Which Is the Smartest Smart Beta: Equal or Fundamental Weighting?

Alternative indexing proponents generally agree that market-cap weighting is dumb beta, but they differ as to whether fundamentally weighted or equally weighted indexing is smarter beta.

Research Affiliates, which pioneered fundamental indexing, makes the case in its current newsletter as to why the competing equal-weight approach is suboptimal despite its merits.

Indeed, authors Max Moroz and Engin Kose concede equal weighting’s many virtues. The alternative indexing approach is superior to traditional cap weighting, easy to understand and easy to explain, they say.

By giving equal weight to, say, the 100 largest stocks in a given universe, an equally weighted portfolio avoids the performance drag of cap-weighted’s preference for popular stocks and will also capture the return advantage of smaller stocks. 

But this story overlooks inferior selection and high implementation costs, the Research Affiliates authors argue.

Indeed, many professional investors who think of equal-weight indexing as avant garde may be surprised to learn that the  first very index fund was in fact equally weighted.

Moroz and Kose say that Wells Fargo index fund, initiated in 1970, was quickly scrapped because of the effort and cost its implementation entailed.

In those days when brokerage commissions were fixed (thus ensuring a high cost for a large portfolio that included some illiquid stocks) and when computers were only just emerging (thus ensuring tremendous effort in rebalancing), it was quickly grasped that market-cap weighting was far more practical as it is a virtual buy and hold strategy.

It thus took some four decades to revive equal weighting, which under today’s low-commission and computerized world, handily outperforms market-cap indexing “without a material increase in risk,” the authors say.

So why bother with a more complicated fundamental indexing approach? Because the strategy offers superior returns and lower costs, Moroz and Kose argue.

Both equally weighted and fundamentally weighted portfolios trump cap weighting by breaking the link with price that serves as a drag on cap-weighted portfolios.

“Stocks that are temporarily overpriced automatically receive a higher weight in the cap-weighted benchmark; conversely, stocks that are temporarily underpriced are given a lower weight,” the authors write.

That’s good so far, but the trouble for equal-weighted indexing starts with the strategy’s ignoring not just price but size.

By making disproportionate bets of smaller and thus less liquid stocks, equal-weighted portfolios add to implementation cost while only indirectly capturing “the noise in prices,” therefore generating performance less effectively.

In contrast, because fundamentally weighted indexes are selecting stocks on the basis of fundamental metrics, rather than just market capitalization, they are less likely to be overpriced, the authors say.

Indeed, in simulation covering eight countries over 28 years that compared the three indexing strategies, the Research Affiliates duo found that “the annualized returns of both smart beta strategies exceed those of the cap-weighted benchmark in almost every case, and the fundamentally weighted index consistently outperformed the equally weighted one.”

Fundamental indexing’s advantage over equal weighting reached as high as 280 basis points in the Australian market over the period under simulated study (1985-2013).

Addressing the claim that equal-weighing offers greater diversification, Moroz and Kose argue that diversification is not a goal but a means to achieving reduced risk, and they show that both strategies have roughly equal volatility.

“Most of the benefits of diversification can be achieved with a relatively small number of stocks; incrementally reducing concentration results only in marginal improvements,” they write.

While the fundamental strategy has outperformed equal weighting, the authors explain that the latter is inherently a higher-cost strategy since most of the cost of indexing stems from rebalancing, a factor that disadvantages equal-weighting in comparison to both fundamental and market-cap weighting.

That is because the equal weight index will more frequently need to replace less liquid stocks rather than merely trade back to a target weight.

What’s more, the net costs of rebalancing rise at high asset levels for equal-weight portfolios (with higher turnover and less liquid stocks) than fundamentally weighted indexes, the authors add. 

---

Related on ThinkAdvisor:

My 4 Favorite Global Dividend Achievers with Over 10% Annual Net Earnings Growth Predictions

Dividend growth investors like you or me should also have a focus on stocks from abroad. It diversifies your portfolio and gives you more opportunities from different countries.

But you always have a currency risk if your stock is traded in a foreign currency. But you also own these risks with U.S. stocks that have a huge share of foreign sales. The corporation manages these risks for you.

Today I would like to filter my International Dividend Achievers list by stocks with the highest earnings per share growth forecast for the mid-term (five years). You can find a list attached about those stocks with double-digit earnings predictions by brokerage firms.

Only 19 of 55 dividend growth stocks from abroad with a dividend growth history of more than five consecutive years fulfilled my restrictions. Six of them still have a low forward P/E of less than 15 and eleven got a current buy or better rating. The yields are low in this environment thanks to Ben Bernanke who said that the tapering must wait until the economy improves stronger. The highest yielding stock from the list has a 3.45 percent yield.

Here are my favorite stocks:

China Mobile (CHL) has a market capitalization of $229.63 billion. The company employs 188,000 people, generates revenue of $91.551 billion and has a net income of $21.136 billion. China Mobile's earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $41.536 billion. The EBITDA margin is 45.37 percent (the operating margin is 26.86 percent and the net profit margin 23.09 percent).

Financial Analysis: The total debt represents 0.48 percent of China Mobile's assets and the total debt in relation to the equity amounts to 0.70 percent. Due to the financial situation, a return on equity of 18.84 percent was realized by China Mobile. Twelve trailing months earnings per share reached a value of $5.23. Last fiscal year, China Mobile paid $2.79 in the form of dividends to shareholders. Earnings are expected to grow by ! 24.30 percent annual.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 10.93, the P/S ratio is 2.50 and the P/B ratio is finally 1.93. The dividend yield amounts to 3.92 percent and the beta ratio has a value of 0.30.

Accenture (ACN) has a market capitalization of $62.20 billion. The company employs 257,000 people, generates revenue of $29.777 billion and has a net income of $2.824 billion. Accenture's earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $4.466 billion. The EBITDA margin is 15.00 percent (the operating margin is 13.00 percent and the net profit margin 9.49 percent).

Financial Analysis: The total debt represents 0.00 percent of Accenture's assets and the total debt in relation to the equity amounts to 0.00 percent. Due to the financial situation, a return on equity of 63.64 percent was realized by Accenture. Twelve trailing months earnings per share reached a value of $4.79. Last fiscal year, Accenture paid $1.35 in the form of dividends to shareholders. Earnings are expected to grow by 10.12 percent annual.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 16.23, the P/S ratio is 1.77 and the P/B ratio is finally 12.51. The dividend yield amounts to 2.08 percent and the beta ratio has a value of 0.91.

Canadian National Railway (CNI) has a market capitalization of $42.82 billion. The company employs 23,925 people, generates revenue of $9.636 billion and has a net income of $2.603 billion. Canadian National Railway's earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $4.477 billion. The EBITDA margin is 46.46 percent (the operating margin is 37.15 percent and the net profit margin 27.02 percent).

Financial Analysis: The total debt represents 25.88 percent of Canadian National Railway's assets and the total debt in relation to the equity amounts to 62.62 percent. Due to the financial situation, a return on equity of 24.70 p! ercent wa! s realized by Canadian National Railway. Twelve trailing months earnings per share reached a value of $5.75. Last fiscal year, Canadian National Railway paid $1.46 in the form of dividends to shareholders. Earnings are expected to grow by 11.20 percent annual.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 17.71, the P/S ratio is 4.35 and the P/B ratio is finally 4.01. The dividend yield amounts to 1.61 percent and the beta ratio has a value of 0.96.

Bunge (BG) has a market capitalization of $11.65 billion. The company employs 36,000 people, generates revenue of $60.991 billion and has a net income of $378.00 million. Bunge's earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1.489 billion. The EBITDA margin is 2.44 percent (the operating margin is 1.01 percent and the net profit margin 0.62 percent).

Financial Analysis: The total debt represents 21.44 percent of Bunge's assets and the total debt in relation to the equity amounts to 53.85 percent. Due to the financial situation, a return on equity of 3.49 percent was realized by Bunge. Twelve trailing months earnings per share reached a value of $1.88. Last fiscal year, Bunge paid $1.06 in the form of dividends to shareholders. Earnings are expected to grow by 17.35 percent annual.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 42.03, the P/S ratio is 0.19 and the P/B ratio is finally 1.14. The dividend yield amounts to 1.52 percent and the beta ratio has a value of 1.01.

Take a closer look at the full list of international dividend growth stocks with strongest 5-Y earnings forecasts. The average P/E ratio amounts to 29.18 and forward P/E ratio is 17.92. The dividend yield has a value of 1.82 percent. Price to book ratio is 4.86 and price to sales ratio 3.91. The operating margin amounts to 22.51 percent and the beta ratio is 1.03. Stocks from the list have an average debt to equity ratio of 0.60.

Do you like this a! rticle? I! f yes, please support us and hit the button for a Facebook Like, make a tweet or post a comment in the Dividend Yield community! Thank you so much, we really appreciate it.

Related Stock Ticker Symbols:
CHL, ENB, WPPGY, LAZ, RBA, ACN, AWH, INFY, CCJ, THI, CNI, PNR, BG, CNQ, NVO, CP, HDB, KOF, ARMH

Selected Articles:
· 17 Low-Priced Dividend Achievers With Low P/S Ratios
· 13 Cheap Stocks With Dividend Yields Over 3% And A Predictable Business
· A Dozen Reasonably Priced Dividend Aristocrats With Buy Or Better Recommendation
· 15 Cheap International Dividend Achievers

*If you would like to receive more dividend stock ideas and the free Dividend Weekly, you should subscribe to my free e-mail list. Alternatively, you can follow me on Facebook or Twitter.

Top 10 Prefered Companies To Own For 2015

Popular Posts: 4 Beaten-Down Dividend Stocks to Buy Now5 Monthly Dividend Stocks to Snag in 20145 Stocks to Buy and Hold Forever Recent Posts: STZ Stock: Constellation Brands Is About to Fall Flat Ignore the China Bank Scare, Buy Chinese Stocks 4 Beaten-Down Dividend Stocks to Buy Now View All Posts

Constellation Brands (STZ), the world�� largest publicly traded winery, is set to report fiscal third quarter 2014 earnings tomorrow morning. The consensus has STZ stock earning 89 cents per share on revenues of $1.4 billion.

Top 10 Prefered Companies To Own For 2015: Cytori Therapeutics Inc(CYTX)

Cytori Therapeutics, Inc. engages in the development, manufacture, and sale of medical products and devices to enable the practice of regenerative medicine. Regenerative medicines focus on repairing or restoring lost or damaged tissue and cell function. Its principal products include the Celution family of products, which processes patients' adipose-derived stem and regenerative cells (ADRCs) at the point of care. The Celution family of products consists of a central device, a related single-use consumable used for each patient procedure, proprietary enzyme reagents, and related instrumentation. Its core product, the Celution System, provides physicians with clinical grade stem and regenerative cells for use in the cosmetic and reconstructive surgery market. The company also provides PureGraft, a consumable product that provides grafts for use in aesthetic body contouring procedures. In addition, it sells the StemSource family of products worldwide, including in the United States, for research, as well as for the cryopreservation and storage of ADRCs. It offers the StemSource System as a standalone product, or as a part of a comprehensive suite of systems, equipment, and protocols collectively referred to as a StemSource Cell Bank. Further, the company develops Celution System, which has completed two clinical trials for applications in cardiovascular disease, wound healing, gastrointestinal disorders, stress urinary incontinence, liver and renal disease, spinal disc degeneration, and pelvic health conditions. It has strategic development and manufacturing joint venture agreement, and other related agreements with Olympus Corporation. The company was formerly known as MacroPore Biosurgery, Inc. Cytori Therapeutics, Inc. was founded in 1996 and is headquartered in San Diego, California.

