Auto Car: July 2014

Friday, July 25, 2014

Diamond Hill Small Cap Fund Second Quarter 2014 Commentary

The Fund increased 6.16% (Class I) during the quarter, compared to a 2.05% increase in the Russell 2000 Index.

During the quarter, the Fund's holdings in the industrials, energy, and financial sectors provided the largest contribution to absolute return. No sectors detracted from return.

The Fund's outperformance relative to the Russell 2000 Index was primarily the result of security selection in the industrials, financial, and health care sectors as well as an overweight position in the energy sector.

Best Performers

•Auto rental company Avis Budget Group, Inc. (CAR) reported strong quarterly results, and pricing appeared to be in line with management's plans in the important summer months. We estimate the company could generate $4 per share in free cash flow per share in 2015. In addition, competitor Hertz announced a multi-period earnings restatement, potentially reducing the probability that one of Avis's two main competitors will take more aggressive pricing actions.

•Oil and gas exploration and production company Rosetta Resources, Inc. (ROSE) rose in anticipation of an ease in regulations on the exportation of condensate, an ultra-light oil that undergoes minimal processing. This could allow the condensate to be exported at higher prices, alleviating a potential condensate glut in the U.S. and benefitting Rosetta.

•Oil and gas exploration and production company Cimarex Energy Co. (XEC) rose as a result of an improving outlook for domestic oil prices as well as continued strong operational results in core areas. In addition, the company continued to see strong results as it tests the resource potential associated with its acreage position in the Delaware Basin.

•Railroad service company Trinity Industries, Inc. (TRN) reported better than expected revenue and profitability based on continued strength in demand for tank cars coupled with a meaningful positive impact from a large new customer (Element Financial).

•Freight transportation management company Hub Group, Inc. (HUBG) rose as investors began to focus on margin improvement opportunities due to indications of improving intermodal pricing as well as company-specific cost improvement initiatives.

Worst Performers

•Online auction marketplace service provider Liquidity Services, Inc. (LQDT) lost a 2015 rolling stock Department of Defense contract but was the winner of the non-rolling stock contract. However, its winning bid of 4.35% was much higher than the historical contracted rate of 1.8%. This will considerably raise the cost of goods sold of its non-rolling stock segment, thus having a material impact on its profitability.

•Consumer products and services company Steiner Leisure Ltd. (STNR) declined after the company reported its first quarter earnings. The company did not repurchase shares during the quarter despite declines in its stock price following the late 2013 announcement of a non-renewal by Celebrity Cruise Lines. In addition, the quarter reflected continued weakness in the company's Ideal Image laser hair removal business. Later in the quarter, the company announced a 10b5-1 plan under which the company can repurchase shares according to a pre-set plan.

•Shares of oil and gas exploration and production company Contango Oil & Gas Co. (MCF) fell, reflecting disappointing results from an exploration well in the Gulf of Mexico.

•Lift truck manufacturer Hyster-Yale Materials Handling, Inc. (HY) declined after the company provided qualitative guidance for the remainder of 2014 that may have been viewed negatively by some investors. Revenues and pre-tax income both increased during the quarter, but after-tax net income declined as a result of a higher tax rate.

•Information processing company DST Systems, Inc. (DST) declined as the company conducted a secondary offering of common stock for a selling shareholder, Argyros Group.

New Positions

We initiated a new position in Aircastle Ltd. (AYR), an aircraft leasing company with a flexible business model and a rational capital allocation philosophy. We took advantage of an opportunity to purchase shares in the heavily capitalized Georgia bank State Bank Financial Corp. (STBZ) as the depressed stock price reflected investors' lack of patience with a slower than expected pace of capital deployment. We like State Bank's management team led by Georgia banker Joe Evans. This management team has experience successfully building and selling other Georgia banks. We also received shares of transportation infrastructure company XPO Logistics, Inc. (XPO) as a result of its acquisition of holding Pacer International, Inc.

Eliminated Positions

Pacer International, Inc. (PACR) was acquired by XPO Logistics, Inc. which remains in our portfolio. We eliminated our position in specialty pharmaceutical company Actavis PLC (ACT) as the price to intrinsic value relationship narrowed. We originally received shares when Actavis bought portfolio holding Warner Chilcott. We eliminated our position in convenience store distributor Core- Mark Holding Co., Inc.( CORE) as the stock rose almost 40% over the last year and reached our estimate of intrinsic value.

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Thursday, July 17, 2014

New Hire Roundup: Great-West Financial Names Manello CFO

This week in personnel announcements and new hires, Chris Feeney went to Quovo’s advisory board, Randy Brown took a new role at Deutsche Asset & Wealth Management, Eric Zipp went to the Private Client Reserve in Milwaukee, and Kevin Corbett joined Mariner Wealth Advisors.

Also, Great-West Financial named Louis Manello Jr. its chief financial officer, Franklin Square welcomed Neil Menard, and the Office of Financial Research announced the addition of 11 members to its financial research advisory committee.

Manello Named CFO at Great-West Financial

Great-West Financial has named Louis Manello Jr. SVP and chief financial officer. He reports to Bob Reynolds, president and CEO of Great-West Financial, and to Bill Lovatt, who is CFO of Great-West Financial’s indirect parent company Great-West Lifeco Inc.

