Make This Oil Move Immediately

From the Editor: In yesterday's members-only message, you got a rare look at Kent's track record and why he averages 55% on every recommendation. Today, Kent recommends a short-term move, based on the latest developments in Syria...

Damascus may have dodged a bullet (or a cruise missile), but nothing else has changed very much. Not in terms of risk.

That explains why the "Syrian Premium" remains. It may be slightly reduced, as you'll see. But it is likely to stay with us even after the threat of a military solution has been averted.

At least for now...

But in addition to the ongoing uncertainty, there are other aspects of market pricing that are coming into focus. These pressures were building even before the latest round of Syrian intrigue.

They involve the traditional factors of supply and demand, with some regional wrinkles thrown in for good measure.

I will have more to say shortly about the best way you can profit from these opportunities. But for the moment, there's one move to make in the immediate aftermath of the latest Syrian developments.

Here's my full briefing...

The U.N. Chemical Weapons Report Emerges

The U.N. report on chemical weapons usage in Syria, released Monday, may not hold the Assad regime responsible for their usage directly. But the conclusions certainly supported the version put forward by Washington, Paris, and Riyadh.

The August attack on suburban Damascus employed massive amounts of sarin gas in a coordinated effort, one labeled a war crime in the report and the worst witnessed worldwide in 25 years. It required missile delivery systems, while the trajectories indicated launches from territory controlled by government forces. That combined with earlier intelligence discounting that the opposition had access to such nerve gas leaves little doubt.

Whether authorized by Syrian President Bashar al-Assad or some underling, this was a coordinated attack on civilians using a substance held in distain by the global community. Russia is continuing to question which side in the festering Syrian civil war bears responsibility.

On the other hand, Cyrillic lettering on casings points toward Moscow's hand in providing Assad with the weapons. They were also more potent than initially thought. The U.N. report concludes the gas was of higher quality than sarin found in Saddam Hussein's arsenal in Iraq.

A few weeks ago, all of this would have been enough for the U.S. to initiate a missile attack of its own on military installations inside Syria. The report may have been enough for the U.K. to come on board (the Parliament in London had refused to support a military move pending the report) and may have even attracted additional European support.

But the situation changed dramatically late last week...

A Deal for International Control

The Russian-brokered deal places Assad's chemical weapons under international control, with destruction of them set for the first half of 2014.

Now, those experienced in such matters flatly declare the time scale is unrealistic; accounting for 100% of the weapons is also not possible.

But the threat level is reduced. A powder keg situation had turned from a threatened military reprisal to a diplomatic initiative - one now likely to have a U.N. Security Council resolution to back it up.

Much is unresolved in this approach. But it does mean, at least for now, Washington has pulled back from an attack while Moscow has bought some time for its erstwhile ally.

Nonetheless, the reduction in tension, even if it turns out to be short-lived, will have an impact on oil prices.

How to Play the Next Big Oil Move

As the crisis escalated, what I have called a "Syrian Premium" (about $4 per barrel in New York and London) had been introduced into the pricing for crude. That premium had increased as the rhetoric on war increased.

As trade opened Tuesday morning, West Texas Intermediate (WTI, the benchmark crude traded on NYMEX) stood at a bit above $106 and Brent in London at more than $109. These levels were down 2.7% and 3.2% for the week, respectively.

Yet each still remained more than $3 a barrel above the anticipated pricing levels in the absence of a Syrian crisis.

In short, the prices have eased, but a premium remains.

That's because much uncertainty remains, as well.

Will the diplomatic approach succeed? Will the weapons be catalogued and destroyed? Will the Security Council step up and put some serious sanctions on Damascus? Will the new U.S.-Russian joint approach hold?

You can see why oil's volatility will continue even with chemical weapons use off the table. The Syrian mess remains even without the impending U.S. attack. The stability of the entire region is at issue, the conflict deepens, the Saudi-Iranian disagreement over surrogate plays in the Persian Gulf region is becoming worse, and the pressures on the global crude oil outlook remains pressured as a consequence.

So here's what to do...

1. Take a profit.

It's time to pull back a bit on exchange-traded fund (ETF) holdings allowing moves playing the WTI-Brent crude pricing spread. I have suggested previously the two primary plays here are PowerShares DB Energy (NYSE Arca: DBE) and United States Brent Oil Fund (NYSE Arca: BNO).

DBE provides a play on both the WTI-Brent spread as well as crack spreads (the difference between the crude oil prices and those for selected oil products). BNO is a straight entry into dollar-denominated Brent pricing in London.

Both have made gains during the Syrian run up, and some of that profit needs now to be creamed.

2. Redeploy the proceeds.

It's time to position yourself for regional variations in price. They're approaching. Fast. Here, the strategy will offset companies controlling large amounts of oil availability in certain global areas with the pricing variations emerging.

Simply put, this approach will be locating where the difference is pronounced enough to generate an added premium.

Much more on this as we move forward...

GM unveils all-new Tahoe, Suburban and Yukon SUVs

  Inside the all new Suburban and Tahoe NEW YORK (CNNMoney) General Motors unveiled all-new versions of its full-sized GMC Yukon, Chevrolet Tahoe and Suburban SUVs on Thursday.

These SUVs are a big deal for GM (GM, Fortune 500) because, although full-sized SUVs make up a small slice of the overall passenger vehicle market, GM sells the majority of them. Of all the full-sized non-luxury SUVs sold in the U.S. last year, three out of four were made by GM, according to data from LMC Automotive.

"This is an important and profitable segment and we have set the bar high to ensure we provide our customers with great quality and performance they expect and deserve," GM's Chief Financial Officer, Dan Ammann, said in a statement.

Besides new, more angular, body styles the new 2015 SUVs feature a number of improvements. There's more rear seat legroom and the third row seats actually fold down flat, as they do in other SUVs. In current versions, those seats fold down but have to be removed in order to get the most space.

Related - Six-wheeled Mercedes monster truck among Frankfurt debuts

GM also promises better fuel economy, although exact fuel economy estimates are not yet available. The SUVs will be available with an improved 5.3-liter V8 engine which will include high-tech features like cylinder deactivation in which half the engine's cylinders are shut off when full power isn't needed. The engine will also have direct fuel injection and continuously variable valve timing. The SUVs will also be equipped with a new six-speed transmission.

Higher-end models will also have the latest version of GM's adaptive suspension system which continuously responds to road surface changes to provide the best possible combination of ride and handling, according to GM.

Big SUVs are a shrinking market segment, though. Full-sized non-luxury SUVs represent just 1.6% of the passenger vehicle market, according to data from industry analysts at RL Polk. That's down from 2.7% in 2008. The Tahoe and Yukon were last redesigned for the 2007 model year.

These new vehicles remain body-on-frame SUVs, a type that the industry has been moving away from for a long time. Body-on-frame vehicles are usually heavier and not as fuel efficient as unibody, or car-based crossover SUVs, but they're generally better for towing and hauling heavy loads.

GM also sells the V6-powered Chevrolet Traverse and GMC Acadia crossover SUVs which get better gas mileage than the present Tahoe and Yukon. The crossover vehicles also have similar passenger space with even move luggage space.

Related - 8 small cars: Cargo space vs. parking space

Tahoe and Yukon buyers might simply be attached to the idea of driving a truck-like vehicle, said Tom Libby, an auto sales analyst with RL Polk, rather than crossover SUVs which some feel are too reminiscent of minivans.

  Inside the brand new Corvette Stingray

The Tahoe and Yukon also come in extra-large variants for those who really need a lot of space. (The Suburban, for instance, is really a stretched-out version of the Tahoe.)

A large percentage of Tahoe and Yukon buyers are corporate fleets. So far this year, about half of Tahoes sold were purchased for fleets, according to KBB.com.

The SUVs will be built in GM's Arlington, Tex., assembly plant and will go on sale early next year. Pricing has not yet been announced. Their redesign follows the recent introduction of GM's redesigned pick-ups which share much of the same engineering.

Top Stocks To Watch For 2014

Despite all the bearish warnings heading into September, the month has gotten off to a decidedly bullish start. Stocks all around the globe rallied today, helped by better-than-expected economic data from China. The U.S. indices are rallied as well, extedning yesterday’s significant gains.

Dow 30 Shake Up

Probably the most widely-covered story on Wall Street this morning was the shake up in the components of the Dow Jones Industrial Average. It was announced that Goldman Sachs (GS), Visa (V), and Nike (NKE) would replace Bank of America (BAC), Hewlett-Packard (HPQ), and Alcoa (AA) on the widely-watched (and scrutinized) 30-stock index. These changes will be put into effect after the closing bell on Friday, September 20th.

Top Stocks To Watch For 2014: Eaton Vance Corporation (EV)

Eaton Vance Corp., through its subsidiaries, engages in the creation, marketing, and management of investment funds in the United States. It also provides investment management and counseling services to institutions and individuals. Further, the company operates as an adviser and distributor of investment companies and separate accounts. As of October 31, 2004, the company provided investment advisory or administration services to approximately 150 funds; approximately 1,300 separately managed individual and institutional accounts; and participated in approximately 40 retail-managed account broker/dealer programs. It markets and distributes shares of funds through a retail network of national and regional broker/dealers, banks, insurance companies, and financial planning firms. Eaton Vance Corp. was founded in 1944 and is headquartered in Boston, Massachusetts.

Top Stocks To Watch For 2014: Mesoblast Ltd(MSB.AX)

Mesoblast Limited engages in the development and commercialization of biologic products for the field of regenerative medicine. Its lead products target cardiovascular conditions, diabetes, inflammatory conditions of lungs and joints, eye diseases, bone marrow cancers, bone fractures, cartilage degeneration, and musculoskeletal conditions. The company has a strategic alliance with Cephalon Inc. to develop and commercialize its adult stem cell therapeutics for degenerative conditions of the cardiovascular and central nervous systems; and Lonza Group for the production of its off-the-shelf adult stem cell products. Mesoblast Limited was founded in 2004 and is based in Melbourne, Australia.

