Hanesbrands Reaches 52-Week High - Analyst Blog

Shares of Hanesbrands, Inc. (HBI) reached a new 52-week high of $53.13 on Jul 8 on the back of bright prospects for 2013, driven by the company's plans to roll out new products.

Shares of this textile retailer closed at $52.59 on Jul 8, recording a healthy return of 48.3% on a year-to-date basis. The company's long-term estimated EPS growth rate is 14%. Average volume of shares traded over the last three months came in at approximately 644K.

Growth Drivers

Hanesbrands plans to stick to its 'Innovate to Elevate' strategy that helped it to achieve higher unit selling prices and lower unit costs, thus contributing to margin enhancement and improved profitability in 2013. Further, Hanesbrands' focus on innovation, emphasis on higher-priced and higher-margin products, lower cotton costs and prudent expense management is expected to drive solid results in 2013.

The company also has substantial cash flows, which will create many opportunities for increasing shareholder returns. Hanesbrands initiated a regular quarterly dividend payment of 20 cents in Apr 2013 and intends to make dividend payout of 20% to 25% of free cash flow in the coming years. The company also plans to engage in acquisitions and share repurchases in order to maximize the value of cash flows.

Hanesbrands reported first-quarter 2013 earnings of 51 cents compared to a loss of 25 cents in the comparable prior-year quarter. The upswing was driven by lower cotton costs and disciplined cost management. Earnings also beat the Zacks Consensus Estimate by 1.9%. In fact, Hanesbrands has topped earnings estimates in the last five quarters.

Gross margin increased 140 basis points (bps) in the quarter on the back of positive pricing and closure of underperforming businesses. Operating margin also expanded 790 bps to 9.0% on the back of lower cotton costs, positive pricing and success of the Innovate-to-Elevate strategy.

Other Stocks to Consider

Hanesbrands holds a Zacks Rank #3 (Hold! ). Other stocks in the textile and apparel industry that are also worth considering are Michael Kors Holding Ltd (KORS), G-III Apparel Group Inc (GIII) and PVH Corp (PVH), all of them carrying a Zacks Rank #2 (Buy).

Acorda Expands Pipeline - Analyst Blog

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Acorda Therapeutics, Inc. (ACOR) recently added two neuropathic pain management assets to its portfolio. The company acquired these assets, Qutenza and NP-1998 (formerly known as NGX-1998), from NeurogesX, Inc. (NGSX).

Financial and Other Details

Acorda made a payment of about $8 million in return for the development and commercialization rights for Qutenza and NP-1998 in the US, Canada, Latin America and certain other territories. Acorda may pay up to another $5 million on the achievement of NP-1998 related regulatory and sales milestones.

Exclusive commercialization rights for Qutenza in the European Economic Area (EEA), certain countries in Eastern Europe, the Middle East and Africa lie with Astellas Pharma Europe Ltd., the European subsidiary of Astellas Pharma, Inc. (ALPMY). Astellas may also exercise an option to develop NP-1998 in the above-mentioned territories.

While Qutenza is approved in the US for the management of neuropathic pain associated with postherpetic neuralgia, NP-1998 is being evaluated for the treatment of neuropathic pain.

Qutenza, which was approved in the US in 2010, posted sales of $2.6 million in 2011. NeurogesX stopped promoting the product actively from Mar 2012. Acorda intends to use its existing commercial organization, including its specialty neurology sales force of about 100 sales reps, for promoting Qutenza.

Qutenza is also being evaluated as a treatment of pain associated with painful diabetic neuropathy by Astellas. It is currently in phase III development for this indication and Acorda has the right to review data from this study. Astellas and Acorda have the option to collaborate and/or split costs associated with future studies.

We are encouraged by Acorda's efforts to expand its product portfolio and pipeline. The company has been looking towards in-licensing deals and acq! uisitions to expand its pipeline. In Dec 2012, Acorda acquired Neuronex and added diazepam nasal spray (management of seizure in certain epilepsy patients) to its pipeline.

Acorda currently carries a Zacks Rank #3 (Hold). At present, Biogen Idec (BIIB) looks well-positioned with a Zacks Rank #1 (Strong Buy).

Guess Inc. Retained at Neutral - Analyst Blog

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We reaffirm our Neutral recommendation on Guess Inc. (GES), a specialty retailer of fashionable and contemporary apparel and accessories for men, women and children following an appraisal of its first quarter 2014 results.

Though we are optimistic about the turnaround strategies undertaken by the company, soft top line results in the first quarter of fiscal 2014 and the lowered fiscal 2014 earnings guidance keep us on the sidelines. Further, the tough retail conditions are expected to prevail throughout 2014.

Why the Reiteration?

On May 31, 2013, Guess? reported first-quarter fiscal 2014 earnings of 14 cents per share, which beat the Zacks Consensus Estimate of 8 cents by 75% and exceeded the company's guidance of 5 cents to 10 cents backed by its initiatives to increase sales.

However, earnings slipped year over year due to higher product cost leading to a rise in the operating expenses. Moreover, revenues in the quarter slipped 5.2% to $548.9 million due to lower sales at the North American retail and European segments.

The significant decline in total sales from the year-ago period was due to the slower pace of economic recovery and lower spending by domestic customers. Transactions per store declined, although traffic was on the rise, implying an increase of window shoppers.

The company has, however, taken several initiatives in order to improve sales. It has embarked on a three-pronged approach to improve the performance of its retail business. Firstly, it is enhancing its denim stocks to revamp the denim heritage of the company, which is the essence of the collection of Guess?.

Secondly, the company is shifting its focus from higher margin products and is offering its stocks at entry point prices in an attempt to attract the young generation. Thirdly, Guess? is geared to change its stocks more often so as to refle! ct the current fashion trends.

Following the release of first-quarter 2014 earnings, the Zacks Consensus Estimate for fiscal 2014 fell by 8.0% to $1.84 per share. For fiscal 2015, however, the estimate went up by only 1.0% to $2.12 per share.

The company narrowed its guidance for fiscal 2014 following the first quarter earnings results. For 2014, the company expects earnings in the range of $1.70 to $1.90 per share, which is narrower than the band of $1.70 to $1.94 per share as announced previously. The company gives a conservative outlook due to the prevailing tough retail conditions and higher product costs

Other Stocks to Consider

Guess? carries a Zacks Rank #3 (Hold). Other diversified retailers worth considering include Restoration Hardware (RH), Dollar Tree, Inc. (DLTR) and Ross Stores (ROST). While Restoration Hardware carries a Zacks Rank #1 (Strong Buy), Dollar Tree and Ross Stores carry a Zacks Rank #2 (Buy).

Analyst: Here’s How Amazon Disappointed Bulls on Friday

Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

In trend most investors have come to expect, Amazon (NASDAQ:AMZN) had marched uphill on a steady pace, rising over 20 percent since the start of May and 22 percent on the year. In fact, shares hit their all-time high above $309 recently. Despite all the good news for Amazon bulls, several were disappointed at the close of trading.

According to Schaeffer’s analyst Karee Venema, the nearly 3,500 contracts with the July 315 call bargained on Amazon hitting $315.40 by Friday. The VWAP of $0.40 plus the $315 left bulls hoping Amazon would rush to unforeseen heights before the week ended. That didn’t happen.

Amazon closed at $305.23 on Friday in New York, leaving many bulls with hopes dashed, though the losses would only amount to the premium paid on the options bet. For Amazon, a bit of overconfidence from investors is nothing new. The stock usually rewards them for their conviction.

