Why it makes sense to start investing early in your career

Investing for your retirement may not be the most important thing on your mind when you start your career. For most people, investing may not even be on the priority list when they start their career. When you start your career, your saving capacity may not be much in absolute terms, as your salary itself may not be much. But this should not deter you from making investments. This is because the first few years of your earning life has a huge impact on your future finances.

As with anything else in life, investing also benefits with an early start. The earlier you do your retirement planning, the greater will be your return on investment. There are more reasons than one for you to start investing early in your career. Let's look at the various benefits of early investing.

The Effect of Compounding:
The most important reason for you to start investing early in your career is to get the benefit of compounding. Compound interest works magic for any investor. As you know, compound interest means the interest earned on interest. If you continuously reinvest your earnings, your return on investment will increase exponentially.

When you regularly invest from the start of your career, you are increasing the return you receive on your returns. A monthly investment of as low as Rs.1,000 or Rs.2,000 will have a large impact on your financial position. Let's understand the effect with a few examples:

Example 1: X is 25 years old and has 35 years left for retirement. He starts to invest Rs. 1000 per month for 35 years at a return of 12% per annum. The corpus left with X at the end of 35 years will be Rs. 64 lakhs.

Y is 30 years old and has only 30 years left for retirement. He also starts to invest Rs. 1000 per month. But as he has started investing late in his career, he can invest this amount only for the next 30 years at 12% per annum. The corpus left with Y at the end of 30 years will be Rs. 35 lakhs. This is the difference 5 years of investment has made to the final corpus value. If Y needs the same Rs. 64 lakhs for his retirement, he will need to shell out Rs.1830 per month instead of Rs. 1000.

To understand the wonder of compounding, let's look at another example:
Example 2: Both X and Y are 30 years of age and have 30 years left for retirement. Now, X invests Rs. 2000 every month for the first 15 years at a return of 12% per annum. He totally invests Rs. 3.6 lakhs. At the end of 15 years of his investment, he does not invest further and also does not withdraw the money. His total corpus at the end of 30 years will be close to Rs. 55 lakhs.

Now Y invests only Rs. 1000 per month at a return of 12% per annum. But he invests for 30 years. Y's total investment is also Rs. 3.6 lakhs - same as X's total investment. But his corpus after 30 years is only Rs. 35 lakhs. Thus for the same total investment, X's corpus is much higher than Y's corpus. This is because X had invested more in the initial years and had allowed this money to get compounded for the total period.

Thus, the most important advantage of beginning to invest early in your career is to realise the full benefits of compounding. There are other reasons why it makes sense to start investing early in your career -

Improvement in spending habits: As you begin to save early in your career to start investing, you have lesser disposable cash with you. This helps you in being more prudent and brings about a discipline in your spending habits.
Ability to take risk: Not all of us get our investment options correct the first time. When you begin exploring investment avenues early in your life, you have a greater ability to take risk and experiment, compared to someone who starts investing later. This is because, at a later stage in life, if you realise you do not have sufficient savings; you will be more cautious in your choice of investments.

Money available during emergencies: When you begin to invest early, you would have a comfortable cushion backing you up. Thus, you can be rest assured that your savings will be of use to you in times of need.
Better choices in life: As seen in the examples above, the corpus built by investing early in life is much bigger than the corpus built by someone who starts a little later. As a result of the savings back-up, you can afford a better lifestyle and an improved quality of life, helping to fulfil your financial goals.

Thus, beginning to invest early in your career can help you in building a secure future.

 

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Hot Safest Stocks To Buy Right Now

Last November, I announced my intention to create a portfolio of 10 companies that investors had effectively thrown away and given up on, in the hope of showing that deep-value investing, and contrarian thinking, can actually be a very successful investing method. I dubbed this the "One Person's Trash Is Another Person's Treasure" portfolio and, over a 10-week span, I highlighted companies that I thought fit this bill and would expect to drastically outperform the benchmark�S&P 500�over the coming 12 months. If you're interested in the reasoning behind why I chose these companies, then I encourage you to review my synopsis of each portfolio selection:

Exelon QLogic Dendreon Dell Staples Arkansas Best Arch Coal Skullcandy France Telecom Xerox

Now, let's get to the portfolio and see how it fared this week:

Hot Safest Stocks To Buy Right Now: Fluor Corporation(FLR)

Fluor Corporation, through its subsidiaries, provides engineering, procurement, construction, maintenance, and project management services worldwide. Its Oil & Gas segment offers design, engineering, procurement, construction, and project management services to upstream oil and gas production, downstream refining, chemicals, and petrochemicals industries. This segment also provides consulting services comprising feasibility studies, process assessment, and project finance structuring and studies. The company?s Industrial & Infrastructure segment offers design, engineering, procurement, and construction services to the transportation, wind power, mining and metals, life sciences, manufacturing, commercial and institutional, telecommunications, microelectronics, and healthcare sectors. Its Government segment provides engineering, construction, logistics support, contingency response, management, and operations services to the United States government focusing on the Departme nt of Energy, the Department of Homeland Security, and the Department of Defense. The company?s Global Services segment offers operations and maintenance, small capital project engineering and execution, site equipment and tool services, industrial fleet services, plant turnaround services, temporary staffing services, and supply chain solutions. Its Power segment provides engineering, procurement, construction, program management, start-up and commissioning, and operations and maintenance services to the gas fueled, solid fueled, plant betterment, renewables, nuclear, and power services markets. The company also offers unionized management and construction services in the United States and Canada. Fluor Corporation was founded in 1912 and is headquartered in Irving, Texas.

Advisors' Opinion:

• [By CRWE]

  Fluor Corporation�� (NYSE:FLR) Chairman and Chief Executive Officer, David Seaton, and Chief Financial Officer, Biggs Porter, will give a presentation to investors at the Credit Suisse 2012 Engineering & Construction Conference in New York on Thursday, June 7 at 9:00 a.m. Eastern Daylight Time.

Hot Safest Stocks To Buy Right Now: Goldman Sachs Group Inc.(The)

The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs; and underwriting securities, loans and other financial instruments, and derivative transactions. The company?s Institutional Client Services segment provides client execution activities, such as fixed income, currency, and commodities client execution related to making markets in interest rate products, credit products, mortgages, currencies, and commodities; and equities related to making markets in equity products, as well as commissions and fees from executing and clearing institutional client transactions on stock, options, and fu tures exchanges. This segment also engages in the securities services business providing financing, securities lending, and other prime brokerage services to institutional clients, including hedge funds, mutual funds, pension funds, and foundations. Its Investing and Lending segment invests in debt securities, loans, public and private equity securities, real estate, consolidated investment entities, and power generation facilities. This segment also involves in the origination of loans to provide financing to clients. The company?s Investment Management segment provides investment management services and investment products to institutional and individual clients. This segment also offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth individuals and families. In addition, it provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.

5 Best Bank Stocks To Invest In Right Now: Petroleo Brasileiro S.A.- Petrobras(PBR)

Petroleo Brasileiro S.A. primarily engages in oil and natural gas exploration and production, refining, trade, and transportation businesses. The company?s Exploration and Production segment involves in the exploration, production, development, and production of oil, liquefied natural gas (LNG), and natural gas in Brazil. This segment supplies its products to the refineries in Brazil, as well as sells surplus petroleum and byproducts in domestic and foreign markets. Its Supply segment engages in the refining, logistics, transportation, and trade of oil and oil products; export of ethanol; and extraction and processing of schist, as well as holds interests in companies of the petrochemical sector in Brazil. The Gas and Energy segment involves in the transportation and trade of natural gas produced in or imported into Brazil; transportation and trade of LNG; and generation and trade of electric power. In addition, the segment has interests in natural gas transportation and d istribution companies; and thermoelectric power stations in Brazil, as well engages in fertilizer business. The Distribution segment distributes oil products, ethanol, and compressed natural gas in Brazil. The International segment involves in the exploration and production of oil and gas, as well as in supplying, gas and energy, and distribution operations in the Americas, Africa, Europe, and Asia. Further, the company involves in biofuel production business. Petroleo Brasileiro was founded in 1953 and is based in Rio de Janeiro, Brazil.

Advisors' Opinion:

• [By Dave Friedman]

  Institutional investors bought 78,663,680 shares and sold 101,125,380 shares, for a net of -22,461,700 shares. This net represents 0.23% of common shares outstanding. The number of shares outstanding is 9,872,826,100. The shares recently traded at $27.61 and the company’s market capitalization is $170,178,700,000.00. About the company: Petroleo Brasileiro S.A. – Petrobras explores for and produces oil and natural gas. The Company refines, markets, and supplies oil products. Petrobras operates oil tankers, distribution pipelines, marine, river and lake terminals, thermal power plants, fertilizer plants, and petrochemical units. The Company operates in South America and elsewhere around the world.

Hot Safest Stocks To Buy Right Now: Under Armour Inc.(UA)

Under Armour, Inc. develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth primarily in the United States, Canada, and internationally. It offers products made from moisture-wicking synthetic fabrics designed to regulate body temperature and enhance performance regardless of weather conditions. The company provides its products in three fit types: compression (tight fitting), fitted (athletic cut), and loose (relaxed) extending across the sporting goods, outdoor, and active lifestyle markets. Its footwear offerings comprise football, baseball, lacrosse, softball, and soccer cleats; slides; performance training footwear; and running footwear. The company also provides baseball batting, football, golf, and running gloves, as well as licenses bags, socks, headwear, custom-molded mouth guards, and eyewear that are designed to be used and worn before, during, and after competition. Under Armour sells its products through retai l stores, as well as directly to consumers through its own retail outlets and specialty stores, Website, and catalogs. The company was founded in 1996 and is headquartered in Baltimore, Maryland.

