Mecklai Graph: Tightening noose around liquidity?

The borrowings through the RBI repo window rose to a four-month high of Rs.1.016 trillion yesterday. The comfortable liquidity in the banking system proved to be shortlived as the demand for the cash from customers in the festival season and banks' repayment obligations are constricting liquidity in the market. Earlier in September, liquidity shortfall was observed on account of advance corporate tax outflows which soon receded later to as low as Rs.1840 cr on 5th October, as government spending picked up (as indicated in the graph with a dip).

Citing an increased pressure on the inter-bank liquidity, RBI is expected to return to open market operations sooner rather than later. The excess SLR investment of the banks is also likely to ensure success in the OMO auctions. This has also stoked speculations of further cut in the Cash Reserve Ratio (CRR) in the upcoming monetary policy if not a repo cut.

Below graph shows liquidity situation in the system since July

 

 

 

 

 

 

 

 

 

 

 

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Dish TV Opts for Broadcom SOCs - Analyst Blog

Leading semiconductor solutions provider Broadcom Corp's (BRCM) BCM7358HD and BCM7301SD system-on-chips (SOC) were recently selected by Dish TV India Ltd, a leading Indian direct broadcast satellite television provider, to support its high-definition content offerings.

Dish TV India boasts a large distribution network with more than 400 channels and 15 million subscribers on its platform. These SOCs support variety of advanced security and connectivity solutions and are used to power new generation of USB-based Digital Video Recorders (DVR). With Broadcom's SOCs, the satellite television provider is aiming to offer a cost-efficient platform, while maintaining high-quality features and performance.

Demand for high-definition contents has been continuously moving north as more and more consumers are moving to high-definition televisions. Broadcom's business is expected to expand on the back of growing volume of television content and interactive services available for home entertainment and information. With the help of Broadcom's SOCs, Dish TV is likely to further strengthen its leadership position in the direct-to-home market.

This is also Broadcom's second such deal in India in this month. Earlier, BCM7301 was selected by Tata Sky, an Indian direct-to-home satellite television provider, to provide its first MPEG-4 standard definition (SD) set-top boxes (STBs) across the country.

Based in Irvine, Calif., Broadcom is engaged in designing and marketing semiconductor components of network voice, video, and data traffic for various applications. The company continues to drive innovation and engineering excellence across a broad range of communication end markets to help its customers enhance device performance and overall efficiency.

Broadcom currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look in the industry include Marvell Technology Group Ltd (MRVL), TriQuint Semiconductor, Inc. (TQNT) and NeoPhotonics Corpor! ation (NPTN), each carrying a Zacks Rank #2 (Buy).

Plains All Ups Distribution Rate - Analyst Blog

Plains All American Pipeline LP (PAA) continues to share more benefits with its unitholders by increasing the cash distribution rate. The partnership has increased the quarterly cash distribution rate by 2.2% sequentially and 10.3% year over year to 58.75 cents per unit. The new distribution will be paid on Aug 14, 2013, to unitholders of record as of Aug 2.

The hike in the distribution rate is in line with Plains All American Pipeline's strategy of increasing the 2013 distribution rate by 9% to 10% year over year.

The partnership has been hiking the cash distribution almost every year since 1999. Plains All American Pipeline increased its quarterly distribution to the limited partners in 35 out of the past 37 quarters and consecutively in each of the last 16 quarters.

Plains All American Pipeline's cash flow from operating activities during the first three months of 2013 was $979 million. A strong financial position allows the partnership to meet the cash requirements for its distribution payment and for future growth projects.

Further, Plains All American Pipeline plans to invest $1.4 billion in 2013 for several projects including the Mississippian Lime pipeline, Rainbow 2 pipeline, Gardendale Gathering System, and extension of the Oklahoma pipeline and the Cactus pipeline projects. These initiatives would add to the partnership's profitability in the long run, which will in turn enable it to provide higher returns to its unitholders.

Houston, Texas-based Plains All American Pipeline owns assets strategically located in well-established oil producing regions, catering to the major U.S. refinery and distribution markets.

Plains All American Pipeline currently has a Zacks Rank #3 (Hold). However, other stocks from the industry that are presently performing well include Delek Logistics Partners, LP (DKL) with a Zacks Rank #1 (Strong Buy), and Kinder Morgan Management LLC (KMR) and Atlas Pipeline Partners, L.P. (APL), both with a Zacks Rank #2 (! Buy).

Buffalo Wild Wings Hits 52-Week High - Analyst Blog

Shares of the casual dining restaurant chain, Buffalo Wild Wings Inc. (BWLD), reached a new 52-week high of $106.03 on Jul 12, following consistent decline in prices of its main material, chicken wings.

The closing price of Buffalo Wild Wings on July 12 was $104.96, representing a solid 1-year return of about 25.2% and year-to-date return of about 43.8%. Average volume of shares traded over the last three months stands at approximately 423K.

Growth Drivers

After witnessing high wing costs even as late as the first quarter of 2013, Buffalo Wild Wings' premium wings prices are now easing. During the first quarter conference call, the company stated that the average price of chicken wing was $1.75 per pound in the first two months of the second quarter, down nearly 7.9% from the comparable year-ago period. The wing price is also expected to go further down in the coming quarters, thus, boosting profitability.

Amid uncertain economic conditions, Buffalo Wild Wings has been posting positive comparable store sales (comps) for the past eight quarters, driven by unit expansion and higher guest counts. The company is also taking a series of initiatives to further boost its comps in the ensuing quarters.

With a consistent fall in wing costs, Buffalo Wild Wings is now making an effort to reduce the risk associated with inconsistent wing yields. The company has decided to change its traditional menu servings and serve wings based on its weight, rather than by its numbers. This initiative, slated to start in the third quarter of 2013, will help the company to serve a consistent portion of chicken wings to its customers.

Buffalo Wild Wings, famous for its 'dine and watch the game' concept, is highly benefitting from its three-year collaboration with National Collegiate Athletic Association (NCAA). The partnership allowed the company to be an official marketing as well as hangout partner for all NCAA sport events through 2016. This association will help the restauran! t chain to increase its visibility as a brand and attract customers through digital and social media platform.

The company plans to unveil nearly 100 units in 2013 in its attempt to achieve the 1,000-unit milestone by the end of this year. Gaining from the higher top line, easing wing costs and proper labor management, Buffalo Wild Wings expects to achieve net earnings growth of 25% in 2013, higher than the prior-year growth of 17%.

Buffalo Wild Wings is expected to report its second-quarter 2013 earnings on Jul 30. The Zacks Consensus Estimate for the quarter at the moment is 78 cents per share. With a Zacks Rank #3 (Hold) and positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of 2.56%, the company is expected to beat the Zacks Consensus Estimate in the second quarter of 2013.

Some other restaurateurs that are likely to perform well include BJ's Restaurants, Inc. (BJRI), AFC Enterprises Inc. (AFCE) and The Cheesecake Factory Inc. (CAKE). All these companies carry a Zacks Rank #2 (Buy).

Deutsche Bank Directs Bearish Growl At Dendreon

Once, one of the hottest biotech stocks around, Dendreon (DNDN) has become a cautionary tale, warning investors what can happen when a cutting-edge drug turns into a dud.

Now at less than $3 a share, the stock had traded as high as $54 in 2010 as excitement buzzed over the experimental prostate cancer vaccine Provenge. Initially, Wall Street expected peak sales of $3 billion to $4 billion. But insurers balked at the hefty price tag for Provenge, and now, three years after it won FDA approval, analysts see annual sales at roughly $300 million.

Disappointing sales are just one reason Deutsche Bank has joined the bearish voices surrounding this drug maker. Today, analyst Robyn Karnauskas downgraded Dendreon to a Sell and cut the price target to $1, warning that even if the company can significantly reduce costs and drastically restructures, its spending may still outpace revenue growth in the short-term. Karnauskas believes Dendreon may have to refinance its debt, negatively impacting shareholders.

Earlier this month, the company posted a bigger-than-expected second-quarter loss as Provenge sales fell compared to last year. A restructuring plan was unveiled in late July, though analysts say it isn’t enough without revenue growth. Today, Deutsche Bank’s Karnauskas writes: 

…By our math, even with $165M in cost cuts, the co will have to grow current sales from $300M to $525M over next 7 years to support current share price. 2Q13 sales were $73M and DTC campaign does not seem to have a lot of effect to offset impact from competition so that the company could reach profitability in 4Q13. While they note that they plan to cut costs, we are concerned it may be too late. Revenue growth is not occurring quick enough; we note 1Q13 yoy growth was guided and in 2Q13 they noted this was unlikely to occur going fwd. The co's inability to guide growth & provide visibility makes it difficult for us to see sales accelerating sufficiently in next 12-18 months to give equity & debt shareholders confidence.

