Sunday, March 31, 2013

iPod Pinch 32GB 4th – No Reasons For Not It!

iPod Touch 32GB 4th Generation was released in September 2010 and currently, it is the most amazing, the thinnest and the lightest iPod ever. Due to its high technology features, iPod Touch 32GB 4th Generation is one of the best-selling products this year.

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What can I do with iPod Touch 32GB 4th Generation?

Gyro and Accelerometer enables you to bask and change your games more advisable because of author change gestures and greater exactitude for the graphics.

Multi-Touch enables you to zoom in and out, flick through pictures or enlarge them, and you can control your game with better precision.

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Could AutoZone’s Earnings Growth Soon Stall Out?

Even with the overall market down, specialty retailer and distributor of automotive replacement parts and accessories AutoZone (NYSE:AZO) has risen 20% this year.

For fiscal 2011, net income increased 15% to $849 million, while diluted earnings per share for the period increased 30.0% to $19.47 from $14.97. Last quarter, AutoZone beat Q4 earnings expectations with a 12% increase in earnings growth and a 4.5% increase in same-store sales. While this earnings growth seems impressive on the surface, it is important to note that the rate of earnings growth far outpaced revenue growth, meaning margins expanded at an unsustainable rate.

Given the market cap of about $13 billion, I find it difficult for a company this large to continue to find ways to create earnings growth without concomitant revenue growth. With a P/E ratio of 16.5, AZO trades at a premium to the overall market. I’m looking for a slight multiple contraction as well, along with slowing earnings growth. My six-month target on AZO is $286, based on $22 in earnings and a 13 multiple.

Based on AZO’s current market price of $327.61 and using a target price of $286, a target date of March 16, 2012, and $10,000 of investment capital, this is a great candidate for an intermediate-term options trade.

To play this with options, visit TradingBlock.com, create a free Instant Login and try the TradeBuilder feature. Input the ticker, target price and date, and investment amount, and you�ll see several ways to trade that include buying a March call spread, buying the stock, or using some more-advanced strategies.

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Wall Street Breakfast: Must-Know News

  • Eurozone comes through with Greek aid plan. Eurozone countries agreed on a bailout plan for Greece that would be two-thirds funded by government loans and one-third funded by the IMF, and would only be initiated as a last resort. European Central Bank President Jean-Claude Trichet initially called the proposed IMF involvement "very, very bad," but later endorsed the plan and said what he had meant earlier was that he "wanted to preserve the responsibility of the governments of the euro area." The exact sum of the bailout plan wasn't announced, but diplomats in recent weeks have consistently spoken of figures upwards of €20B ($27B). Greek bonds have tightened significantly since news of the deal was released and the euro, which weakened initially, is now pulling up from a ten-month low against the dollar. Euro +0.75% against the dollar (7:00 ET).
  • New plan for housing policy. The White House is expected to update its housing policy later this morning. Complete details aren't yet available, but the plan will likely include the following measures: Mortgage servicers will be required to completely underwrite each loan; principal reduction will be optional, but will be the first step servicers must take to reduce a borrower's monthly mortgage payment ratio; unemployed borrowers will receive temporary help; TARP money will be used to help fund the plan; the changes will take effect in September. The update comes as delinquent mortgages continue to rise, and amid criticism by TARP watchdog Neil Barofsky that current foreclosure prevention efforts are falling short.
  • Ambac gets slammed, future uncertain. Struggling bond insurer Ambac (ABK) plunged nearly 17% yesterday, following its announcement that it's open to a prepackaged bankruptcy and is handing over control of troubled mortgage contracts totaling around $35B to its state regulator. The Wisconsin regulator said clients with claims on the home-loan bonds should get around 25 cents on the dollar, noting its actions are meant to protect muni bondholders and to encourage hedge funds, pension plans and other investors to negotiate. Investors are less sure about the regulatory action, worried that policyholders could end up seeing different recovery rates from one another, as well as from the group of banks involved. Regulators also said yesterday that payments on credit default swaps insuring the policies of Ambac's insurance arm may need to be paid out. ABK -6% premarket (7:00 ET).
  • Major banks accused of muni bid-rigging. More than a dozen Wall Street firms, including JPMorgan (JPM), UBS (UBS) and Lehman Brothers (LEHMQ.PK), have been accused of participating in a conspiracy to pay below-market interest rates to U.S. state and local governments on their investments. According to documents filed in a Justice Department antitrust case, the previously unidentified "co-conspirators" have not been charged with wrongdoing. However, the court records provide the broadest look to date at alleged collusion in the $2.8T municipal securities market.
  • Gores may go for Polycom merger. Private equity firm The Gores Group is said to be considering a merger of its Siemens Enterprise Communications unit with videoconferencing firm Polycom (PLCM). After talks between Polycom and Apax Partners fell through earlier this week, Gores CEO Robert Hagerty reportedly sent a letter asking for a meeting to discuss a potential merger.
  • RBS details share buyback. Royal Bank of Scotland (RBS) disclosed details last night of its plan to repurchase up to £7.7B ($11.4B) of debt and preference shares, a move that will likely raise the quality of the bank's core capital. The bank admitted that the plan was more conservative than some bondholders had expected, but called it a sensible compromise given "the changing shape of regulation and the changing dynamic around stress tests." Another restructuring is possible later in the year. RBS +0.4% premarket (6:00 ET).
  • DoJ probes pension funds on pay-to-play. The Justice Department is said to be investigating public pension funds for possible wrongdoing in pay-to-play schemes. Investigators are trying to establish whether illegal payments were made to influence where public pension fund money is invested. Targets of the probe include Calpers, the nation's largest public pension fund by assets. New York Attorney General Andrew Cuomo and the SEC are conducting similar investigations.
  • GM to repay more funds. General Motors plans to make another $1.2B payment by the end of the month to the U.S. and Canadian governments. GM made a $1.2B payment in December, and intends to repay the full $6.7B in loans from the U.S. by June.
  • One step closer to open skies. The U.S. and the European Union drafted an extension to their "Open Skies" agreement that moves closer to allowing foreign ownership of airlines, but stops short of lifting ownership limits. EU companies are currently limited to 25% stakes in U.S. carriers, while American operators can control 49% of EU airlines. The International Air Transport Association said the accord is a step in the right direction but doesn't go far enough.
  • China may allow yuan to float. China may be softening its position on the yuan, as an adviser to the country’s central bank suggests China could allow the yuan to trade more freely against the dollar as long as the move is made gradually. "China may resume a managed float of its exchange rate, particularly if the uncertainty of the overall post-crisis economic situation diminishes," wrote adviser Fan Gang in an op-ed published today. However, "if the adjustment came abruptly, Chinese companies would suffer a sudden loss of competitiveness.”
Earnings: Thursday After Close
  • Accenture (ACN): Q2 2010 EPS of $0.60 misses by $0.01. Revenue of $5.18B (-1.7%) vs. $5.21B. Guides Q3 revenue in-line, lowers FY10 EPS below consensus. Shares -1.5% AH. (PR, earnings call transcript)
  • Oracle (ORCL): Q3 2010 EPS of $0.38, in-line. Revenue of $6.4B (+17.4%) vs. $6.35B. GAAP new software license revenue +13% to $1.7B, license updates and product support revenue +13% to $3.3B. Shares -0.7% AH. (PR, earnings call transcript)
  • Tibco Software (TIBX): Q1 2010 EPS of $0.12 beats by $0.02. Revenue of $155M (+16.6%) vs. $148M. Shares +3.7% AH. (PR, earnings call transcript)
  • Wet Seal (WTSLA): Q4 EPS of $0.79 beats by $0.71, may not be comparable. Revenue of $151M (-2.5%) vs. $152M. Guides Q1 revenue above consensus. Shares +4.1% AH. (PR)
Today's Markets
  • In Asia, Nikkei +1.6% to 10996. Hang Seng +1.3% to 21053. Shanghai +1.3% to 3060. BSE +0.5% to 17645.
  • In Europe at midday, London -0.3% to 5711. Paris -0.3% to 3986. Frankfurt -0.3% to 6116.
  • Futures: Dow +0.2%. S&P +0.2%. Nasdaq +0.2%. Crude +0.5% to $80.92. Gold +0.4% to $1097.30.
Friday's Economic Calendar
  • 8:30 Q4 GDP, Final
    9:00 Fed: Forum on Monetary Policy
    9:55 Reuters/UofM Consumer Sentiment
    11:30 Fed's Warsh: Maintaining Central Bank Independence

Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.


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Why a Sirius Share Buyback Is Not a Good Idea

The last several SiriusXM earnings reports have shown the balance sheet improving and the conference calls have discussed the possibility of a share buyback. During the most recent conference call, Mel Karmazin noted the large cash balance that the company was building up and expressed a desire to return it in some form to shareholders. One way was to use it for acquisitions, although he noted that because of the company's "criteria and threshold for acquisitions, they are hard to come by." Then he went on, "So absent a compelling acquisition, shrinking our shares outstanding would be a great use of our free cash flow."

Ignoring the hotly debated topic by Seeking Alpha authors Spencer Osborne, Relmor Demitrius and others on whether or not a share buyback changes the ownership percentage of Liberty Capital, is a share buyback good for SiriusXM shareholders? Certainly the reactions expressed in comments by members of Seeking Alpha would seem to approve. Why wouldn't we approve? There will be fewer shares outstanding, our percentage ownership goes up, the earnings per share increase and the price of the shares should rise. There is also a perception by the markets that share buybacks are good for the stock price and should be good for shareholders. This is reflected in the immediate spikes in share prices that take place when companies announce buybacks. But what happens over the longer term?

