Stocks Shaking the Investment World

There are one-hit wonders, and then there are those stocks whose initial big move is only a preview of even bigger and better gains to come.

Today, we list a pair of stocks that made some of the biggest upward moves over the past month, despite the incredible volatility in the market, which we'll pair with the ratings issued by our Motley Fool CAPS community. The higher each stock's rating, the greater CAPS members' faith in that company's ability to keep on beating the market.

Stock	1-Month �% Change	CAPS Rating (out of 5)
Tudou Holdings (Nasdaq: TUDO  )	151.3%	*
Arena Pharmaceuticals (Nasdaq: ARNA  )	67.6%	**

Source: FinViz.com; 1 Month % change from Feb. 8 to March 9.

While you were out, the markets rebounded, but they may turn tail again if Europe's fragile financial system falls apart. So before we get shaken out again, let's see why the CAPS community thinks some of these companies might continue to outperform the market.

A mighty temblor
It was the acquisition that had to be made to cement Youku.com's (Nasdaq: YOKU  ) leadership position in streaming media, but its purchase of Tudou Holdings will also shore up the gaping holes in its own operations.

With Youku owning more than one-fifth of the video market, buying the 16% share Tudou controls will give it a commanding lead over soon-to-be distant-third-place rival Sohu.com (Nasdaq: SOHU  ) . But Youku is still bleeding red ink, and even though it projects "synergistic" savings of $50 million to $60 million, such large purchases like this -- it's paying $1.1 billion for Tudou -- often create more indigestion than they're worth.

When the deal was announced, I closed out my outperform rating on Youku and switched it to an underperform. I'll be maintaining that outlook, as I think this acquisition will weigh it down even further. More than half of the CAPS members rating Youku apparently agree with me (or me with them), and the bounce Tudou shareholders got from the offer should entice them to take the money and run.

But tell me in the comments section below whether you think this will be a successful pairing in the long run, then add Tudou and Youku to�your Watchlist�to see how it plays out.

Overweighting expectations
I've mocked the weight-loss therapies being developed by Arena Pharmaceuticals, VIVUS (Nasdaq: VVUS  ) , and Orexigen Therapeutics as nirvana for couch potatoes like me. With the potential for VIVUS' Qnexa in particular to actually receive FDA approval, we'll be able to still sit back and pop bonbons while avoiding what's really needed: a healthy diet and exercise.

But as ATLnsider recently noted, the treatments aren't really designed or intended to work like that. Since they're being developed for the obese, doctors are going to insist on permanent lifestyle alterations that ensure the patient is doing more than thinking a pill is going to cure his or her ills.

Qnexa is not intended to replace diet and exercise. Qnexa is intended to be used in conjunction with diet and exercise. Qnexa will not work without a proper diet and regular exercise. No reputable doctor should ever prescribe Qnexa without requiring their patients to adhere to significant permanent lifestyle changes, including regular exercise and a healthy diet that will support and contribute to weight loss.

Agreed, but I still maintain that the weighty assumptions investors are extrapolating to Arena's lorcaserin from Qnexa's pending approval are overdone. The approval of one does not automatically mean the other will follow. Yet with 91% of the CAPS members rating Arena to outperform the market averages, it's clear I'm in the minority, though its low, two-star CAPS rating suggests they think there are better places for your money.

Add the biotech to the Fool's free portfolio tracker and tell us on the Arena Pharmaceuticals CAPS page whether you think it will be able to continue its climb higher regardless of the outcome.

Shake, rattle, and roll
These two stocks shook the market this past month, but the Fool has found one company that's digging up massive profits and is likely to continue to do so if the markets become rattled. Roll on over to get your free copy, but hurry, because it's available only for a limited time.

Top Stocks For 2011-12-7-5

SPS Commerce, Inc (Nasdaq:SPSC) and JCurve, a software performance provider of cloud-based business IT solutions including e-commerce, CRM and ERP, have partnered to provide cloud-based solutions to small and mid-sized organizations in Australia and New Zealand. The organizations have teamed to help organizations streamline their e-commerce or drop ship operations, trading partner integration and supply chain collaboration by leveraging JCurve and SPSCommerce.net.

SPS Commerce, Inc. provides on-demand supply chain management solutions worldwide. It offers integration, collaboration, connectivity, visibility, and data analytics over the Internet using a software-as-a-service model. SPS Commerce, Inc. provides its solutions through SPSCommerce.net, a hosted software suite that enables suppliers, retailers, distributors, and other customers to manage and fulfill orders.

Mercury Computer Systems, Inc. (Nasdaq:MRCY) announced that its Mercury Federal Systems subsidiary is part of the Sierra Nevada Corporation (SNC)-led team that was named the 2011 C4ISR Journal Big 25 Awards Top Sensor award winner. The award was presented at the 11th Annual C4ISR Journal Conference in Washington D.C.

Mercury Computer Systems, Inc. designs, manufactures, and markets high-performance embedded, real-time digital signal and image processing systems and software for specialized defense and commercial computing markets.

Global Hunter (GBLHF.PK)
Global Hunter’s focus is on strategic and base metals, with an advanced stage copper oxide project in Chile and a highly prospective molybdenum property in British Columbia, Canada. GBLHF teams are working on developing the Corona de Cobre property in Chile and the Rabbit south property in British Columbia.

Copper’s recent applications includes its use in frequently touched surfaces (such as brass doorknobs), where copper’s antimicrobial properties reduce the transfer of germs and disease. Semiconductor manufacturers have also begun using copper for circuitry in silicon chips, which enables microprocessors to operate faster and use less energy. Copper rotors have also recently been found to increase the efficiency of electric motors, which are a major consumer of electric power.

Global Hunter Corp. (GBLHF.PK) is pleased to announce initial assay results from its previously announced surface sampling program. The results are encouraging with new gold showings as well as very positive copper oxide assays over wide-spread areas.

Highlights of the entire program
9 mineralized shear and/or alteration zones sampled total of 13.5 kilometers of strike length along know copper bearing shear and alteration zones tested with 205 rock chip samples
Good grades of soluble copper (oxide) over a significantly large area have been identified, however they represent only about 50% of the total copper grade indicating a mixed oxide-sulphide zone. Numerous iron oxide structures have also been mapped but no iron assays have been received to date.

The Company is planning to re-assay samples for iron to determine if iron is present in significant quantities to represent another target.

Copper was one of the first metals ever extracted and used by humans, and it has made vital contributions to sustaining and improving society since the dawn of civilization. Copper was first used in coins and ornaments starting about 8000 B.C., and at about 5500 B.C., copper tools helped civilization emerge from the Stone Age. The discovery that copper alloyed with tin produces bronze marked the beginning of the Bronze Age at about 3000 B.C.

For more information http://www.globalhunter.ca/homeabout.html

ServiceSource Corporation (Nasdaq:SREV) unveiled the vision for the next major release of the Service Revenue Performance Cloud that unites over ten years of focus and experience managing recurring service revenue with the advantages and data capabilities of tomorrow’s cloud technology.

ServiceSource International, LLC provides service revenue management solutions that drive renewals of maintenance, support, and subscription agreements for technology companies.

3 Reasons The Rally Will Likely Continue Next Week

The market isn't going straight down. While the S&P 500 and its tracking exchange traded fund, SPY (SPY), has rallied nearly 20% from the summer lows of last year, and stocks such as Apple (AAPL) are up nearly 30% in the last year, the last several months have been brutal.

Indeed, while the S&P 500 has sold-off around 10% in the last several months, market leaders in sectors such as energy, the industrials, and the financial sector, have sold-off hard. Market leaders such as GE (GE), Citigroup (C), JP Morgan (JPM), and Exxon-Mobil (XOM), have also performed poorly.

(charts courtesy of thestreet.com)

Still, despite the recent disappointing job reports in the U.S., and poor economic data in Europe and and China, the recent bailout of Spain and Fed commentary about possible new stimulus measures has helped the market rally for two straight weeks.

The first reason I think the market will rally next week is the Greek elections are unlikely to produce a government that would withdraw from the eurozone. With over 70% of Greek debt held by foreign banks, and German and French banks the largest holder of Greece's bonds, Germany and France are unlikely to accept repayment in Drachmas. Greece is dependent on the EU and IMF for emergency funding, and the Greek government will likely need to comply with EU and IMF demands to receive additional funding. Polls also show 8 out of 10 Greeks want to stay in the EU, and even the leftist leaders in Greece have said that their party has no plans to withdraw from the EU.

The second reason I think the market will continue to rally next week is a likely short-term peak in fear levels. While there have been a number of reports of massive withdrawals from the Greek banking system over the last several weeks, the Greek government is still dependent on the EU and IMF for financing. The recent bailout funds that Spain received are likely just one of several additional bailouts Spain and the other PIIGs will need.

Still, Germany has recently openly discussed increasing the European Financial Stability Fund significantly, and the EU and IMF remain committed to continuing provide funds to Greece as well. While Germany has been very resistant to calls for euro bonds, and new, more aggressive forms of monetary easing, Germany's recent comments suggest continued economic deterioration in the eurozone is making politicians more willing to take aggressive measures. The fact the recent Spanish bailout did not face significant political opposition in France and Germany, who are providing nearly half the funds, also suggests political opposition to bailing out the PIIGS is weakening.

Finally, the last reason the market will likely continue to rise next week is that bearish sentiment remains very high. While sentiment is always hard to gauge, put option volume in the S&P 500 has spiked enormously over the last month, and short positions in financial stocks such as Citigroup and Bank of America (BAC) have increased by over 50% since mid-May. While put options are obviously traditionally are bets on a continued sell-off, traders and investors also often hedge positions in the options market. With longs likely heavily hedged and the volatility premiums in put options having fallen significantly in the last couple weeks as the VIX has fallen nearly 20% from its highs this month.

