Why stocks are in for a rough ride this week
Stocks in for a rough ride this week

Longtime market bull Jeremy Siegel says investors could realize the market is behind the curve on interest rates.

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The company stands to gain from the latest complex exploration methods.

By Trefis Jan 27, 2012 10:47AM
Scott Gibson/CorbisHigh oil prices and declining production from existing fields have been prompting oil companies to explore technically complex and remotely located reserves. As a result, oilfield services companies like Schlumberger (SLB) are positioning themselves to benefit from the long-term trends shaping the energy industry.

Already we see strong revenue and earnings growth because of the rising interest in shale exploration and increasing deepwater activity. We expect Schlumbeger to leverage its global presence and its technological edge to benefit from the current era of high energy prices. The company competes with other players in the field, such as Halliburton (HAL) and Baker Hughes (BHI). 
Tags: BHIHALSLB

These picks fit the bill in a sector with great long-term prospects.

By InvestorPlace Jan 27, 2012 10:21AM
Don Farrall/Photodisc/Getty ImagesBy Jeff Reeves

Heath care stocks are the no-brainer demographic trend that every investor should take advantage of.


Aging baby boomers will demand more services, prescriptions and medical care. Health care is recession-proof, since people rarely cut back on their quality of life even if money is stretched thin. The big-picture reasons go on and on.

 

The coffee behemoth has a record holiday quarter, but investors are wary of narrowing margins and a disappointing forecast.

By Kim Peterson Jan 26, 2012 5:57PM
Image: Coffee Beans (© Purestock/SuperStock)Starbucks (SBUX) continued its pattern of beating Wall Street estimates Thursday, reporting quarterly profit and sales that were ahead of expectations. But margin concerns and a not-quite-high-enough forecast hurt shares in after-hours trading.

The coffee giant reported a $382.1 million profit, or 50 cents a share, for the fourth quarter, a 10% rise from a year earlier. Revenue rose 16% to a record $3.44 billion. Analysts expected a profit of 49 cents a share on revenue of $3.29 billion. 
Tags: SBUX

The food company may be trying to divert investors' attention ahead of earnings.

By Jonathan Berr Jan 26, 2012 4:18PM
If PepsiCo (PEP) can't dazzle investors with brilliant results, it seems the company is trying to baffle them with baloney.

The Purchase, N.Y., beverage giant announced Thursday that three of its brands -- Diet Mountain Dew, Brisk and Starbucks bottled beverages -- have each surpassed $1 billion in annual retail sales. There is less to this claim than meets the eye. 

The stock flies high above the otherwise stagnant Brazilian steel industry. So is it time to buy?

By Jim J. Jubak Jan 26, 2012 3:46PM
Image: Brazil (© Donald Edwards/age fotostock)The numbers out of Brazil's steel industry are ugly. How ugly? Uglier than a mole rat. Uglier than the first day of school. Uglier than an Ugli fruit.

Brazil's steel industry produced a record 35.2 million metric tons in 2011, 6.8% more than in 2010, but "apparent consumption" (the sum of domestic production plus imports minus exports) fell by 4.2% to just 25 million tons. And since Brazil’s steel industry has a total capacity of 45 million tons, steel prices haven't gone up strongly even if exports did climb 21% in 2011.
 
Tags: GGB

With superior asset quality and conservative loan policies, this bank is the top play on Brazil's economic growth.

By TheStockAdvisors Jan 26, 2012 2:53PM
By Yiannis Mostrous, Global Investment Strategist

One of Brazil's most favorable characteristics is a strong banking system, a sector that should benefit as investment flows return to the country. 

Banco Bradesco (BBD) is our favorite bank to gain exposure to this sector. Banco Bradesco is Brazil's second-largest private bank, with over 40 million customers and more than 4,000 braches. 

Strong growth in 2012 will be driven by its infrastructure businesses and a good backlog of orders.

By Trefis Jan 26, 2012 2:34PM
Image: Power lines (© Digital Vision)General Electric's (GE) recent earnings indicate that it might not have had an exceptional fourth quarter, but it has put all the drivers in place to help it record impressive growth in 2012. While earnings were in line with our expectations, they were considerably lower than last year's quarter.

Revenue growth was lower than we expected partly because of project delays, which have helped GE build an exceptional order backlog.  

The cable operator's investments in broadband networks have certainly paid off.

By Trefis Jan 26, 2012 2:10PM
Image: Global communication (© Maciej Frolow/Brand X/Getty Images) Comcast (CMCSA) and Time Warner Cable (TWC) are the two largest cable operators in the U.S., providing broadband, pay-TV and VoIP (voice over Internet protocol) services. Both companies have suffered pay-TV subscriber losses as competitors such as DirecTV (DTV), AT&T (T) and Verizon (VZ) have been expanding their pay-TV subscriber bases.

To offset these losses, the cable companies have resorted to investment in their broadband networks to improve speeds and increase their high-margin broadband subscriber base.  

The company appears to be stabilizing its subscriber levels, but it has a lot to prove before it becomes the market darling it once was.

