that Petroleo Brasileiro SA Petrobras ADR grew less than 15% per year in the past three years. Fifteen percent is the minimum annual growth level I am looking for when investing in growth stocks. This fact does not prevent me from potentially investing in PBR, but it is certainly a warning sign that cannot be ignored.

A key step in analyzing Petroleo Brasileiro SA Petrobras ADR is studying how sales grew in the recent quarters or years. Why is this important? Well, revenue growth cannot be masked with accounting tricks or via cost-cutting strategies. This metric tells you in simple terms how demanded a company´s products or services are.

The company reported a 16% quarterly revenue growth year over year.

PBR generated strong quarterly growth levels. I am confident on Petroleo Brasileiro SA Petrobras ADR´s continued success in emerging economies.

I find the fact that revenues grew more than earnings per share very encouraging. This is a very important ratio because both sales and earnings must grow at same levels. If a company generates strong EPS growth levels and even stronger revenue growth levels, I tend to feel very bullish about it. Petroleo Brasileiro SA Petrobras ADR generated quarterly EPS growth of -15%, while sales grew by 16%.

It is important to watch beyond quarterly earnings, which are more short-term oriented. It is also crucial to pay attention to how annual sales grew in the past three years. Petroleo Brasileiro SA Petrobras ADR reported an average annual sales growth of 16.19% over the past three years over the minimum of 15% I am looking for in these kind of stocks.

The gross profit margin is a measure of a company's manufacturing and distribution efficiency during the production process. It tells an investor the percentage of revenue/sales left after subtracting the cost of the goods/services sold. Investors tend to pay more for businesses that have higher efficiency ratings, as these should be able to make a decent profit as long as overhead costs are controlled (overhead refers to rent, utilities, etc.).

Reviewing PBR's gross margin over the past five years, an investor can see that the company's gross margin has been decreasing. In fact, the 5-year low for the gross margin was reported at 25.4%. The 5-year high for this ratio was achieved over the past twelve months, when the margin reached 44.5%. However, the TTM gross profit margin of 23.9% is below the five-year average of 36.22%.

A gross margin below the five-year average implies that management has not been efficient in improving this key profitability metric.

Operating Margin = Operating Income / Total Sales

The operating margin is a measure of the proportion of a company's revenue that is left over after paying for variable costs of production, such as wages, raw materials, etc. A healthy operating margin is required for a company to be able to pay for its fixed costs such as interest on debt. If a company's margin is increasing, it is earning more per dollar of sales.

Over the past five years, the operating margin of Petroleo Brasileiro SA Petrobras ADR has been increasing. In 2009, the company reported an operating margin of 21.4%. Over the past twelve months the margin reached 10.6%.

The TTM operating margin of 10.6% is above the five-year average of 8.04%. I am always looking for companies that have improving operating margin trends.

Net Profit Margin = Net Income / Total Sales

A ratio of profitability calculated as net income divided by revenue, or net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings.

The profit margin is a very useful metric when comparing companies in the same –or similar- industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Profit margin is displayed as a percentage.

Over the past five years, PBR's net profit margin shrank, compared to the five-year average. The TTM net profit margin of 8.55% is below the five-year average of 12.71%. This implies that there has been a decline in the percentage of earnings that the company is able to keep compared to the company's five-year average.

I think it is important to look for stock with current net profit margins above the five year average margin. Basically, almost all my stock market winners were companies with above-average margins.

ROA - Return on Assets = Net Income / Total Assets

ROA is an indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company's net income by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as "return on investment."

The 2012 ROA of Petroleo Brasileiro SA Petrobras ADR 3.68% is below the five-year average of 7.08%. This implies that the management has lessened its ability to use the company's assets to generate earnings over the past five years.

Free Cash Flow = Operating Cash Flow - Capital Expenditure

A measure of financial performance calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base. Free cash flow is important because it allows a company to pursue opportunities that enhance shareholder value. Without cash, it's tough to develop new products, make acquisitions, pay dividends and reduce debt.

Petroleo Brasileiro SA Petrobras ADR generated a ratio of cash flow from operations/total sales of (OCFS). The higher the percentage, the more cash available from sales.

If a company is generating a negative cash flow, it shows up as a negative number in the numerator in the cash flow margin equation. This means that even though the company can generate revenue, it is losing money.

I feel encouraged by the fact that Paul Tudor Jones (Trades, Portfolio) and Ray Dalio (Trades, Portfolio) bought the stock in the past months at an average price of $15.62. This shows that hedge funds have confidence in the stock.

