Here's a guide to piecemeal approach for wealth creation

Below is the edited transcript of the interview on CNBC-TV18. Also watch the accompanying video.

Q: An investor can invest a lump sum of Rs 40 lakh with a time horizon of 10-15 years timeframe. His goal is wealth creation. What's the advice you would give?

A: If I have understood correctly, he wishes to invest Rs 40 lakh for a period of 10-15 years. The purpose is to accumulate wealth over a period of time and he understands the relationship between high risk and high reward.

Q: There is also a little bit about insurance background. His sum assured is Rs 10 lakh and he pays a premium of Rs 30,000 yearly. It's an insurance scheme from Tata AIG.

A: I am happy that he understands the need to take risk to get high rewards. So I would suggest a two step process. He could park this entire Rs 40 lakh into a liquid fund offered by a mutual fund, say for example in HDFC Cash Management Fund Treasury Advantage Plan . This invests entirely into debt. So at this moment, the money will be invested 100% into debt.

From here, the second step is to instruct HDFC Mutual Fund to transfer Rs 9,000 everyday into an equity scheme of the same fund house, for example, HDFC Equity Fund . In this form, over a period of two years, the entire Rs 40 lakh will get invested into equities. I assume that the markets will be more stable by the end of two years from now. So in the volatile period, he has entered into equities.

Say if it's in the tenth year from now that the money is required, from 2nd to 9 years, remain invested into equities. Just evaluate the performance of the fund. If he is not happy, he can switch to another well performing fund. But remain in equities from 2nd year to the 9th year.

After the 9th year, when his goal is one year away, start withdrawing money out of equity and parking into areas which are not volatile in nature. In this way, he is protecting the gains that made over the period of 9 years. In this case, one can capture the benefits of the equity market, and at the same time, enter into a piecemeal method and try and capture benefit out of the volatility in the next two years from now.

Q: Should all Rs 40 lakh be invested in only one type of an HDFC Equity Fund or it doesn't make sense that in HDFC as well you could recommend two or three funds to break-up his equity portfolio?

A: That's a very valid question. But if I look at the HDFC Equity Fund by itself, it's a multi-cap fund. We are not concentrating on any particular segment or any particular capitalization. So the fund manager has the liberty to actually invest across the industry. It's more of a diversified kind of a portfolio.

Secondly, each fund in itself also has a number of stocks. If they have about 50 companies that they are investing into, that's well enough a diversification.

For the sake of convenience, and it's anyway is an STP, everyday the money will get transferred. Lot of transactions will happen at the end of one year.

If you look at the statement, there will be 240 transactions because it's 20 working days a month, so there will be 240 transactions in one statement and then multiply it by two or three schemes, it just becomes too much of paperwork.

Fix your goals before investing in stock market: Uday Dhoot

Below is the verbatim transcript of the interview

Q: Many people begin investing without having any real objective. How important is it to invest with financial goals in mind? Does it change in any way, your asset allocations or what kind of return anyone could make?

A: Investing without a goal is like shooting in the dark. Many people come to financial markets chasing the hot assets, chasing the returns but never look at what they really want from themselves. So, I think the first and the most important thing that goals help you in doing is that goals help you avoid bad investment decisions.

If you have put down your goals, the first thing that you do when you are looking at financial instruments or savings is that whenever somebody comes and tells you that - should you be investing in this product, will it help you achieving your goals. If not then this product is not for you. So, that is the most important thing that financial goals help you to figure out.

Apart from that, there are three other important reasons of how financial goals can help you in your investment decision making. First and by far the more important one of it is that it tells you the kind of risk appetite that you have. People very often have certain goals but the goals and the kind of savings that they do are not linked to the kind of risks that they are willing to take. That is where it helps you.

Secondly, it helps you to decide the kind of asset allocation that you should be going for. Let's say a particular individual can save Rs 10,000 a month, he is not willing to take risk with that investment and let's say that particular value grows at 8%. Now, at 8%, the value can grow to a certain amount during the investment horizon. Now, if investor's goal is higher than that then he has to obviously take higher amounts of risk. So, not only does it tell you what is the kind of risk appetite you have, it also tells you how your asset should be distributed.

Also Read: Why should you prefer SIP than equity funds?   

Finally, it helps you in the emotional aspect of investing. People are very emotional. We are always driven by either greed or fear. Let me relate a story from 2007. Many people in 2007 had more money in their corpus, in their savings than they needed for their retirement but because of the way market were, people were very bullish and they wanted to basically hold on.

If at the same time you had a corpus target, if you know you need Rs 2 crore for retirement and you saw that your assets were higher than Rs 2 crore, you would have then not risked anymore or you would have at least partially booked your profits. So, if this is how you think about your investments where you have a goal linked to your savings, it helps you to take a decision as to when is a good time to get out of your investments.

How should you go about this whole process of framing goals for your investments? Framing goals is basically asking four simple easy questions to yourself. The first question - is what is this goal that you are talking about? Is this a goal of going for a holiday six months down the line, is it a goal of buying a car three years down the line or is it a goal of retiring after 20 years? So, the goals could be of different types. It could be a short term goal, it could be a long term goal. So, first what you need to decide is that what is this goal that you are aiming.

Secondly, you need to figure out if you are going to use up or basically plan for this goal what is the kind of money that you are willing to spend on that goal. You need to figure that value as of today. So, if you were to plan for your kid's education and if you were to send him for an engineering education, that would cost you Rs 10 lakh today. If this goal is due 10 years from now then possibly you will need Rs 20 lakh. So, you need to start saving for that goal doing calculations on Rs 20 lakh and not on Rs 10 lakh. That is the second thing that you need to ask yourself.

The third thing that you need to ask yourself is that - how much are you currently saving towards this goal? This is very important because that gives you a real picture of where you should be and where you are. So, these are the three-four important things that you need to ask yourself to figure out whether you are progressing towards your goal or you are not progressing towards your goal. We are very certain that having goals, financial objectives towards your investments will definitely help you reap better investment decisions from your savings.

Best Dividend Stocks For 2014

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of natural gas company ONEOK (NYSE: OKE  ) jumped 21% today after announcing a spin-off.

So what: The company is spinning off its natural gas distribution business in an effort to build more focused companies. Investors will maintain their shares in ONEOK and get a stake in the new company through a stock dividend. The exact dividend distribution has not yet been determined and management expects to close the deal in the first quarter of next year.  

Now what: The move is expected to allow ONEOK to pay a higher payout after the deal is complete, which may attract dividend investors. This is essentially a move to unlock value in the stock, which has traded to a discount to rivals. This doesn't change the fundamental investment thesis but, for investors looking into either the pipeline or the utility side, it gives the option for a focused investment instead of the diverse company ONEOK had become.  

