Insight & Advice

Politicians May Want to Heed Fed's Warning

twocents@thestreet.com (Joe Deaux) — Wed, 16 May 2012 22:41 GMT

NEW YORK (TheStreet) -- President Barack Obama and House Speaker John Boehner both gabbed this week about budget showdowns, but the only words that mattered Wednesday were uttered by the Federal Reserve.

The Fed warned of fiscal tightening in 2013 if Congress doesn't reach agreement on a plan for the federal budget.

House Speaker John Boehner ...

Today Pandora Officially Crushes Terrestrial Radio

twocents@thestreet.com (Rocco Pendola) — Wed, 16 May 2012 19:57 GMT

NEW YORK (TheStreet) -- Unless you're doing something truly unique and compelling on terrestrial radio, Pandora just served you the proverbial papers.

Here I explain why investors should pay attention to ratings-related news Pandora released this morning. While the impact might not be immediate, we will look back on May 16, 2012, as the day Pandora -- and Internet radio in general -- rendered terrestrial radio, on a grand scale, obsolete.

I add "by and large" because a place will always exist for traditional radio. What I envision, however, is a product that delivers, almost solely, spoken-word formats -- sports, talk, all-news, etc. -- on the FM band. Examples include top all-sports stations such as WFAN in New York and "The Ticket" in Dallas, which ultimately belong on FM and online, where key demos reside. ...

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Is Brocade a Buy Ahead of Earnings?

twocents@thestreet.com (Richard Saintvilus) — Wed, 16 May 2012 19:56 GMT

NEW YORK (TheStreet) -- Network equipment maker Brocade will be reporting first-quarter earnings on Thursday and I will be paying close attention to see if it presents sufficient justification to remain on my watch list. For as much as I have been an unabashed cheerleader of Cisco and the rest of the networking sector, Brocade has always been a name I have kept at arm's length.

Mainly, the stock has always been too expensive for me. I have never been able to justify paying for an equity that trades almost three times the price-to-earnings ratio of the market leader, Cisco, while also lagging in both operating and gross margins. That never really sat well with me.

However I am more than willing to give the company its share of credit for not only having managed a poor market perception, but also for navigating through a very difficult financial period -- somewhat evident in its latest earnings report. ...

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CEOs Gone Wild: What's Wrong With Corporate America?

twocents@thestreet.com (CNBC) — Wed, 16 May 2012 18:26 GMT

By Jeff Cox, CNBC.com Senior Writer

NEW YORK (CNBC) -- Four years after the financial crisis exploded and resulted in a regulatory clampdown, bad behavior is back in corporate boardrooms and C-suites, generating embarrassing headlines and posing the threat of even more rules.

Whether it's resume-padding at Yahoo, improper relations with female subordinates at Best Buy or questionable loan dealings at Chesapeake Energy, several high-profile CEOs have helped bring back memories of scandals past that destroyed companies and hammered investors. ...

Sirius XM: Give These Analysts Credit

twocents@thestreet.com (Richard Saintvilus) — Wed, 16 May 2012 17:28 GMT

NEW YORK (TheStreet) -- Warren Buffett once reminded investors that "price" is what we pay and "value" is what we get.

Unfortunately, many investors confuse the two.

Smart investing requires lots of homework: dissecting balance sheets and income statements. It also demands objectivity in doing this homework. ...

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8 Stocks Spiking on Unusual Volume

twocents@thestreet.com (Roberto Pedone) — Wed, 16 May 2012 17:28 GMT

WINDERMERE, Fla. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Many times when above average volume moves into equity it precedes a large spike in volatility.

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."

>>5 Stocks to Buy Instead of Facebook ...

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Buy Cisco, Cheapest Tech Stock on the Market, and Short Riverbed

twocents@thestreet.com (Richard Saintvilus) — Wed, 16 May 2012 17:00 GMT

NEW YORK (TheStreet) -- My emotional attachment to networking giant Ciscois now widely known -- to the extent that recently it has been suggested that I have become the company's unabashed cheerleader. Be that as it may, what is absent in my new label and, disappointingly, what continues to be ignored on Wall Street are the fundamental reasons for this connection. The fact of the matter is, I look at rivals such as F5 and Juniper trading at multiples respectively three and 2.5 times that of Cisco's P/E of 12 and wonder: What is this market thinking?

