Apple, IBM, Intel, and Microsoft to Report Profits. Pay Close Attention if Looking to Make Money in Technology Stocks.

The coming week is going to be very interesting for anyone interested in the stock markets tech. heavyweights. IBM, Intel, Microsoft, and Apple will be posting their results, which is sure to move markets and force investors to take another look at fundamentals like earnings, sales, and profit margins... at least for awhile, until we revert back to panic trading on the least bit of financial news coming out of Europe.
IBM is releasing its numbers first. On Monday, it will probably report expectantly dull, but healthy and sustainable revenue and earnings growth. This company has been doing everything right recently and analysts and investors alike will generally sing its praises. Investors like dependability and predictability, it helps them to sleep at night. IBM has achieved well on both counts. In the past eight quarters it has exceeded per share profit expectations by about 2.4%, nothing spectacular, but helps an investor know what he is buying. If IBM says it will make a certain amount of money, they can generally deliver.

Intel has been a little more difficult for investors. Performance wise, it has not been all bad. It has a steady and attractive dividend above 4%, almost unheard of in the tech arena, and it has largely avoided the collapse taking place in financials and many other areas of the market. The difficulty for Intel and its investors is the lackluster performance of PC sales, which are the bread and butter of Intel's chip business. This company needs more avenues of distribution, as PC's are being left in the dust by mobile and tablet sales as of late. Is this transition impossible for Intel, no! But they need to speed up the process.

According to Barron's Online, "consumer PCs have been steadily under-performing this year... tablet computers might be eating away at new purchases." And this is where our discussion of Microsoft kicks in. Microsoft has been increasing revenues at double digit paces, and profits are very healthy. Windows 7 was an effective operating system and sales were brisk. Coming online for Microsoft is Windows 7.5 for mobile devices and tablet computers, which should help give sales a kick as well.

Apple news, however, is most likely to be what excites investors when they report on Tuesday. Sales of the IPhone 4S are extraordinary, and the halo effect that their phones will continue to have on their computer business will be very positive. The more people that buy Apple phones and other gadgets, the more computers and media they continue to sell. This snowball effect for Apple has been going on for some time, and with the release of the IPhone 4S, and then the IPhone 5, it does not seem to be stopping.

Full Disclosure: My company or I own shares in Intel. (INTC).

Happy Investing : ) Comment or E-Mail with any Questions.

Microsoft Windows 7.5 Smartphones Could Sieze 20 Percent of Market by 2015. Microsoft to Provide Big Incentives to Retailers and Sales Staff in Coming Year.

Microsoft could control over 11 percent of the smartphone market by next year, according to some analysts, and 20 percent by 2015. In an attempt to reverse disappointing sales for its Windows 7.5 Phones, Microsoft is heavily targeting retailers, manufacturers, and mobile operators to increase interest in its models. Samsung, HTC Corp., and Nokia are expected to shift sales towards Microsoft Windows 7.5 in the near future.

With lots of cash on the balance sheet, and substantial amounts of free cash flow being generated on a monthly basis, Microsoft can afford to provide incentives and increase marketing efforts to boost sales. Much of the extra money being spent will probably go towards encouraging retail staff to push the phones on new and existing customers. Margins and profits on Apple phones are simply too high for Apple, and manufacturers and mobile operators are eagerly hoping to unlock their stranglehold on the market. Microsoft is providing an excellent opportunity for them to do so.

Nokia alone has more than 6,000 outlets, and it has already announced an exclusive deal with Microsoft for its smartphones after shelving plans for its own operating system. In the United States, many models are expected to cost less than $100, significantly less than phones provided by market leader Apple.

With the recent success of Windows 7, and an increased focus on tablets and smartphones at the company in the coming years, Microsoft shares are going to start looking very cheap. Currently selling from $25-$27, the stock is at similar levels to a decade ago. Investors who buy Microsoft are paid to wait by collecting a dividend of about 2.4%, and the downside risk at this point is very minimal.

Happy Investing : ) Post or E-Mail your Questions and Comments.

