Time-tested investment avenues

Age is just a number. Being 55 is like completing a solid half-century and looking forward to a spectacular century. It is also that time of your life when you have already fulfilled most of your responsibilities, from providing a secure future for yourself and your loved ones to marry-ing off your kids and most importantly building a strong monetary corpus. Now you can safely hang up your boots and say, "From now on I will live for myself."

As amazing as it may sound, the truth is that to live your life your way and enjoy your sunset years to the fullest, finances should be the least of your worries. There should be zero-dependence on others.

Planning for your old-age should ideally start at the youngest age possible - preferably from the time you get your first pay check. This will help you build a strong corpus by the time you reach 55. But alas, most of us are so engrossed in earning for our day-to-day needs that we lay little or no emphasis on retirement planning. So this article is aimed at all those who have never given a second thought to financial planning until today. It's never too late to start.

The first thing to do before drawing a financial plan is to make a list of three basic things - income, expenses and net worth.

Income: Make a list of the income you earn from all sources namely, salary (if still employed), pension (if retired), income from interest and income from other investment avenues.

Expenses: These include your monthly household expenses, medical expenses, insurance policy premiums, loan repayment EMIs and other miscellaneous expenses.

Net worth: Here you should make a list of all your assets like house, office, vehicles, investment in property, fixed deposits, Public Provident Funds or equity investments, Mutual Fund investments, investment in gold, etc.

A thorough evaluation of all the above three basic things will help you determine where you stand in terms of financial stability for the next 10, 20, 30 years or even more. This will also help you in determining which investment avenue is best suited for your particular plan. Many people live under the false belief that they have enough capital to last them through their lifetime. But in doing this they make a very basic but grave mistake of not taking into account the time factor.

For example, if a liter of milk costs around Rs 36-40 in today's market, 10 years or 20 years down the line, inflation will propel the same carton of milk to maybe Rs 50 or even Rs 60. They calculate their present rate of return on investment but with changing times the rates of return can also change and may even give negative returns on investment. Also with advancements in the healthcare sector the average life expectancy of individuals has gone up. So you need to factor in the additional cost of living for your extended lifespan.

Even though life expectancy has gone up, there is no denying the fact that old age will bring with it a host of ailments and maladies and the cost of hospitalization and medication that follow will burn a hole in your pocket. One serious illness can set you back by almost 10 to 20 years, financially.

To tide over all these entities, a proper financial plan needs to be drawn. This plan may differ from person to person depending on their needs. However, the gist remains the same.

The 3 most important factors to consider here are:
a. Safety
b. Rate of Return
c. Liquidity

To achieve an effective mix of all three in one products is next to impossible. In India, the products on offer generally concentrate on safety or on higher returns. There are pros and cons of both. If you go in for a safe investment avenue (debt instruments), the returns are either very low or there is a lock-in period, which hampers the liquidity of the product. In contrast if the returns are high (equity or equity-linked instruments), safety is at stake.

A lot of emphasis is laid on safety. Hence most retirees tend to park almost all their retirement corpus in fixed income and debt instruments and rightly so since at the ripe age of 55, capital erosion is a complete no-no. Only after you have guaranteed yourself a safe, fixed, regular income should equity come into picture.

But senior citizens should not shy away from equity considering it as a risky investment avenue since studies have shown that in the long run equity tends to give the best return than any other investment class. Equity is your best hedge against inflation.

So the right investment plan should include the best of both worlds. A very basic formula for calculating your debt to equity allocation is to subtract your age from 100 (If you are 55 then 100-55 = 45). Thus 55% of your investment should be in debt and fixed instruments whereas the remaining 45% should be in equity and equity-related products. But things are not always in black or white. Sometimes they are in shades of grey too.

The amount of equity exposure that should be factored in your financial plan depends purely on your financial goals and your risk-taking ability. It is a very personal thing. But a word of caution; if you are new to the stock market, don't get ambitious and buy stocks randomly on tips, it's suicidal. Instead invest your money through Mutual Funds. Let experts handle your money. Note that tax implication of each and every investment class should be given due importance while charting your plan.

In addition to the above investment avenues, there is a new product namely reverse mortgage, which is a relatively new and a novel concept in post-retirement planning. In a conventional mortgage setting, you normally borrow a lumpsum amount from a bank and repay it by paying EMIs. And under reverse mortgage, you mortgage your house (property) to a bank, which pays you a fixed sum regularly for a fixed tenure.

The concept of reverse mortgage was put forth in the Budget 2007-08. Under this scheme, any senior citizen above the age of 60, who owns a house in his or her own name can pledge his property to a bank in return for a guaranteed fixed regular amount for a pre-decided period. This is a boon especially for those who have no source of fixed income and nobody to fall back on financially. The prime requisite for any person to be eligible for reverse mortgage is that he should be the owner of the house and there should be no outstanding mortgage on the property.

Golden Rules Of Post-retirement Investing:

Invest more than 50%-60% or even more in debt-related instruments like Fixed Deposits, Postal Schemes, Debt Funds, etc. Roughly 20% of these should be in liquid funds, which can be easily cashed in times of need.
One must always keep at least 6-12 months' worth of monthly expenses as reserve fund in your savings bank account as contingency.

Invest a part of your portfolio in equity and Mutual Funds to hedge against inflation and give superior returns on your investment.

Diversify your investment. Don't put all your money in one or two investment avenues.

Invest in physical assets such as gold and real estate.

Don't stop or be late in your insurance premiums.

Opt for adequate medical insurance even if the premium is high.

Update your bank passbook on a regular basis so that you have a better understanding of your funds and can check for disparities, if any.

Keep your family members abreast of your investments so that they are not in the dark if anything untoward happens to you.

Make a will and provide for adequate nominations in all your accounts. You don't want your loved ones to run from pillar to post for your money after your demise.

If you follow these simple basic rules, your old age will be more enjoyable and wholesome than even your younger days. Remember that you worked all your life for your money. Now it is time for your money to do all the hard work. So relax and enjoy life.

Source: Nirmal Bang's Beyond Market

ADTRAN Upgraded to Outperform - Analyst Blog

We are upgrading our recommendation on ADTRAN Inc. (ADTN) to Outperform ahead of its second quarter of 2013 financial results, which will be released tomorrow before the opening bell.

Why the Upgrade?

ADTRAN continues to perform creditably despite a challenging business environment. The company is facing double-edged problems: (1) the communications equipment industry is currently going through a volatile phase due to uneven capital spending of telecom carriers and (2) increasing competitive pressure within the industry.

In the last reported quarter, ADTRAN stabilized its businesses with the U.S. Tier 1 carriers, while generating contracts from several Tier 2 carriers. The Enterprise division also complemented the effort with strong sales of IP gateway and switch products.

Looking ahead, we expect the company to benefit from market share gain, new product offerings, solid international sales and growing service revenues. We believe that free cash flow will also remain steady in the near future.

Apart from these, the company has also registered significant growth in its professional service activities that deploy the Total Access System components in telecommunication companies. The company has projected that professional services capabilities will remain accretive as both domestic and international carriers seek cost-effective methods to accelerate network deployments.

ADTRAN is also moving into virtual wireless LAN solutions with the buyout of Bluesocket, a privately held U.S. company that specializes in wireless network solutions with virtual control system.

Other Stocks to Consider

ADTRAN currently has a Zacks Rank #2 (Buy). Apart from ADTRAN, other stocks in the industry which are also performing well include Calix Inc. (CALX), Crown Castle International Corp. (CCI) and Equinix Inc. (EQIX). All these stocks currently carry a Zacks Rank #2 (Buy).

PPL Corp. Revamps Renewable Assets - Analyst Blog

Hot Gold Companies To Watch In Right Now

PPL Corporation's (PPL) subsidiary, PPL Montana announced the allotment of a new 60-megawatt (MW) powerhouse to the residents of the region. The company's $245 million investment in the new powerhouse replaces a century old powerhouse at the Ranibow Dam hydroelectric facility. This powerhouse will generate sufficient clean electricity to power 45,000 homes.

The newly constructed powerhouse is located approximately 2,500 feet downstream from the Rainbow Dam in the Great Falls and is 200 feet from the previous powerhouse.