Best Dividend Stocks For 2014: Waste Management Inc.(WM)

Waste Management, Inc., through its subsidiaries, provides waste management services to residential, commercial, industrial, and municipal customers in North America. It offers collection, transfer, recycling, and disposal services. The company also owns, develops, and operates waste-to-energy and landfill gas-to-energy facilities in the United States. Its collection services involves in picking up and transporting waste and recyclable materials from where it was generated to a transfer station, material recovery facility, or disposal site; and recycling operations include collection and materials processing, plastics materials recycling, and commodities recycling. In addition, it provides recycling brokerage, which includes managing the marketing of recyclable materials for third parties; and electronic recycling services, such as collection, sorting, and disassembling of discarded computers, communications equipment, and other electronic equipment. Further, the company e ngages in renting and servicing portable restroom facilities to municipalities and commercial customers under the Port-o-Let name; and involves in landfill gas-to-energy operations comprising recovering and processing the methane gas produced naturally by landfills into a renewable energy source, as well as provides street and parking lot sweeping services. Additionally, it offers portable self-storage, fluorescent lamp recycling, and medical waste services for healthcare facilities, pharmacies, and individuals, as well as provides services on behalf of third parties to construct waste facilities. The company was formerly known as USA Waste Services, Inc. and changed its name to Waste Management, Inc. in 1998. Waste Management, Inc. was incorporated in 1987 and is based in Houston, Texas.

Advisors' Opinion:

• [By Sam Collins]

  Houston-based Waste Management Inc. (NYSE: WM) is the largest trash hauling/disposal company in the United States. This company is a model for steady growth with earnings increasing steadily over many years.?

  S&P has a "four-star buy" on WM with a 12-month target of $42. WM pays an annual dividend of $1.36 for a yield of 3.7%.?

  Technically, the stock is in a powerful bull channel with support at $36 and resistance at $39. Buy WM as a long-term growth opportunity.

• [By Jonas Elmerraji]

  Investors think Waste Management (WM) is a garbage stock right now. Why else would WM's short interest ratio hover around 12.6? Of course, Waste Management is in fact a garbage stock of sorts -- it is the largest waste management service provider in the country. The firm boasts more than 270 landfills and a massive fleet of trash collection vehicles that spans the U.S.

  When I think garbage firms, the first thing that comes to mind is dividends: WM and its peers historically have generous, recession-resistant dividend payouts. Currently, Waste Management's yield adds up to 3.36% annually. Don't forget, dividends are like kryptonite to short sellers.

  WM's willingness to embrace innovation has big potential in the years ahead. Right now, the firm's portfolio includes 22 waste-to-energy plants that are designed to turn the waste that WM literally gets paid to collect into renewable energy that the firm gets paid for again. At this point, the firm's energy plants make up a very small part of its total business, but waste-to-energy projects and the recent acquisition of small oil service firms should look attractive to investors right now.

  Earnings in two months look like the next big catalyst for a short squeeze in WM.

• [By Tom Konrad]

  The only household name in this year's list, Waste Management is coming back for an encore performance in 2013.  WM is the North American leader in recycling and renewable biogas among waste and environmental services companies.  The industry has been in a cyclical downturn, and WM's well-covered 4.2% dividend makes it a solid anchor for this portfolio of small and micro-cap clean energy stocks.

Best Dividend Stocks For 2014: Snap-On Incorporated(SNA)

Snap-on Incorporated provides tools, equipment, diagnostics, repair information, and systems solutions for professional users. Its products include hand tools, such as wrenches, screwdrivers, sockets, pliers, ratchets, saws and cutting tools, pruning tools, and torque measuring instruments; power tools, including pneumatic, hydraulic, cordless, and corded tools; and tool storage products comprising tool chests, roll cabinets, and tool control systems. The company?s diagnostics and repair information products include handheld and PC-based diagnostics products, service and repair information products, diagnostic software solutions, electronic parts catalogs, business management systems, business services, point-of-sale systems, integrated systems for vehicle service shops, original equipment manufacturer purchasing facilitation services, and warranty management systems and analytics to manage and track performance. Snap-on Incorporated?s equipment products comprise solutions for the diagnosis and service of automotive and industrial equipment, such as wheel alignment, collision repair, air conditioning service, brake service, fluid exchange, transmission troubleshooting, and safety testing equipment, as well as wheel balancers, tire changers, vehicle lifts, test lane systems, battery chargers, and hoists. The company also provides financial services, including business loans and vehicle leases to franchisees; loans to the franchisees? customers; and loans to its industrial and other customers for the purchase of tools, equipment, and diagnostics products. Snap-on Incorporated sells its products and services through mobile vans, franchisees, company-direct sales, distributors, and the Internet in approximately 130 countries, including the United States, the United Kingdom, Canada, Germany, Australia, France, Japan, Spain, Italy, Sweden, the Netherlands, Argentina, China, and Brazil. Snap-on Incorporated was founded in 1920 and is based in Kenosh a, Wisconsin.

Best Dividend Stocks For 2014: Paychex Inc.(PAYX)

Paychex Inc., together with its subsidiaries, provides payroll, human resource, and benefits outsourcing solutions for small-to medium-sized businesses in the United States and Germany. It offers payroll processing services, including calculation, preparation, and delivery of employee payroll checks; production of internal accounting records and management reports; preparation of federal, state, and local payroll tax returns; and collection and remittance of clients? payroll obligations. The company also provides payroll tax administration services; employee payment services; and regulatory compliance services, such as new-hire reporting and garnishment processing. Its human resource outsourcing services include payroll, employer compliance, human resource and employee benefits administration, risk management outsourcing, and the on-site availability of a professionally trained human resource representative, as well as provides employee handbooks, management manuals, and r equired regulatory forms. In addition, the company offers retirement services administration; workers? compensation; business-owner policies; commercial auto; and health and benefits coverage, including health, dental, vision, and life. Further, it provides online human resource administration software products for employee benefits management and administration, and time and attendance solutions. As of May 31, 2010, the company served approximately 536,000 clients in the United States; and 1,700 clients in Germany. Paychex, Inc. was founded in 1971 and is headquartered in Rochester, New York.

Best Dividend Stocks For 2014: Cellcom Israel Ltd.(CEL)

Cellcom Israel Ltd. provides cellular communications services in Israel. It offers basic and advanced cellular telephone services, text and multimedia messaging services, and advanced cellular content and data services. The company?s basic cellular telephony services include voice mail, cellular fax, call waiting, call forwarding, caller identification, collect call, conference calling, ?Talk 2?, additional number services, and collect call services; and outbound and inbound roaming services. It also provides value-added services comprising Cellcom volume that includes downloadable content, such as music, games, on-net-reality programs, drama series, and video games; SMS and MMS services to send and receive text, photos, multimedia, and animation messages; access to third party application providers for notification of roadway speed detectors, mange vehicle fleets, and enable subscribers to manage and operate time clocks and various controllers for industrial, agricultural , and commercial purposes; video calls to communicate with each other through video applications; zone services for calls initiated from a specific location; location-based services; voice-based information services; text-based information services and interactive information services, including news headlines, sports results, and traffic and weather reports; and data services to access handsets, cellular modems, laptops, tablets, and cellular routers, as well as Internet based payment services. In addition, the company sells handsets, modems, routers, tablets, and laptops, as well as provides repair and replacement services; and offers landline telephony, transmission, and data services through its approximately 1,500 kilometers of inland fiber-optic infrastructure and complementary microwave links to selected business customers. As of March 31, 2011, it provided its services to approximately 3.395 million subscribers. The company was founded in 1994 and is headquartered in Netanya, Israel.

