Thursday, November 29, 2012

Investopedia: Smith & Nephew's Costly Deal

Even granting that this is a challenging time for the orthopedics industry (and healthcare device providers in general), Smith & Nephew (NYSE:SNN) is struggling a little more than most. The company has been losing share in orthopedic implants like hips and knees and disappointing investors with regards to cash flow production, and the stock has been chopping around in a $20 range for about three years now. While the news on November 28 of the company's Healthpoint Biotherapeutics acquisition does bring in advanced wound care products with very good growth, Smith & Nephew is having to pay a pretty hefty price for this growth injection and this just isn't a sustainable long-term plan.

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Investopedia: Danfoss A/S Once Again Tries To Get Sauer-Danfoss On The Cheap

I can't fault Danfoss A/S for trying to join in the spirit of the Christmas shopping season and score a sweet bargain, but I have a feeling that this privately-held Danish company is going to have to do better if it wants to make Sauer-Danfoss (NYSE:SHS) all its own.

The Deal That May Be
Sauer-Danfoss shares spiked the afternoon of November 28 after an SEC filing revealed that Danfoss A/S CEO Niels Christiansen sent a letter to Sauer-Danfoss' board offering to buy the shares it does not already own (about 24% of the outstanding total) for $49 a share - a roughly 24% premium to the close on November 27. Not surprisingly, the deal offered is an all-cash deal for Sauer-Danfoss shareholders.

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Investopedia: Will Investors Be Secure With ADT?

On the whole, ADT (NYSE:ADT) has what should be a pretty good business model. Not only does the company have a large chunk of the residential security market, but customers sign multi-year contracts that lead to pretty reliable cash flow streams. Unfortunately, it's not quite that simple. ADT has to pay quite a lot to get those customers, the equipment certainly isn't free, and the accounting is not exactly crystal clear. All in all, it's no slam dunk that investors will feel secure with ADT in their portfolio.

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Investopedia: Big Valuation/Small Miss Wrong Combo For The Fresh Market

What's going on in the wake of the third-quarter earnings report from The Fresh Market (Nasdaq:TFM) will be altogether familiar for veteran investors. Here we have a great growth company, perhaps one of the best growth plays today on the mass-affluent customer category, but with a stock that carried nosebleed valuations. Q3 earnings showed a hiccup in store traffic and margin leverage, and the stock got pummeled. Although I still like the growth story at The Fresh Market just fine (as well as the stores themselves), I'm still a long way from liking the stock.

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Wednesday, November 28, 2012

Investopedia: Green Mountain Coffee Roasters Gives The Street A Jolt

Apparently reports of the demise of Green Mountain Coffee Roasters (Nasdaq:GMCR) have been at least a little exaggerated. While the market pioneer for single-serve coffee brewing has some formidable challenges coming from increased competition, it's worth remembering that the consumer products market is not like the prescription drug market where generic launches immediately drive prices into the cellar. That said, it's not as though Green Mountain's valuation marks this out as an especially cheap stock today.

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Investopedia: Analog Devices Marking Time Until The Rebound

Apart from a few signs of life in the telecom infrastructure space, there hasn't been much to cheer about for semiconductor stock investors lately. Consumer electronics are still pretty weak, auto build rates have slowed noticeably and industrial demand has swooned on macro/fiscal worries for 2013. All in all, Analog Devices (Nasdaq:ADI) did OK for its fiscal fourth quarter, but the reality is that these quarters are basically "filler" ahead of the next rebound.

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Tuesday, November 27, 2012

Investopedia: How To Sell Stock In Your Company

Starting a business, building it and owning it lock, stock and barrel is a very rewarding endeavor for many entrepreneurs, but it's not always a practical goal. All businesses require capital and some require a lot of it. What's more, sole ownership may be not be the optimal structure when it comes to transitioning leadership or incentivizing workers. Consequently, many business owners find at some point that they need to explore ways of selling ownership in their company.

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Investopedia: ConAgra Wins Ralcorp After A Long Chase

With Wall Street's quarter-to-quarter obsession, it's often thought that corporate America no longer has the luxury of thinking and planning for the long term. ConAgra's (NYSE:CAG) eventual success in winning over Ralcorp (NYSE:RAH) to a friendly bid shows, though, that patience can still play a significant role in business. Although ConAgra is not getting a great bargain here, this should be a value-additive deal for the company over the long term.

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Investopedia: Recent Scandals Show Wall Street Still Needs A Lot Of Watching

Analysts and fund managers come and go, banks and asset management firms rise and fall, and investing trends appear and disappear with surprising regularity. And yet, for all of that change, one thing seems to remain the same: despite pretty clear (if not tiresomely thorough) rules and compliance procedures, people continue to flout laws and common sense in the overall pursuit of making a buck.