Analyst Outlook

Currently, many analysts have a good outlook for PBR. Analysts at MSN money are predicting that PBR will retrieve EPS of $1.67 for FY 2013 and an EPS of $2.29 for FY 2014. Analysts at Bloomberg estimate (C1F)'s revenue to reach $144.89 billion for FY 2013 and $146.24 billion for FY 2014.

Conclusion

Though Brazilian government owns and will own a controlling portion of the company (by law). And they're upfront about it with shareholders: They often say that they will sometimes pursue their political agenda throughout the company, putting shareholders interests in second place. But, this wouldn't be always a bad thing as long as shareholders keep a close look on the current administration policies.

The recent discovery of gas and, primarily, oil under a salt layer puts the company on top of the world oil market, since it provides an uninterrupted source of oil for the next 10 years. This should be a good sign as long as the government and company's CEO Maria das Gracas Silva Foster come to an arrangement in terms of exploration, exploitation and pricing over this new discovery.

On the good side, the company's new CEO Foster, was honest and upfront about past mistakes and is committed with taking the company up again and lowering production costs. Also, the stock price is near a five-year low of $10.37, which provides an interesting entry point, especially after the new discovery of oil and gas resources.

Disclosure: Vanina Egea holds no position in any stocks mentioned.

Also check out: David Winters Undervalued Stocks David Winters Top Growth Companies David Winters High Yield stocks, and Stocks that David Winters keeps buying
About the author:anina EgeaA fundamental analyst at Lone Tree Analytics

Visit anina Egea's Website

Currently 4.33/512345 Rating: 4.3/5 (3 votes)

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Unemployment Among Gulf War-Era II Veterans Drops to 9%

In a headline that hardly sounds like good news, the Bureau of Labor Statistics announced today that the unemployment rate for veterans who served on active duty in the U.S. Armed Forces at any time since September 2001 — a group referred to as Gulf War-era II veterans — edged down to 9.0% in 2013. A number that still seems enormous considering the current unemployment rate in the United States is hovering in the 6.7% area.

Among Gulf War-era II veterans, the unemployment rates in 2013 for men (8.8 percent) and women (9.6 percent) were not statistically different from the prior year (9.5 percent and 12.5 percent, respectively). Among women, the unemployment rate for Gulf War-era II veterans (9.6 percent) was higher in 2013 than the rate for non veterans. Despite the best efforts of many of the nations largest corporations, jobs for returning veterans have been difficult to secure. This despite the fact that many of the men and women that serve in the military return with job skills that are superior to a large part of the domestic workforce. They also return with discipline that often also trumps the domestic workforce as well.

The Bureau of Labor Statistics highlighted some of the 2013 data:

Among all veterans, the unemployment rate for women declined to 6.9 percent in 2013. The rate for male veterans edged down to 6.5 percent.

Among the 722,000 unemployed veterans in 2013, 60 percent were age 45 and over. Thirty-five percent were age 25 to 44, and 5 percent were age 18 to 24.

Veterans with a service-connected disability had an unemployment rate of 6.2 percent in August 2013, little different than the rate for veterans with no disability (6.6 percent).

One in 3 employed veterans with a service-connected disability worked in the public sector in August 2013, compared with 1 in 5 veterans with no disability.

In 2013, the unemployment rate of veterans varied by state, ranging from over 10 percent in Michigan and New Jersey to under 4 percent in Delaware, Iowa, North Dakota, Vermont, and Virginia.

It is also important to remember that many of our veterans, both men and women, are in the Reserves or the National Guard. They often have ended up having to leave their families and their jobs for extended deployments. Fortunately, many of the businesses that these dedicated and patriotic citizens work for have kept their jobs open and secure until their return. A noble gesture for which they should be commended.

Hopefully the high number of unemployed veterans that served this nation will continue to fall. The 9% number hardly looks good in comparison to the general population numbers. However, the large number of people leaving the workforce is the highest since the 1970s, and it is skewing the current number lower than it actually may be.

Hot Shipping Companies To Own In Right Now

Nissan's fire-breathing GT-R super-sports car, once touted as a relative bargain in its go-fast universe, now starts at more than $100,000.

The 2015 models just now are on sale and Nissan says they start at $103,365 for the GT-R Premium and $113,105 for the GT-R Black Edition.

Those include shipping fees of $1,595, highest of any car in the U.S. In fact, almost no other cars have destination charges of more than $1,000, though some trucks break that threshold by $100 or so.

The GT-R Track Edition goes on sale this summer, starting at $117,305.

A fourth model, GT-R NISMO, joins about the same time. Its price isn't available yet. It will be more powerful and aimed at race drivers.