Advisors' Opinion:

• [By Richard Band]

  Cellcom Israel (NYSE: CEL), Israel's largest wireless carrier with 34% of the market, just declared its first quarterly dividend for 2011 — the equivalent of 85.7 cents (U.S.) per share. Annualized, that works out to a super-sweet yield of almost 11%!

  CEL hands over virtually all its profits to shareholders as dividends, so there's a chance the company may have to trim the payout in future quarters if business hits a speed bump. On the other hand, this "pay it all out" policy (similar to the approach taken by most U.S. master-limited partnerships) imposes rigorous capital allocation discipline on management. In short, Cellcom execs don't waste money.

  Buy dividend stock CEL on a pullback below $33.

Buying Stocks on Sale

In 1998, Warren Buffett (BRK.B) spoke to a group of students at the University of Florida as part of the Graham-Buffett Teaching Endowment, which was set up by renowned investor (and UF graduate) Mason Hawkins. During that speech, Warren was asked a question about where the market was headed and responded with the following (bold added for emphasis; sorry for the length, but it's needed to get the point across):

"I have no idea where the market is going to go. I prefer it going down. But my preferences have nothing to do with it. The market knows nothing about my feelings. That is one of the first things you have to learn about a stock. You buy 100 shares of General Motors (GM). Now all of a sudden you have this feeling about GM. It goes down, you may be mad at it. You may say, "Well, if it just goes up for what I paid for it, my life will be wonderful again." Or if it goes up, you may say how smart you were and how you and GM have this love affair. You have got all these feelings. The stock doesn't know you own it. The stock just sits there; it doesn't care what you paid or the fact that you own it.

Any feeling I have about the market is not reciprocated. I mean it is the ultimate cold shoulder we are talking about here. Practically anybody in this room is probably more likely to be a net buyer of stocks over the next ten years than they are a net seller, so every one of you should prefer lower prices. If you are a net eater of hamburger over the next ten years, you want hamburger to go down unless you are a cattle producer. If you are going to be a buyer of Coca-Cola (KO) and you don't own Coke stock, you hope the price of Coke goes down. You are looking for it to be on sale this weekend at your Supermarket. You want it to be down on the weekends not up on the weekends when you tend the Supermarket. The NYSE is one big supermarket of companies. And you are going to be buying stocks, what you want to have happen? You want to have those stocks go down, way down; you will make better buy! s then…

We want things to go down, but I have no idea what the stock market is going to do. I never do and I never will. It is not something I think about at all. When it goes down, I look harder at what I might buy that day because I know there is more likely to be some merchandise there to use my money effectively in."

For the people who read my articles, you are probably starting to notice a pattern: I tend to write about things that are pretty straightforward ("Buy great companies you can understand? Wow, this Science of Hitting guy is really going out on a limb…"). The reason I do so is quite simple: most of us aren't looking to simply maximize our profits (despite what academia might think); in reality, we are looking for a risk-averse way to build our life savings at an attractive rate of return. For the great majority of people, an intelligent investment strategy that focused on buying great companies when they were attractively priced would generate returns that were more than satisfactory.

The problems often come from two issues: people love buying speculative stocks (which almost always have years of stellar growth priced in), and they hate the idea that stock prices might go lower, which causes them to do all sorts of "interesting" things (for lack of a better word). For now, let's skip point number one, and jump to the second issue, which is the focus of Warren's comments.

As far as I can tell, most people love cheap stuff; that's why the best day for retail in the United States involves waking up at some ungodly hour to save on anything from toaster ovens to wrenches. In addition, you would be hard pressed to find someone who hasn't been happy with the influx of flat screen TV's and their continued drop in price over the past couple of years (besides the people who make them). Yet when it comes to partial ownership of a business, and a chance to buy a series of future cash flows, people freak out when they get the opportunity to add to ! their pos! ition when the market decides to go on clearance.

If you need the money next week, this makes sense; but as Warren notes, if you're a net buyer over the coming years, you should PREFER lower prices, not abhor them. As I discussed the other day, you don't have to worry about clients taking their money back like investment managers do; so why should it bother you that a company has diverged slightly further from its intrinsic value since the last time the Earth made a full rotation? The reality is that it shouldn't; you should be ecstatic that the market is willing to sell you more of company X at a price below what you thought was a good value last week, last month, or last year.

The other part of Warren's comments that I want to discuss is where he talks about the market as a whole, saying the following:

"I have no idea what the stock market is going to do. I never do and I never will. It is not something I think about at all."

Again, this is very instructive: one of the greatest investor's of all time tells you that he doesn't think about the future of the stock market AT ALL, yet everybody and their brother has an opinion on where the market is going (look at Barron's most recent cover story about Dow 15,000).

This brings me back to my original argument: most of us are simply looking for an attractive rate of return. One way to achieve that goal for the novice investor is to buy great businesses when they are attractively priced on simple metrics like price-to-cash flow, regardless of the macro picture or the outlook for the market as a whole. This strategy would be difficult for some, because it involves avoidance of the hot areas like cloud computing and solar energy, and instead focuses on boring companies with consistent free cash flow generation and year after year of intrinsic value growth.

More importantly, it involves the conviction to keep buying even when the future is unknown; rather than blind faith, this is a realization that ce! rtain com! panies have had attractive business results decade after decade for a reason, and will position themselves accordingly to make sure that regardless of any setbacks, they emerge from the depths of recession in one piece. For the investor who finds these companies and buys them when they go "way down" (as Warren says), they are positioning themselves to achieve their financial goals over time; in the words of Mr. Buffett, "time is the enemy of the poor business and the friend of the great business".

Mason Hawkins of Longleaf Funds Answering Investing Questions Now

GuruFocus welcomes renowned investor Mason Hawkins for an interview in which he will be answering readers' questions. To ask your question, post it in the comments section below.

Mason Hawkins is chairman and chief executive officer of Southeastern Asset Management Inc., an investment advisory firm with $34 billion in assets under management. At Southeastern, he and his team seek to achieve long-term absolute returns with minimum risk in their portfolio of 18-22 businesses, focused on their best ideas.

These are Southeastern's long-term beliefs:

- Long-term investment horizon provides opportunity for "time horizon arbitrage."
- In-depth, conservative business appraisals underpin all decisions.
- Stock price volatility offers opportunity.
- Margin of safety determines entry and exit limits based on price-to-value ratio (P/V).
- "Cheap" is not enough – sustainable competitive advantages that lead to value growth are equally critical.
- Corporate management's capability, incentives, and business decisions greatly impact our outcome.
- Concentrating in the 18-22 most qualified opportunities adequately diversifies, reduces risk, and improves return.
- Bottom-up, benchmark agnostic portfolio construction enables superior returns by owning only the highest quality, most discounted businesses.

