By admin | August 28, 2008
Banks and building societies are falling over themselves in the fight for your custom, using great rates on savings accounts to win you over. This means that the best buy tables are frequently changing, but a look at the current leaders in the savings race shows Manchester Building Society's Premier Plus account tops the table for no-notice accounts, with an AER of 5.26%.
If you're after a tax-free home for your 2006/07 individual savings account allowance, Portman Building Society's 15-day notice mini-cash ISA offers a competitive 5.5% AER.
A previously little-known name, Iceland's Landsbanki, has also recently entered the savings market and caused a stir with its
Icesave product - paying 5.2% AER, offering instant access and promising to pay at least the Bank of England base rate for five years.
But of course there's more to a good savings account than an attractive rate, and it's important not to be blinded by interest alone. Follow our tips to find the right account for you and your money:
1. Before you start shopping around for a savings account, stop and think how you will use it. Is there a fixed sum you can afford to save every month? Do you need instant access to your cash or can you afford to tie it up for a year or so?
2. For most people instant access makes the most sense, and thanks to increased competition, rates on the best accounts can be much the same as those requiring 30 or more day's notice.
3. If you haven't used this year's individual savings account (ISA) allowance, remember you can invest up to £3,000 in mini cash ISAs every year free of income and capital gains tax.
4. If you can afford to save a fixed sum each month and don't mind tying up the money for a year, it's worth considering a regular savings account as these pay the highest rates.
5. Read the small print and double check whether the rate includes an introductory bonus which may only be payable for a few months. Once the rate drops it's likely to be very uncompetitive. If you have the discipline to keep switching it may be worth taking advantage of bonus rates, but do be aware some banks have started to reject applicants who have already opened and closed bonus led accounts with them before.
6. Also check whether there are any withdrawal restrictions. Both HSBC and First Direct offer an account where no interest is paid in any month in which a withdrawal is made. This provides absolutely no incentive to save - the more money you save, the bigger the penalty when you come to withdraw any of it. Other high paying accounts limit the number of withdrawals that can be made.
7. Think about how you will pay in and withdraw money - branch access is important to many, but if you are prepared to manage your account remotely (either online or over the phone) you're more likely to get the best rates.
8. Once you have found the right account don't forget to regularly review the interest you are being paid, and be prepared to switch if yours is no longer competitive. If accounts are withdrawn or replaced by new higher paying accounts, rates will usually slip - there are plenty of high street savings accounts out there paying less than 1%.
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By admin | August 27, 2008
Cal-Maine (CALM) -- “This stock has the potential for a short squeeze. I won’t recommend it for that reason. If you believe in the business, it is a buy. Otherwise sell, sell, sell.”
Ford (F) -- “Ford is too dangerous for me to recommend. The stock is too speculative. I can’t touch it.”
Lumber Liquidators (LL) -- ““Not in a healthy sector. Go with Lowe’s instead."
U.S. Steel (X) -- “The stock is inexpensive. This is too much of a cyclical stock to own right now. No one wants these cyclical stocks anymore. This stock is going to be stuck in the mud for a long time. Don’t Buy.”
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By admin | August 27, 2008
AT&T (T) -- “I can’t turn my back on AT&T when it’s just 50 cents from its low, especially since it has great growth and a nice dividend.”
Freeport-McMoRan (FCX) -- “If you want to own a mineral company this is the stock. I think it could be taken over.”
Topics: Stock Picks | 1 Comment »
By admin | August 27, 2008
Housing Bottom - Toll Brothers (TOL), Centex (CTX), D.R. Horton (DHI), Pulte Homes (PHM), Lennar (LEN), MDC Holdings (MDC), KB Homes (KBH)
Jim Cramer believes the housing market will bottom in the third quarter of 2009. He based his conclusion on an analysis of the charts of the seven largest home builders, including Toll Brothers, Centex, D.R. Horton, Pulte Homes, Lennar, MDC Holdings, and KB Homes. He said the charts clearly show the top of the market in July, 2005, one year before the “beginning of the end” in July 2006. Given that 12-month lead, Cramer identified the bottom for the homebuilders on July 17 of this year. Normally, he said he would go with a 6-month to 12-month leading indicator for this bottom, but in this case, he's giving some more leeway and is predicting it will take 309 days before the housing market bottoms.
