Bull & Bear's STOCKS

       David Sandell: “It’s not surprising that in today’s difficult economy, most consumers have become increasingly bargain conscious. This has been a boon for Growth Portfolio’s two retailing picks: Amazon.com (AMZN) and Wal-Mart (WMT).
       Amazon, of course, has long attracted consumers through attractive discounts on the products it sells directly, such as books and compact discs. Moreover, its huge and growing online marketplace of third-party sellers makes it easy for consumers to comparison shop for a wide variety of products – locating the best deals without having to waste money on gas. Amazon’s dominance continues to grow as more retailers increasingly take the “if you can’t beat’em, join’em” approach and sign on with the online retailer. Since third-party sales carry higher profit margins for Amazon, the trend bolsters the company’s earnings even beyond the growth in sales. Amazon shares aren’t cheap, selling at more than 50 times 2012 earnings expectations, but we still view them as attractive in light of the company’s well-entrenched growth and strong capital base, which lets it expand its reach without having to fret about near-term results. (Case in point: the recently announced and attractively priced Kindle Fire).
       No discussion of low-end retailing can ignore industry giant Wal-Mart. With a market cap of $180 billion, Wal-Mart is the rare stock that ended 2008 with a gain (up 20 percent compared to the S&P 500’s 37 percent loss), an amazing feat in view of the economic headwinds. Offering low-cost products delivered via an efficient business model, Wal-Mart is a natural draw for cash-strapped consumers. The massive stores serve as one-stop shops, where consumers can buy everything from food and medications to clothing, TVs, appliances, and more – again, a big advantage in an era of high gas prices.
       In fact, after years of trying to trim its offerings, Wal-Mart has reverted to a “stack ‘em high” philosophy that seeks to provide as diverse a product selection as possible. The strategy is paying off as cost-conscious shoppers continue to flock to the store. A striking phenomenon – heartrending because it shows so plainly the dire straits in which so many Americans find themselves today – is that shortly before midnight at the end of each month, Wal-Mart stores become inundated with traffic as shoppers surge in to buy such necessities as milk, eggs, toilet paper, and baby formula, milling around until the clock strikes twelve, when they head to the checkout lanes. Why? Because that’s the moment their government-issued electronic benefits cards are refilled.
       Wal-Mart shares held up during the recent market volatility and should outperform if the economy remains shaky or deteriorates further. Despite the company’s defensive characteristics, shares are cheap at less than 11 times next year’s earnings. With many rural markets already served by the company’s superstores, the retailer is now targeting urban markets. If it’s successful in opening smaller stores in more densely populated areas, earnings growth could easily hover in the low teens for the next several years. Yielding nearly 3 percent, this retail stalwart is appropriate for just about any portfolio. In recognition of its strength and staying power, we are shifting it to our Growth Portfolio’s Low Risk/Hedge segment.

       It’s an unfortunate (and we think unsustainable) reality that income disparities in the U.S. have widened dramatically in recent years. Even as most Americans struggle, and the middle class shrinks and sinks, those at the very top of the heap still have money to burn. A company likely to benefit from the big spenders in this income barbell is Tiffany & Co. (TIF), which has maintained its status as a symbol of luxury around the world. The company continues to expand the reach of its brand, symbolized by its unmistakable box whose turquoise-like color is known simply as “Tiffany blue.”
       Revenue growth and earnings growth alike have been impressive. For the fiscal year that ended in January 2011, sales rose 14 percent, to $3.1 billion, while earnings soared 40 percent, to $368 million. About 90 percent of revenues came from jewelry sales. These trends have continued in 2011. For the quarter that ended in July, revenues, at $872 million, and profits, at more than $90 million, were both more than 30 percent ahead of the year-earlier period.
       The company has continued its push to gain customers from among the well heeled on other continents. It has been expanding its presence in Europe and aims to double the number of stores in China to 30 within the next few years. It also has been making better headway in Japan, which had proved a difficult market in the past. The company is financially sound, with cash roughly equal to long-term debt. Its balance sheet also includes around $1.8 billion in inventory, i.e., precious metals – another big positive given our conviction that gold, silver, and other precious metals are in long-term uptrends.
       Shares trade at less than 17 times forward earnings and at a PEG below 1. The company also has been rumored to be a potential takeover (by other luxury brands), which could boost shares. Takeover or not, Tiffany has great prospects, and it joins our Growth Portfolio.”

       George Putnam, III: “MetroPCS Communications (NYSE: PCS) was formed in 1994 under the name General Wireless to acquire wireless spectrum licenses in government auctions. After the company had acquired significant blocks of spectrum in 1996, the spectrum dropped in value and the company was unable to service its debt. It filed for bankruptcy in early 1998 and emerged from Chapter 11 later that year. In 2004, the company restructured again and adopted the MetroPCS name. It went public in 2007.
       MetroPCS Communications is now the fifth-largest wireless communications provider in the U.S. and the largest focusing on the “prepaid” segment of the cellular market (where you pay upfront for the service you are going to use rather than entering into a long-term contract). Revenues have grown fairly steadily since the company went public, but earnings stagnated between 2007 and 2010 causing the stock to fall significantly. A change in marketing strategy in 2010 led to renewed profit growth, and the stock responded favorably. However, when the company issued a slightly disappointing second quarter report just as the stock market was cratering in early August, the stock lost almost half its value over the course of a week, and it has drifted lower ever since.
       Analysis: We believe that the market has significantly over-reacted in pummeling MetroPCS stock and that the company is poised to resume its growth path. Prepaid cellular is by far the fastest growing segment of the wireless sector, and the company is well positioned to participate in that growth. It owns significant spectrum and has a strong market presence in most major urban markets, which is where most prepaid sales occur.
       The company’s stumble earlier this year largely resulted for a small loss of customers who wanted to move to expensive new “smart phones” because of their advanced features. Now that smart phone prices are declining, MetroPCS should be able to compete more effectively in that sub-segment of its market. In addition, the company has built out a strong “4G” network in most of its markets, which will support the advanced features.
       Even with the slightly weaker results this year, the company’s earnings and cash flow remain strong, making the stock look quite undervalued. The stock currently trades at less than 4 times EBITDA (a measure of cash flow) and less than ten times expected 2011 earnings – very cheap for a stock with its growth potential.
       The cellular industry is undergoing consolidation, which should benefit MetroPCS. It could either be a target – its spectrum and customer base would be very beneficial to a large cellular company – or an acquirer. With more than $2 billion of cash in hand, MetroPCS could acquire smaller competitors, or it might buy spectrum that was divested as a result of other mergers, or both.
       We believe that the recent sell-off provides an opportunity to purchase a strong and growing company at a very attractive price. We recommend buying MetroPCS up to 14.”
       Disclosure Note: Accounts managed by an affiliate of the The Turnaround Letter own MetroPCS stock.

       Konrad Kuhn’s featured stock of the month for December is Memsic, Inc. (Nasdaq: MEMS; $2.66) a leading provider of state-of-the-art semi-conductor sensor systems solutions based on Micro Electro Mechanical Systems (MEMS) technology and advanced integrated circuit design.
       “With sight and sound, touch and smell we establish communication with the world around us. Just as our eyes sense light and our ears sense sound and relay that information to our brain enabling us to sense the environment, senses comprehend the world around us and relay these electrical signals back through intricate integrated circuitry (IC) and electronic systems.
       MEMSIC is the first and only company that integrates a MEMS technology-based inertial sensor, commonly known as an accelerometer, with missed signal processing circuitry, onto a single chip using a standard complementary metal-oxide-semiconductor (CMOS) process. This proprietary technology has allowed for sensor solutions at lower cost, higher performance and improved functionality. Utilizing a standard CMOS process allows easy integration of additional functions and the creation of new sensors to expand into magnetic, touch and flow sensors, as well as other MEMS application areas beyond accelerometers. Any application that requires the control or measurement of motion is a potential application for accelerometers.
       The company’s leading-edge sensor technologies and unique products are used in a wide range of applications for the mobile phone, automotive, consumer, industrial, medical and general aviation markets. In automotive applications, sensors are being deployed in airbags, electronic stability control, rollover protection and navigation systems. In consumer applications, sensors are used in global positioning systems, video gaming systems and interactive toys. Industrial and medical applications include inclination sensing earthquake detection and cardiac pacemakers. Also, MEMSIC was a pioneer in providing accelerometers to China’s fast growing mobile phone market, and are among the leading providers of accelerometers for image projectors supplying several Japanese OEMs.
       Sales for FY’10 increased 36% to $38.7 mil. with a loss of (.31) per share. Sales for the 1st 9 mos. of FY’11 jumped 71% to $46.7 mil., with the net loss significantly narrowing to (.12) vs. (.26) for the same period in the prior year. It should be noted that the company reported record sales of $18.9 mil. in Q3. Also, the 69% quarter-over-quarter increase reflects the continued success of their magnetic sensor in the Smartphone market and strong sales in the automotive market, which increased by 29% over last year. The company is financially sound with $52.5 mil. in cash and cash equivalents, $1.4 mil., in short-term investments and $3.8 mil. in restricted cash. Of the 24 mil. shares outstanding, about 49% are held by insiders and 15% by institutions.
       After the recommendation In Oct., the stock advanced 35%, and while digesting its recent gains we would Add/Buy in the 2.60-2.75 area. With a close above 3.25, look for a 1st target of 4.75-5.00, especially since MEMSIC has been at the forefront of MEMS technology for over a decade and has developed an extensive and growing international customer base with over 10,000 installations worldwide. In addition, MEMSIC introduced the world’s smallest and most robust digital accelerator with features never before available. The MXC6226XC is approximately 50% smaller than competitive offerings, providing designers enhanced flexibility for integration into space-continued designs. Since it is based on the company’s patented MEMS thermal technology (no moving internal structures) with five-times greater than the shock survivability of competitive accelerometers, the MXC6226XC is ideal for applications in toys and cell phones, or other devices prone to being dropped on hard surfaces. The resulting device demonstrates MEMSIC’s leadership in providing innovative motion sensor functions at a price-point never before available to designers of cost-sensitive systems. Their wafer-level packaged digital accelerometers is truly a breakthrough design. Ultimate target 8-9.”

