Hot Stocks To Buy For 2016: April 2014

Wednesday, April 30, 2014

Costco Is Worth the Premium

There is no doubt about the fact that a sizeable chunk of the world population has been touched by the Internet and that people have now gone online for most things like shopping, medical help and even raising funds for start-ups. While this is definitely a positive step in terms of technology advancement, this shift to the online world has done reasonable damage to the offline retail industry comprising of huge retail chains like Wal-Mart (WMT), Target Corp (TGT) and Costco (COST). However, Costco has been above the rest in terms of delivering consistent results because of its robust membership model, high employee morale and effective cost management.

Reasonable Numbers

For the second quarter of 2014, Costco's earnings slid to $1.05 per share from $1.24 per share, a year ago. Though the company's last year earnings were impacted by a $52 million or $0.14 per share tax benefit, the current earnings are still a few notches below the prior-year period. Sales were up by approximately 6% in quarter two on an overall basis and 3% on a comp basis. As management pointed out, the four-week period between Thanksgiving and Christmas saw weak sales as compared to the previous year mainly because of a snowy weather prevalent at that time.

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The Might of e-Commerce

Besides the large collection of items that online websites boast, these e-commerce websites have also introduced the customers to a plethora of discount deals and other membership benefits. As such, customers have become more focused on the value-for-money aspect with regard to their purchases and scouting for the best deals. Costco is a fantastic alternative in brick-and-mortar retail stores, whose membership model bestows privileged benefits to customers at reasonable cost and thus, matches up with the might of e-retailing.

Costco's Membership Model Is a Hit

The data for the second quarter shows the effectiveness of Costco's membership model. New membership signups in the second quarter company-wide were up 13% year over year while the overall membership fees were up by 4% yyear over year to $550 million. Also, the paid executive memberships stood to the right of 14 million in the quarter, approximately an increase of 2,00,000 since the end of first quarter; it is significant to note that this type of membership represents approximately two-thirds of Costco's total sales.

I have given all these numbers to highlight quite an important point that a major chunk of this retail giant's revenue comes from membership fees as compared to product sales, unlike other chains like Wal-Mart and Target Corp. This is one of the reasons that Costco's quarterly result is notches better than Wal-Mart, which reported a decline of 0.4% in same-store sales for 14 weeks ended on Jan. 31. The reason that Wal-Mart's earnings beat consensus estimates by a whisker was the fact that analysts had lowered their expectations after the announcement of guidance warnings made by the company.

Wal-Mart's Dividend Announcement Was a Shocker

Wal-Mart's performance was affected by similar factors as Costco including harsh weather conditions, fluctuation in currency and strengthening presence of online retail enterprises. However, the event that actually jolted the investor community was an increase of a mere 2% in annual dividend, a considerable aberration from Wal-Mart's strong dividend history. As per past data, this dividend increase is the smallest in the last 10 years and could imply a negative foreseeable future.

This being said, it should also be factored in that brick and mortar retailers faced certain generic unfavorable conditions in December and this poor performance could be a one-off case. It is actually impressive to see that Wal-Mart is at least stepping up its game in e-retailing, which is under its control and can be leveraged. For instance, this report points out the company's plans to push for an e-retailing business model in India similar to that of Amazon (AMZN) and eBay (EBAY). This is a significant step from the company considering the fact that it failed to establish brick and mortar stores in the country after hanging there for almost six years.

Final Words

It is evidently clear that Costco's strength revolves around it membership model and the ability to provide a no-frills shopping experience to its privileged members at a low price. Additionally, the retail giant is making strides in the organic foods business, a growing segment of the grocery industry. As Richard Galanti pointed out in the earnings call: The organic business is big and growing fast and will provide a robust revenue stream for the future.

To sum it up, Costco is an ideal candidate for investment for the following reasons:

1. The threatening growth of online retail business has already done good damage to the brick-and-mortar stores. However, Costco's strong membership model has enabled it to build and sustain its revenues, making it the best pick among all the retail chains.

2. For the quarter, comparable store sales grew by around 3%, in spite of a weak economy and unfavorable business conditions. The primary reason for this growth is the huge discount, i.e. around 55% that members can avail of by purchasing from warehouse clubs. Thus, low prices and commendable quality have been consistently upheld by the company through its warehouse purchase model, and it is going to be a key element of Costco's future growth.

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Tuesday, April 29, 2014

The AMD Story Sounds Very Familiar

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There is a group of tech companies out there whose greatest accomplishment is simply staying in business over the span of decades. Advanced Micro Devices (NYSE:AMD) is a good example, as this company has a horrible record when it comes to generating cash flow or building/maintaining market share, but still seems to get investors re-excited about its prospects every so often. With no reason to believe that AMD will regain share in PCs, build share in tablets or microservers, or achieve any meaningful sustained cash flow from consoles, I see no reason to own AMD shares at this point.

Second Quarter Earnings Highlight Some Of The Trouble
AMD's second quarter results are part of the reason that I'm not all that optimistic about the company's fortunes. Revenue declined 18% from last year, but rose 7% sequentially. Computing revenue declined 20% from last year and rose 12% sequentially, while graphics revenue was down 13% and 5% respectively.

SEE: A Primer On Investing In The Tech Industry

I'm not surprised to see that margins declined on a year-on-year basis, but the lack of sequential gross margin improvement on higher revenue is a concern. Gross margin declined six points from last year and more than a point sequentially, while the company logged another operating loss.

Some Share Growth, For What It Matters
That 12% sequential increase in the computing business is interesting given the sluggish (very low single digit increase) performance at Intel (Nasdaq: INTC) this quarter. But perspective is important – while it does seem that AMD gained a couple of points of PC processor share from the first to the second quarter, the company's share is still in the low teens – well below the brief glory days in 2006 when the company's share was into the 20%'s.

The problem is, though, that I just don't see where AMD fits in anymore. Intel is ahead of AMD in every way that matters – performance, price, R&D, manufacturing – that I don't see how AMD is ever anything more than just a tagalong. Likewise, I see no reason to believe that AMD has a future in tablets or other mobile devices – they don't have the capabilities to compete on the high end, and I see no reason why Spreadtrum or MediaTek wouldn't chew them up on the lower end.

I likewise have little-to-no faith in AMD in graphics or microservers. Nvidia's (Nasdaq: NVDA) capabilities have pushed AMD's share down to about one-third of the market, and I see nothing in the price/performance of new AMD products to think that the company will claw back a meaningful amount of share. On the microserver side, I not only think that the bulls are overestimating the opportunity for this as a product category, but overestimating the likelihood of AMD establishing a sustainable business against Applied Micro (Nasdaq: AMCC), Broadcom (Nasdaq: BRCM), Marvell (Nasdaq: MRVL) and others.

What About Consoles?
It seems that the bull story on AMD hinges around the aforementioned microservers and new console wins with Microsoft (Nasdaq: MSFT) and Sony (NYSE: SNE) for their next-gen gaming systems. Here again, though, I think bulls are too optimistic that "this time is different".

AMD will likely generate a per-chip price around $80 overall (more from Sony, less from Microsoft), but already management has talked down profit expectations. Bullish sell-side analysts boldly predicted gross margins in the 30%'s and operating margins in the 20%'s, only to be told that GMs will likely be closer to 20% (or below) and operating margins will be in the low double-digits.

SEE: Google Building For A Bigger Future

While AMD doesn't have to worry about competition for these sockets, I don't see where AMD has established the credibility to suggest that they will garner substantial free cash flows from this business. All told, I believe these console wins will be worth about $1.00 to $2.00 per share to AMD on a discounted cash flow basis, but it's worth remembering that each incremental 1% of operating margin on this business may only be worth about $0.01 or $0.02 per share.

The Bottom Line
I'm sure I'll hear the usual litany of "You're secretly short/hedge funds are paying you to write this" nonsense from angry longs. What I'd really like to hear, though, is the counter-argument. Where is the evidence that AMD can do much of anything right? The company has shown no ability to compete with Intel or Nvidia on a sustained basis, and the company has been free cash flow positive exactly twice in ten years – a time during which Nvidia has grown from about $1.8 billion in revenue to $4.3 billion in revenue and just under $800 million in trailing free cash flow.