GT-R's target is Porsche. A Porsche 911 Carerra 4S, which matches the Nissan's four-wheel drive, starts at $$106,625 including $995 shipping.

Hot Shipping Companies To Own In Right Now: Genpact Limited (G)

Genpact Limited provides business process management and information technology services worldwide. It offers finance and accounting services, including accounts payable services, payment and inquiry management, order to cash services, preparation of financial statements, closing and reporting, cash management, treasury, cash flow analysis, tax return preparation, financial planning and analysis, governance, and internal controls services. The company also provides smart decision services, such analytics and research; business consulting and enterprise risk consulting services comprising internal audit, compliance advisory, regulatory advisory, enterprise, IT, and fraud risk management services; and re-engineering services. In addition, it offers supply chain and procurement services consisting of direct and indirect sourcing and procurement, demand forecasting and management, engineering, inventory optimization and planning, fleet and logistics, and aftermarket services. Further, the company provides enterprise application services comprising enterprise resource planning, supply chain management, financial management and customer relationship management solutions, and securities trading and accounting services, as well as testing, database administration, and architecture services; IT management services, including onsite and remote monitoring, management and support of the IT functions, and IT infrastructures; and collections and customer services in the areas of consumer finance, commercial finance, and mortgage services. It primarily serves banking and insurance, capital markets, consumer goods and retail, life sciences, infrastructure, manufacturing and services, and healthcare industries. Genpact Limited has a strategic partnership with Research Now. The company was founded in 1997 and is based in Hamilton, Bermuda.

Advisors' Opinion:

• [By Jake L'Ecuyer]

  Equities Trading DOWN
  Shares of Genpact (NYSE: G) were down 17.82 percent to $14.16 after the company issued a downbeat FY14 revenue forecast.

Hot Shipping Companies To Own In Right Now: Planet Platinum Ltd (PPN)

Planet Platinum Limited is an Australia-based company engaged in the operation of Showgirls Bar 20 and the on-going rental of property in Elsternwick. The Company operates in two segments: hospitality and entertainment and property rental businesses. The Company�� hospitality and entertainment segment comprises operations of Showgirls Bar 20 in Melbourne and is engaged in the nightclub through the provision of beverages and adult entertainment. Property segment comprise maintaining of rental property at Home Street, Elsternwick. The Company continues to receive lease rentals from its Home Street property. The investment property is located at 12 Home Street, Elsternwick Victoria. Advisors' Opinion:

• [By Tabitha Jean Naylor]

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Hot Rising Stocks To Buy Right Now: Allstate Corp (ALL)

The Allstate Corporation (Allstate), November 5, 1992, is a holding company for Allstate Insurance Company. The Company�� business is conducted principally through Allstate Insurance Company, Allstate Life Insurance Company and their affiliates. It is engaged, principally in the United States, in the property-liability insurance, life insurance, retirement and investment product business. Allstate's primary business is the sale of private passenger auto and homeowners insurance. The Company also sells several other personal property and casualty insurance products, select commercial property and casualty coverages, life insurance, annuities, voluntary accident and health insurance and funding agreements. Allstate primarily distributes its products through exclusive agencies, financial specialists, independent agencies, call centers and the Internet. It conducts its business primarily in the United States. Allstate has four business segments: Allstate Protection, Allstate Financial, Discontinued Lines and Coverages and Corporate and Other. The Company is a personal lines insurer in the United States. Customers can access Allstate products and services, such as auto insurance and homeowners insurance through nearly 12,000 exclusive Allstate agencies and financial representatives in the United States and Canada. In October 2011, the Company acquired Esurance and Answer Financial from White Mountains Insurance Group.

ALLSTATE PROTECTION SEGMENT

In this segment, the Company principally sells private passenger auto and homeowners insurance through agencies and directly through call centers and the Internet. These products are marketed under the Allstate, Encompass and Esurance brand names. The Allstate Protection segment also includes a separate organization called Emerging Businesses, which comprises Business Insurance (commercial products for small business owners), Consumer Household (specialty products including motorcycle, boat, renters and condominium insurance policies), A! llstate Dealer Services (insurance and non-insurance products sold primarily to auto dealers), Allstate Roadside Services (retail and wholesale roadside assistance products) and Ivantage (insurance agency). The Company also participates in the involuntary or shared private passenger auto insurance business in order to maintain its licenses to do business in many states. In some states, Allstate exclusive agencies offer non-proprietary property insurance products. Allstate brand auto and homeowners insurance products are sold primarily through Allstate exclusive agencies and serve customers who prefer local personal advice and service and are brand-sensitive. In most states, customers can also purchase certain Allstate brand personal insurance products, and obtain service, directly through call centers and the Internet.