Advisors' Opinion:

• [By James E. Brumley]

  If you're reading this, then odds are you already know that Cytori Therapeutics Inc. (NASDAQ:CYTX) is up a whopping 8% today. In some ways that's encouraging, as it proves there's a lot of trade-worthy momentum to be tapped. In other ways, however, it's bad, because CYTX is overbought and ripe for a pullback. No matter how you're seeing Cytori Therapeutics in the short run, though, when you take a step back and look at the longer-term picture, there's a lot to like.

Top 10 Prefered Companies To Own For 2015: MGP Ingredients Inc.(MGPI)

MGP Ingredients, Inc. produces ingredients and distillery products in the United States. It processes wheat flour and corn into various products through an integrated production process. The company operates in three business segments: Ingredient Solutions, Distillery Products, and Other. The Ingredient Solutions segment products consist of specialty proteins, specialty starches, vital wheat gluten, commodity wheat starch, and mill by-products. The Distillery Products segment offers food grade alcohol; fuel grade alcohol, commonly known as ethanol; and distiller?s feed and carbon dioxide, which are co-products of the company?s distillery operations. The Other segment products comprise resins, and plant-based polymers and composites. MGP Ingredients, Inc. sells its products directly or through distributors to the manufacturers and processors of finished goods. The company was founded in 1941 and is headquartered in Atchison, Kansas.

Advisors' Opinion:

• [By John Udovich]

  Small cap ingredients stock Balchem Corporation (NASDAQ: BCPC) jumped 22.76% yesterday on news about an acquisition, meaning its worth taking a closer look at the stock along with potential peers like small cap MGP Ingredients Inc (NASDAQ: MGPI) and the PowerShares Dynamic Food & Beverage ETF (NYSEARCA: PBJ).

Top Supermarket Companies To Invest In 2015: Unum Group(UNM)

Unum Group, together with its subsidiaries, provides group and individual disability insurance products primarily in the United States and the United Kingdom. It also provides a portfolio of other insurance products, including employer-and employee-paid group benefits, life insurance, long-term care insurance, and related services. Its products include group long-term and short-term disability; group life and accidental death, and dismemberment; individual disability; group long-term care; voluntary benefits; group life; accident, sickness, and disability; and cancer and critical illness insurance products. The company also provides individual life and corporate-owned life insurance, reinsurance pools and management operations, group pension, health insurance, and individual annuities. Unum Group markets its products primarily to employers interested in providing benefits to their employees. The company sells its products through field sales personnel, independent brokers, consultants, and agency sales force. Unum Group was founded in 1848 and is based in Chattanooga, Tennessee.

Advisors' Opinion:

• [By Rich Duprey]

  Specialty insurance provider�Unum (NYSE: UNM  ) announced yesterday its third-quarter dividend of $0.145 per share, an 11% increase to the payout made last quarter of $0.13 per share.

Top 10 Prefered Companies To Own For 2015: Stanley Black & Decker Inc (SWJ)

Stanley Black & Decker Inc., June 4, 1901, is a diversified global provider of power and hand tools, mechanical access solutions (automatic doors, commercial and residential locking systems), electronic security and monitoring systems and products and services for various industrial applications. The Company�� operations are classified into three business segments: Construction & Do-It-Yourself (CDIY), Security, and Industrial. In September 2011, Stanley Black & Decker acquired Niscayah Group AB. In September 2011, the Company acquired Microtec Enterprises, Inc. In January 2011, the Company acquired InfoLogix, Inc. In December 2012, Spectrum Brands Holdings Inc acquired Hardware & Home Improvement Group (HHI) of the Company. In February 2013, the Company completed its acquisition of Infastech.

CDIY

The CDIY segment consists of the professional power tool and accessories business, the consumer power tool business, which includes outdoor products, plumbing (Pfister) and the hand tools, fasteners and storage business. The segment sells its products to professional end users, distributors and retail consumers. The majority of sales are distributed through retailers, including home centers, mass merchants, hardware stores, and retail lumber yards. During the year ended December 31, 2011, annual revenues in the CDIY segment represented 50% of the Company�� total revenues. The professional power tool and accessories business sells professional grade corded and cordless electric power tools and equipment, including drills, impact wrenches and drivers, grinders, saws, routers and sanders. The business also sells power tool accessories, which include drill bits, router bits, abrasives and saw blades.

The consumer power tool business sells corded and cordless power tools sold under the Black & Decker brand, lawn and garden products and home products. Lawn and garden products include hedge trimmers, string trimmers, lawn mowers, edgers and related accessories. Home pro! ducts include hand held vacuums, paint tools and cleaning appliances. The hand tools, fasteners and storage business sells measuring and leveling tools, planes, hammers, demolition tools, knives, saws and chisels. Fastening products include pneumatic tools and fasteners including nail guns, nails, staplers and staples. Storage products include tool boxes, sawhorses and storage units.

Security

The Security segment consists of the electronic security solutions and the mechanical access solutions businesses. Annual revenues in the Security segment represented 26% of the Company�� total revenues in 2011. The electronic security solutions business designs, supplies and installs electronic security systems and provides electronic security services, including alarm monitoring, video surveillance, fire alarm monitoring, systems integration and system maintenance. Purchasers of these systems typically contract for ongoing security systems monitoring and maintenance at the time of initial equipment installation. The electronic security business also sells healthcare solutions, which includes medical carts and cabinets, asset tracking solutions, infant protection, pediatric protection, patient protection, wander management, fall management, and emergency call products.

The electronic security solutions business sells to consumers, retailers, educational, financial and healthcare institutions, as well as commercial, governmental and industrial customers. Products are sold predominantly on a direct sales basis. The mechanical access solutions business sells and installs automatic doors, residential and commercial hardware, locking mechanisms, electronic keyless entry systems, keying systems, tubular and mortise door locksets. The mechanical access solutions business sells to both residential and commercial customers, with distribution through direct sales, through retailers (including home centers) and, through third party distributors.

Industrial

!

The In! dustrial segment consists of the industrial and automotive repair tools, engineered fastening and infrastructure businesses. Annual revenues in the Industrial segment represented 24% of the Company�� total revenues. The industrial and automotive repair business sells hand tools, power tools, and engineered storage solution products. The business sells to industrial customers in a variety of industries and geographies. The products are distributed through third party distributors, as well as a direct sales force. The engineered fastening business primarily sells engineered fasteners designed for specific applications. The product lines include stud welding systems, blind rivets and tools, blind inserts and tools, drawn arc weld studs, engineered plastic fasteners, self-piercing riveting systems and precision nut running systems.

The business sells to customers in the automotive, manufacturing, and aerospace industries, amongst others, and the Company's products are distributed through direct sales forces. The infrastructure business consists of the CRC-Evans business, and the Company�� hydraulics business. The business�� product lines include custom pipe handling machinery, joint welding and coating machinery, weld inspection services and hydraulic tools and accessories. The business sells to the oil and natural gas pipeline industry and other industrial customers. The products and services are primarily distributed through a direct sales force.

Advisors' Opinion:

• [By Ben Rooney]

  Stanley Black & Decker (SWJ) tumbled roughly 10% after the power tools maker lowered its full-year earnings outlook. The company said it expected "uncertainty created by the U.S. government's sequestration and shutdown" to hurt business and consumer spending.

Top 10 Prefered Companies To Own For 2015: Yongye International Inc.(YONG)

Yongye International, Inc. engages in the research, development, manufacture, and sale of fulvic acid based crop and animal nutrient products for the agriculture and stock farming industry in the People?s Republic of China. It provides liquid crop nutrient products that consist of fulvic acid compound base and nutrients for the health of crops; and powder animal nutrient products, which include fulvic acid compound base and additional nutrients, and Chinese herbs that reduce inflammation for dairy cows The company markets its products under the Shengmingsu trade name through a network of county-level distributors and independently owned branded retailers. Yongye International, Inc. is based in Beijing, the People?s Republic of China.

Advisors' Opinion:

• [By John Kell and Lauren Pollock var popups = dojo.query(".socialByline .popC"); ]

  Yongye International Inc.(YONG) said its shareholders rejected a go-private deal with Full Alliance International Ltd. that values the Chinese fertilizer company at $339 million. Shares declined 13% to $5.68 premarket.

• [By Lisa Levin]

  Yongye International (NASDAQ: YONG) shares touched a new 52-week high of $6.97 after the company accepted a revised go private bid at $7.10 per share.

Top 10 Prefered Companies To Own For 2015: Qualys Inc (QLYS)

Qualys, Inc. (Qualys), incorporated on December 30, 1999, is a provider of clouds security and compliance solutions that enable organizations to identify security risks to their information technology (IT) infrastructures, help protect their IT systems and applications from cyber attacks and achieve compliance with internal policies and external regulations. The Company designed its QualysGuard Cloud Platform to transform the way organizations secure and protect their IT infrastructures and applications. The Company's cloud platform offers an integrated suite of solutions that automates the lifecycle of asset discovery, security assessments, and compliance management for an organization's IT infrastructure and assets, whether they reside inside the organization, on their network perimeter or in the cloud.

The Company provides its solutions through a software-as-a-service model, primarily with renewable annual subscriptions. These subscriptions require customers to pay a fee in order to access the Company's cloud solutions. The Company's QualysGuard Cloud Platform consists of a suite of IT security and compliance solutions that leverage the Company's shared and extensible core services and its scalable multi-tenant cloud infrastructure. The Company's suite of solutions provides security intelligence by automating the life cycle of IT asset discovery, security assessment and compliance management. The Company's cloud platform's infrastructure includes integrated services that deliver a automated and scalable scanning infrastructure capable of scanning IT systems and Web applications, inside and outside corporate firewalls. The Company also provides open application program interfaces (APIs), and other developer tools that allow third parties to embed its technology into their solutions and build applications on its cloud platform.

The Company's suite of solutions, which the Company refers to as the QualysGuard Cloud Suite, includes Vulnerability Management, Web Application Sca! nning, Malware Detection Service, Policy Compliance, PCI Compliance and Qualys SECURE Seal. The Company's customers can subscribe to one or more of the Company's security and compliance solutions based on their initial needs and expand their subscriptions over time to new areas within their organization or to additional QualysGuard solutions. The Company offers two editions of its QualysGuard Cloud Suite, the Enterprise edition for large and medium-sized enterprises and the Express edition for small and medium-sized businesses.

