Several weeks ago, DepoMed (NASDAQ:DEPO), a specialty pharmaceutical company, announced positive phase 3 trial results for the treatment of Post Herpetic Neuralgia (‘PHN’) with DM1796. But DepoMed’s news of success was soon eclipsed. Only one week later, the company announced that Serada didn’t meet its primary endpoints in two pivotal Phase 3 clinical trials for the treatment of vasomotor symptoms, more commonly known as hot flashes.

Since the upsetting trial data, DepoMed’s stock price has tanked over 50%, yet not one majority-shareholder has sold any shares. Could it be that “smart money” sees something that the ‘market’ doesn’t see?

In this type of market, good management goes further than usual. With depressed prices on almost everything, competent management should be able to leverage their companies' business to take advantage of today’s values and build for the future. The following company not only has a healthy growing business, but has more than able management to help boost the company’s returns for years to come.

NTELOS Holdings Corp. (NTLS)

While major equity markets gyrate in mixed trading after the payroll report, investors in The Blackstone Group LP (BX) are pushing the stock decidedly higher. Blackstone reported earnings Friday morning and while the official numbers showed a loss for the quarter, it appears that trends are turning higher for the private equity firm. Revenue and earnings figures for this company are particularly difficult to analyze because of the partnership accounting surrounding many of the firm’s managed alternative investments, but the statistics from the earnings release were certainly encouraging.

Many of the firms hedge funds have seen significant increases over the past two quarters as asset prices have become more liquid and risk premiums have increased. Unfortunately, quite a few of these funds have “high water marks” which have yet to be eclipsed. A high water mark simply means that the fund must make up losses for investors before Blackstone as a management company can collect the rich incentive allocations as part of its compensation. As these high water marks are reached, the profitability of Blackstone will likely increase geometrically as the firm is able to participate in the profits funded by its investors.

Investing in Dividend Stocks is a long-term strategy. Frequent buying and selling of dividend stocks can significantly increase your expenses and taxes, thus lowering your returns. A growing dividend is a strong indication of a company’s increasing intrinsic value. Great companies that increase dividends tend to have rising share prices over time. Holding only first-rate businesses protects your dividend streams and helps ensure you’ll also get steady price appreciation.

I have done some comparison work on Veeco Instruments (VECO) and Cree (CREE) (two leading LED plays). While CREE is great, the results suggest VECO has a LOT more upside potential from here.

• CREE has a market cap of $4.6 billion. This is 5x the June 2011 revenue estimate of $910 million. Revenue is expected to grow 22% next year. The June 2011 EPS estimate is $1.43…so the stock is trading at 31x earnings.
• VECO has a market cap of $800 million. This is just 1.5x the revenue estimate for next year (compared to 5x revenues for CREE). Revenues are expected to grow 45% next year (far higher than the 22% for CREE). If VECO were to trade at 5x revenues like CREE…the stock would be $80 per share. VECO EPS are expected to be $1.25 next year, so the PE is 19.6. If VECO were to trade at the same PE as CREE…the stock would trade at $39 (+60% from here).
• Comparing the valuations of CREE and VECO gives me a potential upside target for VECO of $50 next year…maybe more if they continue to beat estimates by such a wide margin.

Disclosure: Long VECO.

A shining example of using the sun's energy to heat, cool and light the homes and businesses of a desert community in California is poised to power up next year. It's due in part to the emergence of a technology that uses refraction rather than reflection to produce solar power on a utility-size scale at half the price of photovoltaic technology. But major credit also goes to the pioneering efforts of REDCO, a privately held company, which Ryan Davies established last year to unite free-market concepts with sound environmental policy. The Energy Report caught up with Ryan in the midst of Solar Power International 2009, North America's largest B2B solar industry event. The event in Anaheim was about 250 miles from the forward-thinking community of Needles, where Ryan's company is awaiting permit approvals to build a solar thermal plant that will provide peak power to some 2,500 homes.

The Energy Report: Let's begin with a little thumbnail of REDCO—what your company is and what you do.

Just when it looked like the prophecies of Nostradamus may be coming true, a white knight, in the form of Warren Buffett, strode in and saved the day. Buffett’s buy of Burlington Northern (BNI) turned the US equities markets from ugly duckling to suave Prince.

The purchase was hailed by the Oracle himself as a “bet on America”. We see it a little bit differently…it is a bet on Asia/China.

Back on December 5, 2007 I sent the following note to investors (economictiming.com):

The rate of change of economic data is worsening so it’s time to short the following group of downside leadership: Financial Sector SPDR (XLF) at $30.60, MGIC Investment Corp (MTG) at $23.75, Amabac (ABK) at $23.70, Countrywide Financial at $10.45, Freddie Mac (FRE) at $33.30, Beazer Homes (BZH) at $8.13, PMI Group (PMI) at $12.65, and Citigroup (C) at $33.40.