Previously, Manello was partner at KPMG LLP’s Chicago-based accounting advisory services practice; from 2010 to 2014, he led the financial services industry segment within the practice. From 2002 to 2008, he was at Zurich Financial Services; most recently there, he was executive vice president and CFO for Zurich North America in Schaumburg, Illinois. Before that, he served in Zurich, Switzerland, as group controller from 2002 to 2006. He also spent 16 years in increasingly responsible financial positions in the U.S. and Europe at Arthur Andersen, Shadow Lawn Savings Bank and Deloitte.

Quovo Welcomes Feeney to Advisory Board

Quovo has announced that independent consultant Chris Feeney has joined its advisory board.

Formely Feeney was head of the technology effort at LPL Financial, where he spent five years, and was a member of the executive management committee before leaving the firm in 2013. Earlier he was a global managing director at Thomson Financial, having been responsible for the turnaround of Telerate, which was acquired by Reuters in 2004.

Deutsche Asset & Wealth Management Promotes Brown

Deutsche Asset & Wealth Management (DeAWM) has appointed Randy Brown head of the U.K., a newly created role, as well as head of insurance and pension solutions. He continues to report to Michele Faissola, head of DeAWM, and to serve the global executive committee. He also joins the U.K. executive committee, chaired by Colin Grassie, CEO of Deutsche Bank U.K. With Brown’s appointment as country head, the U.K. becomes a separate region within DeAWM's organizational structure, alongside Germany; Asia Pacific; the Americas; and Europe, the Middle East & Africa (EMEA). It was formerly run as part of the EMEA region. Brown is based in London.

Brown most recently served as DeAWM's co-chief investment officer alongside Asoka Wöhrmann. Prior to this, he was the global head of Deutsche Insurance Asset Management.

Zipp Joins Private Client Reserve

Eric Zipp has been named wealth management advisor for the Private Client Reserve of U.S. Bank in Milwaukee.

Prior to joining, Zipp, who brings several years of financial services experience, was a financial consultant with Thrivent Financial.

Mariner Wealth Advisors Adds Corbett

Mariner Wealth Advisors has announced that Kevin Corbett has joined the firm as senior vice president of wealth management. He will also serve on the firm’s executive committee.

Corbett joins from Fidelity Investments, where he was a senior relationship manager. Through his 17-year tenure at Fidelity, he held various roles throughout the retail and institutional brokerage businesses, including positions in national financial services, capital markets and institutional wealth services. Corbett’s past experience also includes working as a head trader with Bainco International Investors.

Menard Goes to Franklin Square

Franklin Square has announced that Neil Menard has joined the firm as enior vice president and national sales manager for its RIA channel. He is based out of the Orlando office.

With more than 24 years of broad investment management distribution expertise, Menard spent eight years as the SVP of distribution for Steben & Co. Inc. Before that, he was the national sales director for Engagement Systems. In addition, he worked at SEI Investments as a managing director of sales.

OFR Adds 11 to Committee

The Office of Financial Research (OFR) within the U.S. Treasury has announced the addition of 11 new members to its financial research advisory committee. The new members — experts in economics, finance, financial services, data management, risk management and information technology — will join the committee for its next meeting on July 24 in New York City. As the committee adds the new members, the terms of 10 current members will be ending.

The new members and their affiliations are: John Campbell, Harvard University; Lou Crandall, Wrightson ICAP LLC; Stephen Daffron, Interactive Data Corp.; Beth Hammack, Goldman Sachs; Darryll Hendricks, UBS; Simon Johnson, Massachusetts Institute of Technology; Andrew Metrick, Yale University; David Puth, CLS Group Holdings/CLS Bank International; Chester Spatt, Carnegie Mellon University; Lynn Stout, Cornell University Law School; and Kay Vicino, Northern Trust.

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Check out New Hire Roundup: Janus Capital Adds Scholes, Alankar on ThinkAdvisor.