       Russ Kaplan: “One of the advantages of the current downward trend in the Stock Market is that you can find values that would not exist in an upward market. One of these companies is our latest recommendation, DeVry University, Inc. (DV).
       They have over 90 locations throughout the United States. Their degree programs match what is needed for the current job market. In fact, 96 of the Fortune 100 companies employ Devry graduates.
       As I see it, DeVry is providing a very necessary service to remedy our current work force’s deficiencies, whose skills are increasingly mismatched with what is now required. In an ever-evolving world of technology and health care, the job skills that are now needed are what the university provides, with an excellent program of post secondary education. Students are able to receive Associates, Bachelors and Masters Degrees.
       DeVry is currently trading in the $34 range, which is way below its high of almost $75 a share in 2010, even though earnings have been up every year for the last eight years.
       It is a definite value with a price/earning ratio that is one-third of its average and is not far above its book value. The indicator is rare for a service company.
       DeVry’s balance sheet is strong with $450 million in cash and zero long term debt. This gives the company the ability to make strategic acquisitions. Growth is also evident with a 23.8% return on equity.
       One important variable that I always look for is how much stock management owns. In DeVry’s case, their management owns 4.4% of company stock. This gives them the kind of positive long term outlook that is essential for a company’s long term.”

       From modest origins 120 years ago, Abbott has grown into a diversified healthcare company with worldwide sales topping $35 billion. Abbott boasts market leadership positions in pharmaceuticals, nutritional products, medical devices and diagnostics. This balanced portfolio of multiple core growth franchises has led to steady sales growth over the years.
       Abbott is expanding its leadership internationally and is now the number one pharmaceutical company in India. In 2010, international sales of $20 billion accounted for more than 57% of total sales. Additionally, 25% of 2010 worldwide sales were from emerging markets giving the company a strong foothold in countries expected to provide 70% of the growth in the healthcare market in the next 5 years.
       Abbott is the leader in treatment of rheumatoid arthritis, Crohn’s disease, psoriasis, cholesterol management, HIV, and testosterone replacement. Growing at a 20% annual rate, HUMIRA, the company’s largest prescription drug, has over 500,000 patients in 83 countries. Abbott is the fastest-growing international nutritional company with double-digit international sales growth. Market leading nutrition brands include the number one infant formula, Similac, and the number one hospital product, Ensure. In vascular products, Abbott’s XIENCE line is the number one drug-eluting stent, and the company is also the leader in bare metal stents, carotid stents and guide wires. Abbott is a leader in research with over 30 new medical devices in development and a pharmaceutical pipeline that has tripled molecular entities in development over the last four years.

Abbott recently announced a tax-free distribution to shareholders realigning its business into two entities. One entity, retaining the Abbott name, will be a diversified medical products company including branded generic pharmaceuticals, medical devices, diagnostics and nutrition. With $22 billion in sales, Abbott will focus on diversified products with most of its sales generated outside the U.S. and in fast growing emerging markets. This entity should produce high single-digit sales growth and double-digit EPS growth. The second business will focus on proprietary pharmaceuticals and biologics with a sustainable portfolio of market leading brands, including HUMIRA, Creon and Synthroid. Additionally, the business will have a strong pipeline of innovative R&D assets with more than 20 new compounds or indications in phase 2 and 3 development and $18 billion in sales. It will focus on developed markets for the sale of select specialty products and breakthrough innovations.
Although the details of the transaction, which is expected to close by year-end 2012, are still being worked out, both firms are projected to have strong balance sheets and cash flows with dividends equal to the current combined entity. While we like the economies of scale and diversified business base of the current company, the realignment appears to be based on a sound business strategy which should provide for the long-term growth of the separate entities. Buy.”

       Max Bowser: “American Shared Hospital Services (NYSE Amex: AMS), together with its subsidiaries, provides Gamma Knife stereotactic radiosurgery equipment and radiation therapy to 19 medical centers in 17 states, as of March 1, 2011.
       Gamma Knife stereotactic radiosurgery is a non-invasive procedure and an alternative to conventional brain surgery or it can be adjunct to conventional brain surgery.
       Compared to conventional surgery, Gamma Knife radiosurgery usually involves shorter patient hospitalization, lower risk of complications and can be provided at a lower cost. Typically, Gamma Knife patients resume their pre-surgical activities one or two days after treatment.
       The Gamma Knife treats patients with 201 single doses of gamma rays that are focused with great precision on small and medium-size, well-circumscribed and critically-located structures in the brain. During 2006, a new Gamma Knife model was introduced, which treats patients with 192 single does of gamma rays and will also furnish the ability to perform procedures on areas of the upper cervical spine.
       The Gamma Knife deliver a concentrated dose of gamma rays from Cobalt-60 sources housed in the Gamma Knife. The Cobalt-60 sources converge at the target area and deliver a dose that is high enough to destroy the diseased tissue without damaging surrounding healthy issue.
       Treated are selected malignant and benign brain tumors, arteriovenous malformations, and functional disorders – including trigeminal neuralgia (facial pain). Research is being conducted to determine if the Gamma Knife can be effective in the treatment of epilepsy and other functional disorders.

       Ernest A. Bates, M.D., 74, founder of the company, has served as chairman of the board and CEO since the firm’s incorporation. He owns 18% of the outstanding shares (852,670).
       A board-certified neurosurgeon, Dr. Bates is emeritus v-p on the broad of trustees of John Hopkins University and also serves on the Board of Visitors of the John Hopkins Medical Center. Plus, he also participates in other medical organizations.
       Craig K. Tagawa, 57, is the senior v-p, chief financial officer. Ernest R. Bates, 44, is the v-p of sales and business development, and is also the son of the CEO.
Future
       Playing an important role in the AMS Future is proton therapy, which is widely-regarded as the optimal radiation treatment for an increasing variety of cancers.
       The company has invested quite a bit of capital in Mevion Medical Systems – formerly Still River Systems – the vehicle that will be used to promote the acceptance of proton therapy, which is pending FDA clearance.
       AMS continues to negotiate financing for proposed proton therapy centers it is developing in Dayton, OH, Boston, MA Orlando, FL and Long Beach, CA.
       A development-stage company in Littleon, MA, is cooperating with scientists at MIT’s Plasma Science and Fusion Center who are interested in treating cancer patients using proton beam radiation therapy.
       There are 114 Gama Knife sites in the U.S. and 276 units worldwide, with the latter expanding. Adana, Turkey, treated its first patient in March. Lima, Peru, and Sao Paulo, Brazil, will go online in 2012.
       Office: Four Embarcadero Center, Ste. 3700, San Francisco, CA 94111, 415-788-5300, www.ashs.com.”

       Douglas Gerlach: “In a time of low and inconsistent economic growth, it helps to have a portfolio full of steady growers, even as one pursues higher returns in other parts of the portfolio. A high degree of recurring revenue produces consistent cash flow that steadies Waters’ results during economic downturns and fuels growth in upswings.
       Waters (NYSE: WAT) is a leader in the field of chemical separation identification and analysis, a critical part of research, product development and manufacturing in the pharmaceutical and biotech industries. There are also significant quality testing applications in the food and beverage, environmental, chemicals, and plastics industries.
       Scientific instruments and related software make up only about 54% of Waters’ sales. Another 29% of sales are derived from services, primarily preventive maintenance and software upgrades sold in the form of service contracts. The remaining 17% of sales come from consumable chemistry supplies. Waters’ service and supply revenue seems to rise almost all the time, even when an uncertain economy periodically causes instrument sales to fall. The investment thesis on Waters is strengthened by recent new product introductions and the potential for a favorable replacement cycle.
       Sales outside of the United States represented 70% of 2010 sales. Sales in Asia are 33% of the total and exceed Waters’ U.S. sales. Its share price has been more volatile than usual in recent months. Perhaps this is because 30% of its sales are in Europe. In its third quarter commentary, Waters noted that Europe was surprisingly strong, however.
       Waters is the world’s largest manufacturer of high performance liquid chromatography (HPLC) instruments and consumables, and has the highest market share in the United States, Europe, and most of Asia. It is also one of the leaders in mass spectrometry (MS) instruments and the world’s leader in a third field, thermal analysis, through its TA Instruments subsidiary.
       HPLC identifies and measures the chemical, physical, and biological composition of materials. It involves the separation of compounds that are dissolved into a solution. Different components pass through the analytical column (a plastic, glass, or steel tube) at different rates, as they have dissimilar chemical properties. The separated components are collected at the end of the column, as they each exit at different rates. HPLC specifically uses a pump to force the compound through at a faster rate and improves the analysis time. Mass spectrometry involves the application of an electrical charge, separating and identifying components by examining the mass-to-charge ratio of the molecules involved.
       New products are the lifeblood of Waters Corp. Six years ago, Waters unveiled a new system called Acquity UPLC (Ultra Performance Liquid Chromatography), which commands a premium price for its degree of chemical separation and speed. Waters followed this up with Acquity H Class, a lower-cost bridge between the older HPLC and newer UPLC technologies. In the third quarter, it introduced Acquity I Class, which is directed to intense laboratory operations rather than cost-conscious buyers. Waters has developed a family of mass spectrometer products (Synapt, Synapt G2, Zevo) designed to take advantage of Acquity’s features.
       One of Waters’ most attractive aspects is its tremendous cash flow. Free cash flow (cash from operations minus capital expenditures) exceeded 24% of total revenue. This is an exceptional rate of cash generation, and gives the company much flexibility to make acquisitions, pursue new development activities or buy back shares. Waters has retired more than 30% of its shares over the past decade through these buybacks.
       We expect Waters to achieve long-term EPS growth of 14% from a combination of 10% revenue growth (including acquisitions) plus continued share repurchases. Five years of such growth could result in EPS as high as $8.78. Applying a high P/E of 21.7 to estimated EPS of $8.78 yields a potential high price of 190. The total annual return could exceed 19%. The downside risk appears to be 18% to a price of 65, the product of the average low P/E of 14.3 and the last twelve months’ EPS of $4.56. Waters might appear to be somewhat indebted, with total debt equal to 48% of total capital. Also note its sky-high return on equity. Both are due to heavy, ongoing stock repurchases, which have greatly reduced shareholders’ equity, but also boosted EPS. Waters has $1.2 billion of cash on hand, exceeding its total indebtedness. Website: www.waters.com.”

