Top Railroad Stocks To Buy For 2013

Railroads evoke different images or memories for each of us. For some, it is the whistle in the middle of the night. For others, travel to exotic places on the Orient Express. In the United States, the business of railroads is to haul goods across our fair land. The money losing enterprise of people moving is left to the government.
In 2009, the railroad freight industry generated $49 billion in revenue, down due to the recession from $63 billion in 2008. Seven Class I railroad systems account for 90 percent of the industry’s total. In 2009, in addition to the seven Class I freight railroad systems – systems with annual operating revenue of $378.8 million or more – operating in the United States, there were 23 regional railroads and over 500 local railroads.
In 2009, the major rail-carried commodities (in terms of ton-miles) included coal (42%), intermodal traffic (trailers and containers on flatcars) (14%), farm products (predominantly grain and soybeans) (11%), and chemical products (10%).
Railroad stocks are closely tied to the overall economy. During the recession they suffered considerable drops in revenue and income. It was during this time that Warren Buffet famously bought Burlington Northern Santa Fe. As the economy gains strength, these companies will prosper.

Top Railroad Stocks To Buy For 2013: WMS Industries Inc. (WMS)

WMS Industries Inc. engages in the design, manufacture, and distribution of gaming machines, and video lottery terminals (VLTs) for customers in gaming jurisdictions worldwide. The company offers video gaming machines, mechanical reel gaming machines, and video poker gaming machines under Bluebird, Bluebird2, and Twinstar brand names. It also sells replacement parts, conversion kits, amusement-with-prize gaming machines, and used gaming machines, as well as equipment manufactured under original equipment manufacturing agreements to casinos and other licensed gaming machine operators. In addition, the company involves in licensing its gaming themes and other intellectual property to third parties; and leasing of gaming machines and VLTs to casinos and other licensed gaming machine operators. Further, it engages in gaming operations business that include providing participation games, such as wide-area progressive participation games under the brand names, such as MONOPOLY GRAND HOTEL, BIG EVENT, CLINT EASTWOOD, POWERBALL, TOP GUN, THE WIZARD OF OZ, TIME MACHINE, Reel em In Compete To Win, and JOHN WAYNE; local-area progressive participation games under the Jackpot Party Progressive, Life of Luxury, GREEN ACRES, THE DUKES OF HAZZARD, and HAPPY DAYS brands; stand-alone participation games under the MONOPOLY and PRESS YOUR LUCK brands; casino-owned daily fee games; leased for-sale games; and centrally determined systems. The company was formerly known as Williams Electronics, Inc. WMS Industries Inc. was founded in 1946 and is headquartered in Waukegan, Illinois.Advisors’ Opinion:

• By Beacon Equity At 2011-9-22WMS Industries Inc. (NYSE: WMS) is down 17.17% to $30.00 on volume of 5.92 million shares. It set a new 52-week low of $29.85 early in the session. The slot-machine manufacturer late Monday warned of lower-than-expected results for the third quarter. (NYSE:WMS), (WMS)

Top Railroad Stocks To Buy For 2013:Enbridge Inc (ENB)

Enbridge Inc. engages in the transportation and distribution of crude oil and natural gas primarily in Canada and the United States. Its Liquids Pipelines segment operates common carrier and contract crude oil, natural gas liquids (NGLs), and refined products pipelines and terminals. The company?s Gas Distribution segment distributes natural gas to residential, commercial, and industrial customers primarily in central and eastern Ontario, northern New York State, Quebec, and New Brunswick. Enbridge?s Gas Pipelines, Processing and Energy Services segment invests in natural gas pipelines, processing and green energy projects, and commodity marketing businesses, as well as performs commodity storage, transport, and supply management services. Its Sponsored Investments segment transports crude oil and other liquid hydrocarbons through common carrier and feeder pipelines, as well as transports, gathers, processes, and markets natural gas and NGLs; operates a crude oil and liquids pipeline and gathering system; and owns a 50% interest in the Canadian portion of Alliance Pipeline and partial interests in various green energy investments. The company was formerly known as IPL Energy Inc. and changed its name to Enbridge Inc. in October 1998. Enbridge Inc. was founded in 1949 and is headquartered in Calgary, Canada.Advisors’ Opinion:

• By Louis Navellier At 2011-11-17Enbridge Inc. (NYSE:ENB) is an energy transportation and distribution company separated into six segments: Liquids Pipelines, Gas Distribution, Gas Pipelines, Processing and Energy Services, Sponsored Investments and Corporate. Enbridge stock has gained 13% in 2011.

