Dollar Cost Averaging

You're dead sure that shares of Unbeatable Software Ltd at Rs 50 are a great investment. Your broker agrees and so you buy a 1,000 shares for Rs 50,000. A week later, the stock's down to Rs 40 and you are carrying a potential loss of Rs 10,000 on your decision. Don't be surprised. This happens to everyone. And, very often.

Buying at Rs40 would have clearly been the smarter thing to do. Unless, the stock's heading to Rs35. The lesson here is 'dead sure' doesn't exist and stock prices (or for that matter, bonds, mutual funds, or anything that has a price) go up and down.

At what price do you buy? Where's the bottom?

Nobody knows, not even your broker. But there is a way around these issues. And it is a strategy that most smart investors adopt. No, it is not complicated. In fact it is quite simple, most practical and could be quite profitable too. Especially, if you are an individual investor.

Let's see how it works.

Instead of investing your Rs50,000 in one lump sum, suppose you had invested a fixed sum of Rs10,000 at the beginning of every week. Your first Rs10,000 would have bought you 200 shares at Rs50. Your second of Rs10,000 would have allowed you to benefit from the lower share price and you would have bought 250 shares this time around, given that the price was down to Rs40. To understand how this investing approach works, refer to the table below. The table depicts likely stock price movements.

 

 

 

 

Dollar cost averaging
Period	Share Price (Rs)	Amount Invested (Rs)	Shares Bought
Week1	50	10,000	200
Week2	40	10,000	250
Week3	35	10,000	286
Week4	45	10,000	222
Week5	55	10,000	182
Total <		50,000	1,140

 

 

 

 

 

 

 

In the above example, by following this strategy you would have ended up owning 1,140 shares of Unbeatable Software Ltd as against 1,000 shares if you had bought in one lump sum investment.

The difference is significant - your Rs50,000 goes a bit further. In fact, 140 shares further. This approach of spreading out your investments over time and investing a fixed amount periodically is referred to as Dollar Cost Averaging. The important principle here is that you should invest a fixed amount (dollars, rupees, whatever) and not a fixed number of shares.

The above example represents a fluctuating market. While this approach will clearly further increase the number of shares you own with the same Rs50,000 in a one-way downward trended market, you would lose out in a rising market. But then, none of us can predict short-term price movements consistently and perfectly time ups and downs. Which is why this approach will work quite well most of the time. Basically, Dollar Cost Averaging helps you smoothen the market fluctuations to your advantage and removes the uncertainty of answering the question - At what price do you buy?

The psychological attitude to adopt in practicing Dollar Cost Averaging is simple. If prices are falling, you are better off; if they are rising, Dollar Cost Averaging is the price you pay to minimise losses should the market have gone the other way.

Remember, Dollar Cost Averaging - 
1. works equally well for both buying and selling decisions

2. increases your potential gains when acting against the market trend

3. reduces risk when you are playing the market trend

4. can effectively convert a regular savings plan into a regular investing approach

5. helps you to adopt a disciplined approach to investing

6. relieves you from the pressures of forecasting tops and bottoms

Will Earnings Growth Bottom in Q2? - Earnings Trends

The June jobs report has put the spotlight back on the Fed and what it will do to the QE program in the coming months. But hopefully the Q2 earnings season will provide enough of a distraction to not let the Fed become a full-time fixation for the market.

Given how low expectations have come down over the last few months, the Q2 reporting season may not carry many surprises. In fact, it may be reasonable to expect this earnings season to be no different from what we have become accustomed to seeing over the last few quarters. But two aspects of this coming earnings season need paying special attention to – revenues and guidance.

Management teams are typically very good at under-promising and over-delivering. That's why roughly two-thirds of the companies end up beating earnings expectations. But an unusually big proportion of the companies came short of revenue expectations in the previous quarter. The situation has not been much different from the 23 S&P 500 companies that have reported results already, which includes companies like Oracle (ORCL), FedEx (FDX), Walgreen (WAG) and others. As such, more than earnings surprises, it will be interesting to keep an eye on revenue surprises.

But even more significant than growth rates and surprises will be guidance. Guidance is always important, but it has assumed even more significance this time around given the elevated expectations for the second half of the year, as the chart below shows.

Source: Zacks Data

We may not see much earnings growth in the first half of 2013, but consensus expectations are for a material growth ramp up in the back half of the year – from +2.7% in the first half to +9.2% in the second half.
Importantly, the growth expectations for the second half of the year are not due to easy comparisons – the level of total earnings expected in 2013 Q3 and Q4 represen! t new all-time high quarterly records, as shown by the chart below of total bottom-up consensus earnings estimates.


Source: Zacks Data

My sense is that estimates need to come down in a big way. The market hasn't cared much in the recent past about negative revisions as aggregate earnings estimates have been coming down for over a year now. But if we are entering a post-QE world, as I believe we are, then it will likely be difficult to overlook negative earnings estimate revisions going forward. How the market responds to negative guidance over and the resulting negative revisions will tell us a lot about what to expect going forward.

Key Points

Total earnings for the 23 S&P 500 companies that have reported results already are up +8.1%, with 60.9% of this small sample beating earnings expectations. Revenues for these companies are up +5.3%, with a revenue 'beat ratio' of 43.5%. Overall expectations remain low, with total earnings for the S&P companies as a whole expected to be up +0.4% from the same period last year, reflecting -0.8% lower revenues and modestly higher margins. This follows +2.6% earnings growth in Q1 on -1.3% lower revenues. Estimates for Q2 have come down materially since the quarter got underway, with the current +0.4% growth down from +3.9% in early April. Finance is the only major sector with a strong growth profile, with total earnings for the sector expected to be up +18.6% in Q2. This follows +7.6% earnings growth in Q1 and many quarters of double-digit gains for the sector. Excluding Finance, total earnings would be down -3.2% in Q2. Finance reclaims its leadership role in the S&P 500, contributing more earnings to the index's total than Technology this year for the first time since the 2008 crisis. The sector is expected to account for 19.2% of total S&P 500 earnings in 2013 compared to T! echnology! 's 18%. Technology earnings were weak in Q1 and they are even weaker this time around, with total earnings for the sector expected to decline -8.3% in Q2 after declining -4.2% in Q1. Weakness in hardware and semi-conductor industries more than offset the modest growth in software earnings. Excluding Technology, total earnings for the S&P 500 would be up +2.4% in Q2. Estimate revisions remain in neutral territory at present, though Finance continues to experience strong positive revisions, while revisions for Basic Materials, Industrials, Staples, and Business Services predominantly to the downside. Estimates for the second half of the year still reflect strong growth, with total earnings in the second half expected to increase by +9.2% after the +2.7% increase in the first half. Total earnings are expected to be up 6.4% in 2013 and +11.5% in 2014. While there is not much growth, the overall level of total earnings is quite high. Total earnings were an all-time record at $252.6 billion in Q1 and are expected to total $250.3 billion in Q2. For the full year, earnings are expected total $1.03 trillion in 2013 and $1.15 trillion in 2014. Net margins are expected to be up 20 basis points in Q2 as a whole and stay flat outside of the Finance sector. But expectations are for net margins to start expanding materially from the third quarter onwards. For the full year 2013, net margins are expected to top the 2006 peak and expand even further in 2014. The bottom-up 'EPS' for the S&P 500 for 2013 and 2014 currently stands at $109.18 and $121.72, respectively. The top-down 'EPS' estimates for 2013 and 2014 currently stand at $107.83 and $114.80. (Note: All the data in this report is based on bottom-up estimates).
READ THE FULL EARNINGS TRENDS REPORT by clicking here: Will Earnings Growth Bottom in Q2?

Masco Unit Expands in Louisiana - Analyst Blog

Williams Insulation, a wholly-owned subsidiary of Masco Corporation (MAS) recently announced its plans to expand into Lake Charles, La.

Williams Insulation is a part of Masco Contractor Services, which is a group of subsidiaries owned by Masco Corporation. Masco Corporation manufactures, sells and installs home improvement and building products.

Williams Insulation offers various forms of insulation installations such as fiberglass batt, blown fiberglass, spray foam and cellulose. It also offers fireplaces and gutters. The company already serves both homebuilders and homeowners in Southeast Texas and Southwest Louisiana. Expansion in the Lake Charles area will further broaden the company's client base.

Recently, another Masco Contractor Services unit , Red Lion Insulation, announced its plans to expand into Farmingdale, N.J. Red Lion offers various forms of insulation installations such as fiberglass batt, blown fiberglass, spray foam and cellulose.

Masco Corporation will report its second quarter 2013 earnings results on Jul 30, 2013. The Zacks Consensus Estimate for the quarter stands at 19 cents per share. The Zacks Consensus Estimate for 2013 is 69 cents while that for fiscal 2014 is $1.02 per share.

Masco carries a Zacks Rank #3 (Hold).

We are encouraged by Masco's continued focus on product innovation and cost improvements. The company is benefiting from new home construction and repair and remodel activities. However, weak consumer spending on big ticket remodeling and a sluggish European economy remain headwinds.

Other stocks in the construction sector that are performing well and deserve a mention include PulteGroup, Inc. (PHM), DR Horton, Inc. (DHI), and USG Corporation (USG). PulteGroup and DR Horton carry a Zacks Rank #1 (Strong Buy) whereas USG Corporation carries a Zacks Rank #2 (Buy).

AT&T Eyes Leap Wireless - Analyst Blog

Telecommunication behemoth AT&T Inc. (T) has placed a proposal to take over the largest prepaid wireless operator in the U.S. – Leap Wireless International Inc. (LEAP) – for $1.2 billion. Including Leap's net debt of $2.8 billion, as of Apr 15, the value of the deal is around $4 billion.

Leap – which operates under the brand name of Cricket – has an extensive network that spans 35 U.S. states covering almost 96 million people. Supported by an employee base of 3,400, Leap offers both a 3G CDMA network as well as a 4G LTE network.

