Is Facebook a Bargain Here?

With shares of Facebook (NASDAQ:FB) trading at around $27.16, is FB an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock's Movement

Since Facebook Home is the biggest recent news related to the Facebook story, let's get that news out of the way first. For those who aren't familiar with Facebook Home, this is its description on Google (NASDAQ:GOOG) Play: “Facebook Home puts your friends at the heart of your phone. Replace your standard home screen with a steady stream of friends’ posts and photos. Get to apps with one swipe — just drag your profile picture up to open the app launcher. And when you download Facebook Messenger, you can keep chatting with friends when you’re using other apps.”

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Facebook Home currently has a rating of 2.2 of 5 on Google Play, which is poor. Here's a breakdown of those ratings:

5 Stars: 3,060

Top 5 Biotech Stocks To Own Right Now

4 Stars: 1,221

3 Stars: 1,575

2 Stars: 2,187

1 Star: 8,956

It's definitely not a good sign that almost 9,000 people have given Facebook Home the lowest rating possible. All that said, Facebook Home isn't going to make or break the company. It's simply a miss (so far). This is okay, and it even fits with the company philosophy.

Mark Zuckerberg has created an atmosphere where ideas should be shared, and risks should be taken. He doesn't want his employees to fear failure. If someone has an idea, it gets to the top for review within one week. This, in addition to the work/play environment, has led to a strong company culture. This doesn't mean employees play half the day. It means that breaks are allowed at the employee's convenience as long as that employee is productive. Has this approach worked?

Facebook is rated as the #1 place to work by Glassdoor.com. Yes, it has worked. Employees have rated their employer a 4.6 of 5. An incredible 95 percent of employees would recommend the company to a friend. And 98 percent of employees approve of CEO Mark Zuckerberg.

A strong company culture definitely improves the odds of a company's success, but it doesn't guarantee success. This has been evidenced by Facebook Home. Facebook also has other challenges at the moment, which include increased expenses mostly due to infrastructure expense and increased headcount.

Facebook intends to increase spending by as much as 50 percent in 2013. When a company wants to revolutionize online advertising, there is going to be a great deal of risk-taking. While many people don't like Mark Zuckerberg, his innovation, risk-taking, and ability to create a strong company culture must be admired, or at least respected.

As far as results go, revenues have been on the rise for the most part. It's the bottom line that needs to strengthen. In regards to users, results have been strong. On a year-over-year basis in Q1, there was a 26 percent increase in daily active users, a 23 percent increase in monthly active users, and a 54 percent increase in mobile monthly active users. However, according to Alexa.com, traffic hasn't been great over the past three months. Over that time frame, pageviews-per-user have declined 3.46 percent and time-on-site has declined 2 percent. At least the bounce rate has declined 2 percent. And it should be noted that Facebook's traffic stats are ridiculous (that's meant in a good way). The pageviews-per-user average is 17.56, the time-on-site average is 27:45, and the bounce rate is 20.40 percent. Those numbers are lightyears ahead of the average website.

This article might sound positive so far, but let's keep in mind that margins are razor thin, and that the stock is trading at 591 times earnings. Therefore, if any company-specific or broader-market devastating news should come out, the stock is going to get slammed.

The chart below compares fundamentals for Facebook, Google Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).

	FB	GOOG	MSFT
Trailing P/E	589.67	26.55	17.19
Forward P/E	35.23	16.69	10.85
Profit Margin	1.22%	20.92%	21.58%
ROE	0.77%	16.36%	22.58%
Operating Cash Flow	1.89B	16.56B	30.61B
Dividend Yield	N/A	N/A	2.80%
Short Position	1.70%	1.50%	1.30%

Let's take a look at some more important numbers prior to forming an opinion on this stock.

T = Technicals Are Mixed

Facebook hasn’t done much year-to-date. This is better than a loss, but it has greatly unperformed its peers as well as the market.

	1 Month	Year-To-Date	1 Year	3 Year
FB	-1.26%	1.64%	N/A	N/A
GOOG	12.11%	25.21%	46.34%	73.37%
MSFT	15.40%	25.42%	9.83%	22.88%

At $27.16, Facebook is trading above its averages.

50-Day SMA	26.69
200-Day SMA	26.91

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E = Equity to Debt Ratio Is Normal

The debt-to-equity ratio for Facebook is slightly weaker than the industry average of 0.10. However, debt isn’t a concern at the moment. It could be a concern if Facebook were to make a large acquisition, but a large acquisition would also have the potential to lead to improved growth. It would be a tough call in this economic environment.

	Debt-To-Equity	Cash	Long-Term Debt
FB	0.19	9.47B	2.26B
GOOG	0.10	50.10B	7.38B
MSFT	0.19	73.79B	14.76B

E = Earnings Are Decent

We don’t have much information on annual earnings yet. Stay tuned. Annual revenue growth has been impressive.

Fiscal Year	2010	2011	2012
Revenue ($) in billions	1.97	3.71	5.09
Diluted EPS ($)		0.46	0.01

When we look at the last quarter on a year-over-year basis, we see an increase in revenue and flat earnings.

Quarter	Mar. 31, 2012	Jun. 30, 2012	Sep. 30, 2012	Dec. 31, 2012	Mar. 31, 2013
Revenue ($) in billions	1.06	1.18	1.26	1.59	1.46
Diluted EPS ($)	0.09	-0.08	-0.02	0.0143	0.09

 

Now let's take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

T = Trends Might Support the Industry

There are many new websites gaining momentum and stealing traffic from the old guard. Yes, Facebook now qualifies as the old guard. For instance, Twitter has stolen a great deal of traffic from Facebook. This has a lot to do with the younger generation not thinking Facebook is cool. Remember, the kids who were obsessed with Facebook several years ago are now older. The kids who are now teenagers want something of their own to embrace – they want something new. Perhaps Facebook won't target that market, but that would limit growth potential. It basically comes down to this: Is Facebook cool? What's your opinion? What are your kids' opinions? The answers to these questions might be the most important information available.

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Conclusion

At the moment, Facebook is a tradable stock. This column often focuses on solid and proven companies. Facebook is different. It's a proven website, but it's not a proven company. It has also traded between $20 and $30 for a long time. Bulls haven't had a strong enough argument for a sustainable move above $30, and bears haven't had a strong enough argument for a sustainable move below $20. This pattern is likely to continue. Facebook will have to be very creative to be able to find new revenue streams and fight off old and new competition. Perhaps the most dangerous competitor hasn't even arrived yet.

Best Energy Companies To Invest In 2014

New horizontal drilling and fracturing technologies have given energy companies a way to finally tap the tremendous natural gas reserves right beneath our feet. These advances are the definition of a game-changing and disruptive technology, especially for consumers and the future of U.S. manufacturing. In fact, average natural gas prices haven't topped $5 per million BTU in over 750 days -- the longest stretch since 1999. Drillers may have gone a little overboard with developing their newly accessible assets too much too soon, but natural gas prices are nearly double where they were just one year ago. �

That should lead to better economics for natural gas companies and accompany increasing drilling activity. You could invest in the companies holding the natural gas or pumping the oil, but with so many to choose from it could be difficult to narrow down your decision. Investors looking to play the resurgence in American hydrocarbons may want to consider CARBO Ceramics (NYSE: CRR  ) -- the world's largest manufacturer of ceramic proppants -- which is one of the companies enabling the energy renaissance. Here are three opportunities that await investors.

Best Energy Companies To Invest In 2014: (FNVRF)

Finavera Wind Energy Inc., a wind energy development company, focuses on the development, construction, and operation of wind farms in North America and Ireland. It has wind energy projects under development in British Columbia, Canada, and in Ireland. The company was formerly known as Finavera Renewables Inc. and changed its name to Finavera Wind Energy Inc. in February 2011. Finavera Wind Energy Inc. was founded in 2003 and is headquartered in Vancouver, Canada.

Best Energy Companies To Invest In 2014: Freedom Energy Holdings Inc (FDMF)

Freedom Energy Holdings, Inc. (FDMF), incorporated in June 2005, is a holding company with a focus on the identification of opportunities within the oil and energy sectors. KC-9000 is the Company�� heavy oil technology, to assist in the recovery of heavy oil. As of December 31, 2011, the Company research had developed and shown a new product SR-139 at breaking down asphalt shingles allowing the extraction and recovery of hydrocarbons.

KC-9000 is a micro-emulsion technology. KC 9000 is a micro-emulsion developed to assist in the recovery and extraction of heavy based hydrocarbons that are saturated with high metals and paraffin content. KC 9000 is used for tank cleaning processes. By injecting KC 9000 directly into the tank port holes, at the tank bottom, with the emulsifies turning into an easily extractable slurry.

Hot Dividend Stocks To Own Right Now: Northgate Minerals Corporation(NXG)

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

Best Energy Companies To Invest In 2014: Access Midstream Partners LP (ACMP)

Access Midstream Partners, L.P., formerly Chesapeake Midstream Partners, L.L.C. (Partnership), incorporated on January 21, 2010, owns, operates, develops and acquires natural gas, natural gas liquids (NGLs) and oil gathering systems and other midstream energy assets. The Company is focused on natural gas and NGL gathering. The Company provides its midstream services to Chesapeake Energy Corporation (Chesapeake), Total E&P USA, Inc. (Total), Mitsui & Co. (Mitsui), Anadarko Petroleum Corporation (Anadarko), Statoil ASA (Statoil) and other producers under long-term, fixed-fee contracts. On December 20, 2012, the Company acquired from Chesapeake Midstream Development, L.P. (CMD), a wholly owned subsidiary of Chesapeake, and certain of CMD's affiliates, 100% of interests in Chesapeake Midstream Operating, L.L.C. (CMO). As a result of the CMO Acquisition, the Partnership owns certain midstream assets in the Eagle Ford, Utica and Niobrara regions. The CMO Acquisition also extended the Company's assets and operations in the Haynesville, Marcellus and Mid-Continent regions.

