Filed under: Newsletters, S and P 500, Stocks to Buy, Recession, U.S. Bancorp (USB)

“Recent valuations in financial stocks suggest either ‘the world is coming to an end’ or there are some great values,” says Gregory Dorsey.

Here, the contributing editor to the top-notch Leeb’s Income Performance Letter takes a look at one such “bargain” in the sector: U.S. Bancorp (NYSE: USB).

“So far, the financial sector has written off more than $300 million in assets. By some accounts the damage will rise to $1 trillion or more before all is said and done.

“The selloff, which at its nadir was marked by a 55% year-over-year decline in the KBW Index, pushed the constituent members down to a collective 0.64 times book value and a dividend yield of 9%.

“At those levels, either the world is coming to an end or there are tremendous bargains for investors with the courage of their convictions. Looking hard at the data, we can only conclude the latter is the case, provided you’re careful with your investment choices.

Continue reading Insiders bank on US Bancorp (USB)

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Filed under: Earnings reports, Hewlett-Packard (HPQ), Home Depot (HD), Gap Inc (GPS), Lowe’s Cos (LOW), Amgen Inc (AMGN), salesforce.com inc (CRM), Lehman Br Holdings (LEH)

Here are some highlights from this past week’s earnings coverage from BloggingStocks:

• Amgen Inc. (NASDAQ: AMGN) earnings potential due to its denosumab is expected to rise substantially.
• Barnes & Noble Inc. (NYSE: BKS) beat low Q2 expectations but forecast a loss in Q3.
• BJ’s Wholesale Club Inc. (NYSE: BJ) beat Q2 profit estimates and announced share buybacks.
• BWAY Holding Co. (NYSE: BWY) topped Q3 expectations on cost containment and increased productivity.
• Fuqi International Inc. (NASDAQ: FUQI) beat Q2 expectations and offered Q3 and full-year guidance.
• Gap Inc. (NYSE: GPS) reported higher Q2 earnings but lower sales, dragged down by Old Navy.
• Hewlett-Packard Corp. (NYSE: HPQ) reported strong Q3 earnings results due to its global reach.
• Home Depot Inc. (NYSE: HD) Q2 results fell more than expected, but it reaffirmed its earnings forecast.
• Lehman Brothers Holdings Inc. (NYSE: LEH) may post preliminary results (another loss) before Sept.
• Lowe’s Cos. Inc. (NYSE: LOW) posted better-than-expected Q2 profits but offered a cautious sales forecast.
• Pacific Sunwear of California Inc. (NASDAQ: PSUN) weak guidance lead to analyst downgrades.
• Salesforce.com Inc. (NYSE: CRM) posted strong Q2 results and announced an aquisition.
• VeriFone Holdings Inc. (NYSE: PAY) offered a positive outlook, which sent shares soaring.

For more highlights from this week, see: Hershey, Heinz, Burger King, Foot Locker, Saks and others

Upcoming quarterly reports include Big Lots (NYSE: BIG), Borders (NYSE: BGP), Rio Tinto (NYSE: RTP), Tivo (NASDAQ: TIVO), Novell (NASDAQ: NOVL), Dell (NASDAQ: DELL), Sears (NASDAQ: SHLD), and Tiffany (NYSE: TIF).

Visit AOL Money & Finance for more earnings coverage.

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Filed under: Marketing and advertising, Liz Claiborne (LIZ)

I’ve been expressing my long-term bullishness on Liz Claiborne, Inc. (NYSE: LIZ) since the company announced that Isaac Mizrahi would be taking over as creative director for its flagship brand. The stock is down a little since that announcement back in January, but with the re-launch under Mizrahi’s direction scheduled to hit stores in February, investors could start bearing the fruits of that deal soon.

A piece (subscription required) in yesterday’s Wall Street Journal looked at Mizrahi and his plans for the Liz Claiborne brand, which has seen its sales decline by about 50% so far this decade: “The collection includes modern styles like cork-covered high heels and oversize tote bags in soft neutrals, metallics and bright colors, according to two people who were there. The designs also incorporate an updated Liz Claiborne logo.”

Goldman Sachs analyst Benjamin Rowbotham called the relaunch “the single most important issue” for the company, and Liz Claiborne has reportedly given Mizrahi a rare level of creative freedom in reviving its brand.

Liz Claiborne has struggled of late, even more so than the industry at large, but remember: Mizrahi made Target Corporation (NYSE: TGT) a cool place to shop for clothes. With the stock trading in the bargain basement, Mizrahi’s new collection offers savvy investors tremendous upside potential.

