Investopedia: Keep An Eye On This Titan

No one knows when the next run in agriculture is going to start, or if the last one is truly over yet. After all, some of the high crop prices last year were certainly due to a spate of bad harvests, and favorable weather could deliver a bumper crop this year. Then again, a large amount of the U.S. corn crop is going to ethanol, food demand is ever-growing and natural disasters are a "where" not "if" question. 

When agriculture runs, investors turn to fertilizer stocks like Potash (NYSE:POT), equipment companies like Deere (NYSE:DE), seed companies like Syngenta (NYSE:SYT), and ETFs like PowerShares Agriculture (NYSE:DBA) and MarketVectors Agribusiness (NYSE:MOO).

Perhaps investors should add Titan Machinery (Nasdaq:TITN), the leading dealer of CNH Global's (NYSE:CNH) Case and New Holland agriculture and construction equipment, to their watch lists. Not only is this a viable play on agriculture equipment demand, but it gives investors exposure to a recovery in construction equipment demand (whenever that may happen). 

To read the full piece, please go here:
http://stocks.investopedia.com/stock-analysis/2011/Keep-An-Eye-On-This-Titan-TITN-DE-CNH-CAT-AGCO-DBA-MOO0420.aspx

Investopedia: Is Habro A Proto-Disney?

Game and toy maker Hasbro (Nasdaq:HAS) is coming off of what largely looks like a lost decade. Through 2010, the company saw compound revenue growth of less than 4% and negative growth in free cash flow. Keep in mind that period includes the regular production of new customers (children), several acquisitions and the launch of toy-centric movies like the latest round of "Star Wars". 

That said, Hasbro seems to be getting its act together. The toy and game business is looking a little better, and the company's efforts in media (TV and film) could pay off in the long run. Still, toys and children's entertainment is a fiercely competitive business and there is no telling whether Hasbro will draw little kiddies' interest - and their parents' money - over the likes of Mattel (Nasdaq:MAT), Disney (NYSE:DIS) and other competitors. (For more on Hasbro, check out Despite Down Quarter, Hasbro Plays Well.)

A Mixed Quarter With Some Questions 

Hasbro offered up a mixed bag of results for the first quarter, which was reported April 14. Revenue was not bad, and performance was basically the same as last year, although it snuck above the average estimate. Interestingly, there was a fairly wide range of estimates going into this quarter and that often correlates with above-average volatility.

Still, there are some questions in that top-line result. Games/puzzles, along with toys for girls and preschoolers, were all down by double-digit percentages; meanwhile, tous for boys were up 25%. That suggests that Hasbro loaded the channel this quarter - perhaps banking on upcoming movie tie-ins to "Transformers", "Thor and "Captain America". If these movies perform well at the box office and there's good sell-through, that's fine ... but if the movies (or toys) falter, that could sour the whole year for Hasbro.

To read the full piece, please click the link:
http://stocks.investopedia.com/stock-analysis/2011/Is-Hasbro-A-Proto-Disney-HAS-MAT-DIS-DISCA-JAKK-LF-TWX0419.aspx

Investopedia: J.B. Hunt - The Trucking Company That Isn't

As the economy has rebounded and so too has the transportation sector. After all, it's not too easy for companies to sell more "stuff" and not need additional transportation services. While the railroads have been on a much-discussed run since 2009, trucking companies have had a more mixed performance.


Making matters a little more complicated, although J.B. Hunt (Nasdaq:JBHT) is often listed among the trucking companies, that is not really an accurate depiction. In point of fact, intermodal business is the single largest component of the company's revenue and income. What's more, the differences in JBHT's business model seem to go a long way towards explaining why this company has been a solid performer. (To read more on financial statements, see 12 Things You Need To Know About Finncial Statements.)

Strong Demand Leads to Strong Quarter
J.B. Hunt reported a better than 18% jump in revenue for the first quarter, with 13% growth once the impact of fuel surcharges are stripped out of the picture. Intermodal was the leader both in growth and scale, as revenue grew 23% here to $577 million (about 58% of the total) on the back of 15% volume growth. Dedicated contract services saw 15% revenue growth, while revenue from the truck segment rose 6% despite an 11% decrease in loads and a 12% decrease in tractors on the road.