Last month, Christina Rexrode, AP Business Writer, wrote an article titled Use care buying into a company's buyback fever and poses the question "Companies are buying back shares and telling investors they're doing them a favor. Are they?" As you might be able to tell from the headline, she makes a case for caution. She notes:

The logic behind that is simple. If companies are buying, they must believe the share price is going to rise. Their confidence influences investors to bid the shares higher. Investors get higher returns and own more of the company because there are fewer shares circulating. And the company can later reissue shares at a higher price. Everyone ends up happy.

It makes sense. The company knows more about itself than any outsider. If they think the price is too low, they must be right. This point is similar to the logic on insider buying - if insiders, who know more than we do, are buying they must think the shares are cheap and likely to rise. She then notes that there is little evidence that the share prices remain high over the long term. The article gives many reasons the shares revert to their former levels. The most significant one from my perspective is that the fundamental problems that led to a low share price haven't gone away with a buyback.

There are other issues as well. Subsequent to the buyback many companies issue more shares for employee option programs or acquisitions. Here is another interesting point from the article. "TrimTabs Investment Research estimates that companies that announce buybacks outperform the market by 0.7 percent the next day, and by 1.2 percent in the first 100 days." However, Birinyi analyst Rob Leiphart notes that the stock of S&P 500 companies that did not announce buybacks in 2010 actually performed better than those that did.

From my perspective as an investor, I would rather not see a buyback. I have other preferences.

  • I would prefer the company use the cash to pay down debt.
  • I would prefer to see accretive acquisitions
  • I would prefer to see the company reinvest in the business, whether it is enhanced product, enhanced content or better Sales and Marketing
  • I would prefer to see a dividend indicating the company expects to have consistent earnings to maintain and grow payments to shareholders

Before having read the article, I was not particularly in favor of share buybacks. Now, I am even more opposed. I suggest that anyone interested in learning more about the topic read Christina Rexrode's article. Perhaps the SiriusXM investor should be careful what they wish for. One final note. All share buybacks aren't bad. The article ended with this upbeat comment:

Chipotle Mexican Grill Inc. (CMG) is one of the few companies that got it right. The burrito maker began buying shares when they were trading around $40. The stock now trades at about $315. From the fourth quarter of 2008 through the first quarter of 2011, Chipotle spent $244 million, including fees, to buy back about 2.9 million shares. At today's prices, those shares are worth more than $913.5 million.

Disclosure: I have $3 January 2012 covered calls against most of my Sirius position. I may add to my long position of SIRI at any time and might close or open covered call positions at any time. I have no positions in the other stocks mentioned.

Cott Misses on Both Revenue and Earnings

Cott (NYSE: COT  ) reported earnings on Feb. 15. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 29 (Q4), Cott missed estimates on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue contracted and GAAP earnings per share grew.

Margins grew across the board.

Revenue details
Cott booked revenue of $517.2 million. The five analysts polled by S&P Capital IQ predicted net sales of $543.9 million on the same basis. GAAP reported sales were 5.8% lower than the prior-year quarter's $549.2 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.03. The nine earnings estimates compiled by S&P Capital IQ forecast $0.06 per share. GAAP EPS were $0.02 for Q4 compared to -$0.13 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 11.7%, 230 basis points better than the prior-year quarter. Operating margin was 3.3%, 130 basis points better than the prior-year quarter. Net margin was 0.4%, 260 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $534.7 million. On the bottom line, the average EPS estimate is $0.09.

Next year's average estimate for revenue is $2.33 billion. The average EPS estimate is $0.69.

Investor sentiment
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 162 members out of 268 rating the stock outperform, and 106 members rating it underperform. Among 76 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 52 give Cott a green thumbs-up, and 24 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Cott is outperform, with an average price target of $10.36.

Is Cott the best beverage bet for you? Learn how to maximize your investment income and "Secure Your Future With 9 Rock-Solid Dividend Stocks," including one above-average beverage seller. Click here for instant access to this free report.

  • Add Cott to My Watchlist.

Top Stocks To Buy For 3/31/2013-5

Royal Gold, Inc. (NASDAQ:RGLD) achieved its new 52 week high price of $67.29 where it was opened at $66.91 UP -0.52 points or -0.79% by closing at $65.59. RGLD transacted shares during the day were over 488,489 shares however it has an average volume of 584,228.00 shares.

RGLD has a market capitalization $3.63 billion and an enterprise value at $3.78 billion. Trailing twelve months price to sales ratio of the stock was 18.35 while price to book ratio in most recent quarter was 2.50. In profitability ratios, net profit margin in past twelve months appeared at 30.43% whereas operating profit margin for the same period at 50.97%.

The company made a return on asset of 3.60% in past twelve months and return on equity of 5.26% for similar period. In the period of trailing 12 months it generated revenue amounted to $197.87 million gaining $3.70 revenue per share. Its year over year, quarterly growth of revenue was 58.50%.

According to preceding quarter balance sheet results, the company had $125.77 million cash in hand making cash per share at 2.27. The total of $245.00 million debt was there putting a total debt to equity ratio 16.67. Moreover its current ratio according to same quarter results was 5.45 and book value per share was 26.19.

Looking at the trading information, the stock price history displayed that its S&P500 52 Week Change illustrated 19.95% where the stock current price exhibited up beat from its 50 day moving average price of $60.02 and remained above from its 200 Day Moving Average price of $54.67.

RGLD holds 55.34 million outstanding shares with 51.42 million floating shares where insider possessed 5.35% and institutions kept 63.20%.

FINRA to Restructure BrokerCheck, Giving Investors More Power

Brokers and advisors take note: the Financial Industry Regulatory Authority (FINRA) plans to revamp BrokerCheck to not only make it easier for investors to track down information about their broker—including “unifying” the search capabilities for BrokerCheck and the SEC’s Investment Adviser Public Disclosure database—but to also expand the types of information investors can get about their broker.

Until recently, FINRA noted that BrokerCheck was the only regulator that provided a comprehensive, online tool that enabled investors to check the backgrounds of financial service industry professionals. In 2010, the SEC expanded the IAPD database—which had previously only included information on investment advisor firms—to include information on investment advisor representatives. Although BrokerCheck and IAPD have many similarities, there are differences in the information available, FINRA explains, which includes the presentation format and the manner in which individuals may obtain information from the systems.

In January 2011, SEC staff released a study and recommendations on improving investor access to investment advisor and broker-dealer registration information, as required by Section 919B of Dodd-Frank.

The SEC staff recommended the following three near-term recommendations to improve investor access to registration information through BrokerCheck:

  • unify search returns for BrokerCheck and the IAPD databases;
  • add the ability to search BrokerCheck by ZIP Code or other indicator of location; and
  • add educational content to BrokerCheck, including links and definitions of terms that may be unfamiliar to investors.
  • Dodd-Frank mandates that these recommendations be implemented within 18 months after completion of the study, and FINRA will put them into effect before the July 2012 deadline.

    FINRA is also asking the public to weigh in with comments on how to facilitate more use of BrokerCheck by April 6.

    Nancy Lininger (left), a compliance consultant with The Consortium in Camarillo, Calif., says that adding search capabilities by location, for instance, “will make the BrokerCheck database a go-to source for locating and determining background of the investor’s financial advisor.”

    A big problem now, she says, is that to find information on a financial advisor, the investor may not know if the professional is in the IAPD database or FINRA BrokerCheck for BD firms and registered reps. “Studies have proven that investors don’t even know the difference between an RIA and BD. So merging of the two databases (one search engine) is important.”

    What’s more, Lininger says, “if a FINRA rep leaves the commission world and goes to the fee-only advisory side, and the investor is checking the BrokerCheck system, there will be a disconnect.”

    In addition to the near-term recommendations mentioned above, the study includes an intermediate-term recommendation to be addressed after the 18-month implementation period.

    Specifically, SEC staff recommends that FINRA continue to analyze the feasibility and advisability of expanding BrokerCheck to include additional information available in the Central Registration Depository (CRD) system (e.g., the reason for and comments related to a broker’s termination, scores on industry qualification exams, formerly reportable information), as well as the method and format of publishing BrokerCheck content.

    Jonathan Henschen (left), president of the consulting firm Henschen & Associates, says that while having greater transparency is a positive step in “an industry that does things wrong on both a rep and broker-dealer level, and pays fines but rarely admits to wrong doing,” greater disclosure can become “over the top” when considering disclosing advisors test scores, for example, on such securities tests as Series 7, 63, 66 and 24.

    Greater access to information, he says, can spark “greater misuse.” Says Henschen: “With firms like BrightScope having advisor-rating systems you have to question objectivity and balance in their approach and be cautious of data being used to black ball advisors inappropriately.”

    Expanding the amount of data available about brokers/advisors could induce private vendors to “rate” them. “Are private vendors going to be like Weiss Research and use the data to rate reps on an A-F scale based off of the data?” Henschen says. “Will reps use a rep rating service as a marketing tool as they boast of their ‘A’ rating?” he wonders.

    Overall, however, Henschen says that greater public disclosure “will help motivate reps to keep out of trouble for the sake of their client base and livelihood.”

    Living in the world of Google, “clients now do their own research on reps and broker-dealers looking for disparaging articles online as part of their own due diligence, so if FINRA doesn’t bring things to the surface, others will.”

    Saturday, March 30, 2013

    Buyout Firm TPG to Try Hand at Fund

    Lots of real-estate funds that used piles of borrowed money to buy risky properties got crushed during the financial crisis.

    ST Residential

    A TPG partnership acquired this Los Angeles building.