In addition, PPL Corporation replaced over 23 miles of 100-kilovolt (KV) power lines and structures, improved the substations at each plant, and fixed a new Crooked Falls switchyard. Currently, water runs through a 2,500-foot power canal and a 25-foot diameter penstock to the new turbine generator.

This venture will help PPL Corporation to improve the competence and reliability of the electrical systems by linking five hydro plants of the Great Falls to NorthWestern Energy's grid.

PPL Corporation started its development process at the new facility in Oct 2009 and finished the same at the beginning of 2013. This facility commenced commercial operation from Apr 2013.

The project created over 200 construction jobs in the locality. In addition, the venture will increase Rainbow's generating capacity by 70% without the need for building new and big dams.

We note that utilization of renewable energy for electricity generation is increasing primarily due to its clean nature and a growing consciousness among the masses about its benefits. This has influenced utility providers to shift their energy mix to water, solar and wind from fossil fuels.

In fact, several countries have rolled out mandates for minimizing pollution level for power generation. In Aug 2005, the U.S Environmental Protection Agenc! y circulated a regulation that each of the federal agencies will consume renewable energy-fuelled power of not less than 7.5% in 2013 and onward.

To fulfill the environmental legislations, most of the utility providers invested substantial amounts for developing and upgrading their renewable utility assets. Apart from PPL Corporation, other utility providers including ALLETE, Inc. (ALE), Northeast Utilities (NU) and NRG Energy, Inc. (NRG) are investing heavily to develop and upgrade their renewable emission-free utility assets to comply with stringent regulations.

Fossil fuels still remain the most popular fuel source among energy producers owing to its abundance in the U.S. but it continues to face tough competition from the renewable power generation sources.

Allentown, Pa.-based PPL Corporation is an energy and utility holding company. The company currently has a Zacks Rank #3 (Hold).

Hot Growth Companies To Watch In Right Now

1.�Since Warren Buffett took the helm in 1964, Berkshire Hathaway (NYSE: BRK-B  ) has�never�underperformed the S&P 500 over any five-year interval.�

2. If you had taken $10,000 back then and achieved the same rate of return as Berkshire's growth in per share book value, at the end of 2012, you would have had $58,681,700.

3.�Under Buffett, Berkshire shareholders have collected just one dividend: a $0.10 per share payout in 1967. Buffett jokes he "must have been in the bathroom when that decision was made."

4.�Berkshire's roots go back more than 174 years to the founding of textile manufacturer Valley Falls Company, which itself merged with Berkshire Cotton Manufacturing Company in 1929. The resulting company merged with Hathaway Manufacturing to create Berkshire Hathaway in 1955.

Hot Growth Companies To Watch In Right Now: Ibm(IBM.L)

International Business Machines Corporation provides information technology (IT) products and services worldwide. The company operates in five segments: Global Technology Services, Global Business Services, Software, Systems and Technology, and Global Financing. The Global Technology Services segment provides IT infrastructure and business process services, including strategic outsourcing, process, integrated technology, and maintenance services, as well as technology- and process-based services. The Global Business Services segment offers consulting and systems integration, and application management services. The Software segment offers middleware and operating systems software, such as WebSphere software to integrate and manage business processes; information management software for database and enterprise content management, information integration, data warehousing, performance management business analytics, intelligence, and data analytics; Tivoli software for identi ty management, data security, storage management, cloud computing, enterprise mobility, and automation and provisioning of the datacenter; Lotus Software to connect people and processes for communication; rational software to support software development for IT and embedded systems; security systems software; and operating systems software. The Systems and Technology segment provides computing power and storage solutions; and semiconductor technology products and packaging solutions. The company?s Global Financing segment provides lease and loan financing to end users; commercial financing to dealers and remarketers of IT products; and remanufacturing and remarketing of equipment. The company was formerly known as Computing-Tabulating-Recording Co. and changed its name to International Business Machines Corporation in 1924. International Business Machines Corporation was founded in 1910 and is headquartered in Armonk, New York.

Hot Growth Companies To Watch In Right Now: Digital River Inc.(DRIV)

Digital River, Inc. provides end-to-end global cloud-commerce and marketing solutions. The company offers a range of services that enables its customers to establish an online sales channel. Its services include design, development, and hosting of online stores and shopping carts; store merchandising and optimization; order management; denied parties screening; export controls and management; tax compliance and management; fraud management; digital product delivery via download; physical product fulfillment; subscription management; online marketing, including email marketing; management of affiliate programs; paid search programs; payment processing services; Web site optimization, Web analytics, and reporting; and CD production and delivery services. The company also provides paid search advertising, search engine optimization, affiliate marketing, store optimization, multi-variant testing, and Web analytic and e-mail optimization services. In addition, it offers a range of payment processing services, such as multiple payment methods, fraud management, tax management, cloud-based billing, and other payment optimization services. The company sells its products and services through Internet and direct sales force. It serves software, consumer electronics, and computer and video game product manufacturers, as well as online channel partners, including retailers and affiliates in the United States, Austria, Brazil, China, Germany, Korea, Ireland, Japan, Luxembourg, Mexico, Singapore, Sweden, Taiwan, and the United Kingdom. Digital River, Inc. was founded in 1994 and is headquartered in Minnetonka, Minnesota.

Top 10 Tech Stocks To Watch For 2014: Wyndham Worldwide Corp(WYN)

Wyndham Worldwide Corporation, together with its subsidiaries, provides various hospitality products and services to individual consumers and business customers in the United States and internationally. It offers its products and services under the Wyndham Hotels and Resorts, Ramada, Days Inn, Super 8, Howard Johnson, Wyndham Rewards, Wingate by Wyndham, Microtel, RCI, The Registry Collection, ResortQuest, Landal GreenParks, Novasol, Hoseasons, cottages4you, James Villa Holidays, Wyndham Vacation Resorts, and WorldMark by Wyndham brand names. The company?s Lodging segment franchises hotels in the upscale, midscale, economy, and extended stay markets of the lodging industry, as well as provides hotel management services for full-service hotels. Its Vacation Exchange and Rentals segment provides vacation exchange products and services, as well as access to distribution systems and networks to resort developers and owners of intervals of vacation ownership interests (VOIs); a nd markets vacation rental properties primarily on behalf of independent owners, vacation ownership developers, and other hospitality providers. Wyndham Worldwide Corporation?s Vacation Ownership segment develops and markets VOIs to individual consumers; and provides consumer financing in connection with the sale of VOIs, as well as offers property management services at resorts. The company is headquartered in Parsippany, New Jersey.

Best Gold Companies To Invest In 2014

The price of gold fell heavily last week, and gold for immediate delivery ended the week down by 6.5%, at $1,343 per ounce.

LONDON -- Of course, the only practical way for most private investors to invest in gold is through exchange-traded funds. The largest gold ETF, the $51 billion�SPDR Gold Trust� (NYSEMKT: GLD  ) , ended the week 5.4% lower at $131.07, while London-listed�Gold Bullion Securities� (LSE: GBS  ) fell 4.6% to end the week at $131.44. So far this year, shareholders of Gold Bullion Securities have seen the value of their holdings fall by 13.7%, while the value of SPDR Gold Trust shares has fallen by 19.7%.

Gold's big movers
Several miners made gains last week, despite the falling price of gold. Here are three of the biggest risers:

Best Gold Companies To Invest In 2014: Goldman Sachs Group Inc.(The)

The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs; and underwriting securities, loans and other financial instruments, and derivative transactions. The company?s Institutional Client Services segment provides client execution activities, such as fixed income, currency, and commodities client execution related to making markets in interest rate products, credit products, mortgages, currencies, and commodities; and equities related to making markets in equity products, as well as commissions and fees from executing and clearing institutional client transactions on stock, options, and fu tures exchanges. This segment also engages in the securities services business providing financing, securities lending, and other prime brokerage services to institutional clients, including hedge funds, mutual funds, pension funds, and foundations. Its Investing and Lending segment invests in debt securities, loans, public and private equity securities, real estate, consolidated investment entities, and power generation facilities. This segment also involves in the origination of loans to provide financing to clients. The company?s Investment Management segment provides investment management services and investment products to institutional and individual clients. This segment also offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth individuals and families. In addition, it provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.