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http://stocks.investopedia.com/stock-analysis/2011/J.B.-Hunt-The-Trucking-Company-That-Isnt-JBHT-NSC-BRK.A-ODFL-ECHO-KNX-SWFT0419.aspx

Investopedia: High Oil Prices Should Make For A Healthy Halliburton

Building models and calculating price targets for energy service companies like Halliburton (NYSE:HAL) almost feels like an exercise in futility. Not only is the business maddeningly inconsistent, but there is only scant evidence that investors pay much attention to valuation. More often, energy services are simply a trading vehicle for attitudes about near-term exploration and production in oil and gas. 

That said, Halliburton is seeing stronger business conditions and with oil prices as high as they are, the near-term outlook for exploration and production should be quite healthy. (For more, see Unearth Profits In Oil Exploration And Production.)

North America Drives the Quarter 

Halliburton delivered strong revenue performance to start the year, driven in large part by momentum in the North American business. Overall revenue jumped 40% from last year and rose more than 2% on a sequential basis. Completion and production saw better than 6% growth (and made up about 60% of total revenue), while the drilling and evaluation segment saw a 3% contraction. North American revenue jumped 13% sequentially, while business in regions like Africa, Europe, Russia, Asia and the Mideast dropped by double-digit amounts.

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Investopedia; Amarin's Magic Pill

Sometimes good ideas are just there staring scientists in the face. A great deal of energy has been spent finding drugs that can lower cholesterol and triglycerides and counteract the coronary side-effects of the typical American lifestyle. All the while, part of the answer may have just been swimming around our oceans.

Data released by Amarin (Nasdaq:AMRN) on Monday morning indicates strong triglyceride-lowering potential for its purified EPA omega-3 pill, and a potential blockbuster for this small company.

Strong Data Should Drive Approval 

Amarin's results in a Phase 3 study of AMR101 were quite good. The study showed that a daily dose of four or two grams reduced triglyceride levels by 21.5% and 10.1%, respectively. Arguably even more important, though, was that the data showed no meaningful increase in LDL levels (the so-called "bad cholesterol"). (For more, see Measuring The Medicine Makers.)

Here's why that matters: GlaxoSmithKline (NYSE:GSK) has done quite well with its Lovaza pill, a mixture of DHA and EPA ethyl ester omega-3 that also lowers triglyceride levels. While Lovaza is quite efficacious in lowering triglycerides (and maybe better than AMR101), it does lead to higher LDL levels. That combination is worrisome for some patients, and could give AMR101 a real shot at blockbuster status. (For more, see Pharmaceutical Phenoms: America's Best-Selling Medicines.)

To read the full piece, please click below:
http://stocks.investopedia.com/stock-analysis/2011/Amarins-Magic-Pill-AMRN-GSK-PFE-AZN-ISIS-SNY0419.aspx

FinancialEdge: Financial Easter Eggs

There's something about "found money" that feels especially good. Perhaps because it isn't burdened with the memory of hard work or responsibility, it feels a little special. Then again, maybe it feels special because it is special; it's a little extra money that didn't require any particular extra work but it spends just as well as hard-earned cash. With that in mind, let's consider some of the personal financial windfalls that can put a few extra dollars in your pocket.


A Well in Your Backyard? 
The discovery of oil or gas underneath your property may not transform your family into the Beverly Hillbillies, but it can definitely put some extra cash in your pocket. Farmers, ranchers, and other landowners in many parts of the country are finding energy company representatives knocking on their doors, ready to write checks worth thousands of dollars per acre as signing bonuses for leases that give the companies the right to look (and lift) oil, gas and other resources. (Calculate how much your property will need to appreciate to cover the costs of owning it. Check out Will You Break Even On Your Home?)

Not all of these deals offer the same risk/benefit reward to the property owner. There is no such thing as an "average" royalty or signing bonus because so much depends on the prospects of the area in question and the bargaining power (or desperation) of the energy company. Still, a lease in a hot area can offer thousands of dollars per acre in bonuses and royalties in excess of 10%; leases in less productive regions may only offer a few hundred bucks in bonuses for the right to trial exploratory wells.