Top Railroad Stocks To Buy For 2013: Middlesex Water Company (MSEX)

Middlesex Water Company, together with its subsidiaries, owns and operates regulated water utility and wastewater systems in New Jersey, Delaware, and Pennsylvania. It engages in collecting, treating, distributing, and selling water for domestic, commercial, municipal, industrial, and fire protection purposes. The company also operates water and wastewater systems under contract on behalf of municipal and private clients, as well as provides water, water treatment, pumping services, and wastewater services. In addition, it provides a water service line, as well as various maintenance programs that cover parts, material, and labor required to repair or replace specific elements of the customer?s water service lines, and customer shut-off valve and/or sewer lateral in the event of a failure. The company provides water services to approximately 60,000 retail customers primarily in central New Jersey; 34,000 retail customers in New Castle, Kent, and Sussex Counties, Delaware; 6,000 customers in Kent and Sussex Counties; and 120 retail customers in the Township of Shohola, Pike County, Pennsylvania, as well as offers wastewater services to approximately 1,900 residential retail customers in Delaware. Middlesex Water Company was founded in 1897 and is headquartered in Iselin, New Jersey.
Advisors’ Opinion:

• By Sherry Jim At 2011-10-21Hero Honda Motors Ltd is a successful joint venture between India’s Hero Group and Japanese Honda Motors Company. This progressive company is not only the world’s single largest two wheeler company but also a model joint venture company worldwide. Hero Honda in India has managed to achieve indigenization of over 95 percent, a Honda record worldwide.
  Over the years, the Company has received its share of accolades, including the National Productivity Council’s Award (1990-91), and the Economic Times – Harvard Business School Association of India Award, overtaking 200 contenders. If an investor wants his money to be safe and at the same time grow, it is wise to buy Hero Honda shares.

Top Railroad Stocks To Buy For 2013: Hitachi Ltd. (HIT)

Hitachi, Ltd. manufactures and sells electronic and electrical products primarily in Asia, North America, and Europe. Its Information & Telecommunication Systems segment provides systems integration, outsourcing services, software, disk array subsystems, servers, mainframes, telecommunications equipment, and ATMs. The company?s Power Systems segment offers thermal, nuclear, hydroelectric, and wind power generation systems. Its Social Infrastructure & Industrial Systems segment provides industrial machinery and plants, elevators, escalators, and railway vehicles and systems. The company?s Electronic Systems & Equipment segment offers semiconductor and LCD manufacturing equipment, test and measurement equipment, medical electronics equipment, power tools, and electronic parts manufacturing systems. Its Construction Machinery segment provides hydraulic excavators, wheel loaders, and mining dump trucks. The company?s High Functional Materials & Components segment offers wires and cables, copper products, semiconductor and display-related materials, circuit boards and materials, specialty steels, magnetic materials and components, and casting components and materials. Its Automotive Systems segment provides engine management systems, electric power train systems, drive control systems, and car information systems. Hitachi?s Components & Devices segment offers HDDs, LCDs, information storage media, and batteries. Its Digital Media & Consumer Products segment provides optical disk drives, flat-panel TVs, LCD projectors, mobile phones, room air conditioners, refrigerators, washing machines, and air-conditioning equipment. The company?s Financial Services segment offers leasing services and loan guarantees. Its Others segment provides logistics and property management services. The company serves industrial companies, financial institutions, utilities, governments, and individual customers. Hitachi was founded in 1910 and is headquartered in Tokyo, Japan.