To conclude, while the S&P 500 has held up reasonably well during the recent sell-off, cyclical stocks in sectors such as energy, the financials, and the industrials, have sold-off hard. European and Chinese stocks are also trading at one year lows. While the Fed may be limited in an election year, EU leaders are taking more aggressive actions to address the PIIGS financing problems, China and Europe are now openly considering delaying new more stringent financial regulations, and the U.S. economy remains unlikely to reenter a recession

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Ways In Which Basic Bookkeeping For New Business Start Ups Can Be Done Well

During the running of a new business, the company’s book-keeping can often appear to be a difficult thing to do. However, as long as one keeps good records on a regular basis, that person need not go through a lot of trouble with the process. Doing ones books might even help to improve businesses. This article takes a look at basic bookkeeping for new business start ups, and how it can be best performed.

Perhaps the first thing an individual will need to know and do is to keep a record of each thing that is bought for the company as well as all the sales. Doing this on regular intervals will help to keep things accurate, and eliminate any chances of mistakes that could cause trouble at a later date.

Something that will probably help one to do better book-keeping is to keep all the paperwork in order. This is good practice, and may be important if the company’s records need to be checked at any point.

People who are running their own business are not always going to know everything about book-keeping. Therefore, when something comes up that causes one to become baffled, if the problem seems too hard to work out, it is probably best to get in contact with a qualified book-keeper for help.

A big benefit of keeping books is that they can be a good guide to any problems that have arisen in ones company. For instance, one may be spending more than he or she wants, and the books may make this clear.

These were some of the things that it is useful to know for basic bookkeeping for new business start ups. Simply put, one needs to keep order, and constantly update their company’s records – receipts, invoices, and so on. When things get tough, however, one can always call on a professional to guide him or her through the process.

Utilizing accountants West London locale helps to keep your organization on a sound financial base. You can find chartered accountants London to do many of the administrative and financial tasks for a company.

The Crowd is Wrong About this Well-Known Retail Stock

Please excuse me for sounding like a broken record, but in today's market, you need to look at adding stocks with a high margin of safety to your portfolio. The S&P 500's stunning six-month surge should have you thinking about capital preservation as much as capital appreciation.

Simply put, it's hard for me to get behind a stock that has already had a strong recent run, knowing that a shift in the market mood could leave me holding the bag if profit-taking kicks in.

This isn't to suggest that poorly-trading stocks are the only ones that hold appeal. Indeed many of these relative duds are likely to remain as laggards while they address internal operational challenges. Yet even in this group, you need to scour the landscape for potential gainers.

  In that light, I was pretty intrigued to read a recent bullish report by Credit Suisse on beleaguered retailer Best Buy (NYSE: BBY). This consumer electronics chain should have benefited from the demise of bankrupted rival Circuit City, but instead saw its own market share recede in the face of Amazon.com (Nasdaq: AMZN) and Wal-Mart (NYSE: WMT). 

Best Buy's sales grew just 0.1% in fiscal (February) 2011 to $49.8 billion, and just 1.9% in fiscal 2012 (to $50.7 billion). Considering employment levels look better than they did a year earlier, that's pretty anemic growth. Perhaps even more damning, Best Buy is making less profit on each sale. EBITDA margins have historically hovered in the 6% to 7% range, but fell to just 4.1% in fiscal 2012.

Yet even with those dismal metrics, Best Buy is a cash cow. The retailer generated a hefty $2.5 billion in free cash flow in fiscal 2012. That's more than the prior three years combined. In effect, this isn't a broken business, just one that needs some resuscitation. More to the point, that prodigious free cash flow gives a booster shot in terms of valuation support: Best Buy is valued at less than $9 billion on an enterprise value basis, meaning its free cash flow yield is 27% ($2.5 billion / $9 billion = 27%).

I'm not the only one who sees the potential here. Credit Suisse's Gary Balter sees roughly 35% upside to his $32 price target even as he takes management to task. First, he thinks the retailer is mistaken by treating its stores and its website as distinct entities. Retailers such as Wal-Mart and Target (NYSE: TGT) are doing a much better job of leading customers to focus on both sales channels, allowing one effort to leverage the other.

He also says management remains a bit myopic in trying to address weak same-store sales trends. The company recently announced it would close 50 of its 1,100 stores, and analysts say it should close more. Balter even suggests Best Buy move more quickly to close marginally profitable stores and reinvest funds and energy into improving remaining stores.

Yet Balter gives credit where it's due. "It would be unfair to imply management is fiddling. They have made some brilliant moves, growing BBY Mobile, shutting China and Europe large stores, growing private label, etc... but our comment above is that they can do more."

To be sure, many investors think Best Buy is in the midst of a long-term decline, as super-efficient retailers like Amazon will never relent on price. Yet Balter thinks Best Buy remains as the "largest of its breed" and does not have to become a dinosaur.

In fact, profit-sapping price wars between Best Buy and Amazon and Wal-Mart may eventually sharply diminish. Samsung and Sony (NYSE: SNE) announced a new policy on April 1 that forces all retailers to adopt a unilateral pricing policy on many higher-end TVs. "Our ongoing pricing study shows that the policy is helping BBY close the pricing gap with AMZN on televisions in general," notes Deutsche Bank's Mike Baker. That gap stood at 7.3% in mid-March, but is now 3.5%. 

Risks to Consider: Amazon goes for the jugular when it senses a rival has been weakened. Best Buy remains in a very strong financial position, but that still may not stop Amazon from adopting irrational pricing just to beat out Best Buy.

> I like this analyst's call a lot. He's correct in noting that Best Buy's management deserves more credit than it has been getting. And the stock's current valuation borders on the absurd. While the free cash flow yield remains around 27%, Best Buy should be buying stock back at a prodigious clip. Balter's $32 price target isn't all that aggressive, as it equates to just nine times the consensus fiscal 2013 earnings forecast of $3.60 per share. (The fact that the stock currently trades for just seven times that forecast is another point for the value crowd.)

I also like Best Buy for a far more prosaic reason. Even assuming zero improvement in this business model, the cash flow strength and a stock price below $24 offers tremendous downside support. That's a key consideration in today's fast-rising market.

McDermott Looks Strong, Intangibly Speaking

McDermott International (NYSE: MDR  ) carries $41.2 million of goodwill and other intangibles on its balance sheet. Sometimes goodwill, especially when it's excessive, can foreshadow problems down the road. Could this be the case with McDermott?

Before we answer that, let's look at what could go wrong.

AOL blows up
In early 2002, AOL Time Warner was trading for $66.27 per share.

It had $209 billion of assets on its balance sheet, and $128 billion of that was in the form of goodwill and other intangible assets. Goodwill is simply the difference between the price paid for a company during an acquisition and the net assets of the acquired company. The $128 billion of goodwill in this case was created when AOL and Time Warner merged in 2000.

The problem with inflating your net assets with goodwill is that it can -- being intangible after all -- go away if the acquisition or merger doesn't create the amount of value that was expected. That's what happened in AOL Time Warner's case. It had to write off most of the goodwill over the next few months, and one year later that line item had shrunk to $37 billion. Investors punished the stock along the way, sending it down to $27.04 -- or nearly a 60% loss.

In his fine book It's Earnings That Count, Hewitt Heiserman explains the AOL situation and how two simple metrics can help minimize your risk of owning a company that may blow up like this. Let's see how McDermott holds up using his two metrics.

Intangible assets ratio
This ratio shows us the percentage of total assets made up by goodwill and other intangibles. Heiserman says he views anything over 20% as worrisome, "because management might be overpaying for the acquisition or acquisitions that gave rise to the goodwill."

McDermott has an intangible assets ratio of just 1%.

This is well below Heiserman's threshold, and a sign that any growth you see with the company is probably organic. But we're not through; let's also take a look at tangible book value.

Tangible book value
Tangible book value is simply what remains after subtracting goodwill and other intangibles from shareholders' equity. If this is not a positive value, Heiserman advises you to run away because such companies may "lack the balance sheet muscle to protect themselves in a recession or from better-financed competitors."

McDermott's tangible book value is $1.6 billion, so no yellow flags here.

Foolish bottom line
McDermott appears to be in good shape in terms of the intangible assets ratio and tangible book value. You can never base an entire investment thesis on one or two metrics, but there are no yellow flags here. If any companies you're researching do fail one of these checks, make sure you understand the business model and management's objectives. I'll help you keep a close eye on these ratios over the next few quarters by updating them soon after each earnings report.

Keep up with McDermott International, including news and analysis as it's published, by adding the company to your free, personalized watchlist.

One of the Most Hated Stocks in America is a GREAT Deal

Insurance giant American International Group (NYSE: AIG), or AIG for short, has had a tumultuous few years, to say the least. Right now, a handful of investors literally hate the stock and refuse to buy it.

That's their loss...

As counterintuitive as it sounds, emotionally-charged negativity toward certain stocks can be an extremely bullish indicator. It follows the old "buy them when they're hated" mantra. And it's made smart investors money time and time again.

Anyone interested in learning the details behind AIG's spectacular fall from grace to take an estimated $182 billion government bailout should definitely read Roddy Boyd's Fatal Risk: A Cautionary Tale of AIG's Corporate Suicide. Boyd's book is a fascinating read that details the divisions that got caught up in credit-default swaps, mortgage insurance and nearly everything that became toxic during the credit debacle. I was able to speak with Roddy recently about his research efforts and have come away convinced that there is considerable value in AIG's stock.

 

I won't go into many details about AIG's past. As with all successful investing, it's not recapping the past, but rather discerning the future that is important for making money.

All you need to know is that, on Jan. 14, 2011, AIG was officially recapitalized and allowed to start repairing its business. Since the crisis, AIG has been in the process of paying back the government, which has meant selling off divisions such as global insurance arms AIG and Alico. But it has also been fast at work focusing on its remaining core operations, which still qualify it as one of the largest insurers in the world.