To read the full column, please click below:
http://financialedge.investopedia.com/financial-edge/0411/Financial-Easter-Eggs.aspx

Investopedia: Bank Of America Cleans Up Another Mess

As part of its first quarter earnings announcement, Bank of America (NYSE: BAC) announced that it reached its first significant agreement to resolve a non-GSE claim regarding shoddy mortgages. Though it is a positive development insofar as acknowledging responsibility and helping move things back toward normal, it may still be too little too late for the mortgage insurers.


The Deal with Assured Guaranty
Bank of America announced that it had reached an agreement with Assured Guaranty to resolve the insurer's claims against Bank of America for saddling it with billions of non-complying mortgages. The agreement covers a total of 29 first and second-lien residential mortgage trusts with an original exposure of nearly $36 billion and a current principal at risk of just under $11 billion.

Under the agreement, Bank of America will make a $1.1 billion cash payment to Assured Guaranty and enter into a loss-sharing arrangement. This reinsurance agreement will reimburse Assured Guaranty for 80% of its losses on the 21 first-lien transactions until the collateral losses exceed $6.6 billion. All in all, that part of the agreement looks to have an expected value of about $500 million right now ... assuming things do not get dramatically worse. (For related reading, see 2010: A Year Of Banking Dangerously)



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Investopedia: Bank Of The Ozarks Making The Best Of Things

No bank has gone through the housing crash and credit crisis totally unscathed, but it clearly has not harmed all banks to the same degree. Although government-mandated changes to key aspects of the banking industry like capital requirements, lending standards and fee income will alter the profitability of banks going forward, some banks have been able to use the crisis to expand and gather assets. (To read more about how banking has changed, see The Evolution Of Banking.)

Bank of the Ozarks (Nasdaq:OZRK) was a very interesting small-cap bank before the crisis, but a combination of savvy management and FDIC-assisted acquisitions have left the company in good shape for the coming years.

Solid-Looking Numbers for Q1
Bank of the Ozarks has profited from the oxymoronic policy of aggressive conservatism. That in turn has led to unusually low credit losses and non-performing assets, as well as surprisingly high net interest margin. At the same time, it is hard to ignore that the bank's performance has been boosted by the contributions of acquired businesses.

For the first quarter, OZRK saw fully-taxed net interest income rise about 33% on an annual basis (to $36.1 million). On that basis, net interest margin rose to 5.61% from 4.99% - a level that is well above the norm and even high-end performers like Westamerica Bancorp (Nasdaq:WABC), BankUnited (NYSE:BKU) and First Republic Bank (NYSE:FRU).


To read the full piece, please go here:
http://stocks.investopedia.com/stock-analysis/2011/Bank-Of-The-Ozarks-Making-The-Best-Of-Things-OZRK-RF-BXS-BAC-WABC0418.aspx

Investopedia: Check Point Still On Point

Back in the day, Check Point Software (Nasdaq:CHKP) was in that rarefied sphere of must-have tech stocks. Unlike many of its peers from that era, though, this computer hardware/software developer has not only stayed in the game but continued to prosper as a leader in the network and gateway security field. However, Check Point's valuation has long since come back to more reasonable levels, and it may be time for investors to give this name a serious look.

A Solid Start to the Year 
Check Point did not blow the doors off the quarter with a financial report that will send its analysts into hyperventilation, but it was a solid quarter all the same. Revenue grew 15% for the period and surpassed the high end of the range, as product revenue rose almost 16% to $105 million. Deferred revenue performance was not quite as impressive; it rose 10% for the quarter to more than $460 million and slipped about 1% on a sequential basis.

Where Check Point really continues to impress is in its profitability. Gross margin (on a GAAP basis) climbed almost a full point to an eye-popping 85.9%. Operating income is likewise impressive; GAAP operating income rose 22% to over $141 million, while the operating margin was 50.2%. (For more, see The Bottom Line On Margins.)

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DailyWorth : Ditch The Age-Old Retirement Equation

It sounds like an old parlor trick:

Subtract your age from 100—and the resulting number is the percentage of your retirement savings to put into stocks. The remainder (voila!) goes into bonds!

By that logic, a 40-year-old would put 40% of her retirement savings into a bond fund and 60% into equities. But if you follow that old formula now and “invest your age,” you’re likely to run out of money when you retire.