Cramer’s List of 10 reasons why he feels the market will rebound in the third quarter of 2009: Freddie Mac (FRE), Fannie Mae (FNM)
1.
There are far fewer homes being built now than in 2005.
2.
The $300 billion Federal Housing Bill is helping homeowners avoid foreclosure.
3.
Home prices have come down to bargain levels (as much as 30-40% in some areas).
4.
The hottest housing markets are starting to cool off.
5.
Mortgage rates should decline once Freddie Mac and Fannie Mae are nationalized.
6.
The bulk of “teaser rate” home loans have reset and foreclosures will now decline.
7.
The rate of household formation will increase as thousands camped out in apartments can now afford homes.
8.
Immigration levels should rebound after the November election.
9.
The biggest problem areas are now contained in such problem states as California, Florida and Arizona.
10.
The areas with the highest foreclosure rates are starting to stabilize.
Lowe's (LOW) vs Home Depot (HD)
In a new segment called “In The Ring,” Cramer pitted home improvement superstore Lowe's against its biggest rival, Home Depot, to determine which company is the preferred stock to own.
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Cramer outlined how professional money managers would evaluate the two stocks. First, he looked at the sector for both companies. With housing set to rebound next year, he assigned the home improvement sector a value of 2 or 3 on a five-point scale for both companies.
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Then he focused on growth. He said Lowe's reported a 5.2% decrease in same-store sales and raised its guidance, while Home Depot reported a decrease of 7.9% in same-store sales. Cramer gave one point to Lowe's and only half a point to Home Depot.
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Next, Cramer looked at market share. With Lowe's reporting a 1.2% increase in market share and Home Depot reported a loss, Cramer gave one more point to Lowe's.
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After that Cramer looked at how much room each company has for growth. Home Depot expects to open 55 new stores, compared to Lowe's 120 expected new stores. Cramer awarded Lowe's an additional point for its expansion prospects.
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Finally, Cramer considered each company's dividend. After comparing the companies' near identical PE ratios, he said Lowe's dividend clearly comes out on top.
His final conclusion: buy Lowe's and sell Home Depot.
Johnson & Johnson (JNJ) vs. Pfizer (PFE)
In a second installment of “In The Ring,” Cramer compared Pfizer to bellwether Johnson & Johnson to see who came out on top.
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Cramer looked first at the drug sector overall and gave it only a 3 out of 5 due to the uncertainly of the current election cycle. “Drugs are not as safe as a utility in this environment,” he noted. Cramer said the key things to look for with drug stocks are growth, patent protection and invention.
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When comparing the companies' growth prospects, Cramer noted that Pfizer sold much of its consumer products division to Johnson last year, leaving the company with almost no revenues from non-drug related sources. By contrast 24% of Johnson's revenues came from consumer goods. He awarded Johnson 2 points for keeping the “boring stuff” and diversifying its product mix.
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Next, Cramer looked at patent expirations. Johnson expects to lose $3.8 billion in sales from patent expirations in the coming years, while Pfizer expects to lose $6.6 billion. Advantage Johnson, said Cramer.
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Finally, Cramer looked at each company's product pipeline. Here he found Johnson with 7 to 10 new products expected between 2008 and 2010, while Pfizer expects 15-20 new products in their pipeline. He awarded one point to Pfizer on this front.
Tallying up the points, and accounting for some intangibles, like Johnson's great corporate culture and its famed shareholder Warren Buffet, the prize goes to Johnson & Johnson, he said. Pfizer, he said, may look cheap, but it isn't.
Maintenance Pays - Monro Muffler (MNRO)
Robert Gross, chairman and CEO of Monro Muffler, came to discuss whether the tightening credit markets, means people are keeping their cars longer. Gross confirmed Cramer's theory, saying that Monro is seeing an uptick in business as people with older cars look for more expensive repairs. He said that while some customers are delaying some maintenance due to the slowing economy, many are investing in increased maintenance to help increase fuel economy. Gross also said the market still looks great for acquisitions, and with nine recent transactions already completed, he still looks for more in the coming months. Cramer told viewers that he thinks Monro is a buy.