From a fundamental perspective (and likely a great source of my attachment) is the fact that the company is sitting on $32.04 billion of net cash, less debt, while trading at roughly nine times earnings, excluding net cash. It is also remarkable to appreciate that not only has Cisco provided double-digit returns on capital but, as noted recently, is a dominant player in its industry -- one poised to grow at a faster rate than the economy. But the stock is down 12% since reporting earnings May 9, and I think the market continues to overlook what has become the cheapest tech stock on the market.

There wasn't anything in the report to justify the punishment endured by the stock over the past several days. As a matter of fact, Cisco beat estimates on the top and bottom lines. It reported earnings of 48 cents per share on revenues of $11.6 billion. By comparison, one of its rivals in Riverbed recently reported earnings that missed on both top and bottom lines. However remarkably, its stock still enjoys a multiple of 50 or four times that of Cisco's while trading 49 cents higher. This is even more justification for why I have recently considered Riverbed one of the most expensive equities on the market and a likely short to $15. ...

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5 Stocks That Insiders Love Right Now

twocents@thestreet.com (Roberto Pedone) — Wed, 16 May 2012 16:15 GMT

WINDERMERE, Fla. (Stockpickr) -- Corporate insiders sell their own companies' stock for a number of reasons.

They might need the cash for a big personal purchase such as a new house or yacht, or they might need the cash to fund a charity. Sometimes they sell as part of a planned selling program that they have put in place for diversification purposes, which allows them to sell stock in stages instead of selling all at one price.

Other times they sell because they think their stock is overvalued and the risk/reward is no longer attractive. Some even dump their own stock because they have inside knowledge that a competitor is eating their lunch and stealing market share. ...

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Why and How Greece Must Exit the Euro

twocents@thestreet.com (Peter Morici) — Wed, 16 May 2012 15:54 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (TheStreet) -- Austerity is imposing intolerable unemployment and political chaos in Greece and won't permit it to repay its debts. Athens must abandon the euro and reintroduce the drachma.

After the euro was adopted in 1999, productivity growth was slower and prices rose faster in Southern Europe than in Germany and other northern states. The more competitive north enjoyed growing trade surpluses while the Mediterranean states ran deficits. ...

Buy Microsoft Ahead of Windows 8

twocents@thestreet.com (Richard Saintvilus) — Wed, 16 May 2012 15:24 GMT

NEW YORK (TheStreet) -- Wall Street has an insatiable appetite for growth and no other sector has been able to satisfy such cravings better than technology. So it is only right that techs have long enjoyed above-average, if not shocking, valuations.

However, high fliers come with high expectations to perform, as justification for these valuations. Some such as Apple and Amazon have been able to do this better than others, while names like Cisco continue to find it difficult to get past the "prove it to us" attitude of Wall Street.

Booting Up Windows 8 ...

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Sell Apple, Buy Amazon

twocents@thestreet.com (Rocco Pendola) — Wed, 16 May 2012 15:16 GMT

NEW YORK (TheStreet) -- In practice, valuation -- particularly the P/E ratio -- no longer means much. If it did, Apple would not wallow at a forward P/E of 10.27, while Amazon.com sports a robust 88.34 on the same metric. Using Tuesday's closing prices, Apple's current P/E stands at a puny 13.48 relative to Amazon's inflated 185.29.

Unlike Apple bulls and Amazon bears, I pull only one point of significance out of those otherwise meaningless numbers: This is not your Grandfather's stock market. And it has not been for quite some time.

You can deny this reality all you want. You can whine about it. You can claim the world has gone crazy. That it's not like it was when you were a spry young investor. You can write to the SEC. You can quote Warren Buffett. You can reread the Intelligent Investor for the 83rd time. You can throw darts at market maker voodoo dolls and stalk sleazy and soulless short sellers. ...

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5 Tech Stocks Growing Market Share Faster Than Facebook

twocents@thestreet.com (Jonas Elmerraji) — Wed, 16 May 2012 15:10 GMT

BALTIMORE (Stockpickr) -- Facebook is getting all the attention today as we creep one session closer to the social network's first day as a publicly traded company. The argument for most of the folks lining up to buy shares is simple: They want a chance to get in on a fast-growing IPO at the ground floor.

But their focus on Facebook is misguided. Here's why.

Put simply, Facebook is pricey. One of my colleagues said it best when he argued that "retail investors aren't buying Facebook at the ground floor; they're buying at the top floor and hoping that Facebook keeps building floors on top of it." ...