Schaeffer’s analyst Milissa Hodepohl noted a similar trend in her Monday report. She noted that for every 100 puts, 132 calls had been bought on the CBOE, Nasdaq, and ISE for a period of almost two weeks. The ratio held until Thursday, when Venema noted 1.16 calls for every put over the course of 50 sessions.

Hudepohl noted another popular option, the July 310 strike, which also wasn’t met for Amazon bulls on Friday. In this round, nearly 4,500 contracts were bought with a $312. 05 target in sight. Amazon was nearly $7 under that call price for the week.

Yet analysts aren’t changing any forecasts, and nearly every one has a positive or neutral take on the online retail giant. Hudepohl notes 23 of the 33 with opinions on the stock give it a buy rating while the remaining 10 calling it a hold at the moment.

Investors are heeding that advice.  Hudepohl noted on July 15 the call/put ratio of 1.32 was above 94 percent of the readings taken during the previous 10 days of trading. There are many more bulls than bears in Amazon’s corner, at a level that is nearly unmatched.

Is there more disappointment in the works? Venema noted Amazon’s Relative Strength Index sat at 80 on Thursday. With the stock so overbought, it had little chance to beat out either of the two strikes.

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Yelp Gets Bad Reviews From Small Biz Owners at Town Hall

unnormalized/Flickr Yelp is giving small business owners a chance to air their concerns about the review site in a series of town halls across the country. And it turns out some these restaurateurs and small business owners have a bone to pick with the way Yelp does business. On Tuesday, Yelp (YELP) held its latest town hall in Los Angeles, with a panel of company representatives and friendly small businesses fielding questions and discussing ways to use Yelp. The idea, in part, was to reach out to a small-business community that often feels victimized by unfair reviews, as well as what some say are aggressive sales tactics by Yelp. But the forum didn't go exactly as planned for Yelp. As the Los Angeles Times reports, company representatives found a hostile crowd waiting for them:

Many slammed the company for allowing reviewers to post inflammatory comments - one restaurant manager said she cried for three days after a Yelper wrote that her restaurant was filled with Nazis. Others said they had been subjected to aggressive advertising calls from Yelp. Vintage clothing shop owner Reiko Roberts said the advertising pressure amounted to extortion. She said that when she declined to buy ads, "the lower reviews go to the top and the higher reviews go to the bottom."

That's a charge that's been leveled at Yelp numerous times in the past, and which the company has repeatedly denied. The issue lies largely with the site's filter, which seeks to exclude reviews from suspicious or unproven reviewers in favor of reviews from established users.

Yelp has also sought to bring purity to the review process by going after businesses that try to buy positive reviews for themselves. But as the hostile reception makes clear, a lot of business owners feel that these systems work largely to their disadvantage, burying positive reviews and elevating negative ones. It's hard to say how many of these complaints are legitimate, and how many are just sour grapes from business owners angry about negative reviews. But there's no doubt that Yelp has a public-image problem among its most crucial users -- the businesses that pay to advertise on the site. So far, though, it doesn't seem to be hurting Yelp too badly: Since going public last spring, its share price has more than doubled.

The Hunt for a Pension Crisis Fix

The bankruptcy filings of large municipalities, like Detroit and Stockton, Calif., highlight a growing problem that needs more than a temporary fix.

Many, if not most, municipal governments are awash in pension debt. Lots of states are in the same boat. Part of the problem is today’s artificially low interest-rate environment, which has played havoc with pension assets and liabilities. Part of the problem also is a long history of governments not making the required contributions to their plans. Now they don’t have the money to do so, and the debt has become debilitating. It’s gotten so bad that many cities have found themselves paying more for retiree benefits than they do for public services such as fire and police.

About 21,000 retired workers receive pensions from the city of Detroit; the average annual benefit for retired municipal workers there is $19,000. Retired police officers and firefighters receive an average of $30,500.

Moody's Investors Service recently said Detroit's bankruptcy could set a precedent for other financially distressed communities. Somewhat ironically, while Moody’s doesn't anticipate numerous defaults and bankruptcies, more could come if Detroit successfully reduces and restructures its debt and pension liabilities.

Many believe the best way to get out from under crippling pension debt is to close these plans to new hires and move employees to lower-cost defined contribution plans. But there are other options, like asking employees to contribute more toward their pension and retiree health care benefits, tinkering with cost-of-living adjustments, and not allowing public workers to “spike” their retirement earnings at the end of their career.

Here’s a closer look at all of these ideas:

Terminate the Plan

Unlike corporations, municipalities don’t have as much flexibility to change their pension plans. They need the support of their state legislatures to make any substantive changes.

Although it can be tough to win lawmakers’ support, the idea of closing a municipality’s pension plan altogether and moving workers to a lower-cost plan is catching on.

So long as a municipality has enough money to pay all benefits owed to participants and beneficiaries, it can opt to terminate its defined benefit plan. To do that, the plan administrator must either purchase an annuity from an insurance company for its participants or pay the benefits some other way, such as in a lump-sum payout.

Proponents of this scenario say it may cost the employer more upfront in payouts, but will save money in the long-term by shifting those pension liabilities off the books.  

Those who expect to receive pension benefits oppose the closure of the plan because their future security is tied to having those benefits. They feel they were promised a guaranteed benefit and to reduce it or shift it to a less secure option, like a defined contribution plan, is seen as a full frontal assault on their future security.

Corporations already are shifting their retirement assets away from defined benefit plans in droves. A recent survey by Prudential Financial Inc. and CFO Research Services found that nearly 60 percent of companies have either frozen accruals for all participants or closed their defined benefit pension plans to new entrants and many more said they were likely to do so within the next two years.

Switch to a DC Plan, Gradually

Some states including Florida are slowly reforming their pension plans. Rather than abruptly pulling any plugs, they give all of their employees the option to either enroll in the state’s traditional pension plan for government workers or to contribute to a 401(k)-type plan.

Beginning Jan. 1, 2014, however, all new hires in Florida government will automatically be placed into the defined contribution plan as the state phases out its defined benefit plan entirely.

DC plans are cheaper, of course, because they are mostly participant-funded rather than employer-funded. Employers can make contributions to these accounts and they have tax incentives to do so, but they aren’t required to. Critics of this shift point out that defined benefit plans offer one thing that defined contribution plans do not: a guaranteed benefit. That is the biggest negative in switching from a DB plan to a DC plan.

Requiring Employee Contributions

Florida began asking its state workers to contribute 3 percent of their earnings to the state’s defined benefit plan two years ago, triggering a wave. Today, most states require workers to contribute something to their own retirement.

Massachusetts has required its public-sector employees to make contributions to their defined benefit accounts for decades. Since 1996, they have been asked to contribute 9 percent of earnings into their retirement accounts. More governments are exploring this option because they want to honor their commitments to past workers but don’t have the funds to keep making the required contributions themselves.

Tinker With Cost-of-Living Adjustments

According to the National Association of State Retirement Administrators, most state and local governments provide a cost-of-living-adjustment to reduce or offset the effects of inflation, which erodes the value of a worker’s retirement income. They also provide an inflation adjustment to their retiree pension benefits, which is particularly important for those public employees, like public school teachers and public safety workers, who are not eligible for Social Security. Most state and local retirement systems pre-fund the cost of a COLA over the working life of an employee to be distributed annually over the course of a participant’s retired lifetime.