    Now, buyout firm TPG Capital is offering a new twist while mining some of the same territory with its first real-estate fund.

    The firm expects to start raising money in the second half of 2013 with a target of at least $1 billion, said people familiar with TPG's plans. TPG officials acknowledged plans to raise a fund but declined to discuss specifics or timing.

    If TPG raises that amount, it would be the second-largest initial property fund ever, trailing only the $1.6 billion that Lehman Brothers raised in 2001 with its first fund, according to data tracker Preqin.

    Most real-estate funds that aim for double-digit returns search for office towers with high vacancies, financially strapped hotels or other distressed buildings they can buy at a discount, fix and sell within a few years. Like these funds, TPG says it is looking for troubled projects that need fresh capital or new management.

    But in contrast with most peers, TPG has been acquiring property-related companies and large portfolios of buildings with capital staked by a TPG private-equity fund and two partners. The firm is betting this same buyout-like strategy of acquiring complete businesses�instead of adding one property at a time�will distinguish it from other real-estate managers on the fundraising trail.

    "We combine sound property capabilities with corporate-style investing, which TPG has significant expertise in," said Kelvin Davis, who co-founded property investor Colony Capital in 1991 and currently heads TPG's real-estate group.

    He says buying whole companies is a more complex business that deters many other property owners and relies less on borrowed money.

    TPG has invested more than $2 billion for 10 real-estate-related acquisitions since 2009�from a portfolio of Silicon Valley office buildings to a Dutch property company that collects offices and warehouses. Taylor Morrison, a home builder that a TPG partnership acquired in 2011, plans to sell shares in an initial public offering in the coming weeks.

    Mr. Davis declined to discuss overall return figures for real-estate investments.

    But according to the New Jersey state pension fund that invested with TPG last fall, the first $1 billion of the $2 billion it has invested in real estate has appreciated about 30% as of October.

    Enlarge Image

    Close Reuters

    TPG Capital founding partner David Bonderman

    KKR & Co., another well-established private-equity firm, also began investing in real estate recently. After relying on money from the firm and other KKR funds for the past two years, it is edging closer to raising its own dedicated real-estate fund, say people familiar with the matter.

    TPG and KKR are arriving late to the real-estate fundraising game. Rivals including Blackstone Group and Carlyle Group raised multibillion-dollar funds several years ago to buy property, which have generated large fees and boosted their firms' income.

    Raising a large new fund also comes at a challenging time. While there are recent signs that some large institutional investors are warming again to high-risk real-estate funds, many of the biggest remain sour on them after suffering big write-downs.

    In their peak in 2008, North American closed-end real-estate funds raised $71.2 billion in capital, according to Preqin.

    Last year, the total was just $38.5 billion. That included a $13.3 billion fund from Blackstone Group, which raised a record amount despite the tough climate. Excluding the Blackstone fund, last year would have had the smallest amount raised since 2003.

    Making it more challenging for TPG, "there has been a steady decline in investors who will invest in first-time" real-estate funds, said Andrew Moylan, Preqin's manager of real-estate data.

    The Fort Worth, Texas-based private-equity firm has relied on its $19 billion global fund and arrangements with two institutional investors for the money it has invested since 2009. But there is a limit to how much TPG's global private-equity fund will commit to real estate. To expand its real-estate reach, say analysts, it needs to raise a fund dedicated to property investment.

    TPG is one of the world's biggest and most successful private-equity managers. Formerly known as Texas Pacific Group and founded by David Bonderman and Jim Coulter, the 21-year-old firm has $54.5 billion of assets under management and long-term relationships with institutional investors.

    TPG has a history of high-profile acquisitions, including Neiman Marcus, Burger King and Petco.

    Timothy Walsh, director of the New Jersey Division of Investment, which manages about $71 billion in state pension money, said he met with TPG officials at a private-equity conference two years ago. Last fall, New Jersey agreed to invest $350 million with TPG's real-estate group. "They are not buying buildings, but operating companies, that's what appealed to us," he said.

    The other big investor with TPG's real-estate program is Ivanhoe Cambridge, the property investor for Canadian pension manager Caisse de depot et placement du Quebec. Ivanhoe Cambridge provided more than $600 million, said William Tresham, president of global investments.

    In May, TPG bought a 43% stake in the office-focused real-estate investment trust Parkway Properties Inc. Parkway's share price is up about 86% since then, making it the top-performing U.S.-listed REIT over that period, according to financial research company FactSet.

    TPG and Starwood Capital Group led a partnership, known as ST Residential, that acquired the residential assets of the failed Corus Bank from a government auction in 2009. The group has disposed of property and loans representing 70% of the $2.8 billion purchase price, TPG said.

    Write to Craig Karmin at craig.karmin@wsj.com

    Dollar Bulls Beware

    By late 2009, as the U.S. dollar flirted with multi-year lows against most foreign currencies, big investment players crowded into trades that shorted the greenback. Commentators noted that the anti-dollar momentum had taken on a life of its own and that the trade had become too crowded. It is true that markets have a nasty tendency to move against the crowd. When a lot of traders agree on a particular trade, it's more likely that in the short-run the opposite trade will be a winner.

    The 2008 "flight to safety" rally of the U.S. dollar was a once in a lifetime event that presented huge opportunities for aggressive currency traders. By December 2008, after rallying 25% over the previous five months, the dollar topped out. However, there were many speculators who had come somewhat late to the party, as well as many others who had ridden the dollar up and were thus sitting on huge unrealized gains.

    Those technical reasons, combined with the re-emergence of strong growth in emerging markets and solid earnings from overseas companies, redirected investment flows away from the dollar. 2009 became a year of dollar weakness, with the buck giving back nearly all of its gains. At that point, most people made the reasonable conclusion that the decline would continue.

    As is often the case, an unforeseen event came along that made mincemeat out of the consensus' well-conceived strategy. Once some fiscal squabbling grabbed headlines in the eurozone, the negative sentiment that had built up on the dollar was suddenly diverted to the euro. Catalyzed by the Greek debt crisis, the greenback surged by about 8% in six weeks.

    From a technical standpoint, the short dollar trade of late 2009 was too crowded; but from a fundamental standpoint, I don't think it was crowded enough. As with stocks, there can be no long-term substitute to examining a government's fundamentals to determine its currency's worth. Based on the fundamentals, far too many investors remain far too confident about the greenback's underlying viability.

    In fact, I do not think I have ever seen so rapid a change in sentiment in my career. The crowd had completely switched sides, with most now betting on the demise of the euro rather than the dollar. This is looking like July 2008 all over again, with the dollar poised to put in over-sized gains. It also presents a good opportunity for those who keep their heads.

    In my opinion, the market is now perfectly positioned for a massive dollar sell-off. The fundamentals for the dollar in 2010 are so much worse than they were in 2008 that it is hard to imagine a reason for people to keep buying once a modicum of political and monetary stability can be restored in Europe. In fact, the euro has recently stabilized.

    My gut is that the dollar sell-off will be sharp and swift. Once the dollar decisively breaks below last year's lows, many of the traders who jumped ship in the recent rally will look to re-establish their positions. This will accelerate the dollar's descent and refocus everyone's attention back on the financial train-wreck unfolding in the United States.

    Any doubts about the future of the U.S. dollar should be laid to rest by today's announcement that San Francisco Federal Reserve President Janet Yellen has been nominated to be Vice Chair of the Fed's Board of Governors, and thereby a voter on the interest rate-setting, seven-member Open Markets Committee. Ms. Yellen has earned a reputation for being one of the biggest inflation doves among the Fed's top players.

    Looking for an ally to paper over the administration's gaping fiscal holes, it is not surprising that president Obama made this selection. Yellen has consistently downplayed the dangers of inflation and has made statements that indicate she views the Fed as an extension of the Labor Department, rather than a guardian of our currency. Last month, in discussing what she saw as the Fed's obligation to promote employment, she said, "If it were possible to take interest rates into negative territory, I would be voting for that." She may very well make Chairman Bernanke look like a tightwad by comparison.

    It is anyone's guess which sparks will be responsible for igniting the falling dollar powder keg. From a trader's perspective, a sharp reversal in the dollar will catch many investors completely off guard. Those who stepped off the short-dollar train will be stuck on the platform as it speeds away. Those who refused to give up their seats are in for a hell of a ride.

    Will Obamacare Carve Up the Restaurant Industry?

    Because restaurants typically operate on razor-thin margins, President Obama's signature health-care reform law has largely been criticized by the industry for imposing onerous new costs that will potentially wipe out whatever profits they make.

    Under the Affordable Care Act, companies with 50 or more employees have to provide them health insurance if they work 30 hours or more, or else face a $2,000-per-employee penalty. That led many restaurant operators, such as the CEO of Olive Garden and Red Lobster parent Darden Restaurant's (NYSE: DRI  ) , to say worker hours would have be cut to avoid paying for expensive health-insurance premiums.

    Binge eating
    He was joined in his criticism of the law by other restaurant operators, including pizza-shop chain�Papa John's (NASDAQ: PZZA  ) and burger joints Wendy's� (NASDAQ: WEN  ) ,�McDonald's (NYSE: MCD  ) , and Burger King, all of which are chafing at the law's costs.

    While Darden eventually walked back its statement and Papa John's CEO says his comments were misconstrued, others continue to assert there will be real damage coming.

    McDonald's, for example, maintains that complying with the law will cost it $10,000 to $30,000 per restaurant, and as of the end of last year the fast-food chain operated more than 14,000 restaurants in the United States. The CEO of DineEquity's Applebee's chain hasn't altered his charge that the chain's New York City store alone would be subject to fines of $600,000 a year if it didn't provide insurance, yet the company faces the prospect of tens of millions of dollars in higher costs across the chain if it does.