QualysGuard Vulnerability Management (QualysGuard VM), is a solution that automates network auditing and vulnerability management across an organization, including network discovery and mapping, asset management, vulnerability reporting, and remediation tracking. QualysGuard Policy Compliance (QualysGuard PC) allows customers to analyze and collect configuration and access control information from their networked devices and Web applications and automatically maps this information to internal policies and external regulations in order to document compliance.

QualysGuard PCI Compliance (QualysGuard PCI) provides organizations that store cardholder data a automated solution to verify and document compliance with PCI DSS. QualysGuard Web Application Scanning (QualysGuard WAS) uses the scalability of its cloud platform to allow customers to discover, catalog and scan a large number of Web applications. QualysGuard Malware Detection Service (QualysGuard MDS) provides organizations with the ability to scan identify and remove malware infections from their Websites. QualysGuard Web Application Firewall (QualysGuard WAF) delivers enterprise-grade Web application security without associated with appliance-based Web application firewall solutions. QualysGuard SECURE Seal helps organizations demonstrate to their online customers that they maintain a proactive security program.

Core Services include asset tagging and management, reporting and dashboards! , questio! nnaires and collaboration, remediation and workflow, big data correlation and analytics engine, and alerts and notifications. The Company�� infrastructure layer, which it refer to as its Infrastructure, includes the data, data processing capabilities, software and hardware infrastructure and infrastructure management capabilities that provide the foundation for its cloud platform and allow the Company to automatically scale its Infrastructure and Core Services to scan millions of Internet protocols (IPs).

The Company competes with Hewlett-Packard Company, Imperva, Inc., International Business Machines Corporation, McAfee, Inc., Symantec Corporation, Barracuda Networks, Inc., BeyondTrust Software, Inc., Lumension Security, Inc., nCircle Network Security, Inc., NetIQ Corporation, Rapid7 LLC, Tenable Network Security, Inc. and Trustwave Holdings, Inc.

Advisors' Opinion:

• [By Jake L'Ecuyer]

  Equities Trading UP
  Qualys (NASDAQ: QLYS) shares shot up 10.23 percent to $21.07 after the company reported upbeat quarterly results.

  Shares of Office Depot (NYSE: ODP) got a boost, shooting up 15.95 percent to $4.84 after the company reported upbeat quarterly earnings and announced its plans to close at least 400 stores in the US.

• [By Jake L'Ecuyer]

  Equities Trading UP
  Qualys (NASDAQ: QLYS) shares shot up 8.24 percent to $20.68 after the company reported upbeat quarterly results.

  Shares of Office Depot (NYSE: ODP) got a boost, shooting up 15.95 percent to $4.84 after the company reported upbeat quarterly earnings and announced its plans to close at least 400 stores in the US.

Top 10 Prefered Companies To Own For 2015: Varian Medical Systems Inc.(VAR)

Varian Medical Systems, Inc. designs, manufactures, sells, and services equipment and software products for treating cancer with radiotherapy, stereotactic radiotherapy, stereotactic body radiotherapy, stereotactic radiosurgery, and brachytherapy worldwide. Its Oncology Systems segment offers products, such as linear accelerators, brachytherapy afterloaders, treatment simulation and verification equipment, and accessories; and information management, treatment planning, and image processing software. This segment serves university research and community hospitals, private and governmental institutions, healthcare agencies, doctors? offices, and cancer care clinics. The company?s X-ray Products segment provides x-ray tubes for use in a range of applications, including computed tomography scanning, radiographic or fluoroscopic imaging, mammography, special procedures, and industrial applications; and flat panel digital image detectors for filmless x-ray imaging. It sells t hese products to imaging systems original equipment manufacturers that incorporate them into their medical diagnostic, dental, veterinary, and industrial imaging systems; independent service companies; and directly to end-users. The company also designs, manufactures, sells, and services Linatron x-ray accelerators, imaging processing software, and image detection products for security and inspection purposes, such as cargo screening at ports and borders, and nondestructive examination in various applications. In addition, it develops products and systems for delivering proton therapy; and technologies in the areas of digital X-ray imaging technology, volumetric and functional imaging, improved X-ray sources, and technology for security and cargo screening applications. The company was formerly known as Varian Associates, Inc. and changed its name to Varian Medical Systems, Inc. in April 1999. Varian Medical Systems, Inc. was founded in 1948 and is headquartered in Palo Alto , California.

Advisors' Opinion:

• [By WWW.GURUFOCUS.COM]

  Varian Medical Systems (VAR) has been a staple in our portfolio since the fall of 2005. The stock has rebounded smartly, up +31% from its April 2013 lows through the first quarter. Varian continues to be the global market share and technological leader in the radiation oncology business. Unfortunately, the incidence of cancer continues its deadly growth. In the U.S. alone, the American Cancer Society projects that some 1.7 million people will be diagnosed with cancer. Expectations of new cancer cases around the world are approaching 25 million over the next three decades. Of these new cases, approximately two-颅��hirds will be treated with some sort of radiation therapy. Varian has been at the forefront of linear particle accelerator since the late 1940's. Today the Company's installed base numbers over 7,300 LINACS across the globe ��a 60% market share. As impressive as that may sound, the availability of state-颅��f-颅��he-颅��rt radiation therapy (radiosurgery and proton therapy) outside of the U.S. is woefully low. The developed world has access to 35 to 110 LINACS per million people over the age of 65. In the U.S., it's 110 LINACS per million. Western Europe and Japan is 35 to 65 per million. In India, Africa, Eastern Europe and Southeast Asia there are between 1 and 20 machines per million. In China there is less than 10 machines per million. Complementing the Company's long-颅��erm growth opportunity in radiation therapy is the secular trend in the "digitization of radiology," which is a key driver of their lucrative software and flat-颅��anel services business, plus their X-颅��ay tube replacement business that sells into the installed base of competing LINACS. The Company's initiatives to drive greater productivity continue to bear fruit. In 2013 sales per employee increased 14% and operating income per employee increased 20% over 2012 levels. Such productivity has helped the Company offset the continuing losses as they rollout their pro

• [By Ben Levisohn]

  Varian Medical Systems (VAR) and Stryker (SYK) are heading in opposite directions after reporting very different earnings after the close today.

  Getty Images

  Shares of Stryker have gained 0.5% to $79–they were up as much as 3.1% at $81–after reporting a profit of $1.23, beating forecasts for $1.22, while revenue came in at $2.47 billion, ahead of forecasts for $2.43 billion. Stryker also said that its full year earnings would come in between $4.74 and $4.90 using new amortization rules. Because of that change it’s hard to tell how that compares to consensus estimates for $4.57.

  Varian, meanwhile, has dropped 0.6% to $82 after it said it earned 91 cents a share, up 6% from a year ago and ahead of analyst forecasts for 90 cents, according to FactSet. Varian also predicted that full-year earnings would come in between $4.22 and $4.32 a share, straddling the consensus estimate of $4.29.

• [By Monica Gerson]

  Varian Medical Systems (NYSE: VAR) is projected to post its Q4 earnings at $1.12 per share on revenue of $779.02 million.

  Thermo Fisher Scientific (NYSE: TMO) is estimated to report its Q3 earnings at $1.28 per share on revenue of $3.18 billion.

Top 10 Prefered Companies To Own For 2015: Akamai Technologies Inc.(AKAM)

Akamai Technologies, Inc. provides content delivery and cloud infrastructure services for accelerating and improving applications over the Internet in the United States and internationally. The company offers application and cloud performance solutions to enhance the operation of the applications used by enterprises to connect with their employees, suppliers, and customers. Its solutions include Web Application Accelerator, which enables enterprises to run various applications; and IP Application Accelerator that is designed to optimize the performance, availability, and real-time sensitivity associated with IP-enabled applications delivered over Internet-related protocols. The company also provides video and software solutions that are designed to enable enterprises to execute their large file management and distribution strategies, which include media delivery solution to entertainment industry; and electronic software delivery solution that handles the distribution of s oftware for its customers. In addition, it offers Website optimization services for accelerating business-to-consumer Websites that integrate collaborative content and applications into their online architecture; security and protection solutions that address the Internet security requirements; and network operator solutions, which provide custom solutions to commercial and government customers. Further, the company provides mobile content adaptation solution; and advertising decision solutions that enable advertisers, agencies, publishers, and networks to buy and sell advertising, as well as network data feeds, Website analytics, and business performance management services. It markets and sells its services and solutions through direct sales and services organization; and through active channel partners. Akamai Technologies, Inc. was founded in 1998 and is headquartered in Cambridge, Massachusetts.

Advisors' Opinion:

• [By Tim Beyers]

  Akamai Technologies (NASDAQ: AKAM  ) soared as much as 21% as the leading content delivery network served more online media traffic than expected. Both revenue and earnings easily topped estimates.

Top 10 Prefered Companies To Own For 2015: Julius Baer Gruppe AG (BAER)

Julius Baer Gruppe AG (the Group) is a Switzerland-based private banking group, with an exclusive focus on servicing and advising private clients and independent asset managers. The Group has a global presence with approximately 50 locations in more than 25 countries and jurisdictions. Julius Baer Gruppe AG was established through spin off from Julius Baer Holding AG�� businesses into two independent entities, namely the Company, together with its subsidiaries, comprising Bank Julius Baer & Co Ltd as its principal operating entity, and GAM Holding, together with its subsidiaries, comprising GAM and the Julius Baer-branded asset management business, which includes the private label funds business that formerly was part of Julius Baer Holding Ltd�� Bank Julius Baer segment. The Group diversifies its operations into geographical segments, including Switzerland, rest of Europe, Americas, and Asia and Other Countries. Advisors' Opinion:

• [By Corinne Gretler]

  Julius Baer Group Ltd. (BAER) rallied 5.7 percent to 42.04 francs. Switzerland�� third-biggest wealth manager said increased client trading boosted margins as it integrated Merrill Lynch businesses acquired from Bank of America Corp. last year. The gross margin, which reflects how much the bank makes in revenue on managed client assets, rose to 102 basis points in the first half, from 98 basis points in the year-earlier period.

Top 10 Prefered Companies To Own For 2015: Eco Building Products Inc (ECOB)

ECO Building Products, Inc. (ECOB), incorporated on March 21, 2007, is a manufacturer of wood products treated with an eco-friendly chemistry that protects against fire, mold/mycotoxins, fungus, rot-decay, wood ingesting insects and termites with ECOB WoodSurfaceFilm and fire retardant coating). ECOB�� newest product, Eco Red Shield also serves as a fire inhibitor protecting lumber from fire, slowing ignition time and reducing the amount of smoke produced. The Eco Building Products line includes dimensional lumber, wall and floor panels, I-joists, GluLam Beams, laminated veneer lumber (LVL) beams, truss lumber and trim. These products can be coated at its production facilities and at the mill or distributor with its formula and coating machines. Its products include Eco Red Shield, Eco Clear Shield, Eco Blue Shield, Eco Shelter, Eco Cabinets, Smart Components Seismic Walls, Eco LVL Beam, Eco I Joist, Eco Corbels, Eco Trim, Eco LVL Studs, and Calvert Curved Beams.