For now, I'm looking for long-term revenue growth of about 5% and sustained free cash flow margins in the mid single digits. Given AMD's history, predicting any level of sustained positive free cash flow is bullish, but those forecasts are only worth about $3.25 in fair value. Go to a 10% free cash flow margin in 2022 and you can get a target north of $5.50, but it seems like there's already a strong hope trade in these shares.

Sunday, April 27, 2014

Tesla shares crawl back up after drubbing

Tesla Motors share prices continued to plunge today even though some analysts said yesterday's after-hours drubbing was an overreaction. The drop shortly after the start of NASDAQ trading triggered the exchange's short-sale circuit breaker, which doesn't happen often.

The breaker temporarily stops the sale of borrowed shares by investors betting the price will keep falling so they can buy later, lower to replace the borrowed shares.

Tesla shares opened trading on the NASDAQ exchange at $155, about where they'd been in after-hours and pre-market trading. Share price fell to $146.71 before rebounding.

The official close Tuesday was $176.81.

Tesla stock "is more properly valued at $141," industry analyst Brian Johnson at Barclays told his clients late Tuesday.

The cross-currents affecting investment decisions :

•Earnings, announced after the market close Tuesday, were $16 million, or 12 cents a share, exceeding the consensus forecast of 11 cents, using the non-GAAP, adjusted measurements that Tesla prefers. But the GAAP net income was a loss of $38 million, or 32 cents a share, which was worse than a consensus prediction of 25 cents.

•Tesla delivered a record 5,500 of its Model S electric luxury sedans, more than the 5,000 that CEO and founder Elon Musk previously had forecast. But it was fewer than some Wall Streeters had expected and apparently fewer than in rumors circulating before the announcement.

Barclays analyst Johnson had expected 5,850 deliveries in Q3.

Musk forecast 6,000 in the fourth quarter, but Johnson wanted to see 6,603.

•Tesla Supercharger network -- able to refill a battery half-way in 20 minutes, instead of hours -- will be expanded to allow cross-country U.S. driving by the end of the year, Musk says, boosting demand for the cars as real-world, practical machines. But Telsa already is unable to keep up with demand because it can't get enough battery cells. It has a new agreement with Panasonic that should cure that so! on, Musk says.

•The company has begun delivering cars in Europe, which analysts see as a favorable sign. But that's cut into the number otherwise available for the U.S., a negative.

Johnson said it adds up to "somewhat slower" sales growth than expected.

On the other side of the argument, Elaine Kwei, analyst at Jeffries, in a note to clients early this morning, wrote: "A wide range of expectations ahead of the report may have resulted in some disappointment, but in our view, 3Q marked another quarter of remarkable progress since volume deliveries of the Model S began one year ago....(Tesla) has achieved tremendous milestones from a design, marketing, technology, and manufacturing standpoint."

Kwei rated Tesla "buy."

Ryan Brinkman, analyst at J.P. Morgan, wrote: "Earnings likely disappointed elevated expectations on higher operating expenses and what in our view were too-high delivery expectations." Much more important, in his view: "Stronger trend of execution in the areas which matter most right now (the ability to build and deliver more vehicles at a higher gross margin)."

He was "neutral" on the stock.

Tesla stock was up 422% this year before the earnings announcement Tuesday and subsequent share-price tumble. At $155 it's still up 358%.

The 52-week high is $194.50. The 52-week low is $29.85.

Saturday, April 26, 2014

Global markets start to realize the risks of Russia's move into Ukraine

As the unrest in Ukraine gets more real by the day, the financial markets start to show signs of caution. In macroeconomic parlance, there are early signs of a persistent momentum move unfolding, and you might want to get ahead of it. Investors start to seek shelter

Russia's debt-rating gets trimmed to one notch above junk status, which is probably at least one notch above where it should be. A slow and steady selloff of Russian assets

Kerry warns Putin to stop the Russian military drills or he might be forced to issue another stern warning. Don't make me stop this car

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The U.S. manufacturing renaissance that Schwab's Liz Ann Sonders has been promising for years is finally starting to show up. The data show U.S. manufacturing has reached No. 2 behind China in terms of global competitiveness. Worker productivity has doubled since the 1960s

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Thursday, April 24, 2014

GM Profit Sinks; CEO Sees No Hit to Sales from Recall

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US-DETROIT-AUTO-SHOW Stan Honda, AFP/Getty Images DETROIT -- The cost of recalling nearly 7 million cars and trucks sank General Motors' first-quarter profit, but the company's CEO said the much-publicized recalls have yet to cut into sales. GM (GM) on Thursday reported its worst financial results in more than four years, with profit falling 86 percent to $125 million. The biggest contributor was a $1.3 billion charge to cover a series of recalls announced since early February, most notably 2.6 million small cars with defective ignition switches. The Detroit automaker is facing government investigations and civil lawsuits over the small-car recall. On a conference call, CEO Mary Barra called the company's handling of the recall unacceptable but said that, so far, bad publicity has not had a "meaningful impact" on sales. She also said GM is offering employee discounts to owners of cars with the faulty ignition switches. After opening with a 2 percent gain, GM shares were down 13 cents to $34.26 around midday. GM made 6 cents a share in the first quarter, down from 58 cents a year ago. The recall charge alone cut 48 cents off first-quarter earnings. But excluding one-time items, GM made 29 cents a share, far above Wall Street estimates of 3 cents a share. Revenue rose more than 1 percent. Still, it was a rough start to what many expected would be a strong year for the Detroit automaker. The U.S. government its remaining stake in GM at the end of last year, freeing the company of the "Government Motors" nickname. In January, GM announced its first quarterly dividend in six years. And it has rolled out multiple new models in recent months including high-profit pickup trucks and full-size SUVs. But the recalls have overshadowed Barra's first months as CEO. GM has linked the ignition switch problem to 13 deaths and has acknowledged knowing about it for at least a decade. Barra was grilled earlier this month by two congressional panels pushing for an explanation on why GM dragged its feet. She said the answers would come from an ongoing internal investigation. GM also announced other recalls that pushed the total to near 7 million cars and trucks. Barra said the company has formed a leadership team to focus on recall issues. But, as before, she made no excuses for GM's behavior in the ignition switch controversy. "It doesn't matter that the roots of the issue are more than a decade old," she said. She told analysts that dealers are taking advantage of increased showroom traffic due to the recalls. But spokesman Jim Cain said GM has asked dealers to use employee pricing not as a marketing tool, but to help the small-car owners trade for a new car. Employees generally pay about 4 percent below dealer invoice. Without the recalls, GM would have had a strong quarter. The company's revenue grew 1.3 percent from a year ago to $37.4 billion, in line with analysts' estimates. "Clearly the headline results are overshadowed by the recall charges," Chief Financial Officer Chuck Stevens said. GM's global sales for the quarter rose 2.3 percent to 2.42 million cars and trucks. China sales grew 13 percent, and sales in Europe rose less than 1 percent. But sales fell 2 percent in North America, GM's most profitable region, and they dropped 10 percent in South America. The company's North America division earned $600 million. Without the recall charge, it would have earned $1.9 billion, up from $1.4 billion a year ago. Sales in the region fell to 745,000 cars and trucks. Stevens said GM is getting $2,000 more for its vehicles on average in the U.S. than it did a year ago, and $5,000 more for pickup trucks. Stevens said the $1.3 billion charge covers the entire cost of parts for the recalls, as well as installation by dealers and loaner vehicles for owners of cars with bad ignition switches. So far GM has paid for 36,000 loaners. He said it's too early to tell if GM will take more recall-related charges. GM faces multiple lawsuits from families of people killed in crashes, plus owners who claim the recall has lowered the value of their vehicles. GM has hired Kenneth Feinberg -- who handled funds for victims of the Sept. 11, 2001 terrorist attacks and the BP oil spill in the Gulf of Mexico -- to explore ways to compensate crash victims. Stevens said no decision has been made on establishing a fund. GM said ignition parts supplier Delphi is producing parts on one assembly line, running multiple shifts seven days per week. Second and third lines should be up later in the summer, giving GM the ability to finish the small-car repairs by October.

