Buy, Sell or Hold: iShares MSCI Brazil Index

When stocks fall fast and far, they sometimes set themselves up for remarkable rebounds. The following equities suffered dramatic drops over the past week. With help from the 180,000 members of Motley Fool CAPS, we'll see whether any of them have the potential to bounce back.

It's been a while, but thanks to last week's sell-off, we once again have a chance to stand beneath Mr. Market's silverware drawer in hopes of snagging a bargain. Let's meet today's contenders.

Company How Far Below 52-Week High? Recent Price CAPS Rating
(out of 5)
Emerson Electric (NYSE: EMR  ) (24%) $46.29 *****
Travelzoo (Nasdaq: TZOO  ) (75%) $26.11 **
Vivus (Nasdaq: VVUS  ) (20%) $9.17 **
Clearwire (Nasdaq: CLWR  ) (68%) $1.96 **
Rentech (AMEX: RTK  ) (30%) $1.39 **

Companies are selected by screening on finviz.com for abrupt 5% or greater price drops over the past week. Recent price data and 52-week highs provided by finviz.com. CAPS ratings from Motley Fool CAPS.

Five super falls -- one superball
The Santa Claus rally was in full effect last week, as the Dow tacked on more than 3.6%. Yet despite widespread optimism, investors in hundreds of in! dividual stocks found their stockings loaded with coal. So what went wrong?

At Rentech, the sell-off that began two weeks ago with an earnings disappointment continues. The fertilizer maker and alternative-energy concern tells investors that after a "transformative" year in 2011, 2012 is bound to be better. But few investors are buying that promise ... or the stock.

Clearwire's not doing much better. After AT&T (NYSE: T  ) dropped its bid for T-Mobile, Clearwire stock enjoyed a brief pop. Investment banker Jefferies started covering the stock with a buy recommendation on this news, but just as the momentum was getting going, out came JPMorgan with a warning: Q4 profit margins will be weak, and Clearwire will miss analysts' quarterly subscriptions target. Result: Clearwire lost 6% for the week.

Meanwhile, Vivus got some disturbing news from the FDA concerning its Qnexa drug. And Travelzoo had no news of any sort to report -- but dropped anyway. A fitting end to a lousy year for the stock. Will it bounce back? Indeed, will any of these stocks have a better time of things in 2012 than they did in 2011?

Not according to our CAPS Community, which on balance gives all four of these names subpar marks and two-star CAPS ratings. As it turns out, there's only one stock on today's list that our investors think is poised to outperform the market in the coming year. Strangely, it's the most expensive stock on the list.

The bull case for Emerson Electric
CAPS member jareda calls Emerson "a global leader in innovative technologies that [helps] companies reduce power consumption and increase energy efficiency (reduce energy costs)" and adds that "Emerson's technologies will remain in high demand as the energy costs continue to rise."

Meanwhile, CAPS member Joulesh praises the company's "great ROE, nice growth in earnings, low P/E and GREAT CEO."

And to top it all off, alan5757 rem! inds us that this cheap, high quality, well-led company also pays its shareholders a "nice dividend" to own it.

It's hard to overstate the importance of that dividend. In a sideways market like the one we're currently living through, there aren't a lot of people getting rich off capital gains. Instead, what profits investors are earning, they're earning from the dividend checks they collect.

Foolish final thought
One last thing worth mentioning: At 14 times earnings, and with long-term growth rates of just over 13%, Emerson's stock looks only "fairly valued" from a PEG perspective. Add the stock's 3.4% dividend yield, and Emerson starts to look cheap. Maybe not as cheap as General Electric (NYSE: GE  ) -- a competitor that sells for a slightly lower P/E, boasts a slightly higher growth rate, and pays a slightly higher dividend. But still, the difference between the two valuations here is ... what's the word? Ah, yes: "slight."

So while I still give the advantage to GE (and have backed that up with a public recommendation in CAPS), I think Emerson Electric is nearly as good, as well as another fine candidate for your portfolio.

Meanwhile, the Fool's all-star analysts think they've found a stock that can do better than either GE or Emerson. Find out which company our experts prefer in our new free report: "The Motley Fool's Top Stock for 2012." Thousands have already requested access and it'll only be available for a limited time. Best of all, it's free.

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What Makes Historical LIBOR Rates Significant?

Financial institutions in London had an increasing demand for a benchmark for lending rates at the beginning of the nineteen eighties. This benchmark was specially needed to compute prices for financial items such as interest swaps and options. The British Bankers’ Association (BBA) took responsibility in 1984 which then led to the dissemination of the first LIBOR interest rates. Historical LIBOR rates have been useful references or sources for LIBOR.

Today LIBOR is acknowledged worldwide as the most significant benchmark for short-term interest rates. It is also used in the professional financial markets as base rates for a huge number of financial items like the options, swaps and futures. In banks, they use LIBOR interest rates as the basis for deciding on savings, interest rates for loans and mortgages. Since LIBOR is widely accepted as the base rate for other items, historical LIBOR rates are now constantly being tracked by numerous professionals, individuals and businesses all over the world.

LIBOR is known as an average interest rate where carefully selected banks undergo a process of lending funds to each other. These selected banks are recognized as “panel banks”. Each year the British Bankers’ Association together with the Foreign Exchange and Money Markets Committee performs the process of selecting banks. A panel for each currency is made at which can be composed of eight to sixteen banks that are chosen to be delegates for the London money market. The basis for a bank’s candidacy to be in the panel is its reputation, market volume and understanding of the currency.

When LIBOR was just starting, it was only published for three currencies which are the pound, Japanese yen and US dollar. As time passed by the currencies increased to a maximum of 16 where some of them combined with the Euro on 2000.

Since there are fifteen various maturity levels, then there are also fifteen various LIBOR rates. Fifteen Maturity levels wa! sn’ ;t always the case especially in 1998 where the shortest maturity was just one month. A one week rate was then added in the same year and it was only in 2001 when the two-week and overnight LIBOR rates were established.

As you come to understand how LIBOR works then you will know how significant Historical LIBOR rates are. Though these rates are positioned in the United Kingdom, a lot of consumers still require comprehension on the mechanics of LIBOR especially that it is accepted as a basis for many kinds of consumer loans.

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Buy, Sell, or Hold Costco?

Costco (Nasdaq: COST  ) has proven its worth in 2011, that's for sure. Not only has it shamed rivals such as Wal-Mart (NYSE: WMT  ) with incredible sales increases, its shares have been on the upswing, too, having risen about 16% in the past year. Still, some investors may be wondering whether they should buy, sell, or hold Costco while the going's still good.

For some idea of the bulky business Costco has been running, let's compare some financial metrics to some discount retail peers.

Company

LTM Revenue Increase (decrease) %

Earnings (loss) Per Share

Gross Profit Margin %

Total Debt-to-Capital Ratio

Costco 14.3% $3.32 12.5% 15.4%
Big Lots (NYSE: BIG  ) 3.2% $2.82 40.0% 27.5%
Wal-Mart 5.0% $4.44 25.0% 45.3%
Target (NYSE: TGT  ) 3.5% $4.30 29.9% 55.5%

Source: S&P Capital IQ; trailing 12 months.

Costco's 14.3% top-line growth is a comfort for stock holders. Growing sales has been a major sticking point for discount giant Wal-Mart in 2011, yet Costco has managed to keep its loyal customers coming back for more as shown by such an impressive level of sale! s growth .

