Bristol-Myers Squibb – BMY
Growth of mega-blockbuster Plavix is helping <B>Bristol-Myers Squibb Company</B> (<a href=http://www.zacks.com/stock/quote/BMY>BMY</a>) drive EPS growth up near 16% in 2008. However, patent expirations loom large in Bristol's future starting in 2011 when the Plavix patent expires. <P ALIGN="left"> That being said, the company does have an attractive mid-to-late-stage pipeline, and management has been dramatically working to reduce costs and shed less profitable and non-core businesses. We believe the company is an attractive take-over candiate at this level for a larger pharma name such as Sanofi or AstraZeneca. EPS growth through 2011 is near the top ofbig-pharma. <P ALIGN="left"> We expect the shares to trade up near $27.Chemicals & Fertilizers
The global slowdown in economic growth will directly affect the chemical industry. Celanese is rated a Sell due to weak demand growth.BJ Services – BJ
We are reiterating our Sell rating on BJ Services (<a href=http://www.zacks.com/stock/quote/BJS>BJS</a> shares to reflect our weak outlook for the North American pressure pumping market. <P ALIGN="left"> While the current U.S. rig count is already down more than 50% from its all-time peak in August 2008, we see significant room for further decline in the coming months before the market stabilizes. This expected drop in the rig count will affect demand for pressure pumping services, which will continue to weigh on dayrates and margins into 2010, even as normal demand resumes towards the end of 2009, in our view. <P ALIGN="left"> While the company should fare better than many of its smaller peers, given the size and scope of its operations and its strong financial health, it is nevertheless faced with pricing pressures and margin compression in the coming quarters. <P ALIGN="left">Arthur Hill: SPY TRACES OUT POSSIBLE BROADENING FORMATION – BONDS CLOSE STRONG – CONSUMER DISCRETIONARY SPDR CONTINUES TO LEAD – FINANCE SECTOR SPDR HOLDS BREAKOUT – SCHWAB AND MORGAN STANLEY SURGE – REGIONAL BANK ETF BREAKS RESISTANCE
[[http://stockcharts.com/members/videos/20090730-1/|Link for today’s video.]] The major index ETFs have remained overbought for two weeks now. Charts 1, 2 and 3 show the **S&P 500 ETF (SPY), Nasdaq...CAVU Resources, Inc. Announces Acquisition of EnviroTek Fuel Systems, Inc.
TULSA, OK--(Marketwire - July 30, 2009) - CAVU Resources, Inc. ("CAVU"), which trades as
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GEO Group (GEO) A ‘steal’ in for-profit prisons
"With state governments going bankrupt, the last thing bureaucrats want to do is spend precious resources on managing their prison systems," explains growth stock expert Marc Lichtenfeld.
The senior analyst for Xcelerated Profits Report suggests, "For-profit institutions are usually able to provide prison services more efficiently than the government can. And there’s one company that stands out -- The GEO Group (NYSE: GEO)."
"Nearly two-and-a-half million people are behind bars in American prisons. The U.S. incarceration rate is five times higher than the world average and the U.S. prison population is still rising.
"The problem here is two-fold. As the economy worsens, not only are social services being cut across the country, it could also trigger a rise in crime, the latter of which will exacerbate prison overcrowding.
"With state and local governments finding it increasingly tough to cope – both in terms of finances and manpower, privately run prisons have helped ease the burden over the years.
"And these for-profit institutions are usually able to provide prison services more efficiently than the government can. And there’s one company that stands out here.
"Founded in 1984 and based in Boca Raton, Florida, GEO operates 62 detention and correctional facilities; it has 49 facilities in the US, with additional operations in Australia, Britain, and South Africa. Its facilities have a total capacity of 60,000 inmates.
"Right now, shares are cheap. When you couple what should be reliable growth with a bargain buy, you’re looking at a solid investment.
"For example, the stock currently sports a P/E ratio of 14.8, compared to its 10-year average of 18. And at 1.6 times its book value, it’s trading at a discount to its 10-year average of 2.1. And the 0.9 times sales ratio is inexpensive by almost any metric.
"Now, constructing these prisons and correctional facilities does require a good chunk of capital, which explains the $387 million worth of long-term debt on GEO’s books.
"In 2013, $150 million of this will mature, but given that GEO generated $116 million in cash flow from operations over the past 12 months, servicing that debt between now and 2013 should be no problem.
"By 2013, however, it’s likely that management will have to borrow some more money. Right now, though, that’s not an issue for us. And management currently has GEO firing on all cylinders.
"Margins are at their highest level in five years – and are expected to increase further. Both return-on-equity and return-on-assets are steadily climbing, too.
"With facilities around the globe, and several that focus on mental health treatment and immigration detention centers, GEO’s business is a well-rounded mix that is capitalizing on the trend of rising inmate populations.
"And given that our society unfortunately tends to treat the symptom (crime) rather than the cause (poverty), the trend should only accelerate into the future."
