Saturday, May 31, 2014

Why billionaires make bad presidents

The election of Petro Poroshenko as Ukraine's new president is filled with hope—hope that he will ease the battle with Russia and form a bridge with the West. Hope that he will improve Ukraine's crumbling economy. Hope that he can keep his country from breaking into a civil war.

But the greatest hope is that Poroshenko will become the world's first truly effective, democratic billionaire president. The odds aren't good.

One reason is Ukraine itself. The East European oligarchy doesn't exactly lend itself to enlightened democracy and free markets. Its past presidents, from Viktor Yanukovych to Viktor Yushchenko to Leonid Kuchma, have often shown more interest in building sprawling dachas and silencing their opposition than building sustainable economies and civil society.

Poroshenko, known as the "Chocolate King," owns Kiev's Roshen Sweets, which makes chocolate and other confectionery. Voters are hoping that his newfound power will be used to stitch together peace with Russia and prosperity for Ukraine—not to enrich himself further. And therein lies the problem for most billionaire presidents.

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"The problem for Poroshenko is definitely that he is a strong businessman himself," Olexiy Haran, a professor of comparative politics at the National University of Kyiv-Mohyla Academy told the Washington Post. "The problem would be to separate business from politics."

That separation has proven difficult in other countries.

Italy's Silvio Berlusconi, the billionaire media mogul who served as prime minister three times between 1994 and 2011, is currently serving a year of community service for tax fraud. He's also fighting charges of having sex with an underage prostitute.

While Berlusconi and his supporters say he's simply a victim of a left-wing attack, the Italian economy and political system both re! main highly dysfunctional after his long reign.

Then there's Thaksin Shinawatra, the billionaire media mogul who was prime minister of Thailand. Shinawatra now lives in exile to avoid corruption charges in Thailand. His sister, Yingluck Shinawatra, was recently ousted as prime minister. As with Berlusconi, supporters of Thaksin (known as "red shirts") say he's been unfairly demonized by his political opponents.

But a Thai court ruled that $1.4 billion of Thaksin's fortune was gained illegally while he was prime minister. And the fact that Thailand is now being ruled by a military coup, with its economy faltering, suggests that Thaksin did little to improve the foundations of democracy or the economy in the country.

Finally, Vladimir Putin could also be included on lists of billionaire presidents. Putin, of course, argues that he's not rich—once saying that he's a "galley slave" working for the Russian people for little wage. But media reports put his net worth in the billions. And given Russia's economic troubles, its human rights abuses, lack of real opposition and recent penchant for invading its neighbors, Putin is the poster boy for autocratic billionaire leaders.

So is there a cause-and-effect between billionaire wealth and bad leadership? Not necessarily. The billionaire leaders who have come to power so far are all in countries with non-traditional forms of democracy prone to corruption and backroom dealmaking. They are precisely the kind of countries where wealth can more easily buy office. And they are precisely the kind of countries that can't be fixed by a single leader in one or two terms.

Still, billionaires do tend to have some character traits that don't translate well to being democratic leaders. Their success tends to come from starting companies, breaking rules, ignoring critics and controlling virtually every aspect of their lives and companies. Once they've made their fortune, billionaires are used to getting what they want.

And it's not easy for! billiona! ires — economic animals by nature — to suddenly set aside their personal interests.

Nearly three-fourths of billionaire entrepreneurs surveyed recently by the Centre for Policy Studies cited economic profits and wealth as their motivating factors. Being a political leader, by contrast, is a more messy proposition, involving compromise, cooperation and masses of public interests.

We may yet see a great billionaire president, but it's unlikely that Poroshenko will be the first.

© CNBC is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

Friday, May 30, 2014

Top 10 Beverage Stocks To Own Right Now

With shares of Rite Aid (NYSE:RAD) trading around $3, is RAD an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let�� analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Rite Aid is�a retail drugstore chain in the United States that sells�prescription drugs and a range of other general merchandise. Its offerings include prescription drugs,�over-the-counter medications, health and beauty aids, personal care items, cosmetics, household items, beverages, convenience foods, greeting cards, seasonal merchandise and other everyday convenience products, as well as photo processing. General merchandise suppliers make it simpler for the average consumers who wants a quick and efficient shopping experience when looking for convenience items. Prescription drugs and the healthcare field in general is seeing the limelight as there are looming changes imposed by the United States Government. Look for Rite Aid to see rising profits on its steady general merchandise sales and a potential pop from changes in Congress.

Top 10 Beverage Stocks To Own Right Now: California Grapes International Inc (CAGR)

California Grapes International, Inc., formerly China Food Services, Corp., incorporated in 1992, conducts its primary business operations as an importer, exporter and distributor of staple, organic, specialty, and gourmet foods and beverages, catering to the Asian Pacific Rim. The Company owns and operates Golden Dragon Food & Beverage Import & Export Company of Hong Kong, Ltd. (GDHK) in central Hong Kong and Beijing Flying Golden Dragon International Trading Co., Ltd. in China (BFGD). Golden Dragon Holdings, Inc. has agreements with the United State food manufacturers. It acts as a buying agent for GDHK, negotiating vendor contracts and services with the United States food and beverage industry partners.

The Company focuses to offer wholesale food distribution to grocery chains and independent food stores throughout China. The Company focuses on purchasing goods directly from manufactures in the United States, Latin America and Europe, and distributes these products to distributors, grocery stores, supermarkets and hypermarkets throughout China.

Advisors' Opinion:
  • [By David Kerr]

    451 Research released a study that contained several key facts concerning cloud computing growth. According to them, 69% of enterprises who have separate budgets for cloud computing are predicting to spend more this year, and in 2014, for this service. They also projected that the worldwide cloud computing market will grow at a 36% compound annual growth rate (CAGR) through 2016. This would make the market reach $19.5 billion by 2016.

  • [By Sam Stovall]

    1) He could have owned the S&P 500 all year long from April 30, 1990 through October 25, 2013. He would have earned a compound annual growth rate (CAGR) of 8.0%, excluding dividends reinvested.

  • [By Julie Young]

    In 2013 the Microsoft Business segment generated revenue of $24.7 billion with a three-year compound annual growth rate (CAGR) of 8.7%. Operating income grew steadily ending 2013 at $16.2 billion with a three-year CAGR of 11%. Revenue in the Microsoft Business segment is primarily derived from Office products which generate over 90% of sales for the segment. This segment appears set for continued growth as demand remains high for Office products.

Top 10 Beverage Stocks To Own Right Now: Attitude Drinks Inc (ATTD)

Attitude Drinks Incorporated (Attitude), incorporated on May 10, 1988, is a brand-development company. The Company focuses on the non-alcoholic single serving beverage business, developing and marketing of milk based products in two segments: sports recovery and functional dairy. The Company does not directly manufacture its products but instead outsources the manufacturing process to third party packers.

Attitude has developed its second product, which is branded as Phase III Recovery is a milk-based protein drink which is available in chocolate and vanilla flavors. The Company�� co-packer for its dairy based product is O-AT-KA Milk Products Cooperative, Inc. in Batavia, New York. This product contains 35 grams of protein that are inherent in filtered milk. The product is packaged as a retort-processed shelf stable dairy-based 100% milk-based sports recovery drink in both chocolate and vanilla flavors.

The Company competes with The Coca-Cola Company and Pepsico Inc.

Advisors' Opinion:
  • [By Peter Graham]

    Small cap stocks Attitude Drinks Inc (OTCMKTS: ATTD), Axiologix, Inc (OTCMKTS: AXLX) and Unisource Corporation (OTCMKTS: USRC) have all been getting some attention lately in investment emails or investor alerts thanks in part to paid promotions. And while there is nothing wrong with properly disclosed paid promotions or investor relations activity, such activity can backfire on unwary investors or traders. With that in mind, here is a closer look at all three small cap stocks to help you decide whether they are truly hot or not:

Top 5 Financial Companies To Buy For 2015: Cott Corp (COT)

Cott Corporation (Cott), incorporated on December 31, 2006, is a producers of beverages on behalf of retailers, brand owners and distributors. The Company�� product lines include carbonated soft drinks (CSDs), 100% shelf stable juice and juice-based products, clear, still and sparkling flavored waters, energy products, sports products, new age beverages, and ready-to-drink teas, as well as alcoholic beverages for brand owners. The Company operates in five segments: North America (which includes the United States operating segment and Canada operating segment), the United Kingdom (which includes its United Kingdom reporting unit and its Continental European reporting unit), Mexico, Royal Crown International (RCI) and All Other. The Company markets or supplies over 500 retailer, licensed and Company-owned brands in its four core geographic segments. In March of 2012, its U.K. reporting segment acquired a beverage and wholesale business based in Scotland.

Advisors' Opinion:
  • [By Dan Caplinger]

    But SodaStream is continuing to pull out all stops in order to improve its results. SodaStream's recent partnership with Samsung to incorporate carbonation technology into high-end refrigerators could help drive growth for consumers who don't want to deal with a separate appliance in their kitchens. Moreover, SodaStream's deal in March with bottler Cott (NYSE: COT  ) to produce soda syrup within the U.S. should help it boost its efficiency in getting flavors to domestic customers.

  • [By Rick Munarriz]

    It's been a year of brand-widening initiatives for SodaStream, and not just because it cranked out its first Super Bowl ad back in February.

    In February it teamed up with Ocean Spray to co-develop cranberry juice blends exclusively for the SodaStream system. This follows deals last year with Crystal Light, Kool-Aid, and V8 for non-conventional carbonated beverages. My 2012 wish for SodaStream to strike a deal with Monster Beverage (NASDAQ: MNST  ) to make a bigger splash in the energy-drinks market hasn't materialized, but a deal with EBOOST did happen earlier this year. The initial natural energy drink flavors of orange and acai pomegranate will hit the market as SodaStream syrups during the latter half of this year, packing an all-natural energy boost and vitamins in every serving. EBOOST doesn't have the same allure as Monster or Red Bull, but the move was still a strong one since there's a real value proposition for home-crafted energy drinks. If SodaStream is successful, the big boys will be on notice. In March, SodaStream, which is based in Israel, teamed up with private-label bottler Cott (NYSE: COT  ) to produce SodaStream's existing flavors at its facility in Georgia, making it easier to get SodaStream products into the country with the world's largest soda consumption per capita.

