i Stocks Broker For 2013, Best Stocks To Buy For 2013: August 2014

Tuesday, August 26, 2014

5 Stocks With Poor Cash Flow â€” HXM TWGP STP ATPG NIHD

Popular Posts: 10 Best “Strong Buy” Stocks — GMK TRGP TPL and moreHottest Healthcare Stocks Now – INO CNC WCG MNKD10 Oil and Gas Stocks to Buy Now Recent Posts: Hottest Financial Stocks Now – GHL WF BOH WRB Hottest Technology Stocks Now – CGNX IDTI MSTR MDSO Hottest Services Stocks Now – FTR CTL DIN LVLT View All Posts 5 Stocks With Poor Cash Flow — HXM TWGP STP ATPG NIHD

This week, these five stocks have the worst ratings in Cash Flow, one of the eight Fundamental Categories on Portfolio Grader.

Desarrolladora Homex SAB de CV Sponsored ADR () operates as a vertically integrated home builder. HXM also gets F’s in Earnings Growth, Earnings Momentum, Equity, Operating Margin Growth and Sales Growth. For more information, get Portfolio Grader’s complete analysis of HXM stock.

Tower Group International Ltd. () is a provider of property and casualty insurance products and services. TWGP gets F’s in Earnings Growth, Earnings Momentum, Equity, Operating Margin Growth and Sales Growth as well. The price of TWGP is down 22.2% since the first of the year. This is worse than the Nasdaq, which has remained flat. For more information, get Portfolio Grader’s complete analysis of TWGP stock.

Suntech Power Holdings Co. Ltd. Sponsored ADR () is a solar energy company that designs, develops, manufactures and markets PV cells and molecules. STP also gets F’s in Earnings Growth, Equity, Operating Margin Growth and Sales Growth. For more information, get Portfolio Grader’s complete analysis of STP stock.

ATP Oil & Gas () is engaged in the acquisition, development and production of oil and natural gas properties in the Gulf of Mexico and the U.K. ATPG gets F’s in Analyst Earnings Revisions and Sales Growth as well. For more information, get Portfolio Grader’s complete analysis of ATPG stock.

NII Holdings, Inc. Class B () provides mobile communications for business customers in Latin America. NIHD gets F’s in Earnings Momentum, Equity and Sales Growth as well. For more information, get Portfolio Grader’s complete analysis of NIHD stock.

Louis Navellier’s proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results — with A being “strong buy,” and F being “strong sell.” Explore the tool here.

Thursday, August 21, 2014

Are labor unions on the rise?

NEW YORK (CNNMoney) After decades of losing members, legislative defeats and a declining return on labor, American unions have stopped looking within for the answer.

Now they're looking to you.

Once focused mostly on the narrow goals of its members, unions of late have sought to spark broader civic movements. Big unions like the SEIU are funding groups like OUR Walmart and Fight for 15, which advocate for workers' rights — though not many Wal-Mart or fast-food workers seem to show up at their demonstrations. Others are taking workers' battles up the supply chain — in some cases, all the way to Wall Street, whose banks they accuse of charging employers predatory fees. And some unions have found creative ways to enlist parents and citizens in their battles, so that when contract negotiations roll around, they're armed with reinforcements and can't be easily labeled as greedy.

Call these methods hacks, call them alt-labor, call them workarounds: They all aim at getting labor out of the corner that it says it's been painted into for the past 40 years.

"Fixing what's wrong with the labor movement is the responsibility of more than the labor movement and requires the involvement of more than the unions themselves," says Joseph McCartin, a Georgetown historian who directs the Kalmanovitz Initiative for Labor and the Working Poor. In May, the Initiative held a conference called Bargaining for the Common Good to discuss ways to open the labor movement beyond employers and employees. Unions actively participated, says McCartin, having "seen that the future for them has to be reaching out to allies and communities, and bargaining differently and in ways that include those allies."

By most accounts, organized labor in the United States has been on the outs for decades. Last week's Supreme Court decision, Harris v. Quinn, chipped away at a cornerstone of union operations — agency fees — and though the decision was narrow, the Court signaled it'd take a wrecking ball! to the whole edifice if given the chance. Many in the labor movement had been preparing for worse.

There's no doubt that traditional unions have not kept up with the shifting economy or our politics. For years after the Wagner Act of 1935, which regulated employer-union relationships, most unionists worked in manufacturing. Membership peaked in 1954, at 28.3 percent. Some years later began the long slide of globalization. As factory jobs moved overseas and the American workforce shifted to service-economy jobs, manufacturing lost leverage and unions lost members. Despite pouring millions of dollars into luring new members, the movement never made much of a dent in the service economy.

