Why stocks are in for a rough ride this week
Stocks in for a rough ride this week

Longtime market bull Jeremy Siegel says investors could realize the market is behind the curve on interest rates.

VIDEO ON MSN MONEY

Who owns the rights to the popular dolls? Two toy companies are fighting it out.

By Kim Peterson Jan 19, 2011 3:06PM
Credit: Bratz Dolls (©Gregory Bull/AP)The Bratz dolls line has been a huge success for MGA Entertainment. And Barbie, well, let's just say she's no longer the most popular girl in the toy store.

All of this has ruffled feathers within the toy industry, spurring an ugly legal battle between MGA and Barbie maker Mattel (MAT). How ugly is it?

Mattel executives described a "rival-led Barbie genocide" in one internal memo, according to The Associated Press. "This is war and sides must be taken: Barbie stands for good. All others stand for evil," the memo read. Yikes.

The memo emerged in an ongoing court fight that entered its second round this week. At the heart of the case is Mattel's claim that Bratz creator Carter Bryant came up with the idea for the dolls while he was working at Mattel. Mattel also says MGA secretly conspired with Bryant to steal the idea. 

Believe it or not, the company has strengths that investors are missing.

By Motley Fool Pick of the Day Jan 19, 2011 2:57PM

Credit: (© Paul Sakuma/AP)
Caption: Apple CEO Steve JobsFour months ago, Eric Bleeker recommended Apple. After a nice 25% run-up, he's not shying away from the stock and thinks the $300 billion behemoth still has plenty of room to run.

 

Rex Moore, Motley Fool Top Stocks editor

 

The $300 billion market capitalization might scare investors off, but I think Apple (AAPL) has plenty of room to grow. In fact, it's my top conviction selection to outperform the market in 2011. I don't think you'll see another year of 53% returns like Apple had in 2010, but at today's price levels, there's still a lot left in the tank.

 

Why Apple has room to run
There are four key themes that should keep Apple outperforming.

  1. iOS scales. Apple has proven its ability to scale iOS to different devices, which unlocks opportunities in connected living room devices (think Apple TV) as well as advertising.  
  2. Software is the new kingmaker. Unlike the age of Motorola's (MMI) RAZR when phones were differentiated by slick designs that were easy to copy, phone dominance is now dictated by the software. That's a much more defensible position, especially when Apple controls its App Store and the media platform (iTunes) its users have adopted.
 

The highly anticipated system goes on sale March 27. Will its steep price be a turnoff?

By Kim Peterson Jan 19, 2011 1:59PM
Credit: Nintendo 3DS (© Nintendo)Nintendo (NTDOY) has finally announced the launch date for its 3DS portable system. The highly anticipated device will hit stores March 27.

This isn't just another Game Boy. The 3DS is generating lots of excitement because Nintendo says it will show 3D images without the need for 3D glasses. But you'd better start saving now, because that slick technology will come at a cost.

Nintendo will charge $250 for a 3DS. That's a lot of allowance money. But the company hopes the 3DS is broadly appealing enough that adults might use one instead of, or perhaps in addition to, smart phones that also have games on them.    
 
Devices like the iPhone are certainly competing with Nintendo's current handheld, the DS. Sales of the DS dropped 23% in 2010, CNBC reports. And sales of Nintendo's groundbreaking Wii console fell 26% that year. 

One of the most persistent advances in stock market history nears its end.

By Anthony Mirhaydari Jan 19, 2011 1:13PM

Technically, we are now at a decision point. The S&P 500 has scratched its way back to within inches of 1,300, which hasn't been seen since August 2008. This marked the end of a temporary two-month rebound within the 2007-09 bear market. The bears will be camped out at that level with sniper rifles, ready to ambush overeager bulls.


And, boy, have the bulls been enthusiastic. Since Dec. 1, the S&P 500 has closed above its 10-day moving average for 32 days in a row. Aside from a similar low-volatility run last April that ended in disaster and the May 6 flash crash as investors all tried to sell at the same time, you've got to go all the way back to 1997 to find another period of similarly persistent performance.


Runs like this are extremely rare.

 

Reports from the 2 tech titans reveal increased spending at corporate and individual levels -- a rejuvenation the market isn't taking into account yet.

By Jim Cramer Jan 19, 2011 10:00AM

jim cramerWe are both a rich country and a rich world. Isn't that the ultimate takeaway from the IBM (IBM) and Apple (AAPL) earnings reports last night?

 

We fret so much about how consumers are strapped and how companies are just withholding profits and not spending, and then we get two quarters that tell us, frankly, the opposite.

 

First, the products that IBM and Apple sell are not inexpensive. The big rap against Apple is that the price point for so many of its devices is so high. Anyone who has bought a truly wireless, no-Wi-Fi iPad as I did this holiday, or anyone who has bought a MacBook Air, as I did the year before, knows these devices are very expensive compared with a plain-old but pretty good Hewlett-Packard (HPQ) at Costco (COST).

