Life Insurance: 2015

Wednesday, June 24, 2015

The Market Turned Its Back On Facebook Earnings, As Twitter Looms

Facebook’s (NASDAQ: FB) earnings release is less than a week old. In such short period of time, Wall St. has shrugged them off. On the most recent Monday the stock topped out just above $51. It closed the week at just below $49. So, barely a hint of sentiment, perhaps because the numbers were about what was expected, perhaps because there was as much good as bad news in Facebook’s earnings statements, or perhaps because the market has turned its attention aggressively toward Twitter. The anxiety that dinged sentiment about Facebook goes beyond the company to the anxiety about social media in general

Facebook’s number would be the envy of almost any other. Revenue rose to $2 billion in the third quarter from $1.3 billion in the same period a year ago. Net rose from a loss of $59 million to $425 million. Year over year daily active users rose 25% to 728 million. The causes for alarm came on the earnings call as the firm’s CFO said the there was some erosion in teen use, and a sharp slowing of the advertising messages which could be put into news feeds.

Both concerns about Facebook’s future run across all social media sites, and will bedevil the Twitter IPO. If users reject advertising as “part of their experience” they will either ignore them or revolt against them. The Achilles Heel of social media is that members think they own the sites instead of shareholders. There are no other industries in which that belief is quite as strong.

The use of Facebook by teens or anyone else is probably not a direct rejection of the social media company and its primary service. Twitter does not face that challenge either. However, the crowding of social media destinations has started to look like cable television three decades ago. Instead of the dozen challenges people could get in the early years of cable, those same viewers can get 500. And each of the 500 does whatever is within its power to pull audience from competition.

Facebook investors have begun to eye Twitter more carefully. What they see is the refection of an industry which has become too crowded in a remarkably short period of time.

Thursday, June 18, 2015

U.S. Remains Engine of Global Growth: Cerulli

Happy days are here again, at least according to a new report from Cerulli Associates.

The Boston-based research and consulting firm found global assets under management are set to cross $70.4 trillion by the end of 2013, a full $20 trillion higher than the industry's low point in 2008. It added that this is a conservative estimate that may need upward revision if the global financial markets continue to perform.

“The Cerulli Report: Global Markets 2013” covers both retail and retirement asset management globally, and reports that non-U.S. assets accounts for more than 50% of total assets, but the “engine of growth” remains the United States in the near term.

"It would be churlish not to feel a sense of optimism about the near- and medium-term outlook for the global asset management industry, especially when considering top-line growth," Shiv Taneja, Cerulli's London-based managing director, said in a statement. He adds that even Europe has managed to add $5.9 trillion in assets since 2008.

"The worry, however, is when considering bottom-line growth,” added Yoon Ng, associate director at Cerulli and one of the report's authors. “Here the picture is less well-defined, as many firms-large and small-continue to have to deal with the effects of the financial crisis and margin pressure. The sunny uplands may beckon, but a good guide is going to be essential."

The report shows that only Japan is slated to show slower asset growth than Europe over the next five years to 2017, but “there is no getting away from the fact that the United States is, and is likely to remain, the sweetest spot, from a global growth standpoint,” according to the report.

"Could it really get to be more than twice bigger than Europe, in asset terms, by 2017? It certainly appears so," Taneja said.

Cerulli's findings suggests that Asia ex-Japan will continue to show the highest growth rate over the five years to 2017, but this top-line figure “must be measured against the region's ability to generate consistently strongly bottom-line growth.”

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Check out Raymond James’ Saut: We’re Smack-Dab in the Middle of a Bull Market.

Wednesday, June 17, 2015

Anadigics to Power Huawei Smartphone - Analyst Blog

Leading semi-conductor manufacturer Anadigics, Inc. (ANAD) recently shipped production volumes of AWC6340 HELP (High-Efficiency-at-Low-Power) power amplifier to Huawei for the new Ascend P6 ultra-slim smartphone. With continuous launch of such new products, Anadigics expects to offset the decline in its legacy business and thereby stem the tide of losses experienced over the past few quarters.

The new power amplifiers offer unmatched efficacy by combining high gain and linearity for seamless transmission of high definition (HD) videos at extended ranges with voice clarity and unmatched high-speed data. In addition, the product also has greater integration capabilities compared to other variants available in the market, which in turn reduces the requirement for other external components to save valuable printed circuit board (PCB) space.

The power amplifier would extend smartphone's battery life by leveraging Anadigics' patented InGaP-Plus technology that offers higher efficiency at low and high power levels and minimizes quiescent current. The new product further reinforces the long-term business relationship with Huawei and extends Anadigics' client portfolio.

Headquartered in Warren, N.J, Anadigics designs and manufactures semiconductor solutions for the broadband wireless and wireline communications markets. Its products include power amplifiers, tuner integrated circuits, active splitters, line amplifiers, and other components. Anadigics is well positioned in three fast-growing markets: 3G, WiFi and CATV (cable television). In addition, the company is increasing its product content in markets where multiple power amplifiers and multiple tuner integrated circuits are needed.

Anadigics continues to focus on three market drivers that it believes will expand its market. These drivers include the rapid adoption of 3G and 4G data connectivity in wireless mobile devices, expansion of wireless and CATV infrastructure to support higher data usage and proliferation of high! performance WiFi connectivity in mobile devices. Incremental demand for wireless connectivity in consumer devices, including smartphones and tablets, provide substantial growth opportunities for Anadigics. The company's new ProEficient singleband and dual-band power amplifiers, Multimode Multiband Power Amplifiers and WiFi should also fuel revenue growth in the coming quarters.

Anadigics currently has a Zacks Rank #3 (Hold). Other companies in the industry worth mentioning include Advanced Micro Devices, Inc. (AMD), Diodes Incorporated (DIOD) and Integrated Device Technology, Inc. (IDTI), each carrying a Zacks Rank #1 (Strong Buy).

Sunday, June 14, 2015

Why Infinera Shares Imploded

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Infinera (NASDAQ: INFN ) , which bottomed out at a nearly 14% loss earlier today, are sitting on a nearly 8% loss as of this writing after the company failed to impress Wall Street with improved guidance despite a double beat on its earnings report last evening.

So what: Infinera reported revenue of $138.4 million and a $0.01 loss per share for the second quarter. Its top line was a 48% year-over-year improvement, and also bested the $133.6 million consensus. Its narrow loss also surpassed the $0.02 loss per share Wall Street was looking for. However, Infinera noted that its "visibility" into bookings for the upcoming quarter is less than usual, and executive caution regarding third-quarter guidance was a major reason why the stock dropped. Guidance for a revenue range of $135 million to $145 million for the third quarter does beat the consensus of $135 million, and a $0.01 to $0.07 range for EPS also comes in ahead of Wall Street's expectation for zero earnings.

Now what: Despite caution, Infinera did provide guidance that surpassed analyst expectations. This drop seems rather unfounded, but with a near-double in the year to date, some large shareholders may have simply been looking for an ideally profitable exit point. There's nothing in this report that indicates weakness to come, and a cautious executive is better than a reckless one. Don't get too tripped up by the drop -- keep your eye on this one.

Want more news and updates? Add Infinera to your watchlist now.

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Wednesday, June 10, 2015

Microsoft and Facebook Release Number of National Security Requests

After intense lobbying for increased transparency, both Microsoft (NASDAQ: MSFT ) and Facebook (NASDAQ: FB ) have been allowed to released the number of government-related security requests each received the second half of 2102, Microsoft and Facebook recently announced.

For the six-month period ending Dec. 12, 2012, Microsoft received between 6,000 and 7,000 national or criminal security warrants, subpoenas, and orders, the company said. From U.S. government agencies, the security requests affected approximately 31,000 to 32,000 consumer accounts. According to Microsoft, the requests affect "a tiny fraction of Microsoft's global customer base."

Facebook reported that it received between 9,000 and 10,000 government security requests for data during the six-month period ending Dec. 31, 2012. The security requests affected between 18,000 and 19,000 customer accounts, according to Facebook. Ted Ullyot, Facebook's general counsel, said the requests, "run the gamut -- from things like a local sheriff trying to find a missing child, to a federal marshal tracking a fugitive, to a police department investigating an assault, to a national security official investigating a terrorist threat."

As is the case with Microsoft, Facebook was given the OK to publish government security requests; however, both companies were required to adhere to strict stipulations in their respective reports.

Microsoft described the reporting restrictions by saying, "We are permitted to publish data on national security orders received (including, if any, FISA [Foreign Intelligence Surveillance Act] Orders and FISA Directives), but only if aggregated with law enforcement requests from all other U.S. local, state, and federal law enforcement agencies; only for the six-month period of July 1, 2012, through Dec. 31, 2012; only if the totals are presented in bands of 1,000; and all Microsoft consumer services had to be reported together."

Going forward, both Microsoft and Facebook also reiterated their interests in further transparency.

Tuesday, June 9, 2015

Self-Employed? How You Can Save More for Retirement

Most Americans work as employees and can save for retirement through a combination of their own personal IRAs and any retirement plan their employer happens to provide. But if you're self-employed, you have many more options for your retirement savings, and depending on which one you choose, you might be able to put quite a bit more money into tax-favored accounts.

The advantages of being self-employed
These days, typical American workers have access to two main retirement-savings options. Anyone with earned income can open an IRA, funding it with up to $5,500 this year, or $6,500 if you're 50 or older. In addition, many employers offer 401(k) plans, which let you set aside as much as $17,500 from your paycheck into an employer-sponsored retirement plan account -- $23,000 for those 50 years old and up. Combine those amounts, and many employees aren't able to find enough money to save in order to hit the limit.