       Roger Conrad: “Brookfield Renewable Energy Partners LP (TSX: BEP-UN, OTC: BRPFF; $23.89) was forged in November from the union of the former Brookfield Renewable Power Income Fund and renewable power assets for parent Brookfield Asset Management (TSX: BAM/A, NYSE: BAM). The result is the world’s largest bet on hydropower, with a growing $13 billion portfolio of 4.8 gigawatts in Brazil, Canada and the US.
       The deal – which exchanged one unit of the new limited partnership for each of the income fund on a tax-free basis – includes an immediate 5 percent boost to Brookfield Renewable’s quarterly distribution to 33.75 cents Canadian. Meanwhile, 2 gigawatts of new projects will fuel annual distribution growth of 3 to 5 percent through 2015.
       Brookfield Renewable’s current sales are fully contracted, mostly to utilities and government entities, at inflation- protected rates for an average of 24 years. That includes the 10 percent of output from wind farms. Pre-contracting before beginning construction on new plants further reduces risk. And this merger sharply reduces quarterly cash flow fluctuations. Dams protect water flows to newly added US plants (48 percent of capacity), and plants in Brazil (14 percent) receive cash based on capacity.
       Most Canadian limited partnerships restrict US investment. Brookfield Renewable, however, intends to list on the New York Stock Exchange to “deepen its investor base and improve ability to fund growth.” This listing alone will boost Brookfield Renewable’s unit price, which slipped from all-time highs reached in early November due to worries about a European financial crisis from which the company is largely immune.
       Buy Brookfield Renewable Energy Partners up to USD26 on either the Toronto Stock Exchange or the US over-the-counter (OTC) market.”

       William Velmer: “Asian Pacific Wire & Cable (Nasdaq: APWC; $2.70, www.apwcc.com) is engaged in the manufacture and distribution of telecommunication (copper and fiber optic) and power cable and enameled wire products in the Asia Pacific region, primarily in Thailand, China, Singapore and Australia.
       APWC is not a China based company. APWC is based in Taiwan. The company is fully reporting and uses a top 3 auditor. Currently there are 13.8 million fully diluted shares outstanding and the float is around 3 million shares. During 2011 the company ran into a few problems that were not caused by management!
       1. Nuclear Meltdown in Japan had a far reaching effect on commerce in the Asian area and the World.
       2. Continued Meltdown in Europe has rallied the dollar which in turn has softened metals like copper that is the main building block of APWC. In addition, there is an assumption that the Asian economy as well as the world economy will contract. Revenues for 2011 have risen sharply, but during the 3rd Q copper inventories had to be written down, which in turn resulted in a .22 loss. For the Quarter APWC lost .09.
       3. The severe flooding in Thailand cause a shutdown of a subsidiary of their 51% controlled Charoong Thai Wire & Cable.
       For the nine months ending Sept 2011 revenue exploded to $400 million vs $325 million for the same period last year. The net income/sh contracted to .29 vs .80 (some of the income was influenced by copper prices and other non- recurring items.)
       The balance sheet is to die for! APWC has $80 million dollar or $5.80/sh in cash that results in each share trading @ $2.70 is worth $5.80 in cash. The equity is currently $155 million (does not include non-controlling interest of an additional $70 million) or a stated book value of $11.20 based upon 13.8 million fully diluted shares. If we take into account the total equity of APWC, that is, $225 million we get a book value of $16.20! Stock price $2.70 book value $$16.20 – do the math!
       In our opinion, APWC is mis-priced and mis-understood. We believe that this huge discounted value is a trophy not a trap! We believe that the fourth Q will produce revenue of at least $125 million and show an expanding profit! If you look closely at the 3rd Q you will see that $3.3 million from the copper write down and SG & A expense cost APWC millions in currency losses which altered the profits during the 3rd. We do not see this happening going forward.
       Asia is one of the only areas of the world that is still showing dramatic growth! As China continues to modernize – copper usage for wire and cable will continue to drive sales for companies like APWC.
       Bottom-line: We have discounted value, growth of 20%+, trading @ 80% below stated total book & less than 60% cash value, a PSR of .1 (we sub out the current liabilities – also a value of 1 is cheap – we have .1!), potential takeover candidate at current levels, all of Asia being lumped into group because of China's accounting issue has overly depressed quality and garbage alike and at current levels we see only upside potential and very limited downside risk! We rate APWC with a strong buy recommendation and pick APWC as our stock pick for 2012!
       PS: Favorite 2 oil stocks for 2012: Coastal Energy (TSX: CEN; AIM: CEO; $13.05). Visit www.coastalenergy.com for company presentation and press releases.
       My second oil Dragon Oil (quoted on the London and irish Stock exchanges: DG0; $7.03). Visit www.dragonoil.com for company presentations and press releases. Both are super cheap and should be bought!”
       Editor’s Note: William Velmer has been writing S.A. Advisory for over 25 years and is offering Bull & Bear readers a free subscription to his Email Alert, visit www.saadvisory.com to sign up.

       Donald Pearson: Cognizant Technology (CTSH) is featured this month as a solid growth investment. This is an outsourcing firm headquartered in the United States with most of its employees located in India. Their services will probably continue to be in high demand because the service they provide is helping companies save money. We recommended this in June of 2010 at $50.04, so in just 18 months the return exceeds 30% and more importantly should continue to outperform today’s market. It is currently down 11%, and this makes it an opportune time to get in again.
       Here at home we have featured two of our favorites within the value sector. Remember, a value company is one that displays continuous growth while increasing its stock dividends. In uncertain times this is where the largest part of everyone’s portfolio should be.
       MacDonald’s Corp. (MCD) is another five-star opportunity, as same store sales continue to increase, and they continue their aggressive expansion program both here in the United States and around the world. MCD is currently up about 22% and yielding over 3%. We featured this in November of 2010, and in one year one has seen their investment appreciate around 24%.
       International Business Machines (IBM) company is nothing like it was back in the fifties. It now has become a large participant in software, and derives more profit from outside the US than it does here at home. We featured this in our August 2009 Letter at $117.93, May 2010 Letter at $129.00, and again in our February 2011 Letter at $162.00. As you can see by today’s closing price, those purchasing in 2009 have profits of approximately 50%, and those purchasing in 2010 have profits of 30%. So investing wisely is just like Kenny Roger’s sings: “You’ve got to know when to hold em, and know when to fold em.” Although not perfect, as no one can be, I think we are exceptionally good at representing your needs, and the needs of your family, our family, and additional clients.
       Cognizant Technology Solutions Corporation (Nasdaq: CTSH; $67.35) is a provider of custom information technology, consulting and business process outsourcing services. The Company is engaged in Technology Consulting, Complex Systems Development and Integration, Enterprise Software Package Implementation and Maintenance, Data Warehousing, Business Intelligence and Analytics, Application Testing, Application Maintenance, Infrastructure Management, and Business and Knowledge Process Outsourcing, (BPO and KPO). It operates in four segments: Financial Services; Healthcare; Manufacturing, Retail and Logistics, and Other, which includes Communications, Information, Media and Entertainment and High Technology. In August 2011, the Company sold CoreLogic Global Services Private Limited (CoreLogic India) to the Company. In September 2011, the Company acquired Zaffera, LLC. Institutional Holdings: 1740.
       International Business Machines Corporation (NYSE: IBM; $188) is an information technology (IT) company. The Company operates under five segments: Global Technology Services (GTS), Global Business Services (GBS), Software, Systems and Technology, and Global Financing. GTS primarily provides IT infrastructure services and business process services. GBS primarily provides professional services and application management services. IBM’s Software segment consists primarily of middleware and operating systems software. Global Financing invests in financing assets, leverages with debt and manages the associated risks. In April 2011, the Company acquired TRIRIGA, Inc. In October 2011, the Company acquired i2. In October 2011, the Company acquired Algorithmics. In October 2011, it acquired Q1 Labs Inc. Institutional Holdings: 3368.
       McDonald’s Corporation (NYSE: MCD; $95.52) franchises and operates McDonald’s restaurants in the global restaurant industry. These restaurants serve a varied, limited, value-priced menu in more than 100 countries around the world. All restaurants are operated either by it or by franchisees, including conventional franchisees under franchise arrangements, and foreign affiliated markets and developmental licensees under license agreements. The Company and its franchisees purchase food, packaging, equipment and other goods from various independent suppliers. It offers a range of products. Independently owned and operated distribution centers, approved by it, distribute products and supplies to McDonald’s restaurants. It’s menu includes hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, Chicken Selects, Snack Wraps, french fries, salads, shakes, McFlurry desserts, sundaes, soft serve cones, pies and cookies. Institutional Holdings: 2744.”

       Kelley Wright: “The Timely Ten is not just another “best of, right now” list. It is our reasoned expectation based on our methodology and experience for what we believe will perform best over the next five years.
       Do we believe that all 10 will go up simultaneously or immediately? Of course not. Our four decades of research and experience, however, leads us to believe that these stocks, purchased at current Undervalued levels, are well positioned for both growth of capital and income.
       The Timely Ten consists of Undervalued stocks that generally have a S&P Dividend & Earnings Quality rating of A- or better, a “G” designation for exemplary long-term dividend growth, a P/E ratio of 15 or less, a payout ratio of 50% or less (75% for Utilities), debt of 50% or less (75% for Utilities), and technical characteristics on the daily and weekly charts that suggests the potential for imminent capital appreciation.
       The current 10 selections and their yields are: Johnson & Johnson (JNJ, 3.6%), Coca-Cola Co. (KO, yielding 2.8%), Union Pacific (UNP: 2.4%), United Technologies (UTX, 2.6%), Eaton Corp. (ETN, 3.2%), Abbott Labs (ABT, 3.5%), Medtronic Inc. (MDT: 2.7%), 3M Company (MMM: 2.8%), Becton, Dickinson (BDX: 2.5%), and Walt Disney (DIS: 1.7%).”

