Sunday, February 23, 2014

Hang up if a caller claims to be from the IRS

One Grand Blanc woman was so terrified by a supposed call from the IRS demanding money that she drove immediately to the bank while the aggressive caller remained on the cell phone.

But the frightened woman slyly handed the teller a note that said "Robbery in Progress."

The police arrived at the bank, according to Grand Blanc Detective Steve Hatfield, because the teller thought that's who she needed to call.

Once the scam was explained, the police officer then actually talked to the guy on the cell, Hatfield said. But the brazen con artist caller threatened to lock up the police officer if he didn't pay the back-due taxes.

Susan Tompor:Did your cell phone ring just once? Do not call back

Susan Tompor: Better Business Bureau program guards against scams that target seniors

We're looking at one whacked out tax-time telephone scam here. But it's a scam that's growing to be more pervasive, according to the Internal Revenue Service.

The IRS wants to make it clear that the IRS is not calling and demanding that anyone put money on a GreenDot card or other prepaid card, suggesting that you give the IRS your credit card number over the phone. Do not believe anyone who demands that you wire the IRS money, either.

And no, you're not going to lose your driver's license if you don't pay up.

"They're calling people up and telling them they're the IRS and threatening them," said Cindy Burnett, special agent and public information officer for the Department of Treasury IRS criminal investigation office in Traverse City.

The IRS said scammers have called taxpayers in nearly every state in the country.

"They're hitting Michigan really hard," Burnett said.

Burnett heard of one case where a caller running a scam told a Michigan resident to pay the IRS by bringing a money order to a local gas station where the "IRS" would supposedly meet them.

One Troy resident received a morning call on Feb. 4 claiming to be from the IRS. The caller demanded that ! the man pay up and put $4,286.49 on a GreenDot prepaid card. The man left home to get the money but his wife was suspicious and called the Troy police. Once he was alerted about the scam, the man didn't buy the prepaid card or send any money.

The Grand Blanc Police Department received two other complaints in the past month or so about this scam, Hatfield said.

In late January, Hatfield said, one woman did end up sending about $3,500 via GreenDot prepaid cards for supposedly back-due taxes that her husband owed. The money was lost to fraudsters.

"It's gone," Hatfield said.

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The IRS put out an earlier warning on this scam in the fall last year. But the scammers are making these calls now and the calls are likely to heat up as we move closer to the tax deadline April 15.

Some tell-tale signs of the scam: The scammers are targeting seniors or recent immigrants. The caller says the person owes money to the IRS and demands to be paid promptly. The taxpayer is told to go to the store to load cash onto a prepaid debit card or wire the cash. The person who buys a prepaid card may be asked to read the numbers over the phone so the money is immediately available to the con artist.

MORE: IRS releases 'Dirty Dozen' tax scams for 2014

Once money is put on a prepaid card or wired, it's harder to track the con artists, who could be overseas.

Other signs: Caller ID might show an IRS number but that number is being spoofed and it's not a real IRS call. The scammers may give a fake name and a fake IRS badge number to sound more authentic.

And the fake IRS callers act like they have your file right there.

"The thing that's really terrifying is they have the last four digits of your Social Security number. They know your name," said Luis D. Garcia, a spokesman for the IRS in Detroit.

MORE: Poor IRS customer service hurts taxpayers

Some ! callers are extremely intimidating, too.

"They become verbally abusive. They use foul language. You're not going to get that from the IRS," Garcia said.

If you hang up, it's even possible you'd receive another call that might look like its from it's from the local police or the Secretary of State and involve someone threatening to revoke a driver's license or business license. Again, that's a follow up scam call that's designed to convince you to wire money.

The first IRS contact with taxpayers on a legitimate tax issue is likely to take place via a letter sent in the regular mail, not e-mail or a phone call.

Contact the IRS directly if you believe you have a tax issue at 800-829-1040.

Contact Tompor at stompor@freepress.com

Friday, February 21, 2014

Most Generous 401(k) Plans in America

Hot Performing Companies To Watch In Right Now

By Hal M. Bundrick

NEW YORK (MainStreet) Thank your employer for offering a 401(k) retirement plan. It's a big deal. And if you work for one of the companies listed below, you're receiving the most generous benefits available in the U.S. BrightScope, the financial benefits research firm, says these companies "value setting their employees up for a strong financial future."

The research firm examined plan vesting schedules, eligibility periods and all contributions to the plan made by the company for the sole benefit of the plan's participants. Companies in professional services, science and technical fields dominated, representing half of all the plans listed.

Six of the top 10 plans allow immediate vesting: workers are fully vested from the first day of employment. The average account balance for plans on the "most generous companies" list is $470,014 much higher than the average balance of all plans within the BrightScope system ($99,061). The average amount a company contributes to each plan on the list is $31,181, compared to the plan average of $4,184. And the average participation rate is 96.49% -- compared to an average of 85.03%. "Generosity is an important means for companies to recruit and retain top employees," says Brooks Herman, head of data and research at BrightScope. "Its importance is exemplified by the fact that half of the companies on this list have been on one or more other BrightScope rankings this year, and several more have been featured in years past." The 30 Most Generous Companies are: 1. Sullivan & Cromwell LLP - Retirement Plan of Sullivan & Cromwell LLP 2. North American Partners in Anesthesia, LLP - North American Partners in Anesthesia, LLP Profit Sharing Plan 3. Oregon Anesthesiology Group, P.C. - Oregon Anesthesiology Group, P.C. 401(k) Profit Sharing Plan 4. Frontier Refining & Marketing Inc. - Frontier Retirement Savings Plan 5. O'Melveny & Myers LLP - O'Melveny & Myers LLP Keogh Plan 6. Zeta Associates - Zeta Associates Incorporated Savings Plan 7. Shearman & Sterling LLP - Shearman & Sterling LLP Partners Retirement Plan 8. Anesthesia Service Medical Group, Inc. - Anesthesia Service Medical Group, Inc. 401(k) Profit Sharing Plan Trust 9. Cravath, Swaine & Moore LLP - Retirement Plan of Cravath, Swaine & Moore LLP 10. Bryan Cave LLP - Bryan Cave LLP Retirement Plan for Partners 11. Debevoise & Plimpton LLP- Retirement Plan for Lawyers of Debevoise & Plimpton LLP 12. Kay Scholer LLP - Kaye Scholer LLP Retirement Plan 13. Skadden, Arps, Slate, Meagher & Flom, LLP - Skadden, Arps, Slate, Meagher & Flom Retirement Plan 14. Deloitte LLP - Deloitte Profit Sharing Plan 15. United States Member Clubs of the National Hockey League - National Hockey League Pension Plan for Players of United States Member Clubs 16. Ernst & Young U.S. LLP - Ernst & Young Partnership Retirement Plan 17. Weil, Gotshal & Manges, LLP - Weil, Gotshal & Manges Partners' Target Pension Plan 18. Simpson Thacher & Bartlett LLP - Simpson Thacher & Bartlett LLP Supplemental Profit Sharing Plan for Partners 19. Jones Day - Jones Day Retirement Plan 20. Jennison Associates LLC - Jennison Associates Savings Plan 21. Duane Morris LLP - Duane Morris Retirement Plan 22. Dodge & Cox - Dodge & Cox Profit Sharing Plan & Trust 23. Sutter Medical Group, Inc. - Sutter Medical Group 401(k) Profit Sharing Plan 24. United Parcel Service Company - UPS/IPA Defined Contribution Money Purchase Pension Plan 25. Gould Medical Group, Inc. - Gould Medical Group, Inc. 401(k) Profit Sharing Plan and Trust 26. Garland Industries, Inc. - The Garland Industries, Inc. Employee Stock Ownership Plan & Trust 27. Tufts Medical Center Physicians Organization, Inc. - Tufts Medical Center Physicians Organization, Inc. 401(a) Retirement Plan 28. McMaster-Carr Supply Company - McMaster-Carr Supply Company Profit Sharing Trust 29. National Basketball Association - NBA-NBPA 401K Savings Plan 30. Northwest Permanente, P.C. - Northwest Permanente, P.C. Retirement Plan Money Purchase Pension Aspect --Written by Hal M. Bundrick for MainStreet

Thursday, February 20, 2014

Ask Matt: Is Google stock too expensive to buy?