Public-sector workers are a different story. Some 35 percent are unionized, and most can't be offshored. Many provide vital services, like home care, trash collection, teaching and policing. In many ways, they're the heart of the union movement, which Harris hurt so much.

It's also one reason that alt-labor considers public unions promising ground: The public has a clearer stake in teachers' working conditions and sanitation workers' wages than, say, auto workers' wages.

Alt-labor won a key victory in February during teacher-contract negotiations in St. Paul, Minnesota, by rallying community members to the teachers' cause and pushing negotiation limits. The teachers' union had spent the previous year on a listening campaign: Think "house parties, book discussions and focus groups" for parents and community members. All those house parties generated a list of demands that went well outside the usual — salary, hours — and into a vision for the school system. The resulting contract hikes teacher salaries, but also invests $6 million in pre-K education; hires 42 professional support staff, like librarians and social workers; limits class size; and reduces class time devoted to standardized testing.

Such strategies might not work everywhere. They likely breached "management prer! ogative,"! a practice that prevents unions from bargaining for much outside wages and hours. But just as important, such demands might be too narrow in appeal. Seeking community involvement and forming qualitative demands are strengths of alt-labor. But they're also liabilities; it's hard to come up with unified demands.

Another alt-labor strategy bargains up the labor supply chain. It's a recognition that "the entitity that decides how much people are going to get paid is rarely the direct employer," says Stephen Lerner, who organized the Justice for Janitors campaign. Employers these days are often middlemen, squeezed and lacking much room to maneuver themselves.

Beginning in the 1980s, Justice for Janitors organized custodians not against their direct employers — cleaning companies — but against the real power players: the building owners who hired the cleaning companies. Like the Mexican crawfish pickers who forced Wal-Mart to sunder ties with their employer, or the Florida tomato pickers who organized a boycott of Taco Bell, such methods try to locate responsibility somewhere.

As supply chains have lengthened, workers are bargaining all the way up to Wall Street. Last week saw the start of what is likely to be a protracted negotiation between Los Angeles and its city employees, including its trash collectors. The trash collectors don't want just a raise; they also want the city to stop paying "predatory fees" to Wall Street bondholders. They've driven circles around City Hall, honking their horns and clanging cowbells.

Citing all this, Lerner refuses to get down about the labor movement. "I am not a member of the union death cult," he says. Unions' best chance of success, he says, is "embracing the notion that acting together is the only way to take on concentrated power — and I'm optimistic, because you see the seeds of this starting to be planted."

Then again, he adds, "people just aren't excited about joining a movement that says there's no hope."

Image Sensor Company Omnivision Technologies Looks Well-Positioned for the Long Run

Omnivision Technologies (OVTI) finished fiscal 2014 on a solid note. The organization beat analysts' estimates handsomely while the viewpoint also blew past expectations. Known for supplying picture sensors to Apple (AAPL), Omnivision has done well. A glance at its prospects and item advancement will reveal that Omnivision can still scale more prominent heights.

Prospects in the car market

The organization expects the selection of its technology in new products and applications to improve its addressable business. Omnivision has had the capacity to diversify its revenue base by moving into the auto and security markets. Case in point, its Ov10630 solution was selected by Tesla Motors (TSLA) to empower progressed back perspective Polaroid application 18 months prior.

The electric vehicle showcase in the U.S. developed 33% year-over-year in the first six months of 2014. Looking ahead, Tesla is looking to add more models to its lineup. It as of late idled its California plant to outfit it with robots keeping in mind the end goal to boost generation. Tesla is getting ready to dispatch the Model X SUV. This is uplifting news for Omnivision, as it should see an increase in the addressable open door because of Tesla's extending creation.

Likewise, Omnivision has included distortion remedy and light sensitivity to its car sensors. On the once more of such item advancement moves, Omnivision can keep profiting from the auto business going ahead.

Mobile prospects

Past auto, the mobile devices business presents an enormous open door for Omnivision. Increasing sales of minimal effort 3g smartphones, along with the move to 4g LTE in China are driving development in the smartphone class. Moreover, the approaching iPhone 6 is an alternate catalyst as it is relied upon to result in stronger interest for its picture sensors.

This is relied upon to be a blockbuster year for Apple with analysts anticipating that the organization will ship 180 million iPhone units. The iPhone producer is relied upon to convey two devices this year, unified with a 4.7-inch screen and an alternate with a 5.5-inch screen. Greater devices are relied upon to help Apple enhance its position in the smartphone advertise as sales of bigger devices have been on the rise.

China is a standout amongst the most essential markets for extra large screen phones. This share is estimated to develop to half in the following three years. Fruit has entered into an arrangement with China Mobile, and this will be leeway for the smartphone creator, furthermore extend Omnivision's addressable business sector.