 

The company reports a positive revenue picture across the board, but the results weren't as spectacular as you might think.

By Jim J. Jubak Jan 18, 2011 5:00PM
Jim JubakMost of the time, Wall Street's attention is riveted on earnings per share. On Friday, when JPMorgan Chase (JPM) reported fourth-quarter financial results before the stock market opened, eyes were focused on revenue.

That’s because the economic cycle has turned far enough that banks are reserving less against losses and adding withdrawals from reserves back to earnings. (Earlier in the cycle, they were subtracting those withdrawals from earnings.) Because of that, earnings can soar even if a bank’s basic businesses are circling the drain.

The real measure of current health -- and of the potential for future profits -- then becomes revenue growth. The faster revenue is growing now, the more a bank will add to earnings in the future once the temporary additions to earnings from reserve reductions taper off. 

On that basis, JPMorgan Chase’s fourth quarter was good, although not as spectacular as you’d think if you only look at earnings.
 

Yes, the recalls were damaging, but the big picture at the company isn't nearly as bad as you think.

By Kim Peterson Jan 18, 2011 3:11PM
Credit: Tylenol recall (©Paul Sakuma/AP)A recent New York Times article on Johnson & Johnson (JNJ) paints a picture of a company beyond repair, a doomed purveyor of shabbily made medicinal products that has drawn the scrutiny of government officials.

"It looks like a plane spinning out of control," one former employee told the newspaper. This past year, the Times wrote, could have been called "annus horribilis." The headline was just as dramatic: "Can Johnson & Johnson get its act together?"

Let's push aside the doom and gloom and look at the numbers. Johnson and Johnson shares started last year at around $64.50 and by the end had plunged to the shocking level of . . . $61.85. Hmmm. Are investors missing something here?   

How about earnings? A quick scan through the quarters doesn't reveal huge disaster. Third-quarter profit rose 2.2% from the year before, while sales were down 0.7%. The company even raised its full-year guidance in October. The second quarter saw gains in sales and profit. Same with the first quarter

Yum Brands will focus on tacos, pizza and chicken as it aggressively expands into China.

By Kim Peterson Jan 18, 2011 1:45PM
Credit: Cruise Night at A&W Restaurant in Visalia, California (© Car Culture)Long John Silver's and A&W restaurants are on the outs with owner Yum Brands (YUM). The company is putting the two chains up for sale, saying they don't fit into long-term strategy.

Instead, Yum wants to focus on its more popular fast-food restaurants: Taco Bell, Pizza Hut and KFC. The company plans to expand those lines in the U.S. and internationally, it said in a statement.

Yum is all about its international business these days and is focused on its growth in China. About 65% of its profits come from overseas -- up from 22% in 1998 -- and it apparently doesn't think those two restaurants will do well in other countries.  

They don't even do that well in the United States. Long John Silver's and A&W were just a sliver of Yum's operations, with only about 1,630 locations total.  

Earnings and revenue growth fail to meet investor expectations.

By TheStreet Staff Jan 18, 2011 1:01PM

Image: bank (© Image Source/Corbis/Corbis)By Lauren Tara LaCapra, TheStreet

 

Citigroup (C) shares were down sharply Tuesday after the bank released fourth-quarter earnings that fell far short of Wall Street expectations.

 

Though Citi earned just half of what Wall Street was expecting for the fourth quarter, much of the decline came from an accounting oddity that costs financial companies more when their own credit conditions improve. Many analysts hadn't factored such a charge into their estimates.

 

Still, Citi shares were falling 5.7% to $4.84 in midday trading, ahead of a conference call with management.

 

The New York bank said it earned $1.3 billion last quarter, or 4 cents per share, compared with a net loss of $7.6 billion, or 33 cents per share, a year ago. The average analyst had expected Citi to earn 8 cents per share, on average, according to Thomson Reuters. Revenue of $18.4 billion fell far short of the average expectation for $20.5 billion as well.

 

Shares plunge 13% after the bookseller reportedly hires bankruptcy and restructuring lawyers and announces further job cuts.

By TheStreet Staff Jan 18, 2011 12:52PM

the streetImage: Arrow Down Red (© Kyu Oh/Photodisc/Getty)By Jeanine Poggi, TheStreet

 

Borders (BGP) stock was tanking Tuesday after reports surfaced over the weekend that the company has hired bankruptcy and restructuring lawyers.

 

As the company continues talks to secure a $500 million credit line, it has also hired the law firm Kasowitz, Beson, Torres & Friedman, The Wall Street Journal reported, citing sources familiar with the matter. But the sources said Kasowitz's job is to keep Borders out of bankruptcy court.

 

Shares of Borders were falling 13.1% to 92 cents in midday trading.

 

Kasowitz met with publishers last week to pitch them a plan to defer payments and is in talks with GE Capital about providing a new revolving credit facility, the source told the Journal.

