3 Promising Stocks That Aren't Industry Leaders (Screens)

Buy shares of companies that lead their industries -- that sounds like reliable enough advice, doesn't it? After all, top dogs often have the most bargaining power with suppliers, the biggest research budgets and the brands that everyone recognizes.

There's just one problem: Industry leaders tend to lag behind peers in producing stock returns, according to new research.

The findings come from Robert Arnott, who is something of an investment myth-buster and the founder of Research Affiliates, a firm that devises "fundamentals-based" stock and bond indexes for passive investors seeking a performance edge. In the June edition of his firm's newsletter, Arnott tackled the belief that industry leaders offer market-beating stock returns. Prior research had shown that measures like profit margins and returns on equity tend to revert to their means over time. That is, the most profitable companies tend to attract fresh competition, while profit laggards often either fail or are forced to improve. Arnott looked at U.S. stock performance over 58 years ended 2009 and found that sector leaders by market value in a given year tended to underperform their peers by an average of 3.3% a year over the following decade. Leadership proved fleeting. Over the entire 58-year period, the average sector saw its leader change six times.

So much for investing with No. 1. Below are listed three companies that don't lead their industries in size or profitability, but whose margins are improving and whose sales are growing faster than those of their peers.

Projected sales growth, current fiscal year: 36%

The packaged food business is dominated by giants. Kraft Foods (KFT), based 30 minutes north of Chicago, is expected to generate sales of nearly $49 billion this year, and Switzerland's Nestlé should more than double that. Diamond Foods (DMND), based in San Francisco, isn't projected to top $1 billion this year or next. The company has a hit on its hands, however, in chip-maker Kettle Foods, which it bought earlier this year for $615 million. Management says demand for the brand is so fierce it must add production capacity. Diamond's namesake baking nuts and its Emerald snack nuts are selling well, too. Demand for its Pop Secret popcorn has been flat of late, but management is investing in new commercials. Companywide sales are forecast to jump 36% this year, thanks largely to the acquisition, but investment bank BMO Capital Markets estimates that Diamond will generate 8% to 12% of organic sales growth – well faster than the internal growth its big competitors typically achieve.

Projected sales growth, current fiscal year: 27%

Netgear (NTGR) and Cisco Systems (CSCO) both sell networking equipment. The latter is 50 times larger by sales, but the former is expected to increase its sales twice as fast this year. Netgear specializes in products for homes and small businesses, including Wi-Fi routers, print servers, centralized storage systems and boxes that allow users to share their 3G and 4G cellular connections with other devices. Management's latest push is centered on devices that allow users to view Internet content on their televisions – and that allow any company that can deliver a broadband connection to compete with cable television providers. Operating margins for the company have recently topped levels achieved in early 2007, before the start of the recent recession. Netgear is debt-free and holds cash equal to more than one-fifth of its stock market value.

Projected sales growth, current fiscal year: 26%

Watson Pharmaceuticals (WPI) is the third-largest generic drug company operating in the U.S. by number of prescriptions dispensed, behind Teva (TEVA) and Mylan (MYL). Its sales are expected to grow faster this year than those of its larger peers. Unlike legacy drug makers, Watson stands poised to cash in on the parade of patent expirations on blockbuster medicines over the next several years, not shrink during it. For example, Watson will be one of the first companies to sell a U.S. generic form of Lipitor, a cholesterol drug with yearly U.S. sales of more than $7 billion, beginning in November 2011. Management says that in addition to six products launching this year, it has 110 applications pending, including 13 that would bring exclusive marketing rights.

Month Enable visual effect

I am reposting this February. I had done some research on the impact of the month, on the other hand, are:

in 1932, because most of the S & P 500 's capital gain has come for seven days on a monthly basis, in particular witnessed a — the first three trading days and the last four days of each month.This corresponds to approximately one third of the total trading days of the month for the remaining period of their stock market actually lost money.

These numbers: 1932 from the beginning of the S & P 500 has gained almost leaderboard will be%, which is approximately 6.5% annualized.Investment in only the last four days, and the first of each month, more than three days of the date on which the returned to 63,000% (the cost of trading in each direction)., which is the Annualized 8,6%. [1] [2] However, if you consider that it is really only 32% of the time, true annualized has more than 28%.

At the end of the Month — other 68% of the time — has led to the combined loss in close proximity to 78%.

I would like to add some important observations. First of all, I am not offered this advice to trading than. I am merely shows that the market has historically been the outsized gains on a monthly basis on the turn.Remember that the placing on the market of trading and ran out of expensive, and these results do not include taxes or fees.

