The other shoe hit the fan Wednesday when Newcastle Investments (NCT), one of my up-and-down picks for the year announced the pricing for a 15 million common share stock offering -- six bucks! -- considerably lower than the 52-week high of $8.85 the stock reached last month.

NCT closed Wednesday March 23 at $6.02.

In making this move, management seeks to raise $85.6million for future investments and operations. This is the management that guided the company back from the grave. I know, since I bought in at 60 cents. But with 62 million shares outstanding, the 25% dilution is a huge move. What are they thinking?

Continue reading Chasing Value: Newcastle Shares Drop to Offering Level

Chasing Value: Newcastle Shares Drop to Offering Level originally appeared on BloggingStocks on Thu, 24 Mar 2011 10:30:00 EST. Please see our terms for use of feeds.

This morning before the market opened, Newcastle Investments (NCT), one of my 2011 stock picks (see Chasing Value: 2011 Picks Dust the S&P) reported earnings that stomped all over analysts estimates. The company reported that in the fourth quarter of 2010, income applicable to common stockholders ("GAAP income") was $197 million, or $3.18 per diluted share, compared to $17 million, or $0.31 per diluted share, in the fourth quarter of 2009.

For the full year 2010, GAAP income was $657 million, or $10.96 per diluted share, compared to a loss applicable to common stockholders ("GAAP loss") of $223 million, or $4.23 per diluted share, in 2009.

Continue reading Chasing Value: Newcastle Earnings Shatter Estimates

Chasing Value: Newcastle Earnings Shatter Estimates originally appeared on BloggingStocks on Tue, 01 Mar 2011 12:00:00 EST. Please see our terms for use of feeds.

I have already gone on record this year saying that financial companies and insurance stocks are going to continue to rebound. In my previous two posts Chasing Value: 2011 Stock Picks -- 5 of 11 and Chasing Value: 2011 Stock Picks -- 6, 7, 8, 9, I included several financial institutions. Today I add an insurance company.

The industry got whacked hard for many reasons. For one, it makes a significant amount of profit by investing its float, and like every other investor, the industry lost a pile of money in the financial crisis. It was embroiled more directly than some industries, as several insurers are affiliated with banks. Finally the housing crisis meant disruption to payment streams by homeowners who were delinquent on more than their mortgages.

Continue reading Chasing Value: 2011 Stock Picks -- 10 and 11

Chasing Value: 2011 Stock Picks -- 10 and 11 originally appeared on BloggingStocks on Mon, 10 Jan 2011 09:00:00 EST. Please see our terms for use of feeds.

Every day I marvel at all the silly things that happen in the marketplace, the missed opportunities and the overlooked bargains. Mini-mill steel company Nucor Corp. (NUE) is certainly one of them.

I understand that the construction industry is in the dumps and the auto industry has barely come back to life. There is no question that Nucor has fallen on tough times. However, that is what creates the investment opportunity. If you want to make a lot of money, you must find high-quality companies during their business lulls and not be afraid to put your money to work.

Continue reading Chasing Value: Buy Nucor Quality on Sale

Chasing Value: Buy Nucor Quality on Sale originally appeared on BloggingStocks on Wed, 03 Nov 2010 12:00:00 EST. Please see our terms for use of feeds.

Continue reading Chasing Value: Insurance Mess, Ebix to the Rescue

Chasing Value: Insurance Mess, Ebix to the Rescue originally appeared on BloggingStocks on Thu, 25 Mar 2010 12:30:00 EST. Please see our terms for use of feeds.

Continue reading Serious Money: The world's dumbest market

Serious Money: The world's dumbest market originally appeared on BloggingStocks on Fri, 31 Jul 2009 17:00:00 EST. Please see our terms for use of feeds.

Unlike a certain former governor of Illinois, I'm not afraid to admit it when I'm wrong. So, when I noticed that makeup maven Estee Lauder Companies (NYSE: EL) was trading significantly lower today in the wake of its latest earnings report, I decided to take a fresh look at the stock. Was my bullish endorsement back in December completely wrong-headed, or is today's drop just a blip on the charts?

First, let's sum up the quarterly results. EL banked a second-quarter profit of 80 cents per share on $2.04 billion in revenue. The profit number exceeded analysts' expectations by three cents per share, while revenue matched consensus estimates. However, the company warned that third-quarter net sales are expected to drop 2% to 4%, and it announced plans to cut its headcount by 2,000 employees over the next two years -- roughly 6% of its workforce.