Best Gold Companies To Invest In 2014: Golden Star Resources Ltd(GSS)

Golden Star Resources Ltd., a gold mining and exploration company, through its subsidiaries, engages in the acquisition, exploration, development, and production of gold properties. It owns and operates the Bogoso/Prestea gold mining and processing operation that covers approximately 40 kilometers of strike along the southwest-trending Ashanti gold district in western Ghana; and the Wassa open-pit gold mine located to the east of Bogoso/Prestea in southwest Ghana. The company also has an 81% interest in the Prestea underground gold mine located in Ghana. In addition, it holds interests in various gold exploration projects in Ghana, Sierra Leone, Burkina Faso, Niger, and Cote d?Ivoire, as well as holds and manages exploration properties in Brazil in South America. The company was founded in 1984 and is based in Littleton, Colorado.

Advisors' Opinion:

• [By Curtis]

  Golden Star Resources, Ltd Com (AMEX:GSS): This equity had 10,766,183 shares sold short as of Aug 31st, as compared to 9,400,663 on Aug 15th, which represents a change of 1,365,520 shares, or 14.5%. Days to cover for this company is 3 and average daily trading volume is 3,419,976. About the equity: Golden Star Resources Ltd. is a mid-tier gold mining company. The Company’s operating mines are situated along the Ashanti Gold Belt in Ghana, West Africa.

Hot Penny Stocks To Invest In 2014: Iamgold Corporation(IAG)

IAMGOLD Corporation, together with its subsidiaries, engages in the exploration, development, and production of mineral resource properties worldwide. It primarily explores for gold, silver, zinc, copper, niobium, diamonds, and other metals. The company holds interests in eight operating gold mines, a niobium producer, a diamond royalty, and exploration and development projects located in Africa and the Americas. Its advanced exploration and development projects include the Westwood project in Canada; and the Quimsacocha project, which consists of 3 mining concessions covering an aggregate area of approximately 8,030 hectares in Ecuador. The company was formerly known as IAMGOLD International African Mining Gold Corporation and changed its name to IAMGOLD Corporation in June 1997. IAMGOLD Corporation was founded in 1990 and is based in Toronto, Canada.

Advisors' Opinion:

• [By Christopher Barker]

  Although I have not shed my long-standing contention that Yamana Gold offers one of the more deeply discounted vehicles for long-term gold exposure, lately my outlook for IAMGOLD has turned particularly bullish. With a looming spin-off of a 10% to 20% stake in the company's reliably profitable Niobec niobium mine, and the recent sale of its interest in a pair of high-cost gold operations in Ghana for $667 million, IAMGOLD finds itself in terrific financial shape to execute an aggressive $1.2 billion expansion imitative at existing operations.

  Considering the $1.6 billion net asset value (after tax) that IAMGOLD recently assessed for the Niobec mine alone, and a presumed hoard of more than $1.2 billion (in cash, cash equivalents, and gold bullion held for investment), at a market capitalization of $6.9 billion I find extreme comfort in the market's resulting valuation for IAMGOLD's 15.2 million ounces of attributable gold reserves.

Best Gold Companies To Invest In 2014: CME Group Inc.(CME)

CME Group Inc. operates the CME, CBOT, NYMEX, and COMEX regulatory exchanges worldwide. The company provides a range of products available across various asset classes, including futures and options on interest rates, equity indexes, energy, agricultural commodities, metals, foreign exchange, weather, and real estate. It offers various products that provide a means of hedging, speculation, and asset allocation relating to the risks associated with interest rate sensitive instruments, equity ownership, changes in the value of foreign currency, credit risk, and changes in the prices of commodities. CME Group owns and operates clearing house, CME Clearing, which provides clearing and settlement services for exchange-traded contracts and counter derivatives transactions; and also engages in real estate operations. Its primary trade execution facilities consist of its CME Globex electronic trading platform and open outcry trading floors, as well as privately negotiated transact ions that are cleared and settled through its clearing house. In addition, the company offers market data services comprising live quotes, delayed quotes, market reports, and historical data services, as well as involves in index services business. CME Group?s customer base includes professional traders, financial institutions, institutional and individual investors, corporations, manufacturers, producers, and governments. It has strategic partnerships with BM&FBOVESPA S.A., Bursa Malaysia Derivatives, Singapore Exchange Limited, Green Exchange, Dubai Mercantile Exchange, Johannesburg Stock Exchange, and Bolsa Mexicana de Valores, S.A.B. de C.V., as well as joint venture agreement with Dow Jones & Company. The company was formerly known as Chicago Mercantile Exchange Holdings Inc. and changed its name to CME Group Inc. in July 2007. CME Group was founded in 1898 and is headquartered in Chicago, Illinois.

Best Gold Companies To Invest In 2014: First Majestic Silver Corp.(AG)

First Majestic Silver Corp. engages in the production, development, exploration, and acquisition of mineral properties with a focus on silver in Mexico. The company owns interests in La Encantada Silver Mine comprising 4,076 hectares of mining rights and 1,343 hectares of surface land located in Coahuila; La Parrilla Silver Mine consisting of mining concessions covering an area of 69,867 hectares; and San Martin Silver Mine comprising approximately 7,841 hectares of mineral rights and approximately 1,300 hectares of surface land rights located in Jalisco. It also holds interests in Del Toro Silver Mine consisting of 393 contiguous hectares of mining claims and an additional 129 hectares of surface rights located in Zacatecas; Real de Catorce Silver Project comprising 22 mining concessions covering 6,327 hectares located in San Luis Potosi state; and Jalisco Group of Properties consisting of mining claims totalling 5,240 hectares located in Jalisco. The company was founded in 1979 and is headquartered in Vancouver, Canada.

Advisors' Opinion:

• [By Goodwin]

  The shares closed at $88.19, down $1.1, or 1.23%, on the day. Its market capitalization is $77.08 billion. About the company: Siemens AG manufactures a wide range of industrial and consumer products. The Company builds locomotives, traffic control systems, automotive electronics, and engineers electrical power plants. Siemens also provides public and private communications networks, computers, building control systems, medical equipment, and electrical components. The Company operates worldwide.

Best Gold Companies To Invest In 2014: Northgate Minerals Corporation(NXG)

Northgate Minerals Corporation, together with its subsidiaries, engages in exploring, developing, processing, and mining gold and copper deposits in Canada and Australia. Its principal producing assets include 100% interests in the Fosterville and Stawell Gold mines in Victoria, Australia; and the Kemess South mine located in north-central British Columbia, Canada. The company was formerly known as Northgate Exploration Limited and changed its name to Northgate Minerals Corporation in May 2004. Northgate Minerals Corporation was founded in 1919 and is headquartered in Toronto, Canada.

Advisors' Opinion:

• [By Christopher Barker]

  I've been reminding Fools to consider positioning for Northgate Minerals' golden explosion for months, and patient gold investors continue to await the day when Northgate's powerful prospects are more fully reflected in the shares. Construction of the critical Young-Davidson mine continues right on schedule, and first production now stands about two quarters away. That means Northgate is reasonably likely to achieve its 2012 production target of 300,000 ounces, followed by 350,000 ounces in 2013. Meanwhile, Northgate recently drilled "one of the best holes ever intersected on the property" -- featuring 4.31 grams of gold per ton over a very wide 79.6-meter segment -- from a new discovery zone outside of the existing 2.8 million-ounce reserve.

  If Young-Davidson were Northgate's sole asset, these shares would still be undervalued here at about $2.60 per share. With a preliminary assessment looming for the reworked Kemess Underground project, a new drill program at the Awakening Gold project in Nevada, and two operating gold mines in Australia, Northgate figures among the clearest bargains in the gold patch.

John Burbank's Top Q2 Increases

During the second quarter Guru John Burbank of Passport Capital flipped around a lot of his stocks. The guru sold out of 51 different companies and added 55 new stocks to his portfolio. According to the guru's second quarter filings released yesterday, Burbank currently holds 132 stocks valued at over $3 billion.

The following five companies represent the five largest increases Burbank made to his portfolio during the second quarter.



Qihoo 360 Technology Co. (QIHU)

During the second quarter, Burbank made his largest increase in Qihoo 360 Technology. The guru upped his stake 3662.45% by purchasing a total of 1,530,025 shares at an estimated average price of $38.49 per share. The price per share has skyrocketed approximately 84% since then.

As of the second quarter, Burbank held on to 1,530,025 shares of Qihoo, representing 1.32% of the company's shares outstanding and 2.4% of his total portfolio.