Mason aims for a target return each year of 10% or more plus inflation. Since inception, his fund has beat the S&P 500 1186.85% to 729.75%, but more recently lagged, losing 5.64% compared to a gain of 5.45% of the S&P 500 in the last year.

In addition, he uses a valuation metric called the "price-to-valuation" ratio to measure the value of a company compared to the price the market has placed on it.

Holdings

Southeastern is the largest shareholder of Chesapeake Energy (CHK), the embattled energy company whose CEO drew criticism earlier this year for controversial business practices. Hawkins, along with investor Carl Icahn, have! since pushed for and achieved significant changes at the company. They now believe that the company has the best board they have seen, along with the best physical assets they have owned, which makes them enthusiastic about keeping CHK as a core fund holding.

Company

Dell Inc. (DELL)

Chesapeake Energy (CHK)

DirecTV (DTV)

Loews (L)

Walt Disney (DIS)

Aon Plc (AON)

The Travelers Companies (TRV)

Level 3 Communications (LVLT)

FedEx (FDX)

Bank of New York Mellon (BK)

Learn more about Mason and his views on the present economy in his second-quarter letter here. See his portfolio here.

To ask Mason your investing question, post it in the comments section below. We'll be publishing the answers soon.

Related links:Portfolio hereCarl IcahnSecond-quarter letter here

How the Fed's QE Taper May Trigger the Next Financial Crisis

Pete Marovich/Bloomberg via Getty ImagesFederal Reserve Chairman Ben Bernanke More than five years after the financial crisis began, many on Wall Street, Main Street and in government at all levels agree there's still much to be done to get the U.S economy back on track. Yet even the improvements we've already achieved could be derailed by a looming worldwide financial crisis -- a crisis caused by the very economic stimulus policies put in place by the Federal Reserve to help the U.S. get out of its dire economic straits. At least, that's the warning coming from economist Stephen Roach, senior fellow at Yale University's Jackson Institute for Global Affairs.

Best Stocks To Buy For 2014

It doesn't take long for a biotech bull market to gain weight...

 

For the past year, Stansberry & Associates has highlighted one of the greatest bull markets you don't hear about... which is the huge uptrend in biotechnology stocks.

 

Regular readers know that we consider biotech to be one of the greatest "boom and bust" sectors in the market. With its promise of individualized medicine, cancer cures, and miracle drugs, few sectors capture imaginations and speculative money as well as biotechnology.

 

As Steve Sjuggerud says, "If you catch just one biotech bull market in your lifetime, you may never have to work again."

Best Stocks To Buy For 2014: Intevac Inc.(IVAC)

Intevac, Inc. provides process manufacturing equipment solutions to the hard disk drive industry, and process manufacturing equipment and inspection solutions to the photovoltaic industry. The company operates in two segments, Equipment and Intevac Photonics. The Equipment segment designs, develops, and markets magnetic disks; hard disk drive equipment products, including disk sputtering and disk lubrication systems; technology upgrades; and spare parts and consumables, as well as installation, maintenance, and repair services. This segment also offers capital equipment for the photovoltaic solar manufacturing industry. The Intevac Photonics segment develops, manufactures, and sells digital-optical products for the capture and display of low-light images and materials identification used in military aircraft, ground vehicles, ground soldier head-mounted, and weapon-mounted applications. This segment also provides sensors, cameras, and systems for military applications; Ram an spectrometer table-top and handheld systems for use in forensics, homeland security, geology, gemology, medical, pharmaceutical, and industrial quality assurance applications; and low-light cameras for industrial inspection, bio-medical, and scientific applications. The company sells its products through direct sales force, system integrators, distributors, and value added resellers in the United States, Asia, Europe, and rest of world. Intevac, Inc. was founded in 1990 and is headquartered in Santa Clara, California.

Advisors' Opinion:

• [By Roberto Pedone]

  Intevac (IVAC) provides process manufacturing equipment solutions to the hard disk drive industry and high-productivity process manufacturing equipment and inspection solutions to the photovoltaic industry. This stock closed up 8.5% to $6.74 in Tuesday's trading session.

  Tuesday's Range: $6.23-$6.75
  
  52-Week Range: $4.06-$6.80
  
  Tuesday's Volume: 263,000
  
  Three-Month Average Volume: 140,032

  From a technical perspective, IVAC soared higher here right off some near-term support at $6.25 with above-average volume. This stock has been uptrending strong for the last three months, with shares moving higher from its low of $4.31 to its recent high of $6.80. During that move, shares of IVAC have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of IVAC within range of triggering a major breakout trade. That trade will hit if IVAC manages to take out its 52-week high at $6.80 with high volume.

  Traders should now look for long-biased trades in IVAC as long as it's trending above some near-term support levels at $6.25 or at $5.92 and then once it sustains a move or close above its 52-week high at $6.80 with volume that hits near or above 140,032 shares. If that breakout hits soon, then IVAC will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are its next major overhead resistance levels at $8 to $8.37. Any high-volume move above those levels will then put $9 to $9.36 within range for shares of IVAC.

Best Stocks To Buy For 2014: Comfortdelgro Corporation Ltd (C52.SI)

ComfortDelGro Corporation Limited, an investment holding company, operates as a land transport company. It provides public bus and charter bus services; rail services; motor vehicle evaluation and other related services; public taxi services through the rental of taxis to hirers; car rental, care, and leasing services; advertising services; taxi booking management services; vehicle inspection and other related services; vehicle testing and consultancy services; professional inspection and automotive engineering services; inter-city bus services; taxi insurance; coach services; private hire services; crash repair services; and bus station services. The company also operates driving schools; and workshops for repairing, servicing, and the general maintenance of motor vehicles. In addition, it rents buses to hirers and provides related services; operates as a dealer in diesel for motor vehicles; distributes motor vehicles; trades automotive parts; constructs specialized vehic les and assembles bus bodies; and provides and manages taxi booking card facilities. It operates in Singapore, Ireland, the United Kingdom, Australia, China, Vietnam, and Malaysia. As of February 13, 2012, the companyÂ's fleet consisted of 46,329 buses, taxis, and rental vehicles. ComfortDelGro Corporation Limited is headquartered in Singapore.