    The next chapter in what has been a successful year will naturally write itself on Wednesday. There is plenty to prove, even after SodaStream proves quarter after quarter that it's not just a company behind a faddish novelty.

  • [By Lee Jackson]

    Cott Corp. (NYSE: COT) stock has pulled back some 30% from its 52-week high of $11.25 after second-quarter market conditions were presented as “challenging.” However, the dividend was reinstated after a ten-year hiatus, and the company bought back $6 million worth of shares in the second quarter. The company mainly does business in the United States, the United Kingdom, Canada and Mexico, but it also sells beverage concentrate to 50 other countries. Deutsche Bank rates Cott as a stock to buy and has an $11 price target. The consensus is posted at $10. Investors are paid a decent 2.9% dividend. The Friday close for Cott was $7.87.

Top 10 Beverage Stocks To Own Right Now: Beam Inc (BEAM)

Beam Inc. (Beam), incorporated on October 1, 1985, is a premium spirits company that makes and sells branded distilled spirits products in markets worldwide. The Company's principal products include bourbon whiskey, tequila, Scotch whisky, Canadian whisky, vodka, cognac, rum, cordials, and ready-to-drink pre-mixed cocktails. The Company's portfolio consists of brands the Company identifies as Power Brands, Rising Stars, Local Jewels and values Creators. The Power Brands are the Company's core brand equities, with global reach in premium categories. Rising Stars are smaller premium brands. Brands identified as Local Jewels act as Power Brands in local markets. Value Creators include a variety of brands. The Company's three reportable segments are the geographic regions, which consists of North America, Europe/Middle East/Africa (EMEA), and Asia-Pacific/South America (APSA). Each segment is engaged in the manufacture and sale of distilled spirits products. In May 2012, the Company acquired the Pinnacle vodka and Calico Jack rum brands and certain related assets (Pinnacle assets) from White Rock Distilleries, Inc. In January 2012, Beam acquired Cooley Distillery plc (Cooley), an Irish whiskey producer.

The Company�� Power Brands include Jim Beam Bourbon, Maker's Mark Bourbon, Sauza Tequila, Courvoisier Cognac, Canadian Club Whisky, Teacher's Scotch and Pinnacle Vodka. Beam�� Rising Stars brand includes Laphroaig Scotch, Knob Creek Bourbon, Basil Hayden's Bourbon, Kilbeggan Irish Whiskey, Cruzan Rum, Hornitos Tequila, Skinnygirl Cocktails and Sourz Liqueurs. The principal markets for the Company's spirits products are the United States, Australia, Germany, Spain, the United Kingdom, and Canada, and the Company continues to invest in emerging markets such as India, Brazil, Mexico, Russia, Central Europe, Asia, and other geographies.

During the year ended December 31, 2012, Power Brands, Rising Stars, and combined Local Jewels/Value Creators (including non-branded sales) repre! sent approximately 60%, 15%, and 25%, respectively, of the Company's net sales. Approximately 55% of its consolidated net sales were generated in the United States (based on country of destination) during 2012. In the United States, the Company sells its products either to wholesale distributors for resale to retail outlets or, in those states that control alcohol sales, to state governments who then sell them to retail customers and consumers. In the Company's other global markets, the Company uses a variety of route-to-market models, including third party distributors, global or regional duty free customers, other spirits producers and its joint ventures with The Edrington Group Ltd.

The Company competes with Bacardi Limited, Brown-Forman Corporation, Constellation Brands, Inc., Davide Campari Milano-S.p.A., Diageo PLC, Pernod Ricard S.A. and Remy Cointreau S.A.

Advisors' Opinion:
  • [By Shauna O'Brien]

    Shares of spirits company BEAM Inc (BEAM) surged on Monday morning after reports were released that Japan based Suntory Holdings Ltd. has agreed to acquire the company in a $16 billion deal.

    Drink company Suntory will acquire all outstanding shares of Beam for $83.50 per share, or approximately $13.6 billion. With the assumption of debt, Suntory said that the deal is worth about $16 billion. This transaction is expected to close in the second quarter of 2014.

    The combined company will create the third largest premium spirits company in the world. The company is expected to see annual sales of $4.3 billion.

    BEAM shares were up $17.43, or 26.03%, during pre-market trading Monday.

  • [By Jake L'Ecuyer]

    Beam (NYSE: BEAM) shot up 24.06 percent to $83.08 after the company agreed to be acquired by Suntory Holdings for $83.50 per share in cash.

    Clovis Oncology (NASDAQ: CLVS) was also up, gaining 7.26 percent to $79.35 after the company announced 2014 objectives and financial outlook. The company projected to initiate three global registration studies for CO-1686.

  • [By CNNMoney Staff]

    Shares of Beam (BEAM) shot up after the spirits maker announced it was being acquired by Japan's Suntory for $16 billion. Beam, most well-known for its Jim Beam brand of bourbon, said the transaction was expected to close in the second quarter of 2014. Suntory is agreeing to pay $83.50 per share -- a 25% premium over Beam's closing price on Friday.

  • [By Patricio Kehoe]

    When Diageo�� CEO Ivan Menezes declared last quarter that the company would not be buying Beam Inc. (BEAM) in order to boost its bourbon and tequila portfolio, it became clear that the firm was well off as it is. And I applaud management�� decision to hold back, because this firm�� unmatched spirit portfolio combined with its vast distribution network make it a solid global market leader. Although the company operates in 180 countries, its particularly strong position in the U.S. market is highly beneficial, as this is the most profitable spirits market worldwide. The distribution, handled by 2,800 exclusive salespeople that only attend the company�� namesake brands, is highly profitable, resulting in domestic operating margins of almost 40%. Also, these distributor relationships cover 80% of the company�� U.S. volume, making for a business model that would be very difficult for new market entrants to duplicate.

Top 10 Beverage Stocks To Own Right Now: Dr Pepper Snapple Group Inc (DPS)

Dr Pepper Snapple Group, Inc. (DPS), incorporated on October 24, 2007, is an integrated brand owner, manufacturer and distributor of non-alcoholic beverages in the United States, Canada and Mexico with a diverse portfolio of flavored (non-cola) carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs), including ready-to-drink teas, juices, juice drinks and mixers. The Company operates in three segments: Beverage Concentrates, Packaged Beverages and Latin America Beverages. The Company primarily serves two groups of customers: bottlers and distributors and retailers. As of December 31, 2011, it operated 20 manufacturing facilities across the United States and Mexico, excluding its manufacturing facility for its joint venture with Acqua Minerale San Benedetto. Effective March 1, 2013, it acquired Dr. Pepper/7-UP Bottling Co of the West, a producer and wholesaler of bottled soft drinks.

Beverage Concentrates

The Company�� Beverage Concentrates segment is principally a brand ownership business. In this segment the Company manufactures and sells beverage concentrates in the United States and Canada. Most of the brands in this segment are CSD brands. Its brand portfolio includes CSD brands, such as Dr Pepper, Sunkist soda, 7UP, A&W, Canada Dry, Crush, Squirt, Penafiel and Schweppes. Beverage concentrates are shipped to third party bottlers, as well as to its own manufacturing systems, who combine them with carbonation, water, sweeteners and other ingredients, package it in PET containers, glass bottles and aluminum cans, and sell it as a finished beverage to retailers. Beverage concentrates are also manufactured into syrup, which is shipped to fountain customers, such as fast food restaurants, who mix the syrup with water and carbonation to create a finished beverage at the point of sale to consumers. Its Beverage Concentrates brands are sold by its bottlers, including its own Packaged Beverages segment, through all retail channels, including supermarkets, fountains, mas! s merchandisers, club stores, vending machines, convenience stores, gas stations, small groceries, drug chains and dollar stores.

Packaged Beverages

The Company�� Packaged Beverages segment is principally a brand ownership, manufacturing and distribution business. In this segment, it primarily manufacture and distribute packaged beverages and other products, including its brands, third party owned brands and certain private label beverages, in the United States and Canada. Key NCB brands in this segment include Hawaiian Punch, Snapple, Mott's, Yoo-Hoo, Clamato, Deja Blue, AriZona, FIJI, Mistic, Nantucket Nectars, ReaLemon, Mr and Mrs T, Rose's and Country Time. Key CSD brands in this segment include 7UP, Dr Pepper, A&W, Sunkist soda, Canada Dry, Squirt, RC Cola, Big Red, Sun Drop, Diet Rite, IBC and Vernors. Approximately 87% of its 2011 Packaged Beverages net sales of branded products come from its own brands, with the remaining from the distribution of third party brands, such as Big Red, AriZona tea, FIJI mineral water, Neuro beverages, Vita Coco coconut water and Hydrive energy drinks. A portion of its sales also comes from bottling beverages and other products for private label owners or others, which is also referred to as contract manufacturing. Its Packaged Beverages��products are manufactured in multiple facilities across the United States and are sold or distributed to retailers and their warehouses by itsown distribution network or by third party distributors. The Company sells its Packaged Beverages��products both through its Direct Store Delivery system (DSD), supported by a fleet of approximately 6,000 vehicles and 12,000 employees, including sales representatives, merchandisers, drivers and warehouse workers, as well as through its Warehouse Direct delivery system (WD), both of which include the sales to retail channels, including supermarkets, fountain channel, mass merchandisers, club stores, vending machines, convenience stores, gas stations, small groce! ries, dru! g chains and dollar stores.

Latin America Beverages

The Company�� Latin America Beverages segment is a brand ownership, manufacturing and distribution business. This segment participates mainly in the carbonated mineral water, flavored CSD, bottled water and vegetable juice categories, with particular strength in carbonated mineral water, vegetable juice categories and grapefruit flavored CSDs. Its brands include Squirt, Penafiel, Aguafiel, Crush and Clamato.

In Mexico, it manufactures and distributes its products through its bottling operations and third party bottlers and distributors. In the Caribbean, it distributes its products through third party bottlers and distributors. In Mexico, it also participate in a joint venture to manufacture Aguafiel brand water with Acqua Minerale San Benedetto. The Company sells its finished beverages through Mexican retail channels, including mom and pop stores, supermarkets, hypermarkets, and on premise channels.

The Company competes with The Coca-Cola Company (Coca-Cola), PepsiCo, Inc. (PepsiCo), Nestle, S.A. (Nestle), Kraft Foods Inc. (Kraft) and The Cott Corporation (Cott).