With $15 per share payment in cash, AT&T will take possession of all of the smaller rival's stock and wireless properties that include licenses, network assets, retail stores and nearly 5 million subscribers. This acquisition will also entitle AT&T to gain control over Leap's spectrum in the PCS and AWS bands covering 137 million people, thereby enhancing the spectrum base of the former. The company plans to use the unutilized spectrum of Leap to expand its 4G LTE deployment, rendering more capacity, better network connectivity and increased mobile Internet usage.

Interestingly, this deal enables Leap shareholders to have a contingent right to the net proceeds gained on the sale of the firm's 700MHz spectrum in Chicago. Leap had purchased the spectrum in Aug 2012 for $204 million.

Following the completion of the deal, AT&T will continue to serve Cricket customers under the existing brand. AT&T, via its industry-leading 4G LTE mobile network and Cricket's distribution channels, aims to spread Cricket's footprint to additional U.S. cities.

Although 29.8% of Leap's outstanding shareholders have agreed to vote in favor of the acquisition, the deal is yet to be reviewed by the Federal Communications Commission and the Department of Justice. The transaction is expected to be completed within the next six to nine months.

We apprehend that this deal will be thoroughly scrutinized by the regulatory b! roads, which remain skeptical about the over-concentration of wireless spectrum in the hands of the top market players – AT&T and Verizon Communications (VZ).

Apart from improving its spectrum position within the industry, this deal will endow AT&T with a stronger pre-paid business line, sharper competitive edge, more customer care service facilities, low-cost data plans and robust financial resources.

This is AT&T's second attempt in the last two years to acquire a wireless carrier. In 2011, the company was toying with the idea of buying T-Mobile USA (TMUS) for $39 billion. However, the deal failed to materialize due to non-approval by U.S. regulators.

Acquisitions and mergers seem to be the current trend within the telecom industry. In May, T-Mobile USA acquired MetroPCS Communications Inc, while in early July Sprint Nextel Corp. (S) and Japanese telecom company SoftBank announced the successful completion of their merger.

AT&T currently holds a Zacks Rank #3 (Hold).

Top 5 Insurance Stocks To Invest In Right Now

In this video, Matt Koppenheffer outlines three things AIG investors need to watch:

The new CEO. Current chief Robert Benmosche came out of retirement to lead AIG out of its financial crisis and performed admirably well. Who will take over the reins?� Historically low interest rates that have made life difficult for banks and insurance companies, particularly insurance companies like AIG that underwrite life insurance. The performance of AIG's core businesses. Now that AIG has restructured itself, have its property/casualty and life insurance businesses delivered positive results?

Check out the video for more details.

At the end of last year, AIG was the favorite stock among hedge fund managers. Have they identified the next big multibagger, or are the risks facing the insurance giant still too great? In The Motley Fool's premium report on AIG, financials bureau chief Matt Koppenheffer breaks down the key issues that you need to know about if you want to successfully invest in this stock. Simply click here now to claim your copy, and you'll also receive a full year of key updates and expert analysis as news continues to develop.

Top 5 Insurance Stocks To Invest In Right Now: Prudential Financial Inc.(PRU)

Prudential Financial, Inc., through its subsidiaries, offers various financial products and services in the United States, Asia, Europe, and Latin America. The company operates through three divisions: The U.S. Retirement Solutions and Investment Management, The U.S. Individual Life and Group Insurance, and The International Insurance and Investments. The U.S. Retirement Solutions and Investment Management division provides individual variable and fixed annuity products, as well as offers retirement investment and income products and services to retirement plan sponsors in the public, private, and not-for-profit sectors. This division also provides investment management and advisory services to the public and private marketplace. The U.S. Individual Life and Group Insurance division offers individual variable life, term life, and universal life insurance products; and group life, long-term and short-term group disability, long-term care, and group corporate-, bank-and trus t-owned life insurance products to institutional clients. This division also sells accidental death and dismemberment, and other ancillary coverages, as well as provides plan administrative services; and offers preferred provider and indemnity dental coverage plans to clients. The International Insurance and Investments division provides international individual life insurance products in Japan, Korea, and other foreign countries; and offers proprietary and non-proprietary asset management, investment advice, and services to retail and institutional clients internationally. In addition, the company engages in real estate brokerage franchise business, which involves marketing its franchises to the real estate companies. Further, it provides institutional clients and government agencies with various services in connection with the relocation of their employees. Prudential Financial, Inc. was founded in 1875 and is headquartered in Newark, New Jersey.

Advisors' Opinion:

• [By Matthew Scott]

  Retiring Baby Boomers could make Prudential Financial (NYSE: PRU) a strong performer for years to come. Insurance products like its line of guaranteed income annuities have given it an edge over rivals and it continues to make inroads into other areas of investing. Prudential’s stock price increased more than five times over the last two years, jumping from $11.20 on March 9, 2009 to $61.58 at the end of the first quarter.

Top 5 Insurance Stocks To Invest In Right Now: Old Republic International Corporation(ORI)

Old Republic International Corporation, through its subsidiaries, provides various insurance and mortgage guaranty products in North America. The company operates in three segments: General Insurance, Mortgage Guaranty, and Title Insurance. The General Insurance segment provides liability insurance coverages to businesses, government, and other institutions in commercial construction, forest products, energy, general manufacturing, and financial services industries; and transportation, including trucking and general aviation industries. It provides various insurance products, such as automobile extended warranty, aviation, commercial automobile insurance, general liability, home warranty, inland marine, travel accident, and workers? compensation, as well as liability coverage for claims arising from the acts of owners or employees, and protection for the physical assets of businesses. This segment also offers financial indemnity products, such as consumer credit indemnity , errors and omissions/directors and officers, guaranteed asset protection, and surety, as well as bonds that cover the exposures for losses of monies, or debt and equity securities due to acts of employee dishonesty. The Mortgage Guaranty segment insures first mortgage loans, primarily on residential properties incorporating one-to-four family dwelling units to mortgage bankers, brokers, commercial banks, and savings institutions. The Title Insurance segment provides lenders' and owners' title insurance policies to real estate purchasers and investors based upon searches of the public records. It also provides escrow closing and construction disbursement services; and real estate information products, national default management services, and services related to real estate transfers and loan transactions. Old Republic International Corporation markets its products directly, as well as through insurance agents and brokers. The company was founded in 1887 and is based in Chi cago, Illinois.

Hot Gold Stocks To Invest In 2014: Genworth Financial Inc (GNW)

Genworth Financial, Inc., a financial security company, provides insurance, wealth management, investment, and financial solutions in the United States and internationally. The company offers various insurance and fixed annuity products, including life and long-term care insurance products; payment protection insurance products for consumers primarily to meet specified payment obligations; and wealth management products, such as managed account programs with advisor support and financial planning services. It also provides mortgage insurance products and related services to insure prime-based, individually underwritten residential mortgage loans or flow mortgage insurance; and mortgage insurance on a structured or bulk basis, as well as offers services, analytical tools, and technology that enable lenders to operate and manage risk. In addition, the company provides institutional products consisting of funding agreements, funding agreements backing notes, and guaranteed in vestment contracts. Genworth Financial, Inc. distributes its products and services through financial intermediaries, advisors, independent distributors, affinity groups, and sales specialists. The company was founded in 2003 and is headquartered in Richmond, Virginia.

Top 5 Insurance Stocks To Invest In Right Now: CNO Financial Group Inc. (CNO)

CNO Financial Group, Inc., through its subsidiaries, engages in the development, marketing, and administration of health insurance, annuity, individual life insurance, and other insurance products for senior and middle-income markets in the United States. The company markets and distributes Medicare supplement insurance, interest-sensitive and traditional life insurance, fixed annuities, and long-term care insurance products; Medicare advantage plans through a distribution arrangement with Humana Inc.; and Medicare Part D prescription drug plans through a distribution and reinsurance arrangement with Coventry Health Care. It also markets and distributes supplemental health, including specified disease, accident, and hospital indemnity insurance products; and life insurance to middle-income consumers at home and the worksite through independent marketing organizations and insurance agencies. In addition, the company markets primarily graded benefit and simplified issue life insurance products directly to customers through television advertising, direct mail, Internet, and telemarketing. It sells its products through career agents, independent producers, direct marketing, and sales managers. CNO Financial Group, Inc. has strategic alliances with Coventry and Humana. The company was formerly known as Conseco, Inc. and changed its name to CNO Financial Group, Inc. in May 2010. CNO Financial Group, Inc. was founded in 1979 and is headquartered in Carmel, Indiana.

Top 5 Insurance Stocks To Invest In Right Now: American International Group Inc.(AIG)

American International Group, Inc. is an international insurance organization. The company operates property and casualty insurance networks worldwide and conducts activities in the U.S. life insurance and retirement services industry. It also involves in commercial aircraft leasing and residential mortgage guaranty insurance businesses. The company, through Chartis Inc., provides various property and casualty insurance products under commercial and consumer categories worldwide. These products include surplus lines, executive liability/directors? and officers? liability, employment practices, excess casualty, and travel/assistance lines. American International Group, through SunAmerica Financial Group, offers a suite of life insurance and retirement products and services, including term life, universal life, accident and health, fixed and variable deferred annuities, fixed payout annuities, mutual funds, and financial planning products and services to individuals and grou ps in the United States. The company, through International Lease Finance Corporation, operates as an aircraft lessor that acquires commercial jet aircraft from various manufacturers and other parties, and leases those aircraft to airlines worldwide. It also sells aircraft from its fleet to other leasing companies, financial services companies, and airlines, as well as provides management services to third-party owners of aircraft portfolios. American International Group, through United Guaranty Corporation, issues residential mortgage guaranty insurance that covers mortgage lenders from the first loss for credit defaults on high loan-to-value conventional first-lien mortgages for the purchase or refinance of one- to four-family residences in the U.S. and internationally. The company was founded in 1967 and is based in New York, New York.

Advisors' Opinion:

• [By Dennis Slothower]

  American International Group is starting to look dirt cheap to this humble investment pro on a price to book value and price to cash flow basis. It is nice to know that I am not alone in my view as FAIRX has a 10% weighting in the name. AIG has grown book value to over $85 billion today from around $55 billion in 2008 while sporting a market cap of just $65 billion. Morningstar lists AIG's forward P/E ratio at 10X and the stock makes up nearly 10% of Fairholme's flagship mutual fund run by Bruce Berkowitz, arguably the king of Value Investing in today's market.