During the year ended December 31, 2011, total Allstate Protection premiums written were $25.98 billion. Its broad-based network of approximately 10,000 Allstate exclusive agencies in approximately 9,700 locations in the United States produced approximately 86% of the Allstate Protection segment's written premiums in 2011. It provides personal property and casualty insurance products through independent agencies in the United States. Additionally, Allstate distribution, through brokering arrangements, offers non-proprietary products to consumers when an Allstate product is not available.

ALLSTATE FINANCIAL SEGMENT

Allstate Financial segment provides life insurance, retirement and investment products, and voluntary accident and health insurance products. Its principal products are interest-sensitive, traditional and variable life insurance; fixed annuities, including deferred and immediate; and voluntary accident and health insurance. Its institutional products consist of funding agreements sold to unaffiliated trusts that use them to back medium-term notes issued to institutional and individual investors. Banking products and services were offered to! customer! s through the Allstate Bank through September 2011. In 2011, after receiving regulatory approval to voluntarily dissolve, Allstate Bank ceased operations.

The Company sells Allstate Financial products to individuals through multiple intermediary distribution channels, including Allstate exclusive agencies and exclusive financial specialists, independent agents, specialized structured settlement brokers and directly through call centers and the Internet. The Company sells products through independent agents affiliated with approximately 125 master brokerage agencies. Independent workplace enrolling agents and Allstate exclusive agencies also sell its voluntary accident and health insurance products primarily to employees of unaffiliated businesses. Its mortgage loan portfolio, which is primarily held in the Allstate Financial portfolio, totaled $7.14 billion as of December 31, 2011

Allstate Financial, through several companies, is authorized to sell life insurance and retirement products in all 50 states, the District of Columbia, Puerto Rico, the United States, Virgin Islands and Guam. Allstate Financial distributes its products to individuals through multiple distribution channels, including Allstate exclusive agencies and exclusive financial specialists, independent agents (including master brokerage agencies and workplace enrolling agents), specialized structured settlement brokers and directly through call centers and the Internet.

OTHER BUSINESS SEGMENTS

The Company�� Corporate and Other segment consistsof holding company activities and certain non-insurance operations. It�� Discontinued Lines and Coverages segment includes results from insurance coverage that it no longer writes and results for certain commercial and other businesses in run-off. Its exposure to asbestos, environmental and other discontinued lines claims is presented in the segment. The segment also includes the historical results of the commercial and reinsurance businesses ! sold in 1! 996.

Advisors' Opinion:

• [By Jessica Alling]

  Insurance operating income jumped 28% compared to 2012, while investment income was relatively flat. The company has been working on both its underwriting practices and risk selection. And though the flat nature of its investment income may seem disappointing, all of the players in the insurance market have been dealing with pressure from the low interest rates. So the investment income generated by AIG is sign of strength in a difficult environment, with both positive returns from higher securities values and alternative investments. Competitor Allstate (NYSE: ALL  ) noted in its earnings report Wednesday that it was moving into more cash-generating investments that would ultimately lead to lower investment income in the future. AIG hasn't made the same move, and may end up benefiting from the decision to hold firm.

Hot Shipping Companies To Own In Right Now: OSI Systems Inc.(OSIS)

OSI Systems, Inc., together with its subsidiaries, designs and manufactures electronic systems and components for homeland security, healthcare, defense, and aerospace markets worldwide. The company operates in three divisions: Security, Healthcare, and Optoelectronics and Manufacturing. The Security division provides security and inspection systems under the Rapiscan Systems name. Its products include baggage and parcel inspection, cargo and vehicle inspection, hold baggage screening, and people screening products to search for weapons, explosives, drugs, and other contraband, as well as for the verification of cargo manifests for monitoring the export and import of controlled materials. This division also offers various turn-key security screening solutions under the S2 trade name. The Healthcare division provides patient monitoring, diagnostic cardiology, and anesthesia delivery and ventilation systems under the Spacelabs name that are used in critical care, emergency, and perioperative areas within hospitals, as well as physician?s offices, medical clinics, and ambulatory surgery centers. The Optoelectronics and Manufacturing division offers optoelectronic devices for the aerospace and defense, avionics, medical imaging and diagnostic, renewable energy, biochemistry analysis, pharmaceutical, nanotechnology, telecommunications, construction, and homeland security markets under the OSI Optoelectronics name; and electronics manufacturing services to original equipment manufacturers under the OSI Electronics name. This division also provides laser-based remote sensing devices to detect and classify vehicles in toll and traffic management systems under the OSI Laserscan name; blood pressure cuffs and unifusors under the Statcorp Medical name; and solid-state laser products for aerospace, defense, telecommunication, and medical applications under the OSI LaserDiode trade name. The company was founded in 1987 and is headquartered in Hawthorne, California.