    Some restaurants have seen individual stores begin to make good on the threat. A Wendy's franchise in Nebraska cut all non-management workers to 28 hours a week, as did a Yum! Brands (NYSE: YUM  ) Taco Bell franchise in Oklahoma. Others, such as burger joint Five Guys, are starting to raise prices, while RREMC Restaurants, a privately held franchisor of several dozen restaurants including Denny's and Dairy Queen, will begin imposing a 5% surcharge on their menu to cover Obamacare costs.

    Someone else's problem
    Darden may have retreated from its critiques because of the negative publicity it created, while others believe the burden won't be so high because many employees will simply opt to instead pay the $95-a-year penalty for being uninsured. It will be cheaper than paying the monthly premiums associated with the insurance plans companies offer, while others will choose to be covered by the government's Medicaid plan or will sign on to a spouse's policy.

    Still, the burden will fall heaviest on the smaller restaurants. McDonald's reported almost $5.5 billion in profits last year, so it can more readily afford to pull its seat up to the table and offer health insurance for its employees. Harder to quantify, however, will be just how many restaurants at around the 50-employee threshold will simply fire a few people to ensure they don't make the cut-off.

    Standing in line at the soup kitchen
    According to the National Restaurant Association, the average restaurant makes between just $0.02 and $0.06 in pre-tax profits on each dollar of sales. While that doesn't even include all the restaurants that never make a profit and go under, it highlights that the added costs of Obamacare will have to come from one of a three sources: lower profits, higher prices, or lower wages. Maybe a combination of all three, because there's simply little room for restaurants to maneuver.

    In the end, the real lasting impact of the Affordable Care Act may not be universal health care coverage, as originally promised, but rather a nation of part-time workers paying more for our meals when we go out to eat. If we can afford to.

    Where to profit in health care
    When President Obama was re-elected, shares of UnitedHealth Group and other health insurers fell immediately. Is Obamacare a death knell for health insurers, or is the market missing out on some of the opportunities the law presents? In this premium report on UnitedHealth, The Motley Fool takes a long-term view, homing in on�prospects for UnitedHealth in an Obamacare world. So don't miss out -- simply�click here now�to claim your copy today.

    Why Social Security Cuts Are Inevitable

    For decades, people have predicted that Social Security won't be able to meet the demands of an aging population without cuts in benefits. But now that those pessimistic calls have become the majority view, it has paradoxically become easier for lawmakers and other government officials to consider making those cuts, thereby turning dire predictions into self-fulfilling prophecies.

    Confidence in Social Security is falling
    The recent Retirement Confidence Survey from the Employee Benefits Research Institute examined a number of the financial aspects involved with retirement issues. One area of the survey focused on attitudes that workers and retirees have about Social Security and Medicare.

    The results of the survey show that opinions of the health of entitlement programs are at their most pessimistic levels in 15 years. Asked how confident they are that Social Security will provide them with equally valuable benefits as it provides them today, 41% said they were not at all confident, with another 28% claiming they were not too confident. Only 5% said they were very confident that Social Security could continue at current levels.

    Even more alarming, more than one in five respondents said that they didn't expect Social Security to be a source of income at all when they reached retirement. On the other hand, a rise in those expecting Social Security to be their major source of income isn't necessarily good news either, as it reflects trends that have left workers increasingly reliant on government programs to replace the substantial reduction in employer-provided pension benefits that's been occurring gradually for decades. Decisions in the past year from General Motors (NYSE: GM  ) and Verizon (NYSE: VZ  ) to outsource their pension liabilities to insurance giant Prudential (NYSE: PRU  ) mark just the latest in a long series of moves that employers have made to reduce their exposure to the risks involved with providing employee pensions, and newer employees at most companies don't have any access to a traditional pension plan at all.

    Medicare is equally endangered
    Survey respondents weren't any more confident about Medicare, with 32% feeling not too confident in its prospects for maintaining current benefit levels for their retirement, and 37% being not at all confident of Medicare's prospects. The latter figure is the worst showing since 1996, with only 6% feeling very confident about Medicare sustaining current benefits.

    Even current retirees aren't very confident about Medicare's chances of surviving in its current form. A majority, 56%, of retirees are not at all confident or not too confident of Medicare's ability to keep current levels of benefits. Recent threats of cuts to Medicare Advantage plan reimbursements have greatly affected health-insurance companies UnitedHealth (NYSE: UNH  ) and Humana (NYSE: HUM  ) , and with the ongoing need for federal-budget cost-control measures, similar cuts could pop up at any time.

    When cuts become politically expedient
    Clearly, the EBRI survey reflects the informed views of people who stand to gain or lose a great deal depending on the fate of Social Security and Medicare. But the attitudes that the survey reveals also point to a growing acceptance of the future need for entitlement-program cuts, and that acceptance in itself will make it politically easier for policymakers to make those cuts.

    Hoping for outright support among voters for entitlement changes that will hurt them may be unrealistic, but these survey results suggest that voters might well end up resigned to the necessity of cuts after only a token fight. Recent proposals that call for cuts to take effect not on current retirees or near-retirees but rather on those a decade or further away from retirement show the beginning of a movement toward breaking the general public into groups of haves and have-nots, effectively taking advantage of attitudes that generally become even more pessimistic for younger demographic groups.

    Be ready for anything
    Workers used to be able to rely on three financial support mechanisms in retirement: personal savings, employer pensions, and government entitlement programs. With employer pensions becoming a thing of the past and Social Security and Medicare under siege, you're more on your own than ever in securing your retirement future.

    Getting financially ready for your own retirement requires smart investments, and the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of.�Click here now�to keep reading.

    Opinion: Timothy Thomas: Why China Is Reading Your Email

    Fort Leavenworth, Kan.

    For several years, Washington has treated China as the Lord Voldemort of geopolitics�the foe who must not be named, lest all economic and diplomatic hell break loose. That policy seemed to be ending in recent weeks, and Timothy Thomas thinks it's about time.

    The clearest sign of change came in a March 11 speech by Tom Donilon, President Obama's national security adviser, who condemned "cyber intrusions emanating from China on an unprecedented scale" and declared that "the international community cannot tolerate such activity from any country." Chinese cyber aggression poses risks "to international trade, to the reputation of Chinese industry and to our overall relations," Mr. Donilon said, and Beijing must stop it.

    "Why did we wait so long?" wonders Mr. Thomas as we sit in the U.S. Army's Foreign Military Studies Office, where the 64-year-old retired lieutenant colonel has studied Chinese cyber strategy for two decades. More than enough evidence accumulated long ago, he says, for the U.S. to say to Beijing and its denials of responsibility, "Folks, you don't have a leg to stand on, sorry."

    U.S. targets of suspected Chinese cyber attacks include news organizations (this newspaper, the New York Times, Bloomberg), tech firms (Google, Adobe, Yahoo ), multinationals (Coca-Cola, Dow Chemical ), defense contractors (Lockheed Martin, Northrop Grumman ), federal departments (Homeland Security, State, Energy, Commerce), senior officials (Hillary Clinton, Adm. Mike Mullen), nuclear-weapons labs (Los Alamos, Oak Ridge) and just about every other node of American commerce, infrastructure or authority. Identities of confidential sources, hide-outs of human-rights dissidents, negotiation strategies of major corporations, classified avionics of the F-35 fighter jet, the ins and outs of America's power grid: Hackers probe for all this, extracting secrets and possibly laying groundwork for acts of sabotage.

    Enlarge Image

    Close Ken Fallin

    Timothy Thomas

    China's aggression has so far persisted, Mr. Thomas says, because "it makes perfect sense to them." The U.S. has difficulty defending its cyber systems, the relatively new realm of cyber isn't subject to international norms, and years of intrusions have provoked little American response. "I think they're willing to take the risk right now because they believe that we can't do anything to them," he says. "You have to change the playing field for them, and if you don't, they're not going to change. They're going to continue to rip off every bit of information they can."

    Hence the promise of Washington's apparent shift in policy. "There's something going on," Mr. Thomas says, and the Donilon speech was only one part. This month's more significant news, he argues, was the announcement that the U.S. military's Cyber Command (founded in 2009) would for the first time develop and field 13 offensive cyber-warfare teams. The Chinese "now know we are ready to go on the offense. There's something that's been put in place that I think is going to change their view."

    Not that he expects Beijing to back down lightly. On the contrary, Mr. Thomas points to the literature of the People's Liberation Army to demonstrate that China's cyber strategy has deep�even ancient�roots.

    The essence of China's thinking about cyber warfare is the concept of shi, he says, first introduced in Sun Tzu's "The Art of War" about 2,500 years ago. The concept's English translation is debated, but Mr. Thomas subscribes to the rendering of Chinese Gen. Tao Hanzhang, who defines shi as "the strategically advantageous posture before a battle."

    "When I do reconnaissance activities of your [cyber] system," Mr. Thomas explains of China's thinking, "I'm looking for your vulnerabilities. I'm establishing a strategic advantage that enables me to 'win victory before the first battle' "�another classic concept, this one from the "36 Stratagems" of Chinese lore. "I've established the playing field. I have 'prepped the battlefield,' to put it in the U.S. lexicon."

    Or, as Chinese Gen. Dai Qingmin wrote in his 2002 book, "Direct Information Warfare": "Computer network reconnaissance is the prerequisite for seizing victory in warfare. It helps to choose opportune moments, places and measures for attack." Says Mr. Thomas: "He's telling you right there�10 years ago�that if we're going to win, we have to do recon."

