Friday, February 21, 2014

Stocks to Watch: Bank of America, Chelsea Therapeutics, NuVasive

Among the companies with shares expected to actively trade in Wednesday’s session are Bank of America Corp.(BAC), Chelsea Therapeutics International Ltd.(CHTP) and NuVasive Inc.(NUVA)

Aeropostale Inc.(ARO) has contacted at least two private equity firms to gauge interest in a potential sale, Bloomberg News reported Tuesday, citing people with knowledge of the matter. The company isn’t currently in negotiations for a sale, the people told Bloomberg. Shares rose 5.4% to $8.15 premarket.

Bank of America’s fourth-quarter profit surged, beating analyst estimates, as the banking giant bounced back from a year-ago weighed down by one-time charges, while the bank benefited from stronger credit quality. The company logged large litigation expenses but was helped by a narrower loss in its consumer real estate division. Shares edged up 2.3% to $17.15 premarket.

Chelsea Therapeutics’s blood-pressure drug Northera received strong support from a U.S. Food and Drug Administration advisory panel, raising prospects it will receive approval from regulators. Shares more than doubled to $6 premarket.

Datalink Corp.(DTLK), a provider of data-center infrastructure and service, boosted its fourth-quarter earnings outlook amid expectations that its revenue will be stronger than previously anticipated. Shares surged 31% to $14.20 premarket.

ExOne Co.(XONE) lowered its revenue guidance for the year amid a delay in completed sales for some of its 3-D printers. Shares dropped 16% to $52.57 premarket.

Medical device company NuVasive raised its revenue expectations for 2013, saying its growth outperformed the broader spine market. Shares climbed 8.1% to $36.50 premarket.

PetSmart Inc.(PETM) said it won’t replace the chief operating officer position after the retirement of Joseph O’Leary this year, a move that mirrors a growing trend among U.S. corporations. Shares dropped 3.1% to $65 premarket.

Fastenal Co.(FAST) said its sales and margins trends continued to weaken in the fourth quarter after it warned of the trend earlier in December. “This weakening was worse than we expected and this created additional drain on our ability to grow earnings,” Fastenal said.

10 Best Japanese Stocks To Invest In Right Now

General Motors Co.(GM) has announced it will pay a 30-cent quarterly dividend, marking one of the final financial acts by Chief Executive Dan Akerson, who leaves office at midnight Wednesday. The company also said it expects its total earnings before interest and tax to be modestly improved this year, with its underlying operating performance more than offsetting increased restructuring expense.

Medical device company HeartWare International Inc.(HTWR) issued a revenue forecast that fell short of market expectations.

Intrepid Potash Inc.(IPI), the largest potash producer in the U.S., plans to cut its workforce by 7% and cut executive compensation as part of a plan to trim costs in reaction to weaker prices for the fertilizer ingredient.

Kaiser Aluminum Corp.'s(KALU) board raised the quarterly dividend by 17% and also authorized an additional $75 million in stock buybacks.

Linear Technology Corp.'s(LLTC) fiscal second-quarter profit climbed 18% as the chip manufacturer reported higher sales and gross margins.

MeadWestvaco Corp.(MWV) expanded its cost-cutting efforts and said it plans to simplify the structure of its packaging businesses, as it strives to improve its performance.

Verisk Analytics Inc.(VRSK) agreed to acquire EagleView Technology Corp. for $637 million, a move the company expects will enhance its position in the imagery analytics market.

Thursday, February 20, 2014

10 Best Prefered Stocks To Own For 2015

Some have wondered why gas prices haven't plunged while America's energy production booms. The simple answer is that oil is a global commodity and fairly easy to transport, so it's priced on the global market. Rising U.S. production has been mostly offset by Iranian sanctions. There's little net impact on price.

Natural gas is different. It's more difficult to transport, so prices tend to vary depending on location. America's energy boom has pushed natural gas prices down, hitting decade-lows last year. That has a big impact on home energy bills, as the Energy Information Administration noted this week:

Consumers spent 2.7% of their household income on home energy bills last year, the lowest percentage in 10 years. Aggregate home energy expenditures by U.S. households fell $12 billion in 2012 from the 2011 level. In 2012, prices for residential natural gas decreased 3% from the previous year, while household electricity prices stayed about the same.�

10 Best Prefered Stocks To Own For 2015: Buderim Ginger Ltd (BUG.AX)

Buderim Ginger Limited primarily engages in the manufacture and marketing of confectionery ginger and other ginger-based products to industrial, food service, and retail customers worldwide. Its products include naked ginger, baby stem ginger syrup, crystallized syrup, ginger beers, ginger refreshers, chews, gingerbons, cordials, ginger spreads, naked ginger seconds, original ginger marmalades, OsteoSoothe and QueaseEase capsules, sweet chilli and ginger sauces, and whipped ginger. The company is also involved in the processing and marketing of macadamias to wholesale and retail customers worldwide; and manufacture and marketing of frozen bakery products to food service and retail customers in Australia. In addition, it engages in tourism operations that cover the sale of ginger and other retail gift and food products, and the provision of leisure activities within the Australian tourism market. Buderim Ginger Limited was founded in 1941 and is headquartered in Yandina, Au stralia.

10 Best Prefered Stocks To Own For 2015: Five Oaks Investment Corp (OAKS.N)

Five Oaks Investment Corp., incorporated on March 28, 2012, focused on investing in, financing and managing a leveraged portfolio of Agency and Non-Agency residential mortgage-backed securities, or RMBS, residential mortgage loans and other mortgage-related investments. The Company invests in both Agency RMBS and Non-Agency RMBS.

As of December 31, 2012, the Company�� portfolio consisted of Agency RMBS and Non-Agency RMBS. The Company is managed by Oak Circle Capital Partners LLC.

Top 5 Penny Companies To Own For 2014: Tesoro Logistics LP(TLLP)

Tesoro Logistics LP engages in the ownership, operation, development, and acquisition of crude oil and refined products logistics assets in the United States. The company is involved in the gathering, terminalling, transportation, and storage of crude oil and refined products. Its assets consist of a crude oil gathering system in the Bakken Shale/Williston Basin area of North Dakota and Montana; eight refined products terminals in the midwestern and western United States; a crude oil and refined products storage facility; and five related short-haul pipelines. The company was founded in 2010 and is based in San Antonio, Texas. Tesoro Logistics LP is a subsidiary of Tesoro Corporation.

Advisors' Opinion:
  • [By Ben Levisohn]

    Yesterday, Tesoro Corp. (TSO) sold a bunch of assets to Tesoro Logistics (TLLP) for $650 million, the second “drop-down,” or sale of assets by a parent company to a partnership.

  • [By Robert Rapier]

    RRMS didn’t see the same kind of price surge in 2013 as ACMP, so offers a more generous  annualized yield of 5.2 percent. RRMS also has a lower total debt/equity (mrq), at 22 percent versus ACMP’s 71 percent. For Q3 2013, RRMS reported $15.4 million in adjusted EBITDA, a year-over-year increase of 65 percent. In comparison, adjusted EBITDA for the 2013 third quarter totaled $227 million for ACMP, an increase of 90 percent year-over-year.

    Tesoro Logistics (NYSE: TLLP) was spun off by the refiner Tesoro (NYSE: TSO) in 2011 to operate pipelines leading to and from its plants. TLLP’s assets consist of a crude oil gathering system in the Williston Basin area of North Dakota and Montana, 17 refined product and storage terminals, three dedicated storage facilities, four California marine terminals, a rail unloading facility, and a petroleum coke handling facility.

    Distributions have  grown steadily since the IPO, from $1.35 per unit (annualized) in Q2 2011 to the current annualized level of $2.18/unit. At a current unit price of $53.49, TLLP is well off its 52-week high of $71.92. Distributions have increased each quarter since the IPO, and units currently have a yield of 4.2 percent. But investors should be wary given that TLLP is highly leveraged. Its total debt/equity (mrq) is nearly 400 percent, much higher than most competitors.

    Of the three MLPs — ACMP, RRMS and TLLP — RRMS looks best at the moment with the least downside risk. It is by far the least-leveraged, didn’t have a huge run-up in 2013 that depressed its yield, and it has managed to steadily grow revenues and distributions since its IPO.    

  • [By Lee Jackson]

    Tesoro Logistics L.P. (NYSE: TLLP) is an Oppenheimer favorite, especially after the pullback in the stock price. The company has strong fee-based contracts that increase the likelihood of consistent increases in the distribution. The Oppenheimer price target is posted at $61, while the consensus is at $63. Shareholder are paid a 3.8% distribution.

  • [By Lauren Pollock]

    Tesoro Logistics LP(TLLP), a company spun off in 2011 by oil refiner Tesoro Corp.(TSO), agreed to pay its former parent $650 million to acquire Los Angeles assets that include two marine terminals and a pipeline system.