Not surprisingly, the COLA is one of the first things state and local governments tinker with when it comes time to save money. 

“COLAs are receiving increased attention as many states look to make adjustments to the cost of benefits amid challenging fiscal conditions and the current low-inflationary environment,” according to NASRA.

Since 2009, 11 states have changed the COLA affecting current retirees, five states addressed current employees’ benefits and six states have changed the COLA structure for future employees.

Many of these adjustments, however, are being challenged in court because they reduce a retiree’s long-term retirement income.

End Spiking

A popular way for public employees to boost their retirement income is to “spike” their final year of pay by cashing in a stockpile of sick and vacation time. The employee’s pension benefits are then based on the overall higher amount of compensation, rather than strictly on annual income.

Many industry experts attribute a good deal of the problems afflicting the public-sector pension system with spiking, which forces governments to pay out larger pensions than they might have expected. That’s why many states are now eliminating workers’ ability to spike their pay. They also are eliminating another perk: the ability to buy extra years of service toward retirement.

California, among other states, has outlawed spiking, though 20 counties in the state that don’t participate in the public employee pension system, including Los Angeles, continue to allow it.

Related:

Understanding your true net worth!

An accurate understanding of one's financial well being is of utmost importance at every stage of life. So, whether you are a student, fresher into the job market or a veteran - assessment of personal financial health is important in order to make good financial decisions. For example, even if are purchasing a car, purchasing a home, taking a student loan, liquidating an investment or making a risky investment  - all these decisions can be made only if you know your financial status well.

An individual's financial health is computed by means of his personal net worth. In simple terms, personal net worth is the net asset value of an individual. Personal net worth is calculated as follows:

[Total Assets] less [Total Liabilities]

One must assess his / her net personal worth on a regular basis. This is because corrective measures can be taken in time if the net personal worth starts declining. It is much easier to recover at early stages than once you find yourself in deep financial crisis. Your net personal worth will also give you an idea about how financial institutions perceive you as a borrower.  For example, Deepak, an IT consultant with a software company wants to purchase a car. He has set his eyes on the Toyota Corolla. The car dealer informs him that the on road price of the car will come to Rs.11.25 L.  If he takes a car loan, he will have to pay a monthly EMI of Rs. 15,000 towards repayment of the car loan and pay an amount of Rs. 1.0 L as down payment. Deepak's monthly salary is Rs.0.9L and the EMI as well as the down payment seems easily affordable. However, Deepak should assess whether he can afford to buy this car at present by considering all his liabilities and assets. His personal net worth should give him a fair idea of his current financial status and whether he can afford to buy the car.

Computation of Deepak's personal net worth

Assets	Rupees in '000
Current Market Value of his apartment	5000
Market Value of his TVS Scooty (two - wheeler)	10
Value of Fixed Deposits	500
Market Value of shares held by him	200
Market Value of Mutual Funds owned by him	500
Market Value of Jewellery	300
Value of NSCs	5
Amount in PPF	10
Cash in bank and in hand	100
Total Assets (A)	6625
Liabilities
Outstanding home loan	4500
Outstanding loan on TVS Scooty	2
Outstanding student loan	200
Outstanding credit card bills	50
Total Liabilities (B)	4752
Personal Net worth (A-B)	1873

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assuming that Deepak's monthly outflow towards EMIs of outstanding loans is Rs. 35,000/- and looking at his personal net worth, a corolla is a viable option. This is because he has a positive net worth of Rs.18.73 L. Further he is able to make payments of EMIs with ease considering his current income and should also be able to pay the EMI on the new car loan.

Note that knowledge of current personal net worth is essential to make financial decisions. It is important to reevaluate personal net worth while making any important financial decision as the value of assets and liabilities is likely to change. Also, net worth should not be considered in isolation. It is a good idea to consider factors like current and future income levels, future liabilities etc. For example, if Deepak has to bear the expenses of his sister's wedding which costs him approximately Rs. 9 L and he has to sell off some of his investment to meet the wedding expenses, his personal net worth will look different. Further, if the market value of assets declines, his personal net worth will also take a hit. Let us take a look:

Deepak's Personal Net worth if he has to bear his sister's wedding expenses and if the economy takes a down turn:

Assets	Rupees in '000
Current Market Value of his apartment	3000
Market Value of his TVS Scooty (two - wheeler)	10
Value of Fixed Deposits	0
Market Value of shares held by him	100
Market Value of Mutual Funds owned by him	200
Market Value of Jewellery	100
Value of NSCs	5
Amount in PPF	10
Cash in bank and in hand	0
Total Assets (A)	3425
Liabilities
Outstanding home loan	4500
Outstanding loan on TVS Scooty	2
Outstanding student loan	200
Outstanding credit card bills	50
Total Liabilities (B)	4752
Personal Net worth (A-B)	(1327)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Clearly, in the above situation, Deepak should not purchase a car at present and should concentrate on improving his personal net worth.

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Disclaimer: While we have made efforts to ensure the accuracy of our content (consisting of articles and information), neither this website nor the author shall be held responsible for any losses/ incidents suffered by people accessing, using or is supplied with the content.

Natural Gas Build Matches Guidance - Analyst Blog

5 Best Penny Stocks For 2014

The U.S. Energy Department's weekly inventory release showed an in-line rise in natural gas supplies, as the commodity's brisk use for power generation in the face of summer temperatures were offset by strong production. However, on a bearish note, the build was ahead of the five-year average levels, thereby narrowing the deficit with the benchmark.

About the Weekly Natural Gas Storage Report

The Weekly Natural Gas Storage Report – brought out by the Energy Information Administration (EIA) every Thursday since 2002 – includes updates on natural gas market prices, the latest storage level estimates, recent weather data and other market activities or events.

The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of natural gas. It is an indicator of current gas prices and volatility that affect businesses of natural gas-weighted companies and related support plays.

Analysis of the Data

Stockpiles held in underground storage in the lower 48 states rose by 82 billion cubic feet (Bcf) for the week ended Jul 05, 2013, within the guided range (of 80–84 Bcf gain) as per the analysts surveyed by Platts, the energy information arm of McGraw-Hill Financial Inc. (MHFI). But the increase – the thirteenth injection of 2013 – exceeded both last year's build of 34 Bcf and the 5-year (2008–2012) average addition of 74 Bcf for the reported week.

Despite past week's build, the current storage level – at 2.687 trillion cubic feet (Tcf) – is down 443 Bcf (14.2%) from the last year and is 22 Bcf (0.8%) below the benchmark five-year average.

Natural gas stocks hit an all-time high of 3.929 Tcf last year, as production from dense rock formations (shale) – through novel techniques of horizontal drilling and hydraulic fracturing – remained rob! ust. In fact, the oversupply of natural gas pushed down prices to a 10-year low of $1.82 per million Btu (MMBtu) during late Apr 2012 (referring to spot prices at the Henry Hub, the benchmark supply point in Louisiana).

However, things have started to look up in recent times. This year, cold winter weather across most parts of the country boosted natural gas demand for space heating by residential/commercial consumers. This, coupled with flat production volumes, meant that the inventory overhang has now gone, thereby driving commodity prices to around $4.40 per MMBtu in Apr – the highest in 21 months.

Following this, natural gas demand went through a lean period, with the end of the winter heating season and ahead of the peak cooling loads for summer. In this timeframe, the commodity experienced a number of above-average builds, thereby pulling down prices again.