10 Best Dividend Stocks To Invest In Right Now: Premier West Bancorp(PRWT)

PremierWest Bancorp operates as the holding company for PremierWest Bank that provides a range of financial products and services to small and medium-sized businesses, professionals, and retail customers in southern and central Oregon and northern California. It generates various deposit products, including regular checking and savings accounts, money market accounts, individual retirement accounts, negotiable order of withdrawal accounts, time deposits, and certificates of deposit. The company originates various commercial and real estate loans; construction loans for owner-occupied and investment properties; and secured and unsecured consumer loans. It also offers safe deposit facilities, traveler?s checks, money orders, and automated teller machine services. In addition, the company offers investment brokerage services to its customers through a third-party broker-dealer arrangement, as well as through independent insurance companies for the sale of investment and insu rance products, such as stocks, bonds, mutual funds, annuities, and other insurance products. As of December 31, 2009, it had a network of 48 full service branch offices, as well as 10 other office locations. The company was founded in 1999 and is headquartered in Medford, Oregon.

Top Stocks To Watch For 2014: M B T Financial Corp(MBTF)

MBT Financial Corp. operates as the holding company for Monroe Bank & Trust that provides customary retail and commercial banking, and trust services in Michigan. Its deposit products include checking and savings accounts, NOW accounts, money market deposits, certificates of deposit, non-interest bearing deposits, and individual retirement accounts. The company?s loan portfolio comprises commercial loans, personal loans, real estate mortgage loans, and installment loans. It also provides safe deposit facilities, automated teller machine and night depository facilities, treasury management services, telephone and Internet banking, personal trust, employee benefit, and investment management services. The company serves small and middle-market businesses and middle-income individuals. It operates 18 offices in Monroe County, Michigan; and 7 offices in Wayne County, Michigan. The company was founded in 1858 and is headquartered in Monroe, Michigan.

Top Stocks To Watch For 2014: National Beverage Corp.(FIZZ)

National Beverage Corp., together with its subsidiaries, develops, manufactures, markets, and distributes beverage products in the United States. The company offers a range of flavored soft drinks, juices, sparkling waters, energy drinks, and nutritionally-enhanced waters. It provides its soft drink products under the Shasta and Faygo names. The company also provides health-conscious beverage products, including juice and juice based products under the Everfresh, Home Juice, and Mr. Pure brand names; sparkling and spring water products under the LaCroix, Crystal Bay, and ClearFruit brand names; and nutritionally enhanced water under the Asante brand. In addition, it offers energy drinks under the brand, Rip It; fruit-flavored drinks under the Ohana brand name; holiday soft drinks under the brand, St. Nick?s; and effervescent powder beverage enhancers under the NutraFizz brand name. Further, the company develops and produces soft drinks for retailers and beverage companies . National Beverage provides its products through national and regional grocery stores, warehouse clubs, mass-merchandisers, wholesalers and dollar stores, convenience stores, gas stations, and independent and specialized distributors, as well as through direct store distribution facilities. The company was founded in 1985 and is based in Fort Lauderdale, Florida.

Parts suppliers fined, imprisoned for price-fixing

Foreign auto-parts suppliers have been overcharging for years, and the U.S. government said Thursday that the many have begun to plead guilty and be hit with big fines and prison terms.

The latest, announced Thursday by Attorney General Eric Holder: Nine Japan-based companies and two executives have agreed to plead guilty. The companies will pay more than $740 million in criminal fines. The executives will go to prison.

The components are those supplied to new-car factories, so the auto-parts crooks cheated car companies as well as car buyers.

The government did not set a figure on how many billions of dollars were unlawfully filched from U.S. buyers and automakers by the extensive scam.

What Holden announced was the latest and largest action in a multi-year, international investigation involving unfairly priced new-vehicles components bought by Chrysler Group, Ford Motor, General Motors, Toyota and others.

The European Union and Japan also are investigating, Earlier this week, Europeanofficials raided offices of six parts suppliers three.

In the U.S. about 20 suppliers have settled and agree to pay fines, and 21 executives have been charged.

The Justice Department listed these as involved: Hitachi Automotive Systems, Mitsubishi Electric, Mitsubishi Heavy Industries, Mitsuba, Jtek, NSK, T.RAD, Valeo Japan, Yamashita Rubber.

Individuals involved are two former executives of U.S. subsidiaries of Japan-based automobile products suppliers – Tetsuya Kunida, a Japanese citizen, and Gary Walker, a U.S. citizen. Both have agreed to serve time in a U.S. prison.

They were involved in separate conspiracies, Holden said, to fix prices of more than 30 different products sold to U.S. car manufacturers and used in vehicles sold here and elsewhere.

Overall, the main culprits so far are Japan-based auto parts suppliers.

Holden said the international price-fixing conspiracies affected more than $5 billion in automobile parts sold to U.S. car manufa! cturers, and more than 25 million vehicles bought by Americans.

He called it "the largest criminal investigation the Antitrust Division has ever pursued, both in terms of its scope and the commerce affected by the alleged illegal conduct. Never before has the Department of Justice simultaneously announced the breakup of so many separate antitrust conspiracies. And today's charges were filed in three different U.S. District Courts – in Detroit; in Cincinnati; and in Toledo, Ohio."

Parts involved in the price-fixing include safety belts, radiators, windshield wipers, air conditioning systems, power window motors, power steering parts and other products.

Holden described the workings of the conspiracy in spy-like terms:

"Company executives met face to face in the United States and Japan – and talked on the phone – to reach collusive agreements to rig bids, fix prices and allocate the supply of auto parts sold to U.S. car companies. In order to keep their illegal conduct secret, they used code names and met in remote locations. Then they followed up with each other regularly to make sure the collusive agreements were being adhered to."

In addition to the U.S. Justice Department and FBI, foreign agencies involved include he Japan Fair Trade Commission, the European Commission, the Canadian Competition Bureau, the Korean Fair Trade Commission, the Mexican Federal Economic Competition Commission and the Australian Competition and Consumer Commission.

Coach: Aspiring to Be Your Aspiration

About a month or so ago, I heard a story about an adult woman buying a Coach (COH) Barbie doll for around $100. Actually she bought a couple, just for good measure. What struck me about this account was the fact that this woman didn't like Barbie dolls and had no plans of ever using them. She bought $100 molds of plastic for a single reason: the brand, Coach. Later she heard the dolls were sold out, and she was downright giddy about owning a pair of showcase items.

Now, whatever your view about Coach happens to be, it's hard to dispute the fact that there are many people out there who are willing to pay the premium. I don't get the excitement but it's not an aberration that it exists. In some manner, it's relatively similar to consumers paying up time and again for the Coca-Cola (KO) or Johnson & Johnson (JNJ) brand.

In this light, the most important item to consider moving forward would be the loyalty and moat provided by the Coach brand – perhaps even more so than the actual product itself. For instance, for all of the price inflation in raw materials or distribution challenges that might arise, these would likely pale in comparison to a large deflation of the brand.

Morningstar analyst Paul Swinand provides a nice summation:

"With such historically strong financial metrics, investors may worry how sustainable Coach's record is. Fashion-driven companies can often seem like high-return companies when products and styles are popular, and fade quickly when tastes and preferences change."

So the risk with investing in a company like Coach is relatively straight forward: They need to consistently innovate while simultaneously keeping loyal brand followers. With regard to innovation, the "cutting edge" of fashion is finicky at best. However, it remains that Coach has proven itself to be a well-followed brand that has been able to provide solid and consistent returns to shareholders, despite the choosy environment.

Yet that's not to say that th! e company isn't also provided with opportunities. For instance, the emergence into the men's category is seen as a true avenue for growth. Especially to this point is the expansion into the Asian markets where there is now projected to be more wealthy citizens than in North America. In tandem, this population appears to be even more receptive to the aspirational aspects behind the brand.

In addition, the underlying business of Coach held up remarkably well during the last recession. If anything could test the merits of an idea, it's churning out profits in the midst of one of the worse economic times.

Finally, Coach Executive VP and CFO Jane Niel had some encouraging words regarding shareholder returns during the last earnings call:

"We expect that dividend growth over time will be at least in line with net income growth and that share repurchases will be executed opportunistically."

Assuredly Coach doesn't stand on the same level as the tried and true "must have" consumer staples. Nevertheless, if you personally find that the brand is defensible, then Coach's current valuation might be of interest. An easy way to review Coach's past and potential future prospects is through the powerful fundamental analyzer software tool of F.A.S.T. Graphs™.

12 Years of Growth

Coach Inc. has grown earnings (orange line) at a compound rate of 27.5% since 2002, resulting in a $15+ billion dollar market cap. In addition, Coach's earnings have risen from $0.25 per share in 2002, to today's forecasted earnings per share of approximately $3.78 for 2013. Further, Coach initiated a dividend (pink line) in 2009 and has been able to increase this payout at a robust pace since then.

For a look at how the market has historically valued Coach, see the relationship between the price (black line) and earnings of the company as seen on the Earnings and Price Correlated F.A.S.T. Graph below.

12-Year Earnings and Price Correlated Graph

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Here we see that Coach's market price previously began to deviate from its justified earnings growth; starting to become undervalued in 2007 and only coming back close to fair value around in the last couple of years. Today, Coach appears undervalued in relation to both its historical earnings and relative valuation.