    A 1999 book by two Chinese colonels put it more aggressively (albeit in a sentence as verbose as it is apocalyptic): "If the attacking side secretly musters large amounts of capital without the enemy nations being aware of this at all and launches a sneak attack against its financial markets," wrote Qiao Liang and Wang Xiangsui, "then, after causing a financial crisis, buries a computer virus and hacker detachment in the opponent's computer system in advance, while at the same time carrying out a network attack against the enemy so that the civilian electricity network, traffic dispatching network, financial transaction network, telephone communications network, and mass media network are completely paralyzed, this will cause the enemy nation to fall into social panic, street riots, and a political crisis." No kidding.

    This vision from 1999 reads like an outline of the report published last month by Mandiant, a private-security firm, about "Unit 61398," a Shanghai-based Chinese military team that since 2006 has mounted cyber assaults to steal terabytes of codes and other information from U.S. assets. Among the targets of Unit 61398 was Telvent Canada, which provides remote-access software for more than 60% of the oil and gas pipelines in North America and Latin America.

    Unit 61398 is said to engage in "spearphishing," whereby would-be cyber intruders send emails with links and attachments that, if clicked, install malware on target computers. Lesser hackers might spearphish while posing as Nigerian princes, but Unit 61398 developed sophisticated ways, including colloquial language, to mimic corporate and governmental interoffice emails.

    Spearphishing, too, draws on traditional Chinese stratagems: "The Chinese strive to impel opponents to follow a line of reasoning that they (the Chinese) craft," Mr. Thomas wrote in 2007. With this kind of asymmetric approach, he says, "anybody can become an unsuspecting accomplice."

    In this context Mr. Thomas mentions a cartoon published last year in Army magazine in which one Chinese general says to another: "To hell with 'The Art of War,' I say we hack into their infrastructure." Good for a chuckle, perhaps, but Mr. Thomas warns against taking the message seriously. China's hacking is in fact "a manifestation of 'The Art of War,' " he says, and if the U.S. military doesn't realize that, it "can make mistakes. . . . You have to stay with their line of thought if you're going to try to think like them."

    "Boy," he later laments, "we need a lot more Chinese speakers in this country"�a point underscored by the fact that he isn't one himself. He reads Chinese military texts in translation, some published by the U.S. government's Open Source Center and some he has found himself. He stumbled upon Gen. Dai's "Direct Information Warfare" on a trip several years ago to Shanghai, when an associate led him (and an interpreter) to an unmarked military bookstore on the top floor of a building on the outskirts of town. "I could tell when I walked in that the people behind the cash register were stunned I was there," he recalls. In public bookstores, he says, material addressing Chinese national security is often marked "not for foreign sale" on the inside cover.

    The Ohio native does speak Russian, having focused most of his military service (from West Point graduation in 1973 until 1993) on the Soviet Union. That language skill still comes in handy, and not just because Russia is suspected of having carried out cyber assaults against Estonia in 2007 and Georgia in 2008.

    Look at the Mandiant report's map of Chinese cyber intrusions (at least those tied to Unit 61398): Russia is untouched. "That's a huge area. . . . I really would wonder why they're after South Africa, the U.A.E. and Singapore but not Russia. And Luxembourg. They went after Luxembourg but not Russia?" Together with Iran, he argues, China and Russia make up "not the axis of evil but the axis of cyber."

    So what is to be done? Security firms are working to harden networks against hackers, and members of Congress are promoting legislation to let the government work more closely with Internet service providers without opening up the companies to lawsuits or infringing on civil liberties. Washington could challenge Chinese cyber espionage with targeted economic sanctions. Meanwhile, there is much talk about establishing international standards for cyber space, but it is unclear what that would mean�which probably explains why top officials in Washington and Beijing have both endorsed the idea.

    None of this seems promising to Mr. Thomas, who stresses building deterrence through offensive capabilities, such as the 13 new teams at U.S. Cyber Command. The implication is that the best defense is a good offense.

    And doesn't that suggest, in turn, that the U.S. and China are headed toward a dynamic of mutually assured cyber destruction? "It seems like it," he says.

    It's heartening to hear, then, that Chinese military literature isn't uniformly aggressive toward America. This includes writings about the "China Dream," which posits that China will overtake the U.S. economically and militarily by midcentury�and which has been adopted as the signature cause of new President Xi Jinping.

    "They give you both versions," says Mr. Thomas. "They give you a model that says, 'There will be no way we'll ever fight [the U.S.], we'll work on cooperation.' A chapter later, 'There could be a time where if pushed hard enough, we'll have to do something and there will be a battle.' "

    But what about the argument that the U.S. is shedding crocodile tears? America (and Israel) were almost certainly behind the most successful known cyber attack to date: the Stuxnet virus that impeded Iran's uranium-enrichment program. There might be some comfort in knowing that the U.S. is doing unto China what China is doing unto the U.S., says Mr. Thomas, but "we don't seem as intrusive as the other side." That is illustrated especially, he says, by China's state-sponsored commercial espionage. He frequently hears complaints from U.S. firms dealing with Chinese counterparts who know their secrets, adding that "I don't think people really get the security briefing of just how invasive it is."

    Then there's the argument that all this is overblown because no cyber attack has ever killed anyone. Mr. Thomas responds, somewhat impatiently: "If I had access to your bank account, would you worry? If I had access to your home security system, would you worry? If I have access to the pipes coming into your house? Not just your security system but your gas, your electric�and you're the Pentagon?"

    He adds: "Maybe nobody's been killed yet, but I don't want you having the ability to hold me hostage. I don't want that. I don't want you to be able to blackmail me at any point in time that you want." He cites the Chinese colonels' vision, back in 1999, of "social panic" and "street riots." "I wonder what would happen if none of us could withdraw money out of our banks. I watched the Russians when the crash came and they stood in line and . . . they had nothing."

    Mr. Feith is an assistant editorial features editor at the Journal.

    Cyprus: Cash, Security Control for Banks Reopening

    NICOSIA, Cyprus (AP) -- Cyprus will impose limits on money transfers and dispatch extra security guards to prepare for Thursday's reopening of the banks, which have been shut for almost two weeks to avoid a run during the country's financial drama.

    A banking official said Wednesday that new controls will include restrictions on large-scale transfers from the country's two largest and most troubled lenders, Bank of Cyprus and Laiki. Both are being restructured, and big depositors face losses of as much as 40 percent.

    But authorities are looking to increase the daily withdrawal limit from 100 euros to 300 euros (from $130 to $386), while payroll payments will be allowed in order to help businesses, which saw a huge slump as people cut down on their spending amid the uncertainty swirling about the banks.

    The restrictions will be kept for at least a week until the situation stabilizes, said the official, who spoke only on condition of anonymity because the measures have yet to be officially announced.

    Meanwhile, private security firm G4S will install 180 of its staff at bank branches across the island to keep a lid on possible trouble, said John Argyrou, managing director of the firm's Cypriot arm.

    "Our presence there will be for the comfort of both bank staff and clients, but police will also be present," he said.

    Argyrou said he doesn't foresee any serious trouble unfolding once banks open their doors because people had time to "digest" what has transpired.

    "There may be some isolated incidents, but it's in our culture to be civil and patient, so I don't expect anything serious."

    Another 120 staff from G4S would be assigned money transportation duties.

    Banks were closed on March 16 as politicians scrambled to come up with a plan to raise 5.8 billion euros ($7.5 billion) that would qualify the country for 10 billion euros ($12.9 billion) in bailout loans from fellow eurozone partners and the International Monetary Fund.

    Under the deal clinched in Brussels early Monday, Cyprus agreed to slash its oversized banking sector and inflict hefty losses on large Laiki and Bank of Cyprus depositors.

    Cypriot officials said the deal would mean the country would shift its focus away from being an international center of financial services. That is expected to cost jobs, adding to the unemployment rate which now stands at around 14 percent.

    Business leaders and cabinet ministers were meeting with President Nicos Anastasiades on Wednesday to find ways to get the economy going again.

    To give consumers a break, electricity prices will drop 5.75 percent next month. Over the next couple of weeks, authorities will look into how they can reduce them by another 3 percent, said Commerce Minister Giorgos Lakkotrypis.

    Interior Minister Socrates Hasikos said his ministry is looking to cut red tape in order to attract foreign investment. He said Chinese investors have shown interest in property sales, adding that a single real estate office has sold some 400 residences to Chinese buyers.

    "There has always been interest from foreign investors," said Hasikos. "The question is how we as the government, as Cyprus, can convince all these investors ...that the environment is secure, that whatever happened has now passed and that they can continue securely investing in Cyprus."

    BlackBerry Makes App Progress

    Back when BlackBerry (NASDAQ: BBRY  ) 10 launched in January, the company touted a 70,000 headline figure for its app count. I initially criticized BlackBerry for the fact that 40% of these apps were just wrapped Google (NASDAQ: GOOG  ) Android apps, since this would present important strategic challenges farther down the road.

    A couple months later, the company said its app figure reached 100,000, adding 30,000 new apps over seven weeks. At the time, BlackBerry didn't give any details on how many were Android ports.

    Well, the company has now done just that, and is making progress on the divide between native and ported apps. In a recent interview with AllThingsD, BlackBerry exec Martyn Mallick said that roughly 20% of the 100,000 apps are now emulated Android apps (Mallick is the same exec that confirmed the first 40% figure in January).

    If we compare those figures, BlackBerry started with roughly 28,000 ported apps and 42,000 native apps. Now the turnaround candidate has 20,000 ported apps and 80,000 native apps. Even though those figures are approximate, it would appear that developers have made the leap to native with roughly 8,000 apps.

