Filed under: Other issues, Columns, Walt Disney (DIS), JPMorgan Chase (JPM), Comcast Cl’A’ (CMCSA), United Technologies (UTX), Stocks to Buy, Housing

When thinking about the current state of the market, forget about bulls and bears and think slacker.

You know, the type of young person living at home with his parents — usually a guy — who spends their days sitting on the coach playing video games in their underwear whining about their lot in life. Like this annoying protagonist, the stock market doesn’t know what it wants to do, surging from irrational exuberance to manic depression in the blink of an eye.

Uncertainty abounds over the subprime mortgage meltdown, retail sales and whether Lindsey Lohan’s latest stint in rehab will take. (Okay, that’s what I am uncertain about). But remember that some smart person once said that without risk, there is no reward and that markets don’t act crazy forever. Until the market takes a huge chill pill, there are many stocks out there that are too cheap too ignore — some of which I discuss in this video.

Among the stocks I like are Walt Disney Co. (NYSE: DIS). It trades a ridiculously low multiple to its peers and continues to pull rabbits — such as “High School Musical” — out of its hat year after year. Plus, with the dollar being weak the U.S. becomes an attractive tourist destination for foreigners. That’s good news for Walt Disney World and Disneyland.

United Technologies Corp. (NYSE: UTX), whose stock has gotten pounded lately despite posting solid earnings, is worth considering. Bold types should consider Comcast Corp. (NASDAQ: CMCSA), which is hated by Wall Street even though its cash flow generation is strong and JPMorgan Chase Co. (NYSE: JPM) seems to have its subprime problems under control. If any Wall Street CEO can ride this tsunami it’s Jamie Dimon.

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Filed under: Management, Private equity, Goldman Sachs Group (GS), BP p.l.c. ADS (BP)

Private equity firm Riverstone Holdings has invested more than $6 billion in the energy and power space. According to the website: “The current transformation of the energy and power industry is creating market inefficiencies and dislocations that require significant capital investment and exceptional management teams. Riverstone is a catalyst, playing an active and opportunistic role in the ongoing restructuring of the energy and power industry.”

Well, this week, the firm got a new team member - Lord John Browne. He certainly understands the energy market; that is, he was the former CEO of BP (NYSE: BP).

Now, he will be a managing director of Riverstone.

Interestingly enough, he was serving as an advisor and chairman to private equity firm Apax Partners, which is a more general purpose fund. But, he has resigned from that post. He is also no longer on the board of Goldman Sachs (NYSE: GS).

So, I guess Lord Browne will have lots of time to devote to his new gig. And, in light of his extensive background in the energy business, it does look like a big win for Riverstone.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

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Filed under: Industry, BP p.l.c. ADS (BP), Oil

BP plc (ADR) (NYSE: BP), the oil giant that markets itself as environmentally friendly, has learned that it’s best to practice what you preach.

After a month of controversy over the planned $3.8 billion expansion of its Whiting, Ind., refinery — and how much extra pollution would enter Lake Michigan as a result — BP said it will not increase the amount of pollutants flowing out of the refinery into the lake. The company had applied for and received a new permit from the state of Indiana allowing it to dump more pollutants — 1,584 pounds of ammonia per day (a 54% increase from the old limit) and 4,925 pounds of suspended solids (a 35% increase). The solids are tiny sludge particles that pass through water-treatment filters. The permit has been controversial ever since the Chicago Tribune reported about it in mid-July.

Environmental groups, Chicago Mayor Richard Daley, Illinois Governor Rod Blagojevich, the U.S. House of Representatives and Illinois Senator Dick Durbin all pressured BP to stick to its old pollution limits. Opponents gathered 100,000 petition signatures against BP’s plans. Lake Michigan is the source of drinking water for Chicago and many other communities and also attracts many sport fishermen. The Whiting refinery is only about 18 miles south of Chicago and is the largest refinery in the Midwest and the fourth-largest in the nation. The expansion would boost output by 30 to 90% at the 400,000-barrel-a-day refinery, which processes Canadian heavy crude.

BP says it will explore ways to expand the refinery without increasing pollution. BP made the right decision to pull back from its pollution plans, but I wonder why they didn’t think ahead of time about how the issue would play in public. Indiana can share some of the blame: Their permit appears to have allowed BP to violate the Clean Water Act and it also exempts BP from tough limits on mercury pollution until 2012. Score one for the citizens of Chicagoland in protecting their water supply.

