Best Nu Stock Quote 2012: AgFeed Industries (FEED)
By Ian Wyatt
"With
the worlds largest and a quickly growing population of 1.3 billion
people, China has many mouths to feed," observes small cap specialist
Ian Wyatt. In his Small Cap Investor Pro, he explains, "One of my
favorite China small cap stocks is AgFeed Industries Inc. (NASDAQ:
FEED), a hog feed and breeding company.
"I’ve
been bullish on China for several years, but my recent 3-week trip
confirmed my bright outlook for this emerging market. The best news for
investors is that just like the rapid growth Chinese economy, many China
stocks are profitable and expanding, yet their shares are trading at
very attractive valuations.
"AgFeed
Industries sells products to distributors and large-scale pig farms.
Pork is a big business in China, and the country is the largest consumer
of pork in the world.
"In
China it is estimated that nearly half of consumer spending goes
towards food, and pork is an essential component of the Chinese diet and
accounts for over 60% of total meat consumed. My first-hand experience
is that pork is far and away the most popular meat in China.
"China
discourages pork imports, so suppliers operating within the country
need to meet almost all of the nation's pork demand. The country
produced 625 million hogs in 2008, almost 50% of the total worldwide
production and five-times the number produced in the U.S.
"The
challenge for Chinese producers is that undersized backyard farms still
account for over 70% of production, and the country has yet to
industrialize the farming industry.
"However,
the government is encouraging sustainable farming with the goal of
increasing food production, and this is a mandate that should bode well
for agricultural stocks.
"AgFeed Industries has made two strategic agreements this year that will boost production and expand margins.
"The
company recently signed a joint venture with M2P2, a production and
management consulting firm. This venture will modernize AgFeed
Industries' production facilities and enhance total production
capability.
"The
company also formed a partnership with Hypor, a genetics development
company which will increase the quality of the hogs. "Both partnerships
combined may boost total output by 30%, while improving the product
quality. The end result for AgFeed will be a higher market price and
contribute to margin expansion in 2012 and beyond.
"During
the first nine months of this year, AgFeed Industries grew revenues by
20% to $117 million from $97.2 in the first nine months of last year.
"Margins
have decreased this year as hog prices cannot keep up with the rise in
feed price. As a result, profit margins declined to 15.8% from 27% in
the first three quarters of fiscal 2012. Naturally, earnings have also
come down from last year's record levels, with EPS of $0.18 versus $0.42
in the same period last year.
"But
investors should view these results as a short-term bump in the road on
a long- term growth opportunity. AgFeed shares have fallen 45% since
their 52-week high back in June, a reflection of the poorer than
expected financial results.
"This
minor set back should not concern long-term investors in AgFeed.
Despite the fall in hog prices earlier this year, the company was still
able to bring in $1.9 million in operating cash flow. AgFeed is also
sitting on over $36 million in cash, and has minimal debt obligations.
"I
expect EPS of $0.31 for this year and $0.70 in 2012. Shares of AgFeed
are currently trading 14.5-times my 2012 EPS estimate. And looking
forward to 2012, shares are valued at just 6-times my earnings
estimates.
"For
a company with expanding sales and future upside from expanding profit
margins, I see significant upside for AgFeed shares which I believe
should trade at a P/E of 15.5-times 2012 EPS.
"My
AgFeed share price target of $10.50 represents a 138% increase from the
late December share price, and provides investors in this stock with
lots of upside."
Best Nu Stock Quote 2012: China Mobile (CHL)
Validea
is an intriguing advisory that bases its stock selections on the known
investment criteria of legendary stock market investors.
John Reese explains, "China Mobile Ltd. (NYSE: CHL) is one of the rare
stocks to get approval from three of tour Guru Strategy computer models;
it earns top marks from my Warren Bu?ett-, Peter Lynch-, and James
O'Shaughnessy-based models.
"With
the Western world still working its way through the aftermath of the
credit crisis, a number of top strategists are looking eastward for
growth in 2012.
"Byron
Biggs, Anthony Bolton, Jim Rogers -- these are just some of the market
gurus who have been keying in on China, where one of the world's
greatest exporting nations is now poised for some major domestic growth
as well.
"I
also see a lot of opportunities in China, and Hong Kong-based China
Mobile may be the greatest. The country's largest mobile phone network,
it topped the 500-million- subscriber mark in the third quarter.
"The
Bu?ett approach looks for firms with lengthy histories of earnings
growth and conservative financing, and China Mobile delivers.
"It
has upped earnings per share in each year of the past decade (and is on
track to do so again in 2012), and its debt of $1.45 billion is less
than a tenth of its annual earnings ($16.6 billion).
"The
company also has averaged a 23.1% return on equity over the past ten
years, a sign of both the strong management and durable competitive
advantage Bu?ett is known to look for.
"The
Lynch model, meanwhile, considers China Mobile a 'fast-grower' --
Lynch's favorite type of investment -- because of its 24.4% long-term
EPS growth rate. (I use an average of the three-, four-, and five-year
EPS growth figures to determine a long-term rate.)
"
Lynch is famous for using the P/E/Growth ratio to identify growth
stocks selling on the cheap, and the model I base on his writings
considers P/E/Gs below 1.0 acceptable, and those below 0.5 the best
case.
"When
we divide China Mobile's 11.3 P/E ratio by its growth rate, we get a
P/E/G of just 0.46, a great sign. Lynch also liked conservatively
financed firms, and China Mobile's tiny 2.3% debt/equity ratio easily
passes muster with my Lynch-based strategy.
"Finally,
the model I base on James O'Shaughnessy's value stock approach targets
large firms with strong cash flows and high yields.
"China
Mobile's $185 billion market cap, $6.97 in cash flow per share (vs. the
market average of just $0.49), and 3.8% dividend yield are all good
enough to earn this model's approval. Disclosure: I'm long CHL and own
the stock in the portfolios o?ered by my advisory firm, Validea Capital
Management."
Best Nu Stock Quote 2012: China Tel (CHTL)
Growth
stock specialist Toby Smith turns to a speculative micro-cap stock for
his top pick for 2012:ChinaTel Group, Inc. (Other OTC: CHTL).