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Filed under: General Electric (GE), Berkshire Hathaway (BRK.A), China, Diageo plc (DEO), JPMorgan Chase (JPM), Merck and Co (MRK), Huaneng Power Intl ADS (HNP), Serious Money, Stocks to Buy

The following two-part article puts forth ten stock ideas that I believe would be better off in your investment portfolio than one comprised primarily of Certificates of Deposits (CDs) or bonds, or even government treasuries. This is not to say that CD’s do not have value or offer some level of security, but they are long term losers.

A basket of high yielding-high quality stocks can offer a higher return, better tax advantages, and the potential of significant appreciation for those with a long time horizon. Five year CD earning 4%, or a utility stock? I pick the utility every time.

My wife sent me the following quote from Ambrose Redman that I thought would be worth sharing with readers: “Courage is not the absence of fear but rather the judgment that something else is more important than one’s fear.”

It seems that might be extended to one’s view on investing as well. What is really important, the short term or the long term, growth or value, the promise of riches or the hope for stability? In each case I would favor the latter over the former and this brings to mind one of my pal Warren’s lessons: Do not buy a stock unless you would be happy to own it even if the market was closed for ten years.

Berkshire Hathaway (NYSE: BRK.A and BRK.B) is certainly a candidate. Take a look at last week’s Chasing Value: Considering Berkshire Hathaway… again. However, it does not pay a dividend. The following five quality stocks do:

Continue reading Serious Money: Choose these 5 stocks over CDs — DEO, GE, HNP, JPM, MRK

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Filed under: Analyst reports, Management

Shares of The Steak n Shake Company (NYSE: SNS) are up about 5% today on an analyst report that hedge fund manager turned shareholder activist turned Steak n’ Shake CEO Sardar Biglari is “making quick strides” toward a turnaround at the company.

Biglari became chairman of the company back in June after a proxy contest that kicked out a regime that had underperformed for years, and became CEO earlier this month after the board spent a few months looking to bring someone in from the outside.

Biglari certainly qualifies as investor-friendly but he looks like could be overexposed in a role that involves turning around a restaurant chain. He’s currently CEO of the much smaller Western Sizzlin Corporation (NASDAQ: WEST) chain, but his prior experience in the restaurant industry is pretty much limited to an investment in Friendly’s that culminated in a sale to a private equity firm at a price that, in retrospect, appears to have been too high.

Continue reading Time to bet on a Steak n’ Shake turnaround?

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Filed under: Earnings reports, Hershey Co (HSY), Staples Inc (SPLS), Burger King Hldgs (BKC), Limited Brands (LTD)

Here are some highlights from this past week’s earnings coverage from BloggingStocks:

• Aeropostale Inc. (NYSE: ARO) strong Q2 results were in line with analysts’ expectations.
• BHP Billiton Ltd. (NYSE: BHP) reported a record annual profit on demands for commodities in China.
• Burger King Holdings Inc. (NYSE: BKC) beat Q4 expectations despite struggling with commodities costs.
• Foot Locker Inc. (NYSE: FL) reported that it easily beat earnings expectations for the second quarter.
• GameStop Corp. (NYSE: GME) reported strong Q2 results despite a decline in gross margins.
• Hershey Co. (NYSE: HSY) narrowed its 2008 guidance due to rising costs of commodities.
• HJ Heinz Co. (NYSE: HNZ) Q1 results topped analysts’ estimates and raised its full-year guidance.
• JDS Uniphase Corp. (NASDAQ: JDSU) offered disappointing quarterly results and Q1 guidance.
• Limited Brands Inc. (NYSE: LTD) reported better-than-expected Q2 results and boosted its forecast.
• Novatel Wireless Inc. (NASDAQ: NVTL) fell short of estimates, leading to a new 52-week low.
• Saks Inc. (NYSE: SKS) reported a smaller-than-expected Q2 loss and forecast lower operating margins.
• Staples Inc. (NASDAQ: SPLS) warned of lower profits due to continued challenging market conditions.
• Zumiez Inc. (NASDAQ: ZUMZ) warmed of weakness in the second half, including lower same-store sales.

For more earnings highlights from this week, see: Home Depot, Lehman, Hewlett-Packard, Gap, BJ’s and others

Upcoming quarterly reports include Big Lots (NYSE: BIG), Borders (NYSE: BGP), Rio Tinto (NYSE: RTP), Tivo (NASDAQ: TIVO), Novell (NASDAQ: NOVL), Dell (NASDAQ: DELL), Sears (NASDAQ: SHLD), and Tiffany (NYSE: TIF).