A massive global network
The two key units are Chartis and SunAmerica. Chartis offers nearly every type of insurance across the globe, including property and casualty, and specialty insurance to individuals and commercial entities. SunAmerica sells annuities and life insurance, primarily in the United States. AIG also operates a leading aircraft-leasing business, which it's considering selling or spinning off to shareholders.

For all of 2011, AIG was still a massive insurer. It reported total revenue of $64.2 billion to make it roughly twice the size of other large domestic rivals, including Travelers (NYSE: TRV) and Allstate (NYSE: ALL). And while these rivals operate primarily in North America, AIG spans the globe. Half of Chartis' $35 billion in premiums written resides outside the United States and Canada. A significant portion (33%) resides in Asia and developing international economies.

SunAmerica specializes in selling to banks, broker-dealers and other large entities such as independent marketing organizations. It boasts annuity sales at more than 600 banks and through about 70,000 independent financial agencies. Its own advisor group totals more than 5,000 individuals.

The point of detailing this massive network is to demonstrate that it is very difficult for rivals to break into these distribution channels. A key competitive advantage that AIG held prior to the crisis and maintains to this day is its global network of business relationships. 

The numbers...
Turning to AIG's financials, the past few years were obviously a mess, given the losses it had to take and because of the restructuring moves it's currently making. This fiscal year is likely to bring about a big step forward to stabilization. Analysts project minimal revenue growth, and earnings of $2.62 per share. This would put return on book value (also known as shareholder's equity) at about 4.7%.

AIG ended 2011 with a reported book value of $55.33 per share. The average return on equity (ROE) in the industry is 11.5%. Before the credit crisis hit, AIG consistently posted a double-digit ROE. It turned as high as 15.2% in 2006 and is starting to trend upward again. An eventual ROE back to 10% equates to earnings of $5.53 (you can calculate this figure simply by multiplying the ROE by the book value).

It will take several years for AIG to return back to this level of profitability, but it demonstrates that there is a significant earnings upside for its businesses. Right now, the stock price of about $30 a share is at only about 55% of book value. Currently, the industry average is about 80%, so the stock is certainly cheap.

There are two takeaways from AIG's depressed book value multiple. For starters, as investors regain faith in its operations, the multiple should trend toward the industry average. In its heyday before the credit crisis, AIG traded at a significant premium to industry averages. Back in 2000, its share price was nearly five times stated book value. It will likely never again trade at such a premium, but there are still well-respected business units that solid profit generating potential.

The second point is that the industry overall trades at depressed levels. The credit crisis has made many investors fearful of nearly all financial institutions. A past rule of thumb in the industry was to buy a financial stock when it was trading right at book value and then sell it when it reached two times book value. The fact that the entire industry is trading below book value suggests many of the leading players are good deals at current levels.

Book Review – "Trade the Trader," by Quint Tatro

One more book about trading various financial assets ... Shouldn’t the world be tired of these?

I guess not. Trading is a financial knowledge field which advances at a blistering pace, not only technologically, but also behaviorally. Take for example the way the introduction of the iPad has changed the trading behavior of the masses – now you can research, plan and place your orders online, straight from your morning coffee table. Isn’t this brave new world wonderful?

Yes it is, my friends. But it is also dramatically different from one year ago. Think about it a little – how many traders are now online compared with five years ago? This means increased competition, right? How many tools are you using today compared with one year previously? How did the playing field changed?

“Trade the Trader,” by Quint Tatro, does not attempt to answer all of these questions – that would be foolish. What it tries is to show how you can play the market by anticipating the others’ moves. Tatro thinks that the market depends very little on the fundamentals of a stock – at least on the daily trading basis, when no important news is released. So the most important factor is to watch the collective behavior of the market traders and act accordingly. In a sense, Tatro’s market is a self-fulfilling prophecy which comes alive second after second, for a very short while.

This doesn't sound complicated or beyond Dodd’s “Intelligent Investor” words ... but it is. What Tatro brings in is his blend of practical experience and theoretical knowledge on exactly how to interpret the market as it unfolds to you, participant by participant. He speaks directly and in plain words the truth ... whether you want to hear it or not.

What I enjoyed a lot was that the book was alert and very well written. It is like watching the memories of a predator confessing to his prey: what you did wrong, my dear prey, where you should have stayed aside, how you should behave next time, now go and give me a good game! The book is so well written that you can read it as a novel – and it keeps you interested from the beginning till the end. So coming back to our first question – yes, it is possible to have fun and read about trading at the same time. Enjoy!

Book published by Financial Times Press and available at ftpress.com.

Disclosure: No position

U.S. economy gains 120,000 jobs in March

MARKETWATCH FRONT PAGE

The U.S. economy added 120,000 jobs in March, the smallest increase in five months, to break a recent string of strong employment gains, the government reported Friday. See full story.

U.S. seen adding 210,000 jobs in March

The See full story.

China doomsayer sees crash coming

Not everyone is convinced China will escape its current economic slowdown unharmed. Asianomics� Jim Walker says China�s consumption boom is ending, and his contrarian view calls for no growth � or even a contraction � in the economy. See full story.

Corruption�s silver lining for China�s new leaders

The scourge of graft offers the country�s incoming leaders a golden opportunity to enact political reforms that allow the public to supervise its government, Caixin Online writes in an editorial. See full story.

India under pressure over telecom ruling

Two months after India�s Supreme Court suspended 122 telecom licenses tainted in one of the country�s biggest corruption scandals, New Delhi is asking for more time to sort out legal and commercial issues. See full story.

MARKETWATCH COMMENTARY

Instead of acknowledging that banks have become a part of government, we keep pretending they are private institutions, writes David Weidner. See full story.

MARKETWATCH PERSONAL FINANCE

Is the state that you have designs on retiring to tax friendly or not? And the basic questions to answer are these: How does the state tax your income? How does it tax your property and your consumption? And what�s the overall tax burden? See full story.

4 Copper Stocks Ready To Recover

The global demand for copper is closely tied to growing economies and the manufacturing sector, which is growing rapidly in China and beginning to come back in the United States. As the United States automotive industry begins to gain traction again and China shows increased demand for copper in order to add to its growing infrastructure, the world's largest copper miners are poised to benefit from the increase in demand. The following companies could be on the brink of a major recovery after making a turn in the right direction after poor performances several years back.

Freeport-McMoRan Copper & Gold (FCX) is the largest copper producer in the world and single-handedly produces around 12% of the global output of copper. The company has operations in North America, South America, Africa and Indonesia -- where its primary focus lies. Freeport-McMoRan produced almost 4 billion pounds of copper in 2010, and its gold operations provide another reliable source of income. Its stock has grown from $14 per share to $43 over the last three years. I believe we will see continued growth in 2012, and that this is a safe buy when considering recent history.

Freeport-McMoRan has recovered nicely from an enormous loss of over $11.3 billion in 2008 and has made a turn into the black for the three years since. In 2009, it produced $2.3 billion in profit followed by $4.2 billion in 2010. It reported over $3.8 billion in its first three quarters in 2011, putting it on track to break its 2010 profit. It recently announced the sale of three, five and ten year bonds in the amount of $500 million for each tranche and the bonds provide a safety net to investors through the provision that they may be redeemed for 101 cents on the dollar in the event that Freeport-McMoRan is bought out.

The Southern Copper Corporation (SCCO) had a record breaking year in 2011, setting new records for sales and revenue with a net income of $2.3 billion. It showed an increased production of 23% and its income rose by over 50% when compared to 2010. Over the last three years, Southern Copper stock more than doubled from $14 per share to $32, but its success in 2011 has shown a real step in the right direction. From 2008 to 2010, its profits stayed between $1 billion and $1.5 billion, remaining consistent but lacking signs of growth.

The Southern Copper Corporation is poised to continue moving forward at increasing momentum and will succeed on China's increased demand and the return of the United States auto industry. I believe this is a safe buy for 2012.

Sterlite Industries (SLT) is the riskiest pick in the group, and its stock value has been anything but stable over the last three years. It has fluctuated between a low of $5 per share three years ago to a high near $20, and is currently at $10. Its net income grew from $880 million in 2009 to $1.5 billion reported in 2011, but it recently reported a drop of 17% in its third quarter earnings for its upcoming fiscal year. The recent history of this stock suggests that it could take a sharp move in either direction in 2012, which gives the opportunity for investors to make or lose quite a bit of money.

Its stock value has just moved past its six month moving average, making me believe that it could move to $20 rather than making a drop back down to $5, but its recent earnings report could dissuade investors, and push the stock back down just as easily. I would straddle here, placing a put and call option on the stock and benefiting from its move in either direction, because while I'm uncertain of where it is going, I believe it is going to make a move.

Lihua International Inc. (LIWA) provides copper replacement products and is poised to gain as China shows a rapidly growing demand for fine wire. This small company has grown from $5 per share to $6 over three years, but could have a breakaway year in 2012 on China's demand. It made almost $14 million in 2009, which has grown to a profit of $38 million over its last fiscal year. I believe this is a low risk opportunity to get into a growing company while it is cheap. I wouldn't be surprised to see Lihua International move to $10 per share before the year is over.

The copper market is poised for record breaking gains across the board in 2012, and I believe that all of these positions should be given some consideration. For the best results, I would diversify between all of these stocks, but the lowest risk lies in Freeport-McMoRan and the Southern Copper Corporation, which are both showing consistent growth and have a strong footing in the ever-growing copper market. Sterlite and Lihua International pose some risk, but I think that if you play the option game with Sterlite, you will not lose and that Lihua International has much less to lose than it stands to gain.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

7 Stocks Rising on Unusual Volume

Professional traders don't just look at a stock's price moves; they also look for big changes in volume.

