You can still find small-cap superstars
Small-cap superstars still abound

There are some picks in this sector that have excellent valuations and strong earnings growth.

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After months of underperformance compared with US equities, emerging-market stocks are moving higher on renewed dollar weakness.

By Anthony Mirhaydari Feb 18, 2011 8:35PM

One of the most popular investing themes of the past few years looks ready for a resurrection. I'm talking about foreign stocks, which attracted a lot of attention in 2009 and 2010 because of the exposure they offered to fast-growing economies like China and Brazil.

 

All that changed over the past six months as a new problem bubbled to the surface: inflation, driven by higher food and fuel prices. There are structural reasons foreign economies were more sensitive to rising prices. Alas, as the likes of China and Brazil tightened policy in response -- via interest-rate hikes, capital controls and tighter bank capital requirements -- investors fled out of fear of diminished economic growth. At the same time, the U.S. economy revved up.

 

As a result, since Oct. 1, the S&P 500 has climbed nearly 18%, while the iShares Emerging Markets (EEM) has added only 4.3%. Investors responded by pulling cash out of emerging-market mutual funds in a big way. Year to date, they've pulled a fifth of the record-setting $95 billion they put to work in EM during 2010, according to EPFR data. But now, for the first time since December, emerging-market stocks are perking up.

 

The company has farmed nearly a third of its new plane to other countries, and that's created some headaches.

By Kim Peterson Feb 18, 2011 5:21PM
Credit: (©Chris Ratcliffe/Bloomberg via Getty Images)
Caption: Boeing 787Boeing's (BA) next new plane, the 787 Dreamliner, is three years late. It's also become extraordinarily costly for the company, coming in billions of dollars over budget.

Could Boeing's excessive reliance on outsourcing be to blame? That's the topic explored by Michael Hiltzik of The Los Angeles Times this week. About 30% of the Dreamliner is made in other countries -- far more than the 5% in Boeing's well-known 747 airplane.

Now, if Boeing outsourced well and saved money in the process, that would be one thing. But it didn't, and the list of mistakes it made in enlisting offshore help serves as a warning to other companies hoping to cut costs.

Some pieces made by foreign suppliers didn't fit together, Hiltzik writes. Vendors couldn't provide enough parts on time, contributing to delays. Boeing began asking subcontractors to do some of the engineering, and one supplier didn't even have an engineering staff. 

What Wall Street is missing about the computer maker.

By Motley Fool Pick of the Day Feb 18, 2011 3:25PM

Most of us Fools are very interested in unloved, unknown, and undervalued stocks. Dell isn't exactly unknown, but according to contributor Chris Baines, two out of three ain't bad -- it's absolutely great.

 

Rex Moore, Motley Fool Top Stocks Editor

 

Please excuse my enthusiasm. I've been screaming at the top of my lungs about Dell's (DELL) undervaluation ever since I joined the Fool crew (and long before that on CAPS). I even wrote an open letter to Larry Ellison pointing out what a wonderful acquisition Dell would make. Unlike many un-Foolish commentators I like to put my money where my mouth is (and vice versa): I'm a Dell owner.

 

If you want to put new money into commodities, there are better copper plays than BHP Billiton.

By Jim J. Jubak Feb 18, 2011 3:20PM
Jim JubakAs tea leaves go, those presented to investors in BHP Billiton's (BHP) earnings call Wednesday could have been a bit clearer. I think the way to decide to buy, sell or hold BHP and the mining sector as a whole is to look past the very confusing, top-down strategic message to the nitty-gritty of the key commodities of iron ore and copper. (BHP Billiton is a member of my long-term Jubak Picks 50 portfolio.)

Let's start with the murky top-down stuff.

CEO Marius Kloppers said the company would increase its dividend for the first half of 2011 to 46 cents (U.S.) from 42 cents. I'm not clear what that is a sign of, because the increase barely keeps pace with appreciation in the Australian dollar. For Australian shareholders, in other words, the increase is no increase at all.

Kloppers also announced an expansion of the company's current $4.2 billion share buyback to $10 billion. That amounts to about 4% of the company's outstanding shares.
 

Germany's takeover of the NYSE, Pepsi's plunge into the food wars and J.C. Penney's Google gaming were among the week's biggest business blunders.

By TheStreet Staff Feb 18, 2011 2:15PM

By TheStreet Staff, TheStreet

 

Here is this week's roundup of the dumbest actions on Wall Street.

 

5. Das NYSE is kaput


Wall Street on Tuesday went apoplectic over the announcement that Germany's Deutsche Boerse would buy a controlling stake in NYSE Euronext (NYX). Shortly after the announcement the media was filled with an interesting mix of whining, xenophobia and self loathing from all sides of the political spectrum.

 

Donald Trump was quoted as saying "I think it's ridiculous that this country would allow Germany to buy our New York Stock Exchange. It's another black eye for the United States -- victory for Germany, not the United States."

 

Of course, he may have a grudge against Germany ever since Deutsche Bank (DB) sued him for defaulting on a construction loan in 2008. You know those Germans, expecting to be paid back. Jerks.