Omnivision is focused on development to tap the smartphone, tablet and PC markets. It is taking a shot at new technology, such as 3D profundity data, using photography to improve picture quality and transition to higher resolution. Omnivision is also creating new human interface applications, such as gesture control distinguishment and eye following.

The organization's new flagship Purecel technology is also picking up appropriation. Purecel is required to improve the performance of smartphones and tablets with its light sensitivity and cost advancement. The organization had shipped around 200 million sensors in the final quarter and is planning to increase its Purecel sensor volume aggressively to address stretchd business opportunities.

Conclusion

Omnivision Technologies is focusing on key development opportunities such as car and mobile devices. Both these markets are developing quickly, and Omnivision is looking to tap both with its item advancement. Also, the stock is shabby at a trailing P/E proportion of 13, route underneath the 35x industry normal, which makes it a decent long haul pick at current levels.

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Wednesday, August 20, 2014

Travelers Down on Earnings Miss

Dow Jones Industrial Average component Travelers (TRV) reported its second quarter 2014 earnings on July 22. The company is the third financial services company in the DJIA to report second quarter earnings following JPMorgan (JPM) and Goldman Sachs (GS).

For the second quarter total revenue was $6.785 billion with net income of $683 million and earnings per share of $1.95. Revenue was on track beating analysts' estimate of $6.16 billion for the quarter. Earnings per share, however, were below analysts' expectations of $2.07.

Interpretations of the company's earnings results pointed to an increase in catastrophe losses as the main reason for the quarter's earnings miss. Catastrophe losses accounted for $284 million or the equivalent of $0.82 per share, according to management's earnings comments.

Catastrophe losses are a factor regularly accounted for by Travelers. The losses include claims made for damages from natural disasters and man-made events. In Travelers underwriting business catastrophe payouts were $436 million in the second quarter exceeding reserve developments of $183 million. Payouts were higher in the quarter primarily due to increased wind and hail activity as well as damages from winter storms.

In addition to catastrophe losses net realized investment income was down significantly from the second quarter 2013 which had an $87 million after-tax investment gain from options investments. The second quarter of 2013 also included a $122 million increase from favorable tax adjustments and legal settlements.

While catastrophe losses were higher and net investment income lower the firm's revenue from premiums in its core businesses was strong. Business Insurance premiums gained 1% and Financial, Professional & International Insurance gained 38%. Personal Insurance premiums were below the one-year ago mark but still strong for the quarter at $1.893 billion versus $1.907 billion.

Following the company's disappointing earnings report it ended the day at $91.63 down 3.81% versus the DJIA's gain of 0.80%. It has a discounted cash flow valuation of approximately $98.62. Analysts have a high target of $97.53. While its second quarter earnings were a bit disappointing they showed the company's volatility in regards to natural disasters and man-made events. However, even though its net investment realizations were down for the quarter its underwriting business appears to be steadily growing helping it to maintain its market share in the insurance marketplace. While there is upside potential for the financial services company investors should be cautious of its business volatility and quarterly business activities.

About the author:JulieYoung789Julie Young is a Chicago-based financial journalist with nine years of experience in the financial services industry. She primarily writes article publications on financial market news and economic trends. Julie holds a Master of Science degree in Finance from Boston College and a Bachelor of Science degree in Finance from the University of Arkansas.

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Monday, August 18, 2014

Is It Time to Buy the PowerShares QQQ ETF (QQQ)?

Photo: Flickr user Dean Johnson.

If you don't have the time or expertise to carefully select individual stocks to invest in, you'd do well to consider investing in exchange-traded funds (ETFs). They're built like mutual funds, but they trade like stocks, and many charge lower fees than regular mutual funds. That's especially true of ETFs that track indexes. A great example to consider for your portfolio is the PowerShares QQQ ETF (NASDAQ: QQQ ) .

A major index

The PowerShares QQQ ETF tracks the Nasdaq 100 Index, which is made up of 100 of the biggest stocks in the Nasdaq Stock Market based on market capitalization. It includes U.S. and international companies but excludes the financial industry and a few others. It's technology-heavy, featuring industries such as telecommunications, retail, biotechnology, and computer hardware and software.

It's worth noting that with indexes that are weighted by market capitalization, heavyweight companies will have an outsize influence. Indeed, in this index, the top 10 holdings make up roughly half of the index's total value. Apple alone, with its market cap approaching $600 billion, recently made up more than 13% of its value.

Compelling components

So what are these component companies? Here are the top 10, in descending order of market cap:

Apple Microsoft Google (Class C shares) Intel Google (Class A shares) Amazon.com Gilead Sciences Facebook Qualcomm Cisco Systems The ETF in context

Compared to many other major technology-focused ETFs, such as the iShares US Technology ETF (IYW), the PowerShares QQQ ETF is bigger, charges less in fees, and has a more impressive performance record.