The Company operates assets in Barnett Shale region in north-central Texas; Eagle Ford Shale region in South Texas; Haynesville Shale region in northwest Louisiana; Marcellus Shale region in Pennsylvania and West Virginia; Niobrara Shale region in eastern Wyoming; Utica Shale region in eastern Ohio, and Mid-Continent region, which includes the Anadarko, Arkoma, Delaware and Permian Basins. The Company's gathering systems collect natural gas and NGLs from unconventional plays. The Company generates its revenues through long-term, fixed-fee gas gathering, treating and compression contracts and through processing contracts.

Barnett Shale Region

The Company's gathering systems in its Barnett Shale region are located in Tarrant, Johnson and Dallas counties in Texas in the Core and Tier 1 areas of the Barnett Shale and consist of 25 interconnected gathering systems and 850 miles of pipeline. During the year! ended December 31, 2012, average throughput on the Company's Barnett Shale gathering system was 1.195 billion cubic feet per day. The Company connects its gathering systems to receipt points that are either at the individual wellhead or at central receipts points into which production from multiple wells are gathered. The Company's Barnett Shale gathering system is connected to the three downstream transportation pipelines: Atmos Pipeline Texas, Energy Transfer Pipeline Texas and Enterprise Texas Pipeline. Natural gas delivered into Atmos Pipeline Texas pipeline system serves the greater Dallas/Fort Worth metropolitan area and south, east and west Texas markets at the Katy, Carthage and Waha hubs. Natural gas delivered into Energy Transfer Pipeline Texas pipeline system serves the greater Dallas/Fort Worth metropolitan area and southeastern and northeastern the United States markets supplied by the Midcontinent Express Pipeline, Centerpoint CP Expansion Pipeline and Gulf South 42-inch Expansion Pipeline. Natural gas delivered into Enterprise Texas Pipeline pipeline system serves the greater Dallas/Fort Worth metropolitan area and southeastern and northeastern the United States markets supplied by the Gulf Crossing Pipeline.

Eagle Ford Shale Region

The Company's gathering systems in its Eagle Ford Shale region are located in Dimmit, La Salle, Frio, Zavala, McMullen and Webb counties in Texas and consist of 10 gathering systems and 618 miles of pipeline. During 2012, gross throughput for these assets was 0.169 billion cubic feet per day. The Company connects its gathering systems to central receipt points into which production from multiple wells is gathered. The Company's Eagle Ford gathering systems are connected to six downstream transportation pipelines, which include Enterprise, Camino Real, West Texas Gas, Regency Gas Service, Eagle Ford Gathering and Enerfin. The Company processes gas at Yoakum or other Enterprise plants and transports residue to Wharton residue header w! ith conne! ctions to numerous interstate pipelines.

Haynesville Shale Region

The Company's Springridge gas gathering system in the Haynesville Shale region is located in Caddo and DeSoto Parishes, Louisiana, in one of the core areas of the Haynesville Shale and consists of 263 miles of pipeline. During 2012, average throughput on the Company's Springridge gathering system was 0.359 billion cubic feet per day. The Company connects its gathering system to receipt points that are at central receipt points into which production from multiple wells is gathered. The Company's Springridge gathering system is connected to three downstream transportation pipelines: Centerpoint Energy Gas Transmission, ETC Tiger Pipeline and Texas Gas Transmission Pipeline. The Company's Mansfield gas gathering system in the Haynesville Shale region is located in DeSoto and Sabine Parishes, Louisiana, in one of the areas of the Haynesville Shale and, as of December 31, 2012, consist of 304 miles of pipeline. During 2012, average throughput on the Company's Mansfield gathering system was 0.720 billion cubic feet per day. The Company connects its gathering system to receipt points that are at central receipt points into which production from multiple wells is gathered and treated. The Company's Mansfield gathering system is connected to two downstream transportation pipelines: Enterprise Accadian Pipeline and Gulf South Pipeline. Natural gas delivered into Enterprise Accadian pipeline can move to on-system markets in the Midwest and to off-system markets in the Northeast through interconnections with third-party pipelines. Natural gas delivered into Gulf South pipeline can move to on-system markets in the Midwest and to off-system markets in the Northeast through interconnections with third-party pipelines.

Marcellus Shale Region

Through Appalachia Midstream, the Company operates 100% of and own an approximate average 47% interests in 10 gas gathering systems that consist of approximately 5! 49 miles ! of gathering pipeline in the Marcellus Shale region. The Company's volumes in the region are gathered from northern Pennsylvania, southwestern Pennsylvania and the northwestern panhandle of West Virginia, in core areas of the Marcellus Shale. The Company operates these smaller systems in northeast and central West Virginia, southeast Pennsylvania, northwest Maryland, north central Virginia, and south central New York. During 2012, gross throughput for Appalachia Midstream assets was just over 1.8 billion cubic feet per day. The Company's Marcellus gathering systems' delivery points include Caiman Energy, Central New York Oil & Gas, Columbia Gas Transmission, MarkWest, NiSource Midstream, PVR and Tennessee Gas Pipeline. Natural gas is delivered into a 16-inch pipeline and delivered to the Caiman Energy Fort Beeler processing plant where the liquids are extracted from the gas stream. The natural gas is then delivered into the TETCo interstate pipeline for ultimate delivery to the Northeast region of the United States. Natural gas delivered into Central New York Oil & Gas 30-inch diameter pipeline can be delivered to Stagecoach Storage, Millennium Pipeline, or Tennessee Gas Pipeline's Line 300. In Columbia Gas Transmission lean natural gas is delivered into two 36-inch interstate pipelines for delivery to the Mid-Atlantic and Northeast regions of the United States. Natural gas is delivered into a MarkWest pipeline for delivery to the MarkWest Houston processing plant where the liquids are extracted from the gas stream. In NiSource Midstream natural gas is delivered into a 20-inch diameter pipeline and delivered to the MarkWest Majorsville processing plant where the liquids are extracted from the rich gas stream. In PVR natural gas is delivered into the 24-inch diameter Wyoming pipeline and the Hirkey Compressor Station. In Tennessee Gas Pipeline natural gas is delivered into this looped 30-inch diameter pipeline (TGP Line 300) at three different locations can be received in the Northeast at points along th! e 300 Lin! e path, interconnections with other pipelines in northern New Jersey, as well as an existing delivery point in White Plains, New York.

Niobrara Shale Region

The Company's gathering systems in the Niobrara Shale region are located in Converse County, Wyoming and consist of two interconnected gathering systems and 79 miles of pipeline. During 2012, average throughput in the Company's Niobrara Shale region was 0.013 billion cubic feet per day. The Company connects its gathering systems to receipt points,which are either at the individual wellhead or at central receipts points into which production from multiple wells are gathered. The Company's Niobrara gathering systems are connected to two downstream transportation pipelines: Tallgrass/Douglas Pipeline and North Finn/DCP Inlet Pipeline. Natural gas delivered into Tallgrass/Douglas pipeline is sent to the Tallgrass processing facility; after processing, natural gas is delivered to Cheyenne Hub, Rockies Express Pipeline, or Trailblazer Pipeline through Tallgrass Interstate Gas Transmission.

Utica Shale Region

The Company's gathering systems in the Utica Shale region are located in northeast Ohio and consist of 67 miles of pipeline. The Company's Utica gathering systems are connected to two downstream transportation pipelines: Dominion East Ohio (Blue Racer) and Dominion Transmission, Inc.

Mid-Continent Region

The Company's Mid-Continent gathering systems extend across portions of Oklahoma, Texas, Arkansas and Kansas. Included in the Company's Mid-Continent region are three treating facilities located in Beckham and Grady Counties, Oklahoma, and Reeves County, Texas, which are designed to remove contaminants from the natural gas stream.

Anadarko Basin and Northwest Oklahoma

The Company's assets within the Anadarko Basin and Northwest Oklahoma are located in northwestern Oklahoma and the northeastern portion of the Texas Panhandle and consist of appro! ximately ! 1,578 miles of pipeline. During 2012, the Company's Anadarko Basin and Northwest Oklahoma region gathering systems had an average throughput of 0.457 billion cubic feet per day. Within the Anadarko Basin and Northwest Oklahoma, the Company is focused on servicing Chesapeake's production from the Colony Granite Wash, Texas Panhandle Granite Wash and Mississippi Lime plays. Natural gas production from these areas of the Anadarko Basin and Northwest Oklahoma contains NGLs. In addition, the Company operates an amine treater with sulfur removal capabilities at its Mayfield facility in Beckham County, Oklahoma. The Company's Mayfield gathering and treating system gathers Deep Springer natural gas production and treats the natural gas to remove carbon dioxide and hydrogen sulfide to meet the specifications of downstream transportation pipelines.

The Company's Anadarko Basin and Northwest Oklahoma systems are connected to a transportation pipelines transporting natural gas out of the region, including pipelines owned by Enbridge and Atlas Pipelines, as well as local market pipelines such as those owned by Enogex. These pipelines provide access to Midwest and northeastern the United States markets, as well as intrastate markets.