Wednesday, April 23, 2014

Texas Instruments first-quarter profit rises

Texas Instruments Inc. posted a 35% increase in its first-quarter profit as the chip maker's revenue and margins improved.

Looking ahead, the company forecast second quarter per-share earnings of 55 cents to 63 cents on revenue of $3.14 billion to $3.40 billion. Analysts polled by Thomson Reuters projected per-share earnings of 52 cents on revenue of $3.15 billion.

The Dallas-based company (TXN) , whose chips are used for many kinds of devices purchased by consumers and businesses, has shifted its strategy to grapple with broad changes in the semiconductor market.

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In January, the company announced plans to trim about 1,100 jobs, saying the reductions would affect employees in the U.S., Japan and India. TI said at the time it expected the moves to translate into about $130 million in annual savings by the end of 2014, and would trigger charges of about $80 million.

For the latest quarter, TI posted a profit of $487 million, or 44 cents a share, up from $362 million, or 32 cents a share, a year earlier. The latest results included a gain of $37 million, which benefited earnings by two cents a share and wasn't included in the company's prior guidance, related to sales of a site and other assets associated with previously announced restructuring actions, said TI.

Sales rose 3.4% to $2.98 billion.

The company in January had projected per-share earnings of 36 cents to 44 cents on revenue of $2.83 billion to $3.07 billion.

Gross margin widened to 53.9% from 47.6%.

In the latest quarter, sales of analog chips—the company's biggest top-line contributor—climbed 11%, while sales in the embedded processing business rose 17%.

Shares rose 1.7% to $47.25 in after-hours trading. Through Wednesday's close, the stock has risen 5.8% since the start of the year.

--Anna Prior

Tuesday, April 22, 2014

Netflix Wants to Stretch Its Lead Against Amazon With This Recent Move

Shares of online streaming maven Netflix (NASDAQ: NFLX ) were up significantly today (about 7% as of the end of the trading day) as yesterday after the bell the company reported both better-than-expected earnings as well as a planned price increase that should help Netflix fight to maintain its lead against Amazon.com (NASDAQ: AMZN ) .

Today's move still doesn't erase some of the recent losses that Netflix shares have suffered. Shares remain down roughly 10% over the last month and still sit below their all-time high of $454.88 from the beginning of March. However, with its shares still up well over 400% from early 2012 and considering the strength of yesterday's report, it's safe to say that times are good for Netflix and its shareholders.

Netflix by the numbers
In virtually every sense, the first quarter of 2014 was an unabashed success for Netflix.

Source: Netflix.

Netflix's revenue growth remains robust, increasing 36.5% during the quarter, and the inherent operating leverage in Netflix's model translated to even better bottom-line results for it. All told, Netflix's net income ballooned from $3 million in last year's Q1 to $53 million in this year's Q1.

Subscriber growth also remains brisk on both the domestic and international fronts for Netflix. For the quarter, Netflix managed to add 2.25 million net subscribers to its U.S. streaming business, ending the period with a grand total of 35.7 million domestic streaming members. International members increased by 1.75 million, lifting Netflix's international subscriber base to 12.7 million.

Going forward, Netflix guided that it expects continued execution on both the domestic and international fronts, although some seasonality in the coming months could lead to slowing subscriber growth in the short-term. Nevertheless, the main theme remains unchanged: Netflix is clicking on all cylinders.

And in the same vein, Netflix also announced one major move that should help it stave off increased competition from other streaming services, like Amazon's Prime.

Netflix ups the ante against Amazon
Netflix also took some time to humble-brag its superiority to other TV-based networks and streaming competitors. Netflix specifically cited a Morgan Stanley research report ranking it as second behind HBO's original programming, with about 17% of respondents identifying Netflix as the best service for original content. For comparison's sake, Amazon didn't crack the top 6, even as Amazon notches original content wins of its own with series like Alpha House.

And apparently Netflix plans to continue to press its advantage over other streaming rivals like Amazon by increasing prices for new streaming subscribers by $1 to $2 depending on geographic region. This will help Netflix greenlight more original content, as well as acquire new, exclusive rights to other third-party content, both of which should help pull new streaming subscribers toward Netflix and away from Amazon Prime's admittedly compelling value proposition.

In fact, Netflix specifically noted that with streaming competitors following its lead in original content, plus the ramp-up from traditional networks in response, competition for the kind of quality creative talent required to bring flagship series to market has never been higher. Netflix hopes that this price increase will help keep it ahead of the pack.

Up, up, and away
Netflix said it believes it can reach an eventual subscriber base between 60 million and 90 million U.S. subscribers in the years ahead, so there's plenty of growth on the horizon for the streaming pioneer.

Netflix's shares are by no means cheap, as they currently trade at roughly 130 times its last 12 months' earnings. However, Netflix has continued to prove that it is indeed a truly special company with the rare mix of talent, vision, and execution required to dominate a market with its recent earnings release, and that's certainly worth investors' attention.

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Surf's Up: AIG Rides the Wave Today

An hour and a half into the trading day, American International Group (NYSE: AIG ) is up 0.5%, with investors confidently shrugging off last week's news of a potentially expensive lawsuit and riding today's market wave.

Hurricanes and job gains
Last Wednesday, news broke that AIG and 10 other insurers were being sued by Public Service Enterprise Group (NYSE: PEG ) . The New Jersey-based gas and electric provider claims that damage from last fall's Hurricane Sandy far exceeded insurers' payouts of $50 million and is pursuing a total payout of $426 million.

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On a more macro scale, last Friday, the Department of Labor reported that the U.S. economy added 195,000 non-farm jobs in June, easily beating economists' expectations of 165,000. In addition, numbers for the previous two months were revised upwards by 70,000. Unemployment stayed at 7.6%, but only because more people are trying to return to the workforce.

Foolish bottom line
The market wave can clearly be chalked up to Friday's jobs numbers, but what wasn't clear was whether investors would react positively to such seemingly obvious good news.

Ever since the Federal Reserve announced that quantitative easing would start being dialed back sometime later this year, so long as positive economic news continued to roll in, markets have at times reacted negatively to similar news: out of fear that such news meant the end of QE. They were 100% right about that, but with Friday's jobs-driven market boost continuing today, it's possible there's been a shift in the market's thinking, back to a place of "normal," where good economic news is always good news for the stock market.

As for the lawsuit, there's no specific information about how much AIG may individually be on the hook for, but $426 million divided by the number of insurers named in the suit averages out to about $39 million per company.

Assuming AIG loses the suit, and even allowing for AIG's portion to hit $100 million, with more than $49 billion in cash in hand as of the first quarter, the insurance giant should have no problem absorbing the payout in a worst-case scenario. AIG has come a long way since the financial crisis, and investors have good reason to be confident in the insurer's balance-sheet strength in this instance.

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Monday, April 21, 2014

Apple and Samsung Fortify Their Strongholds

The smartphone market continues to be increasingly dominated by Apple (NASDAQ: AAPL ) and Samsung, who are viciously battling to hold down their forts while grabbing share from each other. Kantar Worldpanel ComTech has released its most recent estimates for the three months ending in May, and each company is playing strong defense.

Samsung now has over half of the European market, which has helped drive Google (NASDAQ: GOOG ) Android's platform market share up to 70.4%. Android posted the biggest gain of all operating systems within the five biggest European markets, or EU5. Apple's market share in Europe slipped to 17.8%.

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Apple has long enjoyed a strong user base in the U.S., much like other developed economies that utilize the subsidy model. Apple grabbed 41.9% of the market during the three months, its biggest slice of all the countries measured. The news comes after data that 57% of all smartphones activated on the top three domestic carriers in the first quarter were iPhones.