Continue reading Should you invest in Estee Lauder's post-earnings pullback?

Should you invest in Estee Lauder's post-earnings pullback? originally appeared on BloggingStocks on Thu, 05 Feb 2009 10:50:00 EST. Please see our terms for use of feeds.

As we all know, the market is a fickle mistress -- and I will be the first to admit, she has humiliated me with her indiscretion on many occasions. However, I'm happy to report that my pick of The J.M. Smucker Company (NYSE: SJM) as a "Cheap Stock" for 2009 has not completely blown up in my face (yet).

The peanut butter-based security jumped back on my radar today when I noticed that brokerage firm Janney Montgomery Scott started coverage of SJM with a Buy rating. Not too many analysts are currently following the shares; according to Zacks, the jam giant has garnered just two Strong Buys and one Hold. Any additional bullish initiations could help the stock extend its recent uptrend.

Continue reading Is J.M. Smucker worthy of its new Buy rating?

Is J.M. Smucker worthy of its new Buy rating? originally appeared on BloggingStocks on Tue, 27 Jan 2009 15:30:00 EST. Please see our terms for use of feeds.

This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.

Of the 15 components on our Cheap Stocks roster, Goldman Sachs Group (NYSE: GS) is the one that my colleague Nick Perry dubbed "a bold choice." With plenty of question marks still surrounding the major financial names, there are undoubtedly those who will go even further and dub this pick "an unwise choice." On the other hand, some will probably just say we're stealing Warren Buffett's idea. With all potential criticisms thusly taken into consideration, let's take a look at what makes Goldman so hard to resist.

First, let's be upfront about the fundamentals. Amid the recent financial crisis, Goldman Sachs is one of the few major names on Wall Street that still has a pulse. Although it's now a bank holding company rather than an investment bank, Goldman stands out by sheer virtue of the fact that it has dodged bankruptcy rumors and has not needed an emergency rescue by one of its peers.

In fact, Goldman Sachs survived because it knew that most of those subprime-derived securities were toxic, and placed bets that the investments would lose value. Regardless, the bank still sold those securities to its clients, so we're not talking about the financial equivalent of Mother Theresa. On the bright side, nor are we discussing the financial equivalent of Nero -- and in today's market, there are plenty of favorable comparisons to be made between GS and its sector peers.

Continue reading Cheap Stocks: Goldman Sachs Group

Cheap Stocks: Goldman Sachs Group originally appeared on BloggingStocks on Mon, 08 Dec 2008 18:10:00 EST. Please see our terms for use of feeds.

This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.

In addition to old standbys like consumer staples, utility stocks are a proven favorite during times when your portfolio needs a defensive touch. Among utilities, Virginia-based Dominion Resources (NYSE: D) stands out for its solid price action, its exposure to natural gas, and its heavy potential for future upgrades.

While natural gas might not seem terribly thrilling, many analysts expect it to be a hot commodity in the coming years. It's a plentiful resource in North America, and no less an energy tycoon than T. Boone Pickens is banking on a natural-gas boom. With 1.1 trillion cubic feet of oil and natural gas reserves, Dominion looks poised to capitalize on a shift toward this source of energy.

The utility firm already seems to be thriving, in fact. In its October 30 earnings report, the company exceeded analysts' profit expectations by 4 cents per share, and offered upbeat guidance for fiscal 2008 and 2009.

For value investors, though, the third-quarter report contained even more good news. Thomas Farrell II, Dominion's president, chairman, and CEO, stated, "Given its confidence in the strength of our company's earnings and business model, the board of directors recently declared our fourth-quarter dividend and reconfirmed our dividend policy to sustain increases in 2009 and 2010 that will allow us to reach our targeted 2010 payout ratio of 55%."

Continue reading Cheap Stocks: Dominion Resources

Cheap Stocks: Dominion Resources originally appeared on BloggingStocks on Mon, 08 Dec 2008 15:10:00 EST. Please see our terms for use of feeds.

This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.

If peanut butter-and-jelly sandwiches are comfort food, then The J.M. Smucker Company (NYSE: SJM) is a comfort stock. You're probably familiar with the firm's trademark jams and jellies, but Smucker also peddles foodstuffs under the brand names Jif, Crisco, Hungry Jack, Pillsbury, and Carnation, to name just a few. In short, you'd be hard-pressed to find any aisle in your local grocery store that doesn't display Smucker's wares.

