JPMorgan Chase (JPM)
We are downgrading our rating on <b>JPMorgan Chase </b>(<a href="http://www.zacks.com/stock/quote/jpm">JPM</a>) shares to Underperform. <p> Fourth quarter earnings were well ahead of the Zacks Consensus Estimate, aided by better-than-expected results at its Investment Bank segment. However, persistent high levels of consumer credit costs and increased provisions for credit losses were among the major negatives. <p> While we anticipate continued synergies from the company's diversification and strong capital position, we believe increasing provisions and a pressured credit quality will drag down future earnings.Parker Hannifin (PH)
We are upgrading the recommendation on <b>Parker Hannifin</b> (<a href="http://www.zacks.com/stock/quote/ph">PH</a>) to Outperform with a $67 target price. We are encouraged that order trends have improved sequentially for the prior two consecutive quarters, indicating that the worst is behind the company. <p> Reflecting the benefits of restructuring actions and improving market conditions, it has increased its earnings guidance for fiscal 2010 to the range of $2.40 to $2.80 per share, representing a 44% increase from the midpoint of the previous estimate. <p> Cash on the balance sheet stands at $234 million with no commercial paper outstanding. Inventory has been reduced by $336 million since last year and days sales outstanding have improved over the prior year.What Is An ETF?
ETF stands for Exchange Traded Funds — these are funds that trade on the stock exchange just like any stock. And you follow the same procedure at your online broker to buy an ETF as you would any stock like IBM or GE. It should cost you between $4 and $10 per trade.
ETFs are not a secret, but investment professionals often don’t make fees from them, so they often go ignored.
Each ETF is a “basket” of stocks that represent a particular index. For example if you wanted to own every stock in the S&P 500 Index, you would by one of several ETFs that follows that index – an example being “SPY” or Spiders. By owning one share of SPY, you gain diversification across 500 stocks.
With ETFs you can invest in practically any market you want. Some of the most popular indexes are the S&P 500 (tracks the largest U.S. public companies), the Russell 2000 (tracks some of the smallest U.S. public companies) and the Morgan Stanley Europe Asia Far East (EAFE) index composed of companies in developed foreign countries. ETF investing also allows you to invest in real estate, bonds, commodities, sectors and other markets. There are currently over 800 ETFs now available and growing.
Mutual funds are 6 -10 times more expensive than ETFs because they hire pros who try to select a few stocks within the index that will “beat” it. But when you invest in an index fund, you basically get the exact returns of the index. Since computers (not humans) manage the stocks in an ETF, the fees are very low.
Sit back and let it ride — To allow the Law of Compounding to work its magic, it’s important to hold your ETFs as long as possible so you pay minimal taxes on dividends. And really, unless you decide to get out of a market, there are few good reasons to sell. Better to hold on and ride the markets, continuing to enjoy the benefits of Law of Compounding at rates that have averaged around 9% a year through history for stocks and 5% for bonds.
Still yearning for the excitement of individual stocks or “high-flying” mutual funds? If you’re determined to beat the house, you might as well go to Las Vegas. It has nicer hotels than Wall Street for nursing your financial wounds.
Arthur Hill: SUPPORT COMING INTO PLAY FOR IWM AND SPY – AD VOLUME LINES DECLINE FROM 52-WEEK HIGHS – NET NEW HIGHS HIT MOMENT-OF-TRUTH – BULLISH PERCENT INDICES REMAIN ABOVE 50% – TECHNOLOGY MATTERS
[[http://stockcharts.com/members/videos/|Link for today’s video.]] With the January decline, the **Russell 2000 ETF (IWM)** has retraced around 50% of the November-January advance and returned to its...QED Connect, Inc. Finalizes Agreement With Southeastern Retail Services, Inc., d/b/a “ProRemote Solutions”
MANCHESTER, NH--(Marketwire - January 29, 2010) - QED Connect, Inc. ("QED Connect")
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Under the terms of the agreement ProRemote will become a wholly owned subsidiary of QED Connect, Inc. which, with this acquisition, has started its quest to acquire promising emerging growth operating companies. Tom Makmann, CEO, said, "ProRemote is the first acquisition under our new acquisition strategy whereby we are looking forward to working with new entities to help execute their business model. ProRemote Solutions is already finalizing contracts with Sports Bar entertainment complexes in metro Atlanta and are looking at several other opportunities."
Diesel dollars: Two experts eye China Yuchai (CYD)
Two leading international financial newsletter editors remain bullish on the prospects for China 
Yuchai International Limited (NYSE: CYD), a maker of diesel engines.
Here's recent commentary from Nicholas Vardy (at left), editor of The Global Bull Market Alert and Paul Goodwin (at right), editor of The Cabot China & Emerging Markets Report.
Vardy says, "Although China Yuchai is primarily involved in the decidedly unsexy sector of manufacturing diesel engines for construction equipment, trucks, buses, and cars in China, its financial results last quarter make it look more like that of a red-hot, high-tech play.