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Investopedia: Hewlett-Packard Hits Bottom, Finds A Shovel

At the risk of sounding like I want to pile on to Hewlett-Packard's (NYSE:HPQ) misery, this company may become my go-to example for the years to come in the risks of "how much worse can it get?" thinking. I just don't see a lot of strength here in terms of high-quality end-markets, and I question whether the company can position itself for demands of the always-evolving IT world of tomorrow. Though this stock still looks exceedingly cheap, I have absolutely no confidence that this management team can guide the company back or harvest that underlying value.

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Investopedia: Will Bad Leads Lead St. Jude Astray?

For a company that sold Wall Street on a pretty aggressive set of expectations, St. Jude Medical (NYSE:STJ) is certainly seeing the other side of the momentum trade. Worries about the company's pipeline and competitive positioning would be bad enough in their own right, but ongoing worries about the company's high-voltage leads threaten not only the company's valuation but also its competitive standing.

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Investopedia: Fiat Finally Convinces CNH To Seal The Deal

The laws and regulations that govern mergers and acquisitions (M&A) in Europe are a fair bit different than those in the United States, particularly as they relate to minority shareholders. Similar to how Alcon ultimately secured a better offer for shareholders, despite the fact that Novartis (NYSE:NVS) already owned more than three-quarters of the company, CNH Global (NYSE:CNH) has succeeded in obtaining better terms from Fiat Industrial (OTC:FNDSF) - a company that incorporates most of the non-auto businesses of Fiat (OTC:FIATY) for the 12% stake that Fiat did not already own.

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Investopedia: Will Baxter Go For Gambro?

When real news fade, rumors seem to crop up a little more readily. In the case of the rumor that Baxter (NYSE:BAX) is arranging a bid for Gambro, however, there's a little more credibility than usual. Baxter has long wanted Gambro, and the combination would make sense in a med-tech market where growth is increasingly hard to come by.

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Friday, November 23, 2012

Investopedia: BASF's Deal For Pronova Shows The Importance Of Good Nutrition

More and more, it seems like long-term success in chemicals and specialty materials is all about keeping an open mind toward reinvention. DuPont (NYSE:DD), for instance, is far removed from its legacy in products like gunpowder and nylon, and currently looks to advanced seed traits and nutrition as important growth markets. Likewise, DSM has moved on from coal, fertilizer and petrochemicals into areas like nutrition and biofuels.

DuPont's German cousin
BASF (OTC:BASFY) is following in this path, announcing on Wednesday that it had reached an agreement to acquire Norwegian fish oil specialist Pronova for 12.50 Norwegian kroner, or about $845 million in enterprise value.

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A quick note on posts

Some of you may have been noticing some formatting weirdness. For reasons I don't understand, Investopedia changed their formatting and it now really messes things up when I try to copy/paste in the text.

I'm doing the best I can to adjust and adapt, but I ask for your continued patience with this.


Thursday, November 22, 2012

Investopedia: Can Deere Run Again In 2013?

Investors who bought into the "it's different this time" stories on major equipment and component companies such as Caterpillar (NYSE:CAT), Deere (NYSE:DE), Cummins (NYSE:CMI) or Joy Global (NYSE:JOY) got a hard lesson in 2012, as weakness in Europe, China and South America ultimately hit sales, profits and valuations. With the global Ag markets looking stronger relative to mining and construction, however, it's worth asking if Deere could be a solid stock to own on a macro rebound in 2013 and a lengthening of the Ag cycle.

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Investopedia: Still Seeing Good Growth, Weak Margin Leverage

As is so often the case with popular growth stocks that sport rich valuations and purport to shake up an industry, (NYSE:CRM) generates plenty of controversy. While the company continues to generate respectable free cash flow (FCF), skeptics question whether the company can grow enough to support its valuation and start posting real operating leverage. I do believe that software as a service (SaaS) really is a big shift in the enterprise software sector, but I continue to struggle to see how can grow enough to validate its valuation.

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Investopedia: Medtronic's Growth Looks Good, But Can It Last?

Generally speaking, Medtronic's (NYSE:MDT) in the same boat as every other large-cap med-tech stock, where valuation has been compressed by worries about long-term growth prospects. Like Covidien (NYSE:COV), Johnson & Johnson (NYSE:JNJ) and a handful of select others, Medtronic seems to be past the worst of the growth lull, and the company has several potentially major products lined up in the pipeline. Now the real question for investors is the extent to which this quarter's growth can be sustained and whether the Street will come back and take a fancy to the significant cash flow this company generates.

