Seattle Genetics, Inc. Posts Record Adcetris Sales

Seattle Genetics (NASDAQ: SGEN  ) is up in after-hours trading after posting record sales for its blood cancer drug Adcetris, and raising guidance for the year. The biotech sold $48 million worth of Adcetris in the U.S. and Canada, a 32% year-over-year increase.

Seattle Genetics also booked $8 million worth of royalty revenue from sales of Adcetris by its overseas partner Takeda. The drug is now approved in 47 countries, including 11 new approvals in the last 12 months.

In the U.S., the big driver of sales is coming from off-label use treating Hodgkin lymphoma to knock back the lymphoma so patients can get a stem cell transplant. Adcetris is currently only approved to treat Hodgkin lymphoma patients that have failed a stem cell transplant, so Seattle Genetics can't promote it for use before stem cell transplants, even if doctors are choosing to use it then.

On the back of a strong third quarter, Seattle Genetics raised its guidance for sales of Adcetris this year to between $172 million and $177 million. That guidance implies fourth-quarter sales of $40 million to $45 million.

If you're playing along at home, you'll notice that's less than the $48 million in the third quarter. The holiday season will result in less shipping days, which will affect sales; but it doesn't necessarily mean that demand is down. The aforementioned off-label sales could also diminish -- they tend to be lumpy as doctors explore what's working. And, of course, there's a good chance that management is just sandbagging its guidance.

Looking forward, Adcetris sales growth should come from consolidation therapy immediately following an autologous stem cell transplant in patients with Hodgkin lymphoma. Using it on all patients -- not just those who have failed a stem cell transplant -- will obviously increase sales.

Seattle Genetics recently presented top-line data for a trial in that indication, which showed Adcetris significantly extended survival without the lymphoma progressing, referred to as progression-free survival. We'll get more data on the trial at the American Society of Hematology meeting in December, where Seattle Genetics expects to have data presented at eight oral presentations. The company plans to submit an application to the FDA in the first half of 2015 for using Adcetris as a consolidation therapy, which would put it on track for an approval toward the end of next year or in early 2016.

Of course, Seattle Genetics is more than just Adcetris. The drug is built on its antibody drug conjugate technology, which the biotech has licensed to 12 different companies, including Genmab, which signed up for a second collaboration in September. During the quarter, three of the collaborators -- GlaxoSmithKline (NYSE: GSK  ) , Takeda, and Bayer -- moved drugs along in the clinic, triggering milestone payments.

Seattle Genetics isn't profitable yet; but with $340 million in cash and investments, solid growth in sales of Adcetris, and potential for future royalties from collaborators' drugs, the biotech looks like it's in good shape for now.

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5 Stocks Set to Soar on Bullish Earnings

DELAFIELD, Wis. (Stockpickr) -- Short-sellers hate being caught short a stock that reports a blowout quarter. When this happens, we often see a tradable short squeeze develop as the bears rush to cover their positions to avoid big losses. Even the best short-sellers know that it's never a great idea to stay short once a bullish earnings report sparks a big short-covering rally.

Must Read: Warren Buffett's Top 10 Dividend Stocks




This is why I scan the market for heavily shorted stocks that are about to report earnings. You only need to find a few of these stocks in a year to help enhance your portfolio returns -- the gains become so outsized in such a short time frame that your profits add up quickly.



That said, let's not forget that stocks are heavily shorted for a reason, so you have to use trading discipline and sound money management when playing earnings short-squeeze candidates. It's important that you don't go betting the farm on these plays and that you manage your risk accordingly. Sometimes the best play is to wait for the stock to break out following the report before you jump in to profit off a short squeeze. This way, you're letting the trend emerge after the market has digested all of the news.



Of course, sometimes the stock is going to be in such high demand that you risk missing a lot of the move by waiting. That's why it can be worth betting prior to the report -- but only if the stock is acting technically very bullish and you have a very strong conviction that it is going to rip higher. Just remember that even when you have that conviction and have done your due diligence, the stock can still get hammered if Wall Street doesn't like the numbers or guidance.



If you do decide to bet ahead of a quarter, then you might want to use options to limit your capital exposure. Heavily shorted stocks are usually the names that make the biggest post-earnings moves and have the most volatility. I personally prefer to wait until all the earnings-related news is out for a heavily shorted stock and then jump in and trade the prevailing trend.

With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.

Must Read: 5 Stocks Poised for Breakouts

Rayonier Advanced Materials

My first earnings short-squeeze trade idea is specialty cellulose fibers producer Rayonier Advanced Materials (RYAM), which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect Rayonier Advanced Materials to report revenue of $259.82 million on earnings of 66 cents per share.