Self-employed individuals have the same access to IRAs as employees. But if you're self-employed, you have the capacity to do far more with your retirement savings. By acting both as employer and employee, you can put retirement plans in place that have much higher limits and give you greater flexibility in structuring your retirement investments.

3 smart choices for self-employed retirement plans
The downside of being self-employed is that no one's going to take care of putting a retirement plan in place for you. That burden is all on you, but fortunately, there are several relatively easy-to-implement choices available.

First and arguably simplest is the aptly named SIMPLE IRA, more formally known as the Savings Incentive Match Plan for Employees. You can put 100% of your earnings up to $12,000 in a SIMPLE IRA this year, with an extra $2,500 for those 50 or older. Then, acting as the employer, you can then add a matching contribution equal to whatever you set aside, subject to a limit of 3% of your net self-employment earnings. The big advantage of SIMPLE IRAs is that they're relatively easy to set up, as many financial institutions are equipped to open SIMPLE IRA accounts, and they don't require a lot of additional paperwork or reporting requirements.

The second option is the simplified employee pension, or SEP. With the SEP, you're able to set aside up to 20% of your net self-employment earnings. That means that if your business has only modest income, you might not be able to save as much using a SEP as you could with a SIMPLE IRA. But the maximum dollar limits are much higher, at $51,000 for 2013. So once your net earnings get above the $120,000 level, the SEP gives you the chance to set aside a greater amount on a tax-deferred basis. Like SIMPLE IRAs, SEPs allow you to set up accounts at most banks or financial institutions without a great deal of paperwork.

The third option is to set up your own self-employed 401(k). Sometimes known as solo 401(k)s, these plans give you the best of both worlds: the ability to make the same employee contributions as regular workers, while also having the right to contribute as much as 20% more of your net earnings in the form of employer contributions. You're still subject to the same $51,000 limit, except that those 50 or older can set aside up to $56,500 if your net earnings are high enough to meet the 20% requirement.

Of these options, the self-employed 401(k) is the most burdensome from a reporting standpoint. To establish a solo 401(k), you have to fill out paperwork to establish a formal retirement plan, with ongoing requirements to make updates when retirement-plan laws change. Moreover, once your retirement plan assets exceed $250,000, you'll have to file annual information returns with the IRS. However, several financial institutions offer self-employed 401(k) plans and will help you create and set up your account correctly.

Get big savings now
Whichever way you decide to go with your retirement plan, be sure to take maximum advantage of the generous tax breaks available to the self-employed. Given the high taxes you have to pay as a self-employed professional, anything you can do to cut your tax bill can make a huge difference in your long-term financial success.

Once you open a self-employed retirement account, you have to invest your money well. The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Monday, June 8, 2015

These Stocks Are Leading the Dow's Rise Today

The Dow Jones Industrial Average (DJINDICES: ^DJI ) is up 0.34% as of 1:20 p.m. EDT, while the S&P 500 (SNPINDEX: ^GSPC ) is up 0.48%, thanks to a pair of encouraging economic reports:

Report

Period

Result

Consumer Sentiment	May	83.7	76.4
Leading Indicators	April	0.6%	(0.1%)

The big surprise today was consumer sentiment, which rose by 7.3 points to 83.7 where analysts had expected a slight rise to 77.5. Consumer sentiment is likely gaining on the steadily rising market and falling gasoline prices.

The second release today was the Conference Board's Leading Economic Index, which rose by 0.6% to 95, whereas analysts had expected a 0.3% rise. The index is made up of 10 indicators and is designed to signal peaks and troughs in the business cycle.

The biggest factor moving the index is the large rise in building permits to a seasonally adjusted 1.02 million from 890,000 last month. Further, the spread between 10-year Treasury bond yields and the federal funds rate fell to 1.61. The continued rise in the leading economic indicators bodes well for the economy. Investors should remember, however, that the economy and the stock market are two different things, and the market can get ahead of the economy.

Today's Dow leader
Today's Dow leader is Boeing (NYSE: BA ) , up 2.3%. Boeing's stock took a small hit earlier this year when the FAA grounded its 787 Dreamliner due to problems with its lithium batteries. The company announced on Tuesday that it had resumed deliveries of the plane. Boeing's stock has been on a tear, up 31% since it first became apparent three months ago that the company would be able to work through this problem. Even after its recent run-up, some investors still think Boeing stock is attractive. Fool contributor Daniel Miller recently detailed two reasons to buy Boeing stock now.

Second for the Dow today is JPMorgan Chase (NYSE: JPM ) , up 1.8%. Bank stocks have been on a tear this week after hedge fund manager David Tepper went on CNBC and said he was bullish on Citigroup, JPMorgan, and the economy in general. Next Tuesday is a big day for the bank. The company is holding its annual meeting, where investors will vote on a proposal to separate the CEO and chairman roles, both of which are now held by Jamie Dimon. Some investors are worried that Dimon will leave the bank if the measure is passed. Analysts and pundits have been raising concern over the possibility, with some saying the stock will drop 10% if he leaves. Dimon is a great banking CEO, but if he leaves and the stock drops, it would be a wonderful opportunity to get the bank at a cheap price.

With big finance firms still trading at deep discounts to their historical norms, investors everywhere are wondering if this is the new normal or if finance stocks are a screaming buy today. The answer depends on the company, so to help you figure out whether JPMorgan is a buy today, check out The Motley Fool's premium research report on the company. Click here now for instant access!

Thursday, June 4, 2015

5 Reasons to Worry About Next Week

The economy is showing signs of fumbling the recovery.

For the first time in seven months, the Conference Board Leading Economic Index declined in March. Another problematic report shows new claims for unemployment benefits are on the rise.

The news isn't just iffy on the macro level. There are also more than a few companies that aren't pulling their own weight in this supposed economic recovery.

There are still plenty of names posting lower earnings than they did a year ago. Let's go over a few of the companies that are expected to go the wrong way on the bottom line next week.

Company

Latest Quarter EPS (estimated)

Year-Ago Quarter EPS

Apple (NASDAQ: AAPL )	$10.13	$12.30
Cliffs Natural Resources (NYSE: CLF )	$0.32	$0.85
Corning (NYSE: GLW )	$0.24	$0.30
SUPERVALU (NYSE: SVU )	$0.18	$0.38
Linn Energy (NASDAQ: LINE )	$0.24	$0.25

Source: Thomson Reuters.

Clearing the table
Let's start at the top with Apple. All eyes are on the consumer tech giant after it hit another new 52-week low yesterday. Apple's margins are contracting as shoppers continue to choose cheaper iPad mini tablets and older iPhone smartphones over its higher-priced new models.

Revenue is still growing at Apple, but narrowing margins should result in a significant drop in profitability in Tuesday's report.

Cliffs Natural Resources has seen better days. The iron-ore miner announced last month that it was halting production at a Canadian iron-ore pellet plan, and that was followed a few days later by Morgan Stanley and Credit Suisse slashing their price targets for the stock.

Cliffs has been one of this year's biggest losers, shedding nearly 55% of its value. It doesn't help when you've missed on the bottom line in each of the past four quarters.

Corning is another company heading the wrong way on the bottom line. Analysts see the global leader in specialty glass and ceramics posting mixed results with revenue inching up slightly, but net income taking a hit.

Yes, Corning's Gorilla Glass is a hot product for smartphone makers, but you can probably imagine that Corning isn't selling a lot of PC monitors and LCD television screens these days.

SUPERVALU is the troubled supermarket operator that recently closed on a $3.3 million deal for five of its grocery store chains. Naturally, SUPERVALU will be a smaller player now, but the deal itself didn't close until late March. There are other factors weighing on the retailer's margins. Supermarkets operate on thin markups, and it's not always easy to pass on price increases to shoppers when warehouse clubs and discount department stores continue to ramp up their grocery offerings.

Finally, we have Linn Energy. Linn is one of the country's largest independent oil and natural gas developers. This is the most likely of the five companies to actually post a year-over-year increase in profitability next week. For starters, analysts are only banking on a minor dip in profitability. They see Linn earning $0.24 a share after posting a profit of $0.25 a share a year earlier. Another thing working in its favor is that it has beaten Wall Street's profit projections in back-to-back quarters heading into Thursday's report.

Why the long face, short-seller?
These companies have seen better days. The market has rewarded many of these stocks with reasonable gains over the past year, but they still haven't earned those upticks. Lower earnings translates into higher earnings multiples, and nobody wants to see that happen.

The good news here is that Wall Street already expects these companies to deliver shrinking bottom lines. In other words, the bad news is already baked into the shares.

The more I think about it, the less worried I become.

More on Corning
With the explosive growth of smartphones worldwide, many investors thought they would ride Corning's dominant cover glass to massive investment returns. That hasn't played out yet, as mobile growth has failed to offset declines in the company's core business. In this premium research report on Corning, our analyst walks through the business, as well as the key opportunities and risks facing it today. Click here to claim your copy.

Wednesday, June 3, 2015

7 Alternative Investments You Should Think Twice About

It's hard to get rich with collected items. Source: Flickr user Masked Builder.

For one reason or another, many of us will occasionally turn our gazes to alternative investments. We may have grown impatient with our stock portfolio or been dazzled by spectacular performance in some niche sector, or we have been persuaded by some breathless email or newsletter. In any case, it's worth remembering that many alternative investments are not as great as they may seem, and some are rather dangerous.

First, though, what exactly is an alternative investment? Well, conventional investments include stocks, bonds, cash, and savings accounts, to name a few. Now let's review a handful of alternative investments and what makes them riskier than investors may realize.

