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Be wary of dire market forecasts

The most likely scenario is that the markets will begin to rise from here -- and that bounce is just beginning to take hold.

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Amazon, Qualcomm and others will likely benefit from stronger spending.

By TheStreet Staff Jan 24, 2011 12:32PM

By Frank Byrt, TheStreet

 

Amazon.com (AMZN), Yahoo! (YHOO), EMC (EMC) and Qualcomm (QCOM) are expected by analysts to have closed out 2010 on a positive note as the recovering economy boosted demand for their products and services.

 

That sets the stage for potentially big gains in 2011. Technology stocks should benefit from customers' postponement of capital spending for the past two years, which means many are in dire need of upgrades to computer systems.

 

In addition, the increasing use of the Internet and the potential growth in advertising on Web pages, the booming use of mobile-computing devices and the concurrent demand for data storage -- thanks to the growth of cloud computing -- contribute to a positive outlook for each of these firms. Here are the fourth-quarter earnings expectations for the four companies, starting with Yahoo:

 

A deal at $20 per share would be the largest leveraged buyout since the credit crisis.

By InvestorPlace Jan 24, 2011 12:20PM

Image: Bakery (© Corbis)By Jeff Reeves, editor of InvestorPlace.com


Sara Lee (SLE) is one of the most iconic names in the grocery aisles. But if a group of prospective buyers has its way, the name will be taken off the shelves of Wall Street as the publicly traded stock goes private in a deal worth nearly $13 billion.


The move is worth noting for a few reasons, not the least of which is its size. A deal at that price would be the largest leveraged buyout since before the financial crisis. But a Sara Lee purchase would also show all investors that mergers and takeovers are still very much in favor on Wall Street -- a good sign for all stocks and for the economy in general.


Sara Lee will have a few days to weigh an offer from a group of private-equity firms that have valued the company at up to $20 a share, or nearly 10% above the share price last week. That totals almost $13 billion.


So why should you care about a deal this size? Here are three reasons the Sara Lee buyout is a good sign for everyone -- even if you're not a shareholder:

 

Keep an eye on the industrial, telecommunications, consumer and energy sectors.

By TheStreet Staff Jan 24, 2011 11:55AM

Image: Exchange-traded funds (© ThinkStock/SuperStock)By Don Dion, TheStreet

 

Here are five ETFs to watch this week.

 

1.Industrial Select Sector SPDR (XLI)


General Electric's (GE) quarterly earnings beat analysts' estimates last week, indicating once again that the U.S. conglomerate remains steadily on the road to recovery.

 

The strong showing from GE sets the stage for this week's industrial-heavy week of earnings. On tap are household names including 3M (MMM), Boeing (BA), Caterpillar (CAT), Honeywell (HON) and United Technologies (UTX). These companies represent some of the largest slices of XLI's index and together account for over 30% of its portfolio.

 

Risk-tolerant investors looking for a more volatile play on industrials this week may find a subsector fund such as the iShares Dow Jones U.S. Aerospace & Defense Index Fund (ITA) attractive. Earnings reports from Boeing, UTX, General Dynamics, Lockheed Martin (LMT) and L-3 Communications (LLL) will heavily influence this fund's performance next week.

 

The company resurrects dot-com flop Webvan. Will the home-delivery model work 10 years after the original company went bankrupt?

By InvestorPlace Jan 24, 2011 10:50AM

Image: Groceries (© Jeffrey Hamilton/Getty Images/Getty Images)By Jeff Reeves, editor of InvestorPlace.com


It's been a great few years for Amazon.com (AMZN), with an estimated 40% sales growth in 2010 and its stock up 250% in the past two years. The breakout success of its Kindle e-reader and continued strength in its online retail business have made Amazon one of the top stock picks on Wall Street.

 

Not content to rest on its laurels, Amazon is cooking up a sales strategy that will really turn some heads: a free weekly home-delivery service, bringing baby care products, groceries and cosmetics right to your doorstep.

 

Some observers say it's going to revolutionize Amazon's business model. Others see shades of a dot-com flop that bled cash until it went bankrupt. Here are the details so you can judge for yourself:

 

AMZN has been testing a delivery service, AmazonTote, in its hometown of Seattle since last summer. The program involves free home delivery once a week on a specified day of the customer's choice, and the delivery is made regardless of order value.

 

While other investors wait for the next shoe to drop, ETF traders should stay long and strong.

By Jamie Dlugosch Jan 24, 2011 10:30AM

Image: Investments circled in newspaper (© Digital Vision/Getty Images)If you like roller coasters, this market is for you. Up one day, down the next is likely to be the path for stocks in 2011.

 

Such a trajectory is just one more reason to be a buy-and-hold trader in the early going of trading this year. The quickest way to profits is patience.

 

Each week brings a different story that frankly is almost entirely impossible to predict. That said, when stocks are up, they are really up. When they are down, the decline is modest.