Advisors' Opinion:
  • [By Eileen Rojas]

    Changing consumer habits are influenced by other beverage options
    Dwindling diet soda sales are bad news for PepsiCo (NYSE: PEP  ) and its competitors Coca-Cola� (NYSE: KO  ) and Dr. Pepper Snapple Group (NYSE: DPS  ) , which derive a quarter or more of their U.S. sales from soft drinks. In the third-quarter earnings call, PepsiCo chairman Indra Nooyi noted that "a fundamental shift in consumer habits and behaviors" is taking place within the beverage segment. In addition to the artificial sweetener issue, more beverage options have become available and this has played a major part in the loss of consumer interest in diet sodas.

  • [By Ted Cooper]

    Dr Pepper Snapple Group (NYSE: DPS  ) often gets short shrift from observers of the beverage industry. It is a distant third in the cola wars, with Coca-Cola (NYSE: KO  ) and PepsiCo (NYSE: PEP  ) combining for a 70% share of the market compared to Dr Pepper Snapple's 17% share.�However, the latter's recent initiatives may enable it to close the gap in 2014.

  • [By Alex Planes]

    Although this process would revolutionize the drink industry that had for millennia produced little beyond alcoholic beverages for commercial sale, Priestley never capitalized on it. The first real effort to commercialize carbonated beverages fell instead to J. J. Schweppe, who founded Schweppes in Switzerland in 1783 and later moved the company to London. The Schweppes brand is now held by Dr Pepper Snapple (NYSE: DPS  ) in the United States and Canada, but in much of the rest of the world Schweppes products are made and marketed by either Coca-Cola (NYSE: KO  ) or Pepsico.�The original soft-drink company is now thus controlled, to varying degrees, by the three largest soft-drink companies in the world. That market is now estimated to be worth nearly $500 billion in worldwide annual sales.

  • [By Achilles Research]

    In terms of market valuation, the beverage sector really is not that cheap. Considering that Pepsico trades at 16x forward FCFE and Coca-Cola at 17x, it should not be surprising that the individual P/E ratios are equally high: Pepsico trades at the largest peer group P/E of 16.88, while Coca-Cola trades at 16.43. Dr. Pepper Snapple (DPS) is the cheapest of the industry, at 13.26 times forward earnings. All companies are great companies with top-notch product portfolios, but trade at premium valuations. Investors pay a hefty markup, which restricts equity valuation growth from the outset and makes multiple expansion unlikely.

Top 10 Beverage Stocks To Own Right Now: Fomento Economico Mexicano SAB de CV (FMX)

Fomento Economico Mexicano, S.A.B. de C.V. (FEMSA), incorporated on May 30, 1936, is a holding company. The Company conducts its operations through principal holding companies, each of which it refers to as a principal sub-holding company. These companies are Coca-Cola FEMSA, S.A.B. de C.V. (Coca-Cola FEMSA), which engages in the production, distribution and marketing of soft drinks, and FEMSA Comercio, S.A. de C.V. (FEMSA Comercio), which operates convenience stores. The Company�� convenience store chain OXXO operated a total of 7,492 stores as of March 31, 2010. Compania Internacional de Bebidas, S.A. de C.V. (CIBSA) owns a 53.7% interest in Coca-Cola FEMSA. On April 30, 2010, FEMSA announced the closing of the transaction, pursuant to which FEMSA agreed to exchange 100% of its beer operations conducted by FEMSA Cerveza for a 20% economic interest in the Heineken Group. In February 2009, Coca-Cola FEMSA acquired with The Coca-Cola Company the Brisa bottled water business in Colombia from Bavaria, a subsidiary of SABMiller. Coca-Cola FEMSA acquired the production assets and the rights to distribute in the territory, and The Coca-Cola Company obtained the Brisa brand.

Coca-Cola FEMSA, S.A.B. de C.V.

Coca-Cola FEMSA is a bottler of Coca-Cola trademark beverages. Coca-Cola FEMSA operates in various territories, including Mexico, a substantial portion of central Mexico (including Mexico City and the states of Michoacan and Guanajuato) and southeast Mexico (including the Gulf region); Central America, including Guatemala (Guatemala City and surrounding areas), Nicaragua (nationwide), Costa Rica (nationwide) and Panama (nationwide); Colombia; Venezuela; Argentina, including Buenos Aires and surrounding areas, and Brazil, including the area of greater Sao Paulo, Campinas, Santos, the state of Mato Grosso do Sul, the state of Minas Gerais and part of the state of Goias.

Coca-Cola FEMSA produces, markets and distributes Coca-Cola trademark beverages, own brands and b! rands licensed from the Company. The Coca-Cola trademark beverages include sparkling beverages (colas and flavored sparkling beverages), water, and still beverages (including juice drinks, ready-to-drink teas and isotonics). Out of the more than 100 brands and line extensions of beverages sold and distributed by Coca-Cola FEMSA, its most important brand, Coca-Cola, together with its line extensions, Coca-Cola light, Coca-Cola Zero and Coca-Cola light caffeine free, accounted for 61.4% of total sales volume during the year ended December 31, 2009. Coca-Cola FEMSA�� next largest brands, Ciel (a water brand from Mexico), Fanta (and its line extensions), Sprite (and its line extensions), ValleFrut and Hit, accounted for 10.5%, 5.8%, 2.6%, 1.5% and 1.3%, respectively, of total sales volume in 2009. Coca-Cola FEMSA uses the term line extensions to refer to the different flavors in which it offers its brands.

Coca-Cola FEMSA produces, markets and distributes Coca-Cola trademark beverages in each of its territories in containers authorized by The Coca-Cola Company, which consist of a variety of returnable and non-returnable presentations in the form of glass bottles, cans and plastic bottles made of polyethylene terephtalate (PET). Coca-Cola FEMSA uses the term presentation to refer to the packaging unit in which it sells its products. Presentation sizes for its Coca-Cola trademark beverages range from a 6.5-ounce personal size to a 3-liter multiple serving size. For all of its products excluding water, Coca-Cola FEMSA considers a multiple serving size as equal toor larger than one liter. In addition, it sells some Coca-Cola trademark beverage syrups in containers designed for soda fountain use, which it refers to as fountain. It also sells bottled water products in bulk sizes, which refers to presentations equal to or larger than five liters, which have a much lower average price per unit case than its other beverage products.

In Mexico, Coca-Cola FEMSA�� product portfolio consis! ts of Coc! a-Cola trademark beverages, and includes Mundet trademark beverages licensed from FEMSA in some Mexican territories. Coca-Cola FEMSA�� product sales in Latincentro consist predominantly of Coca-Cola trademark beverages. Per capita consumption of its sparkling beverages products in Colombia and Central America was 92 and 146 eight-ounce servings, respectively, in 2009. Its product portfolio in Venezuela consists of Coca-Cola trademark beverages. Sparkling beverages per capita consumption of its products in Venezuela was 174 eight-ounce servings during 2009. Coca-Cola FEMSA�� product portfolio in Mercosur consists mainly of Coca-Cola trademark beverages, and the Kaiser beer brand in Brazil, which Coca-Cola FEMSA sells and distributes on behalf of FEMSA Cerveza. Sparkling beverages per capita consumption of its products in Brazil and Argentina was 214 and 359 eight-ounce servings, respectively, in 2009.

The Company competes with Pepsi Beverage Company, Grupo Embotelladores Unidos, S.A.B. de C.V., Grupo Jumex, Groupe Danone, Cadbury Schweppes, Big Cola, Consorcio AGA, S.A. de C.V., Postobon, Florida Ice and Farm Co. S.A., Cerveceria Nacional, S.A., Pepsi-Cola Venezuela, C.A., AmBev and Quilmes Industrial S.A.

FEMSA Comercio, S.A. de C.V.

FEMSA Comercio operates a chain of convenience stores in Mexico, under the trade name OXXO. OXXO stores are concentrated in the northern part of Mexico, but also have a presence in central Mexico and the Gulf coast. FEMSA Comercio is the largest single customer of FEMSA Cerveza and of the Coca-Cola system in Mexico. During 2009, a typical OXXO store carried 1,954 different store keeping units (SKUs) in 31 main product categories.

The Company competes with 7-Eleven, Super Extra, Super City, Circle-K and AM/PM.

Advisors' Opinion:
  • [By Dividends4Life]

    Memberships and Peers: PEP is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers��Index and a Dividend Champion. The company's peer group includes: The Coca-Cola Company (KO) with a 2.8% yield, Dr Pepper Snapple Group, Inc. (DPS) with a 3.2% yield and Fomento Econ (FMX) with a 1.7% yield.

  • [By Robert Martin]

    South Africa, China, Mexico and Brazil collectively make up 68% of ECON�� holdings. The top three holdings are Naspers LTD (NPSNY) at 10%, AmBev (ABV) at 8% and FEMSA (FMX) at 5.6%.

Top 10 Beverage Stocks To Own Right Now: Celsius Holdings Inc (CELH)

Celsius Holdings, Inc., incorporated on April 26, 2005, is engaged in the development, marketing, sale and distribution of functional calorie-burning beverages under the Celsius brand name. The Company focuses to combine nutritional science with mainstream beverages by using its thermogenic (calorie-burning) MetaPlus formulation. The Company does not directly manufacture its beverages, but instead outsource the manufacturing process to established third-party co-packers. The Company provides its co-packers with flavors, ingredient blends, cans and other raw materials for its beverages purchased by the Company from various suppliers. Celsius, Inc. and Elite FX, Inc. are the wholly owned subsidiaries of the Company.

The Company�� Celsius is a calorie-burning beverage. Celsius is available in seven flavors, lemon-lime, ginger ale, cola, orange and wild berry (which are carbonated) and non-carbonated green tea raspberry/acai and green tea/peach mango. Its beverages are sold in 12 ounce cans, although it has begun to market the ingredients in powdered form in individual On-The-Go packets. The Company�� customer�� include on-the-go women, age 25 to 54, who are looking for a way to burn calories and gain energy with beverages and natural alternatives to diet sodas, as well as sports enthusiasts of both sexes, who are seeking low sodium, preservative-free alternatives. During the year ended December 31, 2009, the Company developed its MetaPlus formulation into a powder that can be mixed with water.

The Company competes with The Coca-Cola Company, Dr. Pepper Snapple Group, PepsiCo, Inc., Nestl茅, Waters North America, Inc., Hansen Natural Corp., and Red Bull.