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Investopedia: Hormel Can't Escape The Retail Tarpits

Volume growth is hard to come by in the food sector today, and even a very well-run company like Hormel Foods (NYSE:HRL) can't escape that forever. With health and economic factors translating into less animal protein consumption, and grain costs likely to work their way through the animal production cycle in 2013, these aren't the easiest of times for Hormel. Although I think the company's strong operating capabilities and focus on packaged/value-added foods will give it an edge on the likes of Tyson (NYSE:TSN) and Smithfield (NYSE:SFD), I'd be careful chasing the stock so close to a 52-week high and a double-digit EV/EBITDA ratio.

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Investopedia: If You're Going To Overpay For A Food Stock, Why Not Heinz?

I tend to believe that Wall Street overvalues the supposed stability of packaged/branded food and beverage companies, which is why investors seldom have the chance to buy the stocks of Coca-Cola (NYSE:KO), PepsiCo (NYSE:PEP) or Kellogg (NYSE:K) at really compelling valuations. Within the broader group of expensive food names, I can see an argument for owning Heinz (NYSE:HNZ) today. Not only is Heinz doing relatively well from an organic growth standpoint, but the combination of strong brands in developed markets and a very good presence in emerging markets is compelling to me.

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Wednesday, November 21, 2012

Investopedia: Campbell Soup Still More "Ho Hum" Than "Mmm Mmm"

It's largely understood that established packaged/processed food companies are not exactly growth titans. As a result, investors who look at Campbell Soup (NYSE:CPB) as a part of a portfolio of dividend-paying bond alternatives may not be all that put out by the company's sluggish performance. Investors more focused on total returns, however, may need to see more evidence that Campbell Soup management has a real plan to reinvigorate growth before buying these shares.

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Investopedia: The Erosion Of Best Buy Continues

Another quarter is in the books, and there's scarcely any good news at struggling retailer Best Buy (NYSE:BBY). While there is still a chance that founder Schulze will come back with another go-private bid, the fact remains that comps continue to erode and the electronics brick and mortar retailing landscape is a grim one. With Best Buy's management talking about wooly concepts like "reinvigorating the customer experience," investors would do well to approach this turnaround candidate with considerable caution.

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Tuesday, November 20, 2012

Investopedia: Agilent's Grim Guidance Obscures Long-Term Value

About the best thing I can say about my bullish call(s) on Agilent (NYSE:A) is that owning its shares hasn't hurt you too badly in 2012, as the stock has lagged the S&P 500 by about 7% for the year so far and actually outperformed (slightly) over the past quarter. While the company's guidance for 2013 was not very compelling, I continue to believe that Agilent offers a good collection of businesses with ongoing growth potential, as well as longer-term margin and free cash flow (FCF) leverage. The question is whether or not investors can afford to be patient while that long-term thesis works itself out.

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Investopedia: Can Brocade Get Any Benefit Of The Doubt?

Apart from using it as a tether ball in pieces talking about rumored M&A in the tech sector, there aren't many sell-side analysts who seem to have much use for Brocade (Nasdaq:BRCD). Certainly some of this skepticism has been earned by the company through years of sub-optimal execution, not to mention the fact that the company goes up against major rivals like Cisco (Nasdaq:CSCO). That said, even minimal growth expectations point to real value here and patient investors (with an especially high frustration threshold) may want to consider the stock.

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Investopedia: Cisco Pays Dearly For Meraki

Acquisitions often make investors nervous, as the temptation/risk to overpay is so high and there are reams of research indicating that most deals destroy shareholder value for the acquirer. By the same token, sometimes M&A is the only way to fill a product/technology gap and position the company for future growth. While Cisco (Nasdaq:CSCO) shareholders are certainly going to hope that the deal for Meraki advances Cisco's software-defined networking (SDN) strategy, the price tag is going to cause more than a little wincing.

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Monday, November 19, 2012

Investopedia: Dell Proves To Be A Laggard In A Weak Market

For whatever optimism Cisco (Nasdaq:CSCO) and NetApp (Nasdaq:NTAP) generated with respectable quarters, Dell (Nasdaq:DELL) rained on the parade with another weak result. Not only did Dell miss again, but the company seems to be badly lacking momentum in any of the sort of markets that would excite investors. While there is (and has long been) underlying value in this business, it's anybody's guess as to when the bleeding is going to stop.

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Investopedia: Even With A So-So Quarter, Smucker Looks Worth Watching

There aren't many bargains in packaged foods these days, and it seems like all too many quarterly reports require a little explanation. That said, J.M. Smucker (NYSE:SJM) still looks like a worthwhile name that could offer investors some upside. Management still needs to improve how it utilizes its assets, but volume trends are looking OK and the stock's valuation looks like a relative bargain in the space.

