Archive for December 26th, 2007
Filed under: Newsletters, Stocks to Buy, Housing, Best Stocks for 2008
For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
“My favorite picks for 2008 are two monoline bond insurers: MBIA Inc. (NYSE: MBI) and AMBAC (NYSE: ABK),” says Richard Lehmann, editor of The Forbes Lehmann Income Securities Investor.
“These two companies have been heavily shorted by speculators because of their exposure to subprime mortgage defaults. At current pricing, they are selling at half book value and only three times earnings.
“The reason for current concern is that they will lose their AAA credit enhancement ratings and therefore their ability to conduct new business, something I don’t think is likely because there are various remedies to forestall such an event.
“For 2008, the demand for their services should grow substantially since the reliance by lenders on credit ratings alone has been seriously eroded. Also, their insurance of CMOs and CDOs only protect the most senior tier of a multi-tiered debt instrument, so their loss exposure is very marginal and years off.
Continue reading Best Stocks for 2008: Forbes expert banks on MBIA (MBI) and AMBAC (ABK)
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Filed under: International markets, Other issues, Federal Reserve
 If you’re going to make a bold prediction regarding the currency market, perhaps it’s best to announce it during the last week of the year, when most forex trading desks are half-staffed, if not closed for the year-end holiday period, when trading is light.
Continue reading Trader says don’t bank on dollar falling to 95 yen in 2008
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Filed under: Earnings reports, Analyst upgrades and downgrades, Microsoft (MSFT), Motorola (MOT), Nokia Corp. (NOK), Research in Motion (RIMM), Technical Analysis, Stocks to Buy, Technology
Research In Motion (NASDAQ: RIMM) is a leading provider of wireless communications hardware, software and services. Company devices allow access to email, telephone, messaging, internet and intranet-based applications. RIM products include the BlackBerry wireless platform and the RIM Wireless Handheld product line. The firm also provides software development tools and makes radio-based modems that other manufacturers incorporate into their portable devices. Competitors include Microsoft (NASDAQ: MSFT), Motorola (NYSE: MOT) and Nokia (NYSE: NOK).
RIM surprised the Street last week, when it reported Q3 EPS of 65 cents and revenues of $1.67 billion. Analysts had been looking for 62 cents and $1.65 billion. Management also guided Q4 EPS to 66-70 cents (65 cent consensus) and Q4 revenues to $1.80-$1.87 billion ($1.75B consensus). In discussing the solid numbers, the firm noted strong adoption in Europe and improving performance in several emerging markets. Bear Stearns subsequently upgraded RIMM shares to “outperform.” JMP Securities and UBS reiterated calls at the same level. RIMM shares popped on the news and then moved into a bullish “flag” consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Continue reading Research In Motion: Shares define bullish “flag” pattern
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Filed under: Good news, Industry, Archer-Daniels-Midland (ADM), Options, Technical Analysis, Oil, Agriculture
 Archer Daniels Midland Co. (NYSE: ADM) shares are trading higher today as corn futures are trading higher. Corn futures are being sent up by rising oil prices, which increase demand for corn ethanol. If you think that the company won’t fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ADM.
After hitting a one-year low of $30.20 in January, the stock hit a one-year high of $45.30 on Monday, which it has surpassed again today. ADM opened this morning at $44.99. So far today the stock has hit a low of $44.95 and a high of $45.99. As of 11:15, ADM is trading at $45.75, up $0.76 (1.6%). The chart for ADM looks bullish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $35 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make a 7.5% return in just 6 months as long as ADM is above $35 at June expiration. ADM would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.
Continue reading Archer Daniels Midland (ADM) hits new high on rising energy prices
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Filed under: Newsletters, Canada, Stocks to Buy, Best Stocks for 2008
For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
“My favorite speculative stock for 2008 is Toronto-based Biovail (NYSE: BVF),” says Nilus Mattive, editor of Dividend Superstars.
“The company makes branded and generic drugs that are delivered orally. It used to concentrate on research & development for other companies, but lately it’s become more of a fully integrated pharmaceutical concern.
“Some of its products are marketed and sold by other companies — a good example is its pain medication Ultram ER, which is marketed by Johnson & Johnson.
“Investors have punished Biovail because of development setbacks in BVF-033, one of the company’s most promising compounds. The FDA issued a non-approval letter, and more recently said it would not be examining newly submitted data until April. Biovail is also dealing with intensifying generic competition in other product lines.