Kantar cites the addition of T-Mobile (NYSE: TMUS ) as an iPhone carrier in helping Apple grow its domestic presence. The No. 4 carrier launched the iPhone in mid-April, meaning it was on sale for about half of the time frame in question. Kantar's data shows that 28% of T-Mobile customers are planning to by an iPhone for their next upgrade. T-Mobile's subscriber base may be smaller than its three larger rivals, but the pent-up demand from its customers are an incremental positive for Apple.

Corroborating data from IDC, Microsoft (NASDAQ: MSFT ) has overtaken BlackBerry (NASDAQ: BBRY ) as the No. 3 platform in numerous geographical segments. That includes the U.S., Europe, and Australia. Windows Phone's European market share of 6.8% is now well above BlackBerry's estimated 2.5%. Kantar estimates that BlackBerry's U.S. position has declined to just 0.7%, while Windows Phone now grabs 4.6% of the market.

The switch comes as no surprise considering BlackBerry's disappointing smartphone volumes and Nokia's rising Lumia shipments. Nokia is also helping Microsoft gain in the Mexican market with entry-level Windows Phones, although BlackBerry still has a firm lead over Microsoft south of the border.

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Sunday, April 20, 2014

Toyotaâ€™s Redesigned 2015 Camry Is No More Boring

Toyota (TM) Camry, the top-selling North American model in the midsize sedan segment, is going for a complete overhaul. The car was last given a facelift in 2011. The 2015 version of the car was revealed at the New York Auto Show. It showed how much the automaker has worked towards its designing --bringing about a remarkable praiseworthy upgrade.

The Japanese company, although the global lead automaker, has been criticized on several occasion of offering boring and conservative cars. The carmaker ultimately realized that it's high time to modify this image. It could hurt the company's sales volume in the long run as competition is intensifying.

Matching Up with Competitor's Styling

Although Camry's been the highest selling model in the U.S. in the past 12 year, competition is tightening as Ford (F), Nissan (NSANY), Honda (HMC), and Hyundai (HYMTF) are luring customers with their stylish offerings. Honda last redesigned its Accord in 2013, and this year it's Hyundai, which unveiled the all new 2015 Sonata. What's challenging for Toyota is that German luxury giant Mercedes-Benz has introduced cars within the $30,000 range that invades the territory of the Camry. Ford Fusion and Nissan Altima have earned positive response from buyer and critics as well. Credit goes to the car engineers who have paid great attention in designing the car, making it look stylish.

So we see that rivalry for higher market share is intensifying, and Toyota can't afford to stay behind to keep its global lead intact.

In 2013, Toyota sold as many as 408,000 Camrys in North America, reporting lion's share in this category. The next closest in sales in this segment was domestic rival Honda's Accord, which registered sales of 365,000 units during the year. The midsize car segment is a big attract to the carmakers as it sees robust demand. This is precisely why automakers are giving high importance in the designing of these cars as they know that this could bring them big bucks.

A Complete New Look

The Camry has been a reliable car for many American. It has the minimum curves with no extra frills and flares. In simple words it's a very simple looking solid model. But the 2015 Camry is defying all that to give a totally new, more comfortable, modish, and premium experience to its buyers.

The automaker has put in whole lot of effort in the cars styling, which was visible at the New York Auto Show. Toyota claims that it made the car go for a complete makeover, and that there's nothing in similarity with the previous model other than the roof. The auto giant has absorbed ideas from the changing tastes and preferences of customers that it's becoming increasingly important to make vehicles more and more visually attractive if you want to sell them.

Bill Fray, Toyota U.S. division chief said that the carmaker has tried to be more outgoing and daring with the Camry styling this time. The 2015 Camry would give a better balance between the car suspension and firmness, along with a comfortable steering. This would enhance the driving experience.

If Toyota can impress critics and car fanatics, there's going to be no stopping the auto major from earning massive money. Every Camry, that costs around $23,965, pours in $2,500 to $3,000 as profits in the pocket of the company. The redesigned Camry could boost volumes remarkably, help Toyota earn huge amount, and stay atop.

Last Thought

Toyota is working hard to go for a complete shift in image from being branded as the maker of boring cars to the one that offers fantastic cars in terms of both styling and substance. The company has also gone to the extent of shuffling its management in the recent past to provide better styled cars. The Asian auto giant looks poised to maintain its lead with the all new Camry.

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Saturday, April 19, 2014

Investing 101: Don't be fooled by story lines

People have a natural impulse to hear and tell stories. This desire is formed at an early age as parents read bedtime stories to their children and develops throughout adulthood with various forms of media. Unfortunately, storytelling plays a major role in the financial markets, which more often than not, only serves as distracting noise for investors.

All three major U.S. indices are in negative territory this year. Last week, the Dow Jones industrial average and Standard & Poor's 500 both fell more than 2%, while the Nasdaq dropped 3.1% to post its worst weekly decline in almost two years. In fact, some of the biggest leaders of the bull market have turned into laggards almost overnight. With stocks struggling to keep their impressive momentum from last year, there are plenty of stories to be found that attempt to explain the move.

The most obvious narrative involves a mixture of central bank tightening and an overvalued stock market. The Federal Reserve appears to be set on dialing down its monthly bond purchases at every policy meeting — raising fears of reduced liquidity and higher interest rates. Meanwhile, stocks have rallied for five consecutive years and are inducing flashbacks of bubble-themed finales. In the end, history shows that investors will hear whatever story is playing the loudest.

Investors typically become distracted with either greed or fear. Between 1993 and the market peak in March 2000, investors' allocation to equity funds almost doubled to 62%, according to Vanguard. Naturally, greed was the strongest toward the end of the major move with nearly $400 billion rushing into the dotcom bubble in its final two years — regrettably. Stocks across the board then fell sharply and sent investors running for the hills. Bond funds received $221.5 billion in the two years leading up to 2003, just in time to miss a 53% rebound in stocks over the following two years.

Once again, investors who were caught up in the narrative did not receive a happily-ever-after ! ending. An astounding $424 billion flowed into stock funds in the two years preceding the peak of October 2007. The top was followed by the worst financial downturn since the Great Depression, and the fear generated from the crisis kept millions of investors on the sidelines for years as stocks climbed higher.

"Many investors — both individuals and institutions — are moved to action by the performance of the broad stock market, increasing stock exposure during bull markets and reducing it during bear markets," explained Vanguard. "Such 'buy high, sell low' behavior is evident in mutual fund cash flows that mirror what appears to be an emotional response — fear or greed — rather than a rational one. Not only do investors in aggregate allow their portfolios to drift with the markets, but they also tend to move cash between stock and bond investments in patterns that coincide with recent performance of the equity market."

Where does that leave investors today? The current bull market in stocks officially turned five years old last month, and an argument could be made either way about its longevity. It is the fifth-longest bull market since 1928, but would have to climb higher without a 20% correction for another seven years before surpassing the longest bull market that ran from 1987 to 2000, according to Bespoke Investment Group. Most would agree that this is very unlikely, but it is certainly within the realm of possibility.

Instead of worrying about headlines and the daily narrative, investors should focus on financial aspects they can control. You cannot influence the Fed's policy decisions or the events taking place overseas, but you can make sure you are taking the long view on your financial goals. Create a clear, measurable, and attainable plan that reduces the odds of letting the market incite fear or greed in your investing decisions.

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Follow Eric McWhinnie on Twitter @Mr_Eric_WSCS. Wall St. Cheat Sheet is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

Thursday, April 17, 2014

New Fed Chief, New Unemployment Approach

Fifteen months ago, Ben Bernanke, then chairman of the Federal Reserve, indicated that the central bank's ultra-easy money policy—a near zero federal funds rate and massive monthly purchases of Treasuries and mortgage backed securities—would remain in place until the unemployment rate hit 6.5%. Now, with the jobless rate poised just two-tenths of a point above that and the Fed under new leadership, the central bank has a new game plan.

See Also: Economic Outlooks -- Interest Rates

In a recent speech, Federal Reserve Chair Janet Yellen spoke passionately on the continued slackness in the labor market, even citing the difficult circumstances of particular individuals. Yellen's comments on the experience of Vicki Lira of Chicago—stuck in a part-time job because she can't find the full-time employment she wants—sounded more like a political stump speech than the usual analysis from Fed members. Despite, or perhaps because, of the apparent closeness to the 6.5% jobless target, Yellen emphasized the continued need for Fed involvement in boosting the economy. Why the shift? Is it a matter of different chairmen having different policies? Unlikely: Yellen and Bernanke were rarely out of sync when she served as his deputy at the Fed.