Burbank's holding history as of the second quarter:

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The company is an Internet company in China. It has amassed a large and loyal user base, which monetize primarily through offering online advertising and Internet value-added services.

Qihoo's historical revenue and net income:

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Qihoo 360 Technology has a market cap of $8.27 billion. Its shares are currently trading at around $67.34 with a P/E ratio of 217.20, a P/S ratio of 22.50 and a P/B ratio of 15.70.

Mondelez International (MDLZ)

During the second quarter, Burbank increased his position in Mondelez International by 899.32%. The guru purchased a total of 1,834,612 shares at an estimated average second quarter price of $30.42. Since then the share price is up approximately 1.8%.

Burbank now holds 2,038,612 shares of Mondelez, representing 0.11% of the company's shares o! utstanding and 1.9% of his total portfolio.

Burbank's holding history of Mondelez as of the second quarter:

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Mondelez manufactures and markets confectionery products. Its product portfolio includes packaged food products, including biscuits, confectionery, beverages, cheese, convenient meals and various packaged grocery products.

Mondelez's historical revenue and net income:

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The Peter Lynch Chart suggests that the company is currently overvalued:

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Mondelez has a market cap of $55.2 billion. Its shares are currently trading at around $31.00 with a P/E ratio of 29.20, a P/S ratio of 1.60 and a P/B ratio of 1.80. The company had an annual average earnings growth of 0.8% over the past 10 years.

Liberty Global PLC (LBTYK)

John Burbank upped his stake by 376.63% during the second quarter. The guru purchased a total of 402,991 shares in the second quarter price range of $64.57 to $73.78, with an estimated average price of $69.23 per share. Since then the price per share has increased approximately 4.9%.

Burbank holds 509,991 shares of Liberty Global as of the second quarter, representing 0.20% of the company's shares outstanding and 1.1% of his total portfolio.

Burbank's holding history as of the second quarter:

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The company is an international provider of video, broadband internet and telephone services, with continuing consolidated broadband communications and/or direct-to-home satellite operations.

Liberty Global's historical revenue and net income:

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! Liberty Global has a market cap of $29 billion. Its shares are currently trading at around $72.52 with a P/E ratio of 930.20, a P/S ratio of 1.80 and a P/B ratio of 1.60. The company had an annual average earnings growth of 2.9%.

Sempra Energy (SRE)

During the second quarter Burbank increased his position in Sempra Energy by 208.21%. The guru bought a total of 183,588 shares at an estimated average quarterly price of $81.50. The share price has increased approximately 1.8% since then.

As of the second quarter Burbank holds a total of 271,764 shares of Sempra Energy, representing 0.11% of the company's shares outstanding and 0.73% of his total portfolio.

Burbank's holding history as of the second quarter:

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Sempra Energy is an energy services holding company, which provides electric, natural gas and other energy products and services to its customers.

Sempra Energy's historical revenue and net income:

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The Peter Lynch Chart suggests that the company is currently overvalued:

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Sempra Energy has a market cap of $20.27 billion. Its shares are currently trading at around $83.00 with a P/E ratio of 20.90, a P/S ratio of 2.00 and a P/B ratio of 2.00. The company had an annual average earnings growth of 4% over the past ten years.

Amazon.com (AMZN)

John Burbank's fifth largest increase came from Amazon.com. The guru upped his position 183.74% over the second quarter. Burbank bought a total of 160,741 shares in the second quarter price range of $248.23 to $282.10, with an estimated average price of $266.40. Since then the price per share has increased approximately 8.3%.

Burbank held a total of 248,225 shares as of the second quarter, representing! 0.05% of! the company's shares outstanding and 2.3% of his total portfolio.

Burbank's holding history as of the second quarter:

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The company serves consumers through its retail websites and focuses on selection, price, and convenience. It designs its websites to enable millions of unique products to be sold by the company and by third parties across dozens of product categories.

Amazon's historical revenue and net income:

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Amazon has a market cap of $131.59 billion. Its shares are currently trading at around $288.01 with a P/E ratio of 3604.50, a P/S ratio of 1.90 and a P/B ratio of 15.00.

You can view John Burbank's second quarter portfolio here.

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Hot Performing Companies For 2014

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80 Years of Fiduciary in 15 Minutes: TDAI Fiduciary Summit

How do you pack 80 years of financial history into 15 minutes? That was the tall order given to Rutgers University law professor Arthur Laby at TD Ameritrade’s 2013 Fiduciary Leadership Summit in Palm Beach, Fla., on Thursday.

The short oral history was billed as a way to set the stage for many of the fiduciary-related issues that would be discussed that afternoon.

Laby began by noting recent lawsuits brought by the Financial Planning Association and the Business Roundtable relating to the SEC’s attempt to grant the brokerage industry fiduciary status “greatly influenced the debate.”

He added that broker-dealers originally were just that; “brokers acted as agents for the client, while dealers acted as principals with the clients.” They were subject to the Securities Exchange Act of 1934 under a separate SRO framework.

Investment advisors did not (and do not) not have an SRO framework and are regulated under the Investment Advisers Act of 1940.

As long as any advice broker-dealers offered was “incidental,” and they did not collect “special compensation,” they were not subject to regulation under the Investment Adviser Act.  

“It worked pretty well for quite some time,” Laby explained. “Then life got difficult in 1975. Until that time, commissions were fixed, almost like public utilities, but Congress eliminated fixed commissions.”

It was around this time that broker-dealers began to market themselves as advisors.

“It was hard then to argue that the advice was incidental. If anything, it was the opposite. The brokerage portion was incidental to the main dish of advice.”

In addition, broker-dealers began charging asset management fees. They lobbied the SEC by arguing that simply re-pricing their services shouldn’t subject them to the Investment Adviser Act.

“It was also hard to argue that with the two prongs of advice and compensation no longer excluding them, they shouldn’t be subject to the IA act, but that’s what they argued, and the SEC agreed.”

It culminated in the FPA’s lawsuit, which it won. The ruling, issued March 30, 2007, struck down the SEC rule—the so-called "Merrill Rule"—that exempted brokers from being regulated as investment advisors (under the Investment Advisers Act of 1940) in fee-based brokerage accounts.

“The issue of fiduciary started with the SEC, went to Congress with Dodd-Frank, went back to the SEC with the staff study, went to the staff who then reported the findings back to the SEC,” he concluded, noting there still is not a standard.

---

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BrightScope Defends a Business Model Modeled After Morningstar

Independent registered rep David Sterling was infuriated last month when a BrightScope Advisor Pages salesman called to see if he wanted to pay a fee to manage the information on the Web page that describes Sterling’s business.

Until then, Sterling wasn’t aware that there was such a page. But when he checked it out, he discovered that anybody who looked him up on BrightScope would find a red mark against his name and a link to the Financial Industry Regulatory Authority’s BrokerCheck, where FINRA lists what Sterling believes is an out-of-date and irrelevant report on his long-resolved dispute with a contractor over payment on a kitchen remodeling job.

“For just under $1,000 per year I can subscribe to BrightScope so that I can have access to and edit information gathered about me. Of course, the gentleman went on to explain how valuable this option is to my business and branding. What a farce,” Sterling wrote in an complaint emailed to ThinkAdvisor.

But while advisors such as Sterling are upset about BrightScope's sales methods and online business model, others in the advisor industry say that's exactly how the website is supposed to work.

One such fan of BrightScope is Chip Roame, managing partner of industry consultant Tiburon Strategic Advisors, who calls BrightScope an innovative disruptor. “BrightScope will disrupt the advisor industry, and become a portal for advisor data,” said Roame when commenting on Michael Kitces’ decision in April to join BrightScope’s advisory board. Kitces, a partner with Pinnacle Advisory Group, publishes The Kitces Report financial planning blog and is a regular speaker at industry events. He also is a contriubtor to ThinkAdvisor.

Morningstar Is BrightScope’s Role Model

BrightScope officials, too, have argued the merits of online transparency since their launch of Advisor Pages two years ago, and they point to Morningstar as their role model.

BrightScope CEO and co-founder Mike Alfred said last week that he and his team of executives have engaged in regular discussions with officials at Morningstar for several years. Alfred described BrightScope as the Morningstar of financial distribution channels, because it intends to democratize information about advisors and 401(k) plans and make those markets more efficient.