As of June 30, 2012, the Company owned 100% of E Build & Truss, Inc. (E Build), Red Shield Lumber, Inc. (Red Shield) and Seattle Coffee Exchange (Seattle). Red Shield was formed for the purpose of opening a plant in Canada utilizing the Company�� red coating process for sale and distribution. As of December 31, 2011, the wholly owned subsidiary had little operating activity. E Build was formed for the purpose of operating the Company�� Framing Labor and Truss manufacturing activities. ECOB has developed a line of eco-friendly protective wood coatings that extend the life of framing lumber and other wood used in the construction of single-family homes, multi-story buildings, as well as The Eco Shelter. In December 2011, the Company formed Seattle in the State of California. Seattle is a coffee shop which is located in the 1st floor of the Company�� corporate headquarters in Vista, California. This wholly owned subsidiary has not started its operations, as of June 30, 2012.

The Company�� eco-friendly formula ! controls moisture and protects lumber from mold, mildew, fungus, decay, rot, termites (and other wood boring insects including Formosan termites), while simultaneously serving as a fire inhibitor. The Company�� eco-friendly formula was designed for staining - it controls moisture and protects lumber from mold, mildew, fungus, decay, rot, termites while simultaneously serving as a fire inhibitor. ECOB�� eco-friendly formula controls moisture and protects lumber from mold, mildew, fungus, decay, rot, termites (and other wood boring insects including Formosan termites). Eco Red Shield Smart ComponentsO wall systems are pre-engineered seismic wall systems. The Company�� pre-engineered and pre-packaged kit comes pre-cut and ready to assemble with hammer and nails - the simple design makes it ideal for rapid response relief housing, events, offices, meeting halls, storage sheds, medical clinics and more. It is available in a range of sizes and floor plans.

Eco has delivered cabinet solutions for kitchen, bath, garage and office space. Smart Components is made with Eco Red Shield Protected Lumber for builders in seismic hot spots, such as California, Mexico and Japan. The I beam joist is eco-friendly solution to large structural beams. Laminated Eco Trim is protected on all six sides and available in any protective coatings providing a nearly impenetrable barrier against moisture, mold and insects. It also offers an ultra-smooth surface for painting and a clean, finished look that builders and homeowners desire.

The Company competes with Arch Chemical and Osmose, Inc.

Advisors' Opinion:

• [By Peter Graham]

  Small cap green stocks Eco Depot Inc (OTCMKTS: ECDP), Eco Building Products Inc (OTCMKTS: ECOB) and Profire Energy, Inc (OTCBB: PFIE) has been getting some extra attention lately in various investment newsletters thanks to paid promotions or investor relation campaigns. Of course, there is nothing wrong with properly disclosed promotions and investor relations campaigns, but small cap green stocks tend to be extra volatile when compared with other stocks. So how in greenbacks will these three small cap green stocks produce for investors? Here is a quick reality check:

Why Donald Sterling Might Win in the Sale of the Clippers

Source: Flickr / Noize Photography.

Think Donald Sterling is appropriately being punished by being forced to sell the L.A. Clippers? Troublingly, it turns out this may actually be a good thing for him.

The demand of the league
It isn't worth rehashing the awful remarks that brought Sterling into this mess. And it should come as no surprise ESPN reported he was going to fight the demands of the NBA "to the bloody end," and would do all he could to ensure his Clippers weren't sold.

What is regrettably lost in all of this is Sterling might be the big winner as a result of his disgusting remarks.

Staples Center. Source: Flickr / David Jones.

The troubling truth
Consider the reality that there is only one Clippers team.

When supply is fixed at one, the price is only determined by demand. It's a straight line, and it will only get sold for what people are willing to pay for it.

And in the case of Donald Sterling, that may be exactly what is happening. With the widespread media attention surrounding the controversy, it's not difficult to imagine some of the possible groups interested in buying the Clippers are those who would've never considered it otherwise. Perhaps their thought to buy the Clippers was driven solely by the fact it's such a well-known sale.

After all, it was just last month when the Milwaukee Bucks were sold for $550 million, and Sports Illustrated said, "The sale of the team concludes a quiet, extended process carried out with specific ends in mind." 

And while there would undoubtedly be more demand for the Clippers than the Bucks under normal circumstances, a "quiet" and "extended process" is the exact opposite of what the sale of the Clippers will ultimately be.

ESPN said today there are "at least six serious groups" who've approached Sterling's wife to buy the team already. And last week it also reported "the number of bidders for the Clippers is expected to stray well into double digits," provided the league is able to "force the sale of the team."

So does that mean demand will double? While we cannot say for certain, we do know the sale is expected to top $1 billion. But it was just this January when Forbes pegged the value of the Clippers at "just" $575 million. With the demand on the rise, and the supply fixed at one, the price is apparently only moving up. Meaning Sterling will only get more from the sale.

The surprising bright spot
To think a deplorable man like Sterling could actually benefit by getting a higher price than he would otherwise as a result of the attention devoted to him is somewhat defeating. Yet there is one lone bright spot.

Sterling's remarks note:

On top of that punishment, forcing a sale rather than allowing the team to pass by succession to the remaining spouse or heirs would trigger an avoidable capital gains tax estimated to be more than $300 million to $500 million.

If the price rises, it means Sterling will end up having to pay more in taxes. And while we may all think what we will about taxes, it turns out this may be one instance where the taxes appropriately make all Americans -- but one -- a little richer.

Your credit card may soon be completely worthless
The news about the possibility of Sterling coming out on top is troubling, but it turns out supply and demand can actually benefit us all. The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich as the demand for one company's product sky rockets. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

Baron Funds Comments on MasterCard

After rising 70% last year, shares of credit card company MasterCard, Inc. fell 11% in the first quarter on lower than expected fourth quarter earnings and forward guidance, due to higher incentive payments to card issuers and the loss of a large bank customer. In addition, a recent court decision reduced the likelihood that MasterCard would take market share from Visa in signature debit processing. We retain conviction based on high barriers to entry and a long runway for growth in electronic payments, particularly outside the U.S., where MasterCard generates most of its revenue.

From Baron Funds' first quarter 2014 commentary.

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

Currently 0.00/512345 Rating: 0.0/5 (0 votes)

Subscribe via Email Subscribe RSS Comments Please leave your comment:
More GuruFocus Links

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

MORE GURUFOCUS LINKS

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

MA STOCK PRICE CHART

Cliffs Natural Resources: ‘Breach of Covenants Possible’ Despite Cost Cuts, RBC Says

After yesterday’s close, Cliffs Natural Resources (CLF) said that it would cut capital spending by $100 million in 2014, its remedy for continued weakness in iron and coal.

Wells Fargo’s Sam Dubinsky says Cliffs’ management is “doing the best it can” but that “pain is inevitable.” He explains why:

While we think the new CEO is doing a commendable job tightening operations, we see no easy way out for CLF shares due to negative long-term fundamentals for iron ore and ongoing cost challenges in Canada. Note we estimate Cliff’s recurring EBITDA at ~$500M at today’s iron ore pricing, below current Street estimates near $880-$890M for 2014/2015, though the cap-ex cut should keep free cash flow near break-even.

Agence France-Presse/Getty Images

RBC Capital Markets’ Fraser Phillips and team thinks Cliffs Natural Resources could breach its debt covenants:

Cliffs’ reduction of its capital expenditure will help it to conserve cash during the current weak iron ore pricing environment. While we view the capital outlay reduction as a positive, Cliffs’ debt covenant holiday is over, and a breach of covenants is possible if the current weak iron ore price environment persists.

Cliffs must maintain a total funded debt/EBITDA ratio less than 3.5 and an EBITDA to interest expense ratio for the trailing four quarters of at least 2.5. At the end of Q1/14, we calculate that Cliffs’ debt/EBITDA ratio was 2.5 and EBITDA/interest was 7.5, and we expect Cliffs to end the year with debt/EBITDA of 3.1 and EBITDA/interest of 6.5. However, our current iron ore price forecast for 2014 is $119.25/tonne CFR China. Our analysis indicates that if the average spot price for 2014 is $114.30/tonne CFR China or below, Cliffs will trigger its total funded debt/ EBITDA covenant. This corresponds to a spot price for the remainder of the year of $110.25/tonne or below.

Shares of Cliffs Natural Resources have slid 3.9% to $15.73 at 11:13 a.m., while other iron miners have gotten hits as well. Rio Tinto (RIO) has dropped 2.8% to $53.04, BHP Billiton (BHP) has fallen 1.3% to $69.18 and Vale (VALE) is off 0.7% at $12.98.

Why a 1963 Pontiac fetched $530,000 at auction

Paying more than half a million dollars for a 1960s Pontiac is beyond what most car fanatics could ever fathom. For many, a good stock full-size Pontiac of the era might be worth $30,000 or $40,000 in good condition.

But clearly, this is a special Pontiac.

Earlier this month, Mecum Auctions banged the gavel on an Indianapolis auction of a 1963 Pontiac Catalina that came from a group of 14 known by a strange name — the "swiss cheese." It went for $530,000, which may have seemed like bargain to the buyer. After all, it was estimated before the auction to be worth $600,000 to $800,000.

Mecum says it was the most famous of the group, a car that came to the rescue of Pontiac's racing reputation.

As the auctioneers tell it, Pontiac's drag-racing fortunes were going poorly as 1962 drew to a close. The brand was being overpowered by Ford and Chrysler with bigger engines and lighter cars.

Pontiac engineers sought to lighten the racing Catalina by substituting as many steel parts as possible with aluminum, like the hood and fenders. Plexiglass was subsituted for glass. And 120 holes were drilled into the sides of the steel frame that some likened to the look of swiss cheese. Hence the name.

The heavily-modified 421-inch cubic-inch engine developed 410 horsepower.

The work paid off. The car, sponsored by Packer Pontiac of Detroit, set a National Hot Rod Association record in 1963 in the C/Stock class of 12.27 seconds, a speed of 114.64 mph.

Having set the record, the car went out of the limelight until it was rediscovered in the late 1970s and became part of a private collection. Today, after restoration, it looks just as it did in 1963.