Advisors' Opinion:

• [By Glenn]  

  Current Price: $27.27 12-month target: $37

  I see potential in opportunities for new product adjacencies, and expanding distribution worldwide. Footwear growth will continue to increase. Revenues for these products have increased over 69% in 2009. Adding to this I still see growth in Under Armour’s apparel sales, which are up 8%. Under Armor had yet to even break into the international market, which offers a plethora of new opportunities for this growing brand. I believe sales will rise drastically in 2010 driven by international sales, new women’s clothing line, and expansion within their own footwear line.
• [By Victor Mora]

  Under Armour provides athletic apparel, footwear, and accessories to a growing health and wellness, athletic, and fitness enthusiast population around the world. The stock has been on a powerful move towards higher prices that has led to it trading at all-time highs. Earnings and revenue figures have increased over most of the last four quarters which has led to excited investors. Relative to its peers and sector, Under Armour has led in year-to-date performance by a wide margin. Look for Under Armour to OUTPERFORM.

Top 5 Bank Companies To Own For 2014

Now and then, you probably run across headlines like the following:

"Japan Keeps�Monetary Policy�Steady Amid Deflation Fight"

"Bernanke Warns of 'Premature Tightening' in�Monetary Policy"

"Business Groups Back May�Monetary Policy�Decisions"

If you're like many people, they make you a bit uneasy, as you don't have a good handle on what "monetary policy" actually is. Let's remedy that, shall we? Understanding its basics can help you make sense of financial news and our national and global financial condition.

In a nutshell
America's monetary policy is set by the Federal Reserve, our central bank, which influences the amount of money and credit in our economy, and, therefore also influences interest rates, inflation, and our economy's health and performance.

Top 5 Bank Companies To Own For 2014: National Australia Bank Ltd (NAB)

National Australia Bank Limited provides products, advice and services. In Australia, it operates through National Australia Bank, MLC and UBank. In the United Kingdom, it operates through Clydesdale Bank. In New Zealand, it operates through Bank of New Zealand. In the United States, it operates through Great Western Bank. Segments include Business Banking, Personal Banking, Wholesale Banking, UK Banking and NZ Banking, MLC and NAB and Great Western Ban. As of April 5, 2012, the Company and its associated entities ceased to be a substantial holder in BlueScope Steel Limited. On May 17, 2012, it ceased to be a substantial holder in Spark Infrastructure Group and Sandfire Resources NL. As of August 24, 2012, the Company and its associated entities ceased to be holder in Tabcorp Holdings Limited. In September 2012, the Company and its associated entities have ceased to be a substantial holder in Incitec Pivot Limited, as of August 30, 2012. Advisors' Opinion:

• [By Dale Gillham]

  NAB is still a long way from its all-time high of $44.84 from 2007, but has so far been able to hold above 50 per cent ($22.42) of its all-time high, which is a positive sign. Given that NAB has spent a lot of time in a zigzag formation above this level; you can see how strong this level has been for its shares. At present NAB is probably my least preferred bank stocks when weighing up the risks from a technical perspective, but while it stays above this 50 per cent level it has a greater probability of rising than falling.

  What is holding it back? You can see how a few months ago NAB attempted to break the $26.00 level overhead, which has proven to be an important threshold for those just not willing to pay more for NAB. If you are a bit of a contrarian and like to pick underdogs, you may decide to keep NAB on your watch list because very soon I am expecting it to show where it is headed. A move back below the 50 per cent level would not bode well for those holding NAB.

Top 5 Bank Companies To Own For 2014: Commonwealth Bank of Australia (CBA.AX)

Commonwealth Bank of Australia (the Bank) is engaged in the provision of a range of banking and financial products and services to retail, small business, corporate and institutional clients. The Bank is a provider of integrated financial services, including retail, business and institutional banking, superannuation, life insurance, general insurance, funds management, broking services and finance company activities. Its operating segments include Retail Banking Services, Business and Private Banking, Institutional Banking and Markets, Wealth Management, New Zealand, Bankwest and Other. Its retail banking services include home loans, consumer finance, retail deposits and distribution. Its business and private banking include corporate financial services, regional and agribusiness banking, local business banking, private bank and equities and margin lending. The Bank and its subsidiaries ceased to be a substantial holder in Ten Network Holdings Limited, as of September 12, 2012.

Top 5 Small Cap Stocks To Own Right Now: Royal Bank Of Canada(RY)

Royal Bank of Canada provides personal and commercial banking, wealth management services, insurance, corporate and investment banking, and transaction processing services under the RBC name worldwide. Its Canadian Banking segment offers personal financial services, business financial services, and cards and payment solutions. The company?s Wealth Management segment provides wealth and asset management, and estate and trust services to affluent and high net worth clients through distributors, as well as directly to institutional and individual clients in Canada, the United States, Europe, Asia, and Latin America. Its Insurance segment provides various life and health insurance, including universal life, accidental death and critical illness protection, disability, long-term care insurance, and group benefits; and property and casualty insurance comprising home, auto, and travel insurance, as well as wealth accumulation solutions; and reinsurance products through retail ins urance branches, call centers, independent insurance advisors and travel agencies, financial institutions, and career sales force. The company?s International Banking segment offers various financial products and services to individuals, business clients, and public institutions in the U.S. and Caribbean. This segment also provides global custody, fund and pension administration, securities lending, shareholder services, analytics, and other related services to institutional investors. Royal Bank of Canada?s Capital Markets segment engages in the trading and distribution of fixed income, foreign exchange, equities, commodities, and derivative products for institutional, public sector, and corporate clients; and involves in investment banking, debt and equity origination, advisory services, corporate lending, private equity, and client securitization businesses. The company was founded in 1864 and is headquartered in Toronto, Canada.

Top 5 Bank Companies To Own For 2014: New York Community Bancorp Inc (NYCB)

New York Community Bancorp, Inc. is a bank holding company and a producer of multi-family mortgage loans in New York City, with an emphasis on apartment buildings that feature below-market rents. It has two bank subsidiaries: New York Community Bank (the Community Bank),New York Commercial Bank (the Commercial Bank. The Community Bank has 241 branches and operates through seven divisional banks. The Commercial Bank has 34 branches in Manhattan and operates 17 of its branches under the divisional name Atlantic Bank.

During the year ended December 31, 2011, all of the one-to-four family loans the Company originated was sold to government-sponsored enterprises (GSEs). In New York, the Company serves its Community Bank customers through Roslyn Savings Bank, with 55 branches on Long Island; Queens County Savings Bank, with 34 branches in the New York City borough of Queens; Richmond County Savings Bank, with 22 branches in the borough of Staten Island, and Roosevelt Savings Bank, with eight branches in the borough of Brooklyn. As of December 31, 2011, in the Bronx and neighboring Westchester County, the Company had four branches that operated directly under the name New York Community Bank.

In New Jersey, the Company serves its Community Bank customers through 51 branches that operate under the name Garden State Community Bank. In Florida and Arizona, where it has 25 and 14 branches, respectively, the Company serves its customers through the AmTrust Bank (AmTrust) division of the Community Bank. In Ohio, the Company serves its Community Bank customers through 28 branches of Ohio Savings Bank. Customers of the Community Bank and the Commercial Bank have access to their accounts through 261 of its 285 automatic teller machines (ATMs) locations in five states. The Company also serves its customers through three Websites, which include www.myNYCB.com, www.NewYorkCommercialBank.com and www.NYCBfamily.com.

Lending Activities

The Company�� principal asset is l! oans. Its loan portfolio consists of three components: covered loans, non-covered loans held for sale and non-covered loans held for investment. As of December 31, 2011, the balance of covered loans was $3.8 billion, of which $3.4 billion were one-to-four family loans. Non-covered loans held for sale consists of the one-to-four family loans that are originated for sale, primarily to GSEs. At December 31, 2011, the held-for-sale loan portfolio totaled $1.0 billion

As of December 31, 2011, loans held for investment consisted of loans that it originates for its own portfolio, and totaled $ 25.5 billion.

In addition to multi-family loans, loans held for investment include commercial real estate loans (CRE); acquisition, development and construction (ADC) loans; commercial and industrial loans (C&I), and one-to-four family loans. As of December 31, 2011, its multi-family loans represented $17.4 billion, or 68.3%, of total loans held for investment, and represented $5.8 billion, or 64.1%, of the total loans that it originated for investment. The multi-family loans it originates are typically secured by non-luxury apartment buildings in New York City. It also makes multi-family loans to property owners who are seeking to expand their real estate holdings by purchasing additional properties.

As of December 31, 2011, CRE loans represented $6.9 billion, or 26.9%, of total held for investment; ADC loans represented $445.7 million, or 1.7%, of total loans held for investment. Its ADC loan portfolio consists of loans that were originated for land acquisition, development, and construction of multi-family and residential tract projects in New York City and Long Island.

C&I loans represented $600.0 million, or 2.4%, of total held for investment. It also offers a range of loans to small and mid-size businesses for working capital (including inventory and receivables), business expansion, and the purchase of equipment and machinery. Non-covered one-to-four family loans totaled $127! .4 millio! n at December 31, 2011.

Investment Activities

The Company�� securities portfolio primarily consists of mortgage-related securities, and debt and equity (other) securities. Its investments include GSE certificates, GSE collateralized mortgage obligations (CMOs) and GSE debentures. The Community Bank and the Commercial Bank are members of the Federal Home Loan Bank of New York (FHLB-NY), one of 12 regional Federal Home Loan Banks (FHLBs) consisting of the FHLB system. As of December 31, 2011, the Company�� securities represented $4.5 billion, or 10.8%, of total assets. As of December 31, 2011, 93.7% of its securities portfolio consisted of GSE obligations; held-to-maturity securities represented $3.8 billion, or 84.0%, of total securities, and its investment in bank-owned life insurance (BOLI) was $769.0 million.