“I think our business model is pretty much misunderstood,” Alfred said. “But we’ve seen how Morningstar has evolved since 1984. Although Morningstar had people screaming when it was new, the service that Morningstar offers today is huge. Morningstar drives real consumer decision-making, and now the asset managers have to be users of Morningstar because between 70% and 80% of the mutual funds that sell the most have Morningstar ratings of four or five stars. If you’re rated two stars, you’re probably not moving flows. That’s powerful.”

Alfred said his privately held company has almost 70 employees. Though he wouldn’t reveal BrightScope’s market cap or revenues, he said the firm has been cash flow positive for three straight years, with more than 60% revenue growth every year. He said the public website represents only 3% of what’s going on at BrightScope, at the very front end of the business, and the revenue is generated at the back end through software and data subscriptions sold to large asset managers, recordkeepers, large plan sponsors and financial advisory firms in the RIA, wirehouse and IBD channels.

When told of Sterling’s complaints, Alfred said his firm is building out additional functionality to benefit non-subscribers. “We’re trying to make it more inclusive so that advisors who don’t use the subscription service can still get something out of it,” he said in a phone interview.

‘When I Got the Solicitation, I Felt Painted Into a Corner’

But Sterling, who in addition to being a registered rep is a practicing attorney and vice-chairman of the American Bar Association’s Insurance and Financial Planning Committee, expressed concern in a separate phone interview that any consumer who checks him out online will see the red mark against his name in the BrightScope regulatory disclosures section and not even bother to do further due diligence on FINRA’s BrokerCheck site.

Further, Sterling said, he resented feeling forced to pay a fee to clear his name.

“It felt like a solicitation that’s so poorly viewed in the finance industry, where you get a sales pitch in a cold call,” he said. “The foundation of my concern centers on the question of the fiduciary issue. Compliance is a way of life for me, and a lot gets lost in translation. That’s the concern I have with all these online digital deals. I laughed when I told a client about the kitchen repair, but I don’t have the opportunity to do that on BrightScope. When I got the solicitation, I felt painted into a corner. Whether you like it or not, you’re a part of the database.”

Alfred disagreed with David Sterling’s argument that online consumer searches of advisors should be viewed as a problem.

Why balancing your financial portfolio is a must

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Q: I can invest Rs 10,000 per month. My goal is Rs 35-40 lakh in a time period of six years, I have an insurance of approximate Rs 20 lakh cover and I have PPF funds worth Rs 4,000-5,000 per month. How should I allocate the money?

A: Firstly, if you invest Rs 10,000 a month even with a very aggressive allocation you should keep in mind that over a six year horizon it will be difficult to accumulate a corpus of Rs 35-40 lakh without taking too much risk. You are looking at a corpus that is closer to Rs 15-20 lakh even if your allocations were very aggressive and the market did very well.

Your allocations to funds should be pretty aggressive so I would recommend you take about 60% of this amount and invest it in large cap equity funds specifically HDFC Equity or DSP Equity. IDFC Premier Equity is a good fund where you could park another 20% into midcap equity funds to give you some kick in the portfolio. Then save about 15% to allocate to gold; you can allocate to a gold fund like the Goldman Sachs Gold ETF, the former Benchmark Gold ETF - that would be my broad advice.

Q: I want to invest Rs 5,000 per month. I have started an SIP of Rs 5,000 in 2000 each in HDFC Prudent Fund and IDFC Premiere Equity Fund. Please suggest the best Gold ETF for a timeframe of five years with the maximum returns?

A: As far as Gold ETF goes, it�s an important part of your portfolio so you should certainly allocate to it. I think you are allocating about the right amount because between your SIPs and Prudents and Premier Equity, with Rs 5,000 planned in gold, you will have about 60% in equity and 30% in gold, which is a good allocation. Among Gold ETFs, the best one is the Goldman Sachs Gold ETF, this was formerly called Gold Bees by Benchmark Mutual Fund. It is one of the largest and oldest ETF. It tracks the gold prices more closely than any of the other ones. The fees and the management cost are also the lowest so it�s got a very good history behind it. So that would certainly be the one I would recommend.

I would suggest against investing more in prudents. I would look at another fund, either a balanced fund or an equity fund. The reason is that both prudents and Top 200 have got very large overtime and performance is likely to suffer in the next couple of years as the funds get too large for their capacity. So I would look at Birla Frontline Equity or a DSP Equity Fund which also have a great track record but are smaller in size.

Hudson Pacific Leases to Uber - Analyst Blog

Hudson Pacific Properties, Inc. (HPP) recently penned a new lease agreement with Uber Technologies, Inc. for an 88,134 square feet of space at its Class A office property, 1455 Market Street. The 10-year lease deal is slated to commence in first-quarter 2014.

As per the deal, Uber will occupy the entire fourth floor and backfills space of 1455 Market Streetbuilding. This space is occupied by property's largest tenant, whose lease term was scheduled to expire in 2017.

Spanning around 1.02 million square feet, this 1455 Market Street is a 22-story building and data center facility. The property is located on a 3.01-acre plot and already houses Square Inc., a leading electronic payment service provider. It is advantageously placed in the vibrant Civic Center / Van Ness submarket of San Francisco, which is one of the best technology and business hubs of the city. Moreover, it is close to the city's largest government and cultural firms such as City Hall, the Supreme Court of California and the corporate

The ideal location of 1455 Market Street makes it a desirable asset for firms catering to both national and local governmental agencies. The deal will help improve occupancy levels and boost rental revenue growth going forward.

Lately, Hudson Pacific has been inking lease deals to strengthen its tenant base. In May 2013, the company entered into a lease expansion and extension deal with NFL Media for 2 properties in South Calif., namely 10900 and 10950 Washington. The move enhanced Hudson Pacific's relationship with its existing media and entertainment tenants.

However, the demand for office space remains moderate amid a dismal environment with elevated unemployment levels and sufficient availability of space. This creates a pressure on rent and occupancies.

Hudson Pacific currently carries a Zacks Rank #5 (Sell). REITs that are performing better than Hudson Pacific include DCT Industrial Trust Inc. (DCT), Host Hotels & Resorts Inc. (HST) and CubeSmar! t (CUBE). All these stocks have a Zacks Rank #2 (Buy).

Earnings Growth Concentrated in a Few Pockets - Ahead of ...

Thursday, July 25, 2013

This morning's busy lineup of Q2 earnings reports provides further confirmation of the trend we have been seeing repeatedly since this reporting cycle got underway. The trend is that earnings and revenue growth isn't materially different from what we saw in the first quarter. But a lot of the positivity is concentrated in the Finance sector; the picture isn't quite that encouraging outside of that one sector.

To be fair to the data, there are pockets of strength outside of Finance as well – in autos, commercial aviation, and housing. The strong results from General Motors (GM) this morning and Ford (F) and Boeing (BA) on Wednesday confirm the momentum in those end markets. In fact, this morning's Durable Goods Orders outperformance is mostly due to momentum in the order books for Boeing and others in the sector. Growth in non-defense capital goods (excluding aircraft), generally considered a proxy for corporate capital spending, came largely in-line with expectations. Soft capital spending has been a major drag for companies in the Technology and Industrials sectors.

We will get quarterly results from Amazon (AMZN) and Starbucks (SBUX) after the close today, but including this morning's reports from General Motors, Dow Chemicals (DOW), 3M (MMM) and others, we now have Q2 results from 229 S&P 500 companies or 45.8% of the index's total membership that combined account for 54.7% of its total market capitalization.

Total earnings for these 229 companies are up +4%, with 66.8% beating earnings expectations. On the revenue side, we have a growth rate of +3.6%, with 47.6% coming ahead of top-line expectations. The earnings and revenue growth rates and the revenue beat ratio seen thus far are broadly in-line with what we saw from the same group of 229 companies in Q1, while the earnings beat ratio is tracking a bit lower.

As pointed out earlier, the aggregate numbers for the S&P 500 thus far don't look so bad, particularly re! lative to pre-season fears. But a lot of that respectability is coming from the strong Finance sector results. Once we take Finance out of the earnings reports that have come out thus far, what is left behind isn't satisfactory by any measure. Total earnings growth outside of Finance is tracking a decline of -2.9% (vs. +4% for the S&P 500 as a whole). Even the beat ratios are tracking below what we have been seeing in recent quarters once Finance is stripped out of the aggregate numbers.