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GM Abandons Facebook, but Ford Goes Further

twocents@thestreet.com (Marek Fuchs) — Wed, 16 May 2012 14:50 GMT

NEW YORK (TheStreet) -- With its IPO coming on Friday, Facebook needed General Motors pulling its advertising on the social network site like a hole in the head. For Facebook, the move defined inopportune timing, but to understand its complex implications, you unfortunately need to weave together points made by various media outlets. No one covered the unexpected development as traders need it: completely.

In addition to GM's standing as a top three automaker, it's one of the nation's top three advertisers along with AT&T and Procter & Gamble -- a fact that the The Wall Street Journal mentioned. But you have to go to The New York Times to see that Ford remains a strong proponent of Facebook advertising. Not all are abandoning the Good Ship Zuckerberg. ...

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The Most Compelling, Overlooked Bargains in a Melting Stock Market

twocents@thestreet.com (Marc Courtenay) — Wed, 16 May 2012 14:46 GMT

NEW YORK (TheStreet) -- The current stock market sell-off is beginning to make some investors feel a bit queasy.

Investor sentiment hasn't reached the gut-wrenching or the panic levels yet. But traders and investors I've spoken to are almost numb, cautious and cynical.

Just when they hope they've found a good entry point, the next wave of lousy news headlines causes almost all kind of investments, from commodities to equities, to fall more....

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Wall Street Analysts Still Sucking Up to JPMorgan Chase

twocents@thestreet.com (Dan Freed) — Wed, 16 May 2012 14:02 GMT

NEW YORK (TheStreet) -- JPMorgan Chase's shares have fallen more than 11% since its stunning disclosure of more than $2 billion in trading losses, so is the stock suddenly cheap or are analysts just afraid to criticize what may still be the most powerful bank in the country?

Analysts have 29 "Buy" recommendations, seven "Hold"s and just one "Sell" on JPMorgan, according to data from Bloomberg. On a Bloomberg proprietary scale of one to five with five being the best, Wall Street analysts rate JPMorgan the highest among the six largest U.S. banks with a score of 4.55. While that is down from its score of 4.65 before the trading loss was disclosed, it is still ahead of runner-up Wells Fargo, which scores 4.45. Why are analysts afraid of this man?

Twenty-eight analysts have published research reports in the wake of JPMorgan's announcement on Thursday of the trading losses that JPMorgan CEO Jamie Dimon referred to as "egregious mistakes." Just two of those analysts, Stifel Nicolaus' Christopher Mutascio and FBR Capital Markets' Paul Miller, have downgraded the shares to "neutral" in the wake of the news, while the other 26 have maintained the mostly positive recommendations they had previously, according to Bloomberg data. ...

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Oracle: The Most Undervalued Cloud Name

twocents@thestreet.com (Richard Saintvilus) — Wed, 16 May 2012 13:23 GMT

NEW YORK (TheStreet) -- Along with "cloud computing," the term "big data" has become the buzzword of buzzwords on Wall Street. Though there are many who will jump at the chance to offer an opinion on the new craze, there are very few analysts that can describe what the concept really means -- much less appreciate its real potential.

How can Wall Street truly forecast with any degree of accuracy the companies that are positioned to capitalize on this transition?

...

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6 Stocks to Play for Lower Gold Prices

twocents@thestreet.com (Robert Weinstein) — Wed, 16 May 2012 12:06 GMT

NEW YORK (TheStreet) -- Gold bugs continue to take a beating on concerns of the problems in Spain and Greece spreading across the rest of Europe. Gold, priced in dollars, rises when the dollar weakens relative to other major currencies and falls with dollar gains.

Along with currency moves, gold moves based on economic activity. Fears of continued sluggishness in Europe (along with fears of a slowdown in China) has removed some glimmer gold has enjoyed as an inflation hedge. The market is discounting liquidity promises by Germany as gold prices sink to the lowest prices of this year. Fears of elections in Greece rejecting bailout proposals are weighing gold down as well.

Investors have many choices to gain exposure in gold. The SPDR Gold Trust ETF is one of the most popular and liquid methods to play gold prices. ...

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Why I Am Buying Pandora at Any Price

twocents@thestreet.com (Rocco Pendola) — Wed, 16 May 2012 11:32 GMT

NEW YORK (TheStreet) -- I take equal amounts of heat from tortured Sirius XM bulls and investors who would not understand what a perpetual startup is if Steve Jobs stood in front of them and explained.