More than likely, it's a matter of timing and changing circumstances. Traditionally, the unemployment rate has been the key indicator of slack. But as it has dropped from 10% to 6.7%, its reliability—at least as the sole indicator of the job market's health—has fallen into doubt. Because the traditional, standard measure of unemployment does not count as unemployed either individuals who have become too discouraged to actively seek work or involuntary part-timers, such as Lira, it can underestimate the relative scarcity of jobs compared with the number of would-be workers.

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An alternative measurement, called U-6 by the Bureau of Labor Statistics, includes not only the unemployed who are actively pounding the pavement, but also discouraged former workers and involuntary part-timers. And that gauge of unemployment is much higher than the standard unemployment rate.

Bureau of Labor Statistics, Kiplinger

The standard unemployment rate does show some slack in the market; it's still 2.2 percentage points higher than its prerecession low. But the alternative U-6 measure reveals a much looser labor market. The U-6 rate peaked much higher than the standard unemployment rate during the recession, and though it has dropped a good bit already, it is still 4.6 percentage points above its prerecession low point.

Other measuring sticks also indicate too few jobs for too many workers. Wages, for example, are growing very slowly; employees haven't the muscle to insist on higher pay, and employers don't need to bump wages up to attract more workers. Five years after the recession ended, annual wage growth will still be a modest 2% this year in nominal terms and much less after taking inflation into account.

Then there's the labor force participation rate—the share of the population that is either working or actively seeking work. The labor force naturally changes over time as some workers retire, take time off to return to school, raise children or the like, and others seek employment for the first time or after a period of not working. It also waxes and wanes as those who are unemployed are encouraged or discouraged from actively seeking work by their perceived prospects of finding a job. In this particularly long, slow postrecession period, the labor force participation rate has fallen much further than expected, even given an anticipated bulge in baby boomer retirements. Reflecting, in part, a greater share of discouraged workers who are no longer job hunting, the rate has fallen from 66% before the recession to 63% today.

And the quit rate – the share of people who voluntarily leave one job to seek another, better one—remains low. The same today as it was during the recession, the low quit rate also signals slack—workers typically don't risk abandoning one paycheck unless they're sure of getting another.

Each of these measures points to a labor market that, despite the big decline in the standard unemployment rate, remains very weak. In March, private employment finally reclaimed its prerecession peak, but total employment still lags, and the share of jobs that are part time rather than full time is greater than normal.

What's more, it will take several more years before the number of jobs in the U.S. catches up to the long-term trend—the number of jobs that would exist if there had been no recession and employment growth had continued to grow at a pace with population. At that pace, U.S. jobs would now total 146.8 million instead of the actual 141.3 million—a gap of about 5.5 million. (Because we want to focus on breadwinners, we're including only jobs held by those age 20 and up.)

Bureau of Labor Statistics, Kiplinger

It takes roughly 1 million new jobs every year (83,000 a month) just to absorb new entrants to the labor market (immigrants as well as young first-timers). We expect a monthly average job gain of about 200,000 this year. At that pace, it will take until mid-2018 to make up for the shortfall.

Odds are that Yellen and her colleagues at the Fed will be uncomfortable pulling out all the monetary props until they are sure that the economy is well on its way to closing that gap and that something closer to the historical norm for the part-time/full-time divide is reached. Although the ongoing tapering of the Fed's bond buying will continue, the federal funds rate isn't likely to budge for many months yet—probably mid-2015 or so. Rest assured, Vicki Lira, the Fed has your back.

Tuesday, April 15, 2014

Cloud Power: Intel Squeaks By Earnings On Data Centers, Internet Of Things

As the computing business moves from the desktop to the cloud, Intel Intel and companies like it will have to execute a rapid transition. So far they seem to be doing alright.

Intel's first quarter earnings edged out Wall Street's projection: $0.38 per share over the consensus estimate of $0.37. Revenue actually just missed, with $12.76 billion in sales vs. $12.81 billion estimated.

But the real story is the rise of cloud services and other post-PC businesses. While Intel's biggest business sector is PC client revenue ($7.9 billion), that declined 1% from the first quarter of 2013. The growth came from the data center group, which grew 11% year over year to $3.1 billion, and the "Internet of Things" group, which includes embedded chips for a variety of new smartwatches and other non-traditional computer devices. The Internet of things revenues were only $482 million, but that's up 32% year over year. That category was newly broken out by the company this quarter.

Intel shares, which nudged up 0.79% during the day, initially surged about 3% in after hours trading, then receded. As of 4:30pm EST, shares were up 0.86% after hours.

Follow Brian on Facebook and Twitter.

World's Largest Data Centers

Monday, April 14, 2014

Preventive Care Without Cost-Sharing

Do all health insurance policies have to provide preventive care without a deductible? What is covered?

SEE ALSO: 10 Surprising Things Insurance Covers

All health insurance policies that were issued after March 23, 2010, when the health-care law was signed, must provide certain preventive care without being subject to the policy's deductible or copayments. That requirement applies even for high-deductible policies. Policies issued before that date that haven't changed significantly (so-called grandfathered policies) are not required to provide preventive care without cost-sharing, although many of them do.

The preventive coverage includes screenings for high blood pressure, high cholesterol for adults with a history of the condition, colorectal cancer for adults over age 50, and Type 2 diabetes for adults with high blood pressure. Women over 40 can get fully covered mammograms every one or two years, depending on their risk factors. You are also entitled to several immunizations, depending on your age, as well as other tests and services, depending on your age and health. Children can receive routine vaccinations, well-baby and well-child visits, and other preventive services. See the preventive-care page at Healthcare.gov for a list of services and eligibility requirements.

You may still end up with some out-of-pocket expenses for these services if you get follow-up tests or cover other medical issues while at the doctor's office. You may also have to pay extra if you go to an out-of-network provider.

Medicare must now provide certain preventive-care benefits without cost-sharing, too. You can get a "Welcome to Medicare" physical exam within the first year after you sign up for Medicare Part B, and you can get a personalized prevention plan and annual wellness visit. You may also be able to receive screenings for colorectal cancer and high cholesterol without cost sharing, as well as flu shots, pneumonia shots and hepatitis B shots. Women can get mammograms and cervical cancer screening, and men can get certain kinds of prostate screenings. The screenings are fully covered, but you may have to pay for the doctor's visit. The frequency of the screenings often depends on your age and risk.

See Your Guide to Medicare's Preventive Services at Medicare.gov for more information.

Got a question? Ask Kim at askkim@kiplinger.com.

Sunday, April 13, 2014

Big Banks Pull Dow Higher as Housing Improves

The day-to-day movements of the stock market can be hard to decipher, and today is a classic head-scratcher. This morning it was reported that the U.S. economy grew just 2.4% in the first quarter, falling short of the previous estimate of 2.5%, while jobless claims rose 10,000 to 354,000 . Still, the Dow Jones Industrial Average (DJINDICES: ^DJI ) is up 0.54% near the end of the trading session, and the S&P 500 (SNPINDEX: ^GSPC ) has risen 0.75%.

The big banks are leading the charge, with Bank of America (NYSE: BAC ) up 3% and JPMorgan (NYSE: JPM ) gaining 2.1%. RealtyTrac said that foreclosure sales fell 18% sequentially in the first quarter and were down 22% from a year ago. This is just the latest sign that housing has recovered, and a drop in foreclosures means Bank of America and JPMorgan are being paid back for loans outstanding.

The National Association of Realtors also said that pending home sales were up 0.3% in April -- another strong sign for housing. It's been a long road to recovery for housing, but data this year has shown strong improvement, and that will continue to drive big banks higher.