The current short interest as a percentage of the float for Rayonier Advanced Materials is extremely high at 34.9%. That means that out of the 39.80 million shares in the tradable float, 13.91 million shares are sold short by the bears. This is a monster short interest on a stock with a relatively low tradable float. Any bullish earnings news could easily set off a large short-squeeze that sends the bears scrambling to cover some of their positions.

From a technical perspective, RYAM is currently trending below its 50-day moving average, which is bearish. This stock recently formed a double bottom chart pattern at $28.65 to $28.52 a share. Shares of RYAM have started to bounce modestly off those support levels and it's beginning to move within range of triggering a near-term breakout trade post-earnings.

If you're bullish on RYAM, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $30 to $31 a share and then above its 50-day moving average of $31.31 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1 million shares. If that breakout triggers post-earnings, then RYAM will set up to re-test or possibly takeout its next major overhead resistance levels at $33.44 to $33.65 a share, or $34.51 a share. Any high-volume move above $34.51 will then give RYAM a chance to re-fill some of its previous gap-down-day zone from July that started near $38 a share.

I would simply avoid RYAM or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its all-time low of $28.52 a share (or below Tuesday's intraday low if lower) with high volume. If we get that move, then RYAM will set up to enter new 52-week-low territory, which is bearish technical price action. Some possible downside targets off that move are $25 to $20 a share.

Must Read: 5 Stocks Under $10 Set to Soar

LifeLock

Another potential earnings short-squeeze play is proactive identity theft protection services provider LifeLock (LOCK), which is set to release its numbers on Wednesday after the market close. Wall Street analysts, on average, expect LifeLock to report revenue $120.72 million on earnings of 15 cents per share.

The current short interest as a percentage of the float for LifeLock is very high at 19.8%. That means that out of the 56.37 million shares in the tradable float, 11.15 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 4.5%, or by 479,000 shares. If the bears get caught pressing their bets into a bullish quarter, then shares of LOCK could easily rip sharply higher post-earnings as the shorts move to cover some of their positions.

From a technical perspective, LOCK is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last five months, with shares moving higher from its low of $10.48 to its recent high of $16.09 a share. During that uptrend, shares of LOCK have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of LOCK within range of triggering a big breakout trade post-earnings.

If you're in the bull camp on LOCK, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key overhead resistance levels at $16.09 to $17.03 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 939,997 shares. If that breakout kicks off post-earnings, then LOCK will set up to re-test or possibly take out its next major overhead resistance levels at $21.25 to its all-time high of $22.85 a share.

I would simply avoid LOCK or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 50-day moving average of $14.90 a share with high volume. If we get that move, then LOCK will set up to re-test or possibly take out its next major support levels at $14.04 to $13.64 a share. Any high-volume move below those levels will then give LOCK a chance to tag $13 to $12 a share.

Must Read: 5 Rocket Stocks to Buy for November Gains

Knowles

Another potential earnings short-squeeze candidate is communication equipment player Knowles (KN), which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect Knowles to report revenue of $307.22 million on earnings of 41 cents per share.

The current short interest as a percentage of the float for Knowles is very high at 19.1%. That means that out of the 84.76 million shares in the tradable float, 16.23 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of KN could easily rip sharply higher post-earnings as the bears rush to cover some of their trades.

From a technical perspective, KN is currently trending below its 50-day moving average, which is bearish. This stock has been downtrending badly over the last two months, with shares moving lower from its high of $33.82 to its recent new all-time low of $17.23 a share. During that move, shares of KN have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of KN have started to bounce a bit off that all-time low of $17.23 a share and it's beginning to move within range of triggering a near-term breakout trade.

If you're bullish on KN, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $19.45 to $21 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 1.72 million shares. If that breakout develops post-earnings, then KN will set up to re-test or possibly take out its next major overhead resistance levels at $24 to $25.46 a share, or even its 50-day moving average of $27.31 a share.

I would avoid KN or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term support levels at $18 to its all-time low of $17.23 a share with high volume. If we get that move, then KN will set up to enter new 52-week-low territory, which is bearish technical price action. Some possible downside targets off that move are $15 to $12 a share.

Must Read: 5 Stocks Insiders Love Right Now

Amedisys

Another earnings short-squeeze prospect is home health and hospice care services provider Amedisys (AMED), which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect Amedisys to report revenue of $299.26 million on earnings of 15 cents per share.

The current short interest as a percentage of the float for Amedisys is pretty high at 12.7%. That means that out of 28.17 million shares in the tradable float, 3.59 million shares are sold short by the bears. This is a large short interest on a stock with a very low tradable float. If the bulls get the earnings news they're looking for, then shares of AMED could easily soar sharply higher post-earnings as the bears move fast to cover some of their positions.

