If everything goes as planned, this week will be the busiest for initial public offerings since 2000.
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Analysts say shares of the search giant are undervalued, given its track record and growth prospects.
By Jake Lynch, TheStreet
The Internet search stalwart dominates the Web and offers international exposure. It also has an ample balance sheet, with nearly $32 billion of net cash. Most U.S. investors are familiar with Google's business model, its iconic co-founders Larry Page and Sergey Brin, and its penchant for innovation. However, few appreciate the company's overseas growth potential.
Google stock has risen 3.3% during the past 12 months even as sales have advanced 23% and earnings 30%. Similarly, in three years, Google's stock has delivered an annualized return of 8.3%, lagging sales growth of 21% and profit gains of 26%. Google's trailing price-to-earnings ratio, at 23, represents a 30% discount to its five-year average multiple.
Big portfolio managers appear to be positioning themselves for the end of QE2 by rotating into high-yield, slow-growth sectors.
Is the rotation into health care stocks for real? We've had the health care service providers and medical device companies going up for months now, including WellPoint (WLP), Humana (HUM), Allscripts (MDRX) and Cerner (CERN).
Few groups have been as strong as the distributors McKesson (MCK) and AmerisourceBergen (ABC). AmerisourceBergen's target was bumped Monday by UBS. Davita's (DVA) price target was upped by Goldman Sachs. St. Jude Medical (STJ) and Edwards Lifesciences (EW) have been incredibly strong stocks. So has device maker C.R. Bard (BCR).
Now it looks like the old-line drug companies -- which I, among other investors, have written off -- may be catching a bid. Pfizer (PFE) helped the cause by selling one of its divisions, Capsugel, to KKR (KKR). (I am sure we will see a big equity offering within 18 months from that one, creating huge profits for KKR. How predictable is that?) Any breakup of Pfizer will be well received. Bristol-Myers (BMY) announced a breakthrough drug last week. Johnson & Johnson (JNJ) will not go down no matter how many recalls it has. And Abbott Laboratories (ABT) looks like it is breaking out on the charts.
A tentative plan for California would bring fresh foods and other items to customers' doorsteps.
This wide reach and variety of products are part of the reason for sprawling supercenters that offer everything under one gigantic roof. But people with sore feet, take heart: The next category the king of retail wants to dominate may actually cut the mileage on your shopping cart.
That business is home grocery delivery, which Wal-Mart may soon test via online sales in California. And after that, it may be coming to a store near you.
Obviously, the motivation is profits. The fresh grocery delivery service, internally referred to as Project Titan, according to Bloomberg and not finalized by management, would be a serious e-commerce push for Wal-Mart. As more consumers take to the Web, filling the coffers of Amazon.com (AMZN) and other online retailers, the brick-and-mortar model of WMT is threatened in the long term.
4 orders have submitted a challenge over the way the bank pays its executives. With video.
Four orders are all investors in Goldman Sachs and have sent the bank a formal challenge over the excessive ways the bank compensates employees, The Guardian reports. Goldman's top five employees received $69.5 million last year.
The nuns -- Sisters of Saint Joseph of Boston, Sisters of Notre Dame de Namur, Sisters of St. Francis of Philadelphia and the Benedictine Sisters of Mt. Angel -- have asked that shareholders demand the board review the company's executive compensation policies. They also want a report of that review by October.
Post continues after this video about Goldman Sachs executives cashing in:
The company bids $900 million for a host of patents held by Nortel. That's what you have to do to compete. With video updates.
That's why Google (GOOG) has bid $900 million to buy all 6,000 of Nortel's remaining patents. Nortel, at one time a telecom industry leader, is in bankruptcy court and plans to auction off the patents. Its broad patent portfolio covers computer science, wireless, Internet search and social networking technologies, according to The Wall Street Journal.
Google becomes the "stalking horse" in this June auction, which makes its bid the minimum. Others who want to join in the bidding must go higher.
Post continues after this video about Google's massive bid:
Prosecutors argued that the privately produced coins were too similar to legal US currency.
But when your private currency starts to resemble real money, federal prosecutors get very interested. And when your currency looks and feels like a real coin and says "Twenty Dollars" and "$20" on it, that's when the feds take action.