Advisors' Opinion:

• [By Seth Jayson]

  Margins matter. The more OSI Systems (Nasdaq: OSIS  ) keeps of each buck it earns in revenue, the more money it has to invest in growth, fund new strategic plans, or (gasp!) distribute to shareholders. Healthy margins often separate pretenders from the best stocks in the market. That's why we check up on margins at least once a quarter in this series. I'm looking for the absolute numbers, so I can compare them to current and potential competitors, and any trend that may tell me how strong OSI Systems's competitive position could be.

• [By James E. Brumley]

  For tech-savvy investors who know which companies make them, when they hear the words "weapons detection" or "body scanners", they tend to think of companies like American Science & Engineering, Inc. (NASDAQ:ASEI) and OSI Systems, Inc. (NASDAQ:OSIS). And well they should. OSIS and ASEI are two of the biggest North American providers of the kind of equipment you might see being used by airport security personnel screening passengers before allowing them to their gate. There's just one challenge in the average school system tapping OSI Systems or American Science & Engineering to help defend their school grounds.... their hardware starts with a six-figure price tag, and rapidly works its way up to higher-capacity and more powerful versions. For a school with multiple doors, it's simply not feasible. View Systems Inc. is a viable alternative.

Hot Shipping Companies To Own In Right Now: Exterran Holdings Inc. (EXH)

Exterran Holdings, Inc., together with its subsidiaries, provides operations, maintenance, service, and equipment for oil and natural gas production, processing, and transportation applications. The company�s Contract Operations segment offers natural gas compression and production, and processing services, as well as engages in the engineering, procurement, and on site construction of natural gas compression stations and/or crude oil or natural gas production and processing facilities. As of December 31, 2011, this segment provided contract operations services primarily using a fleet of 8,485 natural gas compression units with an aggregate capacity of approximately 3,632,000 horsepower in North America; and a fleet of 1,063 units with an aggregate capacity of approximately 1,260,000 horsepower internationally. Its Aftermarket Services segment sells parts and components; and provides operation, maintenance, overhaul, and reconfiguration services for compression, productio n, treating, and oilfield power generation equipment. The company�s Fabrication segment engages in the design, engineering, installation, fabrication, and sale of natural gas compression units, and accessories and equipment used in the production, treatment, and processing of crude oil and natural gas; provision of engineering, procurement, and fabrication services primarily related to the manufacturing of critical process equipment for refinery and petrochemical facilities; and fabrication of tank farms, and evaporators and brine heaters for desalination plants. Its products include line heaters, oil and natural gas separators, glycol dehydration units, condensate stabilizers, dewpoint control plants, water treatment, mechanical refrigeration and cryogenic plants, and skid-mounted production packages designed for onshore and offshore production facilities. The company was founded in 1990 and is based in Houston, Texas.

Advisors' Opinion:

• [By Seth Jayson]

  Exterran Holdings (NYSE: EXH  ) is expected to report Q1 earnings on May 2. Here's what Wall Street wants to see:

  The 10-second takeaway
  Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Exterran Holdings's revenues will grow 21.6% and EPS will turn positive

• [By Ryan Lowery]

  All natural
  An obvious place to start is coal's biggest competitor, natural gas. For a while now, I've been a fan of the natural gas compression company, Exterran Holdings (NYSE: EXH  ) , which provides operations, maintenance, service, and equipment for both oil and natural gas production. Exterran's stock has had a steady climb the last couple of years -- it's up over 40% this year alone. The majority of analysts are calling Exterran a hold, but several rate it a buy or even a strong buy. Currently, Exterran is trading in the upper $20 range, and with a price target of $33, it still seems to have some upside. And for those interested in investing in master limited partnerships, Exterran operates an MLP as well, Exterran Partners (NASDAQ: EXLP  ) , which has seen a 33% gain in its price this year.

Hot Shipping Companies To Own In Right Now: Gogo Inc (GOGO)

Gogo Inc incorporated on December 14, 2009, is a holding company. The Company operates through its two operating subsidiaries, Gogo LLC and Aircell Business Aviation Services LLC. The Company provides in-flight connectivity and wireless in-cabin digital entertainment solutions. It provide turnkey solutions for passengers to extend their connected lifestyles to the aircraft cabin. It operates in two segments: commercial aviation (CA) and business aviation (BA). Its CA business provides in-flight connectivity and digital entertainment solutions to commercial airline passengers through their personal Wi-Fi enabled devices.