10 Best Prefered Stocks To Own For 2015: Teledyne Technologies Incorporated (TDY)

Teledyne Technologies Incorporated provides instrumentation, digital imaging products and software, aerospace and defense electronics, and engineered systems in the United States and internationally. The company?s Instrumentation segment provides monitoring and control instruments for marine, environmental, scientific, industrial, and defense applications, as well as harsh environmental interconnect products. Its Digital Imaging segment includes sponsored and centralized research laboratories benefiting government programs and businesses, as well as development efforts for innovative digital imaging products for government and space applications. It also includes infrared detectors, cameras, and optomechanical assemblies. Teledyne Technologies? Aerospace and Defense Electronics segment provides electronic components and subsystems and communications products, including defense electronics, data acquisition, and communications equipment for air transport and business aircra ft and components and subsystems for wireless and satellite communications, as well as general aviation batteries. The company?s Engineered Systems segment provides systems engineering and integration, advanced technology application, software development, and manufacturing solutions to space, military, environmental, energy, chemical, biological and nuclear systems, and missile defense requirements. This segment also designs and manufactures hydrogen generators, thermoelectric and fuel-cell based power sources, and small turbine engines. Teledyne Technologies? customers include government agencies, aerospace prime contractors, energy exploration and production companies, industrial companies, and airlines. The company was founded in 1960 and is headquartered in Thousand Oaks, California.

Advisors' Opinion:
  • [By Seth Jayson]

    Calling all cash flows
    When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Teledyne Technologies (NYSE: TDY  ) , whose recent revenue and earnings are plotted below.

  • [By Inyoung Hwang]

    Teledyne Technologies (TDY), which gets 80 percent of its revenue from the U.S., raised its 2013 per-share earnings projections last week. The Thousand Oaks, California-based aerospace and defense electronics provider, up 39 percent for the year, exceeded analyst projections by 8.1 percent last quarter, data compiled by Bloomberg show.

  • [By Geoff Gannon]

    We should be careful to overstate the tax aspect of buybacks. For example, Q-Logic has a lot of cash overseas (almost all of its $500 million). The company could ��in theory ��make several tender offers for close to 50% of its market cap with that cash. This is the Teledyne (TDY) approach. Q-Logic doesn�� do that for several reasons. One, it likes having some cash on hand at all time. But, more importantly, it doesn�� want to pay the tax.

10 Best Prefered Stocks To Own For 2015: Ulstra Lithium Inc (ULI.V)

Ultra Lithium Inc. engages in the acquisition, exploration, and development of mineral properties in Canada. The company primarily explores for lithium and rare earth metals. It holds an option to acquire 100% interest in the Berland Property consisting of 2 lithium brine projects located near Berland River within west central Alberta; the Zigzag Lake lithium, tantalum, beryllium, and gallium property located in the town ship of Crescent Lake, Ontario; and South Big Smokey Valley comprising of approximately 364 placer claims covering approximately 7,280 acres located in the South Big Smokey Valley, Esmeralda County, Nevada. The company was formerly known as Jantar Resources Ltd. and changed its name to Ultra Lithium Inc. in September 2009. Ultra Lithium Inc. was founded in 2004 and is based in Vancouver, Canada.

10 Best Prefered Stocks To Own For 2015: Organic Resources Management(ORI.V)

Organic Resource Management Inc. provides vacuum truck services for the collection, processing, and recycling of food-related organic residuals in Canada. The company offers grease trap services, such as grease trap cleaning, clean-flo preventive maintenance, grease trap repairs, and grease trap installation. It collects the liquefied solid food residuals from approximately 10,000 regularly scheduled grease traps at restaurants, grocery stores, and other food processing facilities. The company also offers drain services, including flushing and snaking, clean-flo preventive maintenance, camera inspection, and sump cleaning; and food processor services comprising handling, transportation, and recycling/disposal of waste water pre-treatment residuals, and off-spec raw materials and product destruction. In addition, it provides food waste recycling services through organic resource recovery system, which is used for the on-site management of solid organic (food) waste, as well as for converting solid organics into slurry. Further, the company offers residuals and feedstock services, such as feedstock recycling, conversion of liquid organic waste into biogas renewable energy, and composting. Organic Resource Management Inc. serves industrial, commercial, and institutional food industry customers primarily in Ontario, the Lower Mainland of British Columbia, and Quebec. The company was founded in 1990 and is headquartered in Woodbridge, Canada.