To read the full piece, please follow this link:
http://www.dailyworth.com/posts/715-Ditch-the-Age-Old-Retirement-Equation

Investopedia: 8 Great ETFs For Income And Diversification

There is a curious conundrum for many income-oriented investors. Income investing is a generally conservative approach, but it can be difficult to find a cost-effective way to obtain a level of diversification that minimizes single-stock risk. Although there are all manner of stocks, bonds, preferred stocks and funds that can offer investors solid yields, investors may want to consider ETF-based income options as a way of securing both income and diversification in a cost-effective way. 

A Quick Run-Down on ETFs  
ETFs can be thought of as a hybrid investment vehicle that blends together aspects of mutual funds and closed-end funds. Like closed-end funds, ETFs trade continuously on exchanges throughout the day and the price is updated continually. ETFs can also be bought on margin and held in a variety of retirement accounts. Unlike closed-end funds, ETFs seldom trade at a significant premium or discount to the fund's net asset value (NAV), they are less vulnerable to style drift, and they often have a lower expense ratio as well.

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Investopedia: Demand Versus Doubt With ASML

Bulls and bears have answered their respective calls to arms and are really going at it in the semiconductor and equipment sectors. On one hand, Apple (Nasdaq:AAPL) can't seem to find a saturation point for iPhones and iPads, and follow-on offerings from the likes of Samsung are also doing well. Everywhere you look there are more and more chips going into more products and consumer spending has picked up nicely from the depths of the recession. 

On the other hand, the Tohoku earthquake has thrown the production side of chips into chaos. What's more, there's the twin notions of "sell in May and go away," and the idea that chip and equipment stocks have already had their runs and are due for a run of underperformance.

That is the scenario swirling around ASML (Nasdaq:ASML) these days, as the world's leading lithography 

equipment company reports its earnings.

An OK Quarter to Start the Year 

Given the push-pull surrounding the industry maybe it's only fitting that ASML's results would be a mix of good and bad news. On the positive side, ASML's reported sales were a little bit ahead of expectations. Sales dropped 5% from the fourth quarter, but nearly doubled on a year-over-year basis, as shipments slipped a bit but prices stayed strong. (For more, see Everything Investors Need To Know About Earnings.)

Please click the link for the full piece:
http://stocks.investopedia.com/stock-analysis/2011/Demand-Versus-Doubt-With-ASML-ASML-AMAT-CYMI-NINOY-TXN-INTC-TSM0414.aspx

Investopedia: Silgan Packs Away Another Deal

Investors likely don't give much of a thought to packaging companies, unless it is to consider the ramifications of scare-stories like the presence of bisphenol A (BPA) in food cans. After all, this is just a commodity business with low growth potential, right?

Well, maybe not. It's absolutely true that packaging is not exciting from a growth perspective, but there is a lot to be said for an industry with customer-supplier relationships measured in decades of years, consistent margins and cash flow and consolidation potential. With that in mind, the deal between Silgan (Nasdaq:SLGN) and Graham Packaging (NYSE:GRM) becomes a little more interesting.

Terms of the Deal 

Silgan has long been an active acquirer, doing over 25 deals in the last 25 years, but Wednesday's deal for Graham is a whopper by past standards. Silgan is acquiring this plastic packaging specialist in a deal worth $4.1 billion based upon the pre-deal values of the respective stocks.

Silgan is paying considerations valued at $19.56 per share (again, based on Tuesday's closing prices), a 17% premium to Graham's prior close. Silgan is offering shareholders a mix of compensation - $4.75 in straight-up cash and 0.402 shares of Silgan stock. Because of that sizable chunk of stock, the real value of the deal is going to move around prior to the close of the deal. (For more, see Mergers And Acquisitions: Understanding Takeovers.)

Please read the full piece:
http://stocks.investopedia.com/stock-analysis/2011/Silgan-Packs-Away-Another-Deal-SLGN-GRM-BLL-CPB-DLM-PEP-KO0414.aspx

Seeking Alpha: A First Glance At JPMorgan Earnings Is Somewhat Encouraging

JPMorgan (JPM) gets a lot of press for being one of the best-run large banks in the country, and that praise is well deserved up to a point. Like virtually every bank earnings report these days, there are certainly some areas of trouble and concern, but overall the results would seem to offer a strong validation for how CEO Jamie Dimon positioned the company both for the credit crisis and the recovery. 

