Month: January 2012

Five Reasons Ford’s (NYSE: F) Shares Are Poised to Jump

by Mike Kapsch, Investment U Research
Wednesday, January 11, 2011

Last week, I wrote about the “connected car” making its debut at this year’s International Consumer Electronics Show (CES) in Las Vegas, Nevada.

Today, Ford’s CEO Alan Mulally will give his keynote speech at CES touting the automaker’s future innovations to the standard automobile. Those in attendance will hear about the coming introduction of heart monitoring systems in your steering wheel, the emergence of vehicle-to-vehicle communication, getting instant weather and traffic updates on your dashboard, as well as a slew of other technologies that’ll soon dramatically improve the everyday driving experience.

But for Ford this is just the beginning. And its shares could see a jolt over the next several months. Here are five good reasons why…

1. Ford’s expanding into Silicon Valley: Ford introduced its communications system – Sync – four years ago, which uses Bluetooth to connect cell phones and MP3 players to Ford’s cars. But now the firm has an even bigger vision with the connected car. And it’s no pipedream…

The company is about to open its first research lab in Silicon Valley in just the next few months. As Fox News reports, “The lab will work on ways to integrate phones and personal devices into cars, as well as safety systems that alert drivers when they’re approaching another vehicle.

The lab will also solicit and test applications from independent programmers. One app… can find an open parking space and reserve it. Another would improve weather reporting by transmitting signals when a car’s rain-sensing wipers are triggered.”

The bottom line: These services could end up generating billions of dollars for Ford and its affiliates each year as it finds ways to integrate new technologies into its automobiles. Just think, GM’s (NYSE: GM) OnStar was a $4-billion revenue boost for the company roughly 10 years ago.

2. Ford is set to claim the first plug-in hybrid with 100 mpg: Oil prices could easily skyrocket this year. Gas prices would certainly follow suit if it happens. And the average car on the road is already over 10 years old.

The point is… it only makes sense the next car consumers look to buy will likely be one that can get much further using less gasoline.

At the Detroit auto show yesterday, Ford revealed its 2013 plug-in hybrid Fusion, which will trump every other liquid-powered vehicle in terms of gas efficiency.

The current Fusion is already the most popular car built by an American automaker, with sales totaling 248,067 in 2011. Incentives like 100 miles per gallon and new gadgets will only likely push sales higher.

3. CEO Alan Mulally is a true American businessman: When the financial crisis struck in 2008, Ford lost $14.8 billion, the most in its 108-year history. It also burned through 61% of its cash reserves, $21.2 billion.

Yet somehow, Mulally led Ford through the financial crisis without needing a single bailout from the U.S. government. And by 2011, The New York Times reported the company announced it would pay bonuses of $5,000 and more to its hourly workers.

Even more, over the past year, Mulally helped boost the company’s return on equity up 317%. And generally, the higher the return on equity, the more efficient a company is at generating profits with the money it gets from investors. That’s a very positive sign for the months ahead.

4. Auto sales are picking up steam: It’s no secret the financial crisis hit the auto manufacturing industry very hard. In fact, the entire global economy is still feeling its effects. Yet the auto industry is starting to rebound. December sales rose 10% signifying a stronger year ahead.

And while they wouldn’t give specifics, both Ford and GM’s CEO have hinted that sales have continued surging so far this month.

5. Ford’s shares appear to be at a discount: Despite all the good news just mentioned, Ford’s shares were clobbered last year… down 39% in 2011.

Yet while that news is likely enough to scare away most investors, company executives say Ford’s shares are way oversold. They’re even putting their money where their mouth is to prove it.

Over the past six months, insiders at Ford have purchased 118,000 shares worth just under $1.4 million at the current share price.

There’s no telling how the markets will treat the auto industry or Ford in 2012, but these five factors seem to point to success in the near future.

Good Investing,

Mike Kapsch

Article by Investment U

Gladstone Capital Corporation (GLAD) announced today that it is maintaining its monthly dividend of 7 cents per share. The Company has paid 102 consecutive monthly cash distributions on its common stock and this month’s distribution is payable on January 31 to shareholders on record as of January 23.