10 Best Prefered Stocks To Own For 2015: NuFarm Ltd(NUF.AX)

Nufarm Limited, together with its subsidiaries, operates as a crop protection company worldwide. The company engages in the manufacture and supply of agricultural chemicals, including turf and ornamental, glyphosate, insecticide, fungicide, and non-glyphosate herbicides. It also operates a seeds business focusing on canola, sorghum, and sunflower seeds, as well as offers seed treatment products. The company supplies its products to farmers to protect crops from damage caused by weeds, pests, and diseases. Nufarm Limited sells its products in 100 countries. The company is headquartered in Laverton, Australia.

10 Best Prefered Stocks To Own For 2015: Baxano Surgical Inc (BAXS)

Baxano Surgical Inc, formerly TranS1 Inc., incorporated in May 2000, is a medical device company focused on designing, developing and marketing products that implement its approach to treat degenerative conditions of the spine affecting the lower lumbar region. It develops its pre-sacral approach to allow spine surgeons to access and treat intervertebral spaces without compromising important surrounding soft tissue, nerves and bone structures. As of December 31, 2011, the Company was marketing the AxiaLIF family of products for single and multilevel lumbar fusion, the Vectre and Avatar lumbar posterior fixation systems and Bi-Ostetic bone void filler, a biologics product. All of the Company�� AxiaLIF products are delivered using its pre-sacral approach. It generates revenue from the sales of itsimplants and disposable surgical instruments. It has two distinct sales methods. The first method is when implants and/or disposable surgical instruments are sold directly to hospitals or surgical centers for the purpose of conducting a scheduled surgery. In November 2011, the Company launched its VEO Lateral Access and Interbody Fusion System.

The Company sells its products directly to hospitals and surgical centers in the United States and certain European countries, and to independent distributors elsewhere. The Company also markets its products at various industry conferences and through industry organized surgical training course. The Company has developed and markets two fusion products that are delivered using its pre-sacral approach include AxiaLIF 1L and AxiaLIF 2L+. Its products include surgical instruments for creating an access route to the L4/L5/S1 vertebral bodies, fusion implants, as well as supplemental stabilization products.

AxiaLIF Lumbar Fusion Implants

The Company markets AxiaLIF family of products for single and two level lumbar fusion, the VEO lateral access and interbody fusion system, the Vectre and Avatar posterior fixation systems and Bi-Ostet! ic bone void filler, a biologics product. The Company also market products that may be used with its AxiaLIF surgical approach, including bowel retractors, a bone graft harvesting system and additional discectomy tools. Its AxiaLIF implants and instruments, combined with facet screws or pedicle screws, provide surgeons with the tools necessary to perform a lumbar fusion.

The Company's AxiaLIF 1L and AxiaLIF 2L+ implants are threaded titanium rods, that come in varying lengths to enable one-level L5/S1 fusions and two-level L4/L5/S1 fusions. As they are implanted, its design allows for the separation of the vertebrae to restore disc height.

VEO Lateral Access and Interbody Fusion System

This system features a two-stage retraction method that focuses on nerve visualization followed by controlled retraction. The VEO Lateral System is designed for direct visualization of the psoas muscles and adjacent nerves prior to muscle dissection, and features a full range of PEEK lateral interbody implants and a variety of ergonomic instruments.

TranS1 Access and Disc Preparation Instruments

The Company�� pre-sacral approach requires the use of a sterile set of surgical instruments that are used to create a safe and reproducible working channel and to prepare the disc and vertebrae for its implant. The instrumentation contained in the set includes stainless steel navigation tools and tubular dissectors to create the working channel, as well as nitinol cutters and brushes to cut and remove the degenerated disc material and prepares the disc space for its implant and the bone graft material.

Vectre Facet Screw System

The Company's Vectre facet screw system offers a cannulated facet screw inserted over a guidewire to provide stability while reducing the muscle and tissue trauma associated with conventional pedicle screws. The Vectre system features offer a reproducible posterior fixation option in select patients.

A! VATAR Ped! icle Screw System

In January 2010, the Company entered into an agreement to distribute Avatar, a pedicle screw system. Avatar can be used with or without its implants to provide lumbar posterior fixation. The AVATAR MIS System offers cannulated pedicle screws inserted over a guidewire to reduce muscle and tissue trauma. Extended tabs integrated to the screws provide a pathway for implantation of the rod while minimizing tissue dissection.