    That's an encouraging sign for BlackBerry, since native apps perform significantly better than the wrapped Android ports running in an emulator, and building its native app count will bolster consumer confidence in the platform and give BlackBerry 10 better odds of long-term viability.

    Mallick also said that some developers are meeting BlackBerry halfway -- keeping their Android apps but tweaking them to cater to specific features of BlackBerry 10. That includes high-profile titles like Amazon.com and eBay. The smartphone maker is also offering incentives like a $10,000 guarantee that developers can successfully monetize their content on the platform.

    BlackBerry isn't in the clear yet, and the distinction between native and ported apps is a subtle one that may potentially be lost on the average consumer, but every little bit helps.

    As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other web companies, it's also struggling to adapt to an increasingly mobile world. Despite gaining an enviable lead with its Android operating system, the market isn't sold. That's why it's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource.

    Valliere at SSG: Economy Is ‘Healing’ but Watch Out for Iran

    Greg Valliere has been covering the ins and out of politics and the economy for more than 30 years in a non-partisan way, and last Friday he provided attendees at Shareholders Service Group first annual conference with a generally optimistic forecast for the economy, markets and employment, tempered with his concern over a possible attack on Iran and the likelihood of continued “paralysis in Congress” after the November elections, regardless of who wins the presidency.

    Valliere (left), whom many advisors know from his near-annual appearance at Schwab Advisor Services’ annual Impact conference, began his presentation in San Diego by suggesting that U.S. GDP will likely be at 2.5% in the current quarter and in the second quarter, and that unemployment will remain in the “low 8%” range for the rest of the year (in February the jobless rate was 8.3%).

    “The labor market is healing,” he said, and “by Labor Day it may well be below 8%,” though he worries that a number of previously disillusioned job seekers may reenter the job market, which will keep it from falling lower. As for inflation worries, “CPI will be tame, despite a [rising] gas price blip,” and he thinks it unikely that there will be a QE3.

    As for other good news, he said an underreported story is that the budget deficit is actually declining, and that government spending has leveled off and will stay that way, and that tax receipts are picking up. Internet sales, he said, are a big reason why some state tax receipts are not going up.

    “So how can Washington screw up” this improving economy? For one thing, he doesn’t expect Congress to pass an extension any time soon of the Bush-era tax cuts. “It wouldn’t surprise me if they don’t act until Dec. 26,” which he said might have a negative effect on the markets in the fourth quarter. But in December, he suggests we may well see a “grand compromise,” which would include extending the Bush tax cuts for those with annual incomes under $250,000; perhaps an end to sequestration, though Valliere thinks there’s a good chance that the defense budget may not be cut, making “defense stocks an interesting play”; and domestic discretionary spending. One other reminder, he noted: the debt ceiling will also expire in December 2012.

    While Valliere said that some of the details on the “Grand Compromise” will depend on who wins the election, “nobody in Washington knows for sure.” In fact, he argues that November 2012 “may not be a cathartic election.” While who wins the presidential election is still up in the air, the makeup of Congress is more likely to be further right than it is currently. Partly due to the number of retirements in Congress, he expects a “very conservative House,” and that there’s a chance the Senate will be GOP controlled as well. “Their magic number is four,” Valliere said about the number of seats in the Senate that the Republicans need to take over leadership there, and even if the Democrats remain a majority in the upper house, “the Senate will get more conservative.” In general, “paralysis in Congress might increase” partly because of the many ‘moderates’ in both parties who are retiring.

    As for the presidency, Valliere said he could see either Mitt Romney, whom he assumes will win the GOP nomination, or Barack Obama winning the election, though both have their own drawbacks. Romney can be tone deaf when talking to the electorate, he said, but because of pressure from the Tea Party Republicans, Romney will not be able to “pivot to the center” in the general election, which may hurt him. Obama, he said, is “not a shoo-in,” however. Among his problems: “rising gas prices are a de facto tax … 25% of U.S. mortgage holders remain under water,” and while the jobless rate is falling, those “people with new jobs are getting paid less.”

    Either man would likely address Social Security reform in 2013, including raising the retirement age, and “in private, Obama says that would be his legacy” in a second term.

    As for geopolitical stories, Valliere lists two big ones: Iran’s nuclear ambitions and “who owns CDSs in Europe.” He sees a recession likely in Europe this year, except in Germany, even though Europe’s “getting better since last month,” thanks to ECB President Mario Draghi “throwing money everywhere” which he characterized as “triage to save the patient,” though now he’s “talking about austerity.”

    A possible military strike by Israel on Iran’s nuclear sites is likely in July or August, but “Iranian retaliation worries me the most,” since not only would Iran likely launch missiles into Israel, but also into Turkey and Saudi Arabia. Oil prices would likely spike in the event of military action, even if the U.S. Navy kept the Straits of Hormuz open with its mine-sweepers. “There’s already a cyber war going on” against Iran, he said, and reminding his audience that he’s cynical about Washington, “Obama won’t complain" about any possible Israeli strike because "he needs New Jersey and Florida votes."

    Responding during the Q&A portion of his presentation to a final question on likely Social Security reforms, he suggested that the most likely steps would be to change the formula for the cost of living adjustment (COLA), to raise the retirement age, and perhaps some forms of means testing. Means testing for Medicare benefits would likely be on the table as well, he suggested.

    Flextronics Shares Jump After Hours On Strong FY Q2 Results

    Flextronics (FLEX) shares are trading sharply higher after hours on better-than-expected results for the fiscal second quarter ended October 1.

    For the quarter, FLEX posted revenue of $7.4 billion and adjusted profits of 23 cents a share, ahead of the Street consensus at $7.01 billion and 20 cents.

    For FY Q3, the contract electronics manufacturer sees revenue of $7.5 billion to $7.7 billion, and adjusted EPS of 23-25 cents a share; the Street has been projecting $7.44 billion and 22 cents.

    The company also noted that it bought back $195 million of stock in the quarter.

    FLEX in late trading is up 71 cents, or 11.1%, to $7.11.

    Friday, March 29, 2013

    Over or Under: 4 Quarters Until Annaly Raises Dividend?

    With interest rates at historic lows, many yield-hungry investors have flocked to the mREIT sector for the robust dividends. Annaly Capital Management (NYSE: NLY  ) is one of the biggest players in the space and sports a staggering +11% annual dividend yield. However, as long-term rates on new agency mortgage-backed securities, Annaly's primary focus, have come down, so has Annaly's dividend.�In this video, Fool financial analysts David Hanson and Matt Koppenheffer discuss whether Annaly shareholders can expect an increase soon, and if not, is that a reason to sell?�

    There's no question Annaly Capital's double-digit dividend is eye-catching. But can investors count on that payout sticking around? With the Federal Reserve keeping interest rates at historically low levels, Annaly has had to scramble to defend its bottom line. In The Motley Fool's premium research report on Annaly, senior analysts Ilan Moscovitz and Matt Koppenheffer uncover the key challenges the company faces and divulge three reasons investors may consider buying it. Simply click here now to claim your copy today!

    Top Stocks To Buy For 3/28/2013-5

    Thomas & Betts Corporation (NYSE:TNB) recently hit 52 week peak price $56.83, opened at $55.45 scored +0.63% closed $56.08. TNB traded on over 0.62 million shares in comparison to average volume of 0.38 million shares.

    TNB has earnings of $137.74 million and made $2.00 billion sales for the last 12 months. Its quarter to quarter sales remained 11.49%. The company has 51.82 million of outstanding shares and 51.59 million shares were floated in the market.

    TNB has an insider ownership at 0.59% and institutional ownership remained 94.07%. Its return on investment (ROI) for the last 12 month was 6.16% as compare to its return on equity (ROE) of 9.81% for the last 12 months.

    The price moved ahead +10.28% from the mean of 20 days, +13.55% from 50 and went up 31.92% from 200 days average price. Company�s performance for the week was 4.12%, +14.47% for month and yearly performance remained 62.17%.

    Its price volatility for a month remained 2.56% whereas volatility for a week noted as 2.17% having beta of 1.36. Company�s price to sales ratio for last 12 months was 1.45 while its price to book ratio for the most recent quarter was 2.03 and its earnings before interest, tax, depreciation and amortization (EBITDA) remained 301.82 million for the past twelve months.

    3 Reasons to Sell Annaly Capital

    Times are still tough for agency mortgage REITs such as Annaly Capital (NYSE: NLY  ) , but a healing economy, rising mortgage rates, and whispers regarding an eventual end to the Federal Reserve's quantitative easing program have spurred investors to send Annaly's stock higher over the past week or so.

    Is it time to buy in? There are a few headwinds here, some that are part and parcel of investing primarily in agency paper, and at least one that is of Annaly's own making. Here are three issues that investors considering a stake in Annaly should take under advisement -- and might very well cause current investors to think about selling.

    Management shakeup seems dicey
    This spring, Annaly management will ask its shareholders to vote on a new management setup, which will change the current method of management by insiders to one that is carried out by an external company. As management points out, this is not uncommon in the mREIT universe. However, there are a couple of things that stockholders should be aware of that make this idea look less enticing for investors.

    One confusing aspect is the makeup of the new management entity -- which will consist of Annaly's current management. This seems a bit strange, to say the least, and here's another thorny issue: Analysts note that, if the change goes through, management's pay will no longer be disclosed. In the current climate of increased calls for transparency and stockholder say-on-pay, this aspect looks very fishy.