Top Railroad Stocks To Buy For 2013: China Metro-Rural Holdings Limited (CNR)

China Metro-Rural Holdings Limited, through its subsidiaries, primarily engages in the development and operation of agricultural logistics and trade centers in northeast China. It also involves in purchasing, processing, assembling, merchandising, and distributing pearls and jewelry products. The company markets its pearls and jewelry products to wholesale distributors and mass merchandisers in Europe, the United States, Hong Kong, and other parts of Asia. In addition, it develops, sells, and leases residential and commercial properties in Hong Kong and the People?s Republic of China. The company is based in Tsimshatsui, Hong Kong.Advisors’ Opinion:

• By Wyatt Research Staff At 2011-8-30The stock moved significantly higher in mid-January and traded in a fairly tight range ever since. However, that could change soon. China’s agricultural exports to Japan will grow if radiation continues to seep into the food chain.
  China exported $593 million worth of agricultural goods to Japan last year.

Top Railroad Stocks To Buy For 2013: Formula Systems (1985) Ltd. (FORTY)

Formula Systems (1985) Ltd., through its subsidiaries, operates as an information technology (IT) solutions and services company worldwide. Its Software Services segment provides software solutions and services, including the development of customer software systems; customization of software developed to provide a response to customers’ requirements; systems assimilation; offshore and domestic services primarily for software developments and quality assurance, and software testing; and integration of various components. It also supplies infrastructure solutions for computer and communication systems, as well as sells hardware products; and operates technological training and qualification centers, which provide professional courses for hi-tech personnel, training and assimilation of computer systems, applications courses, professional training, soft-skills training, and training for capital market operations. The company?s Proprietary Software Products segment develops, markets, sells, and supports application platform, and business and process integration solutions, including uniPaas Application Platform, an application platform that supports various deployment models; and iBOLT Business and Process Integration Suite that provides business integration and process management solutions with a focus on enterprise applications. It also provides consulting and software development project management, maintenance, technical support, and training services; and telecom infrastructure technologies, cargo handling, and installation service. In addition, this segment offers software solutions for the insurance industry comprising Sapiens INSIGH, a suite of business software solutions that helps insurance carriers adapt to the insurance marketplace; IT services; and outsourcing services. Formula Systems (1985) Ltd. was founded in 1985 and is headquartered in Or Yehuda, Israel. As of November 25, 2010, Formula Systems (1985) Ltd. operates as a subsidiary of Asseco Poland SA.Advisors’ Opinion:

• By Vita At 2011-8-26FORTY is an Israel-based software and IT company. Recently, they have been on a tear with first quarter profits soaring 42%. This past year the stock has soared, but don’t expect this trend to stop anytime soon. With a P/E ratio of 12, this stock has become a clear “BUY.” The 10% dividend it pays out is not bad either.

6 Software Penny Stocks to Buy in 2012

There is no better place to find explosive growth than with low-priced penny stocks. I’m not talking about pink sheet stocks that are potentially nonexistent, or fraudulent names set to crash. I’m talking about real companies with real earnings — companies listed for more than one year on a major exchange like the AMEX, NYSE or Nasdaq, and that have a market cap in the ballpark of $100 million.

The returns can be even more powerful when you combine the power of technology stocks and penny stocks. Specifically, the software space is seeing lots of action thanks to the mass acceptance of smart phones and personal computing devices.

These devices are quite powerful, but they still need programs to make them run. The best software companies are those that make users more productive. In this tough economy, those companies that help workers do more with less are poised to be the penny stocks that really move higher.

Because these companies have the wind at their sails from an earnings perspective, these penny stock prices will not last long. Now is the time to pounce before the rest of the market catches on.

Here are six software penny stocks to buy now:
NetSol

6 Software Penny Stocks to Buy in 2012 - NetSol Technologies (NASDAQ:NTWK) is a penny stock with a near $100 million market cap. This is a real company with real products and real revenues. The company makes application software for the automobile finance and leasing industry as well as the banking, financial services and healthcare industries globally.