With
the added disclosue that he personally own shares in CHTL, along with
his clients at ChangeWave Research, the advisor looks to the firm's
potential role in a new joint venture in the China telecom space.
"Our
bullishness is based on a pending China Tel and Chinacomm joint venture
as a 'basic telephone service' (BTS) licensed carrier in China. The
other BTS carriers are all large companies with $10 billion+ market
caps, such as China Mobile, China Netcom and China Unicom. Today's
market cap for China Tel is $130 million.
"The
Chinacomm/ChinaTel joint venture owns 37,000 kilometers of fiber-optic
network and 3.5Ghz spectrum for wireless broadband in 29 of the biggest
China cities. That infrastructure alone has a book value of over $1
billion.
"ChinaTel
has su?ered a great credibility problem on the Street due to a set of
failed capital raising deals that failed to close.
"But
the delays in their closing equity financing over the last 18 months
has turned out to be a blessing in disguise, as the potential valuation
for the China Wi-Max network has at least doubled since the previous
failed deal.
"We
have advised clients to be positioned in China Tel now, ahead of what
we consider to be imminent PIPE (private investment in public equity)
deal, which CHTL announced in their latest SEC 8K. The size of the PIPE
will undoubtedly be larger and at higher value than the failed $3.14 per
share Olotoa deal.
"CHTL's
announcements in the last few weeks on $500M+ of new private network
business alone from the People's Republic of China ministries adds $1 a
share (or more) to the $3.20 book value that Olotoa was paying for 49%
of CHTL.
"In
addition, CHTL just closed stock-only consulting contracts with their
key employees on Dec 1. Nobody takes a stock deal in lieu of cash unless
they know a lot about the near future of the PIPE transaction.
"Based
on our analysis, the PIPE deal o?ers disclosed in Oct 8K are from Asian
telco/ high tech firms itching to capitalize on the China Internet
miracle - -they are the only market other than India with less than 40%
wirless/fixed broadband penetration.
"We
believe ChangeWave Research is the only independent research firm
following China Tel Group; we rate the stock a 'strong buy' with a $5 a
share target for 2012 and a $9-$10 target for 2012."
Best Nu Stock Quote 2012: Canadian Oil Sands Trust
by David Dittman, contributing editor Canadian Edge
Canadian
Oil Sands Trust (COSWF) has clearly lagged broad-based and
energy-sector benchmarks alike over the trailing 12 months. A series of
unplanned turnarounds at the Syncrude operation, of which Canadian Oil
Sands owns 36.7 percent, have analysts questioning whether rising costs
will ever allow Canadian Oil Sands to really benefit from elevated oil
prices.
And
the very skeptical wonder if actual output will ever match Syncrude's
capacity potential. All in all, after years of hype and outperformance
the bar is now set rather low for Canadian Oil Sands. The stock is
likely to revert back to its usual pattern of trading in sympathy with
crude oil prices, a relationship that did break down in 2010.
New
demand from Asia, old demand in the developed world and a desire from
investor for hard assets will keep the per barrel price of oil elevated
over the next 12 months.
Canadian
Oil Sands will restrain the excruciating growth of unplanned turnaround
costs, and Syncrude will get on the path to realizing its potential.
At
the new rate of CAD0.20 per share per quarter, the stock will yield
about 3 percent. The stock has taken a hit in the second half of 2010,
and management has shown it will boost the payout to re?ect upside
oil-price surprises. Soon-to-convert Canadian Oil Sands Trust is a solid
total return play on one of the world's most intriguing resource
stories, set up for capital appreciation as well as dividend growth. Buy
it up to $28.
Best Nu Stock Quote 2012: Catlin Group
by Vivian Lewis, editor Global Investing
Insurers
benefit when things go wrong. That explains our latest pick, Catlin
Group (CNGRY). Incorporated and regulated in Bermuda, listed primarily
in London as CGL, the stock's ADR is equal to two British shares.
It
is the largest syndicator at Lloyd's of London, the reinsurance
business. It's also a favorite holding of institutional investors.
It
very conservatively invests its premiums, in cash and fixed income with
only 2.5% in hedge funds, yet it managed to produce a return on equity
of 1.8% in H1 and of 2.9% in 2009 and Q3.
It
keeps raising its dividend, more steadily if you buy in sterling than
the ADR. Given its current yield of 6% I'm satisfied with the payout but
Citigroup analysts say it will go to 7.7%..
It's a family businees, under CEO Steve Catlin, established as a Lloyd's underwriter in 1984.
It's
green, funding the Catlin Arctic Survey to measures the thickness and
density of ice foes in the Arctic Sea and carbon dioxide absorption
(ocean acidification). Nice but not why to buy.
Rather,
you should buy because Catlin is a globally diversified insurance
business operating 88-89% in US dollars. It is quick to develop new
businesses to benefit from macro-economic trends.
It
shifted its casualty lines from insuring British solicitors and
surveyors, to hot button more profitable US insurance lines: medical
malpractice; directors and o#cers (D&O) insurance; cover for
architects, engineers, and construction and design professions; and
environment risk.
Catlin
justifies these new lines (priced by its experienced actuaries) as
"short tail" controlled latent risk cover for underserved niches.
Longer-tail
risk is very selectively underwritten by Catlin based on claims made.
(Tails refer to the extremes of a normal curve, the unexpected events.
Longer-tails mean unexpected payouts.)
"Crysalis"
is innovative oil production insurance, launched in Feb for oil and gas
drillers. New business is booming post-Gulf of Mexico, and not just
from US drillers.
BP's disaster explains the rush for Crysalis cover. BP had a Bermuda "captive" (self-financed) insurance firm.
What
it will be able to collect for its captive, say industry sources, is
$1.5-3.5 bn. Against this, the economic loss from the Gulf disaster is
$40 bn. And since the Macondo sank, BP shareholders losses from the
stock's drop topped $73 bn, a compelling argument for buying insurance.
Crysalis standard contracts cap the amount of cover per event at $200
mn, and per company at $100 mn, shortening the tail.
Not
everything went Catlin's way. Its first half earnings were nipped 8%
from prior year by Chilean earthquake claims and the Gulf of Mexico.