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

Q: Is Google's stock too expensive to buy?

A: Google can do no wrong in the eyes of its investors. But the online advertising company's shares definitely reflect Wall Street's high expectations.

Google's ability to amass information about its users and sell it as an asset other tech companies are struggling to match. Wall Street, too, has high hopes on how much Google can make.

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Analysts are calling for the company to earn an adjusted $52.76 a share this year, which would be a 20% increase from 2013 profit, says S&P CapitalIQ.

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Google is trading for a lofty 33 times its earnings over the past twelve months. That's high relative to the 17 P-E of the market and 16 P-E of the technology sector, Reuters says, indicating the stock isn't a buy.

But while the valuation on a discounted cash flow basis isn't cheap, it's not overly expensive either, says NewConstructs.

Google sports a strong return on invested capital, a measure of how effective a company is at driving profit from the money invested in it. But its free cash flow yield and price to its book value, or rough measure of its net worth, are not all that compelling, NewConstructs says.

The question is whether Google can continue to grow as online search matures and consumers start asking more questions about how their personal data are being sold.

Tuesday, February 18, 2014

Mid-Day Market Update: US Stocks Mostly Higher; Forest Laboratories Shares Jump On Actavis Deal

Best Medical Stocks To Watch Right Now

Related BZSUM Mid-Morning Market Update: Markets Mixed; Coca-Cola Posts Decline In Profit #PreMarket Primer: Tuesday, February 18: Big Merger Deals In The Works

Midway through trading Tuesday, the Dow traded up 0.05 percent to 16,162.86 while the NASDAQ gained 0.69 percent to 4,273.24. The S&P also rose, gaining 0.23 percent to 1,842.80.

Leading and Lagging Sectors
Tuesday morning, the healthcare sector proved to be a source of strength for the market. Healthcare stocks surged 1% in today's trading. Leading the sector was strength from Forest Laboratories (NYSE: FRX) and Chindex International (NASDAQ: CHDX) on acquisition news.

In trading on Tuesday, non-cyclical consumer goods & services shares were relative laggards, down on the day by 0.07%.

Top decliners in the sector included Fresh Del Monte Produce (NYSE: FDP), off 8.8%, and Coca-Cola Company (NYSE: KO), down 3.5%. Shares of Fresh Del Monte tumbled after the company reported weak quarterly earnings.

Top Headline
Coca-Cola Co (NYSE: KO) reported a drop in its fourth-quarter net profit. Coca-Cola's quarterly profit declined to $1.71 billion, or $0.38 per share, versus a year-ago profit of $1.87 billion, or $0.41 per share. Its adjusted -profit came in at $0.46 per share. Its revenue slipped to $11.04 billion versus $11.46 billion. However, analysts were projecting earnings of $0.46 per share on revenue of $11.31 billion.

Equities Trading UP
Forest Laboratories (NYSE: FRX) shot up 29.85 percent to $92.70 after Actavis (NYSE: ACT) announced its plans to buy Forest Labs for $25 billion. Analysts at Morgan Stanley upgraded Forest Labs from Equal-Weight to Overweight.

Shares of BlackBerry (NASDAQ: BBRY) got a boost, shooting up 5.40 percent to $9.47 on report of Loeb 10 million share stake. FBR Capital upgraded BlackBerry from Underperform to Market Perform.

Actavis plc (NYSE: ACT) was also up, gaining 7.36 percent to $206.00 on deal for Forest Laboratories (NYSE: FRX).

Equities Trading DOWN
Shares of Fresh Del Monte Produce (NYSE: FDP) were down 8.72 percent to $24.42 after the company reported downbeat quarterly earnings.

The Coca-Cola Company (NYSE: KO) shares tumbled 3.52 percent to $37.56 after the company reported a drop in its fourth-quarter net profit.

Waste Management (NYSE: WM) was down, falling 4.71 percent to $41.62 after the company reported weaker-than-expected Q4 results.

Commodities
In commodity news, oil traded up 1.14 percent to $101.49, while gold traded up 1.68 percent to $1,322.00.

Silver traded up 6.77 percent Tuesday to $21.78, while copper rose 1.14 percent to $3.29.

Eurozone
European shares were mixed today.

The Spanish Ibex Index fell 0.73 percent, while Italy's FTSE MIB Index rose 0.05 percent. Meanwhile, the German DAX gained 0.08 percent and the French CAC 40 tumbled 0.10 percent while U.K. shares rose 0.91 percent.

Economics
The Empire State manufacturing index fell to 4.48 in February, versus a prior reading of 12.51. However, economists were expecting a reading of 8.50.

The NAHB housing market index declined to 46.00 in February, from a prior reading of 56.00. However, economists were projecting a reading of 56.00.

Posted-In: Earnings News Guidance Eurozone Futures Forex Global Econ #s Economics Intraday Update Markets Movers Tech

(c) 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Saturday, February 15, 2014

Cars less reliable, Power says

J.D. Power's annual Vehicle Dependability Study showing the most reliable 3-year-old vehicles — a key study for finding a good used car — was released today, and the most stunning news is that the reliability of late-model used cars is down for the first time since 1998.

The widely watched report card says owners of 3-year-old vehicles (2011 models) reported 6% more troubles than owners of 3-year-old vehicles (2010 models) did last year — 133 problems per 100 2011 vehicles ,vs. 126 for 2010s in last year's survey. Power says that reverses steadily improving industry scores since the 1998 study.

Brand rankings and a list of category winners follow this story.

Automakers are striving to convince buyers that quality is continuing to rise — a hard sell if dependability scores continue to get worse.

A Chevrolet tag line asserts that its trucks are the "longest-lasting, most-dependable." VW not only touted 100,000 — and 200,000 miles — in a Super Bowl ad, but also claims to have more vehicles still in service than any other maker.

Such claims will begin to seem hollow if the latest Power VDS is not a hiccup, but the start of annually declining dependability — and that seems quite possible.

Problems that showed up in the 2014 VDS suggest "a continuing challenge" for car companies in maintaining quality as vehicles age, said David Sargent, Power's global automotive vice president. "Some of the changes that automakers implemented for the 2011 model year have led to a noticeable increase in problems reported," he said.

Biggest contributor: new engines and transmissions accounted for nearly 6 of the 7 additional problems per 100 vehicles in this year's study. "The decline in quality is particularity acute for vehicles with four-cylinder engines," Power reports.

The move to smaller engines has taken off in the past few years, with many more vehicles with a four as the base, or now the only available engine. The industry shift is being made to boost fue! l economy to meet federal regulations tightening to an average 54.5 mpg in 2026. But, says Power, it means automakers have saddled drivers with "engine hesitation, rough transmission shifts and lack of power."