Secondly, this only applies to dividends, capital gains are not a very large part of the market. [1] [2] the total amount of the return is due to the increase in the dividends, and if you have only one-third of the time, you are going to return to lose.

Having said that, here is a chart showing what month, on the other hand, investments in the display. S & P 500 is a red line. blue line shall within seven days, and the remaining months of the date on which it is a black line.

This is the time to take a look at the average daily gains.

Why the market has shown this performance?, it is difficult to say. One idea is that we've seen in the figure, which is simply a random action print. If splice and dice long enough information, you are bound to find some discrepancies.

My hunch is, however, that is something that the months turn. perhaps it is becoming the new money or perhaps a positive business News is the more likely you are to be made public.

However, as effective as historical information is, in my opinion, the effect is too short to serve as a basis for all of the strategy.

Posted by Eddy on day 1.November 12, 2010 at 2: 39 pm

The latest Intrade

Unfortunately, I cannot read the contents of the fromt this page.

Dollar/Yen Hits reality, 15-year low

Unfortunately, I cannot read the contents of the fromt this page.

The Gold Mine in Your Old iPhone (Deal of the Day)

For the speed of its march toward becoming the country’s largest public company, Apple (AAPL) has its gadget-happy consumers to thank -- particularly the devotees willing to stand in line for every new version of the iPhone or iPad. But those technophile consumers aren’t just the Pavlovian spenders they might at first appear to be. Apple products hold their value much longer than other consumer electronics, says Toan Tran, an equity analyst who covers Apple for Morningstar – which means reselling an old Apple device can be a smart way to fund a new one.

For example, an AT&T (T) customer who bought an iPhone in 2008 for $199 could sell it today for as much as $104 on trade-in site Gazelle. That’s enough to cover more than half the $199 subsidized price of the newest model. In contrast, a BlackBerry Storm, which cost $199 in 2008, would now fetch $44 at most. For an older 13” MacBook, Radio Shack (RSH) will pay as much as $315, which covers almost a third of the $999 price tag on the newest 13” model. And even a battered Apple device isn't worthless. BuyMyTronics.com will pay $35 for a broken iPad with “extreme damage” and no charger.

Apple prices hold up largely because of good engineering and high demand, says Tran. And, there’s Apple’s name-brand recognition and loyalty. The company also doesn’t make very dramatic changes from generation to generation, says Andrew Eisner, the director of content for marketplace Retrevo. Current software and many apps still work on older models, and similar ports allow interchangeable use with chargers, stereos and other accessories. Considering that Apple allows few discounts, a slight break on relatively new technology can be a good deal for buyers, he says.

To sell an old Apple device quickly and with minimal hassle, try a trade-in site, says Natali Del Conte, a senior editor at CNET. Gazelle, Toshiba, Radio Shack and Costco will all give free estimates of resale value. Putting up items on eBay is riskier and potentially more rewarding. International bidders and Americans looking to buy a newer iPhone before they qualify for the carrier’s lower subsidized price ($199 versus $599 for a 16GB phone) bid up prices as high as $1,000. But don’t expect such a windfall. According to bid-tracker Honesty.com, a buyer shouldn’t pay more than $180 for an iPhone that’s two generations old.

To maximize the value of an Apple resale, don’t wait too long, experts advise. Prices will drop as soon as there’s something newer on the horizon, Eisner says. If you don’t already, pay attention to Apple’s scheduled product announcements and rumors about what new items are likely to be introduced, and when. While the third-generation 32GB iPod Touch was the newest out there, a second-generation model sold for as much as $93 on Gazelle. But after the new fourth-generation was announced Sept. 1, the maximum offer dropped to $75.

Cyclicals are still Rich

This is, of course, crude metric, I want to watch to the valuation of cyclical. These are the companies from which undertakings are closely tied to the cycle of stocks. This is the ratio of the Morgan Stanley cyclical index (^ CYC) divided by the S & P 500:

In other words, when the line goes, cyclicals are out performing.

26. April, the ratio of closed at 0.8034, its largest ever reading.After this, the ratio is moved to the very faint. in March 2009 as low as possible a chance to familiarize yourself with the ratio of 0. comp/m.4184. Historically, when you follow the instructions in the section change, is the big deal, and it will last for a few years (although, but not always).

S & P 500 is currently trading around 1195. If it closes exists, this should be the highest after closing in may at the index was 1202.26.In April of this year, the high became 23 when the S & P 500 close 1217.28.