However, we had a benign hurricane season.
And for all the dollar's appeal, getting a decent investment return is not easy in the present QE2 environment.
If
in?ation takes o", claims will be higher and coverage from investment
income lower. But then Catlin can raise its premiums. And it may have
shifted the policies it o"ers into another currency.
Citi
expects the total payout next year for this "undervalued" (rated low
risk, high return) share to come to 23.4% in sterling, and 16.6% in
dollars at its target price of $12.80. Citi's 2010 profit forecast is
$369 million, vs $243.8 million in 2009 and $384.9 million in 2008. (Per
share, the hit was even greater in 2009 because Catlin did a rights
o"ering to invest more during the crisis.).
Its
Sept. quarter saw Catlin premium income up 9% and earned income up 13%.
Market cap is $1.982 billion, with the ADR stock at $11.50. It has an
A.M. Best A rating from the insurance watchdog.
Its
combined ratio, a key metric, is 97% -- meaning expenses are 97% of
premium income so underwriting was 3% to the good before any investment
income. Buy CNGRY.
Best Nu Stock Quote 2012: Eldorado Gold (EGO)
"While
my primary focus is on the international financial markets, it’s the
glint of gold that has caught my eye for 2012," says Martin Hutchison.
The contributing editor to both Money Map Report and Money Morning,
explains, "Gold – or mining companies like Eldorado Gold (NYSE: EGO) –
an especially compelling investment for 2012.
"There
hasn’t really been a commodity bubble like the current one since the
late 1970s. It will end, as these things always do – but only when the
world’s central banks decisively tighten monetary policy and turn o? the
spigots flooding the system with cash.
"That’s
unlikely to happen until consumer inflation has shown itself rising
sharply. In relative terms, gold’s price is still far below its all-time
highs – the 1980 top at $875 per ounce is equivalent to $2,400 today,
roughly double the current price.
"Supply
is also becoming an ever-larger factor – the total global supply of new
gold in 2012 was valued at under $90 billion, with another $35 billion
or so available from recycling.
"That
first number is unlikely to change as mining output has been declining
by about 1% per annum in volume terms, in spite of the recent surge in
gold’s price.
"This
means that if the big boys – such as the hedge funds (global assets of
$1.9 trillion) or China (o?cial reserves of $2.3 trillion) – get
involved, demand is likely to quickly exceed supply by a huge margin.
"Even
though all the gold ever mined is still with us, it has a value of only
about $5 trillion – a lot of money, but not huge in light of global
investment flows.
"So,
if the money really pours into gold, the price could again take o?.
After all, $2,400 an ounce is still some distance away, and there’s a
lot more speculative capital around today than there was in 1980.
"There’s
no money tightening in the works currently. The Fed has kept monetary
policy extremely loose for a year now, and has said it has no intention
of raising rates in the near term.
"The
European Central Bank, the Bank of Japan and the Bank of England have
also indicated they do not intend to tighten, while China’s M2 money
supply has risen by 29% in the past year.
"Given
all this money supply sloshing around, it’s not surprising that gold
prices have zoomed upwards – and will continue doing so as long as the
Fed and its central bank brothers maintain a loose-money policy.
Rather than gold itself, I’d recommend gold mining shares – first choice, Eldorado Gold – for two reasons:
1 * First, there’s the leverage. A gold mining company with
extraction costs of $600 per ounce doubles its profits when gold goes
from $900 to $1200.
2 * Second, commodity speculation pushes up share valuations, so
chances are you’ll make even more money. After all, the earnings growth
rate becomes pretty spectacular, which can make a very simple company
look like a Google!
"As a bonus, Eldorado is not just in gold, it’s in Chinese gold – both internally and through a takeover it recently executed.
"That
means it benefits not only from any rise in gold prices, but directly
from increases in Chinese wealth. Chinese investors, when they buy gold,
will naturally turn first to domestic output.
"Eldorado
plans to double current production by 2013 (even without its recent
acquisition) – no decline here. What’s more, it’s reasonably valued –
actually quite cheap – considering its earnings potential.
"The
company was founded in 1992, and has come a long way in a relatively
short time, building to a recent market capitalization of $5.15 billion.
"It
owns the Kisladeg gold mine in Turkey, which produced 58,000 ounces of
gold in the third quarter of 2012, and the Tanjanishan gold mine in
western China, which produced 31,000 ounces.
"In
addition, its Efemcukuru project, with projected reserves of 1.7
million ounces of gold in Turkey, is expected to begin production in the
fourth quarter of 2012.
"Eldorado
also has gold-development projects in Greece and Brazil and an iron-ore
project in Brazil. Its current gold reserves, proved and probable,
total 7.6 million ounces.
"In
September 2012, Eldorado made an agreed-share-exchange o?er for Sino
Gold, the largest international gold mine in China. The o?er values Sino
Gold at approximately $2.2 billion and will give Sino shareholders
approximately 25% of the combined group.
"Sino
has two operating mines in China – Jinfeng, the country’s
second-largest mine with production of 151,000 ounces, and the White
Mountain Gold Mine, which began production in January 2012. The Eastern
Dragon project in Heilongjiang province will become Sino’s third mine.
"The
combined companies will have gold reserves of 12.7 million ounces, with
annual production expected to reach 850,000 ounces in 2012. In the
third quarter, Eldorado earned $30.2 million, or 8 cents a share – up
from 5 cents a share in the third quarter of 2008.
"That’s
at an average gold price received of $957 per ounce, compared with a
total production cost, including overhead, of $430 per ounce. Based on
third-quarter earnings, EGO has a P/E ratio of about 35 times – steep,
but not excessive given the growth potential.
"That
should become obvious in the year-end figures, which will show the rise
in gold prices we saw in recent months dropping straight to Eldorado’s
bottom line.
"Just
estimating, if the gold price for the fourth quarter averages $1,100 an
ounce, that will send an extra $150 per ounce or so in profits to
shareholders, adding about 35% to EPS and reducing the P/E
correspondingly.