Permian Basin

The Company's Permian Basin assets are located in west Texas and consist of approximately 358 miles of pipeline across the Permian and Delaware basins. During 2012, average throughput on the Company's gathering systems was 0.076 billion cubic feet per day. The Company's Permian Basin gathering systems are connected to pipelines in the area owned by Southern Union, Enterprise, West Texas Gas, CDP Midstream and Regency. Natural gas delivered into these transportation pipelines is re-delivered into the Waha hub and El Paso Gas Transmission. The Waha hub serves the Texas intrastate electric power plants and heating market, as well as the Houston Ship Channel chemical and refining markets. El Paso Gas Transmission serves western the United ! States ma! rkets.

Other Mid-Continent Regions

The Company's other Mid-Continent region assets consist of systems in the Ardmore Basin in Oklahoma, the Arkoma Basin in eastern Oklahoma and western Arkansas and the East Texas and Gulf Coast regions of Texas. The other Mid-Continent assets include approximately 648 miles of pipeline. These gathering systems are localized systems gathering specific production for re-delivery into established pipeline markets. During 2012, average throughput on these gathering systems was 0.031 billion cubic feet per day.

The Company competes with Energy Transfer Partners, Crosstex Energy, Crestwood Midstream Partners, Freedom Pipeline, Peregrine Pipeline, XTO Energy, EOG Resources, DFW Mid-Stream, Enbridge Energy Partners, DCP Midstream, Enterprise Products Partners Inc., Regency Energy Partners, Texstar Midstream Operating, West Texas Gas Inc., TGGT Holdings, Kinderhawk Field Services, CenterPoint Field Services, Williams Partners, Penn Virginia Resource Partners, Caiman Energy, MarkWest Energy Partners, Kinder Morgan, Dominion Transmission (Blue Racer), Enogex and Atlas Pipeline Partners.

Best Energy Companies To Invest In 2014: Hanwha SolarOne Co. Ltd.(HSOL)

Hanwha Solarone Co., Ltd., an investment holding company, engages in the manufacture and sale of silicon ingots, silicon wafers, and PV cells and modules. The company also offers mono crystalline and multi crystalline silicon cells; and provides PV module processing services. It sells its products to solar power system integrators and distributors primarily in Germany, Italy, Australia, the United States, the Czech Republic, Spain, and China. The company was formerly known as Solarfun Power Holdings Co., Ltd. and changed its name to Hanwha SolarOne Co., Ltd. in December 2010. Hanwha Solarone Co., Ltd. was founded in 2004 and is based in Qidong, the People?s Republic of China.

Advisors' Opinion:

• [By Travis Hoium]

  What: Solar stocks are shooting higher again today as the strong run in 2013 continues. LDK Solar (NYSE: LDK  ) , Canadian Solar (NASDAQ: CSIQ  ) , Yingli Green Energy (NYSE: YGE  ) , Hanwha SolarOne (NASDAQ: HSOL  ) , and JinkoSolar (NYSE: JKS  ) led the way, gaining between 10% and 22% today.

• [By Paul Ausick]

  Stocks on the move: Nokia Corp. (NYSE: NOK) is up 31.5% at $5.13 on the announcement that Microsoft Corp. (NASDAQ: MSFT) will acquire the Finnish firm�� mobile phone business for $7.2 billion. Chinese solar energy stocks are getting a boost again today, with Hanwha SolarOne Co. (NASDAQ: HSOL) up more than 15.9% and ReneSola Ltd. (NYSE: SOL) up 14.9%.

Best Energy Companies To Invest In 2014: National Fuel Gas Company(NFG)

National Fuel Gas Company, through its subsidiaries, operates as a diversified energy company primarily in the United States. The company operates through four segments: Utility, Pipeline and Storage, Exploration and Production, and Energy Marketing. The Utility segment sells natural gas or provides natural gas transportation services to approximately 727,000 customers in Buffalo, Niagara Falls, and Jamestown, New York; and Erie and Sharon, Pennsylvania. The Pipeline and Storage segment provides interstate natural gas transportation and storage services for affiliated and nonaffiliated companies through an integrated gas pipeline system; and 27 underground natural gas storage fields, as well as 4 other underground natural gas storage fields owned and operated jointly with other interstate gas pipeline companies. This segment also transports natural gas for industrial customers and power producers in New York State. It owns the Empire Pipeline, a 157-mile pipeline; and the Empire Connector, which is a 76-mile pipeline extension. The Exploration and Production segment engages in the exploration for, and the development and purchase of natural gas and oil reserves in California, in the Appalachian region of the United States, and in the Gulf Coast region of Texas and Louisiana. As of September 30, 2009, this segment had proved developed and undeveloped reserves of 46,587 thousand barrels of oil and 248,954 million cubic feet equivalent of natural gas. The Energy Marketing segment markets natural gas to industrial, wholesale, commercial, public authority, and residential customers primarily in western and central New York and northwestern Pennsylvania. The company also develops and operates mid-range independent power production and landfill gas electric generation facilities. National Fuel Gas Company was founded in 1902 and is based in Williamsville, New York.

Advisors' Opinion:

• [By Eric Volkman]

  National Fuel Gas (NYSE: NFG  ) is hewing tightly to tradition with its upcoming shareholder payout. The company has declared a bump in its quarterly dividend, to $0.375 per share. This will be dispensed on July 15 to shareholders of record as of June 28. That amount is 2.7% higher than the firm's previous four distributions of $0.365 apiece, the most recent of which was paid in April. Prior to that, National Fuel Gas handed out $0.355 per share.

Best Energy Companies To Invest In 2014: Kodiak Oil & Gas Corp (KOG)

Kodiak Oil & Gas Corp. (Kodiak) is an independent energy company focused on the exploration, exploitation, acquisition and production of crude oil and natural gas in the United States. Kodiak has developed an oil and natural gas asset base of proved reserves, as well as a portfolio of development and exploratory drilling opportunities on high-potential prospects with an emphasis on oil resource plays. The Company�� oil and natural gas reserves and operations are primarily concentrated in the Williston Basin of North Dakota. As of January 31, 2012, it had approximately 169,000 net acres under lease, including 157,000 net acres in the Bakken oil play in the Williston Basin of North Dakota and Montana. In January 2012, the Company acquired Williston Basin oil and gas producing properties and undeveloped leasehold. On January 10, 2012, it acquired certain oil and gas leaseholds, overriding royalty interests and producing properties located in North Dakota. Advisors' Opinion:

• [By Dan Caplinger]

  It's not easy being big
  When most people think about the energy boom, they tend to focus on the small exploration and production companies that have gone from being unknown players in the industry to well-known names focusing on key geographical areas with huge production potential. For instance, the Bakken play in North Dakota has turned the state into the highest-growth area in the nation, and Kodiak Oil & Gas (NYSE: KOG  ) and several other tiny exploration and production companies have ridden the wave of success in boosting their production levels and reaping the Bakken's benefits. Kodiak in particular has leveraged its future success to the Bakken, with plans to spend all of its capital budget in the region.

• [By Arjun Sreekumar]

  Take North Dakota's Bakken Shale, for instance. Well drilling and completion costs routinely averaged north of $10 million a few years ago, but have since declined meaningfully. Continental Resources (NYSE: CLR  ) , the largest leasehold owner in the play, said its average well costs fell by $1 million last year, while Kodiak Oil & Gas (NYSE: KOG  ) , another Bakken operator, reported a 15%-20% decline in well costs for 2012. �

Best Energy Companies To Invest In 2014: HRT Participacoes em Petroleo SA (HRTPY.PK)

HRT Participacoes em Petroleo SA, formerly BN 16 Participacoes Ltda, is a Brazil-based holding company engaged in the oil and gas industry. The Company is primarily involved in the exploration and production (E&P) of oil and natural gas in Brazil and Namibia. Through its subsidiaries, it is active in the geophysical and geological research, exploration, development, production, import, export and sale of oil and natural gas, as well as in the provision of air logistics services in transporting people and equipment related to oil and gas activities in the exploratory campaign in the Solimoes Basin. As of December 31, 2011, the Company had seven subsidiaries, including Integrated Petroleum Expertise Company Servicos em Petroleo Ltda (IPEX), HRT O&G Exploracao e Producao de Petroleo Ltda, HRT Netherlands BV, HRT America Inc, HRT Africa, HRT Canada Inc and Air Amazonia Servicos Aereos Ltda.

Is Nokia Undervalued?

With shares of Nokia (NYSE:NOK) trading around $3, is NOK an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Nokia operates as a mobile communications company worldwide. It designs and develops mobile products and services; provides digital map information and related location-based content and services for mobile navigation devices, automotive navigation systems, Internet-based mapping applications; and provides mobile and fixed network infrastructure, communications and networks service platforms, as well as professional services and business solutions, to operators and service providers. Nokia operates in three segments: Devices & Services, HERE, and Nokia Siemens Networks. The mobile movement is very hot at the moment and if executed correctly, Nokia may be able to see significant profits. Should Nokia provide more relevant mobile products, look for it to become a major player in the space once again.

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T = Technicals on the Stock Chart are Mixed

Nokia stock has witnessed a violent downtrend extending back to late 2007. In the last five years, the stock has gone from near $40 per share to $3. Nokia stock is now seeing a strong bounce from lows that, if held and continued, may signal a reversal in trend. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Nokia is trading around its rising key averages which signal neutral price action in the near-term.