Shares have drifted lower since peaking near $2.40 per share earlier this year. You can buy this penny stock today for just $1.60 per share. That is a bargain that you should exploit.

NetSol beat estimates in the last quarter by 4 cents per share. Look for a similar result when it announces quarterly results. For the full year, the expectation is for a profit of 18 cents per share. If the company does better than expected, this stock could really take off.
Cover-All

The penny stock Cover-All Technologies (AMEX:COVR) has a market cap of $63 million and is part of the Russell micro cap index. In May, the stock was listed on the AMEX exchange taking shares off bulletin board status. The stock has gained about 50cents per share since that time.

Cover-All Technologies is in the business of providing software products and services for the property and casualty insurance space. That sector has been getting headlines this year with the uptick in natural disasters and inclement weather. Any chance to save money with technology will be more likely to be advanced under more difficult financial times.

Cover-All is profitable and expected to make seventeen cents per share in the current fiscal year. That number jumps 3 cents to 20 cents per share in 2012. The company has beaten estimates in the last two quarters. You can buy that 17% growth for less than 15 times estimated earnings.
Top Image

One of the problems owning penny stocks is trading volume is thin and liquidity makes it tough to sell shares for a profit. In the case of Top Image Systems (NASDAQ:TISA), we have a stock that sees an average of 300,000 shares trading hands each day. Clearly this stock will be followed by a fairly large group of investors.

Top Image system is in the business of making software with respect to data capture and manipulation. This Israeli-based company was founded in 1991. Shares of the company blasted higher in early May after the company reported positive results for its first quarter of 2011.

In the period, the company saw a 36% increase in revenue and posted a profit of seven cents per share as opposed to a loss in the year prior. That was enough to move the stock from $1.34 per share to $2.20 per share. Those are the types of moves you can expect from a penny stock when it delivers solid operating performance. I expect a repeat performance in future quarters.
Authentidate

6 Software Penny Stocks to Buy in 2012 -Authentidate Holding Corp. (NASDAQ:ADAT) is in the business of making the health care industry less paper-intensive. Offering web-based solutions for health systems and physician groups, this penny stock has nearly doubled in value since early April.

I don’t think the gains are done there. This sort of momentum is what I like to see. Historically riding these waves of momentum has been very lucrative to me and my investors.

Authentidate is growing and continually adding to its impressive roster of customers. Most recently the company signed a deal with the Department of Veteran Affairs to provide telehealth solutions. The company is expected to lose money in 2011, but to be profitable in 2012. If so, the stock will double again from here.
Cinedigm Digital Cinema

Penny stocks can be quite volatile. 6 Software Penny Stocks to Buy in 2012 -Shares of Cinedigm Digital Cinema (NASDAQ:CIDM) have been on a roller coaster this year. In mid-March the stock caught fire and jumped a dollar per share over the course of a couple of months. Since that time, shares have given up half that gain to the ballpark of $1.90 per share.

Use the selling to get in on this penny stock ride. Cinedigm provides technology solutions and digital content to theater exhibitors. The company just completed a year of operating losses that it expects to sharply narrow in the 2012 fiscal year. Sales are growing rapidly and that is what investors should focus on today.

To the extent they beat expectations, profitability may arrive sooner than later.
Mind CTI

6 Software Penny Stocks to Buy in 2012 -Mind CTI (NASDAQ:MNDO) is an Israeli-based technology company that provides convergent end-to-end billing and customer-care product-based solutions for service providers as well as telecom expense management solutions. After peaking at nearly $3.60 per share, the stock has slipped to current levels at $2.80 per share.

The move lower comes on the heels of a less-than-stellar quarterly earnings report for its first quarter ending March 31, 2011. Year over year revenue in the period was lower, but the company did post a profit of six cents per share. In addition to reporting a backlog to be recognized this year of $10.2 million Mind CTI had previously declared a cash dividend of 32 cents per share.

With telecom and wireless being all the rage around the globe, I expect Mind CTI to perform quite well for the remainder of the year.

