5 reasons the market is seeing red
5 reasons the market is seeing red

Geopolitical crises are taking a toll on stocks as we head into the seasonally weak month of August.

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Despite grim headlines, investment pros who know the stock say this is a good time to buy.

By Gene Marcial Dec 15, 2011 11:02AM

Shares of Best Buy (BBY) have gotten slammed and will likely continue to stagger.

 

But don't panic. Some investment pros who know the largest retailer of consumer electronics quite well are saying the seemingly unthinkable: Buy Best Buy's stock. It is probably the cheapest deal in the store right now.  

 
Tags: BBY

These picks are undervalued based on a price-to-earnings growth strategy.

By TheStockAdvisors Dec 15, 2011 10:38AM
By J. Royden Ward, Cabot Bejamin Graham Value Letter

Twenty-seven years ago, Standard & Poor’s created the PEG ratio (price-to-earnings growth) to measure the degree to which a growth stock is undervalued.

We use the ratio to find growth stocks selling at reasonable prices. The PEG ratio is calculated by dividing the price to earnings (P/E) ratio by the earnings growth rate. The growth rate is our estimated rate of EPS growth for the next five years. A PEG ratio of less than 1.00 indicates that a stock is undervalued.  

Capitalizing on the huge demand for Apple's smartphone, China Unicom should be able to increase its mobile market share.

By Trefis Dec 14, 2011 5:08PM
Image: China (© Brand X/SuperStock)China Unicom (CHU) will finally be able to sell the long-awaited iPhone 4S in mainland China, according to a report in the Beijing Morning Post.

China's Ministry of Industry and Information Technology has issued a network permit to China Unicom, the country's second largest carrier, to sell the phone from this month onward, making it likely that the phone will be available for Christmas. Since its debut in October, Apple's (AAPL) iPhone 4S has ruled smartphone sales for two consecutive months at the three major carriers in the U.S.: Verizon (VZ), AT&T (T) and Sprint (S). 

Some of the world's best investors are keying in on natural-resource plays.

By John Reese Dec 14, 2011 5:01PM

Image: Coal miners (© Digital Vision/SuperStock)Some of the world's most successful investors have been bullish on natural-resource stocks recently as the world population continues to rise, global economies operate on non-renewable resources, and central banks inject huge sums into the financial system.

 

One is Jeremy Grantham of GMO, who has been high on resource stocks as longer-term investments for some time. "I like (personally) resources in the ground on a 10-year horizon," Grantham wrote in his recent third-quarter letter to clients.

 

The company says it will return to full operations at its Grasberg mine by early next year.

By Jim J. Jubak Dec 14, 2011 4:51PM
The strike at Freeport McMoRan Copper & Gold’s (FCX) huge Grasberg mine is over.

The settlement with union workers is reasonable -- a 40% increase in wages over two years will raise pay to $7.50 an hour from the current $2.50 -- especially considering that initial demands were for $200 a hour. Credit Suisse estimates the agreement will raise costs at Grasberg by 2% in 2012 and 4% in 2013.
 
Tags: FCXgold

The soft-drink giant strikes a $980 million deal with a Saudi soda company.

By Benzinga Dec 14, 2011 4:37PM

By John Thorpe, Benzinga Staff Writer


Coca-Cola (KO) announced Wednesday that it has reached an agreement to buy half of Saudi Arabia's Aujan Industries' drinks business.


The deal, valued at $980 million, gives the U.S. beverage maker a significant inroad to the growing food and beverage markets in the Middle East and North Africa. The company said in October that it wanted to move into those markets wherever it was strategically possible to do so. Now, it seems to have that foothold.

 

Major homebuilders have soared since early October, and some analysts say there's no real justification for the rise.

By Kim Peterson Dec 14, 2011 4:23PM
The single-family housing market is a mess. So why are homebuilder stocks so high?

A foreclosure glut is still dragging the sector down. The National Association of Realtors just said the market downturn was worse than it thought. Freddie Mac's chief economist is predicting "another bumpy ride" for 2012.

But shares of D.R. Horton (DHI) were up nearly 50% this week from early October. Toll Brothers (TOL) was up more than 45% in that time. Lennar (LEN) was up more than 50%. 
Tags: DHILENTOL

Rumors swirl that the telecom giant could acquire the red envelope. But such a deal could be bad for both companies -- and worse for customers.

By MSNMoney partner Dec 14, 2011 3:54PM
The Week

On Tuesday, an investment banker told Bloomberg that Verizon is "very serious" about buying Netflix, sending a flurry of rumors flying across the tech world. Just last week, it was reported that Verizon was considering launching its own streaming service to compete with Netflix. Would it make more sense for the company just to acquire Netflix? What would such a deal mean for Verizon, Netflix and customers?

It wouldn't do either Netflix or Verizon any good: Though there are exploitable synergies between the companies, they're better off remaining independent, says Todd Campbell at Seeking Alpha.  
Tags: TWXVZ

Yield-seeking investors shouldn't forget to check the charts.