Penny stocks
Although they are stocks, penny stocks are something of an alternative investment because they're a unique kind of stock with particular qualities. Penny stocks are tantalizing to naive investors who love the idea of owning 20,000 shares of a stock for a total of just $1,000. They don't appreciate that a $200-per-share stock might in fact be a better bargain and that they'd be far better off spending that $1,000 on five shares of it. Penny stocks are often tied to extra-risky, unproven companies with captivating stories (a cure for cancer! An imminent big oil discovery!), no profits, and armies of con artists making money by hyping them up and then selling them. Remember that a $2 stock can quickly become a $0.20 one -- and often does.

Gold hasn't been the best long-term investment. Source: Flickr user Bullion Vault.

Gold
Investing in gold is not a new idea, but the precious metal is volatile and doesn't have the best long-term track record. Wharton Business School professor Jeremy Siegel's data shows that while gold delivered an inflation-adjusted average annual return of 11.8% between 2000 and 2012, it averaged close to 2% between 1926 and 2012. Many choose it as a hedge against inflation, but it doesn't always offer much protection. Over the past three years, for example, the SPDR Gold ETF (NYSEMKT: GLD ) has lost an annual average of 9.3%. Over the past five years, it has averaged a 1% gain.

Further, as Warren Buffett has noted, gold is an "unproductive asset": While you can invest in companies that provide real goods and services for money, gold just sits there, with few practical uses outside of jewelry. Some think of it as a "safe" investment, but its value fluctuations are unpredictable.

Hedge funds
It might seem as if hedge fund investors are making big money, but that's often not the case. In 2014, for example, they gained about 2%, on average, while the S&P 500 advanced about 14%. Most of us can't invest in hedge funds period, as they tend to be restricted to "qualified investors" who are generally wealthy. Investors are typically charged "2 and 20," meaning they fork over 2% of their invested assets each year as a management fee (whereas managed stock mutual funds charge fees closer to 1%, while index funds frequently charge less than 0.25%), and then they also fork over 20% of any gains. Ouch.

The rationale for the high fees is that hedge funds deliver outstanding returns -- except many of them don't. Some are charging less these days, but even half of "2 and 20" is exorbitant. You can get great performance for far less.

Real estate generally doesn't grow in value as briskly as stocks. Source: U.S. Department of Agriculture.

Real estate
If you want to buy a home in order to have a nice place to live, go right ahead. But if you're thinking of your home as a great investment, think again. Nobel-prize-winning economist Robert Shiller is famous for his studies of the housing market, and per his data, housing prices have grown at a compound annual rate of just 0.3% over the past century (inflation-adjusted), while the S&P 500 has averaged roughly 6.5%. And that's just an average; those who bought in the wrong places at the wrong time fared even worse.

Worse still, real estate has some big drawbacks compared to, say, stocks. For one thing, you can't liquidate a home quickly, and you can't sell off part of your home in order to generate some needed funds. If you're thinking of buying property in order to rent it out, give a lot of thought to how easily you'll take to being a landlord and dealing with late-night emergency repairs and tenants who don't pay. It's not for everyone, and when you crunch the numbers, it may not even be that lucrative for you.

Commodities
Those who recommend investing in commodities -- i.e., raw materials or agricultural products such as grains, pork bellies, oil, copper, coffee, and sugar -- often explain that they offer diversification and a hedge against inflation. On the other hand, they commodities be very volatile. They're about twice as volatile as an S&P 500 index fund (remember that the S&P 500 is capable of big drops, too -- such as its 37% plunge in 2008) and nearly four times as volatile as a bond fund benchmark. You can lose a lot of money in commodities, especially if you're not familiar with them.

Forex
The foreign exchange market, or "Forex," has attracted many investors with its steep leverage capabilities. Whereas you can only have 2-to-1 leverage in stocks, you can have 50-to-1 in foreign currencies. This means you can make a lot with a little -- and you can also lose a lot more than you may realize you're putting at risk. You're also involved in making bets on currencies, and you may not understand interest rate movements, global economics, or how the fast-moving, volatile market works well enough to succeed in it.

Collectibles
Let's end with collectibles, as some people out there are filling drawers and cupboards with baseball cards, comics, wines, coins, and so on. Such collections might give you great pleasure, but they won't necessarily make you rich. Again, you need to research and understand the market on a deep level. Rare items can indeed develop great value, but many items produced today are produced in great quantities, making them less likely to fetch much in the future.

There are other alternative investments out there, too. Remember that oftentimes, what seems too good to be true is simply not true. Money can be made in many alternative investments, but those investments shouldn't be taken lightly. Fortunately, though stocks are pretty "mainstream," they've nonetheless made a lot of people wealthy over the long run.

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Tuesday, June 2, 2015

National Coffee Day: 10 Places to Get a Free Cup of Joe

a cup of coffee in hands Shuji Kobayashi/Getty Images | Your Monday morning just got a little more caffeinated. Today marks the annual celebration of National Coffee Day. In recognition of holiday, several national and regional chains will be offering free and heavily discounted fresh cups of joe. With big named retailers such as Dunkin' Donuts, Starbucks, Wawa and more giving away cups of their most popular blends, it's a promotion you won't want to miss. Here are 10 locations participating in National Coffee Day 2014: Peet's Coffee & Tea Get two coffees or espressos for the price of one when you shop at any Peet's Coffee & Tea nationwide locations Monday. Customers who buy anyone beverage will receive a second free drink of their choice for free as part of their Buy One, Get One & Give the Freshest Cup promotion. Peet's will also be offering free coffee and espresso samples all day long in celebration of the holiday. For those who prefer to brew a fresh cup of Peet's in the comfort of their own home, customers will also get $2 off a bag of 12-ounce or larger bag of Peet's fresh coffee. LaMar's Enjoy a free 12 cup of coffee with your doughnut when you visit participating Lamar's Donuts locations Monday. In recognition of the holiday, the retailer will be giving away free, freshly roasted 12-ounce cups of joe to all customers. Wawa If order to receive your free cup of joe from Wawa Inc. on National Coffee Day, customers are required to sign up at Wawa.com. By filing in an electronic voucher, customers will then by given one coupon for a free 16-ounce Wawa coffee to redeem on Sept. 29. Customers must be at 13 years of age or older to participate in the promotion. Krispy Kreme Doughnuts Forget the doughnuts, Krispy Kreme (KKD) is giving away free coffee. The offer is only valid for 12-ounce cups. Only one free drink per customer is permitted. In celebration of the holiday, their best-selling 12-ounce Mocha Latte and iced-coffee will be retailing at a special rate of $1. The offers can't be combined with any other coupons or offers and are only valid in the U.S. Kangaroo Express You'll have to wake up early if you want a discounted cup of Kangaroo Express' Bean Street Coffee Company blend. The company will be offering 1 cent cups of their 12-ounce brew from 6 a.m. to 10 a.m. Monday. McDonald's Enjoy your a free coffee with your McMuffin. Now through Monday, McDonald's (MCD) will be giving away a free small hot and iced McCafe coffee during their breakfast hours at participating locations. No coupon or purchase is necessary. Brooklyn Water Bagels The purchase of any menu item will grant you any free cup of freshly roasted hot or ice coffee of any size at Brooklyn Water Bagels on Monday. Find a participating location near you here. Dunkin' Donuts Dunkin' Donuts (DNKN) customers will be treated to a free cup of the chain's newest beverage. Customers visiting any nationwide Dunkin' Donuts location Monday will be given a free, median Dark Roast Coffee. Only one drink per customer is permitted. The retailer is also celebrating by selling Dunkin' Donuts K-Cup packs and 16-ounce packaged coffee for $6.99 a participating location through Monday while supplies last. Beginning Sept. 30 through Oct. 5, customers can purchase a medium cup of the roast at a reduced rate of 99 cents. Tim Hortons Tim Horton's (THI) will be selling any size of their freshly-brewed coffee for $1 now through Monday. Buffalo, New York locations can enjoy a $1 cup of Tim Horton's new Dark Roast. The promotion is only valid at participating locations. Starbucks If you're looking to try out a new blend of Starbucks' (SBUX) brew, National Coffee Day is your opportunity. The nationwide chain will be giving away free samples of their Anniversary Blend until noon Monday, the Hartford Courant is reporting. No purchases is necessary. When you're done with your coffee, enjoy a free pack of gum courtesy of Orbit. "Saturday Night Live" star Jay Pharoah and the Orbit team will be taking over the streets of New York City Monday giving out complimentary Orbit packs to customers to enjoy after sipping on their free morning coffee.

Monday, June 1, 2015

Benzinga Weekly Preview: Geopolitical Tension Continuing To Weigh On Markets

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Geopolitical tension across the globe has been weighing on markets and next week will likely be no different.

Tension between Russia and Ukraine continued this week as pro-Russian separatists clashed with the Ukrainian military despite efforts to create a ceasefire agreement.

The White House said it may consider tightening sanctions on Russia if Moscow doesn't use its influence to persuade the separatists to lay down their weapons.

NATO foreign ministers are set to meet next week to discuss the situation on Monday, just days before Ukraine's newly elected leader Petro Poroshenko is set to sign a free-trade agreement with the EU on Friday.

Key Earnings Reports

Next week investors will be waiting for several key earnings reports including Walgreen (NYSE: WAG), Accenture (NYSE: ACN), Nike (NYSE: NKE), ConAgra Foods (NYSE: CAG) and General Mills (NYSE: GIS).