In the fiscal year ended August 2011, Costco grew same-store sales by 7%, too, then followed up with a 10% surge in July. Costco isn't showing signs of stopping, either; November same-store sales surged 9%, blowing past analysts' predicted 6.5% increase.

Costco has even managed to implement a hike in membership fees this past year. Given the warehouse retailer's 7.5% increase in membership fee revenue last quarter, it's clearly bested 2011 disgrace case Netflix (Nasdaq: NFLX  ) at implementing a price increase its bargain-hunting members are willing to pay these days. (Granted, Costco's super-low profit margin helps illustrate just what kind of bargains it passes along to its paying members.)

I can imagine many investors might be leaning toward a sell, but don't be hasty. Not only do I believe Costco is a solid hold, I believe it's reasonable to buy the stock now. Granted, Costco's forward price-to-earnings ratio of 25 looks super expensive compared to Wal-Mart, Target, and Big Lots (which trade at forward multiples of 13, 12, and 14, respectively). However, Costco's the one that's pulling off an exceptional feat in the current economic environment: generating double-digit percentage sales growth.

Costco's retiring CEO, Jim Sinegal, has made it clear his goal has been to build a great business for the long haul. Maybe lots of investors think Costco's 2011 victory is a great time to sell, but here's a thought for 2012: Selling exemplary businesses in uncertain economic times is a bigger mistake than ever.

If you haven't already, click the link to add Costco?Wholesale to your watchlist to follow the warehouse retailer's performance in 2012, or download the free report "The Motley Fool's Top Stock for 2012," which highlights a company Motley Fool analysts have dubbed a Latin America version of Costco.

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Among the duds: Dell, RIM, Microsoft & Google

It has been a wild ride for technology stocks in 2010. The tech-heavy Nasdaq composite index went on a tear from February to the end of April, tacking on about +18% in a little over two months. Then the index gave almost all of it back as the market hit its May swoon and tech stocks were caught in the downdraft.

So what��s next for tech? I, for one, am banking on a big surge for small-cap tech stocks as the recovery slowly takes hold across the rest of this year. But don��t think that means the entire sector is coming up roses. The fact is that the choppy stock market this year has made investors very picky and the breadth and power of technology stocks is thinning out.

That means some big-name tech stocks are in for a fall in the coming weeks. To help you steer clear of these duds, here��s my list of 9 famous tech blue chips to sell now:

Dell Inc. (DELL)

Market Cap: $23.5 billion

Dividend Yield: N/A

Dell Inc. (DELL) stock is down -20.7% since the beginning of May this year. The company employs more than 94,000 people and conducts its business on a global scale through its subsidiaries, yet shareholders must face the fact that growth estimates are coming in well below industry averages. With Dell��s operating margins expanding at a less than impressive rate, it may be time to part ways with this stock.

Electronic Arts Inc. (ERTS)

Market Cap: $4.9 billion

Dividend Yield: N/A

Electronic Arts (ERTS), manufacturer and developer of video game software available on gaming consoles such as PlayStation 3, Microsoft Xbox 360 and Nintendo Wii, has witnessed its shares slide -24% since May of this year. On top of that, revenue estimates this quarter are projected to be around -38% lower than this time last year, a trend that seems as if it may continue for th! e remain der of the year for ERTS stock.

Ericsson (ERIC)

Market Cap: $34.5 billion

Dividend Yield: 2.5%

Failing to live up to earnings estimates for two of the past four quarters, outlook seems poor for communications networks provider Ericsson (ERIC). Failing to make any significant gains this year, the ratings for Ericsson��s earnings growth and operating margins growth are contributing factors to the status of this stock as a sell.

Google Inc. (GOOG)

Market Cap: $148.9 billion

Dividend Yield: N/A

Search engine icon and online mainstay Google (GOOG) has found itself in a slump the past few months. Since April, the company��s stock is down -17.4%, following the same slope many of its industry competitors are facing as well. Google just made up with China in a bid to regain some of its clout in the communist nation, but the damage may already have been done in terms of market share and future performance.

McAfee Inc. (MFE)

Market Cap: $4.9 billion

Dividend Yield: N/A

This established security technology company saw both its Q1 returns and its net profit margins drop off from last year��s numbers. Headquartered in Santa Clara, California and employing more than 6,000 people, McAfee (MFE) has been facing a downward spiral in the market since April of this year, under-performing its earning estimates and posting more than -21% losses in that time period.

Microsoft Corp. (MSFT)

Market Cap: $212.7 billion

Dividend Yield: 2.1%

Software juggernaut Microsoft (MSFT) has fallen well below broader market averages in 2010. May and June have proved to be particularly difficult for investors, with MSFT returns trending downward almost -25% in that span. With new versions of Microsoft��s Wind! ows and Office recently released, shareholders will be looking for strong performances form these offerings to help the stock rebound next quarter. But with business spending still fairly weak, chances are that Microsoft may not see as many buyers as its shareholders hope.

Nokia Corp. (ADR) (NOK)

Market Cap: $31.7 billion

Dividend Yield: 5.8%

Nokia (NOK) has made a name for itself globally as a player in the mobile devices and Internet and digital mapping services industry. While it has managed to keep its seat at the table in an industry with very high consumer demand, Nokia��s stock has been struggling all year. Since April, the company��s stock has yielded an unimpressive -43.5% return to shareholders. It may be time for shareholders to drop Nokia and look for another plan.

Qualcomm Inc. (QCOM)

Market Cap: $57 billion

Dividend Yield: 2.2%

Declining revenues and poor growth estimates forecasted for next quarter makes Qualcomm Inc. (QCOM) seem like a dark cloud that shareholders might not want to be caught under. A recent announcement of a quarterly dividend of 19 cents a share, payable Sept. 24, may not be able to erase the memory of the -28.3% loss experienced already in 2010.

Research In Motion Ltd. (RIMM)

Market Cap: $26.5 billion

Dividend Yield:

Research In Motion (RIMM) is yet another mobile communications stock that is struggling to find its legs in 2010. Perhaps best known for its BlackBerry smartphones, RIM has been consistently underperforming the broader markets so far with -21.7% returns year-to-date. The past few weeks have been a setback for RIM with a dip in returns that exceed the losses posted by the Dow Jones and Nasdaq. Though a smartphone innovator, RIM and its BlackBerry have become perennial second fiddles to the iPhone and emergent Android devices.

5 Cheap Money-Doubling Tech Stocks — Each one trades for less than $10 a share AND is set to double in the next 12 months — get their names here.





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U.S. Market Points To A Bright Start; Hot Stocks Of The Day: FNF, NYT, CAVM, MRX, ACAT

The U.S. stock futures traded in green ahead of the opening bell as market gained a little ground in the wake of an Italian-debt auction amid thin holiday-trading conditions. The U.S. market is expected to trade in volatile note today.

Ahead of the real-time trading, the Dow Jones industrial average futures were trading lower by 0.09 percent, or 11 points to 12,230. The Nasdaq Futures were trading higher by 0.27 percent, or 6.25 points to 2,290.75. Standard and Poor's 500 futures were trading higher by 0.23 percent, or 2.90 points, to trade at 1,263.10, today.

Hot Stocks of the Day: FNF, NYT, CAVM, MRX, ACAT

Fidelity National Financial, Inc. (NYSE: FNF) said it agreed to sell an 85 percent interest in the business to WT Holdings Inc. for about $119 million.

New York Times Co. (NYSE: NYT) announced that it would realize estimated net proceeds of about $150 million from the sale of its regional newspaper holdings.