  AIG covered calls are an interesting approach, as the May $35 calls can be sold against the stock for around 3.5% in monthly yield while allowing for meaningful appreciation in stock price over that period of time. Investors may also consider selling the January 2012 $35 put options instead of buying the stock directly for $5.2, although they will not be able to participate in the dividend yield. Personally, I think a "buy and hold", or a hedged position versus a short in the Russell 2000 makes a lot of sense given the margin of safety at AIG.

• [By Andrew Feinberg]

  52-Week High: $37.67
  
  52-Week Low: $22.19
  
  Annual Revenue: $70.6 billion
  
  Projected 2013 Earnings Growth: -17.7% 
  
  When American International Group (symbol: AIG) announced strong third-quarter results, CEO Robert Benmosche said the insurer might not buy back any more AIG shares held by the U.S., as it had earlier said it might. The stock sank on the news, but investors missed the bigger picture. AIG trades at about 50% of its book value of $69 per share, while its peers typically trade at about book value. AIG could eventually earn $6 per share and trade at, or close to, its rising book value.

Meet the Apple and Amazon of Comic Book Publishing

Image Comics is starting to look like the Amazon.com (NASDAQ: AMZN  ) of the comic book publishing industry, says Fool contributor Tim Beyers in the following video.

Specifically, Image has opened a DRM-free store for downloading digital issues of its comics to any electronic device. ComiXology, the industry's top digital distributor, could take a hit as a result.

We've seen these sorts of disruptions before, Tim says. Apple disrupted the music industry when it introduced sales of single tracks. Netflix disrupted the DVD-rental business with rent-by-mail and then unlimited monthly streaming.

Here, Image is trying to disrupt the disruptor (i.e., comiXology) in a manner reminiscent of how Amazon went after iTunes in 2007 with a DRM-free music store. The e-tailer still sells some DRM-free tracks, but not as aggressively as it used to, Tim says.

Image could very well end up taking a similar approach. In the meantime, Tim says, the Big Two of comic book publishing -- Time Warner (NYSE: TWX  ) with DC and Walt Disney (NYSE: DIS  ) with Marvel -- will no doubt be checking to see how Image's experiment tracks with fans, if only because both use comiXology as their primary distributor of digital comics.

Talk about an enviable position. If only comiXology were public, right? Fortunately, there are other ways to profit from the comic book publishing boom. We lay out all the opportunities for you in a special report entitled "Your Ticket to Cash In on the Superhero Battle of the Century." Inside, we tell you everything you know to cash in on your favorite characters. Click here to read the full report now!

Third of Fortune 500 Companies Have ‘Material’ Cyber-Risk

Over a third of Fortune 500 companies said their exposure to cyber-risk was “material” or “serious,” according to a report released Monday by Willis Group, a global risk advisor, insurance and reinsurance broker. Two percent of firms called their level of risk “critical,” suggesting a breach could threaten the company’s continued operations.

In October 2011, the Securities and Exchange Commission issued guidance on disclosing cybersecurity risks and incidents at public companies. The SEC noted that while there is no existing disclosure requirement that explicitly refers to cybersecurity risks and incidents, other “disclosure requirements may impose an obligation on registrants to disclose such risks and incidents.”

Willis Group examined 10-K forms submitted to the SEC by Fortune 500 companies for the report.

Willis found that as of April 2013, 85% of Fortune 500 companies were providing some level of disclosure to the SEC. However, nearly 40% didn’t elaborate on the size of their exposure to risk, or said only that a cyber-event would have an impact on the company without describing what that impact might be.

The most common type of cyber risk reported was a loss of confidential information, reported by nearly two-thirds of companies. Over half said they could suffer a hit to their reputation and half said there was a risk of loss from malicious acts by hackers or viruses.

Six percent of firms said on their 10-K that they purchased insurance to cover cyber events, but other research by Willis’ cyber and E&O team has found more than 50% of large public companies in some sectors purchase cyber insurance. Financial, media, utility and energy companies were most likely to purchase insurance.

Furthermore, 15% of firms don’t have the resources to protect themselves if they are attacked, the report found.

Although the SEC requested specific information in its guidance, many companies didn’t provide it, according to Willis. For example, none of the firms provided the potential or actual cost of cyber events. Only 1% of firms reported an actual cyber event.

---

Check out Small Firms at Greater Risk From Cyberthreats on ThinkAdvisor.

ETF Investors Move Into Shorter Duration, Senior Loans in Bond Selloff: SSgA

Investors in State Street Global Advisors' fixed-income exchange-traded funds are moving their money into shorter duration products and senior loan products since the bond market started its selloff last week, said the firm’s global head of ETF capital markets on Tuesday.

“It’s been a busy couple of days. We’ve seen some selling pressure in the fixed-income products,” said Tim Coyne of SSgA, the nation’s second-largest ETF firm, which manages more than 100 ETFs in a broad variety of asset classes. “We have a lot of client questions coming our way on fixed income liquidity and performance. People are looking at how to position their portfolios.”

Coyne said on Tuesday that investors are still looking for yielding investments, including fixed income, but flows into the high-yielding SPDR Barclays High Yield ETF (JNK) have slowed.

Now, he said, SSgA is seeing more flows into shorter duration products such as SPDR BarCap ST High Yield Bond ETF (SJNK) as well as new senior loan products that SSgA launched about eight weeks ago. For example, the actively managed SPDR Blackstone/GSO Senior Loan ETF (SRLN) portfolio has seen $280 million in volume in the last eight weeks.

High-yield stock ETFs’ 2013 gains have vanished due to the bond markets’ rate spike, reported ETFtrends.com web editor John Spence on Tuesday.

“SPDR Barclays High Yield Bond ETF (NYSEArca: JNK) is off 2.5% so far in 2013 and iShares U.S. Preferred Stock ETF (NYSEArca: PFF) is down 1.8%, according to Morningstar,” Spence wrote. “The recent sell-off as Treasury yields surge has resulted in losses of about 6% over the past month for both funds. The ETFs have also dropped below their 200-day moving averages.”

Surprisingly, investors so far in 2013 have remained faithful to fixed income.

In a midyear 2013 SPDR ETF outlook released on Monday, SSgA ETF investment strategy head David Mazza studied ETF asset flows from January through May and found that investors “remain interested in adding to their fixed income exposure through ETFs even as the prospects of future positive total returns are weakening.”

State Street’s assets under management still weigh heavily toward stock ETFs — at $1.55 billion AUM in equity versus $382 million AUM in fixed income — yet flows were stronger in fixed income funds, Mazza said.

“With nearly $84 billion of inflows during 2013, investors have found comfort in equity ETFs, but not at the expense of fixed income funds, which brought in $30 billion this year,” Mazza wrote. “While this may simply be a function of the continued acceptance of fixed income ETFs by a wider investor base, flows as a percentage of assets were slightly stronger than equities.”

Year to date as of May 31, flows as a percentage of assets stood at 7.9% for fixed income and 5.4% for equities (see chart).

Meanwhile, the biggest loser in ETF flows was the commodity market. A total of $23 billion flowed out of commodities at a negative 17.7% year-to-date flow as a percentage of assts.

“Commodity exposure has clearly been out of favor in 2013,” Mazza wrote. “Even with a sizable outflow from commodities, the global ETF industry has seen over $93 billion of net flows over the first five months of the year.”

---

For direct insights on the role of ETFs in client portfolios from multiple experts—including Rick Ferri, Ron Delegge, Skip Schweiss and more—we invite you to register for AdvisorOne’s premiere advisorcentric Virtual ETF Summit, which starts July 23 (and get multiple hours of CFP Board CE).

Hot Heal Care Stocks To Invest In 2014

BlackBerry�� surprise announcement about exploring options like finding a buyer or forming a joint venture has one deeply ominous implication. Since it happened just 6 weeks after the supposed mass market model Q5 debuted in Europe and Africa, it implies that the Q5 has been another disappointment. This is a very serious matter indeed, since the more expensive Z10 and Q10 sales disappointed during May quarter. BlackBerry has clearly been unable to find its footing in the rapidly evolving smartphone pricing environment, clinging to its premium heritage far too long. But the company still has one ace in the hole ��and on that card rides the entire M&A dream.

The one real asset BlackBerry still possesses is the BlackBerry Messenger, which became a crucially important messaging tool in a variety of emerging markets ranging from Nigeria to Indonesia. BlackBerry has enjoyed the benefits of a powerful network effect in these markets. It still held more than 50% of Nigeria�� smartphone market in 2012 and was the leading smartphone brand in Indonesia with a whopping 12 million users last winter. This is BlackBerry�� secret weapon: it is better to have massive market share in 5-6 substantial phone markets than have a diluted market share among 50 countries. In countries where its smartphone share has been high, BlackBerry Messenger has been a key messaging system, knitting together the most affluent consumers and forcing upper middle classes to join the bandwagon to become part of the club.

Hot Heal Care Stocks To Invest In 2014: Hudbay Minerals Inc (HBM)

HudBay Minerals Inc., an integrated mining company, engages in the exploration and development of copper, zinc, and precious metals mines in North and South America. It primarily produces copper concentrates containing copper, gold, and silver; and zinc metal. The company principally owns underground 777 mine that covers an area of 4,400 hectares and is located in Flin Flon, Manitoba. It also owns ore concentrators and a zinc production facility in northern Manitoba and Saskatchewan. The company was founded in 1992 and is based in Toronto, Canada.

Hot Heal Care Stocks To Invest In 2014: Dycom Industries Inc.(DY)

Dycom Industries, Inc. provides specialty contracting services in the United States and Canada. The company?s services include engineering services, which comprise the design of service area concept boxes, terminals, buried and aerial drops, transmission and central office equipment, administration of feeder and distribution cable pairs, and fiber cable routing and design for telephone companies; and make-ready studies, strand mapping, field walk-out, computer-aided radio frequency design and drafting, and fiber cable routing and design for cable television multiple system operators. The company also provides construction, maintenance, and installation of splice fiber, copper, and coaxial cables to telephone companies; installation and maintenance of customer premise equipment, including set top boxes and cable modems to cable television multiple system operators; and premise wiring services, which include installation, repair, and maintenance of telecommunications infrast ructure within improved structures to various corporations, and state and local governments. In addition, Dycom offers underground utility locating services, such as locating telephone, cable television, power, water, sewer, and gas lines to various utility companies. Further, it provides construction and maintenance services for electric utilities and others, which include installing and maintaining overhead and underground power distribution lines, as well as maintenance and installation of underground natural gas transmission and distribution systems. The company was founded in 1969 and is based in Palm Beach Gardens, Florida.