Tuesday, July 15, 2014

Fresh Data Suggest Economy Firing on All Cylinders

Toby Talbot/AP WASHINGTON -- A gauge of U.S. consumer spending rose solidly in June, in the latest indication that the economy ended the second quarter on a stronger footing. That momentum appeared to have carried into the third quarter, with another report Tuesday showing factory activity in New York state expanded sharply in July. "This is not a fragile economy," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York. "The consumer continues to play their part in moving the economy forward." Core sales, which strip out automobiles, gasoline, building materials and food services, increased 0.6 percent last month after rising an upwardly revised 0.2 percent in May, the Commerce Department said. Core sales, which correspond most closely with the consumer spending component of gross domestic product, were previously reported as being flat in May. Economists had expected them to rise 0.5 percent in June. The report added to signs of the economy's strengthening fundamentals, which could buoy optimism the recovery is on a self-sustaining path, after output contracted sharply in the first quarter. Federal Reserve Chair Janet Yellen told lawmakers the economy continued to improve, but noted that the recovery wasn't yet complete because of still-high unemployment. Yellen, however, cautioned the U.S. central bank could raise interest rates sooner and more rapidly than currently envisioned if the labor market continued to improve faster than anticipated by policymakers. Labor market conditions are firming, with the unemployment rate falling to a near six year-low of 6.1 percent in June and job growth exceeding 200,000 for a fifth straight month. Prices for U.S. Treasury debt fell on the economic data and Yellen's interest rate comments, while the dollar gained against a basket of currencies. U.S. stocks traded lower. June's gains and May's upward revision to core retail sales suggested a pickup in consumer spending in the second quarter after growing at its slowest pace in more than four years in the first quarter because of weak healthcare consumption. Forecasting firm Macroeconomic Advisers raised its second-quarter GDP growth forecast by three-tenths of a percentage point to a 3 percent annual pace. Goldman Sachs (GS) upped its estimate for the quarter by two-tenths to a 3.4 percent rate. Upbeat Outlook A surprise drop in receipts for automobiles, however, held overall retail sales to a 0.2 percent increase in June after advancing 0.5 percent the prior month. "Consumers will likely gain more confidence to spend as the job market improves and summer travel season hits full swing," said Randy Hopper, credit cards vice president at Navy Federal Credit Union in Vienna, Virginia. "We are optimistic that the second half of the year will deliver stronger sales growth." From employment to manufacturing, the economy appears to be firing on nearly all cylinders, with even housing regaining its footing after slumping in late 2013 following a run-up in mortgage rates. Growth estimates for the second quarter top a 3 percent annual rate. In another report, the New York Fed said its Empire State general business conditions index jumped to 25.60 this month, the highest since April 2010, from 19.28 in June. New orders edged up, while factory employment and shipments surged. There were also signs of inflation pressures, with measures of both prices received and paid by manufacturers rising in July. Overall retail sales in June were restrained by a 0.3 percent fall in receipts at auto dealerships. The decline is surprising given automakers reported a surge in motor vehicle sales in June. Auto sales had increased 0.8 percent in May. Excluding autos, sales grew 0.4 percent after rising by the same margin in May. There were increases in sales at non-store retailers, which include online sales, as sales at clothing retailers. Receipts at sporting goods shops rose as did those at electronics and appliances stores. But sales at building materials and garden equipment suppliers fell 1 percent. -. Most of us spend a ton of time researching our options when we first sign up for a plan or policy, then forget all about it and make monthly payments like a robot. But this can cost you.

Fly High With These Stocks

Martin Sass: Wally, as you know the market so far this week has been a little weak. I think it reflected not only the fact that stocks have been strong and have gotten a little ahead of themselves relative to fundamentals, but also the focus is now shifting to the timing and magnitude of the next Fed rate hike. With a strong jobs report there have been some firms like Goldman Sachs this week that pushed forward the timetable to June 15, 2015 as to when they think the Fed is going to begin to gradually increase rates.

I view this as just a healthy pullback in an ongoing bull market. As you know from our prior conversation, we're looking for a long economic recovery and bull market for equities. But looking forward, we expect gains for the overall market are going to be relatively modest as a rule and need to be primarily driven by higher earnings as opposed to multiple expansions.

Wally Forbes: Right on.

Sass: Despite the exceptionally weak 2.9% annualized decline in first quarter 2014 GDP which was due largely to extreme weather and inventory drawdowns, the economy has since then rebounded. And we would expect GDP to likely grow at about 3% in the second quarter.

The faster payroll growth that's been occurring during the past five months has exceeded the rather steady pace that existed in 2012 and '13. And this has driven the unemployment rate down to 6.1% at the last reading from 6.7% at the beginning of 2014.

I continue to like the airlines. American Airlines (NASDAQ: AAL) is our favorite and Delta (NYSE: DAL) is our second. Another company I like is emerging as the leading pure play in aircraft leasing.

That is AerCap Holdings (NYSE: AER). AerCap just acquired International Lease Finance Corp, or ILFC, which was a division of AIG. And it quadruples the aircraft fleet of AerCap making it the largest pure play aircraft lessor in the world controlling along with General Electric's Gecas unit nearly 50% of lessor-owned aircraft globally. The cost of planes is critically important to an aircraft leasing company. And they acquired $11.9 billion of ILFC's book value for about a $6 billion discount — so a very attractive purchase.

Peers are trading at roughly 11 times earnings whereas AerCap is only 9.5 times our estimate for 2015 and with greater earnings growth potential due to merger savings and synergies from the ILFC deal.

Another area that we have liked in a contrarian fashion is TV broadcasting. The two main risks which had depressed the stocks of the TV broadcasters this year until recently were, one, the Supreme Court case of ABC versus Aereo. That was recently decided in favor of the broadcasters and against Aereo.

Secondly depressing the stocks were concerns about the regulatory uncertainties with the FCC's pending regulations. That is now resolved regarding what they call joint services agreements and share services agreements. So deals that were pending in the industry are now closing, these two main risks are now out of the way and the stocks have rallied.

One stock that in particular is significantly undervalued, has been neglected and is quite attractive is Media General (NYSE: MEG). Media General should close the acquisition of Lin Media in early 2015 making Media General the fourth largest broadcaster. This increase in scale will strengthen their ability to negotiate significant retransmission fee increases. Pro forma to include the acquisition, Media General will own or operate 74 stations in 46 markets around the country.