    Dwindling dividends and a shrinking spread
    Annaly is well known for paying out excellent dividends, but that hasn't been the case for some time. Over the past two years, Annaly's dividend has been on a downward spiral, with the most current quarterly payout sitting at $0.45. Compared to other agency players, like American Capital Agency (NASDAQ: AGNC  ) , which has paid out its juicy $1.25 dividend for the past five quarters, and Capstead Mortgage (NYSE: CMO  ) which actually raised its payout�by one penny for the first quarter of this year, Annaly looks like it is losing ground.

    In addition, its spread -- the source of most of its income -- has shrunk to a measly 0.95%. Compare this to American Capital Agency's 1.63% and Capstead's 1.13%, and you can see why Annaly's dividend is looking somewhat anemic.

    The exit of Fannie and Freddie could hurt Annaly
    An especially problematic issue is that of the government's winding down of government-sponsored entities Fannie Mae and Freddie Mac. Of course, the exit of the two GSEs that currently back the lion's share of mortgage-backed securities might put all agency mREITs in peril. But Annaly, as the largest of all these players, would probably suffer the most, as investor concerns regarding the winding-down process impact the value of its current holdings -- and, very possibly -- make finding new investments with an acceptable risk level more difficult.

    Should these issues cause investors to run from Annaly? Not necessarily. It is always better to be safe than sorry, though, and knowing all the facts before you make any important decision -- particularly one concerning investing -- should be priority No. 1.

    Even with decreases, Annaly's dividend isn't the worst. But can investors count on that payout sticking around -- or, more importantly, increasing in time?� With the Federal Reserve keeping interest rates at historically low levels, Annaly has had to scramble to defend its bottom line. In The Motley Fool's premium research report on Annaly, senior analysts Ilan Moscovitz and Matt Koppenheffer uncover the key challenges the company faces and divulge three reasons investors may consider buying it. Simply click here now to claim your copy today!

    Wal-Mart Takes Another Shot at Best Buy

    Best Buy (NYSE: BBY  ) has been beaten up by online competition in recent years and now it may have to fight off quick delivery from Wal-Mart (NYSE: WMT  ) as well. Wal-Mart announced yesterday that it would test locker storage for goods people order on the Internet. This would allow Wal-Mart to combine the ordering ease of Amazon.com�with the quick delivery of any item while still eliminating the headache of shopping in the store.

    Best Buy is the one retail stock that's down on the news today, falling more than 3% for a short period in the middle of the trading day, because it is affected the most by these retail innovations.

    Losing the one advantage it has left
    Best Buy used to rely on people coming into stores and turning knobs, testing TVs, and eventually buying something and walking out the door. But the comfort of online shopping has become more popular�and the need to physically test items is diminishing. This has taken away Best Buy's biggest advantage.

    To make matters worse, it is also fighting growing electronics footprints at Target�and Wal-Mart, where you can also pick up bread and milk. If Wal-Mart is now combining the ease of online shopping with the speed of drive-thru shopping it puts Best Buy in an even further hole. In time, there's no reason Target couldn't do something similar.

    Another hit to Best Buy
    Best Buy can't seem to out-innovate its competitors, allowing them to eat up sales with a more convenient shopping experience. Meanwhile, management has been spending time fighting off takeover bids instead of finding ways to improve the business. I'm rooting for Best Buy to survive but Wal-Mart's latest innovation is another reason it might not.

    More on Best Buy

    The brick-and-mortar vs. e-commerce battle wages on, with Best Buy caught in the middle. After what might have been its most tumultuous year in history, there are now even more unanswered questions about the future for the big-box electronics retailer. How will new leadership perform? Will old leadership take the company private? Will a smaller store format work out for both the company and its brave investors? Should you be one such brave investor? To help answer all these questions, The Motley Fool has released a new premium research report detailing the opportunities -- and the risks -- in store for Best Buy. Simply click here now to claim your comprehensive report today.

    Thursday, March 28, 2013

    SAIC Pops 5% After Special Dividend News

    Shares of SAIC (SAI) are up 5% today after the company announced late yesterday a special $1 per share dividend, payable on June 28.

    “We consider this a demonstration of our continuing confidence in the strength of our financial base, our plan of balanced capital deployment, and our commitment to deliver shareholder value,” said John Jumper, CEO.

    It also didn’t hurt that fourth-quarter earnings and revenue beat Wall Street estimates, according to FactSet.

    My colleague David Englander wrote a bullish Stock Alert about SAIC last week (sub required):

    In the next 12 months, the company plans to spin off its slower-growing government information-technology services business. The remaining company will deliver solutions focused on fast-growing, high-priority industries like national security, health care and engineering.

    The spinoff could unlock significant value. Cai von Rumohr, who covers SAIC for Cowen, estimates that SAIC is worth $17 a share on a sum-of-the-parts basis. Over the next 18 months, as SAIC completes the spinoff, he thinks that value could be realized, implying over 35% upside.

    After today’s rise, SAIC has gained about 20% this year.

    12.1 Million Reasons for Baidu to Bounce Back

    The bears keep piling up on Baidu (NASDAQ: BIDU  ) .

    Nasdaq's bi-monthly update shows that a record 12.1 million shares were sold short as of mid-March. To place those negative wagers in perspective, China's leading search engine only had 8.7 million shares sold short when 2013 began. The number of naysayers has actually more than doubled over the past year.

    Is Baidu broken? Can it bounce back?

    The bullish counter is that Baidu has never been cheaper. As earnings continue to grow and the share price shrinks, the fallen dot-com darling's valuation contracts. Baidu is now trading at just 16 times this year's projected profitability and less than 13 times next year's target.

    Just to put this in context, Russia's Yandex�is going for more than 17 times next year's profit forecast and slower-growing Google (NASDAQ: GOOG  ) is fetching more than 15 times next year's projected earnings.

    This wouldn't seem like such a bargain if Baidu's financials were in a state of decline, but clearly they're not.

    The long road back for Baidu
    Chinese stocks had a rough earnings season earlier this year.

    Results for the fourth quarter were generally mixed, but most of China's bustling Internet companies disappointed investors with their guidance for the current quarter. There's a natural seasonal slowdown this time of year, but the sequential weakness was made worse by a late start to the Chinese New Year this time around.

    Baidu's guidance -- calling for a 4% to 7% sequential dip in revenue -- wasn't welcome, but many of China's once shining dot-com stars checked in with outlooks calling for double-digit percentage declines.

    Qihoo 360 (NYSE: QIHU  ) was one of the rare exceptions. The company behind the leading Internet browser and security software suite that has become a thorn in Baidu's side since rolling out a search engine of its own bucked the trend.

    To be fair, Qihoo 360 is also growing a lot faster than most of its online peers. However, Qihoo 360 is also trading at 19 times next year's earnings.

    Waiting on good news
    Baidu hit a two-year low last week, so for now those 12.1 million shorts are in the black.

    What would shake them out? What would make the bears scramble for the exits?

    A no-brainer catalyst would be an improving perspective, and that's actually starting to happen. After months of seeing Wall Street pros whittle down their profit targets on Baidu, the pros are starting to turn.

    It's not much.

    The same analysts that thought Baidu would earn $5.39 a share this year and $6.77 a share next year just a month ago are now perched on $5.40 a share and $6.78 a share, respectively. It's a baby step, but it's a step in the right direction.

    The next step would be Wall Street warming up to Baidu with upgrades. The last major analyst move was a downgrade by Stifel Nicolaus last month after the company's disappointing quarterly report.

    Baidu can naturally make its own luck here. It reports first-quarter results in four weeks, and nothing would trigger a short squeeze as much as a solid report.

    Growth should be there. Even these uninspired analysts see earnings climbing 21% and revenue spiking 43% higher in next month's report.

    Would it be great to see margins improve? Yes. Would it be great to see Baidu's net income grow a little faster? Sure. However, the market's in love with Google right now, yet it's slated to grow its profitability just 6% during the same period on a per-share basis. Qihoo 360 is actually expected to post a sharp decline in profitability as it invests in the monetization of its growing traffic.

    In a few weeks, Baidu may no longer appear to be the laggard in this lucrative niche.

    Don't turn your back on China
    Save for a few exceptions -- we meet again, Qihoo 360 -- investors have avoided Chinese stocks in recent months. It's not just Baidu dragging its knuckles on the floor.

    However, this is still a potent company with a growing of number of shorts that will have to move the stock higher as they close out their positions. If China gets more restrictive online, the bears will win. If Qihoo 360 somehow gains market share now that it's finally slapping Google ads on its results, the bears will win. If there are accounting shenanigans at Baidu, the bears will win. If China's economy stops growing, the bears will win.

    Any of these things will happen, but isn't the more likely scenario that Baidu will once again prove that it's still growing at a clip that's worthy of a far higher multiple? You can't ignore a company serving up 5 billion search queries a day that's cranking out some of the highest margins in the industry.

    The bears think they have this one. The chart shows them to be victorious, and there's safety in numbers with the number of shares sold short more than doubling over the past year. However, the nice thing about a beaten-down stock is that it often doesn't take a lot of catalysts to turn things around.

    Betting on Baidu?
    Regardless of your short-term view on the Chinese economy, there may be opportunity in Baidu (aka the "Chinese Google"). Our brand-new premium report breaks down the dominant Chinese search provider's strengths and weaknesses. Just click here to access it now.

    Even Affluent Women Fear Becoming ‘Bag Ladies’

    (Photo: AP)

    Irrational fears are often a source of amusement: aliens, monsters, 1950s Gort-style robots gobbling old people’s medicine for fuel. On the surface, degenerating to the point of a destitute bag lady might elicit a smirk, but a new study from Allianz Life makes clear it’s nothing to laugh about.