Trouble-free new cars and trucks are key for repeat sales. Power data show that 56% of owners who reported no problems stayed with the same brand next time. And shoppers are much more likely to avoid models and brands with low dependability rankings, Power data show.

The VDS is based on responses from more than 41,000 original owners of 3-year old vehicles. It is a companion to Power's annual Initial Quality Study, or IQS, that measures problems new vehicles in the first 90 days of ownership.

The VDS offers overall brand lineup scores — Lexus was by far the best — and also lists best individual models by vehicle type. General Motors was segment champ, with eight winners. Toyota won seven.

Brand scores (problems per 100 vehicles for 2011 models; lower is better):

Lexus (68)Mercedes-Benz (104)Cadillac (107)Acura (109)Buick (112)Honda (114)Lincoln (114)Toyota (114)Porsche (125)Infiniti (128)BMW (130)Subaru (131)Chevrolet (132)Jaguar (132)Mazda (132)GMC (133)INDUSTRY AVERAGE (133)Ford (140)Nissan (142)Audi (151)Kia (151)Volvo (152)Scion (153)Chrysler (155)Volkswagen (158)Ram (165)Mitsubishi (166)Hyundai (169)Jeep (178)Land Rover (179)Dodge (181)Mini (185)

Segment winners (top three models in each category, starting with best):

Subcompact car

Honda FitKia RioNissan Versa

Compact car

Chevrolet VoltToyota CorollaHonda Civic

Premium compact car

Lexus ESLexus ISLincoln MKZ

Sporty compact car

Mini Cooper(No others scored high enough to include.)

Midsize car

Toyota CamryBuick LaCrosseHonda Accord

Sporty midsize car

Chevrolet Camaro(No others high enough to include)

Premium midsize car

Lexus GSMercedes-Benz E-classLincoln MKS

Large car

Buick LucerneToyota AvalonFord Taurus

Premi! um large car

(tie) Cadillac DTS, Lexus LS

Subcompact crossover SUV

Honda ElementJeep PatriotKia Sportage

Compact crossover SUV

Honda CR-VToyota FJ CruiserToyota RAV4

Premium compact crossover SUV

Acura RDXMercedes-Benz GLK(No others high enough to include)

Midsize crossover SUV

Honda CrosstourToyota 4RunnerNissan Murano

Premium midsize crossover SUV

Lexus RXLexus GX(tie) Acura MDX, Mercedes-Benz M-class

Large SUV

GMC YukonChevrolet TahoeToyota Sequoia

Premium large SUV

Cadillac EscaladeMercedes-Benz GL

Compact multi-purpose vehicle

Scion xBKia Soul(No others high enough to include)

Midsize pickup

Honda RidgelineFord RangerGMC Canyon

Minivan

Toyota Sienna(No others high enough to include)

Full-size pickup, standard duty

GMC SierraToyota TundraChevrolet Avalanche

Full-size pickup, heavy duty

GMC Sierra HDChevrolet Silverado HD(No others high enough to include)

Thursday, February 13, 2014

Ask Matt: What's the best way to invest $100?

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

Q: What's the best way to invest $100?

A: Online trading has definitely opened the door to beginning investors. You can get started with investing, whether you have $1,000, $100, or even less at some brokerages.

Beginning investors have to deal with two primary barriers: minimum deposits and fees. You need to pay close attention to both these barriers to get started. Many, but not all, mainstream online brokerage firms require investors to have at least $1,000 to start.

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For investors with just $100 to invest, the best place to start is with commission-free investments at a firm with no minimum deposit. One option might be to open an account with TD Ameritrade, which has no minimum deposit. Additionally, TD Ameritrade offers more than a 100 exchange-traded funds, or ETFs, that you can buy and sell for no commission.

ETFs are stocks you can buy that own hundreds of stocks. ETFS are a good way to spread your bet, and keep your expenses low.

If you'd rather invest in individual stocks, and not ETFs, another option is Loyal3. This online brokerage allows you to buy from a limited menu of popular stocks, like Disney, Berkshire Hathaway and Starbucks, and pay no commission. Remember if you go this route, it is up to you to make sure you spread your money around a variety of stocks.

Wednesday, February 12, 2014

The 4 Stocks That Dominated the Market on Tuesday

February 11, 2014: Markets opened higher on Tuesday anticipating that new Fed Chair Janet Yellen would not announce any significant diversion from current Fed policy. And in another expected development, House Republicans have indicated that they will allow a clean vote on raising the U.S. debt limit, a decision that virtually any threat of a default on the nation's debt. The DJIA closed up 1.20%, the S&P 500 closed up 1.10%, and the Nasdaq Composite closed up 1.03%.

Today's big gainer among the Dow 30 stocks was The Boeing Co. (NYSE: BA). Shares closed up 2.29% at $130.07 in a 52-week range of $74.27 to $144.57. The company and its main rival, Airbus, have both forecast deliveries of new aircraft between now and 2032 at just under $2 trillion. The two companies are wooing customers at the Singapore Airshow this week. Boeing's volume today was about 40% higher than the daily average of around 5 million shares.

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Among heavily traded Nasdaq stocks Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) posted a gain of 7.65% to close at $119.40 after posting a new 52-week high of $120.24. The stock's 52-week low is $42.25. The company's deal with The Coca-Cola Co. (NYSE: KO) continues to boost. Trading volume was nearly double the daily average of around 4 million shares traded.

Chevron Corp. (NYSE: CVX) rose 1.63% for the day to close at $113.51, in a 52-week range of $109.27 to $127.83. WTI prices closed above $100 a barrel yesterday and traded above that level for most of the day today before closing at around $99.90. Share volume was about 7% below the daily average of around 6 million shares traded.

Dow component Goldman Sachs Group Inc. (NYSE: GS) issued a bullish note on Alcoa Inc. (NYSE: AA) today. Alcoa's shares got a nice boost, but so did Goldman, which owns warehouses where aluminum inventories are alleged to have been held back from delivery. Goldman's shares closed up 1.99% at $164.21 in a 52-week range of $137.29 to $181.13. Volume was about 25% above the daily average of around 3 million shares.

Of the Dow 30 stocks 29 closed higher today while only Cisco Systems Inc. (NASDAQ: CSCO) closed lower.

Monday, February 10, 2014

5 Dividend Stocks That Want to Give You a Raise in 2014

BALTIMORE (Stockpickr) -- Nothing does a better job of selling dividend investing like a market correction. So, in a lot of ways, the almost 5% decline in the S&P 500 this year was really a sales pitch for dividend investing.

>>5 Stocks Poised for Breakouts

Dividends are one of just a few ways that companies can directly impact their share prices. And between record earnings and more than $1.25 trillion in cash held on S&P 500 companies' balance sheets, there's a lot of latent value yet to be unlocked.

More important, that value translates into capital gains.

Over the last three and a half decades, dividends stocks have outperformed the rest of the S&P 500 by 2.5% annually, and they outperformed nonpayers by nearly 8% every year, according to data compiled by Ned Davis Research. The numbers are even more compelling when looking at companies that consistently increase their payouts.

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To take advantage of that trend today, we're focusing on dividends stocks that look ready to hike their payouts. So instead of chasing yield, we'll try to step in front of the next round of stock payout hikes.

For our purposes, that "crystal ball" is composed of a few factors: namely a solid balance sheet, low payout ratio, and a history of dividend hikes. While those items don't guarantee dividend announcements in the next month or three, they do dramatically increase the odds that management will hike their cash payouts to shareholders.

