Top Stocks

While many companies continue to post strong third-quarter profits, much of the earnings season talk has centered on concerns about the "top line" -- that is, revenue growth. The consensus seems to be that while corporations have done a great job of cutting costs and squeezing every dollar out of every sale, demand for their products hasn't picked up as much as investors would like.

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Generally that may be true, but it doesn't mean there aren't plenty of exceptions. Whether because of conditions within their specific industries, an ability to tap into areas of the world that do have strong demand, or a good old-fashioned ability to market and sell their products, a number of firms have been producing very good top-line growth in a challenging climate.

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With that in mind, I thought I'd see which companies that have been riding impressive sales waves also get approval from my Guru Strategies, fundamentals-based approaches that are each based on the strategy of a different investing great. Here are some of the best of the bunch.  

Pacific Investment Management Company (PIMCO), BlackRock, MetLife, and the Federal Reserve Bank of New York are working to force Bank of America (BAC) to buy back mortgages from its Countrywide Financial unit that were packaged into $47 billion in mortgage-backed securities.

The news hasn't helped the financial sector today since it was announced by Bloomberg on Tuesday. From the close on Monday to the close Thursday, the Financial Select Sector SPDR (XLF) is down 4.5%.

Last month, the holders of the mortgage-backed securities asked Bank of New York Mellon (BK), the trustee on the debt, to investigate the mortgages for problems that included insufficient record keeping. Bank of New York Mellon refused that request.

 

Exchange traded funds can offer protection for cautious investors worried about dollar-drop sensitive trades.

Last week, I wrote about the incredible connection that had formed between currency markets and risk assets including stocks, bonds, commodities, oil and precious metals. Just a quick glance at the charts shows just how closely the ups and downs of the dollar exchange rate is controlling trading.

In fact, according to Jason Goepfert of SentimenTrader, the relationship between the dollar and stocks has reached an all-time record.

 

Research In Motion (RIMM) was filled with indignation when Apple (AAPL) chief executive Steve Jobs took a jab at the company Monday. "We have passed RIM," Jobs said, referring to smart-phone shipments, "and I don't see them catching up with us in the foreseeable future."

But Jobs was right. New data from research firm Strategy Analytics show that Apple has now surpassed RIM in the global smart-phone market. More iPhones shipped than did BlackBerries in the third quarter.

Here's how the quarter broke down in terms of global shipments (thanks to GigaOm for reprinting the numbers): 

By Kyle Anderson, InvestorPlace.com

If you stop by McDonald's (MCD) soon, plan to spend more for your Big Mac than you're used to. Today, McDonald's said it will raise menu prices to offset the rising cost of commodities.

 

McDonald's CFO Peter Benson predicts commodity prices will jump 2% to 3% in 2011. And when the costs of the ground beef and cheese rise, you can bet menu items will cost you more as the Golden Arches passes on those higher prices.

 

By Don Dion, TheStreet

  

While one of Warren Buffett's greatest strengths is his ability to pick out "sure things," not all of his bets have paid off. In fact, there are a number of investments that have done more harm than good.

 

His bets on the airline industry, ConocoPhillips (COP) and Moody's (MCO) come to mind. All three can be seen as stains on his otherwise stellar career.

 

US Airways (LCC) is often highlighted as one of Buffett's most costly mistakes. In 1995, he had to write off 75% of his $385 million investment in the company.

 

By Jim Cramer, TheStreet

 

Sure, a half cent is not that much. Especially on an 84.5-cent basis. But when Suburban Propane (SPH) took that distribution to 85 cents last night, it was a reminder of how special these limited partnerships have been as a consistent way to make money.

 

Propane is a slow-growth business, typically a rural one. Suburban is one of the largest players in the business. It regularly boosts its payout as it takes over mom-and-pop distributions, precisely the kind of companies that have been hurt in this downturn, and grows bigger and bigger.

 

Folks don't buy Suburban because they are looking to shoot the lights out. But it has given us a 31% total return, and I don't think it is done, as it still yields only 6.19%.

 

Good news plus bad news on China's economy added up to bad news for China's stocks Thursday.

The good news was that China's economy grew at an annual rate of 9.6% in the third quarter -- slightly ahead of the 9.5% that economists surveyed by Bloomberg had expected.