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By admin | August 26, 2008
* 7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
9:00 S&P/Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 Ofheo House Price Index
10:00 Richmond Fed's Manufacturing Index
10:00 New Home Sales
2:00 PM FOMC Minutes
5:00 PM ABC Consumer Confidence Index
* Notable earnings before Tuesday's open: AEO, BIG, CHS, COCO, SFD
* Notable earnings after Tuesday's close: JCG
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By admin | August 26, 2008
* Asia markets closed mostly down. Nikkei -0.8% to 12,778. Hang Seng -0.2% to 21,056. Shanghai -2.6% to 2,350. BSE +0.3% to 14,493.
* In Europe at midday: London -1.9%. Paris -0.7%. Frankfurt -0.4%.
* U.S. equity futures are up slightly. Dow +0.14%. S&P +0.14%. Nasdaq +0.11%. Crude -1.57% to $113.30. Gold -1.47% to $813.60.
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By admin | August 26, 2008
Food chains and retail come into play this time of the year and most investors take this serious because of the whole market slow down. Investors look to this most of the time to be a safe haven for the end of the year.
* Big Lots (BIG): Q2 EPS of $0.32 beats by $0.05. Revenue of $1.11B (+1.9%) in-line. [PR]
* Smithfield Foods (SFD): FQ1 EPS of -$0.02 beats by $0.02. Revenue of $3.14B (+20.1%) vs. $2.87B. [PR]
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By admin | August 26, 2008
Winn Dixie comes out with there earning which was a bit of a surprise to most but still not so bad.
Winn-Dixie (WINN): FQ1 EPS of -$0.10 misses by $0.01. Revenue of $1.69B (+0.8%) in-line. Shares -2.7%.
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By admin | August 26, 2008
# Freddie sells $2B in debt, eases bailout worries. Freddie Mac (FRE) easily sold $2B in short-term debt on Monday, providing welcome reassurance to investors worried about Freddie Mac and Fannie Mae's (FNM) ability to fund operations without government help. Freddie's stock jumped 17% to $3.29, and Fannie gained a more modest 3.8% to $5.19. Both companies currently meet regulatory capital requirements and are rolling over their debt on schedule, and Fannie Mae is due to sell $2B in bills tomorrow.
# Rio H1 profit more than doubles. H1 profit more than doubled at Rio Tinto (RTP) on increased aluminum production and record high iron ore prices. Net income rose to $6.91B from $3.25B the previous year, and earnings reached $5.47B, beating estimates of $5.15B. The company is fighting a $142B unsolicited takeover bid from BHP Billiton (BHP) and says it is better able to expand its output of commodities independently.
# Regulators put more banks on probation. Federal regulators have put more struggling banks on "probation," forcing them to fix their problems and try to avoid costly failures. More so-called memorandums of understanding have been issued this year to date than in all of 2007. The memorandums can force banks into agreements that include taking steps to raise capital, cutting back on risky loans and suspending dividend payments. The FDIC had 90 "problem" banks on its list at the end of March, but there have been five bank failures since then and many more considered at risk. A revised list will be released Tuesday.
# Troubled economy weighs on Obama's ambitious agenda. With the Democratic National Convention underway, Obama is finding his ambitious economic agenda threatened by economic reality, WSJ says. Obama is calling for a government healthcare plan to cover millions without insurance; a system of tradeable pollution permits to reduce emissions; and higher income-tax rates and capital-gains tax rates. His top priorities would cost hundreds of billions of dollars a year, not counting a stimulus plan he is considering with a price tag of $115B.
# Anadarko plans $5B stock buyback. Anadarko Petroleum (APC) plans to repurchase $5B of its own stock, representing 18% of its outstanding shares at Monday's stock price. Shares rose 2.4% in after-hours trading.