Outlook

With hot weather expected to prevail over the country during the next few weeks, leading to strong electricity draws to run air conditioners, the commodity's price may experience another upward curve.

This, in turn, is expected to buoy natural gas producers, particularly low cost suppliers like Ultra Petroleum Corp. (UPL), and big players including Chesapeake Energy Corp. (CHK) and Exxon Mobil Corp. (XOM)

With the financial incentive to produce the commodity and the subsequent improvement in the companies' ability to generate positive earnings surprises, they are likely to move higher from their respective Zacks Ranks.

As of now, Ultra Petroleum and Exxon Mobil are Zacks Rank #3 (Hold) stocks, while Chesapeake currently retains a Zacks Rank #2 (Buy).

AT&T Makes One Small Step For Leap

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Maybe AT&T (NYSE:T) was insurmountably frustrated in its rumored attempt to buy all or part of Telefonica (NYSE:TEF), or maybe there never was any substance to that rumor. In any case, in lieu of the $150 billion or so that Telefonica would have cost, AT&T's surprising announcement Friday night that it was acquiring Leap Wireless (Nasdaq:LEAP) for $4 billion seems like a much smaller step.

This is a curious deal on multiple fronts. Leap is not a particularly strong company, and it is not as thought AT&T is badly hurting for spectrum. Instead, this may be a case of AT&T flexing its financial muscles to make life harder on its competition (especially T-Mobile (Nasdaq:TMUS) and Sprint (NYSE:S)) and deny this asset to other potential bidders.

SEE: What Makes An M&A Deal Work?

The Bid – Surprising, But Reasonable
AT&T announced that it reached an agreement to acquire Leap Wireless for $1.2 billion in cash, plus the assumption of $2.8 billion in net debt. For that, AT&T is getting spectrum covering approximately 137M POPs, the network assets and retail stores, and about 5 million subscribers. AT&T is also getting Leap's sizable pre-paid business, and I'll have more on this in a moment.

Leap Wireless shareholders will be getting $15 per share in cash from AT&T, but there's more to the deal than that. Once the deal has closed, AT&T will be looking to sell a 700MHz spectrum license in Chicago that it acquired from Verizon (NYSE:VZ) in 2012, and the proceeds will be passed to Leap shareholders through a non-transferable contingent value right. While there could be some challenges in selling this asset (apparently there are interference issues with DirecTV (NYSE:DTV) Channel 51), most analysts are valuing this asset at something in the neighborhood of $2.50 per Leap share.

Out of its own pocket, AT&T is paying about 8x estimated EBITDA for Leap. That's not unreasonable for the spectrum that Leap holds, but it is quite a bit more (100%-plus) than the market was willing to pay for Leap given the company's serious operating issues. In fact, that's arguably the most surprising part of the deal – the general assumption around Leap was that other companies were circling, but waiting for the company to weaken further before making low-ball bids for the spectrum.

Growing The Pre-Paid Business
Leap is all about pre-paid service, and the addition of this company will increase AT&T's prepaid customer base by more than 70%. As such, it definitely adds scale to this part of AT&T's business (which will now be about 10-12% of the business post-deal) and constitutes a real threat to the pre-paid businesses at Sprint and T-Mobile.

That strategic/competitive aspect is likely what is fueling this deal. While it's true that Leap has an under-utilized asset base, I don't believe AT&T is doing this deal because it believes it can produce major synergies from the combination. Rather, this pre-paid business gives the company a new front line for growth in the U.S. market.

This may also be a case of AT&T using its strength to do a deal that others cannot. Given recent transactions, I'm not sure Sprint and T-Mobile will be in a position to make a counterbid for Leap, though either could certainly use the asset. The bigger unknown is the perennial bridesmaid in the game of wireless musical chairs – Dish Network (Nasdaq:DISH). That Leap Wireless is really not the ideal match for Dish Network may run second to the fact that Dish is rapidly running out of options in the U.S. wireless space.

The Bottom Line
AT&T wouldn't have proposed this deal if they didn't believe they could get regulatory clearance, but I'm sure shareholders remember that the company had to abandon its bid for T-Mobile (and pay some hefty break-up fees) when it couldn't satisfy the concerns of regulators. Leap is small enough (and weak enough) that this deal may be more tolerable to regulators, but I wouldn't put the odds of regulatory objections at 0%.

All told, this looks like a relatively low-risk way for AT&T to deploy some capital in the pursuit of growth and a better competitive position. I don't see this deal being transformative for AT&T, but it's a worthwhile opportunity at this price and wouldn't preclude a larger move overseas if the right opportunity should appear.

Hot Biotech Stocks To Invest In Right Now

Since the 1980s, biotechnology stocks have seen four bull markets with triple-digit gains; Nicholas Vardy explains why a fifth biotech bull market may be underway.

Steven Halpern: We are here today with Nicholas Vardy, editor of The Global Guru, the Bull Market Alert trading service and the longer term focused Alpha Investor Letter. Thank you for joining us from London today.

Nicholas Vardy: Thanks for having me.

Steven Halpern: You recently released an in-depth report on the biotech sector and you noted that since the 1980s, there have been four bull markets, each of which had triple digit gains. Is the good news in the past, or can investors expect a fifth biotech bull?

Nicholas Vardy: Well, based on the way the biotechnology sector has behaved, both last year, and this year, I think we may be very much at the start of the fifth major biotech Bull Run.

Hot Biotech Stocks To Invest In Right Now: Smith & Nephew(SN.L)

Smith & Nephew plc develops, manufactures, markets, and sells medical devices in orthopaedics, endoscopy, and advanced wound management sectors worldwide. The company operates in three segments: Orthopaedics, Endoscopy, and Advanced Wound Management. The Orthopaedics segment offers reconstruction implants, including hip, knee, and shoulder joints, as well as ancillary products, such as bone cement and mixing systems used in cemented reconstruction joint surgery. This segment also provides trauma fixation products consisting of internal and external devices, and shoulder fixation and orthobiological materials used in the stabilization of fractures and deformity correction procedures; and clinical therapies products comprising bone growth stimulation, joint fluid therapies, and outpatient spine products. The Endoscopy segment develops and commercializes minimally invasive surgery techniques, educational programs, and value-added services for surgeons to treat and repair soft tissue and articulating joints. It offers specialized devices and fixation systems to repair damaged tissues; fluid management equipment for surgical access; digital cameras, digital image capture, scopes, light sources, and monitors to assist with visualization; radiofrequency wands, electromechanical and mechanical blades, and hand instruments for resecting damaged tissues. The Advanced Wound Management segment provides a range of initial wound bed preparation and full wound closure products. This segment?s products are targeted at chronic wounds associated with the older population, such as pressure sores and venous leg ulcers; and products for the treatment of wounds, including burns and invasive surgery. Its products include the ALLEVYN and DURAFIBER brand products; and infection management and negative pressure wound therapy products. The company primarily serves medical and surgical service providers. Smith & Nephew plc was founded in 1856 and is headquartered in Lo ndon, the United Kingdom.

Hot Biotech Stocks To Invest In Right Now: 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.