It's more growth-oriented, too, with few value stocks among its holdings. Information Technology (IT) stocks make up more than 50% of its value, leaving less room for industries such as health care, telecommunication services, and consumer staples. Not only does it exclude financial companies, but it also holds no stocks in the energy, utilities, or real-estate industries. And though it holds both domestic and international stocks, it's really a domestic ETF, with U.S. companies comprising 97% of its holdings.

Why you might buy the PowerShares QQQ ETF

There are plenty of reasons to invest in the PowerShares QQQ ETF. For one thing, its fees are low: Its expense ratio (annual fee) is just 0.2%. Better still, its performance in past years has been exceptional. It did take a bigger hit than the S&P 500 in 2008, falling 42% versus the blue-chip index's 37% drop. But over the past three, five, and 10 years, it outperformed the S&P 500, averaging annual gains of 23%, 21%, and 12.5%, respectively.

More importantly, the future is bright for technology-heavy companies. For example, researchers at Gartner have estimated that global IT spending will rise from $3.7 trillion in 2014 o $4.3 trillion in 2018. And with healthcare companies making up 14% of the ETF's assets, it's promising that the Centers for Medicare and Medicaid Services estimate that healthcare spending will double to $5 trillion between 2009 and 2022.

When not to buy the PowerShares QQQ ETF

There are reasons not to buy this ETF, however. For example, if you want an even broader index -- one that includes financial companies -- then this investment is not for you. Note, too, that being an index composed of stocks in the Nasdaq market, the Nasdaq 100 excludes lots of technology giants that trade on the New York Stock Exchange, such as IBM, EMC, and Corning. If you want to collect some fat dividends, it's not a great buy, either, as many tech companies are too focused on reinvesting in their growth to pay dividends at this point.

Perhaps the best reason to pass up this otherwise solid ETF is its market-cap-based weighting, which gives much more influence to some companies than others. If you're not a strong believer in Apple's future, for example, you may not want more than 13% of your money in this ETF tied up in it. If you agree that equal weighting makes more sense in indexes, consider the First Trust NASDAQ-100 Equal Weighted ETF (NASDAQ: QQEW ) , an ETF with the same stock focus as the PowerShares ETF that's also compelling in terms of fees and performance. It charges a bit more in fees, but it will give all its holdings an equal shot at boosting the value of the index.

However you do it, investing in America's robust and growing technology stocks makes a lot of sense.

Speaking of technology stocks, here's a potential big winner
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Saturday, August 9, 2014

Stocks Fall as Ukraine Trumps Jobless Claims

Who cares about falling jobless claims when Russia is massing troops along Ukraine’s border and banning food imports from the U.S.?

European Pressphoto Agency

Not the stock market. The S&P 500 fell 0.6% to 1,909.57, while the Dow Jones Industrial Average dropped 0.5% to 16,367.27 and is now down nine of the past 12 trading days. The Nasdaq Composite declined 0.5% to 4,334.97 and the small-company Russell 2000 dropped 0.5% to 1,119.76.

The losses came even as initial jobless claims fell to 289,000 last week, well below forecasts for a dip to 300,000. The four-week average dropped to 293,500, the lowest since 2006.

RBC’s Robert Stallard quotes the bank’s “geopolitical adviser” General Charles Vyvyan, who thinks the West needs to offer Vladimir Putin a way out:

Putin clearly will not, is not, able to respond to threats; he has invested too much in his nationalist rhetoric. If the West does not want a meltdown in global relations, it is up to them to offer him a lifeline. He knew, even if the vast majority of Russians did not know, that even before the impact of sanctions became apparent, his country was a failing state…I believe that Putin will pursue further offensive strategies in Ukraine which will attract yet more debilitating sanctions; and that he will then blame the disastrous situation in the country on the sanctions, thus absolving himself of all responsibility for a situation entirely of his own making.

It is not in our interests to isolate Russia from international institutions; it is therefore incumbent on us to identify and to facilitate a resolution to the current confrontation – Chancellor Merkel has made it very clear that the only solution is a political solution. That solution must be achieved through the convening of an international conference attended by the interested parties which would formulate structures, principally governance structures, which recognize and protect Russian interests in Ukraine. In the absence of such an initiative, I can only see the stand-off getting worse; and speed and a coherent strategy are of the essence.

