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Emerson Electric, Baker Hughes and PNC Financial are well positioned for growth as the global economic recovery takes hold.

By TheStreet Staff May 11, 2011 12:11PM

By Stephanie Link, TheStreet

 

Global economies and equity markets have improved significantly from their March 2009 lows. Manufacturing activity continues to improve, the global banking system has strengthened and corporate earnings have recovered significantly.

 

Simply put, the last three years of easy global fiscal and monetary policy (including the Federal Reserve's massive QE2 program in the United States) not only rescued the world economies from one of the most severe recessions, but have provided the stimulus for growth. Commodities have surged, GDP has recovered and the consumer has remained resilient.

 

Of course, all is not perfect. China continues to try to slow its economy, European debt remains problematic and Japan has endured an incredible personal and economic tragedy. But a recovery is evident, and I see three stocks that should benefit as economic growth continues to pick up.

 

Slow profit growth is a worry one leader of Indonesia's telecom sector.

By Jim J. Jubak May 11, 2011 12:09PM
Jim JubakIt’s hard to understand how Telkom Indonesia (TLK) -- or, more formally, Telekomunikasi Indonesia -- managed to turn its first quarter into a disappointment.

But it did.

The company, Indonesia’s biggest telecom business, broke through the 100 million-subscribers ceiling in the quarter. And it also predicted that it would add 10 million to 12 million subscribers this year.

But big increases in operating and marketing costs negated all that good news. First-quarter 2011 net profit rose just 1.4% from the first quarter of 2010, to 2.83 trillion Indonesian rupiah ($330 million) from 2.79 trillion rupiah.

Marketing costs rising fast enough to wipe out profit increases from new subscribers are a bad sign in the telecommunications sector. It’s usually an indicator that the company is experiencing so much churn that it has to spend lots of money to replace those departing subscribers.
 

After April's rough patch, retailers have regained their footing, utilities are hopping and we are finally getting credit for Friday's terrific jobs number.

By Jim Cramer May 11, 2011 11:41AM
thestreetjim cramerDid the rough patch end? Did world growth begin to re-accelerate? We all know that the U.S. economy, and maybe the world's, hit a rough patch in April, perhaps in reaction to the suddenly high price of oil or because economic tightening policies are beginning to take effect -- although there are mixed emotions about China's inflation level this morning.

 

But the reports I am getting now about May do not indicate that things are slowing any further. And some of my auto, retail and industrial contacts say things are pretty darned good again. I know that it shouldn't fluctuate like this, but it does seem like the world's still humming.

 

Two of the best gauges I have -- the S&P Retail Index and the utilities -- are flashing out-and-out green after worrying me for a bit. The utilities, ones like Exelon (EXC) and FirstEnergy (FE), took huge hits not that long ago, when it looked like things were turning down again. Now they are hopping.

 

With growth slowing and inflation rising, we face a repeat of the difficult economic environment of the 1970s. Stocks will suffer as a result.

By Anthony Mirhaydari May 11, 2011 11:19AM

Speculative commodities like silver, gold, and crude oil have been on a flyer lately on big concerns over inflation. This, it was believed, would be caused by robust global growth as well as supply disruptions. Ultra-loose monetary policy from the Federal Reserve was also a contributor.


But things are changing now as the economy shows signs of slowing. We now face a rising threat of stagflation -- or high inflation with stagnant growth.


What's more, the problem is global. China is battling inflation, with consumer prices rising at a 5.3% annual rate. Britain's inflation rate is expected to hit 5% this year even as GDP growth stalls. And Europe is under pressure with growth slowing. This is a dangerous situation since there are no easy solutions or quick fixes for stagflation. Morgan Stanley warned clients that equities would "fall significantly" in this scenario -- one that looks increasingly likely.

 

It's the second hike in 2 months, signaling an industrywide trend.

By InvestorPlace May 11, 2011 10:35AM

investorplaceNo matter where you go these days for a burger, be prepared to pay more. Wendy’s/Arby’s Group (WEN) is the latest fast-food chain to announce it will raise prices on select menu items to cover the rising cost of beef and other food commodities.


It’s the second time in as many months that Wendy’s said it will raise menu prices, and a sign that more increases could be cooking.

 

An industrial giant is the highest flier, and a tech icon is the biggest dud.