    Although 60% of women say they are the primary breadwinner in their household and more than half (54%) describe themselves as the household “CFO,” nearly half of all women fear becoming a "bag lady," according to the 2013 Women, Money & Power Study.

    The study, conducted with women ages 25 to 75 with a minimum household income of $30,000 a year, revealed this fear extends to all corners of life and affluence, and was highest among single respondents at 56%, but also a significant concern for divorced women (54%), widows (47%) and married women (43%).

    Despite feeling more empowered about financial planning and having more responsibility for financial decisions than ever before, many women believe that empowerment is potentially alienating to both men and other women. Forty-two percent said they believe financially independent women are intimidating to men and often end up alone, while nearly a third (31%) said those women are hard to relate to and often don’t have many friends. This feeling was even higher among single women at 47% and 32%, respectively.

    “When Allianz Life conducted the initial wave of [the study] seven years ago, we discovered that women everywhere—even well-educated, successful, financially independent women—have major gaps and unmet needs when it comes to achieving comfort and confidence with money,” Allianz Life vice president of consumer insights Katie Libbe said in a statement. “Today, women clearly feel more invested in financial planning, however, fears of fiscal failure still persist. The real message here is that the financial services industry needs to help women learn about money and prepare for their retirement.” Age of the Financially Empowered Woman

    Despite lingering insecurities, women feel more empowered today about financial planning and are more responsible for financial decisions than ever before. Fifty-seven percent of all women surveyed said they both “have more earning power than ever before” and also “handle major investment decisions and retirement planning.” More than half (55%) noted they take the lead in suggesting new investing or retirement ideas, and 60% said they were responsible for handling tax preparation and planning.

    More than 90% of women surveyed agreed that in today’s world, women need to be significantly more involved in financial planning than in the past, with the highest response (96%) coming from divorced women. Sixty-seven percent of women surveyed said that becoming more knowledgeable and involved in managing their finances has improved the quality of their life, with the highest response (71%) coming from single women.

    Financial Crisis Drives Behavior Change

    The financial crisis of 2008-2009 was a major driver of this behavioral change, with seven in 10 (68%) saying they have increased their financial involvement since the crisis, particularly women ages 45-54 (72%) and widows (75%). Yet, despite the increased involvement after 2008, 43% of women surveyed said they don’t feel any smarter about how to manage their money than before the crash. That feeling was shared by 36% of women with the highest income (household income of $200,000 or more).

    This builds on the idea that, in addition to the bag-lady concern, a majority of women still have significant concerns about retirement planning and their level of preparedness for retirement. When asked what key issues will have the greatest effect on their retirement outlook, “lack of adequate retirement savings” was the highest ranked issue by 43% of women surveyed, besting other economic concerns such as “the future of Social Security,” “rising health care costs,” “unemployment” and “tax changes.” Similarly, retirement is the worry that keeps most women up at night. Second only to loss of spouse/significant other, “running out of money in retirement” is a worry that keeps 57% of women up at night and is the No. 1 worry for single and divorced women.

    -----

    Read Advisors vs. the Bag Lady Nightmare: 4 Women Talk Money With Terry Savage on AdvisorOne.

    Best Stocks To Invest In 2011-12-20-1

    Lam Research Corporation (NASDAQ:LRCX), a leading global supplier of semiconductor wafer fabrication equipment and services, has been named the recipient of Taiwan Semiconductor Manufacturing Company’s (TSMC’s) “2011 Supplier Excellence Award in Technology Development Collaboration” for its work in helping TSMC accelerate its transition to next-generation technology nodes.

    Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipments used in the fabrication of integrated circuits.

    Silicon Laboratories Inc. (Nasdaq:SLAB) announced a satisfactory settlement of its litigation against Airoha Technology Corporation. Under the settlement, Airoha has purchased a license on mutually acceptable terms and conditions.

    Silicon Laboratories is an industry leader in the innovation of high-performance, analog-intensive, mixed-signal ICs.

    Onyx Pharmaceuticals, Inc. (Nasdaq:ONXX) announced that it will host a teleconference and webcast to reprise key carfilzomib data presentations that were featured at the 53rd American Society of Hematology (ASH) Annual Meeting in San Diego, California . The teleconference will begin at 10:00 a.m. PT on December 13 , 2011.

    Onyx Pharmaceuticals, Inc., a biopharmaceutical company, engages in the development and commercialization of therapies that target the molecular mechanisms causing cancer the United States, Canada, and Europe.

    Crown Equity Holdings, Inc. (CRWE)

    There are two different types of VoIP service. The first is often used by individual consumers. Also known as Internet Telephony, this type of VoIP uses a standard landline and broadband service with an adapter and a VoIP subscription to connect all calls. While some businesses are small enough to consider use of this kind of VoIP system, most businesses will be looking at the second kind of VoIP system. This type of system, designed to link multisite locations to a single line, uses equipment installed at the location to route phone calls through the Internet.

    Additionally, you should know that there are two VoIP phone options: hosted and premise-based. Hosted VoIP uses no phone lines and has a single broadband connection for both data and voice. Calls are generally charged per use. In contrast, premise-based VoIP uses standard phone lines connected through the Internet and requires a second broadband connection (one for data and one for voice). Calls are generally charged per line.

    Crown Equity Holdings, Inc., together with its digital network, currently provides electronic media services specializing in online publishing, which brings together targeted audiences and advertisers. Crown Equity Holdings Inc. offers internet media-driven advertising services, which covers and connects a range of marketing specialties, as well as search engine optimization for clients interested in online media awareness.

    Crown Equity Holdings Inc. (CRWE.OB) announced that its subsidiary Crown Tele Services Inc. has entered into a letter of intent with AVIX Technologies, Inc., which sets forth terms by which AVIX Technologies, Inc. will acquire an exclusive licensing agreement for Canada and a non-exclusive global licensing agreement in the hospitality, foodservice and tourism industries for telecommunications including VoIP (Voice Over Internet Protocol) telecom technology systems for residential and commercial services, calling card and cellular phone applications.

    Crown Tele Services Inc. is a provider of affordable, world class (VoIP) communications solutions and is a wholly owned subsidiary of Crown Equity Holdings Inc.

    For more information please visit official website of CRWE: www.crownequityholdings.com

    Is Mueller Water the Perfect Stock?

    Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?

    One thing's for sure: You'll never discover truly great investments unless you actively look for them. Let's discuss the ideal qualities of a perfect stock, then decide if Mueller Water (NYSE: MWA  ) fits the bill.

    The quest for perfection
    Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:

    • Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it's certainly a better sign than a stagnant top line.
    • Margins. Higher sales mean nothing if a company can't produce profits from them. Strong margins ensure that company can turn revenue into profit.
    • Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management's attention. Companies with strong balance sheets don't have to worry about the distraction of debt.
    • Money-making opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.
    • Valuation. You can't afford to pay too much for even the best companies. By using normalized figures, you can see how a stock's simple earnings multiple fits into a longer-term context.
    • Dividends. For tangible proof of profits, a check to shareholders every three months can't be beat. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.

    With those factors in mind, let's take a closer look at Mueller Water.

    Factor What We Want to See Actual Pass or Fail?
    Growth 5-Year Annual Revenue Growth > 15% (3.7%) Fail
    1-Year Revenue Growth > 12% (3.9%) Fail
    Margins Gross Margin > 35% 18.4% Fail
    Net Margin > 15% (2.7%) Fail
    Balance Sheet Debt to Equity < 50% 172.2% Fail
    Current Ratio > 1.3 3.27 Pass
    Opportunities Return on Equity > 15% (8.8%) Fail
    Valuation Normalized P/E < 20 NM NM
    Dividends Current Yield > 2% 2.9% Pass
    5-Year Dividend Growth > 10% 0% Fail
    Total Score 2 out of 9

    Source: Capital IQ, a division of Standard & Poor's. NM = not meaningful due to negative earnings. Total score = number of passes.

    With a score of only two points, Mueller Water isn't very refreshing. The company still stands to profit from inevitable municipal spending to upgrade and repair a decaying water infrastructure, but with government budgets stretched to the limit, Mueller may have to wait a while before municipalities actually pony up the cash.

    Mueller makes pipe, valves, and other products related to creating water and wastewater systems for utilities and municipal governments. With rising populations causing ever-increasing demand for water, companies like Mueller, Veolia Environnement (NYSE: VE  ) , and Heckmann (NYSE: HEK  ) are all positioning themselves to take full advantage in their respective market niches. In particular, while Veolia is the largest water services company in the world, and Heckmann focuses on its China bottled water service as well as its pipeline to remove fracking fluids from sensitive oil and gas fields, Mueller stands to benefit when aging water systems get replaced.

    Increasingly, though, investors are skeptical that local governments will have the resources to go forward with this work, leaving Mueller in an uncomfortable situation. Moreover, with alternatives such as Insituform Technologies (Nasdaq: INSU  ) and its less expensive, less disruptive in-place pipe patching process, cash-strapped cities and towns might well bypass Mueller entirely.

    Timing is all-important in investing, and Mueller is a great example of how being early to the game can sometimes cost you. Although it's in an industry that undeniably needs its services, Mueller may nevertheless not reach perfection in the near future.

    Keep searching
    No stock is a sure thing, but some stocks are a lot closer to perfect than others. By looking for the perfect stock, you'll go a long way toward improving your investing prowess and learning how to separate out the best investments from the rest.

    Finding the perfect stock is only one piece of a successful investment strategy. Get the big picture by taking a look at our "13 Steps to Investing Foolishly."