Cavium, Inc. (Nasdaq: CAVM) lowered its outlook for the fiscal 2011 fourth quarter, saying it expects revenue of $56 million to $57 million. Analysts had estimated the company to generate quarterly revenue of $62.6 million.

Medicis Pharmaceutical Corp. (NYSE: MRX) revised higher its 2011 profit forecast, expecting earnings in a range of $2.35 to $2.41 a share, up from the $2.33 to $2.39 a share projected in November. At the same time, the drugmaker lowered its projected revenue range, citing renegotiated contracts. As revised, Medicis sees revenue of $711 million to $724 million for 2011, down from the range of $728 million to $741 million forecast last month.

Arctic Cat Inc. (Nasdaq: ACAT) said it has paid $79.3 million in cash to repurchase its shares held by Suzuki Motor Corp. , concluding the Japanese auto maker's ownership in the company.

Global Markets:

The global markets traded in a mixed note today as two successful Italian bond auctions raised hopes that Italy will be able to roll over billions of! euros o f its debt this year. In Europe, Germany's DAX was up by 0.12 percent or 7.09 points to trade at 5,897.47. Great Britain's FTSE 100 was up 0.62 percent or 34.23 points to 5,546.88. France's CAC40 added 0.51 percent or 15.70 points to 3,118.75.

In the Asian market, China's Shanghai Composite closed higher by 0.18 percent, or 3.81 points to 2,170.01. Hong Kong's Hang Seng fell 0.59 percent or 110.50 points to 18,518.67. Japan's Nikkei 225 was down 0.20 percent or 16.94 points to close trading at 8,423.62. India's BSE 30 Sensex lost 0.92 percent or 146.10 points to close at 15,727.85.

Market Scan:

Ahead of the opening bell, crude oil was trading lower by 0.34 percent at $101 per barrel. Gold was down 0.38 percent at $1,589.40 per ounce.

In the currency market, the euro was trading higher by 0.03 percent against the U.S. dollar, while the British pound was down 0.01 percent against the dollar. The dollar was down 0.21 percent against the Japanese yen.On Tuesday, Wall Street closed on a flat note. The Dow Jones industrial average lost 0.02 percent or 2.27 points to close at 12,291.73. The Standard & Poor's 500 index was up 0.01 percent or 0.11 points to close at 1,265.44. The Nasdaq Stock Market Inc. composite index added 0.25 percent or 6.56 points to close at 2,625.20.

{$end}

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Intel: Needham Cuts To Hold On Inventory Questions

Several analysts with bullish takes on Intel (INTC) rushed to the company’s defense this morning after the chip maker announced Q4 revenue will probably fall a billion short of prior expectations.

But one downgrade has emerged this afternoon, from Needham & Co.’s Quinn Bolton, who cut his rating to Hold from Buy, writing that the shares are now fairly valued given some “near-term risks” raised by the shortfall.

Bolton asks whether inventory buildup over “the last several quarters” were responsible for boosting revenue growth at Intel, and if so, by how much.

He also wonders how long PC makers and the rest of the distribution chain will be cutting chip inventory.

While Bolton can’t answer those questions, he concludes “We believe these questions will be answered next year by the slope of Intel��s revenue recovery.”

Bolton cut his Q4 estimate to $13.7 billion and 59 cents EPS from a prior $14.6 billion and 69 cents. For 2012, he now sees $56 billion in revenue and $2.40 per share in profit, down from a prior $58 billion and $2.60 per share.

Intel shares continue to trade in about the same range they’ve marked all day, currently down $1.19, or 4.8%, at $23.82.

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Attacks in Nigeria Kill at Least 39

Attacks in Nigeria by a radical Muslim sect killed at least 39 people Sunday, according to published media reports.

The violence on Christmas Day underscored the threat the Boko Haram sect poses to Nigeria's government.

Most of the deaths occurred when a bomb exploded at the St. Theresa Catholic Church in Madalla near Nigeria's capital of Abuja, the Associated Press reported. Thirty-five people died and 52 were wounded at the church, according to an official with Nigeria's National Emergency Management Agency, the AP said.

Elsewhere, a bomb exploded near the Mountain of Fire and Miracles Church in the central Nigerian city of Jos, and gunmen later fired at police guarding the area, killing one officer, the AP reported, citing a government representative.

And in Damaturu, a suicide bomber blew up a car at the local headquarters of Nigeria's secret police, killing three people, the news agency added.

World leaders and the Vatican denounced the violence in oil-rich Nigeria.

Following the bombings, a Boko Haram representative claimed responsibility for them in a newspaper interview, the AP added.



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Has Micron Technology 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 Micron Technology (Nasdaq: MU  ) 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 Micron Technolog! y.

Factor

What We Want to See

Actual

Pass or Fail?

Growth 5-Year Annual Revenue Growth > 15% 10.8% Fail ? 1-Year Revenue Growth > 12% 3.6% Fail Margins Gross Margin > 35% 20.0% Fail ? Net Margin > 15% 1.9% Fail Balance Sheet Debt to Equity < 50% 20.3% Pass ? Current Ratio > 1.3 2.35 Pass Opportunities Return on Equity > 15% 1.9% Fail Valuation Normalized P/E < 20 23.43 Fail Dividends Current Yield > 2% 0% Fail ? 5-Year Dividend Growth > 10% 0% Fail ? ? ? ? ? Total Score ? 2 out of 10

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

Since we looked at Micron Technology last year, the memory-chip maker has seen its score plunge by four points. Tepid sales growth, margin contraction, and falling profitability are all to blame for the downgrade.

At first glance, Micron seems like it should fare far better. With the world's electronics makers needing ever-increasing supplies of memory chips, Micron is tapped into a ma! rket wit h plenty of potential. Yet while niche players like Silicon Motion (Nasdaq: SIMO  ) have found ways to profit, huge price wars between Micron and major rivals like SanDisk (Nasdaq: SNDK  ) have taken their toll over the years.

The tough environment continues to weigh on Micron's results. In its most recent quarter, Micron unexpectedly reported an adjusted loss, blaming a weak consumer PC market as prices for the DRAM chips that PCs use dropped precipitously. It also doesn't help that the company has Nokia (NYSE: NOK  ) and Research in Motion (Nasdaq: RIMM  ) , both of which have struggled lately, as major customers.

Micron did get some very good news recently, though. Last month, Micron got a favorable verdict in the lawsuit that Rambus (Nasdaq: RMBS  ) filed against it years ago. With damages that could have been as high as $12 billion, the decision let investors breathe a sigh of relief.

In the long run, though, Micron needs to see better conditions for the industry before it can truly declare victory. Until that happens, Micron will stay far from perfection.

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 Micron Technology 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."

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Prem Watsa Buys Shares of a Gold Miner, Financial, Home Care Provider & Newspaper

Prem Watsa founded Ontario-based Fairfax Holdings, a world-renowned insurance and investment firm resembling Berkshire Hathaway (BRK.A)(BRK.B). Since inception, he has produced a 24.6% average annual return of Fairfax per share book value. Watsa��s value-oriented portfolio is weighted largely toward technology, financials and telecom. In the third quarter, he made some contrarian investments, and one out-of-character stock, a gold miner. These notable buys and adds for the third quarter are: Primero Mining Corporation (PPP), Continucare (CNU), Citigroup Inc. (C), and The New York Times Co. (NYT).

Primero Mining Corporation (PPP)

Primero Mining Corporation is engaged in exploration, acquisition and development of mineral resource properties. Primero Mining Corp has a market cap of $273.6 million; its shares were traded at around $3.1.