Although the S & P 500 and the deposit facility will remain unchanged, as well as its high, Dow is very close to a new high. Dow is currently 11,217, is greater than its high close to the Convention on diplomatic relations of 18 April (which became 23 instead of 24) at 11,205.03. Dow is currently the largest nearby track 19.September 2008 onwards 11,388.44.

Posted by Eddy 2nd.November 2010 at 1: 43 pm

Dow Finishes Below 11000 (Market Update)

By Jonathan Cheng

China's move to slow its economy collided with concerns about the foreclosure crisis to roil financial markets on Tuesday.

The Dow Jones Industrial Average had its worst day since mid-August, falling below 11000 and wiping out two weeks of gains. The average remains up 5.3% for the year-to-date. Bank stocks slid. Crude-oil futures fell below $80 a barrel in its biggest one-day decline in eight months, and gold dropped 2.6%.

While China's move to tighten interest rates was relatively small, its timing surprised investors, many of whom had been fixated on the U.S. market, where the Federal Reserve is expected to soon embark on a new round of monetary easing.

The Dow fell 165.07 points, or 1.48%, to 10978.62.

Tuesday's decline—on the anniversary of the Black Monday crash of 1987—snapped a rally that many had feared was getting long in the tooth. Stocks had rallied 11% since the end of August, in large part because of optimism that the Fed's stimulus would help fuel U.S. economic growth. But the gains belied worries that the Fed's action may not be enough to help juice the economy or drive corporate revenue. The recent debacle over foreclosures has only added to the nagging uncertainty.

"It just shows the nervousness of this market—in the first few weeks of October, people have had this nervous sense that something's going to break, this market can't just keep going up," said Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management.

At the same time, the dollar enjoyed a one-day rebound, surging more than 1% against the euro, the pound, the Swiss franc and the Australian and Canadian dollars.

The sectors most exposed to global demand were the heaviest weights on the market, with energy and materials sagging at the prospect of a Chinese belt-tightening.

But Bank of America was the largest decliner, tumbling 4.4% to close at its lowest point since the financial crisis, after reports that a group of institutional investors and the Federal Reserve Bank of New York were suing the Charlotte, N.C., lender over mortgage securities. Other big banks shadowed BofA's decline, with J.P. Morgan Chase, Wells Fargo and Citigroup all shedding 1.3% or more.

"This is a reminder that much of the mortgage mess remains unresolved," said Brian Lazorishak, portfolio manager and quantitative analyst at Chase Investment Counsel.

Also weighing on the markets were technology stocks, which suffered from robust earnings from giants Apple and International Business Machines that nonetheless failed to impress the market. Apple dropped 2.7% while IBM lost 3.4%, bringing the two bellwethers off all-time highs reached on Monday. Yahoo, which fell 2.7% in Tuesday trading, recouped some of those losses after quadrupling quarterly profits after the market close.

The Standard & Poor's 500-stock index dropped 1.6% and the Nasdaq Composite Index fell 1.8%.

Ominously for market bulls, the losses came amid an increase in stock trading, with 5.7 billion shares changing hands in New York Stock Exchange composite volume—about 25% higher than Monday's trading volume. In another reflection of the investor skittishness, the Chicago Board Options Exchange Volatility Index, the "fear gauge" known as the VIX, jumped off its recent lows, rising as much as 12% during the day.

"The fact we're seeing heavier volume adds some legitimacy to the dip," said Mark Turner, co-head of sales trading for Instinet. "The Apple and IBM numbers got us off to a disappointing start last night, and the news out of China this morning had the dollar higher and commodities lower."

Jerry Webman, chief economist and senior investment officer with OppenheimerFunds, attributed some of the market pessimism to a speech by Federal Reserve Bank of Dallas President Richard Fisher, who said that "no decisions have been made" on another round of Treasury buying by the Fed.

"The Fed can wave the magic wand, but behind it, we need to see what might be unrealistic wishful thinking and temper our enthusiasm," Mr. Webman said. "There was a whole series of things today—'Fedspeak,' China tightening, Apple's guidance, revenue numbers and some of the technical data suggesting we're in an overbought market."

Among stocks in focus, Coldwater Creek plunged 35% after the women's apparel retailer sharply cut its fiscal third-quarter guidance below already-cautious expectations. Meanwhile, Massey Energy was the day's best performer on the S&P 500, jumping 5% after The Wall Street Journal reported the nation's sixth-largest coal miner is exploring strategic alternatives, including a possible sale.

Write to Jonathan Cheng at jonathan.cheng@wsj.com