(Source: Thinkorswim)

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

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Nokia Options	59.12%	93%	90%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
July Options	Steep	Average
August Options	Steep	Average

As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bearish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Nokia’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Nokia look like and more importantly, how did the markets like these numbers?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	13.64%	-87.10%	-778.57%	-537.50%
Revenue Growth (Y-O-Y)	-23.40%	-20.68%	-23.13%	-29.56%
Earnings Reaction	-12.93%	-8.92%	-5%	6.49%

Nokia has seen improving earnings and decreasing revenue figures over the last four quarters. From these numbers, the markets have not been too excited with Nokia’s recent earnings announcements.

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P = Poor Relative Performance Versus Peers and Sector

How has Nokia stock done relative to its peers, Ericsson (NASDAQ:ERIC), Research In Motion (NASDAQ:BBRY), Apple (NASDAQ:AAPL), and sector?

	Nokia	Ericsson	Research In Motion	Apple	Sector
Year-to-Date Return	-13.04%	15.45%	14.66%	-16.39%	5.46%

Nokia has been a relative performance leader, year-to-date.

Conclusion

Nokia provides technology for the use in many platforms ranging from mobile devices to navigation and networks. The stock has not done so well in recent years but is now exhibiting a strong bounce after establishing lows last year. Over the last four quarters, earnings have improved while revenue figures have decreased, but overall, investors have not been too pleased with the company. Relative to its peers and sector, Nokia has been a poor relative performer, year-to-date. WAIT AND SEE what Nokia does this coming quarter.

1 Problem Apple Doesn't Want to Talk About

In the wake of Apple's (NASDAQ: AAPL  ) recent earnings report, investors seem to be convinced that all is well with the Cupertino giant after all. However, there's one problem that Tim Cook and crew are facing outside the realm of smartphones and tablets: cyber crime. Following a breach in one of the company's websites late last week, one of the world's most respected technology companies suddenly finds itself looking surprisingly vulnerable.

Watch as Motley Fool analyst Lyons George breaks down why cyber crime is currently creating $100 billion worth of problems for American businesses -- and no small amount of opportunity for investors who can connect the dots.

Top 10 China Stocks To Watch For 2014

Apple has a history of cranking out revolutionary products -- and then creatively destroying them with something better. Read about the future of Apple in the free report, "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.

At the Close: Stocks Rise Because They Can; Career Education Rises 50% on Asset Sale

Stocks went up today. Why? Heck if I know.

The S&P 500 gained 0.3% to 1,752.07, while the Dow Jones Industrials rose 0.6% to 15,509.21.

The wires trotted out the usual explanations: Earnings, strong China manufacturing indicators, hope that the Federal Reserve will maintain the status quo for longer. Take your pick, your guess is as good as mine.

Which isn’t to downplay those factors, which are clearly in play. It’s just that citing them as a reason for a relatively small move is one of the silliest things about markets reporting. I say that as a former currency reporter at Bloomberg, where I would write that the dollar was falling because commodities were strong, while my counterpart on the commodities desk was writing that commodities rose because of the weak dollar.

Silvercrest Asset Managment Group’s Patrick Chovanec explains why U.S. stocks look attractive:

…from an investor's point of view, U.S. corporations look attractive. Earnings growth may be sluggish, but profit margins are wide and balance sheets are solid. All the cash sitting on corporate balance sheets may represent a hesitation to invest and drive growth, but also indicates a capacity to pay out higher dividends, buy back shares, and snap up smaller companies. Price-to-earnings ratios are reasonable and, based on historical experience, have room to grow. The energy revolution in U.S. shale oil and gas, in particular, is a major trend that is going to make American companies more competitive.

More worrisome: Investor sentiment. Let the American Association of Individual Investors’ Charles Rotblut explain what’s happening:

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 2.9 percentage points to 49.2%. This is the highest level of optimism registered by our survey since January 24, 2013. It is also the fifth time in the past seven weeks that bullish sentiment is above its historical average of 39.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged, rose 4.4 percentage points to 33.2%. This is the first time in three weeks neutral sentiment is above its historical average of 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 7.3 percentage points to 17.6%. This is the lowest pessimism has been since January 12, 2012. (It was also at 17.2% on January 5, 2012.) Bearish sentiment has now been below its historical average of 30.5% for five times in the past seven weeks.

Career Education Corp. (CECO) has gained 53% to $5.80 in after-hours trading after it sold its international schools to a private equity firm.

Express Scripts (ESRX) has fallen 2.7% to $62 in after-hours trading after it reported a profit of $1.08, in line with analyst forecasts, but said the fourth quarter would come in between $109 and $1.13. Analyst had forecast $1.12.

Deckers Outdoor Corp. (DECK) has gained 14% to $66.50 in after-hours trading after the maker of UGGs reported a profit of 95 cents, above forecasts for 72 cents.

Resmed (RMD) has plunged 12% to $49.50 in after-hours trading after it reported a profit of 56 cents, below estimates of 58 cents.

Cliffs Natural Resources (CLF) has gained after it reported a profit of 68 cents, missing forecasts for 71 cents, but beat on revenue.

FedEx Sees 'Cyber Monday' as Year's Busiest Shipping Day

Ross D. Franklin/AP MEMPHIS, Tenn. -- FedEx expects that holiday shoppers will be more nice than naughty this year, with shipments rising from 2012. The company said Wednesday it expects to carry more than 22 million shipments on the busiest day of the season, which it believes will be Monday, Dec. 2. It handled about 19.9 million shipments on Dec. 17, 2012. FedEx (FDX) predicts that shipments in the first week of December will rise 13 percent over last year's peak week, to more than 85 million shipments, driven by online shopping and retailers stocking up on electronics, apparel and other goods. It's basing the forecasts partly on estimates by the National Retail Federation, a trade group, and research firm eMarketer. Memphis-based FedEx Corp. expects to hire about 20,000 seasonal workers, up slightly from last year.

The S&P 500: How Much Higher Can it Go?

Not much, say the folks at Capital Economics.

REUTERS

Sure the S&P 500 has gained 0.4% to 1,750.96 at 12:55 p.m., and traded another new high today. But there are reasons to doubt the benchmark’s ability to head much higher, writes Capital Economics’ Jessica Hinds. Three of them in fact. She writes:

Tuesday's jobs data make it less likely that the Fed will start reducing its purchases in December. And the central bank's balance sheet will continue to expand even after it eventually begins to taper, which might lend some ongoing support to equity prices. However, it is still only a matter of time before unconventional monetary stimulus ends.

What's more, the S&P 500 has risen a long way since early 2009, with the result that the cyclically-adjusted price/earnings ratio has more than doubled to a level that is well above its long-run average. Profit margins are also stretched and long overdue a cyclical correction. These headwinds should cap the upside for US equities over the next year.

Finally, some unexpected event may also dull investors' appetite for risk, such as the recent debt-ceiling crisis. Indeed, this crisis has only been temporarily resolved and could well resurface next year.

In a note from Friday, however, Deutsche Bank’s David Bianco offered a different take–namely that stocks are heading higher:

We expect a further low volatility climb to 1800 by mid 1Q. While risks remain given a full year budget yet to pass and a Fed yet to taper, investor nerve for risk appears battle hardened and emboldened by the S&P’s many advances. The last course of 2013′s feast might be a rationed serving, but it’s best not to refuse and we expect healthy S&P returns in 2014 and 2015. We were disappointed with the mere stopgap fiscal deal reached this week, which may cap the S&P at 1800 until resolved, but profits trump politics and China trumps Congress. 3Q EPS and China’s momentum justify 1800 soon.

The S&P 500 is getting a boost today from Alcoa (AA), which has gained 4.1% to $8.95 after it announced a joint venture aimed at the aerospace industry, Forest Labs (FRX), which has climbed 3.8% to $56.01 after reporting better-than-forecast earnings and guidance and Freeport-McMoran Copper & Gold (FCX), which reported better-than-expected earnings and said it would seek significant cost cuts.

What retirees should do when the kids come back

You're sitting pretty in retirement. Kids gone. Empty house. Vacations. Hobbies. Walks. You and your spouse are getting to do all the things you dreamed about doing when you became empty nesters.

Then, it happens. Your grown kids tell you they need your help, and they need to come back home. The big question is, how do you help your children and keep your retirement on track?

"First piece of advice is, 'Don't panic,'" says Lynn Ballou, managing partner of Ballou Plum Wealth Advisors in Lafayette, Calif. "Take a deep breath. Listen to your children tell you what they think they need. It may not be as horrible as the first panic call would lead you to believe."

RETIREMENT: Get all the latest news, tips on planing and living in retirement

How to Age in Place.

There are two different scenarios where children return, planners say:

• Kids returning from college. Parents have spent thousands on college tuition only to find that the kids cannot get a job after graduating and now must move back home. If the parents are still saving for retirement, the question here is how to keep your retirement savings on track — especially since you likely just spent big bucks on tuition.

"You sat with advisers," says Brian Schwartz, premier wealth adviser with HSBC in New York. "You put a plan together. You find yourself at this crossroad where debt is not a big part of your plan. All of a sudden something like this happens. It can be a detriment to parents, whether it's kids coming from college or young adults coming home from a horrific, costly divorce."

The emotional cost is real, says Ballou. "I think parents are feeling a little betrayed. They saved and scrimped to get their kids the best education they could, and come to find out a part-time job is the best these graduates can do, through no fault of their own."

And so are the monetary costs, says Matthew Curfman, senior vice president of Richmond Bros. in Jackson, Mich. "All of a sudden your kid comes home and y! ou can spend another extra 20 grand a year. You have to learn when to say no. More people get into trouble because they say yes to too many things than when they say no to too many things."