       Vita Nelson’s Bargain stock for December is Invacare (IVC) which makes a broad line of wheelchairs, nursing beds, and related medical equipment, as well as health-care supplies for extended home care.
       “The stock posted a 52-week high of $34.52 on July 7 and a 52-week low of $19.73 on November 18, so its recent price of $19.75 gives us an INVEST% reading of 150%. Wall Street seems overly concerned about the possibility of Medicare cuts that could adversely affect future earnings. But the elderly, disabled, and their families represent a huge voting block, a fact of which politicians are well aware. So if cuts do come, they will probably be minor, as the politicians try to satisfy everyone. That said, Invacare is still streamlining its business and has improved its operating margins by implementing tighter credit policies. The stock’s book value is $21.83 per share, which should help underpin market prices, so the share prices appreciation potential over next five years is substantial, given the demographics of the aging U.S. population. Officers and directors own 7.1 million shares of the common stock and 97% of the 1.1 million Class “B” shares, which carry 10 votes each. Six funds own 38.8% of the 31.9 common shares.
       Editor’s Note: Although Invacare is identified as a bargain stock, Vita Nelson suggests that you build holdings over a period of time. DRIP enrollment is available through Temper Enrollment Service, www.directinvesting.com.

       Nathan Slaughter, editor Street Authority Market Advisor, web.streetauthority.com: “There are many reasons why gold-loving investors might want to choose Goldcorp (GG) over bullion, not the least of which is the sharp disconnect between gold prices and gold stocks.
       Gold has advanced more than 20% over the past year, while shares of many of the companies that produce and sell it have actually lost ground.
       GG has outperformed its peer group and delivered a modest 2% gain – but that still doesn't sync with what's happening on the bottom line.
       Goldcorp sold 571,000 ounces of gold last quarter at a hefty price of $1,719 per ounce. That's a nice 39% increase from the $1,239 an ounce it received this time last year.
       Even better, production costs haven't budged and remain at just $258 an ounce (for a fat profit margin of $1,461 for every ounce sold).
       As a result, the company was able to leverage the 39% increase in gold prices into an 88% surge in earnings.
       Yet while Goldcorp's underlying profits have risen twice as much as gold, its shares haven't kept pace. In fact, they're actually lower now than they were three months ago.
       That's fine – these imbalances tend to correct themselves sooner or later. In the meantime, even if gold prices don't gain another penny, Goldcorp will still churn out $700 million or so in cash flows every quarter.
       And that brings us to the second reason I prefer GG over physical gold. To paraphrase Warren Buffett, gold bars don't do much while they're sitting in the vault except stare back at you.
       But Goldcorp actually pays you to hold it, in the form of regular monthly dividends. And on Dec. 5, the company announced plans for a sizeable 32% dividend hike. This increase (the third in the past 13 months) brings the annual payout to $0.54 per share, for a yield of around 1%.
       That may not sound like much, but it sure beats having to pay for storage and insurance costs.
       Goldcorp is positioned for industry-leading growth over the next few years. Thanks to a combination of expansion and new mine development, management is forecasting annual gold production to soar 60% and reach four million ounces by 2015.
       Even if gold prices level off, that increased volume will keep cash flow and dividends moving forward.
       For now, the firm's massive reserve base equates to 7.8 ounces of gold for every 100 shares held. At current prices, that means a $5,000 investment could get you the equivalent of $13,000 worth of gold reserves.
       With the thinnest costs and the strongest growth outlook, Goldcorp is my top buy recommendation for gold investors.”

       Curtis Hesler, editor The Professional Timing Service, www.protiming.com: “Gold is still your friend. The reality is simple. Debt has to be paid, and you can only pay debt with real money – and gold is real money.
       Our economic debt problems will be ignored if possible, then swept under the rug; the can will be kicked down the road with short term solutions. More money will be printed and more debt will be created to pay off the debts we already have.
       There will come a time when things will change. I believe our government will at some point do the right thing, but only when forced by a serious crisis or by a series of progressively worse emergencies.
       Our challenge as individuals is to protect our wealth in the meantime. Indeed, I look for another recession and another financial crash next year.
       My cyclical analysis is pointing to a significant top in the stock market averages sometime next spring. At this point, this work is indicating that the beginning of the next leg in the secular bear market that began in 2000 will begin in March.
       So, what is one to do? Well, it is wisely said that you cannot direct the wind, but you can adjust your sails.
       My general caveat to avoid the stock market and other paper intangible assets remains intact. There will be rallies during this period of choppy roller coaster action, but the popular averages will assume higher risk as we approach next March.
       As for gold, it has broken under support of $1,700, but I am not disturbed. There seems to be a lot of gold bears out there, which is good news for the bulls. Markets do not end in a mood of skepticism, and gold has much further to go.
       I look for gold to break over the all-important overhead trend line – probably at the $2,000 level – during the next rally phase. Once over $2,000, the up trend will begin to accelerate.
       The transition from hard assets back to financial/paper assets will be a gradual affair, not sudden. There will be widespread exuberance in the gold market by then. How high will the price of gold reach? I look for something in the neighborhood of $5,000.
       Among our recommendations, Central Fund of Canada (NYSE Amex: CEF) is a closed-end fund holding silver and gold bullion. Buy under $22.
       Central Gold Trust (NYSE Amex: GTU) is a sister fund that holds only gold. It is accumulation time at $65 or less.”

       Brien Lundin, editor Gold Newsletter, www.goldnewsletter.com: “I have a new recommendation among small cap gold mining exploration firms; in my view, Vancouver-listed Cayden Resources (TSX.V: CYD) is a solid buy.
       Cayden is run by the same folks behind Keegan Resources (KGN). Between Keegan’s multi-million-ounce Esaae gold deposit and the millions of dollars it has raised in support of that project, the management team knows how to make a market.
       In addition to its management, Cayden it boasts an enviable project portfolio: its flagship Morelos Sur gold project in Mexico; its Quartz Mountain silver and gold project in Nevada; and its Wildcat copper and gold project in British Columbia.
       The company plans to drill 30,000 meters on these projects in the next six months, with Morelos Sur receiving the lion’s share of the drilling. The company has a well-stocked treasury to carry out an aggressive program.
       Cayden is set up in the right neighborhood, to be sure. Its Morelos Sur property directly adjoins the boundary for Goldcorp’s Filos and El Bermejal gold mines.
       Should the company find a major deposit, it should have a ready-made buyer in Goldcorp which Goldcorp has already done the hard work of building a processing plant in the area.
       Overall, Cayden has a great property position in three marquee mining districts and a management team that knows how to generate results for shareholders.
       As disclosure, I participated in an early financing for Cayden. Now, with the share price down, I would consider this a first-class exploration company at a bargain price.”

       Mark Salzinger, editor The Investor’s ETF Report, www.noloadfundinvestor.com: “Major copper producers, both individual companies and countries, have seen significant declines in share prices and single-country stock indexes.
       However, we think such declines are creating opportunities for long-term investors. Here, we examine the outlook for copper and various ways to gain exposure to it, including copper futures ETFs and single-country ETFs for copper-producing nations.
       After reaching nearly $4.60 per pound in the second quarter of 2011, copper prices fell off a cliff, dropping nearly 10% in August and more than 25% in September. Since then, prices have been volatile, recently rebounding to about $3.50.
       Despite the precipitous decline, recent prices are still not unfavorable for copper producers, especially compared to the misery of 2008, when prices touched $1.38 per pound.
       Backstopping the copper price are two factors impacting both demand and supply. Demand is expected to increase as the global economy continues to grind along and the Japanese continue to rebuild after the tsunami and earthquake of March 2011.
       Producers are likely to expand production to profit from higher prices against their low costs, but such new production isn’t likely to come online until the end of 2012 at the earliest.
       One way to gain direct exposure to copper prices is iPath DJ-UBS Copper Total Return (JJC), an ETN that reflects returns on copper futures contracts.
       It invests in a single futures contract that is rolled over monthly, exposing investors to roll yield (the gain or loss from buying a respectively lower or higher priced subsequent contract).
       However, JJC has tracked the performance of copper spot prices (that is, market prices) fairly well over longer periods.
       US Commodity’s new United States Copper (CPER) is an ETF that also invests in copper futures, but it is allowed to invest in a combination of highly liquid futures contracts, a strategy that is expected to make roll yield as favorable as possible to investors.
       If CPER is able to do that, returns over time could be superior to and less volatile than the actual price movements of copper.
       However, for now we continue to prefer JJC – even though it is an ETN and therefore exposes investors to the (minimal) credit risk of its issuer, Barclays – for exposure to copper prices until CPER proves its mettle.
       Single-country ETFs focused on the top two copper producing nations – Chile and peru – are also attractive now.
       Chile produces more than one third of the world’s copper and has more than 35% of global copper reserves. As such, iShares MSCI Chile (ECH) is an indirect play on copper prices and production.
       ECH benefits as well from an increasingly vibrant economy, buttressed by the Chilean government’s rational fiscal policy.
       iShares MSCI Peru (EPU) has more than 55% of its portfolio in materials companies, most of which mine copper among other metals. These companies do most of their production in Peru (the #2 producer of copper globally).”