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."Let's take a look at several stocks rising on unusual volume today. They are all already recording trading volume that is significantly above their average trading volume for a full day.Brigham Exploration(BEXP) is an exploration, development and production company that utilizes advanced exploration, drilling and completion technologies to systematically explore for, develop and produce domestic onshore oil and natural gas reserves. The stocks is up $6.02, or 19.8%, at $36.38 in recent trading. Volume: 49.6 millionAverage Volume: 3 millionVolume % Change: 1,566.7%Ratings: Of 22 analysts covering the stock, 16 rate it a buy, and six rate it a hold. TheStreet Ratings has a B- buy rating on Brigham Exploration.Statoil(STO) agreed Monday to buy Brigham for $36.50 a share in cash.Kinder Morgan(KMI) owns and operates energy infrastructure in the U.S. and Canada. . The stocks is trading up $1.92, or 7.1%, at $28.81 in recent trading. Volume: 8.4 millionAverage Volume: 1.2 millionVolume % Change: 577.8%Ratings: Of seven analysts covering the stock, five rate it a buy, and two rate it a hold. Kinder Morgan has agreed to buy El Paso(EP) for $21.1 billion in cash and stock.Shanda Interactive Entertainment(SNDA) is an interactive entertainment media company, offering an array of online entertainment content on an integrated service platform to a large and diverse user base. The stocks is up $5.97, or 17.8%, at $39.45 in recent trading. Volume: 598,685Average Volume: 160,000Volume % Change: 274.2%Ratings: Of 10 analysts covering the stock, three rate it a buy, five rate it a hold, and two rate it a sell. TheStreet Ratings has a C hold rating on Shanda.

Sequenom(SQNM) is a diagnostic testing and genetics analysis company committed to providing products, services, diagnostic testing, applications and genetic analysis products. The stocks is up 34 cents, or 6.4%, at $5.66 in recent trading.

Volume: 4.4 millionAverage Volume: 1.5 millionVolume % Change: 187.8%Ratings: Of 11 analysts covering the stock, seven rate it a buy, three rate it a hold, and one rates it a sell. TheStreet Ratings has a D- sell rating on Sequenom.Sequenom shows up on a recent list of the 10 Most Shorted Stocks in Biotech and was one of 11 Stocks Loved or Hated by Hedge Funds in the most recently reported quarter. Mesabi Trust(MSB) is a grantor trust in the U.S. The stocks is up 37 cents, or 1.6%, at $24.16 in recent trading. Volume: 238,971Average Volume: 115,800Volume % Change: 105.8%Ratings: The single analyst covering Mesabi rates it a moderate buy. TheStreet Ratings has a B- buy rating on the stock.Mesabi is one of the top-yielding financial services stocks.Halozyme Therapeutics(HALO) is a biopharmaceutical company, which is dedicated to the development and commercialization of products targeting the extracellular matrix for the endocrinology, oncology, dermatology and drug delivery markets. The stocks is trading up 16 cents, or 2.6%, at $6.25 in recent trading. Volume: 960,982Average Volume: 490,200Volume % Change: 95.2%Ratings: Of 10 analysts covering the stock, eight rate it a buy, and two rate it a hold. TheStreet Ratings has a D- sell rating on Halozyme.Achillion Pharmaceuticals(ACHN) is a biopharmaceutical company that focuses on the discovery, development and commercialization of innovative treatments for infectious diseases. The stocks is trading up 8 cents, or 1.4%, at $5.90. Volume: 1.2 millionAverage Volume: 600,300Volume % Change: 89.27%Ratings: Of 13 analysts covering the stock, 11 rate it a buy, and two rate it a hold. TheStreet Ratings has an E+ sell rating on Achillion.Acillion shows up on a recent list of 10 Hep C Stocks on Wall Street's Watch List.Follow Stockpickr on Twitter and become a fan on Facebook. >To order reprints of this article, click here: Reprints

Checking an Important, Overlooked Metric at Zep

Here at The Motley Fool, I've long cautioned investors to keep a close eye on inventory levels. It's a part of my standard diligence when searching for the market's best stocks. I think a quarterly checkup can help you spot potential problems. For many companies, products that sit on the shelves too long can become big trouble. Stale inventory may be sold for lower prices, hurting profitability. In extreme cases, it may be written off completely and sent to the shredder.

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 Zep (NYSE: ZEP  ) out of line? To figure that out, start by comparing the company's figures to those from peers and competitors:

Company	TTM Revenue Growth	TTM Inventory Growth
Zep	13.6%	15.0%
Scotts Miracle-Gro (NYSE: SMG  )	(2.1%)	9.7%
Ecolab (NYSE: ECL  )	7.4%	10.6%
Ashland (NYSE: ASH  )	13.3%	106.9%

Source: S&P Capital IQ. Data is current as of latest fully reported quarter. TTM = trailing 12 months.

How is Zep doing by this quick checkup? At first glance, OK, it seems. Trailing-12-month revenue increased 13.6%, and inventory increased 15%. Over the sequential quarterly period, the trend looks healthy. Revenue grew 3.5%, and inventory dropped 14.8%.

Advanced inventory
I don't stop my checkup there, because the type of inventory can matter even more than the overall quantity. There's even one type of inventory bulge we sometimes like to see. You can check for it by examining the quarterly filings to evaluate the different kinds of inventory: raw materials, work-in-progress inventory, and finished goods. (Some companies report the first two types as a single category.)

A company ramping up for increased demand may increase raw materials and work-in-progress inventory at a faster rate when it expects robust future growth. As such, we might consider oversized growth in those categories to offer a clue to a brighter future, and a clue that most other investors will miss. We call it "positive inventory divergence."

On the other hand, if we see a big increase in finished goods, that often means product isn't moving as well as expected, and it's time to hunker down with the filings and conference calls to find out why.

What's going on with the inventory at Zep? I chart the details below for both quarterly and 12-month periods.

Source: S&P Capital IQ. Data is current as of latest fully reported quarter. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Source: S&P Capital IQ. Data is current as of latest fully reported quarter. Dollar amounts in millions. FQ = fiscal quarter.

Let's dig into the inventory specifics. On a trailing-12-month basis, raw materials inventory was the fastest-growing segment, up 54.1%. On a sequential-quarter basis, each segment of inventory decreased. With inventory segments moving opposite directions for the periods we're considering, this one is a toss-up.

Foolish bottom line
When you're doing your research, remember that aggregate numbers such as inventory balances often mask situations that are more complex than they appear. Even the detailed numbers don't give us the final word. When in doubt, listen to the conference call, or contact investor relations. What at first looks like a problem may actually signal a stock that will provide the market's best returns. And what might look hunky-dory at first glance could actually be warning you to cut your losses before the rest of the Street wises up.

I run these quick inventory checks every quarter. To stay on top of the inventory story at your favorite companies, just use the handy links below to add companies to your free watchlist, and we'll deliver our latest coverage right to your inbox.

• Add Zep to My Watchlist.
• Add Scotts Miracle-Gro to My Watchlist.
• Add Ecolab to My Watchlist.
• Add Ashland to My Watchlist.

Identifying Master Limited Partnerships and Other Worthwhile Dividend Stocks

Master limited partnerships typically are engaged in the transportation of oil and gas across a vast network of pipelines. While prices of energy products fluctuate greatly, the volume transported does not change by much. In addition, once a pipeline is built, there is little in maintenance expenses for this long term asset, and there is little -- if any -- competition in the particular geographic area for transporting energy products like oil or gas. As a result, master limited partnerships are able to pass most of their distributable cash flows to investors in the form of distributions. In effect, master limited partnerships are the perfect dividend growth stocks, as they pay above average yields and they also consistently grow distributions at least once per year.

The list of consistent dividend raisers was dominated by master limited partnerships. The companies which rewarded their investors with higher dividend incomes include:

Is It Time for Investors to Put Stericycle Out With the Trash?

Since trading above $88 in late October, medical waste company Stericycle (NASDAQ:SRCL) has been in somewhat of a tailspin. Is it time for investors to put the company out with the trash before the stock loses more ground?

One hedge fund manager thinks this might be the right move. Paul Nouri of Noble Equity Fund, LP, recently told Seeking Alpha that Stericycle might surprise investors in 2012 — on the downside.

�Since 1989, Stericycle has purchased nearly 250 companies worldwide in the medical waste industry,� he said. �While these acquisitions have aided 15% compound annual growth rates on sales, gross & operating margins are 200 basis points off their 2009 highs and are likely to continue to decline due to pricing pressure. Low barriers to entry breeds competition in the medical waste space and a willingness to undercut Stericycle to gain business.�

In an article published here last March, we waxed enthusiastically about the company�s prospects, noting that �today, Stericycle has the lion�s share — 14% — of a $10.5 billion global market for medical waste and it shows no signs of slowing down. In just the past six months, Stericycle�s shares have climbed from $66.53 to $85.54, a gain of nearly 29%.

It appears we might have gotten a bit carried away. Since that piece appeared, the company�s stock price has dropped more than 9%. But even at $77.36, Stericycle trades at a price-to-earnings ratio of more than 30 based on trailing earnings.

That�s probably far too high for a company in the trash industry, so we probably can look for Stericycle�s P/E to start descending to a level more in line with the other firms in the rubbish industry — say in the 15-16 range. How quickly that occurs remains to be seen. But even at a P/E of 20, Stericycle should be trading at no more than $64 based on estimated earnings of 2012 of about $3.20.

The company might be hearing the footsteps of privately held Daniels Sharpsmart, which last year became the second biggest medical waste company in the United States, according to Business Week. The company also claims to be the world�s largest provider of reusable systems for the disposal of sharps, such as needles.

Last summer, the Department of Justice ordered Stericycle to divest its Bronx, N.Y., waste facility to Daniels to ensure competition after Stericycle acquired an area competitor. Perhaps government pressure, combined with fewer good targets and a need to preserve cash, will force Stericycle to slow down its Pac-Man strategy of gobbling up smaller industry competitors.