LIFESTYLE: Living well in retirement

• Grown kids suffer a setback, such as a divorce or unemployment, and need to come back home or just need financial help. "It's coming up more and more with unemployment at current levels," says Curfman. "If you are working with a planner and you are retired, get your financial planner involved." One way the planner can help: "If I need to be, I can be the bad guy," Curfman says. "It takes away from the human toll on the relationship between parent and child."

Financial experts say parents must plan, in more ways than one. And they must talk openly about the issues and the potential problems.

Average people pay an enormous amount to send their children to college, says Lance Roberts, CEO of STA Wealth Management in Houston. It can hurt everyone if the children don't get a practical degree. "The kids are going to school and getting degrees in liberal arts or basket weaving and not a functional degree that gets a job when they graduate," Roberts says. "The problem for parents with kids in school is they are funding an education that will have little benefit. They are bankrupting themselves going into retirement. There is no law that parents have to pay for kids going to school."

"Parents welcome kids home because they are parents," says Schwartz. "It is a human instinct. That said, most parents don't create some kind of plan. That's where as an adviser I step in. I think of everything as a business, and every business need a plan.

The plan should include things like parents collecting rent or sharing the cost of utilities, and parents should not feel bad about that. There are quite a few hidden costs that parents don't anticipate, like food, car insurance and cellphones. I think a time horizon should be set. I tell parents a year and a half ! is an ade! quate amount of time for kid to regroup, re-strap on his boots and get back out there."

Alex Vicencio, senior vice president at Wells Fargo Advisors in Miami, says sometimes parents will take his advice, and sometimes they will want to help their children at all costs. He will do what they ask, but sometimes he has to warn them of the consequences.

"The focus of my practice is making sure that everyone has an up-to- date, working financial plan," he says. "When I encounter those situations, I find that one approach that worked well is to show the client how that particular help they are planning to provide, how mathematically that will affect their plan, whether it be retirement income or lifestyle. If it will have detrimental effect ton my clients' financial well being, I will let them know that is something that would not be recommended," he said.

The keys to Helping your kids while you keep retirement on track

• Communication. "I think the key to having adult children settle back in successfully is to be upfront and explicit about your expectations and about the rules of the house," says Bornstein. "Things have changed in the years or decades since kids have lived with you, and a lot of families go on the assumption that they will be able to return to old pattern, old life, and that's not true."

"Conversation is key," he says, "about boundaries, about shared space in the house, about the rules, if, for example if your adult children have children of their own. The key to making it work is to have that conversation and have it early and bring up uncomfortable topics instead of sweeping them under the rug. You can be sure of one thing — old family conflicts and dynamics, which may have been dormant for years, and may re-emerge when you are back in the same space."

• Talk to your financial planner and revise your financial plan. Sit down with your financial adviser and figure out what you can afford to do, says Ballou. "Kids tug at our heartstrings. We will ! do anythi! ng for them, but that doesn't mean we can afford to do anything for them. Your financial adviser will help you figure out what you can and can't afford," she says.

•Prepare emotionally. "If you are a person who planned your retirement, and had a preconceived notion of what it looks like — popping in on kids, and popping out, reading the paper and listening to NPR — then suddenly, emotionally, there will be another game plan," Ballou says. Their energy level is much different than yours. And they might have unexpected surprises. "A friend had a daughter who moved back with a pit bull," Ballou says.

MORE: Financial planning for your retirement

The cities where consumers chat most about brands

If you're a car brand, you're the talk of the town in Houston.

If you're a financial service brand, Jacksonville is where folks are likely to chat you up.

And if you're some sort of travel services company, Miami is the hub for brand chatter.

Talk creates sales. Marketers are just beginning to discover that consumers in some cities are far more talkative about their brands than folks living in other cities.

For that matter, residents of these same three cities — Houston, Jacksonville and Miami — are more likely than residents of any other major U.S. cities to have verbal or online conversations about brands of any kind.

"Marketers recognize that consumers trust each other more than anyone else," says Ed Keller, CEO of Keller Fay Group, the market research specialist behind the new study to be released Monday, America's Most Talkative Cities. "Every brand wants to be a brand that people are talking about."

Now, marketers are starting to recognize that they may be able to regionally target their brands to those cities and towns where folks are more receptive to talking about brands in general, and, more specifically, the very kinds of products that they specifically market or sell. This is no small matter.

10 Best Blue Chip Stocks To Watch For 2014

Some 2.1 billion brand impressions are made daily on consumers from word of mouth marketing, says Keller.

The TalkTrack study is based on 75,000 consumer interviews conducted over the past two years in the nation's 50 largest cities.

It also tracked the most talkative — and least talkative — cities. The average consumer nationally has 79 conversations about one brand or another every week. But in Houston, where brand talk is king, the typical consumer has 95 brand conversations a week. Jacksonville and Miami ranked two and three, in that arena, with 94 and 93 brand conversations, respectively.

The seven others, in order: Salt Lake City, Atlanta, New Orleans, Los Angeles, San Diego, Norfolk, Va.; and West Palm Beach, Fla. Seven of the 10 cities ranked as America's "most talkative" were in the South, notes Keller.

Nationally, the most talked about brand topics are media, entertainment, food and dining, says Keller. The study did not track specific brands by name.

Among the study's other findings:

• Car talk. If you live in Houston, you're 37% more likely to talk about auto brands than other consumers.

• Money talk. If you live in Jacksonville, you're 56% more likely to chat about financial service brands than others.

• Trip talk. If you live in Miami, you're 75% more likely to discuss travel services than other folks.

Despite the explosive growth of social media, more than 90% of brand-related conversations still take place off-line, says Keller.

Tesla and Europe: A Match Made in Heaven?

The Fool's own senior auto analyst, John Rosevear, sits down with Richard Engdahl for an in-depth look at Tesla (NASDAQ: TSLA) and the electric vehicle market, as well as Chrysler's unique situation with Fiat (NASDAQOTH: FIATY).

The economic crisis in Europe has slammed the auto industry as a whole, but luxury vehicles aren't doing so badly. Coupled with governments that tend to smile on green technologies, Tesla has enjoyed a warm reception Europe.

A full transcript follows the video.

Richard Engdahl: You mentioned briefly overseas sales for Tesla. It strikes me that Europe is perhaps a better place to sell electric vehicles. On the other hand, maybe the U.S. is a better place to sell premium vehicles. How does the overseas market look for Tesla?

John Rosevear: Well, on the one hand we look at Europe -- and particularly Western Europe -- there's a recession going on. New car sales in general are at terrible lows right now and the mainstream automakers in Europe are having a lot of trouble.

Best Gold Companies To Watch In Right Now

Enter Tesla that walks in. They're competing with a novel product in the luxury space. Luxury cars haven't actually done that badly. Go to a place like Germany, they're still selling plenty of BMWs and Mercedes and Audis in Germany. Britain is doing well. France is doing reasonably well, and the Scandinavian countries are doing fairly well.

I understand Tesla's had a really wonderful recession in, I think Norway. They sold a whole bunch as soon as it opened in Norway. It was like, "Whoa, Norway. OK."

With some of these European governments there's more support for electrification. There's more support for infrastructure. There are tax credits and tax breaks and so forth, because they want to move the country more in that direction.

We have some of that here, of course. We have the tax breaks, but we don't have quite the national support for electrification that you could do in a place like Denmark or something like that, because it's a smaller country and it can be done a little more easily, to set up that kind of infrastructure.

Engdahl: Is there any infrastructure -- speaking of -- is there any more government response to electric vehicles in Europe, as far as setting up charging stations and the like?

Rosevear: I'm not current on all of it. Some of the European governments -- the Western European governments -- I know Germany has done some stuff. I know that a couple of the Scandinavian countries have tried to move it forward.

The EU in general, of course, wants to push toward greener outcomes for motor vehicles in general, so there's some support there. The nature and specifics of it, I don't have that in hand.

Hot Performing Stocks To Buy Right Now

Don't look now but SunPower (NASDAQ: SPWR  ) has become the best-performing stock in the solar industry. Over the past year, it's been better than fellow U.S.-based companies First Solar (NASDAQ: FSLR  ) and SolarCity (NASDAQ: SCTY  ) , and far better than most Chinese manufacturers. Yingli Green Energy (NYSE: YGE  ) and Trina Solar lag well behind even after recent pops higher; only Canadian Solar (NASDAQ: CSIQ  ) can come close to SunPower's return (and I'll get into the reason for that below).

SPWR Total Return Price data by YCharts

So, why is this stock so hot and can the streak continue? I think so, and there are three big reasons why.

Downstream solar is the dominant paradigm
If you have the choice between risky solar manufacturers and a downstream installer, it's better to choose the installer right now. They can lock in long-term power supply agreements, building a business that acts more like a bond than a volatile stock. SolarCity has used this model with success, and despite the fact that it isn't reporting a profit yet, it's building solar installations that will generate revenue for 20 or more years.

Hot Performing Stocks To Buy Right Now: United Uranium Corp (UUC.V)

United Uranium Corp., an exploration stage company, engages in locating, acquiring, exploring, and developing mineral resource properties in Canada. The company holds interests in uranium, diamond, and precious metal properties in Saskatchewan and Alberta. It holds a 100% interest in the mineral claims, S-111365, located in the vicinity of Wollaston Lake in Northern Saskatchewan. The company is headquartered in Saskatoon, Canada.