By MoneyShow.com Dec 14, 2011 2:56PM

(© Kyu Oh/Photodisc/Getty)By Tom Aspray, MoneyShow.com


For most of 2011, with Treasury yields so low, the search has been on for safe, sizable dividends. This explains why the SPDR Diamond Trust (DIA), which tracks the Dow Industrials, is up 4.3%, while the Spyder Trust (SPY) is down 1.2%.


Of course, dividends are not included in these performance numbers, but the demand for large-cap, high-yielding Dow stocks has been strong. In many cases, those who went for the highest yields this year have fallen further behind because many high-yield stocks have dropped sharply in price.

 

Economic turmoil in the Old World is felt by companies in the New World.

By Jonathan Berr Dec 14, 2011 2:19PM
(© Photodisc/SuperStock)General Electric (GE) CEO Jeffrey Immelt sees tougher times ahead in Europe. 

Speaking Tuesday at the company's annual investor day in New York, Immelt announced plans to "restructure some of its industrial operations to prepare for a European recession," according to the Wall Street Journal. The slowdown will affect many GE businesses, including health care, where the company expects the market to contract by as much as 10%. 

Renewable-energy companies face growing questions of viability.

By InvestorPlace Dec 14, 2011 1:49PM
 (© Russell Illig/PhotoDisc/Getty Images)By Jeff Reeves

First Solar (FSLR) is taking a beating Wednesday, off almost 20% thanks to a lowered outlook for 2012, delays in its projects and expensive reorganization plans. The stock is down an ugly 74% so far in 2011 and almost 90% from its 2008 peak.


First Solar isn't alone, either. Many solar companies are getting hit hard this year -- and are running the risk of going dark permanently.

 

The strong interest reflects increased interest in luxury goods and a willingness to spend more per bottle.

By Kim Peterson Dec 14, 2011 1:39PM
Image: New Year celebration (© Stan Fellerman/Corbis)The champagne industry could be approaching record sales this year -- another sign that the rich have recovered economically.

The French champagne industry shipped 192 million bottles by the end of September, The Wall Street Journal reports. The sector counts on the holidays for a good chunk of its sales, and expectations are high that shipments will approach the record 339 million bottles seen in 2007. 

The pharmaceutical leader offers a consistent track record, strong new product pipeline, and generous yield.

By TheStockAdvisors Dec 14, 2011 1:30PM
By Stephen Leeb, Income Performance Letter

While they don’t always deliver eye-popping growth, stocks that offer a steady stream of growing income are must-haves for the conservative investor.

With that in mind, we are now recommending Bristol-Myers Squibb (BMY), the $48 billion giant, as a dependable income play. 
Tags: BMY

Consumers remain reluctant to spend as holiday shopping season hits full swing.

By The Fiscal Times Dec 14, 2011 1:02PM
Best BuyBy Suzanne McGee, The Fiscal Times

For all those who got caught up in the excitement over robust Black Friday sales, the release of the actual retail sales data for November was like an icy shower. The disappointing numbers serve as a reminder that putting money into the retail industry at this juncture is about as risky as strolling through a minefield.

Economists had been expecting retail sales to gain 0.5% to 0.6% last month, roughly the same as the upwardly revised 0.6% advance recorded in October. Instead, sales grew only 0.2%. Some retailers fared better than others, with electronics outlets seeing a 2.1% jump as consumers stocked up on gizmos for the holiday season. But even then, higher sales don’t always translate into higher margins, as illustrated by the earnings results from Best Buy (BBY) for the quarter ended Nov. 26. The Minnesota chain’s net income fell 29% for the quarter year-over year, while margins contracted nearly a full percentage point to 24.2%. 

Avon is upgraded after its CEO is ousted, while Best Buy is both upgraded and downgraded.

By MSN Money Partner Dec 14, 2011 12:14PM
Information provided by Theflyonthewall.com

Wednesday's noteworthy upgrades include:
  • Avon Products (AVP) upgraded to Outperform from Market Perform at BMO Capital
  • Vertex Pharma (VRTX) upgraded to Outperform from Underperform at Credit Suisse
  • SunTrust (STI) upgraded to Outperform from Market Perform at Bernstein
  • Energy Transfer Partners (ETP) upgraded to Buy from Neutral at UBS
  • Energy Transfer Equity (ETE) upgraded to Buy from Neutral at UBS
  • Best Buy (BBY) upgraded to Buy from Above Average at Caris
 

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[BRIEFING.COM] The S&P 500 trades higher by 0.2%.

The University of Michigan Consumer Sentiment report for July was revised up to 81.8 from 81.3 in the final reading, while the Briefing.com consensus expected the reading to be revised up to 82.0.

Separately, June construction spending decreased 1.8% month-over-month, while the Briefing.com consensus expected an increase of 0.3%.

Also of note, the ISM Index for July rose to 57.1 from 55.3, while the Briefing.com ... More


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