8 reasons the market isn't worse
8 reasons the market isn't worse

Stocks should be crushed by global turmoil, Jim Cramer says. Instead, they're doing fine.

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An FDA panel recommends pulling the flavored smokes from store shelves, but analysts are skeptical that the agency will follow through.

By Kim Peterson Mar 18, 2011 12:30PM
Image: Man smoking (© Steve Mason/Photodisc Blue/Getty Images)A panel at the Food and Drug Administration has recommended removing menthol cigarettes from the U.S., saying the public would be healthier as a result.

The FDA doesn't have to follow its panel's recommendations, but it often does. So there's a good chance that menthol cigarettes, which make up nearly a third of all U.S. cigarette sales, will disappear from store shelves. If it happens, the FDA said, it will be years from now, according to Dow Jones.

What's so wrong with menthol cigarettes? They're the preferred choice for adolescents, and the panel worries that menthols are a gateway to youths becoming regular smokers, according to Dow Jones.

The recommendation would dramatically affect Lorillard (LO), which makes the menthol-flavored Newport line. Newports make up about 90% of Lorillard's sales. Altria (MO) and Reynolds American (RAI) also sell menthols, but their sales are more evenly distributed across non-menthols and other products. 

Pepsi drops behind Diet Coke in Super Bowl advertising. Gilbert Gottfried makes insipid jokes about the Japan tragedy on Twitter. KV Pharmaceutical goes price gouging.

By TheStreet Staff Mar 18, 2011 10:39AM

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

 

5. Pepsi fizzles out

 

Who needs to waste money advertising in the Super Bowl? Maybe PepsiCo (PEP).

 

Beverage Digest released annual market share data on Thursday that showed that Pepsi is no longer playing second fiddle to Coca-Cola (KO). Now it's third fiddle, behind Coke and Diet Coke. There was a time that Pepsi sought to seriously challenge Coke. Now, it seems the company is taking the fizz out of its own sales through its own brand of savvy marketing. Read more

 

We've yet to receive an all-clear in Japan, but might the nuclear crisis be resolved without an Armageddon scenario after all?

By Jim Cramer Mar 18, 2011 9:06AM

jim cramerthestreetWhat happened to the "losing battle" stories? What about the "increasingly desperate measures?" Where did those stories go that said Japan’s nukes would blow in the next 48 hours? What happened to them?

 

No, the nukes aren't all clear. In fact, I will give you the whole-nine-yards caveat: long slog, might be weeks, even months, radiation could always leak, it could always meltdown ... blah, blah, blah.

 

But here we are, three days after the losing battle was lost and the desperate measures failed and it looks like there is the distinct possibility that the United States was wrong when it said there was no water on the spent fuel rods and was wrong when, not for attribution, it made it clear to the big-time press guys that all was about to fail and they should run for their lives. You know they were doing that, right? Behind the "not for attribution" stuff? You know they were teaching those lightweights in Japan a thing or two about radiation and nuclear reactors.

 

So, while no one is ever going to argue against getting out of town when there’s a chance radiation could spew, it does look like, for now, that those very, very few who said that things could possibly maybe work out with no massive destruction could be well, ahem, right.

 

Keep an eye on these Japan investments, which could see gains once the reconstruction process begins.

By TheStreet Staff Mar 17, 2011 2:13PM

By Scott Rothbort, StockPickr

 

Japan has suffered a series of disasters -- earthquake, aftershocks, tsunamis and nuclear accidents -- over the course of the last week. The Japanese stock market is down dramatically in the wake of these unfortunate events. I have refrained from making any Japanese investment or trade, with one or two brief exceptions, for nearly 20 years, but I am now taking a more serious look at opportunities that are presenting themselves as a result of the aforementioned events.

 

As a matter of background, I spent an extensive amount of time in Japan from 1986 to 2001, with particular focus on my expatriate years of 1987 to 1989. My first son was born there. While my Japanese is a bit rusty, I have an excellent grasp of the culture, history, business and economics of Japan.

 

Japan was rebuilt by allied occupational forces after World War II. Even today, the U.S. has a large naval presence in Japan. Japan's post-war coming-out party, so to speak, was the 1964 Summer Olympics in Tokyo. It was from that period on that the country became a major exporter of technology, cars, automotive parts, consumer electronics, commercial ships and pharmaceutics.

 

It's unclear how long it will take for the country's manufacturing sector to return to full production.

By Jim J. Jubak Mar 17, 2011 1:48PM
Jim JubakWe are starting to get specific reports from individual companies in Japan, which helps us fill in some of the details of how long any economic recovery will take.

Below I've reprinted a recent update from Komatsu (KMTUY), the Japanese maker of construction machinery. Note the company's outreach to suppliers and their own difficulty in procuring parts and materials, and the long-term worry about the electrical power supply.
With respect to our production plants in the concerned regions (Ibaraki, Oyama and Kooriyama plants and Komatsu Utility Co.), nothing has changed in their conditions since our last news release. We are continuing inspection and repairs of facilities and equipment of these plants.
While Komatsu Utility has resumed production, resuming overall production still remains indefinite. Concerning affected suppliers, we are supporting to their inspection of facilities and equipment and their recovery to normal production.
 