Source of Funds

The Company has four primary funding sources. These include the deposits that it added through its acquisitions or gathered through its branch network, and brokered deposits; wholesale borrowings, primarily in the form of FHLB advances and repurchase agreements with the FHLB and various brokerage firms; cash flows produced by the repayment and sale of loans, and cash flows produced by securities repayments and sales. As of December 31, 2011, deposits totaled $ 22.3 billion, which included certificates of deposit (CDs) of $7.4 billion; negotiable order withdrawal (NOW) and money market accounts of $8.8 billion; savings accounts of $ 4.0 billion, and non-interest-bearing accounts of $2.2 billion. As of December 31, 2011, the Company�� borrowed funds totaled $14.0 billion, loan repayments and sales generated cash flows of $15.0 billion, and securities sales and repayments generated cash flows of $4.2 billion.

Subsidiary Activities

As of December 31, 2011, Community Bank had 34 subsidiary corporations. Of these, 22 are direct subsidiaries of the Community Bank and 12 are subsidiaries of Community Bank! -owned en! tities. The 22 direct subsidiaries of the Community Bank include DHB Real Estate, LLC, Mt. Sinai Ventures, LLC, NYCB Community Development Corp., NYCB Mortgage Company, LLC, Eagle Rock Investment Corp., Pacific Urban Renewal, Inc., Somerset Manor Holding Corp., Synergy Capital Investments, Inc., 1400 Corp., BSR 1400 Corp., Bellingham Corp., Blizzard Realty Corp., CFS Investments, Inc., Main Omni Realty Corp., NYB Realty Holding Company, LLC, O.B. Ventures, LLC, RCBK Mortgage Corp., RCSB Corporation, RSB Agency, Inc., Richmond Enterprises, Inc. and Roslyn National Mortgage Corporation.

The 12 subsidiaries of Community Bank-owned entities include Bronx Realty Funding Company, LLC, Columbia Preferred Capital Corporation, Ferry Development Holding Company, Peter B. Cannell & Co., Inc., Roslyn Real Estate Asset Corp., Walnut Realty Funding Company, LLC, Woodhaven Investments Inc, Your New REO, LLC, Ironbound Investment Company, Inc.,The Hamlet at Olde Oyster Bay, LLC, The Hamlet at Willow Creek, LLC and Richmond County Capital Corporation.

The two direct subsidiaries of the Commercial Bank include Beta Investments, Inc., and Gramercy Leasing Services, Inc. The two subsidiaries of Commercial Bank-owned entities include Omega Commercial Mortgage Corp. and Long Island Commercial Capital Corp.

Advisors' Opinion:

• [By Sally Jones] Kahn�� Current Shares: 4,006,237
  
  In second quarter 2013, Kahn Brothers also increased its position with another long-time holding, New York Community Bancorp Inc. (NYCB) by 3.74%, buying 144,329 shares at an average price of $13.51, for a 13.8% gain. For the 4,006,237 shares bought since the second quarter of 2005, Kahn�� average cost was $13.48 per share with a 14% gain.
  
  NYCB reported second quarter 2013 GAAP earnings of $122.5 million, or $0.28 per diluted share, and $241.2 million, or $0.55 per diluted share for the six months ending June 30, 2013. The company�� balance sheet shows assets of $44.2 billion as of June 30, 2013. The company had a net income of $501.1 million in 2012.
  
  Up 17% over 12 months, NYCB has a market cap of $6.78 billion, and trades with a P/E of 13.30, a P/B of 1.20, and a P/S of 4.62. The current share price is $15.37.
  
  [ Enlarge Image ]
  
  New York Community Bancorp Inc. is the 20th largest bank holding company in the nation and a leading producer of multi-family loans in New York City, with an emphasis on apartment buildings that feature below-market rents. NYCB operates two bank subsidiaries��ew York Community Bank, a thrift, with 239 branches in Metro New York, New Jersey, Ohio, Florida and Arizona--and New York Commercial Bank, with 35 branches in New York City, Westchester County and Long Island, including 18 branches that operate under the name Atlantic Bank.
  
  Nam Tai Electronics (NTE)
  
  Kahn�� Current Shares: 3,736,917
  
  Irving Kahn also increased his position with components manufacturer Nam Tai Electronics (NTE) by 9.24%, buying 315,981 shares at an average price of $8.96, for a 14.5% loss. For the 3,828,873 shares bought since the second quarter of 2008, Kahn�� average price was $9.90 per share with a 23% loss.
  
  Up 15% over 12 months, Nam Tai has a market cap of $343.2 million, and trades with a P/E of 4.70, a P/B of 0.80 and a P/S of 0.27. The current share price is $7.66.
  
  [ Enlarge Image ]
  For the second quarter of 2013, Nam Tai Electronics reported sales of $167.9 million, up 64%, with a net income loss of $31.9 million. The company�� gross profit margin was at 9.4%, compared to 15% in the same quarter a year ago. The company�� net income for first quarter 2013 was reported at $4.9 million, compared to a loss of $3.6 million in the same quarter a year ago.
  
  More Second Quarter Action
  
  Guru Irving Kahn also reduced ten of his positions in the second quarter of 2013.
  
  Here are the trade details.
  
  Irving Kahn, along with brothers Alan and Thomas, founded Kahn Brothers & Company Inc., in 1978, which later became Kahn Brothers Group. The company portfolio lists 46 stocks, none of them new, with a total value of $648 million and a 1% quarter over quarter turnover, according to the recent GuruFocus update.
  
  
  
  GuruFocus Real Time Picks reports the stock purchases and sales that Gurus have made within the prior 2 weeks. The report time lag can be as short as 2 days after the date of the transaction. This feature is for Premium Members only. If you are not a Premium Member, we invite you for a 7-day Free Trial.

Top 5 Bank Companies To Own For 2014: Federal National Mortgage Association (FNMA)

Federal National Mortgage Association (Fannie Mae) is a government-sponsored enterprise (GSE) chartered by the United States Congress to support liquidity and stability in the secondary mortgage market, where mortgage-related assets are purchased and sold. The Company�� activities include providing market liquidity by securitizing mortgage loans originated by lenders in the primary mortgage market into Fannie Mae mortgage-backed securities (Fannie Mae MBS), and purchasing mortgage loans and mortgage-related securities in the secondary market for its mortgage portfolio. Fannie Mae operates in three business segments: Single-Family business, Multifamily Business (formerly Housing and Community Development (HCD)) and Capital Markets group. Its Single-Family Credit Guaranty and Multifamily businesses work with its lender customers to purchase and securitize mortgage loans customers deliver to the Company into Fannie Mae MBS.

The Company obtains funds to support its business activities by issuing a variety of debt securities in the domestic and international capital markets. Fannie Mae acquires funds to purchase mortgage-related assets for its mortgage portfolio by issuing a variety of debt securities in the domestic and international capital markets. It also makes other investments. Fannie Mae conducts its business in the United States residential mortgage market and the global securities market. It conducts business in the United States residential mortgage market and the global securities market. During the year ended December 31, 2011, the Company��

Single-Family Business

Single-Family business includes mortgage securitizations, mortgage acquisitions, credit risk management and credit loss management. Single-Family business works with the Company�� lender customers to provide funds to the mortgage market by securitizing single-family mortgage loans into Fannie Mae MBS. Its Single-Family business also works with its Capital Markets group to facilitate the pu! rchase of single-family mortgage loans for the Company�� mortgage portfolio. Fannie Mae�� Single-Family business prices and manages the credit risk on its single-family guaranty book of business, which consists of single-family mortgage loans underlying Fannie Mae MBS and single-family loans held in its mortgage portfolio. Single-Family business and Capital Markets group securitize and purchase primarily single-family fixed-rate or adjustable-rate, first lien mortgage loans, or mortgage-related securities backed by these types of loans.

The Company securitizes or purchases loans insured by Federal Housing Administration (FHA), loans guaranteed by the Department of Veterans Affairs (VA), and loans guaranteed by the Rural Development Housing and Community Facilities Program of the Department of Agriculture, manufactured housing loans, reverse mortgage loans, multifamily mortgage loans, subordinate lien mortgage loans and other mortgage-related securities. Its Single-Family business securitizes single-family mortgage loans and issues single-class Fannie Mae MBS. Fannie Mae�� Single-Family business securitizes loans solely in lender swap transactions, in which lenders deliver pools of mortgage loans to the Company, which are placed immediately in a trust, in exchange for Fannie Mae MBS backed by these loans. Generally, the servicing of the mortgage loans held in its mortgage portfolio or that backs its Fannie Mae MBS is performed by mortgage servicers on the Company�� behalf. Lenders who sell single-family mortgage loans to Fannie Mae service these loans for the Company. For loans it owns or guarantees, the lender or servicer must obtain its approval before selling servicing rights to another servicer.

Fannie Mae�� mortgage servicers collect and deliver principal and interest payments, administer escrow accounts, monitor and report delinquencies, perform default prevention activities, evaluate transfers of ownership interests, respond to requests for partial releases of s! ecurity, ! and handle proceeds from casualty and condemnation losses. Its mortgage servicers are the primary point of contact for borrowers and perform implementation of its homeownership assistance initiatives, negotiation of workouts of troubled loans, and loss mitigation activities. Mortgage servicers also inspect and preserve properties and process foreclosures and bankruptcies.

Multifamily Mortgage Business

Multifamily business works with the Company�� lender customers to provide funds to the mortgage market by securitizing multifamily mortgage loans into Fannie Mae MBS. Through its Multifamily business, Fannie Mae provides liquidity and support to the United States multifamily housing market principally by purchasing or securitizing loans that finance multifamily rental housing properties. It also provides some limited debt financing for other acquisition, development, construction and rehabilitation activity related to projects that complement this business. Fannie Mae�� Multifamily business also works with its Capital Markets group to facilitate the purchase and securitization of multifamily mortgage loans and securities for Fannie Mae�� portfolio, as well as to facilitate portfolio securitization and resecuritization activities.