Best Stocks To Buy For 2014: Rackspace Hosting Inc(RAX)

Rackspace Hosting, Inc. operates in the hosting and cloud computing industry. It provides information technology (IT) as a service, managing Web-based IT systems for small and medium-sized businesses, as well as large enterprises worldwide. The company?s service suite includes dedicated hosting comprising customer management portal and other management tools that manage data center, network, hardware devices, and operating system software; and cloud computing that enables customers to provide and manage a pool of computing resources, as well as delivery of computing resources to business when they need them. It offers cloud servers, cloud files, and cloud sites, as well as cloud applications, such as email, collaboration, and file back-ups; and hybrid hosting that provides a combination of dedicated hosting and cloud computing services. The company also offers customer support services. It sells its service suite through direct sales teams, third-party channel partners, an d online ordering. The company was formerly known as Rackspace.com, Inc. and changed its name to Rackspace Hosting, Inc. in June 2008. Rackspace Hosting, Inc. was founded in 1998 and is headquartered in San Antonio, Texas.

Advisors' Opinion:

• [By Sherry Jim]  

  This computing specialist that provides web-based IT systems has soared 60%+ in the past year.  With a P/S above 3 and Price to Cash of 10 this stock is poised to continue to soar and outperform it's peers. $25 in a year is a realistic bet.

Campus Crest Forms JV to Enter Canada - Analyst Blog

Campus Crest Communities Inc. (CCG) – a real estate investment trust (REIT) recently disclosed a joint venture (JV) with Beaumont Partners SA for foraying into the Montréal Student Housing Market. The JV purchased the 33-story Delta Centre-Ville Hotel in downtown Montréal, Québec for approximately $60 million. The move comes as part of its efforts to expand its operational footprint.

The JV plans to convert the hotel into a student housing tower and seek redevelopment financing later this year. The renovation is scheduled to be accomplished by the fall of 2014 with leasing to commence in the fall of 2013. Campus Crest, which currently has a 20% stake in the JV, has made the purchase at a discount to the replacement cost.

Advantageously positioned above the Square-Victoria Metro Station stop, this property enjoys easy access to the McGill University, Concordia University and L'École de Technologie Supérieure - a part of the Université du Québec network - serving over 81,500 full-time students. As per the JV, Campus Crest will serve as a property manager.

We expect this JV acquisition to be a strategic fit for the company, given the property's premium location. Moreover, this project in Canada represents Campus Crest's second urban, high-rise development, the first being a JV to develop a 33-storied student housing tower in University City, Philadelphia. This 850-bed facility is slated to be completed in the fall of 2014.

Campus Crest, which currently has a Zacks Rank # 2 (Buy), is a developer, builder, owner and manager of high-quality, purpose-built student housing properties located close to campuses in targeted U.S. markets. The company rents student housing properties, offers student housing services and provides construction, development and management services.

A number of other REITs that are also performing well and deserve look are Avalonbay Communities Inc. (AVB), Camden Property Trust (CPT) and Essex Property Trust Inc. (ESS). All these sto! cks carry a Zacks Rank # 2.

Best Penny Stocks To Buy For 2014

The Elmwood Park, NJ-based specialty packaging service provider has long-term estimated earnings per share growth rate of 12.9%. Average volume of shares traded over the last three months is approximately 1913K.

What’s Driving Sealed Air Up?

Sealed Air reported first-quarter 2013 adjusted net earnings from continuing operations of 17 cents per share, up 6% from the year-ago earnings of 16 cents per share but a penny short of the Zacks Consensus Estimate.

Although earnings missed estimates, Sealed Air declared an improved outlook for full year 2013. The company expects adjusted earnings in the range of $1.10 to $1.20 per share on net sales of $7.7â€"$7.9 billion. Furthermore, adjusted EBITDA is expected in the range of $1.01â€"$1.03 billion.

Best Penny Stocks To Buy For 2014: Information Services Group Inc.(III)

Information Services Group, Inc. operates as a fact-based sourcing advisory company principally in the Americas, Europe, and the Asia Pacific. It provides strategic consulting, benchmarking and analytics, managed services, and research services with a focus on information technology, business process transformation, and enterprise resource planning. The company serves financial services, telecom, healthcare and pharmaceuticals, manufacturing, transportation and travel, and energy and utilities industries; and state and local governments and airport and transit authorities. Information Services Group, Inc. was founded in 2006 and is based in Stamford, Connecticut.

Advisors' Opinion:

• [By Peter Leeds]

  According to The Washington Post over $1.8 trillion dollars is sitting idle in America's corporations.  The original reasons companies were hoarding cash, such as economic uncertainty and European debt contagion fears, are beginning to take a back seat to growth plans.  These companies (such as Microsoft with $40 billion cash, Caterpillar with $3 billion, Exxon at $11 billion, etc...) will look to use their cash to capture market share and expand.  I'm expecting this increased spending to result in a mild improvement in the unemployment rate, pushing it down from 9% to 7.5% in 2012. 

  A consulting firm like Information Services Group (III) will be one of the primary beneficiaries of increased corporate activity.  They have top clients from a broad range of industries, such as financial services, manufacturing, health care, energy, and more.  With the majority of their clientele increasing spending, a portion of those funds will find their way to III.  The Peter Leeds price outlook:  $2.40.

Best Penny Stocks To Buy For 2014: Bristow Group Inc (BRS)

Bristow Group Inc., together with its subsidiaries, provides helicopter services to the offshore energy industry primarily in Europe, West Africa, North America, Australia, and internationally. Its helicopters are used principally to transport personnel between onshore bases and offshore platforms, drilling rigs, and installations, as well as to transport time-sensitive equipment to offshore locations. The company also offers helicopter flight training services to commercial pilots and flight instructors through its Bristow Academy with facilities in Titusville, Florida; Concord, California; New Iberia, Louisiana and Gloucestershire, England. In addition, it provides military training; and helicopter repair, engineering support, aircraft leasing, airport management, and search and rescue services. Bristow Group provides its helicopter services to integrated, national, and independent oil and gas companies. As of March 31, 2011, it operated a fleet of 569 aircraft. The comp any was founded in 1969 and is based in Houston, Texas.

Best Penny Stocks To Buy For 2014: (LTUM)

Lithium Corporation, an exploration stage company, engages in the identification, acquisition, and exploration of metals and minerals with a focus on lithium mineralization in Nevada. It holds interests in Fish Lake Valley property that covers approximately 7,360 acres located in west central Nevada in northern Esmeralda County; Salt Wells property, which covers approximately 8,500 acres in Churchill County; and Cortez property that consists of approximately 4,960 acres located in Lander County, Nevada. The company was formerly known as Utalk Communications Inc. and changed its name to Lithium Corporation in September 2009. Lithium Corporation was founded in 2007 and is based in Reno, Nevada.

Advisors' Opinion:

• [By CRWE]

  Today, LTUM has shed (-19.80%) down -0.0079 at $.0320 with 33,100 shares in play thus far (ref. google finance Delayed: 11:18AM EDT June 26, 2013), but don’t let this get you down.

  Location Based Technologies, Inc. previously reported it received FCC and IC certification for its versatile LBT-886 device. These certifications are necessary before devices can be sold to consumers throughout the US and Canada.