In tandem with the strong earnings growth, Coach shareholders have enjoyed a compound annual return of 23.4% which correlates closely with the 27.5% growth rate in earnings per share. Note that the slight underperformance is due to a declining P/E ratio. A hypothetical $10,000 investment in Coach on Dec. 31, 2001 would have grown to a total value of $118,480.98, without reinvesting dividends. Said differently, Coach shareholders have enjoyed total returns that were roughly seven times the value that would have been achieved by investing in the S&P 500 over the same time period. It's also interesting to note that an investor would have received approximately 3.3 times the amount of dividend income as the index as well; and this comes despite receiving dividends for only five years.

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But of course – as the saying goes – past performance does not guarantee future results. Thus while a strong operating history provides a fundamental platform for evaluating a company, it does not by itself indicate a buy or sell decision. Instead an investor must have an understanding of the past while simultaneously thinking the investment through to its logical, if not understated, conclusion.

In the opening paragraphs a variety of potential risks and opportunities were described. It follows that the probabilities of these outcomes should be the guide for one's investment focus. Yet it is still useful to determine whether or not your predictions seem reasonabl! e.

! Thirty leading analysts reporting to Standard & Poor's Capital IQ come to a consensus five-year annual estimated return grow rate for Coach of 12%. In addition, Coach is currently trading at a P/E of 14.5, which is inside the "value corridor" (defined by the orange lines) of a maximum P/E of 18. If the earnings materialize as forecast, Coach's valuation would be $94.94 at the end of 2018, which would be a 13.1% annualized rate of return including dividends. A graphical representation of this calculation can be seen in the Estimated Earnings and Return Calculator seen below.

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Now it's paramount to remember that this is simply a calculator. Specifically, the estimated total return is a default based on the consensus of the analysts following the stock. The consensus includes the long-term growth rate along with specific earnings estimates for the next two upcoming years. Further, the dividend payout ratio is presumed to stay the same and grow with earnings. Taken collectively, this graph provides a very strong baseline for how analysts are presently viewing this company. However, a F.A.S.T. Graphs' subscriber is also able to change these estimates to fit their own thesis or scenario analysis.

Since all investments potentially compete with all other investments, it is useful to compare investing in any prospective company to that of a comparable investment in low risk treasury bonds. Comparing an investment in Coach to an equal investment in a 10-year Treasury bond, illustrates that Coach's expected earnings would be 4.6 times that of the 10-year T-bond interest. This comparison can be seen in the 10-year Earnings Yield Estimate table below.

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Finally, it's important to underscore the idea that all companies derive their underlyi! ng value ! from the cash flows (earnings) that they are capable of generating for their owners. Therefore, it should be the expectation of a prudent investor that – in the long-run – the likely future earnings of a company justify the price you pay. Fundamentally, this means appropriately addressing these two questions: "In what should I invest?" and "At what time?" In viewing the past history and future prospects of Coach we have learned that it appears to be a strong company with solid upcoming opportunities. However, as always, we recommend that the reader conduct his or her own thorough due diligence.

Disclosure: Long COH, JNJ, KO at the time of writing.

Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.

Best Biotech Companies To Watch In Right Now

Celgene (NASDAQ: CELG  ) shares have soared more than 46% so far in 2013. This booming biotech stock can't go much higher, right? Surely, it's time now to take profits. Actually, the company just announced two developments that add to the reasons to buy Celgene rather than sell.

Facing the giants
For a company known for its blood cancer drugs, Celgene has been quite excited about anti-inflammatory drug apremilast. Clinical results for apremilast have been positive, but some observers have been a little skeptical about the drug's potential in the face of stiff competition. Celgene today announced more results from a phase 3 study of apremilast that could melt some of that skepticism.

Patients with psoriatic arthritis who took 20mg doses of apremilast for 52 weeks showed ACR 20 scores of 63%. Patients taking 30mg doses demonstrated ACR scores of 55%. These ACR scores are measurements established by the American College of Rheumatology that reflect 20% improvement in tender or swollen joint counts as well as 20 percent improvement in three other criteria. Apremilast's 52-week results show significant improvement from earlier results.

Best Biotech Companies To Watch In Right Now: Sanofi(SNY)

sanofi-aventis engages in the discovery, development, and distribution of therapeutic solutions to improve the lives of everyone. The company offers a range of healthcare assets, including a broad-based product portfolio in prescription drugs, OTC/OTX, generics, vaccines, and animal health. It has a strategic alliance with Regulus Therapeutics Inc. to discover, develop, and commercialize micro-RNA therapeutics, initially in fibrosis. The company was founded in 1970 and is headquartered in Paris, France.

Advisors' Opinion:

• [By Ben Levisohn]

  The European pharmaceutical stocks that don’t reflect the potential of biologics yet include Novartis (NVS) and Sanofi (SNY), McGarry says.

  Novartis has dropped 1.3% to $74.15 today, while Sanofi has fallen 2.4% to $49.57.

• [By Paul Ausick]

  The U.S. division of Paris-based Sanofi (NYSE: SNY) announced on Monday that an iconic U.S. consumer product not named Twinkies is on its way back to store shelves. Over-the-counter antacid Rolaids is once again available after a gap of nearly three years.

• [By Kanak Kanti, De]

  Teva's competition
  Teva will still face competition in the colorectal cancer generic market. The company's version of Xeloda is expected to compete with cytotoxic agents such as oxaliplatin, which is a generic version of French drugmaker Sanofi's (NYSE: SNY  ) Eloxatin/Eloxatine. In 2012, sales of Eloxatin totaled $1.3 billion. Generic competition has had a major impact on Eloxatin, however, with sales falling to $159 million in the first half of 2013.

Best Biotech Companies To Watch In Right Now: Inovio Pharmaceuticals Inc (INO)

Inovio Pharmaceuticals, Inc., incorporated on June 29, 1983, is engaged in the development of a new generation of vaccines, called synthetic vaccines, focused on cancers and infectious diseases. The Company's SynCon technology enables the design of universal vaccines capable of providing cross-protection against existing or changing strains of pathogens, such as influenza and human immunodeficiency virus (HIV). The Company's electroporation delivery technology uses brief, controlled electrical pulses to increase cellular uptake of the vaccine. Its clinical programs include cervical dysplasia (therapeutic), avian influenza (preventive), prostate cancer (therapeutic), leukemia (therapeutic), hepatitis C virus (HCV) and HIV vaccines. It is advancing preclinical research and clinical development for a universal seasonal/pandemic influenza vaccine, as well as preclinical work for other products, including malaria and prostate cancer vaccines. Its partners and collaborators include University of Pennsylvania, Drexel University, National Microbiology Laboratory of the Public Health Agency of Canada, Program for Appropriate Technology in Health/Malaria Vaccine Initiative (PATH/MVI), National Institute of Allergy and Infectious Diseases (NIAID), Merck, ChronTech, University of Southampton, United States Military HIV Research Program (USMHRP), the United States Army Medical Research Institute of Infectious Diseases (USAMRIID) and HIV Vaccines Trial Network (HVTN). As of December 31, 2011 it owned 16.1% interest in VGX Int��.

Inovio�� Solution

The Company�� synthetic vaccine platform consists of its SynCon vaccine design process and electroporation delivery technology. It has developed a preclinical and clinical stage pipeline of vaccines. The Company�� synthetic vaccines are designed to prevent a disease (prophylactic vaccines) or treat an existing disease (therapeutic vaccines). Its synthetic vaccine consists of a deoxyribonucleic acid (DNA) plasmid encoding a selected antigen! (s), which is introduced into cells of humans or animals with the purpose of evoking an immune response to the encoded antigen. The Company�� synthetic vaccines are designed to generate specific antibody and/or T-cell responses.

The Company�� SynCon technology provides processes that employ bioinformatics, which combine extensive genetic data and sophisticated algorithms. Its design process uses the genetic make-up of a common antigen(s) from multiple strains of a virus within a viral sub-type or taxonomic group (family) of pathogens, such as HIV, hepatitis C virus (HCV), human papillomavirus (HPV), influenza and other diseases to synthetically create a new antigen for the desired pathogen target that does not exist in nature. Its synthetic vaccine candidates are being delivered into cells of the body using its electroporation (EP) DNA delivery technology.

Cancer Synthetic Vaccines

The Company has two broad types of cancer vaccines: preventive (or prophylactic) vaccines, which are intended to prevent cancer from developing in healthy people, and treatment (or therapeutic) vaccines, which are intended to treat an existing cancer by strengthening the body�� natural defenses against the cancer. Two types of cancer preventive vaccines are available in the United States. The United States Food and Drug Administration (the FDA) has approved two vaccines, Gardasil and Cervarix that protect against infection by the two types of HPV-types 16 and 18-that cause approximately 70% of all cases of cervical cancer worldwide. In addition, Gardasil protects against infection by two additional HPV types, 6 and 11, which are responsible for about 90% of all cases of genital warts in males and females but do not cause cervical cancer.

Cervarix manufactured by GlaxoSmithKline, is composed of virus-like particles (VLPs) made with proteins from HPV types 16 and 18. Cervarix is approved for use in females��ages 10 to 25 for the prevention of cervical cancer caused by! HPV type! s 16 and 18. Gardasil manufactured by Merck, is approved for use in females for the prevention of cervical cancer, and some vulvar and vaginal cancers, caused by HPV types 16 and 18 and for use in males and females for the prevention of genital warts caused by HPV types 6 and 11. The vaccine is approved for these uses in females and males ages 9 to 26. The FDA has also approved a cancer preventive vaccine that protects against hepatitis B virus (HBV) infection.