# JPMorgan loses $600M on Fannie/Freddie. JPMorgan (JPM) reported the market value of its Fannie Mae (FNM) and Freddie Mac (FRE) preferred stock holdings was cut in half this quarter, to $600M. In regulatory filings, the bank said the loss could affect its Q3 earnings, but the fluctuations in Fannie/Freddie share price make the exact loss hard to calculate. Other financial institutions, especially smaller regional banks, could also take losses on their GSE preferred stock holdings.
# Teva's Azilect slows progression of Parkinson's. Shares of Teva Pharmaceutical (TEVA) gained 1.1% in Tel Aviv after it said a phase-III trial of its Parkison's drug Azilect showed patients who began taking the drug immediately demonstrated a significant improvement compared to those who initiated treatment nine months later. The 1mg dose met all three primary endpoints, as well as the secondary endpoint, with statistical significance.
# Gulf investors kick Hummer's tires. Two separate investors from the Arab Gulf region have approached GM (GM) about a possible sale of its Hummer brand. GM's Middle East Managing Director Terry Johnson says such solutions "could be very realistic," but noted keeping the division was also a possibility.
# Delta taps $1B credit line. Delta Air Lines (DAL) tapped a $1B loan ahead of its merger with Northwest Airlines (NWA). The money is part of a credit line made available to Delta after its exit from bankruptcy protection last year, and the company said it is now comfortable with its liquidity level through the end of the year. Delta also renegotiated agreements with credit-card processors to make sure sales revenue continues to be turned over promptly.
# MGM turns to Goldman for capital "enhancements." MGM (SNE, CMCSA) is in the process of arranging a $500M credit line to produce some franchise films, including The Hobbit and Pink Panther, but the company seems to want even more for its turnaround effort. Company execs say MGM's existing financing arrangement is sufficient to meet its needs but has retained Goldman Sachs (GS) to "explore enhancements to MGM's long-term capital structure."
# U.S. home sales rise 3.1% in July. Home sales rose 3.1% in July, their highest level since February, as falling home prices attracted buyers. The number of homes and apartments for sale rose 3.9% in July, adding to the supply glut and further depressing home values. Home prices were down 7.1% in July over the previous year, and at least a third of July's property sales involved foreclosed homes sold at discounted prices or by owners with no alternative.
# German weakness pressures euro. Q2 GDP fell 0.5% in Germany, the first contraction for Europe's biggest economy in almost four years. Q2 building investment fell 3.5%, while consumer spending was down 0.7%. Economists say they see no signs of a broad-based recovery in 2009. German business confidence fell to 94.8 in August - the lowest level since mid-2005 - from 97.5 in July. Economists expected a milder drop to 97.2. The euro is down 1.11% to $1.4575.
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By admin | August 23, 2008
Rebecca Engmann Darst contributed to this report.
Lehman Brothers (LEH) – Shares in Lehman Brothers bounded sharply out of the gate with a 10% gain to $15.09 on speculation that the firm might be bought by Korea Development Bank. The move in Lehman comes a day after respected analyst Richard Bove floated the notion of Lehman’s vulnerability to a hostile takeover bid, and amid generally bullish action in financials today on back of interest rate-dovish and largely reactive, rather than proactive, rhetoric from Fed chairman Ben Bernanke speaking in Jackson Hole. Response from option traders has been interesting, not least in the October contract, where one fund a trader appears to have played against the “easy-fix” rumors by buying a long 8870-lot put spread between strikes 2.50 and 5.00. This trade was entered for a 25-cent debit, creating an initial break even of $4.75 – requiring an almost disastrous $10 drop. The trader stands to gain as much as $2.25 – 9 times the money at risk – if Lehman shares make a cataclysmic drop, but don’t break below the $2.50 level. In another October play, traders may have sold 27-strike calls at 22 cents apiece in order to fund a long collar between strikes 12.50 and 20 – a protective play on an underlying stock position that would otherwise cost 33 cents to put on.
Charles Schwab (SCHW) – Rumors of a Deutsche Bank bid for Charles Schwab appear to be fueling speculative options activity in the brokerage this morning as shares read 2.5% higher at $23.59. The rumors have pumped implied volatility 19.3% higher to 47.8% as options trade at 7 times the normal volume. With calls outtrading puts by more than 8 to 1, traders are clearly buying calls into bullish momentum, particularly at the September 25 line, with interest spilling over into this strike price in the October contract. At least one trader opted to take the other side of the bet, buying a 1,500-lot long position in September 25 puts for $1.85 per contract.