The maker of silver Liberty Dollars, Bernard von NotHaus, 67, was convicted last month for making and selling the private currency in the form of notes and coins, The Associated Press reports. And now the government wants to seize his stash of five tons of the silver dollars and precious metals, estimated at $7 million.
While US stocks remain attractive, these international funds should outhustle the S&P 500 over the next 3 months.
By Gary Gordon, TheStreet
The S&P 500 ($INX) garnered as much as 5.4% in the first three months of 2011. What might we expect for the next quarter?
Other than Jim Cramer, most would likely concede that the April-June period could be a bit tougher for U.S. stocks. "Almanac traders" would point to 100 years of data on second-quarter underperformance. "Inflation fighters" would chronicle the directionality of core and noncore consumer prices. Meanwhile, "monetary policy monitors" would discuss the anticipated conclusion of quantitative easing and the probable rise in treasury yields.
It's not that U.S. stocks look unattractive. On the contrary, U.S. mega-corporations present attractive valuations at 12 to 14 times forward earnings. Yet earnings growth may be simmering down, as not every company can pass along increasing input costs for the products and services being sold.
Recent gains suggest investors have come back to this once-favorite emerging market.
By Don Dion, TheStreet
Exchange-traded funds tracking Brazil got a lift last week. A rally in emerging-market shares benefited many, but iShares MSCI Brazil (EWZ) gained more than 5%. The rally was also particularly kind to Market Vectors Brazil Small-Cap (BRF), which popped almost 9%.
This sudden jump suggests investors have come back to this once-favorite emerging market. Although shares have performed well over the past couple of years, 2010 was a year for leadership by the smaller Southeast Asian markets of Indonesia, Thailand, Malaysia and Taiwan. Among the BRIC nations, Russia and India were the stronger performers, while China and Brazil lagged.
Brazil's underperformance left shares relatively cheap compared with the emerging-market index. Midway through 2010, Brazilian shares traded at a premium to the broader index but now trade at a discount of several percentage points -- and as much as 10% at one point. Not spectacularly cheap but enough that some institutional investors are increasing their allocations to the country.
The fast-food chain's plan to add 50,000 employees is yet another result of its extraordinary business run over the past few years.
The hiring binge is one result of the extraordinary business run McDonald's has engineered over the past few years. When the economy tanked, more people turned to the Golden Arches to dine on a budget. McDonald's added to its bottom line with its successful McCafe line of coffees and other beverages. And smart promotions like the nationwide McRib and oatmeal launches worked well.
Now the company is moving more restaurants to a 24-hour schedule. It's aiming for three to four new hires per restaurant, which would add 7% to its work force in the U.S. for a total of 700,000 employees.
Post continues after this video interview with McDonald's about the hiring spree:
Keep an eye on geopolitical events and funds tracking energy, agriculture and emerging European markets. With video on ETF trends.
By Don Dion, TheStreet
Here are five ETFs to watch this week.
Japan is still struggling to contain the threat of a nuclear crisis, causing sentiment towards the nuclear energy industry to sour. Concerned about the detrimental long-term impact this event may have, droves of jittery investors have turned elsewhere to get their energy fix. Natural gas has been a major beneficiary amidst this shift.
The sudden popularity of this fuel has led to an interesting and concerning development for one of the more popular natural gas-related exchange traded products. GAZ, a futures-based note designed to target price changes, has developed a substantial premium in recent weeks, causing it to trade out of line with its underlying index. The effects of this premium can be seen when comparing day-to-day action of GAZ against fellow futures-backed ETF, United States Natural Gas Fund (UNG).
Traders can be a little more aggressive as we approach what should be another strong earnings season.
Stocks continued to rally last week. Investors are in a buying mood despite significant headwinds and valuations that are at the high end of historical norms.
Instead the focus is on the feel-good growth of the economy, supported by last week's strong employment number. The unemployment rate is dipping, and that is good for stocks irrespective of valuations.
The moves of the past two weeks indicate that the market has turned a corner. With earnings season about to fire up, investors can expect more gains over the next few weeks.
I’m not entirely convinced, given where valuations stand, but it is never wise to fight the tape. This week I’ll ride the tape. My ETF of choice this week is the IShares North American Technology-Multimedia Networking (IGN).
