Top Stocks

How badly would I want to short retail, if I were at my old hedge fund?

 

Consider Nordstrom (JWN). I mean, what the heck? How can that stock be up this much on absolutely nothing? We have a story about how Sears (SHLD) basically doesn't have a real CEO, and the stock is up 20% in a month.

 

Every single show company I follow has had dramatic moves. Can Guess? (GES) and J. Crew (JCG) keep going up on nothing, or Gap (GPS), which seems to be galloping to $30? Isn't this supposed to be the weak quarter for Polo Ralph Lauren (RL)? How many times can Lew Frankfort, CEO of Coach (COH), say things are great? Terry Lundgren has been flogging the turn in Macy's (M) for 8 points now. Jones Apparel (JNY) has gone up fivefold on the fact that things aren't as bad as they were.

 

The future of EMI, a decades-old music titan in the throes of survival mode, will be forged in the weeks to come. And to quote the firm's most bankable property: It's getting better all the time.

If the London-based conglomerate can get over the hump of an overdue debt payment and convince investors to buy into its five-year restructuring plan, all the doomsday predictions about the world's fourth-largest music company -- fueled by a recent exodus of major talent, including Paul McCartney -- will seem like so much hand-wringing.

The difference: EMI artists are doing great right now, from Lady Antebellum to Slash, and the company's market share has increased while the competition has slipped.

 

One of the cornerstones of modern film business, the 1948 Supreme Court case that prevented movie studios from owning theaters, should be junked to allow Hollywood to move into the digital age, said producer and studio executive Joe Roth on Monday.

Speaking at the kickoff to the Variety Entertainment and Technology Summit, which coincided with the first day of the Digital Hollywood conference in Santa Monica, Roth lobbied for a challenge to the so-called "consent decree," Hollywood's response to a ruling that Paramount Pictures was in violation of antitrust laws by owning the production, distribution and exhibition of films.

"It's 60 years old, and it makes no sense whatsoever," said Roth during the keynote interview that opened the summit. When moderator Steven Gaydos pointed out the unlikelihood of anyone in Hollywood mounting a serious challenge, Roth said, "Someone has to have the will to challenge that."

 

 

A product recall is tough on any company. But when the recall involves children's medicines, the issue becomes very important to parents -- and can have long-lasting consequences.

In the case of Johnson & Johnson (JNJ), some parents are wondering if generic drugs are simply a safer bet. The recent recall of children's Tylenol, Motrin and other medicines is at least the fifth recall in a year for the company's McNeil Consumer Healthcare division.

"Well, then no more baby Tylenol, back to generic brand," one father wrote on his Twitter account, according to The New York Times. 

By Lauren Tara LaCapra, TheStreet

 

Warren Buffett is a hypocrite.

 

For at least eight years, the Oracle of Omaha had been grousing about the derivatives business: In 2002, he called derivatives "financial weapons of mass destruction." In 2003, he said they were "unattractive" and moaned about related losses. In 2004, he compared the derivatives market to hell. In 2005, he mocked the way contracts are structured and compared the dangers of derivatives trading to Hurricane Katrina.

 

In 2006 and 2007, Buffett's tone softened a bit as Berkshire Hathaway (BRK.A) wound down a derivatives business it took over when it acquired Gen Re. He breathed a sigh of relief on that front, and assured investors that all remaining derivatives contracts that Berkshire held were personally managed by Buffett himself and contained "no counterparty risk."

 

Intuit Inc. ( INTU ) is trying to show you how easy it is to do all your finances including tax filings on-line. The products are marketed to the public and many of the products can be purchased and downloaded directly on-line. Demographics are in their favor because the youthful markets are used to doing things on line and the boomers are finding that doing tax filings using on-line software isn't really that hard. They enjoy not only the privacy ( they like to play their finances close to the vest ) but also like the math and fact check features that are built into the software.

Price momentum in this stock has been very good lately with a 7.48% increase this past month. The stock hit 12 new highs in the last 20 trading sessions and on Barchart all 13 technical indicators signal a buy for a 100% buy rating.

Wall Street analysts are looking for increased earnings of 5.80% this year and 8.20% next year. Their projections of earnings per share increases get my attention. They estimate an EPS increase of 11.00% this year, 11.40% next year and a 5 year annual compounded EPS increase of 13.83%. I like this for a long term pick.