In its most recent earnings report, SJM proved that it's good to be a consumer-staples company in today's tumultuous economy. Chairman Tim Smucker observed, "The number of meals prepared and consumed at home, as recent market data indicate, continues to be trending upward in this challenging economic environment, and are currently at levels not seen since 1994."

Not only did this positive fundamental catalyst allow Smucker to beat analysts' earnings-per-share estimates, the firm absolutely crushed Wall Street's revenue expectations. The jam giant boasted second-quarter sales of $843.1 million, up 19% from the year-ago period, while analysts had expected revenue of just $796.1 million.

Despite the company's fundamental advantage, short sellers are overwhelmingly betting against SJM. Short interest on the stock has ballooned by an eye-popping 397% during the past month, and now represents 10.7% of the equity's available float. In light of Smucker's strong earnings report and its ensuing surge on the charts, SJM could bounce higher as the shorts are forced to cover their bearish bets.

Continue reading Cheap Stocks: The J.M. Smucker Company

Cheap Stocks: The J.M. Smucker Company originally appeared on BloggingStocks on Mon, 08 Dec 2008 12:30:00 EST. Please see our terms for use of feeds.

This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.

Every time I write about Monsanto Company (NYSE: MON), I get e-mails from vocal opponents of genetically modified foods. It strikes me as unusual, if only because there are so many companies out there doing business in an ethically questionable manner, and I'm rarely e-mailed about most of them. But, hey -- I can't blame anybody for being protective of the food supply.

If you're morally opposed to Monsanto, I definitely don't recommend you invest in it. Otherwise, there are valid reasons for taking a closer look at this agricultural chemicals firm. For example, on October 21, S&P Ratings hiked its long-term ratings on MON from "A" to "A+," citing the "expected continuation for favorable business trends ... a very strong market position ... and an impressive pipeline of new products that should underpin strong future earnings and cash flow."

Add sugar cane to the pipeline; Monsanto recently announced its intention to acquire Brazil's Aly Participacoes Ltda for $290 million. With sugar cane emerging as a popular alternative to corn for ethanol production, the acquisition makes sense. Carl Casale, the company's head of global strategy and operations, observed, "... we think that the biotechnology traits that we've invested in [corn] can bring a lot of value to sugar, as well."

Continue reading Cheap Stocks: Monsanto Company

Cheap Stocks: Monsanto Company originally appeared on BloggingStocks on Mon, 08 Dec 2008 09:20:00 EST. Please see our terms for use of feeds.

This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.

In my opinion, Amazon.com (NASDAQ: AMZN) has two major fundamental advantages. First, we're talking about a dot-com company that survived the dot-com bubble. This is an impressive achievement, on par with Julia Louis-Dreyfus finding success with a second sitcom after Seinfeld.

Second, I caught a bit of Oprah recently when I was home sick with a head cold. Her special guest was Amazon chief Jeff Bezos, and the topic of the day was how much Oprah loves the Kindle reader. Not only did everybody in the audience get a free Kindle, but Ms. Winfrey actually bellowed, "Kiiiinnnnnnnnn-dullllllll!" ("Thank you," stammered Bezos, no doubt overwhelmed by her all-powerful stamp of approval.)

Oprah aside, the key to Amazon's survival so far has been its willingness to adapt. What was once a humble online bookstore is now the internet equivalent of a general store -- on today's Amazon.com, you can pick up a new motherboard for your PC, a pair of winter boots, and a box of popcorn in one fell swoop. The company offers a slew of familiar brand names, which should make the site a popular stop for holiday shopping.

Continue reading Cheap Stocks: Amazon.com

Cheap Stocks: Amazon.com originally appeared on BloggingStocks on Sun, 07 Dec 2008 18:10:00 EST. Please see our terms for use of feeds.

This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.

In troubled economic times, it seems like a no-brainer that discount retailers will fare better than their mid-market competitors. Of the discount group, Costco Wholesale (NASDAQ: COST) garners extra points for its brand recognition, broad geographic reach, and dedication to its customers.

