Filed under: Earnings reports, Analyst upgrades and downgrades, Google (GOOG), Wal-Mart (WMT), Technical Analysis, Western Union (WU), Stocks to Buy

Do you know which company introduced the first consumer charge card? No? It also introduced the first successful stock ticker and was one of the original eleven stocks in the Dow Jones Average. Still no? What if I say that it completed the first transcontinental telegraph line across North America? Now you have it! Of course, the telegram is a memory.

Western Union Company (NYSE: WU) provides a range of money transfer and bill payment services worldwide. Its consumer-to-consumer operations involve multi-currency and real-time processing systems for walk-in, online, and telephone money transfers. Its consumer-to-business operations enable payments to utilities, auto finance companies, mortgage servicers, financial service providers, and governmental agencies. The firm also offers money order products and advance payment services. Western Union does business through a network of more than 320,000 locations, in over 200 countries and territories.

Investors were pleased last week, when the company reported Q3 EPS of 30 cents and revenues of $1.26 billion. The Street had been looking for 28 cents and $1.26 billion. D.A. Davidson subsequently upgraded the shares to “buy,” noting improved business in Mexico and optimism over newer relationships with Wal-Mart Stores Inc. (NYSE: WMT) and Google Inc. (NASDAQ: GOOG). Management also guided FY07 EPS to $1.11-$1.13, versus consensus of $1.08. The share price popped on the news and then moved into a bullish “flag” consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Altogether, brokers recommend the issue with six “strong buys,” five “buys,” eleven “holds” and one “sell.” Analysts expect a 14% growth rate, through the next year. The WU P/E ratio (20.42), Price to Free Cash Flow ratio (14.60), Operating Margin (27.13%), Net Profit Margin (17.45%), Return on Assets (15.50%), Return on Investment (23.26%) and Net Income per Employee ($140.88k) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 83% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $17.96 and $24.14. A stop-loss of $18.70 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: Internet, Google (GOOG), Yahoo! (YHOO), China, Initial public offerings, Technology

The IPO of Alibaba, the large Chinese e-commerce site, may show that the China stock markets are topping. The company appears to have raised $1.5 billion for about 17% of the company. This is good news for Yahoo! Inc. (NASDAQ: YHOO), which invested a billion dollars in the site, but it could also make the US portal look bad. If the China market moves down before Yahoo! can off-load some of those shares, its initial investment in the company may not look like a coup.

The astonishing thing about the Alibaba IPO is that, according to The New York Times, “the I.P.O. price translates to a multiple of 55 times its forecast 2008 earnings.” The number serves to point out the fact that, even with its economy growing at 10% a year, sustaining P/Es at this level will become impossible, as it did in the Japanese markets and US internet stocks in late 1990s. Both of those bubbles led to corrections of more than 50%.

The Shanghai Composite Index is now up well over 200% this year. The bull argument for an ongoing increase is that the emerging China middle class needs a place to invest its money and cannot move that capital into overseas equities. That makes the market overly dependent on one set of buyers.

Warren Buffett recently warned that he could not find any stock values in China. He is more often right than wrong. But the telling evidence of a market that cannot be sustained is when its leaders reach dizzying heights. Shares in Baidu.com (NASDAQ: BIDU) one of the most visible Chinese companies, trades at 76 times its annual sales. The closest comparable company in the US, Google Inc. (NASDAQ: GOOG) trades at 14 times.

Does anyone really think that the disparity can be sustained?

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Deals, Launches, Industry, Consumer experience, Internet, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), General Electric (GE), News Corp’B’ (NWS), Technology

General Electric’s (NYSE: GE) NBC Universal and News Corp’s (NYSE: NWS) Fox have launched [subscription required] their video site Hulu. Fox will offer a number of its shows on the website and NBC will put up programming from its cable networks and some of its feature-length films.

All of this premium content will be wrapped into a video site, Hulu, and be offered through distribution partners including Microsoft’s (NASDAQ: MSFT) MSN, Yahoo! (NASDAQ: YHOO) and MySpace. The issue of whether the content will be available on Google’s (NASDAQ: GOOG) YouTube is still open for negotiation.

The new venture appears to be a perfect example of large companies managing a problem to death. It is not clear why Fox and NBC could not have cut their own content distribution deals without having to band together. It is equally unclear why anyone would go to the Hulu site if the content can be seen at larger web properties

Perhaps some of the online media executives at the two networks wanted to make sure that it appeared they were making progress on getting their programming onto the web. It might be a good way to keep a job, at least for now.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Google (GOOG), Apple Inc (AAPL), China, Market matters, Research in Motion (RIMM), Personal finance, Videos

“Good traders know how to make money, great traders know how to take a loss,” Todd Harrison advises in the latest edition of StockWatch: Between the Bells. The prudent founder and CEO of Minyanville Publishing and Multimedia recommends always working with the market: “Trade to win, never trade not to lose.”