Bi-Ostetic Bone Void Filler

In February 2010, TranS1 entered into an agreement to sell Bi-Ostetic, an osteoconductive bone substitute. Bi-Ostetic is an alternative to allografts or cadaver bone. The spongy granules are bioceramics with interconnected porosity that mimic the cancellous bone structure.

Iliac Crest Bone Graft Harvesting System

The Company�� Iliac Crest Bone Graft Harvesting System is developed to aid surgeons in harvesting iliac crest autograft via a minimally invasive approach. Use of autograft, which is osteogenic, osteoinductive and osteoconductive, further improves the chances of fusion success. It provides structural support as well as scaffolding for new bone growth.

The Company competes with Medtronic Sofamor Danek, Johnson & Johnson DePuy Spine, Stryker Spine, NuVasive, Zimmer Spine, Synthes, Orthofix International, Globus Medical and Alphatec Spine.

10 Best Prefered Stocks To Own For 2015: Commander Resources Ltd (CMD.V)

Commander Resources Ltd. engages in the acquisition and exploration of gold, base metal, and uranium properties primarily in Canada. The company primarily explores for gold, copper, zinc, lead, nickel, molybdenum, and uranium. It holds interests in the Glenmorangie gold property located within the Watson Lake mining district of the Yukon, Canada; the Omineca copper-gold property located in north central British Columbia; Sabin copper-gold property that consists of 114 claims located in northwest Ontario; Houghton Lake gold property located in Ontario; and the Storm copper property located on the northwest corner of Somerset Island, Nunavut. The company was founded in 1987 and is headquartered in Vancouver, Canada.

10 Best Prefered Stocks To Own For 2015: Sinovac Biotech Ltd.(SVA)

Sinovac Biotech Ltd., a biopharmaceutical company, engages in the research, development, manufacture, and commercialization of vaccines against the hepatitis A, hepatitis B, and influenza viruses in the People's Republic of China. It offers Healive, an inactivated hepatitis A vaccine; Bilive, a combination of hepatitis A and B vaccine; Anflu, a split virus influenza vaccine; and Panflu, a vaccine against the influenza A H1N1 virus. The company's pipeline vaccine candidates include a split viron vaccine, which completed Phase II clinical trials for the H5N1 influenza virus; and a SARS vaccine, which completed Phase I clinical trials for the SARS virus. In addition, its pipeline vaccine candidates that completed the pre-clinical trials comprise human vaccines for EV71, pneumococcal conjugate, haemophilus influenzae type b, meningitis, Japanese encephalitis, chickenpox, mumps, and rubella diseases, as well as rabies vaccine for humans and animals. The company markets and sell s its vaccine products directly to the provincial and municipal disease control and prevention centers. It has a patent license agreement with the National Institutes of Health; distribution agreements with LG Life Sciences, Ltd. and Glovax C.V.; and a pandemic influenza vaccine co-development agreement with the China Center for Disease Control and Prevention. Sinovac Biotech Ltd. was founded in 1999 and is headquartered in Beijing, the People's Republic of China.

Advisors' Opinion:
  • [By Brian Pacampara]

    Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biopharmaceutical company Sinovac Biotech (NASDAQ: SVA  ) has received the dreaded one-star ranking.

  • [By Rich Duprey]

    Troubling is that it's a new presence in humans, and while that makes its spread among the populace difficult, scientists fear that it's gaining momentum. Sinovac Biotech (NASDAQ: SVA  ) , which was approved to produce vaccines several years ago, jumped almost 7% yesterday as it gears up to mass produce a vaccine to combat the new threat.

Wednesday, February 19, 2014

U.S. data thefts turn spotlight on Romania

RAMNICU VALCEA, Romania — It's easy to tell which kids in this town have helped to make it a global center for criminal hacking and Internet scams.

They're the pupils who come to school wearing the best clothes and gold jewelry in a region of Romania where chickens are raised in yards and roads are full of potholes.

"In our high school, almost everyone in the 11th and 12th grade did it," said Alina, 22, who worked for a man who bilked Americans and others out of their money online by offering for sale products that did not exist.

Alina, who asked for anonymity out of fear that she would be exposed for criminal actions, said she didn't feel bad about it at the time.

"You rarely feel you're doing any harm when your victim is somewhere across the ocean," she said.

Cybercrime is in the news lately after Target admitted that a massive data hack may have compromised the personal information of as many as 110 million customers.