That 9.6% growth rate, however, was the lowest for the year after a 10.3% annual rate in the second quarter and an 11.9% rate in the first quarter. The 9.6% represents solid growth -- showing that China's economy isn't about to stall -- and yet the slight slowdown is encouraging since it represents a retreat from the clearly unsustainable 11.9% growth of the first quarter.

 

Netflix (NFLX) has spent years building up a solid Internet streaming service, but so far it still requires U.S. customers to sign up for a disc-by-mail plan.

That may soon change. The company could offer customers a streaming-only plan by the end of the year, said chief executive Reed Hastings. It's been testing a similar plan in Canada.

"Our success with our pure streaming offering in Canada at $7.99 has encouraged us to test this model in the USA," Hastings said in his commentary on the company's quarterly results. "If our results are as strong as we think they will be, then we will look to start this offering later in this Q4." 

By Jim Woods

Exchange traded fund (ETF) issuer Global X Funds representatives were granted the honor of ringing the opening bell at the New York Stock Exchange on the morning of Friday, Aug. 27.  The event was a celebration of sorts for the company’s latest bevy of recently released ETFs. One of those new ETFs has more than proven itself worthy of a celebration, and that’s the Global X Lithium ETF (LIT).

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The fund has been a Wall Street sensation since it began trading on Aug. 4, when it opened up at $17.29 per share.  The fund closed at $19.88 on Oct. 20, representing a total return of over +15% in just 11 weeks.

 

Google (GOOG) loves to talk about the ways it makes money, but it stays mostly silent on one of its most profitable units: its tax lawyers.

Those lawyers have made Google and its shareholders oodles of money by devising ways to funnel profits out of high-tax countries and into island tax havens like Bermuda.

It's all perfectly legal -- though it does make some people skeptical of Google's "Don't be evil" mantra. And as a result, Google has cut taxes by $3.1 billion in three years and lowered its overseas tax rate to a jaw-dropping 2.4%, Bloomberg reports. 

Shares of McDonald's (MCD) hit an all-time high Thursday after the company beat analyst estimates for its third quarter.

The company said interesting menu items like frappes and smoothies helped drive traffic, as well as the continued appeal of the dollar menu in tough economic times. Comparable sales were up 6% worldwide.

McDonald's reported a $1.39 billion profit, or $1.29 a share, for the quarter. That's up from $1.26 billion, or $1.15 a share, in the year-ago period. Analysts had expected $1.25 a share. 

By Don Dion, TheStreet

 

Given the company's massive pile of cash and numerous acquisitions throughout 2010, more market commentators are looking to Google (GOOG) as the General Electric (GE) of the 21st century. Using exchange-traded funds, you can gain ample exposure to either company.

 

Throughout 2010, Google has been on a remarkable shopping spree. Often considered a one-trick pony, the tech Goliath has taken a number of steps in hopes of expanding beyond the search engine business, which has traditionally been its bread and butter.

 

Since February, the company has bought at least one name a month, expanding its reach into various outlets. Companies acquired 2010 are in industries such as social gaming, photo editing, advertising and travel technology.

 

By Jim Cramer, TheStreet

 

Don't waste another moment thinking about this foreclosure mess until you listen to the Wells Fargo (WFC) conference call -- a turgid affair but one that will make you realize that there is no way this process is going to be shut down unless the judges and politicians really do want to bankrupt the banks and kill the U.S. economy. Given how costly it was to save the banking system, even anti-bank President Barack Obama is not in favor of putting it on its heels again.

 

Maybe because there are so many business outlets writing and commenting on issues, or maybe because of the unchecked nature of the Web, it has become almost common and accepted wisdom that many things were done wrong on the paperwork of loans themselves.

 

I think that's wrong. If you listen to Wells Fargo -- and I have never thought they were liars -- the process has pretty much been the same all along, and there are no title-chain complications WHATSOEVER. It remains a good, profitable, growing business for WFC.

 

China's Ministry of Commerce said Saturday that the country could run out of medium and heavy rare-earth reserves in 15 to 20 years at the current rate of production.

Could this be true? Or is it simply justification for China's decision to cut export quotas by 72% in the second half of 2010 -- and slap a de facto ban on rare earth exports to Japan to protest the seizure of a Chinese fishing boat? A New York Times story today says that Chinese customs officials are also stopping rare earth shipments destined for Europe and the U.S.

I vote both are true.