By Kim Peterson Jan 26, 2012 2:03PM
Image: Watching television (© Maria Teijeiro/Getty Images/Getty Images)How many times does Netflix (NFLX) have to say it? The company doesn't want to replace your cable box. It can't afford to compete with everything on television.

Instead, Netflix just wants to be an online premium network. Think HBO on the Web. It wants to offer big original shows that you can't find anywhere else, plus a ton of less significant programming that doesn't cost too much. 
Tags: NFLX

The long-heralded shift to a cashless society is happening faster than even companies like PayPal predicted.

By The Fiscal Times Jan 26, 2012 1:40PM
By Suzanne McGee, The Fiscal Times

The smartphone revolution -- just look at the gargantuan surge in the number of iPhones that Apple sold in the fourth quarter -- is finally starting to deliver on an old promise: Increasingly, those phones are doubling as our wallets.

PayPal, which is beginning to roll out in-store e-payment systems, starting with Home Depot (HD), will be one of those companies relying on smartphones as part of the new payment systems.  

Materials stocks are outperforming the broad market, and the primary sector ETF is showing technical strength.

By MoneyShow.com Jan 26, 2012 1:14PM
Image: Stock market (© Digital Vision/SuperStock)By Tom Aspray, MoneyShow.com


The announcement from the Federal Open Market Committee that interest rates will remain low until 2014 appears to have ended the market's very brief corrective phase. The advance/decline lines moved sharply higher Wednesday, with more than 2,300 stocks advancing and just over 700 declining. 


Some of the previously lagging sectors are now showing signs of life. As further evidence that the economy is indeed getting stronger, new sectors are likely to become leaders (see also: Sector Selection Is the Key for 2012).

 

An increasingly aggressive, reckless Fed is gutting the greenback. Investors should play along.

By Anthony Mirhaydari Jan 26, 2012 1:09PM

The Federal Reserve on Wednesday, as expected, extended the period that it anticipates holding short-term interest rates near zero to late 2014. It also, as expected, held off on another round of money printing, known as quantitative easing, for now. But the Fed chairman teased additional action later this year -- something I warned of in my column this week.

 

Yet the real story, one that had Wall Street traders jumping in response, was the establishment of a long-term inflation target for the Fed -- 2% on personal consumption expenditures. But despite the Fed calling inflation "subdued" as it justified holding rates lower for longer,  its new target is already being exceeded.  

 

So it's like this: The Fed is now loudly advertising the fact that it is willing to push more monetary easing into the economy even as consumer price inflation runs at 3%. This is blatant dollar debasement. And it's only going to encourage the kind of mal-investment and speculative excess that brought about the housing bubble in the first place.

 

The good news is that it's creating an opportunity for profits in precious metals again as the dollar tumbles.

 

Morgan Stanley and Goldman Sachs get knocked just as business shows signs of picking up.

By Jim Cramer Jan 26, 2012 1:08PM

By Jim Cramer


Why are analysts so, so quick to downgrade? We caught a downgrade of Morgan Stanley (MS) and Goldman Sachs (GS) on Wednesday, for example, and I thought it was totally fatuous. These stocks had been dogs in 2011, but business could be picking up right now, with the stock markets worldwide doing better and all of the banks in Europe restructuring.


We got a hostile bid Wednesday: Roche's bid for Illumina (ILMN). We have an IPO calendar that could get hot. We have tables of employment that are now rationalized, and we have lower expense structures. This is when you should be looking to buy them, not sell them.

 

Why is Southwest the only carrier that's soaring?

By InvestorPlace Jan 26, 2012 12:34PM
Image: Airline (© Christie & Cole/Corbis)By Lawrence Meyers

Question: Why on earth would you want to buy an airline stock? Answer: You wouldn't. Except for one.


That's because airlines have an awful business model. If oil prices go up, the cost of flying the jets goes up even more, requiring carriers to hedge, which distracts them from what they should be doing: transportation.

 

E-Trade is downgraded to 'neutral' at Goldman.

By MSN Money Partner Jan 26, 2012 12:15PM
Thursday's noteworthy upgrades include:
  • Netflix (NFLX) upgraded to Buy from Neutral at Citigroup, and to Hold from Sell at Gabelli
  • Life Technologies (LIFE) upgraded to Outperform from Market Perform at Leerink
  • Textron (TXT) upgraded to Buy from Hold at EarlyBirdCapital
  • Equity Residential (EQR) upgraded to Overweight from Equal Weight at Barclays
  • Consolidated Edison (ED) upgraded to Hold from Underperform at Jefferies
  • Illinois Tool Works (ITW) upgraded to Buy from Underperform at BofA/Merrill
 

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[BRIEFING.COM] Equity indices remain near their best levels of the session. The S&P 500 trades higher by 0.4%, while the Nasdaq Composite (+0.5%) displays relative strength.

The Nasdaq has received significant support from tech stocks, which have been able to overshadow the underperformance of biotechnology. Top-weighted sector components like Apple (AAPL 102.12, +0.54), SAP (SAP 77.19, +0.67), and Qualcomm (QCOM 76.32, +0.49) display gains between 0.5% and 0.9%, ... More


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