And Reuters reported Sunday that upscale retailer Neiman Marcus has also been the victim of a security breach of credit card customer information. Security firms said the thefts may have originated in Eastern Europe, where Romania has been a focal point of international cyber-fraud investigators for years now.

The FBI and U.S. Secret Service have been involved in numerous arrests of Romanians who target Americans. In response to the rise, in October the Council of Europe — a body that oversees cooperation between European countries — picked the Romanian capital of Bucharest for its latest cybercrime program office.

FBI instructors have trained nearly 600 Romanian investigators in combating cybercrime, according to the U.S. Embassy.

In announcing the creation of the new office, Romanian President Traian Basescu said he hoped repentant scammers might help police track down cybercriminals.

"Maybe we'll manage to bring our performing hackers to the good side of the barricade," he said.

Romania investigators say there wer! e about 1,000 cases of cybercrime in 2012. Police in Ramnicu Valcea, a town of 120,000 people, say every year they arrest around 100 people on cybercrime charges.

Worldwide, individuals and businesses lose around $397 billion a year due to hacking, according to Europol.

Virgil Spiridon, the head of the Romanian National Police's Cybercrime Unit, say the cases take years to litigate because of the difficulty in catching sophisticated hackers. Basescu says his country cannot hope to end the enterprise because it doesn't have the resources to do it.

Police in Romania report that 80% of the cyber attacks originating from Romania target American citizens and companies. The U.S. Embassy in Bucharest has estimated that Romanian cybercriminals steal $1 billion every year by hacking American computers.

The scams tend to involve Americans who share financial and personal information with people they think are legitimate sellers of products. Common schemes include the selling of fake cars and computers or "skimming" — getting someone to reveal financial and password information that is used to fabricate an ATM card and drain a victim's bank account or rack up charges on a credit card.

"Credit card and internet fraud remain among the most common crimes affecting foreigners in Romania," the U.S. Embassy website warns travelers to Romania.

Among the latest:

• In May, the U.S. Justice Department extradited Romanian nationals Cristea Mircea, 30, Ion Pieptea, 36, and Nicolae Simion, 37, on charges of running a multimillion dollar cyber fraud scheme targeting customers of U.S.-based online marketplaces.

The trio ran ads on eBay, Cars.com and AutoTrader.com for non-existent cars, boats and motorcycles priced between $10,000 and $45,000 and sent potential buyers fraudulent certificates of title and links to fake websites for dealerships that they claimed held the vehicles. Once a purchase was agreed upon, the victims were sent fake invoices from Amazon Payments, PayPal, o! r other o! nline payment services.The men allegedly stole more than $2 million.

• In November 2012, prosecutors from the Romanian Directorate for Investigating Organized Crime and Terrorism arrested 16 people individuals suspected of being members of the credit card fraud ring that netted $25 million. Those arrested were accused of hacking into the computer systems of gas stations and grocery stores and installing computer applications that intercept credit card transaction data.

• In October, the directorate arrested members of a cybercrime gang accused of stealing information from 50,000 credit cards across 24 countries.

Romania's anti-hacking police force has risen from a handful of officers to 280 investigators in seven years. But the police might as well be fighting the tide, said Raoul Chiesa, a former Italian hacker who now is an information technology security consultant.

"In Romania, you have brilliant minds and excellent universities while, on the other hand, it's not easy to find a good job," he said.

"I saw the same issue in Bulgaria, for example, in China, in India. When you are a young guy, and some bad guy offers you money in order to do something that you know how to do and are able to do that brings a very low risk, it's not always that easy to say no."

Hacking has triggered a boomlet in Ramnicu Valcea, where the economy has otherwise been depressed for years.

Scammers drive fancy news cars on pothole-filled roads. They frequent a mall packed with expensive stores as well as the nightclubs and beauty centers that have sprouted up amid decaying communist-era factories and tall grey apartment blocks.

Alina said she was playing a video game in an Internet café when a man approached her and asked if she might translate an e-mail into English for him. The e-mail was part of a scam involving the fake sale of digital equipment.

The more she participated in the scams, the harder it was to stop. Once she earned $4,100 for a single job, she said, a ! fortune i! n a country where the annual per capita income is $13,000 a year.

Her family used the money for home improvements and school expenses after Alina confessed her hacking to her mother and quit the business, she said.

"I realized that I was much happier as a normal kid," she said.

Monday, February 17, 2014

Bob Doll: 10 Economic Predictions for 2014

Bob Doll, Nuveen Investments’ chief equity strategist and senior portfolio manager, expects broader and strong but still moderate economic growth in the U.S. and globally in 2014.