From a technical perspective, AMED is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been consolidating and trending sideways over the last three months, with shares moving between $19.03 on the downside and $22.58 on the upside. Any high-volume move above the upper end of its recent sideways trading chart pattern post-earnings could easily trigger a big breakout trade for shares of AMED.

If you're bullish on AMED, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key overhead resistance levels at $22.20 to its 52-week high at $22.58 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 370,226 shares. If that breakout materializes post-earnings, then AMED will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $30 to $35 a share.

I would simply avoid AMED or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 50-day moving average of $20.70 a share and also below more key near-term support levels at $19.39 to $19.03 a share with high volume. If we get that move, then AMED will set up to re-test or possibly take out its next major support levels at its 200-day moving average of $16.78 a share to around $15 a share.

Must Read: 10 Stocks George Soros Is Buying

Cliffs Natural Resources

My final earnings short-squeeze play is international mining and natural resources player Cliffs Natural Resources (CLF), which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect Cliffs Natural Resources to report revenue of $1.28 billion on a loss of 3 cents per share.

Just recently, Credit Suisse analyst Nathan Littlewood said in a report that Credit Suisse is very bullish in the short term for the coming earnings report for Cliffs Natural Resources, but the firm is more cautious in the longer term. Littlewood has an underperform rating on the stock with a $10 per share price target. Littlewood also said that the bulls could cause a short-squeeze in CLF when they report earnings, since he expects the firm to surprise Wall Street.

The current short interest as a percentage of the float for Cliffs Natural Resources is extremely high at 53.2%. That means that out of the 128.56 million shares in the tradable float, 68.46 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 14.5%, or by 8.66 million shares. If the bears get caught pressing their bets into a strong quarter, then shares of CLF could easily jump sharply higher post-earnings as the shorts rush to cover some of their trades.

From a technical perspective, CLF is currently trending well below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last three months, with shares plunging lower from its high of $18.25 to its new 52-week low of $7 a share. During that downtrend, shares of CLF have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of CLF have now started to rebound sharply off that $7 low and it's now quickly moving within range of triggering a big breakout trade above some key near-term overhead resistance levels.

If you're in the bull camp on CLF, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $9.73 to $9.96 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 9.82 million shares. If that breakout gets underway post-earnings, then CLF will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $12.18 to $13 a share, or even $14 a share.

I would avoid CLF or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some key near-term support at $8.16 a share with high volume. If we get that move, then CLF will set up to re-test or possibly take out its next major support level at its 52-week low of $7 a share. Any high-volume move below that level will send shares of CLF into new 52-week-low territory, which is bearish technical price action.

Must Read: 10 Stocks Carl Icahn Loves in 2014

To see more potential earnings short squeeze plays, check out the Earnings Short-Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>5 Stocks Spiking on Unusual Volume

>>5 Stocks Under $10 Set to Soar

>>How to Trade the Market's Most-Active Stocks

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com.

You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Paying thousands before health insurance even kicks in

  Health insurance: 5 basic questions to ask NEW YORK (CNNMoney) Got health insurance at work? You may still have to shell out thousands of dollars before it kicks in.

That's because more employers are offering consumer-directed health plans, which usually come with high deductibles. In 2015, 81% of large employers will offer at least one of these plans, up from 63% five years earlier.

Consumer-directed plans typically carry deductibles of $1,500 for individual coverage, more than three times higher than traditional policies, according to the National Business Group on Health.

And these plans will be the only choice for a growing number of workers. The share of larger employers offering only consumer-directed policies is jumping to 32% for 2015, up from 22% this year.

Deductibles are soaring for traditional insurance policies, too.

Deductibles for individual coverage at all firms have jumped to $1,217, on average, up 47% over the past five years, according to the 2014 Kaiser Family Foundation/Health Research & Educational Trust report. In high-deductible plans, they have hit $2,215.

Employers say they want more accountability, and higher deductibles force workers to take a larger role in their own care while shifting more of the costs to them.

Share your story: Are your health care deductibles going up?

Participants in these plans often have to pay more out of pocket -- not only for deductibles, but for doctors' visits, labs and procedures too.

On the plus side, they benefit from lower monthly premiums. Also, many emp! loyers contribute to savings accounts to help workers cover these costs. Annual checkups and preventative exams, such as colorectal screenings and mammograms, are free, as mandated by Obamacare.

Wells Fargo (WFC) switched to only consumer-directed plans in 2012. This year, the bank's employees can choose between two high-deductible policies -- one at $2,000 and the other at $3,000.