Hot Performing Stocks To Buy Right Now: Maximus Resources Ltd(MXR.AX)

Maximus Resources Limited engages in the exploration and development of mineral properties in Australia. The company primarily explores for gold, uranium, iron ore, and base metals. Its principal properties include the Sellheim alluvial gold project located in north Queensland; the Adelaide Hills gold project situated in South Australia; and the Narndee base metals project located in the Mt Magnet region of Western Australia. The company also holds exploration tenements in Western Australia that are prospective for nickel, and base metals. Maximus Resources Limited was founded in 2004 and is based in Norwood, South Australia.

Hot Casino Stocks For 2014: Southwest Gas Corporation(SWX)

Southwest Gas Corporation engages in the purchase, distribution, and transportation of natural gas in Arizona, Nevada, and California. As of March 31, 2011, it had 1,844,000 residential, commercial, industrial, and other natural gas customers, including 996,000 customers in Arizona; 665,000 in Nevada; and 183,000 in California. The company also operates as an underground piping contractor that provides utility companies with trenching and installation, replacement, and maintenance services for energy distribution systems. Southwest Gas Corporation was founded in 1931 and is headquartered in Las Vegas, Nevada.

Advisors' Opinion:

• [By Rich Duprey]

  Natural gas provider�Southwest Gas� (NYSE: SWX  ) �announced yesterday�its third-quarter dividend of $0.33 per share, the same rate it paid for the last two quarters after it raised the payout from $0.295 per share.

• [By Seth Jayson]

  Calling all cash flows
  When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Southwest Gas (NYSE: SWX  ) , whose recent revenue and earnings are plotted below.

Hot Performing Stocks To Buy Right Now: Blackrock MuniEnhanced Fund Inc. (MEN)

BlackRock MuniEnhanced Fund, Inc. is a closed ended fixed income mutual fund launched by BlackRock, Inc. It is co-managed by BlackRock Advisors, LLC and BlackRock Investment Management LLC. The fund invests in fixed income markets. It invests primarily in long-term, investment grade municipal obligations. BlackRock MuniEnhanced Fund, Inc. was formed in 1988 and is domiciled in United States.

Hot Performing Stocks To Buy Right Now: Corin Group(CRG.L)

Corin Group PLC engages in the development, production, and distribution of reconstructive orthopedic devices worldwide. It offers metal-on-metal hip resurfacing devices, knee products, mobile-bearing total knee replacement systems, ligament augmentation systems, mobile-bearing ankles, acetabular systems, cementless hip replacement systems, and total ankle and shoulder replacement systems. The company also provides hip and knee implant solutions; hip fracture management solutions; spine systems, such as polyaxial pedicular screw, anterior cervical plating, spinal, and pedicle screw systems; and ligament reconstruction and theatre disposables, as well as filtered suction, bone cement, hand operating table, pulsed lavage, autologous autotransfusion, and camera drape systems. Corin Group PLC was founded in 1985 and is based in Cirencester, the United Kingdom.

Hot Performing Stocks To Buy Right Now: Global Geophysical Services Inc. (GGS)

Global Geophysical Services, Inc., together with its subsidiaries, provides an integrated suite of seismic data solutions to the oil and gas industry worldwide. The company�s seismic data solutions primarily include seismic data acquisition, microseismic monitoring, data processing, and interpretation services, which deliver data that enables the creation of high resolution images of the earths subsurface, and reveal complex structural and stratigraphic details. It offers seismic data acquisition for land, transition zone, and shallow marine areas, including marshes, forests, jungles, arctic climates, mountains, and deserts. The company serves oil and gas exploration and production companies comprising national oil companies, integrated oil companies, and independent oil and gas companies. Global Geophysical Services, Inc. was founded in 2003 and is based in Missouri City, Texas.

Hot Performing Stocks To Buy Right Now: Indico Resources Ltd. (IDI.V)

Indico Resources Ltd., an exploration stage company, engages in the exploration for and development of natural resources in South America. It holds an option to acquire a 100% indirect interest in the Ocana copper gold porphyry project consisting of 22 concessions in south-central Peru. The company was founded in 1996 and is based in Vancouver, Canada.

Hot Performing Stocks To Buy Right Now: Theralase Technologies Inc (TLT.V)

Theralase Technologies Inc. designs, develops, manufactures, and markets laser technology used in biostimulative and biodestructive clinical applications. The company engages in the production, marketing, and distribution of TLC-1000 and TLC-2000 laser technology for the treatment of chronic pain, neural muscular-skeletal conditions, and wound healing. It is also involved in the commercialization of the patented TLC-3000 photo dynamic compound technology through pre-clinical research, clinical trials, and new technology development in the treatment of cancers for oncological applications and in the destruction of bacteria, viruses, and microbial pathogens; and research and development activities. The company sells its products in Canada, the United States, and internationally. Theralase Technologies Inc. is based in Toronto, Canada.

Don Phillips to Step Down as Head of Morningstar's Research Group

Don Phillips will be stepping down as head of Morningstar’s Research group after the first of the year, the company announced Tuesday.

Haywood Kelly, currently head of equity, credit and structured credit research, will assume Phillips’ responsibilities as global head of research, effective Jan. 1, 2014. Phillips will remain a managing director as well a member of the board of directors, a position he’s held since 1999.

Both Kelly, 44, and Phillips, 51, will report to Joe Mansueto, Morningstar’s founder, chairman and CEO.

Phillips said in a statement that he’s “had a wonderfully rewarding career and believes passionately in Morningstar’s mission of helping investors.” Said Phillips: “I told Joe that I’d like to step back, but I still want to contribute to Morningstar’s success. He has always been incredibly supportive, and this time was no exception. Our global research team is second to none. Haywood has done a terrific job with our equity, corporate credit, and structured credit teams and has overseen our fund research in the past. He’s an excellent choice for this role, and I look forward to continuing to work closely with him.”

Mansueto added in the same statement that “Don is a great friend and colleague. He joined Morningstar as our first mutual fund analyst in 1986, two years after I started the company. His passion for investing is the same today as it was 27 years ago.”

Added Mansueto: “Don has worked tirelessly over the years, traveling the world to serve as an advocate for investors and share our thought leadership, with the goal of helping them make better decisions. Don has built a strong research team, and feels the time is right to make this life transition. I’m thrilled that he will stay with the company and continue to work closely with Haywood, focusing on new research initiatives.”

Phillips joined Morningstar in 1986 and soon became editor of its flagship print publication, Morningstar Mutual Funds, establishing the editorial voice for which the company is best known. He helped to develop the Morningstar Style Box and the Morningstar Rating.

Kelly was named head of equity research in 1998, served as head of equity and fund research from 2000 to 2008, and became head of equity and credit research in 2009. He has also served as editor of Morningstar StockInvestor and interim president of Morningstar Credit Ratings, LLC.

JC Penney Hits 30-Year Low; JPMorgan Sees Long-Term Viability Trumping Short-Term Share Price

There was good news and bad news for JC Penney (JCP) investors in JPMorgan’s report on the beleaguered retailer today.

REUTERS

The good news is that management is making the tough decisions necessary to ensure that the JC Penney can turn itself around. The bad news is that a turnaround will take time–lots of time.

Analysts Matthew Boss, Anne McCormick and Esteban Gomez explain:

Top 5 Blue Chip Companies For 2014

We left Dallas incrementally positive in management's decision making process, noting a clear mindset shift toward long-term viability…rather than near-term stock price….Re-focused on the core ("don’t try to be something you are not" mantra), management is working to correct missteps of the past (private label reorganization, Home realignment, shops structure). Looking ahead, the top-line ($4B recapture: $2B = home, .com, private brands / $2B = lost customer base) and gross margin (return to 38-39% = 450bps: return to 15% clearance mix + 350bps: private brands to 50%) algorithms remain the carrot on paper, but we left HQ without a clear sense of timing around a top-line inflection (customer connection impaired with traffic driving Home a work in progress), which remains key to the turnaround.

While JC Penney’s recent stock offering helped with liquidity, it could still be an issue, Boss, McCormick and Gomez say. They write:

While management believes current liquidity remained adequate though year-end, the $810M equity raise (9/27) provides a backbone for appropriate longer term decisions with guidance for total liquidity of $2.0B+ at year-end (ex greenshoe). Specifically, initial internal planning discussions around holiday 2014 were being impacted by short-term liquidity concerns (impacting buys / staffing decisions), with the equity injection providing flexibility through 2H15 if fundamentals do not inflect next year. That said, the treasure chest is far from infinite with management speaking to potential restructuring in 1H14 (if needed and not in the planning process today) to include the closing of cash flow negative stores (while four-wall profitable today) as an option…

Shares of JC Penney have dropped 8.1% to $7.23 at 12:07 p.m. today, the lowest price since 1982. Macy's (M) is little changed at $42.57, Sears (SHLD) has gained d0.9% to $55.23, Kohl’s (KSS) has ticked down 0.1% to $51.43.

 

Top 5 Warren Buffett Companies To Own For 2014

On this day in economic and business history...

"A policy row caused by the infusion of outside money into Berkshire Hathaway (NYSE: BRK-B  ) rocked the 76-year-old textile company today and resulted in the resignation of two top officers." This brief New York Times introduction to the events of May 10, 1965 was the first time the world got to know Warren Buffett, majority owner of Berkshire Hathaway. The 35-year-old Buffett had held a large stake in Berkshire since 1962, and made a proclamation he would soon regret (and walk back) once becoming majority owner: "We're going to continue to sell the same goods to the same customers." The early Buffet-era Berkshire investors are undoubtedly very, very glad he didn't keep that promise.