"Yes,
labor and energy costs could rise a bit, but not much – Eldorado’s
costs were only $402 per ounce in the third quarter of 2008, when oil
was at $147 a barrel.
"Bottom
line: Increasing gold production – check. Contained costs – check. In
the middle of the world’s fast-growing Chinese gold market – check.
Decent balance sheet and profitability – check. What’s not to like?"
Best Nu Stock Quote 2012: Flagstar Bancorp
by Mark Skousen, editor The Hedge Fund Trader
My
favorite speculative stock idea for 2012 is Flagstar Bancorp (FBC), the
Troy, Michigan-based bank with 165 branches in Michigan, Indiana, and
Georgia.
The
stock was trading for over $140 a share before the financial crisis;
the stock fell to $5 a share last May, and it is now under $1.50.
Earnings
are way down, and the stock has su"ered from heavy tax loss selling in
November and December. In fact, it's selling for a fraction of its book
value ($5.30). But there is some good news coming out. Quarterly
revenues tripled to $459 million, and the bank is expected to be
marginally profitable next year. They are growing rapidly again by using
a little-known but powerful technique called "EVA momentum."
Economic
Value Added (EVA) -- a powerful new metric in finance -- was
co-invented by Joel Stern and Bennett Stewart as a performance measure
in excess of the opportunity cost of capital.
Joel
Stern is a genius who teaches finance at six graduate schools,
including Chicago, Carnegie-Mellon, and Cape Town, and speaks each year
at FreedomFest.) Flagstar broke positive this year with an EVA momentum
of 11.5%, one of the highest rankings of all thrift and mortgage finance
companies.
In
short, Flagstar is creating value for its shareholders at a rapid pace,
and that fact will re?ect itself in a higher stock price.
Currently
it has nearly $3 billion in cash to deal with its $3.65 billion in
debt. It might be a good takeover candidate by one of the regional
banks.
The tax selling is probably over by now, and FBR Capital just upgraded its rating of the stock to "outperform."
Moreover,
company o#cers and directors are buying stock, 2.2 million shares worth
since November 1 at between $1 and $1.35. In every way, this small bank
stock is a super bargain. It could double in value and still sell below
book.
Best Nu Stock Quote 2012: Hard Asset Producers (HAP)
"Whenever inflation heats up, there's no better place to park your cash than in tangible commodities," says Nathan Slaughter.
his
The ETF Authority, he noes "Our favorite play on this sector is Market
Vectors Hard Asset Producers (NYSE: HAP), an ETF whose 300-stock
portfolio provides one-stop shopping for six distinct commodity sub-
sectors.
"History
has shown conclusively that there is one asset class that thrives above
all others under these hostile conditions: commodities. A depreciating
dollar is a sure-fire recipe for rising commodity prices. And when
inflation is on the rampage, investors always like the reassurance of
owning hard assets.
"
Instead of watching prices for things like steel and gasoline rise all
around you, why not convert your dollars into these commodities directly
and enjoy the ride?
"Even
if the Fed does manage to keep inflation in check, we believe that good
old supply-and-demand fundamentals favor rising prices anyway.
"With
the global economy getting back on track and emerging powers like China
swallowing mountains of raw materials, the short-circuited commodities
rally will have juice once again.
"Investors
have a dizzying array of options here, but our favorite is Market
Vectors Hard Assets. The fund is invested in six commodity
sub-sectors.with top billing going to the energy sector, where
integrated oil & gas giants, o?shore drillers and equipment/service
providers soak up about 40% of the fund's assets.
"Elsewhere,
shareholders will have a large stake in agricultural firms, ample
exposure to gold and silver producers, along with aluminum, nickel, iron
ore and other critical industrial metals. Rounding out the portfolio
are holdings linked to coal, steel, uranium and even forest products.
"Whether
it's to protect purchasing power against the ominous threat of currency
debasement or a simple bet on stronger economic expansion, both point
to a continued run-up in commodity prices -- and the shares of producers
that bring us these goods."
Best Nu Stock Quote 2012: Harmonic (HLIT)
by Elisea Frishberg, contributing editor The MoneyMan Market Report
TV, cable and satellite systems all over the world are making huge investments to providing high definition programming.
As
a result, Harmonic (HLIT) could easily turn out to be one of the
world's biggest winners for 2012; the company makes encoders, advanced
fiber optic and digital delivery systems.
And
as domestic satellite systems and emerging cable systems embrace these
HLIT products, revenues are growing fast, while profits are literally
exploding. The best part of this story is that the markets are still
pricing HLIT based on last year's shaky economy.
Harmonic
has made a number of acquisitions of video technology over the past
several years; it bought Entone's VOD business for $45 million in 2006,
and purchased Rhozet's transcoding technology in 2007.
However,
Omneon is the largest of its recent deals, and we expect the impact on
Harmonic's profitability in the next two years to be huge.
Omneon
sells storage and networking equipment for media companies to enhance
their distribution of high end TV products and services.
Omneon
already had an impressive customer base, including the BBC, BSkyB, CBS,
Comcast, Discovery Communications, Echostar, NBC Universal, News
Corporation, Televisa, Turner Broadcasting and Viacom. Together,
Harmonic says the two companies have 2,000 customers across more than
100 countries.
With
a market cap below $1 billion and dependence on the continuation of
global growth for the next few years, I would put this in the class of
aggressive investments. However, we expect continuation of the global
growth cycle, combined with accelerating U.S. results.
Accordingly,
we believe that HLIT's stock price has not yet caught up with its very
impressive growth prospects. As the skepticism about economic growth
subsides, so will the multiples a"orded Harmonic, Inc. expand.
Rapidly
developing middle classes around the world is leading to increasing
interest in TV distribution systems such as cable providers.
Overall,
the company is in exactly the right place at the right time. In our
view, this underappreciated stock is on track be one of the top
performers for 2012.
Best Nu Stock Quote 2012: iShares Silver (SLV)
"2012
will be the year that silver shines," says metals and mining
specialist Gene Arensberg. In his Got Gold Report, a specialty service
from The Gold Newsletter, he says, “We believe that the metal-backed
exchange traded fund iShares Silver Trust (NYSE: SLV) is a safe and
convenient way for most investors to gain exposure to the silver market.