       Brendan Coffey, editor Cabot Global Energy Investor, www.cabot.net: “By the middle of this decade, oil drawn from the seabed more than 2,000 feet beneath the ocean’s surface will double in volume compared to 2010 levels.
       Hornbeck Offshore Services (HOS) provides technologically sophisticated offshore supply vessels (OSVs) and transport vessels for the oil and gas industry. It has the youngest ﬂeet of OSVs in the industry, and its ships are designed from scratch.
       The company wasn’t involved in the notorious BP Gulf of Mexico rig catastrophe other than showing skill in its operations as part of the clean-up team.
       But he moratorium on deepwater drilling that was put in place after the Deepwater Horizon’s failure forced Hornbeck to rethink its approach.
       Hornbeck management broadened its horizons to promising deepwater regions such as Brazil and territorial waters of Mexico in the Gulf and off Trinidad.
       And now that the moratorium has been lifted in the Gulf, Hornbeck is primed to beneﬁt from continued strength in that region as well.
       The company has amassed a ﬂeet that today stands at 51 OSVs and nine double-hulled barges and another nine ocean-worthy barges. At the moment, Hornbeck has another 16 OSVs under construction, so management clearly sees big demand ahead.
       Hornbeck also has four multipurpose service vessels (MPSVs), which are movable platforms that can lift and haul rigs and provide heavy deepwater support services.
       Looking at revenue projections compiled by management in early November, the diversiﬁcation strategy is taking shape.
       Prior to 2010, no Hornbeck vessels were situated in Brazil; 14 are there now, 12 of which are under long-term commitment to Petrobras and two others working spot business for other companies.
       We like Hornbeck’s competitive advantage in newer OSVs, which tend to be larger than older OSVs and have a higher safety quotient, top of mind in the industry after the Deepwater Horizon spill.
       Even with the recent secondary offering and the third quarter loss, HOS is trading near three-year highs and seeing good institutional support after breaking out of a short-term bearish channel in late November.
       The nadir of that channel completed a 50% retracement of the prior trough-peak trading, which is a sign of an orderly shakeout that bodes well for long-term price action.
       Some resistance will manifest itself at 36, with potentially tougher layers of selling probably due in the high 40s. Support is at 32 and 29. We recommend buying in the 30 to 34 range.”

        Vivian Lewis, editor Global Investing, www.global-investing.com: “NYSE-listed home-builder Homex Develpment (HXM), has long focused on building affordable housing for low-income Mexicans getting government subsidies. And if the US housing industry picks up, the impact will be felt across the border, as HXM is developing tourist sites in Los Cabos, Cancun, and Loreto.
       But the reason for buying HXM is not a only US housing revival. It is also that revenues will be boosted by its new “infrastructure” operations.
       The company has signed two long-term contracts with the Mexican Secretariat for Public Security for building and operating two penitentiaries.
       Next year, HXM will start collecting guaranteed monthly payments for construction, to be followed in 2013 by 20-years of monthly payments from the federales in Mexico City for running the jails.
       According to Homex, revenues in 2012 will rise 37-39% from this year – thanks to prison payments. And even without these payments, sales in home construction will still rise a still healthy 10-12%.
       Further, Homex is now also building in Sao Paulo and southern Brazil,where it is also eligible for government loans. And then there will be expansion into other areas of Brazil, which could pay off as well. HXM is buying land to spread out from its 2-city base there.
       The company is a heavy user of debt to finance building new developments. HSBC (which underwrote a HXM Yankee bond issue) thinks there may be a “potential renegotiation of covenants” on this loan that “could be a major catalyst for the stock.”
       The UK bank estimates that HXM is trading at below 4X next year's earnings (including the jails). Longer-term it expects a 5-yr EPS growth level of over 16%/yr, in pesos, and rates HMX “an overweight conviction” stock.

       John Reese, editor Validea, www.validea.com, www.bullmarket.com: “The most successful gurus I follow share one striking similarity: they are contrarians. When the rest of Wall Street is zigging, they are zagging; when Wall Street zags, they zig.
       One in particular is known for being, well, the most contrarian: David Dreman. Throughout his long career, Dreman has sifted through the market’s dregs in order to find hidden gems.
       His Kemper-Dreman High Return Fund was one of the best-performing mutual funds ever, ranking number one out of 255 funds in its peer groups from 1988 to 1998, according to Lipper Analytical Services.
       Throughout his career, Dreman has keyed in on down-and-out diamonds in the rough, finding winners in beaten-up stocks.
       Dreman, perhaps more than any other guru I follow, is a student of investor psychology. And at the core of his research is the belief that investors tend to overvalue the “best” stocks – that everyone seems to be buying – and undervalue the “worst” stocks – those that people are avoiding like the plague.
       In addition, he also believed that the market was driven largely by how investors reacted to “surprises”, frequent events that include earnings reports that exceed or fall short of expectations, government actions, or news about new products.
       And, he believed that analysts were more often than not wrong about their earnings forecasts, which leads to a lot of these surprises.
       By taking a “contrarian” approach – i.e. targeting out-of-favor stocks and avoiding in-favor stocks – Dreman found you could make a killing.
       Specifically, Dreman compared a stock’s price to four fundamentals: earnings, cash flow, book value, and dividend yield.
       If a stock’s price/earnings, price/cash flow, price/book value, or price/dividend ratio was in the bottom 20% of the market, it was a sign that investors weren’t paying it much attention.
       And to Dreman, that was a sign that these stocks could end up becoming winners. (In my Dreman-based model, a firm is required to be in the bottom 20% of the market in at least two of those four categories to earn “contrarian” status.)
       But Dreman also realized that just because a stock was overlooked, it wasn’t necessarily a good buy. After all, investors sometimes are right to avoid certain poorly performing companies.
       What Dreman wanted to find were good companies that were being ignored, often because of apathy or overblown fears about the stock or its industry.
       To find those good firms, he used a variety of fundamental tests. Among them were return on equity (he wanted a stock’s ROE to be in the top third of the 1,500 largest stocks); the current ratio (which he wanted to be greater than the stock’s industry average, or greater than 2); pre-tax profit margins (which should be at least 8%), and the debt/equity ratio (which should be below the industry average, or below 20%).
       By using those and other fundamental tests in conjunction with his contrarian indicator tests (the low P/E, P/CF, P/B, and P/D criteria), he was able to have great success finding strong but unloved firms that had the potential to take off once investors caught on to their true strength.
       Because Dreman took advantage of the overreactions of others, he found that one of the best times to invest was during a crisis. This type of contrarian approach isn’t for the faint-of-heart. You never know exactly when fear will subside and investors will wake up to a bargain they’ve been overlooking.
       And that means the stocks this model targets may very well keep falling in the short term after you buy them, which, for my Dreman-based portfolio, is what happened during the recent financial crisis and bear market.
       The portfolio, which had trounced the S&P from its inception through 2006, fell on tough times as fears about the economy grew, lagging the S&P by about 15 percentage points in both 2007 and 2008.
       But, as fears abated and the crisis passed, investors began to recognize the strong stocks they’d been shunning. And the Dreman portfolio reaped the benefits, returning more than 37% in 2009 (vs. 23.5% for the S&P) and 23.1% in 2010 (vs. 12.8% for the S&P).
       It has struggled in 2011, but remains far ahead of the broader market over the long haul. Since its July 2003 inception, the 10-stock Dreman-based portfolio has returned 67.7%, or 6.3% annualized, vs. 26.0%, or just 2.8%, for the S&P (through Dec. 7).
       As you might imagine, the portfolio will tread into areas of the market others ignore because of its contrarian bent. Right now, its holdings include some very unloved firms, with a major tilt toward international stocks.
       Here’s the full list of its current holdings: AstraZeneca PLC (AZN), BP PLC (BP), Petroleo Brasileiro SA (PBR), Southern Copper Corporation (SCCO), Assured Guaranty Ltd. (AGO), Total S.A. (TOT), Telecom Argentina S.A. (TEO), Eni S.p.A. (E), Triangle Capital Corporation (TCAP), and Banco Macro SA (BMA).”

       Geoffrey Seiler, editor BullMarket.com: “Booming online sales for retailers helped drive a big increase in home deliveries and an associated jump in net income for international package shipping giant FedEx (FDX).
       The stock – a buy on our recommended list – said that its earnings per share grew by 35% on a normalized basis for the fiscal 2012 second quarter, while revenue increased 10% from last year.
       On an as-reported basis, FedEx earned $1.57 per share, which was up nearly 76%. Revenue for the quarter grew to $10.59 billion, which was in line with the consensus. Analysts were expecting the company to report $1.53 per share in profit.
       Earlier this month, FedEx Ground and FedEx Home Delivery announced that shipping rates would increase by a net average of 4.9% effective January 2nd, 2012.
       The full average rate increase of 5.9% will be partially offset by adjusting the fuel price threshold at which the fuel surcharge begins, reducing the fuel surcharge by one percentage point. FedEx SmartPost rates will also increase.
       The company also said that it repurchased 2.8 million shares of stock in September at an average price of $70. It currently has 2.9 million shares remaining for repurchase out of the total authorized.
       The company guided for EPS in the current quarter to range from $1.25 to $1.45 per share and it maintained its full-year outlook that calls for profit per share to range from $6.25 to $6.75.
       While far from a great quarter, FedEx delivered solid results with a modest earnings beat and operating results that were largely in line or slightly better than the Wall Street consensus.
       Low expectations and unchanged guidance, meanwhile, were enough to send its shares higher. Online sales have been strong and FedEx has been a beneficiary of all those shipping promotions offered by retailers.
       The company also did a good job of adjusting its capacity to deal with inventory de-stocking in Asia, which was one of our primary concerns heading into earnings given that it was an issue last quarter that helped lead the company to lower its full-year forecast.
       The fact FedEx can maintain pricing and grow its yield at the same time its adjusting to reduced Asian volume is a testament to how well run this company is.
       If the company’s view of the global economy is accurate, FedEx’s operating leverage should enable it to post solid results for the rest of its fiscal year.
       We continue to like the FedEx story for investors with a long view, and if the global economy can get out of the doldrums, then the stock can really take off. We rate the stock a “Buy” with a target of $90.”