Prem Watsa does not typically invest in gold. He told GuruFocus in September, ��We've never invested in gold, so I don't really know what will happen to the price of gold. I just see the price of gold going from $300 to $1800 in a very short period of time, and it's quite parabolic, and I remember what happened to silver, I remember what happened to gold 20 years ago. But mostly commodities, there's a lot of speculation in commodities. The price of copper went from $1 to $4. So whatever commodity you follow, they've gone up very dramatically, lots of speculation in commodities worldwide. And my experience, this is when John Templeton would say, never use "This time is different," but it may be this time is different, but these parabolic curves that I've observed don't end well. The ending is not good, you never know when it will happen, but it always happens and there's lots of pain when these prices come down.��

Watsa bought 230,000 shares of Primero Mining Corp, the only gold-related stock to join his portfolio, in the third quarter of 2011.

Canada-based Primero operates one mining property in Mexico! , the Sa n Dimas Mine, which is located on the border of Durango and Sinaloa states. It also has one exploration property, Ventanas, in the state of Durango, Mexico. It appears the company��s growth strategy is to finish off a gold-silver mine in operation since 1757 called San Dimas, which it expects has a remaining life of 20 years, and acquire other properties.

Canada-based Primero��s San Dimas mine is located in Mexico on the border of Durango and Sinaloa states, and it has an exploration property, Ventanas, located in Durango, Mexico. The company��s dealings in San Dimas are relatively new. Primero (then called Mala Noche), acquired the San Dimas mines, mill and related assets from Goldcorp in August 2010. The purchase price was $510 million, paid in $216 million cash, 31,151,200 common shares, a $60 million convertible note and $50 million five-year note. It had a net debt/equity ratio of 10% at year-end 2010.

Before becoming Primero, Mala Noche Resources Corp was a small exploration company focused on becoming a precious metals producer by acquiring producing mines and mineral properties. Prior to the third quarter of 2010, the young company had to revenues to report, and owned no material assets or helpd any long-term liabilities.

San Dimas, considered one of the most significant previous metal deposits in Mexico, consists of three mines. In total, the company��s has 5,881,052 proven and probable reserves and resources. At the time of purchase, the San Dimas mine had produced 113,000 ounces of gold and 5.1 million ounces of silver in 2009. In 2010, it produced 100,266 gold equivalent ounces and in the fourth quarter, it increased production 14% over the previous quarter.

Primero has concentrated on increasing gold and silver output since it acquired the minutes. It saw considerable top-line growth in 2011, reporting $121 million for the first nine months, compared to $19 million in the first nine months of 2010. Net income also increased to $31 million from a ! net loss of $38 million for the same period.

In addition to the amount of gold sold, the price of gold helped the company��s ballooning revenues. It sold 59,002 ounces of gold at an average price of $1,524 per ounce in the first nine months of 2011. The company does have issues with its silver sales. From its third-quarter 2011 report: ��The current high commodity price environment would normally be beneficial to a precious metals producer. The recent rise in the price of silver has, however, decreased the Company��s cash flows due to the negative tax consequences of the silver purchase agreement. Everything else being equal, each $1 increase in the market price of silver to be sold to Silver Wheaton Caymans under the silver purchase agreement reduces the Company��s cash flow from sales under the silver purchase agreement by $0.30 per ounce.��

The company��s exploration property, Ventanas, is composed of 28 near-contiguous mining concessions. Though the mine has been worked before, Primero believes there are still many under-explored areas.

Continucare (CNU)

Continucare Corporation provides a continuum of outpatient and ancillary healthcare services with a primary focus on outpatient treatment of musculoskeletal injuries and diseases, such as arthritis, osteoporosis, stroke and traumatic injuries. Continucare had an annual average earnings growth of 41.1% over the past 10 years.

Watsa bought 61,100 shares of Continucare at an average price of $6.27 in the third quarter.

Continucare showed an ability to produce consistent and growing revenue and free cash flow over the last decade. It also has a relatively strong cash position. It retained virtually all of its $23.9 million net income as cash flow in fiscal 2011, and it has $50 million on its balance sheet, with long-term liabilities of $8.3 million.

The company was acquired by Metropolitan Health networks Inc. on Oct. 4, 2011. Metropolitan paid an aggregate of $403 ! million in cash and issued 2.5 million shares of its common stock to Continucare��s stockholders and option holders for their shares of Continucare common stock and options to purchase share of Continucare common stock. The acquisition made Metropolitan the largest provider service network serving the Medicare and Medicaid eligible population in Florida and one of the largest in the U.S.

Citigroup Inc. (C)

Citigroup Inc., the global financial services company, has some two hundred million customer accounts and does business in more than hundred countries, providing consumers, corporations, governments, and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Citigroup Inc. has a market cap of $72.57 billion; its shares were traded at around $24.82 with a P/E ratio of 6.7 and P/S ratio of 0.8. The dividend yield of Citigroup Inc. stocks is 0.2%.

Prem Watsa added a small amount of Citigroup in the third quarter �� 5,000 shares at an average price of $32.70, bringing his total holding to 15,000 shares. On average, he has lost 38% on this investment. His portfolio is composed of 24.4% financials.

Citigroup improved its return on equity and return on assets since their lows in 2008 and earnings returned to a positive for the first time in 2010.

Recently, a Manhattan federal judge rejected a $285 million SEC appeal against the bank. In the ruling, he said he disagreed with the SEC settling credit crisis lawsuits without requiring defendants to speak to their guilt or innocence. The SEC has accused Citigroup of selling $1 billion in mortgage-linked CDOs in 2007, then betting against the transaction, costing investors $700 million. The judge set the trial for July 16, 2012.

The bank will also cut about 4,500 jobs soon to help reduce expenses.

New York Times Co. (NYT)

New Yo rk Times Company is a diversified media company including newspapers, television and radio stations, magazines, electronic information and publishing, Internet businesses, and forest products investments. New York Times Co. Cl A has a market cap of $1.06 billion; its shares were traded at around $7.19 with a P/E ratio of 11.1 and P/S ratio of 0.8. New York Times Co. Cl A had an annual average earnings growth of 0.1% over the past 5 years.

Watsa increased his holding of the New York Times 40% in the third quarter, adding 10,000 shares at an average price of $7.70. He owns 35,000 shares in total at an average cost of $8 per share. The price has declined an average of 10% since then.

The New York Times Company is currently in advanced talks to sell its Regional Media Group, composed to 16 regional newspapers, other print publications and related businesses, to Halifax Media Holdings LLC. The New York Times will then be able to focus on its core newspaper business as print revenue declines. Revenues have been trending downward since 2005, and fell from $2.4 billion in 2009 to $2.4 billion in 2010. Cash flow has remained strong, and its gross margin is at its highest level in a decade, while operating and net margins all improved in 2010. In the last ten years, its stock has fallen 82%.

In 2010, the company��s strategy of continuing to transition to a multiplatform organization to improve its financial position was successful in many ways. Operating profit increased to $234 million in 2010, more than triple the $74 million reported in 2009. Their total digital revenues increased 15% in 2010 compared with 2009, accounting for 16% of overall revenue.

In the third quarter, there was evidence that digital was helping offset declines in other areas. Overall revenues declined 3.1 percent, though circulation revenues rose as the introduction of digital subscriptions at The Times offset a decline in print copies sold across the News Media Group. Digital revenues increase! d 6.2% a s well, partially offsetting a 10.4% decline in print advertising revenue.