"Earnings soared 292% last quarter on a 34% jump in revenue in Q3. And CYD is getting better at what it does: its after-tax profit margins jumped to a record 15.3%.
"In addition, CYD has announced a couple of high-profile joint ventures with both Caterpillar (China) and Jirui United Heavy Industry. This news has helped the stock break out of its recent trading range.
"Nevertheless, the stock remains a bargain in comparison to its U.S. rivals.
"While the market cap of rival Cummins, a manufacturer of diesel engines and related technology, equals its annual revenue, CYD's market cap trades at one-fourth that level. Meanwhile, Cummins' revenue is down 31%, while CYD's is soaring.
"Also, although I am skeptical of the credit bubble that is being blown in China, that's no reason to stand in the way of a profitable trade.
"There is a lot of short momentum in China with Asian stock markets jumping this morning as the Chinese government announced that exports jumped nearly 18% in December, after 13 months of declines."
Paul Goodwin explains, "Like most of the world outside the U.S., China’s automotive sector is heavily committed to diesel engines. They are sturdy, reliable, cheap to run and will accept a wide range of fuels. The company was founded in 1951, so it has a long history of making diesel engines.
"The 'International' in the company’s name refl ects its approval to sell its diesel engines in the environmentally picky eurozone. That certification is a tribute to the company’s substantial R&D staff of more than 370.
"One tangible result of this commitment to R&D is the company’s development of a prototype dual-fuel engine that uses either natural gas or diesel fuel or a mixture of the two..
"This engine’s lower emissions will make it ideal for municipal buses. Another project is an ISG electric/diesel engine with a 20% reduction in fuel consumption.
"Financial results were outstanding last quarter. It’s worth noting that the last four quarters have produced earnings growth of -48%, 268%, -24% and the 292%.
"Clearly there are either significant market fluctuations or other transactions going on here, because revenues during the same four quarters were up 16%, 12%, 33% and 34%, respectively.
"The chart for CYD is another factor in its favor. After the familiar collapse in 2008 and recovery in 2009, the stock is out to new multi-year highs and has built a nice base since a November rally that lifted it from 10 to 17. The 25-day moving average is just approaching 15—which should provide some impetus."
Defensive four-pack: Investing in airport security
"The attempted Christmas terrorist attack caused me to assess what stocks would benefit from increased attention to the security sector," says Glenn Rogers.
In Gordon Pape's The Internet Wealth Builder, he reviews four defense plays -- L-3 Communications (NYSE: LLL), Cogent Systems (NASDAQ: COGT), American Scientific & Engineering (NASDAQ: ASEI) and OSI Systems (NASDAQ: OSIS).
"L-3 has over 44,000 employees and operates in a large number of areas within the aerospace and defense sectors.
"The company offers solutions in secure communications, mobile satellite communications, shipboard communications, missile arming systems, radar and missile systems, and airport security equipment.
"They also design and manufacture screening systems for explosives, firearms in airports, security checkpoints, and commercial buildings. So if you are looking for a company that covers the waterfront and everywhere else on the security front, L-3 might be for you.
"The company has also become a large manufacturer of unmanned drones which are playing a significant role in the war in Afghanistan. L-3 looks to be a bedrock part of our arsenal going forward.
"The company recorded earnings per share growth of over 24% in the third quarter and it is trading at a P/E of only 11.23. L-3 had revenues last year of almost $15 billion (all currency figures are in U.S. dollars). I am restoring L-3 to our Recommended List.
"The next company on our list -- Cogent Systems -- is considerably smaller than L-3 and is more narrowly focused. Cogent creates systems and devices that track individuals and materials.
"The company's main business is producing automated fingerprint identification systems (AFIS). Its primary customers are the ones you would expect: law enforcement, government agencies, and large corporations. Cogent also manufactures systems that are used at border crossings, which is a high-need area worldwide.
"Although the company is small, with only 137 employees and less than $90 million in sales, it operates internationally. The company showed strong growth in the second quarter as sales increased 131% year-over-year, to $39.4 million, and income grew at a blistering 96%.
"What I particularly like about Cogent is that it maintains a high profit margin of 42.1%. However, third-quarter figures were not as bullish as non-GAAP net income came in at $6.3 million (7c per share) compared to $12.6 million or (14c per share) in the same year ago period.
"Cogent also announced that its board has authorized a new stock buy-back program of $100 million, expiring on Nov. 12, 2010 to replace the program that expired last November.
"The company's main source of revenue has been the U.S. Visit program, which helps to identify foreign visitors to the country, but the company also had 13 significant contracts near the end of last year with the U.S. Army, the U.K. Post Office, and the Belgian police.
"They also recently won a contract with the New York State Office of Temporary and Disability Assistance. Standard & Poor's maintains a buy opinion as does Marketing Edge. The company next reports earnings on Feb. 25 and analysts are predicting that they will raise guidance for 2010 at that time.