Putting the brakes on its buying spree and reducing debt might be a way for the company to keep investors happy in the face of a potential decline in its share price. Stericycle could use its healthy cash flow to pay a nice dividend. Like many firms that experience a slowdown in growth, the company might be primed to make the transition to a value stock that provides decent share appreciation with a healthy yield.

As of this writing, Barry Cohen did not hold a position in any of the aforementioned stocks.

Target: Stock Rises as Discounts, Food Draw Customers In

Target (TGT) shares rose 1.2% in morning trading after the retailer beat analysts’ third quarter earnings expectations and projected� strong earnings for the current quarter.

Target posted 82 cents of EPS, 8 cents better than expectations. Same-store sales rose 4.3% in the quarter. Gross margin fell to 30.5% from 30.6%, which was actually a smaller drop than expected.

Target has attempted to pull more customers into its stores by offering more food, which often has lower margins than apparel and other items. The company has also been offering cardholders 5% discounts. Traffic at its stores is on the way up, while Wal-Mart (WMT) is having trouble drawing in new customers, Reuters noted.

The company projected fourth quarter EPS at $1.43 to $1.53, versus analysts’ expectations for $1.47.

Forget BofA and JP Morgan: This is the One Bank Stock You Want to Own

In the week of March 12, the Federal Reserve gave the nation's major banks their third so-called "stress test" to determine whether they would survive another collapse of the financial system like the one suffered in 2008. Overall, the group passed the test, with 15 of the 19 undergoing the Fed's scrutiny being deemed capable of maintaining the needed capital levels to weather such a storm.

The Fed's positive opinion of those 15 banks, however, wasn't the aspect of the stress tests that prompted investors to begin an impressive buying spree. The bullish spark stemmed from what the passing grade meant those banks could do again, which is raise dividends.

 

The move pleased investors who've been waiting for the stocks to start paying better dividends. After all, the financial crisis notwithstanding, bank stocks have been some of the most reliably outperforming dividend stocks on the market. And the Fed's recent results could be just the signal investors have been waiting for to get back in and buy.

Pick of the litter
Which one of the 15 banks makes the most sense as a dividend play? The ideal bank would offer the combination of a strong balance sheet, debt that isn't facing a downgrade from Moody's or Standard and Poor's, strong profit margins and strong dividend coverage (that is, profits that significantly exceed the dividend payout). The Fed's stress tests looked at all of these factors, but didn't intensely focus on the latter three items, even though they are what reliably puts money in an investor's pocket.

To that end, the best-looking bank to rise to the top of the heap in light of last week's news is U.S. Bancorp (NYSE: USB), for a combination of reasons...

Technically it's a regional bank, but effectively, its $60 billion market cap and strong geographic market penetration puts it quietly on par with bigger brothers like Wells Fargo (NYSE: WFC) and Bank of America (NYSE: BAC). More important, it has the right stuff to maintain the quarterly dividend at its recently-raised rate of $0.195 per share. That dividend would translate into a yield of 2.5%.

While that's certainly not eye-popping at this point, you have to remember that the dividend has a very good chance of climbing significantly going forward.

Indeed, the bank has an impressive history of upping its payout as it grows earnings, cranking up its quarterly dividend of $0.17 in 2000 to $0.30 in 2005 to its peak payout of $0.43 per quarter in 2008, each of which mirrored increasingly stronger earnings. Earnings are on the rise again now, too, and have been since early 2010. And historically speaking, U.S. Bancorp has favored a dividend yield well above 3.5%, so the current payout of 2.5% may be a mere stepping stone to a greater payout.
    
As for other measures, U.S. Bancorp's balance sheet is admittedly just mediocre, at least according the Fed's stress test snapshot. The bank is sitting on $84.7 billion in cash and $283 billion in long-term investments. At the same time, it's got $261 billion in liabilities to manage. No matter how you slice it though, total assets exceed total liabilities by 11%, which is typical within the industry right now.

What the test doesn't adequately indicate, however, is how U.S. Bancorp avoided most of the 2008 financial debacle by not diving neck deep into subprime loans and shaky derivatives in the first place. That's why the bank was able to remain quite profitable in 2009 while other banks were dipping into the red ink, and why it's less likely than other banks to post big loan losses going forward.

The Minneapolis-based bank has also been disciplined about how much it pays out in dividends, too -- explicitly saying on more than one occasion it's aiming to pay out only about 30% of its income as dividends. The rate walks that fine line between being generous and being stifling. It's also the Fed's suggested maximum (though not mandated) payout.

There's no immediate threat of Moody's lowering the U.S. Bank's debt rating either, unlike J.P. Morgan (NYSE: JPM), Citigroup (NYSE: C), and Bank of America. Lower credit worthiness makes it more difficult for banks to borrow, crimping profitability.

Risks to Consider: While U.S. Bancorp is better positioned to control its own destiny more so than any other major bank, it's clear that external pressures from the Fed or a ratings agency like Moody's or S&P can still torpedo the dividend or the company's ability to pay it. Investors should keep tabs on any potential industry undertow as much as the stock itself.

> None of this is to say other bank stocks aren't investment-worthy, particularly to income investors. From a bigger-picture view, though, U.S. Bancorp appears to offer the optimal balance of risk, reward and sustainability.

Believing In A Completely New Bank

Picking the right bank is like picking out a new doctor or dentist. There is a certain level of trust involved with these types of relationships and in some capacity they control a very personal part of your life.

You’ll find hundreds of main reasons why you want to enhance your bank. They may have changed their recommendations, interest levels dropped their CDs, checking accounts, or savings accounts. It might be simple such things as you don’t like the wallpaper they’ll use, but biggest point may be bear in mind that obtaining a new bank isn’t always easy to find, and in addition takes research and persistence.

The initial step to locating a brand new bank would be to learn to really read bank reviews, how to compare banks from each other, and outline what you are actually searching for inside a new bank. Do comprehensive research compare what each bank needs to offer.

Ask yourself just what it had been that made you leave your previous bank? What didn’t they have for you personally? What benefits are you currently searching for? Along with other questions such as these.

Once you figure out all these questions you can begin to shop and compare banks. This can involve comparing your local bank branches to those of national chains, such as Bank of America or Citi Bank. Look at what sort of benefits and services that national banks have over local.

Not all banks are going to have the same policies and chances are there won’t be one bank that has everything you want. Unfortunately life is full of compromise.

According to what you look for compromising is probably not very hard. If you are searching to save extra money, choosing a bank that has lower interest on checking accounts may not matter. Requiring to compromise doesn’t mean you have to omit luxuries, it really means you have to choose what you look for.

Obtaining a new bank may be hard but it’s important to choose one which meets your requirements. You’ll want depend upon your bank given that they hold your hard gained money, and by doing this, your existence.

Looking to find the best info on how to compare banks, then visit www.BankReviews.org to find the best advice on bank reviews for you.

Top Stocks For 2011-12-7-13

Global Hunter (GBLHF.PK)

Global Hunter’s focus is on strategic and base metals, with an advanced stage copper oxide project in Chile and a highly prospective molybdenum property in British Columbia, Canada. GBLHF teams are working on developing the Corona de Cobre property in Chile and the Rabbit south property in British Columbia.

La Corona de Cobre, Chile:

+18,000 hectare land package in coastal belt of Andean Cordillera of Chile on the Atacama Fault Zone.(”Chilean Iron-Copper Belt”)

Project Highlights
- Copper oxide deposit, leachable
- Existing NI 43-101 Resource Estimate (225 million pounds of copper)
- Management with proven track record
- Highly qualified technical team
- Low operating costs of appr. $ 1.00/lb (preliminary calculation)
- Substantial upside potential (resource covers less than 0.1% of total area)

Rabbit South, British Columbia:

1,900 hectare land package between two of British Columbia’s most successful copper mines (Afton and Highland Valley)

Project Highlights
- 1,900 hectares 26km from Kamloops, British Columbia, between the Afton and Highland Valley copper mines
- 86 holes drilled on property from 1979 to 2005
- Two large target areas identified
- Recent drilling confirms presence of wide-spread near-surface molybdenum mineralization

Because it corrodes slowly, copper is used in roofing, guttering, and as rainspouts on buildings. It is also used in plumbing and in cookware and cooking utensils. Commercially important alloys such as brass and bronze are made with copper and other metals. Gun metals and American coins are copper alloys. Copper sulfate is used as a fungicide and as an algicide in rivers, lakes and ponds. Copper oxide in Fehling’s solution is widely used in tests for the presence of monosaccharides (simple sugars).

For more information please visit official website of GBLHF.PK: www.globalhunter.ca/homeabout.html

Sutor Technology Group Limited (Nasdaq:SUTR) announced its unaudited financial results for the first quarter of fiscal year 2012 ended September 30, 2011 .Revenue. For the three months ended September 30, 2011 , revenue was $130.2 million compared to $101.9 million for the same period last year, an increase of approximately 27.8%. The increase was mainly attributable to the increased production capacity utilization and output of our 400,000 metric tons HDG production lines at Jiangsu Cold-Rolled which generated approximately $47.5 million for this quarter as compared to $27.0 million for the same period last year.

Sutor Technology Group Limited, through its subsidiaries, engages in the manufacture and sale of steel products in the People’s Republic of China

Crumbs Bake Shop, Inc (Nasdaq:CRMB) named Julian R. Geiger as the Company’s new President and Chief Executive Officer, . Jason Bauer, who co-founded the Company’s operating subsidiary, Crumbs Holdings, LLC (”Crumbs”) and served as its President and Chief Executive Officer since 2003, will become Senior Vice President of Business Development.

Crumbs Bake Shop, Inc. engages in the retail sale of cupcakes in the United States. It also offers a range of comfort-oriented classics and elegant baked goods.