Speaking of customer service, I recall being mildly shocked earlier this year upon reading this BusinessWeek article, which alleges that Costco often chooses to cater to its customer base rather than pleasing its investors. Amid skyrocketing commodity costs in July, the mega-retailer warned of a quarterly earnings shortfall, because of a reluctance to hike its own prices and potentially alienate its customer base.

I'm no CEO, but to my mind, the happiness of Costco's investors is directly pegged to how satisfied its customers are. If shoppers are turned off by price increases and take their business over to, say, Sam's Club -- what have the investors won? It takes a clear-headed management team to consider the long-term effects on its core customer base over the short-term demands of frustrated traders.

Continue reading Cheap Stocks: Costco Wholesale

Cheap Stocks: Costco Wholesale originally appeared on BloggingStocks on Sun, 07 Dec 2008 15:10:00 EST. Please see our terms for use of feeds.

This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.

Full disclosure: in the Pepsi challenge, I prefer Coke. In terms of investments, though, I overwhelmingly prefer PepsiCo (NYSE: PEP). The shares have fallen hard from their January 2008 peak, but PepsiCo won some respect on the Street recently for fearlessly backing its 2008 earnings outlook -- rather than dramatically slashing it, which has become the latest trend among companies large and small.

In the U.S., firms that produce fizzy beverages, snacks, and convenience foods nearly qualify as defensive stocks. Just check out some of the workhorses in Pepsi's product line: Cheetos, 7 Up, Doritos, Aunt Jemima, Quaker Oats, Gatorade, Rice-A-Roni, Fritos, and Rold Gold pretzels. Not to diminish some of the greater accomplishments our country can claim, this list is comprised almost entirely of prepackaged American icons.

Of course, we live in a global economy, and PepsiCo knows it. While Coca-Cola (NYSE: KO) has caught plenty of flack for environmentally unfriendly practices, Pepsi has been a corporate leader in the push for more "green" technologies ... which brings me to my affinity for Chairman and Chief Executive Indra K. Nooyi.

Continue reading Cheap Stocks: PepsiCo

Cheap Stocks: PepsiCo originally appeared on BloggingStocks on Sun, 07 Dec 2008 12:10:00 EST. Please see our terms for use of feeds.

This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.

Oakland, California, might not be too pleased with the performance of the Raiders, but the (other) City by the Bay can take some pride in The Clorox Company (NYSE: CLX), a hometown stock made good. Even those of you bracing for the worst-case economic scenario can take heart in the fact that Clorox has been around since 1913, and successfully weathered two World Wars and the Great Depression.

In addition to its eponymous bleach, Clorox produces a slew of other well-known consumer staples. You may recognize such brand names as Pine-Sol, Formula 409, Brita, Glad, Hidden Valley, and Burt's Bees -- one of the newest additions to the CLX family. The Burt's Bees buy indicates that Clorox isn't resting on its stable of staples; instead, the company is actively trying to stay relevant amid a shifting consumer climate.

The home-goods firm released its first-quarter earnings on October 31 and cruised past analysts' profit estimates by seven cents per share. Clorox trimmed its sales outlook due to the expected impact of declining foreign currencies, but Chairman and CEO Don Knauss showed no hint of vulnerability. "We will not give consumers a reason to choose another brand," Knauss vowed on a conference call.

Continue reading Cheap Stocks: The Clorox Company

Cheap Stocks: The Clorox Company originally appeared on BloggingStocks on Sun, 07 Dec 2008 09:10:00 EST. Please see our terms for use of feeds.

This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.

In addition to being a crackerjack equities analyst, I'm also something of a makeup aficionado. Credit my upbringing for this; my mother grew up in the '50s, and even today, she is loathe to so much as check the mail without a full application of liquid eyeliner. So, as you might imagine, I'm quite familiar with Estee Lauder Companies (NYSE: EL).

While it's technically a consumer-goods company, you might have a perception of Estee Lauder as a peddler of upscale cosmetics -- in today's economy, high-priced eyeshadow is unarguably a discretionary expense worth cutting. However, EL's reach is probably broader than you realize. For example, the company owns MAC, a line that caters specifically to professional makeup artists and amateur makeup fetishists. No matter the economic climates, these two constituencies can be counted on to keep shelling out for blush.

Estee Lauder also boasts the lower-priced Clinique line, a staple of many women's' skin-care and cosmetics routines for decades. On the high end, the company sells fragrances by the likes of Tom Ford and Michael Kors -- two names favored by the kind of consumers who do still have disposable income to spare. Plus, its Bumble and bumble brand name is a favorite of professional hair stylists.