It will cover 23% of U.S. TV households, which is well below the 39% ownership cap that the FCC has placed on TV broadcasters. That puts Media General in the sweet spot for more acquisitions. Furthermore, Media General has a digital TV business that, together with Lin, should grow revenues at about a 20% compound rate over the next five years and grow their EBITDA by a much faster rate of 40% CAGR — which will be another kicker in the Media General story.

They also have the optionality of hidden asset values from spectrum some of which could be sold in an auction slated by the FCC for 2015 and others of which could be repurposed for a new technology called ATSC 3.0 that will allow TV broadcasts to be transmitted directly to mobile phones.

Forbes: Mobile phone transmission seems to be the new area of big potential.

Sass: Exactly. The third name is what I consider to be the most attractive play on increasing existing home sales. Home building and housing sales I believe will resume growth along with the economy after falling in the past few quarters. I think we're just in the middle of a long-term home sales recovery.

And mortgage availability for first time home buyers should finally improve. Tight inventories should normalize and job growth should increase household formations, which would drive increased demand for housing. Realogy Holdings Corp (NYSE: RLGY) is the stock that I favor here. This is a company that was spun out of a conglomerate called Cendant and then was bought in an LBO by Apollo and then IPO'd in October of 2012 at about $27 a share. They own very well known brands like Century 21, Coldwell Banker, Sotheby's International Realty, Corcoran amongst others.

Sunday, July 13, 2014

Cummins: I’ll Have a Side Order of Buy Backs With That Dividend Hike, Please

How do you turn a frown upside down? If you’re Cummins (CMI), you announce a dividend hike and a $1 billion share buyback.

At around 2:30, Cummins said that it would increase its dividend to 78 cents from 62.5 cents, a jump of nearly 25%, while also announcing that it would buy back an additional $1 billion in shares after the completion of its current $1 billion repurchase plan.

At the time of the announcement today, Cummins shares were down 0.6% at $155.11. Since then, they’ve gained 1.1% and are now up 0.5% at 156.83 at 2:58 p.m.

And since a picture is worth a thousand words:

UPDATE: Citigroup’s Timothy Thein and team offer their take:

We believe this move demonstrates Cummins’ superior cash generation capability and confidence in its business model. We continue to see solid risk-adjusted upside in Buy-rated Cummins, as we think its diverse and attractive growth profile will continue to support above average EPS growth, all of which argue for a higher normalized valuation in our opinion.

Shares of Cummins closed little changed at $155.96.

Saturday, July 12, 2014

U.S. Records $71 Billion Budget Surplus in June

Budget Deficit J. Scott Applewhite/AP WASHINGTON -- The U.S. government ran a monthly budget surplus in June, putting it on course to record the lowest annual deficit since 2008. The Treasury Department said Friday that its June surplus totaled $71 billion, following a $130 billion deficit in May. The government also ran a surplus in June 2013, bolstered by dividends from Fannie Mae, the mortgage giant under federal conservatorship for the past six years. For the first nine months of this budget year, the deficit totals $366 billion, down 28 percent from the same period in 2013. Tax receipts are up 8 percent compared to the prior year-to-date, while spending has increased 1 percent. The Congressional Budget Office is forecasting a deficit of $492 billion for the full budget year ending Sept. 30. That would be the narrowest gap since 2008. In 2008, the government recorded a deficit of $458.6 billion, which was the record high for deficits up to that time. But with the outbreak of the recession, deficits soared to unprecedented levels, exceeding $1 trillion for four consecutive years. Tax revenues fell during that period, while government boosted spending in an attempt to stabilize the financial system and provide relief to people who had lost jobs. The yearly deficit peaked at $1.4 trillion in 2009 during the worst of the financial crisis. It gradually fell from there, plunging to $680.2 billion last year. Over the next decade, CBO is projecting that the deficits will total $7.6 trillion. The deficit will fall to $469 billion in 2015 before rising again and topping $1 trillion annually starting in 2023, according to the CBO. Spending on the government's major benefit programs, including Social Security and Medicare, will drive those increases as more baby boomers retire. Republicans have accused President Barack Obama of failing to propose significant cost cuts to reduce soaring entitlement costs. Democrats counter that Republicans would rather impose sharp cuts on needed government programs than impose higher taxes on the wealthy. Neither side is expected to make major concessions in this congressional election year. But the budget wars of the past three years have subsided at least for a brief time. An agreement was reached in December on the broad outlines for spending over the next two years. The agreement will allow Washington to avoid the gridlock that culminated in October's 16-day partial shutdown of the government. The budget cease-fire also includes legislation that will suspend the government's borrowing limit through March 15 of next year. That puts off another battle over raising the debt ceiling until a new Congress takes office in January.

Thursday, July 10, 2014

Biggest Retirement Income Gap Seen for Oldest Pre-Retirees

Click to enlarge: The retirement income gap by age. Source: BlackRock Older pre-retirees are furthest from being retirement-ready, according to a recent analysis by BlackRock and the Employee Benefit Research Institute.