Doing so helped Wells Fargo keep plans affordable and allows it to offer a broad network of doctors and hospitals, said spokeswoman Richele Messick. "It gives them greater visibility into the cost of care and how they spend their health care dollars," she said.

Wells Fargo contributes up to $1,000 to workers' accounts, depending on their salary and the plan they choose. Employees can also earn up to $800 by participating in corporate wellness programs, including health screenings and quizzes.

For many, however, high-deductible health plans are a burden. They are nearly twice as likely to skip going to the doctor when sick or injured as those with traditional plans, according to a recent survey by the Associated Press-NORC Center for Public Affairs Research. Also, they are more likely to have difficulty paying other bills and to have decreased the amount they save.

Medical care has become more costly for the Vance family under a high-deductible plan.

Melissa Vance has had to go back to work. Her husband's employer just jacked up the family's deductible from $0 to $5,000. The Columbia, S.C., couple has four children with chronic conditions that require frequent lab work and costly medications.

Last year, Vance estimated she paid $2,000 for the family's health care. This year, the tab will likely surpass $10,000, which she said will take them years to pay off.

"I have a stack of bills I haven't even opened," ! said Vanc! e, who now works part-time as an administrative assistant. "I get nauseous every time I look at them."

ELS Stock: Live Large With This REIT

Popular Posts: 3 High-Yield Stocks on the Road Less TraveledAMZN Stock: What Do Amazon Earnings Have in Store?Why Retirement Investors Should Always Hold Energy Stocks Recent Posts: Rent-to-Own Stocks Look Compelling ELS Stock: Live Large With This REIT Why Retirement Investors Should Always Hold Energy Stocks View All Posts

Just imagine nice houses with resort-style amenities, situated in a nice community, probably with a pool — and maybe even a golf course nearby.

I'm talking about manufactured home communities. In the case of Equity LifeStyle Properties (ELS), 70% are communities for those 55 years of age or older. It's a great niche, and this REIT has grown into 370 communities and resorts in 32 states and British Columbia, which contain 140,000 actual sites. The properties certainly look nice on the company's home page, and community living for seniors has taken on increased popularity over the past twenty years.

This is the kind of operation that I like, because once someone moves into a community like this, they are very likely to remain for quite some time. Not that someone who chooses to move out won't get replaced by another buyer (the average home cost is only $75,000), but the company reduces its market price risk by effectively capturing long-term homeowners.

And because ELS stock must pay out 90% of income as a dividend anyway, it's particularly reassuring to know that such income should be relatively consistent.

ELS stock just reported results for Q1. Funds from operations increased $6.4 million to $71.4 million (78 cents per share), compared to $65.0 million, year-over-year. Net income increased $3.1 million to $38.1 million, or 46 cents per share. That's a solid gain of 10% across the board.

These increases came on rather modest revenue gains in the 6% range. ELS stock reports "property operating revenues," which increased $10.5 million to $186.4 million. Income from property operations increased $6.7 million to $111.0 million.

A big concern for most REITs is mortgage debt. Equity LifeStyle's debt structure is prudent, and the company is always trying to pay off more expensive debt and/or replace it with lower-cost debt. In fact, ELS stock paid off $20.7 million in mortgages in Q1, which carried a 5.63% weighted average interest rate. That was done in conjunction with a year-long refinance, which netted the company $430 million in proceeds at a mere 4.54% weighted average.

The best part is that the debt doesn't mature until 2034 at the earliest. That's the beauty of mortgage debt: It costs very little, so if a company can generate more than enough revenue to pay that debt and make money to boot, it's a real business.

And the company is indeed able to cover those interest payments — almost four times over. ELS also has a cash backstop of $56 million and continues to expand via acquisition. It completed two purchases in the quarter for $61 million. The advantage of this niche market is that an entire community can be scooped up for eight figures, from which multiples can be earned over the life of the property.

With a 3.2% dividend yield and a solid business model, ELS stock is a good choice for core and retirement portfolios alike.

Lawrence Meyers does not own any security mentioned.