Blue Coat Systems Inc (Nasdaq:BCSI) reported financial results for its second fiscal quarter ended October 31, 2011. Total net revenue for the second quarter of fiscal 2012 was $114.1 million compared with net revenue of $109.5 million in the first quarter of fiscal 2012 and $121.0 million in the second quarter of fiscal 2011.

Blue Coat Systems, Inc. designs, develops, and sells products and services that secure, accelerate, and optimize the delivery of business applications, Web content, and other information to distributed users over a wide area network (WAN) or the public Internet/Web.

When Investing in Latin America, Politics Point the Way to Profits

Brazil's election win by the Workers Party candidate Dilma Rousseff has cast a dark shadow over the investment prospects of that long-fashionable "BRIC" economy.

And it has underscored an important lesson for investors: In Latin America, the political climate is really the No. 1 factor in determining where to invest for the long run.

In short, when looking to invest in Latin America, let politics be your guide to profits.

Different RulesThis isn't true in parts of the world beyond Latin America. In those markets, while investors must still keep an eye on the political picture, there are many other factors that in most cases are more important when deciding where to put your money.

For instance, many investors have made excellent money investing in Sweden and Germany while those countries were under social-democratic rule. And even Great Britain did pretty well for investors during the early years of the center-left premiership of former Prime Minister Tony Blair.

The same is true for China, where long-term investors have done quite well - even though the county is still nominally run by communists.

India is a more complex situation: It elects a succession of Congress Party governments (often with communist support), who don't try hard enough to control public spending. But since 2004, the new regimes have at least had the good sense to not destroy the prosperity that their center-right predecessors had left them.

In Latin America, while there are sometimes short-term rallies under leftist governments, the overall picture is different. The line between right and left is quite severe ... most likely a cause of - and a result of - that continent's glaring income inequalities.


A Country-By-Country StrategyIn Latin America, there are some variations from country to country, some of them significant enough to influence profit potential. It's well worth taking the time to examine the regimes from country to country.

Let's take a look.

What follows is a country-by-country analysis, including our current investment rating.

Mexico: In Mexico, the center-right PAN (National Action Party) has theoretically been in power since 2000. In practice, it has proved completely unable to unravel the nexus of leftist and union control left by the 71 years of PRI (Institutional Revolutionary Party) rule that took place from 1929-2000. For example, Mexico's oil sector remains completely dominated by the state controlled Petroleos Mexicanos (PEMEX), and repeated attempts to allow foreign participation have failed - foreign oil companies have been in bad odor in Mexico since the oil business was nationalized by President Lazaro Cardenas in 1938. Thus, Mexico has appalling productivity growth - indeed its productivity is still lower than at the peak of the pre-crisis boom in 1981. A few politically connected billionaires dominate its industry and entrepreneurship is minimal. Avoid.

Argentina: Here was a country that seemed headed toward a free-market-style economy in the 1990s and became a very fashionable investment destination. However, Argentina had the bad luck to have its free-market push coincide with very low commodity prices, so the commodity-dependent Argentine economy did not prosper, and ran up debt until going bankrupt in 2001. Since then, there has been some recovery as commodity prices have soared, but foreign investors have been treated badly and there is little likelihood of any truly successful Argentine private-sector growth stories. Avoid.

Venezuela: As stunning as it sounds, this country has lower productivity today than it had back in 1957; the country was badly run even before Hugo Chavez came to power in 1998. These days, every foreign company is liable to be nationalized. Avoid.

Brazil: This was well run in the 1990s, but entered a crisis in 1998-2002, which led to the election of Workers Party President Luiz Inacio Lula da Silva in 2002 - and almost to bankruptcy. In his first term in office, Lula did a surprisingly good job; he kept public spending down, except for the Bolsa Familia system of payments to poor families who kept their children in school. That was genuinely useful in reducing Brazilian inequality, and only moderately expensive - about 0.5% of Brazil's gross domestic product (GDP). However, in his second term Lula increased public spending excessively, especially in the run-up to the 2010 election, and meddled with property rights in the energy sector. Rousseff, the new president, appears somewhat left of Lula and is a firm believer in government control. Thus, even though Brazil has done well under Lula, that progress is likely to end in a financial crisis - and to lead to meddling in such major Brazilian companies as Vale SA (NYSE ADR: VALE). Avoid for now, though Brazil could well become a "Buy" again if it gets cheap enough - its decline in inequality may make its politics work better in the long run.

The Two Markets to Buy NowThere are two Latin American countries where investment is attractive:

• Chile: The Chilean economy was revolutionized by President Augusto Pinochet in the 1980s, with most major state-owned companies being sold and the world's first private-sector universal pension scheme being introduced. Fortunately, the center-left governments that ruled from 1990-2010 had the sense not to meddle with Pinochet's reforms. What's more, when copper prices rose after 2003, the government used the proceeds of copper sales to form a $19 billion Stabilization Fund, which came in very handy in the 2009 slump. With the new pro-business President Sebastian Pinera, Chile now looks to have major growth potential, particularly during this period of high commodity prices. Chile's response to the earthquake and the miners' rescue demonstrates that, in contrast to most of Latin America, Chile is an open society where both public and private sectors function at a high standard. Buy.

• Colombia: Was recently included in the CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa) collection of emerging markets that are expected to follow the BRICs into rapid growth. (Chile is not a CIVETS, but even though it is still quite poor it can be regarded as a super-CIVETS, like say South Korea). The successful presidency of Javier Uribe overcame Colombia's guerilla problem, or at least lessened it, and set Colombia on a path of free-market growth. Under the new president Jose Santos those policies can be expected to continue. Colombia will additionally benefit if the new U.S. Congress ratifies the U.S.-Colombia Free Trade Agreement, signed in 2007 but held hostage by the protectionist Democrat majority. Also, like Chile, it has a huge bounty of natural resources, including major offshore oil deposits. Buy.

Actions To Take: When it comes to Latin American investing, let politics be your guide.

Several of the countries - including longtime "BRIC" darling Brazil - aren't as alluring as they once were.

However, the encouraging thing is that the two best countries - Chile and Colombia - are genuinely attractive investments; in fact, they can stand up to virtually any other market opportunity anywhere else in the world.

Wynn Stock is Cookin’ as Controversy Boils

Wynn Resorts (WYNN) just upped the stakes in a no-holds-barred battle with one of its largest shareholders, and shares are rising sharply higher. They were recently up 6.5%.

This weekend, Wynn forcibly bought out Japanese gaming tycoon Kazuo Ozada, who owned 20% of the company, purchasing shares owned by his company Universal Entertainment at a 31% discount to last Friday’s closing price. Wynn said it bought the shares after a year-long investigation of Okada uncovered that “Mr. Okada and his associates engaged in improper activities for their own benefit in apparent violation of U.S. anti-corruption laws and gross disregard for the Company�s Code of Conduct. These troubling discoveries include cash payments and gifts totaling approximately $110,000 to foreign gaming regulators.”

Okada had already sued Wynn questioning a $135 million gift the company had made to a Macau university. Said Universal Entertainment in response to Wynn’s recent action:

“While Wynn Resorts has still not provided Universal with a copy of the “investigation” report, we believe the allegations leveled against Universal are motivated by self-interest and represent the results of an incomplete and otherwise flawed corporate governance process in breach of the Board’s fiduciary and other duties. Universal believes the entire process has been tainted by the desire to serve Steve Wynn’s predetermined goal of removing Aruze USA as the largest stockholder of the Company.� Aruze USA intends to commence litigation, which includes seeking a temporary restraining order and preliminary injunction, to protect its interests in Wynn Resorts and prevent the redemption of its shares.”

CLSA analyst Jon Oh does not expect the controversy to derail his positive thesis on the company.

“Although we do caution investors that we foresee further duels between the two parties, and it is unlikely that this is the final outcome, our investment call on Wynn Resorts remains a BUY with a value of $140/share based on a sum of the parts analysis. Any significant weakness to the share price on the back of this event could be seen as a buying opportunity as our thesis remains that Wynn Resorts is one of the most solid cash-flow generating companies within our coverage, potentially yielding as high as 6% if one includes the trend of special dividends.�This is premised on our understanding that the battle does not percolate to the operational level of the company (running of the business in Macau and Vegas) and does not in any way affect the ability of Wynn management and the board (declaring dividends, approving Cotai plans, etc) to continue steering the company forward.”

A Jackson Hole Primer: Look For Hints At Aggressive Options

Standard economic textbooks teach that the Fed has essentially two means of providing stimulus to the economy. The first tool is lowering the fed funds rate. The second tool is "open market operations" in which the Fed purchases securities on the open market (e.g. QE).

The Fed has reached the limit of what it can do with the first option: the fed funds rate is near 0%.

In terms of the second option, the Fed has already implemented QE1 and QE2. Many analysts feel that the Fed has reached its limit as to what it can do with QE.

Indeed, it has become more or less the consensus that given what the Fed has done already, the U.S. central bank is "out of ammunition" and can do nothing to help the economy at this point. This skepticism has raised the stakes for Bernanke's annual speech at Jackson Hole. The prospect of an economy and financial markets without credible Fed support is creating much anxiety.

Many people feel that if Bernanke's is not able to outline a credible plan of action, financial markets will indeed conclude that the Fed is "out of ammunition." This realization that the Fed is "powerless" in the face of enormous contractionary and deflationary forces in an economy that is deleveraging could potentially set off a financial and economic panic.

The Policy Menu

In a series of articles, I have addressed this issue of the Fed's policy options and the power that the Fed has to counteract contractionary and deflationary forces.

On the one hand, I have acknowledged that some proposed solutions are unlikely to gain traction given their limited expected effectiveness in the current environment relative to their costs/risks. For example, I have argued that lowering the interest rate that the Fed pays banks for holding excess reserves at the Fed is a policy that would entail many risks with relatively few discernible benefits. I have also argued that an "Operation Twist" would make little sense in the current environment.