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Investopedia: The Third Quarter Was Good To Lowe's

One quarter ago, I said I favored Lowe's (NYSE: LOW) over Home Depot (NYSE: HD), as I thought the difference in valuation outweighed the difference in quality between the two companies. So far, so good with that call, as Lowe's basically doubled Home Depot's return for the past three months. While I do worry that both stocks are a little expensive on the basis of investor optimism for a housing recovery, I won't rule out the idea that an improved business plan coupled with improving sales trends will be a powerful boost to earnings and cash flow for Lowe's over the next few years.

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Friday, November 16, 2012

Investopedia: Has Abercrombie & Fitch Turned The Corner?

Clothing retailers are not typically included in lists of cyclical industries, but I would challenge investors to look at the long-term performance of companies like American Eagle (NYSE:AEO), Buckle (NYSE:BKE) or Aeropostale (NYSE:ARO) and not conclude that sizable up-and-down swings are just part of the fabric of this business.

With that in mind, it was tempting to argue during
Abercrombie & Fitch's (NYSE:ANF) recent struggles that "this too shall pass," and that the company will eventually turn around its operating performance. While Abercrombie's third quarter performance was certainly surprising, and stimulated a major move in the stock, investors may want to be cautious in assuming that the worst is now past.

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Investopedia: Can Facebook Get Through Another Lock-up Expiration Quietly?

Nothing ever seems quite normal when it involves Facebook (NYSE:FB). So it's worth wondering what will happen to the stock as the company, the market and (it would seem) the world at large all deal with another sizable lock-up expiry that will add hundreds of millions of shares to the float. Considering that Facebook recently posted some encouraging financial results, it may be the case that putting this lock-up expiration in the rearview mirror marks the end of the "what's wrong with Facebook?" meme within the financial press.

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Investopedia: Unlike Twinkies, Hostess Proves Very Perishable

For many companies, bankruptcy is an opportunity to gain some breathing space, refinance debt and move on. Most airlines have been through bankruptcy at least once, and many other companies in operation today once had to seek protection from their creditors. It's not often that major companies choose the route of liquidation, but on Thursday, Hostess, the maker of well-known baked goods like Wonder Bread and Twinkies, announced that it was doing precisely that.

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Investopedia: NetApp Handling This Rough Patch Relatively Well

It's starting to look as though those tech companies reporting late in the cycle have better news to give to the Street, as Cisco's (Nasdaq:CSCO) earnings report was decent and now so too was NetApp's(Nasdaq:NTAP). Although it's an open question as to whether much share is shifting between EMC (NYSE:EMC) and NetApp, both companies seem to be putting lesser competitors further and further behind. While there's definitely a risk that the near-term IT spending environment could worsen, NetApp still looks attractively-priced as a growth play on enterprise storage.

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Investopedia: Tyco Makes A Conservative Debut

If Tyco's (NYSE:TYC) first post-split quarter is any indication, this is going to be a conservatively-managed company focused on smart growth and steady operating improvements. Although a global recovery in commercial markets would be a big help, improving cost efficiency and takeout chatter is likely to buoy the stock in the near term.

Closing the Year as Expected 
Although Tyco's fiscal fourth quarter report was pretty messy from a GAAP standpoint (due in part to the split from ADT (NYSE:ADT) and the flow control business (since merging with Pentair (NYSE:PNR)), it was basically in line with expectations.

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Investopedia: Wal-Mart's "Meh" Quarter Doesn't Excite Investors

This has been a better year for Walmart's (NYSE:WMT) stock than many of its customers, as the stock has more than doubled the return of the S&P 500. While Walmart did have a solid back-to-school season and is as leveraged as anybody to improving consumer conditions (and confidence), the sluggish comp numbers suggest that the company is not completely out of the woods. 
Decent, but Not Great, Third Quarter Numbers 
Walmart's earnings always get a lot of attention, given its enormous position within the United States retail sector. To that end, Walmart's numbers may be a good reminder that, while the worst may be over, that's not the same thing as saying that the good times are back.

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Investopedia: Cisco Making The Best Of A Tough Environment

With a host of tech companies taking their licks through earnings season (or shortly thereafter), including companies like F5 (Nasdaq:FFIV), Riverbed (Nasdaq:RVBD) and Juniper (Nasdaq:JNPR), investors were nervous going into Cisco's (Nasdaq:CSCO) earnings report. While Cisco's numbers don't reflect all that much strength in the tech markets as a whole, it was a solid result in a tough time and the guidance for the next quarter wasn't bad either. Cisco continues to look meaningfully undervalued, but this stock is likely going to need some time to work out.