Today, Dendreon's share price fell 10% to $2.87.

New Hire Roundup: Ex-NFL Quarterback Joins Lourd Capital Management

This week in new hires, Lourd Capital Management welcomed Cade McNown, Christine Walker went to Drexel Morgan Capital Advisers, Thornburg added Chris Elsmark and Karim Elfar to head up its new London office, Mercer announced three senior appointments, CaseSlattery Wealth Partners joined Securities America, and State Street Global Advisors announced that it was enhancing its investment capabilities.

Also, Jerry Paul joined ICON Advisors, Scott Berlin moved up at New York Life, the Private Client Reserve of U.S. Bank made two appointments, Guardian Life Insurance appointed Dr. Eric Studley president of the executive committee of its leader’s club, and Trust Co. of America named Robert MacDonald to its board.

Ex-NFL Quarterback McNown Joins Lourd Capital Management as Vice President

Lourd Capital Management announced Monday the appointment of Cade McNown as vice president. In this new position, he is responsible for cultivating new and existing client relationships as well as working with clients to develop customized investment solutions.

Prior to joining Lourd, McNown was a banker with J.P. Morgan Private Bank, where he focused on building and managing client relationships. Before joining J.P. Morgan, McNown worked in the private wealth division of UBS. He began his investment career at a boutique Southern California real estate investment firm. Before that, he spent four years as a professional quarterback in the National Football League after being selected in the first round of the 1999 draft by the Chicago Bears.

Christine Walker Joins Drexel Morgan Capital Advisers

Drexel Morgan Capital Advisers (formerly McCabe Capital Managers) announced Tuesday its hiring of Christine Walker as vice president, senior portfolio manager. In this role, she will serve as a member of the investment committee, manage client portfolios and relationships, design and direct investment and asset management strategies and develop new business.

Most recently, Walker served as vice president, senior portfolio manager for BNY Mellon Wealth Management in Philadelphia. Earlier, she filled similar roles at Lehman Brothers, Millennium Wealth Management & Private Banking Group, and The Vanguard Group of Investment Companies.

Thornburg Opens London Office

Thornburg Investment Management Inc. (TIM) established an office in London to enhance its global distribution capabilities. The firm also announced the appointments of Chris Elsmark and Karim Elfar to the newly created positions of joint managing directors in the new office. They will lead Thornburg Global Advisors, the London-based entity responsible for the firm’s institutional and professional investor market outside the U.S., and report to Peter Trevisani, head of global distribution and president of Thornburg Global Investment, their Irish-domiciled UCITS range of funds.

Elsmark joins from Copthall Partners, where he served as senior advisor to numerous investment management firms. He has held senior leadership positions at Scottish Widows Investment Partnerships, BNP Paribas Investment Partners and T. Rowe Price Group, including serving as head of global institutional client business. Prior to joining T. Rowe Price, he was investment director (European equities) at J.P. Morgan Asset Management in London.

Elfar joins with 16 years of industry experience primarily focused on all aspects of global business development. He was formerly a managing director and head of international for Davis Advisors. Prior to joining Davis, he had various roles within Merrill Lynch & Co. Inc. based in Miami, New York and London.

Mercer Announces Senior Appointments

Mercer announced Monday three senior-level appointments in Europe and in the growth markets. Andrew Kirton has been appointed head of the firm’s investments business in Europe, succeeding Tom Geraghty, who, as previously announced, has assumed the post of market leader and CEO for Ireland. Jeff Schutes has been appointed head of the firm’s investments business in the growth markets, a newly created position, which includes Asia, Middle East and Turkey, Africa, and Latin America. Akhil Sethi has been appointed head of the firm’s retirement business in the growth markets, a newly created position.

Kirton joined in 1998, has more than 25 years’ experience in the investment consulting industry and, since 2010, has been global chief investment officer. Previously, he held head of business positions for the global and European investment consulting business.

Schutes has held a number of senior leadership positions since he joined in 1995, most recently serving as global leader of manager research and head of the firm’s Latin America investments business. He previously led its U.S. investment consulting business.

Akhil Sethi joined in 1987 and most recently was global chief operating officer for the firm’s retirement business. He has held a number of key positions in New York, London and Singapore, including serving as CFO for Mercer Asia and CFO for Mercer Europe.

Securities America Welcomes CaseSlattery Wealth Partners

Financial advisors Shannon Case and Mark Slattery have become registered representatives with independent broker-dealer Securities America Inc., a wholly owned subsidiary of Ladenburg Thalmann Financial Services.

Case joined the financial services industry in insurance in 1987, and Slattery joined him at a local firm in 1991. In 1995, Case and Slattery joined Securities America, and in 1997 they affiliated with American National Bank. After more than 10 years with Securities America, Case and Slattery moved their business to SII Investments in Wisconsin, in 2006, and formalized their partnership by founding CaseSlattery Wealth Partners, in Omaha, Neb. On June 3, Case and Slattery moved their financial practice back to Securities America.

SSgA Enhances Investment Capabilities

State Street Global Advisors (SSgA), the asset management business of State Street Corp., announced that it is combining its cash and fixed income capabilities under the leadership of Steve Meier, CIO head of cash, who will become CIO of fixed income, currency and cash. Active quantitative developed and enhanced equity will also be combined under Ted Gekas, currently head of global enhanced equity, who will take a new role as CIO and global head of active quantitative equity.

As part of these changes, Ali Lowe, CIO, global equities, will leave the firm at the end of 2013 after a transition period. Kevin Anderson, currently CIO and head of fixed income, will assume the role of head of investments for the Asia Pacific region based in Hong Kong. He replaces Lochiel Crafter who was recently appointed as head of the Asia Pacific region, succeeding Bernard Reilly, who has taken the role of global head of strategy for SSgA.

SSgA is also integrating its advanced research center (ARC) and dedicated IT support into their respective investment teams.

ICON Advisors Adds Jerry Paul to its Fixed Income Department

ICON Advisors recently announced the addition of Jerry Paul to its fixed income department. He will join Zach Jonson, director of fund management, to comanage the ICON Bond Fund.

Paul has managed bond portfolios for 35 years for various firms, including Stein Roe and INVESCO.

New York Life Names Scott Berlin Head of Group Membership Division

New York Life announced Monday that Scott Berlin, senior vice president, has been named head of the company’s group membership association division. He reports to Paul Pasteris, SVP of New York Life’s insurance group. Berlin replaces John Cassagne, who is retiring after more than 35 years of service with the firm, and is responsible for the overall operation of group membership.

Berlin joined as an actuarial trainee in 1990. In 1996, he joined the individual life department, where he held roles of increasing responsibility including SVP in charge of the individual life department in 2005. He was named chief financial officer of New York Life Enterprises in 2010, and was named head of the advanced markets network and business development in 2012.

U.S. Bank Appoints Andrea Kaempf, Scott Wiley

U.S. Bank Wealth Management announced today that Andrea Kaempf has been appointed personal trust managing director for the Private Client Reserve of U.S. Bank in Seattle and Scott Wiley has been appointed senior private banking officer for the Private Client Reserve in San Francisco. In her new position, Kaempf is responsible for leading the personal trust team in Washington state. Wiley will provide a customized set of services for the banking needs of high-net-worth individuals and families.

Kaempf has an extensive background in complex trust administration, asset allocation and managing private foundations, and brings more than 20 years of experience in the financial services industry to her new position. Before joining, she served in numerous leadership roles with Bank of America’s philanthropic management practice and most recently served in a senior fiduciary capacity with Bank of America’s U.S. Trust division in the Seattle and Bellevue, Wash. markets.

Wiley has more than 14 years of experience in the banking and financial services industry. Prior to joining, he held the position of senior private banking vice president with Wells Fargo Private Bank. Previously, he served as a private client advisor at Smith Barney, where he served clients within Citigroup’s HNW group. He also brings commercial lending experience from work at Comerica Bank, and has worked with high-tech lending and venture investments with Silicon Valley Bank.

Advisors ‘Haven’t Fully Committed’ to Social Media, SEI Expert Says

Recent studies show that the general public and financial services are very focused on the use of social media. Financial advisors, however, have room to catch up.

“We found that nine out of 10 [financial services] companies currently use social media and most agreed that compelling content is vital,” said Norah Denley, distribution and technology research for LIMRA in a press release on Thursday. “Posting content that provides value to an audience is just as important — if not more so — as reaching the audience in the first place.”