Advisors' Opinion:

• [By Paul]

  Dycom Industries, Inc. is a provider of specialty contracting services. Its EPS forecast for the current year is 0.43 and next year is 0.73. According to consensus estimates, its topline is expected to grow 3.41% current year and 7.47% next year. It is trading at a forward P/E of 23.62. Out of five analysts covering the company, three are positive and have buy recommendations, one has a sell rating and one has a hold rating.

10 Best Energy Stocks To Own For 2014: WellCare Helath Plans Inc.(WCG)

WellCare Health Plans, Inc. provides managed care services for government-sponsored health care programs in the United States. The company offers Medicaid plans, including plans for beneficiaries of Temporary Assistance for Needy Families (TANF) programs; Supplemental Security Income (SSI) programs; and ABD programs and state-based programs, such as Children?s Health Insurance Programs (CHIP) and Family Health Plus (FHP) programs for qualifying families who are not eligible for Medicaid. The TANF program provides assistance to low-income families with children; and ABD and SSI programs provide assistance to low-income aged, blind, or disabled individuals. It also provides Medicare, a federal health insurance program; Medicare Advantage, a Medicare?s managed care alternative to original Medicare that provides individuals standard Medicare benefits directly through Centers for Medicare & Medicaid Services; and coordinated care plans, which are administered through health m aintenance organizations and require members to seek health care services and select a primary care physician from a network of health care providers. In addition, the company provides prescription drug plans comprising the Medicare Part D program that offers national in-network prescription drug coverage to Medicare-eligible beneficiaries. As of December 31, 2011, it served approximately 2,562,000 members. WellCare Health Plans, Inc. was founded in 1985 and is headquartered in Tampa, Florida.

Advisors' Opinion:

• [By Paul]

  The managed care provider resolved its problems with Medicare and is all set for a world where its role as a mediator between corporations and government-sponsored health care will be in great demand. The company, with a $1.4 billion market cap, has over $1.2 billion cash in the bank and no debt. This could easily be a double in 2012. I own the stock.

Hot Heal Care Stocks To Invest In 2014: Rush Enterprises Inc.(RUSHB)

Rush Enterprises, Inc., through its subsidiaries, operates as an integrated retailer of commercial vehicles and related services in the United States. The company owns and operates a network of commercial vehicle dealerships under the Rush Truck Centers name. Its Rush Truck Centers primarily sell commercial vehicles manufactured by Peterbilt, International, Hino, UD, Ford, Isuzu, Mitsubishi Fuso, IC Bus, or Blue Bird; and provide new and used commercial vehicles, aftermarket parts, service and repair, financing, leasing, and rental services, as well as property and casualty insurance to its commercial vehicle customers and other truck owners. The company serves owner operators, regional and national truck fleets, corporations, and local governments. It operates a network of 70 centers located in Alabama, Arizona, California, Colorado, Florida, Georgia, Idaho, New Mexico, North Carolina, Oklahoma, Oregon, Tennessee, Texas, and Utah. The company was founded in 1965 and is he adquartered in New Braunfels, Texas.

Hot Heal Care Stocks To Invest In 2014: Thundelarra Explrn Ltd(Canada CUFS)

Thundelarra Exploration Limited engages in the exploration and development of mineral resource properties in Australia. It primarily explores for copper, gold, uranium, and nickel deposits in the Northern Territory and Western Australia. The company is based in West Perth, Australia.

Common Financial Mistakes: Mehrab Irani

We all are social animals and we remain the same social animals while thinking about money and investments. Let me discuss today the common investment mistakes which we human beings make as social animals and to understand that we have to branch out to ��Behavior Economics�� which combines the twin disciplines of psychology and economics to explain why and how rational people make totally irrational decisions when they spend, invest, save and borrow money.

Sunk Cost fallacy - Throwing Good money after bad

Imagine that somebody has given you a play ticket ��free�� in which your favourite star in acting. Now, hours before the play is going to commence you come to know that your favorite star may not be able to act that day and there is big weather problem and going to the theatre and coming back might be risky. Now, imagine that you had actually ��paid�� and purchased that ticket. The likely answer is that in the first instance you might not go for the play while in the second instance you might go for the play even though your favourite star is not acting in it and risk traveling in the dangerous weather. This is called ��sunk cost�� fallacy �V in the first instance since you have not paid for the ticket you don��t mind skipping the event but in the second instance since you paid hard cash for the ticket you don��t want to ��waste�� the money which is actually already wasted or sunk. The same way in investments many a times because we buy a certain stock of a bad company at a certain price and then it halves then in the name of ��averaging�� we invest more in it throwing good money after bad. The lesson we learned from this behavior is that we should not sell winning investments more readily than loosing ones and not take money out of the stock market just because markets have fallen.

Loss Aversion

One of the main tenants of behavior economics is that people are loss averse. The pain people feel from loosing Rs.100 is more than the pleasure they get from gaining Rs.100. This explains why people behave inconsistently while taking risks. For example, the same person can act conservatively when protecting gains (by selling successful investments to guarantee the profits) but recklessly when seeking to avoid losses (by holding on to loosing investments in the hope that they��ll become profitable). Loss aversion causes investors to sell all their investments during periods of unusual market turmoil. If you had sold most of your equities during the bottom in the year 2008 or contemplating of selling your ��good quality�� banking or infrastructure stocks currently, then probably you are suffering from ��loss aversion��.

Mental Accounting

This term ��mental accounting�� refers to describe people who treat money differently depending from where it has been received. For example, a person may treat salary (earned money) as sacred and be over cautious with it while the same person might treat gifts, unexpected bonus, written off tax refunds, huge inheritance as ��free money�� and be careless with it. The sacredness may lead the person to let the money just remain idle in savings account and thus getting beaten down by inflation and the carelessness may lead the person to just spend the money or invest in risky ventures and eventually loosing the funds. The lesson is that money is money from whatever source it is received �V deposit any windfall gains first in your savings account and mentally count is as part of your wealth and then there is less likelihood of you squandering away that money.

Bigness Bias

Most of us try to think big as far as money is concerned but easily forget the small things which when compounded over a period of time result into much bigger losses. This is because of our ignorance to the basic principles of mathematics. For example, the tendency to dismiss or discount small numbers as insignificant can lead us to pay more that we have to pay for brokerage, commissions, mutual fund expenses, income taxes which has a surprisingly deleterious effect on our investment decisions over time.

Decision Paralysis

Whether it is investments, insurance, spending or any other money matter, many a times we are not able to make a decision and just maintain status quo. However, we don��t realize that not making a decision is also a decision in itself that we have voted in confidence for the way we are doing things. The lesson we learned from this behavior is that by not taking the right decisions many a times we continue to promote the wrong decisions, the opportunity cost of which may prove to be very costly over the long term.

Money Illusion

Most of us have illusion with money �V the more the money the more we think we have earned and vice versa. But, this may not always be the case. I explain this with a simple example. Suppose, an employee got a 10% salary increment when the inflation is 12% while in another case the same employee got 5% increment when the inflation is 3% - which one would he prefer. There are chances that he will prefer the first case of 10% increment although in the case the employee is getting negative real increment since inflation is more than the increment while in the second case he is getting positive real increment since inflation is less than the increment. This is called money illusion and one of the main reasons why people prefer investment in fixed deposit at negative real interest rates after tax than long term tax free gains through stocks.

Cash Fallacy

Suppose, we go to buy an expensive gift item for say Rs.1 lac. If we have to actually remove cash from our bank account and then pay for it we will feel the ��pain�� of loosing cash and therefore we would think twice before buying it. In the same instance, if we just pay through our credit card then we may be very comfortable and have the illusionary thought of not seeing the pain of loosing cash. This is called ��cash fallacy�� and is the main cause of lot of unwanted and avoidable expenses in the modern plastic word. Remember, if you buy things you don��t need, soon you will have to sell things which you need.

Over or under confidence

These are the other two enemies of investors. If you are over confident on your abilities then you would only look at your successes and boost about it while trying to ��explain away�� your losses. On the other hand if you are under confident then you would not be able to take control of your finances, make investment and spending decisions based solely on the opinions of friends, colleagues or worst than that the so called ��investment advisors�� (including myself). Both these psychological characters are not good for your money and hence beware of it. The lesson form this is that ��either you act on your own judgment or entirely on the judgment of another�� and that another should be a family member with equal stake in the outcome of the decision and not just a friend or worse than that a financial advisor (including myself). Certain simple steps to take in order to avoid big financial mistakes over time are:

Take proper insurance and let it be pure insurance (term policy).

Make proper retirement plans. �� Pay off credit card bills with so called emergency�� funds lying idle in your savings account. �� Make proper asset allocation and diversify your investments.

Put maximum of your equity allocation in index funds �V it will save you a lot in fund management expenses and avoid the randomness bias of Fund Managers.

Review your assets and take stock of your entire portfolio including real estate, art, retirement plans etc.

Set up a direct payroll deduction�� to some kind of recurring savings / SIP.

Keep reviewing your plan.

Invest in well diversified funds for retirement corpus

In an interview with CNBC-TV18, Rustagi said, "It doesn't mean that sector funds, thematic funds or exotic funds do not have a place in the portfolio. Definitely, there is a place for these funds but not for someone who is beginning to invest, who is investing smaller contribution over a period of time. One can look at these funds maybe little later."

Below is the edited transcript of his interview with CNBC-TV18. Also watch the accompanying video.

Q: An investor is looking for a goal of around Rs 50 lakh in the next 20 years for which he has been saving Rs 25000-28000 per month. How should he allocate the money?