His advice? Todd suggests continued focus on the energy and metals sectors, noting growth in China and other emerging markets around the world. “I think in a globalized economy, you want to stay geared toward things needed to feed, educate and power the world.”

Echoing other StockWatch contributors, Todd warns it’s too early to return to the financial stocks, which have lost 14% this year amid the ongoing subprime mortgage crisis. While the discounted shares might see a near-term bounce, “if you see any gains in these names, as a long-term investor, you might want to move to the sidelines.”

So is technology an option? While tech shares have performed strong this year, “it’s important to note that three stocks — Google (NASDAQ: GOOG), Apple (NASDAQ: AAPL), and RIM (NASDAQ: RIMM) — represent over 50% of the gains to date in the Nasdaq.” Todd cautions that this narrowing leadership is often a bearish tell.

Want more tips? Check out these recent StockWatch interviews:

• Masters 100 fund portfolio manager Ken Kam
• Midas Funds portfolio manager Thomas Winmill
• Timothy Sykes, author of An American Hedge Fund
• AOL Money Coach Hilary Kramer

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Filed under: Before the bell, Earnings reports, Google (GOOG), Microsoft (MSFT), Apple Inc (AAPL), eBay (EBAY), General Electric (GE), Ford Motor (F), General Motors (GM), Verizon Communications (VZ), News Corp’B’ (NWS)

Apple Inc. (NASDAQ: AAPL) has finally launched its new Leopard operating system late Friday, after a delay of four months. In addition, Apple said it would no longer accepts cash for its popular iPhone and limit sales to two per person, an effort to stop people from reselling them.

NBC, a unit of General Electric (NYSE: GE) and New Corp.’s (NYSE: NWS) Fox are set to launch an advertising-supported online video site, Hulu.com. A test version should go online today. The site will have programming from varied entertainment companies as it tries capture some of the audience Google’s (NASDAQ: GOOG) YouTube has.

Verizon Communications Inc. (NYSE: VZ) reported third-quarter earnings this morning that fell by 34% from a year ago due to tax charges. Verizon earned $1.27 billion, or 44 cents per share in the quarter. Excluding charges, earnings would have been 63 cents per share, beating analysts’ estimate by a penny.

eBay Inc.’s (NASDAQ: EBAY) Skype and mobile phone group 3 have launched a mobile handset that allows Skype users to make free Internet calls to each other while on the move. The companies said they hoped to sell “several hundred thousand” 3 Skypephone units worldwide in the fourth quarter of this year.

Ford Motor Company (NYSE: F) might be in the spotlight now that the UAW narrowly ratified a new contract with Chrysler LLC over the weekend. The Chrysler contract is similar to the deal reached with General Motors Corp. (NYSE: GM) and the union will likely want to reach a similar deal with Ford. Ford, however, is in deeper financial trouble than Chrysler or GM and may want additional concessions from the union.

Microsoft Corp. (NASDAQ: MSFT) announced it is buying Global Care Solutions. Financial terms were not disclosed.

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Filed under: Products and services, Consumer experience, Marketing and advertising, Yum Brands (YUM), Business of sports

As Barry pointed out last week, Taco Bell — my favorite arm of the Yum! Brands (NYSE: YUM) empire — introduced a “Steal a Base, Steal a Taco” gimmick wherein free crunchy beef tacos (one per customer) would be handed out if a base was stolen in the 2007 World Series. Thanks to a speedy move from Boston Red Sox rookie center fielder Jacoby Ellsbury, free tacos are on the table.

There are, of course, some catches. The offer must be redeemed between 2:00 p.m. and 5:00 p.m. local time tomorrow, October 30. And the deal is valid at participating locations only.

The site advertising the Free-Tacos deal, however, could use some updating. It closes with “Watch the 2007 MLB World Series Live on FOX.” As fans of the national pastime already know, the Red Sox again nabbed the World Series trophy in a four-game sweep of their opponents. (They committed the same offense against the St. Louis Cardinals in 2004). Colorado Rockies fans should be entitled to two tacos as a consolation prize, but the bitter taste of defeat might have a negative effect.

Meanwhile, at YUM, regular tacos currently run somewhere around 89 cents to 99 cents a pop, depending on the market. That’s a lot of free ground beef, cheese, and red sauce, even for a 3-hour window. I’m assuming YUM officials are counting on most free-taco bandits also ordering other menu items, or a drink.

Beth Gaston Moon is an analyst at Schaeffer’s Investment Research.

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Filed under: Major movement, International markets, Products and services, Industry, Consumer experience, Rants and raves, Middle East, Mexico, Economic data, Politics, Commodities, Oil, Federal Reserve

With oil’s recent strong moves to the upside, we are now sitting at record high oil prices and are within striking distance of crossing through the psychological $100 barrier. This leads us to ask ourselves if and when $100 oil is finally going to become a reality.