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Without further ado, here's a look at five stocks that could be about to increase their dividend payments in the next quarter.

Chevron

First up is oil and gas supermajor Chevron (CVX). While Chevron falls short of being the biggest energy company in the world, the No. 2 oil company in the U.S. makes up for it by sporting one of the most solid financial footings in the industry.

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With more than $25.1 billion in net cash and investments on its balance sheet, Chevron is well-positioned to give investors a dividend hike in the near-term. For now, CVX pays a quarterly $1 check to investors, adding up to a solid 3.6% dividend yield.

Chevron's scale is immense. The firm has proven reserves of 11.3 billion barrels of oil equivalent and pulls more than 2.6 million barrels out of the ground each day. High oil prices have been a big boon for Chevron's operations; with crude prices sitting on the high end of their historic range, more of the firm's wells are economically viable now than ever before. Because around 70% of Chevron's production is oil, the firm also has the smallest natural gas exposure of the supermajors right now. While Chevron's recent natgas investments are closing that gap, CVX still has amplified exposure to the more lucrative commodity.

Earnings in April could be the perfect opportunity for Chevron to announce a dividend hike. While the firm's $1 quarterly check is hefty versus peers right now, CVX has the wherewithal to give shareholders another raise.

Cisco Systems

A decade ago, who would have thought that Cisco Systems (CSCO) would be considered a dividend stock? But with a 3.02% dividend yield at current prices, it's hard to say that the IP networking giant is anything but that. And now investors should be looking out for a hike in CSCO's 17-cent quarterly dividend in 2014.

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Cisco Systems is the standard bearer in the enterprise networking market -- its hardware and software are ubiquitous in server rooms around the world. That gives Cisco a huge tailwind in 2014, as demand for global data connectivity increases demand for Cisco's mission-critical routers and switches. Because Cisco's gear is designed to plug-and-play with other Cisco components, IT departments can often better justify keeping purchases within the Cisco family to keep integration and ongoing tech support costs lower. As competition ramps up in the space, that high switching cost is critical for CSCO to hold its market share.

Financially, Cisco is another name that's in stellar financial shape. Cisco holds more than $32.8 billion in net cash on its balance sheet, enough to pay for almost 30% of its outstanding shares at current price levels. That huge cash cushion takes a lot of risk off of investors right now, and it makes a boost to Cisco's dividend payout look likely.

Southern Co.

Macaroni and cheese, peanut butter and jelly, dividends and utility stocks -- all three just go together. So it shouldn't come as a big surprise that $36 billion electric utility holding firm Southern Co. (SO) is making our list of potential dividend hikers this week. Right now, Southern pays out a 50.75-cent quarterly dividend that adds up to a 4.97% yield at current price levels.

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As its name implies, Southern's main business is focused on the Southeastern states, serving more than 4.4 million customers spread across Alabama, Georgia, Florida and Mississippi. The firm also owns more than 45,700 megawatts of generating capacity and a merchant generation business. As a regulated utility, Southern earns predictable rates on equally predictable power demand. That makes the firm (and other utility stocks) purpose-built to generate consistent dividend payouts.

Southern has a strong history of dividend hikes -- the firm has raised its dividend for 13 straight years now. While that makes SO a bit of a lay-up when it comes to predicting dividend hikes, the bigger yield than peers makes Southern worth watching in the months ahead.

Kinder Morgan

Speaking of dividend lay-ups, next on the list is Kinder Morgan (KMI).

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Kinder Morgan is another name that's become synonymous with dividends. This pipeline stock currently pays out a 41-cent dividend that adds up to a hefty 4.88% yield. Typically, Kinder Morgan hikes its payout on a quarterly basis, but the firm has held its rate flat for the last two quarters. That makes KMI overdue for a dividend raise.

At first glance, Kinder Morgan's structure is a bit tricky. The firm is technically a holding company that owns the general partner and incentive distribution rights for Kinder Morgan Energy Partners (KMP) and El Paso Pipeline Partners (EPB), two MLPs; that's exactly what makes it an investment vehicle designed to maximize distribution income for investors.

One of the big benefits of KMI (besides the fact that it's the largest midstream company out there) is that it's a conventional C corporation rather than an MLP. That means that it sports a much simpler tax treatment for investors. Keep an eye out for earnings in the middle of April as a potential dividend announcement date.

Reynolds American

Last up is Reynolds American (RAI), a $25 billion cigarette stock that owns popular premium brands like Camel, Kool and Natural American Spirits. Reynolds is a typical "sin stock" -- it sports recession-resistant sales, a sticky customer base and generates the cash to pay for a hefty dividend yield. Right now, the firm's 63-cent dividend works out to a 5.27% yield.

Like other tobacco companies, Reynolds is a business that's been dying a slow death. As the mature U.S. cigarette market sees fewer new smokers, the growth really isn't there for RAI -- and because the firm sold off its international rights to Japan Tobacco in 1999, high-growth markets in Southeast Asia and Latin America are off-limits. But the slowness of the market shrinkage means that Reynolds isn't going away anytime soon. With new initiatives such as the Vuse brand of electronic cigarettes offering some scant hints at growth, Reynolds should maintain its cash-generation engine for the foreseeable future.

Financially, Reynolds is in solid shape with reasonable balance sheet leverage and a $2.7 billion cushion of cash. Don't expect this stock to post breakneck numbers in 2014, but investors look due for a dividend raise anyway.

To see these dividend plays in action, check out the at Dividend Stocks for the Week portfolio on Stockpickr. 



-- Written by Jonas Elmerraji in Baltimore.


RELATED LINKS:



>>5 Biotech Stocks Spiking on Unusual Volume



>>3 Hot Stocks on Traders' Radars



>>5 Low-Priced Stocks to Trade for Gains

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to

TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji


Saturday, February 8, 2014

5 Stocks Poised for Breakouts

DELAFIELD, Wis. (Stockpickr) -- Trading stocks that trigger major breakouts can lead to massive profits. Once a stock trends to a new high or takes out a prior overhead resistance point, then it's free to find new buyers and momentum players who can ultimately push the stock significantly higher.

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Breakout candidates are something that I tweet about on a daily basis. I frequently tweet out high-probability setups, breakout plays and stocks that are acting technically bullish. These are the stocks that often go on to make monster moves to the upside. What's great about breakout trading is that you focus on trend, price and volume. You don't have to concern yourself with anything else. The charts do all the talking.

Trading breakouts is not a new game on Wall Street. This strategy has been mastered by legendary traders such as William O'Neal, Stan Weinstein and Nicolas Darvas. These pros know that once a stock starts to break out above past resistance levels and hold above those breakout prices, then it can easily trend significantly higher.

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With that in mind, here's a look at five stocks that are setting up to break out and trade higher from current levels.

Accelerate Diagnostics


One health care player that's quickly moving within range of triggering a big breakout trade is Accelerate Diagnostics (AXDX), which engages in the research and development and commercialization of proprietary surface chemistry formulation and quantitative bio-analytical measurement instruments. This stock has been on fire over the last six months, with shares up large by 78%.

If you take a look at the chart for Accelerate Diagnostics, you'll notice that this stock has been trending sideways and consolidating over the last three months, with shares moving between $11.01 on the downside and $14.92 on the upside. Shares of AXDX are starting to spike higher here right off its 50-day moving average of $13.34 a share. That spike is quickly pushing shares of AXDX within range of triggering a big breakout trade above some key near-term overhead resistance levels.