Inovio�� VGX-3100 is designed to raise immune responses against the E6 and E7 genes of HPV types 16 and 18 that are present in both pre-cancerous and cancerous cells transformed by these HPV types. E6 and E7 are oncogenes that play an integral role in transforming HPV-infected cells into cancerous cells. In March 2011, it initiated a randomized, double-blind Phase II study of VGX-3100 delivered using the CELLECTRA intramuscular electroporation device in women with HPV Type 16 or 18 and diagnosed with, but not yet treated for, cervical intraepithelial neoplasia (CIN) 2/3. The study is designed to enroll 148 subjects. In January 2011, it announced the publication of a scientific paper in the journal Human Vaccines detailing potent immune responses in a preclinical study of its SynCon vaccine for prostate cancer targeting two antigens, prostate specific antigen (PSA) and prostate specific membrane antigen (PSMA).

In January 2011, the Company announced the regulatory approval of a Phase II clinical trial (WIN Trial) to treat leukemia utilizing its new ELGEN 1000 automated vaccine delivery device. The single dose level, Phase II study, called WT1 immunity via DNA fusion gene vaccination in haematological malignancies by intramuscular injection followed by intramuscular electroporation. Cancer Vaccines encodes for hTERT, an antigen related to non-small cell lung, breast and prostate cancers. The vaccine is delivered using its electroporation delivery technology.

Infectious Disease Synthetic Vaccines

In Marc! h 2011, the Company announced the initiation of a follow-on open label, single dose Phase II clinical study in collaboration with ChronTech of the ChronVac-C HCV DNA vaccine delivered using its electroporation technology in treatment naive HCV infected individuals. Its HIV vaccines consist of candidates for HIV prevention, as well as therapy or treatment. PENNVAX-B is designed to target HIV clade B (most commonly found in the United States, North America, Australia and the European Union (EU). PENNVAX-G is designed to target HIV clades A, C and D, which are more commonly found in Asia, Africa, Russia and South America. This Phase I clinical study of PENNVAX-B (HVTN-080) vaccinated 48 healthy, HIV-negative volunteers to assess safety and levels of immune responses generated by Inovio�� PENNVAX-B vaccine delivered with its CELLECTRA electroporation device. PENNVAX-B is a SynCon vaccine that targets HIV gag, pol, and env proteins.

The Company�� VGX-3400X targets H5N1. The vaccine consists of three distinct DNA plasmids coded for a consensus hemagglutinin (HA) antigen derived from different H5N1 virus strains; a consensus neuraminidase (NA) antigen derived from different N1 sequences; and a consensus nucleoprotein (NP) fused to a small portion of the m2 protein (m2E) based on a broader cross-section of influenza viruses in addition to H5N1 and H1N1. Conventional vaccines are strain-specific and have limited ability to protect against genetic shifts in the influenza strains they target. They are therefore modified annually in anticipation of the next flu season�� new strain(s). It is focused on developing DNA-based influenza vaccines able to provide broad protection against known as well as newly emerging, unknown seasonal and pandemic influenza strains.

Animal Health/Veterinary

VGX Animal Health, Inc. (VGX AH), a majority-owned subsidiary, has licensed LifeTide, a plasmid-based growth hormone releasing hormone (GHRH) technology for swine. LifeTide is one of onl! y four DN! A-based treatments approved for use in animals and is the only DNA-based agent delivered using electroporation that has been granted marketing approval (Australia). VGX AH is also developing a GHRH-based treatment for cancer and anemia in dogs and cats. It is developing a synthetic vaccine for foot-and-mouth disease (FMD) administered by its vaccine delivery technology. The FMD virus is one of the most infectious diseases affecting farm animals, including cattle, swine, sheep and goats, and is a serious threat to global food safety.

The Company competes with Crucell N.V, Sanofi-Aventis, Novartis, Inc., GlaxoSmithKline plc, Merck, Pfizer, AstraZeneca, Inc., Novartis, Inc., MedImmune and CSL.

Hot High Tech Companies To Invest In 2014: Gentium SpA(GENT)

Gentium S.p.A., a biopharmaceutical company, focuses on the development and manufacture of its primary product candidate, defibrotide, an investigational drug based on a mixture of single-stranded and double-stranded DNA extracted from pig intestines. It develops defibrotide for the treatment and prevention of hepatic veno-occlusive disease (VOD), a condition that occurs when veins in the liver are blocked as a result of cancer treatments, such as chemotherapy or radiation, that are administered prior to stem cell transplantation. The company has completed a Phase III clinical trial of defibrotide for the treatment of severe VOD in the United States, Canada, and Israel; and a Phase II/III pediatric trial in Europe for the prevention of VOD. It also offers sulglicotide that is developed from swine duodenum, and has ulcer healing and gastrointestinal protective properties in South Korea; and urokinase, which is made from human urine to treat various vascular disorders, such as deep vein thrombosis and pulmonary embolisms. The company was formerly known as Pharma Research S.r.L. and changed its name to Gentium S.p.A. in July 2001. Gentium S.p.A. was founded in 1993 and is headquartered in Villa Guardia, Italy.

Best Biotech Companies To Watch In Right Now: RXi Pharmaceuticals Corp (RXII.PK)

RXi Pharmaceuticals Corporation (RXi), incorporated on September 8, 2011, is a development-stage company. The Company is a biotechnology company focused on discovering, developing and commercializing therapies addressing medical needs using RNA interference (RNAi)-targeted technologies. As of July 12, 2012, RXi was focusing on its internal therapeutic development efforts in fibrosis. RXI-109 is its RNAi product candidate, which is a dermal anti-scarring therapy that targets connective tissue growth factor (CTGF). The Company�� therapeutic platform consists of two main components: RNAi Compounds (rxRNA) and Advanced Delivery Technologies. RNAi compounds include rxRNAori, rxRNAsolo and sd-rxRNA, or self-delivering RNA. On April 26, 2012, it completed the spin-off transaction from Galena Biopharma, Inc. (Galena).

In January 2011, the Company announced research results in collaboration with Generex Biotechnology Corporation, and RXi�� wholly owned subsidia ry Antigen Express, Inc., in developing vaccine formulations for immunotherapy. In January 2011, it announced initial results as part of its collaboration with miRagen Therapeutics, Inc. in creating microRNA mimics, or artificial copies of microRNAs, using the Company�� sd-rxRNA technology. In February 2011, it announced the initiation of RXi�� development program for RXI-109.

Best Biotech Companies To Watch In Right Now: ViroPharma Incorporated(VPHM)

ViroPharma Incorporated, a biotechnology company, develops and commercializes therapeutic products that address serious diseases in the United States and internationally. It focuses on developing products used by physician specialists or in hospital settings. The company markets and sells Cinryze, a C1 esterase inhibitor therapy for the routine prophylaxis against angioedema attacks in adolescent and adult patients with hereditary angioedema, a life-threatening genetic disorder; and Vancocin HCl capsule, an oral capsule formulation for the treatment of C. difficile-associated diarrhea (CDAD) and to treat enterocolitis caused by staphylococcus aureus, including methicillin-resistant strains. It also offers Plenadren, an orphan drug for treatment of adrenal insufficiency in adults; Buccolam, a oromucosal solution for treatment of prolonged, acute, and convulsive seizures in infants, toddlers, children, and adolescents; and maribavir, an antiviral compound for the treatment o f CMV disease through a license agreement with GlaxoSmithKline. The company?s primary development programs include Cinryze, a C1 esterase inhibitor for management of hereditary angioedema; and VP 20621, a non-toxigenic strain of C. difficile. Its clinical stage drug candidate comprises VP-20629 for the treatment of Friedreich?s Ataxia. The company sells its products directly to wholesale drug distributors and specialty pharmacies/distributors. ViroPharma Incorporated was founded in 1994 and is headquartered in Exton, Pennsylvania.

Advisors' Opinion:

• [By Max Macaluso and David Williamson]

  At the end of last week, a Bloomberg article revealed that Shire (NASDAQ: SHPG  ) and pharmaceutical giant Sanofi� (NYSE: SNY  ) may be circling ViroPharma� (NASDAQ: VPHM  ) . The the following video, from The Motley Fool's health care show Market Checkup, analysts David Williamson and Max Macaluso take a close look at ViroPharma and discuss the recent interest in this small biotech company.

Best Biotech Companies To Watch In Right Now: Telik Inc (TELK.PH)

Telik, Inc. (Telik), incorporated in 1988, is a clinical-stage drug development company focused on discovering and developing small molecule drugs to treat cancer. The Company discovers its product candidates using the Company�� drug discovery technology, Target-Related Affinity Profiling (TRAP). TELINTRA, its principal drug product candidate in clinical development, is a small molecule glutathione analog inhibitor of the enzyme glutathione S-transferase P1-1 (GST P1-1). TELCYTA, its other product candidate, is a small molecule cancer drug product candidate designed to be activated in cancer cells.

Clinical Product Development

TELINTRA is the Company�� lead small molecule product candidate in clinical development for the treatment of blood disorders, including cancer. It has a mechanism of action and acts by inhibiting GST P1-1, an enzyme that is involved in the control of cellular growth and differentiation. Inhibition of GST P1-1 results in the activation of the signaling molecule Jun kinase, a regulator of the function of blood precursor cells. Preclinical tests show that TELINTRA is capable of causing the death or apoptosis of leukemic or malignant blood cells, while stimulating the growth and development of normal blood precursor cells. TELINTRA has been studied in Myelodysplastic Syndrome (MDS) using two formulations. A liposomal formulation was developed for intravenous administration of TELINTRA and was used in Phase I and Phase II studies in MDS patients. The results from the Phase II intravenous liposomal TELINTRA clinical trials demonstrated that TELINTRA treatment was associated with improvement in all three types of blood cell levels in patients with all types of MDS, including those in intermediate and high-risk groups. An oral dosage formulation (tablet) was subsequently developed and results from a Phase I study with TELINTRA tablets showed clinical activity and the formulation to be well tole rated. In June 2011, the Company initiated a Phase II clini! c! al trial to evaluate TELINTRA tablets. In October 2011, the Company initiated an additional Phase IIb clinical trial to evaluate TELINTRA tablets. '

The activity and safety profile of tablet formulation allowed the Company to complete a Phase II trial of TELINTRA tablets in MDS. The primary objective of the Phase II TELINTRA tablet study was to determine the efficacy of TELINTRA. A multivariate logistic regression analysis was conducted to identify MDS disease prognostic factors associated with erythroid improvement response rates, including prior MDS treatment, age, gender, the international prognostic scoring system (IPSS), risk, Eastern Cooperative Group performance status, years from MDS diagnosis, MDS World Health Organization subtypes, anemia only versus anemia plus other cytopenias, dose schedule and starting dose. Results from this study show that TELINTRA is the first GSTP1-1 enzyme inhibitor shown to cause clinically reductions in red blood cell transf usions, including transfusion independence in low to intermediate-1 risk MDS patients, as well as improvement in platelet count and white blood cell levels in certain patients. TELINTRA, administered orally twice daily, appeared to be convenient and flexible for chronic treatment administration.