A: I think there are two important factors; one is that he is looking at building up a portfolio of mutual funds and second is he has a time horizon of around 15-20 years. He has also mentioned about his two goals, one of them is getting married and other one is retirement planning.

If we analyze these goals considering that he is around 27 years old, his goal of getting married would have a time horizon of maybe a couple of years and his retirement could be having a time horizon of 30 years.

During this period again, there will be other goals of maybe buying a house, children's marriage, children's education etc. We listed out some of the goals; each one then has to be then given a time horizon and then there is a need to quantify these goals.

This process basically helps him in deciding what kind of asset allocation should be there. As we know, mutual funds do offer different kinds of funds. There are debt funds, gold funds, equity funds etc. so the asset allocation decides what kind of asset classes he should be investing in. That is very important.

Then comes the question of deciding which fund because once you decide the asset allocation then he can look at which kind of option he should be looking at. That's where mutual funds, being a diversified investment vehicle, are very important.

Coming back to his two goals, getting married is a short term goal. He should be looking at tax efficient debt options and debt oriented hybrid funds like fixed maturity plan provided he is very sure about his time horizon.

The other option is monthly income plan (MIP). These are essentially debt oriented hybrid funds; they invest around 80-85% money in debt and the rest is invested in equity. Another option for him for this particular goal is short term debt funds.

As far as the long term goal is concerned, considering that he has a time horizon of around 25-30 years or even more, he can consider investing in equity funds. The key, ofcourse, will be that if he invests continuously on regular basis; that will help him in terms of averaging.

As far as short term debt is concerned, he can look at Birla Sun Life Dynamic Bond Fund . In terms of MIP, he can consider HDFC MIP long term or Reliance MIP . Fixed Maturity Plans (FMP) essentially are closed ended funds and mutual funds keep launching from time to time for different durations. It's difficult to tell a name at this stage.

As far as equity funds are concerned, my advice would be that core of the equity portfolio should be well diversified funds. I don't know what kind of holdings he has in equity portfolio. But for mutual funds, I will recommend that he should look at a well diversified fund like DSP Blackrock Top 100 . This is a fund which invests in top 100 companies in terms of market cap. Another fund he can look at is HDFC Equity and Reliance Equity Opportunity . These are three funds that he can start investing.

Q: An investor can invest Rs 12000 per month. He has invested in HDFC Growth Fund and ICICI Prudential Infrastructure Fund and ICICI Prudential Technology Fund and also in Reliance Diversified Power Sector Fund . How should he allocate the money?

A: There is definitely need to change the investment strategy here. Every investor who is looking to build up a corpus of a period of time needs to ensure that the core of the portfolio should be well diversified fund. Now it doesn't mean that the sector fund, thematic funds or these exotic funds do not have a place in the portfolio.

Definitely, there is a place for these funds in the portfolio but not for someone who is beginning to invest, who is investing smaller contribution over a period of time. One can look at these funds maybe little later.

As far as this portfolio is concerned, I think the portfolio is completely dominated by the thematic and sector funds so there is definitely need to change that. The focus should be more on the diversified fund. Some of the funds that can be looked at is like in place of infrastructure can be ICICI Focus; in place of Reliance Diversified Power, it can be Reliance Equity Opportunity . There is a definitely a need to change the portfolio.

As far as the insurance is concerned, he has two policies again. I would like him to realize that when it comes to insurance, risk cover is not about the number of policies, it's about the quantum of insurance that you have. I think he has a combination of a money back and endowment plan, which obviously is not going to give him adequate risk cover. He should definitely consider buying a term plan.

I think the third requirement is that he is looking at building up a corpus of around Rs 4 crore over a period of around 15-20 years. If I look at the time horizon, he can definitely look at equity funds because he needs to beat inflation. But the goals also have to be very realistic.

To achieve these goals over a defined time horizon, he needs to invest around Rs 85000 assuming annualized return of around 12%. I think there is a complete mismatch in what he can do, he is looking at basically investing Rs 12000.

PRAA Raised to Strong Buy - Analyst Blog

On Jul 6, 2013, Zacks Investment Research upgraded Portfolio Recovery Associates Inc. (PRAA) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Portfolio Recovery reported positive earnings surprise in the last four quarters with an average beat of 8.28%. The long-term earnings growth of the company is presently pegged at 15%.

Portfolio Recovery's bottom-line results have shown steady improvement over the past few quarters. Strong cash collections drove revenues upward, while an increase in operating income drove operating margin higher.

Moreover, to make the shares more affordable, Portfolio Recovery announced a 3:1 stock split in Jun 2013, which will be conducted on or around Aug 1, 2013. This is the first stock split being implemented by the company, which went public in 2002.

Further, Portfolio Recovery has expanded beyond its primary debt collection business into government collections, audit services and claims settlement with the acquisitions of IGS Nevada, Alatax, Broussard Partners, MuniServices, Claims Compensation Bureau and Mackenzie Hall. The ability to acquire and assimilate businesses in related fields is certainly a long-term positive as the traditional debt collection business matures and becomes more competitive.

We expect Portfolio Recovery to grow 20% year over year in the second quarter of 2013. Consequently, the Zacks Consensus Estimate is currently pegged at $2.24 per share. Over the last 60 days, 2 out of the 5 analysts covering the stock raised their estimates for Portfolio Recovery's second quarter and full year 2013.

Other Stocks to Consider

Other stocks in the sector that are performing well and are worth a look are Sykes Enterprises, Incorporated (SYKE) – Zacks Rank #1 (Strong Buy), Discover Financial Services (DFS) – Zacks Rank #2 (Buy) and Regional Management Corp. (RM) – Zacks Rank #2 (Buy).

Amgen - Servier Ink Deal - Analyst Blog

Amgen (AMGN) recently entered into an agreement with Servier, a privately-run French research-based pharmaceutical company.

The collaboration, which focuses on cardiovascular diseases, will see Amgen making an upfront payment of $50 million. Amgen gained US commercial rights to Servier's ivabradine, a novel oral drug. Ivabradine is currently approved in the EU under the trade name, Procoralan, for chronic heart failure and stable angina in patients with elevated heart rates. It is approved in more than 100 other countries apart from the US.

Amgen also has an exclusive option for the US development and commercialization of another cardiovascular disease candidate in Servier's pipeline, S38844. S38844 is currently in phase II studies for the treatment of heart failure.

Meanwhile, Servier gained European commercialization rights to omecamtiv mecarbil, which is being developed by Amgen in collaboration with Cytokinetics, Incorporated (CYTK). Omecamtiv mecarbil, which is being evaluated for the treatment of heart failure, is currently in a phase II study in patients with left ventricular systolic dysfunction, who are hospitalized with acute heart failure.

Amgen and Servier can exercise their options for S38844 and omecamtiv mecarbil, respectively, up to the completion of phase II studies.

Financial details regarding the S38844 and omecamtiv mecarbil part of the deal were not disclosed. As far as ivabradine is concerned, Servier will be entitled to milestone and royalty payments in addition to the above-mentioned $50 million upfront payment.

With the Servier deal, Amgen is looking to strengthen its cardiovascular pipeline. Amgen has been signing several deals this year. These include the expansion of the company's collaboration with Cytokinetics and the signing of agreements with Astellas (ALPMY) and Zhejiang Beta Pharma Co., Ltd. for Japan and China, respectively. Amgen was also in the news related to its offer to acquire Onyx Pharmaceuticals (ONXX). Amgen! currently carries a Zacks Rank #3 (Hold).

At present, Cytokinetics looks well-positioned with a Zacks Rank #2 (Buy).

Short Sellers Continue to Shy Away from Southwest ...

As the summer travel season got underway, Southwest Airlines (NYSE:LUV) saw sizable swings in short interest.

Other players in the U.S. airline industry that saw increasing short interest between the June 14 and June 28 settlement dates include JetBlue Airways (Nasdaq:JBLU).

But the number of shares sold short during the period in Allegiant Travel (Nasdaq:ALGT) and Delta Air Lines (NYSE:DAL) declined.

Note that American Airlines remains in bankruptcy, pending completion of its merger with U.S. Airways.

In addition, in late June short interest in aircraft manufacturers Boeing (NYSE:BA) and Lockheed Martin (NYSE:LMT) rose marginally.

Southwest Airlines

Shares sold short in this Dallas-based passenger airline operator declined more than 34 percent during the period to around 15.99 million, the third straight period of shrinking short interest. The mid-June figure represents more than two percent of the total float. The days to cover dropped to about two.

This carrier serves 97 destinations in 41 states and six in the Caribbean and Central America. It has a market capitalization of more than $9 billion. A computer glitch caused flight delays and cancellations in June. The company's long-term earnings per share (EPS) growth forecast is more than 36 percent.

Seven of the 15 analysts following the stock that were surveyed by Thomson/First Call recommend buying Southwest shares. The analysts believe the shares have headroom as their mean price target represents about 13 percent potential upside. That consensus target would be a new 52-week high.

The share price is down more than four percent in the past month, but it is still about 27 percent higher year-to-date. Over the past six months, the stock has outperformed competitors JetBlue and U.S. Airways, as well as the Dow Jones Industrial Average and the S&P 500.

Spirit Airlines

Shares sold short in this Florida-based regional carrier declined about 12 percent during the period to around 1.29 million, largely erasing a 16 percent rise in the previous period. The number of shares sold short was about two percent of the float. Days to cover fell to about one.

This ultra-low-cost carrier with its main hub in Ft. Lauderdale has a market cap of more than $2 billion. In ordered 20 new aircraft from Airbus during the period. The company's return on equity is more than 24 percent, and the long-term EPS growth forecast is more than 22 percent. The operating margin is higher than the industry average.

All but one of the 12 analysts polled recommend buying shares, with four of them rating the stock at Strong Buy. But the mean price target represents less than four percent potential upside, relative to the current share price. That consensus target would be a new multiyear high, though.

The share price has risen more than six percent in the past month, and it is up more than 86 percent since the beginning of the year. Over the past six months, the stock has outperformed competitor JetBlue and the broader markets.