OK, first I have to decide if I think that $100 oil is in fact coming in the not-so-distant future, and to that question the answer is yes, I do. When you look at the current market dynamics, all indicators point to even higher oil prices coming our way. But when? When will we see the $100 oil that everyone is starting to talk about?

With oil prices currently at $92.38, we really aren’t that far from seeing the magical $100 mark. With only a little over 8 percent to go, it is feasible to argue that prices could hit $100 this week. I don’t think we will see $100 oil this week, but it is a possibility. Let’s consider that prices are already trading up about 9 percent from last Wednesday, when we got our last U.S. inventory report from the U.S. Energy Department.

Continue reading How soon will we see $100 oil?

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Filed under: Products and services, Consumer experience, AT and T (T), Verizon Communications (VZ), Technology

According to an Associated Press report, AT&T (NYSE: T) is redesigning a plan to engulf St. Louis in WiFi signals after finding no suitable power source and determining that the project could never recoup its own costs. The original plan to cover the city’s 62 square miles has been reduced to a “pilot project” in downtown St. Louis, set to be available early next year.

Plans called for the citywide wireless network to be up and running in two years, providing free internet service to residents for “20 hours a month and [to] charge for more time or higher download speeds.” It was powering the transmitters that first caused the project to hit a roadblock (or air block?), with an estimate by engineers cited that the project would “require 50 transmitters per square mile.” Other plans involved utilizing streetlights, but those transmitters would require batteries, apparently making the attempt unfeasible.

A citywide WiFi network sounds great, in simplest terms, but AT&T’s inability to make the system work may leave it out of reach for the time being. I have to wonder what a citywide WiFi network would do to restaurants, coffee shops, book stores and other businesses that provide or charge for the service. The new network would simply add those stores already using AT&T’s brand of WiFi, but what about other wireless carriers providing this kind of service? Would a citywide WiFi signal from AT&T disrupt existing signals from Verizon Communications (NYSE: VZ)?

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Filed under: Earnings reports, AT and T (T), Verizon Communications (VZ)

Verizon Communications (NYSE: VZ), reported Q3 earnings that dropped by 33% compared to the year-ago quarter, mainly based on tax-related charges. The telecom stalwart did see earnings reach $1.27 billion ($0.44 per share) in the July-to-September quarter, however. That figure compares to $1.92 billion ($0.66 per share) from 2006’s Q3 period. Outside of Q3 charges, earnings would have been $0.63 per share, one-upping the consensus estimates of $0.62 per share.

Q3 revenue for the telecom carrier crept up almost 6% from the year-ago quarter, finishing at $23.8 billion, and as usual, Verizon’s cellphone business saved the day (an all-too-common occurrence). Wireless operations are becoming the consistent engines of both Verizon and larger competitor AT&T (NYSE: T), as the two companies control the two largest cellular carriers in the U.S. for all the right profit reasons.

Verizon’s wireless operations added 1.6 million new customers in the quarter, giving the company a total of 63.7 million customers. Verizon is catching up to AT&T’s 65.7 million customers, although AT&T is not sitting still, and continues to add over a million new subscribers every quarter as well — propelled nicely by being the only carrier to offer Apple (NASDAQ: AAPL)’s iPhone.

Outside of the cellphone arena, Verizon’s FiOS business, which is the program to replace aging copper telephone lines with fiber optic lines directly to homes and businesses, did very well in the quarter. The company added 229,000 FiOS customers in the quarter, up quite a bit from the 203,000 it added in the Q2 period. It also began providing television service over those new fiber lines to 202,000 new customers in the quarter.

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Filed under: Earnings reports, Good news, Options, Technical Analysis

Humana (NYSE: HUM) reported third-quarter income today of $302.4 million, or $1.78 per share, up from $159.2 million, or 95 cents per share, a year earlier — an increase of 90%. Excluding special items, Humana’s Q3 EPS was $1.53. Analysts were expecting earnings of $1.49 per share from the health insurance company. This morning’s positive surprise lifted the stock to a new all-time high of $81.50 just after the opening bell.

Additionally, the company projected that it would add at least 200,000 members to its full-service Medicare Advantage plans. The company has an optimistic outlook for 2008, thanks to improvements in its Medicare prescription-drug plans and commercial plans for employers. The company estimated full-year 2007 earnings of $4.50 to $4.55 per share, slightly above the Wall Street target of $4.52. Humana forecast 2008 earnings of $5.30 to $5.50, also above analysts’ expectations of $5.20. If you think these figures represent company strength, then now might be a good time to look at a bullish hedged trade on HUM.

Continue reading Humana earnings pushes HUM higher