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Shares of Disney (NYSE: DIS ) are down 2.3% after the company hit the headlines for all the wrong reasons. First, a patron at Disney World found a loaded gun on a ride where another patron lost it. Then, a Disneyland employee was charged with possession of a destructive device following a small explosion in Mickey's Toontown on Tuesday. The explosion was reportedly caused by two water bottles filled with dry ice, and early reports say this was a prank.

This isn't good news in the short term for Disney, but in the long term it doesn't change the investment thesis for the stock. Disney is still a well-positioned media company with one of the best assets in the business in ESPN. Today's drop is a blip on the radar and can be seen as a buying opportunity for investors looking to jump in.

Saturday, April 12, 2014

Is Ben Bernanke Swimming Against the Tide?

The following video is from Wednesday's Investor Beat, in which host Chris Hill and analysts Matt Koppenheffer and Matt Argersinger dissect the hardest-hitting investing stories of the day.

Fed Chief Ben Bernanke testified before Congress today and said that the U.S. job market is still weak. Bernanke said it's too soon for the Fed to end its stimulus program. What do his comments mean for investors? Where can investors find value when the Fed does begin winding down its quantitative easing policies? In this installment of Investor Beat, our analysts tackle those questions.

The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

The relevant video segment can be found between 0:16 and 2:48.

Friday, April 11, 2014

4 places you should not swipe your debit card

Breaking news such as the massive data breach at Experian or Target now seems common. Leaving aside the victims of actual fraud, I hear constantly from people who've had to swap out every debit and credit card, or whose cards were unilaterally replaced by their bank. This causes all sorts of problems.

Sometimes it makes you long for the days of cash. While cash is not practical for everything, there are very compelling reasons to consider it or other alternatives instead of those debit cards.

Of course, you also have to watch where you get your cash, too. Criminals are good at installing near-invisible skimmers on ATMs. These steal your card information and then a miniature camera over the keypad steals your PIN. It's everything a thief needs to drain your account.

Avoid out of the way ATMs in isolated areas. When you can, use ATMs in a restricted-access foyer. You should also hold your hand over the keypad when you enter your PIN. This blocks a camera from seeing what you're doing.

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Now that you know how to safely get cash, here's where you should use it.

1. GAS STATIONS

ATMs aren't the only places criminals can install card skimmers. Gas stations are a favorite target for thieves. Last year, four men were arrested for allegedly stealing $2.1 million using skimmers at gas stations in the south. The skimmers were installed in the pumps and were even equipped with Bluetooth — which allowed the thieves to come by and extract the collected numbers and PINs wirelessly!

To keep the odds in your favor, use cash. If nothing else, use a credit card at a gas pump. It's not widely appreciated that consumer responsibility for debit-card charges are different than they are for credit cards. Credit-card charges are easier to contest, and you're only liable for up to $50 of fraudulent purchases.

With a debit card, you have to report a fraudulent purchase within a few business days for the $50 liability limit to kick in.!

2.. RESTAURANTS

Restaurants, too, can be a source of trouble. Some unscrupulous servers bring handheld card skimmers to work to swipe your card info. Even low-tech thieves can just write down the card numbers.

To make matters worse, many restaurants use older computer systems for processing cards. These are easy for hackers to install card-swipe software, as in the Target hack. The price paid can be quite high; Subway got hit in 2011 by Romanian hackers, who got away with $10 million from 150 restaurants.

One of the lesser noted aspects about the coming end to Microsoft's XP operating system is that many restaurants and ATMs still use the XP infrastructure.

3. STORES

Restaurants and gas stations make juicy targets: a steady steam of customers, some not from the area. The same goes for stores.

For small purchases cash is the way to go. Use cash at the grocery store or while buying clothes. For larger purchases, use a credit card instead of a debit card. Again, you have less liability than you do with a debit card.

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Bonus tip: Some people use cash at stores to avoid the store tracking what they buy. However, stores can still track your purchase history if you still swipe a loyalty card.

4. ONLINE

OK, you can't use cash online. But please, use a credit card, not a debit card. The fraud protections are better and a hacker can't overdraft your bank account with a credit card. You don't need to be fighting overdraft fees on top of everything else.

You can also check with your bank to see if it offers one-time credit card numbers for online buying. Since each number only works once, it won't do a hacker any good to steal it.

Of course, one drawback to using a credit card is the interest payments if you don't pay on time. This site can show you the real cost of using a credit card.

Finally, I know this! is a lot ! of work, particularly when it seems that everyone is busy and overworked; but remember as well to check your bank statements, and credit reports, regularly for suspicious activity.

On the Kim Komando Show, the nation's largest weekend radio talk show, Kim takes calls and dispenses advice on today's digital lifestyle, from smartphones and tablets to online privacy and data hacks. For her daily tips, newsletters and more, visitwww.komando.com. E-mail her at techcomments@usatoday.com.

Thursday, April 10, 2014

Advisers warming to real assets as stock market volatility picks up

real assets, asset allocation, mlp, reit, real estate, hedge funds, private equity, stocks, bonds, equities

The latest bout of stock market volatility is helping to make the case again for diversifying into assets that investors can actually touch and feel.

Physical real estate, real estate investment trusts and infrastructure master limited partnerships are the most common forms of the real assets that are hitting the radar screens of savvy financial advisers.

Much like the broader alternative investments universe, real asset investments are becoming an increasingly popular for reducing portfolio volatility.

As the data illustrate, most real asset investments are more about non-correlated exposure than white-hot performance.

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So far this year, real estate mutual funds tracked by Morningstar Inc. gained an average of nearly 10%, while the S&P 500 has been virtually flat.

Last year, when the S&P 500 gained 30%, the category gained 2.3%.

Morningstar doesn't have a specific category for master-limited partnership funds, but a screen of funds with MLP in the name found that the average return this year was 2.8%.

The MLP fund universe had an average gain of 24.4% last year.

“The main thing about real assets is you're getting the diversification of lower correlation to traditional assets, but you're also typically getting some inflation protection,” said James Cunnane, chief investment officer of the MLP & energy Infrastructure team at Advisory Research Investment Inc.

Even with inflation in the U.S. at barely discernable levels, the Fed's unwinding of quantitative easing and the looming threat of higher interest rates make the case for real assets an increasingly logical argument.

“The longer-term attraction of real assets is definitely the inflation sensitivity, because with higher inflation, you will be better off in real assets,” said Keith Black, managing director of curriculum and exams at the Chartered Alternative Investment Analyst Association.

“Another part of the attraction is that we're talking about real assets,” he added. “After the financial crisis, people realized that the stocks and bonds they owned were just paper assets.”

As a subcategory of alternative investments, real assets are sometimes overshadowed by the higher-profile hedge funds and private equity investments, but there are components of the financial advice community that are heavily committed to real asset exposure.

An as-yet released study by Cohen & Steers Inc. estimates that 90% of advisers are alre! ady using real assets for their client portfolios.

But despite the widespread use of real assets, advisers are only using real assets in 20% of their client base, according to the report, which was based on a survey of 660 financial advisers.

For those accounts containing real assets, the allocation is typically between 5% and 9%, illustrating a serious commitment to the asset class.

“It was a little surprising to us to find that among advisers using real assets, they are only using it in about one out of five of their client portfolios,” said Vince Childers, manager of the Cohen & Steers Real Asset Fund (RAPIX).

The research also found that only 40% of advisers are treating real assets as a core holding, with the majority using the asset class for tactical purposes.

Mr. Childers acknowledged his obvious bias when suggesting that investors should have between 10% and 20% allocated to real assets.

“We think people are under-allocated to real assets,” he said, citing an ability to hold value in an inflationary environment.

“But people need to understand that the portfolio diversification benefits go beyond inflationary scenarios,” he added. “In periods like we've seen recently, when stocks and bonds are not diversifying each other very well, that's the sweet spot for real assets.”

The broadest definition of real assets can include everything from direct ownership in real estate to fine art, but the Cohen & Steers study primarily focused on real estate, REITs, infrastructure MLPs and natural resource equities.

The survey found that more than 80% of respondents recognize direct real estate ownership as a real asset, but only about 30% are using direct real estate as a real asset investment.