The S&P 500 has dropped 3.9% from its July 24 high, and the VIX has jumped to 16.7 with it. Credit Suisse’s Ed Tom and Mandy Xu think investors might be overreacting:

With the recent geopolitical turmoil, equity volatility has spiked. The VIX is up more than 5 vol pts over the past week to a high of 17.0%. Yet when we survey other asset classes, volatility remains benign there. Wk/wk, 1M implied vol actually fell for interest rates while they remained unchanged for FX (G7) and gold…

S&P 1M implied correlation also surged to a 1-year high last week, as macro risks have completely overshadowed single stock earnings. However, both cross-asset correlation and volatility contagion still remain at below average levels. This, combined with the high VIX, suggests equity investors may be overpricing near-term macro and geopolitical risks.

We can only hope so.

Chip Wilson Sheds Lululemon Stock: Good News or Bad?

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Chip Wilson threw in the towel Thursday. The Lululemon (LULU) founder sold half of his 28% ownership stake to Advent International, the Boston-based private equity firm that first invested in Lululemon stock back in 2005. Wilson's move signals a truce between LULU and its controversial founder.

lululemon 185 Chip Wilson Sheds Lululemon Stock: Good News or Bad? So, what exactly does yesterday's news mean for LULU and Lululemon stock? Is it good news, bad news or much ado about nothing?

Good News for Lululemon Stock

Chip Wilson's threat to launch a proxy fight was a distraction that LULU didn't need. CEO Laurent Potdevin has been on the job for seven months now, working to revitalize a brand that took a huge hit in 2013. The former head of Tom's Shoes, and before that, Burton Snowboards, is trying to build an organization that's better prepared for its next stage of growth.

As the saying goes, you only get one chance to make a first impression. Wilson's interference took the focus away from the task at hand for Potdevin, which is to regain the trust of its loyal following and owners of Lululemon stock. Fighting a proxy battle does little to engender that.

Wilson receives $845 million for half his 40.2 million shares, which works out to $42 per share. While that's well below $76 — its 52-week high from October 2013, Wilson obviously feels a bird in the hand is worth two in the bush when it comes to Lululemon stock. While this agreement means he can't fight a proxy battle or support a hostile takeover until 2016, he now has the support of his former partners who did very well on their initial investment. Perhaps they feel it's time to return the favor.

The Globe and Mail's Marina Strauss points out a couple of positives I hadn't really considered.

First — and this comes second-hand from Jim Danahey, CEO of CustomerLAB, a Toronto-based productivity consultant — is that the sale agreement forces Laurent Potdevin "to sink or swim." He essentially has until the annual meeting in 2016 to fix the business and get it humming again with gross margins into the mid 60s and Lululemon stock into the $70s. If not, he's gone and Advent goes to work.

The second point is that the agreement calls for the company to hire an independent expert to carry out a 90-day evaluation of the board's policies and procedures. With one of the two Advent representatives becoming co-chairman, the board is being forced to consider the interests of the new board members, which are different from the short-term mindset Wilson feels the current board is following

Wilson selling Lululemon stock should be viewed as a good thing because it enables him to carry out a toned-down fight in the boardroom rather than a messy battle in the press. With an ally alongside (Advent) it will be that much easier.

Bad News for Lululemon Stock

If you're not a Chip Wilson fan because of his outrageous statements about women's bodies, etc., then you probably hoped he would sell his entire stake and quietly disappear. Unfortunately for you, despite selling half his shares, he's not going anywhere. Nor is he getting involved with Kit and Ace, his wife and son's new street-wear brand.

Some believe that Wilson created a cult-like business environment that Christine Day was unable to squash. While she brought a level of professionalism to LULU, it was Wilson's passion that carried the day. That's a good thing when businesses are just starting out … but when they have 263 stores in five countries and expansion plans that include more than 100 stores across North America, Europe and Asia, it helps to have people who aren't prone to speaking first and thinking later.

As long as Chip Wilson remains in the game, it's hard to imagine Laurent Potdevin getting much room to maneuver. Fortunately, Potdevin has worked for two founder-led companies in the past and understands the nature of the beast. Only, in this situation, we're talking about a public company, which makes matters much more delicate.

Bottom Line for Lululemon Stock

Don’t misinterpret yesterday's news as much ado about nothing — despite the fact nothing has really changed at the company. Potdevin is still CEO and Wilson is still the overly protective father figure.

On balance, I view this move as good news for Lululemon stock. Potdevin has the experience to turn LULU around; the share sale provides investors with a little more assurance that Wilson is going to play nice in the sandbox. Hopefully, that translates into a crisis-free remainder of the year.

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

Thursday, August 7, 2014

Should You Buy Bank of America Stock? 3 Pros, 3 Cons

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Bank of America (BAC) stock got a nice bump Wednesday from reports that it’s close to a settlement with the Justice Department. BofA will pay a record $16.5 billion penalty and the four-year investigation into its sale of dodgy mortgage securities will finally come to an end.

bank of america Should You Buy Bank of America Stock? 3 Pros, 3 Cons As tough as the sluggish economic recovery has been on business and ultra-low rates have been on margins, the overhang of the federal investigation has been the most serious headwind for BAC stock.