A recent Pew study, for instance, found that more than two-thirds of all adults who use the Internet on a regular basis rely on social networks.

To understand the industry’s response to this widespread rising use, LIMRA, formerly known as the Life Insurance & Market Research Association, polled 53 large companies in both the United States and Canada. The highlights regarding social media use are:

“The most popular social media sites continue to grow in influence and a number of new sites are rapidly gaining attention,” LIMRA explained. “Financial services companies are still figuring out where they need to have a presence and where they can abstain.”

Advisor Abstinence

Compared with the general public and the financial services firms, financial advisors appear to be much slower at adopting social media for their businesses, said SEI on Wednesday.

SEI polled 200 advisors and found that just 28% said they use social media to promote their practices online; only 31% use it for social engagement. Furthermore, those that do so use social media in a limited fashion.

According to SEI, more than half of respondents said they are experimenting with social media via only LinkedIn profiles. And, close to a-third of those surveyed, 29%, said they have no online presence.

“Whether it’s a lack of time, resources or expertise, it’s clear most advisors haven’t fully committed to social media yet,” said John Anderson, head of practice management for the SEI Advisor Network, in a press release.

“Research shows that the majority of Americans are using social networks; if advisors can reach that audience effectively there is an opportunity for them to reap tangible business benefits,” Anderson explained. “It’s important to note, however, that being consistent and strategic is vital to long-term social media success.”

When asked why they are slow at adopting social media, advisors shared the following issues:

Ironically, most advisors polled, 65%, indicate that they use or would like to use social media for client leads, but just 13% said they actually had secured a client through social media.

“I think many advisors want to use social media more, but they’re just not sure how to do it effectively and what resources to dedicate to it,” said Jill Ciccarelli Rapps, CFP, partner and financial advisor with Ciccarelli Advisory Services  in Naples, Fla., in a statement. “We launched our social media program using a phased process that made sense for our business, and we are beginning to use it regularly to engage current clients and create new relationships.

“We still have a lot to learn, but we believe using social media will be an important step in keeping up awareness of the services we provide to our social media community,” Ciccarelli added. “Patience and consistency are key and after several months, we are beginning to see results from our efforts.”

Still, some firms — from Morgan Stanley (MS) to Raymond James (RJF) — have been taking important steps to encourage broader use of social media by advisors.

In mid-July, for example, Raymond James formed a partnership with Hearsay Social for financial advisors who want to build more customer relationships and grow their businesses through social media. (Previously, it had worked with another IT vendor for such work.)

"Social media engagement is becoming critical to helping advisors manage and build their brands and support their client and prospective client communications," said Michael White, chief marketing officer at Raymond James, in a press release.

(Raymond James says it first moved to help advisors use social media marketing and compliance tools in November 2011. Since then, more than 2,000, or 33-plus%, of its almost 6,000 North America-based advisors are utilizing these Web-based resources for communicating and interacting with clients, it says.)

5 Best Canadian Stocks For 2014

The United States is overflowing with oil. In fact, the Energy Information Administration thinks the country could realistically produce 6 million to 8 million barrels of oil per day over the next three decades. The institution's high estimate exceeds 10 million barrels per day. Canadian production isn't doing too bad, either, although supporting infrastructure is less developed for our northerly neighbors. That bodes well for the companies pumping it out of the ground, but it also represents a big opportunity for the companies transporting and refining crude oil.

Here are four of the best investments supporting oil drillers.

Canadian National Railway (NYSE: CNI  )
Canadian National Railway is one company trying to bail-out Canada's ailing pipelines. In 2010 the company didn't move one carload of crude oil. This year it is expected to "choo-choo" its way to 60,000 carloads of oil from the country. This business in particular has boosted sales and income each year since 2010. Investors have to like that growth and where things are headed in the long term. Canadian National is cutting checks totaling $1.9 billion this year to repair its railways, accommodate growth needs, and purchase new freight cars, including new natural-gas powered models. �

5 Best Canadian Stocks For 2014: 3M Company(MMM)

3M Company, together with subsidiaries, operates as a diversified technology company worldwide. The company?s Industrial and Transportation segment offers tapes, coated and non-woven abrasives, adhesives, specialty materials, filtration products, energy control products, closure systems for personal hygiene products, acoustic systems products, and components and products that are used in the manufacture, repair, and maintenance of automotive, marine, aircraft, and specialty vehicles. Its Health Care segment provides medical and surgical supplies, skin health and infection prevention products, inhalation and transdermal drug delivery systems, dental and orthodontic products, health information systems, and food safety products. The company?s Display and Graphics offers optical film solutions for LCD electronic displays; computer screen filters; reflective sheeting for transportation safety; commercial graphics sheeting and systems; and mobile interactive solutions, includin g mobile display technology, visual systems products, and computer privacy filters. The company?s Consumer and Office segment provides office supply products, stationery products, construction and home improvement products, home care products, protective material products, certain consumer retail personal safety products, and consumer health care products. Its Safety, Security and Protection Services segment offers personal protection products, safety and security products, cleaning and protection products for commercial establishments, track and trace solutions, and roofing granules for asphalt shingles. The company?s Electro and Communications segment provides packaging and interconnection devices; fluids that are used in the manufacture of computer chips, and for cooling electronics and lubricating computer hard disk drives; high-temperature and display tapes; insulating materials, including tapes and resins; and related items. The company was founded in 1902 and is based in St. Paul, Minnesota.

Advisors' Opinion:

• [By Elmerraji]

  3M Company (MMM), together with subsidiaries, operates as a diversified technology company worldwide. The company has raised distributions for 53 years in a row. The 10 year annual dividend growth rate is 6.10%/year. The last dividend increase was 4.80% to 55 cents/share. Analysts are expecting that 3M will earn $6.33/share in 2012. I expect that the quarterly dividend will be raised to 57.50 cents/share sometime in 2012. Yield: 2.60%

• [By Victor Mora]

  3M provides technology solutions and services to companies participating in a multitude of industries worldwide. The stock is seeing an explosive move higher which has taken it to all-time high prices. Earnings and revenue figures have been increasing over most of the last four quarters, producing mixed feelings among investors. Relative to its peers and sector, 3M has been a year-to-date performance leader. Look for 3M to OUTPERFORM.

5 Best Canadian Stocks For 2014: Newmont Mining Corporation(Holding Company)

Newmont Mining Corporation, together with its subsidiaries, engages in the acquisition, exploration, and production of gold and copper properties. The company?s assets or operations are located in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand, and Mexico. As of December 31, 2009, it had proven and probable gold reserves of approximately 93.5 million equity ounces and an aggregate land position of approximately 27,500 square miles. The company was founded in 1916 and is headquartered in Greenwood Village, Colorado.

Hot Penny Stocks To Invest In Right Now: Yamana Gold Inc.(AUY)

Yamana Gold Inc. engages in gold and other precious metals mining, and related activities, including exploration, extraction, processing, and reclamation. It also explores for copper, molybdenum, zinc, and silver metals. The company's portfolio includes 7 operating gold mines namely Chapada; El Pen Advisors' Opinion:

• [By Barker]

  I believe I have touted Yamana Gold's clear prowess as a deep-value favorite from every possible angle. With arguably the lowest downside risk of any stock in the sector, I join fellow value hounds in waiting patiently for the market to recognize the full value of these shares.

5 Best Canadian Stocks For 2014: Iamgold Corporation(IAG)

IAMGOLD Corporation, together with its subsidiaries, engages in the exploration, development, and production of mineral resource properties worldwide. It primarily explores for gold, silver, zinc, copper, niobium, diamonds, and other metals. The company holds interests in eight operating gold mines, a niobium producer, a diamond royalty, and exploration and development projects located in Africa and the Americas. Its advanced exploration and development projects include the Westwood project in Canada; and the Quimsacocha project, which consists of 3 mining concessions covering an aggregate area of approximately 8,030 hectares in Ecuador. The company was formerly known as IAMGOLD International African Mining Gold Corporation and changed its name to IAMGOLD Corporation in June 1997. IAMGOLD Corporation was founded in 1990 and is based in Toronto, Canada.

Advisors' Opinion:

• [By Christopher Barker]

  Although I have not shed my long-standing contention that Yamana Gold offers one of the more deeply discounted vehicles for long-term gold exposure, lately my outlook for IAMGOLD has turned particularly bullish. With a looming spin-off of a 10% to 20% stake in the company's reliably profitable Niobec niobium mine, and the recent sale of its interest in a pair of high-cost gold operations in Ghana for $667 million, IAMGOLD finds itself in terrific financial shape to execute an aggressive $1.2 billion expansion imitative at existing operations.