        J. Royden Ward, editor Cabot Benjamin Graham Value Letter, www.cabot.net: “Twenty-seven years ago, Standard & Poor’s created the PEG ratio to measure the degree to which a growth stock is undervalued.
       We use the ratio to ﬁnd growth stocks selling at reasonable prices. The PEG ratio is calculated by dividing the price to earnings (P/E) ratio by the earnings growth rate.
       The growth rate (the “G” in the PEG ratio) is our estimated rate of EPS growth for the next ﬁve years. A PEG ratio of less than 1.00 indicates that a stock is undervalued. The lowest PEG ratios are best.
       To ﬁnd undervalued stocks, we calculated the PEG ratios for the 1,000 companies contained in our Benjamin Graham database.
       We selected six low-risk companies with PEG ratios below 1.00 and positive earnings forecasts. We included only companies which will likely exceed analysts’ sales and earnings forecasts.
       Baker Hughes (BHI) is one of the largest oilﬁeld service companies in the world. Its $6.9 billion acquisition of BJ Services in April 2010 is providing exciting new opportunities in shale drilling.
       Baker is spending heavily on new technology to stay ahead of the competition. Its technology advantage, its new entry into the oil shale business, and cost savings from BJ will help sales to increase 13% and EPS to surge 34% in 2012. BHI is low risk
       CSX Corp. (CSX), which operates the largest rail network in the eastern U.S. will beneﬁt from the slowly recovering economy in the U.S.
       The recession forced CSX to focus on operating efﬁciencies, which should lead to higher proﬁtability as shipments rise in 2012.
We forecast revenue growth of 10% and EPS gains of 17% in 2012. The 2.2% dividend yield is attractive, and the 0.66 PEG ratio is unusually low. CSX is low risk.
       FedEx (FDX) provides worldwide on-time air express delivery; holiday shipments are likely to increase a hefty 12%, boosted by customers’ switching to online shopping.
       Most importantly, the U.S. Postal Service – FedEx’s competitor – will cut costs and services beginning in 2012 to balance its budget.
       FedEx will spend $2 billion on new aircraft to ﬂy to additional destinations. The expanded international operations will drive revenues and earnings growth in 2012 and beyond.
       Revenues will likely increase by 20% and EPS by 13% during the next 12 months. The PEG ratio of 0.86 is attractive. FDX is low risk.
       Johnson Controls (JCI) supplies energy-efﬁcient management systems for commercial buildings, and makes batteries, seating assemblies and interior systems for cars.
       The demand for automotive seating has grown rapidly in recent years, as production, previously manufactured in-house by automakers, is outsourced to Johnson and others.
       The building efﬁciency segment could get a boost from the government if a program is implemented to help commercial building owners retroﬁt buildings to gain better energy efﬁciency.
       Sales will increase 8% and EPS will likely jump 25% during the next 12-month period. Founded in 1885, Johnson Controls is a top company with a very reasonable PEG ratio of 0.61. JCI pays a dividend yielding 2.2% and is low risk.
       Priceline.com (PCLN) is our favorite low PEG ratio stock. It operates in 99 countries and derives 69% of revenues from international bookings.
       Priceline’s “Name Your Own Price” service, which allows customers to negotiate prices for travel services, has become very popular.
       Shares are volatile, but the company’s balance sheet is strong with no debt and lots of cash. Sales and earnings have soared during the past ﬁve years, and Priceline is well-positioned to produce rapid growth in future years.
       The forward 12-month price to earnings ratio of 17.6 is somewhat high, but not for a company growing at a 25% clip as demonstrated by its PEG ratio of 0.69. Priceline is low risk.
       Universal Health ‘B’ (UHS) owns and operates acute care and surgical hospitals, and behavioral health, ambulatory surgery and radiation oncology centers in 37 states.
       The November 2010 acquisition of Psychiatric Solutions has provided a big boost to sales and earnings.
       Universal is expanding its outpatient services to help reduce healthcare costs.
       We expect sales and earnings to increase 11% and 16% respectively during the next 12 months. The PEG ratio of 0.75 is very reasonable. UHS is low risk.
       Overall, we believe these six recommendations will produce exceptional returns during the next six to 12 months.”

       Glenn Rogers, contributing editor Gordon Pape’s Internet Wealth Builder, www.buildingwealth.ca: “Walt Disney Corp. (DIS) recently announced a big 50% hike in its dividend.
       While the yield is still only 1.6%, the move shows the confidence of the board of directors in the company’s future and that has added to my good feelings about this business.
       The long-term payout for Disney is only about 20% of the 2011 free cash flow. So the company could continue to raise dividends over the next few years without any difficulty.
       But whether they do or not, this is an interesting well-run business that deserves a place in your portfolio.
       The company is basically broken down into five business units. The first is Media Networks which is comprised of Disney and ABC TV and which also includes the valuable ESPN franchises.
       With 2012 being an election year, its local broadcaster franchises will do very well from campaign advertising. It has millions of cable subscribers to the Disney Channel itself.
       The second unit is Parks and Resorts, which includes the famous Disneyland and Disney World as well as Paris and Hong Kong. This year the company broke ground on a new resort in Shanghai, the first in mainland China.
       The company also has two large cruise ships and a total of 42 hotels comprised of more than 36,000 hotel rooms.
       Third business unit is Studio Entertainment. This includes their movie production business, Walt Disney Studios, and Pixar Animation (Steve Jobs’ former company).
       Late last year, Studio Entertainment acquired Marvel Entertainment with its long list of action heroes like Spiderman and the Hulk.
       The fourth business segment is Consumer Products. It produces the numerous toys, books, fashion accessories, Disney games, and other related products that emerge from their hit entertainment franchises.
       Finally, there is Disney Interactive Media which is comprised of a vast array of web and mobile platforms which distributes the company’s content worldwide.
       They have the No. 1 Family site along with a number of family oriented gaming sites and video offerings.
       Financially, the company is sound. In their recent fourth quarter and full year 2011 earnings statement they reported EPS growth of 24% to a record $2.52 compared to $2.03 in the prior year. Net income for the year increased 21% to a record $4.8 billion.
       This is particularly impressive in light of the tough economy we have all been living through. The results will only improve as the economy strengthens.
       The company is led by Robert Iger who has brought quiet competence to the executive suite after the tumultuous years under Michael Eisner.
       The stock is up 54% under his tenure compared to a 2% rise in the broad market. He’s only 60 so hopefully he’ll be around for at least five more years.
       Despite the post-dividend bump, the stock is selling at 17.5% below its 52-week high of $44.34 and I think we could see a 30% move up over the next year. Buy with a target of $50.”

       Leo Fasciocco, editor Ticker Tape Digest, www.tickertapedigest.com: “With annual revenues of $1.6 billion, Domino’s Pizza (DPZ) operates 9,351 company-owned and franchise stores, located in all 50 states; technically, the stock recently broke out to the upside.
       DPZ’s stock has reemerged from a seven-week base, bucking the stock market’s big drop. So, the stock is showing good relative strength.
       The breakout is impressive in that the spread (range from high to low) has expanded. That shows ease of price movement which is bullish. The base is above a rising 50-day moving average line which is bullish too.
       DPZ’s 12-month performance chart shows the stock appreciating 120% versus a 4% gain for the S&P 500 index. DPZ has made some dough for shareholders.
       The stock came public in 2004 and traded around 14. The stock rose to an all-time high of 35.67 in early 2007. In the bear market, the stock plunged to $2.61. Shareholders got burned.
       However, the stock has since staged a sensational recovery and at 34.25 is in position to make a new all-time high.
       This year, analysts forecast a 22% increase in DPZ’s earnings to $1.65 a share from $1.35 a year ago. The stock sells with a price-earnings ratio of 20. We see that as reasonable.
       Looking out to 2012, earnings are expected to rise 15% to $1.89 a share from the anticipated $1.66 this year.
VStrategy Opinion: We are targeting DPZ for a move to 41 off this breakout. A protective stop can be placed near 32.”

       Nicholas Vardy, editor Bull Market Alert, www.nicholasvardy.com: “Our latest featured recommendation is all-American stalwart and success story Ford Motor Co. (F), a bet on the American consumer and the burgeoning U.S. economic recovery.
       Even as Europe struggles with its sovereign debt crisis, the news from the U.S. economy has been steadily improving.
       The Institute for Supply Management reported that the U.S. manufacturing index rose to 52.7 in November, and that new orders and production both rose to seven-month highs.
       The unemployment rate recently dropped down to 8.6%. Consumer confidence has ticked up and U.S consumers went on an auto spending spree in November – a normally weak month for auto sales.
       With the average age of vehicles on U.S. roads hitting almost 11 years, pent-up demand resulted in an impressive 10.6% rise in seasonally adjusted annual sales (SAAS) to 13.6 million units as of last month.
       That’s up from a SAAS total of 12.28 million in the same month of 2010 and the highest SAAS rate since August 2009, when the U.S. government launched the “Cash for Clunkers” program. November was also the third-straight month when annualized vehicle sales have topped the 13-million mark.
       Ford itself posted double-digit gains of 13.3% in November to 166,865 vehicles, driven by strong sales of trucks and SUVs. Its 16.6% share of U.S. vehicle sales in November was its highest level in five years.
       Ford’s retail sales actually soared by an even more impressive 20%. Retail sales, as opposed to sales to fleets like rental-car companies and government agencies, rank as the industry’s most profitable segment.
       Ford itself expects an industry-wide sales rate of around 13.5 million units for all of next year.
       Ford also announced that it would restore a regular dividend. Ford halted its dividend payment back in 2006 when markets were in turmoil. Restoration of a dividend payment is a good sign of financial strength.
       Much of Ford’s success has been thanks to its CEO Alan Mulally, who has prioritized profits over market share.
       Coming to Ford from Boeing just five years ago in September 2006, Mulally eliminated Ford’s dividend and sold Ford’s non-core brands. He also shut down Mercury, focusing Ford on the mass market and Lincoln on the high-end car buyers.
       He also raised $20 billion as a cushion against bad times that has served Ford well, while delivering nine straight quarters of pre-tax profits.
       Ford was a darling of investors after the market bottomed in March 2009 but has actually underperformed the broader market since hitting a high of $18.71 in January of this year.
       But with a price-to-earnings ratio (P/E) of 6.56, and a turnaround in the U.S. car market underway, Ford is once again a bargain. So, bet on a U.S. economic turnaround and buy Ford Motor Co.”