The Company provides Gogo Connectivity to passengers to nine North American airlines that provide Internet connectivity to their passengers. It provide Gogo Connectivity to passengers on Delta Air Lines, American Airlines, Virgin America, Alaska Airlines, US Airways, Frontier Airlines and Air Tran Airways. It also provide Gogo Connectivity to passengers on a small number of aircraft operated by United Airlines and Air Canada. As of September 30, 2011, the Company had equipped 1,177 commercial aircraft, representing approximately 85% of Internet-enabled North American commercial aircraft, which were operated on more than 4,200 daily flights.

The Company�� BA segment sells equipment and provides services for in-flight Internet connectivity and other voice and data communications under its Gogo Biz and Aircell branded products and services. BA�� customers include original equipment manufacturers of private jet aircraft such as Gulfstream, Cessna, Hawker Beechcraft, Bombardier, Dassault, Embraer, NetJets, Flexjets, Flight Options and CitationAir. It sells equipment for three of the primary connectivity network options in the business aviation market: Gogo Biz, through which it delivers broadband Internet connectivity over its (air-to-ground )ATG network, and the Iridium and Inmarsat SwiftBroadband satellite networks. As of September 30, 2011, the Company had m! ore than 700 Gogo Biz systems in operation and more than 4,600 aircraft with Iridium satellite communications systems in operation, and it has sold more than 100 Inmarsat SwiftBroadband systems. It provides in-flight broadband connectivity across the contiguous United States and portions of Alaska through 3 MHz of FCC-licensed ATG spectrum and its network of cell sites.

Through its Gogo platform, the Company provides passengers with a convenient and easy way to access the Internet, view video content, send and receive email and instant messages, and access corporate VPNs on Gogo-equipped commercial aircraft. It provides Internet access through Gogo Connectivity, on-demand streaming video offerings through Gogo Vision and access to a variety of free entertainment and service offerings, customized for each airline, through Gogo Signature Services.

The Company competes with Panasonic Avionics, Row 44, OnAir, LiveTV and Thales.

Advisors' Opinion:

• [By Anna Prior]

  Among the companies with shares expected to actively trade in Monday’s session are ViroPharma Inc.(VPHM), Transocean Ltd.(RIGN.VX) and Gogo Inc.(GOGO)

• [By Jesse Solomon]

  Gogo (GOGO) shares have more than doubled since its June IPO, making it one of the hottest stocks on the Nasdaq.

  But not everyone is jumping on board.

Hot Shipping Companies To Own In Right Now: Beam Inc (BEAM)

Beam Inc. (Beam), incorporated on October 1, 1985, is a premium spirits company that makes and sells branded distilled spirits products in markets worldwide. The Company's principal products include bourbon whiskey, tequila, Scotch whisky, Canadian whisky, vodka, cognac, rum, cordials, and ready-to-drink pre-mixed cocktails. The Company's portfolio consists of brands the Company identifies as Power Brands, Rising Stars, Local Jewels and values Creators. The Power Brands are the Company's core brand equities, with global reach in premium categories. Rising Stars are smaller premium brands. Brands identified as Local Jewels act as Power Brands in local markets. Value Creators include a variety of brands. The Company's three reportable segments are the geographic regions, which consists of North America, Europe/Middle East/Africa (EMEA), and Asia-Pacific/South America (APSA). Each segment is engaged in the manufacture and sale of distilled spirits products. In May 2012, the Company acquired the Pinnacle vodka and Calico Jack rum brands and certain related assets (Pinnacle assets) from White Rock Distilleries, Inc. In January 2012, Beam acquired Cooley Distillery plc (Cooley), an Irish whiskey producer.

The Company�� Power Brands include Jim Beam Bourbon, Maker's Mark Bourbon, Sauza Tequila, Courvoisier Cognac, Canadian Club Whisky, Teacher's Scotch and Pinnacle Vodka. Beam�� Rising Stars brand includes Laphroaig Scotch, Knob Creek Bourbon, Basil Hayden's Bourbon, Kilbeggan Irish Whiskey, Cruzan Rum, Hornitos Tequila, Skinnygirl Cocktails and Sourz Liqueurs. The principal markets for the Company's spirits products are the United States, Australia, Germany, Spain, the United Kingdom, and Canada, and the Company continues to invest in emerging markets such as India, Brazil, Mexico, Russia, Central Europe, Asia, and other geographies.