The charts show too many stocks in too many sectors looking ready to break out. Almost every time that has happened, there's been something lurking that turns things around.
Sometimes too many charts look too good for the market's health. Sometimes you just get a feeling that everything looks like a breakout and there's no way anything can go wrong.
That's how I feel going into the week after looking through the chart book. There are just too many stocks, too many kinds of stocks -- oil, minerals, telecom, health care (excluding pharma), high-growth tech, and even a lot of banks -- for my comfort.
Many times I have sat here before the market opened on a Monday thinking that it looks like the monster breakout week, when in reality we'd been rallying for some time. You look, for example, at the fetching charts of Noble Energy (NBL), Nabors (NBR), National Oilwell Varco (NOV) or of Bard (BCR), Cerner (CERN), Laboratory Corp. of America (LH) and DaVita (DVA) and say, "These are total breakouts about to happen" -- and then it turns out that was as good as it got.
They've lagged the market during the bull run, but now some see bargains among telecom stocks. With video on recent telecom-sector deal activity.
The telecom sector got a big shakeup last week, with AT&T announcing that it will buy T-Mobile in a deal that would boost AT&T's subscribership to almost 130 million -- pushing it past Verizon as the U.S.'s largest wireless carrier. The $39 billion deal is far from complete, however. It still has to make it through regulatory agencies -- and, given the antitrust implications of a deal between two of the four-largest cellular service providers in the country, the deal is likely to face quite a bit of scrutiny.
The AT&T/T-Mobile deal shined a light on a sector that has languished in recent years. Since the March 2009 low, the S&P 500 is up about 95%; the SPDR S&P International Telecom Sector exchange-traded fund, meanwhile, has made less than two-thirds of that gain, as investors have looked for flashier growth-oriented shares amid the market rebound.
Jeffrey Immelt says the rate was unusually low in 2010 but will rise this year. With video updates.
The claim has turned unwelcome attention to GE's chief executive, Jeffrey Immelt. Former Democratic Sen. Russ Feingold says Immelt should step down from President Barack Obama's new council on jobs and competitiveness. Liberal groups have started a campaign to get Immelt to resign or be removed, but the White House says it's standing by him. (Jon Stewart poked fun at the company here.)
Now Immelt is weighing in. Speaking to the Economic Club of Washington, he said GE's taxes were unusually low in the past two years because of losses its financial arm, GE Capital, incurred during the financial crisis of 2008. GE's tax rate will be much higher for 2011, he added.
Post continues after this video of Immelt's speech:
Left for dead by investors since last summer, equities of counties like China, Brazil and India are seeing a powerful new uptrend.
It's no secret that the financial system is awash in cheap cash. Years of extraordinary monetary policy from the Federal Reserve, the Bank of Japan and the European Central Bank have armed investors with plenty of firepower. So we've seen something akin to a global game of hot potato over the past year in which investors have moved en masse from one market to another in search of profits.
Last summer, traders wanted foreign issues as the dollar weakened after the Greek bailout. American stocks were shunned, while European and emerging-market issues soared. Then, as the dollar stabilized last fall and U.S. economic growth re-accelerated, asset flows reversed and everyone piled into American assets. European and emerging-market issues moved lower as Ireland and now Portugal suffered sovereign debt contagion while China had to hike interest rates to fight inflation.
Now things are reversing again. But with Europe still in trouble, emerging-market stocks are receiving all the benefit and have demonstrated huge performance since the Japa-Libya market sell-off two weeks ago. Since March 16, the iShares Emerging Markets (EEM) has gained nearly 11%, almost twice the performance of U.S. stocks. I first highlighted the trend in a blog post last week, and I think there is a lot of upside still to come.
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[BRIEFING.COM] The stock market ended the Wednesday session on a mixed note with small caps displaying relative strength. The Nasdaq Composite (+0.5%) and Russell 2000 (+0.4%) registered modest gains, while the Dow Jones Industrial Average (-0.2%) and S&P 500 (+0.01%) underperformed.
Despite the mixed finish, the key indices traded higher across the board at the start of the session after the advance reading of second quarter GDP surpassed estimates (4.0% versus Briefing.com ... More
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