"When
the general public becomes fully involved in gold, silver shines
brightly … for a time. At least it did so in the last public rush into
gold which peaked about 30 years ago.
"SLV tracks the spot price of silver, less accumulated fees capped at 0.5% per annum.
Since the exchange traded fund’s inception in April, 2006, the trust has accumulated over 300 million ounces of silver.
"That
is about 9,500 metric tonnes of bar silver held in ultra-secure soccer
field sized vaults by a custodian in London. In December, 2012, the SLV
silver stash was worth about $5.3 billion.
“Silver
fell out of popularity until just recently, but we see that changing
now. For more than 20 years, from 1980 to about 2003, investors all over
the globe were conditioned by a weak silver price and not much joy of
ownership.
"'Who
cares?’ sums up the public attitude before this bull market for silver
began in 2003. Even now that attitude prevails among the same investing
establishment that has grudgingly accepted gold as an investment class.
“During
that long bear market for silver, government dishoarding of excess
silver metal, metal left over from when governments actually had silver
in their coinage, acted as a cap to the price.
"That
excess supply from o?cial sources is all gone now, but the e?ects of
the artificial over-supply are only just now retreating.
“Silver
stayed so low-priced for so long it made the second most popular
precious metal di?cult to mine profitably. Because of that, annual
production of silver has not kept pace with increasing industry and
investment demand.
"A
factoid that some will find di?cult to believe is that because prices
for actual physical silver metal have been so cheap for so long, and
because global industry consumes more silver each year than miners are
able to produce, there is actually considerably less silver metal in
existence than there is gold.
“Gold
recently rose to new all-time nominal highs above $1,200 the ounce, but
its sister precious metal has lagged so far. In fact it hasn’t even
gotten to half of where it did in the last bull market peak in January,
1980.
"Silver
reached about $50 an ounce briefly then, but so far this cycle has yet
to beat its May 2008 $21.44 pinnacle. That is with gold having bested
its 1980 high of $850 by more than $350 an ounce. As such, we believe
that silver has some serious catching up to do.
"“What
is so enticing about the silver story is that it currently takes about
64 ounces of silver to buy an ounce of gold. That is called the
gold:silver ratio. During the bull market for precious metals thirty
years ago the ratio fell to about 16:1 or 16 ounces of silver to one
ounce of gold.
"If
gold simply stood still at $1,100 an ounce and the ratio were to fall
to 1980 levels, silver would climb to about $69 an ounce. That suggests
achievable upside for silver and SLV of nearly 4X from today.
“But
wait, there’s more. Consider that compared to period of the last bull
rush for precious metals the world has about 50% more people in it.
Governments have inflated their fiat currencies since then by a factor
of 10.
"World
inventories of actual physical silver metal for investment have
actually fallen to less than half of the amount that was available in
1980.
"Recently
the government of China re-legalized the ownership of precious metals
for its 1.3 billion people and is actually encouraging its citizens to
accumulate them.
"The
number of people of a?uence and means in the developing countries like
Brazil, Russia, China and India has increased exponentially in the last
thirty years.
“So, we see the currently unloved silver market as ripe for an investment renaissance of epic proportions. Think about it.
"Today
versus 1980 we have globally 50% more people who will be using 1,000%
more dollars, yen, euro, pounds sterling, yuan, etc., to chase less than
half as much silver metal in a world where anyone can buy a silver ETF
with just a mouse click from their study, even in their underwear.
“Isn’t
that a potent recipe for silver? We think 2012 could very well be the
year that a global popular rush, a veritable tsunami of liquidity into
silver gets underway in earnest as more and more people discover just
how little of it remains above ground for investment. Our favorite way
to participate is SLV.”
Best Nu Stock Quote 2012: Marvell Technology Group
by Paul McWilliams, editor Next Inning
Marvell
Technology Group (MRVL) clearly fits the bill of a stock that is
currently unloved by Wall Street. As a matter of a fact, there's not
much at all that Wall Street likes about the company. Nevertheless, I
would choose this as one of my favorite stocks for the coming year.
Nearly
half of Marvell's revenue comes from the hard disk drive (HDD)
industry, and even though it has gained market share, Wall Street
believes the HDD sector will be wiped out by solid state drive (SSD)
technology.
We'll
set aside for now that Marvell is also a leader in SSD controllers,
which it just so happens to sell for more than it does its industry
leading HDD controllers.
As I see it, Wall Street has penned the HDD obituary far in advance of when we should plan to attend the funeral.
The
short story for Marvell comes in two intersecting pieces. First,
Marvell is one of only three semiconductor companies in the world that
has an Architectural License from ARM Holdings (ARMH). This means
Marvell can tweak the internal design of the ARM core processor to
optimize it for targeted applications.
It
has done this very eectively in the past to dominate the HDD controller
market, and the company has more recently taken a new approach to
design highly integrated smartphone chips that are intended to
materially drive down the total cost for smartphones, and thereby
radically increase their presence in emerging markets.
China
is, of course, the first target, and I believe we'll see a ?urry of new
Marvell-powered smartphones released there in 2012.
Intersecting
with Marvell's expertise with ARM core processors, which you'll find in
some shape or form in roughly 95% of the chips Marvell ships, is
Marvell's integration talent.
Few,
if any, competitors can match Marvell when it comes to mixed-signal
integration (integrating analog and digital functions on a single
chip)."" "
While
integration skills have always been important for semiconductor
companies, we are now at a tipping point where the companies that are
very good at it will have an opportunity to accelerate growth. I believe
that tipping point will occur sometime between now and 2015, and when
it does, Marvell's growth curve has the potential to ride a very
favorable wave. That said, my price target range for 2012 is somewhere
in the high-$20s to very low $30s.
Best Nu Stock Quote 2012: Kinder Morgan (KMP)
For her top pick for 2012, income specialist Amy Calistri looks to Kinder Morgan Energy Partners L.P. (NYSE: KMP).
The
editor of The Daily Paycheck explains, "I always look for the gift that
keeps on giving; that's how I view this master limited partnership,
which produces a steady stream of income each and every quarter.