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Traders should now look for long-biased trades in AXDX if it manages to break out above some near-term overhead resistance levels at $13.79 to $14.50 a share and then once it takes out more resistance at $14.92 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average volume of 85,255 shares. If that breakout hits soon, then AXDX will set up to re-test or possibly take out its 52-week high at $16.45 a share. Any high-volume move above that level will then give AXDX a chance to tag $20 a share.

Traders can look to buy AXDX off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $13 or at $12.50 a share. One can also buy AXDX off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Infosonics


A communications equipment player that's starting to trend within range of triggering a major breakout trade is Infosonics (IFON), which designs, develops, manufactures and sells wireless telecommunication products and accessories to wireless carriers, distributors, retailers, dealer agents, resellers, and original equipment manufacturers. This stock has been in play big time over the last three months, with shares ripping sharply higher by 219%.

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If you take a look at the chart for Infosonics, you'll notice that this has stock has been uptrending strong over the last two months, with shares soaring higher from its low of 66 cents per share to its recent high of $3.08 a share. During that uptrend, shares of IFON have been consistently making higher lows and higher highs, which is bullish technical price action. Shares of IFON are now starting to push within range of triggering a major breakout trade above some key near-term overhead resistance levels.

Traders should now look for long-biased trades in IFON if it manages to break out above some near-term overhead resistance levels at $2.90 to its 52-week high a $3.08 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 455,840 shares. If that breakout triggers soon, then IFON will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $4 to $4.50 a share.

Traders can look to buy IFON off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $2.30 or at $2 a share. One could also buy IFON off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Himax Technologies


Another technology player that's quickly moving within range of triggering a major breakout trade is Himax Technologies (HIMX), which designs, develops and markets semiconductors for flat panel displays. This stock has been blazing a part to the upside over the last six months, with shares up a whopping 117%.

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If you take a look at the chart for Himax Technologies, you'll notice that this stock has been trending sideways and consolidating over the last month and change, with shares moving between $12.72 on the downside and $15.33 on the upside. Shares of HIMX are now starting to spike higher right above the lower-end of that recent range. That spike is quickly pushing shares of HIMX within range of triggering a major breakout trade above some key near-term overhead resistance levels.

Traders should now look for long-biased trades in HIMX if it manages to break out above some near-term overhead resistance levels at $15.18 to its 52-week high at $15.33 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 7.96 million shares. If that breakout triggers soon, then HIMX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $18 to $20 a share.

Traders can look to buy HIMX off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $12.92 a share or near more support at $12.72 a share. One can also buy HIMX off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Sarepta Therapeutics


Another stock that's starting to push within range of triggering a major breakout trade is Sarepta Therapeutics (SRPT), which focuses on the discovery and development of RNA-based therapeutics for the treatment of rare and infectious diseases. This stock is off to a strong start in 2014, with shares up sharply by 28%.

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If you look at the chart for Sarepta Therapeutics, you'll notice that this stock is breaking out here above some near-term overhead resistance at $25.55 a share. That breakout is coming after shares of SRPT recently pulled back to around its 50-day moving average, where buyers stepped into to support the stock. This intraday breakout is now starting to push shares of SRPT within range of triggering an even bigger breakout trade.

Traders should now look for long-biased trades in SRPT if it manages to break out above some near-term overhead resistance levels at $29.40 to its 200-day moving average of $33.09 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 2.98 million shares. If that breakout hits soon, then SRPT will set up to re-fill some of its previous gap-down-day zone from last November that started at $37.80 a share.

Traders can look to buy SRPT off any weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support at $22.60 a share or near its 50-day at $21.17 a share. One can also buy SRPT off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Targacept


My final breakout trading prospect is biotechnology player Targacept (TRGT), which engages in the development of neuronal nicotinic receptors therapeutics for the treatment of diseases and disorders of the nervous system. This stock has been under a bit of pressure by the sellers so far in 2014, with shares off by 10.5%.

If you look at the chart for Targacept, you'll notice that this stock recently pulled back from $4.91 a share to some to $4.09 a share. That pullback took shares of TRGT right into some previous support levels that sit around $4 a share. Since then, shares of TRGT have started to rebound sharply and move within range of triggering a major breakout trade.

Traders should now look for long-biased trades in TRGT if it manages to break out above its 50-day moving average of $4.66 and its 200-day moving average of $4.98 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 342,752 shares. If that breakout triggers soon, then TRGT will set up to re-fill some of its previous gap-down-day zone from last December that started at $6.11 a share.

Traders can look to buy TRGT off any weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support at $4 a share. One can also buy TRGT off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a conformable percentage from your entry point.

To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.


RELATED LINKS:



>>3 Huge Stocks to Trade (or Not)



>>4 Tech Stocks Spiking on Big Volume



>>5 Low-Priced Stocks to Trade for Gains

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.


Friday, February 7, 2014

Asset-Heavy Advantage

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Print FriendlyAsset-heavy companies can serve as effective inflation hedges, but they also entail a downside. They must pursue substantial reinvestment to maintain their productive capacity. As such, they can actually fall victim to inflation. That’s because the added cost of reinvestment during a period of rising prices offsets the advantage of being able to pass along higher sales prices.

But there are important exceptions. Below, we examine two asset-heavy companies that avoid this dilemma.

The first exception applies to companies that own scarce or in-demand assets that don’t require substantial reinvestment. The second are companies that own assets that are virtually impossible to replicate.

PICO Holdings (NSDQ: PICO) is a prime example of the first exception.

Structured as a holding company, PICO operates in four primary divisions: water resource and storage (WRS), real estate, agribusiness and corporate.

The company’s WRS operations consist primarily of Vidler Water Company, a water resource development and storage business with operations in Nevada, Arizona, Colorado and New Mexico. The company owns land and associated water rights in those arid regions, which it then either leases or sells to other users. It also builds distribution or storage infrastructure which it can use to hold water to be sold later or to sell directly to end users.

In the first nine months of its current fiscal year, the company sold 1,021 acres of land and 3,063 acre-feet of groundwater rights in Arizona for $10 million, with a gross margin of $6.3 million. Two farms in Idaho were also sold for a gross margin of $763,000, as well as 98 acre-feet of water rights in Nevada which grossed $388,000. An additional $1.7 million was generated through lease revenue, or farms th! at operate on land which the company owns due to their water resources.

PICO’s real estate operations consist of its 57.7 percent ownership stake in UCP (NYSE: UCP), a real estate development company that recently went public. UCP owns or controls more than 6,600 development lots in high-demand areas of California and Washington state.

In the third quarter, the segment’s net income fell from a gain of $2.2 million last year to a small net loss of $231,000, largely due to higher operating costs. As a result of the IPO, legal and audit costs were substantially higher than in prior periods and salary and benefit costs rose as a result of new hirers.

The company’s agribusiness consists of a canola processing and refining facility in Minnesota capable of producing food-grade oil suitable for either cooking or industrial use as well as meal for animal feed.

The corporate umbrella is comprised mainly of venture capital investments in a handful of software and technology companies.

With the corporate operations accounting for just 17 percent of shareholders’ equity, more than 80 percent of equity is tied to real assets such as real estate (more than 40 percent to water), the canola processing facility or water rights.

While inflation tends to erode the value of pure financial assets, PICO Holdings should fare well during any inflationary bubbles since demand for water is a constant. Real estate also tends to perform well in inflation, particularly if it isn’t highly leveraged. That’s the case here, in light of the company’s debt-to-equity ratio of just 0.3.