��This quarter we continued to execute on our strategy to transform our business,�� said Janet L. Robinson, president and chief executive officer, The New York Times Company. "We made significant progress in developing a robust digital subscription revenue stream, reduced our operating costs, meaningfully improved our liquidity through the early repayment of high-interest debt and tripled our initial investment on the sale of a portion of our stake in Fenway Sports Group. And despite a challenging advertising environment, our operating profit grew reflecting our strong cost performance and growth in circulation revenues, which rose 3 percent.

To see more of Prem Watsa��s buys and sells, click here.

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Vanguard to SEC: Further Money Market Fund Reforms Should be Weighed Carefully

Vanguard told the Securities and Exchange Commission (SEC) in a Jan. 10 comment letter that while the agency’s recent regulation imposing new minimum liquidity levels on money market funds has “greatly increased the funds’ liquidity and ability to satisfy large redemption requests,” and will help prevent a “future systemic market disruption” from threatening the liquidity of money market funds, as was the case in the financial crisis of 2008, further reforms to money market funds pursued by the Financial Stability Oversight Council (FSOC) should be weighed carefully.

In its comment letter Vanguard said that the President’s Working Group on Financial Markets’ (PWG) report on money market funds that was released last October “appropriately underscores the complexity involved in further reducing money market funds’ potential susceptibility to runs, and demonstrates the very real danger that the potential ‘cure’ is worse than the ‘disease.’ It is important, therefore, Vanguard continued, that any reforms pursued by FSOC, created under Dodd-Frank, “carefully consider the consequences that such reforms may impose on the economy, financial markets, borrowers and investors.” Careful and deliberate consideration of the downstream effects of any additional money market fund reform, Vanguard continued, “will help ensure that any changes will be positive and enduring, and will bolster rather than destroy a valuable cash management product for millions of investors and a much-needed source of financing for government, financial and corporate borrowers.”

The PWG stipulated that the SEC must assist the FSOC in its analysis of money market funds.

Vanguard went on to say that the fund firm does not believe that the “market-wide illiquidity that occurred in the 2008 market crisis resulted from money market fund activity, but rather from banking entities’ unwillingness to accept each others’ credit risk.” Nonetheless, Vanguard continued, “we understand that the PWG, [FSOC] and Commission believe more should be done to further mitigate the potential structural vulnerabilities of money market funds to runs.”

The SEC’s recent amendments to Rule 2a-7 and certain other rules that govern money market funds under the Investment Company Act of 1940, Vanguard said, “have made money market funds more resilient to credit and liquidity pressures, and will help reduce the likelihood of runs. We believe the amendments to Rule 2a-7 and related money market fund rules, which we strongly supported, significantly improve a fund’s ability to withstand unusually high redemption activity.”

Vanguard said it also supports the creation of a private emergency liquidity facility for prime money market funds, as laid out in the PWG report, as it “is the best alternative that directly addresses the liquidity issue and, therefore, would be the most effective and appropriate option to address the potential for a run.” The proposals for a floating NAV, on the other hand, Vanguard said, “do nothing to make money market funds more robust in the face of adverse liquidity conditions. They merely change accounting mechanics and make investment in, and management of, money market funds more complex.”

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Follow the glut of 52-week highs with caution

There still are a few stock bargains to be had, but after the stock market’s brisk Q4 rally (which began to stall Tuesday), they’re getting harder to find.

Caution: When a lot of the stocks and mutual funds I recommend move up and out of my buy ranges, it usually means the market is approaching a significant top. Readers who have been with me a while will recall that I frequently lamented the paucity of bargains in the weeks running up to the April 2010 and April 2011 tops. We’re not at quite the same pass yet, but we’re getting closer.

Just take a peek at Tuesday’s roster of NYSE stocks touching new 52-week highs. It’s studded with names I’ve recommended in my stock newsletter, Profitable Investing: Abbott Laboratories (NYSE:ABT), ConAgra (NYSE:CAG), Duke Energy (NYSE:DUK), Genuine Parts (NYSE:GPC), GlaxoSmithKline (NYSE:GSK), Kimberly-Clark (NYSE:KMB), Kinder Morgan (NYSE:KMP), Magellan Midstream Partners (NYSE:MMP), Marsh & McLennan (NYSE:MMC), McDonald’s (NYSE:MCD), NextEra Energy (NYSE:NEE), Pfizer (NYSE:PFE), Piedmont Natural Gas (NYSE:PNY), Pinnacle West (NYSE:PNW), Plains All American Pipeline (NYSE:PAA), Progress Energy (NYSE:PGN), Questar (NYSE:STR), Verizon (NYSE:VZ), W.P. Carey?(NYSE:WPC) and Xcel Energy (NYSE:XEL).

And that’s without even including two of my closed-end muni bond fund recommendations, BlackRock MuniEnhanced (NYSE:MEN) and Nuveen Quality Income?Municipal (NYSE:NQU).

Obviously, I’m delighted to be wrapping up the year with so many strong performers. However,! I’ ;m wary of the heights that some stocks have achieved — utilities in particular.

Starved by the Federal Reserve’s artificially low interest rates, conservative investors have stampeded into utilities and other “defensive” stocks, driving yields down. This is a dangerous state of affairs. Don’t chase any stock that made the new-highs list yesterday. In fact, if you don’t currently need the dividend income, you might consider taking profits on a few of these names with a view to buying back your position sometime during the first quarter of 2012.

But as I said earlier, there still are a few bargains worth buying on Wall Street. In the health care space, I continue to like Baxter International (NYSE:BAX).

The golds look interesting, too. Speculative sentiment toward the Midas metal has cooled noticeably during the past four months — a welcome development from a contrarian standpoint. If Europe’s sovereign debt troubles erupt again in the New Year, as I expect they will, bullion easily could climb to $2,000 an ounce (or even higher).

Buy Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM). Both stocks, in my judgment, should be able to roll up a total return — dividends plus capital appreciation — of 25% to 30% in the coming year. Favor NEM if you want a slightly higher dividend yield (2.3% currently, versus 1.3% for ABX).

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AMZN: Kindle Coming To Target?

Is the Amazon.com (AMZN) Kindle e-Book reader coming to Target (TGT) stores?

That’s the implication of a post today on Engadget, which has a picture of a hand-held inventory device showing a listing for the Kindle. The site reports that the “in-store” date for the device is April 25.

Seems a little far-fetched, but as the competition in the market accelerates, the company may have decided it needed to have a presence in the bricks-and-mortar world.

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Land of Rising Debt: Falling Tax Revenue Forces Japan to Sell More Bonds

Start saving up your money, couch potatoes. Apple's (Nasdaq: AAPL  ) new TV may hit the market as early as this upcoming summer.

According to DigiTimes -- the Taiwanese publication that has turned its connections with Apple's Asian supply chain providers into occasionally reliable rumor mill fodder -- the tech giant's new TVs will hit the market by the second or third calendar quarter of 2012.

Piper Jaffray's Gene Munster, who has been predicting Apple's move into full-blown high-def TVs for nearly three years, has been calling for a release in time for next year's holiday shopping season. If the DigiTimes report is to be believed, Apple doesn't want to even play it that close.

DigiTimes is reporting that Samsung began producing the chips that will power the smart TVs last month, and that Sharp will be making the displays. The initial TVs will come in 32-inch and 37-inch models.

The screen sizes may seem small to those considering home theater makeovers next year, but you can't blame Apple for starting with smaller displays. Staying in the sub-40-inch camp will allow Apple to keep production costs down. Logistically speaking, this will also make it easier to stock at its growing network of Apple Store locations. Can you really picture shoppers lugging out 46-inch flat screens or bringing them back for repair?