Advisors' Opinion:
  • [By John Udovich]

    Monster Beverage Corp (NASDAQ: MNST), a mid cap marketer and distributor of energy drinks and alternative beverages, has been a monster of a performer since the end of the financial crisis as the stock is up around 308% over the past five years, but could new or overlooked players like small cap beverage stocks�Jones Soda Co (OTCMKTS: JSDA), Celsius Holdings, Inc (OTCMKTS: CELH) and Konared Corp (OTCBB: KRED) repeat that performance? A look strictly at the long term performance of all three small caps might have you thinking otherwise. After all, none of these small cap beverage stocks are profitable while�the beverage industry can be a long hard expensive slog just to increase market share by one or two points when you are competing for shelf space with industry giants like Pepsi and Coke. But past performance is just that���the past and only part of the story as there is much more to consider about these small cap beverage stocks which could also make them potential acquisition targets by larger beverage players seeking to expand their product line up with innovative products:

Top 10 Beverage Stocks To Own Right Now: PureSafe Water Systems Inc (PSWS)

PureSafe Water Systems, Inc., incorporated on March 9, 1987, is engaged in the design and development of its technology to be used in the manufacture and sale of water purification systems both in and outside the United States. The Company�� PureSafe First Response Water System (PureSafe FRWS) is self-contained and purifies most types of contaminated fresh or service water, including seawater that may be found at a first response emergency site. This system is mobile, by helicopter or transported by truck.

The PureSafe FRWS utilizes its technology which consists of water extraction boom that extracts water from the ocean, streams, ponds, pools of floodwater or a failed municipal distribution system. The extracted water is then treated by the application of advanced water treatment technologies which employ multiple stage filtration, multiple stage sanitation (including ozone, chlorine and ultraviolet purification techniques), reverse osmosis membranes, mineralization and final polishing to meet the standard drinking water requirements of the United States Environmental Protection Agency (the EPA). Its 2nd prototype (FRWS unit) unit can produce EPA compliant drinking from contaminated fresh or surface water at the rate of 30,000 gallons per day, to provide drinking water to 45,000 people. The unit has a built in generator and water bagging capability at the rate of 30,000 and a half liters bags of water per day

The Company competes with GE, Siemens, Severn Trent, Ecospheres Technology, Lenntech, Testa/Viwa, Lifekeeper, Mobile MaxPure, Bi Pure Water, Rodi, Global Water Group, Nirosoft, LifeStream, and Aquapura Tempest.

Advisors' Opinion:
  • [By John Udovich]

    Small cap Sodastream International Ltd (NASDAQ: SODA), an Israeli based developer, manufacturer and marketer of�home beverage carbonation systems, has attracted its share of hype over both its products and its stock, but could other small cap water stocks like Primo Water Corporation (NASDAQ: PRMW), Puresafe Water Systems Inc (OTCMKTS: PSWS) and Alkaline Water Company Inc (OTCBB: WTER) attract a similar following? After all, Sodastream International has managed to create a significant amount of buzz from consumers, investors and even short sellers because it�� the�world's largest manufacturer, distributor and marketer of home carbonation systems as its�brands are sold in over 60,000 retail stores in 45 countries. Sodastream International is also up 45.7% since the start of the year, up 70.2% over the past year and up 99.3% since November 2010, but shares did spike up to the $75 level in the middle of 2011 and now trade at the $63 level.

Top 10 Beverage Stocks To Own Right Now: Suntory Beverage & Food Ltd (STBFY)

Suntory Beverage & Food Limited is principally engaged in the manufacture and sale of beverages and food. The Company operates in two geographical segments. The Domestic segment is engaged in the manufacture and sale of various soft drinks within Japan, such as coffee drinks, mineral water, green tea drinks, tea drinks, carbonated drinks, fruit juice drinks, functional beverages, milk beverages, and food for specified health use, as well as syrup for general and business usage. The International segment is engaged in the manufacture and sale of carbonated drinks, fruit juice drinks, health food, seasoning, tea-based beverages and others, with operations in Europe, Oceania, Asia and the Americas. As of May 29, 2013, the Company had 80 subsidiaries and 10 associated companies. On October 15, 2013, the Company acquired Lucozade Ribena Suntory Limited. On December 12, 2013, the Company acquired Suntory Beverage & Food Europe Limited. Advisors' Opinion:
  • [By Charles Sizemore]

    Let�� start with Suntory Beverage & Food Limited (STBFY),which recently completed its acquisition of�Beam Inc., formerly the purest play on bourbon. Beam was the owner of the eponymous Jim Beam brand, as well as the higher-end Maker�� Mark and Knob Creek and the lower-end Old Crow.�Suntory is Japan�� leading spirits company, though most Americans will be unfamiliar with its Japanese whisky brands, such as Yamazaki and Hakushu. (Note for booze snobs: Japanese whisky��ike Scotch and Canadian whisky��s correctly spelled ��hisky.��American bourbon, Tennessee whiskey and Irish whiskey are correctly spelled ��hiskey.��

Top 10 Beverage Stocks To Own Right Now: C&C Group PLC (CCGGY)

C&C Group plc, incorporated on March 19, 2004, is engaged the production, marketing and selling of cider and beer. The Company operates in five segments: Republic of Ireland (ROI), Cider United Kingdom (Cider UK), Tennent�� United Kingdom (Tennent�� UK), International, and Third Party Brands United Kingdom (Third Party Brands UK). The Company�� cider brands include Bulmers, Magners, Gaymers Cider, Blackthorn Cider, Olde English, Addlestones, Woodchuck Hard Cider, Wyder�� Cider and Hornsby��. Its other cider brands include Bulmers Berry, Bulmers Pear, Magners Pear, Magners Specials, Special Vat, K, Natch and Diamond White.

ROI includes the results from sale of all products in the Republic of Ireland (ROI), including Bulmers, Tennent��, Caledonia Smooth and third party brands. Cider UK segment includes the results from sale of the Company�� cider products in the United Kingdom, with Magners, Gaymers and Blackthorn the principal brands. Tennent�� UK segment includes the results from sale of the Company�� owned beer brand Tennent�� in the United Kingdom and sales of Caledonia Best in the United Kingdom. International segment includes the results from sale of the Company�� cider and beer products, principally Magners, Blackthorn, Hornsby��, Woodchuck and Tennent�� in all territories outside of the ROI and the United Kingdom. Third Party Brands UK segment relates to the distribution of third party brands and the production and distribution of private label products in the United Kingdom.

Advisors' Opinion:
  • [By Rich Duprey]

    At C&C Group's (NASDAQOTH: CCGGY  ) annual meeting earlier this month, it was revealed that when it bought the Hornsby brand two years ago, it paid $25 million and got a 20% share of the market for its efforts. It paid more than 10 times that amount, or about $300 million, for Vermont Hard Cider and its top Woodchuck brand, and got another 42% share of the market. So C&C had almost two-thirds of the cider market all to itself.

  • [By Rich Duprey]

    The growth in 2012 follows the success of hard cider sales the year before, which saw a 40% increase. Yet the industry leader remains C&C Group's (NASDAQOTH: CCGGY  ) Vermont Hard Cider, whose Woodchuck Hard Cider has a 41% share of the market, though analysts say Angry Orchard owns nearly half of the on-premises market at the end of the first quarter.

  • [By Rich Duprey]

    While�Anheuser-Busch InBev (NYSE: BUD  ) introduced some fruit-flavored margarita drinks and even Beam offered flavored bourbons to water down the market more,�the bigger threat may be coming from the explosive growth being witnessed in�hard cider.�Brewer Boston Beer (NYSE: SAM  ) rolled out its Angry Orchard cider brand just last year and has already catapulted to the top of the market, surpassing C&C Group's (NASDAQOTH: CCGGY  ) Vermont Hard Cider, the previous market leader.

This Bitcoin Fund Is Sending a Lobbyist to Washington

Sensing that it needs a voice in Washington, Falcon Global Capital, a San Diego-based Bitcoin fund, filed lobbying registration paperwork last week.

Bitcoin FundAnd Falcon isn't sending just anybody, either. According to the filing, the Bitcoin fund's lobbyist will be company Chief Executive Officer Brett Stapper.

"Our objectives at this point are very simple. In our discussions and debates we have realized that those who oppose Bitcoin don't really oppose it, they simply don't understand it. Our main concern is that our elected officials will pass regulations without being fully educated on the topic which could have a negative impact on the Bitcoin ecosystem," Stapper told Business Insider.

Falcon Global Capital launched in March and invests entirely in Bitcoin. It functions like a gold hedge fund, purchasing and storing bitcoins ranging in value from $25,000 to $10,000,000 on behalf of investors.

For now, however, the Falcon Bitcoin fund is only open to accredited investors (an individual with at least $1 million in assets or net income of $200,000 a year), much like SecondMarket's Bitcoin fund, the Bitcoin Investment Trust.

It's a fledgling business, and Stapper is going to Washington in part to head off any misguided regulations.

"My business is Bitcoin and we're the first investment bank to work solely in virtual currencies, so I'm very pro-Bitcoin," Stapper told Bank Innovation. "I was very disturbed to see no one has done this yet and I felt like hopefully if we start, that others will come and help."

While Falcon is the first Bitcoin-based company to seek a lobbyist on Capitol Hill, it won't have the first Bitcoin lobbyist there. Last month, Mastercard Inc. (NYSE: MA) said it would be enlisting five staffers from the lobbying firm Peck Madigan Jones to focus on legislative issues concerning Bitcoin.

The Mastercard lobbyists aren't likely to be advocating for Bitcoin, however, as Stapper intends to do.

And while Mastercard has said its lobbyists will focus on "gathering information," Stapper isn't so sure.

The possibility that Mastercard could see Bitcoin as a threat to its credit card business - and lobby in favor of crippling regulations - is also on Stapper's radar.

Falcon Bitcoin Fund Taking No Chances in Washington

Still, Stapper said he remains optimistic that Mastercard and other legacy payment companies will realize the digital currency's potential.

"Hopefully MasterCard will adopt it. Yes [they're competitors as a transaction service] but that's how innovative companies continue to grow - they can adopt or they cannot," Stapper told Bank Innovation. "Back in the day, the horse-and-buggy operators opposed automobiles and we know how that ended up. Similarly, you see Western Union, a company that has continued to embrace innovation, and they continue to prosper."

And apart from thwarting any possible pushback from those entities that might oppose Bitcoin - and by extension, his Bitcoin fund - Stapper wants to make sure that government regulators have a clear understanding of the digital currency.