On the other hand, I have pointed out the potential effectiveness of certain Fed alternatives. First, I have argued that the pledge to keep the Fed funds rate at 0% for two years is a more significant policy initiative than many have given it credit for. Second, I have laid out a powerful menu of policy options that the Fed has to prevent a debt-deflation depression scenario from unfolding. Indeed, I have argued that the Fed has thus far hardly touched the surface of the sort of things it could do.

With regard to the Fed's policy options, I have attempted to lay out a possible framework that might make such policies institutionally and politically viable.

For example, I have suggested that a policy framework based on "nominal GDP targeting" could provide the institutional "patina" that the Fed would need to be able to effectively implement some of the more radical options outlined in my monetary policy menu. It also would provide political cover with the center-right as this approach is actually more "rules-based" and less discretionary than the current framework - a policy virtue sought after by conservatives.

Furthermore, I have floated an idea which I believe holds some promise as a potential means of the Fed engaging in monetary stimulus, if the need arises. Specifically, I believe that the Fed has an opportunity to tackle the housing problem in the U.S. in a way that can be economically significant. And I believe that a policy specifically targeted at the housing market - and low and middle-income households in particular - would have widespread political appeal (despite the predictable objections on the fringe).

The idea behind these proposals is not to make policy. The idea is to try to imagine what the Fed could do as well as what it is inclined to do. Determining capability and inclination is very important from the perspective of investment management - whether it be equities (SPY, DIA, QQQ) or fixed income (TLT, JNK).

The Fed's Inclinations

Above, I have outlined the Fed's capabilities. Now, let us turn to inclinations.

From Bernanke's past writings and speeches and, more importantly, from his actions as Fed Chairman, it is clear that he favors activist policy in the face of any threat of depression or deflation. At the same time, it is clear that the Fed does not operate in political vacuum. And in this regard, there does not appear to be widespread political consensus for aggressive Fed intervention at this time.

What To Expect From Jackson Hole

It is my assessment that the Bernanke will not announce any concrete actions in the course of his Jackson Hole speech due to the current lack of political consensus regarding Fed action. I believe that Bernanke will wait until the economy is unmistakably in dire straits before actually "pulling the trigger" on some of the aggressive alternatives available to him and which I have outlined in the articles cited above.

Having said that, I think Bernanke may choose to remind financial markets, and the public at large that the Fed is far from powerless in the event that the economy showed confirmed signs of deteriorating further. Bernanke might suggest various possible courses of action that the Fed might eventually take in such a circumstance.

The knowledge on the part of financial markets and the public at large that the Fed is not "powerless" could have a reassuring effect on markets - which is precisely what Bernanke's intention would be in giving such a speech. Such a speech would also serve as a political sounding board to gauge potential political support/opposition to various policy alternatives.

Conclusion

I believe that the Bernanke will deliver a speech at Jackson Hole that is calculated to dispel the notion that the Fed is powerless in the face of a severe economic contraction and/or deflation. I believe that Bernanke will use the Jackson Hole platform to signal the Fed's intent to act aggressively in such an eventuality.

At the same time, I believe that the Fed will make no policy commitments. Bernanke will merely say that the Fed is closely monitoring the situation and stands ready to act, if necessary.

In my opinion, this approach by Bernanke will neither energize markets nor disappoint them. I expect the initial reaction to the speech to be muted.

However, for reasons that I have outlined elsewhere, I believe that the U.S. stock market will soon focus on the terrible August data reported in September. Furthermore, companies may begin to issue lowered guidance.

Time will tell whether the fear occasioned by the terrible numbers published in September will force the Fed's hand as well as provide sufficient political cover for the Fed to take aggressive countercyclical actions. My expectation is that we will soon find out - i.e. within the next couple of months.

Disclosure: I am short TLT and long TBT and SBND.

Splunk Soars 90%; NYSE Cancels Some Trades after Circuit Breaker

Shares of enterprise software vendor Splunk (SPLK) are up $15.04, or almost 90%, at $32.01 in their first hour of trading after the stock priced at $17 this morning and opened at at exactly $32.

Splunk, based in San Francisco, develops software tools that could be lumped into the ultra-hot software segment of “analytics,” allowing companies to divine patterns in mountains of data coming out of traditional databases, in real time.

The company claims 3,700 clients as of the time of its most recently updated prospectus., including Bank of America, Autodesk�(ADSK),�Zynga (ZNGA), and Harvard University.

The company lost $11 million on revenue of $121 million in the fiscal year that ended in January. The company was founded in 2003 but pursued mostly R&D work until it introduced commercial software in 2005.

Interestingly enough, the NYSE said shortly after trading began that it would cancel a whole batch of trades after the stock broke a circuit breaker.

Trades between 11:20 and 11:25, specifically, are withdrawn by NYSE, according to a report by Dow Jones Newswires’s Jacob Bunge and Chris Dieterich.

Update: Splunk shares closed the day up $18.48, or almost 109%, and were up almost another 1% in after-hours trading.

Daily ETF Roundup: VXX Jumps After FOMC Meeting, GDX Plunges With Gold

Bearish pressures took hold of Wall Street on Tuesday as investors broadly pulled the sell trigger following the latest FOMC meeting. The Fed minutes revealed that central bank members �generally agreed that the economic outlook, while a bit stronger overall, was broadly similar to that at the time of their January meeting�. Equity markets were hoping for hints of additional quantitative easing, which inevitably led to a sell-off after the Fed made no such suggestions [see also 3 ETFs For The End Of Operation Twist].�

Profit taking quickly followed the FOMC meeting; the Dow Jones Industrial Average led the way lower, shedding 0.49% on the day, while the Nasdaq proved most resilient, losing only 0.20% as the trading session drew to a close. In other economic news, domestic factory orders came in at 1.3%; this figure was well above last month’s reading of negative 1.1%, but ultimately fell short of analyst estimates of 1.5%. In international news, the Euro zone producer price index came in at 3.6%, a slight down-tick from last month’s reading of 3.8% [see also 3 ETF Trades For The Next Euro Zone Debt Crisis].�

The Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX) was one of the few products in green territory, gaining 1.85% on the day. A wave of uncertainty swept over Wall Street after Fed Chairman Bernanke made no hints of more stimulus to come, leading many to worry that the recovery would not sustain itself without additional quantitative easing.�

The Van Eck Market Vectors Gold Miners (GDX) was one of the worst performing ETFs, dropping 3.25% on the day. GDX followed gold prices lower as the FOMC minutes put a dent in precious metals across the board. Futures prices for the yellow metal sank as low as $1,640 an ounce; safe haven demand and inflation worries cooled off as the Fed made no mention of an additional round of stimulus. After today’s sell-off, GDX is down 5% from a year-to-date perspective [see also GLD-Free Gold Bug ETFdb Portfolio].�

[For more ETF analysis, make sure to sign up for our�free ETF newsletter�or try a�free seven day trial to ETFdb Pro]

Has Encana Become the Perfect Stock?

Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?

One thing's for sure: You'll never discover truly great investments unless you actively look for them. Let's discuss the ideal qualities of a perfect stock, then decide if Encana (NYSE: ECA  ) fits the bill.

The quest for perfection
Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:

• Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it's certainly a better sign than a stagnant top line.
• Margins. Higher sales mean nothing if a company can't produce profits from them. Strong margins ensure that company can turn revenue into profit.
• Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management's attention. Companies with strong balance sheets don't have to worry about the distraction of debt.
• Money-making opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.
• Valuation. You can't afford to pay too much for even the best companies. By using normalized figures, you can see how a stock's simple earnings multiple fits into a longer-term context.
• Dividends. For tangible proof of profits, a check to shareholders every three months can't be beat. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.

With those factors in mind, let's take a closer look at Encana.

Factor	What We Want to See	Actual	Pass or Fail?
Growth	5-year annual revenue growth > 15%	(14.2%)	Fail
�	1-year revenue growth > 12%	(26.7%)	Fail
Margins	Gross margin > 35%	60.8%	Pass
�	Net margin > 15%	3.1%	Fail
Balance sheet	Debt to equity < 50%	52.2%	Fail
�	Current ratio > 1.3	0.81	Fail
Opportunities	Return on equity > 15%	1.4%	Fail
Valuation	Normalized P/E < 20	169.69	Fail
Dividends	Current yield > 2%	4.1%	Pass
�	5-year dividend growth > 10%	18%	Pass
�	�	�	�
�	Total score	�	3 out of 10

Source: S&P Capital IQ. Total score = number of passes.

Since last year, Encana has fallen from grace, losing five full points. Drops in net margins, contracting sales, and a weakening balance sheet have all weighed on the energy company over the past year.

Like peers EOG Resources (NYSE: EOG  ) and Southwestern Energy (NYSE: SWN  ) , Encana is one of many companies that have struggled in the weak natural gas industry. New finds have boosted production, pushing prices into the doldrums and hurting Encana's prospects. Yet unlike rivals Chesapeake Energy (NYSE: CHK  ) and SandRidge (NYSE: SD  ) , which have moved away from natural gas toward the more lucrative oil market, Encana doubled down by divesting itself of its oil business two years ago to focus exclusively on natural gas.

Now, Encana has continued its asset purge. By selling properties in North Texas, Colorado, and British Columbia recently to buyers such as Enbridge (NYSE: ENB  ) , Encana has raised cash to help deal with its debt load. The newly missing pieces of Encana's puzzle help explain the massive drop in revenue.

In its most recent quarter, though, Encana managed to double its operating earnings and boost its production by 6%, in line with its own internal targets. Going forward, Encana hopes to cash in on the growing interest in gas liquids, which are more lucrative than regular natural gas. Even if it's successful, the company has a long way to go to return to the near perfection it enjoyed not long ago.