  Lithium Corporation previously reported it has recently acquired a new Graphite (BC Sugar) prospect in the Shuswap area of British Columbia, in an under-explored area. In addition to the acquired claim, Lithco has also staked another four claims, to bring the total area to be explored by the Company to 3,405.77 acres (1,378.27 hectares). Although graphite has been identified locally in marbles, it has become apparent that graphite is also hosted here in quartz, biotite/mica gneisses, and also in calc-silicate gneisses. The host rocks at BC Sugar are similar to the host rocks in the area of the Crystal Graphite deposit 55 miles (90 kms) to the Southeast, where Lithium Corporation holds the Mt Heimdal block of claims.

Best Penny Stocks To Buy For 2014: (POSC)

Positron Corporation operates as a molecular imaging company providing nuclear medicine technologies and services that are used in the field of nuclear cardiology. The company, through its proprietary PET imaging systems and radiopharmaceutical solutions, enables healthcare providers to accurately diagnose disease, and improve patient outcomes while practicing cost effective medicine. Its proprietary product lines and services include the Attrius, a dedicated PET imaging system; PosiStar, a clinical, technical, and service customer care plan; and PosiRx, a system that automates the elution, preparation, and dispensing processes for radiopharmaceutical agents used in molecular imaging. The company was founded in 1983 and is headquartered in Fishers, Indiana.

Advisors' Opinion:

• [By Dennis Slothower]

  Positron Corp. (OTC: POSC)is up 2.50% to $0.0410 on volume of over 518K shares. POSC, a molecular imaging company specializing in the field of nuclear cardiology, announced that it will beexhibitingat the European Society of Cardiology International Conference. (OTC:POSC), (POSC)

Best Penny Stocks To Buy For 2014: Pinnacle Data Systems Inc.(PNS)

Pinnacle Data Systems, Inc. provides electronics repair and reverse logistics, ODM and OEM integrated computing services, and embedded computing products and design services for the computing, telecommunications, imaging, defense/aerospace, medical, semiconductor, and industrial automation markets in the United States and internationally. The company provides various engineering and manufacturing services to OEMs requiring custom product design, system integration, repair programs, warranty management, and/or specialized production capabilities. Its product capabilities range from board-level designs to fully integrated systems specializing in long-life computer products and customer-centric solutions. The company also operates as a software dealer and distributor. Pinnacle Data Systems, Inc. was founded in 1989 and is headquartered in Groveport, Ohio.

Best Penny Stocks To Buy For 2014: Gold Reserve Inc(GRZ)

Gold Reserve Inc., an exploration stage company, engages in the acquisition, exploration, and development of mining projects. The company was founded in 1956 and is based in Spokane, Washington.

Advisors' Opinion:

• [By Louis Navellier]

  Another exploration-stage mining company making the list is Gold Reserve Inc. (AMEX: GRZ), which has gained 18% in the last six months and 69% in the last 12 months. Buy this stock as it trades near its 52-week high of $1.95.

Chevron: Mixed 2Q Pre-Earnings Update - Analyst Blog

U.S. energy behemoth Chevron Corporation (CVX) released its second-quarter 2013 interim update, covering the first two months of the quarter. Chevron expects foreign exchange translation effect of $250–$300 million during the quarter.

In the upstream activities, the update is bearish with oil production expected to be significantly below the previous quarter. The price realization for crude oil is expected to decrease as compared to first quarter 2013, both in U.S and abroad. However Chevron's domestic natural gas price realization is expected to go up.

In the downstream sector the outlook is positive for the company with refining margin to increase in the U.S. West Coast and Gulf Coast.

Segmental Analysis

Upstream: The company's oil and natural gas production averaged 2.569 million oil-equivalent barrels per day, down 2.1% from the second-quarter 2012 level. This was mainly due to decreased production volume internationally. Production is also likely to fall 2.9% sequentially.

In the first two months of the June quarter, Chevron's total domestic production was 659,000 barrels of oil equivalent per day (BOE/D) as compared to 664,000 BOE/D in the previous quarter. Net international oil equivalent production – at 1,910,000 BOE/D – was 71,000 barrels per day less than the first quarter of 2013. The decrease was due to soft demand in Thailand coupled with maintenance work in Nigeria and planned shutdown activities in Australia and Kazakhstan.

The U.S. crude price realizations during Apr–May 2013 averaged $93.08 per barrel, down from $94.49 in first-quarter 2013, while international realizations decreased by $9.34 to $93.01 per barrel. Chevron's domestic realized natural gas prices for this period averaged $3.83 per thousand cubic feet (Mcf), compared with $3.11 in the first quarter of 2013. Average international natural gas realizations were down 11 cents per Mcf to $5.96.

Downstream: Regarding downstream operations, the second-largest U! .S. oil company by market value after Exxon Mobil Corporation (XOM) said that its domestic refinery crude-input rose 183,000 barrels per day as compared to the previous quarter. The results were aided by the restart of a refinery crude unit in Richmond, CA, along with the finishing of maintenance work of the Pascagoula, MS-based refinery.

Refinery crude-input volumes outside the U.S. were also up (by 40,000 barrels per day) during the same period due to the completion of maintenance of refineries based in Burnaby, Canada and Cape Town, South Africa.

The second-quarter refining margins increased 86 cents per barrel sequentially on the U.S. West Coast and by 81 cents per barrel on the Gulf Coast.

Second Quarter Estimate

Chevron plans to release its quarterly results on Aug 2, 2013, before the opening bell. The Zacks Consensus Estimate for Chevron's first quarter is $3.00 per share.

Zacks Rating

Chevron currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

However, there are certain firms in the energy sector that are expected to significantly outperform the equity markets in the next one to three months. These include InterOil Corporation (IOC) and Ferrellgas Partners LP (FGP). Both these stocks carry a Zacks Rank #1 (Strong Buy).

National Grid Down to Strong Sell - Analyst Blog

Zacks Investment Research downgraded National Grid plc (NGG) to a Zacks Rank #5 (Strong sell) on Jul 5, 2013.

Why the Downgrade?

Shares of National Grid have dipped roughly 6.3% since the company reported its fiscal year 2013 (ended Mar 31 2013) results on May 16. Adjusted net earnings, in local currency, increased roughly 12% year over year on the back of 4% increase in revenue.

Talking of expenses/income, increase of 3% in operating costs, 4% decline in financial income and 20% increase in tax expense restricted bottom-line growth. To add to this peril, long-term borrowings at the end of 2013 represented a year-over-year increase of 20%. Net cash flow generated from operating activities dipped 11% year over year.

In the last 60 days, the Zacks Consensus Estimate for National Grid has gone down by 6.1% to $4.00 for fiscal year 2014 and declined 10.3% to $4.26 for fiscal year 2015. Also, we have an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of -1.0% and -2.1% for fiscal years 2014 and 2015, respectively.

Other Stocks to Consider

National Grid is is a well-renowned company engaged in transmission and distribution of electricity and gas to its residential, commercial, and industrial customers. The company currently has a $42.3 billion market capitalization.