New Home Sales Hit 6-Year High; Recovery Still Fragile

Keith Srakocic/AP WASHINGTON -- Sales of new single-family homes rose to a six-year high in September, but a sharp downward revision to August's sales pace indicated the housing recovery remains tentative. The Commerce Department said Friday that sales increased 0.2 percent to a seasonally adjusted annual rate of 467,000 units, the highest reading since July 2008. August's sales rate was revised down to 466,000 units from 504,000 units. Economists polled by Reuters had forecast new home sales at a 470,000-unit pace last month. U.S. Treasury debt prices held on to gains after the data. U.S. stocks were slightly up, while the dollar edged down against the euro. The housing sector index was down 0.78 percent. U.S. homebuilder PulteGroup (PHM), which Thursday reported a 4 percent rise in quarterly revenue from home sales, was trading more than 1 percent lower. "We expect the housing market recovery to remain relatively gradual over the coming months," said Gennadiy Goldberg, an economist at TD Securities in New York. New home sales, which account for about 8 percent of the housing market, tend to be volatile month to month and large revisions aren't unusual. Compared to September last year, sales were up 17 percent. Housing is slowly regaining its footing after activity stalled in the second half of 2013 as mortgage rates soared. With the 30-year fixed mortgage rate falling this week to its lowest level since June of last year, sales could pick up. Falling Mortgage Rates Mortgage rates have declined in tandem with a sharp fall in U.S. Treasury debt yields as slowing global growth and a sharp sell-off in international stock markets prompted traders to push back expectations for an interest rate increase by the Federal Reserve. Slow wage growth, however, remains a constraint for an acceleration in home sales. Data this week showed sales of previously owned homes touched a one-year high in September. Last month, new home sales fell 8.9 percent in the West, handing back some of August's 28.1 percent surge. In the populous South, sales rose 2 percent, while they increased 12.3 percent in the Midwest. Sales were flat in the Northeast. With sales rising modestly, the stock of new houses available on the market rose 1.5 percent to the highest level since July 2010. Builders have been ramping up construction and the improvement in inventory should provide buyers with more choices and temper house price increases. At September's sales pace it would take 5.3 months to clear the supply of houses on the market, unchanged from August. Six months' supply is normally considered a healthy balance between supply and demand. The median new home price fell 4 percent to $259,000 from a year ago.

Nucor Q3 Earnings: Strong Results in a Tough Environment

Steel-intensive, nonresidential construction projects like this one remain near historic lows. Source: Nucor.

Another quarter, another strong performance by steelmaker extraordinaire Nucor  (NYSE: NUE  ) . Revenue for the quarter came in at $5.7 billion, 8% above last year's quarter and well above the market's expectation of $5.37 billion. Earnings also came in strong, with EPS of $0.76 coming in above both Nucor's guidance and analyst estimates.

However, there are still a number of headwinds in the steel industry, so despite the improved results even Nucor has a lot of work ahead of it. Let's take a deeper look at the earnings release. 

Operational improvements and product mix behind profit growth

Steelmakers have high fixed costs than can be tough to lower in periods of declining demand. Because of these high costs, even a small reduction in output can have an outsize impact on earnings and cash flow. Nucor has long been an industry leader at managing its fixed costs and responding to the market environment. 

DRI produced in Louisiana. Source: Nucor.

Much of this profit growth can be summed up in one key metric: utilization rates.

So far this year, the company's utilization rate is significantly improved compared to last year, increasing from 74% in 2013 to 78% so far in 2014. This is one big driver of improved profits in 2014 versus last year. 

The company also pointed to improved profitability in its fabricated construction products business versus the second quarter of this year, due to improvements in the nonresidential construction market. While total revenues increased 15% over last year, total tons shipped increased only 10%, meaning that Nucor was able to command higher prices. This was driven both by higher-price products and by some cost increases it was able to pass along. 

Headwinds remain 

While Nucor has been able to raise its prices modestly, imports continue to put pricing pressure on the steel market. However, the tariffs implemented earlier this year do seem to be having some impact on improving conditions for domestic steelmakers. 

However, tariffs won't do anything to improve the demand picture. While there has been strength in supplying manufacturing goods for the automotive market and the energy industry, the building industry -- both residential and especially nonresidential -- remain at historically low levels of production. Until the demand cycle turns, Nucor and the rest of the industry will continue competing for a smaller pie. 

Looking forward 

Nucor completed its acquisition of Gallatin Steel in the quarter, which will expand its capacity of flat-rolled steel -- used for pipe and tube steel -- by about 10%, and in the Midwest, where demand is the highest. This facility will be able to use direct-reduced iron from Nucor's Louisiana DRI plant, a further benefit of this facility and its scale. 

Nucor continues doing what it does best: making smart acquisitions that fit within its operational strategy, investing in growth, and keeping its costs low, while positioning the company to remain profitable in bad markets as well as good ones.

It's tough to say when the steel demand cycle will fully rebound. However, Nucor will clearly be ready when it happens. Until then, it remains the most operationally sound steelmaker in the industry, and its management team keeps investing in growth and stability -- a hard thing to do in a tough industry. 

If you're looking for a consistent dividend, Nucor and its 3% yield will be steady. However, I wouldn't count on any significant payment increases before the steel market recovers.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here.