Continue reading Cheap Stocks: Estee Lauder Companies

Cheap Stocks: Estee Lauder Companies originally appeared on BloggingStocks on Sat, 06 Dec 2008 18:10:00 EST. Please see our terms for use of feeds.

This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.

Sunnyvale, California, is home to such well-known tech companies as Advanced Micro Devices (NYSE: AMD) and Yahoo! (NASDAQ: YHOO), so it would be easy to dismiss Intuitive Surgical (NASDAQ: ISRG) as a small fish in a big pond. However, the fundamental prospects for this surgical-technology firm prove that ISRG is a heavyweight in its own right.

Intuitive Surgical is best known for its da Vinci surgical systems, which would no doubt impress Leonardo himself. The high-tech platforms allow surgeons to operate through small, minimally invasive ports while maintaining all the benefits of an open-surgery format.

Lately, ISRG has come under pressure as analysts warn of a slowdown in spending by hospitals. A good deal of this anxiety has already been priced into the stock, despite reassurances from CFO Marshall Mohr. On the company's third-quarter conference call, he asserted that a reduction in hospitals' capital expenditures isn't yet on the radar. "At the present time, we don't have any indicators that tell us that that's the case or that anything has changed," said Mohr, adding, "But we're early into this."

Continue reading Cheap Stocks: Intuitive Surgical

Cheap Stocks: Intuitive Surgical originally appeared on BloggingStocks on Sat, 06 Dec 2008 15:10:00 EST. Please see our terms for use of feeds.

This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.

If you had to judge solely by its year-to-date price action, you would probably never guess that Hudson City Bancorp (NASDAQ: HCBK) is, well, a bank. The shares are currently holding onto a year-to-date gain, and they're thriving for good reason. Paramus, New Jersey-based HCBK is feeling so flush, it recently rejected the opportunity to rake in some of the government's TARP funds.

In a statement accompanying the news, Chairman, CEO, and President Ronald Hermance Jr. explained how Hudson City has endured the financial crisis: "We have never offered subprime mortgages ... or other risky mortgage products. We do not sell any of our loan production to the secondary market. We keep all of our loans in portfolio. As a result, we have not been seriously affected by conditions in the marketplace."

Honestly, Hudson City Bancorp seems to be operating in its own economy independent from the rest of the U.S. Check out some of the figures the bank holding company reported on October 15 in its second-quarter earnings release: profit jumped 64% to hit a record 25 cents per share, one cent higher than analysts expected; through September 30, year-to-date deposits added $2.14 billion to $17.29 billion, while total year-to-date assets rose by $7.35 billion to $51.77 billion; and HCBK reported that it's actually writing more mortgages now than it was last year.

Continue reading Cheap Stocks: Hudson City Bancorp

Cheap Stocks: Hudson City Bancorp originally appeared on BloggingStocks on Sat, 06 Dec 2008 12:10:00 EST. Please see our terms for use of feeds.

This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.

Tech stocks are taking a beating lately, as more and more companies scale back on their IT spending. While it may be foolhardy to bet on any significant short-term rallies for this struggling group, there's probably no better time than the present to dive into a long-term play. With BMC Software (NYSE: BMC) approaching key support levels, this is one stock worth looking into.

While many major technology concerns have provided weak or slashed forecasts for the coming quarters (Cisco, anyone?), BMC recently raised its fiscal 2008 earnings guidance. The company now expects fiscal-year profits of $2.15 to $2.25 per share, up from its previous outlook of $2.10 to $2.20 per share. BMC also exceeded second-quarter profit expectations in its October 30 report -- overall, this is one tech name that's no slouch in the earnings department.

With BMC holding up strong in a tough environment, it's no wonder that Raymond James analyst Michael Turits recently upgraded the shares from Outperform to Strong Buy. "We expect ... BMC to continue to benefit from the relative resilience of the mainframe market," Turits wrote in a note to clients, adding that "customers at the [CA World] conference indicated no slowing in mainframe capacity growth planning."

Continue reading Cheap Stocks: BMC Software

Cheap Stocks: BMC Software originally appeared on BloggingStocks on Sat, 06 Dec 2008 09:10:00 EST. Please see our terms for use of feeds.