Consumers' Hard-Earned Lessons Help Keep Debt in Check

Alamy Have consumers forgotten what it was like during the depths of the Great Recession? Not according to the latest data from Equifax (EFX). The company reports that credit balances rose year over year in the 12 months ending in July. It is the first such increase in five years. The Results Are Mixed American banks hold $536.5 billion in credit card debt as of this writing. That's up marginally from $533.3 billion a year ago at this time, Equifax reports. And yet, interestingly, credit card revenue wasn't up across the board last year. American Express (AXP) saw a 1.6 percent increase in U.S. card revenue, while JPMorgan Chase (JPM) suffered a 4.5 percent decline in credit card proceeds in 2012. But the story doesn't end there. Despite the rise in credit card balances, consumers have made improvements in managing other types of debt. This is definitely a story of silver linings peeking out from under the gray news. Here's a closer look at the four key areas Equifax tracks in its annual National Consumer Credit Trends Report. 1. Credit card balances are rising again, but delinquencies are not. Blame new credit applications for rising balances. According to Equifax, consumers applied for and received $72.9 billion in new credit from January to May -- a 6 percent increase over the same period last year. New loans and new credit now sit at a five-year high. The good news? Delinquencies fell to just 1.86 percent in July -- an 11 percent decrease year over year. 2. Fewer young adults will enter the workforce financially crippled, but ... : Student loan applications fell 9.3 percent from January to May. The bad news? Balances grew 4 percent to $24.3 billion. Those who carry student debt are shouldering more of a load than their graduating peers, leading to record write-offs. Regulators had already forgiven $11.6 billion in student debt through May, an eight-year-high and 58 percent more than than last year at this time. 3. We're ready to go on a spending bender. Good news for Ford Motor (F) and other car makers. Dealers and banks have teamed up to boost auto financing from $745.3 billion at this time last year to $826.8 billion as of Equifax's report, a 10.9 percent increase. 4. We're also ready to buckle down on our biggest debt -- real estate. Home loan write-offs fell more than 22 percent and now stand at their lowest level since 2007. Severe delinquencies (i.e., 30 or more days past due) fell 22 percent while primary mortgages 90 days past due or in foreclosure fell 25 percent to a five-year low. Home equity installment debt fell 4.1 percent while revolving equity debt fell 8.9 percent. Count them all as signs of a sustained recovery in the housing market. "Only two major consumer credit segments are currently growing: auto financing and student loans," said Equifax Chief Economist Amy Crews Cutts in a press release. "In all other segments, consumers are reducing their debt burdens, either negatively, through foreclosures and bankruptcies, or positively, through payoffs -- payoffs are dominating in most cases today. We expect mortgage balances to begin rising again over the next several months as new home purchase loans overtake foreclosures and payoffs." Trading burdensome credit card debt for tax-deductible mortgage debt? Talk about a long-overdue step up. So while there's still a ways to go -- $536 billion in credit card debt isn't to be taken lightly -- efforts to pay off existing balances and avoid late payments and other fees suggest many of us are making progress.

Could Zinc Be The Next Base Metals Star?

A combination of Indonesian ore restrictions, and fears over possible trade sanctions on Russian miners, has seen nickel emerge as the base metals suite's darling during 2014. The metal has advanced 40% since the turn of the year, breaching 27-month peaks above $21,000 per tonne in the process, and more strength looks on the agenda as these supply concerns rumble on.

But for many, a backcloth of declining supply levels is also expected to propel zinc prices skywards in the near future. Bank of America-Merrill Lynch expects the galvanising metal to breach $2,400 per tonne as soon as next year, a sizeable 15% improvement if realised and with many tipping further price growth further out.

Market deficit poised to worsen in coming years

Like nickel, the zinc market is beset by worries over production levels over both the short and near term. However, wider macroeconomic fears have constrained zinc's price performance in recent months, and prices are essentially flat from those recorded at the start of 2014 around $2,100 per tonne.

Still, a spate of mine closures scheduled from the middle of next year looks set to become an increasingly-significant price driver. MMG Limited, one of the planet's biggest zinc producers and owner of the Century mine in Queensland — by far Australia's largest zinc project — expects zinc production from the asset's open pit to range between 465,000 and 480,000 tonnes this year.

This marks a significant decline from 488,233 tonnes in 2013 and 514,707 tonnes in the previous year, and last output from the project is anticipated during the middle of 2015. This downtrend is mirrored by numerous other major projects across the globe. On top of this, the effect of reduced commodity prices on capital expenditure across the mining community is stymieing the development of the next generation of 'super projects.'

Meanwhile, a steady improvement in the global economy continues to bolster demand for the metal, which is used predominantly in battery production as well as to coat iron and steel to protect against corrosion. Galloping automobile demand in emerging markets, in addition to resurgent car sales in Western Europe and North America, has proved pivotal in driving zinc demand higher.

And significantly, a backdrop of rising construction activity in China — the Asian country is responsible for almost half of total zinc consumption — and surging domestic demand for electrical goods also bodes well for metal prices. Indeed, the International Lead and Zinc Study Group (ILZSG) estimates that Chinese apparent demand rose 7.6% last year versus 3.4% in the US and 4% in Japan.

Latest forecasts from metals specialists Sucden Financial and FastMarkets point to a 5% improvement in zinc demand in 2014, to 13.6 million tonnes, outstripping an anticipated 4% output advance to 13.5 million tonnes. These figures push last year's market deficit to 120,000 tonnes from 68,000 tonnes in 2013.

This trend of buoyant consumption outstripping production increases has been the story of the zinc market during recent years — next year's projected deficit compares markedly with oversupply of 375,000 tonnes in 2011, based on ILZSG figures, and 248,000 tonnes in 2012.

Although zinc stocks remain relatively plentiful — material currently held in London Metal Exchange warehouses currently stands at around 735,000 tonnes — levels have collapsed 25% during the past six months and now stand at their lowest since the autumn of 2011.

Of course the prospect of vast quantities of zinc being released onto the market from China is a very real threat, as the metal's role as collateral for a range of financing activities comes under greater regulatory scrutiny.

But as global metal consumption looks set to gallop steadily higher, and output from key mines is not likely to be replaced for some time, in my opinion zinc looks set to enjoy solid long-term price appreciation.

Production halt for India's iconic Ambassador

An Ambassador taxi on the streets during monsoon rain in Kolkata.

HONG KONG (CNNMoney) Hindustan Motors has suspended production of its iconic Ambassador model amid growing financial pressure and low demand for the car.

Once the vehicle of choice for Indian politicians and bureaucrats, the Ambassador's design was borrowed from Britain's Morris Oxford. The car's look hasn't changed much since the 1950's, making it one of the most enduring sights on India's streets.

While the car's popularity has diminished greatly in recent years, the Ambassador is still used today as a taxi in several Indian cities including Kolkata. Last year, the Ambassador was named world's best taxi by the popular BBC show Top Gear.

The suspension of work at Hindustan Motors' Uttarpara production facility, where the Ambassador is built, has thrown the model's future into doubt. Only a few thousand of the cars are sold each year.

The company said in a stock market filing that it was working to fix substantial problems at the factory located near Kolkata.

"The Company has been transparent in sharing updates about the worsening conditions at its Uttarpara Plant which include very low productivity, growing indiscipline, critical shortage of funds, lack of demand for its core product, the Ambassador, and large accumulation of liabilities," the statement said.

  Hottest cars at the NY Auto Show

Rajiv Saxena, a company spokesman, said that the suspension of work at the factory did not mean permanent closure.

"We have suspended operations to set things right for revival," he ! said.

-- CNN's Ravi Agrawal contributed reporting from New Delhi.

How to assess a real estate agent

Selling or buying a home can come with a lot of confusion. If you're in the market for a real estate agent, ask these questions to find the best fit:

• What's your experience? Know how long your agent has been in business, whether this is a full- or part-time job and if this professional specializes in your neighborhood or part of town (depending on the size of the area you live in). Ask the average length of time this agent's homes sit on the market, the homes' list-price-to-selling-price ratio and types of property the agent worked with.

• How will you keep me updated? Any successful relationship depends on communication. Understand the frequency and form of updates you'll receive. Indicate the level of information you expect in terms of buyer interest, new property listings, open house feedback and more.

• What are my home's drawbacks? Your agent must give you honest feedback to set appropriate expectations for the home buying or selling process. If you're selling, your agent needs to help you identify any issues affecting the value of your home.

• What's your strategy? Whether your agent uses a for-sale sign on your front lawn, a direct mail campaign or open houses and online marketing, make sure you're aware of the strategy and, more important, comfortable with it.

If you're buying, know what type of competing buyers are in your market, how the agent helps you search for a new home and handles multiple offers and the agent's intensity of activity. For example, does the agent drive you to prospective homes or just email you listings?

• Do you work alone? Understand if your agent handles all details solo or as part of a team. If your agent uses the team approach, find out what areas your agent specializes in and who else you may work with and in what capacity.

• How many clients do you represent? This helps you gauge how much of your agent's time you may receive. Is the agent spread too thin or not representing many clients at all?

The correc! t answer depends on your personal preference – time or experience. Preferably, your agent blends both.

• Can I see your references? Typically you find these on Yelp these days. If not, ask for at least three references from clients. When screening, ask about the agent's accessibility, personality, professionalism and communication and about the clients' satisfaction.

• How much do you charge? Most real estate fees are negotiable. Agents typically charge a percentage of the deal, averaging 2% to 4% on each side of the transaction. Percentages vary by agent; total commissions are around 6%.

Check the average for your area before going into talks. Make sure you understand the agent's cancellation policy and any other fees involved.

You can also use online assessment tools on sites like the National Association of Realtors.

• What else should I ask? Use your judgment regarding the completeness and honesty of the answer you hear.

Ensure your agent takes the time to educate you and make you feel comfortable; don't rush to make this decision or enter this relationship. Note the agent's observations about your home and effort to explain key terms without real estate jargon.

Above all, assess to your satisfaction the agent's genuine interest in helping you reach your goals.

MORE: Jeff Rose on claiming the child tax credit

MORE: Gabe Muller on apps to manage your money

MORE: Raul Elizalde on 2 problems for this market

Mary Beth Storjohann, CFP, is the founder of Workable Wealth, an RIA in San Diego, and is a member of the AdviceIQ Financial Advisors Network, which is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

Sears ‘Significantly Overvalued,’ Credit Suisse Says

Sears (SHLD) is sagging once again after the shrinking retailer reported financial results this morning.

Associated Press

Sears reported a loss of $402 million, much bigger than the year-ago loss of $279 million, while revenue declined to $7.88 billion, which beat analyst forecasts of $7.71 billion. Gross margins fell to 23.2% from 25.5%, while same-store sales rose 0.2%.

Credit Suisse analysts Gary Balter and Andrew Kinder tries to give Sears the benefit of the doubt:

Some investors…believe that we are too negative on Sears Holdings’ outlook…So let's accept their math and take the low end of their assumed improvements. Based on that, we would add $1 billion to EBITDA from initiatives, which adding to trailing twelve months would give them positive EBITDA (yes you read that right) of $300 million. Here is the problem. The bulls on Sears argue for the most part that the value is in the real estate and brand names. If Mr. Lampert is trying to make it as an operator we should value them as such, but that’s a bigger problem. Using a positive $300 million EBITDA, that would imply a multiple of 29.5x lets say in 2017 to give them time for the turnaround. That would place their multiple well above anything we cover, including our best growth names such as The Container Store (TCS), Tractor Supply (TSCO)…Lumber Liquidators (LL), and CarMax (KMX). So if one accepts the turnaround and we give them an eight multiple of EBITDA three years out, a somewhat generous multiple for a non-top-line grower, then the value of the equity would be negative. H'mmm. Maybe the company should explore the asset sale. Said another way, this remains a significantly overvalued stock and while we are not moving to a negative target price, we maintain our $20 price target.

Shares of Sears have dropped 3.9% to $5.13 at 10:14 a.m., while the Container Store has gained 0.8% to $25.60, Tractor Supply has ticked up 0.2% to $64.07, Lumber Liquidators has risen 1.6% to $80.77 and CarMax is up 0.4% at $44.53.