The Company�� multifamily guaranty book of business consists of multifamily mortgage loans underlying Fannie Mae MBS and multifamily loans and securities held in Fannie Mae�� mortgage portfolio. Revenues for Fannie Mae�� Multifamily business are derived from a variety of sources, including guaranty fees received as compensation for assuming the credit risk on the mortgage loans underlying multifamily Fannie Mae MBS and on the multifamily mortgage loans held in its portfolio and on other mortgage-related securities; transaction fees associated with the multifamily business, and other bond credit enhancement related fees. As with the servicing of single-family mortgages, multifamily mortgage servicing is performed by the lenders who! sell the! mortgages to the Company. Fannie Mae�� Multifamily business is organized and operated as an integrated commercial real estate finance business.

Capital Markets

Capital Markets group's primary business activities include mortgage and other investments, mortgage securitizations, structured mortgage securitizations and other customer services, and interest rate risk management. Capital Markets group manages the Company�� investment activity in mortgage-related assets and other interest-earning, non-mortgage investments. It funds its investments primarily through proceeds the Company receives from the issuance of debt securities in the domestic and international capital markets. Its business activity is focused on making short-term use of its balance sheet rather than long-term investments. Activities Fannie Mae is undertaking to provide liquidity to the mortgage market include whole loan conduit, early funding, real estate mortgage investment conduit (REMICs) and other structured securitizations and dollar roll transactions. Whole loan conduit activities include its purchase of both single-family and multifamily loans principally for the purpose of securitizing them. During the year ended December 31, 2010, it was engaged in dollar roll activity. A dollar roll transaction is a commitment to purchase a mortgage-related security with a concurrent agreement to re-sell a similar security at a later date or vice versa.

Fannie Mae�� Capital Markets group is engaged in issuing both single-class and multi-class Fannie Mae MBS through both portfolio securitizations and structured securitizations involving third party assets. Its Capital Markets group creates single-class and multi-class Fannie Mae MBS from mortgage-related assets held in its mortgage portfolio. Fannie Mae�� Capital Markets group may sell these Fannie Mae MBS into the secondary market or may retain the Fannie Mae MBS in its investment portfolio. The Company�� Capital Markets group creates single-clas! s and mul! ti-class structured Fannie Mae MBS, for its lender customers or securities dealer customers, in exchange for a transaction fee. The Company�� Capital Markets group provides its lender customers and their affiliates with services that include offering to purchase a range of mortgage assets, including non-standard mortgage loan products; segregating customer portfolios to obtain optimal pricing for their mortgage loans, and assisting customers with hedging their mortgage business.

Although the Company�� Capital Markets group�� business activities are focused on short-term financing and investing, revenue from its Capital Markets group is derived primarily from the difference, or spread, between the interests it earns on its mortgage and non-mortgage investments and the interest it incurs on the debt the Company issues to fund these assets. Its Capital Markets revenues are primarily derived from the Company�� mortgage asset portfolio. Capital Markets group funds its investments primarily through the issuance of a variety of debt securities in a range of maturities in the domestic and international capital markets. Investors in the Company�� debt securities include commercial bank portfolios and trust departments, investment fund managers, insurance companies, pension funds, state and local governments, and central banks.

The Company competes with Freddie Mac, FHA and Ginnie Mae.

Neutral Rec for Pinnacle West - Analyst Blog

We retain our Neutral recommendation on Pinnacle West Capital Corp. (PNW). The Arizona based utility play presently holds a Zacks Rank #3 (Hold).

Why the Reiteration?

Pinnacle West posted inspiring earnings results in the first quarter of 2013, widely surpassing our expectation. The company outperformed on the back of positive non-fuel rate changes and favorable retail sales.

Nevertheless, our reiteration takes into consideration the impact of the Obama climate plan which calls for reduction in coal-fired operations in the future. This will inevitably take a toll on Pinnacle West's coal-generation business, which forms a major part of its operational mix.

Also, the lingering weak economic fundamentals in the U.S. will continue to prevent electric prices from gaining momentum thereby deterring Pinnacle West's opportunities.

Yet, the company's gradual shift to renewable energy sources will bode well for its future broad growth objectives. Pinnacle West has a series of solar investments in the pipeline in Arizona which will elevate its clean energy generation share to 15% by 2025. This will be further supported by consistent customer additions expected in the next 3 years.

To expand its market accessibility, the company has also ventured into developing transmission assets. Pinnacle West's ambitious 10-year plan to build a 275-mile line will strengthen its position in the energy industry. Apart from this, the company is also developing transmission lines to connect far off cities like California and Phoenix.

On the flip side, the company needs to watch out for rising operating expenses resulting from regulatory compliance cost.

Other Stocks to Consider

Other stocks which are worth considering are Zacks Ranked #2 (Buy) ALLETE Inc. (ALE), DTE Energy Company (DTE) and Calpine Corp. (CPN).

Friday’s ETF Chart To Watch: XLY Rally In Focus After ...

Stocks rallied higher on Thursday as investors expressed optimism following Fed Chairman Bernanke's reassurance after the latest FOMC minutes released on Wednesday afternoon. Labor market data slid under the radar as the bulls turned the other cheek when weekly jobless claims came in worse-than-expected; 360,000 people had filed for unemployment benefits compared to the previous reading of 344,000 .Our ETF to watch for today is the Consumer Discretionary Select Sector SPDR as the latest consumer confidence data hits the street. Analysts are expecting for July's consumer sentiment figure to come in at 84.1, unchanged from the prior month.

Chart Analysis

Consider XLY's one-year daily performance chart below. Notice how XLY has traded higher within a fairly well-defined trading channel (blue lines) since the last time it rebounded off its 200-day moving average (yellow line) in November of 2012. The chart below reveals that XLY has a tendency to correct lower after grinding along, or deviating above, its upper resistance boundary. Similarly, it has a tendency to resume its uptrend following a pullback down to its lower support boundary. As such, jumping into a long position at current levels is not advisable for more conservative investors seeing as how XLY has broken above its longer-term channel .

Click to EnlargeOn the other hand, taking a short position in XLY at current levels, although very lucrative, is quite risky given the incredibly strong long-term uptrend at hand .

OutlookIf the latest consumer sentiment report comes in above expectations XLY should continue its rally higher; in terms of upside, there is no clear resistance level in sight since the security is trading in uncharted territory. On the flip side, weaker-than-expected sentiment can spark profit taking; in terms of downside, XLY should have immediate support right around $58 a share. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profi! t-taking techniques.

Follow me on Twitter @SBojinov



Disclosure: No positions at time of writing.

Filings Show Fed Vice Chair Yellen Owns Stocks, Funds, Stamps

WASHINGTON (AP) -- Federal Reserve Vice Chair Janet Yellen, a leading contender to replace Ben Bernanke as Fed chairman, holds a mix of big-company stocks and investment funds in a trust with her husband, fellow economist George Akerlof. They also share an interest in stamps.

Yellen's financial disclosure report for 2012, made public Tuesday, shows that she and Akerlof have between $4 million and $13 million in assets, including a stamp collection valued at $15,000 to $50,000. Akerlof is a Nobel Prize-winning economist who teaches at the University of California, Berkeley.

As the No. 2 Fed official, Yellen has represented the central bank at international finance meetings and has helped develop the Fed's plans for responding to a future global crisis. She has been in an unusually public succession battle for the chairman's job with former Treasury Secretary Larry Summers. President Barack Obama will nominate Bernanke's successor.

The exact value of government officials' assets can't be determined from the financial disclosure reports because values are only required to be provided in ranges.

The couple reported no mortgages or other liabilities exceeding $10,000.

Bernanke, who is expected to step down in January after eight years in the job, refinanced his family's Washington home in 2011. He was among the beneficiaries of the Fed's policy of record-low interest rates, taking out a 30-year mortgage with a fixed 4.25% rate that replaced one in 2009 at 5.375%.

The mortgage is valued at between $500,000 and $1 million, Bernanke's 2012 disclosure form shows.

He held between $1.1 million and $2.3 million in assets excluding the home, unchanged from his 2011 report.

Bernanke's investments still are largely plain vanilla with the focus on safety, such as annuities and U.S. Treasury securities. His largest holdings continued to be two annuities managed by TIAA-CREF, each with an estimated value of between $500,000 and $1 million. Bernanke earned a total of between $30,000 and $100,000 last year from the two annuities, which were part of a retirement plan he set up while teaching at Princeton University.

One is a fixed annuity plan, the other a variable annuity. An annuity provides an investor with a series of regular payments. With a fixed annuity, the payments don't vary. With a variable annuity, payments can fluctuate depending on the performance of the underlying investment.

Bernanke earned a $199,700 salary as Fed chairman last year, the same as a Cabinet secretary; Yellen earned $179,700 as a Fed governor.

Summers was Treasury chief in the Clinton administration and more recently was a top economic policy advisor to Obama. He has been the president of Harvard University and also has worked on Wall Street, and his personal fortune could be expected to eclipse Yellen's.

link

Sprint Offers Guaranteed Plan - Analyst Blog

Sprint Nextel Corp. (S) recently announced the launch of unlimited plans for voice, text and data services. The service, known as Sprint Unlimited Guarantee, would offer unlimited data for $30 a month on smartphones and $10 per month on other phones. In addition, voice and messaging services will be offered for $50 for subscribing to the first connection and thereafter will be charged less for subscribing to additional connections.

After declaring its successful merger completion with Japanese telecom company, SoftBank, Sprint's recent move towards product differentiation and promoting its brand signifies its aggressive take on establishing its foothold against major rivals AT&T, Inc. (T) and Verizon Communications Inc. (VZ).