The younger the retiree, though, the better it looks.

According to the study, 55-year-olds with median income and retirement savings are on track to replace 69% of their pre-retirement income. Based on the idea that retirees will need to replace about 80% of their income in retirement in order to maintain their standard of living, these 55-year-old median workers are falling 14% short.

For older pre-retirees, the gap gets wider.

The study found that 64-year-olds with median income and retirement savings will be able to replace only about 59% of their income, less than 60-year-olds who have the potential to replace about 64%.

“U.S. workers closest to retirement, and with the least amount of time left to bulk up their savings, are the ones who have the most work to do,” wrote Chip Castille, head of BlackRock’s U.S. Retirement Group, on BlackRock's blog.

BlackRock focused on people in their last decade before the traditional retirement age of 65 that have the two primary sources of retirement income, Social Security and retirement savings, usually 401(k) plans and individual retirement accounts.

“The 26% gap that the median 64-year-old faces to replace 80% of pre-retirement income is more daunting,” wrote Castille. “And for workers who expect to make up at least some of the difference by staying on the job past age 65, it’s important to note that EBRI’s 2014 Retirement Confidence Survey has found that 49% of retirees left their jobs earlier than they had planned.”

Castille added one explanation for the larger gap for older pre-retirees is “workers in their 60s are far more likely to receive some sort of traditional pension to supplement their retirement.”

To assess the retirement readiness of pre-retirees, BlackRock used its CoRI Retirement Indexes and incorporated data on U.S. workers’ median income and retirement savings provided by the Employee Benefit Research Institute.

To estimate the Social Security retirement benefits at the “full retirement age,” BlackRock collected the median retirement savings balances of people the same ages who have 401(k) accounts and IRAs in EBRI’s database and used the BlackRock CoRIRetirement Indexes to estimate the retirement income that those savings could provide.

Launched last year, the CoRI Retirement Index series was developed to help investors age 55 and older plan for retirement by tracking the estimated cost of $1 of future, annual inflation-adjusted lifetime income beginning at age 65.

The analysis also found that the cost of future income for investors ages 55, 60 and 64 has risen since BlackRock began tracking the cost of future retirement income a year ago.

“For someone age 55, for example, every $1 of lifetime retirement income was estimated to cost $14.09 as of June 30 – a 7.15% increase from what that same income would have cost a 55-year-old a year ago,” the study said.

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Related on ThinkAdvisor:

Wednesday, July 9, 2014

Celgene: Does Failed Trial Matter?

Shares of Celgene (CELG) are dropping this morning after the biotech giant said that its arthritis drug failed to meet its primary endpoint in a Phase III trial. Bernstein’s Geoffrey Porges and Wen Shi aren’t concerned:

The ankylosing spondylitis indication offered upside compared to our forecasts and estimates for Celgene, but was not part of our base case valuation. This disappointment is likely to have some negative effects on sentiment and the stock, but the overall negative reaction is likely to be modest. Celgene’s stock has performed strongly in recent weeks, partly on the basis, we suspect, of company buying. We remain positive about the stock’s outlook for the next 6-12 months, and also increasingly positive on the early stage pipeline which is likely to show its potential more clearly in the next 18 months.

Celgene’s drop has, in fact, been modest. Its shares have fallen 0.5% to $85.28 at 10:26 a.m., while Amgen (AMGN) has dipped 0.4% to $119.45, Biogen Idec (BIIB) has declined 0.6% to $315.58 and the iShares Nasdaq Biotechnology ETF (IBB) is off 0.6% at $252.28.

Tuesday, July 8, 2014

Alcoa Inc Swings to Profit in Q2; Beats Estimates (AA)

After the closing bell on Tuesday afternoon, Alcoa (AA) unofficially kicked off earnings season, reporting its estimates-beating second quarter results.

AA’s Earnings in Brief

Alcoa reported Q2 revenues of $5.84 billion, which are down slightly from last year’s Q2 revenues of $5.85 billion; analysts were expecting revenues of $5.66 billion. Net income for the quarter came in at $138 million, or 12 cents per share, a large improvement over last year’s Q2 loss of $119 million, or 16 cents per share. On an adjusted basis, AA’s earnings for the quarter came in at $216 million, or 18 cents per share, which easily beat analysts’ estimates of 12 cents EPS.

CEO Commentary

Alcoa chairman and CEO Klaus Kleinfeld had the following comments: "Our second quarter results prove Alcoa's transformation is in high gear. We are taking the downstream business to new profitability heights, capturing midstream demand as auto lightweighting accelerates, while continuing to relentlessly improve upstream performance. Our strategy of building a lightweight multi-material innovation powerhouse and a highly competitive commodities business is driving compelling and sustainable shareholder value."

AA’s Dividend

Though Alcoa posted a positive quarter, there was no mention of changes to its dividend. The company cut its quarterly dividend from 17 cents to 4 cents in 2009, and has not raised it since. We expect the company to declare its next dividend in the coming month.

Stock Performance

Alcoa stock closed 11 cents, or 0.75%, higher on Tuesday, and the stock made gains in after hours trading. YTD, AA stock is up a staggering 39.98%.