The Technology sector is a good example of how the Q2 earnings season is shaping up outside of Finance. Facebook's (FB) results after the close on Wednesday were very impressive, but they aren't representative of the issues facing the broader sector. Facebook's outperformance is a function of their ability to monetize the growing mobile traffic, prompting Mark Zuckerberg to claim that mobile platforms will soon be bigger contributors to total ad revenue than the desktop.

Total earnings for the 78.5% of the sector's total market cap that has reported Q2 results already are down -11.3% on +1.6% higher revenues, spotlighting the sector's margin woes. So how much of a drag is the Tech sector proving to be S&P 500 earnings growth thus far? If we exclude results from the Tech sector, then total earnings for the S&P 500 would be up +9.5% from the same period last year.

Not to make light of the strength in the Finance sector, but we should keep in mind that a lot of the earnings growth for the banks came from loan loss reserves and not from loan growth. Reserve releases are a net positive as they reflect improving credit quality, but they don't constitute the sector's earnings power. Bottom line, whichever way you want to look at the corporate earnings picture emerging from the Q2 earnings season, it isn't very encouraging.

Am I the only one wondering why the market should be sprinting towards new all-time highs in this corporate earnings backdrop?

Sheraz M! ian
D! irector of Research





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Hold onto FMC Technologies - Analyst Blog

On Jul 8, 2013, we retained our Neutral recommendation on oil drilling equipment maker FMC Technologies Inc. (FTI). Our investment thesis is supported by a Zacks Rank #3 (Hold).

Why the Reiteration?

The company has a diversified product portfolio, specialty service capabilities and proprietary technological expertise. Other positives for FMC Technologies include a strong backlog position, growing international operations and a favorable outlook for subsea activity levels. However, we think the current valuation is fair and adequately reflects the company's future growth prospects.

Detailed Analysis

FMC Technologies is particularly well positioned in the subsea systems market. It is the company's largest and fastest-growing business, accounting for about two-thirds of revenue. Subsea products have seen an increase in interest, and we expect earnings in this segment to strengthen – especially due to FMC Technologies' leadership position in subsea production systems, including subsea trees, controls and manifold and tie-in systems.

Order flow and backlog for subsea products and services will continue to be healthy and trend higher. FMC Technologies remains poised to receive a large share of big contracts moving forward. We are further encouraged by the company's recent subsea equipment deals with industry giants like Brazil's state-run energy powerhouse Petroleo Brasileiro S.A., or Petrobras (PBR) and French major TOTAL S.A. (TOT).

FMC Technologies' strong backlog, which now stands at more than $5 billion, not only reflects steady demand from its customers but also offers long-term earnings and cash flow visibility. This enables the company to navigate uncertainty better than many of its peers.

However, we have a difficult time justifying a sufficient enough potential return to support an Outperform rating. Moreover, with markets remaining competitive and pricing likely to be weak, we believe FTI shares are fairly valued and expect ! them to perform in line with the broader market.

Stocks That Warrant a Look

While we expect FMC Technologies to perform in line with its peers and industry levels in the coming months and advice investors to wait for a better entry point before accumulating shares, one can look at Dril-Quip Inc. (DRQ) as a good buying opportunity. This U.S. energy machineries provider – sporting a Zacks Rank #1 (Strong Buy) – has a solid secular growth story with potential to rise significantly from current levels.

Ken Fisher and the Price to Research Ratio

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Any investor that has followed the techniques of Kenneth Fisher, writer at Forbes magazine for over 25 years and investing guru, has discovered that Fisher's methodology is ever being refined. Aside from his P/S ratio introduced in his book, "Super Stocks," Fisher also introduced investors to a "price to research ratio." You will still discover Fisher occasionally talking about the P/S ratio, but the price to research ratio appears to have disappeared from the radar screen.

It is this ratio that I would like to revisit.

One finds his book "Super Stocks" still rewarding because Fisher lays out an investing methodology that still leads to satisfactory returns, even if he has personally strayed away and/or altered it to suit himself. In one of his latest books, "The Only Three Questions That Count," Fisher introduces investors to a little statistical lesson on casual correlations and the correlation coefficient. While the concepts sound complicated, they are actually easy and he teaches investors how to "credibly" disprove that any two events are related to one another. This lesson alone makes the book worthwhile once you grasp the concept. Perhaps it was the use of this concept that silenced Fisher on the price to research ratio. Whatever the case, it does not appear to raise its head again in his writings.

Fisher's Price to Research Ratio was simply calculated by dividing the company's market capitalization by the amount of research and development shown on the income statement over the last full 12 months. He determined that if the:

Price to Research Ratio:

>15 = Fail

>10 or ≤ 15 = Pass (barely)

≥5 or ≤10 = Pass

Is Alcatel-Lucent a Buy at These Prices?

With shares of Alcatel-Lucent (NYSE:ALU) trading around $1, is ALU 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

Alcatel-Lucent is a France based company that proposes solutions used by service providers, businesses, and governments worldwide to offer voice, data, and video services to their own customers. It is also engaged in mobile, fixed, Internet Protocol and optics technologies, applications and services. The company operates in three business segments: Networks; Software, Services and Solutions and Enterprise. As consumers and businesses continue to connect at an increasing rate, communications companies like Alcatel-Lucent stand to see rising profits. However, the company must adapt to new technologies if they are to see a rising consumer base.

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T = Technicals on the Stock Chart are Mixed

Alcatel-Lucent stock has seen lower highs and lower lows over the last several years. Any significant push higher by the stock has been met with increased selling. Currently, the stock is trading near multi-year lows but may be forming a base. The stock has made new all-time highs just about every year and looks to be headed there this year as well. 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, Alcatel-Lucent is trading around its key averages which signal neutral price action in the near-term.

(Source: Thinkorswim)

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

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Alcatel-Lucent Options	42.29%	0%	3%

What does this mean? This means that investors or traders are buying a minimal 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	Average	Average
July Options	10 Best Stocks To Buy Right Now Average	Average

As of today, there is an average demand from call and put buyers or sellers, neutral over the next two months. To summarize, investors are buying a minimal 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 Decreasing 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 Alcatel-Lucent’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Alcatel-Lucent 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)	-203.11%	-423.67%	-171.56%	-342.68%
Revenue Growth (Y-O-Y)	-3.14%	0.94%	-7.32%	-19.53%
Earnings Reaction	-1.42%	-7.55%	-9.9%	-2.83%

Alcatel-Lucent has seen decreasing earnings and revenue figures over the last four quarters. From these figures, the markets have been unhappy with Alcatel-Lucent’s recent earnings announcements.

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P = Average Relative Performance Versus Peers and Sector

How has Alcatel-Lucent stock done relative to its peers, Cisco (NASDAQ:CSCO), Ericsson (NASDAQ:ERIC), Nokia (NYSE:NOK), and sector?

	Alcatel-Lucent	Cisco	Ericsson	Nokia	Sector
Year-to-Date Return	6.12%	7.26%	22.57%	-3.54%	8.39%

Alcatel-Lucent has been an average relative performer, year-to-date.

Conclusion

Alcatel-Lucent provides communications products and services to consumers and businesses around the world. The stock has suffered over the last few years, however, it may be forming a value base at these prices. Earnings and revenue figures have been decreasing over most of the last four quarters, so, investors have not been too happy. Relative to its peers and sector, Alcatel-Lucent has been an average performer. WAIT AND SEE what Alcatel-Lucent does in coming quarters.

A-B InBev Completes Modelo Acquisition

The long acquisition is over. Anheuser-Busch InBev (NYSE: BUD  ) announced yesterday it had completed its acquisition of Mexican brewer Grupo Modelo in a deal valued at $20.1 billion that creates a combined company with approximately 400 million hectoliters of beer volume annually.

As part of the transaction hammered out with the U.S. Justice Department to overcome antitrust objections, A-B will sell to Constellation Brands Modelo's Piedras Negras brewery, its 50% stake in Crown Imports, and perpetual rights to Grupo Modelo's brands in the U.S. That deal is separately expected to close on June 7.

The buyout of Grupo Modelo was announced in June 2012. The U.S. Department of Justice had sued A-B in January 2013 to block the deal, before working out a compromise.