Top 10 Growth Stocks To Watch Right Now: Microsemi Corporation(MSCC)

Microsemi Corporation engages in the design, manufacture, and marketing of analog and mixed-signal integrated circuits (IC) and semiconductors primarily in the United States, Europe, and Asia. Its products include individual components and IC solutions that offer light, sound, and power management for desktop and mobile computing platforms, LCD TVs, and other power control applications. These products are used in notebook computers, data storage, wireless local area network, LCD backlighting, LCD TVs, LCD monitors, automobiles, telecommunications, test instruments, defense and aerospace equipment, sound reproduction, and data transfer equipment. The company?s semiconductor products include silicon rectifiers, zener diodes, low leakage and high voltage diodes, temperature compensated zener diodes, transistors, subminiature high power transient suppressor diodes, and pin diodes used in magnetic resonance imaging (MRI) machines. It also manufactures semiconductors for commer cial applications, such as automatic surge protectors, transient suppressor diodes used for telephone applications, and switching diodes used in computer systems. In addition, the company provides electronic components and systems for the defense and aerospace markets; multi-band radio frequency integrated circuit solutions; and anti-tamper solutions to defense clients in securing systems against tampering, piracy, and reverse engineering. It markets its products directly, as well as through electronic component distributors and independent sales representatives to the defense and security, aerospace, enterprise and communication, and industrial and alternative energy markets. The company was formerly known as Microsemiconductor Corporation and changed its name to Microsemi Corporation in February 1983. Microsemi Corporation was founded in 1960 and is headquartered in Aliso Viejo, California.

Warren Buffett's Annual Letter - On Risk And Investment Choices

When Warren Buffett departs from this world he will leave two extraordinarily important legacies. The first will be the philanthropic disbursement of almost all of his immense material wealth. The second legacy will be the philanthropic disbursement of almost all of his immense intellectual wealth. The former will be distributed mainly through the Gate's Foundation; the latter will be distributed through his annual letters. For value investors and money managers, the latter contribution is consummate to hitting the lottery so long as they take the sufficient time to absorb the lessons and follow Mr. Buffett's advice.

In this year's annual letter, on pages 17-19, Mr. Buffett succinctly categorizes the three investment options which exist for investors while discussing the risk associated with each scenario.

The three asset groups are:

1) Non-producing assets such as gold

2) Currency-based producing assets such as treasury bonds

3) Producing assets with inflation protection such as farmland, real estate and stocks with low capital requirements to growth earnings.

The prodigious wisdom expressed in that brief dissertation is the subject of today's discussion.

The Choices for Investors

I have a good friend who was born into a farm family in rural Nebraska. My friend and his wife owned and operated a small restaurant in a small college town for a number of years, until they moved to the "metropolis" of Lincoln where he became a teacher. They sold their restaurant for a tidy profit; however they did not sell the property, instead they leased the property to the current owner in order to secure a steady earnings yield.

Additionally, the couple owns some apartments which they rent for income and several years ago they purchased some farmland in western Nebraska. The land is suitable for growing corn as well as wheat and millet; although it possesses no irrigation potential.

My friend has little interest in the stock mark! et other than holding a significant investment in Berkshire (BRK.A) stock. I get the idea that he feels slightly uncomfortable about his position in Berkshire because unlike his other ventures, he does not receive an earnings yield since the company pays no dividend.

Think my friend is a country rube who merely got lucky? Think again, this man is following the suggestions which Mr. Buffett provided at the bottom of page 19 of this year's annual letter to a tee. Furthermore, he did so without consulting the Oracle of Omaha; instead his financial pursuits were merely a matter of his own common sense.

In his newly released annual letter, Mr Buffett suggested that the lowest risk assets and the ones most likely to increase one's buying power for the foreseeable future are: farmland, real estate and select businesses. Further, Buffett recommends businesses which rely upon minimal capital requirements to grow their earnings. He cited Coke (KO), IBM, and See's Candy as examples.

My friend took care of the real estate and farmland but left the selection of businesses to Mr. Buffett. King Solomon would have certainly approved of his thought process.

You see my friend has invested his net worth in producing assets which are unrelated to currency. According to Buffett, the riskiest assets for investors at this point in history are the ones which produce an earnings yield but provide nothing in the way of inflation protection. Such "conservative" investments as savings bonds and money market accounts hold an almost certain risk of losing long-term buying power when adjusted for inflation. The most risky are long-term treasury bonds which offer minuscule interest rates which are accepted under the guise of safety.

Buffett makes it perfectly clear to his readers that the guarantee of one's return of principle accompanied by a meager interest rate offered by long term US Treasuries is a much riskier proposition than owning equities or even gold. That statement runs count! er-intuit! ive to most conservative investors who similar to the academic proponents of CAPM theory equate market volatility with risk. In reality, risk should be equated with the probability that one will lose significant long-term buying power in the form of inflation should an investor foolishly opt to preserve the nominal value of their nest egg by purchasing low-yield treasury bonds.

In Mr. Buffett's opinion; real estate, farmland and businesses with low capital requirements for growth, particularly ones which possess an economic moat, will maintain their exchange rate in proportion to inflation. In other words, a worker will still be willing to exchange an equivalent amount of his labor for a bottle of Coke or a piece of See's candy. Likewise, the price of rent or the price of corn will rise in a manner that is largely commensurate to the increase in inflation. Of course in the case of grains, real estate or select businesses there will be down years and earnings yield fluctuations; however in the long run such entities will almost certainly maintain their inflation-adjusted gains.

Mr Buffett further states that businesses with high capital requirements will be much more affected by inflation; however such businesses will still outperform nonproductive assets such as gold and currency-based producing assets.

Buffett reflected upon the importance of selecting businesses with low capital requirements during inflationary periods in his 1983 Annual Letter. The following passage from the appendix of the letter which discusses the relationship between investment returns and inflation in detail:

"That probability exists because true economic Goodwill tends to rise in nominal value proportionally with inflation. To illustrate how this works, let's contrast a See's kind of business with a more mundane business. When we purchased See's in 1972, it will be recalled, it was earning about $2 million on $8 million of net tangible assets. Let us assume that our hypothetical mundane bu! siness th! en had $2 million of earnings also, but needed $18 million in net tangible assets for normal operations. Earning only 11% on required tangible assets, that mundane business would possess little or no economic Goodwill.

A business like that, therefore, might well have sold for the value of its net tangible assets, or for $18 million. In contrast, we paid $25 million for See's, even though it had no more in earnings and less than half as much in "honest-to-God" assets. Could less really have been more, as our purchase price implied? The answer is "yes" – even if both businesses were expected to have flat unit volume – as long as you anticipated, as we did in 1972, a world of continuous inflation.

To understand why, imagine the effect that a doubling of the price level would subsequently have on the two businesses. Both would need to double their nominal earnings to $4 million to keep themselves even with inflation. This would seem to be no great trick: just sell the same number of units at double earlier prices and, assuming profit margins remain unchanged, profits also must double.

But, crucially, to bring that about, both businesses probably would have to double their nominal investment in net tangible assets, since that is the kind of economic requirement that inflation usually imposes on businesses, both good and bad. A doubling of dollar sales means correspondingly more dollars must be employed immediately in receivables and inventories. Dollars employed in fixed assets will respond more slowly to inflation, but probably just as surely. And all of this inflation-required investment will produce no improvement in rate of return. The motivation for this investment is the survival of the business, not the prosperity of the owner.

Remember, however, that See's had net tangible assets of only $8 million. So it would only have had to commit an additional $8 million to finance the capital needs imposed by inflation. The mundane business, meanwhile, had a burden over t! wice as l! arge – a need for $18 million of additional capital.

After the dust had settled, the mundane business, now earning $4 million annually, might still be worth the value of its tangible assets, or $36 million. That means its owners would have gained only a dollar of nominal value for every new dollar invested. (This is the same dollar-for-dollar result they would have achieved if they had added money to a savings account.)