By InvestorPlace May 11, 2011 9:32AM

By Jeff Reeves, editor of InvestorPlace.com.


jeff reevesinvestorplaceA lot of folks don’t put a lot of credence in the Dow Jones index. They think it’s an antiquated group of 30 blue chips that reads less like a list of stocks to watch and more like a list of stocks past their prime.


Take General Electric (GE), which first joined the index in 1896 – and adjusted for splits is barely above where it traded back in 1996. To many investors, GE is the perfect example of an outdated, under-performing stock in the Dow Jones.


But not all the 30 components are sleepy blue chips. Here's one fast moving winner that has doubled the index so far in 2011 - and the biggest dog of the Dow that is deeply in the red:

 

Will Dunder Mifflin hire the Oracle of Omaha to lead its Scranton office?

By Kim Peterson May 10, 2011 2:27PM
Credit: (© Michael Buckner/Getty Images)
Caption: Businessman Warren BuffettWould Warren Buffett be a good fit at Dunder Mifflin? I think he'd be a fine replacement for Michael Scott. He'd buy the whole company by lunchtime, double its assets by the end of the day, fill the break room with See's candies and give Dwight Schrute plenty to grumble about.

We'll soon find out how the Oracle of Omaha fares in Scranton. Buffett will guest star in the May 19 season finale of "The Office," The Hollywood Reporter notes. He will be interviewing for the opening created by Michael Scott's departure.

Buffett will have plenty of company on the set. The finale has a number of guest stars lined up, including Ricky Gervais, Jim Carrey, Ray Romano and James Spader.

Buffett has a good relationship with "The Office" folks. At Berkshire Hathaway's (BRK.A) recent shareholder meeting, investors watched a tape of Steve Carell and other "Office" actors, The New York Times reports. In the video, Carell's Michael Scott says Berkshire Hathaway is best known for producing all of Anne Hathaway's movies. 

Semiconductor companies are poised for a breakout, which could be exactly what the techs need. Here are a sector ETF and 2 component firms that could lead the charge.

By MoneyShow.com May 10, 2011 1:14PM
By Tom Aspray, MoneyShow.com

The technology sector is still stalled below the February lows, and an upside breakout may be needed to push the major averages to the next major upside targets. Many investors have been impressed by the tech earnings this quarter.

Despite this, the technology stocks still seem to be out of favor by many analysts, and this week's action may be critical.

Looking at the components of the semiconductor industry group, you get a mixed picture—but the chart of the Semiconductor HOLDRs Trust ETF (SMH) does look positive. As for the individual companies, I favor those that have successfully held above the 2010 highs and show positive volume patterns.
 
Tags: etf

The technology world tries to decipher the software giant's intentions and what the purchase will mean for everyone.

By Kim Peterson May 10, 2011 11:52AM
Microsoft (MSFT) has never made a buy as big as Skype. The $8.5 billion cash deal to buy the online calling company is huge, and the tech world is full of opinions about what it means for Microsoft and the competition.

Does Microsoft see something in Skype that other companies don't? People had pretty much dismissed Skype after its disastrous acquisition by eBay (EBAY) for $2.6 billion in 2005. EBay wanted to integrate Skype into its auction platform, perhaps allowing buyers and sellers to contact each other, but that never worked out. (Microsoft owns and publishes MSN Money.)

EBay sold 65% of Skype to an investor group in 2009 at a $2.75 billion valuation, wisely keeping a significant stake for itself. Skype delayed plans last year to go public and lost about $7 million last year.

So is Microsoft crazy, or is Skype really worth an $8.5 billion gamble? 

What is Sears Holdings? It's a vehicle for losing money.

By Motley Fool Pick of the Day May 10, 2011 11:32AM

By Alyce Lomax

 

Sears Holdings' (SHLD) nasty financial tidings last week further supported the anti-Sears sentiment some of us have harbored for quite a while. Forget about arguments that this is actually a real estate play rather than a retailer. What Sears really seems to be is a vehicle for losing money.

 

Some investors fled after Sears revealed that first-quarter same-store sales dropped 3.6% and warned that it expects a quarterly loss of $1.35 per share to $1.81 per share. Analysts had expected a first-quarter profit of $0.03 per share, so you can see why fleeing the stock looked like a darn good option.

 

There's been plenty of fretting about the future of Wal-Mart (WMT) and Best Buy (BBY), given flagging sales in the U.S. But regardless of the short-term hand-wringing about their prospects, both of those companies remain very relevant companies on the retail landscape, even if their sales growth could be more robust. You can't really say the same of Sears.