Other stocks to watch out for in the industry are Companhia Paranaense de Energia (ELP) and Integrys Energy Group, Inc. (TEG), each with a Zacks Rank #1 (Strong Buy) while The AES Corporation (AES) with a Zacks Rank #2 (Buy).

VelocityShares Rolls Out Risk-Weighted ETF (ERW)

Stocks responded with a last hour sell-off to yesterday's FOMC announcement, yet again signaling uncertainty about how the expected stimulus reduction will actually impact equity markets. Looking ahead, major U.S. indexes still have an opportunity to climb to all-time highs before the end of the week as Friday's monthly employment data may offer the much-needed catalyst to propel the S&P 500 Index to 1,700 and beyond .

Amid the ongoing euphoria on Wall Street, VelocityShares expanded its lineup with an intriguing "risk-weighted" ETF on Thursday that looks to offer a compelling alternative to traditional market cap-weighted strategies.

VelocityShares Equal Risk Weighted Large Cap ETF (ERW)The new VelocityShares ETF looks to join the growing trend of alternative-weighting methodologies; a corner of the ETF market that has seen impressive growth over the past few years as more and more investors have sought out ways to avoid the inherent nuances of traditional market capitalization-weighted funds .



ERW focuses on U.S. large cap equities from the S&P 500 Index with a twist by employing a unique weighting methodology based on each individual security's risk, rather than its market capitalization. The index behind ERW is powered by a proprietary risk-weighting methodology that measures each stock's risk exposure and then weights it relative to the entire portfolio so that in the end each security contributes an equal level of risk to the entire benchmark. VelocityShares measures the risk of each stock based on a combination of two metrics: historical volatility and each stock's sensitivity to market price variation.

The result is a portfolio that avoids the pitfalls of market cap-weighting while also avoiding the over-simplicity of a "Low Volatility ETF," which takes into account only one measure of risk (historical volatility). ERW is rebalanced quarterly and each component contributes the same level of risk to the basket as a whole .

Meet! the CompetitionThe new VelocityShares ETF is joining a competitive space, the Large Cap Blend Equities ETFdb Category, which is made up of nearly 40 ETFs. Although ERW offers a truly unique approach, it will still face very stiff competition from more established funds that fall under the "Low Volatility" umbrella, including:

PowerShares S&P 500 Low Volatility Portfolio  with $4.7 billion in AUM
iShares MSCI USA Minimum Volatility Index Fund with $2.3 billion in AUMPowerShares S&P 500 Downside Hedged Portfolio with $55 million in AUMFrom a cost perspective, ERW's expense ratio of 0.65% falls towards the more expensive end of the cost spectrum as the category average stands at 0.43%. The new VelocityShares ETF warrants a closer look from anyone looking to steer clear of market-cap weighted equity exposure, but is also wary of the simplified "low volatility" approach.

Follow me on Twitter @SBojinov



Disclosure: No positions at time of writing.

Can 3M Continue This Explosive Run?

With shares of 3M (NYSE:MMM) trading around $112, is MMM an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

3M is a diversified technology company with a presence in the industrial and transportation; healthcare; consumer and office; safety, security and protection services; display and graphics, and electro and communications businesses. 3M manages its operations in six business segments: Industrial and Transportation; Health Care; Consumer and Office; Safety, Security and Protection Services; Display and Graphics, and Electro and Communications. Through its segments, 3M is able to provide essential technology products and services to companies spanning an array of industries worldwide. As a main support system to many companies, look for 3M to see growth as the companies it engages with also grow.

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T = Technicals on the Stock Chart are Strong

Over the last few years, 3M stock has broken above multi-year resistance and is surging higher. The stock is now trading at all-time high prices so it does not see any significant selling zones ahead. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, 3M is trading above its rising key averages which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of 3M options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
3M Options	16.69%	43%	41%

What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
June Options	Flat	Average
July Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on 3M’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for 3M look like, and more importantly, how did the markets like these numbers?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	1.26%	4.78%	8.55%	3.75%
Revenue Growth (Y-O-Y)	1.98%	4.20%	-0.45%	-1.90%
Earnings Reaction	-2.77%	0.18%	-4.1%	2.07%

3M has seen increasing earnings and revenue figures over most of the last four quarters. From these figures, the markets have been mixed about 3M’s recent earnings announcements.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

P = Excellent Relative Performance Versus Peers and Sector

How has 3M stock done relative to its peers, Harsco (NYSE:HSC), Avnet (NYSE:AVT), Newell Rubbermaid (NYSE:NWL), and sector?

	3M	Harsco	Avnet	Newell Rubbermaid	Sector
Year-to-Date Return	20.65%	0.51%	10.16%	26.22%	11.46%

3M has been a relative performance leader, year-to-date.

Conclusion

3M provides technology solutions and services to companies participating in a multitude of industries worldwide. The stock is seeing an explosive move higher which has taken it to all-time high prices. Earnings and revenue figures have been increasing over most of the last four quarters, producing mixed feelings among investors. Relative to its peers and sector, 3M has been a year-to-date performance leader. Look for 3M to OUTPERFORM.

Dubai Shares Climb to Five-Year High Led by Deyaar; Egypt

Dubai stocks rose to the highest since November 2008 as Deyaar Development PJSC (DEYAAR) and Union Properties (UPP) PJSC surged on bets the shares are cheap amid a recovery in property prices in the Persian Gulf tourist hub.

Deyaar, which today said it was holding a press conference Sept. 1 to announce a new project, soared the most since March 2012 as trading volumes climbed to more than 10 times the three-month daily average. Union Properties jumped 15 percent to the highest since January 2010. Dubai's DFM General Index advanced 1.8 percent to 2,748.27 at the close in the emirate.

Today's gains brought this year's advance for Deyaar to 63 percent and for Union Properties to 58 percent. That compares with a surge of 67 percent for Emaar Properties PJSC (EMAAR), the developer of the world's tallest tower, and 69 percent for Dubai's benchmark index. The emirate is benefiting from an economic and real-estate recovery, with apartment prices in Dubai rising 17 percent in June from a year ago and those of villas increasing 12 percent, according to data from Jones Lang LaSalle. House prices had dropped more than 65 percent from a peak in 2008 as the global credit crisis crimped lending.

"These two companies were the laggards of the Dubai market and this is a kind of catch up trade," Sebastien Henin, a portfolio manager at The National Investor, said by phone from Abu Dhabi today. The shares, which are penny stocks and "highly speculative," also broke a "major resistance," which spurred buying by retail investors, he said.

Rate Decision

Deyaar and Union Properties trade at about 0.8 times book value, compared with a multiple of almost 1.2 for Emaar, according to data compiled by Bloomberg. Deyaar soared 15 percent to 57.2 fils, while Union Properties closed at 62.4 fils. There are 100 fils to the dirham.