Regulators in Washington and New York have held several hearings over the past six months to find out more about Bitcoin, but some lawmakers have spoken out against Bitcoin in the wake of such black eyes as the Silk Road drug website (which used Bitcoin for payments) and the collapse of the Mt. Gox exchange, which lost 750,000 customer bitcoins.

Stapper wants to be sure lawmakers know Bitcoin is bigger than that and that businesses can take precautions to make digital currencies less risky. For example, his Falcon Bitcoin fund offers investors insurance that will reimburse customers for bitcoins lost to theft or other issues.

Stapper knows it won't be easy, but he knew that when he made the decision to go to Washington.

"I first got the idea [to become a lobbyist] when I was in DC speaking at a conference on May 5 and 6," Stapper told Bank Innovation. "I decided to reach out and speak to a number of congressmen, and I was very disturbed by what they thought of Bitcoin - a 'renegade PayPal' used for drugs and weapons. My goal is educating them - almost everyone I've spoken to changes their mind once they get it. Once the light bulb goes off, they understand the potential impact Bitcoin can have."

Now that Bitcoin is getting a lobbyist in Washington (thanks to the Falcon Bitcoin fund), do you think the digital currency has come of age? Or does it still have something to prove? Tell us on Twitter @moneymorning or Facebook.

Meanwhile, the Winklevoss Bitcoin ETF, which is a Bitcoin fund that retail investors will be able to buy into, is getting closer and closer to SEC approval. One of the few questions remaining is what its ticker symbol will be. Here's why the ticker for the Winklevoss Bitcoin ETF matters...

Related Articles:

Business Insider: There's a Pro-Bitcoin Lobbyist in Washington Now Bank Innovation: Meet the First Pro-Bitcoin Lobbyist in DC CoinDesk: Falcon Global Capital Hires Lobbyists to Promote Bitcoin in Washington

Angie Herbers’ Firm to Merge With Wealth Management Marketing

After a “four-year, overnight merger” process, Angie Herbers Inc., led by Angie Herbers, and Wealth Management Marketing Inc., led by Kristen Luke, are merging to form a new, as-yet-unnamed company with 14 employees that will be based in San Diego.

Herbers, whose firm was founded 12 years ago (and who has been writing for Investment Advisor and ThinkAdvisor for nearly that long; view her most recent writings here), made that quip in an interview Thursday in which she explained the rationale for the merger and the offerings to advisors that the merged company will provide.

The merger is one of equals, with Herbers holding half of the new company’s stock and Luke holding the other 50%. “It’s a true merger,” said Herbers, “creating a new brand and a new name,” which will be rolled out either late this year or early in 2015. Herbers will be managing partner; she and her four employees will move from Manhattan, Kansas, to San Diego, where Wealth Management (founded in 2008) and its 10 employees (including Luke) is based.

“Kristen and I have worked with mutual clients for more than four years,” Herbers said, and “lots of clients told us we should merge; it took us four years for us to say ‘You’re right’” to those clients.

For clients, Herbers said, normally “I would come in at the very beginning and develop a strategy” to help create “great people, processes and procedures, M&A or a succession plan,” but then would refer to Luke’s firm for fulfilling an advisory firm’s marketing strategy.

“I was referring all this business to Kristen, and then we’d work together,” says Herbers, and that’s when clients would say “Why not work together under one firm that offers it all? Once we said yes, it became easy to put together” the merger.

Herbers admits, however, that while she helped “facilitate over 100 mergers” for her advisor clients, “it’s different when it’s your own.”

Why the merger? Herbers says she’s doing it “for myself and my employees and my clients,” since “the missing piece [at her firm] has always been the marketing strategy.” Moreover, she feels strongly that “the competitive landscape of the advisory industry is changing,” which means that for advisors “it’s harder to get new clients from referrals only,” which necessitates a rigorous marketing strategy. “I either had to do this as an advocate for my clients,” Herbers aid, “or send all that business to Kristen.”

Herbers says “our ultimate objective is to be the leading business management firm for independent advisors — for marketing, operations, recruiting and human capital, M&A and succession planning.”

So what’s the plan for two consultants? “We have a clear operational plan that will be rolled out in 2015. We don’t want to do it too fast; we’re asking our clients to change with us, so we need to give clients time to get used to having one firm” to work with.

The toughest part of the process turned out to be the most rewarding, she said. “I was worried” about asking the employees to relocate halfway across the country, Herbers said. “I offered moving packages, and they all agreed,” she says, which served as a “validation of what I worked all my career to accomplish: happy employees. It was the best moment of my professional life.”

---

Check out Should You Be Managing People? How to Tell by Angie Herbers on ThinkAdvisor.

Thursday, May 29, 2014

Why the Roaring S&P 500 Is Really Showing Signs of Weakness

Looking back over the past year, it’s quite amazing to see the shift in market sentiment. Last year, many investors were quite skeptical of the market, best represented by the S&P 500, and this led to cautious market sentiment.

This year, with the S&P 500 hitting new all-time highs, market sentiment has certainly improved substantially. But the question is: can the move continue?

Obviously, nothing moves up in a straight line. However, much of the market sentiment has been built on the belief that the economy will rebound strongly next year. Now, there are some signs emerging that suggest this might not be the case.

While the economy has improved substantially since its depths during the Great Recession, there’s much more work to be done.

Consumer spending is a large part of the economy, and many companies within the S&P 500 are impacted by it. The latest data by the U.S. Department of Commerce indicates that retail sales for the month of August increased by only 0.2%—a disappointment versus expectations of an increase of 0.5%. (Source: U.S. Department of Commerce web site, last accessed September 13, 2013.)

So now we have a situation where the largest part of the U.S. economy—consumer spending—appears to be slowing. If this continues, this could be a dangerous scenario, as market sentiment is clearly in the camp that both revenues and earnings will reaccelerate.

For the S&P 500 to continue moving upward, we need to see revenue growth in addition to earnings growth. Much of the increase in earnings that has helped propel the S&P 500 upward was due to cost-cutting measures. In general, revenues have remained stagnant over this past year.

If the consumer begins to pull back on spending and companies start facing higher input costs, this would be a negative not only for revenues, but for earnings as well. I don’t believe that market sentiment is taking this possibility into account.  

Why the Roaring S&P 500 Is Really Showing Signs of Weakness

Chart courtesy of www.StockCharts.com

One interesting note regarding market sentiment and the S&P 500 is that as stocks made new highs in early August, the moving average convergence/divergence (MACD) did not follow suit.

This type of negative divergence does not necessarily mean that the S&P 500 has to drop, but it is a worrisome indicator that, to me, is indicative of the very real possibility that market sentiment and momentum is beginning to shift away from the bullish camp.

Unless we begin to see some growth in both revenues and income soon—which needs to come from higher wages in addition to accelerating jobs growth that prompts consumer spending—I think it will be increasingly difficult for companies to increase revenues going forward.

This article Why the Roaring S&P 500 Is Really Showing Signs of Weakness was originally published at Investment Contrarians

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Wednesday, May 28, 2014

Cliffs Natural Resources: ‘Breach of Covenants Possible’ Despite Cost Cuts, RBC Says

After yesterday’s close, Cliffs Natural Resources (CLF) said that it would cut capital spending by $100 million in 2014, its remedy for continued weakness in iron and coal.

Wells Fargo’s Sam Dubinsky says Cliffs’ management is “doing the best it can” but that “pain is inevitable.” He explains why:

While we think the new CEO is doing a commendable job tightening operations, we see no easy way out for CLF shares due to negative long-term fundamentals for iron ore and ongoing cost challenges in Canada. Note we estimate Cliff’s recurring EBITDA at ~$500M at today’s iron ore pricing, below current Street estimates near $880-$890M for 2014/2015, though the cap-ex cut should keep free cash flow near break-even.

Agence France-Presse/Getty Images

RBC Capital Markets’ Fraser Phillips and team thinks Cliffs Natural Resources could breach its debt covenants:

Cliffs’ reduction of its capital expenditure will help it to conserve cash during the current weak iron ore pricing environment. While we view the capital outlay reduction as a positive, Cliffs’ debt covenant holiday is over, and a breach of covenants is possible if the current weak iron ore price environment persists.

Cliffs must maintain a total funded debt/EBITDA ratio less than 3.5 and an EBITDA to interest expense ratio for the trailing four quarters of at least 2.5. At the end of Q1/14, we calculate that Cliffs’ debt/EBITDA ratio was 2.5 and EBITDA/interest was 7.5, and we expect Cliffs to end the year with debt/EBITDA of 3.1 and EBITDA/interest of 6.5. However, our current iron ore price forecast for 2014 is $119.25/tonne CFR China. Our analysis indicates that if the average spot price for 2014 is $114.30/tonne CFR China or below, Cliffs will trigger its total funded debt/ EBITDA covenant. This corresponds to a spot price for the remainder of the year of $110.25/tonne or below.

Shares of Cliffs Natural Resources have slid 3.9% to $15.73 at 11:13 a.m., while other iron miners have gotten hits as well. Rio Tinto (RIO) has dropped 2.8% to $53.04, BHP Billiton (BHP) has fallen 1.3% to $69.18 and Vale (VALE) is off 0.7% at $12.98.

Best Tech Stocks To Own Right Now

Amgen (AMGN) is among the hottest large-cap biotech stocks of this year. The stock has been following an upward trend since last April. Most recently, it rallied past the previous 52-week highs. After this run, the stock even surpassed the 1-year target estimates of many analysts. While it still looks cheap based on forward P/E ratio, there are growing concerns among the investors. Traders are becoming more apprehensive about a looming correction. I think a modest correction is possible. However, the company can be a good long-term investment. Here, I look at the company's financial profile and its business prospects to prove my point.

Stock Performance at a Glance

Amgen and its close peer Gilead (GILD) have followed similar trends this year. The price charts of both companies show that the bullish momentum started from the mid year of 2012. As companies followed a steady upward trend, a sharp correction is less likely to happen. Should the prices enter the correction stage the decrease will be gradual, as well.