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Filed under: Internet, Columns, Business of sports

Before you get mad at me and leave nasty comments, this isn’t my idea. Yahoo! Sports writer Dan Wetzel has actually suggested that kids who play in the nationally-televised Little League World Series should be paid $1,000 per game. I’m not kidding. Here’s a quick summary of his reasoning:

1. Advertisers and the networks (and the non-profit Little League Inc.) make a lot of money from the event — and the kids are the ones who play.
2. Many of these young athletes come from developing countries, and a few thousand dollars could go a long way toward providing educational opportunities that they might otherwise miss out on.
3. The event has already been corrupted: “There has long been cheating in Little League, from doctoring birth certificates to playing out-of-district ringers.”

Here’s the problem with these arguments:

Continue reading Should Little Leaguers be paid?

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Filed under: Good news, Consumer experience, Rants and raves, Competitive strategy, Marketing and advertising, Merrill Lynch (MER), MasterCard Inc’A’ (MA), Monster Worldwide (MNST), Symantec Corp (SYMC)

On August 16th, Symantec Corporation (NASDAQ: SYMC) informed Monster Worldwide, Inc. (NASDAQ: MNST) of a thread of malicious software, called Infostealer.Monstres, which uploaded 1.3 million entries with personal information from a remote server. The information contained on this server was limited to names, addresses, phone numbers and email addresses.

It took Monster Worldwide five days to comment on the situation. “Regrettably, opportunistic criminals are increasingly using the Internet for illegitimate purposes,” the company said in a statement Wednesday. The company is in the process of reaching out to its users and law enforcement on this issue.

Now, one might quickly say, “five days is a long time to keep quiet about this,” but you’d be mistaken. Take a look at a few of the recent security breeches and how fast the response has been from corporations:

• Back on June 17th, 2005, MasterCard Incorporated (NYSE: MA) announced the information from 40 million credit cards “may” have been stolen. According to CardSystems, a third party processor of payment data, the credit card theft possibly occurred late last month, CNet.com reported. The company continued to say, “It identified a ‘potential security incident’ on Sunday, May 22nd and called the FBI the next day.

• CNBC’s Charlie Gasparino reported earlier this month that a ‘major identity-theft incident’ occurred at Merrill Lynch & Co., Inc. (NYSE: MER). According to his sources, the device stolen from Merrill’s corporate offices included personal information, including Social Security numbers, of nearly 33,000 employees. Gasparino said the incident allegedly occurred two weeks ago, but Merrill is now “only getting around to telling people.”

• Massachusetts-based TJX Companies, Inc. (NYSE: TJX) reported on the week of January 15th than an “unauthorized intruder” gained access to its systems in mid-December, taking 45.6 million credit card and debt card numbers over a period of 18 months.

Monster Worldwide should be applauded on its immediate response on the matter. While the data stolen did not include credit card numbers or social security numbers, people need to be know what is happening with the information they hand out to websites.

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Filed under: Apple Inc (AAPL), Wal-Mart (WMT), Columns

Welcome to the 25th installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions and just a bit of everything else when it comes down to a very hot topic these days: Wal-Mart.

This past week, I discussed Wal-Mart Stores, Inc.’s (NYSE: WMT) unorthodox pricing scheme. Prices ending in $x.87 and $x.76 are common in Wal-Mart stores. In addition, the world’s largest retailer rarely has “sales” in the general retail sense, opting instead for “everyday low prices” and “rollbacks” as its primary means of indicating to shoppers that Wal-Mart does indeed have “Always Low Prices.”

Is that pricing strategy enough to keep the retailer growing every single year? Hard to say — but a recent admission by the retailer that it is now selling non-protected digital music files for $0.94 is actually quite profound and may end up giving Apple, Inc. (NASDAQ: AAPL)’s iTunes music store a run for its money, iPod ecosystem or not. Read on.

Continue reading The Wal-Mart Weekly: non-protected music downloads will be huge

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Filed under: China, Options

China Petroleum & Chemical (NYSE: SNP) volatility up into 8/27 EPS & Outlook. SNP, an energy and chemical company based in the People’s Republic of China, is expected to report EPS on August 27. SNP is recently up $4.12 to $107. SBSH said on August 22: “We value SNP ADRs at $104 based on a sum-of-the-parts analysis.” WTI Crude Futures are up 1.61% to $70.96 according to Bloomberg. SNP September option implied volatility of 42 is above its 26-week average of 33 according to Track Data, suggesting larger price risk.

CNOOC Ltd (NYSE: CEO) put volatility Elevated into EPS & Outlook. CEO as of 12/31/06, CEO owned net proved reserves of approximately 2.53 billion barrels of oil. CEO is expected to report EPS on August 29. CEO is recently up $2.28 to $117.28. WTI Crude Futures are up 1.61% to $70.96 according to Bloomberg. CEO September call option implied volatility is at 32, puts are at 46; above its 26-week average of 30 according to Track Data, suggesting larger risk.