We still don't have a name for Apple's new line of televisions. Apple TV won't work because it will confuse consumers with the set-top boxes under that name that the company has been selling for years. The iTV name being bandied about -- including in DigiTimes -- is trademarked by another company.

The name won't matter. Many scoffed at the iPad name at first, and that obviously played out well for Apple. Regardless of the name, there's no denying that this rollout will be disruptive to the industry.

Television sales have been in a funk. Google (Nasdaq: GOOG  ) has largely flopped since its Google TV rollout late last year. Hoping to turn around its unprofitable television business, Sony (NYSE: SNE  ) just announced that it was bowing out of its joint-venture partnership for LCD displays with Samsung. Sluggish high-def TV sales have stuck consumer electronics giant Best Buy (NYSE: BBY  ) with more than a year of crummy results.

If there was ever a time for Apple to step into a moribund industry begging to be updated, this would be it.

Summer may seem to be a slow time for big-ticket entertainment gadgetry, but why wait if Apple is ready? The market's dying for a company to get it right.?

Apple won't be the only winner here, just as it's not the only victor in the smartphone and tablet wars. There's a new report detailing three hidden winners riding the coattails of Apple's success. It's a free report, but only for a limited time so check it out now.

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Biotech Stock Spotlight; Human Genome Shares inch upward on Eve of FDA Decision

Human Genome Sciences Inc. (NASDAQ: HGSI) awaiting an FDA decision on its Lupus drug Benlysta; the Food and Drugs Commission is likely to give its decision tomorrow, and market sentiments suggest that the company may receive approval for its medicine.

Benlysta is being produced in collaboration with GlaxoSmithKline (NYSE: GSK). The drug has not been tested on Lupus patients where the ailment attacks the central nervous system or kidneys. It has also been reported that the drug is not very effective in African American patients.

If theFDA does not recommend the usage of the medicine by African American patients, Human Genome may lose up to 25% of the prospective market.

The company recently announced higher-than-expected losses for the fourth quarter of the year, posting a quarterly loss at $(87.6 million), or $(0.46) per share. The company's loss for the corresponding quarter of last year stood at $(9.7 million); the company also reported 60% decline in its revenue to $21.3 million.

Human Genome Sciences reported its total current assets at $531.181 million for the year ending Dec 31, 2010. Its total assets were worth $1.315 billion for the same time period. Human Genome Sciences had valued its total liabilities at $280.944 million. The company had reported its revenue at $157.351 million and its gross profit for the year at $112.394 million. Human Genome Sciences' net income for the year stood at ($233.231) million.

The company stock is currently trading at $25.76, up 0.35% from its previous close. Human Genome Sciences stock opened at $25.88 and touched the high of $25.89. The stock's lowest price in today's session is $25.71. The company stock's EPS is ($1.24). The company stock has traded in the range of $20.56 and $34.49 during the past 52 weeks. The company's market cap is $4.87 billion and its beta is 4.21.

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With McDonald entrenched at No. 1, Wendy¡¯s aims for second

McDonald��s (NYSE:MCD) is the 800-pound gorilla of fast food. The $100 billion company turned quick-service restaurants into a science, has over 33,000 locations worldwide and is a heavyweight in breakfast and beverage sales in addition to selling burgers and fries.

It��s a nearly impossible task to knock No. 1 McDonald��s from its perch. So that��s why fast-food restaurant Wendy��s (NYSE:WEN) is instead focused on the No. 2 spot — and according to reports, has dethroned Burger King to become America��s second-most-popular burger joint.

The strategy? Higher quality foods, redesigned restaurants and marketing that showed American consumers who��s the best �� behind McDonald��s, of course.

It may sound silly to have a goal of second place. But it��s important to be realistic. McDonald’s dominates the marketplace, with a 49.5% share of the ��limited-service burger segment�� business. Consider: With just a bit of growth, MCD will do more in sales than all of its competitors combined.

In 2010, Burger King’s market share in the burger biz was 13.3%, while Wendy’s share was 12.8%. But thanks to healthier options — including skin-on fries seasoned with natural sea salt as well as higher quality fare like its premium Dave��s Hot ��n Juicy Cheeseburgers line — reports indicate big gains for Wendy��s.

According to a report by Janney Capital Markets released Tuesday, Wendy��s likely passed Burger King in market share as a result. And if it hasn��t yet, it will in the very near future.

That may be a bragging point for Wendy��s — however, the U.S. ��limited-service burger segment�� is only a small piece of the fast-food pie. Chipotle (NYSE:CMG) has been one of the biggest growth stories of the past few years — with shares soaring over 260% since January 2010. Wendy��s stock is up less than 10% in the same period.

Also, i nternational growth is really what��s fueling American-based restaurants. Take Yum! Brands (NYSE:YUM). Almost 75% of its operating profits come from abroad, including from some 3,200 KFC locations in China — and even KFCs in Kenya! Even behemoth McDonald��s has room to grow overseas, with the Golden Arches recently announcing a plan to open 700 stores in China over the next two years — roughly one a day — to build on its current total of 1,300 locations in the Middle Kingdom.

In short, a bigger bite out of the American burger market is nice��but not filling enough for a big restaurant stock these days.

Part of the reason restaurants like KFC and McDonald��s do so well abroad is thanks to a well-followed brand in the U.S. Wendy��s might be able to export its popularity later. However, with rivals like Yum! and Mickey D��s already gobbling up international market share, it shouldn��t focus too much on winning in the U.S. when the big profits are to be made overseas.

Jeff Reeves is the editor of InvestorPlace.com. Write him at editor@investorplace.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. As of this writing, he did not own a position in any of the aforementioned stocks.

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Ron Paul Leapfrogs Romney in Iowa Polls

Ron Paul came in second to Newt Gingrich in two Iowa polls released Tuesday, leapfrogging Mitt Romney in both instances as the race for the Republican presidential nomination in 2012 continues.

The bump appears to correlate with ramping up of Paul's campaign presence in the Hawkeye state.

Paul canvased Iowa from Dec. 8 through Dec. 10, speaking at five town hall events and a rally. The three-day trip culminated in a debate appearance.

A Public Policy Polling survey found Gingrich ahead of Paul 22% to 21%, while an Insider Advantage poll showed the former House speaker had 27% of the vote vs. 17% for Paul. The polls conducted interviews this past weekend.

"Our campaign is continuing to make strides in the key early-voting states, especially in Iowa," Jesse Benton, Paul's campaign chairman said. "After witnessing packed rallies time and again in Iowa, it is no surprise that we are seeing these encouraging poll numbers."

"Meanwhile Ron Paul is building an unusual coalition of support for a Republican primary," Dean Debnam, Public Policy Polling president, said. "The big question is: will they really turn out?"

Paul's Iowa numbers had been laboriously consistent between August and October as his favor hovered between 10% to 12% in most polls, but November began an upward trend that put him reliably between 16% and 20%.

Paul's late charge only three weeks before the caucuses could be positive news for his campaign, which almost certainly needs a victory or strong finish in Iowa to retain firm donor support as the campaign moves through New Hampshire, South Carolina and Florida.

It should be noted that Paul has some of the most stalwart grass roots support of the GOP field, but it will take more than loyalists to push Paul over the top.

Paul has scheduled a heavy slate of Iowa appearances between Tuesday and Dec. 22, including a Republican debate on Thursday and eight town hall meet! ings nex t week.