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Wednesday, November 14, 2012

Investopedia: Precision Castparts Goes For A Bold And Eminently Logical Deal

When it comes to specialty metal components manufacturer Precision Castparts (NYSE:PCP), it's really never a question as to whether management will do another deal. Rather, it's just a question of who the company will buy, how much it will pay and how successful it will ultimately prove to be.

Last week, though, management announced a real doozy - a $2.9 billion bid for titanium producer Titanium Metals (NYSE:TIE) (aka "Timet"). Although a large and expensive deal would be a significant risk for most companies, Precision Castparts is not like most companies, and I expect this deal will prove to be quite worthwhile for shareholders over time.

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Investopedia: The Bizarre Merger Of Jefferies And Leucadia

Mergers and Acquisitions (M&A) play a large role in business today. While many recent merger/acquisitions announcements have made quite a bit of sense for both parties, Monday's announcement that Leucadia (NYSE:LUK) will acquire the remainder of mid-tier investment bank Jefferies (NYSE:JEF) breaks that mold. Although this deal brings some fairly clear benefits for Jefferies, I'm not really sure that Leucadia shareholders should be celebrating this deal.

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Investopedia: For Home Depot At Least, The Recovery Looks Real Enough

I'll start this article by openly acknowledging that there seems to be things about Home Depot (NYSE:HD) as a stock that just seem to escape my grasp. While I have ample respect for the quality of the business and the management team, as well as the prospects for a housing recovery to reignite free cash flow growth, the Street always seems to be willing to pay more for Home Depot than I would imagine. So although I personally won't pay a double-digit EV/EBITDA multiple to buy a mature retailer, I'm not going to suggest that Home Depot's momentum ride is over yet.

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Investopedia: Time For Hologic To Translate Technology Into Results

How does an investor profit if a company has the best technology in the world, but can't deliver market-beating returns? That's probably a harsh intro for Hologic (Nasdaq:HOLX) today, but the fact remains that the company has to demonstrate that it can drive tomosynthesis adoption and solid growth in diagnostics for this stock to really work over the coming years. That puts the shares in a challenging place for investors; bulls can likely see a lot of value here, while bears will point to the high debt and oncoming competition and likely conclude that the shares are best avoided for now.

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Tuesday, November 13, 2012

Investopedia: Will Core Labs Get Much Cheaper?

Energy sector investors have learned to expect that a handful of stocks never get that cheap, and specialized service provider Core Laboratories (NYSE:CLB) is definitely one of them. Unlike many energy service companies, Core Labs has a surprisingly consistent record of not only positive free cash flow, but free cash flow growth coupled with double-digit returns on invested capital. While rivals such as Schlumberger (NYSE:SLB) are trying to capture some of Core Labs' business, its strong competitive position seems very much intact. The real question for investors is whether they can get comfortable paying nearly twice the normal premium for a services company.

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Investopedia: Wall Street Still Isn't Buying Nvidia's Story, But Should You?

Another quarter is in the books, and not all that much has changed about the Nvidia (Nasdaq:NVDA) story. Bulls believe that this company will be able to transition away from its PC graphics processor legacy and become a player in the processors that drive mobile devices. Bears take the view that not only will Nvidia struggle to compete against the likes of Qualcomm (Nasdaq:QCOM), Texas Instruments (Nasdaq:TXN) and Broadcom (Nasdaq:BRCM), but that the cost of trying will erode margins and the steady growth of mobile devices will undermine its legacy GPU business.

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Investopedia: The Uneven Consequences Of Corporate Misbehavior

Who, or what, you are, really does seem to matter in America. While corporations may be techno-legally "people," they are seldom treated as harshly as private citizens when it comes to breaking the rules. There are many reasons why you may hate big business. A cynic may say that this is because of the huge contributions they funnel to politicians, while a more charitable argument could be made that the jobs and tax revenue created by corporations create the possibility of substantial collateral damage. Whatever the reason, given the differences in prosecutions and punishments between street crime and corporation crime, it is worth asking if governments really care about the misbehavior of corporations.

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Friday, November 9, 2012

Investopedia: Westport Is Still All About Tomorrow

Whether it's truck and engine company executives like those at Navistar (NYSE:NAV) and Caterpillar (NYSE:CAT), environmentalists, or energy policy pundits, it seems like there's a broad agreement that the U.S. needs to do more to make use of natural gas as a vehicle fuel. With high-quality partners like Volvo (OTC:VOLVY) and Cummins (NYSE:CMI), Westport Innovations (Nasdaq:WPRT) continues to look like a promising play on that trend. That said, while these shares could indeed have substantial upside from here, the LNG/CNG engine market is still in its infancy and there are no guarantees that customers will go in the direction of Westport's technology.