Keep searching
No stock is a sure thing, but some stocks are a lot closer to perfect than others. By looking for the perfect stock, you'll go a long way toward improving your investing prowess and learning how to separate out the best investments from the rest.

Click here to add Encana to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Finding the perfect stock is only one piece of a successful investment strategy. Get the big picture by taking a look at our "13 Steps to Investing Foolishly."

Gaylord Entertainment Misses on Both Revenue and Earnings

Gaylord Entertainment (NYSE: GET  ) reported earnings today. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Gaylord Entertainment missed slightly on revenues and missed expectations on earnings per share.

Compared to the prior-year quarter, revenue increased significantly and GAAP earnings per share grew.

Margins grew across the board.

Revenue details
Gaylord Entertainment reported revenue of $225.2 million. The 12 analysts polled by S&P Capital IQ predicted revenue of $229.2 million. Sales were 26% higher than the prior-year quarter's $158.3 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.04. The 12 earnings estimates compiled by S&P Capital IQ predicted $0.06 per share on the same basis. GAAP EPS were $0.10 for Q3 versus -$0.68 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 39.1%, 510 basis points better than the prior-year quarter. Operating margin was 7.6%, 1,820 basis points better than the prior-year quarter. Net margin was 1.9%, 1,730 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $271.9 million. On the bottom line, the average EPS estimate is $0.15.

Next year's average estimate for revenue is $954.1 million. The average EPS estimate is $0.28.

Investor sentiment
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 59 members out of 130 rating the stock outperform, and 71 members rating it underperform. Among 36 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 23 give Gaylord Entertainment a green thumbs-up, and 13 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Gaylord Entertainment is outperform, with an average price target of $27.92.

Over the decades, small-cap stocks, like Gaylord Entertainment have provided market-beating returns, provided they're value priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.

• Add Gaylord Entertainment to My Watchlist.

Credit Suisse to Offer Platform That Discourages High Frequency Trading

Credit Suisse Securities will begin operating a stock market by the end of March, according to Dan Mathisson, head of the firm’s electronic trading unit.

Mathisson told Businessweek earlier this month that the venue, Light Pool, will be the first U.S. electronic communications network to be started in five years. The ECN is aimed at institutional investors such as mutual funds, hedge funds, pensions and endowments. Unlike existing exchanges, Light Pool will employ a system to classify users by how they trade as a way to set prices and keep out unwanted speculators.

The announcement comes in the wake of the so-called “flash crash” that occurred on May 6, 2010. Largely blamed on high-frequency traders, it caused the Dow Jones Industrial Average to plunge almost 900 points, only to recover those losses within minutes.

According to Businessweek, the Credit Suisse Group AG unit is launching the venue as industry executives and some investors criticize the fragmentation of markets among 13 U.S. stock exchanges, three ECNs and more than 40 dark pools, or private platforms run by brokers to trade stocks without displaying bids and offers. An ECN is a computer system for matching buy and sell requests that competes with the New York Stock Exchange and Nasdaq Stock Market.

“There’s a real need for a new kind of displayed market where all the rules are set with long-term investors in mind,” said New York-based Mathisson. High-frequency trading, which encompasses computer-driven strategies whose common thread is the rapid submission and execution of orders, accounts for at least half of U.S. equities volume, according to the U.S. Securities and Exchange Commission. “Our idea is to forego that chunk of the market and create a niche market with rules aimed at long-term investors,” he said.

As the magazine notes, increasing automation and competition have reduced the NYSE and Nasdaq’s share of trading in securities they list from as much as 80% in the last decade. Now, less than 30% of trading takes place on their main exchanges as orders are dispersed to more than 50 competing venues, almost all of them fully electronic. Twenty years ago, fewer than 10 exchanges competed for the bulk of U.S. equity trades.

Firms that fail to meet standards aimed at protecting long- term investors won’t be allowed directly on the Credit Suisse venue, said Mathisson, head of the broker’s 250-person Advanced Execution Services group. Credit Suisse will subsidize the ECN, which isn’t expected to be initially profitable, as a service to its institutional clients, he said.

Microvision enacts One-for-Eight Reverse Stock Split

Microvision, Inc. (NASDAQ:MVIS) has traded as high as $4.67 during today�s trading session and last traded at $4.33 for a loss of 8.26% from Friday�s close� MVIS has traded as high as $14.16 (Calculated – $1.77 x 8) over the past 52 weeks and is now trading 69.42% off that high.Get my next ALERT 100% FREE

MicroVision provides the PicoP� display technology platform designed to enable next-generation display and imaging products for pico projectors, vehicle displays and wearable displays that interface with mobile devices. The company�s PicoP� laser display engine uses highly efficient laser light sources that create vivid images with high contrast and brightness.

On February�17, 2012, MicroVision filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Amended and Restated Certificate of Incorporation to�effect a one-for-eight reverse stock split of the Company�s issued and outstanding common stock, par value $0.001 per share reducing �the total number of shares of common stock that the Company shall have the authority to issue by 100,000,000 shares from 200,000,000 to 100,000,000 shares and reduce the total number of shares of capital stock that the Company is authorized to issue by the same amount.

As a result of the one-for-eight reverse stock split, at the Effective Time, each eight shares of the Company�s common stock issued and outstanding immediately prior to the Effective Time will be automatically combined into and become one share of Company common stock. Stockholders of record who otherwise would be entitled to receive fractional shares are entitled to rounding up of their fractional share to the nearest whole share. The Reverse Stock Split will not alter the par value of the common stock or modify any voting rights or other terms of the common stock.

At the Effective Time, the number of shares reserved for issuance under, the number of shares subject to awards under, the per-share exercise or purchase price with respect to awards under, the share-based limitations under, and other relevant provisions under the Company�s 2006 Incentive Plan and Independent Director Stock Option Plan will be appropriately adjusted to reflect the Reverse Stock Split. The adjustments will be made in accordance with the terms of the plans and include a proportionate increase in the exercise price of outstanding options and a proportionate decrease in the number of shares of common stock issuable upon the exercise of outstanding options.

Also, at the Effective Time, the exercise prices and the number of shares of common stock issuable upon exercise of the Company�s warrants will be, in accordance with their terms, increased and decreased, respectively, in proportion to the exchange ratio.

 

Canadian Solar: Wells Upgrades

Wells Fargo analyst Sam Dubinsky this morning raised his rating on Canadian Solar (CSIQ) to Outperform from Market Perform, setting a new valuation range of $16-$20, up from $12-$17.

“Shares have done poorly due to margin pressure and an accounting investigation, but we believe both issues will prove backward looking,” he writes in a research note. “Street estimates are low, quarterly comps are easy after a tough Q1 and risk/reward is favorable.”

Dubinsky lifts his 2010 EPS forecast to $1.37, from $1.20; for 2011, he now sees $1.99, up from $1.73.

On the accounting probe, he contends that the investigation is mostly “an inconvenience,” and that the scope is the situation is modest, focused on only a small number of sales transactions.

Despite the upgrade, CSIQ is down 9 cents, or 0.7%, to $12.83.

Japan Still Devastated but Outlook Hopeful

As Japan continued to battle an ongoing nuclear crisis in the wake of the earthquake and tsunami, its currency continued to fall on the world market thanks to a G7intervention on Friday, the first since 2000, that kept speculators at bay.

Warren Buffett also termed the country’s current situation a “buying opportunity,” and the World Bank said that, while the country’s economy would remain depressed through the middle of 2011, growth from rebuilding would result in a boost to the nation’s economy and end a “temporary growth slowdown.”

Reuters reported that the yen continued to fall on Monday after the G7 stepped in on Friday to prevent speculators from driving the currency’s value even higher; the yen had risen to a post-World War II high of 76.25 against the dollar on Thursday as speculators’ demand for the currency anticipated repatriation of funds for rebuilding and stop-loss orders were triggered by the dollar’s fall, driving it down even further.

The G7 intervention appeared successful, however, as Monday saw the yen extend its fall on the expectation of further intervention should the trend reverse. Closed markets in Japan also contributed to lower liquidity.

Warren Buffett also voiced his opinion that the earthquake presented investors with a rare opportunity. In the report, he said, “It will take some time to rebuild, but it will not change the economic future of Japan.”

Buffett, visiting a South Korean factory run by one of his fund-owned companies, added, “If I owned Japanese stocks, I would certainly not be selling them. Frequently, something out of the blue like this, an extraordinary event, really creates a buying opportunity. I have seen that happen in the United States, I have seen that happen around the world. I don't think Japan will be an exception.”

The World Bank seemed to agree with Buffett’s estimation, saying that while the devastation would briefly depress growth, both in Japan and in Asia, the surge of rebuilding to follow would boost its economy. In a supplement to its twice-yearly East Asia and Pacific Economic Update, it said, "If history is any guide, real GDP growth will be negatively affected through mid-2011. Growth should pick up in subsequent quarters as reconstruction efforts, which could last five years, accelerate.”

The report added, “A temporary growth slowdown in Japan will have a modest short-term impact on the region."

The World Bank further said that private insurers would likely absorb a small portion of the expense of rebuilding, with the Japanese government and the nation’s households having to absorb the rest. While it did not provide its own estimates of the cost of the disaster, it cited figures of $122 billion to $235 billion, or 2.5-4% of GDP, from other sources’ estimates, as possibilities.

The World Bank also theorized that the impact on developing nations in East Asia would translate to effects on exports, energy and finance. Regarding exports, if Japan’s GDP slowed by 0.25-0.5%, it could depress exports from developing East Asia countries by 0.75-1.5%. A 1% appreciation in the yen’s value would result in an increase of $250 million for the cost of regional annual debt service, and energy costs would likely rise, although that could benefit energy-producing nations such as Indonesia, Vietnam, and Malaysia.