These folks chide me because I have been purchasing shares of Pandora since last year at prices between $8 and $15 apiece. And, barring an unforeseen and wholesale change to the company's long-term narrative on earnings next week, I will continue to buy Pandora at any price.

Using Tuesday's closing price of $10.83, P is up 38.3% since posting a 52-week low of $7.83 intraday on April 18. Pick a peer, any peer and Pandora has outperformed it over that time frame. For example, SIRI is down 10.4% since its April 18 intraday low. Even Apple is off by a scary 8.2%. ...

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Volcker Rule: Now or Never

twocents@thestreet.com (Philip van Doorn) — Wed, 16 May 2012 10:00 GMT

NEW YORK (TheStreet) -- It's time for Congress to provide more guidance to bank regulators on exactly what kind of hedging activity will be permitted by banks, in the wake of JPMorgan Chase's $2 billion trading loss announced last week.

JPMorgan's $2 billion loss on hedging trades -- announced by CEO James Dimon last Thursday -- is "a potential opportunity for the policy makers to conduct a public hearing to really understand exactly what went wrong here," according to Frank A. Mayer, -- a partner in the Financial Services Practice Group of Pepper Hamilton LLP -- who adds that "you don't want to make policy based on myth." Paul Volcker

At issue is the Volcker Rule, which the Federal Reserve is still struggling to implement, nearly two years after the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed. The Volcker Rule prohibits bank holding companies from engaging in most forms of proprietary trading while severely limiting banks' investments in private equity funds and hedge funds. The Federal Reserve has had difficulty in defining which hedging activities banks will be allowed to continue engaging in. ...

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Market Preview: That Sinking Feeling

twocents@thestreet.com (Michael Baron) — Wed, 16 May 2012 00:35 GMT

NEW YORK (TheStreet) -- It feels like the skittishness is palpable on Wall Street right now, and that's never a good thing for retail investors.

Bank of America Merrill Lynch described the mood this way before Tuesday's sour session that pushed all three major U.S. equity indices back to levels unseen since early February.

"Investor sentiment is bearish on growth and risk, assets are allocated defensively and cash levels are high," the firm said early Tuesday. "But the dominant mood is one of paralysis as investors wait for a 'bad' event to provoke the policy panic and market capitulation that contrarians want to buy." ...

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JPMorgan: When Will We Learn?

twocents@thestreet.com (Elliott Morss) — Tue, 15 May 2012 19:47 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (TheStreet) -- In 2007, the banks gambled on mortgages and lost, causing the largest global recession since 1929. They then gambled on European sovereign debt and lost. And now we hear JPMorgan Chase just lost $2 billion on a derivatives' bet. Should this not be the last straw?

There are important lessons to be learned from all this, lessons the bank lobbyists don't want anyone to hear. ...

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Sell Target, Walmart; Buy Whole Foods

twocents@thestreet.com (Rocco Pendola) — Tue, 15 May 2012 19:41 GMT

NEW YORK (TheStreet) -- For a while I looked forward to Target and Walmart earnings conference calls. On each call for quarters now, I sat and waited patiently for executives at either company to spend meaningful amounts of time on urban expansion plans. In both instances, they have said little.

While Target appears to have loftier urban ambitions, neither company seems all that excited about penetrating the relatively untapped market of affluent loft, condo and apartment dwellers. If they were, I would expect the strategy to receive more prominent billing on the conference calls and in quarterly reports. It's just not happening. Maybe it's a competitive thing.

Now here we are with Target reporting before the open Wednesday and Walmart reporting next week, Thursday, May 24. What do you think we're going to hear? ...

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JPMorgan's Dimon -- What, Me Worry?

twocents@thestreet.com (Gary Weiss) — Tue, 15 May 2012 18:30 GMT

NEW YORK (TheStreet) -- In the monsoon of questions that has descended on JPMorgan Chase during the recent unpleasantness, there's only one that really matters: Where are the consequences?

I'm not talking about the actual impact on the bank of the $2 billion derivatives-loss-from-God-knows-what. JPMorgan is a big bank -- much too big to fail, as we all know -- so that's chump change, relatively speaking. It's just that no single event since the beginning of the Great Recession has proven the fallacy of CEO Jamie Dimon's anti-regulation posturing. In one single action, all of the hubris that he has exuded since the 2008 financial crisis has backed up like a clogged drain pipe and splattered in his face.