That said, the disparate nature of the company’s businesses could result in volatile earnings performance. PICO Holdings is a buy for aggressive investors up to 30.

Enterprise Products Partners LP (NYSE: EPD) is another interesting asset-heavy company and an example of the second exception.

A master limited partnership (MLP), Enterprise operates in! what is ! normally the extremely volatile natural gas business. But rather than producing or even selling the gas, it simply transports it from the well head to the hub via more than 50,000 miles of pipeline, barges and terminals. Instead of being paid based on the final value of the product, the MLP gets paid based on the volume of product it moves.

Enterprise’s assets are particularly valuable for several reasons.

First, regulatory hurdles make it difficult for competitors to move in and duplicate Enterprise’s network. That gives the company a degree of price control in its market.

Natural gas is also becoming an increasingly attractive asset in and of itself, thanks to rising prices. After years of doldrums following the recession, cheap gas and increasingly stringent emissions regulations have prompted many electricity generating utilities to transition from coal to cleaner burning gas. That’s helped push natural gas prices up in recent months.

At the same time, natural gas production in the US has been ticking up, thanks to the “fracking” revolution in the energy patch. So while US gas prices have been on the rise because of the relative glut of gas on the market, the prices Americans pay are nowhere near those paid in the rest of the world. Even with gas fetching between $4 and $5 per million British thermal units in the US, it goes for more than $10 in Europe and $15 in Japan. That’s pushing many producers to look at exporting their gas.

Enterprise already has substantial import and export capacity in Houston (about 14 million barrels per hour) and it has entered into a deal to significantly expand that capacity.

Energy commodities are often the first to move in any inflationary burst and those higher prices can often dent demand. But Enterprise’s growing exposure to the export market will provide a significant degree of insulation for its gas flow volumes.

Enterprise Products Partners LP is a terrific inflation hedg! e up to 7! 0.

Thursday, February 6, 2014

Don't Try to Categorize Latteno Food (KRFT, JVA, LATF, HEMP, MJNA)

What do you get when you cross a Coffee Holding Co., Inc. (NASDAQ:JVA) with a Medical Marijuana Inc. (OTCMKTS:MJNA) and a Kraft Foods Group Inc. (NASDAQ:KRFT)? No, it's not a setup for a punch line - there's a legitimate answer. And that answer is, Latteno Food Corp. (OTCMKTS:LATF).

Don't sweat it if you've never heard of it; most investors haven't. Its obscurity doesn't negate its opportunity, however. Indeed, LATF may be one of the market's best short-term trading opportunities out there right now.

So how does Latteno Food Corp. act as a blend of Kraft Foods Group, Medical Marijuana, and Coffee Holding Co.? The company's technically a food supplier/wholesaler, in the same vein as KRFT. But, its core food business is milk and coffee, following in the footsteps JVA. But, it's also staking a claim in the medical marijuana game - through its subsidiary Valley Organics - that allows an investor to categorize it with a ticker like MJNA. In fact, LATF is going to deepen its exposure to the medical cannabis and food industries by combining regular food products and medical cannabis; there's an open call for MMJ recipes right now that may be converted to on-the-shelf products where legal.

Given how red hot marijuana stocks like Medical Marijuana Inc. or Hemp, Inc. (OTCMKTS:HEMP) have been of late, it's no surprise that Latteno Food Corp. shares have been able to tap into that uptrend. Unlike shares of Hemp, Inc. or Medical Marijuana Inc., however, LATF has just now begun to rally, and there's plenty of meat left on the bone. In fact, the chart looks downright delicious for this eclectic food producer. 

The chart below tells the tale. Things started to heat up in early January, but rather than fade out the way most trends do, this one never quit. In fact, it accelerated, on growing volume. The best shot the bears had at killing the budding rally from LATF was to take a stand at the 200-day line (green), and they even got a helping hand to that end when shares peeled back from the high of $0.0047 on the 28th, when shares finally blew past the 200-day moving average line - the sellers pushed it back under the 200-day line that very day, and pretty much kept it at bay ever since. That is, until today, when the bulls got on their horse again. Shrugging off that lull and not looking back, it's pretty clear as of today that Latteno Food Corp. isn't going to quit anytime soon. The market's sheer willpower here is making it happen, and that's a force you just don't want to mess with.

Bottom line? Time to wade in.

For more trading ideas and insights like these, be sure to sign up for the free SmallCap Network newsletter. You'll get stock picks, market calls, and more, every day. Here's what you've missed recently.

Wednesday, February 5, 2014

CVS ban on cigarettes could cut smoking rates

The decision by CVS to stop selling cigarettes could help to cut smoking rates substantially, especially because the move comes at a time of increased pressure on the tobacco industry from a number of fronts, health experts say.

"It is a big deal — one of those death knell events the tobacco industry has feared for some time," says Thomas Glynn, director of cancer science and trends at the American Cancer Society.

Research shows that making cigarettes even slightly less accessible has a measurable effect on smoking, especially for kids, who have fewer ways to get tobacco, says Otis Brawley, the Cancer Society's chief medical officer.

"It's an act of corporate courage," says Brawley, who says the Cancer Society has pressured pharmacies to ban cigarettes for several years.

Studies show that being forced to travel just two extra blocks can deter someone from buying cigarettes, Brawley says. Brawley notes that retailers have known for decades about the importance of positioning products near cash registers, to increase "impulse" buys.

Canada has reduced cigarette sales simply by requiring retailers to store them under the counter, where they're invisible to customers, says Richard Hurt, director of Mayo Clinic's Nicotine Dependence Center. He notes that tobacco companies pay convenience stores a lot of money to position cigarette ads prominently near the register. "The tobacco industry has known for decades that if they can place their products in customers' faces, they have more attractiveness," Hurt says.

Brawley says he hopes CVS' decision will pressure pharmacies such as Walgreens, which donates a lot of money to the Cancer Society, to also stop selling tobacco.

"If the cigarettes are right in front of you, if they're convenient, you are more likely to buy them," Brawley says. "This is especially true of people who are struggling to quit."

The CVS announcement comes amid a number of renewed efforts to combat smoking, including some timed to coincide with! the 50th anniversary of the first Surgeon General report on smoking.

• The Food and Drug Administration on Tuesday announced a $115 million anti-smoking campaign. On Monday, the Centers for Disease Control and Prevention began its third round of anti-smoking ads. Over the past two years, the CDC has spent $162 million on the ads, called "Tips from Former Smokers," which have been credited with helping 100,000 Americans quit smoking. This summer, the American Legacy Foundation will launch the latest version of its "truth" campaign, which has been credited with preventing 450,000 kids from becoming smokers from 2000 to 2004.

• A Surgeon General report on smoking last month estimated that tobacco kills 480,000 Americans a year, for a total of 20 million Americans in the past 50 years. In addition, 5.6 million children will die of smoking-related illness unless the country takes immediate action.

• Tobacco companies last month reached an agreement with the Justice Department on publishing corrective statements that say the companies lied about the dangers of smoking. The long-awaited advertising campaign was ordered in 2006 by U.S. District Court Judge Gladys Kessler, who found tobacco companies guilty of violating civil racketeering laws and lying to the public about the dangers of smoking and their marketing to children. Because tobacco companies are still appealing part of that ruling, and Kessler has to sign off on the ads' final language, it could take another year or two before the ads actually appear, says Matthew Myers, president of the Campaign for Tobacco-Free Kids.

