When you lose, Don’t lose the lesson - The Dalai Lama

For the better part of 5 months I’ve been kicking myself over not dumping Pfizer (PFE) from the Secular Trends Portfolio the day they announced the Wyeth merger. The second I heard about the deal I honestly thought the TV announcer had made a mistake; “No no, it couldn’t be Wyeth. That would just be stupid”

By David Russell

Evergreen Solar is rallying today on a big upgrade from JP Morgan, and at least one trader is betting that it will more than triple by late this year.

By Mike Castino

This week's rankings have not changed since our last "Sector Detector" update, which discussed possible ways to trade the energy and technology sectors based on index ratings by Sabrient Systems.

RIAanalyst.com: Today we are initiating coverage of three branded food companies with “Buy” ratings on General Mills ([[GIS]]: HISTVAL target price 65 vs latest of 57.8) and Heinz ([[HNZ]]: HISTVAL target price 36.9 vs latest of 43.5) a “Sell” on Campbell's ([[CPB]]: HISTVAL Target 29 vs latest of 30.1). We believe that these are all well-managed, wide-moat companies, with powerful brands, economies of scale, and so on. At the right price any one of these stocks might serve well as defensive equity holdings. At present though, the valuations of General Mills and Heinz are clearly more compelling than Campbell’s based on our HISTVAL methodology and while their potential returns are unexciting we believe they are sufficient for a buy rating on these bread-and-butter consumer staple stocks.

After positive earnings and outlook this week, General Mills is decidedly less interesting today, at almost $58, than it was when we first modeled it on May 27th. Then, just over a month ago, it was trading at $51 vs our target of 64,which was attractive enough for a “strong buy”. Now, after its strong move upwards, its still looking good enough to hold onto, but if it wasn’t in the portfolio we’d probably be looking more closely at HNZ or perhaps passing on the group altogether in search of greater potential elsewhere.

When we saw the news regarding Kazakhstan’s announcement that some foreign uranium deals were illegal, and named one of Uranium One’s (SXRZF.PK) mines in their probe we simply shook our heads. It was hardly surprising considering all that we have been through before. Although it's one of our favorite companies because of its commitment to bringing supply online and aggressively expanding its operations, it conducts business in risky areas and seems to consistently bet the farm.

This all brings us to today. The Kazakhstan government has said that they will not renegotiate any contracts after talking with their partners in the country, but investors seemed hardly moved by this announcement and the damage was done. Many still felt that the government was going to somehow increase its grip on the mines in the country and that its previous announcement indicated that the Kazakhs were interested in not only being the world’s largest producer of uranium, but owning the production as well.

Emerson Electric Co. (EMR), a diversified global technology company, engages in designing and supplying product technology and delivering engineering services to various industrial and commercial, and consumer markets worldwide. The company operates through five segments: Process Management, Industrial Automation, Network Power, Climate Technologies, and Appliance and Tools. The company is member of the S&P 500 and the S&P Dividend Aristocrats indexes.
Emerson Electric Co.has paid uninterrupted dividends on its common stock since 1947 and increased payments to common shareholders every year for 52 years.

From the end of 1998 up until December 2008 this dividend growth stock has delivered a negative annual average total return of 4.90% to its shareholders. The stock is down over 50% from its 2007 and 2008 all-time highs.
The company has managed to deliver an 8.40% average annual increase in its EPS between 1999 and 2008. Analysts are expecting an increase in EPS to $2.35 for 2009 and $2.20 by 2010. This would be a decrease from the 2008 earnings per share of $3.11. The economic crisis is currently affecting the St. Louis based company, which recently announced a 25% decline in orders for the past three months. Emerson Electric does expect to restructure its operations in order to make them more cost effective. In addition to that the relative diversification of its revenue sources by continents and five major business segments should soften the fall in earnings. Another positive for the company is the fact that it focuses on new product introductions, which could add greatly to profitability. Strategic acquisitions could also add to the bottom line as well.
The Return on Equity has increased over the past decade from 22% in 1999 to 27% in 2008. The reason for the increase is managements implementing capital efficiency initiatives after a string of acquisitions. Rather than focus on absolute values for this indicator, I generally want to see at least a stable return on equity over time.
Annual dividends have increased by an average of 7% annually since 1999, which is slightly lower than the growth in EPS.

A 7 % growth in dividends translates into the dividend payment doubling every ten years. If we look at historical data, going as far back as 1982, Emerson Electric Co. has actually managed to double its dividend payment every nine years on average.

By Brandon Clay

Transportation stocks are usually a good barometer of overall economic health. Trucking companies, airfreight shipping firms, and railroad operators thrive when the economy thrives. Conversely, these are among the first to be hit when the economy falters. Slower business activity means less need for transportation of goods and people. While American railroad operators such as Burlington Northern (BNI), Union Pacific (UNP) and others moved up in the recent market rally, the group remains well off its 2008 highs.