       Stephen Leeb, editor Income Performance Letter, www.leebincomeperformance.com: “While they don’t always deliver eye-popping growth, stocks that offer a steady stream of growing income are must-haves for the conservative investor.
       With that in mind, we are now recommending Bristol-Myers Squibb (BMY), the $48 billion giant, as a dependable income play.
       Because patent protection lasts 20 years from the date of application, pharmaceutical companies able to successfully develop and market major drugs enjoy lucrative and unchallenged sales for a number of years.
       But new products must continually be developed to offset the sales declines that accompany patent loss.
       They are key to keeping a company’s cash-generating engines churning relatively uninterrupted. Bristol-Myers Squibb fits this bill nicely.
       We sold Bristol-Myers in early 2010 due to uncertainty over whether the company could compensate for the May 2012 expiration of its U.S. patent on the hugely successful Plavix (the #2 selling drug in the country).
       In addition, its fifth-best selling drug Avapro/Avalide, with $1.2 billion in 2010 net sales will similarly lose U.S. patent protection in March 2012. However, in recent months, Bristol-Myers has shown amazing progress in re-energizing its pipeline.
       One of its most promising new products is Yervoy, a treatment for late stage melanoma that has exhibited very good efficacy during trials.
       Yervoy stimulates the immune system to recognize and attack cancer cells, and is being further tested for use against other cancers such as lung and prostate cancer.
       If the drug’s use can be expanded to treat more common cancers, Yervoy has the potential to be a multi-billion product in the league of Plavix.
       The drug was launched in the U.S. in April, and is delivering on its promise; second-quarter sales were $95 million, fantastic for a newly-launched drug. Approval to market in the E.U. was granted in July.
       During the second quarter, Bristol-Myers booked a 14% year-on-year improvement in net sales, grew EPS by 4% and revised its 2011 earnings guidance upwards to $2.20-$2.30 per share despite headwinds from U.S. health care reform and E.U. austerity measures.
       Sales for new products were strong across the board and the company received a string of new approvals. Plus, encouraging results from a number of late-stage clinical studies make the company’s pipeline arguably one of the best in the industry.
       Reflecting the loss of Plavix exclusivity, the company expects 2013 adjusted EPS to be around $1.95, after which new products are expected to restart earnings growth.
       The company generates more than $1 billion in free cash flow annually and had $5 billion in cash at the end of June.
VThe stock is trading at just 13 times projected 2013 EPS, a reasonable valuation given BMY’s consistent track record, strong pipeline and generous 4.7 percent yield.”

       Yiannis Mostrous, editor Global Investment Strategist, www.globalinvestmentstrategist.com: “Energy remains the linchpin of the Russian economy; the country is second only to Saudi Arabia in terms of total oil production. And Russian gas monopoly Gazprom (OGZPY) is our favorite Russian stock.
       Since the late 1990s, Russia’s production growth has been impressive. Two factors have conspired to bring about that shift.
       First, oil prices have risen sharply, increasing incentives to produce and generating capital to be reinvested in growing production.
       Second, Russia has modernized its infrastructure, adopting more modern technologies imported from the West to squeeze more production out of maturing fields.
       Gazprom is Russia’s largest company by a wide margin and controls almost 85 percent of the country’s total natural gas production. The company alone accounts for nearly 20 percent of global gas production.
       Europe remains the company’s main market; Gazprom supplies about 25 percent of Europe’s natural gas. The recently completed Nord Stream pipeline that connects Russia to Germany is the clearest sign of Russia’s importance to meeting Europe’s energy needs.
       The USD10 billion 760-mile pipeline runs under the Baltic Sea and is expected to carry about 970 billion cubic feet of natural gas per year. A second leg of the pipeline through the Baltic Sea is expected to be completed next year.
       Gazprom’s stock trades at a little more than 3 times estimated 2011 earnings, which makes it one of the cheapest energy companies in the world.
       It’s true that Gazprom is not a high-beta stock and the company’s deep ties with the Russian government makes Gazprom a complicated investment.
       Nevertheless, the current valuation represents a good opportunity for long-term investors. Gazprom remains a buy up to USD20.”

       Paul McWilliams, editor Next Inning, www.nextinning.com: “Intel (INTC) lowered its fourth quarter guidance from its original range of $14.2 billion to $15.2 billion to a range of $13.4 to $14.0. At the midpoint, this represents a 6.8% lower forecast.
       However, it stated very clearly this lower forecast is solely attributable to the shortage of hard disk drives (HDD), and is not at all related to the demand for its products. With that, let’s address some of the questions I’ve received from investors.
       Q) Why did it take INTC so long to lower guidance?
       A) This is a “rolling” event. When the flooding hit the HDD plants and the piece parts supply channel in Thailand, participants in the HDD sector had to quantify the damage, determine its impact on capacity, and estimate the recovery cycle.
       This had to be done at not only an aggregate level, but also at a product by product level. This simply took time and, to some degree, has been a dynamic process as the various companies worked through the situation.
       The initial reactions from HDD manufacturers provided us with a public picture that was couched towards the worst case scenario. (Given the litigious atmosphere in which we all operate, the only logical course was to go with the worst case up front.)
       However, as HDD manufacturers went through the detailed quantification process we learned the situation was not quite as bad as it was originally communicated. It’s still bad – just not as bad.
       Once HDD manufacturers quantified capacity, and the forward supply channel quantified its inventory, PC manufactures began to get a clear picture of HDD allocation.
       According to INTC this picture began to come into focus in late November to early December and, with that, PC manufacturers have adjusted scheduling with INTC.
       Q) Will the impact from HDD shortages weigh on Q1 2012 shipments more than they are Q4 shipments?
       A) The short answer here is most likely yes. During Q4 PC manufacturers depleted supply channel inventory.
       With the inventory buffer now gone, the lower manufacturing capacity that was available during Q4 will flow into the channel.
       In other words, while PC manufacturing capability was above HDD capacity during Q4, it will most likely be aligned with HDD capacity in Q1. What we don’t know for sure is exactly what that HDD capacity will be.
       Q) Do you see any demand factors weighing on the PC industry?
       A) According to INTC, the answer here is no. INTC sees this as strictly a supply issue, which implies that while PC shipments are stunted by HDD shortages there will be building pent up demand.
       I believe this is a logical way to look at the situation, and if it proves to be the case, once HDD capacity is restored we’ll see PC shipments move from below trend to above trend.
       In other words, pent-up demand will be released once supply problems are solved. According to INTC this should begin to happen late in Q2 2012.
       Q) Do you see this slowing the introduction of new INTC chips?
       A) According to INTC, no. I don’t see why INTC would slow the introduction of new chips for either the PC or the server markets.
       This is a major refresh for INTC and if HDD shortages linger it will allow PC and server manufactures shift the mix to the new and more profitable models.
       Q) Do you think INTC is a buy here?
       A) I don’t think there are any one size fits all answers for investors – all of us have our own unique personal goals, strategies, and risk boundaries. That aside, I think INTC merits consideration as a potential strategic investment.
       While I think INTC will be negatively impacted during most of the first half of 2012, I believe the company is executing at the top of its game and once Wall Street can more fully define the point in time PC shipments can keep pace with demand, we’ll see the price of INTC rebound.
       That said, we continue to face mostly near-term risks that could drive prices lower before they rebound.”

       John Buckingham, editor The Prudent Speculator, www.theprudentspeculator.com: “We focus on expansive diversification, which minimizes the risk of individual stock ownership, while maximizing the likelihood of finding the truly big winners among the undervalued masses.
       With that in mind, here’s two high-yielding buys from among our latest recommendations: Anworth (ANH) and United Online (UNTD).
       Anworth is a mortgage real estate investment trust (REIT) focused primarily on U.S. mortgage-backed securities.
       These holdings are issued or guaranteed by an agency of the U.S. (Ginnie Mae) or a U.S. government sponsored entity (Fannie Mae or Freddie Mac).
       We believe the current operating environment remains favorable for ANH due to a relatively steep yield curve, available financing, low interest rates, slower than expected prepayment rates and inexpensive hedging options.
       ANH shares trade about 10% below book value and offer a whopping 14.5% dividend yield.
       As for United Online, this parent company is relatively unknown; however, its brands are pervasive in the online world: FTD Flowers, Juno, NetZero and Memory Lane (formerly Classmates.com).
       Our investment thesis for UNTD has always focused on the company’s incredible dividend payout, today standing at 7.6%.
       Importantly, the dividend continues to be supported by sizeable cash flows. The company has also made significant progress in paying down debt over the past year.
       While UNTD is still admittedly finding its footing in some of its newer endeavors, commitment to its juicy dividend and the extremely inexpensive valuation metrics make it an appealing technology value play, especially given the stock’s recent underperformance.”

       Steven Silver, S&P Capital IQ Equity Research, S&P The Outlook, www.standardandpoors.com: “S&P Capital IQ has a positive fundamental outlook for biotechnology for the next 12 months, reflecting our expectation for new and novel therapies to gain FDA approval and establish a presence in the marketplace.
       Through September 2011, the FDA approved a total of 24 new drugs, more than the 21 for full-year 2010.
       We see a favorable environment for the acquisition of biotech companies, as pharmaceutical firms seek to offset drug patent expirations and large biotech companies seek to boost their pipelines to cope with their own maturing legacy products.
       In addition, large-cap biotech valuations have been compressing in recent years, as the pace of revenue growth and pipeline advancement moderate.
       Today’s large-cap, profitable biotech companies generate significant cash flows, supporting aggressive share repurchases, in addition to robust R&D investments.
       The U.S. large cap biotech group recently traded at an aver-age P/E of approximately 13.5- times our 2012 earnings per share estimate.
       That is significantly lower than the industry’s historical levels and evidence, in our view, of the maturation of the industry.
       Investors seeking exposure to the industry may want to consider the following two biotech-specific exchange-traded funds: SPDR S&P Biotech ETF (XBI), and iShares NASDAQ Biotechnology Index Fund (IBB).”