Best Tech Stocks To Own Right Now: Citrix Systems Inc.(CTXS)

Citrix Systems, Inc. designs, develops, and markets technology solutions that deliver information technology services on-demand worldwide. It offers desktop solutions, including Citrix XenDesktop, an integrated desktop virtualization system; Citrix XenApp, an application virtualization solution; and Citrix XenClient, a bare-metal hypervisor, which runs directly on the client device hardware. The company also provides online services, comprising GoToMeeting for online meetings, sales demonstrations, and collaborative gatherings; GoToWebinar, which allows users to host, attend, or participate in a Webinar session; GoToTraining, a training tool that allows trainers to deliver content to various trainees; Integrated HiDef Audio, which provides a audio and Web experience; HiDef Audio that offers audio options with reservationless audio conferencing; GoToAssist, a remote technical-support solution; GoToManage solution for IT management; and GoToMyPC, which offers remote access t o PC and Mac from an Internet-connected computer. In addition, it provides datacenter and cloud solutions, such as Citrix NetScaler, a Web application delivery controller; Citrix Access Gateway, a SSL/VPN that delivers applications with policy-based SmartAccess control; Citrix Repeater Solutions that provide application delivery to branch office users; Citrix XenServer, a platform for managing server virtualization in the datacenter; and Citrix Essentials for XenServer and Hyper-V solution for lab automation, high availability, provisioning, workflow orchestration, and integration with storage systems. Further, the company provides consulting, technical support, and product training and certification services. It markets and licenses its products to enterprise customers through systems integrators, value-added resellers, value-added distributors, and original equipment manufacturers, as well as through the Web. The company was founded in 1989 and is headquartered in Fort Lau derdale, Florida.

Advisors' Opinion:
  • [By Monica Gerson]

    Citrix Systems (NASDAQ: CTXS) lowered its forecast for the third quarter. Citrix shares tumbled 13.08% to $57.94 in the after-hours trading session.

  • [By Lee Jackson]

    Citrix Systems Inc. (NASDAQ: CTXS) is a name that is showing up on top lists around Wall Street. The company has seen extremely strong cloud software sales growth and recently expanded its strategic alliance with Cisco Systems Inc. (NASDAQ: CSCO) to support data centers. The Thomson/First Call price target for the stock is $80.

Best Tech Stocks To Own Right Now: Proofpoint Inc (PFPT)

Proofpoint, Inc. (Proofpoint), incorporated in 2002, is a security-as-a-service vendor that delivers data protection solutions, which helps medium- and large-sized organizations worldwide. Proofpoint�� security-as-a-service platform consists of an integrated suite of on-demand data protection solutions, including threat protection, regulatory compliance, archiving and governance, and secures communication. It provides a multi-tiered security-as-a-service platform consisting of solutions, platform technologies and infrastructure. The Company�� security-as-a-service platform includes four solutions bundled for the convenience of its customers: Proofpoint Enterprise Protection, Proofpoint Enterprise Privacy, Proofpoint Enterprise Archive and Proofpoint Enterprise Governance. Its platform services consist of content inspection, reputation, encryption and key management, notification and workflow, and analytics and search. During the year ended December 31, 2011, the Company acquired NextPage, Inc. In September 2013, Proofpoint Inc completed its acquisition of Armorize Technologies Inc. In October 2013, the Company acquired Silicon Valley based Sendmail, Inc.

The Company�� solutions are used by approximately 2,400 customers worldwide, including 26 of the Fortune 100, protecting tens of millions of end-users. It markets and sells its solutions worldwide both directly through the sales teams and indirectly through a hybrid model. It also distributes its solutions through International Business Machines Corp. (IBM), Microsoft Corporation and VMware, Inc.

Proofpoint Enterprise Protection

Proofpoint Enterprise Protection is the Company�� communications and collaboration security suite designed to protect customers' mission-critical messaging infrastructure from outside threats including spam, phishing, unpredictable e-mail volumes, malware and other forms of objectionable or dangerous content before they reach the enterprise. Key capabilities within proofpoint en! terprise protection include threat detection, virus protection, zero-hour threat detection and smart search.

Proofpoint Enterprise Privacy

The Company�� data loss prevention, encryption and compliance solution defends against leaks of confidential information, and helps ensure compliance with common United States, international and industry-specific data protection regulations, including HIPAA, GLBA, PIPEDA and PCI-DSS. Key capabilities within Proofpoint Enterprise Privacy include Advanced data loss prevention, Flexible remediation and supervision, Policy-based encryption and Secure file transfer.

Proofpoint Enterprise Archive

Proofpoint Enterprise Archive is designed to ensure accurate enforcement of data governance, data retention and supervision policies and mandates; cost effective litigation support through discovery, and active legal hold management. Proofpoint Enterprise Archive can store, govern and discover a range of data, including e-mail, instant message conversations, social media interactions, and other files throughout the enterprise. The key capabilities within Proofpoint Enterprise Archive include Secure cloud storage, Search performance, Flexible policy enforcement, Active legal-hold management and End-user supervision.

Proofpoint Enterprise Governance

Proofpoint Enterprise Governance provides organizations the ability to track, classify, monitor, and apply governance policies to unstructured information across the enterprise. The key capabilities within Proofpoint Enterprise Governance include Document Tracking-Digital Thread, Cloud-based Search and Analytics, and Flexible policy enforcement.

The Company competes with Cisco Systems, Inc., EMC Corporation, Google Inc., Hewlett-Packard Company, Intel and Microsoft.

Advisors' Opinion:
  • [By Sean Williams]

    One company in particular I'd suggest putting back on the sales rack is Proofpoint (NASDAQ: PFPT  ) , a threat and regulatory security-as-a-service provider. The profit potential is certainly there. Proofpoint's SaaS model is built around getting the client hooked on its products and making it inconvenient and cost-inefficient for them to switch to a competitor. In other words, it's setting up its own razor-and-blades model that should fuel recurring revenue for years to come.

  • [By John Kell]

    Security services provider Proofpoint Inc.(PFPT) shares popped after the company posted better-than-expected fourth-quarter results and issued optimistic revenue guidance. Shares jumped 10% to $40.24 premarket.

10 Best Freight Stocks To Buy For 2015: PDF Solutions Inc.(PDFS)

PDF Solutions, Inc. provides infrastructure technologies and services for the design and manufacture of integrated circuits (IC) in Asia, the United States, and Europe. It offers manufacturing process solutions that include process research and development, and process integration and yield ramp; volume manufacturing solutions; and design-for-manufacturability (DFM) solutions, such as logic DFM, circuit level DFM, memory DFM, and pdBRIX Physical IP solutions. The company also offers characterization vehicle (CV) infrastructure, which includes CV test chips, pdCV analysis software, and pdFasTest electrical wafer test system; Yield Ramp Simulator software that analyzes an IC design to compute its systematic and random yield loss; and Circuit Surfer software, which estimates the parametric performance yield and manufacturability of analog/mixed-signal/RF blocks. In addition, it provides pdBRIX platform, which includes software for identifying and developing a set of physical IP building blocks that are tailored to a given manufacturing process and target product application; dataPOWER YMS platform that collects yield data, loads, and stores it in an integrated database and allows product engineers to identify and analyze production yield issues; FDC software, which provides fault detection and classification capabilities to identify sources of process variations and manufacturing excursions by monitoring equipment parameters; and YA-FDC service and software platform that allows online modeling to create real-time virtual measurements of final product attributes during processing. PDF Solutions sells its technologies and services through direct sales force, sales representatives, and strategic alliances to integrated device manufacturers, fabless semiconductor design companies, and foundries in the microprocessors, memory, graphics, image sensor solutions, and communications segments. The company was founded in 1992 and is headquartered in San Jo se, California.

Advisors' Opinion:
  • [By Roberto Pedone]

    PDF Solutions (PDFS) provides infrastructure technologies and services to improve yield and optimize performance of integrated circuits. This stock closed up 2.6% at $21.51 in Friday's trading session.

    Friday's Volume: 543,000

    Three-Month Average Volume: 112,159

    Volume % Change: 393%

    From a technical perspective, PDFS trended up here right above some near-term support at $20.50 and into new 52-week-high territory with above-average volume. This stock has been uptrending strong for the last three months, with shares moving higher from its low of $14.95 to its intraday high on Friday of $21.64. During that move, shares of PDFS have been consistently making mostly higher lows and higher highs, which is bullish technical price action. That move has also been accompanies by heavy upside volume flows since mid-July.

    Traders should now look for long-biased trades in PDFS as long as it's trending above some near-term support at $20.50 or above its 50-day at $19.06 and then once it sustains a move or close above Friday's high of $21.64 with volume that's near or above 112,159 shares. If we get that move soon, then PDFS will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $25 to $28.

Best Tech Stocks To Own Right Now: Monolithic Power Systems Inc.(MPWR)

Monolithic Power Systems, Inc., a fabless semiconductor company, designs, develops, and markets analog and mixed-signal semiconductors. It offers direct current (DC) to DC converter integrated circuits (IC) that are used to convert and control voltages of various electronic systems, such as portable electronic devices, wireless LAN access points, computers, set top boxes, televisions and monitors, automobiles, and medical equipments. The company also provides lighting control ICs for use in systems that offer the light source for liquid crystal display (LCD) panels in notebook computers, LCD monitors, car navigational systems, and LCD televisions. In addition, it provides audio amplifier ICs to amplify sound produced by audio processors; and Class-D audio amplifiers for plasma televisions, LCD televisions, and digital versatile disk players. The company serves consumer electronics, communications, and computing markets. Monolithic Power Systems, Inc. sells its products thr ough third party distributors and value-added resellers, as well as directly to original equipment manufacturers, original design manufacturers, and electronic manufacturing service providers. The company was founded in 1997 and is headquartered in San Jose, California.

Advisors' Opinion:
  • [By Eric Volkman]

    McDonald is a veteran CFO, having served in that position for a number of tech companies including eASIC, Advanced Analogic Technologies, and Monolithic Power Systems (NASDAQ: MPWR  ) .

  • [By Lee Jackson]

    Monolithic Power Systems Inc. (NASDAQ: MPWR) has a diverse market that includes communications, gaming and computing to continue to drive its growth, all markets that will pay a premium for its technology. The list of tech companies that use its chips is impressive. Deutsche Bank has a $30 target, the same as the consensus target.

  • [By Seth Jayson]

    Calling all cash flows
    When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Monolithic Power Systems (Nasdaq: MPWR  ) , whose recent revenue and earnings are plotted below.