The price of natural gas is relatively very low, so consumers don't mind cranking up the heat. Now were are entering the winter season when consumption will increase. How about looking at natural gas utilities as possible investments, especially because of the great dividends. Seventeen of these stocks pay 4% or more.

Here are a few examples of high yielding natural gas and propane utilities and limited partnerships:

Continental Resources (CLR) announced early today a huge expansion in their drilling plans for the Bakken Shale in the Montana and North Dakota area. Forbes.com has some info about the move. Basically CLR had originally expected to end 2009 with 6 rigs working, but now they expect to be using 9 rigs. Then by mid 2010, they expect to be utilizing 23 rigs. Thats 17 more rigs that CLR will be putting to work.

This is just one company operating in the Bakken Shale, not to mention Haynesville or the Marcellus Shale. Its unclear whether Bronco Drilling (BRNC) will benefit directly from this expansion, but it should benefit from the overall capacity utilization in the sector leading to higher day rates and margins.

“And your inheritance is…You get to take over payments on the family homestead when we go!”

For those thinking today of their kids’ inheritance, or indeed of their own future, there is a new dynamic that must be taken into account: so many people bought much more house than they would have or could have or maybe even should have because (a) the financing was cheap, (b) the qualifying was easy to non-existent, and (c) because “real estate always goes up, at least in our (choose one: town, state, city, region, whatever.)”

Thursday morning Bridgewater Systems (BDWRF.PK) reported Q3 2009 earnings and subsequently discussed the results and outlook during an analyst call. Analysts are likely to view the results and the business outlook as positive for the stock.

Net income for the quarter was reported at $1.7 million or $0.07 EPS, ahead of consensus forecasts of $0.05 EPS. Revenue was reported at $15.8 million, a 53% increase over prior year Q3 revenue of $10.3 million and ahead of consensus forecasts of $14.6 million for the quarter. Gross Margins contracted sequentially to 64% from Q2 2009 Gross Margins of 75% and from Q3 2008 Gross Margins of 75%. The gross margins contraction is related to the deployment of the Widespan contract and activities related to various trials and deployment preparations associated with various recent contract wins - basically scaling costs. Management expects Gross Margins to continue in the mid-60s range until H2 2010, when it anticipates that Gross Margins will expand to a target of 70% where it is expected to stabilize.

Last Sunday morning, I embarked on a spirited 60-mile bike ride with a few like-minded 50-somethings. Our route took us along the beautiful Delaware River. The Delaware – named after the Indian tribe that crossed its waters – defines the north-south border between New Jersey and my home state of Pennsylvania. As we stopped to enjoy the view, we heard the unmistakable whistle of a steam locomotive. We looked up and there it was – New York, Susquehanna and Western’s number 142 – a steam locomotive pulling a line of cars along the Delaware.

One hundred years ago, engines like this – and the rails they ran on – were the backbone of the railroads. When it came to freight and passenger transportation in the United States, railroads were the only game in town.

I believe this is the beginning of a new and enormous growth opportunity for Disney. The cost of the park is estimated at $4 billion, which would rank among the biggest foreign investments in China to date. Disney already has a theme park in Hong Kong. Located on Lantau Island on the route to Hong Kong’s new airport, Hong Kong Disneyland is Disney’s smallest park. It got off to a rocky start after opening in September 2005, though changes have been made and attendance has improved. Now Disney will be able to take that experience from Hong Kong and apply it to a much larger theme park in Shanghai.

Sterlite (SLT) is trading at a very reasonable value; no doubt higher than the bad bear values, but with sufficient upside potential for both long term investors and speculators. Please access “The Quant Report” here (or link straight through to the Sterlite file) for data based on which below commentary is based.

Operating Risk

In addition, the Chinese and other foreign central banks, despite their complaints about U.S. monetary and fiscal policies, continue to reinvest their trade surpluses in U.S. government bonds. Notwithstanding the very bleak longer-term outlook for government bonds, the U.S. for the time being is having no trouble selling its debt. Yields on riskier classes of debt have generally fallen to unattractive levels. Corporate bonds, which were a relative bargain at the start of the year, have recovered so much that in many instances absolute borrowing costs have fallen to their lowest levels in 15-20 years. Similarly, municipal bonds no longer offer the attractive yields and spreads they had early in the year. TIPs, while still a better value than traditional Treasuries, do not offer the same level of protection from fiscal profligacy as they did early in the year. "Break even" inflation rates, derived from nominal versus inflation protected bond yields, have moved closer to long term averages, with the 10 year rate now pricing in around 2% inflation, up from a low of 0.5% in January.