TELCYTA is a small molecule drug product candidate that the Company is developed for the treatment of cancer. TELCYTA binds to GST. TELCYTA has been evaluated in multiple Phase II and Phase III clinical trials, including trials using TELCYTA as monotherapy and in combination regimens in ovarian, non-small cell lung, breast and colorectal cancer. Results from these clinical trials indicate that TELCYTA monotherapy was generally well-tolerated, with mostly mild to moderate side effects, particularly when compared to the side effects and toxicities of standard chemotherapeutic drugs. When TELCYTA was evaluated in combination with standard chemotherapeutic drugs, the tolera bility of the combinations was similar to that expected! of e! ac! h drug ! alone.

Clinical activity including objective tumor responses and/or disease stabilization was reported in the TELCYTA Phase II trials; however, TELCYTA did not meet its primary endpoints in the Phase III studies. Positive results from a Phase I-IIa multicenter, dose-ranging study of TELCYTA in combination with carboplatin and paclitaxel as first-line therapy for patients with non-small cell lung cancer, or NSCLC, were published in a peer reviewed publication. Clinical data demonstrated positive results of TELCYTA in combination with carboplatin and paclitaxel in the treatment of first-line lung cancer followed by TELCYTA maintenance therapy. As of December 31, 2011, the Company had an on-going investigator-led study at a single site of TELCYTA in patients with refractory or relapsed mantle cell lymphoma, diffuse B cell lymphoma, and multiple myeloma.

Preclinical Drug Product Development

The Company has a small molecule compound, TLK60 404, in preclinical development that inhibits both Aurora kinase and VEGFR kinase. Aurora kinase is a signaling enzyme whose function is required for cancer cell division, while VEGF plays a key role in tumor blood vessel formation, ensuring an adequate supply of nutrients to support tumor growth. These lead compounds prevented tumor growth in preclinical models of human colon cancer and human leukemia by inhibiting both Aurora kinase and VEGFR kinase. A development drug product candidate, TLK60404, has been selected.

The Company, using its TRAP technology has discovered TLK60357, a novel, potent small molecule inhibitor of cell division. TLK60357 inhibits the formation of microtubules that are necessary for cancer cell growth leading to persistent G2/M cancer cell cycle block and subsequent cell death. This compound demonstrates potent broad-spectrum anticancer activity against a number of human cancer cells. This compound also displays oral efficacy in multipl e, standard preclinical models of cancer. TLK6059! 6, a pote! nt! VGFR kin! ase inhibitor, blocks the formation of new blood vessels in tumors. Oral administration of TLK60596 to animal models of human colon cancer reduced tumor growth.

Best Biotech Companies To Watch In Right Now: Alnylam Pharmaceuticals Inc.(ALNY)

Alnylam Pharmaceuticals, Inc., a biopharmaceutical company, engages in discovering, developing, and commercializing novel therapeutics based on RNA interference (RNAi). Its core product programs under clinical or pre-clinical development include ALN-TTR, a Phase I clinical trial program for the treatment of transthyretin-mediated amyloidosis; ALN-APC, a Phase I clinical trial program for the treatment of hemophilia; ALN-PCS for the treatment of severe hypercholesterolemia; ALN-HPN, a pre-clinical development for the treatment of refractory anemia; and ALN-TMP, a pre-clinical development for the treatment of hemoglobinopathies, including beta-thalassemia and sickle cell anemia. The company?s partner-based programs comprise ALN-RSV01, a Phase II clinical trial program for the treatment of respiratory syncytial virus infection; ALN-VSP, a Phase I clinical trial completed program for the treatment of liver cancers; and ALN-HTT, a pre-clinical development for the treatment of Huntington?s disease. It has strategic alliances with Novartis Pharma AG; F. Hoffmann-La Roche Ltd; Takeda Pharmaceutical Company Limited; Isis Pharmaceuticals, Inc.; Medtronic Inc.; Kyowa Hakko Kirin Co., Ltd.; and Cubist Pharmaceuticals, Inc. The company was founded in 2002 and is headquartered in Cambridge, Massachusetts.

Best Biotech Companies To Watch In Right Now: InterMune Inc.(ITMN)

InterMune, Inc., a biopharmaceutical company, engages in the research, development, and commercialization of therapies in pulmonology and fibrotic diseases. In pulmonology, the company focuses on therapies for the treatment of idiopathic pulmonary fibrosis (IPF), a progressive and fatal lung disease. It markets pirfenidone, an orally active drug that inhibits the synthesis of TGF-beta under the Esbriet name in the European Union, as well as in a Phase III clinical trial in the United States. Pirfenidone is also approved for the treatment of IPF in Japan, where it is marketed by Shionogi & Co. Ltd. under the Pirespa trade name. The company?s research programs focus on the discovery of small-molecule therapeutics and biomarkers to treat and monitor serious pulmonary and fibrotic diseases. InterMune, Inc. was founded in 1998 and is headquartered in Brisbane, California.

Advisors' Opinion:

• [By Lee Jackson]

  InterMune Inc. (NASDAQ: ITMN) continues to soar on the strength of global sales of its top drug Esbriet. The company is still seeking FDA approval to sell Esbriet in the United States. Before approval can take place, the company is awaiting top-line results from the phase 3 ASCEND study. InterMune expects to release these results during the second quarter of 2014. This could be a huge catalyst. UBS has a $15 price target, which should rise soon, and the consensus is at $16.

Top Five Guru-Held Health Care Companies

Using the GuruFocus Aggregated Portfolio Screener you can filter results to see what companies maintain the highest amount of guru ownership. By using this screener, we filtered down to see which healthcare companies are held by the most gurus. As of the second quarter, the following five health care companies are held by the largest number of gurus.

Johnson & Johnson (JNJ)

As of the close of the second quarter there were 42 guru owners of Johnson & Johnson. During the past quarter there were 11 gurus buying shares of JNJ and there were 25 gurus making sells of their stake in the company. These gurus maintain a combined weighting of 87.18%%.

The top three guru shareholders of Johnson & Johnson:

1. Jeremy Grantham: 23,171,691 shares, representing 0.82% of the company's shares outstanding and 5.2% of his total portfolio.
2. James Barrow: 17,156,379 shares, representing 0.61% of the company's shares outstanding and 2.5% of his total portfolio.
3. PRIMECAP Management: 13,996,087 shares, representing 0.5% of the company's shares outstanding and 1.7% of the fund's total assets managed.

Johnson & Johnson is engaged in the research and development, manufacture and sale of a range of products in the health care field. It is a holding company, which has more than 250 operating companies conducting business in virtually all countries of the world.

Johnson & Johnson's historical revenue and net income:

[ Enlarge Image ]

The company recently announced that they product STELARA received FDA approval to treat active psoriatic arthritis.

The analysis on Johnson & Johnson reports:

· The operating margin is expanding.
· It has issued $3.3 billion of debt over the past three years.
· The price is nearing a 10-year high.
· JNJ has shown predictable revenue and earnings growth.
· The dividend yield is nearing a three-year low.

The Peter Lynch Chart sug! gests that the company is currently overvalued:

[ Enlarge Image ]

Johnson & Johnson has a market cap of $249.09 billion. Its shares are currently trading at around $88.39 with a P/E ratio of 19.60, a P/S ratio of 3.60 and a P/B ratio of 3.60. Johnson & Johnson had an annual average earnings growth of 6.3% over the past 10 years.

GuruFocus rated JNJ the business predictability rank of 3-star.

Pfizer (PFE)

As of the close of the second quarter there were 32 guru owners of Pfizer. During the past quarter there were nine gurus buying shares of PFE and there were 27 gurus making sells of their stake in the company. These gurus maintain a combined weighting of 46.82%.

The top three guru shareholders of Pfizer:

1. Dodge & Cox: 69,191,798 shares, representing 1.03% of the company's shares outstanding and 2.3% of their total portfolio.
2. James Barrow: 60,830,964 shares, representing 0.92% of the company's shares outstanding and 2.9% of his total portfolio.
3. Jeremy Grantham: 58,022,697 shares, representing 0.88% of the company's shares outstanding and 4.2% of his total portfolio.

Pfizer is a global pharmaceutical firm which develops and produces medicines and vaccines for a range of conditions which include areas of immunology, inflammation, oncology, cardiovascular and metabolic diseases, neuroscience and pain.

Pfizer's historical revenue and net income:

[ Enlarge Image ]

The company's most recent quarterly results reported:

· Revenues of $13 billion and adjusted EPS of $0.56 and reported diluted EPS of $1.98.
· Repurchased $3.3 billion and $8.7 billion of common stock in Q2 and year-to-date, respectively.
· Accepted 405.1 million shares of common stock in exchange for remaining Zoetis interest.
· Announced plan to create separate, internal, global innovative and valu! e busines! ses.