Sprint is focusing on revenue growth in the core Sprint platform business. In this platform, increasing penetration of smartphones, in particular Apple Inc.'s (AAPL) iPhones and the $10 data premium plan are accelerating post-paid wireless subscriber growth and average revenue per user (ARPU) with an improving churn rate.

With regard to prepaid, Sprint's multi-brand like Boost Mobile, Assurance Wireless and Virgin Mobile as well as innovative offers like the $50 Monthly Unlimited plan with Shrinkage, Beyond Talk plans and Broadband2Go are making significant contributions to the company's subscriber growth. Additionally, the company started offering the popular iPhone through its no-contract prepaid Virgin Mobile brand and WiMAX service via both prepaid Virgin and Boost Mobile.

Sprint's core platform business also depends upon the success of its multi-billion dollar restructuring program known as Network Vision. Through this plan, the company is concentrating on the core Sprint platform, which includes CDMA, WiMAX and LTE technologies, and the eventual termination of the Nextel platform (iDEN business). The company began the deployment of CDMA voice on 800 MHz in the first quarter and is further expected to deploy LTE on 800 megahertz by ! the fourth quarter of the year. This network restructuring enabled the company to abort the Nextel platform, ultimately removing higher expenses of running two separate networks. The company expects the Network Vision deployment to be over by the end of 2013, two years ahead of the original schedule.

Sprint has a Zacks Rank #3, implying a Hold rating.

Best Undervalued Stocks To Invest In 2014

Now we have rebalanced all the model portfolios. We would like to review these strategies and see if they really work. Our goal is to promote the investing strategy that made Warren Buffett the richest person in the world. We believe that high quality growing companies at reasonable prices are the best places to invest. We rank companies by their business predictability and our value strategies only invest in companies that rank high with business predictability.

Besides the basic requirement of business predictability, we also filter for companies that are financially strong and traded at reasonable valuations by measurements such as intrinsic values and common used ratios. The four value strategies we have focused on use different valuation ratios.

1. Buffett-Munger screener: Invests in predictable companies that have low debt, consistent profit margin and are traded at low P/E to growth ratios.

2. Undervalued Predictable Companies: Invests in predictable companies that are undervalued based on DCF model.

3. Historical low P/S: Companies that have high predictability rank, but traded at historical-low P/S ratios.

4. Historical low P/B: Companies that have high predictability rank, but traded at historical-low P/B ratios.

These are the historical performances of the strategies relative to the S&P 500. All numbers do not include dividends.

Year	S&P 500	Buffett-Munger Screener top 25	Top 25 Undervalued Predictable Companies	Top 25 Historical Low P/S Ratio Companies	Top 25 Historical Low P/B Ratio Companies
2009	24.7%	28.6%	55.7%
2010	11.6%	19.5%	20.2%	16.4%	19%
2011	-0%	6%	-3.3%	-1.9%	-2%
2012	13.4%	11.8%	5%	17.4%	16.4%
Since Inception	85.9%	94.6%	37.1%	37.1%
Outperforming the S&P		24%	32.7%	7.3%	7.3%

Among all four value strategies, ��ndervalued Predictable Companies��had the best overall performance. However, most of the outperformance came from 2009 and 2010, when the market was relatively cheap and it was easier to find undervalued stocks.

The Buffett-Munger strategy, where we invest in companies that have a strong balance sheet and the ��oat��that protects them from margin erosion, shows the most consistent performance. It has outperformed the market in 2009 through 2011, and underperformed slightly in 2012. On average it outperformed the S&P 500 by 5% per year.

The strategies of investing in companies with high predictability ranks at historical low P/S and P/B ratios had similar performances over the past three years. These strategies lagged the market slightly in 2011, but outperformed in 2010 and 2012. On average, they outperform the market by about 2% per year.

We would like point out that even with the strategies that will work well over long term, it is impossible to find a strategy that will outperform the market ALL the time. While the strategy of investing in high quality companies at reasonable prices works, market can be carried by irrational emotions for years.

As mentioned before, we have just rebalanced all the portfolios. It is the time to rebalance your portfolio and invest in high quality companies at reasonable prices with these strategies.

GuruFocus premium membership is needed to access the details of the portfolios and screeners. If you are not a Premium Member, we invite you for a 7-day Free Trial.

Best Undervalued Stocks To Invest In 2014: Caterpillar Inc.(CAT)

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three lines of businesses: Machinery, Engines, and Financial Products. The Machinery business offers construction, mining, and forestry machinery, including track and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer loaders, underground mining equipment, tunnel boring equipment, and related parts. It also manufactures diesel-electric locomotives; and manufactures and services rail-related products and logistics services for other companies. The Engines business provides diesel, heavy fuel, and natural gas reciprocating engines for Caterpillar machinery, electric power generation systems, marine, petrol eum, construction, industrial, agricultural, and other applications. It offers industrial turbines and turbine-related services for oil and gas, and power generation applications. This business also remanufactures Caterpillar engines, machines, and engine components; and offers remanufacturing services for other companies. The Financial Products business provides retail and wholesale financing alternatives for Caterpillar machinery and engines, solar gas turbines, and other equipment and marine vessels, as well as offers loans and various forms of insurance to customers and dealers. It also offers financing for vehicles, power generation facilities, and marine vessels. The company markets its products directly, as well as through its distribution centers, dealers, and distributors. It was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquartered in Peoria, Illinois.

Advisors' Opinion:

• [By Ben Levisohn]

  For one day at least, this CAT is not a dog.

  Caterpillar (CAT) has gained 2% to $86.22 today, its largest gain since in a month and the largest gain among the Dow components. The machinery manufacturer has dropped 11% during the past six months, however, as a slowdown in China and cost-cutting at mining companies have hit its shares.

  Bloomberg

  Susquehanna’s Ted Grace offers reasons for optimism, even as he lowers his 12-month price target to $97 from $104:

  CAT remains Positive rated with 15% upside to our $97 price target and upside-downside of 1.2-to-1 (which, like most of our machinery names, is admittedly shy of the 2-to-1 or better ratio we prefer). Despite our 2014-15 EPS being ~6% below consensus, we view our updated estimates as closer to buyside expectations while noting that consensus appears to embed a low tax rate that explains over half of the variance. While there remains plenty of uncertainty on 2014/15, particularly in mining, we believe CAT shares currently discount reasonable top-line expectations while recent meetings with mgmt suggest potential for structural cost savings that could drive better than expected margins/ incrementals. While difficult to identify discernible catalysts, if CAT’s framework for flat-to-better RI revenue growth in 2014 proves correct (admittedly not assumed in our estimates), this would almost certainly debunk the core of the bear thesis and be meaningfully positive for shares.

  Investors waiting for the stock to actually, you know, rise can take comfort in Caterpillar’s $2.40 dividend per share and its more than $3 per share in buybacks in 2013, Grace says.

  Caterpillar’s 2% gain has trumped the Dow Jones Industrial Average’s 0.04% rise, and United Technology’s (UTX) 0.1% drop, while competitor Deere (DE) has gained 1.9% to $83.22.

• [By Roberto Pedone]

  Caterpillar (CAT) is staging a textbook breakout in May. Shares of heavy equipment maker haven't exactly been kind to investors year-to-date; CAT has barely broken even during a time when the broad market has been in a historic rally. But a textbook breakout should change that.

  CAT started forming an inverse head and shoulders pattern back in early April. The inverse head and shoulders is formed by two swing lows that bottom out around the same level (the shoulders), separated by a lower low called the head; the buy signal comes on the breakout above the pattern's "neckline" level, which was just below $86 for CAT. That puts this stock's upside target right around $92.

  Even though CAT has nearly hit its upside target already (the post-breakout buying has been very quick), the longer-term implication for investors is a break of the downtrend that had been haranguing shares this year. Now, with that downtrend broken, CAT should have more room to move higher. I'd just expect some consolidation first.

• [By Jim Cramer,TheStreet]

  Caterpillar (CAT) could be a monster in 2011, especially with the integration of Bucyrus International (BUCY), which I think will turn out to be a fantastic acquisition.

  Current earnings-per-share estimates of about $6 are, I think, way too low. I see this stock going to $120 in the next year. Too gutsy? Ask yourself what happens if the United States comes back as a growth nation? Right now almost all of the growth is overseas.

  Still a fantastic mineral play and a terrific call on world growth.

Best Undervalued Stocks To Invest In 2014: Schlumberger N.V.(SLB)

Schlumberger Limited, together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. The company?s Oilfield Services segment provides exploration and production services; wireline technology that offers open-hole and cased-hole services; supplies engineering support, directional-drilling, measurement-while-drilling, and logging-while-drilling services; and testing services. This segment also offers well services; supplies well completion services and equipment; artificial lift; data and consulting services; geo services; and information solutions, such as consulting, software, information management system, and IT infrastructure services that support oil and gas industry. Its WesternGeco segment provides reservoir imaging, monitoring, and development services; and operates data processing centers and multiclient seismic library. This segment also offers variou s services include 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management. The company?s M-I SWACO segment supplies drilling fluid systems to improve drilling performance; fluid systems and specialty tools to optimize wellbore productivity; production technology solutions to maximize production rates; and environmental solutions that manages waste volumes generated in drilling and production operations. Its Smith Oilfield segment designs, manufactures, and markets drill bits and borehole enlargement tools; and supplies drilling tools and services, tubular, completion services, and other related downhole solutions. The company?s Distribution segment markets pipes, valves, and fittings, as well as mill, safety, and other maintenance products. This segment also provides warehouse management, vendor integration, and inventory management services. Schlumberger Limited was founded in 1927 and is based in Houston, Texas.

Advisors' Opinion:

• [By Robert Holmes]

   Schlumberger has the most potential upside of any stock in this group of 50 that also makes the firm's Best Ideas list. Analyst Ole Slorer says Schlumberger has "what we consider the most advanced technology portfolio in the industry."