 

The current market environment screams for aggressiveness. One of the more aggressive exchange-traded funds investors can play this week is the ProShares Ultra Oil & Gas (DIG).

 

Oil and gas markets are ripe for an explosion. So far, oil is being held back by aggressive hedge funds that are betting against the global recovery. Those traders will likely be proved wrong.

 
Tags: etfoil

A brutal retreat may be in store for some industrial and rail shares that have had a prolonged advance from last year.

By Jim Cramer Jan 24, 2011 10:20AM

jim cramer of thestreetA thrust too far. That's how so many of the charts feel today, almost as if the charging bull-market armies overshot their supply lines and now are isolated way in front of their old lines without ammo. That means they are ready to be encircled by bearish attackers, with a retreat to the 30-week moving average -- a brutal retreat -- in the cards.

 

I feel that way in particular about the big industrials that have shot up so much so hard, like Parker-Hannifin (PH), that couldn't deliver what was wanted no matter what.

 

Anything that has had a prolonged advance from last year seems so vulnerable that you can hear the stock charts saying, "Pull back, regroup."


There are anomalies. General Electric (GE) feels a year behind these players and is building a solid advance. Really solid, and it looks like it can hold and run. Maybe even to $22.

 

Investors have enjoyed a great rally in emerging markets, but a real correction could be ahead this year.

By Jim J. Jubak Jan 21, 2011 4:51PM
Jim JubakThursday, I posted that I thought investors were looking at a 5% or so pullback in U.S. stocks -- really nothing more than a necessary decline after a long rally so that stocks can build a new base.

In other words, just one of those dips that you have to live through as an investor. I continue to look for a decent to good 2011.

For U.S. stocks.

Overseas markets are in for rougher going in the first half of 2011. (And yes, I am more pessimistic about overseas markets than I was just a couple of weeks ago.) Many overseas markets are looking at a real correction. 
 

While large stocks push to new highs, a lack of participation by smaller issues warns of trouble.

By Anthony Mirhaydari Jan 21, 2011 4:42PM

Stocks have largely been moving lower over the last two days. But the severity of the decline depends on which market index you like to watch. If you're like most retail investors, the Dow Jones Industrial Average (INDU) is your preferred benchmark. And it's managed to push to new highs on an intra-day basis Friday.


But it's a much different story for rest of the market, especially the small cap issues in the Russell 2000 (RUT) which are now down more than 4% over the past week. Frequently, you'll see big disparities in the performance of small cap stocks vs. the mega cap stocks at turning points -- almost as if the Wall Street heavy hitters want to throw the investing public, who closely track the Dow, off the scent.

 

To use another metaphor, think of small stocks as the infantry of an army. If they desert the battlefield, like they are now, the generals still on the field get slaughtered. A healthy market is led by small stocks -- since they are the most sensitive to the economic and liquidity catalysts that push and pull the equity trade. The opposite is happening now.

 

Apple thwarts DIY owners with special screws that make basic maintenance difficult.

By Kim Peterson Jan 21, 2011 3:16PM
Steve Jobs (©Paul Sakuma/AP)Apple (AAPL) is making it much harder to replace the battery in the iPhone 4. According to news reports, Apple stores are removing the screws from iPhone 4s brought in for servicing and replacing them with tamper-proof screws.

The idea is to keep people from opening the devices to replace the battery. But Apple isn't telling customers about it, Reuters reports. That won't sit well with some iPhone users.

"If you took your car in for service and they welded your hood shut, you wouldn't be very happy" one Apple parts supplier told Reuters.

The move stands to boost the revenue Apple gets from replacing the phone's batteries. Apple charges users $79 to replace the battery of an iPhone that is no longer under warranty. 

The company reportedly has hired Goldman Sachs to find potential suitors. The stock jumps 27% in heavy trading.

By TheStreet Staff Jan 21, 2011 3:09PM

TheStreetImage: Guitar (© Corbis)By Theresa McCabe, TheStreet

 

Warner Music Group (WMG) shares were climbing 27% after a report that the company has hired Goldman Sachs (GS) to seek a buyer.

 

Several potential suitors, including buyout firm KKR (KKR), have approached Warner Music in recent months about buying the record company, the New York Times reported, citing an executive familiar with the matter. As of 2 p.m., the shares were up 27% to $6.  

 

The reports are emerging on the same day Warner Music announced that a Paris court had found CEO Edgar Bronfman Jr. guilty of charges related to transactions Bronfman made in Vivendi Universal stock in 2002. The court accused Bronfman of insider trading. He was the vice chairman of Vivendi at the time.

 

The court will fine him and issue a suspended sentence. Bronfman said in a statement today that he will appeal the decision, saying, "My trades were proper."

 

These heavyweights provide great exposure to various segments of the oil industry.