  Considering the $1.6 billion net asset value (after tax) that IAMGOLD recently assessed for the Niobec mine alone, and a presumed hoard of more than $1.2 billion (in cash, cash equivalents, and gold bullion held for investment), at a market capitalization of $6.9 billion I find extreme comfort in the market's resulting valuation for IAMGOLD's 15.2 million ounces of attributable gold reserves.

5 Best Canadian Stocks For 2014: CenturyLink Inc.(CTL)

CenturyLink, Inc., together with its subsidiaries, operates as an integrated communications company. The company provides a range of communications services, including voice, Internet, data, and video services in the continental United States. Its services include local exchange and long distance voice telephone services, as well as enhanced voice services, such as call forwarding, caller identification, conference calling, voicemail, selective call ringing, and call waiting; wholesale local network access services; and data services, including high-speed Internet access services, data transmission services over special circuits and private lines, and switched digital television services, as well as special access and private line services. The company also offers fiber transport, competitive local exchange carrier, security monitoring, and other communications, as well as professional and business information services. In addition, it provides other related services, such as leasing, selling, installing, and maintaining customer premise telecommunications equipment and wiring; payphone services; and network database services, as well as participates in the publication of local telephone directories. Further, the company offers printing, direct mail services, and cable television services; and wireless broadband Internet access services and satellite television services. As of December 31, 2010, it operated approximately 6.5 million telephone access lines. CenturyLink, Inc was founded in 1968 and is based in Monroe, Louisiana.

Advisors' Opinion:

• [By Paul]

  CenturyLink (CTL), provides a range of communications services, including local and long distance voice, wholesale network access, high-speed Internet access, other data services, and video services in the continental United States. The company is a member of the elite dividend aristocrats index, and has raised dividends for 37 consecutive years. In comparison to the previous two telecom players, CenturyLink has been able to cover its distributions from EPS, although its payout ratio is a scary 92.70%. Yield: 7.20%.

GIS Discusses Growth Plans for 2014 - Analyst Blog

General Mills Inc. (GIS), a global consumer food company, recently discussed its outlook and growth strategies for fiscal 2014 at the New York Stock Exchange.

Fiscal 2014

Outlook Retained

Growth in fiscal 2014 is expected to be in line with its long-term targets and driven by new products, increased brand support and cost savings from the Holistic Margin Management (HMM) program. The company maintained its prior guidance for fiscal 2014. Earnings per share are expected to grow at a high single-digit rate in a range of $2.87 to $2.90.

The company continues to expect net sales to grow at a low single-digit rate and exceed $18 billion in fiscal 2014 on the back of new product innovation and contribution from new businesses such as Yoplait Canada and Yoki. The U.S. retail business is expected to benefit from new product launches and increased innovation, while the international business will gain largely from the newly-acquired businesses.

Segment operating profit is expected to grow in mid-single digits. The company expects margin to expand in fiscal 2014 on the back of cost savings from the HMM program. Capital spending is expected to be around $700 million.

Moreover, the company plans to increase dividends and share buybacks in the year, thus offering greater shareholder value. The increased buybacks are expected to lower the average number of shares outstanding by 2% in fiscal 2014. The company also plans to increase its dividend by 15% effective from the quarterly payment due on Aug, 01.

Strategies

Product Innovation

The company intends to launch more than 200 new products in the first half of fiscal 2014. More products are expected to be introduced later in the year.

In 2014 and beyond, in order to drive sales growth, General Mills will focus on five global categories. These categories include ready-to-eat cereals, super-premium ice creams, convenient meals, wholesome snack bars and yogurt. These categories are highly respo! nsive to innovation and are capable of meeting evolving consumer needs. General Mills' retail sales in the five global categories are growing at attractive rates and all of these have promising long-term growth potential.

Focus on Cereals

General Mills operates a $4 billion cereal segment. The company intends to offer new cereal options and brand building in the U.S cereal market in 2014. Some of the new products are Hershey's cookies & Creme cereal and two varieties of Nature valley granola cereal. The company intends to expand the distribution of BFast, a breakfast shake.

Focus on Yogurt Business

General Mills generates $3 billion of sales from yogurt segment. The company intends to launch a new line of Yoplait Greek strained yogurt. The company also plans to increase its advertising expenditure and focus on product innovation, in order to drive sales.

The U.S. yogurt business has been challenging as increased sales prices in response to dairy cost inflation is reducing the competitiveness of its products. With the latest brand building and product innovation, the company expects its U.S. yogurt business to return to growth in fiscal 2014. The company has several products planned for its yogurt business in Europe and U.K.

Focus on Snacks

General Mills' snacks segment is a $3 billion business. The company plans to introduce products like Nature Valley soft baked oatmeal squares, Fiber One, Ckex snack chips and Betty Crocker caramel Brownies in the U.S. It has products lined up for Europe and Brazil as well.

Focus on Meals

The company has planned several innovations for the meal segment also, which includes brands like Old el Paso and Helpers. The company will also launch several new products in China and Brazil.

Ice Cream

The company has initiated a global advertising campaign on Haagen- Dazs. The company intends to open more than 70 new Haagen- Dazs cafes in 13 cities in China in fiscal 2014.

Focus ! on Intern! ational market

General Mills also discussed its plans to shift the geographic mix of its business towards the international markets with particular focus on the emerging markets. Currently more than 1/3rd of its sales are generated from the international markets including about $2 billion in sales from the emerging markets.

General Mills carries a Zacks Rank #3 (Hold).

Other food companies that have been doing well consistently are Flower Foods Inc. (FLO) and B&G Foods Inc. (BGS) both carrying a Zacks Rank #1 (Strong Buy) and Campbell Soup Company (CPB) carrying a Zacks Rank #2 (Buy).

Beginners guide: Ashish Chugh on how to trade in shares

According to him, a serious investor should consider stock as a part of the business. "When you are buying even 100 shares you are actually taking a stake in that business," Chugh adds.

Also read: Tips to help you diversify into commodities

Here is an edited transcript of his comments.

Q: If a new investor want to enter the market now, what are the few things they should keep in mind? How do they start picking stocks?

A: When somebody is new to investing and he enters a stock market, the focus is on how to make money. That's the end objective. But what the investor has to be focused on is how to not let his capital depreciate. I think one should achieve the first objective and the second part will be taken care of automatically. I am not just talking about first time investors but lot of experienced investors also.

Lot of them when invest in the market they see the stock as just a ticker symbol. That's where they make mistake, they are just chasing the price of the stock. I think for a serious investor it is important to consider that stock as a part of the business. When you are buying even 100 shares you are actually taking a stake in that business. But I would like to caution here while you are investing.  I am talking specifically in terms of investing in small and midcap stocks because that's what I do personally.

I think you have to first look within whether your temperament is actually suited for investment in those kinds of stock. Those are stocks where the returns may not come immediately. Returns in midcap and smallcap are not linear or related to the market. It may happen that the stock is consolidating for two years and in one year it goes up five times. So it is very important to have, that frame of mind to hold the stock for two years when it is not making any money.

Q:  What are the cautions one needs to take while building a portfolio in midcaps, considering that one had an investment in power sector but had to come out as it turned bad? If the investment on mutual funds is not giving good returns should one liquidate and put the money back into the stocks or  rather built a portfolio?

A: While creating a portfolio of small and midcap stocks the first thing you should avoid is getting into the hottest stock in the hottest sector. As a value investor that is a strict no-no. Talking about your stock-loss in the power sector, I believe this would be a time when power sector was booming.

When Reliance Power IPO came most power companies were trading at their peaks. I know many retail investors, who entered into power companies at that point of time, without realizing that this is a business which has got a long gestation period. Power projects do not come in a day. It may take three to five years for power projects to come in.

At this point of time power, infra, real estate they may not be bad sectors to invest into, reason being that they have almost seen the worst phases. If you talk about the real estate company, most investors are clearly out of that sector. Fund houses have liquidated their position thinking that all the promoters are frauds. So there is realignment happening and these sectors are probably lying at their lowest level. So, that is maybe one way which you can start building into sectors which have been ignored as of today but have potential for the future.

Q: How safe is it to invest in commodity trading? Gold is reaching its height right now, how safe it would be if one invest in gold?

A: When one does commodity trading, they have to draw a distinction between trading and investing. Like gold can be a small part of once entire portfolio. But trading is totally different ball game. Probably some guys are working the whole day and may not even get the time to look at the screen, so then trading maybe disastrous. Here one has to take care of number of things. One have to consider the stop losses and other things. So for guys like that what I would advice is to have a diversified portfolio and maybe gold and silver can be just one part of that.