• Lawmakers in Kentucky, which has the nation's highest adult smoking rate, at 28%, are considering legislation this week to make workplaces smoke-free. "Momentum is strong" to pass the bill, which has the support of Kentucky's governor, says Bronson Frick, spokesman for Americans for Nonsmokers' Rights. Twenty-six states and Washington, D.C., now ban smoking in indoor public places.

Some question! how much! impact CVS' decision will have.

Jerome Reisman, a senior partner at Reisman Peirez Reisman & Capobianco, a law firm in Garden City, N.Y., predicts the tobacco ban will have a "small financial impact on retail sales." Euromonitor International, which tracks industry trends, reports that pharmacies sold fewer than 4% of all cigarettes sold in 2012.

David Howard, a spokesman for R.J. Reynolds Tobacco, says: "We value the long-term relationship we had with CVS and respect their commercial decision. We will work with them as they transition out of the tobacco category in the coming months."

CDC director Thomas Frieden.(Photo: Jeff Franko)

Thomas Frieden, director of the Centers for Disease Control and Prevention and a longtime anti-smoking advocate, notes that the tobacco industry still spends $8.5 billion on marketing each year. "They remain a very formidable enemy," Frieden says. "They are really trying to squeeze every last dollar out of the people they kill."

But Frieden also says the "days of the tobacco industry are numbered." He notes that a majority of Americans who have ever smoked (about 50 million) have already quit. Most of the country's 42 million current smokers want to quit, he says.

"There's growing momentum to resume the rapid downward course of smoking and thus the upward course of health," Frieden says.

Steven Schroeder, a professor at the University of California-San Francisco, says the country could do far more to combat smoking. Only two states, for example, meet the CDC's goals on spending for anti-smoking efforts, such as educational campaigns. "We're a long way from the endgame," Schroeder says. "But we are a lot closer."

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Ending the tobacco epidemic takes "political will," says Stanton Glantz, a professor at the University of California-San Francisco.

The White House "has the power to fix the tobacco problem in a few years, if they would just get off their behinds."

Tuesday, February 4, 2014

Is Bank of America an Attractive Investment?

With shares of Bank of America (NYSE:BAC) trading around $16, is BAC an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Bank of America is a financial institution serving individual consumers, small- and middle-market businesses, corporations, and governments with a range of banking, investing, asset management, and other financial and risk management products and services. With its banking and various non-banking subsidiaries throughout the United States and international markets, the company provides a range of banking and non-banking financial services and products through several business segments: consumer and business banking, consumer real estate services, global banking, global markets, global wealth, investment management, and other.

Bank of America is increasing salaries for some managing directors at its investment bank in the European Union by about 20 percent to $500,000, according to a person with knowledge of the plan. The raise in base pay for client-facing managing directors is effective immediately and comes amid tougher EU rules on bonuses in the region, said the person, who asked not to be identified because the details are private. European regulators are preparing to outlaw bonuses that are more than twice fixed pay to prevent a repeat of the risk-taking that helped spark the 2008 global financial crisis. Banks are looking for ways to sidestep the stricter EU bonus rules on compensation, which will apply to awards given in 2015, based on this year's performance.

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T = Technicals on the Stock Chart Are Strong

Bank of America stock has been flying higher in recent quarters. The stock is currently trading near highs for the year and looks set to continue this path. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Bank of America is trading above its rising key averages which signal neutral to bullish price action in the near-term.

BAC

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Bank of America options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Bank of America options

29.96%

93%

90%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

March Options

Flat

Average

April Options

Flat

Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Bank of America’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Bank of America look like and more importantly, how did the markets like these numbers?

2013 Q4

2013 Q3

2013 Q2

2013 Q1

Earnings Growth (Y-O-Y)

866.67%

20.00%

68.42%

233.30%

Revenue Growth (Y-O-Y)

364.48%

-1.52%

3.46%

4.13%

Earnings Reaction

2.26%

2.24%

2.80%

-4.72%

Bank of America has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have been pleased with Bank of America’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Bank of America stock done relative to its peers, JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C), and sector?

Bank of America

JPMorgan Chase

Wells Fargo

Citigroup

Sector

Year-to-Date Return

6.81%

-6.50%

-1.35%

-10.40%

-1.86%

Bank of America has been a relative performance leader, year-to-date.

Conclusion

Bank of America is a bank and financial services giant that operates in a recovering financial industry, the backbone of the United States economy. The company is increasing salaries for some managing directors at its investment bank in the European Union by about 20 percent to $500,000. The stock has been exploding to the upside in recent quarters and is currently trading near highs for the year. Over the last four quarters, earnings and revenue figures have been have been increasing, which has left investors pleased about recent earnings announcements. Relative to its peers and sector, Bank of America has been a year-to-date performance leader. Look for Bank of America to OUTPERFORM.

Sunday, February 2, 2014

Dow, S&P 500 Fall For Fourth Straight Session

U.S. stocks finished mostly lower Wednesday, giving back earlier gains, with the Dow and the S&P 500 both extending their losing streak to a fourth day.

The Dow Jones Industrial Average fell 25 points, or 0.15% to close at 15,890. The S&P 500 index lost two points, or 0.12%, to end at 1,793.

The Nasdaq Composite, however, managed to buck the trend, though not by much. The index rose one point, or 0.02% to close at 4,038.

It was a choppy market. The big indices all moved into positive territory on news about progress towards a U.S. budget deal. Those gains disappeared as the day progressed.

What happened? Upbeat economic reports reinforced fears that later this month the Federal Reserve could start to taper the bond-buying program that has supported equities.

Data from ADP showed more private-sector jobs were created in November than economists had forecast. The report is viewed as a preview of the Labor Department's November employment report, due Friday, which investors are watching closely for hints as when the Fed will take action.

New home sales were higher than forecast in October, rising to an annual rate of 444,000, on expectations of a rise to 426,000. And the Fed's Beige Book described improving economic conditions around the country.

A report about the service sector of the U.S. economy disappointed. The Institute for Supply Management's nonmanufacturing purchasing managers index declined by more than expected in November, falling to 53.9 from October's 55.4. It was forecast to slip to 55.

Yields on the 10-year U.S. Treasury note rose to 2.836%, its highest close since Friday. Bond yields move inversely to bond prices.

Crude oil prices rose 1.17% to $97.16 per barrel. Gold prices rose as well, up 1.78% to $1,242.50 per pounce.

In corporate news: Express (EXPR) fell 23% to $19 after the teen clothing retailer cut its full-year outlook.

J.C. Penney (JCP) fell 4.45% to $9.66 as investors appeared disappointed by the 10.1% same-store sales growth reported for November.

Deere (DE) rose 3.2% to $85.38 after the equipment maker expanded its share repurchase.

CF Industries (CF) rose 10.7% to $237 after the fertilizer maker said its evaluating its dividend payment.

General Motors (GM) rose 1.54% to $38.71 on news that hedge fund Hayman Capital has taken a stake in the automobile maker and says the stock could rise more than 40% in the next 12 to 18 months after the U.S. Treasury sells its stake in the company.

And Intuitive Surgical (ISRG) fell 0.6% to $370.68 following news from the FDA that the firm warned customers last month of problems with certain instruments in its da Vinci surgical robots.

After the closing bell, Walt Disney (DIS) rose 0.7% to $70.47 after announcing a 15% dividend hike. And teen retailer Aeropostale (ARO) fell 3.8% $9 after reporting fiscal third-quarter financial results.