 

CEO John Chambers' wrong turns and befuddling council system got Cisco into this mess. Is he capable of getting it out?

By TheStreet Staff May 10, 2011 11:19AM

By Scott Moritz, TheStreet

 

As Cisco's (CSCO) prospects fall, questions of its leadership have risen.

 

After a series financial disappointments over the past six months has resulted in a 28% drop in the stock, Cisco chief John Chambers realized -- out loud -- that the company has gone adrift.

 

Now, analysts and investors are questioning whether Chambers is the right person to get Cisco back on course.

 

Goodbye, fiberglass tables and bright colors. Hello, faux leather and WiFi.

By InvestorPlace May 10, 2011 9:11AM
investorplace logo

Right now, the only reason most adults stop and sit awhile at their localMcDonald's (MCD) is to watch their kids hang out at the indoor playground. That or because they have no place to take the take-out, since they work out of their car or truck.


 

Well, the king of fast food hopes to change that with a massive makeover of its 14,000 U.S. restaurants. McDonalds plans to do away with its fiberglass tables and steel chairs to make the restaurant an inviting destination with padded recliners and warm painted interiors that help customers linger -- and maybe spend a few extra bucks.


 

McDonald's inspiration? None other than coffee king Starbucks (SBUX).

 

The CME is raising the amount of upfront capital required to trade crude oil contracts. While the modest increase is being downplayed in the media, it could pressure oil lower.

By Jim Cramer May 10, 2011 9:00AM

jim cramerthe streetWhen the CME (CME) broke the back of the silver market by increasing margin requirements, it was huge news. Of course, it took a virtual doubling in the requirements to shoot that elephant, and the beast stirred in Monday’s session. Nevertheless the CME's move certainly cooled the frenzy.

 

Can margin requirements do the same for oil? Looks like the CME wants to find out after the harrowing session last week that saw oil plummet $10 in a couple of hours. That's why I think last night's 25% increase in the margin required to buy in the oil complex could have impact.

 

It took an 84% increase in margin requirements to stop silver in its tracks, causing a 27% plunge in the precious metal. We are nowhere near that with these boosts in margin. However, the exchange didn't take up the margin rates 84% in one fell swoop, so I expect more increases if the zaniness continues.

 

Are commodities in trouble or in recovery? Don't ask Goldman Sachs.

By Jim J. Jubak May 9, 2011 5:20PM
Jim JubakI think you’re entitled to feel a little cynical today. And you quite probably feel some anger too if you sold some commodity-stock positions last week.

Goldman Sachs (GS), the Wall Street giant that predicted a sell-off in commodities -- a call that undoubtedly contributed to creating that exact sell-off last week -- is now predicting a recovery.

Last week’s rout drove the Standard & Poor’s GSCI Index of 24 commodities down 11% in five days.

Today, the index was up 3.5% as of 3:05 New York time.

In a May 6 interview with Bloomberg, Jeffrey Currie, Goldman's head of commodity research, said, "Given the magnitude of the pullback, it does create an opportunity for more upside potential, particularly in the second half of this year, when fundamentals are expected to tighten."
 

While U.S. consumers are proving remarkably resilient, fear is helping keep many consumer stocks attractive

By John Reese May 9, 2011 4:35PM

Despite concerns about skyrocketing gas prices, the U.S. consumer is continuing to prove remarkably resilient, according to the latest retail sales figures. According to Thomson Reuters, same-store sales at 25 major stores jumped an average of nearly 9% in April vs. the same month a year ago. Even accounting for the fact that Easter fell in late April this year as opposed to early April last year (which meant more Easter-related shopping was done in March last year), sales have been fairly strong.

 

Still, the high gas prices and lingering weakness in the job market are leaving a cloud hanging over many consumer-oriented stocks. And that's created some good buying opportunities, several of which are popping up on the radars of my Guru Strategies (each of which is based on the approach of a different investing great).

 

As an additional bonus, consumer and food stocks tend to be two of the most resilient sectors during the summer months -- after many investors act on the old adage, "Sell in May and go away." That's what a study recently highlighted by MarketWatch's Mark Hulbert found. The study, performed by Ben Jacobsen and Nuttawat Visaltanachoti of New Zealand’s Massey University, examined the "Sell in May" phenomenon. It found that from 1926-2005, all sectors and industries performed better during winter than summer, but that the effect was "almost absent in sectors related to consumer consumption". 

 

 

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