Walgreens

Walgreens is expected to report third quarter EPS of $0.94 on revenue of $19.30 billion, compared to last year's EPS of $0.85 on revenue of $18.31 billion.

On June 4, Credit Suisse maintained a Neutral rating on Walgreens with a $67.00 price target, cautioning that the reward the stock could provide may not be commensurate with the risk.

“Walgreens reported solid May sales, as better than expected front-end and script growth offset somewhat lower than expected drug price inflation. Total comps rose 4.4%, ahead of consensus of 4.1% and in line with our estimate of 4.4%. Front-end comp growth of 2.6% exceeded consensus of 1.7%, as the company’s recently improving trend continued. Customer traffic (-0.5%) and basket (+3.1%) both improved modestly on a 2-year basis. We believe promotional levels for WAG and competitors remained high. Sales strength in the pharmacy continued, with comps up 5.5%. While dollar comps were roughly in line with expectations, we believe script growth of 5.6% excluding the calendar shift was better than expected while inflation was somewhat lower than expected (both positive). We continue to rate WAG Neutral. While we appreciate the potential for greater earnings power than initially expected from the AB deal and fundamentals affecting all drug retailers should start to gradually improve from here, we struggle with the risk/reward following the stock’s strong run.”

On the first of June, Morgan Stanley was more optimistic with an Overweight rating, though still cautious about weakening store traffic.

“We expect a pharmacy script comp of 2.7% y/y, or 4.5% adjusted for calendar day shift impact, up from an adj. comp of 4.3% in April. Last month’s script comp had been negatively impacted by lower incidence of the flu (-0.2%) which should not be a factor this month. In addition, we will look to see evidence for Rx benefit from improved utilization related to ACA coverage expansion. For front-end sales, we expect a comp of 2.1% y/y, down from 8.2% in April, which benefited from Easter timing, but inline with the 2.1% comp for the combined March/April period. While the front-end sales comp has been in positive territory over the past 12 months (excluding March, which was impacted by Easter timing), traffic trends have recently been weak. Over the past 5 months (excluding April) y/y traffic trends have been in negative territory (-1.3% in Dec ’13, -2.2% in Jan ’14, -0.7% in Feb ’14 and -0.9% for the combined March/April ’14 period).”

On June 4, S&P Capital IQ maintained a Sell rating on Walgreens with a $66.00 price target. The analysts at S&P said that they see the stock staying inline with its peers in the Consumer Staples sector.

“We believe the stock's valuation will stay in line with the Consumer Staples sector as WAG integrates recent acquisitions and realizes increased synergies through its partnership with Alliance Boots. We see valuation benefits from rising demand following the implementation of the Patient Protection and Affordable Care Act on January 1, 2014, offset by non-pharmacy growth pressures from increased nontraditional competition and a less favorable generic drug environment.”

Accenture

Accenture is expected to report third quarter EPS of $1.21 on revenue of $7.54 billion, compared to last year's EPS of $1.14 on revenue of $7.20 billion.

On March 28, Merrill Lynch maintained a Neutral rating on Accenture with a $84.00 price objective. The firm noted that although the company was still on track for growth, it was facing pricing pressure in Europe.

“ACN shares were down 5% following a relatively in line 2Q due to negative commentary around pricing pressure. Bookings growth was solid (+11% YoY). Accenture is on track for revenue acceleration in FY14. We now forecast constant currency revenue growth to rise from 3.0% in 2Q to 3.7% in 3Q and 5.9% in 4Q. ACN noted pricing pressure due to competition in application services, vendor consolidation, and bill rate pushback in existing business. Application services has long been a highly competitive area. The trend of clients consolidating vendors (offering more volume at lower pricing) is also a long-term trend. Getting bill rate increases has never been easy. What is new, in our view, is increasing adoption of offshoring in continental Europe (34% of revenue). Newer entrants (e.g., Cognizant, TCS, Infosys) have made a string of acquisitions in the region. Given rising competition, pricing on new deals is likely to be stressed. For existing ACN clients choosing to offshore, lower offshore bill rates will result in revenue deflation. Accenture has multiple levers to offset a constrained pricing environment, but we expect offshoring adoption in continental Europe to be a long-lasting trend.”

On April 30, Credit Suisse was more optimistic with an Outperform rating and a $92.00 price target. The analysts at Credit Suisse noted that Accenture has the potential to lead the digital revolution as more companies incorporate digital technology into their business.

“Accenture hosted a call today to outline Accenture Digital and key themes from this year's Technology Vision. The key message is that companies of all sizes are embracing digital technologies to try and change the way they interact with customers and how they can improve consumer experiences. We think Accenture has the deepest resource base in the industry in this area and this should play a role in helping Accenture accelerating top line growth. A material revenue driver: The call contained little in the way of incremental data points. However, Accenture has 23,000 people inside Accenture Digital and in our recent note, Opportunity to Outperform, we estimate that it accounts for nearly 20% of group revenues. Accenture describes this is one of the most pervasive technologies they have seen for some time, and industry estimates suggest these technologies are growing at 20%+. This is supported by recent comments from Capgemini which indicates its SMAC revenues are growing at 25% per annum. Overall, this means that Accenture Digital alone could be capable of delivering 4% organic per annum growth.”

On June 14, S&P Capital IQ was more downbeat, maintaining a Sell rating on the stock with a $65.00 price target. The firm cited changes in demand, pricing, growth and execution as reason for their caution.

“We downgraded our opinion on the shares to Sell from Hold in April 2014, reflecting valuation. We have noted challenges related to demand, pricing, growth and execution, especially in the important consulting business. We believe clients, particularly those in developed markets, are looking for help in containing costs and improving their operations. We view ACN as well diversified across geographies as well, which we think constitutes a competitive advantage. However, we see the stock as overvalued at a recent 17X our calendar year 2014 EPS estimate.”

Nike

Nike is expected to report fourth quarter EPS of $0.75 on revenue of $7.34 billion, compared to last year's EPS of $0.76 on revenue of $6.70 billion.

Merrill Lynch maintained a Buy rating on Nike with an $88.00 price target on May 16, noting that the company is likely to continue gaining market share around the globe.

“Our $88 PO is 22x our F2015 EPS estimate of $3.95, which is a premium to the stock's absolute multiple over the last five years of 15-20x but is supported by Nike's global growth outlook given continued market share gains, price increases, accelerating futures orders, powerful footwear product engine, strong execution and global infrastructure, inventory management and continued expansion internationally. Risks are slower growth globally pressuring further top line deceleration particularly in China, a more muted GM outlook due to FX pressure in Europe, and a rotation out of NKE into consumer discretionary names with more earnings recovery potential.”

On June 14, S&P Capital IQ also maintained a Buy rating on Nike with an $82.00 price target, saying that the company has the potential to end the year with strong earnings growth.

“We view the shares as attractively valued at recent levels. After what we saw as very encouraging results for the first nine months of FY 14, we see the year ending on a strong note, with this summer's World Cup set to provide another catalyst for a continued high-single digit revenue growth in FY 15. Globally, we see NKE successfully leveraging its product innovation to drive consumer demand across various price points. We also see the company applying consumer insights from its DTC business to deliver the right assortments to its wholesale partners. In Greater China, we think NKE's focus on meeting the needs of discerning Chinese consumers is starting to gain traction.”

On April 8, Stifel upgraded Nike from Hold to Buy with an $87.00 price target, saying that since the company's shares corrected following first quarter results, the risk and reward is more attractive.

“While we have remained constructive on both NIKE’s near-term fundamentals and opportunity for long-term value creation, our near-term caution on NKE shares and Hold rating had been predicated on: 1) overly ambitious consensus estimates, 2) under-appreciated FX headwinds to earnings, and 3) an extended multiple premium vs. the S&P. Despite continued fundamental strength, NIKE shares have corrected -3.8% since the company’s 1Q14 report and are down -9.9% ytd. vs. the S&P performance of +9.1% and -0.2% respectively.”

ConAgra Foods

ConAgra Foods is expected to report fourth quarter EPS of $0.59 on revenue of $4.38 billion, compared to last year's EPS of $0.60 on revenue of $4.59 billion.

On June 19, Merrill Lynch downgraded ConAgra Foods from Buy to Underperform with a $30.00 price objective, saying that the company's stifled earnings growth and high debt will keep the ConAgra shares from performing as well as other companies in the same space.

“We are downgrading ConAgra Foods (CAG) from Buy to Underperform. While we continue to believe that there is potential for the company to create an advantaged Private Brands business model by delivering higher quality products at a lower cost, it is clear given yesterday’s announcement that it will take longer for the company to realize its full potential. Valuation is attractive but with muted earnings growth, relatively high debt levels and no dividend growth in the near term we expect the stock to underperform its peers over the next 12 months. We lower our FY15/FY16/FY17 estimates from $2.32/$2.58/$2.82 to $2.22/$2.30/$2.36; our revised forecasts reflect management comments reducing the company’s earnings outlook, driven by lower Private Brands profits and Consumer Foods. In addition, asset impairments (primarily in Private Brands) suggest lower forward earnings potential than we had previously anticipated. Our free cash flow forecast is $510mn for FY15 and we think the company will be able to service/reduce debt and pay the dividend, but the pace of balance sheet deleveraging is slower than we anticipated.”

On June 18, Credit Suisse was more positive and maintained a Neutral rating on the stock with a $31.00 price target, though still advising caution as the company has issued a profit warning.

