April 30, 2012
Equities Sector Coverage: Wall Street Dips Into the Red
 Personal Income came in at +0.4% in March with Spending up 0.3%. The Chicago PMI came in at 56.2 in April, below expectations, and the lowest reading since November 2009. The Dow Jones Industrial Average traded down to 13,176.01 then rebounded above 13,200 into the final half hour of trading staying below its March 16th high at 13,289.08. The NASDAQ’s traded down to 3043.25 staying below it’s March 27th high at 3134.17. Asian stocks were mixed on Monday. The Nikkei 225 was closed on Monday. The Hang Seng ended their session at 21,094 – up 1.70% on the day. European exchanges were lower on Monday. The FTSE 100 ended their session at 5,738 – down 0.19% on the day. The DAX ended their session at 6,761 – down 0.59% on the day. The CAC 40 ended their session at 3,213 (more)…
Iconix Brands: A Stable of Premium Brands with Star Power at a Discount Price
 Legendary investor Warren Buffett has always believed in buying a simple business that is easy to understand. Iconix Brand Group (ICON) is as simple a business that you could ever find. The company possesses a stable of leading brands that they license to manufacturers and major retailers throughout the world. Consequently, not only is their business very simple, but it’s also one of the lowest capital-intensive business models I’ve ever seen. Iconix owns the brands and leaves all the heavy lifting such as design, manufacturing, distribution, warehousing and finally retailing to its licensees. However, the company does support its licensees with advertising and product development. The following F.A.S.T. Graphs™ plots the earnings and price relationship on Iconix Brands since the beginning of 2006. As we can see, earnings (the orange line) have grown at a significantly above-average rate of 18.8 (more)…
Facebook: Just an Overpriced Combination of Google and Zynga
 If Facebook (FB) launches with a $100 billion valuation, Mark Zuckerberg, with a controlling stake of the company, is personally worth $50 billion to the platform. That’s the only takeaway one can have after looking through Facebook’s latest IPO registration statement, which showed continued decelerating growth in the company’s two revenue drivers, advertising and payments. The law of large numbers appears to have caught up to Facebook early, as sequential and year-over-year growth have dropped significantly in the past two quarters. When Facebook was growing revenues over 100% per year, it was okay to give the company the benefit of the doubt and throw a fat multiple on what it was taking in. Now that such hypergrowth has stopped, at least for the time being, it seems fair to compare its revenues to its peers. Facebook can be thought of (more)…
A Brief History of Corporate Bribery
 The recent revelations that Wal-Mart (WMT) executives in Mexico had been engaging in widespread and wholesale bribery of officials in order to accelerate the construction of new stores rocked the retail giant last week. The scandal could reach the highest levels at Wal-Mart, with even CEO Michael Duke potentially being implicated in the cover-up, and the alleged violations of the Foreign Corrupt Practices Act (FCPA) of 1977, which makes bribery of foreign officials illegal for American companies, could mean a costly mistake on the part of the Arkansas-based company. While the facts behind this case are still drawn entirely from the New York Times article that exposed the corruption, it certainly appears as though this will ultimately be revealed to be one of the biggest examples of corporate bribery in history. Or does it? Here’s a look back at some (more)…
4 Bargain Small-Cap Financial Stocks on the Rise
 The financial sector, as a whole, appears to be on the rise. Since December, a combination of easing of concerns about Europe, strong earnings reports, and successful stress tests have helped the sector rebound from its previously moribund state. Since November 24 of last year, the Financial Select Sector SPDR (XLF), an ETF that tracks the financial sector, has gained over 30 percent, showing the sector as a whole has been on the rise. Given the potential that the financial sector is rebounding, some investors may be seeking out cheap options to invest in the financial sector. While many will simply cull over the well known investment banks and hedge funds, there are also several small cap financial stocks that offer attractive valuations. The following stocks have P/E ratios under 15, meaning that they’re coming at a cheap price based on their (more)…