Emirates NBD PJSC (EMIRATES), Dubai's biggest bank and the largest shareholder in Union Properties, rose 2.7 percent to 5.75 dirhams, the highest since May 20. Air Arabia PJSC (AIRARABI), the Middle East's biggest low-cost carrier, advanced 4.3 percent to 1.45 dirhams, the highest since September 2008.

Abu Dhabi's benchmark index advanced for a fifth day, gaining 0.3 percent, while Oman's measure added 0.2 percent and Egypt's EGX30 increased 0.9 percent.

Saudi Arabia's Tadawul All Share Index lost 0.8 percent, led by Riyadh-based Al Rajhi Bank (RJHI), which declined 1.3 percent. Kuwait's measure fell 0.4 percent, Qatar's 0.3 percent and Bahrain's 0.2 percent.

In Israel, the TA-25 Index retreated 0.2 percent as the yield on the benchmark government bond due March 2023 declined five basis points, or 0.05 percentage point, to 3.98 percent. The Bank of Israel will hold rates at 1.25 percent tomorrow, according to 20 analyst estimates compiled by Bloomberg.

An Important Update on America's Natural Gas Boom

America's shale gas revolution just took another step forward...

 

Last week, the Department of Energy (DOE) approved the country's third natural gas export facility.

 

As I explained in February, recent studies show the huge economic benefits of exporting natural gas. It will create millions of new jobs and generate billions of dollars in new income for the government, which is in dire need of more revenue.

 

Nearly two dozen natural-gas-export projects are awaiting the DOE's approval. I expect at least half of them to get it in the coming months.

 

It's time to buy in to this megatrend before it's too late. Let me explain...

 

As regular Growth Stock Wire readers know, the U.S. has tapped into huge natural gas deposits over the last five years. Meanwhile, the world is starving for natural gas.

 

You see, the natural gas market is not a typical "global" market, like the markets for crude oil and copper. It's much harder to ship.

 

Because it doesn't have an extensive transportation network, natural gas prices have their own individual markets. In the U.S., where we have a huge supply, prices are extremely low. But in most countries, natural gas is harder to find, so prices are much higher. As you can see in the map, natural gas prices are 150%-300% higher in other major markets.

 

 

That "spread" has created a tremendous opportunity for our country to export natural gas.

 

Two years ago, Cheniere Energy was the first company licensed to build a liquefied natural gas (LNG) export facility in Louisiana. The second approval happened in May... when the government gave permission to LNG terminal operator Freeport LNG to export natural gas from its Quintana Island, Texas facility.

 

The third approval came just last week... The terminal will be built in Lake Charles, Louisiana. Once operational, up to 2 billion cubic feet (bcu) of natural gas will be exported each day to countries around the world.

 

But these three facilities are just the beginning. I expect more and more facilities to gain approval in the next 12-18 months.

 

A lot of companies like Westport Innovations (natural gas engines), Clean Energy Fuels (natural gas fueling stations), and Cheniere Energy (natural gas exporter) will start to see the benefits of these approvals almost immediately. But the biggest beneficiaries will be the companies that own and build the infrastructure needed to export natural gas.

 

A handful of firms have been in this business for over a decade – including Chicago Bridge & Iron (CBI) and KBR (KBR). And in May, I told you to buy these names on a pullback.

 

We haven't had much luck with getting a pullback with CBI. The stock – which receives more than 30% of its revenue from LNG projects – is trading near its 52-week high.

 

KBR, however, has pulled back about 10% in the past month. The stock fell after lowering its 2013 full-year earnings guidance. Most of the weakness was due to LNG project delays. KBR gets 40% of its revenues from LNG projects. The company expected to receive contracts in late 2013. It now sees these contracts hitting the bottom line early next year.

 

I suggest using this pullback to buy shares. The stock is now trading at 11 times forward earnings. That's cheap compared to the average S&P 500 stock – which trades around 15 times earnings. KBR also has a super-strong balance sheet.

 

The company is a key player in a high-growth market. And based on its strong fundamentals and growth, a larger competitor or private-equity firm may make a bid for KBR.

 

I wouldn't wait too long to buy the stock. With the DOE likely to approve several new projects over the next several months, it's just a matter of time before KBR receives new contracts. Once this happens, the stock will ramp higher... just like CBI.

 

Good investing,

 

Frank Curzio

Why Amazon Is A Lousy Business

As a consumer, I love Amazon.  During my years overseas it was an important lifeline for me, reliably sending me books and videos to some pretty out of the way places.

When I moved back to the US, I almost immediately signed up for Amazon Prime and now not only get free delivery, but can stream movies and TV shows too.

Besides being the greatest e-commerce site on the planet, Amazon also brings impressive innovations to market, such as Amazon Web Services and the Kindle tablet.  Undoubtedly, Amazon is a great company.

Unfortunately, it's not a great business.  According to Yahoo Finance, the company earned only a slim 1% operating margin during the last 2 years and a not particularly impressive 4% margin in 2010.  While there's more to a business than just the bottom line, those are worrying numbers.

Jeff Bezos insists that he can turn on the earnings spigot any time he wants and is merely plowing money back in order to grow the business, but that seems thin to me.  Last year Amazon grew its top line 27%, very good, but not unusual for a technology company (Google Google, for comparison, grew 32%).

Further, Amazon is far from the only business that invests in the future.  Google put $6.8 billion (13.5% of revenues) into R&D last year.  Microsoft Microsoft, for its part, invested $10.4 billion (13.4% of revenues).  Both are money machines, pulling down $12.7 billion and $26.7 billion in operating profit during the last fiscal year, respectively.

I believe that there is a much simpler reason for Amazon's poor earnings performance:  They simply do not hold a leadership position in any major category.  To see what I mean, let's look at three: retail, web services and tablets.

Retail:  First, the obvious.  Amazon is not a clear market leader in retail.  Walmart dwarfs it in size and Target Target is significantly bigger too.  Yet, unlike Amazon, both of those companies manage to earn good money every year.

On the other end, Amazon also competes with a whole slew of specialty retailers, ranging from Neiman Marcus, to Williams Sonoma to Crate and Barrel, who hold an advantage not in volume, but in merchandising expertise.

While these firms certainly can't match Amazon's e-commerce platform, who says they have to?  They and roughly 100 other companies use BloomReach's service, which replicates many of Amazon's technology advantages.  The technology you own isn't as important as the technology you can access.

So with neither market heft or cache, it's hard to see how Amazon will ever significantly exceed average retail margins and, as of now, it doesn't even achieve that.

Web Services:  Amazon was a first mover in web services, in which it basically rents out its formidable infrastructure to companies that either don't want or can't afford to build their own.  It's a great idea and a fantastic service.

Alas, here again, Amazon is getting squeezed.  This time between Microsoft's Azure and Rackspace. Microsoft, it should go without saying, is a much stronger technology company with deep enterprise expertise and Rackspace has a lot of appeal to startups.

Tablets:  When Amazon launched the Kindle in 2007 it became the first tablet  to really capture the imagination of consumers (although, at the time, it was really just an e-reader).