During the year ended December 31, 2012, Power Brands, Rising Stars, and combined Local Jewels/Value Creators (including non-branded sales) repre! sent approximately 60%, 15%, and 25%, respectively, of the Company's net sales. Approximately 55% of its consolidated net sales were generated in the United States (based on country of destination) during 2012. In the United States, the Company sells its products either to wholesale distributors for resale to retail outlets or, in those states that control alcohol sales, to state governments who then sell them to retail customers and consumers. In the Company's other global markets, the Company uses a variety of route-to-market models, including third party distributors, global or regional duty free customers, other spirits producers and its joint ventures with The Edrington Group Ltd.

The Company competes with Bacardi Limited, Brown-Forman Corporation, Constellation Brands, Inc., Davide Campari Milano-S.p.A., Diageo PLC, Pernod Ricard S.A. and Remy Cointreau S.A.

Advisors' Opinion:

• [By Jake L'Ecuyer]

  Beam (NYSE: BEAM) shot up 24.06 percent to $83.08 after the company agreed to be acquired by Suntory Holdings for $83.50 per share in cash.

  Clovis Oncology (NASDAQ: CLVS) was also up, gaining 7.26 percent to $79.35 after the company announced 2014 objectives and financial outlook. The company projected to initiate three global registration studies for CO-1686.

• [By Jake L'Ecuyer]

  Beam (NYSE: BEAM) shot up 24.41 percent to $83.32 after the company agreed to be acquired by Suntory Holdings for $83.50 per share in cash.

  Wendy's (NASDAQ: WEN) was also on the rise, gaining 6.16 percent to $8.96 after the company reaffirmed its long-term outlook, announced a $275 million buyback, and lifted its fourth quarter and fiscal year guidance above street consensus.

• [By Jon C. Ogg]

  Rival distillery Beam Inc. (NYSE: BEAM) also experienced growth in its sales, driven in part by sales of Jim Beam, Makers Mark and other premium bourbon brands. Beam’s sales growth ahead�is expected to average about 5%.

• [By MARKETWATCH]

  LOS ANGELES (MarketWatch) -- Japanese stocks slid in early trading Tuesday, hurt after Wall Street sold off on concerns about further reduction in stimulus from the Federal Reserve. The Nikkei Stock Average (JP:NIK) skidded 2.7% lower to 15,501.50, and the broader Topix slumped 2.3%, with stocks also hit as the U.S. dollar fell to around the 103-level against the yen, weaker than its level compared with the end of last week. Stock trading was closed Monday for a holiday. Bucking broader market losses Tuesday, shares of Suntory Holdings Ltd. (JP:2587) rose 1.1% following the company's plan to buy spirits maker Beam Inc. (BEAM) in a deal worth $16 billion. Beam's lineup includes Jim Beam, Maker's Mark and Sauza tequila.

Hot Shipping Companies To Own In Right Now: Computer Task Group Inc (CTG)

Computer Task Group, Incorporated (CTG), incorporated on March 11, 1966, is an information technology (IT) solutions and staffing company with operations in North America and Europe. CTG provides IT services to its clients, which includes IT Solutions and IT Staffing. During the year ended December 31, 2011, the Company had six operating subsidiaries: Computer Task Group of Canada, Inc., providing services in Canada; and Computer Task Group Belgium N.V., CTG ITS S.A., Computer Task Group IT Solutions, S.A., Computer Task Group Luxembourg PSF, and Computer Task Group (U.K.) Ltd., each were providing services in Europe. Services provided in North America are performed by CTG. It provides services to all of the markets, which it serves. The services provided encompass the IT business solution life cycle, including phases for planning, developing, implementing, managing, and maintaining the IT solution. In February 2013, it acquired etrinity from i-Cros Nv of Antwerp, Belgium.

The Company promotes its services through four vertical market focus areas: technology service providers; healthcare, which includes services provided to healthcare providers, health insurers (payers), and life sciences companies; energy, and financial services. At December 31, 2011, CTG provided IT services to approximately 300 clients in North America and Europe. In North America, the Company operates in the United States and Canada. In Europe, the Company operates in Belgium, Luxembourg, and the United Kingdom.

IT Solutions

CTG�� services in IT solution area include helping clients assess their business needs and identifying the IT solutions. The services delivered by the Company include the selection and implementation of packaged software and the design, development, testing, and integration of new systems, and the development and implementation of customized software and solutions designed to fit the needs of a specific client or vertical market. Also included in IT Solutions is Trans! itional Application Management (TAM).