PetroChina (NYSE: PTR) put volatility at 41 after reporting net profit increase. PTR, a People’s Republic of China run petroleum and natural gas company, is recently up $3.71 to $144.35. PTR reported that its net profit for the first half of 2007 was up 1.4% from the first half of 2006. WTI Crude Futures are up 1.61% to $70.96 according to Bloomberg. PTR call option implied volatility is at 25, puts are at 41. PTR 26-week average option implied volatility is 29 according to Track Data. PTR puts are expensive because PTR is not easy to borrow.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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Filed under: Competitive strategy

Is it time to jump back into Quest Diagnostics (NYSE: DGX)?

Quest Diagnostics, which provides laboratory services to roughly 50% of the nation’s doctors and hospitals, fell out of favor after it lost a large client, amid building price pressure.

Slowing growth, and an above-average sector valuation also were data points offered by those making the bearish case.

The bullish case, on the other hand, argues that Quest’s recent cost cutting initiatives, strong cash flow, and growing demand for sophisticated medical tests (bolstered by that old standby, the aging Baby Boomer generation) suggest solid long-term growth prospects for DGX. Quest is trading around $55 with a P/E of 19.

(Note: Technical analysis agnostics stop reading here. All others, continue.)

From a technical analysis standpoint, Quest’s chart appears to have formed a double-bottom around $47.90 in March/April and May/June.

Investment Category: Quest is a moderate-risk stock not suitable for low-risk investors. The Reuters 2007 and 2008 earnings per share consensus estimates for DGX are $2.87 and $3.25, respectively.

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Filed under: Earnings reports, Analyst upgrades and downgrades, Microsoft (MSFT), Cisco Systems (CSCO), Hewlett-Packard (HPQ), Motorola (MOT), International Business Machines (IBM), Advanced Micro Dev (AMD), Oracle Corp (ORCL), Technical Analysis, Stocks to Buy

Manufacturers and resellers generally prefer to do business with large, well-established distributors. On the electronics side, one of the biggest such outfits is headquartered in Phoenix. It serves customers in 70 countries.

Avnet (NYSE: AVT) distributes electronic components, computer products, software and embedded subsystems to more than 100,000 manufacturers and resellers in the Americas, the Middle East, Asia, Africa and Europe. The Electronics Marketing division provides such products as semiconductors, electronic connectors, electronic wires and cables, electromechanical products and interconnect assemblies. The Technology Solutions division sells mid- to high-end servers, enterprise computing systems, data storage products and software. The firm also provides financial and technical services. Suppliers include Advanced Micro Devices (AMD), Cisco Systems (CSCO), Hewlett-Packard (HPQ), IBM (IBM), Microsoft (MSFT), Motorola (MOT) and Oracle (ORCL).

The firm pleased investors earlier in the month, when it announced fiscal Q4 EPS of 81 cents and revenues of $4.24 billion. Analysts had been expecting 76 cents and $4.2 billion. Management also guided Q1 EPS to 69-73 cents (73 cent consensus), Q1 revenues to $4.0-$4.2 billion ($4.12B consensus) and FY08 EPS to $3.17-$3.31 ($3.15 consensus). Citigroup subsequently upgraded the issue from “hold” to “buy.” The earnings news ultimately popped the stock into a bullish “pennant” consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Altogether, brokers now recommend the shares with two “strong buys,” four “buys” and four “holds.” Analysts see a 17% average annual growth rate through the next five years. The AVT P/E ratio (14.92), Price to Sales ratio (0.37), Price to Book ratio (1.72), Price to Cash Flow ratio (13.04), Price to Free Cash Flow ratio (8.77), Sales Growth rate (17.32%) and EPS Growth rate (35%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $18.28 and $44.68. A stop-loss of $33.70 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

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Filed under: Earnings reports, Conventions and conferences, Novell Inc (NOVL)

Monday August 27

• Shanda Interactive Entertainment Ltd (NASDAQ: SNDA) to report Q2 earnings; conference call at 9am.
• Landstar System Inc (NASDAQ: LSTR) to hold Q3 mid-quarter conference call at 2pm.

Tuesday August 28

• Corinthian Colleges Inc (NASDAQ: COCO) to report Q4 earnings; conference call at 12pm.

Wednesday August 29

• TiVo Inc (NASDAQ: TIVO) to report Q2 earnings; conference call at 5pm.
• Novell Inc (NASDAQ: NOVL) to report Q3 earnings; conference call at 5pm.

Thursday August 30

• Freddie Mac Corp (NYSE: FRE) to report Q2 earnings; conference call at 10am.
• Novellus Systems Inc (NASDAQ: NVLS) to hold Q3 mid-quarter conference call at 4:30pm.
• PDUFA Date for Tericia Inc (NASDAQ: TRCA) for Somatuline Autogel for acromegaly.

Friday August 31

• Blyth Inc (NYSE: BTH) to hold Investor Q&A conference call at 2pm.

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