Dollar index rises to nearly seven-week high

NEW YORK (MarketWatch) — The dollar rose Thursday, with a broad gauge of the currency's strength hitting its highest level in nearly seven weeks, as investors sifted through U.S. economic data that included a strong reading on manufacturing.

Click to Play Jobless claims higher than expected

Brendan Conway takes a look at the markets, including three stocks to watch Thursday. Photo: Getty.

The ICE dollar index (DXY) , which pits the greenback against six other currencies, rose to 80.226 from 80.086 late Wednesday. That's the highest level since April 4, according to FactSet. The WSJ Dollar Index (XX:BUXX) , an alternate gauge of dollar strength, rose to 73.07 from 72.99.

U.S. manufacturing activity rose to a 3-month high in May, according to a flash purchasing managers index from Markit. Existing-home sales rose 1.3% in April to a seasonally adjusted annual rate of 4.65 million. That was the first increase since December but the gain missed market expectations, according to TD Securities. Housing data is of particular interest since Federal Reserve Chairwoman Janet Yellen said earlier this month the recent housing-market weakness should be monitored.

The PMI print was "a very healthy number, enough to offset any disappointment on the home-sales front," said Brad Bechtel, managing director at Faros Trading.

Weekly jobless claims jumped by 28,000 to 326,000 in the week ended May 17, coming in higher than expected. Continuing claims, which are filed by people already receiving benefits, fell by 13,000 to a seasonally adjusted 2.65 million in the week ended May 10.

Investors are speculating when the Fed could begin to raise interest rates, which would make dollar-denominated assets more attractive. Minutes from the Fed's April meeting, released Wednesday, revealed central-bank officials had discussed several ways to eventually tighten monetary policy but didn't decide on specific tools.

The dollar (USDJPY)  rose to 101.73 yen from ¥101.44 late Wednesday. Treasury yields rose Thursday.

The euro (EURUSD)  fell to $1.3654 from $1.3683 late Wednesday.

Markit's euro-zone composite purchasing managers index ticked down to 53.9 in May from 54.0 in April but is on track for its best quarter in three years. Performance continued to diverge between countries, with France swinging into contraction while Germany boasted strong growth.

The continued recovery in the euro zone, as demonstrated by the PMI data, is likely to dissuade the European Central Bank from taking aggressive easing actions at its June meeting, said Chris Williamson, chief economist at Markit, in a statement.

The British pound (GBPUSD)  declined to $1.6869 from $1.6899 in the prior session.

Investors also paid attention to a surprisingly strong report on Chinese manufacturing. HSBC's Chinese preliminary purchasing managers index in May rose to 49.7 from 48.1 in April, hovering just under the 50 level separating expansion from contraction.

The Australian dollar (AUDUSD)  was at 92.24 U.S. cents versus 92.34 U.S. cents.

More must-reads on MarketWatch:

Big investors are betting against housing

Pipeline through Bulgaria tests EU resolve on Russia

The biggest economic threat? Big companies

Morning MoneyBeat: Putting a Bow on Earnings Season

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

Click here to receive this morning newsletter via email

MARKET SNAP: At 6:00 a.m. ET, S&P 500 futures up 0.3%. 10-Year Treasury yield higher at 2.52%. Nymex up 77 cents at $103.10. Gold 0.1% lower at $1293.30. In Europe, FTSE 100 down 0.2%, DAX up 0.2% and CAC 40 flat. In Asia, Nikkei 225 down 0.2% and Hang Seng up 0.01%.

WATCH FOR:  No major economic data on dap. American Eagle, Booz Allen, Eaton Vance(EV), Hormel Foods(HRL), L Brands(LB), Lowe's(LOW), NetApp, PetSmart(PETM), Renren(RENN), Sina, Target, Tiffany, Trina Solar(TSL) and Williams-Sonoma(WSM) are among companies scheduled to report quarterly results.

THE BREAKFAST BRIEFING

Another earnings season is in the books. The good news: it wasn't nearly as bad as initially feared. The bad: profit growth and forward guidance don’t offer much to celebrate.

Companies have struck a cautious tone on their earnings projections for the current quarter and the rest of the year. With the economy stuck in a slow slog, the Federal Reserve paring back its stimulus and talk of rate increases ramping up, investors say earnings need to improve to justify the stock market’s latest run toward record levels.

Such a pickup may not be in the cards.

Some 473 companies in the S&P 500, or about 95% of the index, have reported quarterly results as of Tuesday morning. First-quarter profits rose just 2.0% from a year ago, according to John Butters, senior earnings analyst at FactSet. That's better than the 1.3% decline analysts predicted heading into earnings season, but it's still well below the previous quarter's 8.5% growth rate.

Many companies blamed the cold, dreary winter weather for lackluster results. U.S. economic growth was barely positive in the first three months of the year, so poor corporate results get a pass. But as the weather improves, the hope is earnings will follow suit. Analysts forecast second-quarter profit growth of 6%, FactSet data show. Those projections could be too optimistic.

About three of every four companies that have given quarterly outlooks so far have predicted results below Wall Street estimates. That level of caution is actually better than the past few quarters, but it's still a historically high figure for negative guidance.

That's making some investors nervous.

Krishna Memani, chief investment officer at Oppenheimer Funds, which oversees about $237 billion, said investors are concerned that, after a weather-induced slowdown in the first quarter, there is still no clear sign the economy has started accelerating in the second quarter.

“We were looking for a recovery in retail sales and the economy, and we’re just not seeing it,” Mr. Memani told the WSJ.

Meanwhile, worries about interest rates are also weighing on the market. Federal Reserve Bank of Philadelphia President Charles Plosser, a noted hawk, said Tuesday that the central bank may have to boost interest rates earlier than anticipated. The Fed has been gradually paring back on its highly stimulative bond-buying program this year, but most expect the Fed to keep short-term interest rates anchored near zero well into 2015.

Those comments helped spark a retreat in the stock market Tuesday. The Dow Jones Industrial Average tumbled 137 points, 0r 0.8%, to 16374, its lowest close since April 25.

To be sure, the blue-chip average still only sits 2% off its all-time high. Volatility remains historically low, deal activity has picked up and few economists are forecasting a recession anytime soon. That backdrop suggests any decline in the stock market will likely be short and shallow.

Trading volume is expected to be light through the remainder of the week ahead of Memorial Day weekend (markets are closed Monday), which could make stocks susceptible to bigger swings.

But from a longer-term perspective, any substantial advance for U.S. stocks beyond these record levels will need to be supported by strong earnings growth. With the Fed pulling back on stimulus and the economy bouncing back from the brutally cold winter, it’s time for companies to step up.

Morning MoneyBeat Daily Factoid: On this day in 1980, the second "Star Wars" movie–"The Empire Strikes Back"–was released.

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

–Tomi Kilgore contributed to this post.

STOCKS TO WATCH

Target is projected to report first-quarter earnings of 71 cents a share, according to a consensus survey by FactSet. "We remain concerned the departure of Gregg Steinhafel may foreshadow greater than expected difficulties in both markets. While the appointment of a new CEO and a resetting of expectations could prove a positive catalyst, the stock will likely confront further near-term challenges," said Bob Summers at Susquehanna International in a note.

Lowe's is forecast to post first-quarter earnings of 60 cents a share.

Williams-Sonoma is likely to report earnings of 44 cents a share in the first quarter. Analysts at UBS on Tuesday raised the stock's price target to $65 from $63 and maintained its rating at neutral.

MUST READS (LINKS)

Debt Rises in Leveraged Buyouts Despite Warnings: “Regulators have impressed upon banks that they aren’t happy with the amount of loans fueling takeovers by private-equity firms.”

Housing Investors Settle Into a Holding Pattern: “With bargains less plentiful, large housing investors are slowing property purchases and turning their focus to generating steady income from tenants.”

Credit Suisse CEO Nearly Lost Job During Tax Probe: “As a yearslong U.S. tax probe dragged on in recent months, board members at Credit Suisse(CSGN.VX) mulled actions that likely would have cost CEO Brady Dougan his job.”

Ahead of the Tape: With Target, It Helps to Aim Low: “Target’s perverse advantage going into its earnings report is that investors don’t expect much.”

GOP Sees Primaries Taming the Tea Party: “Republican leaders made significant strides in their effort to defang—or at least co-opt—the tea party as an insurgent political force.”

BOE Minutes Indicate Emerging Divisions: ”For some Bank of England officials, the time to raise interest rates in the U.K. is getting closer, as minutes of the central bank’s May meeting record ‘a variety of views on the appropriate path of monetary policy.’”

Demand High as Fannie Mae(FNMA) Sets Price Range for Risky Securities: “Investors are clamoring to buy mortgage giant Fannie Mae’s $1.6 billion offering of derivative debt securities tied to the value of some of the riskiest mortgages it guarantees.”

Heard on the Street: Deal-Making Patience May Prove Dish’s Virtue: “AT&T’s offer to buy DirecTV(DTV) seems to narrow options for Dish. But Chairman Charlie Ergen still has cards to play.”

Copper Mining Squeezed by Tight Water Supply: “Freeport-McMoRan, one of the world’s top copper miners, has invested heavily to secure access to water as copper prices have fallen 32% from highs in 2011.”

Workers Try a New Tactic in Minimum-Wage Fight: “Stymied by Congress on their minimum-wage push, low-wage workers and even Obama administration officials are pleading for U.S. companies from McDonald's(MCD) to Wal-Mart(WMT) to raise wages voluntarily.”

Heard on the Street: Microsoft's(MSFT) Tablet Only Scratches the Surface: “Microsoft’s latest Surface tablet goes in an unexpected direction, but still isn’t enough to assure the tech giant a leading mobile-computing role.”

 

 

How To Get Excellent Leverage With Capped Risk, Using Nadex Spreads

There are three basic things necessary for making money in trading: low risk, increased leverage and more time for the market to move favorably.

Nadex spreads provide all three. With reduced risk, investors don't lose as much money. When reduced risk is combined with an increase in leverage, investors have more control of their "money making money." Compared to most instruments, Nadex contracts (including Nadex spreads) have the best leverage. Also, risk on Nadex spreads is capped and defined up front. There are no margin calls, or risk of unlimited loss, due to skipping over a stop.

Related: Ticks And Pips And Cents, Oh My! Nadex Makes It Easy To Trade Forex And Futures

Margin and leverage vary, meanwhile, depending on strategy and instrument. To trade a Nadex spread, traders only need to have sufficient funds in their accounts to cover the maximum possible loss. Traders can never lose more than the predetermined amount. Whereas if a trader uses margin on securities, they are borrowing money from the broker, and are therefore paying interest to the broker on the margined/borrowed funds.

For example, if a trader has $10,000 in their account and puts up $5,000 in margin, then they are borrowing $5,000 and will eventually pay interest on that.

Many people, without even knowing it, have what is called a Reg-T Margin account. With this kind of margin, if a trade costs $100 the trader only has to put up $50, but the risk is still $100. If a trader goes into the negative, then the account manager will make a margin call and the trader has to deposit the negative amount. Margins can be raised at any time and can change in the middle of the day. If a trader doesn't have the money for the margin call, they can be shut out of a position right away.