Speaking Tuesday at a news briefing in New York about his yearly predictions, Doll said his overarching theme this year was “less fear, more confidence.” Doll said he expected bond yields to continue to rise gradually as the Federal Reserve’s tapering moves ahead slowly and incrementally.

He noted that improving economies were leading to lower macroeconomic risks. Fiscal drag is lessening in the U.S., Europe is coming out of recession, Japan’s deflationary headwinds are diminishing and China appears to be stabilizing. “In the U.S., better business sentiment on top of firming consumption will likely enhance the odds of a noticeable increase in capital spending enabling a somewhat stronger growth trajectory,” Doll said. “The transition to self-sustaining growth will provide a much needed acceleration in revenue and earnings growth.”

He noted that many doubted the durability of the equity rally, arguing that stocks had become expensive and profit margins unsustainably high. Those factors could limit gains, he said, but would not prevent them. The stock market has outperformed, he said, because "corporate America is delivering the goods; they're called earnings." Stocks may be more volatile than they were last year, but his recommended allocation remains to overweight stocks.

“While stocks are vulnerable to a correction any time given their recent strength and some technical deterioration, we continue to favor a moderate pro-growth posture with forward long-term potential and mid- to high- single-digit annual percentage gains,” Doll said. In 2014, he said, Nuveen prefers companies with positive free cash flow profiles, low valuations, economic sensitivity and /or above average secular growth.

The biggest themes for the United States this year, he said, will be the economic recovery, Obamacare, further fiscal restraint, loss of global prestige and the midterm elections in November. He called it an 80% probability that the Democrats would retain power in the Senate and the Republicans in the House, though the GOP will likely pick up some seats in both chambers (see prediction 10 below). Globally, cyclical issues "have interrupted, not ended, the shift of economic power and financial wealth" from the developed to the emerging world.

Following are Doll’s 10 predictions for the economy in 2014.  

1. The U.S. economy grows 3% as housing starts surpass 1 million and private employment hits an all-time high 

The economic recovery that began in mid-2009 will likely show some broader and stronger growth in 2014 after several false starts. Hopeful signs abound: the housing recovery, falling oil prices, acceptable job growth, easing lending standards, low inflation, record high net worth, rising capital expenditures, less fiscal drag and improving non-U.S. growth. Private employment, Doll said, would reach an “all-time high.”

 

2. 10-year Treasury yields move toward 3.5% as the Federal Reserve completes tapering and holds the short-term rate near zero 

Doll said he expected the bear market in bonds that started about 18 months ago to continue as interest rates slowly normalized. A big question for the bond market, as well as for the economy and markets generally, is the inflation rate. Doll said that although a big rise in inflation was unlikely, it would probably be clear by year-end that inflation had reached a bottom. 

 

3. U.S. equities record another good year despite enduring a 10% correction 

Doll said expectations of high single-digit or low double-digit percentage gains were reasonable, but added that a 10% correction during the year is likely to be caused by overbought and deteriorating technical conditions. “A 10% correction is normal,” he said.

 

4. Cyclical stocks outperform defensive stocks 

Doll said he expected cyclicals to outperform in 2014, reversing the recent trend of defensive stock leadership. He pointed to stronger U.S. economic growth, a rise in capital expectations and some improvement in non-U.S. economies. Over all, he expects corporate profit margins in 2014 to be flat, and he doesn't expect real wage gains.

 

5. Dividends, stock buybacks, capital expenditure and M&A all increase at a double-digit rate 

Corporate America has a lot of cash flow, and many companies have underleveraged balance sheets. Dividends and buybacks have been increasing in recent years, Doll said. Now he expects the largesse to spread to business reinvestment and acquisitions. Pent-up demand and aging of plants, equipment and technology argue for increases in those key areas.  

6. The U.S. dollar appreciates as U.S. energy and manufacturing trends continue to improve

The U.S. is rapidly moving toward energy independence, and this is already positively influencing the country’s trade deficit and promises to enhance U.S. job expansion and economic growth, Doll said. Moreover, the increasing desire by U.S. and non-U.S. companies to manufacture in the U.S. has a similar salutary effect on the dollar. Both energy and manufacturing, he said, will have equally important effects on the dollar.