Equity Valuation: The Comparables Approach

The main purpose of equity valuation is to estimate a value for a firm or security. A key assumption of any fundamental value technique is that the value of the security (in this case an equity or a stock) is driven by the fundamentals of the firm's underlying business at the end of the day. There are three primary equity valuation models: the discounted cash flow (DCF), cost and comparable approaches. The comparable model is a relative valuation approach and is explained in more detail below.

Comp Models Introduced
The basic premise of the comparables approach is that an equity's value should bear some resemblance to other equities in a similar class. For a stock, this can simply be determined by comparing a firm to its key rivals, or at least those rivals that operate similar businesses. Discrepancies in the value between similar firms could spell opportunity. The hope is that it means the equity being valued is undervalued and can be bought and held until the value increases. The opposite could hold true, which could present opportunity for shorting the stock, or positioning one's portfolio to profit from a decline in its price.

There are two primary comparable approaches. The first is the most common and looks at market comparables for a firm and its peers. Common market multiples include the following: enterprise value to sales (EV/S), enterprise multiple, price to earnings (P/E), price to book (P/B) and price to free cash flow (P/FCF). To get a better indication of how a firm compares to rivals, analysts can also look at how its margin levels compare. For instance, an activist investor could make the argument that a company with averages below peers is ripe for a turnaround and subsequent increase in value should improvements occur.

The second comparables approach looks at market transactions where similar firms, or at least similar divisions, have been bought out or acquired by other rivals, private equity firms or other classes of large, deep-pocketed investors. Using this approach, an investor can get a feel for the value of the equity being valued. Combined with using market statistics to compare a firm to key rivals, multiples can be estimated to come to a reasonable estimate of the value for a firm.

Quantitative Example
The comparables approach is best illustrated through an example. Below is an analysis of the largest, most diversified chemical firms that trade in the U.S.

EASTMAN CHEMICAL (NYSE:EMN)
COMPARABLE COMPANY VALUATION
Comparable Company	Price	Enterprise Value (EV)	Revenue (TTM)	EPS (TTM)	Free Cash Flow (FCF) per share (2012)	EV ÷ Rev.	Price ÷ Earnings	Price ÷ FCF	Gross Margin (TTM)	Operating Margin (TTM)
Company Financials		millions	millions
Eastman Chemical Company	$80.92	$17,310.00	$8,588.00	$3.38	$4.41	2	23.9	18.3	22.70%	8.70%
Dow Chemical (NYSE:DOW)	$36.06	$57,850.00	$56,514.00	$2.17	$1.24	1	16.6	29.1	16.60%	7.90%
DuPont (NYSE:DD)	$59.20	$62,750.00	$35,411.00	$4.81	$3.24	1.8	12.3	18.3	26.40%	8.40%
Air Products & Chemicals (NYSE:APD)	$106.87	$28,130.00	$10,200.00	$4.68	$1.14	2.8	22.8	93.7	26.40%	13.00%
Huntsman Chemical (NYSE:HUN)	$18.06	$8,290.00	$10,892.00	$0.41	$1.50	0.8	44	12	16.10%	1.70%
Average of Selected Multiples		$34,866.00	$24,321.00			1.7	24	34.3	21.60%	7.90%

Looking at Eastman Chemical, it immediately becomes clear that it is one of the smaller among major diversified firms. The raw data used to compile the primary comparable data includes raw enterprise value, revenue and profit figures. The three primary multiples suggest that Eastman is trading above the industry average in terms of EV/revenue, and slightly below the average in terms of P/E, the most basic tool to investigate the multiple that the market is placing on a firm's earnings.

Eastman's P/FCF multiple, a more nuanced profit multiple that is intended to look at true cash flow by removing some of the subjectivity of reporting earnings, is well below the average, though the high level for Air Products & Chemicals (P/FCF of 93.7) looks suspect and may need an adjustment. A key part of a valuation model is to look at potential outliers and see if they need to be reconsidered or outright ignored. Leaving out Air Product's suspect multiple puts the peer average at 19.4, which leaves Eastman still below the average, but much less so than if all multiples are considered.

The other consideration is Eastman's income statement profitability compared to rivals. Both its gross and operating margins are above the industry average. Overall, the company looks reasonably valued, at least based on the above information. But, as detailed above, other considerations are still needed, such as a valuation by projecting growth and profit trends over the next couple of years, and really looking at the details of earnings, free cash flow, and margins to make sure they are accurate and truly representative of the company. The same goes for each individual company that makes up the comparable universe.

A final consideration is to look at market transactions. For instance, back in 2012 DuPont sold a large part of its chemical division, its performance coatings segment, to private equity giant Carlyle Group (Nasdaq:CG) for $4.9 billion and an estimated multiple of eight times EBITDA. This multiple applied to Eastman, or simply multiplying Eastman's EBITDA of $1.7 billion over the last 12 months, would suggest an enterprise value of nearly $14 billion, or slightly below the current enterprise value that the firm is trading at. This would indicate that Eastman is overvalued by this metric, but as explained in the next section, this may not be the case.

Important Considerations
It is important to note that it can be difficult to find truly comparable companies and transactions to value an equity. This is the most challenging part of a comparables analysis. For instance, Eastman Chemical acquired rival Solutia in 2012 in an effort to have less cyclicality in its operations. DuPont's performance coatings business is highly cyclical, so it should likely have sold at a lower valuation. As detailed above, the free cash flow multiple for Air Products looks suspect in the analysis, meaning further work is needed to determine what adjustments should be made.

Additionally, using trailing and forward multiples can make a big difference in an analysis. If a firm is growing rapidly, a historical valuation will not be overly accurate. What matters most in valuation is making a reasonable estimate of future market multiples. If profits are projected to grow faster than rivals, the value should be higher.

It is also worth noting that, of the three primary valuation approaches, the comparable approach is the only relative model. Both the cost approach and discounted cash flow are absolute models and look solely at the company being valued, which could ignore important market factors. On the flip side, the stock market can become overvalued at times, which would make a comparable approach less meaningful, especially if comps are overvalued. For this reason, using all three approaches is the best idea.

The Bottom Line
Valuation is as much art as science. Instead of obsessing over what the true dollar figure of an equity might be, it is most valuable to come down to a valuation range. For instance, if a stock trades toward the lower end, or below the lower end of a determined range, it is likely a good value. The opposite may hold true at the high end and could indicate a shorting opportunity.

No Finance Degree? No Problem! Top 10 Ways To Jumpstart A Career In Finance

A finance or business degree is a prerequisite for most jobs in finance, but what if you don't possess a finance degree and really want to work in this field? While it is obviously more difficult for someone with a non-financial degree to secure a job in finance than it is for a candidate with one, there's still hope for the former.

Every employer wants smart, committed and motivated employees who can do the job and do it well. A finance degree will impart skills such as financial modeling and analysis, but may not do much to provide other skills required for success in almost any job, such as communication, problem-solving and time management.

The following are 10 ways to demonstrate to potential employers that you possess the skills they desire in an employee, as well as the passion necessary for a successful career in finance. We will rate each of these by the degree of difficulty to achieve (for example, signing up for a financial course is easier than obtaining an internship) as well as the positive impact it may have on getting you closer to your objective of embarking on a financial career.

1. Learn the Lingo
Difficulty: Low
Impact: Low

If you are interested in a financial career, there's no excuse for not knowing the lingo of Wall Street. If you don't know the difference between dilution and dividend, or between NPV and DCF, consider learning financial terms and concepts by browsing the extensive dictionary of terms at sites like Investopedia or by reading the Wall Street Journal.

Not knowing the language of finance may make it almost impossible to get past the preliminary interview stage for a non-financial graduate. That's because an interviewer will generally assume that an applicant for a finance position is knowledgeable about finance, regardless of his or her educational background.

2. Round off Your Education
Difficulty: Low to Moderate
Impact: High

So what if you graduated with a degree in a subject other than finance? You can always redress the situation by taking relevant courses with an emphasis on finance or business at the undergraduate or post-graduate level. At the undergraduate level, courses in economics, accounting or financial analysis are a great option. For post-graduates, the favored option for many is an MBA, since the substantial finance component of the curriculum serves to level the playing field quite significantly between finance and non-finance graduates. If the stiff cost of an MBA is a deterrent, other options such as enrolling in the CFA program are certainly worth exploring.

3. Enroll in Financial Boot Camp
Difficulty: Moderate
Impact: Moderate

Intensive courses by firms like Wall Street Prep and Training the Street can teach you valuable skills that are essential for a career in finance, such as advanced spreadsheet techniques and financial modeling. These crash courses are quite expensive, typically running to a few thousand dollars, but have the advantage of not requiring a long-term time commitment, as they are typically conducted over a few days. One drawback is that due to these programs' intensity, you may need to be familiar with basic financial concepts to derive the maximum benefit from them.