By Motley Fool Pick of the Day Jan 21, 2011 2:05PM

Image: Oil drums (© Kevin Phillips/Digital Vision/age fotostock)If you think the demand for oil is going to dry up soon, this article is probably not for you. If you're in the majority, however, you should read on as Jordan DiPietro makes the case for buying a basket of energy.


Rex Moore, Motley Fool Top Stocks editor

 

If you believe, like I do, that rising oil and gas prices will continue into the near and distant future, then having a basket of energy stocks in your portfolio is a great way to play the rising tide.


In fact, the Energy Information Administration is forecasting 2011 oil prices to average $93 per barrel, $14 more than last year. Prices, according to the EIA, should top out close to $100 by 2012. As demand continues and the incentive for energy companies to add reserves intensifies, oil companies in all facets of the game should stand to benefit. That's why I'm adding a $2,000 position that includes four energy companies to my Motley Fool real-money portfolio.

 

Shares of the highflying tech stock plummeted 20% Thursday on a weak sales forecast, providing investors with an attractive entry point, analysts say.

By TheStreet Staff Jan 21, 2011 2:04PM

By Robert Holmes, TheStreet

 

F5 Networks' (FFIV) shares shredded investors' portfolios after falling by a fifth Thursday, even though the company missed analysts' revenue estimates by less than 1%.

 

That's the danger of investing in highflying tech stocks -- today as it was a decade ago, during the first Nasdaq ($COMPX) bull market.

 

Still, analysts and investors are saying now's the time to buy more shares in the maker of cloud-computing software, including Catharine Trebnick, a senior research analyst with Avian Securities; Credit Suisse's Paul Silverstein; Piper Jaffray's Troy Jensen; and Mark Schultz, the manager of the MTB Mid-Cap Growth Fund.

 

By some accounts, he was looking to jump but was also pushed out.

By Kim Peterson Jan 21, 2011 1:54PM
Credit: Eric Schmidt (©Marcio Jose Sanchez/AP)

 Was Eric Schmidt fired from Google (GOOG)? That's what The New Yorker's Ken Auletta is reporting.

Schmidt "lost some energy and focus" after Google decided to pull out of China, sources tell Auletta. Schmidt wanted to Google to stay in China and was overruled by co-founders Larry Page and Sergey Brin.

Schmidt was pushed out, Auletta reports. But he wanted to jump as well, having felt the strain of numerous business complications. Google has gone nowhere in social networking, getting outmaneuvered by Facebook at every turn.

Google is also a point of controversy in some countries, facing challenges over privacy and size issues, Auletta reports. Finally, Page and Brin were "restive." Auletta interviewed Schmidt 11 times for his book "Googled" and knows the company better than just about any other journalist, so I'm guessing there's basis to his reporting. 

Jeffrey Immelt will advise a council that aims to get US companies hiring again.

By Kim Peterson Jan 21, 2011 12:47PM
Credit: (© Charles Dharapak/AP)
Caption: File photo of General Electric CEO Jeffrey R. ImmeltIs Jeffrey Immelt the right man to get the country's jobs situation back on track? President Barack Obama thinks so and has named Immelt, the chief executive of General Electric (GE), to a new economic advisory panel.

Immelt is essentially the new Paul Volcker, as his panel replaces one previously led by the former Federal Reserve chairman. Immelt's immediate job is to figure out how to get U.S. companies to start hiring.

The pick certainly says a lot about Obama's thinking heading into the 2012 election. He needs to make significant headway with big business -- it doesn't get much bigger than GE -- and he must turn the employment picture around.

Immelt, a lifelong Republican, is entirely qualified for the job. He's already on the board of the New York Federal Reserve Bank, and he spent two years on the economic recovery board that Volcker chaired.  

Starbucks supersizes its coffee. Goldman's Facebook missteps. Ener1 re-cracks the Chinese market. Toyota incurs the NFL's wrath.

By TheStreet Staff Jan 21, 2011 11:37AM

By TheStreet Staff, TheStreet

 

Here is this week's roundup of the dumbest actions in business.

 

5. UBS restyles its standards

Former Yankees owner George Steinbrenner had a few rules about the appearance of his players, mainly no beards or shaggy hair. He wanted his boys to be clean cut. But he has nothing on UBS (UBS).


The Swiss bank has a more than 40-page tome detailing precisely how their employees should look, act and even eat when reporting for duty, according to the Associated Press. The helpful guide says underwear should be skin-colored and that employees shouldn't eat garlic or onions. It even offers makeup and perfume tips for women.

 

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[BRIEFING.COM] The stock market finished the Wednesday session on an upbeat note with the Nasdaq (+1.3%) ending in the lead. The S&P 500 settled higher by 1.1% with all ten sectors posting gains.

The benchmark index spent the entire trading day in the green, rallying to new highs during the last hour of action. The tech-heavy Nasdaq, meanwhile, briefly dipped into the red during morning action, but was able to recover swiftly.

Stocks began the trading day with modest gains ... More


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