The market knew the fine was going be big, but uncertainty over the final damage — and whether a settlement would even get done — was the real weight draped around BofA’s neck.

After all, the big financials all have the money set aside. They’ve already paid out $100 billion in fines since 2007. JPMorgan Chase (JPM) reached a similar settlement with the Justice Department for $13 million. And Citigroup (C) last month settled for a $7 billion fine.

Paying a record fine might sting on the face of it, but this is good news for anyone holding BAC stock.

In other good news for BofA shareholders, the company was finally able to raise its dividend. As expected, the Bank of America dividend went to 5 cents a share from 1 cent.

Like all the big banks, BAC’s capital plans — e.g., dividend hikes and share repurchases — were subject to approval from the Federal Reserve. The Bank of America dividend news is by no means a surprise, but it’s still a key milestone. Indeed, this is the first increase in the Bank of America dividend in seven years. Any concerns about BofA’s balance sheet or liquidity can be retired.

As good as the recent news for Bank of America has been these last couple of days, though, does it mean you should buy BAC stock? To help decide, let’s look at some of the pros and cons:

Bank of America Pros

Settlement Relief: The Justice Department investigation was a huge headwind for Bank of America stock. Just getting this thing done is big catalysts for shares. BAC is one of the most heavily traded stocks in the market, but plenty of longer-term investors wouldn’t touch it until BofA put the investigation behind it. The settlement frees up buyers sitting on the sidelines.

Cost Relief: Bank of America has been enjoying remarkably stable operating performance, but the bottom line keeps getting ripped by legal costs. BAC also recently settled longstanding litigation with American International Group (AIG) for $650 million. By ridding itself of these outstanding legal expenses, Bank of America frees up cash and boosts its bottom line.

Solid Results: Bank of America’s operations have been pretty good this year. For the most recent quarter, BAC beat Wall Street’s estimates for earnings and revenue. It bucked the big-bank trend of reporting a decline in trading revenue — especially in the lucrative area of fixed income, currencies and commodities. And its wealth management business had a record quarter, crossing $3 billion in revenue for the first time.

Bank of America Cons

It’s Still a Bank: It’s been a tough year for big bank stocks. Sure, Wells Fargo (WFC) is having a good year, but BofA and its closest competitors (with significant investment banking businesses) most certainly are not. BAC stock is off 4% for the year-to-date. Citigroup has lost 7%. Even JPM — arguably the best big bank stock — is down 4%. Financials are out of favor at this late stage in the bull market.

Volatility: When a stock bounces around a lot, it increases the risk of an investor buying high and selling low. BAC stock offers that risk in spades. With a beta of close to 2, Bank of America stock can be thought of as twice as volatile as the S&P 500. For comparison, WFC has a beta of 0.9, meaning it is less volatile than the broader market.

Competition: Sure, Bank of America has room to raise its dividend, but at 5 cents a share (so, 0.25%) for now, it’s pretty weak compared with WFC (35 cents, 2.8%) or super-regional US Bancorp (USB) (24.5 cents, 2.4%). Heck, JPM pays 40 cents (2.9%). Furthermore, banks that don’t rely on trading — like WFC and USB — have enjoyed much better market sentiment this year. WFC is up 11% YTD, while USB is off less than 2%.

Verdict

If you’re bullish on stocks and the recovery, you should own a broad basket of banks and other financial sector names. After all, the economy and market aren’t going to go very far without the financials participating.

That said, if you’re looking to cherry pick among the big bank stocks, well … you can do better than BofA. It has made tremendous progress digging out from under the rubble, but JPM and WFC still look like better bets.

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

Want Clients to Trust You? Youâ€™ve Got 0.05 Seconds

Click to enlarge: The trustworthiness of faces. Source: Jon Freeman It used to be cliché to say that the first 60 seconds of a meeting results in an enduring judgment about a person’s character — a view reinforced by the aphorism attributed to Will Rogers that you never get a second chance to make a first impression.

But new research published in the Journal of Neuroscience suggests that early estimate may be more than a 1,000 times too long.

The research suggests that the human brain develops an assessment about trustworthiness in a mere 50-millisecond exposure — indeed before even consciously perceiving a person’s face.

Indeed, the study found that inferences of trustworthiness were highly correlated among multiple perceivers, “indicating that facial cues provide reliable signals about another’s underlying disposition,” the study finds.