United Continental

After the short interest in this operator of United Airlines plunged about 49 percent in the previous period, it recovered more than 16 percent to 10.96 million shares in late June. Less than four percent of United Continental's shares were sold short. The days to cover grew to more than four.

United Airlines ordered 35 new jets from Airbus in June. The company has a market cap of more than $10 billion, but it does not offer a dividend. The long-term EPS growth forecast is more than 61 percent, and the forward earnings multiple is less than the industry average price-to-earnings (P/E) ratio.

For the past two months, the consensus recommendation of analysts has been to hold United Continental shares. Analysts see some headroom for shares, though, as their mean price target is more than 10 percent higher than the current share price. But that target is less than the 52-week high from last May.

The share price has pulled back less than four percent in the past month, but it is still up more than 27 percent year-to-date. Over the past six months, the stock has underperformed Delta but outperformed U.S. Airways and the broader markets.

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Illinois Tool Works Comes Up Short On Growth

Margins typically drive industrial stocks over the long term, but growth can certainly impact share prices on a more short-term basis. That's working to the detriment of Illinois Tool Works (NYSE:ITW), as this high-quality industrial has broken from the peer group this quarter in reporting pretty weak growth numbers. As is typically the case with this company, the shares are not particularly cheap today and even the company's quality edge isn't quite enough to argue strongly for buying today.

Q2 Disappoints On Revenue, But Outperforms On Margins
Illinois Tool Works had a decidedly mixed second quarter report. Illinois Tool Works definitely came in below other industrial conglomerates like General Electric (NYSE: GE), Danaher (NYSE:DHR), Honeywell (NYSE:HON), and Dover (NYSE:DOV) in terms of growth, even though management continues to execute ahead of plan on the restructuring efforts.

SEE: Conglomerates: Risky Proposition?

Revenue rose 1% this quarter, or basically flat on an organic basis. Revenues declined 1% in both North America and the EU, and the company continues to see a relatively weak environment for capital spending, as equipment sales were down 4% while consumables were up 1%.

Between the divestiture of the decorative surfaces business and the company's ongoing restructuring efforts, margins continue to come in better than expected. Gross margin rose about a point from the year-ago period, and ticked up about 30bp sequentially. Operating income rose nearly 4% from the year ago period, with about 40bp of operating margin leverage. The company's food equipment and polymers/fluids businesses were notable outperformers on margins, while test/measurement & electronics and industrial packaging were notable laggards.

Strong Autos, But Construction And Electronics Remain Weak
Like Honeywell, Illinois Tool Works saw a solid performance in autos, as the company's 12% organic revenue growth was well ahead of production growth in North America, Europe, and China. Unfortunately, that is pretty much all of the good news for the quarter from a revenue growth perspective.

SEE: A Look At Corporate Profit Margins

Welding remains stubbornly weak due to sluggish construction, energy, and industrial conditions, and I'll be very curious to see the sort of performance that Lincoln Electric (Nasdaq:LECO) and Colfax (NYSE:CFX) report, as these three leading welding businesses have not exactly moved in lock-step recently. Polymers and fluids revenue was down about 4%, and ITW's more explicit construction business was also soft (up 0.3%), as slight growth in the U.S. residential market was largely overshadowed by weakness overseas and in commercial activity.

ITW also continues to see the effect of weak electronics markets, as the test & measurement and electronics segment was down 9% on exceptional weakness in electronics (down 16%, with electronics assembly down 38%) and sluggishness in test & measurement (down 2%) worse than that seen at Danaher.

It's All About Exposure
It's not too hard to see why Illinois Tool Works came up short versus some of its peers this quarter. Unlike GE and Honeywell, Illinois Tool Works doesn't have much leverage to the aviation end market, and likewise the company's exposure to energy is low relative to GE and Dover. Even so, that doesn't completely absolve this quarter's performance – although ITW did better in autos than Honeywell, the performances in test & measurement, polymers/fluids, food equipment, and construction seemed weaker than I would have expected given other companies' reports. Coupled with the strong margin improvement, I wonder if Illinois Tool Works has (knowingly or not) given up a little growth in the cause of better margins.

The Bottom Line
Barring a sharp turnaround in consumer electronics and/or construction, I think Illinois Tool Works will likely continue to lag its peers in terms of organic revenue growth for the remainder of this year. Given the improvements in margins, though, as well as the long-term full-cycle philosophy of management, I wouldn't sell the stock on that basis.

The reason I might consider selling the stock is that the shares look pretty richly valued. A 7% long-term free cash flow growth (above the long-term trailing growth rate of about 5%) doesn't generate an appealing price target even if you give the company a very low discount rate (which seems inappropriate given the cyclicality). What's more, metrics like EV/EBITDA don't suggest any particular undervaluation in these shares, though the company's P/BV ratio does appear low relative to its ROE.

I don't expect many individual shareholders of ITW shares to be momentum or fast-money traders, so selling out today may not make all that much sense in the context of viewing ITW as a strong long-term holding. Even so, if I needed to raise funds to acquire a cheaper industrial conglomerate, Illinois Tool Works would look like a candidate to sell right now.

Retail Industry Stock Outlook - July 2013 - Industry Outlook

Retailers procure goods in large quantities directly from manufacturers or wholesalers and sell them in smaller quantities to customers through retail shops or online platforms. As consumer spending is the key to the viability of any economy, the health of the retail industry becomes an important economic indicator.

As a leader in the retail business, the United States provides ample growth opportunities for all types of retail companies. The retail industry covers everything in its scope, ranging from internet catalog sales, auto dealers, convenience stores, vending machines and clothing; thus dividing retailers into numerous categories. Retailers of all sizes, including individual direct marketers or direct sellers, small- to medium-sized franchise unit owners, and large "big-box" store operators compete in the U.S.

From a growth perspective, the retail industry is among the dominant U.S. industries, and employs an enormous workforce.

Correlation with the Economy

So far this year, the broader markets have showcased signs of a better pace of recovery and have thus infused hopes of a better economic scenario in the second half of the year and beyond. One could contest this economic outlook, but the stock market's strong recent gains show clearly which way investors think the economy is headed. The S&P 500 index has clocked gains of roughly 14.3%, while the Dow Jones Industrial Average has gained approximately 15.2% so far this year.

The belief in economic recovery is reflected in measures of consumer confidence hitting new multi-year high. The recent Conference Board's Consumer Confidence Index improved to 81.4 in Jun 2013 from a revised 74.3 in May 2013. The index notched its highest level since Jan 2008, when it had touched 87.3. This prompts a sense of optimism about steady increase in consumer spending going forward.

The recovery in the housing market, stock prices gaining momentum and improving labor market conditions played vital roles to h! elp the consumer confidence move north.

According to the Census Bureau and Department of Housing and Urban Development, sales of new houses jumped 2.1% sequentially in May 2013 and surged 29% from May 2012. Additionally, unemployment rate is currently hovering around 7.6%, reflecting an improvement from 7.9% in the beginning of the year.

Meanwhile, Fed Officials hinted that it might gradually roll back the $85 billion monthly stimulus program in the later part of the year and said that they might discontinue the program by the middle of next year if economy improves further.

Fed Officials look quite optimistic about the unemployment rate going down to a range of 7.2% to 7.3% in 2013 with expected economic growth of 2.3% to 2.6%. Moreover, they see the unemployment rate between 6.5% and 6.8% next year, driven by economic growth in the 3% to 3.5% range.

We will have to wait and see how the economic picture unfolds, but Ben Bernanke in his Congressional testimony this week indicated that the Fed will maintain accommodative monetary policy for a very long time even if they make changes to the QE program.

Key Metric for June

The key data in retail industry analysis is comparable-store sales (comps), as it excludes sales at newly opened and closed stores. Improving job market, lower gas prices, warmer weather and clearance discounts boosted consumer sentiment. These positives aided retailers to generate healthy sales for the month of June with consumer spending gaining some pace.

Among the retailers, clothing chain The Gap Inc. (GPS) led the pack with a 7% rise in comps and an 8% increase in net sales to $1.53 billion for the month of June. Off-price retailer of apparels, footwear and accessories Stein Mart Inc. (SMRT) was also on the list of best performers. The company registered a 6.5% rise in June comps, while total sales increased 2.6% to $109 million.

Furthermore, discount store operator Fred's, Inc. (FRED) witnessed a significant improvem! ent with ! a 4.5% rise in comps, substantially up from the 4% decrease witnessed in Jun 2012. Net sales for June increased 3% to $187.7 million. Costco Wholesale Corporation (COST), the warehouse retailer, delivered comparable-store sales growth of 6% in June, following an increase of 5% in May. Meanwhile, net sales for June rose 8% to $9.92 billion from $9.16 billion in the year-ago period.

The Buckle, Inc. (BKE), a retailer of casual apparels, footwear and accessories for men and women, witnessed a 3.4% rise in comps when compared with Jun 2012 results. Net sales increased 3.9% to $82.5 million from $79.4 million in the prior-year period.

However, some retailers showcased soft performance. Apparel and accessories retailer, Cato Corporation (CATO) reported a 1% rise in comps. L Brands, Inc. (LTD), a specialty retailer of women's intimate and other apparel, beauty and personal care products posted flat comparable-store sales. Washington-based retailer of sports-related teen apparel Zumiez Inc. (ZUMZ) reported a 1.0% increase in comps.

Drugstore chain retailer Rite Aid Corp. (RAD) reported marginal growth in comparable-store sales for Jun 2013, thereby breaking the declining trend of comps for the past four months. The company's comps for the 4-week period ended Jun 29, 2013 inched up 0.7%, primarily driven by improved comps results at its pharmacy and front-end stores.

However, the U.S. retail and food services sales data for Jun 2013 were somewhat disappointing. According to the U.S. Census Bureau, the retail and food services sales grew 0.4% sequentially and 5.7% year-over-year to $422.8 billion. The rate of increase decelerated from 0.5% gain in May 2013 and fell short of analysts' expectation of 0.7% to 0.9% increase. Retail sales represent approximately 30% of consumer spending.

Retailing - New Game, New Rules

The retail industry is rapidly evolving with a dramatic change in consumer buying habits. Satisfying customers and enriching buying experience require! new stra! tegies from retailers today. Modern retailing, interestingly enough, is a new game with new rules.