Francesca’s (NASDAQ:FRAN) raised its fourth quarter EPS and sales guidance to above consensus estimates Tuesday, saying it now sees EPS of $0.16 – $0.17 vs. its prior guidance of $0.14 – $0.15 on estimates of $0.15.Revenue guidance for the quarter is now a range of $58.5 million – $59.5 million, vs. its prior guidance of $55.5 million – $55.6 million, vs. consensus estimates of $55.6 million.Francesca’s will release full results on March 13th.

Bargain hunters are wise to pay careful attention to insider buying, because although there are many various reasons for an insider to sell a stock, presumably the only reason they would use their hard-earned cash to make a purchase, is that they expect to make money. Today we look at two noteworthy recent insider buys.

WellPoint (NYSE:WLP) reaffirmed its 2011 adjusted EPS outlook Tuesday of $6.90 – $7.00, vs. consensus estimates of $7.06 while speaking to analysts.The company reports earnings on January 25th and will provide an outlook for 2012 then.The stock is up 7.4% year-to-date, while the S&P Managed Health Care Index is up 23%.WellPoint (NYSE:WLP) has potential upside of 20.4% based on a current price of $71.18 and an average consensus analyst price target of $85.67.

Juniper (NASDAQ:JNPR) shares fell 3.6% in after market hours yesterday after it warned it sees Q4 EPS of $0.26 – $0.28 on revenues of $1.1 – $1.2 billion, vs. consensus estimates of $0.34 and $1.19 billion.Juniper attributed the warning to weak service provider demand, specifying the weakness to domestic use.Juniper Networks (NASDAQ:JNPR) has potential upside of 13.4% based on a current price of $21.53 and an average consensus analyst price target of $24.42.

In trading on Wednesday, general contractors & builders shares were relative leaders, up on the day by about 3.1%. Leading the group were shares of KB Home (KBH), up about 9.6% and shares of Hovnanian Enterprises (HOV) up about 7.8% on the day.

The Central Bank of Kenya held the benchmark lending rate unchanged at 18.00%, and held the Cash Reserve Ratio at 5.25%.  The central bank Governor, Njuguna Ndung’u, said: “The information analysed by the Committee showed that inflation is projected to ease further in early 2012. This outcome is a consequence of the monetary policy stance, the appreciation and stability of the exchange rate and the decline in oil prices. Furthermore, expected improvements in food supply will result in lower commodity prices.”

At its December meeting the CBK increased the interest rate by 150bps to 18.00%, after hiking by 550 basis points and raising the Cash Reserve Ratio by 50bps to 5.25%at its November meeting .  That move followed a 400bp increase of the interest rate to 11.00% at its October meeting, after raising 75bps in September, and previously increasing, and subsequently decreasing the discount window rate by 75 basis points to 6.25%.

The Narodowy Bank Polski‘s Monetary Policy Council held the benchmark 7-day interest rate unchanged at 4.50%.  The Bank said: “In the opinion of the Council, in the medium term inflation will be curbed by gradually decelerating domestic demand amidst fiscal tightening, including reduced public investment spending, and interest rate increases implemented in the first half of 2011, as well as the expected global economic slowdown. The impact  of the situation in the global financial markets on zloty exchange rate together with a possible rise in commodity prices continues to be an upside risk to domestic price developments.”

The Bank also kept the following interest rates unchanged: the rediscount rate at 4.75%, the Lombard rate at 6.00%, and the deposit rate at 3.00%.  The Bank last raised the interest rate by 25 basis points to 4.50% in June last year, and held the interest rate unchanged at its previous meeting.  

Poland reported annual headline inflation of 4.8% in November last year, compared to 4.3% in August, 4.1% in July, with previous readings of 4.2% in June, 5% in May, 4.5% in April, 4.3% in March, and just higher than the Bank’s official inflation target of 2.5% +/- 1%.  

The IMF recently reduced its forecast for Poland’s 2011 economic growth rate to 3.8% from 4% previously.  The Polish Zloty (PLN) has weakened by about 19% against the US dollar so far this year; the USDPLN exchange rate last traded around 3.52.

Bargain hunters are wise to pay careful attention to insider buying, because although there are many various reasons for an insider to sell a stock, presumably the only reason they would use their hard-earned dollars to make a purchase, is that they expect to make money. Today we look at a noteworthy recent insider buy.