Pepsi's marketing blunders allowed Diet Coke to move into the No. 2 spot last year.

By Kim Peterson Mar 17, 2011 1:29PM
Credit: (©Urbano Delvalle/ TIME & LIFE Images/Getty Images)
Caption: Can of Diet CokeDiet Coke outsold Pepsi for the first time last year, and now Diet Coke is the No. 2 soda in the country, The Wall Street Journal reports. The top-selling soda is still Coca-Cola.

Nabbing the first two spots is "a historic win" for Coca-Cola (KO), the Journal reports. And it says a lot about the ongoing problems Pepsi (PEP) faces in trying to drive business and maintain its market share.

It was pretty clear that Diet Coke was moving into the No. 2 spot even back in 2009. Pepsi had just a slight lead over Diet Coke back then, the Journal reports. Both brands had a little less than 10% market share, while regular Coke grabbed 17% of the market.

The issue here isn't so much what Coca-Cola did right but what Pepsi did wrong. Pepsi tried some interesting marketing strategies that simply didn't pay off. 

Come on, $25 billion for a site promoting Brazilian wax treatments and photography classes?

By Kim Peterson Mar 17, 2011 10:54AM
Credit: (© Scott Olson/Getty Images)
Caption: A sign at the Groupon headquarters in ChicagoThe discount-deals site Groupon is exploring an initial public offering that could value the company as high as $25 billion, Bloomberg reports. It's no coincidence that investors are worrying about a new tech bubble.

Now we're getting a better idea of why Groupon turned down a $6 billion offer from Google (GOOG) in December. The site is on fire. It has doubled its subscriber base in the past three months to 70 million users. Just a year ago, Groupon was valued at $1.3 billion.

Aren't we going overboard here? Does a daily-deals site really warrant anything close to a $25 billion consideration? One analyst told Bloomberg that this sector is as "hot as anything, and no one knows where it's going to tap out."

Groupon rang up $760 million in sales last year, but a good chunk of that went back to local merchants in the revenue-sharing system the company has devised. 

These funds offer stability in turbulent times by focusing on the US recovery through consumer staples.

By TheStreet Staff Mar 17, 2011 10:24AM

Image: Arrow Down Umbrella (© Photographers Choice RF/SuperStock)By Don Dion, TheStreet

 

In recent months, investor confidence has been tested by a battery of disconcerting international events.

 

While it is natural to keep a close watch on these gripping news stories, it's also important to avoid letting day-to-day headlines influence your long-term investing success. There are plenty of fears out there. However, bending and swaying with daily and hourly headwinds is a surefire way to increase confusion, which may lead to losses.

 

Investing in this trying economic environment requires a careful eye and a level head. By gearing up with a strong, well-diversified portfolio, investors can alleviate some of the anxieties that come with these volatile times.

 

I don't dislike it. I just like it a lot less than almost every other segment now.

By Jim Cramer Mar 17, 2011 9:28AM

jim cramerthestreetLet's say Qualcomm (QCOM) doesn't see material impact from Japan disruptions. Let's say there are no real supply chain issues for Texas Instruments (TXN). Let's say that whatever weakness Apple (AAPL) might have from Japan supply issues was alleviated all by itself after we went to sleep. Let's postulate that, in fact, everything that any of the U.S. tech companies have going in Japan is now humming and ready.

 

Don't we simply revert to where we were a week ago before the Japanese cataclysm hit? Did we forget that we were in tablet hell, a big glut because Apple has killed the competition? Did someone find a way to create more Chinese demand for the kind of telecommunications infrastructure equipment that was in inventory correction mode last Thursday?

 

Did demand suddenly improve for consumer electronics with the Japanese being urged to stay indoors or, if they took the advice of the U.S. government, flee for their lives? Sure, it is not a big market. But we had big prices for stocks a week ago, and they reflected robust demand everywhere.

 

The master finds value lying in plain sight.

By Motley Fool Pick of the Day Mar 16, 2011 3:54PM

By Alex Dumortier, CFA

 

On Monday, Berkshire Hathaway (BRK.A) announced that it is acquiring Lubrizol (LZ) , the leading global supplier of additives to transportation and industrial lubricants (so boring it's good), in a deal valued at $9.7 billion. Despite the fact that this is one of Berkshire's largest ever acquisitions, it appears that Lubrizol had gone largely unnoticed by investors. I'll take a look at this deal before describing how you can follow Buffett's approach to capitalize on similar opportunities. Finally, I'll highlight two other "Berkshire-type" companies with publicly traded stocks.

 

A bet on growing economic activity
More than 70% of Lubrizol's revenues are related to the transportation and industrial lubricant business. Over the short term, this presents a risk in that Lubrizol's customers are in cyclical industries. However, given Berkshire's holding period -- forever -- that is of no concern to Buffett; he's willing to bet that industrial activity and transportation needs, and the resulting demand for Lubrizol's products, will be greater in 10 years' time than they are today.

 

The social-media giant continues its foray into the video market with live baseball.