“Today ConAgra issued a profit warning saying 4Q EPS would be $0.55 (versus consensus of $0.62). They also took an enormous 4Q impairment charge of $681M for Ralcorp and apparently Chef Boyardee as well. Management attributed the lower than expected results to continued volume weakness in the Consumer Foods segment and on-going challenges with the Ralcorp integration. The company also capitulated on their near term and longer term growth expectations saying FY15 EPS would only grow mid-single digits. This is the second profit warning since they bought Ralcorp in 2013. We do not recommend buying the stock on weakness. These results reinforce the fear we expressed following the company's presentation at CAGNY that the marriage of a private label and branded business will continue to prove difficult. In our view, the pendulum shift to private label has sucked management's attention and resources away from the stewardship of its brands. Management's claim that they can create value for retailers by taking an "agnostic" approach between branded and private label solutions sounds like a long shot at best. Perhaps these two businesses would be better off splitting apart.”

On June 18, Morgan Stanley echoed Credit Suisse's concerns and maintained an Equal-Weight rating on ConAgra with a $30.00 price target.

“CAG reduces Q4 guidance & mid-term outlook, takes impairment on Ralcorp: CAG this morning preannounced Q4 EPS of $0.55 (vs. MS/consensus $0.62), while lowering its 2015 and 2016-17 EPS growth outlooks to mid-single & high-single digits, respectively (consensus previously forecast ~6% growth in F15, and up 10%+ thereafter). Key Q4 headwinds included: (i) Weaker than expected Consumer Foods volume (-7%, vs. MSe -3% and scanner -4%); and (ii) Significant profit weakness in Private Brands (down ~60% YoY), due to pricing concession and integration issues. CAG will also take a $681 MM non-cash impairment associated with Ralcorp (we cannot recall another similarly large goodwill write-off being taken so soon after an acquisition) and selected retail brands (Chef Boyardee).”

General Mills

General Mills is expected to report fourth quarter EPS of $0.72 on revenue of $4.43 billion, compared to last year's EPS of $0.53 on revenue of $4.41 billion.

On June 19, Merrill Lynch maintained a Neutral rating on General Mills with a $56.00 price target, citing the company's strong growth prospects.

“Our 12-month price objective of $56 is based on 17.5x our CY15 EPS estimate of $3.18. Our target multiple is a premium to the packaged food group average. We believe GIS should trade at a premium to the group given its defensive nature, higher top-line and profit growth prospects, strong portfolio, limited private label penetration, and solid execution compared to its peers. Downside risks to General Mills achieving our price objective are consumers trading down to private label, higher-than-expected commodity cost inflation, greater-than-expected weakness in Bakeries and Foodservice, and weaker-than-expected International sales.”

On March 19, Credit Suisse maintained a Neutral rating on General Mills with a $51.00 price target following the company's pre-announcement, which held no surprises.

“Following last week's pre-announcement, today General Mills reported adjusted EPS of $0.62, in line with the communicated range. Management attributed the quarter's poor results to weather, dairy inflation, and increased spending on US yogurt. The weather issues primarily affected the cost side where plant operations and logistics were disrupted by winter storms. The company lost 62 days of production, which has not happened in decades. In addition, school and other institutional closures contributed to a 7% sales decline for the convenience and foodservice segment. While management reaffirmed the growth model for 2015, they emphasized that the recovery will be slow. As of now the company sees normal inflation in FY15 of 4% - 5% and feels confident that it can offset it with pricing and HMM savings. We maintain our estimates slightly below consensus ($2.87 and $3.06 for FY14 and FY15) because of our concerns related to US yogurt, which has now fallen short of management's expectations three years in a row.”

On June 14, S&P Capital IQ maintained a Hold rating on General Mills with a $51.00 price target, noting that the company would face increased competition from lower priced products.

“We think GIS's brand strength will help to provide some protection from competition from less expensive products. However, we expect overall EPS growth to be restricted by continued weak domestic demand, slowing international macro-economic growth, and increased marketing and merchandising investment within the yogurt business which we believe is needed to drive sales growth.”

Economic Releases

Next week's economic calendar will be a busy one with investors closely watching Japanese data for a better picture of how the nation's economy is adjusting to its sale tax hike. After trade data this week showed disappointing figures, Japanese retail sales will be closely watched for any signs that domestic demand is picking up. Eurozone data will also be in the spotlight as investors look to PMI and GPD data for an idea of how the region's recovery is progressing.

Daily Schedule

Monday

Earnings Releases Expected: Sonic (NASDAQ: SONC), Micron Technology (NASDAQ: MU) Economic Releases Expected: US existing home sales, eurozone services and manufacturing PMI, German services and manufacturing PMI, French services and manufacturing PMI

Tuesday

Earnings Expected: Walgreens (NYSE: WAG), Apogee Enterprises (NASDAQ: APOG) Economic Releases Expected: US new home sales, the US redbook, German current assesment, German Ifo business climate index

Wednesday

Earnings Expected: General Mills (NYSE: GIS), Apollo Group (NASDAQ: APOL), Monsanto (NYSE: MON), Barnes & Noble (NYSE: BKS) Economic Releases Expected: German consumer climate, Italian retail sales, US durable goods orders, US oil inventory data, Italian consumer confidence

Thursday

Earnings Expected From: McCormick & Company (NYSE: MKC), ConAgra Foods (NYSE: CAG), Nike (NYSE: NKE) Economic Releases Expected: Japanese retail sales, Japanese CPI, Japanese unemployment, British consumer confidence, Irish GDP, British GDP

Friday

Earnings Expected From: KB Home (NYSE: KBH), Commercial Metals Company (NYSE: CMC) Economic Releases Expected: German CPI, eurozone industrial sentiment, eurozone business climate, eurozone consumer confidence, British GDP, Italian business confidence, French PPI, French GDP

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Sunday, May 31, 2015

Hydrox cookies bake plans for comeback

The Oreo-buster is back.

Hydrox cookies, those Oreo-like chocolate sandwich cookies, could reappear on store shelves as early as September, says Ellia Kassoff, CEO of Leaf Brands, which recently acquired the rights to the unused Hydrox trademark.

"The cosmic difference between Hydrox and Oreo is that Hydrox is a little more crispy; a little less sugary and stands up better in milk," says Kassoff, who will make the official announcement later this month at the Sweets & Snacks Expo in Chicago on May 20.

Even in a new world of nutritional consciousness, there is little evidence that America's sweet tooth is fading. Sales of packaged cookies and baked goods are expected to top $17 billion by 2017 -- up from $13 billion in 2012, reports Packaged Facts. While the return of Hydrox is expected to be a hit with Baby Boomers who may fondly remember the brand -- formerly owned by Kellogg's, Keebler and Sunshine -- it may be a tougher sell with Millennials who are not very familiar with the cookie brand, which hasn't been regularly sold on store shelves in almost a decade.

"We'll use social media to reach out to Millennials," says Kassoff. The 46-year-old CEO says that he likes to acquire old brands or trademarks that still have fans. "We recycle brands that get left on the side of the road."

But the Hydrox brand has special meaning to him. As a young kid raised by parents who were Orthodox Jews, he was only permitted to eat Hydrox -- not Oreos -- because, he says, at the time, Oreos were not kosher but Hydrox were. Today, both are kosher.

The move by Leaf Brands -- which also owns trademarks to Astro Pops, Wacky Wafers and Farts Candy -- comes just two years after giant Oreo celebrated its 100th birthday. Little-known, however, is that Hydrox was the original creme-filled chocolate sandwich cookie when it debuted in 1908 -- followed four years later by Oreo.

But executives at Mondelez, which owns the Oreo brand, are hardly showing any signs of concern. "Oreo i! s America's favorite cookie," says Laurie Guzzinati, a company spokeswoman. She declined to comment specifically on the return of Hydrox. Oreo sales, which exceed $2 billion globally and $1 billion in North America, have grown double-digits in the U.S. for the past two years.

Its been years since Oreo had a genuine rival on the shelf. Kellogg stopped making Hydrox in 2002. Then, in 2008, when Hydrox turned 100, Kellogg briefly resumed distribution, but only for a limited time.

Hydrox still has an online fan page, and a few months ago, Bill Burnett, of Salina, Okla., posted this wishful note about Hydrox: "My brother and I loved them. I never got a taste for the inferior "Oreo," which was far less tasty as the wonderful Hydrox. I think I've only bought one package of them in 50 years! Bring Hydrox back again!"

In fact, says Kassoff, it's fans like Burnett who convinced him to bring back the brand. "I hear from all of them," he says. "I know millions of people are waiting for the product."

But unlike the cookies giants, which typically must sell at least $100 million worth of a brand for it to be an even modest success, Burnett says he can sell a fraction of that and do just fine.

The pricing will be roughly where Hydrox was for years: less expensive than Oreos but more expensive than store brands. If a 14-ounce package of Oreos retails for about $4; Hydrox will be $3 and store brand sandwich cremes often cost about $2, he says.

But success won't come simply. At least one brand guru says Hydrox has lots of work to do. "Oreo conveys round and is fun to say and hear. Hydrox sounds scientific and medicinal ... not appetizing at all," says Steven Addis, CEO of Addis. "Oreo has become part of the fabric of America. Like Coke. This makes it somewhat unassailable, even from a superior product."

The cookies will be made at a factory in Southern California, but Kassoff won't say where. Maybe he doesn't want the fans lining up outside the gates just yet. But lat! er this s! ummer, when the first pack rolls of the line, Kassoff has big plans for that one.

"It's mine," he says. "I'm going to sit down and share it with my family."

Hydrox cookies [Via MerlinFTP Drop](Photo11: Leaf Brands)

Thursday, May 28, 2015

Coke Climbs As Q1 Results Surpassed Low Expectations

Shares of Coca-Cola (KO) were climbing more than 3% Tuesday, as lackluster expectations were enough to turn an in-line quarter into a great one for many investors.