  "Its fundamentals are impressive, with what we think are some of the best field personnel, a pristine service and performance reputation, and leading market share in most of its product lines," Slorer writes.

  Though Slorer's price target is 42% above current levels, his most bullish scenario for Schlumberger over the next year would see shares climb a whopping 116%. On the downside, his most bearish scenario for the company would see shares slide 38% over the next 12 months.

Top 5 Energy Stocks To Invest In Right Now: Dollar Tree Inc.(DLTR)

Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Its stores offer merchandise primarily at the fixed price of $1.00. The company operates its stores under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant, and Dollar Bills. Its stores offer consumable merchandise, including candy and food, and health and beauty care, as well as household consumables, such as paper, plastics, household chemicals, in select stores, and frozen and refrigerated food; variety merchandise, which includes toys, durable housewares, gifts, party goods, greeting cards, softlines, and other items; and seasonal goods, such as Easter, Halloween, and Christmas merchandise. As of April 30, 2011, it operated 4,089 stores in 48 states and the District of Columbia, as well as 88 stores in Canada. The company was founded in 1986 and is based in Chesapeake, Virginia.

Advisors' Opinion:

• [By Sam Collins]

  Dollar Tree (NASDAQ:DLTR) is a leading operator of discount variety stores. The stock has hugged its 50-day moving average since mid-February. But a recent minor revision of earnings for this year by several analysts and the recent market sell-off have resulted in a fall from its high of the year at over $70 to under $66. However, Goldman Sachs (NYSE:GS) increased its price target to $73 from $69.

  Technically DLTR is oversold, according to MACD. A break below its 50-day moving average could result in a pullback to $64, but positions could be taken at the current market price. The trading target for DLTR is $72.

Best Undervalued Stocks To Invest In 2014: Tupperware Corporation(TUP)

Tupperware Brands Corporation operates as a direct seller of various products across a range of brands and categories through an independent sales force. The company engages in the manufacture and sale of kitchen and home products, and beauty and personal care products. It offers preparation, storage, and serving solutions for the kitchen and home, as well as kitchen cookware and tools, children?s educational toys, microwave products, and gifts under the Tupperware brand name primarily in Europe, Africa, the Middle East, the Asia Pacific, and North America. The company provides beauty and personal care products, which include skin care products, cosmetics, bath and body care, toiletries, fragrances, nutritional products, apparel, and related products principally in Mexico, South Africa, the Philippines, Australia, and Uruguay. It offers beauty and personal care products under the Armand Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo, and Swissgar de brand names. The company sells its Tupperware products directly to distributors, directors, managers, and dealers; and beauty products primarily through consultants and directors. As of December 26, 2009, the Tupperware distribution system had approximately 1,800 distributors, 61,300 managers, and 1.3 million dealers; and the sales force representing the Beauty businesses approximately 1.1 million. The company was formerly known as Tupperware Corporation and changed its name to Tupperware Brands Corporation in December 2005. The company was founded in 1996 and is headquartered in Orlando, Florida.

Advisors' Opinion:

• [By Sam Collins]

  Household name Tupperware Brands Corp. (NYSE:TUP) is a global direct seller of products with multiple brands through an independent sales force of 2.4 million people. Its product line focuses on kitchen storage and serving solutions, as well as personal-care products. Over 60% of sales in 2011 are expected to come from Europe and Asia, and the stock has appeal as an emerging markets story.

  S&P estimates that 2011 earnings will increase to $4.54 versus $3.53 in 2010, and it increased its rating to a “five-star strong buy” with a recently revised 12-month target of $81, up from $73. The 2005 purchase of Sara Lee’s (NYSE:SLE) direct-sales business, which has a high growth rate, should be a long-term benefit. TUP’s annual dividend yield is 1.92%.

  Technically TUP had a pullback following a new high at over $70 and is currently oversold. Buy TUP at the current market price with a trading target of $70, but longer term a much higher target will likely be attained.

Chuck Royce on the Opportunities and Elements of Micro-Cap Investing

Although less liquid and more volatile than small-caps and mid-caps, Co-CIO Chuck Royce believes that micro-cap is an evergreen universe that offers many opportunities and greater return potential.See the Chuck Royce video here.

The micro-cap universe—which we define as companies with market capitalizations below $750 million—has evolved significantly since President and Co-CIO Chuck Royce first took notice of the segment in the late 1980s. As of June 30, 2013, the U.S. micro-cap asset class consisted of more than 3,170 companies with more than $500 billion in total capitalization.1

"We came to the conclusion that the asset class of small-cap was really a much bigger and broader universe than just a simple one class setting," says Chuck. "We decided that and we tested this to see if return patterns were different, and we came to the conclusion that they absolutely were," he adds.

Beside market cap, there are distinguishable characteristics that set the asset class apart, including less liquidity and greater volatility than its small-cap and mid-cap peers. Despite what many investors might consider as off-putting appearances, we believe that micro-caps offer greater return potential and present evergreen opportunities.

"We're looking for the sort of least volatile financial characteristics—very strong, low-leverage characteristics—and we take advantage of the volatility in the stocks themselves by buying in a very careful manner," says Chuck about how our investment process centers around risk management and a long-term approach that focuses on achieving above-average absolute returns.

Another attractive quality that we see inherent in micro-caps is the abundance of companies that the universe offers through IPOs, spinoffs of larger companies, and what Chuck likes to call "fallen angels," or higher market-cap companies that drop down into the asset class.

At Royce, we have a very broad look at micro-cap and have wide exposure to the! asset class both domestically and abroad. While some of our core offerings—such as Pennsylvania Mutual,Total Return, and Heritage—have elements of micro-cap in their portfolios, we also have several dedicated micro-cap products:

Royce Micro-Cap Fund – Managed by Jen Taylor since 2009 (co-manager 2006-2008 and assistant portfolio manager 2004-2005), with assistants Whitney George since 2009 andBrendan Hartman since 2013.

Royce Micro-Cap Discovery Fund – Managed by George Necakov since 2003 and Jim Harveysince 2010, with assistant Chuck Royce since 2010.

Royce Capital Fund – Micro-Cap Portfolio – Managed by Jen Taylor since 2010 (co –manager 2009-2010, assistant portfolio manager 2003-2009), with assistants Whitney George since 2010 (manager 2002-2009) and Brendan Hartman since 2013.

Royce Micro-Cap Trust (a closed end fund) – Managed by Chuck Royce since 1993, with assistants Chris Flynn, Jenifer Taylor, and Jim Harvey since 2009.

Royce International Micro-Cap Fund – Managed by David Nadel since 2010 with assistants Jen Taylor and Jim Harvey since 2010.







Important Disclosure Information

The thoughts and opinions in the video are solely those of the person speaking as of August 12, 2013 and may differ from those of other Royce investment professionals, or the firm as a whole. There can be no assurance with regard to future market movements.

This material is not authorized for distribution unless preceded or accompanied by a currentprospectus. Please read the prospectus carefully before investing or sending money. Micro-cap, small-cap, and mid-cap stocks may involve considerably more risk than investing in larger-cap stocks (please see "Primary Risks for Fund Investors" in the prospectus).

1Data provided by [i]Reuters as of 6/30/31

[/i]

Carolina Alliance Bank & Forest Commercial Bank Report Merger (OTCMKTS:CRLN)

Carolina Alliance Bank (CRLN)

Today, CRLN remains (0.00%) +0.000 at $9.60 thus far (ref. google finance Delayed: 10:00AM EDT August 16, 2013).

Carolina Alliance Bank and Forest Commercial Bank jointly previously reported that they have signed a definitive merger agreement. The proposed combination will create a full-service community bank serving customers principally in upstate South Carolina and western North Carolina. The combined bank will have three full-service offices located in Spartanburg, SC, Asheville, NC, and Hendersonville, NC; a loan production office in Charlotte, NC; and a proposed branch office to be located in Seneca, SC. All of the offices will operate as Carolina Alliance Bank. The bank will be headquartered in Spartanburg, SC, with senior management personnel operating from both Spartanburg and Asheville. On a combined basis, the bank will have approximately $385 million in assets, approximately $277 million in loans, approximately $314 million in deposits, and a very strong capital position of approximately $50 million. The transaction is expected to close in the first quarter of 2014, subject to receipt of regulatory approvals and the approval of the shareholders of each institution.

Carolina Alliance Bank (CRLN) 5 day chart:

3 Picks From A Safer Pool Of Stocks

Alex Crooke, Portfolio Manager Henderson Global Equity Income Fund, Henderson Global Investors

Alex Crooke:  We have a very simple philosophy that says that the companies that pay dividends tend to be safe investments if you can apply some fairly standard valuation techniques.  So stocks with a slightly high yield and growth puts them into an even better subset of companies.  By focusing on those dividends, you're screening out a lot of companies that don't have the profits to pay dividends.

So the philosophy then on dividends is that you're buying companies with cash profits, from which they can pay out dividends to us as investors.  So it's a safer pool of stocks.  Above that, we apply standard valuation metrics such as balance sheet strength, moderate levels of debt, top-line revenue growth and margin expansion.

They're all measured in order to try to identify that subset of companies that can grow a dividend.  Hopefully there's a long-term track record of growing dividends that suggests they also can grow their dividends over the next two or three years for the benefit of investors.  We try to find companies with 3% or higher dividend yields.  It's a global fund, so we look for opportunities all over the world.

We find certain markets like Europe, U.K., Australia, and Hong Kong have a slightly higher dividend yield than the U.S. market.  But equally, we have 20 stocks or about 23% of the fund with U.S. exposure in them.

Wally Forbes:  To what degree do you have to try to take into account the ability of each currency to maintain its value, relative to others?