Stocks to Watch: McDonald’s, Coca-Cola, Verizon

Among the companies with shares expected to actively trade in Tuesday’s session are McDonald's Corp.(MCD), Coca-Cola Co.(KO) and Verizon Communications Inc.(VZ)

McDonald’s promised significant changes after reporting a worse-than-forecast 30% drop in third-quarter earnings and calling its challenges “more formidable than expected.” Shares fell 2% to $89.75 in premarket trading.

Coca-Cola unveiled a broader cost-cutting program and warned that it doesn’t expect to meet previous financial targets as the beverage giant again posted lackluster quarterly soda volume and struggled with currency headwinds. Shares dropped 4.6% to $41.29 premarket.

Verizon Communications said it added 1.52 million of its most lucrative long-term wireless contracts in the third quarter, again driven by a surge in tablet connections. But per-share earnings fell below Wall Street estimates. Shares declined 0.9% to $48.05 premarket.

Kimberly-Clark Corp.(KMB) said Tuesday it plans to cut up to 1,300 jobs as part of a restructuring initiative to reduce costs, while also reporting a 2.9% increase in third-quarter earnings. Shares rose 0.9% to $109 premarket.

Lockheed Martin Corp.(LMT) on Tuesday reported a forecast-beating 1.7% rise in third-quarter profit and raised its 2014 earnings outlook for the third time this year, but said sales and margins will drop sequentially in 2015. Shares lost 2.7% to $170.80 premarket.

United Technologies Corp.(UTX) said its sales rose 4.6% in the latest quarter, driven by higher equipment orders at its Otis elevator and other businesses. Shares gained 2.2% to $103.75 premarket.

Lexmark International Inc.(LXK) said its earnings rose 12%, driven by higher hardware and services revenue, and the company boosted the low end of its outlook for the year. Shares jumped 11% to $44 premarket.

Apple Inc.(AAPL) on Monday said its quarterly profit rose 13% as strong demand for its new larger-screen iPhones helped to overcome sluggish iPad sales. Shares were up 2.6% to $102.38 premarket.

Harley-Davidson Inc.(HOG) posted an expected quarterly decline in motorcycle shipments, while profit and revenue also fell. But earnings topped analysts’ expectations, sending shares up 6.4% to $62.10 premarket.

Reynolds American Inc.(RAI) said cigarette volumes slipped again, but revenue and profit grew thanks in part to higher prices.

Travelers Cos. said its operating profit edged up 1.1% in the third quarter, easily topping expectations, amid an unusually quiet U.S. hurricane season so far this year and strong investment earnings.

AbbVie Inc.(ABBV) and Shire (SHPG) PLC officially agreed Monday to terminate their $54 billion deal, killing the year’s biggest agreed-upon merger.

Illinois Tool Works Inc.(ITW) raised its 2014 profit outlook and reported third-quarter earnings rose 17% as most of its business segments posted revenue growth and margins strengthened.

Omnicom Group Inc.(OMC) posted a stronger-than-expected 24% increase in earnings in the third quarter, helped by revenue growth in all markets.

Regions Financial Corp.(RF) reported an 11% increase in profit for the September quarter, but its revenue declined.

Brinker International Inc.(EAT) said its first-quarter profit increased 12%, helped by higher sales at its Chili’s Grill & Bar and Maggiano’s Little Italy chains.

Illumina Inc.(ILMN) on Monday raised its 2014 guidance as third-quarter results topped analysts’ expectations due to strong demand for the gene-sequencing company’s products.

Staples Inc.(SPLS) said late Monday it is investigating a possible card data breach.

Chipotle Mexican Grill Inc.(CMG) warned its sales growth next year may slow from the robust gains reported in recent periods, even as the burrito chain posted stronger-than-expected earnings and revenue for its third quarter.

Steel Dynamics Inc.(STLD) reported another quarter of sharp growth as demand grew amid a recovery in the automotive, energy and construction markets.

United Parcel Service Inc.(UPS) plans to increase freight rates by an average of 4.9% a package after the holiday season, in the U.S., Canada and Puerto Rico, the company said Monday.

Texas Instruments Inc.(TXN) projected a fourth-quarter profit that tops Wall Street’s estimates as the chip maker also reported its third-quarter earnings rose 31% thanks to stronger sales and margins.

Zions Bancorp sa(ZION)w improved credit quality and enhanced capital levels in the third quarter, but its profit fell 14% along with debt extinguishment and a net loss on a securities sale.