Coke reported first quarter adjusted earnings of 44 cents a share, in line with analysts' expectations. Revenue fell 4.2% year-over-year to $10.58 billion, just squeaking past the consensus $10.55 billion.

However, there were bright spots in the quarter: The in-line results came despite foreign exchange headwinds as a result of the strong dollar, and overall volumes rose 2%, ahead of expectations and juiced by growth in fast-growing emerging markets.

On the conference call, management said that it doesn't anticipate currency headwinds to be as severe going forward, and the company's full year plan remains intact.

Citigroup's Wendy Nicholson reiterated a Buy rating and $44 price target on the stock following the report: "KO faced its toughest YoY volume comp of the year in 1Q (to +4% in 1Q13), which had led most folks to expect 0%-1% overall volume growth in 1Q14. We are encouraged that despite a confluence of headwinds – incl. one less selling day, the shift in timing of Easter, the new soda tax in Mexico, unrest in Russia, and robust health & wellness concerns pressuring the CSDs business globally – KO managed to deliver 2 pts of global volume growth. And, while this growth was driven entirely by the stills business, we are pleased that the margin drag from the negative mix shift did not prevent KO from posting 7% organic growth in op income. All in, we consider this to be a better-than-expected start to the year, and we hope this momentum continues, especially in light of easier volume comps to come."

Main rival PepsiCo (PEP) was also trading up at recent check; it reports earnings on Thursday.

Feeling Fashionable: Urban Outfitters Gains as Wedbush Predicts Sentiment Shift

Looks like retailer Urban Outfitters (URBN) is slightly fashionable again…at least for today.

After sinking to a 52 week low on Feb. 4 and reporting a mixed fourth quarter on March 10, shares are advancing today after Morry Brown of Wedbush upgraded the price target to $46 from $44 in a note.

Brown’s increase came following a meeting with CFO Frank Conforti and Director of Investor Relations Oona McCullough, from which he emerged confident of a third-quarter turn. He writes:

1) We believe current challenges at Urban are not driven by secular trends in teen spending, but by poor product execution; 2) category expansion presents a meaningful growth opportunity in the coming years, one that is not available to most peers; and 3) fears of a potential slowdown at Anthropologie lack a catalyst and conflict both with current merchandise execution and quarter-to-date same-store sales results, which show ongoing strength at the division. Over the next three-to-six months, we expect sentiment to shift on these topics, likely driving increases in second half of 2014 estimates and valuation.

Brown also praised Urban for its category expansion opportunities, strength in e-commerce penetration and strong brands:

Beyond near-term execution and sentiment shifts, we continue to view Urban as the best-in-class specialty retailer, and one of the few that remain well positioned for longer-term growth

Shares of Urban Outfitters have gained 1.6% to $37.87 at 3:49 p.m., while Abercrombie & Fitch (ANF) has risen 0.3% to $37.24 and the Gap (GPS) has dropped 1.4% to $40.16.

Wednesday, May 27, 2015

Jefferies Lifts Price Targets on Some Top Stocks to Buy

When brokerage firms on Wall Street start to raise price targets on names that have already been doing well, investors should take note. Typically when companies are hitting on all cylinders, earnings continue to grow both sequentially and year over year. This gives Wall Street analysts the kind of confidence they need to retain their Buy ratings and raise the target price.

In a new Jefferies research report, the analysts highlight some of their top stocks to buy in multiple sectors that are doing so well that the price targets have to be moved higher. We screened their report for not only the top stocks to buy, but the stocks that are in sectors that are poised to do well in 2014. Despite the sizable rally in the S&P 500 and the Dow Jones Industrial Average, both are still down for the year. Now may still be an ideal time to scale in some investment capital to these quality names at Jefferies.

Arris Enterprises Inc. (NASDAQ: ARRS) got hit when press reports indicated that Apple may be working with Time Warner Cable and other companies on a new set-top box. The Jefferies team do not know the specifications of the device. It still may use “HDMI pass through” architecture like XBox One (and therefore will still require a cable STB to support cable content). That would bode well for Arris. The Jefferies target is lifted to $30. The Thomson/First Call estimate is $28.05. Arris closed on Friday at $27.87.

C&J Energy Services Inc. (NYSE: CJES) undertook an aggressive expansion plan for 2013. That strategy culminated in several deals during the fourth quarter and further plans for 2014. The domestic hydraulic fracturing specialist has spent the past couple of years expanding the business line and, surprisingly, building new equipment. Now with natural gas inventories plunging to five-year lows, C&J Energy is positioned to take advantage of a market where utilization is already firming. Jefferies price target holds steady at $28, and the consensus estimate is $25. Shares closed Friday at $24.50.

Discover Financial Services (NYSE: DFS) is the top pick in credit cards at Jefferies. Not only did the analysts up the numbers dramatically for the year, they also think that the rest of Wall Street is way low on modeling asset growth for the company. Lower cost Internet deposits, better performing student loans, lower charge offs and slower delinquent account repricing will support margins. Investors are paid a 1.4% dividend. Jefferies lifts its price target from $57 to $65. The consensus target is $61.96. Discover closed Friday at $56.92.

Orbital Sciences Corp.‘s (NYSE: ORB) 2013 results and 2014 outlook point to the revenue growth and high free cash flow potential of the franchise. The Jefferies analysts see opportunities for new orders, 7% revenue growth and acceleration of free cash flow, and they expect shares to continue to advance. The company develops and manufactures small and medium-class rockets and space systems for commercial, military and civil government customers. Jefferies raises its price target from $27 to $31. The consensus number is $33.17. The stock closed on Friday at $28.27.

Precision Drilling Corp. (NYSE: PDS) is Canada’s leading oilfield services firm, which provides contract drilling, well servicing and strategic support services to its customers. The company was formed as a private drilling contractor in the early 1950s and has grown on the back of fleet expansion and acquisitions, most notably the $2 billion purchase of Grey Wolf in 2008. The company pays investors a 2.1% dividend. The Jefferies price objective goes from $11 to $13. The consensus stands at $12.78. The stock closed Friday at $10.39.

Qihoo 360 Technology Co. Ltd. (NYSE: QIHU) provides Internet and mobile security products in the People’s Republic of China. Its core Internet security products include 360 Safeguard, a solution for Internet security and system optimization; 360 Antivirus, an antivirus application that uses multiple scan engines to protect users’ computers against various kinds of malware; as well as 360 Mobile Safe, a security program for the Google Android, Apple iOS and Nokia Symbian smartphone operating systems. The Jefferies price target rises from $105 to $125, and the consensus target is $94.60. Those consensus numbers may go higher as the stock closed Friday at $99.25.

When analysts sense that a stock they cover has solid upside potential, they usually feel comfortable raising the price target as the stock nears the current target. When the same analysts see business grinding sideways, they typically cut a stock to Hold as it nears or hits the current target. Clearly the Jefferies analysts have confidence, as their numbers are going higher.

Monday, May 25, 2015

A Strong Athletic Brand Racing Back After Mishap

Lululemon Athletica Inc. (LULU) is a designer, manufacturer and retailer of yoga-inspired apparel. Since its creation in 2002, the company has grown from a single store to over 250 locations in the US, Canada and Europe. Its original target market is women in their 30s, but the brand has broadly expanded to new categories including women of all ages, men, youth and focused fitness wear. Its designs have performance features and are made with technology enhanced fabrics. The high quality of its products has positioned the company as a premium brand that caters to affluent consumers.

Its marketing strategy has allowed Lululemon to attain great brand loyalty. The firm distributes its products through yoga studios and top fitness clubs and is also affiliated with yoga and fitness instructors. Thus, the company has developed great connection with its customers. This approach and the company´s adaptability to new market needs have proved right, since annual sales have risen almost six-fold since 2007.

Quality Issues and Powerful Competition

Despite its strengths, Lululemon suffered tough quality issues over the last quarters. Its heaviest misstep was the sheerness of its popular luon fabric. This defect resulted in the company´s pulling out from the market all of its luon-made items, which represent around 17% of all yoga pants. As a result, there was a shortage of these products during the first quarters, which had a significant impact on comps. The fourth quarter also showed a decline in sales with comparative same-store sales expected to be in the low-to-mid single digits. Such results hadn´t been seen since the recession, when the company reported negative comps on the first two quarters of 2009.

Moreover, an unusual January saw traffic and sales trends slow down significantly, partly due to two Polar Vortexes hitting the middle and east coasts of U.S. and Canada. Consequently, the company suffered a cut in its fourth quarter estimates and earnings per share guidance was lowered to $0.71-$0.73 from $0.78-$0.80. Nevertheless, analysts' forecast for fiscal 2014 still sees a rebound in earnings growth which is expected to raise by 17.3%.

Another factor threatening to erode Lululemon´s margins is growing competition from strong companies such as GAP (GPS), Under Armour Inc. (UA) and Nike (NKE). The hole opened by the company´s inventory shortage, and the damage the luon incident caused to the brand image, was well addressed by its rivals. In this manner, UA started producing yogawear apparel and recently launched its studio yoga wear ad campaign. Following this line, GPS opened several Athleta yogawear outlets near Lululemon locations and has partnered with yoga instructors to offer fitness classes. And , NKE is also targeting high to the women´s yoga apparel segment.

Balance Sheet and Valuation

In spite of all headwinds, Lululemon is still a fast growing and profitable company. Its balance sheet shows no debt and it has strong free cash flow, which the company is redirecting to investments in order to expand its operations to new categories. As long as the firm avoids future product missteps, the success in its new initiatives and its strong brand identity can provide Lululemon with a narrow economic moat.