Beyond his increased presence in Iowa, Paul has also explicitly attacked Iowa frontrunner Gingrich as the Texas congressman has launched a series of attacks against the former House speaker. The attacks include the release of a statement and a video that claim Gingrich wants the Constitution to die:

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Dividend ETF Off to Rousing Start

Both the iShares Dow Jones Select Dividend Index Fund(DVY) and SPDR S&P Dividend ETF(SDY) appear set to kick off the New Year on a strong note.

In the face of the seemingly persistent doom and gloom that plagued the latter half of 2011, the two funds have managed to handedly outpace broad-based ETFs like the SPDR S&P 500 ETF(SPY).

The real winner in the realm of dividend ETFs, however, has been the iShares Dow Jones High Yield Equity Fund(HDV). The new kid on the block, HDV powered past its veteran competitors, securing over 7% gains during the past six-month period. This was not an unusual occurrence for the fund, though.

Since its late-march unveiling, HDV has consistently trumped DVY and SDY. With this type of standout strength, came popularity. The fund's average trading volume currently stands at over 220,000.

HDV appears to have already cemented its place within the ETF universe. Now as we prepare to kick off 2012, the question remains: Will the fund maintain its lead in the New Year?

In order to answer to this question, one needs to look under the fund's hood. By uncovering the factors that separate HDV from its competitors, it becomes easier to see what has, and could continue to contribute to its remarkable divergence.

Upon initial inspection it becomes clear that HDV is very different from the elder DVY. In terms of style, the younger fund leans solidly into the large-cap category. In fact, according to Morningstar's style box, HDV can be seen flirting with a giant-cap designation.

DVY, though officially considered a large cap product, toes the line between a large- and mid-cap classification.

During periods of market euphoria, smaller and more-volatile companies like those comprising DVY tend to fall into favor as increas! ingly co nfident investors seek out upside potential.

In tumultuous environments, on the other hand, these same companies often lag as individuals flee from risk. In the event that the turmoil that defined 2011 persists into the New Year, HDV's dedication to stable large- and mega-cap companies will likely help the fund continue to outperform.

Further aiding HDV in 2011 was the fund's ample exposure to defensive sectors. Utilities comprise nearly one-third of DVY's index, making it an attractive play for those looking for protection from market headwinds. In terms of overall safety, however, the fund pales in comparison to HDV. Names hailing from non-cyclicals including utilities, consumer goods, healthcare, and telecommunications dominate the younger fund's index, representing over 80% of its assets.

At the same time that the fund designates the largest percentages of its portfolio to safety, it also shields itself from weakness. Lagging market corners, such as financials and materials, are among the least represented in the fund's breakdown, together accounting for less than 2% of its assets. Comparatively, these two sectors make up more than 20% of DVY's index.

As we prepare to close the book on 2011 and look to the opening weeks of 2012, I do not foresee HDV giving up its lead. In the New Year, the challenges facing retail investors remain great; the European Union is still plagued with turmoil and questions continue to linger regarding the growth status of leading emerging growth engines like China. This type of cloudy forecast has and will continue to benefit HDV.

That is not to say that investors should abandon DVY. Rather, in the event that skies clear, this fund should be on the radar. During periods of duress, the elder product will likely sell off harder than HDV. These magnified downturns may present attractive buying opportunities in the event that market conditions improve.

With challenges ! on the h orizon in 2012, investors need to maintain a level head. Whether you opt for DVY, SDY, or HDV, dividend-paying equity ETFs look like strong bets for the New Year.

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Stock Picks: Jim Cramer's Top Stocks for the 2011 Holidays

Did you consider stocks as stocking stuffers? Jim Cramer did, and he graced us all with a list of his favorite 2011 holiday stock picks.

Cramer, host of CNBC's Mad Money, thinks a few well-timed shares of companies make an excellent holiday gift. Interested?

The following are Kramer's top picks. He feels these are attractive names, and many are retailers he thinks are poised to benefit from better-than-expected sales this holiday shopping season. (Click here to access free, interactive tools to analyze these ideas.)

1. Deckers Outdoor Corp. (Nasdaq: DECK  ) : Engages in the design, production, marketing, and brand management of footwear and accessories for outdoor activities and everyday casual lifestyle use. Market cap of $3.26B. This footwear and accessories company made the list because Cramer believes it should see major savings and a nice boost to earnings from bringing its European distribution arm in-house. He also sees more growth for its men's and luxury women's boot lines.

2. The Home Depot (NYSE: HD  ) : Operates as a home improvement retailer. Market cap of $64.62B. Cramer says Home Depot has an attractive 3% dividend yield, and believes the company is big enough to support itself if the stock market gets slammed with sell-offs. "This is the kind of stock you can own, in part because if Europe does cause us to crash, Home Depot won't fall as hard as the rest of the market ... and it will bounce back much harder," Cramer said.

3. International Paper Co. (NYSE: IP  ) : Operates as a paper and packaging company with operations in North America, Europe, Latin America, Russia, Asia, and North Africa. Market cap of $12.66B. This company has the best margins in the business, says Cramer, and that it can only get better with its pending acquisition of Temple-Inland. A 3.6% yield dividend doesn'! t hurt e ither.

4. Macy's (NYSE: M  ) : Operates department stores and Internet websites in the United States. Market cap of $13.38B. Thanks to rebounding consumer spending Macy's hit its 52-week high early in December, and Cramer thinks there's more momentum to price in because consumers have been "spending like mad" this holiday season.

5. McDonald's (NYSE: MCD  ) : Operates as a foodservice retailer worldwide. Market cap of $100.89B. The fast-food chain operates almost 33K restaurants in 117 countries and has a "superbly managed company with terrific execution," according to Cramer. He says the business is growing into Asia Pacific, the Middle East and Africa, and that the chain can survive just about anything.

6. Pier 1 Imports (NYSE: PIR  ) : Operates as an importer and specialty retailer of imported decorative home furnishings and gifts in the United States, Canada, and Mexico. Market cap of $1.50B. Cramer calls this company the "best turnaround story in all of retail" after it avoided bankruptcy in 2009. Since then Cramer says its focus on smaller and less-expensive pieces makes it one of the strongest performers out there.

7. PVH Corp. (NYSE: PVH  ) : Designs and markets branded dress shirts, neckwear, sportswear, footwear, and other related products worldwide. Market cap of $4.64B. Cramer says this apparel maker is constantly improving. Thanks to its Calvin Klein, IZOD and Van Heusen and Tommy Hilfiger brands it is now the third-largest apparel company in the world.

8. Saks Inc. (NYSE: SKS  ) : Operates fashion retail stores in the United States. Market cap of $1.58B. Cramer believes high-end luxury shopping and low-end shopping will thrive the most. There's nothing more symbolic of the luxury market! than Sa ks, he says. The company is down more than 10% this year but the CEO told Cramer the holiday season has been going well.

9. Tanger Factory Outlet Centers (NYSE: SKT  ) : Operates as a real estate investment trust (REIT). Market cap of $2.57B. Cramer thinks this company will thrive regardless of what happens in Europe. The REIT is the only publicly traded pure play on businesses and is holding up better than other retailer REITS.

10. Tractor Supply Company (Nasdaq: TSCO  ) : Operates retail farm and ranch stores in the United States. Market cap of $5.03B. This tractor supply company targets hobby farmers and has a "terrific niche," says Cramer. It is nearly immune to online competition and because it is mostly located in rural areas and outer suburbs it faces less competition with big box retailers.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.

Kapitall's Rebecca Lipman does not own any of the shares mentioned above.

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Is Corning's Stock a Bargain by the Numbers?