Excelon (EXC): Powered by nuclear
"No US utility owns more of them than Exelon (NYSE: EXC), with 17 reactors," says Roger Conrad, who chose the stock as his latest "growth spotlight" in The Utility Forecaster.
"Carbon free and, above all, paid for, existing nuclear plants are among the most prized assets in the power business.
"Some 80% of company earnings come from its unregulated generation fleet, 90% of which is nuclear. And it’s by far the best-positioned US utility to ramp up nuclear output.
"Existing brownfield sites are the only places to build the new reactors Washington wants. Exelon has also been masterful boosting efficiency, running its nukes at 92% of capacity or better for a decade.
"And it will increase their capacity 20%, or 1,300 to 1,500 megawatts, by 2017, by upgrading plant turbines.
"Exelon shares took a hit last year and now sell for barely half their July 2008 high. A 29 percent boost in first quarter earnings per share and affirmation of full year guidance laid recession questions to rest.
"The stock price and the company’s credit rating, however, have remained under pressure, due to a takeover bid for power producer NRG Energy. NRG management has gone to court to block the offer of 0.485 Exelon shares, though it’s hinted it would accept a higher number.
"The current deal has apparently won over a majority of NRG shareholders. The bottom line, however, is that Exelon will prosper as a nuclear power with or without NRG. And yielding over 4% and at barely 10 times projected 2010 profits, Exelon is a buy up to 60."
A preference for yield: Investng in preferreds
"Preferred stock has been much in the news over the past 18 months, primarily as the favorite way for cash-strapped banks to raise capital," says Mark Salzinger.
In The Investor's ETF Report, he says, "These unusual securities are popular because they offer high yields and have a higher position in corporate credit structure than common stock." Here, he offers a pair of favored ETFs that invest in preferred shares.
"We caution that preferred stocks also have significant drawbacks that dampen their appeal. Apreferred stock is really more like a fixed-income instrument than an equity security.
"Many preferred stocks have a maturity date, and all pay dividends of a set amount each year. Therefore many are not eligible for the 15% tax rate on 'Qualified' dividends; their dividends are taxed as ordinary income, just like the interest on bonds.
"Unlike common stock dividends, preferred stock dividends generally do not increase over time at the discretion of the company.
"Preferred stock dividends are sheltered more than common stock dividends. Companies must pay dividends on preferred stock before dividends on common stock. If a common stock dividend is reduced or eliminated, the company still owes those on preferred stock.
"Despite this preferential positioning, preferred stocks are still quite low in the pecking order behind a company’s creditors— all of them, not just the secured creditors. Neither do preferred stocks have the covenants that protect and govern conditions and terms of payment to bondholders.
"Why would anyone want to own preferred stocks then? Simply, they have high yields, almost always significantly higher than yields on common stock.
"Some companies would rather issue preferred stock than bonds because it expands their capital base without increasing their debt burden. To entice investors to buy these unusual instruments that work like bonds but lack their security, they have to offer higher yields.
"Preferred stock has bounced strongly off the March market lows. Financial-services companies have been the most prolific issuers of preferred shares, and preferred stock ETFs are a way to earn a fat yield and bet on a turnaround for the sector.
"Both iShares S&PUS Preferred Stock (NYSE: PFF) and PowerShares Preferred (NYSE: PGX) invest in about 70 of the largest and most heavily traded preferred stocks.
"Financials dominate each portfolio, accounting for more than 80% of each. Yields are high: PFF recently yielded 8.4%, PGX 8.8%. They even have similar expense ratios (0.48% for PFF, 0.50% for PGX).
"The biggest differences are in foreign holdings and average credit quality. iShares S&PUS Preferred Stock invests only in U.S. preferred stocks, while PowerShares Preferred also invests in foreign issues.
"This subjects the latter ETF to foreign-currency fluctuations but better reflects the global market for preferred shares.
"But PowerShares Preferred is limited to preferred stocks with investment-grade credit ratings at the time of purchase. Its average credit rating is BBB+, vs. BB- (which is below investment grade) for the iShares offering.
"Many of the lower credit ratings come from preferred stocks whose credit ratings have been downgraded over the past year.
"With so many similarities, we are inclined to favor iShares S&PUS Preferred because it has a larger asset base and has a higher trading volume.
"This will help keep bid/ask spreads tighter and in turn keep its share price more closely aligned with its net asset value, an important trait in a product that invests primarily in generally misunderstood assets from an out-of-favor sector."
IGSM Group Inc. Acquires Music Label Richie Rich Entertainment Inc.
FT. LAUDERDALE, FL--(Marketwire - July 29, 2009) - IGSM GROUP INC. (
"We are so pleased to have finalized the transaction and believe now as part of a publicly traded company, Richie Rich Entertainment will be able to expand. Our focus is on Latin America as well as continuing to solidify our position in the United States as a leader in production and distribution of top records in Hip Hop, America's number one seller at this time," said Richard Markle, President and CEO of Richie Rich Entertainment, Inc.