By TheStreet Staff Mar 16, 2011 3:20PM

By Scott Moritz, TheStreet

 

Facebook has started a little spring training of its own.

 

The social-networking giant is offering users live streaming of Major League Baseball games. The service was introduced this week, featuring a game of the day from baseball's spring training season.

 

The games are largely a promotion to lure subscribers to MLB.TV's $120 season-long subscription package. But the move also looks like a warm-up to Facebook's ongoing push in to the nascent streaming-video market.

 

The nation wants to rebuild its ruined factories quickly, but this disaster may end up accelerating interest in off-shoring.

By Jim J. Jubak Mar 16, 2011 2:52PM
Jim JubakOne long-term consequence of the earthquake, tsunami and nuclear meltdown in Japan will be an acceleration of the hollowing out of the country's export manufacturing.

One criticism of Japan's big exporters during the strong-yen period was that companies like Sony (SNE)Toyota (TM), and Canon (CAJ) were slow to move production out of Japan to lower-cost production platforms such as China and Vietnam.

Part of that came from a reluctance to disrupt long-term relationships with suppliers in Japan. Another part came from the traditional -- somewhat frayed but still strong -- commitment to lifetime employment for workers.

Whatever the reason, Japanese companies haven't moved as aggressively as those in the United States to send manufacturing functions and manufacturing jobs overseas. And that has left Japanese companies paying higher costs as the yen has appreciated.
 

The downtrend appears far from over as traders react to Japan's natural disaster, the end of QE2, rising inflationary pressure and a simmering debt crisis in Europe.

By Anthony Mirhaydari Mar 16, 2011 2:44PM

The stock market is in free fall as the major averages break their seven-month uptrends and drop into the abyss.  The Nasdaq QQQ Trust (QQQQ) has already returned to levels reached last December. And it's showing no signs of slowing its descent. Even market stalwarts like Apple (AAPL) have succumbed to the wave of selling pressure, with shares of the tech giant falling at a pace not seen in more than a year.

 

After months of believing that all ailments could be solved by the Fed's $600 billion monetary injection, it's becoming clear that the concerns about Japan's nuclear disaster and violence in Bahrain are now too large. What's more, rising inflation, with the Producer Price Index increasing at a whopping 5.8% annual pace in February, means that another round of money printing will just make the problem worse. When QE2 was teased last August and started in November, these pressures didn't exist.

 

As a result, no risky asset class is being spared as commodities, oil, corporate bonds and even gold and silver follow stocks lower as investors head for the exits. All indications suggest the downtrend is far from over. Here's why.

 

Jon Bon Jovi says the ability to preview songs on iTunes before you buy them has taken the magic out of music.

By Kim Peterson Mar 16, 2011 2:23PM
Steve Jobs (©Paul Sakuma/AP)Rocker Jon Bon Jovi is unhappy with Apple (AAPL) chief executive Steve Jobs, telling the Sunday Times Magazine that Jobs killed the music industry with iTunes.

Bon Jovi comes across as quite the aging rocker, lamenting the loss of those days when you could go into a record store and have a "magical" experience.

"Kids today have missed the whole experience of putting the headphones on, turning it up to 10, holding the jacket, closing their eyes and getting lost in an album; and the beauty of taking your allowance money and making a decision based on the jacket, not knowing what the record sounded like, and looking at a couple of still pictures and imagining it."

I remember those days, and they were great. You didn't know all the songs on the album, because there was no way to preview them. So you bought an album with the hope and expectation that those songs would be good. It was a gamble that people liked to take. 

These companies count on the quake-stricken nation for a portion of their sales and will likely see revenue fall this year.

By Kim Peterson Mar 16, 2011 12:15PM
Credit: (© Yasushi Kanno, The Yomiuri Shimbun/AP)
Caption: The Fukushima Daiichi power plant in Okumamachi, Fukushima prefecture, JapanSome U.S. companies get a good portion of their sales from Japan and are mighty worried now about what their revenue picture will look like this year.

Aflac (AFL), the health and life insurance company, does 75% of its business in Japan. It sells a popular line of cancer insurance there, The New York Times reports. In the past five days of trading, the stock has dropped from $56 to $50.56.

"The market is looking at everything that's exposed to Japan, and we're part of that," an Aflac spokeswoman told the newspaper. Maybe that's why the company reacted so harshly to Gilbert Gottfried's crude Twitter jokes about Japan's earthquakes and tsunami, firing the comedian from his role as the voice of Aflac's duck mascot.

Other U.S. companies are exposed to Japan, though not to Aflac's extent. Bank of America Merrill Lynch has compiled a list of the top 10 Japan-exposed S&P 500 companies, according to Business Insider. See the list below. 

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[BRIEFING.COM] The stock market ended the Wednesday session on a mixed note. The tech-heavy Nasdaq displayed relative strength, climbing 0.4%, while the S&P 500 added 0.2% with five sectors settling in the green. For its part, the Dow Jones Industrial Average (-0.2%) spent the entire session below its flat line.

Equities started the midweek affair on a rather unassuming note in the absence of market-moving news or economic releases. With those pieces missing from the equation, ... More


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