Best Tech Stocks To Own Right Now: Omnicell Inc.(OMCL)

Omnicell Inc. provides automated solutions for hospital medication and supply management primarily in the United States and Canada. The company offers medication use products, which include OmniRx that automates the management and dispensing of medications at the point of use; SinglePointe, a software product that controls medications on a patient-specific basis; AnywhereRN, a software that allows nurses to remotely operate automated dispensing cabinets; Pandora Analytics, a reporting and data analytics tool; and Savvy Mobile Medication System, a mobile platform for hospital information systems. Its medication use products also include OmniLinkRx, a software product that automates communication between nurses and the pharmacy; WorkflowRx, an automated storage, retrieval, inventory management, and repackaging solution; controlled substance barcode inventory management system; and Anesthesia Workstation, a secure dispensing system for the management of anesthesia supplies an d medications. In addition, the company provides medical and surgical supply products, which comprise Omnicell Supply Solution that automates the management and dispensing of medical and surgical supplies at the point of use; Supply/Rx Combination Solution, which manages medications and supplies in one versatile cabinet; Omnicell Tissue Center that manages the chain of custody for bone and tissue specimens; OptiFlex SS, which supplies modules for the perioperative areas; OptiFlex CL that supplies modules for the cardiac catheterization lab and other procedure areas; and OptiFlex MS, a system for the management of medical and surgical supplies. Further, it provides customer education and training, and maintenance and support services. The company was formerly known as Omnicell Technologies, Inc. and changed its name to Omnicell, Inc. in 2001. Omnicell, Inc. was founded in 1992 and is headquartered in Mountain View, California.

Advisors' Opinion:
  • [By Seth Jayson]

    Calling all cash flows
    When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Omnicell (Nasdaq: OMCL  ) , whose recent revenue and earnings are plotted below.

  • [By Leo Fasciocco]

    Omnicell (OMCL) is organized into two operating business segments: Acute Care, which primarily includes sold to hospitals, and non-acute care, for customers outside of hospitals.

  • [By Seth Jayson]

    Basic guidelines
    In this series, I examine inventory using a simple rule of thumb: Inventory increases ought to roughly parallel revenue increases. If inventory bloats more quickly than sales grow, this might be a sign that expected sales haven't materialized. Is the current inventory situation at Omnicell (Nasdaq: OMCL  ) out of line? To figure that out, start by comparing the company's inventory growth to sales growth. How is Omnicell doing by this quick checkup? At first glance, not so great. Trailing-12-month revenue increased 33.5%, and inventory increased 53.7%. Comparing the latest quarter to the prior-year quarter, the story looks potentially problematic. Revenue expanded 35.8%, and inventory increased 53.7%. Over the sequential quarterly period, the trend looks OK but not great. Revenue dropped 3.4%, and inventory dropped 2.9%.

Best Tech Stocks To Own Right Now: Unisys Corporation (UIS)

Unisys Corporation provides information technology (IT) services, software, and technology that solve mission-critical problems for clients worldwide. It operates in two segments, Services and Technology. The Services segment provides outsourcing services, including management of customers� data centers, computer servers, and end-user computing environments, as well as specific business processes; systems integration and consulting services, such as assessing the security and cost effectiveness of clients� IT systems and enabling them to design, integrate, and modernize mission-critical applications; infrastructure services consisting of design, warranty, and support services for its customers� IT infrastructure, such as networks, desktops, servers, and mobile and wireless devices; and maintenance services. The Technology segment designs and develops servers and related products consisting of enterprise-class servers, which comprise the ClearPath family of servers and t he ES7000 family of Intel-based servers, as well as operating system software and middleware; and provides data center, infrastructure management, and cloud computing offerings for clients to virtualize and automate their data-center environments. The company serves public sector; financial services; and other commercial markets comprising communications and transportation. Unisys Corporation markets its products and services primarily through direct sales force, as well as through distributors and alliance partners. Unisys Corporation was founded in 1886 and is headquartered in Blue Bell, Pennsylvania.

Advisors' Opinion:
  • [By Jake L'Ecuyer]

    Unisys (NYSE: UIS) shares tumbled 11.86 percent to $25.50 on Q1 results. Unisys reported a quarterly loss of $0.74 per share on revenue of $762.0 million.

Best Tech Stocks To Own Right Now: Techne Corporation(TECH)

TECHNE Corporation develops, manufactures, and sells biotechnology products, and hematology calibrators and controls worldwide. The company?s Biotechnology segment offers proteins, such as cytokines, and enzyme substrates and inhibitors; antibodies, including polyclonal and monoclonal antibodies; immunoassays comprising quantikine kits for the detection of human and animal proteins, and immunoassays that allow researchers to quantify a specific analyte in a biological fluids sample; clinical diagnostic immunoassay kits consisting of erythropoietin, transferrin receptor, and beta2-microglobulin immunoassays for use as in vitro diagnostic devices; flow cytometry products, such as fluorochrome labeled antibodies and kits; intracellular cell signaling products, including antibodies, phospho-specific antibodies, antibody arrays, active caspases, kinases, and phosphatases, and ELISA assays to measure the activity of apoptotic and signaling molecules; and natural and synthetic c hemical compounds for use as agonists, antagonists, and inhibitors of various biological functions by investigators. Its Hematology segment provides whole blood CBC controls controls and calibrators; linearity and reportable range controls for the assessment of the linearity of hematology analyzers for white blood cells, red blood cells, platelets, and reticulocytes; whole blood reticulocyte controls for manual and automated counting of reticulocytes; whole blood flow cytometry controls for the identification and quantification white blood cells; whole blood glucose/hemoglobin control to monitor instruments, which measure glucose and hemoglobin in blood; erythrocyte sedimentation rate control to monitor erythrocyte sedimentation rate tests; and multi-purpose platelet reference controls, such as Platelet-Trol II and Platelet-Trol Extended for use by automated and semi-automated analyzers, which monitor platelet levels. The company was founded in 1976 and is headquartered in M inneapolis, Minnesota.

Advisors' Opinion:
  • [By Rich Duprey]

    Medical device maker Techne (NASDAQ: TECH  ) announced today that it's taking a 100% ownership stake in�Bionostics Holdings for $104 million cash.

  • [By Nicolas73]

    Digitalized data (documents, books, articles) volume is growing at an incredible pace. Moreover, it would be simply not possible (nor useful) to print everything.Company and institutions encourage people to print something only when strictly needed, both for environmental and for cost-cutting purposes.Fax machines will quickly become (tech) museum pieces, replaced by emails (people are free to print an email whenever it is really necessary).Combo printers (scanner and printer) will quickly replace most photocopiers (people will scan everything and print only when it is really necessary).
    I think Xerox's management felt the responsibility to deal with these kinds of business dangers as soon as they became evident. I also think they brilliantly addressed and solved them.

Best Tech Stocks To Own Right Now: RigNet Inc.(RNET)

RigNet, Inc. provides remote communications services for the oil and gas industry. It offers remote communications services through a controlled and managed Internet protocol/multiprotocol label switching (IP/MPLS) global network, enabling drilling contractors, oil companies, and oilfield service companies to communicate. The company offers a communications package of voice, data, video, networking, and real-time data management to offshore and land-based remote locations. It primarily provides voice-over-Internet-protocol, data, and high-speed Internet access, as well as other value-added services, such as video conferencing solutions, TurboNet solutions for wide area network, real-time data management solutions, Wi-Fi hotspots and Internet kiosks, wireless intercoms, and handheld radios. The company also offers Secure Oil Information Link, a managed members-only communications network hub that enables collaborative partners, suppliers, and customers to transfer and share data. It serves the owners and operators of offshore drilling rigs and production facilities, land rigs, remote offices, and supply bases primarily in the United States, Brazil, Norway, the United Kingdom, Nigeria, Qatar, Saudi Arabia, Singapore, and Australia. The company was founded in 2000 and is headquartered in Houston, Texas.

Advisors' Opinion:
  • [By Seth Jayson]

    Calling all cash flows
    When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on RigNet (Nasdaq: RNET  ) , whose recent revenue and earnings are plotted below.

Best Tech Stocks To Own Right Now: Baidu Inc.(BIDU)

Baidu, Inc. provides Chinese and Japanese language Internet search services. Its search services enable users to find relevant information online, including Web pages, news, images, multimedia files, and blogs through the links provided on its Websites. The company also offers online community-based products and entertainment platforms; an instant messaging service; and a consumer-oriented e-commerce platform. In addition, it designs and delivers online marketing services and auction-based P4P services that enable its customers to reach users who search for information related to their products or services. The company serves online marketing customers consisting of small and medium sized enterprises, large domestic corporations, and Chinese divisions or subsidiaries of multinational corporations primarily operating in the medical, machinery, education, franchising, electronic products, e-commerce, ticketing, tourism, information technology, consumer products, real estate, entertainment, and financial services industries. It sells its online marketing services directly, as well as through its distribution network. The company was formerly known as Baidu.com, Inc. and changed its name to Baidu, Inc. in December 2008. Baidu, Inc. was founded in 2000 and is headquartered in Beijing, the People?s Republic of China.

Advisors' Opinion:
  • [By Seth Jayson]

    Baidu (Nasdaq: BIDU  ) reported earnings on July 24. Here are the numbers you need to know.

    The 10-second takeaway
    For the quarter ended June 30 (Q2), Baidu beat expectations on revenues and met expectations on earnings per share.

  • [By Rick Munarriz]

    Baidu (NASDAQ: BIDU  ) will have to try harder if it wants to win back its status as the dot-com darling of China. The leading Chinese search engine fell short in its latest quarter. Revenue soared 40% to $961 million, but analysts were hovering around the $969 million mark. Profitability inched 9% higher to $328.9 million -- or $0.95 a share -- but Wall Street was expecting a profit of $1.03 a share.

Tuesday, May 27, 2014

Coal: No ‘Imminent Bankruptcy Risk’ But UBS Discusses Anyway

Pick a coal stock–any coal stock–and it’s likely that those shares have been pounded this year. That’s made some analysts consider whether they’re cheap enough to buy. UBS thinks its time to consider bankruptcy, even if its not a near-term concern.

Bloomberg

How bad have the losses been this year? Peabody Energy (BTU) is down 9.5% so far in 2014, while Arch Coal (ACI) is off 16%. Alpha Natural Resources (ANR) has plunged 48% and Walter Energy (WLT) had plummeted 66%.