Perceptions about trust stem from a subcortal region of the brain called the amygdala, and while previous studies have shown the amygdala automatically codes trustworthiness when perceiving faces, what is new about the current study is that such automatic judgments are formed even in the absence of a full focus on the face — in other words, a mere glance is sufficient.

Simple visual cues, such as enlarged white eyes, may trigger a fearful response.

That trigger reaction may have evolved as a means of survival by motivating “appropriate behavioral responses” in reaction to an “evaluation of another’s likelihood to harm or help,” the study says.

Specifically, lower inner brows and shallower cheekbones may signal untrustworthiness, whereas higher inner brows and pronounced cheekbones are cues of trustworthiness, according to New York University professor Jonathan Freeman, one of the study’s authors, reached by ThinkAdvisor.

So what can financial advisors — who cannot do anything about the faces they were born with — do to enhance perceptions of trust among clients and prospective clients?

“Some research suggests faces appearing more trustworthy structurally resemble a happy expression and faces appearing more untrustworthy structurally resemble an angry expression,” Freeman says.

And while a face does not change dramatically over a lifespan, some evidence indicates it is malleable, he adds, indicating that a person can work on himself to trigger greater trust.

“For example, chronic displays of anger could, in theory, lead the face to become angrier at baseline, which in turn may influence automatic, initial responses to the trustworthiness of the face. In that case, the face may be seen as more untrustworthy,” Freeman says.

In contrast, “smiling and displays of joy can convey openness to interaction, which could potentially convey more trust, so long as they are genuine and not forced smiles,” he adds.

But beyond the theoretical potential benefits of that sort of active conditioning, the bottom line may be, as Freud put it, that anatomy is destiny.

“First impressions are highly consequential and difficult to alter, and so one implication of our results is that this initial and automatic response to trustworthiness may be quite important for later social interactions in the real world,” Freeman concludes.

Despite this biological determinism, the realities of how business is done today may provide an out for financial advisors cursed to look like used-car salesmen.

That thought stems from a survey by advisor-vetting site Paladin Registry on how investors find advisors.

Forget the 50 milliseconds. These days investors check out their advisor before they even get that subliminal glimpse — through the trust they impute via their friends and already trusted professionals (e.g. their CPAs) and through their Internet due diligence.

The Paladin survey of 386 investors found that 75% of respondents used the Internet to research their advisors anonymously.

What’s more, the survey shows, about half investors determined advisor trustworthiness sight unseen — through the Internet (23.9%); testimonials of other professionals (8.8%); references (7.7%); and Finra BrokerCheck (4.9%).

The key factors in finding an advisor were referrals from family, friends and associates (39.5%); the Internet (25.3%); and referrals from CPAs or attorneys (13.4%).

On another trust-related measure, Paladin asked if investors had a preference for large Wall Street firms or not. Respondents, all users of Paladin’s registry, expressed a strong aversion to the big firms — 69%, compared with the 16% that favored them.

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Check out Winning New Clients by Building Trust in the Initial Prospect Meeting on ThinkAdvisor.

Wednesday, August 6, 2014

La Jolla Pharmaceutical Companyâ€™s (LJPC): Mr. Everything Keeps on Buying, and Buying, andâ€¦

Like professional money managers, boardroom investors seem leery of the energizer rally. The number of companies reporting insider purchases last week was a blah 64. Records have been below the 100 threshold for some time.

However, one insider has taken the bunny with a drum approach and keeps buying, and buying, and … La Jolla Pharmaceutical Company's (NASDAQ:LJPC) Chief Exec. Officer, President, Principal Financial Officer, Principal Accounting Officer, Sec. and Director, Dr. George F. Tidmarsh M.D., Ph.D., bought 19,000 LJPC shares at $10.50 for a total investment of $199,500.

How in the world does all that alphabet soup fit on the man's business card?

[Related -4 Buyout Candidates You Need To Own For 2010]

La Jolla Pharmaceutical Company, a biopharmaceutical company, focuses on the discovery, development, and commercialization of therapeutics for chronic organ failure and cancer. The company's products include GCS-100 that is in Phase II clinical trial for the treatment of chronic kidney disease. It also provides LJPC-501, a peptide agonist of the renin-angiotensin system, which is designed to help restore kidney function in patients with hepatorenal syndrome; and LJPC-401, a peptide for the treatment of iron disorders.

It is Mr. All-Everything's fifth purchase since February 2014 but most significantly, it is Tidmarsh's largest purchase to date, more than doubling the next most costly of $88,000 in May 2014.

It's also interesting to note the most recent $10.50 purchase is almost a 50% premium to the CEO's original foray at $7.25. More money at a higher price, one has to come to the conclusion the doctor is a believer.