Maple seeks regulator OK for TSX bid - Business - CBC News

Maple seeks regulator OK for TSX bid - Business - CBC News:

The Canadian consortium of banks and insurance companies knows as "Maple Group" has finally submitted its proposal to acquire TMX Group (Canada's largest stock and options exchange owner) to four provincial regulators. Regulators will now begin seeking public comment on the $3.8 billion deal.

Provincial and federal competition bureaus are going to have to approve the deal because if it goes through there would be a virtual monopoly on stock and options trading in Canada. And though this deal is great for shareholders, it will be much more difficult to ascertain whether or not it is in the public's best interest. There is, however, a good chance of it getting the green light under Harper's conservatives.

The conservative government under Stephen Harper, though known to have blocked some deals, especially Potash, will look more favourably upon this deal as it is not a foreign takeover, which can often be a political fire-storm.

Maple's $50 per share offer for TMX is superior to the previous offer they received from the London Exchange, and a breath of fresh air for many shareholders during the current economic and financial turbulence. With current shares of TMX trading well below $50, there is still a lot of upside potential for this deal should it go through.

Happy Investing : )

Comment or E-Mail

Lowe's Losing Market Share to Home Depot. Intituting New Everyday Low Prices. Lowe's Dividends and Profits Should Increase.

Home renovation superstore Lowe's is hoping to revive its fledgling operations with a new everyday low price strategy. Second to Home-Depot, North Carolina based Lowe's has been struggling to compete with Home Depot in recent years as declining same store sales and promotions have trimmed profits. The stock is down 40% from its 2007 high, and is trading for the same prices you could buy it for 10 years ago.

Lowe's has 1,753 stores throughout North America, and hopes to keep adding more as it spreads in Canada and elsewhere.

According to Barron's:

Lowe's "bought back $2.4 billion of stock in the first six months of the fiscal year that ends in January 2012, an amount equal to about 8% of shares outstanding. Last year management set ambitious multi year financial targets, including $3.40 a share in earnings by 2015, sharply higher dividends and $3.6 billion of average annual share buybacks. The company could repurchase half its shares outstanding if buybacks run at the current annual rate, let alone the higher target."

By returning cash to shareholders in the form of dividends and share buybacks, Lowe's management is showing that it has its owners interests in mind. Far too often companies utilize precious shareholder cash to embark on costly acquisition sprees that yield little to no value for owners. When a company returns free cash flow to investors instead of squandering it, the Intelligent Investor should be pleased. To be sure, Lowe's could increase its dividend to 4% and still retain 50% of earnings in the company.

Lowe's is also closing under-performing stores and reducing the ranks of costly middle managers. Currently, Lowe's and Home Depot have a very nice duopoly in the United States, with Rona in Canada providing additional competition north of the border. As the housing market improves in the United States, margins and profits at Lowe's should improve and investors will be rewarded. As a relatively conservative and healthy investment in the American retail and home improvement sector, Lowe's is a solid fundamental choice for the Intelligent Investor.

Cheers and Happy Investing : )

Ireland Escaping the Recession. GDP, GNP, and Consumption are up, but Irish Wages are Down.

This week's Economist notes that the Irish economy expanded at a faster rate then expected in the second quarter. GDP, GNP, and domestic demand and consumption all increased during the same period. Though GDP and GNP increased by only 1.6 percent and 1.1 percent respectively, two quarters of successive growth is a bright spot amidst the doom and gloom of contemporary Europe.

Ireland's economy features a number of characteristics that give it a benefit compared to other nations as they pull out of the recession. It has a highly educated labour force, it is open to free-trade, and the populace speaks English, always a plus in a globalized environment. In addition, the national economy is structured around exports, as they make up about 70 percent of Irish GDP.

Also, corporate taxes in Ireland are very low, and do not seem to be rising like in other nations. Wages too are very low, great news for European employers looking for a hub in Western Europe. But as other countries race to the bottom with regards to corporate tax rates and wages, the entire Euro-Zone may suffer. If consumers in other countries are not making enough money to buy your goods and services, exports and production will plummet.