At the time, Berkshire was headed for annualized revenue of $51.2 million, with an expected profit of roughly $3.4 million. Four and a half decades later, Berkshire was a behemoth with $136 billion in revenue and $13 billion in profit. On the day Buffett gained majority control, one of the now-legendary Berkshire Class A shares (which was the only share class available at the time) could be had for $18. Those shares grew through 45 years of Buffett stewardship to become worth $117,290 -- representing an annualized growth rate of 21.6%. Nine shares, worth just $162 in 1965, would have made you a millionaire. Compare that to the performance of the Dow Jones Industrial Average (DJINDICES: ^DJI  ) over those 45 years: the index closed at 931 points on May 10, 1965, and ended up at 10,785 points in 2010, for an annualized growth rate of just 5.6%.

Top 5 Warren Buffett Companies To Own For 2014: Zongshen Pem Pwr Systems Inc(ZPP.TO)

Zongshen PEM Power Systems Inc., together with its subsidiaries, engages in manufacturing and selling environmentally friendly gas motorbikes, electric motorcycles, electric bicycles, and other e-vehicles and parts. The company sells its products through dealers primarily in China, as well as in other regions, including Africa, South America, and Asia. The company is headquartered in Vancouver, Canada. Zongshen PEM Power Systems Inc. is a subsidiary of Zongshen Industrial Group Co. Ltd.

Top 5 Warren Buffett Companies To Own For 2014: OFFICE2OFFICE ORD GBP0.01(OFF.L)

office2office plc provides managed procurement and business critical services to customers in the public, corporate, and mid-market sectors in the United Kingdom and the Republic of Ireland. The company?s managed procurement services help its customers to reduce their expenditure on office and business products. Its business critical services include communication services comprising creative design, print management, fulfillment, and response handling services enabling customers to outsource the requirements from a single provider; and on-site and off-site document destruction services. It provides managed supply chain solutions, including solution audit and design, it integration, inventory management, sourcing and purchasing, distribution, warehousing, and customer services. The company offers managed procurement services under the brand names of Banner, Accord, and Truline; and business critical services under the brand names of Banner Managed Communications and Banne r Document Services. office2office plc is headquartered in Norwich, the United Kingdom.

Top 5 Undervalued Stocks To Invest In 2014: Noble Corp (NE)

Noble Corporation is an offshore drilling contractor for the oil and gas industry. The Company performs contract drilling services with its fleet of 79 mobile offshore drilling units and one floating production storage and offloading unit (FPSO) located globally. As of December 31, 2011, its fleet consisted of 14 semisubmersibles, 14 drillships, 49 jackups and two submersibles. Its fleet includes 11 units under construction, which include five ultra-deepwater drillships, and six jackup rigs. As of February 15, 2012, approximately 84% of its fleet was located outside the United States in areas, which included Mexico, Brazil, the North Sea, the Mediterranean, West Africa, the Middle East, India and the Asian Pacific. During the year ended December 31, 2011, it completed construction on the Noble Bully I, a drillship, owned through a joint venture with a subsidiary of Royal Dutch Shell plc; completed construction on the Noble Bully II, a drillship, and it completed construction of Globetrotter-class drillship. As of February 15, 2012, it had 10 rigs under contract in Mexico with Pemex Exploracion y Produccion (Pemex).

During 2011, the Company conducted offshore contract drilling operations, which accounted for over 98% of its operating revenues. It conducts its contract drilling operations in the United States Gulf of Mexico, Mexico, Brazil, the North Sea, the Mediterranean, West Africa, the Middle East, India and the Asian Pacific. During 2011, revenues from Shell and its affiliates accounted for approximately 24% of its total operating revenues. During 2011, revenues from Petroleo Brasileiro S.A. (Petrobras) accounted for approximately 18% and 19% of its total operating revenues. Revenues from Pemex accounted for approximately 15%, 20% and 23% of its total operating revenues.

Semisubmersibles

Semisubmersibles are floating platforms which, by means of a water ballasting system, can be submerged to a predetermined depth so that a substantial portion of the hull is b! elow the water surface during drilling operations. As of December 31, 2011, the semisubmersible fleet consisted of 14 units, including five Noble EVA-4000 semisubmersibles; three Friede & Goldman 9500 Enhanced Pacesetter semisubmersibles; two Pentagone 85 semisubmersibles; two Bingo 9000 design unit submersibles; one Aker H-3 Twin Hull S1289 Column semisubmersible, and one Offshore Co. SCP III Mark 2 semisubmersible.

Drillships

The Company�� drillships are self-propelled vessels. These units maintain their position over the well through the use of either a fixed mooring system or a computer controlled dynamic positioning system. Its drillships are capable of drilling in water depths from 1,000 to 12,000 feet. The maximum drilling depth of its drillships ranges from 20,000 feet to 40,000 feet. As of December 31, 2011, the drillship fleet consisted of 14 units, including four drillships under construction with Hyundai Heavy Industries Co. Ltd. (HHI); three Gusto Engineering Pelican Class drillships; two Bully-class drillships to be operated by it through a 50% joint venture with a subsidiary of Shell; one dynamically positioned Globetrotter-class drillship that left the shipyard during the fourth quarter of 2011; one Globetrotter-class drillship under construction; one moored Sonat Discoverer Class drillship capable of drilling in Arctic environments; one NAM Nedlloyd-C drillship, and one moored conversion class drillship.

Jackups

As of December 31, 2011, the Company had 49 jackups in its fleet, including six jackups under construction. The rig hull includes the drilling rig, jacking system, crew quarters, loading and unloading facilities, storage areas for bulk and liquid materials, helicopter landing deck and other related equipment. All of its jackups are independent leg and cantilevered. Its jackups are capable of drilling to a maximum depth of 30,000 feet in water depths up to 400 feet.

Submersibles

The Company has two su! bmersible! s in the fleet, which are cold-stacked. Submersibles are mobile drilling platforms, which are towed to the drill site and submerged to drilling position by flooding the lower hull until it rests on the sea floor, with the upper deck above the water surface. Its submersibles are capable of drilling to a depth of 25,000 feet in water depths up to 70 feet.

Advisors' Opinion:

• [By Michael Flannelly]

  Bernstein analysts downgraded drilling company Noble Corporation (NE) on Friday, as they believe the current industry cycle is likely beginning to end.

  The analysts downgraded NE from “Outperform” to “Market Perform” and see shares reaching $41. This price target suggests a slight upside to the stock’s Thursday closing price of $39.34.

  Noble shares were down 14 cents, or 0.36%, during pre-market trading on Friday. The stock is up 12.98% year-to-date.

Top 5 Warren Buffett Companies To Own For 2014: Valgold Resources Ltd. (VAL.V)

ValGold Resources Ltd. engages in the exploration and development of mineral properties in Canada. The company explores for gold, silver, lead, and zinc deposits in Western Ukraine. It holds a 75% interest the MBK Project located in western Ukraine; a 100% interest in the Tower Mountain gold property that comprises 55 claims covering an area of 3,875 acres located in the Shebandowan Gold Belt, northwestern Ontario; and Venezuela Properties that cover a total area of approximately 162,768 acres. ValGold Resources Ltd. was founded in 1987 and is based in Vancouver, Canada.

Top 5 Warren Buffett Companies To Own For 2014: Laboratory Corporation of America Holdings(LH)

Laboratory Corporation of America Holdings operates as an independent clinical laboratory company in the United States. The company offers a range of testing services used by the medical profession in routine testing, patient diagnosis, and in the monitoring and treatment of disease, as well as specialty testing services. Its routine tests include blood chemistry analyses, urinalyses, blood cell counts, thyroid tests, Pap tests, HIV tests, microbiology cultures and procedures, and alcohol and other substance-abuse tests. The company?s specialty tests and related services comprise viral load measurements, genotyping and phenotyping, and host genetic factors for managing and treating HIV infections; cytogenetic, molecular cytogenetic, biochemical, and molecular genetic tests for diagnostic genetics; oncology tests for diagnosing and monitoring certain cancers and treatments; clinical trials testing for pharmaceutical companies, which conducts clinical research trials on diag nostic assays; forensic identity testing used in criminal proceedings and parentage evaluation services, as well as testing services in reconstruction cases; allergy testing; and occupational testing for the detection of drug and alcohol abuse. Its customers include independent physicians and physician groups, hospitals, managed care organizations, governmental agencies, employers, pharmaceutical companies, and other independent clinical laboratories. The company operates a network of 51 primary laboratories and approximately 1,700 patient service centers. In addition, it delivers a co-branded electronic health records Lite solution for physician practices. The company works with university, hospital, and academic institutions, such as Duke University, The Johns Hopkins University, the University of Minnesota, and Yale University to license and commercialize new diagnostic tests. Laboratory Corporation of America Holdings was founded in 1971 and is headquartered in Burlingto n, North Carolina.

Advisors' Opinion:

• [By Seth Jayson]

  Laboratory Corp. of America Holdings (NYSE: LH  ) reported earnings on July 19. Here are the numbers you need to know.

  The 10-second takeaway
  For the quarter ended June 30 (Q2), Laboratory Corp. of America Holdings met expectations on revenues and met expectations on earnings per share.