4. Expand Your Knowledge Base
Difficulty: Moderate
Impact: High

Relevant knowledge is not obtained only through a college degree. There are plenty of resources available, either through your local library or online, to further your knowledge of finance. These resources may be free or available on a paid basis from course providers such as those mentioned above. Being self-taught in a difficult field like finance demonstrates a number of desirable attributes to an employer such as initiative, passion and drive.

5. Use a Trading Simulator
Difficulty: Moderate
Impact: Low

A number of financial education and online brokerages have trading simulators that can be used to construct "mock" portfolios. Using a trading simulator will force you to track the markets and keep abreast of market developments. This is a great way to impress a potential employer with your trading prowess, or at least your market knowledge, with very little investment on your part, aside from some time commitment.

6. Complete Industry Courses
Difficulty: High
Impact: High

Completing a relevant industry course, such as the Canadian Securities Course™ in Canada, for example, not only demonstrates your commitment to a career in finance, but also gives you an edge on the competition in terms of job readiness. This option may not be available in all jurisdictions; for instance, in order to write the Series 7 exam in the United States, one has to be sponsored by a member firm, a self-regulatory organization or an exchange. In this case, consider the options mentioned in the earlier points.

7. Maintain a Financial Blog
Difficulty: High
Impact: Moderate

Starting and maintaining a financial blog is a great way to communicate your investment ideas to the world. It is an opportunity to convey to a potential employer a favorable impression of your diverse skill set, including financial acumen, communication skills and technological dexterity. This mode of self-marketing is only suitable for those who already possess a measure of these skills.

8. Link up with a Mentor
Difficulty: High
Impact: Moderate

Linking up with a mentor is another way of jumpstarting a financial career. A mentor can be anyone in a position of influence who thinks highly of your capabilities and is willing to help you achieve your goals. Possible mentors include your favorite professor at college, a family friend or relation with a successful career in finance or someone you know in a professional capacity, such as a supervisor during a previous internship. Don't hesitate to approach a contact who you think could help you in your job search.

9. Score a Meaningful Internship
Difficulty: Very High
Impact: Very High

Scoring a summer internship still remains one of the best ways to lock in a prestigious full-time job in finance, as many Wall Street firms pick their new hires from the ranks of their summer interns. At the best business schools, an estimated one-third to half of MBA students work for their summer employer after graduation.

But since obtaining a paid internship in finance is likely to be very difficult for a non-financial graduate, one must consider other options such as an unpaid internship or volunteer work with a broker. The opportunity cost that arises from doing such unpaid internships or volunteer work will be more than offset in due course by the higher earning potential of a finance career.

10. Do Your Best to Get Your Foot in the Door
Difficulty: Very High
Impact: Very High

Knock on doors, expand your job search to other locations, use your network to check for job openings – in short, do everything you can to get your foot in the door of a financial organization. Getting an entry-level position with a financial company, even in a non-finance role, may open doors to other career paths in finance down the line.

The Bottom Line
Some non-finance degrees are certainly in demand on Wall Street for specific tasks, including:
Physics and mathematics for structured products, derivatives and quantitative trading Information technology for algorithmic trading and platform development Engineering, mining and medical for sector-specific research analysis and investment banking But for the vast majority of non-finance degree holders, getting a job in finance is likely to pose a significant challenge. This is more so because thousands of positions were eliminated by banks and financial institutions in the aftermath of the 2008 global recession. However, using a combination of the tips discussed above should enable a non-financial graduate to substantially improve his or her chances of launching a career in finance.

Baby Boomers Are Not Likely To Cause The Next Housing Crisis (Part 1)

Back in March, 2013, an intriguing article appeared in The Atlantic Cities called "The Great Senior Sell-Off Could Cause the Next Housing Crisis." Author Emily Badger interviewed demographer Arthur C. Nelson, a professor at the University of Utah and director of the Metropolitan Research Center there. Nelson basically argues that by 2020 the supply of homes for sale from downsizing baby boomers will begin to overwhelm the demand for their homes. Mismatches in preferences (baby boomers bought extremely large homes) and declining median household incomes (from an American public education system continuing to suffer from severe "achievement gaps") will drive the imbalance between supply and demand. By the time these motivated sellers reach a very advanced age (like 80 and up?), they will finally just walk away from the homes they are unable to sell, leaving behind plummeting values in contracting or otherwise stagnant cities. Nelson calls this dynamic the "Great Senior Sell-Off."

Despite the doomsday possibilities, Nelson acknowledges that growing metro areas will not experience this sell-off debacle because the demand will exist to absorb the supply. So, to me, the worst case scenario abut downsizing baby boomers is that they may hasten the decline of already dying cities and/or regions. The best prescription for such areas is to figure out how to stoke economic growth, the same thing any city or region always tries to do. Moreover, the calamity in one region or sector of the economy could translate into a boom elsewhere. The seniors who can afford to leave behind homes (a prospect I still have a hard time believing) will generate economic opportunities in rental markets or retirement and assisted living centers set up to cater to their needs.

Nelson's research seems to rely heavily on a 2007 paper in the Journal of the American Planning Association called "Aging Baby Boomers and the Generational Housing Bubble: Foresight and Mitigation of an Epi! c Transition" by Dowell Myers and SungHo Ryu. In this paper, Myers and Ryu make an intuitive conclusion about the impact of an aging population that aligns with what I consider the absolute worst case scenario regarding the Senior Sell-Off:

…it is a mix of the coldest, most congested, and most expensive states, rather than high-growth states of the South or West, which we expect to lose older homeowners most rapidly. Of greatest importance is whether a state has a growing or static population of young adults to absorb the homes its senior population will sell.

Myers and Ryu estimate that "…the ratio of seniors to working-age residents [will grow] by roughly 30% in each of the next two decades." The coming crisis is a simple numbers game given senior citizens are net sellers of housing. As planners, the authors are focused on the levers available to city/region planners to mitigate the coming crisis. Again, it is a simple numbers game: retain the elderly and promote immigration to replace departing seniors. Since we all eventually die, retention of the elderly (and keeping them in their homes) is of course only a temporary solution.

Myers and Ryu wrote their paper at the very edge of the economic precipice that preceded a financial panic and recession. They argued that "…the United States is currently experiencing a short-term housing market bubble that is nested within a longer-term, generational housing bubble of greater magnitude." Without anticipating the severity of the coming collapse of the "short-term" housing bubble, I think the authors over-inflated on a relative basis the seriousness of the larger, generational bubble. Here is what they said about the possibility of lower housing prices:

If prices fall low enough, home buying rates may rise, sellers who are able to remain in their homes may decide to keep them, and investors may step in to claim some properties. If prices fall we also expect home builders to scale ! back on c! onstruction, reducing the growth in supply. The question is whether these adjustments will be sufficient to cushion the baby boomer sell-off.

With hindsight, we now know some answers: investors and cash buyers descend in droves upon collapsed housing markets with particular concentration in areas where the economy is most likely to revive the fastest; and homebuilders quickly retrenched in response to the collapse, causing what is now in 2013 a growing supply shortage in the hotter markets. If a baby boomer sell-off is currently unfolding (Nelson points to a few more years down the line), we certainly cannot see it through the fog and uncertainty of the on-going post-bubble adjustments.

Since Myers and Ryu did not consider the immediate bubble as serious as the generational bubble, they somewhat conflate the two in terms of predicting the likely start of a Senior Sell-Off:

If the elderly are more often home sellers, and are more numerous than the young who are buyers, a market shift could come on quickly after 2010, causing housing prices to fall. Even if prices remain flat, without the investment incentive young households will likely slow their entry into homeownership, worsening the imbalance between sellers and buyers. Once past the tipping point, market adjustments will cascade in virtually every community, as the ratio of seniors to working age adults will increase for the greater part of two decades.

Now, in 2013, rather than worrying about selling seniors pressuring almost every city in the country, we are a lot more worried about keeping people of all ages in underwater homes, preventing foreclosures, and generating momentum for a housing market finally moving off a bottom.

The "affordability barrier" for younger buyers that Myers and Ryu feared has been generally swept away by the crash of the housing market although it has left even more serious economic dislocations in its wake. In fact, tightening credit conditions are more of a barrier to younger buy! ers right! now. Nelson's prediction of a calamity starting around 2020 is informed by the financial crisis, but it too may get derailed by as yet unforeseen major economic/political events. For example, immigration reform may become a reality soon and could transform the country's immigration system, paving the way for improvements in education and removing some of the economic dysfunction in some immigrant communities. Nelson identifies the dysfunctions as drivers of sub-par performance for median incomes. Moreover, an influx of well-trained and highly skilled immigrants could create an economic resurgence whose contours are difficult to predict at this point.