Best Investments in 2012 - 5 Popular Mutual Funds to Avoid

While competitive returns are key for attracting assets, some funds mostly rely on their former glory. They have become somewhat like a trusted brand, leading some investors to do not perform their due diligence. And even if they’re down, won’t an iconic fund return to its winning ways?
Not necessarily. There are many examples where portfolio managers have lost their touch. Sometimes it’s because prior success came on just a few good investments or a surge in a particular market. Or, even more ominously, it could have been the result of some risky bets that just happened to pay off — at one time.
Here’s a look at a few big-time mutual funds that investors shouldn’t just trust on name alone:

Fidelity Magellan

Back in the 1980s, legendary investor Peter Lynch posted a standout performance at the helm of the Best Investments in 2012 -Fidelity Magellan (MUTF:FMAGX) fund. Now that success is a distant memory. Over the past decade, the average annual return was a meager 1.58%. Of course, with $15.9 billion in assets, it is not easy to find investment opportunities that can significantly move the needle.
However, in September, Fidelity brought on board a new manager, Jeff Feingold. Before this, he managed the Best Investments in 2012 -Fidelity Trend (MUTF:FTRNX) fund and posted a strong track record. And at least early on, Feingold is showing promise, with FMAGX up 11.07% year-to-date.

Janus Overseas A

Foreign investing is never easy. A portfolio manager must not only figure out where to find growth opportunities across hundreds of countries, but also deal with political situations and currency swings.
But Best Investments in 2012 -Janus Overseas A (MUTF:JDIAX), which has more than $9 billion in assets, has truly struggled. JDIAX posted a 32.88% loss in 2011, and its average return for the past five years is barely positive, at 0.28%.
The portfolio manager, Brent Lynn, likes to focus on emerging markets and smaller companies. Some years, that strategy can result in big returns. But in others, it means big losses. Either way, it’s a wild ride mutual fund investors could do without.

American Funds Growth Fund

Investors have been losing patience with the American Funds Growth Fund (MUTF:RGAAX). The fund lost 5.58% last year, and it suffered outflows of almost $26 billion.
Yet RGAAX still has a whopping $127 billion under management.
A key issue has been the fund’s focus on foreign markets. Also, because of its enormous size, the Growth Fund is heavily concentrated with large-cap stocks, which can be a bit of a drag, too.

Vanguard Windsor Investor

For 31 years, John Neff posted an average return of 13.7% at the Best Investments in 2012 -Vanguard Windsor Investor (MUTF:VWNDX) fund. However, it has not had the same kind of magic since he left in the mid-90s. The fund has generated an average loss of about 2% int he past five years and fell 4% in 2011.
Current VWNDX manager Jim Mordy (who oversees 70% of the portfolio) is trying to stay true to Neff’s contrarian style. But making money as a contrarian is no easy feat, considering that in today’s markets, value stocks can stay depressed for prolonged periods of time.

Eaton Vance Large-Cap Value

It’s tough to get excited about the Eaton Vance Large-Cap Value (MUTF:EILVX) fund, which has almost $12 billion in assets. During the past five years, EILVX is averaging a loss of 1.6%, and it shed more than 4% last year.
As the name implies, the fund sticks to large-cap stocks, with top holdings including Pfizer (NYSE:PFE), Best Investments in 2012 -Johnson & Johnson (NYSE:JNJ) and Apple (NASDAQ:AAPL). But EILVX has had missteps with its industry allocation — last year, it was bullish on financials, and we all know how that sector played out.