 

A California company that makes pot-growing equipment hopes to go public this year.

By Kim Peterson Feb 18, 2011 2:04PM
Image: Marijuana (© Halfdark/fStop/Getty Images)The booming medical marijuana industry may soon produce its first publicly traded company.

A California outfit called GrowOp Technology plans an initial public offering later this year, according to its website. The company is not a marijuana grower. Instead, it makes growing equipment that includes a 53-foot high-tech tractor trailer designed for growing pot. The trailers are outfitted with a hydroponic growing system and can be monitored remotely with a computer or iPhone.

Trailers come in three sizes and cost between $10,000 and $70,000, the company said.

GrowOp appears to be taking its IPO very seriously. Its founder, Derek Peterson, was an investment banker at Wachovia and Morgan Stanley (MS), reports 24/7 Wall St. The company's advisory committee includes a fund manager, an investment banker and the head of a corporate advisory firm. 

After a rough holiday season, the retailer considers using Wal-Mart's model of everyday low prices.

By Kim Peterson Feb 18, 2011 12:52PM
Credit: (© Gary Malerba/AP)
Caption: Best Buy storeShoppers have outwitted Best Buy (BBY).

For years, Best Buy was doing fine with its tactical pricing strategy. Yes, its regular prices were high, but the chain would offer blowout discounts on specific items to entice customers. The promotional strategy worked well, especially when Circuit City imploded.

But now shoppers are getting wise. They price-check on their smart phones. They know what deal they want. And they know that items will eventually get into Best Buy's sale rotation. So they wait.

Shoppers are so smart, in fact, that Best Buy is questioning its entire pricing strategy. "Why do we carry inventory when we train consumers only to buy it" on sale, executive Mike Vitelli asked at a recent staff meeting, Bloomberg reports.

Another executive admitted to Bloomberg that without the "everyday pricing" model favored by Wal-Mart (WMT) and others, shoppers will wait it out. "Our inventory sits and waits for that next promotional moment," said the executive, Rick Rommel. 

A single fund holds some of the Oracle's most popular big-company investments.

By TheStreet Staff Feb 18, 2011 11:48AM

By Don Dion, TheStreet

 

It has been a busy week for Warren Buffett fans.

 

On top of Buffett's visit to the White House -- where he, George H.W. Bush, Maya Angelou and others were honored by President Barack Obama and presented with the Presidential Medal of Freedom -- the Berkshire Hathaway (BRK.A)13F filing was released to the public.

 

Oberservers have spent the week fiercely digging through the document in hopes of uncovering clues to Buffett's view of the global market.

 

In the final months of 2010, Buffett made some tweaks to his legendary portfolio. Overall, the famously bullish investor ended the quarter as a net seller, unloading shares of a number of his holdings and further increasing the size of his already substantial pile of cash.

 

Doomsayers and critics abound, but they are missing the point -- and missing opportunities to make money.

By Jim Cramer Feb 18, 2011 10:20AM

jim cramerthestreetYou can learn so much from Twitter. You can learn how total amateurs think (there are a lot of good people out there, too, but that's not the point of this post). You can learn how people are adept at losing money and have a total loser's mind-set. You can see how far people need to go to stay in the game and make money. In fact, you want to kick them out of the game!

 

Let me detail some of the loser attitudes I am seeing. By far the most common one is "Is this a top?" for the stock they want to know about. A top? This kind of illogic is something we seek to combat every day in Action Alerts Plus. If you think the fundamentals are deteriorating, that sales are decelerating, that margins are being compressed, that the end markets are getting weak, that the execution is getting sloppy, that the competition is heating up, then you very well might have a top on your hands.

 

If you think that gross margins are good and maybe getting better and sales are strong, you most likely don't have a top on your hands. You have a stock that can churn higher that might have excellent earnings power in the out years.

 

Boosted by improvement in the construction and forestry equipment units, Deere enjoys a blowout first quarter.

By Jim J. Jubak Feb 18, 2011 1:08AM
Jim JubakGood times for the world’s farmers and for Deere (DE) will continue, Deere said in its first-quarter earnings report, released before the market opened Wednesday.

The company’s earnings reports get scrutinized as much for Deere’s projections on farm prices as they do for the company’s own financial results. And Deere’s news for farmers was all good. The company raised its forecast for the 2011-2012 price of corn to $4.90 a bushel from its earlier forecast of $4.35 and its forecast for wheat to $6.35 a bushel from $5.50.

Not that the company’s own results were anything shabby. For the just-completed quarter, Deere announced earnings of $1.20 a share, better than the 99 cents a share expected by Wall Street analysts. In last year’s first quarter, the company earned 57 cents a share. Sales climbed to $6.12 billion, up 27% from the first quarter of 2010.
 

Traditionally sleepy sectors like healthcare are finding favor again. Here's why, along with a few fast moving stocks in the group.