"Kinder
Morgan Energy Partners is one of the largest owners and operators of
energy- product pipelines and storage facilities in the United States.
"Formed
in 1992, KMP is structured as a publicly-traded master limited
partnership (MLP). MLPs are an important asset class for income
investors because they are legally required to distribute most of their
taxable income and cash flow to shareholders (known as 'unitholders').
"KMP's
extensive pipeline systems carry products such as gasoline and heating
oil from the Gulf Coast to the East and West Coasts.
"KMP
also owns and operates a network of carbon-dioxide (CO2) pipelines,
which are used in a process known as enhanced oil recovery. These pipes
carry CO2 to old oil fields where it is injected into the fields to
increase productivity. These enhanced recovery techniques become more
popular as oil prices rise.
"And
KMP is continuing to grow its pipeline revenues through expansion. This
past November , the Rockies Express Pipeline became fully operational.
"KMP
owns a 50% stake in the 1,679-mile project, which carries natural gas
from the Rocky Mountains to the Pennsylvania/Ohio border.
"Although
KMP is an energy-related company, its revenues are relatively
insensitive to energy prices. The partnership earns fees based on the
amount -- not the price -- of gas, oil or refined products it processes
and transports.
"Many
of its interstate pipelines charge rates that are regulated by the
Federal Energy Regulatory Commission. These regulated rates are set to
allow Kinder Morgan a steady, reliable return on invested capital.
"Further,
the partnership has already locked in guaranteed capacity from a few
shippers on its pipes. KMP appears to be on track to not only deliver,
but also continue to grow, its distributions.
"And
when it comes to distributions, KMP has a stellar track record, having
made quarterly payments like clockwork since October 1992.
"KMP
also has a very consistent record of dividend growth, boosting
distributions nearly every year since its inception. The partnership has
increased its distributions at an annualized rate of +7.5% in the last
five years alone.
"KMP
currently pays a quarterly dividend of $1.05 per unit, equivalent to
$4.20 per year for a yield of approximately 7% at current prices. It
should be noted that MLPs are best held in taxable accounts as most of
their distributions are classified as 'return of capital'."
Best Nu Stock Quote 2012: NovaGold Resources
by Stephen Leeb, editor The Complete Investor
NovaGold Resources (NG) -- my top pick for 2012 -- is an up-and-coming mining outfit that owns a pair of world-class deposits.
It
has partnered with a couple of industry heavyweights to develop these
projects, and it has the backing of some of the savviest investors
around, giving it the wherewithal that will enable the company to
transition from junior explorer to mid-tier producer in a few short
years.
The
company's Galore Creek property in northwestern British Columbia is a
copper/gold deposit it is developing in a 50-50 partnership with Teck
Resources. The property's measured reserves include 8.9 billion pounds
of copper, 7.3 million ounces of gold and 123 million ounces of silver
-- as well as commercial quantities of lead and zinc.
NovaGold
is in the process of acquiring Copper Canyon Resources, whose property
adjacent to Galore Creek will add substantially to those reserve
figures.
And the property's resource base is likely to prove to be even greater once additional exploration e"orts are conducted.
NovaGold
is working with Barrick Gold in a similar arrangement to bring Donlin
Creek in Alaska, one of the largest undeveloped gold deposits in the
world, on line.
With
33.6 million ounces of proven and probable gold reserves, once
operational the open-pit Donlin Creek mine is expected to produce more
than a million ounces of the Midas metal annually
Both
mines are several years from commercial production and both with
require investments in the billions, in addition to huge technical
hurdles to overcome. Yet that has not deterred some of the best hedge
managers around from taking large stakes in NovaGold, these notable
investors include John Paulson, George Soros and Tom Kaplan Adding to
its attractiveness, while many gold companies are turning to politically
unstable countries around the world in search of new ore bodies,
developing NovaGold's U.S. and Canadian assets requires no such risk.
Indeed,
the company has strong support for its projects from State and
Provincial governments as well as local native associations who are
eager to see economic development and job creation for their
populations.
This
stock has been an outstanding performer in the last two years but it
literally has the potential to rise another 10-fold in the coming years—if it's not acquired by a larger competitor first.
With
an excellent team running the show we think the company will
successfully conquer the challenges it faces and reward shareholders
immensely in the process.
Best Nu Stock Quote 2012: Monsanto (MON)
"Monsanto
(NYSE: MON) is my top investment idea for 2012," says Sy Harding, an
advisor well-known for his seasonal timing strategies.
In
his Street Smart Report, he observes, "Monsanto is the world’s leading
provider of biotech-advanced seeds and agricultural products for
growers; seeds for corn, soybeans, cotton, fruit, and vegetables, which
are produced by its genomics division.
"Monsanto
experiences high grower demand for such seeds, which are genetically
engineered to provide increased crop yields, increased quality, insect
and disease resistance, and drought tolerance.
"The
company recently introduced two new products, SmartStax for corn, and
Round- up Ready-2-Yield soybeans, which are potential drivers for
significant growth going forward.
"The
company said it expects to plant 8 to 10 million acres of Roundup
Ready-2-Yield soybeans in 2012, along with a more than 4 million acre
launch of SmartStax seed corn, both significantly higher than earlier
projections for the new products.
"The company has also introduced two versions of a lower cost genetic corn seed, VT Double Pro, and VT Triple Pro.
"The
goal of those products is to let growers test the advantages of farming
with genetically engineered seeds without having to move all the way to
the higher-priced SmartStax seeds.
"The
lower price products were introduced in anticipation that the growers
will be so impressed with their extra yield, quality, and profits that
they will move up to SmartStax the following year.
"he
company invests roughly 10% of revenues back into research and
development of new products, and has also demonstrated an ability to
make meaningful acquisitions, which in recent years have included
DeKalb, Asgrow, and DeltaPine, which add to its technology and product
base, while at the same time eliminating some competitors.
"The
company has received import approval for its Roundup Ready-to-Yield
soybeans in China, which potentially will result in demand from growers
in South America, who export large quantities of soybeans to China.
"The
risks include that consumers are not completely sold on genetically
altered foods, and growers will only grow from biotech-advanced seeds
that percentage of their crops that they know they can sell. And of
course Monsanto’s sales are influenced seasonally by weather and
commodity grain prices.