See's, however, also earning $4 million, might be worth $50 million if valued (as it logically would be) on the same basis as it was at the time of our purchase. So it would have gained $25 million in nominal value while the owners were putting up only $8 million in additional capital – over $3 of nominal value gained for each $1 invested.

Remember, even so, that the owners of the See's kind of business were forced by inflation to ante up $8 million in additional capital just to stay even in real profits. Any unleveraged business that requires some net tangible assets to operate (and almost all do) is hurt by inflation. Businesses needing little in the way of tangible assets simply are hurt the least."

Clearly the best type of investments to own during periods of extended inflation are businesses which hold limited capital requirements thus reducing the ravages of inflation or other assets which are nearly guaranteed to rise proportionally in value as inflation increases. Of course pricing power is everything during inflationary runs.

Conclusion

Buffett has clearly spelled out to investors that he believes the meager interest rates currently offered by US Treasuries are entirely inadequate to offset the long term inflationary risk for investors. Thus the virtually guaranteed return of principle plus interest offers only the illusion of a risk-free investment. In reality, the greatest risk which all investors face is the substantial loss of long-term buying power.

Certainly most of us are not equipped to purchase a farm nor a! re many o! f us suited to enter the world of real estate investment. Additionally, such options are rarely available in one's 401K account. However, almost every one of us has the ability to invest our savings in the stock market in one form or another.

It has been obvious to many market mavens that the Fed has been intent upon eliminating the option of Treasury bond investment in favor of stimulating the economy and ensuring that deflation does not become a long-term problem. Holding interest rates at low levels for an extended period and engaging in quantitative easing practices has accorded astute investors few options other than to overweight equities.

At some time in the future, Treasury bond yields will rise to a point where they offer a legitimate alternative to equities as they have in decades past but that time frame lies well out on the horizon. In the meantime, astute investors have no choice but to hold stocks in their IRAs, 401Ks and savings accounts in hopes of preserving the buying power of their hard-earned nest eggs.

Just bear in mind one additional thought which Buffett pointed out in his letter; liquidity is everything. In the case of the individual investor, liquidity means holding enough cash to meet one's intermediate needs and never I repeat never, employing margin in an attempt to magnify returns.

It is also important to note the importance of maintaining an earnings stream in the form of employment. The practice is immensely important in providing financial security as well as enhancing one's piece of mind. If Mr. Buffett can work productively into his 80s I imagine that most of us can make it until at least 65 years of age.

Disclosure: No position in any stock mentioned

Top 10 Value Companies To Invest In Right Now

After a big slide earlier in the week, it looks like financial firms are back on track to make some gains this morning. Yesterday proved to be a momentum-building exercise, but American International Group (NYSE: AIG  ) is firmly back in positive territory an hour into trading today with a 0.9% gain as of 10:30 a.m. EDT. After fears swept away any investors confidence last week, some good news for the insurer's reputation may be helping it out today.

Quick recap
Of course we all know that last week saw a huge drop in the market following the Fed's revelation that there's a timetable for its tapering of stimulus policy. Since financials were seen as some of the biggest benefactors of the current policy, it only made sense that investors would drop them first. AIG lost 3.3% following the Fed announcement on concerns that insurance companies' investment portfolios would lose value as interest rates rise.

Top 10 Value Companies To Invest In Right Now: Dollar Tree Inc.(DLTR)

Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Its stores offer merchandise primarily at the fixed price of $1.00. The company operates its stores under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant, and Dollar Bills. Its stores offer consumable merchandise, including candy and food, and health and beauty care, as well as household consumables, such as paper, plastics, household chemicals, in select stores, and frozen and refrigerated food; variety merchandise, which includes toys, durable housewares, gifts, party goods, greeting cards, softlines, and other items; and seasonal goods, such as Easter, Halloween, and Christmas merchandise. As of April 30, 2011, it operated 4,089 stores in 48 states and the District of Columbia, as well as 88 stores in Canada. The company was founded in 1986 and is based in Chesapeake, Virginia.

Advisors' Opinion:

• [By Sam Collins]

  Dollar Tree (NASDAQ:DLTR) is a leading operator of discount variety stores. The stock has hugged its 50-day moving average since mid-February. But a recent minor revision of earnings for this year by several analysts and the recent market sell-off have resulted in a fall from its high of the year at over $70 to under $66. However, Goldman Sachs (NYSE:GS) increased its price target to $73 from $69.

  Technically DLTR is oversold, according to MACD. A break below its 50-day moving average could result in a pullback to $64, but positions could be taken at the current market price. The trading target for DLTR is $72.

Top 10 Value Companies To Invest In Right Now: Caterpillar Inc.(CAT)

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three lines of businesses: Machinery, Engines, and Financial Products. The Machinery business offers construction, mining, and forestry machinery, including track and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer loaders, underground mining equipment, tunnel boring equipment, and related parts. It also manufactures diesel-electric locomotives; and manufactures and services rail-related products and logistics services for other companies. The Engines business provides diesel, heavy fuel, and natural gas reciprocating engines for Caterpillar machinery, electric power generation systems, marine, petrol eum, construction, industrial, agricultural, and other applications. It offers industrial turbines and turbine-related services for oil and gas, and power generation applications. This business also remanufactures Caterpillar engines, machines, and engine components; and offers remanufacturing services for other companies. The Financial Products business provides retail and wholesale financing alternatives for Caterpillar machinery and engines, solar gas turbines, and other equipment and marine vessels, as well as offers loans and various forms of insurance to customers and dealers. It also offers financing for vehicles, power generation facilities, and marine vessels. The company markets its products directly, as well as through its distribution centers, dealers, and distributors. It was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquartered in Peoria, Illinois.

Advisors' Opinion:

• [By Jim Cramer,TheStreet]

  Caterpillar (CAT) could be a monster in 2011, especially with the integration of Bucyrus International (BUCY), which I think will turn out to be a fantastic acquisition.

  Current earnings-per-share estimates of about $6 are, I think, way too low. I see this stock going to $120 in the next year. Too gutsy? Ask yourself what happens if the United States comes back as a growth nation? Right now almost all of the growth is overseas.

  Still a fantastic mineral play and a terrific call on world growth.

• [By Roberto Pedone]

  Caterpillar (CAT) is staging a textbook breakout in May. Shares of heavy equipment maker haven't exactly been kind to investors year-to-date; CAT has barely broken even during a time when the broad market has been in a historic rally. But a textbook breakout should change that.

  CAT started forming an inverse head and shoulders pattern back in early April. The inverse head and shoulders is formed by two swing lows that bottom out around the same level (the shoulders), separated by a lower low called the head; the buy signal comes on the breakout above the pattern's "neckline" level, which was just below $86 for CAT. That puts this stock's upside target right around $92.

  Even though CAT has nearly hit its upside target already (the post-breakout buying has been very quick), the longer-term implication for investors is a break of the downtrend that had been haranguing shares this year. Now, with that downtrend broken, CAT should have more room to move higher. I'd just expect some consolidation first.