Level 3 (LVLT) poised for major broadband demand. A bullish analyst view from Mike Sapien, a principal analyst for Ovum, a telecommunications, software and IT analysis company with offices worldwide.

As a result of LVLT's nine acquisitions in the last five years, the company not only supplies fiber optics network infrastructure to companies like Comcast Corp. (CMCSA), AT&T Inc. (T), Sprint Nextel Corp. (S) and EarthLink Inc. (ELNK), but it is moving into the "enterprise" sector, which LVLT calls its Business Markets Group.

As an alternative, it might make sense for investors to consider the Claymore/Beacon Global Timber Index ETF (CUT). The fund's fact sheet outlines the following criterion for a stock's inclusion in the underlying index:

The consolidated net loss for Tata Motors was $520 million in the year ended March 31, compared with a net income of $460 million a year ago. Year-ago numbers don’t include Jaguar and Land Rover, which Tata bought from Ford (NYSE:F) in June 08'.

By Sean Hyman

There are many dynamics working against the dollar and for the Canadian dollar. I don’t claim that these are the ONLY reasons but I do believe that they are very important dynamics that are all collectively working at the same time to bring down the USD/CAD currency pair.

The question about owning gold should not be 'why' but 'how much'. At the very least, gold should be considered a form of insurance against either financial collapse or rising inflation. It is pointless therefore to ask 'why' if you generally believe in the merits of owning insurance on anything. You don't buy insurance for your house as an investment, but as a hedge against the low-probability scenario of it burning down or being destroyed by a hurricane or flood.

The only caveat to this analogy is if you don't believe gold is a suitable form of insurance. But then what is? One scenario where gold may fail the test would be a deflationary economy. However, considering the amount of pump-priming that central banks are engaged in, the likelihood of deflation has receded compared to six months ago. Furthermore, the scenario of a Japanese-style deflation is unlikely for the American economy because our financial system (unlike Japan's) is hard-wired to domestic economic growth and any deflation would quickly result in renewed systemic stress which would in turn lead to more investors buying gold.

This is part 2 of a 4 part series looking at each of the companies selected and listed by Fortune in their 2009 Fortune 40: The Best Stocks to Retire On list.

Part 1 | Part 2

Traders who took advantage of our January 21 article on Shanda Interactive Entertainment (SNDA) have enjoyed quite a ride! The stock is currently up roughly 100% in less than six months, handily beating market returns. The sector has been a bright area to invest in, as China Massively Multiplayer Online Role Playing Games (MMORPGs) gain popularity. For many consumers in China, Shanda games have been a less expensive form of entertainment, so the industry has enjoyed dollars (or more appropriately yuan) that might have otherwise been spent on travel, expensive dinners, or new vehicles. It’s easy to see why some investors claim that china online game companies are recession proof.

But despite the solid earnings at Shanda, and the recent sharp move in the share price, SNDA stock still appears to be undervalued with significant room to run. Analysts who follow the company expect earnings to hit $3.39 per share this year representing an increase of 29%, and for 2010, earnings are expected to hit nearly $4.00 per share - another 17% on top of 2009. The stock is trading in the mid 50’s, setting the PE at 16 compared to 2009 expectations, and just 13.75 compared to 2010 expectations. Considering the proven track record, and strong financial footing, I find it difficult to understand why this stock doesn’t have a multiple of at least 20 times next year’s EPS.

Mel Karmazin, CEO of SiriusXM Satellite Radio (SIRI), recently received a contract extension and a raise in his base pay from $1.25 million to $1.5 million. Additionally, Karmazin has the option to purchase up to 120 million shares at an exercise price of 43 cents a share.

Full disclosure. Readers here know I own Wal-Mart (WMT) shares.

Now the news (from the WSJ):

In a major break with most other large companies, Wal-Mart Stores Inc. Tuesday told the White House that it supports requiring employers to provide health insurance to workers, a centerpiece of President Barack Obama's effort to provide near-universal coverage to Americans.

When evaluating a company as a potential income investment you look at its calculated fair value, ability to generate cash, debt position and the net present value of its dividend stream compared alternative “safe” investments.

Air Canada (AIDIF.PK) may be headed for bankruptcy courts, but Jazz Air Income Fund (JAARF.PK) won't miss a beat and will continue to crank out steady distributions according to analysts at Genuity Capital. Uncertainty about AC has weighed on JAZ's [TSE:JAZ] unit price to the point that it looks cheap. Investors might just get jazzed by the current 30% distributable cash per unit yield based on its current unit price of C$3.32.

Jazz Air Income Fund provides 97% of Air Canada regional capacity using its fleet of 133 regional jets and turboprops. The income trust, a spinoff from ACE Aviations (ACEAF.PK), provides fixed regional aircraft operations to Air Canada equal to 400,000 block hours per year. In return, JAZ gets a mark-up targeted at 13.2% over controllable costs.