By Anthony Mirhaydari Feb 17, 2011 6:15PM

A shift is underway. Long ignored stocks in defensive sectors are perking up. Specifically, I'm seeing activity among health care issues. As a group, the sector is recovering from a period of underperformance and demonstrating relative strength vs. the broad market for the first time since last summer. Why the shift?

 

For one, there is an argument to be made that as the economic growth cycle and stock bull market matures, investors will start to transition from ultra-cyclical stocks like semiconductors into more defensive names.

 

There are other reasons too, including attractive valuations and high "sector idiosyncratic risk" -- something I explain below. As all of this normalizes, there will be opportunities for those who can identify the best companies with the brightest growth prospects. Here are a few stocks that I think are good candidates.

 

The company is reportedly hogging touch panels from Taiwanese manufacturers, making it difficult for rivals to secure enough supply.

By Kim Peterson Feb 17, 2011 2:56PM
Credit: (© Justin Sullivan/Getty Images)
Caption: Apple iPadThere's an amusing report out of Digitimes in Taiwan today. Apple (AAPL) has snaked nearly 60% of the world's touch-panel supply, causing headaches for rivals debuting new tablets.

Apple wants to ship 40 million iPads this year, Digitimes reports, and it's buying what it can from major touch-panel makers Wintek and TPK. Now, second-tier tablet makers "are already out of the game," sources tell Digitimes.

There's tight supply left for Research in Motion (RIMM), Motorola (MSI) and Hewlett-Packard (HPQ), all of whom are debuting tablet devices this year. Apple's iPad already has a formidable market lead, and other companies need volume in order to catch up. "Sources from tablet PC makers also pointed out that the component shortage is causing their shipment volumes to be unable to catch up with their orders, especially for second-tier players," Digitimes reported. 

W.R. Berkley has a track record, talent, and a tantalizing price

By Motley Fool Pick of the Day Feb 17, 2011 2:52PM

Image: Insurance (© Hemera/age fotostock)After investing in an insurance company, Mark Twain said, "Life has seemed more precious. Accidents have assumed a kindlier aspect . . . But to me now there is a charm about a railway collision that is unspeakable." Fool analyst Michael Olsen explains Twain's not necessarily being macabre.

 

Rex Moore, Motley Fool Top Stocks Editor

 

The best insurance companies don't just write a simple policy, perform a service of mutual societal benefit, and part ways.

 

They seek risks -- the dirty, shunned variety -- and exploit them: Workers' compensation, product liability, and three-legged donkeys. The best insurers bide their time, and when other run, they write insurance on them. And they make lots of money.

 

The rumors are true: Android phones that allow users one-touch access to their Facebook accounts are unveiled at the World Mobile Congress in Barcelona.

By TheStreet Staff Feb 17, 2011 2:47PM

Credit: © Paul Sakuma/AP
Caption: Facebook CEO Mark Zuckerberg talks about the new email service at an announcement in San Francisco, Monday, Nov. 15, 2010By Seth Fiegerman, MainStreet

 

For months, Facebook has denied rumors that it would take a page from Google’s (GOOG) playbook and come out with its own line of smartphones, but this week the company did an about-face and revealed that even though it will not develop a Facebook phone, other companies already are.

 

“A lot has been made about a single Facebook phone but this year you can expect to see dozens of phones with much deeper social integrations than anything we’ve seen so far,” Mark Zuckerberg, the co-founder and CEO of Facebook, announced Tuesday at the 2011 Mobile World Congress in Barcelona, Spain.

 

In particular, Zuckerberg highlighted two new Android phones manufactured by HTC – the ChaCha and Salsa - that will boast a special Facebook button to give users the ability to pull up their Facebook accounts with one touch.

 

The National Enquirer publishes photos that purport to show the Apple chief outside of a treatment center in California.

By Kim Peterson Feb 17, 2011 1:11PM
File photo of Apple CEO Steve Jobs (© Tony Avelar/AP)Some Apple (AAPL) shareholders are nervous today after photos surfaced apparently showing chief executive Steve Jobs outside a cancer clinic in California.

The National Enquirer published photos after following Jobs from breakfast to the Stanford Cancer Center, Gizmodo reports. Jobs is on a medical leave from the company, but it's hard to tell whether he is in fact the man in the photos. Apple has not verified the Enquirer's report.

As unseemly as the photos are, shareholders are reacting by pushing the stock down more than 1% today to $358.50. That's not a huge drop -- certainly not enough to dent the massive climb the stock has made since September. Apple is still trading close to its 52-week high of $364.90.

Apple shareholders are desperate for information about Jobs, even unverified reports accompanied by National Enquirer photos. The company has not explained why Jobs needed to go on medical leave -- his third in seven years -- and the reports, if correct, could shed some light on the situation. 

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[BRIEFING.COM] Equity indices closed out the month of August on a modestly higher note. The Russell 2000 (+0.6%) and Nasdaq Composite (+0.5%) finished ahead of the S&P 500 (+0.3%), which extended its August gain to 3.8%. Blue chips lagged with the Dow Jones Industrial Average (+0.1%) spending the bulk of the session in the red.

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