Big Week for Economic Reports
 Investor’s first read – Brooksie’s edge before the open Monday, April 30, 2012 9:10 a.m. ET DJIA: 13,228 S&P 500: 1403.36 Nasdaq Comp.: 3069.20 Russell 2000: 825.47 Manufacturing and employment reports will hog the spotlight this week. It was the disappointing March Employment Situation report that triggered a sharp break in stock prices in early April. However, last week’s sudden rebound came just in time to cut short the final stages of a Head & Shoulders top formation that stood to result is a nasty correction (but not a bear market). The reason is unclear. Q1 earnings have been upbeat, and Fed chief Bernanke said last week that the Fed would do more to stimulate the economy if necessary. Perhaps some big hitters got wind of good news this week on the economic front. Worth noting, last week’s rally lacked (more)…
Confidence in Chinese Economy Grows
 Growing confidence that the worst is over for the Chinese economy pushed China stocks up sharply on Monday. The Hang Seng Index in Hong Kong jumped 1.7% to 21,094, and the index of Chinese companies rose 1.6% to 11,081. With markets closed in China and Japan, turnover was thin. The Hong Kong market will close for a holiday Tuesday. China stocks have been weak since a solid rally in January and February due to stubbornly high inflation and fast-sinking economic growth. The Hang Seng poked its nose back above 21,000 on April 20 but promptly sank on profit-taking. Monday’s charge over 21,000 might have more staying power. That’s because many investors may agree with a brokerage that said on its website Monday that China is shifting its focus from tightening credit to fight inflation to easing credit to support economic (more)…
April 27, 2012
Earnings on the Rise, But Can Stocks Go Higher?
 The late Benjamin Graham, the author and economist whose writings are probably the most influential on the subject of value investing, thought any stock with a P/E ratio above 16 had a price that was considered “speculative,” meaning too high a price to pay for value-minded investors. Here’s the problem: it has been almost 25 years since the S&P 500 average P/E ratio was lower than that for any length of time. For whatever reason, in the current environment, P/E Ratios of 15 are relatively low. If the market then drops to those levels is time to buy or a signal of trouble? In today’s economy, if a P/E ratio of 15 is low enough to make investors take notice, then a P/E ratio of 14 might be low enough to make them take action; if so, now is the (more)…
Wood Stocks: A Look a Lumber Companies for Arbor Day
 Finally! The one day a year that we get to celebrate…wood. Well, trees, to be accurate. Today is Arbor Day, the day on which people are meant to gather to care for and celebrate trees. The holiday dates back to April 10, 1872 when an estimated one million trees were planted. The holiday originated in Nebraska City, NE, which might seem odd to anyone who has driven through Nebraska as there doesn’t appear to be anything growing there aside from corn. However, what better way to celebrate Arbor Day than to explore those companies that make their money from trees. Granted, most of these companies either profit from cutting down trees or making things out of dead trees, which would, in fact, make them wildly inappropriate for today, but lets not split hairs! Lumber Stocks Lumber is not the industry (more)…
Equities Sector Coverage: Stocks End Week Higher Despite Disappointing GDP Growth
 The Advanced reading of Real GDP for the first quarter of 2012 came in below expectations at just 2.2%. A drag was Business Investment which was down 2.1%, the first decline since Q4 2009. The University of Michigan reading on consumer sentiment for the month of April came in at 76.4, the highest level since February 2011. The Dow Jones Industrial Average rallied to a day’s high at 13,266.68 versus the March 16th high at 13,289.08. The NASDAQ’s rallied to a day’s high at 3076.44 versus the March 27th high at 3134.17. Asian stocks were lower on Friday. The Nikkei 225 ended their session at 9,521 – down 0.43% on the day. The Hang Seng ended their session at 20,741 – down 0.33% on the day. European exchanges were mixed on Friday but closed higher. The FTSE 100 ended their (more)…
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