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Thursday, November 8, 2012

Investopedia: Qualcomm Offers Some Rare Outperformance In Chips

Investors who've followed chips for a while probably won't be too surprised to see that, in a quarter largely defined by weak performance and lower guidance, Qualcomm (Nasdaq:QCOM) was one of the positive exceptions. Not only does Qualcomm continue to post impressive revenue gains, but the company's extensive spending forces rivals to up their game as well. While there are cheaper chip stocks out there right now, Qualcomm may be one of the best options in terms of its current results, future prospects and overall quality of operations.

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Investopedia: Louisiana-Pacific, Like Housing, Coming Back To Life

Residential housing construction is coming back to life. Although progress has been unsteady and comes off of an unsustainably weak base, demand is improving and Louisiana-Pacific (NYSE:LPX) is seeing the benefits. The stock has already roared back from its going-out-of-business-sale price, but these shares could continue to appreciate if Congress can avert the fiscal cliff and if other building material companies remain rational and prudent with their capacities and pricing.

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Investopedia: Whole Foods Still Not Cheap, But It's A Reliable Grower

Investors can look across the various sectors and industries in the stock market and find many examples of stocks that enjoy seemingly outsized valuation premiums, largely because of the consistent growth that the companies offer. Whole Foods Market (Nasdaq:WFM) belongs on that list, as this high-end food retailer continues to deliver excellent growth but also sports a pretty hefty valuation. Although I wouldn't be in any great rush to sell these shares today, investors will almost certainly have to face an eventual valuation adjustment, and that will likely be a painful process.

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Investopedia: Can Emerson Build On Some Positive Momentum

There are plenty of industrial companies that have had challenging times in 2012, particularly as the year has gone on. It has been even worse for Emerson Electric (NYSE:EMR), however, as poor execution and higher exposure to emerging markets has hurt results. While one quarter doesn't change anything, Emerson ended its fiscal 2012 on a stronger note and there are encouraging signs of not only better financial results, but also more realism in the executive suite.

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Wednesday, November 7, 2012

Investopedia: TreeHouse Falls Back To Earth

TreeHouse Foods (NYSE:THS) is a case in point as to why I try very hard to stick to my guns when the stock of a good company looks too pricey. While TreeHouse has been one of the more dynamic companies in the private label food space (and one of the relatively few investment plays on the space), valuation left no room for error on performance and recent results have started showing some error. Although I still don't believe these shares are especially cheap, it would be a name I'd revisit if the stock continues to slide.

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Investopedia: Improving Utilization And Efficiency Should Shrink Transocean's Discount

It's been a long and painful fall for Transocean (NYSE:RIG). Once seen as one of the best operators in the energy space, and deserving of a premium valuation as a result, Transocean has struggled with its involvement in high-profile accidents, unacceptable downtime leading to contract cancellations and various other operational shortcomings. While I wouldn't say that Transocean is completely in the clear again, nor back in Wall Street's good graces, the combination of improving operations and discounted valuation could make this stock an outperformer in 2013.

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Investopedia: Familiar Challenges Show Up For Manitowoc Too

Investors who have been following developments in the construction equipment and foodservice industries probably weren't too surprised with Manitowoc's (NYSE:MTW) third quarter, even if results were lower than the sell-side analyst averages. Order trends still point to an ongoing recovery in the crane business, and the food equipment business is still solid, but 2013 could be challenging on both sides. Manitowoc's shares do look undervalued today, but investors considering the shares cannot afford to ignore the above-average risks here, nor the extent to which share performance will be tied to macroeconomic developments.

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Investopedia: Endo Health Solutions Needs Some Solutions Of Its Own

Running a specialty drug business is hard enough on its own - just ask Salix Pharmaceuticals (Nasdaq:SLXP), Forest Labs (NYSE:FRX) or Warner Chilcott (Nasdaq:WCRX) shareholders - but Endo Health Solutions (Nasdaq:ENDP) decided to up the difficulty level up going deeply into debt to fund a diversification into devices, services and medical records. With generics challenging the branded drug business and improvements needed in the AMS business, this is a tricky stock right now. Although Endo has a good history of generating solid free cash flow, I think investors are justified in questioning management's vision and this isn't an especially compelling stock today.

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Investopedia: Sysco Can't Fight A Low Tide

Without going a little too far with the nautical analogies, Sysco (NYSE:SYY) continues to look like a very tight ship, but one that can't change the tides. With established restaurants such as McDonald's (NYSE:MCD) and growth chains like Chipotle (NYSE:CMG) all seeing weaker traffic, there's not a lot that Sysco can do to goose organic volume growth. Although Sysco's margins softened a bit this quarter, this remains a top-notch company for the long-term, albeit one that is not especially cheap.