"Meanwhile, two new recommendations ours, ASEI and OSIS, both of which will benefit from the ongoing counterterrorist efforts:
"American Science and Engineering manufactures x-ray inspection equipment and other detection devices for Homeland Security and other countries around the world. They have equipment that can be used to inspect not only humans but also cargo containers, baggage, vehicles, etc.
"This is a pure play on x-ray machines and the company has been flooded with orders from around the globe.
"For instance, they recently received a $39.7 million order for cargo x-ray inspection systems from an unnamed government agency and a $5.8 million follow-on order for cargo security equipment in the Middle East.
"Understandably, the company and its customers are careful about how much information they release to the general public but suffice to say business is booming and is likely to continue doing so for the foreseeable future.
"The company's profits are showing steady growth. Second-quarter 2010 earnings came in at $1.18 a share, up 42% from 83c in the same period last year. The stock has run up lately and is trading at 19 times forward earnings but I would still take a small position here and add to it on any pull-back.
"Finally, owning shares in OSI Systems gives you x-ray equipment that competes with the companies that we discussed above along with the more traditional baggage equipment scanners that you are used to seeing in airports everywhere.
"The company also has a Health Care division that specializes in patient monitoring cardiology diagnostics and anesthesia delivery.
"A third division, Optoelectronics, manufactures devices for the aerospace and defense industries. OSI Systems was recently written up in Barron's as a turnaround story and even after the recent run-up still trades at 18 times earnings.
"The company has received a number of new contracts lately including a $3.2 million deal to provide security inspection systems at the Vancouver Winter Olympics. Their latest financial statement showed earnings per share of 14c compared to only a penny in the prior year.
"In that report, OSI raised its 2010 earnings guidance to between $1.14 to $1.23 per share, which would represent year-over-year earnings growth of between 25% and 35%. They have a record backlog of $146 million.
"The stock has almost tripled in value in the past year and closed on Friday at $30.69. I suggest taking a small position and watch for a pull-back to add more. OSI is trading near its 52-week high but terrorism is a long-term problem as is health care so OSI should continue to benefit over the long haul."
Editor's note: Gordon Pape, editor of The Internet Walth Builder, will be speaking at the Fairmont Royal York Hotel Toronto on February 13 and 14. Click here for details.
Diesel dollars: Two expert eye China Yuchai (CYD)
Two leading international financial newsletter editors remain bullish on the prospects for China Yuchai International Limited (NYSE: CYD), a maker of diesel engines.
Here's recent commentary from Nicholas Vardy (at left), editor of The Global Bull Market Alert and Paul Goodwin (at right), editor of The Cabot China & Emerging Markets Report.
Vardy says, "Although China Yuchai is primarily involved in the decidedly unsexy sector of manufacturing diesel engines for construction equipment, trucks, buses, and cars in China, its financial results last quarter make it look more like that of a red-hot, high-tech play.
"Earnings soared 292% last quarter on a 34% jump in revenue in Q3. And CYD is getting better at what it does: its after-tax profit margins jumped to a record 15.3%.
"In addition, CYD has announced a couple of high-profile joint ventures with both Caterpillar (China) and Jirui United Heavy Industry. This news has helped the stock break out of its recent trading range.
"Nevertheless, the stock remains a bargain in comparison to its U.S. rivals.
"While the market cap of rival Cummins, a manufacturer of diesel engines and related technology, equals its annual revenue, CYD's market cap trades at one-fourth that level. Meanwhile, Cummins' revenue is down 31%, while CYD's is soaring.
"Also, although I am skeptical of the credit bubble that is being blown in China, that's no reason to stand in the way of a profitable trade.
"There is a lot of short momentum in China with Asian stock markets jumping this morning as the Chinese government announced that exports jumped nearly 18% in December, after 13 months of declines."
Paul Goodwin explains, "Like most of the world outside the U.S., China’s automotive sector is heavily committed to diesel engines. They are sturdy, reliable, cheap to run and will accept a wide range of fuels. The company was founded in 1951, so it has a long history of making diesel engines.
"The 'International' in the company’s name refl ects its approval to sell its diesel engines in the environmentally picky eurozone. That certification is a tribute to the company’s substantial R&D staff of more than 370.
"One tangible result of this commitment to R&D is the company’s development of a prototype dual-fuel engine that uses either natural gas or diesel fuel or a mixture of the two..
"This engine’s lower emissions will make it ideal for municipal buses. Another project is an ISG electric/diesel engine with a 20% reduction in fuel consumption.
"Financial results were outstanding last quarter. It’s worth noting that the last four quarters have produced earnings growth of -48%, 268%, -24% and the 292%.
"Clearly there are either significant market fluctuations or other transactions going on here, because revenues during the same four quarters were up 16%, 12%, 33% and 34%, respectively.
"The chart for CYD is another factor in its favor. After the familiar collapse in 2008 and recovery in 2009, the stock is out to new multi-year highs and has built a nice base since a November rally that lifted it from 10 to 17. The 25-day moving average is just approaching 15—which should provide some impetus."