REITs, which are used by 75% of the respondents, stood out as the most popular means of gaining real asset exposure. Interestingly, less than 35% of the respondents recognized REITs as a real asset.

Nearly 70% of respondents recognized prec! ious meta! ls as a real asset, but less than 40% say they are using precious metals as a real asset allocation.

Looking past what might appear to be some confusion or lack of communication surround real asset nomenclature, it is more important to focus on the growing appetite for the benefits that real assets can bring to a portfolio.

“People are worried about interest rates going up,” Jerry Swank, founder of Cushing Asset Management, said while discussing a new partnership to manage MLP and energy-related mutual funds with MainStay Investments.

“Don't underestimate this humongous energy renaissance going on in the U.S.,” he added. “We have a decade or more of growth in that area ahead of us.”

Just like there are multiple stripes of hedge funds and alternative strategy mutual funds, a real asset allocation should be built around diversification.

While an MLP fund allocation can hopefully catch the energy infrastructure renaissance, the REIT space is poised to benefit from increased demand for housing and office space.

“Right now we're seeing improving fundamentals in real estate, but they're still not building enough to make up for what hasn't been built over the past five years,” said Calvin Schnure, senior economist at the National Association of Real Estate Investment Trusts.

“Things that affect real estate are different than the things that affect stocks,” he added. “Improved job growth and consumer spending will benefit REITs because that translates almost one-for-one to an increased need for office space, because job growth means vacancy rates will fill faster.”

Big Funds Love This Small Stock -- Should You?

DELAFIELD, Wis. (Stockpickr) -- Small-cap stock trading is not for the faint of heart.

>>5 Stocks Set to Soar on Bullish Earnings

Trading in the small-cap universe requires one to be very flexible and able to stomach large volatility moves. Small-cap stocks tend to have lower share prices, and when a stock trades at around $1 a share, it doesn't have to move much to cause large swings from a percentage-point basis. That being said, when you find a compelling opportunity in the small-cap world, you can generate fat gains when a swing goes in your favor.

One small-cap stock that's piqued my interest here is Body Central (BODY), which operates as a specialty retailer of young women's apparel and accessories in the South, Southwest, Mid-Atlantic and Midwest regions of the U.S. This is an extremely small-cap stock, with a market cap of just $19.6 million and an enterprise value of $11.7 million. This stock has been absolutely annihilated by the bears so far in 2014, with shares down sharply by 69%.

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Shares of Body Central have been under heavy selling pressure of late after the company said it was possible it would not be able to continue as a going concern after reporting poor numbers for its year-ending quarter. Net revenue for the quarter in question dropped 18.3% to $66.2 million, vs. $81 million for the fourth quarter. Losses from operations were $26.6 million, vs. income from operations of $3.9 million for the fourth quarter of 2012. The company's gross for the quarter dropped by 45% to $13.4 million, vs. $24.5 million for the same quarter last year.

These disastrous results are putting a big crunch on Body Central's liquidity, but the company did say on its conference call that they believe they have enough cash to survive through 2014. At the moment, Body Central as $20.1 million of cash on hand, which includes $12 million drawn on a recent term loan. To put things in perspective, with shares of BODY trading around $1.18 as I type this, the stock is basically trading at par on a cash-per-share basis.

The market is pricing shares of BODY as if the company is about to go out of business soon. There's definitely a chance that that could happen, but the reason I am warming up big-time to this stock is due to the fact that some large players have started to move in at these levels. On April 4, hedge fund Lane Five Partners reported that it had taken a 7.5% stake in shares of BODY after the firm bought 1,247,000 shares. Then yesterday, mergers and acquisitions advisory firm Blackwood Capital Group reported it has taken a 5.4% stake in BODY after the firm bought 900,000 shares.

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Blackwood's announcement is what has me really warming up to BODY here. It's starting to look like BODY is going to be a target for a merger or a private equity deal, since the company has fallen on hard times. I wouldn't be surprised to see more hedge funds and M&A firms taking stakes in shares of BODY in the coming weeks, considering how beaten up the stock is. Those firms might also see a silver lining in comments made by the company on its conference call, regarding its new concept store in Orange Park. Body Central mentioned that the new concept store saw as much as a 30% jump in traffic on a weekly basis. This new store format is significantly outperforming the rest of its store base, and that's something the company could really build on if it can obtain the capital to make it happen and execute more on its turnaround strategy.

Another reason I am starting to warm up to BODY here is that the chart is starting to look very interesting from a technical standpoint. If you take a look at the chart for BODY, you'll notice that this stock gapped down sharply a few weeks ago from close to $2 a share to its low of 86 cents per share. That move has now pushed shares of BODY into extremely oversold territory, since its current relative strength index reading is well below 30. If you pull the chart back on an even longer timeframe, you'll see that BODY has absolutely collapsed from its January high of $4.36 a share. Make no mistake about it; smart funds are moving in here because they think the selling is way overblown.

Shares of BODY have now started to bounce off that 86 cents per share low, with the stock now trending at around $1.18 a share. Another key technical indicator that's starting to draw my attention for shares of BODY here is the MACD momentum indicator that's starting to trigger a bullish crossover. That MACD crossover, if it can sustain, is also happening as the stock nears a key breakout trade.

>>Chart Smarts: Trade These 5 Big Stocks for Gains in April

Traders should now look for long-biased trades in BODY as long as it's trending above some key near-term support levels at $1.10 or at $1 a share and then once it breaks out above some near-term overhead resistance levels at $1.26 to $1.31 a share with high volume. Look for a sustained move or close above those breakout levels with volume that hits near or above its three-month average action of 711,516 shares. If that breakout starts soon, then BODY will set up to re-fill some of its previous gap-down-day zone from March that started near $2 a share. Shares of BODY could even tag its 50-day moving average of $2.55 a share if that gap gets filled with strong upside volume flows.

One last reason that BODY could rip significantly higher from current levels is due to the large short interest in the stock and the very low float. Those shorts have been dead right by the way, but now might be a good time for them to think about covering. The current short interest as a percentage of the float for BODY is very high at 13.2%. That means that out of 15.99 million shares in the tradable float, 2.12 million shares are sold short by the bears.

The bottom line: Considering the improving technical picture for shares of BODY, the interest from hedge funds and M&A firms at current levels and the large short interest and small float, you need to have this stock on your trading radar for a breakout play into that gap.

-- Written by Roberto Pedone in Delafield, Wis.

Tuesday, April 8, 2014

Rieder: The ultimate sacrifice for journalism

So much of the talk about journalism these days revolves around new business models and clicks and platforms.

It's easy to forget about the underlying public service role of the field, the reason the press gets singled out for protection under the First Amendment.

Journalism at its best is about truth-telling, about providing people with information they need to understand their world. It's a deeply imperfect enterprise — and a critically important one. And sometimes those carrying it out pay the ultimate price.

We were reminded of this powerfully last Friday when Anja Niedringhaus, a photographer for the Associated Press, and Kathy Gannon, an AP correspondent, were shot while covering the run-up to the election in Afghanistan. Niedringhaus died from her injuries.

Another reminder of journalism's heft came with the death Sunday of former Philadelphia Daily News columnist Chuck Stone, a man whose writing engendered such trust in the community that scores of criminal suspects surrendered to him rather than to the police, a man who once successfully negotiated a hostage situation at a prison at great personal risk.

Niedringhaus and Gannon were shot by a police commander in the perilous terrain of Khost in eastern Afghanistan. No surprise that they were there. The mission reflected their determination to get close to the story, the real story, the real people, whatever the risk.

Carlotta Gall, no stranger to danger herself during her many years covering Afghanistan for The New York Times, was with the two AP journalists just before the fatal journey.

AP_APTOPIX_Obit_Anja_Niedringhaus_Photo_Gallery

An Afghan boy flies his kite on a hill overlooking Kabul, on May 13, 2013, a moment captured by ! Associated Press photographer Anja Niedringhaus.(Photo: Anja Niedringhaus, AP)

Gall, now the Times' Tunis bureau chief, warned them of reports she was hearing of rampant Taliban attacks planned for that Friday targeting foreigners and government officials.