Best Tech Companies To Watch In Right Now: Tupperware Corporation(TUP)

Tupperware Brands Corporation operates as a direct seller of various products across a range of brands and categories through an independent sales force. The company engages in the manufacture and sale of kitchen and home products, and beauty and personal care products. It offers preparation, storage, and serving solutions for the kitchen and home, as well as kitchen cookware and tools, children?s educational toys, microwave products, and gifts under the Tupperware brand name primarily in Europe, Africa, the Middle East, the Asia Pacific, and North America. The company provides beauty and personal care products, which include skin care products, cosmetics, bath and body care, toiletries, fragrances, nutritional products, apparel, and related products principally in Mexico, South Africa, the Philippines, Australia, and Uruguay. It offers beauty and personal care products under the Armand Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo, and Swissgar de brand names. The company sells its Tupperware products directly to distributors, directors, managers, and dealers; and beauty products primarily through consultants and directors. As of December 26, 2009, the Tupperware distribution system had approximately 1,800 distributors, 61,300 managers, and 1.3 million dealers; and the sales force representing the Beauty businesses approximately 1.1 million. The company was formerly known as Tupperware Corporation and changed its name to Tupperware Brands Corporation in December 2005. The company was founded in 1996 and is headquartered in Orlando, Florida.

Advisors' Opinion:

• [By Sam Collins]

  Household name Tupperware Brands Corp. (NYSE:TUP) is a global direct seller of products with multiple brands through an independent sales force of 2.4 million people. Its product line focuses on kitchen storage and serving solutions, as well as personal-care products. Over 60% of sales in 2011 are expected to come from Europe and Asia, and the stock has appeal as an emerging markets story.

  S&P estimates that 2011 earnings will increase to $4.54 versus $3.53 in 2010, and it increased its rating to a “five-star strong buy” with a recently revised 12-month target of $81, up from $73. The 2005 purchase of Sara Lee’s (NYSE:SLE) direct-sales business, which has a high growth rate, should be a long-term benefit. TUP’s annual dividend yield is 1.92%.

  Technically TUP had a pullback following a new high at over $70 and is currently oversold. Buy TUP at the current market price with a trading target of $70, but longer term a much higher target will likely be attained.

Top 10 Value Companies To Invest In Right Now: Schlumberger N.V.(SLB)

Schlumberger Limited, together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. The company?s Oilfield Services segment provides exploration and production services; wireline technology that offers open-hole and cased-hole services; supplies engineering support, directional-drilling, measurement-while-drilling, and logging-while-drilling services; and testing services. This segment also offers well services; supplies well completion services and equipment; artificial lift; data and consulting services; geo services; and information solutions, such as consulting, software, information management system, and IT infrastructure services that support oil and gas industry. Its WesternGeco segment provides reservoir imaging, monitoring, and development services; and operates data processing centers and multiclient seismic library. This segment also offers variou s services include 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management. The company?s M-I SWACO segment supplies drilling fluid systems to improve drilling performance; fluid systems and specialty tools to optimize wellbore productivity; production technology solutions to maximize production rates; and environmental solutions that manages waste volumes generated in drilling and production operations. Its Smith Oilfield segment designs, manufactures, and markets drill bits and borehole enlargement tools; and supplies drilling tools and services, tubular, completion services, and other related downhole solutions. The company?s Distribution segment markets pipes, valves, and fittings, as well as mill, safety, and other maintenance products. This segment also provides warehouse management, vendor integration, and inventory management services. Schlumberger Limited was founded in 1927 and is based in Houston, Texas.

Advisors' Opinion:

• [By Brian Stoffel]

  This company has been a pick of both Jordan DiPietro and Bryan White. And both analysts have pointed to the company's opportunity for oil exploration abroad -- which is where much of the demand will soon be coming from as well.

  Bryan points out that three-fourths of the company's revenue comes from abroad, with "Brazil, the Middle East, and Africa [as] key regions where activity is expected to be robust and growing."

  Jordan adds, "[Schlumberger] has an important presence in high-growth regions of the world such as Iraq, Mexico, and Russia, and has the competitive advantage to be able to offer full services, from managing entire oil fields to drilling wells."

• [By Kathy Kristof]

  Headquarters: Houston
  
  52-Week High: $79.38
  
  52-Week Low: $56.86 
  
  Annual Sales: $39.5 bill.
  
  Projected Earnings Growth: 18% annually over the next five years 
  
  
  Energy-services giant Schlumberger is the prototypical multinational. The company derives roughly 85% of its revenues from overseas, including developing markets in Africa, Brazil and Asia. 
  
  With particular expertise in deep-water drilling, Schlumberger is well-positioned to compete in a world where oil is harder to find, says Argus Research analyst Philip Weiss. Admittedly, oil exploration is a cyclical business, driven largely by crude prices. And weak prices for natural gas have hit the company’s stock, Weiss says. But the price of natural gas has little to do with Schlumberger’s profits, so Weiss just sees this as an opportunity to get the shares at a more reasonable price.

U.S. Stock-Index Futures Rise on China Data; Tesla Jumps

U.S. stock-index futures rose, indicating the Standard & Poor's 500 Index will rebound from three days of losses, after U.S. jobless claims fell in July and China's trade data rose more than estimated last month.

Tesla Motors Inc. surged 14 percent after reporting second-quarter results that surpassed analysts' estimates. Groupon Inc. jumped 26 percent after the daily-deals company appointed a new chief executive officer and reported a smaller-than-projected loss. McDonald's Corp. jumped 0.9 percent after same-store sales topped analysts' estimates as new wraps and breakfast food attracted U.S. diners.

Futures on the S&P 500 expiring in September rose 0.3 percent to 1,693.90 at 8:37 a.m. in New York. Contracts on the Dow Jones Industrial Average increased 55 points, or 0.4 percent, to 15,497 today.

10 Best Clean Energy Stocks To Watch For 2014

Today's data "could be a sign that we see some stabilization in Chinese activity," said Patrick Moonen, who helps oversee $244 billion as senior strategist at ING Investment Management in The Hague. "I don't think the U.S. equity market is only a matter of monetary policy. As the economy recovers, the earnings backdrop will become the most important element."

The S&P 500 has declined 1.1 percent over the past three days amid growing speculation the Federal Reserve will pare bond purchases this year as the economy strengthens. Fed Bank of Cleveland President Sandra Pianalto said yesterday there had been "meaningful improvement" in the labor market and a scaling back of stimulus may be warranted if it continues.

Jobless Claims

Data today showed the fewest workers applied for U.S. unemployment benefits over the past month since before the last recession. The number of claims in the four weeks ended Aug. 3 declined to 335,500 on average, the least since November 2007, a Labor Department report showed. They rose to 333,000 last week, in line with the median forecast of 50 economists surveyed by Bloomberg, from 328,000 the prior week.

China's exports and imports exceeded economists' forecasts, adding to signs that the world's second-largest economy is stabilizing following a two-quarter slowdown. Shipments abroad rose 5.1 percent in July from a year earlier, the General Administration of Customs said. The median estimate was for a 2 percent increase in a Bloomberg survey, after June's 3.1 percent drop. Imports gained 10.9 percent.

Advances in stocks this year have also been underpinned by better-than-expected earnings. Of the 441 companies in the S&P 500 to have reported quarterly earnings this period, 72 percent have exceeded analysts' profit estimates and 55 percent have beaten sales projections, data compiled by Bloomberg show.

Musk's Tesla

Tesla, the electric-car company led by Elon Musk, soared 14 percent to $153.51. The manufacturer reported second-quarter operating profit of 20 cents a share, including 15 cents related to a leasing program. Even without that provision, results exceeded the average of 10 analysts' estimates for a 20-cent loss, according data compiled by Bloomberg. On its operating basis, Tesla said it will make money all year.