[Related -Mixed Earnings Signals]

Based on what we've found, it is our opinion that the insider has his eye on early 2015. That's when La Jolla Pharmaceutical "plans to initiate a Phase 3 registration study for LJPC-501 in patients with catecholamine-resistant hypotension (CRH)."

Additionally, "La Jolla intends to file an IND and begin a phase 1 investigation of LJPC-1010 in NASH in the first half of 2015."

Looking at the biotech's chart, the stock touched as much as $18 in the early part of the year. Since, shares have been setting towards support from $9 -$7.50. Considering recent weakness in the overall market, patient investors might get a better price than today.

Longer-term, La Jolla could eventually build a rounded bottom and take another shot at all-time highs based on the news flow in the early to mid-part of 2015.

Now, La Jolla is expected to bleed money and have little to no revenue for the foreseeable future, according to current analyst sales and earnings estimates. Most of the money will come via some sort of offering, which will dilute shares. So, LJPC is only appropriate for investors with a tolerance for high, high risk i.e. the kind of folks who ride the wildest rollercoasters with their hands up. Perhaps, that's George F. Tidmarsh in the front car.

Sunday, August 3, 2014

SunPower Stock Crashes, but the Future Looks Bright

SunPower (NASDAQ: SPWR ) stock dropped 5.5% today after the company reported second-quarter earnings that failed to wow investors. Second-quarter non-GAAP revenue fell 4.4%, to $621.1 million, and non-GAAP net income fell 30.1%, to $43.9 million, or $0.28 per share. But these results only scratch the surface of SunPower's quarter, so I'll try to peel back what really happened.

SunPower's headquarters, lined with solar panels. Source: SunPower.

The HoldCo strategy emerges
Earlier this year, SunPower announced a HoldCo/YieldCo strategy, which basically involves building projects on its balance sheet and holding them until after they're completed. Then, it would have the option to sell them, launch a YieldCo, or hold onto them long term. Management says that the strategy can produce nearly double the profit per watt than selling projects before construction begins, because SunPower is taking on the development risk, and cash flows can be proven to acquiring investors.

Solar home communities are a growing portion of SunPower's business. Source: SunPower.

That's great long term, but it also has the effect of dampening revenue and earnings short term. That impact was felt in a big way this quarter because, even though around 411 MW of modules were shipped, only 311 MW were recognized as revenue.

About 100 MW of projects built during the quarter -- including residential, commercial, and utility scale -- were built on the balance sheet. If we assume that the sale of these projects could be done at $3 per watt -- a conservative figure -- there could have been another $300 million in revenue in the quarter, and probably $75 million or more in gross margin. But because SunPower is building these projects on the balance sheet, it doesn't explicitly show the value that's being created.

The numbers you need to know
There are a few other items that investors should know about when it comes to SunPower's future. First, the company's 350 MW capacity expansion is on track, and 50 MW-100 MW are expected next year. with a ramp to more than 250 MW in 2016, and full production in 2017 and beyond. When complete, production will be more than 1.8 GW annually.

The bigger news may have been hints from management about the next capacity expansion. The 350 MW expansion is really a test facility to optimize new process changes and, once those are understood, the company plans to build another expansion of at least 700 MW. I'd expect this to be completed more quickly than the current expansion, so it's possible production will jump to more than 2.5 GW by 2018 from 1.2 GW a year ago.

Carports are also an important offering to commercial customers. Source: SunPower.

Project backlog and pipeline also continue to grow. The HoldCo backlog, including what is already built, stands at 605 MW, including 184 MW of residential, 100 MW of commercial, and 322 MW of utility-scale projects. Pipeline projects, which aren't fully contracted, stand at more than 8.0 GW.

After a $400 million convertible debt offering, SunPower also has $1 billion in cash on hand, and more than $1.2 billion in liquidity. That's key, because that cash will be used to build projects held on the balance sheet as part of the HoldCo strategy, and pay for capacity expansions.

SunPower is still at the top of its game
Don't let the headline numbers fool you; SunPower is adding a lot of value to shareholders. The problem is that the HoldCo strategy hides a lot of that value on the balance sheet, and management doesn't give us a lot of information about what those projects are worth.

I think that if management gave a retained value figure it would get a lot more credit from the stock market for the value it actually added, despite the flaws in calculating retained value. Management has indicated to me that it expects between $2 and $3 per watt in retained value for projects it builds in the HoldCo, which, if correct, means at least $200 million in value was added to the balance sheet this quarter.

It's that balance-sheet value from SunPower that investors need to understand, because the goal of management is to create long-term value rather than short-term revenue or profits. But that takes a lot of effort to pull out of the earnings release, and investors are clearly looking past that positive news today.

More from The Motley Fool: Warren Buffett Tells You How to Turn $40 into $10 Million.