AA Dividend Snapshot

As of Market Close on July 8, 2014

WMT dividend yield annual payout payout ratio dividend growth

Click here to see the complete history of AA dividends.

Monday, July 7, 2014

Wall Street This Week: The Magic's a Bit Iffy for Harry Potter

2007 Film Preview Murray Close, Warner Bros./AP From a major banking institution kicking off the new earnings season to the most-anticipated theme park debut of the year staging its grand opening, here are some things that will help shape the week that lies ahead on Wall Street. Monday -- Food for Thought The market's going to get off to a slow start on the news front. That's not a surprise given that it was closed Friday for Independence Day. One company that will be in the news on Monday is food and industrial products maker Penford (PENX). Penford's wide range of products include food ingredients, pet and animal products, sustainable bioproducts, starches for paper and packaging products and biofuels. Analysts see Penford earning 21 cents a share, but keep in mind that it has come up short against Wall Street expectations in each of the three previous quarters. Tuesday -- Harry Potter Central Florida will be a bit busier than usual on Tuesday when Comcast's (CMCSK) Universal Orlando has its grand opening of the new Diagon Alley expansion to The Wizarding World of Harry Potter. It's been a rough start. July 8 wasn't the opening date that the park originally wanted, judging by the fact that it had "The Tonight Show" and "Today" run weeklong tie-ins a few weeks ago. Conveniently for Comcast, it owns both the Universal theme parks and NBC. However, with the expansion's indoor coaster proving unreliable -- and even Universal pass holders being denied early access to attractions outside of the new Hogwarts Express train ride -- it could be an interesting debut. The crowds should be huge, the expectations lofty. Wednesday -- Mopping Up WD-40 (WDFC) reports on Wednesday afternoon. This is the company behind the multi-use lubricant. It also offers industrial cleaners, toilet sanitizers and other compounds. WD-40 didn't work out for its shareholders last time out. It posted better than expected 9 percent growth in revenue, but earnings fell just short of expectations. WD-40's guidance for all of 2014 -- calling for earnings of $40.5 million to $42.8 million on $383 million to $398 million in revenue didn't impress the market. Three months later we'll see if it's going to revise those targets higher or lower. Thursday -- A Dollar Saved Family Dollar (FDO) reports on Thursday. The market was planning on Family Dollar merging with Dollar General (DG) -- a move that would unite two leaders of deep discount retail -- but that doesn't seem likely after Dollar General's CEO announced his resignation late last month. This will make Family Dollar's report even more interesting. It probably doesn't help that it has missed Wall Street's income forecasts in back-to-back quarters heading into Thursday's report. Friday -- Can You Bank on It? Earnings season doesn't truly kick in until later in July, but banking giants are some of the first companies to report on the quarters ending in June. They're bankers. They have to be quick with the bean counting. Wells Fargo (WFC) reports on Friday morning, symbolically kicking off the second quarter earnings season that will heat up in the coming weeks. The financial service industry has benefited from the housing boom that's been ignited in part by low loan rates, but the downside to that is that customers aren't in a hurry to open savings and interest-bearing checking accounts in that kind of climate.

Sunday, July 6, 2014

Stocks To Watch For July 3, 2014

Related SNX Markets Little Changed Ahead Of 4th Of July Break #PreMarket Primer: Wednesday, July 2: Hopes For A United Iraq Fade Related ISCA Top 4 Stocks In The Sporting Activities Industry With The Highest EPS Company News for April 09, 2014 - Corporate Summary

Some of the stocks that may grab investor focus today are:

Synnex (NYSE: SNX) reported better-than-expected results for the second quarter. However, the company issued downbeat outlook for the third quarter. It expected adjusted earnings of $1.45 to $1.50 per share on revenue of $3.3 billion to $3.4 billion. Analysts were projecting earnings of $1.53 per share on revenue of $3.29 billion. Synnex shares fell 2.73% to $71.91 in the after-hours trading session.

Wall Street expects International Speedway (NASDAQ: ISCA) to report its Q2 earnings at $0.49 per share on revenue of $186.34 million. International Speedway shares gained 1.02% to close at $33.56 yesterday.

Chesapeake Utilities (NYSE: CPK) announced a three-for-two stock split of its outstanding common stock. Chesapeake Utilities shares fell 2.18% to close at $70.91 yesterday.

QLogic (NASDAQ: QLGC) appointed Tony Carrozza as the senior vice president of worldwide sales. The company also announced its plans to report its FQ1 results after the closing bell on July 24, 2014. QLogic shares declined 0.10% to close at $10.24 yesterday.

Shares of GoPro (NASDAQ: GPRO) tumbled 13.85% in regular trading session on Wednesday after strong gains following its IPO. GoPro shares slipped 0.33% to $41.90 in after-hours trading.

Posted-In: Earnings News Guidance Management Stock Split Pre-Market Outlook Markets Trading Ideas

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Saturday, July 5, 2014

Why Altera Is the Best Pick in the Semiconductor Industry

Altera (ALTR) has achieved it again. The programmable logic devices maker came out with strong results for the first quarter, beating Street estimates by a big margin. Altera has been a consistent performer over the past few quarters because of its innovative product portfolio.