Numbers can lie -- but they're the best first step in determining whether a stock is a buy. In this series, we use some carefully chosen metrics to size up a stock's true value based on the following clues:

  • The current price multiples.
  • The consistency of past earnings and cash flow.
  • How much growth we can expect.

Let's see what those numbers can tell us about how expensive or cheap Corning (NYSE: GLW  ) might be.

The current price multiples
First, we'll look at most investors' favorite metric: the P/E ratio. It divides the company's share price by its earnings per share -- the lower, the better.

Then, we'll take things up a notch with a more advanced metric: enterprise value to unlevered free cash flow. This divides the company's enterprise value (basically, its market cap plus its debt, minus its cash) by its unlevered free cash flow (its free cash flow, adding back the interest payments on its debt). Like the P/E, the lower this number is, the better.

Analysts argue about which is more important -- earnings or cash flow. Who cares? A good buy ideally has low multiples on both.

Corning has a P/E ratio of 6.4 and an EV/FCF ratio of 8.5 over the trailing 12 months. If we stretch and compare current valuations to the five-year averages for earnings and free cash flow, Corning has a P/E ratio of 6.7 and a five-year EV/FCF ratio of 14.4.

A positive one-year ratio under 10 for both metrics is ideal (at least in my opinion). For a five-year metric, under 20 is ideal.

Corning is a mouthwatering four for four on hitting the ideal targets, but let's see how it compares against some competitors and industry mates (note that its closest competitors are Asian glassmakers that aren't traded on major U.S. exchanges, so these comps aren't ideal): ?

Company

1-Year P/E

1-Year EV/FCF

5-Year P/E

5-Year EV/FCF

Corning 6.4 8.5 6.7 14.4
3M (NYSE: MMM  ) 13.3 15.0 14.7 16.0
TE Connectivity (NYSE: TEL  ) 10.9 11.6 315.0 14.8
Cisco Systems (Nasdaq: CSCO  ) 15.9 7.3 14.1 7.6

Source: S&P Capital IQ.

Numerically, we've seen how Corning's valuation rates on both an absolute and relative basis. Next, let's examine...

The consistency of past earnings and cash flow
An ideal company will be consistently strong in its earnings and cash flow generation.

In the past five years, Corning's net income margin has ranged from 30.7% to 88.8%. In that same time frame, unlevered free cash flow margin has ranged from 1.9% to 31.6%.

How do those figures compare with those of the company's peers? See for yourself:

anImage

Source: S&P Capital IQ; margin ranges are combined.

Additionally, over the last five years, Corning has tallied up five years of positive earnings and five years of positive free cash flow.

Next, let's figure out...

! How much growth we can expect
Analysts tend to comically overstate their five-year growth estimates. If you accept them at face value, you will overpay for stocks. But while you should definitely take the analysts' prognostications with a grain of salt, they can still provide a useful starting point when compared to similar numbers from a company's closest rivals.

Let's start by seeing what this company's done over the past five years. In that time period, Corning has put up past EPS growth rates of 23.4%. Meanwhile, Wall Street's analysts expect future growth rates of 9%.

Here's how Corning compares to its peers for trailing five-year growth:

anImage

Source: S&P Capital IQ; EPS growth shown.

And here's how it measures up with regard to the growth analysts expect over the next five years:

anImage

Source: S&P Capital IQ; estimates for EPS growth.

The bottom line
The pile of numbers we've plowed through has shown us the price multiples shares of Corning?are trading at, the volatility of its operational performance, and what kind of growth profile it has -- both on an absolute and a relative basis.

The more consistent a company's performance has been and the more growth we can expect, the more we should be willing to pay. We've gone well beyond looking at a 6.4 P/E ratio, and we see low price multiples all around. We also see consistent profitability and solid growth.

I really like the story of this premium glass producer. I laid out the "buy" case a couple months ago. In addition to that analysis, you have to factor in a bit of a share price bump and that Corning warned of a rough fourth quarter due to the loss of a key co! ntract.< /p>

If you also find Corning's numbers or story compelling, don't stop. Continue your due diligence process until you're confident one way or the other. As a start, add it to My Watchlist to find all of our Foolish analysis.

To see the stocks that I've researched beyond the initial numbers and bought in my public real-money portfolio, click here.

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Are Shorts Watching This Number at American Greetings?

There's no foolproof way to know the future for American Greetings (NYSE: AM  ) or any other company. However, certain clues may help you see potential stumbles before they happen -- and before your stock craters as a result.

A cloudy crystal ball
In this series, we use accounts receivable and days sales outstanding to judge a company's current health and future prospects. It's an important step in separating the pretenders from the market's best stocks. Alone, AR -- the amount of money owed the company -- and DSO -- the number of days' worth of sales owed to the company -- don't tell you much. However, by considering the trends in AR and DSO, you can sometimes get a window onto the future.

Sometimes, problems with AR or DSO simply indicate a change in the business (like an acquisition), or lax collections. However, AR that grows more quickly than revenue, or ballooning DSO, can also suggest a desperate company that's trying to boost sales by giving its customers overly generous payment terms. Alternately, it can indicate that the company sprinted to book a load of sales at the end of the quarter, like used-car dealers on the 29th of the month. (Sometimes, companies do both.)

Why might an upstanding firm like American Greetings do this? For the same reason any other company might: to make the numbers. Investors don't like revenue shortfalls, and employees don't like reporting them to their superiors.

Is American Greetings sending any potential warning signs? Take a look at the chart below, which plots revenue growth against AR growth, and DSO:

anImage

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. FQ = fiscal quarter.

The standard way to calculate DSO uses average accounts receivable. I prefer to look at end-of-qu! arter re ceivables, but I've plotted both above.

Watching the trends
When that red line (AR growth) crosses above the green line (revenue growth), I know I need to consult the filings. Similarly, a spike in the blue bars indicates a trend worth worrying about. As another reality check, it's reasonable to consider what a normal DSO figure might look like in this space.

Company

LFQ Revenue

DSO

?American Greetings $369 31
?Shutterfly (Nasdaq: SFLY  ) $77 8
?Gannett (NYSE: GCI  ) $1,266 47
?R.R. Donnelley & Sons Co. (Nasdaq: RRD  ) $2,683 69

Source: S&P Capital IQ. DSO calculated from average AR. Data is current as of last fully reported fiscal quarter. LFQ = last fiscal quarter. Dollar figures in millions.

Differences in business models can generate variations in DSO, so don't consider this the final word -- just a way to add some context to the numbers. But let's get back to our original question: Will American Greetings miss its numbers in the next quarter or two?

The numbers don't paint a clear picture. For the last fully reported fiscal quarter, American Greetings' year-over-year revenue grew 7.6%, and its AR grew 24.9%. That's a yellow flag. End-of-quarter DSO increased 16.1% over the prior-year quarter. It was down 8.2% versus the prior quarter. That demands a good explanation. Still, I'm no fort! unetelle r, and these are just numbers. Investors putting their money on the line always need to dig into the filings for the root causes and draw their own conclusions.

What now?
I use this kind of analysis to figure out which investments I need to watch more closely as I hunt the market's best returns. However, some investors actively seek out companies on the wrong side of AR trends in order to sell them short, profiting when they eventually fall. Which way would you play this one? Let us know in the comments below, or keep up with the stocks mentioned in this article by tracking them in our free watchlist service, My Watchlist.

  • Add American Greetings to My Watchlist.
  • Add Shutterfly ?to My Watchlist.
  • Add Gannett ?to My Watchlist.
  • Add R.R. Donnelley & Sons Co. to My Watchlist.

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