Anheuser-Busch InBev CEO Carlos Brito said in a statement Tuesday: "We have tremendous respect for Grupo Modelo and its brands, and we are thrilled to welcome our Grupo Modelo colleagues to the global team. We look forward to realizing our opportunities for growth and bringing our beers to more consumers around the world as we join two world-class brewers."

The deal brings together five of the top six most valuable beer brands in the world. With Mexico recognized as what A-B calls "the world's fourth-largest profit pool for beer" and still possessing an "attractive" growth profile, the combination of the two brewers is expected to generate approximately $1 billion in cost synergies.

With almost 90% of Modelo's outstanding Series C shares validly tendered and acquired as of May 31, A-B will establish a trust to further accept Modelo shares that get tendered at a rate of $9.15 per share and will do so over the next 25 months. Until then, Modelo's shares will continue to be quoted on the Mexican Stock Exchange.

A-B InBev will recognize in its financial reports the amount deposited with the trust as restricted cash and will recognize a liability for the Grupo Modelo shares it did not acquire by the end of the tender offer. A-B InBev now owns approximately 95% of Grupo Modelo's outstanding common shares.

A side agreement has Modelo shareholders receiving 23.1 million A-B shares over the next five years for $1.5 billion through deferred share instruments. However, by May 31, approximately 80% of the shares promised in the deferred share instruments had been hedged.

Both companies have a relationship dating back more than 20 years, and their combination expects to benefit from the significant growth potential that brands such as Corona have on a global basis. Moreover, A-B seeks to leverage opportunities for its own brands to grow through Modelo's distribution network.

link

Investing In Fine Wine

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Your significant other orders a certain cabernet for $40 that he feels will be worth $400 in the future, and wants to start collecting it and other vintages. But should you invest in a product that disappears with a broken bottle, or can be emptied into glasses at a party on a whim? How do you really know what a bottle is worth and what it will be worth in the future? Plus, what expenses and space requirements are involved in storing wine? Read on to learn more about investing in wine.

For Love or Money
When you decide to invest in wine collecting, the first decision you have to make is whether you are investing for the love of certain wines, to make money, or a combination of both.

If you are going to invest purely because you are a connoisseur of fine wines, you can pick wines you enjoy in the hope that they will increase in value. Then, if you happen to drink a few bottles along the way, it's OK, because the endeavor is a hobby, like collecting baseball cards or stamps.

Defeating Breakage and Spoilage with Storage
When you are storing wine that you'll drink within a few weeks, you can keep it in a wine rack for display in your home. However, keeping your wine in optimal salable and flavor condition for long time periods requires more careful storage. After all, according to Wine Spectator writer Bruce Sanderson in "The ABCs Of Storage", wine will produce small, flaky crystals if exposed to excessive cold temperatures, although this is less likely to happen in wines that are cold-stabilized. A room that is too hot could cause rapid increases in the time a wine takes to mature and reach optimum flavor and salability.

If your wine matures too fast, you'll have to sell it faster, reducing the likelihood of making big profits in the future.

To properly store wine, you have to have a dark area with optimal temperature and humidity l! evels. This can be accomplished in a natural cellar in your basement or a dark closet if you live in a moderate climate. To decide whether your area of the country is suitable to store wine, talk with wine cellar managers in your area. Otherwise, if you don't have optimal conditions available, you will need a wine cooler, which for a large collection could run into the thousands of dollars. You'll also need substantial space.

In addition to space and equipment, you will have to include the electricity costs of running your wine coolers in your budget. The best way to calculate estimated costs of electricity use is to check energy ratings of the wine coolers you are considering buying, and then relay this information to your electric company to see what electricity costs would average per month.

If you don't have the space to store your wine collection, you will want to contact local wine storage facilities for pricing and information concerning storage capabilities, and the amount of insurance included with storage pricing.

Wine Insurance
Expensive wines are considered valuable items similar to jewelry. You will need to discuss with your home insurance company how to cover your collection to its full value, which will most likely include adding coverage for valuables. You will want to compare prices for wine insurance from other carriers as well. Remember to consider the deductible amount, the coverage amount in relation to the value of your collection, and the cost of the insurance policy.

If you live in a climate prone to natural disasters such as earthquakes, floods or tornadoes, make sure your insurance policy covers breakage or contamination due to these weather emergencies.

Collecting by Budgeting
Once you've added up storage and insurance costs, you should configure an overall budget for how much you'd like to spend on wine investments. Use the following factors to calculate a total budget: Costs of insurance and upkeep of storage facility; and How much money you are willing to risk on wine bottles after deducting wine insurance and storage costs plus other safer investments from your total investment budget. The Impact of State Regulations
If you live in a state that doesn't allow purchasing wine over the internet, directly through a winery or through a retailer that isn't required to purchase wine through a wholesaler, you are limited in the selections of wines you can purchase for your collection based on what your region's wholesalers choose to carry. Before you decide to start a collection, call your state government to find out if you will be faced with these restrictions in wine availability.

How to Research Current and Future Wine Values
The best indicators of a wine's current and future values are ratings and scarcity. Wine critics rate wines on a scale of 1 to 100. Before you purchase wine based on ratings, read reviews and ratings from several critics. Wines that rate around 95 are considered high quality.

Scarcity is harder to predict. A wine that is currently in limited production is a good indicator, but which wines will be scarce later on is harder to figure out. Research wineries you are interested in for past performance of prices. You can keep track of wine prices for more than 10,000 different wines at Vinfolio.com.

Commission
If you graduate to selling a valuable wine in the future, most of this is done through auction houses. The commission charged varies quite a bit between an online auction house, such as winebid.com or winecommune.com, and Sotheby's or Christie's. However, before you decide to go with a cheaper online alternative, make sure the sale prices of the wines you wish to sell are similar. If you have a wine that is currently going for $10,000 a case at Sotheby's and $5,000 at an online auction, the difference in commission costs is worthwhile. You can find out bid prices for online auction houses on their websites, but brick-and-mortar auction houses will require a phone call to acquire more details.

Wine Funds
If you don't have the storage or the willpower to keep from drinking your investment vehicle, invest in wine stocks and mutual! funds. There are dozens of options from which to choose. You can drink your favorite vintage and invest your money without the work involved in housing your own collection.

Bottom Line
Investing in wine can be a risky proposition, but if you weigh all the associated costs and are prepared to drink what you don't sell, it can be a fun and savvy investment vehicle. Plus, if you fail to pick a winner, you can always toast your loss.

3 FTSE Shares Hitting New Highs

LONDON -- The FTSE 100 (FTSEINDICES: ^FTSE  ) set a 13-year high of 6,876 points on May 22, and since then it's been lurching from euphoria to panic on a regular basis, with 100-point swings becoming a near-daily occurrence. But at least things are a little quieter today, with the U.K.'s top-tier index up a relaxed 25 points, or 0.38%, to 6,652 as of 8:30 a.m. EDT.

A number of top companies have also been bouncing around their record share prices. Here are three toying with their peaks today.

BP (LSE: BP  ) (NYSE: BP  )
The BP share price has been hovering around a 52-week high of 485 pence all week. It's at 481 pence as I write, having approached 482 pence again around mid-morning. And over the past 12 months, BP shares have gained about 21% as panic from the Gulf of Mexico disaster subsides.

But after such a rise, what's the current valuation like? Well, with current forecasts for the year to December 2013 suggesting a 35% rise in earnings per share to about 54 pence, that puts the shares on a price-to-earnings ratio of less than nine. And though there is still some uncertainty surrounding the final cost of the oil spill cleanup, that looks cheap to me -- especially with a well-covered dividend yield of about 5% being predicted.

Whitbread (LSE: WTB  )
Whitbread shares have been behaving similarly this week, hitting a 52-week intraday high of 2,905 pence on Tuesday before dropping back to 2,853 pence as I write. Over the past 12 months, the price of the hotel, restaurant, and coffee shop operator has soared by more than 50%.

Full-year results to Feb. 28 were impressive, with revenue up 14%, underlying pre-tax profit up 11.4%, and underlying EPS up 12% -- all enabling a 12% boost to the annual dividend. But that rise comes at a price, and the shares are now valued on a P/E of 17 based on forecasts for the current year.