Akamai Technologies (AKAM) – Takeover chatter, albeit of a more diffuse nature, is also coloring the volume in options of Internet content delivery company Akamai Technologies, whose shares are trading 5.5% higher at $23.85. Options volume has tripled against the daily average, with calls outmoving puts by more than 22 to 1. Buying interest has settled on front month calls at strikes 25 and 30, with volume at these same call strikes in the October contract trading to buyers and sellers. Implied volatility on all Akamai options is up more than 20% on the session at 54.1%.
King Pharmaceuticals (KG) – Shares in King Pharmaceuticals rose 7.2% to $12.05 today after disclosing that it had made a $1.4 billion bid to acquire Alpharma, that the company rejected. Option volume in King Pharmaceuticals tripled on the news, due largely to a spell of fresh buying in January 12.50 calls at $1.30 per contract. The premium on this position at $1.30 requires upside to $13.80 to break even, a level that would put King shares within $2 of its 52-week high set back in August 2007. King shares have hobbled this month since losing 17% in a single session after reporting a decline in Q2 profits of more than a third.
Alpharma (ALO) – Meanwhile, Alpharma’s finding out that it’s good to be the….object of King’s affections. Shares rose more than 42% to $34.20 on the news – a premium to the $33-per-share bid that Alpharma nixe. The news has lit a fire under Alpharma calls, which are outpacing puts by nearly 3-to-1. Heaviest volume appears at the September 35 calls, which are trading mostly to the middle of the market, while calls at the 40 strike appear to have mostly sold. Activity at the December 35 line showed calls trade to the middle of the market at $2.10, while a trader on the put side roughly half an hour later appeared confident enough to sell 35-strike puts for $1.80 per strike.
Target (TGT) – Shares in quirky retailer Target are up 2.4% at $52.31, three days after reporting a decline in Q2 profits that still exceeded consensus street estimates. Profits were hurt by a consumer pullback in nonessential items, where Target has tended to excel. Slowing profits or none, it’s been a banner month for the retailer – its stock is up more than 17% this month alone. One trader looks to have positioned for stocks to remain above the $50 watermark into September expiration while taking in premium by selling a 3,500 put spread in the September contract between strikes 47.0 and 50. The trader took a 65 cent credit that represents the maximum potential profit to be yielded if both contracts expire worthless on September 19.
Oracle (ORCL) – A similar strategy was employed in options of Oracle, where a 3,000-lot spread using puts was deployed in the front month contract between strikes 22.50 and 24 as shares printed a 1.5% rise to $22.64. The spread involved here totaled 90 cents, which a bullish seller of the spread would take as a credit in hopes of seeing Oracle shares break their 52-week high of $23.62 by September 19. A buyer of the put spread would take a soberer angle, paying the 90-cents as a debit while betting on a widening of the spread between the two strikes that would result in both contracts being exercised. Bear in mind that the maximum profit for a long buyer of this put spread is just 60 cents – less than the money at risk in the form of the 90 cents paid for the position. In this case, both sides of the spread are reported at the middle of the market, so we cannot confirm whether this trade was entered by a buyer or a seller. Open interest shows existing call and put positions at a near-even split.
Coca-Cola (KO) – Shares in Warren Buffett favorite Coca-Cola are up 1.3% to $54.20, pacing gains in the Dow today. Murmurings of a global slowdown in recent sessions have sparked some market investors to call for positioning away from large-multinationals with heavy European exposure , and option activity over the past week has shown some signs of traders positioning more defensively in December/January contracts in some multinational tickers. It’s in this light that the action in Coca-Cola is interesting, as it appears that a trader entered a 7,000-lot calendar put spread, selling 50-strike puts in the January 2010 $4.00 and buying the same position in the January ’09 contract for $1.60. Along with a $2.40 initial credit, the trader gets some defensive cover against a 7% pullback between now and mid-January.
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