A super high return on equity of 30.50 compared to the 9.0 industry median goes along with an outstanding return on capital of 135.3 relative to the 19.1 industry average. Its revenues grew 43.4 compared to rivals' average of 7.0, and earnings per share soared to 65.20, leaving the rest of the industry look weak at 13.50. Lulemon´s stocks trade at 23.40 its trailing earnings compared to 18.20 held by the industry median. Analysts' estimates forecast a growth of 16.9% and for the next five years, the company's earnings per share are expected to grow an impressive 18.4% per year. Rivals Gap and Nike on the other hand expected an increase of 13.5% and 12.3% respectively in their EPS. Therefore, although investment guru Steve Mandel (Trades, Portfolio) recently sold out, I feel strongly bullish about the Lululemon´s growth potential.

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

About the author:Vanina EgeaA fundamental analyst at Lone Tree Analytics

Visit Vanina Egea's Website

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Sunday, May 24, 2015

47 Ronin, 50 New Highs: Stocks Cap Stellar Week With Friday Pause

Let’s talk about expectations. Specifically, let’s talk about expectations for the Keanu Reeves-led 47 Ronin. The troubled film–and that’s the word just about everyone uses to describe it–cost at least $150 million to make, and well before its release date Universal Studios knew it would be a stinker. But here’s the thing: 47 Ronin has made $11 million in its first two days of release and could end up making $50 million at the U.S. box office. No, that won’t begin to cover its costs, but again, it’s all about expectations. If the movie is what the critics say it is, $50 million might not be a bad haul.

Now consider the U.S. stock market. The Dow Jones Industrial Average rose 1.6% to 16,378.41 this week, and narrowly missed closing at a 51st new all-time high this year after it fell 0.01% today. Likewise, the S&P 500 gained 1.3% to 1,841.40, and it too missed its 45th record high by just 0.03%.

But as the year ends, it’s time to think about expectations, as in what will the next year bring. And just as what came before could color how 47 Ronin is perceived, its likely that investors will let the Dow Jones Industrial Average’s 26% gain and the S&P 500′s 29% rise, color their outlook–for the better or for the worse.

Don’t. Let the folks at Birinyi Associates explain:

Our research has also concluded that the market works on its own, not calendar, cycle. We postulate that the markets of 1982, 1990 and 2009 have four stages and that this is the exuberant phase. Perhaps our biggest surprise this year has been that we have still not reached the point in the fourth phase where the optimists triumph. At the risk of being considered an annual projection we would recommend that investors at least consider the possibility of another outstanding year.

Given that the market does not adhere to the Gregorian calendar, we have adopted the practice of forecasting (and investing) in documentable stages or steps…Analyzing the trend of the S&P, the top of its current trading range is 1,870 which we would consider as a possible target. While we will fine-tune this after all of 2013's results and data have been posted, we are comfortable, confident and most assuredly positive.

Citigroup’s Tobias Levkovich frets about a first-quarter selloff:

We continue to think that a 1Q14 correction (in the 5%-10% range) is possible given weakening EPS forward guidance trends…not to mention euphoric sentiment levels. While credit conditions remain favorable in the US, disappointment in emerging economies and a lackluster though improving Europe could hold back the earnings story. Admittedly, better hiring intentions are encouraging, plus stock buyback activity has stepped up and money has begun to flow into equity funds.

Investors, however, are showing no signs of letting up on the risk taking. Want evidence? Just look at the top-performing stocks this week. Four of the top-five come from the materials sector, which could benefit from a stronger economy. Cliffs Natural Resources (CLF), which rose 9.6% this week, Allegheny Technologies (ATI), which gained 7.7%, U.S. Steel (X), which advanced 7.7%, and Dow-exile Alcoa (AA), which finished the week up 7.6% They were joined by PulteGroup (PHM), which rose 7.8% after a delay of a Fannie Mae and Freddie Mac mortgage-fee hike was mooted.

Like I said, expectations.

Wednesday, May 20, 2015

Target: Justice Dept. investigates data breach

NEW YORK (AP) — Target said Monday that the Department of Justice is investigating the credit and debit card security breach at the retailer that's being called the second largest incident in U.S. history.

The investigation comes after the discounter revealed last week that data connected to about 40 million credit and debit card accounts was stolen between Nov. 27 and Dec. 15. The theft is exceeded only by a scam that began in 2005 involving retailer TJX Cos. It affected at least 45.7 million card users.

The Department of Justice declined to comment on whether it's investigating the breach at Target, the nation's second largest discounter. But Target said that it's cooperating with the DOJ's probe.

CYBERTRUTH: Why the Target breach won't be the last of its kind

The news came as Target also said that it is working with the U.S. Secret Service in the retailer's own investigation and that its general counsel held a conference call on Monday with state attorneys general to bring them up to date on the breach.

"Target remains committed to sharing information about the recent data breach with all who are impacted," said Molly Snyder, a Target spokeswoman, in a statement.

The moves come as Target is trying to deal with the bad publicity that's being generated by the breach during what is typically the busiest shopping season of the year. By Monday evening, more than a dozen Target customers had already filed class-action lawsuits in federal courts around the country, with some alleging Target was negligent and should have done a better job of protecting customer data.

Target has said that it told authorities and financial institutions once it became aware of the breach on Dec. 15. The company issued an apology to customers and doubled the number of workers taking calls from customers around the clock. It also offered 10% off to customers who wanted to shop in its stores on Saturday and Sunday and free credit-monitoring services to those who are affected by the issue.!

But there are early signs that some shoppers are scared off by the breach. Scotty Haywood said he plans to no longer shop at the store because he was a victim of the breach. After his wife tried to use the couple's debit card on Thursday to buy a few items at a grocery store, he said the card was denied. He said the couple knew something was wrong because they had $2,200 in the account.

"The possible savings of a few dollars (by going to Target) are nothing compared to the money that has been stolen from us," he said.

Overall, Customer Growth Partners, a retail consultancy, estimates that the number of transactions at Target fell 3% to 4% on Saturday, which is usually one of the top busiest days of the season.

"Before this incident, Target had a chance of at least a decent Christmas. Now, it will be mediocre at best," said Craig Johnson, president of Customer Growth Partners, a retail consultancy.

Meanwhile, consumer perception about the Target brand has dropped steeply since the news broke Wednesday night, according to YouGov BrandIndex, which surveys 4,300 people daily. The index ranges from 100 to negative 100 and is compiled by subtracting negative customer feedback from positive customer feedback.

Before the breach, Target's index was 26, higher than the rating of 12 of its peer group of retailers that include Wal-Mart. Now, it's negative 19.

Eric Hausman, a Target spokesman, declined to comment specifically on sales or the impact of its 10 percent offer, but said that stores "were busy."

Target, which is based in Minneapolis and has nearly 1,800 stores in the U.S. and 124 in Canada, said on Friday that it's heard of "very few" reports of fraud so far. But experts say the investigation is still in its early stages.

The retailer also said the Secret Service has asked it not to share many of the details of the probe.

How Russia and China Killed Cisco

John Chambers, the longtime CEO of Cisco Systems Inc. (NASDAQ: CSCO) made a presentation to investment analysts. It contained dozens of PowerPoint slides, but the audience only cared about one. It showed that over the past two quarters, sales in China, Russia and Brazil wrecked Cisco’s short-term, and perhaps longer term, fortunes. The business press hammered the downturn in Cisco’s prospects, as dozens of media outlets predicted that Cisco’s major opportunities had died.

At the center of Chamber’s presentation was what must be considered positive news, although it was mostly overlooked. According to Reuters, he said to reporters, ”If the U.S. does well we’ll pull the rest of the world out of this.” Many economists believe that the accelerated growth of the U.S. economy has already started and will only improve into 2014. Under those circumstances, America would resume its long-time role as the engine of demand for both business and consumer goods and services, with a ripple effect that will go worldwide. Chamber’s real message was optimistic. Russia and China appeared to be at the heart of his presentation. There were not.

Pessimistic analysts regard Cisco as a dinosaur, no matter where it does business. The company has too much competition in its big router business. And its expensive products will be replaced by ones that rely more heavily on software — more efficient and with lower costs to operate. The other trend that Chambers blamed for Cisco’s problems is falling sales of set-top boxes. As consumers move from the traditional boxes deployed by almost all cable companies to Internet-delivered content, set-top box revenue may continue to decline. On the other hand, while router technology may have advanced quickly, Cisco’s router systems remain at the core of much of the Internet’s infrastructure. Between the lines of Chamber’s forecasts was not a statement that Cisco had a product problem. Rather, it has a regional demand one. The risk, therefore, is that Chamber’s basic analysis of Cisco’s problems is wrong.

Ultimately, Russia and China will not kill Cisco. The company will die only if Chamber’s assessment of its product prospects is flawed.

Tuesday, May 19, 2015

Nissan recalling 150k SUVs for brake problem

The 2013 Infiniti JX35 and 2014 QX60 are among the crossover SUVs Nissan is recalling. The closely related Nissan JX35 is also being recalled.

NEW YORK (CNNMoney) Nissan is recalling approximately almost 152,000 Nissan and Infiniti SUVs due to a computer problem that could weaken brake performance.

In-car computers that control the anti-lock braking system may not respond correctly during light braking on rough surfaces. The result is that the vehicles can take slightly longer than expected to come to a full stop.

Anti-lock braking systems pump the brakes rapidly during hard braking to prevent the wheels from locking up, or skidding. When tires begin skidding across the pavement it becomes impossible to control a car so anti-lock braking systems are supposed to provide for safer, more controlled, stops.