Despite the gradual rise in consumer discretionary purchases, the sluggish U.S. economy and recessionary fears in Europe cannot be ignored. Burdened with the lackluster scenario, retailers have largely concentrated on buyers' needs and lured them with innovative products, attractive discounts, free shipping and the ease of shopping through smartphones and tablets. However, these strategies only helped in generating modest revenues.

Thus, retailers essentially need to ideate brilliant strategies, while incorporating technological advancements and utilizing their real estate portfolio to the optimum level. In short, they need to Experiment, Differentiate, Optimize and Transform.

Banking on this new mantra, Staples Inc. (SPLS), the world's largest retailer of office products and services and second largest online retailer, launched its first omnichannel stores – what it refers to as the future of retail.

Simply put, through this omnichannel strategy, Staples hopes to integrate its retail network with enhanced digital capabilities. The company stated that stores will incorporate its .com and mobile assets. Alongside, the stores will feature Staples.com kiosks.

This new era store concept, with all its attractions could well prove to be a game changer in the long run for Staples. Providing shoppers the ease of shopping on their own terms and enriching their in-store shopping experience could be a crucial point of differentiation among other retailers.

In harmony with the evolving retail industry, department store operator Macy's, Inc. (M) also adopted an omnichannel strategy. Despite macroeconomic challenges and cautious consumer spending, Macy's continues to post healthy results. Management largely attributes the credit to its omnichannel strategy aimed at enhancing customers' shopping experience.

Trends to Rule 2013

Some of the trends t! hat are e! xpected to rule the retail sector this year include employing more technological solutions, incorporating customer feedback and targeting additional audiences with products and services.

With the growth of the .com era, shoppers have largely adopted new purchasing modes, using the Internet, mobile phones and tablets. Consumers today prefer to use their laptops or smartphones to compare prices of products they want to buy and place orders online, instead of visiting the company's stores. This growing trend has guided major U.S. retail chains to downsize their physical retail operations, and in turn develop their e-Commerce and m-Commerce sites to attract customers.

Other traits that are expected to affect the retail industry are the growth of self-service options for processes such as checking out and finding items in stores. These offerings provide greater convenience and faster transactions, and they satisfy shoppers who prefer to visit brick-and-mortar locations for immediately purchasing predetermined items.

Of late, store-within-a store has been making headlines, though the concept is nothing new to retailers. J. C. Penney Company Inc. (JCP) is one such retailer which has been focusing on this business strategy for quite some time. The recent one to join the league is consumer electronic retailer Best Buy Company Inc. (BBY), which has been facing stiff competition from industry bellwethers such as Wal-Mart Stores Inc. (WMT) and Amazon.com Inc. (AMZN) to increase its footfall, sales and profitability.

Best Buy is leaving no stone unturned to woo consumers and attain incremental revenue, and it was well evident from its strategic initiative of opening over 1,400 "Samsung Experience Shops" within its stores, announced in April. The model seems to be working for the retailer, which also has a dedicated floor area for Apple Inc.'s (AAPL) products. Taking the initiatives further, Best Buy recently unveiled its partnership with Microsoft Corporation (MSFT) to roll out �! �Windows ! Store" across its 500 outlets in the U.S. with an additional 100 in Canada.

Challenges and Some Remedial Measures

The retail industry is highly competitive and encounters significant challenges. Although the U.S. economy has started witnessing a recovery, we still believe that 2013 will not fully mark the resurrection. Consumers are slowly regaining confidence and cautiously increasing their spending.

Moreover, consumers remain sensitive to macroeconomic factors including interest rate hikes, increase in fuel and energy costs, credit availability, unemployment levels, and high household debt levels, which may negatively impact their discretionary spending and eventually adversely affect the growth and profitability of retail companies.

Macroeconomic Conditions: Retail is no different from other U.S. industries, which is highly dependent on the economy to prosper. Such heightened dependence on the economy and factors like job growth and interest rates indicate that a speedy recovery of the economy is vital for the health of the retail industry. While the unemployment rate has decreased considerably over time, consumers are now beginning to draw out their savings to spend, anticipating some economic recovery.

Changes in Consumer Needs, Attitudes and Behavior: The growth of modern retail is linked to consumer needs, attitudes and behavior. Adapting to the sluggish economic environment prevalent over the last few years, consumer behavior has shifted to being more conservative. This has now become the regular behavioral pattern of consumers as they remain budget conscious, seeking greater value. In the process, buyers are swiftly switching to the less expensive brands and consolidating shopping trips.

Moreover, people today prefer to cook at home instead of eat out. This shift in consumer behavior is inducing retailers to adopt various strategies to stay in the competition. Retailers are offering trend-right and well-designed assortments at compelling prices, wi! thout com! promising on the quality, in order to drive traffic.

Staging Stores: The waning popularity of brick-and-mortar store formats has made it essential for retailers to adopt new techniques like 'staging stores' to woo customers. Staging basically refers to the act of making the company's stores attractive, where people like to spend their time. The idea behind this strategy is to make shopping interesting for consumers, so that they would want to walk into the stores, rather than shop online.
Zacks Industry Rank

Within the Zacks Industry classification, Retail/Wholesale (one of 16 Zacks sectors) is divided into two categories – Nonfood Retail-Wholesale and Food/Drug- Retail/Wholesale under the Medium (M) Industry Group and further sub-divided into 15 industries at the expanded level – Building Products-Retail/Wholesale, Food Items-Wholesale, Internet Commerce, Retail/Wholesale Auto/Truck, Retail-Apparel/Shoe, Retail-Consumer Electronic, Retail-Discount, Retail-Drug Store, Retail-Jewelry, Retail-Miscellaneous/Diversified, Retail-Restaurants, Retail-RGN Department, Retail-Supermarket, Retail/Wholesale-Auto Parts and Retail/Wholesale CMP.

We rank all the 260 plus industries in the 16 Zacks sectors based on the earnings outlook and fundamental strength of the constituent companies in each industry. To learn more visit: About Zacks Industry Rank.

As a point of reference, the outlook for industries with Zacks Industry Rank #88 and lower is 'Positive,' between #89 and #176 is 'Neutral' and #177 and higher is 'Negative.'

The Zacks Industry Rank for Retail-RGN Department #8, Retail/Wholesale CMP #9, Retail-Restaurants #40, Retail-Jewelry #44, Building Products-Retail/Wholesale #61, Retail/Wholesale Auto/Truck #67, Retail-Drug Store #71, Retail-Consumer Electronic #76, Retail-Miscellaneous/Diversified #97, Internet Commerce #104, Food Items-Wholesale #111, Retail-Apparel/Shoe #156, Retail-Supermarket #159, Retail/Wholesale-Auto Parts #184 and Retail-Discount #204! .

! Analyzing the Zacks Industry Rank for the constituent industries in this space, it is apparent that the overall outlook for the Retail/Wholesale sector is positive.

Earnings Trends

The broader Retail/Wholesale sector portrays an impressive earnings trend. The first quarter 2013 results for the sector were impressive in terms of both beat ratios (percentage of companies coming out with positive surprises) and growth.

The earnings "beat ratio" was 75%, while the revenue "beat ratio" was 50%. Total earnings for this sector increased 7.9%, reflecting an improvement over 6.6% growth registered in the fourth quarter of 2012. Total revenue grew 1.7% in the quarter versus 5.3% jump in the previous quarter.

Looking at the consensus earnings expectations for the rest of the year, we remain encouraged since earnings are expected to grow 5.9% in the second quarter of 2013 and 17.6% in the third quarter, but are expected to decline by 9.1% in the fourth quarter, thereby registering full-year 2013 growth of 10.0%.

For more details about earnings for this sector and others, please read our 'Earnings Trends' report.

Conclusion

Retailers are trying to remain competitive primarily by shifting focus to the long-term horizon and finding innovative solutions to create value, reduce operating costs and mitigate risks throughout the enterprise.

Right-sizing inventories, enhancing efficiency and competence and bringing in technological advancements are the key agendas that retailers are focusing on. Moreover, cost-containment efforts and merchandise initiatives to improve margins are top priorities.

Retail, owing to its huge spectrum, remains a lucrative investment avenue for investors. The sector reflects consumer spending trends, an important parameter to gauge the health of the economy. Thus, identifying future winners from this sector would be a good investment decision.

We recommend few stocks in the sector at this point, as these companies! are show! ing significant growth despite the secular headwinds. The stocks in our coverage with a Zacks Rank #1 (Strong Buy) include, Bon-Ton Stores Inc. (BONT), Big 5 Sporting Goods Corp. (BGFV), PVH Corp. (PVH), The Children's Place (PLCE), Macy's Inc. (M), Mohawk Industries Inc. (MHK), Haverty Furniture Companies Inc. (HVT), Conns Inc. (CONN) and Restoration Hardware Holdings, Inc. (RH).

Additionally, we prefer stocks with a Zacks Rank #2 (Buy), namely Tiffany & Co. (TIF), Kohl's Corp. (KSS), SUPERVALU Inc. (SVU), The Kroger Company (KR), Build-A-Bear Workshop Inc. (BBW), Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA), G-III Apparel Group, Ltd. (GIII) and Michael Kors Holdings Limited (KORS).

On the other hand, there are stocks that don't hold promise in the near term, and carry Zacks Rank #4 (Sell) and Zacks Rank #5 (Strong Sell). These include Ralph Lauren Corporation (RL), Target Corp. (TGT), Ascena Retail Group Inc. (ASNA), Companhia Brasileira de Distribuicao (CBD), Furniture Brands International Inc. (FBN), Gordmans Stores, Inc. (GMAN), Jos. A Bank Clothiers Inc. (JOSB), Marinemax Inc. (HZO) and Safeway Inc. (SWY).

LinkedIn Spearheading Business Networking - Analyst Blog

The concept of professional / business networking has come a long way. Companies such as LinkedIn Corporation (LNKD), Xing and Viadeo have helped in a big way to add new features and revolutionize this field.