Crooke:  Good question.  The current GBP hedge is 10.5% versus a UK weighting in the Global Equity Income Fund of 35%.  As a general rule we try to hedge the domestic UK exposure.  Currently in the Fund there is roughly 10% of what is classed as domestic UK stocks rather than those with an international sales base.

Occasionally, we take a view on sterling.  For example, towards the beginning of the year we increased the hedge to 15% as we expected the pound to weaken.  As the Fund is overweight UK versus the MSCI World Index, which is around 10% UK, we maintain the hedge to limit currency risk exposure to our investors.  We expect to keep the hedge in place for the foreseeable future unless our view on sterling changes, or the Fund's weighting in the UK reduces dramatically – which is very unlikely.

Forbes:  Let's get into some specific stock ideas.

Crooke:  Let's start with the technology area.  Often when you talk about income funds or stocks, you hear about utilities.  But we have more fun hunting in markets where a shift is taking place.

And there are a lot of mature technology companies where investors have moved on and said, "These businesses are boring, they're not innovating, times are moving on."  To us, what's often happening is that these companies are now paying very large dividends and growing those dividends; and actually as long as they can maintain their margins and grow the top line a little bit, we think they can be very attractive investments.

Forbes:  Do you have any specific names?

Crooke:  Cisco (NASDAQ: CSCO) is one.  It is one of our top ten holdings because we think you've come from a period of quite low spending by customer companies that are hoarding cash.  We do think that you'll see a bit more expansion if the economy picks up; and you should see some more spending by the telecom companies and basic companies spending on Cisco's products.  So we see top line revenue growth of 7%.  If they can maintain margins we should see this business produce an awful lot of cash.  At 11 times earnings, you have got a really attractive investment.

Forbes:  Good.

Kabe Exploration Announced Loan Agreement with Phoenix Group Capital Markets (OTCMKTS:KABX, OTCMKTS:EQLB)

Kabe Exploration, Inc (KABX)

Last Friday, KABX previously surged (+4.93%) up +0.0007 at $.0149 with 220,466 shares in play at the close (ref. google finance July 12, 2013 – Close).

Kabe Exploration, Inc. previously reported it has secured a bridge loan with Phoenix Group Capital Markets, a UK holding company, through its wholly owned micro-cap investment fund. The bridge loan was secured with restricted stock for operating capital purposes. The company had previously entered into a $5,000,000 Reserve Equity Financing Agreement with Phoenix Group in a term sheet announced in May. "This bridge loan affirms the level of investment confidence we are seeing from the professional investment community," said Erik Ulsteen, the company's CE

Kabe Exploration, Inc (KABX) 5 day chart:

EQ Labs, Inc. (EQLB)

Last Friday, EQ Labs, Inc. (OTCMKTS:EQLB) (www.drinkeq.com) previously surged (+4.17%) up +0.0002 at $.0050 with 125,000 shares in play at the close (ref. google finance July 12, 2013 – Close).

Now at the current price of $.0050, EQLB would be considered to have experienced a (+733.33%) gain if compared to the 52 week low of $.0006. The stock is up +25% since the concerning dates of January 15, 2013 – July 12, 2013. +25% is the 6 month high and rightly so.

EQ Labs, Inc. manufactures and markets energy drink products in the United States and Latin America. The company offers EQ Smart Energy Drink, in an effervescent tablet form that provides an instant energy drink once added to a beverage of choice. EQ Labs, Inc. distributes its products through national and regional distributors.

EQ Labs, Inc. (EQLB) 5d chart:

Advisors Struggle With Life Insurance Sales

Many advisors struggle to make a good business out of life insurance, a survey released on Tuesday by Saybrus Partners found. Less than half described their life insurance sales and advice as “successful” or “very successful.”

Clients don’t appear to be very interested in life insurance. Forty-four percent of advisors polled at Pershing’s 2013 INSITE conference in Hollywood, Fla., said just 10% of their clients brought up the subject of life insurance on their own.

“This survey shows that financial advisors have an opportunity to fill a gap and educate their clients about the potential role of life insurance,” Kevin Kimbrough, national sales manager for Saybrus Partners, an insurance firm, said in a statement. “Though most advisors work to incorporate life insurance into their clients’ financial plans, they are not as successful as they could be.”

The survey found 70% of advisors offer life insurance to their clients. Of those who don’t, nearly half said it took away from their primary business. Just 17% said they didn’t offer it because it was too complicated.

More than a third of advisors who do offer life insurance said the number of different policies and riders and understanding how they meet clients’ needs make selling it difficult. About a quarter said there was too much paperwork, and 13% said they couldn’t keep up with frequent changes in products.

Although advisors surveyed by Saybrus feel their clients aren’t interested in hearing about life insurance, a separate survey conducted in August by New York Life found that people who own life insurance tend to be happier than those without it. Forty-two percent of life insurance owners said they are very happy with their lives, compared with 32% of non-owners. Almost two-thirds think their quality of life is better than the average American’s, compared with 51% of non-owners.

“There is a sense that you’ve taken care of a key element of protection for your family, and that brings comfort and confidence that an important base is covered,” Mark Pfaff, executive vice president and head of agency for New York Life, said in a statement.

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Check out Median Retirement Balance Is $3,000 for All Working-Age Households on AdvisorOne.

UBS Improves Profits 32%; U.S. Advisors Top $1M in Average Fees

UBS (UBS) said Tuesday that its second-quarter profit improved 32% to 690 million Swiss francs ($742 million), or 0.18 Swiss francs per share, from 524 million Swiss francs ($563 million), or 0.14 Swiss francs per share, a year ago. (In the first quarter, profits were 988 million Swiss francs–about $1.06 billion–or 0.26 Swiss francs a share.)

Sales across the company grew 15% year over year to 7.4 billion Swiss francs ($8 billion), though they dropped 5% from the earlier quarter.

"I am very pleased with our performance this quarter. The results show that our strategy is right, and we're ahead on execution,” said Group CEO Sergio P. Ermotti, in a statement. “Every quarter since we set the strategy in 2011, we have executed it in a very clear and disciplined way building an unmatched capital position and delivering for our clients.”

The non-U.S. Wealth Management operations delivered their “highest profit in four years excluding charges related to the Swiss-UK tax agreement and restructuring costs” while drawing “robust inflows,” the company said.

Wealth Management Americas

The group’s financial-advisor headcount grew by 34 from last quarter and by 78 from last year to 7,099.

Invested assets per financial advisors stand at $126 million, close to last quarter’s results and up 11% from $114 million in the year-ago period.

Average annualized fees & commissions per financial advisor are $1,012,000–an improvement of 3% from $984,000 in the first quarter and up 12% from the second quarter of 2012.

(Rival Merrill Lynch (BAC) said that its advisors also have yearly production levels of over $1 million, though Morgan Stanley’s reps (MS) have annual fees & commissions of $866,000 as of June 30.)

In Wealth Management Americas, net new money totaled 2.7 billion Swiss francs ($2.8 billion), a drop from 8.6 billion Swiss francs ($9.2 billion) in the first quarter and from 3.7 billion Swiss francs ($4 billion) in the prior quarter. (The unit has had 12 consecutive quarters of net inflows, and its results exclude interest and dividend income.)

“The second quarter result mainly reflects outflows related to financial advisors employed with UBS for more than one year and included client withdrawals of around 2.2 billion Swiss Francs or $2.5 billion associated with annual income tax payments as well as seasonal declines compared with the first quarter,” the company explained in a report.

As a result, the annualized net new money growth rate for the second quarter was 1.3% vs. 4.4% in the prior quarter and below the target range of 2% to 4%, according to UBS.

Overall, the unit had a pretax profit of $258 million, up 3% from $251 million in the prior quarter and a jump of 21% from $214 million a year ago.

Assets stood at $892 billion as of June 30, a slight increase from $891 billion on March 31 and an increase of 12% from $797 billion last year.

Revenues for the unit expanded 13% year over year and 3% from last quarter to nearly $1.8 billion.

In other news, UBS says it plans to acquire SNB StabFund’s equity in the fourth quarter, which should improve its BIS Basel III CET1 capital ratio by an additional 70 to 90 basis points.

Brickwork accredits BWR BB ratings for ARPL's NCD

BWR has relied on the audited financial results of Adarsh Developers for FY 2011,  audited financial statements of ARPL for FY 2011 and quarter ending September 2011, projected financial figures of ARPL, information and legal opinion about the ownership of the  land on which the project is to come up and other data/information provided  by ARPL and the promoters.

As per unaudited results of ARPL for September ending 2011, borrowings stood at ` 100 Crore. The company�s Advances recoverable in cash increased to ` 81.95 Crore in H1 FY2012 from ` 71.77 Crore in H1 FY11. Expenses stood at ` 5.97 Crore in H1 FY12 as compared to ` 2.47 Crore in H1 FY11.

As per latest available audited results of Adarsh Developers, in FY11 income from sale of properties has marginally decreased to ` 312.21 Crore as compared to ` 319.53 Crore in FY10. PBT has marginally decreased to ` 59.06 Crore in FY11 from ` 59.65 Crore in FY10. 

Borrowings, including secured loan and unsecured loan decreased to ` 714.33 Crore in FY11 from ` 739.24 Crore in FY10. Total Debt to Equity ratio has gone down to 2.20 in FY11 as compared to 2.60 in FY10 mainly due to increase in capital and reserves to ` 324.02 Crore in FY11 from ` 284.61 Crore in FY10.

Click here to know more on investing in Fixed Income products

5 ETFs Surging on Bernanke's Dovish Comments - ETF News ...

Stocks received a nice boost to start Thursday trading, as investors focused in on a recent Q&A session from Fed Chairman Ben Bernanke. The statements were made at a conference at the National Bureau of Economic Research, and were well-received by those looking for stimulus programs to continue a little longer.