Driven by a foundry agreement with Intel (INTC), Altera is gaining share in the field programmable gate array, or FPGA, market. As such, it should continue outperforming the likes of Xilinx (XLNX) going forward and maintain its streak of impressive performances.

Beating competition

Altera's performance in the recently reported first quarter was much better than Xilinx. Its revenue grew 12% year-over-year to $461 million, comprehensively ahead of the $438 million consensus target. Earnings, meanwhile, came in at $0.37 per share, while analysts were looking for $0.32.

Altera's outlook was also strong. The company expects revenue in the range of $470 million-$488 million in the ongoing quarter, blowing past the $461 million estimate. In comparison, rival Xilinx's performance left a lot to be desired. The company's earnings missed estimates, and its revenue outlook for the current quarter also lagged expectations, as it saw a drop in orders from a couple of large communication customers.

Hence, Altera seems to be executing better than Xilinx. Going forward, considering Altera's product development efforts, there's a strong chance that it will be able to overtake Xilinx in the programmable logic devices market.

Fresh products

Altera's new products now account for almost half of its total revenue. The 28-nanometer process has been the primary driver for Altera so far, and the company seems to have successfully taken away some market share from Xilinx in this area. While Xilinx cited delays in LTE deployment as the reason behind its sluggish performance in the previous quarter, Altera was singing a different tune.

In fact, the roll out of LTE by China Mobile (CHL) resulted in 20% sequential growth in Altera's wireless business. In addition, Altera is also counting on the growing adoption of 3G in India and other developing countries to propel its business higher.

The company's focus on making its production processes more efficient has helped it land some solid design wins. Altera has already started sampling its 20-nanometer process with customers, extending its chip portfolio further. However, it is the 14-nanometer FinFET process technology that's expected to become a major growth driver for Altera going forward.

Altera is developing chips based on the 14-nanometer platform, using Intel's foundry. This month, Altera showcased its FPGA technology, based on Intel's 14 nm Tri-Gate process. The company has seen some positive cues early on in the design process, which should accelerate the time to market for 14-nm chips.

Intel has played a key role in the development of this platform, offering its true die shrink based on the second-generation 14-nm Tri-Gate process. According to Transparency Market Research, the FPGA market is a huge opportunity since it is expected to grow to almost $9 billion over the next five years. Now, through this technology, Altera is planning to capture half of the FPGA market by 2019.

Takeaway

In conclusion, Altera's strong fundamentals, and the fact that it returns a good amount of cash to investors, makes the stock highly attractive. The company's debt of $1.49 billion is easily covered by its cash position of $3 billion, while a dividend yield of 1.70% isn't bad either. Since Altera has a payout ratio of just 37%, there's a good chance that it might increase its dividend in the future. The company plans on returning 60%-80% of its cash flow from operations to shareholders by way of dividends and share repurchases.

Altera has been consistently good, and its product development could lead to further improvements. The company has an ambitious plan of becoming the leader in the FPGA market, and it is working aggressively toward it. Moreover, Altera's shareholder-friendly moves make the stock even more attractive, and it could turn out to be a solid long-term investment.

About the author:Riddhi KharkiaA practicing Chartered Accountant based out of India. I have keen interest in analyzing tech stocks that are driven by value.

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Friday, July 4, 2014

Asia stocks lifted by strength in U.S. jobs data

Asian stocks rose Friday following an upbeat employment report in the U.S.

Japan's Nikkei 225 (JP:NIK) rose 0.6% to 15,437.13, closing at a fresh five-month high. Australia's S&P/ASX 200 (AU:XJO) rose 0.6% to 5,525.00 Hong Kong's Hang Seng Index (HK:HSI) edged up 0.1% to 23,546.36.

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'No North Korean nukes' say China, South Korea

China's President Xi Jinping and South Korea's President Park Geun-Hye wrapped up a two-day state visit in Seoul. The WSJ's Ramy Inocencio speaks with Yongsei University's Chung-in Moon about a free-trade deal and North Korean denuclearization.

A thinly traded session ahead of the U.S. Independence Day holiday kept price gains in check. More action was seen in the region's currency markets, with the Malaysian ringgit jumping to its highest this year following a strong exports report.

The currency climbed as much as 0.4% to touch 3.1790 against the dollar, its strongest since Nov. 20. It was trading at 3.1850 late in the Asian day.

Data released Thursday by the Bureau of Labor Statistics showed U.S. employers added 288,000 jobs in June, exceeding the 215,000 economists expected. The unemployment rate also unexpectedly fell to 6.1% in June from 6.3% a month earlier.

The rosy report sent U.S. stocks to another record high for the year, lifting the Dow Jones Industrial Average (DJIA) above 17000 for the first time. The Dow closed up 0.5% at 17,068.26 while the broader S&P 500 (SPX) rose 0.5% to 1,985.44, its 25th record high of 2014.

Fiona Law contributed to this article.

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Thursday, July 3, 2014

Why Constellation Brands and Shutterfly Jumped Today

In the last full day of trading before the holiday weekend, stocks ended essentially flat but small gains lifted the Dow Jones Industrial Average (DJINDICES: ^DJI ) and the S&P 500 into record territory once again. On the day, the blue chips finished up 20 points, or 0.1%, while the S&P gained 0.07% and the Nasdaq edged 0.02% lower.