Gallery - 8 collectible SUVs

The vehicles involved in the recall are some Nissan Pathfinders from the 2013 and 2014 model years as well as 2013 Infiniti JX35 and 2014 QX60 SUVs. Infiniti is Nissan's luxury division.

Can the Infiniti Q50 compete with the Germans?

Nissan (NSANF) will ask owners of effected vehicles to bring their vehicles to a Nissan or Infiniti dealer to have the ABS computer chips reprogrammed. The service will be performed at no charge. No accidents or injuries have been reported due to the problem, Nissan said.

Wednesday, May 13, 2015

Ellison brand a big winner, too, in America’s Cup

The America's Cup win is great for America and terrific for sponsor Oracle, but the biggest winner may be the billionaire owner whose personal brand just got the largest lift of all: Larry Ellison.

"Oracle is really code for Ellison," says Rob Prazmark, founder and CEO of 21 Marketing, which specializes in sports marketing. "Ellison uses sailing and his America's Cup victories to further Oracle's business relationships."

Only a handful of CEOs are as big as their brands. Phil Knight and Nike are synonymous. So are Mark Zuckerberg and Facebook. Larry Page and Google. And, of course, Steve Jobs may have been bigger than the Apple brand itself. So when a brand reaches new heights, as Oracle has with Wednesday's comeback-of-a-lifetime America's Cup win, so rises the reputation of Ellison, the billionaire behind the boat.

ORACLE'S WIN: Stunning America's Cup comeback

LARRY ELLISON: World's wealthiest underdog?

What should Ellison — and the Oracle brand — do next? Sports marketing gurus offer these suggestions:

• Timing is everything. The big tech fest for business and Internet technology honchos, Oracle OpenWorld 2013, concluded Thursday in San Francisco. What a way to end the show, with the America's Cup champs appearing at the conference keynote address. Oracle enticed folks to attend with commemorative T-shirts that were promised to the first 1,000 attendees. It also gave them the chance to have their photos taken alongside the Cup. The big win was also highlighted on the conference's blog. "If they had lost, it could have been a very bad story; but now, it is an incredible story," says Prazmark.

• Brag a little. Perhaps Oracle should consider some tablet advertisements, reminding Americans that the leader in corporate software is still the leader in yachting, says Chris Raih, founder of the sports marketing agency Zambezi. Raih suggests this headline: "Oracle: maintaining our lead in the software industry and the high seas."

• Bring the t! hrill to clients. Oracle should create some sort of America's Cup "daily experience" that brings the thrill of the victory to top clients and vendors, suggests David Schwab, senior vice president at Octagon, a sports and entertainment marketing agency. This is particularly important in markets with water access, including San Francisco, Los Angeles, New York, Chicago and Miami, he says.

• Personal brand. Not all the personal branding need be Ellison's. Oracle skipper, Jimmy Spithill, an Australia native who also led the team to victory in the last cup, is already a hot marketing item in his native country, and should now be increasingly marketable in the U.S. market, says Raih.

• Create an image. Unlike New Zealand, which cautiously sat on its seemingly insurmountable 8-1 lead in the race, the Oracle brand should now emphasize, "It's not complacent in the marketplace and pushes the outer limits of creativity and innovation," says Darcy Bouzeos, president of DLB, a sports and entertainment marketing firm

• Focus on the rich. Even after this win, the America's Cup remains a "very niche" sport that's laser-focused on the "über-wealthy" says Prazmark. Ellison and Oracle still need to remember that, whenever and wherever they flaunt this big victory.

Tuesday, May 12, 2015

Non-Bank Banks

Neil George, editor of By George, discusses non-bank banks and the Small Business Investment Incentive Act and suggests a way to aid your investments in the tech sector.

NANCY: Hi, my guest today is Neil George. Hi Neil, and thank you so much for dropping by.

NEIL: Nancy, it’s always a pleasure.

NANCY: That’s wonderful. Let’s talk about non-bank banks. When I think about non-bank banks, I think about the way they used to be back in the 1970’s and the 1980’s, and that’s not what the terminology means today.

NEIL: Well Nancy, there’s another phenomena in the marketplace that stems from a period of time in which the US was in a real pickle. You and I both remember the 1970’s. We both might have been little tykes back then…

NANCY: Yes, we were.

NEIL: But at least we remember our history. Inflation was really out of control. Interest rates were to the moon. Many people were having difficulty getting mortgages; a lot of people had one or two mortgages on their homes.

NANCY: And negative amortization mortgages.

NEIL: Even worse, and the idea – it wasn’t because people had bad credit, it was because banks really were kind of constrained and they knew with inflation in the double digits, if they made a mortgage loan, they were getting paid back in effectively less valuable dollars in the future, and what made it even worse and made the economy really go into that stagflation mode was that businesses couldn’t get loans, because again, banks were afraid to make loans and they were very fearful of the impact of inflation. Jimmy Carter, the president back then, and congress…

NANCY: The peanut guy.

NEIL: Yeah, the fellow from Georgia – no, and the naval officer.

NANCY: Right, a physicist.

NEIL: And a physicist, nuclear physicist, so a guy with a propeller head, but regardless of how people judge him and his presidency, one of the bit of legislations that he basically signed off on was the Small Business Investment Incentive Act of 1980, and what this bit of legislation did, it basically examined small and mid-sized businesses and what they needed. Needed to have access to capital, needed to have access to loans, and therefore, what this did was it enabled companies to be setup much like investment companies that were setup under the Investment Company Act of 1940. In other words, like funds.

NANCY: Right.

NEIL: Companies could set themselves up as a company and be able to make loans to businesses, particularly small to mid-sized firms, and they would not be taxed as a corporation, so they don’t have to pay any corporate income tax.

NANCY: Interesting.

NEIL: But, at the same time, the money that they would earn would be passed through to their investors. This provides two nice incentives. One is that the investor in these sorts of companies that would be funding it would be able to get a fairly good dividend, and back then it was pretty high, and today, there were a handful of these sorts of companies that are quite well and we’ll talk about a few in a moment, if you would like.

NANCY: Is there a percentage that they’re required to give back to the investors?

NEIL: No, there isn’t.

NANCY: Okay, so not like a REIT.

NEIL: It’s not like a REIT, but there is a general incentive for them to pass through, so the idea the investor gets a lot of cash flow back, but also, they get all the depreciation and all the other expenses passed through, so that part of their dividend is going to be shielded from current tax liability, so the benefit is you get a lot of interest in your dividend, and you’re not going to have to pay as much of your own income tax on that amount, so it’s a win-win all around. No double taxation and you actually get part of your dividend is tax shielded, so there have been a variety of companies that have used this formula to be able to operate, and one of the ones, since we’re in San Francisco, not too far away from here is Paolo Alto, which is sort of the tech mecca of the US.

NANCY: Exactly, Stanford University.

NEIL: And you have a lot of guys in hoodies in their parent’s garages that are coming up with the gizmos that you and I and the rest of the world are going to want to have or got to have, and we’ll stand in line at various stores to buy these little gizmos.

NANCY: And pay a premium for them.

NEIL: And we’ll pay premium, or it might very well be the next wiz bang thing on the internet, or who knows that it’s going to be, but tech is one of those things that Northern California is famous for. Well, there’s a firm that’s headquartered in Paolo Alto right in the thick, and there’s a – the guys running this company have really gotten to know all those guys in the hoodies in the garages, and they’ve been able to identify the guys that are going to make it and not, and so their process is they will basically come in, they will help examine the company, and a lot of them are everything from small to already established private companies in the technology world, but these companies need funding, and therefore, they will make loans to them.

NANCY: But not like VC’s where they take out part of the equity.

NEIL: No, but what they do is they do have an equity incentive, so the idea that the companies have to pay back their loans, but they also get to participate in the equity through warrants, so when the companies go public and cash out, they’ll get a piece of the action, as well as their loans repaid, and they’ve been doing this over and over. Now, the company in Paolo Alto is a company called Hercules Growth Technology Corporations, HTGC, and it’s a company that has had a fairly good track record. Some companies, like, you might remember Facebook.

NANCY: Yes, I might have heard of that.

NEIL: You might have heard of Facebook. Well, Facebook came to the market about a year ago, and one fellow with the hoodie in the garage…

NANCY: Right, Zuckerberg.

NEIL: Mr. Zuckerberg, who still likes his sweatshirts. He was able to make about $18 billion dollars out of it. Now, investors, subsequently, they’re just getting their money back kind of.

NANCY: Right, a year later.

NEIL: A year later, but Hercules got their money up front, just like Mr. Zuckerberg. Another company you might have heard of, Google.

NANCY: Yes.

NEIL: That one’s kind of famous now. Well, years ago, it wasn’t so famous, and the idea that those are two examples, and there’s a myriad of other investments that this company has helped to fund with these sort of loans. Now, one of the other great benefits, Nancy, is that, as you know, people at the Money Show are always interested in income, and income is one of those things that retirees, as well as people looking to build a portfolio really needs, and so Hercules throws off a lot of cash and the current dividend is about 8% right now.

NANCY: Very healthy.

NEIL: So the idea, if you like the idea of investing in technology and you like the idea of being able to cash in on what’s next and what’s going to be really big, but you also want to make sure you’re going to be paid and get a good dividend, Hercules is one I really think people ought to take a look at.

NANCY: Fascinating. Thank you, Neil.

NEIL: Thanks Nancy.

NANCY: And thanks for being with us on the MoneyShow.com Video Network.