Visit AOL Money & Finance for more earnings coverage.

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

Foot Locker (NYSE: FL - option chain) shares are soaring higher today after the company announced yesterday evening that it earned a second-quarter profit of $18 million, or 11 cents per share and well above estimates of 3 cents. Other retail earnings this morning were a mixed bag, as Gap (NYSE: GPS) and Jones Apparel (NYSE: JNY) are rising while Pacific Sunwear (NASDAQ: PSUN) is tanking. This makes me think that the retail sector may not trade as a block for the next few months, but rather on the individual merits of each stock. If you think that FL stock 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 the stock.

FL opened this morning at $16.40. So far today the stock has hit a low of $14.93 and a high of $16.50. As of 12:05, FL is trading at $15.57, up 0.29 (1.9%). The chart for FL looks neutral and S&P gives FL a neutral 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $10 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 an 8.7% return in five months as long as FL is above $10 at January expiration. Foot Locker would have to fall by more than 35% before we would start to lose money. Learn more about this type of trade here.

FL hasn’t been below $9 at all and hasn’t been below $10 for more than a few days in the past year. It has shown support around $14 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in FL.

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Filed under: Forecasts, Commodities, Oil

Just a short quarter ago — three months — the lingua franca in economics and financial circles was “decoupling” — the argument that the global economy could grow, despite an economic slowdown in the United States.

Then the U.S. slowdown persisted, lower growth rates and projections in Europe Asia followed, and the commodity price correction ensued, led by the most vital of all commodities, crude oil.

Oil, which for the better part of four years knew only one direction — up — pulled back about $30, or more than 20%. (Oil closed Friday down $6.49 to $114.59 per barrel). And unlike previous mild dips, emerging market demand — the “rest of the world” in the oil market — was not enough to protect the oil bulls. U.S. oil demand did matter — it had declined on a year-over-year basis for more than three months — and is projected to drop 3.1% in 2008, according to U.S. Energy Information Administration data.

What’s more, the EIA expects U.S. oil consumption to drop another 2.3% in 2009, to 20.08 million barrels per day.

Continue reading Oil’s pull-back represents a (temporary) break for U.S. motorists

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Filed under: CVS Corp (CVS)

CVS Caremark (NYSE: CVS) will begin testing an upscale beauty store concept this year under the less than creative name “Beauty 360″, with the first locations set to open up right next to existing CVS locations. “Beauty 360″ will offer 32 lines of skin care and cosmetics along with various fragrances, according to Reuters.

Can you say flop? The problem is that people hate CVS. Googling the phrase “hate CVS” yields 17,900 results, and the chain has experienced success with decent prices on prescription drugs and an expansion strategy that has obliterated most of the mom and pop stores. I can’t even imagine why anyone would choose to go to CVS to buy expensive skincare products.

Plus the name “Beauty 360″ is really, really, really insipid.

CVS’s only hope of having any success with this concept would seem to be making the stores nothing like CVS, and hoping consumers won’t notice that there’s any connection. Opening them next door won’t accomplish that.

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Filed under: Ford Motor (F), General Motors (GM)

I know, I know: forecasting the imminent demise of America’s car companies is nothing new, but recent events have highlighted the kind of shortsighted planning that has plagued Ford Motor Company (NYSE: F) and General Motors Corporation (NYSE: GM) for years. While the gas crisis has exacerbated the shortcomings of the automakers, the companies’ failures to understand their core audience, invest in R&D, and ensure the quality of their finished product are long-term, endemic problems that make them a very questionable bet.

Recently, for example, General Motors’ decided to offer incentives, extended protection plans, and employee pricing to draw buyers to the line; these innovations, however, have had the added impact of massively undercutting revenues. As Williams-Sonoma could now point out, slashing your profit margin is not really the best way to make a profit. While their decision to get rid of Hummer should help GM shed a pricey and currently unpopular line, by the time the sale is finished, gas prices will be back down and everybody will be driving hydrogen-powered cars.

Ford, meanwhile, has decided to focus its attention on cars, a long-term plan that doesn’t seem very well thought out. While the Mustang is, perhaps, Ford’s most famous model, their trucks have long been an iconic symbol of the company. Rather than invest in making their strongest sellers more fuel-efficient and thus more attractive to consumers, Ford seems to be placing its eggs in a somewhat unreliable basket.

Continue reading Going down in flames: Ford and GM

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