Invensys (LSE: ISYS  )
Engineering software and services specialist Invensys has seen its shares climb more than 80% over the past year to 399 pence today -- and in recent days we've seen regular closes around a record 400 pence mark. The year ended March 31 was described as "transformational" by the company after it disposed of Invensys Rail for £1.7 billion, settled its outstanding pension-scheme issues, and allocated £625 million in cash for return to shareholders.

With the firm now a "focused supplier of industrial software, systems and control equipment," forecasts are looking strong, and there is a near-doubling of EPS being forecast for the year to March 2014. But at this early stage the share valuation is pretty high -- they're on a P/E of 24.

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Dillard's Flies High in a Troubled Industry

While some old-school department stores are doing rain dances and praying to the Lord of Light in attempts to save themselves from pending irrelevance, one Southern-based chain is achieving record results. Flirting with its 52-week high, Dillard's (NYSE: DDS  ) seems to be making the right moves in a disrupted industry. But what does the latest earnings release show about the future? Can the company continue its attractive earnings growth, or has this story passed? Let's take a closer look at the results and forward valuations to find out.

The results
For Dillard's, the headline number for the recently ended first quarter was a 27% increase on the bottom line to $2.40 per share, after accounting for a one-time $0.09 benefit. The number comes in at a sharp premium to both the prior year's number and analyst expectations of $2.12. But EPS was not the only line to celebrate.

Same-store sales crept up just 1%, while cash flow from operations blew up 39%, from $98.5 million to $136.9 million. Revenue hit $1.55 billion for the quarter -- almost perfectly flat with 2012's first quarter and a discount to analyst expectations of $1.62 billion. The top-line miss dipped the stock briefly, but investors and analysts eventually found much more to be excited about than to lament.

Margins improved slightly across the board, with gross margins up 110 basis points and operating margins up 170 basis points. Throughout the first quarter, the company bought back $114.7 million worth of Class A stock.

Where from here?
The stock pushed to new highs last week, and has seemed to stabilize above the $90 mark, giving it a forward P/E of 11.61 times. Now, the company is in much better shape and deserves higher valuation multiples than, say, J.C. Penney (NYSE: JCP  ) , which has negative earnings but trades at just 0.32 times sales. But when comparing Dillard's to other, healthy department chains, such as Kohl's (NYSE: KSS  ) , we see a more interesting picture. Kohl's trades at 10.7 times forward earnings, and while it saw lower same-store sales due to bad weather, the company still beat estimates and is set to grow via new stores.

Another strong performer, Target (NYSE: TGT  ) , trades at 12.73 times forward earnings. Target has conducted a successful facelift in recent years -- becoming the premium-products-with-value-pricing department store. While there have been some missteps, such as its recent partnership with Neiman Marcus, the store has largely kept its shopper base while reaching out to new, younger consumers. 

So Dillard's current valuation sandwiches it among the leading stores. The company has a sizable $622 million debt load, but overall has a strong balance sheet with $156 million in cash.

One of the early attractive features of Dillard's before its run-up in stock price was its real estate portfolio -- a common thesis for large retail store investing. The company is shutting down poor-performing stores and investing in the remaining square footage. This smart capital management will likely keep the company on solid footing going forward. Also to note is the recent quarter's segment performance, which shows home and furniture as the worst department. As the housing recovery continues in the U.S., there may be some growth in these areas, especially as the stores are renovated and inventory is updated.

Overall, Dillard's appears to be valued fairly at neither a considerable discount nor premium to its intrinsic value. Investors encouraged by management's ability to control costs and use capital may want to take a closer look, but this is no longer a value-oriented story. Still, in an industry subjected to plenty of turmoil in recent years, Dillard's appears to be an outperformer.

Will the cloud over this retailer lift?
J.C. Penney's stock cratered under Ron Johnson's leadership, but could new CEO Mike Ullman present the opportunity investors have been waiting for? If you're wondering whether J.C. Penney is a buy today, you're invited to claim a copy of The Motley Fool's must-read report on the company. Learn everything you need to know about JCP's turnaround -- or lack thereof. Simply click here now for instant access.

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Should I Buy Diageo or SABMiller?

LONDON -- I believe that having emerging-market exposure in your portfolio is essential, but like many investors, I don't fancy the hassle and risk of trying to buy shares listed on the stock exchanges of African and Latin American nations.

Luckily, there is another way. The FTSE 100 contains a number of companies whose earnings come from these countries. Two great examples are Diageo (LSE: DGE  ) (NYSE: DEO  ) and SABMiller (LSE: SAB  ) (NASDAQOTH: SBMRY  ) , which sell spirits and beer, respectively, and have global operations providing exactly the kind of emerging-market exposure I'm looking for.

Diageo vs. SABMiller
I'm going to start with a look at a few key statistics that can be used to provide a quick comparison of these two companies:

Metric

Diageo

SABMiller

5-year average EPS growth	9.3%	19.2%
5-year average dividend growth	5.9%	12.7%
Trailing P/E	20.1	20
Dividend yield	2.2%	1.7%

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Both companies have delivered solid growth over the last five years, and their share prices reflect this. Diageo's shares have risen by 98% since May 2008, while SABMiller's share price is 202% higher than it was then.

Both firms' dividends have grown faster than inflation, but the pace of their share price growth has been such that they both offer yields of about 2% -- well below the FTSE 100 average of 3%.

What's next?
Diageo and SABMiller have both benefited from substantial sales growth in emerging markets in recent years. Can they sustain this rate of growth, or is some slowdown inevitable? Analysts' forecasts are notoriously unreliable, but FTSE 100 companies generally get the benefit of the most comprehensive analysis, and they tend to deliver fewer surprises than smaller companies.

With that in mind, let's take a look at some forward-looking numbers for Diageo and SABMiller. These apply to the companies' current financial years:

Metric

Diageo

SABMiller

Forecast P/E	19.9	23
Forecast dividend yield	2.3%	1.8%
Forecast dividend growth	9.2%	11.4%
Forecast earnings growth	10.3%	14.3%

SABMiller's financial year ended on March 31 (it hasn't reported yet), while Diageo's ends on June 30, so there should be few surprises in the firms' annual results when they are published.

Given this, it seems a safe bet that both companies will report another year of strong growth in fiscal 2013, although it is worth noting that Diageo's chief executive, Paul Walsh, is about to retire after a 13-year stint. The firm's choice to succeed him is Ivan Menezes, Diageo's current chief operating officer. Menezes should provide good continuity, but there is always the possibility that a change of leadership will coincide with a change of fortunes for the firm.

Which share should I buy?
The downside of the success of Diageo and SABMiller is that they have become quite expensive for new investors. Both firms are on my personal watchlist, and I intend to add one of them to my portfolio at some point in the future. But for my style of investing, which is based on income and value, they both look too expensive at present.

Growth investors may take a different view, and I agree that the share price momentum of both firms could continue for some time yet. If I were to buy one of these shares today, it would be Diageo, as it offers a higher yield and has not experienced the same dramatic share-price growth as SABMiller over the last five years.

The top growth stock for 2013?
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The Company designs its social games to pro vide players with shared experiences. Its social games leverage the global connectivity and distribution on Facebook, other social networks and mobile platforms, such as Apple iOS and Google Android. Its games are free to play, span a number of genres. It operates its games as live services and updates them with content and features. Its games include CityVille, Zynga Poker, FarmVille, CastleVille, FrontierVille, Mafia Wars and Word with Friends.

Virtual Goods

The Company�� primary revenue source is the sale of virtual currency, which players use to buy in-game virtual goods. Some forms of virtual currency are earned through game play, while other forms can only be acquired for cash or, in some cases, by accepting promotional offers from its advertising partners.

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The Company competes with Crowdstar, Inc., DeNA, Electronic Arts Inc., King.com, The Walt Disney Company, Vostu, Ltd. wooga GmbH, Amazon.com, Inc., Facebook, Inc., Google Inc., Microsoft Corporation , Tencent Holdings Limited, Apple, Electronic Arts, GREE, DeNA Co. Ltd., Gameloft, Glu Mobile, Rovio Mobile Ltd , Storm8, Inc., Activision Blizzard, Inc., Big Fish Games, Inc., Electronic Arts, SEGA of America, Inc., and THQ Inc..

Top 10 Financial Companies To Invest In Right Now: Gefran Spa(GE.MI)

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