"We
believe higher prices lie ahead for MON. Our upside target is $100 a
share. We suggest a trailing 'mental' protective stop at $69.40."
Best Nu Stock Quote 2012: Range Resources
by Geoffrey Seiler, editor Bullmarket.com
We have selected Range Resources (RRC), which is on our recommended buy list, as our top investment idea for 2012.
The
natural gas producer recently posted a loss of 5 cents per share,
versus a loss of 19 cents, a year ago. Adjusted EPS was 12 cents,
topping the 10-cent consensus.
Cash
?ow from operating activities totaled $138.4 million, while cash how
from operations before changes in working capital fell -18% to $140.8
million. Revenues rose 11% to $227.0 million. Natural gas, NGL and oil
sales climbed 9% to $219.6 million, while natural gas, NGL and oil sales
including all cash-settled derivatives declined -4% to $245.4 million.
As
previously announced prior to earnings, Q3 production volumes rose 15%,
and 7% sequentially, to an average of 503 Mmcfe net per day. Production
was 77% natural gas and 23% natural gas liquids (NGLs) and oil.
The
company said the growth came from its e"orts in the liquids-rich
portion of the Marcellus Shale play in Pennsylvania, as well as the
Midcontinent and Permian Basin regions.
The company drilled 78 net wells and 5 net recompletions in the quarter with a 99% success rate.
Realized
oil, gas and NGL prices, after adjusting for realized cash-settled
hedges and cash-settled derivatives, averaged $4.97 per mcfe for the
third quarter.
This was generally below analyst estimates, and lower than the $6.35 per mcfe last year and $5.07 per mcfe for Q2.
On
the hedging front, the company has 335,000 Mmbtu per day of natural gas
production hedged at an average ?oor price of $5.56 and an average cap
of $7.20. Meanwhile, it increased its hedge position for both 2011 and
2012. For 2012, Range has now hedged its natural gas position to 408,200
Mmbtu per day at an average ?oor price of $5.56 and an average cap of
$6.48.
For
2012, Range has increased its natural gas hedges to 119,641 Mmbtu per
day at an average ?oor of $5.50 and an average cap of $6.25.
In
conjunction with its earnings announcement, Range also announced that
it was putting up its Barnett Shale assets for sales. The assets include
53,000 acres with 360 producing wells that average approximately
120-130 Mmcfe per day. "Divesting of our Barnett Shale properties
re?ects Range's strategy of focusing on per-share growth," CEO John
Pinkerton said in statement. While a sale of our Barnett Shale
properties will provide substantial capital, it will not inhibit our
per-share production and reserve growth outlook. We currently anticipate
that we can grow production and reserves in 2012 on both an absolute
and per-share basis, despite losing the production and reserves
associated with the planned sale."
BMO Capital analyst Dan McSpirit believes a sale could gross around $1.6 billion based on recent asset sales in the area.
Best Nu Stock Quote 2012: Peabody Energy (BTU)
"Peabody Energy (NYSE: BTU), the world’s largest coal producer, is my top pick for the coming year," says Hannah Choe.
The contributing analyst with Personal Finance explains, "Demand for
coal, particularly from the Pacific Rim, China and India, is rebounding
as the global economy recovers.
"The
company reported better-than-expected third quarter earnings, primarily
because of a lower costs associated with US operations, increased
volumes of metallurgical coal, and strong trading results.
"Net
income and revenue were down 71% and 12%, respectively, hurt mainly by
lower US demand. But despite a di?cult economic environment, Peabody
expanded US margins and shipped record volumes of coal in the third
quarter.
"Although
demand from Japan and South Korea hasn’t bounced back as strongly as it
has in the early stages of prior recoveries, China has more than made
up for this shortfall, emerging as a top coal importer.
"In
the first nine months of 2012, Chinese imports of thermal and coking
coal rose 167% and 400%, respectively. And India will rely heavily on
coal imports over the next five to six years to feed its rising domestic
consumption of electricity.
"Peabody
CEO Greg Boyce anticipates that China will grow by 8% and India will
grow by 6% in 2012, with even more impressive rates in 2012.
"As
a result, management projects markets for metallurgical and thermal
coal to have a 7.5% compound annual growth rate in the next five-plus
years as demand for steel and coal-fueled electricity rise.
"As
of mid-October, Peabody committed 3.3 million tons of coal for China
deliveries in 2012, more than 1.7 million tons coming from its
Australian operations. This demand from Asia should push Australia’s
coal sales to 21 million to 23 million tons this year.
"Peabody’s
US sales declined, in part due to recession pressures; cooler weather
and rising use of natural gas also crimped results. This combination of
trends has led
management to adjust 2012 product projects 15 million tons below 2008 levels.
"Although
US numbers are weak, third quarter sales from Peabody’s Australia
operations climbed 30 percent from the second quarter, driven by surging
demand in China and India.
"The
Australia unit projects sales of growth of 15% for 2012 over 2011
levels;Peabody actually plans to double exports from Australia over the
next five years.
"As
part of its shift in focus to Asia, Peabody established a trading hub
in Singapore and a new business center in Indonesia during the third
quarter. Based on emerging Asia’s rapid turnaround, Peabody forecasts
higher prices for thermal and coking coal in 2012.
"Green
energy is gaining popularity but coal remains king-half of the
electricity generated in the US comes from it, and emerging markets want
it, too. Global coal use
is still expected to grow by 55% by 2025, and Peabody Energy is well positioned to profit."
Best Nu Stock Quote 2012: Seadrill
by Elliott Gue, editor The Energy Strategist
Seadrill
(SDRL) is the best-placed contract driller in my coverage universe. The
company doesn't produce or explore for oil and natural gas; rather, it
is in the business of owning drilling rigs that are leased out to major
producers for a daily fee known as a day rate.
There
are three major reasons to buy Seadrill. First, the company has the
youngest and most advanced ?eet of drilling rigs of any of the major
contractors.
Second,
Seadrill's rigs are primarily booked under long-term contracts at
attractive rates for several years into the future, providing a
guaranteed backlog of cash how regardless of the path of commodity
prices.