Top Stocks to Invest in 2012 - ETF Alternatives for Last Week’s Hot Stocks

Until Warren Buffett sent his annual letter to shareholders Saturday, the highlight for stocks last week was the S&P 500 hitting its highest level since June 2008. In an otherwise slow week, investors had something to talk about. Here at InvestorPlace.com, several stocks were on the minds of our writers. In my weekly roundup, I’ll look at some ETF alternatives.
Beginning the week, crime was on Lawrence Meyers’ mind. On Feb. 20, he pointed out that Top Stocks to Invest in 2012 - Corrections Corporation of America (NYSE:CXW), the largest private prison company in the nation, is really a real estate business that happens to also run prisons. Hedge fund manager Bill Ackman owned a big position in CXW until the middle of 2011, when he moved into Top Stocks to Invest in 2012 - J.C. Penney (NYSE:JCP), likely because of the hiring of Ron Johnson, Apple‘s (NASDAQ:AAPL) former head of retail, around the same time.
Investors who like what they see at Corrections Corporation of America might consider two exchange-traded funds in its place. The first is Top Stocks to Invest in 2012 - First Trust’s Industrials/Producer Durables AlphaDEX Fund (NYSE:FXR), which takes the top stocks from the Russell 1000 index that exhibit both growth and value factors. Corrections Corporation of America has a 0.99% weighting and is one of 103 stocks in the portfolio. With an expense ratio of 0.70% and an annual turnover of more than 100%, the fund is expensive to own and not very tax efficient.
A second idea is the Rydex S&P MidCap 400 Equal Weight ETF (NYSE:EWMD), which unlike the quant fund earlier, has 400 equal-weighted stocks that are rebalanced quarterly and reconstituted annually. Although Corrections Corporation of America’s weighting is only 0.24%, its expense ratio is 43% cheaper at 0.40%. Long-term I like the Rydex fund because equal-weighted funds tend to do better than cap-weighted funds and quant funds are simply too complicated for average investors.
On Feb. 21, Tom Taulli was talking up Top Stocks to Invest in 2012 - Groupon‘s (NASDAQ:GRPN) acquisition strategy. The daily-deal site raised $700 million in its December IPO and is busily spending some of that stash in an effort to improve its technology relative to LinkedIn (NYSE:LNKD) and others. I’ve never been a fan of Groupon’s business model, but those who are will likely be interested in the Global X Social Media Index ETF (NASDAQ:SOCL), which invests in all the big names in social media, including Groupon at 3% of the portfolio.
I had previously recommended SOCL on Feb. 13 as a good alternative to Zynga (NASDAQ:ZNGA), which accounts for 4.49% of the fund. For social media, it’s the only game in town.
InvestorPlace.com editor Jeff Reeves was on Boston’s WRKO AM 680 on Feb. 22, extolling the virtues of Top Stocks to Invest in 2012 - Caterpillar (NYSE:CAT), suggesting that the maker of construction and mining equipment is a good long-term play based on its business in emerging markets and an economy that continues to recover. Back in November I picked Joy Global (NYSE:JOY) over Caterpillar as the better stock to own. After the way Caterpillar manhandled its Electro-Motive employees in London, Ontario, I’m confident I made the right choice despite short-term results indicating otherwise.
However, if you must own this labor despot, a better alternative would be to buy the Industrial Select Sector SPDR Fund (NYSE:XLI), which gives you ownership of some of this country’s biggest industrial companies, including Caterpillar at 5.67% of the portfolio. The fund has almost $4 billion in assets, its expense ratio is cheap at 0.18% and it has provided good long-term performance. Eventually, all stocks revert to the mean, and Caterpillar is due.
Kellogg‘s (NYSE:K) recent acquisition of Pringles from Procter & Gamble (NYSE:PG) for $2.7 billion made Jeff Reeves take notice on Feb. 23. It turns out P&G had a Plan B if its original deal with Top Stocks to Invest in 2012 - Diamond Foods (NASDAQ:DMND) fell apart, which it did.
Kellogg suddenly finds itself in second place in the snack-food business. I like Kellogg as a stock, but you have to wonder about the integration process given the quality-control issues the food giant has faced in the past couple of years.
Consumer-staples stocks have done well in recent years. A good defensive position that also gives you a piece of Kellogg would be to buy the Top Stocks to Invest in 2012 -Consumer Staples Select SPDR Fund (NYSE:XLP), which has an annual expense ratio of 0.18%. It has 44 holdings, including the maker of Special K at 1.25% of the portfolio. Long term, you won’t find many funds more predictable.
Jim Woods wrapped up the week on Feb. 24 talking about 24 companies that increased their quarterly dividends. The rise that most caught my attention was that of Herbalife (NYSE:HLF), which bumped its dividend by 50%, to $0.30 quarterly. With share repurchases outweighing dividend payments by 300% in the past three years, this was a good opportunity to provide shareholders with a more tangible reward.
Despite the increase, HLF’s yield is still below 2%. Consumer Staples Select is the obvious choice, but it doesn’t hold Herbalife. Instead, go for the Vanguard Consumer Staples ETF (NYSE:VDC), which has a small HLF weighting (less than 1%), but an SEC yield of 2.69%, giving you better income and diversification.