Overall the company did report some upside in total revenue (around $500 million depending upon whose “average” estimate you use) and earnings were $0.12 ahead of average expectations. JPMorgan saw about a three-cent net benefit from special items, so overall profitability was solid. Details matter, though, and a large part of JPMorgan's outperformance was due to the investment banking operations.

I-Banking A-Ok
Investment banking was the only area to show sequential revenue growth and a clear area of strength for JPMorgan this quarter. Although banking fees were down a bit, trading was exceptionally strong this quarter – defying the expectation of generally weak trading results from big banks this quarter.


To read the full piece, please go to:
A First Glance at JP Morgan Earnings Is Somewhat Encouraging

Investopedia: Can Alcoa's Recovery Continue?

It is almost hard to believe that Alcoa (NYSE:AA) shares went for about $5 a share in early 2009, but that was the depth of pessimism about global growth. Since then, investors are a lot more positive on the fortunes and future of aluminum, but the question remains whether Alcoa can continue to reward its supporters.

A First Quarter That Didn't Quite Make It 

Alcoa had a decent quarter and pricing in the aluminum market is getting better, but things were not quite as good as analysts had hoped. There was a big spread in analyst estimates (about $1.1 billion), and though Alcoa only missed the average by a relatively small amount, the company was clearly a ways off the high end of the range. Profitability was solid and on target, but that only seems to matter when it's significantly better or worse than analysts hope.

It really was not a bad quarter, though. Sales were up 5% from last year (and up 22% sequentially), and EBTIDA snapped back to the tune of 22% sequential growth and 60% annual growth.

To read the full article, please click here:
http://stocks.investopedia.com/stock-analysis/2011/Can-Alcoas-Recovery-Continue-AA-FCX-AWC-ACH-RIO-KALU-DOW0413.aspx

Seeking Alpha: Johnson & Johnson: Potential M&A Targets To Recharge Growth, Divert Investor Attention

There is no question that healthcare and personal care giant Johnson & Johnson (NYSE: JNJ) has been an active acquirer over the years – doing over 20 deals worth more than $40 billion in the last ten years alone. With the company struggling through a dry spell in organic growth and embarrassing itself with a series of product defect (and recall) announcements, it would seem likely that the company will once again lean on M&A to recharge its growth prospects and divert investor attention away from management's own poor recent record.

With that in mind, it seems appropriate to take a look at JNJ's menu of options and its potential shopping list.

A Few General Thoughts

There is nothing wrong with small deals or the acquisition of pre-revenue companies with promising products in the pipeline, but for purposes of this analysis I am only considering major, multi-billion-dollar deals that could meaningfully impact short-term revenue and earnings performance.

Based on what the company has done in the past, it would seem improbable that the company would look too seriously at areas like life sciences (thus excluding names like Thermo Fisher (TMO), Life Technologies (LIFE), or Illumina (ILMN)). Likewise, services would be a big change in strategy, so names like Lab Corp (LH) or Davita (DVA) are likely out, as are imaging or “big iron” companies like Varian (VAR).

Generally speaking, it would also seem that JNJ should target businesses with good emerging market exposure – JNJ has good overall non-US revenue exposure, but not so much in the faster-growing emerging markets.

To read the full piece, please go to Seeking Alpha:
Johnson & Johnson: Potential M&A Targets to Recharge Growth, Divert Investor Attention 

FinancialEdge: 5 Government Statistics You Can't Trust

As pattern-seeking creatures, statistics have a peculiar hold on our minds. Quite a large number of decisions are undertaken on the basis of what statistics tell us. That is certainly true when it comes to government economic data and the blizzard of stats that come out every month; billions of dollars worth of value appears or vanishes on the basis of what these numbers say about the health, growth and direction of the economy, and the implications for company profits, interest rates and so on. (Can butter production help you predict the market's next move? Find out here. Read World's Wackiest Stock Indicators.)

Unfortunately, some of that faith seems to be misplaced. While great reliance is placed on government economic numbers and the financial media reports on them at length, in-depth discussions of how the numbers are created - and where the weaknesses may lie - is relatively rare. Unfortunately, those gaps are significant.