Stocks Rally on Greek Debt Default Relief. France and Germany Agree to Continue Bailouts.

Stocks Rally on Greek Debt Default Relief. France and Germany Agree to Continue Bailouts.

French and German taxpayers are again backstopping years of Greek excess. In return, Greek's prime minister was forced to once again pledge support for reforms that will hopefully ensure deep cutbacks in government spending.

Investors have been pleased with the news as it prevents, for the time being, a Greek default or expulsion from the Eurozone. The International Monetary Fund and the World Bank will review Greek finances again in the coming days to ensure that reforms are being implemented.

In Europe, all stock markets headed higher on the news, with Germany up over 2 percent. However, Greek debt still stands at 150% of GDP and citizens across Europe's capitals are largely going to reject more efforts to bailout foreign governments.

A milestone in low-cost investing - The Globe and Mail

A milestone in low-cost investing - The Globe and Mail:

How to buy index investments for free:

1. Commission-free ETFs

Online broker Scotia iTrade now offers commission-free trading of 46 exchange-traded funds.

2. Claymore Investments' PAC Plan

Under this pre-authorized cash contribution plan, investors pay a commission to buy an initial position in Claymore ETFs and then arrange to make regular subsequent investments at no additional cost. Check with your brokerage firm to see if it's enrolled.

3. Bank index funds

Costs to own these funds vary, but all are sold on a no-load basis. The best deal is TD's e-series, which you must buy online via TD Asset Management or TD Waterhouse online brokerage.

Wal-Mart cashes in on income gap - The Globe and Mail

Wal-Mart cashes in on income gap - The Globe and Mail:

After the 20th of each month, when government cheques go out, Wal-Mart gets a pop in sales. It gets a surge in business at the beginning of the month, when many people are paid, and softening sales at the end of the month when they run out of money.

At the same time, the retailer enjoys a sales boost in pricier items from more affluent consumers who are returning to the discount chain after having shopped there during the recession.

To respond to these trends, chief executive officer David Cheesewright is dipping into a recessionary-like tool kit that includes weekly price comparisons with competitors; stocking smaller, more affordable packages of diapers and other essentials; $1 greeting cards at outlets next to a dollar store; and beefing up lower-cost private labels. But he’s also testing a new own-brand high-end food line called Our Finest; planning for a smaller city store, dubbed Urban 90, to broaden its customer base; and stocking higher end brands such as Bauer hockey equipment.

Mr. Cheesewright’s race over the past several years to add more Super centres with full supermarkets is paying off, more so in market-share gains than in same-store sales increases, he said. Since 2005, Wal-Mart drove 77.3 per cent of the growth in food, health and beauty and other consumer product sales in Canada, according to market researcher Nielsen. That business makes up more than 40 per cent of Wal-Mart’s total estimated $20-billion of annual revenue.

Good Countries and Economies for Investment. Economic and Financial Indicators of Health for Businesses.

When on the hunt for new investment ideas, macroeconomics, or the larger economic picture can often be over-looked. One source for macroeconomic analysis that provides investors with valuable insights is the Economist. In particular the "economic and financial indicators" on the back pages provide the Intelligent Investor with a wealth of information from which to make broader decisions regarding where in the world to invest your money. This week, six countries or economies stuck out to me as being particularly favourable for the enterprising investor.


The metrics I used to measure the general health of the following economies was their trade balance, current account balance, and general level of interest rates and inflation. If inflation or interest rates are out of control, they should not be considered as stable areas to invest.


1. Hungary. Hungary is poised for substantial growth when Europe rebounds from the doldrums. It has a +$9 billion trade balance, +$2.9 billion current account balance, and a budget balance of +1.9% of GDP.


2. Norway. With vast amounts of oil and natural gas wealth, Norway is poised to be a great provider of scarce resources to the rest of the world for still some time to come. It has a +$63.4 billion trade balance, +$49.6 billion current account balance, and a budget balance of +12.5% of GDP. Much like Canada in its abundance of resources, Norway has been a much better steward of its wealth for future generations.