The analysis on Pfizer reports that the company's revenue has been in decline over the past year, its price is nearing a five-year high and its operating margin is expanding.

The Peter Lynch Chart suggests that the company is currently undervalued:

[ Enlarge Image ]

Pfizer has a market cap of $191.06 billion. Its shares are currently trading at around $28.86 with a P/E ratio of 19.10, a P/S ratio of 3.70 and a P/B ratio of 2.40. The company had an annual average earnings growth of 4.9% over the past 10 years.

Pfizer has the business predictability rank of 3-star.

Merck & Co (MRK)

As of the close of the second quarter there were 32 guru owners of Merck & Co. During the past quarter there were 15 gurus buying shares of MRK and there were 14 gurus making sells of their stake in the company. These gurus maintain a combined weighting of 36.38%.

The top three guru shareholders of Merck & Co:

1. Dodge & Cox: 50,697,146 shares, representing 1.73% of the company's shares outstanding and 2.8% of their total portfolio.
2. Vanguard Health Care Fund: 35,919,648 shares, representing 1.23% of the company's shares outstanding and 6.1% of the fund's total assets managed.
3. James Barrow: 29,318,754 shares, representing 1% of the company's shares outstanding and 2.3% of his total portfolio.

Merck & Co is a global health care company that delivers innovative health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products, which it markets directly and through its joint ventures.

Merck's historical revenue and net income:

[ Enlarge Image ]

The company recently entered a license agreement with AstraZeneca for the investigational Oral WEE1 Kinase Inhibitor therapy for cancer. Merck was also recently named one of the top 100 ! companies! to work for by working mothers.

The analysis on Merck reports that the company's revenue has been in decline over the past year, the price is near a five-year high and that the company has issued $10.1 billion of debt in the past three years.

The Peter Lynch Chart suggests that Merck is currently overvalued:

[ Enlarge Image ]

Merck & Co has a market cap of $139.73 billion. Its shares are currently trading at around $47.75 with a P/E ratio of 28.30, a P/S ratio of 3.30 and a P/B ratio of 3.00. The company had an annual average earnings growth of 1.9% over the past 10 years.

UnitedHealth Group (UNH)

As of the close of the second quarter there were 27 guru owners of UnitedHealth Group. During the past quarter there were 14 gurus buying shares of UNH and there were 15 gurus making sells of their stake in the company. These gurus maintain a combined weighting of 34.35%.

The top three guru shareholders of UnitedHealth Group:

1. Vanguard Health Care Fund: 19,960,200 shares, representing 1.96% of the company's shares outstanding and 4.8% of the fund's total assets managed.
2. Chris Davis: 14,750,586 shares, representing 1.45% of the company's shares outstanding and 2.5% of his total portfolio.
3. Meryl Witmer: 10,971,511 shares, representing 1.08% of the company's shares outstanding and 3.8% of her total portfolio.

UnitedHealth is a diversified health and well-being company dedicated to helping people live healthier lives and making health care work better. UnitedHealthcare, through UnitedHealthcare and Optum, serve more than 80 million worldwide.

UnitedHealth's historical revenue and net income:

[ Enlarge Image ]

The company's third quarter results are set to be released on Oct. 17. The company was also named to the Dow Jones Sustainability North America and World Indices for ! the 15th ! year in a row.

The analysis on UnitedHealth reports that the company's price is nearing a 10-year high, its revenue and earnings growth are consistently growing and its has also issued $5.4 billion over the past three years.

The Peter Lynch Chart suggests that the company is currently undervalued:

[ Enlarge Image ]

UnitedHealth has a market cap of $73.75 billion. Its shares are currently trading at around $72.45 with a P/E ratio of 13.80, a P/S ratio of 0.60 and a P/B ratio of 2.30. The company had an annual average earnings growth of 13.7% over the past ten years.

GuruFocus rated UnitedHealth the business predictability rank of 3.5-star.

Baxter International (BAX)

As of the close of the second quarter there were 27 guru owners of Baxter International. During the past quarter there were 9 gurus buying shares of BAX and there were 11 gurus making sells of their stake in the company. These gurus maintain a combined weighting of 20.48%.

The top three guru shareholders of Baxter International:

1. James Barrow: 3,550,586 shares, representing 0.65% of the company's shares outstanding and 0.41% of his total portfolio.
2. Vanguard Health Care Fund: 3,179,300 shares, representing 0.59% of the company's shares outstanding and 0.81% of the fund's total assets managed
3. Tweedy Browne: 2,607,066 shares, representing 0.48% of the company's shares outstanding and 4.5% of the fund's total portfolio.

Baxter International is a diversified healthcare company. Through its subsidiaries, it develops, manufactures and markets products that save and sustain the lives of people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions.

Baxter's historical revenue and net income:

[ Enlarge Image ]

The analysis on Baxte! r reports! that the company has shown predictable revenue and earnings growth, its price is nearing a 10-year high, the dividend yield is at a 10-year high and the company has issued $4.5 billion of debt over the past three years.

The Peter Lynch Chart suggests that the company is currently overvalued:

[ Enlarge Image ]

Baxter International has a market cap of $38.67 billion. Its shares are currently trading at around $71.25 with a P/E ratio of 17.70, a P/S ratio of 2.80 and a P/B ratio of 5.30. The company had an annual average earnings growth of 11.4% over the past 10 years.

GuruFocus rated Baxter International the business predictability rank of 4.5-star.

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Value Investor Charles de Vaulx On Gold, Apple And Berkshire Hathaway

Charles de Vaulx is chief investment Officer at International Value Advisers. I recently sat down with Charles to discuss his changing feelings about banks, Japan and Apple. Part II of our conversation follows in a video and transcript.

(Click here for the first half of my interview with Charles de Vaulx.)

Forbes: Now in a May newsletter, you said, "Markets are being manipulated very heavily these days," when talking about the global scene. What did you mean by that?

de Vaulx: The policymakers who we believe were, you know, more than responsible for what led to the financial crisis you know, I own no bank stock from '04 to '08, which was basically a way for me to say that we were in the middle of a credit bubble of epic proportion, in the US, but in many other places

Forbes: Explain quickly why you stayed away from banks when on paper, including Fannie and Freddie, they looked cheap? You mentioned leverage.

de Vaulx: Well, because the banks themselves became more and more levered, but we also could tell that they were making worse and worse loans. I mean, securitization basically allowed banks to lower their standards in terms of lending, because they knew that once they would originate the loan, they would repackage it and sell it.

There were so many signs of a credit bubble of historical proportion. And also there were some sober minds out there. I mean, anyone who, you know, read your publication or Grant's Interest Rate Observer, anyway who read the annual reports from the bank for international settlements realized that there was something amazing going on.

Forbes: Do you buy banks today?

de Vaulx: No. I mean, we bought a few after the crisis: UBS, Goldman Sachs, Bangkok Bank in Thailand. Recently, the Brazilian stock market has been weak, along with many other BRICs, so we've started buying into Itau Bank. It's a pretty well-managed bank in Brazil. So, yes, at the right price, we will buy a bank if we think that the underlying culture of the bank is good enough.

I think Warren Buffett several years ago said, "The problem is that there are many more banks than bankers." It's a levered business and there are very few people that have the right mind to properly manage those banks, and I think that Buffett was spot-on. He's still spot-on. So whenever we pick banks, we try to find those that have a pretty good culture, and a pretty good understanding of risk. In the case of UBS, the fact that they are moving more and more into private wealthy management at the expense of lending is something that we've been welcoming.

Forbes: Now, you don't have very much, you mentioned, yet of Brazilian stock, but you stay away from what we call "emerging markets"?

de Vaulx: Yes, because there is a paradox, which is that high economic growth does not always translate to good stock market performance.

Forbes: You see that in China.

de Vaulx: There are many reasons for that within China, but Steve, we have seen this even in the United States. I think of the United States, in the middle to late 19th century, as the ultimate emerging economy. America was so successful that by World War I, it became the leading economic superpower. Yet my history books somehow suggest that stocks did okay but not that great. The big stocks were those big capital intensive businesses.

Forbes: Railroads

5 Biotech Stocks Under $10 on the Move

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>5 Big Trades to Take as the Fed Hits the Gas

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

>>5 Stocks Insiders Love Right Now

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside today.

Organovo

Organovo (ONVO) is a three-dimensional biology company focused on delivering breakthrough bioprinting technology and creating tissue on demand for research and medical applications. This stock closed up 8.2% to $6.03 in Thursday's trading session.

Thursday's Range: $5.80-$6.20

52-Week Range: $1.80-$8.50

Thursday's Volume: 5.36 million

Three-Month Average Volume: 2.67 million

>>5 Rocket Stocks to Buy as Mr. Market Climbs

From a technical perspective, ONVO spiked sharply higher here right off its 50-day moving average of $5.80 with heavy upside volume. This move is quickly pushing shares of ONVO within range of triggering a big breakout trade. That trade will hit if ONVO manages to take out some near-term overhead resistance levels at $6.20 to $6.39 with high volume.

Traders should now look for long-biased trades in ONVO as long as it's trending above its 50-day at $5.80 or above $5.50 and then once it sustains a move or close above those breakout levels with volume that hits near or above 2.67 million shares. If that breakout hits soon, then ONVO will set up to re-test or possibly take out its next major overhead resistance levels at $7.50 to its 52-week high at $8.50.

Arca Biopharma

Arca Biopharma (ABIO) is a biopharmaceutical company developing genetically targeted therapies for cardiovascular diseases. This stock closed up 4.3% to $1.45 in Thursday's trading session.