Interestingly enough, Myers and Ryu demonstrate their recognition of the importance of immigration to America's housing market:

Per capita rates of homeownership rise dramatically as immigrants reside longer in the United States, and immigrant populations are growing faster than native-born populations (Myers & Liu, 2005). As a result, the foreign-born share of the increase in homeowners has roughly doubled each decade since 1980, rising from 10.5% in the 1980s, to 20.7% in the 1990s, and 40.0% in the period 2000 to 2006 (Myers & Liu, 2005, Table 2). These shares are even higher in several states, exceeding 60% in California, New York, New Jersey, Massachusetts, and Illinois, and they will climb much higher after the baby boomer sell-off commences. It is immigrants who will lead many markets out of the current downturn in home sales and prices.

I think these data alone are sufficient for plenty of optimism that the American housing market (and economy) will prove resilient in the face of an aging and downsizing baby boomer population. In fact, it perhaps may be more important to consider some future consequence of a shrinking immigrant population rather than the direct impact of selling baby boomers. That is, the demand side may prove much more important than the supply side. Nelson fears that the stock of homes seniors have to of! fer will ! not match the preferences of following generations, but this mismatch may create more of a crisis for those individuals who want to sell but cannot. The decline in value in these homes may never "infect" the value of the homes people do want to buy (or rent).

Myers and Ryu also cite the infamous doomsday housing predictions of Mankiw and Weil (1989) as a tale of caution about the methodology used to make long-term predictions in the housing market based on demographics:

Mankiw and Weil (1989) predicted a 47% decline in house prices during the 1990s, based largely on their modeling of declining demand as baby boomers aged. Instead, we have seen baby boomer demand for housing grow and prices double. Housing economist Karl Case recently called the Mankiw-Weil prophecy 'one of the worst forecasts in the history of mankind' (Carmichael, 2007, p. 2). Their approach used cross-sectional analysis improperly to predict trends for age cohorts. Although economists have avoided long-term forecasts since Mankiw and Weil's experience, longitudinal inferences about housing demand can still be made with cross-sectional data if we are careful (Myers, 1999). Indeed, planners should attempt careful, forward-oriented analysis so as not to make major policy errors and to avoid either undue pessimism or unwarranted optimism (Krainer, 2005).`

The prescription to be "careful" and to walk the fine line of sobriety that lies between "undue pessimism" and "unwarranted optimism" is of course good advice, but it does not eliminate the fundamental reason why economists have now seemingly decided to avoid these kinds of forecasts: the number of variables is great, uncertainty is high, and, most importantly, the American economy has proven time and time again to be incredibly resilient, responsive, and flexible. Nelson himself says it best at the end of a presentation dealing with the Senior Sell-Off titled "Resetting the Demand for Multifamily Housing: Demographic & E! conomic D! rivers to 2020" when he cautions: "We don't really understand where we're headed." (This presentation contains Nelson's data and approximate quantification supporting his theory of the Great Senior Sell-Off).

In fact, plenty of literature and research exists based on previous generations of seniors suggesting that we need not fear selling seniors. This body of work suggests that seniors are inclined to remain in their homes unless or until a "precipitating shock" forces them out. The desire to keep a house as a buffer against financial and medical contingencies as well as the desire to pass on housing wealth to future generations (a bequest) is another motivation for keeping a house as long as possible. Even surveys from the AARP suggest that seniors are not likely to precipitate a broad and generalized housing crisis. Here are some results from the "Home and Community Preferences of the 45+ Population - 2010":

Seventy-three percent of the respondents from the AARP and GfK Customer Research North America study stated they strongly agreed with the statement 'what I'd really like to do is stay in my current residence as long as possible.'

Respondents who indicated their desire to live in their current house agreed they liked what the community had to offer (65 percent) and that they were financially unable to move (24 percent).

Sixty-seven percent of respondents agreed that they would like to remain in their local community for as long as possible.

I will cover more of the counter-evidence for the Great Senior Sell-Off in a part two to this piece. (I also appreciate any feedback that will help inform the next piece on this topic.)

Be careful out there!

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Chesapeake Has a New Chief: Is It Time to Buy?

Anadarko Petroleum (NYSE: APC  ) executive Robert Lawler has agreed to take the vacant CEO post at Chesapeake Energy (NYSE: CHK  ) , and investors want to know how he will fit into the Chesapeake mold. In some ways, he may be just what the company needs. Working his way up from engineering to senior vice president of international and offshore operations, Lawler is an operations guy at heart that could help Chesapeake start making the most of its massive asset holdings.

Chesapeake is still in the middle of a massive asset sale to pay down debt. Fool.com contributor Tyler Crowe wants to see improvements in operational performance and more clarity with the asset sale before he is ready to make an investment decision. Should you do the same?

With Lawler in charge and the company on its way back to profitability, Chesapeake certainly is in much better shape than it was a year ago, but the market still has this company trading at a big discount. To learn more about Chesapeake and its enormous potential, you're invited to check out The Motley Fool's brand-new premium report on the company. Simply click here now to access your copy.

5 Best Small Cap Stocks To Own For 2014

The following video is from Thursday's MarketFoolery podcast, in which host Chris Hill, along with analysts Jeff Fischer and Jason Moser discuss the top business and investing stories of the day.

Shares of Nokia (NYSE: NOK  ) plummeted on Thursday�after the company reported a 31% drop in its mobile phone sales. Nokia's first-quarter loss was smaller than last year's, and sales of�its Lumia smartphones increased. But sales in North America were down sharply. Is the market overreacting to Nokia's news? Should investors buy the embattled tech giant? In this installment of MarketFoolery, our analysts discuss the future of Nokia.

Nokia's been struggling in a world of Apple and Android smartphone dominance. However, the company has banked its future on its next generation of Windows smartphones. Motley Fool analyst Charly Travers has created a new premium report that digs into both the opportunities and risks facing Nokia to help investors decide if the company is a buy or sell. To get started, simply click here now.

5 Best Small Cap Stocks To Own For 2014: Achillion Pharmaceuticals Inc.(ACHN)

Achillion Pharmaceuticals, Inc., a biopharmaceutical company, engages in the discovery, development, and commercialization of treatments for infectious diseases. The company focuses on the development of antivirals for the treatment of chronic hepatitis C; and the development of antibacterials for the treatment of resistant bacterial infections. Its drug candidates for the treatment of chronic HCV include ACH-1625, a protease inhibitor, which is in phase IIa clinical trial for the treatment of chronic HCV; ACH-2684, a pangenotypic protease inhibitor, which is in phase I clinical trial for the treatment of chronic HCV infection; and NS5A inhibitors for the treatment of chronic HCV infection, including ACH-2928, which is to enter a phase I clinical trial, as well as various additional NS5A inhibitors in preclinical development. Its pipeline of product candidates also includes ACH-702 and ACH-2881 for drug resistant bacterial infections; elvucitabine for HIV infection; and AC H-1095 for HCV infection. The company was founded in 1998 and is based in New Haven, Connecticut.

Advisors' Opinion:

• [By Brian Nichols]

  Achillion is an odd play because it has both the most upside and the most downside of any stock on this list. The company's developing and testing its hepatitis C treating drug, ACH-1625, which is currently in phase II. The results of initial testing have consisted of ups and downs, but after many years and a long process, ACH-1625, appears to be on the right track for an FDA approval.

  The upside in shares of ACHN comes from two places: encouraging data from trials and its likelihood of being acquired. In my opinion, ACHN has a very high chance of being acquired in the next 6 months. Both Pharmasset (VRUS) and Inhibitex (INHX) were acquired over the last 5 months with insanely large premiums. VRUS was purchased at a 81% premium and INHX for a 182% premium. ACHN is perhaps the most speculative, but it could also be purchased the cheapest.

  The stock's recently pulled back after a downgrade and is trading much lower over the last couple weeks. The stock's trend reminds me so much of INHX; the month following the VRUS acquisition when INHX traded higher by nearly 300%. But then after the one-month gain, INHX lost its momentum and traded lower by 40% before being acquired with a 182% premium. INHX traded higher after the VRUS purchase because investors thought it would also be acquired, because of its hepatitis C candidate. ACHN is following the same trend, from November 12 till January 13 the stock more than doubled, but has since retraced.