And finally, Seadrill has a policy of paying out sizeable quarterly dividends supported by its backlog of rig contracts.
In
the most recent quarter, Seadrill paid $0.65 per share, equivalent to
an annualized yield of approximately 8 percent at the current price.
I
see the company boosting its payout to around $0.75 per quarter by the
fourth quarter of 2012; given strong investor preference for
income-paying stocks, a growing dividend will continue to drive further
upside in the stock.
Seadrill owns a feet of sixteen deepwater drilling rigs including ten semi-submersibles and six drillships.
The
average operating Seadrill rig is less than five years old and that
only includes the 13 rigs currently working on contracts.
The remaining 10 rigs in the feet were all built between 2008 and 2010 and are of the most modern and capable design.
All
are ultra-deepwater rigs able to drill in waters more than 10,000 feet
deep and are powerful enough to complete wells more than 6 miles in
length.
Deepwater
operations are only going to get more complex in coming years; as a
result, producers need the most advanced, state-of-the-art rigs In
addition to its deepwater feet, Seadrill also owns around 20
shallow-water jackup rigs and 17 tender rigs that are used to ferry
people and equipment and to support o"shore drilling operations.
Seadrill
has a backlog of over $8.5 billion in contracts covering its deepwater
rigs, $2 billion covering its jack-ups and $1.5 billion for tender rigs.
Since
these revenues are essentially guaranteed under long-term deals signed
with major oil and gas producers, this represents a highly visible
stream of cash?ow over the next few years.
With
a ?eet that's ideal for the current market, a growing 8 percent yield
and opportunities to grow via new rig construction, the stock rates a
buy under $38.
Best Nu Stock Quote 2012: Standard Chartered (SCBFF)
Yiannis
Mostrous is a leading expert on Asian Stocks. For his top pick last
year, advisor choseStandard Chartered (London: STAN, OTC: SCBFF) as his
top pick.
The stock has risen 110% since his original recommend -- and
remains his top pick for 2012 as well. Here's the latest from his The
Silk Road Investor.
"Standard Charter is an international bank focused on consumer and corporate banking and treasury activities.
"Though
based in London, the bank gives exposure to emerging markets in Asia,
the Middle East and Africa. Asia makes up 59% of the firm’s profits with
Hong King as its biggest single concentration of customers.
"The
economies in Asia are rebounding faster than those in the west,
increasing competitor activity amongst international and local banks.
"The
banks strategy is to continue to develop its consumer banking
franchises while maximizing profitability in its historically strong
wholesale operations.
"For
the January-November period, the firm reached record income and pretax
profit highs, driven by growth in the corporate banking business.
"Standard
Chartered has a relatively low loan-to-deposit ratio of 75%, giving the
bank the luxury of relying less on borrowed funds and more on its
increasingly strong, less costly deposits for expansion.
"Valuations
are attractive; share price per trailing earnings is 14.3, trading at
1.5 times tangible book value. The firm maintains a strong balance sheet
and a healthy liquidity position."
Best Nu Stock Quote 2012: Yongye International
by Jim Trippon, editor Global Profits Alert
Yongye
International (YONG) is a leading developer, manufacturer, and
distributor of plant and animal nutrient products in the People's
Republic of China.
Its plant nutrient product can significantly increase the plant's output and nutritional value and improve its taste.
As
a result of receiving greater value in the marketplace, Yongye says its
product helps increase farmers' incomes and improves their living
standards. Directly addressing the need for greater e#ciency and more
environmentally friendly require?
ments
in the agricultural sector, Yongye's products dramatically increase the
quality of crops and yields, and improve the health of livestock,
according to the firm. The company is striking for its valuation with a
bargain basement PEG ratio of only 0.15 Yongye has impressive financials
with gross margins above 57 percent and a profit margin of 24.86
percent. Earnings per share are expected to climb 43 percent next year.
While
the company has only been in operation a short amount of time, its
predecessor, Inner Mongolia Yongye Company, had over 15 years'
operational history which it has passed on to Yongye.
From
this experience, Yongye International says it aims to inherit its
predecessor com?pany's managerial experience and corporate culture to
continue emulating its long-term success.
Learn more about this financial newsletter at Jim Trippon's Global Profits Alert.
Best Nu Stock Quote 2012: Verenium (VRNM)
"The
Energy Security Act of 2007 has received little investor attention;
however, it contains provisions that are likely to lead to significant
returns for investors," suggests Andy Obermueller.
In his Government-Driven Investing, he notes, "The law codifies
the federal production targets for biofuel, which we believe presents a
real opportunity for Vernenium (NASDAQ: VRNM).
"'Biofuel'
has, for decades, been code for 'corn-based ethanol.' But this law also
contains provisions for a new, advanced biofuel derived from cellulose,
an organic compound found in all plant matter.
"Instead
of using corn -- which uses valuable farmland and can drive up the
price of a staple food -- cellulose can be derived from any plant,
wheat or rice straw, corn stalks, scrap wood or even grass.
"The
law calls for hundreds of millions of gallons of cellulose ethanol.
There’s just one problem: Very little of cellulosic ethanol is being
produced. By 2022, however, the nation will need, by virtue of federal
law, 16 billion gallons.
"All
problems, of course, are really opportunities in disguise. Especially
for one company: Verenium. This is a biotech company that has mastered
the enzymes required to unlock the energy in cellulose.
"It
has built two demonstration-scale plants, one in Jennings, La., and
another in Japan, and has announced it will build the nation’s first
commercial-scale ethanol plant.
"It
has two partners in this endeavor: Petroleum giant BP and the U.S.
federal government, which has begun its due diligence on a federal loan
guarantee for the project.
"The
demand for cellulosic ethanol will rise many-fold in coming years, and
Verenium, the leader in this field, will likely see similar gains as it
puts this ground-breaking technology to work in the new plant and
licenses the technology to hundreds of others.
"The
loan guarantee for the plant will likely be a significant catalyst for
these shares, and the continued demand for cellulosic ethanol will fill
its co?ers -- and reward shareholders -- for years to come."