So what happens now? Where are the consequences for Jamie Dimon? Where are the consequences for the Volcker Rule? Where are the consequences for Mitt Romney, who has pledged to repeal Dodd-Frank and Sarbanes-Oxley? Where are the consequences for President Obama, who has failed to put the full power of his office behind meaningful financial reform? ...

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7 Stocks Under $10 Spiking Higher

twocents@thestreet.com (Roberto Pedone) — Tue, 15 May 2012 18:24 GMT

WINDERMERE, Fla. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst upgrade.

>>5 Stocks Primed to Pay Bigger Dividends ...

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10 Stocks Set to Benefit From Gay Marriage

twocents@thestreet.com (Robert Weinstein) — Tue, 15 May 2012 18:19 GMT

NEW YORK (TheStreet) -- The gay marriage issue is once again on the front burner, and while many debate if President Barack Obama's move will aid or hinder the administration politically, we can spend our time looking at ways to profit.

One issue not in dispute is that marriage is big business and appears poised to become bigger. Last year saw the average wedding budget hit more than $27,000, according to XO Group, with wedding dresses at around $1,100, floral expenses at $1,900 and engagement rings costing $5,130.

Here are 10 stocks positioned to take advantage of an increase in weddings: ...

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Sirius XM: Get Ready for a $2 Trading Top

twocents@thestreet.com (Richard Saintvilus) — Tue, 15 May 2012 17:31 GMT

NEW YORK (TheStreet) -- Nothing bothers me more on Wall Street than when someone asks a question they already know the answer to. It is as if asking the question can somehow magically alter the current reality.

Many continue to ask whether or not shares of satellite radio giant Sirius XM will start to trade higher based on factors like moves being made by Liberty Media. These questions are being raised as the market is providing the answers.

...

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Sirius XM: Howard Stern's TV Stint Is No Help

twocents@thestreet.com (Rocco Pendola) — Tue, 15 May 2012 16:40 GMT

NEW YORK (TheStreet) -- They cannot say they were not warned. For months, a whole host of writers have cautioned Sirius XM loyalist longs against buying the stock as it prepared to breach the key psychological marker of $2.00.

The swoon continued right out of the gate Tuesday morning. Now we just wait for the other shoe to drop: A close below $2.00 followed by lower lowers. It's the same old story with this stock. It swings back and forth, dropping in the absence of little more than effectively meaningless near-term catalysts. I Feel Bad for Howard Stern ...

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CEO Scandals Can Create Opportunities

twocents@thestreet.com (Rocco Pendola) — Tue, 15 May 2012 16:39 GMT

NEW YORK (TheStreet) -- Executive-toppling scandals are generating big headlines again.

This week, we're getting the details of the personal relationship that cost former Best Buy CEO Brian Dunn his job, courtesy of a report from the electronics retailer's board.

And, of course, we also just saw the ouster of Yahoo! CEO Scott Thompson in the wake of controversy about his biography. ...

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10 Steps Yahoo! Must Take to Succeed

twocents@thestreet.com (Eric Jackson) — Tue, 15 May 2012 15:33 GMT

NEW YORK (TheStreet) -- With a new board in place with Dan Loeb, and an "interim" CEO who is well-liked internally and externally in Ross Levinsohn, Yahoo! seems ready to start taking a number of steps to unlock value.

The laundry list basically breaks down into two parts: internal fixes and external ones. With a new board and interim CEO in place, Yahoo! seems ready to take steps toward unlocking value.

Internally: ...

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How to Get a Piece of Facebook Before the IPO

twocents@thestreet.com (Steve Cordasco) — Tue, 15 May 2012 12:00 GMT

WOODSIDE, California (TheStreet) -- With Facebook shares scheduled to hit the market this week, many individuals are scrambling to get in on the action. What investors are finding is that unless they are an institution, or their account has a minimum of two commas in it, they're not getting any Facebook shares.

I'm here to tell you that there's another way to participate in the Facebook IPO and position yourself for what may be the hottest IPOs yet to come.

Little known GSV Capital based in Woodside, CA, is a publicly traded fund that seeks to invest in high-growth, venture-backed private companies, and owns some 350,000 shares of Facebook that it acquired in two transactions last June and December. By buying shares of GSVC, you are, de facto, gaining exposure to shares of Facebook. ...

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