Hot Stocks to buy - Sears Holdings Stock: 3 Prosm 3 Cons

Last year, shareholders of Hot Stocks to buy - Sears Holdings (NASDAQ:SHLD) lost 57%, and they even had to deal with talks of bankruptcy.
But 2012 has been a whole new year. Rather than become the next American icon to bite the dust, Sears has watched its stock soar a stunning 124% so far this year.
So does SHLD still have room to make investors money, or would it be better to hold off? Let’s take a look at Sears’ pros and cons:

Hot Stocks to buy - Pros

Proprietary Brands: These are products that retailers own, and they have become increasingly popular over the years. Reasons include better differentiation and higher margins.
In the case of Sears, it actually has an assortment of strong proprietary brands. Examples include Kenmore, Craftsman, DieHard and Lands’ End. With more attention and investment, the company has an opportunity to leverage these assets to find growth.
Convenience: Between Sears and Kmart locations, SHLD’s extensive footprint is a competitive advantage. It not only has thousands of stores but also service centers (for example, there are nearly 800 Sears auto centers).
But Sears wants to integrate this infrastructure with its e-commerce platform and mobile technologies. This is all part of the company’s “Shop Your Way Rewards” strategy, which has the goal of creating a continuous relationship with customers. It could be an effective way to increase loyalty and sales.
Skin in the Game: Members of the Sears board control roughly 65% of the outstanding stock. Of this, ESL Investments has a 61% stake. In other words, there is strong motivation to find ways to enhance shareholder value. Eddie Lampert, who operates ESL, has a strong investment track record, with investments in great companies like Hot Stocks to buy - AutoNation (NYSE:AN) and Hot Stocks to buy - AutoZone (NYSE:AZO).

Cons

Losses: In 2011, Sears posted a loss of $3.14 billion, and the company has seen revenues decline for the past six years. And it’s far from clear when and if the company can reverse these adverse trends.
Competition: It’s brutal. While Sears restructures, it also must fend off brick-and-mortar competitors like Hot Stocks to buy - Wal-Mart (NYSE:WMT), Kohl’s (NYSE:KSS) and Best Buy (NYSE:BBY), as well as e-commerce operators like Amazon (NASDAQ:AMZN).
Macroeconomic Trends. The U.S. economy has shown renewed strength during the past few months, but it might be temporary. Consumers might once again start to pull back thanks to a recent surge in gas prices.
Sears also has shown a lack of ability to deal with changes in the economy. For example, it was not able to move quickly enough to change its inventory to adapt to the hotter winter. While companies like Hot Stocks to buy - Home Depot (NYSE:HD) and Hot Stocks to buy - Lowe’s (NYSE:LOW) were able to capitalize on warmer weather, Sears could not.

Verdict

Last week, Sears announced a major restructuring. The company plans to raise as much as $500 million through a spinoff of its specialty Hometown and Outlet stores. There also will be a $270 million infusion from the sale of real estate assets.
All in all, these actions certainly will help to deal with the company’s liquidity concerns. Yet they do little about the core problem of Sears — that is, getting more people to come into its stores. This will take more than financial engineering. Unfortunately, Sears still has not provided much detail on how to get back on track.
So for now, Sears’ cons outweigh the pros.