UBS analyst Kuni Chen explains why now’s a good time to start thinking about bankruptcy in the coal sector:

Since 2012, we have seen Patriot Coal and James River file for bankruptcy protection. There continues to be signs of mounting financial distress in the coal sector with some tranches of Walter paper trading at 60 cents on the dollar. Alpha and Arch paper is trading a bit better in the 70-80 range for unsecured debt. With yields approaching the mid-teens percentages for Arch Coal/Alpha Natural Resources paper, the bonds are edging closer to distressed levels. Meantime, the equities continue to be weak with Walter Energy down almost 70% in the last 12 months and Alpha Natural Resources down 40% vs. the S&P 500 +14%. While there does not appear to be any imminent bankruptcy risk, we want to discuss the potential event path to a next potential liquidity crisis looking ahead 2-3 years. Within our coverage universe, the companies with the most financial leverage include Alpha Natural, Arch Coal, and Walter Energy.

It’s not like any of them are low on cash, however. Chen notes that Alpha Natural Rea sources and Arch Coal each have $1 billion in cash equivalents, while Walter Energy has $430 million. Chen says that’s enough to last Alpha Natural Resources and Arch Coal three years, and Walter Energy has enough to last until the end of 2015. So what happens if that cash runs out? Not necessarily Chapter 11. Chen explains:

If companies deplete available cash, we expect credit lines to be drawn and more
secured paper issued to the extent possible. In our view, Alpha, Arch, and Walter may not be good Chapter 11 restructuring candidates since debt comprises most of the long term liability pie. There may be limited ability to shed other liabilities through a restructuring process. Hence, it may make more sense for unsecured bondholders to do exchange offers or agree to other concessions out of bankruptcy. That said, companies with a larger amount of secured debt, like Walter, may be more inclined to go through a Chapter 11 process in anticipation of higher recoveries.

Chen also thinks it makes sense for Peabody Energy to sell more stock to pay down its big debt load:

We've been getting more questions from investors on whether Peabody may consider an equity raise. In our view, the arguments in favour of an equity raise make a lot of sense and give Peabody a clear way to tackle its $6B debt load without shedding assets. Balance sheet leverage is high but not disastrous at 8-9x net debt/EBITDA this year. In addition, Peabody's $4.8B market cap provides more flexibility to do an equity raise. For argument's sake, if Peabody did a $2B equity raise, net leverage would fall to a range of 4-5x and debt-to-capitalization would drop from 60% to the low 40% range. This would provide added flexibility to weather the downturn in the seaborne coal markets should prices stay at depressed levels for a longer than expected period of time. Contrary to some views, a recapitalization of the balance sheet probably does not provide substantial dry powder for Peabody to make acquisitions. However, if coal markets strengthen somewhat then the recapitalization could bring net leverage down to a reasonable 3-4x level by 2016.

Shares of Walter Energy have dropped 1.4% to $5.61 at 3:44 p.m. today, while Alpha Natural Resources has fallen 0.3% to $3.71 and Peabody Energy is unchanged at $17.22. Arch Coal has gained 1.1% to $3.73.

Could Zinc Be The Next Base Metals Star?

A combination of Indonesian ore restrictions, and fears over possible trade sanctions on Russian miners, has seen nickel emerge as the base metals suite's darling during 2014. The metal has advanced 40% since the turn of the year, breaching 27-month peaks above $21,000 per tonne in the process, and more strength looks on the agenda as these supply concerns rumble on.

But for many, a backcloth of declining supply levels is also expected to propel zinc prices skywards in the near future. Bank of America-Merrill Lynch expects the galvanising metal to breach $2,400 per tonne as soon as next year, a sizeable 15% improvement if realised and with many tipping further price growth further out.

Market deficit poised to worsen in coming years

Like nickel, the zinc market is beset by worries over production levels over both the short and near term. However, wider macroeconomic fears have constrained zinc's price performance in recent months, and prices are essentially flat from those recorded at the start of 2014 around $2,100 per tonne.

Still, a spate of mine closures scheduled from the middle of next year looks set to become an increasingly-significant price driver. MMG Limited, one of the planet's biggest zinc producers and owner of the Century mine in Queensland — by far Australia's largest zinc project — expects zinc production from the asset's open pit to range between 465,000 and 480,000 tonnes this year.

This marks a significant decline from 488,233 tonnes in 2013 and 514,707 tonnes in the previous year, and last output from the project is anticipated during the middle of 2015. This downtrend is mirrored by numerous other major projects across the globe. On top of this, the effect of reduced commodity prices on capital expenditure across the mining community is stymieing the development of the next generation of 'super projects.'

Meanwhile, a steady improvement in the global economy continues to bolster demand for the metal, which is used predominantly in battery production as well as to coat iron and steel to protect against corrosion. Galloping automobile demand in emerging markets, in addition to resurgent car sales in Western Europe and North America, has proved pivotal in driving zinc demand higher.

And significantly, a backdrop of rising construction activity in China — the Asian country is responsible for almost half of total zinc consumption — and surging domestic demand for electrical goods also bodes well for metal prices. Indeed, the International Lead and Zinc Study Group (ILZSG) estimates that Chinese apparent demand rose 7.6% last year versus 3.4% in the US and 4% in Japan.

Latest forecasts from metals specialists Sucden Financial and FastMarkets point to a 5% improvement in zinc demand in 2014, to 13.6 million tonnes, outstripping an anticipated 4% output advance to 13.5 million tonnes. These figures push last year's market deficit to 120,000 tonnes from 68,000 tonnes in 2013.

This trend of buoyant consumption outstripping production increases has been the story of the zinc market during recent years — next year's projected deficit compares markedly with oversupply of 375,000 tonnes in 2011, based on ILZSG figures, and 248,000 tonnes in 2012.

Although zinc stocks remain relatively plentiful — material currently held in London Metal Exchange warehouses currently stands at around 735,000 tonnes — levels have collapsed 25% during the past six months and now stand at their lowest since the autumn of 2011.

Of course the prospect of vast quantities of zinc being released onto the market from China is a very real threat, as the metal's role as collateral for a range of financing activities comes under greater regulatory scrutiny.

But as global metal consumption looks set to gallop steadily higher, and output from key mines is not likely to be replaced for some time, in my opinion zinc looks set to enjoy solid long-term price appreciation.

Searching for the Market Boogeyman

With the stock market reaching all-time record highs (S&P 500: 1900), you would think there would be a lot of cheers, high-fiving, and back slapping. Instead, investors are ignoring the sunny, blue skies and taking off their rose-colored glasses. Rather than securely sleeping like a baby (or relaxing during a three-day weekend) with their investment accounts, people are biting their fingernails with clenched teeth, while searching for a market boogeyman in their closets or under their beds.If you don't believe me, all you have to do is pick up the paper, turn on the TV, or walk over to the office water cooler. An avalanche of scary headlines that are spooking investors include geopolitical concerns in Ukraine & Thailand, slowing housing statistics, bearish hedge fund managers (i.e., Tepper Einhorn, Cooperman), declining interest rates, and collapsing internet stocks. In other words, investors are looking for things to worry about, despite record corporate profits and stock prices. Peter Lynch, the manager of the Magellan Fund that posted +2,700% in gains from 1977-1990, put short-term stock price volatility into perspective:"You shouldn't worry about it. You should worry what are stocks going to be 10 years from now, 20 years from now, 30 years from now."Rather than focusing on immediate stock market volatility and other factors out of your control, why not prioritize your time on things you can control. What investors can control is their asset allocation and spending levels (budget), subject to their personal time horizons and risk tolerances. Circumstances always change, but if people spent half the time on investing that they devoted to planning holiday vacations, purchasing a car, or choosing a school for their child, then retirement would be a lot less stressful. After realizing 99% of all the short-term news is nonsensical noise, the next important realization is stocks are volatile securities, which frequently go down -10 to -20%. As much as amateurs and professionals say or t! hink they can profitably predict these corrections, they very rarely can. If your stomach can't handle the roller-coaster swings, then you shouldn't be investing in the stock market.Bear-markets generally coincide with recessions, and since World War II, Americans experience about two economic contractions every decade. And as I pointed out earlier in A Series of Unfortunate Events, even during the current massive bull market, a recession has not been required to suffer significant short-term losses (e.g., Flash Crash, Greece, Arab Spring, Obamacare, Cyprus, etc.). Seasoned veterans understand these volatile periods provide incredible investment opportunities. As Warren Buffett (Trades, Portfolio) states, "Be fearful when others are greedy, and be greedy when others are fearful." Fear and panic may be behind us, but skepticism is still firmly in place. Buying during current skepticism is still not a bad thing, as long as greed hasn't permeated the masses, which remains the case today.Overly emotional people that make investment decisions with their gut do more damage to their savings accounts than conservative, emotional investors who understand their emotional shortcomings. On the other hand, the problem with investing too conservatively, for those that have longer-term time horizons (10+ years), is multi-pronged. For starters, overly conservative investments made while interest rate levels hover near historical lows lead to inflationary pressures gobbling up savings accounts. Secondly, the low total returns associated with excessively conservative investments will result in a later retirement (e.g., part-time Wal-Mart greeter in your 80s), or lower quality standard of living (e.g., macaroni & cheese dinners vs. filet mignon).Most people say they understand the trade-offs of risk and return. Over the long-run, low-risk investments result in lower returns than high risk investments (i.e., bonds vs. stocks). If you look at the following chart and ask anyone what their preferred path would b! e over th! e long-run, almost everyone would select the steep, upward-sloping equity return line.Source: Betterment.com / Stocks for the Long RunSource: Betterment.com / Stocks for the Long RunYet, stock ownership and attitudes towards stocks remain at relatively low and skeptical levels (see Gallup survey in Markets Soar and Investors Snore). It's true that attitudes are changing at a glacial pace and bond outflows accelerated in 2013, but more recently stock inflows remain sporadic and scared money is returning to bonds. Even though it has been over five years, the emotional scars from 2008-2009 apparently still need some time to heal.Investing in stocks can be very scary and hazardous to your health. For those millions of investors who realize they do not hold the emotional fortitude to withstand the ups and downs, leave the worrying responsibilities to the experienced advisors and investment managers like me. That way you can focus on your job and retirement, while the pros can remain responsible for hunting and slaying the boogeyman.www.Sidoxia.comWade W. Slome, CFA, CFP®Plan. Invest. Prosper.DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients hold long positions in certain exchange traded funds and WMT, but at the time of publishing SCM had no direct position in any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC Contact page.

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