Related: What Is A Nadex Spread?

Traders can access a day trading account if they have $25,000 or a portfolio margining account with $125,000 for really high leverage. There are also margins on futures, which all have unlimited risk down to zero for long positions, and infinite risk for short positions.

With Nadex spreads, traders only need $100 to start, and only need to cover the maximum potential risk when opening a position. There is no minimum account balance either.

Below is a comparison showing the details of a EUR/USD day trade using different instruments. In the far right column are the details for trading using a Nadex spread.  

To view image click HERE

*Margin on ETFs, Futures, and Options may vary by broker and capital in an account. Margin is always the same on Nadex Spreads. The above is for illustration purposes only and is not all encompassing of all variables.

This is an example of equalized position sizing, to show leveraging examples and where money can be most effectively used. Looking at the day trading margin row, there are differing amounts of money required to trade the position. For FXE and an ETF, a trader needs around $35,000 providing a minimal 4:1 leverage. For Spot FX, a trader needs around $3,000, providing a little better 50:1

Chattanooga's super-fast publicly owned Internet

Chattanooga's Electric Power Board has automatically upgraded connection speeds for customers at no charge each of the past four years.

NEW YORK (CNNMoney) Chattanooga, Tenn., may not be the first place that springs to mind when it comes to cutting-edge technology. But thanks to its ultra-high-speed Internet, the city has established itself as a center for innovation -- and an encouraging example for those frustrated with slow speeds and high costs from private broadband providers.

Chattanooga rolled out a fiber-optic network a few years ago that now offers speeds of up to 1000 Megabits per second, or 1 gigabit, for just $70 a month. A cheaper 100 Megabit plan costs $58 per month. Even the slower plan is still light-years ahead of the average U.S. connection speed, which stood at 9.8 megabits per second as of late last year, according to Akamai Technologies.

"It's really altered how we think of ourselves as a city," said Chattanooga Mayor Andy Berke. "We're a midsized, southern city -- for us to be at the front of the technological curve rather than at the tail end is a real achievement."

As federal officials find themselves at the center of controversy over net neutrality and the regulation of private Internet service providers like Comcast (CMCSA, Fortune 500) and Time Warner Cable (TWC, Fortune 500), Chattanooga offers an alternative model for keeping people connected. A city-owned agency, the Electric Power Board, runs its own network, offering higher-speed service than any of its private-sector competitors can manage.

The problem with fiber networks is that they're hugely expensive to install and maintain, requiring operators to lay new wiring underground and link it to individual homes. Since 1996, cable operators have invested $210 billion in broadband networks and other infrast! ructure, according to the National Cable and Telecommunications Association.

Since there's little competition in the broadband industry, some industry experts believe that there's little incentive for broadband providers to dramatically beef up their bandwidth and drastically improve their infrastructure.

Chattanooga's project started in 2008 with the goal of building a "smart" power grid for the city, capable of rerouting electricity on the fly to prevent outages in addition to carrying Internet traffic.

"It just didn't look like the private sector was going to bring true, high-speed connectivity to this market," EPB spokeswoman Danna Bailey said.

The city had to contend with lawsuits from Comcast and local cable operators as it worked to get the network up and running. But aided by an $111 million stimulus grant from the Department of Energy, the service was up and running by September 2009. The EPB currently has around 5,000 business customers along with 57,540 households, which have access to "triple play" bundles of video, phone and Internet service just like they would from a private provider.

"Deploying a network for telecommunications is not fundamentally different from deploying a network for power," said Benoit Felten, a broadband expert with Diffraction Analysis. "Chattanooga is the prime example of that, and it's absolutely worked."

The Federal Communications Commission recognizes the potential of muncipality-run broadband, saying earlier this year that it will push for the repeal of state and local laws supported by the cable industry that make it harder for cities to set up their own networks.

Chattanooga officials say the network has helped spark a burgeoning local tech scene and the relocation of a number of businesses, drawn by both the fast Internet and the reliability offered by the smart grid.

Hunter Lindsay, CEO of IT services firm Claris Networks, said he moved his 85-person company from Knoxville to ! Chattanoo! ga "just because of the network."

"It's logical for every city to do it, but that doesn't mean it's going to happen," Lindsay said.

Berke said Chattanooga regularly receives inquiries from other cities both in the U.S. and internationally that are interested in setting up their own networks. The city recently set up a task force to figure out how to bring the network to poorer families and make sure the community gains the maximum benefit.

"People understand that high-speed Internet access is quickly becoming a national infrastructure issue just like the highways were in the 1950s," Berke said. "If the private sector is unable to provide that kind of bandwidth because of the steep infrastructure investment, then just like highways in the 1950s, the government has to consider providing that support."

Top Internet Companies To Own For 2015

According to evidence gathered by The New York Times, the rise of Internet streaming has resulted in the rise of password sharing among users. At this time, Netflix (NASDAQ: NFLX  ) has yet to formally crack down on password sharing, despite the fact that it potentially threatens its business. Before it can lay down the hammer, it must create a thriving ecosystem that commands the mindshare of Internet streamers. In this video, Motley Fool contributor Steve Heller weighs in on the findings and what it could mean for investors.

The opportunities in streaming media have brought some new, deep-pocketed rivals looking for their piece of a growing pie. Can Netflix fend off this burgeoning competition, and will its international growth aspirations really pay off? These are must-know issues for investors, which is why The Motley Fool has released a premium report on Netflix. Inside, you'll learn about the key opportunities and risks facing the company, as well as reasons to buy or sell the stock. The report includes a full year of updates to cover critical new developments, so make sure to click here and claim a copy today.

Top Internet Companies To Own For 2015: Google Inc.(GOOG)

Google Inc. maintains an index of Web sites and other online content for users, advertisers, and Google network members and other content providers. It offers AdWords, an auction-based advertising program; AdSense program, which enables Web sites that are part of the Google Network to deliver ads from its AdWords advertisers; Google Display, a display advertising network that comprises the videos, text, images, and other interactive ads; DoubleClick Ad Exchange, a real-time auction marketplace for the trading of display ad space; and YouTube that provides video, interactive, and other ad formats for advertisers. The company also provides Google Mobile that optimizes Google?s applications for mobile devices in browser and downloadable form; and enables advertisers to run search ad campaigns on mobile devices, as well as Google Local that provides local information on the Web; and Google Boost for small businesses to participate in the ads auction. In addition, it offers And roid, an open source mobile software platform; Google Chrome OS, an open source operating system; Google Chrome, a Web browser; Google TV, a platform for the consumers to use the television and the Internet on a single screen; and Google Books platform to discover, search, and consume content from printed books online. Further, the company provides Google Apps, a cloud computing suite of message and collaboration tools, which includes Gmail, Google Docs, Google Calendar, and Google Sites; Google Search Appliance that offers real-time search of business and intranet applications, and public Web sites; Google Site Search, a custom search engine; Google Commerce Search for online retail enterprises; Google Checkout to make online shopping and payments streamlined and secure; Google Maps Application Programming Interface; and Google Earth Enterprise, a firewall software solution for imagery and data visualization. Google Inc. was founded in 1998 and is headquartered in Mountain View, California.

Advisors' Opinion:

• [By Holly LaFon] had been trading shares of Google since prior to 2007 but had completely sold out in the second quarter of 2011. He then bought 1,126 shares in the third quarter of 2011 at about $550 per share. In the fourth quarter, he bought his largest stake to date ��258,900 shares at about $592, for a total investment of $154 million. Google is now his fifth largest holding, with 7.3% of his portfolio.

  Google, once known for being a search engine giant, has grown to become the largest maker of smartphone software. But its Android platform lost market share in the fourth quarter. In the fourth quarter, 50 percent of phones sold ran on the Android operating system, compared to 30.5 percent in the fourth quarter of 2010, but down from 52.5% in the third quarter. Smartphone sales overall increased 47.3 percent in the fourth quarter of 2011 compared to the fourth quarter of 2010.

  The company may have an opportunity to edge up its lead in the upcoming quarter as Gartner analysts expect iPhone sales to decline quarter-on-quarter and smaller competitors, whose devices can run on Android, become more aggressive.

  Google generates 96% of its revenues from advertising, down one percent from 2009, and has benefited from the accelerated transition from offline to online advertising over the years. But the rate of its growth has slowed over time. Advertising revenue grew from $15.7 billion in 2009 to $19.4 billion in 2010, to $26.1 billion in 2011. The increase from 2010 to 2011 was primarily due to an increase in traffic, monetization improvements including new ad formats, global expansion, and added Google Network members, as well as an increase in the average cost-per-click paid by advertisers.

  At year-end 2011, Google had approximately $44 billion in cash and $8.5 billion in long-term liabilities, with no debt. It also traded at particularly low valuations in 2011:

  GOOG pe,ps,pb Interactive Chart

  Comverse Technology Inc. (CMVT)

  Israeli-base

Top Internet Companies To Own For 2015: eBay Inc.(EBAY)

eBay Inc. provides online platforms, services, and tools to help individuals and merchants in online and mobile commerce and payments in the United States and internationally. Its Marketplaces segment operates ecommerce platform eBay.com; vertical shopping sites, such as StubHub, Fashion, Motors, and Half.com; and classifieds Websites, including Den Bl�Avis, BilBasen, Gumtree, Kijiji, LoQUo, Marktplaats.nl, mobile.de, Alamaula, Rent.com, eBay Anuncios, eBay Kleinanzeigen, and eBay Annunci, as well as provides advertising services. The company?s Payments segment offers payment and settlement services for consumers and merchants on and off eBay Websites and other merchant Websites. This segment operates PayPal, which enables individuals and businesses to send and receive payments online and through mobile devices; Bill Me Later that enables the United States merchants to offer, the United States consumers to obtain, credit at the point of sale for ecommerce and mobile tra nsactions; Zong, which allows users with mobile phones to purchase digital goods and have the transactions charged to their phone bill; and BillSAFE that enables customers pay for purchases upon receipt of an invoice. Its GSI segment offers an ecommerce services suite for enterprise clients that operate in general merchandise categories, including apparel, sporting goods, toys and baby, health and beauty, and home; and marketing services comprising full-service digital agency, enterprise email marketing, mobile advertising, affiliate marketing, advertisement retargeting, and in-depth analytics services. The company also offers X.commerce platform that provides software developers access to the company?s applications programming interfaces to develop functionality for various merchants; and Magento Connect, which allows developers to market and sell add-on functionality and solutions to merchants that use a Magento storefront. eBay Inc. was founded in 1995 and is headquarter ed in San Jose, California.

Advisors' Opinion:

• [By Andy Obermueller]

  The magazine examined some large companies as the drivers in this new technological push, which hinges largely on the continued adoption of portable devices, like cellphones, that can be used much like a credit or debit card. Its winners are Google (Nasdaq: GOOG) because of its Google Wallet initiative, which I was among the first to cover; eBay's (Nasdaq: EBAY) PayPal; Visa (NYSE: V); MasterCard (NYSE: MA); Apple (Nasdaq: AAPL) and Facebook (Nasdaq: FB).