• [By Daniel Lauchheimer]

  EXAS began their pivotal DeeP-C trial earlier this year, with 10,000 patients enrolled around the USA. Success in this trial formed a pivotal fulcrum for EXAS -- success would mean commercialization, and revenue, but failure means, well failure. In April, EXAS submitted the final module of this trial, and it reported significantly worse results than expected causing the company to sink 40%. Additionally, as reported in a detailed five part series, Seeking Alpha Contributor Alpha Exposure reported on the inflated numbers both in terms of scientific research data and market projections -- yet another reason to give investors pause before they decide to invest in EXAS. Additionally, EXAS has not formed a meaningful partnership with other molecular diagnostic companies. True, it formed a partnership with LabCorp (LH), but this partnership doesn't focus on the heart of EXAS product (and thus provide it with a measure of validation), but on a commercialization post approval.

Glacier Media: Shares Are Cold, Product Creating Hot Investment Opportunity

Shares of Glacier Media (GLMFF.PK)(GVC.TO) ("Glacier" or "the company") are cold product in this market of stocks, trading at decade lows after a summer sell-off. Famed value investor Walter Schloss preferred buying stocks not at 52-week lows, but at multi-year lows. If Mr. Schloss were here with us today, I suspect he'd be taking a look at Glacier shares.

Glacier shares that trade over-the-counter in the US are quite illiquid; alternatively, the Canadian issue provides ample volume to build a decent position, if one were so inclined.

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The Business

Glacier is a media business in transformation, moving from a traditional print model to a scalable digital platform distribution model. According to its most recent quarterly filing:

Glacier Media Inc. is an information communications company focused on the provision of primary and essential information and related services through print, electronic and online media. Glacier is pursuing this strategy through its core business segments: the community media, trade information and business and professional information sectors.

The value proposition at Glacier is made up of several components. It appears that Glacier is considered a newspaper company by the greater investment community, one of the most reviled sectors in the investment universe today. While Glacier does operate a number of community based newspapers, discerning investors must dig deeper to find the compelling value underlying its shares. Namely, the business and trade journals it publishes and a number of recent investments in scalable, internet-based businesses.

I look at Glacier as one part Lee Enterprises (LEE) (community newspapers), one part Daily Journal Corp. (DJCO) (business/trade publications) with a splash of web start up. If Glacier were a drink, it would make for a delectable ! cocktail.. Instead, its shares make for compelling investment aperitif at current prices.

Valuation

Currently priced at $107 million and encumbered by $118 million in net debt, Glacier has an enterprise value of $225 million. When looking at the underlying fundamentals, Glacier appears quite cheap. It trades at a parsimonious 5.1x TTM EV/EBITDA, 0.7x TTM EV/Revenue and 0.3x book value.

We then need to drill down a bit further to assess the community newspaper and the business/trade journals segments. Unfortunately, Glacier groups its trade publishing assets with its newspaper assets. In my view, the trade publishing assets likely have higher margins than the newspaper assets given they provide recurring subscription revenue whereas the newspapers rely solely on advertising revenue.

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We do get a clue from management, however, where it indicates that 56% of its EBITDA comes from business information operations which I take to mean its trade publications and various business information services such as Fundata and Ecolog.

Collectively, Glacier generated $21.2 million EBITDA in the first-half of 2013, of which 56% represents $11.9 million, or $23.8 million annualized. Comparables such as Daily Journal Corp. and to a lesser extent, Pearson plc (PSO) trade at EV/EBITDA multiples of 12x and 11.5x, respectively. If we assume 10x for the Glacier's business information services is a better proxy of value, we arrive at $238 million valuation for the segment.

The remaining EBITDA generated by the newspaper assets, $9.3 million, or $18.6 million annualized, should fetch a lower multiple, probably in the 4 to 5x range given it is in a declining segment. Therefore, the community newspapers are probably worth in the neighborhood of $85 million. These assets, however, do benefit from being the only game in town in terms of a local ! informatio! n source, generally fitting the investment thesis outlined by Warren Buffett in recent newspaper investments.

All told, I think Glacier is worth about $325 million. After considering net debt of ~$120 million, Glacier's equity is likely worth about $205 million, indicating about 90% upside from current levels.

One way management may help unlock value would be to simply report separately the trade publishing assets in the segment reporting in the footnotes to the financial statements. That would help investors assess each segment on its own, and make the value proposition more transparent.

Paid to Wait

While there has been M&A activity in the newspaper segment in the US, Canada's newspaper industry has yet to participate in any meaningful upside. I am not sure how long it will take for the market to recognize the value in Glacier's shares, so investors can take solace in Glacier's large, well-covered $0.08/share ($0.02 paid quarterly), providing investors a 'get paid to wait' opportunity.

At current prices, the dividend yield is 6.5%. In my view, the dividend should be considered safe, as management has indicated a number of cost containment initiatives, the underlying businesses cash generation abilities and from a balance sheet that is devoid of any large, near-term maturities. The next large debt repayment occurs in 2015.

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Accounting Changes

Due to an accounting change beginning January 1, 2013, Glacier is now required to account for its investments in joint ventures and associates under the equity method of accounting. Prior to the change, Glacier proportionately consolidated its share of the JVs' earnings.

Now, under the equity method, Glacier no longer reports its pro rata share of the JVs' revenues expenses in its income statement, rather it records its share of its JVs' earnings less its share! of divid! ends received on its balance sheet. This change artificially minimizes the scope of its business activities from an income statement perspective.

(click to enlarge)

As we can see, Glacier's investments in JVs and associates make up $66.5 million in net asset value, nearly two-thirds of its $106 million market capitalization. Note that I used the numbers derived from the proportionate consolidation approach in the segment information above prior to adjustments for the equity method of accounting. Therefore, to add the net asset values of the JVs to my valuation above would be double counting. I point out the issue as a possible reason for investor confusion for financial statements reported post-accounting change.

Conclusion

The investment thesis here is pretty clear. Glacier is a quality business, trading at bargain price. Investors are shielded from further downside risk from the juicy and well-covered 6.5% dividend at current prices.

While the newspaper business is in flux, we have seen numerous deals where sophisticated investors recognize the value that community dailies represent, as they have unique and enviable moats from being the only game in town for local information.

The business and trade journal segment, however, is really what makes Glacier a buy at today's prices. Targeted, information rich and a multi-faceted distribution model (print, web, mobile) to a less price-sensitive customer (businesses), is the reason to own Glacier. Throw in some of its recent internet business investments such as Social Shopper and Weather INnovations, and the Glacier value proposition becomes very well-rounded.

Like its name, Glacier shares are cold product making them undervalued coincident with low risk. As a value investor, I will drink to that.

Source: Glacier Media: Shares Are Cold, Product Creating Hot Investment Opportunity

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in GLMFF.PK over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

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Carlyle-to-Bass Backed Mortgage Insurer NMI Files for IPO

NMI Holdings Inc. (NMIHZ), a mortgage insurer backed by funds tied to Carlyle Group LP (CG) and Kyle Bass, filed to sell shares in an initial public offering as investors bet on a housing-market rebound.

FBR & Co. (FBRC) is leading the sale, according to a regulatory filing today from Emeryville, California-based NMI. The company said it's seeking to raise $25 million, a placeholder amount used to calculate registration fees, according to the document.

Investors have poured cash into mortgage insurance this year as home prices rise, pushing up shares of MGIC Investment Corp. (MTG) and Radian Group Inc. (RDN) by more than 100 percent, and buying their notes in offerings. Essent Group Ltd. (ESNT), a mortgage guarantor funded amid the financial crisis by Goldman Sachs Group Inc. and billionaire George Soros, filed last month for an IPO. The companies cover losses when homeowners default and foreclosures fail to recoup costs.

"As the U.S. housing market continues to recover, the demand for private capital to insure mortgage risk and to facilitate secondary market loan sales will grow," NMI said in the filing.

Claren Road Asset Management LLC, the hedge fund majority owned by Carlyle, is NMI's largest backer, with a 12.6 percent stake, according to the filing. Bass's Hayman Capital Management LP has 9.9 percent and Blue Mountain Capital Management LP owns 9.8 percent. Funds overseen by Perry Corp. have 7.2 percent.

Claren and Perry also have investments in publicly traded mortgage guarantors, according to data compiled by Bloomberg. Hedge fund manager John Paulson has invested in the companies as part of a bet on a recovery in the U.S. housing market. Mortgage insurance is typically required when borrowers pay less than 20 percent of the cost of their home upfront.

Housing Rebound

Home prices rose by the most in more than seven years in the 12 months through July, according to the S&P Case-Shiller index of property values in 20 U.S. cities. Private mortgage guarantors are also benefiting as the U.S. reduces its role insuring home loans.

NMI was founded in 2011 and raised $550 million in a private share sale in 2012, according to the filing. The firm, led by Chief Executive Officer Bradley Shuster, a former manager at PMI Group Inc., began selling mortgage insurance in April.

10 Best Performing Stocks To Watch For 2014

Stockholders' equity was about $456 million as of June 30, according to the filing. The filing doesn't show how many shares existing holders plan to sell.

Fannie Mae, the government-controlled mortgage buyer, obtained insurance on a pool of about $5 billion of home loans from NMI, according to a July statement.

Mortgage insurers PMI and Triad Guaranty Inc. (TGICQ) filed for bankruptcy after housing crashed. Old Republic International Corp. also retreated from the mortgage guaranty business.

NMI applied to list on the Nasdaq Stock Market under the symbol NMIH, according to the filing. The company filed as an "emerging growth company" under the Jumpstart Our Business Startups Act, allowing for reduced disclosure.