       Jack Adamo, editor Insiders Plus, www.jackadamo.com: “I fully expect gold to fall between 12 and 20 percent from here, possibly more. Gold mining stocks will probably get hit worse. Nevertheless, I am still adding Agnico-Eagle Mines (AEM) to our portfolio.
       You probably think I’m crazy recommending a new gold position given my outlook, and you’ll think I’m even crazier when I confess I don’t like this company very much. But if the price is right, almost anything can be a good investment.
       The last 10 years has taught me that getting back into gold at the right time is difficult, and staying in has been the right choice in the long run.
       We owned Agnico-Eagle Mines Ltd. before, until its options issuance got out of hand. And although the company gets high marks on some matters of investor stewardship, I’m not a fan of the company’s tendency to gloss over some of its problems.
       That said, the stock is just too cheap now. Probably due to year-end tax selling after getting creamed this year, it is still falling and may continue to do so for the next couple of weeks, but I want to dip a toe in now.
       It is down nearly 60% in the last year. If it continues to fall – even another 20% or more – I’m fine with that. Two years from now it should all be money well spent. We will buy more on any significant pullbacks.
       The short story is that the company is having trouble at two of its big mines. That will slow production and lift average costs, reining in expected EPS growth for the coming year.
       However, the company should still bring in $3 for 2012, assuming gold stays above $1250, which is a pretty safe bet.
       The stock is selling at about 12-times 2012 expected earnings – by far the cheapest of the group.
       But even if AE misses estimates, the following three years should see gold prices soar as the Fed’s money printing works overtime to pay off our country’s approaching grand parade of unfunded liabilities.
       Meanwhile, several other of the company’s mining projects should come on line, lifting earnings 15-20% for a few years running.
       I should also mention that all of Agnico-Eagle’s mines are in countries that are politically very stable. That may be very important in coming years as South and Central American countries swing back to the political Left. Buy Agnico-Eagle Mines Ltd. up to $40.”

       Ian Wyatt, editor Top Stock Insights, www.topstockinsights.com: “Emerging markets are industrializing, increasing expenditure on energy and infrastructure projects, and creating a massive demand for industrial resources.
       One of the most vital of these industrial resources is coal-cheap, dirty, plentiful coal. While we’re all fans of renewable energy, coal still remains a major part of energy generation, and it will remain so for many years into the future.
       In fact, more than half of the energy generated in the U.S., and more than 40% of energy generated worldwide, comes from coal.
       There are a number of coal companies out there, but I want to invest in one that is determined to pay its shareholders an ever increasing dividend as its profits grow. Alliances Resource Partners LP (ARLP) is that stock.
       Alliance has an operational history that is only surpassed by its history of substantial dividend increases. In fact, in 2010, S&P ranked Alliance in the top one half of one percent of companies for total return to shareholders over the last 10 years.
       Alliance has increased its dividend every year for the past 10 years, and while other companies may have a longer history of consecutive dividend increases, few have increased their dividend to the same extent of Alliance.
       Since 2001, Alliance has increased its dividend more than 200%, as it rose from $1.00 in 2001 to more than $3.00 a share in 2010. On an annualized basis, the current annual dividend is a whopping $3.63, and a yield of 5%.
       Alliance is a diversified producer and marketer of coal to major utilities and industrial users primarily in the United States. But in the globalized market economy it doesn’t really matter who the company is selling too.
       The increased international demand will increase the price of coal in all markets, allowing Alliance to make more money even if it only sold its coal domestically. It’s all just a matter of supply and demand.
       Alliance has 697 million tons of proven and probable reserves and 9 mining complexes in the Illinois Basin, Northern Appalachian and Central Appalachian coal-producing regions.
       Its 10th complex is currently under production and is expected to start long-wall production in early 2012.
       2010 was a great year for Alliance, as the company strengthened its long-term domestic coal sales position and also moved more coal into the export market.
       The efforts by Alliance helped it reach record highs in its revenues, EBITDA (earnings before interest, taxes, deductibles and amortization) and net income for the year.
       Compared to 2009, revenues were up 30.8% percent to $1.6 billion, EBITDA was up 46.7% to $499.5 million and net income rose 67.1% percent to $321 million.
       Alliance has maintained this strong growth throughout the nine months ended September 2011 when it announced record revenues and earnings once again.
       Record coal sales volumes combined with record average coal sales prices to brought revenues to $1,323 million, an increase of 15% over the same period in 2010. Likewise, quarterly operating cash increased 12% over the previous year to $1,045 million.
       Shares are at the cheapest level in some time. Analysts expect the company to generate $7.99 EPS this year and $8.25 next year. That EPS puts shares at 9 and 8 times estimates. The stock should trade around 11.5 times EPS, or about $92.
       Additionally, shares pump out a 5% annual dividend on the side. Coal stocks should rebound over the next year, and ARLP investors can collect a hefty dividend until the industry does bounce-back. Action: Buy ARLP below $77.”

       David Fried, editor The Buyback Letter, secure.buybackletter.com: “Fiserv (FISV) is an IT financial-services company with more than 16,000 clients worldwide. We have added the stock to our model buyback portfolio.
       The company helps banks, credit unions and other companies carry on their day-to-day activities, with systems such as payment tracking, check posting and account management, as well as goals like retaining customers or projects like handling fraud allegations and regulatory compliance.
       Fiserv took an early lead in online bill paying in 2007 when it acquired CheckFree Holdings, a world leader in electronic bill pay and Internet banking.
       These days, Fiserv processes more than 17 billion digital bank payments and 9 billion ATM transactions every year, which accounts for more than half of Fiserv’s sales.
       For six of the past eight years, Fiserv ranked No. 1 on the FinTech 100, an annual international listing of the top technology providers to the financial services industry.
       Considered a relatively stable growth stock because most of its revenue comes from account and transaction-based fees under multiyear contracts, Fiserv’s Q3 profit beat market expectations by 2 cents a share.
       Net income was $127 million (89 cents a share), compared with $132 million (87 cents a share) last year. Revenue grew 4%, to $1.06 billion.
       In the last 12 months, management has reduced shares outstanding by 5.2%.”

       Paul Tracy, editor High-Yield International, web.streetauthority.com: “Navios Maritime (NMM) is a shipping firm with a fleet of 18 dry-bulk vessels used to transport commodities such as coal, iron ore and grains.
       Shipping firms like Navios do not take ownership of the commodities they transport. They simply charge companies a fee, known as a day rate, to ship commodities on their vessels.
       Ships can be booked either on a spot charter basis (for a short time period at a day rate that varies based on the supply and demand) or under term charters (a fixed rate for a period of several years.
       The spot rates for dry-bulk vessels have been depressed in recent months. But the effect of spot charter rates is mainly psychological rather than real because the vast majority of Navios Maritime’s ships are booked under long-term time charter arrangements.
       In fact, 62% of Navios’ ships have a remaining contract duration of six to 10 years, and another 9% have a remaining contract duration of three to six years.
       Since rates are locked in under long-term deals, Navios’s cash flows are largely locked in over the next few years, and the company should have no trouble covering its payout.
       With a double-digit yield and little chance of a cut in distributions, the recent dip in Navios represents an excellent buying opportunity.
       The main risk facing Navios is that dry bulk shipping rates remain depressed well into 2014, when a larger number of its vessels are due to come off time-charter contracts.
       If day rates remain depressed, the company would not be able to recharter its ships at anything close to current rates and would likely be forced to cut its payout.
       Action to Take: With an 11.2% yield and locked-in cash flows, Navios Maritime is a buy for investors willing to stomach the volatility in the stock.”

       Paul McWilliams, editor Next Inning, www.nextinning.com: “While I wouldn’t yet call Alcatel-Lucent (ALU) a “value” play, my outlook for the company has improved and I think in the mid one dollar range it merits consideration as a speculative investment.
       The price of ALU has declined for several reasons. While ALU has reported earnings above the consensus of the covering analysts during the first three quarters of 2011, it has done so while reporting revenues below the consensus estimates.
       It appears that analysts are looking at the wrong line on the income statement. Going into 2011 ALU was not suffering from a revenue problem - it was suffering from an absolutely horrendous operating structure.
       By virtue of the fact ALU reported notable year-over-year profitability improvement in Q3 2011 off lower revenue is a sign the company is addressing this core problem.
       However, as I see it, we should view this as only the start of the process and not assume the problem is fixed or even that the rest of the process will be successful. The short story here is there are still a lot of ghosts in Lucent’s past haunting the company.
       Beyond its revenue shortfalls this year, ALU has suffered with a weaker than expected demand environment in Radio Access Network (RAN) markets, and substantially higher competition.
       In addition, ALU has also suffered from fiscal issues still plaguing Western Europe and the fact it operates with a highly leveraged balance sheet.
       When we add all these together and consider ALU’s still thin operating profit margin, the sharp decline we’ve seen in ALU’s price in this risk-adverse market shouldn’t be terribly surprising.
       While there are still plenty of things that could go wrong for ALU, it appears to me most of the bad news is baked into the price and, with that, I think there is room to speculate things might go better than Wall Street is modeling.
       While analysts have boosted earnings estimates for 2011, they have dropped earnings estimates for 2012. As I see it, the big wildcard in the ALU deck is whether or not we’ll see an acceleration in RAN deployments in 2012; if the value of the Euro continues to fall (like I continue to believe it will) ALU’s competitive positioning should improve.
       If this proves to be the case, and ALU executes as well as it has in 2011 (not to imply 2011 execution was stellar, but that improvements were made), I think we will see analysts’ estimates for 2012 improve, and if Europe is able to stabilize its fiscal mess, I think the price of ALU could move up considerably.
       The other alternative for ALU would be to sell off some assets and become a smaller, but more focused and more profitable company. I think Wall Street would also react favorably to that strategy.”