Longleaf Partners Q1 2014 Shareholder Letter

Longleaf Partners Q1 Letter

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SEC’s Lack of Fiduciary Action Is Hurting Investors, Advocates Warn

Fiduciary advocates renewed their call Tuesday for the Securities and Exchange Commission to act “expeditiously” to establish this year a uniform fiduciary standard of conduct consistent with Section 913 of the Dodd-Frank Act, which says the agency has the authority to write a fiduciary rule for brokers that’s “no less stringent” than the Investment Advisers Act rule.

In a joint letter to SEC Chairwoman Mary Jo White and the four SEC commissioners, the groups — which include AARP, the Certified Financial Planner Board of Standards, the Consumer Federation of America, the Financial Planning Association, Fund Democracy and the National Association of Personal Financial Advisors — provide what they say is “empirical evidence” from academic research, market analysis, and observation of industry practices that illustrates the harm to investors that results from allowing brokers to give advice to retail customers under a “suitability” standard.

“We strongly believe that in order to be meaningful and consistent with Section 913, a uniform fiduciary rule must include more than the current suitability standard supplemented by additional disclosure requirements,” wrote the groups, who dub themselves the “Friends of Fiduciary.”

Designed with a sales relationship in mind, the groups continued, “the suitability standard does not impose the same clear obligation that exists under a fiduciary standard, which requires the advisor to put the customer’s interest first.”

The groups go on to argue that the suitability standard “does not impose an obligation on brokers to appropriately manage conflicts of interest in order to ensure that they do not influence recommendations. These are among the standards that distinguish a suitability relationship from a fiduciary relationship.”

But Ira Hammerman, executive vice president and general counsel for the Securities Industry and Financial Markets Association, said in reaction to the groups' letter that while SIFMA "fully supports the SEC moving forward with fiduciary rulemaking," SIFMA "strongly disagrees with any suggestion that customers of broker-dealers are suffering concrete harm in terms of higher costs or poorer performance."

In fact, Hammerman continued, "because broker-dealer customers pay commissions as opposed to asset management fees, they are often more economical than RIA accounts. As for account performance, I'm sure there are plenty of broker-dealer accounts that perform better than RIA accounts, and I'm sure there are examples of RIA accounts that do better than broker-dealer accounts.”

There is no justification, the groups say, “for applying different standards of care to financial professionals who are offering the same services to investors. Over the years, broker-dealers have not only identified themselves as financial advisors, but they have offered virtually identical services to investors in order to compete. The Commission has permitted, at least tacitly, this evolution by failing to apply the appropriate regulatory standard,” the groups say.

SEC Chairwoman White stated in late February that the agency would make a “threshold decision” this year on whether to move forward with a fiduciary rulemaking.

The letter then goes on to cite how investors are harmed by not requiring brokers to adhere to a fiduciary standard. “Investors suffer concrete harm — in the form of higher costs and poorer performance.” /* .premium-promo { border: 1px solid #ddd; padding: 10px; margin: 0 10px 10px 0; width: 200px; float: left; } .premium-promo li, .premium-promo ul { list-style-type: none; margin: 0; padding: 0; } .premium-promo li { margin: 0 0 10px; padding: 0 0 10px; border-bottom: 1px dotted #ddd; } .premium-promo h3 { text-transform: uppercase; font-size: 11px; } .premium-promo h4 { font-size: 16px; } .premium-promo a { text-decoration: none !important; } .premium-promo .btn { background: #0069a1; border-radius: 4px; display: inline-block; padding: 5px 10px; clear: both; color: #fff; font-weight: bold; } .premium-promo .btn:hover { background: #034c92; } */ The letter notes that advice offered by a broker-dealer in a nonfiduciary capacity can significantly erode long-term investor returns: “As the Commission warned in a recent bulletin for investors, ‘over time, even ongoing fees that are small can have a big impact on your investment portfolio,’ reducing returns, shrinking a nest egg, and preventing investors from achieving financial goals.”

This impact, the groups say, was illustrated in an October Bloomberg Markets Magazine report on data filed with the SEC, which showed that “'89% of the $11.51 billion of gains in 63 managed-futures funds went to fees, commissions and expenses during the decade from Jan. 1, 2003 to Dec. 31, 2012.’”

The article stated that brokers, “’have an incentive to keep clients in managed-futures funds because they receive annual commissions of up to 4% of assets invested and investors pay as much as 9% in total fees each year.’”

The letter also cites research reviews performed by Michael Finke, professor and coordinator of the doctoral program in personal financial planning at Texas Tech University, of a number of academic studies related to the potential benefits to consumers of a fiduciary standard, including studies showing that less sophisticated and less wealthy investors are most likely to suffer harm from recommendations that are not based on their best interest.