Continue reading Best Stocks for 2008: Biovail (BVF) for capital gains and yield
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Filed under: SEC filings, Deals, Press releases, Products and services, Management, Industry, Competitive strategy, General Electric (GE), Merrill Lynch (MER)
 General Electric (NYSE: GE) and Merrill Lynch (NYSE: MER) announced a deal Monday, which will result in GE picking up most of Merrill’s commercial finance business.
The deal is expected to be completed during the first quarter of 2008, and will add an estimated $10 billion plus in assets to GE Capital. Merrill has been hit pretty hard this year with the subprime mortgage mess, and this deal will result in around $1.3 billion worth of capital that the company will be able to allocate elsewhere.
Merrill, which announced a massive $8.4 billion worth of write downs back in October is in the middle of what it is calling a “strategic focus on divesting non-core assets.” This sale is beneficial to Merrill because the firm’s commercial-lending business has become reliant on companies that do not posses investment-grade credit ratings and pose a financial risk that Merrill does not need to be assuming, especially after Merrill’s recent write down.
Continue reading General Electric buys Merrill Lynch finance units
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Filed under: Management, Insiders, Marketing and advertising
 The resignation of a board member at once high-flying skate-shoe manufacturer Heelys (NASDAQ: HLYS) could be a harbinger of a managerial shake-up at the company.
On December 21st, Heelys filed an 8-K announcing that on December 17th, board member James Kindley had resigned in protest to a board resolution “relating to Michael G. Staffaroni’s, the Company’s President and Chief Executive Officer, handling of certain operational matters”.
In a letter to Staffaroni filed with the 8-K, Kindley explained his resignation:
As you know, I strongly support your vision for the company and your strategy for realizing it. Regrettably, a majority of the directors voted at the November meeting for an ultimatum expressing dissatisfaction with your performance, an action I openly opposed (that is not reflected in the minutes) and one that I feel signals an unjustified lack of confidence in you and your strategy. I am unable and unwilling to support the majority’s alternatives and directives.
Given that a majority of the board has expressed dissatisfaction with the CEO — and saw fit to hold a vote to formalize that disappointment — his days with the company could be numbered.
Heelys has had a rough time since its IPO. Its stock has fallen from a high of $40.09 to its current price under $6.25, which was accompanied by a slew of shareholder class action lawsuits. A change at the top could be a short-term catalyst for a recovery in the share price and, with the board’s dissatisfaction with the CEO now plastered over an SEC filing, that could come soon.
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Filed under: Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO)
 In November internet search engine rankings by comScore (NASDAQ: SCOR), Google (NASDAQ: GOOG) again lead the pack, with 5.9 billion core searches conducted — a 58.6% market share of all searches in the internet. This was almost the exact same level as October.
Coming up a distant second (as usual) was Yahoo! (NASDAQ: YHOO) with market share of 22.4%. The next three were Microsoft (NASDAQ: MSFT) at 9.8%, IAC/InterActiveCorp.’s (NASADAQ: IACI) Ask.com at 4.6% and Time Warner’s (NYSE: TWX) AOL at 4.5%. In November (a seasonally weak month for web searches), U.S. web searchers conducted 10 billion searches — a 5% decline from October.
Do these rankings surprise any web surfer? They shouldn’t — Google continues to dominate internet searches and Yahoo!’s Project Panama — although technically a job well done — is probably too late to the party to put any significant pressure on Google. Microsoft’s Live Search push has garnered it about the same market share as in the past (a decent third place). The power of first-mover advantage is quite evident in Google’s placement, and I’d suspect it’s not going anywhere soon.
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Filed under: Bad news, Economic data, Housing
Home prices fell 6.1% in the past 12 months — the largest 12-month decline in at least six years, and a sign that the housing market remains in a pronounced slump, research from the S&P/Case-Shiller home price index indicated Wednesday. In the survey, all 20 metropolitan markets surveyed showed year-over-year price declines.
Analyst C. Leonard Bauer, formerly of Prudential, told BloggingStocks on Wednesday that the October 2007 Case-Shiller data confirms some of the worst fears analysts have about the U.S. housing market heading into 2008.
“This is a sobering statistic,” Bauer said. “It confirms a housing market in a deep slump. This is the worst year-over-year decline in prices that I’ve seen nationally, and I’ve been following housing for 20 years. The northeast [U.S.] condo slump in the early 1990s saw bigger percentage drops but that was only one section of the market. This is across the board.”
Continue reading U.S. home prices drop 6.1% in past 12 months
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