Groupon rallied 26 percent to $10.96. The operator of the largest daily-deals website posted a second-quarter net loss of $7.57 million, or 1 cent a share, compared with the 3-cent average analyst estimate. The company also named co-founder Eric Lefkofsky as CEO. Groupon sold shares to the public at $20 in November 2011.

McDonald's climbed 0.9 percent to $99.25. The world's largest restaurant chain said sales at stores open at least 13 months rose 0.7 percent last month. The 34,700-restaurant chain has this year introduced new menu items in the U.S., including chicken McWraps and new flavors of Quarter Pounder burgers, to compete with Burger King Worldwide Inc. and Wendy's Co., which are rolling out new foods.

Prudential, Coffee

Prudential Financial Inc. added 1.4 percent to $80.50. The second-largest U.S. life insurer said results improved in its home nation after buying a unit from Hartford Financial Services Group Inc. and adding pension accounts from General Motors Co.

Green Mountain Coffee Roasters Inc., a maker of Keurig single-serve pods and machines, fell 4.5 percent to $75.69 after reporting declining coffee brewer sales.

Brewer and accessory sales dropped 4.3 percent to $133.1 million in its fiscal third quarter, Green Mountain said. Sales growth of single-serve packs slowed to 18 percent in the quarter from 21 percent in the prior three months.

Top 5 High Tech Companies For 2014

In the cutthroat grocer business, a vote of confidence from a big-time investor goes a long way. If that vote of confidence comes in the form of a billion-dollar investment from Warren Buffett, then it becomes a saving grace. U.K.-based grocery giant Tesco (LSE: TSCO  ) has faced difficult headwinds in recent years, losing market share to competitors and navigating an anemic European economy. Its U.S. branch, called Fresh & Easy, caused company profits to drop 96% and led management to pull the curtains on the five-year-old chain. For Tesco, there's plenty of bad news, but many investors still have faith that the Oracle of Omaha sees something here. Should you be looking at Tesco?

Do you know Tesco?
Though not a household name in the United States, Tesco is the largest retailer in the United Kingdom. It is a behemoth of a company -- many times the size of Whole Foods Market and Safeway, or any other U.S. grocer, with the exception of Wal-Mart (NYSE: WMT  ) . It may be in part that Tesco resembles a smaller, younger version of the latter that Warren Buffett's Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) owns more than 5% of the outstanding shares. Buffett often talks about his biggest mistake in investing -- not buying Wal-Mart in the '80s because it was a few cents more than he wanted to pay. The cost to shareholders over time, he says, is in the billions. So perhaps this is an effort to right one of his few mistakes in the past.

Top 5 High Tech Companies For 2014: ROB(ROB.AX)

Robe Australia Limited does not have significant operations. Previously, it was engaged in the provision of client investment advisory, stock broking and associated financial, corporate advisory, and fund and wealth management services. The company was formerly known as Tolhurst Group Limited and changed its name to Robe Australia Limited in April 2009. The company was incorporated in 1920 and is based in Melbourne, Australia.

Top 5 High Tech Companies For 2014: Flexsteel Industries Inc.(FLXS)

Flexsteel Industries, Inc., together with its subsidiaries, engages in the manufacture, import, and market of residential and commercial upholstered and wooden furniture products in the United States. Its upholstered and wooden furniture products include sofas, loveseats, chairs, reclining and rocker-reclining chairs, swivel rockers, sofa beds, convertible bedding units, occasional tables, desks, dining tables and chairs, and bedroom furniture. The company distributes its products for use in home, office, hotel, and other commercial applications through its sales force and various independent representatives, as well as to various national and regional chains. Flexsteel Industries, Inc. was founded in 1929 and is based in Dubuque, Iowa.

Top Low Price Stocks To Own For 2014: Family Dollar Stores Inc.(FDO)

Family Dollar Stores, Inc. operates a chain of self-service retail discount stores primarily for low and middle income consumers in the United States. The company offers consumables, including household chemicals, paper products, candy and snack products, health and beauty aids, hardware and automotive supplies, and pet food products and supplies; and home products, which comprise domestics, housewares, giftware products, and home decor products. It also provides apparel products and accessories consisting of men?s and women?s clothing products, boys? and girls? clothing products, infants? clothing products, shoes, and fashion accessories; and seasonal products and electronics, such as toys, stationery and school supplies, seasonal goods, and personal electronics. As of August 11, 2011, the company operated approximately 7,000 stores in rural and urban settings across 44 states. Family Dollar Stores, Inc. was founded in 1959 and is headquartered in Matthews, North Carolina .

Advisors' Opinion:

• [By Sy_Harding]

  My second retail value stock is clearly a value stock: Family Dollar Stores (FDO -0.20%, news). Operating in the intensely competitive discount retail segment at a time when its customer base was feeling the brunt of the slow recovery, Family Dollar managed to grow same-store sales 4.8% in fiscal 2011, with a 5% to 7% increase projected for fiscal 2012 and to improve its market position by shifting its merchandise mix and moving into urban neighborhoods. The stock trades at about 18 times trailing 12-month earnings per share and just about 13 times forward projected earnings. Wall Street analysts are looking for 23.6% earnings growth in the quarter that ends in February 2012.

Top 5 High Tech Companies For 2014: Consolidated Edison Company of New York Inc. (ED)

Consolidated Edison, Inc., through its subsidiaries, provides electric, gas, and steam utility services in the United States. It provides electric service to approximately 3.3 million customers and gas service to approximately 1.1 million customers in New York City and Westchester County, as well as provides steam service to office buildings and apartment houses in parts of Manhattan. The company also provides electric service to approximately 0.3 million customers in southeastern New York and in adjacent areas of northern New Jersey, and northeastern Pennsylvania; and gas service to approximately 0.1 million customers in southeastern New York and adjacent areas of northeastern Pennsylvania. In addition, Consolidated Edison involves in the sale and related hedging of electricity to wholesale and retail customers; operation of generating plants; participation in other infrastructure projects; and provision of energy-efficiency services, including the design and installation of lighting retrofits, high-efficiency heating, ventilating and air conditioning equipment, and other energy saving technologies to government and commercial customers. It serves residential, industrial, and large commercial customers. The company was founded in 1884 and is based in New York, New York.

Top 5 High Tech Companies For 2014: Aviva plc (AV)

Aviva plc provides insurance, savings, and fund management products and services worldwide. It offers life insurance and savings products, which comprise pensions products, such as personal and group pensions, stakeholder pensions, and income drawdown; annuities; protection products, including term assurance, mortgage life insurance, flexible whole life, and critical illness cover; bonds and savings comprising single premium investment bonds, regular premium savings plans, mortgage endowment products, and funding agreements; and investment products consisting of unit trusts, individual savings accounts, and open ended investment companies, as well as equity release and structured settlements. The company also provides general and health insurance products that include personal lines of insurance products, such as motor, household, travel, and creditor insurance; commercial lines of insurance products consisting of fleet, liability, and commercial property insurance; health insurance products comprising private health, income protection, personal accident, and corporate healthcare insurance products; and insurance for corporate and specialty risks. In addition, it offers fund management products and services for institutional, pension fund, and retail clients. Aviva plc sells its products through various distribution channels, including direct sales forces, intermediaries, corporate partnerships, bancassurance, and joint ventures, as well as through the telephone and Internet. The company was formerly known as CGNU plc and changed its name to Aviva plc in July 2002. Aviva plc is headquartered in London, the United Kingdom.