3. Sweden. Another Nordic economy, Sweden does not benefit from the oil and gas reserves of Norway, but it has a highly skilled and educated workforce. It has a +$12.3 billion trade balance, +$32.2 billion current account balance, and a budget balance of +0.5% of GDP.


4. Singapore. With an excellent base in South-East Asia, Singapore will surely benefit from the significant growth and investment there going forward. As global trade moves eastward, Singapore has much to gain. It has a +$48.3 billion trade balance, +$52.5 billion current account balance, and a budget balance of +0.3% of GDP.


5. South Korea. Another bastion of Asian growth going forward, the South-Korean economy has been an export powerhouse for years. It has a +$40.7 billion trade balance, +$28.2 billion current account balance, and a budget balance of +1.6% of GDP. The important caveat with a country like South Korea is its low birth rate. As the people tend to focus more on consumerist elements of their society, population growth slows and future productivity can be seriously threatened.


6. Chile. The only South American country on my list, Chile is often neglected by investors due to a rough history of corrupt and inept governments. However, Brazilian consumer growth means that neighbouring markets could experience a halo effect and also gain a massive new market for their resources. It has a +$16.6 billion trade balance, +$2.4 billion current account balance, and a budget balance of +0.4% of GDP.


It is often said that a rising tide lifts all shifts. In the vein of investing, this means that the national or macroeconomic picture, if positive, bodes well for the business and investment climate in the country, and for those who invest there.

Investment Bubbles, Manias, and Panics. Remain Patient and Rational when Investing. Tulip Mania, The South Sea Company, the Great Crash.

According to most, an investment bubble could be described as a period of high trading volumes at prices that are at odds or at a high variance above common measures of intrinsic value. For housing, the intrinsic value of the property might be a multiple of its net rental income, for a common stock, a multiple of its book value, earnings, or dividend payments.

During the "dot-com" or technology bubble stock prices for most technology and telecommunication companies were trading well above any reasonable measure of current earnings or dividends. To be sure, a vast number of the companies involved in the tech bubble had little to no earnings at all. Former Federal Reserve Chairman Alan Greenspan coined the phrase "irrational exuberance" to describe the psychology of investors and markets during this time. Many people believed that prices would go up forever because modern technology would transform business and enable them to achieve future earnings that seemed unfathomable only a decade before. So goes the usual mantra at least. More sensible minds, however, would conclude that vast amounts of people, acting of their own volition, chose to casually disregard all semblance of reason with regards to corporate fundamentals and instead act on faith... a faith that other people would be dumb enough to keep buying securities of dubious intrinsic or real value and thus provide someone to whom they could sell their shares at a higher price in the future.

Acts of faith, however, are better left to theological or religious spheres than investment ones. Crowds are prone to turn and panic with little warning and little chance for the average investor to escape. When an investment bubble bursts, unless you got in near the point of its initial ascent, you will most likely be waiting years to recover your losses and return to break-even. And in other instances, your break even point may be unattainable as your investment dropped to zero.... a 1,000,000 % gain on zero is still zero.

There have been numerous investment bubbles and manias over the centuries. Tulip Mania first hit Holland and then began to burst circa 1637. During this time, a single tulip bulb could fetch the price of a home or 10x the annual earnings of a skilled craftsman. Rational? Of course not, but investors were hoping that another sucker would come along and buy their tulip bulbs for a little higher in a week, month, or year down the road. They wanted to ride the upsurge in tulip bulb prices and make it rich quick.

There was also the South Sea Company and Mississippi Company Bubbles of the 1720s, the Railway Manias of the 1840s, the Great Crash of 1929, and countless others on markets all around the world. What propels bubbles? Behavioural psychologists could undoubtedly write books on people's particular motivations, but stupidity and greed mark the top of my list. If something does not make money, don't buy it. If it would take over 25 years to make your money back given present earnings levels, move on to another investment. There is no need to succumb to get rich quick schemes when honest rational investments are in plentiful supply. Rationality and patience will always win the day in the investment business, it just might take some time, and a fair amount of resistance to greed.