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Tuesday, November 6, 2012

Investopedia: Weight Watchers May Be the Best House On An Awful Street

Everybody knows that obesity is a huge problem in America, but it's devilishly hard to make money here on a sustained basis. The sales of various diet drugs and devices have largely disappointed their developers, and even those companies that have steered clear of the FDA process (supplements and "nutritional products") have struggled to make the money that investors expected. That puts Weight Watchers (NYSE:WTW) in a curious place - although Wall Street has gotten a lot more rational about this name (and the stock has badly underperformed this year as a result), it's still not necessarily a compelling stock today, even though it may be the best-positioned company in the market.

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Monday, November 5, 2012

Investopedia: Can Atmel Touch Bottom?

Sometimes it pays listen to the voice in your head at the expense of what numbers and company managements may have to say. There have been plenty of calls out there in 2012 to buy semiconductors in the hopes of a recovery, and in particular to buy Atmel (Nasdaq:ATML) in the prospects for good growth in the touch controllers that help drive the user-interaction experience for smartphone and tablet users. And yet, worries about the ongoing commodization of this category have kept me on the sidelines and have cut the value of Atmel roughly in half this year.

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Investopedia: Will It Be Even Harder For Life Tech To Muddle Through In 2013?

Outside of some notable struggles among small and unproven companies, this has been a surprisingly strong year for life sciences companies. This strength, and relatively health multiples, is coming despite relatively unimpressive revenue growth and signs that 2013 could be a very tough year for the academic and government lab sectors. Consequently, while Life Technologies (Nasdaq:LIFE) is certainly worth a spot on a watch list, it's hard to muster a lot of enthusiasm for the stock right now.

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Investopedia: Teva Likely To Tread Water Ahead Of New Strategy

It is perhaps a little ironic that generics giant Teva Pharmaceutical (NYSE:TEVA) finds itself in a position similar to what it helped create for many other pharmaceutical companies over the years. The company is facing increasing competition for its blockbuster MS drug Copaxone, while also having to deal with more pushback on pricing and a thinning pipeline for major generic releases. While Teva does have to face up to some near-term challenges, success with biosimiliars and a decision from management to double-down on internal efficiency and profitability would likely go a long way toward improving investor sentiment.

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Investopedia: Uniting CK Should Pay Off For PVH Corp

The apparel and footwear sectors have been seeing more than their share of acquisition activity over the past year, as companies look to better leverage supply chains and distribution and better compete with overseas competitors. PVH Corp (NYSE:PVH) is paying a lot to bring Warnaco (NYSE:WRC) into the fold (and further consolidate the Calvin Klein brand), but this deal looks like a relative win-win, where both the acquirer and the acquired are making a smart deal.

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Investopedia: Is "Less Bad" As Good As It Gets For Dendreon?

Investors who continue to stick by Dendreon (Nasdaq:DNDN), and its struggling prostate cancer therapy, Provenge, finally got a glimmer of good news after third quarter results. While Wall Street seemed to be pleased that this quarterly result was closer to "on target" (after a string of bad quarterly reports), Dendreon still has a lot of work ahead of it to turn this story around. I know Dendreon still has a loyal core of supporters, but it's difficult to argue for buying this stock when so many other drug companies offer better prospects for long-term gains.

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Investopedia: Bull Vs. Bear - Wall Street May Like A Republican President

Question: Would Wall Street love or hate a republican president?
Love Side
No matter what an investor's personal leanings and preferences are, it's always helpful to evaluate each side of a binary outcome, and the upcoming Presidential election is very definitely a binary outcome - either a republican or democrat will win. With that in mind, it is useful to consider which industries/sectors may do well under four years of a republican administration. Although data suggests that the stock market does better during democratic administrations, there are, nevertheless, sectors that seem likely to do well (or better) under a Romney administration.

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Friday, November 2, 2012

Commodity HQ: Can Commodity ETFs Hedge Your Everyday Expenses?

Although the concept of “hedging” has been stretched, abused, and otherwise manipulated over the years, it is nevertheless a very important process for many companies. Commodity producers use forwards and futures contracts to help ensure a certain level of cash flow, and corporate commodity consumers use hedging to help control costs. So here’s a thought – can regular people use commodity investment products like ETFs to hedge some of their everyday costs of living?

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Commodity HQ: Stocks To Buy For Hyperinflation

With the Federal Reserve firing up the presses for a third round of quantitative easing, it’s only a matter of time before more talk of imminent hyperinflation pops up. While calm discussions on the prospects of hyperinflation are rare (and there’s often a tinge of hysteria or paranoia around the topic), the reality is that the U.S. does have some disturbing trends working against it in terms of demographics, debt/deficits, and a policy of easy money that debases the fiat currency.