An increasing number of companies, irrespective of their sizes, are taking the help of popular networking and information sharing sites, such as Facebook Inc.(FB) and Twitter, to market their products and services.With each passing day, these mediums of business communication are gaining an edge over their traditional counterparts, such as television and print media.

Online professional networks are gaining popularity among both young and veteran professionals. They are helping these professionals address professional issues online.

Although business networking has taken a little more time to gain a foothold, compared to social networking, which has grown in leaps and bounds, it is noticeably scaling up as we speak and is in the process of transforming the fields of recruitment, self-employment and product promotion. Sensing the opportunities available in the field of professional / business networking, social networking sites, such as Facebook, are also coming up with services to cater to business customers and professionals.

LinkedIn has come a long way since its IPO in 2011. The cash cow for LinkedIn has been its talent solutions segment, which connected recruiters to candidates. On an average, this segment generated over 50.0% of the company's total revenues over the last couple of years.

Although the talent solutions unit is generating good business for the company, it is havingtrouble generating ad revenues from its growing mobile user base. The company's premium subscriber base in the advertisement segment generates only about 20.0% of the revenues as most users do not get converted to paid subscribers.

Moreover, business networks are facing some other issues as well. One of the main issues is the absence of video interaction. As a result of! this, members are unable to convey a sense of their personality to the prospective employer or business counterpart. Some industry veterans feel that this is an important part of networking and business interaction. It is for this reason that sites like LinkedIn are not preferred by recruiters for conducting a preliminary interview.

This is one of the main reasons behind people opting for sites like Yammer and Ning. Growth prospects of business networking sites are dependent on their ability to introduce new technologies so that employers, recruiters, marketers and public relations departments of companieshave greater flexibility and better use for the service. This will also attract new paid users and build customer loyalty.

Both LinkedIn and Facebook carry a Zacks Rank#2 (Buy). Investors can also consider investing in other stocks such as Yahoo Inc. (YHOO) and Akamai Technologies Inc. (AKAM) both of which carry a Zacks Rank#2 (Buy).

Yum! 2Q Earnings Top Ests, Rev Misses - Analyst Blog

Yum! Brands Inc.'s (YUM) second-quarter 2013 adjusted earnings of 56 cents per share beat the Zacks Consensus Estimate by 1.8%, but slipped 16.4% year over year. On a reported basis, Yum! Brands' quarterly earnings of 61 cents per share were down 13% year over year.

In the second quarter, total revenue declined 8% year over year to $2.9 billion and also fell short of the Zacks Consensus Estimate of $3.0 billion by nearly 3.3%. Yum!'s weak China division has been held responsible for such poor results during the quarter.

The outbreak of avian flu in China in early-Apr 2013 marred the division's quarterly results. To add to the woes, an adverse publicity arising from the KFC China's poultry supply situation in Dec 2012 continues to negatively impact on the China division's performance. China, which used to be a major contributor to Yum!'s growth in the past few years, began to post dismal results since late 2012 due to these setbacks.

Behind the Headline Numbers

Geographically, Yum!'s business includes four reporting segments: United States, the China Division, consisting only of mainland China, Yum Restaurants International (YRI) and India.

China division's comps have suffered a 20% decline in the second quarter as against a 10% growth in the year-ago quarter. Quarterly decline in comps was the result of a 26% fall in KFC comps owing to the negative publicity, partially offset by a 7% increase in comps at Pizza Hut Casual Dining.

Comps at the India division increased 2%. Comps also nudged up 1% in the YRI division.

The U.S. division witnessed comps growth of 1% on the back of 2% and 3% rise in comps at Taco Bell and KFC, respectively. However, comps at Pizza Hut were down 2%. Management expects Taco Bell to grow further in the U.S. with the ongoing investment in technology and equipment.

In the quarter under review, Yum! Brands witnessed a decline in its overall cost structure. Company-restaurant expenses decreased 7.5% year ov! er year as a result of significantly lower expenses in the company's U.S. and YRI division. Company-restaurant expenses were significantly higher in the India division.

Worldwide operating profit witnessed a fall of 20%, excluding foreign currency translation, mainly due to a 63% decrease in China division's profit, partially offset by 12% and 4% profit growth at YRI and the U.S., respectively. While foreign currency translation helped China's profit to grow by $1 million, the same has pulled back the YRI's profit by $5 million.

Restaurant margin fell 270 basis points (bps) to 12.5% as a result of a 500 bps decline in China's restaurant margin. China division's margin was mostly affected by the company's lower sales in the region. However, both the YRI and the U.S. compensated the decline with a margin gain of 80 bps, driven by its refranchising initiatives.

Share Repurchase

Year to date, the company has bought back 5.7 million shares worth $390.0 million.

Outlook

The company retains its earnings outlook for 2013. Yum! expects its 2013 earnings per share to decline in mid-single digit owing to lower sales. With new sales-driven initiatives, management expects its business to pick up speed from 2014 onward.

Although the company's China division is under pressure, it will gradually recover from the downturn and might post impressive results in late 2013 and 2014. The company plans to unveil 700 restaurants in China in 2013.

The company also remains positive on the growth prospects of its YRI and India divisions as it has a solid development pipeline in the emerging markets including India in 2013.

Our Take

Although Yum! Brands' second-quarter 2013 earnings per share and revenues fell sharply due to the lackluster performance of the China division, management expects these hurdles to be short-term and also anticipates a strong performance in the latter half of the year. However, we believe that there is an unce! rtainty r! egarding the proper pace of recovery.

On a brighter side, Yum!'s India and YRI segments are expected to perform well, going ahead. The U.S. segment is also rebounding with higher profits and comps growth in Taco Bell and KFC.

Some other restaurateurs which look attractive at the current level include Krispy Kreme Doughnuts, Inc. (KKD), BJ's Restaurants, Inc. (BJRI) and AFC Enterprises Inc. (AFCE). While Krispy Kreme carries a Zacks Rank #1 (Strong Buy), BJ's Restaurants and AFC Enterprises both carry a Zacks Rank #2 (Buy).

Want to participate in Dedicated Debt Exchange? Here's help

Below is the verbatim transcript of Rustagi's interview with CNBC-TV18.

Q: For the first time, India's top banks, insurance companies, pension funds, mutual funds and small investors will come together to trade in corporate bonds and government securities under a dedicated debt segment, which will be launched by the stock exchanges shortly. In theory, this will provide small investors a platform to buy corporate and government securities. But in practice, is it really advisable?

A: This is certainly one of the biggest steps that have been taken to deepen the debt market in India. We have seen in the past also a number of steps taken in this direction but they have not been successful. However, this time my feeling is that that because of the participation of the banks as well as the insurance companies, which are big players in both corporate debt as well as the government securities the liquidity will get a boost.

One of the major factors or objectives of introducing this segment is to activate the retail segment or allow retail investors to participate in the debt market in a very transparent manner. The retail participation today in the debt market is very low and investors often struggle to find out as to which security to buy and where to buy and also one of the factors, which has kept retail investor away from the debt market so far, has been the low liquidity.

Therefore, with this initiative the retail investor will be able to buy and sell publicly issued securities in a very simple manner as both the price as well as the security will be visible to them. The dedicated debt exchange will list out all the securities that are listed on it and also will provide a screen based trading for order matching as well as providing quotes. So, it is good news for all those individual investors who would like to participate in the debt market.

Know all about investing in Gilt Funds

However, my guess is that it is the high networth individual (HNI) segment, which will initiate the process. As far as retail investors are concerned, my advice to them would be to increase their awareness level before taking the plunge. The fact is that debt market is complicated, in fact can be more complicated than equity market and the fact that there is an inverse relationship between interest rates and the bond prices. Investing directly can be a little complicated, in fact quite complicated for retail investors. So, the right starting point for retail investor would be to look at debt funds because these are debt funds, which are diversified by nature and also give an opportunity to retail investors to buy into a portfolio, which has a mix of corporate debt as well as government securities and also the fact that they have to look at only one price that is net asset value (NAV) rather than looking at individual prices, number of bonds in the portfolio.

Once they become experienced, once they understand the nuisances of investing in the debt market, one will definitely see more retail participation in the dedicated debt segment. However, it is going to be a slow process, but of course in the interim they will definitely benefit by way of increased activation of the debt market through their investment in the debt funds.

1 2

Watch Video

Excerpts from Markets and Macros on CNBC-TV18 Watch the full show »

.ftCnbcShare{border-top:#d1d1d1 1px solid; padding:8px;margin-bottom: -27px; margin-top:10px;}

Markets And Macros at 11:00 am

Tweet

Share on Tumblr

SHARE . EMAIL

.gD_15nRedN{font:15px/20px Arial;color:#FF0000 !important;text-decoration:none;font-weight:normal;}

Related News

Should you remain invested in mutual funds?  Monthly Income Plans: Should investors put money in? 

.gD_15nRed{font:15px/20px Arial;color:#FF0000 !important;text-decoration:none;font-weight:bold;}

.GoogleNewsTitle{font:14px/16px Trebuchet MS,Arial,Helvetica,sans-serif;color:#005066;text-decoration:none;} .GoogleNewsTitle:hover{text-decoration:underline} .GoogleNewsURL{font:12px Trebuchet MS,Arial,Helvetica,sans-serif;color:#000;text-decoration:none;} .GoogleNewsURL:hover{text-decoration:underline} .GoogleNewsTitleLine{font:20px/22px Trebuchet MS,Arial,Helvetica,sans-serif;color:#F01414;text-decoration:none} .GoogleNewsTitleLine:hover{text-decoration:underline} .GoogleNewsLineURL{font:12px family:Trebuchet MS,Arial,Helvetica,sans-serif;color:#000;text-decoration:none} .GoogleNewsLineURL:hover{text-decoration:underline}

Tags: Hemant Rustagi, Wiseinvest Advisors, corporate bond, government securities, HNI, equity, NAV, ICICI Prudential Focused Bluechip Equity Fund, IDFC Premier Equity, inflation

Buy NIIT; target Rs 31: Ventura

Tata Motors global wholesales down 14% in July

.scroll_hv .panel{width:250px !important; padding:10px 10px 25px !important} #scroll13{width:540px;} .hv_bx{margin-left:-10px;} .tab_data1{padding:0px;}