 

Though Movie Gallery had already declared bankruptcy, things went from bad to worse over the weekend as the company has decided to close all of its 2,415 stores and liquidate its inventory. The movie rental chain had hoped to stay alive after some restructuring, but it couldn’t stop the bleeding fast enough.  Movie Gallery also operated locations under the Hollywood Video and Game Crazy brands, and all will be closed at an undetermined date.

 

This prevents an interesting dilemma for investors in regards to the top brick-and-mortar rental chain Blockbuster (BBI). Will the company continue its own descent to the bottom and follow Movie Gallery into oblivion, or will it turn Movie Gallery’s failure into a success now that it has the market almost all to itself?

 

When you think of the quintessential American restaurant, fast-food giant McDonald's (MCD) is first in line. But Mickey D’s much more than just an iconic U.S. burger joint  -- it has also proved to be a recession buster for many investors’ portfolios. Over the past five years, the stock has shot up nearly 138%, and so far this year there's been no sign the stock is slowing down. The restaurant stock now trades at 52-week highs.

Certainly, value-conscious consumers have demonstrated a taste for McDonald's during the recession … but many investors are wondering if the ride over now that the economy is improving. After all, a focus on healthier eating has some pushing for McDonald's to fire longtime mascot Ronald McDonald.

Well, if you’re thinking of cashing out your shares of the Golden Arches -- think again. Here are three reasons to buy McDonald’s right now:

 

If you didn't know any better, you would think that all drilling in the world is being done in the Gulf, that the Gulf is finished as a place to drill -- a la California after the huge Santa Barbara Unocal spill of a different generation -- and that all the drillers should therefore be sold.

 

If you looked at the bank stocks, you would presume that the Senate is going to run roughshod over the group and trash all but the smaller regionals, when I think the opposite is true. Sen. Chris Dodd is well aware of the anger in America, and yet he wants to be constructive, and the declines this morning are totally out of sync with what's happening in Washington, as there is some negative analyst chatter that I think does not read Congress correctly.

 

There are issues in both cases. I do not know the impact for Transocean (RIG), although the consensus is they will owe nothing because they are immunized by BP (BP).

 

 

GMO's Jeremy Grantham, the longtime bear who in late 2008 and early 2009 said stocks had become cheap for the first time in more than two decades, is sounding gloomy again. In his latest quarterly letter, released last week, Grantham says he thinks U.S. stocks have blown past fair value and are now "very overpriced".

• Check out my Buffett-inspired Top Stocks tracking portfolio at Wall Street Survivor

But Grantham says one particular area of the market is still offering good buys: U.S. high-quality large-caps. And he's not alone. BusinessWeek reported this week that two other fund managers with excellent long-term track records -- Thomas Perkins and Donald Yacktman -- are finding bargains in similar areas. Perkins, whose Mid Cap Value fund has beaten 94% of its peers in the past decade, says large-caps "have gotten so cheap that they should outperform for the next several years"; Yacktman, whose fund has beaten 99% of funds in its category over the past three, five, and ten years, according to Morningstar, has big positions in high-quality blue chips like Coca-Cola (KO) and Pfizer (PFE).

 

While my Guru Strategies -- each of which is based on the approach of a different investing great -- are currently finding value in a number of different areas of the market, Grantham's, Perkins', and Yacktman's comments got me wondering which large-caps these models might be highest on. And, right now, according to my models, one stock may clearly be the best of the large-cap bunch.

 

Now we know why Wall Street lobbyists are out in force in the fight against financial regulatory reform.

 

The New York Times is reporting that new rules with respect to trading of derivative securities would cost banks billions.

 

Of course this issue boils down to big dollars. For too long Wall Street firms have operated in a shadow environment whereby the rules were fast and loose. As a result of market inefficiency with respect to complex financial derivatives, big bucks were made.

 

• Citigroup is one of the five worst stocks on the market now

 

To the extent regulations are passed those profits could evaporate, hurting the biggest banks of the world. But that pain will benefit the smaller banks that I will mention below.

 

Trying to figure out where the stock market -- or, actually, stock markets, since global markets aren't closely correlated right now -- is headed from here? 

This drama has all the right elements: A whistle-blowing lawyer. Possible lies to Congress. Hundreds of millions of dollars quietly pocketed.

Pass the popcorn! Oh, wait. The case of the salary of former Lehman exec Richard Fuld is just a drop in the bucket. There are countless scandals now involving Wall Street bosses, their ridiculous salaries, the investor money they lost and how it all helped the economy implode.

Will the case of Dick Fuld's missing money get any traction? It all centers around the claim that Fuld, the boss at Lehman as the corporate ship was sinking, lied to lawmakers about the salary he was bringing home.