Thursday's Range: $1.37-$1.49

52-Week Range: $1.13-$5.94

Thursday's Volume: 2.08 million

Three-Month Average Volume: 232,217

>>5 Stocks Set to Soar on Bullish Earnings

From a technical perspective, ABIO ripped higher here right off its 50-day moving average of $1.38 with monster upside volume. This move saw shares of ABIO flirt with a breakout since the stock tested some near-term overhead resistance at $1.45. Shares of ABIO are now trending within range of triggering a big breakout trade. That trade will hit if ABIO manage to take out some near-term overhead resistance levels at $1.50 to $1.52 with high volume.

Traders should now look for long-biased trades in ABIO as long as it's trending above its 50-day at $1.38 or above more near-term support at $1.29 and then once it sustains a move or close above those breakout levels with volume that hits near or above 232,217 shares. If that breakout hits soon, then ABIO will set up to re-test or possibly take out its next major overhead resistance level at $1.65. Any high-volume move above $1.65 will then give ABIO a chance to re-fill some of its previous gap down zone from May that started near $2.80.

Supernus Pharmaceuticals

Supernus Pharmaceuticals (SUPN) is a specialty pharmaceutical company focused on developing and commercializing products for the treatment of central nervous system, or CNS, diseases. This stock closed up 4.3% to $6.87 in Thursday's trading session.

Thursday's Range: $6.55-$6.90

52-Week Range: $4.45-$14.98

Thursday's Volume: 754,000

Three-Month Average Volume: 546,767

>>4 Biotech Stocks Triggering Breakout Trades

From a technical perspective, SUPN jumped sharply higher here back above both its 200-day moving average of $6.63 and its 50-day moving average of $6.67 with above-average volume. This stock has been trending sideways for the last month, with shares moving between $6.40 on the downside and $7.08 on the upside. This spike on Thursday is now quickly pushing shares of SUPN within range of triggering a big breakout trade above the upper-end of its recent sideways trading chart pattern. That trade will hit if SUPN manages to take out some near-term overhead resistance levels at $7 to $7.08 with high volume.

Traders should now look for long-biased trades in SUPN as long as it's trending above some key near-term support at $6.40 and then once it sustains a move or close above those breakout levels with volume that hits near or above 546,767 shares. If that breakout hits soon, then SUPN will set up to re-test or possibly take out its next major overhead resistance levels at $8.40.

Cerus

Cerus (CERS) is a biomedical products company that focuses on commercializing the Intercept Blood System to enhance blood safety. This stock closed up 2.2% to $5.88 in Thursday's trading session.

Thursday's Range: $5.66-$5.94

52-Week Range: $2.68-$6.00

Thursday's Volume: 512,000

Three-Month Average Volume: 519,862

From a technical perspective, CERS moved modestly higher here right above its 50-day moving average of $5.48 with decent upside volume. This stock has been uptrending strong for the last two months and change, with shares moving higher from its low of $4.16 to its recent high of $6. During that uptrend, shares of CERS have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of CERS within range of triggering a big breakout trade. That trade will hit if CERS manages to take out Thursday's high of $5.94 and then once it clears its 52-week high at $6 with high volume.

Traders should now look for long-biased trades in CERS as long as it's trending above its 50-day at $5.48 and then once it sustains a move or close above those breakout levels with volume that hits near or above 519,862 shares. If that breakout hits soon, then CERS will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $7 or $8.

Transition Therapeutics

Transition Therapeutics (TTHI) is a product-focused biopharmaceutical company, developing therapeutics for disease indications with markets. This stock closed up 3.9% to $4.18 in Thursday's trading session.

Thursday's Range: $3.98-$4.18

52-Week Range: $1.90-$4.99

Thursday's Volume: 76,000

Three-Month Average Volume: 158,130

From a technical perspective, TTHI ripped higher here right off its 50-day moving average of $4.04 with lighter-than-average volume. This stock has been trending sideways inside of a consolidation pattern for the last month and change, with shares moving between $3.93 on the downside and $4.53 on the upside. This pattern has started to coil into a tighter range over the last few weeks, which often signals that a stock is ready to see a sharp move if that range is taken out. Shares of TTHI are now starting to move within range of triggering a major breakout trade above the upper-end of its recent sideways trading chart pattern. That trade will hit if TTHI manages to take out some key overhead resistance levels at $4.31 to $4.53 with high volume.

Traders should now look for long-biased trades in TTHI as long as it's trending above support at $3.93 and then once it sustains a move or close above those breakout levels with volume that hits near or above 158,130 shares. If that breakout hits soon, then TTHI will set up to re-test or possibly take out its 52-week high at $4.99. Any high-volume move above $4.99 will then give TTHI a chance to tag $6 or $7.

To see more stocks that are making notable moves higher today, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>5 Stocks Under $10 Set to Soar

>>Beat the S&P With These 5 Shareholder Yield Champs

>>5 Stocks Rising on Unusual Volume

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Winning Returns From Short-Term Junk Bonds

NEW YORK ( TheStreet ) -- Concerned about rocky markets, investors have been dumping intermediate-term bonds and shifting to short-term issues. Short-term bonds tend to be more resilient when interest rates rise. The flows have been particularly notable among high-yield funds, which hold bonds that are rated below-investment grade.

While investors have withdrawn $3.3 billion from the intermediate-term SPDR Barclays High Yield Bond (JNK) this year, SPDR Barclays Short Term High Yield Bond (SJNK) recorded inflows of $1.6 billion, and Pimco 0-5 Year High Yield Corporate Bond (HYS) attracted $2.1 billion, according to IndexUniverse.com. Strong returns have attracted the cash. For the year, SPDR Barclays Short Term returned 3.5%, compared to 1.8% for SPDR's intermediate term exchange-traded fund, according to Morningstar. In comparison, the Barclays Capital U.S. Aggregate index lost 3.2%.

For investors seeking to diversify fixed-income portfolios, the short-term high-yield funds can be intriguing choices. "The short-term ETF gives you an attractive yield with less volatility than you get with longer bonds," says David Mazza, head of ETF investment strategy for State Street Global Advisors, which operates the SPDR funds.

SPDR Barclays Short Term currently yields 4.5%, compared to a yield of 5.9% for the intermediate-term SPDR high-yield ETF. In comparison, iShares Core Total US Bond Market (AGG), which tracks the Barclays Aggregate, yields 2.5%. Make no mistake, high-yield bonds of all kinds can suffer sizable losses in downturns. During the turmoil of 2008, the average high-yield mutual fund lost 26.4%, and short-term issues also suffered big losses. But below-investment grade bonds can be appealing because they can deliver solid long-term returns. During the past five years, the SPDR intermediate high-yield ETF returned 10.7% annually, compared to 4.6% for the Barclays Aggregate. The most important reason to consider high-yield funds is they can help to diversify portfolios, sometimes rising when most bonds are falling. When rates climb, Treasuries and other high-grade bonds tend to fall as investors bid down existing bonds and search for new issues with higher yields. Rising yields can also hurt high-yield bonds somewhat because their income becomes less competitive. But high-yield bonds can appreciate during times when a growing economy is pushing up rates. In such periods, investors tend to bid up high yield prices because default risks are lower.

To limit risks in difficult periods, some investors may prefer holding a short-term high yield fund. But over the long term, funds with greater average maturities and higher yields are likely to outperform. One solution is to hold a short-term fund and a longer portfolio. David Mazza of State Street Global Advisors argues his two high-yield ETFs can complement each other. While the short-term funds has securities with maturities of 0 to five years, the intermediate choice has most of its assets in maturities of five to 10 years.

To hold short-term high-yield securities in an actively managed mutual fund, consider Osterweis Strategic Income (OSTIX). This year the fund returned 4.5%. Portfolio manager Carl Kaufman has the flexibility to buy a variety of kinds of bonds, but in recent years he has focused on short-term high yield issues. He says that the short bonds provide relatively attractive yields. "You are not getting paid a whole lot more to buy an eight-year bond than you are to buy a two-year bond," he says.

While many bond funds hold hundreds of issues, Kaufman runs a more concentrated portfolio, owning about 100 names. He shops carefully, looking for undervalued names. When he can't find bargains, Kaufman holds cash. At the end of the second quarter, the fund had 14% of assets in cash. That helped to cushion the fund when interest rates rose in June and many high-yield bonds sank.

Kaufman often puts his cash stake to work when high-yield bonds suffer one of their periodic corrections. During the downturn of 2008, he scooped up bonds at depressed prices. He figures that another buying opportunity will appear soon enough. "The market is very nervous right now," he says. "If there are surprises from the Federal Reserve or the economy, bonds will fall, and that will be a good time to buy." Follow @StanLuxenberg This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Stan Luxenberg is a freelance writer specializing in mutual funds and investing. He was executive editor of Individual Investor magazine.

Hidden Values at Parker Hannifin

The latest featured stock from our Prime Time Portfolio is a leading worldwide-diversified maker of motion and control technologies and systems for mobile, industrial, and aerospace markets, notes Charles Mizrahi of Hidden Values Alert.

Parker Hannifin (PH) generates strong revenue from its aerospace division, while its primary industrial segment is lagging.

Overall, we like the company's balanced portfolio. PH had solid order rates this past year with backlog of $3.6 billion between its industrial and aerospace segments.

The company's Industrial International division produced weaker figures in recent years. However, PH's diversity in terms of business structure and geographic exposure allows the company to remain profitable, despite slowdowns in some of its markets.

We also like the company's growth strategy, which is driven by increased investment in emerging markets and innovation.

Market expansion in terms of both, its product line, and geographic exposure is crucial to the company's success going forward. R&D of $400 million in 2013 (and more than $350 million in 2012 and 2011) exhibits the PH's focus on long-term growth.

The company had a free cash flow of $1.3 billion in 2012. After paying all of its expenses and allocating money for capital expenditures (more than $200 million of capex in 2012), the company was still left with greater than a billion dollars.

This gives the company several options, which it has taken advantage of. In the past two years PH has allocated $1.15 billion to share repurchases.