In the session, the Chairman said, 'You can only conclude that highly accommodative monetary policy for the foreseeable future is what's needed in the U.S. economy'. He also stated that the current unemployment rate of 7.6% 'probably understates the weakness of the labor market', suggesting to many that Bernanke isn't as hawkish as many might have initially thought (read QE Tapering Could Make These Bond ETFs Winners).

The statements also imply that tapering may not begin in the immediate future, potentially pushing a reduction of bond buying into the end of the year, if not 2014. It also suggests that even if a 6.5% unemployment rate is hit, this may not cause a rise in rates as the 'real' unemployment rate—especially when counting underemployment—is far higher than the 6.5% target and that more accommodation may be necessary to get back to full employment.

This news was very well received by the markets, as a number of securities took off in Thursday trading with the S&P 500 adding about 1%. However, a few corners of the market did even better on the day, and we have highlighted a few of the biggest ETF winners that surged thanks to Bernanke's dovish comments below:

Gold ETFs

More easy money is good news for precious metal investors, as it could help to push the dollar down and increase the appeal of alternative assets. After all, gold had been doing pretty well for much of the Fed's easy money history, though it has traded sluggishly—to put it mildly—as of late due to talk of a wind down in the QE program.

Thanks to this, gold ETFs like the SPDR Gold Trust (GLD) and the iShares Gold Trust (IAU) both added about 2.3! % on the day. This continues the recent bullish five day run for gold, though the metal is down significantly over the past three months (See ETF Asset Report for the First Half of 2013).

Silver ETFs

Silver also has many of the same safe haven properties as gold, though it also has a big industrial component as well. And with both hopes for an economy boosted by easing, and a sluggish dollar, silver has rocketed off of its lows and is once again approaching the $20/oz. level.

Silver ETFs like the iShares Silver Trust (SLV) and the ETF Securities Silver Trust (SIVR) both outdid gold in Thursday trading. Both added about 4.2% on the session, though the funds are down 30% in the past 90 days.

Mining ETFs

Mining stocks tend to trade as leveraged plays on their underlying commodities, so when gold and silver are rising, gold and silver mining stocks soar. This was certainly the case in Thursday trading, as big gains were seen in this beaten down space.

The popular gold mining ETFs such as the Market Vectors Gold Miners ETF (GDX) and the Market Vectors Junior Gold Miners ETF (GDXJ) both did quite well on the day, adding, respectively, 5% and 6.6%. Meanwhile, the Global X Silver Miners ETF (SIL) also posted strong gains, adding about 6% too (see A Safer Way to Invest in Precious Metal ETFs?).

Emerging Market ETFs

Emerging markets were crushed by the initial Fed comments about tapering, as a strong dollar hurt these securities across the board. However, with possibly a more dovish Fed, the dollar may face some weakness in the near term, while the risk on trade may also be back, signaling solid conditions for emerging markets investments.

Broad emerging market funds like VWO and EEM both added more than 3.5% on the day, but some specific countries were the biggest winners. These include a 6.8% gain for the Thailand ETF (THD), and a 4.9% surge for the South Korea ETF (EWY).

Homebuilder ETFs

The prospect of a longer period with low! rates wa! s certainly welcomed by the homebuilder space, as mortgage rates were starting to creep higher and possibly dull housing demand. But if the Fed is going to keep easy money policies for a bit longer, homebuilders might have some more room to run.

Due to this, the focused homebuilder ETF of ITB added about 4.9% on the session, helping the fund to move out of its near term bottom. Meanwhile, the broader XHB homebuilder ETF also saw a good day, adding 3.4% for the Thursday session (see Are Housing ETFs Back on Track?).

Bottom Line

The markets clearly liked the statements from Ben Bernanke and the suggestion that easy money policies are here to stay for a little longer. Pretty much every corner of the market—save some segments of the financial sector—were up on the news, with 1% gains common across the board.

However, some segments did even better with gains of at least a couple percent seen for the day. These gains were concentrated in some of the sectors that saw the biggest losses after the initial Fed panic a few weeks ago, helping these segments to rebound at least a little from their recent slump.

So if easy money continues, look for some of the aforementioned sectors to continue to move higher. However, these gains could easily evaporate if investors think the Fed may curtail bond purchases sooner rather than later, so make sure to keep a close eye on these ETFs should any new comments come from Bernanke, or if any policy changes appear likely in the near future.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>



Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Bear of the Day: Agnico Eagle Mines (AEM) - Bear of the Day

I last wrote about Agnico Eagle Mines (AEM) as a Zacks #5 Rank Strong Sell on April 2, right before they missed earnings estimates by 35%.

That was also before I decided to short gold above $1450 an ounce in May to take advantage of what I thought was becoming a bear market for the barbarous relic.

Since then, AEM has fallen from $40 a share to as low as $25 in late June when gold fell below $1200. You can access that Bear of the Day report here.

Things Could Improve for AEM, But...

Here's a summary note from Zacks Research on July 4, with a price target of $29:

We are upgrading our recommendation on Agnico-Eagle to Neutral. Profit for the first quarter slid roughly 70% on lower gold prices and production as well as higher cash costs. Adjusted earnings fell well short of the Zacks Consensus Estimate. Revenues fell by double digits, yet beat expectations.

The company backed its production guidance for the full year. Agnico-Eagle maintains a solid exploration budget and is reinvesting in its assets to expand output. Moreover, the company s revised life of mine plan is expected to yield significant free cash flows over the next several years.

However, any potential delay associated with the development projects may jeopardize its future production. We are also concerned about high operating costs across a number of mines.

Gold Miners Still Buried

I proposed as early as February when gold began its breakdown below $1600 that the miners would continue to remain under pressure as analysts had to keep lowering their earnings estimates.

Why would they have to keep doing that? To keep up with the falling price of gold.

Joining AEM as a Zacks #5 Rank in one of the lowest-ranked industry groups (244 out of 265), are Randgold (GOLD), Royal Gold (RGLD), Yamana Gold (AUY), Anglogold Ashanti (AU), and Allied Nevada (ANV).

While many gold worshippers will be searching for a bottom in the shiny metal at these levels, don't bet on these miners until thei! r earnings outlooks can get out of the dirt.

Their fortunes are tied to the current downtrend and the turn-arounds could take a while.

Kevin Cook is a Senior Stock Strategist with Zacks.com

United Technologies Still Has Plenty Of Runway

Not unlike Honeywell (NYSE:HON) and General Electric (NYSE:GE), United Technologies (NYSE:UTX) has built its business to take advantage of emerging growth cycles in commercial aviation, urbanization, and energy efficiency. Weak construction activity and share losses have limited the growth at Otis, Carrier, and Fire & Security, but the company's aviation business seems to doing relatively well and I believe there's further upside in all of these businesses. My question with UTX, though, is how much margin and cash flow leverage is waiting to emerge, as these shares seem fairly rich without some significant improvements along those lines.

Defense Weighs, But Commercial Aviation Is Doing Better
Although aerospace is one of the growthier areas of the industrial sector today, it wasn't enough to pull United Technologies up to meaningful organic growth. While reported revenue rose 16%, organic revenue growth was flat and the company missed sell-side expectations by more than 2%, largely on weaker defense-related sales.

Margins were mixed. Although the gross margin was not impressive (down 30bp and below expectations), operating income rose about 13% on a "core" basis and the company's margins were about a point higher than most analysts had projected.

By segment, Pratt & Whitney was up about 5% and Aero Systems revenue was up more than 164% on a reported basis (boosted by the acquisition), while Sikorsky was down about 3%. These results were about 2% to 5% below expectation, and the major sources of the revenue underperformance, as military/defense fell off more than expected. That slots UTX between Honeywell and General Electric, as the former seemed to be significantly impacted by lower defense revenue as well.

SEE: 5 Earnings Season Investing Tips

The CCS business was not particularly strong either (down about 1%), though, which is surprising given how Honeywell and Ingersoll-Rand (NYSE:IR) fared, though it's not out of line with Johnson Controls (NYSE:JCI). Relative to Kone, UTX's Otis results (up 4% versus up 14%) weren't very impressive and it looks like the company continues to cede share.

The Plan Sounds Good, But Execution Will Be Everything
In theory, UTX is addressing some very attractive markets with above-average growth potential. Growing demand for air travel in emerging markets ought to fuel a very strong commercial aviation cycle, and UTX is now a major supplier for both Boeing (NYSE:BA) and Airbus. What's more, the increased urbanization of emerging markets and growing need for better energy efficiency across the globe ought to be supportive for Otis and the CCS segment.

SEE: Conglomerates: Risky Proposition?

The question is whether UTX can and will make the most of this opportunity. I'm frankly not all that worried about the aviation side of things, as though I think UTX overpaid for Goodrich, I think the growth and margins will ultimately prove worthwhile.

I'm a little less confident in the other businesses. The order growth at Otis looked impressive this quarter (up 22%), but the cynic in me can't help but say "yes, but look at the base it's growing from". Likewise, I wonder if all of the focus on aviation has led to Otis and CCS suffering from some comparative neglect. With that, I think it may be harder for management to achieve the sort of operating margin and cash flow generation levels it will take to really drive the stock from here.

The Bottom Line
I'm expecting long-term free cash flow growth of 12% from United Technologies (or 7% adjusting for the acquisition), which puts in the upper tier of large cap industrial growth stories. Even with that, though, an investor has to be wiling to ignore the company's sizable debt load for that cash flow to translate into an appealing price target today. I don't believe in ignoring debt, and therefore I think UTX is going to have to achieve some pretty impressive margin improvements for the stock to outperform long term – and with Boeing squeezing suppliers and Otis/CCS looking less competitive, I have my doubts about that.

As it is, if I had to buy a potentially overpriced industrial with aviation exposure, I'd buy Honeywell and General Electric actually still looks undervalued on its own merits. Accordingly, while I understand that investors want stocks with above-average leverage to aviation, I think UTX is already richly valued on that basis.