Unemployment
There are two different surveys that examine employment - the household survey and the payroll survey. While many seem to think that the larger sample size of the payroll survey makes it more accurate and reliable, from a statistical standpoint the household survey's design is more sound and the margin of error is usually better.

To read the full piece, please click the link:
http://financialedge.investopedia.com/financial-edge/0411/5-Government-Statistics-You-Cant-Trust.aspx

Investopedia: Endo Choosing The Less Traveled Path

Investors may not realize it, but there was a time when a lot of large pharmaceutical companies had device businesses as well. Most companies decided it was better to focus around their branded drugs, though, and sold or spun-off those businesses, leaving a few companies like Johnson & Johnson (NYSE:JNJ) and Abbott (NYSE:ABT) as the exceptions.

Endo Pharmaceuticals (Nasdaq:ENDP) seems to be comfortably swimming against the tide, though. As this smaller pharmaceutical company works to diversify its model and find multiple growth opportunities ahead of generic competition for its key product Lipoderm, the company is looking to devices as part of its future.

The company announced another big move on Monday - the acquisition of urology device specialist American Medical Systems (Nasdaq:AMMD).

Terms of the Deal
Endo is paying $30 a share for American Medical, better than a 34% premium to Friday's closing price. Under the deal, Endo will be paying all cash for the device company, and assuming over $300 million in AMMD debt - bringing the total deal value to about $2.9 billion.


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Investopedia: Level 3 Getting Bigger; Better Remains To Be Seen

Investors who have supported Level 3 (Nasdaq:LVLT) through thick and thin have seen at least half of the investment thesis play out. Demand for bandwidth has indeed exploded, and broadband connectivity is everywhere. On the other hand, the profitability side of the thesis has just never worked out, and it has been a perennial question as to whether Level 3 will ever reap profits from its impressive fiber network. 

Level 3 is taking another big step in trying to drive profitability and free cash flow out of its assets, announcing on Monday that it would acquire rival Global Crossing (Nasdaq:GLBC) in a $3 billion stock deal. Assuming that the deal goes through, Level 3 should be able to drive some meaningful synergies, but it is an open question as to whether even this combined company will produce compelling returns on its huge asset base.


Terms of the Deal
Level 3 will be paying 16 of its own shares for every share of Global Crossing, a deal that valued Global Crossing at just a bit over $23 based on Friday's close. Level 3 will also be taking on $1.1 billion in Global Crossing debt, bringing the total value of the deal to $3 billion.

At those prices, Level 3 is paying almost eight-times trailing EBITDA, and valuing Global Crossing at about 1.2-times on an EV/revenue basis. So even though Level 3 is paying a 55% premium to acquire Global Crossing, it is still valuing its target at a lower multiple that it itself trades for currently.

Although not part of the deal itself per se, Level 3 has also announced a shareholder rights plan in conjunction with the deal. Now, this is not a run-of-the-mill rights plan; the sort that companies will issue in the name of "protecting" shareholders while actually only protecting their cushy seats. This plan is about limiting ownership stakes in Level 3 that could imperil the company's considerable tax loss carryforwards or net operating losses (NOL). (For related reading, check out A Sticky Fight Between Comcast And Level 3 Over The Web.)


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Investopedia: This HERO's Tale Unfortunately Common

Shares of offshore driller and liftboat operator Hercules Offshore (Nasdaq:HERO) took a beating on news that the company was under investigation by the U.S. government for possible violations of the Foreign Corrupt Practices Act. While history suggests that the actual punishments for the company (if it is in fact proven guilty) will not be crippling, the issue represents a distraction for management, a black hole for company resources that will now be directed towards legal matters and a significant embarrassment in a world that seems increasingly concerned about company conduct. 


What HERO's tale highlights, though, is just how common this issue is among companies great and small in a variety of industries. It also raises a dilemma for investors - should companies toe a high moral line, even if their competitors do not (and lose business), or should companies be allowed to act according to the notion of, "When in Rome ..."?

Few Details at This Point
At this point, it is impossible to say what specific allegations are in play against Hercules Offshore, to say nothing of whether the company is actually guilty. The company does operate in overseas markets like Saudi Arabia, Malaysia, India, Mexico and Nigeria - and Nigeria in particular has long been a hotbed of corruption, especially so in the energy and energy services sectors. 



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