What’s more, thumbing through the history books shows that periods of extreme inflation or hyperinflation (definitions vary) are not all that uncommon around the world. Post-World War I Germany is probably the most oft-cited example, but a range of countries including Greece, Russia, Argentina, China, Brazil, and Zimbabwe (most recently) have seen stretches of inflation severe enough to call it hyperinflation.

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Commodity HQ: GDX vs. SIL vs. CU - How They've Performed So Far In 2012

It has been an interesting year for investors and traders focused on the metals. While ongoing economic uncertainty and recent additional monetary stimulus from the Fed has kept gold in the news, silver has quietly had a strong run as well. Amidst that uncertainty, industrial metals like copper have not done nearly so well.

What has that background meant for the leading metal miner ETFs?

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Commodity HQ: Gold Stocks To Play QE3

With QE3 now an announced fact, gold has come back into the spotlight. While the actual historical performance of gold as an inflation hedge is more mixed than some goldbugs realize, the reality is that gold has done pretty well during most prior periods of monetary stimulus. Moreover, with the ongoing uncertainty regarding the economic health and future of Europe, the United States, Japan and China, gold’s demonstrated value as a hedge against uncertainty may also come into play.

Investors have a variety of ways to use gold to enhance or secure the performance of their portfolio. Here are five names to consider.

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Commodity HQ: The Difference Between Forwards And Futures

While commodities have enjoyed a renaissance of sorts over the past ten years, they are still somewhat outside the comfort zone of most investors. Part of that may be due to the perception that commodities are riskier, but some of it may be because of the unfamiliarity with the instruments and terms that make up the market. To cite just one example, futures and forward contracts (also called “forwards”) are very popular instruments among commodity investors, but very different in their fundamental natures.

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Commodity HQ: A Deeper Look At Australia's Commodity Industry

One of the wealthiest countries in the world, and the richest in Asia in GDP per capita terms, Australia is an unusual mix of a modern market economy with a large commodities-driven export infrastructure. Despite the influx of wealth created by its natural resources, Australia has never been particularly successful in developing a large manufacturing base. What’s more, the country has run large and persistent current account deficits for over a half-century. Nevertheless, Australia has very significant and efficient mining and agricultural sectors, and ranks highly in the world in many categories.

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Commodity HQ: A Deeper Look At South Africa's Commodity Industry

South Africa is the largest economy of Africa, and it accounts for almost one-quarter of the continent’s GDP. The path to this status has not been an easy one, however, as the country languished under sanctions in the 1980s tied to the government’s apartheid policies. While South Africa has a relatively well-developed manufacturing sector by the standards of African economies (and developing economies in general), a meaningful percentage of the country’s economy still revolves around commodities.

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Commodity HQ: A Deeper Look At China's Commodity Industry

Although the geographical size of China is perhaps not that difficult for North Americans to appreciate, their population is another matter. As China has become the second-largest economy in the world, it is without question transformed into an enormous force in the world’s commodity markets; so much so, in fact, that the recent commodity supercycle is now generally seen as a byproduct of China’s emergence.

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Investopedia: Pringles Already Paying Off For Kellogg

If early returns are any indication, it looks like the nearly $3 billion deal for Pringles is going to work out for Kellogg (NYSE:K). Management has already indicated, through SEC filings and this quarterly report, that the deal is looking even more accretive than originally expected, and it looks like the cereal business is also improving. The biggest question with Kellogg would seem to be whether the company can deliver real growth at the operating/EBITDA line, but today's valuation already seems to expect solid improvements there.

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Thursday, November 1, 2012

Investopedia: Diversification Pays For AEIS

Although there are exceptions here and there, this is, by and large, a miserable time for companies in the semiconductor equipment and solar energy markets. So it would stand to reason that if companies such as Applied Materials (Nasdaq:AMAT) and First Solar (Nasdaq:FSLR) are having difficulties, Advanced Energy Industries (Nasdaq:AEIS) should be in trouble too. And yet, while these are not exactly banner days for this small component and subsystems company, business is holding up reasonably well, which gives me even more confidence for when the eventual recoveries take hold.

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Investopedia: Investors Were Ready Fro A Tough Quarter From Eaton

If there's a benefit to reporting earnings later in the cycle, it may be in that investors have time to adjust their expectations as other companies report. That would seem to be the case for Eaton (NYSE:ETN), as the market's reaction to a small quarterly miss and lower guidance has gone along the lines of "well, it could have been worse. While it's going to take time for Eaton to get on a better track (probably not until the second half of 2013) and valuation is not that compelling today, investors should still keep an eye on this quality diversified industrial.

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