Though trading will close tomorrow at 1 p.m., the day will be a busy one as it's chock-full of economic reports including the always-followed monthly jobs report from the Department of Labor. Today, ADP reported a whopping 281,000 jobs were added last month, trouncing expectations at 200,000 and May's total of 179,000. The unofficial report from ADP often differs significantly from the government's reading, but it stillbodes well for tomorrow's numbers nonetheless. Growth in construction was particularly high with 36,000 jobs as the overall number was easily the best in over a year. Elsewhere, factory orders fell 0.5% in May but economists had expected a decline in that category.

Among stocks making headlines today was Constellation Brands (NYSE: STZ ) , which finished up 2.3% after turning in a strong earnings report. The alcohol distributor and parent of brands including Modelo and Corona said sales jumped 127% to $1.53 billion, ahead of expectations of $1.49 billion, driven by its acquisition of Crown Imports beer business, which gave it access to the high-profile Mexican brands above. Adjusting for the acquisition, net sales grew 14% in the beer segment, and CEO Rob Sands called the results in the beer business "outstanding," while wine and spirits sales fell 1% on a constant currency basis, in line with company expectations. On the bottom line, the company delivered a per-share profit of $1.07, ahead of estimates at $0.93. Looking ahead, Constellation lifted its full-year EPS guidance from $3.95-$4.15 to $4.10-$4.25, better than $3.25 a year ago and ahead of estimates at $4.12. With strong growth in the Mexican beer category, Constellation should have more promising years ahead.

Finally, shares of Shutterfly (NASDAQ: SFLY ) were soaring today, finishing up 15% after reports emerged that the company was looking to selling itself. According to Bloomberg, the digital photo-specialist, which makes albums and household products with personal digital images, is in the early stages of seeking a buyer, considering private-equity firms, e-commerce companies and web storage businesses. Shutterfly has hired Qatalyst Partners, a boutique investment firm, to help with its search. After many years of profits, the company has seen its bottom line turn into the red recently despite revenue growth in the teens. That struggle and the number of acquisitions among Internet companies recently may explain its search for a buyer. There were no details on a potential buyer, but further reports could push shares higher as we learn more about a possible sale.

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Stocks To Watch For July 3, 2014

Some of the stocks that may grab investor focus today are:

Chesapeake Utilities (NYSE: CPK) announced a three-for-two stock split of its outstanding common stock. Chesapeake Utilities shares fell 2.18% to close at $70.91 yesterday.

Shares of GoPro (NASDAQ: GPRO) tumbled 13.85% in regular trading session on Wednesday after strong gains following its IPO. GoPro shares slipped 0.33% to $41.90 in after-hours trading.

Posted-In: Earnings News Guidance Management Stock Split Pre-Market Outlook Markets Trading Ideas

Wednesday, July 2, 2014

Your commute could get even worse

Transportation chief Anthony Foxx warns that the federal government is going to delay payments for state projects fixing highways and bridges next month. WASHINGTON (CNNMoney) Gridlock on Capitol Hill may yield more gridlock for American commuters who have to navigate congested, pothole-filled roads and highways, rundown rails or bad bridges.

The nation's top transportation chief warned governors in all 50 states this week that the federal government will start delaying payments for projects that are currently underway to fix the nation's roads and bridges.

The federal Highway Trust Fund, which finances transportation projects, is about to run out of money.

If Congress doesn't act by Aug. 1, the Department of Transportation will trim and postpone payments to states. That could lead to interruptions in highway construction late this summer, according to the Committee for a Responsible Federal Budget.

"People will see it in traffic and they'll see it in the condition of our roads," said Transportation Secretary Anthony Foxx at a breakfast with media on Tuesday. "I think they'll see it in our lack of authority to fix our bridges and to put new capacity in place that this country needs."

The highway fund gets its money mostly from the federal gas tax, but it has been spending more than it takes in for the past decade. So Congress has periodically transferred money from general U.S. tax revenue into the fund -- a total of $54 billion so far.

Starting Aug. 1, the federal agency will have less than $4 billion in its trust fund and will stop making "same-day" reimbursements to states that are improving highways and bridges, the agency warned.

States will instead get money in two installments in August -- some on Aug. 11, and then again two weeks later when gas tax revenue comes in, according to the letters.

At the end of August or early September, the fund will reach zero. And if there's no bill by Sept. 30, even if the highway fund has gas tax money, it will have no power to spend it, Foxx said.

Foxx couldn't put a specific number on how many projects will be halted, because the decision rests with state governors and local transportation agencies.

New smart car tech already saving lives

There's bipartisan support for improving transportation infr! astructure, since it's good for the economy. Better roads and rails mean less wasted time, safer travels and efficiency for trucks and freight trains delivering vital goods across the country.

And infrastructure improvement projects can mean hundreds of thousands of jobs.

So what's the hold up?

Lawmakers don't agree on how much money is needed or where to find it.

Lots of ideas have been proposed. But as yet, there's no common ground in sight.