Do-nothing Congress dithers on budget as deadline nears

congress, budget, obama, boehner The Capitol building. Bloomberg News

Congress's latest attempt at crafting a budget plan is on track to end up the same way as others have in the past decade: with little or no agreement.

Negotiators have little chance of breaking this string of futility, even after a 16-day government shutdown in October that cost the U.S. economy $24 billion. If they do, it'll only be to curb automatic spending cuts, including $19 billion that hits the Pentagon starting in January.

Now budget experts, labor unions and business groups are saying enough's enough, and questioning why lawmakers can't live within their means the way ordinary Americans do and instead lurch from one budget standoff to the next.

“It's a stupid way to run a country,” said Maya MacGuineas, head of the Campaign to Fix the Debt, a non-partisan advocacy group whose members include business leaders and former lawmakers. “Change comes from two possible things: a crisis or leadership.”

One of the co-chairmen of the campaign is Michael Bloomberg, founder and majority owner of Bloomberg News parent Bloomberg LP and the New York City mayor.

Unlike with previous budget panels, including the failed 2011 supercommittee, there are no immediate consequences if the budget conference misses its Dec. 13 deadline – the U.S. won't default on its debt and the federal government won't shut down for lack of funding.

The committee's lack of progress is frustrating outside groups, especially business executives, who say congressional lawmakers' habit of governing by crisis and temporary spending bills is hurting the economy and costing jobs.

'CHILLING EFFECT'

“The uncertainty has a chilling effect on job creators, households and anybody who's trying to see around a corner,” said Ms. MacGuineas, who is also president of the Committee for a Responsible Federal Budget, a fiscal advocacy group.

Congress in 2009 last passed a budget resolution, the equivalent of a household budget that sets spending parameters for the federal government.

In 2010, disagreement over how to handle the scheduled expiration of tax cuts enacted under former President George W. Bush prevented agreement on a budget resolution and Republicans won the House majority, creating a divided Congress.

The current panel is the fifth bipartisan attempt in three years to address the nation's debt and deficit. The others, starting with the 2010 debt-reduction commission appointed by President Barack Obama, ended in failure.

'SOMETHING DONE'

This one may, too, said Maryland Representative Chris Van Hollen, a panel member and the top Democrat on the House Budget Committee. “Negotiations have to accelerate significantly if we'r! e going to get something done,” he said.

The conference committee was supposed to mark a return to so-called regular order, where the chairmen and members instead of ad hoc negotiating groups work to craft a budget for the coming fiscal year and figure out a way to replace some of the automatic cuts known as sequestration.

Instead, they're stumbling over the same obstacles that have prevented past agreements. Democrats want to end some corporate tax breaks while Republicans say they oppose any changes to the tax code outside a broader deal. Republicans want to cut spending on entitlement programs, which Democrats oppose without considerable revenue concessions.

AUTOMATIC CUTS

The panel's progress so far has been limited to agreeing that its objective should be to replace the automatic cuts for one to two years with more palatable spending reductions, Mr. Van Hollen said.

“That's a much more narrow target, but that doesn't mean we'll hit the target,” said Mr. Van Hollen, noting the full committee has met just twice.

The conference, headed by Senator Patty Murray of Washington and Paul Ryan of Wisconsin, chairmen of their chambers' budget committees, is the first panel in the past three years to set such a narrow goal. Mr. Murray, a Democrat, and Mr. Ryan, a Republican, made clear from their first meeting that they weren't striving for a grand fiscal bargain.

Now, they're struggling to achieve even a deal in the range of $50 billion to $100 billion just to reapportion automatic spending cuts that lawmakers of both parties agree are stunting investments in the military, scientific research and education.

“It's demonstrating how difficult it is even to hit a very low bar, which is kind of depressing when you think of how much work really needs to be done,” said Robert Bixby, executive director of the Concord Coalition, a fiscal advocacy group.

For long-term deficit reduction, lawmakers would need to make changes to Social Security, Medicare and Medicaid, which! make up ! almost half of federal spending. Many lawmakers are hesitant to trim the programs amid lobbying from interest groups including AARP, the nation's largest seniors' lobby with 37 million members.

It was in 2011, with the U.S. on the brink of a debt default, that Congress created the deficit-reduction supercommittee, empowering it with authority to expedite any agreement through Congress. No deal was reached.

The panel was the fourth such bipartisan commission formed in the preceding two years to deal with the nation's growing debt and deficit. They included the president's 2010 commission led by former President Bill Clinton Chief of Staff Erskine Bowles and former Wyoming Senator Alan Simpson, a Republican, who couldn't get the votes to send their $4 trillion plan to Congress.

TAX CHANGES

A separate bipartisan group of six senators negotiated a similar plan that never made it to Congress for consideration because of Republican opposition to revenue increases through proposed changes to the U.S. tax code.

Earlier, in mid-2011, Vice President Joe Biden led another group of congressional leaders in talks to raise the debt ceiling and curb the deficit.

The group fell apart after House Majority Leader Eric Cantor, a Virginia Republican, dropped out of talks over Democratic demands that tax revenue be included. With each attempt, the debt-reduction target was scaled back, with Biden's group aiming for a $2 trillion reduction over 10 years.

In November 2011, the supercommittee struck out amid disagreements on revenues and entitlement programs. That triggered the automatic spending cuts to domestic and defense programs now in effect. Ms. Murray and Mr. Ryan are now trying to reapportion the cuts to blunt their effects on the Pentagon and domestic programs such as Head Start that serve poor children.

While the two continue to negotiate over the Thanksgiving holiday, aides say they haven't come to terms on revenue.

Talks are further complicated by a recent demand by House Speaker John Boehner, an! Ohio Rep! ublican, that a deal shouldn't include cuts to farm subsidies, removing one of the few areas where both parties agree reductions are needed, Mr. Van Hollen said.

“The math doesn't work if you start doing that,” he said.

Even if Mr. Ryan and Ms. Murray reach a compromise, it would have trouble winning approval by the full committee, let alone passage in a divided Congress.

“A budget conference committee of 29 representatives and senators is so unlikely to agree on anything that, unless they want to go hungry, they had better delegate to a single staffer the authority to decide what to order for lunch,” said Stan Collender, managing director of Qorvis Communications LLC in Washington and a former congressional appropriations aide.

The real deadline is Jan. 15, when government funding again expires, said Mr. Bixby, and there is a chance that Mr. Ryan and Ms. Murray can hammer out a deal by then.

Meanwhile, businesses are growing frustrated with Washington's inability to bridge its differences to replace spending cuts that no one thinks are good policy.

“Uncertainty holds back growth and investment,” Dorothy Coleman, vice president of tax and domestic economic policy at the National Association of Manufacturers in Washington, said in an e-mailed statement, urging Congress and the administration to work for policies to provide stable growth.

“Given the divisions between the parties and our experience over the last three years, it's difficult to be optimistic,” Dan Stohr, a spokesman for the Aerospace Industries Association, said in an e-mail.

The Arlington, Virginia-based industry group's members include defense contractors General Dynamics Corp., Lockheed Martin Corp. and Raytheon Co. Lockheed, the largest U.S. government contractor, will cut 4,000 jobs in response to declining federal spending.

“We cannot keep lurching from crisis to crisis,” Mr. Stohr said. “It's having a very detrimental effect on investments” for t! he trade ! group's members, including layoffs and less money for research and development, that prevents businesses from being able to plan ahead.

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