  At $10 I think ACHN is a buy, it does have a good HCV candidate, and I believe that big pharma will bid to acquire ACHN in the near future. However, the risk in ACHN is if the company's not acquired, then it could have significant loss over the next year. But in a competitive biotechnology industry I believe the reward is worth the risk, and that a large pharma company will take the chance and purchase ACHN in an attempt to stay competitive and capitalize on the trend of investors being bullish on HCV treating drugs.

• [By Wyatt Research]

  The developer of treatments for infectious diseases has seen its shares rise 280 percent in the past year, and last month had a successful sale of 1.44 million more shares that raised $60.9 million.

5 Best Small Cap Stocks To Own For 2014: Sky-mobi Limited(MOBI)

Sky-mobi Limited engages in the operation of a mobile application store in the People?s Republic of China. It works with handset companies to pre-install its Maopao mobile application store on handsets and with content developers to provide users with applications and content titles. The users of its Maopao store could browse, download, and purchase a range of applications and content, such as single-player games, mobile music, and books. The company?s Maopao store enables mobile applications and content to be downloaded and run on various mobile handsets with hardware and operating system configurations. It also operates a mobile social network community, the Maopao Community, where it offers localized mobile social games, as well as applications and content with social network functions to its registered members. The company owns proprietary mobile application technology in the cloud computing, the MRP format, and SDK development environment. As of March 31, 2011, it had entered into cooperation agreements with approximately 523 handset companies to pre-install Maopao. The company was formerly known as Profit Star Limited and changed its name to Sky-Mobi Limited in October 2010. Sky-mobi Limited was incorporated in 2007 and is headquartered in Hangzhou, China.

Advisors' Opinion:

• [By Wyatt Research Staff]

  MOBI hit another 52-week high of $12.15 late last week. The stock continues to surge on increasing volume. The latest advance in share price came after Oppenheimer upgraded the stock to "Outperform".

  Last week, the China-based internet portal and gaming provider giant Sohu.com (Nasdaq: SOHU), announced an advertising agreement with MOBI.

Top 5 Oil Stocks To Invest In 2014: FuelCell Energy Inc.(FCEL)

FuelCell Energy, Inc., together with its subsidiaries, engages in the development, manufacturing, and sale of high temperature fuel cells for clean electric power generation primarily in South Korea, the United States, Germany, Canada, and Japan. The company offers proprietary carbonate Direct FuelCell Power Plants that electrochemically produce electricity from hydrocarbon fuels, such as natural gas and biogas. Its fuel cells operate on a range of hydrocarbon fuels, including natural gas, renewable biogas, propane, methanol, coal gas, and coal mine methane. The company also develops carbonate fuel cells, planar solid oxide fuel cell technology, and other fuel cell technologies. It provides its products to universities; manufacturers; mission critical institutions, such as correction facilities and government installations; hotels; and natural gas letdown stations, as well as to customers who use renewable biogas for fuel, including municipal water treatment facilities, br eweries, and food processors. The company was founded in 1969 and is headquartered in Danbury, Connecticut.

Advisors' Opinion:

• [By SmallCap Investor]

  The developer of stationary fuel cells used by commercial and government customers might be headed for a rebound from a pullback that began this spring - which has left the stock down 39 percent year-to-date.

• [By Roberto Pedone]

   Fuelcell Energy (FCEL) designs, manufactures, sells, installs and services ultra-clean, highly efficient stationary fuel cell power plants for distributed baseload power generation. This stock is trading up 7.2% to $1.01 in recent trading.

  Today’s Range: $0.94-$1.01

  52-Week Range: $0.83-$1.95

  Volume: 1.27 million

  Three-Month Average Volume: 1.04 million

  From a technical perspective, FCEL is ripping higher here right above its 50-day moving average of 92 cents per share with above-average volume. This move is quickly pushing shares of FCEL within range of triggering a near-term breakout trade. That trade will hit if FCEL manages to take out its 200-day moving average at $1.05 and then once it takes out more overhead resistance at $1.06 with high volume.

  Traders should now look for long-biased trades in FCEL as long as it’s trending above its 50-day at 92 cents per share, and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.04 million shares. If that breakout hits soon, then FCEL will set up to re-test or possibly take out its next major overhead resistance level at $1.18. Any high-volume move above $1.18 will then put $1.39 into range for shares of FCEL.

5 Best Small Cap Stocks To Own For 2014: Voyager Oil & Gas Inc.(VOG)

Voyager Oil & Gas, Inc. engages in the exploration and production of oil and gas in the United States. It primarily focuses on oil shale resource prospects in Montana, North Dakota, Colorado, and Wyoming. As of May 17, 2011, the company controlled approximately 141,500 net acres in the five primary prospect areas comprising 28,000 net acres targeting the Bakken/Three Forks in North Dakota and Montana; 14,200 net acres targeting the Niobrara formation in Colorado and Wyoming; 800 net acres targeting a Red River prospect in Montana; 33,500 net acres in a joint venture targeting the Heath Shale formation in Musselshell, Petroleum, Garfield, and Fergus counties of Montana; and 65,000 net acres in a joint venture in the Tiger Ridge gas field in Blaine, Hill, and Chouteau counties of Montana. It supplies energy and fuel for industrial, commercial, and individual consumers. The company is based in Billings, Montana.

Advisors' Opinion:

• [By SmallCap Investor]

  Shares of this explorer, which has operations in the Western U.S., crossed back above $3 and have risen 40 percent in the past month, amid increasing investor interest in companies drilling in the Bakken region.

5 Best Small Cap Stocks To Own For 2014: KongZhong Corporation(KONG)

KongZhong Corporation, together with its subsidiaries, provides wireless interactive entertainment, media, and community services to mobile phone users in the People's Republic of China. It also involves in the development, distribution, and marketing of consumer wireless value-added services, including wireless application protocol, multimedia messaging services, short messaging services, interactive voice response services, and color ring back tones. In addition, it offers interactive entertainment services, such as mobile games, pictures, karaoke, electronic books, mobile phone personalization features, entertainment news, chat, and message boards; and through Kong.net offer news, community services, games, and other interactive media and entertainment services; and sells advertising space in the form of text-link, banner, and button advertisements. Further, the company develops and publishes mobile games, including downloadable mobile games and online mobile games cons isting of action, role-playing, and leisure games. As of December 31, 2009, it had a library of approximately 300 internally developed mobile games. Additionally, it develops online games; and provides consulting and technology services, as well as media and net book services. The company was formerly known as Communication Over The Air Inc. and changed its name to KongZhong Corporation in March 2004. KongZhong Corporation was founded in 2002 and is headquartered in Beijing, the People?s Republic of China

Advisors' Opinion:

• [By Louis Navellier]

  Thanks largely to the country’s tremendous economic growth, there’s a new middle class in China. They have more leisure time than ever before, and that means big opportunity for entertainment provider KongZhong Corporation (KONG).

  The company provides wireless interactive entertainment, media and community services to mobile phone users, but it also offers interactive entertainment services, including mobile games, pictures, logos, karaoke, electronic books and mobile phone personalization features such as ring tones. The Chinese love their cell phones, and KongZhong provides much of the content that goes on those phones.

  Investors certainly haven’t been hesitant to dial up shares of KONG, as the stock is up over 218% in the last 12 months.

  I rate KONG an A, making it a strong buy.

Why Renewable Energy Group's Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of biodiesel maker Renewable Energy Group (NASDAQ: REGI  ) jumped 15% today after the company reported earnings.

So what: The company sold 39 million gallons of biodiesel during the quarter, up 14% from a year ago, and net income rose from $14 million, to $46 million. On a per share basis earnings were $1.25 versus an expectation of $0.51 from Wall Street. 

Now what: The government retroactively reinstated the Biodiesel Mixture Excise Tax Credit, which accounted for the big jump in profit. Still, the strong increase in revenue is a positive sign, and the tax credit will give the company some stability this year. My biggest problem is the dependence on a tax credit, which will keep me from buying shares, because it's at the whim of Congress, not a position I want to be in with a big budget deficit in Washington.

Interested in more info on Renewable Energy Group? Add it to your watchlist by clicking here.

Is Avnet Making You Any Cash?

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Avnet (NYSE: AVT  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Avnet generated $577.2 million cash while it booked net income of $518.8 million. That means it turned 2.3% of its revenue into FCF. That doesn't sound so great.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Avnet look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 10.4% of operating cash flow coming from questionable sources, Avnet investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, stock-based compensation and related tax benefits provided the biggest boost, at 5.9% of cash flow from operations. Overall, the biggest drag on FCF came from changes in accounts receivable, which represented 33.1% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Looking for alternatives to Avnet? It takes more than great companies to build a fortune for the future. Learn the basic financial habits of millionaires next door and get focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report.

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