 

After taking a beating last year, SunPower is ready to shine in 2011.

By Motley Fool Pick of the Day Jan 18, 2011 12:37PM

Image: Solar panel (© Russell Illig/PhotoDisc/Getty Images)For today's pick of the day, we turn to Alyce Lomax. Alyce is running a real-money socially responsible portfolio for us, which so far is making money while also making us feel good about ourselves. Which making money tends to do anyway, but I digress.

 

Rex Moore, Motley Fool Top Stocks editor

 

Renewable-energy stocks are solid contenders for a socially responsible portfolio. And while many stocks rallied in 2010, solar stocks took a real beating. This presents an opportunity to profit off others' pessimism and buy a promising green-energy stock at a low, low price for my SRI-focused Rising Stars portfolio.

 

After weighing alternatives like low-price solar leader First Solar, I settled on one choice: SunPower (SPWRA).

 

The business
San Jose, Calif.-based SunPower, a subsidiary of Cypress Semiconductor until late 2008, has a holistic approach to the solar-panel business. It targets the entire gamut of customers seeking green-energy alternatives: governments, corporations, utilities, homebuilders and even homeowners.

 

Delivery, originally scheduled for May 2008, is now put off until later this year.

By TheStreet Staff Jan 18, 2011 12:03PM

Image: Airplane (© Christie & Cole/Corbis)By Ted Reed, TheStreet

 

Boeing (BA) has once again delayed delivery of the 787.

 

First delivery is now expected in the third quarter. Most recently, first delivery was scheduled for the current quarter. The original date for first delivery was May 2008, so the plane is now more than three years behind schedule.

 

The new date reflects the impact on an in-flight fire during testing in November. It includes time required to produce, install and test updated software and new electrical power-distribution panels in the flight-test and production airplanes, Boeing said.

 

"This revised time line for first delivery accommodates the work we believe remains to be done to complete testing and certification of the 787," said Scott Fancher, the vice president and general manager of the 787 program. "We've also restored some margin in the schedule to allow for any additional time that may be needed to complete certification activities."

 

The iPhone maker's succession plan and product road map may not be enough to allay investors' concerns.

By TheStreet Staff Jan 18, 2011 11:40AM

TheStreetCredit: (© Paul Sakuma/AP)
Caption: Apple CEO Steve JobsBy Scott Moritz, TheStreet

 

Apple (AAPL) shares slid as much as 6.5% today as investors braced for more information about Steve Jobs' illness.

 

The Apple chief said Monday that he would take a medical leave for an unspecified reason and that COO Tim Cook would head the company as the day-to-day manager in the interim. The shares were trading at $341, down 2%, this afternoon.


The move comes as Apple gets set to release its quarterly results later today. While analysts expect Apple to post blowout numbers on strong sales of iPads, iPhones and Macs, the stellar financial performance will likely be overshadowed by worries about the extent of Jobs' illness.

 

The financial industry will be front and center during this shortened trading week.

By TheStreet Staff Jan 18, 2011 11:04AM

Find ETFs © Digital Vision / Getty ImagesBy Don Dion, TheStreet

 

Here are the five exchange-traded funds to watch this week.

 

1. SPDR KBW Bank ETF (KBE)

The financial industry will be front and center during this shortened trading week as a combination of Wall Street giants and smaller regional players release their quarterly earnings reports. Notable names on tap include Bank of America (BAC), Goldman Sachs (GS), Fifth Third Bancorp (FITB), U.S. Bancorp (USB) and Wells Fargo (WFC).

 

KBE is an ideal product for investors looking to take a broad approach to tracking the financial industry. The fund is topped by industry leaders but sets aside a considerable portion of its portfolio for smaller, more volatile regional institutions.

 

In 2010, financials faced pressure from Washington as lawmakers sought to construct sweeping reform legislation. With the bill completed and passed, it will be interesting to watch how banks react in the new year.

 

If you're afraid to get into the market after its big run, consider these high-quality underperformers.

By Jim Cramer Jan 18, 2011 10:08AM

Image: Jim CramerThis market is driven by fear. It's the fear that everyone has of being the last guy in the pool, of looking ridiculous to customers, friends or relatives. They just can't come in "up here," and that's why we don't have a lot of noninstitutional participation.

 

Worse, judging by the horror stories, many people seemed to have been hiding in leveraged municipal bond funds or tax-exempts of the dubious variety because they were so afraid of stocks. They are "all in," but they are in the wrong pool!

 

By the time they give up and get in, the water will most certainly not be fine.

 

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[BRIEFING.COM] The major averages ended the midweek session with slim gains after showing some intraday volatility in reaction to the release of the latest policy directive from the Federal Open Market Committee. The S&P 500 added 0.1%, while the relative strength among small caps sent the Russell 2000 higher by 0.3%.

Equities spent the first half of the session near their flat lines as participants stuck to the sidelines ahead of the FOMC statement, which conveyed no changes to the ... More


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