Parker Hannifin has reduced shares outstanding by more than ten million since 2011. It has also returned nearly $600 million in dividends during the same period. Its $1.80 annual dividend represents a 1.91% dividend yield.

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Top Analyst Upgrades and Downgrades: Deere, Lululemon, Newmont, Starbucks and More

Investors and traders often get to read about the Wall Street analyst upgrades, but they often do not get to hear when to sell or avoid a stock. Each morning 24/7 Wall St. reviews literally dozens of Wall Street analyst research reports with a goal of finding fresh ideas for investors and traders. Some turn out to be stocks to buy and others stocks to sell. These are this Thursday’s top analyst upgrades, downgrades and initiations seen from Wall Street research firms.

Banco Bilbao Vizcaya Argentaria S.A. (NYSE: BBVA) was raised to Outperform from Neutral by Credit Suisse.

Caterpillar Inc. (NYSE: CAT) was started as Equal Weight at Morgan Stanley

Deere & Co. (NYSE: DE) was started as Underweight with a $72 price target (versus $84.48 close) by Morgan Stanley.

Dollar General Corp. (NYSE: DG) was raised to Buy with a $66 price target at Sterne Agee.

Groupon Inc. (NASDAQ: GRPN) was raised to Overweight from Equal Weight at Morgan Stanley.

Lockheed Martin Corp. (NYSE: LMT) was downgraded to Sector Perform from Outperform at RBC Capital Markets.

Lululemon Athletica Inc. (NASDAQ: LULU) was reiterated as Neutral but the price target was raised to $78 from $73 (versus $70.10 close) at Credit Suisse.

Newmont Mining Corp. (NYSE: NEM) was downgraded to Equal Weight from Overweight at Barclays.

OpenTable Inc. (NASDAQ: OPEN) was downgraded to Equal Weight from Overweight on valuation by Morgan Stanley.

Starbucks Corp. (NASDAQ: SBUX) was started as Outperform with an $80 price target (versus $72.14 close) at Wedbush.

Transocean Ltd. (NYSE: RIG) was raised to Outperform from Neutral with a $60 target price (versus $45.39 close) at Credit Suisse.

Zillow Inc. (NYSE: Z) was downgraded to Underweight from Equal Weight at Morgan Stanley; shares are down 3% after a $100.50 close.

Deutsche Bank has issued a tech research report showing that large networking giants are set to take even more selective market share.

Cushioning The Blow Of Rising Rates

There is a certain sense of doom among income investors these days. It started with nerves over the Federal Reserve's tapering mishap and continues as the question of Chairman Ben Bernanke's succession hangs overhead. Ultimately income investors are fretting about what interest rates will look like once the Fed's manipulation is over.

First, it's time to stop worrying about short-term rates. Those will continue to be manipulated down for the benefit of Uncle Sam, maybe forever.

You should also stop focusing on what Bernanke is saying. His timetable ends in January, and we don't yet know the name or sentiments of his successor.

No matter who is the next chairman, you can be sure that long-term rates are going to rise over the next two years and that the change will be accompanied with significant volatility.

For individuals this is a scary prospect. The natural reaction is to go to cash and ride it out, but the downside is not earning any income on your capital for the next two years.

I say embrace the new financial reality. There is a glut of capital in the world, and economic growth is slow. That means too much money is chasing too few good investment options. Hence, anything that is safe doesn't even pay you the rate of inflation. Witness the negative 0.75% rate on TIPS earlier this year. In this environment, volatility is a plus because it creates investment opportunities.

As an alternative to cash, I would suggest investing in preferred stocks, which are callable anytime. This will provide significant short-term income and very limited volatility. What I call "cushion preferreds" are normally something investors avoid because they can be called in at any time. But it's exactly this feature that now makes them highly attractive given that short-term yields are being manipulated by the Fed.

Many cushion preferreds can be bought today at their call price plus accreted dividends. So you have no risk of loss–even if they're called the next day you are accruing income at their coupon rate during the 30-day notification period. This strategy works for callable bonds, too, but they're not exchange traded and are harder to buy at the right price.

Special Offer: Why bother with stocks or Treasurys when you can clean up in convertibles, preferreds and MLPs? Earn 8% yields on top of chunky capital gains. Click here for recommended buys in Forbes/Lehmann Income Securities Investor.

Here are the ground rules for buying cushion preferreds. First, I recommend a website called Quantumonline.com, which has a trove of data on preferred stocks, or my own website, Incomesecurities.com, which also lists candidates.

Seek out investment-grade issues to minimize credit risk and coupon rates over 6%. Calculate the accreted amount of the next dividend payment and add this to the call price. This sum should be your bid price.

Set a limit order, and be careful not to chase the price. In fact, I find it best to bid on multiple preferreds to increase the chances of getting enough viable investments. It's also important to watch for the ex-dividend date and then adjust your buy price down to the call price. Note your broker's bidding system will generally do this for you automatically. Be cautious of issues selling substantially below their accreted value, as there may be some overriding credit problem.

Here's an example: Barclays Barclays has a 7.75% preferred (BCSpC) that traded at 25.45 just before an Aug. 28 48-cent ex-dividend date. It's callable at $25. On the 28th the price dropped to 25.10. Since it won't be called sooner than Nov. 28, the price will rise to accrue the dividend and, even if called, will yield 6.1% for the three-month holding period. If it's not called for another year, that yield goes to 7.3%.

Yes, interest rates are going up. But my guess is that 6% to 7% for investment-grade preferreds will again become the norm, and these cushion preferreds will find a permanent place in your long-term portfolio.

Richard Lehmann is editor of the Forbes/Lehmann Income Securities Investor and Forbes/ISA Closed End Fund & ETF Report newsletters. He is also the author of Income Investing Today (John Wiley & Sonss, 2007). For more follow him at forbes.com/lehmann.

Is It Time to Get Behind the Wheel and Buy Ford?

In its first-quarter earnings report in April, Ford (NYSE:F) announced that it earned its highest North American profit in more than a decade. This optimistic news is a far cry the dire situation the company was in following the 2008 financial crisis when the stock plunged to below $2 a share. With a strong first-quarter earnings report and a rising share price, is it finally time to get behind the wheel and buy Ford? Let's use relevant sections from our CHEAT SHEET investing framework to see whether Ford is an OUTPERFORM, WAIT AND SEE, or STAY AWAY.

C = Catalyst for the Stock's Movement

Ford has experienced a remarkable run since the company bottomed out during the financial crisis. CEO Alan Mullaly steered the company out of hard times by focusing on offering smaller, more fuel-efficient vehicles and divesting a series of luxury brands that it owned, including Land Rover and Jaguar. Ford's management team seems to have figured out its domestic business. Last quarter, the company recorded its highest North American pre-tax profit in more than a decade at $2.4 billion.

The same cannot be said for Europe and South America. Ford posted negative profits in both markets this past quarter. Some of these losses can be attributed to unfavorable exchange rates — the dollar appreciated against certain currencies in South America — but Ford still has a long way to go in solidifying its position overseas. With an aging vehicle fleet in Europe and a slowly improving economy, demand for new cars in Europe will rise. Ford is in a good position to take advantage of imminent new vehicle purchases by Europeans. The company has increased its marketing presence in Europe and is producing smaller and more fuel-efficient cars, such as the Fiesta and the Focus, that have greater appeal to the tastes of European consumers.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

E = Excellent Relative Performance to Peers?

Based on trailing price-to-earnings figures, Ford looks relatively cheap when compared with its chief competitors, GM (NYSE:GM) and Toyota (NYSE:TM). Ford is trading at a trailing price to earnings multiple of 10.43; GM trades at a slightly higher multiple of 11.59, and Toyota's is significantly higher at 15.71. Based on analyst growth estimates over the coming year, it makes sense why Ford is trading at a lower multiple — its projected growth in earnings is zero, while GM and Toyota are both expected to increase their revenue growth. Still, the numbers suggest that Ford offers the best value of the three.

From a dividend perspective, Ford is the clear winner. It offers a 2.6 percent dividend yield, more than double that of Toyota's. GM does not offer a dividend at this time, discontinuing it after the 2009 bailout. Ford trumps both GM and Toyota when comparing ROE numbers between the three. This is unsurprising due to Ford's strong management team and its competitive advantages in product offerings and its manufacturing processes.

	Ford	GM	Toyota
Trailing P/E	10.43	11.59	15.71
Growth Est. (2013)	0.0%	2.2%	10.1%
Dividend Yield	2.6%	N/A	1.2%
Return on Equity	34%	15.2%	9.09

T = Technicals are Strong

Ford is currently trading around $15.50, above both its 50-day moving average of $14.91 and its 200-day moving average of $13.43. The stock has experienced mostly upward momentum over the last twelve months. Additionally, the stock price has surged since it announced its first-quarter earnings in April. It is trading near its 52-week high of $16.09. Investors should be wary of the sharp ascent of the share price over the past six months. While Ford had a strong first quarter, such a rapid increase in a stock's price can signify that it is overbought, and a selloff period could begin.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

Conclusion

Expect Ford to continue its positive momentum over the next few quarters. Its strong domestic numbers and continued investment into Europe and emerging markets should begin to show positive operating profits by the middle of the decade. Additionally, Ford is trading at a relatively low price-to-earnings ratio compared with its competitors, suggesting that it is cheap at its current share price.

The company seems relatively strong compared to its competitors — GM had a shaky first quarter and Toyota is exposed to economic uncertainty in Japan. At around $15.40, Ford is trading at a reasonable price and it should continue to report strong earnings throughout the year. For now, Ford is an OUTPERFORM.

Using a solid investing framework such as this can help improve your stock-picking skills. Don't waste another minute — click here and get our CHEAT SHEET stock picks now.