In 2011, the healthcare market accounted for most of CTG�� TAM business. In 2011, CTG continued to invest in new IT solutions development, primarily targeted to the healthcare market, which support cost reductions and productivity improvements. In 2011, several healthcare solutions under development moved from the pilot stage of testing using live data into the sales process as completed tools. These solutions include medical fraud, waste, and abuse detection and reduction, medical care and disease management, and group insurance underwriting risk assessment. The Company has developed software to support these offerings. These solutions support both the healthcare provider and payer markets.

IT Staffing

The Company recruits, retains, and manages IT talent for its clients, which are technology service providers and companies with multiple locations and need for external IT resources. The Company also supports companies and organizations that need to augment their own IT staff on a flexible basis. It provides IT talent services on a temporary or long-term basis. CTG�� recruiting organization works with customers to define their staffing requirements. The primary focus of the Company�� staffing business is a managed services model that provides clients with support through supply models customized to client needs, resource management support, vendor management programs, and a automated recruiting process and system. During 2011, its IT staffing service generated 63% of its total revenue.

Advisors' Opinion:

• [By Seth Jayson]

  Computer Task Group (Nasdaq: CTG  ) reported earnings on July 22. Here are the numbers you need to know.

  The 10-second takeaway
  For the quarter ended June 28 (Q2), Computer Task Group missed estimates on revenues and met expectations on earnings per share.

Hot Shipping Companies To Own In Right Now: BlackRock Kelso Capital Corporation(BKCC)

BlackRock Kelso Capital Corporation is a private equity firm specializing in investments in middle market companies. The firm invests in all industries. It prefers to invest between $10 million and $50 million and can invest more or less in companies with EBITDA or operating cash flow between $10 million and $50 million. The firm invests in the form of senior and junior secured, unsecured, and subordinated debt securities and loans including cash flow, asset backed, and junior lien facilities and equity securities. It's equity investments can be structured in the form of warrants, preferred stock, common equity co-investments, and direct investments in common stock. The firm debt investments are principally structured to provide for current cash interest and to a lesser extent non-cash interest, particularly with subordinated debt investments, through a pay-in-kind (PIK) feature. It can also make non-control investments. Blackrock Kelso Capital Corporation was founded in 2 005 and is based in New York, New York with an additional office in Chicago, Illinois.

Advisors' Opinion:

• [By Regarded Solutions]

  The Team Alpha portfolio consists of Ford (F) Chevron (CVX) Apple (AAPL), McDonald's (MCD), Exxon Mobil (XOM), Johnson & Johnson (JNJ), AT&T (T), General Electric (GE), BlackRock Kelso Capital (BKCC), KKR Financial (KFN), Procter & Gamble (PG), CSX Corp. (CSX), Realty Income (O), Coca-Cola (KO), Annaly Capital (NLY), Cisco (CSCO), Bristol-Myers Squibb (BMY), Newmont Mining (NEM), and Wells Fargo (WFC), and Intel (INTC).

• [By Sally Jones]

  Highlight: BlackRock Kelso Capital Corporation (BKCC)

  The share price is currently $9.62 or 11.1% off the 52-week high of $10.82. Its yield is 10.80%.

Hot Shipping Companies To Own In Right Now: Edison International (EIX)

Edison International, incorporated on April 20, 1987, is a holding company of Southern California Edison Company (SCE). SCE is a public utility primarily engaged in the business of supplying electricity to an approximately 50,000 square-mile area of southern California. The SCE service territory contains a population of nearly 14 million people and SCE serves the population through approximately 5 million customer accounts. In August 2013, Edison International completed the acquisition of SoCore Energy, LLC.

SCE's retail operations are subject to regulation by the California Public Utilities Commission (CPUC). SCE has a five tier residential rate structure. SCE supplies electricity to its customers through transmission and distribution networks. Its transmission facilities, which are located primarily in California but also in Nevada and Arizona, deliver power from generating sources to the distribution network and consist of lines ranging from 33 kilovolts to 500 kilovolts and substations. SCE's distribution system, which takes power from substations to customers, includes over 59,000 circuit miles of overhead lines, 44,000 circuit miles of underground lines and over 700 distribution substations, all of which are located in California. San Onofre, Four Corners, certain of SCE's substations, and portions of its transmission, distribution and communication systems are located on lands owned by the United States or others under licenses, permits, easements or leases, or on public streets or highways pursuant to franchises. Thirty-one of SCE's 36 hydroelectric plants and related reservoirs are located in whole or in part on United States-owned lands and are subject to Federal Energy Regulatory Commission (FERC) licenses.

Advisors' Opinion:

• [By Rich Duprey]

  Electric-power generator and distributor Edison International (NYSE: EIX  ) said today it had completed its previously announced acquisition of privately held�distributed solar developer�SoCore Energy.