For instance, a 2012 study found that commission-compensated insurance agents “will consistently recommend higher commission products to less sophisticated consumers, leading to welfare losses that are greatest among those who can least afford to sustain them,” the groups’ letter states.

Improving disclosures, the groups argue, will not “cure the significant harm that currently exists,” nor will better educating investors about the differences between brokers and advisors or relying on investors to choose the business model that is best for them. “It is in this context that the well-documented problem of investor confusion becomes relevant,” the groups state. “Numerous studies over the years have demonstrated that investors do not understand the differences between brokers and advisors, including the differences in the legal obligations to clients.”

Indeed, Finke told ThinkAdvisor that “increased disclosure is probably the worst thing that could happen. It may even be counterproductive.” Basically, he says, “conflict-of-interest disclosure may even create an environment where a client feels they either have to follow the advice or admit that they don’t trust the advisor. Since advisors are often acquaintances, this is very difficult to do.”

Housing Construction Increases In September

Housing starts rose 6.3% last month, primarily due to construction of multi-family units, according to this morning's update from the US Census Bureau. The single-family slice of starts, by contrast, rose just 1.1% last month vs. August. The multi-family growth bias looks set to persist, based on the September data for newly issued housing permits. New permits overall rose a tepid 1.7% last month as single-family permits retreated 0.5%; fresh authorization to build multi units of five or more, however, jumped 7.0% in September vs. August. It's fair to say that the housing market's growth rate has slowed in general and that's not likely to change anytime soon. But the key point in today's report remains upbeat, albeit moderately so via a gentle tailwind that's blowing in residential construction activity.

[Related -A Pair Of Bullish Surprises: Jobless Claims & Industrial Production]

The trend doesn't look impressive, at least not by recent standards. But it's clear that the bias for expansion remains intact. The year-over-year pace for housing starts accelerated last month to 17.8%–more than double the annual rate of increase through August. But the yearly gain for permits decelerated to a sluggish 2.5% rise, which suggests that the growth in starts will moderate in the months ahead.

[Related -Fear Poll: Fed/QE, Ebola and Technicals Top Worry List]

The fact that housing is still expanding is the main takeaway in today's release. It's been clear for some time that the recovery in this crucial corner of the economy has been trending lower. The latest numbers suggest a degree of resiliency, however. The upbeat trend is even more encouraging in the wake of yesterday's surprisingly strong numbers for initial jobless claims and industrial production.

"The trend in starts continues to be up," the chief economist at Nationwide Insurance tells Bloomberg. "As the job market's gotten better, as the mortgage rates have remained low and in the last week gone even lower, the underlying demand for single-family homes has improved," according to David Berson.

It remains to be seen if the ill winds blowing in from Europe will take a sizable bite out of the US expansion in the weeks and months ahead. But based on this the latest numbers, it's clear that the American economy remains in a moderate growth mode. As a result, it's still reasonable to argue that business cycle risk for the US remains low.

Market Wrap-up for Oct. 17 – A Tumultuous Week in Review

The Columbus Day holiday on Monday made for a slow start, but as the big-name third quarter earnings were released, and the markets started to crumble, it wound up being a very eventful week.

Tuesday Highlights

The big banks, including JP Morgan (JPM), Wells Fargo (WFC) and Citigroup (C), started to release earnings on Tuesday – each of them reporting higher net income from last year, but not all matching analysts’ expectations.

JP Morgan – Turned a profit from last year, but missed earnings estimates. Shares dropped. Wells Fargo – Reported higher net income and beat analysts’ expectations. Shares declined. Citigroup –  Posted higher profits and beat estimates. Shares increased.

Tuesday also included an earnings release from Johnson & Johnson (JNJ). The healthcare giant posted higher earnings and revenue, both beating estimates. Despite the positive results, shares took a steep turn downward. After hours, Intel (INTC) released positive earnings news, reporting that profit and revenue had increased and were above estimates.

Wednesday

Bank of America (BAC) and PNC Financial Services (PNC) both reported lower results, but both beat analysts’ estimates. Despite Bank of America’s net loss, analysts reported that they remained bullish on the bank as its legal troubles are coming to an end.

When the markets opened on Wednesday, it soon became a gloomy day after a disappointing retail sales report was released and fears of a global economic slowdown panicked investors. Towards the end of the trading day, the market rebounded after Janet Yellen reported that she has confidence in the U.S. economy.

Thursday

Thursday began with a positive Jobless Claims report that was released before the market opened, indicating that the number of people applying to unemployment is at its lowest since April 2000. The pre-market also came with several big earnings releases:

Mattel (MAT) – Reported a 22% drop in earnings, which missed estimates. Shares dropped. Phillip Morris (