 

7. Gold falls for the second year and commodity prices languish 

Gold had a good bull run, trading above $1,500 an ounce for a while even after concerns about the financial system’s viability and inflation went unrealized. The precious metal ran out of steam in 2013, and will remain under pressure this year from improving global growth and reduction in systemic threats, some rise in real interest rates and likely dollar improvement. "My guess," Doll said, "is that we haven't seen the bottom for gold." The Fed's QE, which helped prevent both deflation and inflation, also affected gold in 2013.

On commodities, a lack of strong global demand and abundant supply for many commodities portends trendless but volatile commodity prices in the new year.

 

8. Municipal bonds, led by high yield, outperform taxable bond counterparts

The fundamentals are mixed, but Doll contended that the pricing of municipal securities relative to taxable fixed income securities took that into account, and the tax-exempt market is positioned for outperformance. "Munis are cheap comparable to Treasuries," he said.

Detroit’s and Puerto Rico’s widely publicized difficulties have created an opportunity for municipal bond investors, Doll said. The fall of 2013 signaled a "turning point for state and local governments,"  as both government and unions began to agree to some capping of pension benefits, which he called "a big change in munis." In addition, state and local government receipt and outlay patterns are improving. 

 

9. Active managers outperform index funds 

When asked if active managers had become more intelligent, Doll said "we've got the same IQ as we always had." Instead, the broadening of the equity market and reductions of correlations may increase the ability of active managers to outperform benchmarks. As well, he said there were "fewer active players mining for a larger pool of alpha." 

 

10. Republicans increase their lead in the House, but fall short of capturing the Senate 

Doll predicted that in the November midterm elections, Republicans would increase their 234-seat majority in the House, picking up between four and six seats. However, their campaign to win a majority in the Senate would fall short, as they are most likely to add three or four seats to their current 45.

---

Check out these related stories on ThinkAdvisor:

Sunday, February 16, 2014

Corrections: Historical Observations

History shows us that a new 5%+ correction occurs on average about every seven months during bull markets. Studies also show that a correction turns into a greater than 10% decline about once every two years, observes Jim Stack, market historian, money manager, and editor of InvesTech Market Analyst.

The last time this bull market saw a 10%+ pullback was in 2011 (although there was a 9.9% sell-off in mid-2012). Thus, it would be within the realm of expectations to see a 10% correction at some point this year. The possibility is even more likely, given the typical volatility and weakness in mid-term election years.

Although corrections usually come frequently, they don't last long. Even larger corrections with 10%+ market declines are often brief, lasting only a few months...and losses are recovered quickly.

Since 1974, there have been six bull markets, and those have seen 13 market corrections that exceeded 10%. We looked at these corrections to determine the number of months after the low that it took the market to recover its correction losses and hit a new bull market high.

The recovery time for these 13 corrections of 10%+ had a median duration of 2.3 months. The shortest such correction was 29 days in 1997, and the longest was 1.5 years during the high inflation period from 1976 to 1978.

However, these deep corrections rarely lasted more than four months. The median time it took the S&P 500 to fully recover after a 10%+ correction was 3.6 months, with recovery time as brief as 32 days in 1999. With the exception of the extended 1976-78 decline, losses in all these larger corrections were fully recovered within six months.

During corrections, cyclical stocks are the most vulnerable, but that doesn't mean they should be sold to avoid losses. In fact, maintaining a balanced sector strategy will speed your recovery.

We looked at the sharp change in sector leadership that occurs once the correction low is in place, to determine the most and least resilient, based on their median losses during 10%+ corrections.

Defensive stocks are the clear winners, with the non-cyclical Utilities, Staples, and Telecom sectors outperforming the S&P 500 at least 70% of the time. Conversely, the cyclical Financials, Industrials, and Technology sectors tend to suffer the biggest losses.

After the market reaches the correction low, however, it's these vulnerable stocks that typically lead the recovery. Financials, Industrials, and Technology are among the leading recovery sectors in the three months following a correction, outperforming the S&P 500 the majority of the time.

Meanwhile, the non-cyclical stocks also recover, but usually lag the Index as it moves on to new highs. Bottom line, if you panic and sell all your cyclical stocks during a correction, you have eliminated a substantial part of your recovery potential.

Overall, market corrections are fairly frequent occurrences during a bull market, but they should not significantly affect your investment strategy. Actually, these pullbacks can be healthy, as they control speculation and exuberance, and may help extend the life of a bull market.

Subscribe to InvesTech Market Analyst here…

More from MoneyShow.com:

S&P's Outlook for 2014

2014 and the Presidential Cycle

Signs of a Top?

.