"But Anja and Kathy took it in stride," Gall wrote. "They knew the dangers."

They went to Khost because that is what they did.

Just two years ago, two splendid journalists lost their lives in combat zones within a week of each other.

Anthony Shadid succumbed to an asthma attack while covering the fighting in Syria for The New York Times. He was said to have been allergic to horses, and he was being smuggled by horseback out of Syria, largely off-limits to Western journalists, when he was stricken.

Marie Colvin, an America-born war correspondent for Britain's Sunday Times, was killed along with French photojournalist Remi Ochlik when the media center where they were working was shelled by the Syrian army.

Like Niedringhaus and Gannon, both were known for their determination to put a human face on warfare, for their first-hand reportage on war's impact rather than settling for bland pronouncements by policymakers.

In a 2004 interview with American Journalism Review's Sherry Ricchiardi, Shadid summed up his approach: "You want to find the human moment ― that's your challenge as a reporter. And you have to be on the scene to do that,"

It's easy to see war correspondents as adrenaline junkies, as adventurers who get off on the boom-boom and the risk. But Colvin, who had lost an eye covering combat, hated being portrayed that way. "I don't do this for fun," she once said. "I do it because it is necessary."

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Stone, who crusaded against injustice in his columns, was a different type of journalist, but also a brave and impressive one. In addition to that prison negotiation, he was onc! e summone! d by bank robbers holding a hostage. Stone defused that situation, too.

All told, 75 suspects reluctant to turn themselves in to the Philadelphia police because of the beatings they feared might ensue surrendered to Stone in the Daily News newsroom.

He was, former Daily News editorial page editor Rich Aregood wrote on Facebook, "the only Underground Railroad for criminal suspects a newspaper ever maintained."

Rieder is USA TODAY's media editor and columnist

In Paris, roses frame a picture of the Associated Press photographer Anja Niedringhaus, 48, who was killed April 4, 2014, in Afghanistan.(Photo: Michel Euler, AP)

Monday, April 7, 2014

Google to Help Developers Add Gaming, Location and More to Android Apps

Continuing a string of announcements from its I/O developer conference, Google (NASDAQ: GOOG ) on Thursday announced changes to its Google Play services that will span four major areas for developers and users.

Google Play services (version) 3.1 changes affect gaming, location, messaging, and notifications settings. In gaming, the search giant introduces achievements, leaderboards, multiplayer, and saving (so users can pick up the game where they left off on a different device). On location, Google has made it easier to build "efficient location-aware apps" with three pieces of software. Regarding messaging, Google is making it easier for developers to set up Google Cloud Messaging platform on their apps. Finally, with user notification software, Google is making it easier for developers to synchronize notifications across a user's multiple devices.

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This latest version of Google Play is rolling out already, so Android developers can start building better apps with this new software today.

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Sunday, April 6, 2014

How Bill Gates Invested in Smart Grid Technolgy

Not a week after word spread that Bill Gates had invested in Varentec, a company that specializes in "edge of network" technology, utility industry analysts already are avowing that Grid Edge platforms will be "the next big thing" in electric power transmission.

Indeed, for electric utilities that have been trying to harden their infrastructure -- to make it more reliable, even during severe weather events -- Grid Edge may offer a better option than the smart grid 1.0.

Smart grids are utility networks that have been upgraded and configured to transmit not just electricity, but also two-way, actionable communications from the base station to the end user and back again.

The difference between the smart grid as we know it now and as it would be with Grid Edge is that:

Using smart grid 1.0, a utility can remotely monitor network data for surges, outages, and other events -- and, if an issue is discovered, can relay commands from the base station (or, if necessary, service teams) to make rapid repairs. Sometimes, problems can be fixed before customers report them.

With Grid Edge, equipment installed along the periphery of the network autonomously identifies and self-corrects problems on-site, in real time -- without requiring intervention by professionals at the utility's base station.

Thus, while the smart grid 1.0 fixes problems from the inside out, Grid Edge would restore service from the outside in -- providing a quantum leap in customer service.

To remain relevant and competitive, current smart grid vendors -- among them ABB (NYSE: ABB ) , General Electric (NYSE: GE ) , IBM (NYSE: IBM ) , and Siemens (NYSE: SI ) -- may have to make market adjustments, including partnerships, acquisitions, and advances of their own.

Each of them currently is offering a platform that manages fault detection, isolation, and restoration centrally. However, with nearly 60% to 70% of energy losses on the grid occurring during transmission and distribution, their customers, the global utilities, may want to explore the advantages of Grid Edge. After all, Bill Gates usually knows a good thing when he sees it.

Stepping into this mix in order "to further define the space and drive the conversation" -- and (let's be serious) to get a jump on a trend that will affect the industry worldwide -- Boston-based Greentech Media, a research and publishing house, has just announced the establishment of a Grid Edge Executive Council.

Shifting the Smart Grid Paradigm

But let's go back to see how all of this began. On Sept. 30, Varentec, a Silicon Valley-based start-up, announced that it had received an $8 million infusion of Series B funding from Gates and Khosla Ventures, a Menlo Park, Calif., venture capital firm in which the Microsoft co-founder participates as a limited partner.

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The eponymous firm is run by Vinod Khosla, who, like Gates, knows a thing or two about disruptive technologies. Khosla co-founded Sun Microsystems, the computer company acquired in 2010 by Oracle for $7.4 billion.

Not only does the association with these two iconic investors elevate Varentec to sudden (and welcome) prominence, but it augurs a shift in the smart grid paradigm -- away from centrally configured electricity transmission and base station controls, and toward distributed generation and load management.

Deepak Divan, president and CTO of Varentec, commented that he felt "validated" by the Series B funding from his high-profile backers, and noted that the infusion of funding would "allow us to commercialize our cutting-edge technology."

Specifically, rather than placing nodes from end to end of the electric grid to send data back to a central base station, Varentec's breakthrough digital technology places inverter-like controllers (which the company calls "power routers") at sites where energy management is needed most. With that, events on the grid can be addressed in real time, without the need for feet on the ground or a procedure implemented by the back office.

This so-called edge-of-network routing system becomes particularly valuable when forms of distributed energy, such as wind and solar generation, are tied to the grid, because their input can be intermittent and unpredictable -- for example, when the wind dies down or the sun goes behind a cloud. Grid Edge can help a utility to regulate the power load and respond to other transmission-related events quickly -- to the advantage of both the company and its customers.

What's more, experts now are saying that Grid Edge technology will be far more resilient against failure of today's dilapidated, centralized power infrastructure, which is vulnerable to accidents and cyber attacks, and is subject to cascading failures.

On the cusp of a major transition

In recognition of this new power prototype, Greentech Media has released a free report, "The Grid Edge: Utility Modernization in the Age of Distributed Generation," and is inviting "leaders from across the industry to discuss the future of the electricity market" as members of its new Grid Edge Executive Council.

"We are on the cusp of a major transition to a next-generation, distribution, intelligent energy system," said Greentech president Rick Thompson. "This conversation moves the concept of a smart grid to an entirely new level."

The transition is expected to benefit a broad swath of industry players. Greetech's analysts see growth opportunities for a number of renewable energy sectors and suppliers, among them:

Photovoltaic solar manufacturers and installers, which the researchers say will benefit as the technology becomes more cost-efficient and inverters become cheaper, more intelligent, and more grid interactive; Open automated demand response applications (OpenADR 2.0), which will enable utilities and their customers to remotely control the power load; Sensors and synchrophasers, which will alert utilities to faults and facilitate rapid response to fast-transient processes; Cloud infrastructure, which will reduce the need for local servers; and Energy storage at the Grid Edge, which will provide backup during fluctuations in capacity and power blackouts.

Of course, turning the electric utility industry in a new direction -- especially when many utilities worldwide already have deployed centralized demand response operations -- is a little like turning around an ocean liner in mid-stream.

However, with proponents like Gates and Khosla already signed on for the Grid Edge transition, can others be far behind? Look for stocks in these sectors to surge in value as the Grid Edge gives them an undeniable advantage of their own in the growing clean technology market.

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