• [By Jay Jenkins]

  For the technology to really go mainstream, it needs consumer-side products to support it (cue�Square and PayPal�(subsidiary of eBay (NASDAQ: EBAY  ) ), it needs infrastructure to transmit the data (looking at you,�MasterCard (NYSE: MA  ) and Visa (NYSE: V  ) ), and it needs vendor-side hardware to close the loop (uh, hmm...�VeriFone (NYSE: PAY  ) ).

• [By Doug Ehrman]

  With the world of mobile payments in its infancy, the true power of iTunes and its huge database of user information remains essentially untapped. With Google�Wallet having yet to gain any major traction, eBay's (NASDAQ: EBAY  ) PayPal is battling Square for the top spot in a market that is estimated to reach $1 trillion by 2016.

Hot Retail Stocks For 2015: Symantec Corporation(SYMC)

Symantec Corporation provides security, storage, and systems management solutions internationally. The company?s Consumer segment delivers Internet security, PC tune-up, and online backup solutions and services to individual users and home offices. Its Security and Compliance segment provides solutions for endpoint security and management, compliance, messaging management, data loss prevention, encryption, and authentication services to large, medium, and small-sized businesses, as well as offers solutions through its software-as-a-service (SaaS) security offerings. This segment?s products enable customers to secure, provision, and remotely manage their laptops, PCs, mobile devices, and servers. The company?s Storage and Server Management segment provides storage and server management, backup, archiving, and data protection solutions across heterogeneous storage and server platforms, as well as solutions delivered through its SaaS offerings to large, medium, and small-s ized businesses. Symantec?s Services segment offers implementation services and solutions, including consulting, business critical services, education, and managed security services. The company also provides various enterprise support offerings, such as annual maintenance support contracts, including content, upgrades, and technical support. It sells its products through its eCommerce platform, as well as through distributors, direct marketers, Internet-based resellers, system builders, ISPs, and retail locations worldwide. Symantec markets and sells its products through distributors, retailers, direct marketers, Internet-based resellers, original equipment manufacturers, system builders, and Internet service providers; and its e-commerce channels, as well as direct sales force, value-added and large account resellers, and system integrators. The company was founded in 1982 and is headquartered in Mountain View, California.

Advisors' Opinion:

• [By Vanina Egea] and earnings growth (which came in better than expected on the last reported quarter), profit margins and other profitability ratios.

  Additionally, I will evaluate which institutional investors bought the stock in the recent quarters (institutional backup can tell a lot about a stock), and the initiatives that the company is putting in motion in order to ameliorate its sales and margins.

  Earnings

  The first step is analyzing Symantec Corp�� earnings growth. I am looking for companies that are able to expand both their quarterly and annual earnings by more than 15% a year. Last quarter the company generated 13% quarterly EPS growth when compared to the same quarter last year. Thus, I am not encouraged by SYMC�� numbers. Past growth winners (Apple, Baidu, etc.) generated consistent quarterly EPS growth above 15% and I am certainly looking for that level before investing.

  In addition, SYMC generated three-year average annual EPS growth of 10%. This is an important metric to follow in growth stocks because it highlights how well the stock grew in the past years. I like to invest in companies that are growing consistently.

  Revenue

  Let's take a look at SYMC麓s revenue growth. This is a key metric that needs to be analyzed before investing in a company, as it is one of the scarce figures that cannot be modified through accounting tricks and similar dodges.

  The company reported a 5% quarterly revenue drop year over year. On the contrary, I look for companies that generate more than 15% in quarterly growth.

  When betting on a company, an investor wants to see sales grow or improve over time ���nd not just in the last reported quarter. Looking at the company�� financials in comparison to previous years will give participants a much better idea of how well a company is doing. Symantec Corp generated a three-year average annual sales growth rate of 4%.

  A New Strategic Plan

  Accepting the problems in its

• [By Paul Ausick]

  Big Earnings Movers: AT&T Inc. (NYSE: T) is down 1.9% at $34.62 on earnings that were good but not great. Symantec Inc. (NASDAQ: SYMC) is down 12.8% at $21.48 on lagging revenues and a weak outlook. Fusion-io Inc. (NYSE: FIO) is down 24.4% at $9.81 on soft results. Goldcorp Inc. (NYSE: GG) is up 4% at $26.62 after reporting earnings this morning. Xerox Corp. (NYSE: XRX) is down 10.4% at $9.61 on a weak outlook tied to a failing turnaround plan.

• [By Damian Illia]

  California-based Symantec Corporation (SYMC) is a company that provides Internet security technology, with a wide range of application and software products of content security solutions and information back-up solutions such as firewall, virtual private network (VPN), virus protection, vulnerability management, intrusion detection and other services, offered to individuals and enterprises. Best known for Norton products which provide antivirus protection, identity protection and online backup, Symantec operates in more than 50 countries, and has recently realigned its business into three divisions: User Productivity & Protection, Information Security and Information Management.

• [By Jake L'Ecuyer]

  Equities Trading DOWN
  Shares of Symantec (NASDAQ: SYMC) were down 13.42 percent to $18.10 after the company fired President and Chief Executive Steve Bennett and appointed director Michael Brown as interim president and CEO. UBS downgraded the stock from Buy to Neutral and lowered the price target from $27.00 to $21.00.

Top Internet Companies To Own For 2015: Yahoo! Inc.(YHOO)

Yahoo! Inc., together with its subsidiaries, operates as a digital media company that delivers personalized digital content and experiences through various devices worldwide. It offers online properties and services to users; and a range of marketing services to businesses. The company?s communications and communities offerings include Yahoo! Mail, Yahoo! Messenger, Yahoo! Groups, Yahoo! Answers, Flickr, and Connected TV, which provide a range of communication and social services to users and small businesses enabling users to organize into groups and share knowledge, common interests, and photos. Its search products comprise Yahoo! Search and Yahoo! Local, available free to users to navigate the Internet and discover content. The company?s marketplaces offerings and services include Yahoo! Shopping, Yahoo! Travel, Yahoo! Real Estate, Yahoo! Autos, and Yahoo! Small Business, which allow users to research specific topics, products, services, or areas of interest by review ing and exchanging information, obtaining contact details, or considering offers from providers of goods, services, or parties with similar interests. Its media offerings comprise Yahoo! Homepage, Yahoo! News, Yahoo! Sports, Yahoo! Finance, My Yahoo!, Yahoo! Toolbar, Yahoo! Entertainment & Lifestyles, Yahoo! Contributor Network, and Yahoo! Pulse, which are designed to engage users with online content and services on the Web. The company also offers marketing services, such as display and search advertising, listing-based services, and commerce-based transactions to advertisers. In addition, it provides software and platform offerings for third-party developers, advertisers, and publishers, such as Yahoo! Developer Network, Yahoo! Open Strategy, Yahoo! Application Platform, Yahoo! Updates, Yahoo! Query Language, and Yahoo! Search BOSS. The company has strategic alliances with Nokia and ABC News, Inc. Yahoo! Inc. was founded in 1994 and is headquartered in Sunnyvale, Californi a.

Advisors' Opinion:

• [By Chris Hill]

  In this segment, Matt discusses why he'll have his eye on Bank of America (NYSE: BAC  ) , and Jason tells us why he'll be watching Yahoo! (NASDAQ: YHOO  ) this week.

Top Internet Companies To Own For 2015: IAC/InterActiveCorp (IACI)

IAC/InterActiveCorp engages in the Internet business in the United States and internationally. The company�s Search segment develops, markets, and distributes various downloadable toolbars; provides search, reference, and content services through its destination search and other Websites, including Ask.com and Dictionary.com; and aggregates and integrates local advertising and content for distribution to publishers on Web and mobile platforms, as well as markets and distributes mobile applications through which it provides search and additional services. Its Match segment offers subscription-based and advertiser-supported online personals services through its Websites comprising Match.com, Chemistry.com, OurTime.com, BlackPeopleMeet.com, and OkCupid.com, as well as through mobile applications and Meetic-branded Websites. The company�s ServiceMagic segment offers Market Match service that matches consumers with service professionals; Exact Match service, which enables con sumers to review service professional profiles and select the service professional that meets their specific needs; and 1800Contractor.com, an online directory of service professionals. This segment also offers Website design and hosting services. Its Media and Other segment operates CollegeHumor.com, an online entertainment Website that targets young males; Vimeo, a Website on which users can upload, share, and view video; and Pronto.com, a comparison search engine. This segment also engages in the creation of video content for various distribution platforms; and operates as an Internet retailer of footwear and related apparel and accessories, as well as focuses on multimedia business. The company was formerly known as InterActiveCorp and changed its name to IAC/InterActiveCorp in July 2004. IAC/InterActiveCorp was founded in 1986 and is headquartered in New York, New York.

Advisors' Opinion:

• [By Rex Crum]

  Additionally, Devitt initiated coverage of IAC/InterActive Corp. (IACI) �with an equal weight rating and best-case stock price scenario of $67 a share.

• [By Jayson Derrick]

  InterActiveCorp (NASDAQ: IACI) announced that its CEO is stepping down from his current position to become chairman of a new operating unit. Investors cheered the management shakeup which is potentially hinting at a spinoff. Shares hit new 52 week highs of $70.44 before closing at $68.49, up 13.98 percent.

• [By Jake L'Ecuyer]

  Equities Trading UP
  IAC/InterActiveCorp (NASDAQ: IACI) shot up 15.54 percent to $69.43 after the company reported that that it is reorganizing and that Greg Blatt, its CEO, will become the Chairman of the newly created Match Group.

Top Internet Companies To Own For 2015: Amazon.com Inc.(AMZN)

Amazon.com, Inc. operates as an online retailer in North America and internationally. It operates retail Web sites, including amazon.com and amazon.ca. The company serves consumers through its retail Web sites and focuses on selection, price, and convenience. It also offers programs that enable sellers to sell their products on its Web sites, and their own branded Web sites. In addition, the company serves developer customers through Amazon Web Services, which provides access to technology infrastructure that developers can use to enable virtually various type of business. Further, it manufactures and sells the Kindle e-reader. Additionally, the company provides fulfillment; miscellaneous marketing and promotional agreements, such as online advertising; and co-branded credit cards. Amazon.com, Inc. was founded in 1994 and is headquartered in Seattle, Washington.

Advisors' Opinion:

• [By Austin Smith]

  Austin: Now, obviously there's a lot of incumbents in the streaming space. We can't talk about this without saying Netflix [ (NASDAQ: NFLX  ) ] and Amazon [ (NASDAQ: AMZN  ) ]�Prime. Are they your biggest competitors here, or am I misreading it? Do you think about it differently?

• [By Paul Ausick]

  The top smartphone properties measured by reach belong to Google (92.6% reach), Facebook Inc. (NASDAQ: FB) with an 86.3% reach, Yahoo! Inc. (NASDAQ: YHOO) with 81.7% reach, Amazon.com Inc. (NASDAQ: AMZN) with 66.8%, and Apple with 50.2%. The top smartphone apps belong to Facebook with 76.1% of U.S. users and four Google apps — YouTube, Google Play, Google Search, and Google Maps — rounding out the top five.